STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DOROTHEA L. PRISAMENT and )

WARRICKS REAL ESTATE, INC., )

)

Petitioners, )

)

vs. ) CASE NO. 90-7684F

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

)

Respondent. )

)

FINAL ORDER

On January 18, 1991, by agreement of the parties, a formal administrative hearing was held in this case by conference telephone call before J. Lawrence Johnston, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioners: Salvatore A. Carpino, Esquire

One North Dale Mabry, Suite 1010 Tampa, Florida 33609

For Respondent: Janine B. Myrick, Esquire

Senior Attorney

Department of Professional Regulation Division of Real Estate

Suite 308, North Tower

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

STATEMENT OF THE ISSUES

The general issue for determination in this proceeding is whether, under Section 57.011, Fla. Stat. (1989), the Florida Equal Access to Justice Act, the Department of Professional Regulation, Division of Real Estate (DPR), should pay Dorothea L. Prisament and Warricks Real Estate, Inc., attorney fees and costs incurred in their defense to the Administrative Complaint DPR filed in DOAH Case No. 89-6293. As reflected in the Preliminary Statement, the parties stipulated that Prisament and Warricks operate as a "small business party" 1/ and that the amount of the fees and costs they seek is reasonable. It already has been ruled, by Order Denying [DPR's] Motion to Dismiss, that Prisament and Warricks "prevailed" in the underlying administrative proceeding. The only remaining issues under the statute are whether the Respondent was "substantially justified" in filing the Administrative Complaint in Case No. 89-6293 and, if not, whether "special circumstances exist that would make an award unjust."

PRELIMINARY STATEMENT

On or about October 18, 1989, the Respondent, the Department of Professional Regulation, Division of Real Estate, filed a six-count Administrative Complaint seeking to discipline Dorothea L. Prisament and Warricks Real Estate, Inc. Four counts involved an allegation that Prisament and Warricks had a shortage in their escrow account; two counts alleged improper signage in that Prisament's name did not appear on the sign. After a formal administrative proceeding, the facts were clear, and the parties filed a Joint Proposed Recommended Order, which formed the basis of the Recommended Order in the case. Eventually, a Final Order was entered dismissing the four counts involving the allegation of a shortage in the escrow account and sustaining the two counts involving the improper sign. On or about December 6, 1990, Prisament and Warricks filed a Petition for Attorney's Fees and Costs.

Before the final hearing was scheduled, the Respondent filed a Motion to Dismiss on the ground that Prisament and Warricks were not the "prevailing" parties under the Final Order entered in the underlying administrative proceeding. A hearing was held on the Motion to Dismiss by conference telephone call on January 18, 1991. When it was announced at the hearing that the Motion to Dismiss would be denied, the parties agreed to proceed with the final hearing. Since no testimony was being presented, arrangements were made for the admission of evidence, and the parties argued their cases. The parties stipulated that Prisament and Warricks operate as a "small business party" and that the amount of the fees and costs they seeks is reasonable. The only remaining issues under the statute were whether DPR was "substantially justified" in filing the Administrative Complaint in Case No. 89-6293 and, if not, whether "special circumstances exist that would make an award unjust."

At the conclusion of the hearing, the parties were given ten days after the filing of their exhibits to file proposed final orders. Instead of filing its exhibits, on January 28, 1991, the DPR filed a Motion to Supplement Argument and for Reconsideration of Ruling. On February 7, 1991, an Order Denying Motion to Dismiss was filed. It reduced to writing the ruling on the Motion to Dismiss and disposed of the pending motion for reconsideration. It also required that DPR's exhibits (and the exhibit identified by Prisament and Warricks, if desired) be filed forthwith and that the parties' proposed final orders be filed within ten days after the filing of the exhibits. When no exbibits were filed, an Order Closing Evidentiary Record was filed on March 1, 1991. It required that DPR's exhibits (and the exhibit identified by Prisament and Warricks, if desired) be filed within ten days, at the expiration of which the evidentiary record would be closed, and that the parties' proposed final orders be filed within 20 days. Eventually, Respondent's Exhibits 1-5 and the parties' proposed final orders were filed.

The facts in this case, other than the ultimate mixed questions of law and fact, are not in serious dispute, and all of the proposed findings of fact contained in the parties' proposed final orders are accepted and incorporated in the Final Order to the extent not subordinate or unnecessary.

FINDINGS OF FACT

1. On or about August 16, 1989, DPR's investigator Marjorie G. May conducted an office inspection and audit of the escrow account of Dorothea L. Prisament and Warricks Real Estate, Inc. (Prisament is a licensed real estate broker who serves as qualifying broker for Warricks, a corporate real estate broker owned by Prisament.) May's audit revealed to her that the escrow account

   had a $1,380.86 shortage. This determination was in error. In adding the entries she had copied down by hand from the Warricks records to arrive at the total amount required in the escrow account, May inadvertently entered an incorrect $7,000 figure into her calculator instead of the correct figure of

   $1,000. As a result, the total incorrectly indicated a $1,380.86 shortage instead of the actual overage that was in the account.

   
   

2. May also noted that the office entrance sign did not have Prisament's name on it as broker; the sign did have Warricks's correct name, identified as a licensed real estate broker, on it.

   
   

3. On October 17, 1989, a probable cause panel of the Florida Real Estate Commission deliberated on information presented to it as the report of May's investigation. The information included a draft proposed Administrative Complaint that alleged a $1,380.86 shortage in the escrow account as the basis for four counts (two each against Prisament and Warricks); two counts (one each against Prisament and Warricks) alleged the improper signage. Attached to the draft proposed Administrative Complaint was a copy of May's handwritten notes correctly listing the entries from Warricks's records. In addition, the information presented to the probable cause panel included a copy of the calculator tape showing how May entered these amounts into her calculator-- including the erroneous entry--to arrive at a total amount required in the account (the incorrect total.)

4. The draft proposed Administrative Complaint also alleged: When the [DPR's] investigator suggested that

   Respondent Prisament go over the books again to make sure nothing was overlooked prior to making up the shortage, Respondent Prisament replied "I dont't have time." The Respondents replaced the shortage on August 24, 1989.

   
   

   The copy of the Investigative Report attached to the draft proposed Administrative Complaint supported these allegations. It also disclosed that Prisament agreed on the day of the inspection and audit, August 16, 1989, to make up the shortage and that she signed an Office Inspection and Escrow/Trust Account Audit Form by which she agreed "to take corrective action within 10 days." The Investigative Report also recites that Prisament told May on the day of the inspection and audit: "It is believed the deficit came from errors as opposed to any 'intentional' withdrawal." Additional information presented to the probable cause panel included a copy of a "speedy reply message" from Prisament to May, dated August 24, 1989, that said, among other things: "Due to several deals not closing, I was short of the amount you say I owe but now have obtained it and have deposited in into my Escrow Account. . . . Thanks for your help correcting us." Attached was a copy of the check and the deposit slip.

   
   

5. May's Investigative Report was signed by May and by her supervisor, John W. Shrive, Inv. Mgr. The information was presented to the probable cause panel by the DPR's attorney as establishing an escrow shortage and with the comment: "We believe this supports a charge of culpable negligence and failure to maintain sufficient funds in a trust account."

   
   

6. The probable cause panel found probable cause, reciting that the finding came "after a complete review of the file." One member commented: "I guess he'll have time to come to a hearing."

7. On or about October 18, 1989, DPR filed the six-count Administrative Complaint. At the formal administrative proceeding in the case, the error in calculating the amount required in the escrow account was disclosed, and the true facts were made clear. The parties filed a Joint Proposed Recommended Order, which formed the basis of the Recommended Order in the case. Eventually, a Final Order was entered adopting the Recommended Order. The four counts involving the allegation of a shortage in the escrow account were dismissed. The two counts involving the improper sign (which were characterized as "technical violations" that were "immediately corrected") were sustained, and Prisament and Warricks were reprimanded.

   
   

8. On or about December 6, 1990, Prisament and Warricks filed a Petition for Attorney's Fees and Costs.

   
   

   CONCLUSIONS OF LAW

   
   

9. This proceeding was commenced by the filing of a Petition for Attorney's Fees and Costs by Dorothea L. Prisament and Warricks Real Estate, Inc., under the Florida Equal Access to Justice Act, Section 57.111, Fla. Stat. (1989). It has been stipulated in this case both that Prisament and Warricks operate as a "small business party" and that the amount of the fees and costs they seek is reasonable. In pertinent part, Section 57.111 provides for the payment of attorney fees and costs incurred in a formal administrative proceeding initiated by a state agency to a "prevailing small business party," as defined in the statute, "unless the actions of the state agency were substantially justified or special circumstances exist which would make the award unjust." Section 57.111(4)(a).

   
   

10. Prisament and Warricks have the burden to prove that they operate as a "small business party," that they prevailed in the underlying administrative proceeding, and that the underlying proceeding was initiated by a state agency. The burden then shifts to the Respondent to prove that its Administrative Complaint against Prisament and Warricks was "substantially justified" or that "special circumstances exist which would make an award unjust." See Gentele v. Dept. of Prof. Reg., 513 So. 2d 672 (Fla. 1st DCA 1987); Final Order, Dept. of Prof. Reg. v. Webster, 11 F.A.L.R. 3016 (DOAH 1988).

    
    

11. In this case, DPR conceded that Prisament and Warricks operate as a "small business party." There is no dispute that the Respondent is the state agency that initiated the underlying administrative proceeding.

    
    

12. The Order Denying [DPR's] Motion to Dismiss disposed of the question whether Prisament and Warricks "prevailed" in the underlying proceeding. In the Final Order, Gentele v. Dept. of Prof. Reg., Bd. of Optometry, 9 F.A.L.R. 310, 321-326 (DOAH 1986), this precise issue was thoroughly examined. It was pointed out that federal law construing the Federal Equal Access to Justice Act, 5

    U.S.C. 504, on which the Florida act is patterned, holds that it is not required for a party to prevail on all counts in order to be viewed as the "prevailing small business party" under the federal statute. Since the legislative history reveals that the Federal Act served as the protoytpe for Section 57.111, the federal case law is persuasive authority. See Gentele v. Dept. of Prof. Reg.,

    513 So. 2d 672, 673 (Fla. 1st DCA 1987); Pasco County School Boiard v. Florida Public Employee Relations Comm'n, 353 So. 2d 108, 116 (Fla. 1st DCA 1977). As the Gentele Final Order points out, under the construction urged by DPR, "an agency could bring multiple unfounded charges (lacking a reasonable basis in law and fact) yet avoid FEAJA by prevailing on one technical, or trivial charge." Final Order, Gentele, supra, at 325.

13. Conversely, the Gentele Final Order also points out that, to "prevail," the small business party must succeed on issues that are significant and achieve some of the benefits sought through litigation. A small business party may not be the "prevailing party" if it loses the significant issues and wins only on minor or technical points, achieving no real benefit from having litigated.

    
    

14. Under the Final Order in the underlying proceeding, Prisament and Warricks prevailed on the four most serious of the six counts alleged against them. It was not required for them to prevail on all counts in order to be viewed as the "prevailing small business party" under Section 57.111(3)(c).

    
    

15. "A proceeding is substantially justified if it had a reasonable basis in law and in fact at the time it was initiated by the state agency." Section 57.111(3)(e). Under the facts of this case, it is concluded that the Administrative Complaint DPR filed against Prisament and Warricks had "a reasonable basis in law and in fact at the time it was initiated by" DPR, and therefore was "substantially justified," under Section 57.111. It is true that Prisament and Warricks did not in fact have a shortage in their escrow account, as alleged in the Administrative Complaint against them. The steps leading to the filing of the charge began with a calculating error. The true facts could have been ascertained from a careful review of the information presented to the probable cause panel that found probable cause to file the Administrative Complaint. 2/ It also is true that neither the primary DPR investigator, her immediate supervisor, the DPR attorney presenting the information to the probable cause panel, nor the members of the probable cause panel itself conducted a careful review of the information. But it also is true that neither Prisament nor Warricks conducted a careful review designed to disclose the true facts. To the contrary, Prisament admitted to the shortage several times. Unfortunate as events turned out for all involved, given Prisament's repeated admissions to the charge of an escrow shortage, it is concluded that the probable cause panel had a "reasonable basis" to file the Administrative Complaint.

    
    

16. If there was no "reasonable basis in law and fact" for the Administrative Complaint DPR filed against Prisament and Warricks, it would have to be concluded that, under Section 57.111(4)(a), the facts of this case constitute "special circumstances . . . that make an award unjust." Prisament's repeated admissions to the charge of an escrow shortage had the effect of lulling DPR into thinking that there was no particular need or reason to carefully check the calculations.

DISPOSITION

Based on the foregoing Findings of Fact and Conclusions of Law, the Petition for Attorney's Fees and Costs is dismissed.

DONE AND ENTERED this 20th day of March, 1991, in Tallahassee, Florida.

J. LAWRENCE JOHNSTON 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 20th day of March, 1991.

ENDNOTES

1/ Prisament is a licensed real estate broker who serves as the qualifying broker for Warricks, a corporate real estate broker owned by Prisament.

2/ Prisament and Warricks argue in their Proposed Order: "In this case, however, had the DPR reviewed the investigative report when making its recommendation to the Probable Cause Panel, or had the Probable Cause Panel members themselves reviewed the investigative report, it would have easily been determined that the deposits required did not reveal a shortage in the account." (Emphasis added.) But it should be noted that, on the occasion of moving for a continuance of the final hearing in the underlying administrative proceeding, Case No. 89-6293, Prisament and Warricks represented, as one ground for a continuance: "In addition, undersigned counsel will need to secure the services of an accountant since the allegations against the respondent involve accounting practices."

COPIES FURNISHED:

Salvatore A. Carpino, Esquire Suite 1010

One North Dale Mabry Tampa, Florida 33609

Janine B. Myrick, Esquire Senior Attorney

Department of Professional Regulation, Division of Real Estate

Suite 308 - North Tower

400 West Robinson Street

P.O. Box 1900

Orlando, Florida 32802

George Stuart Secretary

Department of Professional Regulation

Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Jack McRay, Esquire General Counsel

Department of Professional Regulation

Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 90-007684F

Orders for Case No: 90-007684F