Atlantic International Investment Corporation vs. Department of Business Regulation, a Dept. of the State of Florida, et al. and Gordon J. Pfersich, etc., et al.

Material Information

Atlantic International Investment Corporation vs. Department of Business Regulation, a Dept. of the State of Florida, et al. and Gordon J. Pfersich, etc., et al.


Subjects / Keywords:
Volusia County ( local )
Fact stipulations ( jstor )
Land development ( jstor )
Cost estimates ( jstor )
Spatial Coverage:
North America -- United States of America -- Florida


Jake Varn Collection - Atlantic International Investment Corporation vs. Department of Business Regulation, a Dept. of the State of Florida, et al. and Gordon J. Pfersich, etc., et al. (JDV Box 86)
General Note:
Box 22, Folder 4 ( Court Cases in The State Of Florida - 1982 ), Item 11
Digitized by the Legal Technology Institute in the Levin College of Law at the University of Florida.

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Levin College of Law, University of Florida
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Levin College of Law, University of Florida
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All applicable rights reserved by the source institution and holding location.


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a corporation,



REGULATION, a Department
of the State of Florida, )
et al.,


a corporation,



et al.

Case To. 75-295

Case :;o. 79-762





1. This case involves factually complex circumstances,

which, in the Court's judgment, are unique. [See McLouth at



2. Many of the relevant facts were established through

a 25-page pre-trial stipulation. Other facts were established

at a four-day non-jury trial which was held from April 26, 1982,

1/ References to testimony at the four-aay trial from April
26, 1982, through April 29, 1982, will be indicated by the
witness' name and page number; references to the exhibits will
be indicated as plaintiff's, intervenors' or defendants' exhibit
with its number.

" 4,

... \ : ..... .... ...

through April 29, 1982. The Court heard the testimony of nine

live witnesses and received into evidence the deposition

testimony of two witnesses and more than 100 documentary exhibits

(including transcripts of sworn testimony of five state


3. The Court has considered and evaluated the

documentary exhibits and the testimony of:

Anthony Trella, president of the plaintiff, Atlantic

International Investment Corporation ("Atlantic"), and

president of the holding company that owns Atlantic's

stock, Mondex, Inc. ("Mondex"). [Trella at 4-5]. Mr.

Trella has been president of Mondex since 1969 and was

on the Board of Supervisors of South County Drainage

District ("SCDD") beginning in 1969 as well. [Trella

at 23-243. Mondex and its subsidiaries are in a wide

variety of land development businesses, including land

development, land planning, golf course construction,

completed homesite development, residential construction,

condominium and townhouse planning and construction,

heavy construction for private and governmental entities,

--and construction management. Mondex subsidiaries had

more than ten land sales projects. [Trella at 5-8].

In no other venture has any Mondex subsidiary failed

to accomplish promised improvements. [Trella at 613.

Mr. Trella is a member of the prestigious Urban Land

SInstitute, is a lecturer for the Urban Land Institute

and the Homebuilders Association of South Florida [Trella

at 83, and is an experienced businessman in the

development and construction industry. He testified

concerning the history of Cape Atlantic Estates and

the effect of the various events on Atlantic.

Jorge Garcia is a civil engineer with twenty-six

years' engineering experience, fifteen of those as a


registered engineer in Florida. [Garcia at 4].

Beginning in 1970, he was chief engineer for the SCDD,

is familiar with all SCDD plans of reclamation, was

responsible for their revision and supervised the actual

construction of the main canal in the late 1960's and

1970, was the person who had contact with involved

government agencies, was constantly on the land during

the initial construction, and is a well qualified expert

as well as a person with personal knowledge of many

of the facts in this case. [Garcia at 5, 91-92; Trella

at 87]. He has been chief engineer for a drainage

district of similar size with similar soil and drainage

conditions in this area of Florida, in which the work

has been completed. [Garcia at 5-63. He not only was

responsible for the 1969 and 1971 plans of reclamation

for the SCDD [Garcia at 73 ann the construction of the

main outfall canal, but he also coordinated the Fredric

R. Harris and Company modifications prepared in 1974

(the "Harris Report," Plaintiff's Exhibit 28). [Garcia

at 42-433.

Eugene Lipman is the Senior Vice President and Chief

Financial Officer of both Atlantic and Mondex. [Lipman

at 4-53. He has been chief financial officer of those

companies since 1969. He also served as a member of

the board of supervisors and treasurer for the South

County Drainage District (SCDD). [Lipman, Volume I,

at 73. It is he who is most familiar with Atlantic's

financial records. An accountant by education and

experience and well qualified in matters of corporate

finance, financing, preparation and maintenance of

corporate books and records [Lipman, Volume I, at 19-

20], he also is personally familiar with many of the

facts in the case. He testified concerning Atlantic's

..* -_ --

financial expectations and the effects of the various

events on Atlantic's financial conditions, as well as

other factual matters.

Malcolm McLouth is a registered engineer with many

years experience in land development. He is an

environmental engineer and an officer of Stottler, Stagg

and Associates/Brevard Engineering, a large

architectural, engineering, planning firm located in

Cape Canaveral, Florida, specializing in environmental

engineering, often for governmental agencies. [McLouth

at 56-58; Trella at 44-45). In 1972-1973 Brevard

Engineering was hired to prepare an environmental impact

study, which it did, for submission to the Department

of Pollution Control ("DPC") and ot-er interested

agencies. Mr. McLouth was responsible for the report

and coordinated with outside experts and members of

other disciplines in preparing the report. [McLouth

at 563. In addition, in 1977, he was asked for and

prepared cost estimates for a partial development of

the property consistent with the terms of the 1977

Department of Environmental Regulation ("DER") permit

that finally issued and in view of the additional delays

which appeared would be caused by St.. John's River Water

Management District's ("St. John's") newly asserted

jurisdiction. [McLouth at 61-623.

Additionally, Mr. McLouth was asked to prepare,

and did prepare and present at trial, complete cost

estimates for the construction of the project as of

the alleged date of taking, September 1, 1977. [McLouth

at 63-643. As Mr. McLouth testified, the estimates

assumed that construction could only start if the go

ahead had been given from all agencies to begin

construction on September 1, 1977. If that had occurred,

the final drawings and contracting process would take

ten to twelve months and construction could begin only

in mid-1978 and, even with expedited construction, would

run for three years. [McLouth at 66, 733. Mr. McLouth

also prepared a graphic representation of inflation

in the construction industry in Florida from. 1967 through

1981. [McLouth at 69-73; Plaintiff's Exhibit 453.

Charlie Knight is a highly qualified expert in real

property appraisal. In addition to his other

qualifications and his thirty years' experience in

appraisals, he has been designated an MAI appraiser

for twenty years, is a senior number of the American

Society of Appraisers, ,and is an instructor in appraisal

methods. His clients have included governmental agencies

including the State of Florida, the Southwest Florida

Water Management District, the United States Department

of Justice, and the Internal Revenue Service. [Knight

at 3-83.

Two additional witnesses appeared for Atlantic by

deposition, Alan Dakan, the attorney for Volusia County

who had handled the litigation and negotiations between

Volusia County and Atlantic concerning the South County

Drainage District, and Brice Dennis Auth, the projects

manager for St. John's River Water Management District.

Additionally, the prior sworn statements of the

four employees of the Department of Environmental

Regulation who had voted to deny the permit application

in 1974 were admitted as admissions as was the sworn

statement of an employee of St. John's River Water

Management District, who had testified in opposition

to the permit application in 1975.

Max Simon, the representative of the class of

purchasers of lands at Cape Atlantic Estates, testified

for the plaintiff intervenors. He testified that

he purchased his lot in Cape Atlantic Estates after

reviewing the public offering statements, verifying

with the Division that Atlantic was a responsible company

and determining that it would be wise to purchase the

lands. [Simon at 41-42, 49-523. He testified that he

hoped to be able to use the lands, either as an

investment or physically. [Simon at 433. He testified

that he had no physical access to his lot; that he could

not locate it on the ground; and that he could neither

use nor sell it. [Simon at 453. On behalf of the class,

"he accepted Atlantic's assignment of the oause of action

for the taking. [Simon at 46, 483.

Defendants produced three witnesses. Nevin Smith,

a well qualified civil engineer, had been hired by the

defendants in February 1982 to give an opinion of the


Broward Davis,.a registered land surveyor and the

- ::- ::- president of a well-respected Tallahassee land planning

firm, also testified for the defendants. [Davis at 93.

Mr. Davis has attended and taught courses in land

surveying. [Davis at 10). Mr. Davis testified that

the State retained him to look at "Cape Atlantic Estates

from a standpoint of a large tract of land in Volusia

County [and] their desirability for development." [Davis

at 173. He also was asked to evaluate the desirability

of the current grid system of some 5,000 individual

tracts. [Davis at 173.

Thomas Anderson, a real property appraiser with

the Department of Natural Resources, also testified

for the defendants. [Anderson at 44-45). Mr. Anderson

testified that the highest and best use of the property

would be agricultural. [Anderson at 573. In determining

the value of the property as of September 1, 1977, he

was asked to determine it "for the property as a whole,"

rather than for checkerboarded lots without access and

drainage. [Anderson at 58]. He was not asked for an

opinion of the value of the lots if the improvements

were installed.


4. Plaintiff Atlantic Inter.iati-nal Investment

Corporation ("Atlantic") is a Florida corporation. Plaintiff-

intervenor Max Simon is the representative of a class of

purchasers at Cape Atlantic Estates ("Si--on class"). Some of

the class members were deeded on the alleged date of taking.

Other class members, who were not deeded on the alleged date

of taking, have been assigned Atlantic's right to the taking.

[Lipman at 41). Mr. Simon accepted the assignment on behalf

of the class. [Simon at 46, 48). Harold Housewart, a purchaser

but not a member of the Simon class, was added as a plaintiff

at trial. [Lipman at 22-24].

5. The State opposed the certification of the class

and challenged the standing of the class members, arguing that

only owners on the alleged date of taking, not purchasers, had

the cause of action for inverse condemnation. This argument

was based upon the fact that the purchasers had no obligation

to make payments under their agreements for deed and had no

right to possession of the property. The agreements for deed

are thus distinguishable from where a purchaser is contractually

obligated to pay for the property and/or has possession, in

- :-- ;-

which case the purported retention of title is merely a security

interest. The agreements for deed in this case could be

analogized to an option, which ripens into a contract right

only if all the payments are continued to be made. Because

of the limited nature of the agreements for deed, Atlantic has

filed with the Court and with certain individuals an assignment

of. its cause of action for inverse condemnation as to each

purchaser's individual lot to those purchasers who were current

on their contracts on the alleged date of taking and who were

subsequently deeded or have continued to pay. The court rejects

the state's argument that without an'individual acceptance of

that assignment by each purchaser individually, the assignment

is ineffective. The assignment is clearly for the benefit of

the purchasers, and it is assumed -hat those who have elected

to be part of the class have accepted it and the acceptance

or the acceptance on their behalf by the class representative

for the purpose of this litigation is effective.

6.. The defendants were the State of Florida, the

Division of Florida Land Sales and Condominiums ("Division")

its director, the Department of Pollution Control ("DPC"), later

to become the Department of Environmental Regulation ("DER"),

St." John's River Water Management District ("St. John's"), and

Volusia County. DBR and DER are departments and agencies of

the State of Florida. The Division is a division of DBR. St.

John's is an agency of the State of Florida with certain

statutory responsibilities and certain responsibilities delegated

from DER. Volusia County is a political subdivision of the

State of Florida.


7. In 1975, Atlantic sued the Division of Land Sales,

Volusia County, and DER alleging that the Division had instituted

an administrative action to revoke Atlantic's registration under

_IIIIIL __ _~U--

--_ _~rC~~'YY------Y _~ II _~ ii~LI


the land sales law because the planned improvements had not

been installed at Cape Atlantic Estates by December 1973, while

at the same time, DPC had refused to permit the improvements.

It was also alleged that Volusia County, which had a contract

with Atlantic to use its best efforts to secure all necessary

permits, had, in fact, through the head of one of its

departments, actively opposed the improvements. The relief

sought included injunctive relief, compensation for the

possibility that these inconsistent actions had resulted in

a taking of Atlantic's property or its contracts with its

purchasers, and, in a separate count, damages against Volusia

County for.breach of contract.

8. On motion to dissolve a temporary injunction, Judge

Cawthon of this court, recognizing t-e potential conflict between

the Court and the administrative tribunals which might be

associated with the permitting process (the denial of the permit

had by then been made a subject of an administrative appeal

under the old administrative procedures act), ruled that the

parties should exhaust the administrative permitting proceeding,

but that he would retain jurisdiction over the "taking" claims

and other constitutional issues raised by the pleadings. In

so ruling,' Judge Cawthon warned: -

the agencies can increase the ultimate
liability of the State vastly by a mishandling
of the administrative proceedings. That is
going to be the damages and the value of the
compensation of the taking, if it turns out
to be that. It is going to depend a great
deal on the way that the administrative
agencies handle their jobs. [Transcript of
SHearing of March 11, 1975, at 823.

Volusia County appealed that ruling (as an interlocutor order

in equity) arguing particularly that the case should have been

dismissed because of a failure to exhaust administrative remedies

and that the circuit court lacked jurisdiction. The District

Court of Appeal affirmed Judge Cawthon's actions, ruling: "We

find no reversible error."

. ; ; *- : ': .: .. .

9. The administrative proceedings lasted, with appeals,

until 1977, when a permit was issued. Thereafter, having

determined that the improvements could -nst '-e installed because

of financial considerations, Atlantic demanded that the proceeds

of a certain improvement trust account under the control of

the Division of Florida Land Sales be released to it to

distribute to its purchasers. The Division refused and Atlantic

instituted an action to require the trust fund to be released.

Almost simultaneously with the filing of that action, the

Division of Florida Land Sales issued an order to show cause

why Atlantic should not turn over all Of its assets (including

its remaining lots) to the Division for the purpose of

distribution to the purchasers. Atlantic amended its recently

Tiled complaint concerning the trust fund to seek to enjoin

the Division's action as an attempted taking of its property.

That case and the pending 1975 action were consolidated. Amended

and supplemented complaints were subsequently filed.

10. Since the consolidation of these actions, many

of the issues have been resolved: (1) the Division dismissed

its 1974 order to show cause why Atlantic's registration should

not be revoked in 1975;_ (2) the issues concerning the trust .

account were resolved in part by stipulation, then transferring

by stipulation the remaining trust account issues to a companion

case which has been resolved; and (3) the 1979 adminstrative

order to show cause from the Division was dismissed as part

of the settlement of the trust account issues, thus eliminating

most 'of the claims specifically against the Division.

11. Five defendants in the subject case have been

dismissed. The court ruled that Volusia County was not a

necessary party to Count I (the "taking" count) and dismissed

it, as it did the St. John's River Water management District

which had been added as a party in connection with the


consolidation with the 1979 action, ruling, however, that the

actions of all state subdivisions and agencies (specifically

including Volusia County and St. Johns) would be relevant on

the issue whether the combined acts of the various state agencies

involved in this case might have resulted in a taking. On April

29, 1982, at the close of the plaintiff's evidence in this case,

which involved only the question whether the various state

agencies resulted in a taking, the Court dismissed DBR, the

Division and its directors. Once again, DBR's and the Division's

acts, including the circumstances of the laws which Atlantic

was required to follow, are relevant, in the particular

circumstances of this case, in determining if the combined

actions and inactions of the various state actors have resulted

i a taking. Thus, the court Thas ru'lea that the only necessary

party to this case is the State of Florida. Volusia County's

actions were in some instances accidental and others may have

been unauthorized, but without the State's approval of the

Volusia charter provision abolishing the SCDD and without DER's

unreasonable position insisting on jurisdiction but refusing

to discuss the project, ignoring the practical problems such

a position created, and ignoring the fact that the ownership

of the lots dictat-ed both a speedy resolution and a geographical

limitation on the design, the taking would not have occurred.

Although St. John's actions in late 1977 and 1978 clearly were

designed to delay or frustrate the project, and as state actions

are relevant as to matters of intent, public benefit, and

arbitrary and capricious actions, the realities faced by Atlantic

when forced to abandon the project were in place by the date

of taking which the court finds to be September 1, 1977, and

St. John's actions before that date were not extensive. DER,

however, is another matter. Although the Court finds that the

cumulative actions of all the state actions amounts to a taking,

the court is also of the opinion that the actions of DER alone,

in the particular circumstances of this case, also would have

effected a taking.

Cape Atlantic Estates

12. In 1967 and 1968, Atlantic acquired, at a cost

in excess of $7 million, some 12,000 acres in Volusia County

and 2,000 acres in Brevard County which it planned to sell as

two and one-half and one and one-quarter acre lots as Cape

Atlantic Estates. (Pretrial Stipulation III.3; Trella at 15,

73; Lipman at 27; Intervenors' Exhibit 118 at 1). The lands

were divided into sections A through K. [Plaintiff's Exhibit


13. Approximately 7,400 acres of the property are

located west of Interstate 95, are generally high, but are

generally wet because they are flat and shallow "hardpan"

underlies the surface soils, precluding rainwater from

percolating below the surface. [Garcia at 15, 18-20; Plaintiff's

Exhibits 11, 12, 27, 28 at page 1-3). The surface wetness is

"ponded surface waters" or a "perched water table" and does

not represent the true groundwater table which is generally

between four and eight feet below the surface. [Garcia at 21-

23; Plaintiff's Exhibit 27 at page 48, 28 at page 11-63. The

lands east of Interstate 95 slope to the Turnbull Hammock, the

"reserved" area on the maps of Cape Atlantic Estates. [Garcia

at 15; Plaintiff's Exhibits 1, 23. Because of their slope,

waters from those lands drain into Turnbull Hammock. [Garcia

at 23)'. Generally, those lands are drier than the lands west

of Interstate 95, but the lands immediately adjacent to the

Turnbull Hammock are often wet.

14. In order to sell the lands in Cape Atlantic Estates,

the lands had to be improved with access roads and drainage.

The access roads and drainage were designed in a gridwork


fashion, a common and acceptable design in the late 1960s.

[Trella at 42, 76; McLouth at 783. Once almost all lots in

Cape Atlantic Estates sold, it would have been an "insurmountable

problem" to redesign the project tao change e te grid design which

followed the borders of the lots. [Trella at 42].

15. In order to improve the lands, the Florida

Legislature, by special act in 1967 (Chapter 67-1022), created

the SCDD "Ef]or the purpose of draining and conserving the lands

[at Cape Atlantic Estates], and protecting [those lands from

the effects of water, for controlling the water [in Cape Atlantic

Estates] and for the public health, convenience, welfare,

utility, and benefit, and for the purpose of making the lands

[within Cape Atlantic Estates] available for agricultural,

settlement, orban and subdivision -rposes by drainage,

reclamation, and improvement. ." The SCDD also had the power

to levy taxes. [Pretrial Stipulation IZI.7; Plaintiff's Exhibits

6 and 91]. The special act provided that the general drainage

district statute (Chapter 298, Florida Statutes), providing

for circuit court supervision and control, would otherwise apply

to SCDD. [Plaintiff's Exhibit 63.

16. On May 2, 1967, a petition to form the SCDD was

filed in Circuit Court for Volusia County. [Plaintiff's Exhibit

14 at pages 1-2]. On September 13, 1967, the court entered

a judgment creating and incorporating the South County Drainage

District. [Plaintiff's Exhibit 14 at pages 24-263. Thereafter

the SCDD boundaries were occasionally extended. [Plaintiff's

Exhibit 143.

Improvement Plans and Lmorovements

17. 'The South County Drainage District (SCDD), using

funds advanced by Atlantic, was to install the improvements

in accordance with improvement plans. [Pretrial Stipulation

III.6, II.9). In November 1967, John S. Bristol and Associates,

Inc., prepared a plan for reclamation for the SCDD and Cape

Atlantic Estates, which was then 10,184 acres. The plan included

canals, roads and swales in a gridwork design, which at least

through the 1960's was a very common design. [Trella at 42,

76; McLouth at 783. Surface water would be drained into Turnbull

Hammock. [Garcia at 233. The estimated costs for the

improvements were $82 per acre. [Plaintiff's Exhibit 11; Trella

at 753.

18. On June 20, 1968, Atlantic and the SCDD agreed

that Atlantic would finance the improvements for the SCDD.

Atlantic would receive interest-bearing SCDD bonds in the amount

of its advances. [Pretrial Stipulation -.9; Trella at 25;

Plaintiff's Exhibit 103. SCDD was to retire the bonds from

the collection of assessments against Cape Atlantic Estates

lands over ten years beginning in 1980. [Pretrial Stipulation

1.9; Lipman at 8-93.

19. In December 1968, John S. Bristol and Associates,

Inc., supplemented the plan of reclamation to include

approximately 1700 acres in section K-I at an estimated increased

cost of between $153,000 and $337,000 bringing the overall

estimated costs to between $980,000 and $1.163 million. [Exhibit


20. In May 1969, J. J. Garcia and Associates, Inc.,

supplemented the plan of reclamation to include all of Cape

Atlanjtic Estates by including selling areas K-2, K-3 and K-4.

Total costs were then estimated to be $1.7 million, or

approximately $110 per acre. [Lipman at 8; Plaintiff's Exhibit


21. In June 1971, J. J. Garcia and Associates, Inc.,

published a revised plan of reclamation for the South County

Drainage District to preserve certain ecological elements to

the extent possible. [Plaintiff's Exhibit 12].

22. Work on the improvements ccrmenced in 1967

and, by 1970, Atlantic had expended in excess of $560,000 in

connection with the improvements, incLhi tlhe completed main

outfall canal (variously described as be-ing 12, 13 or 14 miles

long) just west of and parallel to Interstate 95 and was

proceeding with detailed plans for other improvements. [Pretrial

Stipulation 111.15, III.16; Trella at 1_, 27, 31; Lipman at

10; Garcia at 24; Intervenors' Exhibit 118 at 1i. The

improvements were, at that time, on tie :an d within budget.

[Garcia at 24; Trella at 28-29].

23. As district engineer, Mr. Garcia, between January

1971 and September 1974, kept the Trustees of the Internal

Improvement Fund, the Central and Scatfer- Florida Flood Control

District, the Game and Fresh Water Fish Co~z--ission, the

Department of Natural Resources, DPC, anr Volusia County, as

well as other state agencies and instrumentalities, informed

concerning the drainage plan and improvements. [Garcia at 25-

26, 34-353. DBR and the Division also were kept informed.

[Plaintiff's Exhibits 97, 101, 102, 106, 107, 109, 112, 114-


24. With the exception of DPC, none of these agencies

asserted jurisdiction or had any proble-s with the improvements.

The Central and Southern Florida Flood Control District, for

example, indicated that it had no problems with the improvements,

but asked Mr. Garcia to "continue to keep us advised as your

work progresses." [Plaintiff's Exhibit 16-3). The Department

of Natural Resources, as another exa-.le, indicated that, while

it "would prefer to see subdivisions of -eandering streets which

protect water detention areas, we realize that much of the work

in this area has been completed." Thus, D'R recommended only

that "that every reasonable effort be made to preserve natural

patterns and wetlands." [Plaintiff's Exhibit 18-d].

25. The State has argued that the land at Cape Atlantic

Estates would not be usable even with the installation of the

drainage plan. It should be obvious, and is specifically set

forth in the public offering statements, that additional

improvements would be needed to make the land ready to build

on or to use for certain other purposes. That fact does not

make the land useless.

26. Implementing the improvement plans would have

provided access and drainage to the lots. Cape Atlantic

Estates, particularly west of Interstate 95, contains ponded

surface water which remains on the ground after rainfall for

relatively long periods of time. The drainage plan was

designed to remove that water by a two-fold action, first

breaking the hard pan which prevents the rainwaters from

percolating down into the groundwater table, and secondly by

allowing the water to flow off through the drainage ditches

into the main canal and thence on through to the discharge point

at Turnbull Hammock. [Plaintiff's Exhibits 11, 12, 27]. As

the Brevard Engineering report clearly indicated, the ponded

surface water was some four to seven feet above the true

groundwater table on the west side of 1-95. [Plaintiff's Exhibit

27 at 47-48]. Mr. Garcia designed the plan for improvements

at Cape Atlantic Estates, supervised construction of the main

canal, and is very, very familiar with the property over the

years. Mr. Garcia's testimony, which termed the ponded surface

water tas the "perched water table" as compared to the "true

water table," is clear and unambiguous. [Garcia at 19, 20,

21, 22, 23]. He had no doubt that the improvements would be

effective, and the court so finds that they would be effective.

That portion of the property which was subject to flooding

did flood mostly because it was flat and because the

hardpan prevented percolation. Thus, the canal system would

give the water a place to go, and would also break up the shallow

hard pan to allow the water to percolate deeper to the true

groundwater table.

27. The only contradiction to this evidence is Mr.

Nevin Smith's testimony for the State. Much of Mr. Smith's

testimony about usability had to do with waste disposal

considerations [Smith at 88] and his concerns about that depended

on his interpretation of the effect on the water table. [Smith

at 893. Mr. Smith's testimony, however, is substantially based

on a misinterpretation of certain language in the Harris report -

(1) that there will be only a minimal lowering of the ground

water table, and (2) that there will be no effect on the existing

"ground water regime." [Smith at 373. The Harris report

specifically does state that surface water will be removed.

Mr. Smith's interpretation that the surface will remain wet

because the ground water table will not be significantly affected

is a strained interpretation of the Harris report. As the State

admits in its brief, the Harris report relied on the Brevard

Engineering report (which Mr. Smith had not closely examined)

for its information on ground water, and the Brevard Engineering

report specifically states on pages.47-4S that the ground water

is some 4-8 feet below the surface of the pounded surface water.

Finally, Mr. Smith had not been shown the testimony of the man

who made Harris report along with Mr. Garcia concerning his

definition of ground water regime, although Mr. Smith admitted

that ,"you can certainly take that to mean a series of water

tables." [Smith at 83, 86, 87]. "If he says that he only meant

the lower tables, as a competent engineer myself, I would have

to say that this report is not -- certainly not clear, and it

could be misleading."



Moreover, Mr. Smith agreed that in some areas that

rainfall would dissipate into the soil, but that in other areas

there was hard pan which would prevent percolation. In response

to hypothetical type questions, Mr. Smith agreed that there

could be several water tables. [Smith at 77-783.

Registration and Sales

28. The lands comprising Cape Atlantic Estates (and

.SCDD) were registered, by section, with the then Florida Lands

,Sales Board.(the Division's predecessor) in 1967, 1968 and 1969

for sale under Chapter 478 (now renumbered Chapter 498), Florida

Statutes. [Pretrial Stipulation III.4; Plaintiff's Exhibit

7; Trella at 15-16; Lipman at 26].

29. Upon :approval of the registration statements, it

is stipulated that it was a requirement of the Department of

Business Regulation that the lands offered for sale be drained

of surface water and that graded dirt roads be provided before

December 31, 1973, in accordance with the registration

statements, the public offering statements, and the approved

form of contract to be used. [Pretrial Stipulation III.8]..

30. The public offering statements and agreements for

deed disclosed that lots in Cape Atlantic Estate needed drainage

and were not physically accessible, but that the SCDD would

improve them with graded dirt roads and drainage by December

31, 1973. [Plaintiff's Exhibit 8; Trella at 23]. The offering

statements acknowledged that, until the improvements were

installed, the lands would not be useable. [Plaintiff's Exhibit

83. As reflected in the offering statements and agreements

for deed, Atlantic was to advance the costs of the improvements

against the property for ten years beginning in 1980. [Pretrial

Stipulation III.5; Trella at 23; Plaintiff's Exhibits 8, 9,

103. Costs for installing the drainage and roads were estimated

in the late 1960s as $110 per acre. [Trella at 25; Plaintiff's

Exhibit 9].

31. Between 1967 (after the initial registration became

effective) and mid-1972, the lands in Cape Atlantic Estates

were sold to purchasers in one and one-quarter acre and two

and one-half acre parcels under agreements for deed. [Trella

at 16, 18; Lipman at 26; Plaintiff's Exhibit 8]. Atlantic,

which originally sold the two and one-half acres lots, eventually

converted its sales to one and one-cuarter acre lots. Prices

for the lots also increased from 1967 to mid-1972, from $1,990

for a two and one-half acre lot in 1967 to $5,990 for a one

and one-quarter acre lot in 1972. [Lipman, Volume II at 483.

By mid-1972, Atlantic had sold, in two and one-half and one

.an one-quarter acre parcels to approximately 5,000 purchasers,

over 95 percent of the lots in Cape Atlantic Estates. [Pretrial

Stipulation III.12, III.13; Trella ae 41-42; Lipnan at 20].

32. In mid-1972, Atlantic ceased sales (temporarily,

it thought and intended) because "it got a little cloudy in

terms of what we could say in the offering statement" in light

of, inter alia, the Florida Legislature abolishing the SCDD,

Volusia County's reluctance and refusal to assume the SCDD's

obligations, and the DPC asserting permit jurisdiction over

the improvements at Cape Atlantic Estates. [Trella at 26-27;

Lipman, Volume I, at 29-32].

33. After sales were suspended in mid-1972, DBR wrote

Atlantic that, "it is important that you do not re-open sales

without prior notice and approval of this Division." [Lipman,

Volume I, at 21; Lipman, Volume II at 4, 6-7; Plaintiff's

Exhibits 96, 99). As long as there was uncertainty concerning

whether the improvements could be installed, the Division would

not have approved the resale of lots in Cape Atlantic Estates

which the Division described as "useless" without the

improvements. [See Trella at 26, 49, 60; Plaintiff's Exhibits

96-99].. It was also made clear that the Division did not agree

to any extension of time for completion of the improvements.

[Plaintiff's Exhibit 96, 993.

34. Of some 6,000 lots in Cape Atlantic Estates, 3,000

lots have been deeded to purchasers; between 850 and 900 lots

are still subject to agreements for deed; and Atlantic owns

2,079 lots. [Lipman, Volume I at 223. Atlartic's lots include

those which it never sold, but are primarily composed of lots

which were returned to inventory when purchasers would cancel

their agreements for deed or Atlantic would cancel those

agreements for prolonged nonpayment. Because of the problems

in installing improvements, there was an extraordinarily high

percentage of cancellations. [Trella at 60-61, P.2; Lipman,

Volume I, at 20-22; Plaintiff's Exhibit 33.

35. Only 153 lots in all (117 which the intervenors

either own or are purchasing through an agreement for deed and

36 which Atlantic controls) have physical access. [Lipman, Volume

I, at 253.

Governmental Actions

36. Between 1970 and 1977, a series of unforeseeable

events arose which precluded the improvements from being made

and, given the fact that most lands had been sold in two and

one-half and one and one-quarter acre parcels, foreclosed any

reasonable use of Atlantic's unsold and returned lots which

are ch'eckerboarded throughout the subdivision.

SCDD's Abolition

37. First, the Florida Legislature passed a home rule

charter for Volusia County in 1970, which was adopted by

referendum on June 30, 1970, to be effective January 1, 1971.

[Pretrial Stipulation III.17; Trella at 31; Plaintiff's Exhibit

24]. Section 1409 of the charter provided that "[t]he functions,

responsibilities, duties, and obligations of the South County

Drainage District as provided in Chapter 67-1022, Laws of

Florida, are hereby transferred and vested in the Charter

government and said District shall cease to exist on the

effective date of the Charter and said act is hereby repealed."

IPlaintiff's Exhibit 24).

38. Neither Atlantic nor the SCDD was notified or

consulted about the proposed abolition of SCDD and, in fact,

they learned of the abolition only ia September 1971. [Lipman

at 45; Dakan depo.). Volusia County also was "surprised" that

the SCDD was actively operating [Bakan depo. at 30-31; Exhibit

2 to Dakan depo. at pages 3-32]. As late as July 1971, the

Circuit Court for Volusia County noticed an annual meeting of

the owners of land within SCDD for Sep--ember 8, 1971.

[Plaintiff's Exhibit 14 at 12].

39. Abolishing the SCDD apparently was inadvertent

because the charter was intended only to abolish non-active

"paper" organizations and because Volusia County was not

interested in assuming real obligations of drainage districts.

[Trella at 27-28, 31-33; Dakan depo. at 13; Plaintiff's Exhibit


40. The legal effect of the home rule charter was to

abolish the SCDD within Volusia County and to cause the county

to assume the obligations of the SCDD. The practical effect

of the abolition of SCDD, combined with DPC's conduct, however,

was to delay the improvements well over two years. Volusia

County did not wish to take up the project where the SCDD left

off, saw no urgency to complete the project on time, and wished

to avoid spending general funds (even though it clearly

recognized that the County Charter could impose a general

obligation upon the County). [Dakan. depo. at 13, 16, 17, 19,

22; Plaintiff's Exhibit 913.

41. Because of Volusia County's unwillingness to

complete the improvements and because of Atlantic's desire to

have the improvements installed, Atlantic attempted to convince

the circuit court that the SCDD remained viable. On June 4,

1982, however, the Circuit Court for Volusia County found that

*section 1409, chapter 70-966, had abolished the South County

Drainage District and transferred its powers and functions to

Volusia County Charter government. [Exhibit 14 at 58-60).

The First District Court of Appeal -affirmed the circuit court's

ruling, and the Supreme Court of Florida denied a petition for

writ of certiorari. [Exhibit 143.

42. On September 20, 1973, the Volusia County Council

passed ordinance No. 73-13, which, inter alia, established a

special Volusia County improvement district, to be known as

the SCDD, as the governing body of the South County Drainage

District with powers and duties to implement the drainage system.

43. Thereafter, continued negotiations finally resulted

in December 1973, in an agreement between Volusia County on

behalf of itself, Volusia County on behalf of the SCDD, and

Atlantic, which "basically place[d3 the entire matter

in status just prior to adoption of the Charter ." Atlantic

agreed to advance, without accruing any interest, monies to.

the SCDD for the improvements in exchange for bonds which would

be retired over ten years beginning in 1980. [Lipman at 29;

Plaintiff's Exhibit 26). It was noted in no fewer than three

places in the agreement that the bonds, "will not be general

obligation bonds to the county, but will be secured only by

the obligation of the owners of land within the special

improvement district to pay assessments relating to the

implementation of the drainage plan ." [Plaintiff's Exhibit

26]. Volusia County specifically acknowledged in the agreement

that its best efforts would be necesseay to secure all necessary

governmental and private approvals for the improvements and

Volusia County agreed to use its best efforts to facilitate

the installation of the improvements at Cape Atlantic Estates.

Notwithstanding that agreement, Volu-sia Ccn--ty actively opposed

the application for a DER permit for the improvements.

[Pretrial Stipulation III.17, III.18; Lipman at 29; Plaintiff's

Exhibits 26, 30, 38 at page 10-11, 91 at pages 9-10, 93].

Permit Delays

44. The Department of Pollution Cc-trol (DPC), DER's

predecessor, imposed significant and unwarranted delays on

Atlantic's obtaining a State permit pursuant to Florida Statutes

408.087 and 403.088 which had not been required when the

,improvements were begun. The Florida Legislature passed sections

403.87 and 403.088, in 1971, as Chapter 71-203, to become

effective January 1, 1972.

45. As of 1971, DPC had not adopted dredge and fill

regulations [Pretrial Stipulation III.203 and had not imposed

any requirements upon Atlantic or the SCDD [Trella at 30-39),

but (with almost all lots sold, improvement plans completed,

and in excess of $560,000 spent on completing the main canal

and engineering the remaining improvements at Cape Atlantic

Estates) indicated in late October 1971 that it had jurisdiction

and permitting authority over the improvements at Cape Atlantic

Estates. [Pretrial Stipulation III.21; Trella at 39; Plaintiff's

Exhibit 143.

46. Soon thereafter, Atlantic contacted, by meeting

or letter, DPC, the Department of Natural Resources, the Trustees

of the Internal Improvement Fund, the Department of

Transportation, the Department of State Planning, the Central

and Southern Florida Flood Central District, and the Florida

-Game and Freshwater Fish Commission. [Trella at 40-41; Garcia

at 25-26, 34-35; Plaintiff's Exhibits 15-233.

47. But, while litigation with Volusia County continued

concerning the SCDD, DPC refused to process a permit application

taking the position that review and processing of the permit

application for the improvements was then inappropriate. [Trella

at 43; Garcia at 36-37; Pretrial Stipulation III.22]. Mr.

Garcia's testimony is unrebutted that DPC even refused to discuss

technical or other requirements and to hold "workshop" sessions

rwith Atlantic to discuss the improvements and permitting.

[Trella at 43, 83, 85]. DPC refused even though the State

Attorney General :*ho handled -DPC's intervention in the SCDD

litigation noted on June 9, 1972 (one and one-half years prior

to the litigation being completed), that DPC will "require a

permit for excavation whether the district continues to exist

as a legal entity or whether it is incorporated within the

Charter government of Volusia County. In this regard, the

Department's technical personnel should be able to give you

some valuable advice about the district's proposed drainage."

[Plaintiff's Exhibit 953. Mr. Garcia testified without

contradiction that he made requests for assistance almost weekly

and was always turned down. [Garcia at 37-383. Trying to

anticipate concerns which might be expressed, Atlantic

commissioned an expensive and detailed environmental study

[Plaintiff's Exhibit 27) by an independent environmental

engineer, and filed it with DPC and other agencies [McLouth

at 56 et seq.; Garcia at 29, 36-37; Plaintiff's Exhibits 110,

1113. Still, DPC would give no guidance until the SCDD problem

was resolved.

48. With the SCDD litigation complete, DPC's Tallahassee

personnel with whom contact had been made, referred Atlantic


to its Central Region in Orlando, where Atlantic had to "start

fresh." [Garcia at 38]. Permitting proposals were discussed

with DPC, and modifications to the i-provement plans were made.

[Garcia at 39, 41). DPC officials told Atlantic to "go ahead

and file" the application. [Garcia at 413. Atlantic and Volusia

County jointly filed a permit application for the improvements

in September 1974, the application specifically noting that

it would "control flooding and permit the construction

of rough graded dirt roads to the individual tracts which were

sold in the late 1960's and early 1970's." [Trella at 42, 45;

Plaintiff's Exhibits 26, 29 at page 7].

49. The permit application was denied, by form letter,

in November 1974. [Pretrial Stipulatio- III.25; Trella at 45,

49; Plaintiff's Exhibit 313. Between the submission of the

application and its denial., Atlantic received no notice of any

deficiencies, procedural or substantive, fr=- the DPC,

notwithstanding DPC,rules then in effect. [Trella at 46, Garcia

at 433.

50. The denial of the permit was not on statutory

grounds, but was done for individual reasons of the four state

employees charged with the decision. [Plaintiff's Exhibit 36).

Four DER employees participated in the decision to deny the

permit. [Pretrial Stipulation 26). Gene Medley, a biologist

just out of school and the person assigned to the project,

opposed the project because it drained wetlands, and in his

opinion, wetlands ought to stay as they are. (DER had finally

had told Atlantic it must apply for a permit to operate a

potential pollution source the canal discharge point not

a permit to drain wetlands). Mr. Medley also said there was

no way he would vote for a permit for a grid design of canals

even though he knew that the ownership dictated the grid design.

James Hulbert admitted that because Volusia County opposed the



project and Brevard County opposed the project, he would in

no circumstances grant the permit. It was his policy to deny

the permit in such circumstances so the applicant would be

required to go before a hearing officer and there would be a

public hearing. He admitted that Brevard County's opposition

.was unsupported by data. Volusia Coun-y 's opposition was

contrary to its agreement with the SCDD and Atlantic and contrary

to the fact that Volusia County was one of the applicants.

Mr. Hulbert also said he was concerned about future maintenance,

'and although it was clear from the application Volusia County

had agreed to do the maintenance, he said he rejected that

because he was not sure Volusia County realized what it was

getting into. Thomas Hunnicutt, the new district engineer,

woted to deny the project in part because he was under the

misimpression that a state hydrologist disagreed with the

hydrologist's conclusions submitted with the application (the

,Harris report, Plaintiff's Exhibit 28). In fact, no state

hydrologist had reviewed the project and the DNR hydrologist

who subsequently reviewed it agreed with it. He was also

concerned with maintenance. Although he admitted there were

things that Atlantic could have done to get a permit, he did

not communicate those things to Atlantic, even though the

department rules at that time contemplated a pre-filing review

of an application to assure there were no deficiencies and notice

of any problems to give the applicant a opportunity to resolve

them. Alex Senkevich, the District Marager, had been of the

impression, as Mr. Garcia testified, that the matter had been

worked out prior to the filing of the application. He, too,

admitted that the opposition from Volusia County influenced

the decision, and he voted to deny the project because the other

three members of his staff opposed it.

51. Atlantic promptly commenced an administrative

proceeding to challenge the denial of the permit, which


ultimately resulted in the hearing officer recommending that
the permit be granted.2/ [Pretrial Stipulation III.28;

Plaintiff's Exhibit 38]./ Notwithstanding the hearing officer's

order, DER issued a final order denying the permit on May 4,

1976. [Pretrial Stipulation III.29; Plaintiff's Exhibit 39).

Although Atlantic argues that the final -orer ignored substantial

competent evidence on which the hearing officer based his

findings, the court declines to review the order in those terms,

although it does appear that the order required Atlantic to

anticipate all further use that might be made of the property

after Atlantic sold it.

52. Atlantic filed simultaneous appeals of the DER

final order to the First District Court of Appeal and the

Environmental Regulation Commission. [Pretrial Stipulation

III.30]. DER, however, moved to dismiss both the administrative

appeal to the Environmental Regulation Cc-r-ssion and the appeal

to the district court on the clearly inconsistent grounds that

the other had exclusive jurisdiction. [Pretrial Stipulation


53. On June 27, 1977, after oral argument in the

district court, but prior to decision, DER and Atlantic entered

into a stipulation which constituted a permit. [Pretrial

Stipulation III.30; Trella at 54j.

St. John's Assertion of Jurisdiction

54. In August 1977, approximately one month after

obtaining approval from DER, Atlantic received notice from St.

2/ The hearing officer, originally assigned to the case by
DPC, resigned, significantly delaying the hearing. [Trella
at 48].

3/ The administrative hearing was held under the old
administrative procedures act, and evidence was limited by rule
to the situation at the time of denial of the permit.

John's that it also was considering asserting permitting

jurisdiction over Cape Atlantic Estates. [Pretrial Stipulation

III.31; Trella at 54]. St. John's asserted jurisdiction despite

-the fact that St. John's permitting authori-y did not

geographically include Volusia County.

Effects of Governmental Actions

55. Faced with the additional requirements, Atlantic

re-evaluated the cost of installing the modified improvements

in view of the delays, uncertainties, and new requirements

[Trella at 55], determined that they could not be installed,

and notified DBR and Atlantic's purchasers. [Trella at 56-57,

59-60; Pretrial Stipulation III.333].

56. The combination of the delays and the increased

complexity of the improvements had a number of effects on

Atlantic and resulted in rendering it economically impossible

to install the improvements necessary to make the lots usable

for any practical purpose.

A. Increased Costs of Improvements

57. Inflation. The effects of inflation are illustrated .

by Exhibit 45 and Mr. McLouth's testimony both of which are

uncontradicted. For example, the cost of doing a project in

mid 1977 was 240% of the cost of the same work in 1967 when

this project began. Mr. McLouth estimated and the court finds

that the project constructed according to the DER permit actually

issued would cost approximately $17 million at September 1,

4/ By stipulation of December 11, 1982, in the subject cases,
DBR acknowledged that the improvements will never be installed
and that it had moved for interpleader to distribute the monies
in the improvement trust account. If the improvements could
be installed, DBR, given its past actions, would not favor the
distribution of the improvement trust account which was designed
to ensure that the improvements were made.

1977, plus inflation during construction. That same work would

have cost $7 million in 1969-70. Atlantic could have constructed

the improvements at a $7 million cost if that requirement had

been imposed in 1969-70 and still trade a profit of almost $10

million. [Lipman Volume I at 35-423.

58. Complexity of the improvements. Mr. Garcia

testified without contradiction that the major portion of the

increased cost of the improvements (not counting inflation)

was not the result of modifying the. drainage system itself,

but in the method of doing the work and in such extras as

requiring stabilized roads throughout the subdivision. [Garcia

49-563. Taking Mr. McLouth's $17 million estimate at 1977

prices, Mr. Garcia eliminated those extras such as stabilized

roads and the extra handling of materials and testified that

the cost of doing the work as originally contemplated would

have been $5.5 to $6 million at the 1977 prices. [Garcia 513.

Working backwards to eliminate inflation, that figure

approximated the estimates Mr. Garcia had under the late 60's

and through the $2.7 million estimate in the January 1973

improvement trust agreement. [Plaintiff's exhibit 25; Garcia

at 53). As Mr. Lipman testified without contradiction, if

Atlantic or the SCDD had been allkced to proceed without delay

to construct the original plan, it would have been a profit

of $12 million.

B. Decreased Income

59. Cessation of Sales and Cancellations. A significant

effect of the delay and the uncertainty created thereby was

the cessation of sales. As a registered subdivision under the

Land Sales-Law, Atlantic was required to make accurate

disclosures in order to make sales. 3y mid 1972 it ceased sales

because of the uncertain situation. [Trella at 26-27; Lipman,

Volume I at 293. Atlantic thought -t the ti-. that the situation

rejects the argument that as a practical matter that a request

to permit sales would be a viable alternative to Atlantic.

61. Improvement trust monies =-.available. An additional

$1.7 million (plus several hundred thousand dollars of interest)

was lost to Atlantic through the improrve.ent trust account which

would have been used to reimburse improvement expenditures or

advances. [Lipman Volume I at 28-31]. Although the disposition

of the improvement trust is no longer a part of this case, the

fact that those monies would have been available to Atlantic

is relevant to the financial realities and economic effect of

the delays and other state actions.

C. Increased Expenses

62. On the expense side, general and administrative

expenses, which Mr. Lipman testified wo-ld have averaged 10%

of sales value, instead amounted to some 28% of sales value

at Cape Atlantic Estates. The higher percentage of general

and administrative expenses is caused by both the decrease of

income (which would increase the percentage of the absolute

amount), the increased costs of executive time in dealing with

problems and the additional personnel required to handle customer

inquiries and customer relations. Additionally, of course,

increased legal fees were experienced in handling the Volusia

County litigation, the permitting appeals, and other matters

attendant on the delay, and additional engineering fees in

connection with the Volusia County agree-aent, the Brevard

Engineering report, the Harris report, the revisions, and other

items were all likewise involved. [Liprman Volume I at 44-463.

D. Combined Result of Increased Expense/Decreased Income

63. The net result on Atlantic's financial picture

is that if the delays had not occurred, even if DER had increased

the cost of the improvements by imposinr the requirements which

were set forth in the permit, could have handled the installation

of the improvements, made its property accessible, and would

have sold or retained accessible, sellable and useable property.

On the other hand, if it had been only the delay and there had

been no increase in the complexity in improvements, probably

the same is true. The combination, however, of tripling the

cost of the improvements and delaying while inflation more than

doubled the cost again at a time when the income from the project

was fixed, cancellations multiplied, and sales could not

continue, has virtually rendered Atlantic bankrupt, even without

the improvements (refer to details under "investment-backed

expectations," infra).

E. Inability To Borrow And Secure Improvements After Date Of Taking

64. As both Mr. Lipman and Mr. Trella testified,

Atlantic could not have borrowed the money in 1977 to install

the improvements. In the first place, Atlantic did not have

assets exceeding the $17 million cost of improvement, and would

be unable to give any collateral except that dependent upon

the collection of assessments against the land beginning in

1980 by Volusia County's newly formed South County Drainage

District. Because those assessments were not yet in existence,

and there had been no experience with them, the reliability

of that sort of method of repayment could not be reasonably

evaluated by a potential lender. The accounts receivable at

that time were in the neighborhood of $7 million [Plaintiff's

Exhibit 53], and they were at that time pledged to cover

Atlantic's other borrowings used to finance such things as the

initial land purchase and selling expenses. Selling expenses

in the land sales business, Mr. Lipman and Mr. Trella testified,

are high, and, of course, must be paid at the time they are

incurred. Thus Atlantic was required to borrow money "up front"

in order to cover those initial expenses, and was in the process

of paying those back out of the receivables. CLipman Volume.

I at 17-19; Trella at 103].

65. The receivables would ordinarily "have been much

higher, but the increased cancellations and suspended sales,

both resulting from state action, -caused less than anticipated

receivables. The combination of the decreased cash flow, the

increased costs, the delays, including the uncertainty with

St.. John's, and the uncertain future sales, made it apparent,

as both Mr. Lipman and Mr. Trella testified without

contradiction, that no commercial lender would lend money in

the necessary amounts to finance the imprrovements.

66. Under the circumstances, then, the improvements

cannot be completed. Atlantic is left -wit h 2,079 scattered,

landlocked lots which are inaccessible and unsellable. Atlantic

cannot use the lots because there is no practical access, it

cannot sell the lots because the land sales law cannot be

complied with and a purchaser would likewise have no access,

and, as stated in the registered offering statement, most of

the land is not usable without drainage. The lots are unusable

for any reasonable purpose as a result of the actions of the

State in these particular circumstances and there has been a

taking of the individual lots in the subdivision.

Applying Estuary Properties

67. As noted in conclusion of law 9, at least six

factors should be considered in determining whether there has

been a taking. Graham v. Estuary Prooerties, Inc., 399 So.2d

1374 (Fla. 1981).

Diminution in Value

68. Had the roads and the drainage been put in,

Atlantic's remaining lots of one arn one quarter acres could

have been sold at a realistic "but probably conservative" average

value of at least $6,990 as of September 1, 1977. [Knight at

11-12; Trella at 61, 93-94[.3. Mr. Knight's testimony of an

average value of $6,990 was based on a number of factors, but

one of the primary considerations in determining the market

value was the fact that 5,000 purchases of lots in Cape Atlantic

Estates had been made between 1967 and, with one and

one-quarter acre lots selling at $5,990 when Atlantic suspended

sales in mid-1972. [Knight at 11-22, 28-29; Lipman at 483.

Moreover, his testimony of an average value of $6,990 is

unrebutted on the record. Indeed, the state's appraiser was

not asked a valuation of the lots if improved, and did not answer

when asked if he agreed with Mr. Knight's evaluation of the

.,000 actual sales as a primary factor in determining the fair

market value for the Cape Atlantic lots. [Anderson at 76-77).

69. The State argues that, because only minimal

improvements were offered at Cape Atlantic Estates, the lots

have no value in any event. The State ignores the fa9t that

it was fully disclosed that this property was sold with only

minimal development-graded dirt roads and surface water drainage.

Having only minimal improvements doesn't mean that the lots

would have no value; it merely means that if additional

improvements had been put in, the land would be worth more than

it would be with the minimal initial improvements.

70. Without the roads and drainage, and as a result

of the State's delay and inconsistent actions, the average value

of Atlantic's and the Simon class's properties, checkerboarded

across Cape Atlantic Estates, would be only "nominal" ($100

to $200 per lot) since, as the offering statement disclosed,

there is no access, no drainage, and the lots could not be

readily located on the ground. [Knight at 10, 15-17, 183. Even

DBR's attorney has admitted that, without the improvements,

the land at Cape Atlantic Estates "is absolutely valueless."

[Transcript of Hearing of March 11, 1975, eat 7, 123, and it

was on that basis that the State (through DBR) instituted

proceedings in 1974 to revoke Atlantic's registration.

Physical Invasi~o

71. There has been no physical invasion by the state

of Cape Atlantic Estates. However, the practical effect of

governmental action has been to eliminate physical access to

the individual lots, a factor many courts virtually equate with

physical invasion.

Public Harm/Public Benefit

72. The delays and conflicting de-7nds of the State

have not prevented a public harm. In fact, DER, at last, agreed

to grant a permit to Atlantic, thereby evidencing that the

improvements could be made consistently with the public health,

safety, welfare and morals.

73. On the other hand, the delays and the resulting

inability to install the improvements have presumably created

a public benefit. The Cape Atlantic lands surround Turnbull .

Hammock which St. John's, using public monies, acquired for

preservation presumably to benefit the public. One of the

justifications given for the purchase of Turnbull Hammock was

to prevent or control development of Cape Atlantic Estates.

Cape Atlantic Estates also borders the Farmton Wildlife

Management Area which the state controls,- borders and is

5/ The Game and Fresh Water Fish Commission has established
Farmton as a Type I Wildlife Management Area. Section 372.121,
Florida Statutes, authorizes the Ga-e and Fresh Water Fish
Commission to make reasonable rules to protect, control, operate,
manage, and develop lands which the co.-mission owns, leases,
or otherwise controls with permission of the owner. As a Type
I Wildlife Management Area, Farmton is subject to the Game and
Fresh Water Fish Commission opening it to hunting, trapping,
or fishing, as the commission deems appropriate. Fla. Adm.

-~~~~ -- - -- -.._~~_

included in the Brevard County Game Refuge [Plaintiff's Exhibit

27 at page 463, and is approximately 12 miles from the 28,000

acre Seminole Ranch which St. John's also acquired for

preservation, again purportedly for a public benefit.-- The

difficulties encountered by Atlantic have arisen in large part

from the desire of State agencies or state officials to preserve

Cape Atlantic Estates in its natural state. That was the express

desire of some of the DPC personnel (Medley) charged with the

permit decision; the final order [Exhibit 393 denying the permit

did so to prevent development and the future problems development

would cause; St. John's director Dr. Knapp submitted to St.

-John's the report of the Environmental Task Force calling for

opposition to the project [Plaintiff's 'Exhibit 66; see also

Exhibit 673; Volusia County opposed the project it had agreed

to support because of a desire to preserve the land from being

developed. [Plaintiff's Exhibit 30).

Public Health, Safety, Welfare and Morals.

74. This is not a case where a permit has been

justifiably denied in order to prevent environmental harm and

where the property owner then attempts to claim that the State

has taken the property. As previously noted, this is a case

where as DER recognized at last, the improvements could be made

consistently with the public health, safety, welfare and morals.

Continued from prev. page

Code 39-15.03(3). The commission has, in fact, established
specific regulations governing hunting and fishing in Farmton.
The commission has established check stations around Farmton
in order to monitor the number of deer, turkeys, and hogs being
taken from Farmton. Fla. Admin. Code 15-06(5)(c).

6/ St. John's acquired Seminole Ranch (14,500 acres in fee,
the remainder with the Nature Conservancy) in order to provide
non-structural flood protection, to preserve a vegetated marsh
eco-system, to retain water quality enhancement characteristics,
and for fish, wildlife, and outdoor recreation benefits. [Auth
depo. of September 11, 1981, at 27-29].

As the DER attorney admitted at the hearing of February 3, 1981,

Atlantic has

a permit. They can take graders and draglines
out there tomorrow as far as our Department
is concerned and in due time be in the position
of saying that the purchasers of these lots
will, in fact, have what they bargained for,
a piece of property that is suitably drained.
S. t's very important in our view to
distinguish this case from those in which --
for a variety of valid purposes the Department
may have found the basis for denying the permit
of this nature. That is -- that is essentially
your position, Your Honor. [Transcript of
Hearing of February 3, 1981, at 55-573.

Therefore, it has not been established that the granting of

the permit would materially and adversely affect the public

health, safety, welfare and morals.

Arbitrary/Capricious Conduct

75. Various State agencies and instrumentalities have

acted arbitrarily and capriciously toward Atlantic. There have

been abuses of power and conflicts of interest. For example,

DPC refused to process the permit application for the

improvements for three years, denied the permit for the

individual reasons of certain DER employees (rather than

statutory reasons), and, when the hearing officer recommended

that the permit be granted, DER overruled the hearing officer's

order, clearly ignoring substantial competent evidence which

supported it. See findings of Fact 49, above.

76. Volusia County's actions also produced an unfair

result on Atlantic and the purchasers. As early as May 1970,

Volusia County indicated that "no action will be required at

this time" concerning the improvements. [Plaintiff's Exhibit

153. After-the Volusia County Charter transferred the SCDD's

obligation to Volusia County, Volusia County refused to accept

its statutory obligation to assume those obligations. After

Volusia County ultimately agreed in December 1973 to facilitate

the improvements and to use its best efforts to obtain necessary

permits, Volusia County opposed the permits and, as shown above,

its opposition was a significant factor in the permit being


77. St. John's also dealt unfairly with Atlantic.

One of the leaders of the Volusia County Environmental Task

Force, which opposed the permitting at Cape Atlantic Estates,

was a member of the Board of Governors of St. John's. [Auth

depo. of April 7, 1981, at 29; Exhibit 11 to Auth depo. of April

7, 1981]. In 1975, he demanded that St. John's oppose the

project as it did. A St. John's employee, John Merriam, also

a member of the Task Force, testified in opposition to the

project [Plaintiff's Exhibit 36 at pp. 68 et seq3, even though

St. John's exercised no jurisdiction whatever over the project

at that time. [Auth depo. at page 20). Later, after Atlantic

finally obtained permits from DER for the i-provements to be

completed (over St. John's objections) [Trella at 313, St.

John's, having lost before the DER, mobilized to stop those

improvements from being completed. Frank X. Friedmann, Jr.,

was a member of the Board of the St. John's River Water

Management District in August, 1977. [Auth depo. of April 7,

1981, at 14; Exhibit 9 to Auth depo. of April 7, 1981]. On

August 3, 1977, Mr. Friedmann's law firm, acting for a client,

demanded that St. John's notify Atlantic of the need to apply

to St. John's for a permit for construction in accordance with

Chapter 373, Florida Statutes. Six days later, St. John's

notified Atlantic that the Brevard County portion of improvements
at Cape Atlantic Estates was within the District's permitting

jurisdiction and that appropriate applications for a management

and storage of surplus waters (MSSW) permit must be filed and

processed prior to any additional construction of improvements

at Cape Atlantic Estates. [Auth depo. of April 7, 1981, at

14, 153. St. John's specifically recognized that its regulations

*'. 4

did not permit it to exercise permit jurisdiction over the major

portions of Cape Atlantic Estates which were in Volusia County.

[Auth depo. of April 7, 1981, at 12, 133.7/ Nonetheless, on

:September 14, 1977, St. John's notifie- Atlantic that the entire

Cape Atlantic Estates area would be technically reviewed and

subject to permitting [Exhibit 9 to Auth depo. of April 7,

1981), even though the rule implementing that ad hoc decision

was not adopted until later (after October 19, 1977). [Auth

depo. of April 7, 1981, at 24; Exhibit 13 to Auth depo. of April

7, 1981; Auth depo. of September 11, 1991, at 7, 83.

78. St. John's also expended fu-ds to acquire the

portion of Turnbull Hammock lying between the east and west

portions of Cape Atlantic Estates as "a managementt tool not

otherwise available" to control development of Cape Atlantic

Estates [Auth depo. of April 7, 1981, at 41, 42, 45, 46, 53,

54, 56; Exhibits 19, 24, 25 to Auth ez-?. of April 7, 1981;

Auth depo. of September 11, 1981, at 15, 17-18, 21-23, 26-273,

and in order "to assume a more authoritative posture in reviewing

the permit applications involved with the drainage plan" for

Cape Atlantic Estates. [Exhibit 84). Mr. Auth noted that

acquiring Turnbull Hammock would "be especially effective as

a regulatory tool to prevent adverse water quality and water

quantity impacts from Cape Atlantic Estates." [Plaintiff's

Exhibit 85, 883.

7/ Exhibit 3 to Auth deposition (July 27, 1977 memo: "One
difficulty with issuance of a permit would be that so much of
Cape Atlantic Estates falls outside our permittable area");
Exhibit 6 to Auth deposition (August 9, 1977 memo; "An additional
section is needed in the dealing with projects which straddle
a district boundary . A case in point is the Cape
Atlantic Estates project ."); Copposite Exhibit 7 to Auth
deposition page 9 (August 9, 1977 letter to Atlantic: "In
processing your permit the District will consider the .
entire project in both Brevard and Voiusia Counties); Exhibit
9 to Auth deposition (September 14, 1977 -.e.o: "The entire
project would be treated in the review.")

79. St. John's actions were particularly arbitrary

because, as noted above, its predecessor, the Central and

Southern Florida Tlood Control District, ihad in September 1971

found no problem with the improvements. [Garcia at 27;

Plaintiff's Exhibit 16-B].

Reasonable Investment-Back Expectations

80. Atlantic acquired the property specifically in

order to sell it at a profit. CLipman, Volume I, at 303. Its

expectations have been frustrated. It planned to sell all of

the lots in Cape Atlantic Estates. It has been left, however,

with approximately 20 percent of the lots, which are landlocked

and checkerboarded throughout Cape Atlantic Estates. [Trella

at 61]. Those lands are in effect unusable without the

improvements which will never be installed because of State


81. Atlantic will lose over $300,000 on Cape Atlantic

Estates. [Lipman, Volume I, at 30,35]. Had the improvements

been installed and Atlantic sold the remaining land, and any

returned lots, it would have made a profit of approximately

$12 million on Cape Atlantic Estates. [Lipman, Volume I, at

35, 40-413.

82. Purchasers of lands at Cape Atlantic Estates also

had reasonable investment-backed expectations. They purchased

their lands, expecting that those lands would be improved with

access roads and drainage. They had the reasonable expectation

that their lands, once improved, would have substantial value,

and that their lands could be used or sold. Without the

improvements, however, their lands have no more than nominal

value, and cannot be used or sold at more than the nominal value.

Thus, their reasonable investment-backed expectations also have

'been frustrated and thwarted.

Summary of Findings of Fact

83. The evidence shows tibae: *(a) the improvements

cannot be built because of economic realities; the inflation

factor in the increased costs is significant; late 1977 prices

were approximately 240% of 1967 prices; inflation became

particularly significant beginning in 1973. Even at the

increased costs, if it had not been for the continued delays,

Atlantic could have financed the irprovements;

(b) The combination of increased costs and

inflation, after the ownership wa-s ivid-;d a-nd income set at

1967-72 prices, rendered the land unimprovable for all practical

purposes and therefore worth aon1ey e mamv~ial amount;

(c) There has been a deprivation of all reasonable

use of the property as a result of the S-ate action and there

has, therefore, been a taking of the lots in Cape Atlantic



1. Because more than $5,000 is in dispute, this Court

has subject matter jurisdiction.

2. The Florida Constitution always has prohibited the

State from "taking" private property without paying "just" or

"full" compensation to its owner. Presently, section 6(a) of

Article X of the Florida Constitution provides that "En]o private
property shall be taken except for public purpose and with full

compensation therefore paid ." Section 6(a) is self-

executing; it does not require enabling legislation to be

effective. Flatt v. City of Brooksville, 368 So.2d 638 (Fla.

2d DCA 1979), citing Jacksonville Expressway Authority v. Henry

G. DuPree Co., 108 So.2d 289, 294 (Fla. 1958); Division of

Administration v. Grant Motor Co., 345 So.2d 843, 845 (Fla.

2nd DCA 1977). Similarly, the prohibition in the Fifth Amendment

of the United States Constitution against-the United States

"taking" property without "just compensation" applies to the

states through the due process clause of the Fourteenth

Amendment. Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449

U.S. 155, 101 S.Ct. 446, 450 (1980); Chicaco B. & Q. R. Co.

v. Chicago, 166 U.S. 226, 241 (1897).

3. Florida courts have recognized section 6(a) and

its predecessors as "fundamental" and "universal" law basic

to American democracy. In State Road Department v. Tharp, 146

Fla. 745, 1 So.2d 868, 870 (Fla. 1941), -Justice Terrell wrote:

American democracy is a distinct departure
from other democracies in that we place the
emphasis on the individual and protect him
in his personal property rights against the
State and all other assailants. The State
may condemn the property for public use and
pay a just compensation for it, but it will
not be permitted to grab or take it by force
and the doctrine of nonsuability shall not
be so construed .

4. Whether there has been a taking is determined on

a case by case basis, depending upon the facts of the particular

case. Penn Central Transportation Co. v. New York City, 438

U.S. 104, 124, (1978); Pennsylvania Coal Co. v. Mahon, 260

U.S. 393, 413 (1922); Graham v. Estuary Properties, Inc., 399

So.2d 1374 (Fla. 1981); South Dade Farms, Inc. v. B&L Farms

Co., 62 So.2d 350, 357 (Fla. 1952).

5. The constitutional prohibitions are concerned with

the effect of governmental action or inaction. San Diego Gas

& Electric Co. v. City of San Diego, 450 U.S. 621 (1981);-.

Pete v. United States, 531 F.2d 1018, 1032 (Ct. Cl. 1976);

Lincoln Loan Co. v. State, 274 Ore. 49, 545 P.2d 105 (1976);

8/ See footnote supra.

Harris, Environmental Regulations, Zoning and withheld Municipal

Services: Takings of Property by Multi-Governnent Action, 25

Fla. L. Rev. 635, 682-685 (1973).

6. Government inaction and delay --y give rise to a

taking under section 6(a) and the Unitei States Constitution.

San Diego Gas & Elec. Co. v. City of San Diego, 450 U.S. 621,

101 S.Ct. 1287 (1981); Askew v. Gables by the Sea, Inc., 333

.So.2d 56, 61 (Fla. 1st DCA 1976), cert. denied, 345 So.2d 420

(1977); City of Shreveport v. Bernstein, 391 Sc.2d 1331 (La.

App. 1980); Charles v. Diamond, 41 N.Y.2d 318, 360 N.E.2d 1285,

382 N.Y.S.2d 594 (1977).

7. The cumulative effects of the various governmental

actions must be considered in determini-ns w-hether there has

been a "taking." E.g., Askew v. Gables-bv-the-Sea, Inc., 333

So.2d 56, 59 (Fla. 1st DCA 1976), cert. denied, 343 So.2d 420

(Fla. 1977); Board of Commissioners of S-ate Institutions v.

Tallahassee Trust Co., 108 S2d 74 (Fla. 1st DCA 1958), cert.

quashed, 116 So.2d 762 (Fla. 1949); Benerson v. United States,

548 F.2d 939, 948, 212 Ct. Cl. 375 (1977); Amen v. City of

Dearborn, 363 F. Supp. 1267, 1278 (E.D. Mich. 1973), rev'd on

other grounds, 532 F.2d 554 (6th Cir. 1974); Peacock v. County

of Sacramento, 271 Cal. App. 2d 845 Cal.Rptr. 391, 399, 403

(1969); Metropolitan Board of Zoning Appeals of Marion County

v. Gateway Corp., 256 Ind. 326, 268 N.E.2d 736 (1971); Ventures

in Property I v. City of Wichita, 225 Kan. 693, 594 P.2d 671

(1979). Browne v. Town of Hamptonburgh, 76 A.D.2d 848, 428

N.Y.S.2d 526 (1980); Charles v. Diamond, 47 A.D.2d 426, 366

N.Y.S.2d 921 (1975), modified, 41 N.Y.2d 318, 360 N.E.2d 1285,

382 N.Y.S.2d 534 (1977); Lincoln Loan Co. v. State, 274 Ore.

49, 545 p.2d 105, 109 (1976); Harris, Environmnental Regulations,

Zoning, and Withheld Municipal Services: Takings of Property

by Multi-Government Action, 25 Fla. L. ev.- 635 (1973). Actions


-* - -, -

was temporary and that delays would be resolved shortly. [Trella

at 26-27]. When that did not occur, cancellations rose sharply.

[Lipman, Volume I, at 20-22]. As a result, Atlantic ended up

with 2,079 unsold lots which it was unable to resell. Those

lots had been selling at $5,990 when -sales stopped, and therefore

they represented a significant portion of the economic viability

of the project. As Mr. Lipman testified without contradiction,

the normal land sales project would have had approximately 100

unsold lots by this time. [Lipman, Volu.e I at 22; See Trella

at 60].

60. Defendants have argued that sales could have been

recommended if the company had merely applied to the Division

of Land Sales for permission to reco-uence sales. Defendant

adduced no evidence to support this contention; however, from

the testimony of Mr. Trella and from the record of this case,

the court finds as a fact that that was not a viable solution.

In the first place, in mid-1974, the Departnent of Business

Regulation instituted an administrative proceeding designed

to revoke the Atlantic's registration for failure to install

the improvements as promised in the offering statement by 1973.

Secondly, a request to extend that deadline was denied.

[Plaintiff's exhibit 96-99]. Third, when, caught between the

administrative proceeding to revoke its license for failure

to install the improvements and refusal of DER to permit the

improvements, Atlantic filed suit in this court in early 1975,

the position of the Divison clearly was that not only should

sales be stopped, and the registration be revoked, but also

that existing contracts be cancelled! [Transcript of March

11, 19753. That, plus the fact that the Division requested

no further sales be made under the existing registration

statements without its permission [Plaintiff's exhibit 97, 98,

99], supports Mr. Trella's testimony, which the court finds

credible, that sales could not be recon-enced, and the court

.and inactions of the Florida Legislature, the Department of

Environmental Regulation (and its predecessor, the Department

-of Pollution Control), the Department of Business Regulation,

the Divison of Florida Land Sales and Condcminiums, Volusia

County, and the St. John's River Water Management District are

to be considered actions of the State of Florida for purposes

of the "taking" clauses of the Florida and United States


8. There may be a taking of lands even though there

is no legal prohibition on using or developing lands, if as

a result of state action the land owner would be economically

or physically precluded from using or developing his lands.

Pennsylvania Coal Company v. Mahon, 260 U.S. 393, 414, 415

(1922); Arastra Limited Partnership v. City of Palo Alto, 401

F. Supp. 962 (N.D. Calif. 1975), vacated per stipulation, 417

F. Supp. 425 (N.D. Calif. 1976); Richmond Elks Hall Ass'n

v. Richmond Redevelopment Agency, 561 F.2d 1327 (9th Cir. 1977);

Hernandez v. City of Lafayette, 643 F.2d 1188, 1197, N.17 (5th

Cir. 1981); Virginia Surface Mining and Reclamation Ass'n, Inc.

v. Andrus,483 F.Supp. 425, 441 (D. W.Va. 1980), rev'd on other

grounds, U.S. 101 S.Ct. 2352 (1981); Sixth Camden

Corp. v. Township of Eyesham, 420 F.Supp. 709 (D.N.J. 1976);

Benenson v. United States, 548 F.2d 939, 947 (Ct. Cl. 1977);

Pete v. United States, 531 F.2d 1018, 209 Ct. Cl. 270 (1976);

Cardon Oil Co. v. City of Phoenix, 122 Ariz. 102, 593, P.2d

656 (1979); Kasparek v. Johnson County Board of Health, 288

N.W.2d 511, 516 (Iowa 1980); Ventures in Property I v. City

of Wichita, 225 Kan. 698, 594 P.2d 671, 682 (1978); Broadview

Apartments Co. v. Commission for Historical & Architectural

Preservation, 49 Md. App. 538, 433 A.2d 1214 (1981); Ed Zaagman,

Inc. v. City of Kentwood, 406 Mich. 137, 277 N.W.2d 475 (1979).

9. Six non-exclusive factors are to be considered in

determining whether governmental action effects a taking. Those


." '* / \ '-_. *

factors are: (1) the degree to which there is a diminution

in the value of the property; (2) whether there has been a

physical invasion of the property; (3) whether the state action

confers a public benefit or prevents a public harm; (4) whether

the state action promotes the public health, safety, welfare

or morals; (5) whether the state act-ion is arbitrary or

capricious; and (6) whether the state action curtails investment

backed expectations. Graham v. Estuary Properties, Inc., 399

So.2d 1374 (Fla. 1981).

10. Even if the lots could be sold for the nominal price

of $100 or $200 per acre as the price "the market will bear,"

that would not preclude a taking. Cardon Oil Co. v. City of

Phoenix, 122 Ariz. 102, 593 P.2d 656, 559 (1979).

11. There may be a taking even in the absence of a

physical encoachment or invasion. Gran--= v. Estuary Properties,

Inc., 399 So.2d 1374 (Fla. 1981); United States v. General Motors

Corp., 323 U.S. 373 377-378 (1945); Benitez v. Hillsborough

County Aviation Authority, 26 Fla. Supp. 53, aff'd, 200 So.2d

194 (Fla. 2d DCA), cert. denied. 204 So.2d 328 (Fla. 1967);

Thomas W. Garland, Inc. v. City of St. Louis, 586 F.2d 784,

787 (8th Cir.), cert. denied, 444 U.S. 899 (1979); Richmond

Elks Hall Ass'n v. Richmond Redevelopment Agency, 561 F.2d 13.27,

1330 (9th Cir. 1977); Benenson v. United States, 548 F.2d 539,

212 Ct. Cl. 375 (1977); Eldridge v. City of Palo Alto, 51 Cal.

App. 3rd 726, 124 Cal.Rptr. 547, 554-55 (1975); Duffield v.

DeKalb County, 242 Ga. 432, 249 S.E.2d 235 (Ga. 1978); Burrows

v. City of Keene, N.H. 432 A.2d 15, 19 (1981); Lutheran

Church in America v. City of New York, 35 N.Y.2d 121, 359

N.Y.S.2d 7, 15, 316 N.E.2d 305 (1974): Spears v. Berle, 63 A.D.2d

372, 407 N.Y.S.2d 590 (1978), rev'd and re.-anded for an

evidentiary hearing, 48 N.Y.2d 254, 422 N.Y.S.2d 636, 387 N.E.2d

1304 (1978); Metzger v. Brentwood, 117 ":.H.497, 374 A.2d 954,

*- .... -* W . .. -_i -" '- : "F ,

957-958 (1977); Ventures in Property I v. City of Wichita, 225

Kan. 698, 594 P.2d 671, 679-682 (1979) and cases cited therein;

Lincoln Loan Co. v. State, 274 Ore. 49, 545 P.2d 105, 106 (1976);

Snyder v. Railroad Borough, Pa. Corru-w. 430 A.2d 339

(1981); City of Austin v. Teague, 570 S.W.2d 389 (Tex. 1978);

San Antonio River Authority v. Garrett Bros., 528 SW.2d 266,

273 (Tex. Civ. 1975); Highline School District No. 401 v. Port

of Seattle, 87 Wash. 2d 6, 548 P.2d 1085, 1088-1089 (1976);

Harris, Environmental Regulations, Zoning, and Withheld Municipal

Services: Taking of Property by Multi-Government Action, 25

Fla. L. Rev. 635, 640-652 (1973).

12. The taking of property rights, rather than any

resulting benefit to the State, is crucial in inverse

condemnation. Altantic and the intervenors do not necessarily

have to prove that the taking of their lands benefitted the

State. Lincoln Loan Co. v. State, 274 Cre. 49, 545 p.2d 105,

108 (1976). In any event, the State's actions have resulted

in a public benefit. As a majority of the Untied States Supreme

Court has recognized, public benefits flow from actions such

as the State's in connection with Cape Atlantic Estates. See

San Diego Gas & Elec. Co. v. City of San Diego, 450 U.S. 621

(1981); Lutheran Church in America v. City of New York, 35 N.Y.2d

121, 359 N.Y.Sd 7 (1974); Spears v. Berle, 63 A.D. 372, 407

N.Y.S.2d 590, 593-594,.rev'd and remanded for an evidentiary

hearing, 48 N.Y.2d 254, 422 N.Y.S.25 35, 387 N.E.2d 1304 (1978).

13. The taking clause is specifically "meant to prevent

the arbitrary use of governmental power." Webb's Fabulous

Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 452

(1980); Estuary Properties; Burrows v. City of Keene,._ N.H.

432 A.2d 15, 20 (1981). [See transcript of Hearing of March

11, 1975, at 43]. It is unreasonable and arbitrary for St.

John's to obtain property in order to regulate what it could

. 'h. A
r; '<

not regulate directly. See Cardon Oil Co. v. City of Phoenix,

122 Ariz. 102, 593 P.2d 656 (1979).

14. Even the valid exercise of t`-ne police power may

result in a taking. Graham v. Estuary Properties, Inc., 399

So.2d 1374, 1381 (Fla. 1981), citing Pennsylvania Coal Co. v.

Mahon, 260 U.S. 393 (1922). Accord, San Diego Gas & Elec. Co.

v. City of San Diego, 450 U.S. 621, 101 S.Ct. 1287 (1981);9/

Moviematic Industries Corp. v. Board of County Commissioners,

349 So.2d 667, 670-671 (Fla. 3rd DCA 1977); Kaiser Aetna v.

United States, 444 U.S. 164, 100 S.Ct. 383 (1979); Berman v.

Parker 348 U.S. 26 (1951); Devines v. Maier, 665 F.2d 138, 141-

142 (7th Cir. 1981); Hernandez v. City of Lafayette, 643 F.2d

1188, 1198 (5th Cir. 1981) Richmond Elks Hall Ass'n v. Richmond

Redevelopment Agency, 561 F.2d 1327, 1332 (9th Cir. 1977);

Benenson v. United States, 548 F.2d 939, 949, 212 Ct. Cl. 375

(1977); Bydion v. United States, 146 Ct. Cl. 764. 175 F.Supp.

891, 899 (1959); Ocean Acres Limited Partnership v. Dare County

Board of Health, 514 F. Supp. 1117, 1119-1120 (E.D.N.C. 1981);

State of Utah v. Andrus, 486 F.Supp. 995, 1011 (D. Utah 1979);

Arastra Limited Partnership v. City of Palo Alto, 401 F.Supp.

962 (N.D. Calif. 1975), vacated per stipulation, 417 F. Supp.

1125 (N.D. Calif. 1976); Eldridge v. City of Palo Alto, 51 Cal.

App. 3rd 726, 124 Cal.Rptr. 547, 556 (1975); Bartlett v. Zoning

Comm'n, 161 Conn. 24, 282 A.2d 907 (1971); Kasparek v. Johnson

County Board of Health, 288 N.W.2d 511, 517 (Iowa 1980);

Commissioner of Natural Resources v. V. S. Volpe Co., 206 N.E.2d

9/ The Supreme Court in San Diego Gas dismissed the appeal
because five justices held that the Supreme Court lacked
jurisdiction. The four dissenters, who would have held that
the Supreme Court had jurisdiction, went on to address the merits
of the appeal and, in doing so, approved Mahon. Justice
Rehnquist, who voted with the four justices that there was no
jurisdiction, indicated that if he had found jurisdiction he
"would have little difficulty in agreeing" with the dissenters.
Thus, five of the five justices who expressed an opinion on
the merits approved Mahon.

666 (Mass. 1965); Charles v. Diamond, 47 A.D.2d 426, 366 N.Y.S.2d

920, 925 (1975), modified, 41 N.Y.2d 312, 360 N.E.2d 1285, 382

N.Y.S.2d 594 (1977); Lutheran Church in America v. City of New

York, 35 N.Y.2d 121, 359 N.Y.S.2d 7, 15-16 (1974); Burrows v.

City of Keene, N.H. 432 A.2d 15, 19 (1981); Mattoon

v. City of Norman, 617 F.2d 1347, 1341 :4kDa. 1980); Steele

v. City of Houston, Tex. 603 S.W.2d 786, 789 (1980);

City of Austin v. Teague, Tex. 570 S.W.2d 389, 391-

392 (1978); San Antonio River Authority v. Garrett Bros., 528

S.W.2d 266, 273 (Tex. Civ. 1975); Harris, Environmental

Regulations, Zoning, and Withheld Municipal Services; Takings

of Property by Multi-Government Action, 25 ?la. L. Rev. 635,

691 (1973); Nichols, Eminent Domait, Vol. II, Section 6.35111.

15. There may be a taking even ir. the absence of

negligence, fault or wrongdoing by the State because the right

to compensation for taking is based upon the constitutional

prohibitions against takings without just compensation, not

on a tort theory. Holtz v. San Francisco Bay Area Rapid Transit

District, 131 Cal. Rptr. 646, 552 P.2d 430, 436 n.8 (1976);

Marin v. City of San Rafael, 111 Cal. App. 3d 591, 168 Cal.

Rptr. 750 (1980); Wireman v. City of Greenuo, 582 S.W.2d 48,

50 (Ky. 1979); B&W Const. Co., Inc. v. City of Lacey, 19 Wash.

App. 220, 577 P.2d 583, 585 (1978).

16. This Court may not, and will not, review the validity

of the permit denial, but the general background of the denial

of the permit, the delay, the grounds therefore, and the

subsequent granting thereof are relevant in determining, in

accordance with Estuary Properties, whether government action

has precluded a public harm, conferred a public benefit, advanced

the public health, safety, welfare an-d morals, or been arbitrary

and capricious. Zabel v. Pinellas County Water & Navigation

Control Auth., 171 So.2d 376 (Fla. 1965); City of Austin v.


Teague, 570 S.W.2d 389 (Tex. 1968); Charles v. Diamond, 47 A.D.2d

426, 366 N.Y.S.2d 920 (1975), modified, 41 N.Y.2d 318, 360 N.E.2d

1285, 382 N.Y.S.2d 594 (1977).


WHEREFORE, based upon the foregoing findings of fact

and conclusions of law, it shall be, and it hereby is,


1. The cumulative effects of the actions of the various

agencies of the State have rendered the lots of Cape Atlantic

Estates, described in Plaintiff's Exhibit 4, of no reasonable

use, the State has "taken" the lots, and Atlantic is

constitutionally entitled to compensation therefore.

2. The State shall institute eminent domain proceedings

against the lots described in Plaintiff's Exhibit 4 within 30

days of the date of this order. In determining just

compensation, there should be no diminution of value because

of the effects of the acts of the State or its agencies, which

have contributed to the taking, and the lots should be valued

as if they had been improved with graded dirt roads and surface

*water drainage as of the date of taking. The date of taking

is determined to be September 1, 1977.

3. The cumulative effects of the actions of the various

agencies of the State has rendered the lots in Cape Atlantic

Estates, owned by or under agreements for deed to the members

of the Simon class and Harold Housewart, of no reasonable use,

the State has "taken" those lots, and the members of the Simon

class and Mr. Housewart are constitutionally entitled to

compensation therefore.

4. The State shall institute eminent domain proceedings

against the lots owned or under current contract by the members

, >. *'-'1<^

of the Simon class and Harold Housewart, described in Exhibit

4, within 30 days of the date of this order. In determining

just compensation, there should be no diminution of value because

of the effects of the acts of the State or its agencies, which

have contributed to the taking, and the lots should be valued

as if they had been improved with graded dirt roads and surface

water drainage as of the date of taking. The date of taking

is determined to be September 1, 1977.

5. Jurisdiction is retained to determine reasonable

attorneys' fees for this portion of the case.

6. The motions for rehearing as to the dismissal of

the Department of Business Regulation and Volusia County are


DONE and ORDERED at Tallahassee, Florida, this 7 day

of May, 1982.



Daniel C. Brown, Esquire
Peter J. Winders, Esquire
Louis F. Hubener, Esquire
Charles G. Stephens, Esquire
Daniel D. Eckert, Esquire
John C. Briggs, Esquire
Cynthia S. Tunnicliff, Esquire