Darden Rests., Inc. v. Singh

266 So.3d 228

DARDEN RESTAURANTS, INC. and GMRI, Inc., Appellants,

v.Rick SINGH, as Orange County Property Appraiser and Department of Revenue, Appellees.

Case No. 5D16-4049

District Court of Appeal of Florida, Fifth District.

Opinion filed March 1, 2019

Robert E.V. Kelley, Jr., of Hill, Ward & Henderson, P.A., Tampa, and Nicholas A. Shannin, of Shannin Law Firm, P.A., Orlando, for Appellants.

Kenneth P. Hazouri, of de Beaubien, Simmons, Knight, Mantzaris & Neal, LLP, Orlando, for Appellee Rick Singh.

Ashley Moody, Attorney General, and Robert P. Elson, Assistant Attorney General, Office of the Attorney General Revenue Litigation Bureau, Tallahassee, for Appellee Leon M. Biegalski, as Executive Director of the Florida Department of Revenue.

Chris W. Altenbernd of Banker Lopez Gassler, P.A., and Joseph H. Lang, Jr., of Carlton Fields Jorden Burt, P.A., Tampa, Amicus Curiae for Chamber of Commerce of the United States of America, the Restaurant Law Center, and the Florida Restaurant & Lodging Association.

Robert S. Goldman, of Dean, Mead & Dunbar, Tallahassee, Amicus Curiae for Florida Chamber of Commerce, Inc.

Gaylord A. Wood, Jr., of Wood & Stuart, P.A., Bunnell, Amicus Curiae for Larry Bartlett, as Volusia County Property Appraiser.

Loren E. Levy, of The Levy Law Firm, Tallahassee, Amicus Curiae for The Property Appraisers' Association of Florida, Inc.

EVANDER, C.J.,

Darden Restaurants, Inc. and GMRI, Inc. (collectively "Darden") appeal a final judgment that vacated the Value Adjustment Board's ("VAB") rulings and reinstated the Orange County Property Appraiser's ("Property Appraiser") 2013 and 2014 tax assessments on tangible personal property ("TPP")¹ located in Darden's corporate headquarters. In accepting the Property Appraiser's assessments, the trial court determined that the Property Appraiser was not required to present competent, substantial evidence that its appraisal methodology complied with professionally accepted appraisal practices. Rather, in setting forth the legal standards governing "fair market value determination" in its final judgment, the trial court cited to language from Mazourek v. Wal-Mart Stores, Inc. , 831 So.2d 85, 89 (Fla. 2002), that "[t]he property appraiser's determination of assessment value is an exercise of administrative discretion within the officer's field of expertise." The Mazourek decision preceded the 2009 amendment to section 194.301, Florida Statutes, where the Legislature articulated that the value of property must be determined by an appraisal methodology that met the criteria of section 193.011 and professionally accepted appraisal practices. Because the trial court did not comply with section 194.301(2)(b)'s requirement that its assessment must be based on "competent, substantial evidence of value in the record which cumulatively meets the criteria of s. 193.011 and professionally accepted appraisal practices," we reverse.

In 2009, Darden constructed a new corporate headquarters facility in Orange County. The three-story, 469,000 square foot facility employed over one thousand people providing support for Darden's restaurants throughout the country. The facility contains a large amount of TPP, including computers, office furniture, fitness center equipment, test kitchen equipment, solar panels, signage, an alarm system, and a music system. The value of the TPP for 2013 and 2014 is the subject of the parties' litigation.²

In 2013, Darden filed a TPP tax return estimating the current fair market value of its TPP to be $20,503,172. However, the Property Appraiser valued Darden's TPP for 2013 at $29,033,332, or $8,530,160 more than Darden's estimate. In 2014, Darden filed a TPP tax return estimating the current fair market value of its TPP to be $18,217,701, while the Property Appraiser valued it at $27,424,505 or $9,206,804 more than Darden's estimate. Darden timely challenged the Property Appraiser's valuations for both years by filing petitions with the VAB. In each case, the VAB sided with Darden and reduced the Property Appraiser's assessment.

The Property Appraiser timely challenged the VAB's decisions by filing complaints in the circuit court.³ The two actions were consolidated and a multi-day, nonjury, trial took place, in which both sides presented expert witness testimony. During the trial, the trial court expressly rejected Darden's argument that the Property Appraiser was required to show that its appraisal methodology complied with professionally accepted appraisal practices. Subsequently, the trial court entered a final judgment reinstating the Property Appraiser's original assessments for both years. After the denial of Darden's motion for rehearing, this appeal followed.

Article VII, section 4 of the Florida Constitution directs the Legislature, subject to certain provisos and exceptions, to prescribe regulations "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 Mazourek , 831 So.2d at 88 (citing Walter v. Schuler , 176 So.2d 81, 85–86 (Fla. 1965) ); see also § 192.001(2), Fla. Stat. (2013) (defining "assessed value of property" as annual determination of the "just or fair market value" of an item or property). Fair market value is "the amount a purchaser willing but not obliged to buy, would pay to one willing but not obliged to sell." Smith v. Krosschell , 937 So.2d 658, 662 (Fla. 2006) (citing Walter , 176 So.2d at 85–86 ); see also Fla. Admin. Code R. 12D-1.002(2) (defining just value).

Section 194.301 provides that in proceedings before the VAB or the circuit court, the value of property must be determined by an appraisal methodology that complies with the criteria set forth in section 193.011⁴ and with professionally accepted appraisal practices:

(1) In any administrative or judicial action in which a taxpayer challenges an ad valorem tax assessment of value, the property appraiser's assessment is presumed correct if the appraiser proves by a preponderance of the evidence that the assessment was arrived at by complying with s. 193.011, any other applicable statutory requirements relating to classified use values or assessment caps, and professionally accepted appraisal practices, including mass appraisal standards, if appropriate. However, a taxpayer who challenges an assessment is entitled to a determination by the value adjustment board or court of the appropriateness of the appraisal methodology used in making the assessment. The value of property must be determined by an appraisal methodology that complies with the criteria of s. 193.011 and professionally accepted appraisal practices. The provisions of this subsection preempt any prior case law that is inconsistent with this subsection.

(2) In an administrative or judicial action in which an ad valorem tax assessment is challenged, the burden of proof is on the party initiating the challenge.

(a) If the challenge is to the assessed value of the property, the party initiating the challenge has the burden of proving by a preponderance of the evidence that the assessed value:

1. Does not represent the just value of the property after taking into account any applicable limits on annual increases in the value of the property;

2. Does not represent the classified use value or fractional value of the property if the property is required to be assessed based on its character or use; or

3. Is arbitrarily based on appraisal practices that are different from the appraisal practices generally applied by the property appraiser to comparable property within the same county.

(b) If the party challenging the assessment satisfies the requirements of paragraph (a), the presumption provided in subsection (1) is overcome, and the value adjustment board or the court shall establish the assessment if there is competent, substantial evidence of value in the record which cumulatively meets the criteria of s. 193.011 and professionally accepted appraisal practices. If the record lacks such evidence, the matter must be remanded to the property appraiser with appropriate directions from the value adjustment board or the court, and the property appraiser must comply with those directions.

(c) If the revised assessment following remand is challenged, the procedures described in this section apply.

(d) If the challenge is to the classification or exemption status of the property, there is no presumption of correctness, and the party initiating the challenge has the burden of proving by a preponderance of the evidence that the classification or exempt status assigned to the property is incorrect.

§ 194.301, Fla. Stat. (2013) (emphasis added).⁵

In an effort to fulfill the State's responsibility to secure a just valuation for ad valorem tax purposes and to provide uniform assessment throughout the state, see sections 195.0012 and 195.002, Florida Statutes (2013), Florida's Department of Revenue ("DOR") is required to establish and promulgate standard measures of value ("DOR Guidelines") to be used by property appraisers in all counties. See § 195.032, Fla. Stat. (2013). These standard measures of value "shall assist the property appraiser in the valuation of property and be deemed prima facie correct, but shall not be deemed to establish the just value of any property." Id. For purposes of this appeal, we accept the Property Appraiser's suggestion, without so holding, that the DOR Guidelines are reflective of professionally accepted appraisal practices to the extent that they specifically direct certain action by the Property Appraiser.

There are three recognized approaches to property valuations: cost, income, and market or sales-comparison. Havill v. Scripps Howard Cable Co. , 742 So.2d 210, 212–13 (Fla. 1998). In the instant case, Darden and the Property Appraiser agreed that the income approach was not appropriate for valuing Darden's TPP. Darden's valuation expert utilized the market or sales-comparison approach in arriving...