STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA MOVING SYSTEMS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 95-1275

) COMMISSION ON MINORITY ECONOMIC ) AND BUSINESS DEVELOPMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above-styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Daniel M. Kilbride, on July 6, 1995 in Melbourne, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Claudia Deneen

Vice President and Secretary/Treasurer 4317 Fortune Place

West Melbourne, Florida 32904

For Respondent: Joseph L. Shields, Esquire

Senior Attorney

107 West Gaines Street

201 Collins Building Tallahassee, Florida 32399-2005

STATEMENT OF THE ISSUES

Whether Florida Moving Systems, Inc. should be certified as a minority business enterprise by the Respondent, pursuant to Section 288.703(1) and (2), Florida Statutes and the applicable rules implementing the statute.

PRELIMINARY STATEMENT

On January 27, 1994, the Petitioner filed an application with the office of Respondent for Minority Business Enterprise (MBE) certification. By letter, dated December 12, 1994, the Respondent notified the Petitioner that its application for MBE certification was denied. Petitioner filed a Petition for formal hearing on February 23, 1995. This matter was referred to the Division of Administrative Hearings on March 7, 1995 and this proceeding followed.

At the hearing, Claudia Deneen, Thomas B. Deneen and David P. Astolfi testified on behalf of the applicant. One exhibit consisting of seven letters of recommendation was offered in evidence. Respondent presented the testimony of one witness and a composite exhibit (consisting of pages R1 through R319) was

admitted. Official recognition was taken of the Respondent's statutes and rules as set forth herein. A transcript of the proceedings was filed on July 20, 1995. Petitioner did not file proposed findings of fact or conclusions of law. Respondent filed its proposals on August 24, 1995. My specific rulings on Respondent's proposals are set forth in the Appendix attached hereto.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Claudia Deneen and Thomas B. Deneen, husband and wife, and another partner purchased the applicant company with joint funds in 1988. Subsequently, the business was incorporated and the name changed to Florida Moving Systems, Inc.

   
   

2. Prior to the time of the incorporation of the business, David P. Astolfi bought out the original partner and obtained a 25 percent share in the incorporated business.

   
   

3. Claudia Deneen, Thomas B. Deneen and David P. Astolfi presently serve as the Directors of the applicant corporation.

   
   

4. Neither Thomas B. Deneen nor David P. Astolfi qualify for classification as a "minority."

   
   

5. In 1992, Claudia Deneen obtained her husband's stock in the corporation without consideration, but for prior services rendered. Claudia Deneen now holds 75 percent of the outstanding stock in her name.

   
   

6. While Claudia Deneen was out on maternity leave in 1992, Thomas Deneen ran the business.

   
   

7. Claudia and Thomas Deneen, as well as David Astolfi each have authority to individually sign business checks.

   
   

8. Astolfi who serves as Vice President for Sales, is paid $1100 weekly, Thomas Deneen who serves as President, is paid $1500 weekly. Claudia Deneen who serves as Vice President, Secretary/Treasurer, and chief purchasing agent, is paid $1000 weekly when money is available.

   
   

9. Both Claudia and Thomas Deneen signed and guaranteed the business leases.

   
   

10. All three Directors, Claudia and Thomas Deneen and Astolfi, share common ownership in a similar business called Florida Distribution Systems, Inc. which is housed adjacent to the applicant.

    
    

11. Thomas Deneen signs 90 percent of applicant's payroll checks.

    
    

12. Business decisions are made jointly by all directors. Claudia Deneen is the chief purchasing agent for the corporation and maintains control over the purchase of goods, equipment and services. She also participates in the hiring and firing of personnel and the setting of all employment policies.

13. Petitioner's offer of proof, consisting of business letters or recommendation, all recommended both Claudia and Thomas Deneen as a team, not individually.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

15. The Commission on Minority Economic and Business Development is required, by statute, to ensure that the preferences for minority business firms obtained by the certification process are awarded only to those firms for which the benefit is intended. Petitioner, as applicant for minority business enterprise status, has the burden of proving its entitlement to certification. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981).

    
    

16. Subsection 288.703(2) Florida Statutes (1994 Supp.), defines MBE as follows:

    
    

    (2) "Minority business enterprise" means any small business concern as defined in subsection (1) which is organized to engage

    in commercial transactions, which is domiciled in Florida, and which is at least 51-percent- owned by minority persons who are members of

    an insular group that is of a particular racial, ethnic, or gender makeup or national origin, which has been subjected historically to disparate treatment due to identification in

    and with that group resulting in an under- representation of commercial enterprises under the group's control, and whose management and daily operations are controlled by such persons.

    
    

17. Subsection 288.703(3), Florida Statutes, (1994 Supp.) defines a minority person as follows:

    
    

    (3) "Minority person" means a lawful, permanent resident of Florida who is:

    (e) An American woman.

    
    

18. The Department of Management Services has promulgated rules to be followed in determining the certification of eligibility of applicants for MBE status, which rules have been transferred to the Commission on Minority Economic and Business Development.

    
    

19. Rule 60A-2.005, Florida Administrative Code defines the eligibility requirements for MBE certification. In substance, to be considered 51 percent minority owned, and thereby eligible for MBE certification, the applicant must establish real, substantial, continuing ownership of the firm by (a), owning 51 percent of the issued stock of the company; (b), receiving income commensurate with the percentage of her ownership from any means; (c), demonstrating she shares in all of the business and financial risks through her role in decision- making, negotiation and execution of documents as either an individual or officer of the firm, and (d), not being subject to rights of others which would

    dilute the minority's ownership below 51 percent. In addition, as paraphrased here, the rule requires the minority owners to exercise unfettered discretion in the control over the management and daily operation of the business; constitute a majority of the board of directors, if the entity is a corporation; exercise sufficient management and technical responsibilities to maintain control of the business; and, if a family business, control the purchase of goods, equipment, and services needed, the hiring and firing of personnel and the setting of all employment policies. The minority owner must demonstrate knowledge and control of the financial affairs of the business, and have managerial and technical capability, knowledge and training, and display independence and initiative in seeking and negotiating contracts and in conducting all operations of the business. Further, the minority owner shall exercise substantive personal direction and actual involvement with all major aspects of the business - those tasks essential to accomplish all business objectives and operations.

    
    

20. Claudia Deneen does not meet the requirements of 60A-2.005(3)(b), Florida Administrative Code, because Thomas Deneen and Astolfi (both non- minorities) are Directors of the corporation with her. The rule clearly states that a majority of the Directors must be minorities.

    
    

21. Although Claudia Deneen testified that she controls the day-to-day operations of the applicant business, the testimony of all witnesses taken as a whole shows that Claudia Deneen's control of the business is not real, substantial and continuing, but is shared with the other officers. Thus, the applicant does not comply with 60A-2.005(3)(d), Florida Administrative Code.

    
    

22. Claudia Deneen's majority ownership of the corporate stock (75 percent) does not go beyond mere pro forma ownership because she obtained her husband's stock without payment for it. Her testimony that it was for prior services rendered is vague and unpersuasive and is in violation of 60A-2.005(2), Florida Administrative Code.

    
    

23. Claudia Deneen has not demonstrated that she shares income, earnings and other benefits from the applicant business to the same extent that are afforded Thomas Deneen and David Astolfi, as required by 60A-2.005(2)(b), Florida Administrative Code. On the contrary, Claudia. Deneen testified that the company pays Astolfi $1100 weekly; Mr. Deneen is paid $1500 weekly; Claudia Deneen is paid only occasionally.

    
    

24. Claudia Deneen has failed to show that she controls all financial affairs of the applicant business as required by 60A-2.005(3)(d) 3, Florida Administrative Code because Thomas Deneen writes 90 percent of all payroll checks and all three directors have authority to sign checks individually. Further, Thomas Deneen signed the lease for the applicant business premises and borrows most of the money needed by the business for working capital.

    
    

25. Claudia Deneen is also affiliated with a non-minority business which is in the same or associated field by common ownership, directors and management. That non-minority business is Florida Distribution Systems. Such affiliation is a violation of 60A-2.005(4)(b), Florida Administrative Code.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application for Minority Business Certification filed

by Florida Moving Systems, Inc. on January 17, 1994, be DENIED.

DONE and ENTERED this 1st day of September, 1995, in Tallahassee, Florida.

DANIEL M. KILBRIDE

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 1st day of September, 1995.

APPENDIX

The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on proposed findings of fact submitted by the parties.

Proposed findings of fact submitted by Petitioner.

Petitioner did not submit proposed findings of fact.

Proposed findings of fact submitted by Respondent.

Accepted in substance: paragraphs 1-13.

COPIES FURNISHED:

Claudia Deneen

Vice President and Secretary/Treasurer 4317 Fortune Place

West Melbourne, Florida 32904

Joseph L. Shields, Esquire Senior Attorney

107 West Gaines Street

201 Collins Building Tallahassee, Florida 32399-2005

Crandall Jones Executive Administrator

Collins Building, Suite 201

107 W. Gaines Street Tallahassee, Florida 32399-2000

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the final order in this case concerning their rules on the deadline for filing exceptions to 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: 95-001275

Orders for Case No: 95-001275