Case Title: Crescent Miami Center, Llc V. Florida Department Of Revenue

Citation: 

Docket Number: SC03-2063

State: florida

Court: Florida Supreme Court

Date: 2005-05-19T00:00:00Z

Document:
Supreme 
Court 
of 
Florida 
 
_____________ 
 
No. SC03-2063 
_____________ 
 
 
 
CRESCENT MIAMI CENTER, LLC,  
Petitioner, 
 
vs. 
 
FLORIDA DEPARTMENT OF REVENUE,  
Respondent. 
 
[May 19, 2005] 
 
WELLS, J. 
We have for review Crescent Miami Center, LLC v. Department of 
Revenue, 857 So. 2d 904 (Fla. 3d DCA 2003), which expressly and directly 
conflicts with the decision in Kuro, Inc. v. State Department of Revenue, 713 So. 
2d 1021 (Fla. 2d DCA 1998).  We have jurisdiction.  See art. V, § 3(b)(3), Fla. 
Const. 
FACTS 
Crescent Real Estate Funding IX, LP (Crescent Funding) is owned by 
Crescent Real Estate Equities, LP (Crescent Equities), as the sole limited partner, 
and CRE Management IX, LLC (CRE), as the general partner.  CRE is also wholly 
 
 
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owned by Crescent Equities.  On February 24, 2000, Crescent Equities formed 
Crescent Miami Center, LLC (CMC), the petitioner in the present case.  Crescent 
Equities then transferred 99.9 percent of its interest in CMC to Crescent Funding 
and the remaining 0.1 percent interest to CRE.  That same day, CRE transferred 
this 0.1 percent interest in CMC to Crescent Funding, so that Crescent Funding 
became the sole owner of CMC. 
On February 25, 2000, Crescent Equities transferred a tract of real property, 
which is the subject of the present case, in fee simple to CMC.  According to the 
deed, CMC paid ten dollars and “other good and valuable consideration” for the 
property.  This transfer was made to separate the property from Crescent Equities’ 
other assets in order to facilitate future unsecured financing.  The deed was 
recorded, and CMC paid $1,212,750 in documentary stamp tax, which was 
comprised of the state documentary stamp tax and a Dade County documentary 
surtax.  
The documentary stamp tax as applied to deeds conveying real property is 
set out in section 201.02(1), Florida Statutes (2003), which states: 
On deeds, instruments, or writings whereby any lands, 
tenements, or other real property, or any interest therein, shall be 
granted, assigned, transferred, or otherwise conveyed to, or vested in, 
the purchaser or any other person by his or her direction, on each $100 
of the consideration therefor the tax shall be 70 cents.  When the full 
amount of the consideration for the execution, assignment, transfer, or 
conveyance is not shown in the face of such deed, instrument, 
document, or writing, the tax shall be at the rate of 70 cents for each 
 
 
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$100 or fractional part thereof of the consideration therefor.  For 
purposes of this section, consideration includes, but is not limited to, 
the money paid or agreed to be paid; the discharge of an obligation; 
and the amount of any mortgage, purchase money mortgage lien, or 
other encumbrance, whether or not the underlying indebtedness is 
assumed.  If the consideration paid or given in exchange for real 
property or any interest therein includes property other than money, it 
is presumed that the consideration is equal to the fair market value of 
the real property or interest therein. 
(Emphasis added.)  The underlined text was added by a 1990 amendment and was 
critical to the lower court’s analysis in the present case.  See ch. 90-132, § 7, at 
451, Laws of Fla. 
After paying this tax, CMC filed for a refund of the documentary stamp tax, 
but the Florida Department of Revenue (DOR) denied the application.  CMC filed 
suit and asserted that it should not have been required to pay the tax because it was 
not a purchaser of real property under section 201.02(1).  Since beneficial 
ownership of the property did not actually change, CMC argued, the transfer was a 
mere book transaction and thus not subject to the documentary stamp tax.  The 
DOR argued that the plain language of the statute, including its 1990 amendment, 
required CMC to pay the documentary stamp tax.  Final summary judgment was 
entered in favor of the DOR. 
The Third District Court of Appeal affirmed the summary judgment 
decision.  Crescent, 857 So. 2d at 911.  The Third District acknowledged that this 
Court has previously held that transfers from a corporation to its shareholders were 
 
 
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not subject to the tax because the shareholders were not purchasers within the 
meaning of the statute.  State ex rel. Palmer-Florida Corp. v. Green, 88 So. 2d 493 
(Fla. 1956).  We later defined the term “purchaser” for purposes of the tax as “one 
who obtains or acquires property by paying an equivalent in money or other 
exchange in value,” and thus a transfer of an unencumbered interest in real 
property from a corporation to its sole shareholder was not taxable.  Florida Dep’t 
of Revenue v. De Maria, 338 So. 2d 838, 840 (Fla. 1976) (quoting Webster’s New 
Twentieth Century Dictionary 1463 (2d unab. ed. 1971)).  However, the Third 
District asserted that these decisions were based on the statute as it existed prior to 
the 1990 amendment, before the addition of the final two sentences that, according 
to the court, “specifie[d] four types of exchange mediums which constitute 
consideration.”  Crescent, 857 So. 2d at 907.  Thus, according to the Third District, 
the decisions in Palmer-Florida and De Maria were valid before the 1990 
amendment because the statute had not provided a means of determining 
consideration in those situations, so no consideration could exist when property 
was transferred to a wholly owned grantee.  Id. 
The Third District held that the deed in the present case was subject to the 
documentary stamp tax because there was consideration for the conveyance, and 
the value of that consideration was reasonably determinable as being equal to the 
fair market value of the property under the 1990 amendment to section 201.02(1).  
 
 
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Id. at 909.  Consideration existed in the transaction because Crescent Equities 
surrendered its 100-percent interest in the property for an increase in the value of 
its interest in Crescent Funding (as the value of CMC, wholly owned by Crescent 
Funding, increased with the conveyance of property).  Consideration “follow[ed] 
as a natural consequence of the commercial transaction transferring intangible 
property with exchangeable value,” and the transfer “effectuated a complete 
change in both the legal title and the beneficial ownership of the property.”  Id.  
The Third District noted that this Court in De Maria had held that whenever there 
is consideration, there is a purchaser, and thus the statute’s purchaser requirement 
was also fulfilled in the present case.  Id.1 
The Second District Court of Appeal came to a different conclusion under 
similar facts in Kuro, where a father and son transferred condominiums which they 
solely owned to Kuro, Inc., a corporation which they had formed and in which they 
were the sole shareholders.  The transfer was made for the purpose of the Kuros 
avoiding potential personal liability arising from the management of the 
condominiums.  713 So. 2d at 1022.  The deeds recited the nominal consideration 
                                        
1.  In support of its holding, the Third District cited to similar decisions in 
Dean v. Pinder, 538 A.2d 1184 (Md. 1988) (increase in value of the grantors’ stock 
in corporation they wholly owned following their transfer of real property to it was 
sufficient “actual consideration” to impose documentary stamp tax on transfer), 
and Carpenter v. White, 80 F.2d 145 (1st Cir. 1935) (conveyance to business trust 
in return for shares issued by trust was subject to federal stamp tax because 
equitable interests of new shares in property were not same as those of old shares). 
 
 
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amount of ten dollars, and Kuro, Inc., paid the minimum documentary stamp tax.  
The DOR argued that Kuro, Inc., owed the tax in proportion to the fair market 
value of the property since the shareholders had received an increase in the value 
of their interest in Kuro, Inc., by transferring property to the corporation.  The 
Second District, however, did not hold Kuro, Inc., accountable for the 
documentary stamp tax because the company was not a purchaser under section 
201.02(1).  Id.  Moreover, the grantors received no interest in the corporation or 
the property that they did not already have before the transfer; thus, the Second 
District held that the conveyance was a mere book transaction like the transfer in 
Palmer-Florida.  The Second District held that despite the conveyance, under De 
Maria and Palmer-Florida, no documentary stamp tax was owed.  Id.  We granted 
jurisdiction because of this express and direct conflict between Crescent and Kuro. 
ANALYSIS 
The issue to be resolved in the present case is whether the conveyance of 
property from a grantor to its wholly owned grantee is taxable under section 
201.02(1), Florida Statutes.  In order to assist in this analysis, a review follows of 
the case law and administrative rules under the pre-amendment and post-
amendment statute. 
Case Law Pre-1990 Amendment 
 
 
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Prior to the 1990 amendment, this Court had encountered similar issues to 
those presented in the instant case.  In State ex rel. Palmer-Florida Corp. v. Green, 
88 So. 2d 493 (Fla. 1956), a corporation delivered a deed to property it owned to 
its shareholders in proportion to their shares in the corporation.  The corporation 
argued that the transfer should not be subject to the documentary stamp tax 
because the shareholders had given nothing in exchange for the property.  Id. at 
494.  We agreed and held that under the statute, the shareholders were not 
purchasers; the transaction had not involved any form of consideration; and thus 
the transaction was not subject to the documentary stamp tax.  Id. at 495.  The 
transaction was termed “a mere book transaction” and was “in no sense a sale to a 
‘purchaser’ as contemplated by” the statute.  Id. 
We again considered the application of section 201.02(1) in Florida 
Department of Revenue v. De Maria, 338 So. 2d 838 (Fla. 1976).  In De Maria, a 
corporation transferred property to its sole shareholder, but part of the property 
transferred was subject to a mortgage.  Id. at 839.  We reasoned that this 
encumbrance on the property made the transfer different from that in Palmer-
Florida because the economic burden of the mortgage had been transferred to the 
individual, and the grantor corporation received a benefit in not having to pay the 
mortgage.  Therefore, the transaction involving that part of the property 
encumbered by the mortgage was not a mere transfer of title.  Id.  This benefit and 
 
 
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burden transfer constituted sufficient consideration to impose the documentary 
stamp tax on that part of the property subject to the mortgage.  Id. at 840.  We also 
adopted the definition in Webster’s New Twentieth Century Dictionary of the term 
“purchaser” as “one who obtains or acquires property by paying an equivalent in 
money or other exchange in value.”  Id.  Thus, since consideration existed in the 
transaction because the burden of the mortgage had shifted, we concluded that the 
sole shareholder was a purchaser as to that part of the property subject to the 
mortgage.  Id.  However, we did not apply the documentary stamp tax to the 
corporation’s unencumbered $25,000 equity in the real property––that portion of 
the property not subject to the mortgage––because that transfer “was a mere 
change in form of the stockholder’s equity in the corporation.”  Id. 
Post-1990 Amendment 
In 1990, the Florida Legisl
ature amended section 201.02(1), listing potential 
sources of consideration in a conveyance of real property.  The types of 
consideration listed were (1) money exchanged, (2) the discharge of an obligation, 
and (3) the amount of any mortgage, purchase money mortgage lien, or other 
encumbrance.  The amendment also provided for the valuation of nonmonetary 
consideration, presuming such consideration to be equal to the fair market value of 
the real property or interest therein. 
 
 
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Following this amendment, the DOR amended its rules concerning the 
imposition of the tax on transfers to corporations.  Before the 1990 amendment to 
the statute, rule 12B-4.013(7) of the Florida Administrative Code provided that 
transfers of real property to corporations by their shareholders as a contribution to 
capital were not subject to the documentary stamp tax if the transfer was not in 
exchange for valuable consideration.  Bernard A. Barton, et al., Kuro and Muben-
Lamar In the Eye of the Beholder?, Fla. B.J., May 2002, at 49.  Following the 1990 
amendment, the rule states that “[a] conveyance of realty to a corporation in 
exchange for shares of its capital stock, or as a contribution to the capital of a 
corporation, is subject to tax.  There is a presumption that the consideration is 
equal to the fair market value of the real property interest being transferred.”  Fla. 
Admin. Code R. 12B-4.013(7).  Similarly, when the value of an interest in a 
partnership is increased by a conveyance of real property to the partnership, this 
transaction is also subject to the tax.  Fla. Admin. Code R. 12B-4.013(10). 
Following the 1990 amendment to section 201.02(1), conflict has developed 
among the Florida district courts as to how to impose the statute on transactions 
conveying property between grantors and their wholly owned companies.  In Kuro, 
as stated above, the Second District held that the documentary stamp tax did not 
apply to a transfer of property from two sole stockholders to their corporation.  713 
So. 2d at 1022.  The Second District considered the DOR rules on transfers to 
 
 
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corporations and the 1990 amendment to section 201.02(1), but held that the 
shareholders had rebutted the presumption that the stock issued to them was 
consideration valued as equal to the fair market value of the condominiums 
transferred.  Id. 
In Muben-Lamar, L.P. v. Department of Revenue, 763 So. 2d 1209 (Fla. 1st 
DCA 2000), the First District Court of Appeal held that the issuing of partnership 
interests for real property was consideration and thus a transaction subject to the 
documentary stamp tax.  In Muben-Lamar, however, the partnership was made up 
of three partners, only two of whom owned the property prior to transferring it to 
the partnership as a capital contribution.  Id. at 1210.  The third partner, who 
owned one percent of the partnership, contributed a promissory note as a capital 
contribution.  Id.  Thus, while the majority of the First District certified conflict 
with Kuro, Judge Lawrence specially concurred in result only, arguing that the 
decision in Muben-Lamar did not conflict with Kuro.  Judge Lawrence 
distinguished the facts in Muben-Lamar from those in Kuro because of the 
“various and diverse interests” in the partnership, “each [partner] contributing 
property in which the other previously had no interest.”  Muben-Lamar, 763 So. 2d 
at 1210 (Lawrence, J., specially concurring).  We granted review in Muben-Lamar 
on the basis of its conflict with Kuro, but we subsequently dismissed review.  
Muben-Lamar, L.P. v. Fla. Dep’t of Revenue, 789 So. 2d 337 (Fla. 2001). 
 
 
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Analysis of Present Case 
Although the 1990 amendment to section 201.02(1) added three 
nonexclusive definitions of consideration, as well as providing a means of 
assessing the value of nonmonetary consideration, we hold that there is nothing in 
the statute that indicates any intent or attempt to alter the interpretations of the 
statute in Palmer-Florida or De Maria.  A determination of legislative intent “is 
derived primarily from the language of the statute.”  State v. Bodden, 877 So. 2d 
680, 685 (Fla.), cert. denied, 125 S. Ct. 628 (2004).  If statutory intent is unclear 
from the plain language of the statute, only then may “we apply rules of statutory 
construction and explore legislative history to determine legislative intent.”  
BellSouth Telecommunications, Inc. v. Meeks, 863 So. 2d 287, 289 (Fla. 2003).  In 
applying the plain language of the statute in Palmer-Florida and De Maria, we held 
that the tax is not applicable to transactions involving a conveyance of property 
between a corporation and its sole shareholders where nothing of value is 
exchanged for the property.  Thus, “a mere change in form of the stockholder’s 
equity in the corporation” is not sufficient consideration to meet the statute’s 
requirements.  De Maria, 338 So. 2d at 840.  Furthermore, since there is no 
consideration for such transfers and thus no “exchange in value,” there is no 
purchaser.  Id. 
 
 
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The plain language of section 201.02(1), even following the 1990 
amendments, did not eliminate the requirements of consideration and purchaser 
that existed at the time of our decisions in Palmer-Florida and De Maria.  The new 
language simply provided nonexclusive examples of consideration.  None of these 
examples change our prior holdings that a change in the form of ownership of 
property, without any exchange of value, does not constitute consideration.  While 
the last sentence added a means of determining the value assigned nonmonetary 
consideration, it did not change the requirement that consideration actually exist 
for the transfer.  Thus, based on the plain language of the amendments, the statute 
does not recede from the statutory requirements employed by this Court to reach 
the results in Palmer-Florida and De Maria.  “Florida’s well-settled rule of 
statutory construction [is] that the legislature is presumed to know the existing law 
when a statute is enacted, including ‘judicial decisions on the subject concerning 
which it subsequently enacts a statute.’”  Wood v. Fraser, 677 So. 2d 15, 18 (Fla. 
2d DCA 1996) (quoting Collins Inv. Co. v. Metro. Dade County, 164 So. 2d 806, 
809 (Fla. 1964)).  Without any clear express changes on the statute’s face, the 
amendment did not recede from our decisions rendered prior to the amendment’s 
enactment.  The statute still covers only those situations in which property is 
exchanged for something of value. 
 
 
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The Third District held in the present case that the conveyances in Palmer-
Florida and De Maria could not be taxed under the statute prior to the 1990 
amendment because the conveyances had neither reasonably determinable 
consideration nor a purchaser.  Crescent, 857 So. 2d at 907.  Accordingly, the 
Third District implies that this situation has changed because the amendment 
provides a means by which to value the interests in the company that were 
exchanged and that the transfers in Palmer-Florida and De Maria could now be 
taxed under the amended statutory scheme.  However, we objected to the tax being 
applied in these situations not because consideration was not reasonably 
determinable but, rather, because there was no consideration at all involved in the 
transactions.  Hence, in the present case, the documentary stamp tax does not apply 
to the transfer because nothing was exchanged by CMC for the grant of property 
from Crescent Equities; thus, there was no consideration or purchaser in the 
transaction, just a “mere change in form of the stockholder’s equity in the 
corporation.”  De Maria, 338 So. 2d at 840. 
The Third District and the DOR also rely on the rules promulgated by the 
DOR following the 1990 amendment to section 201.02(1).  Those rules provide 
that a conveyance of realty to a corporation “as a contribution to the capital of a 
corporation, is subject to tax.”  Fla. Admin. Code R. 12B-4.013(7).  The Third 
District held that these “agency rules are presumed valid” and thus refused to 
 
 
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deviate from them.  Crescent, 857 So. 2d at 908 n.4.  While “administrative rules . . 
. should be accorded considerable persuasive force,” State ex rel. Szabo Food 
Services, Inc. v. Dickinson, 286 So. 2d 529, 531 (Fla. 1973), decisions of this 
Court interpreting the same statute have a much greater persuasive force.  In the 
absence of any statutory amendment by the Legislature contrary to the holdings in 
Palmer-Florida and De Maria, those opinions are to be followed. 
CONCLUSION 
 
We conclude 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).  
The 1990 amendments to the statute did not repudiate or alter our holdings in 
Palmer-Florida or De Maria.  While CMC received the property, it gave nothing to 
Crescent Equities in exchange for that property except for the continuing interest in 
the same property that Crescent Equities owned before the transaction occurred.  
This transaction was merely a change in the form of ownership by the entities who 
had owned and continued to own the property.  The argument that the increase in 
the value of Crescent Equities’ interest in CMC constituted consideration is not 
persuasive, as this increased interest resulted from the transfer and was not the 
consideration for making the transfer. 
 
 
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For the foregoing reasons, we quash the Third District’s decision in this case 
and remand this case to the district court for further consideration consistent with 
this opinion. 
It is so ordered. 
PARIENTE, C.J., and ANSTEAD, LEWIS, QUINCE, CANTERO, and BELL, JJ., 
concur. 
 
NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION, AND 
IF FILED, DETERMINED. 
 
 
Application for Review of the Decision of the District Court of Appeal - Direct 
Conflict of Decisions 
 
 
Third District - Case No. 3D02-3002 
 
 
(Miami-Dade County) 
 
Fred Owen Goldberg of Berger Singerman, P.A., Miami, Florida, 
 
 
for Petitioner 
 
Charles J. Crist, Jr., Attorney General, and Charles Catanzaro, Assistant Attorney 
General, Tallahassee, Florida, 
 
 
for Respondent 
 
Gary V. Perko and Victoria L. Weber of Hopping Green and Sams, P.A. and Keith 
C. Hetrick, General Counsel, Tallahassee, Florida on behalf of Florida Home 
Builders Association, 
 
 
for Amicus Curiae