Genesis Ministries, Inc. v. Gregory S. Brown, as Property etc.

FIRST DISTRICT COURT OF APPEAL

STATE OF FLORIDA

_____________________________

No. 1D17-4313

_____________________________

GENESIS MINISTRIES, INC.,

a Delaware Corporation,

Appellant,

v.

GREGORY S. BROWN, as Property

Appraiser for Santa Rosa

County, Florida; STAN COLIE

NICHOLS, as Tax Collector for

Santa Rosa County, Florida; and

LEON M. BIEGALSKI, as

Executive Director of the Florida

Department of Revenue,

Appellees.

_____________________________

On appeal from the Circuit Court for Santa Rosa County.

David Rimmer, Judge.

July 25, 2018

ROWE, J.

Genesis Ministries, Inc. appeals an order granting summary

judgment in favor of Gregory S. Brown and Stan Nichols, as

Property Appraiser and Tax Collector for Santa Rosa County,

Florida. Genesis had filed an action challenging tax assessments

made from 2005 to 2013. Genesis raises several arguments

regarding its entitlement to tax exemption during this period, only

two of which merit discussion. ∗ We agree with the trial court’s

conclusion that Genesis was not entitled to exemption from ad

valorem taxes from 2005 to 2012. However, as to the 2013 tax

year, because the property appraiser failed to comply with the

statutory notice requirements of section 196.193(5), Florida

Statutes (2013), the property appraiser improperly denied

Genesis’s existing tax exemption for 2013. Accordingly, we reverse

the grant of summary judgment with respect to the 2013 taxes and

remand for entry of summary judgment in favor of Genesis

consistent with this opinion.

I. Background

In 1994, Reverend Dr. Michael Palmer formed Genesis

Ministries, Inc. under the laws of Delaware. At or around the same

time, Genesis acquired title to property in Santa Rosa County,

Florida. From 1994 to 2004, Genesis operated a Christian church

and school on the property—Genesis Ministries and Victory

Christian Academy. Palmer also formed a Florida non-profit

corporation, Genesis Ministries, Inc., without specifying the

purpose of the non-profit. Genesis applied for and was granted a

“religious exemption” from ad valorem taxes from 1994 to 2004.

In 2004, Palmer closed Victory Christian Academy, dissolved

the Florida non-profit Genesis Ministries, and moved to Iowa.

After the school closed, Russell Cookston, a former employee of

Genesis Ministries, entered into a commercial lease and

agreement with Palmer to lease the property where the former

church and school had operated. Cookston formed a new

corporation called Lighthouse of Northwest Florida, Inc. for the

purpose of operating a new Christian church and school—

Lighthouse Ministries and Lighthouse Academy. From 2005 to

2013, Lighthouse of Northwest Florida, Inc. paid rent and operated

the Christian church and school on the property. Genesis, as the

property owner, continued to receive a “religious exemption” from

ad valorem taxes from 2005 to 2012.

∗

We affirm without comment all other issues raised by

Genesis on appeal.

2

In a February 26, 2013 letter, the property appraiser informed

Genesis that it no longer qualified for a tax exemption for the

property. An investigation by the property appraiser revealed that

Genesis had dissolved in 2004. Thus, according to the property

appraiser, Genesis erroneously received exemption from ad

valorem taxes from 2005 to 2012. The property appraiser

indicated it would file a lien against Genesis for recovery of the

amount of taxes exempted from 2005 to 2012, plus penalties and

interest. In the same letter, the property appraiser notified

Genesis that it was revoking Genesis’s tax exempt status for the

2013 tax year.

In August 2013, Genesis received a standard Truth in Millage

Notice listing the amount of taxes owed for 2013. The county’s

2013 tax rolls were certified on October 18, 2013, and Genesis’s

property was listed as fully taxable with no exemption.

After seeking explanation from the property appraiser,

Genesis received a letter that the tax determination would not be

changed. Genesis then sold the property and paid the tax lien and

2013 taxes under protest. In September 2014, Genesis sued the

property appraiser, the tax collector, and the executive director of

the Department of Revenue, asserting its entitlement to the

religious exemption from 2005 to 2013 and seeking a refund of the

taxes paid under protest.

The trial court dismissed Genesis’s complaint on jurisdictional

grounds, finding Genesis was barred from challenging both the

imposition of the tax lien and the denial of the 2013 exemption

because Genesis failed to file suit within 60 days after the

certification of the tax rolls as required under section 194.171(2),

Florida Statutes (2013). Genesis appealed, and this Court

reversed. See Genesis Ministries, Inc. v. Brown, 186 So. 3d 1074,

1082 (Fla. 1st DCA 2016) (Genesis I). We held that the 60-day

period in section 194.171(2) does not apply to actions challenging

a tax lien. Id. at 1079. As to the denial of the 2013 exemption, we

reiterated that the 60-day period does not begin to run if the

property appraiser fails to strictly comply with the applicable

statutory notice requirements. Id. at 1077 (citing Chihocky v.

Crapo, 632 So. 2d 230, 232-33 (Fla. 1st DCA 1994)). We remanded

3

the case, noting that further record development was necessary to

determine whether the property appraiser complied with the

requirements of section 196.193(5), Florida Statutes (2013). Id. at

1080-82.

On remand and after several months of discovery, the parties

filed competing motions for summary judgment. Genesis argued

it was entitled to exemption because it continuously operated a

Christian church and school on the property through Lighthouse

of Northwest Florida, Inc. The property appraiser argued Genesis

had no involvement with the operation of the Christian church or

school and instead used the property for the purpose of obtaining

substantial lease income. As to the denial of the 2013 tax

exemption, the parties disputed whether the property appraiser

satisfied the statutory notice requirements of section 196.193(5),

Florida Statutes.

The trial court granted summary judgment in favor of the

property appraiser, finding Genesis was not entitled to the tax

exemption because it held the real property for the production of

commercial rent. This appeal followed.

II. Analysis

We review the trial court’s order granting summary judgment

de novo. Lesnik v. Duval Ford, LLC, 185 So. 3d 577, 580 (Fla. 1st

DCA 2016). “Summary judgment is proper if there is no genuine

issue of material fact and if the moving party is entitled to a

judgment as a matter of law.” Volusia Cty. v. Aberdeen at Ormond

Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000).

Unless expressly exempted, all real property in the state is

subject to taxation. § 196.001(1), Fla. Stat. (2005). While certain

properties may qualify for an exemption, tax exemptions are

highly disfavored and are strictly construed against the party

claiming them. See Sebring Airport Auth. v. McIntyre, 642 So. 2d

1072, 1073 (Fla. 1994). The claimant has the burden to show

entitlement to tax exemption, and any ambiguity should be

resolved against the taxpayer and against exemption. Volusia Cty.

v. Daytona Beach Racing & Recreational Facilities Dist., 341 So.

4

2d 498, 502 (Fla. 1976); Markham v. PPI, Inc., 843 So. 2d 922, 925

(Fla. 4th DCA 2003).

A. 2005 to 2012 Taxes

“All property owned by an exempt entity and used

exclusively for exempt purposes shall be totally exempt from ad

valorem taxation.” § 196.192(1), Fla. Stat. (2005). The law

requires that the exempt entity both own and use the property.

Ocean Highway & Port Auth. v. Page, 609 So. 2d 84, 86 (Fla. 1st

DCA 1992) (“[U]nder the plain language of section 196.192, an ad

valorem tax exemption is only permitted when the property in

question is both owned and used by the tax-exempt entity.”)

(emphasis in original); see also Metropolitan Dade Cty. v. Bros. of

Good Shepherd, Inc., 714 So. 2d 573, 573 (Fla. 3d DCA 1998)

(reversing final judgment, finding that “the property in question,

although concededly used for exempt charitable purposes by an

exempt entity, was not, as the statute requires, ‘owned’ by that

entity”). It is not enough that an exempt entity owns the property

and that the property is being used for exempt purposes. The

exempt entity owner must also be the entity using the property for

exempt purposes. Ocean Highway, 609 So. 2d at 86.

Here, it was undisputed Genesis owned the property.

However, the evidence before the trial court demonstrated that

Genesis was not the entity that used the property for exempt

purposes. Lighthouse of Northwest Florida, Inc., a distinct and

separate entity, operated the Christian church and school on

Genesis’s property. That a former employee of Genesis formed

Lighthouse does not create a corporate or contractual relationship

between Genesis and Lighthouse. At oral argument, Genesis

admitted that Lighthouse was a completely separate corporate

entity. Because the undisputed evidence shows Genesis was not

the entity that used the property for exempt purposes from 2005

to 2012, it was not entitled to tax exemption during those years.

See § 196.192(1), Fla. Stat. (2005); Ocean Highway, 609 So. 2d at

86.

B. 2013 Tax Exemption Revocation

Genesis argues the property appraiser’s denial of the 2013

exemption was invalid as a matter of law because the property

5

appraiser failed to comply with the statutory notice requirements.

In order to revoke an existing tax exemption, the property

appraiser must follow the notice requirements outlined in section

196.193(5), Florida Statutes (2013). As we explained in Genesis I,

“section 196.193(1)(c) necessarily contemplates that the property

appraiser is required to provide notice in accordance with

subsection (5) when denying an existing religious exemption.” 186

So. 3d at 1081. Although dicta, we added that the “Legislature has

made clear that the property appraiser’s failure to comply with the

notice requirements in section 196.193(5) has consequences . . .

[the] statutory provision would be meaningless if, as Appellees

argue, Genesis was barred from challenging the denial of its

exemption for 2013 when it was not provided notice of the denial.”

Id. at 1082; § 196.193(5)(b), Fla. Stat. (2013) (“If a property

appraiser fails to provide a notice that complies with this

subsection, any denial of an exemption or an attempted denial of

an exemption is invalid.”).

Now, with a fully developed record after remand, it is

undisputed that the property appraiser failed to provide Genesis

with the proper notice. The property appraiser’s February 26,

2013 letter to Genesis did not notify Genesis of its right to appeal

the property appraiser’s revocation to the value adjustment board.

See § 196.193(5)(c), Fla. Stat. (2013). And the Truth in Millage

Notice, delivered after the July 1 deadline did not cure the

deficiency in the notice. See § 196.193(5)(a), Fla. Stat. (2013) (“If

the property appraiser determines that any property claimed as

wholly or partially exempt under this section is not entitled to any

exemption . . . he or she shall notify the person or organization . . .

in writing on or before July 1 of the year for which the application

was filed.”).

Accordingly, with regard to the trial court’s entry of summary

judgment in favor of the property appraiser with respect to the

denial of the 2013 tax exemption, we reverse and remand with

instructions to grant summary final judgment in favor of Genesis.

We affirm the summary judgment order in all other respects.

AFFIRMED in part, REVERSED and REMANDED in part with

instructions.

6

WETHERELL and WINOKUR, JJ., concur.

_____________________________

Not final until disposition of any timely and

authorized motion under Fla. R. App. P. 9.330 or

9.331.

_____________________________

Douglas L. Smith of Burke, Blue, Hutchison, Walters & Smith,

P.A., Panama City, for Appellant.

Thomas M. Findley of Baker, Donelson, Bearman, Caldwell &

Berkowitz, PC, Tallahassee, for Appellees Gregory S. Brown and

Stan Colie Nichols; Pamela Jo Bondi, Attorney General, and

Timothy E. Dennis, Chief Assistant Attorney General,

Tallahassee, for Appellee Leon M. Biegalski.

7