Sarnoff v. FLA. DEPT. OF HIGHWAY SAFETY AND MOTOR VEHICLES

• Decision Date: 22 August 2002
• Docket Number: No. SC01-351.,SC01-351.
• Citation: 825 So.2d 351
• Parties: Marc D. SARNOFF, et al., Petitioners, v. FLORIDA DEPARTMENT OF HIGWAY SAFETY AND MOTOR VEHICLES, Respondent.
• Court: Florida Supreme Court

825 So.2d 351

Marc D. SARNOFF, et al., Petitioners, v. FLORIDA DEPARTMENT OF HIGWAY SAFETY AND MOTOR VEHICLES, Respondent.

No. SC01-351.

Supreme Court of Florida.

August 22, 2002.

Scott D. Makar, Alan Wachs, and Catherine T. King of Holland & Knight LLP, Jacksonville, FL, for Petitioners.

Robert A. Butterworth, Attorney General, and Eric J. Taylor, Assistant Attorney General, Tallahassee, FL, for Respondent.

QUINCE, J.

We have for review the decision of the First District Court of Appeal in State Department of Highway Safety & Motor Vehicles v. Sarnoff, 776 So.2d 976 (Fla. 1st DCA 2000), which is alleged to expressly and directly conflict with this Court's decision in Department of Revenue v. Nemeth, 733 So.2d 970 (Fla.1999), cert. denied, 528 U.S. 871, 120 S.Ct. 173, 145 L.Ed.2d 146 (1999). We have jurisdiction. See art. V, § 3(b)(3), Fla. Const. For the reasons explained below, we approve the First District's decision.

MATERIAL FACTS AND PROCEEDINGS BELOW

Marc D. Sarnoff is a member of a class of automobile owners (petitioners) who filed an action in the circuit court for declaratory judgment. Petitioners challenged the constitutionality of section 325.214(2), Florida Statutes (1995)¹ and the interpretation and implementation of the statute² made by the Department of Highway Safety and Motor Vehicles (the Department). The circuit court granted class certification. The Department appealed the circuit court's order granting certification to the First District Court of Appeal. The Department argued that the circuit court had improperly exercised jurisdiction over the case because petitioners had failed to comply with the requirements of section 215.26 Florida Statutes (1995), which requires the filing of an administrative claim before bringing an action in circuit court.³ The Department also argued that this Court's decision in Nemeth, which allows a taxpayer to file directly in circuit court without filing an administrative claim pursuant to section 215.26, was inapplicable to the instant case, because petitioners' claim involved an as-applied challenge rather than a facial challenge to the constitutionality of a statute.

On appeal, the First District partially reversed the decision of the circuit court. See Dep't. of Highway Safety & Motor Vehicles v. Sarnoff, 776 So.2d 976, 981 (Fla. 1st DCA 2000)

. The First District found that the circuit court did not have jurisdiction over count I of petitioners' amended complaint because they had failed to seek relief from the Comptroller pursuant to section 215.26.⁴ The First District recognized that Department of Revenue v. Nemeth, 733 So.2d 970 (Fla. 1999), provided a direct file exception to section 215.26. However, the First District reasoned that this Court intended for the direct file exception in Nemeth to be applicable to facial, rather than as-applied, challenges to the constitutionality of a statute. Since petitioners challenged only the agency's interpretation of section 325.214 in count I, the First District found that the direct file exception did not apply.

LAW AND ANALYSIS

The resolution of this case requires a determination of the scope of this Court's decision in Nemeth. In Nemeth, a group of taxpayers who had failed to seek an administrative refund challenged the constitutionality of a statute imposing an impact fee on a certain class of automobiles. This Court expressly held in Nemeth:

[A] Florida taxpayer may file directly in the appropriate court without filing an administrative claim pursuant to section 215.26 if the sole basis for the refund is that the tax is unconstitutional. We recognize that the Comptroller cannot declare a tax unconstitutional, and thus, when the claim is solely that the refund is required because the tax is unconstitutional, to file the claim with the Comptroller would be a futile act.

See id. at 974 (emphasis added). However, this Court explained that a taxpayer qualifying for the direct-file exception is still required to file suit within three years of payment as required by section 215.26(2).

The Nemeth decision clarified this Court's opinion in Department of Revenue v. Kuhnlein, 646 So.2d 717 (Fla.1994). In Kuhnlein, the petitioners challenged the constitutionality of a statute imposing an impact fee on cars purchased or titled in other states by individuals later establishing permanent residency in Florida. The State argued that the petitioners should be denied relief because they had failed to comply with the requirements of section 215.26, Florida Statutes (1993). The Court rejected this argument and, since the parties had raised a challenge to a facially unconstitutional statute, it held there was no need to request a refund pursuant to section 215.26.

Since Kuhnlein and Nemeth involved facial challenges to the same statute, the First District reasoned that the direct-file exception created by the decisions should be interpreted as applying only to challenges to the facial validity of a statute. See Sarnoff, 776 So.2d at 981

.

It is well accepted that a challenge to the facial constitutionality of a statute cannot be resolved by an administrative agency. See Dep't of Revenue v. Young Am. Builders, 330 So.2d 864, 865 (Fla. 1st DCA 1976)

. In Key Haven Associated Enterprises., Inc. v. Board of Trustees of Internal Improvement Trust Fund, 427 So.2d 153, 157 (Fla.1982), this Court acknowledged that "[i]f the statute being implemented by an agency is claimed to be facially unconstitutional, the circuit court may, in appropriate circumstances, entertain a declaratory action on the statute's validity." When the administrative process can have no impact on the constitutional issues presented to the court, it would be "pointless to require applicants to endure the time and expense of full administrative proceedings." See id. (quoting Gulf Pines Mem'l Park, Inc. v. Oaklawn Mem'l Park, Inc., 361 So.2d 695, 699 (Fla.1978)). Conversely, where an as-applied challenge to a rule is raised, courts have held that an individual must exhaust administrative remedies before proceeding to circuit court.⁵ The Court in Key Haven observed:

A suit in the circuit court requesting that court to declare an agency's action improper because of such a constitutional deficiency in the administrative process should not be allowed.... [A]dministrative remedies must be exhausted to assure that the responsible agency "has had a full opportunity to reach a sensitive, mature, and considered decision upon a complete record appropriate to the issue."

427 So.2d at 158.

Here, the crux of petitioners' argument is based upon the assertion that this case involves a challenge to the validity of a tax statute. Count I of petitioners' complaint alleges that section 325.214(2) is "unconstitutional as implemented" by the Department because "by charging a fee in excess of the actual cost of administration, the excess portion of the fee actually constitutes an unauthorized and unlawful tax." Essentially, count I centers around the allegation that the $10 fee imposed by the Department's rule is in excess of the amount actually needed to administer the program.⁶ Although petitioners have framed count I as a constitutional challenge to section 325.214(2), their challenge is really to the rule promulgated by the Department to implement the statute. Since petitioners are challenging an agency rule, the administrative process must be adhered to because adequate remedies may exist within the administrative realm. See, e.g., Rice v. Dep't of Health & Rehabilitative Servs., 386 So.2d 844, 846 (Fla. 1st DCA 1980)

(holding that parents seeking to challenge the department's rule which required the child of a married couple to be registered under the father's surname must first exhaust administrative procedures before filing an action in court).

Petitioners contend that section 215.26 does not permit the Comptroller to give a refund outside of the conditions detailed in the statute. Section 215.26 provides the mechanism for receiving a refund from the State. The purpose of this statute is to allow the Comptroller to give refunds from the fund to which payment was made. See State ex. rel. Hardaway Contracting Co. v. Lee, 155 Fla. 724, 21 So.2d 211, 212 (1945). Generally, an individual is required to request a refund under this statute before proceeding to circuit court. See Westring v. State Dep't of Revenue, 682 So.2d 171, 172 (Fla. 3d DCA 1996). Whenever a request for a refund does not fall within the statutory requirements, it is permissible for the Comptroller to refuse to grant a refund. See Estate of W.T. Grant Co. v. Lewis, 358 So.2d 76, 80 (Fla. 1st DCA 1978),

aff'd,

370 So.2d 764 (Fla.1979). Petitioners argue that it would be futile to seek relief from the Comptroller pursuant to section 215.26, because the statute does not specifically give the Comptroller the power to give a refund where the basis claimed for the refund is that the agency rule setting the fee is unconstitutional.

The First District considered a similar argument in Florida Livestock Board v. Hygrade Food Prod. Corp., 145 So.2d 535 (Fla. 1st DCA 1962). In that case Hygrade filed an action in circuit court seeking a refund of inspection fees paid under protest to the Florida Livestock Board. Hygrade argued that the board was not lawfully authorized to inspect federally inspected frozen meat entering the State of Florida and to charge a fee for such inspections. The circuit court entered summary judgment in favor of Hygrade, and the board sought review. The board argued that because Hygrade had failed to comply with section 215.26, its claim was barred. Hygrade countered, arguing that the exhaustion of administrative remedies pursuant to section 215.26 was not required because the statute was inapplicable to refunds of monies paid as inspection fees. The First District rejected this argument, reasoning:

If such position is correct, then no means have been provided by law whereby

...