09-001551 Sg Outdoor vs. Department Of Transportation Status: Closed Recommended Order on Thursday, November 19, 2009.

Summary: Respondent must compensate Petitioner for the original sign; Petitioner must remove the new sign.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SG OUTDOOR, )

)

Petitioner, )

)

vs. ) Case No. 09-1551

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this

case on September 9, 2009, in Clearwater, Florida, before

Administrative Law Judge R. Bruce McKibben of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Vincent Stona, pro se

SG Outdoor

36181 East Lake Road, Suite 185

Palm Harbor, Florida 34685

For Respondent: Susan Schwartz, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

STATEMENT OF THE ISSUE

There are two separate issues in this case: (1) Whether

Petitioner breached its contract with Respondent by not making

payments for a sign lease, thereby resulting in the sign permit

becoming invalid; and (2) Whether Petitioner constructed a

roadside sign illegally, i.e., without a permit.

PRELIMINARY STATEMENT

On July 9, 2004, Respondent, Department of Transportation

("DOT" or the "Department"), issued a Notice of Violation to

Petitioner, SG Outdoor, alleging that Petitioner did not have

the permission of the owner of the sign site to have its sign in

place. On August 10, 2004, DOT issued a letter to Petitioner

revoking DOT Sign Permit No. AU557. On October 6, 2005, DOT

issued a Notice of Violation, Illegally Erected Sign relating to

Sign Permit No. AU557a; and a Notice of Violation, Illegally

Erected Sign relating to Sign Permit No. AU557a#2. Petitioner

filed a document which was accepted by DOT as a request for

formal administrative hearing on October 26, 2005. The request

was transferred to the Division of Administrative Hearings

("DOAH) on March 24, 2009, and assigned to the undersigned.

At the final hearing held in this matter, Petitioner called

two witnesses: Vincent A. Stona and Gary Barbosa. Petitioner's

Exhibits 1 through 28 were admitted into evidence. Respondent

called one witness: Lynn Holschuh, an outdoor advertising

administrator with DOT. Holschuh was also re-called briefly for

rebuttal. Respondent's Exhibits 5 through 14 were admitted into

evidence.

At the close of the evidentiary portion of the final

hearing, the parties requested, and were allowed, ten days from

the filing of the hearing transcript within which to file their

respective proposed recommended orders. A one-volume hearing

Transcript was filed on October 14, 2009. Both parties timely

filed Proposed Recommended Orders containing proposed Findings

of Fact and Conclusions of Law. The parties' proposals have

been carefully considered during the preparation of this

Recommended Order.

FINDINGS OF FACT

1. Petitioner, SG Outdoor, is a company engaged in the

business of outdoor advertising in Florida.

2. Respondent is the State of Florida ("State") agency

responsible for monitoring compliance with State and Federal

laws relating to outdoor advertising. According to those laws,

signs within 660 feet of primary or interstate roadways visible

from those roadways are subject to advertising regulations.

There is currently a 1,500-foot spacing requirement (up from

1,000 feet in 1984) between signs. Further, signs must be

located on land zoned for commercial and industrial use.

3. Petitioner owns two signs which are at issue in this

proceeding. One of the signs is a single facing sign of wood

construction with a seven-foot height above ground level. The

sign is assigned Tag No. AU557. The sign is situated just off

Interstate 4, .871 miles east of State Road 33 in Polk County,

Florida. This sign will be referred to herein as the "Original

Sign." The Original Sign was built in 1971 and was located, at

all times relevant hereto, on land owned by Mrs. Ona Grimes

until that land was purchased by the State in October 2002.

4. Petitioner also constructed another sign at

approximately the same location. This sign, referred to herein

as the "New Sign," has a double-faced, single-metal pole and is

considerably higher in height than the Original Sign. Both the

Original Sign and the New Sign are located on property which DOT

contends is zoned as "Pasture, with residence." However, Polk

County did away with its zoning ordinance in March 2000 and

replaced it with Land Use Districts. The current Land Use

District designation for the site is Business Park Center

(within the Green Swamp Area of Critical State Concern). There

was no competent testimony at final hearing as to whether that

designation constitutes commercial or industrial zoning for

purposes of roadside signs.

5. The Original Sign was purchased by Petitioner in 1991

and was located on the Grimes property. Petitioner entered into

a Ground Lease with Grimes that had a term of 30 years at a

payment of $1,500 per year.

6. In 2002, DOT entered into negotiations with Grimes to

purchase the property. When DOT purchases property on which a

roadside sign already exists, DOT may take the sign by way of

condemnation through eminent domain (sometimes referred to by

DOT as a "Take"). In such cases, the State must reasonably

compensate the sign owner for the taking of its sign. In the

alternative, the State may assume the sign lease and become a

lessor to the sign owner. In that case, the sign owner must

make its lease payments directly to the State.

7. On May 22, 2002, DOT sent a letter to Petitioner

explaining that DOT was in the process of acquiring the right of

way on which the Original Sign was located. DOT offered to

purchase (or Take) the sign from Petitioner for $17,300. While

that offer to Petitioner was pending, DOT went forward with the

purchase of the Grimes property. The purchase agreement for the

property was signed by Grimes on July 11, 2002. Four days

later, a letter from DOT to Petitioner was issued which said:

Subsequent to receiving agreement and signed

ODA [out door advertising] disclaimer from

the property owner, an offer has been made

to SG Outdoor, Inc. for the purchase of the

ODA structure. Negotiations are ongoing.

However, the purchase of Grimes property did not occur

immediately.

8. Meanwhile, in August 2002, Grimes entered into an

illegal lease with Lamar Advertising, giving Lamar the same

rights it had already contracted away to Petitioner. Petitioner

was unaware of the lease with Lamar at that time. Such a lease

would have been in violation of the already-existing lease

between Grimes and Petitioner. At almost the same time, a DOT

memorandum indicated that DOT was still "involved in ongoing

negotiations" with Petitioner concerning the sign.

9. The Grimes property purchase (by DOT) finally closed on

October 1, 2002, at which time DOT became the owner of the

Grimes property. Because of this fact, Petitioner was supposed

to make its annual lease payments to the State of Florida

("State") as the new owner. Stated differently, the State

became Petitioner's new lessor.

10. On October 14, 2002, Lamar Advertising filed a Sign

Permit Application with the Polk County Building Division. The

application was for approval of its sign on the Grimes property.

The application included a copy of Lamar's lease with Grimes;

the lease had a 10-year period and a payment of $4,000 per year. 1

11. On July 8, 2003 (ten months after DOT purchased the

property), Petitioner filed a permit application with Polk

County for the New Sign. Petitioner did not, at that time, have

permission from DOT to erect a new sign, but believed it could

obtain that permission after the fact. Petitioner then went

forward with the construction of the New Sign.

12. Meanwhile, Petitioner sent Grimes a check in October

2003, for its lease payment for the period June 1, 2003, through

May 30, 2004. By that time, the State already owned the Grimes

property. A member of the Grimes family sent Petitioner's check

back to Petitioner in January 2004, explaining that all payments

should be made directly to the State. There is no evidence in

the record as to whether Petitioner attempted to make a lease

payment to the Department at that time or at any other time.

13. In November 2003, DOT issued a certified letter to

Petitioner addressing Sign Permit No. AU557 that said:

On October 2, 2002, the above referenced

parcel was purchased by the Florida

Department of Transportation. Although the

Department will honor an existing lease, it

will not engage in any new lease agreements

nor grant permission for the referenced sign

to remain. Since any potential oral

agreement with the previous owner has

expired, the Department requests that the

[Original] sign be removed.

14. Clearly DOT was mistaken. Petitioner had a written,

not oral, lease with the prior owner. In response, Petitioner

sent DOT a copy of its Ground Lease with Grimes. At that time,

Petitioner also asked for a meeting with DOT's acquisition

director to continue negotiating a fair price for the Original

Sign.

15. Several months later (on July 9, 2004), DOT issued its

Notice of Violation regarding the Original Sign. The notice

said "that the outdoor advertising sign referenced above has

been acquired by the Department" (rather than saying the

Department had purchased the land). The notice directed

Petitioner to immediately remove the sign from the premises.

16. The notice was partially in error; DOT had actually

acquired the land, not the sign. Petitioner was in breach of

its lease with the State by failing to make lease payments as

required by the lease which DOT had assumed. However, it is

unclear as to whether, upon notice of receipt of the written

lease, DOT had ever advised Petitioner to send its lease

payments directly to the Department. The Notice of

Administrative Hearing Rights attached to the DOT Notice of

Violation indicates a deadline of 30 days from receipt of the

Notice for filing such a request, i.e., on or about August 10,

2005.

17. Petitioner responded to the Notice with another letter

(dated July 14, 2009) explaining again that it had a valid lease

with Grimes for the sign location. Petitioner's letter asked

DOT to abate its violation notice and reinstate Petitioner's

permit. It also stated that "[i]f the State decides not to

acknowledge the Judicial process [the ongoing probate dispute

with the Grimes family concerning the lease with Lamar] and

still proceeds with the Notice of Violation, then upon receiving

your next correspondence, we will exercise our privilege to

request an administrative hearing." Petitioner contends that

the quoted statement constituted its request for an

administrative hearing. However, the plain reading of the

statement indicates that it is a statement of future intent

based upon future actions by DOT.

18. DOT then issued a letter dated August 10, 2004, to

Petitioner explaining that the permit for the Original Sign had

been revoked. The letter directed Petitioner to remove the

sign. The letter stated that if Petitioner does not do so, then

DOT would have the right to remove the sign. (As of the date of

the final hearing in this matter, the sign was still in place.)

The August 10 letter, in response to Petitioner's July 14

letter, appears to be the "next correspondence" Petitioner had

requested. The exercise of its right to an administrative

hearing would, therefore, be due on or about September 11, 2004.

19. On September 8, 2004, Petitioner sent a letter to

Holschuh declining DOT's offer to purchase the Original Sign for

$17,000. That offer had been made in May 2002. 2 This letter

suggests a counter-offer of $82,500 as the purchase price. The

letter did not invoke Petitioner's right to an administrative

hearing. Holschuh responded that she was not involved in

acquisitions, and Petitioner should contact the district office

(with whom Petitioner had previously negotiated).

20. Instead of heeding Holschuh's directions, Petitioner

then sent her another letter asking her to send the

correspondence on to someone in the acquisition division. The

new letter also repeats the counter-offer of $82,500. This

letter did not invoke Petitioner's right to a formal hearing,

either.

21. About one year later, on October 6, 2005, DOT issued

another Notice of Violation, this one addressing Sign Permit

No. AU557a (which Holschuh at final hearing said referred to the

Original Sign, although there was no "a" nomenclature on the

July 9, 2004, Notice of Violation). Also, on October 6, 2005,

DOT issued a Notice of Violation addressing Sign Permit

No. AU557a#2, which Holschuh said referred to Petitioner's New

Sign, even though no permit for the New Sign had ever been

issued by DOT. The New Sign by this time had been completed and

was being used for outdoor advertising. Petitioner understands

the need for a permit to construct a new outdoor sign on the

State road right-of-ways, but opined that it believed it could

do so after the fact.

22. Petitioner has only obtained approval from Polk County

for erecting the sign, an event necessary for construction

purposes, but irrelevant to DOT requirements.

23. In the letter to DOT from Petitioner dated October 26,

2005 (and presumably accepted by DOT as Petitioner's request for

a formal hearing), reference is made to Sign Permit

No. AU557a#2, i.e., the New Sign. However, the letter addresses

the Original Sign and its perceived value by Petitioner. It is

patently unclear as to which sign is actually being addressed,

but facts surrounding both signs were presented at final hearing

and both have been addressed herein.

24. Nonetheless, Petitioner's October 26, 2005, letter was

submitted within 30 days of the latest Notice of Violation and

was presumably intended to invoke Petitioner's right to a formal

administrative hearing. This letter was then forwarded to DOAH

by DOT in March 2009, for the purpose of conducting the hearing.

(No evidence was presented as to why the DOT's cover letter and

Petitioner's request for hearing were not submitted to DOAH

until three-and-a-half years after the letter was written.)

CONCLUSIONS OF LAW

25. DOAH has jurisdiction over the parties to and the

subject matter of this proceeding pursuant to Section 120.569

and Subsection 120.57(1), Florida Statutes. 3

26. Proceedings under the jurisdiction of DOAH are de novo

in nature. § 120.57(1)(k), Fla. Stat.

27. As the party seeking to revoke Petitioner's permit,

the Department bears the burden of proof, by a preponderance of

the evidence, that the allegation in the charging document is

correct. See LaPointe Outdoor Advertising v Florida Department

of Transportation , 382 So. 2d 1347 (Fla. 1980); Florida

Department of Transportation v. J.W.C. Company , 396 So. 2d 778,

788 (Fla. 1st DCA 1981).

28. The control and regulation of roadside signs in the

State falls within the purview of DOT as set forth in Chapter

479, Florida Statutes. DOT's specific duties in this regard are

set forth at Section 479.02, Florida Statutes, and in Florida

Administrative Code Rule 14-10.

29. Florida Administrative Rule 14-10.0042 states in

pertinent part:

(1) If the Department intends to deny an

application for a license or permit, deny

reinstatement of a permit cancelled or not

renewed in error, or intends to revoke a

license or permit, the Department shall

provide, by certified mail, return receipt

requested, or by personal delivery with

receipt, notice of the facts which warrant

such action. The written notice shall

contain:

(a) The particular facts or bases for the

Department's action;

(b) The statute or rule relied upon;

(c) A statement that the applicant or

permittee has the right to an administrative

hearing pursuant to Section 120.57,F.S.;

(d) A statement that the Department's

action shall become conclusive and final

agency action and that the permit or license

will be denied or revoked if no request for

a hearing is filed within 30 calendar days

of receipt of the notice of the Department's

intended action.

In the present action, DOT met the requisite requirements

concerning notice about revocation of the Original Sign in its

July 9, 2004, Notice of Violation. However, when Petitioner

responded with correspondence indicating errors on the part of

DOT and requesting further consideration, DOT seems to have

abandoned its initial Notice of Violation.

30. Thereafter, on October 6, 2005, the Department

reissued a Notice of Violation for the Original Sign and also

issued one for the New Sign. Each of the notices was properly

served on Petitioner. In response, Petitioner requested and was

granted a formal administrative hearing.

31. Section 479.07, Florida Statutes, reads in pertinent

part:

(1) Except as provided in ss.

479.105(1)(e) and 479.16, a person may not

erect, operate, use, or maintain, or cause

to be erected, operated, used or maintained,

any sign on the State Highway System outside

an incorporated area or on any such portion

of the interstate or federal-aid primary

highway system without first obtaining a

permit for the sign from the department and

paying the annual fee as provided in this

section. For the purposes of this section,

"on any portion of the State Highway System,

interstate or federal-aid primary system"

shall mean a sign located within the

controlled area which is visible from any

portion of the main-traveled way of such

system.

* * *

(7) A permittee shall at all times

maintain the permission of the owner or

other person in lawful control of the sign

site to have and maintain a sign at such

site.

Once DOT had purchased the Grimes land, DOT became the de facto

and de jure landlord for purposes of the existing sign lease

with Petitioner. Petitioner should have, at that time, began

making lease payments to the Department. However, the extremely

confusing dialogue between DOT and Petitioner makes it

impossible to determine whether Petitioner was ever sufficiently

notified of this fact. Only upon receipt of the October 6,

2005, Notice of Violation does Petitioner get any idea that its

failure to make the payments is considered by the Department to

be a breach of the lease. No cure period was granted to

Petitioner as required by Section 479.05, Florida Statutes.

Thus, DOT cannot meet its burden of proving non-compliance by

Petitioner concerning the lease on the Original Sign.

32. Section 479.24, Florida Statutes, states in part:

Just compensation shall be paid by the

department upon the department's removal of

a lawful nonconforming sign along any

portion of the interstate or federal-aid

primary highway systems. This section does

not apply to a sign which is illegal at the

time of its removal. A sign will lose its

nonconforming status and become illegal at

such time as it fails to be permitted or

maintained in accordance with all applicable

laws, rules, ordinances, or regulations

other than the provision which makes it

nonconforming.

The Department should, therefore, pay just compensation to

Petitioner for the Original Sign, minus any lease payments due

and owing.

33. The New Sign was admittedly constructed without State

approval and its revocation is warranted under the facts stated

herein. Petitioner admits its failure to apply for and receive

a permit for the New Sign.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that a final order be entered by Respondent,

Department of Transportation, reversing the revocation of Sign

Permit No. AU557 and providing Petitioner, SG Outdoor, just

compensation for that sign. Further, the final order should

deem the newly constructed sign on the same site to be

unauthorized and order its removal.

DONE AND ENTERED this 19th day of November, 2009, in

Tallahassee, Leon County, Florida.

R. BRUCE MCKIBBEN

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 the Clerk of the

Division of Administrative Hearings

this 19th day of November, 2009.

ENDNOTES

1/ This fact is not material to Petitioner's dispute with DOT,

except that it is a clear indication of some ongoing

misunderstanding concerning the subject property.

2/ The offer was actually for $17,300.

3/ Unless otherwise stated herein, all references to the Florida

Statutes shall be to the 2009 version.

COPIES FURNISHED :

Stephanie C. Kopelousos, Secretary

Department of Transportation

Haydon Burns Building, Mail Station 57

605 Suwannee Street

Tallahassee, Florida 32399-0450

Alexis M. Yarbrough, General Counsel

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

Deanna Hurt, Clerk of Agency Proceedings

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

Susan Schwartz, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0450

Vincent Stona

SG Outdoor

36181 East Lake Road, Suite 185

Palm Harbor, Florida 34685

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.