Findings Of Fact Terrell Oil Company (TOC) was incorporated in 1986 with Grady Terrell, Jr., as president; Richard W. Gilliam and J. Anthony Belcher as board director members. As of the time of this application, Grady Terrell owned 60 percent of the stock of the company, Belcher owned 20 percent, Gilliam owned 19 percent, and Anna Alverez, company secretary, owned 1 percent. The company was started with a $6000 loan made by Grady Terrell, Jr., which sum was borrowed from C & S National Bank (Exhibit 16). Grady Terrell, Jr., is a black male and, therefore, designated as a member of a minority and/or disadvantaged class by statute. Neither Belcher nor Gilliam invested capital in TOC, but received their stock in the company for services in kind. The By-Laws of TOC provide that all times at least 51 percent of the stock in TOC shall be owned by "minority individuals" as that term is defined in state and federal statutes applicable to minority business enterprises or disadvantaged business enterprises. Several lines of credit obtained by TOC from C & S Bank were guaranteed by Grady Terrell, Jr. (Exhibits 9-12). No loans to TOC were guaranteed by anyone else. Anthony Belcher resigned from the Board of Directors of Belcher Oil Company in 1982 and thereafter served as a consultant for approximately two years. He has not been affiliated with Belcher Oil Company since that time (Exhibit 15). Grady Terrell, Jr., executed the lease for the property occupied by TOC for an office (Exhibit 6). Grady Terrell, Jr., approves all major purchases, all invoices for payment, and other bills for payment except routine monthly bills for utilities, vehicle payments, etc., at TOC. In connection with the line of credit with C & S Bank, TOC assigns most of its receivables to the bank for collection. TOC is involved with bidding on and supplying various agencies of government (federal, state and local) with petroleum supplies. To make these deliveries, TOC owns two small tank vehicles of 1500 and 2500 gallon capacities, respectively. (The record is unclear whether the 2500 gallon tank vehicle replaced the 1500 gallon truck.) When necessary to deliver larger quantities than can be hauled in TOC's trucks, a commercial carrier is utilized. In all cases, however, TOC takes ownership of the oil at the loading site. TOC entered into a lockbox agreement with Belcher Oil Company in which Belcher extended TOC a line of credit to purchase petroleum products from Belcher. An arrangement was made with the bank to establish a special account into which the customer would remit payment for product delivered and the bank would credit Belcher's account for the invoice price. This lockbox arrangement with Belcher has been inactive for several years. At one time, TOC purchased nearly all of its products from Belcher, but that is no longer true. Richard W. Gilliam is the executive vice-president of Terrell. He receives no salary from TOC, but is reimbursed for out-of-pocket expenses. He has the authority to accept bids for the purchase of fuel from dealers and to execute contracts with purchasers. Gilliam has operated other businesses in the past and has considerably more experience in business matters than does Grady Terrell, Jr. However, no evidence was presented upon which a finding can be made that Gilliam is the person actually running TOC, and Grady Terrell, Jr., is but a figurehead. It is a fact that Grady Terrell, Jr., is legally in charge of, and has the authority to, fully direct the operations of TOC. In addition to the tank truck(s), TOC has leased a service station where three 3000 gallon tanks are located in which TOC can store inventory if desired. Grady Terrell, Jr., also executed this lease. TOC has been certified as a DBE by several governmental agencies, including the Defense Logistics Agency who contracts with TOC to deliver petroleum products to ships in Miami; and certification has been denied by more than two agencies to which applications were made. No evidence was presented that TOC failed to submit all information requested by DOT.
Recommendation It is recommended that Terrell Oil Company, Inc., be certified as a Disadvantaged Business Enterprise. DONE and ENTERED this 17th day of May, 1990, in Tallahassee, Florida. K. N. AYERS Hearing Officer Division of Administrative Hearings The Desoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of May, 1990. COPIES FURNISHED: John L. Chamblee, Jr., Esquire 202 Cardy Street Tampa, FL 33601 Vernon L. Whittier, Jr., Esquire Department of Transportation 605 Suwannee Street Tallahassee, FL 32399-0458 Ben G. Watts Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, FL 32399-0458 Attn: Eleanor F. Turner, MS 58 Robert Scanlan Interim General Counsel Department of Transportation 562 Haydon Burns Building 605 Suwannee Street Tallahassee, FL 32399-0458
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the application of JEDI Enterprises, Inc., for certification as a minority business enterprise be APPROVED. DONE and ENTERED this 27th day of August, 1984, 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 27th day of August, 1984. COPIES FURNISHED: Paul A. Pappas, Secretary Department of Transportation Haydon Burns Bldg. Tallahassee, Florida 32301 Thomas G. Brown, Esquire Florida National Bank Bldg. 301 First Street West Palm Beach, Florida 33401 Mark A. Linsky, Esquire Haydon Burns Bldg., M.S. 58 Tallahassee, Florida 32301-8064
Findings Of Fact At all times pertinent to the matters concerned herein, either the Department of Management Services, or its successor, the Commission of Minority Economic and Business Development, was the state agency in Florida responsible for certification of Minority Business Enterprises in this state. Johnston was started by Mrs. Cloversettle's grandfather and operated by him and his three sons, including Conrad Johnston, Mrs. Cloversettle's father, for many years. As a child and young woman, Mrs. Cloversettle worked at the place of business in differing capacities and learned something of the business operation. At some point in time, she married Mr. Cloversettle who was and has been an employee of the firm, and over the years, he operated much of the equipment used in the business. Mrs. Cloversettle is also a licensed cosmetologist, and owns and operates a beauty salon through a corporation she owns with her husband. He does much of the handyman work at that shop and she works, part time, as a cosmetologist. Most of her time, however, is occupied with the affairs of Johnston. There are currently 60 shares of common stock issued in Johnston Lithograph & Engraving, Inc.. Seven and three quarters shares are owned by Mr. and Mrs. Cloversettle. Three and three-quarters shares came from her father, and she acquired four additional shares at the time she bought the business. Three and three quarters shares are owned by Mrs. Cloversettle's aunt, Ms. Sims, who lives in North Carolina; fifteen shares are held in the name of her father, Conrad Johnston; and eighteen and three-quarters shares each are held by his two brothers, Bert and Don. Ms. Sims takes no income from Johnston, does not participate in the management of the company, and plays no role in it other than as share owner. At one point, Mr. Cloversettle owned a one-half interest in the four shares his wife got at the time of purchase, but she considered herself the owner in that they were titled jointly only "for simplicity", just as the house and their bank accounts are also owned jointly. On April 26, 1994, after the initial denial of Petitioner's application for MBE certification, the joint ownership was terminated and the shares registered in Ms. Cloversettle's name only without any exchange of consideration therefor. Much the same pertains to the company bank accounts. Before the denial, both George and Brenda Cloversettle could sign company checks. Since then, however, George Cloversettle has been removed as an authorized signatory on company accounts. The shares owned by Ms. Cloversettle's father and his brothers, Donald, Bertram, are presently held as "security" for the payment of the purchase of Johnston by Mrs. Cloversettle. The shares are not voted and are held in escrow under an escrow agreement. A stock pledge agreement, dated February 7, 1986, to which the Cloversettles were not parties, produced after the hearing, pertains only to the corporation and Conrad and Margaret Johnston. Its terms, somewhat confusing, can best be interpreted as providing that upon default in payment, the stock held in escrow would revert to the original holder as titled on the face of the certificate or, at the option of the original owner, be sold. At the time of denial, the shares owned by Donald and Bertram had not been properly endorsed into the escrow but this was done prior to formal hearing when, by affidavit dated August 1, 1994, the escrow agent indicated both Donald's and Bertram's shares were subject to the 1986 escrow agreement. The 1986 agreement prohibits the issuance of any new or additional shares of stock until the purchase obligation is paid off. This provision may have been violated when the four additional shares were issued to the Cloversettles in 1990. The shares owned by both Bertram and Donald were the subject of a stock sale agreement for $93,000.00 for each block of eighteen and three-quarters shares. Both the date of the agreement and the signatures of the parties are not evidenced on the documents, however, but it appears Bertram deposited fifteen of his shares with the Tampa 1st National Bank in 1975, some fifteen years prior to the Cloversettle's 1990 purchase of the company. Conrad Johnston entered into a purchase agreement in 1985 with the original owners which did not include the Cloversettles. His fifteen shares were signed into escrow on February 6, 1986. These discrepancies in capital ownership were not clarified at hearing. Mr. and Mrs. Cloversettle entered into the agreement to buy the company from the Johnstons in 1990 for a purchase price of $300,000. Though in an earlier deposition, Mrs. Cloversettle indicated only about $3,000 of the purchase price had been paid, which money allegedly came from the proceeds of an insurance policy loan and a mortgage on their home, at hearing, she testified $30,000 had been paid, all of which came from the mortgage on their home. No payments on the obligation are currently being made by the Cloversettles because each of the original owners executed an agreement deferring payment until the company is financially able to make regular payments. The minutes of a special shareholder's meeting held on July 8, 1994, reflect the above-noted Johnston brothers' certificates were surrendered for cancellation in July, 1990. However, the minutes also note that the sale and redemption of the certificates was subject to an escrow pursuant to the February, 1986 escrow agreement which, in November, 1993, was affixed to an amended agreement naming Edward Hill as Escrow Agent, which referred to the Johnston brothers not as stockholders but as secured creditors. Because of the complex manipulation of the shares and their status, it is impossible to determine the relative ownership of the parties. Petitioner has not established with any degree of clarity that Brenda Cloversettle, though a minority owner, has actual and real ownership of at least 51 percent of the company equity free of any residuary or reversionary interest which could divest her of her 51 percent ownership. The shares covered by the escrow agreement, while classified by Petitioners as treasury stock, cannot legitimately be so considered since it is still in the name of the original owners and does not become property of the company until the obligation incurred for its purchase is satisfied. While, as noted previously, no additional payments have been made on the purchase price, the company maintains a life insurance policy on each Johnston which Ms. Cloversettle indicates is to be used to pay off the outstanding debt upon their respective deaths. She admits however, there is no document requiring the insurance proceeds to be used that way, and no independent evidence of the policies' existence was forthcoming. The primary business of Johnston is commercial printing/graphics. Ms. Cloversettle is the sole director of the corporation whose bylaws, as of July 8, 1994, require all directors to be minority persons. She has asserted, and it was not disproved by evidence to the contrary, that she has the primary role in decision-making concerning the company's business transactions and she is the sole person required to execute any transaction related documents. She has final authority as to all corporate decisions and is not required to consult with anyone else when corporate decisions are being made, though she may do so. Johnston does not keep inventory on hand but purchases supplies necessary on a job driven basis. According to Ms. Cloversettle, she controls the purchase of inventory and determines the need and appropriateness of equipment rentals or purchases. She seems to be familiar with and to understand the use of the products utilized by the company in its daily operations. She has a fundamental knowledge of the equipment used in the company's operation and, though she may not be fully qualified to operate every piece, can operate some of it. Though she periodically consults with her husband regarding business operations, she is not required to do so and has the responsibility for the hiring and management of employees. She alleges she sets employment policies, wages, benefits, and employments conditions at the company without the need to coordinate her actions with anyone. However, in a phone interview with the Department's representative, in February, 1994, Ms. Cloversettle had difficulty correctly answering many of the technical questions she was asked at hearing. Mr. Cloversettle, who has worked with the firm for approximately twenty years, is its key employee in computer graphics and serves as production manager and vice-president. Without doubt, along with Mr. Ezell, the firm's printer, he is primarily responsible for the daily plant operations, supervising the other employees, planning daily work flow, and insuring the vendors who supply the needed raw materials do so in a timely fashion. Ms. Cloversettle is college trained and, as noted previously, a licensed cosmetologist. She has done bookkeeping for the firm and acted as office manager, but has no formal training in printing, or graphics, other than years of observation as she grew up with the operation when it was operated by her father. Her primary hands-on experience is in book bindery and shop cleaning but she can run some of the smaller, less exotic equipment. She is not familiar with all the terms and duties involved in the operation of this business and could not accomplish them all. She acknowledges she spends most of her time in the office. She claims to be solely responsible for the financial affairs of the company and is the only one currently authorized to sign company checks. This situation, as has been noted, is of but recent origin, however. Nonetheless, Mr. Cloversettle continues to remain subject to equal debt responsibility with Ms. Cloversettle because of his prior co-signing of risk documents relative to loans taken by the company prior to the application, denial and hearing. Ms. Cloversettle's testimony regarding her method of evaluating the company's ability to perform potential jobs creates the impression that she is aware of the company's limitations and its abilities. She does not run the cameras or the presses and she need not do so. She does not solicit business but she hires a salesperson to do so and has the authority and capability to evaluate and accept or reject the work brought in. In the last two quarters of 1993, according to company payroll records, Mr. Cloversettle was paid approximately $6,426.00 while Ms. Cloversettle was paid only $2,650.00. However, after the application was denied, the ratio was changed dramatically to where she now earns $180.00 per week, and he, only $52.95.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that a Final Order be entered denying Johnston Lithograph & Engraving, Inc.'s request for certification as a minority business enterprise. RECOMMENDED this 15th day of September, 1994, 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 15th day of September, 1994. APPENDIX TO RECOMMENDED ORDER The following constitutes 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: & 2. Accepted and incorporated herein. 3. Accepted as to the shares of Ms. Cloversettle and Ms. Sims. However, this does not indicate acceptance of the proposition that there are no other shareholders, or that the transfer of shares from Mr. Cloversettle to his wife was bona fide. 4. Accepted and incorporated herein. 5. Accepted and incorporated herein. 6. Accepted. However, as noted in the body of the Recommended Order, it is impossible to clearly define the actual status of the brothers' and father's retained shares or whether they have the potential to dilute Ms. Cloversettle's shares. 7. Accepted and incorporated herein. 8. Not proven. 9. Not proven. 10. - 12. Accepted, but based entirely on unsupported testimony of Ms. Cloversettle. 13. & 14. Accepted and incorporated herein. 15. - 18. Accepted, but based entirely on unsupported testimony of Ms. Cloversettle. 19. & 20. Accepted and incorporated herein. 21. Accepted as a restatement of testimony. 22. & 23. Accepted. 24. Accepted as a restatement of testimony. 25. Not an appropriate Finding of Fact but a comment on the evidence. 26. & 27. Accepted and incorporated herein. FOR THE RESPONDENT: First four sentences accepted and incorporated herein. Balance accepted as a comment on the evidence. Accepted. Not a proper Finding of Fact but more a comment on the state of the evidence. Accepted. Accepted but more as a comment on the state of the evidence. - 12. Accepted and incorporated more briefly herein. More a comment on the evidence and a Conclusion of Law than a Finding of Fact. Accepted and incorporated herein. First two sentences accepted and incorporated herein. Balance more a comment on the meaning and effect of the basic fact. & 17. Accepted and incorporated herein. First three sentences accepted and incorporated herein. Balance comment on the evidence. - 22. Accepted and incorporated herein. 23. & 25. This is a restatement of testimony by both sides. 26. & 27. Accepted and incorporated herein. COPIES FURNISHED: Frederick T. Reeves, Esquire Langford, Hill, Trybus & Whalen, P.A. Post Office Box 3277 Tampa, Florida 33601-3277 Wayne H. Mitchell, Esquire Commission on Minority Economic and Business Development Knight Building, Suite 201 2737 Centerview Drive Tallahassee, Florida 32399-0950 John Thomas Interim Executive Director Commission on Minority Economic and Business Development Knight Building 2737 Centerview Drive Tallahassee, Florida 32399-0950
Findings Of Fact Petitioner Haul-It, Inc., is a trucking company in the business of hauling road building materials. It owns 19 trucks and 13 trailers worth about $106,000; and owes between $75,000 and $79,000 to a bank. Occasionally petitioner engages additional trucks and drivers. All but eight of its 15 or 16 employees are truck drivers. Haul-It, Inc., was organized in 1973. Jack Taylor and his father started the business but later sold out to Hubert E. Real, the president, half- owner and operator of Columbia Paving, and Wiley Jinwright, a 24-year employee of Columbia Paving. Mr. Jinwright became president of Haul-It, Inc., and Jack Taylor stayed on as truck foreman. Messrs. Real and Jinwright each owned 20 shares of stock, representing half interest in petitioner. Columbia Paving itself has never held any of the 40 shares of stock that petitioner has issued. In November of 1980, Mr. Real conveyed all 20 of his shares to his wife, Helen Real; and Mr. Jinwright conveyed one share to Mrs. Real. Both transfers of stock to Mrs. Real were gratuitous. She knew at the time that her ownership might help Haul-It, Inc., qualify as a minority business enterprise. In addition, Mr. Real "had had a couple of heart attacks" (T. 14) and Mrs. Real "thought it would be nice to have a related [to Columbia Paving] business." (T. 14.) The evidence did not reveal whether Mr. Real has spent more, less, or the same amount of time with petitioner's affairs since his divestiture as before. Mr. Real remains active as president of Columbia Paving. From November of 1980 to the time of hearing, Mrs. Real has owned 52.5 percent of petitioner's stock and Mr. Jinwright has owned 47.5 percent. Petitioner's only offices are housed in a trailer located on land owned by Columbia Paving. Haul-It, Inc., pays Columbia Paving rent for the land on which its office trailer, trucks, and other equipment are parked. At the time of the hearing, between 70 and 80 percent of Haul-It, Inc.'s work was being performed under contract to Columbia Paving. As far as the evidence showed, petitioner has always performed most of its services under contract to Columbia Paving. Although it has had other customers, Columbia Paving is petitioner's only regular customer. (T. 27.) Petitioner uses Columbia Paving's computer to keep its books and shares a bookkeeper with Columbia Paving. Each company pays the bookkeeper a separate salary. Mrs. Real sits on Columbia Paving's board of directors. Neither Columbia Paving nor any other entity uses petitioner's hauling equipment unless it has contracted to do so. When Haul-It, Inc., "bid[s] through Columbia Paving" (T. 39) in response to invitations by the Department of Transportation, Columbia Paving personnel check the bid over to make sure that it "fits whatever plan or whatever estimates they feel are in order." (T. 40.) Soon after she became owner of a majority of petitioner's Stock, Mrs. Real became petitioner's vice-president, secretary, and treasurer, even though she had had no prior experience in the trucking business. Mr. Jinwright remains president of Haul-It, Inc. It was also in November of 1980 that Haul-It, Inc., applied for certification as a minority business enterprise. At that time and for some months afterward, Mrs. Real was not working for Haul-It, Inc., on any regular schedule. On the basis of the information petitioner furnished with its application, respondent, in November of 1980, "certified them for 12 months, on the condition that an on-site review would be conducted and at that time the decision would be made as to the ownership and control and whether this minority business enterprise should be continued as certified." (T. 61.) In April of 1981, respondent's Mr. Nath conducted an on-site review. At that time, Mr. Nath requested additional documents which petitioner eventually mailed to respondent. In September of 1981, respondent for the first time communicated to Haul-It, Inc., its intention to disqualify petitioner as a minority business enterprise. After receiving this news, Mrs. Real began going to work for petitioner daily. She has an office in the trailer that she shares with Mr. Jinwright, whose role in Haul-It, Inc., was reduced to cosigning checks when Mrs. Real began working full time. Most of Mr. Jinwright's time is now spent as Superintendent of Columbia Paving's four asphalt plants. Even so, he still draws a salary from Haul-It, Inc., equal to Mrs. Real's salary. Despite their respective titles, both Mr. Jinwright and Mrs. Real act on the assumption that she, rather than he, has ultimate authority in the conduct of Haul-It, Inc.'s business. Mrs. Real has full authority to hire and fire, authority which she has delegated, in the case of the truck drivers, to Jack Taylor. She has the final say on all questions of policy and operations that arise in the business. Haul-It, Inc., cannot borrow money or make expenditures without her permission. Jack Taylor and two other employees buy for Haul-It, Inc., but she cosigns all checks with Mr. Jinwright. She has not learned how to prepare a written bid for the Department of Transportation, although she is involved with bidding. Mrs. Real relies heavily on Jack Taylor's bidding expertise, as have petitioner's other owners. Petitioner's proposed findings of fact and conclusions of law and respondent's proposed findings of fact, conclusions of law, and recommendation reflect the good work done in this case by counsel on both sides. To the limited extent proposed findings have not been adopted, they have been deemed immaterial or unsupported by the evidence.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent deny Haul-It, Inc., certification as a minority business enterprise. DONE AND ENTERED this 3rd day of March, 1982, in Tallahassee, Florida. ROBERT T. BENTON, II 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 3rd day of March, 1982. COPIES FURNISHED: Patrick E. Hurley, Esquire Post Office Drawer 1049 Tallahassee, Florida 32302 Vernon L. Whittier, Jr., Esquire Ella Jane P. Davis, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32301 Paul A. Pappas, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301
Findings Of Fact At all times pertinent to the matters concerned herein, the Respondent, Department of Transportation, was the state agency responsible for the construction and maintenance of state highways in Florida and for the certification of disadvantaged and minority business enterprises to do business with it. Petitioner, Tri-D, Inc., is a heavy construction firm whose primary business involves the installation of water, sewer and storm pipes, including conduits for all underground utilities, doing business in the State of Florida. Tri-D, Inc., was organized and incorporated by Donald Burton in 1979. Mr. Burton was the sole owner and President until 1982 at which time his wife, Nancy Ann, became the Secretary/Treasurer of the corporation. In 1985, Lou DeMarco was hired as Vice President. In 1986, Mrs. Burton and Mr. DeMarco each purchased 10 shares of corporation stock. In doing so, each became a one/third owner of the corporation. In March, 1990, Mrs. Burton purchased an additional 20 shares of corporate stock, which has a par value of $10.00 per share, for $200.00. When this was done, fifty total shares were outstanding, of which Mrs. Burton owned sixty percent. Mr. Burton and Mr. DeMarco each owned twenty percent of the corporate shares. At the time Mrs. Burton became the sixty percent shareholder, she was also made Chairman of the Board of the corporation. Mr. Burton remains President, and Mr. DeMarco, Vice President. There have been no other changes in the corporate structure since that time. All three shareholders receive the same salary, $600.00 per week. The decision to make Mrs. Burton the majority shareholder came about as a result of the desire to facilitate Tri-D's qualification as a DBE. One month after her purchase of the controlling interest in the corporation, Tri-D applied for certification as a DBE and after investigation by the Department, the application was denied on the basis that Mrs. Burton did not exercise the requisite control of the firm. Mr. Burton holds a state license in Florida as a registered underground utility contractor, the license under which Tri-D, Inc. does business. He has held that registration for approximately 6 or 7 years. It is not the type of registration which requires a competency examination. Mr. Burton founded the company in 1979 and has been the President from that time on. He cannot remember whether he was sole stockholder at the time or not, but does recall that even in 1979, his wife was significantly involved with the business. Before she started with Tri-D, she had her own catering company, but when Tri-D started out, it grew with a speed beyond his expectations, and he was not able to handle it alone. As a result, Mrs. Burton gave up her own company in order to devote full time to the affairs of Tri-D. Mrs. Burton did the things he was unable to handle from the time the company was started up to approximately 1985. At that point, she started taking control of the entire business because he had to devote his time to field operations. Because of the loss that Tri-D suffered as a result of a job that they were working on at that time, in which the original contractor was dismissed and Tri-D was required to finish up under the sole direction of Mrs. Burton, Mr. Burton has been very unhappy with the entire industry since, and his involvement with the company from a management standpoint has decreased radically. He is now getting into other investments and has other financial interests. He is a Director of the Southern Utilities Contractor Board, and he sits on the Board of the Florida Contractor's Association and on the National Utilities Contractors Board, as well as the National Wetlands Committee and the National Safety Committee of that Board. These various interests take up a substantial portion of his time, and were it not for Mrs. Burton being able to run the company, he would not be able to serve on them. Mr. Burton sees the division of responsibilities at Tri-D as calling for Mr. DeMarco to handle the financial aspects and him, Burton, to handle field operations. Mrs. Burton actually brings it all together, coordinating the efforts of finance with those of operations, and making the ultimate decisions on anything that goes on. He has retained the title of President primarily because he could see no reason to change it. There are a lot of people who do not care to deal with women and because he retains the title of President, he can deal with them when they refuse to talk to his wife. He contends, however, that Mrs. Burton makes all decisions, not only on questions of finance, but also on questions of bids and contract letting, and she has final decision authority as to whether or not to take a contract or bid on one. Once that decision has been made by Mrs. Burton, then the financial aspects are controlled, to a degree, by Mr. DeMarco, and the operational concerns by Mr. Burton. Purchases by the company are approved by Mrs. Burton, as is the hiring and firing of employees, though the actual implementation of the decision might be left to someone else. Several years ago, Mrs. Burton was offered the title of President, to go with the realities of her responsibilities, but she declined it. When Mrs. Burton purchased the additional shares in the company which brought her ownership up to 60%, she paid only the $10.00 per share par value. At that time, for the additional minimum investment, she acquired a 60% ownership in all corporation tangible assets and good will which had been developed over the years since the company was founded. Mr. Burton justifies this on the basis that at the time, though she paid only par value, the corporation owed her a great deal of money representing sums she had loaned the company over the years. She estimates this at somewhat in excess of $100,000.00, much of which she inherited from her mother and grandmother. Mr. Burton cannot say where these loans are reflected in the company books, and Mrs. Burton indicates she has, somewhere, notes for only a portion thereof. Nonetheless, there is no evidence to contradict these assertions, and they are accepted. Item 32 on the application form shows a total of $68,108.00 owed by the company to Mrs. Burton. The Department's consultant, Mr. Knight, took the position that the fact that all three principals earn the same salary, $31,500.00 per year, ($600.00 per week), indicates that Mrs. Burton is not really the controlling owner since the relationship between salary and responsibility is one of the indicators for DBE qualification. However, Mr. Burton feels that the salary an individual makes need not necessarily be commensurate with that person's ownership in the corporation or, for that matter, with their responsibility. Mrs. Burton relates that up until a few years ago, she was not earning as much as her husband or Mr. DeMarco. However, because of the money she had invested in the company, and because of the fact that over the years she kept gaining more and more control of the business and assuming more and more responsibility, she felt she was entitled to make at least as much as everyone else was making. No dividend is paid at the end of each year. Any surplus is plowed back into the business. Mr. Burton's field supervision amounts primarily to his driving around to the various jobs to oversee that the employees are working and to check with the job superintendent to insure that things are being done properly. If something needs to be taken care of, he works it out with the superintendent and makes sure that that individual has the information he needs to keep the job going. Though both Burtons are not usually in the field, at the same job, at the same time, there have been frequent occasions when he has been on a job site and she has shown up. When she is on the job in the field, she does exactly what he does - facilitate the completion of the job. In any event, if the field superintendent needs to call about the failure of supplies or equipment to get to the job site timely, he calls the main office where the message is delivered to Mrs. Burton who takes the necessary action to resolve the problem. With respect to authority, Mrs. Burton leaves little doubt as to her opinion as to who controls the business. As she succinctly put it, There is no doubt that I am the boss. There is no doubt. I mean, I've been the boss in our family. I'm the boss in Tri-D. I'll tell you the honest truth. I've got two boys; they both work for me. One goes to college part time and the other one works for me, and he goes to Mom for all decisions. He did when we were at home and he does now. She admits that sometimes Mr. Burton is not entirely happy with the decisions she makes. In fact, on one occasion, "He did a few flips" about a decision she'd made, but her decision was not changed. Mrs. Burton also admits she cannot be everywhere at all times, and she cannot do everything that needs to be done. As a result, she has delegated some of her responsibilities to others to implement, but the ultimate policy making and the overall conceptual decision making is done by her. Though her husband feels he has responsibility for field supervision, in reality she does not believe that during the last year he has been on the job that much. When he gets there he causes problems because he is angry as a result of his disenchantment with the industry, and blows up and takes off. As a result, she encourages him not to go out on the jobs. The field superintendents, she claims, primarily report to her. She has a radio in her office which allows her to stay in constant contact with the field superintendent on each of the jobs. In addition, she goes out to the jobs - not as much as she would like, but when it is necessary, and she claims she is on every job, one way or another, two or three times a week. It does not matter, however, whether she is physically present on site or not. Through the radio, she can be reached at any time. Mrs. Burton has qualified people whom she has put in charge of each of the company's jobs, but when the time comes for someone to "crack the whip" with the employees, she does it. Mr. DeMarco's function is primarily financial, yet periodically she sees things he has done which she has to "whack him every now and then" for. She's not particularly happy with the way he pays the bills, and he comes to her to collect from the more recalcitrant clients. In short, he manages the routine financial aspects of the firm, but when it comes to big checks, subcontractors, or the important matters, she makes those decisions. She admits she does not always sign all contracts entered into by Tri- D. On occasion, other employees, primarily Mr. Zeigler, have signed contracts, but they are not supposed to do so without her prior approval. On the rare occasion that her policy has been violated, she was furious, and as she stated, "I kinda beat him up a little bit." For the most part, however, if Mr. Zeigler wants something, needs something, or really has to have a financial question answered, he will come to her for help. All major purchases must be approved by and cleared through her, and she is the company's primary liaison with the Gulf Coast Builders Exchange, an industry association which serves as a clearing house for contractors in the area and through which much of the company's business is derived. In 1982, through her efforts, the company was enrolled in the Exchange, and since that time, the company's membership has been in her name. No independent evidence was presented by the Department to rebut or contradict any of the above. Mr. DeMarco's expertise is primarily in the field of accounting and finance, and his relationship with Tri-D is limited to that area. He does not get involved in field operations, and participates in the management of the company only to a limited degree. It is his understanding that company practice dictates that decisions be made by Mrs. Burton after they are discussed to some degree among Mrs. Burton, Mr. Burton and him. He is satisfied that Mrs. Burton has the final word, however. Mr. DeMarco signs checks for the company, occasionally, but two signatures are required on company checks. In almost every case, Nancy Burton is one of the two signatories. In regard to payroll, however, the other signatory could well be the payroll clerk. Also, on occasion, he signs construction contracts for the company, but both Mr. and Mrs. Burton have independent authority to do that as well. If anyone else were to sign a contract for the company, it would have to be authorized first by Mrs. Burton. Routine operating practice provides that when a contract comes in, it is first given to Mrs. Burton to look at and then is sent to the estimating department to be evaluated against the bid to be sure it is consistent with the bid submitted. If there are any comments to be made, they are discussed among the parties, and then the contract is ultimately referred back to Mrs. Burton who can either elect to sign it or authorize someone else to do so. However, she is the final authority as to whether it is signed at all or not. Mrs. Burton is also the individual who selects the lawyers and accountants used by Tri-D in its routine operations. Mr. Burton's role with the company is primarily in the field. His expertise is more in the area of mechanics and his involvement in the actual management of the company as regards financial management and contract administration is virtually nil. According to Mr. DeMarco, even before the change in proportionate ownership in 1990, since his association with the firm in 1985, there really has been no change in operation. Mrs. Burton has always made all the ultimate decisions for the company. Even in the area of his expertise, financial matters, he does not have the authority to independently sign contracts without first securing approval from Mrs. Burton. Though he recently signed for the company on a $200,000 loan, it was discussed with Mrs. Burton before hand and it constituted, in fact, only the renewal of an existing loan and not the initiation of a new loan resulting in increased company debt. Rick Arnold, a sales representative for Barnie's Pumps, a company which sells equipment to contractors, including Tri-D, has dealt with Tri-D for the past 10 years and makes contact with company management about once a month. He first met Mr. Burton at a job site in 1981. His acquaintance with Mrs. Burton came about somewhat later, but he has known her for approximately 8 years. Unless he is called by Tri-D, he generally just periodically goes to one of the work sites and meets with either Mrs. Burton or Mr. Zeigler, the estimator. He has found Mrs. Burton to be knowledgeable concerning the industry in which Tri-D operates, and though his relationship with the company relates only to his product, what he sees in Tri-D's office when he is there indicates to him that Mrs. Burton is responsible for handling the entire scope of the business. When they speak, she seems familiar with the subject matter and understands the information he has to impart. Based on his observation of the Tri-D operation over a 10 year period, he has concluded that Mr. Burton's role in the operation of the corporation has diminished considerably from what it used to be. He is comfortable with the decisions he gets from Mrs. Burton and does not feel, after having talked with her, that he has to find Mr. Burton or anyone else to confirm what she has decided. He believes that the impetus for Tri-D's preference to do business with him and his concern comes from Mrs. Burton. Philip Light, Vice President of Luehring Land Development, who has been in the construction industry for approximately 25 years, has had business contacts with Tri-D since early in 1989. He recalls several substantial projects where Luehring was general contractor to Tri-D on projects. In each case, the relationship between the two corporations was formed through a bid process where Tri-D was awarded a subcontract. In all cases, Mr. Light's counterpart at Tri-D was either Mr. or Mrs. Burton. To his recollection, he would deal with Mrs. Burton approximately 60% of the time. Much of his relationship with Mr. Burton was related to field problems, though he also dealt with Mrs. Burton in the field. As a result of his dealings with her, he believes without question that she is knowledgable in all phases of the industry in which they both operate. On one occasion where a dispute developed on a project in which they were both involved, his negotiations during the litigation which resulted in the settlement of that dispute was always with Mrs. Burton, and no one else from Tri-D was involved in the settlement discussions. Based on his observations as an outsider, but one who deals with Tri-D on a frequent basis on bidding, contracting, pricing and billing, he is satisfied that Mrs. Burton is the prime and controlling individual in the operations of that concern. He is also satisfied that both technically and administratively, she is fully aware of the responsibilities of the job and exercises supervision and control in both areas. After Tri-D submitted its application for certification as a DBE,in accordance with Department rule, the file was assigned to Howard Knight who conducted the required investigation and on-site interview of Tri-D's operation, and prepared a summary of his findings for the certification committee within DOT. In the on-site interview, conducted after advance notification, the consultant looks primarily at certain key functions of the minority program including ownership, management and control. He tries to determine if the minority owner of the firm owns 51% of the company, and whether that 51% is in stock and equipment or expertise and background. The Department does not question Mrs. Burton's majority ownership of the corporation. He also looks at whether or not the minority owner in fact has control of the company - whether or not that person acts independently of other people involved in the company operations, ownership or management. He looks at who is signing the documents and papers of the corporation and the checks, who is supervising, and who is hiring and firing. One criteria established by the federal government, as well as the state, is that the minority majority owner act independently of others. Those steps were followed in Mr. Knight's survey of Tri-D which took place on June 27, 1990. During the interview, he worked primarily with Mrs. Burton, but also contacted some individuals from outside the company who had business relationships with Tri-D in an effort to determine with whom in the company they dealt. Some of these people dealt with Mrs. Burton exclusively, and some with others. For the most part, however, Mrs. Burton was accepted as at least an equal to her husband in business matters. It does not appear that Mr. Knight interviewed anyone in the company except Mrs. Burton. Mr. Knight had some reservations regarding Mrs. Burton's control of the company. In his opinion, it appeared there was not sufficient control as called for by federal and state regulations. He perceived a lack of independence in her control of the corporation. In making that determination, he looked at several indicators which, to him, showed she acted either with her husband, with Mr. DeMarco, or with some other person in the firm, and in Mr. Knight's opinion, few of the actions she took were independent of someone else. In support of that conclusions, Mr. Knight referred to the application and the on-site review check list accomplished at the time of the interview, which was filled out either by or in conjunction with the applicant, and in which certain questions were answered which led him to conclude Mrs. Burton did not act independently. Paragraphs 18 - 20 of the application, which ask for the names and titles of the individuals who perform certain managerial functions for the firm, provide spaces for two names as to each area. With only one exception, that dealing with the supervision of field operations, Mrs. Burton was one of the two individuals identified. The other was either Mr. DeMarco, Mr. Burton or Mr. Zeigler. This shows that while one of those three might perform some tasks, with the one exception, Mrs. Burton could perform all of them. This appears to be some substantial evidence of overall supervision and control. Nonetheless, because of the fact that Mrs. Burton's name was not usually listed alone, all of the above established, in Mr. Knight's mind, that Mrs. Burton does not act independently of others in her management of the organization. In fact, the only thing he could see that she does by herself is hire and terminate employees. Only the question, "Who establishes policy procedures?" is answered utilizing Mrs. Burton's name alone. Other factors which Mr. Knight felt indicated a lack of control by the minority party were what he perceived to be Mrs. Burton's lack of expertise and licenses to run the business, and he questions whether or not she can do so without the assistance of Mr. DeMarco from the financial side, and that of Mr. Burton and Mr. Zeigler from the operational standpoint. All of the business licenses of the firm are in Mr. Burton's name. Comparing the resumes of Mr. and Mrs. Burton, and those of the other people in the company, led Mr. Knight to the conclusion that all those other than Mrs. Burton had more experience and expertise in the construction business. Further, Mr. Knight rejects Mrs. Burton's contention that her husband is not particularly involved in the business, finding instead that he is quite involved because he signs a lot of business documentation, repairs equipment, is out seeking jobs for the company, and serves on numerous boards and councils directly relating to the construction industry. He feels the company history, indicating that it was started by Mr. Burton, added to by Mr. DeMarco, and finally turned over to Mrs. Burton only recently supports his position. He also considers the company officer structure to indicate a lack of control in Mrs. Burton. The President of the company is, in his opinion, normally the one who makes decisions and runs the daily business of the company. Mr. Knight also investigated the financial structure of the company relating to who signs and makes the loans, how the majority ownership was transferred to Mrs. Burton, and what she gave in return for that majority ownership. He was unable to develop much relevant information regarding the consideration paid for the stock above and beyond par value. With regard to the authority to sign loans, however, Mr. Knight felt it significant that Mr. DeMarco was the only signatory to a major loan to the company. He felt a loan of this size would ordinarily be signed for by the controlling owner of the corporation, and the fact that DeMarco did it and not Mrs. Burton was, to him, significant. This, however, is the renewal loan, the signature for which had been fully discussed with and coordinated on by Mrs. Burton. Mr. Knight's summary was submitted to the Department's Certification Committee, whose function it is to recommend on any particular file whether or not the applicant should be certified as a DBE. The committee does not consider the report of the consultant to be a recommendation by itself. In fact, the consultants are instructed not to make recommendations to the committee, but to compile facts which are summarized for the committee and used by it in its independent determination of whether or not a recommendation for certification should be made to the Director. In the instant case, the committee recommended against certification of Tri-D. The certification committee meets on a weekly basis and considers anywhere from 7 to 16 applications at any time. Three of the four committee members are voting members. Before the committee meets as a collegiate body, the individual files are circulated among the members for review, and by the time the members meet as a body to discuss and recommend, they should be familiar with the aspects of each application and be prepared to discuss it. In the instant case, the committed accepted the fact that Mrs. Burton, the minority party, is, in fact the majority owner. They saw, however, a major problem regarding the day to day control of the corporation. It was clear to Mr. Waldon, in his review of the file and of Mr. Knights report, that Mrs. Burton did not exercise the requisite day to day control of the company. That determination was based on his evaluation of some eight or nine factors listed on Schedule A of the application form, and includes such items as equipment purchases, hiring and firing, and the like. In almost all of those categories, according to Mr. Waldon, Mrs. Burton was listed as either the secondary person in authority or had no authority at all in a particular category. This latter claim is clearly contradicted by the evidence of record. Only in one area was she not listed as an actor. Mr. Waldon admits that the review by the certification committee was based entirely on the documents contained in the file, and it was on the basis of those documents, the financial papers, the signatures on leases and loan papers, and those items which are contained in the documentation file, which led the committee to the conclusion that there was insufficient evidence to show Mrs. Burton exercised the requisite day to day control that one would expect from the chief managing officer of a corporation. One of the primary indicators that the committee relied upon in reaching its conclusion was the fact that Mrs. Burton did not have the title of President of the corporation. Further, on the notarized application form, filled out by Mrs. Burton, she indicated she did not play a leading role in most of the categories looked at in determining whether or not she had day to day control of the entity. Again, this is merely the committee's interpretation of the answer. When the committee reviews an application, it looks primarily at the applicant. While no one aspect of a file will control, each of the various aspects and documents in the file contributes to the overall picture generated in the collective minds of the committee as to whether or not the applicant meets the criteria for certification as a DBE. In this case, based purely on the documentation contained in the file, one piece of which was Mr. Knight's summary and evaluation, it appeared to the committee that both Mr. Burton and Mr. DeMarco had more authority, both individually and together, than did Mrs. Burton. It is important to note here that no member of the committee talked with Mrs. Burton or visited the site, nor did they talk with anyone else associated with the industry or with the corporation. They relied exclusively on the impressions gained by Mr. Knight and the documents submitted.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Tri-D, Inc. be certified as a disadvantaged business enterprise, (woman owned). RECOMMENDED this 7th day of May, 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 7th day of May, 1991. APPENDIX TO RECOMMENDED ORDER The following constitutes 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: 1. - 5. Accepted and incorporated herein. FOR THE RESPONDENT: 1. - 4. Accepted and incorporated herein. Accepted to mean her experience is not as extensive as his. First sentence rejected as unproven. Second and third sentences accepted. Fourth sentence accepted and incorporated herein with the additional finding that the loan was a renewal of a loan and was with Mrs. Burton's approval. Accepted except for the finding that all current business was obtained by Mr. Burton (See testimony regarding contacts obtained through Gulf Coast Builders Exchange.) Accepted and incorporated herein except that Mrs. Burton indicated that she had, over the years, invested in the business considerable sums she had inherited. & 10. Accepted and incorporated herein. COPIES FURNISHED: Charles J. Bartlett, Esquire Icard, Merrill, Culliss, Timm, Furen & Ginsburg, P.A. Postal Drawer 4195 2033 Main Street, Suite 600 Sarasota, Florida 34237 Harry R. Bishop, Jr., Esquire Assistant General Counsel Department of Transportation 605 Suwannee Street, MS - 58 Tallahassee, Florida 32399-0458 Ben G. Watts Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams General Counsel Department of Transportation 562 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458
Findings Of Fact KTT was incorporated in January, 1987, with F. Kay McDougald owning 90 percent of the issued stock and her daughter, Tracy McDougald, owning 10 percent of the issued stock. F. Kay McDougald is president, treasurer, and one director of the Corporation, and Tracy McDougald is secretary and the second of two directors. Paid in capital was $500. At the time KTT was incorporated, F. Kay McDougald held one-third of the outstanding stock in Florida Transport Services (FTS) with the balance of the shares held by her husband. The land upon which FTS has its office and keeps its equipment is owned by the McDougalds jointly. FTS pays monthly rent to the McDougalds. Upon the incorporation of KTT, the latter shared the space with FTS and paid monthly rent to the McDougalds. Since the incorporation of FTS, circa 1974, F. Kay McDougald has worked in the company with her husband. She has generally functioned as office manager, bookkeeper and in charge of all clerical-type functions. In addition, she performed operational functions by dispatching vehicles and making any and all operational decisions during the absence of her husband. By experience, she is fully qualified to operate KTT as an independent business. Since becoming incorporated, KTT has purchased one tractor-trailer, and has obtained lease operator agreements with the owner-drivers of eight vehicles, of which three are miniwheelers, four are tractor trailers, and one a tandem truck. All of these vehicles are capable of, and are used primarily for, hauling road aggregates. In continuing operations during 1987 to date of hearing, the net worth of KTT has increased to approximately $20,000. As a subchapter S corporation, the income of KTT is taxable to the owners. FTS also operates vehicles used in hauling road aggregates; however, most of FTS equipment is tractor trailers. Since KTT began operations, FTS has leased equipment to and from KTT. Due to many years working closely with competitors Mac Asphalt Company and Trans Phos, FTS and Kay McDougald developed a cooperative relationship with those companies, and KTT has been able to lease equipment from those companies when needed. No evidence was presented that Mr. McDougald exercises any control over, or has any interest in, the operation of KTT other than a spousal interest in his wife succeeding in the business. Some three years ago two or more contractors approached Mrs. McDougald to suggest that she form a corporation, obtain minority business certification, and bid to subcontract on DOT road building contracts for the hauling of road aggregates. After considering the concept for about two years, Mrs. McDougald formed KTT and initiated the application for certification here being considered.
Findings Of Fact Vedder and Associates Incorporated's (VAI's) application for minority certification dated January 22, 1992 was received by the Department of Management Services on January 27, 1992. Petitioner's application for minority certification was denied by the Department of Management Services in a letter dated May 22, 1992. VAI was established in October of 1991 and offers as its principal service "land surveying." VAI is licensed to do business in Florida and is fifty-one percent (51 percent) owned by Kathleen Vedder, a Caucasian female, and forty-nine percent (49 percent) owned by John Vedder her husband, a Caucasian male. Kathleen A. Vedder and John F. Vedder were the sole directors of the corporation at the time of certification denial, with Kathleen A. Vedder serving as president/secretary and John F. Vedder serving as vice-president/treasurer. On September 16, 1992, after the denial of certification, John Vedder resigned as a director of VAI. No business reason was offered for this decision. Kathleen Vedder, the minority owner, is presently the sole director of the corporation. As sole director, she represents a majority of the board of directors. She continues to serve as president and secretary. John Vedder continues to serve as treasurer. It is not clear if he still serves as vice- president. (See Findings of Fact 5-11 and 28-29). At all times material, Kathleen Vedder has owned 51 percent of the stock through a greater monetary investment than John Vedder, who owns 49 percent of the stock. At all times material, Kathleen Vedder has served as the principal officers, president and secretary. At all times material, Kathleen Vedder has made up at least 50 percent of the board of directors. Since September 16, 1992, she has made up 100 percent of the board of directors. At all times material, John Vedder has served as a principal officer, treasurer. Up until September 16, 1992, John Vedder made up 50 percent of the board of directors. Thereafter, he did not serve on the board. At all times material, Article VII of VAI's Articles of Incorporation have permitted an increase or decrease in the board of directors as permitted by the bylaws, but never less than one director. At all times material, Item III of VAI's bylaws have provided that corporate officers hold office at the "satisfaction" of the board of directors; that the president shall be the chief executive officer; and that subject to any specific assignment of duties by the board of directors, the vice-president, the secretary, and the treasurer act under the direction of the president. VAI was formed by the purchase of assets from the Perry C. McGriff Company, which had employed Kathleen and John Vedder. Kathleen Vedder began her career with the surveying firm of Keith & Schnars, P.A., in Fort Lauderdale in 1976. She was the administrative assistant to the President. In 1981 she and John Vedder moved to Gainesville to manage the Perry C. McGriff Company, a wholly owned subsidiary of Keith & Schnars. John Vedder handled the surveying aspects of the business, and Kathleen Vedder handled most of the management of the company other than the surveying portion, including purchasing, handling business accounts and financial affairs, client relations, insurance, and correspondence. This continued until 1991 when the assets of the Perry C. McGriff Company were sold to VAI. Kathleen Vedder now performs for VAI basically the same functions as she did for the predecessor company with certain additions. John Vedder served as the director of survey for the Perry C. McGriff Company which employed both Mr. and Mrs. Vedder prior to the formation of VAI. In his position as director of survey at Perry C. McGriff Company, he was responsible for all contracts and negotiations and coordination of personnel to ensure timely completion of contracts. His background by education, training, and experience is extensive in the technical applications to perform land surveying. The business of VAI essentially began on December 6, 1991. Prior to that date, husband and wife had discussed the purchase of the McGriff assets. Kathleen Vedder discussed the purchase of the business with her husband and informed him that she wanted to run the business. He accepted this relationship and her role as "boss" because he hated working in the office and wanted nothing to do with running the business. Kathleen Vedder contacted the old Perry C. McGriff clients and facilitated the transition from the old company to the new company. The Perry C. McGriff Company was purchased for $100,000 with a $15,000 down payment and the remainder to be paid over 7 years. Funds for the original purchase price of the assets were obtained by cashing Kathleen Vedder's 401K plan, two IRA's, and by loans against her life insurance policies for an investment of $57,185.62 by Kathleen Vedder and $25,682.25 of marital assets held with her husband, John Vedder. John Vedder participated in the negotiations to buy Perry C. McGriff Company. John Vedder provided input and expertise regarding the assets of Perry C. McGriff Company which were to be purchased, whether survey equipment was acceptable, and the vehicles to be purchased. John Vedder discussed and consulted with Kathleen Vedder regarding the financial aspects of the purchase of Perry C. McGriff Company. He discussed with her the starting salaries of employees to be hired/transferred to VAI, and the leasing and location of business premises for VAI and purchase of furniture. Kathleen Vedder established the corporate policies, the accounting procedures, the job costing, and the standard management practices of the new company. Kathleen Vedder, as VAI president, made all of the final decisions regarding implementation of the new business such as renting the office, moving the assets purchased from the old Perry C. McGriff Company, establishing lines of insurance, determining the manner and location of the survey records purchased, and hiring the staff. Kathleen Vedder and John Vedder made it clear to all of the employees from the beginning of the company that she was the "boss". The takeover of Perry C. McGriff Company by VAI was explained to former employees during a field visit by John Vedder. His explanation was made at Kathleen Vedder's direction and took place while these employees were already in the field, during a time of transition, in a spirit of damage control when Kathleen and John Vedder were concerned that rumors might affect the new company's ability to retain good personnel from the old company and over concern that some might have trouble working for a woman. Kathleen Vedder hired six employees initially from the old Perry C. McGriff Company. Kathleen Vedder set the initial pay scale for the employees of the company and maintained the documentation relevant to this function. The additional four persons hired by the company since it began were Robert Henderson, Tom Crossman, George Gruner, and Doug Zimmerman, each of whom were hired by Kathleen Vedder who interviewed them, who set their wages and benefits, and who described their job functions to them as new employees. VAI has a business license posted on its premises issued by the City of Gainesville, Florida, in the name of John Vedder, authorizing the performance of land survey services. VAI currently employs eight permanent employees and the qualifying agent is John F. Vedder, who serves as a principal officer, treasurer. He holds a land survey license issued by the State of Florida, Department of Professional Regulation, Land Surveying Board. In order to be qualified as a licensed land surveying corporation, a principal officer must be a licensed land surveyor. The participation of John Vedder or another duly-licensed land surveyor is required to satisfy the requirements of Chapter 472 F.S., for a qualifying agent. Under that statute, the qualifying agent must have a license as a land surveyor and hold a position as a principal officer in VAI. If John Vedder were to lose his professional land surveyor license, there would be three licensed land surveyors remaining with the company, and it would be possible for VAI to continue if one of these were designated as a principal officer. Kathleen Vedder holds no license or certification other than a notary public. In terms of any special needs or requests, such as medical needs, all employees are required to report to Kathleen Vedder. Kathleen Vedder earns $14.50 per hour. The survey party chiefs, including John Vedder, now earn $13.00 per hour. These amounts are commensurate with Kathleen Vedder's percentage of VAI ownership of fifty-one percent (51 percent). The evidence is conflicting as to whether another crew chief earned more than John Vedder in one year due to a higher rate of pay or more hours worked in that period. No one in the company draws any bonus, commission or has any particular insurance coverage as a benefit of employment. The company has not posted any dividends or distributed any proceeds from business investments or engaged in any profit sharing. The corporation has, as a risk of doing business, the liability connected with its $85,000.00 promissory note to Keith & Schnars, P.A. It also has the risk associated with premises liability, with motor vehicle liability, with general errors and omissions liability, and with professional liability. Kathleen Vedder has procured insurance to cover all these risks. These premiums are paid by the corporation. There has been no additional ownership interest acquired by anyone since the inception of the corporation. There are no third party agreements. There are no bonding applications. The company has not at any time entered into an agreement, option, scheme, or created any rights of conversion which, when exercised, would result in less than fifty-one percent (51 percent) minority ownership and minority control of the business by Kathleen Vedder. Kathleen Vedder controls the purchase of the goods, equipment, business inventory and services needed in the day-to-day-operation of the business. Kathleen Vedder expressly controls the investments, loans to and from stockholders, bonding, payment of general business loans, and payments and establishment of lines of credit. The corporate business account of VAI contains the signatures of John Vedder and Kathleen Vedder on the bank signature card. Only one signature is required to transact business. Of the 823 checks issued by VAI since it began, John Vedder signed one at Kathleen Vedder's direction when it was not possible for her to be in two places at once, and Kathleen Vedder signed 822 checks. Although he is treasurer, John Vedder professed to know nothing of VAI's finances and deferred to Kathleen Vedder in all matters of financing from the very beginning. Nonetheless, the corporate documents list the treasurer as the chief financial officer in ultimate charge of all funds. Kathleen Vedder has knowledge of only the minimum technical standards required for a survey. In her certification interviews, Mrs. Vedder did not know how to establish true north or how a line survey would establish true north. She lacks basic survey knowledge and could not identify Polaris as the north star or state the standard measurement (length of a chain) for a surveyor. Identifying Polaris is not particularly important in modern surveying. Kathleen Vedder is capable of doing the necessary paper search and telephone call regarding underground utilities for surveyors in the field. Kathleen Vedder has extensive experience in the production of a surveying product and is able to manage the surveyors who perform the technical aspects of the business. Upon acquisition of the assets and formation of the new company, Kathleen Vedder began directing the two field crews newly employed by VAI to the various projects and work which she had scheduled. This direction has primarily been in the timing and coordination of projects and is commensurate with some of the work previously done by John Vedder when he was director of survey for the predecessor company, Perry C. McGriff Company. (See Finding of Fact 14). Technical problems involving a particular site do not arise very often so as to require a discussion among the land surveyors of the company but if they do, the professional land surveyors jointly or singly make all technical surveying decisions. Surveys must be signed by a registered land surveyor pursuant to Chapter 472 F.S. John Vedder provides Kathleen Vedder technical advice, coordinates field crews' work, makes decisions pertaining to technical work which is not within Kathleen Vedder's abilities, consults with Kathleen Vedder once a week concerning the general financial picture of VAI, and does some job estimating and quality control. Kathleen Vedder rarely visits work sites in the field. Employees in the field report to John Vedder whenever they have a problem and report to Kathleen Vedder if the problem is in the nature of project coordination. John Vedder is responsible for training and working with employees and providing technical training required for the performance of land surveys. He does computer aided drafting (CAD) and provides technical assistance to the CAD operator, which Kathleen Vedder cannot do, however she works it afterward on her computer. Kathleen Vedder does not work in the field, and of the two, John Vedder performs the majority of work in the field. Kathleen Vedder defers to John Vedder to handle technical matters because he has more experience. Party Chief John Vedder supervises his crew. Party Chief Louis Crosier supervises his crew. Kathleen Vedder supervises Louis Crosier and John Vedder and a third crew chief when one is used, usually Robert Henderson. Kathleen Vedder established a fee schedule for the company and a method of formulating the estimates and bids which the company would propose to prospective clients. John Vedder is not knowledgeable in this area. When a job comes in, the prospective client initially contacts Kathleen Vedder. If a client calls requesting a survey, Kathleen Vedder does the research and provides the estimate or bid without further input from any surveyor if the survey requested is a standard routine survey. If the job is complex, Kathleen Vedder requires man hour estimates from two land surveyors, one of whom is often John Vedder. She takes these estimates and applies previous histories, experience, and adjustments in order to prepare the final bid or survey estimate. Once she has received the man-hour estimate, Kathleen Vedder reviews it, compares it with previous surveys, applies a job costs analysis to it, applies any other known costs to it, and presents the final estimate or bid. There is a difference between compiling the work hours necessary for the estimate and compiling the estimate itself. Kathleen Vedder has the ultimate responsibility for finalizing complex estimates and bids. Kathleen Vedder makes presentations as a part of her function which involve technical presentations of the survey services rendered by VAI. In the fourteen month period since the business began, Kathleen Vedder has given approximately eight presentations of a technical nature to prospective clients, including the Florida Department of Transportation (DOT). Kathleen Vedder is capable of complying with DOT bid specifications to submit material on a DOS disc. DOT has qualified VAI under its Disadvantaged Business Enterprise program. Petitioner's witnesses skilled in land surveying consistently testified that without Kathleen Vedder's skilled contributions to the firm, technical land surveying could be accomplished but the firm would not show a profit. Rule 13A-2.005(3)(d)(4), requires minority owners to have managerial, technical capability, knowledge, training, education and experience to make decisions regarding the business. In interpreting this rule, the Respondent agency relies on Barton S. Amey v. Department of General Services, DOAH Case No. 86-3954, (RO 3/5/87; FO 4/21/87), aff'd Fla. DCA February 11, 1988, No. 87-235. The agency has no further refinement by way of rule or policy which applies specifically to the land surveying industry. It does not require the minority owner to have a land surveying license per se. It does not require the minority business owner to have an extensive knowledge of surveying.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that a final order be entered certifying Vedder Associates, Incorporated as a Minority Business Enterprise. RECOMMENDED this 7th day of June, 1993, at Tallahassee, Florida. ELLA JANE P. DAVIS 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 7th day of June, 1993. APPENDIX TO RECOMMENDED ORDER 92-3763 The following constitute specific rulings, pursuant to S120.59(2), F.S., upon the parties' respective proposed findings of fact (PFOF). Petitioner's PFOF: The so-called "stipulated facts" is accepted, as stipulated, but not as to the inserted conclusion of law/argument. 1-19 Accepted except to the degree it is unnecessary, subordinate, or cumulative. 20-21 Accepted, but not dispositive, subordinate. Rejected as a conclusion of law or argument. Accepted, but not dispositive, subordinate. Rejected as a conclusion of law or argument. 25-33 Accepted as modified to more closely conform to the record, and to eliminate mere leal argument, conclusions of law, and unnecessary, subordinate, or cumulative material. Also testimony was to 823 checks. Rejected as stated as not supported by the greater weight of the credible evidence. Accepted, except to the degree it is unnecessary, subordinate or cumulative. Rejected as out of context, a conclusion of law, or argument. 37-46 Accepted, as modified, except to the degree it is unnecessary, subordinate, or cumulative. 47-48 Rejected as out of context, a conclusion of law, or argument. 49-53 Covered to the degree necessary in Finding of Fact 65, otherwise irrelevant and immaterial to a de novo proceeding under Section 120.57(1) F.S. 54-56 Accepted except to the degree unnecessary, subordinate, or cumulative. 57 Rejected as out of context, a conclusion of law, or argument. 58-60 Accepted except to the degree unnecessary, subordinate, or cumulative. Petitioner's "factual conclusions" are rejected as proposed conclusions of law not proposed findings of fact. Respondent's PFOF: 1-10 Accepted except to the degree unnecessary or cumulative. 11 Rejected as subordinate. 12-14 Rejected as stated as argument. Covered in Findings of Fact 27-30, absent argument, conclusions of law, and erroneous statements not supported by the greater weight of the credible competent evidence. Rejected as argument. Mostly accepted except to the degree it is unnecessary, subordinate or cumulative. However, the job estimating as stated is not supported by the record nor the argument of "day-to-day business." 17-19 Accepted as modified to conform to the record evidence, and except to the degree it is unnecessary, subordinate, or cumulative. 20 Rejected as argument. 21-22 Accepted but incomplete, irrelevant and immaterial in a de novo Section 120.57(1) F.S. proceeding. Also, the footnote is rejected as mere argument. 23-24 Rejected as argument. Accepted, but not complete or dispositive; unnecessary and cumulative. Accepted to the degree stated except to the degree unnecessary, subordinate, or cumulative. She also did more. Rejected as partially not supported by the record; other parts are rejected as unnecessary, subordinate, or cumulative. Accepted except to the degree unnecessary, subordinate, or cumulative or not supported by the record. Accepted in part and rejected in part upon the greater weight of the credible, competent record evidence. Rejected as argument. Rejected as stated as not supported by the greater weight of the credible, competent record evidence, also unnecessary, subordinate, or cumulative. Accepted except to the degree it is unnecessary, subordinate, or cumulative. Rejected as argument 34-35 Accepted in part. Remainder rejected as stated as not supported by the greater weight of the credible, competent record evidence, and as a conclusion of law contrary to Mid State Industries, Inc. v. Department of General Services, DOAH Case No. 92-2110 (RO 9/14/92). 36 Rejected as argument. 37-38 Accepted in part, and rejected in part because not proven as stated. Rejected as argument. Rejected as stated because out of context or not supported as stated by the greater weight of the credible, competent record evidence. Rejected as argument. Accepted, except to the degree unnecessary, subordinate or cumulative. Rejected as argument. 44-46 Rejected as subordinate. 47,(No #48),49 Accepted except to the degree unnecessary, subordinate, or cumulative. 50-55 Rejected as subordinate or unnecessary or as conclusions of law or argument. COPIES FURNISHED: Peter C. K. Enwall, Esquire Post Office Box 23879 Gainesville, FL 32602 Terry A. Stepp, Esquire Department of Management Services Koger Executive Center Suite 309, Knight Building 2737 Centerview Drive Tallahassee, FL 32399-0950 William H. Lindner, Secretary Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, FL 32399-0950 Susan B. Kirkland, Esquire Department of Management Services Koger Executive Center Suite 309, Knight Building 2737 Centerview Drive Tallahassee, FL 32399-0950
The Issue The central issue in this case is whether the Petitioner is a prevailing small business party as defined by law.
Findings Of Fact The administrative complaint in Department of Professional Regulation, Board of Medicine v. Beltran J. Pages, DOAH Case No. 87-4157, DPR Case No. 30291, was filed on September 23, 1987. This case was consolidated with another case then pending against Dr. Pages, DOAH Case No. 87-1882. On October 15, 1987, an order was entered which denied Dr. Pages' request to dismiss Case No. 87-4157. The hearing for both cases was conducted on January 26-27, 1988. Pertinent to this cause is the following finding of fact reached in the Pages' order: Respondent is a board certified psychiatrist who has practiced in the Palm Beach County area since July, 1981. Respondent left private practice in September, 1985, and is currently employed at the South Florida Evaluation and Treatment Center, an HRS facility for the criminally insane. An exception was not filed to the finding of fact described in paragraph 4.
Findings Of Fact The Petitioner, Parson & Associates, Inc., d/b/a Overhead Door Company of Tampa Bay (Parsons & Associates), is a Florida corporation, having been incorporated under the laws of the State of Florida in March, 1992. The principal place of business for Parsons & Associates is 5134 W. Idlewild, Tampa, Florida. The Petitioner corporation engages in the business of the sale, installation, and repair of overhead doors, both residential and commercial. The corporation has ten (10) full-time employees and one (1) part-time employee. The only stockholders of the Petitioner corporation are: Gail Parsons, the minority owner; and her son-in-law, Robert Briesacher. Gail Parsons owns eighty (80 percent) of the stock of Parsons & Associates. Robert Briesacher, who is not a minority, owns the remaining twenty (20 percent) of the Petitioner corporation. Gail Parsons was the incorporator of Parsons & Associates when it was initially incorporated. She also is its President. Robert Briesacher is the Vice-President. Prior to the incorporation of Parsons & Associates, Gail Parsons, who has a Bachelor of Business Administration degree, worked for the Better Business Bureau. Robert Briesacher had previous experience in the overhead door business, having worked for Overhead Door Company of Clearwater. Briesacher, who at the time was engaged to marry Parsons's daughter, learned from Overhead Door Corporation (the manufacturer) that the manufacturer intended to establish a distributorship in Tampa. Briesacher told Parsons about it. While Briesacher had the knowledge and experience to successfully sell, install, and repair both residential and commercial overhead doors, he had no money to invest in the business opportunity and had no experience running his own business. Thinking that she might be able to help her daughter and future/present son-in-law, and herself, by combining her capital and business and financial skills with his knowledge and technical skill in the automatic door business, Parsons suggested to Briesacher that they go into business together. He readily agreed, and the pursued the opportunity with the manufacturer. Parsons incorporated the business, registered the fictitious name, compiled the business plan, developed the cash flow projections (with Briesacher's help), found the office/warehouse space (which the manufacturer had to approve), and negotiated, executed, and personally guaranteed the lease agreement and negotiated the Distributorship Agreement with the manufacturer. Briesacher provided none of the initial start-up monies for the Petitioner. Gail Parsons is the financial interest holder in the corporation, having made all the initial contributions to capital ($38,000), as well as making all the personal loans to the corporation thereby accepting all the financial risk. Parsons personally guaranteed the promissory note, the credit agreement, contracts required to be personally guaranteed and the warehouse lease. The Distributorship Agreement is a standard Overhead Door Corporation agreement common to all distributors nationwide. It is customary for a manufacturer like Overhead Door Corporation to offer a distributor incentives-- like yellow page advertisement, signage, and telephone numbers--in order to gain market penetration. In the case of Parsons & Associates, Overhead Door supplied a telephone number (the number Overhead Door previously had bought from the prior distributor in Tampa), a year's worth (about $10,000) of yellow page advertising, and some signage. The total fair market value of the incentives to Parsons & Associates was approximately $31,000, but the marginal cost to the manufacturer was less. In the initial months of operation of the business, Gail Parsons had to rely on Briesacher and the first employee they hired, Charles Martin, who worked under Briesacher at Overhead Door of Clearwater, to teach her what she had to know about the technical aspects of the business. She had to learn about the Overhead Door products and the basics of how to install them. This knowledge, which she quickly acquired, soon enabled her to take service orders, schedule the orders, supervise the day-to-day activities, perform trouble-shooting over the telephone and handle all of the sales calls. Meanwhile, Robert Briesacher was in the field with Martin installing and servicing Overhead Doors. Briesacher currently corresponds with the factories on product orders, schedules and supervises the installers, and takes the physical inventory. Commercial bidding is only one portion of the total corporate sales, which includes residential new construction, residential service and residential retrofit. Over ninety-five (95 percent) percent of the business of Parsons and Associates is handled over the telephone from the office where Parsons spends virtually one hundred (100 percent) percent of her time. Parsons is personally responsible for the majority of the residential sales, including negotiating and contracting with contractors, and negotiating and entering into the agreement to provide installation services for Home Depot door sales. Business from negotiating, estimating, and bidding on contracts in the field is a relatively small portion of the company's overall revenues. Gail Parson is involved in the interviewing of prospective employees, including Martin and Charles Jarvis. She confers with Briesacher, but she alone controls hiring and firing. She possesses the knowledge to evaluate employee performance and has demonstrated her supervisory authority and evaluation skills in exercising her authority to fire an employee. Actually, it is not difficult to evaluate the performance of installers: service calls on warranty work and customer complaints generally tell her all she needs to know. The Petitioner/corporation has both commercial and residential outside sales persons who prepare bids for the Petitioner. The minority owner, Gail Parsons, establishes the geographic and profit margin parameters, which ultimately control the bidding process. She inspects all bids prior to executing the contracts, thereby further controlling who, where and under what terms the Petitioner corporation does business. In fact, Parsons recently rejected an accepted bid and cancelled the job because it was too far from Tampa. While both Gail Parsons and Robert Briesacher are authorized to sign checks for Parsons & Associates, Briesacher has signed less than five checks, out of the thousands of checks written. Parsons and Briesacher draw the same salary. However, their salaries are commensurate with the work they perform for the company. Parsons has chosen the salary levels; Briesacher does not even know what Parsons's salary is. Parsons also is entitled to an 80/20 split of any future distributions as a result of the operation of the company. Briesacher has the use of a company truck, while Parsons does not. However, Briesacher is a part-time installer and service man, while Parsons is not. All installers/service technicians at Parsons and Associates have the use of company trucks, not just Briesacher. Currently, in addition to controlling the entire corporation and making all of the business decisions, Gail Parsons sets inventory parameters, purchases the inventory, sells doors in the showroom, knows the purchased products, is responsible for accounts receivable, handles the payroll, and assists in the scheduling and supervising of the installers.
Recommendation On the basis of the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Management Services enter a final order granting Petitioner's application for certification as a minority business enterprise (MBE). RECOMMENDED this 14th day of July, 1994, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 14th day of July, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-1268 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1.-3. Accepted and incorporated. First sentence, rejected as contrary to facts found; the rest is accepted and incorporated. Second sentence, rejected to the extent that it implies that Briesacher has no financial interest. Otherwise, accepted and incorporated. Accepted and incorporated. Rejected, as contrary to facts found, to the extent that it implies Parsons knew it all from the start and that Parsons "supervised" Briesacher and Martin installing and servicing doors; in fact, there was a learning curve. Otherwise, accepted and incorporated. 8.-11. Accepted and incorporated. Respondent's Proposed Findings of Fact. 1.-2. Accepted and incorporated to the extent not subordinate or unnecessary. 3.-4. Accepted and incorporated to the extent not subordinate or unnecessary. Last sentence, rejected in part as contrary to facts found and as contrary to the greater weight of the evidence. (She makes sales and trouble- shoots, and is no longer just learning those aspects of the business.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. Accepted and incorporated to the extent not subordinate or unnecessary. However, except for actually installing and servicing doors, Parsons also does the same jobs as Briesacher to some extent, and some of Briesacher's functions are ministerial in light of Parsons's management decisions. Penultimate sentence, rejected as contrary to facts found and as contrary to the greater weight of the evidence; he proposed "piece-work" but Parsons participated in the final decision. (Since it is standard in Florida, it was not a difficult or controversial decision.) Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. (However, "joint responsibility" should not be construed to mean "equal authority." Parsons has the final say.) Accepted and incorporated to the extent not subordinate or unnecessary. However, while Parsons's knowledge and skill does not exceed the others' in the area of installing and servicing doors, she has enough knowledge to control the business. The characterization "very broad" in the last sentence is rejected as contrary to facts found and as contrary to the greater weight of the evidence. Otherwise, accepted and incorporated to the extent not subordinate or unnecessary. However, again, while Parsons's knowledge and skill does not exceed the others' in the area of installing and servicing doors, and while she does not personally install and service doors, she has enough knowledge to control the business. 10.-14. Accepted and incorporated to the extent not subordinate or unnecessary. Again, while Parsons and Briesacher, and other employees, share responsibilities, Parsons has the knowledge necessary to control the business and has dominant control over the business. COPIES FURNISHED: Jonathan D. Kaplan, Esquire 6617 Memorial Highway Tampa, Florida 33615 Wayne H. Mitchell, Esquire Department of Management Services Office of the General Counsel Suite 312, Ninth Building 2737 Centerview Drive Tallahassee, Florida 32399-0950 William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950 Paul A. Rowell, General Counsel Department of Management Services Knight Building, Suite 312 Koger Executive Center 2737 Centerview Drive Tallahassee, Florida 32399-0950
Findings Of Fact Petitioner Coggin and Deermont, Inc. (C&D) has forty-odd employees. The company owns a building and, among other equipment, bulldozers, loaders, scrapers, graders, draglines, and dump trucks. Respondent's Exhibit No. 1. C&D clears, grubs, grades, and otherwise prepares roadbeds and constructs roads through the stage called "base work." C&D has qualified as a prime contractor with respondent Department of Transportation. The firm also builds culverts and storm drainage structures, including head walls, and does other concrete work. After Mr. Deermont died, at age 94, his partner carried on their road- building business with the help of Ralph C. Carlisle, a 25-year employee, and, until recently, president of C&D. Mr. Coggin died last year at 88, and the Carlisle family decided to acquire the rest of C&D's stock. Mr. Carlisle's wife Bertha, nee Lopez, had inherited Six Thousand Dollars ($6,000) from her father, who, like her mother, was born in Mexico. Blonde and blue-eyed, Mrs. Carlisle herself was born in the United States, on April 26, 1929. Petitioner's Exhibit No. 1. FAMILY BUYS COMPANY On February 10, 1982, the Carlisles bought all of C&D's stock Mr. Carlisle did not already own. They used Bertha's inheritance to make a Six Thousand Dollar ($6,000) cash payment and executed a promissory note in the amount of One Hundred Seventy-three Thousand, Three Hundred Twenty-five Dollars ($173,325), Petitioner's Exhibit No. 3, for the balance of the purchase price. The note was secured by a mortgage encumbering three parcels of real estate owned jointly by Ralph C. and Bertha L. Carlisle. Petitioner's Exhibit No. 2. The expectation is that income from C&D will make it possible for Mr. and Mrs. Carlisle to make the installment payments promised in Petitioner's Exhibit No. 3. C&D owes some Ninety Thousand Dollars ($90,000) to various banks. Mr. and Mrs. Carlisle are personally liable for some, if not all, of C&D's debt. They are not obligated to begin installment payments on the note they executed to pay for the stock until March 10, 1983. Mrs. Carlisle paid Two Hundred Twenty-five Dollars ($225) per share for her stock. (T. 58.) Only one hundred (100) shares are outstanding. Respondent's Exhibit No. 1. Mrs. Carlisle holds fifty-one percent (51 percent) of C&D's stock, and her husband holds thirty-four percent (34 percent). Mr. and Mrs. Carlisle have two sons, Ralph C. III and Richard D., to whom they gave ten percent (10 percent) and five percent (5 percent) of C&D's stock, respectively. All the Carlisles are directors of the corporation. Dividends have not been paid since the Carlisles took over. At some point, the Carlisles "decided [they] were going to apply for minority business enterprise [certification] and use [Mrs. Carlisle's] ethnic origin." (T. 64.) PRESIDENT'S DUTIES Mrs. Carlisle did not bring any particular expertise to C&D, even though she had accompanied her husband on some of his travels for C&D (without compensation). After graduation from high school, attendance at "business school," and two years as a clerk in a stock broker's office, she married Mr. Carlisle and began a twenty-five-year career as a housewife, which was interrupted recently by a two-year stint as an interior designer in a gift shop. (T. 65.) When she became majority stockholder, Mrs. Carlisle voted herself president of C&D. She succeeded her husband in that office. Her salary is One Thousand, One Hundred Twenty-Five Dollars ($1,125) weekly, and his is Eight Hundred Ninety-five Dollars ($895) 1/ weekly. They "combine" their salaries. (T. 90.) Machinery is not Mrs. Carlisle's strong point; she has some difficulty distinguishing among the different types of heavy equipment C&D uses. Field operations are not her primary concern. As a matter of company policy, she ordinarily visits job sites only in the company of her husband. (T. 63, 66- 67.) Her routine upon returning from site inspections she described as follows: [W]hen I come back I always check my mail and my phone calls or--something like that. Most of the time when I go out on the job, like I say, it's quite a distance away from home and I go back to the office and check to see what problems we have had, I have had. He checks his desk and I check my desk. And then we'll go on home and that's when we confer with our sons again. And business starts all over again. (T. 67-68.) She also buys most of the office supplies and signs weekly payroll checks, which are prepared by an employee and countersigned both by her husband and Patricia Kirkland, who keeps C&D's books. Mrs. Carlisle has only limited knowledge of basic accounting concepts. (T. 85-86.) She acts as C&D's "EEO representative," (T. 53) a task she took over from a secretary, Mrs. Cook. Mrs. Carlisle has other duties in connection with bid preparation. She reads some ten newspapers published in Chipley, Florida, and surrounds "to see which jobs are going to be coming up" (T. 50) and orders the plans for jobs C&D might be interested in; she and her husband ["he's the engineer and has all the experience . . ." (T. 51)] inspect the site; she inquires by telephone of "salesmen and people to get the prices" (T. 52) for pipe, concrete, and other materials, but does not negotiate prices. According to Mrs. Carlisle, her "husband is the one that is doing all of the figuring on the job," (T. 52) but Mrs. Carlisle works at figuring, particularly when she travels with her husband to Tallahassee. MINORITY OWNERS Both sons work for C&D and had held salaried positions with C&D before the Carlisles bought out the other owners. Their combined experience amounted to less than five years. The older boy, Ralph C. III, serves as corporate treasurer and as general superintendent "overseeing all the work that the company has under construction" (T. 20) and overseeing maintenance. He has power to hire and fire and has exercised it. As treasurer, he reviews a treasurer's report prepared by Mrs. Kirkland and signs rental agreements. He can operate every piece of equipment C&D owns. He has never supervised a road-building project from start to finish, but he worked on one project as a timekeeper and grade man from start to finish. He worked for C&D for a year after he graduated from high school. Since then he has had two years of college; he took math, engineering, and accounting courses. After college, he worked for Ardaman & Associates in Tallahassee for eight or nine months taking soil samples, before returning to C&D in February of 1982. He is paid Two Hundred Twenty-Five Dollars ($225) weekly. Richard D. works as foreman of a six-man crew, at a salary of One Hundred Seventy Dollars ($170) per week, and has full authority in the field in his father's absence, including the power to hire and fire the men he supervises. He began at C&D as a laborer. He has finished 60 hours of drafting technology courses at a junior college and may graduate in December. EFFECTIVE CONTROL As vice-president and general manager, answerable only to his wife, Ralph C. Carlisle has charge of C&D and manages day-to-day operations. He is trained as an engineer and does surveying for C&D. He is "the job estimator" (T. 90); he stakes out jobs and prepares cost reports. Richard D. Carlisle testified as follows: Q: Who do you report to? A: My daddy. Q: Do you receive instructions from him? A: Mostly. And I receive instructions from my brother and my mother. She will help us out. (T. 13.) Ralph C. Carlisle III testified, as follows: Well, basically I have the control of field supervising. If I make a decision in the field and it doesn't work then I ask [my father] to make a decision. That way he has a little more experience than I do, not a little more, a lot more. I make ninety- nine per cent of the decisions in the field. (T. 28-29.) He explained the lines of authority at C&D in these words: Totally to my mama, I'm totally responsible to her. But in the meantime I'm still re- sponsible to my daddy too. What I'm saying is, basically I do not have to report my day to day activities to anybody. If I have to, if there is something that arises I tell my mama first, being the stockholder, if she is available. If not then I go over it with my daddy. Basically my daddy and I have a little conference every evening on the field activ- ities, which my mama is also in on. We have a little conference every evening. We do report our activities to each other every evening. When it gets right down to it we don't have to. When asked whether decisions she makes in the field are joint decisions, Mrs. Carlisle answered: Yes. Just really because I'm president of the company that still doesn't mean -- that still means that we share it. My husband has a lot of say so just like I do. He has more knowledge in this field than I have. And this is what he is educated in too. (T. 70.) Mrs. Carlisle does not make policy for C&D by herself. (T. 76.) Mr. Carlisle is involved with all technical decisions. (T. 91.) The four owners live together as a family and discuss business at home as well as on the job.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent deny petitioner's application for certification as a minority business enterprise. DONE AND ENTERED this 9th day of September, 1982, in Tallahassee, Florida. ROBERT T. BENTON, II 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 9th day of September, 1982.
