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Insurer: City not liable for permit

Despite regulations on gas station distance, a RaceTrac was built too close to a Coastal. The city may not have to pay.

By ALEX LEARY, Times Staff Writer
© St. Petersburg Times
published December 3, 2002

CRYSTAL RIVER -- The city's insurer says it will not compensate Whetstone Oil Co. for lost business due to the erroneous permitting of a RaceTrac gas station across the street.

"We regret that we cannot advise you more favorably in this matter, and trust you will understand that it is our responsibility to pay only those claims for which our client is legally liable," a claims representative wrote to Whetstone attorney John Eden.

Eden said that the presence of RaceTrac caused his client to "suffer past, present and future economic losses far in excess of the statutory maximum amount of liability, which is currently $200,000."

A city code in place before the Atlanta-based chain applied for a permit states that gasoline stations should not be located within 800 feet of another.

RaceTrac, which opened nearly a year ago, is about 300 feet from Mike Whetstone's Coastal station on the east side of U.S. 19.

Former building official Walter Brown said he was unaware of the ordinance, on the books for about a decade. Whetstone said he told officials about the ordinance but nothing was done.

"In our feeling, they really wronged us," Whetstone said Monday. "We have the documents that (show) we are going into the red in that location every month."

Whetstone said he is considering a lawsuit -- in federal court, if possible -- but first will appeal to the City Council.

"I am very dismayed at the way they are handling this," he said, speaking generally of the city. "They are not acting responsible for any of their actions at all."

When Eden notified the city about possible legal action in late September, he proposed a settlement that would require the city to pay Whetstone's property taxes for the next 10 years -- a deal worth about $100,000.

The city forwarded the complaint to its insurance company, Public Risk Management, which had another company investigate the claim.

Terri Morris, a senior claims representative for Gallagher Bassett Services of Fort Myers, refused to comment Monday. Her letter to Eden cited Florida Statute 768.28, which covers negligent government action.

The law waives immunity in certain instances, but case law has backed cities when it comes to mistaken or erroneous issuance of permits, said Chip Morrison, general counsel for the Florida League of Cities.

The most notable case, he said, came in 1985 and involved the city of Hialeah and a condominium development.

The city had inspected the building and issued a certificate of occupancy. Heavy rain caused the roof to collapse, and the condo company sued, saying the permit should not have been granted.

When the Florida Supreme Court weighed in, it favored the city, Morrison said.

"The courts say you can't be subjected to liability for your failure to enforce a law," Morrison said. "You are pretty much there to do your best, but they are not going to hold you responsible if you don't."

-- Alex Leary can be reached at (352) 564-3623 or .

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