May 6, 2008
Jury awards Keystone Coal $67 million in case with Jaxport
JACKSONVILLE, FL – In an eminent domain proceeding that began just after Florida tightened its eminent domain laws, Brigham Moore LLP, Florida’s largest private property rights defense firm, recently attained a $67 million jury verdict for its client, Keystone Coal. This is the largest eminent domain jury verdict ever in circuit court in the state of Florida.
For the past few years, Keystone has been involved in a hotly-disputed eminent domain battle with the Jacksonville Port Authority (Jaxport), which is conducting a slow take of Keystone’s 70-acre property along the St. Johns River. Keystone intended to develop it into a large-scale coal/bulk cargo terminal. Although Keystone challenged the taking, the courts decided to allow it in 2006.
On April 21, 2008 a jury trial began to determine the value of the property. Jaxport valued the property at $17 million. In a slow take eminent domain proceeding, the condemning authority has the right to wait until a valuation to make a final decision about whether to take the property.
For eight years, Tom Scholl, a third generation coal man who once worked in the mines of West Virginia, sought to secure property along the St. Johns River in Jacksonville to develop a deep water bulk cargo depot for Keystone Coal and affiliated companies to offload coal, coke and anthracite from sources throughout the world.
Prior to the filing of Jaxport’s lawsuit, Scholl secured a letter of commitment to purchase the property in April of 2005 for $8 million. Jaxport competed with Scholl in free enterprise and had passed on purchasing this property twice before. Scholl paid the asking price of the seller and knew it to be a bargain. He was willing to accept the environmental risk associated with a former 12-acre landfill, but saw great worth in the property as an intermodal gateway for coal that others in the marketplace did not see at the time.
After Scholl’s purchase, Jaxport entered into discussions with a competing coal interest, Drummond Coal Company, to negotiate a long term lease on the Keystone property with a minimum guarantee of $11 million annual rent. However, pretrial rulings of the trial judge prevented the jury from hearing any evidence of the income to be made by Jaxport, leaving the attorneys who tried the case to prove the measure of full compensation through comparable sales alone.
The problem was, there weren’t any properties as strategically located as the Keystone property from which to compare for valuation purposes, although the appraisers went beyond Jacksonville to Charleston, S.C., Savannah, Ga. and Tampa, Fl. to locate sales. Jaxport’s lawyers argued heavily that Scholl’s bargain price paid in 2005 was the market value as of 2008.
Keystone’s lawyers Andrew Prince Brigham, Jackson Bowman, and Mark Natirboff of Brigham Moore LLP prevailed in having the jury consider Keystone’s appraisal of the property at $66 million and Keystone owner Tom Scholl’s opinion of value at $80 million.
“In many ways, litigating with a port is tougher than fighting city hall,” said Brigham, who added, “a jury’s determination of full compensation acts to level the playing field between government and the individual.” When asked how the case was won, Brigham said that “Jaxport can take private property through eminent domain, but it does not have the right to take an owner’s bargain or the economic advantage away secured by the owner in free enterprise. The jury understood that and recognized the tremendous worth of the property.”
“To this day, it is still Tom Scholl’s desire to keep the property and develop it into a productive coal/bulk cargo terminal,” added Brigham.