Today’s post is by our Pacific Legal Foundation colleague Kady Valois, writing about last week’s opinion by the Florida District Court of Appeal (Second District) in Lake Lincoln, LLC v. County of Manatee, No. 2D21-2826 (Jan. 13, 2023),

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Divide and Conquer (Or Not): Florida’s Test

For The Regulatory Takings Larger Parcel

by Kady Valois

It is highly likely that anyone who follows this blog, at least as religiously as I do, groaned when the Supreme Court issued its decision in Murr v. Wisconsin, 137 S.Ct. 1933 (2017). After all, what could be more accessible and pro- private property than creating a balancing test within a balancing test and expanding the “parcel as a whole analysis” to encompass not only the regulated property but also any other property owned by the plaintiff (in the case of the Murr family, a parcel abutting the property they asserted was taken without compensation when Wisconsin’s regulations effectively prohibited them from developing it). This emitted collective groan (see, e.g., this piece, describing the Murr majority’s test as “Penn Central squared”) was not only for the increased difficulty of litigating future takings claims, but also the loss of private property rights generally.

Fortunately, though, Murr‘s muddle had little effect on the property owners in the Lake Lincoln case. There, Florida’s Second District Court of Appeal was faced with substantially the same question SCOTUS addressed in Murr: namely, “what is the ‘relevant parcel’ upon which [the property owner’s] takings claim . . . should be measured.” Thankfully, and somewhat surprisingly, the Second District (employing Florida law principles) reached a different conclusion — and applied a different analysis — than the SCOTUS Murr majority.

The case arose out of Manatee County’s refusal to bisect and partially rezone a portion of Lake Lincoln’s ten-acre parcel, located within Tara’s Development of Regional Impact (DRI) – an area over eleven hundred acres – into two separate subplots. This refusal led to two separate regulatory takings claims, one sounding in Florida statutory law – the Bert J. Harris, Jr., Private Property Rights Protection Act – and the other under the Florida Constitution’s Takings Clause. See slip op. at 4.

The trial court quickly disposed of both claims, granting the County summary judgment. It held that the entire 1,124-acre DRI parcel was the relevant parcel (aka the “denominator”) for analyzing whether a taking occurred.

After a hearing on the motions, the trial court granted summary judgment in favor of the County on June 11, 2021. In its order the trial court concluded, “Considering the relevant factors and the undisputed facts and giving particular weight to the unique interdependence created by the DRI regulatory scheme, the Court finds the appropriate ‘relevant parcel’ in this case is the entire Tara DRI property.”

Id.

Lake Lincoln appealed, arguing only the ten acres it owned should have been examined as the denominator/larger parcel.

The Second District Court of Appeal agreed. In doing so, the court employed an often-under-utilized Florida Supreme Court decision, Dep’t of Trans. Div. of Admin. v. Jirik, 498 So.2d 1253 (1986). Jirik set forth a three-part test that eminent domain lawyers recognize: to determine the larger parcel in a regulatory takings case, a court examines a property’s “physical contiguity, unity of ownership, and unity of use.”

Yes, the “three unities.”

The court noted that unity of use incorporates a number of considerations including: (1) the intent of the owner, (2) the adaptability of the property, (3) the dependence between parcels, (4) the highest and best use of the property, (5) zoning, (6) the appearance of the land, (7) the actual use of the land, and (8) the possibility of tracts being combined in use in the reasonably near future.

The court of appeal concluded these unity of use factors tip in the owner’s favor and that there was no overall use of the DRI parcel:

As to unity of use, the trial court stated the subfactors to consider but did not apply them…. The trial court appeared to make a determination on unity of use based in large part on the one subfactor that there was dependence between the parcels due to the development entitlements.

Regarding the subfactors of the intent of the owner and the dependence between parcels, Lake Lincoln intended the 3.32-acre subparcel to be a standalone commercial property. The 10.32-acre parcel is not dependent upon any adjacent DRI properties to appreciate the commercial use Lake Lincoln sought. Although Lake Lincoln sought the 3.32-acre subphase through a larger DRI amendment process and

the application lists the entire DRI as the property, Lake Lincoln was seeking amendments for other parcels in the DRI in addition to the 10.32-acre parcel and seeking transfers of entitlements. The application shows that Lake Lincoln’s proposed use and intent was to develop a 3.32-acre commercial subphase independently from other properties within the DRI.

As to zoning, adaptability, and appearance, this standalone commercial property would be consistent with its future land-use classification and the neighboring uses. Commercial use for the 3.32-acre subparcel with the remainder of the 10.32 acres for use as wetland mitigation/ conservation is the property’s highest and best use. Further, there is no realistic possibility of the parcel being combined with other tracts in the reasonably near future, given the DRI build-out.

Slip op. at 8-9.

The primary point on unity of use seems to have been that Lake Lincoln didn’t own any other property within the DRI, and that using the DRI parcel as the takings denominator was just too expansive: just how was Lake Lincoln supposed to use someone else’s property?

The second factor – physical contiguity – also cut in favor of Lake Lincoln. The court of appeal concluded that the mere proximity of the DRI to Lake Lincoln’s property was not enough to confer “relevant parcel” status. Rather, the fact Lake Lincoln owned only its ten acre parcel within the DRI and no other property, ruled the day.

Additionally, Lake Lincoln’s intent to create a standalone commercial property weighed heavily in the Second District Court’s analysis. An analysis which was fully in line with the Federal Circuit’s decision in Lost Tree Village Corp. v. United States, 707 F.3d 1286 (Fed. Cir. 2013).

Having concluded that the relevant parcel is the 10-acre piece, the court of appeal concluded that it shouldn’t merely vacate the judgment and send the case back down for more. Instead, it reversed and remanded with an order to enter judgment on the Florida law takings claim in Lake Lincoln’s favor:

Considering the undisputed facts, we conclude that the relevant parcel for takings purposes is the 10.32-acre parcel. When considering the proper relevant parcel, the undisputed facts demonstrated that Lake Lincoln could achieve no economic use on its 10.32-acre parcel as a result of the County’s restriction to uses for only open spaces and wetlands during the nearly nine-year period.

We conclude that the trial court erred as a matter of law in determining that the entire 1,124 Tara DRI was the relevant parcel for takings purposes. We reverse the final summary judgment and the ruling that the County was entitled to summary judgment on count two for inverse condemnation and that Lake Lincoln was not entitled to partial summary judgment on count two. We remand for further proceedings and direct the trial court to enter partial summary judgment as to liability on count two in favor of Lake Lincoln. To the extent that the trial court granted summary judgment on count one [the Bert Harris Act claim], we affirm.

Slip op. at 10.

The Second Circuit’s reversal in this case and its ultimate decision that the relevant parcel was only Lake Lincoln’s ten acres, represents a marked departure from what seems to be Murr’s ever expanding nature.

And for once, the good guys and their little lot conquered all.

                       – Kady Valois

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Barista’s comments: the Florida court here applies what we think is the right approach, as we wrote in our article criticizing the Murr majority, and suggesting that the three unities test under state law may be the way to go until Murr is clarified or overruled. See Restatement (SCOTUS) of Property – What Happened to Use in Murr v. Wisconsin?, 87 UMKC L. Rev. 891 (2019). And, again correctly, the Florida court focused on unity of use as the most critical factor of the three (something we emphasized in this amicus brief in another court).

Lake Lincoln, LLC v. Manatee County, No. 2D21-2826 (Fla. Dist. Ct. App. Jan. 13, 2023)