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.
The Issue Whether Petitioner's application for certification as a minority business enterprise should be granted.
Findings Of Fact Virginia Valletti, an American woman, within the meaning of Section 288.703, Florida Statutes, holds 75 percent of the stock of Petitioner, Commercial Air Tech, Inc., (Commercial Air). Sam Valletti, the husband of Virginia Valletti, owns 15 percent of the stock of Commercial Air, and the two daughters of the Valetti's each owns five percent of the stock of the business. Sam Valletti is not a minority person as defined in Section 288.703, Florida Statutes. Article II, Section 1 of the bylaws of Commercial Air provides that "All Corporate powers shall be exercised by or under the authority of, and the business affairs of the corporation shall be managed under the direction of, the Board of Directors." The bylaws state that the corporation shall have two directors. Those directors are Virginia and Sam Valletti. Article III, Section 2 of the bylaws of Commercial Air sets out the duties of the President of the company as follows: The President shall be the chief executive officer of the corporation, shall have general and active management of the business and affairs of the corporation subject to the directions of the Board of Directors, and shall preside at all meetings of the shareholders and Board of Directors. Commercial Air provides heating, ventilation, and air conditioning (HVAC) services and is required by Florida statutes to be qualified by a licensed contractor. Sam Valletti holds the contractor's license which qualifies Commercial Air. Virginia Valletti testified that she does not believe that she could pass the contractor's test to become the qualifying agent for the company. Sam Valletti is authorized to sign checks on the account of Commercial Air, but Virginia Valletti signs the majority of the checks for the business. Sam Valletti signed the business lease for Commercial Air. Sam Valletti or a male employee, signs the contracts on behalf of the business. According to Virginia Valletti, the two men sign the contracts for appearance sake because the HVAC business is a male-dominated industry. According to the application submitted to the Respondent, Department of Labor and Employment Security, Minority Business Advocacy and Assistance Office (Department), Virginia Valletti's major responsibilities in the business are as follows: Open and close office Monday through Friday Transact all accounts receivables and payables Answer customer calls and inquiry's [sic] all on customers to insure their needs are being met Dispatch technicians to job sites Compose all company forms and form letters and contract forms Track job costs Analyze profit & loss statement, balance sheet and other financial reports Oversee office personnel - hire, review (all personnel) and fire (office only) Shop and purchase all insurance (workman's comp., liability, bond, etc) Figure payroll and all associated taxes Negotiate credit lines and loans Track truck maintenance and inventory Place orders with vendors and track shipments to job sites The application submitted to the Department lists Sam Valletti's major responsibilities as follows: Estimates jobs in construction and service Troubleshoots equipment problems with technicians Recommends and designs new installations with property managers and owners Keeps up to date on So. Florida code changes, labor laws, and union regulations Finds new resources and seeks out leading edge technological advances Customer liaison for technical questions Hires, reviews, and fires service personnel Purchases company vehicles Sam Valletti receives approximately $16,000 per quarter in wages from Commercial Air, and Virginia Valletti receives approximately $3,000 in wages.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying Commercial Air, Tech Inc.'s request for certification as a minority business enterprise. DONE AND ENTERED this 28th day of April, 1998, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 1998. COPIES FURNISHED: Joseph L. Shields, Esquire Florida Department of Labor and Employment Security 2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189 Edmond L. Sugar, Esquire 950 South Federal Highway Hollywood, Florida 33020 Douglas L. Jamerson, Secretary Department of Labor and Employment Security Suite 303, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Edward A. Dion, General Counsel Department of Labor and Employment Security Suite 307, Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189
Findings Of Fact Union Trucking is a Florida corporation engaged in the business of trucking. Its net worth is less than $2,000,000.00 In DOAH Case NO. 87-4007, the Department sent Petitioner a letter dated August 6, 1987, denying Petitioner's request for certification as a minority business enterprise pursuant to the Department's Rule 14-78.005, Florida Administrative Code. The reason stated in the letter was that Petitioner was not actually under the control of a minority person. On August 25, 1987, Petitioner timely requested a hearing and the case was sent to the Division Of Administrative Hearings on September 11, 1987. By Notice of Hearing dated September 23, 1987, hearing was scheduled for November 16, 1987 and later continued until February 10, 1988. Rule 14-78.002, Florida Administrative Code, was amended on September 21, 1987. The amendment effectively removed DOT's reason-for denial of Petitioner's certification. However, on February 11, 1988, well after the rule change came into effect, DOT formally decided to certify Petitioner. Petitioner was therefore forced to proceed for several months in preparation for an action which Respondent admits it had no basis for after the rule change took effect. Respondent's initial decision occurred on August 6, 1987, when Respondent notified Petitioner of its denial of minority business status. At some point in time, Respondent had filed its proposed rule change. Petitioner failed to demonstrate the time of the proposed change. Depending on the facts surrounding the rule change as to its likelihood of adoption at the time Respondent initiated this action, no findings regarding substantial justification can be made at the time of the agency's initial action on August Most certainly after September 21, 1987, the date the MBE rule was amended, Respondent lacked any substantial justification to continue to litigate this matter. The Final Order of the Department recognized the earlier certification of Petitioner and dismissed the action. However, the Final Order of Respondent did not dispose of the attorney's fees issue which had also been raised during the principal action. The order, therefore, did not dispose of substantially all the issues raised in the principal action. Additionally, there was no settlement of this case since a written settlement agreement was drafted and signed by Petitioner, but refused by Respondent. Respondent's unilateral certification is not enough to force a settlement on Petitioner, especially since Respondent elected to enter a Final Order in this case. Petitioner, therefore, became a prevailing party when Respondent entered its Final Order on April 18, 1988. Section 57.111(4)(b)(2) , Florida Statutes. The application and affidavit which initiated this action were filed on May 23, 1988. The application substantially meets the requirements of Section 57.111, Florida Statutes, and Rule 22I-6.035, Florida Administrative Code, in that it fairly put Respondent on notice of Petitioner's claim. The application and affidavit were timely, having been filed within 60 days after the date on which Petitioner became a prevailing small business party. According to the affidavit of Frank M. Gafford, Petitioner incurred legal fees of $3,572.86. These fees and costs are found to be reasonable. The Department does not dispute the reasonableness of the fees in this case.
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
The Issue The issue for determination at final hearing was whether Petitioner should be certified as a minority business enterprise pursuant to Section 287.09451, Florida Statutes, and Chapter 38A- 20, Florida Administrative Code, by the Office of the Supplier Diversity of the Department of Management Services.
Findings Of Fact Petitioner is a Florida corporation seeking certification in the field of "Sales and Installation of Network and Telephone Cabling" under the minority status of female-owned company. Fifty-one percent of Petitioner's stock is owned by Cynthia Martin, a white female, and 49 percent is owned by her husband, a white male. Until shortly before submitting its application, Petitioner corporation had previously operated as a sole proprietorship under the ownership of Keith Martin. The majority of the assets of Petitioner came from the previous sole proprietorship when Petitioner was formed. According to Mrs. Martin's testimony and payroll information submitted by Petitioner, Keith Martin received twice the salary of Cynthia Martin. Cynthia Martin is a full-time employee of the State of Florida. There is no evidence of employment for Keith Martin other than with Petitioner. The corporate documents in evidence reflect that since incorporation Cynthia Martin has been vice-president and secretary of the corporation, while Keith Martin has been president and treasurer. Petitioner's checks may be signed by either Keith Martin or Cynthia Martin and only one signature is required on each corporate check. Petitioner's Articles of Incorporation provide that the number of directors shall be determined in the By-Laws. The initial directors were Keith Martin and Cynthia Martin. The By- Laws provide that the corporation shall be managed by two directors, and that the number of directors may be increased only by amendment of the By-Laws. Also, a majority of the directors shall constitute a quorum for the transaction of business. This provision of the By-Laws has not been changed. At the organizational meeting of Petitioner, Keith Martin was elected president and treasurer, and Cynthia Martin was elected vice- president and secretary. No other documents were introduced into evidence reflecting any changes to the articles of incorporation or the By-Laws. The documentation submitted by Petitioner, and prepared by Cynthia Martin, consistently reflect Keith Martin as the president of the company and Cynthia Martin as vice-president. Cynthia Martin's duties include bookkeeping and performing administrative functions. Keith Martin's duties include the installation of cabling for local area networks and phone systems, picking up goods to be used on contracts, preparing daily timesheets and generating the paperwork necessary for billing clients, preparing quotations for clients, consulting with clients to determine needs, installation of phone systems and providing sales, service, and repair for clients. Cynthia Martin's duties for Petitioner are performed on her days off from her full-time employment, and on nights and weekends. The fact that Cynthia Martin owns 51 percent of the stock of Petitioner is important at stockholder meetings. At such meetings, she is entitled to one vote for each share owned, thereby allowing her to control stockholder meetings and effectively determine the directors of the company. The company is managed by the directors, while the day-to-day operations are managed by the officers.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Management Services, Office of Supplier Diversity enter a final order denying Tele-Net Communications, Inc.'s, application to be a certified minority business enterprise. DONE AND ENTERED this 25th day of October, 2000, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 25th day of October, 2000. COPIES FURNISHED: O. Earl Black, Jr., Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Cynthia Martin Tele-Net Communications, Inc. Post Office Box 11784 Jacksonville, Florida 32239 Bruce Hoffmann, General Counsel Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950 Windell Paige, Director Office of Supplier Diversity Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950
The Issue The issues for determination in this proceeding are: (1) whether the Respondent properly rejected the lowest bid because the bid did not comply with the requirements set forth in the Project Manual, and (2) whether the Respondent properly awarded the bid to the second lowest bidder.
Findings Of Fact Findings Based Upon Stipulation of All Parties The Respondent, Florida Board of Regents, issued a Call For Bids, as published in Vol. 16, No. 7, February 16, 1990, issue of the Florida Administrative Weekly, for project number BR-183, Life Safety and Fire Code Corrective Work, J. Hillis Miller Health Center, University of Florida., Gainesville, Florida. Sealed bids were received on March 15, 1990, at which time they were publicly opened and read aloud. Petitioner, Anglin Construction Co. (hereinafter referred to as "Anglin"), submitted the lowest monetary bid for the project; and Charles R. Perry (hereinafter referred to as "Perry") submitted the second lowest monetary bid on the project. By letter dated March 19, 1990, the University of Florida notified Anglin that its bid proposal, submitted on March 15, 1990, had been found to be in non-compliance with the Project Manual and rejected by the University of Florida. The specific reason for non-compliance was that Anglin's advertisement for Minority Business Enterprise ("MBE") participation, as part of its demonstration of good-faith effort, did not appear in the media at least seven (7) days prior to bid opening. On March 23, 1990, the contract for this project was awarded to Perry by the Chancellor of the Florida Board of Regents. By letter dated March 26, 1990, Anglin filed a notice of protest in regard to the award of this contract to Perry. Anglin timely filed a formal bid protest in regard to this action, which was received by the Florida Board of Regents on April 4, 1990. A representative from Anglin and Perry attended the required pre- solicitation/pre-bid meeting scheduled for March 1, 1990 for this project. Mr. Larry Ellis, Minority Purchasing Coordinator, University of Florida, was present at the pre- solicitation/pre-bid meeting and distributed a handbook entitled "Minority Business Enterprise Requirements for Major and Minor Construction Projects Survival Handbook" to those in attendance. Anglin and Perry obtained or examined the Project Manual for BR-183. By letter dated March 6, 1990, Anglin requested the Gainesville Sun newspaper to run an advertisement for seven (7) consecutive days to solicit bids from qualified MBE/WBE companies for BR-183. The advertisement in the Gainesville Sun was initially published in the March 9, 1990 edition and ran consecutively through the March 15, 1990 edition. The Project Manual, at page L-2 of L-13 pages, Special Conditions section, paragraph 1.7.2.2, provides that advertisements for minority business enterprises must run or be published on a date at least seven (7) days prior to the bid opening. Findings Based Upon Documentary Evidence The Call for Bids provided that at least fifteen percent (15%) of the project contracted amount be expended with minority business enterprises certified by the Department of General Services and if fifteen percent (15%) were not obtainable, the State University System would recognize good- faith efforts by the bidder (Jt. Ex. 1). The Call for Bids (Jt. Ex. 1) provided that all bidders must be qualified at the time of their bid proposal in accordance with the Instructions to Bidders, Article B-2. The Instructions to Bidders, Article B-2, at page 9 of the Project Manual (Jt. Ex. 2) provided, in pertinent part, that in order to be eligible to submit a Bid Proposal, a bidder must meet any special requirements set forth in the Special Conditions section of the Project Manual. The Project Manual, Special Conditions, paragraph 1.1 at page L-1 sets forth the MBE requirements. Paragraph 1.1.2 provides that evidence of good- faith efforts will be required to be submitted to the University Planning Office within two working days after the opening of the bids. Paragraph 1.1.2 further provides that incomplete evidence which does not fully support the good-faith effort requirements shall constitute cause for determining the bid to be non- responsive. Subparagraph 1.7.2.2 of the Special Conditions section in the Project Manual at page L-2 (Jt. Ex. 2) provides that a contractor, as part of meeting the good-faith efforts for this project, should advertise to inform MBEs of contracting and subcontracting opportunities, through minority focus media, through a trade association, or one local newspaper with a minimum circulation of 25,000. Subparagraph 1.7.2.3 provides for required documentation and provides for a copy of the advertisement run by the media and the date thereof. The copy of the tear sheet from The Gainesville Sun for Anglin regarding BR-183 and the affidavit from the Gainesville Sun reflect that Anglin's advertisement ran or was published beginning March 9, 1990, which was six (6) days prior to bid opening, through March 15, 1990 (Jt. Ex. 9 at section 1- 7.2). Anglin's advertisement did not run in the Gainesville Sun seven (7) days prior to the bid opening (Jt. Ex. 9 at section 1-7.2, and Jt. Ex. 8). The Respondent interprets paragraph 1.7.2.2 to require that advertising through minority focus media, through a trade association or one local newspaper with a minimum circulation of 25,000 to be run on at least one day, seven (7) days prior to the day the bids are opened. Anglin ran an otherwise qualifying advertisement for seven (7) consecutive days, the seventh of which was the day the bids were opened. Anglin sent letters to fourteen (14) minority businesses qualified for participation in state contracts inviting participation and providing information about the program. These letters indicated that Anglin would subdivide work to assist in their participation and invited them to inspect the drawings. Anglin sent followup letters to the same fourteen (14) minority businesses. Anglin apparently divided portions of the electrical work between two minority businesses and included their estimates totaling $288,000.00 in the bid which is at issue (see Jt. Ex. 9 at section 1-7.7). A representative of Anglin, Dennis Ramsey, attended the pre- solicitation/pre-bid meeting on March 1, 1990 (Jt. Ex. 4). One of the purposes of the pre-solicitation/pre-bid meeting is to invite MBEs to attend to become familiar with the project specifications and to become acquainted with contractors interested in bidding the project. The Project Manual, Instructions to Bidders, B-23 at page 16 (Jt. Ex. 2) provides that the contract award will be awarded by the Respondent for projects of $500,000.00 or more, to the lowest qualified bidder, provided it is in the best interest of the Respondent to accept it. The award of the contract is subject to the provisions of Section 287.0945, Florida Statutes, and the demonstration of "good-faith effort" by any bidder whose Bid Proposal proposes less than fifteen percent (15%) participation in the contract by MBEs. The contract award will be made to the bidder who submits the lowest responsive aggregate bid within the pre-established construction budget. Sealed bids for BR-183 were opened on March 15, 1990 (Jt. Ex. 1). Anglin's bid of $1,768,400.00 was the lowest monetary bid (Jt. Ex. 5). Perry was the second lowest monetary bidder (Jt. Ex. 5). Anglin submitted its bid proposal (Jt. Ex. 6) and documentation of good-faith efforts for BR-183 (Jt. Ex. 9). Anglin was notified by letter dated March 19, 1990 that its bid proposal had been found to be in noncompliance with the requirements of the Project Manual and was, therefore, rejected. The specific reason for Anglin's noncompliance was that the advertisement for MBE participation did not appear in the media at least seven (7) days prior to the day the bids were opened (Jt. Ex. 10). By letter dated March 19, 1990, the Project Manager from the architectural and planning firm responsible for BR-183 recommended to Respondent that the contract be awarded to Perry (Jt. Ex. 11). By letter dated March 20, 1990, the University of Florida recommended to the Director of Capital Programs for Respondent that Perry be awarded the contract for BR-183 for the base bid and alternates #1 through #5 in the amount of $1,789,400.00 (Jt. Ex. 12). The Respondent awarded the contract to Perry on March 23, 1990 (Jt. Ex. 14). The MBE award to electricians of $288,000.00 is 16.29% of the $1,768,400.00 Anglin bid.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that the Board of Regents award the contract to Anglin. DONE AND ENTERED this 18th day of July, 1990, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 18th day of July, 1990. APPENDIX "A" TO RECOMMENDED ORDER IN CASE NO. 90-2652BID Anglin and Perry's proposed findings of fact were adopted as paragraphs 1 through 10 of this Recommended Order. The Board of Regents' proposed findings of fact, which duplicated the stipulation, were adopted as paragraphs 1 through 10 of this Recommended Order, and otherwise ruled upon as follows: Adopted as paragraph 11. Adopted as paragraph 12. Adopted as paragraph 20. Rejected as a conclusion of law. Rejected as a conclusion of law. Adopted as paragraph 19. Adopted as paragraph 13. Adopted as paragraph 14. Rejected as a conclusion of law. Adopted as paragraph 21. Adopted as paragraph 22. Adopted as paragraph 15. Adopted as paragraph 23. Adopted as paragraph 24. Adopted as paragraph 25. COPIES FURNISHED: Charles B. Reed Chancellor of Florida State University System 325 W. Gaines Street Suite 1514 Tallahassee, Florida 32399-1950 Gregg Gleason, Esquire General Counsel Board of Regents 107 W. Gaines Street Room 210-D Tallahassee, Florida 32301 Jane Mostoller, Esquire Assistant General Counsel Board of Regents 325 W. Gaines Street Tallahassee, Florida 32399-1950 William B. Watson, III, Esquire Watson, Folds, Steadham, Christmann, Brashear, Tovkach & Walker P.O. Box 1070 Gainesville, Florida 32602 Raymond M. Ivey, Esquire Rakusin, Ivey, Waratuke, Solomon & Koteff, P.A. 703 North Main Street Suite A Gainesville, Florida 32601 =================================================================
Findings Of Fact General Contractors & Construction Management, Inc. (Petitioner), is a Florida corporation engaged in the business of general contracting and construction (construction and renovation of commercial and residential buildings), including subcontracting, since 1985. Petitioner's President is Ms. Akram Niroomand-Rad and its Vice-President is Mr. Kamran Ghovanloo, Ms. Niroomand-Rad's husband. Petitioner is a small business concern as defined by Subsection 288.703(1), Florida Statutes. Prior to April 1990, Ms. Niroomand-Rad owned 50 percent of Petitioner's stock. In April 1990, she acquired 100 percent of the stock and became the Petitioner's sole owner. Ms. Niroomand-Rad is a minority person as defined by Subsection 288.703(3), Florida Statutes. According to Petitioner's articles of incorporation and by-laws, its corporate business is conducted by a majority of the board of directors. Petitioner has two directors, Ms. Niroomand-Rad and Mr. Ghovanloo, 1/ and as such, the minority owner does not control the board of directors. Also, according to Petitioner's by-laws, Petitioner's President manages its business and affairs subject to the direction of the board of directors. Petitioner's licensed contractor is Mr. Ghovanloo who is a certified general contractor. Ms. Niroomand-Rad is not a licensed contractor although she is taking course work to become a licensed contractor. Mr. Ghovanloo is Petitioner's qualifier, and, as its qualifier, brings his expertise and license to the business. Further, as qualifier, he is also responsible for the finances of Petitioner and for pulling the necessary permits in order for Petitioner to perform the contractual work. Additionally, Mr. Ghovanloo performs Petitioner's estimating, handles quality inspection of job sites, assists in the evaluation and preparation of bids, and attends some of the pre-bid meetings on projects. Ms. Niroomand-Rad has been involved in soliciting bids, reviewing bids and estimates, negotiating contracts, visiting clients, responding to correspondence, overseeing financial activities, hiring and firing, and visiting job sites. However, Ms. Niroomand-Rad relies heavily upon Mr. Ghovanloo's technical expertise, expert opinions, and judgment and upon others for guidance and for handling the technical aspects of the business. Further, Ms. Niroomand-Rad relies heavily on Mr. Ghovanloo, and others to a lesser degree, regarding the purchasing of goods, equipment, or inventory, and services needed for the day-to-day operation of the business, including evaluating and retaining subcontractors. Mr. Ghovanloo is authorized to sign checks without restriction. Ms. Niroomand-Rad was reared in a construction environment. Also, she has completed a construction management course offered by the City of Miami and is a licensed real estate broker. Petitioner has been certified as an MBE by Dade County and the Dade County School Board.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission on Minority Economic and Business Development enter a final order denying General Contractors & Construction Management, Inc., certification as a Minority Business Enterprise. DONE AND ENTERED this 24th day of July, 1995, in Tallahassee, Leon County, Florida. ERROL H. POWELL Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of July, 1995.
The Issue The issue for consideration in this hearing is whether Petitioner should be certified as a Minority Business Enterprise, (Woman-Owned).
Findings Of Fact At all times pertinent to the allegations herein, the Commission On Minority Economic and Business Development, now the Division of Minority Business Advocacy and Assistance Office of the Department of Labor and Employment Security, was the state agency in Florida charged with the responsibility for certifying minority and women-owned businesses for most state agencies. It is required, by statute, to ensure that the preference for minority business firms obtained by the certification process are awarded only to those firms for which the benefit is intended. Petitioner, Bay Area Window Cleaning, Inc., is a small business corporation registered in Florida on August 7, 1985. At the time of the original incorporation of the corporation, 1,000 shares of corporate stock were issued of the 7,000 shares authorized in the Articles of Incorporation. Of these, 510 were issued to John D. Richeson, the individual who, with his brother in the late 1970's, started the window cleaning business while a student in college as a means of supporting himself and, later, his wife and family. The remaining 490 shares were issued to Hope L. Richeson, his wife. The funds utilized to start the business and ultimately incorporate were jointly owned by Mr. and Mrs. Richeson. The Articles of Incorporation, as filed initially, list John D. Richeson as incorporator and registered agent, and John D. Richeson and Hope L. Richeson as the Initial Board of Directors. On January 1, 1986, an additional 500 shares of corporate stock was issued in her name to give her a total of 990 shares out of a total 1,500 shares issued and outstanding. Mrs. Richeson's percentage of ownership, after the issuance of the additional 500 shares, was 66 percent. Share certificates reflect this fact. No additional funds were contributed to the corporate assets by Mrs. Richeson as consideration for the issuance of those shares. Mrs. Richeson, currently the President of the company, attended Bible College in Kansas for three years, graduating in 1978. She moved to Florida in 1980 where she attended Hillsborough Community College (HCC), taking as many business education courses as she could in pursuit of an Associates Degree in Business. In addition to that, she has taken the Small Business Administration Class offered by the University of South Florida. She married John Richeson in 1982 and they have worked together in the window cleaning business since that time. After graduating from HCC Mrs. Richeson contacted a family friend, an attorney, for the purpose of incorporating the business. It was at this time she began to run the business. Without asking any questions about the division of duties or the responsibility for leadership in the business, the attorney drafted the incorporation papers making Mr. Richeson the president. Ms. Richeson took the position of vice-president. She admits she did not, at the time, understand the ramifications of that action. Had she known the importance of the title, she would not have acquiesced in having her husband made president. Even though Ms. Richeson was the de-facto head of the business from the time of its expansion from a one-man operation, John D. Richeson served as president of the corporation from inception up to January 1, 1996, when Hope L. Richeson was elected president. At the annual meeting of the Board of Directors of the corporation, held on December 20, 1995, attended by Mr. and Mrs. Richeson, the two directors, the Board recognized Mrs. Richeson's control over the operation of the business since its inception and made her president effective January 1, 1996, when Mr. Richeson, the incumbent, became vice- president Mrs. Richeson indicates, and there is no evidence to the contrary, that neither she nor her husband had any specific training in order to operate the business. What was most important was a general business sense and a knowledge, gained by reading trade periodicals and from experience, of specific window cleaning products. Most of the major business contracts obtained by Petitioner come from bids to government entities and corporations. Other than herself, several employees, namely those who were brought into the business because of their experience with large cleaning projects, evaluate prospective jobs and prepare proposals. This proposal is then brought to her for approval before it is submitted to the potential client. These individuals are her husband and the Van Buren brothers. Based on a job costing formula learned in school, Mrs. Richeson then evaluates the bid to determine if it is too low or too high. She determines if the company can do the job for the price quoted. In addition to bidding, Ms. Richeson claims to oversee every aspect of the business. These functions range from buying office supplies to costing jobs. No one but she has the authority to purchase supplies or equipment other than minor items in an emergency. She also supervises the finances of the operation, determining how earnings are to be distributed and how much corporate officers and employees are to receive as compensation. By her recollection, on several occasions, due to a shortage of liquid funds, she has waived her right to be paid for a particular work period. She claims not to have taken a withdrawal from the corporation for a year, but the corporation's payroll documents reflect otherwise. The salary of each employee is set by Mrs. Richeson. Employees are paid on a percentage of job income. Those employees who do the high-rise jobs receive 40 percent of the income from those jobs. From her experience in the business, this arrangement for paying washers works far better than paying a straight salary. On the other hand, office personnel are paid on an hourly basis. In the event the business were to be dissolved due to insolvency, Mrs. Richeson would lose her 66 percent stock interest in the corporation and her husband would lose his 34 percent interest. There are no other owners of the company, and no one other than the Richesons would bear any loss. Not only can no one but Mrs. Richeson make purchases for the company, even Mr. Richeson cannot sign company checks by himself nor can he pay bills or make any major business decisions. Only she has the authority to borrow money in the name of the corporation. This was not always the case, however. In 1994, Mr. Richeson purchased a new vehicle for the corporation, signing the finance arrangement as president of the company, but even then, Mrs. Richeson signed as co-buyer. Also, the 1994 unsigned lease agreement for the company's use of real property owned by the Richesons calls for Mr. Richeson to sign as president of the company. Mrs. Richeson is the only one in the company who has the authority to hire or fire employees. While she believes the company would go out of business if she were not the president, she also believes she would be able easily to hire someone to replace Mr. Richeson if he were to leave the company. These beliefs are confirmed and reiterated by Mr. Richeson who claims that his role in the company from its very beginning has been that of services rather than management. On August 14, 1995, Mrs. Richeson, who at the time owned 990 of 1,500 shares of corporate stock, filed an application for certification as a minority business enterprise. The application reflected Mrs. Richeson as the owner of a 66 percent interest in the corporation, but also reflected Mr. Richeson as president. This was before the change mentioned previously Melissa Leon reviewed this application as a certification office for the Commission in September 1995. She recommended denial of the application on several bases. The Articles of Incorporation submitted with the application reflect the Director of the corporation as John D. and Hope Richeson and list only John Richeson as incorporator in August 1985. The corporate detail record as maintained in the office of the Secretary of State also reflects the resident agent for the corporation is John Richeson. The corporation's 1993 and 1994 federal income tax returns show John Richeson as 100 percent owner. No minority ownership is indicated. Income tax returns are afforded great weight by the Commission staff in determining ownership. Though Mrs. Richeson claims to own the majority interest in the corporation in her application, the tax returns do not reflect this. In addition, the corporation payroll summaries for February 28, 1995, March 31, 1995 and April 30, 1995 all show John Richeson receiving more income from the business than did Hope Richeson. In the opinion of Ms. Leon, Mrs. Richeson's salary was not commensurate with her claimed ownership interest. The same records for the last three months of 1995 and through April 1996 reflect Mrs. Richeson as receiving more than Mr. Richeson, however. Other factors playing a role in Ms. Leon's determination of non- qualification include the fact that the purchase order for the truck reflected Mr. Richeson as president; the lease agreement shows him signing as president; the bank signature card reflects him as president in 1994 and the corporate detail record shows Mrs. Richeson as resident agent by change dated May 14, 1996, after the filing of the application. Upon receipt of the Petitioner's application, Ms. Leon reviewed the documents submitted therewith and did a telephone interview with Mrs. Richeson. Based on this information and consistent with the guidelines set out in the agency's rules governing certification, (60A-2, F.A.C.), she concluded that the application did not qualify for certification. Not only was the required 51 percent minority ownership not clearly established, she could not determine that the minority owner contributed funds toward the establishment of the business. Ms. Leon determined that the payroll records, reflecting that from February through April 1995, Mrs. Richeson drew less than Mr. Richeson, were not consistent with the same records for the period from October 1995 through April 1996, which reflected that Mrs. Richeson was now earning more than her husband. Further, the amount Mrs. Richeson earned constituted only 53.2 percent of the salary while her ownership interest was purportedly 66 percent. A further factor militating toward denial, in Ms. Leon's eyes, was the fact that there were only two directors. Since Mrs. Richeson was one of two, she could not control the Board, and minority directors do not make up a majority of the Board. While the documents played an important part in Ms. Leon's determination, the telephone interview was also important. Here Ms. Leon found what she felt were many inconsistencies between what was stated in the interview and Mrs. Richeson's testimony at hearing. Therefore, Ms. Leon concluded at the time of her review that the business was jointly owned and operated. It was not sufficiently controlled by the minority party, to qualify for certification. Nothing she heard at hearing would cause her to change her opinion.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Labor and Employment Security enter a Final Order denying Minority Business Enterprise status to Bay Area Window Cleaning, Inc. DONE and ENTERED this 22nd day of August, 1996, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of August, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5913 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. 1. Accepted and incorporated herein. 1. - 4. Accepted and incorporated herein. Accepted and incorporated herein except for the last sentence which is rejected as a legal conclusion. Accepted that she ran the operation. Accepted and incorporated herein. Accepted as a restatement of the testimony of Mrs. Richeson and a generalized agreement with the comments made. - 10. Accepted and incorporated herein, 11. - 12. Accepted. 13. - 14. Accepted. 15. - 17. Accepted. 18. - 19. Not proper Finding of Fact, but accepted as a restatement of witness testimony. 20. - 21. Accepted and incorporated herein. 22. - 25. Accepted as a restatement of witness testimony. Respondent's Proposed Findings of Fact. 1. - 8. Accepted and incorporated herein. Rejected as contradicted by the evidence. Accepted and incorporated herein. Accepted that until after the application was filed, Mr. Richeson was paid more than Mrs. Richeson, but the difference was not great. Accepted and incorporated herein. Accepted and incorporated herein. Rejected as not consistent with the evidence of record except for the allegation concerning Mr. Richeson's authority to sign corporate checks, which is accepted and incorporated herein. COPIES FURNISHED: Miriam L. Sumpter, Esquire 2700 North Dale Mabry Avenue, Suite 208 Tampa, Florida 33607 Joseph L. Shields, Esquire Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 303 Tallahassee, Florida 32399-2152 Edward A. Dion, General Counsel Department of Labor and Employment Security 2012 Capital Circle, Southeast Hartman Building, Suite 307 Tallahassee, Florida 32399-2189
Recommendation Based on the foregoing, it is RECOMMENDED: That petitioner's application for certification as a Women Business Enterprise be denied. DONE and ORDERED this 29th day of June, 1984, in Tallahassee, Florida. R. L. CALEEN, JR. 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 29th day of June, 1984. COPIES FURNISHED: Diann Criss Atkinson, Qualified Representative Shurly Contracting, Inc. P. O. Box 15267 West Palm Beach, Florida 33406 Vernon L. Whittier, Jr., Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32301 Paul A Pappas, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301
The Issue Whether Petitioner is eligible for certification as a "minority business enterprise" in the area of landscape contracting?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner is a Florida corporation that was formed and incorporated by Margaret Gordon, who is the corporation's sole shareholder and its lone officer and director. Gordon is an American woman. Before forming Petitioner, Gordon held various jobs. Among her former employers are Florida Maintenance Contractors and Scenico, Inc. She worked for the former from 1984 to 1991, and for the latter from 1984 to 1990. As an employee of Florida Maintenance Contractors and Scenico, Inc., Gordon supervised landscaping projects. As a result of this work experience, Gordon has the managerial and technical knowledge and capability to run a landscape contracting business. Petitioner is such a landscape contracting business, although it has not undertaken any landscaping projects recently. Its last project was completed two years prior to the final hearing in this case. Since that time, the business has been inactive. Gordon's two sons, working as subcontractors under Gordon's general supervision, have performed the physical labor and the actual landscaping involved in the previous jobs Petitioner has performed. Gordon herself has never done such work and she has no intention to do so in the future. Instead, she will, on behalf of Petitioner, as she has done in the past, use subcontractors (albeit not her sons inasmuch as they are no longer available to perform such work.) Petitioner filed its application for "minority business enterprise" certification in the area of landscape contracting in March of 1994.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Respondent issue a final order denying Petitioner's application for certification as a "minority business enterprise" in the area of landscape contracting. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of October, 1995. STUART M. LERNER 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 9th day of October, 1995.
