STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION

W. R. FAIRCHILD CONSTRUCTION CO., LLC,

Petitioner, DOAH CASE NO.: 99-3619 DOT CASE NO.: 99-0177

vs.

DEPARTMENT OF TRANSPORTATION,

Respondent.

/

FINAL ORDER

This proceeding was initiated by a petition for an informal administrative hearing filed by Petitioner, W. R. FAIRCHILD CONSTRUCTION CO., LLC, (hereinafter FAIRCHILD) in response to a Notice of Intent to Deny Application for Qualification issued by the Respondent, DEPARTMENT OF TRANSPORTATION (hereinafter DEPARTMENT).

On August 26, 1999, the matter was referred to the Division of Administrative Hearings (DOAH) for appointment of an Administrative Law Judge to conduct the requested hearing. A hearing was scheduled and held on December 1, 1999, in Tallahassee, Florida, before Suzanne F. Hood, a duly appointed Administrative Law Judge. Appearances on behalf of the parties were as follows:

For Petitioner: F. Alan Cummings, Esquire

W. Guy McKenzie, Esquire Cummings & Snyder, P.A. 1004 DeSoto Park Drive Post Office Box 589 Tallahassee, Florida 32301

For Respondent: Brian A. Crumbaker, Esquire

Brian F. McGrail, Esquire

Florida Department of Transportation Haydon Burns Building

605 Suwannee Street, MS 58

Tallahassee, Florida 32399-0458

At the hearing, the parties offered seven joint exhibits that were accepted into evidence. FAIRCHILD and the DEPARTMENT

each offered the testimony of three witnesses. The transcript of the proceeding was filed on December 10, 1999. The DEPARTMENT and FAIRCHILD each filed a Proposed Recommended Order on December 15, 1999. A Recommended Order was entered on December 23, 1999. On January 7, 2000, the DEPARTMENT filed its exceptions to the Recommended Order.

STATEMENT OF THE ISSUE

As stated by the Administrative Law Judge in her Recommended Order, the issue presented was: "Whether the Respondent properly denied Petitioner's application for a certificate of qualification, pursuant to Chapter 337, Florida Statutes, and Rule [sic] 14-22, Florida Administrative Code, for failure to timely file the application."

BACKGROUND

On May 25, 1999, the DEPARTMENT filed its Notice of Intent to Deny Application for Qualification. On June 17, 1999, FAIRCHILD filed a request for an informal administrative hearing. Because there appeared to be disputed issues of material fact, the matter was referred to DOAH for a formal hearing. It was FAIRCHILD'S position that its application for qualification should be granted despite the fact that its receipt by the DEPARTMENT did not comply with Section 337.14(1), Florida Statutes. The DEPARTMENT'S position was that the statutory requirements are mandatory and not waivable. Because FAIRCHILD failed to satisfy the requirements, its application must be denied. A hearing was held on December 1, 1999, on December 23, 1999, the Administrative Law Judge entered her Recommended Order, and on January 7, 2000, the DEPARTMENT filed its exceptions to the Recommended Order.

DEPARTMENT'S EXCEPTIONS TO RECOMMENDED ORDER

The DEPARTMENT'S first exception is to the Administrative Law Judge's misconstruction of Rules 28- 106.103 and 14- 22.002(2), Florida Administrative Code, and Section 337.14(1), Florida Statutes. The DEPARTMENT argues that although an agency may waive a procedural or evidentiary rule, an agency has no authority to waive a substantive requirement embodied by statute. Wood-Hopkins Contracting Co. v. Dep't of Transp., 1982 WL 214761 (Fla. Div. Admin. Hrgs.).

Wood-Hopkins Contracting filed its financial statements eight (8) days late under the 1982 statute and Rule 14- 22.02(1)(b)1, Florida Administrative Code. Id. It, like FAIRCHILD, argued that being late a few days should not matter, that application of the statutory requirement was arbitrary, and

that denial of its right to bid on DEPARTMENT contracts as a result of the denial of its application for qualification was too harsh a result for such a minor violation. Wood-Hopkins Contracting, 1982 WL 214761*2. The hearing officer in Wood- Hopkins Contracting properly acknowledged the DEPARTMENT'S uniform policy of not waiving the rule in any cases, and requiring strict compliance. Id. He concluded that while an agency may waive a procedural or evidentiary rule, United Tel.

Co. v. Mavo, 345 So. 2d 648, 653 (Fla. 1977), an agency has no authority to waive a substantive requirement embodied in law.

Wood-Hopkins Contracting, 1982 WL at 214763. The DEPARTMENT lacked the ability to waive a substantive requirement and properly denied the application of Wood-Hopkins Contracting then and the application of Fairchild now.

The substantive requirement applicable to this matter is embodied in Section 337.14(1), Florida Statutes, and provides in relevant part:

Any person desiring to bid for the performance of any construction contract is excess of $250,000 which the department proposes to let must first be certified by the department as qualified pursuant to this section and rules of the department. . . .

Each application for certification shall be accompanied by the latest annual financial statement of the applicant completed within the last 12 months. If the financial statement shows the financial condition of the applicant more than four months prior to the date on which the application is received by the department, then an interim financial statement must also be submitted. . . .

The statute imposes a clear deadline for the filing of an applicant's financial statement with the application for a Certificate of Qualification. The statute noticeably fails to contain any language granting the DEPARTMENT discretion in cases such as this, allowing the DEPARTMENT to determine whether a material change has occurred to justify accepting a late filed application, or providing the DEPARTMENT any flexibility in applying the statute or determining the deadline.

The Administrative Law Judge's interpretation of Section 337.14, Florida Statutes, is contrary to its plain language and is also contrary to the DEPARTMENT'S consistent interpretation and application of the statute. Such consistent interpretation and application were established long before this case and were well settled by 1982 when Wood-Hopkins Contracting was decided.

The record reflects that the DEPARTMENT has uniformly applied the statute to determine whether an applicant has timely filed its financial statements as required by Section 337.14(1), Florida Statutes. The DEPARTMENT strictly construes the statutory time requirement for filing an application for qualification even on those occasions when the application is outside of the statutory four (4) month period by only one (1) day. However, if a contractor misses the four month deadline, an audited financial statement may be submitted to cure the deficiency.

An agency is entitled to deference in interpreting and applying its own rules and the statutes it implements. State Environmental Assistance Found. v. Board of County Comm'rs of Brevard County, 648 So. 2d 1081, 1084 (Fla. 1994); Pan American Airways. Inc. v. Florida Public Serv. Comm'n, 427 So. 2d 716, 720 (Fla. 1983). Unless FAIRCHILD could demonstrate that the DEPARTMENT'S interpretation and application of the rule and the statute are unreasonable or clearly erroneous, they must be accepted. Environmental Assistance Found., 648 So. 2d at 1084; Pan American, 427 So. 2d at 720.

The DEPARTMENT strictly construes Rule 14-22.002(2), Florida Administrative Code, and requires financial statements to show the financial condition of the applicant not more than four

(4) months prior to the date upon which the application is filed with the Contracts Administration Office. Less than strict construction and application of the statute and the rule would result in increasing demands upon the DEPARTMENT to accept late filed applications and financial statements and claims of disparate treatment of applicants whose applications are denied. Relaxation or waiver of the requirement was rejected in Wood- Hopkins Contracting, the pleas of all late filed applicants have been rejected by the DEPARTMENT, and the Administrative Law Judge in this case erred in concluding otherwise. The DEPARTMENT'S interpretation is consistent with the language and intent of the rule, and the DEPARTMENT'S unwavering application of Rule 14- 22.002(2), Florida Administrative Code. An agency is afforded wide discretion in the interpretation of a statute it administers and such interpretation should not be overturned unless clearly erroneous. State Contracting & Engineering Corp. v. Dep't of Transp.. 709 So. 2d 607 (Fla. 1st DCA 1998); Natelson v. Dep't of Ins., 454 So. 2d 31, 32 (Fla. 1st DCA 1984). In fact, even if a agency's interpretation is only one of several reasonable alternatives, deference must be given to an agency's interpretation so long as it is within the range of reasonableness and such interpretation must stand even though it may not appear to be the most reasonable of the alternatives. Expedient Servs. Inc. v. Weaver, 614 F. 2d 56 (5th Cir. 1980). The DEPARTMENT'S interpretation was not shown to be clearly erroneous, and no proof of a more reasonable interpretation or

application was offered. Although the Administrative Law Judge reached a legal conclusion that denying an application filed one day late is unreasonable, she made no findings to support her conclusion. The Administrative Law Judge erred in failing to give deference to the DEPARTMENT'S interpretation and erred in construing the rule and the statute contrary to their plain meaning and in a manner that will result in claims of disparate treatment.

The Administrative Law Judge's statement that "the disqualification of a contractor, which has performed satisfactorily for Respondent for over fifty years because the application .v one day late is unreasonable" (Conclusion of Law No. 41), is not supported by any findings and is contrary to the law. While the Administrative Law Judge may sympathize with the plight FAIRCHILD has created for itself, the literal language of the statute commands the conclusion that the application must be denied. If the literal language of the statute is deemed to be unfair, the issue is a policy matter to be corrected by the legislature, not a court or the Division of Administrative Hearings. See Hawkins v. Ford Motor Co., 24 Fla. L. Weekly 5480,

482 (Fla. October 14, 1999); Kuch v. Llovd, 616 So. 2d 415, 419420 (Fla. 1992). There is no basis in the record or the law to declare FAIRCHILD'S application timely received under the statute or the rule.

The DEPARTMENT'S first exception is accepted.

The DEPARTMENT'S second exception is to Conclusions of Law No. 33, 34, 38, and 39, and the Administrative Law Judge's application of Rule 28-106.103, Florida Administrative Code.

Rule 28-106.103, Florida Administrative Code, states in relevant part:

Except as provided in Rule 28-106.217, five days shall be added to the time limits when service has been made by U.S. Mail.

Application of this five (5) day mailing rule to alter a statutory requirement is erroneous. Rule 28-106.103, Florida Administrative Code, is similar to Florida Rule of Civil Procedure 1.090(e), which states:

Additional Time after Service by Mail. When a party has the right or is required to do some act or take some proceeding within a prescribed period after the service of a notice or other paper upon that party and the notice or paper is served upon that party by

mail, 5 days shall be added to the prescribed period.

Conclusion of Law 34 states: "Rule 28-106.103, Florida Administrative Code, allows for five days to be added to the time limits when service has been made by U.S. Mail." FAIRCHILD'S certification expires annually as a matter of law. The DEPARTMENT'S routine reminder to FAIRCHILD of the date its certification will expire is insufficient to trigger the five (5) day grace period for service by mail anticipated by the rule. A model rule allowing for additional time to be added to prescribed time limits has been applied to extend the requirement of Rule 4- 121.072, Florida Administrative Code, that "the department [of Insurance] shall allow ten (10) days in which any party of record may submit exceptions to recommended orders" only when service is made by mail. Beacon Finance v. Dep't of Ins., 656 So. 2d 197 (Fla. 1st DCA 1995) (emphasis added). Beacon is not dispositive, as the result may have been different if the word submit had been something less ambiguous, like filed or received. If a rule of civil procedure granting an additional five (S) day grace period after service by mail cannot extend a statutory time period, neither can a model agency rule. City of Fernandina Beach v.

Page. 682 So. 2d 573 (Fla. 1st DCA 1996); Wood-Hopkins

Contracting, 1982 WL 214761.

In Finding of Fact No. 26 the Administrative Law Judge finds that the DEPARTMENT has a policy of not allowing the five- day grace period for service by mail. This is an over simplification. The DEPARTMENT'S interpretation and Rule 28- 106.403, Florida Administrative Code, emphasize the legislature's mandate that four months means four months. The DEPARTMENT'S interpretation is consistent, reasonable, and entitled to deference. The Administrative Law Judge erred in her construction and application of the rule and in her failure to give deference to the DEPARTMENT'S interpretation and application of the rule, which has not been shown to be unreasonable or clearly erroneous.

Moreover, the competent substantial evidence in the record is undisputed that the DEPARTMENT receives approximately twenty

(20) late applications per year, and that all late applications received by the DEPARTMENT have been denied. To create and apply a new standard for the DEPARTMENT in this case, by creating an exception to the mandatory filing deadline, leads to an arbitrary and capricious result in this case and claims of disparate treatment by applicants whose late applications have been previously denied.

The DEPARTMENT'S second exception is accepted.

The DEPARTMENT'S third exception is to the last sentence of Finding of Fact No. 3 that "The application directs applicants to 'mail' the completed forms to Respondent's Contracts Administration Office."

FAIRCHILD admitted that despite the word "mail" on the application, FAIRCHILD knew it was not required to mail the application and financial statement and that the documents could have been sent by overnight delivery. In fact, FAIRCHILD admitted that overnight delivery would have been easier. The competent substantial evidence in this record establishes that while many contractors hand deliver the completed application to the DEPARTMENT, most contractors send their applications by express mail. There is no evidence that anyone, let alone anyone at FAIRCHILD, understood that the statement that those documents should be mailed was mandatory or that mailing was the only acceptable method of submittal.

While the statement about mailing the completed forms is accurate, to the extent such a finding is meant to imply, or could be interpreted to imply, that FAIRCHILD was required to mail its application and financial statements, it must be rejected. The statement on the application that it be mailed cannot support subsequent findings of fact or conclusions of law allowing additional days to extend FAIRCHILD'S statutory deadline because it was not timely received as required by statute and rule.

The DEPARTMENT'S third exception is accepted.

The DEPARTMENT'S fourth exception is to Findings of Fact No. 7 and 8, and Conclusion of Law 37 regarding the state of FAIRCHILD'S financial condition. The Administrative Law Judge addresses FAIRCHILD'S audit in Finding of Fact No. 7 and concludes in Finding of Fact No. 8 that there was no material change in FAIRCHILD'S financial condition over the holiday weekend from December 31, 1998, to January 4, 1999. These findings are irrelevant and cannot support the conclusions and recommendation of the Administrative Law Judge in this proceeding.

Section 337.14(1), Florida Statutes, and Rule 14-22.002(2), Florida Administrative Code, require an audited financial statement to show the financial condition of the applicant no more than four (4) months prior to the date on which the application [for qualification] is "received by the department."

§ 337.14(1), Fla. Stat. The statute also provides that an interim financial statement may be included should the annual financial statement fail to reflect the financial condition of the applicant within the statutorily required time period. This

interim financial statement must meet the same criteria as the annual financial statement. See Basic Asphalt & Construction Corp. v. Florida Dep't of Transp., DOAH Case No. 84-3563BID (February 8, 1985). The statute does not authorize the DEPARTMENT to consider, let alone presume, there has been no material change in the financial condition of an applicant when the applicant fails to ensure the application is timely "received" by the DEPARTMENT. As such, the DEPARTMENT is without authority to determine that an applicant's financial statements reflect the requisite period required by statute.

These findings of fact are irrelevant to this proceeding.

To the extent they are included to support the Administrative Law Judge's erroneous interpretation of Section 337.14(1), Florida Statutes, and Rule 14-22.002(2), Florida Administrative Code, they must be rejected. Conclusion of Law No. 37 is an erroneous construction of the law and erroneously empowers the DEPARTMENT to look behind an applicant's late filed application and financial statements to determine whether the late filing had any material affect on a company's financial condition. No statutory authority has been offered to support a conclusion that the DEPARTMENT can accept late filed applications, let alone make determinations regarding the financial condition of the applicant during a period not reflected in the financial statements provided.

The DEPARTMENT'S fourth exception is accepted.

The DEPARTMENT'S fifth exception is to Findings of Fact No.

10, 11, and 21, lines 1-3 of Finding of Fact No. 22, and Conclusion of Law No. 36 regarding expectations of service from the postal service.

FAIRCHILD'S subjective expectations regarding mail delivery and FAIRCHILD'S anticipated receipt of its application and financial statement by the DEPARTMENT'S Contracts Administration Office on or before April 30, 1999, are irrelevant. Similarly irrelevant are postal service standards of quality of service and mail delivery between Tallahassee and Mississippi. By statute, the application for Certificate of Qualification must be accompanied by audited annual financial statements that reflect the financial condition of the applicant not more than four (4) months prior to the date on which the application is "received by the department." § 337.14(1), Fla. Stat. Pursuant to Rule 14- 22.002(2), Florida Administrative Code, "if the audited financial statements show the financial condition of the applicant more than four months prior to the date in which the application is filed with the Contracts Administrative Office, then audited interim financial statements must also be submitted." FAIRCHILD by statute and by rule has the obligation to ensure that the

application and financial statement are received by the Contracts Administration Office within the time provided by statute. Tony Depaul & Sons v. Transp.. DOAH Case No. 95-2944 (October 16, 1995); Wood-Hopkins Contracting, 1982 WL 214761.

There is no competent, substantial evidence in the record that FAIRCHILD'S application and financial statements sent from Hattiesburg, Mississippi, or from anywhere else, were timely received by the DEPARTMENT'S Contracts Administration Office in Tallahassee, Florida. FAIRCHILD failed to comply with the requirements of Section 337.14(1), Florida Statutes, and FAIRCHILD'S application was properly denied. Postal service standards and FAIRCHILD'S subjective expectation of the postal service are irrelevant.

The DEPARTMENT'S fifth exception is accepted.

The DEPARTMENT'S sixth exception is to lines 3-6 of Finding of Fact No. 22, and the burden placed therein on the DEPARTMENT to explain a "delay" in the mail delivery of FAIRCHILD'S application.

The ability of the postal service to deliver first class mail is not an issue in this case and the DEPARTMENT has no burden to explain or show cause for any perceived delay in the receipt of FAIRCHILD'S application by the DEPARTMENT'S Contracts Administration Office. It is not required of the DEPARTMENT, nor would it serve any useful purpose for the DEPARTMENT, to present testimony of even one person, let alone hundreds of thousands of people, who could attest to the fact that mail they properly sent was never received, or received later that expected. The statute places the burden on FAIRCHILD to ensure that the application and financial statement are timely received by the DEPARTMENT. Thus, if delay is a defense to FAIRCHILD'S late filing, FAIRCHILD may have prevailed under equitable principles if it established that any delay in the application's receipt resulted from the actions the DEPARTMENT. However, this record is devoid of any such proof.

The DEPARTMENT'S sixth exception is accepted.

The DEPARTMENT'S seventh exception is to Finding of Fact No. 25 and its revelation that certain four month periods contain more days than other four month periods.

Finding of Fact No. 25 concludes that when calculating four months under the statute, some applicants may have in excess of one hundred twenty (120) days to file an application and financial statements depending upon when the applicant's fiscal year ends. While correct, this finding is irrelevant. Prior to

1986, Section 337.14(1), Florida Statutes, provided: "If such [financial] statement reflects the financial condition of the applicant more than 120 days prior to the application date, then an interim financial statement reflecting conditions no more than

120 days prior to application shall also be submitted." In 1986, Section 337.14(1), Florida Statutes, was amended to require that a financial statement reflect the financial condition of the applicant not more than four (4) months prior to the date on which the application was "received by the department." Ch. 86- 243, § 33, at 1835-1836, Laws of Fla. "When the legislature amends a statute, we presume it intended the statute to have a different meaning than that accorded it before the amendment." State v. Mark Marks. P.A., 698 So. 2d 533, 541-542 (Fla. 1997). The legislature, by its amendment rejected a deadline calculated by days (i.e., one hundred twenty (120) days) in favor of a monthly calculated deadline. FAIRCHILD'S fiscal year ends December 31 of each year. As such, its application for Certificate of Qualification and accompanying financial statements which must be received by the DEPARTMENT within 4 months are due on April 30 of the following year. They were not.

The DEPARTMENT'S seventh exception is accepted.

FINDINGS OF FACT

After review of the record in its entirety, it is determined that the Administrative Law Judge's Findings of Fact contained in paragraphs 1, 2, 4-6, 9, 12-20, 23, 24, and 26-28, and the first two sentences of Finding of Fact No. 3 of the Recommended Order are supported by the record and are accepted and incorporated as if fully set forth herein; Findings of Fact contained in the last sentence of paragraph 3, and paragraphs 7, 8, 10, 11, 21, 22, and 25 are rejected as irrelevant or not supported by competent substantial evidence.

CONCLUSIONS OF LAW

1. The DEPARTMENT has jurisdiction over the subject matter of and the parties to this proceeding pursuant to Chapters 120 and 337, Florida Statutes.

   
   

2. The Conclusions of Law contained in paragraphs 29-32, 35, 40, and 41 of the Recommended Order are fully supported in law. As such, they are adopted and incorporated as if fully set forth herein.

   
   

3. The Conclusions of Law contained in paragraphs 33, 34, and 36-39 of the Recommended Order are rejected as not supported in the law.

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

ORDERED that those portions of the Administrative Law Judge's Recommended Order, as detailed hereinabove are hereby adopted. It is further ORDERED that the Findings of Fact and Conclusions of Law hereinabove rejected and the Recommendation of the Administrative Law Judge in the Recommended Order that a final order be entered approving the application for a certification of qualification of Petitioner, W.R. FAIRCHILD CONSTRUCTION CO., LLC, are hereby rejected. It is further

ORDERED that the application for a certificate of qualification of Petitioner, W.R. FAIRCHILD CONSTRUCTION CO., LLC, is hereby denied.

DONE AND ORDERED 9th day of March, 2000.

THOMAS F. BARRY, JR., PE.

Secretary

Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399

NOTICE OF RIGHT TO APPEAL

THIS ORDER CONSTITUTES FINAL AGENCY ACTION AND MAY BE APPEALED BY ANY PARTY PURSUANT TO SECTION 120.68, FLORIDA STATUTES, AND RULES 9.110 AND 9.190, FLORIDA RULES OF APPELLATE PROCEDURE, BY FILING A NOTICE OF APPEAL CONFORMING TO THE REQUIREMENTS OF RULE 9.110(d), FLORIDA RULED OF APPELLATE PROCEDURE, BOTH WITH THE APPROPRIATE DISTRICT COURT OF APPEAL, ACCOMPANIED BY THE APPROPRIATE FILING FEE, AND WITH THE DEPARTMENT'S CLERK OF AGENCY PROCEEDINGS, HAYDON BURNS BUILDING, 605 SUWANNEE STREET, M.S. 58, TALLAHASSEE, FLORIDA 32399-0458, WITHIN THIRTY (30) DAYS OF RENDITION OF THIS ORDER.

Copies furnished to:

F. Alan Cummings, Esquire

W. Guy McKenzie, Esquire Cummings & Snyder, P.A. 1004 DeSoto Park Drive Post Office Box 589

Tallahassee, Florida 32302-0589

Brian A. Crumbaker, Esquire Brian F. McGrail, Esquire

Florida Department of Transportation 605 Suwannee Street, MS 58

Tallahassee, Florida 32399-0458

Suzanne F. Hood Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

Juanita Moore, Manager Contracts Administration Office

Florida Department of Transportation 605 Suwannee Street, MS 55

Tallahassee, Florida 32399-0450

Docket for Case No: 99-003619

Orders for Case No: 99-003619