Multiple Appraisals can Satisfy the Bert J. Harris, Jr., Private Property Rights Protection Act’s Presuit Appraisal Requirement

The First District Court of Appeal dropped a decision dealing with the presuit appraisal requirement under the Bert J. Harris, Jr., Private Property Rights Protection Act.

Under the state and federal constitutions, a landowner may be able to sue the government in inverse condemnation when its regulation of property goes too far. Traditional regulatory taking cases are difficult for landowners to win, however, because they have to prove that a regulation is so onerous that it virtually denies all use or value of property – in other words, the regulation makes the property almost valueless. Stated in non-lawyerly terms, to win a regulatory taking case an owner must essentially prove that a regulation’s impact on property is tantamount to the government physically taking an owner’s land.

To fix this problem, the Florida Legislature enacted the Harris Act, creating a new statutory remedy to give inordinately burdened property owners a new day in court. The Harris Act lowers the threshold for owners when a land use regulation, according to the law, “inordinately burdens”, existing or vested property uses. Court decisions define inordinate burdens. Under the Harris Act, owners don’t have to prove that a regulation effectively deprives them of nearly 100 percent of their property’s value. Before filing a Harris Act lawsuit, an owner has to serve a local government with a notice of claim and an appraisal documenting the inordinate burden.

In Blue Water Holdings SRC, Inc., v. Santa Rosa County, ___So.3d____, 2021 WL 5816416 (Fla. 1st DCA 2021), the District Court discussed the Harris Act’s requirement of submitting a bona fide, valid appraisal demonstrating an inordinate burden.  Blue Water sued under the Harris Act for the loss in value of its 158-acre parcel in Santa Rosa County based on a February 2013 denial of a permit to construct and operate a landfill. In March of 2013, Blue Water served its presuit notice and a total of three appraisals, two appraisals from Richard Sterner (“Sterner appraisals”) demonstrating the property’s value with the permits and a third, an EquiValue appraisal, demonstrating the property’s value without the permits.

The Court’s decision is sparce on details. Blue Water pieced together a “before and after” valuation scenario using these three appraisals. The Sterner appraisals included a 2008 appraisal of the real property and a 2011 update prepared at the request of the owner’s lender. The difference between the Sterner appraisals and the EquiVlaue appraisal represented what Blue Water contended was the dollar amount of the inordinate burden caused by the permit denial. The Sterner opinion was $9,858,410.00 with the permits; the EquiValue opinion was $2,700,000.00 without the permits. The difference was $7,158,410.00. During the lawsuit, Blue Water applied for a new operating permit, which the County granted in September 2017. Blue Water filed a second amended complaint to claim damages for the  inordinate burden during the temporary delay from February 14, 2013, when the permit was denied, to September 14, 2017, when it was granted. That’s when the case got really interesting. The County moved to dismiss the second amended complaint, claiming that the appraisals were inadequate. The trial court denied the motion to dismiss, but later granted the County summary judgment because of the lack of valid appraisals.

The District Court was not at all happy with the County’s litigation shenanigans. The County objected to the piecemeal appraisal approach Blue Water used to support its notice of claim. On appeal, it also argued that none of the appraisals was temporally related to the date of the permit denial. It further argued that, even if any of the three reports were valid, bona fide appraisals, Blue Water did not present any evidence of the loss in fair market value to the property because there were no valuations of the real property after the County denied the permit. I suspect that the County argued that the Harris Act required one complete appraisal with a “before and after” analysis of the property’s value with and without the restriction. Probably, the County’s position was that, since one before and after appraisal was required, it could not be cured after suit.

“Not so fast,” said the learned appellate judges. They were taken aback by the County’s years’ long delay in objecting to the appraisals. Before turning to the merits of Blue Water’s appeal, they noted the County received the appraisals when Blue Water gave its notice in 2013. The County did not complain then that they were inadequate. After Blue Water filed suit, it amended the complaint in 2014. Although the County also moved to dismiss the amended complaint, the County didn’t argue that the appraisals were inadequate. Not until 2018, after Blue Water filed its second amended complaint, did the County argue that the appraisals were inadequate – five years after Blue Water filed its Harris Act suit!

The judges rejected the County’s arguments one by one. They noted that the purpose of the appraisals under the Harris Act was merely to provide notice to the government in order to evaluate the claim. It was clear that the County was on notice of the loss in fair market value before Blue Water’s suit and accepted the validity of the appraisals for at least five years. They also found that the trial court erred by adding a requirement that the appraisals must be prepared specifically for Blue Water as of dates immediately before and after the date the County denied the permit. According to the judges, when an appraisal is prepared by a professional appraiser for a bank or other entity, so long as it appraises the fair market value of the land, it meets the requirements of the Harris Act. Similarly, the appraisals must demonstrate a loss in value tied to the government’s action so as to allow the government to evaluate the claim. The judges acknowledged that, while an appraisal that shows the value of the land immediately before and after the government’s action is ideal, the Harris Act didn’t require that. Finally, they rejected the trial court’s conclusion that the appraisals were invalid because they wouldn’t give a jury sufficient information to return a verdict. They observed that an appraisal was merely a presuit requirement to put the government on notice of the claim and allow it to evaluate the claim. The appraisal requirement in no way limited the evidence that could ultimately be presented to the jury.

Jay Small practices in the areas of eminent domain, condemnation, property rights, inverse condemnation, and land use law. If you have any questions about how government regulations can affect your property, contact him at (407) 425-9044, by email at [email protected], or follow him on LinkedIn.

This blog and these materials are not intended to provide legal advice. They do not represent the legal opinions of the firm, nor should they be regarded as the legal positions of any client of the law firm of Mateer Harbert, P.A. They are provided for general informational purposes only. These materials should not be used as a substitute for the advice of qualified legal counsel.

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