Ves Carpenter Contractors, Inc. v. City of Dania

• Decision Date: 10 November 1982
• Docket Number: Nos. 81-499,81-1089,s. 81-499
• Citation: 422 So.2d 342
• Parties: VES CARPENTER CONTRACTORS, INC., et al., Appellants, v. CITY OF DANIA, a municipal corporation, et al., Appellees.
• Court: Florida District Court of Appeals

Page 342

422 So.2d 342

VES CARPENTER CONTRACTORS, INC., et al., Appellants, v. CITY OF DANIA, a municipal corporation, et al., Appellees.

Nos. 81-499, 81-1089.

District Court of Appeal of Florida Fourth District.

Nov. 10, 1982.

Rehearing Denied Dec. 30, 1982.

Constance J. Kaplan, Jesse H. Diner and Jay Cohen of Atkinson, Golden, Bacen & Diner, P.A., Hollywood, for appellants.

Frank C. Adler and Robert B. Dunckel of Adler, Tolar & Adler, Fort Lauderdale, for appellees.

HURLEY, Judge.

Ves Carpenter Contractors, Inc. ("Ves") appeals a judgment which found that Ves had been illegally required to pay water and sewer impact fees but which denied Ves restitution of those fees. We have concluded that the trial court should have ordered restitution of those fees paid within the statute of limitations period and, accordingly, we affirm in part and reverse in part.

From February 1973 through July 13, 1976, the City of Dania ("the city") collected impact fees for sewer and water services. These fees, however, later proved to be illegal because the city commission had not adopted a proper enabling ordinance or resolution. ¹

On July 13, 1976, in an effort to rectify the situation, three of the five members of the city commission voted to enact "Ordinance 99," an emergency ordinance, which authorized the imposition of impact fees. Even though the vote was three to zero, the ordinance was ineffective and subject to attack because an emergency ordinance must pass by a two-thirds vote of a municipality's governing body in order to be valid under Florida law. Section 166.041(3)(b), Florida Statutes (1981).

The appellant Ves, a real estate developer, instituted a class action suit against the city on August 29, 1977, challenging the validity of the impact fees, seeking injunctive relief, and seeking restitution of the fees paid. A lengthy series of pre-trial maneuvers occurred which we need not detail here. Suffice it to say that the city's last pre-trial amended answer asserted laches as an affirmative defense but failed to assert the statute of limitations even though the city's prior answer and amended answers had raised the statute of limitations defense. In addition, Ves was allowed to represent the class of entities that paid fees under the invalid July 13th emergency ordinance, Ordinance 99, but was not allowed to represent the class that paid fees prior to July 13, 1976.

At the conclusion of a bench trial, the court permitted the city to amend its answer in order to assert the statute of limitations which had been omitted after an earlier amendment. The court then found that Ves was barred by the statute of limitations from recovering fees paid prior to August 29, 1973. As to the fees paid after August 29, 1973, the court found that the fees were illegal because they had been collected either without an enabling ordinance (pre-July 13, 1976) or under an illegal ordinance (post-July 13, 1976). The court also found that Ves had paid these fees without passing the cost on to its customers, but concluded that Ves could not recover the fees because it had not overcome the presumption that the fees had been paid voluntarily. As for the class action, the court found that Ves had violated a due process requirement by failing to notify the members of the plaintiff class and, as a result, the court decertified the class. Lastly, by a post-judgment order, Ves was awarded certain trial costs.

In addressing the propriety of the trial court's actions, we start by examining the prerequisites for recoupment of an illegal tax or fee. ² In North Miami v. Seaway Corp., 151 Fla. 301, 9 So.2d 705 (1942), the Florida Supreme Court established the standards that a taxpayer must meet in order to recover taxes already paid. The taxpayer must demonstrate that (1) the tax was illegal and void, not merely irregular; (2) the tax must have been paid under compulsion or the legal equivalent; (3) the tax must have been paid and received by the municipality, and (4) the party must not have elected to proceed with any other remedy against the tax assessor or collector. ³

In the present case, Ves satisfied elements (1), (3), and (4). The question on appeal is whether the trial court was correct in concluding that the fees were not paid under compulsion or duress. In this respect we note the Supreme Court's observation in North Miami v. Seaway Corp., supra, at 707, that "[p]ayment [of a tax] to avoid onerous penalties is generally considered as involuntary and compulsory." Applying this concept to the case at bar, we must determine whether the city's refusal to issue building permits unless the sewer and water fees had been paid in full amounted to an onerous penalty so as to render payment involuntary and, thus, recoverable.

Guidance on this point is found in New Smyrna Inlet District v. Esch, 103 Fla. 24, 137 So. 1, rehearing denied, 103 Fla. 24, 138 So. 49 (1931), a case which involved an improperly created special taxing district. The district collected special assessment taxes to construct and maintain an inlet channel. When Esch and others sued to recover the assessment taxes the district asserted that the taxes had been paid voluntarily and were not recoverable. The Supreme Court ruled for the taxpayers and held that, since the taxes had been paid to avoid a cloud on the owner's property, such payments were involuntary. ⁴ The court reasoned that when a special benefit assessment tax is illegally enacted, and the assessment is collected along with other government taxes, a taxpayer has no choice but to pay. Consequently, the court determined that there was sufficient coercion to enable the taxpayers to recoup the illegally paid taxes.

We too have held that "payment of a tax is deemed involuntary where the penalty exacted for non-payment is so severe that it constitutes coercion and duress." Broward County v. Mattel, 397 So.2d 457, 460 (Fla. 4th DCA 1981). Mattel involved the threat of an injunction plus civil and criminal penalties against a lawyer who initially refused to pay an illegally excessive occupational license tax. We found this to be sufficiently coercive to justify recovery of the monies paid. Our ruling was predicated on the theory that "payment of an illegal tax, even without protest, in order to avoid forfeiture of the right to do business is not a voluntary payment." Ibid.

Applying these principles to the case at bar, we hold that sufficient economic coercion was brought to bear against Ves to require a finding that the fee payments were involuntary. Prior to purchasing the land for the development, Ves had requested and received a statement of the fees which would be required in order to pull building permits, etc. The city failed to include the sewer and water fees on this list. Ves learned of these fees only after it had purchased the property and had made a substantial financial commitment to its development. Because the fees in question were collected along with other legitimate fees which were necessary to obtain building permits, certificates of occupancy, etc., Ves was required to pay all of the fees if it wished to engage in any construction at all. In retrospect, it is clear that Ves paid the impact fees to avoid the imposition of a substantial burden...