STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MINI-WAREHOUSES AT KENDALL, LTD., ) d/b/a A+ MINI-STORAGE, )

)

Petitioner, )

)

vs. ) CASE NO. 93-6564RX

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

FINAL 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 December 17, 1993, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Timothy G. Schoenwalder, Esquire

Jay O. Barber, Esquire BLANK, RIGSBY & MEENAN, P.A.

Post Office Box 11068 Tallahassee, Florida 32302-3068

For Respondent: Charles G. Gardner, Esquire

Florida Department of Transportation

562 Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32399-0458 STATEMENT OF THE ISSUE

The issue for determination at final hearing was whether the Florida Department of Transportation's Lease Agreement Form 225-080-03, OGC-0003, 7/92 constitutes an invalid exercise of delegated legislative authority.

PRELIMINARY STATEMENT

This is a rule challenge brought under the provisions of Section 120.56, Florida Statutes, to challenge the validity of Respondent's Lease Agreement Form 225-080-03, OGC-0003, 7/92, which Petitioner contends constitutes a rule.

At the hearing, Petitioner presented the testimony of two witnesses, and entered two exhibits into evidence. Respondent presented the testimony of three witnesses, and entered one exhibit into evidence. Also, Petitioner filed a proposed prehearing stipulation and, subsequently, a supplemental proposed prehearing stipulation in which Respondent joined, stipulating at the hearing to certain facts stated therein.

A transcript of the formal hearing was ordered. The parties submitted proposed findings of fact and conclusions of law. All proposed findings of fact are addressed in the appendix to this final order.

FINDINGS OF FACT

1. Mini-Warehouses At Kendall, Ltd., d/b/a A+ Mini-Storage (Petitioner) is a business located in Dade County, engaged primarily in the rental of storage space. Petitioner employs 20 to 21 employees and has been operating for 13 to

   14 years.

   
   

2. Petitioner's property on which its business is located consists of approximately four acres and abuts property owned by the Florida Department of Transportation (Respondent), known as Parcel 0739, which contains approximately

   .0986 acres.

   
   

3. On June 28, 1985, Petitioner executed a written lease agreement leasing Parcel 0739 from Respondent. The lease terms provided that it was a year-to- year lease, automatically renewable yearly until terminated by either party upon a 30-day notice, and that the yearly rental cost was $2,400 plus tax.

   
   

4. Petitioner leased Parcel 0739 from Respondent because the parcel provides better access to Petitioner's property from the rear and prevents water from encroaching onto Petitioner's property.

   
   

5. The same lease agreement was renewed yearly until 1991.

   
   

6. In 1991, prior to the expiration of the lease, Respondent notified Petitioner that a new lease form would have to be executed. Respondent provided Petitioner with its Lease Agreement Form 225-080-03, OGC-00031, dated 7/92 (Form Lease) for execution. The Form Lease was developed by Respondent's Office of General Counsel and the General Counsel of each of its Districts, so that there would be a standard lease form statewide with minimal review by Respondent. The Form Lease contains blanks to be completed by Districts to comport with their specific situations. The Form Lease dramatically changed the terms and conditions of leasing Parcel 0739.

   
   

7. Petitioner attempted to modify Paragraphs 6 and 8 of the Form Lease, but Respondent refused to agree to any modifications.

   
   

8. Paragraph 6 of the Form Lease provides:

   
   

   6. Indemnification. Lessee shall indemnify, defend, save and hold Lessor, its agents and employees, harmless of and from any losses, fines, penalties, costs, damage, claims, demands, suits and liabilities of any nature, including attorneys fees (including regulatory and appellate fees), arising out of, because of,

   or due to any accident, happening or occurrence on the leased land or arising in any manner on account of the exercise or attempted exercise of Lessee's rights hereunder, whether the same

   regards person or property of any nature whatsoever, regardless of the apportionment of negligence, unless due to the sole negligence of Lessor.

   Lessee's obligation to indemnify, defend, and

   pay for the defense or at the Department's option, to participate and associate with the Department in the defense and trial of any claim and any

   related settlement negotiations, shall be triggered by the Department's notice of claim for indemnifica- tion to Lessee. Lessee's inability to evaluate liability or its evaluation of liability shall not excuse Lessee's duty to defend and indemnify within seven days after such notice by the Department is given by registered mail. Only an adjudication or judgment after the highest appeal is exhausted specifically finding the Department solely negligent shall excuse performance of this provision by Lessee. Lessee shall pay all costs and fees related to this obligation and its enforcement by the Department.

   Department's failure to notify Lessee of a claim shall not release Lessee of the above duty to defend.

   
   

9. Under Paragraph 6, Respondent intended to limit lessee's liability to its (lessee's) own negligence or damages it causes.

   
   

10. Paragraph 8 of the Form Lease provides:

    
    

    8. Eminent Domain. Lessee acknowledges and agrees that its relationship with Lessor under this Lease is one of Landlord and Tenant and no other relationship either expressed or implied shall be deemed to apply to the parties under this Lease. Termination of this Lease for any cause shall not be deemed a taking under any eminent domain or other law so as to entitle Lessee to compensation for any interest suffered or lost as a result of termination of this Lease, including but not limited to (i) any residual interest in the Lease, or (ii) any other facts

    or circumstances arising out of or in connection with this Lease.

    
    

    Lessee hereby waives and relinquishes any legal rights and monetary claims which it might have for full compensation, or damages of any sort, including but not limited to special damages, severance damages, removal costs or loss of business profits resulting from its loss of occupancy of the leased property specified

    in this Agreement, or adjacent properties owned or leased by it, when any or all such properties are taken by eminent domain proceedings or sold under the threat thereof. This waiver and relinquishment applies whether (i) this Lease

    is still in existence on the date of taking

    or sale; or, (ii) has been terminated prior thereto.

    
    

11. Under Paragraph 8, Respondent did not intend for the lessee to waive any of its eminent domain rights or relinquish such rights subsequent to the termination of the lease, which would be improper.

12. Presently, Respondent refuses to lease the Parcel to Petitioner unless Petitioner executes the Form Lease without modification. However, at hearing Respondent admitted that it has no intention of requiring Petitioner to agree to Paragraph 8 of the Form Lease.

    
    

13. Rule Chapter 14-19, Florida Administrative Code, sets forth Respondent's rules on right-of-way property management. Rule 14-19.002 provides that the purpose of Chapter 14-19 is to set forth standardized methods for, among other things, the leasing of surplus property owned by Respondent.

    
    

14. In 1992, the Form Lease was incorporated by reference in Rule Chapter 14-19. Rule 14-19.0012 specifically provides that the Form Lease is one of the forms incorporated by reference in and made a part of Chapter 14-19. Moreover, Rule 14-19.013 requires the Form Lease to be used for short term leasing. Chapter 14-19 is silent as to whether the Form Lease must be used in any of Respondent's other lease situations.

    
    

15. Rule 14-19.013, Florida Administrative Code, does not apply to the circumstances of this case.

    
    

16. Respondent has a Right Of Way Manual (Manual) for statewide use. Chapter 10, Section 6 of the Manual, entitled "Right of Way Property Leases" and effective January 21, 1993, provides in its "Purpose" section that the purpose of Section 6 is to establish uniform procedures for leasing property owned by Respondent. Also, the Manual's "Procedure" section mandates the use of the Form Lease for all of Respondent's leases. Prior to this mandate, Respondent had no standard lease form for its leases.

    
    

17. In October 1992, Respondent required the Form Lease to be used in surplus property leases. The Form Lease is applicable statewide and implements procedures and policies involved in leasing surplus property.

    
    

18. Parcel 0739 is considered by Respondent to be surplus property.

    
    

19. The Manual is silent as to whether the Form Lease may be modified.

    
    

20. Since the implementation of the Form Lease for surplus property, Respondent's District Offices have modified the Form Lease but rarely. In the rare instances when modification has been made, it has been on a case-by-case basis and only with approval of the District General Counsel.

    
    

21. Respondent's Office of the Right-Of-Way Administrator under which the responsibility for leasing falls has no authority to approve or disapprove modifications made to the Form Lease by District Offices. However, Respondent's Office of General Counsel does have such authority, but it has not exercised its authority in any of the District situations in which the Form Lease has been modified.

    
    

22. Even though there have been modifications to the Form Lease by Respondent's District Offices, although rare, no District Office has modified Paragraphs 6 or 8.

    
    

23. Respondent admits that Petitioner has standing in this proceeding.

    CONCLUSIONS OF LAW

    
    

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

    
    

25. The threshold issue is whether Respondent's Lease Agreement Form 225- 080-03, OGC-0003, 7/92 (Form Lease) is a rule.

26. Subsection 120.52(16), Florida Statutes, defines "rule" to mean: [E]ach agency statement of general applicability

    that implements, interprets, or prescribes law or

    policy or describes the organization, procedure, or practice requirements of an agency and includes any form which imposes any requirement or solicits

    any information not specifically required by statute or by an existing rule . . . .

    
    

27. As the challenger, the burden is upon Petitioner to demonstrate by a preponderance of evidence that the Form Lease constitutes a rule as defined by Subsection 120.52(16), Florida Statutes. Humana, Inc. v. Department of Health and Rehabilitative Services, 469 So.2d 889 (Fla. 1st DCA 1985); and Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 1st DCA 1978).

    
    

28. Petitioner has failed to meet its burden. The evidence is uncontroverted that the Form Lease is incorporated by reference in Respondent's Rule Chapter 14-19, Florida Administrative Code. The Form Lease has been subjected to the rulemaking process. Moreover, contrary to the definition of rule in Subsection 120.52(16), Florida Statutes, the Form Lease imposes a requirement specifically required by Rule 14-19.013, which is that the Form Lease must be used in short term leasing. In Petitioner's situation, the Form Lease is more in the nature of a contractual agreement as opposed to a rule. Department of Transportation v. Blackhawk Quarry Co. of Fla., 528 So.2d 447 (Fla. 5th DCA 1988).

    
    

29. However, what does fall within the definition of rule in Subsection 120.52(16) is Chapter 10, Section 6 of Respondent's Right of Way Manual, which was not subjected to the rulemaking process. The Manual has statewide application; the stated purpose of the Manual's Section is to establish standard procedures for the leasing of Respondent's property; and it mandates the use of the Form Lease in all of Respondent's leases. Moreover, Respondent specifically requires the Form Lease to be used statewide for leasing its surplus property.2 Department of Business Regulation v. Martin County Liquors, 574 So.2d 170 (Fla. 1st DCA 1991); Balsam v. Department of Health and Rehabilitative Services, 452 So.2d 976 (Fla. 1st DCA 1984); and State, Department of Administration v. Harvey, 356 So.2d 323 (Fla. 1st DCA 1977). Notwithstanding, no challenge has been made by Petitioner, pursuant to Section 120.535, Florida Statutes, to Respondent's Right of Way Manual, Chapter 10, Section 6.

    
    

30. Even though both Petitioner and Respondent have specifically addressed Paragraphs 6 and 8 of the Form Lease, it is not necessary to address those issues for the determination of this case.

31. Additionally, Petitioner raises constitutional challenges to Paragraphs 6 and 8 of the Form Lease. Constitutional challenges are not within the purview of a hearing officer's decision making authority, but are issues properly reserved for the courts upon subsequent judicial review. Rice v. Department of Health and Rehabilitative Services, 386 So.2d 844 (Fla. 1st DCA 1980); Key Haven Associated Enter. v. Bd. of Trustees of the Internal Improvement Trust Fund, 427 So.2d 153 (Fla. 1982). Petitioner's constitutional challenges having been properly raised have been preserved for any judicial review.

    
    

32. There was no challenge to Petitioner's standing.

CONCLUSION

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED that the petition to declare State of Florida, Department of

Transportation's Lease Agreement Form 225-080-03, OGC-0003, 7/92 invalid is DISMISSED.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 4th day of March 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 4th day of March 1994.

ENDNOTES

1/ The initials "OGC" indicates Office of General Counsel.

2/ Even though there have been rare instances in which Respondent's District Offices have modified the Form Lease in leasing surplus property, such action by the District Offices are of no consequence in determining whether the Form Lease is a rule.

APPENDIX

The following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact

1, 3, and 4-10. Accepted in substance.

2. Partially accepted in substance; and partially rejected as to the date.*

1. Partially accepted in substance; and partially rejected as to sentences 2 and 3 (whether terms are clear and unambiguous).*

2. Partially accepted in substance; and partially rejected as to the second paragraph, sentences 1 and 2 (whether terms are clear and unambiguous).*

Respondent's Proposed Findings of Fact

(Respondent's proposed findings of fact begin with paragraph numbered 22.) 22, 24, 26, 28, 31, 36, and 38-41. Accepted in substance.

23, 27, and 32-35. Rejected*

37. Partially accepted in substance; and partially rejected as to the last sentence.*

*Rejected or 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:

Timothy G. Schoenwalder, Esquire Jay O. Barber, Esquire

BLANK, RIGSBY & MEENAN, P.A.

Post Office Box 11068 Tallahassee, Florida 32302-3068

Charles G. Gardner, Esquire

Florida Department of Transportation

562 Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32399-0458

Ben G. Watts Secretary

Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

Thornton J. Williams General Counsel

Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

Carroll Webb, Executive Director Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32399-1300

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: 93-006564RX

Orders for Case No: 93-006564RX