NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING
                      MOTION AND, IF FILED, DETERMINED


                                             IN THE DISTRICT COURT OF APPEAL

                                             OF FLORIDA

                                             SECOND DISTRICT


AHF-BAY FUND, LLC,                           )
                                             )
             Appellant,                      )
                                             )
v.                                           )            Case No. 2D14-408
                                             )
CITY OF LARGO, FLORIDA,                      )
a municipal corporation,                     )
                                             )
           Appellee.                         )
________________________________             )

Opinion filed September 27, 2017.

Appeal from the Circuit Court for Pinellas
County; John A Schaefer, Judge.

Joseph H. Lang, Jr., and Christopher W.
Smart of Carlton Fields Jorden Burt, P.A.,
Tampa, for Appellant.

Elizabeth W. Neiberger of Bryant Miller
Olive P.A., Tallahassee, and Alan S.
Zimmet and Nicole C. Nate of Bryant
Miller Olive P.A., Tampa, for Appellee.


             ON REMAND FROM THE FLORIDA SUPREME COURT

MORRIS, Judge.

             In City of Largo v. AHF-Bay Fund, LLC, 

(Fla. 2017), the

Florida Supreme Court quashed, in part, our decision in AHF-Bay Fund v. City of Largo,

(Fla. 2d DCA 2015). Accordingly, the mandate of this court issued in
this case on July 31, 2015, is withdrawn; the opinion and judgment of this court filed on

April 22, 2015, is withdrawn and vacated insofar as it is in conflict with or fails to

conform to the views expressed in the opinion and judgment of the Florida Supreme

Court; and the opinion and judgment of the Florida Supreme Court are adopted and

made part of the opinion and judgment of this court. We adhere to our prior judgment

and opinion except as it is withdrawn and vacated. On remand, we now solely consider

the third issue raised by AHF-Bay Fund (AHF) in the prior appeal, which we previously

declined to address due to our decision on another issue.

              I. Background

              For purposes of this appeal on remand,1 only a brief recitation of the

underlying facts is necessary. This case involves the City of Largo's claims for breach

of contract and enforcement of a covenant at law. The action was based on a PILOT

agreement entered into by AHF's predecessor in interest, RHF Brittany Bay, LLC (RHF),

and the City. A PILOT agreement is an agreement which requires an entity that is

otherwise exempt from ad valorem taxation to make "payments in lieu of taxes" to a

local government. In this case, RHF entered into the PILOT agreement with the City in

return for the City's assistance in obtaining financing so that RHF could develop the

subject property to provide affordable housing for persons with low to moderate income.

              The PILOT agreement did not indicate that it was a covenant running with

the land, but it did specify that it was binding on any subsequent owners of the subject

property as long as certain conditions were met. The PILOT agreement was not

recorded in the official public records. However, there is no dispute that simultaneously


              1
             A full recitation of the facts can be read in our prior opinion. AHF-Bay
Fund, 

.
                                              -2-
with the execution of the PILOT agreement, the parties executed a memorandum of

agreement that was properly recorded in the official public records. The memorandum

indicated that the PILOT agreement was available for inspection in the City clerk's office

and that it imposed certain covenants running with the land. Attached to the

memorandum was a copy of the property's legal description.

              AHF acquired the property in November 2005 but failed to make the

annual payments required by the PILOT agreement beginning in 2006, denying

knowledge of either the PILOT agreement or the memorandum of agreement. AHF

asserted that the documents were not shown to be exceptions to coverage in its title

insurance policy and that the documents were not referenced in the special warranty

deed by which AHF took title.

              The City ultimately filed suit based on AHF's refusal to make the required

payments. The trial court granted the City's motion for summary judgment in part and

entered a final judgment in favor of the City. The City was awarded $685,158.23 in

damages and prejudgment interest.

              In the prior appeal, AHF argued that the trial court erred for three reasons:

(1) the PILOT agreement was not a covenant running with the land; (2) the PILOT

agreement was contrary to Florida law as well as Florida's public policy; and (3) AHF

could not be held liable for the payments under the PILOT agreement because it was

neither a party nor a beneficiary under the PILOT agreement. We summarily rejected

the first argument. AHF-Bay Fund, 

. However, we agreed with

AHF on the second issue, concluding that the PILOT agreement not only violated public

policy but also violated section 196.1978, Florida Statutes (2000), and article VII, § 9(a)



                                            -3-
of the Florida Constitution. We also certified a question to the Florida Supreme Court

based on our resolution of the second issue. Finally, because we concluded that the

resolution of the second issue was dispositive, we declined to address AHF's third

issue.

              The City of Largo sought review in the Florida Supreme Court, and the

court answered the certified question in the negative and quashed our prior opinion

based only on our resolution of the second issue. AHF-Bay Fund, 

. The Florida Supreme Court did not address the first issue as it was beyond the

scope of the certified question. 

portion of our prior opinion and judgment

remains valid. We are now asked to determine the merits of AHF's third argument that

it should not be held liable under the PILOT agreement.

              II. Analysis of the case on remand.

              AHF argues that it cannot be sued for breach of the PILOT agreement

because it was not a party to or a third-party beneficiary of the contract and because it

did not assume or agree to the terms of the contract.2 AHF raises this issue as distinct

and separate from the issue of whether the PILOT agreement was a covenant running

with the land. But as we explain, AHF was bound by the PILOT agreement regardless

of whether the agreement was a covenant running with the land.

              A breach of contract action may be based on a party's breach of a

covenant. Cf. A.R. Holland, Inc. v. Wendco Corp., 

, 1007-08 (Fla. 1st


              2
                As an alternative reason for why it could not be held personally liable for
breach of contract, AHF argued that governments are limited to imposing a tax lien
against a party that fails to pay ad valorem taxes. However, due to the Florida Supreme
Court's conclusion that the payments due under the PILOT agreement are not taxes,
AHF-Bay Fund, 

, we find no merit to this argument and do not
address it further.
                                            -4-
DCA 2004) (involving breach of contract action based on breach of a restrictive

covenant). And here, the memorandum of agreement was filed in the public records,

specifically referenced the PILOT agreement, and noted that the PILOT agreement

imposed covenants running with the land. Consequently, AHF was—at the very least—

on constructive notice of the PILOT agreement when it purchased the property. Having

been properly filed in the public records, the memorandum of agreement with the

attached legal description of the property provided subsequent purchasers with facts

that, had they been investigated, would have led a prudent man to discover the

existence and contents of the PILOT agreement. See Sapp v. Warner, 

,

127-28 (Fla. 1932); see also Regions Bank v. Deluca, 

, 883 (Fla. 2d DCA

2012) ("Constructive notice is a legal inference, and it is imputed to . . . subsequent

purchasers by virtue of any document filed in . . . the official records." (quoting Dunn v.

Stack, 

, 349 (Fla. 1st DCA 1982))). AHF is therefore bound by the

provisions of the PILOT agreement. Cf. Silver Blue Lake Apartments, Inc. v. Silver Blue

Lake Home Owners Ass'n, 

, 611 (Fla. 1971) (recognizing that parties are

bound by restrictive agreements where they take property with notice of the contract

because "[i]n such a case, the person violating the agreement, though not a party to it,

is a privy in conscience with the maker" (quoting Langenback v. Mays, 

,

241 (Ga. 1950))); Vetzel v. Brown, 

, 140-41 (Fla. 1956) (affirming

dismissal of appellants' complaint where they had constructive notice of recorded

restrictive covenants and implied actual notice because of a statement in their deed that

the title was subject to easements and restrictions of record); A & P Inv. Grp. v. Circle

Prop. Owners Ass'n, 

, 1139 (Fla. 4th DCA 1998) (affirming trial court's



                                             -5-
finding that an unrecorded agreement as to shared expenses of recreation facilities

executed by the appellant's predecessor in title was binding on the appellant because

the appellant had notice of the agreement when it purchased the property).

             The fact that AHF's title insurance company failed to locate the

memorandum of agreement and, as a result, the PILOT agreement itself during the title

search is unfortunate, but it does not relieve AHF from its obligation under the PILOT

agreement. AHF's remedy lies with the title insurance company.3 Similarly, while AHF's

special warranty deed may not have referenced the PILOT agreement, any dispute over

that issue is between AHF and RHF. It does not relieve AHF from its obligation to make

the required payments to the City.

             Moreover, we note that even if AHF had not been provided with

constructive notice of the PILOT agreement, our conclusion regarding the binding

nature of the PILOT agreement would remain the same because we previously rejected

AHF's argument that the PILOT agreement was not a covenant running with the land.

See Silver Blue Lake Apartments, 

(recognizing that a restrictive

agreement that runs with the land is binding on a subsequent purchaser "regardless of

notice").

             Affirmed.


SILBERMAN and BLACK, JJ., Concur.




             3
               Our record includes correspondence from a title insurance company to
AHF indicating that the title insurance company had agreed to make a payment to AHF
based on the City's claim for payment, though not in the amount for which AHF was
ultimately held liable to the City. A copy of a check from the title insurance company to
AHF is also included in our record.
                                           -6-