02-003027F John Gerrity Wade, A.R.N.P., R.N. vs. Department Of Health, Board Of Nursing Status: Closed DOAH Final Order on Monday, February 3, 2003.

Summary: Sole "member" of limited liability company is not small business party where limited liability company was created after date of events alleged in Administrative Complaint and limited liability company was not named as a party in the complaint.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN GERRITY WADE, A.R.N.P., )

R.N., )

)

Petitioner, )

)

vs. ) Case No. 02 - 3027F

)

DEPARTMENT OF HEALTH, BOARD OF )

NURSING, )

)

Respondent. )

)

FIN AL ORDER

On July 31, 2002, the Petitioner, John Gerrity Wade,

A.R.N.P., R.N. ("Mr. Wade"), filed his Petition for Attorney's

Fees and Costs, in which he seeks an award of such fees and

costs pursuant to Section 57.111, Florida Statutes. He asserts

entit lement to such costs and fees on the basis of his

contention that he is a "small business party" and a "prevailing

small business party" within the meaning of those terms as

defined at Section 57.111(3)(c) and (d), Florida Statutes. 1

Attached to the petit ion were numerous exhibits. One of

those exhibits (Exhibit 6) is a certification dated June 12,

2002, by the Florida Secretary of State, which includes the

following language:

I certify from the records of this office

that JOHN G. WADE, L.L.C., is a limit ed

liability company organized under the laws

of the State of Florida, filed on

November 17, 2000.

On August 1, 2002, the Division of Administrative Hearings

issued an Initial Order which required the Respondent to, within

20 days, file a written stateme nt setting forth its defenses to

the petition. On August 21, 2002, the Respondent timely filed

Respondent's Response to Initial Order, in which it stated its

defenses. On the same date, the Respondent filed Respondent's

Motion to Dismiss Petitioner's Pet ition for Attorneys Fees and

Costs. 2

In its motion seeking dismissal of the Petition in this

case, the Respondent asserts that, for two basic reasons set

forth in the motion, the Petitioner is not entitled to an award

of attorney's fees and costs under Se ction 57.111, Florida

Statutes. The first of such reasons is an assertion that the

Petitioner is not a "small business party" within the definition

of that term in Section 57.111(3)(d), Florida Statutes. The

second of such reasons is an assertion that th e agency's action

in the underlying case was "substantially justified." 3

On August 30, 2002, the Petitioner filed a response in

opposition to the motion to dismiss. The arguments in the

response include the assertion that the motion to dismiss should

be denied because it relies on facts different from the facts

alleged in the Petition and, for purposes of the motion to

dismiss, all facts alleged in the Petition must be taken as

true. The response also contains legal arguments regarding the

interpretation that should be given to the relevant definitions

in Section 57.111, Florida Statutes, and legal arguments as to

how some of the apparent conflicts and inconsistencies in the

case law interpreting Section 57.111, Florida Statutes, should

be resolved. And, finally, the response argues that the

"substantial justification" issue is not ripe for disposition by

motion to dismiss, because there are disputed issues of fact

that are material to the "substantial justification" issue.

The parties' written arguments have been carefully

considered during the preparation of this order. All facts

asserted in the Petition for Attorney's Fees and Costs have

been, as they must be, taken to be true for purposes of

disposing of the motion. 4

Section 57.111, Florida Statutes , includes the following

definitions of terms used in that statutory provision:

(c) 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

issue s which such party raised during the

course of the proceeding; or

3. The state agency has sought a voluntary

dismissal of its complaint.

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

1.a. A sole proprietor of an unincorporated

business, including a p rofessional practice,

whose principal office is in this state, who

is domiciled 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 no t more than $2 million,

including both personal and business

investments; or

b. A partnership or corporation, including

a professional practice, which has its

principal office in this state and has at

the time the action is initiated by a state

agency n ot more than 25 full - time employees

or a net worth of not more than $2 million.

. . .

The Respondent's motion to dismiss first addresses the

contention that the Petitioner is not a "small business party"

within the meaning of that term, as defined in the statutory

provisions upon which the Petitioner bases his claim to costs

and fees. In the arguments incorporated into its motion to

dismiss, the Respondent, relying on such cases as Shealy , Toledo

Realty , Thompson , Jory , and Zalis , 5 presents a convincing a nd

compelling argument in support of the proposition that the

Petitioner is not a "small business party." Conclusions based

on the reasoning contained in the above - mentioned cases appear

to be much more sound than any conclusions that can be reached

by re lying on the reasoning that supports the conclusions

reached in such cases as Albert and Ann & Jan . 6

All of the argument on the subject of the Petitioner's

status as a "small business party" on pages 7 through 17 of the

Respondent's corrected motion to dis miss is hereby adopted as a

basis for granting the motion to dismiss. Additional support

for the same conclusion also flows from the fact that the

business entity named JOHN G. WADE, L.L.C., a limited liability

company organized under the laws of the Stat e of Florida, did

not come into existence until November 17, 2000, which was

several months after the last of the alleged actions of Mr. Wade

(the individual) that formed the basis for the agency actions

for which Mr. Wade seeks costs and fees. ( See Exhib its 1, 2, 3,

and 6 attached to the Petition.) The business entity named

JOHN G. WADE, L.L.C., was not a named party in any of the agency

actions upon which Mr. Wade claims entitlement to costs and

fees, and there is no rational basis for attributing to su ch

business entity some form of imputed party status in

administrative proceedings that arose from events that preceded

the formation of the business entity upon which Mr. Wade bases

his claim to status as a "small business party."

It is also worthy of not e that Mr. Wade's claim to small

business party status is asserted to be in his capacity as "the

sole proprietor of John G. Wade, LLC, an unincorporated

business." ( See paragraph 10 of the Petition.) Although the

matter is not entirely free from doubt, t he term "sole

proprietor" does not appear to be a term that would normally

encompass a person who was a creator, investor, or owner of a

limited liability company, even if such person were the sole

creator, investor, or owner. The statutory term for such a

person, whether acting alone or in concert with others, is

"member." Section 608.402(21), Florida Statutes. In this

regard, it should also be noted that the definition of a "small

business party" in Section 57.111, Florida Statutes, does not

mention a "limited liability company," nor does it mention a

"member" of such a company. And there does not appear to be any

logical way to stretch the language of Section 57.111, Florida

Statutes, far enough to encompass a "limited liability company"

or a "member" of such a company.

Implicit in the Petitioner's arguments is the notion that a

"limited liability company" is "an unincorporated business."

Such does not appear to be the case. The most logical

interpretation of the term "sole proprietor of an unincorpo rated

business" is to limit the scope of the quoted term to those

individuals who engage in a business or practice a profession in

their own name or in a fictitious name, without creating a

separate legal entity through which to engage in business or

pract ice a profession . A "limited liability company" is a legal

entity that is separate and distinct from the person who created

the company, even when the creator is the sole "member" of the

company. Because of that separate and distinct status, a

"limited l iability company" does not appear to be an entity that

would come within the normal meaning of the term "sole

proprietor of an unincorporated business." This view of what is

encompassed by the quoted definition is also supported by the

fact that, although not a corporation in name, a "limited

liability company" is, for all practical purposes, a

corporation. In this regard it is interesting to note that

Section 608.701, Florida Statutes, reads as follows:

In any case in which a party seeks to hold

the memb ers of a limited liability company

responsible for the liabilities or alleged

improper actions of the limited liability

company, the court shall apply the case law

which interprets the conditions and

circumstances under which the corporate veil

of a corpor ation may be pierced under the

law of this state.

Judging from the above - quoted provision, it would appear

that a "limited liability company" is much more like a

corporation than it is like a "sole proprietor of an

unincorporated business." It seems mos t unlikely that the

Legislature intended to include "limited liability companies" or

their "members" within the statutory definition of "small

business party" in Section 57.111, Florida Statutes.

The motion to dismiss also argues that the petition in this

case should be dismissed because the agency actions upon which

the Petitioner bases his claim were "substantially justified."

On the present state of the record, the substantial

justification issue cannot be addressed on the merits because

the Respondent 's position on that issue depends in part on facts

that are not alleged in the petition or on facts asserted by the

Respondent which are disputed by the Petitioner. Under such

circumstances an issue raised in a motion to dismiss cannot

properly be resolve d on the merits.

FINAL ORDER

For all of the reasons set forth above, it is ORDERED:

That the pending motion seeking the dismissal of the

petition in this case is GRANTED, the petition is hereby

DISMISSED, all relief sought by the Petitioner is hereby DEN IED,

and the file of the Division of Administrative Hearings in this

matter is hereby CLOSED. 7

DONE AND ORDERED this 3rd day of February, 2003 , in

Tallahassee, Leon County, Florida.

___________________________________

MICHAEL M. PARRISH

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 3rd day of February, 2003 .

ENDNOTES

1/ In the underlying license discipline proceeding, DOAH Case

No. 02 - 1646PL, Mr. Wade is also seeking an award of attorney's

fees and costs pursua nt to Section 120.569(2)(e), Florida

Statutes.

2/ The Respondent's original motion to dismiss filed on

August 21, 2002, bore the case number of the underlying case

(DOAH Case No. 02 - 1646PL) and was, accordingly, filed in that

case. The Respondent prompt ly took steps to remedy its mistake,

and on August 22, 2002, it filed a corrected motion to dismiss

in this case. The Petitioner has moved to strike the corrected

motion. The motion to strike is denied.

3/ In the Respondent's Response to Initial Order, the

Respondent raised a third issue; namely, that the Petitioner was

not entitled to recover attorney's fees and costs pursuant to

Section 57.111, Florida Statutes, because such an award would be

"unjust."

4/ In his response to the motion to dismiss, th e Petitioner

asserts that the motion to dismiss must be denied because, for

purposes of the motion, the Petitioner's assertion that he is a

"small business party" must be taken as true. While it is clear

that all facts alleged in the petition must be take n as true for

the purpose of addressing the issues raised in a motion to

dismiss, not every assertion of a Petitioner is an assertion of

fact. In this case, the Petitioner's assertion that he is a

"small business party" is an assertion of an opinion or of a

conclusion reached by the Petitioner based on his interpretation

of the facts. But that opinion or conclusion is not a fact. At

best it is an assertion of a conclusion of law.

5/ Florida Real Estate Commission v. Shealy , 647 So. 2d 151

(Fla. 1st DCA 1994); Department of Professional Regulation,

Division of Real Estate v. Toledo Realty, Inc. , 549 So. 2d 715

(Fla. 1st DCA 1989); Thompson v. Department of Health and

Rehabilitative Services , 533 So. 2d 840 (Fla. 1st DCA 1988);

Jory v. Department of Profe ssional Regulation , 583 So. 2d 1075

(Fla. 1st DCA 1991); Department of Insurance and Treasurer v.

The Administrators Corporation and Charles H. Zalis , 603 So. 2d

1359 (Fla. 1st DCA 1992). These cases interpreting Section

57.111, Florida Statutes, are all well - reasoned and are all

consistent with each other. These cases also adhere to well -

established rules of statutory construction in deciding how

Section 57.111, Florida Statutes, should be applied.

6/ Albert, D.D.S. v. Department of Health, Board of De ntistry ,

763 So. 2d 1130 (Fla. 4th DCA 2000), and Ann & Jan Retirement

Villa, Inc. v. Department of Health and Rehabilitative Services ,

580 So. 2d 278 (Fla. 4th DCA 1991). These two cases are

inconsistent with a number of the conclusions reached in the

ca ses cited in the immediately preceding endnote. Further, some

of the reasoning supporting the conclusions reached in these two

cases is, at best, difficult to follow. Some of such reasoning

also appears to be inconsistent with a number of well -

establishe d rules of statutory construction.

7/ In view of the reasons for granting the motion to dismiss

the petition in this case, there does not appear to be any

manner in which the Petition for Attorney's Fees and Costs could

be amended to overcome the basis f or dismissal of the petition.

Accordingly, this order is a Final Order without any provision

for leave to amend the petition.

COPIES FURNISHED :

Kelly Cruz - Brown, Esquire

Carlton, Fields, Ward, Emmanuel,

Smith & Cutler, P.A.

Post Office Drawer 190

Ta llahassee, Florida 32302

Reginald Dixon, Esquire

Department of Health

4052 Bald Cypress Way

Bin C - 65

Tallahassee, Florida 32399 - 3265

R. S. Power, Agency Clerk

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399 - 1701

William W. Large, General Counsel

Department of Health

4052 Bald Cypress Way, Bin A02

Tallahassee, Florida 32399 - 1701

Dan Coble, R.N., Ph.D., C.N.A.A. C., B.C.

Executive Director

Board of Nursing

Department of Health

4052 Bald Cypress Way, Bin C02

Tallahassee, Florida 32399 - 3252

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 Pr ocedure. Such proceedings are commenced by

filing one copy of a Notice of Appeal with the agency 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 Dis trict, 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.