The flailings of Lee County, South Seas
To the editor:
The snowbirds have flown north for the summer, leaving behind locals, lizards, and (thanks to relentless Lee County/South Seas efforts to bloat the once-legendary Captiva resort) a whole lot of lawyers. In keeping with the season, some of their legal efforts are downright silly, and will be given the scant attention they deserve. Then we can move on to more serious fare, and sink our teeth into important, interesting issues affecting the future of Captiva.
Working from the bottom up, Item #1 is a new lawsuit brought by the owners of South Seas against the Captiva Civic Association (CCA), a venerable community group opposing the resort’s proposed hyperdevelopment. The suit alleges that the CCA solicited donations to its Protect Captiva arm by stating that hotel rooms are counted toward the resort’s longstanding 912-unit limit, which the CCA is defending. South Seas wants any funds garnered using this supposed misinformation returned to their donors.
The problem for South Seas is that hotel rooms have in fact been included in the resort’s unit count for a half-century. That fact is unmistakably displayed in county documents governing the resort, publicly conceded by county and resort officials, and recently confirmed by state administrative and Circuit Court judges. Its obvious truth is implicitly acknowledged by South Seas’ fight to overturn the 912-unit limit in court: that wouldn’t be necessary if hotel rooms weren’t included in the unit count. Item #1 appears to be a frivolous lawsuit on stilts, and the CCA will be seeking costs and fees upon its dismissal.
Item #2 is an appeal by South Seas of a trial court order upholding the permanent 912-unit limit for the resort. The limit was agreed to in 2003 through a legal settlement between the resort, county and CCA. Its enforcement mechanism is a prohibition against the county ever issuing building permits for the resort that would result in more than 912 units. Last year — as the county prepared to consider a resort application for far more than 912 units — the CCA asked the Circuit Court to declare the validity and enforceability of the 2003 agreement, and succeeded.
The South Seas appeal argues that the 2003 agreement only applied to the resort owners of that time, and not to subsequent owners. The text and context of the settlement agreement do not support the resort’s position. If it were true, the 2003 resort owners could simply have changed nominal ownership as the ink dried, voiding the contract. The South Seas appeal is so unfounded, the county in its separate but concurrent appeal of the settlement agreement prudently submits to the court that it “is taking essentially a neutral position on the issue” the resort has lamely raised. Item #2 appears to be a frivolous appeal on stilts.
Item #3 is the county’s appeal of the trial court’s order upholding the 2003 settlement agreement. Rather than use its own attorneys, the county tapped a prominent statewide appellate law firm to do the heavy lifting. The county’s original trial strategy was to throw everything at the wall, to see what might stick. The new attorneys have instead shed some of the less tenable arguments, narrowing their appeal to three basic prongs.
Let’s take a look at the three different paths the county is offering for the appeals court to find in its favor:
– DOOR #1: REINTERPRET THE LANGUAGE OF THE SETTLEMENT AGREEMENT
Readers may recall that in the June 5, 2024, issue of the Island Reporter, I wrote a letter to the editor analyzing the county’s defense against the CCA’s lawsuit (“County to CCA: Heads We Win, Tails You Lose”). Since the county’s trial and appellate briefs share so much content, in order not to repeat my rebuttals, I’ll offer a link here to last year’s letter and focus on the new elements in the county’s appeal: https://www.captivasanibel.com/opinion/letters-to-the-editor/2024/06/county-to-cca-heads-we-win-tails-you-lose/.
My letter took a deep dive into paragraph 3 of the settlement agreement, whose interpretation is the crux of the textual dispute and reads in relevant part:
“The total number of dwelling units on South Seas Resort is limited to 912. No building permits may be issued by County for dwelling units within South Seas Resort that will cause that number to be exceeded at any time. CCA and Kelly (a co-plaintiff) agree that the unit count in Determination #1 of the July 30, 2002 Administrative Interpretation will control and is the basis for future development of South Seas Resort.”
The county’s appeal concentrates its textual arguments on the contention that “at any time” is an “isolated phrase” that only referred to the period during which the then-existing zoning — capping resort units at 912 — remained in effect. In other words, if the county passed new zoning for South Seas (as it did in 2023), paragraph 3’s limitations no longer apply:
“The second sentence addresses only the ‘building permits’ that could be lawfully issued ‘at any time’ under the then-existing ordinances.”
The problem with this interpretation is the dearth of supporting language. The plain language of paragraph 3 is, well, plain enough, and would need some countervailing passages to convince us otherwise. The third sentence of the paragraph further contradicts the notion that a zoning change could erase the 912-unit limit. It states without qualification that the county’s official 912-unit count “will control and is the basis for future development of South Seas Resort.”
The county attempts to explain away the third sentence by misrepresenting it: “Indeed, the next sentence merely explains that the parties to this contract will rely on the unit count in the Administrative Interpretation that was disputed in the lawsuit to determine the number of existing dwelling units.” If the purpose of the sentence is simply “to determine the number of existing dwelling units,” why does it say that “the unit count … will control and is the basis for future development” at the resort? The sentence doesn’t “merely explain” an agreement on the existing unit count: the count is clearly prescriptive of the resort’s future, its “basis for future development.”
Moreover, if paragraph 3 means something very different from its plain English, one must ask: why didn’t anyone — especially the county — add clarifying language spelling out that the 912-unit limit was only dictated by the existing zoning, and that the zoning and unit limit can be changed through a public-hearing process?
The county commissioners publicly reviewed and accepted the settlement agreement without making any changes to the mediated language. There was no deadline for the commissioners and county attorneys to complete the process, and therefore every opportunity to tweak the text. If all parties to the agreement understood that the 912-unit limit was only applicable to the existing zoning, which could be changed over time, there would be no reason for anyone not to accordingly agree to clarify the language. And yet there is no evidence of even a discussion of altering the text to spell out the meaning that the county would now, 23 years later, attempt to graft onto the document.
In the absence of textual support for their interpretation, the county’s appeal resorts to disparaging the concise, unadorned document that the county was mutually responsible for creating. It is repeatedly diminished as a “private contract,” when one of the signatories is Lee County, a public agency. The attorneys take exception to its being filed with circuit court, but not with the county recorder’s office:
“The Mediation Agreement is simply a private contract between CCA, Mr. Kelly, and Lee County that is filed in a closed court file.”
They also question why the Circuit Court would retain jurisdiction over enforcement of the settlement: “It makes little sense that the circuit court would, apparently, have continuing jurisdiction over any enforcement of the Mediation Agreement in perpetuity.” Other loose ends are noted: “It provides for the preparation of a ‘Final Judgment’ for the judge to sign. But that was never done.” What the appellate attorneys fail to acknowledge is that the county was equally responsible for all aspects of the final product, and as co-equal signatories cannot blame others for the contract’s supposed deficiencies in order to belatedly diminish its validity.
– DOOR #2: DECLARE THE SETTLEMENT AGREEMENT AN ILLEGAL CONTRACT
At trial, and again on appeal, the county argues that it unlawfully exceeded its own authority in two different ways when entering the settlement agreement. First, it alleges it wrongly ceded planning authority over South Seas (one of its police powers) to the CCA. Second, that it engaged in “contract zoning.” Both of these arguments are answered at some length in my letter from last year, and will be dealt with more briefly here. We will begin with a very important point, that neither of these wrongs — ceding police powers or contract zoning — depends on a temporal aspect. That is, each practice is unlawful regardless of its duration: whether for all of eternity or a New York minute, the practices are impermissible. The timeframe is irrelevant.
This introductory point is so important because the county is using the permanence of the prohibition against South Seas having more than 912 units as an extra-legal red herring. By my count, not including direct quotes from or references to the actual language of the settlement agreement, the county’s appeal includes 38 separate locutions emphasizing the permanence of the prohibition. Words and phrases such as “never,” “ever,” “perpetual,” “forever,” “indefinite future,” “permanent,” “in perpetuity,” “unamendable,” “never, for the rest of eternity” and so on are sprinkled throughout the document. The appeal describes the settlement’s consequences as “drastic,” “extraordinary” and “absurd,” terms that are emotional and inflammatory, but without legal value.
The purpose of this handwaving is to create a smokescreen, distracting the appellate judges from the fact that the illegalities the county accuses itself of committing — and thus getting off the hook of its contractual obligations — should be considered irrespective of the duration of their commitments or consequences. So let’s look at each alleged illegality that would invalidate the settlement agreement.
First up is the assertion that the county wrongly gave (or ceded, or transferred) the CCA its sovereign police powers (in this case, authority over development at South Seas). The legal fallacy here is conflating an agreement to make changes to the exercise of police powers, with giving the exercise of those police powers away to someone else. The CCA did not acquire police powers through the settlement agreement. It did acquire the legal power to enforce the promises the county made in the settlement agreement. I gave a few examples in my prior piece distinguishing between a government agency agreeing to modify exercise of its police powers, versus giving away exercise of those police powers to someone else. Here’s a simple situation many American cities have faced, to illustrate the distinction:
Imagine that a driver is pulled over by a police cruiser, and dies in the resulting interaction. An investigation ensues. Witnesses and physical evidence indicate the police officers may have been culpable, but no charges are brought. The family of the deceased sues the city. They’re offered a financial settlement, but they want more. They want to know this will be less likely to occur again. And what really eats away at them is they’ll never know exactly what happened. As a corrective, the city offers to mandate police bodycams and dashcams. The family agrees, but wants some way to enforce the new rules. They’re just a family, so they suggest a community watchdog group be given oversight of the new bodycam/dashcam practices, with a straightforward legal process to compel enforcement. The city agrees.
What just happened? As in almost all lawsuits against a government agency over exercise of its police powers that end in a settlement agreement, the government voluntarily agreed to modify (and hopefully improve) exercise of those powers. There must be some legal enforcement mechanism, delegated either to a specific individual or organization, or to the general public, to ensure the government keeps its promises. Otherwise, it’s all hot air. In the case at hand, the CCA didn’t acquire any police powers. It did acquire — through agreement with the county and resort — the legal ability to compel obedience to the promises made therein.
“Contract zoning” is the second illegality the county accuses itself of committing, in order to invalidate the settlement agreement. To begin, how are zoning approvals properly accomplished? A jurisdiction publicly considers an application for a zoning change, compares it to relevant codes and regulations, factors in special circumstances, takes public comment, then approves or denies the application. If approved, a number of conditions for completion are typically attached.
Contract zoning subverts this public process: the jurisdiction comes to a private agreement with the applicant; the approval will be granted in return for certain measures taken by the applicant. In common parlance, they cut a deal, a bargain, based on a quid pro quo.
That bears no resemblance to what happened here. Now the reader will see why the county repeatedly calls the settlement agreement a “private contract,” when in fact it involved a public agency, a public trial, and public approvals by the county commissioners and Circuit Court judge. There wasn’t anything private at all about the agreement, but tarring it with that brush helps to mischaracterize it as contract zoning.
The differences between the settlement agreement and examples of contract zoning are so rife, the county appeal at one point admits ” … CCA is technically correct that its contract falls outside the literal definition of ‘contract zoning’ …” ‘Nuff said.
Before going to Door #3, let’s circle back to the “forever” component of the settlement agreement, where the county is permanently barred “at any time” from permitting more than 912 units at South Seas. We’ve seen that the duration of that provision has no bearing on whether the county unlawfully ceded its police powers or engaged in contract zoning. The county appeal waves around the “forever” component for dramatic — not legal — effect. But we should ask an important question anyway: can counties, or any other federal, state or local agencies, ever voluntarily (and lawfully) agree to “forever” limitations on their powers to regulate property development? The answer is that they’ve done so many thousands of times, with plenty more to come. Here’s why:
It’s hard to find much in this life that lasts forever, until we consider real estate, where our society has deeply woven “forever” into property law for centuries. The most ubiquitous example is the easement, which allows a property owner to grant a perpetual right or interest in land to someone else. The beneficiary is the “easement holder,” with the legal ability to enforce the provisions of the easement. The beneficiary may assign a third party as the easement holder. Easements “run with the land,” that is, they’re intended to last forever, binding all successor owners of the property to the terms of the easement. Easements are protected from contravention by government: no government agency may lawfully regulate development of any property such that the provisions of its easements are ever violated.
Conservation easements are a special type of restriction intended to preserve property. When a property owner wishes to conserve their land in perpetuity, they can create a conservation easement, with the assigned holder (i.e., overseer and enforcer) being usually a government agency or conservation group.
Federal and state government is very keen to encourage conservation easements: the IRS and a number of state tax agencies have longstanding policies offering massive tax benefits to property owners in return for creating conservation easements. This is a glaring example of government voluntarily accepting limitations on its police powers of regulating property development. Every time government financially induces a property owner to create a conservation easement, government willingly ties its hands forever (i.e., limits its police powers) with respect to what development decisions it can make concerning that property.
There can be no clearer proof of government’s lawful ability to voluntarily and permanently limit its power to regulate property development than the existence of tax laws that financially benefit property owners for doing exactly that, through the creation of conservation easements. Government programs to financially incentivize conservation easements are basically paying property owners to forever restrict their police powers to regulate development.
Government agencies also voluntarily restrict their powers to regulate development on properties they own or acquire, by placing conservation easements on the government-owned property, designating themselves or someone else as the easement holder. In these types of conservation easement situations, government is voluntarily creating perpetual development restrictions on public lands it owns. Government creating conservation easements on properties it owns, or incentivizing private property owners to create conservation easements, are both common practices wherein government is willingly — and permanently -limiting its power to regulate property development.
– DOOR #3: REMAND THE CASE TO TRIAL COURT FOR EVIDENTIARY HEARINGS
This is a new twist. At trial court, the county and the CCA didn’t dispute the facts surrounding the settlement agreement, arguing solely over its interpretation and legality. No oral testimony was taken. County appellate attorneys are now saying that if the judges don’t find the county acted unlawfully, thereby creating an illegal contract, and the meaning of the settlement’s text is uncertain, send the case back down for evidentiary hearings “to explain its meaning.”
The most important question an evidentiary hearing would attempt to answer is how paragraph 3 came into existence during mediation. More exactly, which party introduced its crucial second sentence, the one that restricts the county from permitting more than 912 resort units “at any time.” It is unlikely any physical record of the sentence’s origins will ever surface, and oral testimony on events from 23 years ago is unreliable. We will need to proceed from inference.
Fortunately, there are only three possibilities, and two of them are improbable. First, the county would not have been motivated to offer a permanent cap on resort development. Then as now, the county has always been reliably pro-development. What the county wanted out of the settlement was an assurance that its latest agreements with the resort, and interpretations of its development, would avoid going through public hearings.
As the county’s appeal emphasizes, the CCA’s complaint had just two counts: lock-out units breach the 912-unit limit and should be disallowed; and the county’s agreements with the resort and interpretations of its development should go through public hearings. The CCA was worried about contract zoning, that the county and resort were making agreements about development approvals without public participation.
The mediator was court-appointed and (we may assume) professionally trained. The first task of a court mediator is to keep the participants focused on the subjects at issue in the lawsuit. Any attempts to introduce fresh demands would predictably be shut down as out-of-bounds. That is why it’s improbable that the CCA introduced a new demand that the 912-unit limit become permanent. And as the county’s appeal observes, any attempt by the CCA to make such a demand as a third count in the lawsuit would have been a long shot.
That leaves the resort. An evidentiary hearing would certainly uncover the reasons for the flurry of development activity at the resort around the turn of the century. The original longtime owner/developers had sold to another outfit, who then teamed up with deep-pockets investors to spend some real money and bring the resort roaring into the new century. Hence their elaborate discussions with the county over what was and wasn’t allowed, and what the future of the resort would look like.
The CCA’s lawsuit was sand in the gears. Their first demand, to eliminate lock-out units, was an easy giveaway for the resort: it had built those condos and sold them off; no skin off its back. The second demand, to subject the agreements and interpretations the resort had been working on with the county to public hearings, was a big problem. It would set the improvements project back timewise, and who knows what might crawl out from underneath the rocks the CCA and the public would turn over.
South Seas’ new owners, like its original owner/developers, were convinced of the historic low-rise, low-density development concept of the resort. They planned to build new pools, restaurants, and other amenities; the only new units they wanted were some larger timeshare units. None of the planned new development risked exceeding the 912-unit limit.
It makes the most sense that it was the resort’s idea to make the 912-unit cap permanent. They already believed in it, were committing millions to the resort’s modernization without seeking a rezoning, and it would certainly make the CCA go away. That’s why the settlement agreement has specific language wherein the CCA retracts its demand for the county/resort agreements and development interpretations to go through public hearings. The CCA also specifically promises not to oppose permits for the new timeshares. In short, by offering something they already believed in, the resort greenlighted everything they were trying to accomplish. Enforcement was ensured by the county agreeing not to issue permits that would ever violate the 912-unit cap.
The inferences that the resort introduced the “at any time” sentence are persuasive, and their plausibility helps to flesh out what probably transpired in mediation. The resort’s key role in the negotiations is now being overlooked in large part because the current lawsuit under appeal is between the county and CCA (the resort can only participate as intervenor). For example, the county’s appeal twice states that “There is no dispute that the Mediation Agreement is a private contract between CCA and Lee County settling that lawsuit,” with no mention of the resort, which is treated like the poor cousin in this saga, along for the ride. But that doesn’t matter: the resort, like the county and CCA, signed on to the “forever” provision, most likely at its own behest.
A large irony in overlooking the resort’s fulcrum role in 2003 is that the poor cousin had an impeccable authority to restrict South Seas’ future development, precisely because it was the owner. As we saw above with conservation easements, property owners can encumber their properties, and future owners, with restrictions and limitations that run with the land in perpetuity. In fact, the settlement agreement closely conforms with Florida’s statutory definition of a conservation easement, which lists “maintaining existing land uses” that “limits construction or placing of buildings” as one of its accepted purposes.
One could counter that while the settlement agreement might be the functional equivalent of a conservation easement, it doesn’t declare itself as such. The statutory language is however quite flexible concerning the form by which the easement may be created:
“Conservation easements are perpetual, undivided interests in property and may be created or stated in the form of a restriction, easement, covenant, or condition in any deed, will, or other instrument executed by or on behalf of the owner of the property.”
The “other instrument” in this case is not a handwritten note found in a shoebox: it is a legal settlement agreement whose authenticity no one has yet had the temerity to question. Florida law states without qualification that “Conservation easements shall run with the land and be binding on all subsequent owners.”
The settlement agreement has other structural similarities with a conservation easement, in that the CCA and county are the functional equivalents of easement holders: “Conservation easements may provide for a third-party right of enforcement,” which may be “enforced by injunction or proceeding in equity or at law.”
On that subject, the county speculates that the CCA as an overseer in the settlement agreement could choose to selectively enforce its strictures. The county even suggests that the CCA might extort property owners whose building projects would violate the 912-unit limit: if the CCA’s extortionate demands aren’t met, it will enforce the agreement; if the property owner plays ball, the CCA will look the other way.
Of course this is an utterly baseless suggestion, coming from a county that is practicing selective enforcement before our very eyes. Does the county not have a mirror, to see that disregarding the settlement agreement, passing ordinances violating its provisions without mentioning its existence, and then spending millions in court attempting to have it invalidated, is in itself selective non-enforcement?Finally, based on the evidence before us, is the agreement the county attempts to ignore and erase not a de facto conservation easement in all but name, a functional equivalent that shares all its essential characteristics? And if it walks like a duck, and quacks like a duck, is it not indeed a duck?
Don Bacon
Montara, California