STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PETER J. SINGHOFEN, P.E. AND ) STREAMLINE TECHNOLOGIES, INC., )

)

Petitioners, )

)

vs. )

)

BOARD OF PROFESSIONAL )

ENGINEERS, )

)

Respondent. )

Case No. 06-0845F

)

FINAL ORDER

This matter came before Diane Cleavinger, a duly-designated Administrative Law Judge of the Division of Administrative Hearings. The parties stipulated to the material facts.

Therefore, no evidentiary hearing was conducted.

APPEARANCES

For Petitioner: Edwin A. Bayo, Esquire

Gray Robinson, P.A.

301 South Bronough Street, Suite 600 Tallahassee, Florida 32301

For Respondent: Lee Ann Gustafson, Esquire

Assistant Attorney General The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUE

The issue in this matter is whether Petitioners are entitled to attorneys’ fees pursuant to Section 120.595(3),

Florida Statutes (2006), and Section 57.105, Florida Statutes (2006).

PRELIMINARY STATEMENT

On March 2, 2006, a Final Order was entered in the rule challenge case, Peter J. Singhofen, P.E., and Streamline Technologies, Inc. v. Board of Professional Engineers, DOAH Case No. 05-3674RX. In the Final Order, this Administrative Law Judge found Florida Administrative Code Rule 61G15-22.011(2) to be an invalid exercise of delegated legislative authority under Section 120.52(8)(c), Florida Statutes 2006.

On March 9, 2006, Petitioners filed a Motion for Attorneys fees pursuant to Section 120.595(3), Florida Statutes. On March 30, 2006, Petitioners filed an additional Motion for Attorneys fees pursuant to Section 57.105, Florida Statutes 2006. The parties stipulated that there were no disputed issues of material fact. Respondent did not dispute the reasonableness or amount of attorneys’ fees alleged subject to the statutory cap. However, Respondent disputed the Petitioners’ entitlement to such fees. Both parties requested that the final hearing be cancelled and that the case proceed by summary disposition. The parties’ request was granted and the hearing was cancelled by Order dated July 18, 2006. Petitioners and Respondent filed Proposed Final Orders on August 14, 2006, and August 17, 2006, respectively.

FINDINGS OF FACT

1. In Peter J. Singhofen, P.E., and Streamline

   
   

   Technologies, Inc. v. Board of Professional Engineers, DOAH Case No. 05-3674RX, Petitioner challenged the validity of Florida Administrative Code Rule 61G15-22.011(2), promulgated by Respondent. The Rule generally denied owners of technology, such as computer software programs the ability to qualify a course, taught by the owner on the technology, from qualifying for continuing education credit. The published purpose of the rule was to prevent a continuing education provider from having a conflict of interest.

2. Petitioner filed an Affidavit detailing the hours and work performed in the rule challenge care and requesting fees in the amount of $15,750. Respondent also submitted an Affidavit from an expert supporting the hours, work, and fees requested as reasonable.

3. In the underlying case, the record contained some evidence of some meaningful discussion by the Board supporting the Rule. The discussion primarily reflected that the Board’s desire was to prohibit and prevent “shill” courses from receiving continuing education credit. Significantly, the Board had previously denied applications for continuing education providers proposing to offer “shill” courses. However, the record did not contain any evidence that the Board considered

   whether the Rule was consistent with NCEES guidelines as required by statute. There was no discussion or finding by the Board prior to engaging in rulemaking that a continuing education provider who taught about technology over which he or she had a commercial interest would be engaging in a conflict of interest or be inconsistent with NCEES guidelines.

   Additionally, the published purpose for promulgating the Rule was admitted to be erroneous by Respondent’s Executive Director. This error alone was material and a sufficient ground to invalidate the rule.

4. Petitioner’s courses met both the NCEES and Florida Administrative Code Rule 61G15-22.003 as a qualifying activity for purposes of continuing education credit. The Rule resulted in Petitioners’ being denied approval to teach such qualifying activity; and was therefore, inconsistent with NCEES guidelines. Such inconsistency was outside of the Board’s rulemaking authority.

5. In this case, Respondent stipulated to the reasonableness and the amount of fees, subject to the statutory cap.

6. Respondent presented no evidence showing that special

   
   

   circumstances existed which would make the award unjust. Therefore, Petitioner is entitled to attorneys’ fees and costs subject to the statutory cap.

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the parties to and subject matter of this proceeding. § 120.595(3), Fla. Stat. (2006)

8. Section 120.595, Florida Statutes (2006), in part states:

   (3) CHALLENGES TO EXISTING AGENCY RULES PURSUANT TO SECTION 120.56(3).-If the court or administrative law judge declares a rule or portion of a rule invalid pursuant to s. 120.56(3) a judgment or order shall be rendered against the agency for reasonable costs and reasonable attorney’s fees, unless the agency demonstrates that its actions were substantially justified or special circumstances exist which would make the award unjust. An agency’s actions are “substantially justified” if there was a reasonable basis in law and fact at the time the actions were taken by the agency. . .

   
   

9. In Stockman v. Downs, 573 So. 2d 835, (Fla. 1991), the Court held that a claim for attorney's fees, whether based on statute or contract, must be pled prior to the final judgment, except:

   Where a party has notice that an opponent claims entitlement to attorney's fees, and by its conduct recognizes or acquiesces to that claim or otherwise fails to object to the failure to plead entitlement, that party waives any objection to the failure to plead a claim for attorney's fees.

   
   

   Stockman, 573 So. 2d at 838.

10. In this case, Petitioners raised their claim under Section 120.595(3) for the first time in their proposed final order in the underlying action before the issuance of the Final Order. Therefore, Petitioners’ claim for attorney's fees and costs under Section 120.595(3) was timely pled. However, Petitioners’ claim for attorney’s fees pursuant to Section 57.105, Florida Statutes (2006), was filed well after entry of the Final Order in the underlying action and is untimely.

11. In the underlying case, Respondent prevailed on all issues raised in the underlying petition, except the issue of compliance with the statute that requires the Board’s rules to be consistent with the NCEES guidelines. The Rule was not consistent with those guidelines. Petitioners prevailed, and are therefore entitled to an award of attorney’s fees and costs, unless the Board can demonstrate either special circumstances or that the Rule was substantially justified. Department of Health and Rehabilitative Services v. South Beach Pharmacy, 635 So. 2d

    117 (Fla. 1st DCA 1994).

    
    

12. In South Beach Pharmacy, the court, in discussing the meaning of “substantial justification” contained in Section 57.111, Florida Statutes (2006), stated:

    "The Act is designed to discourage unreasonable governmental action, not to paralyze agencies doing the necessary and beneficial work of government." Rudloe v. Department of Environmental Regulation, 33

    Fla. Supp. 2d 203 (DOAH 1987). But, once a prevailing small business party proves that it qualifies as such under section 57.111, the agency that initiated the main or underlying proceeding has the burden to show substantial justification or special circumstances, Department of Health and Rehabilitative Services v. S.G., 613 So. 2d 1380, 1386-7 (Fla. 1st DCA 1993); Department of Professional Regulation, Div. of Real Estate v. Toledo Realty, Inc., 549 So. 2d 715 (Fla. 1st DCA 1989); Ray v. Department of Transportation, 9 F.A.L.R. 1537 (DOAH 1990); Gentele v. Department of Professional Regulation, 9 F.A.L.R. 310 (DOAH 1986),

    aff'd, 513 So. 2d 672 (Fla. 1st DCA), in order to avoid liability for fees and costs.

    
    

    Id. at 121.

    
    

13. In Department of Health and Rehabilitative Services v.

    
    

    S.G., cited in the above quotation, the court also discussed the meaning of the term "substantial justification" in Section

    57.111. The court stated:

    
    

    In Gentele v. Department of Professional Regulation, Board of Optometry, 513 So. 2d 672 (Fla. 1st DCA 1987), this court addressed the issue of whether fees were properly awarded pursuant to section 57.111, and concluded that it must follow persuasive federal authority in defining the scope of the statutory definition of "substantially justified." In that respect, McDonald v.

    Schweiker, 726 F. 2d 311, 316 (7th Cir. 1983), proposed that "non-frivolous" (as that term is utilized in federal rule 11) may not be equated with "substantial justification" for purposes of awarding fees under the Federal Equal Access to Justice Act. Rather, the phrase "substantially justified" was defined in McDonald as meaning that "the government must have a solid though not necessarily correct basis

    in fact and law for the position that it took" in the action. Id. at 316. Thus, the clear implication is that while governmental action may not be so unfounded as to be frivolous, it may nonetheless be based on such an unsteady foundation factually and legally as not to be substantially justified.

    
    

    613 So. 2d at 1386.

    
    

14. In Helmy v. Dep't of Bus. and Prof. Reg., 707 So. 2d 366, 370 (Fla. 1st DCA 1998), the court followed the test for "substantially justified" set forth by the United States Supreme Court in Pierce v. Underwood under the analogous federal Equal Access to Justice Act. There, the Court found "substantially justified" to mean:

    "justified in substance or in the main" - that is, justified to a degree that could satisfy a reasonable person. That is no differen[t] [than] the "reasonable basis both in law and fact" formulation adopted by

    . . . the vast majority of other Courts of Appeals that have addressed this issue

    . . . . To be "substantially justified" means, of course, more than merely undeserving of sanctions for frivolousness; that is assuredly not the standard for Government litigation of which a reasonable person would approve.

    
    

    Helmy, 707 So. 2d at 368, quoting Pierce v. Underwood, 487 U.S. 552, 565 (1988). Thus, under Florida law, "the 'substantially justified' standard falls somewhere between the no justiciable issue standard of Section 57.105 . . . and an automatic award of fees to a prevailing party." Helmy at 368. At the same time,

    an agency must have a solid, but not necessarily correct, basis in law and fact for the position that it took when it initiated the action. Dep't of Health and Rehab. Services v. S.G., 613 So. 2d 1380, 1386 (Fla. 1st DCA 1993). In order to be substantially justified, "an agency must, at the very least, have a working knowledge of the applicable statutes under which it is proceeding." Helmy at 370.

15. In this case, the evidence did not demonstrate that the Rule was substantially justified. Respondent may have had a laudable goal of preventing “shill” continuing education courses. However, a legitimate goal for a Rule is not sufficient to demonstrate substantial justification under Section 120.595. An agency must demonstrate that the Rule conforms to the law at the time of promulgation. South Beach

Pharmacy, supra. The evidence does not demonstrate that there was substantial justification for Respondent's actions or material consideration given to whether the Rule was consistent with NCEES guidelines. Additionally, the published purpose of the Rule was in error. Finally, there were no special circumstances present that would make an award of attorney's fees and costs unjust. Therefore, Petitioner is entitled to an award of attorney’s fees and costs under Section 120.595(3), Florida Statutes (2006).

ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, it is ORDERED:

Petitioners’ Motion for Attorneys’ Fees and Costs pursuant to Sections 120.595(3), Florida Statutes (2006), is granted and limited to the statutory cap of $15,000.00. Petitioners’ Motion for Attorneys’ Fees pursuant to Section 57.105 is denied.

DONE AND ORDERED this 28th day of December, 2006, in Tallahassee, Leon County, Florida.

S

DIANE CLEAVINGER

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 28th day of December, 2006.

COPIES FURNISHED:

Edwin A. Bayo, Esquire Gray Robinson, P.A. Post Office Box 11189

Tallahassee, Florida 32302-3189

Paul J. Martin, Executive Director Board of Professional Engineers Department of Business and

Professional Regulation 2507 Callaway Road, Suite 200

Tallahassee, Florida 32303-5267

Patrick Creehan, Esquire Chief Prosecuting Attorney

Florida Engineers Management Corporation 2507 Callaway Road, Suite 200

Tallahassee, Florida 32303-5267

Josefina Tamayo, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Lee Ann Gustafson, Esquire Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

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 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.

Docket for Case No: 06-000845F

Orders for Case No: 06-000845F