RODNEY SHANDS, ET AL.

v.

CITY OF MARATHON, ET AL.

Third District Court of Appeal State of Florida

Opinion filed May³, 2023. Not final until disposition of timely filed motion for rehearing.

________________

No. 3D21-1987 Lower Tribunal No. 07-99-M ________________

Rodney Shands, et al., Appellants,

vs.

City of Marathon, etc., et al., Appellees.

An appeal from the Circuit Court for Monroe County, Mark H. Jones, Judge.

Pacific Legal Foundation, Jeremy Talcott, and Robert H. Thomas (Sacramento, CA), and Kathryn D. Valois (Palm Beach Gardens), for appellants.

Johnson, Anselmo, Murdoch, Burke, Piper & Hochman, P.A. and Michael T. Burke, and Hudson C. Gill (Fort Lauderdale), for appellees.

Before EMAS, HENDON, and MILLER, JJ.

MILLER, J.

2

This inverse condemnation appeal presents a novel issue regarding the role that transferred development rights (“TDRs”) occupy in adjudicating a per se as-applied regulatory taking claim advanced under the landmark case of Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). Appellants, the children of the late Dr. R.E. Shands, are the owners of Shands Key, an offshore island in the Florida Keys. Dr. Shands acquired the property in 1956, and, upon his death, title to the island passed to his wife. She, in turn, conveyed the property to appellants. In 1986, Monroe County changed Shands Key’s zoning status from “General Use” to “Conservation Offshore Island.” In 1999, appellee, the City of Marathon, incorporated and adopted Monroe County’s regulations. An application to construct a dock to allow for increased island access was denied, and the zoning authority effectively foreclosed any use of the property, other than for beekeeping or personal camping. After unsuccessfully pursuing administrative avenues for relief, appellants filed suit, alleging a regulatory taking. They then sought partial summary judgment on the basis that the regulation, as applied, deprived them of all economically beneficial use of their property. Finding that an award of TDRs and Building Permit Allocation System (“BPAS”) points, considered in tandem with the residual land value derived from personal recreation and beekeeping, precluded a per se as-

PROCEDURAL HISTORY

This dispute underscores the “cryptic and convoluted” nature of contemporary regulatory takings jurisprudence. See Ganson v. City of Marathon, 222 So. 3d 17, 20 (Fla. 3d DCA 2016) (Shepherd, J., dissenting). This is the third time this case has come before this court. The salient facts precipitating the filing of suit are as follows: Dr. R.E. Shands purchased the 7.9-acre Little Fat Deer Key in 1956, and seven acres of adjacent bay bottom in 1959, before any state land use policies existed. He died in 1963, and his wife inherited the property, now known as Shands Key. She conveyed title to their children, the appellants, in 1985. From the time it was purchased until 1986, Shands Key was within Monroe County jurisdiction and was zoned General Use.

In 1986, Monroe County adopted the State Comprehensive Plan and development regulations that altered Shands Key’s zoning status to Conservation Offshore Island (OS), and placed it in the Future Land Use category. When the City of Marathon incorporated in 1999, it adopted the 1986 Monroe County comprehensive land use plan, and Shands Key was within the City bounds. In 2005, the City adopted the City of Marathon Comprehensive Plan; the land use and zoning designations of Shands Key remained unchanged.

In 2004, the Shands filed an application for a dock permit. The application was denied, referring to the City’s prohibition on development in areas classified as high[-]quality hammocks, or

1 Because the error associated with the partial summary judgment denial is dispositive, we decline to reach the other issues on appeal.

The Shands then brought suit against the City, claiming that the City’s acts resulted in an as-applied regulatory taking of their property without just compensation, in violation of state and federal law.

Shands v. City of Marathon (Shands II), 261 So. 3d 750, 751–52 (Fla. 3d DCA 2019) (quoting Shands v. City of Marathon (Shands I), 999 So. 2d 718, 720–22 (Fla. 3d DCA 2008)).

Some additional procedural history is necessary. In the parties’ first appeal, this court reversed a trial court order dismissing the case on statute of limitations grounds. Shands I, 999 So. 2d at 720. There, the court determined appellants’ challenge was “as applied,” rather than “categorical [or] facial,” and therefore not barred by the statute of limitations. Id. at 725– 26. In support of this characterization, the court reviewed the relevant ordinance and noted that it provided for “low intensity residential uses . . .

2 The affidavit-based submissions outline the availability of TDRs and BPAS points, rather than ROGOs.

3 Because the government may not evade the duty to compensate on the basis that the landowner retains a token interest in the property, we reject the circular and conclusory assertion that a hypothetical acquisition of the property for beekeeping or personal camping precluded a per se as-applied claim. See Bridge Aina Le’a, LLC v. Land Use Comm’n, 950 F. 3d 610, 628 (9th Cir. 2020) (“[T]he relevant inquiry for us is whether the land’s residual value reflected a token interest or was attributable to noneconomic use.”), cert. denied, 141 S. Ct. 731 (2021); see also Res. Invs., Inc. v. United States, 85 Fed. Cl. 447, 486 (2009) (“Lucas . . . focuses on whether a regulation permits economically viable use of the property, not whether the property retains some value on paper.”); Lost Tree Vill. Corp. v. United States, 787 F. 3d 1111, 1117 (Fed. Cir. 2015) (“When there are no underlying economic uses, it is unreasonable to define land use as including the sale of the land. Typical economic uses enable a landowner to derive benefits from land ownership rather than requiring a landowner to sell the affected parcel.”); State ex. rel. AWMS Water Sols., LLC v. Mertz, 165 N.E. 3d 1167, 1181 (Ohio 2020) (finding that potential subletting of the property to a third party “does not rise to the level of an economically beneficial use under Lucas”); Nekrilov v. City of Jersey City, 45 F. 4th 662, 671 n.3 (3d Cir. 2022) (“The plaintiffs are correct that the ability to sell a property does not always constitute an economically beneficial use.”); Banker’s Choice, LLC v. Zoning Bd. of Appeals of Cincinnati, 170 N.E. 3d 923, 930 (Ohio Ct. App. 2021) (“However, an owner’s ability to sell an affected property does not constitute an economically beneficial use.”).

4 As this appeal is from a final judgment, “the antecedent denial of summary judgment is reviewable.” Tiger Point Golf & Country Club v. Hipple, 977 So. 2d 608, 610 (Fla. 1st DCA 2007).

7

STANDARD OF REVIEW

Our review is de novo, as it entails the denial of partial summary judgment and resultant claim preclusion. Shands II, 261 So. 3d at 752. This case was decided under Florida’s “old” summary judgment standard. As we explained in Feldman v. Schocket: Pursuant to the old standard, summary judgment was proper “if there [was] no genuine issue of material fact and if the moving party [was] entitled to a judgment as a matter of law.” In accordance with this test, “the existence of any competent evidence creating an issue of fact, however credible or incredible, substantial or trivial, stop[ped] the inquiry and preclude[d] summary judgment, so long as the ‘slightest doubt’ [was] raised.”

47 Fla. L. Weekly D1930–31 (Fla. 3d DCA Sept. 21, 2022) (alterations in original) (first quoting Volusia County v. Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000); and then quoting Bruce J. Berman & Peter D. Webster, Berman’s Florida Civil Procedure § 1.510:5 (2020 ed.)).

ANALYSIS

The Takings Clause of the Fifth Amendment, applicable to the states through the Fourteenth Amendment, commands: “[N]or shall private property be taken for public use, without just compensation.” Amend. V, U.S. Const. Similarly, the Florida Constitution provides that “[n]o private property shall be taken except for a public purpose and with full compensation therefor paid.” Art. X, § 6(a), Fla. Const. As the Supreme Court has explained, “[t]he aim of

5 See Richard D. Himberger, Transferable Development Rights, 43 Advocate⁸, 12 (2000) (footnote omitted) (“If government enacts a zoning ordinance requiring a landowner to leave his real estate as open space, that regulation will emasculate all viable economic use in his land. Under the Lucas Total Deprivation Rule, such a regulation would constitute a taking of private property requiring payment of just compensation. This conclusion is not altered when a TDR program is added to the mix. The fact that the owner receives part of his just compensation in the form of TDR sales proceeds does not change the fact the taking has occurred.”); see also William Hadley Littlewood, Transferable Development Rights, TRPA, and Takings, the Role of TDRs in the Constitutional Takings Analysis, 30 McGeorge L. Rev. 201, 232 (1998) (“Applying TDRs to the takings side of the Fifth Amendment’s protections will prove both unworkable and inequitable.”); Samantha Peikoff Adler, Penn Central 2.0: The Takings Implications of Printing Air Rights, 2015 Colum. Bus. L. Rev. 1120, 1181 (2015) (“While TDRs have become an important investment option and land use currency, it is questionable whether they will ever be perceived the same as property rights in land.”).

6 See Arden H. Rathkopf et al., Relation to Constitutional Taking Claims— As Factor on Merits of Claim, in³ Rathkopf’s The Law of Zoning and Planning § 59:17 (4th ed.) (“[E]conomic value of available TDRs are to be considered in determining whether an owner is provided with a reasonable return on his investment and might possibly result in rejection of such a claim even where economically viable developmental uses of the particular restricted site are prohibited.”); Jennifer Scro, Navigating the Takings Maze: The Use of Transfers of Development Rights in Defending Regulations Against Takings Challenges, 19 Ocean & Coastal L.J. 219, 238 (2014) (“[T]o

maintain TDRs’ continuing viability, courts should consider TDRs as a mitigating property right both in the takings analysis itself and for potential post-verdict compensation.”); Paul Merwin, Caught Between Scalia and the Deep Blue Lake: The Takings Clause and Transferable Development Rights Programs, 83 Minn. L. Rev. 815, 847–48 (1999) (footnote omitted) (“TDR programs avoid the categorical takings rule of Lucas by providing landowners with an economic use of property. TDR programs meet the goals of the Takings Clause, and avoid many of the evils that takings law seeks to prevent.”).

Id. at 747 (Scalia, J., concurring in part and concurring in judgment). More recently, in Horne v. Department of Agriculture, 576 U.S. 350 (2015), Chief Justice Roberts, writing for the majority, invoked Scalia’s concurrence in Suitum for the proposition that “once there is a taking, as in the case of a physical appropriation, any payment from the Government in connection with that action goes, at most, to the question of just compensation.” Id. at 364. This is consistent with Justice Thomas’s recent reiteration of the Lucas principle that “[a] regulation effects a taking . . . categorically whenever [it] . . . leaves land ‘without economically beneficial or productive options for its use.’” Bridge Aina Le’a, 141 S. Ct. at 731 (Thomas, J., dissenting from denial of certiorari) (emphasis added) (citations omitted) (quoting Lucas, 505 U.S. at 1018). Against this jurisprudential landscape, we examine the summary judgment record in the instant case. Appellants established that regulation deprived them of any use of the property, other than for beekeeping or personal camping. These do not constitute economically beneficial uses, as

Littlewood, supra note⁵, at 225 (footnotes omitted). Further, to the extent that the City invokes the law of the case or res judicata for the proposition that the Lucas claim has been previously adjudicated, neither the Shands I nor Shands II court directly considered the viability of the total as-applied regulatory taking claim under Lucas. The first panel effectively folded the entirety of the as-applied challenge into the Penn Central rubric. In so doing, the panel viewed Lucas as applicable only to “facial” challenges. This conclusion was incomplete and not quite precise.7 “[A] per se taking challenge can be brought as either an as-applied or facial claim.” Goodwin v. Walton County Fla., No. 3:16-CV-364/MCR/CJK, 2018 WL 11413298, at *6 n.15 (N.D. Fla. Mar.⁶, 2018). A per se facial claim, also

7 This court painted the Beyer case with the same broad stroke and recast the landowner’s challenge as a Penn Central claim. See Ganson, 222 So. 3d at 22–23 (Shepherd, J., dissenting) (“Although the Beyers brought a Lucas-type challenge alleging the deprivation of all economic use of their land, Beyer I went to great lengths to transform the Beyers’ categorical challenge into one controlled by the ad hoc, factual inquiry set forth Penn Central. . . . Unfortunately, despite the unmistakable parallels between the economic impact in Lucas and the economic impact on the Beyers’ property, the Beyers’ challenge was never considered under Lucas’s total regulatory takings framework.”).

8 See Bunn v. Bunn, 311 So. 2d 387, 389 (Fla. 4th DCA 1975) (“[A] purely gratuitious [sic] observation or remark made in pronouncing an opinion and which concerns some rule, principle or application of law not necessarily involved in the case or essential to its determination is obiter dictum, pure and simple. While such dictum may furnish insight into the philosophical views of the judge or the court, it has no precedential value.”); First Protective Ins. Co. v. Hess, 81 So. 3d 482, 485 (Fla. 1st DCA 2011) (“We find the relevant language . . . dicta and, therefore, not binding under the facts in this case.”); State ex rel. Biscayne Kennel Club v. Bd. of Bus. Regul. of Dep’t of Bus. Regul. of State, 276 So. 2d 823, 826 (Fla. 1973) (“The statement of the District Court of Appeal in its opinion requiring the allocation of dates to be on the fiscal year basis in the future was not essential to the decision of that court and is without force as precedent.”).