08-003546F Community Health Charities Of Florida vs. Department Of Management Services Status: Closed DOAH Final Order on Monday, March 9, 2009.

Summary: Petitioner failed to prove it was a prevailing small business party for attorney fee claim. In the underlying case, the parties awarded benefits (Charities) who brought the attorney fee claim. Thus, it did not prevail in lower proceeding.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COMMUNITY HEALTH CHARITIES OF )

FLORIDA, )

)

Petitioners, ) )

vs. ) Case No. 08-3546F

)

DEPARTMENT OF MANAGEMENT SERVICES, )

)

)

Respondent. ) )

FINAL ORDER

This cause came on for final hearing, pursuant to

appropriate notice, on a Motion by Petitioner, Community Health

Charities of Florida, and 27 other Petitioners for attorney's

fees and costs in accordance with Section 57.111, Florida

Statutes (2008). The cause came before P. Michael Ruff, duly-

designated Administrative Law Judge of the Division of

Administrative Hearings. The hearing was conducted on

November 7, 2008, and the appearances are as follows:

APPEARANCES

For Petitioner: D. Andrew Byrne, Esquire

Phillips Nizer, LLP

666 Fifth Avenue

New York, New York 10103-0084

David C. Hawkins, Esquire

David C. Hawkins, PLLC

3141 Brockton Way

Tallahassee, Florida 32308

For Respondent: James A. Peters, Special Counsel

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399

Lisa Raleigh, Assistant General Counsel

Gerard T. York, Assistant General Counsel

Assistant General Counsel

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399-0950

STATEMENT OF THE ISSUES

The issues to be resolved in this proceeding concern

whether the Petitioner, Community Health Charities of Florida

(CHC), is entitled to an award of attorney's fees and costs as a

"prevailing small business party" pursuant to Section 57.111,

Florida Statutes (2008), by being a prevailing small business

party in the underlying case of Community Health Charities of

Florida, et. al v. Florida Department of Management Services ,

DOAH Case No. 07-3547, Recommended Order February 29, 2008;

Final Order May 29, 2008. Also, at issue is whether the

Respondent Agency's actions, with regard to the underlying case,

were substantially justified or whether special circumstances

exist which would render an award of attorney's fees and costs

unjust.

PRELIMINARY STATEMENT

Case History

This case arose upon the filing of a Motion by the

Petitioner, CHC and 27 named charitable health organizations

(Charities), as Co-Petitioners, on July 22, 2008. The

Petitioner, CHC, seeks to recover attorney's fees and costs

incurred in the underlying case cited above. That case

progressed through the filing of a Recommended Order, a Final

Order by the above-named Respondent Agency, and the matter was

then appealed to the First District Court of Appeal. The status

and nature of that appeal, as related to the question of the

Petitioner being a "prevailing party" for purposes of Section

57.111, Florida Statutes, is addressed below.

The Final Order in the underlying case awarded certain

undesignated funds from the 2006 Florida State Employee's

Charitable Campaign "fiscal agent areas," to the Charities, by

finding that they provided "direct services" in certain areas for

which they had applied. The Steering Committee, under the

auspices of the Respondent, had originally made a finding that

the Charities had provided "direct services" in merely 18 percent

of the areas in which they applied. The Petitioner maintains

that it achieved success before the Administrative Law Judge, and

in the Final Order, by securing a ruling that the Petitioners

provided "direct services" in 77 percent of the areas in which

they applied, and that the Administrative Law Judge had added

further success to the Charities when he issued a Recommended

Order that added areas in which three additional Petitioners had

applied. In its Final Order the Respondent Agency adopted the

Administrative Law Judge's Recommended Order and thereafter the

Petitioners appealed that Final Order.

The issues preserved for that appeal are co-extensive with

their exceptions to the Recommended Order. None of those

exceptions, nor the issues on appeal, take issue with the

favorable findings and rulings for the Petitioners, made in the

Recommended and Final Orders. Rather, the Petitioners appealed

that portion of the Final Order that denied discrete claims

arising under Section 120.56(4), Florida Statutes. This posture

of the issues on the appeal was stated at the hearing held by

Administrative Law Judge Wetherell (previously assigned this

case) concerning the response to his Order to Show Cause. After

showing that the issues on appeal did not relate to the portion

of the Final Order determining the undesignated funds

distribution for the Charities, the parties stipulated that this

attorney fee claim could proceed, notwithstanding the pending

appeal from the same Final Order on the rule validity-related

issues.

The Parties' Positions

The Petitioner, CHC, maintains that it is a "prevailing

party" for purposes of Section 57.111, Florida Statutes. It

contends that when the Department and the Steering Committee

refused to change their decision concerning distribution of

"undesignated funds" (funds contributed by a state employee

without specifying a particular charity to receive the funds)

that the CHC filed a Petition for formal hearing. The Department

refused to refer the matter to DOAH and a Petition for Writ of

Mandamus was filed by CHC in the First District Court of Appeal.

That court ordered that the Department provide an administrative

hearing for CHC and ordered the Department to pay CHC's appellate

attorney's fees and costs. Community Health Charities of Florida

v. State of Florida, Department of Management Services , 961 So.

2d 372 (Fla. 1st DCA 2007).

Upon the case being referred to DOAH for formal proceeding,

the Department and Committee became motivated to reconsider the

decision regarding distribution of undesignated funds.

Thereafter, after an additional meeting in September 2007, the

Department and Committee decided to increase the award of

undesignated funds to Member Charities from 18 percent direct

services in fiscal agent areas to 77 percent of the areas in

which the Charities applied. The Petitioner, CHC, maintains that

when the number of affiliated charities awarded undesignated

funds was also increased by the Administrative Law Judge, to

award undesignated funds to an additional three member charities,

that a substantial benefit was thus gained for the affiliated

Charities by CHC's Petition and litigation of that claim. CHC

thus maintains that it is entitled to recover attorney's fees and

costs under the above statutory section because it is a

"prevailing small business party." It maintains that it is a

small business party because it has less than 25 full-time

employees and less than 2 million dollars in net worth.

The Respondent Department contends that the true prevailing

parties in the underlying case, concerning the distribution of

undesignated funds, were really the 27 charities. They were all

Petitioners in the underlying proceeding as well as CHC. In

fact, all 27 of those charities also are named Petitioners in the

attorney's fee and cost motion in this cause. They were all

Petitioners in this fee proceeding, until the entry of Judge

Wetherell's Order of August 11, 2008 (discussed infra ). The

Respondent contends that CHC is "an umbrella organization" for

those 27 or so affiliated charities, and that CHC and its

affiliates are part of a network of corporations, affiliated by

various agreements to share contributions and expenses. The

Respondent contends that the Final Order in the underlying

proceeding awarded the funds to the various charities named in

the Petition in that case, but awarded nothing to CHC. While CHC

stands to gain a 25 percent fee by its agreement with those

charities, as a portion of funds awarded to the Charities, that

benefit to CHC did not come as a proximate result of prosecuting

the underlying litigation.

The Respondent likewise contends that while CHC may be

obligated to the affiliated charities to bear the burden of

attorney's fees and costs for that proceeding, that is a matter

of private agreement between CHC and those charities. It argues

that such does not accord CHC standing to litigate and receive an

award of attorney's fees and costs in this proceeding, based upon

purportedly being a "prevailing small business party" in the

underlying case.

The Respondent also maintains that special circumstances

exist to make an award of attorney's fees and costs to CHC

unjust, for purposes of Section 57.111, Florida Statutes, because

of the lack of a funding source, other than the charitable

contributions themselves, to pay the attorney's fees and costs.

This is purportedly because of the significant budget reductions

the Department has suffered from 2006 forward, and because the

affiliation agreements between CHC and the several dozen

Petitioners would allegedly render a $50,000.00 attorney fee and

cost award to CHC unjust.

In this connection, the Respondent maintains that CHC might

have agreements with the Charities, to the effect that it would

bear the attorney's fees and costs related to the underlying

litigation, and contends that it is a prevailing small business

party because it has fewer than 25 employees and less than

$2,000,000.00 dollars net worth. However, if those facts

resulted in its being deemed a "prevailing party," an unjust

result would be imposed because the 27 affiliated charities who

actually prevailed and received the benefits awarded in the

underlying proceeding, in some cases, singly have more than two

million dollars net worth, but if one aggregated them together,

as prevailing parties, would clearly have many more than 25

employees and much more than two million dollars net worth. For

this additional reason, the Respondent maintains that to single

out CHC as a prevailing party, and award attorney's fees and

costs under those circumstances, would be unjust.

The Hearing and the Record

The cause came on for hearing as noticed, the case having

been transferred to the undersigned from Judge Wetherell. At the

hearing the Petitioner, CHC, presented the testimony of witness

Gwen Cooper. CHC did not present any exhibits or documentary

evidence.

The Respondent presented the testimony of witnesses Nancy

Kelly, Director of Administration of the Florida Department of

Revenue and a member of the Steering Committee; Debra Forbess,

Director of Administration, Florida Department of Management

Services; and Murphy Chandler, Para-legal for the Office of the

Florida Attorney General. The Respondent offered nine exhibits.

The Respondent's Exhibits Two, Three, Five, Six, Seven, and Eight

were admitted into evidence. Additionally, the parties

stipulated that official recognition be taken of the Transcript

and evidence in the underlying proceeding in DOAH Case No. 07-

3547. A copy of the record on appeal has been filed as a Joint

Exhibit in this proceeding, on November 25, 2008.

After the hearing the Respondent filed a Motion to

Supplement the Hearing Record, seeking to admit Respondent's

Composite Exhibit One. The Motion was opposed on the basis that

no authority had been cited by the Respondent authorizing

introduction of evidence after the close of hearing; because the

exhibit was not properly authenticated, was irrelevant; and

constituted uncorroborative hearsay. The Motion was denied by

Order of December 19, 2008.

Upon conclusion of the hearing, the parties elected to have

it transcribed and to submit proposed final orders. The Proposed

Final Orders have been considered in the rendition of this Final

Order.

FINDINGS OF FACT

1. This cause arose upon the filing of a motion or

petition for attorney's fees and costs on July 22, 2008, by the

Petitioners, CHC and the Charities (the American Liver

Foundation, Cystic Fibrosis Foundation, Crohn's and Colitis

Foundation, Prevent Blindness Florida, Children's Tumor

Foundation, March of Dimes, Lupus Foundation of America, Florida

Chapter, Florida Hospices and Palliative Care, Hemophilia

Foundation of Greater Florida, National Parkinson Foundation,

American Diabetes Association, Leukemia and Lymphoma Society,

American Lung Association, ALS Association, Alzheimer's

Association, Juvenile Diabetes Research Foundation, Arthritis

Foundation, Florida SIDS Alliance, Sickle Cell Disease

Association of Florida, Easter Seals Florida, St. Jude

Children's Research Hospital, Muscular Dystrophy Association,

Nami Florida, National Kidney Foundation, National Multiple

Sclerosis Foundation, Huntington's Disease Society of America,

and Association for Retarded Citizens). This attorney fee and

cost motion was filed in connection with the above Charities

having received distribution of undesignated contributions from

the 2006 Florida State Employees' Charitable Campaign (FSECC).

The Charities made application for the funds and then contested

the initial decision of the Steering Committee charged with

determining distribution of undesignated contributions (by

fiscal agent area). Ultimately, after obtaining a Writ of

Mandamus from the First District Court of Appeal, requiring an

administrative proceeding and hearing before the Division of

Administrative Hearings on the contested claims, the Charities

received additional distribution of undesignated contributions.

Those additional distributions represent an additional benefit

the Charities received upon the entry of the Recommended Order

and the Final Order in the underlying proceeding. Therefore,

one Petitioner, CHC, in the motion for attorney's fees and costs

asserts that it is thus a prevailing party and a small business

for purposes of Section 57.111, Florida Statutes, and is

entitled to an award of attorney's fees and costs.

2. The Respondent is an Agency of the State of Florida

with authority to establish an maintain the FSECC. 1/ It

administers the decision-making process involving distribution

of undesignated funds and issued the Final Order in the original

proceeding.

3. The attorney fee and cost proceeding was initially

assigned to Administrative Law Judge Charles Adams. Thereafter

the case was re-assigned to Administrative Law Judge T. Kent

Wetherell, II. He issued an Order, sua sponte , on July 29,

2008, instructing the Petitioners to show cause why the case

should not be held in abeyance pending disposition of the appeal

of the Final Order in Community Health Charities of Florida v.

State of Florida, Department of Management Services , 1D08-3126,

the appeal before the First District Court of Appeal. The

Petitioners filed a response to the Order to Show Cause stating,

in essence, that the issues preserved for appeal involved

discreet claims under Section 120.56(4), Florida Statutes. The

parties agreed that the portions of the Final Order in the

underlying proceeding which granted undesignated fund

distributions to the Charities were separable, and not the

subject of the appeal to the First District Court of Appeal in

the above-cited case. The parties thus stipulated that the case

could proceed on the matter of fees and costs, notwithstanding

the pending appeal.

4. An Order was entered by Judge Wetherell on August 11,

2008, based upon the responses to the Order to Show Cause. The

Order references the parties' agreement that the case could go

forward notwithstanding the pending appeal of the Final Order in

the underlying case and then, significantly, Judge Wetherell

made the following finding: "a closer review of the motion [the

motion seeking the award of attorney's fees and costs] reflects

that the only Petitioner alleged to be a prevailing small

business party entitled to an award of fees under that statute

[Section 57.111, Florida Statutes] is Community Health Charities

of Florida." Judge Wetherell thereupon proceeded to order that

the case style be amended to identify Community Health Charities

of Florida (CHC), as the "only Petitioner in this fee case."

5. The Petitioner, CHC, is a Florida non-profit

corporation that employs less than 25 full-time employees and

has a net worth of less than two million dollars. It is a

"federation" under the FSECC Act. A "federation" is defined as

an umbrella agency that supplies "common fund raising,

administrative and management services to . . . charitable

constituent member organizations. . . ." Fla. Admin. Code R.

60L-39.0015(1)(j). Federations were required to file with the

Committee (the Steering Committee) a Direct Local Certification

Form, describing the direct services that each member charity

provided in the various fiscal agent areas. In this capacity,

the Petitioner CHC represented 27 member charities in the 2006

charitable campaign.

6. Charitable organizations that provide "direct services

in a local fiscal agent's area" are entitled to receive "the

same percentage of undesignated funds as the percentage of

designated funds they receive." § 110.181(2)(e), Fla. Stat.

(2006). CHC is not a provider of services or direct services.

Therefore, it, itself, did not receive any undesignated funds.

The charitable organizations named above, are the entities which

received undesignated funds related to direct services they

provided in local fiscal agents' areas. Some received them

through the initial decision of the subject Steering Committee,

and some after the underlying administrative proceeding was

litigated through Final Order.

7. On February 28, 2007, the Steering Committee, under the

Respondent's auspices, conducted a public meeting in which it

found the charities named above provided direct services in 18

percent of the fiscal agent areas in which they had applied.

The Committee therefore denied Charities their share of

undesignated funds in the remaining fiscal agent areas. That

Committee decision was announced by memorandum of March 12,

2007, which provided the Petitioners with a point of entry to

dispute the initial decision in an administrative proceeding.

8. On March 30, 2007, the Petitioners filed an Amended

Petition which alleged that they had provided direct services in

all the fiscal agent areas in which they applied for

undesignated funds, and identified alleged deficiencies in the

Committee's decision-making process. That Amended Petition was

ultimately referred to the Division of Administrative Hearings

for conduct of a formal proceeding, by Order of the First

District Court of Appeal, requiring the Agency to refer the

Amended Petition to the Division of Administrative Hearings.

9. With the Amended Petition pending before the Division

of Administrative Hearings, the Steering Committee called an

unscheduled meeting on September 10, 2007, to further address

the Petitioners' claims and re-visit the earlier decision

denying some applications for undesignated funds. Thereafter,

the Respondent changed its initial decision by increasing the

percentages of fiscal agent areas where direct services were

provided and undesignated funds awarded to the Petitioners, the

Charities, as a result of the September 10, 2007, meeting. This

percentage thus increased from 18 percent to 77 percent as a

result of "additional review of material provided by

Petitioners." The Respondent Agency ultimately rendered a Final

Order that adopted the decision of the Statewide Steering

Committee, approving 77 percent of the Petitioners' previous

submittals, as well as the finding of the Administrative Law

Judge with regard to the three additional member charities.

10. The Respondent had maintained in the original

proceeding that the Committee must limit its consideration to

the Direct Local Certification Form. The Petitioners, on the

other hand, argued that they were entitled to a de novo review

of the Agency action before the Division of Administrative

Hearings. Reserving ruling on that matter, Judge Adams

permitted the Petitioners, at the Final Hearing, to introduce

additional evidence of direct services provided in those fiscal

agent areas in which their applications had been denied by the

Committee. The issue of direct services was considered de novo

before the Division. The judge considered not only the direct

local services certification form, but also supporting evidence

of direct services introduced by the Petitioners at the Final

Hearing. On considering that evidence, the Administrative Law

Judge found that three additional member charities, not

previously approved by the Committee, had provided direct

services, which entitled them to receive undesignated funds.

11. The Final Order entered by the Respondent Agency

adopted the Administrative Law Judge's ruling. No exceptions

were filed to that Recommended Order, thus the Agency waived its

appellate rights with respect to any issue it might have raised,

and the Charities prevailed as to the relief they sought in the

Amended Petition.

12. In their affidavits filed with the Motion for

Attorney's Fees and Costs on July 22, 2008, the attorneys Byrne

and Hawkins, for the above-named Petitioners, stated that they

were "retained" by those Petitioners, meaning all the above-

named charities and also the Petitioner CHC. In the affidavits

they stated that those Petitioners "incurred" the attorney's

fees and costs to which the affidavits relate. As stated above,

the attorney's fee Motion was filed and joined-in by all the

above-named charities and CHC.

13. The Petitioners in the underlying case, which was

appealed to the First District Court of Appeal, were all the

above-named charities and CHC. Nonetheless, the Petitioner CHC

took the position at the hearing in this proceeding that an

agreement or understanding existed with the affiliate charities,

whereby CHC would bear the attorney's fees and costs on behalf

of all the affiliate charities.

14. CHC has an agreement concerning how revenue it

receives is shared with its national office and member

charities. CHC pays its national office a percentage of

revenue. It sends money to the national office and the national

office also sends an allocation of funds to CHC. CHC is a

member of the Arlington, Virginia-based Community Health

Charities of America. For the fiscal year beginning July 1,

2006, CHC withheld 25 percent of charitable donations from

Florida employees to its affiliated charities as its fee. This

is the maximum amount authorized by Florida law in order for it

to participate in the FSECC. § 110.181(1)(h)1., Fla. Stat.

(2006).

15. In the 2006 campaign at issue, CHC did not file an

application in its own name to the Steering Committee for

receipt of undesignated funds. As Ms. Cooper testified "we did

not apply." CHC received no allocation or award of undesignated

funds either in the initial Steering Committee consideration

process or as a result of the underlying proceeding through the

Agency's Final Order. All the undesignated fund distributions

were made to the charities themselves, who were the entities who

filed applications to the Steering Committee seeking receipt of

undesignated funds.

16. The Steering Committee, which made the initial

decisions about distribution of undesignated funds is composed

of appointed volunteers. The members of the committee are not

compensated and do not have support staff to assist them in

their fact-finding review of applications concerning receipt of

undesignated funds. The committee members personally review all

applications. Review of the applications takes many hours by

each member of the committee, much more time than is spent in

actual committee meetings.

17. The combined net worth and number of employees of some

or all of the Charities, was not established. It was not

established that the net worth of one or more of the charities

filing this Motion for Attorney's Fees and participating as

Petitioners in the underlying case, is less than two million

dollars, nor that one or more of them have less than 25

employees.

18. The legislature appropriated $17,000.00 dollars to DMS

to administer the FSECC for 2006. Substantially more than that

appropriated sum has been expended by DMS to administer the

campaign. DMS has no insurance coverage which would pay

attorney's fees and costs if they were awarded. DMS is also

subject to at least a four percent budget "hold back" for the

current fiscal year and is contemplating laying off employees in

January 2009, due to budget reductions. If DMS is ordered to

pay attorney's fees and costs to CHC, DMS will bill the fiscal

agent, United Way, for payment of those amounts from the FSECC

charitable contributions.

19. Contrary to the situation with the Petitioner

Charities, who made the original filing of the Amended Petition

in the underlying case and were named as parties in the filing

of the Motion for Attorney's Fees at issue in this case, CHC did

offer evidence that its net worth was less than two million

dollars and that it had less than 25 employees. Thus, it

established this threshold for being considered a small business

party. It is also true, however, that the Recommended Order

from the Administrative Law Judge and the Final Order from the

Agency in the underlying proceeding specifically make no mention

of CHC as a prevailing party and award nothing of benefit to

CHC, as opposed to the other actual charities, who filed the

subject applications.

CONCLUSIONS OF LAW

20. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2008).

21. Section 57.111(2), Florida Statutes (2008), the

"Florida Equal Access to Justice Act" (FEAJA) provides as

follows:

The legislature finds that certain persons

may be deterred from seeking review of, or

defending against, unreasonable governmental

action because of the expense of civil

actions and administrative proceedings.

Because of the greater resources of the

state, the standard for an award of

attorney's fees and costs against the state

should be different from the standard for an

award against a private litigant. The

purpose of this section is to diminish the

deterrent effect of seeking review of, or

defending against, governmental action by

providing in certain situations an award of

attorney's fees and costs.

22. Section 57.111(4)(a), Florida Statutes (2008),

proceeds to provide:

Unless otherwise provided by law, an award

of attorney's fees and costs shall be made

to a prevailing small business party in any

adjudicatory proceeding or administrative

proceeding pursuant to Chapter 120 initiated

by a state agency . . . (Emphasis supplied).

23. The term "small business party" includes a

"corporation . . ., which has its principal office in this state

and has at the time the action is initiated by a state agency

not more than 25 full-time employees or a net worth of not more

than two million dollars." § 57.111(3)(d)1.b., Fla. Stat.

(2008). A small business party is a "prevailing small business

party" when:

1. A final judgment or order has been

entered in favor of the small business party

and such judgment or order has not been

reversed on appeal or the time for seeking

judicial review of the judgment or order has

expired;

2. A settlement has been obtained by the

small business party which is favorable to

the small business party on the majority of

issues which such party raised during the

course of the proceeding; or

3. The state agency has sought a voluntary

dismissal of its complaint.

§ 57.111(3)(c), Fla. Stat. (2008).

24. An award under Section 57.111, Florida Statutes, shall

be made to a prevailing small business party "unless the actions

of the agency were substantially justified or special

circumstances exist which would make the award unjust." §

57.111(4)(a), Fla. Stat. (2008).

25. The initial burden rests on the movant in the Motion

for Attorney's Fees and Costs to establish that it was a "small

business party" and that it "prevailed" in the underlying

proceeding. After that burden is satisfied, the burden shifts

to the Agency to show that it was "substantially justified" or

that special circumstances exist which would make an award of

attorney's fees and costs unjust. See Department of

Professional Regulation, Division of Real Estate v. Toledo

Realty, Inc. , 549 So. 2d 715, 717 (Fla. 1st DCA 1989).

26. CHC has adduced evidence in this proceeding that it is

a party having less than 25 full-time employees and a net worth

of less than two million dollars. That evidence is not refuted

by evidence adduced by the Respondents. Thus, it has been

established that the Petitioner CHC is a "small business party"

for purposes of the above-referenced statutory provision.

27. The Petitioner CHC also maintains that it was a

prevailing small business party in the underlying proceeding.

The Motion for Attorney's Fees in this case was filed by not

only CHC, but all of the Petitioner charities in the underlying

litigation, some 27 of them. However, in the Order based upon

the responses to his Order to Show Cause, Judge Wetherell

determined that "a closer review of the Motion reflects that the

only Petitioner alleged to be a prevailing small business party

entitled to an award of fees under that statute is Community

Health Charities of Florida." Accordingly, Judge Wetherell

ordered that the case style in this attorney fee proceeding be

amended to identify CHC as the only Petitioner in this fee case.

28. In light of this determination, if there is a

prevailing small business party in this fee case, then CHC must

show that it prevailed in the underlying proceeding. CHC

maintained that it did so by achieving the relief sought in the

Amended Petition. That Petition objected to the manner in which

the Respondent proposed to distribute the undesignated funds and

requested a de novo proceeding before DOAH. That de novo

proceeding was initially denied and the Petitioners in that

proceeding, all the charities and CHC, secured a Writ of

Mandamus from the First District Court of Appeal requiring a

DOAH proceeding, which was done. The Petitioner, CHC, then

contends that, by the Recommended Order and the Final Order,

additional distribution of undesignated funds in the manner

referenced in the Findings of Fact was granted. Thus CHC

maintains that it achieved a substantial increase in the direct

services determined to have been provided by the Petitioner

Charities and achieved the conduct of a de novo proceeding

before DOAH. It thus maintains that it prevailed on both issues

in the Final Order, the germane portions of which were not

appealed.

29. It has been held that the test for determining a

prevailing party is whether the party "succeed[ed] on any

significant issue in litigation which achieves some of the

benefit the parties sought in bringing the suit." Moritz v.

Hoyt Enterprises, Inc. , 604 So. 2d 807, 809-810 (Fla. 1992)

(quoting Hensley v. Eckerhart , 103 S. Ct. 1933, 1939. The

Petitioner relies on the federal "catalyst test," recognized in

decisional interpretations of the Federal Equal Access to

Justice Act. It asserts that Section 57.111, Florida Statutes,

is patterned after the Federal Equal Access to Justice Act and

is to be construed in an identical fashion. Department of

Professional Regulation, Division of Real Estate v. Toledo

Realty, Inc. , 549 So. 2d 715, 717 (Fla. 1st DCA 1989). The

Petitioner argues that the catalyst test demands only "that

practicable relief has been obtained that is factually a causal

result of the law suit." Fields v. City of Tarpon Springs,

Florida , 721 F.2d 318, 321 (11th Cir. 1983). It maintains,

then, that CHC was the catalyst that caused the reversal of the

Agency's position in the Petitioners' favor. CHC's point is

that, but for the lawsuit, the Respondent Agency would not have

increased the award of undesignated funds to member charities.

30. The problem with CHC's argument is that it was not the

only Petitioner in the underlying "lawsuit." The 27 named

charities, as well as CHC, were the named party "Petitioners" in

that case. Indeed, and somewhat parenthetically, it might be

argued that had it been the only Petitioner party in that

proceeding, CHC would not have had standing to seek the

adjustment in the distribution of the undesignated funds. Be

that as it may, it was the presence of the Charities themselves,

as participating parties in that underlying litigation, and the

evidence they could bring forth, that caused the Respondent

Agency "to substantially change its distribution of undesignated

funds and award substantially more of the portion claimed by the

member charities . . . ." Those undesignated funds were, and

could only have been, distributed to those charities, not to

CHC. Thus, CHC did not, as a Petitioner party, in its own

right, win any "significant benefit" resulting from the Final

Order in that proceeding. The award of the disputed fund

distribution was, in fact, to the Charities, not to CHC.

31. CHC also contends that CHC benefited directly from the

funds received by the member charities based upon the agreement

between it and the Charities. Pursuant to that agreement it

receives 25 percent of all donations received by the Charities,

the statutory maximum fee. See § 110.181(1)(h)1., Fla. Stat.

(2006). Thus the Petitioner contends that it directly benefited

from the increase in distribution of undesignated funds to the

Charities.

32. That argument loses sight of the fact, however, that

it did not receive any such funds as a direct benefit resulting

from its party status, in relation to the award made by the

Final Order to the Charities. Rather, any benefit resulting in

an increase in the value of the 25 percent fee the Petitioner

was to receive from the charitable campaign that year, caused by

the increase in the distribution to the Charities, was the

proximate result of the contract it had with those charities,

not as a direct result of the Final Order. Benefits that it

received as a result of that contract are a collateral matter

and not a result of CHC's participation in the underlying

proceeding.

33. Accordingly, it must be determined, under the

preponderant, persuasive evidence received, that the Petitioner

Charities prevailed on the relief sought and gained by the

Amended Petition in the underlying proceeding. The Petitioner

CHC has not been established to be a prevailing party for the

reasons delineated above.

34. CHC demonstrated that it is a small business, for

purposes of the above-referenced statutory provision, by having

less than 25 employees and less than two million dollars of net

worth attributable to its Florida entity or organization. If,

however, the Petitioner Charities had remained active

Petitioners in this proceeding, (without Judge Wetherell's

August 11, 2008, Order) it should be pointed out that there is

no persuasive evidence to show what those charities' net worth

or number of employees is, or was, at times relevant hereto.

Thus, if they were considered to remain as Petitioners in this

fee proceeding, as being prevailing parties on the relief

gained by the Amended Petition in the underlying proceeding, the

evidence would not support them being prevailing small business

parties in this fee proceeding.

35. Inasmuch as the movant failed to satisfy its initial

burden to prove that it is a prevailing small business party,

the attorney's fee and cost claim must fail. Moreover, the

persuasive evidence adduced by the Respondent, as well as, to

some extent, undisputed facts, show that the $17,000.00 budget

allocation from the legislature for the FSECC costs was expended

before the underlying proceeding occurred; that the Respondent

agency is in a serious budget reduction posture; that any fees

and costs would have to be paid from charitable donation funds

themselves, and that CHC already, by contract, receives a

management or administration fee of 25 percent of charitable

donations. In consideration of these special circumstances, an

award of attorney's fees and costs would be manifestly unjust.

ORDER

Having considered the foregoing Findings of Fact,

Conclusions of Law, the evidence of record, the candor and

demeanor of the witnesses, and the pleadings and arguments of

the parties, it is, therefore,

ORDERED: That the motion for attorney's fees and costs be

and the same is hereby denied.

DONE AND ORDERED this 9th day of March, 2009, in

Tallahassee, Leon County, Florida.

S

___________________________________

P. MICHAEL RUFF

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with Clerk of the

Division of Administrative Hearings

this 9th day of March, 2009.

ENDNOTE

1/ § 110.181(1)(a), Fla. Stat. (2006).

COPIES FURNISHED :

D. Andrew Byrne, Esquire

Phillips Nizer, LLP

666 Fifth Avenue

New York, New York 10103-0084

David C. Hawkins, Esquire

David C. Hawkins, PLLC

3141 Brockton Way

Tallahassee, Florida 32308

James A. Peters, Special Counsel

Office of the Attorney General

The Capitol, Plaza Level 01

Tallahassee, Florida 32399

Lisa Raleigh, Assistant General Counsel

Gerard T. York, Assistant General Counsel

Department of Management Services

4050 Esplanade Way, Suite 160

Tallahassee, Florida 32399-0950

Linda South, Secretary

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399-0950

John Brenneis, General Counsel

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399-0950

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pursuant to Section 120.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing the original notice of appeal with the Clerk of the

Division of Administrative Hearings and a copy, accompanied by

filing fees prescribed by law, with the District Court of

Appeal, First District, or with the District Court of Appeal in

the Appellate District where the party resides. The notice of

appeal must be filed within 30 days of rendition of the order to

be reviewed.