October 31, 2007 Update

Commercial Lawsuit:

As was reported in the web site update last month, the residential liaison committee arranged to meet with our attorneys after a decision was rendered in the commercial case to be advised of the implications of this ruling on the residential case. Shell, Fleming, Davis & Menge also represent 37 commercial leaseholders on Pensacola Beach. Two prior posting to this web site (“Order Granting Summary Judgment Relief” and “Update from Attorneys – April 24, 2007”) provide background on Judge Geeker’s ruling in favor of the Property Appraiser and Tax Collector and Shell, Fleming’s arguments to counter that decision.

The appeal of Judge Geeker’s decision in the 2004 case brought on behalf of commercial lessees on Pensacola Beach in the First District Court of Appeal was not successful. A three judge panel, made up of Judges Davis, Lewis and Roberts filed an opinion of “Per Curiam Affirmed” on October 22, 2007, just 5 days after the oral arguments were heard in this case. A per curiam affirmed (PCA) means that all three judges on the appellate panel agree with the trial court’s decision and find no need to explain further. The appellate court is not required to explain its decision if it agrees with the lower court and this panel of judges did not offer any written opinion of why they affirmed Judge Geeker’s ruling. This appellate opinion effectively ends the commercial case. There can be no appeal to the Florida Supreme Court. The 37 plaintiffs in the commercial case must pay ad valorem property taxes on their governmental leasehold property on Pensacola Beach. This decision by the District Court of Appeal has no bearing on lease fees. Leaseholders are still obligated pay lease fees to the Santa Rosa Island Authority.

Since Judges Davis, Lewis and Roberts of the First District Court of Appeal offered no explanation as to why they affirmed the lower court decision by ruling per curiam affirmed, it has no direct precedential impact on other cases. In other words, the appellate decision went against the commercial leaseholders but it cannot be cited as authority that is binding on, or must be followed by, another court or by a trial judge in a separate case.

Portofino Lawsuit:

As was mentioned in the April 24, 2007 update for our attorneys, the leaseholders at Portofino filed a separate lawsuit through the firm of McDonald, Fleming and Moorhead. Circuit Court Judge Frank Bell ruled that the Escambia County Property Appraiser and Tax Collector have the authority under Florida law to assess and collect real property ad valorem taxes on improvements constructed by lessees on government owned property. Unlike Judge Geeker, Judge Bell provided no explanation for his ruling. An appeal in the Portofino case has been filed with the First District Court of Appeal. It is anticipated that oral arguments would be heard in the Portofino appeal sometime in the Spring of 2008. It is hoped that the panel of judges that will hear the Portofino appeal will issue an opinion with their ruling in the case, and if they do, that opinion would most likely have an impact on our case.

Residential Lawsuit:

The case involving over 3,400 residential leaseholders on Pensacola Beach remains active in the Escambia County Circuit Court. Case Number 2004-CA-002290 is assigned to Judge Michael Jones. In each of the past three years, a complaint has been filed against Chris Jones, Escambia County Property Appraiser and Janet Holley, Escambia County Tax Collector on behalf of residential leaseholders contesting that their leasehold interest cannot be taxed as real property. Florida law requires filing a new case each year, to avoid having to pay the assessed taxes. We are represented by the law firm of Shell, Fleming, Davis & Menge. The firm is currently preparing a complaint contesting the 2007 property taxes, which must be filed with the court early in December.

We continue to be advised by our attorneys at Shell, Fleming, Davis & Menge not to pay the real property taxes. This advice is based on the uncertainties related to refund procedures in the event the court rules in our favor.

A stay has been granted in the 2004 and 2005 tax year complaints suspending all procedures for the collection of the contested taxes pending final disposition of the lawsuits. In the 2006 litigation, a stay order was not requested because Florida Statute 194.171(3) provides for an automatic stay. We as plaintiffs in these actions have alleged in good faith that we do not owe any of the taxes at issue in this case, and the Defendants have conceded that our cases have been filed in a timely manner. In other words, plaintiffs in these cases are not obligated to pay the taxes in question until the courts have made a final disposition in this matter.

If an appeal court ultimately rules the real property taxes to be valid and payable, the leaseholder who has not paid taxes will not obtain the discounts otherwise available for early payment and will be required to pay any unpaid taxes for years 2004 through the date of such ruling, plus 12% simple (not compounded) interest per year as established in Florida Statute 194.192(2).

It is anticipated that a hearing at the Circuit Court level will be scheduled in the residential case within the next few months. This web site will continue to be updated periodically. Any questions should be addressed to a member of the residential liaison committee. Contact information for the committee as well as an e-mail contact are listed on the home page of the web site.