Petition for Writ of Certiorari — Lemon Bay Cove, LLC, Petitioner v. United States

1

TABLE OF CONTENTS

Page

U.S. Court of Appeals for the Federal Circuit

No. 2022-2242, Judgment,

filed March 6, 2024 ............................................. la

U.S. Court of Federal Claims, No. 17-436L,

Judgment, filed July 15, 2022 ............................ 3a

U.S. Court of Federal Claims, No. 17-436L,

Post-Trial Opinion, filed July 15, 2022 .............. 4a

U.S. Court of Federal Claims, No. 17-436L,

Notice of Appeal, filed September 13, 2022 ..... 61a

Appendix la

Filed 03/06/2024

NOTE: This disposition is nonprecedential.

United States Court of Appeals

for the Federal Circuit

LEMON BAY COVE, LLC,

Plaintiff-Appellant

v.

UNITED STATES,

Defendant-Appellee

2022-2242

Appeal from the United States Court of Federal

Claims in No. 1:17-cv-00436-MCW, Senior Judge

Mary Ellen Coster Williams.

JUDGMENT

DAVID SMOLKER, Smolker Mathews, LLP, Tampa,

FL, argued for plaintiff-appellant.

ANDREW MARSHALL BERNIE, Environment & Natural

Resources Division, United States Department of

Justice, Washington, DC, argued for defendantappellee. Also represented by MICHAEL THOMAS

Appendix 2a

GRAY, THEKLA HANSEN-YOUNG, TODD KIM,

BENJAMIN RICHMOND.

CHRISTOPHER KIESER, Pacific Legal Foundation,

Sacramento, CA, for amicus curiae

Pacific Legal Foundation.

THIS CAUSE having been heard and considered, it

1S

ORDERED and ADJUDGED:

PER CURIAM (MOORE, Chief Judge, CLEVENGER

and CHEN, Circuit Judges).

AFFIRMED. See Fed. Cir. R. 36.

ENTERED BY ORDER OF THE COURT

March 6. 2024

Date

Jarrett B. Perlow

Clerk of Court

Appendix 3a

In the United States Court of Federal Claims

No. 17-436L

Filed: July 15, 2022

LEMON BAY COVE,

LLC,

JUDGMENT

v.

THE UNITED

STATES

Pursuant to the court's Post-Trial Opinion, filed

July 15, 2022,

IT IS ORDERED AND ADJUDGED this date,

pursuant to Rule 58, that judgment is entered in favor

of defendant.

Lisa L. Reyes

Clerk of Court

By: s/ Debra L. Samler

Deputy Clerk

NOTE: As to appeal to the United States Court of

Appeals for the Federal Circuit, 60 days from this

date, see RCFC 58.1, re number of copies and listing

of all plaintiffs. Filing fee is $505.00

Appendix 4a

In the United States Court of Federal Claims

No. 17-436L

(Filed: July 15, 2022)

***************

LEMON BAY COVE,

LLC,

Plaintiff,

v.

THE UNITED

STATES,

Defendant.

***************

*

*

*

*

*

*

*

Fifth Amendment

Taking: Army

Corps of

Engineers' Denial

of Permit to

Bulkhead and Fill;

*

*

David Smolker and Allison Doucette. Smolker

Mathews, LLP, 100 S. Ashley Drive, Suite 1490,

Tampa, FL 33602, for Plaintiff.

Jean E. Williams, Frank J. Singer, Claudia

Antonacci Hadjigeorgiou, and Hayley A. Carpenter,

United States Department of Justice Environment &

Natural Resources Division, Natural Resources

Section, P.O. Box 7611, Washington, D.C. 20044, for

Defendant.

David J. Deerson, Pacific Legal Foundation, 930 G

Street, Sacramento, CA 95814, for Amicus Curiae

Pacific Legal Foundation, Rodney E. Shands, Robert

E. Shands, Robert E. Shands, Jr., Anna Kathryn

Shands Edwards, and Thomas A. Shands.

Appendix 5a

POST-TRIAL OPINION

WILLIAMS, Senior Judge.

This Fifth Amendment taking case comes before

the Court following a trial on liability and damages.

Plaintiff, Lemon Bay Cove, LLC ("Lemon Bay"), seeks

$3,800,000 as just compensation for a taking of its

property containing submerged land and mangroves.

Alleging a categorical taking claim, Plaintiff contends

that the United States Army Corps of Engineers'

denial of a permit to bulkhead and fill 2.08 acres

deprived it of all economically beneficial use of its

land. Alternatively, Plaintiff claims the denial of the

permit was a regulatory taking under Penn Central

Transportation Company v. City of New York. 438

U.S. 104 (1978), in light of its distinct investmentbacked expectations, the character of the

governmental action, and the permit denial's

economic impact.

Although the Corps' permit denial prevented

Plaintiff from developing the project it proposed,

Plaintiff has not established that this discrete permit

denial deprived Plaintiff of all beneficial economic use

of its property. Despite the Corps' repeated requests

that Plaintiff minimize its footprint on the wetlands,

Plaintiff never sought a permit for a development with

less impact on wetlands and protected species.

Rather, Plaintiff persisted in requesting a 12-unit

2.08-acre development to meet its own financial

needs. As such, Plaintiff has not demonstrated a

categorical taking that denied all potential

Appendix 6a

development or all productive

beneficial use of its land.

or economically

Nor has Plaintiff demonstrated the elements of a

regulatory taking. First, Plaintiff failed to establish

that

it

had

reasonable

investment-backed

expectations in its development project because as

Plaintiff knew, both federal and state regulatory

regimes imposed significant restrictions on

developing wetlands that could ultimately prevent it

from developing the land. Second, Plaintiff failed to

demonstrate that the governmental action of

protecting wetlands resulted in a disproportionate

burden on Plaintiff which should have been borne by

the public. Finally, Plaintiff failed to demonstrate a

substantial economic loss attributable to the Corps'

permit denial as there were other state and local

hurdles affecting its development that Plaintiff had

not met.

Findings of Fact 1

Lemon Bay's Acquisition of the Property

Plaintiff Lemon Bay is a limited liability company

that owns 5.64 acres of submerged lands, mangroves

and scattered isolated uplands on Sandpiper Key in

Charlotte County, Florida. Tr. 55-56; JX 140 at 16.

Lemon Bay was formed in 2011, solely for the purpose

of developing this property. Tr. 57-58. Dominik

Goertz is the day-to-day managing member and

1 These findings of fact are derived from the record developed during a 1Oday trial, which took place via Zoom videoconferencing. Additional

fmdings of fact are in the Discussion section. The Court uses "PX," "DX"

and "JX" to designate exhibits admitted during trial and "Tr." to cite trial

testimony. The parties' Stipulations of Fact (ECF No. 111) are cited as

"Stip." Grammatical errors in quotations from the record have not been

corrected.

Appendix 7a

authorized agent of Lemon Bay and was Lemon Bay's

corporate representative in this proceeding. Tr. 55;

Stip. ,r 42. Mr. Goertz also has been a consultant and

financial advisor to I.H.T. Corporation, a Florida real

estate company owned by his business partner. Tr. 57;

Stip. ,r 42.

The property at issue consists of three parcels and

abuts and lies partially beneath the tidal waters of

Lemon Bay. Stip. ,r 3. In 1986, the Florida legislature

designated the submerged lands in the Lemon Bay

estuarine system as the Lemon Bay Aquatic Preserve.

Stip. ,r 4. The property is comprised of tidal habitats

such as tidal flats, seagrass beds and mangroves, and

the submerged part of the property serves as a habitat

for birds, fish, sea turtles and the West Indian

manatee. Stip. ,r,r 5, 7.

In 1954, Earl Farr purchased the entirety of

Sandpiper Key, containing 33.2 acres, from the

Florida Trustees-the Florida Governor and Cabinet.

JX 2; Tr. 338. In 1955, Mr. Farr sold the entire tract

of land, a portion of which contained the Lemon Bay

property, to John Stanford. JX3. In 1960, Charlotte

County granted Mr. Stanford a permit to fill "portions

of the parent tract, including the [Lemon Bay]

Property'' and, in 1961, both the Trustees and Army

Corps of Engineers approved a fill permit for land that

included the Lemon Bay property. 2 Stip. ,r 18; DX 2;

DX 3; DX 4. By 1970, Mr. Stanford had filled the

northwest portion of Sandpiper Key, but the area that

2 Although the Corps has regulated activities in United States

waters since the 1890's, the permit at issue here, a Section 404

permit, did not come into play until 1975, with the promulgation

of the Section 404(b)(l) Guidelines. 40 Fed. Reg. 31,320 (1975).

Appendix 8a

constitutes Lemon Bay's property remained unfilled

and undeveloped. Stip. ,r 19; Tr. 593-94. In 1980,

Sandpiper Key Associates acquired the entire 33.2acre tract of Sandpiper Key from Mr. Stanford for

$1,726,699.93

and

constructed

a

79-unit

condominium development, the Sandpiper Key

Condominium Complex, on the portion of the property

that had been filled. JX 9; Stip. ,r 22. The wetlands

containing Lemon Bay's property remained

untouched. Stip. ,r,r 19, 23.

By the early 1990's, Sandpiper Key had stopped

paying real estate taxes on the undeveloped portion of

the tract. JX 10 at 1-3; Tr. 594; Stip. ,r 24. In August

1993, Gerald LeFave purchased three parcels of this

unfilled tract, totaling 5.62 acres, at a tax sale from

Charlotte County for $12,100 and sought to develop

the property, eventually seeking approval to build a

39-unit development. Stip. ,r 25; JX 10 at 1-3. Mr.

LeFave did not submit his proposal to the Southwest

Florida Water Management District or to the Army

Corps of Engineers-only to Charlotte County. Tr.

564, 568. In November 2007, Mr. LeFave obtained

preliminary site plan approval from Charlotte County

for his development subject to 34 conditions. Stip.

,r 32; JX 23. Upon obtaining this preliminary

approval, Mr. LeFave sought investment capital for

his development, the Verandahs at Lemon Bay. Stip.

,r 34; Tr. 59-60, 63.

In 2008, I.H.T. Corporation, on the advice of Mr.

Goertz, its financial advisor, loaned Mr. LeFave

$750,000 secured by this 5.62-acre property. Stip.

,r 36; Tr. 56-58; JX 25. In Mr. Goertz's view, this loan

functioned as a mortgage that would be repaid when

the borrower obtained the resources to proceed with

Appendix 9a

development and then be converted into a

construction loan. Tr. 56-57. As a condition of the

loan, Mr. LeFave agreed to provide I.H.T. with copies

of invoices for obtaining "developmental entitlements

for the property." JX 25 at 2. At the time of the loan,

Mr. Goertz was aware that Mr. LeFave had been

advised of challenges in obtaining permits for the

property. Mr. Goertz testified:

Q: COUNSEL FOR DEFENDANT: Do you know

whether DMK3 informed Mr. LeFave that his planned

development would not be easy to permit because of

the impacts to wetlands on the property?

A: MR. GOERTZ:

Yes, we were aware, not at

each level, but we were aware about the red flags that

Mr. LeFave has to work on.

Tr. 124-25.

When determining whether to extend the loan,

I.H.T. requested an appraisal of the property and the

development plan from Mr. LeFave. Tr. 61-63. The

appraisal, prepared by Certified Appraisal Services,

Inc. on April 5, 2007, for Fusion Mortgage Corporation

of Tampa, Florida, stated that the site:

DMK Associates is an engineering and land surveying firm in

Florida. JX 26. Mr. LeFave hired DMK for his 39-unit

condominium development project, and Lemon Bay later hired

DMK to assist with its proposed development of the same

property. Tr. 124, 141-42; Stip. ,r 52.

3

Appendix 10a

has some mangroves and wetlands but is

considered an excellent location for multi

family

development.

There

are

condominiums all along Beach Road

which demonstrates the success of multi

family development in the area.

PX 12 at 3. The stated "intended use" of the appraisal

was "to assist the client in arriving at aD 'Subject to

Entitlements' Market Value with a zoning

designation of RMF-10 (Residential Multi Family 10

Units per acre)." PX 12 at 4. The appraisal defined

entitlements as "secured legal permissions from

regulatory bodies (typically in the form of permits, but

sometimes in the form of re-zoning or planned unit

developments)." Id. (emphasis in original). The

appraisal valued the 5.62-acre property at $4,740,000

when developed into multi-family housing, which the

appraisers considered the highest and best use of the

property, but did not state the number of housing

units. PX 12.

In June 2010, Mr. LeFave defaulted on the I.H.T.

loan, and a Florida court granted summary judgment

to I.H.T. in the foreclosure proceeding, awarding

I.H.T. $875,878.02. JX 33; JX 36 at ,r,r 3, 7. According

to the final foreclosure judgment, this amount

included $750,000 in principal, plus a $75,000 late fee,

$46,027.52 in interest, $2,500 in attorney's fees, and

$2,350.50 in costs. JX 36 at ,r 6.

A foreclosure sale was held on September 3, 2010.

JX 41. According to the foreclosure judgment, I.H.T.

was allowed to bid at the sale, and if successful, was

entitled to a credit on its bid up to the full amount due

under the judgment after the payment of costs. JX 36

at 3; see JX 40, JX 41. Under Florida law, the

Appendix 1 la

foreclosing mortgagee receives a bidding credit

amounting to the principal and interest due under the

mortgage and its costs of foreclosing. See generally

RadLAX Gateway Hotel, LLC v. Amalgamated Bank,

566 U.S. 639, 649 (2012) (stating that secured

creditors have a right to credit-bid at bankruptcy

auctions); Branch Banking & Trust Co. v. Tomblin,

163 So. 3d 1229, 1230 (Fla. Dist. Ct. App. 2015)

(noting that credit bidding is a judicially created right

to bid at a foreclosure sale the amount due on first

mortgage debt). At the foreclosure sale, I.H.T., using

its credit bid and a payment of $15,200, purchased the

property. JX 36 at ,r 10; JX 40; JX 41.

Once I.H.T. obtained possession of the property,

Mr. Goertz, in his role as I.H.T.'s financial advisor,

advised I.H. T. to move the property to a development

company. Tr. 55, 58. In November 2011, after

determining that I.H. T. would be unable to recoup its

investment by selling the property as-is, Mr. Goertz

and Nils Richter 4 "decided to develop the property ...

and formed a development company [Lemon Bay]" for

that purpose. Tr. 57, 139. I.H.T. then "moved the

assets, the judgment, and all the rights to develop the

property into [Lemon Bay].'' Tr. 57. I.H.T. became a

member of Lemon Bay and sold the property for $10

via quitclaim deed to Lemon Bay on November 9,

2011. JX 47; Tr. 57-58. Mr. Goertz considered the

2010 Florida court judgment awarding I.H.T.

$875,878.02 on Mr. LeFave's defaulted loan to be

I.H.T.'s "investment" in the property. Tr. 139.

4 Mr. Richter was a real estate agent and a "very close business

associate" of Mr. Goertz for over 20 years. Tr. 137.

Appendix 12a

Charlotte County Zoning Requirements

The property Lemon Bay acquired was subject to

Charlotte County's land development regulations,

called the Manasota and Sandpiper Key Zoning

District Overlay, codified in Section 3-9-50 of

Charlotte County's laws and ordinances. JX 138 at 6.

The District Overlay land development regulations

include 10 zoning districts including Manasota

environmentally sensitive (MES), as well as singlefamily and multifamily districts, and several

commercial and special districts. JX 138 at 8--9. At the

time of both I.H.T.'s loan in 2008, and Lemon Bay's

acquisition in 2011, the property was zoned MMF-7.5,

which allowed for single and multi-family residential

use at a density of up to 7.5 units per acre. PX 1 at 6;

Tr. 510. This zoning permitted a maximum of 42 units

on the property. Tr. 793.

The Charlotte County and Southwest Florida

Restrictions on Wetland Development

Lemon Bay's property contains Category I

wetlands, defined as "critically necessary to sustain

the health of the County's environment," and a

landowner must receive approval from Charlotte

County in order to develop this type of property. JX 44

at 40. To obtain site plan approval from Charlotte

County, the property must conform to the County's

Comprehensive Plan, which restricts development of

Category I wetlands to "cases where no other feasible

and practicable alternative exists that will permit a

reasonable use of the land.'' JX 44 at 41.

Appendix 13a

According to the Charlotte County Comprehensive

Plan:

Category I wetlands are those wetlands that

are considered critically necessary to sustain

the health of the County's environment and

shall mean those wetlands that meet at least

two of the following criteria:

1. Any wetland of any size that has a

permanent surface water connection to

natural surface waterbodies with special

water

classifications,

such

as

an

Outstanding Florida Water, an Aquatic

Preserve, or Class I or II waters ....

2. Any wetland of any size that has a direct

connection to the Floridan aquifer by way of

an open sinkhole or spring.

3. Any wetland of any size that has functioning

hydroperiods

with

minimal

human

disturbance and provides critical habitat for

listed species.

4. Any wetland of any size whose functioning

hydroperiods are connected via a direct

natural surface water connection to parks or

conservation lands.

5. Any wetland of any size where downstream

or other hydrologically connected habitats

are significantly dependent on discharges

from the wetland.

JX 44 at 40.

According to Ian Vincent, Defendant's expert in

environmental permitting and environmental land

use approval in Southwest Florida, Lemon Bay's

Appendix 14a

wetlands met criteria 1, 3, and 4 of the Comprehensive

Plan's criteria for being "critically necessary" for the

health of the County's environment. Tr. 1644-46. In

order to develop such wetlands, in addition to meeting

the Comprehensive Plan, a developer had to obtain an

Environmental Resource Permit ("ERP") from the

Southwest Florida Water Management District

("SWFWMD").

The Clean Water Act and Section 404(b) Permit

Requirements for Wetlands

The objective of the Clean Water Act ("CWA") is to

"restore and maintain the chemical, physical, and

biological integrity of the Nation's waters." 40 C.F.R.

§ 230.l(a) (2020). The Clean Water Act delegates

responsibility to the Army Corps of Engineers to

"protect wetlands subject to the Corps' jurisdiction

from unnecessary destruction." Deltona Corp. v.

United States, 657 F.2d 1184, 1188 (Ct. Cl. 1981); Fla.

Rock Indus .. Inc. v. United States, 791 F.2d 893, 904

(Fed. Cir. 1981); see 33 U.S.C. § 1344(d). In

recognition of this objective, the CWA prohibits the

discharge of dredged or fill material into waters of the

United States unless a permit, issued by the Army

Corps of Engineers under Section 404 of the CWA,

authorizes such discharge. 33 U.S.C. §§ 1311(a),

1344(a).

In deciding whether to approve a Section 404

permit to dredge and fill, the Corps looks to the

Section 404(b)(l) guidelines outlined in 40 C.F.R.

§ 230.10. The intent of the Section 404 permit

determination is to ensure that there be "no net loss

of functions and values of wetlands." Tr. 969.

According to Tunis McElwain, the Chief of the

Jacksonville District Corps of Engineers, "wetlands

Appendix 15a

have ... functions and values. So functions are things

like water retention, flood water retention, or the

filtering of water.... Habitat, wildlife habitat is

another example of a function. And then values are

things like aesthetics and ... more general things that

wetlands provide." Tr. 971.

Under the Section 404(b)(l) Guidelines, the Corps

may only issue a Section 404 permit if it concludes

that the proposed project is the "least environmentally

damaging practicable alternative." 40 C.F.R.

§ 230.10(a)(2) (2020). The Corps may not grant a

permit if there is a practicable alternative that would

have a less adverse impact on the aquatic ecosystem

than dredging and filling. 40 C.F.R. § 230.l0(a). For

non-water dependent projects, the Corps presumes

that less environmentally damaging practicable

alternatives

are

available

unless

clearly

demonstrated otherwise. See Tr. 975.

To determine whether a project is the least

environmentally damaging practicable alternative,

the Corps reviews the project's avoidance,

minimization, and mitigation of adverse impacts on

the aquatic ecosystem. Tr. 966; see also 40 C.F.R.

§ 230 (2020). Under the Section 404 program, a

potential permittee is first expected to "avoid"

deliberate discharge of materials into wetlands, then

to "minimize" unavoidable discharge impacts, and

finally to effect compensatory "mitigation" of any

remaining impacts through restoration, embankment,

creation,

or,

in

exceptional

circumstances,

preservation of other on- or off-site wetlands or

aquatic resources. 40 C.F.R. § 230 (2020).

Avoidance is the first step in the Corps' evaluation

sequence because there is a presumption that

Appendix 16a

alternative sites are available that would avoid

impacts to the waters of the United States completely.

Tr. 970. If avoidance is not possible, the Guidelines

call for minimization of the impact to the waters, such

as changing a site plan configuration to reduce

impacts to the higher quality wetlands. Id. Finally,

mitigation entails the replacement of the wetlands'

functions that would be lost due to the proposed

project's environmental impacts. Tr. 970--71.

Lemon Bay's Permit Applications and the

Corps' Responses

Prior to submitting any permit applications,

Lemon Bay sought to include a dock on the southern

edge of the property which extended into the stateowned Lemon Bay Aquatic Preserve. JX 82. In a preapplication meeting, the SWFWMD informed Lemon

Bay that including a dock that was on state sovereign

lands in the permit application for the ERP could push

the application into the "Heightened Public Concern"

category, which would require approval from the

Trustees of the Internal Improvement Trust Fund. JX

81 at 1; Tr. 144. Lemon Bay decided to defer

requesting the SWFWMD to review the proposed dock

until the residential portion of the project was

reviewed and approved. Tr. 425--26.

In February 2012, Lemon Bay applied for the

required ERP without the contemplated dock. JX 49.

On December 20, 2012, the SWFWMD granted Lemon

Bay the ERP for a project that did not include a dock,

subject to 18 conditions. JX 77. Among these

conditions were requirements that manatees and sea

turtles be protected from direct project effects. Id. at

7. This permit was set to expire after five years and

Appendix 17a

did ultimately expire on January 5, 2018. JX 77 at 3;

JX 112.

In April 2012, Lemon Bay filed an application with

the Army Corps of Engineers for a permit to fill

approximately 1.95 acres of the submerged aquatic

wetlands and construct a 12-unit single-family

townhome development. 5 Tr. 28, 987-88; JX 51. In

accordance with Corps' policy, the Corps issued a

public notice inviting comments on Lemon Bay's

proposed fill plan on May 3, 2012. JX 51. In its public

notice, the Corps "determined the proposed project

may affect. but is not likely to affect" various species

of endangered aquatic animals and that "the proposed

action would have a substantial adverse impact on

[Essential Fish Habitat] EFH." JX 51 at 3-4

(emphasis in original); Tr. 1285. The notice explained

that "the Corps [would] request [United States

Department of Interior, Fish and Wildlife Service's]

and National Marine Fisheries Service's (NMFS)

concurrence"

with

its

endangered

species

determination, and that its "final determination

relative to project impacts and the need for mitigation

measures [was] subject to review by and coordination

with the National Marine Fisheries Service." JX 51 at

3-4. 6

5 Lemon Bay expanded the footprint to 2.08 acres in late 2012.

Stip. ,r,r 51, 82; see JX 51 at 1 and JX 74 at 6.

6 Beginning in the 1960s, the Corps was obligated by the Fish

and Wildlife Coordination Act to consult with the United States

Department of Interior, Fish and Wildlife Service (FWS) when it

made permit decisions regarding dredging, filling, excavating,

and other related work in traditionally navigable waters. Under

the Endangered Species Act, which was passed in 1973, federal

Appendix 18a

In response to the public notice, the Corps received

over 200 letters from agencies, adjacent property

owners and residents in the surrounding area, citing

environmental concerns based on, inter alia. Section

10 of the Rivers and Harbors Act of 1899 (33 U.S.C.

§ 403), Section 404 of the Clean Water Act (33 U.S.C.

§ 1344), and the Endangered Species Act (16 U.S.C.

§ 1531 et seq.). JX 71 at 3; JX 54, JX 64, JX 65. The

comments included a statement from the NMFS that

the property was an "Essential Fish Habitat" and

should not be filled and a statement from the U.S.

Environmental Protection Agency ("EPA") that "the

proposed project may have substantial and

unacceptable adverse impacts to mangroves." JX 71 at

1.

In May of 2012, a project manager from the Corps

conducted an interagency site inspection with a

fishery biologist from the NMFS, Mark Sramek, and

a biologist from the EPA. JX 55; Tr. 1287-88. They

"collectively walked the entire mangrove wetland site,

and the purpose was to assess the quality ... and

quantity of the mangrove habitats, which are

identified as essential fish habitat." Tr. 1289; DX 40.

In Mr. Sramek's view, the project site contained highquality, functioning mangrove wetlands. Tr. 1289.

Based upon the interagency site inspection, the

NMFS reported that the site contained aquatic

resources of national importance and "provided an

essential fish habitat conservation recommendation"

to the Corps. Tr. 1287; 1291-92. Essential fish habitat

agencies must consult with the National Marine Fisheries

Service when any action of the agency, including permitting, may

affect a species listed as threatened or endangered under the Act.

See 16 U.S.C. § 1536(a)(2).

Appendix 19a

is "essentially the backbone of the estuarine system,"

providing protection and forage for endangered and

economically important fish species. Tr. 1074-75; see

JX 108 at 49-50. The Corps determined that the

mangrove wetlands were high-quality wetlands and

agreed with the NMFS that they were an essential

fish habitat and an aquatic resource of national

importance. Tr. 1074.

On October 5, 2012, the Corps provided Lemon Bay

with the public comments, and determined that

Lemon Bay's proposed project was not water

dependent because it did not require access to water

as the basic project purpose was to construct homes.

JX 71 at 4. As a result of this determination, the Corps

requested that Lemon Bay provide an "alternatives

analysis" to determine if the proposed project was the

least

environmentally

damaging

practicable

alternative. Id.; Tr. 1030. The Corps requested Lemon

Bay to provide a report "describing the search for the

[alternative] sites, identification of their location and

rating, and a narrative that shows which site, if any,

is the preferred alternative." JX 71 at 4.

The Corps specified that the alternatives analysis

should include:

a. A defined set of criteria for site evaluation;

b. A defined system for rating each site against

each of the criteria; and

c. A description of the method used to

comparatively weigh each rating as to its

importance.

Id. The Corps also requested an "on-site alternative

analysis," that referenced the set of criteria discussed

Appendix 20a

in the Alternatives Analysis, compared and

contrasted the on-site alternative plans, and included:

"a. A description of the site plan/configuration; b. A

method to estimate the environmental consequences

of each plan; and c. A narrative that shows the

quantity of fill is the minimum amount practicable."

JX 71 at 5.

In response to the Corps' request, Lemon Bay

submitted a four-page "Practical" Alternatives

Narrative in December 2012, analyzing three

alternative sites. JX 79 at 15. Lemon Bay emphasized

that "consideration must be made for the fact that the

subject parcel was not acquired by the current owner

in any form of an open market transaction." Id. Lemon

Bay continued:

[t]o the contrary, the owner had no

intentions to acquire this or any similar

parcel for real estate developments. The

additional explanation below will help

clarify why the owner does not have the

option to acquire any other similar

waterfront property to avoid the impact

to the subject site, since any additional

purchase would not reduce the cost and

financial losses that have already been

incurred to date ... [T]he borrower

defaulted on the loan terms, eventually

forcing the lender, and now current

owner, to take possession of the parcel

through foreclosure to get control of the

loan collateral. At this point the new

owner had to realize that the total

investment in the mortgage and accrued

unpaid interest and cost was at risk due

Appendix 21a

to the lack of final approval or permits

for the previously proposed development.

Lemon Bay submitted that avoidance was

impossible based on the financial circumstances

surrounding its acquisition of the property and

addressed minimization and mitigation as follows:

To mitigate the financial damage and

minimize the losses incurred to date the

owner has to develop this site making

avoidance of onsite wetland impacts

impossible. Based on current market

research and comparable sales / listings,

it was determined that a use of the site

as a single family development is the

only feasible way to allow for absorption

of the site into the market ....

The resulting new development plan

minimized the wetland impact to the

smallest impact possible while allowing

the current owner to recoup the losses

that were previously incurred, which

still represents a substantial financial

risk. However, without approval for the

development the owner would de facto be

incurring a total loss on this investment

that now inadvertently turned into a

lengthy and tedious development

process. Due to the length of the

permitting and approval process the

current owner continues to incur

additional expenses and loss of interest

Appendix 22a

on the outstanding capital that continue

to increase the financial damages ....

However, since avoidance of the impact

is not practicable, it was the owner's

intention to minimize the impact as far

as feasible while also mitigating any

damages

through

the

approved

mitigation bank/mangrove credits for

any losses to the habitat.

JX 79 at 15-16.

Recognizing that mitigation credits purchased

from a mitigation bank 7 can be used to offset

mangrove wetland impact by providing new or

improved habitat for the affected wildlife, Lemon Bay

acquired credits in the Little Pine Island Mitigation

Bank and proposed additional mitigation via

conveyance of a three-acre portion of the property to

the State of Florida. Tr. 1780.

It is not typical for the Corps to consider property

that is not available for purchase in an alternatives

analysis because the purpose of the analysis is to

identify other sites that could be used for the proposed

project. Tr. 1035. Mr. McElwain elaborated, "the site

has to be available or potentially capable of being used

after taking into consideration cost, existing

technology, and logistics in light of the overall

purpose." Id. For minimization, after the Corps

7 A mitigation bank is "a site where wetlands and/or other

aquatic resources are restored, created, enhanced, or in

exceptional circumstances, preserved expressly for the purpose

of providing compensatory mitigation in advance of authorized

impacts to similar resources." 40 C.F.R. § 230.93 (2021).

Appendix 23a

identifies higher quality wetlands on the site and asks

the developer to avoid those wetlands to the extent

practicable, the developer typically works with the

Corps and "go[es] through iterations of site plans

where there's minimization involved." Tr. 1032. In

response to the Corps' request for minimization,

however, Lemon Bay did not propose any iterations to

its site plan. Instead, Lemon Bay said that because

Mr. LeFave had received approval for a 39-unit

development in 2007, and Lemon Bay's proposed

development was only 12 units, it had already

minimized impacts to the wetlands and no further

minimization was required. See JX 79 at 24.

Finally, Lemon Bay did not address comments

from EPA and the NMFS submitted in response to the

Corps' May 3, 2012 public notice stating that the

project would have substantial and unacceptable

adverse impacts on mangroves. JX 65. Instead, Lemon

Bay argued that the Corps has sole decision-making

authority, and that these agencies should retract their

comments. See JX 79 at 2-4.

The Corps critiqued various aspects of Lemon

Bay's "Practical" Alternatives Narrative, including

Lemon Bay's choice of alternative sites. According to

Mr. McElwain, typically when the Corps requests an

alternatives analysis, a developer provides an

analysis that shows multiple alternative sites and

analyzes the presence or absence of wetlands on those

sites. See Tr. 1031-32. The applicant then compares

these potential sites with its needs. Lemon Bay's

Alternatives Analysis, however, included two sites

that were not available for purchase at the time and

Appendix 24a

one additional property that was for sale for $1.5

million. JX 79 at 18-23. 8

On February 14, 2013, Lemon Bay amended its

application and proposed a 13-slip dock as part of the

development. JX 82. As a result of the dock addition,

the Corps published another public notice on April 5,

2013, inviting comments on the proposed development

with the dock. JX 86. The public comments in

response to the second notice were "virtually the

same" as the comments on the first notice. Tr. 1039;

see DX 50.

On May 13, 2013, the Corps informed Lemon Bay

that the dock would negatively impact the West

Indian manatee and was inconsistent with the

Endangered Species Act-a situation known as a

"take likely." JX 91; Tr. 1044-45. According to Mr.

McElwain, the Corps cannot approve a Section 404

permit if there is a "take likely" situation because in

order to receive a permit, the project must be in

compliance with all federal legislation. Tr. 1047-48.

On May 28, 2013, the NMFS informed the Corps

that it had conducted a benthic survey of the area

proposed for dock construction to "evaluate the

presence and abundance and overall ecological health

of the SAV [submerged aquatic vegetation] at the

project site," which "provides very high-quality

habitat for many commercially and recreationally

8 In response to the Corps' request for Lemon Bay to assess

practicable site alternatives, Lemon Bay hired Market America

Realty to "conduct a thorough search in Charlotte County for

property on the market that would allow [Lemon Bay] to build

12 single family homes on the water." JX 79 at 16. Market

America Realty, however, only found three potential alternative

sites, two of which had already been sold. Id.

Appendix 25a

important fish and invertebrate species." JX 92; Tr.

1298, 1300. Based on the survey, the NMFS

determined that the dock project as proposed would

have resulted in adverse impacts to essential fish

habitat and recommended that the Corps not

authorize it. Tr. 1301. In response to the concerns

about the West Indian manatee and essential fish

habitat that arose because of the dock construction,

Lemon Bay amended its application to have the

proposed dock include only nine slips. JX 93; Tr. 31011.

In a letter dated January 3, 2014, the Corps

revised the Project Purpose from "residential

development in Charlotte County" to "[r]esidential

development in coastal southwest Florida with water

access to Lemon Bay" given Lemon Bay's request that

the Corps evaluate the project with the addition of

boat slips. JX 96 at 2. The Corps provided a list of

outstanding issues for Lemon Bay to address and

again asked Lemon Bay to show why it could not

minimize its development's impact by shrinking the

footprint or reducing the number of units proposed. JX

96 at 13-14; Tr. 170--71. In addition, the Corps asked

Lemon Bay to respond to the FWS' concern about the

project's "take of the manatee." JX 96 at 16. Although

Lemon Bay had asserted that it could not acquire any

other similar waterfront property due to cost, the

Corps responded that it "looks at costs from a neutral

industry-wide perspective and not an economic

perspective to ensure an individual applicant's rate of

return." JX 96 at 9.

Regarding minimization, the Corps informed

Lemon Bay:

Appendix 26a

In order to determine that Lemon Bay

Cove LLC has minimized impacts to

aquatic resources to the maximum

extent practicable, Lemon Bay Cove LLC

must

clearly

demonstrate

that

alternatives that do not discharge into

special aquatic sites are either not

practicable or not available.

***

The Corps has identified several features

of the proposed project that could be

minimized in order to reduce impacts to

aquatic

resources.

Please

clearly

demonstrate why it is not practicable to

minimize the following site features.

Please include the acreage of wetland

impacts that could be minimized in your

evaluation.

1. Please clearly demonstrate why it is

not practicable to minimize the

number of residential units.

2. Please clearly demonstrate why it is

not practicable to reduce the lot sizes.

3. Please clearly demonstrate why it is

not practicable to minimize the

number of docks.

4. Please clearly demonstrate why it is

not practicable to minimize the vessel

size to a kayak, canoe, and nonmotorized vessel or a motorized

shallow-draft vessel.

Appendix 27 a

5. Please clearly demonstrate why it is

not practicable to construct the houses

on pilings and reduce the acreage of

wetland fill. Please include if any fill is

needed for any construction activities

such as septic or utility lines.

6. Please clearly demonstrate why it is

not practicable to minimize the project

design to eliminate the residential

homes and construct parking spaces

adjacent to the roadway and docks

with an elevated walkway from the

parking spaces to the docks.

JX 96 at 13-14 (emphasis in original).

On May 3, 2014, Lemon Bay responded to the

Corps' request that it demonstrate why it could not

minimize its development's impacts. JX 98. Although

the Corps advised Lemon Bay that it did not agree

with the basis of its proposed evaluation criteria,

Lemon Bay did not revise its evaluation criteria.

Compare JX 98 at 3 with JX 79 at 16. Lemon Bay

wrote that

[u]nfortunately, there is nothing on the

market that will meet all the criteria

requirements. Neither of the considered

alternatives possess equal frontage or

views. Roadway access and deep water

access are also limited. Lastly, viability

of these sites for residential development

would be further reduced due to the

current condition and use of the

surrounding properties of the alternate

sites that are not consistent with the

Appendix 28a

intended use of the subject site, which

would result in a significantly reduced

value of the finished product, thus

rendering the project infeasible.

JX 98 at 3. Lemon Bay replaced two of the three

alternative sites but did not provide upland acreage or

impacted or non-impacted wetland acreage. JX 98 at

4. In its avoidance narrative, Lemon Bay noted that

utilizing the existing site was the most cost-effective

for the owner and the Corps because either of the new

alternative sites would require an additional $3.8

million or $1.65 million investment. JX 98 at 6.

With respect to the Corps' concerns with its

minimization narrative, Lemon Bay reiterated that it

"had demonstrated" "why it [was] not practicable to

minimize ANY FURTHER the number of residential

units" because its "new proposal" represented a 69%

reduction in residential units and a 26% reduction in

wetland impacts compared to the original plan for a

39-unit development submitted by Mr. LeFave. JX 98

at 10.

On May 28, 2014, the Corps conducted another site

visit to Lemon Bay's property to assess the quality and

conditions of the mangrove wetlands and quantify

their functions. DX 60; Tr. 1071-72. The Corps

determined that the property received regular tidal

interchange and that the mangrove wetlands were

high-quality wetlands and an essential fish habitat

and aquatic resource of national importance. Tr. 1074;

JX 108; see DX 60.

On January 16, 2015, the Corps told Lemon Bay

that it did not provide enough information to

demonstrate that the proposed project was the least

Appendix 29a

environmentally damaging practicable alternative

and that, based on the information provided, it was

unlikely that the Corps would recommend a positive

permit determination. JX 101 at 2. In response,

Lemon Bay reiterated that "none of lesser

environmentally damaging alternatives available in

the marketplace having the same project purpose

would be economically practical." JX 104 at 1. Lemon

Bay acknowledged that "while there are less

environmentally damaging alternatives in the market

place, they are too costly." JX 104 at 1. Lemon Bay

submitted an updated market research report

prepared by Market America Realty, which stated

that according to Lemon Bay's own assessment, the

proposed site was the least environmentally

damaging practicable alternative and the only

economically practical option given Lemon Bay's

already expended costs. See JX 104 at 1-3. The

updated Market America Realty report included the

following "Development Exit Scenario" concluding

that "[d]evelopment is only financially feasible at 12

sellable units, to avoid potential losses due to cost

overruns in development phase" and stating:

$(3,167,921.20) $(2,732,223.70) $(1,860,828.70)

Balance

Summary:

-79%

-61%

$ 4,449,493.70

-35%

$ 5,295,368.70

$ 1,691,750.00

-16%

$ (989,433.70)

$ 6,141,243.70

$ 2,537,625.00

$ 3,603,618.70

$ 5,151,810.00

6

-2%

$ (118,038.70)

$ 6,987,118.70

$ 3,383,500.00

$ 3,603,618.70

$ 6,869,080.00

8

$

10%

753,356.30

$ 7,832,993.70

$ 4,229,375.00

$ 3,603,618.70

$ 8,586,350.00

10

12

$

3,428,370.00

19%

$ 1,624,751.30

$ 8,678,868.70

$ 5,075,250.00

$ 3,603,618.70

$ 10,303,620.00

Development is only financially feasible at 12 sellable units, to avoid potential losses due to cost overruns in development phase

(cost + lost profit)

Lot Value – as is

% profit

$ 4,026,556.20

Total cost

845,875.00

$

422,937.50

$

Cost to build

$ 3,603,618.70

$ 3,603,618.70

$ 3,434,540.00

4

Lot + Infrastructure cost $ 3,603,618.70

2

$ 1,717,270.00

$

1

858,635.00

Total revenue

Units

Development Exit Scenario

Appendix 30a

Appendix 31a

JX 104 at 12.

On February 1, 2016, the Corps denied Lemon

Bay's permit application with prejudice having

determined that after "carefully consider[ing] all

information provided subsequent to the initial

submittal of the application," "the proposed project

[did] not comply with the Section 404(b)(l) Guidelines

and [was] contrary to the public interest." JX 107 at 1.

The Corps emphasized that Lemon Bay did not

demonstrate that its project was the least

environmentally damaging practicable alternative.

JX 108 at 76. Lemon Bay filed an administrative

appeal on March 29, 2016, and on December 19, 2016,

the Corps denied that appeal. JX 109; JX 111. In the

instant action, Plaintiff seeks just compensation in

the amount of $3,800,000 based upon its experts'

valuation of the property but for the denial of the

Corps' permit.

Discussion

Legal Standards: Categorical and Regulatory

Takings

The Fifth Amendment to the United States

Constitution provides that private property shall not

be taken for public use without just compensation.

U.S. Const. amend. V. "[A] taking can be accomplished

by a physical invasion of the property or by the

imposition of a governmental regulation." Bass

Enters. Prod. Co. v. United States, 381 F.3d 1360,

1365 (Fed. Cir. 2004). As Justice Holmes

characterized the general rule a century ago, "while

property may be regulated to a certain extent, if the

regulation goes too far, it will be recognized as a

taking." Pa. Coal Co. v. Mahon, 260 U.S. 393, 415

Appendix 32a

(1922). In Lucas v. South Carolina Coastal Council.

the Court explained that there could be a taking

"where [a] regulation denied all economically

beneficial or productive use of the land." 505 U.S.

1003, 1015 (1992).

More recently, in Tahoe-Sierra Pres. Council. Inc.

v. Tahoe Regional Planning Agency. the Court

clarified that its Lucas rule on categorical takings was

limited to the "extraordinary circumstance where no

productive or economically beneficial use of land is

permitted." 535 U.S. 302, 330 (2002) (emphasis in

original). The Tahoe-Sierra Court characterized a

Lucas categorical taking as a '"permanent obliteration

of value' of a fee simple estate." Id. For "[a]nything less

than a 'complete elimination of value,' or a 'total loss,"'

the Court articulated a different analytical framework

"that would require the kind of analysis applied in

Penn Central." Id. (citing Lucas, 505 U.S. at 1019-20,

n.8).

Under Penn Central. courts use a three-factor

analysis to assess claimed regulatory takings: (1) the

character of the governmental action, (2) the economic

impact of the regulation on the claimant, and (3) the

extent to which the regulation interfered with distinct

investment-backed expectations. Penn Cent. Transp.

Co. v. City of New York. 438 U.S. at 124 (1978);

Cienega Gardens v. United States, 331 F.3d 1319,

1337 (Fed. Cir. 2003). When an individual alleges a

taking by government regulation, the court must

conduct an ad hoc, factual inquiry to determine

whether the particular circumstances in the case give

rise to a regulatory taking. Penn Central. 438 U.S. at

124.

Appendix 33a

If a "categorical" taking has occurred under Lucas,

this ends the taking inquiry, and no Penn Central

factual analysis need be performed. Thus, the Federal

Circuit has instructed that "it is often important to

determine at the outset whether a particular claimed

taking was 'categorical' or not." Rith Energy. Inc. v.

United States, 247 F.3d 1355, 1362 (Fed. Cir. 2001)

(on rehearing).

Was There a Categorical Taking of Lemon Bay's

Property?

In order to effect a compensable categorical taking

under Lucas, a regulation must deny all economically

beneficial or productive use of the land such that "the

owner of real property has been called upon to

sacrifice all economically beneficial uses in the name

of the common good, that is, to leave his property

economically idle." Lucas, 505 U.S. at 1019 (emphasis

in original). Lost Tree Village Corp. v. United States

(Lost Tree III), 115 Fed. Cl. 219, 228 (2014) (citing

Tahoe-Sierra, 535 U.S. at 330).

Plaintiff argues that the Corps' denial of a permit

to fill 2.08 acres of wetlands deprived Lemon Bay of

any economically beneficial use of the property, based

on the difference in value of its parcel as developed

with a Corps permit and undeveloped without it. In so

arguing, Lemon Bay relies on the opinion of its

appraiser, Linwood Gilbert. 9 PX 14B at 8; PX 53; Tr.

825.

9 This Court admitted Mr. Gilbert as an expert in the fields of

real estate appraisal and valuation. Tr. 769.

Appendix 34a

In valuing the Lemon Bay property, Mr. Gilbert

relied on the expert opinion of Dr. David Depew 10

regarding the permitting process and other cost

factors and that of Dr. Henry Fishkind 11 regarding the

maximally productive use of the property. See PX 14B

at 4. Taking these expert opinions into account, Mr.

Gilbert opined that the highest and best use of the

Lemon Bay property would be the development of

seven single-family lots.1 2 Mr. Gilbert then utilized

the subdivision approach 13 because there was a lack

of comparable sales in the marketplace and

determined how quickly the lots would sell and

10 The Court admitted Dr. Depew as an expert in the fields of

land use planning and regulation, site design, development and

permitting, construction cost estimating, and the creation and

utilization of Transfer Density Units ("TDUs") in Florida. Tr.

482.

11 The Court admitted Dr. Fishkind as an expert in real estate

economics and TDUs. Tr. 672.

12 Highest and best use is "the reasonably probable and legal use

of property, which is physically possible, appropriately

supported, financially feasible, and that results in the highest

value, including those uses to which the property may be readily

converted." United States v. Powelson, 319 U.S. 266, 275 (1943);

see Otay Mesa Prop., L.P. v. United States, 779 F.3d 1315, 1329

n.4 (2015).

Despite its insistence during the administrative permit

application process that it needed a 12-unit project to avoid

financial losses, Plaintiffreduced its requested 12-unit project to

seven units for purposes of calculating its damages in this

litigation. See PX 14B; Tr. 437-548 (Depew); Tr. 672-709

(Fishkind); Tr. 759-832 (Gilbert).

13 The subdivision approach employs aspects of the three major

approaches to valuation: the sales comparison approach, the cost

approach, and the income capitalization approach and estimates

the value of the residential lots that could be developed on the

property and the costs of developing those lots and subtracts the

costs from the lot sale value. Tr. 786-87.

Appendix 35a

calculated a net cash flow for each future period. Tr.

784-87. Finally, he discounted the net cash flow to

present value to determine the current value of the

property. Tr. 820.

Specifically, Mr. Gilbert determined that the seven

lots would sell for a total of $6,600,000 ($900,000 per

lot with the two lots on the end selling for $1 million

and $1.1 million due to better views). PX 14B at 71.

Mr. Gilbert calculated the site development and

improvement costs to be $957,343. PX 53 at 2; Tr.

811-17. Mr. Gilbert added professional fees, real

estate taxes, interest, and developer's overhead to

bring the total development costs to $1,196,505 and

rounded that to $1,200,000. PX 53 at 3. Thus, he

determined the net cash flow to be $4,554,165. PX 53

at 4. After discounting to present value using a rate of

8.25%, Mr. Gilbert valued the Lemon Bay property as

developed with the permit at $3,793,415 rounded to

$3,800,000. PX 53 at 4-5; Tr. 825.

Mr. Gilbert valued the property as undeveloped at

$12,500. PX 53 at 8. He opined that since the property

"is virtually entirely wetlands," no economically

beneficial use or value could exist "without the ability

to remove mangroves and fill in a portion of the

Property." PX 14B at 37. Based on Mr. Gilbert's

opinion, Plaintiff argues that the approximate 99.6

percent diminution in value of the property from

$3,800,000 to $12,500 constitutes a categorical taking.

In contrast, Defendant contends that the undeveloped

property should be valued at $15,200, and that Mr.

Gilbert inflated the value of the property as developed

by overestimating the per-lot value at $900,000 when

it should have been $399,000 per lot. Def.'s Post-Trial

Br. at 10-11, 72.

Appendix 36a

Setting aside the parties' dispute about the

valuation of the property in its developed or

undeveloped state, there is a more fundamental issue

about the nature and scope of the taking that dictates

whether the alleged taking can be deemed

"categorical." Defendant argues that Plaintiff has not

established a categorical taking that rendered

Plaintiffs property totally without value because

Plaintiff never attempted to develop its property by

proposmg a smaller footprint or fewer units to

mm1m1ze the adverse environmental impacts.

Plaintiff,

however,

contends

that

Corps

representatives advised Lemon Bay that the Corps

would never have granted Lemon Bay any permit to

develop this property. Lemon Bay argues that Tunis

McElwain, Chief of the Corps' Jacksonville District

and Defendant's Rule 30(b)(6) representative, orally

stated that the Corps would deny Lemon Bay any

permit to fill the property. Tr. 187; see Tr. 702. The

evidence of record, however, does not bear out Lemon

Bay's contention.

Plaintiff Has Not Established That the Corps

Denied All Potential Development of Plaintiff's

Land

Mr. Goertz testified that in 2012, at the first

meeting between Lemon Bay and the Corps after

Lemon Bay submitted its permit application, Mr.

McElwain told Lemon Bay that the Corps would never

allow any development on the property. Tr. 79 ("[I]t

was Tunis McElwain, he approached us immediately

and said that they [would] never give us a permit to

move forward on the property."). Despite these alleged

statements from the Corps as far back as 2012, Mr.

Goertz and Lemon Bay continued to engage in the

Appendix 37 a

permitting process until 2016, when the permit was

ultimately denied. Tr. 187-89.

Mr. Dinkler, Plaintiffs expert in wetland ecology

and permitting, who previously worked for the

SWFWMD, testified that "in almost every meeting

that [Lemon Bay] had, [it was] instructed that the

Fort Myers office didn't approve projects that

impacted mangroves." Tr. 300. He continued, that "if

there were any phone or meetings with other agency

staff, [Lemon Bay was] told that [it] would be asked

questions until [it] went away." Id. 14 According to Mr.

Dinkler, these statements primarily "came from Tunis

McElwain, who at the time was the . . . overall

manager for the Fort Myers office" and Susan

Waichulis, the Corps' project manager, who made it

clear "that it was going to be a very steep hill and

almost impossible to climb past." Tr. 301.

On cross-examination, Mr. Dinkler acknowledged:

Q: COUNSEL FOR DEFENDANT: So ... Mr.

McElwain did not state that the Corps would

never let Lemon Bay Cove impact any wetlands

on its property. Is that right?

A: MR. DINKLER: I did not hear him say that

specifically, but he did say that they rarely, if

ever, permit mangroves out of the Fort Myers

office.

14 Mr. Dinkler was both a fact and expert witness for Plaintiff.

As principal of Ecological Services Associates, Mr. Dinkler

assisted Lemon Bay in permitting its project in Charlotte

County. Tr. 266. The Court admitted Mr. Dinkler as an expert in

wetland ecology and local, state, and federal wetland and

submerged lands permitting. Tr. 265.

Appendix 38a

Tr. 403.

Mr. McElwain denied telling Lemon Bay

representatives that the Corps would never grant

Lemon Bay a permit and testified that on 12 occasions

between 2008 and 2018, the Corps issued permits for

developments with mangrove impacts in the

Charlotte Harbor estuary area. Tr. 983-84; 1086--87.

Specifically, Mr. McElwain testified:

Q: COUNSEL FOR DEFENDANT: And did

you tell any representative of Lemon Bay that

they could never be approved for any

development on the property?

A: MR. MCELWAIN: No, I didn't say that. Iwhen I took this job, I took an oath to uphold

the Constitution, and due process is part of

that, part of the Constitution, and review of the

permit application is due process. So I-that's

not something I would say."

Tr. 1087. Mr. McElwain further testified:

Q: Can you tell us how many times the Corps

issued permits for mangrove impacts in the

Charlotte Harbor estuary area between 2008

and 2018?

A: Twelve times.

Tr. 983-84.

Ian Vincent, Defendant's expert in environmental

permitting and environmental land use approval in

Southwest Florida, including Charlotte County,

testified that he "absolutely did not believe" that

"Charlotte County would never allow development of

this property'' as "there certainly [was] nothing in

their comprehensive plan policies that [he] reviewed

Appendix 39a

that absolutely would preclude development." Tr.

1706.

Plaintiff did not adduce any contemporaneous

documentary evidence of the Corps advising Lemon

Bay that it would be denied any permit whatsoever,

as illustrated by the following exchange:

Q: COUNSEL FOR DEFENDANT: I'd just like

to ask, Mr. Goertz, did you make any notes of

the meeting with Mr. McElwain in which you

claim that he told you that Lemon Bay would

never be permitted to develop the site?

A: MR. GOERTZ: I'm sure I did.

Q: Okay. And have those notes been produced

to the United States?

A: Nope.

Q: Those notes were not produced to the United

States in connection with this case?

A: No, no written-no written notes.

Q: But do you have written notes of the

meeting at which Mr. McElwain allegedly told

you that no permit would be developed?

A: No, not anymore.

Q: Is there any written record that you have of

the statement that Mr. McElwain allegedly

made regarding development of the Lemon Bay

site?

A: No, nope, nope. I think only the witnesses in

the room.

Appendix 40a

Tr. 162-63.

In voluminous correspondence spannmg several

years, the Corps asked Lemon Bay for further

information to demonstrate compliance with the

Section 404 Guidelines, but did not reject any and all

potential development. JX 71; JX 96; JX 101; Tr. 18789. The Corps repeatedly notified Lemon Bay that its

proposed 12-unit project was not the least

environmentally damaging practicable alternative

and requested that Lemon Bay provide further

information on possible avoidance (alternative

development sites) and minimization (alternative site

plans with a smaller impact to the wetlands) as

required by the Section 404 guidelines.

In its October 5, 2012 letter, the Corps cautioned

Lemon Bay that it needed to show that practicable

alternatives were unavailable and that its proposed

onsite fill was the minimum necessary. JX 71.

Plaintiff, however, chose not to amend its permit

application to attempt to meet the Corps' concerns. JX

79. Instead, Lemon Bay reiterated that because the

previous owner, Mr. LeFave, had received

preliminary approval for a 39-unit project from

Charlotte County in 2007, and Lemon Bay was

proposing only 12 units, the project had already

achieved the requisite minimization. JX 79 at 24.

Lemon Bay stressed that it could not reduce the

project any further because the 12-unit project was

"the breaking point for an economically viable

project," and that it had to "mitigate the financial

damage and minimize the losses incurred to date" and

develop this site "making avoidance of onsite wetland

impacts impossible." JX 79 at 24.

Appendix 41a

Although in early 2013, Lemon Bay added a dock

in the Lemon Bay Aquatic Preserve to its plans and

submitted that it made the project water-dependent,

the Corps disagreed that the dock converted the

project to water-dependence, and informed Lemon

Bay that the 13-slip dock would result in more adverse

impacts and a "take" of the West Indian Manatee,

which the Endangered Species Act and Marine

Mammal Protection Act prohibit. Tr. 165-67, 1040,

1044-46; Stip. ,r 97. Lemon Bay reduced the dock from

13 to nine slips, but the Corps concluded that the nineslip dock was still "likely to result in [a] take of the

manatee." JX 93; JX 101 at 1.

In correspondence between 2014 and 2015, the

Corps provided a list of outstanding issues, asking

Lemon Bay to show why its development could not be

minimized by shrinking the footprint or reducing the

number of units proposed, and to clarify the extent of

wetlands onsite. Tr. 170-71, 1060, 1061-65; JX 96 at

6, 9, 13-14. But in response, Lemon Bay did not

suggest any minimization of the project footprint or

reduction in the number of units, reiterating that the

project was already minimized from Mr. LeFave's

original project proposal, and that it needed to recoup

the loss on LeFave's defaulted loan by developing the

property in a financially feasible way-12 singlefamily homes "given Lemon Bay Cove's sunk costs in

the land." JX 103 at 1; see also Tr. 177-80, 1066--67,

1079-80; JX 98; JX 104 at 12.

The Corps' ultimate denial decision was limited to

the discrete permit that Lemon Bay had sought-a

permit to fill 2.08 acres of high quality tidal forested

mangrove wetlands to construct a 12 single-family

unit residential development, not any conceivable

Appendix 42a

potential development of this land. See JX 108 at 45;

JX 111 at 25. Plaintiff suggests that the Corps' denial

of Lemon Bay's application "with prejudice" indicates

that the Corps would never approve any permit for

Lemon Bay to fill the property. However, the only

application that the Corps denied with prejudice was

the application to fill 2.08 acres and construct 12

units.

In sum, in correspondence spanning 2012-2015,

the Corps requested avoidance, minimization, and

mitigation, but Lemon Bay refused to propose the

requested

less

environmentally

damaging

development scenarios or alter the parameters of its

proposed project for its own financial reasons. See ~

JX 71; JX 79; JX 91; JX 93; JX 96; JX 98; JX 101; JX

103. As such, the record as a whole does not support

Plaintiffs contention that the Corps advised Lemon

Bay that it would never grant any permit no matter

what the acreage or number of units. Plaintiff did not

prove that the Corps' denial of its permit for a 12-unit

project deprived the property of all economic value as

required to establish a categorical taking.

This Case Is Distinguishable from Lost Tree

Village

Plaintiff further argues that this case is essentially

identical to Lost Tree Village where the courts

determined that the denial of a Corps' permit effected

a categorical taking. Tr. 2201-05. However, the issue

in Lost Tree Village was defining the parcel, not the

scope and parameters of the requested permit. In Lost

Tree Village, the landowner sought a Section 404

permit to fill a previously platted parcel consisting of

mangroves, swamp, and wetlands, Parcel 57, and

develop a residential home site, and the court looked

Appendix 43a

to a neighboring plat and scattered wetlands within

the community to define the relevant parcel. Lost Tree

Village I, 100 Fed. Cl. at 424-25. The Court of Federal

Claims found no regulatory taking because the denial

of the permit for the two plats and scattered wetlands

only diminished the value of this parcel by some

58.4%, an insufficient economic loss under Penn

Central. 100 Fed. Cl. at 439. On appeal, the Federal

Circuit found that the trial court erred in defining the

relevant parcel by aggregating the two parcels and the

scattered wetlands, and instructed that when

determining whether a categorical taking has

occurred, the court must look only to Parcel 57

because Lost Tree Village had treated Parcel 57 as a

separate economic unit. Lost Tree Village v. United

States, 707 F.3d 1286, 1294 (Fed. Cir. 2013). On

remand, the trial court found that considering the

single plat, the denial of a permit by the Corps caused

a diminution in value of 99.4% and amounted to a

categorical taking because it denied Lost Tree Village

all economically beneficial or productive use of the

land in that parcel. Lost Tree Village III, 115 Fed. Cl.

at 231; accord Palm Beach Isles Assoc. v. United

States, 208 F.3d 1374, 1381 (Fed. Cir. 2000).

There was no suggestion in Lost Tree Village. as

there is here, that the denial of the permit was based

on a use-specific application that the landowner could

have altered to minimize adverse environmental

impacts. Here, the Corps denied Lemon Bay a permit

to fill 2.08 acres and build a 12-unit project, and

invited Lemon Bay to amend its permit application to

encompass a development of lesser size and impact.

Plaintiffs persistence in limiting its proposed

development to a 12-unit footprint for its own

financial reasons prevented the Corps' consideration

Appendix 44a

of any other economically viable uses of the property.

Because Plaintiff has failed to establish that the

Corps' denial of Plaintiffs Section 404 permit

application for a 12-unit development obliterated all

value of the property, Plaintiff has not established a

categorical taking. Mehaffy v. United States, 499 F.

App'x 18 (Fed. Cir. 2012).

Defendant's Alternative Ground for Denying a

Taking: The Economic Value of Plaintiff's

Potential Perfection and Sale of Transfer

Density Units

Defendant posits an alternative ground for

denying Plaintiffs categorical taking claim

submitting that there is an economic use for Lemon

Bay's land in the potential perfection and sale of its

estimated Transfer Density Units ("TDUs"). The

Pacific Legal Foundation's amicus brief explains the

Charlotte County TDU program:

Like similar schemes employed by

municipalities across the nation, TDUs

utilize market mechanisms to facilitate a

more

optimal

distribution

of

development rights. Arthur C. Nelson et

al., The TDR Handbook: Designing and

Implementing Transfer of Development

Rights Programs xiv. In particular,

Charlotte County's program "shifts

residential density from areas where it is

inappropriate ... to areas where [it is]

more appropriate." Transfer of Density

Units (TDU). Charlotte County, Florida

Government Portal. It does so by

identifying "sending zones," i.e. areas to

be made less dense, and "receiving zones,

Appendix 45a

areas where density is added." Id.

County zoning ordinances determine the

number of residential dwelling units

permitted per gross acre of land.

Comprehensive Plan: Future Land Use

Appendix III at 6. Each additional

"increment" of permitted housing

constitutes a "density unit." Id. Property

owners in sending zones can "sever"

unused density units from the land by

entering a perpetual covenant to restrict

the use thereof. Charlotte Cty. Muni.

Code § 3-9-150(b), (f). This creates

"density credits" which can then be sold

to property owners in receiving zones.

Charlotte Cty. Muni. Code § 3-9-150(b).

For the receiving property owners, these

credits operate as exemptions from

otherwise applicable density limits.

ECF No. 98-1 (Br. Amicus Curiae of Pacific Legal

Foundation) at 4-5.

Plaintiff vigorously disputes that the potential

perfection and sale of its estimated TDUs to third

parties represents an "economic use" for purposes of a

taking because the perfection of TDUs requires the

property to remain in its natural undeveloped state.

According to Plaintiff, selling TDUs would yield

income to a landowner, not from cultivating or

developing its property in the traditional framework

of property ownership but from a regulatory construct

-a devised market-which requires that the owner's

land be kept vacant and idle in order to allow someone

else's land to be developed in its stead. For this swap

in development rights, the owner would receive a

Appendix 46a

monetary payment based on the nonuse of its

property. Defendant, on the other hand, ascribes a

valuation of between $504,000 and $630,000 to

Plaintiffs potentially marketable TDUs, which it

claims establishes an economic value for Plaintiffs

property in its undeveloped state.

The parties dispute whether the potential

perfection and sale of Plaintiffs TDUs can be

considered in determining whether a taking has

occurred. In debating the propriety of considering

TDUs in the taking context, the parties attribute

different interpretations to the existing caselaw-a

dispute which raises a thorny legal issue. 15 In the

15 Plaintiff and the amici rely on Justice Scalia's concurrence in

Suitum v. Tahoe Regional Planning Agency. 520 U.S. 725, 747

(1997) (Scalia, J., concurring in part and concurring in the

judgment, O'Connor, J. and Thomas, J. joining) ("TDRs, of

course, have nothing to do with the use or development of the

land to which they are (by regulatory decree) 'attached.' The right

to use and develop one's own land is quite distinct from the right

to confer upon someone else an increased power to use and

develop his land. The latter is valuable, to be sure, but it is a new

right conferred upon the landowner in exchange for the taking,

rather than a reduction of the taking .... Just as a cash payment

from the government would not relate to whether the regulation

'goes too far' G&..,_, restricts use of the land so severely as to

constitute a taking), but rather to whether there has been

adequate compensation for the taking; so also the marketable

TDR, a peculiar type of chit which enables a third party ... to use

his land in ways the government would otherwise not permit,

relates not to taking but to compensation.'') (emphasis in

original).

On the other hand, Defendant focuses on language in Penn

Central and cases construing that language. See Penn Central,

438 U.S. at 137 (stating that "while these rights [TDRs] may well

not have constituted 'just compensation' if a 'taking' had

Appendix 4 7a

instant case, the record is insufficient for this Court to

resolve the threshold factual issue of whether the

potential perfection and sale of Plaintiffs estimated

TDUs had economic value, and, if so, what that value

was.1 6 Thus, the Court does not reach Defendant's

alternative ground for challenging Plaintiffs

categorical taking claim. 17 In any event, reaching this

issue is unnecessary here given the Court's conclusion

that Plaintiff failed to establish that the Corps' permit

denial deprived Lemon Bay of all economic use of its

property. If Defendant had prevailed on its

occurred, the rights nevertheless undoubtedly mitigate whatever

financial burden the law has imposed on appellants and, for that

reason, are to be taken into account in considering the impact of

regulation''); Deltona Corp. v. United States, 657 F.2d 1184,

1192, n.14, 228 Ct. CL 476, 490, n. 14 (1981) (despite the

frustration of the plaintiffs reasonable investment-backed

expectation by the statutes and regulations at issue, plaintiffs

"residual economic position [was] very great" in part because it

possessed TDRs, which "mitigate whatever financial burdens the

law imposes"); Good v. United States, 39 Fed. CL 81, 108 (1997),

affd, 189 F.3d 1355 (Fed. Cir. 1999) (stating that "the concurring

opinion in Suitum underscores the Court's reaffirmance of the

Penn Central holding that the value of TD Rs is to be considered

to answer the threshold question of whether a taking has

occurred.").

16 The Court finds the opinion and testimony of Defendant's

expert on the estimated valuation of the potential perfection and

sale of Plaintiffs TDUs to be unpersuasive. See Tr. 1319-1512;

DX 72; JX 141. Defendant failed to establish a sufficient factual

predicate or indicia of the reliability of the expert's pricing of

individual TDU transactions that were the basis for his

valuation opinion. See Tr. at 1424-45, 1447-49, 1466--73, 1479-81; DX 72 at 2, 14; JX 141.

17 The Court also cannot determine on this record whether the

perfection and sale of Plaintiffs estimated TDUs have economic

value in the context of assessing the Penn Central factors.

Appendix 48a

alternative argument, it would merely have bolstered

this conclusion by demonstrating that the property

could potentially have retained beneficial economic

value by generating marketable TDUs.

Regulatory Taking of Lemon Bay's Property

under Penn Central

Alternatively, Plaintiff alleges a regulatory taking

of its property under Penn Central Transportation

Company v. City of New York, 438 U.S. 104 (1978). In

the context of a Penn Central analysis, whether a

given regulation goes "too far" in imposing a burden

on a landowner and warranting compensation under

the Fifth Amendment is determined by an "ad hoc,

factual inquiry." Cienega Gardens, 331 F.3d at 1337

(citing Penn Central. 438 U.S. at 124). The Penn

Central three-factor analysis considers (1) the extent

to which the regulation interfered with distinct

investment-backed expectations, (2) the character of

the governmental action, and (3) the economic impact

of the regulation on the claimant. Id. Using this

factual inquiry, this Court must determine whether

the Corps' denial of a permit to Lemon Bay to fill its

property constitutes a taking that requires just

compensation.

Reasonable Investment-Backed Expectations

Lemon Bay claims that it invested $891,078.02 in

its property, representing its member I.H.T.'s loss on

the defaulted loan, plus $400,000 that Lemon Bay

expended "in attempting to permit the property." Pl.'s

Post-Trial Br. at 34. Defendant argues that Plaintiffs

reasonable investment-backed expectations equate to

either the $10 Lemon Bay paid to I.H.T. for the

Appendix 49a

property in 2011, or LR.T's $15,200 payment at the

foreclosure sale in 2010.

"[T]o support a claim for a regulatory taking, an

investment-backed expectation must be 'reasonable."'

Cienega Gardens, 331 F.3d at 1346 (citing

Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005

(1984)). The test for whether investment-backed

expectations are reasonable is an objective one.

Cienega Gardens, 331 F.3d at 1346. "The subjective

expectations of the [plaintiff] are irrelevant. The

critical question is what a reasonable owner in

[plaintiffs] position should have anticipated."

Chancellor Manor v. United States, 331 F.3d 891, 904

(Fed. Cir. 2003). "A reasonable investment-backed

expectation must be more than a unilateral

expectation or an abstract need." Ruckelshaus, 467

U.S. at 1005. "[T]he timing of the purchase and

knowledge of the purchaser are relevant

considerations in determining whether a purchaser

had reasonable investment-backed expectations with

which the government's regulatory action interfered."

Anaheim Gardens. LP v. United States, 953 F.3d

1344, 1350 (Fed. Cir. 2020) (citations omitted).

"In the context of the Penn Central balancing test,

the complete absence of reasonable distinct

investment-backed

expectations

can

weigh

sufficiently heavily to be dispositive of a takings

claim." Id. at 1351 (citing Ruckelshaus, 467 U.S. at

1005). A property owner who acquires land with

knowledge of a regulatory restraint "could be said to

have no reliance interest or to have assumed the risk

of any economic loss." Loveladies Harbor. Inc. v.

United States, 28 F.3d 1171, 1179 (Fed. Cir. 1994);

Appendix 50a

Creppel v. United States, 41 F.3d 627, 632 (Fed. Cir.

1994).

Here, as Plaintiff was aware, the Corps'

requirement that it obtain a Section 404 permit was a

longstanding regulatory restraint that impacted

potential development of its property. In 2008, when

I.H.T. made the loan to Mr. LeFave secured by the

property, and in 2011, when I.H.T. both acquired the

property at the tax sale then sold the property to

Lemon Bay, this requirement was in place. When

I.H. T. acquired the property, Plaintiffs members were

aware that it would not be easy to obtain permits. Tr.

125 (''Yes, we were aware, not at each level, but we

were aware about the red flags that Mr. LeFave had

to work on."). As the Federal Circuit recognized in

Anaheim Gardens, "it is particularly difficult to

establish

a

reasonable

investment-backed

expectation" if the property was acquired after the

alleged regulatory restriction. 953 F.3d at 1350

(quoting Norman v. United States, 429 F.3d 1081,

1092-93 (Fed. Cir. 2005)).

Plaintiff argues that takings claims are "not

barred by the mere fact that . . . title was acquired

after the effective date of the state-imposed

restriction." Lost Tree Village I, 100 Fed. Cl. 412, 43738 (2011) (citing Palazzolo, 533 U.S. at 633) (internal

citations omitted), rev'd on other grounds, 707 F.3d

1286 (Fed. Cir. 2013). Under the Section 404

regulatory regime, however, an applicant's knowledge

of the Clean Water Act's restrictions and the need to

obtain regulatory approval to fill wetlands, can be a

significant factor preventing a finding of reasonable

investment-backed expectations. See Norman v.

United States, 429 F.3d at 1093 (finding no

Appendix 51a

reasonable investment-backed expectation because

plaintiff knew of the wetland restrictions and

acquired the property "with full knowledge that

portions ofit were not subject to development"); Good,

189 F.3d at 1361-62 (recognizing that "[i]n view of the

regulatory climate that existed when appellant

acquired the property, he could not have had a

reasonable expectation that he would receive approval

to fill ten acres of wetlands in order to develop the

land."). "To hold otherwise would turn the

Government into an involuntary guarantor of the

property owner's gamble that he could develop the

land as he wished despite the existing regulatory

structure." Mehaffy v. United States, 102 Fed. Cl. 755,

765 (2012), affd, 499 F. App'x 18 (Fed. Cir. 2012)

(quoting Forest Props .. Inc. v. United States, 39 Fed.

Cl. 56, 76--77 (1997)). In Mehaffy, the court found that

the plaintiff had both constructive and actual

knowledge that federal regulations could ultimately

prevent him from developing his land, and "did not

have a reasonable, investment-backed expectation

that he could develop the property without being

subject to the permitting requirements of the [Clean

Water Act]." Mehaffy v. United States, 499 F. App'x at

22. Here, as in Mehaffy. Plaintiff did not prove that it

had a reasonable investment-backed expectation in

developing its wetland property without being subject

to the regulatory permitting requirements. 18

18 In addition to its knowledge of the regulatory hurdles

undercutting its reasonable investment-backed expectations,

Plaintiff did not establish that its reliance on a single appraisal

that I.H.T. received in 2007, valuing the property as developed

at $4,470,000, created a reasonable expectation of the value of

the property within the meaning of Penn Central. PX 12 at 23.

Appendix 52a

Character of the Governmental Action

In determining the character of the governmental

action, a reviewing court must consider the purpose

and importance of the public interest reflected in the

regulatory imposition. Under the Clean Water Act,

the Government is required to protect and prevent

damage to the waters of the United States, including

the type of wetlands on Plaintiffs property. It is

undisputed that Plaintiffs property contains

Category I wetlands and mangroves. Tr. 135-36.

According to Mr. Sramek, a biologist from the NMFS,

the property "contains overall high-quality,

functioning mangrove wetlands," and there was "very

little anthropogenic or human use evidence that the

mangroves had been impacted." Tr. at 1289-90.

Further, the property was designated as an essential

fish habitat and an aquatic resource of national

importance. See JX 55.

Courts have consistently held that the Clean

Water Act's Section 404 program serves a legitimate

public purpose in preventing harm to environmental

resources such as wetlands. Mehaffy. 102 Fed. Cl. at

768 (The Corps' section 404 permitting regime "is

designed to protect and preserve the nation's

wetlands."); Brace v. United States, 72 Fed. Cl. 337,

356 (2006) ("[T]he United States has a legitimate

This appraisal was subject to the owner receiving requisite

permits, the preparer of the appraisal did not testify at trial, and

the appraisal itself was not admitted as evidence of the truth of

its contents, but only for the limited purpose of demonstrating

that I.H.T. relied on it in making the loan. Tr. 62-64; PX 12 at 4,

n. l. There is no evidence establishing the bona fides of the

appraisal, and Plaintiff has not established that the appraisal's

valuation of the property was accurate, or that I.H.T.'s reliance

on the appraisal was reasonable.

Appendix 53a

public welfare obligation to preserve our nation's

wetlands.").

In assessing the character of the governmental

action, "a court [must] balance the liberty interest of

the private property owner against the Government's

need to protect the public interest through imposition

of the restraint," and determine whether a burden

benefitting the public was "placed disproportionally

on a few private property owners." Cienega Gardens.

331 F.3d at 1337-38 (citing Loveladies Harbor. 28

F.3d at 1176). A landowner plaintiff will prevail only

when the burden on the landowner is "so substantial

and unforeseeable" that it must instead be borne by

the public. Kirby Forest Indus .. Inc. v. United States,

467 U.S. 1, 14 (1984).

While the governmental action here-the permit

denial-leaves Plaintiff unable to effect what it

considered to be the only profitable development of its

property and imposes a burden, Plaintiff has not

demonstrated that this burden is "so substantial and

unforeseeable" that it must be borne by the public.

Kirby Forest, 467 U.S. at 14. In Plaintiffs view, the

permit denial created a substantial burden because it

prevented it from developing 12 single-family units

that it needed to make the site an economically viable

project. JX 104 at 12. However, Lemon Bay's economic

dilemma stems from its member's pre-existing

financial outlay on I.H.T.'s defaulted loan and its

resultant inability to minimize the project's impact on

wetlands by reducing the number of units or footprint.

This burden, caused in part by circumstances of

Plaintiffs own making, cannot be deemed so

"substantial" in a takings analysis that it must be

borne by the public.

Appendix 54a

Nor was the regulatory landscape reqmrmg

Lemon Bay to obtain the Section 404 permit

"unforeseeable." The Section 404 Guidelines were in

effect decades before Lemon Bay sought its permit

and provided that "no discharge of dredged or fill

material shall be permitted if there is a practicable

alternative to the proposed discharge which would

have less adverse impact on the aquatic ecosystem."

Forest Prop .. Inc. v. United States, 177 F.3d 1360,

1363 (Fed. Cir. 1999) (quoting 40 C.F.R. § 230.l0(a)

(1988)). Because of these restrictions on development

resulting from the Section 404 permitting regime, as

the Federal Circuit explained, "few, if any, dredge or

fill permits will be granted for the construction of

housing." Id.; see Loveladies Harbor. Inc. v. United

States, 27 F.3d 1545, 1547 (Fed. Cir. 1994); Good v.

United States, 189 F.3d 1355, 1359 (Fed. Cir. 1999).

As such, the burden that Plaintiff experienced due to

the permit denial was foreseeable. In sum, the

character of the governmental action weighs in favor

of Defendant.

Economic Impact

This factor requires "that plaintiffs show 'serious

financial loss' from the regulatory imposition in order

to merit compensation" and is "intended to ensure

that not every restraint imposed by the government to

adjust the competing demands of private owners [will]

result in a takings claim." Cienega Gardens, 331 F.3d

at 1340 (citing Loveladies Harbor, 28 F.3d at 1177).

"Proving economic loss requires a plaintiff to show

what use or value its property would have but for the

government action." A&D Auto Sales. Inc. v. United

States, 748 F.3d 1142, 1157 (Fed. Cir. 2014). Plaintiff

argues that its economic loss should be measured by

Appendix 55a

the difference in value of the property without a

Section 404 permit, $12,500, a nominal value, and the

value of the property with the permit, $3,800,000.

Defendant argues that Plaintiffs valuation of its

property but for the denial of the Corps permit hinges

on the assumption that the property is readily

convertible for residential use, an assumption that is

unwarranted because Lemon Bay did not receive all

federal, state, and local permits required for

developing the property. ECF No. 167 at 46. In

addition to the Section 404 permit from the Corps,

Lemon Bay needed an ERP from the SWFWMD, the

state of Florida water management district, and

approval from Charlotte County on compliance with

its Comprehensive Plan and land development

regulations.

In order to get an ERP, Plaintiff had to show that

the project would not be harmful to water resources or

violate state water quality standards, and not be

contrary to the public interest. See Fla. Stat. Ann.

§ 373.414(1) (West 2020). According to Hugh Dinkler,

an environmental scientist retained by Lemon Bay to

obtain the ERP and "future state sovereign lands

authorization" for the multi-slip dock, the proposed

project met all criteria for an ERP. Tr. 266. On

December 20, 2012, Plaintiff had been granted an

ERP from the SWFWMD for the project without a

dock. JX 77 at 1. Although Plaintiffs experts opined

that Lemon Bay would likely have been able to lease

land from the state and include a dock, they

acknowledged that no federal, state, or local

regulatory authority had authorized construction of a

dock on the subject property. See Tr. 282-84, 325-26,

552, 842; PX 1 at 10; Stip. ,r,r 78, 111. Lemon Bay

Appendix 56a

never amended its ERP application to the SWFWMD

to reflect the addition of the dock, and Lemon Bay's

ERP, without a dock, ultimately expired on January

5, 2018. Based on the record of Plaintiffs dealings

with the SWFWMD and the expert testimony, the

Court finds that Plaintiff did not demonstrate by a

preponderance of the evidence that it would have been

able to obtain an ERP from the state of Florida water

management district.

Nor has Plaintiff demonstrated that it would have

obtained approval of its site plan from Charlotte

County. Plaintiffs land use planning and regulation

expert, Dr. Depew, opined that because the LeFave

site plan had received preliminary approval from

Charlotte County, Lemon Bay would have also

received such approval. Tr. 523-25. Dr. Depew

dismissed the detailed conditions that had to be

addressed before final approval, as "nothing out of the

ordinary." Tr. 525. He opined that both the LeFave 39unit site plan and Lemon Bay's seven-unit site plans

would have been approved after providing

unexplained "engineering details." Tr. 526, 531-33;

see also PX 1 (Depew Report).

Defendant's expert in environmental permitting,

Ian Vincent, 19 opined that the fact that the LeFave

plan received preliminary ERP approval did not

increase the likelihood that Charlotte County would

approve either the Lemon Bay 12-unit or seven-unit

plans. Tr. 1649-50. The Court credits the testimony of

Mr. Vincent that Lemon Bay would not have received

19 The Court admitted Mr. Vincent as an expert in the fields of

environmental permitting and the environmental components of

local land use approvals in Southwest Florida, including

Charlotte County. Tr. 1570.

Appendix 57a

site plan approval from Charlotte County, based on

his review of the Charlotte County Comprehensive

Plan's environmental and coastal planning goals, the

Manasota and Sandpiper Key Zoning Overlay District

regulations, as well as the history of Mr. LeFave's and

Lemon Bay's applications to the SWFWMD and the

Corps. DX 73 at 17; Tr. 1615-16, 1644-47. Mr.

Vincent opined that both Lemon Bay's original 12unit plan and Dr. Depew's subsequent 7-unit plan

were inconsistent with the County's Environmental

Policies 3. 1.3, 3.1.5, and 3. 1.8, Coastal Planning

Policies 1.1.2, 1.1.3, 1.1.4, 1.1.5, and 1.1.9, and the nofill provision of the Manasota and Sandpiper Key

Zoning Overlay District. Tr. 1681-1705; see also JX

44. These policies provide for the limitation of impacts

on Category I wetlands where no feasible and

practicable alternative exists that will permit a

reasonable use of the land. See Tr. 1671. Mr. Vincent

testified that the county would require a wetland

avoidance and minimization discussion, and that

Lemon Bay had made "no effort ... to justify why a

development footprint of two acres of... Category I

wetland impact was necessary." Tr. 1672-73; see also

Tr. 1687-88, 1691-92, 1696, 1735.

According to Mr. Vincent, Lemon Bay's plan was

inconsistent with Coastal Planning Policies because it

"propose [d] the removal of approximately two acres of

mangroves, along with the construction of a dock in

an aquatic preserve," which would "adversely impact

the environmental integrity of natural resources" and

because Lemon Bay's proposed development was

habitat for some of the protected species of flora and

fauna, such as the smalltooth sawfish. Tr. 1693, 1697.

Appendix 58a

The Manasota and Sandpiper Key Zoning Overlay

District provides that Sandpiper Key is "a no-fill area

within which only pilings and stem walls may be used

for all construction, except the minimum amount of

fill necessary within the building footprint and for

drainfields associated with onsite water treatment

and disposal systems." Tr. 1698-99. According to Mr.

Vincent, Lemon Bay's plan was inconsistent with this

no-fill provision because the proposed fill extended

"well beyond the building footprint and associated

drainfields." Tr. 1699.

Mr. Vincent opined that the preliminary approval

of the LeFave site plan did not mean that the Lemon

Bay site plan would have been approved, pointing out

that the LeFave plan had been approved using the

1997 version of the Comprehensive Plan which had

less onerous requirements for approval than the

applicable 2005 version. Tr. 1646--49. Ms. Jaime

Scudera, an environmental specialist for Charlotte

County in the zoning division that reviewed

development applications testified that the

preliminary site plan approval is "incredibly easy'' to

obtain and is essentially just a mechanism to obtain a

list of conditions that need to be met in order to obtain

final approval. Tr. 1235, 1241, 1245-48. Based on Mr.

Vincent's and Ms. Scudera's persuasive testimony, the

Court finds that Lemon Bay has not demonstrated

that it would have been able to obtain final site plan

approval from Charlotte County.

While it is obvious that Plaintiffs property would

be far more valuable if it were a residential

development rather than unspoiled wetlands,

Plaintiff has not established financial loss

attributable to the Corps' denial of its permit

Appendix 59a

application, given its failure to prove that it would

have obtained the necessary ERP from the SWFWMD

and site plan approval from Charlotte County. Thus,

the economic impact factor weighs in favor of the

Government.

Statutory Right to Bulkhead and Fill Under

Florida Law

Lemon Bay alleges that the Corps' denial of its

Section 404 wetland permit application amounts to a

taking of its statutory right to bulkhead and fill its

property under Florida law because the right to

bulkhead and fill submerged wetlands is a property

right that is appurtenant to and runs with its title to

the property. Even assuming that Plaintiff does have

a statutory right to bulkhead and fill its property

under Florida law and that that right runs with its

title to the property, this does not resuscitate

Plaintiffs failed takings claim or operate to confer a

separate basis for takings liability. As the

Government points out, Plaintiffs state-law conferred

entitlement to bulkhead and fill cannot be segregated

from its bundle of rights associated with ownership of

property for a takings analysis. "Taking jurisprudence

does not divide a single parcel into discrete segments

and attempt to determine whether rights in a

particular segment have been entirely abrogated."

Penn Central, 438 U.S. at 130.

Even if Plaintiff demonstrated a vested right

under state law to bulkhead and fill its property, a

restriction of that right via the denial of a federal

permit to fill wetlands would not be determinative of

a federal taking claim. Good v. United States, 39 Fed.

Cl. 81, 98 (1997), affd, 189 F.3d 1355 (Fed. Cir. 1999)

("[E]ven if plaintiff were able to demonstrate the

Appendix 60a

existence of such a vested right under state law, a

federal restriction on that state right would not

demonstrate the federal restriction to be a taking."

(citing Corn v. City of Lauderdale Lakes, 95 F.3d

1066, 1073 (11th Cir. 1996) (denial of permission to

build project to which developer holds vested right

does not by itself establish takings liability)).

Conclusion

Plaintiff has failed to demonstrate either a Lucas

categorical taking or a Penn Central regulatory

taking. The Clerk is directed to enter final judgment

in favor of Defendant.

s/Mary Ellen Coster Williams

MARY ELLEN COSTER WILLIAMS

Senior Judge

Appendix 61a

FILED 09/13/22

In the United States Court of Federal Claims

)

LEMON BAY COVE,

LLC,

Plaintiff(s ),

v.

)

)

THE UNITED STATES,

~

Defendant.

)

Case No. 17-436L

Judge Mary

Ellen Coster

Williams

)

)

NOTICE OF APPEAL

Notice is hereby given that Lemon Bay Cove, LLC (list

all parties taking the appeal) in the above named case

hereby appeal to the United States Court of Appeals

for the Federal Circuit from the Final Judgment and

Post Trial Opinion (Doc. 173 and 174) (describe

document being appealed; e.g. final judgment, order)

entered in this action on July 15. 2022 (filed date of

document being appealed).

/s/ David Smolker

(Signature of Appellant or

Attorney)

David Smolker Esq.

(Printed Name)

100 South Ashley Drive Suite

1490

(Street Address)

Tampa, FL 33602

(City, State, ZIP Code)

813-819-2552

(Phone Number)