STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CREATIVE DESIGNS AND INTERIORS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 88-0778T

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Don W. Davis, on July 15, 1988, in Fort Lauderdale, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Douglas Reynolds, Esquire

499 Northwest 70 Avenue, Suite 220 Fort Lauderdale, Florida 33317-2443

For Respondent: Charles Gardner, Esquire

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458 BACKGROUND

This matter began when Respondent refused to grant Petitioner reimbursement for certain expenses alleged to have resulted from the relocation of Petitioner's business to accommodate Respondent's construction of a portion of an interstate highway in Broward County, Florida. Upon Respondent's denial of reimbursement, Petitioner requested a formal administrative hearing. This proceeding ensued.

At the final hearing, Petitioner presented the testimony of three witnesses and 15 evidentiary exhibits. Respondent presented the testimony of one witness and one evidentiary exhibit. The parties presented one joint exhibit. Proposed findings of fact presented by the parties are addressed in the appendix to this recommended order.

Based upon all of the evidence, including the candor and demeanor of the witnesses who testified, the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner is engaged in the business of interior design and space planning of residential and commercial structures. In conjunction with these activities, Petitioner also manufactures furniture and cabinets.

   
   

2. In 1986, prior to relocation to the present business site, Petitioner's facilities in Davie, Florida, included a kitchen, business offices, manufacturing room and bathroom. In the rear of the building, Petitioner maintained a spray room for the painting of furniture. In June or July of 1986, Petitioner was required to relocate to Pompano Beach, Florida, as the result of a public taking of the property where it was previously situated for the construction of interstate highway 595 in Broward County, Florida.

   
   

3. The parties stipulated at hearing that Petitioner is an eligible displacee under the federal government's Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970. Respondent administers the Act using federal law interpretations. Respondent also administers a corresponding state relocation aid program established by state law. Rules governing the state program are almost a verbatim duplicate of the federal program. Chapter 4 of Respondent's right-of-way procedures manual, comprised of state rules governing nonfederal relocation assistance, has been adopted by reference by Respondent as a formal administrative rule. Both federal and state rules are used in administration of federal relocation aid projects. Common requirements of the two sets of rules are given the same interpretations by Respondent.

   
   

4. Petitioner was previously reimbursed by Respondent for various expenses related to relocation. Respondent denied reimbursement for Petitioner's expenses related to telephone "yellow page" advertising, consultant and legal fees, installation of an exhaust fan system, and the time Petitioner's employees spent meeting with officials regarding relocation.

   
   

5. Petitioner's primary source of advertising in the previous location was the telephone directory yellow pages. Petitioner had run the advertisement in the yellow pages for approximately 10 years. The advertisement was paid for monthly by Petitioner. While cancellation for the remaining period of time on the advertisement contract was possible at the time of Petitioner's relocation, Petitioner did not cancel the contract since a call forwarding service was provided by the telephone company. This service informed callers at Petitioner's previous telephone number of the number at the new location. Since Petitioner continued using this telephone directory advertisement for the completed 12 month term of the contract, Respondent denied Petitioner's request for reimbursement of approximately $1,324 or 10 monthly payments of $132.40. Respondent's denial was based on the benefit Petitioner obtained from the telephone call message service providing potential customers with Petitioner's new number and federal regulations prohibiting reimbursement for additional operating expenses incurred because of operating in a new location.

   
   

6. Respondent's employee informed Petitioner that the cost of "hooking up" extensive duct work from the spray paint booth at the new location to an exhaust fan would be reimbursed by Respondent. The original exhaust fan employed in Petitioner's operation at the previous location had consisted of a portable fan on a movable dolly with a three to four-foot vent pipe which allowed toxic fumes to be blown out of the rear door of the facility. The new facility location did not offer such a convenience for ventilation. Further, local ordinances and regulations prevented use of Petitioner's former exhaust system. Instead, Petitioner was required to acquire a new exhaust apparatus. The new equipment

   consisted of a ventilation fan which had to be permanently attached to the outside of the roof of the facility. Ductwork measuring 6 to 7 feet in length was connected to the fan through an opening cut into the roof. The ductwork extended into the building's interior spray booth from the roof. Petitioner sought reimbursement of $385 for a flange fitting necessary to connect the ductwork to the booth. Petitioner also sought reimbursement in the amount of

   $460 for an offset fitting used to line up the ductwork with structural aspects of the roof, and $525 for labor costs associated with connection of the ductwork. Respondent denied reimbursement of the entire amount of $1,370 on the basis that such a larger, more modern and comprehensive exhaust system constituted a building improvement and was not permitted under applicable regulations governing either federal and state relocation programs.

   
   

7. Petitioner's vice president is Sherry Parrish. Ms. Parrish was employed by Petitioner as a consultant to design a front or display area in the new facility. Among other consultant duties, she evaluated and selected an improved telephone system, wall coverings, carpet and linoleum for the new location. Petitioner had previously utilized the services of its president, Jerry Parrish, as a consultant regarding layout of manufacturing space located at the rear of the new facility. Petitioner's payment to Mr. Parrish of approximately $2,000 for this service was previously reimbursed by Respondent. Petitioner's claim for reimbursement of $1,035 paid to Ms. Parrish for this purpose was denied by Respondent on the basis that the building at the new location was unfinished. Federal and state regulations governing reimbursement for such expenses require that the building which is the subject of relocation be an "existing structure" that is already built, finished and completed. The building had been issued a certificate of occupancy in accordance with local governmental regulations prior to Petitioner's move to the premises.

   
   

8. Petitioner hired an attorney to draft a lease in response to the lease proffered by Petitioner's future landlord at the new location facility. Petitioner was charged $1,180 by the attorney for this service. The attorney also provided petitioner with consultation services regarding certain relocation sites and the relative commercial advantages and disadvantages of each site. On a professional basis, the attorney has provided this consultative service to a number of other small businesses. The amount of the attorney's consultation fee for this service to Petitioner was $2,405. Respondent, considering the attorney's services to be of a legal nature, denied all expense reimbursement related to these charges on the basis that reimbursement for legal fees is not permitted by federal or state regulations.

   
   

9. Petitioner sought reimbursement for the time spent by its officers in conferences with Respondent's representatives regarding Petitioner's relocation. Conferences were generally held at the Petitioner's facility or by telephone. Petitioner's request for reimbursement of a total of $1,200 for this alleged loss of employee time was denied by Respondent on the basis that regulations did not permit reimbursement for time spent determining claims or claim eligibility.

   
   

10. Petitioner was previously paid $1,000 by Respondent to cover the cost of search expenses incurred in looking for relocation sites. The initial property which Petitioner decided upon as a site for relocation became unavailable as a result of the progress of condemnation action involving Petitioner's old location. Petitioner undertook a second and successful search to find a suitable relocation site. Petitioner's request for reimbursement of an additional $1,500 for expenses related to the second search was denied by Respondent. Respondent noted that rules governing federal and state relocation expense reimbursement limit search expenses to $1,000.

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding, and the parties thereto, pursuant to subsection 120.57(1), Florida Statutes.

    
    

12. The federal regulations which are pertinent to this case, and used by Respondent in administering the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (the Uniform Act), are set forth in portions of Title 23 and Title 49 of the Code Of Federal Regulations. Respondent is authorized by Sections 339.09(4) and 421.55(3), Florida Statutes, to comply with the Uniform Act in construction projects involving federal financial assistance. Respondent's procedures for administering the Uniform Act are set forth in the Department of Transportation's Right Of Way Procedures Manual, adopted as a rule by reference in Chapter 14-15, Florida Administrative Code. In that manual, Respondent's Procedure RA 1-1(e) acknowledges the applicability of Title 23 CFR and Title 49 CFR, Part 25 to determinations made with regard to Respondent's relocation assistance program on federal and federally assisted projects. Authorization for Respondent to implement a nonfederal aid program of relocation assistance is set forth in Section 339.09(5), Florida Statutes, and rules implementing such a program are contained in Rule Chapter 14-66, Florida Administrative Code.

    
    

13. The standard utilized to determine whether Petitioner's requests for reimbursement should be granted is whether the expenses are reasonable and necessary in the judgement of Respondent. Title 49 CFR Section 25303. Unless denial of the requested reimbursements could be characterized as an arbitrary and capricious exercise of the authority delegated to Respondent by federal regulations, it should be sustained. Department of Transportation v. Groves- Watkins, 13 FLW 462, (Fla. August 18, 1988), and Department of Transportation v. Reddy Ice, (DOAH 87-4590, Recommended Order dated May 5, 1988).

    
    

14. The claim for reimbursement of the telephone directory yellow page expense was appropriately denied. Petitioner chose not to cancel the advertisement and sacrifice the benefit of having potential customers and other callers advised that the business number had changed. Petitioner effectively decided to acquire an additional operating expense as a result of being at the new location. Title 49 CFR Section 25.305(f) prohibits reimbursement for such additional operating expenses.

    
    

15. Petitioner's request for reimbursement of "hook up" costs of the new exhaust fan apparatus was appropriately denied. From the facts presented it is unclear what, if any, portion of the claimed $1,370 was related solely to "hook up" expenses, as distinguished from an improvement to real property or an additional operating expense of that particular location in the face of local governmental requirements that a different exhaust system be utilized. Title 49 CFR Section 25.305(f) prohibits reimbursement for such additional operating expenses. Further, physical changes made to the real property in the connection and installation of the system constitute an improvement to real property, a prohibited expense reimbursement under provisions of RA 3-3 A. 10 of Respondent's Right of Way Procedures Manual. Such an expense also falls outside of the eligibility requirements set forth in Title 49 CFR Section 25.303(a).

    
    

16. The consultation expenses of hiring Petitioner's vice president to provide interior design work were necessary and reasonable and constitute an authorized reimbursement under provisions of Right of Way Manual Procedure RA 3-

    2 and Title 49 CFR Section 25.303(a)(8). Respondent's argument that the

    building was not an existing structure is not persuasive in the face of previous payments to Petitioner's president for similar work and the unrebutted testimony that a certificate of occupancy existed for the building.

    
    

17. Petitioner's claims for reimbursement of legal expenses relating to lease document review and modification, along with expense claims for cost of its officers' time spent in conferences with Respondent's representatives are not eligible for reimbursement. Payment for these items is prohibited by provisions of Right of Way Manual Procedures RA 3-2, 3-3A, and Title 49 CFR Sections 25.303(a) and 25.305(a) through 25.305(h). Likewise, Petitioner's expense reimbursement request for consultative fees paid to the attorney for advice regarding advantages and disadvantages of various relocation sites were properly denied. While the attorney's advice may have been helpful to Petitioner, there is no showing that such consultation was necessary. Further, Title 49 CFR Section 25.303(13), provides authorization for a one time payment to relocatees not to exceed $1,000 to defray expenses of searching for replacement locations. Such payment has already been made by Respondent, and additional search cost expense reimbursement sought by Petitioner is in excess of the amount permitted by Title 49 CFR Section 25.303(13).

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered awarding Petitioner reimbursement

for consultative fees paid to Sherry Parrish in the amount of $1,035 as an eligible relocation expense and denying all other claims for reimbursement.

DONE AND ENTERED this 5th day of October, 1988, in Tallahassee, Leon County, Florida.

DON W. DAVIS

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of October, 1988.

APPENDIX

The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties.

Petitioner's Proposed Findings 1-6. Addressed.

7-10. Unnecessary to result reached.

11. Addressed.

12-14. Unnecessary to result reached.

15-16. Not supported by weight of the evidence.

1. Corroborative only of self-serving assertion; hearsay.

2. Addressed.

3. Unnecessary to result reached. Also, facts evidence that payment by was to be for the "unused portion" of which there was none.

4. Not supported by weight of the evidence.

21-28. Addressed; some portions unnecessary to result on this issue. 29-35. Addressed; some portions unnecessary to result reached.

36-41. Addressed; some portions unnecessary to result reached.

42. -49. Addressed in part; remainder unnecessary to result reached. 50-51. Addressed in part; remainder unnecessary for result reached. 52-53. Addressed in part; remainder rejected as legal conclusion

unsupported by the evidence. Respondent's Proposed Findings

1-9. Addressed in part; remainder unnecessary to result. 10-16. Addressed.

1. Addressed.

2. Rejected; Hearsay. 19-24. Addressed.

25-26. Addressed in part; remainder unnecessary to result.

1. Weight of the evidence does not support that the building was unfinished.

2. Addressed.

29-33. Addressed.

34-41. Addressed in part; remainder unnecessary to result.

COPIES FURNISHED:

Charles Gardner, Esquire Haydon Burns Building

605 Suwannee Street, M.S. 58

Tallahassee, Florida 32399-0458

Douglas Reynolds, Esquire

499 Northwest 70 Avenue Suite 220

Fort Lauderdale, Florida 33317-2443

Thomas H. Bateman, III, Esquire General Counsel

Department of Transportation

562 Haydon Burns Building Tallahassee, Florida 32399-0450

Hon. Kaye N. Henderson Secretary

Haydon Burns Building

Attn: Eleanor F. Turner, M.S. 58 605 Suwannee Street

Tallahassee, Florida 32399-0450

Docket for Case No: 88-000778

Orders for Case No: 88-000778