STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CAPITAL CITY FIRST NATIONAL BANK, )

)

Petitioner, )

)

vs. ) CASE No. 87-4474

)

DEPARTMENT OF ADMINISTRATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in Tallahassee, Florida, on March 21, 1988, before Jose A. Diez-Arguelles, a hearing officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: James D. Beasley, Esquire

Ausley, McMullen, McGhee, Carouthers & Proctor

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32303

For Respondent: Augustus D. Aikens, Jr., Esquire General Counsel

Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

BACKGROUND

This proceeding arises out of Capital City First National Bank's, Petitioner's, request for additional compensation for services rendered on a contract with the Department of Administration, Respondent. Respondent denied the request and Petitioner requested a formal hearing. By letter dated October 8, 1987, Respondent requested the appointment of a hearing officer from the Division of Administrative Hearings.

At the hearing, Petitioner presented the testimony of Mr. Dale Thompson and offered 7 exhibits, which were accepted into evidence. Respondent presented the testimony of Mr. Andrew Lewis and offered 2 exhibits, which were accepted into evidence.

The parties timely filed proposed recommended orders addressed in the attached Appendix.

FINDINGS OF FACT

1. On August 1, 1986, Respondent issued ,Invitation to Bid Number 87-2, which was titled, "Invitation to Bid for Providing Financial Services Related to the Payment of State Employees' Group Health Self Insurance Claims: (Invitation to Bid).

   
   

2. Under the terms of the Invitation to Bid, the winning bidder would agree to provide banking services for two interest bearing accounts.

   
   

3. One account (Prescription Drug Account), was to be

   used to transfer funds from the Respondent to Paid Prescriptions, Inc., the administrator of the prescription drug component of the State Employee's Group Health Self Insurance Plan (Plan).

   
   

4. The other account (Health Claims Account) was to be used to pay drafts issued by Blue Cross and Blue Shield of Florida, Inc., to participants and providers for payment of all health claims, except prescription drugs. Blue Cross and Blue Shield of Florida, Inc., was the administrator of the Plan, except for Prescription drugs.

   
   

5. For both accounts, the Invitation to Bid required that all fees and charges of the winning bidder must be offset by "the required minimum daily balance." The required minimum daily balance was an amount of money which Respondent would have to maintain deposited in the account with Petitioner. Interest earned by the winning bidder on the required minimum daily balance amount would compensate the winning bidder for providing the services required by Respondent.

   
   

6. In addition, funds deposited in the accounts in excess of the required minimum daily balance would earn interest credited to the account each month.

   
   

7. Responses to the Invitation to Bid were to be evaluated based on the amount of required minimum daily balances and the amount of interest Respondent would earn on funds on deposit in excess of the required minimum daily balance.

   
   

8. Appendix 1 to the Invitation to Bid, was titled "Prescription Drug Account Activity" and contained the following information:

   
   

   Estimated number of deposits per month	2
   Estimated number of wire transfers per month	2
   Average amount per transfer from February 1986 through May 1986	$480,000

   
   

9. Appendix 2 to the Invitation to Bid was Titled "Heath Claims Account Activity" and contained the following information:

   
   

   The following data was collected from the Period May 1, 1985 through April 30, 1986.

   
   

   Average number of drafts paid per month $40,568 Average daily amount of drafts paid $395,398

   Average number of deposits per month 8

   Average number of stop Payments per month 19

10. In preparing its response to the Invitation to Bid, Petitioner based its calculations on the number of transactions set forth in the Appendix.

11. Petitioner determined that, to cover its costs plus a 20 percent profit margin, it would need to receive 13.7 cents per draft handled on the Health Claims Account. By using the 13.7 cents per draft, the average number of drafts per month listed in Appendix 2, and by assuming that it could earn 6.3 percent interest on the required minimum daily balance, Petitioner determined that it needed to ask for a required minimum daily balance of $1,059,000, if the funds were to be maintained in a Demand Deposit Account.

    
    

12. Before petitioner submitted its response, Mr. Dale Thompson, an employee of Petitioner's, contacted Mr. Andrew Lewis, Respondent's contact for the invitation to bid, to ask a few questions, and make sure Petitioner understood what it was doing. During this conversation, Mr. Thompson asked Mr. Lewis if he had any reason to expect that the average number of drafts listed in Appendix 2 would increase. Mr. Lewis responded that

    the number reflected what it had been over the last period and that he had no expectation that it would increase.

    
    

13. Petitioner submitted a response which asked for a required minimum daily balance of $0.00 for the Prescription Drug Account, contingent upon having the Health Claims Account of $961,216, if funds were to be maintained in a zero interest Certificate of Deposit, $1,059,522, if funds were to be maintained in a Demand Deposit Account. Also, the amounts on deposit in excess of the required minimum daily balance would earn interest based on the current month's auction average of the ninety-day U. S. Treasury Bill Discount Rate, but not less than 4 Percent.

    
    

14. Based on Respondent's analysis of the bids submitted by five firms, Petitioner was selected as having submitted the best bid.

    
    

15. Thereupon, Petitioner and Respondent entered into and Agreement whereby Petitioner agreed to provide the services set forth in the Invitation to Bid and pay the interest set forth in Finding of Fact 13, supra, in exchange for Respondent's maintaining a required minimum daily balance of $1,059,522 in a Demand Deposit account with Petitioner.

    
    

16. Nowhere in the Agreement is there mention of the average number of drafts listed on Appendix 2.

17. Page 6 of the Agreement contains the following language: SECTION VI - ADDITIONAL DOCUMENTS

    Invitation to Bid Number 87-2, mailed

    August 1, 1986 and Capital City's Response to Invitation to Bid Number 87-2

    are incorporated herein by reference, except where there is a conflict between

    this Agreement and the Invitation to Bid shall take precedence over Capital City's Response to the Invitation to Bid.

    
    

18. Petitioner began performing services under the Agreement on November 8, 1986, and continued to do so until December 31, 1987, when the agreement expired.

19. Immediately after beginning to perform services, the number of drafts being processed in the Health Claims Account exceeded the number Petitioner had anticipated. This continued for the entire period of the Agreement, during which Petitioner processed the following number of drafts:

    
    

    Nov. 8 -	Nov.	30,	1986	38,291
    December				55,313
    January,	1987			59,887
    February				73,309
    March				74,468
    April				68,654
    May				67,911
    June				81,065
    July				86,838

    August 74,337

    September 82,846

    October 85,624

    November 74,474

    December 76,374

    
    

    Monthly Average 72,217

    
    

20. On April 21, 1987, Petitioner, requested that Respondent pay additional compensation to Petitioner based on 13.7 cents per draft for the number of drafts which were being

    processed in excess of the number reflected on Appendix 2 of the Invitation to Bid. By letter dated May 25, 1987, Respondent

    denied Petitioner's request, stating that the "unpredictable fluctuations in the volume of drafts was a business risk agreement." Petitioner's Exhibit 4..

    After further oral communications between the parties, Petitioner requested an administrative hearing regarding its request for additional compensation.

    
    

21. The number of drafts paid from Respondent's,

    account during May, 1985 through April 1986, which formed the basis for the average number of drafts listed on Appendix 2 were:

    
    

    May 1985	32,783
    June	28,045
    July	32,697
    August	32,822
    September	34,923
    October	41,430
    November	41,491
    December	39,136
    January 1986	53,103
    February	51,390
    March	50,775
    April	48,176
    Total	$486,811

    
    

22. Additionally, the number of drafts paid in May, June and July, 1986 were 44,020; 45,123; and 53,095; respectively.

    
    

23. At the time Mr. Lewis was working on the Invitation to Bid and had the conversation with Mr. Thompson described in Finding of Fact 12, supra, he was not aware that the number of drafts paid per month had been increasing over

    the prior three months. In preparing the Invitation to Bid, Mr. Lewis had asked someone in his office to give him an average for the past 12 months and the number he received is the number reflected in Appendix 2.

    
    

    ISSUE

    
    

    Whether Petitioner is entitled to additional compensation under the Agreement with Respondent?

    
    

    CONCLUSIONS OF LAW

    
    

24. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of this proceeding Section 120.57, Florida Statutes; Graham Contracting, Inc. v. Department of General Services, 363 So.2d 810 (Fla. 1st DCA 1978), cert. denied, 373, So.2d 456 (Fla. 1979).

    
    

25. In its Proposed Recommended Order, Petitioner argues it is entitled to additional compensation under one or more of the following theories: unjust enrichment, quantum meruit and fraudulent inducement. Petitioner does not discuss the reasons why it is entitled to relief under these theories, but cites Davis v. Department of Health and Rehabilitative Services, 461 So.2d 210 (Fla. 1st DCA 1984) in support of its entitlement to additional compensation.

    
    

26. Briefly, Petitioner is not entitled to relief under any of the three theories. Quantum meruit and unjust enrichment are not applicable in cases where, like here, there is an express contract. See, Davis, supra; Tobin & Tobin Insurance Company, Inc. v. Leskind, 345 So.2d 518 (Fla. 3rd DCA 1975); 11 Fla. Jur. 2d Contracts Sec. 3,4, 228-235. In order to succeed on a claim of fraudulent inducement, Petitioner must prove the following elements: a false statement of material fact; the representor's knowledge that the representation was false; an intention that the representation induce another to act on it; and consequent injury by the party acting in reliance of the representation. Shee-Con, Inc. v. Al Seim Appraisal Services, 427 So.2d 311 (Fla. 5th DCA 1983). In this case, no false statement was alleged or proven; Appendix 2 contains accurate information.

    
    

27. In Davis, supra, Mr. Davis was the winning bidder in a bid solicitation for the lease of office space (including utilities and other services) to the Department of Health and Rehabilitative Services (HRS). During a pre-bid conference, HRS representatives stated that the building would be used from 8:00 a.m. to 5:00 p.m., Monday through Friday, except holidays. Mr. Davis prepared his bid accordingly, and was awarded the contract. Shortly after HRS began using the facility, it notified Mr. Davis that, from time to time, HRS would use the facility for more hours than indicated at the pre-bid conference and that Mr. Davis would have to provide utilities and other services at no additional cost. Mr. Davis asked for additional compensation. HRS refused, interpreting the lease to mean that Mr. Davis provide services 24 hours a day,

    365 days per year. Mr. Davis filed suit and the trial court granted HRS's motion to dismiss based on the lease agreement being clear and unambiguous. The District Court of Appeal, reversed, stating:

    
    

    The law will not imply a contract

    where a valid express contract exists...

    But where a contract exists and changes or alterations are required by the owner, the law does imply an

    obligation to "pay the reasonable costs

    thereof"... If the trial court

    finds that the lease terms incorporated the use limitation developed, in the pre- bid conference, then Davis will be

    entitled to reasonable payment for use of the facility in excess, of that agreed

    upon. Davis, supra at p.212,,,(citations omitted).

    
    

    The facts in Davis are different from the facts present in this case. Here, Respondent never indicated that the number of transactions would be limited to a certain amount, and the Agreement does not contain such a limitation.

    
    

28. Petitioner argues it is entitle to relief because it relied on the information provided in Appendix 2 and because of Mr. Lewis's statement to Mr. Thompson that Respondent did not expect the number of transactions to increase. The information provided to Respondent, however, was accurate at the time it was provided. Only in retrospect did it become inaccurate. Respondent cannot be faulted for this.

    
    

29. Finally, Petitioner argues that the Agreement limits the number of drafts because Appendix 2 is incorporated by reference into the Agreement. Appendix 2, however, does not limit the number of drafts. It only shows what the average number of drafts were for the period May 1985 through April 1986.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED, that Respondent issue a final order denying Petitioner's

request for additional compensation.

Done and ENTERED this 17th day of May, 1988, in Tallahassee, Florida.

JOSE A. DIEZ-ARGUELLES

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

Filed with the Clerk of the Division of Administrative Hearings this 17th day of May, 1988.

APPENDIX

The parties submitted proposed findings of fact which are addressed below.

Paragraph numbers in the Recommended Order are referred to as "RO ." Petitioner's Proposed Findings of Fact

Proposed Finding Ruling and Paragraph Number in

of Fact Number Recommended Order

1. Accepted. RO1, 2.

2. Accepted, generally. RO3, 4

3. Accepted, generally. RO5

4. Accepted. RO9

5. Irrelevant

6. Accepted. RO12

7. Accepted. RO11, 13

8. First sentence, accepted. RO14, 15. Second sentence, generally accepted, except to the extent

   it indicates that the number of items was limited by the Agreement. RO16, 17 and last paragraph of Conclusions of Law.

9. Generally supported by the evidence, but irrelevant. The fact that Respondent had this information in its records does

   not mean that it had a duty to inform bidders when, at the time, it did not know its significance.

10. Accepted. RO19

11. Accepted, except for parenthetical on incorporation by reference. RO19

12. Supported by competent evidence but not necessary for the decision reached

13-15. Rejected as argument Respondent's Proposed Finding's of Fact

Proposed Finding Ruling and Paragraph Number in

of Fact Number Recommended Order

11-13. Accepted. RO20

14. Supported by the evidence, but unnecessary to the decision.

COPIES FURNISHED:

James D. Beasley, Esquire Ausley, McMullen, McGehee,

Carothers & Proctor

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302

Augustus D. Aikens, Jr., Esquire General Counsel

Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

Adis Vila, Secretary Department of Administration

435 Carlton Building Tallahassee, Florida 32399-1550

Docket for Case No: 87-004474

Orders for Case No: 87-004474