STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
SOUTH FLORIDA WATER )
MANAGEMENT DISTRICT, )
)
Petitioner, )
)
vs. ) Case No. 05-4514
) ECO-ENGINEERING, LCC, f/k/a ) ENVIROGLADES, LLC, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, this matter was heard before the Division of Administrative Hearings by its assigned Administrative Law Judge, Donald R. Alexander, on May 2 and 3, 2006, in West Palm Beach, Florida.
APPEARANCES
For Petitioner: Catherine M. Linton, Esquire
South Florida Water Management District Mail Stop Code 1410
3301 Gun Club Road
West Palm Beach, Florida 33406-3007
For Respondent: Marcy I. LaHart, Esquire
Marcy LaHart, P.A. 771 Talladega Street
West Palm Beach, Florida 33405-1443
Howard K. Heims, Esquire Littman, Sherlock & Heims, P.A. Post Office Box 1197
Stuart, Florida 34995-1197
ISSUE
The issue is whether Respondent materially breached a contract with Petitioner, South Florida Water Management District (District), as alleged in the District's Final Order dated November 10, 2005, and if so, whether Respondent should be placed on the temporarily suspended list for a period of one
year.
BACKGROUND
This matter began on November 10, 2005, when the District issued a Final Order determining that Respondent, Eco- Engineering, LLC (formerly known as Enviroglades, LLC), should be suspended from doing work with the District for a period of one year because it materially breached a contract with the District to provide ground application services for invasive exotic plant control. The Final Order also indicated that the decision to place Respondent on the temporarily suspended list for one year was based on considerations found in Florida Administrative Code Rule 40E-7.218(2)(a)-(c) that the breach caused the District to incur additional expenses and that Respondent substantially delayed the project.
On November 30, 2005, Respondent filed its Request for Administrative Hearing disputing the allegations in the District's Final Order. The matter was forwarded by the District to the Division of Administrative Hearings on
December 12, 2005, with a request that an administrative law judge be assigned and conduct a hearing.
By Notice of Hearing dated December 21, 2005, the matter was scheduled for final hearing on February 6 and 7, 2006, in West Palm Beach, Florida. The parties' Joint Motion to Continue the February 6, 2006 Administrative Hearing was granted, and the matter was rescheduled to May 2 and 3, 2006, at the same location.
At the final hearing, the District presented the testimony of Daniel D. Thayer, Director of the Vegetation Management Division and accepted as an expert; Francois B. LaRoche, a Senior Supervising Environmental Scientist and accepted as an expert; David K. Johnson, an Environmental Scientist; Donald Hill, a Contract Specialist; and B. Frank Hayden, current Director of Governmental Affairs and former Director of Procurement. Also, it offered District Exhibits 1-4, 6-20, 22,
24-26, 28, 30-41, 43-45, 47-53, 62, 66A-E, and 67-76. All were
received in evidence except Exhibits 24 and 74. (Through inadvertence, District Exhibit 23 was never moved into evidence by either party; however, both parties relied on the exhibit at hearing, and it is hereby received.) Respondent presented the testimony of Dr. Howard E. Westerdalh, majority owner; Shaun E. Bless, one of its supervisors; Christopher P. Bless, a minority owner and certified in exotic plant control; and Irene Goltzene,
its office manager. Also, it offered Respondent's Exhibits 1-6, 7A-D, and 8, which were accepted in evidence. Finally, the undersigned granted the District's Motion for Official Recognition of Section 373.610, Florida Statutes (2005), and Part II of Florida Administrative Code Chapter 40E-7.
The Transcript of the hearing (four volumes) was filed on May 26, 2006. A corrected Transcript (four volumes) was filed on June 20, 2006. Proposed findings of fact and conclusions of law were originally due by June 5, 2005. By agreement of the parties, this time was extended to June 16, 2006, and then again to June 23, 2006. The parties timely submitted their filings that date, and they have been considered in the preparation of this Recommended Order.
FINDINGS OF FACT
Based on the evidence presented by the parties, the following findings of fact are made:
Respondent is engaged in the business of exotic vegetation control. The firm's office is located in Loxahatchee, Florida, and its principals are Dr. Howard E. Westerdahl, president and majority owner (52 percent), and Christopher P. Bless, minority owner (48 percent). The business has been in existence for around ten years, operating first under the name of Enviroglades, Inc. and then Enviroglades, LLC. When this matter first began before the District in 2004, the
firm's majority stockholder was Irene Goltzene, who now serves as its office manager, and the firm was classified as a District Non-Certified Minority Business Enterprise. In April 2005, the business was sold to its current majority shareholder,
Dr. Westerdahl, and on May 15, 2005, Enviroglades, LLC, changed its name to Eco-Engineering, LLC.
The District is a public corporation created under Chapter 373, Florida Statutes. Its Vegetation Management Division is responsible for administering its exotic vegetation control program.
On May 28, 2004, the District issued Request for Proposal OT040866 (RFP) soliciting "technical and cost proposals from qualified respondents to provide crews, equipment, and supplies for ground based control of exotic plant species via the application of herbicides and the hand removal of small seedlings using licensed applicators and laborers." The RFP called for responses to be submitted no later than June 25, 2004. Three companies, including Respondent, then known as Enviroglades, LLC, timely submitted proposals.
On September 23, 2004, the District conducted a negotiation meeting with Respondent. During that meeting, Francois B. LaRoche and Donald Hill, both employees in the Vegetation Management Division, discussed items on a prepared Agenda concerning the RFP, including the type of contract,
contract execution, cost proposal, invoicing, statement of work, and general questions. Also, Mr. Hill negotiated labor rates to be charged for Respondent's labor and supervisory positions.
On October 14, 2004, the District awarded a contract (Contract) to Respondent and the other two companies who submitted proposals. The Contract with Respondent is a three- year "work order contract," that together with the other two contracts awarded was not to exceed the total project funding of
$18 million.
A work order contract and the work orders issued pursuant to the contract are based on time and materials, which obligates the District to pay the contractor for labor and chemicals when the invoices are submitted to the District up to the "not to exceed" amount in the work order. Under this process, Respondent would invoice the District for the actual cost of materials, such as herbicides, and for labor according to the negotiated rate schedule attached to the Contract as Exhibit L. Reimbursement under the work order, however, could not exceed $50,000.00.
Paragraph 1 of the Contract's Special Provisions, found in Exhibit A of the Contract, provides as follows:
. . . The DISTRICT does not guarantee or represent that any minimum number of Work Orders for any dollar amount will be issued as a result of this CONTRACT.
Multiple contracts have been awarded for ground application services for exotic plant control, stated on the cover page as the Project Title, to be provided under this CONTRACT. The DISTRICT does not guarantee or represent that any minimum number of Work Orders for any dollar amount will be issued as a result of this CONTRACT. The amount stated on page one of this CONTRACT represents funding that may be used among the multiple CONTRACTS awarded by the DISTRICT'S Governing Board and in no way represents the amount to be paid under any single CONTRACT issued herein.
This language meant that the District does not guarantee that any contractor will receive any minimum number of work orders or be issued more than one work order to complete a job.
On November 2, 2004, the District conducted a second meeting, identified as a Contractor Review Meeting, which was attended by all contractors, including representatives of Respondent. At the meeting, the District discussed the following topics: statement of work, applicator safety and training, herbicide mixing, loading, and on-site storage of BMP's, new daily activity report, inspection, billing, anticipated Fiscal Year 2005 projects, questions and discussions, and facility and equipment inspection.
On November 24, 2004, the District issued several work orders to Respondent for execution under the Contract. Under the District's customary practice, in order for the District to encumber the funds for the current budget year, the work orders
were executed in advance of Respondent starting the work under each work order.
One of the work orders issued by the District to Respondent was Work Order No. 01 for $50,000.00 to "treat exotics on SandHill Crane Property" (SandHill). This property encompasses approximately 1,400 acres, is located in Central Western Palm Beach County (west of the City of Riviera Beach), and is bordered by the Beeline Expressway on the south side, the District's C-18 Canal on the north side, an unnamed canal that dumps into C-18 on the west side, and a fence that separates the property from a development on the east side.
Although Work Order No. 01 stated, without greater specificity, that the contractor was to "treat exotics on the SandHill Crane property," the District intended for the work order to cover all targeted vegetation on the entire site, and not just certain exotics or portions of the property. This was consistent with the type of work that had been performed on the same property for the two prior years (2003 and 2004) by other contractors.
The District also intended that under Work Order No.
01, the $50,000.00 represented a ceiling, and Respondent could be reimbursed up to, but not in excess of, that amount. The Work Order called for the work to begin on November 22, 2004, and to be completed no later than March 31, 2005. It can be
inferred from the evidence that the purpose of the March 31, 2005, completion date was to ensure that the work would be completed before the rainy season began a few months later.
In determining the ceiling of a work order, and whether the value of the work order will afford sufficient labor and materials for the job, the District, through its Vegetation and Management Division staff, considers at least two factors. First, Mr. LaRoche, who is Senior Supervising Scientist in the Vegetation and Management Division, and/or his staff, makes a visit to the site to assess the extent of work to be performed. While on the site, the staff engages in discussions with the property's land manager to better ascertain the scope of the work. Also, Mr. LaRoche considers whether the property is being treated for the first time, or whether only follow-up treatment is required. In this case, Mr. LaRoche knew that the initial clearing of the exotics on the site had been done in 2003 (by another contractor) for $110,000.00 (consisting of two work orders - one for $50,000.00 and a second for $60,000.00), while a second contractor was paid $75,000.00 to maintain the site in 2004. (Prior to 2003, treatment of vegetation had been performed by mechanical removal, and not with herbicides.) Therefore, because the property had already been treated twice, and only follow-up work was required, he concluded that in 2005 it could be completed for a lesser amount, or $50,000.00.
Finally, Mr. LaRoche described SandHill as "a very small property" (apparently in comparison to other sites) on which "a lot of work" had already been performed, "a very easy site," and one with "fairly clear boundaries."
The Work Order itself did not contain a map or any information regarding the size of the property, the level of infestation of exotic species, the difficulty in performing the work, or ease of access to the property. Even so, Respondent's representative accepted the Work Order by affixing his signature to the document on November 24, 2004. In addition, Respondent's proposal in response to the RFP contained the following language:
The office will receive a work order from SFWMD. The project manager will then schedule a meeting with the SFWMD project supervisor at the site where work is to be performed. When meeting with the SFWMD on site Enviroglades will obtain all necessary information, maps, target species, methodology, type and rate of chemical to be used to perform the work specified in the work order. Enviroglades project manager will then relay all information to the crew leader making sure all aspects of the work order are understood. The crew will then be scheduled to perform the work. The project manager and crew leader will be in contact daily while the work is performed. Daily reports will be turned into the office and reviewed by the project manager. The daily reports will then be processed for invoicing to SFWMD. Enviroglades uses Microsoft Projects to track work orders and all pertaining information.
By including this language in its proposal, Respondent understood and agreed that if it needed maps or any additional information to understand the nature or scope of the work to be performed under the work order, that it was required to ask the District for that information. It also understood that before the actual work began, its project supervisor would visit the SandHill site with a District representative to better understand the scope of the work. While Section 1.5 of the Contract provided that "[t]he District shall provide additional guidance and instructions to Contractors' employees or hired workers where necessary or appropriate as determined by the District," this did not mean that the District would micromanage the job or provide continual guidance and assistance to a contractor while the work was being performed.
In its proposal, Respondent also indicated that it had experienced no problems performing work for the District under other contracts. (Respondent had performed work for the District under at least one other contract in prior years.) More specifically, it stated in its proposal that "while working on a similar contract several years ago Enviroglades was able to handle all project tracking responsibilities set forth by the SFWMD."
Before Respondent began any work, on January 18, 2005, the District project manager, David K. Johnson, a District
Environmental Scientist in the Vegetation Management Division, met with Respondent's representative, Shaun E. Bless, at the SandHill site. In preparation for the site visit, Mr. Bless acknowledges that he did not read the contract or the Work Order. (Shaun Bless' supervisor, Christopher P. Bless, his older brother, minority owner of the firm, and listed as project manager, also admitted that he only "briefly looked through [the contract].")
Mr. Johnson testified that during the site visit, he drove Mr. Bless around the perimeter of the property, described what exotics needed to be treated, and explained the methodology for treating those exotics. He also provided a small map of the property to Mr. Bless, which was admittedly not "very detailed." While on the site, Mr. Johnson and Mr. Bless met with SandHill's land manager, Bill Helfferich, who was familiar with the property and could answer any questions regarding its size or the type and extent of vegetation present on the property. At hearing, Mr. Bless denied that Mr. Johnson was able to provide a map, a list of exotics to be treated, or the actual size of the site. However, because his deposition testimony directly conflicts with his testimony at hearing in several material respects, Mr. Bless' assertions have not been accepted as being credible. For example, at his deposition, Mr. Bless acknowledged that he knew he was supposed to treat Australian
Pine, Melaleuca, Lygodium, Acacia, and Brazilian Pepper. He also stated that he understood what the boundaries of the site were and that Respondent had to treat all exotics, identified above, within the boundaries.
There is no evidence that, before the work began, any representative from Respondent ever asked for clarification of any provision in the Contract, a more specific description of the area to be treated, or whether $50,000.00 was sufficient to complete the work. An assertion by Mr. Bless that he asked Mr. Johnson on January 18, 2005, whether there were additional funds (over and above the $50,000.00) to do the work is not deemed to be credible. Mr. Johnson denied that he was asked this question, and no other employee of Respondent expressed this concern to the District.
Under Section 4.5 of Exhibit C of the Contract, the District spelled out detailed procedures for the treatment of exotic vegetation. Specifically, Subsection 4.5.3 provided that "[e]xotic vegetation to be treated includes, but is not limited to, melaleuca, Brazilian pepper, Australian pine, Java plum, earleaf acacia, Old World climbing fern, and torpedograss."
At the same time, Subsection 4.4.2 of Exhibit C of the Contract spelled out the following level of performance expected to be achieved by the contractor:
Minimum acceptable performance is defined as 90% control of targeted vegetation within the timeframe of the manufacturers recommended period for control to occur.
This meant that ninety percent of the targeted exotic vegetation (in this case everything identified by the District to be treated) "needs to be showing sign of death or dying once they are treated." Therefore, since specific vegetation on the entire SandHill site was targeted for treatment, at a minimum, it was expected that ninety percent of the targeted vegetation on the entire site "would be dead."
Finally, Subsection 4.4.3 of Exhibit C of the Contract specified how Respondent had to remedy the situation if it performed poorly by not meeting the minimum performance standards. Specifically, that provision stated that:
If minimum acceptable performance is not achieved for any area of the project within a reasonable time frame following project completion (time frame dependent upon species targeted, mode of action of treatment, site and weather conditions), additional thorough treatment of the target plant(s) shall be the responsibility of the CONTRACTOR at no cost to the District.
Areas not treated or not responding to treatment may be required to be retreated at the CONTRACTOR'S expense, if it is determined that the CONTRACTOR provided faulty treatment measures or products.
Vegetation treatments will be determined in terms of 'surface acres,' i.e., 43,560 square feet equal one surface acre.
In short, this meant that if Respondent did not achieve the minimum acceptable performance for treating any area of the site, it was required to retreat that area at its own expense.
Each of these provisions has been used in the District's contracts for many years. Until this case arose, the District represented without contradiction that no contractor had ever claimed to be "confused" by any of these requirements, particularly since there is a negotiation meeting, a contractor review meeting, and a site visit before any work begins.
Respondent began work on the SandHill site around January 19, 2005. The District's project manager, Mr. Johnson, visited the site approximately two times per week to check on the progress. If he found a problem, he would prepare a written report, known as an Exotic Plant Treatment Inspection Report. Apparently, no significant problems were noted until the last week in February, when Mr. Johnson prepared two reports. See Finding of Fact 25, infra. However, before those reports were prepared, Mr. Johnson says there were several oral
communications to one of the supervisors and the office manager, Irene Goltzene, concerning the proper equipment to be used and the number of employees that were performing the work. It is also worth noting that it takes two to three weeks after vegetation is treated to "figure out what's been killed, what's been treated." At a minimum, then, an evaluation of the quality
of the work could not be made until several weeks after the work began.
In late February 2005, Ms. Goltzene notified Mr. LaRoche (presumably by telephone) that Respondent had
finished its work at the SandHill site, but that Respondent "would require more money to complete the property." By that time, the District had paid invoices totaling $49,300.00 to Respondent. After receiving this request, Mr. LaRoche requested a meeting with Respondent's representatives to discuss what he characterized as a lack of performance at the site and the District's expectation that the site would be retreated at Respondent's own expense.
On February 28, 2005, the parties met to discuss the work being performed on the site. According to Mr. Johnson, the District discussed "the problems that we've had," "[s]howed them the pictures we took of both sites, the SDS site and the SandHill Crane site," and "show[ed] them the improper treatments done at both locations." (It can be inferred that Respondent was simultaneously performing work under another work order at "the SDS site.") Finally, the District advised Respondent that "they would have to retreat the SandHill Crane at their own expense." During the course of the meeting, Mr. Johnson documented two instances indicating that Respondent was doing a less than adequate job at the site. These deficiencies were
noted in two Exotic Plant Treatment Inspection Reports, which are summarized below:
On February 23, 2005, Mr. Johnson inspected the site and found one of Respondent's supervisors (Paul Eversley) asleep in his truck while the truck was running. This activity constituted a safety hazard since a running vehicle could possibly cause a fire. (District Exhibit 12)
On February 25, 2005, or two days later, Mr. Johnson again inspected the site and found an "unsystematic treatment of the property and the poor treatment that was done of the property, specifically to Brazilian pepper, Lygodium and . . . melaleuca." Mr. Johnson concluded in his Exotic Plant Treatment Inspection Report that Respondent's treatment was "not a very systematic approach to treatments." (District Exhibit 13)
In response to the concerns expressed at the meeting, on March 2, 2005, Ms. Goltzene sent an email to Mr. LaRoche advising that Mr. Eversley "was orally reprimanded and told he was never to sleep while at the job site, this included during lunch and break time. Also that he would not be able to perform work on any SFWMD job for a period of 2 months." (The email notes that a similar oral reprimand was given to Mr. Shaun Bless, who apparently was observed sleeping on another job.) The email did not respond in any manner to criticisms raised at the meeting concerning the "poor treatment" of the vegetation.
On March 14, 2005, Daniel D. Thayer, Director of the Vegetation Management Division, received an email from SandHill's manager, Mr. Helfferich, who stated in part:
I don't want Enviroglades setting foot on any SOR property again if I have anything to say about it. They did a shitty job and charged us $50k. Steve Smith told me Veg.
Manage. was trying to get some answers from the contractor about why the work was so poor and spotty. . . . I would like to have the rest of the area really treated this time, but not by them.
After reviewing the emails from Ms. Goltzene and
Mr. Helfferich, on March 17, 2005, Mr. LaRoche sent a letter to Ms. Goltzene in which he stated that he did not agree that a verbal reprimand of Mr. Eversley (and Mr. Bless) was adequate; instead, he stated that a suspension from District work for six months was the appropriate remediation. In addition,
Mr. LaRoche advised as follows:
We have the impression that your company is not fully committed to working for the District. You request additional work orders but are reluctant to fully staff the existing projects to accomplish the work in a timely and efficacious manner. The immediate availability of properly working equipment for all projects must also be included in the commitment. Without this type of commitment we may not be able to continue the contractual arrangement with your company.
The projects you have been involved in with the District have multiple partners within the agency and with other governmental agencies. The Vegetation Management
Division and its contract partners must be responsive and responsible in its operational activities. A recent evaluation of the SandHill Crane project your company completed, which we are doing for the Land Stewardship Division, is not up to their or our standards. They have indicated to us that their preference is for your company not to be allowed to perform work on any of their properties.
Please indicate to us how these issues will be resolved in thirty (30) days, according to Exhibit B, Article 6 - Termination/ Remediation (copy attached) and Exhibit A. Without resolution there will not be any further work orders. (Emphasis in original)
No one from Respondent answered Mr. LaRoche's letter of March 17, 2005.1 Further, the SandHill site was not retreated. However, someone from Respondent's office requested a meeting with Mr. LaRoche's supervisor, Mr. Thayer.
On April 1, 2005, the parties met and discussed "questions about SandHill Crane, and also what [the District was] going to do to help Enviroglades continue the work on the property." The parties also agreed to meet again on April 13, 2005, at the SandHill site.
On April 12, 2005, or the day before the site meeting, Mr. Johnson took photographs which establish that there were misapplications of chemicals at the site as well as areas that were supposed to be treated and were not. These photographs have been received in evidence as District Composite Exhibit 19.
On April 13, 2005, several District employees, including Mr. Thayer, met with Shaun and Christopher Bless on the site to "see what was done, what was treated, and determine
- what they were going to do about SandHill Crane."
On April 22, 2005, Mr. Thayer sent Ms. Goltzene a letter which summarized the results of the April 13 meeting. In his letter, Mr. Thayer stated in part as follows:
The work was satisfactory in the areas where melaleuca was treated. However, the areas where Brazilian pepper was targeted (this was throughout the majority of the property) the work was poorly done.
According to the contract (Exhibit "C", Section 4.4.2) between the District and Enviroglades, "minimum acceptable performance is defined as a 90% control of the target vegetation within the timeframe of the manufacturers recommended period for control to occur." This critical standard was not met by Enviroglades with the Brazilian pepper work. Therefore in accordance with the contract, Exhibit "C", Section 4.4.3 which states "If minimum acceptable performance is not achieved . . . additional thorough treatment of the target plant(s) shall be the responsibility of
the contractor at no cost to the District
. . .", the District is requesting that Enviroglades re-treat the Brazilian pepper throughout the entire property. The District will provide the herbicide and Enviroglades shall provide the labor at no further cost to the District.
Please respond, in writing, no later than May 1, 2005. Your prompt attention to this matter is appreciated.
By this time, Dr. Westerdahl had just purchased controlling interest in the business. (Whether he was fully aware of the problems which the former owners had created under Work Order No. 01 is unknown.) At hearing, Dr. Westerdahl produced an undated letter (District Exhibit 23), which he states was a response to Mr. Thayer's letter of April 22, 2005. Mr. Thayer denied ever receiving a copy, and the District has no record of such a letter being filed or date-stamped. In the letter, Dr. Westerdahl pointed out that a change in ownership had occurred, that he was now the "point person . . . for relations with the District," and that while he disagreed with the "assessment of the work product," Respondent agreed "to do the labor [to retreat the property if] SFWMD [would] supply the chemical."
On April 29, 2005, Dr. Westerdahl sent a short email to Mr. Thayer in which he stated in part that the "[o]riginal is being sent in the mail. I would like to set up a meeting with you so you understand that this is important to us and we would like to have the opportunity to re-express our commitment to this[.]" He also asked that Mr. Thayer call him at his cell phone number, which was shown on the email. Dr. Westerdahl says he did not receive a return call from Mr. Thayer.
By May 9, 2005, the SandHill property had still not been retreated. About the same time, Mr. LaRoche spoke with
J. J. Flathmann, Deputy Director of Procurement, concerning the problems the District had encountered under the Contract. They reached a concensus that Respondent had breached the contract in a material respect. A "material breach" is defined as "any substantial unexcused nonperformance. The breach is either failing to perform an act that is an important part of the transaction or performing an act inconsistent with the terms and conditions of the contract." Fla. Admin. Code R. 40E-7.215(5). They concluded that by failing to meet the minimum performance standard in the Contract, Respondent had performed an act inconsistent with the terms and conditions of the contract.
Ms. Flathmann then spoke with Frank Hayden, then Director of Procurement, who had the responsibility of issuing Cure Notices. A "cure notice" is defined in Florida Administrative Code Rule 40E-7.215(3) as follows:
a letter citing the specific nature of the material breach, the corrective action required by the District and a thirty (30) day time frame for curing the breach, starting from receipt of the Cure Notice. The letter shall also state that if the contracting entity fails to cure the breach within the thirty (30) day period, the contracting entity will be found in default and may be placed on the District's Temporary or Permanent Suspension List.
Mr. Hayden agreed with the assessment of Ms. Flathmann and Mr. LaRoche and directed Ms. Flathmann to prepare a Cure Notice and authorized her to sign it. On May 10, 2005, a Cure
Notice was sent to Respondent indicating that the District considered Respondent's failure to comply with the District's vegetation control requirements a material breach of the terms and conditions of Contract No. OTO40866. The Cure Notice went on to say:
Pursuant to Exhibit "C" of the contract, paragraph 4.4 you are required to achieve 90% control of targeted vegetation. On February 25, 2005, [sic] Enviroglades, LLC was issued a work order to treat exotic vegetation at the SandHill Crane Property. The completed work did not meet the acceptable performance as defined as 90% control of targeted vegetation.
Accordingly, unless this material breach is corrected within thirty (30) days after receipt of this Cure Notice, the District shall terminate Contract No. OTO40866 for default pursuant to Article 6 titled Termination/Remedies of the contract, and shall initiate Governing Board action for determination of temporary or permanent suspension, if any.
Please direct all questions concerning this matter to the undersigned . . . .
Thus, the Cure Notice provided that all deficiencies must be cured no later than June 10, 2005.
After Dr. Westerdahl received the Cure Notice on May 11, 2005, he immediately telephoned Mr. Thayer and
reiterated that he desired to work with the District to resolve any outstanding issues. He also retained new counsel (John J. Fumero, Esquire) to assist in resolving the problem.
(Enviroglades' counsel to the former owners had been terminated after sending a letter on May 4, 2005, to the District's Executive Director accusing the District of "favoritism, pettiness and discrimination" and other "unfair, illegal, [and] discriminatory" acts in administering the Contract, accusations which apparently did not sit well with the District.]
On May 26, 2005, Respondent's new counsel sent a letter to Mr. Hayden advising that he now represented Respondent and confirming that a meeting with District staff was scheduled for May 31, 2005.
Dr. Westerdahl stated that he had never received a Cure Notice before, and on advice of his new counsel, did not begin working on the SandHill site after receiving the Cure Notice. He was also told by counsel that the cure period of thirty days could be "stayed."
On May 31, 2005, a meeting by District staff and Respondent's representatives took place. At the meeting, which Dr. Westerdahl described as being "a very accusatory meeting" accompanied by considerable "disagreement," the parties apparently agreed to allow Respondent to re-enter the site and complete any remaining work. This was confirmed in a letter from Mr. Fumero to District counsel on June 7, 2005. See
District Exhibit 35. (It appears that much of the meeting addressed the accusations raised in the letter which
Respondent's former counsel had sent to the Executive Director on May 4, 2005.)
A written response to the May 10, 2005 Cure Notice was not sent by Respondent until June 2, 2005, or eight days before the deficiency was expected to be cured. In his letter to
Mr. Hayden, Dr. Westerdahl stated in part that Respondent intended to
complete the exotic plant treatment on the Sandhill Crane Property in the manner required and expected of the SFWMD staff. Our goal is to start the treatment program NLT [no later than] Monday, June 5, 2005. Arrangements have been made to meet with
Mr. David Johnson, SFWMD, on Friday, June 3, 2005, to conduct a thorough site visit, obtain map(s), estimate treatment acreage, and identify herbicides required and quantities required."
The letter also indicated that a treatment plan would be submitted to the staff by June 6, 2005. Dr. Westerdahl acknowledged that he prepared a treatment plan because he knew (as of June 2) that he would not be able to begin retreatment of the site until June 9 or 10 at the earliest (or when the time for curing the deficiency expired), even though his letter stated that work would begin no later than June 5. Finally, the letter outlined "some of the key changes that have been made specific to this contract as well as company policy."
On June 3, 2005, the south and north areas of the SandHill site were reinspected by Mr. Johnson, who was
accompanied by Dr. Westerdahl and Mr. Christopher Bless. (Due to the rainy season, which had now begun, other areas on the site were temporarily inaccessible.) In his Exotic Plant Inspection Treatment Report (District Exhibit 31), Mr. Johnson noted that the treatment of the Brazilian pepper was not "thorough," that the Lygodium in the south area "had not been treated at all," that there were "mis-applications" of chemicals to the north and west of a pasture area, and that hardwood species like Acacia "were not treated in the initial sweep." At the conclusion of the inspection, Mr. Johnson provided a treatment list for Dr. Westerdahl indicating the plant species to be treated, the treatment method, and the chemical to be used. See District Exhibit 32.
Based on the information received at the June 3 meeting with Mr. Johnson, on June 6, 2005, Dr. Westerdahl advised Mr. Hayden by letter that there were two areas on the property which needed retreatment. The letter indicated that the first area would be treated on eight days between June 9 and June 20, 2005, while the second area would be treated on ten days between June 13 and 24, 2005. Finally, the letter listed the herbicides and chemicals that would be required for the retreatment. (The District had previously agreed to provide the chemicals if Respondent would provide the labor to complete the job. See Finding of Fact 33, supra.)
On June 8, 2005, or more than two months after the Contract called for the work to be completed, Respondent's counsel advised Mr. Hayden by letter that Respondent's personnel misunderstood the terms and conditions of the Contract. Specifically, counsel stated that Respondent understood Subsection 4.4.2 of the Contract to call for "90% of the treated species rather than 90% of all the exotics on the property," and this was responsible for Respondent's "perceived nonperformance" under the Contract. (In other words, Respondent interpreted the provision to mean that whatever areas it was able to treat within the dollar amount of the work order, a ninety percent kill rate was expected; it did not interpret the provision to mean that at least ninety percent of all targeted exotic vegetation on the site must be killed.) The letter also noted that while the Cure Notice required Respondent to cure all deficiencies by June 10, 2005, Dr. Westerdahl's plan to correct the deficiencies "will require additional time to properly complete," and that "[s]ite work will resume on the site upon the District's authorization."
By letter dated June 13, 2005, District counsel advised Mr. Fumero that "[d]ue to the unusually wet weather we have experienced, the District is willing to extend the cure notice by ten (10) working days starting on Tuesday, June 14, 2005." The letter also noted that "under no circumstances will
the District allow the cure period to extend beyond June 30, 2005." (Emphasis supplied) The purpose of this language was to make it explicitly clear that no further extensions of the cure period would be granted. The letter further stated that
Mr. Fumero's letter of June 8, 2005, was the first time the District learned that Respondent did not understand the terms of the Contract. Finally, the letter advised that Respondent should contact Mr. Hayden to make arrangements to visit the site.
On June 16, 2005, Dr. Westerdahl, Christopher Bless, and a District Environmental Scientist, Gordon Baker, met on the SandHill site "to review policies and procedures for the retreatment of property in accordance with the Cure Notice." Dr. Westerdahl had a work crew present that day and intended for it to be supervised by Shaun Bless. However, because Mr. Bless had been suspended from all District work for six months (for sleeping while on duty), see Finding of Fact 28, supra, the work could not begin and was delayed until another supervisor could be found. Mr. Baker prepared a memorandum summarizing the meeting and pointed out that Mr. Johnson would meet with Respondent's representatives again the following day (June 17, 2005) at which time it would be emphasized that the entire property had to be "swept." See District Exhibit 38. Based on his inspection of the site and the amount of vegetation that
needed to be retreated, on June 17, 2005, Mr. Baker signed a new work order which authorized Respondent to purchase herbicides in the amount of $15,000.00 (rather than $5,000.00) for the retreatment of the site.
On June 17, 2005, Dr. Westerdahl prepared a memorandum to Mr. Baker concerning their meeting on the site the previous morning. He confirmed that he had been given a map which marked all areas to be retreated, that Mr. Shaun Bless and Mr. Eversley could not work on the property, and that work would commence the day after the meeting, or on June 17.
On June 17, 2005, Mr. Johnson prepared an Exotic Plant Treatment Inspection Report for the two targeted species: Brazilian pepper and Lygodium. He noted that personnel were now working on the site treating the Brazilian pepper.
On June 23, 2005, another Exotic Plant Treatment Inspection Report was prepared by Mr. Baker, who reported on the progress of the work to treat the Brazilian pepper. He noted that "at this rate they may not be able to complete the property. Called Howard [Westerdahl] to request additional crews. He said he planned to have additional crew tomorrow."
Dr. Westerdahl submitted progress reports to Mr. Baker on June 24, 28, 29, and 30, 2005. See Respondent's Exhibit 4. In his June 28 report, he noted that afternoon rains were delaying the completion of the work. He also stated that out of
ten targeted areas, Areas I, II, and V were completed or would be completed no later than June 27; that Areas III, VI, and VII should be completed by July 1; that areas VIII, IX, and X may not be finished until "early next week"; and that Areas III and IV may require "a little follow up spraying" the following two days. Accordingly, he requested "a few extra days to complete this work."
In his final progress report submitted on June 30, 2005, Dr. Westerdahl stated that his crews worked all that day and "all B. peppers, melaleuca, and acacia in Area III will be treated by the end of Friday, July 1." He further stated that he anticipated "being finished with all open areas" by July 7; treatment of Brazilian peppers and acacia in Areas VI and VI would be completed by July 5; the "[r]emaining Lygodium in Areas III, VI, and VII will be treated starting again on Tuesday, July 5"; and "[t]he wooded areas (VIII, IX, and X) should be finished by Monday, July 11 or before, if weather permits."
Finally, he stated that July 12 would "be used to survey and re- spray colonies that do not appear to be dying."
Notwithstanding the District's earlier admonition that no further extensions of the cure period would be granted, on June 30, 2005, Respondent's counsel submitted a letter to District counsel requesting "an extension of time for the SandHill Crane project up to and including July 14, 2005." The
letter noted that Respondent had lost "a couple of days due to rain," that access to the certain areas of the property was limited to marsh buggies due to the amount of rainfall, and that two new workers would not begin work until July 11, 2005.
As of June 30, 2005, the work was not completed, and Respondent had failed to cure the breach within the time period specified by the Cure Notice. This was treated by the District as a default on the Contract under Florida Administrative Code Rule 40E-7.217. Under that rule, the District is required to issue a Termination for Default Notice by Certified U.S. Mail "[i]n the event that the contracting entity fails to cure the material breach within the time specified in the Cure Notice." In making this determination, Section 6-4 of the Contract requires in part that the District shall specify the reasons for taking this action, "which shall not be arbitrary or capricious."
After discussions by Ms. Flathmann and Mr. Hayden, on July 1, 2005, the District, through Mr. Hayden, issued a Stop Work Order, which was provided to Respondent's counsel. (One of Respondent's work crews was also ordered off the site the same day.) The Stop Work Order constituted a termination of the Contract and provided in relevant part as follows:
The South Florida Water Management District (District) hereby provides notice that your client has failed to cure the conditions of
the material breach under Contract No. OTO40866 as specified in the District's certified letter of May 10, 2005 and the extension letter dated June 13, 2005.
Pursuant to clause 6.1 of the contract, the District is therefore issuing this Termination for Default Notice (Notice), effective immediately upon your receipt of this certified Notice for failure to perform ground application services for exotic plant control at SandHill Crane Property.
All contract performance shall cease as of the effective date of this Notice and the District shall initiate Governing Board actions for determination of temporary or permanent suspension, if any.
* * *
The District is in receipt of your letter dated June 30, 2005, in which you have requested additional time for your client to finish spraying at the SandHill Crane project. As the attached letter states, your client materially breached its contract with the District and was given a thirty
(30) day cure notice. Your client failed to cure the breach within the required time. The District provided your client an additional 13 days to cure the breach due to the extraordinary circumstances surrounding the impossibility to perform due to the weather. Even after your client was afforded more time to complete the job, Enviroglades failed to show up at the site for over a week while the weather was good. As the attached letter states under no circumstances would your client be provided an extension of time after June 30, 2005. This letter shall serve as notice to have your client cease work on the SandHill Crane Project effective at the close of business on June 30, 2005.
On July 29, 2005, Mr. Johnson made a post-treatment inspection of the SandHill site. In his final Exotic Plant Treatment Inspection Report, he noted as follows:
The entire property was divided into 10 units which were to be treated sequently (sic) before proceeding to the next. Our inspection revealed that units 1, 2 and 3 were swept while unit 5 had some partial treatments. On units 1, 2 and 3 the Brazilian pepper treatments revealed [at] 80% control, while the Lygodium treatment were around 5% control. Unit 5 had only the western and southwestern area treated. The total area of the three units and one partial unit totaled approximately 30% of the property.
When a default on a contract occurs, the District is required to determine "whether the contracting entity should be suspended, and if so, whether it should be temporarily suspended and for what period of time, or permanently suspended from doing business with the District." Fla. Admin. Code R. 40E-7.218(1). Section (2) of the rule identifies seventeen factors to take into account in making this determination. Three such factors are "[t]he economic impact of the material breach to the District," whether "the breach caused or will cause delay in the completion of a District project," and "if the breach caused a delay in performance, whether it was a substantial delay." Fla. Admin. Code R. 40E-7.218(2)(a), (b), and (c).
Pursuant to the rule, Mr. Hayden "gathered material that would assist [him] in making the recommendation to the
governing board," which included discussions with members of the Vegetation Management Division, the contract administrator, his deputy, and counsel, and a review of documents pertaining to the matter. The evidence shows that because of the breach, the District incurred additional costs due to an "inordinate amount of staff time supervising Enviroglades during the time they performed at SandHill Crane." This included additional site visits, inspections, and monitoring by the staff, numerous meetings with Respondent's representatives, the preparation of written communications, and the provision of further instructions and guidance not normally given to the contracting entity. Mr. Hayden also took into consideration the fact that the District incurred additional expenses in purchasing herbicides while Respondent attempted to complete the job. In all, the District says it incurred an economic impact of
$6,264.15. (Mr. Hayden's testimony is unclear as to whether that amount is for the herbicides alone, or whether it also includes the value of the additional staff time expended on this job. It is assumed, however, that this amount represents the cost of the herbicides only, as this would be consistent with the District's Final Order.) Finally, Respondent's inability to complete the work "put the job performance into the rainy season," which caused a substantial delay in getting the project finished. It can reasonably be inferred from the evidence that
because of the delay, the site could not be completed by another contractor until a new fiscal year (Fiscal Year 2006), at which time it would have to treat not only the normal vegetation growth which occurs from year to year, but also any targeted vegetation not treated by Respondent in 2005.2
On November 9, 2005, Mr. Hayden recommended that given these considerations, Respondent should be placed on the temporarily suspended list for a period of one year. The Governing Board accepted this recommendation and a Final Order was entered on November 10, 2005. This appeal followed.
At hearing, among other things, Respondent contended that the $50,000.00 was insufficient to treat the entire site, and because the Contract was a time and materials contract, Respondent could do as much as it could for that amount, and consistent with District practice on other contracts, then request additional work orders to complete the project.
If a contractor expresses concern about going over the ceiling amount in a work order in order to complete a job, the District customarily meets with the contractor to assess the property. This can occur before the job begins, during the job, or near the completion of the work.
In determining whether funding is adequate for treatment at a particular site, and additional work orders should be issued for a job, the District takes into
consideration such matters as the job performance of the contractor at the time the request is made, the manner in which the money to date has been expended by the contractor, any new conditions unknown to the District at the time the work order was written (such as access problems), and any other circumstances that may affect the price of the work. There are also certain types of sites and work that have constantly changing conditions that often require more than one work order. Examples are the District's Stormwater Treatment Areas (STAs) and the spraying of exotic vegetation in canals. The evidence suggests that Respondent had a work order under the Contract for one such area known as "STA One East." The SandHill site did not fall into either category.
Respondent correctly points out that the District issued two work orders for the same site in 2003, and it has issued additional work orders to other contractors to complete a job, including the STA One East job, which Respondent was then performing under the same Contract. In the case of the work performed on the SandHill property in 2003, the contractor was doing the first herbicidal treatment of the site, it was meeting the minimum performance standards under its contract, and the District agreed that the contractor needed and deserved additional money to complete the job. Unlike that situation, Respondent failed to meet the minimum performance standard under
the Contract, the District (and SandHill's land manager) did not believe that $50,000.00 worth of work had been performed, and therefore no additional work orders were justified. To issue work orders under these circumstances would be in direct conflict with Subsections 4.4.2 and 4.4.3 of the Contract. As to the issuance of a second work order for the STA One East job, STAs and canals are uniquely different from other projects (such as SandHill) and often times require additional work orders to complete the job.
Respondent also contends that the District rule governing cure notices does not contain any prohibition against extending the cure period, and there is no evidence to justify not extending the period for another ten working days when the job was not completed on June 30, 2005.
Neither Florida Administrative Code Rule 40E-7.215(3), which defines a "cure notice," or 40E-7.216, which describes the procedure for issuing one, address the issue of whether or not an extension of time to satisfy a cure notice can be granted. Here, the evidence does not show that the District was arbitrary or capricious or otherwise abused its discretion by failing to approve a second extension of time for Respondent to complete the work.
Respondent further suggests that after the meeting on May 31, 2005 (which was two months after the work should have been completed), it was prohibited by the District from entering the SandHill site to finish the work for several weeks. The evidence shows that the District's primary concern was to get the job completed as soon as possible, given the fact that the rainy season began in June. Although there may have been some confusion on Respondent's part, particularly since its counsel instructed it not to enter the property until permission was given, there is no credible evidence that any District staffer told Respondent that it was prohibited from entering the site, or that retreatment must be delayed until a treatment plan had been formally approved by the District. Indeed, the evidence shows that Respondent had keys to the property at all times, and notification to the Vegetation Management Division is all that would have been required to access the site.
Respondent further contends that it was confused over the language in Section 4.4.2 of the Contract calling for "90% control of targeted vegetation," that the cited provision is ambiguous, and that it did not learn the actual scope of the work until specific instructions were given after the Cure Notice was issued. Given the fact that Respondent's representatives attended a negotiation meeting and a contractor's review meeting, Mr. Bless visited the site prior to
the beginning of the work, and no other contractor has ever been confused by this language, this argument has been rejected.
All other contentions raised by Respondent have either been addressed in other Findings of Fact, or they are deemed to be without merit.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over this matter pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2005).3
The burden of proof is on the party asserting the affirmative of an issue before an administrative tribunal. Balino v. Department of Health & Rehabilitative Servs., 348 So. 2d 349, 350 (Fla. 1st DCA 1977). Therefore, the District has the burden of proving by a preponderance of the evidence that Respondent materially breached its contract and that a one-year suspension from doing work with the District is warranted.
Section 373.610, Florida Statutes, provides in part that "[t]he district may suspend a contractor on a temporary or permanent basis from doing work with the district if such contractor has materially breached its contract with the district." A material breach is defined as "any substantial, unexcused non-performance. The breach is either failing to perform an act that is an important part of the transaction or
performing an act inconsistent with the terms and conditions of the contract." Fla. Admin. Code R. 40E-7.215(5).
To implement the foregoing statutory authority, the District has promulgated Part II, Florida Administrative Code Chapter 40E-7, which establishes the procedures for contracting professional and contractual services. See Fla. Admin. Code R. 40E-7.201 and 40E-7.214 through 40E-7.219. The rules also establish the policies and procedures for suspending a contractor from working with the District, either temporarily or permanently, whenever a contractor materially breaches its contract with the District.
Under this process, once the District's Director of Procurement establishes that a material breach has occurred, he shall initiate termination for default and suspension procedures. Fla. Admin. Code R. 40E-7.216(1). The contractor is then notified of the breach through a cure notice. Fla. Admin. Code R. 40E-7.216(2). In the event the contractor fails to cure the material breach within the time specified in the cure notice, the District issues a Termination for Default Notice, which terminates the contract. Fla. Admin. Code R. 40E-
7.217. After a Termination for Default Notice is issued, the District's Governing Board must determine whether the contractor should be suspended, and if so, whether it should be temporarily suspended and for what period of time, or permanently suspended
from doing business with the District. Fla. Admin. Code R. 40E- 7.218(1). In making this determination, the Governing Board considers seventeen factors enumerated in Florida Administrative Code Rule 40E-7.218(2). Relevant to this case are the following three factors:
In making such a determination, the District's Governing Board shall consider the following factors:
* * *
The economic impact of the material breach to the District;
Whether the breach caused or will cause delay in the completion of a District project;
If the breach caused a delay in performance, whether it was a substantial delay;
The preponderance of the evidence establishes that Respondent materially breached its contract with the District by failing to meet the minimum performance standard, that is, ninety percent control of targeted vegetation, as provided for in Section 4.4.2 of the Contract; that Respondent's nonperformance of this standard was substantial and unexcused; and that it failed to cure the material breach within the time period specified in the Cure Notice, or by June 30, 2005. Accordingly, the District's action in issuing a Termination for Default Notice, which terminated the Contract, was in compliance with applicable District rules.
Also, the preponderance of the evidence establishes that Respondent's one-year suspension from doing work with the District is appropriate and consistent with Florida Administrative Code Rule 40E-7.218(2)(a)-(c). More specifically, the evidence establishes that the breach resulted in an economic impact to the District through excessive staff time spent monitoring the work, visiting the site, providing additional instructions and guidance, preparing correspondence, and conducting numerous meetings with Respondent's representatives. Also, the District expended additional funds for herbicides, even though the job was never finished. Further, because the work was not completed before the rainy season began, a substantial delay in the completion of the District project occurred. This is because the site could not be treated by another contractor until Fiscal Year 2006, at which time it would have to remove not only the normal accumulated vegetation growth from the work in the preceding year, but also the vegetation which was not removed by Respondent in 2005.
In summary, it is concluded that a material breach of the contract occurred, that it was not timely cured, and the nonperformance by Respondent had an economic impact on the District and substantially delayed the completion of the
project. The District's placement of Respondent on the temporary suspension list for one year is appropriate.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED that the South Florida Water Management District enter a final order determining that Eco-Engineering, LLC, breached its Contract C-OT040866 in a material respect, and that it be placed on the temporarily suspended list from doing business with the District for a period of one year.
DONE AND ENTERED this 25th day of July, 2006, in Tallahassee, Leon County, Florida.
S
DONALD R. ALEXANDER
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 25th day of July, 2006.
ENDNOTES
1/ In its Proposed Recommended Order, Respondent argues that it did not receive "any indication that the District was not
satisfied with the treatment of exotics on the SandHill Crane site" until it received Mr. LaRoche's letter dated March 17, 2005. As previously found, however, oral communications were given to Respondent by Mr. Johnson shortly after the work began, and a meeting was held on February 28, 2005, to discuss Respondent's level of performance. See Findings of Fact 23 and 24, supra.
2/ Mr. Hayden's recommendation to the District also noted that Respondent had refused to provide additional labor to complete the job. However, there was no evidence to support this consideration.
3/ All references are to the 2005 version of the Florida Statutes.
COPIES FURNISHED:
Carol Ann Wehle, Executive Director South Florida Water Management District 3301 Gun Club Road
West Palm Beach, Florida 33406-3007
Catherine M. Linton, Esquire
South Florida Water Management District Mail Stop Code 1410
3301 Gun Club Road
West Palm Beach, Florida Marcy I. LaHart, Esquire | 33406-3007 |
Marcy Lahart, P.A. | |
711 Talladega Street | |
West Palm Beach, Florida | 33405-1443 |
Howard K. Heims, Esquire Littman, Sherlock & Heims, P.A. Post Office Box 1197
Stuart, Florida 34995-1197
NOTICE OF RIGHT TO FILE EXCEPTIONS
All parties have the right to submit written exceptions within
15 days of the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will render a final order in this matter.
| Issue Date | Document | Summary |
|---|---|---|
| Aug. 21, 2006 | Agency Final Order | |
| Jul. 25, 2006 | Recommended Order | Respondent materially breached its contract with Petitioner by failing to timely fulfill the contract requirements. Recommend a one-year suspension of work by the contractor. |
POSEIDON MINES, INC. vs. SOUTHWEST FLORIDA REGIONAL PLANNING COUNCIL, 05-004514 (2005)
HARRY PEPPER AND ASSOCIATES, INC. vs SOUTH FLORIDA WATER MANAGEMENT DISTRICT, 05-004514 (2005)
WILLIAM B. SWAIM vs FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION, 05-004514 (2005)
DUNES GOLF AND COUNTRY CLUB vs. SOUTH FLORIDA WATER MANAGEMENT DISTRICT, 05-004514 (2005)
