STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN WITMER, )

)

Petitioner, )

)

vs. ) CASE NO. 94-2268F

)

DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, DIVISION ) OF PARI-MUTUEL WAGERING )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a formal hearing was held in this case on November 13, 1996, in Tallahassee, Florida, before Patricia Hart Malono, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Harold F. X. Purnell, Esquire

Rutledge, Ecenia, Underwood & Purnell

215 South Monroe Street, Suite 420 Tallahassee, Florida 32303-0551

For Respondent: Richard L. Windsor, Esquire

Department of Business and Professional Regulation

Division of Pari-Mutuel Wagering 1940 North Monroe Street Tallahassee, Florida 32399-1020

STATEMENT OF THE ISSUE

Whether the petitioner is entitled to an award under section 57.111, Florida Statutes, of attorney’s fees and costs incurred in the appellate matter Witmer v. Department of Business and Professional Regulation, 631 So. 2d 338 (Fla. 4th DCA 1994), and, if so, the amount of such award.

PRELIMINARY STATEMENT

On April 22, 1994, John R. Witmer filed with the Division of Administrative Hearings a Petition for Attorneys’ Fees and Costs Pursuant to F. S. 57.111--The Florida Equal Access to Justice Act (“application”). In the application, Dr. Witmer requested an award of attorney’s fees and costs incurred in the appellate proceeding initiated pursuant to sections 120.60(8) and 120.54(9)(a)3, Florida Statutes (1993), and culminating in the issuance of the opinion and mandate in Witmer v. Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, 631 So. 2d 338 (Fla. 4th DCA 1994). In the appellate proceeding at issue herein, Dr. Witmer challenged the legal sufficiency of the Emergency Order of Suspension contained in the Administrative Complaint and Emergency Order of Suspension entered by the Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (“Department”), on October 19, 1993.

On May 11, 1994, the Department filed its Affidavit and

Response to Petitioner’s Motion for Award of Attorneys’ Fees and Costs. In its response, the Department claimed that Dr. Witmer’s application for attorney’s fees and costs was premature because the formal administrative hearing on the merits of the disciplinary action underlying the emergency suspension order had not been concluded, so that no final determination had been made in the case. On this basis, the Department contended that there had been no adversarial

proceeding before the Division of Administrative Hearings upon which to base the application for attorney’s fees and costs; that Dr. Witmer could not demonstrate that he was a prevailing small business party until a final determination had been made in the disciplinary action; and that the Department had a reasonable basis in law and fact for the emergency suspension, which could only be demonstrated in a formal hearing on the merits of the administrative complaint. In addition, the Department asserted that the Affidavit in Support of Attorneys’ Fees and Costs attached to the application did not adequately allocate fees and costs between the appellate proceeding and the proceeding challenging the merits of the administrative complaint and that it included time spent on telephone calls to persons who had no authority over or involvement with the emergency order of suspension.

After a series of continuances, this matter was

scheduled for hearing on November 13, 1996, in Tallahassee, Florida. At hearing, neither party presented testimony. Joint exhibits 1 through 6 were offered and received into evidence. Petitioner’s exhibit 1 was offered and received into evidence. Respondent’s exhibit 1 was offered and received into evidence; respondent’s exhibit 2 was offered but not received into evidence. Official recognition was taken of the proceeding in which Dr. Witmer challenged the administrative complaint on its merits, which was assigned DOAH Case Number 93-6638. The Department’s request that official recognition

be taken of the rule challenge proceeding identified as DOAH Case Number 93-6549RX was denied, and the Final Order entered in that proceeding, marked for identification as Respondent’s exhibit 2, was offered into evidence but rejected.

The transcript of the hearing was filed with the Division on December 18, 1996, and the parties timely submitted proposed findings of fact and conclusions of law, which have been duly considered.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made:

1. The Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, is the state agency responsible for issuing occupational licenses to veterinarians with access to the backside of a racetrack and for regulating such licensees. Sections 550.10(1)(b) and

   .105(2)(d)2, Florida Statutes.

2. Dr. Witmer has been licensed to practice veterinary medicine in Florida since January 1, 1993, and, as of October 19, 1993, he was authorized to practice veterinary medicine at Florida racetracks by virtue of a pari-mutuel wagering occupational license (“license”) issued by the Department. He has been domiciled in Florida at all times material to this matter.

3. On October 19, 1993, Dr. Witmer was a partner in a

   professional practice in veterinary medicine with its principal office at 1450 Southwest Third Street, Pompano Park, Broward County, Florida. His professional practice had three full-time employees and a net worth, including both personal and business investments, of less than $2 million.

4. In the Administrative Complaint and Emergency Order of Suspension dated October 19, 1993, the Department took two actions with respect to Dr. Witmer’s license.1 First, in the administrative complaint, it put Dr. Witmer on notice that the Department had initiated a disciplinary action against him, charging him with violations of a statute and a rule governing his license which, if proven, would justify the imposition of penalties, including revocation or suspension of his license.

   Secondly, in the emergency order of suspension, it summarily suspended Dr. Witmer’s license.

5. Dr. Witmer requested a formal administrative hearing pursuant to section 120.57(1), Florida Statutes, to challenge the truth of the allegations contained in the administrative complaint. The request was forwarded to the Division of Administrative Hearings and assigned DOAH Case Number 93-6638. That action was pending at the time Dr. Witmer filed the application for attorney’s fees and costs at issue in this

   proceeding. Underlying proceeding

6. On the basis of the allegations contained in the administrative complaint and its determination that Dr.

   Witmer’s interest in his license was “far outweighed by the immediate danger to the public health and safety and to the integrity of harness racing in the State of Florida,” the Department suspended Dr. Witmer’s pari-mutuel wagering occupational license as of October 19, 1993, ordered him to cease and desist from all activities authorized by the license, and barred him from entering any pari-mutuel establishment as a patron for the duration of the emergency suspension.

7. Dr. Witmer chose to seek immediate judicial review of the emergency order pursuant to sections 120.60(8) and 120.54(9)(a)3, Florida Statutes (1993). It is this appellate proceeding which is the proceeding underlying Dr. Witmer’s application for attorney’s fees and costs at issue herein.

8. State agencies are authorized by section 120.60(8), Florida Statutes (1995) to immediately suspend a license under the following circumstances and subject to the following conditions:

   If the agency finds that immediate serious danger to the public health, safety, or welfare requires emergency suspension, restriction, or limitation of a license, it shall show compliance in its order with the requirements imposed by s. 120.54(9) on agencies making emergency rules. Summary suspension, restriction, or limitation

   may be ordered, but a formal suspension or revocation proceeding under this section shall also be promptly instituted and acted upon.

9. Section 120.54(9)(a), Florida Statutes, provides in pertinent part:

   If an agency finds that an immediate danger to the public health, safety, or welfare requires emergency action, the agency may adopt any rule necessitated by the immediate danger by any procedure which is fair under the circumstances and necessary to protect the public interest, provided that:

   * * *

   3. The agency publishes in writing at the time of, or prior to, its action the specific facts and reasons for finding an immediate danger to the public health, safety, or welfare and its reasons for concluding that the procedure used is fair under the circumstances. . .

   . The agency’s findings of immediate danger, necessity, and procedural fairness shall be judicially reviewable.

10. On February 2, 1994, the District Court of Appeal for the Fourth District of Florida issued its opinion in Witmer v. Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering, Case Number 93-3232, reported at 631 So. 2d 338. The court quashed the Emergency Order of Suspension, concluding that the order was “facially inadequate,” and ruling that “the Department’s findings of immediate danger to the public welfare are not supported by specific facts and reasons as required by 120.54(9)(a)3, Florida Statutes.” Id. at 340, 343.

11. The district court in Witmer observed that its review was limited to a determination of whether the order complied with the requirements of section 120.54(9)(a)3 and based its analysis upon the following rules of law:

    If the facts alleged in the complaint and [emergency] order are sufficient to demonstrate immediacy, necessity and fairness, no hearing is required prior to the emergency suspension. . . .

    The factual allegations contained in the emergency order must sufficiently identify particularized facts which demonstrate an immediate danger to the public. (Citation omitted.) Where, as here, no hearing was held prior to the entry of the emergency order, every element necessary to its validity must appear on the face of the order. (Citation omitted.) The order must be “factually explicit and persuasive concerning the existence of a genuine emergency.” (Citation omitted.)

    Witmer, 631 So. 2d at 341.

12. In reaching its conclusion that the emergency order was facially inadequate, the court in Witmer held that the Department failed to allege facts in the complaint and order to establish the essential elements of the violations upon which the emergency suspension was based. Firstly, the court found that the charge in the emergency order that Dr. Witmer had failed to report gratuities was not supported by any allegations of fact in the complaint and order. Id. at

341. Secondly, the court found that the Department failed to allege that Dr. Witmer’s actions related to horse racing or to race horses, an essential element of a violation of section

550.235(2), Florida Statutes, and of rule 61D-1.002(10), Florida Administrative Code. Id. at 342. Thirdly, the court found that the Department failed to allege that Dr. Witmer reached an agreement with a second person to commit the violation, an essential element of any conspiracy, including one to violate section 550.235(2) and rule 61D-1.002(10). Id. Finally, the court concluded that the public harm alleged by the Department in the order was too attenuated to support the

emergency suspension of Dr. Witmer’s license. Id. at 343.

1. The district court issued its mandate to the Department on February 18, 1994, directing it to act in accordance with the opinion quashing the Emergency Order of Suspension. The Department did not seek review of the decision of the district court in the Florida Supreme Court. Consequently, the decision of the district court had the effect of nullifying the emergency suspension of Dr. Witmer’s license.

   Summary

2. Dr. Witmer was a small business party, as that term is defined for purposes of section 57.111, at the time the Department entered the emergency order.2

3. The evidence is sufficient to establish that the Department initiated an action against Dr. Witmer when it entered an Emergency Order of Suspension. This order was issued under the authority granted state agencies in section 120.60(8), Florida Statutes. The order had the effect of

   immediately and summarily suspending Dr. Witmer’s pari-mutuel wagering occupational license. Dr. Witmer had the right to seek immediate judicial review of the emergency order pursuant to section 120.54(9)(a)3. The appellate court quashed the emergency order because it was legally insufficient to support the suspension of Dr. Witmer’s license under the standards of section 120.54(9)(a)3. The Department did not appeal or seek further review of the appellate court’s decision. Dr. Witmer, therefore, prevailed in the administrative proceeding initiated by the Department.

4. The Department presented no evidence to establish that its action in ordering the emergency suspension of Dr. Witmer’s license had a reasonable basis in law and fact or that any special circumstances exist which would make an award of attorney’s fees and costs in this case unjust.3

5. The monetary value of the attorney’s fees rendered in connection with the appellate proceeding culminating in the decision quashing the Emergency Order of Suspension is

   $9,715.00, and the costs incurred total $250. These fees and costs are reasonable and were necessary to prosecute the appellate proceeding.4

   CONCLUSIONS OF LAW

6. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to section 57.111(4)(b)1, Florida Statutes (1993), and section 120.57(1), Florida Statutes

   (Supp. 1996).5

7. Section 57.111(4)(a) provides:

   Unless otherwise provided by law, an award of attorney’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 exist which would make the award unjust.

8. “Attorney’s fees and costs” are defined in section 57.111(3)(a) as “the reasonable and necessary attorney’s fees and costs incurred for all preparations, motions, hearings, trials, and appeals in a proceeding.”

9. “Small business party” is defined in pertinent part in section 57.111(3)(d)1.b as

   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 the state agency not more than 25 full-time employees or a net worth of not more than $2 million;

10. An action is “initiated by a state agency” if the agency “[w]as required by law or rule to advise a small business party of a clear point of entry after some recognizable event in the investigatory or other free-form proceeding of the agency.” Section 57.111(3)(b)3.

11. 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 small

    business party is deemed to be a “prevailing small business party.” Section 57.111(3)(c)1.

12. The party seeking an award of attorney’s fees and costs pursuant to section 57.111 has the burden of establishing “by a preponderance of the evidence, first, that it had prevailed in the earlier disciplinary proceeding, and second, that it was a small business party as defined by statute.” Department of Professional Regulation, Division of Real Estate v. Toledo Realty, Inc., 549 So. 2d 715, 717 (Fla. 1st DCA 1989). Once this burden is satisfied, the burden shifts to the “agency to establish whether it was substantially justified in prosecuting the administrative complaint.” Id.

13. Based on the facts as found herein, Dr. Witmer has met his burden of proving by a preponderance of the evidence that he was a small business party at the time the Department entered the Emergency Order of Suspension and that he prevailed before the district court in his challenge to that order.

14. In order for a proceeding to be “substantially justified,” the state agency must, at the time the proceeding is initiated, have had “a reasonable basis in law and fact” for the action taken. The court in McDonald v. Schweiker, 726 F.2d 311, 316 (7th Cir. 1983) construed the term “substantially justified,” as that term is used in the Federal Equal Access to Justice Act, as requiring the government to

    “have a solid though not necessarily correct basis in fact and law for the position that it took.” And, the court in Department of Health and Rehabilitative Services v. S. G., 613 So. 2d 1380, 1386 (Fla. 1st DCA 1993), observed that “while governmental action may not be so unfounded as to be frivolous, it may nonetheless be based on such an unsteady foundation factually and legally as not to be substantially justified.”

15. On the basis of the facts found herein, the Department has failed to demonstrate that the emergency suspension of Dr. Witmer’s license was substantially justified. In both its response to the application for attorney’s fees and costs and at hearing, the Department took the position that the appellate proceeding challenging the legal sufficiency of the emergency order of suspension and the proceeding before the Division of Administrative Hearings on the Department’s administrative complaint were one proceeding for purposes of determining whether attorney’s fees and costs for the appellate proceeding should be awarded to Dr. Witmer pursuant to section 57.111. According to the Department, a determination as to whether the Department had a reasonable basis in law and fact for entry of the emergency order of suspension is entirely dependent on whether the Department had a reasonable basis in law and fact for filing

    the administrative complaint against Dr. Witmer. The Department’s position is rejected.

16. Section 120.60(7), Florida Statutes (1993), provides

    
    

    that

    
    

    No revocation, suspension, annulment, or withdrawal of any license is lawful unless, prior to the entry of a final order, the agency has served, by personal service or certified mail, an administrative complaint which affords reasonable notice to the licensee of facts or conduct which warrant the intended action and unless the licensee has been given an adequate opportunity to request a proceeding pursuant to s.

    120.57. . . .

17. However, section 120.60(8) and section

    
    

    120.54(9)(a), quoted above in paragraphs 8 and 9, require something more if the agency wishes to suspend a license without providing an opportunity for the licensee to be heard prior to the suspension. The court in Witmer relied on the provisions of section 120.54(9)(a)3 and on the applicable case law to quash the emergency order of suspension because, even assuming that they were true, the specific facts and reasons published by the Department at the time it ordered the emergency suspension were legally insufficient to justify this action.6 Consequently, the facts which were known by the Department at the time it suspended Dr. Witmer’s license and the facts which the Department could prove at a formal hearing on the administrative complaint, but which were not alleged in the complaint and order, are irrelevant to the determination of whether the Department’s emergency order was substantially

    justified. Rather, the only inquiry is whether the Department had a reasonable basis in law and fact for believing that the allegations included in the complaint and order were sufficient to support the emergency suspension of Dr. Witmer’s license under the standards established by sections 120.60(8) and 120.54(9)(a)3.

    1. It is reasonable to expect the Department to be aware of the essential elements of the statutes and rules it enforces, of the procedural rules governing the regulation of the licenses within its jurisdiction, and of the case law construing these statutes, rules, and procedures. Because the court in Witmer quashed the emergency order on the grounds that the Department failed to allege essential elements of the violations charged, the Department’s action had no reasonable basis in law and fact and “rested on such an unsteady foundation factually and legally as not to be substantially justified” when it was initiated. S. G., 613 So. 2d at 1386.

    2. On the basis of the facts found herein, the Department has not met its burden of proving that it was substantially justified in suspending Dr. Witmer’s pari-mutuel wagering occupational license immediately upon entry of the Administrative Complaint and Emergency Order of Suspension, nor has it established the existence of any special circumstances that would make an award of attorney’s fees and costs unjust.

CONCLUSION

Based on the foregoing Findings of Fact and Conclusions of Law, the application of John R. Witmer for attorney’s fees and costs pursuant to section 57.111, Florida Statutes, is GRANTED, and he shall recover from the Department of Business and Professional Regulation the sum of $9,965.00 in reasonable attorney’s fees and costs.

DONE AND ORDERED this 24th day of February, 1997, in Tallahassee, Leon County, Florida.

PATRICIA HART MALONO

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 24th day of February, 1997.

ENDNOTES

1 This charging document was separated into four sections, the first entitled “Administrative Complaint,” the second entitled “Emergency Order of Suspension,” the third entitled “Right to Hearing, and the fourth entitled “Order.”

2 The Department did not dispute Dr. Witmer’s status as a small business party either in its response to the application for attorney’s fees and costs or at the hearing.

3 At the hearing, the Department identified as special circumstances which would make the award of attorney’s fees and costs to Dr. Witmer unjust the confusion resulting from the sunset repeal in July, 1992, of many of the statutes regulating pari-mutuel wagering. The Department failed to show, however, how this confusion had any impact on the Department’s emergency suspension of Dr. Witmer’s license.

4 Although the Department challenged the amount of fees set out in the Affidavit in Support of Attorney’s Fees and Costs in its response to Dr. Witmer’s application, it did not raise any issue at the hearing or in the Department’s proposed final order as to the amount of fees and costs claimed. In fact, the Department requested that the Affidavit in Support of Attorney’s Fees and Costs be admitted into evidence as a joint exhibit. It is presumed, therefore, that the Department has waived its initial objection to the amount of fees and costs claimed.

5 At the same time that he filed his application with the Division of Administrative Hearings, Dr. Witmer filed a virtually identical application for attorney’s fees and costs pursuant to section 57.111 with the district court. After the Division of Administrative Hearings accepted the application and assigned the case to an administrative law judge, Dr. Witmer filed with the district court a Motion to Transfer Jurisdiction of the application to the Division of Administrative Hearings. An order was entered June 20, 1994, granting the motion and transferring the application. This order is not, however, the basis on which the Division of Administrative Hearings exercises jurisdiction over the application.

6 The court expressly stated that it did “not reach nor determine the merits of the disciplinary action which remains to be resolved at a formal hearing on the Department’s complaint.” Id. at 340.

COPIES FURNISHED:

Harold F.X. Purnell, Esquire Gary R. Rutledge, Esquire Barnett Bank Building, Suite 420 Post Office Box 551

Tallahassee, Florida 32302-0551

Richard L. Windsor, Esquire Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-1020

Deborah R. Miller, Director Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Richard T. Farrell, Secretary Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Lynda L. Goodgame, General Counsel Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 94-002268F

Orders for Case No: 94-002268F