STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DONALD L. HILGEMAN, )

)

Petitioner, )

)

vs. ) CASE NO. 89-6598RX

) STATE OF FLORIDA, DEPARTMENT OF ) BUSINESS REGULATION, DIVISION OF ) FLORIDA LAND SALES, CONDOMINIUMS ) AND MOBILE HOMES, )

)

Respondent. )

)

and )

)

THE FEDERATION OF MOBILE ) HOME OWNERS OF FLORIDA, INC., )

)

Intervenor. )

)

FINAL ORDER

Notice was provided and on February 22, 1990, in the City Hall, Ocala, Florida, a final hearing was held under the authority of Section 120.56, Florida Statutes. Charles C. Adams was the Hearing Officer.

APPEARANCES

For Petitioner: David D. Eastman, Esquire

Parker, Skelding, Labasky & Corry Post Office Box 669

Tallahassee, FL 32302

For Respondent: Susan C. Marvin

Pamela Leslie

Assistants General Counsel Department of Business

Regulation

725 South Bronough Street Tallahassee, FL 32399-1007

For Intervenor: Thomas Presnell, Jr., Esquire

Lee Jay Colling & Associates Suite 1107 First Union Tower

20 North Orange Avenue Orlando, FL 32801

STATEMENT OF ISSUES

The issues for consideration in this case concern the petition and challenge to the validity of Rule 7D-32.001(4); Rule 7D-32.003 and Rules 7D- 32.004(1) and (2), Florida Administrative Code. The basis for the challenge is premised upon an alleged vagueness, inadequacy in the establishment of standards for agency decisions, the vesting of unbridled discretion in the agency and the contention that the rules are arbitrary and capricious.

PRELIMINARY STATEMENT

Prior to the final hearing Respondent had moved to dismiss the petition based upon an alleged failure to adequately state the cause of action. That motion was denied.

The Intervenor petitioned and was granted the opportunity to intervene. The Respondent joined by the Intervenor moved for a summary final order.

That motion met opposition by the Petitioner. At the commencement of the final

hearing a ruling was made which denied that motion.

Petitioner's request for official recognition of Chapter 87-162, Laws of Florida, and Vol. 13, No. 16, April 17, 1987, Florida Administrative Weekly pertaining to Rules 70-32.001, 32.003 and 32.004, Florida Administrative Code, was granted.

The parties through a stipulation arrived at in hearing agreed to the standing of the Petitioner to bring this challenge and of the Intervenor to participate in this case. The challenge does not focus on the methods employed by the agency in the rule promulgation process.

The parties have offered proposed final orders. The fact-finding within those proposed final orders is addressed in an Appendix to this Final Order.

FINDINGS OF FACT

1. Petitioner is the owner of Lake Waldena Resort, a mobile home park located in Marion County, Florida. That park is regulated under the provisions of Chapter 723, Florida Statutes. Petitioner is a mobile home park owner within the definition set out in Section 723.003(7), Florida Statutes. In addition, Petitioner is presently charged, through a notice to show cause/administrative complaint, with violating Section 723.037(3), Florida Statutes and Rule 7D- 32.004(1), Florida Administrative Code, by his alleged refusal to meet with a designated homeowners' committee within 30 days of the giving of notice of a proposed increase of lot rental. That disciplinary case was heard on the same date as the present case and is awaiting disposition through a recommended order. If Petitioner is found to have violated provisions within Chapter 723, Florida Statutes and Chapter 7D-32, Florida Administrative Code, he may be subjected to a civil penalty or have other administrative sanctions imposed.

   
   

2. The rules that are under challenge are related to the formation of the homeowners committee; the activities of that committee in ascertaining the basis for the park owners' reason for a lot rental increase; the obligation of the park owner to meet with the committee and the opportunity of the park owner to request certification of the committee's selection to participate in the meeting envisioned by Section 737.0037(3), Florida statues.

3. Respondent by the authority set forth in Section 732.006(6), Florida Statutes, is authorized to promulgate rules which it deems to be necessary to implement, enforce, and interpret the provisions of Chapter 723, Florida Statutes. In accordance with that authority and the authority set forth in Section 723.037, Florida Statutes, it enacted the rules which are the subject of this dispute.

   
   

4. Intervenor is a Florida non-profit corporation which represents over 150,000 mobile home owners and tenants in Florida and has as its purpose the representation of those mobile home owners in various activities, to include legal issues.

   
   

5. The Petitioner and Respondent and the mobile home owners whom the Intervenor represents are substantially affected by the decision concerning the validity of the aforementioned rules.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties pursuant to Section 120.56, Florida Statutes.

   
   

7. All parties to the action have standing to participate in the examination of the questioned validity of the rules under challenge.

   
   

8. The grounds for challenge are announced in Section 120.52(8), Florida Statutes, which says:

   
   

   "Invalid exercise of delegated legislative authority" means action which goes beyond the powers, functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one or more of the following apply:

   1. The agency has materially failed to follow the applicable rulemaking procedures set forth in S. 120.54.

   2. The agency has exceeded its grant of rulemaking authority, citation to which is required by S. 120.57(7);

   3. The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by S. 120.57(7);

   4. The rule is vague, fails to establish adequate standards for agency

      decisions, or vests unbridled discretion in the agency; or

   5. The rule is arbitrary or capricious.

      
      

9. The burden of proof resides with the Petitioner to demonstrate the existence of one or more of the infirmities which are spoken to in Section 120.52(8), Florida Statutes. See Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1979), Cert. den. 376 So.2d 74 (Fla. 1979); Department of Professional Regulation v. Durrani, 455 So.2d 515 (Fla. 1st DCA 1984); and Hobe Associates v. Department of Business Regulation, 504 So.2d 1301 (Fla. 1st DCA 1987). These opinions recognize the

   broad discretion of the agency in exercising the rulemaking authority which has been conferred or may be fairly implied and as seen as consistent with the agency's statutory duty. The construction which the agency would give to its statutes is entitled to great weight and absent some clear error in that process of interpretation may not be overturned. A rule is valid and should be upheld if it is reasonably related to the purposes that the legislature had in mind.

   On the other hand, if a rule tends to be contrary to those admonitions set forth in Section 120.52(8), Florida Statutes, it may not be sustained.

   
   

10. Section 723.006(7), Florida Statutes creates the general opportunity for the Respondent to promulgate the rules that are necessary to implement, enforce, or interpret other provisions within Chapter 723, Florida Statutes. Among those provisions is found 723.037, Florida Statutes, which states:

    
    

    (1) A park owner shall give written notice to each affected mobile home owner and the board of directors of the homeowners' association, if one has been formed, at least 90 days prior to any increase in lot rental amount or reduction in services or utilities provided by the park owner or change in rules and regulations. The notice shall identify all other affected homeowners, which may be by lot number, name, group, or phase. If the affected homeowners are not identified by name, the park owner shall make the names and addresses available upon request. Rules adopted as a result of restrictions imposed by governmental entities and required to protect the public health, safety, and welfare may be enforced prior to the expiration of the 90-day period but are otherwise exempt from the requirements of this chapter. Pass-through charges must be separately listed as to the amount of the charge, the name of the governmental entity mandating the capital improvement, and the nature or type of the pass-through charge being levied. Notices of increase in the lot rental amount due to a pass-through charge shall state the additional payment and starting and ending dates of each pass- through charge. The homeowners' association shall have no standing to challenge the increase in lot rental amount reduction in services or utilities, or change of rules and regulations unless a majority of the affected homeowners agree, in writing, to such representation.

    2) Notice as required by this section shall only be required to include the change in the present lot rental amount, the reduction in services or utilities, or

    the change in rules and regulation; and the effective date thereof.

    1. A committee, not to exceed five in number, designated by a majority of the affected mobile home owners or by the board of directors of the homeowners' association, if applicable, and the park owner shall meet, at a mutually convenient time and place within 30 days after receipt by the homeowners of the notice of change, to discuss the reasons for the increase in lot rental amount, reduction in services or utilities, or change in rules and regulations.

    2. Within 30 days of the date of scheduled meeting described in subsection (3), the homeowners shall request that the dispute be submitted to mediation pursuant

       to S. 723.038 if a majority of the affected homeowners have designated, in writing, that:

       1. The rental increase is unreasonable;

       2. The rental increase has made the lot rental amount unreasonable;

       3. The decrease in services or utilities is not accompanied by a corresponding decrease in rent or is otherwise unreasonable; or

       4. The change in the rules and regulations in unreasonable

    3. If both parties subsequently agree, they may request that the dispute be arbitrated rather than mediated.

    4. No action relating to a dispute described in this section may be filed in any court unless and until a request has been submitted to the division for mediation or arbitration and the request has been processed in accordance with s. 723.038.

    5. If a party refuses to agree to mediate or arbitrate, or fails to request medication, upon proper request, that party shall not be entitled to attorney's fees In any action relating to a dispute described in this section.

    
    

11. Section 723.037(1), Florida Statutes, contemplates the opportunity for a homeowners' association to challenge the increase in lot rental amount, among other items, if the majority of the affected homeowners agreed in writing to that representation. The concept of a challenge to the increase in lot rental amount is separate and apart from the informational meeting which is referenced in Section 723.037(3), Florida Statutes. This informational session is distinguished from the idea of-a specific challenge to the increase in lot rental amount which willc not transpire prior to a discussion of the lot rental increase between the park owner and the committee or at all if that discussion satisfies the homeowners. Moreover, participation in the meeting may be by a committee constituted either by designation through a majority of affected homeowners or by the board of directors of the homeowners association unrelated

    to the designation of the majority of homeowners at large. Participation in the meeting, unlike the conduct of the meeting itself, is not a prerequisite to availing oneself of the opportunities related to mediation, arbitration, or court action, the latter opportunity being that envisioned in Section 723.038(2), Florida Statutes.

    
    

12. The language in Section 723.037(3), Florida Statutes, is to the effect that the committee, constituted of not more than five persons, may be designated through the process of the majority of affected mobile home owners having chosen a committee, or in the instance where a homeowners' association has been formed, the board of directors may designate the committee. This section does not state a preference for which of these committees, that is to say a committee formed by a majority of mobile home owners or a committee designated by the board of directors of the homeowners' association, takes precedence as the appropriate body to meet with the park owner and discuss a lot rental increase, or other changes. It speaks in the disjunctive and appears to contemplate that one group or the other will be meeting with the park owner; however, having failed to state a preference for the committee of the majority of affected mobile homeowners or that constituted by the board of directors contemporaneously, it would not seem to bar the participation of both groups in a discussion of the S0S for a lot rental increases. On the other hand, the section does not appear to prohibit the park owner from meeting with the first of those committees who had requested such meeting and if that meeting is concluded before the hypothetical second committee had made its request for a meeting, then arguably the park owner would not find it necessary to conduct a second discussion with the second committee. Against this statutory background Respondent has attempted to effect the purposes of the legislation by the enactment of the rules which are questioned here.

    
    

13. The first of the rules is under the definitional section at Rule 7D- 32.001, Florida Administrative Code. Within those definitions is found a definition of "homeowners committee" at Rule 7D-32.001(4), Florida Administrative Code. It states:

    
    

    "Homeowners' committee" means a committee, not to exceed 5 persons in number, designated by a majority of the affected homeowners in a mobile home park or a subdivision; or, if a homeowners' association has been formed, designated by the board of directors of the association, for the purpose of meeting with the park owner to discuss lot rental increases, decreases in services or utilities, or changes in rules and regulations.

    
    

    This rule provision is not invalid. It accurately paraphrases section 723.037(3), Florida Statutes.

    
    

14. Rule 7D-32.003, Florida Administrative Code is attacked in its entirety. That rule states:

    
    

    1. In a mobile home park or subdivision where a homeowners' association has been formed, a committee of not more than five persons may be selected by the board of directors of the association to meet with

       the park owner to discuss the reasons for any proposed increase in lot rental amount, reduction in services or utilities, or change in rules or regulations.

    2. Whether or not a homeowners' association has been formed, the homeowners who are affected by a proposed increase in lot rental amount, reduction in services or utilities, or a change in rules and regulations may designate by majority agreement a committee of not more than five persons to meet with the park owner to discuss the reasons for the change. If a homeowners' committee has been designated by the board of directors of a associations and a committee has also been designated by a majority of the affected homeowners, the homeowners' committee shall consist of the committee designated by the majority of the affected homeowners. However, where one or more members of a homeowners' committee designated by a majority of the affected homeowners is unwilling or unable to serve or attend a required meeting, the board may designate replacement if the majority of the affected homeowners do not do so.

       1. Any homeowner or group of homeowners may obtain the approval of the required homeowners to the designation of a homeowners' committee either at a meeting, by agreement in writing, or a combination thereof.

       2. If a mobile home or subdivision lot

          is owned jointly, the owners of that mobile home or subdivision lot shall be counted as one for the purpose of determining the number of votes required for a majority.

          Only one vote per mobile home or subdivision lot shall be counted. A majority shall constitute any number greater than 50 percent of the total.

    3. The homeowners' association or committee shall retain records to verify the selection of the committee by a majority of the affected homeowners or the board of directors of the association. The records shall be retained until the dispute is resolved or the arbitration or mediation process described in Section 723.037, F.S, has been completed, or, in the case of a homeowners' association, for not less than

    7 years.

    The rule is valid with the exception of a portion of the preamble to Section 7D- 32.003(2), Florida Administrative Code The first sentence within that preamble is acceptable as being a paraphrase of Section 723.037(3), Florida Statutes.

    What is not acceptable is that portion which states:

    
    

    If a homeowners' committee has been designated by the board of directors of a homeowners' associations and a committee has also been designated by a majority of the affected homeowners, the homeowners' committee shall consist of the committee designated by the majority of the affected homeowners. However, where one or more members of a homeowners' committee designated by a majority of the affected homeowners is unwilling or unable to serve or attend a required meeting, the board may designate a replacement if the majority of the affected homeowners do not do so.

    
    

    This language enlarges the statutory scheme by recognizing a preference for the committee that was designated by the majority of the affected mobile homeowners to the exclusion of a committee designated by the board of directors of the homeowners' association. It also enlarges and contravenes Section 723.037(3), Florida Statutes, in its idea of allowing the board of directors of the homeowners' association to appoint substitute committee members for missing committee members in a committee that had been designated by the majority of affected mobile homeowners. Therefore, the subject language in the preamble is stricken from the rule.

    
    

15. Petitioner next challenges Rules 7D-32.004l) and (2), Florida Administrative Code, which state:

    
    

    1. If a homeowners' committee has been designated in accordance with Rule 7D- 32.003, Florida Administrative Code, the park owner or subdivision developer shall meet with the homeowners' committee within

       30 days of the giving of the notice required by Rule 7D-32.002, Florida Administrative Code, if requested to do so by the homeowners' committee. The purpose of the meeting is to discuss the proposed change which is the subject of said notice

    2. If requested to do so by the park owner or subdivision developer, the committee shall certify that it has been selected as described in Rule 7D-32.003, Florida Administrative Code. The certification shall include a certificate of all members of the committee attesting to its proper formation under the statute and these rules.

    
    

    Having stricken the language within the preamble at Rule 7D- 32.003(2), Florida Administrative Code, there is no infirmity within Rule 7D-32.004(1), Florida Administrative Code. By contrast, Rule 7D-32.004(2), Florida Administrative

    Code, is invalid in that it enlarges, modifies, and contravenes Section 723.037(3), Florida Statutes. Moreover, it is vague and fails to establish adequate standards for agency decisions. It vests the agency with unbridled discretion and it is arbitrary in its terms.

    
    

16. Nothing within Section 723.037(3), Florida Statutes, contemplates the opportunity on the part of the park owner to question the bona fides of committee members nor the necessity of committee members to offer some form of certification identifying who they are. Nonetheless, Rule 7D-32.004(2);, Florida Administrative Code, does these things.

    
    

17. Moreover, even if one were to assume that the agency would have the opportunity to create the certification process, the self-serving nature of the certification process contemplated by that rule provision affords no particular insight to the park owner about the process of designation of committee members. This is as contrasted with a hypothetical requirement to attach minutes of discussion in the selection process or other evidence which would tend to verify the credentials of the putative committee members. The provision does not indicate at chat point the park owner must request the credentials check related to the requirement for needing to discuss the changes within 30 days of notice as envisioned by Section 723.037(3), Florida Statutes, in particular the effect of having made a request before the expiration of that 30 days and not receiving a response within sufficient time to schedule the meeting within the 30 days allotted. Put another way, does this request toll the requirements of the 30 day meeting envisioned by Section 723.037(3), Florida Statutes.

    
    

18. Having considered this case through the facts found and conclusions of law reached, it is

ORDERED:

That the preamble to Rule 7D-32.004(2), Florida Administrative Code, in the language referred to before is found invalid, as is Rule 7D-32.004(2), Florida Administrative Code. The petition and challenge to Rule 7D-32.001(4), Florida Administrative Code, the balance of Rule 7D-32.003, Florida Administrative Code, and Rule 7D-32.004(1), Florida Administrative Code, is dismissed.

DONE and ORDERED this 18th day of April, 1990, in Tallahassee, Florida.

CHARLES C. ADAMS

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 18th day of April, 1990.

APPENDIX CASE NO. 89-658R

The following discussion is given concerning the proposed fact finding of the parties:

Petitioner's Facts

Paragraphs 1-4 are subordinate to facts found. Paragraph 5 is a conclusion of law.

Respondent' s Facts

Paragraphs 1-3 are subordinate to facts found.

Paragraph 4 is a recapitulation of the stipulation between the Respondent and Intervenors to recognize the substantial affect of this series of rules on the Petitioner which has been addressed in the preliminary statement and conclusions of law.

Intervenor's Facts

Paragraphs 1 and 2 and all sentences save the last in

Paragraph 3 are subordinate to facts found. The latter sentence is a restatement of law which has been discussed in the conclusions of law to the final order.

Likewise, Paragraphs 4-7 constitute a restatement of rules and sections within Florida Statutes which are set out in the conclusion of law.

Paragraph 8 is a characterization of the claims of the Petitioner which are discussed in the preliminary statement and conclusions of law.

COPIES FURNISHED:

Stephen R. MacNamara, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1007

Joseph A. Sole, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1007

David D. Eastman, Esquire

Parker, Skelding, Labasky & Corry Post Office Box 669

Tallahassee, FL 32302

Susan C. Marvin Pamela Leslie

Assistants General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1007

Thomas Presnell, Jr., Esquire Lee Jay Colling & Associates Suite 1107 First Union Tower

20 North Orange Avenue Orlando, FL 32801

Liz Cloud, Chief

Bureau of Administrative Code The Capitol - 1802 Tallahassee, FL 32399-0250

Carroll Webb, Executive Director Administrative Procedure Committee

120 Holland Building Tallahassee, FL 32399-1300

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW 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 THIRTY (30) DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 89-006598RX

Orders for Case No: 89-006598RX