02-003527 My Oil Company, Inc. vs. Department Of Revenue Status: Closed Recommended Order on Wednesday, May 28, 2003.

Summary: Applicant failed to demonstrate entitlement to fuel license, where family member who is convicted felon is the source of funding, equipment, and facilities for proposed business.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MY OIL COMPANY, INC., )

)

Petitioner, )

)

vs. ) Case No. 02 - 3527

)

DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice , a formal hearing was held in this case

on January 16, 2003, via video teleconference in Tallahassee and

Fort Myers, Florida, before Lawrence P. Stevenson, a duly -

designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: E. Raymond Shope, II, Esquire

1404 Goodlette Road, North

Naples, Florida 34102

For Respondent: R. Lynn Lovejoy, Esquire

Office of the Attorney General

The Capitol - Tax Section

Tallahassee, Florida 32399 - 1050

STATEMENT OF THE ISSUE

Whether the Department of Revenue's denial of Petitioner's

application for a Florida fuel license should be upheld.

PRELIMINARY STATEMENT

On June 20, 2001, the Department of Revenue (the

"Department") received a Florida Fuel Tax Application for a fuel

license in the name of My Oil Company, Inc. ("My Oil"), the sole

owner and operator of which was listed as Maria Yzaguirre. On

January 18, 2002, the Department iss ued a Notice of Intent to

Deny the application. The stated basis for the denial was the

application of Section 206.026(1)(a)9, Florida Statutes, which

provides that a corporation may not hold a fuel license if an

owner of any interest in the corporation, including an immediate

family member of the owner, has been convicted of a felony.

Maria Yzaguirre's husband, Armando Yzaguirre, had attested in a

separate fuel license application, filed on behalf of his

company, Yzaguirre Oil Company, Inc., that he had been convicted

of a felony. Also on January 18, 2002, the Department denied

Yzaguirre Oil Company's application because of Mr. Yzaguirre's

admission of a felony conviction.

On January 28, 2002, My Oil timely filed a Petition for

Administrative Hearing, re questing an evidentiary hearing to

contest the Department's denial of its application. The case

was forwarded to the Division of Administrative Hearings and

assigned DOAH Case No. 02 - 0469. The hearing was held on

March 29, 2002. On July 3, 2002, the und ersigned issued a

Recommended Order upholding the Department's decision to deny

the license, but further recommending that such denial should be

without prejudice to My Oil's ability to file a subsequent

application curing the defects of its initial applic ation . The

Department's Final Order of September 5, 2002, adopted the

Recommended Order in toto .

By application dated July 22, 2002, My Oil again applied

for a fuel tax license as a carrier and wholesaler. This

application listed Maria Yzaguirre as presi dent of the

corporation and Armando B. Yzaguirre, the son of Armando

Yzaguirre, as vice - president of the corporation. On August 22,

2002, the Department denied the fuel tax license, again based

upon the provisions of Section 206.026(1)(a)9., Florida

Statu tes, that authorizes the Department to deny licensure to

any applicant whose immediate family member is a convicted felon

who is in a position to control the applicant corporation.

By petition dated August 26, 2002, My Oil challenged the

Department's deni al of its application. On September 11, 2002,

the Department forwarded the petition to the Division of

Administrative Hearings for assignment of an Administrative Law

Judge to conduct a formal administrative hearing. The hearing

was initially scheduled f or October 24, 2002, continued three

times, and ultimately held on January 16, 2003.

At the hearing, the Department presented the testimony of

Armando Yzaguirre; Lawrence J. Gowen, supervisor of the

Department's motor fuel registration unit; William P. Wel ch, a

senior tax specialist with the Department; and David L. Skinner,

the Department's fuel tax compliance coordinator and an expert

in fuel tax licensing. The Department's Exhibits 1 through 9

were accepted into evidence. My Oil presented the testimony of

Armando B. Yzaguirre. My Oil's Exhibits 1 through 3 were

accepted into evidence. My Oil's Exhibit 1 duplicated the

Department's Exhibit 6. My Oil's Exhibit 2 was the deposition

testimony of Mr. Gowen. My Oil's Exhibit 3 was the Final Order

in DOAH Case No. 02 - 0469.

A one - volume Transcript of the final hearing was filed with

the Division of Administrative Hearings on February 20, 2003.

The parties timely filed their Proposed Recommended Orders on

March 24, 2003.

FINDINGS OF FACT

Based on the oral a nd documentary evidence presented at the

final hearing and on the entire record of this proceeding, the

following findings of fact are made:

1. On or about July 22, 2002, Armando B. Yzaguirre

submitted to the Department a completed Florida Fuel Tax

Applic ation, Form DR - 156, seeking licensure as a private carrier

and wholesaler on behalf of My Oil (the "2002 Application").

The application listed Maria Yzaguirre as the president and

chairman of the board of My Oil, and listed Armando B. Yzaguirre

as the vic e - president and chief executive officer of My Oil.

2. This was the second Florida Fuel Tax Application filed

by My Oil. On or about June 22, 2001, Maria Yzaguirre submitted

to the Department a completed Florida Fuel Tax Application, Form

DR - 156, seeking licensure as a private carrier and wholesaler on

behalf of My Oil (the "2001 Application"). The application

listed Mrs. Yzaguirre as the president and sole stockholder of

My Oil.

3. The Department's rejection of the 2001 Application was

at issue in DOAH Case No. 02 - 0469. The rejection was based on

the fact that Armando Yzaguirre, a convicted felon whose civil

rights had not been restored and who was the father of

Armando B. Yzaguirre and the husband of Maria Yzaguirre,

appeared to be in a position to exe rt control over the business

of My Oil.

4. Shortly before the 2001 Application was filed, Armando

Yzaguirre had filed a Florida Fuel Tax Application for Yzaguirre

Oil Company Inc. ("Yzaguirre Oil"). The application listed

Armando Yzaguirre as the presi dent and sole stockholder of

Yzaguirre Oil. The coincidence of the applications, and the

fact that they listed many of the same assets, led the

Department to suspect that My Oil would operate as a "front" for

Yzaguirre Oil, which was presumptively ineligi ble for licensure

because it was owned and operated by a convicted felon.

5. The relevant facts found in the Recommended Order for

DOAH Case No. 02 - 0469 are as follows:

13. In his review of the Yzaguirre Oil

and My Oil applications, [Aaron Hood, the

De partment's revenue specialist] discovered

that the companies claimed many of the same

assets. Each company listed the same two

tanker trucks to be used in transporting

fuel. Each company listed 211 New Market

Road, East, in Immolakee as its principal

bus iness address. Each company claimed

exactly $1 million in accounts receivable.

14. The timing of the filings and the

common assets led Mr. Hood to suspect that

the later My Oil application was submitted

under Maria Yzaguirre's name to evade the

possib le disqualification of the Yzaguirre

Oil application because of Mr. Yzaguirre's

felony convictions. In short, Mr. Hood

suspected that My Oil was a "front"

corporation over which Mr. Yzaguirre would

exercise control.

15. The common assets also led Mr. Hood

to suspect the truthfulness and accuracy of

the financial affidavits filed by Maria

Yzaguirre on behalf of My Oil. While it

investigated the criminal history of

Mr. Yzaguirre, the Department also

investigated the extent of Mr. Yzaguirre's

possible co ntrol over My Oil's business

activities.

16. Armando B. Yzaguirre is the 25 - year -

old son of Armando Yzaguirre and the stepson

of Maria Yzaguirre. Testimony at the

hearing established that Armando B.

Yzaguirre completed both license

applications and wa s the driving force

behind the creation of both Yzaguirre Oil

and My Oil.

17. The elder Armando Yzaguirre's chief

business is farming. His tomato and melon

operation earns over $1 million per year.

To save money on transporting the large

amounts of f uel needed for his farming

operations, Mr. Yzaguirre purchased two

sizable tanker trucks in 2001, a new

Peterbilt with a capacity of 9,200 gallons,

and a 1998 Ford with a 2,500 gallon

capacity.

18. If these trucks were used only for

Mr. Yzaguirre's far m, they would sit idle

much of the time. This idle capacity gave

Armando B. Yzaguirre the idea of going into

the fuel transport business, using his

father's tankers to deliver fuel to other

farms and businesses in the area.

19. Yzaguirre Oil was incor porated to

operate as a fuel transport business. The

business would be operated entirely by

Armando B. Yzaguirre, who was the only

member of the family licensed to drive the

large tanker truck. The trucks were owned

by and licensed to Yzaguirre Oil.

2 0. Armando B. Yzaguirre was going

through a divorce at the time Yzaguirre Oil

was established. He was concerned that his

wife would have a claim to half of any

business he owned, and wished to ensure that

ownership of Yzaguirre Oil would remain in

his fa mily. Thus, Armando B. Yzaguirre

placed all ownership of Yzaguirre Oil in the

name of his father, though his father would

have no connection with the operation of the

company's business.

21. Subsequent to incorporating Yzaguirre

Oil, Armando B. Yzagui rre discussed his

prospective business with his stepmother,

Maria Yzaguirre. Mrs. Yzaguirre was pleased

that young Armando was establishing a

business for himself. They discussed the

future of the six younger Yzaguirre children

and ideas for businesses t hat could be

established to eventually be taken over by

the children.

22. Ultimately, the younger Armando and

Maria Yzaguirre settled on the idea of a

convenience store and filling station that

could be established on part of a city block

in Immolake e that the senior Mr. Yzaguirre

already owned. This would be the type of

business that the children could learn and

work at while they were still in school,

then take over after their graduation. This

was the genesis of My Oil.

23. Mrs. Yzaguirre con tacted a lawyer to

draft articles of incorporation and later

transferred $100,000 from her personal money

market account into a My Oil bank account to

provide start - up money.

24. The younger Armando Yzaguirre filled

out the fuel license application, using his

earlier application for Yzaguirre Oil as a

model. As with the earlier application, the

younger Armando Yzaguirre kept his name off

the corporate documents and the fuel license

application to avoid any claim by his soon -

to - be ex - wife to the compa ny's assets. He

anticipated that My Oil would lease the two

tanker trucks from Yzaguirre Oil, and thus

listed them on the application as assets of

My Oil.

25. At the hearing, Mr. Yzaguirre

conceded that he made mistakes on both

applications. As not ed above, he listed

$1 million in accounts receivable for each

of the companies. These were actually

accounts receivable for his father’s farming

operation, and should not have been included

as assets for either Yzaguirre Oil or My

Oil.

* * *

29. The Department pointed to several

alleged discrepancies in the My Oil

application as grounds for its suspicion

that the company was a "front" for Yzaguirre

Oil. First, the My Oil application, filed

June 20, 2001, lists a corporate asset of

$100,000 in c ash on deposit at an unnamed

bank, when in fact the cash was not

deposited in a My Oil account at Florida

Community Bank until September 10, 2001.

30. Second, the My Oil application lists

the two tanker trucks as corporate assets as

of the date of ap plication, when in fact the

trucks were titled in the name of Yzaguirre

Oil and the anticipated lease arrangement

had yet to be consummated.

31. Third, the My Oil application claimed

the property at 211 New Market Road, East,

as a corporate asset as of the date of

application, when in fact the property was

titled in the name of the elder

Mr. Yzaguirre.

32. Fourth, the My Oil application listed

$1 million in accounts receivable as a

corporate asset. As noted above, Armando B.

Yzaguirre admitted at t he hearing that these

receivables were from his father's farming

operation and should not have been listed on

the application as assets of My Oil.

33. Armando B. Yzaguirre plausibly

explained that My Oil anticipated leasing

the trucks, but that there w as no reason to

spend the money to finalize that arrangement

until the fuel license was obtained and My

Oil could actually commence operations.

Similarly, Mrs. Yzaguirre clearly had on

hand the $100,000 in cash claimed as a My

Oil asset, and the timing of her actual

transfer of that money into a My Oil account

would not alone constitute cause for

suspicion, given that My Oil had yet to

commence operations when the application was

filed.

34. Armando B. Yzaguirre also

convincingly explained that leasing the

tanker trucks from his father's company

would not give Yzaguirre Oil effective

control over My Oil's business. The younger

Mr. Yzaguirre contemplated that the lease

agreement would be an arms - length

arrangement between the two companies. If

the compa nies could not arrive at a mutually

satisfactory lease agreement, or if the

lease agreement should later fall through,

My Oil could lease trucks from another

company and continue doing business.

35. However, no witness for My Oil

offered a satisfactory explanation as to how

the elder Mr. Yzaguirre's ownership of the

real property would not give him some degree

of control over My Oil's business. At the

time of the hearing, title to the property

at 211 New Market Road, East, was in the

name of Armando Yz aguirre. A warranty deed

for at least a portion of the property,

executed by the prior owners on July 16,

1998, was in the name of Armando Yzaguirre.

36. The Yzaguirres did not explain

whether My Oil would purchase or lease the

property from the eld er Mr. Yzaguirre. The

structure of the arrangement is critical to

the issue of the elder Mr. Yzaguirre's

control over My Oil. Substitutes for the

tanker trucks could be obtained in short

order with little or no disruption of My

Oil's business. However, the physical

location of the convenience store and

filling station could not be changed so

readily, and the elder Mr. Yzaguirre's

position as owner of that property could

give him great leverage over the operation

of the business.

37. The Department al so raised the issue

of the undisclosed participation of

Armando B. Yzaguirre in the business affairs

of My Oil. The testimony of Maria Yzaguirre

and of her stepson strongly indicated that

the younger Mr. Yzaguirre would have

substantial control over the b usiness

activities of My Oil. However, because

Armando B. Yzaguirre's identity was not

disclosed on My Oil's application, the

Department had no opportunity to conduct a

review of his background and character to

determine whether he met the standard set by

Section 206.026, Florida Statutes.

38. In summary, there was no direct

evidence that the Yzaguirres deliberately

attempted to deceive the Department or that

My Oil was established as a front to obtain

licensure for the presumptively ineligible

Yzagu irre Oil. The evidence did establish

that Armando Yzaguirre has been convicted of

at least one felony, and that his ownership

of the real property on which My Oil would

conduct business could provide him with

control of My Oil's business activities.

The evidence further established that

Armando B. Yzaguirre will have control over

My Oil's business, and that the Department

should have had the opportunity to conduct a

background review to determine his fitness

under Section 206.026, Florida Statutes.

6. The relevant conclusions of law set forth in the

Recommended Order for DOAH Case No. 02 - 0469 are as follows:

42. Section 206.026, Florida Statutes,

provides in relevant part:

(1) No corporation . . . shall hold a

terminal supplier, importer, export er,

blender, carrier, terminal operator, or

wholesaler license in this state if any one

of the persons or entities specified in

paragraph (a) has been determined by the

department not to be of good moral character

or has been convicted of any offense

speci fied in paragraph (b):

(a)1. The licenseholder.

2. The sole proprietor of the

licenseholder.

3. A corporate officer or director of

the licenseholder.

4. A general or limited partner of the

licenseholder.

5. A trustee of the licenseholder.

6. A member of an unincorporated

association licenseholder.

7. A joint venturer of the

licenseholder.

8. The owner of any equity interest in

the licenseholder, whether as a common

shareholder, general or limited partner,

voting trustee, or trust beneficiary.

9. An owner of any interest in the

license or licenseholder, including any

immediate family member of the owner, or

holder of any debt, mortgage, contract, or

concession from the licenseholder, who by

virtue th ereof is able to control the

business of the licenseholder.

(b)1. A felony in this state.

2. Any felony in any other state which

would be a felony if committed in this state

under the laws of Florida.

3. Any felony under the laws of the

U nited States.

(2)(a) If the applicant for a license as

specified under subsection (1) or a

licenseholder as specified in paragraph

(1)(a) has received a full pardon or a

restoration of civil rights with respect to

the conviction specified in paragraph

(1)(b), then the conviction shall not

constitute an absolute bar to the issuance

or renewal of a license or ground for the

revocation or suspension of a license. . . .

43. In December 1990, Armando Yzaguirre

entered a no contest plea to a second - degree

felony charge of possession of more than

five but not more than 50 pounds of

marijuana in a Texas court. At the time of

Mr. Yzaguirre's Texas conviction, Florida

law listed cannabis as a Schedule I

substance. Section 893.03(1)(c)4, Florida

Statutes (199 0). Absent licensure or other

authorization, bringing cannabis into the

state was a third - degree felony in 1990.

Section 893.13(1)(d)2, Florida Statutes

(1990). Possession of more than 20 grams of

cannabis was a third - degree felony in 1990.

Section 893 .13(1)(f) and (g), Florida

Statutes (1990). There can be little

question that Mr. Yzaguirre's felony in

Texas would have constituted at least one

felony under Florida law, and thus that

Mr. Yzaguirre has been convicted of an

offense specified in Section 2 06.026(1)(b),

Florida Statutes.

44. Mr. Yzaguirre has not received a full

pardon or restoration of civil rights, thus

mooting any potential application of

Section 206.026(2)(a), Florida Statutes, to

this case.

45. Mr. Yzaguirre's ownership of the r eal

property that would hold My Oil's principal

place of business would give him the ability

to control the business of the

licenseholder. This conclusion might have

been different had My Oil presented evidence

of the business relationship under which it

would operate the facility on

Mr. Yzaguirre's property.

46. The extent of Armando B. Yzaguirre's

involvement in My Oil was not disclosed to

the Department. Testimony at the hearing

established that the younger Mr. Yzaguirre

would be the principal oper ator of My Oil

for the foreseeable future. Due diligence

under Section 206.026, Florida Statutes,

requires the Department to conduct a

background investigation of Armando B.

Yzaguirre prior to the issuance of a fuel

license to My Oil.

47. In conclusio n, My Oil has failed to

demonstrate its entitlement to a Florida

fuel license on the merits of the

application it filed on June 20, 2001.

7. The Recommended Order in DOAH Case No. 02 - 0469

recommended that My Oil's 2001 Application be denied, but

without prejudice to My Oil's ability to file a subsequent

application curing the defects of its 2001 Application.

8. In the 2002 Application, My Oil sought to cure those

defects. First, the 2002 Application listed Armando B.

Yzaguirre as a principal of My Oil, providing the Department an

opportunity to conduct an investigation of his background and

character. The Department's background check revealed no

criminal convictions or other disqualifying factors related to

Armando B. Yzaguirre.

9. The Department's ba ckground check also revealed no

criminal convictions or other disqualifying factors related to

Maria Yzaguirre.

10. The 2002 Application included an executed lease

agreement, dated July 19, 2002, by which Armando Yzaguirre

granted to My Oil a five - year le ase on the premises at 211 New

Market Road, East, in Immokalee. The lease specifies that My

Oil will pay rent of $1,000 per month, and that the premises are

to be used for the purpose of "a convenience store and retail

gasoline sales to the general public , storage, and uses related

to such use . . . and for no other purpose or purposes." The

lease expressly states: "Landlord shall have no control over

the use of the premises by the Tenant during the period of the

lease."

11. The 2002 Application contin ued to list the two tanker

trucks as assets of My Oil, though they remain titled to

Yzaguirre Oil. Armando B. Yzaguirre testified that My Oil does

have a written lease with Yzaguirre Oil for the use of the

tanker trucks. Armando Yzaguirre confirmed the e xistence of a

lease on the trucks. However, the lease was not included in the

2002 Application and was not produced at the hearing.

12. After receiving the 2002 Application, the Department

contacted Armando B. Yzaguirre to request a current balance

sheet for My Oil. The balance sheet submitted by Mr. Yzaguirre

purported to show the assets and liabilities of My Oil as of

July 22, 2002. The balance sheet indicated a negative total

equity of $5,904.43. It indicated a "credit card" debt of

$101,000 to Yzag uirre Farms, and other accounts payable of

$36,852.79 to Yzaguirre Farms.

13. At the hearing, the Department produced a canceled

check from Armando Yzaguirre to My Oil in the amount of

$101,000, with the notation, "My Oil Operating & Payroll."

14. Armand o Yzaguirre testified at the hearing that he has

taken steps to have his civil rights restored, but that the

process is not yet complete and his rights have not been

restored.

15. On August 22, 2002, the Department issued its Notice

of Intent to Deny the 2002 Application, which stated, in

relevant part:

Your organization does not qualify for this

license as there is a felony conviction of

an owner of interest in the license and/or

an immediate family member of the owner, as

outlined in Chapter 206.026(1)(a )(9)&(b),

Florida Statutes.

16. The Department based its denial on several factors.

First, the family relationship between My Oil's principals and

Armando Yzaguirre itself raised the potential for Armando

Yzaguirre to control My Oil. In particular, th e Department

noted the fact that Armando B. Yzaguirre resides in a mobile

home owned by his father, and located a few hundred feet away

from Armando Yzaguirre's main residence on the family property.

17. Second, the balance sheet submitted by My Oil

indic ated a negative equity with large debts owed to Yzaguirre

Farms, controlled by Armando Yzaguirre.

18. Third, the Department concluded that the lease on the

premises at 211 New Market Road, East, would not prevent Armando

Yzaguirre from exerting control over My Oil, by breaking the

lease, raising the rent, selling the property, or ejecting My

Oil from the premises.

19. Fourth, no proof was offered that My Oil had leased or

purchased the tanker trucks from Yzaguirre Oil, meaning that My

Oil's means of tra nsporting fuel would be directly controlled by

Armando Yzaguirre.

20. Fifth, the $101,000 constituting the startup money for

My Oil appears to have come directly from the bank account of

Armando Yzaguirre.

21. Sixth, My Oil was administratively dissolved by the

Department of State on October 4, 2002, for failure to file an

annual report.

22. Finally, the Department stated that, regardless of the

arms - length nature of any business dealings between My Oil and

Armando Yzaguirre, My Oil would not be granted a license until

Armando Yzaguirre's civil rights have been restored. The close

family relationship coupled with the fact that Armando Yzaguirre

is the source of My Oil's startup funds, its tanker trucks, and

its business location, militate against grantin g My Oil a

license so long as Armando Yzaguirre's civil rights have not

been restored.

23. In response, My Oil insisted that its 2002 Application

cured every specific deficiency noted in the 2001 Application.

First, it listed Armando B. Yzaguirre as a principal so that his

background and criminal history could be investigated, and the

Department's investigation revealed no disqualifying offenses.

24. Armando B. Yzaguirre testified that the July 22, 2002,

balance sheet submitted at the Department's requ est was not an

accurate My Oil balance sheet. He stated that in setting up the

computer program for My Oil's accounting, he attempted to

shortcut the software's lengthy setup process for new businesses

by simply copying an existing Yzaguirre Farms spreads heet, then

substituting the name "My Oil" for "Yzaguirre Farms." However,

he quickly discovered that his "shortcut" would require him to

delete manually every balance sheet entry for Yzaguirre Farms

and re - enter the correct entries for My Oil. He abandon ed this

effort and began a My Oil spreadsheet from scratch, but he never

deleted the partially converted Yzaguirre Farms spreadsheet from

his computer.

25. Mr. Yzaguirre testified the Department's phone call to

request a current balance sheet came to him on his cellular

phone while he was working on his father's farm. He relayed the

message to his secretary, who printed a My Oil balance sheet and

faxed it to the Department. Mr. Yzaguirre stated that, until

the Department rejected the 2002 Application, he did not realize

that his secretary had faxed a balance sheet generated by his

aborted conversion of the Yzaguirre Farms spreadsheet, rather

than the actual balance sheet for My Oil.

26. A copy of what Armando B. Yzaguirre claimed was the

actual My Oil ba lance sheet as of July 31, 2002, was introduced

at the hearing. This balance sheet indicates an opening equity

of $101,000, with $92,078.02 in retained earnings and operating

and payroll accounts totaling $8,921.98.

27. The July 31, 2002, balance sheet i s accepted as the

actual balance sheet for My Oil. While this balance sheet

refutes the Department's conclusion that My Oil is starting

business with a negative balance sheet indicating over $136,000

in debts to Yzaguirre Farms, it does not refute the evi dence

that the entire source of My Oil's cash accounts is $101,000,

provided in the form of a check from an account in the name of

Armando Yzaguirre.

28. Armando B. Yzaguirre testified that the money came

from a joint money market account in the name of A rmando and

Maria Yzaguirre, and that Maria was the source of the funds.

This testimony is inconsistent with the fact that the check in

question was signed by Armando Yzaguirre, and that his name

alone appeared on the account name printed on the check. Th e

elder Mr. Yzaguirre testified that he signed the check, but also

testified that the account is in his name and that of his wife,

and that they both consider the $101,000 to be her investment in

My Oil. Neither of the Yzaguirres offered an explanation as to

why Maria Yzaguirre's name did not appear on a check they

claimed was drawn on a joint account.

29. The Department's concerns about Armando Yzaguirre, a

convicted felon, being the source of My Oil's startup funding

were reasonable. My Oil failed to o ffer evidence sufficient to

allay those concerns. Despite My Oil's claims to the contrary,

the $101,000 check was plainly signed by Armando Yzaguirre and

drawn from an account in his name. My Oil failed to explain the

terms under which it accepted this s tartup funding from Armando

Yzaguirre.

30. The Department's explanation of its rejection of the

lease submitted by My Oil for the premises at 211 New Market

Road, East, was not reasonable. The lease document is a

standard, arms - length agreement between M y Oil and Armando

Yzaguirre. The Department offered no evidence to support its

assertions that Armando Yzaguirre would break the terms of the

lease, that My Oil would not exercise its legal rights should

Mr. Yzaguirre violate the lease's provisions, or th at the lease

should be considered invalid because a contract between

relatives is inherently suspect. The other concerns raised by

the Department -- that Mr. Yzaguirre might raise the rent, sell

the property, or evict My Oil -- are answered by the terms of the

lease itself and raise no issues beyond those that would arise

in any lessor/lessee relationship.

31. As to the lease on the tanker trucks, both Armando B.

and Armando Yzaguirre testified that My Oil did have a lease on

the trucks, to take effect if a nd when My Oil receives a fuel

tax license from the Department. Their testimony is credited as

to the existence of the lease, though they offered no testimony

specifying the terms of the lease.

32. The fact that My Oil was administratively dissolved

for failure to file an annual report should have played no part

in the Department's rejection of My Oil's application. Such

dissolution is an administrative matter easily cured by the

filing of the report. At most, the Department should have

required My Oil to provide proof of reinstatement prior to

issuance of any fuel tax license.

33. In summary, several of the particular concerns on

which the Department based its decision were overstated.

However, the Department's overarching concern that Armando

Yzagui rre was in a position to control the business of My Oil

was reasonable. Armando Yzaguirre was clearly the source of the

$101,000 in startup money for My Oil, and no evidence was

offered to explain the terms under which this money was provided

to My Oil. The lease arrangements for the premises and the

tanker trucks may be unobjectionable in themselves, but when

coupled with the fact that My Oil is heavily indebted to Armando

Yzaguirre, they raise entirely reasonable suspicions regarding

My Oil's independen ce from Mr. Yzaguirre's control.

34. The Department's position that My Oil cannot be

granted a license until Armando Yzaguirre's civil rights have

been restored is supported by the evidence. Armando Yzaguirre

is the source of My Oil's funds, its place of doing business,

and its means of transporting fuel. My Oil failed to

demonstrate that these facts do not give Armando Yzaguirre the

ability to control its business.

CONCLUSIONS OF LAW

35. The Division of Administrative Hearings has

jurisdiction over the subject matter of this proceeding and of

the parties thereto pursuant to Section 120.569 and

Subsection 120.57(1), Florida Statutes.

36. As the applicant for a fuel license, My Oil bears the

burden of proving its entitlement to licensure. Department of

Banking and Finance v. Osborne Stern and Company , 670 So. 2d

932, 934 (Fla. 1996); Department of Transportation v. J.W.C.

Co., Inc. , 396 So. 2d 778, 787 - 788 (Fla. 1st DCA 1981).

37. Section 206.026, Florida Statutes, provides in

relevant part:

(1) No corporation . . . shall hold a

terminal supplier, importer, exporter,

blender, carrier, terminal operator, or

wholesaler license in this state if any one

of the persons or entities specified in

paragraph (a) has been determined by the

department not to be of good moral character

or has been convicted of any offense

specified in paragraph (b):

(a)1. The licenseholder.

2. The sole proprietor of the

licenseholder.

3. A corporate officer or director of

the licenseholder.

4. A genera l or limited partner of the

licenseholder.

5. A trustee of the licenseholder.

6. A member of an unincorporated

association licenseholder.

7. A joint venturer of the

licenseholder.

8. The owner of any equity interest in

the licen seholder, whether as a common

shareholder, general or limited partner,

voting trustee, or trust beneficiary.

9. An owner of any interest in the

license or licenseholder, including any

immediate family member of the owner, or

holder of any debt, mort gage, contract, or

concession from the licenseholder, who by

virtue thereof is able to control the

business of the licenseholder.

(b)1. A felony in this state.

2. Any felony in any other state which

would be a felony if committed in this state

u nder the laws of Florida.

3. Any felony under the laws of the

United States.

(2)(a) If the applicant for a license as

specified under subsection (1) or a

licenseholder as specified in paragraph

(1)(a) has received a full pardon or a

restoration of civil rights with respect to

the conviction specified in paragraph

(1)(b), then the conviction shall not

constitute an absolute bar to the issuance

or renewal of a license or ground for the

revocation or suspension of a license. . . .

38. As set forth in detail in the Recommended Order in

DOAH Case No. 02 - 0469, Armando Yzaguirre was convicted in Texas

of a crime that would be considered a felony in the State of

Florida. Mr. Yzaguirre has not received a full pardon or

restoration of civil rights, thus mooting any potential

application of Subsection 206.026(2)(a), Florida Statutes, to

this case.

39. Mr. Yzaguirre's provision of $101,000 in startup money

to My Oil without explanation of the terms under which the money

was provided, coupled with his posit ions as the landlord of My

Oil's place of business and the lessor of My Oil's tanker

trucks, would give him the ability to control the business of

the licenseholder.

40. In conclusion, My Oil has failed to demonstrate its

entitlement to a Florida fuel li cense on the merits of the

application it filed on July 22, 2002.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Revenue enter a final

order denying the application of My Oil Compa ny, Inc., for a

Florida fuel license, without prejudice to the ability of My Oil

Company, Inc., to file a new application upon the restoration of

Armando Yzaguirre's civil rights.

DONE AND ENTERED this 28th day of May, 2003, in

Tallahassee, Leon County, F lorida.

___________________________________

LAWRENCE P. STEVENSON

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) 92 1 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 28th day of May, 2003.

COPIES FURNISHED :

J. Bruce Hoffmann, General Counsel

Department of Revenue

204 Carlton Building

Post Office Box 6668

Tallahassee, Fl orida 32314 - 6668

Robert F. Langford, Jr., Esquire

Office of the Attorney General

The Capitol - Tax Section

Plaza Level 01

Tallahassee, Florida 32399 - 1050

E. Raymond Shope, II, Esquire

1404 Goodlette Road, North

Naples, Florida 34102

R. Lynn Lovejoy, E squire

Office of the Attorney General

The Capitol - Tax Section

Tallahassee, Florida 32399 - 1050

James Zingale, Executive Director

Department of Revenue

104 Carlton Building

Tallahassee, Florida 32399 - 0100

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All partie s 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.