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HomeMy WebLinkAboutLTC 520-2025 Court Victory in Setai Hotel Acquisition, LLC et al. v. City of Miami BeachMIAMI BEACH OFFICE OF THE CITY ATTORNEY LTC No. 520-2025 TO: FROM: DATE: SUBJECT: LETTER TO COMMISSION Mayor Steven Meiner and Members of the City Commission Ricardo J. Dopico, City Attorney Ci;;) December 11, 2025 Court Victory in Setai Hotel Acquisition, LLC et al. v. City of Miami Beach This purpose of this L TC is to inform you of the City's court victory in a challenge to the legality of the City's stormwater utility fee methodology by a group of 27 plaintiffs. Judge Robert Watson of the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida, recently dismissed the plaintiffs' claims with prejudice after more than six years of litigation. The City's stormwater utility fee methodology has been in place, unchanged, since 1996 and is based on "equivalent residential usage units" or "ERUs." To calculate the stormwater utility fee owed for residential developed properties, the City charges 1 ERU per dwelling unit (as defined in City Code §110-107). So, for example, a single-family residential home would be assessed 1 ERU, and acondominium building containing 10 dwelling units would be assessed 10 ERUs. For nonresidential properties, the number of ERUs is calculated by dividing the impervious area of the property by 791 square feet (the ERU basis). For mixed-use properties, the number of ERUs is calculated by adding the number of ERUs for dwelling units on the property plus the number of ERUs attributable to thatportion of the property not used for dwelling units. Once the number of ERUs is established, each utility user's stormwater utility fee is determined by multiplying the stormwater utility service charge (i.e., the fee rate) by the number of ERUs for the user account. In the lawsuit, the 27 plaintiffs-a consortium of condominium associations, multi-family property owners, and commercial entities-alleged that the City's ERU methodology creates an illegal windfall for single-family homeowners in violation of state law and constitutes a purported "breach of contract" and "unjust enrichment." The plaintiffs requested a remedy of restitution/disgorgement from the City of the stormwater fees they paid over at least 10 years, which would likely total several millions of dollars. The lawsuit was filed in 2019 but was temporarily stayed in 2023 while virtually identical litigation in the Town of Surfside was completed. The Surfside case was decided in favor of the municipality at the trial level and affirmed by the appellate court in 2024. Accordingly, the City moved to dismiss the lawsuit on all the same grounds as in the Surfside case, plus additional grounds not raised by Surfside, such as sovereign immunity. After a hearing on December 9, 2025, Judge Watson ruled in the City's favor and dismissed the entire lawsuit with prejudice. On behalf of the City, the case was litigated entirely in-house over the six years of litigation, with, most recently, the winning motion to dismiss being handled by Deputy City Attorney Henry J. Hunnefeld and First Assistant City Attorney Freddi Mack. A copy of the Order of Dismissal with Prejudice is attached. The Order is not yet considered final, as the plaintiffs still have the opportunity to appeal. As always, please feel free to contact me or Rob Rosenwald for further information about this or any City litigation matter. RJD/fm/ag Filing#237447235 E-Filed 12/10/2025 03:45:42 PM IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT IN AND FOR MIAMI-DADE COUNTY,FLORIDA CASE NO:2019-022086-CA-01 SECTION:CA08 JUDGE:Robert T.Watson Setai Hotel Acquisition,LLC et al Plaintiff(s) VS. City of Miami Beach Defendant(s) I----------- ORDER GRANTING CITY OF MIAMI BEACH'S MOTION TO DISMISS WITH PREJUDICE THIS CAUSE came before the Court on the Motion to Dismiss (DIN 106)("Motion")filed by Defendant,CITY OF MIAMI BEACH (the "City"),seeking dismissal with prejudice of the Third Amended Complaint (DIN 105)(the "Complaint")filed by Plaintiffs SETAl HOTEL ACQUISITION,LLC et al.(collectively,"Plaintiffs"). THE COURT has considered the Motion and pertinent parts of the record.Plaintiffs did not file any written response to the Motion,but the Court heard argument of counsel at a special-set hearing on December 8,2025 (see DIN 107). For the reasons stated on the record at the hearing,set forth in the Motion,and as elaborated further herein,the Motion is GRANTED.The Complaint is DISMISSED WITH PREJUDICE. The Clerk of Court shall CLOSE THIS CASE. I.COUNT IV IS DISMISSED WITH PREJUDICE ON SOVEREIGN IMMUNITY GROUNDS Count IV of the Complaint purports to assert a claim for unjust enrichment against the Case No:2019-022086-CA-01 Page I of 10 City.This is a quasi-contract or implied contract theory:a "fiction"that is "created without regard to the parties'expression of assent by their words or conduct"but rather "adopted to provide a remedy where one party was unjustly enriched,where that party received a benefit under circumstances that made it unjust to retain it without giving compensation."Commerce P'ship 8098 Ltd.P 'ship v.Equity Contracting Co.,695 So.2d 383,386 (Fla.4th DCA 1997). As well-settled law makes clear,the City has not waived sovereign immunity on implied contract,quasi-contract,or equitable claims,including unjust enrichment claims. City of Fort Lauderdale v.Israel,178 So.3d 444,447-48 (Fla.4th DCA 2015)(holding sovereign immunity barred,inter alia,claim for unjust enrichment);Cty.of Brevard v. Miorelli Eng 'g,Inc.,703 So.2d I 049,1051 (Fla.1997)(claim for damages flowing from unauthorized work changes outside the terms of express contract were barred by sovereign immunity);City ofMiami v.Tarafa Constr.,Inc.,696 So.2d 1275,1277 (Fla.3d DCA 1997) (sovereign immunity barred claim for damages a contractor incurred before it entered into a written contract with the city);Brevard Cty.v.Morehead,181 So.3d 1229,1230-33 (Fla. 5th DCA 2015)(quashing order that denied sovereign immunity from suit seeking damages for implied contract,quantum meruit,and unjust enrichment);City of Orlando v.W.Orange Country Club,Inc.,9 So.3d 1268,1271-73 (Fla.5th DCA 2009)(sovereign immunity barred suit on unenforceable,unsigned contract);Veolia Water N.Am.-S.,LLC v.City of Everglades City,No.2:18-cv-785-FtM-99UAM,2019 WL 1921900,at *4 (M.D.Fla.Apr. 30,2019)(dismissing unjust enrichment claim on the basis of sovereign immunity);see also Dist.Bd.ofTrs.ofMiami Dade Coll.v.Verdini,339 So.3d 413,416 n.3 (Fla.3d DCA 2022) (recognizing that "the trial court's order correctly noted,'Florida law does not permit a waiver of sovereign immunity based on implied contracts."'). Because any unjust enrichment theory is precluded as a matter of law by sovereign immunity,Count IV is dismissed with prejudice. Case No:2019-022086-CA-O I Page 2 of 10 II.COUNT III IS DISMISSED WITH PREJUDICE ON SOVEREIGN IMMUNITY GROUNDS AND FOR FAILURE TO STATE A CLAIM Count III of the Complaint purports to assert a claim for breach of contract.The Court notes that no purported express,written contract is attached to the Complaint;thus,Plaintiffs have not met their burden of establishing that their claim overcomes sovereign immunity. See,e.g.,Israel,178 So.3d at 447-48 (reviewing cases such as Pan-Am Tobacco Corporation v.Department of Corrections,471 So.2d 4 (Fla.1984),and progeny,and concluding that "[t]he aforementioned cases demonstrate that a municipality waives the protections of sovereign immunity only when it enters into an express contract");Verdini, 339 So.3d at 417-21 (holding that trial court should have granted sovereign-immunity motion-to-dismiss for failure to adequately identify breach of terms in an express,written contract). The Court further concludes that this defect is incurable,based on the legal theory as pied in the Complaint.Plaintiffs'sole basis for believing any contract exists is the existence of section 110-36 of the City Code,which discusses contracts for water supply services-not the stormwater utility.See Comp!.,i,i 38-39,68-69,75.Plaintiffs'belief is facially refuted by the plain language of the City ordinances,and amendment would be futile.The Court hereby adopts (as if fully set forth herein)the reasoning of Judge Sanchez-Llorens in Solimar Condominium Association,Inc.v.Town of Surfside,Case No.2019-025481-CA-01 (the "Surfside Case"),attached as Exhibit 2 to the Motion and affirmed by the Third District Court of Appeal,399 So.3d 1259 (Fla.3d DCA 2024). The City's stormwater utility fee ordinance is mandatory and self-effectuating, requiring no "agreement"to obligate property owners to pay for stormwater utility services. See City Code §110-109(a).Accordingly,there are no contracts for stormwater utility service between the City and any property owner.The Third District Court of Appeal has Case No:2019-022086-CA-0l Page 3 of 10 recognized as much.See Sch.Bd.of Miami-Dade Cty.v.City of Miami Beach,317 So.3d 1203,120506 (Fla.3d DCA 2021)(noting in the sovereign-immunity context that there is no written contract for the City to collect stormwater utility fees). Plaintiffs contend that because (1)"the City collects its fee by placing it on the water bill issued to Plaintiffs[,]"Comp!.at 1 37;(2)the water bill also contains a line-item for water supply,see id.at 1 38;and (3)City Code section 110-36 discusses "contracts for water supply service,"see id.;then necessarily (4)the water bill as a whole is a contract,with the stormwater fee line-item being a term of that contract,see id.This syllogism is deeply flawed. For one thing,stormwater management is fundamentally different from water supply. Water supply is something that a property owner can apply for,thereby voluntarily creating a contract.See City Code§110-36(b)-(c)(noting that a premises owner can apply for service pipe and water supply,and the application "shall become a binding contract upon both the owner and the city when the service connection for water supply applied for has been installed").By contrast,the City imposed a stormwater utility fee,as authorized by Florida Statutes,upon all owners ofdeveloped property.See City Code§110-109(a);Comp!.17. There is no application process for the provision of stormwater utility services like there is for water supply.No property owner,tenant,or occupant of a developed property has the right to completely reject the benefits of the stormwater utility.Stormwater,unlike the supply of water and related sewer service,cannot be turned off and on upon request-stormwater and the need to remove it efficiently is a fact of life in South Florida. As such,there is no offer and no acceptance with respect to the stormwater utility fee,and therefore there is no contract.See,e.g.,Jericho All-Weather Opportunity Fund,LP v.Pier Seventeen Marina &Yacht Club,LLC,207 So.3d 938,941 (Fla.4th DCA 2016)(The basic elements of an enforceable contract are offer,acceptance,consideration,and sufficient specification of essential terms.");see also Leopold v.Kimball Hill Homes Fla.,Inc.,842 So. Case No:2019-022086-CA-01 Page 4 of 10 2d 133,136 (Fla.3d DCA 2003)(explaining that a contract requires that "there has actually been a meeting of the minds of the parties upon definite terms and conditions which include the essential elements of a valid contract"(emphasis added,internal quotations omitted)). It is even contemplated that the City can assess the stormwater utility fee on a property owner who never formed a water supply contract and therefore receives no water bill.See City Code§l 10-109(c)("The amount of such fee shall be shown as a separate item on water bills (or shown as a stormwater utility bill ifno water bill is issued)...."(emphasis added)).It therefore cannot be said that the terms of the Stormwater Utility Ordinance are necessarily part of a purported water-bill-contract;a user could receive a stand-alone stormwater utility bill and no water supply bill.The stormwater fee is placed on a water bill solely for convenience for a property owner who both uses the water supply and benefits from the stormwater utility.Under Plaintiffs'theory,some stormwater utility users could have a "contract"for stormwater services,but other users would not have such a "contract"-all depending on whether the user is receiving potable water from the City. Nothing in the City Code supports that theory. The water supply provisions of the City Code are found in Chapter 110,Article II ("Water"),whereas the stormwater utility fee provisions are found in Article Ill ("Stormwater Utility").They do not reference each other in any way except that the property owner is given a single bill,if a water bill is issued.Yet the Code provides that the stormwater fee "shall be shown as a separate item"on any such water bill.City Code $110- 09(c)(emphasis added).Merely itemizing a stormwater fee on the same billing invoice does not mean that the stormwater utility assessment is subject to the same regulations as a water supply contract.This is especially true where the water supply ordinances make clear that it is the application for water supply services-not the receipt of a water bill-that forms the basis of a water supply user's contract,which is automatically renewed month to month.See City Code§110-36(a)-(d).Again,there is no such application for the stormwater utility. Case No:201 9-022086-CA-0 1 Page 5 of 10 It also bears noting that the stormwater fund is completely independent from,and cannot be used toward,water supply.See City Code §110-09(h)("The fees collected by the city with respect to the stormwater utility,together with investment earnings thereon,shall be deposited in the stormwater utility fund and shall be used exclusively for planning, constructing,financing,operating and maintaining the stormwater utility and the infrastructure ofthe stormwater management system....."). In short,the "contractual"water supply provisions from Chapter 1I0,Article II, cannot be applied in the stormwater fee context.Even assuming a link between the two Articles were intended,that link does not appear in the text and may not be added by the Court.E.g.,Heine v.Lee Cnty.,221 So.3d 1254,1258 (Fla.2d DCA 2017)("The omission may be a legislative oversight;nevertheless,court should not rewrite legislation to cure an omission ...just because it seems to fit overall legislative policy.").To craft a contract out of two separate Code of Ordinances Articles would violate the separation of powers principles underpinning the sovereign immunity doctrine.Cf Castro,279 So.3d at 808 (expressing reluctance to engage in a "judicial expansion of ...general duties"contained in municipal ordinances "into express contractual obligations that waive a government's sovereign immunity"). Thus,not only is Count III barred by sovereign immunity,Plaintiffs'underlying breach-of-contract legal theory is also not supportable as a matter of law.Count III is dismissed with prejudice. III.COUNTS I &II ARE DISMISSED AS TIME-BARRED The Court declines to reach the merits of Plaintiffs'challenges in Counts I &II to the City's Stormwater Utility Ordinance (as defined in the Motion),as the claims are time-barred.Judge Sanchez-Llorens held this to be true as to the Town of Surfside's stormwater utility ordinance,see Case No:2019-022086-CA-0 I Page 6 of 10 Surfside Case,and the City of Miami Beach's ordinance is approximately two years older than Surfside's is.The Court hereby adopts (as if fully set forth herein)the reasoning of Judge Sanchez- Llorens on this basis as well. A four-year limitations period applies to Counts I &II under Florida Statutes Sections 95.11 (3)(m)(action for money paid to any governmental authority by mistake or inadvertence)or 95.11 (3)(p)(any action not specifically provided for by statute).In this action,Plaintiffs are complaining about the ERU methodology adopted by the City in 1996 (Count I)and asserting that the resulting stormwater utility fee amounts to an illegal tax (Count II).Those challenges to the City's Stormwater Utility Ordinance have been barred since the year 2000nearly 20 years before this suit was filed. The statute of limitations to challenge the validity of a local government's ordinance,or a code provision created pursuant to the ordinance,begins to run when the challenged ordinance or provision is enacted.See,e.g.,Paresky v.Miami-Dade Cty.Bd.of Comm 'rs,893 So.2d 664,665 (Fla.3d DCA 2005)(statute of limitations period began to run when resolution was first enacted); Milan Inv.Group.Inc.v.City of Miami,50 So.3d 662,663-64 (Fla.3d DCA 2010)(affirming dismissal on statute-of-limitations grounds of claims challenging the establishment of the Downtown Development Authority (DDA)and its boundaries,where the final code amendment to the DDA boundaries occurred in 2002 but suit was not filed until 2008;but concluding that statute of limitations did not bar a claim founded on "the separate and later City ordinance"enacted in 2008 that imposed a half-mill levy for that fiscal year).Here,the Stormwater Utility Ordinance, which includes the challenged ERU basis methodology,was enacted in September 1996.That methodology has never been amended.[ll cf.Milan Inv.Group,50 So.3d at 663-64,so the four- year limitations period expired in September 2000.Plaintiffs'lawsuit is nearly two decades too late. The Fourth District Court of Appeal's decision in City of Fort Pierce v.Australian Properties,LLC,179 So.3d 426 (Fla.4th DCA 2015),is consistent with the Third District's Case No:2019-022086-CA-O 1 Page 7 of 10 precedent in Paresky and Milan and is squarely on point here.In Australian Properties,property owners brought an action against the City of Fort Pierce to challenge fees for stormwater management services.The plaintiffs in that case challenged the constitutionality of what they described as a stormwater "tax,"just as Plaintiffs do here (and just as the plaintiff did in the Surfside Case).Recognizing that the statutory limitation period presented a problem for them,the plaintiffs tried to avoid it by asserting that the utility fees were annual assessments and that each new assessment began a new statutory limitation period.Id.at 429,431. The Fourth District Court of Appeal rejected the "each-new-assessment"theory of the statute oflimitations to challenge a stormwater utility ordinance.Australian Properties held that the limitations period contained in section 95.11 (3)(p)and (m)began to run from the city's approval and enactment of the ordinance,not each time the plaintiffs were assessed under that ordinance.Id. at 432.In reaching that conclusion,the Fourth District relied upon three cases:Fredrick v.Northern Palm Beach Cnty.Impr.Dist.,971 So.2d 974 (Fla.4th DCA 2008);H &B Builders,Inc.v.City of Sunrise,727 So.2d 1068 (Fla.4th DCA 1999);and Keenan v.City ofEdgewater,684 So.2d 226 (Fla.5th DCA 1996). In each of those cases,the plaintiffs attempted to avoid the operation of the limitations period,which clearly barred the action.There were two types of challenges:(1)an assertion that the plaintiffs were not aware that other properties were being treated differently (Keenan and Fredrick)or (2)a claim that the "installment payment"theory resulted in resetting the limitation clock each time a new payment was due or the assessment renewed.(H &B Builders and Fredrick).Australian Props.,179 So.3d at 431-32.Neither of these theories was availing.Each time,the District Courts of Appeal properly barred the claims,determining that the limitation began to run on the date the ordinance was created or the date ofthe municipality's approval. The same conclusion follows in this case concerning Counts I and II.The ERU methodology has not changed since it was first enacted on September 11,1996.Compare Mot.Ex. 4 at 14 (Stormwater Utility Ordinance passed and adopted September 11,1996)with Mot.Ex.3 Case No:2019-022086-CA-0 I Page 8 of 10 (identical version codified in current City Code under different numbering).The fact that the ERU basis methodology has never been changed is significant:it means the limitations period was never affected by later legislative action (compare the "separate and later"ordinance that was timely challenged in Milan).Thus,the limitations clock started running on September 11,1996,and expired in September 2000. Thus,the time to challenge the ERU methodology in the City's Stormwater Utility Ordinance is long past the four-year limitations period-it expired nearly five times over. $95.11(3)(mn)and/or (p),Fla.Stat.;Australian Properties,179 So.3d at 432.Judge Sanchez- Llorens found the Australian Properties case to be "dispositive,"Ex.2 at 7,and this Court does as well.The Court therefore dismisses Counts 1 and II with prejudice as time-barred,without reaching the merits of either claim. WHEREFORE,for the foregoing reasons,the Motion is GRANTED.The Complaint is DISMISSED WITH PREJUDICE.The Clerk of Court shall CLOSE THIS CASE. illPlaintiffs allege that the fee schedule-i.e.,the dollars per ERU-have changed.See Compl.,r,r 45-48;see also the publicly available Ordinance 2019-4299,available at https://docmgmt.miamibeachfl.gov/WcbLink/DocView.aspx?id257204dbid0&repoCityClerk. However,Plaintiffs do not and cannot allege that the ERU methodology has changed since 1996. DONE and ORDERED in Chambers at Miami-Dade County,Florida on this 1O day of December.2025. 2019-022086-CA-01 12-10-2025 3:39 PM Hon.Robert T.Watson CIRCUIT COURT JUDGE Electronically Signed Case No:2019-022086-CA-O 1 Page 9 of 10 Final Order as to All Parties UCR #:CAOlO (Disposed by Judge) THE COURT DISMISSES THIS CASE AGAINST ANY PARTY NOT LISTED IN THIS FINAL ORDER OR PREVIOUS ORDER(S).THIS CASE IS CLOSED AS TO ALL PARTIES. Electronically Served: •Henry J Hunnefeld:henryhunnefeld@iiamibeachfl.gov •Henry J Hunnefeld:sandraperez@miamibeachfl.gov •Henry J Hunnefeld:merarimotola@miamibeachfl.gov •Freddi Rebecca Mack:freddimack@miamibeachtl.gov •Freddi Rebecca Mack:merarimotola@miamibeachfl.gov •Freddi Rebecca Mack:carlapompa@miamibeachfl.gov •Moreno Jose Alejandro:amoreno@fowler-white.com •Moreno Jose Alejandro:cnelson@fowler-white.com •Steven H.Rothstein:stevenrothstein@miamibeachfl.gov •Steven H.Rothstein:sandraperez@miamibeachfl.gov •Thomas H.Robertson:trobertson@brzoninglaw.com •Thomas H.Robertson:vceballos@brzoninglaw.com •Steven H.Rothstein:StevenRothstein@miamibeachfl.gov •Emily Balter:ebalter@brzoninglaw.com •Nicholas Rodriguez Caballero:nrodriguez@brzoninglaw.com •Nicholas Rodriguez Caballero:nvilladiego@brzoninglaw.com •Yoe Lopez Jr.:yoelopez@miamibeachfl.gov •Yoe Lopez Jr.:bonniestewart@miamibeachfl.gov Case No:2019-022086-CA-O I Page 10 of 10