DAVID C. HASTINGS, )
vs. ) Case No. 02-1066F
Respondent. )
Pursuant to notice, the final hearing was held in this case on May 9, 2002, via video teleconference in Tampa and Tallahassee, Florida, before Lawrence P. Stevenson, a duly- designated Administrative Law Judge of the Division of
Administrative Hearings.
For Petitioner: Penelope T. Bryan, Esquire
Rahdert, Steele, Bryan & Bole, P.A.
St. Petersburg, Florida 33701-3703
For Respondent: Charles F. Tunnicliff, Esquire
Hardy L. Roberts, III, Esquire General Counsel
The issue in this case is whether Respondent, Department of Business and Professional Regulation, Board of Accountancy (the "Board" or the "Florida Board"), is liable to Petitioner,
David C. Hastings, for attorney's fees and costs pursuant to Section 57.111, Florida Statutes, and, if so, the amount of attorney's fees and costs Petitioner should be awarded.
On March 14, 2002, Petitioner, David C. Hastings, filed at the Division of Administrative Hearings a Petition for Award of Fees and Costs (the "Petition"), pursuant to Section 57.111, Florida Statutes, the "Equal Access to Justice Act." The Petition alleged: that Mr. Hastings has been a Virginia- licensed certified public accountant ("CPA") in good standing since 1974; that on June 22, 2001, Mr. Hastings submitted to the Board an application for licensure by endorsement as a CPA in Florida; that on August 15, 2001, in response to a request by the Board, Mr. Hastings submitted documentation of his Virginia licensure, of his having passed the Uniform CPA Examination with a grade of at least 75 on all four parts, and of his having
obtained a score of at least 90 percent on the Ethics Examination; that the Board notified Mr. Hastings by letter dated September 21, 2001, that it would issue a license with stipulations due to the fact that the State of Virginia was unable to provide Mr. Hastings' exact scores on the Uniform CPA Examination; that on September 27, 2001, the Board issued an order granting Mr. Hastings a conditional license that placed him on probation for a period of one year; that Mr. Hastings objected to his probationary status and filed a petition for formal administrative proceeding on October 27, 2001; that the petition caused the Board to reconsider its order of
September 27, 2001; and that by order dated December 17, 2001, the Board rescinded Mr. Hastings' probationary status and granted him unconditional licensure as a Florida CPA. The Petition alleged that the Board's action in placing Mr. Hastings on probation was not substantially justified, and that
Mr. Hastings was entitled to costs and attorney’s fees as a "small business party" under Section 57.111, Florida Statutes.
By Notice of Hearing entered April 1, 2002, this case was set for hearing to be held on May 9, 2002, in Tallahassee. By order dated April 12, 2002, the Notice of Hearing was amended to provide for hearing via video teleconference in Tallahassee and St. Petersburg.
At the final hearing, Petitioner testified on his own behalf and presented the testimony of Darryl Rouson as an expert on the reasonableness of the asserted costs and attorney’s fees. Petitioner's Exhibits 1 through 11, 12-1, 12-3, 12-4, 12-5, and
13 were admitted into evidence. Respondent presented the testimony of Martha P. Willis. Respondent's Exhibits 1 through
12 were admitted into evidence.
A one-volume Transcript of the proceeding was filed on May 20, 2002. The parties timely filed Proposed Final Orders. On June 5, 2002, Petitioner filed a list of objections to
Respondent's Proposed Final Order. On June 10, 2002, the Board filed a Motion to Strike the objections, noting that no law or rule authorizes a direct response to a proposed recommended order without allowance from the tribunal. The Board's Motion
to Strike is GRANTED.
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:
Respondent, the Board of Accountancy, is the state agency charged with the responsibility to regulate the practice of certified public accountants licensed within the state. Chapter 473, Florida Statutes.
One of the Board's duties is to certify applicants for licensure to the Department of Business and Professional Regulation. An applicant may seek licensure by passing the Florida examination prescribed by Section 473.306, Florida Statutes, or may seek licensure by endorsement as prescribed by Section 473.308(3), Florida Statutes.
Section 473.308(3), Florida Statutes, provides (emphasis added):
The board shall certify as qualified for a license by endorsement an applicant who:
1. Is not licensed and has not been licensed in another state or territory and who qualifies to take the examination as set forth in s. 473.306 and has passed a national, regional, state, or territorial licensing examination which is substantially equivalent to the examination required by s. 473.306; and
2. Has completed such continuing education courses as the board deems appropriate, within the limits for each applicable 2-year period as set forth in s. 473.312, but at least such courses as are equivalent to the continuing education requirements for a licensee in this state during the 2 years immediately preceding her or his application for licensure by endorsement; or
1. a. Holds a valid license to practice public accounting issued by another state or territory of the United States, if the criteria for issuance of such license were substantially equivalent to the licensure criteria which existed in this state at the time the license was issued; or
b. Holds a valid license to practice public accounting issued by another state or territory of the United States but the criteria for issuance of such license did not meet the requirements of subparagraph a., who qualifies to take the examination as set forth in s. 473.306 and has passed a national, regional, state, or territorial licensing examination which is substantially equivalent to the examination required by s. 473.306; and
2. Has completed continuing education courses which are equivalent to the continuing education requirements for a licensee in this state during the 2 years immediately preceding her or his application for licensure by endorsement.
The Uniform CPA Examination, prepared by the Board of Examiners of the American Institute of Certified Public Accountants, is administered throughout the United States and constitutes the primary means by which state boards of accountancy determine the competence of CPA candidates. The "substantially equivalent" language of Section 473.308(3)(b)1.a, Florida Statutes, underscored above, has been interpreted since at least 1981 as requiring a candidate for licensure by endorsement to demonstrate that his grade on the Uniform CPA Examination would have been a passing score in Florida at the time he sat for the examination. See Cohen v. State Board of Accountancy, DOAH Case No. 80-2332 (Recommended Order, June 22, 1981).
The Uniform CPA Examination consists of four sections.
Since at least 1949, Florida has required that a candidate pass each section of the examination with a score of 75 or better.
Cohen involved a candidate for licensure by endorsement who was a CPA licensed in the State of Pennsylvania. The evidence established that the Pennsylvania Board of Accountancy had determined to accept Mr. Cohen's score on the Uniform CPA Examination as passing, though he had failed to reach a score of
75 on two of the four sections. The Florida Board of Accountancy preliminarily denied Mr. Cohen's application because the criteria applied by the Pennsylvania board were not "substantially equivalent" to the Florida licensure criteria. The DOAH Hearing Officer recommended that the denial be upheld, and the agency's final order adopted that recommendation.
Martha P. Willis, the director of the Division of Certified Public Accountants, testified that the Board had also become aware that the State of Illinois had a practice of averaging the four sections of the examination to arrive at a passing score, rather than requiring a score of 75 or better on each section.
Ms. Willis testified that, from at least the early 1980's until 1996, the Board required any candidate for licensure by endorsement to submit his or her actual scores from the Uniform CPA Examination, to provide assurances that the
candidate's score would have constituted a passing grade in Florida at the time the exam was administered. Candidates who could not provide evidence of their exam scores would have their applications denied. No evidence was presented to establish that this practice was ever codified by rulemaking.
In 1996, the Board decided that outright denial was too onerous an outcome for a candidate who is licensed as a CPA in another state but who is unable to provide evidence of his actual examination scores. Since 1996, the Board has issued a license to such a candidate, but placed the candidate on probation for a period of one year, pending a practice review to ensure that the candidate possesses the technical ability and ethical attributes expected of a Florida CPA. Upon successful completion of the practice review, the probation is lifted and the candidate is fully licensed. The Board has not codified this practice through rulemaking.
Mr. Hastings is a Virginia-licensed CPA. At all times relevant to this proceeding, he has owned and operated Hastings & Associates, P.A. in Pinellas County. Aside from a secretary, Mr. Hastings constitutes the entire workforce of Hastings & Associates, which has historically performed uncomplicated bookkeeping for individuals and small businesses. At all times relevant to this proceeding, Mr. Hastings' combined business and personal assets were less than $2 million.
Seeking licensure by endorsement, Mr. Hastings wrote a letter dated May 10, 2001, authorizing the State Board of Accountancy of the Commonwealth of Virginia (the "Virginia Board") to release his regulatory records and test scores to the Florida Board.
On May 25, 2001, the Virginia Board sent a letter to the Florida Board. The letter verified that Mr. Hastings had passed each section of the Uniform CPA Examination with a score of 75 or better, but also stated: "due to Virginia file retention schedule no other information available." The letter verified that Mr. Hastings had passed the Ethics Examination with a score of 90 percent or better, and that no record existed that Mr. Hastings had been found guilty of any violation by the Virginia Board.
On June 22, 2001, Mr. Hastings submitted to the Florida Board an application for licensure by endorsement. On his application, Mr. Hastings answered affirmatively that he had unlawfully held himself out as a CPA in Florida prior to licensure. The Division of Certified Public Accountants investigated and found instances of Mr. Hastings having been disciplined in 1995 and 1998 for holding himself out as a CPA in Florida.
No evidence was presented that Mr. Hastings' prior discipline caused the Board to treat him any differently than it
did other candidates unable to verify their exact scores on the Uniform CPA Examination, and therefore no detailed findings are necessary on these incidents, which involved use of a business card stating that Mr. Hastings was a CPA.
Some time passed after filing the application, and Mr. Hastings became concerned as to its status. He communicated with Board staff, who told him the delay was due to the fact that his exact examination scores had not been provided by the Virginia Board.
At Mr. Hastings’ behest, the Virginia Board sent a second letter to the Florida Board, dated August 15, 2001. This letter restates that Mr. Hastings passed the Virginia Uniform CPA Examination, and adds:
A search of the Board's records reveals that Mr. Hastings was selected for renewal in 1984, so he was initially licensed in 1983 or earlier. In order to qualify for licensure in Virginia before 1984, the Board's 1981 regulation 5.01.03.05 states that "a grade of at least seventy-five shall be necessary for passing" the CPA examination.
On September 7, 2001, the Board adopted a staff recommendation that Mr. Hastings be granted a Florida CPA license with a one-year probationary period and practice review. Mr. Hastings received no prior notice of the Board's action.
By letter dated September 21, 2001, Ms. Willis informed Mr. Hastings of the Board's action. The letter stated, in relevant part:
One of the requirements for licensure is providing evidence of successful passage of the AICPA Uniform CPA Exam. According to the Virginia Board of Accountancy, due to the retention schedule, the exact exam dates and scores are not available, only that the applicant passed all four parts of the Uniform CPA exam with a score of 75% or above.
The Board, at the September 7, 2001 meeting, reviewed your application for CPA licensure and determined you would be issued a license with stipulations. The Board's stipulations are listed in the Order. Accordingly, the stipulations outlined in the Order must be adhered to.
The referenced Final Order, dated September 27, 2001, set forth the following conditions:
. . . Respondent must notify the Board when employment in Florida commences, at which time he will be placed on one-year probation. A review must be done prior to the end of the probation period. The review shall include five (5) tax returns, three
(3) compilations including any work papers and any audits or reviews if they have been performed. If the review has not been completed and presented to the Board, probation will be extended until the review is presented to the Board, at which time the Board may remove the probation or take such further action, as it deems necessary. This review will be conducted by a CPA/Consultant assigned by the Board and will be at Respondent's expense.
Mr. Hastings again contacted the Virginia Board concerning his score, and received a letter dated October 24, 2001, from Nancy Taylor Feldman, the executive director of the Virginia Board. Ms. Feldman's letter stated, in relevant part:
I have on several occasions in the past two months provided information to the Florida Board of Accountancy regarding your licensure status and Uniform CPA examination scores in the Commonwealth of Virginia.
In my latest effort to explain that the Virginia Board of Accountancy had provided written documentation to the Florida Board of Accountancy that you passed the Uniform CPA examination for Virginia with a grade on each of the four parts of at least 75, I was provided some insight into the action by the Florida Board of Accountancy. A staff member stated that because of the fire in New Jersey Department of Professional Regulation about ten years ago that destroyed all regulant [sic] records, the Florida Board of Accountancy had established a policy that if actual examination grades could not be provided from another state, there would be a probationary period established for those who wanted to be obtain [sic] a CPA license there.
I explained that if a candidate could not show proof that they had completed the Uniform CPA examination with a grade of at least 75 that a license could not be issued in Virginia, either. However, I explained that the Virginia Board had provided certification of your licensure status to the Florida Board of Accountancy and that our Board records substantiated that you received a grade of at least 75 on each of the four parts of the examination.
As I indicated to you, the Board does not have your examination record card from the
mid-1970s when you successfully completed the Uniform CPA examination and became licensed in Virginia. This morning, I personally reviewed the official minutes of the Board of Accountancy that are housed at the Virginia State Library. The minutes of the Board's meeting in April 1974 indicated by name, David C. Hastings, that your license application was approved by the Board, and you were granted Certificate Number 3883. It stated that you were a resident of Richmond, Virginia.
Further in support of the statement by the Virginia Board of Accountancy that you passed each of the four parts of the Uniform CPA examination with a grade of at least 75, Board Regulations 54-92-5 effective October 15, 1970, 54-92-5 effective November 15,
1972 and POR 3-28 effective February 15, 1975 require a grade of at least 75 to pass the Uniform CPA examination. The Board did not make adjustments in examination grades as the regulations did not provide any discretion to the Board to raise or lower the grade required to pass the examination
. . . .
As you are aware, last week, I contacted the American Institute of Certified Public Accountants (AICPA) in an effort to locate your grades. The AICPA owns the Uniform CPA examination and that organization has the grades for all candidates. The AICPA is not permitted to retain the grades with the name and social security number of the examination candidate. A candidate ID number is issued at the time of registration to take the examination. AICPA can locate the grades for you with the ID number.
Unfortunately, the Virginia Board does not have your candidate ID number and it is understandable that after nearly thirty years, you do not have that information
. . . . (emphasis in original)
On October 26, 2001, counsel for Mr. Hastings filed a petition for formal administrative hearing contesting the Board's decision to impose probationary status on Mr. Hastings' license. The petition asserted that the Board's rules made no provision for placing a licensee on probation for the reasons stated in Ms. Willis' letter of September 21, 2001, and that the Board's action was therefore based on an invalid non-rule statement or policy. The petition also claimed entitlement to reasonable costs and attorney’s fees under Section 57.111, Florida Statutes.
Upon advice of the Board's counsel, Ms. Willis did not forward the petition to the Division of Administrative Hearings. Rather, she placed it on the agenda for the next regularly scheduled public meeting of the Board on December 17, 2001.
Mr. Hastings was notified of this action by letter from Board staff dated November 6, 2001.
On or about December 7, 2001, Ms. Willis approved a staff recommendation to the Board that Mr. Hastings' petition be denied and that the Board decline to remove his probationary status. However, at some point prior to the Board meeting,
Ms. Willis had a telephone conversation with Ms. Feldman of the Virginia Board. Ms. Feldman conveyed to Ms. Willis essentially the same information contained in her October 24 letter to
Mr. Hastings: that she had reviewed the minutes from the Virginia Board meeting at which Mr. Hastings was licensed, and that Mr. Hastings was approved for license pursuant to standards substantially equivalent to the contemporaneous Florida standards, but that she could not locate Mr. Hastings' exact scores on the Uniform CPA Examination.
Ms. Willis testified that her conversation with Ms. Feldman served to distinguish this case from the blanket practice of requiring a probationary period for candidates
unable to produce exact scores. The distinguishing factor was Ms. Feldman's assurance that Virginia's loss of Mr. Hastings' scores was a unique case, not a statewide problem or practice. At the December 17, 2001, Board meeting, Ms. Willis stated:
. . . One thing I would like to clarify that in the correspondence that is in here is some point where I make reference to the Virginia Board of Accountancy-- their problem in this instance is that apparently they just lost that information relating only to Mr. Hastings. As you know we have instances in the past where some states have lost lots of information relating to lots of licensees because of floods and fires and whatever that does not appear to be the problem with Virginia. It doesn't appear that it would affect a lot of other people just in Mr. Hastings [sic] instance they have been unable to find out although they have given us assurances that their requirements are-- you have to have a grade of at least 75 or above in order to be licensed in Virginia.
No explanation was offered for the apparent contradiction between this explanation and the Virginia Board’s initial statement that Mr. Hastings’ scores were unavailable “due to Virginia file retention schedule,” which appeared to imply a general practice of discarding old test scores.
Moments later, the Board's counsel reiterated the widespread alteration and averaging of scores received from Pennsylvania and Illinois, pointing out that "there was history of not just losing information but also substantive problems." Counsel stated, "To my knowledge there has not been an issue in Virginia. I don't think we've ever seen where Virginia lost the grades in the first place. There has been no history in Virginia that there has been any changing of grades or modification of grades "
After this discussion, the Board adopted a motion "to remove the requirement for probation due to the fact that the loss of [Mr. Hastings'] grades by Virginia appears to be an isolated instance." On January 15, 2002, a Board order was entered rescinding the stipulations previously placed on
Mr. Hastings' Florida CPA license.
The Board is an "agency" as defined in Section 57.111, Florida Statutes; the Board initiated an administrative proceeding against Mr. Hastings in that it was required by law or rule to advise Mr. Hastings of a clear point of entry after
it issued his probationary license, a "recognizable event in the investigatory or other free-form proceeding of the agency," as set forth in Section 57.111(3)(b)3, Florida Statutes; and the Board was not a nominal party.
On March 14, 2002, Mr. Hastings filed the Petition in the instant case. An Affidavit of Fees and Costs Expended was attached to the Petition in which it is represented that attorney's fees in the amount of $1,459.00 and costs of $270.00 were reasonably incurred in the underlying case between October 18, 2001 and January 28, 2002. Also attached to the
Petition was a Supplemental Affidavit of Fees and Costs Expended in which it is represented that attorney's fees in the amount of
$462.00 were reasonably incurred between January 29, 2002 and February 28, 2002. On May 8, 2002, Mr. Hastings filed a Second Supplemental Affidavit of Fees and Costs Expended in which it is represented that attorney's fees in the amount of $2,142.00 and costs of $176.00 were reasonably incurred between March 7, 2002 and April 30, 2002.
The affidavits and expert testimony offered at the hearing establish that the claimed fees totaling $4,063.00 and costs totaling $908.00 were reasonably incurred.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this
proceeding. Sections 57.111 and 120.57, Florida Statutes (2000).
Attorney's fees and costs have been sought by
Mr. Hastings in this matter pursuant to Section 57.111, Florida Statutes, the "Equal Access to Justice Act."
The legislative intent for enacting the Equal Access to Justice Act is provided in Section 57.111(2), Florida Statutes:
(2) The Legislature finds that certain persons may be deterred from seeking review of, or defending against, unreasonable governmental action because of the expense of civil actions and administrative proceedings. Because of the greater resources of the state, the standard for an award of attorney's fees and costs against the state should be different from the standard for an award against a private litigant. The purpose of this section is to diminish the deterrent effect of seeking review of, or defending against, governmental action by providing in certain situations an award of attorney's fees and costs against the state.
In pertinent part, Section 57.111(4)(a), Florida Statutes, provides for an award of attorney's fees and costs under the following circumstances:
(4)(a) 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.
The Board has contested whether Mr. Hastings is a "small business party" and whether Mr. Hastings "prevailed" as those terms are employed in Section 57.111, Florida Statutes. The Board has affirmatively asserted that its actions were "substantially justified." Finally, the Board has contested whether Mr. Hastings is entitled to attorney's fees and costs incurred after entry of the order rescinding his probationary status.
The Board's contention that Mr. Hastings is not a "small business party" is rejected. The Board correctly cites the proposition that the Equal Access to Justice Act does not authorize an award of fees and costs to an individual employee of a small business who recovers a judgment against a state agency in his or her individual capacity. See Florida Real Estate Commission v. Shealy, 647 So. 2d 151, 152 (Fla. 1st DCA 1994); Department of Professional Regulation v. Toledo Realty, Inc., 549 So. 2d 715, 716 (Fla. 1st DCA 1989).
In the instant case, however, Mr. Hastings operates a professional practice as the sole proprietor of a professional association and is thus a "small business party" under Section 57.111(3)(d)1.b, Florida Statutes. In Albert v. Department of
Health, 763 So. 2d 1130, 1131-32 (Fla. 4th DCA 1999), the court disposed of the precise issue raised here by the Board:
Although we must agree with the Department that a literal interpretation of [Section 57.111(3)(d)1.a & b] would not include the appellant, this interpretation would lead to an absurd result which the legislature could not have intended. Amente v. Newman, 653 So. 2d 1030 (Fla. 1995). It is clear from the language of subsections (a) and (b), which both contain the term "including a professional practice," that the legislature intended for the statute to apply to professionals, regardless of whether they practice as sole proprietorships or professional service corporations. What the legislature overlooked is that the license to operate, which is generally the subject of the administrative proceedings, is issued to the individual, not the professional service corporation. The Department's interpretation would mean that professionals who have incorporated are not covered by subsection (b), and would render subsection
(b) meaningless.
See also Ann & Jan Retirement Villa, Inc. v. Department of Health and Rehabilitative Services, 580 So. 2d 278 (Fla. 4th DCA 1991).
In its proposed final order, the Board for the first time contended that Mr. Hastings cannot be considered a “small business party” because his company was engaged in providing simple bookkeeping, not CPA services. This contention is also rejected. Mr. Hastings’ professional association historically did not provide CPA services because he had yet to obtain Florida licensure. Because the issue was not raised at hearing,
Mr. Hastings offered no evidence that his company is now offering CPA services. However, the lengths to which
Mr. Hastings went to obtain an unencumbered Florida CPA license allows the inference that Hastings & Associates, P.A., is now providing CPA services.
The Board's contention that Mr. Hastings is not a "prevailing" party is rejected. The Board's order granting
Mr. Hastings' conditional licensure constituted a clear point of entry to formal administrative proceedings. Mr. Hastings filed a petition for formal proceedings, and ultimately succeeded in changing the Agency's mind. The Board claims that the situation was "murky," but any confusion as to Mr. Hastings' status as a prevailing party was caused by the Board's action in placing Mr. Hastings' petition on its consent agenda rather than forwarding it to the Division of Administrative Hearings.
The term "substantially justified" is defined in Section 57.111(3)(e), Florida Statutes, as follows:
(e) A proceeding is "substantially justified" if it had a reasonable basis in law and fact at the time it was initiated by a state agency.
Although Mr. Hastings has the ultimate burden of proving his entitlement to an award in this case, the Board has the burden of demonstrating that it was "substantially justified" in its actions. See Department of Health and
Rehabilitative Services v. South Beach Pharmacy, Inc., 635 So. 2d 117 (Fla. 1st DCA 1994). In South Beach Pharmacy, the
court indicated the following concerning the burden of proof in actions for fees pursuant to Section 57.111, Florida Statutes:
"The Act is designed to discourage unreasonable governmental action, not to paralyze agencies doing the necessary and beneficial work of government." Rudloe v. Department of Environmental Regulation, 33 Fla. Supp. 2d 203 (DOAH 1987). But, once a prevailing small business party proves that it qualifies as such under section 57.111, the agency that initiated the main or underlying proceeding has the burden to show substantial justification or special circumstances, Department of Health and Rehabilitative Services v. S.G., 613 So. 2d 1380, 1386-7 (Fla. 1st DCA 1993); Department of Professional Regulation, Div. of Real Estate v. Toledo Realty, Inc., 549 So. 2d 715 (Fla. 1st DCA 1989); Ray v. Department of Transportation, 9 F.A.L.R. 1537 (DOAH 1990); Gentele v. Department of Professional Regulation, 9 F.A.L.R. 310 (DOAH 1986),
aff'd, 513 So. 2d 672 (Fla. 1st DCA), in order to avoid liability for fees and costs.
Id. at 121.
Department of Health and Rehabilitative Services v.
S.G., cited in the above quotation, offers an instructive and persuasive discussion of the "substantial justification" standard:
In Gentele v. Department of Professional Regulation, Board of Optometry, 513 So. 2d 672 (Fla. 1st DCA 1987), this court addressed the issue of whether fees were properly awarded pursuant to section 57.111, and concluded that it must follow persuasive
federal authority in defining the scope of the statutory definition of "substantially justified." In that respect, McDonald v. Schweiker, 726 F. 2d 311, 316 (7th Cir.
1983), proposed that "non-frivolous" (as that term is utilized in federal rule 11) may not be equated with "substantial justification" for purposes of awarding fees under the Federal Equal Access to Justice Act. Rather, the phrase "substantially justified" was defined in McDonald as meaning that "the government must have a solid though not necessarily correct basis in fact and law for the position that it took" in the action. Id. at 316. Thus, the clear implication is 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.
613 So. 2d at 1386.
As set forth above, Section 473.308(3)(b)1.a, Florida Statutes, requires the Board to certify as qualified for licensure by endorsement an applicant who holds a valid license to practice in another state, "if the criteria for issuance of such license were substantially equivalent to the licensure criteria which existed in this state at the time the license was issued." Rule 61H1-28.006, Florida Administrative Code, provides the Board's elucidation of the general term "substantially equivalent:"
Upon application an individual who has been granted credit by another state for accounting practice or two or more subjects, on the Uniform CPA Examination, the specific examinations for which subjects were
identical to those offered in Florida, shall receive Florida credit for such out-of-state credit provided similar credit would have been granted in Florida at the time out-of- state credit was granted had he met all the Florida requirements and sat for such examinations in Florida. For purposes of this rule in determining whether to transfer examination credit from another state, the Board shall consider and hold binding the examination conditioning requirements in effect in Florida at the time the individual received out-of-state credit Any
person desiring to receive credit under this rule shall file an application with the Department and be certified as eligible to the Department by the Board.
It was undisputed that the Florida requirement at all relevant times was that the candidate pass with a score of at least 75 on each section of the Uniform CPA Examination. As early as May 25, 2001, the Virginia Board verified that
Mr. Hastings passed the Uniform CPA Examination with a score of at least 75 on each section. The Virginia Board was unable to provide Mr. Hastings' exact scores, either due to its general "file retention schedule" as stated in its May 25, 2001, letter, or due to its having lost Mr. Hastings' record, as Ms. Willis stated she was told by staff of the Virginia Board.
The sole reason provided by the Board to Mr. Hastings for the conditions placed on his license was that he was unable to provide his exact scores from the Uniform CPA Examination. The "substantially equivalent" language of Section 473.308(3)(b)1.a, Florida Statutes, does not necessitate such a
result. Likewise, Rule 61H1-28.006, Florida Administrative Code, requires confirmation that the out-of-state applicant would have received "similar credit" for the examination had he taken it in Florida, but does not require the applicant to provide exact scores. The Board failed to offer persuasive reasons why the information it received from the Virginia Board did not suffice to establish “substantial equivalence” between the Virginia and Florida standards.
It was only the Board's unwritten practice, initiated in 1996, of requiring exact scores that led the Board to place the condition of probation on Mr. Hastings' license. Whatever the factual premises upon which it was based, such a longstanding unwritten practice facially deviates from the rulemaking requirements of Section 120.54, Florida Statutes. Such a practice also invites arbitrary agency decision making, as evidenced by the Board's sudden deviation from the practice after Ms. Willis' telephone conversation with Ms. Feldman of the Virginia Board. This conversation did not change the fact that the Board did not know Mr. Hastings' exact scores, supposedly the decisive factor in his probationary status, yet caused the Board to reverse itself.
Mr. Hastings satisfied the requirements of the statute and the applicable rule in the first instance by demonstrating that he attained grades that would have been passing scores in
Florida at the time he sat for the exam, and he should have received his license without conditions. The Board has cited to no statute or rule providing a substantial justification in law for its initial action on Mr. Hastings' application.
The Board also contends that its initial action was substantially justified because Mr. Hastings' prior discipline could have provided a separate ground for placing him on probation. This contention is without merit. The only ground stated for Mr. Hastings' probationary status was his failure to provide exact examination scores. The Board gave Mr. Hastings no indication at any point in its deliberations that his prior discipline was an issue. The Board cannot now seek to justify its actions on grounds it declined to raise at the time of its initial decision. See, e.g., Cottrill v. Department of
Insurance, 685 So. 2d 1371 (Fla. 1st DCA 1996) (agency may not predicate discipline against a licensee on conduct never alleged in an administrative complaint).
Finally, the Board contends that Mr. Hastings should not be allowed costs and attorney's fees for services rendered in the fee litigation. The Board cites no Florida judicial decisions to support its contention, and the undersigned could discover no case dealing with this issue under Section 57.111, Florida Statutes. However, Florida courts have on many occasions ruled on this issue in relation to other attorney’s
fee statutes. See State Farm Fire & Casualty v. Palma, 629 So. 2d 830 (Fla. 1993) (attorney’s fees pursuant to Section 627.428, Florida Statutes); Seminole County v. Chandrinos, 2002 WL 1072054 (Fla. 5th DCA, May 31, 2002) (attorney’s fees in eminent domain proceeding); Gaston v. Department of Revenue, 742 So. 2d
517 (Fla. 1st DCA 1999) (attorney’s fees pursuant to Section 447.208(3), Florida Statutes); National Portland Cement Company v. Goudie, 718 So. 2d 274 (Fla. 2d DCA 1998) (attorney’s fees pursuant to Section 448.08, Florida Statutes); Oruga Corporation v. AT&T Wireless of Florida, Inc., 712 So. 2d 1141 (Fla. 3rd DCA 1998) (attorney’s fees pursuant to Section 768.79, Florida Statutes); Zepeda v. Klein, 698 So. 2d 329 (Fla. 4th DCA 1997) (attorney’s fees pursuant to Section 744.108(1), Florida Statutes); Florida Birth-Related Neurological Injury
Compensation Association v. Carreras, 633 So. 2d 1103 (Fla. 3rd DCA 1994) (attorney’s fees pursuant to Section 766.31(1), Florida Statutes).
The rule established by the Supreme Court of Florida in Palma and followed consistently by the district courts of appeal is that a prevailing party is entitled to compensation for attorney’s fees incurred in litigating his entitlement to attorney’s fees, but not for fees incurred in litigating the amount of such fees. Palma, 629 So. 2d at 833. There is no reason to assume that the courts would treat Section 57.111,
Florida Statutes, any differently than they have the statutes discussed in the cases cited above.
The instant case was brought to establish
Mr. Hastings’ entitlement to attorney’s fees and costs. The Board did not dispute the reasonableness of the hourly rate or of the time expended by Mr. Hastings’ counsel in pursuing the matter. It is concluded that Mr. Hastings is entitled to the full amount of fees and costs asserted in the three affidavits filed by his counsel.
Based upon the foregoing, it is concluded that the Board's initial administrative action in this matter was not "substantially justified" as those terms are used in Section 57.111, Florida Statutes. Mr. Hastings is, therefore, entitled to an award of attorney's fees and costs.
ORDERED that the Petition for Award of Fees and Costs Pursuant to Section 57.111, Florida Statutes, is GRANTED. Within the time specified in Section 57.111(5), Florida Statutes, the Department of Business and Professional Regulation, Board of Accountancy, shall pay attorney's fees of
$4,063.00 and costs of $908.00 on behalf of David C. Hastings.
DONE AND ORDERED this 17th day of June, 2002, in Tallahassee, Leon County, Florida.
LAWRENCE P. STEVENSON
Filed with the Clerk of the Division of Administrative Hearings this 17th day of June, 2002.
Penelope T. Bryan, Esquire Rahdert, Steele, Bryan & Bole, P.A.
St. Petersburg, Florida 33701-3703
Charles F. Tunnicliff, Esquire Assistant General Counsel Department of Business and
Hardy L. Roberts, III, Esquire General Counsel
A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original notice of appeal with the Clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
