Opinion ID: 1788757
Heading Depth: 1
Heading Rank: 12

Heading: Part VII. Contract Clause

Text: The final contention that we shall address is the argument that the provisions contained in chapter 87-6 dealing with the construction industry violate article I, section 10 of the Florida Constitution. This provision provides that [n]o bill of attainder, ex post facto law or law impairing the obligation of contracts shall be passed. Representatives of the construction industry argue that the interaction of section 5 of the act, which creates section 212.0594 of the Florida Statutes, and section 31 of the law act in concert to impair construction contracts in existence prior to the statute's enactment. See Ch. 87-6, §§ 5 & 31, Laws of Fla. We agree. Newly created sections 212.0594(6) and (8) of the Florida Statutes, contained in section 5 of the act, impose a tax upon prime contractors for both certain services that subcontractors supply and on the cost price of the construction that eventually results. [15] The tax on the latter construction is due at the time that either the contract for new construction is fulfilled or when the certificate of occupancy is issued, whichever occurs first. Ch. 87-6, § 5, Laws of Fla. (creating § 212.0592(8), Fla. Stat.). Section 31 of the act, however, provides: Notwithstanding any other provision of this act, in the case of written contracts which are signed prior to May 1, 1987, for constructing improvements to real property, prime contractors ... responsible for performing the contract shall not be required to remit any tax on services levied pursuant to s. 212.059 or s. 212.0594, Florida Statutes, provided that: ... . (4) The purchase of the service occurs before June 30, 1988. Ch. 87-6, § 31, Laws of Fla. Reading these two sections in pari materia, section 31 creates an exemption to the taxation provisions of section 5 for written construction contracts signed prior to May 1, 1987. Under section 31(4), however, this exemption expires if the contractor's performance under the contract is not fully rendered prior to June 30, 1988. Thus, if the contractor fails to complete construction and obtain a certificate of occupancy before that date, the general taxation provisions of section 212.0594, Florida Statutes, are resurrected and applied to the contract even though it was signed prior to May 1, 1987. The legislature filed the instant statute on April 23, 1987, and the Governor signed it into law on the following day. Once enacted into law, contractors were placed on notice that they should take their upcoming tax burden into consideration when entering into construction contracts after May 1, 1987. The act, however, does not limit its effect to this permissible burden. Instead, by retroactively placing a tax burden upon all construction contracts that are incomplete by June 30, 1988, and thereby adding an unknown, uncontemplated cost, it retroactively burdens contracts that were in existence before any party could have reasonably been on notice of the impending tax. Unquestionably, contract rights are ordinarily subject to the state's powers of taxation. Straughn v. Camp, 293 So.2d 689 (Fla.), appeal dismissed, 419 U.S. 891, 95 S.Ct. 168, 42 L.Ed.2d 135 (1974). It is equally indisputable, however, that rights existing under a valid contract enjoy protection under the Florida Constitution. Green v. Quincy State Bank, 368 So.2d 451 (Fla. 1st DCA 1979). We cannot accept the state's argument that the fact the instant tax may make certain contracts unprofitable does not constitute an impairment of contract. Any legislative action which diminishes the value of a contract is repugnant to and inhibited by the Constitution. Dewberry v. Auto-Owners Insurance Co., 363 So.2d 1077 (Fla. 1978). A statute which retroactively turns otherwise profitable contracts into losing propositions is clearly such a prohibited enactment. Thus, it is our opinion that section 31(4) of the statute is facially unconstitutional. In summation, we emphasize that an advisory opinion is for the benefit of the chief executive and, therefore, does not carry with it the mandate of the Court. Moreover, the scope of our advisory authority prevents us from considering either federal constitutional questions or the constitutionality of the statute as applied to specific factual scenarios and individual taxpayers. Nevertheless, it is our opinion that, with the exception of section 31(4), chapter 87-6 is facially constitutional. Respectfully, Parker Lee McDonald Chief Justice Ben F. Overton Leander J. Shaw, Jr. Gerald Kogan Justices