The Issue 1. Whether the Emergency Rules on Sales and Use Tax on Services and Other Transactions adopted by the Respondent effective July 1, 1987, were adopted pursuant to Section 33, Chapter 87-6, l987 Laws of Florida, and Section 120.54(9), Florida Statutes (1987)? 2. Whether Rules 12AER87-31(1)(c), (5), (7)(i)(7)(k), (10), (12) and (13), Florida Administrative Code, constitute an invalid exercise of delegated legislative authority?
Findings Of Fact The Respondent is an agency of the State of Florida. It is charged with the responsibility to implement, enforce and collect the taxes levied by the State of Florida, including Chapter 212, Florida Statutes (1987). During the 1987 Legislative Session the Legislature enacted Committee Substitute for Senate Bill 777, which is codified as Chapter 87-6, 1987 Laws of Florida (hereinafter referred to as "Chapter 87-6"). This act, which amended Chapter 212, Florida Statutes, was signed into law by the Governor on April 23, 1987. Section 5 of Chapter 87-6, created Section 212.0594, Florida Statutes. This new Section of Chapter 212 imposed a sales tax on construction services performed on or after July 1, 1987. Section 33 of Chapter 87-6, authorized the Respondent to adopt emergency rules pursuant to Section 120.54(9), Florida Statutes, to implement the new law. In authorizing the adoption of emergency rules, the Legislature determined that the failure to promptly implement the provisions of Chapter 87-6 would present an immediate threat to the welfare of the State because revenues needed for the operation of the State would not be collected. On June 6, 1987, the Legislature enacted Committee Substitute for House Bill 1506, which is codified as Chapter 87-101, 1987 Laws of Florida (hereinafter referred to as "Chapter 87-101"). Chapter 87-101 is commonly known as the Sales Tax Glitch Bill. Chapter 87-101 was passed by the Legislature on June 6, 1987, signed into law by the Governor on June 30, 1987, and was effective beginning July 1, 1987. Section 5 of Chapter 87-101 repealed Section 5 of Chapter 87-6. Section 6 of Chapter 87-101, created a new Section 212.0594, Florida Statutes, taxing construction services, in replace of the Section 212.0594, Florida - Statutes, previously created by Section 5 of Chapter 87-6. Thus the Legislature substantially changed the manner in which sales tax was to be imposed upon construction services. Section 20 of Chapter 87-101 amended Section 33 of Chapter 87-6 but continued the authorization to adopt emergency rules and the justification for doing so. On May 8, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold public meetings and workshops on May 19 and 26, 1987, and June 6, 1987. Proposed rules relating to Chapter 87-6 were to be considered at these meetings and workshops. On May 22, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold public meetings and workshops on May 26, 1987, and June 26, 1987. Proposed rules relating to Chapter 87-6 were to be considered at these meetings and workshops. On May 29, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold a public meeting and workshop on June 6, 1987, to consider proposed rules relating to Chapter 87-6. On June 5, 1987, the Respondent published notice in the Florida Administrative Weekly of its intent to hold a public meeting and workshop on June 12, 1987, to consider proposed rules relating to Chapter 87-6. Ultimately, the Respondent held four workshops concerning the emergency rules: May 19 and 26, 1987, and June 6 and 12, 1987. The workshop conducted on June 12, 1987, was conducted to consider Rules 12AER87-31, Florida Administrative Code. The rules considered at the June 12, 1987, workshop had been redrafted to implement Chapter 87-101. The rules considered at the workshop were available for a short period of time before the workshop and during the workshop. Comments were received by the Department at the June 12, 1987, workshop from the public, including representatives of the construction industry. As a result of these comments, changes in the Emergency Rules were made following the workshop. The Emergency Rules took into account the method of taxing construction services provided for in Chapter 87-101 rather than the method previously provided for in Chapter 87-6. The Respondent's emergency rules, including Rule 12AER87-31, Florida Administrative Code, were certified by the Executive Director of the Respondent and delivered to the Secretary of State for publication on June 18, 1987. The Respondent delivered the full text of the emergency rules, a statement of the specific reasons for finding an immediate danger, a statement of the reasons for concluding that the procedure followed to adopt the rules was fair under the circumstances and a summary of the purpose of the rules for publication in the first available issue of the Florida Administrative Weekly. The emergency rules had to be filed with the Secretary of State no later than June 18, 1987, in order to be published in the Florida Administrative Weekly by July 1, 1987, the effective date of Chapters 87-6 and 87-101 and the emergency rules. The full text of the emergency rules was published in the Florida Administrative Weekly on June 26, 1987. The text of this notice, which was accepted into evidence as Petitioner's exhibit 4, is hereby incorporated into this Final Order. The Emergency Rules had an effective date of July 1, 1987. Initially the Emergency Rules were to expire January 1, 1988, six months after their effective date, as specified in Chapter 87-101. Pursuant to Section 1, Chapter 87-539, 1987 Laws of Florida, the Emergency Rules are effective through June 30, 1988. Representatives of the Respondent and the Petitioner met between the passage of Chapter 87-101 by the Legislature and June 18, 1987, and discussed the act. The Respondent expended a great deal of time and effort in adopting the emergency rules implementing Chapters 87-6 and 87-101, and in providing information to the public. The method of taxation to be implemented was unique and, therefore, the Respondent was unable to look to other jurisdictions for guidance concerning implementation of the tax. The taxation of construction services was one of a multitude of services taxed. Chapter 87-101, required substantial redrafting of the emergency rules, including Rule 12AER87-31, Florida Administrative Code, within a relatively short period of time. The new tax necessitated the registration of 100,000 to 150,000 new sales tax "dealers" by July 1, 1987. Prior to July 1, 1987, the Respondent received thousands of telephone calls and thousands of written requests seeking information concerning the sales tax on services. The Respondent was extensively involved with the Legislature during the period of time when Chapters 87-6 and 87-101 were adopted. Representatives of the Respondent discussed the acts with Legislative members and staff. Dr. James Francis acted as a liaison between the Respondent and the Legislature. Dr. Francis also served on the Revenue Estimating Conference. In his capacity with the Revenue Estimating Conference, Dr. Francis prepared estimates of tax revenues from the services tax. A revenue impact analysis of the services tax was also provided by the Respondent to the Legislature based upon each amendment and proposed amendment to Chapters 87-6 and 87-101. Representatives of the petitioner expressed dissatisfaction with the method of taxation of construction services contained in Chapter 87-6 because of the required itemization of building material costs on each contract. The Respondent prepared a revenue neutral (no loss of tax revenue previously estimated to be generated by Chapter 87-6) method of imposing the services tax on construction services without requiring itemization of building material costs. Pursuant to this method, a set percentage, generally equal to the average percentage of building material costs, is backed out of "contract price" or "cost price." The remainder is treated as the amount of the "contract price" or "cost price" attributable to the construction services. The revenue estimated by the Respondent and provided to the Legislature, based upon the elimination of an average percentage of building material costs, was based upon the inclusion in "contract price" and "cost price" of all expenditures associated with the construction industry, including the total expenditures for building materials supplied by owners to contractors. The Legislature was aware of this fact before it adopted Chapter 87-101. Fiscal notes for Chapter 87-101, which the Respondent had available prior to the adoption of the Emergency Rules, numerically quantified the estimated revenue to be generated by Chapter 87-101. The Respondent also knew what amounts were included in the estimate of revenue contained in the fiscal notes. These amounts were consistent with the revenue estimates provided by the Respondent to the Legislature. The Emergency Rules represent a contemporaneous administrative construction of Chapters 87-6 and 87-101 by an agency charged with responsibility to administer the acts and which was intimately involved in the adoption of the acts. The Petitioner has challenged the validity of Rules 12AER87-31(1)(c), (5), (7)(i), (7)(k), (10), (12) and (13) Florida Administrative Code. The Petitioner withdrew its challenge of other portions of the Emergency Rules. Rule 12AER87-31(7)(i), Florida Administrative Code, defines the terms "contract price" which determines the amount of tax due on construction work performed pursuant to a contract and any speculative construction which is sold within six months of completion. The Petitioner has challenged Rule 12AER87-31(7)(i), Florida Administrative Code, to the extent that contract price is defined to include the fair market value of materials used by a contractor if the value of those materials is not otherwise included in the contract price. The Petitioner's contractor witnesses' understanding of Rule 12AER87- 31(7)(i), Florida Administrative Code, that the fair market value of materials supplied by the owner are to be included in the computation of contract price, is consistent with the Respondent's interpretation of the Rule. Prime contractors often estimate the cost of building materials in their daily business activities. The Respondent's interpretation of Rule 12AER87-31(1)(c), Florida Administrative Code, does not require a contractor or subcontractor who uses building materials which are purchased tax free to remit a tax. The rule simply makes it clear that there is not necessarily any link between the question of whether the purchase of building materials and the provision of construction services are tax exempt.
Findings Of Fact Petitioner, Omni International of Miami, Limited (Omni), is the owner of a large complex located at 1601 Biscayne Boulevard, Miami, Florida. The complex is commonly known as the Omni complex, and contains a shopping mall, hotel and parking garage. On July 30, 1981, Petitioner filed two applications for refund with Respondent, Department of Banking and Finance, seeking a refund of $57,866.20 and $4,466.48 for sales tax previously paid to the Department of Revenue on sales of electricity and gas consumed by its commercial tenants from April, 1978 through March, 1981. On November 22, 1982, Respondent denied the applications. The denial prompted the instant proceeding. The shopping mall portion of the Omni complex houses more than one hundred fifty commercial tenants, each of whom has entered into a lease arrangement with Omni. The utility companies do not provide individual electric and gas meters to each commercial tenant but instead furnish the utilities through a single master meter. Because of this, it is necessary that electricity and gas charges be reallocated to each tenant on a monthly basis. Therefore, Omni receives a single monthly electric and gas bill reflecting total consumption for the entire complex, and charges each tenant its estimated monthly consumption plus a sales tax on that amount. The utility charge is separately itemized on the tenant's bill and includes a provision for sales tax. Petitioner has paid all required sales taxes on such consumption. The estimated consumption is derived after reviewing the number of electric outlets, hours of operations, square footage, and number and type of appliances and lights that are used within the rented space. This consumption is then applied to billing schedules prepared by the utility companies which give the monthly charge. The estimates are revised every six months based upon further inspections of the tenant's premises, and any changes such as the adding or decreasing of appliances and lights, or different hours of operations. The lease agreement executed by Omni and its tenants provides that if Omni opts to furnish utilities through a master meter arrangement, as it has done in the past, the tenant agrees to "pay additional rent therefor when bills are rendered." This term was included in the lease to give Omni the right to invoke the rent default provision of the lease in the event a tenant failed to make payment. It is not construed as additional rent or consideration for the privilege of occupying the premises. Omni makes no profit on the sale of electricity and gas. Rather, it is simply being reimbursed by the tenants for their actual utility consumption. If the applications are denied, Petitioner will have paid a sales tax on the utility consumption twice -- once when the monthly utility bills were paid, and a second time for "additional rent" for occupancy of the premises.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner's applications for refund, with interest, be approved. DONE and RECOMMENDED this 15th day of April, 1983, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of April, 1983.
The Issue The issue is whether Section 11B(3) of the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2004 Second Edition, is an invalid exercise of delegated legislative authority.
Findings Of Fact The petitions filed by FFVA and TIC challenge the validity of Section 11B(3) of the 2004 Manual,4/ which prior to October 1, 2007, was adopted by reference as part of Florida Administrative Code Rule 69L-7.501(1). Florida Administrative Code Rule 69L-7.501(1) was amended effective October 1, 2007, to adopt by reference the Florida Workers' Compensation Reimbursement Manual for Hospitals, 2006 Edition ("the 2006 Manual"). Florida Administrative Code Rule 69L-7.501(1), as it existed when the petitions were filed and as it currently exists, adopts by reference the 2006 Manual, not the 2004 Manual. The 2004 Manual is no longer adopted by reference as part of Florida Administrative Code Rule 69L-7.501, or any other rule. AHCA applied the 2004 Manual in the reimbursement dispute initiated by HRMC against FFVA under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on October 24, 2007, which was attached to FFVA's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 07-5414. AHCA applied the 2004 Manual in a reimbursement dispute involving TIC under Section 440.13, Florida Statutes, as reflected in the determination letter issued by AHCA on January 9, 2008, which was attached to TIC's petition. The reimbursement dispute is the subject of the pending DOAH Case No. 08-0703.
Findings Of Fact Petitioner, Richard Shambo, is the legal guardian for Linda Shambo. Linda Shambo is a "client" as defined in Section 402.33(1)(b), Florida Statutes, and has been assessed a fee in the amount of $286.00 per month by the Department. Such fee is paid by the Petitioner as the client's guardian. Petitioner manages the client's financial resources. The client resides in a group home, an intensive care level 3 facility, for which the monthly charge is $633.00. No dispute was made as to the appropriateness of that charge. The fee which has been assessed in this case is equal to the monthly charge less the client's reimbursements from other sources (e.g. Social Security benefits). The Department's Fee Collection Review Committee met on January 8, 1993 to review the fee assessed for this client. Such committee denied Petitioner's request for a reduction in fee and advised him of his right to an administrative review of that decision. The client's income over the last few years has declined due to lower interest rates. According to Petitioner, if the assessed fee is not reduced from $286 to $250 per month, the client will have insufficient income to cover the assessment. As a result, the client's principal will be reduced to cover the difference. Such testimony has been deemed credible and has not been challenged by the Department. No argument as to the appropriateness of other expenditures made on behalf of this client has been raised. Accordingly, it is found that the client's income less such appropriate expenses is insufficient to yield a disposable income sufficient to cover the fee assessed by the Department.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That the Department of Health and Rehabilitative Services enter a final order granting Petitioner's request for a reduced fee. DONE AND RECOMMENDED this 29th day of March, 1994, in Tallahassee, Leon County, Florida. JOYOUS D. 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 29th day of March, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4617 Neither party submitted a proposed recommended order. COPIES FURNISHED: Robert L. Powell, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Kim Tucker, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Richard E. Shambo 125 Cooper Drive Santee, South Carolina 29142 Karen M. Miller District Legal Counsel Department of Health and Rehabilitative Services 111 Georgia Avenue West Palm Beach, Florida 33401
Findings Of Fact 8. The factual allegations contained in the Order of Penalty Assessment issued on September 22, 2009, which is fully incorporated herein by reference, are hereby adopted as the Department’s Findings of Fact in this case.
Conclusions THIS PROCEEDING came on for final agency action and Alex Sink, Chief Financial Officer of the State of Florida, or her designee, having considered the record in this case, including the Order of Penalty Assessment served in Division of Workers’ Compensation Case No. 09-235-D3-OPA, and being otherwise fully advised in the premises, hereby finds that: 1. On July 8, 2009, the Department of Financial Services, Division of Workers’ Compensation (hereinafter “Department”) issued a Request for Production of Business Records for Penalty Assessment Calculation in Division of Workers’ Compensation Case No. 09-235-D3- OPA to JUAN MERLO D/B/A MERLO HARVESTING. 2. On July 8, 2009, the Request for Production of Business Records for Penalty Assessment Calculation was served by personal service on JUAN MERLO D/B/A MERLO HARVESTING. A copy of the Request for Production of Business Records for Penalty Assessment Calculation is attached hereto as “Exhibit A” and incorporated herein by reference. 3. On September 22, 2009, the Department issued an Order of Penalty Assessment in Division of Workers’ Compensation Case No. 09-235-D3-OPA to JUAN MERLO D/B/A MERLO HARVESTING. The Order of Penalty Assessment assessed a total penalty of $104,004.19 against JUAN MERLO D/B/A MERLO HARVESTING. The Order of Penalty Assessment included a Notice of Rights wherein JUAN MERLO D/B/A MERLO HARVESTING was advised that any request for an administrative proceeding to challenge or contest the Order of Penalty Assessment must be filed within twenty-one (21) days of receipt of the Order of Penalty Assessment in accordance with Sections 120.569 and 120.57, Florida Statutes. 4. On September 25, 2009, the Order of Penalty Assessment was served by certified mail on JUAN MERLO D/B/A MERLO HARVESTING. A copy of the Order of Penalty Assessment is attached hereto as “Exhibit B” and incorporated herein by reference. 5. On October 13, 2009, JUAN MERLO D/B/A MERLO HARVESTING filed a petition for administrative review with the Department. The petition for administrative review was forwarded to the Division of Administrative Hearings on October 22, 2009, and the matter was assigned DOAH Case No. 09-5854. 6. On December 14, 2009, JUAN MERLO D/B/A MERLO HARVESTING filed A Notice of Voluntary Dismissal with the Division of Administrative Hearings. A copy of the Notice of Voluntary Dismissal is attached hereto as “Exhibit C” and incorporated herein by reference. 7. On December 16, 2009, the Administrative Law Judge issued an Order Closing File which relinquished jurisdiction to the Department for final agency action. A copy of the Order Closing File is attached hereto as “Exhibit D” and incorporated herein by reference.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Respondent Cavalier Group filed applications for and obtained orders of registration from petitioner for Miami's Green Acres, Units I and II, in 1967 and 1968. Miami's Green Acres is located in the far western portion of Dade County and consists of 488 lots, ranging from 2 1/2 to 10 acres in size. Most of the lots have been sold by way of Agreement for Deed, and the last sale to the public occurred in 1974. Well over 200 lots have been deeded to the purchasers. The Florida Public Offering Statement, effective April 1, 1969, filed with the petitioner provides in pertinent part that "Miami's Green Acres presently has a mile and one-half of graded access roads. All other similar roads within the subdivision will be completed at the time the deed is required to be delivered to the purchasers." It further provides that "Access to the individual tracts will be pro- vided by graded access roads composed of compacted sand and rock .... These streets have been dedicated to Dade County for public use, but have not been accepted for maintenance." With respect to real estate taxes, the Public Offering Statement provides that "Real estate taxes will be advanced by seller as per contract and purchaser billed therefor prior to deeding of property. Seller retains possession until contract is paid in full and title is conveyed." The Agreements for Deed contain similar provisions. Tommy Farrell, a securities examiner with the petitioner, inspected the subject Miami Green Acres on May 22, 1979. Out of approximately eighteen (18) miles of road promised in the Public Offering Statement, Ms. Ferrell observed only 1 1/4 miles of drivable roads and approximately 6 miles of road which had been originally cut through, but were currently impassable by automobile. The road work has been completed for Unit I of the subdivision. According to Eugene R. Melton, respondent's president, the road work for Unit II has not been completed for various reasons. Initially, the construction of roads was held back because respondent's mortgagee, Arvida Corporation, refused to join in the declaration of easements. This fact concerning Arvida's refusal was made known to the petitioner at the time petitioner approved respondent's registration. Without any further notice to the petitioner concerning the promised road completion, respondent did not begin construction on the roads for Unit II until November, 1974. Approximately two weeks of work was accomplished when Dade County issued a cease and desist order. In February or March of 1975, the cease and desist order was lifted and construction recommenced. In May or June, 1975, heavy rains occurred and construction stopped. At this time, according to Mr. Melton, the road work was approximately 25 to 30 percent complete. No further work was done on the roads until May of 1976, when respondent entered into a contract with a company for the remainder of the work. This work continued only for a few months, bringing the completion up to 40 percent, according to respondent. Except for cleaning up, no further work occurred in 1976 or thereafter. Apparently, the Department of Environmental Regulation and the Army Corps of Engineers became involved in the project and all work ceased. Again, except for the 1968 failure of the mortgagee to join in the dedication of easements, respondent has never advised the petitioner of the problems it was having in the construction of the roads. Kenneth Harris, who was accepted as an expert witness in agricultural road construction, estimated that the cost of completing the remaining road work would be $16,400.00. This estimate was based upon a view of the premises and the assumption that the fill materials could be obtained at a price substantially below market price. Mr. Harris could not recall which roads he traversed while making his physical inspection and he underestimated the amount of road work needed to be done. The last subdivider's annual report submitted to the petitioner by the respondent indicates that approximately $75,000.00 remains to be spent on road work. Respondent did not pay the real estate taxes that accrued on lots within the subdivision during the years 1977 and 1978 prior to the date such taxes became delinquent. These taxes, with the exception of two or three parcels still unpaid, were not paid by respondent until March of 1980. 1/ Prior to March of 1980, respondent had collected from purchasers monies for reimbursement for taxes that had not been timely paid. Respondent did issue warranty deeds to some purchasers at the time that the 1977 and 1978 real estate taxes were delinquent. It is not clear from the evidence how many such deeds were issued, whether the purchasers were aware that the taxes were outstanding at the time they received their warranty deeds, or whether those purchasers had indeed already paid respondent for the taxes. The quarterly encumbrance reports filed by respondent with the petitioner covering the period from January 1, 1978, through June 30, 1979, do not inform the petitioner that the taxes were unpaid and delinquent. After the filing of the Notice to Show Cause, respondent included the unpaid taxes as an encumbrance on the quarterly encumbrance reports.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that: the respondent be found guilty of violating Sections 478.121(3) and 478.052(2), Florida Statutes (1977), (now ss. 498.033(3) and 498.039(3)); a civil penalty be imposed against the respondent for such violations in the total amount of $5,000.00; the respondent submit to the Petitioner within thirty (30) days of the final order a new estimate from a duly licensed engineer of the cost of constructing all roads promised in the Florida Public Offering Statement; the respondent enter into an improvement trust account based upon the estimated cost of completion of the promised road work; and the respondent be ordered to immediately pay all delinquent real estate taxes. Respectfully submitted and entered this 28th day of April, 1980, in Tallahassee, Florida. DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675
The Issue The issue to be resolved in this proceeding is the amount of attorney’s fees to be paid by Respondent, Agency for Persons with Disabilities (“APD” or the “Agency”), to the Petitioners, G.B., Z.L., through his guardian K.L., J.H., and M.R.
Conclusions This matter is related to the promulgation of proposed rules 65G-4.0210 through 65G-4.027 (the “Proposed Rules”) by the Agency in May 2013 in its effort to follow the mandate issued by the Florida Legislature concerning the iBudget statute, section 393.0662, Florida Statute (2010). Petitioners challenged the Proposed Rules in DOAH Case No. 13-1849RP. The Proposed Rules were upheld by the Administrative Law Judge, but Petitioners appealed the Final Order to the First District Court of Appeal (the “Court”). The Court’s decision was rendered July 21, 2014. G.B. v. Ag. for Pers. with Disab., 143 So. 3d 454 (Fla. 1st DCA 2014). The Fee Order was entered by the Court on the same date. The Fee Order had been entered upon the filing of a motion for appellate attorney’s fees filed with the Court by Appellants/Petitioners. The motion set forth three bases for an award of fees, to wit: Section 120.595(2), Florida Statutes, which provides: Challenges to Proposed Agency Rules Pursuant to Section 120.56(2).– If the appellate court or the administrative law judge declares a proposed rule or portion of a proposed rule invalid pursuant to s. 120.56(2), a judgment or order shall be rendered against the agency for reasonable costs and reasonable attorney’s fees, unless the agency demonstrates that its actions were substantially justified or special circumstances exist which would make the award unjust. An agency’s actions are “substantially justified” if there was a reasonable basis in law and fact at the time the actions were taken by the agency. If the agency prevails in the proceedings, the appellate court or administrative law judge shall award reasonable costs and reasonable attorney’s fees against a party if the appellate court or administrative law judge determines that a party participated in the proceedings for an improper purpose as defined by paragraph (1)(e). No award of attorney’s fees as provided by this subsection shall exceed $50,000. Section 120.595(5), Florida Statutes, which provides: Appeals.– When there is an appeal, the court in its discretion may award reasonable attorney’s fees and reasonable costs to the prevailing party if the court finds that the appeal was frivolous, meritless, or an abuse of the appellate process, or that the agency action which precipitated the appeal was a gross abuse of the agency’s discretion. Upon review of the agency action that precipitates an appeal, if the court finds that the agency improperly rejected or modified findings of fact in a recommended order, the court shall award reasonable attorney’s fees and reasonable costs to a prevailing appellant for the administrative proceeding and the appellate proceeding. Section 120.569(2)(e), Florida Statutes, which provides: All pleadings, motions, or other papers filed in the proceeding must be signed by the party, the party’s attorney, or the party’s qualified representative. The signature constitutes a certificate that the person has read the pleading, motion, or other paper and that, based upon reasonable inquiry, it is not interposed for any improper purposes, such as to harass or to cause unnecessary delay, or for frivolous purpose or needless increase in the cost of litigation. If a pleading, motion or other paper is signed in violation of these requirements, the presiding officer shall impose upon the person who signed it, the represented party, or both, an appropriate sanction, which may include an order to pay the other party or parties the amount of reasonable expense incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney’s fee. The Court did not specifically address which of Petitioners’ stated bases for award of attorney’s fees was being relied upon when granting Petitioners’ motion. Petitioners assert that it must therefore be presumed that the Court granted the request for fees on the basis of all three of Petitioners’ bases. There is no other support for that presumption, as the Fee Order is silent on the issue. It could equally be presumed that only one of the bases was relied upon by the Court. Thus, a determination of the appropriate basis for fees is critical in the determination of the amount of fees to be awarded, as will be set forth more particularly below. The Fee Order establishes only that attorney’s fees are awarded, with leave for the parties to determine the appropriate amount or, failing to do so, obtain direction from an Administrative Law Judge on the matter. There is no issue as to whether Petitioners are entitled to fees or costs, only the amount to be awarded. DOAH has jurisdiction over the parties and the subject matter of this proceeding under the August 6, 2014, Mandate of the First DCA, and under section 120.595(2). Although it is herein determined that section 120.595(2) is the appropriate provision to be considered for fees in this case, each of the other statutory sections argued in Petitioners’ motion for fees will be addressed nonetheless. Section 120.595(5) If section 120.595(5) is to be the basis for fees, it must be shown that Respondent is guilty of a “gross abuse” of its discretion. “Gross abuse” is not defined in statute. As stated by the Court in Allstate Floridian Insurance Co. v. Ronco Inventions, LLC, 890 So. 2d 300, 302 (Fla. 2d DCA 2004), “The troublesome nature of our review here is the admittedly high ‘gross abuse of discretion’ standard. . . . However, we have no definition of what a ‘gross’ abuse of discretion includes or how it differs from an abuse of discretion. We can only assume that it is more egregious than a typical abuse of discretion.” The Court cited Canakaris v. Canakaris, 382 So. 2d 1197 (Fla. 1980), in which the Supreme Court iterated that if reasonable men could differ on an issue, there was no abuse of discretion to act one way or the other. Other courts, looking at the issue of “abuse of discretion” in administrative matters, have struggled with a definitive description or definition. In Citizens to Preserve Overton Park, Inc., et al. v. Volpe, Secretary of Transportation, 401 U.S. 402; 91 S. Ct. 814; 23 L. Ed. 2d 136 (1971), the Court was trying to determine whether the Transportation Secretary had acted within his discretion. The Court decided it “must consider whether the decision was based on clear error or judgment. [citations omitted] Although this inquiry into the facts is to be searching and careful, the ultimate standard of review is a narrow one. The Court is not empowered to substitute its judgment for that of the agency.” Id., at 416. And, as found by another Court, whether an act is arbitrary, capricious, or an abuse of discretion is “far from being entirely discrete as a matter of the ordinary meaning of language. . . . Rather than denoting a fixed template to be imposed mechanically on every case within their ambit, these words summon forth what may best be described as an attitude of mind in the reviewing court one that is ‘searching and careful’ . . . yet, in the last analysis, diffident and deferential.” Natural Res. Def. Council, Inc., et al. v. Sec. and Exch. Comm'n, et al., 606 F.2d 1031, 1034, U.S. App. DC (1979). In Ft. Myers Real Estate Holdings, LLC, v. Department of Business and Professional Regulation, 53 So. 3d 1158 (Fla. 1st DCA 2011), the Court awarded fees under section 120.595(5). In that case, the agency denied party status to the applicant for services. The Court said, “The position taken by the Division in the dismissal order, and maintained in this appeal, is so contrary to the fundamental principles of administrative law that, by separate order, we have granted Appellant’s motion for attorney’s fees under section 120.595(5), Florida Statutes.” The Court did not, however, define gross abuse of discretion any more specifically than that. Likewise, in Salam v. Board of Professional Engineers, 946 So. 2d 48 (Fla. 1st DCA 2006), the Court found that an agency’s intentional delay on acting upon a petition for formal administrative hearing warranted fees under the statute. The Salam Court did not further define gross abuse of discretion; it merely found that such abuse existed under the circumstances of the case. Gross abuse of discretion must, by definition, be more difficult to ascertain than simple abuse of discretion. Gross abuse implies that the Agency first believed its intended action was improper, yet engaged in the action despite that knowledge. That is, that the Agency acted intentionally to do something it knew to be wrong. Proof of such intent would be extremely difficult.1/ One need only look at the plain language of the Court’s opinion in the rule challenge appeal at issue here to see that there was no gross abuse of discretion. The Court ultimately held that although the Agency’s rules “directly conflict with and contravene the Legislature’s clear language” concerning development of an algorithm to assist with the distribution of funds to needy Floridians, “[W]e recognize the difficulty in adhering to the Legislature’s command to create an algorithm solely capable of determining each client’s level of need. Further, we accept that [Respondent] is attempting to find a reasonable way to administer funds to the tens-of-thousands of people in need that it assists.” G.B. et al., supra, 143 So. 3d 454, 458. Nothing in that language suggests that the Agency knew its proposed rule was improper or that it was doing anything intentionally wrong. Rather, the language of the Court’s decision indicates that Respondent was certainly attempting to exercise its discretion properly in the adoption of the Proposed Rules. Despite the Agency’s attempts to justify the rules both at final hearing and on appeal, the Court found that the Proposed Rules did not comport with the specific authorizing statute. That failure did not, ipso facto, establish that there was a gross abuse of the Agency’s discretion. Besides, upon hearing all the testimony and reviewing the evidence, the undersigned initially upheld the Proposed Rule; that, in and of itself, is some indication that the Agency’s efforts were legitimate. Thus, in the present matter, there is no rational basis for finding that gross abuse of discretion was involved in the Court’s award of attorney’s fees. Section 120.569(2)(e) As for section 120.569(2)(e), there is no evidence to support Petitioners’ contention that the proposed rule addressed in the rule challenge proceeding (DOAH Case No. 13-1849RP) was interposed for any improper purpose. The appellate court said, “[W]e accept that APD is attempting to find a reasonable way to administer funds to the tens-of-thousands of people in need that it assists.” Id. Clearly, the Agency did not act for an improper purpose; its best efforts to follow the Legislative mandate for an iBudget simply fell short. The Proposed Rules contravened certain specific requirements of the governing statute. In order to find a way to meet its mandate, the Agency made a Herculean effort, yet failed. Although Petitioners argue that an “improper purpose” was implied by the Court in the Fee Order, there is no substantive support for that position. Not only was APD’s attempt to find a “reasonable way” to discharge its responsibility found wanting by the Court, experts in the field who testified at the underlying hearing disagreed as well. There was no dispute about the intended purpose of the Proposed Rules, only as to how that intent was to be effectuated. There was never any dispute as to the Proposed Rules’ intended purpose; they were meant to find a way to serve the tens-of-thousands of people in need. There is nothing in any of the Agency’s actions in this case that would be even arguably described as “interposed for any improper purposes, such as to harass or to cause unnecessary delay, or for frivolous purpose or needless increase in the cost of litigation.” This attorney’s fee section does not apply to the facts of this case. Section 120.595(2) Finally, in section 120.595(2), the Legislature has declared that if an appellate court or administrative law judge declares all or part of a proposed rule invalid, an order will be entered awarding reasonable attorney’s fees and costs (unless the agency demonstrated that its actions were substantially justified). The Court ultimately concluded that the proposed rules “directly conflict with and contravene the Legislature’s clear language.” That being the case, the Court seems to be finding that the Agency’s actions--promulgating the Proposed Rules--was not substantially justified, even if the Court did recognize the difficulty faced by APD in its efforts to comply with the statutes at issue. By process of elimination, section 120.595(2) is the basis for the Court’s award of attorney’s fees in the present case. That being so, the award is capped at $50,000. The Agency has conceded that Petitioners are entitled to at least $50,000 in fees, as well as costs in the amount of $41,609.65. There remains the issue of whether each of the four Petitioners is entitled to an award of the maximum fee. In their (singular) Petition for Administrative Determination of the Invalidity of Proposed Rules, the parties sought the following relief: That a Final Order be entered finding the Proposed Rules to be an invalid exercise of delegated legislative authority; and That Petitioners be awarded their reasonable attorney’s fees; and Such other relief as the Administrative Law Judge deems appropriate. That is, the relief sought by each of the Petitioners was the same: invalidation of the proposed rules. It cannot be argued that each Petitioner in his or her own right was seeking individual redress or damages. Collectively, they wanted the proposed rules invalidated so that they could return to the status quo concerning their benefits from the State. In fact, only one of the four Petitioners presented testimony at the underlying administrative hearing as to the impact of the Proposed Rules. There was no issue as to each Petitioner’s standing in the underlying administrative hearing. As stated by the Agency in its Proposed Final Order in that case: “Petitioners are each recipients of Medicaid Services under the DD waiver program and have been or will be transitioned to the iBudget system. Stip., pp. 23-24. Thus, Petitioners have standing to challenge the substance of the Proposed Rules.” Petitioners contend that each of the 25,000-plus recipients of benefits from the Agency could have filed petitions challenging the Proposed Rule. That is true. But in the rule challenge proceeding there were four petitioners (ostensibly representing those other 25,000), each seeking the same relief, i.e., invalidation of the proposed rules. And only one of those, K.L., testified at final hearing in the underlying rule challenge proceeding. Thus, there is no justification for an award of fees to each of the Petitioners under section 120.595(2). In light of the findings and conclusions above, and based upon the Order as stated below, the issue of contingency multipliers is not relevant to the discussion of fees herein. As a general rule in Florida, fees and costs incurred in litigating entitlement to attorney’s fees are collectible although time spent litigating the amount of the award is not compensable. See, e.g., State Farm Fire & Cas. Co. v. Parma, 629 So. 2d 830, 833 (1993). § 92.931, Fla. Stat.; Stokus v. Phillips, 651 So. 2d 1244 (Fla. 2d DCA 1995). Inasmuch as the Agency does not dispute entitlement to attorney’s fees, no fees for the fee case are warranted. The amount of fees sought in this administrative rule challenge by the Petitioners is, as set forth in their Proposed Final Order: $255,614.39 for the DOAH rule challenge proceeding; $154,662.35 for the appeal but also applied a contingent multiplier for a total of $309,324.70; $62,850.00 for the fee case but also applied a contingent multiplier for a total of $94,275.00; and $41,609.65 in taxable costs, for a total of approximately $660,000.00. While the amount of fees and costs allowed under the appropriate statute is well less than what Petitioners sought, it has been deemed legally sufficient by statute.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Petitioner, a corporation headquartered in Charlotte, North Carolina, is in the business of operating movie theatres both within and without the State of Florida. At these theatres Petitioner Operates concession stands which sell both candy items and drinks in various sizes at different prices to persons who frequent the theatres. For the period of time from September, 1985 through May, 1985, Petitioner remitted to the Department of Revenue sales tax on the total taxable value of all taxable items sold at its concession stands in all of its Florida theatres, in accordance with the presumptive effective rate of tax of 5.63 percent contained in Rule 12A-1.11(37), Florida Administrative Code. As a result of an audit for a previous period dated October 1, 1982, Petitioner remitted to the Department of Revenue the amount of $10,637.00 for sales tax on taxable items sold at its concession stands during this audit period in accordance with the presumptive effective tax rate of 4.5 percent as contained in Rule 12A-1.11(37), Florida Administrative Code during the audit period. On August 15, 1985, Petitioner filed with the Department of Revenue, as agent for Respondent, two (2) applications for sales tax refund in the amount of $16,876.52 and $10,637.00. The applications were dated August 13, 1985, and were timely filed. During the refund periods at issue in this matter, the Petitioner: (a) posted and charged flat prices for the various items offered for sale, which prices included sales tax (b) kept records of daily and weekly sales of taxable items at each of its Florida theatres (c) kept records of daily attendance at each movie shown by each Florida theatre and (d) kept records of weekly calculations, through inventory analysis, of sales of drinks and candy items, including the number, size and price of each item sold at each of its Florida theatre. During the refund periods at issue in this matter, the Petitioner did not maintain cash registers at its concession stands in its Florida theatres and did not maintain records made contemporaneously with the sale of taxable items from the concession stands which separately itemized the amounts of sales tax collected on each sale transaction occurring at the theatres' concession stands. Rather, Petitioner chose, for its own convenience, to operate a "cash box" operation at each of its concession stands in its Florida theatres and willingly remitted sales tax to the Department of Revenue pursuant to the presumptive effective tax rate contained in Rule 12-1.11(37), Florida Administrative Code for the relevant periods. In April, 1985, Petitioner placed computerized cash registers in each of its Florida theatre concession stands. These cash registers provided tapes of each individual transaction each day, specifically recording each taxable and nontaxable sale and the amount of sales tax due on each taxable sale with a daily summation on each tape at each theatre. Rule 12A-1.11(37), Florida Administrative Code, requires concessionaires such as Petitioner to remit sales tax at a rate of 5.63 percent of taxable sales under the present 5 percent statutory sales tax schedule and at 4.5 percent of taxable sales under the previous statutory sales tax schedule unless a concessionaire, through its records, shows another effective rate by "proof to the contrary". Petitioner produced an effective tax rate of 5.13 percent for the month of April 1985, for all its Florida theatres by dividing the total sales tax collected during April, 1985 by the total taxable sales during April, 1985, as evidenced by the cash register tapes from all of Petitioner's concession stands in Florida. Petitioner then used that tax rate as a base to retroactively reconstruct an effective tax rate for the refund periods by assuming that the product sales mix (product mix of products sold) and the transactional sales mix (the number of items purchased together in a single transaction by a customer) experienced during the refund periods were the same as that experienced during the month of April, 1985. There was no competent evidence that the product sales mix or the transactional sales mix experienced during the refund periods were the same as that experienced during the nonth of April, 1985. There is insufficient evidence in the record to support Petitioner's reconstructed effective tax rates that were used to calculate the refunds. Therefore, Petitioner has failed to show "proof to the contrary" that its reconstructed effective tax rates are correct or that the presumptive effective tax rate contained in Rule 12A-1.11(37), Florida Administrative Code were incorrect for the refund periods at issue in this matter.
Recommendation Based on the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the Comptroller enter his final order DENYING Petitioner's refund applications. Respectfully submitted and entered this 25th day of September, 1986, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 25th day of September, 1986.
The Issue Whether the lump sum performance payments paid to Petitioner's employees should be considered compensation and included within the "average final compensation;" or whether such payments are "bonuses" and are, therefore, excluded for retirement purposes.
Findings Of Fact The District is a public corporation in the State of Florida existing by virtue of Chapter 25270, Laws of Florida, 1949, and operating pursuant to Chapter 373, Florida Statutes, and Chapter 40E, Florida Administrative Code, as a water management district. Retirement is an agency of the State of Florida existing by virtue of Section 20.22(2)(i), Florida Statutes, and operating pursuant to Chapter 121, Florida Statutes, and Chapter 60S, Florida Administrative Code, as the retirement and pension administrator for the Florida Retirement System (FRS). The District is an employer and its employees are eligible to be members of the FRS. The District is a member of the FRS pursuant to Section 121.051(2)(b)1., Florida Statutes, and, as such, makes regular contributions (based upon its employees' total compensation) to Retirement. Until February, 1993, and for the period of time at issue in this case, the District provided its employees with a total compensation package which included: one performance appraisal with a base pay increase depending on merit, and one interim performance appraisal with a lump sum performance payment also dependent on merit. The District's lump sum performance payments were funded on a sound actuarial basis. The District's performance appraisals are based on merit and the procedure for both base pay and lump sum performance appraisals are identical. The District's lump sum performance payments are paid according to a formal written policy which was adopted as a rule and applies to all eligible employees equally. In order to receive the lump sum amount, the employee must requalify for it each year based on merit. Eligibility for the District's lump sum performance payments commences during the first year an employee works at the District. The District's lump sum performance payments are paid at least annually to all employees who qualify for it. Not all District employees qualify for the payment. Less than one percent of the District's employees do not receive the lump sum performance payment. The District has made contributions to Retirement based upon the total compensation paid to its employees, including the lump sum performance payments. However, the District did not pay contributions for the months of February, 1990, through April, 1990; this cumulative amount was paid in lump sum to Retirement in May, 1990. Retirement accepted the contributions, including the lump sum performance payments, through February, 1993, when the plan was terminated and contributions ceased. The District was aware that Retirement had a dispute regarding the reporting of lump sum performance payments in June, 1992, as the result of a calculation of a District employee's retirement benefit. In May, 1993, after receiving notice of the disallowance, the District timely challenged Retirement's decision to exclude the lump sum performance payments from average final compensation.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That Department of Management Services, Division of Retirement, enter a final order disallowing the lump sum performance payments from the average final compensation of the District's employees and refunding all amounts contributed based upon such payments. DONE AND RECOMMENDED this 19th day of April, 1994, in Tallahassee, Leon County, Florida. JOYOUS D. 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 19th day of April, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-3377 Rulings on the proposed findings of fact submitted by the Petitioner: 1. Paragraphs 1 through 13, 16, 17, 19, 20, 21, 23, and 28 are accepted. Paragraph 14 is rejected as contrary to the weight of the credible evidence. Paragraph 15 is rejected as contrary to the weight of the credible evidence. Paragraph 18 is rejected as contrary to the weight of the credible evidence. Paragraph 22 is rejected as contrary to the weight of the credible evidence. Paragraph 24 is rejected as contrary to the weight of the credible evidence. Paragraph 25 is rejected as contrary to the weight of the credible evidence. Paragraph 26 is rejected as erroneous conclusion of law. Paragraph 27 is rejected as erroneous conclusion of law. Paragraph 29 is rejected as erroneous conclusion of law. Rulings on the proposed findings of fact submitted by the Respondent: Paragraphs 1 through 3, 7 through 11, 13 through 23, and 25 through 28 are accepted. With the deletion of the last sentence which is rejected as a conclusion of law, paragraph 4 is accepted. With the deletion of the last sentence which is rejected as a conclusion of law, paragraph 5 is accepted. With the deletion of the last sentence which is rejected as a conclusion of law, paragraph 6 is accepted. With the deletion of the third sentence which is rejected as irrelevant, paragraph 12 is accepted. Paragraph 24 is rejected as irrelevant. COPIES FURNISHED: Sheryl G. Wood Jacquelyn W. Birch South Florida Water Management District Post Office Box 2460 West Palm Beach, Florida 33416-4680 Stanley M. Danek Division Attorney Department of Management Services Division of Retirement Cedars Executive Center 2639 North Monroe Street Building C Tallahassee, Florida 32399-1560 A.J. McMullian, III Director, Division of Retirement Cedars Executive Center, Building C 2639 North Monroe Street Tallahassee, Florida 32399-1560 William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Sylvan Strickland Acting General Counsel Knight Building, Suite 309 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
