STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
WILLIAM P. PEARSON, JR. )
)
Petitioner, )
)
vs. ) CASE NO. 86-1916F
)
DEPARTMENT OF PROFESSIONAL )
REGULATION, CONSTRUCTION )
INDUSTRY LICENSING BOARD, )
)
Respondent. )
)
FINAL ORDER
Upon due notice, a final formal hearing in this cause was held in Tallahassee, Florida on November 17, 1986 before Ella Jane P. Davis, a duly designated hearing officer of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: John C. Heekin, Esquire
C-2 Olean Plaza 21202 Olean Boulevard
Port Charlotte, Florida 33952
For Respondent: W. Douglas Beason, Esquire
Department of Professional Regulation
130 North Monroe Street Tallahassee, Florida 32302
ISSUE
Whether Petitioner, William P. Pearson, Jr., is entitled to recover attorney's fees and costs pursuant to the Florida Equal Access to Justice Act, Section 57.111 Florida Statutes and Rule 221-6,35.
BACKGROUND AND PROCEDURE
At hearing, Petitioner presented the oral testimony of William P. Pearson, Jr. and had admitted five exhibits. Respondent presented the oral testimony of Richard Hartog, Investigator, and Douglas A. Shropshire, the Department of Professional Regulation's senior attorney for the prosecution of all Florida Construction Industry Licensing Board cases, and had admitted five exhibits.
At close of formal hearing, Petitioner elected to make oral closing argument and to file no post-hearing proposals. Respondent elected to file a transcript of proceedings and written proposed findings of fact and conclusions of law within 10 days of filing transcript. Respondent's proposals are ruled on within the appendix to this recommended order pursuant to Section 120.59(2) Florida Statutes.
FINDINGS OF FACT
Petitioner seeks to recover attorney's fees and costs associated with his defense against charges contained in an administrative complaint filed and prosecuted by the Department of Professional Regulation which was styled, Department of Professional Regulation, Construction Industrv Licensing Board v. William P. Pearson, Jr., DOAH Case No. 85-0672. The administrative complaint in DOAH Case No. 85-0672 contained two counts. Count I alleged a violation of Section 489.129(1)(c) through violation of Section 455.227(1)(a) Florida Statutes (1983), which statutory section addresses making misleading, deceptive, or fraudulent representations in the practice of the profession of construction. Count II alleged a violation of Section 489.129(1)(d) Florida Statutes (1983) by not complying with the specific escrow requirements imposed by the consumer protection Statute, Section 501.1375(2) Florida Statutes and violation of Section 489.129(1)(m) Florida Statutes (1983), which latter statutory section addresses gross negligence, incompetence or misconduct in the practice of contracting. The state agency was therefore not a nominal party only but was an accusing and principal party.
Petitioner seeks an award of attorney's fees in the sum of $3,568.75 together with costs of $11.10. Respondent, in its Amended Response to Petitioner's Amended Motion for Attorney's Fees and Costs, did not challenge the reasonableness of the attorney's fees and costs set forth in Petitioner's affidavit attached and incorporated in his Amended Motion and specifically stipulated to reasonableness and necessity at formal hearing. Accordingly, the foregoing amounts are found to be necessary and reasonable.
Pearson Construction Co., Inc.'s domicile during the whole of DOAH Case No. 85-0672's initial prosecution was Charlotte County, Florida. It had no employees other than William P. Pearson, Jr. and his wife, who worked without compensation. William P. Pearson, Jr. was the president and qualifying agent of Pearson Construction Co., Inc. which was a Florida corporation at all times material to the initial prosecution. The combined net worth of William P. Pearson, Jr. and of Pearson Construction Co., Inc. never exceeded two million dollars and presently petitioner Pearson's personal net worth does not exceed two million dollars. In early 1986, prior to initiating this instant fee and costs recovery case, Mr. Pearson failed to update payment of his corporate fees and Pearson Construction Co., Inc. was automatically dissolved by the secretary of State.
Respondent Department of Professional Regulation (DPR) notified John Vlasek of its intent to investigate his complaint against Petitioner in late July 1984. DPR's investigation was conducted by Investigator Richard Hartog. Mr. Hartog has been employed by the Respondent since November 1982 and has been its investigator since March 1983. He has a degree in criminal justice and 23 years prior experience as a detective with the Police Department of Nassau County, New York.
Investigator Hartog was first made aware of vlasek's complaint against Pearson Construction Co., Inc. by way of a memorandum dated July 16, 1984 received directly from the State Attorney's Office for the 20th Judicial Circuit. Attached to the State Attorney's memorandum was a 6 page consumer complaint form signed by John A. Vlasek.
Hartog determined that William P. Pearson, Jr. was the qualifying agent for Pearson Construction Co., Inc. and then telephoned DPR's complaint section
in Tallahassee, giving the complaint section the basis of the information received from the State Attorney's Office and statutory citations for alleged violations of sections 489.129(1)(m), 455.227(1)(a) and 501.1375 Florida statutes. His purpose was to obtain a complaint number to continue the investigation.
Investigator Hartog personally interviewed Petitioner William P. Pearson, Jr. regarding the allegations underlying Vlasek's complaint. Upon completion of the investigation the Department's investigator prepared an investigative report. The investigative report includes a narrative summary of the investigator's interview with Pearson.
The investigative report prepared at the conclusion of Hartog's investigation contains the following findings with regard to the investigator's interview of Pearson:
Mr. Pearson states he built a good number of homes a year. Last year he built thirty-nine (39) homes.
Mr. Pearson was readvised of the allegations made by Mr. Vlasek, a prospective buyer of one of Pearson's spec homes.
Mr. Pearson maintains the reason the house was not completed on June 12, 1984, the date originally stipulated in the contract, was the fact Mr. Vlasek was not in a hurry to have the house completed.
Mr. Pearson stated he is not aware of the requirements of P.S. 501.1375, therefore, he did not handle the deposit according to the requirement set forth. The money was used to complete the spec house for Vlasek.
Mr. Pearson states he received a letter from the First Federal Savings and, Loan of Charlotte County indicating Mr. Vlasek obtained an extension of his loan commitment with the bank. Mr. Malone, who was present, verifies that such a letter was received by Mr. Pearson.
Investigator Hartog personally interviewed Barbara Lowe, a loan officer for the First Federal Savings and Loan of Charlotte County. The investigator interviewed Ms. Lowe to determine "whether the bank had, in fact, sent a letter to Mr. Pearson indicating that an extension to Mr. Vlasek's 45-day loan had been extended." The investigative report prepared at the conclusion of Hartog's investigation contains the following findings with regard to the interview of Ms. Lowe:
Barbara Lowe, who states she handled the transaction, states no such letter was mailed to Pearson Construction. It would not be appropriate to grant an extension in this type of action.
Mr. Vlasek would be required to enter
into a separate agreement for an additional forty-five (45) days thereby nullifying the original commitent.
This was not done by Mr. Vlasek, therefore, the original commitment expired 5/31/84.
Investigator Hartog personally interviewed Tom Hannon, a loan officer with the First Federal Savings and Loan Association in Charlotte County. The investigative report prepared at the conclusion of Hartog's investigation contains the following finding:
Mr. Hannon contacted this office to relate that the loan commitment obtained by Vlasek was for a period of forty-five (45) days between 4/19/84 and 5/31/84. There is no record a thirty (30) day extension was asked for or granted according to the records.
Investigator Hartog personally interviewed Jack R. Malone who was a salesman for Pearson Construction Co., Inc. The investigative report prepared at the conclusion of Hartog's investigation relates that Malone stated the deposit money was not required to be deposited in an escrow account but when referred to section 501.1375 Malone stated money might have been given to an attorney, presumably for escrow, and further Malone related that:
Mr. Vlasek became very impatient because he said very little was being done to complete his house. He was concerned because the terms of his loan agreement was a commitment which expired June 1, 1984.
The completed investigative report as forwarded by the investigator to the Department's legal section consisted, in part, of the following:
a three page narrative summary of the investigator' s findings;
a copy of the memorandum and accompanying executed consumer complaint form;
a First Federal savings and Loan Association loan transfer commitment to John and Madelyn Vlasek;
a copy of section 501.1375, Florida statutes;
a copy of the April 1984 contract between Pearson Construction Company and John and Madelyn Vlasek reflecting a completion date altered from June 12 to June 1, 1984.
Douglas A. Shropshire was the DPR attorney responsible for reviewing the investigative report with regard to making a recommendation to the probable Cause Panel of the Construction Industry Licensing Board. The complaint against Petitioner was a "case of first impression" in that DPR had not previously investigated a complaint alleging a violation of the escrow requirement of Chapter 501, Florida Statutes.
As a result of the complaint against Petitioner, Mr. Shropshire requested that a law clerk prepare a memorandum of law with regard to the relationship between Section 501.1375, Florida Statutes and the regulation of licensed contractors under Chapter 489 Florida Statutes. On or about September 21, 1984 the law clerk provided Mr. Shropshire with a two page memorandum of law exploring the relationship between Chapter 501, Florida Statutes and the regulation of the construction industry. The memorandum reached the general conclusion that licensed contractors were subject to the provisions of Chapter
501 Florida Statutes. In preparing his recommendation to the Probable Cause Panel, Shropshire reviewed both Hartog's investigative report with all attachments and the law clerk's memorandum of law.
On January 10, 1985 DPR, through Mr. Shropshire, made a probable cause recommendation to the Construction Industry Licensing Board Probable Cause Panel. Prior to January 10, 1985 DPR had provided each panel member with a copy of the DPR's probable cause package.
The probable-cause package as reviewed by the Probable Cause Panel consisted of the following:
a cover sheet setting forth the Subject's name, case number and statutory violations;
a proposed administrative complaint;
a copy of the narrative portion of the Department's investigative report.
The Probable Cause Panel did not review a copy of the Vlasek-Pearson contract which provided it was not contingent on financing, which provided for forfeit to Pearson of Vlasek's deposit upon Vlasek's default, and which provided for escrow of Vlasek's deposit pending closing of the transaction. However, this item was reviewed by the DPR attorney before making the probable cause recommendation and the copy of this item reviewed showed that the completion date had been altered, allegedly by Malone.
Petitioner stipulated to the correctness of the procedure employed in impaneling the Probable Cause panel.
Each panel member had the opportunity to review the probable cause package before the Probable Cause Panel was convened. Each panel member had the opportunity to familiarize himself with the probable cause materials prior to the meeting.
The Chairman of the Probable Cause Panel was Mr. Roy Adams. Mr. Adams is a certified general contractor. The other probable cause member was Mr. Joseph Richards. Mr. Richards is a pharmacist and is a public member of the Construction Industry Licensing Board. Neither Mr. Richards nor Mr. Adams is an attorney. The Construction Industry Licensing Board is not involved in the investigation or prosecution of a complaint.
In making the determination of probable cause the panel members discussed the allegations contained in the complaint with both DPR's prosecuting attorney and their independent advisor from the Department of Legal Affairs.
On January 10, 1985 the Probable Cause Panel found probable cause to believe Petitioner violated Chapter 489, Florida Statutes. The panel's finding
of probable cause included, but was not limited to, the violations alleged by DPR in its recommendation. The Probable Cause Panel directed DPR to file a formal complaint.
On January 16, 1985 DPR's Secretary signed a formal administrative complaint charging Petitioner with violating the provisions of Chapters 455 and 489, Florida Statutes reviewed by the panel plus Section 489.129(1)(d) Florida Statutes. Petitioner denied all the allegations in the administrative complaint and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. On August 20, 1985 a formal hearing was conducted before the undersigned hearing officer.
Petitioner interposed the defense that Section 501.1375 Florida Statutes did not apply to him because he had constructed less than 10 houses in the year 1984 despite constructing more than 20 homes per year in most years.
Section 501.1375 provides in pertinent part as follows:
"Building Contractor" means any person who, for compensation, constructs and sells one-family or two-family residential
dwelling units, except for a person who sells or constructs less than 10 units per year state wide.
"Developer" means either a building contractor who offers new residential dwelling units for sale or any person who offers a new one-family or two-family dwelling unit for sale except a person who sells or constructs less than 10 units per year state wide.
The Recommended Order entered December 20, 1985 found as fact that:
On April 12, 1984 John and Madelyn Vlasek contracted with Pearson Construction Company for the purchase of a home in Port Charlotte, Florida. . . .The contract specified a $2,000 escrow deposit on the purchase price of $68,500. On April 12, 1984, the Vlaseks provided Pearson Construction Company with $200 in cash toward the escrow deposit. On April 13, 1984, the Vlaseks provided Pearso Construction Company with a check in the amount of $1,800 toward the escrow deposit. The contract specified the deposit was to be held in escrow pending closing of the transaction. . . .The contract referred to above was not contingent on the buyer obtaining financing. However, the deposit was not placed in escrow as specified in the contract and as required under the terms of the contract. Instead, it was used by the Respondent in purchasing lighting fixtures, carpeting, tiling and other accoutrements in colors and styles selected by John R.
Vlasek. On April 23, 1984, the Vlaseks executed the loan transfer commitment.
. . .After executing the loan transfer commitment, Vlasek realized that the commitment would expire prior to the June 12, 1984 closing date. Vlasek then
notified Pearson Construction Company of the discrepancy between the expiration date of the loan commitment and the actual closing date. Upon being informed of the discrepancy, Jack R. Malone agreed to modify the closing date. Malone expressly modified the contract by changing the closing date from June 12 to June 1, 1984. Vlasek subsequently informed the Respondent of the change of the closing date. When informed of the change, Respondent indicated the home would be substantially completed by June 1, 1984. . . .Vlasek was repeatedly assured by Malone and other members of the construction team (not Pearson) that the home would be completed by June 2, 1984. . . .the Vlasek contract was rescinded . . .Pearson Construction Company, Inc. and William P. Pearson constructed a total of 8, possibly 9 houses during the calendar year of 1984. In most previous years he has constructed in excess of 20 houses per year.
The findings and conclusions of law of the recommended order are replete with analyses of credibility of witnesses. The conclusions of law discuss such diverse legal concepts as the differences in actual versus apparent authority and ratification of an agent's/employee's misrepresentations by his employer, reasonable reliance thereon, and whether section 501.1375 should be applied annually (10 houses constructed per year) or upon a pattern of annual house construction (8-9 houses in 1984 versus more than 20 houses each previous year).
The recommended order determined that DPR had failed to establish Count I (misleading, deceptive or fraudulent representations) by clear and convincing evidence and found only a "minimal" violation of Section 429.129(1)(m) had been established within Count II due to the petitioner's failure to escrow. By Final Order dated March 17, 1986, the Board adopted the findings of fact in toto. The final order rejected the conclusions of law and dismissed the administrative complaint.
No evidence was introduced to indicate or otherwise explain why the Board rejected the hearing officer's conclusions of law.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding, Sections 57.111, 120.57(1) Florida statutes and Rule 221-6.35 Florida Administrative Code.
This case arises under the Florida Equal Access to Justice Act (FEAJA), Section 57.111 Florida Statutes, which provides, in pertinent part:
(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 their agency were substantially justified or special circumstances exist which would make the award unjust.
Under FEAJA, only a small business party is eligible to recover costs and attorney's fees. Petitioner was the qualifying agent of a corporation in a regulated profession at all times material to DOAH Case No. 85-0672. Petitioner met the statutory definition of a "small business party" within section 57.111(3)(d)2 at all times material to that action. The facts that the license revocation proceeding was initiated against him, not his corporation, and that the corporation, now dissolved, exists only de facto do not impinge on this conclusion. Any other statutory construction would lead to a result obviously not intended by the legislature and should be avoided, City of St. Petersburg v. Siebold, 48 So 2d 291 (Fla. 1950). See also Wakulla Co. v. Davis, 395 So.2d 540 (Fla. 1981).
Petitioner is the prevailing party on both counts of the administrative complaint in DOAH Case No. 85-0672. Although Petitioner did not specifically present evidence that he had not appealed the Board's dismissal of all charges against him, both parties have relied on the Final Order of the Board being, in fact, final (P-1) and this issue was excluded from the need for formal proof by prior pleadings of the parties. 1/
PEAJA entitles a prevailing small business party to recover attorney's fees and costs "unless the actions were substantially justified or special circumstances exist which would make the award unjust." A proceeding is "substantially justified" if it had a reasonable basis in law and fact at the time it was initiated, Section 57.111(3)(e) Florida Statutes. Herein, the thrust of the Petitioner's case seems to be that the Respondent's investigator did not immediately interview Pearson before interviewing various other witnesses, that he and the agency complaint section wrote out on agency complaint forms what he (they) believed to be the statutory violations before the investigator talked to any witnesses except the complaining witness, Vlasek, and that therefore there was no basis in fact or law for either count of the formal administrative complaint. This line of reasoning erroneously assumes that the proceeding is "initiated" by the investigator and not by the formal administrative complaint filed in response to the finding of probable cause by the Board's Probable Cause panel. At hearing, Petitioner also urged that due to the investigator's summary of interviews with Malone and Pearson which were reviewed by the Probable Cause Panel and the contract itself which was not reviewed by the Probable Cause Panel there was no basis in law and fact on either Count. On the contrary, upon the foregoing findings of fact, it is clear that discrepancies among various witnesses' testimony would make it reasonable that the Board require that their respective credibility be tested through a formal evidentary proceeding initiated by a formal administrative complaint.
The panel's review of the provisions of the contract concerning escrow, default, and financing arrangements would not necessarily have resolved all the conflicts in the various interviews related in the investigator's summary. If anything,
the failure to escrow would have been emphasized. Additionally, there were all of the contributing factors raised by a case of first impression concerning Section 501.1375 Florida statutes.
In determining probable cause, the question is not the guilt or innocence of an accused, but rather that there is some evidence before the panel that would reasonably indicate that the alleged violations had indeed occurred. Kibler v. Department of Professional Regulation, 418 So.2d 1081 (Fla. 4th DCA 1982). The procedural requirements established by Kibler insure the probable cause panel does not merely "rubber stamp" the prosecutor's recommendation as to a finding of probable cause.
Respondent has fulfilled its shifted burden to establish that the filing and prosecution of the administrative was "substantially justified" within the meaning of section 57.111, Florida Statutes. Whether one fastens upon the panel's finding of probable cause or DPR's filing of the administrative complaint to be the "initiation" of the proceeding, is immaterial since "substantial justification" existed at either point.
The panel's finding of probable cause had a reasonable basis in law and fact. The panel was justified in relying on the observations and findings of the Respondent's trained and experienced investigator. The panel conducted a "meaningful" probable cause inquiry, and did not merely "rubber stamp" Respondent's recommendation. The probable cause finding meets the Kibler standard in that the panel had evidence before it which (if credited at final hearing) would reasonably indicate that the alleged violations had occurred.
DPR established by clear and convincing evidence in the course of a formal section 120.57(1) Florida statutes evidentiary hearing the alleged violation of Section 489.129(1)(m), Florida statutes. The mere fact that the Florida Construction Industry Licensing Board reversed the hearing officer's conclusions of law without giving any reasons therefore does not raise a presumption that the proceeding was not "substantially justified when initiated." Nor does the agency have to prove that its decision to prosecute was based on a "substantial probability of prevailing." Ashburn v. United States of America, 740 F. 2d 843 (11th Cir. 1984). It is sufficient that by the time the Probable Cause Panel met it had evidence before it which would constitute prima facie proof of a violation if the testimony of the witnesses had been credited at final hearing. This is particularly true where any issues turn, as some did in DOAH Case No. 85-0672, upon credibility.
Section 455.225(3), Florida statutes requires the DPR to follow the direction of a probable cause panel with regard to the filing and prosecution of a formal complaint. In the instant case, the Respondent's prosecution of a formal complaint was "substantially justified" and had a reasonable basis in law and fact. First, the Respondent undertook and completed a full investigation of the complaint against Petitioner. This investigation included interviewing the witnesses involved and obtaining relevant documents. Second, the investigator's report was fully reviewed by the DPR's legal section. The DPR's legal section requested legal research into the issues raised by Chapter 501, Florida Statutes since the complaint was one of first impression, a situation of "special circumstances." Third, after reviewing the investigative report and performing further legal research, the Department made its recommendation to the Probable Cause Panel. The Probable Cause Panel had the opportunity to review the Respondent's probable cause package and to ask questions of both its legal advisor and Respondent's prosecuting attorney. Finally, DPR prosecuted the administrative complaint and prevailed on at least one count at formal hearing.
At formal hearing DPR produced clear and convincing evidence to establish that the Petitioner was in clear violation of the provisions of Chapter 489, Florida Statutes.
Therefore, in the instant cause, Respondent DPR has demonstrated the finding of probable cause and the filing of the administrative complaint in DOAH Case No. 85-0672 was "substantially justified" within the meeting of Section 57.111, Florida Statutes. It has also demonstrated special circumstances which would make an award unjust. Accordingly, it is
ORDERED: That Petitioner's application for attorney's fees and costs is DENIED.
DONE and ORDERED this 3rd day of February, 1987 in Tallahassee, Florida.
ELLA JANE P. DAVIS
Hearing Officer
Division of Administrative Hearings 2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of February, 1987.
ENDNOTE
1/ DPR's Motion to Dismiss made at the conclusion of Petitioner's case in chief was accordingly denied (TR-30).
APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 86-1916F
The proposed findings of fact (FOF) of the Respondent are ruled upon as follows:
Covered FOF 4.
Covered FOF 5.
Covered FOF 7-8.
Covered FOF 8.
Covered FOF 9.
Covered FOF 10.
Covered FOF 11.
Covered FOF 24 through 26. Accepted but not adopted because not supported as worded. An accurate statement from the recommended order is substituted in FOF 24.
Covered FOF 12.
Covered FOF 13.
Covered FOF 14.
Covered FOF 15.
Covered FOF 16.
Covered FOF 18.
Covered FOF 19.
Covered FOF 20.
Covered FOF 21.
Covered FOF 22.
Covered FOF 26. What is not accepted is rejected as subordinate and unnecessary. Further, the burden of proof stated and statement of what is implied thereby is inaccurate as a matter of law. The test is "clear and convincing."
Covered FOF 26.
Covered, but more accurately stated in FOF 27.
COPIES FURNISHED:
John C. Heekin, Esquire C-2 Olean Plaza
21202 Clean Boulevard
Port Charlotte Florida 33952
W. Douglas Beason, Esquire Department of Professional
Regulation
130 North Monroe Street Tallahassee, Florida 32301
NOTICE OF RIGHT TO JUDICIAL REVIEW
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 ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND 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.
| Issue Date | Proceedings |
|---|---|
| Feb. 03, 1987 | Final Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Feb. 03, 1987 | DOAH Final Order | Petitioner as qualifying agent of corporation was a ""small business party."" Fees not awarded prevailing licensee in justified case of first impression. |
