STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARK H. FELDMAN, )

)

Petitioner, )

)

vs. ) CASE NO. 81-1384

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on August 14, 1981, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Dr. Mark H. Feldman

Appeared on his own behalf 7160 Northwest 45th Court Lauderhill, Florida 33319

For Respondent: Charles G. Gardner, Esquire

Department of Transportation Haydon Burns Building Tallahassee, Florida

As a result of an earlier proceeding, it was determined that Petitioner is entitled to recover from the Respondent a fixed payment in lieu of moving expenses as relocation benefits due to the acquisition by Respondent of certain real estate for right-of-way purposes. The only issues herein are the calendar years to be used in calculating the relocation benefits to which Petitioner is entitled and the amount of fixed payment to be paid by the Respondent to the Petitioner.

Petitioner testified on his own behalf and presented the testimony of Joseph M. Shore, Kathleen M. Kuester, and David Leighow. Additionally, Petitioner's Exhibits numbered 1 through 16 were admitted in evidence. Both the Petitioner and David Leighow testified on behalf of the Respondent, and Respondent's Exhibits numbered 1 through 3 were admitted in evidence.

By Order dated July 30, 1981, and again at the commencement of the final hearing in this cause, ruling was reserved on Respondent's motion to tax costs against the Petitioner relating to certain discovery depositions.

Respondent submitted post-hearing proposed findings of fact in the form of a recommended order. Although Petitioner specifically waived his right to submit proposed findings of fact, he filed a post-hearing "Answer to Respondents Proposed Findings of Fact and Conclusions of Law." To the extent that any

proposed findings of fact have not been adopted in this Recommended Order, they have been rejected as not having been supported by the evidence, as having been irrelevant to the issues under consideration herein, or as constituting unsupported argument of counsel or conclusions of law.

FINDINGS OF FACT

1. Petitioner and another podiatrist were engaged in a partnership, practicing podiatry with offices in two locations, one on Broward Boulevard (hereinafter "the Broward office"), and one in Tamarac (hereinafter "the Tamarac office") On February 2, 1977, Respondent initiated negotiations for the acquisition of Parcel No. 154, the property leased by Petitioner or his partnership for the location of the partnership's Broward office. On February 7, 1977, Respondent delivered to the Broward office its ninety-day letter of assured occupancy. Since Respondent and the owner of Parcel No. 154 were unable to agree, Respondent was required to litigate the acquisition of that parcel, and Respondent obtained an order of taking in August, 1978. The contract for constructing the segment on Broward Boulevard where the Broward office was located was let on December 31, 1978.

   
   

2. Petitioner closed his Broward office and vacated the premises in March, 1978. No notice to vacate the premises was ever issued to Petitioner, since he had vacated the premises approximately five and one-half months prior to Respondent obtaining possession of the property pursuant to the order of taking.

   
   

3. Petitioner's partnership kept only one set of records for both the Tamarac and Broward offices. All of the income, the expenses, and the other allowable deductions were consolidated for both offices, and it is not possible to determine from those records any specific expenses attributable to the Broward office only.

   
   

4. In determining the amount of gross income for patients seen at the Broward office, Petitioner, through his accountant, reviewed all patient cards of Broward office patients and added together those charges for services rendered. Those patient cards, however, do not indicate whether those patients were seen by Petitioner or by Petitioner's partner and, accordingly, reflect the income generated by both members of the partnership.

   
   

5. In order to then determine expenses generated by the Broward office in order to compute net income, Petitioner, through his accountant, selected a percentage and, using that percentage, divided all expenses between the Broward office and the Tamarac office. No evidence was presented to explain or justify the basis upon which the percentage figures were chosen.

   
   

6. Petitioner sold both offices to his partner on April 18, 1977.

   
   

7. Petitioner's accountant certified the following figures in support of the amount of fixed payment claimed by the Petitioner:

   
   

   Fee Income per Patient Cards Year Broward Office		Profit Percentage per Income Tax Returns	Indicated Annual Profit Broward Office
   1975	$ 30,371.00	25.09 percent	$ 7,620.00
   1976	8,093.00	18.04 percent	1,460.00
   1977	491.00	44.09 percent	216.00

8. The figures for expenses used in determining Petitioner's net income were taken from Petitioner's income tax returns, and those returns were also used to verify income and in computing the percentage of business attributable to the Broward office. Petitioner's tax returns, however, were computed on the accrual basis rather than on the cash basis. Books maintained using the accrual method include billed fees not actually received in that year and total expense obligations incurred that year although those expenses may not have been paid.

   
   

9. In billing patients who were medicaid or medicare recipients, Petitioner charged the amount of fee he considered proper. If the full amount of Petitioner's bill was not paid by medicare or medicaid, he reduced his fee to the amount actually paid under those programs. Fees not collected would be written off during the following tax year. A review of the records and of the return for the year in which the fee was declared would not reveal the fact that it was subsequently written off, whether partially or fully, such as in the case of an uncollectable fee.

   
   

10. The figures set forth in Paragraph numbered 7 above are based upon Petitioner's books and tax returns on the accrual basis and have not been adjusted to reflect income actually received rather than billed or to reflect expenses actually paid rather than incurred.

    
    

11. Only sixteen residents were displaced as a result of the entire road- widening project along Broward Boulevard.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto. Section 120.57(1), Florida Statutes.

    
    

13. It has previously been determined that Petitioner is entitled to receive a fixed payment in lieu of actual moving expenses. The Florida Department of Transportation Right of Way Manual, which is based upon the Federal Highway Administration Federal-Aid Highway Program Manual, sets forth the method of calculation of a fixed payment and provides, in pertinent part, as follows: (Section 4.3.7E)

    
    

    [A]n owner of a discontinued or relo- cated business (including a business that is a rental of real property) may be eligible to receive a Fixed Payment equal to the average annual net earn- ings of the business; such payment shall be not less than $2,500 nor more than $10,000. . .

    
    

    (2) . . . The term "average annual net earnings" means one-half of any net earnings of the business before Federal, State and local income taxes, during the two taxable years immedi-

    ately preceeding [sic] the taxable year in which the business is relocated. If

    the two taxable years immediately preceed- ing [sic] displacement are not represen- tative, the Department may with prior approval from the FHWA Division Adminis-

    trator use a 2-year period beginning with 2 years prior to negotiations for the project that would be more repre- sentative. It must be determined that the proposed construction has been the cause of the outflow of residents thereby resulting in a decline in net income for the business, prior to uti- lizing this alternative. .

    
    

14. Respondent could not have issued to Petitioner its thirty-day notice to vacate until it obtained possession of Parcel No. 154 pursuant to the Order of Taking entered on August 17, 1978. Petitioner voluntarily relocated his Broward office on March 1, 1978. Accordingly, the two taxable years immediately preceding the taxable year in which the business was relocated are 1976 and 1977. Petitioner's argument that 1975 should be included in computing his average annual net earnings is without merit, since Section 4.3.7E(2) clearly provides that earlier years can only be used if the proposed construction has been the cause of the outflow of residents so as to cause a loss in net income. Since only sixteen residents were relocated as a result of the entire project along Broward Boulevard and not just in the immediate vicinity of Petitioner's business, there is no basis for utilizing the earlier years' alternative.

    
    

15. Respondent argues that since it is now aware that the figures submitted by Petitioner are based upon books kept on the accrual method of accounting rather than on the cash method, Petitioner's figures should be adjusted to reflect income actually received rather than billed and to reflect expenses actually paid rather than incurred. Respondent argues in favor of the cash method of accounting rather than the accrual method, since its regulations require that the Department consider two years in determining the average annual net earnings of a business, and utilization of the accrual basis would require an analysis of numerous years in order to obtain an accurate picture of actual income and actual expenses. It is not only impossible to compute adjusted figures due to the total absence of underlying documentation presented by either side, but also unnecessary to recompute Petitioner's claim under the facts of this case. Petitioner has already been held to be entitled to a fixed payment. Such a payment cannot be less than $2,500. If Petitioner's average annual net earnings were adjusted downward to reflect money actually received rather than billed, Petitioner would still be entitled to the minimum fixed payment set forth in the regulations and in the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. Public Law 91-646.

    
    

16. The amount of fixed payment to which Petitioner is entitled in lieu of moving expenses is properly calculated as follows: Petitioner's 1976 net income of $1,460 should be added to Petitioner's 1977 net income of $216; the total of those two figures, or $1,676, should be divided by two in order to obtain the average annual net earnings, which figure equals $838. Since this amount is less than the $2,500 minimum payment, Petitioner is entitled to the minimum payment of $2,500 less the $600 paid to him on March 20, 1978, for moving costs and less the $500 paid to him on September 1, 1978, for search expenses. Accordingly, Petitioner is entitled to the sum of $1,400, which figure equals the minimum fixed payment minus the monies already paid to Petitioner herein.

    
    

17. Respondent's motion to tax costs arising out of the scheduling of discovery depositions be and the same is hereby denied.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is, therefore,

RECOMMENDED THAT:

A final order be entered finding Petitioner, Mark H. Feldman, entitled to receive an additional $1,400 in relocation benefits, which represents the minimum fixed payment minus the amounts previously paid to him by the Respondent.

RECOMMENDED this 16th day of June, 1982, in Tallahassee, Florida.

LINDA M. RIGOT, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 1982.

COPIES FURNISHED:

Dr. Mark H. Feldman 7160 N.W. 45th Court

Lauderhill, Florida 33319

Charles G. Gardner, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

Mr. Paul N. Pappas Secretary

Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

Docket for Case No: 81-001384

Orders for Case No: 81-001384