vs. ) CASE NO. 94-0790F
Respondent. )
Upon due notice, this cause came on for formal hearing on July 25, 1994, in Tallahassee, Florida, before Ella Jane P. Davis, a duly assigned hearing officer of the Division of Administrative Hearings.
For Petitioner: Frank M. Gafford, Esquire
For Respondent: Cindy S. Price, Esquire
$2,775.00 pursuant to Section 57.111, F.S.
This cause arose upon an application for award of attorney's fees pursuant to Section 57.111 F.S. Because the procedural history is relevant to disposition of the jurisdictional issue, it appears within the findings of fact.
At formal hearing on July 25, 1994, Petitioner stood upon all undisputed facts as related in the Amended Petition for Award of Attorneys Fees filed May 11, 1994. Respondent Florida Department of Transportation (FDOT) defended exclusively upon the grounds that its original denial of recertification in the
underlying case was "substantially justified," as provided by statute. FDOT had
14 exhibits admitted in evidence and presented the oral testimony of Russell Waldon, Toni Bernstein, Howard Jemison, and Kenneth Cannon.
A transcript was filed on August 15, 1994. A posthearing order explaining how to prepare proposed final orders was entered and mailed on August 16, 1994. Respondent DOT filed a proposed final order on September 9, 1994. Petitioner has filed none. Respondent's proposed findings of fact are ruled upon in the appendix to this recommended order, pursuant to Section 120.59(2) F.S.
The underlying case for which attorneys fees in the undisputed amount of $2,775.00 are sought involved a 1992 application by Union Trucking, Inc. for recertification by the Florida Department of Transportation (FDOT) as a disadvantaged business enterprise (DBE). Union Trucking, Inc. had originally been certified by FDOT in 1988, and upon successive applications for certification, had been recertified by FDOT in 1989, 1990 and 1991.
Recertification was applied for on July 20, 1992 and denied on December 14, 1992. A request for formal hearing followed on January 15, 1993 and the case proceeded before the Division of Administrative Hearings (DOAH) until FDOT recertified Union Trucking, Inc. on October 15, 1993. On November 17, 1993, DOAH hearing officer P. Michael Ruff entered an order relinquishing jurisdiction, which resulted in FDOT's December 17, 1993 final order. FDOT's final order was entered on the grounds that certification had been granted, did not alter the recertification terms, and dismissed the request for formal hearing.
On February 14, 1994, less than sixty days after entry of the FDOT final order, Petitioner filed its original "Application for Award of Attorneys Fees Pursuant to F.S. 57.111," hereafter "petition."
On March 2, 1994, FDOT filed a response, which, although no motion to dismiss was filed, addressed assorted insufficiencies of the petition. FDOT's response did not raise any timeliness bar. An order of dismissal with leave to amend within fifteen days was entered by the undersigned hearing officer on April 21, 1994. The amended petition was filed May 11, 1994, and FDOT filed its response on May 26, 1994, still not asserting any timeliness bar.
At formal hearing, the parties stipulated that the only issue for consideration was whether or not FDOT had been substantially justified in denying the 1992 recertification. Otherwise, it was undisputed that Petitioner is a small business party; that FDOT was not merely a nominal party; that the employment, amount of fee, and hours worked by Petitioner's counsel were as stated in the pleadings, and that there were no "unusual circumstances" as contemplated within the applicable statute and rule. The undersigned hearing officer suggested that the parties include in their post-hearing proposals arguments directed to timeliness, vel non, of the attorney's fee and costs petition, and thus, whether or not DOAH has jurisdiction of this case.
With regard to the "substantial justification" issue, it is necessary to review the DBE process since 1991. Union Trucking, Inc.'s 1991 application for recertification was received by FDOT on April 30, 1991. Documents submitted to FDOT by Union Trucking, Inc. in conjunction with the 1991 application revealed that Petitioner corporation had undergone an ownership change on April 1, 1991, approximately 29 days prior to submittal of the 1991 application, which
ownership change had transferred 49 percent of Union Trucking, Inc.'s corporate stock from Denise Willis to Robin P. Wilson; that the new owner, Robin P. Wilson, did not list any employment on her resume other than at Pritchett Trucking, Inc.; that Union Trucking, Inc. had a business relationship with Pritchett Trucking, Inc.; and that the new 49 percent owner of Union Trucking, Inc., Robin P. Wilson, is the daughter of Marvin Pritchett, owner of Pritchett Trucking, Inc.
Marvin Pritchett is a white American male. Robin Pritchett Wilson is a white American female. Denise Willis, who previously owned the 49 percent of Union Trucking, Inc. stock which was transferred to Robin Wilson is also a white American female, and the stepdaughter of Marvin Pritchett. From Union Trucking, Inc.'s inception and at all times material, 51 percent of Union Trucking, Inc.'s stock has been owned by Warren Lee, a black American male. At all times material, Union Trucking, Inc. has been 100 percent owned by disadvantaged classes (female and black). At all times material, FDOT did not break down its disadvantaged certifications as to "black" versus "female" for purposes of categorizing DBE status, but only looked to whether or not at least 51 percent of the stock was owned by a member(s) of a disadvantaged class. FDOT has no rule specifically requiring that all owners work in the business, only that day to day control be in the hands of the disadvantaged class.
FDOT conducted an on-site visit to Union Trucking, Inc. on July 22, 1991, at which time FDOT requested additional information as to Robin Wilson's employment with Union Trucking, Inc. and was notified that Robin Wilson spent approximately one to two hours per day working for Union Trucking, Inc.
FDOT also inquired about Union Trucking Inc.'s business relationship with Pritchett Trucking, Inc. and received the explanation that the relationship was "like any lease owner with the company they lease with." DBE personnel at FDOT did not understand what this response meant, but they did not inquire further in 1991. Instead, the FDOT DBE certification committee voted to recertify Union Trucking, Inc. with a special monitor, because there were undefined "concerns" and unidentified "feelings" about the eligibility of Union Trucking, Inc. At formal hearing, FDOT personnel were very clear that recertification in 1991 with a "special monitor" meant that when Union Trucking, Inc. came up for recertification in 1992, an on-site review must be conducted.
Prior to receiving Union Trucking, Inc.'s July 20, 1992 application for recertification, FDOT was notified by the Department of General Services (DGS) that DGS also had "concerns" about Union Trucking, Inc.
On September 10, 1992, DGS notified FDOT that DGS had denied Union Trucking, Inc.'s application to DGS for Minority Business Enterprise (MBE) certification, that the DGS denial had been upheld at a DOAH hearing, and that FDOT would be provided a copy of the DOAH hearing officer's recommended order. FDOT subsequently received a copy of that recommended order which had been entered September 9, 1992.
FDOT's Minority Programs Office Manager testified that, in his opinion, the recommended order in the DGS case (Exhibit DOT 9) "verified" the FDOT "concerns" expressed during the 1991 FDOT recertification process, but he defined those concerns as independent financing. The FDOT DBE certification committee chairperson testified that the recommended order addressed concerns expressed during the 1991 FDOT recertification process, but he defined the concerns differently, as lack of independency from familial relationships, i.e.
control, and financial relationships of family corporations. Both men considered FDOT's and DGS' rules to be substantially similar.
In fact, the September 9, 1992 recommended order to DGS involved a different agency (DGS) than FDOT, a different statute (Section 287.0943 F.S.) than the one authorizing FDOT's DBE program and different rules (Rules 13A- 2.005(4)(a) and (b) and 13A-4 F.A.C.) than the ones administered by FDOT. FDOT is required to operate under Section 337.135 F.S. and administer Rules 14-78.002 and 14-78.005 F.A.C. Also, the recommended order focused on a legal conclusion that Union Trucking, Inc. was financially dependent, or at least at the time of its corporate "start-up" in 1986 was financially dependent, upon Pritchett Trucking, Inc. The recommended order stated, in pertinent part, as follows:
. . . co-owner of the applicant is Pritchett's daughter and a natural subject of his goodwill and generosity, such a relationship is prohibited
by the statute, [referring to Section 287.0943 F.S.] Similarly, her service as a director of Pritchett corporation, carrying on Union's business from her desk at Pritchett Trucking is natural, but estab- lishes a prohibited relationship. [Bracketed material added her for clarification].
Upon receipt of the DGS recommended order, FDOT did not seek further explanatory information from the applicant, as was FDOT's standard procedure under its normal operation. Further, FDOT did not follow its own specially prescribed procedure for certified DBEs with "special monitor" status, in that FDOT did not conduct a new 1992 on-site review.
Instead, two months later, FDOT sent its December 14, 1992 denial letter. The FDOT employee who prepared the letter testified that the letter denial was based on her review of all the information already in FDOT's DBE file on Union Trucking, Inc., upon the audio tape of the old 1991 on-site review interview, and upon corporate records of the Secretary of State. The FDOT letter, however, closely tracked the DGS recommended order but denied recertification by FDOT on the basis of FDOT Rules 14-78.005(7)(c)1. and 2.c. and 14-78.005(7)(a) F.A.C. It also stated that Union Trucking, Inc. was not an independent business entity or a small business concern and that there was an "affiliate" relationship under FDOT rules due to "Susan [sic] Wilson." It renamed Robin Wilson and also extrapolated a great deal of financial information that appears to come directly from the DGS recommended order.
As a result of FDOT's denial of its 1992 recertification application, Union Trucking, Inc. requested a formal hearing. During the progress of that case before DOAH, FDOT received a copy of an affidavit by Robin Wilson in which she stated that Union Trucking, Inc. only purchased parts and fuel from Pritchett Trucking because Pritchett's Lake Butler terminal was the least expensive and most convenient source. Ms. Wilson also stated that Union Trucking, Inc. had not received any loans from her father's companies in four to five years, and that there were no current outstanding loans.
In an effort to negotiate the issues and resolve matters without formal hearing before DOAH, FDOT finally conducted an on-site review in July 1993. Documentation was provided by Union Trucking, Inc. to show that all recent transactions with any of Marvin Pritchett's companies were properly invoiced "arm's length" transactions and that Union Trucking, Inc. dealt with many other companies as well; that Union Trucking, Inc.'s old debts to Marvin
Pritchett's companies had been retired with zero balances prior to Union Trucking, Inc.'s 1992 recertification application to FDOT; and that Union Trucking, Inc. had three trucks and trailers normally being used full-time in its business. Random samplings by FDOT's consultant during this on-site review confirmed the information in the possession of FDOT prior to the 1992 application for recertification, most of which had been provided and was already in FDOT's possession as early as April 30, 1991. If FDOT had inquired concerning any loans at the time it received the recommended order in September 1992, it would have determined that all loans to Union Trucking, Inc. from any of Marvin Pritchett's various enterprises had been paid off prior to Union Trucking, Inc.'s 1992 recertification application to FDOT. FDOT's consultant's report after the 1993 on-site review determined that there currently were no "affiliated" firms under FDOT rules. It also appears from the report that FDOT then accepted that Robin Wilson split her time between office management for Union Trucking, Inc., running her own company named "Robin Pritchett Trucking Inc.," and working for her father's "[Marvin] Pritchett Trucking Inc." Having clarified these matters, FDOT no longer had problems or concerns with such an arrangement. Union Trucking, Inc.'s records on file for contract work with FDOT through other contractors also reflected use of owned trucks and drivers employed by Union Trucking, Inc. FDOT then recertified Petitioner effective October 15, 1993.
At the attorney's fee and costs hearing herein, FDOT presented evidence that it did not have the correct location address for Union Trucking, Inc. when its personnel went to the July 1993 on-site review. This evidence does not justify FDOT's 1992 denial. Union Trucking, Inc.'s corporate office had moved a few weeks previous to the 1993 on-site review. Since Union Trucking, Inc. and its lawyer had been in constant communication with FDOT during the litigation phase of the recertification denial case, consistently urging an on-site inspection, any failure by Union Trucking, Inc. to clarify the geographical relocation of its office in 1993 was either an oversight or an innocent miscommunication. This change of address was not noted in Union Trucking, Inc.'s 1992 reapplication because the move had not yet occurred when that reapplication was submitted in July of 1992. Obviously, FDOT did not use the 1993 failure to notify the agency of a change of address as a reason to deny recertification in 1992, and FDOT also did not consider it a sufficiently serious flaw to withhold recertification after the July 1993 on-site review.
FDOT also presented evidence that Robin Wilson did not tell the agency that she owned 100 percent of another corporate entity, "Robin Pritchett (her maiden name) Trucking, Inc." until the July 1993 on-site review. FDOT's two on- site reviewers concurred that "Robin Pritchett Trucking," consisting of one truck, which was sporadically used to haul wood chips, was never any cause for FDOT's concern. Apparently, FDOT considers hauling wood products to be an entirely different industry than the hauling of highway aggregates, which is the type of work done on FDOT contracts and the type of work done by Union Trucking, Inc. While Robin Pritchett Wilson's "affiliation" with her own independent corporation, "Robin Pritchett Trucking, Inc.," possibly was the type of "affiliation" which she should have disclosed, pursuant to FDOT's DBE rule, on Union Trucking Inc.'s 1992 application for recertification by FDOT as a DBE, it is clear that FDOT did not know of this nondisclosure when the agency denied recertification in December 1992. FDOT did not deny recertification at that time for that reason. FDOT also did not consider such nondisclosure to be a sufficiently serious flaw so as to withhold recertification after the disclosure at the July 1993 on-site review. Also, FDOT never asserted that its personnel had been confused in 1992 between "Robin Pritchett Trucking, Inc." and "[Marvin]
Pritchett Trucking, Inc." Therefore, this late disclosure does not justify FDOT's 1992 denial of certification.
In its July 1993 on-site review, FDOT investigated but found no barrier to recertifying Union Trucking, Inc. under the statutes and rules FDOT administers. There were no barriers related to familial relationships, related to Robin Wilson's being an owner of her own corporation, related to her being a director of any corporation, related to her owning a nominal number of stock shares in Marvin Pritchett's several businesses, related to her use of Pritchett's desk or office equipment, related to Pritchett loans to Union Trucking, Inc., related to Mr. Lee's use of a special account, or related to any other factual reason cited in either FDOT's December 14, 1992 denial letter or the September 9, 1992 recommended order affecting DGS.
Nonetheless, FDOT's consultant's closing comments in the 1993 on-site report sum up FDOT's continuing overall approach to Union Trucking, Inc., both before the 1993 on-site review and thereafter. This approach is to "continue to question" successful DBEs whose principals have successful families and successful corporate investments. He wrote:
Because of the close family relationships and multiple companies owned or operated, this firm will continue to be questioned as to eligibility for the DBE program. Any concerns I have remaining
can only be resolved through the actual job perform- ance and compliance on future projects. I strongly recommend a continued compliance report be addressed with detailed concerns to support the next certif- ication provided the firm is recertified.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Section 120.57(1), F.S.
It was appropriate for the undersigned to raise the jurisdictional issue at formal hearing. See, Walt v. Walt, 574 So.2d 205 (Fla 1st DCA 1991). The jurisdictional issue was not waived simply by FDOT's failure to raise it until that point in time. Jurisdiction, as a threshold issue, may be raised at any time. See, State of Florida Department of Health and Rehabilitation v. Schreiber, 561 So.2d 1236 (Fla. 4th DCA 1990).
The law relating to a time bar pursuant to Section 57.111 F.S. is as follows:
Section 57.111(4)(b)1., F.S., provides:
The application for an award of attorney's fees must be made within 60 days after the date that the small business party becomes a prevailing small business party.
Section 57.111(3)(c), F.S., provides:
A small business party is a "prevailing small business party" when:
A final judgment or order has been entered in favor of the small business party and such
judgment or order has not been reversed on appeal or the time for seeking judicial review of the judgment or order has expired;
A settlement has been obtained by the small business party which is favorable to the small business party on the majority of issues which such party raised during the course of the proceeding; or
The state agency has sought a voluntary dismissal of its complaint. (Emphasis supplied).
The alternative starting points for determining when a small business party has prevailed are listed in the disjunctive. Accordingly, any of the alternatives separated by "or" may be the starting point, and the last point is as good a starting point as the first. In the case of an unappealed final order, the time for filing the Section 57.111 F.S. petition does not begin to run until the time for appeal has expired. FDOT felt the case was not concluded finally until it entered a final order on December 17, 1993, and it should be bound by that determination, even though the final order's only purpose was to dismiss the petition for hearing long after the relief prayed-for (DBE certification) had, in fact, been granted. The final order, in effect, consummated the parties' settlement. The petition herein was timely. This result is in accord with the liberal legislative intent to award attorney's fees expressed in Sections 57.111(2) and (4)(a) F.S.
In making the foregoing conclusion, FDOT's argument that the recertification on October 15, 1993 or the DOAH order relinquishing jurisdiction constituted the date Petitioner "prevailed," is rejected. With regard to whether or not the order relinquishing jurisdiction constituted a "settlement," it is specifically concluded to the contrary. See, Gessler v. Board of Medical Examiners, DOAH Case No. 88-4902F (November 17, 1988). "Settlements," as recognized in Section 57.111(3)(c)2 refer primarily to the type of final agreements reached between parties in Circuit Court civil actions which then are followed by voluntary dismissals requiring no order of court. DOAH orders relinquishing jurisdiction do not consummate settlements or provide the mechanism to enforce settlements. They are certainly not voluntary dismissals. After DOAH relinquishes jurisdiction, if a settlement is not ultimately consummated, agencies frequently refer cases back to DOAH and DOAH merely reopens its old file. DOAH's relinquishment of jurisdiction in the underlying case cannot be read as a "settlement," or as an end to the case, given FDOT's entry of its final order of dismissal.
Respondent asserted that its denial of recertification and subsequent handling of the case was "substantially justified." The evidence shows otherwise.
Union Trucking, Inc. showed that FDOT knew or had the information, except for some inconsequential matters, upon which it ultimately relied to grant recertification, before its December 14, 1992 denial, and that the information had remained essentially unchanged between the previous 1991 FDOT certification and the 1992 reapplication.
FDOT witnesses denied that the recommended order in the DGS case was the sole reason for FDOT to deny recertification, but all conceded that it was the precipitating factor. The evidence as a whole is persuasive that the recommended order was the only significant change in information between the 1991 FDOT certification and the 1992 denial. Therefore, I conclude that the
recommended order was the sole reason for denial of certification in 1992. Nothing in the record rationally explains why FDOT felt DOAH's interpretation of DGS' rules or even DGS' interpretation of its own rules should relieve FDOT of the duty to process this reapplication like any other application under FDOT rules. The doctrine of stare decisis is not generally applicable to decisions of administrative bodies, Mercedes Lighting, Inc. v. Department of General Services, 560 So.2d 272 (Fla. 1st DCA 1990).
FDOT also argued that since it was the applicant's duty and burden to provide information sufficient for FDOT to certify it, and since FDOT had the discretion to determine whether or not to request further information or to conduct an on-site review, FDOT was substantially justified in denying recertification without further inquiry of Union Trucking, Inc. or its principals. Upon the foregoing findings of fact, it is concluded otherwise.
Seeking more information may have been discretionary under the statute, rules and case law, but such a procedure was so standardized with FDOT that to not to follow it meant this reapplicant was treated differently than all the others. Likewise, once "special monitor" status was assigned by the DBE certification committee in 1991, FDOT's failure to conduct an on-site review for Union Trucking, Inc.'s 1992 reapplication constituted FDOT's ignoring its own policy and procedure and treating this reapplicant differently than all others similarly situated. The "special monitor" status may have been hatched in a spirit of suspicion or in an effort to "catch" an applicant who was not truly an independent DBE, but once "special monitor" status was in place, the standard policy had to be followed. Had it been followed, an on-site review in the fall of 1992 could have easily resolved all FDOT's concerns as evidenced in the result of the on-site review in July 1993. Had FDOT followed its own policy, Union Trucking, Inc. would not have lost a year's worth of business.
Under the circumstances, FDOT was not entitled to save itself the effort of an on-site review by relying on a recommended order based on different statutes and rules than those FDOT was charged with applying to the applicant. An atmosphere of undefined "concerns" and residual suspicion blossomed into FDOT's 1992 denial without reasonable consideration of the 1992 reapplication. This degree of zeal to "root out the bad guys" does not constitute "substantial justification." See, by analogy, the following cases, Department of Health and Rehabilitative Services v. S.G., 613 So.2d 1386 (Fla. 1st DCA 1993) and Altman
v. Department of Health and Rehabilitative Services, DOAH Case No. 92-4034F (March 11, 1993), each holding that irresponsible and one-sided investigation excluding all witnesses and documents favorable to Respondent's position was not substantially justified; F&F Equipment d/b/a American Ammunition v. Department of General Services, DOAH Case No. 91-4951F (March 19, 1992) which awarded fees when an order in the underlying case showed the agency failed to follow its own standards in assessing an applicant's proposals; the agency was not substantially justified; Barnard v. Department of State, Division of Licensing, DOAH Case No. 90-0738F (July 3, 1990) where an agency's retroactive application of statutory amendments was not substantially justified; Alario et. al. v. Department of Professional Responsibility, Board of Real Estate, DOAH Case No. 97-4093F (March 22, 1988) where a speculative and selective reading of the intent of the Circuit Court in rendering judgment confirming a jury verdict was not substantially justified; and Robaina v. Division of Professional Regulation, DOAH Case No. 87-1242F (July 9, 1987) where an agency's retroactive application of its own statute was not substantially justified. The instant case is distinguishable from Business Telephone Systems v. Department of General Services, DOAH Case No. 89-2715 (October 29, 1989) for many reasons, not the
least of which is the absence in this case of an on-site review and the lack of opportunity for this applicant to explain or supplement its application prior to denial.
Upon the foregoing findings of fact and conclusions of law, it is ORDERED that the Florida Department of Transportation pay to Petitioner $2,775.00 in earned attorney's fees and costs.
DONE AND ORDERED this 15th day of November, 1994, at Tallahassee, Florida.
ELLA JANE P. DAVIS
Filed with the Clerk of the Division of Administrative Hearings this 15th day of November, 1994.
The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF).
1-6 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized.
7 Rejected as covered in FOF 15 upon the greater weight of the credible evidence as a whole.
8-14 Accepted as modified to more closely conform to the record and eliminate, except that unnecessary, subordinate, and/or cumulative material was not utilized.
15 Rejected as immaterial or legal argument.
16-17 Rejected as covered in Findings of Fact 12-14 upon the greater weight of the credible evidence as a whole. See Conclusions of Law.
20-24 Accepted, except that unnecessary, subordinate, and/or cumulative material was not utilized.
Frank M. Gafford, Esquire
Cindy S. Price, Esquire Assistant General Counsel Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street
Ben G. Watts, Secretary Department of Transportation Haydon Burns Building
Attn: Eleanor F. Turner, M.S. 58 605 Suwannee Street
Thornton J. Williams, General Counsel Department of Transportation
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.
