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Tax Revolt
Some Florida lawyers are staging a modern day tea party, seeking refunds of millions of dollars in occupational license taxes assessed against attorneys.
By David R. Corder
Associate Editor
The phone call from Steve Scott intrigued Wally Pope. The two have known each other since the late '60s in law school. Sometimes they work as co-counsel. But this call last spring was different. Scott told Pope the Georgia Supreme Court had just upheld a trial court decision that declared unconstitutional Atlanta's occupational license tax on lawyers. It would cost the city millions of dollars in tax refunds.
Scott, a Gainesville lawyer, considered Florida fertile for a similar challenge. He pitched the idea to Pope, a respected litigator at Clearwater's Johnson Pope Bokor Ruppel & Burns LLP.
"We sifted through it and saw it was worth trying," Pope recalls. "It was a very similar situation. Obviously, what the Georgia court did is not binding on Florida courts. It would be persuasive authority because it's a very similar circumstance."
If the two lawyers are successful, Florida cities and counties that assess occupational licenses taxes on attorneys could face millions of dollars in potential tax refunds dating back to 1999.
"It could have far-reaching effects," acknowledges Fred Karl, a former Florida Supreme Court justice who recently served as interim Tampa city attorney. "It would affect all (Florida) cities. We don't understand why the Florida League of Cities hasn't joined us. We've asked them to participate, and they've declined."
Once committed to the challenge, Scott and Pope faced an immediate problem: Out of about 74,000 licensed Florida lawyers, who would be willing to sign the court petition? They couldn't represent themselves; that didn't make sense. They couldn't ask just any lawyer to champion the cause. For instance, the plaintiff couldn't be a lawyer from a large firm that thrives on profitable governmental relationships or a solo practitioner whose clients might suffer the sting of governmental retaliation. They needed a maverick.
Pope knew the right person - Michael Addison, a fiercely independent attorney with a thriving litigation practice at Tampa's Addison & Delano PA. The two became acquainted in the early 1970s, when Pope worked at a predecessor of Tampa's Trenam Kemker Scharf Barkin Frye O'Neill & Mullis. Pope served on the law firm committee that hired Addison.
It was a philosophical match. Each of the three agreed that a possible constitutional flaw exists with how Florida local governments now enforce the collection of occupational taxes on attorneys under Chapter 205 of the Florida Statutes. In their opinion, the state Constitution allows only the Florida Supreme Court to regulate attorneys. If true, they reasoned, that means the local taxing authorities have no right to shut down a law practice or jail an attorney for unpaid occupational licenses taxes. It's unclear, Pope says, whether any Florida lawyer has faced such drastic action.
"Most lawyers, rather than make a ruckus, pay it," Pope says. "To us, the problem is holding the hammer over the lawyer in terrorem.
"I hasten to add it's not our contention that lawyers can't be taxed," Pope adds. "It's the way they're doing it. They're intruding on the constitutional authority vested in the Supreme Court as to who and who cannot practice law.
"It's the power that these ordinances give these people to yank a license or get an injunction and say you can't practice law," he adds. "Some (ordinances) allow jail for not paying taxes."
By June 10 last year, Scott, Pope and Addison had enlisted another supporter - Richard T. Petitt of Tampa's Bricklemyer Smolker & Bolves PA. Petitt agreed to sign on with Addison as co-plaintiff. They then filed the complaint as a class action in the 13th Circuit against the city of Tampa, as the representative of all other Florida municipalities. The court assigned the lawsuit to Circuit Judge Perry Little.
The lawsuit seeks certification of two classes: the plaintiff's class, all licensed attorneys in Florida; and a defendant's class, any county or city government whose ordinances fit within the petition's cause for action.
"It is similarly well settled that, as a general statement, attorneys are not exempt from local or municipal occupational license taxes," the complaint states. "Rather, the issue here is whether the manner in which these particular taxes are imposed and enforced renders them unconstitutional.
"It need scarcely be said that an attorney at law needs no license, other than the Florida Supreme Court, to practice his profession in the state," the complaint states. "While he may be taxed for exercising the privilege of engaging in his profession, an attorney's right to engage in, or to continue to engage in, the practice of law may not be conditioned upon obtaining the so-called occupational license or paying the tax imposed by the ordinance, nor may it in any manner be regulated or affected thereby."
About six months later Scott and Pope filed an amended complaint. They consolidated their efforts with attorneys who had filed a similar complaint with the Miami-Dade County Circuit Court.
Besides Addison and Petitt, the plaintiffs in the amended complaint included Miami attorneys Thomas Buscaglia, Gerardo Vazquez, Alfredo Perez, Fred Glickman, Roy Granoff, David Kessler, David Berman and Paul Berman. They also added the city of Miami and Miami-Dade as co-defendants.
Scott and Pope also bolstered their ranks with the support of attorneys Brett Panter of Miami, Joseph Moffa of Fort Lauderdale, David Woodward of Pensacola and Herbert Schwartz of Houston. All of them accepted the challenge on contingency.
"We had a legitimate argument the case should be heard in one court so you didn't end up potentially with conflicting legal rulings on the same legal issue," Addison says.
Not long after they filed the amended complaint, the city of Tampa publicly acknowledged its intention. Assistant City Attorney Jerry Gewirtz dug deep into the appellate archives to dispute the plaintiffs' claim. In a motion to dismiss, he cited a 1961 decision by the 2nd District Court of Appeal in Sandstrom v. City of Fort Lauderdale (133 So.2nd 755).
" '¦we are in accord with those jurisdictions which have held that a judicial department's power to control admission and regulation of attorneys in the practice of law does not preclude the exacting by a city of a municipal license tax upon attorneys,' " Gewirtz attributed to the 2nd DCA opinion. " 'Here, the license tax under the municipal ordinance is assessed upon the 'business' of practicing law. Conversely, the constitutional jurisdiction reposed in the Supreme Court is over admission to and discipline of persons admitted to the practice of law.' "
Except for newspaper articles in Miami and the Tampa Bay area, the legal challenge has yet to become a pervasive issue. For instance, a spokesperson for the Sarasota Bar Association knew nothing about the challenge until GCBR made an inquiry about it. Not all attorneys think it's a good idea.
On the surface, Sarasota attorney Tom Luzier of Riddell & Luzier disagrees with the plaintiffs' premise. As a commercial real estate lawyer, he expressed concerns about any effort that would distinguish him from his real estate clients.
"My initial inclination is it would be an unpopular position with the people with whom I do business," Luzier says. "I'm asking to be a protected class, while they're out there being taxed for the operation of their business? It's very intriguing to me that they're pursuing this."
And it's apparent from recent activity in the 13th Circuit lawsuit the plaintiffs face a long battle.
In December, the city of Miami filed a motion to sever and to transfer, or alternatively, dismiss with prejudice. Miami city attorneys claimed venue was improper. Assistant City Attorney Warren Bittner also argued the 3rd DCA in 1980 rejected a similar legal challenge in Graham v. City of Miami (388 So.3rd 305, 307). He says the 3rd DCA ruling clearly states Chapter 205 applies to lawyers and law firms.
In response, Scott reasserted the argument that the plaintiffs do not seek a challenge over the constitutionality of Chapter 205. They only question the integrity of the local ordinances authorized by state law.
"Only the local ordinances enacted and enforced by cities and counties pursuant to the apparent authority (but not the mandate) of Chapter 205 impose unconstitutional restrictions and taxes on attorneys," Scott wrote in the memorandum. "It is only the cities and counties to whom plaintiffs paid the unconstitutional taxes from which they may seek refunds and relief."
In mid-February, the plaintiffs suffered a partial defeat. Judge Little issued a non-final order that dismissed the city of Miami and Miami-Dade from the 13th Circuit lawsuit. He ruled venue was improper.
Miami City Attorney Alejandro Vilarello says Little correctly applied the law in his decision to dismiss Miami and Miami-Dade County from the complaint. "I feel comfortable with the judge's ruling that they have to file separate lawsuits," he says. "It was inappropriate for (the plaintiff) to bring this lawsuit in that jurisdiction."
Undaunted by the ruling, however, Scott filed a notice of appeal in mid-March with the 2nd DCA.
"We're asking them to pass it to the Supreme Court," Scott says. "The Supreme Court has stated it's the only authority authorized to create an additional exception."
Scott maintains an exception exists under the legal principle of joint tortfeasor - the joining of multiple defendants under a single claimant's petition.
"Instead of having multiple lawsuits tried in multiple courts with different rulings, where one trial court rules one way and another may rule another way, then you have multiplicity of decisions," he says. "(Little asked:) 'Are you asking me to create an additional exception?' My response was I'm not asking him to create a new exception for us because only the Supreme Court could do that. But we came at least within the outer limits of the joint tortfeasor exception."
Nevertheless, Scott says Miami and Miami-Dade scored hollow victories by winning the motions to dismiss. He argues they may have relinquished certain rights if he and his colleagues successfully persuade Little to certify the class action.
"I don't think it was smart for Miami and Miami-Dade County to do this," he says. "If we proceed against the city of Tampa alone, and if the court certifies the class action as we requested, the city of Tampa will be designated as the class representative for a class that is comprised of all the cities and all the counties in the state that have enacted and enforced this occupational license tax against attorneys.
"Now, if the class is certified in that manner, the city of Miami and Miami-Dade County are members of the class," he adds. "That means they are bound by the substantive rulings of the court. If they proceed as members of the class instead of named defendants, they don't get to participate. They get taken for a ride. If I was a member of a class, and I was potentially liable for millions of dollars if the class would lose, I wouldn't want anyone else representing me."
Melinda Thornton, an assistant Miami-Dade County attorney, disputes Scott's claim. "That's their opinion; it's certainly not ours. We don't even think it's an appropriate class action. But certainly if a class were ever certified that doesn't mean that we couldn't have our interests represented."
Vilarello would not comment on the merits of Scott's arguments nor would he speculate about any impact the Georgia court action (S02A1338 and S02A1478) might have on proceedings in Florida. "I'm not familiar the case," he says.
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