SC Administrative Law Court Decisions

STATEMENT OF THE CASE

            The Charleston County Assessor (“Petitioner” or “Assessor”) filed a request for a contested case hearing with the Administrative Law Court (“ALC” or “Court”) seeking to have this Court reject a determination by the Charleston County Board of Assessment Appeals (“Board”) that an assessable transfer of interest did not occur regarding a real estate transaction involving 4 Cousins, LLC (“Respondent”).  The parties filed joint stipulations pursuant to ALC Rule 25(C) and subsequently filed cross‑motions for summary judgment.  Additionally, both parties filed Memorandums of Law, with exhibits, in support of their respective summary judgment motion.  

            For the reasons set forth below, the Court grants the motion for summary judgment filed by the Petitioner, denies the motion for summary judgment filed by the Respondent, and rejects the Board’s determination.

JOINT STIPULATIONS OF FACT

            Pursuant to ALC Rule 25(C), the Assessor and Respondent jointly entered into the following stipulations:

1.                   Mamie S. Harrison died in 1981 owning real property located at 1545 Savannah Highway, Charleston, South Caroling, having TMS# 349-01-00-022, and her estate was probated in Charleston County Probate Court under File No. 81-0878.  Article XVI of Mamie S. Harrison’s Last Will and Testament (the “Will”) devised one-half (1/2) of all the estate residue, which included the subject property, to Madeline L. Burns, as Trustee for Madeline’s two children, being Amy E. Burns and Marshall M. Burns, III.  The Trustee was to divide all the Trust Property into separate Trusts equal in value, one for the great, great, grandniece, Amy E. Burns, and one for the great, great, grandnephew, Marshall M. Burns, III.

The other one-half (1/2) of the estate residue was devised to Margaret L. LaBoone, as Trustee, for the benefit of Margaret’s two children, being Madeline Carroll LaBoone and Kathryn Carroll LaBoone.  The Trustee was to divide all the Trust Property into separate Trusts equal in value, one for the great, great, grandniece, Madeline Carroll LaBoone, and one for the great, great, grandniece, Kathryn Carroll LaBoone.

The Will of Mamie S. Harrison directed that each separate trust shall terminate upon the four beneficiaries reaching the age of twenty-five (25). 

2.                   In connection with the probating of Mamie S. Harrison’s estate, Citizens and Southern National Bank of South Carolina, as executor, conveyed the subject property in 1984 to the aforesaid Madeline L. Burns, as Trustee, and the aforesaid Margaret L. LaBoone, as Trustee via deed recorded in the Charleston County RMC Office in Book O142, page 316.

3.                   The aforesaid Trustees failed to create four (4) separate trusts as directed by the Last Will and Testament of Mamie S. Harrison and failed to convey the subject property to the four (4) trust beneficiaries at such time the beneficiaries became twenty-five (25) years of age.  Rather, the property was conveyed in 2007 when the great, great grandnieces and nephew were all over the age of twenty-five (25) years.  The property was conveyed from Madeline Burns, as Trustee for Amy E. Burns and Eugene M. Burns, III a/k/a Marshall M. Burns, III, under the Last Will and Testament of Mamie S. Harrison, deceased, and Margaret L. LaBoone, as Trustee for Madeline Carroll LaBoone, and Kathryn LaBoone Michel f/k/a Kathryn Carroll LaBoone (hereinafter whether singular or plural the “Grantor”) to the Amy Burns Kissell f/k/a Amy E. Burns, Eugene Marshall Burns, III a/k/a Eugene M. Burns, III a/k/a Marshall M. Burns, III, Madeline LaBoone Tavel f/k/a Madeline Carroll LaBoone, and Kathryn LaBoone Michel f/k/a Kathryn Carroll LaBoone (hereinafter whether singular or plural the “Grantee”) on August 30, 2007 as evidenced by Limited Warranty deed recorded in the Charleston County RMC Office Book E637, page 652.  No trusts in the names of Amy Burns Kissell f/k/a Amy E. Burns, Eugene Marshall Burns, III, a/k/a Eugene M. Burns, III a/k/a Marshall M. Burns, III, Madeline LaBoone Tavel f/k/a Madeline Carroll LaBoone, and Kathryn LaBoone Michel f/k/a Kathryn Carroll LaBoone existed in 2007.

4.                   Subsequently, the four individuals identified in Stipulation of Facts Number 3 created a limited liability company named 4 Cousins, LLC and conveyed the subject property to the limited liability company via Quitclaim deed dated December 14, 2007 and recorded in the Charleston County RMC Office in Book M646, Page 812.  The Assessor does not contend this particular conveyance constitutes an assessable transfer of interest.[1]

5.                   The aforementioned (i) Amy Burns Kissell f/k/a Amy E. Burns, (ii) Eugene Marshall Burns, III, a/k/a Eugene M. Burns, III, a/k/a Marshall M. Burns, III, (iii) Madeline LaBoone Tavel f/k/a Madeline Carroll LaBoone, and (iv) Kathryn LaBoone Michel f/k/a Kathryn Carroll LaBoone, are the sole members of the aforesaid 4 Cousins, LLC as evidenced by the Operating Agreement.

6.                   The subject property was appraised by the Assessor at Eight Hundred One Thousand Dollars ($801,000) at implementation of county-wide reassessment in 2005, which remained the value of record for tax years 2005, 2006, and 2007.  After the filing of the deed on August 30, 2007, referenced in Stipulation of Facts Number 3, the Assessor subsequently valued the subject property at One Million Seven Hundred Sixty Thousand Dollars ($1,760,000) and pursuant to an appraisal of the property dated June 20, 2009, the Assessor lowered the value to One Million Four Hundred Thousand Dollars ($1,400,000) for purposes of the appeal before the Charleston County Board of Assessment Appeals.

7.                   Respondent appealed the Assessor’s appraisal of value and whether the 2007 transfer was considered an assessable transfer of interest pursuant to S.C. Code Ann. § 12-37-3110 et seq.  The Charleston County Board of Assessment Appeals conducted a hearing on July 22, 2009.  In a decision dated July 23, 2009, the Board ruled in favor of Respondent on both counts, stating an assessable transfer of interest did not occur and set the value at $801,000 for tax year 2008.  The Board also affirmed the Assessor’s fair market valuation of $1,165,000 for tax year 2008 should the case be lost on appeal at the ALC.

8.                   The Assessor and Respondent stipulate that the property’s appraised value shall be Eight Hundred One Thousand Dollars ($801,000) for purposes of the 2008 tax bill if the Court determines that no assessable transfer of interest has occurred.

9.                   The Assessor and Respondent stipulate that the property’s appraised value shall be One Million One Hundred Sixty-Five Thousand Dollars ($1,165,000) for purposes of the 2008 tax bill if the Court determines than an assessable transfer of interest has occurred.

STANDARD OF REVIEW

Rule 68 of the Rules of Procedure for the Administrative Law Court provides that “[t]he South Carolina Rules of Civil Procedure may, where practicable, be applied in proceedings before the Court to resolve questions not addressed by these rules.”  Rule 56(c), SCRCP, provides that summary judgment shall be granted if it is shown “that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”  See also Gadson v. Hembree, 364 S.C. 316, 613 S.E.2d 533 (2005); Cafe Assocs., Ltd. v. Gerngross, 305 S.C. 6, 406 S.E.2d 162 (1991).  In determining whether any triable issues of fact exist, the evidence and all inferences which can be reasonably drawn there from must be viewed in the light most favorable to the nonmoving party.  Strother v. Lexington County Recreation Comm’n, 332 S.C. 54, 61, 504 S.E.2d 117, 121 (1998).

Summary judgment is not appropriate where further inquiry into the facts of the case is desirable to clarify the application of the law.  Tupper v. Dorchester County, 326 S.C. 318, 487 S.E.2d 187 (1997).  Furthermore, summary judgment should not be granted even when there is no dispute as to the evidentiary facts if there is dispute as to the conclusions to be drawn from those facts.  Nelson v. Charleston County Parks & Recreation Comm’n, 362 S.C. 1, 605 S.E.2d 744 (Ct. App. 2004).  However, summary judgment should be granted when plain, palpable and undisputed facts exist on which reasonable minds cannot differ.  Rife v. Hitachi Constr. Mach. Co., Ltd., 363 S.C. 209, 609 S.E.2d 565 (Ct. App. 2005).

The party seeking summary judgment has the burden of clearly establishing the absence of a genuine issue of material fact.  McCall v. State Farm Mut. Auto. Ins. Co., 359 S.C. 372, 376, 597 S.E.2d 181, 183 (Ct. App. 2004).  Once the party moving for summary judgment meets the initial burden of showing an absence of evidentiary support for the opponent's case, the non-moving party may not simply rest on mere allegations or denials contained in the pleadings. Rather, the non-moving party must come forward with specific facts showing there is a genuine issue for trial.  Bennett v. Investors Title Ins. Co., 370 S.C. 578, 635 S.E.2d 649 (Ct. App. 2006); see also Regions Bank v. Schmauch, 354 S.C. 648, 582 S.E.2d 432 (Ct. App. 2003).  Because it is a drastic remedy, summary judgment should be cautiously invoked to ensure that a litigant is not improperly deprived of a trial on disputed factual issues.  Helena Chem. Co. v. Allianz Underwriters Ins. Co., 357 S.C. 631, 594 S.E.2d 455 (2004).           

DISCUSSION

            The Petitioner and Respondent filed joint stipulation of facts which are recited above.  Following the filing of the stipulated facts, Petitioner and Respondent filed motions requesting summary judgment in their respective favor.  Specifically, the parties are asserting that because of the factual stipulation, there is no genuine issue of material fact to be ruled upon, and the sole issue to be determined by the Court is of a legal nature. 

The question presented for resolution by this Court is whether the August 30, 2007 conveyance of real property to the four individuals – the principals of the Respondent – qualified as an assessable transfer of interest (ATI) pursuant to S.C. Code Ann. § 12-37-3110 et seq.  S.C. Code Ann. § 12-37-3150(A)(4) states an ATI occurs upon conveyance of real property by “distribution from a trust, except if the distribute is the sole present beneficiary or the spouse of the sole present beneficiary, or both.”  In the instant case, the parties have differing interpretations of the word “sole”.

The cardinal rule of statutory construction is to give effect to the intent of the legislature.  S.C. Coastal Conservation League v. S.C. Dep’t of Health and Envtl. Control, 380 S.C. 349, 365, 669 S.E.2d 899, 907 (Ct. App. 2008); Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000) (citing Charleston County Sch. Dist. v. State Budget and Control Bd. , 313 S.C. 1, 437 S.E.2d 6 (1993)). Legislative intent is first and foremost determined by the language of the statute. State v. Pittman, 373 S.C. 527, 561, 647 S.E.2d 144, 161 (2007) (citing Whitner v. State, 328 S.C. 1, 6, 492 S.E.2d 777, 779 (1997)).  “Clear and unambiguous statutes require no statutory construction and should be applied by the court according to their literal meaning.” S.C. Coastal Conservation League, 380 S.C. at 366, 669 S.E.2d at 908; see, also Paschal v. State Election Comm’n, 317 S.C. 434, 454 S.E.2d 890 (1995).  “The words of a statute must be given their plain and ordinary meaning without resorting to subtle or forced construction.” S.C. Coastal Conservation League, 380 S.C. at 366, 669 S.E.2d at 908.  The literal language of a statute should be disregarded only when the result is so plainly absurd that it clearly could not have been the intent of the legislature.  Kiriakides v. United Artists Commc’ns, Inc., 312 S.C. 271, 275, 440 S.E.2d 364, 366 (1994) (citing Stackhouse v. Rowland, 86 S.C. 419, 68 S.E. 561 (1910)).

“The legislature is presumed to have fully understood the meaning of the words used in a statute and, unless this meaning is vague or indefinite, intended to use them in their ordinary and common meaning or in their well-defined legal sense.”  S.C. Coastal Conservation League, 380 S.C. at 367, 669 S.E.2d at 908.  “If the General Assembly declined to define a term within a statute, the Court should construe the work in accordance with its usual and customary meaning.”  Id.  “The true guide to statutory construction is not the phraseology of an isolated section or provision, but the language of the statute as a whole considered in light of its manifest purpose.  Id. “Once the legislature has made [a] choice, there is no room for the courts to impose a different judgment based upon their notions of public policy.” Id. at 368, 669 S.E.2d 909.

In 2006, the South Carolina Legislature adopted the South Carolina Real Property Valuation Reform Act (the “Act”) which provides in relevant part:

(A)             For purposes of determining when a parcel of real property must be appraised, an assessable transfer of interest in real property includes, but is not limited to, the following: (1) a conveyance by deed; . . . (4) a conveyance by distribution from a trust, except if the distributee is the sole present beneficiary or the spouse of the sole present beneficiary, or both.  (emphasis added)  S.C. Code Ann. §12-37-3150(A). 

            In the instant case, Respondent contends the 2007 conveyance of property to the four individuals did not constitute an ATI under S.C. Code Ann. § 12-37-3150 because of the exception provided for in subsection (A)(4).  Respondent argues that “sole” can mean one unit or group, and the conveyance from the group or unit of trust beneficiaries to the same group of individuals does not constitute an assessable transfer of interest.  The Petitioner argues that the 2007 conveyance was a conveyance by deed – not a distribution from a trust.  Petitioner further argues that even if the conveyance is determined to be a distribution by trust, the distributees are not the “sole present beneficiary,” and as such, do not qualify for the exception provided for in S.C. Code Ann. §12-37-3150(A).

            Respondent, as the taxpayer, has the burden to bring itself squarely within the exception it claims is relevant in this matter.  “Statutory language alleged to create ‘exemptions from taxation will not be strained or liberally construed in favor of the taxpayer claiming the exemption.’”  Fraternal Order of Police v. S.C. Dep’t of Rev., 352 S.C. 420, 436, 574 S.E.2d 717, 725 (2002), quoting York County Fair Assoc. v. S.C. Tax Comm., 249 S.C. 337, 341, 154 S.E.2d 361, 363 (1967)) (emphasis in original).  As an initial matter, I find the conveyance of real property from Madeline L. Burns to Amy Burns Kissell and Eugene Marshall Burns, III, and from Margaret L. LaBoone to Madeline LaBoone Tavel and Kathryn LaBoone Michel by Limited Warranty Deed dated August 30, 2007, and recorded August 30, 2007, in Book E637, Page 652 in the R.M.C. Office for Charleston County, South Carolina (the “deed”) was an assessable transfer of interest in real property pursuant to S.C. Code Ann. § 12-37-3150. 

Respondent attempts to characterize the 2007 property conveyance as “a mere re-titling of property” where the parties retained the same percentage of ownership interest.  (Resp’t Mo. for Summary Judgment 4).  I disagree.  The deed identifies Madeline L. Burns and Margaret LaBoone as “trustees” for the four individuals; however, Madeline L. Burns and Margaret L. LaBoone are not trustees of trust(s) for their respective children.  Madeline and Margaret are also identified in the deed as “grantors.”  In the conveyance clause the deed specifically provides that Madeline L. Burns and Margaret L. LaBoone are “(hereinafter whether singular or plural the ‘Grantor’)”and the four individuals are “(hereinafter whether singular or plural the ‘Grantee’).”  The facts simply do not support Madeline L. Burns and Margaret L. LaBoone as trustees of trust(s) in the names of Amy Burns Kissell, Eugene Marshall Burns, III, Madeline LaBoone Tavel and Kathryn LaBoone Michel. 

It has been stipulated by the parties that the trustees failed to create the four trusts as directed by the Will, and it was further stipulated that the trustees failed to convey the property to the four trust beneficiaries when each became 25 years of age.  Rather, the property was conveyed, via deed, in 2007 when all the named trust beneficiaries were over the age of 25.[2]  Therefore, the transfer is an ATI in real property and must be appraised by the Assessor.

            Even if the conveyance was a distribution from a trust, the transfer in this matter would not qualify as an exception under § 12-37-3150(A)(1).[3]  This section specifically provides that the distributee must be the “sole present beneficiary or the spouse of the sole present beneficiary, or both.” § 12-37-3150(A)(1).  Despite Respondent’s argument to the contrary, the trust beneficiaries under the Will do not constitute one “sole” beneficiary for purposes of § 12-37-3150.  Merriam-Webster Dictionary contains several definitions for the word “sole,” and one such definition is “belonging exclusively or otherwise limited to one usually specified individual, unit, or group.”[4] Respondent relies upon this definition in its argument; however, it misunderstands and misconstrues the meaning of the word “sole” because it fails to give meaning to the words “belonging exclusively or otherwise limited to one” which in their plain and unambiguous interpretation means one, and only one, of something.  If four separate trusts were created for the great, great, grandnieces and great, great grandnephew, each trust had one beneficiary.  Thus, there is no “sole present beneficiary” to qualify for the exemption under § 12-37-3150.    

            In sum, the Court finds that under the plain and unambiguous meaning of the statute, the four individuals – the principals of the Respondent – are not the sole present beneficiaries of the trusts pursuant to S.C. Code Ann. § 12-37-3150(A)(4); but rather finds that these four individuals received the real property through a conveyance by deed pursuant to S.C. Code Ann. §12-37-3150(A)(3).  Therefore, an ATI in real property did occur pursuant to § 12-37-3150 and the Board’s determination in this matter is reversed.

ORDER

IT IS HEREBY ORDERED that the Assessor’s Motion for Summary Judgment is GRANTED, and that the Respondent’s Motion for Summary Judgment is DENIED. 

IT IS FURTHER ORDERED that the Board’s Determination in this matter is REVERSED.  The property’s appraised value shall be One Million One Hundred Sixty-Five Thousand Dollars ($1,165,000) for purposes of the 2008 tax bill.

AND IT IS SO ORDERED.

                                                                        _________________________________________

                                                                         SHIRLEY C. ROBINSON

                                                                         Administrative Law Judge

May 27, 2010

Columbia, South Carolina