The Issue This is a disciplinary proceeding in which the Petitioner seeks to take disciplinary action against the Respondent on the basis of alleged violations of Section 849.094, Florida Statutes, set forth in a two-count Administrative Complaint.
Findings Of Fact At various times during early 1993, the Respondent, Set-Tel Marketing, Incorporated (hereinafter "Set-Tel"), arranged through a marketing company in Florida by the name of MRG for certificates to be mailed to people in various other states. The certificates evidenced participation in a game promotion known as "Celebrate America." Set-Tel paid MRG an agreed amount for each certificate that was mailed with Set-Tel's name, address, and telephone number. The certificates arranged for through MRG were ultimately mailed by Celebrate America, a game promotion located in New York. The subject certificates offered prizes to the certificate holder. The total value of the prizes was greater than $5,000.00. The subject certificates stated that the certificate holder was guaranteed one of the five listed prizes, which ranged in value from a brand new automobile to a 27-inch color television. Set-Tel's name, address, and telephone number were displayed on the front of the certificates. No other telephone numbers appeared anywhere on the certificates. The fine print on the back of the certificates included the following information: "To enter the sweepstakes automatically and receive additional details on the sweepstakes prizes and the values offered, call the telephone number indicated on the reverse side." Inasmuch as Set-Tel's telephone number was the only telephone number on the certificates, all telephone calls from certificate holders seeking to enter the sweepstakes and obtain prize information were made to Set-Tel. When certificate holders would call, Set-Tel would try to sell vacation packages to them. Certificate holders who were only interested in sweepstakes and prize information were told to contact Celebrate America directly. The subject game promotion was not registered in Florida. Set-Tel did not have any liability insurance, bond, or trust account.
Recommendation Inasmuch as the Department of State lacks statutory authority to issue a final order imposing any penalty for violation of Section 849.094, Florida Statutes, it is RECOMMENDED that the Department of State issue a Final Order in this proceeding dismissing the Administrative Complaint in its entirety. DONE AND ENTERED this 29th day of March 1995 in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of March 1995.
The Issue Whether the Petitioner, Macia Poole, was subject to an unlawful employment practice by Respondent, Westminster Village of Pensacola, on account of her sex or due to retaliation for her opposition to an unlawful employment practice in violation of section 760.10, Florida Statutes.
Findings Of Fact On April 3, 2015, Petitioner’s Employment Complaint of Discrimination and Petition for Relief were transmitted to the Division of Administrative Hearings by the Florida Commission on Human Relations for a formal administrative hearing to be held in accordance with section 120.57, Florida Statutes. On April 10, 2015, a Notice of Hearing by Video Teleconference was entered which set the final hearing for June 1, 2015, at 9:00 a.m., Central Time, (10:00 a.m., Eastern Time), at video teleconference sites in Pensacola, at the Office of the Judges of Compensation Claims, Video Teleconferencing Room, 700 South Palafox Street, Suite 305, Pensacola, Florida, and in Tallahassee, at the Division of Administrative Hearings, the DeSoto Building, 1230 Apalachee Parkway, Tallahassee, Florida. On May 4, 2015, one Subpoena Duces Tecum and four Subpoenas Ad Testificandum were issued at the request of Petitioner. On May 14, 2015, Petitioner electronically filed her Notice of Appearance in this proceeding. On May 26, 2015, Petitioner filed a Request to Reschedule Video Hearing. The Request made no allegation of an inability to attend the hearing, only that her attendance would be an “inconvenience.” The Request was denied. The filing of the Request is convincing evidence that Petitioner knew that the final hearing was scheduled to be heard in accordance with the Notice of Hearing by Video Teleconference. On June 1, 2015, at the scheduled date, time, and place, the final hearing was convened. Mr. Moran, representing Respondent, Westminster Village of Pensacola, made his appearance. Petitioner did not appear. The final hearing was recessed for twenty minutes to allow Petitioner to appear. During the recess, the undersigned confirmed that the Division had not received any communication from Petitioner of exigent circumstances that may have interfered with her appearance at the final hearing. After twenty minutes had passed, the final hearing was re-convened. Petitioner was not in attendance. Respondent was prepared to proceed, and had its witnesses in attendance at the Pensacola video location. Mr. Moran confirmed that he had received no emails from Petitioner, that being their normal form of communication. At 9:25 a.m., Central Time, (10:25 a.m., Eastern Time), the final hearing was adjourned. There was no evidence presented at the final hearing in support of Petitioner’s Employment Complaint of Discrimination and Petition for Relief.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Commission on Human Relations issue a final order finding that Respondent, Westminster Village of Pensacola, did not commit an unlawful employment practice as to Petitioner, Macia Poole, and dismissing the Petition for Relief filed in FCHR No. 2014-01235. DONE AND ENTERED this 3rd day of June, 2015, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of June, 2015. COPIES FURNISHED: Tammy Scott Barton, Agency Clerk Florida Commission on Human Relations 4075 Esplanade Way, Room 110 Tallahassee, Florida 32399 Brian J. Moran, Esquire Moran Kidd Lyons Johnson, P.A. 111 North Orange Avenue, Suite 900 Orlando, Florida 32801 (eServed) Macia Deanne Poole Apartment 176 6901A North 9th Avenue Pensacola, Florida 32504 (eServed) Christopher R. Parkinson, Esquire Moran, Kidd, Lyons, and Johnson, P.A. 111 North Orange Avenue Orlando, Florida 32801 (eServed) Cheyanne Costilla, General Counsel Florida Commission on Human Relations 4075 Esplanade Way, Room 110 Tallahassee, Florida 32399
The Issue Whether Respondent’s termination for alleged misconduct should be upheld based on the reasons stated in the termination letter dated July 25, 2005.
Findings Of Fact Respondent, Gregory V. Black was employed as an assistant football coach at FAMU from July 1, 1998 to July 25, 2005. Head Football Coach William (Billie) Joe was Mr. Black’s supervisor. During his employment, Coach Black received excellent to superior evaluation ratings. Coach Black was employed under an annual contract with FAMU. Until his termination, Coach Black was paid his regular salary and received the normal and customary retirement benefits and perks for his position. The last fully executed contract with the University ran from January 1, 2004, to December 31, 2004. However, a printout generated from the University’s personnel department indicates a beginning date of August 8, 2004, and an ending date of August 7, 2005. Additionally, there was a partially executed contract signed by the University’s interim president, Castell Bryant. The term of the partially executed contract ran from January 1, 2005 to June 30, 2005. The contract incorporated NCAA regulation 11.2 regarding contractual agreements between coaches and an NCAA member institution. The incorporated provisions state, in relevant part: Stipulation That NCAA Enforcement Provisions Apply. Contractual agreements . . . shall include the stipulation that a coach who is found in violation of NCAA regulations shall be subject to disciplinary or corrective action as set forth in the provisions of the NCAA enforcement procedures. Termination of Employment. Contractual agreements . . . shall include the stipulation that the coach may be suspended for a period of time, without pay, or that the coach’s employment may be terminated if the coach is found to be involved in deliberate and serious violations of the NCAA regulations. FAMU is a member of the NCAA. Member institutions of the NCAA are obligated to apply and enforce NCAA regulations and are responsible for operating their intercollegiate athletics program in compliance with the regulations of the NCAA. As part of that responsibility, FAMU has adopted the NCAA By-Laws as part of its rules and regulations governing the University. Member institutions also are responsible for governing staff members involved with athletics. Penalties for violations of NCAA regulations generally apply to member institutions and their programs. Occasionally penalties can apply to individual staff members who are directly involved in violations of NCAA regulations. In cases where an individual is the subject of an NCAA investigation, the NCAA issues a Notice of Allegations. In this case no Notice of Allegations was issued to Coach Black or any other member of the football coaching staff. In fact, the NCAA did not conclude or find that Coach Black committed any NCAA rule violation and the NCAA report only mentions his name in reference to being interviewed. There is no mention of Coach Black in reference to being involved in or knowing about any of the NCAA violations referenced in the report. Indeed Coach Black has never been the subject of an NCAA rule violation. Coach Black was primarily responsible for coaching and developing the offensive line. He ran practices and monitored the progress of his players. Coach Black did not generally monitor his player’s academics, unless the athletic office advised him of a problem. Likewise, Coach Black was not generally responsible for ensuring various student eligibility forms were completed and on file with the University. Nor was he generally responsible for recruitment activities. He was required to have general knowledge of NCAA regulations and responsible for reporting any violations of those regulations that he had knowledge of to the proper authorities at the University. The evidence showed that Coach Black did have such knowledge of the NCAA regulations and that he understood the reporting requirements of those regulations. It was Coach Black’s practice to be present when the offensive line was practicing. Generally, if he was on the field, the offensive line was out there with him. At some point FAMU became aware that their were allegations of NCAA violations at FAMU and that an NCAA investigation might occur. In light of those allegations, FAMU completed a Self-Report concerning violations of NCAA regulations. The Self-Report identified multiple alleged violations, of which the University’s football program allegedly constituted the bulk of the violations. No one who was involved with the Self-Report testified at the hearing. There was no competent evidence introduced at the hearing corroborating the allegations of the report. Uncorroborated hearsay statements made in the report about alleged violations cannot be used to prove that Coach Black violated NCAA regulations or knew about such alleged violations and failed to report those violations. In addition to the Self-Report, the NCAA conducted an investigation and issued a report concerning such alleged violations. The NCAA investigated numerous violations of NCAA regulations, including exceeding the daily practice time limitation, exceeding the weekly practice time limitation and not observing the day-off requirement regarding its football program. No NCAA official or investigator testified at the hearing. No corroborating evidence was offered at the hearing. As with the Self-Report, uncorroborated hearsay statements made in the report about alleged violations cannot be used to prove that Coach Black violated NCAA regulations or knew about such alleged violations and failed to report those violations. As a result of the NCAA conducting an investigation, the University retained a consultant, Mr. Nelson Townsend, to assist in interpreting exactly what the NCAA findings meant to the University. Mr. Townsend generally recommended the University make staff changes in the football program. There was no evidence that Mr. Townsend considered The University’s personnel rules in making his recommendation. On July 25, 2006, FAMU issued a letter of termination to Coach Black terminating his employment “contract” with FAMU. The termination was based on alleged NCAA violations regarding daily and weekly hours of practice, not permitting a day off to the players and failure to report such violations. The letter treated Coach Black as if he had a contract with FAMU and provided him rights under FAMU’s personnel rules regarding just cause and a right to a hearing. The letter, also, clearly had the effect of stigmatizing Coach Black in his profession as an assistant football coach. The allegations and termination were on the news. Indeed, Coach Black had difficulty finding suitable employment equivalent to what he possessed at FAMU after his termination. However, FAMU, in this proceeding, has admitted that Coach Black did not commit any NCAA violations. Indeed, there was no competent evidence that Coach Black was aware of or should have been aware of any alleged violations. Given this lack of evidence FAMU has failed to establish just cause for terminating Coach Black, and he is entitled to be reinstated for the remaining term of his contract, if any. The University’s interim president decided to withhold the employment contracts of all of the assistant football coaches. The evidence showed that there were many times that Coach Black’s employment contracts were executed after the start date of the contract period. However, the employment contract clearly states: . . . Neither this employment contract nor any action or commitment taken pursuant to it, is final or binding upon the parties until, and unless, the signature of the University President or President’s designee, . . . and the signature of the employee have been affixed and the employment contract has been returned to the appropriate authority . . . . Irrespective of the language and terms of the contract, FAMU treated this matter as one arising under employment that can only be terminated for just cause. For purposes of this action, FAMU is estopped from claiming that Coach Black was an at-will employee. Additionally, the issue of whether Coach Black had an employment contract with FAMU need not be addressed since Coach Black was not terminated based on the expiration or absence of his contract. It is the reasons regarding NCAA violations stated in the termination letter that are at issue here. As noted, there was an absence of proof to support those allegations. Therefore, Coach Black is entitled to reinstatement and to have his name cleared of the stigma that termination for those allegations have caused.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore, RECOMMENDED that a Final Order be entered by FAMU reinstating Respondent and clearing his name from the allegations made in the termination letter. DONE AND ENTERED this 24th of July, 2006, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER 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 24th day of July, 2006. COPIES FURNISHED: H. Richard Bisbee, Esquire H. Richard Bisbee, P.A. 1882 Capital Circle Northeast, Suite 206 Tallahassee, Florida 32308 Antoneia L. Roe, Esquire Florida A&M University Office of the General Counsel Lee Hall, Suite 300 Tallahassee, Florida 32307 Robert E. Larkin, III Allen, Norton and Blue, P.A. 906 North Monroe Street Tallahassee, Florida 32303 Elizabeth T. McBride, Esquire Florida A & M University Office of the General Counsel 300 Lee Hall Tallahassee, Florida 32307-3100 Dr. Castell V. Bryant, Interim President Florida A & M University 400 Lee Hall Tallahassee, Florida 32307-3100
Findings Of Fact Petitioner designs, manufactures, and sells the "Little Casino" video game machine. The machine is designed to enable a player, through the insertion of either one or two quarters, to play one of four games: poker, high-low, blackjack, or craps. The machine contains two switches which enable the owner to control the cost per game, whether 25 cents or 50 cents per game. Upon deposit of the appropriate amount of money, the player of the game receives 10,000 points to play the selected game. If the operator utilizes the entire 10,000 points in less than four hands or rolls, the game is over. If, however, the operator earns or wins 100,000 points by the conclusion of the fourth hand or roll, a free fifth hand or roll is allowed. If the operator earns 200,000 points by the conclusion of the fifth hand or roll, a free sixth hand or roll is allowed. The player of the game is allowed no more than six hands or rolls in the chosen game, regardless of the number of points scored. Depending upon the game option selected, cards or dice appear on the video screen. So far as can be determined from the record in this cause, the dealing of the cards or roll of the dice is entirely determined by the programming of the machine, and the player is wholly unable to control or influence the initial selection of cards or the roll of the dice. Little Casino does not allow free replays, does not accumulate free replays, and makes no permanent record of free replays. The game is not classified by the United States as requiring a federal gambling tax stamp under any applicable provisions of the Internal Revenue Code. The machine can be set to eliminate what Respondent considers to be the objectionable fifth and sixth hands.
The Issue The first issue in this case is the amount of attorneys' fees to assess against Respondent, Department of Business and Professional Regulation, Division of Pari-Mutuel Wagering (Respondent or Division), pursuant to an Order of the First District Court of Appeal (First DCA) granting a motion by Petitioner, Ft. Myers Real Estate Holdings, LLC (Petitioner or Ft. Myers REH), for attorneys' fees pursuant to section 120.595(5), Florida Statutes (2010),1/ and remanding the case to DOAH to assess the amount. The second issue is whether Petitioner is entitled to recover attorneys' fees and costs incurred in this proceeding, and, if so, in what amount.
Findings Of Fact For reasons that the First DCA found to be a "gross abuse of agency discretion," the Division rendered a Final Order dismissing Ft. Myers REH's petition for a formal administrative hearing to contest the Division's denial of Ft. Myers REH's amended application for a quarter horse racing permit. The premise of the Division's Final Order was that Petitioner could not prove that it meets the requirements for a permit, hence its claimed injury was not "redressable." Ft. Myers REH appealed the Final Order. The Notice of Appeal to the First DCA was filed on April 5, 2010, signed by Cynthia Tunnicliff for Pennington, Moore, Wilkinson, Bell and Dunbar, P.A. (the Pennington firm). After two motions to extend the deadline for filing the initial brief, Ft. Myers REH filed its Initial Brief on July 26, 2010. With the Initial Brief, Ft. Myers REH filed a motion for an award of attorneys' fees under section 120.595(5), asserting that the agency action which precipitated the appeal was a gross abuse of the agency's discretion. The motion's prayer for relief asked for "entry of an order awarding the Appellant the attorneys' fees it has incurred prosecuting this appeal, pursuant to . . . Section 120.595(5)." As stated in the opinion, the First DCA found that the Division's Final Order was "contrary to the basic, settled principle of administrative law that a person whose substantial interests are determined by an agency is entitled to some kind of hearing . . . to challenge the agency's decision[.]" The court determined that the dismissal of Ft. Myers REH's petition was "so contrary to the fundamental principles of administrative law" that Petitioner was entitled to an award of attorneys' fees under section 120.595(5). To assess reasonable attorneys' fees, a starting place is necessarily the time records of Petitioner's appellate legal team. Although Judge Farmer offered his opinion that the time records had little to no significance in this case, nonetheless, even Judge Farmer accepted the time-based attorneys' fees shown on those time records as the base amount to which a multiplier should be applied. Therefore, the undersigned examined the time records in the context of the appellate record and considered the conflicting opinions of the parties' experts to assess whether the time incurred by Petitioner's legal team was reasonable in light of the steps needed to successfully prosecute the appeal. There was extensive motion practice in the appeal, which significantly increased the amount of time that might otherwise be considered reasonable for an appeal of an order summarily dismissing a petition for administrative hearing, with no record to speak of from proceedings below, such as would be developed in a trial or administrative hearing. Several motions were filed by the Division, including a motion to dismiss the appeal, which resulted in an Order to Show Cause directing Ft. Myers REH to demonstrate why the appeal should not be dismissed. The Division also filed two different motions to strike, one directed to Ft. Myers REH's response to the Order to Show Cause why the appeal should not be dismissed, and the other directed to the reply brief; both of these motions were denied. Ft. Myers REH filed even more motions than the Division. In addition to the motion for attorneys' fees pursuant to section 120.595(5) and two perfunctory motions for enlargement of time to file the initial brief, Ft. Myers REH also filed a motion for substitution of counsel, making the mid-stream decision that David Romanik, whose expertise was in gaming law, should be counsel of record instead of Cynthia Tunnicliff, whose expertise was in administrative and appellate law, even though both attorneys remained involved before and after the substitution. More substantively, in reaction to the Division's motion to dismiss, Ft. Myers REH filed a motion to supplement the record and a motion for judicial notice, which were denied; a motion to consolidate the appeal with a separate mandamus action it had filed, which was denied; and a motion to strike the Division's response to the motion to supplement the record, or, in the alternative, a motion for leave to respond to new legal issues raised in the Division's response, both of which were denied. The basis for the Division's motion to dismiss was that a newly enacted law rendered the appeal moot, because under the new law, Ft. Myers REH could no longer qualify for the quarter horse racing permit for which it had applied. The Division sought to invoke the general rule that the law in effect at the time of a final decision applies to determine whether to grant or deny an application for a permit or other form of license. See Lavernia v. Dep't of Prof'l. Reg., 616 So. 2d 53, 54 (Fla. 1st DCA 1993). Ft. Myers REH's motion flurry, even though unsuccessful, was a reasonable response to the Division's position in that Ft. Myers REH sought to demonstrate that one of the exceptions to the general rule, as recognized in Lavernia, was applicable. See, e.g., Dep't of HRS v. Petty-Eifert, 443 So. 2d 266, 267-268 (Fla. 1st DCA 1983)(under the circumstances of that case, applicants were entitled to have the law applied as it existed when they filed their applications). In its opinion, the First DCA acknowledged both the Division's mootness argument and Ft. Myers REH's contention that there were circumstances that would preclude the Division from applying the statutory changes to the permit application. The court deemed these issues more suitable for fleshing out in the administrative hearing on remand. See Ft. Myers, 53 So. 3d at 1162-1163. In addition to the other motions, Ft. Myers REH also filed a motion for an award of attorneys' fees and costs pursuant to section 57.105, in which Ft. Myers REH asserted that the Division's motion to dismiss the appeal was unsupported by material facts and then-existing law. The court considered and denied the section 57.105 motion. There were four attorneys who worked on the appeal on behalf of Ft. Myers REH: David S. Romanik from Oxford, Florida; and Cynthia Tunnicliff, Marc Dunbar, and Ashley Mayer, all of the Pennington firm in Tallahassee, Florida. The first three of these attorneys are long-time practitioners with substantial experience and particular areas of expertise. Mr. Romanik, who became the counsel of record in the middle of the appeal, is an attorney with 35 years' experience, gained in private practice and in executive, legal, and consulting positions in the racing/gaming industry. He was described as the "general counsel, sort of," for the Florida interests of Green Bridge Company, which is the parent company of, and primary investor in, Ft. Myers REH. While Mr. Romanik has some experience in administrative litigation and appellate practice, his primary area of expertise is in gaming law. Ms. Tunnicliff is a shareholder of the Pennington firm, with vast experience and a well-established excellent reputation for her expertise in administrative law and administrative litigation under the Administrative Procedure Act (APA), chapter 120, as well as in appellate practice. Ms. Tunnicliff's appellate experience is documented in well over 100 appeals in which she has appeared as counsel of record, spanning the last 25 years. Marc W. Dunbar has been practicing law for 17 years, and he also is a shareholder of the Pennington firm. Like Mr. Romanik, Mr. Dunbar's recognized area of legal expertise is in gaming law. For the last 13 years, he has been head of the firm's gaming law practice group, and he has substantial experience in gaming law and in providing consulting services to the pari-mutuel industry. Mr. Dunbar's testimony was that this has been the focus of his practice and has grown over the years such that it is now virtually all he does. Ashley Mayer was the lone associate who worked on the appeal. Ms. Mayer graduated in 2009 with high honors from Florida State University College of Law, where she was a member of the moot court team. Those who worked with her regularly at the Pennington firm, including Ms. Tunnicliff and Mr. Dunbar, thought very highly of her work as a one-year associate. Based on the expert opinions offered for and against the reasonableness of the time records for these four attorneys, including the hourly rates applied to the time entries, the undersigned finds as follows: there are some obvious flaws and less obvious insufficiencies in the time records that require adjustment; there is a large amount of duplication, which is tolerable to some extent given the stakes, but which exceeds a tolerable degree and requires some adjustment; the hourly rates for the two gaming law experts are too high for the non-gaming law legal services they each provided, requiring adjustment; and that the hourly rate for the one-year associate is too high, requiring adjustment. The time records of each of the four timekeepers will be addressed in turn, starting with the one-year associate, Ms. Mayer. As an example of an obvious flaw in the time records, the very first time entry is for researching and analyzing case law regarding bringing a civil rights lawsuit under 42 U.S.C. section 1983, for 2.8 hours. Another time entry described work related to a separate mandamus action, which Petitioner sought unsuccessfully to consolidate with the appeal. These entries are unrelated to the appeal. In addition, Ms. Mayer performed research regarding the process for assessing appellate attorneys' fees by remand to the lower tribunal. These entries do not relate to the appeal or to litigating over the entitlement to attorneys' fees. Several of Ms. Mayer's entries do not reflect legal work, but, rather, administrative or secretarial work, such as retrieving a law review article from the law library, conferring with a secretary regarding formatting briefs, and revising documents to conform to others' edits. Other than these entries, Ms. Mayer's time records seem generally appropriate, in that she performed a large amount of research before the initial brief, she performed drafting, and she continued to carry out research assignments throughout the appeal. Of the total 66.7 hours claimed, a reduction of 6.4 hours is warranted to account for the inappropriate entries. 60.3 hours are reasonable for Ms. Mayer. An hourly rate of $225 was applied to Ms. Mayer's time. Petitioner's expert attested, in general and in the aggregate, to the reasonableness of the hourly rates in Petitioner's time records for attorneys with comparable experience and skill, but gave no specific information regarding the basis for his opinions. Respondent's expert disagreed and testified that in her opinion, an hourly rate of $225.00 for a one-year associate was excessive. She based her opinion on The Florida Bar's 2010 Economics and Law Office Management Survey, which reported that for the north region of Florida, 47 percent of all attorneys at any experience level charge an hourly rate of $200.00 or less. In the opinion of Respondent's expert, a reasonable hourly rate for Ms. Mayer would be $150.00, instead of $225.00. While Respondent's expert's information was also somewhat generalized, the undersigned finds that based on the limited information provided, a reasonable rate for a highly skilled, but not very experienced attorney one year out of law school, would be $185.00 per hour. A reasonable attorney's fee for Ms. Mayer's legal work on the appeal is $11,155.50. Turning to Ms. Tunnicliff's time records, the hourly rate for Ms. Tunnicliff of $400.00, though high, is accepted as appropriately so. The rate is comparable to the rates charged by other attorneys of comparable skill and experience in the same locale, as ultimately agreed to by both parties' experts. Ms. Tunnicliff's time entries show that in general, she limited her hours appropriately to a high level of supervision, direction, and review, while allowing others, particularly Ms. Mayer, to conduct the more time-intensive research and drafting efforts. Based on the expert testimony and a review of the time record entries, a few adjustments to Ms. Tunnicliff's records are necessary. One-half hour is subtracted for an entry related to mandamus, because the mandamus action was separate and unrelated to work done to prosecute the appeal at issue. Another adjustment is necessary because of an error in the time records: The billing summary shows that Ms. Tunnicliff's total time was 31.6 hours, which was multiplied by the hourly rate to reach the fees sought for Ms. Tunnicliff's time. However, the individual time entries add up to a total of only 24.6 hours. With the additional deduction of one-half hour for work unrelated to the appeal, a total of 24.1 hours will be allowed for Ms. Tunnicliff's time. Applied to the agreed reasonable hourly rate, a reasonable attorney's fee for Ms. Tunnicliff's work on the appeal is $9,640.00. The time records for the two gaming law experts present more difficult issues, because the legal questions presented in the appeal were not gaming law questions; they were administrative law questions and, indeed, "basic, settled" administrative law questions. While certainly gaming law was the substantive, regulatory context in which these issues arose, it is clear from the time entry descriptions of exhaustive, duplicative legal research on rights to administrative hearings, party standing, and what law applies in license application proceedings, that at their core, the questions presented were general administrative law principles and were treated as such. Yet not only one, but two highly specialized gaming law experts whose experience and specialized expertise allow them to command hourly rates of $450 when practicing gaming law, spent most of the total attorney time prosecuting this administrative law appeal. Mr. Romanik's time records claim 195.5 total hours at $450 per hour, while Mr. Dunbar's time records claim 80.6 total hours, of which 30.2 were claimed at the rate of $450 per hour, while 50.4 additional hours were claimed at $300 per hour. The reduced $300 per-hour fee was an adjustment made at the urging of Petitioner's expert to account for research time spent not within Mr. Dunbar's area of expertise. Mr. Romanik's time records require adjustment. In general, many of the types of criticisms of these records by Respondent's expert are accepted, although the undersigned does not agree with the degree of adjustments deemed warranted by Respondent's expert. In general, Mr. Romanik's time entries reflect excessive hours spent by Mr. Romanik, doing tasks that were duplicative of tasks more appropriately performed by Ms. Mayer, which were, in fact, performed by Ms. Mayer, including research and initial drafting. Perhaps one reason for the sheer number of hours invested by Mr. Romanik was that he was performing research on basic, settled principles of administrative law, such as standing, hearing rights, licensing proceedings, what happens when the law changes while a license application is pending, and other questions of administrative procedure. Mr. Romanik's time records also reflect too many basic drafting tasks, such as initially drafting a request for oral argument. The time records also show excessive secretarial or administrative tasks, such as listing and downloading cases and uploading briefs. Not only did Mr. Romanik's specialized expertise in gaming law not facilitate his performing these tasks efficiently, but he inefficiently performed these tasks very expensively, i.e., at the claimed rate of $450 per hour. Nonetheless, Mr. Romanik apparently did the lion's share of work in redrafting the initial brief (initially drafted by Ms. Mayer), drafting the reply brief, drafting the numerous motions and responses to the Division's motions, and performing well at the oral argument. The high stakes and good outcome cannot be denied. Yet the total time claimed would be high at the hourly rate claimed, if Mr. Romanik were the sole attorney working on the appeal. Given his role as the "general contractor," it is conceivable that many of his hours were invested, or should be considered as having been invested, as "client" time in which Mr. Romanik was serving as the client liaison for the prosecution of the appeal to oversee the work done by the attorneys prosecuting the appeal. Regardless of how Mr. Romanik's hours are characterized, they were excessive and duplicative. To adjust for excessive time in tasks outside Mr. Romanik's area of expertise and for duplication, the undersigned finds that Mr. Romanik's time should be reduced by 83 hours. Reflecting the high stakes and good outcome, as well as the aggressive motion practice in the appeal, a reasonable--though still very high--number of hours for Mr. Romanik to have spent in prosecuting this appeal (with the substantial help of three other attorneys) is 112.50 hours. With almost all of the time Mr. Romanik spent in this appeal falling in areas outside of his recognized legal expertise, the undersigned finds that a high, but reasonable, hourly rate to apply to Mr. Romanik's time is $325.00. Essentially, Mr. Romanik's legal services fell more within the legal expertise of Ms. Tunnicliff. If $400.00 per hour is the acknowledged reasonable rate for someone of Ms. Tunnicliff's experience and expertise, the rate to apply to Mr. Romanik's time should be less, although not substantially so, recognizing that Mr. Romanik's gaming law expertise was a big advantage. If intricate issues of gaming law were involved in this appeal, as opposed to just being the substantive, regulatory context in which basic, settled principles of administrative law arose, then perhaps Mr. Romanik could command his standard hourly rate. Instead, with the predominant focus of Mr. Romanik's work, as reflected in his time entries on administrative and appellate law and procedure, the reasonable rate that will be applied to the reasonable time total found above is a blended rate that is discounted because of reduced expertise in the main area, but increased because of expertise in a collateral area. Applying the reasonable rate of $325.00 per hour to 112.50 hours for Mr. Romanik yields a reasonable attorney's fee of $36,562.50 for Mr. Romanik's prosecution of the appeal. Mr. Dunbar's time records suffer from the same essential problem as Mr. Romanik's--he is a gaming law expert, but his expertise was hardly utilized. If it was not necessary to tap into Mr. Romanik's gaming law expertise to any great extent, then it was not necessary and redundant to have a second gaming law expert substantially involved in the appeal. Additional problems with Mr. Dunbar's time records include several time entries with inadequate descriptions (e.g., "Research" or "Research re: key cite authority") and other entries with descriptions that did not seem to relate to the appeal (e.g., several entries two months after the initial brief was filed for "Research re: standards for appellate review of motion denial" when there was no denied motion for which appellate review was sought). Mr. Dunbar's time records had a large number of entries for performing basic research on questions of administrative law or appellate practice, such as standing, hearing rights, standards for supplementing the record on appeal, standards for motions to strike and to consolidate appeals, standards for reply briefs, and similar descriptions. Substantial adjustments are in order to remove the inadequately described time entries and the entries seemingly unrelated to this appeal and to substantially reduce the duplicative research done by Mr. Dunbar outside of his area that was also done by Ms. Mayer and/or Mr. Romanik and/or Ms. Tunnicliff. While some overlap is tolerable to ensure that all bases are covered, the time entries do not sufficiently establish what was added by Mr. Dunbar's substantial time- performing tasks outside his area of expertise to the already substantial time allowed for Mr. Romanik outside his area of expertise. Mr. Dunbar's reasonable time spent as a fourth attorney prosecuting this appeal is reduced by 43 hours, to 37.6 hours. A little more than half of the 37.6 hours found to be reasonable were in the non-research category, such as Mr. Dunbar's review and comment on the draft briefs and motions and assistance in preparation for oral argument. The research hours found reasonable were those that appeared to augment, but not duplicate, work by one or more other attorneys. As with Mr. Romanik, a blended reasonable hourly rate is applied, which recognizes that even for the non-research time allowed for Mr. Dunbar, his work was primarily outside his recognized legal expertise, although his expertise provided benefit in understanding the context in which the issues arose. An hourly rate of $300.00 is reasonable for 37.6 hours of work done by Mr. Dunbar in prosecuting this appeal, equaling a reasonable attorney's fee of $11,280.00. The following summarizes the number of hours, hourly rate, and resulting fee found to be reasonable for each of the four attorneys who aided in prosecuting the appeal: Attorney Hours Hourly Rate Fee Mayer 60.3 $185 $11,155.50 Dunbar 37.6 $300 $11,280.00 Romanik 112.5 $325 $36,562.50 Tunnicliff 24.1 $400 $ 9,640.00 Total hours by all attorneys: 234.50 Total time-based fees: $68,638.00 As previously alluded to, the stakes of this appeal were very high, in that without success in the appeal, Petitioner would have no chance of obtaining the quarter horse racing permit for which it had applied. While success in the appeal would not assure Petitioner that it would ultimately prevail in its effort to secure a permit, winning the appeal was a necessary step to keep the permit application alive and allow Petitioner to take the next step in the process. If, at the end of the long road ahead, Petitioner secures the sought-after permit, the value of that permit could be in the neighborhood of $70 million. Given the stakes, a higher amount of hours and greater degree of duplication were allowed than might normally be considered reasonable. The undersigned finds that there was not a huge risk factor with regard to the outcome of the appeal. While in a general sense and statistically speaking, odds always may be greatly against success in an appeal, those across-the-board statistics are mitigated in this case by such a clear violation of a "basic, settled" and "fundamental" principle of administrative law and due process. The complexity and novelty of the issues on appeal are reflected, as one would expect, in the number of hours found to be reasonable for Petitioner's team of attorneys to have spent in prosecuting this appeal. Even as reduced, the total hours found reasonable for this appeal are nearly three times the amount of time Respondent's expert would expect in the typical appeal. Thus, the hours found to have been reasonably invested were substantially higher than typical for an appeal, when one might have expected less hours than typical since this appeal did not follow a trial or administrative hearing. No evidence was presented to show that any of the four attorneys on Petitioner's appeal team were precluded from taking other work because of their role in the appeal or that there were any time constraints placed on the attorneys, either by the client or the circumstances. The evidence was not entirely clear regarding the nature of the arrangements with Ft. Myers REH for payment of attorneys' fees for the appeal. Two separate contingency fee agreements were admitted in evidence. One agreement, "[a]s of August 15, 2010[,]" was between Ft. Myers REH and Mr. Romanik (and his firm, David S. Romanik, P.A.). The operative term of the agreement provided that "[u]pon and after the execution of this fee agreement, the [Romanik] Firm shall handle this matter and all aspects of it on a contingent fee basis." The "matter" covered by the agreement was broadly described as "the pursuit of the issuance by the Division of Pari-Mutuel Wagering of a quarter horse racing and wagering permit . . . ." Therefore, from August 15, 2010, forward, Mr. Romanik and his firm agreed to be compensated on a contingent fee basis for not only the appeal, but also, any subsequent administrative hearings if the appeal was successful and any other administrative or judicial litigation required to secure the permit. Services would be considered successfully completed upon commencement of Ft. Myers REH's gaming operation pursuant to the permit. For such successful services, the Romanik firm would receive $5 million. In addition, the agreement provided that the firm would be entitled to "any and all fees that may be awarded" by any court or administrative tribunal. No evidence was presented regarding the prior fee arrangement that was in place until August 15, 2010, when the contingent fee arrangement took effect. Mr. Romanik and his firm entered into a separate contingency fee agreement with the Pennington firm to secure the Pennington firm's assistance, as a subcontractor, in prosecuting the appeal of the Division's dismissal of Ft. Myers REH's request for an administrative hearing to contest the denial of its quarter horse permit application. The agreement, dated September 1, 2010, was called "a revised representation agreement," which superseded "all prior agreements related to this matter." Payment for services under the agreement was contingent on success in the appeal and was set at "the greater of $100,000 or any fee award from the court, if any." No prior representation agreement for services provided by the Pennington firm in the appeal before September 1, 2010, either with Mr. Romanik and his firm or with Ft. Myers REH, was offered into evidence. However, Mr. Dunbar testified that before the Pennington firm entered into a contingency fee arrangement with Mr. Romanik and his firm, the Pennington firm provided services to Ft. Myers REH under a standard fee agreement by which the Pennington firm attorneys provided legal services for which they billed and were paid at their standard hourly rates. As of August 16, 2010, the standard fee agreement between Ft. Myers REH and the Pennington firm was apparently still in place, because in the motion for section 57.105 sanctions served on Respondent on August 16, 2010, and subsequently filed with the First DCA on September 20, 2010, Mr. Dunbar represented that Ft. Myers REH "had retained the [Pennington law firm] to represent it in this matter and has agreed to pay its attorneys a reasonable fee for their services." This statement was not qualified by any contingency, such as that Ft. Myers REH only agreed to pay a reasonable fee to the Pennington firm if the appeal was successful. Thus, although Mr. Dunbar seemed to indicate in his testimony that the September 1, 2010, contingent fee agreement was intended to apply retroactively, that testimony is inconsistent with the representation in the section 57.105 motion signed by Mr. Dunbar. The evidence establishes that contingency fee agreements were entered into midway through the appeal. The greater weight of the credible evidence was insufficient to prove that before August 15, 2010, the attorneys providing services in the Ft. Myers REH appeal would only be paid if the appeal was successful. Thus, the undersigned finds that the fee arrangements for the appeal were partially contingent. The contingent fee agreements were reached as an accommodation to Ft. Myers REH's desire for such arrangements, rather than as an enticement that had to be offered by Ft. Myers REH in order to secure competent counsel to represent it in the appeal. No evidence was presented detailing the nature and length of Petitioner's relationship with its team of attorneys. As noted, Mr. Romanik has a relationship with Petitioner and its parent that is akin to general counsel over the parent's Florida interests, though it is unknown how long this relationship has existed. The Pennington firm, likewise, has done work for Petitioner and its parent before and has sent invoices for legal services to Mr. Romanik for his review, approval, and transmittal to the parent for payment. It is unknown how extensive or over what period of time this relationship existed. Petitioner established that it incurred an additional $28,087.00 in attorneys' fees charged for litigating the reasonable amount of attorney's fees in this proceeding, plus $44,016.00 in expert witness fees. In addition, Petitioner incurred $1,094.43 for expense items, of which $409.50 represents the cost of the final hearing transcript, and the balance represents costs for copying, courier service, and postage. Respondent did not dispute the reasonableness of those attorneys' fees, expert witness fees, and costs.
Findings Of Fact Based upon the evidence adduced at hearing, the stipulations of the parties, matters officially recognized and the record as a whole, the following Findings of Fact are made: Petitioner is a Florida corporation that was at all times material to the instant case (but is no longer) in the coin-operated machine business. It owned various amusement and game machines that were placed at different locations pursuant to agreements with the location operators. Most of these agreements were not reduced to writing. In those instances where there was a written agreement, a "Location Lease Agreement" form was used, with insertions made where appropriate in the spaces provided. The form indicated, among other things, that Petitioner was "in the business of leasing, renting, servicing, maintaining and repairing of coin-operated machines" and that the agreement was "for the placement, servicing and maintaining of certain coin-operated machines" in the location specified in the agreement. In the coin-operated machine trade, the custom (hereinafter referred to as the "industry custom") was for the parties to an oral or written agreement for the placement of an amusement or game machine on the property of another to treat such an agreement as involving the location operator's rental of the machine owner's tangible personal property rather than the machine owner's rental of the location operator's real property. Petitioner and the location operators with whom it contracted followed this custom of the trade in their dealings with one another. They construed their agreements as involving the rental of Petitioner's tangible personal property by the location operators and acted accordingly. Petitioner collected from the location operators the sales tax due on such rentals and remitted the monies collected to Respondent. 1/ It engaged in this practice for approximately a decade without challenge by Respondent. In late 1990 and early 1991, Respondent conducted a routine audit (Audit No. 90-19801486) of Petitioner's records. The audit covered the period from January 1, 1988, to September 30, 1990 (referred to herein as the "audit period"). The Department's auditors are, for the most part, college-trained accountants. While they receive Department-sponsored training in the general procedures and standards they are expected to adhere to in conducting their audits, they are not provided with training and information regarding the trade customs and practices that are unique to particular industries or businesses they audit. The Department auditors who conducted the audit of Petitioner's records reviewed, among other things, those agreements between Petitioner and location operators that were reduced to writing. Based upon their reading of these agreements, the auditors erroneously, yet not unreasonably given the imprecise contractual language used, believed that the agreements into which Petitioner had entered were actually for the rental of the location operators' real property, not the rental of Petitioner's machines. They therefore concluded that, in light of then existing provisions of Rule 12A-1.044, Florida Administrative Code (hereinafter referred to as the "Rule"), Petitioner, as opposed to the location operators, should have paid sales tax and that Petitioner's purchase of machines and parts should not have been treated as tax exempt. In March of 1991, the Department sent Petitioner a Notice of Intent to Make Sales and Use Tax Audit Changes for the audit period based upon the auditors' findings. The Notice advised Petitioner of its right to meet with the Department and discuss these findings made by the auditors. Petitioner requested such a meeting. The meeting was held on May 7, 1991, in Tallahassee. Petitioner's attorney, Marie A. Mattox, Esquire, represented Petitioner at the meeting. Mattox was accompanied by Robert Matthews, one of Petitioner's officers. The Department was represented by the head of the its Bureau of Hearings and Appeals and several other employees. Mattox and the Department representatives discussed the contents of the written agreements the auditors had reviewed. During the discussion, Mattox reminded the Department representatives of the "industry custom." 2/ In addition, she brought to their attention that the agreements under review involved amusement and game, not vending, machines. The meeting lasted only approximately ten minutes. Mattox and Matthews left the meeting with the impression, based upon the comments made by the Department representatives, that the matter would be resolved in Petitioner's favor. To their surprise, on May 23, 1991, the Department issued a Notice of Proposed Assessment in which it announced its intention, based upon Audit No. 90-19801486, to issue an assessment against Petitioner in the amount of $238,780.06 for taxes owed (plus penalty and interest) for Petitioner's alleged use, during the audit period, of real property in connection with its coin- operated machine business. The Notice of Proposed Assessment contained a statement advising Petitioner of its right to protest the Department's proposed action. Mattox, on behalf of Petitioner, responded to the Notice of Proposed Assessment by sending a letter, dated July 22, 1991, to the Department's General Counsel. In her letter, Mattox advised the General Counsel that Petitioner was contesting the proposed assessment and made the following argument in support of Petitioner's position that the Department had made "an error:" This tax has been assessed apparently because of a misunderstanding on the part of the auditors as to the arrangements under which Lauren, Inc. conducts business. As I am sure you are aware, under Rule 12A-1.004, Florida Administrative Code, there are various arrange- ments and agreements through which amusement and game machine owners conduct business. The first arrangement is where the machine owner rents the real property upon which the machine is located from the location owner. Under this arrangement, the machine owner pays a "lease fee" to the location owner, which fee is subject to sales and use tax. Under this arrangement, the location owner collects tax upon the lease fee and remits said tax to the state. The second arrangement through which amusement and machine owners conduct business is where the machine is rented by the location owner. Under this scenario, the machine owner acts as tax collector for the State and submits sales and use tax paid on the "rental fee" paid to the machine owner by the location owner. On March 25, 1991, Carmen R. Cordoba, C.P.N., Audit Group Supervisor with the Department of Revenue, wrote to Mr. Matthews indicating that the Department was construing the arrangement under which Mr. Matthews operated to be a lease of real property as opposed to the rental of personal property. Specifically, the Department stated the following: "we found them to be agreements to lease space to place the vending machines." To the contrary, Mr. Matthews' agreements are not for the rental of real property. Instead, he rents his personal property (the amusement and game machines) to the various locations. Under this scenario, Mr. Matthews is responsible for collecting sales and use tax on the rental fee paid to him and transmitting the sales and use tax thereon to the Department of Revenue. Apparently, the Department of Revenue has assessed an additional use tax on the payments made to the location owners where the Department has construed that Lauren, Inc. "rents space" for the machines. An additional tax has been assessed on the purchase of the machines, purchases of parts, etc... because the Department found that he was not renting these machines. This is simply in error. The Department has specified that Lauren, Inc. must refund all taxes collected from the location owners where Lauren, Inc., purportedly "rents space." At that point, Lauren, Inc. can apply for a refund on the taxes paid by Lauren, Inc. on the rental of the personal property. It is my opinion that this is a simple misunderstanding by the Department of Revenue staff as not under- standing the arrangements made by Lauren, Inc. in conducting its business with various location owners. On July 25, 1991, Mattox sent a copy of this letter to the Disposition Section of the Department's Bureau of Hearings and Appeals. By letter dated September 6, 1991, the Administrator of the Sales Tax Appeals Section of the Department's Bureau of Hearings and Appeals gave notice that Mattox's July 22, 1991, letter, had "been accepted for review as a qualifying protest." On November 13, 1991, a Notice of Decision was issued denying the protest. The nature of the protest was described in the Notice of Decision as follows: Lauren, Inc. is protesting the assessment of use taxation for the rental of real property involving the following situations: Taxation of purchases of vending machines, repairs and purchasers [sic] of parts; and Tax erroneously collected to be reimbursed to customers/landlords and taxpayer to request a refund from D.O.R. The following were set forth in the Notice of Decision as the "facts" pertinent to the protest: This is a first time audit of the taxpayer. The taxpayer is a full service vending machine business. The taxpayer has furnished representative con- tracts between his business and the location owners where his machines are placed. The specifics of the contracts are discussed below. According to the agreement, the taxpayer "installs, operates, services, and maintains coin operated machines on the proprietor's premises." The taxpayer has collected tax from location owners on their share of the proceeds, which he refers to as "rentals of the machine" to the location owners. The contract provides for the location owner to provide a space for the vending machines. It makes no reference whatsoever to a lease of the machine to the location owner. The taxpayer collects the money from the machines, and when applicable, also provides and owns the merchandise. The Notice of Decision contained the following discussion and analysis of the "law and [Petitioner's] argument:" You argue in the letter of protest that the Lauren, Inc. lease agreements are for the rental of personal property (the vending machines) to various locations. You state that "Mr. Matthews is responsible for collecting sales and use tax on the rental fee paid to him and transmitting the sales and use tax thereon to the Department of Revenue." You also state "an additional tax has been assessed on the purchase of the machine, purchases of parts, etc.... because the Department found that he was not renting these machines. This is simply in error." A tax is imposed on the privilege of engaging in the business of coin operated vending and amusement machines by Rule 12A-1.044(2)(A), F.A.C., which is written as follows: "(a) When coin-operated vending and amusement machines or devices dispensing tangible personal property are placed on location by the owner of the machines under a written agreement, the terms of the agreement will govern whether the agreement is a lease or license to use tangible personal property or whether it is a lease or license to use real property." Rule 12A-1.044(4), F.A.C., states..."the purchase of amusement machines or merchandise vending machines and devices is taxable, unless purchased for exclusive rental." The effect of the agreement is utterly clear. Lauren, Inc. provides the food and cigarette items to be sold. The sales revenues belong to Lauren, Inc. Sales tax is due the state from Lauren, Inc. on the entire amount of those sales revenues. A share of the sales revenues is paid to the location owner by Lauren, Inc. as consideration for what the location owner has provided, a license to use his realty by placing the vending machines on the premises. NO RENT WHATSOEVER FOR THE MACHINES IS PAYABLE BY THE LOCATION OWNER TO LAUREN, INC. UNDER THE AGREEMENT. Generally, whether an agreement is a lease or a license depends upon the intent of the parties as determined from the entire agreement. In determining the intent of the parties, the fact that the parties may use terms such as "lease," "lessor," "lessee," or "rent" will not be determinative of whether an agreement is a lease. In Napoleon v. Glass, supra, 224 So.2d 883 (3d Dist. Ct. App. 1968), the court, at 884-885 states: "Although the parking concession agreement was called a Concession Lease and provided for the payment of 'rent,' the document unquestionably created a licensor-licensee relationship rather than a landlord-tenant relationship." The "conclusion" that the Department reached by applying the foregoing principles of "law" to the pertinent "facts" in Petitioner's case was articulated as follows in the Notice of Decision: It is the Department's position that based upon the terms of the agreements provided by Lauren, Inc. that this is a license to use the location owner's real property rather than a lease of Lauren, Inc.'s tangible personal property to the location owners. Likewise, absent a re-rental of the vending machines, the sales tax is due from, Lauren, Inc. on its purchases of and repairs to its vending machines. Likewise, the taxes collected in error by the taxpayer from his customers should be reimbursed to the taxpayer's customers. The audit findings shall, therefore, remain as assessed. The Notice of Decision advised Petitioner of its right to file a Petition for Reconsideration. Such a Petition for Reconsideration was subsequently submitted on or about December 10, 1991, by Mattox on Petitioner's behalf. In the Petition for Reconsideration, Mattox made the following argument: The Notice of Decision is flawed in all respects. With respect to issue No. 1, which the Tax Conferee [the author of the Notice] has entitled "Vending Machines," even the situations set forth are incorrect. Lauren, Inc. does not contest nor is there any issue related to any finding regarding its vending machines. There is simply no issue regarding vending machines. There is also no issue regarding the taxation of purchases of vending machines, repairs, and/or purchases or parts. Lauren, Inc., purchases its machines and performs repairs for machines that are rented to various locations. Therefore, under Rule 12A-1.044, Florida Admini- strative Code, these purchases and repairs are exempt from taxation. The only issue in this case is the factual scenario with which Lauren, Inc. conducts business. Under Rule 12A-1.044, Florida Administrative Code, there are several instances in which the rental of tangible personal property are recognized. The Tax Conferee has apparently ignored the industry standards in this regard and has misinterpreted the manner and method in which Lauren, Inc., conducts business. As I originally stated in my July 22, 1991 correspondence to the Department protesting the assessment of Sales and Use Tax, Lauren, Inc. has agreements with various location owners to place amusement and game machines at any particular location and the location owner rents Lauren, Inc.'s personal property (amusement and game machines). Even under the Location Lease Agreements that Lauren, Inc. has with its customers, they specify that the company (Lauren, Inc.) is in "the business of leasing, renting, servicing, operating, maintaining and repairing... coin operated machines..." I am absolutely confounded as to why the Department has determined that Lauren, Inc., owes the above- stated tax and penalty. There has never been any question that Lauren, Inc. collected tax from the various locations and remitted this tax to the Department of Revenue. It appears that Lauren, Inc. is now to apply for a refund to the Department of Revenue, pay all sums already paid to the Depart- ment of Revenue to the various locations where its machines are located, for the various locations to remit this same amount back to the Department of Revenue. This simply does not make sense to me. With respect to the statement made in the Notice of Decision that the "effect of the agreement is utterly clear," Mattox continued: We are in complete agreement with the Tax Conferee in this regard, except for the fact that our conclusions are utterly inapposite. Lauren, Inc. does provide food and cigarette items to be sold out of the various machines, however, in this audit and protest, there is no issue regarding food and cigarette items or the tax paid thereon. The only issue is the [e]ffect of the agreement between Lauren, Inc. and the location owners. If the Tax Conferee had characterized this relationship correctly, a completely different result would have been reached. Lauren, Inc. does have vending machines as well as amusement and game machines. The Tax Conferee may have confused the vending arrangements with location owners with the amusement and game agreements. There is a recognized difference industry wide in the method and manner within which vending businesses and amusement and game business are conducted. There has been no such recognition by the Tax Conferee and we would sincerely appreciate the opportunity to present additional evidence, if necessary, to the Department of Revenue for its reconsideration of the issues raised herein. Sometime after it received the Petition for Reconsideration, the Department, through one of its employees, Vicki Allen, telephoned Mattox and asked her to provide the Department with any additional materials she wanted the Department to consider. Mattox responded to this request by letter dated February 19, 1992, in which she stated the following: You have requested that I provide additional information regarding Lauren, Inc. however, in lieu of providing this information through the mails, I would like the opportunity to sit down and explain in person our position regarding the sales and use tax assessments set forth in the recent assessment. Moreover, I am not certain as to whether any additional documentation or information exists or the nature of the documentation that will be helpful to you. Upon your receipt of this correspondence, please contact me to discuss this matter further. We are more than willing to provide additional information, but truly believe that the issues involved in this assessment could be resolved through a meeting between all parties concerned. Please advise accordingly. Allen never responded to Mattox's letter. On April 21, 1992, the Department issued a Notice of Reconsideration sustaining an assessment against Petitioner in the amount of $206,017.85 for taxes owed (plus penalty and interest). Allen was the author of the Notice of Reconsideration. The following were set forth in the Notice of Reconsideration as the "facts" upon which the sustained assessment was based: Lauren, Inc. is in the business of owning and operating coin-operated vending machines. The corporation entered into various agreements under which it received permission to install, place, operate, service and maintain its coin-operated vending machines on the premises of various location owners in return for an agreement to pay the location owners a percentage of the gross receipts from the machines. The corporation interpreted the agreements to be transactions involving the rental of tangible personal property and not for the license to use real property. Therefore the corporation collected and remitted tax on the gross receipts taken from the machines and from the location owners on the rental of the machines as provided under Rule 12A- 1.044(2)(b), F.A.C. The auditor determined that the agreements between Lauren, Inc. and the location owners, involving the placement of vending machines at the various location owner's premises, were agreements made for the license to use real property and not for the rental of tangible personal property. Therefore, the auditor assessed use tax on these transactions. In addition, the auditor assessed use tax on the purchases made by Lauren, Inc. for the coin-operated machines, parts, and accessories. The only issue maintained by you is whether or not the agreements between Lauren, Inc. and the location owners were agreements for the license to use real property or whether the agreements constitute the rental of tangible personal property and would therefore, exempt the purchases of the coin operated vending machines, parts, and accessories as provided under Rule 12A-1.044(2)(B), F.A.C. In the Notice of Reconsideration, the Department cited Section 66 of Chapter 86-152, Laws of Florida, which, the Department stated in the Notice, "amended Section 212.031, Florida Statutes, (F.S.), effective July 1, 1986, to make licenses to use real property, as well as leases, subject to tax." The Notice of Reconsideration also contained the following excerpt from Rule 12A-1.070, Florida Administrative Code: "(g) An agreement whereby the owner of real property grants another person permission to install and maintain a full service coin-operated vending machine, coin-operated amusement machine, coin-operated laundry machine, or any like items, on the premises is a taxable use of real property. The consideration paid by the machine owner to the real property owner is taxable." [Emphasis in original.] In addition, the provisions of subsections (2)(a), (b) and (c) of the Rule were recited in the Notice of Reconsideration. Allen stated her "conclusion" as follows in the Notice of Reconsideration: A review of the agreements presented in the audit file was made by this writer and the following conclusion was made: The agreements clearly reflect that Lauren, Inc. is installing, placing, operating and maintaining the coin-operated vending machines on the various location owner's realty for a percentage of the gross proceeds. Nowhere in the agreements does it state that Lauren, Inc. is leasing or renting the coin- operated vending machines to the location owner for a percentage of the gross proceeds. The agreements do, however, specifically state that the location owner will provide a space for Lauren, Inc. to install, operate, service, and maintain a coin-operated vending machine on the location owner's premises. The agreements made between Lauren, Inc., the owner of the machines[,] is and has been since July 1, 1986, a taxable license to use real property. Before that date, amounts paid for leases of real property were taxable, but licenses to use were not. Black's Law Dictionary defines a license to use real property as: "a privilege to go on premises for a certain purpose, but does not operate to confer on, or vest in a licensee any title, interest, or estate in such property." The agreements did not confer to Lauren, Inc. any "title, interest, or estate" in the location owner's realty, but, instead, only permitted Lauren, Inc. to come onto the property and place the coin- operated vending machines on the property for the purpose of making the machines available to those who wanted to use them. It is the Department's decision that the subject tax was assessed correctly pursuant to Rule 12A- 1.070(1)(g), F.A.C. and 12A-1.044(2)(a) and (c), F.A.C. and in accordance with Departmental policies and procedures. The audit findings shall remain as assessed in the enclosed closing statement. Particularly in light of the provision of Rule 12A-1.070, Florida Administrative Code, set forth in the Notice of Reconsideration, the agreements that Petitioner had provided the Department were reasonably susceptible to the interpretation that they were, as Allen had concluded, "taxable license[s] to use real property," notwithstanding that the parties to these agreements had intended that they be interpreted otherwise. The Notice of Reconsideration advised Petitioner of its right "to file a petition for a Chapter 120 administrative hearing with the Department." Petitioner filed such a petition with the Department on May 8, 1992. The Department referred the matter to the Division of Administrative Hearings on June 18, 1992, for the assignment of a Hearing Officer to conduct the hearing Petitioner had requested. The hearing was held on October 6, 1992. Two witnesses testified at the hearing, Matthews and Manley Lawson, a member of the Board of Directors of the Florida Amusement and Vending Association. In addition to the testimony of these two witnesses, a total of 11 exhibits were offered and received into evidence. The evidence presented at hearing was supplemented by a stipulation into which the parties had entered prior to hearing. On November 23, 1992, the Hearing Officer issued a Recommended Order recommending that the Department "enter a final order withdrawing the assessment that is the subject of the instant proceeding." The Hearing Officer's recommendation was based upon the following Conclusions of Law set forth in his Recommended Order: The instant case is governed by the version of Rule 12A-1.044, Florida Administrative Code, that was in effect during the audit period (referred to herein as the "Rule"). It read in pertinent part as follows: "(2) Vending and amusement machines, machine parts, and locations. When coin-operated vending and amusement machines or devices dispensing tangible personal property are placed on location by the owner of the machines under a written agreement, the terms of the agreement will govern whether the agreement is a lease or license to use tangible personal property or whether it is a lease or license to use real property. If machines are placed on location by the owner under an agreement which is a lease or license to use tangible personal property, and the agreement provides that the machine owner receives a percentage of the proceeds and the location operator receives a percentage, the percentage the machine owner receives is rental income and is taxable. The tax is to be collected by the machine owner from the location operator. The purchase of the records, needles, tapes, cassettes, and similar items, machines, machine parts and repairs, and replacements thereof by the machine owner is exempt. If machines are placed on location by the owner under an agreement which is a lease or license to use real property, and the agreement provides that the machine owner receives a percentage of the proceeds and the location operator receives a percentage, the percentage the location operator receives is income from the lease or license to use real property and is taxable. The tax is to be collected by the location operator from the machine owner. The purchase of the records, needles, tapes, cassettes, and similar items, machines, machine parts, and repairs and replacements thereof by the machine owner is taxable. * * * (4) The purchase of amusement machines or merchandise vending machines and devices is taxable, unless purchased for exclusive rental. * * * The following examples are intended to provide further clarification of the provisions of this section: Example: The owner of Town Tavern enters into a lease agreement with Funtime Company. Under the terms of the agreement, Funtime will provide coin-operated video game machines to Town Tavern, with Funtime retaining title to the machines and providing repairs or replacement parts as necessary. As consideration for the rental of the machines, Town Tavern will give Funtime 60 percent of the proceeds from the machine. By the terms of the agreement, this arrangement is a lease of tangible personal property and Funtime, as the lessor, must collect tax from Town Tavern on the portion of the proceeds it receives. The purchase of the video game machines, machine parts, and repairs thereof by Funtime Company is exempt. The portion of the proceeds retained by Town Tavern is not taxable. Example: An amusement and vending machine owner enters into a license agreement with City Airport, which grants the machine owner the right to place amusement and vending machines in Concourse A. The amusement machines consist of several electronic games and a pinball machine. The vending machines consist of soft drink, snack food, and candy machines. City Airport has the right to designate the areas within the concourse where the machines will be located; the machine owner and owner's employees are to stock the machines and provide repairs as needed. As consideration under the agreement, City Airport will receive 15 percent of all proceeds from the machines. By the terms of the agreement, this arrangement is a license to use real property, and City Airport, as the licensor, must collect tax from the machine owner." 3/ At issue in the instant case is whether the agreements Petitioner entered into with location operators during the audit period were, as claimed by Petitioner, leases or licenses to use tangible personal property, within the meaning of subsection (2)(b) of the Rule, or whether they were, as asserted by Respondent, leases or licenses to use real property, within the meaning of sub- section (2)(c) of the Rule. After having carefully examined the record in the instant case, particularly the stipulations and evidence regarding the contents of the agreements in question, how the agreements were interpreted by Petitioner and the other parties to the agreements, and the trade customs prevailing at the time, the Hearing Officer finds that the agreements were leases or licenses to use tangible personal property, within the meaning of subsection (2)(b) of the Rule, and that therefore the assessment issued against Petitioner, which was predicated upon a contrary finding, is not valid. See Blackhawk Heating & Plumbing Co., Inc., v. Data Lease Financial Corp., 302 So.2d 404, 407 (Fla. 1974)("[i]n the construction of written contracts, it is the duty of the court, as near as may be, to place itself in the situation of the parties, and from a consideration of the surrounding circumstances, the occasion, and apparent object of the parties, to determine the meaning and intent of the language employed;" "[w]here the terms of a written agreement are in any respect doubtful or uncertain, or if the contract contains no provisions on a given point, or if it fails to define with certainty the duties of the parties with respect to a particular matter or in a given emergency, and the parties to it have, by their own conduct, placed a construction upon it which is reasonable, such construction will be adopted by the court, upon the principle that it is the duty of the court to give effect to the intention of the parties where it is not wholly at variance with the correct legal interpretation of the terms of the contract"); Oakwood Hills Company v. Horacio Toledo, Inc., 599 So.2d 1374, 1376 (Fla. 3d DCA 1992)("[i]t is a recognized principle of law that the parties' own interpretation of their contract will be followed unless it is contrary to law;" "the court may consider the conduct of the parties through their course of dealings to determine the meaning of a written agreement"); International Bulk Shipping, Inc. v. Manatee County Port Authority, 472 So.2d 1321, 1323 (Fla. 2d DCA 1985)("[w]hile we agree that the language of Item 220 [of the tariff] does not clearly cover the shifting charges at issue, we observe that a court may consider trade customs and prior dealings between the parties to give meaning to the provision"); Bay Management, Inc., v. Beau Monde, Inc., 366 So.2d 788, 793 (Fla. 2d DCA 1978)("where a contract fails to define with certainty the duties of the parties, and the parties by their conduct have placed a reasonable construction on it, . . . such construction should be adopted by the court"). Accordingly, the assessment should be withdrawn. The Department, on January 15, 1993, issued a Final Order adopting the Hearing Officer's Findings of Fact and Conclusions of Law and his recommendation that the subject assessment be withdrawn.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Petitioner is a Florida corporation that was at all times material to the instant case (but is no longer) in the coin-operated machine business. It owned various amusement and game machines that were placed at different locations pursuant to agreements with the location operators. Most of these agreements were not reduced to writing. In those instances where there was a written agreement, a "Location Lease Agreement" form was used, with insertions made where appropriate in the spaces provided. The form indicated, among other things, that Petitioner was "in the business of leasing, renting, servicing, maintaining and repairing of coin-operated machines" and that the agreement was "for the placement, servicing and maintaining of certain coin-operated machines" in the location specified in the agreement. In the coin-operated machine trade, the custom was for the parties to an oral or written agreement for the placement of an amusement or game machine on the property of another to treat such an agreement as involving the location operator's rental of the machine owner's tangible personal property rather than the machine owner's rental of the location operator's real property. Petitioner and the location operators with whom it contracted followed this custom of the trade in their dealings with one another. They construed their agreements as involving the rental of Petitioner's tangible personal property by the location operators and acted accordingly. Petitioner collected from the location operators the sales tax due on such rentals and remitted the monies collected to Respondent. 1/ It engaged in this practice for approximately a decade without challenge by Respondent. In late 1990 and early 1991, Respondent conducted an audit of Petitioner's records. The audit covered the period from January 1, 1988, to September 30, 1990 (referred to herein as the "audit period"). Among the records reviewed were those agreements between Petitioner and location operators that were reduced to writing. Based upon their reading of these agreements, the auditors were of the view that the agreements into which Petitioner had entered were actually for the rental of the location operators' real property, not the rental of Petitioner's machines. They therefore concluded that Petitioner, as opposed to the location operators, should have paid sales tax and that Petitioner's purchase of machines and parts should not have been treated as tax exempt. The assessment which is the subject of this proceeding thereafter issued.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Revenue enter a final order withdrawing the assessment that is the subject of the instant proceeding. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 23rd day of November, 1992. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of November, 1992.
The Issue The issue is whether Respondent's license as a real estate salesperson should be disciplined for the reasons given in the Administrative Complaint filed on May 20, 1998.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: In this disciplinary action, Petitioner, Department of Business and Professional Regulation, Division of Real Estate (Division), seeks to impose penal sanctions on the license of Respondent, Howard Sarven Williams, a licensed real estate salesperson, on the ground that he failed to disclose that he had pled guilty to a crime when he filed his application for licensure in September 1994. In his Election of Rights Form filed with the Division, Respondent disputed this allegation, contended that his incorrect response "was done with the mistaken belief that it could be answered that way," and requested a formal hearing. Respondent is subject to the regulatory jurisdiction of the Division, having been issued license no. SL 0617682 by the Division in late 1994. The license remained inactive from January 1, 1995, until February 8, 1995; on that date, Respondent became an active salesperson with J.A.S. Coastal Realty, Inc. in Destin, Florida, until June 20, 1998. Between then and December 1998, he had no employing broker. Whether he is currently employed as a realtor is not of record. It is undisputed that on November 9, 1994, Respondent pled no contest to 12 counts of keeping a gambling house, a felony of the third degree. The offenses related to the illicit placement by Respondent (and two other individuals now deceased) of video gambling machines in approximately 10 VFW clubs and American Legion posts in Northwest Florida. On November 10, 1994, the court withheld adjudication of guilt; it placed Respondent on 10 years' supervised probation; and it ordered him to pay a fine and investigative costs totaling in excess of $25,000.00. Respondent was arrested in late 1993. On September 23, 1994, or before he entered his plea of no contest, Respondent completed and filed with the Division an application for licensure as a real estate salesperson. Question 9 on the application asks in part the following: Have you ever been convicted of a crime, found guilty, or entered a plea of guilty or nolo contendere (no contest), even if adjudication was withheld? At the time the application was filled out, Respondent had not yet entered his plea of no contest. Therefore, he properly answered the foregoing question in the negative. Although Respondent was statutorily required to notify the Commission in writing of this matter within 30 days after entering his plea, he has not been charged with violating that statute. The record does not reveal how the Division learned that Respondent had pled no contest to the charges. In any event, in March 1998, or more than three years later, a Division investigator interviewed Respondent who readily admitted that he had pled no contest to the charges, that he was still on probation, and that he was making monthly payments on the substantial fine imposed in 1994. The issuance of the Administrative Complaint followed. Although the evidence does not support the charge, as narrowly drawn in the Administrative Complaint, it should be noted that Respondent says he mistakenly assumed (without the advice of counsel) that because he had pled no contest and adjudication of guilt was withheld, he had not been convicted of a crime. Thus, he believed that his record was clean. At the same time, the plea is a matter of public record, and Respondent did not intend to make a fraudulent statement in order to secure his license.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order dismissing the Administrative Complaint, with prejudice. DONE AND ENTERED this 23rd day of November, 1999, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 23rd day of November, 1999. COPIES FURNISHED: Herbert S. Fecker, Director Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Laura McCarthy, Esquire Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Drew S. Pinkerton, Esquire Post Office Box 2379 Fort Walton Beach, Florida 32549-2379 Barbara D. Auger, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
