STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GEORGE S. PONTIGO, )

)

Petitioner, )

)

vs. ) CASE NO. 90-3861F

) DEPARTMENT OF STATE, DIVISION ) OF LICENSING, )

)

Respondent. )

)

FINAL ORDER

This matter was considered by William R. Dorsey, Jr., the Hearing Officer designated by the Division of Administrative Hearings, upon stipulated facts, and several memoranda of law submitted by the parties.

APPEARANCES

For Petitioner: John O. Sutton, Esquire

Sutton, Jamerson & Mullin 2655 LeJeune Road Penthouse II

Coral Gables, Florida 33134

For Respondent: Henri C. Cawthon, Esquire

Department of State

The Capitol, Mail Station 4 Tallahassee, Florida 32399-0250

STATEMENT OF THE ISSUE

The issue is whether Mr. Pontigo should be awarded $7,150 in attorneys' fees and $300 in costs under Section 57.111(4)(a), Florida Statutes, because the Department brought a proceeding against him which terminated in Mr. Pontigo's favor, the proceeding was not substantially justified when initiated and no special circumstances make an award of fees unjust.

PRELIMINARY STATEMENT

An application for attorneys' fees and costs under the Florida Equal Access to Justice Act, Section 57.111, Florida Statutes, was filed by George Pontigo with the Division of Administrative Hearings on June 21, 1990. By agreement of the parties, this matter was not set for hearing, the parties were granted a period of time in which to reach a stipulation of fact, and to submit proposed findings of fact and conclusions of law based upon the stipulation. Mr. Pontigo submitted his stipulated facts and memorandum of law on August 15, 1990, along with two affidavits in support of attorneys' fees and costs in the amount of

$5,950. A separate copy of the stipulation of facts executed by counsel for the Department of State was also filed on August 15, 1990.

The Department requested additional time in which to file its memorandum of law, which was granted on August 20, 1990. The Department filed its memorandum of law on August 30, 1990, and Mr. Pontigo filed his reply memorandum on September 6, 1990.

On October 17, 1990, the Department sought a telephone conference call, to discuss the effect of the decision in Middlebrooks v. Department of State, 565 So.2d 727 (Fla. 1st DCA 1990) on this case. The parties then sought, and were granted, the opportunity to make further filings, after a telephonic conference hearing on October 23, 1990. The Department filed a supplemental memorandum of law on October 31, 1990, and Mr. Pontigo filed a response on November 14, 1990, which supplemented his fee request, seeking an additional $1,500, for a total of

$7,150 in fees and $300 in costs.

FINDINGS OF FACT

Based upon the stipulated facts and the chronology of events filed by the Department on October 31, 1990, the following are found:

1. On December 21, 1982, George S. Pontigo was convicted of three felony offenses (a tax violation, conspiracy to distribute cocaine, and using a telephone to distribute cocaine). These convictions constituted violations of Section 493.319(1)(c), Florida Statutes (1982), for at the time of his convictions, Mr. Pontigo held Class "P" license #P00-00679 (detection of deception examiner license). On September 1, 1983, the Department of State, Division of Licensing filed an Administrative Complaint (Case No. C 83-24) to revoke that license. An informal hearing was held on October 25, 1983, during which several character witnesses attested to the unique circumstances of Mr. Pontigo's arrest and conviction, his good moral character, his competence as a polygraph examiner, his honesty and his suitability for licensure. The Department of State entered a Final Order on November 15, 1983, which specifically found that a denial of licensure based solely on Section 493.319(1)(c), Florida Statutes, was unwarranted as too severe. A period of probation for one (1) year was imposed. The probationary period ended on November 30, 1984. No conduct during the probationary period provided a basis for non-renewal of the license. Mr. Pontigo's license was renewed and has been continuously renewed since that date.

   
   

2. On June 7, 1988, the Department again filed an Administrative Complaint to revoke Mr. Pontigo's Detection of Deception Examiner License, this time based upon Section 493.319(3), Florida Statutes, and the same criminal conviction of December 21, 1982, which had been the basis for the imposition of probation in the Department's Final Order of November 15, 1983. On June 28, 1989, the Department amended its Administrative Complaint. On August 18, 1989, Pontigo filed an answer and defenses, which argued that further disciplinary action was barred by the doctrines of res judicata and collateral estoppel, and that the statute could not be applied retroactively to Mr. Pontigo.

   
   

3. An informal hearing was held on this second effort to revoke Mr. Pontigo's license on October 3, 1989. An Order entered that same day by Fred Speaker, the internal departmental hearing officer, recommended that "in the interest of fairness, I would recommend the Division [of Licensing] honor the decision reached as a result of the hearing of October 25, 1983." The internal departmental hearing officer felt compelled, however, to revoke Mr. Pontigo's

   license. On November 7, 1989, the Department of State, Division of Licensing entered its second Final Order based upon the 1982 criminal conviction, this time revoking Mr. Pontigo's license.

   
   

4. By letter dated November 21, 1989, the Department confirmed that the Final Order was issued after considering Mr. Pontigo's October 19, 1989 Memorandum of Law and the Affidavit of Representative Alberto Gutman of the Florida House of Representatives dated January 5, 1989.

   
   

5. The Department stated in the Final Order that it revoked Mr. Pontigo's license based upon Section 493.319(3), Florida Statutes. That statute mandates the revocation of a license or denial of an application "... when the person or licensee has been convicted of a felony, regardless of whether adjudication was withheld or whether imposition of sentence was suspended, unless and until civil rights have been restored and a period of ten years has expired."

   
   

6. This disciplinary provision was first enacted in 1986 as part of Chapter 86-193, sec. 17 Laws of Florida, and codified as Section 493.319(1)(p), Florida Statutes (1986 Supp.). Before that time, a licensee could be disciplined if found guilty of a crime directly related to the business for which the license had been issued. Section 493.319(1)(c), Florida Statutes (1985). Amendatory language was added regarding convictions based upon a plea of nolo contendere in 1987 and the provision was renumbered. Chapters 87-135, sec. 3 and 87-274, sec. 10, Laws of Florida.

   
   

7. By letter of May 9, 1988, the Secretary of State informed the Governor, the President of the Senate, and the Speaker of the House, that the Department would be required to review all licensing files for possible revocation action based on the 1987 amendment. The 1988 Legislature authorized a transfer of funds within the Department for the purpose of reviewing existing Chapter 493, gun permits and Chapter 790, concealed weapons licenses for appropriate action. Chapter 88-557, sec. 30, Laws of Florida; Chapter 87-247, sec. 58, Laws of Florida. The permit at issue here was neither a gun permit nor a concealed weapons permit, so the authorization for a fund transfer is irrelevant.

   
   

8. George Pontigo appealed the Final Order of the Department revoking his Detection of Deception License to the District Court of Appeal, Third District, by Notice of Appeal dated December 1, 1989. The Department did not oppose a motion filed in the appellate court to stay the effect of the revocation order, and a judicial stay of the revocation was granted on January 9, 1990. Mr. Pontigo filed his brief on March 19, 1990. On April 13, 1990, the Department entered an Amended Final Order dismissing with prejudice its Administrative Complaint.

   
   

9. While the second round of administrative litigation with Mr. Pontigo had been pending, Congressional action placed the continued licensure of polygraph examiners in doubt, because the Employee Polygraph Protection Act of 1988, Public Law 100-347, effective December 27, 1988 would reduce the number of examiners throughout the country because the uses of polygraphy were restricted. Chapter 493 went through Sunset Review during the 1990 session of the Florida Legislature. By March 1990, the Department believed that the state licensure program for polygraph examiners would cease. Chapter 493 was revised by Chapter 90-364, Laws of Florida, so that as of October 1, 1990, Part II of Chapter 493, which had regulated polygraphers was repealed. Id., Sec. 10. After the Department determined that the polygraph licensure program would be phased out, it dismissed the Pontigo revocation action then pending in the Court of Appeal.

10. The attorneys for George Pontigo filed a Petition for attorneys fees and costs pursuant to Florida Statute 57.111. For services rendered through November 8, 1990, the attorneys for Petitioner request $7,150.00 in legal fees and $300.00 in costs for a total of $7,450.00 The Department does not dispute the reasonableness of the amount claimed.

    
    

11. The sole issue in this proceeding is whether attorneys fees and costs should be awarded to Mr. Pontigo under Section 571.111(4)(a), Florida Statutes, as a prevailing small business party because the actions of the agency were not substantially justified and no special circumstances exist which would make the award unjust.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over this matter. Sections 57.111(4)(b) and 120.57(1), Florida Statutes.

    
    

13. Section 57.111(4)(a) states:

    
    

    Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in any adjud- icatory proceeding or administrative proceed- ing pursuant to Chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special cir- cumstances exist which would make the award unjust.

    
    

14. A proceeding is substantially justified when it has a reasonable basis in law and fact at the time it is initiated. Section 57.111(3)(e), Florida Statutes.

    
    

15. The burden is on the state agency to prove that there was a substantial justification for prosecuting the administrative complaint after the Petitioner shows he is a small business party and prevailed in an action initiated by a state agency. Department of Professional Regulation v. Toledo Realty, 549 So.2d 715 (Fla. 1st DCA 1989).

    
    

16. The Department believes that the provisions of Section 493.319(3), Florida Statutes (1987), required it to revoke the licensure of Mr. Pontigo and it had no discretion in the matter. This argument is unpersuasive. General principles of retroactivity, and res judicata made the Department's position unreasonable as a matter of law at the time it began its second prosecution of Mr. Pontigo.

    
    

17. Appellate decisions have made it clear that a statute only operates prospectively, in the absence of a specific expression of legislative intention to the contrary. Middlebrooks v. Department of State, 565 So.2d 727 (Fla. 1st DCA 1990); Hector v. Department of Professional Regulation, Florida Real Estate Commission, 504 So.2d 469 (Fla. 1st DCA 1987); Crane v. Department of State, Division of Licensing, 547 So.2d 266 (Fla. 3rd DCA 1989) (permitting the retroactive application of a statute). See also, Benton, Retroactivity in Licensing Cases, 59 Fla. Bar J. 81 (June 1985).

18. In the Crane decision, the Third District Court of Appeal permitted the Department to review files to determine whether any person had obtained a concealed weapons permit who was no longer entitled to one under an amended statute which specifically directed the Department to undertake the file review. In effect, the Legislature itself had decided that any person who had already received a permit to carry a concealed weapon, but who had been convicted of a felony within the past three years should no longer be eligible for a permit, and that permits already granted such persons should be revoked. Chapter 88- 183, Section 1, Laws of Florida. No statutory text shows a similar legislative intention with respect to the 1987 amendments to Section 493.319(3), Florida Statutes (1987).

    
    

19. The opinion in the Middlebrooks case, supra, is the controlling decision here. The Middlebrooks court found that Section 493.319(3), Florida Statutes (1987) which the Department relies upon here (prescribing discipline for a number of different licensure programs administered by the Department of State), could not be used to revoke retroactively Class "D" or Class "G" security guard permits due to felony convictions which had occurred in 1979, before the effective date of the amendment to Section 493.319(3), Florida Statutes. The holding in Middlebrooks is consistent with holdings in cases such as Hector, supra, which were available to the Department when making its decision whether to prosecute Mr. Pontigo for the second time. Middlebrooks announced no new law.

    
    

20. The recent decision of the Third District Court of Appeal in Lora v. Department of State, Division of Licensing, So.2d 15 FLW 2710 (Fla. 3rd DCA 1990) does not assist the Department. The Lora court distinguished the Middlebrooks decision, because the 1985 conviction of Mr. Lora subjected him to discipline under a portion of the licensing statute which had been in effect at the time of the conviction, Section 493.319(1)(c), Florida Statutes (1985). The prosecution of Lora did not result in a retroactive imposition of discipline.

    In Mr. Pontigo's case, the Department had already prosecuted him based upon his 1982 conviction, and a final order had been entered in that matter by November 15, 1983, which placed him on probation. That disciplinary action constituted res judicata, and would prohibit the Department from relying for a second time on Section 493.319(1)(c), Florida Statutes (1985) as the basis for disciplinary action in 1988. In fact, the Department did not rely on Section 493.319(1)(c), Florida Statutes (1985) in its second prosecution of Mr. Pontigo, but on Section 493.319(3), Florida Statutes (1987), which Middlebrooks forbids.

    
    

21. The reasonableness of the Department's decision to terminate its revocation action by entering an amended final order dismissing the complaint with prejudice on April 13, 1990, while Mr. Pontigo was appealing his revocation in the appeallate court is not an issue here. The statutory inquiry under Section 57.111 has a specific temporal limitation. A small business party applying for fees is not required to prove that the agency's prosecution lacked substantial justification throughout the whole period it was maintained by the agency. Instead, the inquiry is focused by Section 57.111(3)(e) on whether the agency's position had a reasonable basis in law and fact "at the time it was initiated by [the] state agency." It may be that the Department decided not to oppose Mr. Pontigo's appeal because administrators believed that the Legislature was about to abolish licensing of polygraph examiners. The facts shown here, however, are that the Department's prosecution was ill-founded from the outset, because the Department either knew, or should have known, that there was no basis to begin its second prosecution through a retroactive application of Section 493.319(3), Florida Statutes. The Department had completed one prosecution based on Pontigo's 1982 criminal conviction, which had led the

Department to enter a Final Order in 1983 imposing, as a penalty on Mr. Pontigo, a one year period of probation. The Department knew, or should have known, at the outset that its prior action barred a reimposition of discipline in the form of licensure revocation under principles of due process, res judicata and collateral estoppel.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is ordered that the Department of State shall pay to George S. Pontigo $7,150 as attorney fees and $300 as costs pursuant to Section 57.111(4)(a), Florida Statutes.

DONE and ORDERED this 24th day of January, 1991, at Tallahassee, Florida.

WILLIAM R. DORSEY, JR.

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 24th day of January, 1991.

COPIES FURNISHED:

Henri C. Cawthon, Esquire Department of State

The Capitol, M.S. #4 Tallahassee, Florida 32399-0250

John O. Sutton, Esquire Sutton, Jamerson & Mullin 2655 LeJeune Road Penthouse II

Coral Gables, Florida 33134

Honorable Jim Smith Secretary of State The Capitol

Tallahassee, Florida 32399-0250

Ken Rouse, General Counsel Department of State

The Capitol, LL-10

Tallahassee, Florida 32399-0250

NOTICE OF RIGHT TO JUDICIAL REVIEW

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 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.

Docket for Case No: 90-003861F

Orders for Case No: 90-003861F