vs.
Respondent.
) Case No. 05-1453F
Pursuant to notice, this cause came on for formal hearing before Daniel M. Kilbride, Administrative Law Judge of the Division of Administrative Hearings, on July 6, 2005, in Tallahassee, Florida.
For Petitioner: William M. Furlow, III, Esquire
For Respondent: James P. Harwood, Esquire
Whether Petitioner is entitled to an award of attorney's fees and costs pursuant to the provisions of Section 57.111, Florida Statutes (2004), and, if so, in what amount.
On August 11, 2004, a Recommended Order was entered on the underlying case in this matter. On January 7, 2005, the Final Order was entered on the case. Petitioner initially filed its Petition for Costs and Attorney's Fees pursuant to Section 57.111, Florida Statutes (2004), on February 7, 2005. The agency took no action on the Petition. On April 18, 2005, Petitioner filed a Motion to Accept Petition for Costs and Attorneys' Fees with the Clerk of the Division of Administrative Hearings (DOAH). Following multiple motions and the denial of a Motion for Summary Final Order, the filing of a Pre-Hearing Statement, and the granting of a continuance, a formal hearing was held on July 6, 2005.
At the hearing, William M. Furlow, Esquire, counsel for Petitioner, testified on behalf of Petitioner and offered one composite exhibit in evidence, consisting of a Motion to Accept Petition for Costs and Attorneys' Fees; Motion to Transfer, with the underlying Recommended and Final Orders with exceptions attached; the Amended Administrative Complaint; Affidavit of Nicholas A. Musashe; compiled legal fees and costs sheet;
Affidavit of counsel; and Affidavit of Edwin Bayo, Esquire, expert witness. Respondent offered five exhibits which were received into evidence.
A Transcript of the hearing was filed on July 26, 2005.
Petitioner timely filed its Proposed Final Order on August 12, 2005. Respondent has not filed its proposals as of the date of this Final Order.
The evidence and case law have been carefully considered in the preparation of this Final Order.
In May 2003, Respondent filed an Amended Administrative Complaint against Petitioner. The Amended Administrative Complaint was brought before the Florida Real Estate Commission Probable Cause Panel (Probable Cause Panel) for a determination of probable cause.
The Probable Cause Panel reviewed the entire record and found probable cause to file an Amended Administrative Complaint against Petitioner alleging various violations of Section 475.25, Florida Statutes (2004).
On or about July 2, 2003, Petitioner served Respondent, through counsel, with Petitioner's response to the Amended Administrative Complaint.
Petitioner did not dispute the essential allegations of material fact in the Amended Administrative Complaint, but raised affirmative defenses to the allegations.
On or about November 19, 2003, at the Florida Real Estate Commission (FREC) meeting, Petitioner's counsel stated that they did not dispute the essential facts as alleged in the Amended Administrative Complaint and requested a formal hearing based on additional facts alleged by Petitioner, but not Respondent.
Following a formal hearing, a Recommended Order was entered by the undersigned Administrative Law Judge on August 11, 2004, in the case of Department of Business and Professional Regulation, Division of Real Estate v. Nicholas
Anthony Musashe and the Jander Group, Inc. (Petitioner herein). The case arose from allegations that Mr. Musashe and Petitioner violated various provisions of the Real Estate Practice Act, Chapter 475, Florida Statutes (2004), with respect to the handling of certain deposits.
Petitioner is a Florida corporation owned by
Mr. Musashe. Petitioner is licensed as a real estate broker under the provisions of Chapter 475, Florida Statutes (2004). Petitioner's sole business is managing rental properties.
The gravamen of the complaint against Petitioner was that it failed to handle certain deposits as directed by provisions of Chapter 475, Florida Statutes (2004).
Petitioner's defense was that it handled those deposits in accordance with the Residential Landlord and Tenant Act, Chapter 83, Part II, Florida Statutes (2004), specifically Section 83.40, Florida Statutes (2004). That provision provides that compliance therewith specifically exempts real estate licensees from having to comply with the provisions of
Chapter 475, Florida Statutes (2004), concerning rental deposits. Furthermore, Petitioner's method of handling these types of deposits under the Residential Landlord and Tenant Act, rather than under Chapter 475, Florida Statutes (2004), had been earlier specifically approved of by Respondent.
Prior to filing the underlying case and without notice to real estate brokers, Respondent reversed its position. It now required real estate licensees to comply with the provisions of Chapter 475, Florida Statutes (2004), instead of Chapter 83, Florida Statutes (2004), on how these types of deposits should be handled. Petitioner relied, to his detriment, upon the previously-held position of Respondent in handling the subject deposits. The Recommended Order found in Petitioner's favor and recommended dismissal of the charges.
A final order essentially adopting the Recommended Order and dismissing the charges was filed by the FREC on January 7, 2005. However, the Final Order rejected the first sentence of the Conclusions of Law, paragraph 24, and the first two sentences of the Conclusions of Law, paragraph 29, in the Recommended Order and asserted that it has substantive jurisdiction over the provisions of Section 83.49, Florida Statutes (2004). Respondent holds that the alternative procedure for handling deposits set out in Section 83.49, Florida Statutes (2004), does not apply to deposits that are made by a person who is not entitled to occupy a property as part of an application that is not a rental agreement.
Petitioner was the "prevailing party" in the underlying action, as that term is defined in Section 57.111, Florida Statutes (2004).
At the time of commencement of the action, Petitioner was a "small business party" as that term is defined in Section 57.111, Florida Statutes (2004).
A Petition for Costs and Attorney's Fees pursuant to Section 57.111, Florida Statutes (2004), was filed by Petitioner with Respondent agency on February 7, 2005. Respondent took no action on said Petition. The Petition was late-filed with DOAH on April 18, 2005.
The attorney's fees of $49,610.00 and costs of
$1,137.98 sought by Petitioner are reasonable for the defense of this action.
The actions of the agency in bringing the initial proceeding were substantially justified.
There are no circumstances which would make an award of costs and attorney's fees unjust.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding pursuant to Subsections 57.111(4)(b)1. and 120.57(1), Florida Statutes (2004).
The Florida Equal Access to Justice Act (FEAJA), Section 57.111, Florida Statutes (2004), provides in pertinent
part:
(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 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.
The FEAJA, originally enacted by the Florida Legislature in 1984, is patterned after a federal law on the same subject -- the Federal Equal Access to Justice Act (the
Federal Act), 5 U.S.C., Section 504. Enacted in 1981, the Federal Act provides in pertinent part:
(a)(1) An agency that conducts an adversary adjudication shall award, to a prevailing party other than the United States, fees and expenses incurred by that party in connection with that proceeding, unless the adjudicative officer of the agency finds that the position of the agency was substantially justified or that special circumstances make an award unjust . . .
The federal and state statutes use similar language and the legislative history of the FEAJA shows that legislators were aware of the federal prototype. Gentele v. Department of
Professional Regulation, 9 F.A.L.R. 311 (June 20, 1986), citing Senate Staff Analysis and Economic Input Statements CS/SB 438 (May 2, 1984); and the record of the May 2, 1984, meeting of the Senate Government Operations Committee, sponsor of the bill.
When, as in this case, a Florida statute is patterned after a federal law on the same subject, it will take the same construction in the Florida courts as its prototype has been given in federal courts insofar as such construction is harmonious with the spirit and policy of the Florida legislation on the subject. Gentele v. Department of Professional Regulation, Board of Optometry, 513 So. 2d 672, 673 (Fla. 1st DCA 1987).
Section 57.111, Florida Statutes (2004), provides for an award of attorney's fees from the state to a "small business
party" under certain circumstances in order to diminish the detrimental effect of seeking review of, or defending against, governmental action. This section states, in part:
(3)(d) The term "small business party" means:
* * *
b. A partnership or corporation, including a professional practice, which has its principal office in this 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; . . . .
Petitioner established and/or the parties stipulated that the Jander Group, Inc., was a small business party within the contemplation of the statute. Department of Professional Regulation v. Toledo Realty, Inc., 549 So. 2d 715 (Fla. 1st DCA 1989); See also Daniels v. Department of Health, 898 So. 2d 61,
66 (Fla. 2005). Petitioner qualifies as a small business party under the FEAJA.
Next, a state agency must have initiated some action against a small business party. The recited purpose behind the establishment of Section 57.111, Florida Statutes (2004), the FEAJA, is that "[t]he Legislature finds that certain persons may be deterred from seeking review of, or defending against, unreasonable governmental action because of the expense of civil actions and administrative proceedings . . . . The purpose of this section is to diminish the deterrent effect of seeking
review of, or defending against, governmental action by providing in certain situations an award of attorney's fees and costs against the state." §57.111(2), Fla. Stat. (2004).
Subsection 57.111(3)(b), Florida Statutes (2004), provides, as follows:
(b) The term "initiated by a state agency" means that the state agency:
* * *
3. Was required by law or rule to advise a small business party of a clear point of entry after some recognizable event in the investigatory or other free-form proceeding of the agency. . . .
In the instant case, Respondent issued an Amended Administrative Complaint directed to Nicholas Musashe and Petitioner, charging them with certain violations of statutes enforced by the FREC. Petitioner denied the charges and requested a formal hearing pursuant to Chapter 120, Florida Statutes (2004). Therefore, this matter was initiated by a state agency.
Petitioner is a "prevailing small business party," since the Final Order has been entered in its favor in the underlying case. § 57.111(3)(c)1., Fla. Stat. (2004). Toledo Realty, 549 So. 2d at 717. Once this showing is made, the burden shifts to Respondent to demonstrate that its actions were substantially justified or that special circumstances exist that would make the award unjust. Id.
Subsection 57.111(3)(e), Florida Statutes (2004), states:
(e) A proceeding is "substantially justified" if it had a reasonable basis in law and fact at the time it was initiated by a state agency.
It is instructive to look to the decisions of federal courts, which have construed the meaning of the language of the Federal Act. Gentele, 513 So. 2d at 673. In discussing the meaning of the term "substantially justified," the court in Ashburn v. U.S., 740 F.2d 843, 850 (11th Cir. 1984), said:
The government bears the burden of showing that its position was substantially justified. (Citation omitted) The standard is one of reasonableness; the government must show "that its case had a reasonable basis both in law and fact." (Citation omitted).
Ashburn went on to say that the fact that the government lost its case does not raise a presumption that the government's position was not substantially justified. The government is not required to establish that the decision to litigate was based on a substantial probability of prevailing. White v. U.S., 740 F.2d at 836, 839 (11th Cir. 1984). Under Florida law, the "substantially justified" standard fails somewhere between the "no justiciable issue standard" of Section 57.105, Florida Statutes (2004), and an automatic award of fees to the prevailing party. Helmly v. Department of Business and
Professional Regulation, 707 So. 2d 366, 368 (Fla. 1st DCA 1998).
In order to determine whether Respondent's initiation of the underlying action against Petitioner was substantially justified, one must determine whether the agency had a reasonable basis in law and fact to allege that a violation had occurred. In order to sustain a finding of probable cause, it is necessary that there be "some evidence considered by the [Probable Cause] Panel that would reasonably indicate that the violations alleged had indeed occurred." Kibler v. Department
of Professional Regulation, 418 So. 2d 1081, 1084 (Fla. 4th DCA 1982).
Respondent has advanced three arguments against such an award being made. First, Respondent argues that the Petition for the award of attorney's fees and costs was untimely filed. The statute requires such a petition to be filed with the DOAH within 60 days of the date that the small business party prevails. Petitioner became the prevailing party on the date of the Final Order, January 7, 2005. The Petition was filed with DOAH on April 18, 2005.
Notwithstanding the late filing with DOAH, Petitioner incorrectly filed its Petition with Respondent on February 7, 2005, and Respondent took no further action when it could easily have either notified Petitioner of the error or forwarded the
Petition to DOAH within the statutory time period. A Petition timely filed in the wrong forum is considered timely filed.
Machules v. Department of Administration, 523 So. 2d 1132 (Fla. 1988). Accordingly, it is concluded that the Petition in this case was timely filed.
Next, Respondent points out that the maximum amount of costs and attorney's fees allowed under Section 57.111, Florida Statutes (2004), at the time the underlying action was commenced, was only $15,000; and, therefore, Petitioner should be limited to that amount. To support its position, Respondent relies on the case of Young v. Altenhaus, 472 So. 2d 1152 (Fla. 1985). In Altenhaus, the Florida Supreme Court held that a statute which creates a substantive right, such as the right to an award of attorney's fees and costs, cannot be applied to causes of action which accrued prior to the effective date of the statute. Altenhaus goes on to say, however, that when a statute simply changes the procedure or remedy (opposed to creating the right to an award), it is normally applied to any pending cases. Since the increase in the maximum amount of an award under the statute occurred during the pendancy of this case, it is concluded that Petitioner would be entitled to the maximum award of $50,000, if Respondent was not substantially justified. See also Metropolitan Dade County v. chase Federal Housing Corporation, 737 So. 2d 494, 503 (Fla. 1999).
Third, in order to show that its position was substantially justified, it is necessary that there be "some evidence considered by the [Probable Cause] Panel that would reasonably indicate that the violations alleged had indeed occurred." Kibler, 418 So. 2d at 1084. Prior to the initiation of the underlying DOAH Case No. 04-1444, the Probable Cause Panel, in May 2003, reviewed and considered the Agency's investigative file and proposed Amended Administrative Complaint. Following Petitioner's response to the Amended Administrative Complaint, the case was brought before the entire Probable Cause Panel on November 19, 2003, to determine if the matter should be decided at an informal hearing or if the case should be sent to DOAH. Although Petitioner had admitted the essential facts in the Amended Administrative Complaint, it raised the affirmative defense that Section 475.25, Florida Statutes (2004), did not apply in this case, but that Petitioner acted properly under the provisions of Section 83.49, Florida Statutes (2004). The Probable Cause Panel voted to send the case to DOAH. From those documents, since the Probable Cause Panel claimed jurisdiction over the provisions of Chapter 83, Florida Statutes (2004), as well as Chapter 475, Florida Statutes (2004), it was reasonable for the Panel to conclude that a violation of Subsection 475.25(1)(b) and (d)1., Florida Statutes (2004), had occurred. Such action did not mean that
the Probable Cause Panel did not have a reasonable basis in law and fact. The Probable Cause Panel was simply making a decision on probable cause. It was not reaching a conclusion about the guilt or innocence of Petitioner. Gentele, supra.
As stated in the recent case of Fish v. Department of Health, Board of Dentistry, 825 So. 2d 421, 423 (Fla. 4th DCA 2002), the evidence considered by the Probable Cause Panel "need not be as compelling as that which must be presented at the formal administrative hearing on the charges to support a finding of guilt and the imposition of sanctions." Petitioner's response to the complaint in Fish "disputed the allegations against him, but did not disprove or conclusively rebut those allegations. In fact, [Petitioner's] response highlighted the fact that there were disputed issues of fact as to the charges against him." Id. at 423. See also Department of Health, Board of Medicine v. Thomas, 890 So. 2d 400, 401 (Fla. 1st DCA 2004).
The determination of substantial justification focuses on the initiation of the agency action, in this case the finding of probable cause. A review of the record demonstrates that there was clearly a dispute about the proper procedure that Petitioner should have followed in the case, and the Panel had a reasonable basis in both law and fact to find probable cause against Petitioner.
In this case, Respondent initiated the action, Petitioner was the prevailing party in the underlying action, and Petitioner is a "small business party" within the meaning of the FEAJA. However, Respondent demonstrated that it had a reasonable basis in both law and fact for its actions and was substantially justified in its position. Therefore, it is
ORDERED that the Petition for Costs and Attorneys' Fees is DENIED.
DONE AND ORDERED this 26th day of August, 2005, in Tallahassee, Leon County, Florida.
DANIEL M. KILBRIDE
Filed with the Clerk of the Division of Administrative Hearings this 26th day of August, 2005.
William M. Furlow, III, Esquire Akerman Senterfitt
James P. Harwood, Esquire Department of Business and
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 the original Notice of Appeal with the agency Clerk of the Division of Administrative Hearings and a 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.
