Keith Howard, The Howard Company etc. v. Roger Murray and K&H Development etc.

The final judgment before us 1 was entered in cases consolidated below, in which *1158 the trial court ruled that. development rights within the Sandestin Development of Regional Impact (DRI) run with the land: The trial court decided that “the issuance of a deed or other instrument of conveyance carries with it the ownership of a reasonable portion of intensity rights” and that “the amount of intensity allowed for a parcel must be determined based upon the individual circumstances of the development.” We conclude this approach is unworkable and reverse the . final judgment in part, on this basis..

The focus of the parties’ dispute is 1.453 acres located within the Sandestin DRI in South Walton County (Tract 3) which has been a subject of contention between Keith Howard, The Howard Company of the Southeast, Inc., and Howard Rock Fee, LLC (Howard/Howard parties), on the one hand, and Roger Murray, K & H Development Group, Inc., and Bla-Lock Destín Development Group, Inc. (Murray/Murray parties), 2 on the other, over a period of some years.

The final judgment decided that Bla-Lock “has vésted commercial development intensity rights in its 1.453 acre parcel of real property,” quieted title to the real property “along with associated commercial intensity development rights” in Bla-Lock against Howard, and decreed that Sandestin Investments, LLC (a non-party) “is authorized to confirm to the appropriate Walton County officials that development intensity rights are available to Bla-Lock,” whereupon Walton County could issue a permit to Murray for building on the lot. An earlier summary judgment, also renewable now that final judgment has been entered, had disposed of other claims.

We affirm the summary judgment in favor of Howard on Murray’s claims of tortious interference with a business relationship, fraudulent misrepresentation, negligent misrepresentation, and civil theft. We also affirm the trial court’s dismissal of Murray’s causes of action for inverse condemnation as not ripe for decision. We reverse both the summary judgment in favor of Murray on Howard’s claim of tortious interference with an option Howard had on Tract 3 (and the underlying business relationship the option represented) and the final judgment determining Bla-Lock Destín Development Group, Inc. holds vested (albeit unspecified) development rights in Tract 3 that entitle it to a development order at this time. 3 We cannot agree with the learned *1159 trial judge that development rights created by an order authorizing a development of regional impact but never allocated — by the development order or otherwise — to a specific subparcel are automatically conveyed when the subpareel is deeded.

Aggregate Development Rights Created and Assigned

By the time Walton County entered a development order authorizing the ■ San-destin DRI on some 2300 acres, Evans & Mitcheil Industries, Inc., the original applicant, had gone bankrupt. Property subject to the development order was subdivided among various mortgage holders. After 1976, ownership of the DRI property fragmented further, 4 before all. owners of undeveloped property subject to the original DRI agreed to the Sandestin Declaration of Covenants, Conditions and Restrictions (CCR), recorded in the Walton County land records in 1980.

After it had acquired all the assets of Lakeland B.V., including its development rights under the DRI order, 5 Sandestin Corporation submitted its 1984 Master Plan Update, notifying Walton County that “the Sandestin Corporation and its affiliates [had] succeeded in reestablishing uni-fled development control” and requesting modifications to the DRI order. Accordingly, by Resolution 1984-24, Walton County amended'the initial DRI development order, so that Parcel 208/308 consisting of 48.1 acres, including Tract 3, was allotted 550,000 square feet of commercial development rights.

Legal Title to Tract 3 Changes Hands

On December 1, 1984, Sandestin Corporation agreed to sell approximately 16 acres lying within Parcel 208/308, including Tract 3, to Great Southwest Commercial, Inc. 6 The sales contract, which was explicitly subject to the DRI order and the CCR,- provided that the parties would agree on necessary amendments to the CCR and, on July 1, 1985, a Supplemental Declaration to the CCR was in fact executed. This Supplement to the CCR did not, however, purport to allocate development rights among lots or parcels lying within the 16-acre parcel Sandestin Corporation agreed to sell (or elsewhere within Parcel 208/308’s 48.1 acres). 7

By 1992, Centaworld Corporation had obtained title to the 16-aere parcel, includ- *1160 tag Tract 3. 8 On February 1, 1996, Centa-world Corporation conveyed Tract 3 to Centaworld Holding Corporation (Centa-world Holding). After Centaworld Holding executed a first mortgage in favor of Peoples First Community Bank (Peoples First), encumbering Tract 3, to secure a loan of approximately $227,000.00, Howard obtained an option to purchase Tract 3 (among other parcels) from Centaworld Holding. 9

Under the terms of the option, Howard paid $150,000 for the right to purchase various subparcels in Parcel 208 at prices calculated to equal (roughly) the debts encumbering the respective, optioned parcels. 10 After the option was executed (but before Howard recorded a “Memorandum of Option”), Murray lent several hundred thousand dollars to Centaworld Holding, securing the loan with a second mortgage encumbering some of the property described in the option contract, including Tract 3.

Peoples First initiated proceedings to foreclose the first mortgage on Tract 3 on February 25, 1999, 11 and, on May 27, 1999, *1161 Centaworld Holding filed for Chapter 11 protection in bankruptcy court. On September 1, 1999, Peoples First assigned its Tract 3 mortgage to Murray. After the bankruptcy case was dismissed, Centa-world Holding conveyed its interest in Tract 3 to K & H Development Group, Inc. by quitclaim deed on May 9,2000.

As holder of the first and second mortgages on Tract 3, Murray initiated a foreclosure action against K & H in 2004. At the foreclosure sale, both Murray and Howard bid repeatedly on Tract 3. Murray made the winning bid of $2,625,000.00, then assigned purchase rights to Bla-Lock, and the Walton County Clerk of Court issued a certificate of title to Bla-Lock on May 27, 2008.

Development Rights Dealt with Separately

On October 28, 1999, Intrawest Sandes-tin filed a Notice of Proposed Change (NOPC) to the DRI order. (By then In-trawest Sandestin had succeeded to San-destin Corporation’s rights under the DRI order, as amended.) This change, approved by Walton County Ordinance No.2000-03, stated the total projected available development rights for Parcel 208/308 as 398,000 square feet of retail and 40,000 square feet of office space (based on transfers of intensity of 152,000 square feet of retail and 40,000 square feet of office from other parcels). Walton County Ordinance No.2000-03 was adopted and recorded in February of 2000.

In June of 2000, Intrawest Sandestin agreed to convey approximately 26.2 acres (described as Parcel 208A and Parcel 208B) to Baytowne Commercial Joint Venture Partners II (another entity controlled by Howard), and acknowledged “that under the currently approved Development Order, a total aggregate of 398,000 square feet of commercial retail intensity and an additional 40,000 square feet of office use intensity is allocated to all of the Property, the Parcel 208A Property and the Parcel 208B Property, collectively.”

On August 6, 2002, Intrawest Sandestin submitted an NOPC that again proposed transferring densities among parcels subject to the DRI order. The NOPC provided, in a footnote:

The majority of Parcel 208/308 is currently undeveloped. The present densities as set forth in the existing and proposed changes applicable to Parcel 208/308 are and will be owned by the Howard Group, with the exception of the densities allocated to the nursing home, Tom Thumb Store, and Applebee’s restaurant. The nursing home, Tom Thumb Store, and Applebee’s restaurant are presently owned by non Howard Group entities and the square footages and uses are being established at the request of Walton County to accurately depict what was previously constructed or allocated under the prior DRI amendment. In addition, Tract 3 is unimproved and is not owned by Howard Group. All other improvements on Parcel 208/308 are presently owned by Howard Group.

This NOPC, approved by Walton County Ordinance No.2002-18, increased the commercial square footage available for retail, banking, office and hotel development on Parcel 208/308.

During a hearing prior to the adoption of Ordinance No.2002-18, counsel representing K & H requested assurance that Tract 3 was not included in the NOPC. Attorneys for Howard/Intrawest Sandestin represented that the NOPC would not affect development rights for Tract 3. A letter from Keith Howard to Walton Coun *1162 ty staff) regarding the NOPC, “reeon-firm[ed] that the proposed NOPC does not affect property within Sandestin that is not owned by Howard Group” and that “any non Howard Group property owner will not have their ownership status or development ability changed by this NOPC, Their present status will continue.”

In 2008 when the Murray parties applied to Walton County for a development order for Tract 3, county personnel advised them it appeared that the Howard parties owned all development rights for Parcel 208, 12 in which Tract 3 lies, A “pre-application note” made by Walton County staff suggested that an “NOPC may be needed to transfer density, intensity to this site.”

Present Judicial Proceedings Begin Below .

On September 10, 2002, Howard filed suit 'in Walton County Circuit Court against Murray and K & H,-alleging intentional interference with Howard’s option contract, among other things. Howard asserted that, after Centaworld Holding gave the option on Tract 3, Murray induced Centaworld Holding to execute a second mortgage, which, as a practical matter, prevented Centaworld Holding from performing under the terms of the. option: Howard alleged that, because the-option price would not be enough to satisfy Murray’s second mortgage, Centaworld could not convey clear title as required by the option contract. Howard asserted Murray further interfered tortiously by obtaining the first mortgage People’s First held on Tract 3 and a quitclaim deed to Tract 3 from Centaworld, alleging specifically that Murray had knowledge of the option at the time Murray obtained the second mortgage and quitclaim deed.

Howard’s suit remained pending when, in 2009, Murray parties (K & H and Bla-Lock) filed against Howard, Walton County, and Intrawest Sandestin, in the United States District Court for the Northern District 'of Florida. Murray’s complaint stated federal and state law claims 13 alleging Murray was unable to develop Tract 3 even, though commercial development rights had been conveyed as a matter of law when Bla-Lock acquired title to Tract 3. Howard counterclaimed for declaratory judgment, asking the federal court to declare that K & H did not own development rights ih Tract 3 or any other portion of Parcel 208/308. After entering summary judgment in favor of the defendants on *1163 claims alleging violation of the equal protection -clause and a substantive due process violation, the federal court declined to exercise pendent jurisdiction over state law claims. 14

The Murray parties then filed in state court, alleging (insofar as pertinent here) civil theft, tortious interference with a business relationship, and fraudulent and negligent misrepresentation by Howard; and inverse condemnation on the part of Walton County. Murray alleged that K & H had agreed in 2004 to sell Tract 3 to Parish National Bank for $1.65 million, but that the Bank cancelled the contract after Howard misrepresented to the Bank that Murray did not have development rights for Tract 3. The complaint also alleged that “K ■& H has hot been able to sell [Tract 3], despite several interested purchasers, due to the ongoing intentional interference of the Howard Defendants,” and that Howard had falsely represented that the 2002 NOPC would impact only Howard-owned property on ' Parcel 208/308. Murray also contended that Walton County had effectively deprived K & H of its property rights ⅛ Tract 3 which, it said, constituted a de facto taking.

Murray’s complaint sought declaratory relief and to “quiet title” to development rights, alleging that the conveyance to Great Southwest by Sandestin included 150,000 square feet of commercial development rights, and that the Murray parties retained their “proportionate share of the development rights through the chain of title.” The trial court consolidated Murray’s 2009 action with, among others, 15 the action Howard had initiated in 2002.

On February 4, 2013, the court ruled, on cross motions for summary judgment, that the Great Southwest contract (even read together with the Supplemental Declaration to the OCR) did not transfer development rights, and noted that none of the deeds in the Murray parties’ chain of title purported to convey development rights to Murray parties or to their immediate predecessor in interest. This ruling has not been directly challenged on appeal.

The order granting summary judgment also ruled against Howard on the 2002 complaint for damages and against Murray on the 2009 damages claims for tortious interference with a. business relationship, fraudulent or negligent misrepresentation, or civil theft. The:same order ruled inverse condemnation issues were not ripe *1164 for resolution because the application to develop Tract 3 Murray filed with Walton County was still pending. Finally, the summary judgment order ruled genuine issues of material fact remained with regard to whether or not all development rights in Parcel 208 had been transferred to the Howard parties, issues it decided against Howard in the final judgment. 16

Development Rights Distinct From Legal Title

To recapitulate, Tract 3 was part of a 16-acre parcel Sandestin Corporation conveyed in 1985. No document reflects an allocation or conveyance of development rights to Great Southwest or to the trustee who first received title to the parcel. The July 1985 deed to Mark E. Bentley, Trustee, conveying the fee estate, did not convey commercial square footage intensity for development. The deed’s language granting legal title to the real property 17 made no mention of development rights.

In the absence of any agreement to convey specified development rights, no development rights were transferred when the 16-acre parcel “separated” from the 48.1-acre Parcel 208/308 (as the trial court-itself acknowledged), much less when any Murray entity acquired Tract 3. There was no contract between any holder of development rights and the Murray interests, and Murray’s only claim to development rights rests on naked title to the real estate. Bla-Lock acquired title to Tract 3 through mortgage foreclosure proceedings (after K & H had received a quitclaim deed making no mention of development rights). Obtaining title to real estate subject to a DRI order does not, however, in and of itself confer development rights.

As the trial court explained, “[b]y their nature, DRIs are designed to allow flexibility in the distribution of development rights within the development area. Rather than immediately creating small lots and assigning a certain amount of square footage for development to each, the property is divided into larger tracts with the intent that they later be subdivided by deeds into such smaller pieces as the market dictates. The intensity needed for individual development is then assigned to each smaller parcel as indicated, and county officials are notified, so that the assigned amount can be deducted to reflect on the county records the intensity remaining available for future development.”

Development rights allocated to a parcel of DRI property need not be deployed uniformly over the entire parcel. *1165 When DRI property is subdivided, the contracting parties determine which development rights, if any, are transferred, unless the development'order provides otherwise. 18 Development rights need not, indeed, attach to all land within a parcel to which aggregate development rights are assigned. Wetlands or other topographical issues may render part of a parcel undevelopable. A DRI developer may identify portions of DRI property for public parks, convey to a nature conservancy, or in other ways dispose of a subparcel without any intention that it be developed. And a nature conservancy or other grantee may purchase a subparcel for such purposes without acquiring development rights. 19

In sum,, we hold development rights do not pass automatically with the conveyance of the fee interest in a DRI subparcel. See Keith v. Mountain Resorts Dev., L.L.C., 337 P.3d 213, 227 (Utah 2014) (“Land development rights, which are a conditional right granted and controlled by the county government, are not included as a matter of law in a deed’s general terms of conveyance giving a grantee the ‘rights and privileges belonging’ to a piece of real property.”). There is no automatic transfer of a specific proportion (or even *1166 some reasonable.portion) of the development rights allotted to a large parcel on a DRI master plan when a conveyance is made of title to only a portion of the large parcel;

Alleged Interference with Howard’s Option Contract on Tract S

On review of summary judgment, the court’s “task is to- determine whether, after reviewing every inference in favor of Appellants as the non-moving party, no genuine issue of material fact exists and the moving party is entitled tb a judgment as a matter of law.” Dianne v. Wingate, 84 So.3d 427, 429 (Fla. 1st DCA 2012). “If there is even the slightest doubt that material factual issues remain, summary judgment may not be entered.” Alpha Data Corp. v. HX5, L.L.C., 139 So.3d 907, 910 (Fla. 1st DCA 2013).

Four elements are required to establish tortious interference with a contractual'or business relationship: (1) the existence of a business relationship or contract; (2) knowledge of the business relationship or contract on the part of- the defendant;' (3) an intentional and unjustified interference with the business relationship or procurement of the contract’s breach; and (4) damage to the plaintiff as a result of the interference. See Tamiami Trail Tours, Inc. v. Cotton, 463 So.2d 1126, 1127 (Fla.1985); McKinney-Green, Inc. v. Davis, 606 So.2d 393, 397-98 (Fla. 1st DCA 1992) (treating absence of justification as a separate element).

There is no dispute that Mr. Howard and Centaworld Holding entered into, a contract giving Howard an option to purchase Tract 3. Material factual issues exist regarding the remaining elements. 20 Mr. Howard and his attorney testified on deposition that Mr. Gardner told them that when he assigned the second mortgage to Murray, Mr. Murray was well aware of the option agreement and Howard’s efforts to assemble all the property in Parcel 208/308. See Progressive Express Ins. Co. v. Cantillo, 80 So.3d 394, 399 (Fla. 4th DCA 2012) (“A trial court may not weigh the evidence or judge the credibility of witnesses in arriving at summary judgment.”). Mr. Howard testified that Mr. Gardner, 21 who controlled Centaworld, told him that Mr. Murray promised to release the parcels encumbered by the second mortgage upon payment of the purchase prices set out in the option agreement.

Genuine issues of material fact exist regarding whether Murray knew about the option and intentionally interfered with the contract or Gardner’s business relationship with Howard in a commercially unjustified manner. Mr. Murray claims he was unaware of the option but also argues that he was entitled to advance or protect his own business or financial interests for any lawful reason or motive, using proper methods. See McCurdy v. Collis, 508 So.2d 380, 384 (Fla. 1st DCA 1987) (“The justification for intentional interference ‘depends upon a balancing of the importance, social and private, of the objective *1167 advanced by the interference against the importance of the interest interfered with, considering all circumstances among which the methods and means used, and the relation of the parties are important.”’ (citation omitted)). But any determination whether a defendant acted without justification is also highly fact dependent and “requires an examination of the defendant’s ‘conduct, its motive, and the interests it' sought to advance.’ ” Sec. Title Guarantee Corp. of Baltimore v. McDill Columbus Corp., 543 So.2d 852, 855 (Fla. 2d DCA 1989) (citations omitted). The trial court erred in granting the Murray parties’ motion for summary judgment on Howard’s tortious interference claims.

Alleged Taking and Interference with Murray’s Contract to Sell Tract 3

We affirm entry of summary judgment on Murray’s 2009 claims. First, the trial court correctly determined the claims against Walton County for inverse condemnation were not ripe. A claim “ ‘is not ripe until the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue.’ ” Alachua Land Investors, LLC v. City of Gainesville, 107 So.3d 1154, 1158-59 (Fla. 1st DCA 2013) (quoting Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186, 105 S.Ct. 3108, 87 L.Ed.2d 126 (1985)). Although “extraordinary delay” may obviate the finality requirement, see Grosscup v. Pantano, 725 F.Supp.2d 1370, 1379 (S.D.Fla,2010),.the record establishes the delay in this case can be attributed to Murray’s failure to provide the County with needed additional information regarding matters other than the contested development rights. See Wyatt v. United States, 271 F.3d 1090, 1098 (Fed.Cir.2001) (stating “that a taking may occur by reason of ‘extraordinary delay in governmental decisionmaking,’” but that “delay in the permitting process may be attributable to the applicant as well as the government.” (citation omitted)).

Finally, Murray’s argument that the trial court erred in granting summary judgment on its claims of tortious interference with a business relationship, fraudulent misrepresentation, 22 negligent misrepresentation, 23 and civil theft 24 all rely on Murray’s claim to have had development rights for Tract 3 and Murray’s claim that Howard’s representations that *1168 title to Tract 3 did not automatically confer development rights under the DRI order were false. As explained above, Howard’s assertions in this regard were not false or actionable.

Affirmed in part, reversed in part, and remanded for further proceedings.