On June 2, 2008, an administrative hearing in this case was held in Tallahassee, Florida, before William F. Quattlebaum, Administrative Law Judge, Division of Administrative Hearings (DOAH).
For Petitioner: Lawrence M. Kosto, Esquire
Kosto & Rotella, P.A.
The issue in the case is whether Affordable Restaurant Equipments, Inc. (Petitioner), is entitled to receive $209,720
from the Department of Transportation (DOT) as additional reimbursement for property storage expenses.
The Petitioner was a business that was required to relocate operations after its original location was acquired for highway construction by DOT through an eminent domain action. As part of the relocation compensation, DOT paid for 12 months of storage costs for the Petitioner's property. The Petitioner had not completed the relocation at the end of the 12 months, and the property remained in storage for an additional seven months. The Petitioner is seeking reimbursement for the additional storage charges.
By letter dated October 31, 2007, DOT denied the Petitioner's request for the additional reimbursement. The Petitioner appealed the denial through an internal DOT process. By letter dated February 12, 2008, DOT notified the Petitioner that the appeal of the denial was also denied.
The Petitioner then filed a request for an administrative hearing. DOT forwarded the request to the DOAH, which scheduled and conducted the proceeding.
At the hearing, the Petitioner presented the testimony of three witnesses and had Exhibits numbered 1, 2, and 4 through 44 admitted into evidence. DOT presented the testimony of two
21, and 24 admitted into evidence.
A Transcript of the hearing was filed on June 16, 2008. Both parties filed Proposed Recommended Orders.
At all times material to this case, the Petitioner operated a large restaurant equipment and supply business located in Orlando, Florida.
At all times material to this case, Thomas Sheen was the owner and operator of the Petitioner.
The Petitioner was represented by legal counsel during the property acquisition phase of the eminent domain proceeding.
The Petitioner was represented by separate legal counsel during the acquisition of the relocation property.
The Petitioner was also represented by Jan Rybak- Matalon, a consultant on eminent domain relocations, who was hired to handle contacts between the Petitioner and DOT related to the relocation of the business.
Claudia Calzaretta, a DOT employee, was assigned to represent DOT through the eminent domain proceeding and the relocation process.
Mr. Sheen had limited contact with DOT and was generally non-responsive to communications with DOT or Ms. Calzaretta.
In December 2005, the Petitioner vacated the original business location, and Mr. Sheen received compensation for the taking of the property which is not at issue in the instant case.
DOT also paid property storage expenses for a 12-month period commencing on January 15, 2006, through January 14, 2007.
Due to the nature of the Petitioner's business operations, location of a similar and suitable facility in the same region of Florida was difficult, particularly as to the square footage and public retail accessibility Mr. Sheen had enjoyed at the original location.
The Petitioner asserted that there were no suitable and available replacement locations within Florida. He employed a realtor to assist in the search. Mr. Sheen testified that he also spent a substantial amount of personal time looking for a relocation site. He identified and pursued alternative locations that were apparently for sale, only to learn that the properties were committed to other buyers or that alternative uses for the properties had been determined.
DOT asserted that alternative properties within Florida were available and offered evidence (essentially real estate advertisements from the internet) in support of the assertion. The evidence lacked sufficient specificity to
establish that the identified properties were, in fact, available. There was no competent functional analysis offered to establish that the properties met the requirements of the Petitioner's business.
At some point prior to June 2006, the Petitioner located suitable property (the "Tuxedo" property) in Atlanta, Georgia.
The greater weight of the evidence establishes that the Petitioner was unable to locate an acceptable facility within Florida. Mr. Sheen's testimony regarding the search for an alternative location within Florida was reasonable and has been credited. Additionally, the fact that DOT agreed to fund the Petitioner's move to Atlanta suggests that DOT conceded the issue to the Petitioner.
The Tuxedo property had been used as an automobile dealer sales location. The Petitioner wanted to acquire the property through a lease-purchase transaction. The Petitioner apparently initiated discussions with the seller of the property in late May or early June 2006.
According to emails (admitted as exhibits for the Petitioner), the Petitioner, through his attorney, made numerous demands of the sellers. The sellers apparently acceded to some demands and not to others.
The negotiations between the Petitioner and the seller were protracted and difficult. On more than one occasion, the Petitioner threatened to walk away from the negotiations if the Petitioner's demands were not met. In an email to the seller's attorney dated June 16, 2006, the Petitioner's attorney wrote in part as follows:
If your client is not willing to make these changes, then perhaps your client isn't interested in making the sale and lease. If this is the case, maybe I need to let my client know that they should consider continuing to look for other properties for their intended purpose.
Approximately three weeks after the Petitioner threatened to abandon the negotiations with the Tuxedo seller, Ms. Rybak-Matalon, in an August 8, 2006, letter to DOT Administrator Paul Horn, advised that the "deal has been made to purchase" the Tuxedo property, that the site was "currently undergoing improvements to make it more suitable" for the Petitioner's business, and that the Petitioner would begin moving property from storage to the new location in "(approximately) mid-September."
The letter requested release of funding for the move of the Petitioner's stored property to the new location. A copy of the letter was provided to Ms. Calzaretta.
In response to the August 8, 2006, letter, DOT released $200,000 to provide funds for the Petitioner to move the stored property to the Atlanta location.
At the time Ms. Rybak-Matalon advised DOT that the "deal has been made," the parties had not entered into any agreement on the Tuxedo property, and there is no evidence that any alterations to the property were being made. In fact,
the parties continued to exchange threats to abandon the negotiations.
In an email to the Petitioner's attorney dated August 22, 2006, the seller's lawyer wrote in part as follows:
The attached documents contain all adjustments and concessions that Tuxedo is prepared to make in connection with the proposed transaction. . . . Accordingly, we hereby request confirmation [of approval] on or before Friday, August 25. If we do not receive confirmation on or before that date
. . . Tuxedo will pursue other options with the property.
In an email to the seller's attorney dated August 23, 2006, the Petitioner's lawyer wrote in part as follows:
If your client is unwilling to relent on this issue, then we are at an apparent impasse and my clients will pursue other properties for their purpose. In fact, they are so disturbed at your client's inflexibility on this issue . . . that frankly if your client relented, I am not sure they would be willing to buy at this point.
* * *
Other than verify that the language is still within the contracts, I have not read the latest drafts, and won't do so, unless and until you remove the language and provide me new drafts to review.
On August 31, 2006, the seller's attorney responded in part as follows:
. . . [t]hose documents contain all the concessions/adjustments our client is prepared to make in connection with the proposed transaction. As also indicated in my message to you on August 22, our client will now pursue other options with respect to the property. . . . So, our client considers the negotiations with your client at an end and, correspondingly, our client will proceed immediately with other parties to negotiate disposition of the subject sale.
After DOT released the $200,000 moving funds to the Petitioner in response to Ms. Rybak-Matalon's letter,
Ms. Calzaretta, attempting over a period of six to seven weeks to ascertain the status of the move, made frequent calls to Ms. Rybak-Matalon.
Ms. Rybak-Matalon was unable to provide any information on the status of the move to Ms. Calzaretta, presumably because not only had the move not commenced, but the Petitioner had not acquired the location.
In fact, the Petitioner was continuing to negotiate the terms of the transaction with the Tuxedo sellers as late as
October 8, 2006, two months after Ms. Rybak-Matalon had assured DOT that the "deal has been made."
In October 2006, after Ms. Calzaretta was unsuccessful at obtaining information regarding the move and the disposition of the $200,000, she contacted a counterpart at the Georgia Department of Transportation (Georgia DOT) and asked for assistance. In response, Ms. Calzaretta received photographs of the Tuxedo location from a Georgia DOT agent. The photographs showed no indication of activity at the site and a "For Sale" sign was still present on the property.
Ms. Calzaretta called the number on the "For Sale" sign and spoke with the real estate broker who advised that the sale of the property had not occurred and that negotiations were continuing.
Shortly thereafter, the dialogue between the Petitioner and the seller stopped when the seller withdrew from the negotiations.
Mr. Sheen was very angry that the Tuxedo acquisition had fallen through. The Petitioner asserted that Ms. Calzaretta made statements to the broker that caused the seller to withdraw from the negotiations with the Petitioner and resulted in the Petitioner incurring storage charges for property beyond the previously-approved 12-month period. The assertion is unsupported by credible evidence.
Ms. Calzaretta's recollection of statements allegedly made by the broker is uncorroborated hearsay. Neither the broker nor the owner/seller of the Tuxedo property testified at the hearing.
Ms. Calzaretta is unable to recall any specific statement she made to the broker other than asking whether a deal was complete and whether alterations to the property were underway. Given Ms. Rybak-Matalon's misrepresentations to DOT on behalf of the Petitioner, Ms. Calzaretta's questions to the broker were not unreasonable.
The evidence fails to establish that the conversation between the broker and Ms. Calzaretta was the primary cause for the termination of the negotiations between the Petitioner and the seller.
Despite the exchange of continuing threats to abandon the Tuxedo negotiations, Mr. Sheen apparently presumed that he would prevail in the Tuxedo negotiations and acquire the property.
Review of the evidence related to the Tuxedo property dialogue fails to indicate that the Petitioner's acquisition of the Tuxedo property was an inevitable conclusion of the negotiations at any point in time.
After the Tuxedo negotiations ended, the Petitioner renewed the search. There is no credible evidence that
Mr. Sheen continued to seek alternative locations after deciding he wanted to locate the business to the Tuxedo property.
The Petitioner eventually acquired another Atlanta property and completed relocating into the new property by August 15, 2007.
The evidence fails to establish that there were no other suitable relocation properties available in the Atlanta area during the protracted Tuxedo negotiations.
The evidence establishes that the extended storage fees were the result of the Petitioner's failure to identify alternatives during the protracted Tuxedo negotiations, apparently assuming that the Tuxedo acquisition would occur.
The evidence fails to establish that the extended storage fees for the period from January 15, 2007, to August 15, 2007, were necessary or were the result of an inability to locate a suitable relocation alternative.
CONCLUSIONS OF LAW
The DOAH has jurisdiction over the parties to and subject matter of this proceeding. §§ 120.569 and 120.57, Fla. Stat. (2007).
Pursuant to Section 421.55, Florida Statutes (2006), DOT is responsible for administering the expenditure of funds provided through the federal Surface Transportation and Uniform Relocation Assistance Act of 1987, Pub. L. No. 100-17. The
Petitioner is a "displaced person" as the term is defined at Subsection 421.55(2)(c), Florida Statutes (2006).
DOT may authorize funds for the storage of personal property for a period not to exceed 12 months, unless DOT "determines that a longer period is necessary." 49 C.F.R.
§ 24.301(g)(4).
The Petitioner has the burden of establishing entitlement to reimbursement by a preponderance of the evidence. Florida Department of Transportation v. J. W. C. Company, Inc.,
396 So. 2d 778 (Fla. 1st DCA 1981). This administrative hearing is a de novo proceeding designed to find facts based on evidence presented during the hearing and to assist an agency head in formulating the final action to be taken. McDonald v. Dept. of Banking & Finance, 346 So. 2d 569 (Fla. 1st DCA 1977). This is not a review of DOT's determination regarding the Petitioner's request for reimbursement.
In order to prevail in this dispute, the Petitioner must establish that the extended storage charges were "necessary." Webster's Dictionary defines "necessary" as "of an inevitable nature," "logically unavoidable" or "absolutely needed." In this case, the Petitioner has failed to establish that an extended storage period was necessary. See Merriam- Webster Online Dictionary, (retrieved July 10, 2008, http://www.merriam-webster.com/dictionary/necessary).
The extended storage fees resulted from an apparent assumption by Mr. Sheen that, despite threats to abandon the lengthy negotiations, he would prevail and would acquire the Tuxedo property. Having reviewed the evidence of the negotiations, Mr. Sheen's assumption was not reasonable.
When the Tuxedo acquisition did not occur, Mr. Sheen resumed searching for alternative locations, but more than four months had elapsed during which there had been no substantive effort to identify additional alternatives to the Tuxedo property.
The evidence fails to establish that the Tuxedo property was the sole location in the Atlanta area available to the Petitioner. Mr. Sheen's assertion that there were no alternative Atlanta-area properties has not been credited, and in fact, is contradicted by the fact that an alternative location was identified and acquired.
The Petitioner asserted that but for the telephone call from DOT employee to the Tuxedo agent, the Tuxedo transaction would have closed, and the extended storage period would not have been required.
The Tuxedo negotiations extended for a period of at least four months. As previously noted, there were a series of threats to abandon the dialogue including a declaration that
Mr. Sheen was so dissatisfied with the seller that Mr. Sheen might abandon the deal even if the seller complied with
Mr. Sheen's demands. It is not unreasonable to presume that, at some point in the negotiations, the seller was of the same mind.
The evidence fails to establish that Ms. Calzaretta's telephone call caused the seller to decide not to sell the property to the Petitioner.
In any event, it must be noted that Ms. Calzaretta did not contact the Tuxedo broker on a whim. Ms. Calzaretta's telephone call to the broker was the direct result of the Petitioner's actions beginning on August 8, 2006, when the Petitioner, through Ms. Rybak-Matalon, advised DOT in writing that the acquisition was complete, that alterations were being made, and that the move from storage was imminent.
Ms. Rybak-Matalon's representations regarding the status of the Tuxedo acquisition were blatantly untrue. In reliance on Ms. Rybak-Matalon's representations, DOT released
$200,000 to fund the move.
Thereafter, Ms. Calzaretta reasonably attempted to ascertain the status of the move and the money, and for at least six weeks, the Petitioner failed to provide any information in response to Ms. Calzaretta's requests.
Absent affirmative assurances from the Petitioner that the previously funded move had occurred or was in process, it
was not unreasonable for Ms. Calzaretta to gather information by other means.
The information she received indicated that the Tuxedo property was still for sale and had not been acquired by the Petitioner, despite the statements in the August 8, 2006, letter. It was not unreasonable for her to call the telephone number on the "For Sale" sign and to make further inquiry of the broker who was handling the sale of the property.
Had the Petitioner not provided clearly bogus information to DOT by the letter of August 8, 2006, and had the Petitioner been responsive to Ms. Calzaretta's related inquiries, the telephone call to the broker would not have occurred. The Petitioner created the situation which resulted in the telephone call and any responsibility for the consequences of the call are the Petitioner's alone.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter a final order denying Petitioner's request for extended storage fees in the amount of $209,720.
DONE AND ENTERED this 25th day of July, 2008, in Tallahassee, Leon County, Florida.
WILLIAM F. QUATTLEBAUM
Filed with the Clerk of the Division of Administrative Hearings this 25th day of July, 2008.
Lawrence M. Kosto, Esquire Kosto & Rotella, P.A.
James C. Myers,
Alexis M. Yarbrough, General Counsel Department of Transportation
Stephanie Kopelousos, Secretary Department of Transportation Haydon Burns Building
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
