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JETTE CONSTRUCTION COMPANY, INC. vs. DEPARTMENT OF TRANSPORTATION, 83-003966 (1983)

Court: Division of Administrative Hearings, Florida Number: 83-003966 Visitors: 15
Judges: LINDA M. RIGOT
Agency: Department of Transportation
Latest Update: Aug. 23, 1984
Summary: Application for certification as a Minority/Women's Business Enterprise (M/WBE) where husband owned majority of family-owned company and ran the business.
83-3966.PDF

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS


JETTE CONSTRUCTION COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 83-3966

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)


RECOMMENDED ORDER


Pursuant to notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer of the Division of Administrative Hearings, on April 20, 1984, in Coral Gables, Florida.


Petitioner Jette Construction Company, Inc., was represented by John R. Sutton, Esquire, South Miami, Florida; and Respondent Department of Transportation was represented by Mark A. Linsky, Esquire, Tallahassee, Florida.


On November 28, 1983, Respondent advised Petitioner that its application for certification as a Minority Business Enterprise was denied, and Petitioner timely requested a formal hearing on that denial. Accordingly, the issue for determination is whether Petitioner's application for certification should be approved.


Annette Munz Sauder testified on behalf of Petitioner, and Thaddeus Alvin Fortune testified on behalf of Respondent. Additionally, Joint Exhibits numbered 1-17 were admitted in evidence.


Respondent submitted posthearing proposed findings of fact in the form of a proposed recommended order. To the extent that any proposed findings have not been adopted in this Recommended Order, they have been rejected as not having been supported by the evidence, as having been irrelevant to the issues under consideration herein, or as constituting unsupported argument of counsel or conclusions of law.


FINDINGS OF FACT


  1. Petitioner was incorporated on November 17, 1980, and, since that time, has been primarily engaged in the base work and asphalt paving business. James

    L. Sauder and his wife, Annette, were the incorporators of Petitioner and continue to serve as Petitioner's two directors. From the inception of the corporation through the present time, James Sauder has been Petitioner's president while Annette Sauder has filled the offices of both secretary and treasurer of Petitioner. Additionally, at all times material hereto, James Sauder has been the registered agent for the corporation.


  2. Initially, James Sauder drew a salary of $220 a week, while Annette Sauder received no salary for her work. Thereafter, the Sauders decided to

    declare Petitioner a "subchapter S. corporation" for income tax purposes. At the end of Petitioner's first and second years of operation, all of the undistributed shareholders' profit of the company was drawn out by James Sauder only. Petitioner's income tax returns for both 1981 and 1982 reflect that James Sauder is the stockholder, that he owns 170 shares of Petitioner's stock, and that he devotes all of his time to the business.


  3. Petitioner's bylaws describe the duties of the officers of the corporation and provide that:


    The President shall be the chief executive officer of the corporation, shall have general and active management of the business and affairs of the corporation subject to the directions of the Board of Directors, and shall preside at all meetings of the shareholders and Board of Directors.


    The bylaws further provide, in addition to some specific duties, that the secretary and the treasurer are also required to ". . . perform such other duties as may be prescribed by the Board of Directors or the President." Accordingly, Petitioner's secretary and treasurer work under the supervision and control of the president.


  4. Petitioner's articles of incorporation authorize Petitioner to issue

    250 shares of stock with a five-dollar par value. On August 20, 1980, Petitioner's stock certificate No. 1 was issued to James L. Sauder for 125 shares of Petitioner's stock. No shares were issued to Annette Sauder until March 1, 1983, when 70 shares of James Sauder's stock were transferred to her using Petitioner's stock certificate No. 2. At the same time, an additional 55 shares of stock were issued to James L. Sauder using Petitioner's stock certificate No. 3. Accordingly, James Sauder owns 110 shares of Petitioner's stock, while Annette Sauder owns only 70 shares of Petitioner's stock.


  5. The occupational license issued to Petitioner by the City of Key West, Florida, for the 1982-83 year lists James L. Sauder as the owner of Petitioner.


  6. Decisions as to hiring and firing, the purchase and/or financing of equipment and other personalty, the jobs on which bids will be submitted and the amounts of bids, the supervision of Petitioner's employees, and even actual paving work are duties performed by both James and Annette Sauder. Although operating Petitioner's business appears to be a joint effort on the part of both James and Annette Sauder, it is clear that the ultimate decision maker, as well as chief executive officer, is James Sauder. In addition to testifying primarily using the word "we," the following is illustrative of the testimony given by Annette Sauder as to whether she or her husband controls the operation of Petitioner:



    (Tr. 72.)


    Q. If your husband told you that he didn't want a piece of equipment, but you wanted it, would you go out and get it?

    A. Not unless I wanted a divorce, I don't think I would.

  7. On November 28, 1983, Respondent denied Petitioner's application to be certified as a Minority Business Enterprise.


    CONCLUSIONS OF LAW


  8. The Division of Administrative Hearings has jurisdiction over the subject matter hereof and the parties hereto. Section 120.57(1), Florida Statutes (1993).


  9. Section 14-78.05(3), Florida Administrative Code, contains standards for determining whether to certify a Minority Business Enterprise and provides as follows:


    (3) In certifying a firm as an MBE, the Department shall consider but shall not be limited to the following standards:

    (b) 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 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 nonminority firms vary from industry practice.

    1. An eligible minority business enterprise under this rule shall be one in which the minority or women owners shall also possess the power to direct or cause the direction of the management and policies of the MBE and to make day-to-day as well as major business decisions concerning the MBEs [sic] management, policy, and operation. The discretion of the minority or women owners shall not be subject to any formal or informal restrictions

      (including but not limited to bylaw provisions, partnership agreements, or charter

      requirements for cumulative voting rights or otherwise) which would vary managerial discretion customary in the industry.

      In determining whether the minority or women owners also possess the power to direct or cause the direction of the management and policies of the MBE and have the requisite

      decision-making authority, the Department may look to the control lodged in the owners who are not minorities or women. If the owners who are not minorities or women are disproportionately responsible for the operation of the enterprise or if there exists any requirement which prevents the minority or women owners from making business decisions without concurrence of any owner or employee who is not a minority or a woman, then the enterprise is not controlled by minorities or women and shall not be considered an MBE within the meaning of this rule. Where the actual management of the enterprise is contracted out to individuals other than the owner(s) those persons who have the ultimate power to hire and fire the managers can, for the purposes of this rule be considered as controlling the enterprise.

    2. 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.


  10. Petitioner has failed to carry its burden of proving that it is qualified to be certified as a Minority Business Enterprise because it is controlled by a woman. The evidence is clear that Annette and James Sauder own and operate Petitioner in the same manner and to the same extent as most small family businesses. It is clear that they have equal responsibility in operating the business but that in the event of a dispute the female owner is "out-voted" by the male owner, and, accordingly, Petitioner is not a small business concern owned and controlled by a woman. Minority certification carries stringent requirements that go beyond family business operations to ensure that the minority or woman is the individual who independently acquires, owns, operates, and controls the business. It is a specialized program targeted for specific classes of individuals and designed to benefit only those individuals.


RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Petitioner's application

for certification as a Minority Business Enterprise and, specifically, Women's Business Enterprise.

DONE and RECOMMENDED this 23rd day of July, 1984, in Tallahassee, Leon County, Florida.


LINDA M. RIGOT, 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 23rd day of July, 1984.


COPIES FURNISHED:


John R. Sutton, Esquire

7721 South West 62nd Avenue, First Floor

South Miami, Florida 33143


Mark A. Linsky, Esquire Department of Transportation 605 Suwannee Street, MS-58

Tallahassee, Florida 32301-8064


Paul N. Pappas, Secretary Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32301-8064


Docket for Case No: 83-003966
Issue Date Proceedings
Aug. 23, 1984 Final Order filed.
Jul. 23, 1984 Recommended Order sent out. CASE CLOSED.

Orders for Case No: 83-003966
Issue Date Document Summary
Aug. 21, 1984 Agency Final Order
Jul. 23, 1984 Recommended Order Application for certification as a Minority/Women's Business Enterprise (M/WBE) where husband owned majority of family-owned company and ran the business.
Source:  Florida - Division of Administrative Hearings

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