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PLANTATION KEY, FL-In a decision that could cost local taxpayers millions of dollars in damages, a trial court judge has ruled the Monroe County Commission unlawfully prohibited two property owners from developing a residential resort during the 1980s in northern Key Largo, 48 miles south of Downtown Miami in the Florida Keys.

The landmark ruling is expected to be used by individual property owners across the country in cases of inverse condemnation battles with local governments.

By adopting a building moratorium in 1982 and extending it in 1986, says Monroe Circuit Judge Luis Garcia, the county commission violated the constitutional rights of the families of Arthur Shadek and Joseph Harrison.

“Judge Garcia’s well-reasoned opinion confirms that local governments, which adopt extended development moratoria, will be subject to suit under the Fifth Amendment,” Douglas M. Halsey, a law partner in the Miami offices of White & Case, says in a prepared statement. White & Case represented the Shadek and Harrison families.

Referring to Garcia’s 43-page court order, Halsey says even the judge found it compelling to note that Lucien Proby, former Monroe County attorney, warned the commission in 1987 that a continued extension of the development moratorium put the county at risk.

“The County Commission ignored his advice and just hung my clients out to dry,” Halsey says. “This case establishes an important precedent nationally, and will likely curb local governments’ abusive use of development moratoria, especially those that extend for unreasonable periods of time.”

It is uncertain now exactly how the current commission will react to the ruling, Key West land-use attorney Karen K. Cabanas tells GlobeSt.com.

“We’ll be scheduling an executive session with the Board of County Commissioners to discuss the issue of mediating damages,” says Cabanas, an attorney in the Key West firm of Morgan & Hendrick, whose partner, James T. Hendrick, serves as the current Monroe County attorney. “If we can’t come to an agreement on damages, we’ll go to phase two, which is picking a jury and letting it decide.”

By the time the county adopted the building moratorium, the Shadek and Harrison families already had invested more than $1.6 million into a project known as Ocean Forest. The development group envisioned a resort comparable to the neighboring Ocean Reef Club, an exclusive condominium resort whose clientele has included banana baron Carl Lindner and the late first lady, Jacqueline Kennedy Onassis.

Frustrated by the county’s action, the property owners sold the development site in 1990 for about $6 million to a state land conversation trust. However, Garcia says the sale did not sever the county from its liability.

“It does not matter how much plaintiffs received for their property when they sold it,” he writes in the court order.

“Plaintiffs are seeking damage for the temporary taking of their property between 1982 and 1990. During this time, plaintiffs were precluded from deriving any income from their property.”

The judge ruled, “They have yet to be compensated for this damage. Courts have consistently held that the subsequent sale of property, even for a profit, at the end of a temporary taking does not defeat a claim for damages arising during the preceding temporary taking.”

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