STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
J. D. BLIGH CONSTRUCTION, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 92-5694
) STATE OF FLORIDA, DEPARTMENT OF ) MANAGEMERNT SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to written notice, a formal hearing was held in this case before Errol H. Powell, a duly designated Hearing Officer of the Division of Administrative Hearings, on March 2, 1993, in Fort Lauderdale, Florida.
APPEARANCES
For Petitioner: Carol E. Bligh, pro se
President
J.D. Bligh Construction, Inc.
6289 West Sunrise Boulevard, Suite 124
Sunrise, Florida 33313
For Respondent: O. Earl Black, Jr., Esquire
Department of Management Services Knight Building, Suite 309
2737 Centerview Drive
Tallahassee, Florida 32399-0950 STATEMENT OF THE ISSUE
The issue for determination at final hearing was whether J. D. Bligh Construction, Inc., should be certified as a Minority Business Enterprise by the Department of Management Services.
PRELIMINARY STATEMENT
J. D. Bligh Construction, Inc. (Petitioner), filed an application with the Department of Management Services (Respondent) for certification as a Minority Business Enterprise (MBE). By letter dated July 14, 1992, Respondent denied Petitioner's request for the following reasons: (1) Failure to satisfy the requirements of Subsection 288.703(2), Florida Statutes, in that the minority owner's share of the business risk was not commensurate with the percentage of ownership and the minority owner did not have control of the daily operations of the business and management; and (2) Failure to meet the specifications required in Respondent's MBE Rules 13A-2.001(7) and (14) and 13A-2.005(2), (2)(e), (3), (3)(c), (3)(d), 1, 2, 3, 4 and 5, Florida Administrative Code.
Contesting Respondent's denial, on September 17, 1992, Petitioner filed a petition for a formal hearing, asserting in essence that it satisfied and met all of the statutory and rule requirements. On September 21, 1992, the matter was referred to the Division of Administrative Hearings. A formal hearing was scheduled on March 2, 1993, pursuant to notice.
At the hearing, Petitioner presented the testimony of two witnesses, and Respondent presented the testimony of one witness. Respondent entered six exhibits into evidence. Petitioner did not enter any exhibits into evidence but was permitted to late file exhibits within ten days from the date of the hearing. However, Petitioner untimely filed a composite exhibit, consisting of
39 pages. Respondent was provided an opportunity to respond to the untimely late filed exhibit which also included documents beyond those permitted to be filed. By Order dated August 4, 1993, only pages numbered 20-22 and 37 of the late filed exhibit were entered into evidence.
A transcript of the formal hearing was ordered. Respondent timely submitted its proposed recommended order. Petitioner requested an extension of time to file its proposed recommended order, to which Respondent did not object. Subsequently, Petitioner filed a one page letter, together with the late filed composite exhibit aforementioned. Petitioner's letter did not present proposed findings of fact. All proposed findings of fact have been addressed in the appendix to this recommended order.
FINDINGS OF FACT
J.D. Bligh Construction, Inc. (Petitioner), was incorporated and began doing business on or about February 18, 1974. Petitioner engaged in the construction business; erecting, repairing and remodeling buildings and structures; and performing public works. The majority of Petitioner's work is subcontracted out.
At Petitioner's inception, Jack D. Bligh and his wife, Carol E. Bligh, were co-owners with each possessing 50 percent of the stock in the business. Jack Bligh was the President and the only Director. Petitioner was started as a family business.
At all times material hereto, Jack Bligh was licensed as a certified Management contractor by the State of Florida, Department of Professional Regulation, Construction Industry Licensing Board. Petitioner is authorized by the State of Florida to engage in the construction business under his license.
Petitioner had no employees other than Jack and Carol Bligh and subcontracted out work for which contracts were awarded or agreements entered into.
All proposals for work and contract agreements on behalf of Petitioner were accepted and executed by Jack Bligh. Jack Bligh was the guarantor on behalf of Petitioner. For example, he was the guarantor for Petitioner's lease agreement for the site location of its business, dated June 15, 1988.
Carol Bligh's duties with Petitioner were clerical and administrative, such as determining draw requests, ordering supplies and banking. She had no experience in the construction industry whether it was Management contracting or actual field experience.
Jack Bligh, her husband, was responsible for the actual running of the business and handling the day-to-day operations of the business, such as contracting, estimating, bidding and hiring and firing subcontractors.
On or about August 22, 1985, Jack and Carol Bligh formed J. D. Bligh Airport Construction, Inc., with Jack Bligh as the sole director and President, owning 49 percent of the stock, and Carol Bligh as Secretary, owning 51 percent of the stock. It was a wholly owned subsidiary and formed on the advice of their insurance agent and accountant for liability insurance purposes regarding a contract for work at the Fort Lauderdale International Airport, which at that time was a big project for Jack and Carol Bligh.
In September 1988, Petitioner, as contractor, contracted with the Boca Raton Airport, Inc., d/b/a Boca Aviation to perform work at the airport at a cost of approximately $533,000. The subsidiary corporation, J. D. Bligh Airport Construction, Inc., was not used for this job.
In July 1990, Petitioner entered into a contract as subcontractor to perform work at the Opa-Locka Airport at a cost of approximately $65,000. The subsidiary, J. D. Bligh Airport Construction, Inc., was also not used for this job.
On or about August 8, 1990, J. D. Bligh Airport Construction, Inc., was changed to J. D. Bligh Caribbean Construction, Inc. The purpose of the name change was again for liability insurance purposes in order to perform work in St. Thomas, U.S. Virgin Islands. The Blighs were rebuilding apartments damaged by Hurricane Hugo.
Also, in September 1992, Petitioner again contracted with Boca Raton Airport to perform work at a cost of approximately $272,000. Carol Bligh executed the contract and the performance bond.
For 17 years, Jack Bligh remained Petitioner's President until on or about January 15, 1991, at which time Carol Bligh became President. She was gratuitously given additional stock in the business by her husband for her long years of service and dedication to Petitioner. With this additional stock, Carol Bligh also became the minority/majority stockholder.
When Carol Bligh became President of Petitioner and minority/majority owner with 51 percent in January 1991, her main duties and responsibilities did not change. She continued with the clerical and administrative aspect of Petitioner's Management contracting business. However, her duties and responsibilities also expanded to include dealing with bonding, securing lines of credit and insurance, setting-up workers compensation, assisting in policy- making, financial planning and operational procedures, and contract negotiations.
On or about October 3, 1991, Carol Bligh's duties and responsibilities relating to hiring and firing were officially increased by Petitioner's directors to include hiring and firing of all personnel, including office and field personnel.
In 1990, Carol and Jack Bligh's daughter, Janice Bligh, joined the business. Using his more than 17 years experience in the construction business, Jack Bligh began training her in Petitioner's contracting business, which included taking her to job sites for observation of the work being performed.
Around mid-1991, Janice Bligh was placed in control of field supervision, estimating and bidding. For the past year and a half, Jack Bligh performed these functions only when she was unable to do so. Janice Bligh received her training as a field supervisor from her father, Jack Bligh, through observing him and the subcontractors. His supervision extends over the subcontractors since the majority of Petitioner's work is subcontracted out.
Janice Bligh is taking courses in contracting and has completed three; one in estimating, one in plan reading and one in the South Florida Building Code. She is not currently licensed in the construction industry but eventually wants to take the State licensing examination to become a Management contractor but that is 2 1/2 to 3 years away. She has limited knowledge of the statutory requirements placed upon a Management contractor in terms of authorized scope of work and required liability coverage.
Since Carol Bligh became Petitioner's President, proposals and agreements or contracts have been signed by either Janice Bligh or Carol Bligh. Also, bonding documents have been signed by Carol Bligh.
Authorized signers and users on Petitioner's bank account are Carol, Jack and Janice Bligh, individually, with either one of them being authorized to execute bank documents on behalf of Petitioner.
When Petitioner needed funds for operating expenses, they came from Carol and Jack Bligh. A promissory note dated April 15, 1992, from Petitioner to Carol Bligh was signed by Carol Bligh, as President, and came from funds in Carol and Jack Bligh's joint account. However, another promissory note dated June 30, 1992, involved funds loaned to the businesses from a business owned by Jack Bligh's father. Additionally, a promissory note dated April 15, 1993, was from Petitioner to Carol and Jack Bligh, equally.
On or about December 1, 1992, Janice Bligh became a shareholder and officer of Petitioner's business, acquiring 2 percent of the stock from Jack Bligh, thereby leaving him with 47 percent of the stock. Carol Bligh retained
51 percent of the stock.
Even though Janice Bligh was a shareholder and part owner of Petitioner, an indemnity agreement with a bonding surety dated February 23, 1993, was signed by Carol and Jack Bligh only. Also, the agreement reflected no differentiation of liability.
As to wages, Petitioner's quarterly wage report dated April 17, 1991, reflects Jack Bligh's salary as $3,650, Carol Bligh's salary as $7,250, Janice Bligh's salary as $5,200, Jill Bligh's salary as $1,209 and Lawrence Massey's salary as $4,093.76.
Jill Bligh is another daughter of Carol and Jack Bligh. She performs office work, run errands and answers the telephone. She is neither an officer nor a director.
Petitioner's quarterly wage report dated July 12, 1991, reflects Jack Bligh's salary as $650, Carol Bligh's salary as $650, Janice Bligh's salary as
$5,200, Jill Bligh's salary as $1,698 and Lawrence Massey's salary as $1,593.77.
Petitioner's quarterly wage report dated October 15, 1991, reflects Jack Bligh's salary as $440, Carol Bligh's salary as $600, Janice Bligh's salary as $5,200 and Jill Bligh's salary as $1,804.50.
Petitioner's quarterly wage report dated January 27, 1992, reflects Jack Bligh's salary as $390, Carol Bligh's salary as $300, Janice Bligh's salary as $2,400 and Jill Bligh's salary as $1,522.50.
Carol Bligh testified that she and Jack Bligh reduced their salary to aid the business economically in the bad economic times of the construction industry. However, her testimony is not credible in light of the salary paid their daughter Jill Bligh in relationship to the work she performed.
Petitioner applied for certification by Respondent as a minority business enterprise (MBE) on March 24, 1992. An initial review of the documentation provided by Petitioner indicated that Petitioner did not meet the criteria for MBE status; however, questions remained so a telephone interview with Carol Bligh was held in July 1992. Based on the documentation provided and the telephone interview, Petitioner was denied MBE status and notified by certified letter, dated July 14, 1992.
Petitioner has been certified as a MBE by local governments.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto, pursuant to Subsection 120.57(1), Florida Statutes. The parties were duly noticed for the formal hearing.
J. D. Bligh Construction, Inc. (Petitioner), has the burden of proof by establishing through a preponderance of the evidence that it is entitled to be certified as a Minority Business Enterprise (MBE) by the Department of Management Services (Respondent).
Subsection 288.703(2), Florida Statutes (1992 Supp.), defines MBE as follows:
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 at least
51 percent owned by minority persons and whose management and daily operations are controlled by such persons.
It is uncontroverted that Petitioner engages in commercial transactions and is domiciled in Florida.
The evidence is uncontroverted that Carol Bligh and Janice Bligh are minority persons as defined in Subsection 288.703(3)(e), Florida Statutes (1992 Supp.), and that Carol Bligh owns 51 percent of Petitioner's stock and Janice Bligh owns 2 percent of the stock.
The remaining questions are whether the minority persons control the management and daily operations of the business and whether Petitioner is a small business concern. Petitioner's contention is the affirmative, whereas, Respondent's contention, is the negative.
Rules have been promulgated by Respondent in determining the certification eligibility of MBE applicants, and they are found at Chapter 60A- 2, Florida Administrative Code. The pertinent rule for the case at hand is Rule 60A-2.005, Florida Administrative Code.
Respondent contends that Petitioner has failed to satisfy several requirements of the said Rule. Respondent's contention is persuasive as it pertains to Rule 60A-2.005(2)(d), (e) and (3)(d)3, Florida Administrative Code.
Petitioner's minority owners' share of income and earnings are not commensurate with the percentage of their ownership which is contrary to Rule 60A-2.005(2)(d). For the year 1991 when Carol Bligh's ownership stock increased to 51 percent, salaries paid totalled $43,851.53, of which Carol Bligh's salary was $8,800, Janice Bligh's salary was $18,000 1/, Jack Bligh's salary was
$5,130, and Jill Bligh's salary was $6,234.
Contrary to Rule 60A-2.005(2)(e), Florida Administrative Code, the minority owners' sharing in the business risks are not commensurate with their percentages of ownership, and capital contributions by the minority owners are not real and substantial. In 1993 Carol and Jack Bligh signed an indemnity agreement with a bonding surety. Contributions of capital have come from joint funds of Carol and Jack Bligh and the business of one of Jack Bligh's family members. Furthermore, even though Janice Bligh owns 2 percent of the stock, she has not made any contributions of capital.
Also, Petitioner has failed to show that the minority owners have control of all the financial affairs, contrary to Rule 60A-2.005(3)(d)3, Florida Administrative Code. Jack Bligh, as well as Carol and Janice Bligh, are authorized to sign checks on Petitioner's checking account without restriction or limitation.
Hence, Petitioner has failed to meet its burden that it is entitled to be certified as a MBE.
Notwithstanding, Petitioner is not prohibited from reapplying for certification. In order to provide guidance to the parties if reapplication should occur, Respondent's remaining arguments are addressed below.
Respondent's argument regarding Petitioner not meeting the requirements of Rules 60A-2.005(3)(c) and (d), Florida Administrative Code, as it relates to the minority owners not having sufficient management and technical capabilities to maintain control of the business, is not persuasive. Respondent agrees that Carol Bligh possesses the capabilities to run Petitioner's office but disagrees that Janice Bligh, the other minority owner, has the technical capabilities to maintain control of the business.
Section 489.119, Florida Statutes, requires that in order for Petitioner to engage in contracting, it must have a qualifying agent who is certified or registered. In accordance therewith, Jack Bligh, who is licensed by the Construction Industry Licensing Board pursuant to Chapter 489, Florida Statutes, is Petitioner's qualifying agent. Neither Carol Bligh nor Janice Bligh are licensed contractors. Furthermore, as the qualifying agent, Chapter
489 requires Jack Bligh to be legally able to control Petitioner's contracting activities and have the responsibility of supervising, directing, managing and controlling Petitioner's construction activities and financial matters. Petitioner has shown that Janice Bligh has the technical capabilities to maintain control of the business. It is unreasonable to penalize Petitioner
because Florida's construction law requires a qualifying agent to have control over the construction aspects of the business.
Additionally, if Jack Bligh ceases to be Petitioner's qualifying agent, Chapter 489 permits Petitioner to employ another qualifying agent within a specified time period in order to continue operating in the construction industry. Consequently, Petitioner can continue to operate without Jack Bligh by employing another qualifying agent. Moreover, Janice Bligh's goal is to become a certified Management contractor and if she completes her classwork and continues with her on the job supervision, she too can become a qualifying agent for the business.
Additionally, Respondent contends that Petitioner is not a small business concern because its wholly owned subsidiary corporation is a non- minority business in the same field and shares common owners and directors with the non-minority business contrary to Rule 60A-2.005(4)(b), Florida Administrative Code. Here, Respondent's argument is also not persuasive. The corporation complained of, J. D. Bligh Caribbean Construction, Inc., formerly J.
D. Bligh Airport Construction, Inc., as of February 1991 became a minority business with Carol Bligh owning 51 percent of the stock and becoming its President, Jack Bligh its Vice-President (owning 49 percent of the stock) and Janice Bligh its Secretary/Treasurer. 2/ The reason given for the creation of the subsidiary corporation is of no consequence since it has become a minority business.
Also, Respondent's contention that Petitioner fails to meet the requirements of Rule 60A-2.005(3)(d)5, Florida Administrative Code, in that the minority owners fail to display independence in seeking and negotiating contracts, is not persuasive. Since Carol Bligh became Petitioner's President and minority/majority stock owner in January 1991, she and her daughter, Janice Bligh who became a minority owner in December 1992, have independently sought and negotiated contracts and have executed all construction contracts. Furthermore, Janice Bligh, as well as Jack Bligh, performs estimating and bid submission.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services issue a Final Order
denying J. D. Bligh Construction, Inc., certification as a Minority Business Enterprise.
DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of February 1994.
ERROL H. POWELL
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 21st day of February 1994.
ENDNOTES
1/ Janice Bligh did not obtain her 2 percent ownership until on or about December 1, 1992.
2/ This evidence is contained in Petitioner's late filed exhibit, as admitted, which was filed subsequent to Respondent submitting its proposed recommended order.
APPENDIX
The following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact
Petitioner presented a one page letter which contained no proposed findings of fact and, therefore, none are addressed.
Respondent's Proposed Findings of Fact
Paragraphs 1-4, 6-8, 13-15, 17, 18, 20, and 22-27 are accepted in substance.
Paragraph 5 is partially accepted in substance; and partially rejected as to the date Mr. Bligh ceased being president.*
Paragraph 9 is partially accepted in substance; and partially rejected as to the date of no field experience.*
Paragraph 10 is partially accepted in substance; and partially rejected regarding what Janice Bligh's field experience consists of and the extent of her supervisory responsibility.*
Paragraphs 11 and 12 are rejected.*
Paragraph 16 is partially accepted in substance; and partially rejected as to the salary ranges and the ownership of stock by Janice Bligh.*
Paragraph 19 is partially rejected--the first sentence--because there was no testimony presented as to what were the answers to the questions; and the reminder rejected in whole.*
Paragraph 21 is partially accepted in substance; and partially rejected as to the last sentence.*
Paragraph 28 is partially accepted in substance; and partially rejected as to the location of the job performed by J. D. Bligh Airport Construction.*
Paragraph 29 is partially accepted in substance; and partially rejected as to the St. Thomas job.*
Paragraph 30 is partially accepted in substance; and partially rejected as to the reason J. D. Bligh Caribbean Construction, Inc., was formed.*
Paragraph 31 is partially accepted in substance; and partially rejected as to the last sentence in that Petitioner was permitted to and did submit a late filed exhibit.
Paragraph 32 is partially accepted in substance; and partially rejected as to the date Jack Bligh ceased signing contracts, as to the date of the two projects, and as to who signed the documents associated with re-contracting the work on the second project and when they were signed.*
*Rejected as subordinate to the issues herein, irrelevant to the issues herein, unnecessary, contrary to the weight of the evidence, recitation of testimony, argument, or conclusions of law.
COPIES FURNISHED:
Carol E. Bligh, pro se President
J.D. Bligh Construction, Inc.
6289 West Sunrise Boulevard, Suite 124
Sunrise, Florida 33313
O. Earl Black, Jr., Esquire Department of Management Services Knight Building, Suite 309
2737 Centerview Drive
Tallahassee, Florida 32399-0950
William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307
2737 Centerview Drive
Tallahassee, Florida 32399-0950
Paul A. Rowell General Counsel
Knight Building, Suite 312 Koger Executive Center 2737 Centerview Drive
Tallahassee, Florida 32399-0950
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
| Issue Date | Proceedings |
|---|---|
| Mar. 29, 1994 | Final Order filed. |
| Feb. 21, 1994 | Recommended Order sent out. CASE CLOSED. Hearing held March 2, 1993. |
| Nov. 04, 1993 | Letter to SLS from Sylvan Strickland (re: ruling in cases) filed. |
| Aug. 04, 1993 | Order Admitting Parts of Late Filed Exhibit sent out. |
| May 07, 1993 | Letter to EHP from Carol E. Bligh (re: Notice of Change of Address) filed. |
| May 05, 1993 | (Respondent) Response to Order Requiring Response filed. |
| Apr. 26, 1993 | Order Requiring Response sent out. (Respondent shall respond in writing within 10 days from the date of this order) |
| Apr. 13, 1993 | Letter to O.E. Black from E. Powell (RE: letter enclosing copy of documents filed with DOAH 4-8-93) filed. |
| Apr. 08, 1993 | Documents filed. (From Carol E. Bligh) |
| Apr. 05, 1993 | Respondent`s Proposed Recommended Order filed. |
| Mar. 29, 1993 | Letter to EHP from Carol E. Bligh (re: filing PRO) filed. |
| Mar. 25, 1993 | Transcript filed. |
| Mar. 02, 1993 | CASE STATUS: Hearing Held. |
| Feb. 26, 1993 | Amended Notice of Hearing sent out. (hearing set for 3-2-93; 11:00am;Fort Lauderdale) |
| Feb. 22, 1993 | Order sent out. (Respondent`s motion granted) |
| Feb. 18, 1993 | (Respondent) Amended Motion for Order Approving/Authorizing Telephone Depositions filed. |
| Feb. 16, 1993 | (Respondent) Motion for Order Approving/Authorizing Telephone Deposition filed. |
| Jan. 20, 1993 | Order Continuing and Rescheduling Formal Hearing sent out. (hearing rescheduled for 3-2-93; 9:30am; Fort Lauderdale) |
| Jan. 13, 1993 | Joint Motion for Continuance filed. |
| Jan. 13, 1993 | (Respondent) Notice of Filing Respondent`s First Set of Interrogatories to Petitioner w/Interrogatories filed. |
| Dec. 10, 1992 | (DMS) Notice of Propounding Respondent`s First Set of Interrogatories to Petitioner filed. |
| Oct. 26, 1992 | Notice of Hearing sent out. (hearing set for 1-21-93; 1:00pm; Fort Lauderdale) |
| Oct. 08, 1992 | Joint Response to Initial Order filed. |
| Sep. 28, 1992 | Initial Order issued. |
| Sep. 21, 1992 | Agency referral letter; Petition for Formal Hearing; Agency Action letter filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 25, 1994 | Agency Final Order | |
| Feb. 21, 1994 | Recommended Order | Petitioner failed to satisfy respondent's MBE rules requirements on income and earnings, sharing of risks and control of financial matters. |
