STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JAY H. MILLER, et al., )

)

Petitioners, )

)

vs. ) CASE NO. 89-5042F

)

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL ) ESTATE, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a formal hearing in this case on March 7, 1990, in Clearwater, Florida.

APPEARANCES

For Petitioner: Stephen O. Cole, Esquire

McMULLEN EVERETT LOGAN MARQUARDT & CLINE

First National Bank Building Post Office Box 1669 Clearwater, Florida 34617

For Respondent: John R. Alexander, Esquire

Department of Professional Regulation Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

STATEMENT OF THE ISSUE

Whether or not Petitioners are entitled to an award of attorney's fees and costs.

PRELIMINARY STATEMENT

In this case, Petitioners are seeking attorney's fees and costs under Section 57.111, Florida Statutes, as a result of final agency action taken in DOAH Case Nose 88-2983 and 88-5237, an earlier case involving the same parties. Official recognition was taken of DOAH Case Nos. 88-2983 and 88-5237, and final agency action resulting therefrom.

The parties stipulated that Petitioner, Dynamic Realty, Inc. (Dynamic) is a small business party within the meaning of Chapter 57, Florida Statutes; that Dynamic is a "prevailing small business party" as defined in Section 57.111(3)(c), Florida Statutes, and that the fees requested are reasonable provided a showing is made that they were in fact incurred.

Respondent challenges the status of Petitioner, Jay H. Miller, as being a sole proprietor and not a small business party within the meaning of Section 57.111, Florida Statutes. 1/

FINDINGS OF FACT

1. On October 21, 1983, Derek and Lucy Lea entered into a sales contract to purchase the Wal-Mar Hotel that was listed for sale with the Petitioners. The Leas retained an attorney and the transaction closed on December 15, 1983. Three months later, due to low revenues, the Leas defaulted on the mortgage and the seller foreclosed. The Leas filed a civil action in circuit court against Petitioners for misrepresenting the property, which action was dismissed.

   
   

2. Petitioners denied the allegations filed by the Leas.

   
   

3. On July 29, 1986, Respondent, Florida Real Estate Commission, received a complaint filed by the Leas which was investigated. Following Respondent's investigation, the Lea's complaint was forwarded to a probable cause panel and the panel determined that probable cause did not exist to believe that a violation of the real estate licensing law had occurred and a closing order was entered on February 18, 1987, dismissing the complaint.

   
   

4. The Leas refiled their civil complaint and alleged that Petitioners misrepresented and overstated the per night room rate, the past occupancy rates, the gross income rates and future reservations; that Petitioners knew or should have known that the acts and statements were false and incomplete at the time made and that the Leas acted in reliance of Petitioners representations in purchasing the Wal-Mar Motel.

   
   

5. On or about August 5, 1987, the Leas obtained a final judgment for

   $5,250.00 against Petitioners, Dynamic Realty, Inc. and Jay H. Miller, which judgment was satisfied. A copy of the judgment, and satisfaction thereof was refiled with the Respondent which evidenced that the Petitioners paid the judgment.

   
   

6. The Leas refiled their complaint with Respondent and on September 20, 1988, the Leas complaint was again reviewed by the probable cause panel. The probable cause panel determined that probable cause existed to believe that based on the documentation presented, including the civil judgment entered against Petitioners which was satisfied, and a review of the investigative report, adequate facts existed to support a charge of fraud through breach of trust in a business transaction and Respondent filed Administrative Complaints on October 4, 1988, alleging that Petitioners engaged in fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction, in violation of Subsections 475.25(1)(b), (d) and (k), Florida Statutes, by virtue of Petitioners' misrepresentation in overstating the various financial data relative to the Leas purchase of the Wal-Mar Hotel.

   
   

7. Petitioners incurred legal fees and costs in the amount of $4,058.00 to litigate the Administrative Complaint filed by Respondent.

8. The amount expended by Petitioners for legal fees and costs was reasonable.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding, pursuant to Chapters 57 and 120, Florida Statutes.

   
   

10. Section 57.111(4) (a), Florida Statutes, provides:

    
    

    Unless otherwise provided by law, an award

    of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.

    
    

11. The Petitioner (Dynamic) is a small business party. Section 57.111(3)(d), Florida Statutes (1987).

    
    

12. DOAH Case Nos. 88-2983 and 88-5237 was a consolidated proceeding pursuant to Chapter 120, Florida Statutes.

    
    

13. The Petitioners were prevailing parties in DOAH Case Nos. 88-2983 and 88-5237. Section 57.111(3) (c)1, Florida Statutes.

    
    

14. There are no special circumstances proven by evidence in the record in this case which would make an award of attorney's fees and costs unjust.

    
    

15. Thus, the only issue is whether the actions of the agency were substantially justified when initiated. Section 57.111(3)(e), Florida Statutes, provides in pertinent part:

    
    

    A proceeding is "substantially justified"

    if it had a reasonable basis in law and fact at the time it was initiated by a state agency.

    
    

16. The burden of proof that the proceeding was "substantially justified" is upon the agency. Foley Construction Company v. U.S. Army Corps of Engineers, 716 F.2d 1202 (8th Cir. 1983), cert. denied. 104 S.Ct. 1908 (1983). The Equal Access to Justice Act is modeled after the Federal Equal Access to Justice Act, Section 504, 5 U.S.C.A. Thus, the construction that has been given by the Federal courts to the extent harmonious with the Florida Act, provides guidance in construing the Florida Act. Gentele v. Department of Professional Regulation, Board of Optometry, 513 So.2d 672, 673 (Fla. 1st DCA 1987).

    
    

17. The proceeding may have been substantially justified even though the agency did not prevail. The agency need not prove that there was a substantial probability of prevailing to prove that the proceeding was substantially justified. See, Westerman, Inc. v. N.L.R.B., 749 F.2d 14 (6th Cir. 1984).

18. The Respondent was substantially justified to assert that the Petitioners were in violation of the real estate licensing law when it issued the subject complaints. This "reasonable justification" is based on the fact that Respondent's investigators were told by the Lea's that Petitioners' agents made false statements to them which prompted them to purchase the Wal-Mar. The fact that these statements here not proven to be false at the final hearing does not impact on the issue as to whether or not there was substantial justification at the time the probable cause panel initiated the complaints.

    
    

19. Respondent was substantially justified to assert that Petitioners were in violation of the real estate licensing law when it recommended issuance of the subject complaints against Petitioners. The proceeding against Petitioners had a reasonable basis in fact when initiated by Respondent.

Accordingly, it is ORDERED:

That the Petition for attorneys fees and costs is DENIED.

DONE and ORDERED this 16th day of May, 1990, in Tallahassee, Leon County, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 16th day of May, 1990.

ENDNOTE

1/ Based on the final determination herein, no ruling is made respecting the status of Petitioner Miller.

COPIES FURNISHED:

Stephen O. Cole, Esquire McMULLEN EVERETT LOGAN

MARQUARDT & CLINE

First National Bank Building Post Office Box 1669 Clearwater, Florida 34617

John R. Alexander, Esquire DPR - Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Darlene F. Keller Executive Director Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Kenneth E. Easley, Esquire General Counsel

Department of Professional Regulation

1940 North Monroe, Suite 60

Tallahassee, FL 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.

Docket for Case No: 89-005042F

Orders for Case No: 89-005042F