STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

J. D. WATERPROOFING, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 88-1467

) DEPARTMENT OF GENERAL SERVICES,)

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Fort Lauderdale, Florida, before Robert

T. Benton, II, Hearing Officer of the Division of Administrative Hearings, on June 22, 1988.

The Division of Administrative Hearings received the transcript of proceedings on July 19, 1988. The attached appendix addresses the proposed findings of fact set out in the Department of General Services' proposed recommended order filed August 3, 1988.

Although employees of the corporate petitioner appeared and testified, petitioner was not represented either by counsel or by qualified representative. Counsel did represent the respondent:

Deborah S. Rose

452 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0955

By letter dated March 4, 1988, respondent apprised petitioner of its intention to deny petitioner's request for certification as a minority business enterprise on grounds Mrs. Kathleen DeBrino "does not control the management and daily operations of the business" and because of petitioner's alleged failure to "meet the specifications of" Section 288.703(2), Florida Statutes (1987) and Rules 13-8.005(2)(d) and (e) and (3)(a) through (h), Florida Administrative Code. After petitioner filed a timely request for "review," disputing the factual predicate for the proposed denial, the Department of General Services (DGS) referred the matter to the Division of Administrative Hearings for proceedings in accordance with Section 120.57(1), Florida Statutes (1987).

ISSUES

Whether Kathleen DeBrino controls the management and daily operations of

1. Waterproofing, Inc. Whether petitioner otherwise complies with Section 288.703(2), Florida Statutes (1987) and Rule 13-8.005(2)(d) and (e), and (3)(a) through (h), Florida Administrative Code?

   FINDINGS OF FACT

   
   

   1. During the 23 years James and Kathleen DeBrino have been married, they have maintained joint bank accounts, checking and saving. Not until Mrs. DeBrino opened an individual checking account "six or eight years ago" (T. 22) in order to make clear her ownership of an insurance policy on her husband's life did she have her own checking account. Although she maintains this checking account "simply for a life insurance policy," (T. 21) she also uses it to pay some "personal bills with it to just keep it active." Id.

      
      

      Waterproofing

      
      

   2. For close to 30 years Kathleen's husband James has been in the waterproofing business. Until September of last year, he was half owner of J.D. Caulking Company, which, like J.D. Waterproofing, Inc., waterproofed "concrete slabs, walls, precast panels . . . [and] floor joints," (T. 26) among other things. Perhaps Mrs. DeBrino owned the other half.

      
      

   3. Until its demise last fall, J.D. Caulking Company "was a unionized business," (T. 25) even though, Mr. DeBrino testified,

      
      

      A union did nothing for me down here. I tried to get out for three years. They wouldn't let me out. (T. 36)

      
      

      After receiving legal advice "to open J.D. Waterproofing and not be an officer," (T. 36) he did so, in order o avoid doing business with a union. This explains "[why . . . [he's] not an officer with J.D. Waterproofing," id., although he had been an officer in J.D. Caulking Company.

      
      

      New Company

      
      

   4. When J.D. Waterproofing, Inc. was incorporated in April of 1987, Mr. DeBrino owned all 100 authorized and outstanding shares. (T. 17) Loans from the DeBrinos' personal, joint accounts furnished the company capital. At the time of final hearing, the company was worth between $120,000 and $150,000. On Mrs. DeBrino's birthday, September 18, 1987, her husband gave her all 100 shares.

      
      

   5. Mrs. DeBrino's not an officer in J.D. Waterproofing, Inc., although her mother, whose only other connection with the company is doing office work if Mrs. DeBrino "[s]hould . . . be sick or have to be away for a period of time," (T. 29) is president. Harold Buckles, the estimator, is vice-president, and Grey Robinson, the foreman, is secretary. Mr. DeBrino is a director, but Mrs. DeBrino is not.

      
      

   6. As J.D. Waterproofing, Inc.'s general manager, Mr. DeBrino's duties do not differ from what they were when the business was incorporated as J.D. Caulking Company. Indeed, Mr. DeBrino testified, "They can't change." (T. 35) He supervises work in the field, while his wife, with whom he exercises "joint control" (T. 37) of the business, works in an office.

      
      

      Secretarial Work

      
      

   7. Mrs. DeBrino does "the banking for the corporation, all the secretarial work . . . all the accounting for [her] accountant who does the accounting." (T.

      24) She signs the company's checks, and orders some materials. But she does not

      prepare job estimates on her own, except perhaps "a rough estimate." (T. 29) "I don't actually get in the actual detail of reading plans," (T. 26) she testified.

      
      

   8. When a job requires more than the usual complement of laborers, Mrs. DeBrino causes a classified advertisement to be published in the newspaper and talks to applicants on the telephone. "Then they come in and meet with Jim DeBrino and the foreman is the one who decides." (T. 27) Although she feels she has the power to hire and fire, she has never discharged an employee. Aside from occasional laborers, J.D. Waterproofing, Inc.'s employees are the "[s]ame people" (T. 35) who worked for J.D. Caulking Company.

      
      

   9. While J.D. Waterproofing, Inc. originally paid Mr. DeBrino $1500 weekly and Mrs. DeBrino $300 weekly, DGS' Exhibit Nos. 8 and 9, two or three months before the hearing the company began paying him $1,000 and her $800 each week. (T. 25, 31)

      
      

      CONCLUSIONS OF LAW

      
      

   10. When DGS referred this matter to the Division of Administrative Hearings, the Division of Administrative Hearings assumed "jurisdiction over the formal proceeding." Section 120.57(1)(b)3., Florida Statutes (1987).

       
       

   11. Petitioner seeks certification as a minority business enterprise, which Section 288.703(2), Florida Statutes (1987), defines as:

       
       

       [a]ny small business concern as defined in subsection (1) which is organized to engage in commercial transactions, which is domiciled in Florida, and which is 51 percent owned by minority persons and whose management and daily operations are controlled by such persons.

       
       

       As an "American woman," Section 288.703(3)(f), Florida Statutes (1987), Kathleen DeBrino, who owns all of petitioner's outstanding and authorized shares, is a minority person, for purposes of the statute.

       
       

   12. In its proposed recommended order, DGS concedes petitioner's entitlement to certification, except for "[t]he issue . . . whether Kathleen DeBrino controls the management and daily operations of the petitioner." At p.

1. Petitioner has the burden of proving that she does exercise such control.

   
   

   1. Whether or not certification as a minority business enterprise is licensure for purposes of the Administrative Procedure Act, see Rule 28-6.008, Florida Administrative Code, and Florida Department of Transportation vs. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981), DGS' Rule 13-8.005(3), Florida Administrative Code, requires that "[a]n applicant must establish that the minority owners possess control over the management and daily operations of the business."

      
      

   2. The same rule specifies factors to be considered in determining whether the requisite control exists:

      
      

      (3) . . . The Department will consider the following factors:

      1. Whether the minority owners have

         control over the purchase of goods, equipment, business inventory and services needed in the day-to-day operations of the business.

      2. Whether the minority owners have the authority to hire and fire employees.

      3. Whether the minority owners have a knowledge of the financial structure of the business and control over all financial affairs.

      4. Whether the minority owners control business accounts - checking, savings, and other financial affairs.

      5. Whether the minority owners have the capability, knowledge, and experience required to make decisions regarding that particular type of work.

      6. Whether the minority owners have displayed independence and initiative in seeking and negotiating contracts, accepting and rejecting bids and in conducting all major aspects of the business.

      7. Whether the minority owners are current employees of a non-minority business corporation, or individual, or partnership which has a significant ownership interest in the business firm applying for certification.

      8. Whether the directors and/or management of the applicant is substantially the same as an affiliated non-minority firm.

      9. Whether the applicant is a wholly- owned subsidiary or affiliate of a non- minority firm.

      Rule 13-8.005, Florida Administrative Code.

      
      

      Mrs. DeBrino does not work for a non-minority firm nor does her husband manage or direct any affiliated firm. The question here is the role she plays within

      J. D. Waterproofing, Inc.

      
      

   3. Because Mrs. DeBrino is not a corporate officer, she does not "have the authority to hire and fire employees." Rule 13-8.005(3)(b), Florida Administrative Code. Her stock ownership notwithstanding, she is herself an employee answerable to the corporate officers and her husband, the general manager. The evidence also failed to establish that she has "control over all financial affairs," Rule 13-8.005(3)(c), Florida Administrative Code, or even all the "business accounts," Rule 13-8.005(3)(c), Florida Administrative Code, despite her bookkeeping duties.

      
      

   4. Petitioner did not prove that Mrs. DeBrino had "the capability, knowledge, and experience required to make decisions," Rule 13-8.005(3)(e), Florida Administrative Code, such as what to charge for the work the company does, and how to supervise or perform the work. The proof wholly failed to show

Mrs. DeBrino's "independence and initiative in seeking and negotiating contracts, accepting and rejecting bids and in conducting all major aspects of the business." Rule 13-8.005(3)(f), Florida Administrative Code.

It is, accordingly, RECOMMENDED:

That DGS deny petitioner's application for certification as a minority business enterprise.

DONE AND ENTERED this 25th day of August, 1988, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 25th day of August 1988.

APPENDIX

Respondent's proposed findings of fact Nos. 1 through 11, 14 and 15 have been adopted, in substance, insofar as material.

With respect to respondent's proposed finding of fact No. 12, Mr. DeBrino's salary, at the time of hearing, was $1,000, not $1,500, per week. See finding of fact No. 9.

With respect to respondent's proposed finding of fact No. 13, Mrs. DeBrino lacks the capability, knowledge and experience necessary to make many of these decisions.

COPIES FURNISHED:

Deborah S. Rose

Department of General Services

452 Larson Building

200 East Gaines Street Tallahassee, Florida 32399-0955

Kathleen DeBrino

J. D. Waterproofing, Inc. Post Office Box 757

Pompano Beach, Florida 33061

Ronald W. Thomas Executive Director

Department of General Services Room 133, Larson Building Tallahassee, Florida 32399-0955

Docket for Case No: 88-001467

Orders for Case No: 88-001467