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The Waterview Towers Condominium Association, Inc. v. City of West Palm Beach

Florida Court of Appeals, Fourth District

November 1, 2017

THE WATERVIEW TOWERS CONDOMINIUM ASSOCIATION, INC., a Florida corporation not-for-profit, LAURA BENNETT, HELEN BOSSMAN, and THOMAS J. O'NEILL, individually, Appellants,
v.
CITY OF WEST PALM BEACH, a Florida Municipal Corporation, and PALM HARBOR HOTEL, LLC, a foreign limited liability company, Appellees.

         Not final until disposition of timely filed motion for rehearing.

         Appeal from the Circuit Court for the Fifteenth Judicial Circuit, Palm Beach County; Edward A. Garrison, Acting Circuit Judge; L.T. Case No. 50-2014-CA-005009-XXXX-MB.

          Robert J. Hauser of Pankauski Hauser PLLC, West Palm Beach, Robert Sweetapple of Sweetapple, Broeker & Varkas, PL, Boca Raton, and John R. Eubanks, Jr. of Breton, Lynch, Eubanks & Suarez-Murias, P.A., West Palm Beach, for appellants.

          K. Denise Haire and Douglas N. Yeargin, Office of the City Attorney, West Palm Beach, for appellee, City of West Palm Beach.

          Bruce S. Rogow and Tara A. Campion of Bruce S. Rogow, P.A., Fort Lauderdale, and Joseph Ianno, Jr. and Henry S. Wulf of Carlton Fields Jorden Burt, P.A., West Palm Beach, for appellee, Palm Harbor Hotel, LLC.

          Gross, J.

         We hold that unit owners and a condominium association have standing to enforce certain development restrictions contained in condominium documents, as defined in the declaration of condominium.

         Overview

         The property central to this litigation is owned by the City of West Palm Beach. It is bordered on the west side by Flagler Drive, on the east side by Lake Worth, on the north side by 5th Street, and on the south side by 1st Street.

         It is a single piece of property, divided into three parcels: R-1, C-1, and C-2. The parcels are aligned like this:

         (Image Omitted)

         Palm Harbor Hotel, LLC (the "Hotel") wants to build a hotel and parking garage on parcel C-2. The neighbors living in the condominium tower located on parcel R-1 oppose the Hotel's plans.

         This action was brought by The Waterview Towers Condominium Association, Inc. and three individuals who own residential units in the condominium (collectively, the "Plaintiffs") against the City and the Hotel. The Plaintiffs asked the circuit court to declare that the Hotel's plans violated development restrictions found in various documents.

         Historical Background

         In 1968, the City leased the parcel to the West Palm Beach Marina, Inc. for 99 years. In 1979, the City Commission passed Ordinance 1455-79 which permitted the City to amend the lease. The City, as lessor, and the Marina, as lessee, executed the "Consolidated and Amended Lease" (the "Lease"). Both parties to the Lease anticipated future development of the property. While a portion of the property was to be maintained as a marina, [1] the remainder of the property could be used in almost any manner.

         Article XXX, section 5 of the Lease is important because it contains two development restrictions the Plaintiffs seek to enforce in this action, the "View Restriction, " and the "Unanimity Provision." The relevant language reads:

         Art. XXX - Miscellaneous Provisions

It is further mutually covenanted and agreed by and between both of the parties hereto as follows:
* * *
Section 5. Lessee agrees that it will use good site planning and architectural design so that the buildings will fit into the character of the downtown area of West Palm Beach or enhance the same, and retain the waterfront characteristics of the area. There are 1, 573.35 feet of waterfront view, measured on a north-south line, presently existing, of which Lessee agrees to retain open and free from building obstructions as viewed from Flagler Drive [62.82%]. All development of the Leasehold Premises herein shall be pursuant to a site plan to be approved by resolution or motion of the City Commission unanimously passed, and any modification, change or amendment thereto shall require a unanimous vote of approval of same by the City Commission of the City of West Palm.[2]

         Under Article XXXVI of the Lease, entitled "Condominium Provisions, " the parties agreed that the entire property would be submitted to condominium ownership in accordance with the Condominium Act. The plan for the "leasehold condominium" was to divide the property into a residential and a commercial portion. The residential portion would be further divided into 132 units, and the commercial portion would be divided into two units. The operation of both the residential and commercial portions would be conducted by the Association.

         In addition to the development restrictions set forth above, the Plaintiffs sought a declaration that development of Unit C-2 is limited to a four-story building with surface parking only. The Plaintiffs' argument relies on the following language found under Article XXXVI of the Lease:

. . . The Commercial Portion will include boat dockage facilities, a marina office with related facilities, and surface parking; additionally, a commercial building having approximately one hundred (100') feet of frontage on Flagler Drive and not exceeding four (4) stories in height may be constructed on the Commercial Portion.

         The following definitions found within the "Condominium Provisions" of the Lease are relevant to this appeal:

l. "Condominium Documents" means in the aggregate the "Declaration" (as hereinafter defined), Articles, By-Laws, this Lease and all of the instruments and documents referred to therein.
* * *
q. "Lessee" means in the first instance West Palm Beach Marina, Inc. . . .; and in the second instance upon [the Marina's] assignment of the Lease . . . to LRI, "Lessee" means LRI; and finally, after Submission and upon assignment of the First Unit, "Lessee" means the Unit Owners.

         One of the documents "referred to" by the Lease is a site plan. In June of 1979, "Site Plan 7" was unanimously approved by the City Commission. The Plaintiffs argue that language in Site Plan 7 imposes the same four-story height restriction as well as a square footage restriction on the future development of Unit C-2. Site Plan 7 contains this "NOTE:"

THE COMMERCIAL STRUCTURE SHALL NOT EXCEED FOUR STORIES IN HEIGHT AND 20, 000 Sq. Ft. IN AREA. THE COMMERCIAL STRUCTURE MAY BE LOCATED ANYWHERE SOUTH OF THIRD STREET, PROVIDED ITS LOCATION IS IN COMPLIANCE WITH THE CITY OF WEST PALM BEACH ZONING ORDINANCES. LESSEE MAY BUT IS NOT REQUIRED TO BUILD THE COMMERCIAL STRUCTURE.

         Shortly after the Lease was executed, it was assigned by the Marina to Leisure Resorts, Inc. ("LRI"). In 1981, LRI established a condominium on the entire leased parcel by filing of the "Declaration of Condominium of The Waterview Towers, A Condominium" (the "Declaration"). The condominium, including residential and commercial units, was named "The Waterview Towers, A Condominium."

         Although not attached to the Declaration, the Lease is referenced throughout the document and, significantly, the Lease and all documents referenced therein are included in the Declaration's definition of the term "Condominium Documents:"

l. "Condominium Documents" means in the aggregate this Declaration, the Articles, By-Laws, the Lease and all of the instruments and documents referred to therein.

         In addition to the development restrictions in the Lease (and its referenced documents), the Plaintiffs sought a declaration that development of Unit C-2 is limited to a single commercial building, not exceeding seventy-five feet in height, with no more than one-hundred feet of frontage along Flagler Drive. The Plaintiffs' argument relies on the following language of the Declaration:

. . . The Commercial Unit, designated as "C-2" on the Survey shall contain parking facilities which may be used as determined by the C-2 Commercial Unit Owner and the Developer reserves the right for and on behalf of the C-2 Commercial Unit Owner to construct a commercial building ("Commercial Structure") within the C-2 Commercial Unit not exceeding seventy five (75') feet in height with approximately one hundred (100') feet of frontage on Flagler Drive.

         More than 25 years after establishing the condominium, in 2007, LRI sold parcels C-1 and C-2 to Leisure Resorts, LLC ("Leisure Resorts"). The parties executed a Warranty Leasehold Estate Deed and Partial Assignment of Lease Agreement which transferred all of LRI's interest in parcels C-1 and C-2, including "any and all remaining rights . . . held by Grantor as 'Developer' under the Declaration and/or as the owner of the Units."

         Current Dispute

         In 2009, the City and Leisure Resorts executed a Development Agreement recognizing Leisure Resorts' intent to develop Unit C-2 to include a hotel and a parking garage (the "Development Agreement"). A diagram titled "Site Plan No. 8" was attached to the Development Agreement. The conceptual site plan had been approved by Resolution 239-07 in 2007 by the City Commission.

         In the Development Agreement, the City gave "conceptual approval" to development of Unit C-2 in accordance with Site Plan No. 8. Both parties agreed to "work cooperatively for a period of up to three (3) years ... towards a revised site plan ... in lieu of [Site Plan No. 8]."

         In the Development Agreement, the City expressly waived any right it may have had as Lessor to enforce the provisions of Article XXX, section 5 of the Lease "with respect to the Approved Site Plan [Site Plan No. 8] or any Revised Site Plan."[3] The City and Leisure Resorts also agreed that the Development Agreement did not "constitute an amendment or modification of any of the terms and provisions of the Consolidated Lease, " and none of the Condominium Documents were modified or amended to reflect the new development plan for Unit C-2.

         After executing the Development Agreement, Leisure Resorts subleased Unit C-2 to the Hotel. The sublease is subject to the terms and conditions of the Lease, the Declaration, and the Development Agreement.

         Sometime in 2013, the Hotel applied to rezone Unit C-2 so it could build an eight-story hotel with an attached three story parking garage. The City approved the rezoning.

         Because of their opposition to the proposed development of Unit C-2 (which had been a parking lot since the early 1980's), the Association and two R-1 unit owners filed a petition for writ of certiorari in the circuit court. A three judge panel ruled that the petitioners were denied due process by the City and quashed the 2014 Development Orders. The circuit court appellate panel held that the Association and R-1 Unit Owners had standing to participate in the "quasi-judicial" zoning proceedings due to their special relationship with the land.

         In this case, the Plaintiffs sought a declaration that the Association and Unit Owners have the right to enforce the development restrictions found in the referenced documents and that ...


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