STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HAUL-IT, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 81-2624

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Tallahassee, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Robert T. Benton II, on January 28, 1982. The Division of Administrative Hearings received the hearing transcript on February 17, 1982. The parties were represented by counsel:

APPEARANCES

For Petitioner: Patrick E. Hurley, Esquire

Post Office Drawer 1049 Tallahassee, Florida 32302

For Respondent: Vernon L. Whittier, Jr., Esquire, and

Ella Jane P. Davis, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

On September 23, 1981, Sunil B. Nath, respondent's "MBE Liaison Officer," wrote Mrs. Helen B. Real of Haul-It, Inc., advising that respondent intended to deny petitioner's "request for certification as a Minority Business Enterprise.

. .[because petitioner] lacks independent minority business status and the required minimum control and day-to-day policy decision making." On October 12, 1981, petitioner filed with respondent its petition for formal proceeding alleging that petitioner had "[o]n or about November 5, 1980,. . .submitted a Florida Department of Transportation Minority Business Enterprise Certification Form #1 to Respondent requesting that it be certified as a Minority Business Enterprise. . .[and received from respondent] a letter. . .stating that Petitioner had met the requirements for certification as a Minority Business Enterprise and. . .was certified as such for a period of one year effective November 6, 1980"; that respondent thereafter sent the letter of September 23, 1981, even though petitioner "had no request for certification as a Minority Business Enterprise pending at the time"; and that respondent violated Section 120.60(6), Florida Statutes (1979), if these Proceedings are in the nature of license revocation cases; or violated Section 120.60(2), Florida Statutes (1981), if these proceedings are in the nature of license application proceedings.

The parties entered into a prehearing stipulation in which they agreed that "[t]here are no issues of law in controversy," and further narrowed the issues by agreement that the factual question was, "whether Petitioner should be certified or recertified[?]" The emergency rule in force at the time notice of hearing issued was superseded by Chapter 14-78, Florida Administrative Code, effective December 9, 1981, which is in evidence as Hearing Officer's Exhibit No. 1.

FINDINGS OF FACT

1. Petitioner Haul-It, Inc., is a trucking company in the business of hauling road building materials. It owns 19 trucks and 13 trailers worth about

   $106,000; and owes between $75,000 and $79,000 to a bank. Occasionally petitioner engages additional trucks and drivers. All but eight of its 15 or 16 employees are truck drivers.

   
   

2. Haul-It, Inc., was organized in 1973. Jack Taylor and his father started the business but later sold out to Hubert E. Real, the president, half- owner and operator of Columbia Paving, and Wiley Jinwright, a 24-year employee of Columbia Paving. Mr. Jinwright became president of Haul-It, Inc., and Jack Taylor stayed on as truck foreman. Messrs. Real and Jinwright each owned 20 shares of stock, representing half interest in petitioner. Columbia Paving itself has never held any of the 40 shares of stock that petitioner has issued.

   
   

3. In November of 1980, Mr. Real conveyed all 20 of his shares to his wife, Helen Real; and Mr. Jinwright conveyed one share to Mrs. Real. Both transfers of stock to Mrs. Real were gratuitous. She knew at the time that her ownership might help Haul-It, Inc., qualify as a minority business enterprise. In addition, Mr. Real "had had a couple of heart attacks" (T. 14) and Mrs. Real "thought it would be nice to have a related [to Columbia Paving] business." (T. 14.) The evidence did not reveal whether Mr. Real has spent more, less, or the same amount of time with petitioner's affairs since his divestiture as before. Mr. Real remains active as president of Columbia Paving. From November of 1980 to the time of hearing, Mrs. Real has owned 52.5 percent of petitioner's stock and Mr. Jinwright has owned 47.5 percent.

   
   

4. Petitioner's only offices are housed in a trailer located on land owned by Columbia Paving. Haul-It, Inc., pays Columbia Paving rent for the land on which its office trailer, trucks, and other equipment are parked. At the time of the hearing, between 70 and 80 percent of Haul-It, Inc.'s work was being performed under contract to Columbia Paving. As far as the evidence showed, petitioner has always performed most of its services under contract to Columbia Paving. Although it has had other customers, Columbia Paving is petitioner's only regular customer. (T. 27.)

   
   

5. Petitioner uses Columbia Paving's computer to keep its books and shares a bookkeeper with Columbia Paving. Each company pays the bookkeeper a separate salary. Mrs. Real sits on Columbia Paving's board of directors. Neither Columbia Paving nor any other entity uses petitioner's hauling equipment unless it has contracted to do so. When Haul-It, Inc., "bid[s] through Columbia Paving" (T. 39) in response to invitations by the Department of Transportation, Columbia Paving personnel check the bid over to make sure that it "fits whatever plan or whatever estimates they feel are in order." (T. 40.)

6. Soon after she became owner of a majority of petitioner's Stock, Mrs. Real became petitioner's vice-president, secretary, and treasurer, even though she had had no prior experience in the trucking business. Mr. Jinwright remains president of Haul-It, Inc. It was also in November of 1980 that Haul-It, Inc., applied for certification as a minority business enterprise. At that time and for some months afterward, Mrs. Real was not working for Haul-It, Inc., on any regular schedule.

   
   

7. On the basis of the information petitioner furnished with its application, respondent, in November of 1980, "certified them for 12 months, on the condition that an on-site review would be conducted and at that time the decision would be made as to the ownership and control and whether this minority business enterprise should be continued as certified." (T. 61.) In April of 1981, respondent's Mr. Nath conducted an on-site review. At that time, Mr. Nath requested additional documents which petitioner eventually mailed to respondent. In September of 1981, respondent for the first time communicated to Haul-It, Inc., its intention to disqualify petitioner as a minority business enterprise.

   
   

8. After receiving this news, Mrs. Real began going to work for petitioner daily. She has an office in the trailer that she shares with Mr. Jinwright, whose role in Haul-It, Inc., was reduced to cosigning checks when Mrs. Real began working full time. Most of Mr. Jinwright's time is now spent as Superintendent of Columbia Paving's four asphalt plants. Even so, he still draws a salary from Haul-It, Inc., equal to Mrs. Real's salary.

   
   

9. Despite their respective titles, both Mr. Jinwright and Mrs. Real act on the assumption that she, rather than he, has ultimate authority in the conduct of Haul-It, Inc.'s business. Mrs. Real has full authority to hire and fire, authority which she has delegated, in the case of the truck drivers, to Jack Taylor. She has the final say on all questions of policy and operations that arise in the business. Haul-It, Inc., cannot borrow money or make expenditures without her permission. Jack Taylor and two other employees buy for Haul-It, Inc., but she cosigns all checks with Mr. Jinwright. She has not learned how to prepare a written bid for the Department of Transportation, although she is involved with bidding. Mrs. Real relies heavily on Jack Taylor's bidding expertise, as have petitioner's other owners.

   
   

10. Petitioner's proposed findings of fact and conclusions of law and respondent's proposed findings of fact, conclusions of law, and recommendation reflect the good work done in this case by counsel on both sides. To the limited extent proposed findings have not been adopted, they have been deemed immaterial or unsupported by the evidence.

    
    

    CONCLUSIONS OF LAW

    
    

11. Haul-It, Inc., raised two procedural arguments in its petition for formal proceeding but abandoned these procedural challenges at the final hearing. (T. 4.) In this connection, Rule 14-78.05(3)(i), Florida Administrative Code, provides that "certification of MBE status shall be for a maximum of one calendar year. . .conditioned upon continued eligibility. . ." There is no automatic renewal provision; an updated application must be filed annually. Rule 14-78.05(3)(i), Florida Administrative Code. Viewed in the light most favorable to petitioner, therefore, Haul-It, Inc., was certified as a minority business enterprise until November of 1981, but is now in the posture of applying for recertification.

12. When an agency has "set forth in writing the grounds or basis for [proposed] denial of a license," Rule 28-6.08(2), Florida Administrative Code; see Section 120.60(2), Florida Statutes (1981), "unless otherwise provided by law the applicant shall have the burden of establishing entitlement." Rule 28- 6.08(3), Florida Administrative Code. See Department of Transportation v.

    J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981); Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

    
    

13. The criteria for certification as a minority business enterprise are Set forth in Rule 14-78.05(3), Florida Administrative Code, as follows:

    
    

    1. An eligible minority business enterprise under this rule shall be an independent business entity, the real, substantial, and continuing ownership and control of which shall be by minorities or women and go beyond mere pro forma ownership of the firm as reflected in its ownership documents. The minority or women owners shall enjoy the customary incidence [sic] of ownership and shall share in the risks and profits commensurate with their ownership interests, as demonstrated by an examination of the substance rather than form of financial and managerial arrangements in assessing business independence the Department shall consider all relevant factors, including but not limited to the date the MBE applicant was established, the adequacy of its resources, and the degree to which financial relationships, equipment leasing, and other business relationships with

       non-minority firms vary from industry practice.

    2. . . .Recognition of the enterprise as a separate entity for tax or corporate purposes is not necessarily sufficient for certification as a minority business enterprise under this rule.

       (e) An eligible minority business enterprise under this rule shall be one in which the contributions of capital or expertise invested by the minority or women owners In order to acquire their interest(s) in the enterprise are real and substantial. Examples of insufficient contributions include a promise to contribute capital, a note payable to the enterprise or its owners who are neither socially nor economically disadvantaged, or the mere participation as an employee, rather than as a decision-maker.

       
       

       Respondent contends that Rule 14-78.05(3)(f)3, Florida Administrative Code, should also be looked to, but that provision is limited to situations where "a business which is not an eligible MBE. . .has an interest in the enterprise seeking certification." Rule 14-78.05(3)(f)3, Florida Administrative Code. The evidence showed that Columbia Paving never had any ownership interest in Columbia Paving, notwithstanding the many interconnections.

14. Mrs. Real's testimony made it clear that she is very capable and astute; and as owner of a majority of petitioner's stock she is obviously in a position to wield real power. The evidence did not establish, however, that she had legal authority to countermand directives by the president of Haul-It, Inc.

    
    

15. Mrs. Real's stock in Haul-It, Inc., was given to her; she has not invested one penny in the corporation. Neither did she bring to the enterprise any expertise in the trucking business. In short, her "contributions of capital or expertise" are not "real and substantial," within the meaning of Rule 14- 78.05(3)(e), Florida Administrative Code. She acquired her "interest in the enterprise" as a gift from her husband and Mr. Jinwright in the hope that this maneuver would qualify Haul-It, Inc., as a minority business enterprise.

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That respondent deny Haul-It, Inc., certification as a minority business enterprise.

DONE AND ENTERED this 3rd day of March, 1982, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 1982.

COPIES FURNISHED:

Patrick E. Hurley, Esquire Post Office Drawer 1049 Tallahassee, Florida 32302

Vernon L. Whittier, Jr., Esquire Ella Jane P. Davis, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

Paul A. Pappas, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

Docket for Case No: 81-002624

Orders for Case No: 81-002624