STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

THOMAS C. BIRKHEAD, d/b/a )

CENTURY CENTER, )

)

Petitioner, )

)

vs. ) Case No. 99-0679F

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF HOTELS AND )

RESTAURANTS, )

)

Respondent. )

)

FINAL ORDER

This case was heard by David M. Maloney, Administrative Law Judge of the Division of Administrative Hearings, on April 7, 1999, in Viera, Florida (Brevard County).

APPEARANCES

For Petitioner: Dwight W. Severs, Esquire

Dwight W. Severs & Associates, P.A. Post Office Box 6088

Titusville, Florida 32782-6088

For Respondent: Daniel R. Biggins, Esquire

Gail S. Hoge, Esquire

Office of the General Counsel Department of Business

and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-1007

STATEMENT OF THE ISSUE

Is Petitioner entitled under Section 57.111(4), Florida Statutes, to attorney's fees and costs incurred in DOAH Case No. 97-5194?

PRELIMINARY STATEMENT

On February 11, 1999, Thomas A. Birkhead, d/b/a Century Center, filed a Petition for Award of Attorney's Fees and Costs with the Division of Administrative Hearings ("DOAH"). Shortly thereafter, an Initial Order was issued by DOAH. On March 12, 1999, Respondent, the Division of Hotels and Restaurants under the Department of Business and Professional Regulation, filed a Response to the Initial Order and a Motion to Dismiss.

The hearing set for April 7, 1999, in Viera, Florida, took place as scheduled. Petitioner and his attorney, Mr. Dwight W. Severs, testified and offered three exhibits into evidence, marked as Petitioner's Exhibit Nos. 1, 2 and 3. No witnesses were called by the Division. Official recognition was taken of six documents: the Recommended and Final Orders in Case No. 97- 5194; a copy of Section 57.111, Florida Statutes; the Transcript of the hearing in Case No. 97-5194; the cover letter under which Mr. Birkhead submitted the petition for fees and costs; and a Recommended Order entered in Department of Business and Professional Regulation vs. Bentley Farms, Inc., DOAH Case No.

98-2923.

The Transcript was filed on April 26, 1999. Petitioner served a Memorandum in Support of Request for Attorney's Fees and Costs on May 3, 1999, as well as a Proposed Recommended Order, both timely. Respondent's Proposed Recommended Order was served eight days late, on May 11, 1999.

FINDINGS OF FACT

1. Outcome of Prior Administrative Proceeding

   
   

   1. Thomas A. Birkhead, d/b/a Century Center ("Birkhead," "Mr. Birkhead, or the "business") is a business in the form of a sole proprietorship. On August 4, 1997, the Division of Hotels and Restaurants (the "Division") served the business with a Notice to Show Cause. Seven weeks or so earlier, on June 13, 1997, the business had been served with an Emergency Order of Suspension. The Emergency Order suspended the business's license to operate a public lodging establishment in Cocoa Beach, Florida, as a nontransient rooming house. The license, bearing number 15-04001 H, had been issued to Mr. Birkhead by the Division.

   2. Mr. Birkhead requested a hearing on both the Emergency Order and the Notice to Show Cause. The request was referred to DOAH and assigned Case No. 97-5184. Unlike this case for fees and costs in which Mr. Severs has appeared in behalf of Mr. Birkhead, at no time during the pendency of DOAH Case No. 97-5184 did any attorney, including Mr. Severs, file a notice of appearance or appear in any capacity on behalf of Mr. Birkhead.

   3. The hearing held in April and June of 1998 (at which Mr. Birkhead appeared pro se) culminated in a Recommended Order issued October 1, 1998. The order recommended that the Notice to Show Cause be dismissed but that the Emergency Order be sustained.

   4. On May 14, 1998, the Division issued a Final Order. The Order makes no mention of Mr. Birkhead having been represented in any capacity other than pro se in post-recommended order proceedings. In acceptance of the advice of the Recommended Order, the Division dismissed the Notice to Show Cause. As for the recommendation with regard to the Emergency Order the final order stated:

      The Emergency Order of Suspension was a final order of the Division and subject to judicial review pursuant to section 120.60(6) and 120.68, Florida Statutes, not administrative review. Thus, the part of Birkhead's request for formal administrative review that pertained to the issuance of the Emergency Order of Suspension should have been dismissed for lack of jurisdiction.

      Final Order, page 9, Paragraph 16. Accordingly, the Division ordered that "Birkhead's Motion to Dismiss is hereby granted and the request for formal administrative review of the Emergency Order of Suspension is hereby dismissed." Final Order, page 10.

2. Attorney's Fees and Costs

   
   

   1. When Case No. 97-5184 was initiated, Mr. Severs had long represented Mr. Birkhead as an attorney in various matters. His normal billing rate during the life of the case was $175 per hour.

   2. Although Mr. Severs did not appear as attorney of record in the administrative case, from the time the Emergency Order of Suspension was issued in June of 1997, through the issuance of the Final Order by the Department in Case No. 97-5184, Mr. Severs

      provided legal services to Mr. Birkhead. Some of the services were related to the administrative case; some were related to other matters. The fees for these services, related or unrelated, totaled $14,929.95, according to the petition filed in this case. An affidavit by Mr. Severs, attached to the petition, showed that only $4,860 of that amount was related to the administrative case.

   3. The related services were performed on at least fifteen occasions. Principally these included review and/or drafting of documents and consultation with regard to the reviewed or drafted documents. Mr. Severs' records demonstrate that at least 32.4 hours were expended in the performance of legal services related to Case No. 97-5184. (There were many telephone consultations not included in these hours because Mr. Severs moved from one firm, to his own firm, to the Titusville City Hall, where he is now the full-time City Attorney for the City of Titusville. Because of these transitions, phone records became unavailable.)

   4. At an hourly rate of $150 (the rate requested by Petitioner for this case, $25 below Mr. Severs' normal rate), total attorney's fees for 32.4 hours come to $4,860.00. These fees are reasonable.

   5. Court reporter costs in defending this action incurred by Mr. Birkhead totaled $478.50. He paid an expert witness fee in the amount of $200 to an engineer who testified in the proceeding. In addition, there were subpoenas for documents of

      $42; publications, such as the Fire Safety Manual 101, necessary to purchase in order to defend the case, in the amount of $49.35; photocopies of $48.10; office supplies of $56.12; postage and postage stamps of $173.52; and copier maintenance of $605.13.

      These costs total: $1,655.72.

      
      

   6. Mr. Birkhead also claimed additional costs of more than

      
      

      $10,000 used to maintain and operate the closed Century Center as an office for the duration of the administrative case.

      Mr. Birkhead explained this claim at hearing:

      
      

      The building that I was in there using as an office [Century Center] was shut down by the Division, so I could do nothing with it, except just work out of there myself to prepare this case, to work on the case. So, what I have given here is the direct charges of -- you know, that were during the time period for electricity and so forth.

      (Tr. 25). In addition to electricity, this sum includes charges for telephone, sanitation, pest control, water and sewer and fire extinguisher maintenance.

3. Small Business Party

   
   

   1. The business's claim for attorney's fees and costs is filed under the authority of Section 57.111, Florida Statutes, a provision of the Florida Equal Access To Justice Act (the "Act.")

   2. Section 57.111(3)(d), Florida Statutes, of the Act defines the term "small business party," in pertinent part as:

      1. A sole proprietor of an unincorporated business . . . whose principal office is in this state, who is domiciled in this state, and whose business . . . 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 including both personal and business investments. . .

         
         

   3. Mr. Birkhead is the sole proprietor of the business, Thomas A. Birkhead, d/b/a Century Center. The business is unincorporated. Its principal office is in Florida.

      Mr. Birkhead is domiciled in Florida and his business has less than 25 full-time employees. The only criterion left in order for Thomas A. Birkhead, d/b/a Century Center to qualify as a small business party is net worth. Is Mr. Birkhead's net worth "not more than $2 million including both personal and business investments . . ."?

4. Net Worth

1. Mr. Birkhead's undocumented testimony that his personal net worth and that of the business was less than two million dollars was not rebutted by any evidence offered by the Division.

2. Cross examination revealed that Birkhead's net worth in June of 1997 was certainly in excess of $1.5 million. How much in excess could not be determined because his calculation of net worth was anything but precise as shown from Mr. Birkhead's testimony:

   Q What is the value of the hotel located across the street from the Century Center?

   
   

   A The value of the hotel at that time, I believe was one and a half million dollars .

   . .

   
   

   Q What portion of the hotel did you own? A Um?

   Q What portion of the hotel did you own? A Two thirds. Two thirds of the stock.

   * * *

   
   

   Q . . . And what was the Century Center worth [in June of 97]?

   
   

   * * *

   
   

   A Well, I had a mortgage against it for two hundred and some thousand dollars. I gave, I believe, five hundred something. So, five hundred and something minus two, whatever it was, forty or fifty thousand, two hundred and thirty five or forty thousand. It would leave three hundred thousand dollars.

   
   

   Q . . . Your testimony is that you've had an equity in the Century Center of three hundred thousand dollars?

   
   

   A That was my intention, to say that. Yes. I subtracted out in my mind the mortgage that I had against the property, versus what I had paid for it.

   
   

   Q And when did you purchase it? A I purchased it . . .in 1990.

   Q But you don't . . . know what the value was in 1997?

   
   

   A Not at the Century Center.

   
   

   * * *

   
   

   Q . . . What other properties did you own, besides the Century Center, the hotel and the condo in Cape Canaveral?

   
   

   A I own my house.

   
   

   Q How much is it worth?

   A Well I paid sixty five thousand for it, I believe. It's probably worth a little bit more than that now.

   
   

   * * * JUDGE: When did you buy it?

   
   

   * * *

   
   

   WITNESS: When did I buy it? I bought it in

   -- let's see. Twenty five years ago or more.

   
   

   * * *

   
   

   Q Was there any other property that we didn't cover so far that you owned at that time?

   
   

   A Let me think a little bit. Yeah. I've got one in Cape Canaveral. It's an empty lot up there. I think I paid very little for it. I bought it because it was cheap. It's the only reason I've still got the thing. I think I gave eighteen hundred dollars for it or something like that. It think it would be worth more than that now. I don't know exactly what it would be worth. Try to sell it. These lots go up, you know, they might be worth fifteen to twenty thousand dollars. I can't -- I can't give you an exact figure on that.

   JUDGE: When did you buy it?

   
   

   * * *

   
   

   A . . . April of 1967, I believe.

   
   

   * * *

   
   

   JUDGE: . . . What Mr. Biggins is getting at is he wants to know about all our your personal and business investments and what their . . . net worth is. And you said you made a list and you went through and you figured this out.

   
   

   WITNESS: Say what?

   JUDGE: You said that you figured this out before you filed this motion for attorney's fees . . .

   
   

   WITNESS: Yeah. I called and got the figures as to what I had in June of '97. And I looked at, you know, statements that I had, and this that and the other thing, and added it all up. . . Some of the things, like I say, are joint with my wife.

   
   

   JUDGE: Yes, sir. But what were those things? That's what I want to know. You say you did this calculation. You got together all this information. Now, what information was it and what did the information show?

   
   

   WITNESS: Well, it showed the value of the things that I had in June of '97.

   
   

   JUDGE: And what were those things? What information did you obtain?

   
   

   WITNESS: Well, bank accounts, stock brokers, whatever I could, you know, had money in.

   
   

   JUDGE: . . . What was the value of the bank accounts?

   
   

   WITNESS: Not a whole lot. I don't think I probably had over -- I'm guessing a little bit now. You know, three or four thousand dollars.

   
   

   JUDGE: How about stock? WITNESS: Um?

   JUDGE: Stock? WITNESS: Stock, what? JUDGE: Equities.

   WITNESS: Um?

   
   

   JUDGE: Equities? New York Stock Exchange?

   
   

   WITNESS: Well, my stock is largely in a joint account with my wife. And . . .

   JUDGE: . . . You have control of it? WITNESS: Um?

   JUDGE: You have control of it?

   
   

   WITNESS: Well, either one of us could be called in control. It's joint . . . with right of survivorship.

   
   

   JUDGE: . . . Did you include the value of that stock in this calculation you did?

   
   

   WITNESS: I believe I did. Yes sir.

   
   

   JUDGE: . . . And what was the value of that stock?

   
   

   WITNESS: I can't recall, Your Honor, exactly what it was.

   
   

   JUDGE: Well, we've been . . . dealing with approximations here. So, do your best.

   
   

   WITNESS: Well, it's a joint account.

   
   

   JUDGE: And what's the value of the account?

   
   

   WITNESS: . . . I think it's somewhere in the neighborhood of probably seventy five or a hundred thousand dollars.

   
   

   JUDGE: And you can't do any better than that?

   
   

   WITNESS: Um?

   
   

   JUDGE: You can't pinpoint it any more than that, a twenty five thousand dollar swing?

   
   

   WITNESS: I can't to be honest with you, Your Honor . . .

   
   

   (Tr. 38-50). Mr. Birkhead's testimony also revealed that he owned two "low priced condos in Cape Canaveral" (Tr. 36) held as rental property. At the time he purchased them, Mr. Birkhead

   "gave twenty four thousand and change for them." Id. Asked when they were purchased, Mr. Birkhead replied, "I'm not sure. Before 1997." When asked to approximate when they were purchased, Mr.

   Birkhead testified, "Five, ten years. I don't know." Id.

   
   

   CONCLUSIONS OF LAW

   
   

3. The Division of Administrative Hearings has jurisdiction over the parties to this proceeding as well as its subject matter.

4. Section 57.111(4)(a), Florida Statutes, the provision of the Act under which Mr. Birkhead filed his petition, provides,

   Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in an . . . 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.

5. In a case of this kind, initially, the burden is on the claimant to prove by a preponderance of evidence both that the claimant was the prevailing party in the administrative proceeding and that it is a small business party as defined by the Act. Department of Professional Regulation v. Toledo Realty,

   549 So. 2d 715, (Fla. 1st DCA 1989). Only then does the burden shift to the state agency to show that its actions were substantially justified or that circumstances exist which would make an award unjust. State Department of Health and Rehabilitative Services v. South Beach Pharmacy, Inc., 635 So. 2d 117, 121 (Fla. 1st DCA 1994).

6. Petitioner did not meet the burden of proof required by the statute.

7. First, there is some question as to whether Petitioner prevailed in the administrative proceeding. In its Final Order, the Division dismissed the Notice to Show Cause as recommended by the order of the Administrative Law Judge. On this point, Birkhead clearly prevailed. Final action on the Emergency Order, however, was mixed. The Final Order dismissed the request to review the Emergency Order (an order antagonistic to Birkhead) originally requested by Birkhead. Since Birkhead sought review of the order, from one perspective, the decision is adverse to Birkhead. On the other hand, Birkhead sought dismissal of the review of the Emergency Order so long as it was coupled with dismissal of the Notice to Show Cause. As the Final Order stated, "Birkhead's Motion to Dismiss is hereby granted and the request for formal administrative review of the Emergency Order of Suspension is dismissed." (e.s.) Viewed in the light that the dismissal was at the urging of Birkhead, one could say that he prevailed on that issue of the case as well.

8. Whether it be determined that Birkhead was the prevailing party or not, he failed to carry the burden of proving that he is a small business party as defined by the Act because of its "net worth" requirement. His net worth was shown to be something approaching the cut-off of $2 million dollars. Given the length of time that his various properties had been held, his

failure to take into account possible increases in their value over the years held, and other imprecisions in his calculation of his net worth together with the overall vague nature of his testimony on the subject, it is determined that Birkhead did not prove by a preponderance of the evidence that his net worth did not exceed $2 million dollars. This determination takes into account that the Division offered no evidence in rebuttal of Birkhead's testimony. But Birkhead's direct testimony was undermined by his testimony on cross-examination to the point of making his direct testimony on the subject of no value. Taking into consideration all of his testimony on the subject, therefore, it is determined that Mr. Birkhead did not prove by a preponderance of the evidence that his net worth did not exceed

$2 million dollars and that he is a small business party within the meaning of the Act.

21. Failure to carry the burden of proving Thomas A. Birkhead, d/b/a Century Center was a small business party when the administrative proceeding was initiated obviates the need to address the issue of whether a party may claim costs and fees when no attorney has filed an appearance of record in the administrative proceeding.

FINAL ORDER

Based on the foregoing, it is hereby ordered that the claim for attorney's fees and costs under Section 57.111, Florida Statutes, by Thomas A. Birkhead, d/b/a Century Center be DENIED.

DONE AND ORDERED this 24th day of May, 1999, in Tallahassee, Leon County, Florida.

DAVID M. MALONEY

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 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 24th day of May, 1999.

COPIES FURNISHED:

Daniel R. Biggins, Attorney Gail S. Hoge, Attorney

Division of Hotels and Restaurants Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0750

Dwight W. Severs, Attorney

Dwight W. Severs & Associates, P.A. Post Office Box 6088

Titusville, Florida 32782-6088

Thomas C. Birkhead

1615 North Atlantic Avenue Cocoa Beach, Florida 32931

Dorothy W. Joyce, Director Division of Hotels and Restaurants Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-1007

William Woodyard, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-1007

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.

Docket for Case No: 99-000679F

Orders for Case No: 99-000679F