STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OMNI OUTDOORS, INC., )

)

Petitioner, )

)

vs. ) Case No. 97-4455

) MINORITY BUSINESS ADVOCACY AND ) ASSISTANCE OFFICE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned Administrative Law Judge of the Division of Administrative Hearings, on January 29, 1998, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Terry M. Reeb, Chief Executive Officer

Omni Outdoors, Inc.

1742 Northwest 112 Terrace Coral Springs, Florida 33071

For Respondent: Joseph L. Shields, Esquire

Department of Labor and Employment Security 2012 Capital Circle, Southeast

The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189

STATEMENT OF THE ISSUE

The issue presented is whether Petitioner's application for certification as a minority business enterprise should be granted.

PRELIMINARY STATEMENT

By correspondence dated July 17, 1997, Respondent denied Petitioner's application for certification as a minority business enterprise, and Petitioner timely requested an evidentiary proceeding regarding that determination. This cause was transferred to the Division of Administrative Hearings to conduct that evidentiary proceeding.

Terry M. Reeb testified on behalf of Petitioner, and Susan Hodge testified on behalf of Respondent. Additionally, Petitioner's Exhibits numbered 1-9 and Respondent's Exhibits lettered A, B, D, H-M, O, P, and R were admitted in evidence.

Both parties submitted post hearing proposed recommended orders. Those documents have been considered in the entry of this Recommended Order.

FINDINGS OF FACT

1. Petitioner Omni Outdoors, Inc., a for-profit corporation located in Coral Springs, Florida, is engaged in the business of commercial landscaping and irrigation. It was incorporated on September 19, 1995, by Bruce Reeb.

2. When incorporated, Petitioner issued its 100 shares of stock as follows: 24 shares to Bruce, 26 shares to his wife Terry, 24 shares to Kevin McMahon, and 26 shares to Kevin's wife Michele. Accordingly, the Reebs and the McMahons each own 50 percent of the business.

3. Both Reebs and both McMahons became the 4-member Board of Directors. Bruce became the president and the secretary of

   the corporation, and Kevin became the vice-president and the treasurer. According to the corporation's By-laws, the President is the chief executive officer of the corporation, responsible for the general supervision of its business.

4. Bruce is a certified general contractor in the State of Florida and is the qualifier for Petitioner. Kevin holds an irrigation license and is the qualifier for Petitioner in that area.

5. Bruce handles estimating, pricing, and proposal preparation and presentation. Kevin runs the field operations and purchasing of materials.

6. In October 1996 Terry quit her job as a flight attendant to begin working for Petitioner, handling accounting and personnel matters. Her name was added to the corporation's bank accounts as an authorized signature. Bruce and Kevin remain as authorized signatures on the accounts, and only one signature is required for the corporation's checks. She was given the title "chief executive officer" of the corporation in January 1997, a position authorized by an amendment to the By-laws in March 1997. She was given a smaller salary than Bruce or Kevin, who were paid the same amount.

7. Kevin's wife Michele has never been involved in the day- to-day activities of the corporation. She has never received a salary from the business.

8. In January 1997 Terry filed an application with

   Respondent for the corporation to be certified as a minority business enterprise, under the status of "American Woman."

9. Around the time the corporation filed its application, Terry's salary was increased to $600 per week so she would be making the same as Kevin, and Bruce's salary was decreased to

   $400 per week.

   
   

10. Even after Terry's full-time employment by the corporation, the signatures of her husband or of Kevin continue to appear on corporate obligations, such as an indemnity agreement and corporate promissory notes.

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties hereto and the subject matter hereof. Sections 120.569 and 120.57(1), Florida Statutes.

12. Section 288.703, Florida Statutes, establishes the minority business enterprise program. Pursuant thereto, Respondent has promulgated rules for the certification of eligible minority business enterprises. Chapter 38A-20, Florida Administrative Code.

13. Rule 38A-20.005(2)(a), Florida Administrative Code, requires that the minority persons own at least 51 percent of the stock. Terry and Michele together own 52 percent of the stock and qualify under this subsection. Terry alone does not qualify since she only owns 26 percent of the stock.

14. Rule 38A-20.005(2)(b), Florida Administrative Code, requires that the minority owners share income and other benefits of the business, including salaries, commensurate with the percentage of their ownership. Petitioner does not qualify under this provision. Michele earns no salary, and Kevin earns the same salary as Terry.

15. Rule 38A-20.005(2)(c) requires that the minority owners demonstrate that they share in all the risks assumed by the business. Petitioner has failed to demonstrate this requirement.

16. Rule 38A-20.005(3)(c) requires that the minority owners must exercise sufficient management and technical responsibility and capability to control the business. Michele does not work in the business, and Terry has no technical background. Further, both Bruce and Kevin are licensed as the qualifiers of the company and are required thereby to exercise technical control.

17. Rule 38A-20.005(3)(d) requires that the minority owners exercise real, substantial, and continuing control. Subsection (3)(d)3 requires that the minority owners control all financial affairs of the business. Petitioner fails to meet this criterion. Michele does not have the authority to sign checks, but Bruce and Kevin do.

18. Rule 38A-20.005(3)(d)4, Florida Administrative Code, provides that when an applicant business provides services which require that the business and/or its professional qualifier be licensed, the minority owner must hold the license issued by the

    State of Florida or local licensing entity. Both Bruce and Kevin hold those licenses. Terry and Michele are not licensed.

19. The evidence is overwhelming that the minority owners do not control this business enterprise. Michele's only involvement is attending board of directors meetings. Terry's involvement is more substantial, but it is clear that Bruce and Kevin have the technical expertise to control the business, and Terry does not. Terry does perform some of the functions that Bruce and Kevin previously performed without her. However, her testimony that she alone created the business and that the corporation could not exist without her is both not credible and irrelevant since Terry and Michele together must control the corporation in order for Petitioner to qualify as a minority business enterprise.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a final order be entered denying Petitioner's application for certification as a minority business enterprise.

DONE AND ENTERED this 8th day of April, 1998, in Tallahassee, Leon County, Florida.

LINDA M. RIGOT

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 8th day of April, 1998.

COPIES FURNISHED:

Terry M. Reeb, Chief Executive Officer Omni Outdoors, Inc.

1742 Northwest 112 Terrace Coral Springs, Florida 33071

Joseph L. Shields, Esquire Department of Labor and

Employment Security

2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189

Edward A. Dion, General Counsel Department of Labor and

Employment Security

2012 Capital Circle, Southeast The Hartman Building, Suite 307 Tallahassee, Florida 32399-2189

Douglas L. Jamerson, Secretary Department of Labor and

Employment Security

2012 Capital Circle, Southeast The Hartman Building, Suite 303 Tallahassee, Florida 32399-2189

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 97-004455

Orders for Case No: 97-004455