STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WORLDWIDE INVESTMENT GROUP, INC., )

)

Petitioner, )

)

vs. ) Case No. 97-1498

) STATE OF FLORIDA, DEPARTMENT ) OF ENVIRONMENTAL PROTECTION, )

)

Respondent. )

)

RECOMMENDED ORDER

Notice was provided and on February 19, 1998, a formal hearing was held in this case. Authority for conducting the hearing is set forth in Sections 120.569 and 120.57(1), Florida Statutes. The hearing location was the office of the Division of Administrative Hearings, the DeSoto Building, 1230 Apalachee Parkway, Tallahassee, Florida. The hearing was conducted by Charles C. Adams, Administrative Law Judge.

APPEARANCES

For Petitioner: P. Tim Howard, Esquire

P. Tim Howard and Associations, P. A. 1424 East Piedmont Drive, Suite 202 Tallahassee, Florida 32312

For Respondent: Jeffrey Brown, Esquire

Department of Environmental Protection Douglas Building, Mail Station 35

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

STATEMENT OF THE ISSUES

Is Worldwide Investment Group, Inc. (Worldwide) entitled to apply to the State of Florida, Department of Environmental Protection (the Department) for funds to reimburse Worldwide for costs associated with petroleum clean-up at 500 Wells Road, Orange Park, Florida, Facility ID#108736319? See Section 376.3071(12), Florida Statutes.

PRELIMINARY STATEMENT

On February 7, 1997, the Respondent received Worldwide's application to be reimbursed for the costs incurred in the petroleum clean-up at the Wells Road Facility. On February 11, 1997, that application was denied as untimely. On March 3, 1997, the Respondent received Worldwide's Petition challenging the determination to deny the application as untimely. On March 27, 1997, the Petition challenging the decision to deny the application was forwarded to the Division of Administrative Hearings for assignment of an Administrative Law Judge to conduct a hearing involving disputed issues of material fact, as envisioned by Section 120.57(1), Florida Statutes.

On April 4, 1997, the Respondent moved to dismiss the Petition, as a matter of law, conceding the facts that were alleged in the Petition. On April 16, 1997, Worldwide responded in opposition to the Motion to Dismiss. On May 6, 1997, oral argument was heard on the Motion to Dismiss.

On May 30, 1997, Worldwide moved for a Summary Final Order based upon the memoranda in association with the Motion to Dismiss and response to that motion and the consequences of factual stipulations entered into by the parties on May 30, 1997, resolving a number of factual disputes between the parties. The Motion for Summary Final Order was also supported by the Affidavit of Jerrold Knee, Esquire.

On June 5, 1997, a pre-hearing conference was held with counsel for the parties. It was determined to proceed with the hearing. Under the circumstances, the relief called for in the Respondent's Motion to Dismiss and Worldwide's Motion for Summary Final Order will be addressed in the Recommended Order.

This case was originally noticed to be heard on July 14, 1997. It was continued to be heard on November 13, 1997. It was heard on February 19, 1998.

Worldwide presented its case upon the submission of three

1. exhibits, to include the deposition testimony of Jerrold Knee, Esquire, and Howard Steinberg, CPA. The Department presented three (3) exhibits and also presented the testimony of Michael Wilson Sole, Bureau Chief, Bureau of Petroleum Storage Systems, Department of Environmental Protection.

   The parties had entered into written stipulations of fact. Those stipulations are also available for fact finding in this Recommended Order.

   On March 17, 1998, a transcript of the final hearing was filed. Ordinarily, the deadline for filing proposed recommended orders would have been March 27, 1998. The Department met that deadline; Worldwide did not. Nonetheless the Department's counsel agreed to an extension of time for Worldwide to submit a proposed recommended order, assuming that Worldwide's counsel did not review the Department's proposed recommended order before submitting its own. The last agreed deadline for Worldwide to file the proposed recommended order was April 21, 1998.

   Worldwide met that deadline. The proposed recommended orders by the parties have been considered in preparing the recommended order.

   FINDINGS OF FACT

   
   

   The Property

   
   

   1. Howard A. Steinberg is a Certified Public Accountant, (CPA) licensed to practice in Florida. In addition to his work as a CPA, Mr. Steinberg has other business interests. Among those interests is Worldwide, a corporation which Mr. Steinberg formed for the purpose of acquiring certain assets, or properties, from Home Savings Bank and American Homes Service Corporation (Home Savings Bank). Worldwide became a corporation in July 1996.

   2. Mr. Steinberg is the sole shareholder of that corporation and has been since the inception of the corporation.

   3. In addition to controlling all of the assets within Worldwide, Mr. Steinberg is the sole officer of the corporation. The corporation has no other employees.

   4. Worldwide has its office in Hollywood, Florida, in the same physical location as Mr. Steinberg's accounting firm of Keystone, Steinberg and Company, C.P.A.

   5. Under its arrangement with Home Savings Bank, Worldwide acquired property known as Save-A-Stop at 500 Wells Road, Orange Park, Florida.

   6. Mr. Steinberg engaged the law firm of Burnstein and Knee, to assist Worldwide in the purchase of the Save-A-Stop property.

   7. The Save-A-Stop property is a commercial parcel that has experienced environmental contamination from petroleum products. To address that problem the firm of M. P. Brown & Associates, Inc., (Brown) was paid for services in rendering environmental clean-up of that site. Substantial work had been done by Brown to remediate the contamination before Worldwide purchased the property from Home Savings Bank. Home Savings had paid Brown for part of the costs of clean-up before Worldwide acquired the Save- A-Stop property.

   8. After the purchase, Mr. Steinberg paid Brown to finish the clean-up.

      
      

      Application for Reimbursement

      
      

   9. Mr. Steinberg, as owner of Worldwide, understood that the possibility existed that Worldwide could be reimbursed for some of the clean-up costs by resorting to funds available from the Department.

   10. On July 29, 1997, Bonnie J. Novak, P.G., Senior Environmental Geologist for Brown, wrote to Mr. Steinberg to provide a cost estimate for preparing a reimbursement application in relation to the Save-A-Stop property. The cost to prepare

       the application was $1,870.00. On August 27, 1996, Mr. Steinberg accepted the offer that had been executed by Brown by

       Mr. Steinberg signing a contract, and by calling for Brown to prepare an application, to be presented to the Department for reimbursement of costs expended in the clean-up. In furtherance of the agreement between Worldwide and Brown, $935.00 was paid as part of the costs of preparation of the application. This payment was by a check mailed on August 27, 1996. The balance of the fee was to be paid upon the completion of the preparation of the application.

   11. In 1996, outside the experience of his businesses, Mr. Steinberg was having difficulties in his marriage. To address the situation, Mr. Steinberg filed a Petition for

       Dissolution of Marriage. That Petition was filed in April 1996, at which time Mr. Steinberg assumed custody of the children of

       that marriage, with no right for their mother to unaccompanied visits. After filing for dissolution, Mr. Steinberg relied on others to assist him in dealing with his personal and business life.

   12. From December 1996 through January 6, 1997,

       
       

       Mr. Steinberg was particularly influenced by the upheaval in his personal life. It caused him to request extension of deadlines from the Internal Revenue Service for the benefit of his clients whom he served as a CPA.

   13. During December, Mr. Steinberg was only in his office for approximately 10 percent of the normal time he would have spent had conditions in his personal life been more serene.

   14. On January 6, 1997, the conditions in Mr. Steinberg's personal life took a turn for the worse when his wife committed suicide.

   15. In December 1996, attorney Jerrold Knee, who had assisted Mr. Steinberg as counsel in purchasing the Save-A-Stop property, spoke to someone at Brown concerning the status of the preparation of the application for reimbursement of funds expended in the clean-up. He was told that the application was being worked on. Mr. Knee was aware that the deadline for filing the application was December 31, 1996.

   16. Mr. Steinberg was also aware of the December 31, 1996, deadline for submitting the application.

   17. In that connection, Mr. Knee was familiar with the difficulties that Mr. Steinberg was having in Mr. Steinberg's marriage in 1996. Mr. Knee knew that Mr. Steinberg was infrequently in the office attending to business. Mr. Knee surmised that Mr. Steinberg was relying upon Mr. Knee to make certain that the application was timely submitted, and Mr. Knee felt personally obligated to assist Mr. Steinberg in filing the application, given the knowledge that Mr. Steinberg was not in the office routinely during December 1996. His sense of responsibility did not rise to the level of a legal obligation between lawyer and client. Although Mr. Knee was aware of the pending deadline for submitting the application for reimbursement, and had inquired about its preparation by Brown, and had discussed it with Mr. Steinberg, Mr. Knee never specifically committed to making certain that the reimbursement application was filed on time.

1. As it had committed to do, Brown prepared the reimbursement application for the Save-A-Stop site. The application was for the total amount of $58,632.85, not including preparation charges and CPA Fees. Written notification of the preparation of the application was provided to Mr. Steinberg on December 12, 1996. The correspondence reminded Mr. Steinberg that the application needed CPA approval, an invoice and registration, and a signed certification affidavit. Most importantly, the notification reminded Mr. Steinberg that an

   original and two copies of the application must be sent to a person within the Department prior to December 31, 1996. The notification specifically indicated the name of that individual within the Department and set forth that person's address. The notification arrived in Mr. Steinberg's office during the week of December 12, 1996. That notification was not opened until late January or early February 1997. Mr. Steinberg opened the letter at that time.

2. During December 1996 Mr. Steinberg was responsible for opening the mail received in his office. No other person was expected to open that mail for the benefit of Worldwide.

   Untimely Application

   
   

3. On February 6, 1997, Worldwide submitted its application for reimbursement for clean-up at the Save-A-Stop location. That application was received by the Department on February 7, 1997.

4. The Department has consistently interpreted the statutory deadline for submitting reimbursement applications in accordance with Section 376.3071(12), Florida Statutes, (Supp. 1996) to be absolute. Consequently, on February 11, 1997, the Department denied the Worldwide application because it had been filed beyond the December 31, 1996, deadline recognized by the statute. Worldwide contested that proposed agency action by requesting a hearing to examine the issue of the timing of the application submission.

   Consequences of Untimely Application

   
   

5. In Florida, petroleum taxes are deposited for the benefit of the Inland Protection Trust Fund. The Florida Legislature allows monies to be appropriated from those deposited funds. In that budgetary process, the Governor's office serves as liaison in requesting the Legislature to appropriate monies from the Inland Protection Trust Fund in relation to the costs of cleanup of sites contaminated by petroleum products. To assist the Governor's office, the Department identifies the need for covering the costs of the clean-up and makes a recommendation to the Governor to provide to the Legislature concerning the amount to be appropriated for the clean-up.

6. In the history of the clean-up program, in 1995, problems were experienced with fraudulent and inflated claims calling for reimbursement for the cost of clean-up. This led to a debt of approximately $550,000,000.00. There was a concern that that debt could not be repaid in a reasonable time frame. In response, the Department, as authorized by the Legislature in action taken in 1996, negotiated a bond transaction through the Inland Protection Financing Corporation.

7. With the advent of the bond issue, $343,000,000.00, not to include the cost of funding the bond, was made available to pay for petroleum clean-up.

8. That bond issue was designed to fund the payment of reimbursement applications that had been received before the end

   of the life of the petroleum clean-up reimbursement program in place.

9. During the 1996 session, in which the Legislature approved the bond issue, the Legislature also made changes to the petroleum clean-up program.

10. The changes were fundamental in that applicants were no longer reimbursed for clean-up work that had been performed. With the advent of the legislative changes, petroleum clean-up, under a system calling for payment from the fund, could only be conducted if an applicant was pre-approved to conduct the clean- up.

11. As part of that process of gaining funds pursuant to the bond issue, the Department performed an analysis, as authorized by the Legislature, to determine that amount necessary to pay existing obligations that had accrued under the petroleum clean-up reimbursement program that predated the Legislative change in 1996. To ascertain the existing obligation, the Department totaled the known dollar amount associated with the existing reimbursement applications and a portion of unreviewed reimbursement applications that had been received. The Department adjusted the sum to be paid in association with applications that had not been reviewed to that point, having in mind prior experience in which only 82 percent of claims had been allowed. The overriding concern by the Department was that it needed to determine whether the bond issue would be sufficient to

    defease the backlog of applications for reimbursement previously filed.

12. Information concerning the reimbursement obligations was made known to the Florida Supreme Court in bond validation proceedings held before that court. The Inland Protection Finance Corporation was also made aware of the reimbursement obligations.

13. In 1997, the Department gave further information to the Inland Protection Financing Corporation, indicating that the amount of bond was sufficient for reimbursement obligations.

14. The Department in association with the terms of the bond transaction agreed that the bond proceeds would not be used to fund claims that were received after January 3, 1997. The deadline for submitting applications had been extended until January 3, 1997, by virtue of a statutory amendment found at Section 376.3071(12), Florida Statutes, (1997). Therefore, consistent with the statutory change, the Department had allowed applications submitted after December 31, 1996, but before January 4, 1997, to be considered on their merits. The

    December 31, 1996, deadline had existed under Section 376.3071(12), Florida Statutes (Supp. 1996).

15. The statutory change occurred because a number of applications that were filed pursuant to the December 31, 1996, deadline set forth in Section 376.3071(12), Florida Statutes (Supp. 1996) did not meet that deadline. The reason for this

    failure was due to weather conditions that caused overnight couriers, Federal Express and United Parcel Service, to be unable to deliver parcels to the Tallahassee, Florida, airport. These applications, as other applications, were sent to the Department at a Tallahassee, Florida, address. Based on the inability of the two couriers to deliver applications under the timeline anticipated, the Department did not receive that group of applications until January 2, 1997. Subsequently, the applications were accepted as timely based upon the amendment found in Section 376.371(12), Florida Statutes (1997) which extended the filing deadline until January 3, 1997.

16. As a policy consideration, the Department believes it must strictly enforce the deadline for submission of reimbursement applications, as extended by the Legislature, to avoid the future accrual of debt for applications submitted after January 3, 1997, which the Department cannot reasonably anticipate. Apropos of the present case, the Department does not believe that it is well-advised to allow even a single claim for reimbursement, if that claim was received after January 3, 1997.

17. To date, 64 applications have been received by the Department subsequent to December 31, 1996. All but six of those applications were received no later than January 3, 1997. Two of that six applications for reimbursement are still pending before the Department.

18. Historically 22,000 applications for petroleum clean-up have been received by the Department since 1986. At the time of the hearing, 9,000 applications were pending before the Department. In December 1996, 3,000 applications were received calling for reimbursement of costs.

19. At the time of hearing, approximately $340,000,000 in reimbursement claims had not been satisfied.

20. Petitioner makes its claim to be excepted from the deadline for submitting its application based upon the doctrine of equitable tolling.

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties pursuant to Sections 120.569 and 120.57(1), Florida Statutes.

22. Worldwide sought reimbursement for environmental clean- up expenses associated with the Save-A-Stop site.

23. Section 376.3071(12), Florida Statutes (Supp. 1996), required that:

    
    

    . . . all reimbursement applications pursuant to this subsection must be submitted to the department by December 31, 1996. The department shall not accept any applications for reimbursement or pay any claims on applications for reimbursements received after that date.

24. In the next legislative session, the law for filing applications was amended in Section 376.371(12), Florida Statutes (1997), to read:

    . . . all reimbursement applications pursuant to this subsection must be submitted to the department by January 3, 1997. The department shall not accept any applications for reimbursement or pay any claims on applications for reimbursement received after that date; provided, however, if an application filed on or prior to January 3, 1997, was returned by the department on the grounds of untimely filing, it shall be refiled within 30 days after the effective date of this act in order to be processed.

25. Worldwide was untimely in filing its application under either version of the law.

26. The statute in question establishing the deadline for submitting applications for reimbursement is jurisdictional in nature, such as to bar any right to apply for reimbursement based upon the failure to meet the deadlines set forth in the statute. This conclusion is reached in view of the language set forth in the 1996 and 1997 versions of the statute. Read individually, or together, both versions of Section 376.3071(12), Florida Statutes, constitute a bar to the consideration of late filed applications. The individual versions of the statute are not statutes of limitations. As such the deadlines announced in the two versions may not be waived in view of equitable considerations, such as tolling. See Machules vs. Department of Administration, 502 So. 2d 437 (Fla. 1st DCA 1986).

27. Here, Worldwide claims the right to relief based upon the doctrine of equitable tolling as announced in Machules vs. Department of Administration, 523 So. 2d 1132 (Fla. 1988). For reasons stated, it fails in that attempt.

28. Even if the statute is not jurisdictional, rather it is a statute of limitations, to succeed under the reasoning in the Machules case before the Florida Supreme Court, Worldwide must prove that it has been lulled into inaction by the Department, or has in some extraordinary way been prevented from asserting its rights, or timely but mistakenly asserted those rights in another forum. To prevail Worldwide must show excusable ignorance of the time limitations set forth in Section 370.3071(12), Florida Statutes, (Supp. 1996) and that the consequences of its excusable conduct do not prejudice the Department.

29. The Department did nothing to mislead or lull Worldwide into inaction, causing Worldwide to be late in filing the application for participation in the reimbursement program. Worldwide did not timely file its action in another forum before submitting the application for consideration by the Department beyond the deadline for filing. Notwithstanding, the circumstances that Mr. Steinberg encountered in his personal life, those circumstances were not so extraordinary that they prevented Worldwide from timely requesting participation in the reimbursement program. Mr. Steinberg as the principal for Worldwide was not ignorant of the time limitation for filing.

Finally, the possible prejudice to the Department by allowing the application is more than mere speculation, given the nature of the reimbursement program described in the fact finding.

RECOMMENDATION

Upon consideration of the facts found and the conclusions of law reached, it is,

RECOMMENDED that a Final Order be entered denying the application of Worldwide to participate in the reimbursement program for clean-up expenses as untimely.

DONE AND ENTERED this 7th day of May, 1998, in Tallahassee, Leon County, Florida.

CHARLES C. ADAMS

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1998.

COPIES FURNISHED:

P. Tim Howard, Esquire

P. Tim Howard and Associates, P.A. 1424 East Piedmont Drive, Suite 202 Tallahassee, Florida 32312

Jeffrey Brown, Esquire

Department of Environmental Protection Douglas Building, Mail Station 35

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

Kathy Carter, Agency Clerk

Department of Environmental Protection Douglas Building, Mail Station 35

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

F. Perry Odom, General Counsel Department of Environmental Protection 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000

Virginia B. Wetherell, Secretary Department of Environmental Protection 3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

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: 97-001498

Orders for Case No: 97-001498