S AND A PROPERTY INVESTMENT SERVICES, LLC v. PEDRO J. GARCIA, etc.

• Court: District Court of Appeal of Florida
• Decided: March 15, 2023
• Docket: 22-0835
• Status: Published

Opinion

Third District Court of Appeal State of Florida

Opinion filed March 15, 2023. Not final until disposition of timely filed motion for rehearing.

________________

No. 3D22-835 Lower Tribunal No. 21-18225 ________________

S and A Property Investment Services, LLC, Appellant,

vs.

Pedro J. Garcia, etc., et al., Appellees.

An Appeal from the Circuit Court for Miami-Dade County, Pedro P. Echarte, Jr., Judge.

Law Office of Stanley H. Beck, and Stanley H. Beck (Hallandale Beach), for appellant.

Geraldine Bonzon-Keenan, Miami-Dade County Attorney, and Daija Page Lifshitz, Assistant County Attorney, for appellees Pedro J. Garcia and Peter Cam.

Before SCALES, MILLER and BOKOR, JJ.

SCALES, J. Appellant, plaintiff below, S and A Property Investment Services, LLC

(“Taxpayer”), appeals an April 26, 2022 final summary judgment entered in

favor of appellees, defendants below, Pedro J. Garcia, the Miami-Dade

County Property Appraiser (“Property Appraiser”) and Jim Zingale, executive

director of the Florida Department of Revenue. 1 The trial court’s summary

judgment confirmed a determination by both the Property Appraiser and the

Miami-Dade County Value Adjustment Board (“VAB”) that, under the facts

presented, the conveyance of the subject non-homestead residential

property from Taxpayer’s owners to Taxpayer constituted a “change of

ownership or control” of the property. As such, the trial court found, pursuant

to section 193.1554(3) of the Florida Statutes, that the Taxpayer lost its

annual assessment cap (the “10% Assessment Limitation”).

We affirm because the Taxpayer’s assertion that the conveyance to

Taxpayer was merely a transfer between legal and equitable title, rather than

a change of ownership, is belied by (i) the plain language of section

193.1554, (ii) the subject quitclaim deed, and (iii) Florida’s limited liability

company (LLC) law.

I. Relevant Factual Background

1 The Florida Department of Revenue filed a notice of joinder below, adopting the Property Appraiser’s pleadings at the summary judgment stage. The Department did not file an answer brief with this Court.

2 In 2000, Sylvester and Angela Anderson (the “Andersons”) purchased,

as tenants by the entireties, a non-homestead property in Miami (the

“Subject Property”). In 2015, the Andersons established Taxpayer, a for-

profit Florida limited liability company, with the Florida Department of State’s

Division of Corporations. Angela Anderson owns fifty-one percent of

Taxpayer; Sylvester Anderson owns the remaining forty-nine percent.

In June 2019, the Andersons executed a quitclaim deed transferring to

Taxpayer fee simple interest in the Subject Property. The Andersons

received no consideration for the transfer, and, according to the testimony of

Angela Anderson, the Andersons transferred the Subject Property to

Taxpayer so that the Andersons would not face any personal tort liability

arising from their ownership of the Subject Property.

While the Andersons owned the Subject Property as tenants by the

entireties, they enjoyed the 10% Assessment Limitation for non-homestead

residential property on the Subject Property. In January 2020, though, after

the 2019 transfer of the Subject Property from the Andersons to Taxpayer,

the Property Appraiser re-assessed the Subject Property at its just value,

thereby removing the 10% Assessment Limitation. Without the benefit of the

10% Assessment Limitation that the Andersons had enjoyed, the Property

3 Appraiser’s assessed value of the Subject Property rose from $104,023 in

2019, to $273,409 in 2020, resulting in an increased property tax liability.

II. Procedural History

Taxpayer appealed its 2020 tax assessment to VAB, challenging the

Property Appraiser’s decision to remove the 10% Assessment Limitation

from the Subject Property. The VAB magistrate ruled in favor of the Property

Appraiser and denied Taxpayer’s VAB appeal.

Taxpayer then, pursuant to sections 194.036(2) and 194.171 of the

Florida Statutes, 2 filed a two-count complaint in circuit court. Count II of

Taxpayer’s complaint challenged the Property Appraiser’s removal of the

Andersons’ 10% Assessment Limitation. 3

The parties filed cross-motions for summary judgment. Taxpayer’s

summary judgment evidence consisted of an affidavit by Angela Anderson

stating the legal conclusion that the Andersons retained equitable ownership

of the Subject Property after quitclaiming the Subject Property to Taxpayer.

Thus, according to Angela Anderson’s affidavit, the transfer was “between

2 These related statutes provide a taxpayer with the right to file an action in circuit court to contest a tax assessment. 3 Count I of the complaint, which eventually was dismissed, challenged the market value assigned to the Subject Property, and is not a part of this appeal.

4 legal and equitable title,” and therefore, did not constitute a “change of

ownership” under section 193.1554(5). After an April 18, 2022 hearing on

the parties’ competing summary judgment motions, the trial court entered

the challenged April 26, 2022 final summary judgment in favor of the

Property Appraiser, rejecting Taxpayer’s assertion that the Andersons had

retained equitable title after transferring the Subject Property to Taxpayer.

The trial court found that nothing in the quitclaim deed or in Taxpayer’s LLC

operating agreement indicated that the Andersons retained equitable title in

the Subject Property. Taxpayer timely appealed the judgment.

III. Analysis4

A. Section 193.1554

As mentioned above, section 193.1554(3) provides that any change

resulting from the annual assessment of a non-homestead residential

property is capped at ten percent of the assessed value of the property for

the prior year. § 193.1554(3), Fla. Stat. (2020). The property retains this 10%

Assessment Limitation so long as the property does not undergo “a change

of ownership or control.” § 193.1554(5), Fla. Stat. (2020). If, however, there

4 This Court reviews de novo a trial court’s summary judgment. Ibarra v. Ross Dress for Less, Inc., 350 So. 3d 465, 467 (Fla. 3d DCA 2022). A trial court’s interpretation of a statute is reviewed de novo as well. Rahimi v. Global Discoveries Ltd., LLC, 252 So. 3d 804, 806 (Fla. 3d DCA 2018).

5 is “a change of ownership or control,” the property “shall be assessed at just

value as of January 1 of the year following such change in ownership or

control.” Id.

Section 193.1554(5) defines “a change of ownership or control” as

“any sale, foreclosure, transfer of legal title or beneficial title in equity to any

person, or the cumulative transfer of control or of more than 50 percent of

the ownership of the legal entity that owned the property when it was most

recently assessed at just value.” Id.

The statute contains four express exemptions to this definition. The

exemption at issue in the instant case reads as follows: “There is no change

of ownership if: . . . [t]he transfer is between legal and equitable title.” §

193.1554(5)(b), Fla. Stat. (2020).

B. Crescent City Miami and Kuro cases

Taxpayer asserts on appeal, as it did below, that the Property

Appraiser wrongfully characterized the Andersons’ 2019 conveyance of the

Subject Property to Taxpayer as a change of ownership of the property.

Taxpayer asserts that when real property is transferred from two married

individuals to an LLC that is owned solely by the two married individuals, as

occurred here, only a transfer between legal and equitable title has occurred,

and ownership has not changed for the purposes of section 193.1554(5)(b).

6 In support of its argument, Taxpayer relies on two cases construing a

different statute from the one involved here – section 201.02(1) of the Florida

Statutes, the documentary tax statute. 5 These cases are Crescent Miami

Center, LLC v. Florida Department of Revenue, 903 So. 2d 913 (Fla. 2005)

and Kuro, Inc. v. State Department of Revenue, 713 So. 2d 1021 (Fla. 2d

DCA 1998). The Crescent Miami Center Court held that “the transfer of

property between a grantor and its wholly owned grantee, absent any

exchange of value, is without consideration or a purchaser and thus not

subject to the documentary stamp tax in section 201.02(1).” Crescent, 903

So. 2d at 919; see Kuro, Inc., 713 So. 2d at 1022 (“[w]e conclude that Kuro

was not a purchaser within the meaning of section 201.02(1) and, thus, no

additional taxes were due. Section 201.02(1) applies to transfers of real

estate for consideration to a ‘purchaser.’”)

Taxpayer asserts that the transfer from the Andersons to Taxpayer is

identical to the transfers in Crescent Miami Center and Kuro, Inc. where in

each of those cases the courts concluded that the challenging taxpayer was

not a “purchaser” under section 201.02(1). Crescent Miami Center, 903 So.

5 In relevant part, this statute provides that when a deed for real property is conveyed, the purchaser shall pay a documentary stamp tax of $.70 per every $100 of consideration paid for that real property. § 201.02(1), Fla. Stat. (2020).

7 2d at 919; Kuro, Inc., 713 So. 2d at 1022 (holding that the “beneficial

ownership of the land remained unchanged.”). Taxpayer urges us to come

to a similar conclusion when analyzing the transactions under section

193.1554(5).

The inquiry in both Crescent Miami Center and Kuro, Inc. was whether,

under section 201.02(1), there had been a sale, supported by consideration,

to a “purchaser.” As the Crescent Miami Center and Kuro, Inc. Courts held,

documentary tax liability under section 201.02(1)’s plain language is

triggered only when there is a “purchaser” and, relatedly, when there is

“consideration.” Crescent Miami Center, 903 So. 2d at 918; Kuro, Inc., 713

So. 2d at 1022. While our inquiry under section 193.1554(5) might seem

similar to the inquiry undertaken by the Crescent Miami Center and Kuro,

Inc. courts, our focus is not whether there was a purchaser and consideration

for the transaction. Rather, our focus, based on section 193.1554(5)’s plain

language, is whether there was a “change of ownership.” Clearly, the transfer

of the property from the Andersons – who held the property in the entireties

– to Taxpayer, a Florida LLC, constituted a change of ownership.

Taxpayer is an entity separate and distinct from its owners, the

Andersons. § 605.0108(1), Fla. Stat. (2020); Palma v. S. Fla. Pulmonary &

Critical Care, LLC, 307 So. 3d 860, 866 (Fla. 3d DCA 2020 (“[A]n LLC is an

8 autonomous legal entity, separate and distinct from its members”). 6 Indeed,

the purpose of the 2019 transfer of the Subject Property to an LLC was to

separate the Andersons from their ownership of the property so that tort

liability for occurrences on the property would not touch them. Nothing in the

summary judgment record indicates that this purpose was not effectuated by

the transfer.

Plainly, there was a “change of ownership” – as that term is defined in

section 193.1554(5) – in the Subject Property. The transfer to LLC ownership

was not a mere “book transaction,” as Taxpayer suggests. We find

Taxpayer’s reliance on Crescent Miami Center and Kuro, Inc. unpersuasive.

C. Transfer between Legal and Equitable Title – the Statutory Exception

Finally, Taxpayer asserts that, because the Andersons control

Taxpayer, the 2019 transfer was merely “between legal and equitable title,”

6 While not critical to our analysis, we note that, contrary to Taxpayer’s assertion, this transfer was not a mere “book transaction” whereby they “received no interest in the property that they did not already have before the transfer.” Crescent Miami Center, 903 So. 2d at 916. Before the transfer, each Anderson spouse, as a tenant in the entirety, owned a one hundred percent undivided interest by the property with a right of survivorship. See Beal Bank, SSB v. Almand & Assocs., 780 So. 2d 45, 52 (Fla. 2001). After the transfer, Angela Anderson owned a fifty-one percent interest and Sylvester Anderson owned a forty-nine percent interest in Taxpayer. Additionally, the summary judgment record does not indicate that the Andersons’ ownership interest in Taxpayer was subject to a right of survivorship.

9 and therefore, pursuant to the statutory exception found in section

193.1554(5)(b), no change of ownership occurred. Put another way,

Taxpayer argues that only legal title to the Subject Property was transferred

by the quitclaim deed, and that the Andersons retained equitable title to the

Subject Property because they are the owners of Taxpayer. They claim the

authority to “revest” ownership of the Subject Property.

In our view, Taxpayer’s argument misapprehends the effect of a

quitclaim deed, Florida LLC law, and equitable ownership. First, it is black-

letter Florida real property law that when a grantor delivers a quitclaim deed,

the grantor is divested of any interest in the deeded property, and any

interest of the grantor vests in the grantee. See June Sand Co. v. Devon

Corp., 23 So. 2d 621, 623 (Fla. 1945). “When the language of a deed is clear

and certain in meaning and the grantor's intention is reflected by the

language employed, there is no room for judicial construction of the language

nor interpretation of the words used.” Rogers v. United States, 184 So. 3d

1087, 1095 (Fla. 2015) (quoting Saltzman v. Ahern, 306 So. 2d 537, 539

(Fla. 1st DCA 1975)). The quitclaim deed in this case unambiguously

transferred fee simple ownership of the Subject Property to Taxpayer.

Neither the deed, nor any other document in the summary judgment record,

10 purports to reserve to the Andersons any interest, equitable or otherwise, in

the Subject Property.

Also, of import here, the grantee Taxpayer is a Florida limited liability

company. Section 605.0110 of the Florida Statutes unequivocally specifies

that “[a]ll property originally contributed to the limited liability company or

subsequently acquired by a limited liability company by purchase or other

method is limited liability company property.” § 605.0110(1), Fla. Stat.

(2019). “It is basic hornbook law that ‘corporate property is vested in the

corporation itself, and not in the individual stockholders, who have neither

legal nor equitable title in the corporate property.’” Brevard Cnty. v. Ramsey,

658 So. 2d 1190, 1196 (Fla. 5th DCA 1995) (quoting In re Miner, 177 B.R.

104, 106 (Bankr. N.D. Fla. 1994) (emphasis added)). Consequently, an LLC

member has “no interest in any specific limited liability company property.” §

605.0110(4), Fla. Stat. (2019) (emphasis added).

Taxpayer has cited no authority for the proposition that owners or

members of an LLC who convey, via quitclaim deed, real property to an LLC

retain, as a matter of law, the equitable title to the conveyed property

because those owners or members control the LLC. We therefore agree with

the Property Appraiser, VAB, and the trial court that, for the purposes of

11 section 193.1554(5)(b), the Andersons did not retain equitable ownership of

the Subject Property when they conveyed the Subject Property to Taxpayer.

IV. Conclusion

The transfer from the Andersons to the Taxpayer constituted a “change

of ownership” of the Subject Property. While we are not unsympathetic to

Taxpayer’s argument that the 10% Assessment Limitation should be

retained under the circumstances presented here, we are simply not free, by

judicial fiat, to craft what would amount to a fifth exception to section

193.1554(5) to exempt from the definition of “change of ownership” any real

property transfer from individuals to a Florida limited liability company wholly

owned by such individuals. We therefore affirm the trial court’s final summary

judgment for appellees.

Affirmed.