The Issue At issue in this proceeding is whether the application of Petitioner for registration as an associated person with J.T. Moran and Company, Inc.should be approved by the Florida Department of Banking and Finance.
Findings Of Fact Based upon my observation of the witnesses, their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I make the following findings of fact: Petitioner, who turned 46 years old on May 25, 1989, first became involved in the securities industry in approximately January of 1983 when he began working with the firm of Huberman, Margaretten and Straus, Inc.(HMS). Petitioner was registered with the Department as an associated person with HMS from May, 1983 until January, 1984. Petitioner's involvement in the securities industry evolved from discussions that he had with Paul Michelin. After some preliminary conversations, Mr. Michelin (who was a partner at HMS and had been involved in the securities industry for over twenty years) hired Petitioner to work as an account executive at HMS. Prior to starting work at HMS in 1983, Petitioner had been employed in unrelated industries and had never sold securities or worked in a position of responsibility for a securities firm. During his employment at HMS, Petitioner was supervised and trained by Paul Michelin. In approximately January of 1984, Paul Michelin left HMS and started his own broker-dealer firm, Michelin and Company. Petitioner was hired by Paul Michelin to work at that company beginning in January of 1984. Petitioner was registered with the Department as an associated person with Michelin and Company effective February 28, 1984. Paul Michelin owned all of the stock of the company. He oversaw and was responsible for the day to day operations of Michelin and Company throughout the entire time period relevant to these proceedings. Paul Michelin also had ultimate and sole responsibility for hiring and firing at Michelin and Company. There is conflicting evidence as to Petitioner's job title and responsibilities when he first joined Michelin and Company. At the hearing, Petitioner testified that he was originally hired as an account executive and did not become a vice president until sometime around May or June of 1984. However, in early 1986, Petitioner filed a lawsuit against Michelin and Company for commissions and money supposedly due. In pleadings filed on behalf of Petitioner in that lawsuit, allegations were made that Petitioner was hired as a vice president of Michelin and Company in January of 1984 and his job responsibilities included a role in the management of the company. After reviewing the testimony and the documents received into evidence, the undersigned finds that Petitioner did not actually become a vice-president of the company until May or June of 1984. Petitioner passed the Series 24 examination that was given in May of 1984 and his registration with the Department was upgraded to principal effective July 26, 1984. Petitioner did not supervise any other brokers at Michelin and Company prior to passing the Series 24 exam. During the time period involved in this case, there were at least four other individuals employed by Michelin and Company who were principals and held the title of vice president. At some point in time, Petitioner became president of Michelin and Company. There is conflicting testimony as to when Petitioner actually was made President of the company. At the hearing, Petitioner and several other witnesses testified that he was not made president until April of 1985. In the pleadings filed by Petitioner against Michelin and Company, there is an allegation that Petitioner assumed this position in October of 1984. After hearing the testimony of the witnesses and reviewing the evidence submitted, the undersigned accepts the testimony of Petitioner that he did not become president of the company until April of 1985. When Petitioner became president of the company, his job responsibilities did not significantly change with the assumption of this office. While Petitioner handled some administrative and managerial duties for the company, Paul Michelin became Chairman of the Board for the company and continued to be involved on a day to day basis and remained responsible for the overall operations of the company. During the entire time the company was in operation Paul Michelin was primarily responsible for generating business, determining which stocks Michelin and Company would make a market in, deciding whether the company would underwrite particular issues and coordinating due diligence on specific offerings. Paul Michelin advised the sales force of the selling price of everything sold by Michelin and Company. Throughout the entire period that he was employed at Michelin and Company, Petitioner reported to Paul Michelin. There is no evidence that Petitioner was ever involved in directing due diligence on behalf of the company, determining underwriting criteria or requirements, deciding which stocks the company would make a market in, or deciding when the company would take a market to issue. Petitioner did not have the authority to hire or fire brokers or staff employees at Michelin and Company. Petitioner assisted in recruiting some brokers to the firm and received an override on the commissions produced by some of those brokers Petitioner supervised some of these other brokers, including, on occasion, reviewing their order tickets. Petitioner occasionally provided the sales staff with general advice on sales techniques and motivation. However, there is no evidence that Petitioner ever instructed or directed sales personnel to push any particular stock nor is there any evidence that Petitioner knowingly advised sales personnel to sell unregistered securities. Beginning in March or April of 1984, Michelin and Company started selling "convertible notes" of a company called Mikrotek. The Mikrotek "convertible notes" constituted securities under Chapter 517 Florida Statutes and were required to be registered prior to sale pursuant to S. 517.017, Florida Statutes. Paul Michelin was instrumental in the structuring of the Mikrotek transaction and the offering of the notes for sale by Michelin and Company. Petitioner was not involved in structuring the Mikrotek transaction. While Petitioner had some managerial and administrative responsibilities with Michelin and Company at the time the Mikrotek convertible notes were sold, his involvement was administrative in nature and did not include review or decision- making authority with respect to the structuring of the Mikrotek transaction. Michelin and Company's involvement with the Mikrotek transaction was originated by Paul Michelin. Paul Michelin brought the president of Adeck Technology to Michelin and Company to explain the Mikrotek deal to the employees of Michelin and Company. The president of Adeck Technology explained to the Michelin and Company employees that his company was in need of raising capital and, therefore, would be offering for sale the convertible notes of a European subsidiary or affiliate referred to as Mikrotek. Paul Michelin provided additional information regarding the Mikrotek transaction to Petitioner and other brokers with the company and advised them that the convertible notes were exempt from registration. There is no evidence that Petitioner knew the notes had to be registered at the time that he was selling them. Petitioner accepted Paul Michelin's representations that the convertible notes did not need to be registered. Petitioner did not learn that the notes had to be registered until some time after October, 1985. Even as late as January, 1986 when the Department began investigating the sale of Mikrotek notes by Michelin and Company, Paul Michelin took the position that the notes did not need to be registered. Petitioner and other brokers with Michelin and Company conducted personal due diligence regarding the Nikrotek transaction prior to selling the notes. However, their due diligence was limited in scope because the transaction was being structured by and was the responsibility of Paul Michelin. The due diligence conducted by Petitioner and the other brokers included a visit to the Adeck Plant in West Palm Beach where they were provided with more details regarding the nature of the investment. The visit to the Adeck Plant revealed an ongoing business operation and did not provide any indication of an intended scheme to defraud investors Paul Michelin advised Petitioner and the other brokers at Michelin and Company as to the denominations of and anticipated conversion rates for the notes. During a period of time from August of 1984 through February of 1985, Petitioner sold the convertible notes of Mikrotek to twelve (12) purchasers The following is a list of investors to whom Petitioner sold the notes: Investor Amount Emmanuel Weinberger $10,000/ 10,000 shares ($1.00 per share) John Silvestri 21,000/ 21,000 shares ($1.00 per share) John Silvestri, Jr. 20,000/ 10,000 shares ($2.00 per share) Ester Palley Sol Palley 5,500/ 11,000/ 10,000 shares 20,000 shares ($0.55 ($0.55 per per share) share) Arthur & Ann Katz 2,750/ 5,000 shares ($0.55 per share) Mark Krowda 3,500/ 3,500 shares ($1.00 per share) Ed Dinkins 1,000/ 1,000 shares ($1.00 per share) Geraldine Faley Robert Brasington 5,500/ 12,250/ 10,000 shares 16,750 shares ($0.55 ($0.73 per per share) share) Robert Daniels 1,375/ 2,500 shares ($0.55 per share) Maxine Daniels 1,375/ 2,500 shares ($0.55 per share) 94,000/112,250 shares The sales of the notes by Petitioner were made on the following dates: Investor Date of Sale Emmanuel Weinberger November, 1984 John Silvestri September, 1984 John Silvestri, Jr. February, 1985 Ester Palley August, 1984 Sol Palley August, 1984 Arthur & Ann Katz August, 1984 Mark Krowda October, 1984 Ed Dinkins October, 1984 Geraldine Faley August, 1984 Robert Brasington September, 1984 Robert Daniels August, 1984 Maxine Daniels August, 1984 Included among the purchasers to whom Petitioner sold the notes were his own mother and father. Petitioner was not president of Michelin and Company at the time he sold the Mikrotek convertible notes. Paul Michelin and the president of Adeck Technology periodically provided the Michelin employees with updated information on the Mikrotek transaction during the period the notes were being sold. At no time was Petitioner advised that the notes had to be registered. Petitioner did not provide any of the purchasers of the Notes with an offering circular, prospectus or any other document constituting full and fair disclosure nor did he advise them that they were entitled to receive such a document. In connection with the sale of the convertible notes of Mikrotek, Petitioner did not inform the purchasers that they had a right to rescission under Florida law. In connection with the sale of the convertible notes of Mikrotek, Petitioner represented to the purchasers that Mikrotek intended to do a public offering of stock at a price range of $2 - $5 a share and the convertible notes could be converted and registered at that time and sold at the public offering price. At the time he made these representations, Petitioner believed them to be true. There was never a public offering of Mikrotek stock and, therefore, investors were not able to convert the notes to stock. Mikrotek was unable to repay the notes. In September of 1986, the Department filed an Administrative Complaint for Revocation of Registration seeking to revoke Michelin and Company's registration. Petitioner was not employed by Michelin and Company and was, not registered with the Department at the time the complaint was filed and, therefore, Petitioner was not named in the Administrative Complaint. While the allegations of the Administrative Complaint filed against Michelin and Company focused largely on the sale of Mikrotek convertible notes, several other transactions were also cited. However, no evidence was introduced with respect to those transactions. Aside from the sale of the Mikrotek convertible notes, there is no indication that Petitioner was ever involved in any other sales of securities in violation of Chapter 517, Florida Statutes. Ultimately, all of the investors who purchased Mikrotek convertible notes through Michelin and Company were repaid their investment by Paul Michelin from his personal funds. Or August 2, 1985, Petitioner and his wife were involved in a plane crash in Dallas, Texas. Petitioner was compelled to spend a considerable portion of the following months in Dallas with his wife. As a result, Petitioner was severely restricted in his ability to conduct his business in a regular manner. Not surprisingly, strains developed in his relationship with Michelin and Company. A dispute arose as to whether Petitioner was receiving all of the commissions and payments due him. This dispute resulted in a lawsuit brought by Petitioner against Michelin and Company, Paul Michelin and others in January of 1986. Shortly thereafter, Petitioner was terminated from employment with Michelin and Company. A Form U-5 termination notice regarding Petitioner was submitted by Michelin and Company to the Department on January 26, 1986 and Petitioner has not been registered to sell securities in Florida since that time. On November 20, 1987, Petitioner filed with the Department a Form U-4 Application for registration as an associated person with J. T. Moran and Company. By letter dated July 1, 1988, the Department denied Petitioner's application. The denial letter sent by the Department references a customer complaint received by the Department regarding Petitioner and a civil lawsuit filed against Petitioner. Both of these matters arise from the sale of Mikrotek convertible notes. The customer complaint referenced in the denial letter was filed by John Silvestri (Silvestri) who was a client of Petitioner. In November of 1985, Silvestri filed a complaint with the Department alleging that Petitioner had forged the signature of Silvestri and his son to two letters of authorization to purchase Mikrotek convertible notes. Prior to filing this complaint, Silvestri had arranged to receive a check from Mikrotek in the amount of the investment. However, that check bounced and Silvestri then contacted Petitioner seeking assistance in obtaining a refund of the amount invested in Mikrotek notes in the name of Silvestri and his son. At the time Silvestri contacted him, Petitioner was in Dallas with his wife who had been critically injured in the plane crash on August 2, 1985. Because of his personal crisis, Petitioner advised Silvestri that he could not assist him at that time and told Silvestri that he should contact Paul Michelin. Silvestri had problems getting in touch with Paul Michelin and could not get prompt or sufficient assistance. At that point, Silvestri filed his complaint with the Department. There is no evidence to substantiate the allegations that Petitioner forged Silvestri's or any other customer's signature on authorization letters Although approximately $12,000 was withheld from Petitioner'S last paycheck from Michelin and Company, those withheld funds cannot be directly traced to the payments made to Mr. Silvestri or any other customer. Ultimately, Silvestri, like the other purchasers of Mikrotek convertible notes, received a refund from Paul Michelin for the full amount of the investment. While the allegations against Petitioner by Silvestri are very serious, the allegations have never been proven and there is no indication that Silvestri was treated any differently than the other purchasers of the Mikrotek notes in the settlements made by Paul Michelin with the purchasers of the notes. The civil action referred to in the denial letter was filed in October of 1985 by Warren Gersham, David Kaplan, Jeffrey Weiner, and Delia Weiner (the "Plaintiffs) in the Circuit Court for Broward County, Florida. The complaint in that action alleges that Michelin and Company, through Petitioner and others, sold the Plaintiffs unregistered securities in violation of federal and Florida law and that such securities were acquired by the Plaintiffs as a result of negligence and/or misrepresentations committed by Petitioner and the other defendants. The Plaintiffs were actually customers of another broker of Michelin and Company and Petitioner did not sell any Mikrotek notes to them. In fact, there is no evidence that Petitioner had any contact with any of these Plaintiffs regarding the notes. The lawsuit was ultimately settled as a result of payments made by Paul Michelin. The Plaintiffs in that action were treated the same as the other purchasers of Mikrotek notes. No other customer complaints relating to Petitioner have been received by the Department. All of the grounds cited by the Department in support of its denial of Petitioner's application were predicated upon Petitioner's involvement in the sale of the Mikrotek convertible notes. Although at some point in time Petitioner was named president of the company, he did not assume this position until after the company had begun selling the notes and there is no evidence indicating that his involvement in the Mikrotek transaction was significantly greater than that of other brokers who have subsequently been registered by the Department. At least three other brokers who were employed by Michelin and Company and who sold Mikrotek convertible notes to investors have subsequently become registered with the Department. At least two of those other brokers were officers with Michelin and Company including Jeffrey Zwitter who was a witness for the Department at the hearing and was a vice president with Michelin and Company beginning in December, 1985. A second former Michelin broker who has subsequently been registered by the Department is Jack Leathers who was a vice president of sales for Michelin and Company and who, on some occasions when Paul Michelin was out of the office, supervised the office.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered in this case granting the application of Petitioner for registration as an associated person with J.T. Moran and Company, provided Petitioner agrees to receive strict supervision in his capacity as an associated person for a period of one year from the date of his registration, agrees not to exercise discretionary authority in any customer account, agrees not to act in a supervisory capacity for a period of one year from the date of his registration and agrees not to engage in any prohibited practice, as that term is defined by Rule 3E-600.13, Florida Administrative Code DONE AND ENTERED this 21st day of June, 1989, in Tallahassee, Leon County, Florida. J. STEPHEN MENTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of June, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-3935 The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. The Petitioner's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1,2 45 3,4 Included in the Preliminary Statement 5(a) 1 However, the evidence established that Petitioner began working at Huberman in January of 1983. 2 4 6 5 5 1 and 2 (h) 29 (i) 35 and 36 (j) 10 (k) 11 (l) 13 (m) 40 (n) 40 (o) 46 and 58 (p) 57 Included in the Preliminary Statement Included in the Preliminary Statement Included in the Preliminary Statement Included in the Preliminary Statement Adopted in part in Findings of Fact 8, otherwise rejected as irrelevant 11 6,12,13 12 Rejected as phrased because the "relevant period" is not defined. However, this subject is covered, in part, in Findings of Fact 5. 13 16 1. However, the evidence established that Petitioner began working at Huberman in January of 1983. 1 and 2 16 2 17 2 18 3 19 3 20 4 21 5 22 1,2 and 5 23 5 24 7 25 Rejected because the time period is not defined and it is unclear what is meant by "with Paul Michelin the entire period of time." However, Findings of Fact 2-5 cover related issues. 26 2 Rejected as being over-broad and non- specific. However, Findings of Fact 23 relates to this issue. Rejected as irrelevant and because it is simply a recitation of testimony and not a finding of fact. Rejected as irrelevant and because it is simply a recitation of testimony and not a finding of fact. Rejected as irrelevant and because it is simply a recitation of testimony and not a finding of fact. Rejected as irrelevant and because it is simply a recitation of testimony and not a finding of fact. Rejected because "ran" is not defined. However, Findings of Fact 6,11 and 12 cover related issues. Rejected because "ran" is not defined. However, Findings of Fact 6,11 and 12 cover related issues. Rejected as irrelevant and because it is simply a recitation of testimony and not a finding of fact. 35 12 36 12 37 12 Rejected as simply a recitation of testimony and not a finding of fact. Rejected as simply a recitation of testimony and not a finding of fact. Rejected as irrelevant. 41 Rejected as irrelevant and over-broad. 42 12 43 6 44 11 45 Rejected as irrelevant. 46 Rejected as irrelevant. 47 Rejected as irrelevant. 48 Rejected as simply a recitation of testimony and not a finding of fact. 49 Rejected as subordinate. 50 13 51 7 The first sentence is adopted in Findings of Fact 11. However, the remainder is rejected as unsupported by competent substantial evidence. Adopted in part in Findings of Fact 15. However, the portions of this proposal which are not set forth in Findings of Fact 15 are rejected as unsupported by competent substantial evidence. 54 10 55 11 56 11 57 11 Rejected as irrelevant and unsupported by competent substantial evidence. Rejected because the term "control" is not defined. However, this subject is covered, in part, in Findings of Fact 13. Rejected because the term "managerial duties" is not defined. However, this subject is covered, in part, in Findings of Fact 11. Rejected as unsupported by competent substantial evidence. Rejected as unsupported by competent substantial evidence. Rejected as irrelevant. 64 14 65 Rejected as irrelevant. 66 13 67 13 Adopted in part in Findings of Fact 8. However, the portions of this proposal which are not set forth in Findings of Fact 8 are rejected as unsupported by competent substantial evidence. Rejected because the term "sales meeting" is not defined. This subject is covered, in part, in Findings of Fact 15. 70 15 71 15 72 11 73 9 Rejected as simply a recitation of testimony and not a finding of fact. Rejected as unsupported by competent substantial evidence. Substantially adopted in Findings of Fact 46. 77 16 78 29 79 Substantially adopted in Findings of Fact 29. However, there was at least one sale made in February of 1985. 80-81 Rejected as unsupported by competent substantial evidence. A response to a request for admission is not evidence. 82 18 and 33. Rejected as unsupported by competent substantial evidence. Rejected because the term "control" is not defined. However, this subject is covered, in part, in Findings of Fact 33. 85 18 86 19 87 20 88 21 and 34 89 25 90 Rejected as vague and ambiguous. This subject is covered, in part, in Findings of Fact 21 and 28. 91 21 Adopted in part in Findings of Fact 22 and 23. However, the portions of this proposal which are not set forth in Findings of Fact 22 and 23 are rejected as unsupported by competent substantial evidence. Rejected as unnecessary. Findings of Fact 21-24 are related to this subject. 94-100 Rejected as irrelevant and because they are simply a recitation of testimony and not findings of fact. Findings of Fact 22-24 are related to this subject. 101 23 Rejected as simply argument on the evidence. Rejected because it is simply a recitation of testimony and not a finding of fact. In addition, this proposal mischaracterizes the testimony. 104 42 105 48-49 106 Substantially adopted in Findings of Fact 50. However, the portions of this proposal which are not set forth in Findings of Fact 50 are rejected as unsupported by competent substantial evidence. 107 50 108-110 Rejected as irrelevant and because they are simply a recitation of testimony and not findings of fact. Findings of Fact 50 and 53 are related to this subject. Rejected as irrelevant and unnecessary. Adopted in part in Findings of Fact 48- 49. However, the portions of this proposal which are not set forth in Findings of Fact 48-49 are rejected as unsupported by competent substantial evidence. Adopted in part in Findings of Fact 51- 53. However, the portions of this proposal which are not set forth in Findings of Fact 51-53 are rejected as unsupported by competent substantial evidence. Rejected as irrelevant and because it is simply a recitation of testimony and not a finding of fact Rejected as over-broad. 116 54 117 Rejected as simply argument on the evidence. Findings of Fact 55-56 are related to this subject. 118-121 Rejected as simply a recitation of testimony and not findings of fact. Findings of Fact 55-56 are related to this subject. 122 56 Rejected as irrelevant. However, Findings of Fact 56 is related to this subject. Rejected as over-broad. 125 57 126 46 127-128 Adopted in part in Findings of Fact 60. However, the portions of these proposals which are not set forth in Findings of Fact 60 are rejected as unsupported by competent substantial evidence. 129-130 Rejected as irrelevant and because they are simply a recitation of testimony and not findings of fact. 131-133 Adopted in part in Findings of Fact 60. However, the portions of these proposals which are not set forth in Findings of Fact 60 are rejected as unsupported by competent substantial evidence. 134-135 40 136 57 137 45 138 44 139-148 Rejected as simply argument on the evidence. 149-153 Rejected as irrelevant. Rejected as unsupported by competent substantial evidence. Rejected as irrelevant. 156-159 Rejected as over-broad. The Respondent's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended of Fact Number Order of Acceptance or Reason for Rejection 1,2 45 3 1 However, the evidence established that Petitioner began working at Huberman in January of 1983. 4 5 5 8 Adopted in part in Findings of Fact 3 and 15. However, the portions of this proposal which are contrary to or not set forth in Findings of Fact 3 and 15 (including, but not limited to, the date Petitioner became a vice president) are rejected as unsupported by competent substantial evidence. Subordinate to Findings of Fact 10. The portions of this proposal which are contrary to or not set forth in Findings of Fact 10 (including, but not limited to, the date Petitioner became president) are rejected as unsupported by competent substantial evidence. Adopted in part in Findings of Fact 15. However, the portions of this proposal which are not set forth in Findings of Fact 15 are rejected as unsupported by competent substantial evidence. Substantially adopted in Findings of Fact 29, but Findings of Fact 10 and 33 establish that Petitioner was not president at the time the notes were sold. Adopted in part in Findings of Fact 37. However, the portions of this proposal which are not set forth in Findings of Fact 37 are rejected as unsupported by competent substantial evidence. 11-14 Adopted in part in Findings of Fact 35 and 36. However, the portions of this proposal which are not set forth in Findings of Fact 35 and 36 are rejected as unsupported by competent substantial evidence. Rejected as unsupported by competent substantial evidence. Subordinate to Findings of Fact 47- 53. Adopted in part in Findings of Fact 54-56. However, the portions of this proposal which are not set forth in Findings of Fact 54-56 are rejected as unsupported by competent substantial evidence. Subordinate to Findings of Fact 43- 44. Except as set forth in Findings of Fact 43 and 44, the reasons for Petitioner's termination are uncorroborated hearsay. Adopted in part in Findings of Fact 40- 41. However, the portions of this proposal which are not set forth in Findings of Fact 40-41 are rejected as unsupported by competent substantial evidence. COPIES FURNISHED: Jan Douglas Atlas, Esquire Natalie Z. Aizpuru, Esquire Suite 300 700 S.R. Third Avenue Ft. Lauderdale, FL 33316 Carmen L. Leon Assistant General Counsel Office of the Comptroller 401 W. Second Avenue, Suite 708-N Miami, FL 33128-1796 Tamara Cain, Esquire Office of the Comptroller The Capitol Tallahassee, FL 32399-0350
The Issue Is Petitioner entitled to attorney's fees and costs pursuant to Section 57.111, Florida Statutes, The Florida Equal Access to Justice Act, and Rule 22I- 6.035, Florida Administrative Code?
Findings Of Fact Petitioner herein, Jules G. Minkes was the Respondent in a license disciplinary proceeding styled Department of Professional Regulation, Board of Osteopathic Medical Examiners, DOAH Case No. 88-3749. That underlying case was resolved by a Notice of Voluntary Dismissal served by the Department of Professional Regulation attorney on December 9, 1988. It was filed with the Division of Administrative Hearings on the same date. On December 16, 1988, the undersigned entered an Order providing in pertinent part, "This cause came on for consideration upon Petitioner's Notice of Voluntary Dismissal, which, by operation of law, dismisses this cause and the file of the Division of Administrative Hearings is accordingly CLOSED." On February 13, 1989 the Petition and Affidavit for attorney's fees, together with supporting documents and a Memorandum in support of the petition were filed with the Division of Administrative Hearings. The Petition was served by mail on February 10, 1989. It does not specifically request an evidentiary hearing. This fees and cost cause was subsequently styled as Minkes v. Department of Professional Regulation, Board of Medical Examiners, DOAH Case No. 89-0792F. On February 28, 1989, Respondent filed an Answer which was "sworn and subscribed" by the DPR attorney. The Answer constitutes a general denial of all allegations and demands "strict proof" of the attorney's fees and costs set forth by Petitioner's pleadings, but contains no itemized counter-affidavit challenging the reasonableness of the attorney's fees and costs claimed by Petitioner as contemplated by Rule 22I-6.035(4) and (5)(a), Florida Administrative Code. The answer also alleges substantial justification for the underlying action and "special circumstances" which would render unjust any award of fees and costs. These latter two allegations are made without any particularity as to what constitutes the "justification" or the "special circumstances." The Answer makes no specific request for evidentiary hearing beyond the demand for "strict proof" of "whether and/or to what extent" fees and costs were incurred by Petitioner. No counter-affidavit or request for evidentiary hearing has been filed to date. See, Rule 22I-6.035(4), (5) Florida Administrative Code.
The Issue The issue presented is whether Petitioner is entitled to be reimbursed for his attorney's fees and costs incurred in defending the underlying proceeding.
Findings Of Fact On July 2, 1992, the Department of Professional Regulation filed an Administrative Complaint against Petitioner, alleging that Petitioner had used the letters "D.D.S." following his name on letterhead and had testified as an expert in the field of dentistry in a case involving a Florida licensed dentist. The Administrative Complaint alleged that such conduct by Petitioner constituted the unlicensed practice of dentistry. Petitioner requested a formal hearing regarding those allegations. That cause was thereafter transferred to the Division of Administrative Hearings to conduct the formal proceeding and was assigned DOAH Case No. 92-4570. On January 27, 1993, a Recommended Order was entered in DOAH Case No. 92-4570, holding that Petitioner's use of the letters "D.D.S." did not represent that he was licensed to practice dentistry in the State of Florida, but merely reflected Petitioner's educational background, and that Petitioner was not required by the Florida Evidence Code or any other law to be licensed in the State of Florida in order to testify as an expert in an administrative or judicial proceeding. The Recommended Order concluded that Petitioner should be found not guilty of the allegations in the Administrative Complaint. The Department of Professional Regulation entered a Final Order rejecting findings of fact and conclusions of law in that Recommended Order and found Petitioner guilty of the unauthorized practice of dentistry. Petitioner appealed that Final Order to the District Court of Appeal of Florida, Third District. The appellate court reversed the Department's Final Order and remanded the cause for entry of an order consistent with the Recommended Order. The attorney for the Department who prosecuted the underlying proceeding reviewed the investigative file and then discussed his recommendation with his supervisor. He recommended that Petitioner be prosecuted criminally, not administratively, because he believed that Petitioner was committing a criminal offense and not an administrative violation by holding himself out to be a dentist licensed in the State of Florida. No evidence was offered to show who made the decision to initiate the underlying proceeding on behalf of the Department, and, therefore, no evidence was offered to show what was considered by that person or persons when the decision was made to initiate the underlying proceeding against Petitioner. There is, accordingly, no evidence to show the factual basis for the Department's determination to issue an Administrative Complaint against Petitioner. No evidence was offered to show that anyone on behalf of the Department determined that there was a legal basis for initiating a proceeding against Petitioner for disclosing his educational credentials on letterhead or testifying as an expert witness without being licensed in the state where that testimony was given. In 1990 (the year during which Petitioner testified as an expert witness) and in 1991 (the year during which Petitioner wrote an opinion on the letterhead which concerned the Department), Petitioner performed his services as a legal-dental consultant as a sole proprietor of an unincorporated business, under his own name, although some other services were performed through Dental-Legal Advisors, Inc. Petitioner's principal office was located in Florida, he was domiciled in Florida, he had no employees, and Petitioner's net worth was less than $2,000,000, including both personal and business investments. The Department was not substantially justified in initiating the underlying proceeding against Petitioner. Petitioner qualified as a small business party when the underlying proceeding was brought against him. Petitioner is entitled to recover $15,000 from the Department for his costs and attorney's fees in defending the underlying proceeding.
The Issue The issue in this case is whether the Florida Commission on Human Relations should grant the Petition for Relief alleging that the Respondent discriminated against the Petitioner on the basis of his marital status, in violation of Section 760.10, Fla. Stat. (1995).
Findings Of Fact The Respondent, Shaker Lakes Apartments Company d/b/a Seasons of Tampa, Limited, is a property management company whose principal place of business is in Cuyahoga County, Ohio. The Respondent owns real property or conducts business in Florida and has 15 or more employees. The Petitioner, Jerry Dolinger, was hired by the Respondent on or about August 14, 1989, as a maintenance supervisor at a starting pay of $12,000 a year. On or about May 1, 1991, the Petitioner was promoted to district manager at an annual salary of $20,541.57 ($395.03 per week), plus hospitalization benefits and the use of a company car. By the end of 1992, the Petitioner was demoted to maintenance supervisor, but his salary and benefits remained the same. The Petitioner's wife, Karen Dolinger, also was employed by the Respondent, as property manager for Seasons of Tampa, Limited. On or about April 1, 1993, the Petitioner's wife resigned due to disputes with and conduct of the Respondent's vice-president of operations, Jacqueline McCullough. Upon her resignation, she distributed a letter to all residents of the apartment complex giving the residents information concerning the change in property management and the names, addresses and telephone numbers of the Respondent's management personnel in Ohio. The Respondent did not wish to have the names, addresses and telephone numbers of the Respondent's management personnel in Ohio given to the tenants at Seasons of Tampa. The Respondent wished to have those individuals remain unknown to the tenants so all tenant complaints and similar issues would have to be resolved locally through the property manager and district manager. On or about April 2, 1993, Jacquelyn McCullough telephoned the Petitioner and asked whether he had any knowledge of his wife's letter to the tenants. The Petitioner denied any knowledge and in fact had no such knowledge. She asked if the Petitioner also intended to resign, and the Petitioner answered that he did not. Later on April 2, 1993, the Respondent terminated the Petitioner's employment. One of the reasons given for the termination--an alleged temporary staff reduction--was a pretext. (Within days of the Petitioner's termination, the Respondent hired someone to take the Petitioner's place as maintenance supervisor.) The other reason--alleged insubordination and disloyalty--was based on the Respondent's belief that the Petitioner knew about and participated in the letter to the tenants. But the only basis for this belief was the Petitioner's marital status. Since there was no evidence to support the Respondent's belief, the basis of the Petitioner's termination was his marital status. The Petitioner was unable to find reemployment until approximately June 11, 1993. However, his new employment was at a salary of only $17,000 a year, a reduction of $68.11 a week. The Petitioner suffered this reduction in salary until November 5, 1993, when he obtain employment at a salary higher than what he earned with the Respondent, together with hospitalization benefits and the use of a company car, for a total of salary loss during this period of $1,430.31. The Petitioner's loss of use of the Respondent's company car from April 2 through November 5, 1993, cost him monetary damages of $295 a month for replacement transportation, or approximately $2,100. (The Affidavit of Petitioner's damages incorrectly multiplies the monthly expense by 31 weeks, resulting in an incorrect alleged total loss of $9,145.) In order to redeem the second mortgage on the Petitioner's home, which went into default as a result of the loss of the Petitioner's salary, the Petitioner and his wife had to refinance, at a cost of $2,033.02. The Petitioner also claims damages due to the loss of life and health and hospitalization insurance from April 2 through November 5, 1993. But the Petitioner's testimony was that he could not afford to replace those insurance coverages, and there was not evidence that he suffered any out-of-pocket uninsured expenses that would have been covered by them. The Petitioner also claims damages for the loss of $3,775 worth of personal items sold to pay necessary living expenses for the period from April 2 through November 5, 1993. But those sums already are accounted for in loss of salary and would result in a double recovery if added to the loss of salary. Based on the Affidavit of Plaintiff's Attorney's Fees, a reasonable attorney fee in this case is $6,492.50. Based on the Certificate of Costs, reasonable costs to be taxed to the Respondent in this case is $178.42.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Commission on Human Relations enter a final order: finding the Respondent guilty of illegal discrimination on the basis of the Petitioner's marital status; and (2) requiring that the Respondent pay the Petitioner a total of $9,692.03, together with legal interest from November 5, 1993, plus $6,492.50 as a reasonable attorney fee, together with legal interest from May 1, 1996, as affirmative relief from the effects of the illegal practice. DONE and ENTERED this 6th day of June, 1996, in Tallahassee, Florida. J. LAWRENCE JOHNSTON, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of June, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5381 To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the Petitioner's proposed findings of fact: Conclusion of law. 2.-5. Accepted and incorporated to the extent not conclusion of law, subordinate or unnecessary. Accepted and incorporated. Accepted but subordinate and unnecessary. Annual salary rejected as inconsistent with the Affidavit of Petitioner's Damages; otherwise, accepted and incorporated to the extent not subordinate or unnecessary. 9.-10. Accepted but subordinate and unnecessary. 11.-15. Accepted and incorporated. 16. Accepted but subordinate and unnecessary. 17.-23. Accepted and incorporated to the extent not subordinate or unnecessary. Amount of loss rejected as not proven by the evidence; "mental anguish, loss of dignity, and other intangible injuries" rejected as not relevant in this proceeding; otherwise, accepted and incorporated. Accepted and incorporated. COPIES FURNISHED: David E. Davis, Esquire 620 E. Twiggs Street, Suite 305 Tampa, Florida 33602-3929 Jacqueline McCullough Vice President Shaker Lakes Apartments Company 1422 Euclid Avenue, Suite 1146 Cleveland, Ohio 44115-1951 Sharon Moultry, Clerk Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303-4149 Dana Baird, Esquire Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, Florida 32303-4149
The Issue The issues are whether Petitioner is entitled to recover attorney's fees and costs (fees and costs) pursuant to Section 120.569(2)(e), Florida Statutes (2002); and, if so, what amount of fees and costs is reasonable. (All statutory references are to Florida Statutes (2000)).
Findings Of Fact The underlying case arose from an inspection conducted by the Agency for Health Care Administration (AHCA) employees on March 8, 2001, of a nursing home facility owned and operated by Petitioner and identified in the record as Palm Bay. AHCA employees prepared a survey report that alleged several deficiencies at Palm Bay. The parties attempted unsuccessfully to resolve the alleged deficiencies through Informal Dispute Resolution. By letter dated May 14, 2001, the Director of Nursing Services for AHCA notified Petitioner that Respondent proposed to uphold the deficiencies cited in the survey report. Neither the survey report nor the letter dated May 14, 2001, is a "pleading, motion, or other paper" within the meaning of Section 120.569(2)(e). Petitioner does not identify a specific pleading, motion, or other paper that Petitioner claims Respondent filed for an improper purpose. Petitioner claims that Respondent "participated" in the underlying proceeding for a frivolous purpose or to needlessly increase the cost of litigation. In paragraph 32 of Petitioner's Proposed Final Order, for example, Petitioner proposes that the ALJ conclude: . . . that AHCA participated in the underlying proceeding for a frivolous purpose or to needlessly increase the cost of litigation within the meaning of Section 120.569(2). (emphasis supplied) Section 120.569(2) does not include the term "participated" and does not include any derivation of the term. The scope of Section 120.569(2) is expressly limited to pleadings, motions, or other papers filed in the underlying proceeding. Section 120.569(2) neither requires nor authorizes the ALJ to make findings or conclusions concerning the issue of whether Respondent "participated" in the underlying proceeding for an improper purpose. Statutory authority to determine whether Respondent "participated" in the underlying proceeding for an improper purpose is found in Section 120.595. However, Petitioner relies solely on Section 120.569(2)(e) as the basis for its claim for fees and costs. Petitioner did not provide prompt notice to the ALJ or Respondent that Petitioner intended to seek fees and costs pursuant to Section 120.569(2)(e). At the outset of the administrative hearing in the underlying case, Petitioner made an ore tenus motion on the record for fees and costs without specifying the statutory basis of the claim. At the suggestion of the ALJ, the parties agreed to address the issue of fees and costs after the ALJ issued a recommended order. The fees and costs sought by Petitioner are not reasonable for the purposes of Section 120.569(2)(e). By not providing prompt notice that Petitioner intended to seek fees and costs pursuant to Section 120.569(2)(e), Petitioner did not take action to mitigate the amount of resources expended by Petitioner in defense of a pleading, motion, or other paper filed by Respondent in the underlying proceeding. Petitioner failed to show that Respondent did not have a reasonably clear legal justification for issuing the survey report and letter dated May 14, 2001. The issue of whether Respondent was reasonably justified in filing the survey report and letter dated May 14, 2001, must be resolved on the basis of the facts known to Respondent at the times that Respondent issued the report and letter. The ALJ should not engage in hindsight based on the evidence adduced at the hearing in the underlying case. Petitioner relies on findings in the Recommended Order that evidence submitted by Respondent was either insufficient to sustain that allegations against Petitioner, not credible, or not persuasive. Petitioner also relies on conclusions in the Recommended Order that Respondent's legal interpretation of applicable law conflicted with published opinions of the United States Department of Health and Human Services. That the ALJ chose to adopt Petitioner's position over that of Respondent is not an adequate basis for the imposition of fees and costs pursuant to Section 120.569(2)(e). Section 120.569(2)(e) is not aimed at fee shifting to compensate the prevailing party. Even if Section 120.569(2)(e) were aimed at fee shifting to compensate the prevailing party, Petitioner's reliance on findings and conclusions in the Recommended Order is misplaced. The Final Order issued by Respondent in the underlying case modified many of the findings and conclusions in the Recommended Order that Petitioner relies on to support its request for fees and costs; even though the Final Order did not change the ultimate outcome. The recommended findings and conclusions modified in the Final Order are a matter of record and need not be repeated. The changes made in the Final Order in the underlying case illustrate the justification Respondent had for issuing the survey report and letter dated May 14, 2001.
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.
The Issue The issue in this case is whether Petitioner, Conval-Care, Inc., is entitled to the payment of attorney fees and costs pursuant to Section 57.111, Florida Statutes, from the Agency for Health Care Administration, the successor in interest to the Respondent, the Department of Health and Rehabilitative Services.
Findings Of Fact By letter dated November 4, 1991, the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department"), notified Conval-Care, Inc. (hereinafter referred to as "Conval-Care"), that it intended to impose an administrative fine on Conval-Care pursuant to Section 409.913(9)(c), Florida Statutes. Conval-Care contested the proposed fine and requested a formal administrative hearing, including a request that it be awarded attorney fees and costs pursuant to Section 57.111, Florida Statutes. The matter was designated case number 92-0126 and was assigned to the Honorable Judge Robert T. Benton, then Hearing Officer Benton. On June 30, 1993, following a formal hearing held on March 24, 1993, Hearing Officer Benton entered a Recommended Order recommending dismissal of the sanctions letter of November 4, 1991. The findings of fact made by Hearing Officer Benton, in Conval-Care, Inc. v. Department of Health and Rehabilitative Services, DOAH Case No. 92-0126, are hereby adopted to the extent relevant to this proceeding. On September 19, 1993, the Department entered a Final Order. The Department accepted and incorporated into its Final Order the findings of fact made by Hearing Officer Benton. The Department, however, rejected Hearing Officer Benton's conclusions of law to the extent that he not had concluded that Conval-Care lacked authority to reject the demand for its records which was the subject of the proceedings. The Department concluded that, in light of the fact that Conval-Care had acted on the advice of counsel, it would reduce the fine from $25,000.00 to $5,000.00. The Department's decision was appealed by Conval-Care. On December 16, 1994, the District Court of Appeal, First District, filed an opinion reversing the Department's Final Order. Mandate from the First District was entered January 3, 1995. On February 14, 1995, Conval-Care filed a Petition for Attorneys Fees and Costs in this case. Conval-Care requested an award of $15,000.00 as a small business party pursuant to the provisions of Section 57.111, Florida Statutes. Attached to the Petition were the Final Order entered by the Department, the Recommended Order, the First District's Opinion and Mandate, an Attorney's Affidavit stating the nature, extent and monetary value of the services rendered and costs incurred in the proceedings, the Petition for Formal Administrative Hearing filed by Conval-Care in 1991 and the Department's November 4, 1991 sanctions letter. On March 2, 1995, the Agency for Health Care Administration, the successor in interest of the Department (hereinafter referred to as "AHCA"), filed a Response in Opposition to Petition for Attorney's Fees and Costs. 10 In its Response, AHCA admitted all of the allegations contained in paragraphs 1 through 6 and 8 through 9 of the Petition. AHCA denied the allegations of paragraph 7 of the Petition. Paragraph 7 of the Petition alleged the following: 7. The action of DHRS, in filing the admini- strative complaint against CCI, was not sub- stantially justified because there was no reasonable basis in law or fact to support the issuance of its letter seeking to impose an administrative fine upon CCI. Attached to the Response was an Affidavit from John M. Whiddon in support of its position that its actions were substantially justified. The Affidavit does not add any alleged credible justification not presented to Hearing Officer Benton or the First District Court of Appeal. AHCA did not assert in it Response the following: that the costs and attorney's fees claimed in Conval-Care's affidavit were unreasonable; that Conval-Care is not a prevailing small business party; that circumstances exist that would make an award unjust; or that AHCA was a nominal party only. AHCA also did not "either admit to the reasonableness of the fees and costs claimed or file a counter affidavit [specifying each item of costs and fee in dispute] along with its response." Finally, AHCA did not request an evidentiary hearing in its Response. The only issue which AHCA asserted in its Response was at issue in this proceeding is whether AHCA's actions were substantially justified. On April 6, 1995, an Order to Provide Information was entered. Although the parties had not requested an evidentiary hearing, the undersigned entered the Order soliciting input from the parties before the undersigned decided whether a hearing was necessary on the one issue raised by the Department. In the Order, the parties were given an opportunity to provide input concerning the procedures they believed should be followed to resolve this matter. The parties were specifically requested to answer certain specified questions, including the following: 1. Do the parties believe that an [sic] hearing is necessary to resolve any factual disputes and/or for purposes of oral argument before a decision is rendered? * * * 5. Do the parties agree that the documents attached to the Petition and the Response should be considered in rendering a decision in this case? . . ." Conval-Care filed a response to the April 6, 1995 Order indicating that there was no need for a hearing. Conval-Care asserted that a hearing would be improper unless Conval-Care consents to one. Conval-Care also asserted that all of the documents attached to petition should be considered. AHCA filed a response to the April 6, 1995 Order indicating that "[t]he Respondent feels a hearing in this matter is essential." AHCA did not provide any explanation of why it believed a hearing was necessary or any discussion of whether a hearing was authorized under the applicable statutes and rules. AHCA also indicated in its response that it "agrees that the documents attached to the Petition and Response should be considered in this case " On May 19, 1995, an Order Concerning Final Order was entered. Based upon a review of the pleadings and the lack of explanation from either party to justify an evidentiary hearing, it was concluded that no evidentiary hearing was necessary. Therefore, the parties were informed in the May 19, 1995 Order that a hearing would not be held in this case. The parties were also informed that they could file proposed final orders on or before May 30, 1995. Conval-Care filed a proposed order. AHCA did not. Neither Conval-Care nor AHCA timely requested an evidentiary hearing in this case. Both parties agreed that the documentation filed with Conval- Care's Petition and AHCA's Response could be relied upon in reaching a decision in this case. Based upon AHCA's failure to contest most of the relevant issues in this proceeding, the only issue which requires a decision if whether the Department's actions against Conval-Care were substantially justified. The documents, including the Mr. Whiddon's Affidavit filed by AHCA with its Response, sufficiently explain why the Department took the actions it took against Conval-Care which led to this proceeding. No evidentiary hearing was, therefore, necessary. The weight of the evidence failed to prove that the Department's actions in this matter were substantially justified. The Department could have sought the information it wanted by pursuing available discovery. Counsel for Conval-Care even remained the Department of the availability of discovery. The Department, however, rather than pursuing the information which it indicated it needed, elected to pursue a punitive action against Conval-Care rather than obtaining the information through discovery. The Department's reason for pursuing punitive actions against Conval-Care was not convincing to Hearing Officer Benton. Despite this fact, the Department entered a Final Order upholding its actions and imposing a fine of $5,000.00 for refusing to provide it with information which it could have obtained through other means. The First District Court reversed the Department's Final Order opining that the Department "lacked a legitimate investigatory purpose for demanding the records" which gave rise to its action against Conval-Care. Finally, the entire record in this case failed to indicate that there was any basis in law or fact to substantially justify the actions of the Department.
