Saturday, December 31, 2011

Is FEMA Forcing Monroe County to Pay Millions for Regulatory Takings as the Price of Maintaining Flood Insurance in the County?

On Christmas Eve 2011, the Florida Keys Keynoter published an article entitled "County to Sue FEMA Over Habitat Inspections." One wonders how Monroe County even figured out it had a problem --- even though the Florida Key Deer sued the Federal Emergency Management Agency (FEMA) in 1990. 

In that case, the Key Deer, through their human spokesman, sued to prohibit the issuance of federal flood insurance in areas where Key Deer habitat existed. A summary judgment hearing was held, in Key West, on August 25, 1994. I assume the Key West Citizen let the locals know that a bunch of deer were trying to stop development in the Florida Keys. Monroe County, on the other hand, made no effort to intervene in the lawsuit.

Following the hearing, U.S. District Judge Michael Moore entered summary judgment in favor of the Key Deer, and against FEMA, ordering FEMA to "consult with" the USFWS (U.S. Fish & Wildlife Service) within 30 days. The agencies were required to determine whether the implementation of FEMA's National Flood Insurance Program [NFIP] was "likely to jeopardize the continued existence of the endangered Key Deer." See Florida Key Deer, et al. v.Stickney, 864 F. Supp. 1222 (DC SD Fla., 1994).

Several people have asked why Monroe County did not move to intervene in the 1990 Key Deer lawsuit. There is a simple answer for this. After the huge changes in land development regulations that Monroe County went through from February 1982 through September 1986, including more than 100 public hearings (or one every two weeks for four years), Florida Keys landowners were worn out. In addition, all the 1990 Key Deer lawsuit sought to accomplish was to require FEMA to "consult" with USFWS. 

In 1990, USFWS was adamantly opposed to FEMA issuing flood insurance policies in the Florida Keys. As time went on, USFWS began to waiver, and it ultimately decided to "work with" FEMA. One could probably look at Washington, DC, politics between 1990 and 2005, and figure out who was doing what to whom, but that is a story for another day (and another blogger).

Nothing much occurred for the next 15 years, until the Key Deer plaintiffs sought, and Judge Moore granted, a permanent injunction against both FEMA and the USFWS. The injunction was to be lifted after the agencies "have complied with the [court's] order." As part of the order, the federal agencies were to provide the court with a list of all the properties in the Florida Keys that are "suitable habitat for the Listed Species." By 2005, the list had grown to eight species: the Key Largo cotton mouse, Key Deer, Key Largo woodrat, Lower Keys marsh rabbit, Schaus' swallowtail butterfly, silver rice rat, Stock Island tree snail, and Key tree cactus. See Florida Key Deer, et al, v. Brown, et al., 386 F. Supp. 2d 1281 (DC SD Fla. 2005), affirmed, 522 F. 3d 1133 (11th Cir., 2008).

Monroe County finally woke up in 2005 -- not because the County was asleep, but because the County was beginning to understand the concept of "regulatory taking" jurisprudence. It frantically sought to become a defendant in Florida Key Deer v. Brown, supra, but Judge Moore rejected the County's effort -- saying it was too little, too late, and that after waiting 15 years to intervene, the County's options had run out. In an attempt to appear meaningful, Monroe County appeared as an amicus in the 11th Circuit's appeal of Judge Moore's 2005 decision.

The future is not clear as to Monroe County. But what is this hullabaloo all about? First, we note that many parts of the United States were denied federal flood Insurance in 1989. These are coastal areas deemed "too sensitive" for development for a variety of reasons, and are in the Coastal Barrier Resource System (CBRS). No Name Key, just east of Big Pine Key, is such an area. There are several other parts of the Keys that were, or almost were, designated as CBRS zones in 1989.

The federal flood insurance program does not reach the CBRS areas, yet those areas continue to be developed, with or without some form of flood insurance. If people want to own a house on a beach, they are in an income bracket in which they can afford to purchase private flood insurance. What difference does it make whether a Federal flood insurance prohibition or a CBRS prohibition prevents private landowners from obtaining inexpensive flood insurance from the federal government? These landowners are going to build anyway.

Monroe County has had a schizophrenic County Commission since 1990 -- which happens to be when the CBRS and flood insurance fiascos started (and I started practicing law here in 1983). The County's latest threat, as County Attorney Bob Shillinger put it, is:

"We'll file suit and seek an injunction to stop [FEMA's request to Monroe County to determine which parcels are located in endangered species habitat]." Why, I am not sure. The County also puts a price tag on the issue, quoting County Administrator Roman Gastesi, stating:

  • "the real exposure comes in possible takings cases in which landowners claim they can't build on their land because the County denied use of the land through the Endangered Species Act. They could then sue the County for the value of their land."
Now, I am the first person who would sue the County under Mr. Gastesi's theory, if it made sense. But, these are federal regulations, and they don't actually deprive landowners of anything other than subsidized federal flood insurance -- which is not within the County's purview. On the other hand, I do not pretend to be a genius, and I would be willing to listen to the County's theories. The invitation is theirs to accept or reject.

On that note, I wish everyone a Happy New Year! (And it lies less than an hour away.)

Thursday, December 29, 2011

Do Some of our Elected Judges Lean Toward "Politically Correct" Decisions?

Any trial attorney knows that psychological issues are as important to a trial judge as legal issues are to a jury. Anyone who ever watched a Perry Mason TV episode (sorry if you're too young to get it) understands the role emotions play in a courtroom. Instead of cops and robbers, we often just have robbers who consist of: (a) government bureaucrats who are interested in "taking" private property without paying just compensation, and (b) trial court judges who are more concerned with the financial integrity of the local government than they are for the Constitution of the United States of America.

The 50 states that comprise the United States of America are blessed with some of the most pristine -- and beautiful -- landscapes on earth. For private owners of these landscapes, the words "beautiful" and "pristine" have often become fighting words. Yet in 1789, our founders reached an accommodation, of sorts, on that issue. That deal, ultimately part of our constitution, and included assurances that no private property would be taken by the government without just compensation.

It would not surprise me to learn that, on the first opportunity, some 18th century government bureaucrats sought to seize private property "for a public purpose," without any regard for just compensation. Today, it goes without saying that local governments have fallen behind on revenue projections to the extent that their grande schemes of the previous decade were nothing but pixie dust. Unfortunately, that dust includes fixed labor contracts with government employees' unions, primarily teachers, firefighters, and police, but also school janitors, bus drivers, etc. These forces can re-shape the environment in any town or city in the United States.

One subject, that of elected vs. appointed trial judges, has come up many times over the past 200 years. To whom are elected judges indebted to? The subject has been debated before, as we note below.
"What method of judicial selection produces the “best” judges? And how do we determine who are the “best” judges? Stephen J. Choi (NYU Law), G. Mitu Gulati (Duke Law), and Eric A. Posner (University of Chicago Law) endeavored to answer these questions in their paper, “Professionals or Politicians: The Uncertain Empirical Case For An Elected Rather Than An Appointed Judiciary.” They took an empirical look at how differently selected judges rate on effort, skill, and independence aspects of judicial performance. As you might discern from the title, which judges perform “best” largely turns on what virtues you are looking for in a judge. (Hat tip to the University of Chicago Law Faculty Blog).
Although federal judges are appointed with life tenure, most state judges are elected for short terms. Conventional wisdom holds that appointed judges are superior to elected judges because appointed judges are less vulnerable to political pressure. However, there is little empirical evidence for this view. Using a dataset of state high court opinions, we construct objective measures for three aspects of judicial performance: effort, skill and independence. The measures permit a test of the relationship between performance and the four primary methods of state high court judge selection: partisan election, non-partisan election, merit plan, and appointment. The empirical results do not show appointed judges performing at a higher level than their elected counterparts. Appointed judges write higher quality opinions than elected judges do, but elected judges write many more opinions, and the evidence suggests that the large quantity difference makes up for the small quality difference. In addition, elected judges do not appear less independent than appointed judges. The results suggest that elected judges are more focused on providing service to the voters (that is, they behave like politicians), whereas appointed judges are more focused on their long-term legacy as creators of precedent (that is, they behave like professionals).
It is my professional opinion that judges who are appointed on ability, rather than elected in a nonpartison election are the better choice.

Thursday, December 1, 2011

The Galleon Bay Case

During the 1960s, Hannelore and Wolfgang Schleu bought undeveloped land on No Name Key, then linked by a wooden bridge to Big Pine Key. In the late '60s and early '70s, the Schleus, and others, platted two canal subdivisions, Bahia Shores in 1969 and Dolphin Harbour in 1970, with 91 lots in total. The Schleus held on to additional vacant land east of the two subdivisions, 14.5 acres of which were transferred to the Galleon Bay Corporation.

In 1986 - at the request of a commercial fisherman who had an option to buy the 14.5 acres, Monroe County rezoned the Galleon Bay land to commercial fishing village, or CFV, a zoning district that allows both residential development and limited commercial fishing uses. When the fisherman could not obtain a dredging permit from the Dolphin Harbour canal to the 2-acre borrow pit on the Galleon Bay parcel, he let the option expire. At that point in time, the Schleu's daughter began a quest to develop the Galleon Bay land.

This is where we came in - in 1988 - to assist Galleon Bay in obtaining a dredging permit so fishermen could have ingress and egress to the ocean. Even though the state agency responsible for issuing the permit agreed to do so, another state agency - the Department of Community Affairs (DCA) - exercised a then-unheard of state authority, under the federal Coastal Zone Management Act, and stated its opposition to the issuance of the dredging permit. What made this particularly galling was the same agency - DCA - had to sign off on the rezoning to commercial fishing village just two years earlier.

After its first fiasco with DCA, Galleon Bay requested a change in zoning to improved subdivision, that Monroe County denied. After all, they had to protect commercial fishing villages even if they had no access to the ocean. Undaunted, in January 1991 Ms. Schleu appeared before the County Commission for a 14-lot plat approval - after giving up 11 of the 25 dwelling units that supposedly came with CFA zoning. The plat was approved, but the DCA stuck its nose into Galleon Bay again. The DCA lodged an appeal of the plat approval with the Florida Land & Water Adjudicatory Commission (FLAWAC), an "agency" comprised of the Governor and Cabinet of Florida.

Still undaunted, Ms. Schleu filed a lawsuit against the Department of Community Affairs, and she filed it in the 16th Judicial Circuit, which consists solely of Monroe County. Circuit Court Judge Richard Fowler strongly suggested the DCA settle with Galleon Bay. And, after numerous conferences and delays, DCA, the County, and Galleon Bay agreed to a reduction in the sizes of the 14 lots, and the Revised Plat of Galleon Bay was approved by the County Commission in April 1994.

From 1991 to 2011, the only development on the Galleon Bay subdivision has been the construction of roads and drainage structures. One lot was exchanged for a loan advanced by a family friend. It is now owned by the government - because she could not build on it.

Galleon Bay went through a (statutorynot common-law) vested rights proceeding in 1998, after which a hearing officer, in October 1998, determined the corporation had invested $578,670 from the date of the first plat approval, January 1991, through April 1998. He recommended the County grant Galleon Bay vested rights to construct 14 homes on the property.

By 1998, the majority of the County Commission were "got-miners" (I've got mine; we don't want any more development). In April 1999, the County Commission rejected both the hearing officer's factual findings - which is a no-no - and his recommended order. In November 2001, Galleon Bay filed a Certiorari complaint against the Monroe County Commission on their vested rights decision. Circuit Judge Richard Payne reversed the County Commission's 1999 decision. See Final Judgment Granting Writ of Certiorari, October 2002. Monroe County appealed to the Third District Court of Appeal, and lost. Monroe County v. Galleon Bay Corporation, 876 So. 2d 569, writ denied, no opinion (Fla. 3rd DCA, 2004).

Meanwhile, in May 2002, Galleon Bay filed a regulatory taking lawsuit against Monroe County. The County third-partied the State of Florida, and Galleon Bay also sued the State after they became a party. Circuit Judge Richard Payne rendered an Amended Order on Liability on January 30, 2006. On April 18, 2006, Monroe County and the State of Florida filed a rather novel, Petition for Writ of Prohibition with the Third District Court of Appeal. The petition is so off-the-wall that I always suggest attorneys read it, if only for laughs. The District Court denied the petition, without oral argument, on June 2, 2006, four days before the jury trial was to begin. State of Florida and Monroe County, 930 So. 2d 627 (Fla. 3d DCA 2006). The jury trial on compensation was had June 6-10, and 12, 2006. The jury returned a verdict of $3,000,000.

Galleon Bay's appraiser valued the subject property at $6,000,000, while the government's appraiser valued it at $250,000. Galleon Bay had forcefully argued before, and during, trial that the government's appraiser should not be allowed to testify, as his appraisals were nonsensical. All the jury did was split the difference. Galleon Bay moved for a new trial, which was granted. Order Granting Motion for New Trial. The County and State appealed the new trial order and lost. Monroe County et al. v. Galleon Bay Corporation, 954 So. 2d 1169, per curiam affirmed, (Fla. 3d DCA 2007).

Circuit Judge Richard Payne retired at the end of 2006, and his successor rolled the clock back to before January 30, 2006, invalidating Judge Payne's January 30, 2006, liability order. In light of the fact that this successor judge also threw out four regulatory taking cases that were in front of him (Collins, Shands, McCole, and Beyer), and he was reversed in Collins, Shands, and Beyer, Galleon Bay filed a motion to disqualify the successor judge, as did Collins, Shands, and Beyer. Galleon Bay's regulatory taking case ended up with Circuit Judge Mark Jones - whose judicial experience is almost exclusively criminal law. Following a four-day bench trial on liability (as Judge Payne's January 30, 2006, liability order had been rescinded), Judge Jones entered an order, on April 27, 2011, dismissing Galleon Bay's regulatory taking case in its entirety. Galleon Bay has appealed that order, and its initial brief is due on January 4, 2012. For those with an interest in these matters, you may wish to read Judge Jones' Final Judgment in Favor of Defendants Denying Claim for Inverse Condemnation.

Twenty years is not the end of it all. There will be more to come.

Saturday, November 19, 2011

Florida's Trial Judges Should be Appointed, Not Elected

There are good state trial judges in Florida, and there are bad ones. However, all of them are elected -- not appointed as state appellate judges and all federal judges -- are. I have been a trial and appellate lawyer in Monroe County (the Florida Keys) since 1983. Over those 28 years, I have appeared before good, and not-so-good, judges. I have also appeared before state appellate judges, and it is my firm conviction that electing trial judges is a bad idea. 

Being an attorney is a second career for me -- and there are days when I wish I had never switched. From 1963 to 1970, I earned BS, MS, and PhD degrees from the University of Michigan. From 1966 through 1984, I published 50 peer-reviewed papers and reports. I published my first book in 1971, on the surface chemistry of activated carbon, and edited nine books on chemistry instrumentation from 1972 to 1981. In 1979, I graduated from George Washington University law school, in the top 5% of my class.

Monroe County has four Circuit judges and four County judges. Over the years, some Circuit judges have developed specialties such as criminal or probate matters. That works in Key West, where there are three Circuit Judges. Occasionally, the voters have elected judges who don't have the patience a judge needs, or do not take the time to learn a field of law that is in front of them. One of the best we ever had was Steve Shea, who did his own research and spent nights writing well reasoned decisions. However, Judge Shea irritated his colleagues to the point where they ran him off the bench. (Steve Shea passed away last year, from kidney cancer.)

I do not believe that Monroe County's trial judges are any different from those in the rest of Florida -- and they may well be better. What I do believe is that the parties, and counsel, who appear before Florida's trial judges are entitled to a higher level of quality than the haphazard situation we have now. Florida's appellate judges are appointed by the Governor. As far as I can tell from 24 years of appellate practice, our appointed judges are well-vetted by their peers. I realize this is an issue in many States, not just in Florida, but there is just no way to "vet" every lawyer who puts up signs before election day. 

Sunday, May 15, 2011

The Galleon Bay TragiComedy

I cannot explain how a trial judge could enter the judgment that 16th Judicial Circuit Judge Mark Jones rendered in Galleon Bay Corporation v. Monroe County, et al., on April 27, 2011. This is the most extraordinary trial court decision I have ever seen --- and I've seen a lot in my 30 years of practicing law ---  but this one takes the cake.

There is no doubt that Judge Jones is a very good trial judge. But his experience has been dominated by hundreds of criminal cases, where the government rarely loses. Before sitting down to write this blog entry, I pulled a Lexis-Nexis listing of every appellate decision in Judge Jones' career -- from June 11, 1997, through April 20, 2011. In 14 years on the bench, Judge Jones' decisions have been appealed 140 times. But for a few exceptions, he has rarely been reversed in his criminal appeals.

Judge Jones' appellate affirmances at the 3rd District Court of Appeal are impressive, but it is unlikely that his criminal successes will carry over into eminent domain law. He has never had to decide such a case, and nobody should be surprised when this Galleon Bay decision is reversed.

Sunday, April 24, 2011

Collins Liability Trial Concluded April 14, 2011

The liability trial in Collins, et al. v. Monroe County & State of Florida, was heard over nine days, from April 4-14, 2011, in Key West. When the Collins case returned to the trial court in 2009, it was ultimately assigned to Circuit Judge Tegan Slaton. Judge Slaton knocked out three of the eleven plaintiffs, and those three plaintiffs have filed their Notices of Appeal. In the nine trial days during April 2011, Judge Slaton heard testimony only on the issue of liability. (A compensation trial -- requiring a jury -- follows a finding of liability.)

Judge Slaton acknowledged a complete lack of experience in regulatory taking litigation -- but he is a copious note-taker. He tasked the parties to submit proposed orders after the trial transcript is available, and expressed hope that he would issue an order before August of this year. The transcript has been delivered, and the proposed orders are due on June 6, 2011.

[Edited May 14, 2011.]

Saturday, March 26, 2011

April 4-14, 2011: Finally, a Trial in Collins v Monroe County

[Edited May 14, 2011.] On December 31, 2008, the 3rd District Court of Appeal (DCA) reversed Circuit Judge David Audlin's 2007 dismissal of the 11-plaintiff Collins regulatory taking lawsuit. The Florida Supreme Court denied review July 16, 2009. After some judge-shifting, the liability trial was set by Circuit Judge Tegan Slaton, for April 4-14, 2011. Judge Slaton also dismissed three of the 11 plaintiffs before trial. The Collinses and Magrinis had received building permits -- but only after extensive delays. The Schneider heirs, according to Judge Slaton, "waited too long" to bring their taking claims (no statute of limitation argument here, just "you waited too long."). The Schneider heirs' claims are now being litigated by Greg Riordan, who is two generations removed from Mr. Schneider. These dismissals were appealed and are now before the 3rd DCA.

A Little History: On January 3, 1997, the original 11 Collins plaintiffs started down this path when Mr. Tobin and I filed their petitions for Beneficial Use Determinations ("BUDs"). The 1997 BUD process was effective January 4, 1996. It was written by the Florida Department of Community Affairs (DCA) as part of the Florida Keys 1996 Comprehensive Plan. Technically, the language was adopted -- by rule -- by the Governor and Cabinet sitting as the Florida Administration Commission (ADCOM). We would note that the 1996 ADCOM rule was a huge improvement over the unconstitutional BUD process that the County -- and ADCOM -- adopted in 1986. For those who were not involved in the 1982-86 evolution of the first ADCOM Florida Keys Comprehensive Plan, it is worth reviewing the 1986 BUD regulation to understand why landowners did not utilize the 1986 BUD to obtain compensation for the loss of all beneficial use of their land.

The 1986 BUD rule/regulation [this, too, had to be approved by ADCOM] required landowners whose property was unbuildable to: (1) make a "bona-fide attempt" to sell their post-1986 unbuildable property for no more than 40% of its pre-1986 Fair Market Value ("FMV"), and (2) if they found no buyers, these property owners would, at best, be entitled to compensation that would not exceed 40% of the land's pre-1986 FMV. The 1986 BUD rule/regulation was declared unconstitutional by Circuit Judge Richard Payne, in Gonzalez v. Monroe County, a lawsuit we initiated in 1988. Judge Payne's decision was affirmed by the 3rd DCA, with an opinion, in Monroe County v. Gonzalez, 593 So. 2d 1143 (Fla. 3d DCA 1992).

Ultimately, between 2002 and 2004, each of the Collins plaintiffs received a resolution, from the Monroe County Board of County Commissioners, stating that they had been "denied all beneficial use" of their subject properties. In 2004, they sued Monroe County for the just compensation they were entitled to under the United States and Florida Constitutions. On November 6, 2006, then-Chief Circuit Judge Richard Payne denied the County's and State's motions for summary judgment on liability. Unfortunately, Judge Payne was about to retire as of December 31, 2006, and this case was automatically assigned to newly-elected Circuit Judge David Audlin on January 1, 2007.

Judge Audlin turned out to be the governments' greatest ally in 2007. After assuming the Circuit Judge seat left vacant by Chief Circuit Judge Richard Payne, David Audlin swept all regulatory taking cases off his docket within a year! Needless to say, we spent many months on the Audlin appeals. We sucessfully reversed Judge Audlin's dismissals in Collins v. Monroe County and Beyers v. City of Marathon. At the same time, Pacific Legal Foundation ("PLF") successfully reversed Judge Audlin in Shands v. City of Marathon. [We are in the process of taking over PLF's responsibilities in Shands v. City of Marathon, while PLF focuses on appellate practice.]

So far, we have not been successful in reversing Judge Audlin's decision in McCole v. City of Marathon, nor Judge Garcia's decision in Sutton v. Monroe County. We believe these appeals were wrongly decided by the 3rd District Court of Appeal, but there are no longer any Florida courts in which we can continue these battles. There is a possibility, having exhausted State judicial remedies, that the Sutton and McCole cases can now be brought in a United States District Court under the United States Constitution. [At least U.S. trial judges do not have to worry about re-election.]