G. FURNITURE, )
vs. ) CASE NO. 91-6033F
Respondent. )
Pursuant to Notice, this cause was scheduled for final hearing on July 21, 1992, in Tallahassee, Florida. By subsequent agreement of the parties, the final hearing was cancelled and deadlines were established by which the parties would file their exhibits and their proposed final orders.
For Petitioner: J. Philip Landsman, Esquire
For Respondent: Charles G. Gardner, Esquire
The issue to be determined herein is whether Petitioner is entitled to reimbursement of attorney's fees and costs incurred in maintaining the underlying action.
On September 23, 1991, Petitioner R. G. Furniture filed its Petition for Attorney's Fees and Costs, pursuant to the Florida Equal Access to Justice Act, Section 57.111, Florida Statutes. In compliance with Rule 22I-6.035, Florida Administrative Code, Respondent Department of Transportation filed its Response to the Petition for Attorney's Fees and Costs setting forth those allegations in the Petition disputed by Respondent. The parties subsequently resolved several of the disputed issues involved in this proceeding and agreed that an evidentiary hearing would be unnecessary for resolution of the remaining disputes. On August 10, 1992, Respondent filed the Agency's Notice of Filing listing and attaching those portions of the record in the underlying proceeding to be considered as part of the record in this cause. On August 28, 1992, Petitioner R. G. Furniture filed its Notice of Filing by listing and attaching four depositions to be considered herein.
Both parties have submitted proposed findings of fact in the form of proposed final orders. A specific ruling on each proposed finding of fact can be found in the Appendix to this Final Order.
At all times material hereto, Petitioner has been in the business of manufacturing and selling extruded aluminum patio furniture. Petitioner is owned by Robert L. Gass, Jr., who was also the owner of the real estate which Petitioner occupied as a tenant. It was necessary for the Department to acquire the real property owned by Gass and to relocate Petitioner as a result of a federally-funded highway construction project, I-595 in Broward County, Florida. Accordingly, Gass and Petitioner became entitled to benefits pursuant to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970.
Pursuant to a contract with the Department, employees of Kaiser Engineers were responsible for both the acquisition of real property and the relocation of personal property of businesses and persons displaced by the I-595 project. Some of Kaiser's employees were involved with acquisition (acquiring ownership of real property) and different employees were responsible for relocation assistance (relocating personal property).
An appraisal of the land and improvements at the manufacturing site was performed on behalf of the Department. The Department's real estate appraiser called in a machinery and equipment appraiser to appraise certain "immovable business fixtures and special purpose process systems."
The machinery and equipment appraiser prepared an appraisal containing
20 categories/items, consisting primarily of the components of Petitioner's painting machinery and assembly line. A three-page listing of those 20 categories/items was compiled and became entitled "Inventory."
Gass and the Department entered into negotiations for the acquisition of his real property. Gass was concerned about the "down time" Petitioner would incur if Petitioner were required to disassemble, move, reassemble, and install its assembly line and painting system process. It was important to Gass that Petitioner have a replacement assembly line and painting system process operational before moving to the relocation site. Gass was aware of the relocation benefit under which a displaced business might be eligible to purchase new equipment and machinery and have it fully installed and operational before the business is physically relocated.
On August 22, 1988, Gass entered into a Right-of-Way Purchase Agreement with the Department under which the Department purchased from Gass the real property which was Petitioner's manufacturing site. Exhibit "A" to the Right- of-Way Purchase Agreement was the Inventory of the 20 categories/items prepared by the machinery and equipment appraiser.
Petitioner subsequently made application to the Department for relocation benefits to purchase replacement items for the categories/items contained in the Inventory. The Department denied that claim for relocation benefits, and Petitioner timely requested a formal hearing regarding the Department's determination.
The matter was thereafter transferred to the Division of Administrative Hearings where it was assigned DOAH Case No. 90-8112. In that dispute, the Department took the position that the 20 items in the Inventory were immovable trade fixtures and, therefore, items of real property, that those items had been purchased by the Department as part of its acquisition of the real property, and that Petitioner was entitled to no relocation benefits relative to those items. Petitioner, on the other hand, contended that the Inventory items were personal property, that they were not converted into real property because the Right-of- Way Purchase Agreement referred to them, and that Petitioner, through Gass, had specifically reserved its right to receive relocation benefits regarding those items due to negotiated language which Gass had required and which was included in the Addendum to the Right-of-Way Purchase Agreement.
The threshold issue to be adjudicated in the underlying proceeding was whether the items of property listed in the Inventory were items of personal property, as Petitioner contended, or trade fixtures and items of real property, as the Department contended. Expert real property appraisers and expert machinery and equipment appraisers testified in the evidentiary hearing. The one area of agreement among them was that whether a piece of equipment is considered real property or personal property is a "gray area."
On September 12, 1991, a Recommended Order was entered in DOAH Case No. 90-8112. That Recommended Order determined that all of the items listed in the Inventory were items of personal property, that the Right-of-Way Purchase Agreement was ambiguous, and that Petitioner was entitled to relocation benefits for substitute personal property in the amount of $275,900. On December 10, 1991, the Department entered its Final Order essentially adopting the Recommended Order. The Final Order specifically held that all of the items listed in the Inventory were items of personal property and that Petitioner was entitled to relocation payments for substitute personal property in an amount not to exceed $275,900 upon submission of the appropriate documentation.
At the time that the Department denied Petitioner's claim for relocation benefits regarding those items listed in the Inventory and advised Petitioner of its right to request an administrative hearing regarding that determination, the Department believed, in good faith, that it had purchased the
20 categories/items listed in the Inventory as part of its acquisition of the real property at Petitioner's manufacturing site. At that same time, the Department believed, in good faith, that the 20 categories/items listed in the Inventory were not items of personal property and that Petitioner was not, therefore, entitled to relocation benefits for that personal property.
At the time, the Department's decision to deny Petitioner's claim for relocation benefits was substantially justified. At the time, the Department's determination had a reasonable basis in law and in fact.
When the Department and Gass entered into the Right-of-Way Purchase Agreement and Addendum and attached the Inventory as Exhibit "A" thereto, the Department believed that it had paid Petitioner, through Gass, those monies to which Petitioner was entitled related to the 20 categories/items listed in the Inventory. The Department did not foresee that Petitioner would be entitled to additional payments regarding those same items because language added to the Department's standard form contract increased the ambiguity in that document so that there was never a "meeting of the minds" as to whether the 20 categories/items listed in the Inventory were agreed to be real property acquired by the Department in the Right-of-Way Purchase Agreement or were agreed to be personal property and the subject of relocation benefits. Accordingly,
circumstances exist which would make the award of attorney's fees and costs in this proceeding unjust.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties hereto and the subject matter hereof. Sections 57.111 and 120.57(1), Florida Statutes.
Section 57.111, Florida Statutes, is entitled the Florida Equal Access to Justice Act and authorizes an award of attorney's fees and costs to a prevailing small business party in an administrative proceeding initiated by a state agency "unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust." Section 57.111(4)(a), Florida Statutes. Section 57.111(4)(d)2., Florida Statutes, provides that no award of attorney's fees and costs shall exceed $15,000. On July 14, 1992, Petitioner and the Department filed a Stipulation, agreeing that Petitioner is a prevailing small business party and that the statutory maximum of $15,000 is a reasonable fee to be awarded as a result of this proceeding.
The Stipulation further provides that the only two issues remaining for resolution in this cause are (1) whether the actions of the Department were substantially justified at the time of denial of benefits, and (2) whether circumstances exist such as to make an award of fees unjust.
Whether an item of personal property has been affixed to real property in such a manner that it has become a fixture, i.e., part of the real property itself, depends upon a number of factors, such as the intent of the owner, the manner in which the personal property has been attached to the real property, and the ease with which the item can be moved. Experts in the field differ as to whether a particular item is still personal property or has become part of the real property. In the case at bar, the Department obtained expert opinions, concluded that the 20 items in dispute were trade fixtures which had become part of the real property, negotiated their purchase as part of the Department's acquisition of real property, and believed that it had no additional lability to Petitioner for the payment of relocation benefits for the same items. The Department's denial of Petitioner's subsequent claim for relocation benefits was substantially justified both in fact and in law.
When the Department negotiated with Gass its acquisition of the real property, it did not realize that the modifications to its standard form purchase agreement increased the ambiguity of that agreement, which ambiguity required the construing of that agreement against the Department. The Department did not know that it was interpreting the executed agreement in a different manner than Petitioner was interpreting that agreement. Accordingly, circumstances exist which would make an award of attorney's fees and costs unjust under the facts of this case.
