State, Dept. of Highway Safety v. Sarnoff

• Decision Date: 29 December 2000
• Docket Number: No. 1D00-1335.,1D00-1335.
• Citation: 776 So.2d 976
• Parties: STATE of Florida DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES, Appellants, v. Marc D. SARNOFF, Tom Hyde, Steven Register, Charles Stahman, Harry Brady & Melissa Richie, individually and on behalf of all others similarly situated, Appellees.
• Court: Florida District Court of Appeals

776 So.2d 976

STATE of Florida DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES, Appellants, v. Marc D. SARNOFF, Tom Hyde, Steven Register, Charles Stahman, Harry Brady & Melissa Richie, individually and on behalf of all others similarly situated, Appellees.

No. 1D00-1335.

District Court of Appeal of Florida, First District.

December 29, 2000.

Rehearing Denied February 2, 2001.

Robert A. Butterworth, Attorney General; Eric J. Taylor, Assistant Attorney General, Tallahassee, for Appellants.

Scott D. Makar, Alan S. Wachs and Catherine J. Tackett of Holland & Knight LLP, Jacksonville, for Appellees.

JOANOS, J.

The Department of Highway Safety and Motor Vehicles (Department) seeks review of the circuit court's non-final order granting class certification in a case seeking refund for moneys paid into the state treasury in which none of the named plaintiffs, appellees herein, complied with the provisions of the refund statute, section 215.26, Florida Statutes (1995). The issues presented for review are: (1) whether the "direct file" exception to the exhaustion of administrative remedies doctrine in refund claim class actions applies only to "facial" constitutional challenges; and (2) whether appellees' real challenge is to Florida Administrative Code Rule 15C-6.003, the rule promulgated by the Department to implement section 325.214, Florida Statutes. The United States Environmental Protection Agency (EPA) designated six of Florida's sixty-seven counties as ozone non-attainment areas, because they exceeded national ambient air quality standards. The six designated counties are Duval, Dade, Broward, Hillsborough, Palm Beach, and Pinellas. In response, the Florida Legislature enacted the Clean Outdoor Air Law (COAL), which authorized creation of Florida's Motor Vehicle Inspection Program, including section 325.214, Florida Statutes. The legislation required each person with a registered vehicle in one of the six affected counties to have his or her motor vehicle inspected annually for emissions as a precondition to annual registration.

This appeal is concerned only with Count I of the amended complaint, which is an action for declaratory judgment. In Count I, appellees alleged in part:

33. Section 325.214(2), Florida Statutes (1995), is unconstitutional as implemented by the DHSMV 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 in violation of Article II, § 3 and Article VII, § 1 of the Florida Constitution.

34. The statute is also unconstitutional because the DHSMV's implementation of section 325.214(2) constitutes a tax, and the Florida Constitution does not allow a tax which is a general law taxing only a targeted locale.....

36. Because Section 325.214(2) and Rule 15C-6.003, Fla.Admin.Code, are in operation charging a tax without any rational basis and the tax is no way designed to promote the health, safety or welfare of the persons subject to the MVIP, both the statute and the rule constitute substantive due process violations and are therefore unconstitutional.

Appellees requested a circuit court declaration that section 325.214(2), Florida Statutes (1995), and Rule 15C-6.003 are "unconstitutional in operation."

Contemporaneously with their amended complaint, appellees served their Motion for Order Determining that Action Shall Be maintained as Class Action. The motion states that appellees filed the action on July 22, 1997, on behalf of over five million Florida registered motorists, seeking a determination that certain inspection fees imposed in only six counties are unconstitutional. Paragraph 3 of the motion states:

3. The operative class Complaint seeks a declaration that the Inspection Fees, promulgated through section 325.214, Florida Statutes (1995), are not "fees" that simply cover the administrative costs of the Program. Instead, the Inspection Fees—as implemented—are unconstitutional "taxes" as they were set at the statutory maximum of $10.00 without regard to the actual administrative costs, which are significantly less than the $10.00 ceiling. Plaintiffs seek a declaration as to the constitutionality of the fees as implemented and enforced by the Department and its agents. Further, the operative class Complaint seeks a declaration that the Inspection Fees, promulgated through section 325.214(2), Florida Statutes (1998), are facially unconstitutional.

In its amended answer, the Department asserted the circuit court did not have jurisdiction under section 26.02(2)(e), Florida Statutes, over that part of the amended complaint which sought a declaratory judgment regarding the former versions of section 325.214(2), as those versions were amended and have not been in effect since May 28, 1999, the effective date of current section 325.214(2), Florida Statutes (1999). The Department further asserted the circuit court has jurisdiction of a refund case only after each person seeking a refund applies for a refund under section 215.26, Florida Statutes, and is denied same. In addition, the Department alleged:

... Because the Plaintiffs' sole basis for this suit is not the "facial" constitutionality of Section 325.214(2), Florida Statutes (1988), no class action "direct-file" exception is available to the Plaintiffs under Nemeth, supra. Therefore, the Plaintiffs have failed to comply with the Legislature's conditions precedent in Section 215.26, Florida Statutes.

As an affirmative defense, the Department alleged appellees failed to state a cause of action, because they never filed claims for refunds as required by section 215.26, Florida Statutes, as pronounced by the supreme court in Department of Revenue v. Nemeth, 733 So.2d 970 (Fla.), cert. denied, 528 U.S. 871, 120 S.Ct. 173, 145 L.Ed.2d 146 (1999).

Thereafter, the circuit court entered the appealed order determining that the instant action is maintainable on behalf of a class, thereby giving rise to this interlocutory appeal.

Our determination of the issues presented in this case requires a construction of the rule of law pronounced by the Florida Supreme Court in Department of Revenue v. Nemeth. In Nemeth, the supreme court considered a constitutional challenge to section 320.072(1)(b), Florida Statutes. This provision imposed a $295.00 impact fee upon motor vehicles purchased or titled in other states that then are registered in Florida by persons having or establishing permanent Florida residency. The supreme court held "that a taxpayer's claim based solely upon the tax being unconstitutional may be filed in the appropriate court rather than with the Comptroller." See id. The court further explained that suit must be filed within the three-year time limit prescribed by section 215.26(2), Florida Statute. See id.

The Nemeth decision was guided by the court's earlier opinion in Department of Revenue v. Kuhnlein, 646 So.2d 717, 725 (Fla.1994), cert. denied by Adams v. Dickinson, 515 U.S. 1158, 115 S.Ct. 2608, 132 L.Ed.2d 853 (1995). In Kuhnlein, the supreme court declared the impact fee statute to be facially unconstitutional, because it violated the commerce clause. Then in Nemeth, the court clarified the Kuhnlein decision, explaining:

[W]e expressly hold that a Florida taxpayer may file directly in the appropriate court without filing an administrative claim pursuant to section 215.26 if the sole basis claimed 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.

The claim based solely upon the constitutionality of the tax must be commenced by filing in the appropriate court within the time requirements set forth in section 215.26(2), that is, "within 3 years after the right to refund has accrued." ...

Although in Nemeth, the supreme court did not use the term "facial" in its discussion of the direct-file exception for claims based on the unconstitutionality of a tax, such concept is implicit in the subject of the court's clarification of its Kuhnlein decision. In Kuhnlein, the court declared in express terms that the impact fee statute was facially unconstitutional. Since the Nemeth opinion considered a challenge to the same statute that was under attack in Kuhnlein, we conclude the court intended the rule announced in Nemeth to be applicable to facial challenges to the constitutionality of a statute, because that was the rule announced in Kuhnlein.

Florida appellate courts called upon to address the direct-file exception pronounced in Kuhnlein and Nemeth, have construed the opinion as pertaining only to facial constitutional challenges in refund cases. In such cases, a taxpayer is not required to comply with the state's refund procedures as a condition precedent to bringing a constitutionally-based refund suit. See, e.g., Reinish v. Clark, 765 So.2d 197 (Fla. 1st DCA 2000)

; Public Medical Assistance Trust Fund v. Hameroff, 689 So.2d 358 (Fla. 1st DCA 1997), approved in part, 736 So.2d 1150 (Fla.1999); P.R. Marketing Group, Inc. v. GTE Florida, Inc., 747 So.2d 962 (Fla. 2d DCA 1999).

The P.R. Marketing fact scenario is analogous to the uncontroverted facts in this case, and suggests a similar result should obtain herein. In P.R. Marketing v. GTE, appellants filed a complaint alleging that GTE collected more sales tax than the law allows, then remitted the tax to the Department of Revenue. The court noted that after Kuhnlein was released, the district courts differed as to how the decision should be applied. See id. at 964. The court further observed that the questions left unanswered by Kuhnlein were addressed by the supreme court in Nemeth, wherein the court held that "a taxpayer is required to first apply for a refund pursuant to the relevant statute before filing suit, unless the claim...