STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SUN WORLD TRAVEL, INC. )

)

Petitioner, )

)

vs. ) CASE NO. 94-0773F

)

STATE OF FLORIDA, )

DEPARTMENT OF MANAGEMENT SERVICES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to written stipulation, the parties stipulated to submit this case to the hearing officer on the certification file and transcript of the onsite taped interviews.

APPEARANCES

For Petitioner: Ronald G. Meyer

Meyer and Brooks, P. A. Post Office Box 1547 Tallahassee, Florida 32302

For Respondent: Cindy Horne

Office of General Counsel Department of Management Services Knight Building, Suite 312

2737 Centerview Drive

Tallahassee, Florida 32399-0950 ISSUES

The issue in this case is whether the Department of Management Services was substantially justified in denying Minority Business Enterprise Certification to Sun World Travel, Inc.

PRELIMINARY STATEMENT

Pursuant to written stipulation, the parties stipulated to submit this case to the hearing officer on the certification file and transcript of the onsite taped interviews. In addition, both parties submitted proposed findings on May 9, 1994 which were read and considered. The Appendix to this order states which of the proposed findings was adopted and which were rejected and why.

FINDINGS OF FACT

1. The Respondent, Department of Management Services (DMS), issued a letter denying Minority Business Enterprise Certification to Sun World Travel, Inc., (Sun) on February 18, 1993. (C. 2-3) Sun appealed the denial of certification and subsequently prevailed in DOAH Case No. 93-1465.

   
   

2. Sun requested a formal hearing on the denial, and a formal hearing was conducted, after which, the hearing officer found that Sun was a qualified minority business in a recommended order. The agency adopted that recommended order by final order dated January 10, 1994, and granted minority business enterprise status to Sun. Neither party appealed the final order.

   
   

3. Sun is a Florida corporation with fewer than 25 employees and a net worth less than $2 million. Sun seeks attorney's fees and costs totaling

   $14,052.50 for reasonable attorney's fees in prosecuting Sun's case. The parties have not objected to the reasonableness of these fees and costs.

   
   

4. All of the information available to DMS at the time of the issuance of the denial letter is contained in the certification file and the transcript of the onsite tape. These were read and considered. This information did not fully develop Joanne Gamache's involvement with Sun and its predecessors.

   
   

5. In his Recommended Order, the hearing officer cited and relied on facts which were not available to the Department of Management Services at the time of the issuance of the denial letter.

   
   

6. DMS did not have all of the information the hearing officer recited in Paragraph 3 of the Findings to the Recommended Order, and relied upon in Paragraph 29 of the Conclusion of Laws at the time of the issuance of the denial letter. The hearing officer found that Joanne Gamache worked in Transit Travel and her duties included delivering tickets, making reservations and doing the bookkeeping.

   
   

7. In Paragraph 4 of the Findings to the Recommended Order and in Paragraph 29 of the Conclusions of Law, the hearing officer stated that Joanne Gamache sold reservations for Sun World Travel before acquiring her share of ownership. However, she did not list making reservations as one of her duties on either her resume or during the onsite interview. (C. 106. R. 3) Before the formal hearing DMS was not aware of the fact that Joanne Gamache has ever made reservations.

   
   

8. In Paragraph 5 of the Findings to the Recommended Order and Paragraph

   27 of the Conclusions of Law, the hearing officer found that Joanne Gamache had maintained her employment as a teacher and contributed more to the family's joint savings, and concluded that Joanne Gamache had at least 51 percent of the financial risk in Sun World Travel. DMS did not know that when both Gamaches were teachers that Joanne Gamache earned more than Gilles Gamache and that she invested those greater earnings in either their joint savings account. The information DMS had at the time of denial indicated that the funds for opening Sun World Travel came from the sale of Transit Travel and jointly owned property. (O. 3-4) At the time of denial, DMS did not have knowledge of Joanne Gamache's greater financial contributions to the family's saving which were used to purchase the real property and later provide the start up costs of Sun.

   
   

9. At the time of the onsite inspection of Sun, a full-time manager had not been hired by the business. (O. 16) The only employee working full-time

   was Gilles Gamache. (O. 16) Cindy Cimbora was not hired until after the inspection, and Sun World Travel did not inform DMS of her hiring and the extent of her responsibilities. (C. 61-66) Cimbora's hiring and responsibilities were significant factors in Paragraphs 7, 12 and 16 of the Findings to the Recommended Order and in Conclusions of Law, Paragraphs 23, 24 and 25.

   
   

10. Joanne Gamache did not fully explain her role as the prime mover in the purchase of the new business site until after the denial of certification. (O. 6) The DMS did not have this information when the letter was issued. The hearing officer relied upon her role in buying this site for establishing the degree of her control over the business in Paragraph 3 of the Findings to the Recommended Order and in Conclusion of Law, Paragraph 24.

    
    

11. Sun World Travel did not inform DMS during the certification review that Joanne Gamache had not negotiated the COVIA contract due to illness in her family, or that Joanne Gamache had negotiated the System One contract. (O. 9-

    10) These facts were the basis for Paragraph 13 of the Findings to the Recommended Order.

    
    

12. The certification officer and administrator both testified at the hearing. Both had extensive experience, and their assessment, as evidenced in part by the interviews conducted, indicates a careful and reasonable consideration of the application.

    
    

13. The certification file shows three separate desk reviews and audits, together with the interview at the business site, mentioned above. The agency's representatives were qualified, and the diligence of the agency's review was not wanting.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

15. This case arises under the Florida Equal Access to Justice Act, Section 57.111, Florida Statutes. Section 57.111(4) (a), Florida Statutes, states:

    
    

    Unless otherwise provided by law, an award of attorneys'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 which would make the award unjust.

    
    

16. The party claiming attorney's fees has the initial burden to establish by the preponderance of evidence its entitlement to attorney's fees. Department of Professional v. Toledo Realty, Inc., 549 So. 2d 715 (Fla. 1st DCA 1986). The Petitioner must show that it is the prevailing party, that it is a small business party in an adjudicatory proceeding pursuant to Chapter 120, that the action was initiated by a state agency, and that the requested fees and costs, which can not exceed $15,000, are reasonable and necessary. Gentele v. Department of Professional Regulation, 513 So. 2d 672 (Fla. 1st DCA 1987). Once

    a party has met its initial burden, the burden shifts to the agency to establish that it was "substantially justified" in initiating the action against Petitioner at the time it was initiated or that special circumstances exist which would make the award unjust. Id.

    
    

17. The parties have stipulated that Sun World Travel is a small business party; that Sun World Travel prevailed in the administrative hearing regarding denial of MBE Certification; and that the fees requested are reasonable. The remaining issue is whether DMS was substantially justified in issuing the denial letter.

    
    

18. A proceeding is substantially justified if it had a reasonable basis in law and fact at the time it was initiated by the agency. Id. The government must have a solid, if not correct, basis in fact and law for the position that it took in the action. Department of Health and Rehabilitative Services v. S. G., 613 So. 2d 1380, 1386 (Fla. 1st DCA 1993). The factors considered in determining whether or not an agency's action is substantially justified are: the duty and authority of the state agency involved, credentials and experience of the agency persons who made the initial decision to take action, evidence in the possession of the agency at the time of the initial decision, and the process used by the agency in making the initial decision. Business Telephone Systems v. Department of General Services, DOAH CASE NO. 89-2175F (Oct. 27, 1989).

    
    

19. Section 287.0943(1), Florida Statutes, authorizes the Department of Management Services to certify minority businesses and Section 287.0943(5), Florida Statutes, authorizes DMS to promulgate rules for certification. The certification officer and administrator both testified at the hearing to extensive experience, and their assessment, as evidenced in part by the interviews conducted, indicates a careful and reasonable consideration of the application. The certification file shows three separate desk reviews and audits, together with the interview at the business site, mentioned above. The agency was authorized to act, and the qualifications and diligence of the agency's review were not wanting. The only issue remaining is whether the initial decision reached by the agency was reasonable based upon the facts and the application of the statutes and rules to those facts.

    
    

20. Pursuant to Section 287.0943(1), Florida Statutes, DMS promulgated Rule 60A-2, Florida Administrative Code. Rule 60A-2.005(2)(e), Florida Administrative Code, states that minority owners must demonstrate that they share in all the risks assumed by the business firm. The minority owners' sharing in business risks shall be commensurate with their percentage of ownership including start-up costs. Start-up contributions must be real and substantial and may be space, cash, equipment, real estate, inventory or services estimated at fair market value. Rule 2.005(3) states that an applicant must establish that the minority owners possess the authority to control and exercise dominant control over the management and daily operations of the business.

    
    

21. Unlike the cases cited above involving agency against a regulated individual or business, this case involves the application for a privilege granted by the state, and is analogous to a licensing proceeding. In a license application case, the applicant has the burden to perfect its application and to demonstrate its qualifications for minority business status.

    
    

22. The Department's agents made their initial determination based upon the materials submitted by Sun, its inspection of Sun, and the interview of the

    principals. DMS's initial denial was based upon its tentative findings that the capital investment for Sun World Travel was primarily from Gilles Gamache, and Mr. and Mrs. Gamache did not shared the financial risks in accordance with their percentage of ownership, 51 percent v. 49 percent. The applicant had not indicated that Joanne Gamache had contributed more to the couple's joint savings with which they bought both Transit Travel, the predecessor business and the jointly held property, the proceeds of the sale of which were used to start the instant business. This was developed at hearing.

    
    

23. DMS stated that Sun World Travel appeared to be a family run business. (C. 138-142) In part, this was based upon the Department's determination that Ms. Gamache did not exercise sufficient control over the operations of the business. The rules regarding control of the business by a minority owner, which were relied upon by DMS in its denial of certification, are Rules 2.001(14), 2.005(3), 2.005(3)(c), 2.005(3)(d), 2.005(3)(d)1, 2.005(3)(d)2, and 2.005(3)(d)5., Florida Administrative Code.

    
    

24. During the onsite interview, Joyce Stillwill and Gilles Gamache both indicated that Gilles Gamache provided daily supervision in the office. (O. 30,

    42) At the time of denial, Cindy Cimbora had not yet been hired by the business, and Gilles Gamache was the only full time employee of the business. (C. 61-66, O. 16) The certification officer noted that Joanne Gamache was not present at the business on a full-time basis, and that Gilles Gamache was working full-time and was there to provide supervision.

    
    

25. DMS had sufficient documentation in the file and from the onsite interview to deny certification to the applicant. Perfection of an application after denial does not make the denial of certification unjustified. Business Telephone Systems, supra. A determination based upon the data submitted and provided by the applicant which is supported by the laws and facts has a reasonable basis. The different result reached by the hearing officer after a full evidentiary hearing in which additional facts were adduced does not mean that the agency's initial determination was unreasonable.

    
    

26. The DMS' certification officer conducted an extensive and careful review of the file before recommending denial; his file was subsequently reviewed by supervisory and legal staff; and the decision to deny was based upon the existing facts and applicable law. The agency's action was reasonable and justifiable. The applicant provided additional information regarding Joanne Gamache's role in starting and managing the business at the formal hearing upon which the hearing officer determined that it was a qualified minority business enterprise. However, the DMS' actions, when taken, were consistent with the facts as diligently developed, and were substantially justified. Therefore, Sun World Travel's application for attorney's fees must be denied.

THEREFORE, on the basis of the foregoing findings of fact and conclusions of law, it is

ORDERED:

That the application of Sun World Travel, Inc. for attorney's fees is DENIED.

DONE and ENTERED this 6th day of July, 1994, in Tallahassee, Florida.

STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of July, 1994.

APPENDIX TO ORDER 94-0773F

Both the parties submitted proposed findings of fact which were read and considered. The following states which of those findings were adopted, and which were rejected and why:

PETITIONER'S FINDINGS FINAL ORDER

Paragraph 1,2 Paragraph 2

Paragraph 3 Preliminary Stmt

Paragraph 4,5 Paragraph 3

Paragraph 6 Subsumed in 3

Paragraph 7 Rejected as Prelim. Stmt

Paragraph 8,9 Rejected as Argument

Paragraph 10-12 Rejected because the interview revealed Mr. Gamache was only full-time employee.

Paragraph 13 True, but supports the HO's conclusion that this was after the initial denial.

Paragraph 14,15 Contrary to better evidence.

Paragraph 16,17,18 Burden was not upon the

agency to explore, but upon the applicant to show.

Paragraph 19 The issue was not who was writing checks, but who was in control.

Paragraph 20,21 Although Ms. Gamache mentioned

her activities in redecorating the office, she did not provide the details regarding her involvement in the purchase which she did at the hearing.

RESPONDENT'S FINDINGS FINAL ORDER

Paragraph 1 Paragraph 1,5

Paragraph 2 Paragraph 6

Paragraph 3 Paragraph 7

Paragraph 4 Paragraph 8

Paragraph 5 Paragraph 9

Paragraph 6 Paragraph 10

Paragraph 7 Paragraph 11

COPIES FURNISHED:

Ronald G. Meyer, Esquire Meyer and Brooks, P. A. Post Office Box 1547 Tallahassee, FL 32302

Cindy Horne, Esquire

Department of Management Services

312 Knight Building 2737 Centerview Drive

Tallahassee, FL 32399-0950

William H. Linder, Secretary Department of Management Services

307 Knight Building 2737 Centerview Drive

Tallahassee, FL 32399-0950

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.

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DISTRICT COURT OPINION

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IN THE DISTRICT COURT OF APPEAL FIRST DISTRICT, STATE OF FLORIDA

SUN WORLD TRAVEL, INC., NOT FINAL UNTIL TIME EXPIRES TO

FILE MOTION FOR REHEARING AND

Appellant, DISPOSITION THEREOF IF FILED.

vs. CASE NO. 94-2526

DOAH CASE NO. 94-773F

STATE OF FLORIDA, DEPARTMENT OF MANAGEMENT SERVICES,

Appellee.

/ Opinion filed April 5, 1995.

An appeal from an order of the Division of Administrative Hearings. Stephen F. Dean, Hearing Officer.

Robert J. Sniffen of Meyer and Brooks, P.A., Tallahassee, for Appellant.

Cindy J. Horne, Staff Attorney, Department of Management Services, Tallahassee, for Appellee.

PER CURIAM.

AFFIRMED.

ZEHMER, C.J., BARFIELD, J., and SHIVERS, SENIOR JUDGE, CONCUR.

Docket for Case No: 94-000773F

Orders for Case No: 94-000773F