The Issue Is Petitioner entitled to certification as a Minority Business Enterprise pursuant to Rule 38A-20.005, Florida Administrative Code?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: On February 12, 1998, Teddy L. Serdynski and Janice A. Serdynski entered into a Partnership Agreement which in pertinent part provides as follows: NAME: The name of the partnership shall be known as "Ted's Auto Parts." PURPOSE: The purpose of the partnership shall be the operation of an automobile parts business and related enterprises. * * * COMMENCEMENT: The partnership shall officially commence upon execution of this agreement. DURATION: The partnership shall continue until dissolved, either by the parties or by legal proceedings, or by liquidation. CAPITAL: The capital of the partnership shall be contributed in amounts equalling 51% by JANICE A. SERDYNSKI and 49% by TEDDY L. SERDYNSKI, thereby granting to the said JANICE A. SERDYNSKI the controlling interest of said partnership. WITHDRAWAL: No partner shall withdraw any invested capital without the consent of the other partner. CAPITAL GAINS AND LOSSES: Capital gains and losses shall be shared in a proportionate amount of their investment and ownership interest. * * * MANAGEMENT: Although JANICE A. SERDYNSKI is the owner of a controlling interest in the partnership, each shall have equal voice in the management of the affairs of the partnership. Both parties shall administer to the general affairs of the partnership and shall carry out and put into effect the general policies and specific instructions of their decision on any given matter. BANK ACCOUNTS: The partnership shall maintain checking and other accounts in such bank or banks as the partners shall agree upon. Withdrawals and writing of checks on the partnership account may be done jointly and/or singly. PROFITS AND LOSSES: The partners shall share in accordance with their ownership interest in the profits and losses. . . . LIMITATIONS ON PARTNER: No partner, without the consent of the other partner, shall borrow money in the partnership name for partnership purposes or utilize collateral owned by the partnership as security for such loans, assign, transfer, pledge, compromise or release any of the claims or debts due to the partnership except on payment in full; consent to the arbitration of any dispute or controversy of the partnership; transfer firm assets; make, execute or deliver any assignment for the benefit of creditors; maker, execute or deliver any bond, confession of judgment, guaranty bond, indemnity bond, or surety bond or any contract to sell, bill of sale, deed, mortgage, lease relating to any substantial part of the partnership assets or his/her interest therein; or engage in any business or occupation without the consent of the other partner. * * * 17. DISPUTES: That the parties agree that all disputes and differences, if any, which shall arise between the parties, shall be referred to and decided by two indifferent, competent persons in or well acquainted with the trade, one person to be chosen by each party, or to submit to arbitration by a recognized arbitration service, and his/her or their decisions shall, in all respect, be final and conclusive on all parties. Ted's Auto Parts was a sole proprietorship from May 1, 1985 until February 11, 1998. From May 1, 1985, until February 11, 1998, Janice A. Serdynski shared ownership in Ted's Auto Parts equally with her husband, Teddy L. Serdynski, a non- minority. Janice A. Serdynski does not share income from Ted's Auto Parts commensurate with her 51 percent ownership. Decision-making, withdrawal of funds, borrowing of money, and the day-to-day management of Ted's Auto Parts are shared equally between Janice A. Serdynski and Teddy L. Serdynski. Ted's Auto Parts is a family operated business with duties, responsibilities, and decision-making occurring jointly, and, at time, mutually among family members. Both Janice A. Serdynski and Teddy L. Serdynski are authorized to sign checks on the account of Ted's Auto Parts.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it recommended that the Department enter a final order finding that Petitioner has failed to meet the requirements for Minority Business Enterprise certification and dismiss the petition filed by Petitioner. DONE AND ENTERED this 22nd day of March, 1999, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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) 921-6947 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd of March, 1999. COPIES FURNISHED: Douglas I. Jamerson. Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Edward A. Dion General Counsel Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2152 Janice A. Serdynski Ted's Auto Parts 190 Second Avenue, South Bartow, Florida 33830 Joseph L. Shields, Senior Attorney Department of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189
Findings Of Fact On or about March 17, 1994, Petitioner, T-B Services, Inc., filed an application for certification as a minority business enterprise with the Florida Department of Management Services. The Respondent, the State of Florida Commission on Minority Economic and Business Development, has subsequently been assigned responsibility for this matter. On May 3, 1994, Petitioner's application was denied. Petitioner's application was denied based upon Respondent's conclusion that Petitioner did not satisfy Sections 288.703(2) and 287.0942(1), Florida Statues, and rules governing minority business enterprises of the Department of Management Services. Mr. Anthony D. Nelson is the minority, 100 percent, owner of Petitioner. Mr. Nelson is an African-American. The business of Petitioner, fire protection consulting, and fabrication and installation services, requires the association of an individual holding a professional license to perform those services. There are two professional license holders associated with Petitioner. Neither of the professional license holders are members of any minority. Mr. Nelson does not hold a professional license necessary for the Petitioner to provide fire protection consulting, or fabrication and installation services.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Respondent dismissing the Petition for Formal Hearing filed by T-B Services Group, Inc., and denying Petitioner's application for minority business enterprise certification. DONE AND ENTERED this 26th day of May, 1995, in Tallahassee Florida. LARRY J. SARTIN, 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 26th day of May, 1995. COPIES FURNISHED: Cindy A. Laquidara, Esquire Suite 1629, Riverplace Tower 1301 Riverplace Boulevard Jacksonville, Florida 32207 Kenneth W. Williams Assistant Attorney General Office of the Attorney General PL-01, The Capitol Tallahassee, Florida 32399-1050 Crandall Jones Commission on Minority Economic and Business Development Executive Administrator Knight Building 272 Centerview Drive Tallahassee, Florida 32399-0950
The Issue Whether Petitioner is entitled to certification as a Disadvantaged Business Enterprise (DBE) pursuant to Section 339.0805, Florida Statutes, and Rule Chapter 14-78, Florida Administrative Code?
Findings Of Fact Adnan Alghita, a licensed general contractor in the State of Florida, is the president and sole owner of Adnan Investment and Development, Inc. (Adnan's). Alghita is a United States citizen2 of Iraqi origin. He came to the United States from Iraq in 1969 and settled in Atlanta, Georgia, where he attended Georgia Tech. He graduated from Georgia Tech after only 15 months. After graduation, Alghita started his own construction company (Adnan's) in Atlanta. For a number of years, Alghita was a very successful businessman. His company evolved into a multi-million dollar business. He and his company suffered a serious setback, however, when the lending institution he had been dealing with on a regular basis terminated his line of credit and severed its relationship with him.3 In 1984, Alghita filed for Chapter 11 bankruptcy. Hoping that a change in location would revive his business, Alghita moved (both his residence and business) from Atlanta to Florida in 1990. At the time, he had very little capital. The change has not produced the results Alghita had hoped it would. Like other owners of businesses of marginal financial status, he has continued to have difficulty obtaining bonding and credit for his business and expanding its customer base.4 Recently, Alghita, on behalf of Adnan's, submitted a bid in response to a request for bids to undertake a construction project for the South Florida Water Management District (SFWMD). Adnan's bid was the lowest priced bid submitted, but it was rejected by SFWMD as non-responsive. There is no indication that Alghita's national origin played any role in SFWMD's decision to reject the bid. On May 2, 1996, Alghita filed an application requesting that the Department certify Adnan's as a Disadvantaged Business Enterprise. On the application, Alghita indicated that the "approximate value of the firm" was $300,000.00 and that its inventory (which included two homes) was worth $460,000.00. In a follow-up letter that he wrote to the Department, Alghita advised that in 1989, 1990, 1991, 1993, 1994, and 1995, his "personal income" was "below the minimum income to file an Income Tax return." In further support of the application, Alghita submitted to the Department a statement of credit denial, dated June 7, 1994, that he had received from the First Bank of Indiantown. The statement indicated that he had been denied a "$5,940 Letter of Credit to Bankers Insurance Co." because of past "bankruptcy" and "lack of collateral." By letter dated August 7, 1996, the Department notified Alghita of its intent to deny the application for DBE certification that he had filed on behalf of Adnan's. Such proposed action (which Alghita has challenged) is the subject of the instant administrative proceeding.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department issue a final order denying Petitioner’s application for certification as a Disadvantaged Business Enterprise DONE AND ENTERED IN Tallahassee, Leon County, Florida, this 16th day of April, 1997. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 16th day of April, 1997.
Findings Of Fact Based upon the documentary evidence received and the entire record compiled herein, the following relevant facts are found. By letter dated March 2, 1982, Respondent, Department of Transportation, advised Petitioner that its application for certification as a Minority Business Enterprise was denied on the basis that it "[l]acks minority ownership and control." By letter dated March 9, 1982, Petitioner, in the person of its Vice President, Charles J. Cedeno, appealed the Respondent's denial. Pursuant to a notice of hearing dated April 1, 1982, issued by Hearing Officer Charles C. Adams, a hearing on the denial of certification of Petitioner was held on July 7, 1982, in Tallahassee, Florida. Petitioner did not have a representative at that hearing, although based upon a representation from Respondent's counsel, Vernon L. Whittier, Jr., indicating the possibility that Petitioner was considering the possibility of requesting a continuance of the July 7, 1982, hearing, the matter was in fact continued by Hearing Officer Adams and rescheduled for hearing by service of a notice of hearing dated July 19, 1982, scheduling the matter for hearing on September 15, 1982, in Tallahassee, Florida. Copies of the notice of hearing were sent to the parties of record and there was no showing that the notice of hearing was returned as being undeliverable. As noted herein, Petitioner did not appear at the subject hearing herein nor was any communique received from Petitioner indicating that a continuance was being requested. During the hearing, counsel for Respondent made an ore tenus motion to dismiss the Petition on the ground of default as Petitioner failed to appear at the time and place noticed for hearing. That motion was granted by the undersigned.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED: That the Respondent, Department of Transportation, issue a final order denying Petitioner's application for certification as a Minority Business Enterprise. RECOMMENDED this 28th day of September, 1982, in Tallahassee, Florida. JAMES E. BRADWELL, 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 28th day of September, 1982.
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
Findings Of Fact Swiftline Trucking, Inc., was incorporated in Florida in 1979 by Rose Laquidara. The Articles of Incorporation filed with the Florida Secretary of State reflect Rose Laquidara as President and Treasurer, Carl Laquidara, her son, as one Vice- President, and Felix Laquidara, her other son, as the other Vice- President and Secretary. These same individuals were also identified as the initial Directors of the corporation. Anthony Laquidara, Rose Laquidara's husband, was neither an officer nor a director. Carl is no longer with the firm. The corporation originally operated out of the Laquidara home with Anthony Laquidara serving as a truck driver and Rose serving as bookkeeper and general manager. The two sons, Carl and Felix, ages 14 and 15 at the time, acted as mechanics. Ultimately the corporate offices were moved to a commercial site owned by Rose and Anthony Laquidara, personally, which was leased to the corporation. The Laquidaras moved to Florida sometime prior to 1979 when Anthony retired from his position as a police officer in New York City. When the family moved to the Ft. Myers area, Rose went back to school and Anthony spent his time fishing and driving a truck part time. In 1978, when the trucking industry was deregulated, Rose got the idea of starting her own trucking company. Swiftline Trucking, Inc., the result of that idea, was started with $5,000.00 that she inherited from her father. This $5,000.00 was used to purchase the company's first truck. Later on, during the growing years, additional money was put into the business to cover payroll. This money came from Rose's share of the proceeds of the sale of the family home in New York. The business operated continuously from its inception until the present. On October 10, 1986, as President of the corporation, Rose submitted an application for certification as a disadvantaged business enterprise. Thereafter, the Department sent Tyrone Reddish to Ft. Myers to interview her and to inspect the records of the company. In the course of his review, Mr. Reddish examined the documents, looked at the corporate books, records, and files, and examined contracts and purchase vouchers as well as subcontracts, and financial records. He concluded that Swiftline met two of the five standards necessary for certification as a disadvantaged business enterprise. These were: (1) that the applicant was a female and, (2) that the applicant owned 51 percent of the stock issued in the corporation. However, he also concluded that three other standards were not supported by independent evidence. These were: (1) that the applicant failed to exercise substantial control over the operation, (2) that the applicant was responsible for the day to day operation of the company, and (3) that the applicant was, in fact, in charge of company management. Because of this, he could not conclude that the business should be certified and he prepared a report outlining his findings and conclusions which he sent for review by the Department. Specifically, Mr. Reddish found several discrepancies between stock certificates issued and the stock ledger. Corporate records reflect that from the time of incorporation in 1979 to 1984, Rose Laquidara held 80 percent of the stock. Records for 1984 indicate a directors' meeting at which Rose Laquidara was not present. The minutes of that meeting reflect only that her stock was sold. They are silent as to how much, if any, compensation was received by Rose Laquidara for the sale of her stock. The minutes of a 1986 meeting reflect that Rose Laquidara reacquired her original 400 shares (80 percent), and an additional 510 shares. However, the minutes did not provide any information regarding the transfer or furnish the background for it. Additional discrepancies found by Mr. Reddish include the fact that the income tax forms filed in 1986 reflected that Rose Laquidara held 80 percent of the stock and two other individuals, her sons, held 9.8 percent of the stock. The stock record book reflects that 39 percent of the stock was at that time owned by Anthony Laquidara, Rose's husband, 51 percent was owned by Rose Laquidara, and 5 percent each was owned by the sons. This discrepancy and the previous one are explained by Mrs. Laquidara who indicates that in 1984, she and her husband were divorced. As a part of the divorce settlement, she transferred all her stock in Swiftline to her husband who paid her compensation therefor. This compensation came from the proceeds of the corporation. However, Mr. Laquidara was unable to make a go of the business and suffered a nervous breakdown in 1986. He called Mrs. Laquidara from New York and advised her he had walked away from the business and if she didn't want it to fail completely, she had best step in and take over again. Thereafter, Rose Laquidara accepted transfer of the ownership back from Anthony who indicated he wanted no ownership interest in the corporation. She felt, however, that because he had provided so well for the family for the first years of their marriage, it would be unfair for him to end up without anything and she insisted he be given a 39 percent interest in the corporation. This stock was issued from treasury stock. The sons, who were identified as each owning 9.8 percent of the stock, in reality each own 50 shares representing 5 percent of the 1,000 shares authorized and issued. According to the stock record book, 1400 shares of stock have been issued to various members of the Laquidara family. This is incorrect. Only 1,000 shares was authorized by the Articles of Incorporation and have been issued. Another discrepancy disclosed by Mr. Reddish was in the report of profits for 1986 which showed an 80 percent distribution to Rose Laquidara and 10 percent to each of her sons. Anthony Laquidara was not represented at all. Nonetheless, he later wrote a letter stating he had no claims on profits in 1986 and this constituted a discrepancy in Mr. Reddish's mind for which he could find no explanation. It really is quite clear, however. Mr. Reddish also concluded there were other discrepancies such as, (1) the By-Laws had some restrictions which impacted on total control resting in Rose Laquidara; (2) a problem with employment of other family members in supervisory positions; (3) several checks were made payable to Tony Laquidara for which there were no supporting documents. With respect to those three discrepancies, the By-Laws have been amended to remove any impediments to Rose, as majority stockholder, having controlling voice in the operation of the business. There is nothing wrong with other family members exercising supervision over portions of the business operation so long as this supervision is delegated to them by the majority stockholder. The two checks in question were issued to Tony for, in one case, rent for the office building, and in the other for payment of the property taxes. These notations are clearly inscribed on the checks. It is difficult to understand why Mr. Reddish did not see them. Mr. Reddish was also concerned about he fact that even though Swiftline had done in excess of one million dollars worth of work with the Department, he could find only one or two purchase orders from the Department to back this up. When questioned, Mrs. Laquidara was unable to provide answers to satisfy him. This area of inquiry, however, is not pertinent to a determination of minority or disadvantaged business status. In the course of his visit with Swiftline, Mr. Reddish did not speak with any employees or customers because, he claims, the Department's method of certification is to talk only with the owner. This was not, he states, a compliance review and though he found several things as described above with which he was dissatisfied, he asked no one other than Mrs. Laquidara for an explanation. He claims it is the Department policy to talk only with the majority owner in a validation review and that validation is accomplished by an examination primarily of documentation. He claims he does not know who hires, who fires, within whom the decision making authority rests, or who is responsible for personnel actions. When he asked who performed these functions, he was told Mrs. Laquidara did some and others did other things. He does not know who delegated this authority to these other people but he asked only Mrs. Laquidara and, apparently, he did not ask her either enough questions or the right questions. The interview was taped but a copy of the tape was not forwarded for review with his report. Had Mr. Reddish's interview been more inclusive, he would have found, for example that Felix Laquidara, Rose's son and a road supervisor for the company, monitors its operation, seeks out jobs for the fleet to perform, and reports to Mrs. Laquidara. He makes no decisions as to the business without consulting with Mrs. Laquidara, nor can he commit the company to new work without her approval. He cannot hire or fire employees without consulting her nor does he take any part in determining employee salaries. That is done by Mrs. Laquidara who also determines how many employees the company should have. Felix is not permitted to extend credit to customers based on his own determination of creditworthiness, nor does he make any decisions about collecting outstanding fees. Mrs. Laquidara does both. In the event of any problem with customers, they are referred to Mrs. Laquidara for the resolution of their complaints. Felix has no idea how much income the company grossed during the last business year, (or, for that matter, in any business year), nor does he know how much profit was earned by the company. Though he is given a portion of the year-end profit as a bonus, the amount of bonus is determined by Mrs. Laquidara and it may take a form other than cash. Felix works between 14 and 16 hours per day and is paid a flat salary not based on the number of hours worked. Each week, he and the other road supervisors meet with Mrs. Laquidara to decide what business will be taken on for the next week. There is no question in his mind that Mrs. Laquidara runs the business. He is on the books as corporate secretary, and has attended corporate meetings but has had no input. Had he checked deeper, Mr. Reddish would also have found that when Rose Laquidara started Swiftline in 1979, her husband had little to do with it. He had no input as to the form of the business nor did he sign or file any of the paperwork involved. When the company was first started, with the first truck bought with Rose's money, their original business was the hauling of sand, stone and dirt, and he drove the truck part time. Now, he helps out with estimates, assists with collections, checks job sites and the like, but has no specific duties nor does he make any decisions regarding the operation. He works from 10 to 30 hours per week and draws no salary. Mr. Laquidara has no part in deciding how many jobs the company can handle at one time; he has no part in deciding which jobs to take on; he does not grant credit; nor does he decide how many employees should be kept on the payroll or who should be hired or fired. The individual with ultimate authority in all aspects of Swiftline's operation is Rose Laquidara who makes her decision after input from her employees. By the same token, she is the source from whom all authority flows. That which is not specifically delegated by her to her underlings is retained by her. Though Anthony Laquidara is an authorized signatory on company checks, along with Mrs. Laquidara, he was made so because he was also a signatory on some of the outstanding business loans of the corporation. The lender wanted a personal guarantee from him, as well as Mrs. Laquidara. He rarely signs corporate checks, however. As a shareholder in the corporation, he receives a portion of the business profits distributed at year end. The amount of distribution is determined by Mrs. Laquidara. This information, given by Felix and Anthony as to business and organizational arrangements and responsibilities, was confirmed by Mrs. Laquidara. In the early years of the business she did the dispatching herself, assigning jobs to individual truckers who signed on with her. Now she spends the majority of her time in management, settling problems within the operation and talking with customers. She opened the east coast office on her own, putting one of her former drivers in as manager, and he reports to her, alone. There are presently approximately 100 independent contractor drivers working for her who are paid about 89 to 90 percent of what the job brings in. She has arranged a line of credit with a financing institution, but Anthony was required to join her in personally guaranteeing the loans. As to the share breakdown, prior to her divorce, she held 90 percent of the corporate stock. Pursuant to the settlement agreement, she signed her shares over to Anthony and received a cash settlement in return. When he subsequently had a nervous breakdown and she had to step in and take back control of the business, she chose to take only a 51 percent share instead of the 90 percent share she previously held. She felt it was only equitable that Anthony keep a 38 percent share of the company stock because during the early years of their marriage, he supported them all. The stock decision was hers alone, however, and had nothing to do with the disadvantaged business certification. She now runs the corporation taking care of all financial, legal, and personnel matters. She employs an office manager and 7 office personnel. She discharged her son, Carl, because he could not take orders. Swiftline was certified as a minority business enterprise by Lee County for several years, renewed each year until the last year when it was turned down since the Lee County application is based on undefined federal guidelines which, apparently, were not met. When Swiftline was turned down by Lee County, Mrs. Laquidara applied for state minority certification. This application resulted in the visit by Mr. Reddish which ultimately culminated in the denial of this application as well. Without certification as a minority business enterprise, Swiftline is precluded from preforming many jobs for state, city, or county governments which require such certification and which, up until the present, have made up a substantival portion of Swiftline's business. Mr. Reddish's validation review was not sufficiently comprehensive. It was insufficient to generate adequate information upon which to base an informed conclusion and recommendation. It appears to be more an attempt to support denial of certification than a bona fide attempt to determine if the applicant qualified for certification. When Mr. Reddish completed his validation review, he forwarded his report to the validation committee which unanimously voted, based on the record, to deny Swiftline its certification. This decision was based on what the committee had before it which included only the documentation submitted with the application and Mr. Reddish's report. Mr. Sweet and the committee identified several problems with the file which included: (1) that Swiftline was a family business which could not demonstrate that control rested within one person. It appeared that everything was within the control of various family members with responsibility equally shared, and that, therefore, non-disadvantaged business people had more than one-half the control even though Mrs. Laquidara admittedly owned 51 percent of the stock. (2) The corporate By-Laws were not followed and there was no documentation to show compliance. (3) Last year the corporation did $4.6 million in gross business and this does not appear to be a small business so as to justify operating without formal procedures as was done here. Mr. Sweet indicated there were several deficiencies in the By-Laws. For example, 3/4 of the stockholders are required to appoint the Board of Directors. Article I, Section 7 of the Constitution provides that 4/5 of the voting stockholders are required to validate. This is far more than 51 percent and if applied, would divest Mrs. Laquidara of control. Directors are required to conduct certain specific types of business and only two are required to do others. As a result, the Board can operate and conduct corporate affairs without participation of the 51 percent owner. The committee's conclusions, however, can be no more valid than those of Mr. Reddish since it's deliberations were based solely upon the information he provided.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Swiftline Trucking, Inc.'s application for certification as a disadvantaged business enterprise be granted. RECOMMENDED this 7th day of March, 1988, at Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of March, 1988. Appendix to Recommended Order The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statute, on all of the proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONER 1., 2. Accepted and incorporated herein. 3., 4. Accepted and incorporated herein. 5. Accepted and incorporated herein. 6. Accepted and incorporated herein. 7. Accepted and incorporated herein. 8., 9. Accepted and incorporated herein. 10.-13. Accepted and incorporated herein. Accepted and incorporated herein. Accepted and incorporated herein. 16.-19. Accepted and incorporated herein. 20. Accepted and incorporated herein. 21.-22. Accepted and incorporated herein. This is not a completely true statement. His authority to sign checks is not conditioned upon something happening to Mrs. Laquidara but was required because he is a co-signer in lending arrangements. Accepted and incorporated herein. Mr. Reddish also talked with Mrs. Laquidara. Accepted and incorporated herein. 27.-29. A summary of testimony - not a Finding of Fact 30. Accepted. 31.-32. Accepted and incorporated herein. FOR THE RESPONDENT Accepted and incorporated herein. Accepted as the original determination of the department on which this hearing is based. 3.-5. Accepted and incorporated except for the comment that Anthony and Felix share the control of the company which is rejected as contra to the evidence. First sentence as rejected as a Conclusion of Law as is the last. Remainder is accepted. Accepted. Rejected as an incorrect statement of Fact. Store records are unclear, but ownership, upon inquiry was clarified. The finding that Rose owns only 40 percent of the store is rejected. Rejected as contra to the weight of the evidence and as argument. The loan from Anthony's further, classified as "substantial", was not otherwise described. Accepted. Accepted, but not controlling. Accepted except for last sentence, which is rejected. Accepted in that the family worked together. Rejected as implying management responsibility was shared. The Finding that decision making and actual power was shared by the family as a unit is rejected. No evidence was presented to show that by the Department. Accepted. Accepted. 17.-19. Accepted. COPIES FURNISHED: LEIBY AND ELDER 290 NORTHWEST 165TH STREET PENTHOUSE 2 MIAMI, FLORIDA 33169 JUDY RICE, ESQUIRE DEPARTMENT OF TRANSPORTATION 605 SUWANNEE STREET, MS 58 TALLAHASSEE, FLORIDA 32399 KAYE N. HENDERSON, SECRETARY DEPARTMENT OF TRANSPORTATION HAYDON BURNS BUILDING 605 SUWANNEE STREET TALLAHASSEE, FLORIDA 32399-0450 THOMAS H. BATEMAN, III, ESQUIRE GENERAL COUNSEL DEPARTMENT OF TRANSPORTATION HAYDON BURNS BUILDING 605 SUWANNEE STREET TALLAHASSEE, FLORIDA 32399-0450 =================================================================
Findings Of Fact Petitioner is a closely held Florida corporation engaged in the business of inspecting elevators, providing expert testimony in cases involving malfunctioning elevators, and writing elevator specifications. Petitioner also functions as a consultant to operators of elevator equipment. All of the outstanding stock of Petitioner is owned by Mr. Theodore Baranowski and Mrs. Dorothy Baranowski, his wife. Mrs. Baranowski owns 65 percent of Petitioner's outstanding stock, and Mr. Baranowski owns the remainder. Technical Control The essential services provided by Petitioner are rendered by Mr. Baranowski. Mrs. Baranowski is a full-time school teacher. She is only available to work in Petitioner's business when school is not in session. She assists Mr. Baranowski in rendering the services provided by Petitioner. Of the 15 jobs Petitioner completed in the year preceding the formal hearing, Mrs. Baranowski assisted in seven. Mr. Baranowski completed the other eight jobs without assistance. Mrs. Baranowski did not provide the essential services for any job. Mr. Baranowski has 30 years of experience in the elevator field and a certificate of competency. His extensive experience and expertise is the primary reason Petitioner is able to render the services it provides. Mrs. Baranowski has only two years of experience as an elevator consultant. She lacks the training and experience needed to obtain a certificate of competency. Without a certificate of competency, Mrs. Baranowski must rely on Mr. Baranowski to conduct the major aspects of Petitioner's business, including consulting, expert testimony, and elevator inspections. During elevator inspections, Mr. Baranowski conducts the inspection of the machine room and the elevator car. He instructs Mrs. Baranowski while she takes pictures and notes of Mr. Baranowski's findings. A person conducting elevator inspections must have extensive knowledge of the Florida Elevator Code. Mrs. Baranowski lacks the requisite knowledge of the Florida Elevator Code. Mrs. Baranowski's main duties for Petitioner involve invoicing, purchasing supplies, and scheduling. Mrs. Baranowski also writes reports after going over notes of inspections with Mr. Baranowski. Reports provided to customers at the end of elevator inspections are signed by Mr. Baranowski. A marketing brochure sent by Petitioner to potential customers extols the qualifications of Mr. Baranowski. The brochure does not mention Mrs. Baranowski's role in the services provided by Petitioner. Letters to potential customers are typically signed by Mr. Baranowski. Mr. and Mrs. Baranowski tacitly admit in Petitioner's advertising brochures and letters that potential customers will hire Petitioner based on Mr. Baranowski's technical experience and expertise. Mrs. Baranowski is a minority owner (not a minority shareholder) in the learning process and does not have technical control of Petitioner. Mrs. Baranowski does not have the technical proficiency required under applicable rules to manage and operate Petitioner's business and make independent decisions. Operating And Financial Control Petitioner is required by its bylaws to have a minimum of two members on its board of directors. The two current directors are also Petitioner's sole shareholders. Mr. Baranowski is a white male and does not qualify as a member of any statutorily designated minority. Section 288.703, Florida Statutes. Mrs. Baranowski qualifies as a member of a minority but comprises only 50 percent of the current directors. Therefore, a majority of the directors are not minority owners. The corporate bylaws provide that Petitioner is to be managed and operated by the board of directors. The board can not make corporate decisions without a quorum present. A quorum consists of a majority of the board members. As currently constituted, both board members must be present to satisfy the requirement for a quorum. Corporate decisions are made by majority vote of the board of directors. The requirement for a majority vote of the board of directors, in effect, is a requirement for unanimity of the current members of the board. Mrs. Baranowski does not have a majority vote on the board of directors. Either member has an effective veto of any proposed corporate action. Mrs. Baranowski owns a majority of the voting stock. As the majority shareholder, Mrs. Baranowski has the legal authority and ability to remove or add directors, with or without cause. She can conduct business without a meeting of the directors by signing a consent form approving any corporate action. In economic substance, Mrs. Baranowski cannot exercise her legal authority as the majority shareholder without risking loss of the technical expertise provided by Mr. Baranowski. Mrs. Baranowski's legal control of the board of directors is inextricably intertwined with Mr. Baranowski's technical control of Petitioner's business. Minorities do not, in substance, control Petitioner's board of directors. Both current directors are authorized signatories on Petitioner's bank account. There are no limitations on Mr. Baranowski's legal right to draw on the account, and he regularly writes checks for Petitioner. For the reasons stated in the preceding paragraph, Mrs. Baranowski could not use her position as a majority shareholder to control Mr. Baranowski's legal right to draw on Petitioner's bank account without risking loss of Mr. Baranowski's technical expertise. Therefore, minorities do not, in substance, have financial control of Petitioner.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent enter a Final Order and therein DENY Petitioner's request for certification as a minority business enterprise. DONE AND ENTERED this 1st day of September, 1994, in Tallahassee, Florida. DANIEL MANRY 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 1st day of September, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-0403 Petitioner's Proposed Findings Of Fact 1.-3. Accepted in substance 4. Not at issue and, therefore, immaterial 5.-7. Accepted in substance Not at issue and, therefore, immaterial Accepted in substance Rejected as inconsistent with a preponderance of competent and substantial evidence Respondent's Proposed Findings Of Fact 1. Accepted in substance 2.-3. Not at issue and, therefore, immaterial 4.-6. Accepted in substance 7. Accepted in substance but not characterization 8.-9. Accepted in substance 10. Rejected as recited testimony 11.-12. Accepted in substance COPIES FURNISHED: Dorothy Baranowski, Esquire Baranowski & Associates 7050 Tallow Tree Road Sanford, Florida 32771 Cindy Horne, Esquire Office of General Counsel Department of Management Services 2737 Centerview Drive Tallahassee, Florida 32399-0950 William H. Lindner, Secretary Department of Management Services Knight Building, Suite 307 2737 Centerview Drive Tallahassee, Florida 32399-0950 Paul A. Rowell, General Counsel Department of Management Services Knight Building, Suite 307 2737 Centerview Drive Tallahassee, Florida 32399-0950
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
The Issue Whether the Petitioner is properly qualified to participate in the disadvantaged business enterprise program.
Findings Of Fact Ameriseal of Northeast Florida, Inc. is an active Florida corporation engaged in the business of highway striping and marking. Ameriseal of Northeast Florida, Inc., was considered for re-certification by the Department of Transportation as a DBE. Sheran Carter is the president and majority stock holder of Ameriseal of Northeast Florida, Inc. She is a white female, and in charge of administration of the corporation. Her husband, Melvin Carter, a white male, is the minority shareholder of the corporation and is described by various witnesses as an individual with a broad range of experience and knowledge in the business in which the Petitioner engages and is the key operational employee of the company supervising the operational activities of the corporation. The relationship of Sheran Carter and Melvin Carter is a normal, close relationship in which business is mutually discussed and suggestions are exchanged. The Department asserts that there are many reasons for denying DBE status to the Petitioner, to include: lack of adequate capital contribution to the company by Sheran Carter, lack of control by Ms. Carter as that term is defined by the rules, filing of false documents by the Petitioner with the Department, failure to reveal "affiliated" companies, and the assertion that Sheran Carter's financial contributions to the corporation were loans. The facts reveal that Melvin Carter, Dennie Carter, and Henry Allen engaged in a paving business in the 1980s which was successful, and gradually came to specialize in resurfacing airport runways. The company was very successful. However, in 1988 and 1989 changes in federal funding for the maintenance of airports resulted in a drastic downturn in the company's business. As a result thereof, their company suffered financial reverses and was in danger of financial collapse. At or about this time, Ameriseal of Northeast Florida, Inc., was formed. The owners and principal officers of the company were the wives of Melvin Carter, Dennie Carter, and Henry Allen. Certain unencumbered assets of the predecessor corporation were transferred to the wives in repayment for loans made by the wives to the predecessor corporation. In turn, these assets became part of the capital contribution of the wives to the establishment of Ameriseal of Northeast Florida, Inc. After its formation, Ameriseal of Northeast Florida, Inc., engaged in highway striping and marking. The operations of Ameriseal of Northeast Florida, Inc., were significantly smaller than its predecessor corporation, and after a couple of years' operation, it was determined that its activities could not support the three families. There is competent evidence to establish that the monies loaned by Sheran Carter to the predecessor corporation were jointly held funds belonging to Sheran Carter and her husband, Melvin Carter. On this basis, Melvin Carter would be considered one-half owner of the one-third share transferred to Sheran Carter. However, the testimony of the corporation's accountant establishes that Sheran Carter purchased with personal funds belonging to her the shares and corporation owned by Sharon Allen. Upon completion of this purchase, Sheran Carter owned 50% of the corporation, her husband owned 16 2/3% of the corporation and Glenda Carter, the wife of Dennie Carter, owned 33 1/3% of the corporation. A controversy developed regarding the purchase and transfer of the shares owned by Glenda Carter in Ameriseal of Northeast Florida, Inc. Glenda Carter filed a civil action against Melvin Carter and Ameriseal of Northeast Florida, Inc., alleging that her name had been forged on transfer documents indicating the purchase of her shares by the corporation. This action was eventually settled upon payment of additional funds to Glenda Carter. The testimony of the corporation's accountant establishes that Sheran Carter paid her personal funds to settle the suit with Glenda Carter and received a bill of sale for transfer of Glenda Carter's shares in the corporation. Upon settlement with Glenda Carter, Sheran Carter owned 83 1/3% of the corporation. Testimony was also received that Sheran Carter transferred sufficient shares in the corporation to Melvin Carter such that Melvin Carter owns 25% of the corporation and Sheran Carter owns 75% of the corporation. At all times relevant to the pending denial, Sheran Carter was a majority share holder of the corporation. Evidence was received that over the years Melvin Carter, Dennie Carter, and Henry Allen in various combinations owned various corporations. However, there is no evidence that any of these corporations are affiliated with or do business in any manner with Ameriseal of Northeast Florida, Inc. Because Melvin Carter, a minority stock holder in Ameriseal of Northeast Florida, Inc., was also a stock holder or officer in these other corporations, it may have been appropriate to have reported them as affiliated corporations in filings with the Department; however, the evidence is that none of these corporations is currently active. The Department asserts that the formation of Ameriseal of Northeast Florida, Inc. was to establish the corporation as a DBE. While creation of the corporation and the transfer of assets from the predecessor corporation to Ameriseal of Northeast Florida, Inc., may have been an effort to protect assets from potential creditors upon the demise of the predecessor corporation, there is no evidence that it was created for the purpose of establishing the new corporation as an DBE. The creation of the corporation preceded by a couple of years' consideration of obtaining DBE status. At or about the time of the purchase of the shares from Dennie and Glenda Carter and Sharon and Henry Allen, Sheran Carter took an increasingly active role in the management in the corporation. As that participation has evolved, she is responsible for administration of the office and financial activities of the corporation, and Melvin Carter is responsible for the field operations of the company. They mutually manage their family company. Although there is evidence that Melvin Carter's participation in the activities of the corporation are decreasing, the evidence is that the couple's sons are taking an increasingly active role in the business. They are white males. Sheran Carter demonstrated technical expertise and possesses knowledge and understanding of the technical aspects of the company's operations and functions.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Department enter a final order finding that the Petitioner's application for re-certification as a disadvantaged business enterprise be denied. DONE AND ENTERED this 11th day of August, 1999, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN 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 11th day of August, 1999. COPIES FURNISHED: August Quesada, Esquire Bishop Square, Suite 104 5700 St. Augustine Road Jacksonville, Florida 32207 Kelly A. Bennett, Esquire Department of Transportation Haydon Burns Building Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458 Thomas F. Barry, Secretary Attn: James C. Myers Clerk of Agency Proceedings Department of Transportation Haydon Burns Building Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458 Pamela Leslie, General Counsel Department of Transportation Haydon Burns Building Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458
