Universal challenges real estate law in case over theme park land development rights

Universal Orlando is challenging a basic tenet of real estate law in its latest effort to end a civil court case over authority to develop land it owns near Universal Boulevard for a new theme park.

Universal's land-owner affiliate SLRC Holdings filed a motion for summary judgment on Jan. 19, asking the judge to rule in its favor over Georgia-based developer Stan Thomas.


His injunction lawsuit, made 15 months ago in Orange County's Ninth Circuit Court, has blocked Universal from theme park development on 480 contiguous acres it now owns south of Sand Lake Road, east of Universal Boulevard and north of Destination Parkway, separated only by drainage canals.

Universal reiterates a claim in the motion that public land use entitlements take priority over private title restrictions. But the company's argument isn't supported by real property law, and Orange County has an ordinance in its Land Development Code that affirms deference to private title restrictions.


"The recent filings continue to ignore the significant distinction between public land use entitlements and private title restrictions," Allison Turnbull, Orlando managing shareholder with Gunster law firm and attorney for Thomas Enterprises' affiliates, told GrowthSpotter on Wednesday.

"It is a cornerstone of real property law that publicly conferred entitlements do not trump private title restrictions," she continued. "To find otherwise would eviscerate real property law as we know it."

Thomas' Universal City Property Management III (UCPM III) holds the sole authority to approve or deny development plans on more than 2,126 acres that fall within the Universal Boulevard Planned Development zoning area.

Back in 2003, Thomas purchased the UCPM III corporate entity from then-Vivendi Universal, which came with 1,800 acres it owned. That included the "Master Declarant" rights, which UCPM III is responsible for to enforce covenants and rules of the PD.

When Universal sold those rights to Thomas, they included a rule that no other "entertainment/theme park" uses could be built there without the master declarant's sole permission. It was meant to protect Universal's two existing theme parks from competition.

Since then, UCPM III has turned away multiple entertainment developers that have pursued parts of the property.

Thomas' affiliate lost 474 acres of this land in lieu of foreclosure in August 2014 to Colony Capital, but retained the master declarant role because the Master Declaration was never amended.

Universal's SLRC Holdings reacquired that land from Colony in December 2015, but the private entitlements still don't allow Universal to build a theme park there without UCPM III's permission.


Universal has zoning approvals from Orange County for theme park use on this land northeast of Universal Boulevard. But to develop that use, Universal will likely have to pay Thomas for the master declarant rights.

Attorneys for Universal Orlando and its affiliate did not respond to requests for comment.

Universal's latest motion claims that Thomas' staff said in 2015 the company would have authority to build new theme parks on the property. It also notes that it could initiate new theme park development on the property in the next three years.

The company continues to argue its entitlements from the county LUP supersede private title restrictions.

There are no new data or arguments that Universal presents in the summary judgment motion, but the company did add personalized claims from Perry Hariri, a former consultant for Colony Capital when it sold the property back to Universal, and Peter C. Giacalone, a former vice president of business development with Universal.

They contend that restrictions were imposed "for the benefit of Universal," and that the intended prohibition on theme parks was only meant to apply to Universal competitors.


But Universal's attorneys in 2003 didn't write it that way. They failed to include a few key words, and instead wrote in general terms that only the master declarant could grant permission to build a theme park.

Hariri also claimed that Turnbull, who was Colony Capital's attorney previously during transfer of the property, had drafted an agreement that changed terms of the Master Declaration which would strip Thomas of his authority.

But that's incorrect. Turnbull only processed an amendment to the county LUP, which has no impact on the private title restrictions.

"To say government regulations supersede the privately recorded covenant isn't accurate, so no matter what the county does or allows, the party has a right to enforce the covenant," said Hal H. Kantor, attorney with Lowndes, Drosdick Doster Kantor & Reed, P.A.

Kantor is a specialist in covenants of title, and has authored a chapter on the subject in recent years for the Florida Real Property Sales Transactions book, issued by The Florida Bar.

His firm is also defending several International Drive property owners in another lawsuit, in which a Universal affiliate is challenging their stormwater drainage into Sandy Lake, which borders its former Wet 'n Wild waterpark where a new hotel is being built.


"A private covenant runs with title to the property, and all successor owners are bound by it," Kantor said. "Asking the (judge) to make an interpretation of language in a covenant is a hard argument to win. Only if the judge determines the language is very unclear."

Universal's attorneys conceded that language of the Master Declaration is clear and unambiguous, according to an answer response filed in December 2016 for the case.

UCPM III had previously filed its own motion for summary judgment in February 2017, so now both its and SLRC's new motion are expected to be scheduled for a hearing in April.

In a separate court case, Thomas faces a foreclosure lawsuit on the developable area of more than 260 acres in the tourism corridor, some of which lie in strategic position to Universal's land assets.

For that property, Thomas' land owner affiliates are still negotiating with the lender, Atlanta-based investment firm Ardent Financial, to resolve the dispute, possibly by bringing in a new lender.

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