[00:00:00] Speaker 01: Our next case for argument is 22-2242, Lemon Bay Cove versus United States. [00:00:08] Speaker 01: Is it Mr. Smoker? [00:00:09] Speaker 01: Am I saying it right? [00:00:12] Speaker 04: Yes, Your Honor, you are. [00:00:13] Speaker 01: OK, please proceed. [00:00:14] Speaker 04: Thank you, Your Honor. [00:00:16] Speaker 04: Your Honors, I'm Dave Smoker on behalf of the appellant, Lemon Bay Cove LLC. [00:00:22] Speaker 04: I would like to reserve three minutes for rebuttal. [00:00:28] Speaker 04: So. [00:00:29] Speaker 04: This is a regulatory taking case. [00:00:32] Speaker 04: The facts are really essentially not in dispute. [00:00:36] Speaker 04: Our contention is that the claims court didn't properly apply the law to those facts. [00:00:42] Speaker 04: And there's a couple of facts that I think are hugely important here. [00:00:46] Speaker 04: First, the property in question consisted of 5.64 acres of mangroves and privately owned submerged lands. [00:00:55] Speaker 04: In other words, 99.2% of this property was wetlands. [00:01:00] Speaker 04: There were no developable uplands. [00:01:03] Speaker 04: And it's undisputed that without a core permit, the property had no economically beneficial use. [00:01:10] Speaker 04: You had to have a core permit, or else you had no use. [00:01:13] Speaker 01: But you bought the property for $15,000 as an option. [00:01:16] Speaker 01: Is that right? [00:01:18] Speaker 04: We did. [00:01:19] Speaker 04: And it was at a foreclosure sale. [00:01:21] Speaker 04: And there was a credit bid. [00:01:22] Speaker 04: of $875,000 plus interest on the loan that had defaulted. [00:01:30] Speaker 04: So the $15,000 was essentially a pro forma bid under Florida law that the foreclosing mortgagee would show up and give if they wanted. [00:01:40] Speaker 01: But anybody could have shown up and given. [00:01:41] Speaker 01: What if somebody had come and given $16,000? [00:01:43] Speaker 01: Would they have gotten the property over you? [00:01:44] Speaker 04: No, they would have had $16,000 plus the principal and the interest. [00:01:48] Speaker 01: I see. [00:01:49] Speaker 01: OK, but when you bought the property, you already knew that this was wetlands. [00:01:55] Speaker 04: Correct. [00:01:56] Speaker 01: You already knew that there were problems with that, and that that would create a challenge for you. [00:02:02] Speaker 04: It would create a challenge with respect to the Penn Central taking claim on the legitimacy of investment-backed expectations. [00:02:10] Speaker 04: But that's just one factor that should be looked at when you're evaluating investment-backed expectations. [00:02:17] Speaker 04: It's irrelevant in the case of a Lucas taking claim. [00:02:20] Speaker 04: The only issue in Lucas is whether or not there was. [00:02:24] Speaker 01: That's categorical in Lucas. [00:02:26] Speaker 01: And your problem there, it seems to me with all due respect, is that you asked the Army Corps of Engineers to approve one set of plans. [00:02:35] Speaker 01: And they said no to that one set of plans and asked you [00:02:39] Speaker 01: to discuss or talk about alternatives that would maybe not be so extensive and invasive and not require such extensive fill. [00:02:49] Speaker 01: And instead, you just threw your hands up in the air and said, nope, we're not going to do it. [00:02:53] Speaker 01: How is that a categorical taking? [00:02:56] Speaker 01: You were denied one set of plans. [00:03:00] Speaker 01: You could have come back in and asked for anything different, smaller, maybe drop the dock. [00:03:05] Speaker 01: you know, maybe not go after 12 single-family homes, maybe just condominiums. [00:03:09] Speaker 01: How does that deprive you completely, categorically, of any use of that land? [00:03:16] Speaker 04: Because without a core permit, there is no economically beneficial use. [00:03:21] Speaker 01: And once the core decided... You don't have a right to the particular permit you sought. [00:03:26] Speaker 01: You have a right to be able to use your property under Lucas. [00:03:28] Speaker 01: And you can only follow Lucas' claim if you're completely deprived of that right. [00:03:32] Speaker 01: The core [00:03:33] Speaker 01: asked you questions that you refused to answer and made it clear that you could file another permit. [00:03:38] Speaker 01: You could. [00:03:38] Speaker 01: I mean, what I don't understand, how is the denial of a single permit a categorical taking? [00:03:45] Speaker 04: It's a categorical taking in this particular instance because once the Corps concluded that they would not grant this permit for this particular development proposal, then the burden shifted to the Corps to tell us specifically what they would approve. [00:04:01] Speaker 01: otherwise we're relegated essentially to the syriotum permitting process but that was a great that may carry some weight if you'd actually tried multiple times but you try exactly one lots of people apply for permits more than once so you're you're right if if you've been put into some hellish version of groundhog day with bill murray yeah that had been a problem but u s for one permit full stop and they said no not that one but they actually threw questions back at you and asked you to consider [00:04:30] Speaker 01: less invasive, I don't remember the language of the question, alternatives and to propose them. [00:04:34] Speaker 01: They kind of invited you to propose them and you didn't. [00:04:38] Speaker 04: Right, because it was the client's conclusion that any further reductions or minimization would not achieve the economic objective that they had, which was to recover their... Your client was quite honest in telling the Corp of Engineers you had to do this in order to break even. [00:04:56] Speaker 02: Yes, and also... You lose money if you do anything else. [00:05:00] Speaker 02: And also to realize... And that's not the core's problem, is it? [00:05:03] Speaker 04: Well, I think it is. [00:05:05] Speaker 04: I think that the core has a duty in reviewing... I think it's Love Ladies Harbor... They don't have a duty to make you whole. [00:05:16] Speaker 02: Economically, right? [00:05:18] Speaker 04: The answer is one of the elements that is relevant to a regulatory taking claim is the ability to recover the investment into the property. [00:05:27] Speaker 04: That's a factor. [00:05:28] Speaker 02: Is that a property right? [00:05:32] Speaker 02: do I have a property right in having a return on my investment? [00:05:37] Speaker 04: You don't, but it is a factor that is considered under Penn Central. [00:05:42] Speaker 01: But you're not under Penn Central. [00:05:43] Speaker 01: You're focusing on Lucas now. [00:05:46] Speaker 01: And in Lucas, there was a complete refusal to allow any development. [00:05:51] Speaker 01: Those facts are just wildly different than these facts. [00:05:54] Speaker 04: I would agree, but Your Honor, the key point here is before it applied for a permit, [00:06:01] Speaker 04: They had an expectation that they should be able to get a fill for a couple of reasons. [00:06:07] Speaker 04: One, the prior owner had applied for and gotten a site plan approval from the county for a larger fill footprint. [00:06:15] Speaker 04: From the county? [00:06:16] Speaker 04: From the county, the local government. [00:06:18] Speaker 02: Additionally, the local county doesn't have a statutory duty to protect the mangroves and the manatees, right? [00:06:27] Speaker 04: Well, in this particular instance, the answer is yes. [00:06:31] Speaker 04: Charlotte County, which was a relevant county, did have regulations regulating impacts to mangroves. [00:06:36] Speaker 04: They essentially tracked the same sort of regulations that you had under state law. [00:06:41] Speaker 04: And incidentally, a month before we applied in April of 2012 to the Army Corps, we received a permit from the state environmental wetland permitting agency for it precisely. [00:06:54] Speaker 01: Just to be clear, my brilliant law clerk, who, by the way, grew up 20 miles from your site, [00:07:00] Speaker 01: and says that that was only a preliminary approval it came with conditions and it didn't have a doc and that's very true so your client came in with the understanding that there were conditions on whether this would happen even from the state and it didn't have a doc and now you're using that to say it was somehow reasonable for them to believe that the army corps a different entity should have approved without conditions and something that included a doc [00:07:26] Speaker 04: First of all, we are contending that the Corps couldn't have put reasonable conditions on a permit. [00:07:31] Speaker 04: But the point is that the fill area, the impact that's being regulated by the Army Corps of Engineers, they don't regulate land use and zoning and that sort of thing. [00:07:40] Speaker 04: They regulate the impact that you have on wetlands. [00:07:44] Speaker 04: We had already had gotten a preliminary approval [00:07:48] Speaker 04: for a similar fill footprint. [00:07:51] Speaker 04: We had also gotten a permit from the water management district for essentially the identical fill footprint. [00:07:58] Speaker 04: Additionally, the property is zoned and land used specifically for the residential type of development that we were proposing. [00:08:06] Speaker 04: And so I think in the context of a Lucas Taken, I don't think the owner has a burden [00:08:12] Speaker 04: of having to respond to the core and acquiesce in their requests for further reductions and minimizations. [00:08:26] Speaker 04: In this particular instance, the [00:08:29] Speaker 04: economic value isn't really the test under lucas it's the test is whether there's economically beneficial use now whether or not i guess it was going to land now i know this is way outside the record i'm kind of curious what's what have you did you ever at any point for another permit anything happened was going on as far as i know the client has not sought an additional permit because they basically feel that [00:08:55] Speaker 02: it's a catch-22 that they're not going to get a permit from they'll have to go back to the to the uh... one thing that interested me was that in your original proposal you recognize the significance of uh... the situation here with the mangroves and so you on purpose reserved a part of the original mangroves so not to be disturbed yes what we did here and what is that recognition seeming to be [00:09:24] Speaker 02: In the mine, I'm talking to the regulator who wants to preserve the mangrove as that duty. [00:09:29] Speaker 02: So we reserve two acres or whatever it was for the mangrove. [00:09:33] Speaker 02: We don't know what would happen if you had come back and applied for, say, five houses saving half of the mangroves and getting rid of the dock so that the manatee wouldn't be disturbed. [00:09:45] Speaker 04: Those were all theoretical possibilities, but they were speculative. [00:09:49] Speaker 02: And the Corps did not give us one... Well, speculative that you might have filed such a proposal. [00:09:55] Speaker 04: Speculative that the Army Corps of Engineers would have approved it. [00:09:58] Speaker 02: No, no, no. [00:09:58] Speaker 02: If you'd filed it and they turned it down, right? [00:10:02] Speaker 02: I suppose your main argument is that you shouldn't be made to have successive filings in order to prove that the Corps is never like in [00:10:13] Speaker 02: Lucas never going to give it to you? [00:10:15] Speaker 04: Precisely. [00:10:16] Speaker 04: In other words, we shouldn't, under the course permitting procedures, if they deny us, we shouldn't be obligated to engage in seriatim permitting exercises. [00:10:25] Speaker 02: Probably the question is how many times? [00:10:27] Speaker 02: I mean, if we had a record where you, say, asked for 12 and were turned down, then you asked for six and turned down, then you asked for three and were turned down, we might be in a different position to reach a conclusion whether you were ever going to get it. [00:10:41] Speaker 04: No question. [00:10:42] Speaker 04: However, that's not what we understand the law to be. [00:10:46] Speaker 04: The law is once the court denies the application that's in front of it, the burden shifts to them to say specifically, here's what we would approve and then we can make an application. [00:10:55] Speaker 03: What case says that? [00:10:57] Speaker 03: the uh... first permit application once it gets denied the the burden shifts the government to explain what kind of uh... permit application they would grant love ladies harbor the u.s. [00:11:11] Speaker 04: what ladies there were multiple permit applications and that were denied that right there was more there's certainly more than one i don't believe so your honor but i i will trust your judgment on that but the point here [00:11:26] Speaker 04: is that well we're not ladies did it say after the denial of the first permit application the burden shifts to the government to prove that it would in fact grants some from that i was directed page one fifty seven there is a apparently elaborate discussion where that issue is squarely raised before the claims court what the claims court said was uh... essentially we're not going to relegate permit applicants to syriam permitting exercises [00:11:55] Speaker 04: Once it's determined that there is no economically beneficial use of the property and the court elects to deny a permit. [00:12:02] Speaker 01: No, on that page it goes on to say the plaintiffs argued the evidence established additional applications would have been futile. [00:12:10] Speaker 01: You have not put forth any such evidence. [00:12:13] Speaker 01: There's no evidence in this case that you tried more than once or that it would have been futile to try more than once with a different application. [00:12:21] Speaker 04: We think that the record, based on the way the Corps treated this permit application, they characterized those mangroves on this property as an aquatic resource of national importance [00:12:32] Speaker 04: and essential fish habitat, per se. [00:12:35] Speaker 02: And I don't see how in any set of circumstances that they would then say, but if you reduce the size of your... Yes, you're arguing that the Plains Court judge committed clear error when she found against you on the question of whether or not they would ever give a permit. [00:12:54] Speaker 04: What she said was we had failed to prove that the Corps would never issue a permit. [00:12:59] Speaker 04: And our argument is that's not our burden. [00:13:04] Speaker 01: Okay, let's save the rest of your time for rebuttals. [00:13:10] Speaker 01: Let's hear from the government. [00:13:11] Speaker 01: Thank you. [00:13:13] Speaker 01: Mr. Bernie? [00:13:14] Speaker 01: Yes. [00:13:21] Speaker 00: Thank you, Your Honor. [00:13:21] Speaker 00: May it please the Court, Andrew Burney on behalf of the United States. [00:13:25] Speaker 00: First of all, I just want to correct the record on one thing. [00:13:27] Speaker 00: I'm sure it was unintentional, but my understanding, and I can certainly correct the record if I'm wrong about this, in the 28-J, is that Mr. Smoker's client, while it's not submitted a formal application, has come to the Court with [00:13:39] Speaker 00: with an alternative proposal. [00:13:44] Speaker 00: So I just wanted to... There's no reason... It's not part of this record. [00:13:49] Speaker 00: It's not part of this record. [00:13:50] Speaker 00: I wasn't even going to bring it up. [00:13:51] Speaker 01: It wasn't considered by the court below, right? [00:13:53] Speaker 00: No, no, no. [00:13:53] Speaker 01: The only reason... We certainly don't need a 28-J letter. [00:13:55] Speaker 00: Okay, fair enough. [00:13:57] Speaker 00: Since that statement was made. [00:13:58] Speaker 00: The CFC correctly held, following a 10-day trial, that the Corps' denial of a single permit did not qualify as a categorical taking under Lucas or taking under Penn Central. [00:14:07] Speaker 00: Turning first to Lucas, Chief Judge Moore, you're exactly right. [00:14:10] Speaker 00: This was one permit. [00:14:12] Speaker 00: The Corps denied one permit to fill two acres of high-quality mangrove wetlands with an extravagant 12-townhome development with a nine-slip dock. [00:14:22] Speaker 01: So you think if it wasn't extravagant, they'd have approved it? [00:14:25] Speaker 00: I think we don't know. [00:14:26] Speaker 01: In print, but not extravagant. [00:14:28] Speaker 00: I think the court's denial of this single project does not prove that the court has denied any proposal. [00:14:35] Speaker 00: Just in terms of the record, I think the argument made to the court in the administrative proceedings was very different than the argument being made in the judicial proceedings. [00:14:44] Speaker 00: In the administrative proceedings, the court specifically told, this is in the January 2014 letter discussed at 11 and 12 of the [00:14:54] Speaker 00: appendix. [00:14:55] Speaker 00: The Corps said, you know, come forth with proposals to minimize the number of residences, to minimize the lot size, to minimize deep water impacts, to minimize the dock. [00:15:04] Speaker 00: And then they came back, they say this several times in the record, but I think it's shown most strikingly at page 1318 of the appendix. [00:15:11] Speaker 00: This is their May 2014 letter. [00:15:13] Speaker 00: They come forth with a laundry list of [00:15:16] Speaker 00: uh... sort of must-haves they say it has to be twelve units of equal size it has to have deepwater access in a list of number of things in the reason why they're so rigid about this is because they say they need to recover their investment which by investment they don't mean that the relatively small amount they paid for the property but their prior uh... failed loan to mister lefebvre [00:15:38] Speaker 00: And so the court denied that one proposal. [00:15:43] Speaker 00: But in this court, they're saying that the court would have inevitably denied any fill proposal. [00:15:47] Speaker 00: But there's no support for that in the record. [00:15:50] Speaker 00: The court's denial of this single permit does not show that the court would have necessarily denied a different proposal, such as for a water-dependent use, a non-water-dependent use with a smaller footprint, or perhaps something else entirely, like houses built with pilings or something like that. [00:16:07] Speaker 03: Is there evidence that the court suggested that they file an amended application or a renewed permit application? [00:16:17] Speaker 00: I don't know if there's anything where they suggest they file a renewed permit application, Judge Chen, but what I would say about that, I mean, Mr. Smoker referenced the prospect of seriatim applications. [00:16:26] Speaker 00: but the 404b permitting process itself within that single process is supposed to be an iterative process where the core where a proposal is made, the core comes back with requests to minimize which the core did in that letter that I indicated but that didn't happen here because Lemon Bay insisted that it had to build this specific project to recover [00:16:55] Speaker 00: its investment. [00:16:56] Speaker 00: And it's simply not the case. [00:16:59] Speaker 00: The one thing I want to emphasize is a Lucas claim is by its very nature an extraordinary claim. [00:17:05] Speaker 00: It's a complete exemption from Penn Central for the sort of extraordinary case where all economically beneficial value is extinguished by a regulation. [00:17:15] Speaker 00: So it is incumbent, particularly within the 404B process, for [00:17:20] Speaker 00: the claimants to establish that not just that a single large proposal was denied, that the court necessarily would have denied any proposal. [00:17:31] Speaker 00: We simply don't have that on this record. [00:17:34] Speaker 00: I want to say a few things about some of the approvals from the other counties. [00:17:41] Speaker 00: I mean, we think, first of all, that those are not relevant to the Lucasum Query initially, because [00:17:45] Speaker 00: As I think Judge Clevenger indicated, these are separate entities. [00:17:49] Speaker 00: But on the site plan approval from Charlotte County, this was a preliminary approval from Charlotte County. [00:17:57] Speaker 00: This project was never submitted to the Corps. [00:18:00] Speaker 00: And there was testimony in the record, particularly testimony from Jamie Scudera, a project specialist, I think beginning on page 659 of the appendix, which the CFC credit is persuasive. [00:18:13] Speaker 00: The preliminary site plan approval is not at all difficult to get, at least in 2007 under the prior version. [00:18:20] Speaker 00: And Charlotte County subsequently overhauled its regulations after that site plan approval. [00:18:30] Speaker 00: expired. [00:18:31] Speaker 00: So I don't think you can take anything from that. [00:18:33] Speaker 01: It certainly doesn't undermine... Is Charlotte County charged with administering the Clean Air Act? [00:18:39] Speaker 00: No, Charlotte County or the Clean Water Act, you mean? [00:18:42] Speaker 00: Yeah. [00:18:42] Speaker 00: I mean, no, not necessarily. [00:18:45] Speaker 00: But the point is they list that as part of their investment-backed expectations. [00:18:50] Speaker 00: And I'm [00:18:50] Speaker 00: even on its own terms, they're not charged with administrating the Clean Water Act. [00:18:54] Speaker 00: But even putting that aside, it's just not persuasive because it's not difficult to get. [00:18:58] Speaker 00: And a revised regulatory regime, even at the local level, would have applied. [00:19:02] Speaker 00: As to the state approval, the state approval they received was without a DOC. [00:19:08] Speaker 00: The Southwest Water District specifically advised them to take the DOC out to avoid heightened scrutiny. [00:19:14] Speaker 00: So they did that. [00:19:15] Speaker 00: And I think the timing here is important. [00:19:17] Speaker 00: In December 2012, they received the approval from the state for a proposal that does not include a DOC. [00:19:24] Speaker 00: Two months later, in February 2013, they amend their application to the Corps to add a DOC. [00:19:30] Speaker 00: They never come back to the state of Florida to obtain approval for any sort of proposal with a DOC. [00:19:37] Speaker 00: And their submission to the CFC, which the CFC didn't find persuasive, is that the state of Florida would have inevitably granted them that permit. [00:19:45] Speaker 00: with a doc that they never sought. [00:19:47] Speaker 00: And just like they said that Charlotte County would have granted them final approval, which they also never sought. [00:19:53] Speaker 01: Okay, so we've talked about mangroves, about the manatees. [00:19:56] Speaker 00: Yeah, so that was a separate issue caused mainly by the dock. [00:20:02] Speaker 00: The Fish and Wildlife Service in a buyout found that that would likely result in take of the endangered manatees, and specifically indicated that removal from the dock from the proposal would alleviate that. [00:20:16] Speaker 00: And Lemon Bay Cove declined to remove the dock from the proposal. [00:20:21] Speaker 01: And am I right in remembering that the doc would actually extend beyond what is arguably their property right and into a portion of the state property right? [00:20:29] Speaker 00: No, right. [00:20:30] Speaker 00: That's correct. [00:20:31] Speaker 00: That's correct. [00:20:31] Speaker 01: They don't usually interrupt the judgment. [00:20:33] Speaker 01: They're throwing you a softball. [00:20:35] Speaker 01: I'm terribly sorry. [00:20:36] Speaker 01: They're throwing you a softball. [00:20:36] Speaker 01: Wait for it and then sway. [00:20:38] Speaker 00: Thank you, Your Honor, and I apologize. [00:20:41] Speaker 00: I was a little over eager. [00:20:43] Speaker 00: So no, I mean, that's right. [00:20:44] Speaker 00: It would require a sovereign land lease from the state of Florida, which they never obtained. [00:20:49] Speaker 00: And under the Florida statutes, once the requirement to obtain that, it's a higher level of review from the governor and his cabinet. [00:20:59] Speaker 01: Is there anything else you feel like you need to cover today? [00:21:02] Speaker 00: uh... no i mean we think just on on penn central is really no reasonable investment backed expectations here on all the other factors favor the government and uh... without seat balance thank you mister smoker have some of our time three minutes uh... i think you have two minutes and eight seconds but go ahead thank you your honor with regard to the last point how do you swear the fact that [00:21:31] Speaker 04: the trial court found no reasonable investment expectation in being able to fill this property because of the Army Corps' regulations with the finding under Lucas that we should have applied for lesser impactful development. [00:21:48] Speaker 04: I don't know how you square that. [00:21:50] Speaker 04: And I think that it illustrates the problem here in terms of [00:21:58] Speaker 04: exactly what did we have to show before we had a taking of this property under Lucas. [00:22:06] Speaker 04: And I would suggest to you, first of all, the denial of our permit application was with prejudice, quote unquote. [00:22:14] Speaker 04: They didn't say this particular permit is denied. [00:22:18] Speaker 04: However, if you make the following changes, we will approve it. [00:22:23] Speaker 04: And in fact, the testimony of the corporate representative of [00:22:27] Speaker 04: the Army Corps of Engineers at trial was, oh, we don't tell applicants what we will approve. [00:22:35] Speaker 04: We don't make specific suggestions as to what we would approve. [00:22:40] Speaker 04: So it puts the applicant in this position of, okay, so I think in the Sackett case, we cited a supplemental authority. [00:22:50] Speaker 04: The Supreme Court took judicial notice of the fact that the Corps permitting process [00:22:57] Speaker 04: Uh, is, uh, essentially extremely burdensome. [00:23:02] Speaker 04: Um, and, and it, it, the costs are inordinate. [00:23:05] Speaker 04: Our client in the record establishes this spent four years and $400,000 trying to get this permit. [00:23:12] Speaker 04: And at the end of the day, we're being told, no, sorry, you need to apply for and see whether the core will approve some undefined speculative other [00:23:23] Speaker 04: less impactful development when we've already had a permit from the state agency who regulates essentially the same things. [00:23:31] Speaker 04: We had the zoning, we had prior site plan approval. [00:23:35] Speaker 04: In other words, if we have to continually be changing with new applications, then you end up in this seriatim permitting where you're supposed to prove a negative. [00:23:46] Speaker 01: Thank you, Mr. Smoker. [00:23:49] Speaker 01: Your time is up. [00:23:50] Speaker 01: Thank you, Your Honor.