STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NELLIE BUTTERWORTH, )

)

Petitioner, )

)

vs. ) Case No. 97-2911RU

) DEPARTMENT OF BANKING AND ) FINANCE, )

)

Respondent. )

)

FINAL ORDER OF DISMISSAL

This matter came before the undersigned after considering responses to an Order to Show Cause issued on July 7, 1997. For the following reasons, the Petition to Challenge Agency Statement Defined as Rule is dismissed.

On June 20, 1997, Petitioner, Nellie Butterworth, filed a Petition to Challenge Agency Statement Defined as Rule in which she contended that three statements in a Final Order and Notice of Rights issued on May 1, 1997, by Respondent, Department of Banking and Finance (Department), were unpromulgated rules and therefore violated Section 120.54(1)(a), Florida Statutes (Supp. 1996). The challenged order was a declaratory statement issued by the Department under Section 120.565, Florida Statutes (Supp. 1996), to Quick & Reilly, Inc., a securities dealer, in which the Department responded to three issues raised by the dealer.

The case was originally assigned to Administrative Law Judge Mary Clark. On July 7, 1997, Judge Clark issued an Order to Show

Cause, the relevant part of which is set forth below:

. . . [T]he petition, on its face, and in its attached exhibits, raises jurisdictional questions that should be addressed prior to hearing. Specifically, the Petition seeks as relief that a Final Order styled "In re: Petition for Declaratory Statement of Quick & Reilly, Inc. . . . " be vacated. Yet, the Petition recites in its first paragraph that the Final Order is currently on appeal to the First District Court of Appeal. Moreover, the statements alleged to be rules are in a declaratory statement which, pursuant to Section 120.565, Florida Statutes, applies only to the Petitioner's particular set of circumstances, and is thus the anthesis [sic] of a rule which is an "agency statement of general applicability."

The Order to Show Cause required Petitioner, within ten days from date of the order, to show cause why her petition should not be dismissed for lack of jurisdiction. On July 17, 1997, Petitioner filed a lengthy response, with attachments. This was supplemented by a second response filed on July 24, 1997. A response was also filed by the Department the same date. In addition, on July 24, 1997, Petitioner filed a Motion to Disqualify Administrative Law Judge on the ground Petitioner feared that she would "not receive a fair trial in this tribunal." After a determination was made that the motion was legally sufficient, it was granted on July 29, 1997, and the case was transferred to the undersigned on August 1, 1997.

In her response, Petitioner contends that her Petition should not be dismissed for two reasons. First, she asserts that the Division of Administrative Hearings (DOAH) has jurisdiction

over this case, despite the appeal of the Department's order, because "this tribunal is not the tribunal that rendered the order being appealed." Second, she asserts that the declaratory statement rendered by the Department in its Final Order and Notice of Rights contains rules of general applicability "because they apply to entire classes of persons and they are not limited to the specific circumstances of the entity seeking the statement." Because the second issue is dispositive of this case, it is unnecessary to reach the question of whether DOAH lacks jurisdiction because the agency's final order is now before an appellate court.

Dismissal is appropriate since the challenged statements are found in a declaratory statement issued pursuant to Section 120.565, Florida Statutes (Supp. 1996). That statute provides that

[a]ny substantially affected person may seek a declaratory statement regarding an agency's opinion as to the applicability of a statutory provision, or of any rule or order of the agency, as it applies to the petitioner's particular set of circumstances.

The foregoing statute must be considered in light of the definition of a rule found in Section 120.52(15), Florida Statutes (Supp. 1996). That provision reads in relevant part as follows:

(15) "Rule" means each agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the procedure or practice requirements of an agency . . .

Therefore, in order for a statement to qualify as a rule, it must be a "statement of general applicability that implements, interprets, or prescribes law or policy . . . of an agency." By its own terms, a declaratory statement applies to a "particular set of circumstances" and cannot qualify as a statement of general applicability.

More importantly, however, is the holding in the case of State Dep't of Health and Rehab. Services v. Barr, 359 So. 2d 503 (Fla. 1st DCA 1978). There, a substantially affected person obtained a declaratory statement from the agency. A number of third parties then filed a petition with DOAH seeking to have the statement declared an illicit rule. In reversing an order of the hearing officer denying the agency's motion to dismiss, the court dismissed the petition and held that

neither the letter nor the purposes of the [Administrative Procedure] Act justify subjecting formal agency statements, in declaratory statements rendered pursuant to Section 120.565, . . . to such collateral scrutiny and review by [administrative law judges]. Section 120.565 declaratory statements constitute "final agency action" and they are reviewable, in the same way as orders entered in Section 120.57 proceedings, by timely petition in a district court of appeal. Section 120.68. Nothing in the Act gives [administrative law judges] collateral review power over final agency action taken after regular proceedings under other provisions of the Act.

Id. at 505. The Barr decision is directly on point, has not been overturned or modified, and is controlling in the instant case.

Accordingly, the petition should be dismissed.

In reaching this conclusion, the undersigned has considered Petitioner's contention that under the rationale of Fla.

Optometric Assn. v. Dep't of Prof. Reg., 567 So. 2d 928 (Fla. 1st DCA 1990), she is entitled to bring this action. But that case merely suggests that "where the question presented by the petition [for declaratory statement] is not narrowly drawn, [and] the substantial interests of other parties [are] implicated," a third person may seek to initiate proceedings with the agency under Section 120.57, Florida Statutes. Id. at 936. It does not hold that a remedy lies under Section 120.56(4), Florida Statutes (Supp. 1996). It is, therefore,

ORDERED that the Petition to Challenge Agency Statement Defined as Rule is dismissed, with prejudice.

DONE AND ENTERED this 19th day of August, 1997, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 19th day of August, 1997.

COPIES FURNISHED:

Margaret S. Karniewicz, Esquire Department of Banking and Finance Suite 526, Fletcher Building Tallahassee, Florida 32399-0350

Stephen C. Krosschell, Esquire

311 North Bayshore Drive Safety Harbor, Florida 34695

V. Carroll Webb, Executive Director Joint Administrative Procecedures

Committee

Room 120, Holland Building Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICAL 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: 97-002911RU

Orders for Case No: 97-002911RU