STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LAGOON OAKS, INC., )

)

Petitioner, )

)

vs. ) Case No: 96-4969F

) STATE OF FLORIDA, DEPARTMENT OF ) HEALTH AND REHABILITATIVE )

SERVICES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice this cause came on for final hearing on March 19, 1997, in Tallahassee, Florida. The appearances were as follows:

APPEARANCES

For Petitioner: Lee M. Killinger, Esquire

Gray, Harris & Robinson, P.A.

225 South Adams Street, Suite 250 Tallahassee, Florida 32302

For Respondent: Thomas D. Koch, Esquire

Department of Health and Rehabilitative Services

2639 North Monroe Street, Suite 125-A Tallahassee, Florida 32399-2949

STATEMENT OF THE ISSUE

The issue to be resolved in this proceeding concerns whether Lagoon Oaks, Inc., (Petitioner) is entitled to an award of attorney's fees, pursuant to Section 57.111 Florida Statutes, by becoming a prevailing party in accordance with the final order issued by the Department of Health and Rehabilitative Services

(Department) in the underlying case related to this proceeding which is Case No. 95-4394. The primary issue concerns whether the Agency's intended action was "substantially justified." Additionally it must be determined whether the Petitioner is a "small business party" in terms of its net worth.

PRELIMINARY STATEMENT

This cause has arisen upon the filing of a Petition for Attorney's Fees, pursuant to Section 57.111 Florida Statutes, by the Petitioner, Lagoon Oaks, Inc. It is alleged by the Petitioner that, in Case No. 95-4394, by the final order entered on August 1, 1996, the Petitioner became a "prevailing party." It is alleged that the Petitioner is a "small business party" because it has no employees and has a net worth that does not exceed $2 million.

The Respondent (Department) filed a Motion to Dismiss the Petition, alleging in essence that the claim for attorney's fees had not been timely filed since it had not been raised in the underlying proceeding. That motion was denied by the Order of the undersigned entered March 3, 1997, finding in essence that in Section 57.111 Florida Statutes attorney's fee proceeding the attorney's fee claim is not ripe for filing until it becomes known that the small business party is a "prevailing party."

That can only become known after the final order by the agency is entered in the underlying proceeding. The attorney's fee

petition was thereafter timely filed, as found in the order on the motion.

A hearing was conducted in this matter on March 19, 1997, and the testimony of the Petitioner's President and principal owner, Fred M. Webb, was taken. The testimony of Cindy Barton, an attorney, was taken on the issue of amount and reasonableness of claimed attorney's fees and costs. Additionally, Petitioner's Exhibits 1 through 4 were admitted and Respondent's Exhibit one was admitted into evidence. The requisite attorney's fee affidavits have been submitted by the Petitioner.

Upon conclusion of the hearing, the parties elected to obtain a transcript. They reserved the right to submit proposed orders but ultimately advised the undersigned that they waived the submission of proposed orders. In consideration of the foregoing, this final order is entered.

FINDINGS OF FACT

1. The preponderance of the testimony and evidence of record establishes that the Petitioner, Lagoon Oaks, Inc.'s domicile and principal office is located in Panama City, Bay County, Florida. Lagoon Oaks is a de Jure Florida corporation. It has no employees and has a net worth which does not exceed $2 million. Additionally, it is established that Lagoon Oaks, Inc., is a "prevailing small business party," inasmuch as the above- referenced final order has been entered by the Department granting Lagoon Oaks' permits, which were originally denied,

   thereby sustaining Lagoon Oaks' position that it was entitled to the permits pursuant to applicable Florida Statutes and Rules.

   That order has not been reversed on appeal and the time for seeking judicial review thereof has expired.

2. Further, this case qualifies as an "administrative proceeding pursuant to Chapter 120 initiated by a state agency." The agency herein was required by law to advise the Petitioner of a clear point of entry after some recognizable event in the investigatory or other proceeding by the agency, to wit, the denial of the sought permits. See Section 57.111(3)(b), Florida Statutes.

3. The Petitioner has requested and the undersigned takes "judicial notice" of the original record in this proceeding including the transcript of the hearing in DOAH Case No. 95-4394, pursuant to Rule 60Q.2010, Florida Administrative Code. The Findings of Facts and Conclusions of Law in the Recommended Order entered by the undersigned in that proceeding are hereby adopted and incorporated by reference herein as well. In the final order entered, the Department found and conceded that:

   ". . . the Department did not follow the applicable rules in Chapter 10D-6 Florida Administrative Code, in denying the permit applications. The site evaluation forms do not identify a recognizable water body (ie. a normally wet drainage ditch), nor do they establish the presence of surface water for the requisite 72 hours following rainfall.

   The forms do not indicate the setback which exists from the proposed system to the disputed feature. The forms are not signed or dated. The observed water table and

   estimated wet season water table are not provided, nor is high water table vegetation indicated. The extensive soil sampling that was detailed at the hearing is not described. Much of the evidence tending to demonstrate the presence of a surface water apparently was not gathered until well after the permits were denied. Finally, the denial letter, as noted by the hearing officer, references a 'normally wet area' which is not a 'surface water' feature described in statute or rule that may justify denial of a septic system permit. (footnotes omitted)."

4. The Department has thus conceded that it did not follow its own rules in denying these permits, that the documentation allegedly supportive of the denial was incomplete and did not justify the denial and that much of the evidence tending to demonstrate the presence of a surface water apparently was not gathered until well after the permits were denied. Thus, when the intended agency action was taken (the denial) by the Department's own admission, it had not gathered much of the evidence which it contended supported its position concerning presence of the surface water involved in the underlying proceeding.

5. Attorney's fee affidavits required by Section 57.111(4)(b)1. Florida Statutes and submitted by the Petitioner demonstrate that Lagoon Oaks incurred the sum of $17,950.00 in attorney's fees and $2,281.98 in costs in the course of this proceeding. Additionally, the affidavit of R. Steve Lewis, Esquire, illustrates that Lagoon Oaks incurred an additional

   $2,707.50 in attorney's fees for services he performed for this

   proceeding (This is not inclusive of any fees or services for which Mr. Lewis might have become entitled for work done unrelated to the subject proceeding). The attorney's fees submitted and represented by affidavit (Exhibit E) by Attorney Lee Killinger, counsel of record, alone exceed the $15,000.00 limit provided for in Section 57.111(4)(d)2, Florida Statutes. Testimony and evidence adduced at hearing demonstrates that the fees and costs claimed are reasonable under the circumstances of the underlying case and this proceeding.

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Section 120.569 and 12.57(1), Florida Statutes and Section 57.111, Florida Statutes.

7. Section 57.111(4)(a), Florida Statutes, provides in pertinent part that:

   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 administrative 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.

8. The preponderant evidence of record and the above findings of fact demonstrate that Lagoon Oaks, Inc., qualifies as a "prevailing small business party" in this case. See Section 57.111(3)(d)1.b and Section 57.111(3)(c)1., Florida Statutes. A

   small business party is a "prevailing small business party" when a final judgment or order has been entered in its favor and that judgment or order has not been reversed on appeal or the time for seeking judicial review thereof has expired. The Final Order in the underlying case granted Lagoon Oaks, Inc., the permits which were originally denied by the Department's initial agency action, thereby sustaining Lagoon Oaks' position that it was entitled to the permits pursuant to applicable statutes and rules. Moreover, this case qualifies as an "administrative proceeding pursuant to Chapter 120 initiated by a state agency." Section 57.111(3)(b), Florida Statutes.

9. Section 57.111(3)(d)1.b defines a "small business party" with regard to a corporation or partnership as "[a] partnership or corporation, including a professional practice, which has its principle office in the state and has at the time the action is initiated by a state agency not more than 25 full-time employees or a net worth of not more than $2 million dollars . . . ." In view of this authority, the preponderance of evidence and the above-referenced findings of fact show that the Petitioner corporation is a "small business party" with a net worth of less than two million dollars and less than twenty-five full-time employees. It is a prevailing party, having timely filed its petition for fees and costs herein.

10. The Department claims that its actions were substantially justified. This assertion is refuted, however, by

    the language of the Department's own final order:

    
    

    ". . . the Department did not follow the applicable rules in Chapter 10D-6 Florida Administrative Code, in denying the permit applications. The site evaluation forms do not identify a recognizable water body (ie. a normally wet drainage ditch), nor do they establish the presence of surface water for the requisite 72 hours following rainfall.

    The forms do not indicate the setback which exists from the proposed system to the disputed feature. The forms are not signed or dated. The observed water table and estimated wet season water table are not provided, nor is high water table vegetation indicated. The extensive soil sampling that was detailed at the hearing is not described. Much of the evidence tending to demonstrate the presence of a surface water apparently was not gathered until well after the permits were denied. Finally, the denial letter, as noted by the hearing officer, references a 'normally wet area' which is not a 'surface water' feature described in statute or rule that may justify denial of a septic system permit. (footnotes omitted)."

11. The Department cannot claim to have been substantially justified in denying the permits at issue when it admits that it did not follow its own rules in doing so; that the alleged site inspections which formed the basis for the denials were inadequately and improperly performed; that the forms documenting the alleged site inspections were incomplete and improperly filled out, thereby failing to provide any basis for the denial which could be substantiated and particularly noteworthy. Moreover, the Department admits in the Final Order that much of the evidence relied upon at hearing was not gathered until well after the issuance of the denials. Such an admission from the

    agency cannot provide the foundation for a "substantially justified," proposed agency action.

12. Section 57.111(4)(a) requires that the agency have a "reasonable basis in law and fact" (emphasis added). In this case, because of the Department's failure to follow its own rules regarding the site evaluation, it could not have had a reasonable basis in law upon which to base the denials. Because of the improper procedures and legally inadequate documentation underlying the denials, the Department could not have had a reasonable basis, in fact, to deny the applications at the time they were denied. Section 57.111(4)(a), Florida Statutes, provides that the award of fees and costs shall be made unless the actions of the agency was substantially justified at the time they were initiated. See Frederick Mann, DDS v. Department of Professional Regulation, Board of Dentistry, 91-7865F (April 10, 1992). In fact, the Final Order indicates precisely that the agency had no reasonable basis, in fact, or law to deny the applications at the time they were denied and that language quoted above in the Final Order is the justification for the mandate in the underlying proceedings that the permits issue. Therefore, the Department's own order demonstrates that its actions in the case were not substantially justified.

13. The Petitioner also contends that the assertion of HRS, in Paragraph 3 of its "Response to Petition," that "HRS granted the permits only because of technical deficiencies in the site

    evaluations and the denial letter; that is a reprimand for the health unit, not a victory on the merits for the Petitioner" is tantamount to the Department stating that it has granted these permits to Lagoon Oaks, Inc., as an internal discipline measure and, therefore, in flagrant disregard for its own rules and Florida law. The Petitioner asserts that this statement and the failure to raise proper and legitimate defenses to the fee petition in the response reveal that the Department has participated in this action for an improper purpose primarily to harass, to cause unnecessary delay, or for a frivolous purpose and that pursuant to Section 120.569(2)(c), Lagoon Oaks is entitled to attorney's fees and costs for this fee proceeding.

14. The request for fees pursuant to Section 120.569(2)(c) is denied. The statement referenced above by the Petitioner in this portion of its claim, concerning the Department's grant of the permits only because of technical deficiencies, etc., "as a reprimand for the health unit and not a victory on the merits for the Petitioner" is deemed to be an ill-advised, unsupported argument of counsel, which does not bind counsel's client to a position of having participated in this action for an improper, harassing, unnecessary, or frivolous purpose. Accordingly, this claim for attorney's fees and costs pursuant to Section 120.569(2)(c) is denied.

It having been proven that the agency action at issue herein was not "substantially justified," and the other provisions of Section 57.111 having been complied with, it is therefore

ORDERED:

That reasonable attorney's fees and costs, in an amount not to exceed $15,000.00, are hereby awarded to the Petitioner, Lagoon Oaks, Inc.

DONE AND ORDERED this 2nd day of July, 1997, in Tallahassee, Leon County, Florida.

P. MICHAEL RUFF Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 2nd day of July, 1997.

COPIES FURNISHED:

Lee M. Killinger, Esquire Gray, Harris & Robinson, P.A.

225 South Adams Street, Suite 250 Tallahassee, Florida 32302

Thomas D. Koch, Esquire District 2, Legal Office Department of Health and

Rehabilitative Services

2639 North Monroe Street, Suite 125-A Tallahassee, Florida 32399-2949

Gregory D. Venz, Agency Clerk Department of Children & Families Building 2, Room 204

Tallahassee, Florida 32399-0700

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 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.

Alternatively, a Party adversely affected by this Final Order may bring a civil action filed in Circuit Court under Section 230.23(4)(m)5., Florida Statutes, or bring a civil action in Federal Court.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LAGOON OAKS, INC., )

)

Petitioner, )

)

vs. ) Case No. 96-4969F

)

DEPARTMENT OF CHILDREN )

AND FAMILIES )

)

Respondent. )

)

CORRECTIVE ORDER

THIS CAUSE comes before the undersigned on a Motion and Amended Motion for Clarification of the order entered herein awarding attorneys' fees and costs. The undersigned will treat the motions as requesting a "corrective order" in accordance with

Rule 62Q-2.032 F.A.C. The Petitioner is unclear as to the meaning and intent of the award entered at page 10 of the Final Order awarding reasonable attorneys' fees and costs, "in an amount not to exceed $15,000, . . . ." In accordance with the matter expressed in the motion, the undersigned hereby corrects, modifies, or amends the Final Order previously entered herein to specifically award $15,000 in attorneys' fees and costs to the Petitioner.

In the amended motion, the Petitioner also requests specific findings concerning the factors delineated in the cases of Standard Guarantee Insurance Company v. Quanstrom, 555 So. 2d 828 (Fla. 1990) and findings as to the reasonable number of hours spent on the case below and the reasonable hourly rate as may be required by the opinion in Florida Patient's Compensation Fund v. Rowe, 472 So. 2d 1145, 1150 (Fla. 1985).

The undersigned is not convinced that those two decisions apply to this type of attorneys' fee proceeding but in any event, as found in the underlying Final Order on fees and costs, the undersigned has considered the affidavits and the testimony received in evidence in determining that the number of hours spent, the hourly rate, and the total fees and costs incurred in the prior proceeding were reasonable. The hourly rate and the total number of hours spent and the other circumstances reflected in the attorneys' fees and costs affidavits and other evidence received from the Petitioner were preponderant and persuasive and

are specifically accepted herein in their total amounts reflected in the underlying Final Order as to the fees and costs incurred for the efforts of attorney Killinger and attorney Lewis, as to their work performed on the matters involved in the underlying proceeding.

Because the undersigned has found the evidence of the specific number of hours, hourly rate and the cost figures adduced in the Petitioner's testimony and evidence to be preponderant, persuasive, and reasonable and because no substantial, credible, preponderant evidence which would refute the Petitioner's evidence, the specific factors enumerated in the above two decisions need not be addressed with more specificity in the Final Order. The undersigned found that the number of hours, the hourly rate, and the total amount of fees and costs was as depicted in the Petitioner's evidence and further that, the number of hours, hourly rate, and total amount of fees and costs was reasonable.

It has not been shown that this is the type of proceeding in which a "multiplier" factor as elucidated in the Rowe opinion is applicable. Nonetheless, whether the multiplier factor is applicable, the evidence adduced by the Petitioner clearly shows the reasonableness and appropriateness of the hourly rate, the number of hours, and the total amount of the fees and costs advanced by Petitioner. Accordingly it is

ORDERED that inasmuch as the attorneys' fees and costs in the total amounts found in the Final Order entered herein exceed the statutory cap of $15,000, that an award of fees and costs in the amount of $15,000 be accorded the Petitioner.

DONE AND ORDERED this 29th day of August, 1997, in Tallahassee, Leon County, Florida.

COPIES FURNISHED:

Lee M. Killinger, Esquire

P. MICHAEL RUFF Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 29th day of August, 1997.

Gray, Harris and Robinson, P.A.

225 South Adams Street, Suite 250 Tallahassee, Florida 32302

Thomas D. Koch, Esquire Department of Children

and Families Suite 125-A

2639 North Monroe Street Tallahassee, Florida 32399-2949

Gregory D. Venz, Agency Clerk Department of Children

and Families Building 2, Room 204

1317 Winewood Boulevard

Tallahassee, Florida 32399-0700

Richard A. Doran, Esquire Department of Children

and Families Building 2, Room 204

1317 Winewood Bouelvard

Tallahassee, Florida 32399-0700

NOTICE OF RIGHT TO APPEAL

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 the 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: 96-004969F

Orders for Case No: 96-004969F