Blue Water's Legal Battle Over Florida Landfill Property

To say that Florida is business-friendly would be an understatement.  State law generally favors private enterprise on liability and employment matters. In addition, residents pay no personal income tax, and the corporate tax is relatively low.  In fact, many businesses pay no tax at all.

Besides these overall advantages and thanks to aggressive lobbying efforts, Florida waste companies in particular enjoy a deferential environment. Looking at the big picture, state agencies and local governments that provide solid waste management services are, by law, urged “to contract with private persons for any or all of such services or programs.”  The stated premise, which some might find dubious, is that private sector involvement is the key to cost-effective public services.    

No local government may discriminate by regulation against privately owned solid waste management facilities because they are privately owned. What’s more, local government waste collection programs, where they compete with a private company, may not enjoy any material advantage “in terms of cost or ability to promptly or efficiently provide such collection services.”

With weighty strings attached, a local government may introduce or expand its own waste collection operations, creating a situation where a private company can no longer serve the customers it had when local officials made their service decision. As Florida lawmakers see it, the displacement of private waste companies in such a manner amounts to the expropriation or taking of private property for public use.

To ease the impact on affected waste companies, the legislature established a process that includes public hearings and a three-year waiting period preceding the company’s exclusion. At the end of the moratorium, the local government must pay the affected company an amount representing the company’s “preceding 18 months’ gross receipts for the displaced service.”  A local government and a company are, however, free to negotiate a different transition schedule and compensation amount.  

Waste company displacement is not the only scenario where the legislature has provided relief from governmental authority. In 1995, then Governor Lawton Chiles signed into law the Bert J. Harris, Jr. Private Property Rights Protection Act.  Under the Harris Act, landowners have recourse through a civil action, apart from condemnation proceedings, that awards compensation for the loss in value of real property when a law, regulation, ordinance or other governmental action “inordinately” burdens, restricts or limits private property. The Harris Act purports to redress a situation where “the property owner is left with existing or vested uses that are unreasonable such that the property owner bears permanently a disproportionate share of a burden imposed for the good of the public, which in fairness should be borne by the public at large.” 

In this setting we find Blue Water Holdings, which was formed in 2006 as a Florida for-profit corporation. Blue Water sought recovery under the Harris Act for the loss in value of its 158-acre parcel in Santa Rosa County based on the County's denying, in February 2013, a permit to construct and operate a landfill. Getting the matter underway, the company delivered to the County the required notice and claim, including two appraisals from Richard Sterner substantiating the fully permitted value and an appraisal from EquiValue documenting the loss in value without permits. A claim must be filed at least 150 days preceding a court action.

Following the statutory interlude, Blue Water filed suit, in September 2013, in Santa Rosa County Circuit Court. During the course of the protracted litigation, the company submitted a new application for an operating permit, which the County granted in September 2017. Blue Water then amended its claim for damages to include those resulting from an “inordinate burden” imposed for the delay from February 2013 to September 2017.

In response, the County moved to dismiss the amended complaint, claiming that the appraisals attached to the Harris Act notice were inadequate. Circuit Judge Darlene F. Dickey denied the motion to dismiss, but later granted judgment in favor of the County "due to the lack of valid appraisal(s) of the real property as required by the [Harris Act]."  She concluded that Sterner's appraisals were of "business damages.” Business damages relative to any development, activity or use may not be recovered under the Harris Act. On appeal, a three-judge panel overturned Judge Dickey’s ruling and sent the case back to her for further proceedings.

For starters, the panel was conspicuously annoyed with the County.  “[T]he County received the appraisals when Blue Water gave it the Harris Act notice in 2013,” the justices observed. “The County did not complain then that the appraisals were inadequate. *  *  * It was not until 2018, after Blue Water had filed its second amended complaint, that the County argued that the appraisals were inadequate. In other words, five years after Blue Water filed a Harris Act suit, the County claimed for the first time that the appraisals attached to the notice did not properly comply with the . . . requirements. *  *  * The County never claimed that its ability to evaluate Blue Water's claim was hampered by the insufficiency of the appraisals. Instead, it said nothing about the sufficiency of the appraisals until long after the suit was filed, after it was far too late for Blue Water to have done anything about it.”  

Noting that Blue Water had not argued that the County had, under the circumstances, forfeited its right to challenge the appraisals, the panel did not decide the issue. But the inference was unmistakable:  if and when a similar situation comes to the court’s attention, the government agency will likely get its comeuppance. 

“The purpose of the appraisals . . . is merely to provide notice to the government in order to evaluate the claim,” the panel wrote.  In fact, the Act requires the government to make a settlement offer during the 150-day notice period following receipt of the claim and appraisals.

“[I]t is clear that the County was on notice of the loss in fair market value of the landfill prior to Blue Water's suit, and had accepted the validity of the appraisals, prior to the suit and for five years thereafter,” the opinion continued.  “In granting the permit in September 2017, the county commissioners afforded significant weight to the appraisals submitted with the claim. The County cannot claim that they were never on notice of the claimed loss of property value.”

Addressing the trial judge’s determination on “business damages,” the appellate panel noted that Blue Water had no operating business. “Sterner's appraisals showed the value of the permitted land at its best and highest use, a landfill,” the judges wrote.  “The appraisals demonstrated a loss in value, not a loss in income.”

Following the County's denial of the operating permit and its vote to include Blue Water's property in a protection area, Sterner wrote a letter indicating that those actions "directly restricted the use of the Property in such a manner that Blue Water will never be able to utilize the Property for its intended purpose." The panel concluded that the letter “confirmed Blue Water's claim that based on the County's actions, the property was no longer worth what it once was.”

The appeals court ultimately concluded that the appraisals are valid because they were “prepared by a person qualified to provide an expert opinion as to fair market value” and “provided sufficient information to allow the County to evaluate the claim for the purpose of determining whether to make a settlement offer.”   

Blue Water Holdings SRC, Inc. v. Santa Rosa County, Florida, No. 1D19-4387, Fla. Dist. Ct. App., Dec. 8, 2021.

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