New Turquoise Towers In Orange Beach OK

The following article further shows how the legal system is so unpredictable.

Judge, who ruled in July that covenants blocking Turquoise Place East were unenforceable, said last week that homeowners aren't owed compensation

Published By Mobile Press Register
Friday, October 27, 2006
By RYAN DEZEMBER
Staff Reporter

ORANGE BEACH -- After a legal battle that lasted more than two years, a Baldwin County Circuit judge's ruling has cleared the way for developer Larry Wireman to build his Turquoise Place East condominiums, a planned two-tower companion to his burgeoning pair of Gulf-front high-rises called Turquoise Place.

At issue was whether 1950s-era restrictive covenants that limited nine lots between Turquoise Place and the 11-story Island House Hotel to single-family homes were still relevant on Orange Beach's high-rise-lined beaches and, if not, whether owners of those covenants should be compensated.

Presiding Circuit Judge James H. Reid ruled in July that the covenants were unenforceable because the surrounding neighborhood had changed so much since the restrictions were put in place between 1955 and 1966 that their original purpose was lost.

"The enforcement of the covenants would work a hardship on the property owners because it would require them to maintain single-family residences in an area that is no longer suitable for that purpose due to extensive development in the area, zoning changes, and changes in the building codes," Reid wrote. "The defendants' attempt to burden the property with obsolete restrictions against the unanimous will of the property owners would be inequitable."

Reid left open the possibility that the defendants who claimed to own the covenants could be compensated, but last week ruled that they had failed to prove why or what they were owed and therefore weren't entitled to any payment.

Those defendants are: Island House Hotel; Sea Shell Inc., through which Bay Minette developer Thomas Mitchell owns half of the hotel; and AmSouth Bank, which represents the estate of Carl T. and Jessie A. Martin, who established the restrictions on what was then their Gulf-front property.

Reid also rejected the defendants' request for a new trial.

That decision, pending an appeal, clears the way for Wireman to build Turquoise Place East. Mirroring the western Turquoise Place towers that are already under construction, one building will reach 310 feet while another will top out at around 370 feet, according to plans.

Between the four luxury high-rises, 882 units are planned.

Wireman did not return calls seeking comment this week, but in early September told the Press-Register that only a few units in the first tower remained available and that prices for the condos started at $1.5 million.

Reid's ruling also will allow owners of the nine lots to complete sales to Wireman, which will make them multimillionaires. During a two-day nonjury trial in December, it was disclosed that the developer was paying each of the owners $55,000 a waterfront foot. The lots are generally 100 feet wide, which would mean a sales price of $5.5 million for each owner.

Currently only three houses remain on the 928-foot stretch of beach, the others having already been moved or so badly damaged in 2004's Hurricane Ivan that they were demolished.

"I think it's safe to say that the property owners were very frustrated with how long this process has taken," said Daniel Blackburn, who represents Wireman and the owners.

Walter Cook, who represented AmSouth and the Martin estate, said he couldn't discuss the case without first consulting his clients, but did say, "We are considering our options at this point and looking at taking an appeal."

Lawyers involved in the case said that the defendants have 42 days from Reid's Oct. 12 ruling to appeal the decision.

Robert Wills, the lawyer for Island House Hotel and Mitchell, did not return calls seeking comment.

During the December 2005 trial, Wills and Cook argued that their clients should be paid if the restrictive covenants were set aside. At the time of the trial, Wireman said that the defendants had asked him to pay $22 million for the covenants. Lawyers for the defendants claimed their clients would settle for $10 million.

Mitchell testified that in 1999 his Sea Shell Inc. had paid the Martin Estate $25,000 for the restrictions over two lots to the hotel's immediate west. The estate retained the covenants over the other seven.

He said the point of buying the covenants was to preserve sunset views from the building and limit the number of people using the surrounding beach. The Martin Estate contended that high-rise construction on the lots would devalue property it owned across the beach highway.

Reid, however, concluded in his ruling that the estate failed to provide evidence of its claims and said of the hotel's concerns: "a decline in the hotel's future occupancy rate and profits due specifically to development on the hotel's west side is speculative."