98-003449F Regency Place Apartments And Carole Naylor vs. Human Relations Commission Status: Closed DOAH Final Order on Monday, May 3, 1999.

Summary: Agency failed to prove that it was substantially justified in filing Administrative Charge two and one-half years after statutory deadline expired. Petitioner is entitled to attorney`s fees and costs as a prevailing small business party.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

REGENCY PLACE APARTMENTS, )

)

Petitioner, )

)

vs. ) Case No. 98-3449F

)

FLORIDA COMMISSION ON HUMAN )

RELATIONS, )

)

Respondent. )

_________________________________)

FINAL ORDER

A Formal Hearing was heard before the Division of

Administrative Hearings by Daniel M. Kilbride, Administrative Law

Judge, on December 15, 1998, by video conference between

Tallahassee and Orlando, Florida. The following appearances were

entered:

APPEARANCES

For Petitioner: Mike Krasney, Esquire

Krasney and Dettmer

304 South Harbor City Boulevard

Melbourne, Florida 32901

For Respondent: Evelyn Davis Golden

Assistant General Counsel

Florida Commission on Human Relations

325 John Knox Road

Building F, Suite 240

Tallahassee, Florida 32303-4149

STATEMENT OF THE ISSUE

Whether Petitioner is entitled to an award of attorney's

fees and costs as a prevailing small business party in an

adjudicatory proceeding initiated by a state agency as provided

under the Florida Equal Access to Justice Act (FEAJA),

Section 57.111, Florida Statutes.

Whether the amount claimed by Petitioner for attorney's fees

and costs is reasonable.

PRELIMINARY STATEMENT

Respondent agency issued a Notice of Determination: Cause

and Issuance of Administrative Charge on August 28, 1996.

Petitioner filed a request for a formal hearing. A formal

hearing, pursuant to Section 120.57(1), Florida Statutes, was

held before the Division of Administrative Hearings on April 16,

1997. The Administrative Law Judge issued a Recommended Order,

dated July 7, 1997, recommending the charges be dismissed against

all parties in that action. A Final Order, adopting the

Recommended Order, was issued on June 17, 1998. The Petition for

Costs and Attorney's Fees, pursuant to Section 57.111, Florida

Statutes, was filed with the Division of Administrative Hearings

by the Petitioner on July 27, 1998. Following entry of an Order

denying Respondent agency's Motion to Strike, this matter was

subsequently set for hearing. At a motion hearing, conducted by

telephone conference call, it was determined that Petitioner,

Carole Naylor, was not a small business owner, as defined by

Section 57.111, Florida Statutes, and is not entitled to recover

fees in this matter and was dismissed as a party.

The hearing on the merits was held on December 15, 1998.

Official Recognition was taken of the transcript of the formal

hearing held on April 16, 1997, as well as the Recommended and

Final Orders in the underlying case. Robert Stitzel testified,

as did Eli Subin, Esquire, and counsel for Petitioner on behalf

of Petitioner. Respondent agency offered no opposing affidavits

and submitted no testimony in opposition to the claim for

attorney's fees and costs, but did cross-examine Petitioner's

witnesses and offered oral argument. The Transcript was filed

with the Clerk of the Division of Administrative Hearings on

January 15, 1999. The Petitioner filed a motion for extension of

time to file proposed final orders on January 17, 1999.

Respondent agency timely filed an objection to the Motion. The

Motion was granted by order dated February 1, 1999. Respondent

agency filed a Motion to Reconsider the order of February 1,

1999, and Petitioner filed a response thereto. Said Motion to

Reconsider is denied. Each party has filed proposed final orders

in this matter which have been carefully considered in the

preparation of this Final Order.

Based upon all of the evidence, the following findings of

relevant fact are determined:

FINDINGS OF FACT

1. The Respondent agency is charged with the

administration of the Florida Civil Rights Act of 1992, as

amended, Section 760.30, Florida Statutes (1995). If Petitioner

is unable to obtain voluntary compliance with Sections 760.20 -

760.37, Florida Statutes, or has reasonable cause to believe a

discriminatory housing practice has occurred, the Respondent

agency may institute an administrative proceeding under Chapter

120, Florida Statues, on behalf of the aggrieved party.

2. On February 3, 1993, Polly Leggitt filed a complaint

with the Respondent agency and the United States Department of

Housing and Urban Development. The Complaint named Carole

Naylor, Property Administrator, as the person who discriminated

against her.

3. On March 24, 1993, the Respondent agency notified

Regency Place Apartments and Carole Naylor that the Complaint had

been filed, and stated that within 100 days, the Respondent

agency would investigate the Complaint and give notice whether

there was or was not reasonable cause to believe that a

discriminatory housing practice had occurred. The notice further

provided that final administrative disposition of the Complaint

would be completed within one year from the filing of the

Complaint, which would be on or about February 3, 1994.

4. A Notice of Determination: Cause and Issuance of an

Administrative Charge was made and issued and served on

August 28, 1996. It named Regency Place Apartments; Carole

Naylor, Frank Cutrona, Property Manager; and Robert Stitzel,

owner. The notice was issued more than one year after the filing

of the Complaint.

5. Following the formal hearing, this Administrative Law

Judge made certain findings of fact which were incorporated in

the Recommended Order. Those findings held, inter alia :

(a) Robert Stitzel was the developer and

owner of Regency Place Apartments. Carole

Naylor, at the direction of the manager Frank

Cutrona, sent Ms. Leggitt letters rejecting

her application for an apartment unit at

Regency Place Apartments because there was no

apartment of the kind she wanted that was

available and further that her income was

insufficient to qualify her for housing at

that place. Cutrona died on December 26,

1996.

(b) Carole Naylor did not work in the rental

office. She made no judgments regarding the

rental of the apartment, nor the

creditworthiness of the prospective tenants.

(c) Robert Stitzel made no judgments

regarding the tenants.

(d) Regency Place Apartments had a policy

which requires income equaling three times the

gross rental. The creditworthiness and the

determination of who would rent apartments was

left solely with the resident manager.

(e) Stitzel demonstrated that many disabled

people had lived in the apartment complex.

Accommodations were made for people with

disabilities by the manager and such costs for

these accommodations were paid by Regency

Place Apartments.

(f) The agency made a prima facie case of

discrimination in that Leggitt is a

handicapped person, who is otherwise qualified

to rent the apartment, and suffered a loss of

a housing opportunity, under circumstances

which lead to an inference that Stitzel based

its action solely upon her handicap.

(g) Evidence was presented that Regency Place

Apartment's requirement of gross income

equaling three times the monthly rent had not

been satisfied by Leggitt's mother's agreement

to contribute $550 per month. Leggitt's

income was $281.34 per month. Three times the

monthly rent was $1,140.00, thus rendering her

income short by $308.66 per month.

(h) The motivation for rejecting the

application was that the apartment which

Leggitt wanted was not available and Leggitt

did not have sufficient income to qualify.

(i) There was no evidence of a discriminatory

motive on the part of Cutrona, Naylor,

Stitzel, or Regency Place Apartments, other

than conjecture. There was no evidence that

suggests the reasons given were not true at

the time the letters were written or that they

were merely pretextual. Further, it did not

appear from the evidence that any

discriminatory motive was proven. There was

nothing in the evidence that proves that

Leggitt's legal blindness was a cause of the

rejection of her application.

(j) There was no evidence of any act or

conduct which would suggest discriminatory

conduct or a discriminatory animus by any of

the persons named as Respondents in the

Administrative Charge.

(k) Taken as a whole, the credible evidence

indicated that the sole basis for rejecting

Leggitt's application was the unavailability

of the unit that she requested, and her

failure to satisfy management of her financial

ability to meet the financial requirements of

Regency Place Apartments.

(l) Although Leggitt testified as to her

inconvenience caused by the denial of her

application, there was no evidence of any

quantifiable damages presented at the hearing.

6. In the Conclusions of Law, it was determined that the

Motion to Dismiss should have and was granted on the grounds that

the Respondent agency failed to comply with the statutory time

requirements:

(a) Under the Federal Fair Housing

Amendments Act, "the Secretary shall make

an investigation of the alleged

discriminatory housing practice and

complete such investigation within 100

days after filing of the Complaint . . .

unless it is impracticable to do so." 42

U.S.C. s 3610(a)(1)(B)(iv). The statute

also provides that if "the Secretary is

unable to complete the investigation

within 100 days" after complainant files

the complaint, the Secretary "shall notify

the complainant and respondent in writing

of the reasons for not doing so." 42

U.S.C. s. 3610(a)(1)(c).

(b) This same provision is found in the

Florida Fair Housing Act. See Section

760.34, Florida Statutes (1995), and

Chapter 60Y-7, Florida Administrative

Code.

(c) The Florida Administrative Code

provides as follows:

"Section 60Y-7004(8)(b) If the

Commission is unable to

complete its investigation

within 100 days, it shall

notify the complainant and

respondent in writing of the

reasons for not doing so."

(d) Section 60Y-7.004(10) The Commission

will make final administrative deposition

of a complaint within one year of the date

of receipt of the complaint, unless it is

impracticable to do so. If the Commission

is unable to do so, it shall notify the

complainant and respondent in writing of

the reasons for not doing so."

7. It is undisputed in this case that the Respondent

agency did not file its determination until August 28, 1996, over

three and one-half years from the time Leggitt filed her

complaint. It is also undisputed that the Respondent agency

never notified Petitioner, or the other parties, that it would be

unable to complete the investigation within 100 days as required

by statute. Nor did it notify Stitzel in writing why an

administrative disposition of a Complaint had not been made

within one year of receipt of the Complaint.

8. Petitioner established that the Respondent agency

violated the statutory time limits and that the three and one-

half year delay in filing the Respondent agency's Notice of

Probable Cause caused the proceedings to be impaired and was to

Petitioner's extreme prejudice.

9. At the attorney's fee hearing, Respondent agency

offered no testimony or other evidence as to the cause for the

extreme delay in the filing of the Administrative Charge, or the

rationale for filing the Charge two and one-half years after the

expiration of the statutory deadline for filing said charges.

10. At the attorney's fees hearing, Respondent agency

offered no testimony or other evidence as to why it claimed to be

substantially justified in finding probable cause and filing the

Administrative Charge.

11. The Petitioner, demonstrated that, at the time the

matter was initiated, Regency Place Apartments was a business

operating as a limited partnership and that Robert Stitzel was

the general partner; that the principal place of business was in

Florida; and that it did not have more than 25 full-time

employees.

12. Petitioner retained counsel to defend it on the charges

contained in the Notice of Determination, Cause and Issuance of

an Administrative Charge, and Petitioner was the prevailing small

business party.

13. Counsel for Petitioner expended 76 hours on this

matter, not including time expended on the Petition for

Attorney's Fees or time expended following his appearance before

the Commission prior to the issuance of the final order.

Counsel's billing for Petitioner's time at an hourly rate of $200

is reasonable in this case.

14. The Petitioner's billable costs of $609.75 are

reasonable.

CONCLUSIONS OF LAW

15. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding, and the

parties thereto, pursuant to subsections 57.111(4)(b)1. and

Section 120.57(1), Florida Statutes (1997).

16. The Florida Equal Access to Justice Act (FEAJA),

Section 57.111, Florida Statutes, provides in pertinent part:

(4)(a) 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, unless the actions of the

agency were substantially justified or

special circumstances exist which would make

the award unjust.

17. The FEAJA, enacted by the Florida Legislature in 1984,

is patterned after a federal law on the same subject -- The

Federal Equal Access to Justice Act (the Federal Act), 5 U.S.C.,

Section 504. Enacted in 1981, the Federal Act provides in

pertinent part:

(a)(1) An agency that conducts an adversary

adjudication shall award, to a prevailing

party other than the United States, fees and

expenses incurred by that party in connection

with that proceeding, unless the adjudicative

officer of the agency finds that the position

of the agency was substantially justified or

that special circumstances make an award

unjust . . . .

18. The federal and state statutes use similar language,

and the legislative history of the Florida Act shows that

legislators were aware of the federal prototype. Gentele v.

Department of Professional Regulation , 9 FALR 311 (DOAH,

June 20, 1986), citing Senate Staff Analysis and Economic Input

Statements CS/SB 438 (5-2-84); and the record of the 5-2-84

meeting of the Senate Governmental Operations Committee, sponsor

of the bill.

19. When, as in this case, a Florida Statute is patterned

after a federal law on the same subject, it will take the same

construction in the Florida courts as its prototype has been

given in federal courts insofar as such construction is

harmonious with the spirit and policy of Florida legislation on

the subject. Gentele v. Department of Professional Regulation ,

513 So. 2d 672, 673 (Fla. 1st DCA 1987).

20. Section 57.111, Florida Statutes, provides for an award

of attorney's fees from the state to a "small business party"

under certain circumstances in order to diminish the detrimental

effect of seeking review of, or defending against governmental

action. This section states in part:

(3)(d) The term "small business party" means:

1.a. A sole proprietor of an unincorporated

business, including a professional practice,

whose principal office is in this state, and

whose business or professional practice 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 $2

million, including both personal and business

investments.

21. The Petitioner established that it was a small business

party within the contemplation of the statute in that:

a) During the relevant time, Petitioner was

operating a business as a limited partnership

and Robert Stitzel was the general partner;

b) Petitioner's principal place of business

was in the State of Florida, located at

Regency Place Apartments, Melbourne, Florida;

c) Petitioner did not have more than 25

full-time employees;

See generally Ann and Jan Retirement Villa v. Department of

Health and Rehabilitative Services , 580 So. 2d 278 (Fla. 1st DCA

1991).

22. Since Petitioner qualifies as a small business party

under the FEAJA, a state agency must have initiated some action

against a small business party. The recited purpose behind the

establishment of Section 57.111, FEAJA, is that "[t]he

Legislature finds that certain persons may be deterred from

seeking review of, or defending against, unreasonable government

action because of the expense of civil actions and administrative

proceedings . . . . The purpose of this section is to diminish

the deterrent effect of seeking review of, or defending against,

government action by providing in certain situations an award of

attorney's fees and costs against the state."

23. Section 57.111(3)(b), Florida Statutes, provides as

follows: The term "initiated by a state agency" means that the

state agency: . . . (3) was required by law or rule to advise a

small business party of a clear point of entry after some

recognizable event in the investigatory or other free-form

proceeding of the agency.

24. In the instant case, the Respondent agency issued a

Notice of Determination: Cause and Issuance of an Administrative

Charge directed to Petitioner, and others, charging them with

certain discriminatory housing practice violations. Petitioner

denied the charges and requested a formal hearing, pursuant to

Chapter 120, Florida Statutes. Therefore, this matter was

initiated by a state agency.

25. Petitioner is a "prevailing small business party" since

the Final Order has been entered in its favor.

Section 57.111(3)(c)1., Florida Statutes (1997). Department of

Professional Regulation v. Toledo Realty , 549 So. 2d 715, 717

(Fla. 1st DCA 1989).

26. Section 57.111(3)(e) of the Act states: A proceeding

is "substantially justified" if it had a reasonable basis in law

and fact at the time it was initiated by a state agency. It is

instructive to look to the decisions of federal courts which have

construed the meaning of the language of the Federal Act.

Structured Shelters Financial Management Inc. v. Department of

Banking, 10 FALR 389, (DOAH 1987); Gentele v. Department of

Professional Regulation , supra .

27. In discussing the meaning of the term "substantially

justified," the court in Ashburn v. U.S. , 740 F.2d 843 (11th Cir.

1984), said:

The government bears the burden of showing

that its position was substantially

justified. (citation omitted) The standard

is one of reasonableness; the government must

show "that its case had a reasonable basis

both in law and fact." (citations omitted)

Ashburn went on to say that the fact that the government lost its

case does not raise a presumption that the government's position

was not substantially justified. Neither is the government

required to establish that the decision to litigate was based on

a substantial probability of prevailing. White v. U.S. , 740 F.2d

836 (11th Cir. 1984). See generally Pierce vs. Underwood , 487

U.S. 552, 565, 108 S.Ct. 2541 (1988).

28. Respondent agency's reliance on Christiansburg Garment

Company vs. Equal Opportunity Commission , 434 U.S. 412 (1978) and

LeBlanc-Sternberg vs. Fletcher , 143 F.2d 765 (2d Cir. 1998), is

misplaced. The test under Section 57.111, Florida Statutes, is

far different than the criteria established under the federal

cases or under Section 57.105, Florida Statutes. Section 57.105,

Florida Statutes, awards attorney's fees only if there is a

complete absence of justiciable issue in law or fact. The cases

comparing the results between Sections 57.105 and 57.111, Florida

Statutes, are clearly distinguishable.

29. The Florida Legislature recognized the difference

between the two criteria for determining attorney's fees. The

cases cited by Respondent agency which deny attorney's fees under

Section 57.105, Florida Statutes, have a completely different

standard of proof. Section 57.111, Florida Statutes, mandates

that attorney's fees be awarded unless the agency proves

substantial justification. Under Florida Law, the "substantially

justified" standard falls somewhere between the "no justiciable"

issue standard of Section 57.105, Florida Statutes, and an

automatic award of fees to the prevailing party. Helmly vs.

Department of Business and Professional Regulation , 707 So. 2d

366 (Fla. 1st DCA 1998).

30. Once the Petitioner, who is seeking fees, proved that

it was a small business, as defined by Section 57.111, Florida

Statutes, and is the prevailing party, the burden shifted to the

Respondent agency to show that its action in initiating the

proceeding was "substantially justified." Gentele vs. Department

of Professional Regulation , 9 FALR 310, 327 (DOAH 1986), affirmed

513 So. 2d 672 (Fla. 1st DCA 1987). In this regard, Respondent

agency wholly failed to present any evidence as the basis on

which it initially filed the Administrative Charge. At the

hearing, the only argument that was made was that 'substantial

justification' existed.

31. The fact that the Respondent agency was able to prove a

prima facie case in the underlying action is insufficient to show

"substantial justification" by the agency because the order and

burden of proof in a handicap-discrimination case involving the

'traditional' standard set forth in McDonnell-Douglas Corporation

vs. Greece , 411 U.S. 792 (1973), and Texas Department of

Community Affairs vs. Burdine , 450 U.S. 248 (1981), is that a

prima facie case of unlawful discrimination merely raises an

inference that the complainant's loss of a housing opportunity

was based on her handicap. No inference of animus attaches and

the ultimate burden of persuasion remained with the Respondent

agency. See St. Mary's Honor Center vs. Hicks , 509 U.S. ____,

113 S.Ct. 2742 (1993). Respondent agency had the obligation in

this proceeding to present some evidence to demonstrate that it

had probable cause to issue the Notice of Determination: Cause

and Administrative Charge in the first instance. This, it has

wholly failed to do. At the formal hearing in the underlying

case, the only evidence offered to prove pretextual motive on the

part of Petitioner was hearsay or conjecture.

32. Equally important, the Recommended Order held, and the

Final Order agreed, that the case should be dismissed because

Respondent agency failed to make an administrative disposition of

the Complaint within one year of the date of receipt of the

Complaint and failed to notify the complainant and Petitioner

(Respondents in the underlying case) of the reasons for not doing

so. Nevertheless, it filed its Administrative Charge

Determination more than two and one-half years after the

expiration of the statutory time limit. Respondent agency failed

to produce any evidence at the hearing on this matter as to the

cause for the excessive delay in prosecuting this case or why it

ignored its statutory time limits and filed the charges anyway.

This is clearly unreasonable government action. Ann and Jan

Retirement Villa v. Department of Health and Rehabilitative

Services , supra .

33. Accordingly, at the time the Administrative Charge was

issued, the Respondent agency had had no reasonable basis both in

law and fact for its decision to issue the Notice of

Determination and the Administrative Charge and was, therefore,

not substantially justified in issuing the charge citation.

Helmly v. Department of Business and Professional Regulation ,

supra ; Gentele vs. Department of Professional Regulation , supra ;

Department of Professional Regulation v. Toledo Realty , supra .

34. Petitioner presented sufficient evidence to show that

the request for attorney's fees and costs was reasonable for the

maximum amount allowable under Section 57.111(4)(d)2., Florida

Statutes,

CONCLUSION

In this case, the Respondent agency initiated the action and

the Petitioner was the prevailing party in the underlying action.

The greater weight of the evidence supports the position that

Petitioner is a "small business party" within the meaning of the

Florida Equal Access to Justice Act. The Respondent agency

wholly failed to prove that it had a reasonable basis in both law

and fact for its actions at the time the Administrative Charge

was issued or that it was substantially justified in its

position.

ORDER

It is, therefore,

ORDERED that

1. The Petition for Attorney's Fees and Costs is GRANTED.

2. Petitioner is entitled to an award of $15,000 in

attorney's fees and costs.

DONE AND ORDERED this 3rd day of May, 1999, in Tallahassee,

Leon County, Florida.

___________________________________

DANIEL M. KILBRIDE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 3rd day of May, 1999.

COPIES FURNISHED:

Evelyn Davis Golden

Assistant General Counsel

Florida Commission on Human Relations

325 John Knox Road

Building, Suite 240

Tallahassee, Florida 32303-4149

Mike Krasny, Esquire

Krasny and Dettmer

304 South Harbor City Boulevard

Melbourne, Florida 32901

Sharon Moultry, Clerk

Florida Commission on Human Relations

325 John Knox Road

Building F, Suite 240

Tallahassee, Florida 32303-4149

Dana Baird, General Counsel

Florida Commission on Human Relations

325 John Knox Road

Building F, Suite 240

Tallahassee, Florida 32303-4149

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 one copy of

a notice of appeal with the Clerk of the Division of

Administrative Hearings and a second 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.