STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
WAYNE H. CROTTY, and CROTTY )
UNLIMITED, INC. formerly doing ) business as CROTTY SEPTIC/ )
ROTO-ROOTER, and now doing )
business as CROTTY SEPTIC )
SERVICE, INC., )
)
Petitioners, )
)
vs. ) CASE NO. 94-5980F
)
DEPARTMENT OF HEALTH AND )
REHABILITATIVE SERVICES, )
)
Respondent. )
)
FINAL ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on July 25, 1995. The hearing officer presided from the videoconference center in Tallahassee, Florida. Counsel, the parties, the court reporter and most of the witnesses participated from the videoconference center in Orlando, Florida; one witness appeared at the center in Tallahassee, Florida.
APPEARANCES
For Petitioner: Stephen D. Milbrath, Esquire
ALLEN, DYER, DOPPELT, FRANJOLA & MILBRATH, P.A.
255 South Orange Avenue, Suite 1401 Post Office Box 3791
Orlando, Florida 32802
For Respondent: Sonia Nieves Burton, Esquire
Department of Health and Rehabilitative Services
District 7 Legal Office
400 West Robinson Street, Suite S-827 Orlando, Florida 32801
STATEMENT OF THE ISSUES
The petition in this matter was filed pursuant to Section 57.111, Florida Statutes, seeking fees and costs arising from an underlying proceeding (DOAH Case No. 93-5526) in which the Department of Health and Rehabilitative Services entered a Final Order adopting the hearing officer's recommendation that the administrative complaint against Wayne H. Crotty, d/b/a Crotty Septic/Roto- Rooter, be dismissed.
The parties have stipulated to the reasonableness of the fees and costs, the total of which exceeds the statutory $15,000.00 maximum. Respondent, Department of Health and Rehabilitative Services, contests entitlement to the award and argues that Petitioners are not prevailing small business parties and, further, that the agency had a reasonable basis in law and fact at the time its complaint was filed.
PRELIMINARY STATEMENT
The petition for fees was timely filed sixty days from the entry of the Final Order and named as petitioners Wayne H. Crotty, d/b/a Crotty Septic/Roto- Rooter, and Crotty Septic, Inc. Respondent answered with a response and motion to dismiss the petition.
On April 27, 1995, the hearing officer granted Petitioners' motion to amend the petition to reflect that the Petitioners were "Wayne H. Crotty, and Crotty Unlimited, Inc., formerly doing business as Crotty Septic/Roto-Rooter, and now doing business as Crotty Septic Service, Inc." The same order also denied the agency's motion to dismiss as it was apparent that the issue of designation of an appropriate petitioner as a "small business party" was a factual issue for resolution in an evidentiary hearing.
The formal hearing was set and continued several times, for good cause, until it proceeded as described.
At the hearing Petitioners presented the testimony of Wayne Crotty, Lewis Lauteria, CPA, and Michael Napier. Petitioner offered exhibits number 1-20 and 22-23, all of which were received in evidence without objection or were taken under advisement and are now received. (No exhibit number 21 was identified)
Respondent's witnesses were Richard Hunter, Ph.D., Michael Napier, and Gerald Briggs. Respondent's exhibits number 1 and 2 were taken under advisement and are now received. By stipulation the record of the underlying proceeding (transcript and exhibits) was received as Joint Exhibit number 1.
After hearing, the transcript was filed and both parties submitted proposed orders. These have been considered and the findings of fact proposed by each are addressed in the attached appendix.
FINDINGS OF FACT
The Parties
Wayne H. Crotty is, and at all relevant times has been a licensed septic tank contractor in the State of Florida.
Crotty Unlimited, Inc. was formed in 1987 as a holding and management company for several small, diversified corporations held by the Crotty family. One of those companies was Crotty Septic Service, Inc., which was involved in septic contracting and related businesses since 1972.
In the early 1990's the other small corporations were sold, and when only Crotty Septic Service, Inc. was left, it was dissolved and was later registered as a fictitious name under which Crotty Unlimited, Inc. was doing business.
From March 1992 until approximately June 1994, Crotty Septic Roto- Rooter was registered as a fictitious name owned by the corporation, Crotty Unlimited, Inc.
Wayne H. Crotty is currently a director and president of Crotty Unlimited, Inc. Prior to Fall of 1994 he was vice president and secretary of the corporation. He is now, and was at all relevant times, a minority shareholder.
In 1992 and 1993, Wayne H. Crotty filed applications for septic tank contracting authorization pursuant to Chapter 489, part III, Florida Statutes, for the business "Crotty Septic/Roto-Rooter." The certificates were issued by the Department of Health and Rehabilitative Services under that designated business name. Wayne Crotty never applied for or received a certificate of authorization for septic tank contracting under the name, "Crotty Unlimited, Inc." Prior to 1992 the business authorization was in the name, Crotty Septic Services, Inc.
The Department of Health and Rehabilitative Services (HRS), through its state health program officer, is the state agency with statutory responsibility for licensing septic contractors, and monitoring and disciplining those contractors. The program office relies on the field staff in local county health units to conduct inspections and investigate complaints.
The Underlying Proceeding
In 1993 Wayne Crotty had an application pending for a permit from HRS for a septage disposal service, temporary system service and septage treatment and disposal facility. The application designates the business as "Crotty Septic/Roto-Rooter" and the owner as "Crotty Unlimited, Inc." The application describes a lime stabilization facility on Southport Road in Osceola County (the Southport facility). The purpose of the facility was to receive pumped-out sewage effluent, treat the effluent through lime stabilization and spread the treated effluent in a designated field at the facility.
Michael Napier, assistant director of environmental health in Osceola County conducted a series of inspections of the Southport facility in April, May and June of 1993. Mr. Napier noted what he considered were violations of Chapter 386, Florida Statutes, relating to sanitary nuisances and rule chapter 10D-6, Florida Administrative Code, relating to the treatment and disposal of septage and the standards of practice of septic tank contracting. He spoke with Wayne Crotty and corresponded with him regarding the inspection findings and he also consulted with Gerald Briggs, an environmental manager with HRS' state health program office in Tallahassee.
Gerald Briggs drafted the administrative complaint in July 1993 based on the consultations with Michael Napier, the correspondence between the Osceola County health unit and Wayne Crotty and the inspection reports, photographs, or other supporting documentation. Throughout several months' time period Briggs felt from the tone of the letters that the corrections would be made. By July when Michael Napier said that the plant was handling a large quantity of septage in a very unsanitary and sloppy manner, Briggs agreed the facility should not be permitted as he was concerned about the impact on public health and the threat to ground and surface water in the area.
Once Gerald Briggs decided to pursue an administrative complaint he determined that the respondent should be Wayne Crotty as the licensed septic
tank contractor. The file on Wayne Crotty's certificate of authorization indicated that Crotty Septic/Roto-Rooter was the authorized business name.
Wayne Crotty had in early 1992 informed Gerald Briggs that he had purchased a Roto-Rooter franchise and wanted to be able to advertise under that name. Briggs advised that as an individual septic tank contractor he could only qualify one authorized business and the business he advertised would have to be the one that was authorized by the agency. Briggs advised that Wayne Crotty could amend his authorization to change the business name from Crotty Septic Service, Inc. to Crotty Septic/Roto-Rooter.
When Gerald Briggs drafted the administrative complaint alleging violations found by Michael Napier and the Osceola County field staff, he relied on the information in his files and named Wayne Crotty as the responsible septic tank contractor and what he understood was Crotty's business: Crotty
Septic/Roto-Rooter. The respondent throughout the underlying proceeding was designated as "Wayne H. Crotty, d/b/a Crotty Septic/Roto-Rooter." No corporate party appeared in that underlying case (DOAH number 93-5526) by intervention or otherwise.
Richard G. Hunter, Ph.D., HRS Health Officer for Environmental Health and Statewide Services signed the administrative complaint based on his examination of the packet prepared by his program and legal staff and the information from the field. The complaint sought to impose $2,500 in administrative fines on Wayne H. Crotty for violating regulations concerning disposal of stabilized septage and for creating or maintaining a sanitary nuisance.
Wayne Crotty denied the allegations and requested a formal hearing. The case was referred to the Division of Administrative Hearings, was assigned DOAH number 93-5526 and was heard on February 3-4, 1994. Included in the recommended order was this ultimate conclusion:
94. At most, the department established some intermittent sloppy practices by the Respondent -- practices that resulted primarily from the failure to have proper equipment available (the dumpster), and from untrained staff (Norm's admission about the cows). In the absence of clear advance notice of violations and an opportunity to correct the violations as
provided by section 386.03, Florida Statutes, and with Respondent's evidence of reasonable attempts to cooperate and to obtain more appropriate equipment and train staff,
those isolated practices should not be subject to penalty.
(Recommended Order entered 6/28/94)
In a Final Order entered on August 22, 1994, the Department of Health and Rehabilitative Services adopted the findings, conclusions and recommendation of the hearing officer and dismissed the administrative complaint against Wayne
H. Crotty, d/b/a Crotty Septic/Roto-Rooter.
The Elements Required for an Award of Fees and Costs
Respondent, Wayne H. Crotty, thus prevailed in the underlying action.
Wayne Crotty was an officer, minority shareholder and, according to his testimony, an employee of Crotty Unlimited, Inc. (transcript, p. 58). He was not a sole proprietor of an unincorporated business; he was not a small business party.
At the time that the complaint was filed the agency had a reasonable basis to claim that violations were occurring or had occurred. However, its initiation of the proceeding was fatally flawed by its failure to provide statutory notice and an opportunity to correct the violations. When the complaint was filed the parties were still engaged in free-form discussion and correspondence regarding operations at the lime stabilization facility.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to sections 57.111 and 120.57(1), Florida Statutes.
Subsection 57.111(4)(a), Florida Statutes, provides: (4)(a) Unless otherwise provided by law,
an award of attorney's fees and costs shall
be made to a prevailing small business party in any adjudicatory proceeding or administra- tive proceeding pursuant to chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.
Petitioner, Wayne H. Crotty, prevailed in the proceeding initiated by the agency, but he was not a "small business party." Crotty Unlimited, Inc. was neither a nominal party nor a "real party in interest" in the underlying proceeding.
In Ann & Jan Retirement Villa, Inc. v. Department of HRS, 580 So.2d
278 (Fla. 4th DCA 1991) costs and fees were awarded to a corporation under 57.111, F.S. when the individual who was the subject of the agency action and her solely-owned corporation were one and the same entity. Wayne Crotty and Crotty Unlimited, Inc. are not the same.
In another case, Florida Real Estate Commission v. Shealy, 647 So.2d
151 (Fla. 1st DCA 1994) the appellate court reversed an order granting fees in a license denial case when the corporation owned by the successful licensee and his spouse was not a party to the administrative proceedings below.
Petitioners argue that the agency knew or should have know that it was Crotty Unlimited, Inc., and not Wayne Crotty that was doing business as Crotty Septic/Roto-Rooter since the name was registered with the Secretary of State as a fictitious name of Crotty Unlimited, Inc. Section 865.09, Florida Statutes, (Florida Fictitious Name Statute) is designed to provide notice to the public of the identities of persons who are doing business under fictitious names. However, it was not incumbent on the agency to ferret out record ownership. See, Robinson and St. John Advertising v. Lane, 557 So.2d 908 (Fla. 1st DCA 1990); Van D. Costas, Inc. v. Rosenberg, 432 So.2d 656 (Fla. 2d DCA 1983). As
indicated by Petitioners' need to amend their petition for fees, determination of a "real party in interest" was not a simple matter.
Section 489.552, Florida Statutes, requires registration by HRS of any persons practicing or holding themselves out as practicing septic tank contracting. Section 489.556, Florida Statutes, section 381.0061, Florida Statutes, and Chapter 10D-6, Florida Administrative Code, provide for discipline of that registration. In addition to registration of individuals, Chapter 489, part III, Florida Statutes, and Chapter 10D-6, Florida Administrative Code, provide for certificates of authorization of corporations or businesses qualified to offer septic tank contracting services through a registered individual. A registered contractor may qualify only one business requesting a certificate of authorization. Rule 10D-6.076(3), Florida Administrative Code.
Section 489.555, Florida Statutes, provides:
489.555 Certification of partnerships and corporations.-
The practice of or the offer to practice septic tank contracting services by registrants through a corporation or partnership offering septic tank contracting services to the public through registrants under this chapter as agents, employers, officers, or partners is permitted, provided that one or more of the principal officers of the corporation or one
or more partners of the partnership and all personnel of the corporation or partnership
who act in its behalf as septic tank contractors in this state are registered as provided by this act, and further provided that the corporation or partnership has been issued a certificate of authorization by the department as provided in this section. Nothing in this section shall be construed to mean that a certificate of regis- tration to practice septic tank contracting shall be held by a corporation. No corporation
or partnership shall be relieved of responsibility for the conduct or acts of its agents, employees, or officers by reason of its compliance with this section, nor shall any individual practicing septic tank contracting be relieved of responsibility for professional services performed by reason of his employment or relationship with a corporation or partnership.
For the purposes of this section, a certificate of authorization shall be required for a corporation, partnership, association, or
person practicing under a fictitious name, offering septic tank contracting services to the public, except that when an individual is practicing septic tank contracting in his own given name, he shall not be required to register under this section.
Each certification of authorization shall be renewed every 2 years. Each partnership and corporation certified under this section shall notify the department within 1 month of any change
in the information contained in the application upon which the certification is based.
Disciplinary action against a corporation or partnership shall be administered in the same manner and on the same grounds as disciplinary
action against a registered septic tank contractor. (emphasis added)
Aside from the fictitious name issue, it was the agency's prerogative to seek an administrative penalty from the person who, according to its files, was registered and authorized to provide septic tank contracting services. That decision was consistent with the regulatory scheme in Chapters 381, 386 and 489, Florida Statutes, and Chapter 10D-6, Florida Administrative Code, cited above and discussed in the order in the underlying case number 93-5526.
At no time during the prosecution of the alleged violations did Crotty Unlimited, Inc. come forward to assert that it was the proper party; it cannot now claim the fruits of successful defense of that case. Wayne Crotty did participate and successfully defend , and the fees incurred in that process have been stipulated as reasonable. That he, like the applicant in Shealy, supra, remains uncompensated under section 57.111, Florida Statutes, is a matter for legislative correction.
Although the determination that there is no "prevailing small business party" resolves the case, some conclusions may appropriately be addressed regarding the second issue: "substantial justification" for the agency's action. A proceeding is "substantially justified" if it had a "reasonable basis in law and fact" at the time it was initiated. Subsection 57.111(3)(e), Florida Statutes.
As found above, Dr. Hunter relied in good faith on the reports of his staff, both in Tallahassee and in the field as to the "sloppy practices" that were acknowledged in the order in case number 93-5526. However, the agency should have known that statutory notice had not been provided to the respondent. If that notice had been provided, it is likely that the complaint would not have been necessary, no proceeding would have been necessary and no fees incurred. Without that notice, the agency did not have a reasonable basis to initiate the proceeding.
ORDER
Based on the foregoing, it is, hereby, ORDERED:
Petitioners' petition for fees and costs is DISMISSED.
DONE and ORDERED this 18th day of October, 1995, in Tallahassee, Leon County, Florida.
MARY W. CLARK, 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 October, 1995.
APPENDIX TO FINAL ORDER, CASE NO. 94-5980F
The following constitute specific rulings in the findings of fact proposed by the parties.
Petitioner's Proposed Findings:
Adopted in paragraph 1.
Adopted in substance in paragraph 18.
Addressed in conclusions of law.
Adopted in substance in paragraph 6.
5 & 6. Adopted in substance in paragraph 2.
7 & 8. Adopted in substance in paragraph 3.
9 & 10. Adopted in substance in paragraph 12.
Adopted in part in paragraph 11, but the business name was "Crotty Septic/Roto-Rooter" (Petitioners' Exhibit number 9).
Adopted in part in paragraph 8, otherwise rejected as unnecessary.
13 - 20. Rejected as unnecessary.
Adopted in substance in paragraph 12.
Adopted in paragraph 4.
Rejected as contrary to the greater weight of evidence.
24 & 25. Rejected as cumulative and unnecessary.
26. Rejected as contrary to the evidence. The document referenced, Petitioners' Exhibit number 13, nowhere mentions "Crotty Unlimited, Inc."
27 - 30. Rejected as unnecessary or not probative of material facts.
Adopted in paragraph 13.
Rejected as cumulative.
33 & 34. Rejected as unsupported by the weight of evidence.
35 - 39. Rejected as unnecessary.
40. Adopted in substance in paragraph 13.
41 - 48. Rejected as cumulative or unnecessary.
49 - 52. Rejected as unsupported by the weight of evidence.
53 & 54. Accepted as true, but unnecessary.
55 - 81. Adopted in summary in paragraphs 19 and 31.
Respondent's Proposed Findings:
Adopted in paragraph 7.
Adopted in paragraphs 1, 6, and 13.
Adopted in paragraph 6.
4 - 12. Rejected as unnecessary.
(Second group of proposed findings, commencing on page 7)
1 & 2. Adopted in summary in paragraphs 6 and 14.
3 - 15. Rejected as unnecessary or recitation of testimony.
COPIES FURNISHED:
Stephen D. Milbrath, Esquire ALLEN, DYER, DOPPELT, FRANJOLA &
MILBRATH, P.A.
255 South Orange Avenue, Suite 1401 Post Office Box 3791
Orlando, Florida 32802
Sonia Nieves Burton, Esquire
Department of Health and Rehabilitative Services
District 7 Legal Office
400 West Robinson Street, Suite S-827 Orlando, Florida 32801
Linda Powell, Agency Clerk Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399
Kim Tucker, General Counsel Department of Health and
Rehabilitative Services 1323 Winewood Boulevard
Tallahassee, Florida 32399
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.
| Issue Date | Proceedings |
|---|---|
| Oct. 18, 1995 | CASE CLOSED. Final Order sent out. Hearing held 7/25/95. |
| Oct. 06, 1995 | (Respondent) Notice of Filing a Clarification w/cover letter filed. |
| Sep. 20, 1995 | Notice of Filing sent out. |
| Sep. 18, 1995 | Correction on Proposed Final Order (From Sonia Nieves-Burton) filed. |
| Sep. 12, 1995 | (Respondent) Proposed Final Order filed. |
| Sep. 12, 1995 | Notice of Filing Petitioner`s Recommended Order; Petitioner`s Recommended Order (for Hearing Officer signature) filed. |
| Sep. 07, 1995 | Order sent out. (proposed orders are due 9/12/95) |
| Sep. 05, 1995 | Joint Motion for One Week Extension of Time to File Proposed Recommended Orders filed. |
| Aug. 15, 1995 | Transcript of Proceedings ; Exhibits filed. |
| Jul. 25, 1995 | CASE STATUS: Hearing Held. |
| Jul. 25, 1995 | Letter to MWC from Stephen Milbrath (RE: enclosing exhibits for 10:00am hearing) filed. |
| Jun. 12, 1995 | Order Granting Continuance and Amended Notice sent out. (video hearing rescheduled for 7/25/95; 10:00am; Orlando) |
| May 26, 1995 | (Respondent) Prehearing Statement filed. |
| May 26, 1995 | Petitioner`s Prehearing Statement filed. |
| Apr. 27, 1995 | Order for Prehearing Conference sent out. |
| Apr. 27, 1995 | Order and Notice of Evidentiary Hearing sent out. (hearing set for 6/1/95; 9:00am; Orlando) |
| Apr. 17, 1995 | Respondent`s Response to Amended Petition for Attorney Fees and Costs; (Petitioner) Motion to Dismiss Petitioner`s Amended Petition for Attorney`s Fees and Costs; (Petitioner) Notice of Filing Affidavit of Gerald Briggs; Affidavit filed. |
| Mar. 28, 1995 | Amended Notice of Hearing sent out. (telephonic final hearing set for 4/17/95; 2:30pm) |
| Mar. 15, 1995 | Order sent out. (hearing date to be rescheduled at a later date; instead the time set aside for hearing on 3/27/95, is reserved for further argument on pending Motions, if necessary or for other prehearing conference) |
| Mar. 08, 1995 | (Petitioners) Notice of Filing Affidavit of Wayne Crotty; Affidavit of Wayne Crotty filed. |
| Mar. 08, 1995 | (Petitioner) Notice of Telephone Hearing filed. |
| Mar. 06, 1995 | Amended Notice of Hearing sent out. (Video Hearing set for 3/27/95; 9:00am; Tallahassee & Orlando) |
| Mar. 01, 1995 | Motion opposing Petitioner`s Motion to amend Petition for attorney fees and costs and Motion to dismiss original Petition for attorney fees and costs filed. |
| Feb. 21, 1995 | Motion for Leave to amend Petition for Administrative Hearing to correct the name of Petitioners filed. |
| Feb. 15, 1995 | Order and Amended Notice of Hearing sent out. (hearing set for 3/14/95; 1:00pm; Orlando) |
| Feb. 06, 1995 | Letter to Hearing Officer from Sonia Nieves Burton re: Dates Respondent is not available filed. |
| Feb. 03, 1995 | (Petitioner) Motion for Continuance filed. |
| Jan. 17, 1995 | Notice of Hearing sent out. (hearing set for 2/13/95; 1:00pm; Orlando) |
| Nov. 14, 1994 | Order sent out. |
| Nov. 12, 1994 | Respondent`s Response/Motion to Dismiss Petitioner`s Petition for Attorney Fees and Cost filed. |
| Nov. 08, 1994 | (Respondent) Motion for Extension of Time to File A Response filed. |
| Oct. 28, 1994 | Notification card sent out. |
| Oct. 21, 1994 | Petition for Administrative Hearing (Action Under the Florida Equal Access to Justice Act) filed. (Prior DOAH #93-5526) |
| Issue Date | Document | Summary |
|---|---|---|
| Oct. 18, 1995 | DOAH Final Order | Corportation wasn't a party to underlying case or a ""prevailing"" sub party or a real party in interest despite fictitious name ownership. |
