The Issue The central issue in this case is whether Petitioner is entitled to be certified as a minority business enterprise.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact: Certified General Contractors & Developers, Inc. is a Florida corporation organized to do business in this state. Jeri Dee Goodkin, at all times material to this case, has been the president and sole owner of Certified General Contractors & Developers, Inc. Ms. Goodkin is a minority person as that term is defined by Section 288.703, Florida Statutes. Jeri Dee Goodkin holds a general contractor's license, number CGC041575, which was issued by the Construction Industry Licensing Board. Ms. Goodkin is the only employee of Certified General Contractors & Developers, Inc. so licensed. The sole business of the company is to do general construction contracting. Ms. Goodkin's father, Ivan Goodkin, and brother, Mark Goodkin, are employed by the company. Both father and brother work as salesmen. They attempt to procure jobs for the company, and their responsibilities include estimating the price at which the work can be completed. Once the job is secured, Ms. Goodkin contacts subcontractors who submit bids for portions of the job. Ivan and Mark Goodkin may supervise the jobs they procure for the company. Ms. Goodkin is also responsible for supervision and must be on site for inspections performed by governmental agencies. According to two subcontractors with whom Petitioner has done business, Jeri Dee Goodkin negotiated and reviewed all work performed by the subcontractors. Prior to forming the Petitioner company, Ms. Goodkin and her father and brother worked for another company which was involuntarily dissolved by the Secretary of State. Ivan Goodkin was not an owner of the prior company. There is no evidence from which it could be concluded that the Goodkins owned or solely operated their prior employer. Jeri Dee Goodkin has executed a lease on behalf of the company.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That a final order be entered approving Petitioner's request to be certified as a minority business enterprise. DONE and RECOMMENDED this 30th day of August, 1988, in Tallahassee, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Buildinc 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 30th day of August, 1988. APPENDIX Rulings on Proposed Findings of Fact submitted by Petitioner: Paragraphs 1,2,3,5.7,8,10,13,and 14 are accepted. Paragraph 4 is rejected as not supported by the record in this cause. Paragraph 6 is rejected as not supported by the record in this cause. Paragraph 9 is rejected as argument or comment unnecessary to the determinations and findings of fact. That portion of paragraph 11 which sets forth the license number for Jeri Dee Goodkin is accepted, the rest of the paragraph is rejected as not supported by the record in this cause. Paragraph 12 is rejected as not supported by the record in this cause. Paragraph 15 is rejected as argument, irrelevant or unsupported by the record in this cause. With regard to the subparagraphs listed under paragraph 16, the following findings are made: subparagraphs 2,3,7,10,13,and 27 are accepted. Subparagraph 28 is accepted to the extent that Jeri Dee Goodkin is the only licensee employed by the company. All other subparagraphs are rejected as unsupported by the record in this cause. Rulings on proposed findings of fact submitted by the Department: Paragraphs 1,2,3,4,8,9,10,11,13,and 15 are accepted. Paragraph 5 is accepted, however is deemed irrelevant and immaterial to the resolution of the issue in this case. The evidence does not establish nor suggest that the Goodkins had an ownership interest in the prior company with whom they were employed. Paragraph 6 is rejected as irrelevant and immaterial. Paragraph 7 is rejected as speculative or argument. At best the lease shows it was executed by Jeri Dee Goodkin. The "Mr.Goodkin" referenced on the lease is not explained either by the document itself or the record in this cause. Paragraphs 12 and 14 are rejected as a recitation of testimony, argument or irrelevant comment. COPIES FURNISHED: Deborah S. Rose Office of General Counsel Department of General Services Room 452, Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0955 Jeri Dee Goodkin Certified General Contractors & Developers, Inc. 16375 Northeast 18th Avenue North Miami Beach, Florida 33162 Ronald W. Thomas Executive Director Department of General Services Room 133, Larson Building Tallahassee, Florida 32399-0955
Findings Of Fact Based on the evidence received at the hearing, I make the following findings of fact. The Petitioner, Business Telephone Systems of Tallahassee, Inc., was incorporated as a Florida corporation in October of 1985, and was certified as a minority business enterprise ("MBE") by the Department of General Services through May 21, 1988. Pursuant to its bylaws, the business of the corporation is managed by, and its corporate powers are exercised by, a board of directors. Ms. Nancy L. Nuce is the solemember of the Board of Directors of the Petitioner corporation and all corporate officers serve at her pleasure. Ms. Nancy L. Nuce, a female, owns 97.25% of the stock of the Petitioner corporation. She serves as Vice President, Secretary, and Treasurer of the Petitioner corporation. Her husband, Mr. William Nuce, has always been the President of the Petitioner corporation. According to the bylaws, the President is the chief executive officer of the corporation. Nevertheless, the President serves at the pleasure of the Board of Directors, and Ms. Nancy Nuce, as sole member of that board, has the discretion to remove the President at any time. Since January of 1988, both Mr. William Nuce and Ms. Nancy Nuce have been working full-time for the Petitioner corporation. Ms. Nancy L. Nuce has the sole authority to hire and fire employees of the Petitioner corporation, and she has exercised that authority. Ms. Nancy L. Nuce is well informed as to the financial structure of the Petitioner corporation. She is the person who is most familiar with the financial affairs of the corporation, and she appears to be well informed regarding the corporation's financial affairs. She controls the business checking account of the Petitioner corporation and signs the vast majority of the checks. Mr. William Nuce is authorized to sign on the checking account, but rarely does so. Mr. William Nuce usually signs checks only when deliveries are made to the office at times when Ms. Nancy L. Nuce is not available. Mr. William Nuce does not get involved in the financial affairs of the Petitioner corporation. He performs the technical aspects of the business, including such matters as installations, moves, changes, additions, and maintenance of telephone systems. Although he uses technicians to do most of the physical labor, he checks to make sure that the work is done properly and he does the site surveys prior to commencement of the work. As described in detail below, Ms. Nancy L. Nuce has a good working knowledge of the corporation's business operations and she handles all aspects of the corporation's business operations other than actual installation. Ms. Nancy Nuce develops and plans the necessary telephone systems with potential customers, determines the customers' needs, designs the systems, orders the necessary equipment for the telephone systems, and trains the customers on the systems once they are installed. She seeks and negotiates contracts, prepares and submits bid proposals, determines the amount of profit to include in the bid, negotiates and obtains the necessary bonding to submit bids, and determines which projects to bid on. She purchases all necessary insurance for the corporation. She orders and purchases all necessary inventory and insures that all supplies necessary for the day-to-day operation of the business are on hand. She negotiated the lease of the corporation's business premises and recently negotiated and purchased a truck for the corporation.
Recommendation Based on all of the foregoing, it is recommended that the Department of General Services issue a final order in this case recertifying the Petitioner corporation as a minority business enterprise. DONE and ENTERED this 21st day of March, 1989, at Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 1989. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-3885 The following are my specific rulings on the proposed findings of fact submitted by all parties. Findings proposed by Petitioner: All findings of fact submitted by the Petitioner have been accepted, except as specifically noted below. Paragraph 2: The first sentence is rejected a unnecessary historical and procedural details. Findings proposed by Respondent: Paragraph 1: First sentence accepted. The remainder of this paragraph is rejected as constituting unnecessary background details. Paragraphs 2 and 3: Rejected as constituting subordinate and unnecessary details. Paragraph 4: It is accepted that Ms. Nuce owns 97.25% of the stock of the Petitioner corporation. The rest of this paragraph is rejected as subordinate and unnecessary details. Paragraphs 5 and 6: Rejected as subordinate and unnecessary details. Paragraph 7: The first and fourth sentences of this paragraph are accepted. The remainder of the paragraph is rejected as subordinate and unnecessary details and as unnecessary commentary upon the quality of the evidence. Paragraphs 8 and 9: Accepted in substance with some unnecessary details omitted. Paragraph 10: Rejected as subordinate and unnecessary details. Paragraph 11: For the most part, rejected as subordinate and unnecessary details. Last sentence of this paragraph has been accepted. Paragraph 12: Rejected as subordinate and unnecessary details and as constituting an inference contrary to the greater weight of the evidence. Paragraph 13: Last sentence accepted in substance. The remainder of this paragraph is rejected as subordinate and unnecessary details. Paragraph 14: Rejected because the fact that discussions take place is irrelevant and joint decisions is contrary to the greater weight of the evidence. Paragraph 15: Rejected as subordinate and unnecessary details. Third sentence also rejected as not fully supported by persuasive competent substantial evidence. Paragraph 16: Accepted in substance, with many unnecessary details omitted. Paragraphs 17, 18, and 19: Rejected as subordinate and unnecessary details. Paragraph 20: Accepted in substance with unnecessary details omitted. Paragraph 21: First sentence reflected as constituting a commentary on the quality of the evidence father than a proposed finding of fact. Second sentence rejected as unnecessary details. Paragraphs 22, 23, 24, 25, 26, and 27: Rejected as subordinate and unnecessary details, some of which are not fully supported by the evidence. COPIES FURNISHED: W. Crit Smith, Esquire SMITH & THOMPSON, P.A. 1530 Metropolitan Boulevard Tallahassee, Florida 32308 Sandra D. Allen, Esquire Office of General Counsel Department of General Services 200 East Gaines Street Room 452, Larson Building Tallahassee, Florida 32399-0955 Ronald W. Thomas Executive Director Department of General Services 200 East Gaines Street Room 133, Larson Building Tallahassee, Florida 32399-0955 Susan Kirkland, Esquire General Counsel Department of General Services 200 East Gaines Street Room 452, Larson Building Tallahassee, Florida 32399-0955
The Issue Whether the Petitioner qualifies as a minority business enterprise?
Findings Of Fact J. F. Dees is the husband of Edith Dees and the father of Gale Dees Paschal and Michael Dees. Edith Dees is the mother of Ms. Paschal and Michael Dees. In 1959, J. F. Dees and Edith Dees began operating a painting business. The business was eventually incorporated as J. F. Dees, Inc. J. F. Dees, Inc., employed union employees. In June of 1974, Ms. Dees formed the Petitioner. The Petitioner was formed so that nonunion labor could be used and to provide for the future of Ms. Paschal and Michael Dees. Ms. Dees owned 100 percent of the stock of the Petitioner from its formation in 1974 until 1976. In 1976, Ms. Dees sold 50 percent of the stock of the Petitioner to Ms. Paschal and 50 percent to Michael Dees. The purchase price for 50 percent of the stock of the Petitioner in 1976 was $25,000.00, half the appraised value of the Petitioner at that time. The money used by Ms. Paschal and Michael Dees to purchase the stock was given to them by Ms. Dees. After selling the stock of the Petitioner, Ms. Dees and J. F. Dees retired. From 1976 until June, 1986, Ms. Paschal and Michael Dees were 50-50 owners and the only directors of the Petitioner. On June 19, 1986, Ms. Paschal and Michael Dees each gave 100 shares of their stock in the Petitioner to Ms. Dees. Ms. Dees was given an interest in the Petitioner and returned to work because J. F. Dees had suffered a serious illness. As a result of this illness, Ms. Dees had suffered financial difficulties which necessitated her return to work. The Petitioner is a Florida corporation. It was formed on June 6, 1974. The Petitioner is engaged in the business of commercial and industrial painting and related services. The Petitioner has no affiliation or relationship with J. F. Dees, Inc., or any other business. As of March 31, 1986, the net worth of the Petitioner was $652,128.29. No financial statements as of March 31, 1987, or any other date after March 31, 1986, have been prepared. In 1986 the Petitioner had gross sales of over $2,000,000.00. The net profit on the Petitioner's gross sales was $164,870.23. The net worth of the Petitioner as of the date of the final hearing of this case was less than $1,000,000.00. The Petitioner is performing a useful business function. Ms. Paschal and Ms. Dees are not employees of a non-minority business with any ownership interest in the Petitioner. The Petitioner has one outstanding class of stock. The outstanding stock of the Petitioner is currently owned as follows: Ms. Paschal 400 Shares -- 40 percent Michael Dees 400 Shares -- 40 percent Ms. Dees 200 Shares -- 20 percent Ms. Paschal, Ms. Dees and Michael Dees are the only directors of the Petitioner at this time. The By-Laws of the Petitioner provide that the management and control of the business of the Petitioner is vested in the Board of Directors. Any combination of two directors can control the business of the Petitioner. The Petitioner's officers are as follows: President: Ms. Paschal Vice-President: Michael Dees Vice-President: Ms. Dees Secretary/Treasurer: Joye M. Glenna The By-Laws of the Petitioner provide the following with regard to the duties of the officers: The duties of the officers shall be such as are usually imposed upon such officials of corporations and as are required by law, and such as may be assigned to them, respectively, by the Board of Directors from time to time. Ms. Paschal, Ms. Dees and Michael Dees are all paid a salary for the work they perform for the Petitioner. The Board of Directors approves Christmas bonuses. In 1985 no bonuses were given to Ms. Paschal, Ms. Dees or Michael Dees. In 1986, Michael Dees was awarded a bonus. The bonus was awarded to Michael Dees because of his work as one of 5 estimators of the Petitioner. His bonus was computed in the same manner that bonuses for the other 4 estimators were calculated. Bonuses were awarded based upon an employee's contribution to the Petitioner's business. Ms. Paschal and Ms. Dees did not receive a bonus in 1986 because they did not work as estimators. Michael Dees has received a loan from the Petitioner. The Petitioner is a subchapter S corporation for Federal income tax purposes. The profits and losses of the Petitioner are allocated to Ms. Paschal, Ms. Dees and Michael Dees in the same proportions as their stock ownership. The five estimators of the Petitioner, including Michael Dees, have the same authority and duties. Michael Dees' primary job function with the Petitioner is in his capacity as an estimator. Michael Dees does not supervise the work of the other 4 estimators. In his capacity as an estimator, Michael Dees prepares bids on jobs, supervises projects he is responsible for, orders materials needed for his projects and signs some correspondence. Correspondence signed by Michael Dees is prepared for his signature by Ms. Paschal. The duties Michael Dees performs as an estimator are also performed by the other 4 estimators. Estimators, including Michael Dees, hire painters and laborers for their projects. Foremen are also hired at the suggestion of the estimators by the Directors. The Petitioner has a weekly staff meeting attended by the estimators, Ms. Paschal and Ms. Dees. Ms. Dees attends as few of the meetings as possible because she does not like getting up as early as the time the meetings are held. The general operation of the Petitioner is discussed at the staff meetings. The estimators report on the status of their projects and recommend who should be hired as a foreman when one is needed. The ultimate decision on who is to be hired by the Petitioner is made by the Directors. The Board of Directors has authorized Ms. Paschal, Ms. Dees, Michael Dees and Joye Glenna, the Secretary/Treasurer, to sign checks on the Petitioner's bank accounts. They are all authorized to sign checks for convenience purposes. All checks are authorized by Ms. Paschal or Ms. Dees. Ms. Glenna prepares the checks and Ms. Paschal or Ms. Glenna sign them. Ms. Paschal reviews all checks except routine ones. Ms. Paschal is a guarantor on outstanding loans of the Petitioner. The Petitioner has not borrowed any funds since Ms. Dees acquired her stock in the Petitioner. If required by a lending institution, Ms. Dees would personally guarantee loans to the Petitioner. Ms. Paschal, Ms. Dees and Michael Dees are all liable on the Petitioner's indemnity bond. Ms. Paschal, Ms. Dees and Michael Dees have the authority to hire and fire employees. If an employee is to be hired or fired, they consult with each other. The last estimator position filled by the Petitioner was filled by the promotion of L. Wayne Long. Mr. Long was promoted in March, 1987. Ms. Dees participated in the decision to promote Mr. Long. Ms. Dees has participated in the decisions to hire foremen since June, 1986. The Petitioner has 18 non-painter permanent positions: 5 estimators, 2 clerical, 8 foremen, 1 warehouse employee and Ms. Paschal and Ms. Dees. During 1985, 1986 and the first quarter of 1987, the Petitioner reported the following number of employees on Form 941, Employer's Quarterly Federal Tax Return: 1985 1986 1987 January 64 58 52 February 54 54 49 March 61 61 40 April 74 73 May 61 69 June 60 91 July 57 104 August 78 86 September 58 65 October 74 80 November 79 72 December 69 70 The Petitioner had 212 projects in 1986. The projects had an average duration of 8 weeks. Therefore, the Petitioner had an average of 32 projects at any given time during 1986. The Petitioner currently has approximately 34 projects. The Petitioner has 60 to 75 persons on its payroll as of the date of the formal hearing of this case. The Petitioner paid a bonus to 18 employees at the end of 1986. Not all permanent employees received a bonus, i.e., Ms. Paschal and Ms. Dees. Painting contractor companies generally experience a high turnover of employees. In 1985 the Petitioner employed 337 people during the year. In 1986 the Petitioner employed a total of 374 persons. The Petitioner has 8 foremen who are permanent full-time employees. In order for them to function they must have painters to supervise. If each foreman has only 1 painter, there would be at least 8 additional employees on a permanent full-time basis. More than 8 painters would be needed to work on the 32-34 projects the Petitioner has had at any given time in 1986 and 1987. During 1985 and 1986 the Petitioner employed at least 23 employees who worked for at least 12 months. Ms. Paschal is an American woman. From 1964 until 1974, Ms. Paschal worked full-time with J. F. Dees and J. F. Dees, Inc. Her responsibilities included accounting, payroll and payables. She learned estimating and how to prepare bids and participated in such activities. Since 1974, Ms. Paschal has been employed full-time with the Petitioner. From 1974 until 1976 Ms. Paschal served as a Vice-President of the Petitioner. From 1974 until the present Ms. Paschal has served as a Director of the Petitioner. From 1976 until the present Ms. Paschal has served as the President of the Petitioner. Ms. Paschal graduated from high school. She also has attended Florida Junior College and the University of North Florida. She has taken courses in business and construction, including accounting, management, tax law, blueprint reading, hiring/firing, safety and loss control, Worker's Compensation, insurance and bonding and contract law. Ms. Paschal has also attended seminars relating to product specifications and applications and computers. Ms. Paschal is the secretary/treasurer and founding member of the First Coast Chapter of Painting and Decorating Contractors of America. Ms. Paschal's duties as President of the Petitioner include the following: Overseeing the day to day operations of personnel. She performs this function in part through the estimators and other management personnel who report directly to her; Supervision and control of estimating and final bid estimates; Reviewing specifications on all large and complex projects; The preparation and signing of the vast majority of correspondence on behalf of the Petitioner; Overseeing accounts receivable billings and collections. Estimators, including Michael Dees, also handle the collection of receivables. Difficult collections are often turned over to Ms. Dees to collect; Overseeing and coordinating the use of field personnel; Approval of payroll; Evaluation of personnel and setting of pay; Preparing and overseeing employee management duties, establishing company policies and compliance with personnel laws; Responsibility for financial aspects of the Petitioner; Procurement of insurance; Signing contracts and change orders. Michael Dees and Ms. Dees can also sign contracts and change orders after Ms. Paschal's review and approval; Handling legal matters, including decisions as to whether to institute legal proceedings on behalf of the Petitioner; and Acting as spokesperson on policies of the Petitioner. Ms. Paschal signs the vast majority of contracts entered into by the Petitioner. Michael Dees has signed contracts. Ms. Paschal reviews and approves all bids submitted by the Petitioner. Most bids are initially prepared by the five estimators, including Michael Dees. Ms. Paschal has prepared safety policies for the Petitioner. Ms. Paschal has prepared employee "right to know" compliance manuals for the Petitioner's employees. Ms. Paschal handles the Petitioner's finances, including, among other things, banking relations, loans, payroll, cash flow, review of accounts receivable and budgeting. Ms. Dees assists Ms. Paschal with cash flow and budgeting and other financial aspects of the Petitioner. Ms. Paschal participates in the preparation of large and complex bids. Ms. Paschal and Ms. Dees coordinate and consult on all large purchases. Ms. Paschal keeps her direct contacts with owners, general contractors and project superintendents to a minimum. She has delegated authority to the estimators and allows them to coordinate their projects directly. She is available, however, to handle any problems which the estimators cannot handle. When estimators have a problem they discuss the problem with other estimators, including, but not limited to, Michael Dees. If the estimators cannot resolve the problem they bring the problem to Ms. Paschal for resolution. Ms. Dees is an American woman. Ms. Dees has been involved in the painting business since her early childhood. Her father and her husband were involved in the contract painting business. She has been involved in virtually every function of the contract painting business, including, among other things, estimating, signing contracts, payroll, bookkeeping and inventory control. She is qualified to handle estimating work for the Petitioner. Ms. Dees graduated from high school. Although she has not taken courses in business and construction, her extensive experience in the painting business more than compensates for her lack of formal education. Ms. Dees has served as a Vice-President and comptroller of the Petitioner since 1986. Her duties include collection of difficult overdue accounts, overseeing accounts payable, overseeing purchasing and inventory control and job cost and overhead analysis. A shop man handles the inventory and ordering of supplies but Ms. Dees has the overall responsibility for purchasing and inventory. Ms. Dees reviews estimates prepared by the estimators and can perform estimating work. Ms. Dees designed the purchase order system used by the Petitioner. From 1976 until the present Michael Dees has served as a Vice- President of the Petitioner. Michael Dees graduated from high school and attended Florida Junior College. He has taken building and construction courses and attended seminars, including blueprint reading, estimating and application of new coating products, management, hiring and firing, spray painting and contract law. Michael Dees does not participate in the general, everyday financial affairs of the Petitioner. He is also not actively responsible for accounting, purchasing, payroll, legal matters, insurance or employee and safety regulation compliance. Michael Dees' primary activity with the Petitioner is as an estimator. Although he also serves as 1 of 3 Directors of the Petitioner, Michael Dees does not engage in the overall, daily management of the Petitioner. Michael Dees lacks the experience and knowledge concerning the management of the Petitioner of Ms. Paschal and Ms. Dees. Although he is attempting to learn more about the operation and management of the Petitioner, he relies upon Ms. Paschal and Ms. Dees currently because of their superior experience and knowledge. At present, Michael is more interested in working and being treated in the same manner as the other estimators of the Petitioner. Ms. Paschal has 23 years experience in the painting business, including 11 years with the Petitioner. Ms. Dees has 19 years experience in the painting business, including 3 with the Petitioner. Michael Dees has 18 years experience in the painting business, including 11 years with the Petitioner. Ms. Paschal and Ms. Dees have knowledge of the financial structure of the Petitioner and possess the capability, knowledge and experience necessary to make decisions concerning commercial and industrial painting. In November of 1986, a request for certification as a minority business enterprise was filed by Ms. Paschal on behalf of the Petitioner. The Petitioner has not entered into any agreement which could result in Ms. Paschal and Ms. Dees owning less than 51 percent of the Petitioner's stock.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner's request for certification as a minority business enterprise be denied. DONE and ENTERED this 5th day of August, 1987, in Tallahassee, Florida. LARRY J. SARTIN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of August, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-0515 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 10. 2 11. 3-6 18. 7 43 and 62. 8 21 and 48. 9 21 and 65. 10 21. 11 19. 12-13 44. 14 45. 15 46-47. 16 49. 17 50. 18-19 5. 20 9. 21 12. 22 26. 23 22. 24 52. 25 27 and 69-70. 26-27 27. 28 52-53. 29 54. 30 52. 31 52 and 65. 32 52. 33 57. 34 69. 35 59. 36 31. 37 15. 38 32. 39 33. 40 55. 41 56. 42 51. 43 23. 44 40. 45-47 These proposed findings of fact are not supported by the weight of the evidence. 48 16. 49-50 63. 51 2 and 4. 52 63. 53 65. 54 66. 55 65. 56 34. 57 28. 58 52. 59 69. 60 70. 61 17. 62 12. Respondent's Proposed Findings of Fact 1 4 and 10. 2 11. 3 18. 4 1. 5 49, 64, 68. 6-8 71. 9 8 and 19. The evidence failed to prove that Ms. Paschal and Michael Dees "jointly managed the business" prior to June, 1986. 10 21 and 48. 11 21 and 67. 12 5, 9, 18, 21 and 65. 13 22. 14 The first two sentences are rejected. The resolution and the ratification of the lawful actions of the officers of a corporation are routine practices of a corporation's Board of Directors. Duties had already been assigned to the officers through the By-Laws of the Petitioner. No further action was required by the Board in order for the officers to carry out their duties. The last sentence is accepted in paragraph 31. 15 This proposed finding of fact is irrelevant. The last sentence is not supported by the weight of the evidence. The authority of the officers was already provided by the By-Laws. 16 73. 17-21 Hereby accepted to the extent they are relevant findings of fact. 22 52 and 65. Michael Dees handles collecting accounts receivables relating to his projects and in his capacity as an estimator. 23 52 and 57. 30. The last sentence is not supported by the weight of the evidence. 34. The last sentence is not supported by the weight of the evidence. 26 29. 27 30. 28 65. 29 Hereby accepted. 30 57. 31 59 and 65. 32 24. 33 31. 34-35 65. 36-39 52. 40 52 and 53. 41 60. 42-44 Not supported by the weight of the evidence. Hereby accepted. Not supported by the weight of the evidence. 47 53. 48-51 28. Hereby accepted. The first 3 sentences are irrelevant or not supported by the weight of the evidence. The last 4 sentences are irrelevant or not supported by the weight of the evidence. The rest of the proposed finding of fact is accepted in 19-20 and 22. 54-55 72. Not supported by the weight of the evidence. 25. The last sentence is irrelevant. 58 24. 59 The first sentence is irrelevant. 32. 60 33. 61 38. The first 2 sentences are not supported by the weight of the evidence. 24 and 39. Hereby accepted. 14 and 37. The next to the last sentence is not supported by the weight of the evidence. COPIES FURNISHED: Ronald W. Thomas John B. MacDonald, Esquire Executive Director Brant, Moore, Sapp, Department of General Services MacDonald & Wells, P.A. Room 133, Larson Building 121 West Forsyth Street Tallahassee, Florida 32399-0950 Suite 900 Post Office Box 4548 Claire D. Dryfuss, Esquire Jacksonville, Florida 32202 Office of General Counsel Department of General Services Room 452, Larson Building Tallahassee, Florida 32399-0955
The Issue Whether the petitioner should revoke respondent's self-insurance privilege for failure to comply with Rule 38F-5.10(2)(a), Florida Administrative Code.
Findings Of Fact On February 12, 1980, the Department of Labor and Employment Security, through its Bureau of Self-Insurance, notified the Deauville Hotel (respondent) of its intention to revoke respondent's workers' compensation self-insurance privilege for failure to comply with the requirements of Rule 38F-5.10(2)(a), Florida Administrative Code. This Rule requires each se1f-insurer to have on file with the Department a "financial statement of a current date showing a net worth of not less than $250,000 and a current ratio of more than 1 to 1, and a working capital of an amount establishing financial strength and liquidity of the business to pay normal compensation claims promptly". Specifically, petitioner contends the respondent filed financial statements for calendar year 1978 that were not certified by an outside independent accounting firm, and that such statements reflected an unsatisfactory current ratio and net worth in contravention of the Rule. Respondent is a large luxury hotel located in Miami Beach, Florida, and employs more than 400 persons. It is a division of Deauville Operating Corporation. Respondent is now and has been for a number of years a self- insurer under Section 440.38(1)(b), Florida Statutes. The privilege to self- insure is granted by the Department when an employer demonstrates the financial ability to promptly discharge all amounts required to be paid under the provisions of the Workers' Compensation Law as contained in Chapter 440, Florida Statutes. Having once established the requisite financial integrity, an employer must file within six months following the close of each succeeding fiscal year financial statements demonstrating the continued ability to discharge all obligations under the Law. The Department is reposed with the responsibility of reviewing the financial statements to insure compliance with the applicable rules governing self-insurers. When the administrative complaint was issued, respondent had on file financial statements consisting of a balance sheet, statement of income, home office equity, and changes in financial position (Exhibit No. 1). All statements were prepared using the year ending December 31, 1978. Three financial measurements are used by the Department to evaluate the financial integrity of an employer. These are current ratio, net worth and working capital. However, the Department has chosen to rely only upon the first two measurements as a basis for revoking the self-insurance privilege of respondent. The current ratio of a business entity is determined by comparing the ratio of current assets to current liabilities as shown in the most recent financial statement (Rule 38F-5.01 (10), Florida Administrative Code). The owner's equity or net worth is computed by subtracting total liabilities from total assets. Working capital is derived by taking the excess of current assets over current liabilities. (Rule 38F-5.01(16), Florida Administrative Code);. The application of these measurements to the 1978 financial statements of respondent reveals a current ratio of .82 to 1 based upon current assets and liabilities of $667,542 and $816,542, respectively, a negative net worth of $543,112, and a working capital in a negative position. Efforts by petitioner in late 1979 and early 1980 to obtain more current financial statements of respondent were not successful. However, in April and July, 1980, respondent filed certain financial data for calendar year 1979 and the year ending March 31, 1980 (Exhibit Nos. 2, 3, 6 and 7). Exhibit Nos. 2 and 3 pertain to the financial position of the Deauville Operating Corporation at December 31, 1979, and incorporate therein the operating results of the Deauville Hotel. Exhibit No. 2 failed to segregate the Corporation's current assets and liabilities from total assets and liabilities. Therefore, no determination of current ratio or working capital can be made. The Exhibit does show the Corporation had a net worth of $2,643,487. Exhibit No. 3 revised the data shown in Exhibit No. 2 and provided a division of assets and liabilities from which a measurement of current ratio and working capital can be calculated. However, the Corporation improperly classified as a current asset a long-term receivable in the amount of $2 million. Had this asset been properly classified, current liabilities would have exceeded current assets and produced a negative working capital and current ratio of less than 1 to 1. Exhibit Nos. 6 and 7 are financial statements of the Deauville Hotel for calendar year 1979 and the year ending March 31, 1980, respectively. Exhibit No. 6 shows total current assets and liabilities of $495,449 and $1,072,540, respectively, as of December 31, 1979. The resulting current ratio is .46 to 1 while the working capital is in a negative position. Net worth is a negative $394,639. As of March 31, 1980, current assets had increased to $832,763 while current liabilities had slightly decreased to $1,017,636. The current ratio is accordingly less than 1 to 1. At the same time, net worth had increased to a positive amount of $137,901 while working capital remained in a negative position by virtue of current liabilities exceeding current assets (Exhibit No. 7). None of the financial statements are certified by outside independent accounting firms. The audit reports for the set of statements contained in Exhibit Nos. 1, 2, 6 and 7 specifically contain a disclaimer by the accountants that they have "not audited or reviewed the accompanying financial statements, and accordingly, do not express an opinion or any other form of assurance on them". By the same token, the statements encompassed in Exhibit No. 3 include the conspicuous disclaimer by the accountant that such statements are "unaudited".
Recommendation Based upon the foregoing findings of fact and conclusions of law, the Hearing Officer recommends that petitioner Department revoke the privilege of respondent to be a self-insurer under Section 440.38(1)(b), Florida Statutes. DONE AND ENTERED this 15th day of August, 1980, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of August, 1980. COPIES FURNISHED: Douglas P. Chanco, Esquire Suite 131, Montgomery Building 2652 Executive Center Circle East Tallahassee, Florida 32301 William Wade Hampton, Esquire Post Office Box 355 Gainesville, Florida 32602
The Issue Whether Petitioner is entitled to attorneys' fees and costs and, if so, in what amount.
Findings Of Fact On or about April 29, 1993, the Department of Health and Rehabilitative Services issued an agency action letter which rejected certain of Petitioner's cost reports in calculating the Medicaid reimbursement to which Petitioner was entitled. As a result, the Medicaid reimbursement to Petitioner was reduced. Thereafter, Petitioner timely filed a challenge to the agency action, and the matter was forwarded to the Division of Administrative Hearings for formal proceedings, DOAH Case No. 93-3687. Such case was assigned to Judge Arrington and scheduled for hearing in Miami for October 14-15, 1993. On October 12, 1993, the Department filed a suggestion of mootness which led to the withdrawal of the agency action letter, the acceptance of Petitioner's cost reports, and, presumably, to the recalculation of the Medicaid reimbursement favorable to Petitioner. On May 2, 1996, the agency, now the Agency for Health Care Administration, entered a final order adopting the recommended order. On July 1, 1996, the Petitioner filed the instant motion for attorney's fees and costs and supporting memorandum of law together with the exhibits thereto. On or about September 6, 1996, Respondent filed a motion to dismiss or alternatively motion to strike Petitioner's motion for attorney's fees and costs, and argued that the Petitioner is not entitled to fees pursuant to Section 57.105, Florida Statutes; that the affidavit submitted by Petitioner does not comply with the statute; that Petitioner is not a prevailing party under Section 57.111, Florida Statutes; and that the relief requested exceeds the maximum award of $15,000.00. Such responses relate only to the initial pleading filed, however, and not to the amended request filed on February 12, 1997. Petitioner has a net worth of not more than $2,000,000.00 and its principal place of business is Dade County, Florida. Petitioner's attorney's normal billing rate for general matters is $250.00 and he expended in excess of 100 hours of time in the litigation of the underlying matter. Petitioner has requested $87,500.00 in attorney's fees as the prevailing party in the principal case and $21,875 for litigation on the issue of fees and costs. Petitioner alleged it is entitled to fees and costs pursuant to Sections 57.105 and 57.111, Florida Statutes.
Findings Of Fact At all times pertinent to the issues herein, the Department had the authority to certify those firms who qualified as MBE's for the purpose of contracting with it under the provisions of Chapter 13-8, F.A.C. When an application for MBE status is received at the Department's certification office in Tallahassee, it is assigned to one of five certifying officers who reviews it and determines whether it is complete as submitted or requires additional documentation. This is called a desk audit review. In the event all required documents have not been submitted with the application, they are requested in writing and the applicant has thirty days to provide them. Failure to do so results in denial of the application. If, on the other hand, all the required documentation is present, a decision is then made as to whether an on-site visit of the applicant's operation is necessary. If so, Department personnel go to the site and look to see if the business can qualify as an MBE. If an on-site visit is appropriate, but for some reason cannot be made, Department personnel try to get the required information by phone. The decision to approve or deny certification is made, based on the reviewing certifying officer's recommendation, by the certification manager who, before making a decision, personally reviews the file and, if appropriate, sends it to the Department's legal staff for additional review. Once the legal staff has made its recommendation, if the decision is made to deny the application, a letter of denial is sent to the applicant who may then appeal that decision. An application must meet all criteria set out in Rule 13-8, F.A.C. to be certified as an MBE. Each application is looked at on a case by case basis to see if those criteria are met. In the instant case, the denial was based on the Department's concern over several factors. These are related to Rule 13- 8.005(3), F.A.C. and included A question as to whether the business was actually controlled by Ms. Hogan. The nature of the corporate structure. The application of Chapter 47, F.A.C., dealing with the construction industry. The ability of both Hogan and Perretta to sign business checks. Whether Ms. Hogan had the technical and mechanical capability, skills and training to run a construction company, and Whether Ms. Hogan could effectively control such areas as financing, purchasing, hiring and firing, and the like. In arriving at its decision to deny Petitioner's application, the Department relied only on those matter submitted with the application. It did not ask for or seek any information about the company and its operation beyond that initially provided. Notwithstanding her recommendation in this case, Ms. Freeman has previously recommended the certification of numerous woman owned businesses as MBEs. On April 6, 1990, Ms. Hogan, as owner of E.C. Construction, Inc., a licensed general contractor qualified under the license of Carmen M. Perretta, applied to the Department for certification as a woman owned MBE. The application form reflected Ms. Hogan as the sole owner of the business, a corporation created under the laws of Florida. Ms. Hogan was listed on both the Articles of Incorporation, (1989), and the application form in issue here as the sole officer and director of the corporation, as well. Mr. Perretta was to be merely an employee of the firm, E.C. Construction, Inc.. In that regard Ms. Hogan claims, and it is so found, that the letters, "E. C." in the corporate name do not stand for Elinor and Carmen. Instead, they stand for Elite and Creative. Ms. Hogan is a 63 year old widow who professes a long-standing interest in building, design and decorating. In 1950, she and her husband started a floor covering business in another state which they operated for nineteen years. In 1969 they moved to Florida where her husband started a lawn maintenance business in Sarasota. She worked full time as a nurse at a local hospital and still found time to assist her husband in every aspect of their business including marketing, bookkeeping, public relations, etc. Her husband took ill in early 1986 and from that time on and after his death in May, 1988, until the business was sold almost a year later, she exercised complete control. She still runs a wedding supply and stationery business from her home. She sold the lawn business because she wanted to break the emotional links with the past and since she had some experience in construction, design and remodeling of her own home, went into the construction business establishing the Petitioner firm. In the few preceding years, she had designed and supervised several construction projects in the area in which she attended to financing, hiring the1 subcontractors, and supervision of the work. She also took some courses in design and has taken other courses and seminars in financing, accounting, marketing, advertising and operating a small business. Ms. Hogan and her husband met Mr. Perretta in 1987 when they put an addition on their house and she was impressed by his talents. When she decided to look into going into the construction business, she turned to him for advice and ultimately recruited him as the corporation's qualifying agent. Notwithstanding the fact that neither the corporate documents nor the application for MBE status so reflect, Ms. Hogan's lawyer now indicates that Perretta was also made a Vice-President of the firm, but his authority was limited to those actions necessary to meet the minimum compliance requirements of Florida law. When confronted with this discrepancy, Ms. Hagan claimed that the corporate papers and the application were in error and that she didn't know what they meant when she signed them. Ms. Hogan claims to be in full and complete control of all corporate activities, and to delegate to Mr. Perretta those responsibilities and functions, relating to the actual construction, that he is best qualified to carry out. She claims she does not share dominant control of the daily business activities of the firm though the evidence indicates both she and Mr. Perretta can individually sign corporate checks. In that regard, she claims he has signed only 19 of more than 500 checks issued by the firm since its inception. They have an understanding he will sign checks only for the purchase of materials, and then only in an emergency situation. He claims to no longer use that authority. The Department introduced no evidence to the contrary. Ms. Hogan admits to not having formal construction training or experience but, based on her other experience, believes she is qualified to run a business. Under her leadership the company has reportedly secured over one million dollars in contracts and for the most part, has performed them successfully. Under oath she claims to negotiate the contracts, prepare the estimates and deal with contracting customers in all the projects in which the company is engaged. She claims to have made those contractual decisions independent of Mr. Perretta to whom she is not accountable. Yet, as was seen, the Articles of Incorporation wrongfully indicate her as the only officer when Mr. Perretta was actually a Vice-President, and she claims not to have known that. This gives rise to some doubt as to her business credentials. In reality, Mr. Perretta actually directs and supervises the actual construction work at all job sites and schedules the subcontractors and materials to insure their presence at the job when needed. When changes are required, Mr. Perretta gives the necessary information to Ms. Hogan who prepares the change orders, including the typing, and forwards them as appropriate. Ms. Hogan has also entered into an agreement, dated June 25, 1989, with Mr. Perretta whereby, in lieu of salary as qualifying agent and field superintendent for the company, he is to receive 40% of the gross profits of each construction project. He gets a periodic draw against that percentage. In addition, in May, 1989, Ms. Hogan, as President, and Mr. Perretta, as Vice- President, entered into an agreement with Raymond Meltzer to retain him as general manager of E.C.'s Designer Structures division. Under the terms of the agreement, Mr. Meltzer was to have "absolute, unlimited and exclusive authority" to conduct all affairs of the division, except to incur debt other than short term debt to subcontractors. Mr. Meltzer was to have the right to draw checks on a separate E.C. account in a bank of his choosing, and was to receive 95% of all monies received as a result of the activities of that division. E.C. was to obtain the required permits or licenses for projects and to provide such supervision as is required by law. Though Petitioner did not incorporate under the name Designer Structures, nor did it register that name under the fictitious name statue, it continues to do business under that name. When it does, business is not conducted out of E.C.'s office, but from Meltzer's office instead. This is not consistent with Petitioner's MBE application which reflects only one office. Petitioner submitted at the hearing a notarized statement dated December 8, 1990, from Mr. Meltzer in which he admits to seeking to originally use Mr. Perretta and E.C. primarily as a qualifying agent for his own construction activities. The terms of the agreement referenced above tend to confirm that arrangement. Nonetheless, he is of the opinion that Ms. Hogan possess excellent business acumen and administrative abilities, and, he claims that, based on his initial meeting with her, he abandoned his plans to set up his own business and went into a business relationship with her. The evidence indicates he develops the work for the division and gets 95% of the fee. Ms. Hogan claims to be considering terminating the arrangement since it has not proven to be a lucrative one. She is apparently not aware the agreement specifically states it is for a three year term and carries options to renew. Though both Petitioner's application for MBE status and its bonding application indicate E.C. has no employees, Ms. Hogan testified that both Mr. Perretta and Mr. Meltzer are employees. She claims to use only subcontractors in the accomplishment of company projects and this appears to be so. She claims to have the strength of character and the will. to manage, hire and fire subcontractors as required. There is other evidence in the record, however, to indicate that Mr. Perretta actually schedules the subcontractors and materials to insure their presence at the job site when needed. It is found that there are no other employees who do direct, hands on contracting work, but while there may be a question of word meaning, it is clear that both Perretta and Meltzer qualify as employees. E.C.'s application for MBE status also indicates that it had not executed any promissory notes, yet there is a note for $3,500.00 from E.C. to Mr. Perretta, dated May 10, 1989, on which no payments have been made. Though Ms. Hogan claims to be fully in charge of running the business side of the operation, she is apparently also unaware of certain basic facts other than those previously mentioned. In addition to the inconsistencies regarding the office structure and her mistake concerning the employee status of Mr. Perretta and Mr. Meltzer, as well as her error regarding the loan, she was also in error as to the company's net worth. Whereas she indicated it was set at about $30,000.00, the company's most current financial statement reflects net worth at just above, $6,000.00, revealing her estimate to be 80% off. She also did not know the character of Mr. Perretta's license, (Class E.C. owns very little construction equipment and Ms. Hogan rents all needed equipment as indicated to her by Mr. Perretta. The lack of ownership is not significant, however. The one piece of equipment the company owns is a transit level which was purchased at Mr. Perretta's insistence. He has also donated to the company some used office equipment from his prior business as a contractor. He was not paid for it. Other equipment, in addition to office space, was furnished by Mr. Meltzer.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be issued in this case denying E.C. Construction, Inc.'s application for certification as a Minority Business Enterprise. RECOMMENDED this 22nd day of January, 1991, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of January, 1991. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-5217 The following constituted my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of fact submitted by the parties to this case. FOR THE PETITIONER: None submitted FOR THE RESPONDENT: & 2. Accepted and incorporated herein. Accepted. & 5. Accepted and incorporated herein. Accepted and incorporated herein. & 8. Accepted and incorporated herein. 9. & 10. Accepted 11. - 13. Accepted and incorporated herein. 14. & 15. Accepted and incorporated herein. Rejected as to her prior experience though it was limited. Accepted and incorporated herein. - 20. Accepted and incorporated herein. Accepted. - 24. Accepted. Accepted and incorporated herein. & 27. Accepted and incorporated herein. 28. & 29. Accepted. Not proven. - 33. Accepted and incorporated herein. 34. & 35. Accepted and incorporated herein. Unknown but accepted. Accepted. Accepted and incorporated herein. COPIES FURNISHED: Guy Brisson, Personal Representative E. C. Construction, Inc. 105 Island Circle Sarasota, Florida 34232-1933 Dannie L. Hart, Esquire Joan V. Whelan, Esquire Department of General Services Suite 309, Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-0950 Ronald W. Thomas Executive Director Knight Building Koger Center 2737 Centerview Drive Tallahassee, Florida 3399-0950 Susan Kirkland General Counsel DGS Suite 309, Knight Building Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
The Issue The issue for determination is whether Respondent should certify Petitioner as a minority business enterprise ("MBE").
Findings Of Fact Respondent is the governmental agency responsible for granting or denying applications for MBE certification in accordance with Section 288.703(1), Florida Statutes,1 and Florida Administrative Code Rules 60A-2.001 and 60A-2.005.2 Petitioner is an applicant for MBE certification. Petitioner is engaged in the business of selling and installing commercial audio products. Petitioner is a closely held Florida corporation that was organized in May, 1996, as Commercial Audio Products, Inc. Petitioner does business in the name of CAP Distribution, Inc. Petitioner was initially capitalized with $4,000. Ms. Carol Pitts contributed $3,000, and Mr. Justin Chitmon, her son, contributed $1,000. Ms. Pitts and Mr. Chitmon are Petitioner's sole shareholders, directors, officers, and employees. Ms. Pitts is the president and Mr. Chitmon is the secretary.3 Ms. Pitts is a minority person within the meaning of Section 288.703(3). Mr. Chitmon is not a minority person. Minority Ownership Petitioner's articles of incorporation authorize only one class of stock. All of Petitioner's authorized stock is no- par-value common voting stock. No preferred stock or special class of stock is authorized. All 300 shares of Petitioner's authorized stock is issued and outstanding. Ms. Pitts and Mr. Chitmon own all 300 shares. Ms. Pitts is a minority shareholder because she is a minority person who owns stock in the corporation (the "minority owner" or "minority shareholder"). Ms. Pitts owns 95 percent of Petitioner's issued and outstanding stock. Thus, the minority shareholder is Petitioner's majority shareholder because she owns at least 51 percent of Petitioner's stock within the meaning of Rule 60A- 2.005(2)1. Financial Control The minority ownership of Petitioner is real, substantial, and continuing. Ms. Pitts has knowledge and control of all financial affairs of the business within the meaning of Rule 60A-2.005(3)(d)3. As president and majority shareholder, the minority owner expressly controls Petitioner's investments, loans, payment of business obligations, financial transactions, and payroll. Ms. Pitts and Mr. Chitmon are individually authorized to sign checks for Petitioner. However, Mr. Chitmon's authority to sign checks is a matter of convenience to the company and does not obviate the minority owner's real, substantial, and continuing management control as president and majority shareholder. Operating And Management Control The minority owner has operating control of Petitioner and is technically qualified to manage and operate Petitioner's business.4 Her management and operation of has produced significant business and new customers for Petitioner. Petitioner does business in at least eight counties in Florida. They include Duval, Orange, Hillsborough, St. Johns, Seminole, Broward, and Marion counties. Operating revenues already are sufficient to maintain a $15,000 inventory and pay overhead, including a salary to Mr. Chitmon. Ms. Pitts gained the knowledge and experience needed to operate Petitioner successfully during the time she was employed by CAP Design Group, Inc. ("CAP"). CAP is a closely held Florida corporation owned by Ms. Pitts' estranged husband. He is not a minority person and CAP is not certified as an MBE. When Petitioner was formed in May, 1996, Petitioner shared office space and equipment with CAP. Petitioner's minority owner was an employee of both companies. Petitioner derived its name in part to benefit from the goodwill of CAP. Although both companies were engaged in similar businesses, CAP specialized in a substantially more expensive product line and Petitioner specialized in low-end products. Neither Petitioner nor its minority owner are now affiliated with CAP. Petitioner no longer shares office space, equipment, or employees with CAP. Ms. Pitts operates Petitioner's business from her mother's garage. Ms. Pitts is relocating Petitioner to Orlando, Florida. A divorce is pending between Ms. Pitts and her husband. Share Of Income, Earnings, And Benefits Petitioner's minority owner has a legal right to share income, earnings, and other benefits in proportion to her stock ownership within the meaning of Rule 60A-2.005(2)(b). None of the shareholders share net income and other benefits because Petitioner is not yet profitable. Therefore, Petitioner has not declared any dividends and has not funded any benefits for directors, officers, or employees. Petitioner's earnings are sufficient to fund employee salaries. However, Petitioner pays a salary only to Mr. Chitmon. There is no agreement or other limitation that prevents the minority owner from drawing a salary. Rather, the minority owner exercises her discretion not to receive a salary. The minority owner's discretion is not subject to any formal or informal restrictions within the meaning of Rule 60A- 2.005(3)(a). There are no provisions in any purchase agreement, employment agreement, voting rights agreement, or the corporate by-laws that vary or usurp the minority owner's discretion. The minority owner exercises her discretion not to receive a salary for independent economic reasons. The minority owner's exercise of discretion is consistent with economic reality and with her greater equity position and risk in Petitioner's profit and loss. Conversely, the minority owner's choice to pay a salary to Mr. Chitmon is consistent with his status as a valued employee and technical consultant. Directors A majority of Petitioner's corporate directors are not minority owners in violation of Rule 60A-2.005(3)(b). Petitioner's articles of incorporation authorize two directors. Ms. Pitts and Mr. Chitmon are those two directors. The minority owner comprises only half of the directors. Mr. Chitmon is not a minority. A majority of the directors are not comprised of minority owners.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a Final Order and thereinDENY Petitioner's application for MBE certification. RECOMMENDED this 18th day of February, 1997, in Tallahassee, Florida. DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 18th day of February, 1997.
Findings Of Fact J.D. Bligh Construction, Inc. (Petitioner), was incorporated and began doing business on or about February 18, 1974. Petitioner engaged in the construction business; erecting, repairing and remodeling buildings and structures; and performing public works. The majority of Petitioner's work is subcontracted out. At Petitioner's inception, Jack D. Bligh and his wife, Carol E. Bligh, were co-owners with each possessing 50 percent of the stock in the business. Jack Bligh was the President and the only Director. Petitioner was started as a family business. At all times material hereto, Jack Bligh was licensed as a certified Management contractor by the State of Florida, Department of Professional Regulation, Construction Industry Licensing Board. Petitioner is authorized by the State of Florida to engage in the construction business under his license. Petitioner had no employees other than Jack and Carol Bligh and subcontracted out work for which contracts were awarded or agreements entered into. All proposals for work and contract agreements on behalf of Petitioner were accepted and executed by Jack Bligh. Jack Bligh was the guarantor on behalf of Petitioner. For example, he was the guarantor for Petitioner's lease agreement for the site location of its business, dated June 15, 1988. Carol Bligh's duties with Petitioner were clerical and administrative, such as determining draw requests, ordering supplies and banking. She had no experience in the construction industry whether it was Management contracting or actual field experience. Jack Bligh, her husband, was responsible for the actual running of the business and handling the day-to-day operations of the business, such as contracting, estimating, bidding and hiring and firing subcontractors. On or about August 22, 1985, Jack and Carol Bligh formed J. D. Bligh Airport Construction, Inc., with Jack Bligh as the sole director and President, owning 49 percent of the stock, and Carol Bligh as Secretary, owning 51 percent of the stock. It was a wholly owned subsidiary and formed on the advice of their insurance agent and accountant for liability insurance purposes regarding a contract for work at the Fort Lauderdale International Airport, which at that time was a big project for Jack and Carol Bligh. In September 1988, Petitioner, as contractor, contracted with the Boca Raton Airport, Inc., d/b/a Boca Aviation to perform work at the airport at a cost of approximately $533,000. The subsidiary corporation, J. D. Bligh Airport Construction, Inc., was not used for this job. In July 1990, Petitioner entered into a contract as subcontractor to perform work at the Opa-Locka Airport at a cost of approximately $65,000. The subsidiary, J. D. Bligh Airport Construction, Inc., was also not used for this job. On or about August 8, 1990, J. D. Bligh Airport Construction, Inc., was changed to J. D. Bligh Caribbean Construction, Inc. The purpose of the name change was again for liability insurance purposes in order to perform work in St. Thomas, U.S. Virgin Islands. The Blighs were rebuilding apartments damaged by Hurricane Hugo. Also, in September 1992, Petitioner again contracted with Boca Raton Airport to perform work at a cost of approximately $272,000. Carol Bligh executed the contract and the performance bond. For 17 years, Jack Bligh remained Petitioner's President until on or about January 15, 1991, at which time Carol Bligh became President. She was gratuitously given additional stock in the business by her husband for her long years of service and dedication to Petitioner. With this additional stock, Carol Bligh also became the minority/majority stockholder. When Carol Bligh became President of Petitioner and minority/majority owner with 51 percent in January 1991, her main duties and responsibilities did not change. She continued with the clerical and administrative aspect of Petitioner's Management contracting business. However, her duties and responsibilities also expanded to include dealing with bonding, securing lines of credit and insurance, setting-up workers compensation, assisting in policy- making, financial planning and operational procedures, and contract negotiations. On or about October 3, 1991, Carol Bligh's duties and responsibilities relating to hiring and firing were officially increased by Petitioner's directors to include hiring and firing of all personnel, including office and field personnel. In 1990, Carol and Jack Bligh's daughter, Janice Bligh, joined the business. Using his more than 17 years experience in the construction business, Jack Bligh began training her in Petitioner's contracting business, which included taking her to job sites for observation of the work being performed. Around mid-1991, Janice Bligh was placed in control of field supervision, estimating and bidding. For the past year and a half, Jack Bligh performed these functions only when she was unable to do so. Janice Bligh received her training as a field supervisor from her father, Jack Bligh, through observing him and the subcontractors. His supervision extends over the subcontractors since the majority of Petitioner's work is subcontracted out. Janice Bligh is taking courses in contracting and has completed three; one in estimating, one in plan reading and one in the South Florida Building Code. She is not currently licensed in the construction industry but eventually wants to take the State licensing examination to become a Management contractor but that is 2 1/2 to 3 years away. She has limited knowledge of the statutory requirements placed upon a Management contractor in terms of authorized scope of work and required liability coverage. Since Carol Bligh became Petitioner's President, proposals and agreements or contracts have been signed by either Janice Bligh or Carol Bligh. Also, bonding documents have been signed by Carol Bligh. Authorized signers and users on Petitioner's bank account are Carol, Jack and Janice Bligh, individually, with either one of them being authorized to execute bank documents on behalf of Petitioner. When Petitioner needed funds for operating expenses, they came from Carol and Jack Bligh. A promissory note dated April 15, 1992, from Petitioner to Carol Bligh was signed by Carol Bligh, as President, and came from funds in Carol and Jack Bligh's joint account. However, another promissory note dated June 30, 1992, involved funds loaned to the businesses from a business owned by Jack Bligh's father. Additionally, a promissory note dated April 15, 1993, was from Petitioner to Carol and Jack Bligh, equally. On or about December 1, 1992, Janice Bligh became a shareholder and officer of Petitioner's business, acquiring 2 percent of the stock from Jack Bligh, thereby leaving him with 47 percent of the stock. Carol Bligh retained 51 percent of the stock. Even though Janice Bligh was a shareholder and part owner of Petitioner, an indemnity agreement with a bonding surety dated February 23, 1993, was signed by Carol and Jack Bligh only. Also, the agreement reflected no differentiation of liability. As to wages, Petitioner's quarterly wage report dated April 17, 1991, reflects Jack Bligh's salary as $3,650, Carol Bligh's salary as $7,250, Janice Bligh's salary as $5,200, Jill Bligh's salary as $1,209 and Lawrence Massey's salary as $4,093.76. Jill Bligh is another daughter of Carol and Jack Bligh. She performs office work, run errands and answers the telephone. She is neither an officer nor a director. Petitioner's quarterly wage report dated July 12, 1991, reflects Jack Bligh's salary as $650, Carol Bligh's salary as $650, Janice Bligh's salary as $5,200, Jill Bligh's salary as $1,698 and Lawrence Massey's salary as $1,593.77. Petitioner's quarterly wage report dated October 15, 1991, reflects Jack Bligh's salary as $440, Carol Bligh's salary as $600, Janice Bligh's salary as $5,200 and Jill Bligh's salary as $1,804.50. Petitioner's quarterly wage report dated January 27, 1992, reflects Jack Bligh's salary as $390, Carol Bligh's salary as $300, Janice Bligh's salary as $2,400 and Jill Bligh's salary as $1,522.50. Carol Bligh testified that she and Jack Bligh reduced their salary to aid the business economically in the bad economic times of the construction industry. However, her testimony is not credible in light of the salary paid their daughter Jill Bligh in relationship to the work she performed. Petitioner applied for certification by Respondent as a minority business enterprise (MBE) on March 24, 1992. An initial review of the documentation provided by Petitioner indicated that Petitioner did not meet the criteria for MBE status; however, questions remained so a telephone interview with Carol Bligh was held in July 1992. Based on the documentation provided and the telephone interview, Petitioner was denied MBE status and notified by certified letter, dated July 14, 1992. Petitioner has been certified as a MBE by local governments.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services issue a Final Order denying J. D. Bligh Construction, Inc., certification as a Minority Business Enterprise. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of February 1994. ERROL H. POWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of February 1994.
Findings Of Fact Lorraine K. Read is President and Chief Operating Officer of Mid-State Industries and owns 60 percent of the stock. Her husband, Ronald C. Read owns the remaining 40 percent of the stock. They are the only employees of Mid- State. The bylaws of the company (Exhibit 2) provides that the President shall be the chief executive officer of the corporation, shall have general and active management of the business and affairs of the corporation subject to the directions of the Board of Directors and shall preside at all meetings of the shareholders and Board of Directors. The application (Exhibit 1) shows that Lorraine Read provided the start-up capital of $600 for her 600 shares of stock and Ronald Read provided $400 for his 400 shares. The business is operated from the Read's home. The only supplies sold by Mid-State which are kept on the premises are sandpaper, assorted nuts and bolts, hydraulic fittings, electric tape, duct tape, brass fittings, wire terminals and cabinet screws with a total value of approximately $1,000. Ronald Read acts as outside salesman visiting businesses having a need for chemicals to ascertain their needs and take their orders. However this is done on a part-time basis as he is the Florida West Coast District Manager for OEC Corporation in Ohio. He sells truck parts for that company. These chemicals, which comprise approximately 80 percent of Mid-State sales, are ordered by Lorraine Read when the orders are called in to her. Those chemicals in 55-gallon drums are delivered to the customer by the supplier but are billed to Mid-State. Mid-State adds a markup to the price paid by Mid-State which forms the price the customers are billed. The customer owes Mid-State for the products and Mid-State owes the supplier. Although Ronald Read has check signing authority for Mid-State, this power is used only when Lorraine Read is unavailable to sign checks. All of the business records of Mid-State are kept and maintained by Lorraine Read. Mid-State has neither the storage facilities necessary to maintain a stock of chemical supplies nor vehicles capable of transporting 55-gallon drums of chemicals. Some of the chemicals sold which are small enough to be handled by one person without mechanical lift equipment are delivered to the purchasers by Ronald Read in his Jeep Cheeokee.
Recommendation It is RECOMMENDED that a final order be entered denying Mid-State Industries, Inc.'s, certification as a minority business enterprise because the company is not performing a useful business function. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 14 day of September 1992. K. N. AYERS Hearing Officer Division of Administrative Hearings 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14 day of September 1992. APPENDIX Proposed findings submitted by Petitioner are accepted except as noted below. Those proposed findings not included in the Hearing Officer's findings as noted below were deemed unnecessary to the conclusions reached. 12. Rejected. Only minor supplies in garage are maintained as "inventory." 16. Rejected. Nearly 80 percent of Mid State sales are large bulk items such as chemicals. 17.-18. While the number of items delivered to Read's home may equal or exceed the number delivered directly to the customer, the value of the items delivered to the customer greatly exceeds that delivered to Read's garage. 14.-20. Accepted as testimony of Ringgold--not as fact. Proposed findings submitted by Respondent are accepted except as noted below. Those proposed findings not included in the Hearing Officer's findings as noted below were deemed immaterial to the conclusions reached. 8. Accept as testimony of Ronald Read. COPIES FURNISHED: Michael William LeBron, Esquire 400 East Dr. Martin Luther King Boulevard Suite 101 Tampa, Florida 33603-3866 Dannie L. Hart, Esquire Suite 309 Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-0950 Larry Strong, Acting Secretary Knight Building, Suite 307 2737 Centerview Drive Tallahassee, Florida 32399-0950 Susan Kirkland, General Counsel Knight Building, Suite 110 2737 Centerview Drive Tallahassee, Florida 32399-0950
