The Issue The issue in this case is whether Petitioner should be granted an exemption from disqualification from employment with a private contractor providing adult day training to developmentally disabled clients of Respondent.
Findings Of Fact From April 2016 to October 2016, Petitioner Bertha Delaney ("Delaney") was employed by Cypress Place, Inc. ("Cypress"), a private, nonprofit corporation that provides services to developmentally disabled clients, and operates under the regulatory jurisdiction, of Respondent Agency for Persons with Disabilities ("APD"). Delaney was hired by Cypress as a receptionist, and her responsibilities included answering the phones, handling clerical tasks such as maintaining attendance sheets and filing, and assisting other employees as needed. Cypress operates an adult day training program, which offers "adult day training services" to APD clients. Such services include "training services that take place in a nonresidential setting, separate from the home or facility in which the client resides, and are intended to support the participation of clients in daily, meaningful, and valued routines of the community. Such training may be provided in work-like settings that do not meet the definition of supported employment." § 393.063(1), Fla. Stat. There is no persuasive evidence showing that, during her employment with Cypress, Delaney ever had face-to-face contact with a client while performing adult day training services. She was not, therefore, a "direct service provider" as that term is defined in section 393.063(13), Florida Statutes. Delaney did, however, have incidental, in-person interactions with clients, the evidence establishes, occasionally assisting clients in need of immediate help. Thus, although Delaney did not provide training services to clients, she provided some services in the broader sense of "helpful acts." In early August of 2016, an incident involving a client occurred at Cypress's facility, which the Department of Children and Families ("DCF") investigated. In the course of the investigation, the DCF investigator interviewed Delaney and learned that, because the subject client had appeared to be limping on the day in question, Delaney had helped the client walk from the bus to the building. At the time, Delaney had not yet undergone level 2 background screening because Cypress had not instructed her to do so. Rather, in or around April 2016, when she was hired, Cypress had required Delaney to go to the police department for a local criminal background check, which she did. Delaney, in fact, did everything that Cypress asked her to do with regard to background screening. Soon after (and perhaps because of) the DCF investigation, Cypress directed Delaney to submit to a level 2 background review, which she did.1/ And so it happened that in late August 2016, a search of Delaney's criminal history was performed, and the results were forwarded to DCF, which administers the background screening process for APD. By letter dated October 3, 2016, DCF notified Delaney that it had discovered her criminal conviction on a charge of grand theft of the third degree, to which she had pleaded no contest on June 13, 2001. This crime is a "disqualifying offense" under the applicable screening standards, which means that Delaney is ineligible to work as a direct service provider without an exemption from such disqualification. DCF advised Delaney that she needed to quit her job at Cypress and obtain an exemption from disqualification if she wanted to resume working there. Delaney promptly resigned her position with Cypress. Delaney then sought an exemption from disqualification from employment, submitting her Request for Exemption to DCF in November 2016. By letter dated March 17, 2017, APD informed Delaney that it intended to deny her request based solely on the ground that Delaney had "not submitted clear and convincing evidence of [her] rehabilitation." In other words, APD determined as a matter of ultimate fact that Delaney was not rehabilitated, which meant (as a matter of law) that the head of the agency had no discretion to grant an exemption.2/ APD did not, as an alternative basis for its proposed agency action, articulate any rationale for denying the exemption notwithstanding a showing of rehabilitation, assuming arguendo that such had been made. Delaney initiated the instant proceeding, hoping to prove her rehabilitation. The undersigned has considered the evidence as it relates to the statutory criteria for assessing rehabilitation, and makes the following findings of fact as a predicate for the ultimate determination. The Circumstances Surrounding the Criminal Incident. In or around September of 2000, Delaney stole cash receipts from her employer, Blockbuster Video, totaling approximately $13,800.00. She was soon arrested and charged with grand theft of the third degree, a felony offense as defined in section 812.014, Florida Statutes. At the time of the offense, Delaney, then 25 years old, was experiencing financial difficulties raising two young daughters. Although married, Delaney managed the household mostly on her own, as her husband, an interstate truck driver, was often on the road. Exercising what she now acknowledges was poor judgment, Delaney stole her employer's funds to ease her personal financial burden. On June 13, 2001, appearing before the Circuit Court in and for the Eleventh Judicial Circuit of Florida, Delaney entered a plea of nolo contendere to the criminal charge, was convicted by plea (adjudication withheld), and was sentenced to two years' probation with orders to make restitution in the amount of $13,778.00 to Blockbuster. Delaney completed her term of probation and complied with all of the other conditions imposed by the court, including the payment of restitution. The Time Period That Has Elapsed since the Incident. The disqualifying offense was committed about 17 years ago. Delaney thus has had ample time to restore her reputation and usefulness to society as a law abiding citizen following her conviction, and to mature into an older, more responsible adult. The Nature of the Harm Caused to the Victim. Delaney did not cause personal injury to any person in the commission of her crime. She was ordered to make restitution to the victim, and did, although the details of this transaction are not available in the record. Therefore, the economic harm caused by Delaney's theft appears to have been minimal. The History of the Applicant since the Incident. Since her conviction, Delaney has completed a training program to become a patient care technician and obtained a license to practice in Florida as a certified nursing assistant. She has held positions in these fields and performed admirably. Delaney lives with her two adult daughters, son-in-law, grandson, and fiancé; her current family situation is stable, both emotionally and financially. Her civil rights have been restored. She has not reoffended or otherwise run afoul of the law. APD severely faults Delaney for a so-called nondisclosure in her response to a question on the exemption request form concerning previous employment. The form asks the applicant to "provide your employment history for the last three years." Delaney answered, in relevant part, by stating: "I have not been employed for the last three (3) years." She followed this statement by describing employment predating "the last three (3) years" and explaining that an ankle injury in May 2013 (which required multiple surgeries to repair), together with the attendant convalescence and rehabilitation, had kept her out of the workforce for a couple of years. APD argues that Delaney lied about her employment history——it is undisputed that she had, in fact, worked (for Cypress) during the three years preceding her request for an exemption——and that this alleged "lie" proves Delaney had known not only that she was required to undergo level 2 background screening before taking the job with Cypress, but also that such screening would reveal her disqualifying criminal conviction, and that, therefore, to avoid detection, she had worked without being screened, in knowing violation of law. Put aside for the moment the issue of fact regarding whether Delaney "lied" about her employment history. APD's argument (that this "lie" is proof of Delaney's knowing violation of the background screening law) is illogical. For even if (as a matter of fact3/) Delany were required to be screened, and even if (as a matter of law4/) the background screening statutes were personally violable by an applicant or employee, Delaney's allegedly fraudulent answer to the employment history question does not rationally lead to the conclusion that she knew either of these premises to be true. Moreover, as discussed in endnote 1, it is unacceptable for an agency to rely upon an applicant's alleged violation of a regulatory statute as grounds to deny an exemption request where such alleged violation has never been proved in an enforcement proceeding. This is because any person charged with committing a disciplinable offense must be served with an administrative complaint and afforded clear notice of the right to a hearing, at which, if timely requested, the agency must prove the alleged wrongdoing by clear and convincing evidence. APD wants to skip all that and just have the undersigned find here, for the first time, that Delaney clearly violated section 393.0655 by working at Cypress for at least six months without being screened. See Resp.'s PRO at 9. That's not happening. The only relevant finding in this regard, which the undersigned makes, is that Delaney has never been found to have violated section 393.0655 by working at Cypress for at least six months without being screened. As for the alleged "lie," APD's position that Delaney's response to the employment history question was knowingly and intentionally false (by omitting reference to Cypress) does not make sense, because DCF already knew (from investigating an unrelated matter) that Delaney had worked for Cypress, and Delaney knew that DCF was aware of this fact when she filled out the form. That cat was out of the bag. At hearing, Delaney testified credibly and convincingly that she had not intended to mislead DCF. It is clear that she interpreted the question as asking about her employment during the three years before the job from which she had been disqualified (as opposed to the three years before completing the exemption request form). She misunderstood the question, to be sure, but it was an honest mistake, and the undersigned can appreciate how a person in Delaney's shoes could conclude that the job from which one has recently been disqualified does not "count" towards her employment history for purposes of seeking an exemption from disqualification. Delaney's testimony in this regard is corroborated by the fact that she submitted to DCF, as part of her exemption request package, two letters of recommendation from employees of Cypress, written on Cypress letterhead, attesting to her good character. These letters, taken together, make it clear that Delaney had recently been an employee of Cypress. Obviously, if Delaney had intended, knowingly, to deceive DCF by concealing her employment with Cypress, she would not have provided these letters. APD argues that one of these letters, from Rashard Williams, which is dated October 27, 2016, does not specifically indicate that Delaney ever worked at Cypress——and thus does not bolster Delaney's testimony that she never intended to conceal the fact that she had. To reach this conclusion one must discount the writer's statement that "Ms. Delaney has proven herself to be reliable, trustworthy, and compassionate both as a person and as an employee." If the Williams letter were the only written recommendation from a Cypress employee, however, the undersigned would consider APD's interpretation to be, while certainly not the best or most reasonable, at least plausible in view of Mr. Williams's additional comments about how well Delaney took care of his grandmother in a capacity, apparently, other than as an employee of Cypress. But the companion to the Williams letter, a recommendation from Mark Chmiel dated October 24, 2016, leaves no room for doubt that Delaney was a recent employee of Cypress. A short, two-sentence excerpt suffices to support this finding: "Bertha is an invaluable addition to our agency [i.e., Cypress,] and she has fulfilled the potential of her position far better than anyone before her. Her moral character is beyond reproach and I have no qualms about trusting her with our clients."5/ The letters of recommendation that Delaney furnished DCF refute the notion that she knowingly omitted Cypress from her employment history with the intent to mislead DCF. They prove, instead, that Delaney took for granted DCF's knowledge of her work for Cypress, for she was certain DCF already knew about it. In turn, that foundational assumption (which, in fact, was true) prompted Delaney to provide a history of her employment during the several years leading up to the job with Cypress. The undersigned finds that Delaney is not guilty of knowingly withholding material information from DCF in response to the question about her previous employment. Finally, the undersigned observes that APD, in its preliminary decision-making, impermissibly allowed speculation and conjecture to take the place of facts. In forming its intent to deny Delaney's application, APD took into account the "possibility that Ms. Delaney was trying to protect Cypress Place from demonstrating that they were in violation of the screening laws" as well as the "possibility that Rashard Williams might have tried to hide the fact [sic6/] that there was a violation of the screening requirements by Cypress Place." Resp.'s PRO at 10 (emphasis added). On the basis of this rank speculation, APD conjectured that "Ms. Delaney was willing to collude with [Cypress employees] in order not to spotlight their violation of the licensing law." Resp.'s PRO at 18. APD proved none of this imaginative guesswork. Circumstances Showing Applicant Poses No Danger. Yvonne Ginsberg, the executive director of Cypress, testified in support of Delaney's application. Ms. Ginsberg stated that Delaney was an "excellent" employee and affirmed that she had "no qualms" about Delaney's returning to work at Cypress once an exemption has been secured. The undersigned credits Ms. Ginsberg's testimony as to Delaney's character. In addition, Delaney submitted the written character references of Messrs. Chmiel and Williams, which were discussed above. These documents credibly attest to Delaney's trustworthiness, integrity, and ethical behavior. The undersigned finds without hesitation that Delaney would likely not present a danger in the future if an exemption from disqualification were granted. Ultimate Factual Determination The undersigned has determined, based on clear and convincing evidence, including sufficient persuasive evidence of rehabilitation, that Delaney should not be disqualified from employment because she is, in fact, rehabilitated.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Agency for Persons with Disabilities enter a final order granting Bertha Delaney the exemption from disqualification for which she is, in fact, eligible. DONE AND ENTERED this 18th day of August, 2017, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM 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 18th day of August, 2017.
The Issue The central issue in this case is whether the Respondent is guilty of the violations alleged in the administrative complaint dated December 20, 1989; and, if so, what penalty should be imposed.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: At all times material to the allegations of the administrative complaint, the Respondent has held teaching certificate number 390667. That certificate was issued by the Department of Education and covers the areas of driver education, physical education, and kindergarten through eighth grade. Respondent's current teaching certificate expires on June 30, 1991. At all times material to the allegations of the administrative complaint, the Respondent was an annual contract teacher employed by the School Board of Dade County, Florida (Board). Respondent began teaching in the public school system upon employment by the Board in 1986. Prior to that time Respondent had pursued other career options. At the beginning of the 1988/89 school year, Respondent was assigned to West Homestead Elementary School where he taught physical education. Subsequent to an investigation regarding allegations at that school, Respondent was administratively reassigned to teach a half day at Cypress Elementary School. In the mornings, Respondent taught at another school, then he went to Cypress Elementary for the remainder of the day. Prior to assuming his teaching responsibilities at Cypress Elementary in October, 1988, Respondent met with Judith Martin. Ms. Martin, the principal at Cypress Elementary, instructed Respondent that he was not to touch the students assigned to his classes. Ms. Martin advised Respondent that she expected him to exhibit professional conduct and to show respect toward the children. Respondent acknowledged that he understood he was to refrain from improper conduct, and asserted that he was a very good teacher. In January, 1989, Ms. Martin received complaints from female students in Respondent's class that he had inappropriately touched them on the back or arms. When Ms. Martin met with Respondent regarding the allegations and made him aware of the students' discomfort with his conduct, he explained that he is a "touchy" person and that his manner of teaching sometimes required putting his hands on a student but that it was not done in an inappropriate way or intended to make them uncomfortable. At that time, Ms. Martin reminded Respondent that he was not to touch students or to embarrass them. Anette DuQuesne was a sixth grade student in Respondent's class during the 1988/89 school year. On one occasion, Respondent directed Anette to remove her jacket when she did not wish to take it off. The jacket did not interfere with her play and she did not wish to remove it since her shirt was too big and she felt she would be exposed. Respondent insisted that she remove her jacket and told her that there was nothing (referring to her breasts) there to see. The comment was made in front of Anette's classmates and embarrassed and angered her. Mike Quintana, Gievan Rodriguez, and Roger Perez were fourth grade students assigned to Respondent's class during the 1988/89 school year. On one occasion, Respondent directed the students, who were engaged in a tug-of-war, to let go of the rope. When the students continued to pull, Respondent went down the rope separating the students from the rope. To accomplish that separation, Respondent struck Mike, Gievan, and Roger in the chest area with his hands, forearms, or elbows. The students were not seriously injured but were hurt to the point of tears by the blows struck by Respondent. The activity described in paragraph 8 occurred after Respondent had been directed for a second time to refrain from touching students. Respondent presented no credible explanation for why it was necessary to separate the students from the rope in such a manner. Respondent admitted that Gievan (who was crying) approached him regarding the incident and complained about being struck by Respondent's elbow. The physical education grounds at Cypress Elementary are immediately adjacent to a Dade County public park. On one occasion, park employees removed a malalucca tree which was next to the park's tennis courts. A backhoe used to pull the tree stump repeatedly came onto school property and crossed the Cypress track. During the tree removal process, Mr. McCauley, a physical education teacher at Cypress Elementary, observed that students from Respondent's class were running the track in an area dangerously close to the backhoe. Mr. McCauley observed that one of Respondent's students dodge the backhoe at a close range. Mr. McCauley advised Respondent of the problem so that he could take corrective measures. Despite being made aware of the dangerous condition, Respondent allowed and, in fact, directed his students (all of whom were elementary school ages) to continue running the track. Respondent's warning to the students (to be aware of the backhoe and to run further in) was inadequate given their ages and the alternatives available to Respondent. After a second warning from Mr. McCauley, Respondent continued to allow his students to run the track. Subsequently, Mr. McCauley reported the incident to a school administrator. Following an investigation of the allegations against him, school officials removed Respondent from Cypress Elementary in April, 1989. Respondent was given a non-student contact assignment at an area office. When his contract with the Board expired in June, 1989, Respondent was not offered a contract for the following school year. Respondent did not intentionally touch female students to make them feel uncomfortable. However, touchings did occur after Respondent was directed to refrain from such conduct. Respondent maintained that pats on the back or shoulder were done out of praise for something well done and that boys and girls were treated similarly. Since June, 1989, Respondent has been self- employed.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Education Practices Commission enter a final order suspending the Respondent's teaching certificate for a period of one year. DONE and ENTERED this 3rd day of August, 1990, in Tallahassee, Leon County, Florida. JOYOUS D. 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 3rd day of August, 1990. APPENDIX TO CASE NO. 90-1391 RULINGS ON THE PROPOSED FINDINDS OF FACT SUBMITTED BY THE COMMISSION: Paragraphs 1 through 4 are accepted. With regard to paragraph 5 it is accepted that the Respondent struck the students. Whether he did so with his hands or his forearms or elbows is unclear; however, the blows were of a sufficient force to cause the students to cry. Paragraph 6 is rejected as irrelevant. Paragraphs 7 through 9 are rejected as recitation of testimony, repetitive, or irrelevant. To the extent that paragraph 10 describes Respondent's admission that he went through the tug-of-war line separating the students off the rope, it is accepted; otherwise rejected as irrelevant. Paragraph 11 is accepted. Paragraph 12 is accepted but is irrelevant. Paragraphs 13 through 15 are accepted. To the extent addressed in findings of fact paragraphs 10 and 11, paragraphs 16 and 17 are accepted; otherwise rejected as irrelevant. Paragraphs 18 and 19 are rejected as argument, comment, or irrelevant. Paragraph 20 is accepted but is irrelevant. To the extent addressed in findings of fact paragraph 7, paragraphs 21 and 22 is accepted; otherwise rejected as irrelevant or recitation of testimony. Paragraph 23 is rejected as not supported by the weight of the evidence. It is accepted that the children complained about Respondent, but it is not found that Respondent committed the acts complained of with an intention to embarrass or disparage the students nor for some other inappropriate purpose. Paragraphs 24 through 27 are accepted but see findings of fact paragraph It is not found that Respondent actually was touching the students in an inappropriate way or for an inappropriate reason; it is not disputed that the students perceived that Respondent was acting inappropriately. The accuracy of those perceptions has not been established by clear and convincing evidence. Paragraph 28 is rejected as irrelevant. The first two sentences of paragraph 29 are accepted; otherwise rejected as irrelevant or hearsay. The last sentence of paragraph 30 is accepted; otherwise rejected as irrelevant. Paragraphs 31 and 32 are accepted. Paragraph 33 accurately recites Dr. Gray's opinion, but is rejected since the factual basis for that opinion has not been established in total, by clear and convincing evidence. Dr. Gray's opinion has been considered to determine a recommendation since the Commission has established by clear and convincing evidence a violation of law or rule. Paragraph 34 is accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT: Paragraph 1 is accepted but is irrelevant. Paragraph 2 is rejected as contrary to the weight of credible evidence. Paragraph 3 is accepted. With the exception of the last sentence which is rejected as contrary to the weight of the evidence, paragraph 4 is accepted. Paragraph 5 is accepted. Paragraph 6 is accepted. COPIES FURNISHED: Karen B. Wilde, Executive Director Education Practices Commission 301 Florida Education Center 325 West Gaines Street Tallahassee, Florida 32399 Martin Schaap, Administrator Professional Practices Services 325 West Gaines Street Room 352 Tallahassee, Florida 32399 Craig R. Wilson Suite 315 1201 U.S. Highway 1 North Palm Beach, Florida 33408-3581 William DuFresne DuFRESNE AND BRADLEY 2929 S.W. Third Avenue, Suite One Miami, Florida 33129
The Issue The issues presented are whether Respondent, Smallwood Design Group/Smallwood Landscape, Inc. (Smallwood or the company), owes Petitioner $12,817.17 for agricultural products and, if so, whether the surety is liable for any deficiency.
Findings Of Fact Petitioner is a Florida corporation licensed by the Department as a “dealer in agricultural products,” within the meaning of Subsection 604.15(2), Florida Statutes (2006) (agricultural dealer).1 The license number and business address of Petitioner are 68954 and 3930 14th Street North, Naples, Florida 34103. Smallwood is a Florida corporation licensed by the Department as an agricultural dealer pursuant to license number 68513. The sole shareholder and registered agent for Smallwood is Ms. JoAnn Smallwood. The business address for Smallwood is 2010 Orange Blossom Drive, Naples, Florida 34109. Hartford Fire Insurance Company (Hartford) is the surety for Smallwood pursuant to bond number 21BSBCI1473 issued in the amount of $100,000 (the bond). The term of the bond is December 9, 2005, through December 9, 2006. Petitioner conducts a garden center business that, in relevant part, sells agricultural products, defined in Subsection 604.15(1). Petitioner sells products at wholesale and retail to businesses and consumers in the Naples area. Smallwood purchased agricultural products from Petitioner from 1983 until sometime in 2006. The purchases were made in the ordinary course of Smallwood's architectural landscape construction and horticultural management business (landscape business). The terms of purchase required payment from Smallwood within 30 days. Any monthly balance that remained unpaid after 45 days was subject to interest at a monthly rate of 1.5 percent and an annual rate of 18 percent.2 With one exception, Smallwood paid Petitioner within 60 days of delivery. The exception to Smallwood's payment history with Petitioner is the subject of this proceeding. From May 11 through September 26, 2006, Smallwood did not pay Petitioner $12,817.17 for 66 invoices involving 440 items (pallets or pieces) of sod that Petitioner delivered to Smallwood.3 The sod consisted of varieties identified in the record as: Floratam, Seville, Zoysia, Croton, and Fountain Grass.4 Smallwood does not deny that Petitioner should be paid $12,817.17. However, Smallwood alleges that Petitioner has filed its claim against the wrong party. Smallwood alleges that, on June 13, 2006, another corporation purchased the assets of Smallwood, including the right to conduct the landscape business in the name of Smallwood, and assumed Smallwood's liability to Petitioner for any prior purchases. Subsequent purchases are allegedly the obligation of the successor corporation. Ms. Smallwood filed a Response to Amended Claim with the Department on January 7, 2007 (the Response). The Response identifies the successor corporation as Spartan Partners, Inc., an Illinois corporation, located at 350 Pfingsten Road, Suite 109, Northbrook, Illinois 60062 (Spartan), and alleges that Petitioner’s claim is not valid because: [Smallwood] sold its assets and has not been engaged in business since June 13, 2006. Specifically, pursuant to an Asset Purchase Agreement, [Smallwood] sold its assets (including its name) to Spartan . . . , and thereafter, Spartan continued operating the business for a period of time and then sold some of the assets and ceased operations. (emphasis supplied) Smallwood . . . does not have knowledge of the accounts of Spartan, which continued doing business under the Smallwood name after the sale of assets on June 13, 2006. If items purchased from [Petitioner] have not been paid for, Spartan is the responsible and liable party. (emphasis supplied) The Response filed in January of 2007 was not the first time Petitioner had seen the Smallwood defense. Smallwood sent Petitioner a form letter, dated September 14, 2006, that: contained a salutation addressing “All Vendors of [Smallwood],” referenced the "Termination of Credit Arrangements and Guaranties," and was signed by Ms. Smallwood on behalf of Smallwood (notice letter). The notice letter provided in relevant part: The purpose of this letter is to advise you that the assets of [Smallwood], including the company name, were sold to Spartan . . . as of June 13, 2006. Since [Smallwood] sold all of its assets, that corporate entity is no longer actively engaged in any business. The business known as [Smallwood] is now conducted by [Spartan]. (emphasis supplied) As a result of the sale of assets and the fact that [Smallwood] is no longer actively engaged in business, the relationship or agreement you had with that particular corporate entity is hereby terminated and of no further force and effect. If you are continuing to do business with [Spartan], you should, if you have not done so already, make or confirm your business arrangements with that entity. Furthermore, if I signed any document that could be construed as a personal guaranty of payment for any obligations of [Smallwood], please consider this letter to be a formal revocation, cancellation and termination of any such document. (emphasis supplied) Petitioner's Exhibit 3 (P-3). Part of the Smallwood defense is supported by the evidence. Smallwood did sell its assets to Spartan. The Asset Purchase Agreement between Smallwood and Spartan was admitted into evidence as Petitioner’s Exhibit 2 (P-2). The Agreement shows that Spartan purchased the assets of Smallwood on June 13, 2006, for $1.030 million, of which $883,602.11 was allocated to accounts receivable due the seller. The seller is identified in the Asset Purchase Agreement as Ms. Smallwood and the company. The seller received $895,500.00 in cash at the closing. The remaining part of the Smallwood defense involves two allegations. First, Smallwood alleges that Spartan assumed a liability of $3,834.43 for 23 purchases of sod by Smallwood from May 11 through June 13, 2006. Second, Smallwood alleges that Spartan owes Petitioner $8,982.74 for 43 purchases of sod from June 14 through September 26, 2006. If the evidence were to support both allegations, the result may effectively deprive Petitioner of an administrative remedy. The corporate documents attached to the Asset Purchase Agreement do not show that Spartan complied with the bond and license requirements in Subsection 604.19 prior to conducting the landscape business in the name of Smallwood. Spartan sold the assets needed to satisfy a judgment against Spartan, Spartan is a foreign corporation, and Spartan no longer conducts the landscape business in Florida. It would be unnecessary to determine whether Smallwood or Spartan is liable for the $12,817.17 if: the terms of the bond were to allow an assignment of the bond to Spartan, and the Asset Purchase Agreement were to show that the bond was one of the contracts assigned to Spartan or one of the assets purchased by Spartan. The bond would cover both Smallwood and Spartan in such a case, and a determination of which shell hid the proverbial pea would be moot. A copy of the bond did not find its way into the record. Petitioner did not submit a copy of the bond for admission into evidence, and the Department did not transmit a copy of the bond when the agency referred the matter to DOAH. The copy of the Asset Purchase Agreement admitted into evidence does not include a schedule of the contracts assigned to Spartan or a schedule of the assets sold to Spartan. A finding that Spartan expressly assumed Smallwood's liability to pay Petitioner $3,834.43 for sod delivered from May 11 through June 13, 2006, is not supported by the evidence. In relevant part, the Asset Purchase Agreement provides: At Closing, Purchaser shall assume those liabilities of Company specifically defined and listed on the Schedule 1.6(b) attached hereto (“Assumed Liabilities”), and Purchaser shall not assume, incur, guarantee, or be otherwise obligated with respect to any liability whatsoever of Company other than as so stated. . . . (emphasis not supplied) Purchaser shall cause Stockholder [Ms. Smallwood] to be released as guarantor or obligor under the Assumed Liabilities. . . . P-2 at 2. Schedule 1.6(b) is missing from the copy of the Asset Purchase Agreement that was admitted into evidence. Even if a complete exhibit were to show that Spartan assumed Smallwood's liability to Petitioner, neither of the respondents submitted evidence or cited legal authority to support a finding that such an assumption released Smallwood from its obligation to Petitioner or otherwise extinguished that obligation. Nor is there any evidence that Petitioner acquiesced in an assumption by Spartan or otherwise released Smallwood from the obligation to pay Petitioner for sod delivered prior to June 13, 2006. The remaining allegation in the Smallwood defense is that Spartan, rather than Smallwood, purchased the sod Petitioner delivered between June 13 and September 26, 2006. It allegedly is Spartan that owes Petitioner $8,982.74. The remaining allegation implicitly argues that, after June 13, 2006, Smallwood was no longer a viable corporation with the legal capacity to purchase sod from Petitioner because the asset sale resulted in what courts describe as a “de facto merger” of Smallwood into Spartan or a “mere continuation of business” by Spartan. The law pertaining to these two doctrines is discussed in the Conclusions of Law, but certain factual findings are relevant to both doctrines. The Smallwood defense is a mutation of the doctrines of "de facto merger" and "mere continuation of business," either of which have been utilized by courts to hold a successor corporation liable for the obligations of the corporate predecessor. The Smallwood defense takes the relevant judicial doctrines a step further. The defense implicitly assumes that if a "de facto merger" or "mere continuation of business" occurred as a result of the asset sale, Smallwood "merged" into Spartan, and Smallwood was no longer a viable corporate entity with the legal capacity to purchase sod from Petitioner. Two facts preclude the application of either judicial doctrine to the sale of Smallwood's assets. First, there is no commonality or continuity of ownership interests between Smallwood and Spartan. Spartan did not acquire some or all of the stock of Smallwood, and Ms. Smallwood did not become a shareholder in Spartan. The two corporations do not share common directors or officers. The second fact involves the purchase price paid for the Smallwood assets. The purchase price does not suggest a cozy relationship between Smallwood and Spartan that otherwise may have persuaded a court to disregard the separate corporate existence of Smallwood after the asset-sale. No evidence suggests that the price paid was not the fair market value of the Smallwood assets negotiated at arms length between a willing buyer and a willing seller. Smallwood remained in existence as a viable Florida corporation after the asset-sale on June 13, 2006. No legal impediment prevented Smallwood from purchasing sod from Petitioner, and Smallwood had the legal capacity to do so. The purchases may have breached the terms of the Asset Purchase Agreement, but the legal capacity of Smallwood to purchase sod from Petitioner is not driven by contractual arrangements between Smallwood and private third parties. Smallwood remained in existence as a Florida corporation at least through January 7, 2007, when Ms. Smallwood filed the Response with the Department. The Response does not allege as a factual matter that Smallwood had been liquidated and was no longer in existence as a Florida corporation; or that the $895,500 the seller received for the sale of assets was not in corporate solution and available to pay invoices submitted by Petitioner. The Response merely states that Smallwood was not actively engaged in the conduct of business. Smallwood was actively engaged in the landscape business after June 13, 2006. Smallwood maintained its customary banking account; continued to issue checks imprinted with the company name; paid Petitioner for goods that Petitioner delivered to Smallwood before May 11, 2006; accepted without objection or disclaimer 43 invoices totaling $8,982.74 that were billed to the company for sod delivered to the company at the company's business address; issued the notice letter to its creditors; and purported to terminate credit agreements and guarantees. Prior to receiving the notice letter, Petitioner had no reason to believe that Smallwood was not conducting the landscape business. The face of Smallwood remained unchanged. Ms. Smallwood continued to operate the landscape business pursuant to a long-term employment contract with Spartan. Spartan signed Mr. Keith Whipple, another key employee of Smallwood, to a similar contract. Copies of the employment contracts are attached to the Asset Purchase Agreement.5 Between June 13 and September 14, 2006, Ms. Smallwood continued to sign Smallwood checks imprinted with the company name and issued on the Smallwood business account. Ms. Smallwood signed the checks as the authorized representative of Smallwood. Smallwood accepted 35 invoices issued to the company for $7,007.13 and deliveries of the sod at the company's customary business address. The notice letter was dated September 14, 2006, but Petitioner received the letter on or about September 26, 2006. Between September 14 and 26, 2006, Smallwood accepted eight invoices for sod purchased for $1,975.61. The evidence does not show when Smallwood actually mailed the notice letter, and Petitioner did not stamp the notice letter with the date it was received. The chief operating officer for Petitioner testified at the hearing but does not recall the date Petitioner actually received the notice letter. However, the witness testified that Petitioner stopped all sales to Smallwood immediately upon receipt of the notice letter to allow time for Petitioner to complete a credit check of Spartan. The trier of fact finds the relevant testimony to be credible and persuasive. The failure to timely disclose the identity of Spartan as a successor entity operating in the name of Smallwood misled Petitioner, if not other creditors.6 Between June 13 and September 26, 2006, Petitioner extended credit for purchases of $8,982.74 before Petitioner had the opportunity to ensure the credit worthiness of Spartan and, if desired, to obtain a written guarantee from the individual officers and shareholders.7 Smallwood, rather than Spartan, purchased sod from Petitioner from May 11 through September 26, 2006. Smallwood owes Petitioner $12,817.17. Hartford does not claim that the terms of the bond do not ensure payment of the purchases made by Smallwood. Hartford’s sole objection in its PRO is that the bond proceeds must be paid directly to the Department rather than to Petitioner. Hartford correctly cites Subsection 604.21(8) in support of its objection.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order directing Smallwood to pay $12,817.17 to Petitioner, and, in accordance with Subsection 604.21(8), requiring Hartford to pay over to the Department any amount not paid by Smallwood. DONE AND ENTERED this 15th day of August, 2007, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 15th day of August, 2007.
Findings Of Fact The dredge/fill project sought to be permitted involves a proposed residential lot located on Lake Padgett in Pasco County. The tract is also adjacent to a canal dug by the Applicant and his father. The Applicant, Michael Millen, acquired this property from his father, Otis Millen, who continues to own other property in this area. Petitioner is an adjoining landowner, and also acquired his property from Otis Millen. DER prematurely issued the proposed permit 1/ on August 9, 1984. If reissued, this permit would allow the Applicant to develop a residential lot by filling a portion of a cypress swamp and creating compensating wetland elsewhere on his property. Additionally, the Applicant agrees to dedicate a three acre "conservation easement" and to install a culvert to improve drainage. The advantages of this project include the creation of a homesite where none is available now, acquisition by the State of three acres of dedicated wetland (conservation easement) and improved drainage through the culvert installation. There would be no net loss in cypress swamp area. The disadvantages include temporary turbidity in surrounding waters and some tree removal in the construction area. The Applicant would replace any trees removed through replanting. The Applicant also seeks permits to build a "summer kitchen" over jurisdictional wetlands and to fill the lakefront area with white sand. These "add-on" permit requests are not properly a part of this proceeding, however, and were not contemplated in the application at issue here. DER's expert witness gave only limited testimony on their feasibility during the rebuttal phase of this hearing. Petitioner has raised numerous objections to all the proposed projects, but principally to the one at issue here. He was not notified of DER's intent to grant the dredge and fill permit, and became aware of the project only after he observed construction activity. It was determined that DER had failed to notify him through an oversight of that agency or the Applicant. Petitioner points out that lot development is not being done in accordance with the (proposed) permit. He noted that trees have been cut down, fill was dumped in the canal and work on canal banks was taking place, all in contravention of permit conditions. Petitioner believes DER has acted improperly in tolerating the Applicant's unpermitted construction activity. To support this charge, he called as a witness a neighbor who had placed white sand on his lakefront property, but was required to remove it by DER enforcement personnel. The Applicant, on the other hand, has placed white sand on his beachfront property without a permit, and DER is assisting him in obtaining an after the-fact permit. Petitioner proved, through a series of aerial photographs, and the testimony of both expert and lay witnesses, that the canal which separates his lot from the Millen properties was constructed between 1976 and 1977. DER had jurisdiction at that time, 2/ but no permit was ever sought or obtained. The canal was dug as a "joint venture" of the Applicant and his father. It connects Lake Padgett with a drainage pond several hundred feet behind the lake. This canal has changed area drainage causing one nearby resident to experience periodic property flooding as a result. Prior to the canal's construction, a small drainage ditch with an earthen or cement dam did exist in the general area. However, the canal construction removed the dam and greatly enlarged the size and capacity of the previous ditch. Expert interpretation of aerial photographs revealed that a substantial number of mature cypress trees were removed in conjunction with the Millens' canal project. Some cypress trees were also cut for the recent (unpermitted) construction of the "summer kitchen" by the Applicant. He also constructed a dock which was later determined to be exempt by DER. Again, the Applicant had not obtained DER approval for the dock and had, in fact, been advised to stop construction until a determination of permitting requirements, if any, was made. Petitioner attempted to show a conflict of interest within DER. However, the fact that one DER field representative knew Otis Millen did not demonstrate such a conflict. Rather, DER's enforcement policies have been lax or inconsistent primarily due to a shortage of field personnel.
Recommendation From the foregoing, it is RECOMMENDED: That the Department of Environmental Regulation reissue Permit No. 510852383 to Michael A. Millen. DONE and ENTERED this 24th day of September, 1985 in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of September, 1985.
The Issue The issue for consideration in this case is whether the Respondent's license as a certified general contractor in Florida should be disciplined because of the alleged misconduct outlined in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the allegations contained herein, the Petitioner, Construction Industry Licensing Board was the state agency responsible for the licensing and regulation of construction contractors in this state. Respondent, Frank W. Miller, was licensed as a certified general contractor in Florida under License No. CG C036176. On June 2, 1988, Lots of Casey Key, Inc., a group of investors and contractors, including the Respondent, purchased the land in question located in Sarasota County, Florida. On June 26, 1988, the group hired an environmentalist from a list provided by the county, who evaluated the property with a view toward development. The developers also hired a surveyor and an engineer to get the proper permits for the development. They also published all required notices and acquired at least some of the required permits for the initial stage of the development. This consisted of the construction of a fishing pier extending from the property into Sarasota Bay. This permit was taken out by the Respondent. The Respondent and his associates also contacted Robert B. Patten, an environmental consultant, with a view toward having the eight acres in question rezoned so that houses could be built on it. After examining the property, however, Mr. Patten advised Respondent there were so many protected mangroves on the property, both state and local permits would be required and he, Patten, was not interested in the job. He suggested that Respondent hire an attorney to insure the proper permits were obtained. Respondent claims that in January of 1989, he took his site drawing for the proposed development to the county natural resources office headed by Mr. McCarthy, told him what was planned at the property, and secured his approval. Mr. McCarthy was not called as a witness, and all the appropriate permits were not offered, so at most it can be found that McCarthy approved the concept of the activity in principle. At approximately this same time, the environmentalist the group hired to insure compliance with the environmental requirements purportedly also assured them that the proposal was environmentally sound and properly permitted. It is accepted that he did. As a result, the group acquired the state and county permit for the pier and, in addition, a permit to clear the uplands. They also procured a permit from the Southwest Florida Water Management District and the appropriate agency governing the construction and installation of utilities. In addition, the Respondent procured a permit allowing construction of a boardwalk and a seawall. He did not, however, procure the appropriate permit to allow him to cut, trim, or top mangroves in the numbers shown here. The group hired Southern Landscaping to do all the land work under a contract which called for all mangrove trimming to be done in accordance with the Division of Natural Resources rules This company, which was the low bidder in the procurement process, was relied on to trim the mangroves in accordance with the law and before beginning work, showed how the trees would be trimmed. It appeared to Respondent at this time that the work was being and would be done properly. On March 10, 1989, Belinda S. Perry, an employee of the county's Natural Resources Department, was out on Casey Key and observed that at the Respondent's work site clearing work was being done. She questioned the permitability of this work. She also observed that the mangroves on the north side of the property had been improperly cut, and she asked her associate, Mr. McCarthy, to check it out. He did and thereafter, on March 14, 1989, Respondent came to the office with a copy of his state-issued permit. After analyzing the permit and comparing the work done with the terms thereof, Ms. Perry and Mr. McCarthy advised Respondent it appeared his work was in excess of the limits imposed by his permit and that they would have to notify state authorities and get back to him. At that time, Respondent was cooperative and indicated he wanted to get the proper authorization. As a result, Ms. Perry contacted Ms. Toledo, of the Department of Environmental Regulation, discussed the possible violation with her, and arranged to visit the site with her on March 20, 1989. When they did, Ms. Perry again observed the cutting on the North side of the property in addition to which there was a corridor which had been cut to the east (water) side of the property heading toward the bay. At that point, they contacted Mr. McClintock, the forester, who examined the Respondent's permit. When he saw it permitted only the relocation of 20 palm trees and made no mention of or gave no approval of cutting or trimming of mangroves, he authorized the issuance of a stop work order on March 20, 1989. Ms. Perry and Ms. Toledo, pursuant to the terms of that order, served a copy on Mr. Miller and advised him he was in violation of both state and county regulations and should discontinue the work at the site. Ms. Toledo recalls that when she visited the site on March 20, 1989, she observed much the same situation as described by Ms. Perry. She also recognizes that one of Respondent's permits allowed the moving of palms, and he also had one for the construction of a fishing pier. As a part of this second permit, Respondent was allowed to cut mangroves. Nonetheless, she noted on her visit that in the area to the left of the pathway, many more mangroves had been cut than were allowed by the permit. This cutting was in the form of trimming in excess of any exemption criteria outlined in Rule 17-27.060, F.A.C., (17- 321.060), which allows trimming by a property owner without a permit, but of no more than 25 % of the lateral branches. The red mangroves on the property had been topped which is totally prohibited, and the trimming of the remaining white and black mangroves was to an extent in excess of the permitted 25%. At that time, Mr. Miller indicated to Ms. Toledo that he was the general contractor in charge of the site, and the workers doing the actual trimming were operating under his direction. This is corroborated by the testimony of Mr. Boatright, one of the trimmers, who indicates much the same. At that time, in Ms. Toledo's opinion, Mr. Miller was uncooperative and aggressive and as a result, on March 31, 1989, she drafted a warning notice which was issued on April 3, 1989. On that latter date, Ms. Toledo again went to the site and saw that additional and different mangroves had been trimmed in excess of the exemption criteria mentioned above. Thereafter, on April 7, 1989, she had a telephone conversation with the Respondent during which she advised him that the Department of Environmental Regulation intended to file criminal and civil charges against Lots of Casey Key, Inc. because of the violations described. At that time, Respondent expressed his regret that the situation had happened. As a result of the visits by Ms. Toledo and Ms. Perry, in late March or early April, 1989, Steven T. Cooley, environmental prosecutor for the 15th Judicial Circuit of Florida, was notified through the Sarasota County Sheriff's Department and Division of Natural Resources that there was significant damage to a mangrove forest at Lots of Casey Key. Mr. Cooley conducted an extensive investigation into the matter and caused a collateral criminal investigation to be conducted as well, and as a result of these inquiries, decided to file criminal charges against Mr. Miller and a co-defendant, Mr. Burke. This decision was based on the investigation which revealed that the county's tree protection ordinance, Ordinance 83-44, which included mangroves among the protected species, had been violated. It appeared that Respondent and Mr. Burke had hired subcontractors who committed a significant cutting, (trimming, topping and stumping) of more than 2000 mature trees. The Respondent and Burke were contacted by code enforcement people, (Perry and Toledo), and advised to stop. Nonetheless, additional damage was done after the notice to stop and a Stop Order was thereafter issued. Respondent had a permit to cut mangroves in a corridor area out to the fishing pier, but the actual cutting far exceeded the terms of the permit. The first cutting was a thinning out of mangroves around Casey Key, which, in itself, was a violation, and even after the Respondent was informed he was in violation, he improperly cut more trees. Not all trees were cut down to the ground, but many of those which were illegally trimmed were trimmed to a point where the tree would ultimately die. This was verified by county tree experts. Mr. Cooley filed criminal charges against the Respondent rather than the actual workers who did the cutting because, in his opinion and as a result of his investigation, the workers were merely agents working under the direction of the Respondent. Mr. Miller originally pleaded Not Guilty to the charges against him but subsequently, on June 25, 1990, changed his plea to Guilty. At a sentencing hearing held in December, 1990, adjudication of guilt was withheld, and Mr. Miller was fined a total of $15,000.00; ordered to perform 500 hours of public service, and ordered to spend 10 weekends on the road gang. In addition to the criminal charges, a civil suit was filed by the county against Lots of Casey Key, Inc., to prevent additional cutting of mangroves. By stipulation, a temporary injunction was entered. Trial on the permanent injunction had not been held at time of hearing. According to Mr. McClintock, a sampling taken on March 22, 1989, after the stop work order was approved, showed approximately 2175 mangrove trees had been severely cut on the northern side of the property and between 75 and 100 cut down to the ground in the corridor on which the pathway to the fishing pier was to be constructed. This accounted for a total of 2275 trees. When he went back to the property on March 30, 1989, after the stop work order had been issued, McClintock observed that while cutting was no longer in progress, an additional cutting had taken place, and he counted approximately 78 additional trees which had been destroyed. He later verified that additional trees were cut in the corridor area as well. Taken together, a total of approximately 2350 trees were improperly cut in violation of the state and county codes protecting mangroves. This destruction is the largest in the recollection of Norman C. Easey, the Director of the county's forestry division, and it constituted a serious impact on what was then the largest single mangrove stand in the southern part of Sarasota County. Respondent does not deny that the trees were cut. He notes, however, that after Ms. Perry first came out and advised him of the possibility he was in violation, he agreed not to cut further and in fact, tried to cooperate. He met with his associates who encouraged him to nonetheless continue the cutting even though he advised against it. Ultimately he was able to convince them. An associate, Norman Sharrit, the architect for the project, recalls that Respondent spontaneously exclaimed to him that Burke and Jaffe, the other partners, directed the additional cutting after the stop work order was issued. Nonetheless, after securing his associates' agreement to suspend any cutting, Respondent attempted to contact the trimmers, Southern Landscaping, to advise them to stop work but claims he could never find anyone on site. In this claim, he is supported by Davis Baker, an adjacent retired homeowner, who, in observing the clearing process on a daily basis, noticed that the cutters kept very irregular hours and were gone as often as not. Respondent also claims he left word for the cutters to stop on the company's answering machine but the work continued. It is this additional work, after Respondent's efforts to get the work stopped, that constituted the additional cutting charged. Respondent also claims that the additional trees near the walkway were cut as activity beyond the scope of the contract which he had entered into with the landscape company. Mr. Miller also contends that the work was not done under his license because he was not an owner of Casey Key Estates. The owners of that company, the parent company for development, were Mr. Burke and Mr. Jaffe. He was, however, the Secretary of the corporation, but claims he did not have complete control as to who did what and where. He claims he was not a stockholder in the company and had no ownership in the operation. Under the terms of his agreement with the owners, he was to get a percentage of the profits when the development was completed. As of the date of the hearing, he has received nothing in the way of remuneration. Except for the claim that the work was not done under his license, it is so found. He also claims that in the instant case he was not acting as a contractor for the project. His reasoning here is not supported by the facts. His relationship with the other developers was based on the fact that he obtained the option to purchase the land; he was to put in the utilities; and he was to build the homes and construct the walk over to the beach and the seawall. He also was the one who obtained all permits and who entered into the contract for trimming with Southern Landscaping. It is found, therefore, that he was, in fact, the general contractor for this project and ultimately responsible for all actions taken under his certificate. Mr. Miller cites in his defense that as he understands the law, mangroves can be trimmed without a permit between October and March, up to 25% of the lateral growth, and in his opinion, the trimming did not constitute more than that allowable 25%. This is clearly not so, as evaluation of the Petitioner's photographs, taken near the time in question, which Respondent agrees fairly represents the site at the time, clearly indicates that more than 25% of the lateral growth of the trees' foliage was taken off. It should be noted, however, that a photograph taken some substantial time after the cutting shows that the trimmed area is filling in again and the trees are not dead. This does not mean there was no damage, however. Mr. Easely, the Director of Forestry, whose expertise indicates a reliable opinion, opined that the mangroves are not as healthy as they should be. Once cut, they are going through a period of shock and are branching out from reserve buds developed by the tree for emergency situations such as fire and damage. The tree, once in this condition, has a much shorter life span. Though new trees may, and probably will come in, there is a loss of habitat in the a rea as a result of the trimming, of some 30 to 40 years. In any case, minimization of damage does not excuse or justify prohibited trimming.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Respondent, Frank W. Miller's certification as a General contractor be suspended for three years, with the execution of the last two years of the suspension stayed under such terms and conditions as prescribed by the Construction Industry Licensing Board, and that he pay an administrative fine of $5,000.00. RECOMMENDED this 8th day of April, 1991, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of April, 1991. COPIES FURNISHED: Robert B. Jurand, Esquire Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Frank W. Miller 20 Dover Drive Englewood, Florida 34223 Jack McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Daniel O'Brien Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202
The Issue The issues in this bid protest are whether Respondent's preliminary decision to award low-income housing tax credits to Intervenor should be implemented, notwithstanding the fact that, unbeknownst to Respondent during the evaluation and scoring of the competing applications, Intervenor's application contained a material misrepresentation about a transit service, which Intervenor urges is a minor irregularity that can be waived; and, if the preliminary decision is set aside, whether Respondent should award the credits to Petitioner, who is next in line, but whose application, Intervenor alleges, contains material deviations from the specifications that render it nonresponsive.
Findings Of Fact Respondent Florida Housing Finance Corporation ("FHFC") is the housing credit agency for the state of Florida whose responsibilities include the awarding of low-income housing tax credits, which developers use to finance the construction of affordable housing. Tax credits are made available annually pursuant to a competitive cycle that starts with FHFC's issuance of a Request for Applications. On November 21, 2014, FHFC issued Request for Applications 2014-115 (the "RFA"), whose full title——"Housing Credit Financing for Affordable Housing Developments Located in Broward, Duval, Hillsborough, Orange, Palm Beach, and Pinellas Counties"——generally describes the developments for which FHFC expects to award tax credits totaling up to approximately $15.5 million to selected applicants proposing to construct such projects in accordance with the specifications of the RFA, FHFC's generally applicable standards, and all other governing laws. Applications were due on February 3, 2015. Applicants were required to make a commitment to serve one of several populations: Family, Elderly, or Homeless. Under the selection process that the RFA prescribes, only one project targeted for either the Family or Elderly population in Duval County will be selected for funding. The dispute in this case arises from FHFC's preliminary decision regarding the award of credits for the Duval County development intended to serve the Family or Elderly demographic. Petitioner Houston Street Manor Limited Partnership ("Houston Street") and Intervenor Powers Avenue Senior Apartments, Ltd., d/b/a Pine Grove Senior Apartments ("Pine Grove") each timely submitted an application proposing to build affordable housing for elderly residents in Duval County, making them direct competitors for the sole award available for such a project. The RFA provided that applications would be evaluated and scored by a committee, with the scoring to be based on "Mandatory Items" and "Point Items" identified in a table included in the RFA. Upon completing its evaluation, the committee was required to list the eligible applications in order from highest total score to lowest total score, and to make a recommendation to FHFC's Board of Directors. In theory, the award should go to the applicant with the highest score. Because of the likelihood, however, that multiple applications will get perfect scores——as it happened, all 49 of the eligible applications in the Family or Elderly Demographic Commitment category received the maximum score of 23 points——the RFA established a sequence of six tiebreakers, the sixth being a lottery, with the award falling to the application having the lowest, randomly assigned lottery number. Knowledgeable developers understood that, in practice, most of the successful applications would be lottery winners owing their selection largely to luck. It is therefore not surprising that all eight eligible applications proposing to serve the Family or Elderly population in Duval County received the full 23 points. None of the first five tiebreakers separated these applications, which forced a lottery. Pine Grove had the lowest lottery number (14), followed by Houston Street Manor (25). Thus, Pine Grove was chosen for preliminary funding, as FHFC announced on May 8, 2015. The RFA specifies two Point Items in the Family or Elderly Demographic Commitment category. One Point Item is "Local Government Contributions," for which a maximum of 5.0 points could be awarded. The other is "Proximity to Transit and Community Services," which was worth a maximum of 18 "proximity points." To be considered eligible for funding, an applicant needed to receive at least 10.25 proximity points, including a minimum of 2.0 points for Transit Services.1/ Significantly, an applicant who earned 12.25 or more proximity points would be given the maximum Total Proximity Score of 18. Thus, to be eligible an applicant needed to qualify for a Transit Service Score of at least 2.0 plus win 8.25 additional proximity points; to be competitive, however, it had to win at least 10.25 additional proximity points, to "bump up" to 18. During the evaluation and scoring, Pine Grove received a Transit Service Score of 5.0, which, together with the 9.5 proximity points that Pine Grove earned for its proximity to other community services, gave Pine Grove a raw score of 14.5 and, consequently, a Total Proximity Score of 18——the maximum. Pine Grove's Transit Service Score, however, was based upon a representation of material fact that——it is undisputed——was not correct. To understand the problem requires a more detailed explanation of the Transit Services criteria. The RFA required an applicant to select one——and only one——Transit Service upon which its Transit Service Score would be based. The category of Transit Services comprises five specifically defined services divided into three subgroups as follows: (1) Private Transportation — 2 points; (2) Public Bus Stop – maximum 2 points; and (3) Public Bus Transfer Stop; Public Bus Rapid Transit Stop; or Public Rail Station — maximum 6 points. The services relevant to this case are Public Bus Stop and Public Bus Transfer Stop. The RFA defines Public Bus Stop in relevant part as follows: Public Bus Stop means a fixed location at which passengers may access one or two routes of public transportation via buses. The Public Bus Stop must service at least one bus route with scheduled stops at least hourly during the times of 7am to 9am and also during the times of 4pm to 6pm Monday through Friday, excluding holidays, on a year-round basis. RFA at 21. The pertinent provisions of the definition of Public Bus Transfer Stop provide as follows: Public Bus Transfer Stop means a fixed location at which passengers may access at least three routes of public transportation via buses. Each qualifying route must have a scheduled stop at the Public Bus Transfer Stop at least hourly during the times of 7am to 9am and also during the times of 4pm to 6pm Monday through Friday, excluding holidays, on a year-round basis. This would include both bus stations (i.e., hubs) and bus stops with multiple routes. RFA at 21. The number of proximity points that would be awarded for a Public Bus Stop or a Public Bus Transfer Stop, if an applicant chose one or the other as the sole service upon which its Transit Service Score would be based, was not committed to the discretion of the evaluators. Rather, the RFA prescribes the precise number of points to be assigned, based on an objective criterion, namely the distance in miles between the proposed development and the particular service. Thus, a Public Bus Stop would be scored as follows: RFA at 24. A Public Bus Transfer Stop, in contrast, would be awarded points pursuant to the following schedule: RFA at 25. The RFA required applicants to attach to their applications a Surveyor Certification Form completed and signed by a licensed surveyor. On this form, the surveyor must state the latitude and longitude coordinates for, among other things, the selected Transit Service, e.g., Public Bus Stop or Public Bus Transfer Stop, together with the distance in miles between such service and the proposed development. By signing the form, the surveyor declares, under penalties of perjury, "that the foregoing statement is true and correct." RFA at 86. Pine Grove submitted a Surveyor Certification Form which identified a Public Bus Transfer Stop as its Transit Service: Joint Ex. 3 at 52 of 101. Because the distance between this service and the proposed development was stated to be 0.55 miles, Pine Grove received 5.0 proximity points pursuant to the schedule reproduced above. The site whose coordinates are shown in Pine Grove's Surveyor Certification Form is, in fact, a bus stop, which the Jacksonville Transportation Authority ("JTA") refers to as Stop #4203. But, as the parties have stipulated, only two routes serve Stop #4203 during the morning and afternoon rush hours. Consequently, contrary to the representation in Pine Grove's application, Stop #4203 is not a Public Bus Transfer Stop as that term is defined in the RFA, but a less-prized Public Bus Stop. Houston Street raised this issue as a protest ground in its formal petition challenging the proposed award to Pine Grove. During discovery, Pine Grove confessed error and admitted that Stop #4203 is only a Public Bus Stop, not a Public Bus Transfer Stop. Thereafter, FHFC announced that it would side with Houston Street in arguing that Pine Grove's application must be rejected as ineligible since Stop #4203, as a Public Bus Stop greater than 0.30 miles from the proposed development, earns just 0.0 points under the applicable scoring schedule——2.0 points less than the Required Minimum Transit Service Score of 2.0. Pine Grove would be dead in the water at this point but for an unlikely, yet undisputed, factual twist. It turns out that JTA Stop #1397, which is located 0.48 miles from Pine Grove's proposed development, happens to qualify as a Public Bus Transfer Stop. Had Pine Grove identified Stop #1397 as its Transit Service, it legitimately would have been entitled to 5.5 points. In other words, Pine Grove could have offered an actual Public Bus Transfer Stop that is closer to its proposed development than Stop #4203 (and thus more valuable in terms of proximity points), but instead it identified a Public Bus Stop—— which it misrepresented as a Public Bus Transfer Stop——that was worth less in proximity points than Stop #1397 even if it truly were a Public Bus Transfer Stop, and is worthless as the Public Bus Stop it truly is. Houston Street and FHFC have framed their objection to Pine Grove's application in terms of responsiveness, contending that Pine Grove's failure to identify a Transit Service eligible for at least the Required Minimum Transit Service Score is a material deviation that the agency cannot waive. This has opened the door to Pine Grove's argument that falsely describing Stop #4203 in its Surveyor Certification Form as a Public Bus Transfer Stop worth 5.0 proximity points should be deemed a minor irregularity given the existence of Stop #1397, which everyone agrees is a Public Bus Transfer Stop that would have been worth 5.5 proximity points to Pine Grove, had Pine Grove relied upon Stop #1397. Pine Grove's position is part "no competitive advantage" (as indeed citing Stop #4203 was not advantageous in light of the superior alternative) and part "no harm, no foul." Before examining the questions of whether Pine Grove's designating Stop #4203 as its Transit Service was a deviation from the specifications and, if so, whether such a lack of responsiveness should be considered a material deviation or a minor irregularity, the undersigned wants to mention a point that the parties have not raised, but which nevertheless warrants consideration. Preliminarily, though, the undersigned stresses that no allegation was made, no evidence was received, and no finding is being made that Pine Grove intended to deceive FHFC by holding out Stop #4203 as a Public Bus Transfer Stop. Rather, although there is no direct evidence in the record, the logical and reasonable inference based on the circumstances is that Pine Grove simply made an unfortunate and costly mistake in failing timely to discover that Stop #4203 does not qualify as a Public Bus Transfer Stop, as Pine Grove honestly had believed. That said, by identifying Stop #4203 in its Surveyor Certification Form as a Public Bus Transfer Stop, Pine Grove unequivocally represented that the material facts concerning this particular stop satisfied the RFA's definition of a Public Bus Transfer Stop——and they did not. Not to put too fine a point on it, the representation that Stop #4203 is a Public Bus Transfer Stop was a false statement of material fact——objective fact at that, not ultimate fact involving the exercise of discretion or judgment, and not opinion. To be sure, this material misrepresentation was not intentionally false. But it was false. Like all applicants, Pine Grove was required to submit with its application a fully executed Applicant Certification and Acknowledgment Form. Among the statements therein whose truth Pine Grove confirmed is the following: In eliciting information from third parties required by and/or included in this application, the Applicant has provided such parties information that accurately describes the Development as proposed in this Application. The Applicant has reviewed the third party information included in this Application and/or provided during the credit underwriting process and the information provided by any such party is based upon, and accurate with respect to, the Development as proposed in this Application. Joint Ex. 3 at 26 of 101 (emphasis added). In signing this form, Pine Grove's agent "declare[d] and certif[ied] that [he] ha[d] read the foregoing and that the information is true, correct, and complete." As is now known, a third party (Pine Grove's surveyor) provided information about Stop #4203 that was not accurate with respect to the proposed development. Pine Grove's submission of third party information that contained a false statement of material fact (i.e., that Stop #4203 is a Public Bus Transfer Stop located 0.55 miles from the proposed development) was a deviation from the RFA's specifications, including the provisions of the Applicant Certification and Acknowledgment Form set forth above. The undersigned is inclined to believe that a false statement of material fact in a bid or similar response to a public solicitation should almost always be deemed a material deviation. Agencies reasonably and justifiably rely upon the statements of fact contained in such documents, and therefore the disincentives to making factual misstatements, even innocently, should be strong and consistently applied. Here, however, as mentioned, no party has urged that Pine Grove's application be deemed nonresponsive for misrepresenting the true nature of Stop #4203, and therefore the undersigned will not recommend that the case be decided on this basis. Nevertheless, it should be stated that to treat Pine Grove's application as having accurately identified Stop #4203 as a Public Bus Stop, which is the premise behind Houston Street and FHFC's position, is to waive the material misrepresentation in Pine Grove's Surveyor Certification Form——a significant, and arguably unduly generous, threshold concession to Pine Grove. Once the misrepresentation is overlooked, it is not obvious that a deviation exists that would make Pine Grove's application nonresponsive. Bus Stop #4203 meets the RFA's definition of a Public Bus Stop worth up to 2.0 points. Thus, it is an Eligible Service that does not depart from the specifications for a Public Bus Stop. Pine Grove's application was not "nonresponsive" for identifying a Public Bus Stop as its Transit Service. Located at a distance of 0.55 miles from the proposed development, Bus Stop #4203 was entitled to a score of 0.0 according to the RFA's scoring schedule, which requires that 0.0 points be awarded to a Public Bus Stop that is farther than 0.30 miles from the proposed development. That Bus Stop #4203 must be awarded no points does not, of itself, make Pine Grove's application nonresponsive; it just means that the application will receive fewer points than the maximum available for this item. The RFA pointedly does not state that reliance upon a Public Bus Stop located more than 0.30 miles from the proposed development will result in a finding of noncompliance, and it strongly implies otherwise by instructing that distant Public Bus Stops shall be given a score, albeit a score of zero. Pine Grove's application was not "nonresponsive" merely for identifying a faraway Public Bus Stop as its Transit Service. Because Bus Stop #4203 could be awarded no more than 0.0 points, however, Pine Grove's application fails to earn the Required Minimum Transit Service Score of 2.0, which makes it ineligible to be considered for funding. Being found ineligible for funding due to a low score is different from being deemed nonresponsive to the specifications. To be sure, in this instance the effect is the same, either way. But still, it is at best debatable whether there is any deviation here that FHFC could waive as a minor irregularity, even if it wanted to. Putting aside that technicality, the irreducible problem for Pine Grove is that, to remain in line for the award, it must receive at least 2.75 proximity points for its Transit Service. Pine Grove needs a Transit Service Score of 2.75 to get a raw score of 12.25 and hence an adjusted Total Proximity Score of 18. Without a Total Proximity Score of 18, Pine Grove will not have a perfect overall score of 23, and without a perfect overall score, Pine Grove is out of the lottery. Pine Grove's irreducible problem is insoluble because a Public Bus Stop such as Stop #4203 cannot receive more than 2.0 points, and Pine Grove needs 2.75. Therefore, even if FHFC could deem Pine Grove's reliance upon a Public Bus Stop that is situated beyond the 0.30-mile limit a "minor irregularity"; and even if FHFC could then award Pine Grove the full 2.0 points for Stop #4203, these extraordinary (and probably impermissible) steps still would be insufficient to keep Pine Grove in first place for preliminary funding. Obviously FHFC could not award Pine Grove more than the maximum score of 2.0 points for a "nonresponsive" distant Public Bus Stop. The only way for Pine Grove to hold on to its preliminary funding would be for FHFC to treat Stop #4203 as a Public Bus Transfer Stop even though, pursuant to the unambiguous specifications of the RFA, it is a Public Bus Stop. This, it seems to the undersigned, would not be a matter of waiving a "minor irregularity," but instead would amount to pretending that one clearly defined Transit Service (Public Bus Stop) is another clearly defined Transit Service (Public Bus Transfer Stop), for the sole purpose of raising an applicant's score above that which the RFA plainly requires. Such agency conduct would be both clearly erroneous and contrary to competition——in short, impermissible. Pine Grove has a point when it asserts that the existence of Stop #1397 means that its proposed development actually would be located close to adequate transportation services——a fact that is undisputed——and therefore that the needs behind the Transit Services component of the proximity criteria would be fulfilled notwithstanding Pine Grove's misplaced reliance upon Stop #4203. Rejecting Pine Grove's application for lack of a nearby Transit Service while knowing that a nearby Transit Service exists does seem somewhat unfair. This sense of unfairness is ameliorated in part, however, by the recognition that Pine Grove's preliminary selection was, after all, the result of the "luck of the draw"——not qualitative superiority over other applicants. It is eliminated by the recognition that to accept Pine Grove's application as the winner would require FHFC to give Pine Grove a Transit Service Score to which it clearly is not entitled——in effect handing out "bonus points" ultimately explicable, if with a wink and a nod, only as an impermissible tribute to Stop #1397.2/ In sum, Pine Grove's application was technically responsive to the RFA. Unbeknownst to Pine Grove and FHFC, however, Pine Grove's application contained a material misrepresentation——namely that Stop #4203 is a Public Bus Transfer Stop——upon which FHFC reasonably relied in giving Pine Grove a Transit Service Score of 5.0, which, under the RFA's unambiguous scoring schedule, was the correct score to give for a Public Bus Transfer stop located 0.55 miles from the proposed development. As everyone now agrees, Stop #4203 is not a Public Bus Transfer Stop, but a Public Bus Stop——an Eligible Service, without question, but one which, under the RFA's scoring schedule, earns just 0.0 points. Adjusting Pine Grove's Transit Service Score to 0.0, as must be done after forgiving and correcting the misrepresentation, makes Pine Grove's application ineligible for further consideration for failure to achieve the Required Minimum Transit Score of 2.0. Even if eligible, however, Pine Grove necessarily would be out of the running, for with a Transit Service Score of 0.0 (ignoring eligibility), Pine Grove's overall score falls short of the perfect 23 that seven other competitors achieved. If Pine Grove is eliminated from consideration, as the undersigned will recommend, the next applicant in line is Houston Street, holder of the second lowest lottery number. Pine Grove asserts that Houston Street's application is nonresponsive for two reasons: (1) failure to demonstrate site control and (2) failure to prove its ability to proceed. These issues will be taken up in turn. "Evidence of Site Control" is an unscored Mandatory Item. The RFA instructs that the "Applicant must demonstrate site control by providing, as Attachment 14 to Exhibit A, the documentation required . . . below. If the proposed Development consists of Scattered Sites, site control must be demonstrated for all of the Scattered Sites." RFA at 31. As relevant to this case, the document necessary to establish site control is an "Eligible Contract," which is an instrument defined in pertinent part as follows: For purposes of the RFA, an eligible contract is one that has a term that does not expire before July 31, 2015 or that contains extension options exercisable by the purchaser and conditioned solely upon payment of additional monies which, if exercised, would extend the term to a date that is not earlier than July 31, 2015; specifically states that the buyer's remedy for default on the part of the seller includes or is specific performance; and the buyer MUST be the Applicant unless an assignment of the eligible contract which assigns all of the buyer's rights, title and interests in the eligible contract to the Applicant, is provided. RFA at 31. Houston Street's proposed development would be located on property comprising two contiguous parcels, each of which Houston Street has under contract to purchase. Houston Street provided both contracts as evidence of site control, attaching them to its application as instructed. One of the two parcels is 0.09 acres owned by Kesher Investments, LLC ("Kesher"), for which Houston Street has agreed to pay $750,000. Based on the Real Estate Purchase Agreement supplied as evidence of site control, the Kesher parcel remained on the market as of the date Houston Street submitted its application to FHFC. Paragraph 18 of the contract provides: RIGHT OF FIRST REFUSAL. It is understood that Purchaser is planning to apply for housing tax credits from the FHFC. Seller shall continue to market the property until FHFC approved or denies Purchasers application for tax credits, bonds or other similar financing. If any other written purchase offer for Property is submitted and deemed acceptable to Seller, the offer shall be presented to Purchaser and Purchaser shall have ten (10) days in which to match the terms of written offer or terminate this Agreement and receive a full refund of the Deposit and neither party shall have any further obligations under this Agreement. Only exception to this First Right of Refusal is if such submitted written offer is from an entity that would be a competitor for FHFC tax credits, bonds or other type of similar financing then that offer will be deemed unacceptable. Joint Ex. 2 at 65 of 111. The Real Estate Purchase Agreement requires the parties to close on the Kesher parcel "no later than August 31st, 2015, unless the closing date is extended." Joint Ex. 2 at 59 of 111. The agreement provides extension options, as follows: Purchaser shall have the right to extend the closing for the payment of Two Thousand Five Hundred Dollars ($2,500) per 30 day ("Extension Period") for Four (4) Extension Periods. The extension fee(s) shall be released to Seller by the Escrow Agent immediately upon notice from Purchaser to Seller to extend the contract. Payment of extension fee(s) to be deducted from the Earnest Money Deposit. All extension fee(s) released to Seller through Escrow Agent shall be non-refundable, but applicable to the purchase price, and shall be deemed to be liquidated damages in the event this transaction does not close and is earned as such by Seller. Joint Ex. 2 at 59 of 111. The other parcel is owned by Downtown Station, LLC. It is 0.50 acres, and Houston Street has agreed to purchase the property for $975,000. Like the Kesher parcel, this half-acre piece of land remained on the market as of the date Houston Street submitted its application, according to a provision of the Real Estate Purchase Agreement which provides as follows: Continued Marketing/Right of First Refusal. It is agreed that Seller herein, shall continue to market the subject Property and entertain any and all offers to purchase the said Property by others. Should Seller receive an offer to purchase the subject property from any other person or entity, with terms and conditions acceptable to Seller, Seller shall provide Purchaser herein notice of same. Purchaser shall have ten (10) days from notice of the foregoing that it wishes to purchase the subject property on the same terms and conditions as offered by another buyer. If Purchaser herein does not agree to purchase the subject property in accordance with said terms and conditions, then Seller shall have the right to proceed to sell the subject property to the subsequent buyer and this Agreement shall be null and void, at which time any and all deposits placed by Purchaser herein shall be returned to Purchaser. Joint Ex. 2 at 80 of 111. Closing on the Downtown Station parcel is to occur "no later than August 31st, 2015, unless the closing date is extended." Joint Ex. 2 at 74 of 111. The purchase and sale agreement gives the buyer four successive options to extend the closing date for 30-day periods, respectively, upon payment of $2,500 for each extension, pursuant to a provision which is identical to the one in the Kesher agreement, quoted above. Pine Grove argues that Houston Street has failed to demonstrate site control because the properties it has under contract are still for sale, and because exercising a right of first refusal could require Houston Street to meet conditions besides the payment of additional monies. Pine Grove's position first raises the question of whether both of the agreements Houston Street provided with its application satisfy the definition of an "Eligible Contract." If this question were answered in the negative, then Houston Street's application would be nonresponsive because the submission of an Eligible Contract is necessary to demonstrate site control. If the answer were affirmative, however, a second question would arise, and that is whether an Eligible Contract is sufficient to demonstrate site control. If so, then Houston Street's application would be responsive. If not, then it would be necessary to scrutinize the terms and conditions of the Eligible Contracts to ascertain whether they demonstrate site control or (as Pine Grove maintains) a lack thereof. The contracts that Houston Street submitted satisfy the plain and literal meaning of the language used in the RFA to define an Eligible Contract. Neither agreement expires before July 31, 2015, and in any event both agreements contain extension options which Houston Street can exercise solely by paying additional monies. The other requirements of the relevant definition, e.g., the availability of specific performance as a buyer's remedy, are met. Therefore, Houston's Street's application is responsive to the specifications mandating that an Eligible Contract be provided as evidence of site control. The foregoing determination gives rise to the question of whether an Eligible Contract is sufficient to establish site control. On this point, the RFA is ambiguous. The provisions dealing with site control reasonably could be understood as directing that the submission of an Eligible Contract is both necessary and sufficient to establish the requisite degree of control over the proposed development site. Under this interpretation, the inquiry into Houston Street's site control ends, for Houston Street provided FHFC with Eligible Contracts relating to the parcels it hopes to develop. Alternatively, the RFA's site control provisions reasonably could be read as directing that the submission of an Eligible Contract is necessary, but not sufficient, to prove the requisite degree of site control. Pine Grove has offered evidence showing that, in past cycles, FHFC has examined the terms and conditions of "Qualified Contracts" (the substantial equivalent of Eligible Contracts under the RFA) to determine the existence of site control, and found the site-control evidence to be insufficient. This suggests that providing the necessary contract does not necessarily demonstrate site control. Indeed, Pine Grove asserts that under FHFC's previous interpretations of "site control," Houston Street's documentation should be found wanting. In one earlier instance, FHFC expressed concern over a Qualified Contract that was subject to a right of first refusal belonging to a third party. In other words, by exercising its right of first refusal, a third party over whom the applicant had no control could purchase the proposed development site, and the applicant had no contractual means of stopping such a sale, which would deprive the applicant of the subject site. In another past instance, FHFC found fault with a provision in a Qualified Contract which gave the seller the right (until a certain date) to sell the property to a third party but did not grant the applicant a right of first refusal. Here then, once again, a third party over whom the applicant had no control could purchase the proposed development site, and the applicant had no contractual means of stopping such a sale, which would deprive the applicant of the subject site. Despite some superficial similarities, Houston Street's situation is distinguishable from these historical situations because Houston Street, as a holder of first-refusal rights, possesses a measure of control over the potential sale(s) of the development site(s) to a third party or parties that the previous applicants lacked. Unlike them, Houston Street has at its disposal contractual means of stopping another person from buying the subject parcel(s). The decision whether to meet the terms and conditions of a competing offer is Houston Street's to make; therefore, Houston Street controls its own destiny with regard to the purchase of the proposed development site. Consequently, assuming that an Eligible Contract is not sufficient under the RFA to prove site control, but instead must be examined to ascertain whether site control exists, the undersigned determines that Houston Street's sellers' continued marketing of the parcels comprising the development site subject to Houston Street's rights of first refusal is not inconsistent with Houston Street's retention of adequate control over its acquisition of the site. In short, it is determined, as a matter of ultimate fact, that Houston Street has demonstrated site control adequately for purposes of the RFA. At the very least, it is determined that FHFC's determination to the same effect was not clearly erroneous.3/ The RFA requires that an applicant provide documentation establishing its "Ability to Proceed," including the following items: Status of Site Plan Approval. The Applicant must provide, as Attachment 7 to Exhibit A, the properly completed and executed Florida Housing Finance Corporation Local Government Verification of Status of Site Plan Approval for Multifamily Developments form (Form Rev. 11-14). Appropriate Zoning. The Applicant must provide, as Attachment 8 to Exhibit A, the applicable properly completed and executed verification form: (a) Florida Housing Finance Corporation Local Government Verification that Development is Consistent with Zoning and Land Use Regulations form (Form Rev. 11-14) or (b) Florida Housing Finance Corporation Local Government Verification that Permits are not Required for this Development form (Form Rev. 11-14). RFA at 60. Attachment 7 relates to the status of the project's site plan approval. The form directs the person who signs it to mark one of three alternative statements to signify which is applicable to the proposed development. On the form attached to Houston Street's application, the following statement was selected: ? The above-referenced Development is (a) new construction, or (b) rehabilitation with new construction, or (c) rehabilitation, without new construction, that requires additional site plan approval or similar process, and (i) this jurisdiction provides either preliminary site plan approval or conceptual site plan approval which has been issued, or (ii) site plan approval is required for the new construction work and/or the rehabilitation work; however, this jurisdiction provides neither preliminary site plan approval nor conceptual site plan approval, nor is any other similar process provided prior to issuing final site plan approval. Although there is no preliminary or conceptual site plan approval process and the final site plan approval has not yet been issued, the site plan, in the zoning designation stated above, has been reviewed. The necessary approval and/or review was performed on or before the submission deadline for the above referenced FHFC Request for Proposal/Application by the appropriate City/County legally authorized body; e.g. council, commission, board, department, division, etc., responsible for such approval process. Joint Ex. 2 at 39 of 111. The Local Government Verification of Status of Site Plan Approval must be "signed by the applicable City's or County's Director of Planning and Zoning, chief appointed official (staff) responsible for determination of issues related to site plan approval, City Manager, or County Manager/Administrator/Coordinator." Houston Street's form was signed by Folks Huxford, Chief of the Current Planning Division for the City of Jacksonville. By signing the form, Mr. Huxford certified that he had the authority "to verify status of site plan approval as specified above and . . . that the information stated above is true and correct." Mr. Huxford was an acceptable signatory. Pine Grove asserts that Houston Street did not obtain the conceptual site plan approval for which local law allegedly provides, and therefore that Houston Street's Local Government Verification of Status of Site Plan Approval form is incorrect and, accordingly, nonresponsive. Pine Grove bases its argument on certain provisions of the Jacksonville, Florida, Code of Ordinances, about whose meaning Pine Grove disagrees with Mr. Huxford, and on the fact that no conceptual site plan approval had been issued for Houston Street's proposed development. A good place to start in evaluating Pine Grove's position is with a look at the site-plan status form's purpose. It is clear from the language of the form that what FHFC wants, in a nutshell, is an authoritative statement from the local government advising that the local government either has approved, or is currently unaware of grounds for disapproving, the proposed development's site plan. The relevance of this statement lies not so much in its being correct, per se, but in the fact that it was made by a person in authority whose word carries the weight of a governmental pronouncement. Put another way, the statement is correct if made by an official with the authority to utter the statement on behalf of the local government; it is a verbal act, a kind of approval in itself. FHFC might, of course, deem a fully executed site-plan status form nonresponsive for a number of reasons. If it were determined that the person who signed the form lacked the requisite authority to speak for the government; if the statement were tainted by fraud, illegality, or corruption; or if the signatory withdrew his certification, for example, FHFC likely would reject the certification. No such grounds were established in this case, or anything similar. Instead, Pine Grove contends that Mr. Huxford simply erred, that he should not have signed the Local Government Verification of Status of Site Plan Approval. Pine Grove makes a reasonable, or at least plausible, case to this effect. The fatal flaw in Pine Grove's argument, however, is that the decision whether to grant or deny this particular form of (preliminary) local governmental approval to Houston Street's site plan must be made by the local government having jurisdiction over the proposed development, i.e, the City of Jacksonville——not by Pine Grove, Houston Street, FHFC, or the undersigned. Mr. Huxford was empowered to make the statement for the city. He made it. No compelling reason has been shown here to disturb FHFC's acceptance of Mr. Huxford's certification as a valid expression of the City of Jacksonville's favorable opinion, as of the application submission deadline, regarding Houston Street's site plan. Attachment 8 relates to local zoning and land use regulations and requires a local official to confirm the following representations: The proposed number of units and intended use are consistent with current land use regulations and the referenced zoning designation or, if the Development consists of rehabilitation, the intended use is allowed as a legally non-conforming use. To the best of my knowledge, there are no additional land use regulation hearings or approvals required to obtain the zoning classification or density described herein. Assuming compliance with the applicable land use regulations, there are no known conditions which would preclude construction or rehabilitation (as the case may be) of the referenced Development on the proposed site. Joint Ex. 2 at 41 of 111. Mr. Huxford signed Houston Street's form, verifying that the proposed development is consistent with the City of Jacksonville's "local land use regulations and the [applicable] zoning designation." Mr. Huxford had the authority to make this statement on the city's behalf. Pine Grove claims that Houston Street's Local Government Verification That Development Is Consistent With Zoning and Land Use Regulations form is incorrect and nonresponsive because Houston Street has not yet obtained all the necessary land use approvals, including the allegedly available conceptual site plan approval mentioned previously. Pine Grove's argument in this regard is identical to its objection to Houston Street's site-plan status form, which was rejected above. For the reasons previously given, therefore, it is found that FHFC did not err in accepting Mr. Huxford's verification of consistency with local zoning and land use regulations as a valid expression of the City of Jacksonville's position on these matters in relation to Houston Street's proposed project. Thus, it is determined, as matters of ultimate fact, that Houston Street's application satisfied the RFA's specifications pertaining to Evidence of Site Control and Ability to Proceed, and that FHFC made no mistakes in deeming the application compliant with these requirements.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Housing Finance Corporation enter a Final Order rescinding the preliminary award to Pine Grove and designating Houston Street as the recipient of the tax credits being made available for the development in the "Family or Elderly Demographic Commitment" category to be built in Duval County. DONE AND ENTERED this 18th day of August, 2015, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM 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 18th day of August, 2015.
The Issue Whether Respondent, Greenway Nursery, Inc. (“Greenway”), is liable to Petitioner, Huntsman Tree Supplier, Inc. (“Huntsman”), for the purchase of landscaping trees, and, if so, in what amount.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following Findings of Fact are made: Huntsman is a Florida corporation for profit, located in Lake City, and engaged in the business of commercial tree farming. Its owners are James and Michelle Huntsman. Mr. Huntsman is the president of the company and Ms. Huntsman is the secretary. Greenway is a Florida corporation for profit, located in Morriston, and engaged in the business of commercial nursery and landscaping. Its owner and president is Brian D. Love. At issue in this proceeding are two deliveries of trees from Huntsman to Greenway, one on March 12, 2015, and one on June 23, 2015. The invoice for the March 12 delivery indicates that it was billed to Greenway. It is for 12 East Palatka holly trees, 65 gallons each. The trees are billed at the rate of $240 each, for a total bill of $2,880. The invoice indicates that Greenway took delivery of the trees by customer pick-up. The invoice for the June 23 delivery also states that it was billed to Greenway. The invoice includes one ligustrum, eight feet in height, for $200; one 2.5-inch DBH1/ slash pine for $130; two 4-inch live oaks with a height of 14 to 16 feet for $250 each; and one cypress for $240. The total amount of the invoice is $1,070. Again, the invoice indicates that Greenway took delivery by picking up the trees. All of the trees in both invoices were destined for a landscaping project at Adena Golf and Country Club in Ocala (“Adena”). Both parties were involved in planting trees in different areas of the Adena property. The parties’ course of dealing until June 2015, was not completely explained at the hearing. It was clear that Huntsman would directly bill Greenway for the trees and that Greenway would take delivery of the trees by pick-up. It was unclear whether Huntsman expected to receive payment directly from Adena or whether Greenway would pay Huntsman for the trees from payments Greenway received from Adena. In any event, Greenway accepted the billings and took delivery of the trees in each instance, thus accepting ultimate responsibility for payment to Huntsman. In its answer to the Complaint, and again at the final hearing, Greenway admitted liability for the $2,880 stated in the March 12 invoice. Mr. Love agreed to pay Huntsman that amount within 15 days of entry of the final order in this case. However, Greenway denied liability for the $1,070 stated in the June 23 invoice. Mr. Love stated that his company was not liable for these trees because they were not part of his project with Adena. He stated that he installed these trees to replace trees on the Adena property that had died, but that the dead trees had not been the responsibility of his company. Ms. Huntsman denied that the dead trees had been installed in the area of the Adena property where her company was working. She testified that Adena’s representative told her that she should seek payment from Greenway because the June 23 tree delivery constituted “warranty work.” Greenway had planted trees on the Adena property that had died, and Adena considered Greenway the warrantor of those trees and therefore liable for their replacement. Based on all of the testimony, it appears that Huntsman found itself in the middle of a dispute between Greenway and Adena as to whether Greenway had warranted the trees that died, and became aware of the dispute only after it had billed and delivered the trees to Greenway in accordance with the parties usual course of dealing. The evidence was insufficient to establish that Huntsman had any responsibility for, or prior knowledge of, the dead trees. It will be left to one or the other of these parties to take up the issue of payment with Adena. Fundamental fairness dictates that this burden should fall to Greenway. Greenway had the warranty dispute with Adena that caused this controversy. Greenway accepted the bill of lading and the invoice for the June 23 shipment, and took delivery of the trees in accordance with the parties usual course of business. As the innocent supplier of the trees, Huntsman should be made whole.
Recommendation Based on the foregoing, it is, therefore, RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order approving the claim of Huntsman Tree Supplier, Inc., against Greenway Nursery, Inc., in the amount of $4,000. DONE AND ENTERED this 12th day of April, 2016, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 12th day of April, 2016.
