Mazourek v. Wal-Mart Stores, Inc.

• Decision Date: 13 June 2002
• Docket Number: No. SC01-663.,SC01-663.
• Parties: Alvin MAZOUREK, etc., et al., Petitioners, v. WAL-MART STORES, INC., Respondent.
• Court: Florida Supreme Court

831 So.2d 85

Alvin MAZOUREK, etc., et al., Petitioners, v. WAL-MART STORES, INC., Respondent.

No. SC01-663.

Supreme Court of Florida.

June 13, 2002.

Rehearing Denied September , 2002.

Mark Aliff, Assistant Attorney General, Tallahassee, FL; and Gaylord A. Wood, Jr., and B. Jordan Stuart of Wood & Stuart, P.A., New Smyrna Beach, FL, for Petitioners.

Stacy D. Blank and Robert E.V. Kelley, Jr. of Holland & Knight LLP, Tampa, FL, for Respondent.

Roy C. Young, General Counsel, Young, van Assenderp, Varnadoe & Anderson, P.A., Tallahassee, FL; and Victoria L. Weber and Rex D. Ware, Special Counsel, of Hopping, Green & Sams, P.A., Tallahassee, FL, for the Florida Chamber of Commerce, Amicus Curiae.

J. Ben Harrill of Figurski & Harrill, Holiday, FL, for Mike Wells as Pasco County Property Appraiser, Amicus Curiae.

John C. Dent, Jr., and Sherri L. Johnson of Dent & Cook, Sarasota, FL, for James Todora, as Property Appraiser of Sarasota County; Ed Crapo, as Property Appraiser of Alachua County; Timothy "Pete" Smith, as Property Appraiser of Okaloosa County; and Ervin Higgs, as Property Appraiser of Monroe County, Amici Curiae.

WELLS, C.J.

We have for review Wal-Mart Stores, Inc. v. Mazourek, 778 So.2d 346 (Fla. 5th DCA 2000), which expressly and directly conflicts with the decision in Wal-Mart Stores, Inc. v. Todora, 791 So.2d 29 (Fla. 2d DCA 2001), notice invoking discretionary review filed, No. SC01-1130 (Fla. May 18, 2001), and which affects a class of state or constitutional officers. We have jurisdiction, see art. V, § 3(b)(3), Fla. Const., quash the Fifth District's decision in Mazourek, and approve the Second District's opinion in Todora.

PROCEDURAL HISTORY

Wal-Mart Stores, Inc. (Wal-Mart) operates two retail stores in Hernando County. Wal-Mart store 1213 is commonly referred to as a "superstore," and it opened in the fall of 1996. Wal-Mart store 967 is a conventional store. Within Hernando County, Wal-Mart also operates a distribution center. Alvin Mazourek is the Hernando County Property Appraiser who assessed the value of Wal-Mart's real and tangible property existing as of January 1, 1997, the lien date, for ad valorem taxation purposes.

Wal-Mart instituted two suits against Mazourek, Leona Bechtelheimer, as Hernando County Tax Collector, and Larry Fuchs, as the Executive Director of the Florida Department of Revenue. The suits, which were consolidated, contended that Mazourek's assessments of Wal-Mart's tangible personal property within the two stores and the distribution center exceeded just valuation. Wal-Mart made a similar claim that Mazourek's assessment of certain real property and improvements thereon were incorrect. Mazourek counterclaimed and alleged that Wal-Mart failed to disclose for assessment multiple items of tangible personal property. Prior to trial, the real property issue was settled.

In a nonjury trial conducted before Circuit Judge John W. Springstead, Wal-Mart attempted to demonstrate that Mazourek failed to properly consider the factors listed in section 193.011, Florida Statutes (1997), and that Mazourek's assessments exceeded just valuation. For instance, Wal-Mart alleged that the fair market value of store shelving and the Rapistan conveyer system used in the distribution center were much lower than the assessed amount. The tangible personal property supervisor in Mazourek's office used a mass appraisal cost approach to determine the assessment amount. The supervisor testified that he did not deduct sales tax paid by Wal-Mart on the assessed property when he determined the assessments.

The trial court concluded that Mazourek properly considered all factors enumerated in section 193.011 and that the mass appraisal cost approach method was appropriate in this case. The court further found that the "evidence clearly shows that sales tax, shipping, installation and the like are proper costs which must be included in a properly conducted cost approach." Wal-Mart Stores, Inc. v. Mazourek, Nos. 97-2994-CA & 97-3121-CA, order at 6 (Fla. 5th Cir. Ct. order filed Oct. 15, 1999). The trial court entered judgment in Mazourek's favor and ratified Mazourek's assessments of tangible personal property located at the distribution center and both stores. On the counterclaim issue, the trial court found that Wal-Mart failed to return items of tangible personal property for assessment at its distribution center and at the superstore. Consequently, the court ordered Wal-Mart to cooperate with Mazourek by listing all items of property not previously disclosed by Wal-Mart. Accordingly, judgment was entered in Mazourek's favor on the counterclaim issue.

The Fifth District Court of Appeal reversed both judgments, see Mazourek, 778 So.2d at 351-52, and held that sales tax paid by Wal-Mart on the items of tangible personal property must be excluded from consideration in establishing just value and that Mazourek's assessments lost their presumption of correctness because Mazourek failed to properly consider the section 193.011 factors. See id. at 350-51. As to the counterclaim issue, the district court concluded that Mazourek failed to exhaust his administrative remedies, and therefore the judgment in Mazourek's favor could not stand. See id. at 352.

Mazourek and the Department of Revenue sought review in this Court, asserting conflict between the Fifth and Second District Courts of Appeal in respect to the issue concerning the property appraisers' inclusion of sales tax in an appraisal conducted pursuant to the cost approach. Mazourek's position is supported by numerous amicus filings by other Florida property appraisers, the property appraiser's association, the Association of Counties, Inc., and the Association of County Attorneys, Inc. An amicus brief in favor of Wal-Mart was filed by the Florida Chamber of Commerce, Inc.

ANALYSIS

The first issue we address is whether sales tax paid by a taxpayer on tangible personal property may properly be considered in a cost approach valuation of such personalty. We conclude that there is no impediment in Florida law prohibiting property appraisers from including sales tax in the original cost of such personalty where a property appraiser determines the ad valorem assessment for that personalty using the cost approach pursuant to generally accepted appraisal methods.

An ad valorem tax is a tax assessed upon the value of property. See Collier County v. State, 733 So.2d 1012, 1014 n. 2 (Fla.1999) (citing § 192.001(1), Fla. Stat. (1997)); Smith v. American Airlines, Inc., 606 So.2d 618, 620 n. 2 (Fla.1992) (quoting Black's Law Dictionary 51 (6th ed.1990)). The Legislature has defined tangible personal property as "all goods, chattels, and other articles of value ... capable of manual possession and whose chief value is intrinsic to the article itself." § 192.001(11)(d), Fla. Stat. (1997).

Article VII, section 4, Florida Constitution, provides in pertinent part: "By general law regulations shall be prescribed which shall secure a just valuation of all property for ad valorem taxation...." The phrase "just valuation" has been construed to mean "fair market value." See Valencia Center, Inc. v. Bystrom, 543 So.2d 214, 216 (Fla.1989) (citing Walter v. Schuler, 176 So.2d 81, 85-86 (Fla.1965) ("fair market value" legally synonymous with "just valuation")). The Legislature has enacted eight factors which a property appraiser must consider to assist the property appraiser in determining just valuation. See § 193.011(1)-(8), Fla. Stat. (1997). That statute provides in relevant part:

In arriving at just valuation as required under s. 4, Art. VII of the State Constitution, the property appraiser shall take into consideration the following factors:

(1) The present cash value of the property, which is the amount a willing purchaser would pay a willing seller, exclusive of reasonable fees and costs of purchase, in cash or the immediate equivalent thereof in a transaction at arm's length;

(2) The highest and best use to which the property can be expected to be put in the immediate future and the present use of the property, taking into consideration any applicable judicial limitation, local or state land use regulation, or historic preservation ordinance, and considering any moratorium imposed by executive order, law, ordinance, regulation, resolution, or proclamation adopted by any governmental body or agency or the Governor (3) The location of said property;

(4) The quantity or size of said property;

(5) The cost of said property and the present replacement value of any improvements thereon;

(6) The condition of said property;

(7) The income from said property;

(8) The net proceeds of the sale of the property, as received by the seller, after deduction of all of the usual and reasonable fees and costs of the sale, including the costs and expenses of financing ....

§ 193.011, Fla. Stat. (1997). The property appraiser's assessment is presumed correct, but such presumption is lost where the taxpayer demonstrates by a preponderance of the evidence that the property appraiser "has failed to consider properly" the section 193.011 factors. See § 194.301, Fla. Stat. (1997); see also Havill v. Scripps Howard Cable Co., 742 So.2d 210, 212 (Fla.1998) ("If the property appraiser does not consider each of these statutory factors, the presumption of validity of the assessment is lost.") (citing Straughn v. Tuck, 354 So.2d 368, 371 (Fla.1978)). The obligation upon the property appraiser is for the property appraiser to "consider," but not necessarily apply, each factor. See Havill, 742 So.2d at 212. "The property appraiser's determination of assessment value [is] an exercise of administrative discretion within the officer's field of expertise." Blake, 447 So.2d at 1350. There are "three well-recognized approaches to determining the value of tangible personal property," Havill, 742 So.2d at 212, of which the cost approach is one. We previously have described the cost...