02-004286 South Florida Water Management District vs. Berryman &Amp; Henigar, Inc. Status: Closed Recommended Order on Monday, May 12, 2003.

Summary: SFWMD action to decertify Minority Business Enterprise due to affiliation with other entities owned or controlled by the same minority person. RO: no grounds to decertify under statutes and rules.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTH FLORIDA WATER )

MANAGEMENT DISTRICT, )

)

Petitioner, )

)

vs. ) Case No. 02 - 4286

)

BERRYMAN & HENIGAR, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

On February 10 - 11, 2003, a final administrative hearing

was held in this case in West Palm Beach, Florida, before

J. Lawrence Johnston, Administrative Law Judge, Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Catherine M. Linto n, Esquire

Frank M. Mendez, Esquire

South Florida Water Management

District

3301 Gun Club Road

West Palm Beach, Florida 33406 - 3007

For Respondent: R. Dean Cannon, Jr., Esquire

Heather M. Blom Ramos, Esquire

Gray, Harris & Robinso n, P.A.

301 East Pine Street, Suite 1400

Post Office Box 3068

Orlando, Florida 32802 - 3068

STATEMENT OF THE ISSUES

The primary issue in this case is whether the Minority

Business Enterprise (MBE) certification issued by the South

Florida Water M anagement District (SFWMD) to the Respondent,

Berryman & Henigar, Inc. (BHI) should be revoked. In

addition, BHI seeks an award of attorney's fees and costs

under Section 120.595(1), Florida Statutes.

PRELIMINARY STATEMENT

On September 19, 2002, Raymond J. Berryman, P.E., Chief

Executive Officer (CEO) of BHI, received a letter from Frank

Hayden, SFWMD's Director of the Procurement Department,

stating SFWMD's intent to decertify BHI on grounds set forth

in a Memorandum from Allen Vann, SFWMD's Inspector G eneral.

The Vann Memorandum recommended decertification

essentially on three grounds: (1) BHI is not independently

owned and operated; (2) BHI shares resources with affiliated

"non - minority" businesses; and (3) BHI exceeds size standards

because, togeth er with its affiliates, it has more than 200

permanent, full - time employees.

This BHI decertification proceeding followed a prior

decision by SFWMD regarding an application for certification

by Everglades Surveying Joint Venture (ESJV), of which BHI was

the qualifying MBE. An administrative hearing was held in the

ESJV case before Donald R. Alexander, Administrative Law

Judge, who found that ESJV failed to meet all requirements for

MBE certification because Mr. Berryman did not hold a

surveyor’s license.

On January 31, 2003, BHI filed a Motion to Request

Official Recognition of: (1) Judge Alexander’s Recommended

Order in the ESJV case; (2) SFWMD’s Exceptions to the

Recommended Order; and (3) SFWMD’s Final Order entered

October 22, 2002. In response, SF WMD filed a Motion in Limine

to completely exclude any evidence or testimony regarding the

ESJV case and to prohibit BHI from arguing the legal

significance of the ESJV Final Order. During a telephonic

hearing on February 7, 2003, BHI’s Motion for Officia l

Recognition was granted, and SFWMD’s Motion in Limine was

denied.

BHI and SFWMD filed a Joint Prehearing Stipulation on

February 5, 2003. In accordance with the Joint Prehearing

Stipulation, Petitioner's (SFWMD's) Exhibits 1 - 33 and

Respondent's (BHI's ) Exhibits 1 - 31 were admitted in evidence

at the outset of the final hearing. SFWMD then called three

witnesses: Candice Boyer, Senior MBE Coordinator for SFWMD;

John Timothy Beirnes, consulting auditor for SFWMD; and

Mr. Berryman. BHI called Mr. Berrym an and Rhonda Mortimer.

After presentation of the evidence, the parties were

given 30 days after the filing of the Transcript of the final

hearing to file proposed recommended orders (PROs). The

Transcript was filed on February 27, 2003, making PROs due by

March 31, 2003. The timely - filed PROs have been considered in

the preparation of this Recommended Order.

In addition to a PRO, BHI filed a Motion for Attorney's

Fees and Costs under Section 120.595(1), Florida Statutes; and

SFWMD filed a response in opposition on April 4, 2003. The

ruling on BHI's Motion for Attorney's Fees and Costs is

incorporated in this Recommended Order.

FINDINGS OF FACT

1. It is undisputed that Raymond J. Berryman is an

"Asian American" under the part of the definition of

" Minority" person under Florida Administrative Code Rule

40E - 7.621(12)(b). (All rule citations are to the current

Florida Administrative Code.)

2. Mr. Berryman owns 77.4 percent of Berryman & Henigar

Enterprises, Inc. (BHE), a Nevada corporation formed in

March 1994. BHE is the sole owner of Berryman & Henigar, Inc.

(BHI), a Florida corporation and the Respondent in this case.

BHE also owns holds 100 percent of the stock of Berryman &

Henigar, Inc., a California corporation (BHI California), and

Employ ment Systems, Inc., a California corporation (ESI). BHE

also holds ten percent of the stock of GovPartner.com, a

Nevada company.

3. BHI and BHI California are both engineering firms.

BHI's business in Florida is oriented more towards

environmental eng ineering consulting. The business of BHI

California in that state is more oriented towards engineering

management consulting. BHI California does more building

safety and project management work than BHI in Florida.

Notwithstanding these differences bet ween the business of the

two corporations, they can be said to be in business in the

same or an associated field of operation.

4. BHE provides a corporate shield and consolidated tax

reporting for the companies it owns. Most of its directors

and office rs also serve as directors and officers of the

subsidiaries. As a result, BHI and BHI California share the

following directors: Ray Berryman, Mary Berryman, Jon

Rodriguez, and Scott Kvandal. They also share three or four

officers, including Mr. Berryman as CEO. BHE also provides

accounting, legal, human resource, and marketing services to

all the affiliates under the holding company's umbrella.

5. BHE's marketing department refers to both BHI and BHI

California as "Berryman and Henigar" in order to i mply the

size and strength of BHE and all of its affiliates. By

holding both businesses out as one large company, the

marketing department attempts to make BHI "look as grandiose

as possible."

6. BHE has a negative net worth, as reflected in the

consol idated statements of its affiliates.

7. BHI itself has approximately 114 permanent, full - time

employees; however, altogether, BHI and its affiliates have

well over 200 permanent, full - time employees (although the

exact number of employees of BHI's affil iates was not clear

from the evidence ) .

8. Candice Boyer, SFWMD's Senior MBE Coordinator,

testified that SFWMD consistently interprets its MBE rules to

disqualify an entity either: (1) owned by a holding company

not certified by SFWMD as an MBE, or at least not able to

qualify for such certification ( e.g. , by not being domiciled

in Florida); (2) affiliated with or sharing resources with

another business concern in the same or an associated field of

operation if the affiliate is not certified by SFWMD as an

MBE, or at least is not able to qualify for such certification

( e.g. , by not being domiciled in Florida); or (3) whose net

worth, or number of permanent, full - time employees , together

with all affiliates, exceeds the rule's limits. However, the

eviden ce of SFWMD's actual practice (which was limited to its

practice with respect to BHI and ESJV) did not support Boyer's

testimony in that regard.

9. BHI first sought certification from SFWMD in July

1996 under an MBE - type program in effect at the time an d was

denied because the gross receipts of BHI, apparently together

with its affiliates , were too high under the program's

guidelines. SFWMD's MBE rules, as first adopted in Part VI of

Florida Administrative Code Rule Chapter 40E - 7, entitled

"Supplier Div ersity and Outreach MBE Contracting Rule," went

into effect on October 1, 1996. In April 1997, SFWMD

"graduated" BHI under one of the new MBE rules (since

repealed) that counted subcontractor participation by a firm

exceeding the size standards (at that t ime, $3 million net

worth and $2 million in net income after federal income taxes,

excluding carryover losses) towards a prime contractor's MBE

participation goal. In December 1997, BHI updated its

application for MBE certification and was granted full

ce rtification in the fields of civil engineering, surveying,

and construction management for a three - year period of time,

even though the application revealed BHI's continued

affiliations with BHE and the other affiliated companies. In

March 2001, BHI was r e - certified for another three years

notwithstanding that it continued to be affiliated with BHE

and the other companies. Boyer's only explanation was that

she should have investigated the affiliates in December 1997

and March 2001 but did not.

10. In l ate 2001 or early 2002, a joint venture called

Everglades Survey Joint Venture (ESJV) sought MBE

certification in the field of surveying, with BHI as the

qualifying member of the joint venture. Certification was

denied because Mr. Berryman did not have a required surveyor's

license, as required by Rule 40E - 7.653(5). Although not

necessary to the decision, the Recommended Order entered by

Administrative Law Judge Donald R. Alexander found that ESJV

otherwise met the requirements for certification. SFWMD

e ntered a Final Order adopting those findings.

11. Confusing evidence presented in the course of the

ESJV proceeding as to BHI's net worth and number of employees

caused SFWMD to focus on those issues and cause an

investigation to be conducted by its Off ice of the Inspector

General, which is defined by Rule 40E - 7.621(14) as the SFWMD

"office which provides a central point for coordination of and

responsibility for activities that promote accountability,

integrity, and efficiency in government as referenc ed in

Section 20.055(2), F.S." The investigation, which was

conducted by a consulting auditor employed by SFWMD named John

Timothy Beirnes, also focused on the rules dealing with those

issues and resulted in an investigative report advancing the

interpret ations of SFWMD's MBE rules ultimately used to

support the decertification recommendation of the Inspector

General, Allen Vann. Notwithstanding Boyer's testimony as to

SFWMD's purported consistent interpretations of its rules,

there was no evidence that S FWMD asserted these

interpretations prior to issuance of the Inspector General's

investigative report.

12. Boyer also testified that other government agencies

in Florida uniformly interpret their MBE - type programs in a

manner that would disqualify BHI i n this case. However, the

evidence was clear that BHI is certified under the MBE - type

programs of other agencies in Florida, including the State of

Florida Department of Management Services, Orange County, the

City of Orlando, and the City of Tampa.

13. One of SFWMD's exhibits was the affidavit of an

Operation and Management Consultant I for the State of Florida

Department of Management Services stating: "If a firm is

affiliated with other firms, I count the number of employees

as well as the net worth of the firm together with all of its

affiliates." SFWMD's PRO contended that this hearsay

statement supported Boyer's testimony. Actually, besides

being inconsistent with the action of the Department of

Management Services in certifying BHI as an MBE, t he hearsay

statement is ambiguous, and it is not clear whether the

affidavit supports Boyer's testimony as to the purported

uniform interpretation of all state agencies.

14. SFWMD's PRO cites Petitioner's Exhibit 10, page 265,

as evidence that Palm Beac h County decertified BHI for

exceeding size limitations, contrary to Mr. Berryman's

recollection of never having had an MBE - type certification

decertified. In fact, the exhibit merely evidences

decertification because BHI failed to respond to a request fo r

information needed for re - evaluation of BHI's continued

eligibility under recent changes to provisions of the Palm

Beach County Code. In addition, while the exhibit reflects

the section numbers of the changed provisions, the provisions

are not further i dentified; and it is not clear from the

evidence that they related to size limitations. Finally, the

evidence was that the requirements of MBE - type programs of

different jurisdiction in Florida can vary except, as of

October 1, 1998, in certain respects. See Conclusion 31,

infra . For that reason, denial of certification or

decertification in one jurisdiction does not necessarily

require similar action in another jurisdiction -- which is one

reason why SFWMD has not reciprocated any certifications by

other jurisdictions under Rule 40E - 7.651(1).

No Improper Purpose

15. BHI takes the position that SFWMD's purpose in

seeking revocation of BHI's MBE certification after the Final

Order in the ESJV case was improper. But the findings in the

ESJV case relied u pon by BHI were not necessary to the denial

of EVSJ's application, which was based on the joint venture's

not having the required professional license as a surveyor.

It does not appear that the issues presented in this case were

fully litigated in the ESJ V case.

16. It appears that the confusing evidence presented in

the course of the ESJV proceeding as to BHI's net worth and

number of employees prompted SFWMD to focus on those issues.

In so doing, SFWMD also focused on the rules dealing with

those iss ues and ultimately advanced interpretations of its

MBE rules supporting revocation.

17. It is not found that SFWMD fashioned those

interpretations for an improper purpose -- i.e. , "primarily to

harass or to cause unnecessary delay or for frivolous purpose

or to needlessly increase the cost of licensing or securing

the approval of an activity." Section 120.595(1)(e)1, Florida

Statutes. Aside from the relative merits of the positions of

the parties on the proper interpretation of the pertinent

statutes and rules, and the earlier decision in the ESJV case,

BHI's evidence of improper purpose essentially involved the

timing of SFWMD's decision to initiate decertification

proceedings in relation to the letting of contracts for work

in which BHI intended to part icipate as a subcontractor, and

the resulting monetary impact on BHI. BHI's evidence was

insufficient to prove improper purpose.

CONCLUSIONS OF LAW

18. Certification as an MBE is similar to a license.

See Int’l Contractors, Inc. vs. Dept. of Transp. , DOAH Case

No. 89 - 4982, 1990 WL 749524 (Fla. Div. Admin. Hrgs. 1990). As

such, MBE certification can be suspended or revoked only on

clear and convincing evidence. See Ferris v. Turlington , 510

So. 2d 292, 294 (Fla. 1987). As the agency seeking

decertifi cation, SFWMD bears the burden of proof by clear and

convincing evidence. However, in this case, there was no

genuine dispute as to any material underlying fact; the only

genuine dispute involved the proper interpretation of

applicable rules.

19. Entit lement to certification under SFWMD's MBE

program is governed by Part VI of Florida Administrative Code

Rule Chapter 40E - 7, "Supplier Diversity and Outreach MBE

Contracting Rule."

20. Rule 40E - 7.653 provides in pertinent part:

(6) To establish that i t is a small

minority business concern, the applicant

shall:

(a) Demonstrate that it is an

independently owned and operated business

concern. In assessing business

independence, the District shall consider

all relevant factors, including the date

the fir m was established, the adequacy of

its resources, and the degree to which

financial, managerial and operational

relationships exist with other persons or

business concerns. For purposes of this

rule, the District's consideration of such

financial relation ships, managerial or

operational relationships shall not be

affected by arrangements made out of

necessity or due to the business' inability

to secure traditional capitalization

through banks, lending institutions or

others.

(b) Demonstrate that it is not an

affiliate of a non - minority business nor

share (on an individual or combined basis)

common ownership, directors, management,

employees, facilities, inventory, financial

resources and expenses, equipment or

business operations with a non - minority

person or business concern which is in the

same or an associated field of operation.

(c) To establish that it is a small

business concern, the applicant shall

demonstrate that the net worth of the

business concern, together with its

affiliates, does not exceed five (5)

million. In determining the net worth of

the business and its affiliates, the

District shall consider the most recent

federal tax returns or annual financial

statements for the business. As applicable

to sole proprietorships, the 5 million

dolla r net worth requirement shall include

both personal and business investments.

(d) To establish that it is a small

business concern, the applicant shall

provide documentation to demonstrate that

it employs two - hundred (200) or fewer

permanent, full - time em ployees. In

determining whether the applicant meets the

criteria for a small business, the District

shall consider such documentation as:

1. Personnel records.

2. Florida Quarterly Unemployment Reports.

3. Annual Federal Unemployment Report.

4. Payrol l ledgers.

5. Employee leasing agreement.

(e) The applicant must demonstrate that it

is domiciled in Florida. In determining

whether the applicant is domiciled in

Florida, the District shall consider such

documentation as:

1. Articles of Incorporation.

2. Partnership Agreement.

3. Certification required to be filed

pursuant to Section 620.108, F.S.

4. Business licenses.

21. SFWMD contends that BHI does not qualify for

certification as an MBE and should be decertified under these

rules because BHI: (1) is not "an independently owned and

operated business concern" under paragraph (6)(a); (2) is an

"affiliate of a non - minority business" or "share[s] (on an

individual or combined basis) common ownership, directors,

management, employees, facilities, in ventory, financial

resources and expenses, equipment or business operations with

a non - minority person or business concern which is in the same

or an associated field of operation" under paragraph (6)(b);

and (3) has more than 200 full - time employees under paragraph

(6)(c).

Independent Ownership and Operation

22. Rule 40E - 7.653(6)(a) does not define independent

ownership. But paragraphs (3) and (4) of the state in

pertinent part:

(3) An applicant business must satisfy

subsection (4) below in order to be

considered 51% owned by minority persons.

The ownership exercised by minority persons

shall be real, substantial, and continuing,

and shall go beyond mere pro forma

ownership of the firm as reflected in its

ownership documents. In its analysis, the

D istrict may also consider the transferal

of ownership percentages with no exchange

of capital at fair market value.

(4) . . . .

(a) The applicant business must satisfy

either subparagraphs 1., 2., or 3. below:

1. In a corporate form of organization,

the minority shareholders of the

corporation must own at least 51% of all

issued stock. Minority shareholders who

own at least 51% of each and every class of

stock will be presumed to have satisfied

the conditions of this rule.

23. SFWMD takes the position in this case that BHI is

not independently owned because Mr. Berryman owns its stock

indirectly through the holding company, BHE. Notwithstanding

that Mr. Berryman's ownership of 77 percent of the stock of

BHE puts him in actual and complete control of B HI, SFWMD

takes the position in this case that the form of ownership is

dispositive in that BHE is not a "minority shareholder." As

found, there is no indication in the evidence that SFWMD ever

took this position prior to the Inspector General's

investiga tion of BHI which resulted in this case.

24. The term "Independently Operated" is defined in Rule

40E - 7.621(9) as follows:

"Independently Operated" means not

dependent on the support, influence,

guidance, control or not subject to

restriction, modificat ion or limitation

from a non - minority, except for customary

business auxiliary services, e.g. legal,

banking, etc.

SFWMD contends that, in this context, "non - minority" means

either any person or entity not certified by SFWMD as an MBE

or perhaps any per son or entity not qualifying for

certification by SFWMD as an MBE. If so, BHI would not

qualify for certification because BHE is not and clearly

cannot be certified by SFWMD as an MBE since it is not

domiciled in Florida. See Rule 40E - 7.653(6)(e). But R ule

40E - 7.621(13) defines "non - minority" as "any person who does

not meet the eligibility requirements of a minority person

related to ethnicity, race or gender, permanent Florida

residency or origins . . . ." (Emphasis added.) Under that

definition, BHI is not dependent on any "non - minority" so as

to be disqualified under Rule 40E - 7.653(6)(a). Since the

language used in the rules conveys a clear and definite

meaning, resort to rules of statutory and rule interpretation

is not warranted. See Donato v. A mer. Telephone and

Telegraph , 767 So. 2d 1146, 1151 (Fla. 2000).

Affiliation and Resource - Sharing

25. Similarly, this ground turns on the definition of

"non - minority business" and "non - minority person or business

concern." If BHI California comes withi n the definition of

those terms in the context of Rule 40E - 7.653(6)(b), then BHI

would not be eligible for MBE certification by SFWMD due to

its affiliation and resource - sharing with BHI California.

26. SFWMD argues that BHI California is a "non - minorit y

business" or "non - minority person or business concern" under

the following definitions in Rule 40E - 7.621:

(2) "Certified Minority Business

Enterprise" means a firm certified by the

District pursuant to Rules 40E - 7.651 and

40E - 7.653, F.A.C., and Sectio ns 287.0943(1)

and (2), F.S.

* * *

(11) "Minority Business Enterprise" or

"MBE" is as defined in Section 288.703(2),

F.S.

Section 288.703(2) defines "minority business enterprise" as

follows:

"Minority business enterprise" means any

small busi ness concern as defined in

subsection (1) which is organized to engage

in commercial transactions, which is

domiciled in Florida, and which is at least

51 - percent - owned by minority persons who

are members of an insular group that is of

a particular racial, ethnic, or gender

makeup or national origin, which has been

subjected historically to disparate

treatment due to identification in and with

that group resulting in an

underrepresentation of commercial

enterprises under the group's control, and

whose manag ement and daily operations are

controlled by such persons. A minority

business enterprise may primarily involve

the practice of a profession. Ownership by

a minority person does not include

ownership which is the result of a transfer

from a nonminority pe rson to a minority

person within a related immediate family

group if the combined total net asset value

of all members of such family group exceeds

$1 million. For purposes of this

subsection, the term "related immediate

family group" means one or more ch ildren

under 16 years of age and a parent of such

children or the spouse of such parent

residing in the same house or living unit.

Subsection (1) of the statute states:

(1) "Small business" means an

independently owned and operated business

concern th at employs 200 or fewer permanent

full - time employees and that, together with

its affiliates, has a net worth of not more

than $5 million or any firm based in this

state which has a Small Business

Administration 8(a) certification. As

applicable to sole p roprietorships , the $5

million net worth requirement shall include

both personal and business investments.

(This definition of "small business" is essentially the same

definition found in Rule 40E - 7.621(20).)

27. If either Rule 40E - 7.621(2) or (11) def ines "non -

minority business" or "non - minority person or business

concern," then BHI would not be eligible for MBE certification

by SFWMD due to its affiliation and resource - sharing with BHI

California. But it is concluded that neither of those rules

defin es "non - minority business" or "non - minority person or

business concern" in the context of Rule 40E - 7.653(6)(b). Had

that been the intent, SFWMD easily could have used the terms

defined in Rule 40E - 7.621(2) and (11). The use of different

terms is strong e vidence that different meanings are intended.

Instead, the language used -- "non - minority business" and "non -

minority person or business concern" -- is more like the term

"non - minority" used in Rule 40E - 7.621(9). It also noted that

the purpose of the two rul es in which the similar language is

used also is similar -- to avoid certification of a purported

minority applicant actually under the control of another who

is not a minority.

Number of Employees

28. In contrast, the last ground asserted by SFWMD for

ce rtification relates to size rather than minority control.

As can be seen by simple comparison of paragraphs (c) and (d)

of Rule 40E - 7.653(6), the phrase "together with its

affiliates" is found only in paragraph (d). Similarly, in

Section 288.703(1) and i n Rule 40E - 7.621(20), the phrase

"together with its affiliates" is used only in connection with

the net worth limitation. The language used in the statute

and in the rules seems to convey a clear and definite meaning -

- i.e. , that the number of employees li mitations apply to the

applicant only and that employees of affiliates are not to be

counted. As such, there would seem to be no need to resort to

rules of statutory and rule interpretation. See Donato , supra

at 1151. But even assuming ambiguity, it is a general

principal of statutory construction that the mention of one

thing implies the exclusion of another. See Jordan v. State ,

801 So. 2d 1032, 1035 (Fla. 5th DCA 2001). When drafters of

statutes use a term in one section of a statute but omit it in

another section of the same statute, courts will not imply it

where it has been excluded. See Leisure Resorts, Inc. v.

Frank J. Rooney, Inc. , 654 So. 2d 911, 914 (Fla. 1995). Under

the doctrine of expressio unius exclusio alterius est , the

expression of one thing is the exclusion of the other; that

is, when a law expressly describes a situation where something

should apply, an inference must be drawn that what is not

included by specific reference was intended to be omitted or

excluded. See St. John v. C oisman , 799 So. 2d 1110, 1113

(Fla. 5th DCA 2001). Since administrative rules have the

force and effect of statutes, these rules of statutory

interpretation also apply to administrative rules. See McCoy

v. Hollywood Quarries, Inc. , 544 So. 2d 274, 277 (F la. 4th DCA

1989).

29. For these reasons, it is concluded that the number

of employees limitations in Section 288.703(1) and in Rule

40E - 7.653(6)(d) apply to the applicant only; employees of

affiliates are not to be counted.

Arguments for "SFWMD Inter pretations" Rejected

30. Citing Donato , supra , at 1153, and State Contracting

and Engineering Corp. v. Dept. of Transp. , 709 So. 2d 607

(Fla. 1st DCA 1998), SFWMD argues that deference must be given

to its own purported interpretations of the pertinent st atutes

and rules. But, as found, it is not clear from the evidence

that SFWMD in fact has previously - established interpretations;

rather, the interpretations advanced in this case arose out of

the Inspector General's investigation of BHI. As a result,

SF WMD's interpretations are being formulated through this

administrative proceeding. See United Wisconsin Life Ins. Co.

v. Office Of Ins. Regulation , 2003 WL 1914097, at *3 (Fla. 1st

DCA 2003)(not yet released for publication in the permanent

law reports an d still subject to revision or

withdrawal)(agency interpretation of statute was not

established prior to entry of final order). See also Hamilton

County Board of County Commissioners v. Dept. of Environmental

Reg. , 587 So. 2d 1378, 1387 (Fla. 1st DCA 1991 ); Beverly

Enterprises - Florida v. Dept. of Health, etc. , 573 So. 2d 19,

23 (Fla. 1st DCA 1990); Dept. of Transp. v. J.W.C. Co., Inc. ,

396 So. 2d 778, 786 - 787 (Fla. 1st DCA 1981); McDonald v. Dept.

of Banking and Finance , 346 So. 2d 569, 584 (Fla. 1st DCA

1 977) (administrative proceeding is de novo and is intended

"to formulate final agency action, not to review action taken

earlier and preliminarily"). Clearly, SFWMD in its final

order may disagree with interpretations of statutes and rules

contained in a Recommended Order. See Section 120.57(1)(l),

Florida Statutes. If SFWMD's ultimate statutory

interpretations are judged to be erroneous, or its rule

interpretations inconsistent with the language used in the

rules, the interpretations would be subject to reversal on

appeal. See Section 120.68(7)(d) and (e)2.

31. SFWMD also argues that Section 288.7031, Florida

Statutes, somehow requires the terms "non - minority business"

and "non - minority person or business concern" in Rule 40E -

7.653(6)(b) to be define d in accordance with the definitions

of "Certified Minority Business Enterprise" and "Minority

Business Enterprise" in Rule 40E - 7.621(2) and (11),

respectively, because Section 288.7031 was enacted by Chapter

98 - 295, Laws of Florida (1998), effective Octob er 1, 1998,

which was after initial adoption of SFWMD's MBE rule. But

Section 288.7031 merely requires the definitions of "small

business," "minority business enterprise," and "certified

minority business enterprise" in Section 288.703, to apply to

the st ate and all political subdivisions of the state, which

would include SFWMD. However, while this suggests that Rule

40E - 7.653(6)(b) should be interpreted so as to be consistent

with Section 288.703, it does not require that the terms "non -

minority business " and "non - minority person or business

concern" in Rule 40E - 7.653(6)(b) be defined in accordance with

the definitions of "Certified Minority Business Enterprise"

and "Minority Business Enterprise" in Rule 40E - 7.621(2) and

(11), respectively.

32. SFWMD's argument based on Falcon Mechanical, Inc.

vs. Dept. of General Services , DOAH Case No. 87 - 1950, 1989 WL

644887 (Fla. Div. Admin. Hrgs.), adopted in Final Order

entered April 12, 1989, does not assist in the proper

interpretation of the number of employees limitations in

Section 288.703(1) and Rule 40E - 7.653(6)(d). That case merely

acknowledged the existence of the limitation. It did not

address its application to an applicant with affiliates.

33. SFWMD also argues that legislative amendments to the

ne t worth and number of employees limitations make it clear

that the Legislature intended the number of employees

limitation to apply to the applicant and all affiliates. The

argument begins: the legislative amendments demonstrate that

the Legislature cons idered the net worth and number of

employees limitations to be "equally important aspects of the

'small business' definition." While it is not clear how the

legislative amendments indicate the relative importance of

these two limitations, it is clear that exceeding either

limitation would be disqualifying. The argument proceeds:

interpreting the language added in 1994 regarding affiliates

to apply only to net worth would lead to absurd results that

clearly were not intended. For example, SFWMD argues th at,

assuming a net worth not in excess of $5 million, "a company

as large as IBM, if owned by a minority, could open up a

subsidiary and call it a minority business enterprise." But

the plain meaning of the language of the statute and rules (as

well as th e " expressio unius " rule of statutory

interpretation) make the intent clear. See Conclusion 28,

supra . "It is a settled rule of statutory construction that

unambiguous language is not subject to judicial construction,

however wise it may seem to alter th e plain language." State

v. Jett , 626 So. 2d 691, 693 (Fla. 1993).

34. Finally, SFWMD cites the requirement of City of

Richmond v. J.A. Croson Co. , 488 U.S. 469, 109 S. Ct. 706

(1989), that an MBE program be narrowly tailored, and argues

that this requ ires strict enforcement of rules applied without

exception. That argument merely begs the question of the

proper interpretation of the pertinent statutes and rules.

No Improper Purpose Award

35. Case law holds that an objective standard is used to

dete rmine improper purpose for the purpose of imposing

sanctions on a party or attorney under Section 120.569(2)(e),

Florida Statutes, and predecessor statutes. As stated in

Friends of Nassau County, Inc. v. Nassau County , 752 So. 2d

42, 49 - 51 (Fla. 1st DCA 2 000):

In the same vein, we stated in Procacci

Commercial Realty, Inc. v. Department of

Health and Rehabilitative Services , 690

So.2d 603 (Fla. 1st DCA 1997): The use of

an objective standard creates a requirement

to make reasonable inquiry regarding

per tinent facts and applicable law. In the

absence of "direct evidence of the party's

and counsel's state of mind, we must

examine the circumstantial evidence at hand

and ask, objectively, whether an ordinary

person standing in the party's or counsel's

shoes would have prosecuted the claim."

Id. at 608 n. 9 (quoting Pelletier v.

Zweifel , 921 F.2d 1465, 1515 (11th

Cir.1991)). See In re Sargent , 136 F.3d

349, 352 (4th Cir.1998) ("Put differently a

legal position violates Rule 11 if it 'has

"absolutely no cha nce of success under the

existing precedent." ') Brubaker v. City of

Richmond , 943 F.2d 1363, 1373 (4th

Cir.1991)(quoting Cleveland Demolition Co.

v. Azcon Scrap Corp. , 827 F.2d 984, 988

(4th Cir.1987))."[)]

* * *

Whether [predecessor to Section 12 0.595(1)]

section 120.57(1)(b)5., Florida Statutes

(1995), authorizes sanctions for an initial

petition in an environmental case turns

. . . on the question whether the signer

could reasonably have concluded that a

justiciable controversy existed under

per tinent statutes and regulations. If,

after reasonable inquiry, a person who

reads, then signs, a pleading had

"reasonably clear legal justification" to

proceed, sanctions are inappropriate.

Procacci , 690 So.2d at 608 n. 9; Mercedes ,

560 So.2d at 278.

Al though there is no appellate decision explicitly extending

the objective standard to Section 120.595(1), there does not

appear to be any reason why the objective standard should not

be used to determine whether Petitioner's participation in

this proceeding was for an improper purpose. See Friends Of

Nassau County, Inc., vs. Fisher Development Co., et al. , 1998

WL 929876 (Fla. Div. Admin. Hrgs.); Amscot Insurance, Inc., et

al. vs. Dept. of Ins. , 1998 WL 866225 (Fla. Div. Admin.

Hrgs.).

36. In another app ellate decision, decided under a

predecessor to Section 120.595(1) before the objective

standard was enunciated for cases under Section 120.569(2)(e)

and its predecessor statutes, the court in Burke v. Harbor

Estates Ass'n , 591 So. 2d 1034, 1036 - 1037 (Fla. 1st DCA 1991),

held:

The statute is intended to shift the cost

of participation in a Section 120.57(1)

proceeding to the nonprevailing party if

the nonprevailing party participated in the

proceeding for an improper purpose. A

party participates in the proceeding for an

improper purpose if the party's primary

intent in participating is any of four

reasons, viz: to harass, to cause

unnecessary delay, for any frivolous

purpose, [FN1] or to needlessly increase

the prevailing party's cost of securing a

lice nse or securing agency approval of an

activity.

Whether a party intended to participate in

a Section 120.57(1) proceeding for an

improper purpose is an issue of fact. See

Howard Johnson Company v. Kilpatrick , 501

So.2d 59, 61 (Fla. 1st DCA 1987) (existenc e

of discriminatory intent is a factual

issue); School Board of Leon County v.

Hargis , 400 So.2d 103, 107 (Fla. 1st DCA

1981) (questions of credibility,

motivation, and purpose are ordinarily

questions of fact). The absence of direct

evidence of a party's intent does not

convert the issue to a question of law.

Indeed, direct evidence of intent may

seldom be available. In determining a

party's intent, the finder of fact is

entitled to rely upon permissible

inferences from all the facts and

circumstances o f the case and the

proceedings before him.

FN1. A frivolous purpose is one which is

of little significance or importance in the

context of the goal of administrative

proceedings. Mercedes Lighting &

Electrical Supply, Inc. v. Department of

General Servi ces , 560 So.2d 272, 278 (Fla.

1st DCA 1990).

37. On the facts, this case is easily distinguishable

from the Friends of Nassau County and Burke cases. Likewise,

this case is easily distinguishable on the facts from the

decision in Good Samaritan Hosp. v. Dept. of Health and

Rehabilitative Servs. , 582 So. 2d 722, 724 (Fla. 4th DCA

1991), also cited by BHI in support of its claim for an award

under Section 120.595(1). As found, it was not proven in this

case that SFWMD participated in this proceeding for a n

improper purpose.

38. In addition, it is not clear how SFWMD can be a

"nonprevailing adverse party" under Section 120.595(1)(e)3,

Florida Statutes. See Sellars vs. Broward County School Bd. ,

DOAH Case No. 97 - 3540F, 1997 WL 1053430 (DOAH 1997).

RECO MMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law, it is

RECOMMENDED that BHI's MBE certification not be revoked.

DONE AND ENTERED this 12th day of May, 2003, in

Tallahassee, Leon County, Florida.

___________________ ________________

J. LAWRENCE JOHNSTON

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 12th day of May, 2003.

COPIES FURNISHED :

R. Dean Cannon, Jr., Esquire

Gray, Harris & Robinson, P.A.

301 East Pine Street, Suite 140 0

Post Office Box 3068

Orlando, Florida 32802 - 3068

Catherine M. Linton, Esquire

Frank M. Mendez, Esquire

South Florida Water Management District

3301 Gun Club Road

West Palm Beach, Florida 33406 - 3007

Henry Dean, Executive Director

South Florida Water M anagement District

3301 Gun Club Road

West Palm Beach, Florida 33406 - 3007

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 Recom mended Order should be filed with the agency that will

issue the final order in this case.