STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN MARSHALL BRUMLEY, )

)

Petitioner, )

)

vs. ) CASE NO. 90-5656F

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a hearing was held in this case on November 16, 1990, in Miami, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Stanley B. Erskine, Esquire

420 Lincoln Road, Suite 251 Miami Beach, Florida 33139

Michael A. Levin, Esquire 2780 Douglas Road, Suite 300 Coral Gables, Florida 33133

For Respondent: Lee R. Rohe, Esquire

Assistant Attorney General Tax Section, Capitol Building

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUES

1. Whether Petitioner is entitled to an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes, in connection with his successful administrative challenge to the October 13, 1989, jeopardy assessment issued against him by Respondent?

   
   

2. If so, what is the amount of fees and costs that should be awarded?

   
   

   PRELIMINARY STATEMENT

   
   

   On October 13, 1989, Respondent issued a Notice of Assessment and Jeopardy Findings against Petitioner. Respondent asserted in the notice that, on or about August 16, 1989, Petitioner had "engaged in the unlawful sale, use, consumption, distribution, manufacture, derivation, production, transportation, or storage" of 27 kilograms of cocaine and that, pursuant to Section 212.0505, Florida Statutes, Petitioner therefore owed $394,257.58 in taxes, penalties, and interest through September 21, 1989. On or about December 3, 1989, Petitioner filed a petition with Respondent challenging the assessment and requesting an

   administrative hearing on his challenge. In his petition, Petitioner denied that he had engaged in any unlawful, taxable activity on August 16, 1989.

   Petitioner's petition was referred to the Division of Administrative Hearings on December 13, 1989. The matter was docketed as Case No. 89-6841.

   
   

   On May 21, 1990, the Hearing Officer issued an order in Case No. 89-6841 recommending that Petitioner's challenge to the October 13, 1989, jeopardy assessment issued against him be sustained and that the assessment be rescinded. On August 27, 1990, Respondent issued a final order adopting the Hearing Officer's recommendation.

   
   

   On September 7, 1990, Petitioner filed with the Division of Administrative Hearings an application seeking an order directing Respondent to reimburse him for the attorney's fees and costs he incurred in connection with his successful administrative challenge to the October 13, 1989, jeopardy assessment. A hearing on Petitioner's application was held on November 16, 1990. No evidence was taken at the hearing, but the parties agreed to file a stipulated record, upon which the Hearing Officer would base his determination on the threshold issue of whether Petitioner qualifies as a "small business party," within the meaning of Section 57.111, Florida Statutes. The Hearing Officer, on the record, indicated his willingness to proceed in this manner. He instructed the parties to file the stipulated record no later than December 7, 1990, and to file any memoranda, briefs or proposed orders they wished the Hearing Officer to consider no later than seven days following the filing of the stipulated record.

   
   

   At the request of the parties, the Hearing Officer, by order issued December 6, 1990, extended the deadline for the filing of the stipulated record to January 4, 1991. On January 7, 1991, Petitioner filed an affidavit in which he stated the following:

   
   

   1. That John M. Brumley Racing Engines Inc. had under five, full time

      employees,

   2. That John M. Brumley Racing Engines Inc. did under two million dollars in gross sales.

   3. That the DOR in fact froze and confiscated a bank account in the name of John M. Brumley Racing Engines Inc.

   4. That John M. Brumley Racing Engines Inc. could not make a payroll check, deposit work checks or dispense work related checks to creditors, employees, the I.R.S. or various other state agencies,

   5. John M. Brumley has incurred reasonable attorney's fees, relative to the above.

On January 11, 1991, the stipulated record was filed. It consists exclusively of documents found in Respondent's files. On January 24, 1991, Respondent filed a memorandum of law on the issue of whether Petitioner is a "small business party," within the meaning of Section 57.111, Florida Statutes. To date, Petitioner has not filed any pleading subsequent to the submission of the stipulated record.

FINDINGS OF FACT

Based upon the stipulated record submitted by the parties, the following Findings of Facts arc made:

1. Following the issuance of its October 13, 1989, jeopardy assessment against Petitioner, Respondent began its efforts to recover the monies allegedly owed by Petitioner.

   
   

2. Collectable assets were identified.

   
   

3. These identified assets included a bank account at Barnett Bank of South Florida, N.A. (Account No. 1595012259) in the name of John M. Brumley Racing Engines, Inc. (Corporation) with a balance of $176.29 and real property that appeared to be owned by the Corporation.

   
   

4. Respondent gave written notice of its October 13, 1989, jeopardy assessment against Petitioner to Barnett Bank. In the notice, Respondent requested that the bank not transfer nor otherwise dispose of the funds in Account No 1595012259 without Respondent's consent.

   
   

5. Subsequently, the bank notified Respondent that it had taken measures to comply with Respondent's request.

   
   

   CONCLUSIONS OF LAW

   
   

6. Petitioner is seeking an award of attorney's fees and costs in the instant case pursuant Section 57.111, Florida Statutes. 1/

   
   

7. An applicant for such an award must establish by the preponderance of the evidence that he, she or Fit is a "small business party," as defined in Section 57.111(3)(d), Florida Statutes. See Department of Professional Regulation v. Toledo Realty, Inc., 549 So.2d 715, 717 (Fla. 1st DCA 198).

   
   

8. Section 57.111(3)(d), Florida Statutes, defines the term "small business party" as follows:

   
   

   1.a. A sole proprietor of an unincorporated business, including a professional practice, whose principal office is in this state, who is domiciled in this state, and whose business or professional practice has, at the time the action is initiated by a state agency, not more than 25 full-time employees or a net worth of not more than $2 million, including both personal and business investments; or

   b. A partnership or corporation, including a professional practice, which has its principal office in this state and has at the time the action is initiated by a state agency not more than 25 full-time employees or a net worth of not more than $2 million.

   2. Either small business party as defined in subparagraph 1, without regard to the number of employees or its net worth, in any action under S. 72.011 or in any administrative proceeding under that section and s, 120.575(1)(b) to contest the legality of any assessment of tax imposed for the sale or use of services as provided in chapter 212, or interest thereon, or penalty therefor.

   
   

9. Petitioner has failed to meet his burden of demonstrating that he qualifies as a "small business party" under this definition.

   
   

10. Petitioner takes the position that, for purposes of determining his entitlement to attorney's fees and cost pursuant to Section 57.111, Florida Statutes, he should be treated as the alter ego of John M. Brumley Racing Engines Inc. because Respondent targeted property owned by the corporation in its efforts to collect the monies allegedly owed by Petitioner. Essentially, Petitioner is suggesting that the "corporate veil," which heretofore has shielded him from potential personal liability, should be pierced so that he may be considered a "small business party" eligible for an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes. The argument is unpersuasive.

    
    

11. Under certain circumstances, to prevent some injustice, the "corporate veil" may be pierced so as to subject the corporation's alter ego to liability. See Dania Jai-Alai Palace, Inc. v. Sykes, 450 So.2d 1114, 1121 Fla. 1984) ("the corporate veil may not be pierced absent a showing of improper conduct" on the part of the alter ego. Under no circumstances, however, may the "corporate veil" be pierced at the behest and for the benefit of the Purported alter ego, "[W]hen a man chooses to avail himself of the privilege of doing business as a corporation, even where he is its sole shareholder, he forfeits his right to claim that he is the alter ego of the corporation." See State v. Barreiro, 432 So.2d 138, 140 (Fla. 3d DCA 1983). Accordingly, Petitioner's contention that he is the alter ego of the Corporation and therefore a "small business party," within the meaning of Section 57.111, Florida Statutes, is without merit.

    
    

12. Because Petitioner has not shown by a preponderance of the evidence that he is a "small business party," as defined in Section 57.111(3)(d), Florida Statutes, he is not entitled to an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes. See Thompson v. Department of Health and Rehabilitative Services, 533 So.2d 840, 841 (Fla. 1st DCA 1988) (state employee who prevailed in administrative proceeding to determine his eligibility for continued employment not entitled to award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes, where evidence did not establish he was among "the limited class of persons falling within the [statutory] definition of "small business party").

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

ORDERED that Petitioner's application for an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes, is DENIED.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 25th day of January, 1991.

STUART M. LERNER

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 Administrative Hearings this 25th day of January, 1991.

ENDNOTE

1/ While Petitioner also referenced Section 120.69, Florida Statutes, in his application for attorney's fees and costs, he candidly admitted at hearing that his reliance upon that statutory provision, which authorizes the award of attorney's fees and costs in circuit court enforcement actions, was misplaced.

COPIES FURNISHED:

Stanley B. Erskine, Esquire

420 Lincoln Road Suite 251

Miami Beach, Florida 33139

Michael A. Levin, Esquire 2780 Douglas Road

Suite 300

Coral Gables, Florida 33133

Lee R. Rohe, Esquire Assistant Attorney General The Capitol, Tax Section

Tallahassee, Florida 32399-1050

J. Thomas Herndon Executive Director Department of Revenue

104 Carlton Building Tallahassee, Florida 32399-0100

William D. Moore, Esquire General Counsel Department of Revenue

203 Carlton Building Tallahassee, Florida 32399-0100

Docket for Case No: 90-005656F

Orders for Case No: 90-005656F