STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA AFL-CIO UNITED LABOR ) AGENCY, INC., )

)

Petitioner, )

vs. ) CASE NO. 88-2755

) STATE OF FLORIDA, DEPARTMENT OF ) LABOR AND EMPLOYMENT SECURITY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was conducted in this case on October

19 and 20, 1988, at Tallahassee, Florida, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:

For Petitioner: Sidney L. Matthew, Esquire

Gorman & Matthew, P.A. Post Office Box 1754 Tallahassee, Florida 32302

For Respondent: David J. Busch, Esquire

Department of Labor and Employment Security

Suite 131, Montgomery Building 2562 Executive Center Circle, East Tallahassee, Florida 32399-0657

ISSUES AND INTRODUCTION

By amended petition for hearing, the Petitioner requested a hearing on the Department's determination that the Petitioner is obligated to refund to the Department the sum of $53,724.00, which the Department asserts is the amount by which the Petitioner was overpaid pursuant to Wagner-Peyser Contract No. SA016. For numerous reasons recited in its Petition and argued in its post-hearing brief, the Petitioner contends that it should not be required to refund the disputed sum.

At the formal hearing, both parties presented the testimony of witnesses and both parties offered exhibits in support of their respective positions.

Following the hearing, a transcript was prepared and the parties were allowed until November 19, 1988, within which to file their proposed recommended orders. Thereafter, upon joint motion of the parties, the period for filing post-hearing briefs and/or proposed recommended orders was extended until December 6, 1988.

Both parties timely filed post-hearing briefs in a format more customary to appellate than to administrative hearing proceedings. The parties' briefs have been carefully considered during the formulation of this recommended order.

Specific rulings on the factual assertions of the parties are contained in the appendix to this recommended order.

FINDINGS OF FACT

Based on the stipulations and admissions of the parties, on the exhibits received in evidence, and on the testimony of the witnesses at hearing, I make the following findings of fact.

1. In November of 1984 the Petitioner and the Respondent entered into a contract which has the following title:

   
   

   GOVERNOR'S WAGNER-PEYSER 10% DISCRETIONARY FUNDS FIXED-UNIT PRICE CONTRACT

   CONTRACT NO. SA016

   "STATEWIDE FARMWORKERS JOB PLACEMENT PROJECT"

   
   

2. Paragraph 1.A. of the subject contract contains the following description of the project activities:

   
   

   The Florida AFL-CIO United Labor Agency will operate a statewide job placement program to meet the increased employment needs of migrants/farmworkers and related workers in- volved in the processing of agricultural pro- ducts. The Agency will coordinate and work with farmworker advocacy organizations in Apopka and Dade City, Florida, to recruit and identify participants. Unsubsidized employ- ment opportunities will be developed with unions, apprenticeship programs, and private sector employers. The employment resources of the Agency will be coordinated and inte- grated with those of the Job Service and local PICs.

   
   

3. Paragraph 2.A. of the subject contract contains a "work activity plan" described as follows:

   
   

   1. To recruit and provide employability counseling to migrants/farmworkers;

   2. To place 230 migrants/farmworkers into unsubsidized, non-agricultural employment with a duration of 30 days or more;

   3. To integrate the employment resources of unions and the United Labor Agency with those of the Job Service.

   4. Prepare and submit a final narrative report to DLET documenting the success and failures of the project.

      
      

4. Paragraph 2.B. of the subject contract contains the following description of the performance units applicable to the contract:

   
   

   1. The contractor will make up to 230 place- ments in unsubsidized employment over the course of the contract period at $726.00

      each, for a total amount not to exceed

      $166,980.00.

   2. A placement will be defined as employment by a participant engaged in work for at least

      35 hours per week, in a job paying at least the minimum wage, for a period of at least 30 calendar days.

      
      

5. At Paragraph 2.D. of the subject contract, under the subcaption "ACTIVITY/PAYMENT SCHEDULE OF PERFORMANCE UNITS," the contract provides, in pertinent part:

   
   

   1. The contractor will be advanced

      $37,062.00.

   2. The advance will be repaid monthly by deducting $6,177.00 per month from the amount of deliverables produced over a six month period, beginning with the November 1984 invoice and being completed with the April 1985 invoice.

   3. There will be one performance unit for this contract, and it will be for placement at the rate of $726.00 each.

      
      

6. Paragraph 14.e. of the subject contract reads as follows:

   
   

   The Contractor is responsible for fulfilling all terms and conditions of this Contract.

   While the DLET shall monitor the Contrac- tor's performance under the Contract, the Contractor remains solely responsible for its performance. The DLET monitoring of the Contract shall not constitute a waiver or

   modification of any term or condition. Terms and conditions may only be modified by written contract amendment as specified herein.

   
   

7. One of the documents used in the administration of the subject contract was a Form BRI-100, which was designed so that three individuals had to sign the form to certify that a valid job placement had been accomplished. The required signatures were those of the employer, the farmworker/employee, and a representative of the Petitioner. Early in the administration of the contract the Petitioner began to have problems obtaining employer signatures on Form BRI- 100, especially where employment was obtained through union hiring halls. At the behest of the Petitioner, the Respondent deleted the requirement that the employer sign the form and permitted the form to be signed by a representative of the union hiring hall.

   
   

8. During the course of the Petitioner's performance of the subject contract, one of the Petitioner's employees submitted fraudulent documentation on numerous occasions. The fraudulent documentation purported to be evidence of successful job placements under the contract. The fraudulent documentation was submitted to the Respondent and the Respondent paid money to the Petitioner on the basis of the fraudulent documentation. A post-performance audit revealed that 74 of the job placements for which the Petitioner was paid were in fact fictitious placements supported by fraudulent documentation. As a result of the

   fraudulent documentation, the Petitioner was paid $726.00 for each of 74 fictitious job placements, a total of $53,724.00. The $53,724.00 which was paid on the basis of fraudulent documentation was paid to the Petitioner solely because at the time of making the payment the Respondent believed that the Petitioner had made 74 placements which, in fact, were never made. The Respondent's belief that the 74 placements had been made was based on the fact that the Petitioner submitted fraudulent documentation claiming payment for 74 job placements that had not been made.

   
   

9. In fairness to the Petitioner it should be noted that at the time the fraudulent documentation was submitted the officers and managing agents of the Petitioner did not know that one of their employees was preparing fraudulent documentation. Further, as soon as the officers and managing agents of the Petitioner discovered that one of their employees had been submitting fraudulent documentation, they candidly reported the problem to the Respondent.

   
   

10. The employee who prepared the fraudulent documentation described above did not abscond with the proceeds derived from his fraudulent actions. The

    $53,724.00 that was paid on the basis of the 74 fictitious job placements was paid to and retained by the Petitioner.

    
    

11. The Respondent did very little in the way of monitoring the subject contract. More extensive monitoring might well have resulted in earlier detection of the fraudulent documentation submitted by Petitioner's employee.

    
    

    CONCLUSIONS OF LAW

    
    

    Based on the foregoing findings of fact and on the applicable statutes, rules, and court decisions, I make the following conclusions of law.

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Sec. 120.57, Fla. Stat.

    
    

13. It is well settled in this state that the language of written contracts, like the language of statutes, must be given its plain and ordinary meaning. It is also well established that contracts are to be applied and enforced so as to give meaning to the intent of the parties as expressed in the contract. It is clear from the title of the contract and from the language of the contract that the sole basis for payment to the Petitioner under the contract is the placement of eligible individuals into eligible jobs. For each such job placement the Petitioner is entitled to payment in the amount of

    $726.00. The Petitioner is not entitled to payment for performing any other activity required under the contract. The Petitioner was paid for 74 fictitious job placements based on the fraudulent activities of its own employee. There is no basis under the contract for the Petitioner to retain the amount paid for those 74 fictitious job placements.

    
    

14. The Petitioner argues that the contract is ambiguous and that such ambiguities should be resolved in the Petitioner's favor. There are provisions in the contract which appear to be ambiguous, but none of those provisions bear on the issues in this case. The portions of the contract relevant to this case, principally the portions that set forth the basis for payment to the Petitioner, are clear and unambiguous, and those provisions clearly limit the Petitioner's entitlement to payment under the contract to one specific thing, successful job placements.

15. The Petitioner also argues that it should be excused from repayment of the $53,724.00 in dispute because the fraudulent actions of its employee were unforeseeable. The established law is otherwise. As noted at 2 Fla. Jur. 2d, Agency and Employment, Sec. 90:

    
    

    It is well settled that a principal is liable for the deceit and false representa- tions made by his agent in the scope and course of his employment, and it makes no difference whether the principal authorized or was cognizant of the misrepresentations and deceit of his agent or not... One who puts an agent in a position that enables the agent, while apparently acting within his authority, to commit a fraud upon third persons, is liable to such third persons for the fraud and he is not relieved from liabi- lity by the fact that the apparent agent acts entirely for his own purposes, unless such third persons have notice of such fact.

    
    

16. The Petitioner next argues that it should be excused from repayment because the Respondent facilitated the fraud committed by Petitioner's employee. In this regard, Petitioner directs attention to the fact that during the contract period the Respondent deleted a requirement that the employer sign Form BRI-100 when a placement was made, and that this deletion facilitated the implementation of the fraud. What this argument overlooks is that with or without the requirement of the employer's signature on the Form BRI-100, Petitioner's employee was required to forge the same number of signatures to work his fraud. The argument also overlooks the fact that the deletion of the requirement that the employer sign the Form BRI-100 was at the behest of the Petitioner, because the Petitioner was having problems getting employers to sign the forms. More fundamentally, the Petitioner must bear the responsibility for the wrongdoing of its own employee, particularly where, as here, the Petitioner has reaped the benefit of the wrongdoing.

    
    

17. A further Petitioner argument is that it should be excused from the repayment sought by the Respondent because the Respondent failed to properly monitor the Petitioner's performance under the contract. In this regard it is argued that better monitoring would likely have resulted in earlier detection of the fraudulent activities of the Petitioner's employee. The argument misses the point. The Petitioner is not being penalized because of the fraudulent activities of its employee; it is being asked to return the fruits of that fraudulent activity. The timing of the discovery of the fraud has no bearing on the Petitioner's obligation to repay fraudulently obtained funds.

    
    

18. The Petitioner next argues that it should be excused from repayment because it has substantially performed the contract. The proof is otherwise. With regard to the 74 fictitious placements which form the basis for the Respondent's claim for repayment, the greater weight of the evidence is that those 74 alleged placements were total frauds. This is not a case of doing the substance of the job and then "fudging" a little bit on the paperwork; it is a case of claiming $53,724.00 on the basis of total fiction.

    
    

19. The Petitioner's final argument is another variation on the theme of "unforeseeable intervening actions." There is neither a factual nor a legal basis to support this argument. The only case cited in support of this argument

deals with tort law rather than contract law. Simply stated, the Petitioner is not entitled under the subject contract to retain funds paid to it on the basis of fraudulent documents provided by its own employee.

RECOMMENDATION

Based on all of the foregoing, I recommend the entry of a Final Order finding that the Petitioner has received $53,724.00 to which it is not entitled under the subject contract and ordering the Petitioner to repay that amount to the Respondent.

DONE AND ENTERED this 20th day of January, 1989, at Tallahassee, Florida.

MICHAEL M. PARRISH, Hearing Officer Division of Administrative Hearings The Oakland Building

2900 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of January, 1989.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-2755

The following are my specific rulings on all proposed findings of fact submitted by all of the parties.

Findings proposed by Petitioner:

The Brief of Petitioner does not contain any section specifically identified as proposed findings of fact. It does contain a distinct section captioned "STATEMENT OF THE FACTS," which I have treated as the Petitioner's proposed findings. The page numbers below refer to pages of the Brief Of Petitioner.

Page 2: All but last four lines are rejected as subordinate and unnecessary background details. The last four lines are accepted in substance.

Page 3: All but last five lines are accepted in substance. The last full paragraph on the page is rejected as unnecessary commentary.

Page 4: First fourteen lines (plus last line on page 3) accepted in substance, but with most details omitted as unnecessary. The remainder of page

4 and the top four lines of page 5 are rejected as subordinate and unnecessary details, as for the most part irrelevant, and as containing implications contrary to the greater weight of the evidence.

Page 5: First full paragraph is rejected as constituting subordinate and unnecessary details; I have found that little was done to monitor the contract performance. The last four lines are rejected as argument or unnecessary commentary rather than findings of fact.

Page 6: First twenty lines rejected as irrelevant and as unnecessary details. Paragraph beginning at sixth line from bottom is accepted in substance.

Page 7: Top four lines (and last line of page 6) rejected as Irrelevant.

Lines five through twenty-two are for the most part rejected as irrelevant or as not supported by persuasive competent substantial evidence, with exception of proposed finding that an employee committed fraud and that Petitioner promptly reported the fraud when it was discovered. Last four lines rejected as irrelevant.

Page 8: First full paragraph is rejected as being for the most part irrelevant and as in part contrary to the greater weight of the evidence.

Second full paragraph is rejected as argument or unnecessary commentary. Third full paragraph is rejected as Irrelevant. Last four lines accepted in substance with some unnecessary details omitted.

Page 9: Top two lines rejected; the greater weight of the evidence is that all "disallowed costs" were caused by the fraud of one employee. First full paragraph rejected as irrelevant. Second full paragraph is rejected as for the most

12 part irrelevant, although some details have been included. Last three lines rejected as irrelevant.

Page 10: Rejected as irrelevant.

Findings proposed by Respondent:

The Brief Of Respondent does not contain any section specifically identified as proposed findings of fact. It does contain a distinct section captioned "STATEMENT OF THE CASE AND FACTS," which I have treated as the Respondent's proposed findings of fact. The page numbers below refer to pages of the Brief Of Respondent.

Page 2: Rejected as subordinate and unnecessary background details. Page 3: Rejected as subordinate and unnecessary background details.

Page 4: First paragraph accepted in substance. The remainder of this page is accepted in substance with some details and some argumentative passages omitted.

Page 5: Accepted as correct statement, but omitted as unnecessary details.

Page 6: First paragraph rejected as constituting subordinate and unnecessary details. Second paragraph rejected as constituting subordinate and unnecessary details. Third paragraph rejected as constituting subordinate and unnecessary details. Last paragraph accepted in substance with unnecessary details omitted.

Page 7: Rejected as subordinate and unnecessary details.

COPIES FURNISHED:

Sidney L. Matthew, Esquire Gorman & Matthew, P.A. Post Office Box 1754 Tallahassee, Florida 32302

David J. Busch, Esquire Department of Labor and Employment Security

Suite 131, Montgomery Building 2562 Executive Center Circle, East Tallahassee, Florida 32399-0657

Hugo Menendez, Secretary Department of Labor and Employment Security

206 Berkeley Building

2590 Executive Center Circle, East Tallahassee, Florida 32399-2152

Stephen Barron, Esquire General Counsel Department of Labor and Employment Security

Suite 131, Montgomery Building 2562 Executive Center Circle, East Tallahassee, Florida 32399-0657

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY

FLORIDA AFL-CIO UNITED LABOR AGENCY, INC.,

Petitioner,

vs. CASE NO. 88-2755

STATE OF FLORIDA DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY,

Respondent.

/

FINAL ORDER

THIS MATTER came on for final agency action before Robert D. Johnston, Director of the Division of Labor, Employment and Training, upon the Recommended Order dated January 20, 1989, by Michael M. Parrish, an administrative hearing officer with the State of Florida, Division of Administrative Hearings, and upon the Petitioner's exceptions to Recommended Order of Hearing Officer, dated February 2, 1989, copies of which are attached hereto as Exhibit A and Exhibit respectively, and made a part hereof by reference.

Upon review of the Recommended Order, the argument of the parties, and after a review of the complete record in this case, I hereby make the following findings and conclusions.

CONCLUSIONS OF LAW

1. The conclusions of law set forth in the Recommended Order are approved and adopted and incorporated herein.

   
   

2. There is competent substantial evidence to support the conclusions of

law.

RULING ON EXCEPTIONS

Petitioner filed four exceptions to the Recommended Order, which shall be

addressed in sequence.

Exception No. 1. Petitioner first excepts all findings of fact proposed by Petitioner which were rejected by the hearing officer. My review of the record indicates that the hearing officer's findings are supported by competent substantial evidence. That being the case, I am not at liberty to reject those findings. Section 120.57(1)(b)10, Florida Statutes. This exception, therefore, is rejected.

Exception No. 2. Petitioner objects to the conclusion that Petitioner repay the sum of $53,724 on the grounds that Petitioner was not entitled to said funds pursuant to the contract. Having determined that there was competent substantial evidence to support the hearing officer's findings of fact and conclusions of law, it follows that the recommendation that Petitioner repay the amount so found to be due would also be supported thereby. This exception, therefore is rejected.

Exception No. 3. This exception actually objects to seven conclusions of law, each of which shall be addressed.

1. Petitioner excepts conclusion of law contained in Paragraph 3 as being contrary to the evidence. Based upon my review of the record, the hearing officer's conclusion that the portions of the contract that set forth the basis of payment to the Petitioner are clear and unambiguous is supported by competent substantial evidence. The exception, therefore, is rejected.

   
   

2. a. Petitioner first objects to the conclusion of law contained in Paragraph 4 of the Recommended Order concerning excuse from repayment on the grounds that the actions of Petitioner's employee were unforeseeable. The hearing officer has accurately described the law of agency as it applies to the facts of this case. The exception, therefore, is rejected.

1. Petitioner excepts conclusion of law contained in Paragraph 5 of the Recommended Order relating to excuse from repayment on the grounds that Respondent facilitated the fraud committed by Petitioner's employee. There is no competent evidence in the records to support Petitioner's contention on this point. This exception, therefore, is rejected.

   
   

2. Petitioner excepts the conclusion of law contained in Paragraph 6 of the Recommended Order, asserting excuse from repayment on the grounds that Respondent failed to properly monitor performance under the contract. Paragraph

   14.e. of the subject contract provides, in pertinent part:

   
   

   The Contractor [Petitioners is responsible for fulfilling all terms and conditions of this

   Contract. While the DLET shall monitor the Contractor's

   performance under the Contract, the Contractor remains solely responsible for its performance The LET monitoring of the Contract shall not constitute a waiver or modification of any term or condition. (Emphasis supplied.)

   
   

3. Petitioner excepts the conclusion of law contained in Paragraph 7 of the Recommended Order on the grounds that Petitioner should be excused from repayment because it has substantially performed the contract. Based upon my review of the record, the hearing officer properly found that the 74 alleged placements were total frauds. This exception, therefore, is rejected.

   
   

   Exception No. 4. Petitioner objects to the conclusion of law contained in Paragraph 8 as being contrary to Barrett, Daffin & Figg v. McCormick, 362 So.2d 966 (Fla. 1st DCA 1978). It is apparent that the cited case is inapplicable to the instant case since the employer had no contract with the injured party (McCormick) and did not directly benefit from its employee's fraud, as the Petitioner has in this action. The hearing officer has, again, correctly concluded that the cited case is distinguishable from the case at bar. The exception, therefore, is rejected.

   
   

   Exception No. 5. Petitioner also takes exception to the conclusion of law contained in Paragraph 4 of the Recommended Order as being in direct contradiction to Martin v. United Security Services, Inc., 373 So.2d 720 (Fla. 1st DCA 1979). Although not previously cited by the Petitioner, Davis is clearly distinguishable on the grounds that since the Petitioner received the funds associated with its employee's fraudulent activity, it is reasonable to conclude that the motive for the employee's actions was the furtherance of Petitioner's interests, not the employee's. Since the employer has directly benefited from its employee's actions, it is liable for those actions. This exception, therefore, is likewise rejected.

   
   

   THEREFORE, IT IS HEREBY ORDERED AND ADJUDGED AS FOLLOWS:

   
   

   1. That Petitioner, FLORIDA AFL-CIO UNITED LABOR AGENCY, INC., has received the sum of $53,724.00 to which it was not entitled under its contract with Respondent, STATE OF FLORIDA DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY.

      
      

   2. That Respondent recover from Petitioner the sum of $53,724.00 as repayment therefore.

DONE and ORDERED this 17th day of March, 1989, at Tallahassee, Leon County, Florida.

ROBERT D. JOHNSTON, Director

Division of Labor, Employment and Training

Florida Department of Labor and Employment Security Suite 300, Atkins Building 1320 Executive Center Drive

Tallahassee, Florida 32399-0667

COPIES FURNISHED:

Sidney L. Matthew, Esquire Gorman & Matthew, P.A. Post Office Box 1754 Tallahassee, Florida 32302

Hugo Menendez, Secretary Florida Department of Labor and Employment Security

Suite 206, Berkeley Building

2590 Executive Center Circle, East Tallahassee, Florida 32399-2152

Stephen D. Barron, Esquire Florida Department of Labor and Employment Security

Suite 131, Montgomery Building, 2562 Executive Center Circle, East Tallahassee, Florida 32399-0657

Docket for Case No: 88-002755

Orders for Case No: 88-002755