STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LYONS TOWING, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-0597

) COMMISSION ON MINORITY ECONOMIC ) AND BUSINESS DEVELOPMENT, now ) known as DEPARTMENT OF LABOR AND ) EMPLOYMENT SECURITY, MINORITY ) BUSINESS ADVOCACY AND ASSISTANCE ) OFFICE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case at West Palm Beach, Florida, on May 7, 1996, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: John J. Bulfin, Esquire

Wiederhold, Moses, Bulfin and Rubin, P.A.

515 North Flagler Drive, Suite 800 West Palm Beach, Florida 33401

For Respondent: Joseph L. Shields, Esquire

Office of the General Counsel

Department of Labor and Employment Security Minority Business Advocacy and

Assistance Office

2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189

STATEMENT OF THE ISSUE

The issue in this case is whether the Petitioner, Lyons Towing, Inc., is entitled to certification as a minority business enterprise.

PRELIMINARY STATEMENT

By letter dated December 22, 1995, the Commission on Minority Economic and Business Development 1/ advised the Petitioner that the Commission intended to deny the Petitioner's application for certification as a minority business enterprise. The Petitioner requested a formal hearing and the matter was referred to the Division of Administrative Hearings.

At the formal hearing on May 7, 1996, the Petitioner presented the testimony of three witnesses; Mrs. Bobbye Lyons (co-owner of Lyons Towing, Inc.), Mr. Don Lyons (co-owner of Lyons Towing, Inc.), and Mr. Allan Gold (manager of Lyons Towing, Inc.). The Respondent recalled Bobbye Lyons as a witness and also presented the testimony of Melissa Leon (an employee of the Commission). The Petitioner offered one exhibit and the Respondent offered five. All of the exhibits were received in evidence.

At the conclusion of the formal hearing no deadline was established for the submission of proposed recommended orders because the parties requested an opportunity to make a further effort to resolve the case by settlement agreement. Thereafter, the Hearing Officer was notified that the parties had been unable to reach a post-hearing settlement. The parties were then advised that the deadline for submission of proposed recommended orders would be July 5, 1996. Both parties submitted proposed recommended orders containing proposed findings of fact and conclusions of law. The parties' proposals have been carefully considered. All proposed findings of fact are specifically addressed in the appendix to this Recommended Order. Neither party filed a transcript of the hearing.

FINDINGS OF FACT

1. Mrs. Bobbye Lyons, an American woman, presently owns 89 percent of the corporate stock of the Petitioner, Lyons Towing, Inc. Her husband, Mr. Don Lyons, owns the other 11 percent of the corporate stock of the Petitioner. The only directors of Lyons Towing, Inc., are Bobbye Lyons and her husband, Don Lyons. Mr. Don Lyons is also the vice-president of Lyons Towing, Inc. Mr. Don Lyons is not a "minority person" within the meaning of the definition of that term at Section 288.703(3), Florida Statutes.

   
   

2. Mrs. Bobbye Lyons also presently owns 11 percent of the corporate stock of Lyons Autobody, Inc. Her husband, Don Lyons, owns the other 89 percent of the corporate stock of Lyons Autobody, Inc. The only directors of Lyons Autobody, Inc., are Bobbye Lyons and her husband, Don Jones. Mrs. Bobbye Lyons is also the vice-president of Lyons Autobody, Inc. Lyons Autobody, Inc., is not a "minority business enterprise" within the meaning of the definition of that term at Section 288.703(2), Florida Statutes.

   
   

3. The Petitioner, Lyons Towing, Inc., shares space with Lyons Autobody, Inc. The Petitioner, Lyons Towing, Inc., leases most of its towing trucks from Lyons Autobody, Inc.

   
   

4. Mr. Don Lyons is authorized to sign checks on the Petitioner's checking accounts. Mr. Don Lyons is the co-maker of at least two promissory notes and security agreements on behalf of the Petitioner, Lyons Towing, Inc. The two notes are in the amounts of $36,356.26 and $51,812.65. Mrs. Bobbye Lyons is authorized to sign checks on the checking accounts of Lyons Autobody, Inc.

   
   

5. Mrs. Bobbye Lyons and Mr. Don Lyons jointly own at least one of the storage lots on which the Petitioner stores impounded vehicles.

   
   

6. The Petitioner corporation, Lyons Towing, Inc., is engaged primarily in the business of towing motor vehicles. Lyons Autobody, Inc., is engaged primarily in the business of repairing wrecked or damaged motor vehicles. Prior to the incorporation of Lyons Towing, Inc., Lyons Autobody, Inc., also engaged in the business of towing motor vehicles. The business of towing motor vehicles

   and the business of repairing wrecked or damaged vehicles are businesses in associated fields of operation.

   
   

7. Mrs. Bobbye Lyons has been married to Mr. Don Lyons since 1975. At the time of their marriage, Mr. Don Lyons was already engaged in business. Mr. Don Lyons and his father had started a business in 1964 that engaged in both repairing wrecked or damaged motor vehicles and in towing motor vehicles. In 1975, Mrs. Bobbye Lyons began to work in her husband's business and continued to do so until 1987. During that period of time Mrs. Bobbye Lyons worked primarily on the towing side of the business, but she also did a little bit of everything in the business, except drive tow trucks.

   
   

8. In 1987, Mr. Don Lyons decided to split his business into two separate businesses; one business to be engaged primarily in the business of repairing wrecked and damaged motor vehicles and the other to be engaged primarily in the business of towing motor vehicles. At that time the Petitioner, Lyons Towing, Inc., was incorporated and Mrs. Bobbye Lyons was installed as President and "Chief Operations Officer" of the new corporation. Sometime thereafter, 89 percent of the stock of the Petitioner, Lyons Towing, Inc., was "given" to Mrs. Bobbye Lyons. Mrs. Bobbye Lyons did not make any capital contribution to Lyons Towing, Inc., and did not purchase her shares in that corporation.

   
   

9. At least until March 16, 1996, both the Petitioner, Lyons Towing, Inc., and Lyons Autobody, Inc., had a single motor vehicle insurance policy under which all of the vehicles owned by both corporations were co-insured.

   
   

10. Mrs. Bobbye Lyons is a high school graduate and a graduate of Clevinger's Business College. She has attended Palm Beach Junior College and has previously been certified as a sworn law enforcement officer. She has been involved in the towing business since 1975 and appears to have sufficient experience and knowledge regarding the towing business to be able to operate a business like Lyons Towing, Inc., without assistance from her husband.

    
    

11. Mrs. Bobbye Lyons is a regular and active participant in the day-to- day operations of Lyons Towing, Inc. She is the person who is primarily responsible for the day-to-day operations of Lyons Towing, Inc., and she directly or indirectly supervises and directs all employees of Lyons Towing, Inc. She also supervises and directs the purchase of goods, equipment, business inventory, and services needed in the day-to-day operation of the business. Similarly, she supervises and directs the hiring, firing, and work assignments of all employees. She also establishes employment policies, wages, benefits, and other conditions of employment. She is assisted in this regard by Mr. Allan Gold, who has the title of General Manager of Lyons Towing, Inc. Mr. Gold is subordinate to Mrs. Bobbye Lyons and must receive her approval before he can hire or fire employees, enter into contracts, or purchase equipment.

    
    

12. Mrs. Bobbye Lyons makes or participates in all of the major decisions regarding hiring and firing employees, payroll, business expenditures, purchase of equipment, and contract negotiations with customers. In this regard, Mrs. Bobbye Lyons exercises control over the business affairs of Lyons Towing, Inc., on a regular and continuing basis, but always subject to the influence of, and with the tacit approval of, her husband, Mr. Don Lyons. Because of his more extensive experience in the business, Mr. Don Lyons often participates in important business decisions affecting Lyons Towing, Inc., and spends several hours each week providing guidance and assistance in the management of Lyons Towing, Inc. Further, by reason of his status as one of only two board members on the board of directors of Lyons Towing, Inc., he can effectively veto any

    decision by Mrs. Bobbye Lyons regarding any corporate decision with which he disagrees. And by reason of his status as an officer of Lyons Towing, Inc., and his authority to sign checks on the Lyons Towing, Inc., checking account, he has the power and authority to intervene in the day-to-day operations of the Petitioner corporation.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Sec. 120.57(1), Fla. Stat.

    
    

14. In a case of this nature the burden of proof is on the applicant to demonstrate by a preponderance of the evidence that it is entitled to the certification it seeks. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778, 787 (Fla. 1st DCA 1981). For the reasons discussed below, the evidence in this case is insufficient to show that the Petitioner is entitled to the certification it seeks.

15. Rule 60A-2.005(4)(b), Florida Administrative Code, reads as follows: To establish that it is a small business concern,

    the applicant shall demonstrate that it is not

    an affiliate of a non-minority business nor share (on an individual or combined basis) common ownership, directors, management, employees, facilities, inventory, financial resources and expenses, equipment or business operations with a non-minority person and/or business concern which is in the same or an associated field of operation.

    
    

16. The Petitioner corporation fails to comply with the rule requirements quoted immediately above. In this regard it is observed that, the evidence shows that the Petitioner corporation shares common ownership, common directors, common management (Mr. and Mrs. Lyons are both officers and directors in both corporations), common facilities, some common financial resources (Mr. Lyons guarantees some loans for the Petitioner corporation), and some common equipment with a non-minority business concern (Lyons Autobody, Inc.) which is in an associated field of operation.

17. Rule 60A-2.001(9), Florida Administrative Code, provides: "Independently operated" means not dependent

    on the support, influence, guidance, control

    or not subject to restriction, modification or limitation from a given outside source, except for customary business auxiliary services, e.g., legal, banking, etc.,

    and Rule 60A-2.005(4)(a), Florida Administrative Code, provides: To establish that it is a small business concern,

    the applicant shall demonstrate that it is an

    independently owned and operated business concern. In assessing business independence, the Office shall consider all relevant factors, including

    the date the firm was established, the adequacy

    of its resources, and the degree to which financial, managerial and/or operational relationships exist with other persons and/or business concerns. For purposes of this rule, the Office's consideration

    of such financial, managerial and/or operational relationships shall not be affected by arrangements made out of necessity or due to the business' inability to secure traditional capitalization through banks, lending institutions or others.

    
    

18. The evidence in this case establishes that the Petitioner corporation is not "independently operated" within the meaning of the two rule provisions quoted immediately above. To the contrary, the Petitioner corporation is dependent in several ways on Lyons Autobody, Inc. (a non-minority business enterprise) and/or on Mr. Don Lyons (a non-minority person). In this regard it is first noted that Mrs. Bobbye Lyons did not contribute any capital to the Petitioner corporation and did not pay anything for her stock in the corporation. Further, the Petitioner corporation appears to be dependent on Mr. Don Lyons in obtaining bank loans and it uses at least seventeen trucks that belong to Lyons Autobody, Inc., of which Mr. Don Lyons is 89 percent owner. Mr. Don Lyons is also involved in the management of the Petitioner corporation by reason of his membership on the board of directors, his office of vice president, and his authority to write checks on the Petitioner corporation's checking account.

    
    

19. Rule 60A-2.005(3)(d)1-3, Florida Administrative Code, reads as follows:

    
    

    1. The control exercised by the minority

       owners shall be real, substantial and continuing. In instances where the applicant business is found to be a family-operated business, with duties, responsibilities and decision-making occurring either jointly and mutually among owners and principals, or severally along managerial and operational lines between

       minority owners and non-minority owners or principals, the minority owners shall not be considered as controlling the business. Where the minority owners substantiate that the assumption of duties is not based on their

       lack of knowledge or capability to independently make decisions regarding the business' management and day-to-day operations, the minority owners' control may not be affected. The minority owners shall establish that they have dominant respon- sibility for the management and daily operations of the business as follows:

       1. The minority owners shall control the purchase of goods, equipment, business inventory and services needed in the day-to- day operation of the business. The minority owners' control of purchasing shall be evidence of their knowledge of products, brands, manufacturers, types of equipment and products and their uses, etc., rather than merely reflective of the minority owners' ministerial execution of the

          ordering/acquisition of goods.

       2. The minority owners shall control the hiring, firing and supervision of all employees, and the setting of employment policies, wages, benefits

          and other employment conditions. In instances where minority owners have delegated the hiring and firing of employees, the minority owners shall demonstrate that their knowledge and

          capability is sufficient to evaluate the employees' performance in the given industry.

       3. The minority owners shall have knowledge and control of all financial affairs of the business. The ability of any non-minority owner

          or employee to sign checks and enter into financial transactions on behalf of the business shall be considered in determining financial control. The minority owners shall expressly control the investments, loans to/from stockholders, bonding, payment of general business loans, payroll and establishment of lines of credit.

          
          

20. The evidence in this case shows that the Petitioner corporation also fails to meet the rule requirements quoted immediately above. The Petitioner corporation is, in essence, a family-owned business with shared decision-making between Mrs. Bobbye Lyons and Mr. Don Lyons. Although Mrs. Bobbye Lyons is the primary manager of the Petitioner corporation, her management is not independent. Rather, her husband, Mr. Don Lyons, is also involved in the management of the Petitioner corporation on a regular and continuing basis. By reason of his involvement in the management of the Petitioner corporation, it cannot be said that Mrs. Bobbye Lyons controls the Petitioner corporation. The control is shared by Mrs. Bobbye Lyons and Mr. Don Lyons.

RECOMMENDATION

On the basis of all of the foregoing, it is RECOMMENDED that a Final Order be issued in this case denying the certification sought by the Petitioner and dismissing the petition in this case.

DONE AND ENTERED this 30th day of August, 1996, at Tallahassee, Leon County, Florida.

MICHAEL M. PARRISH, 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 30th day of August, 1996.

ENDNOTE

1/ Effective July 1, 1996, the Commission of Minority Economic and Business Development was abolished. In its place, the Minority Business Advocacy and Assistance Office was established within the Department of Labor and Employment Security in order to "assist minority business enterprises in becoming suppliers of commodities, services, and construction to state government." See Chapter

96-320, Laws of Florida, Sections 27 and 28.

APPENDIX

The following are the specific rulings on all proposed findings of fact submitted by all parties.

Findings proposed by Petitioner: Paragraphs 1 and 2: Accepted.

Paragraph 3: Accepted for the most part, but with some qualification.

Paragraph 4: Accepted.

Paragraph 5: Accepted for the most part, but with some qualification.

Paragraph 6: Accepted in part and rejected in part. First sentence is accepted. The remainder of this paragraph is rejected because it is based on evidence which was not submitted at the formal hearing. [The Petitioner agreed to send the Respondent some post-hearing documents in an effort to reach a settlement of this matter, but those documents were not submitted as exhibits by either party.]

Paragraph 7: Accepted in part and rejected in part. The first sentence is rejected as overly broad and not fully supported by persuasive competent substantial evidence. The second sentence is accepted.

Paragraph 8: Rejected as overly broad and not fully supported by persuasive competent substantial evidence.

Paragraphs 9, 10 and 11: Accepted for the most part, but with some qualification.

Findings proposed by Respondent:

Paragraphs 1, 2, and 3: Accepted in substance.

Paragraph 4: Accepted in part and rejected in part. Accepted that Lyons Towing, Inc., leases most of its trucks from Lyons Autobody, Inc. The portion of this paragraph regarding a "late-filed lease" is rejected because there were no "late-filed" exhibits in this case. [Perhaps the "late-filed lease" was included in the documents the Petitioner sent to the Respondent in an effort to reach a post-hearing settlement of this matter.]

Paragraphs 5, 6, 7, 8, and 9: Accepted in substance.

Paragraph 10: Rejected as contrary to the greater weight of the evidence. Paragraph 11: Accepted in substance.

Paragraph 12: Rejected as subordinate and unnecessary details. Paragraph 13: Accepted in substance.

Paragraph 14: Rejected as irrelevant.

COPIES FURNISHED:

John J. Bulfin, Esquire

Wiederhold, Moses, Bulfin and Rubin, P.A.

515 North Flagler Drive, Suite 800 West Palm Beach, Florida 33401

Joseph L. Shields, Esquire Office of the General Counsel

Department of Labor and Employment Security Minority Business Advocacy

and Assistance Office

2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189

Edward A. Dion, General Counsel

Department of Labor and Employment Security

307 Hartman Building

2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189

Douglas L. Jamerson, Secretary

Department of Labor and Employment Security 2012 Capital Circle, Southeast

303 Hartman Building Tallahassee, Florida 32399-2152

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this 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 contact the agency that will issue the final order in this case concerning agency 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: 96-000597

Orders for Case No: 96-000597