04-004652F One Watergate Association, Inc. vs. Florida Commission On Human Relations, On Behalf Of Derrick Bhayat Status: Closed DOAH Final Order on Tuesday, June 7, 2005.

Summary: Respondent was substantially justified in finding cause to believe that housing discrimination occurred, although it ultimately failed to prove its case at the final hearing.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ONE WATERGATE ASSOCIATION, )

INC., )

)

Petitioner, )

)

vs. ) Case No. 04 - 4652F

)

FLORIDA COMMISSION ON HUMAN )

RELATIONS, ON BEHALF OF DERRICK )

BHAYAT, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a formal hearing was conducted in this

case on March 22, 2005, in Sarasota, Florida, before Lawrence P.

Stevenson, a duly - designated Administrative Law Judge of the

Division of Administrative Hea rings.

APPEARANCES

For Petitioner: Mary R. Hawk, Esquire

Porges, Hamlin, Knowles & Prouty, P.A.

1205 Manatee Avenue West

Bradenton, Florida 34205

For Respondent: Elizabeth A. Miller, Esquire

Flor ida Commission on Human Relations

2009 Apalachee Parkway, Suite 100

Tallahassee, Florida 32301 - 48 30

STATEMENT OF THE ISSUE

Whether Petitioner, One Watergate Association, Inc. ("One

Watergate"), as a prevailing small business party in an

adj udicatory proceeding , initiated by a state agency, should be

awarded attorney's fees and costs pursuant to the Florida Equal

Access to Justice Act, Subsection 57.111(4)(a), Florida Statutes

(2002) .

PRELIMINARY STATEMENT

On July 19, 2002, Derrick Bhayat fi led a Housing

Discrimination Complaint (the "Complaint") with the Florida

Commission on Human Relations (the "Commission") against One

Watergate. The Complaint alleged that One Watergate

discriminated against Mr. Bhayat on the basis of national origin

and color in violation of Title VII of the Civil Rights Act of

1968, as amended by the Fair Housing Act of 1988, and of the

Florida Fair Housing Act, Sections 760.22 through 760.37,

Florida Statutes (2002) . The alleged discrimination concerned

the failure of One Watergate's Board of Directors (the "Board")

to approve Mr. Bhayat's application to purchase a unit in the

One Watergate building.

The Commission conducted an investigation of the Complaint.

By letter dated November 14, 2003, the Commission notif ied

Mr. Bhayat of its determination that reasonable cause existed to

believe that a discriminatory housing practice had occurred and

that as the Complainant, Mr. Bhayat could elect to have the

Attorney General bring a court action in the name of the S tate

of Florida on his behalf to enforce the provisions of the Fair

Housing Act or to have the Commission petition the Division of

Administrative Hearings ("DOAH") for an administrative hearing

and seek relief on his behalf. Mr. Bhayat elected to have the

Comm ission pursue an administrative remedy.

The Commission first attempted to conciliate the matter

pursuant to Florida Administrative Code Rule 60Y - 7.005. The

Commission issued a Notice of Failure of Conciliation on

March 10, 2004, and filed a Petition for Relief at DOAH on

March 12, 2004. The matter was assigned DOAH Case No. 04 - 0816 ,

and a hearing was held on June 23 and 24, 2004.

On November 3, 2004, the undersigned entered a Recommended

Order in Case No. 04 - 0816, recommending that the Commission

enter a f inal o r der dismissing the Petition for Relief in its

entirety. On December 30, 2004, One Watergate filed a Petition

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

Florida Statutes (2002) . On January 19, 2005, the Commission

filed a re sponse that, in addition to defending the Commission's

actions on the merits, accurately stated that One Watergate's

Petition for Attorney's Fees and Costs was premature because no

"final judgment or order" had yet been rendered to establish

that One Watergate wa s a "prevailing small business party."

§ 57.111(3)(c)1, Fla. Stat. (2003).

On January 31, 2005, the Commission entered a Final Order

adopting the F indings of F act and C onclusions of L aw contained

in the Recommended Order. No appeal was taken from the F inal

Order. At the final hearing in this matter, the undersigned

declined to dismiss One Watergate's p etition on the

jurisdictional ground asserted by the Commission, because

subsequent events rendered the premature filing a harmless

error. No purpose wo uld be served by requiring One Watergate to

re - file the same petition in order to fulfill a technical

pleading requirement, where both parties were ready and able to

proceed to a hearing on the merits.

The hearing was scheduled for and held on March 22, 20 05.

At the hearing, One Watergate presented the testimony of

Harry W. Haskins, Esquire, its lead trial counsel in the

underlying proceeding. One Watergate's Exhibits 1 through 15

were admitted into evidence. The Commission presented the

testimony of Vic ki D. Johnson, Esquire, its trial counsel in the

underlying proceeding. The Commission's Exhibits 1 through 6

were admitted into evidence. No t ranscript of the hearing was

ordered. Both parties timely submitted Proposed Final Orders.

FINDINGS OF FACT

Based on the oral and documentary evidence adduced at the

final hearing and the entire record in this proceeding, the

following F indings of F act are made:

1. The Commission is the state agency charged with

investigating complaints of discriminatory housi ng practices and

enforcing the Fair Housing Act, Sections 760.20 through 760.37,

Florida Statutes (2002) . The Commission is charged with

investigating fair housing complaints filed with the Commission

and with the federal Department of Housing and Urban D evelopment

under the Federal Fair Housing Act, 42 U.S.C. Section 3601, et.

seq.

2. On e Watergate is the duly - incorporated owners'

association for the One Watergate condominium building in

Sarasota. The Board is the governing body of One Watergate an d

is responsible for the approval or denial of potential residents

and purchasers of units in the One Watergate building. One

Watergate is a "prevailing small business party , " as that term

is employed in Section 57.111, Florida Statutes (2002) .

3. Prio r to May 2002, prospective buyers or residents at

One Watergate were required to complete an application that

asked for character references , but did not require the

applicant to provide bank references or other financial

information. In early 2001, the B oard commenced a search

process to find a third - party investigative firm to conduct more

detailed screenings of potential residents and purchasers at One

Watergate. In April 2002, the Board reviewed detailed

information regarding one such firm, Renters Re ference of

Florida, Inc. ("Renters Reference"), an investigative consumer

reporting agency operating under the Federal Fair Credit

Reporting Act.

4. On April 16, 2002, the Board met in a duly - noticed,

regularly scheduled meeting and voted to pursue a co ntract with

Renters Reference to conduct applicant screenings. The minutes

of the April 16, 2002, Board meeting also indicated that the

Board approved an amendment to the Renters Reference motion to

the effect that no new applicants would be rejected unti l the

Board voted on the repeal of the "buy back" provision of the One

Watergate by - laws. The "buy back" provision stated that if the

Board rejected a bona fide purchaser, the owner of the unit in

question could demand that One Watergate itself purchase t he

unit.

5. On May 2, 2002, One Watergate and Renters Reference

entered into an "Agreement for Service" for the conduct of

confidential background checks, credit checks, and other

screenings of potential One Watergate residents.

6. In cooperation with the Board, Renters Reference

established form applications to be completed by potential

residents and by potential unit purchasers. The forms required

applicants to sign an authorization to release their banking,

credit, residence, employment, and police record information to

Renters Reference. The forms also required applicants to

disclose their Social Security numbers to Renters Reference,

which would allow Renters Reference to obtain credit reports

directly from the three national credit reporting agen cies,

TransUnion , Experian, and Equifax. The purchase application

form also contained a provision that required the applicant to

agree to "hold harmless" Renters Reference and the Board from

any claim in connection with the use of information obtained

thr ough the Renters Reference investigation.

7. The forms advised applicants that a failure to complete

any portion would result in the application being "returned, not

processed and not approved." Renters Reference advised One

Watergate to strictly enfor ce the requirement that applicants

complete all portions of the forms on the ground that a waiver

of application requirements for any one applicant would

necessitate such a waiver for any subsequent applicant or else

invite a discrimination claim by the su bsequent applicant.

After completing the investigation, Renters Reference would send

a report to One Watergate with its findings. Renters Reference

was not authorized to approve or deny the application, and it

made no recommendations as to approval of th e application.

8. The Board established a screening committee to act upon

the applications. The two - person screening committee consisted

of Janis Farr, One Watergate's resident manager, along with the

sitting Board president. The screening committee's d ecision to

approve or disapprove the application was later subject to a

ratification vote by the full Board.

9. On May 16, 2002, potential unit purchaser Marcia Lang

submitted a completed form Application for Occupancy/Approval

and a completed form Applic ation for Purchase. The application

was forwarded to Renters Reference, which performed a background

screening that included obtaining a TransUnion credit report

dated May 24, 2002. Renters Reference completed its

investigation on May 29, 2002, and made its report to One

Watergate. The screening committee approved the application and

issued an undated Certificate of Approval. Ms. Lang closed on

her unit in One Watergate in August 2002. Because the Board

does not meet during the months of May through Au gust, the Board

did not ratify the screening committee's approval until its

October 15, 2002, meeting.

10. On May 29, 2002, Derrick Bhayat, a Sarasota realtor,

entered into a contract with Janey and Paul Hess to purchase

their One Watergate unit for $315, 000. Mr. Bhayat was

originally from Capetown, South Africa, where he was considered

"colored." His ancestry is Malaysian, Zulu, and French. No

party to the underlying proceeding disputed that Mr. Bhayat was

a person of color.

11. On May 30, 2002, Mr. B hayat telephoned Ms. Farr and

requested that he not be required to complete the application

forms. Mr. Bhayat explained that he had always been cautious

about providing personal information, such as his Social

Security number to businesses. This general cautiousness became

alarm in 2001 when his wife, Nancy Bhayat, was the victim of an

identity theft. The thief used Mrs. Bhayat's Social Security

number to obtain a Visa card and make $12,000 worth of

purchases.

12. Ms. Farr responded that the application would not be

accepted unless all the requested information was provided.

Nevertheless, on May 31, 2002, Mr. Bhayat submitted to the One

Watergate office an application to occupy a unit and an

application to purchase a unit. On these applications,

Mr. Bh ayat did not provide his or his wife's Social Security

number. He did not sign the authorization to release his

banking, credit, residence, employment, and police record

information to Renters Reference, and he struck through the hold

harmless provision.

13. Mr. Bhayat's application to purchase was not accepted

because One Watergate deemed it incomplete. This event

triggered a series of negotiations between One Watergate's

attorneys and the lawyer for Mr. Bhayat, the details of which

are recited in the R ecommended Order in Case No. 04 - 0816. The

parties finally agreed that One Watergate would accept an

application from Mr. Bhayat that reinstated the hold harmless

provision, include his driver's license number in lieu of his

Social Security number for cond uct of the Renters Reference

background check, and also include a credit report provided by

Mr. Bhayat.

14. Pursuant to this agreement, Mr. Bhayat re - submitted

his application on or about June 12, 2002. On June 14, 2002,

One Watergate's lawyer wrote a letter to Mr. Bhayat's lawyer

that stated, in relevant part:

It has come to my attention that the credit

report submitted by Mr. and Mrs. Bhayat is

not a credit report from a national credit

reporting bureau but, in fact, is a consumer

report which appar ently is used quite often

by mortgage brokers and realtors to compile

only the positive aspects of an individual's

credit reports. As a result of Mr. and

Mrs. Bhayat's misrepresentation and attempt

to deceive the Association, at this point

only a complete and accurate application

will be accepted by One Watergate

Association. A complete and accurate

application shall include both applicant's

[sic] date of birth and social security

numbers, as well as all other information

requested on the application. . . .

15. Mr. Bhayat made no further attempts to submit

applications to One Watergate. Neither the screening committee,

nor the full Board, ever took official action because the

application was never deemed complete. Mr. Bhayat's purchase of

the unit fell through.

16. On July 19, 2002, Mr. Bhayat filed the Complaint with

the Commission, alleging that One Watergate discriminated

against him on the basis of national origin and color. The

Commission assigned an investigator to the case.

17. In support of h is Complaint, Mr. Bhayat submitted a

copy of his One Watergate application, including a 13 - page

credit report generated by MSC Mortgage, a joint venture of

Wells Fargo Bank and Mr. Bhayat's employer, Michael Sanders and

Company. The credit report was a "t ri - merge" report, meaning

that it combined information from all three major reporting

services into a single report.

18. In response to the investigator's request, One

Watergate submitted a position statement on August 22, 2002.

One Watergate generally d enied Mr. Bhayat's allegations of

discrimination and set forth a statement of facts in support of

its position. One Watergate explained that Mr. Bhayat's final

application was not considered complete because the credit

report came from MSC Mortgage , rathe r than a credit reporting

agency, which rendered it unacceptable. In response to

Mr. Bhayat's allegation that he was required to provide

information not asked of other applicants, One Watergate pointed

out that Marcia Lang had applied and been accepted as a unit

purchaser, using the Renters Reference application, two weeks

before Mr. Bhayat submitted his first application.

19. The Commission's investigator interviewed Jan Gillett,

a former resident and Board member of One Watergate.

Ms. Gillett told the investigator that the Renters Reference

form applications had not been approved at the time Mr. Bhayat

applied because the Board had yet to resolve the "buy back"

controversy. Ms. Gillett also mentioned that a former Board

member, now deceased, believed t hat Arab terrorists were

planning to come into high rise condominiums , such as One

Watergate , and blow them up. Ms. Gillett asserted that this

former Board member had also stated that Mr. Bhayat's reluctance

to disclose his Social Security number indicate d that he had

something to hide.

20. The Commission's investigator interviewed Ms. Hess,

co - owner of the unit Mr. Bhayat attempted to purchase. Ms. Hess

told the investigator that Larry Farr, the husband of Janis Farr

and "a member of management ," had ma de remarks to her about

Mr. Bhayat that could only be interpreted as referring to his

skin color. According to Ms. Hess, Mr. Farr stated, "I knew the

minute I saw that guy he was going to be trouble." Given that

Mr. Bhayat did not have an intimidating ph ysical presence,

Ms. Hess assumed that Mr. Farr was referencing Mr. Bhayat's skin

color or national origin.

21. The Commission's investigator requested One Watergate

to produce copies of all applications submitted by prospective

residents during the perio d May 2002 through December 2002.

When One Watergate declined to provide the applications, the

Commission issued a subpoena seeking their production. One

Watergate again declined on the ground that its residents'

privacy interests precluded production of these applications

absent a court order setting forth the type and dates of

documents to be produced and the information that could be

redacted from the documents prior to their production. One

Watergate ultimately produced the redacted applications purs uant

to an O rder of the Circuit Court of the Twelfth Judicial Circuit

entered on July 18, 2003.

22. On September 22, 2003, the Commission's investigator

produced a Final Investigative Report listing all the witnesses

interviewed and documents reviewed dur ing the investigation.

The report lists Mr. Bhayat, Ms. Hess, and Ms. Gillett as the

only substantive interviewees. On the same date, the

investigator also produced a document entitled , "Determination"

that set forth his findings and his recommendation t hat there

was cause to believe that a discriminatory housing practice had

occurred.

23. On November 14, 2003, the Commission issued a document

en titled , "Legal Concurrence: Cause ." As the title suggests,

this document represented the concurrence of the Commission's

legal counsel with the investigator's conclusion that there was

reasonable cause to believe that a discriminatory housing

practice had occurred. The legal analysis, prepared by the

Commission 's attorney Vicki Johnson, stated as follows, in

r elevant part:

The Complainant has satisfied all the

requirements of a prima facie case. The

Complainant has a dark complexion and is

from South Africa, therefore he is protected

on the basis of color and national origin;

he submitted an application to pur chase the

condominium and had obtained mortgage

approval. Once his application was

rejected, the condominium remained available

for sale.

Respondent articulated a non - discriminatory

reason for denying the Complainant's

application; however, this reason i s

determined to be pretext. To show pretext,

the Complainant need only show that his

color and national origin were in some part ,

the basis for the denial of the sale. . .

A landlord has the right to request

information about the financial status of

pros pective tenants; an inadequate or

incomplete application form may act as a

defense to a discrimination charge by

providing a legitimate basis for the action

taken. . . However, a violation of the Fair

Housing Act can be found even where formal

requisites of a contract/application are not

satisfied, if the motivation behind

rejection of the contract was

discriminatory. . . .

Respondent states that the Complainant did

not submit a complete application because he

failed to provide his and his wife's social

security number[s]. The Complainant

explained that he did not provide the social

security numbers because his wife had

recently had her identity stolen and was

afraid to disclose her social security

number. The application which the

Complainant was asked to complete was not to

take effect until July 1, 2002, when

Respondent entered into a contract with

Renter's [sic] Reference, who was to provide

a credit report for applicants applying to

purchase a condominium. The Renter's

Reference application form is more detailed

than the previous application. While it is

true that the Complainant did not disclose

his social security number, which would

permit Renter's Reference to obtain his

credit report, the Complainant did provide a

copy of a credit report that was obtained by

his mortgage company. This credit report

included both positive and negative credit

issues and provided similar information as

that which would have been generated by

Renter's Reference.

Moreover, the minutes of the April 2002

meeting of the One Watergate Board of

Directors indicates [sic] that the board

approved a motion that "no new applicants be

turned down until the revision of documents

with reference to the obligation of the

Association to purchase the unit where an

applicant has bee n rejected." The

Complainant's application was submitted

after this decision by the board, but was

turned down. In addition, Mrs. Hess stated

that when she inquired about the

Complainant's application, Mr. Farr (the

building manager) told her that "I kne w from

the minute I saw that guy that he was going

to be trouble . . . when you see him, you'll

know what I mean." This statement is

clearly referencing the Complainant's

physical appearance. Mr. Farr was acting as

an agent for the Respondent, therefore, the

Respondent is vicariously liable for his

actions and statements. . . . [Citations

omitted . ]

24. Also , on November 14, 2003, the Commission's e xecutive

d irector issued a Notice of Determination and Administrative

Charge finding that there was reason able cause to believe that a

discriminatory housing practice had occurred.

25. Prior to filing the Petition for Relief that initiated

the underlying proceeding, the Commission afforded One Watergate

an opportunity to submit additional information in its defense.

On February 23, 2004, counsel for One Watergate submitted

several documents to the Commission. The first was a signed

statement by Mr. Farr denying that he made the remarks alleged

by Ms. Hess. The second document was the contract between

Rent ers Reference and One Watergate, indicating an effective

date of May 6, 2002, not July 1, 2002, as alleged by the

Commission. Counsel for One Watergate also included Ms. Farr's

version of the sequence of events concerning Mr. Bhayat's

application and the minutes of a June 25, 2002, Board meeting at

which the Board voted to return the application to Mr. Bhayat

for completion, thus indicating that the Board did not

"disapprove" that application. Finally, One Watergate included

a letter from Warren Plant, th e president of Renters Reference,

explaining why he considered the credit report submitted by

Mr. Bhayat to be unacceptable:

At this time in 2002, we could not pull a

credit report without an individual's Social

Security Number. We obtain our credit

repor ts directly from the national credit

bureaus and provide our customer with an

exact copy of this credit report. We do not

obtain our credit reports from third - party

consumer reporting agencies. The credit

report submitted by Mr. Bhayat was a

concoction p ut together by a third - party

consumer reporting agency, not an exact copy

of a credit report from a national credit

bureau. A consumer reporting agency takes

information from different sources and they

make up their own credit report, including

or excludi ng whatever information they want.

26. On March 10, 2004, the Commission filed the Petition

for Relief that initiated Case No. 04 - 0816. At the hearing in

that case, it was established that Mr. Farr had nothing to do

with management of One Watergate; rat her, he was the building's

maintenance man. The undersigned credited his denial of the

statements attributed to him by Ms. Hess, but also found that

even if Mr. Farr made those statements, they could not be

attributed to One Watergate because Mr. Farr pla yed no role in

the application process and had not discussed Mr. Bhayat with

any Board member or with his wife.

27. At the hearing, it was also established that Renters

Reference never received the full credit report prepared by MSC

Mortgage and submitted by Mr. Bhayat with his last application.

Mr. Bhayat produced a 13 - page report at the hearing, but

witnesses for One Watergate and Renters Reference credibly

testified that they received only the first two pages, which

summarized the information in the fu ll report. The undersigned

credited Mr. Plant's testimony that even the full report did not

meet Renters Reference's criteria for a credit report, and thus ,

the result would have been the same even if Mr. Bhayat had

submitted the full credit report.

28. The undersigned also credited Mr. Plant's testimony

that his company does not "mess around" with the Fair Housing

Act and that he would have immediately canceled the contract

with One Watergate if he had had the least suspicion that the

Board was basing it s actions on Mr. Bhayat's race, color, or

national origin.

29. The Recommended Order in Case No. 04 - 0816 did not

directly address the issue of the minutes of the April 16, 2002,

Board meeting because the evidence produced by One Watergate at

the hearing r endered that issue irrelevant. The undersigned

credited the testimonial and documentary evidence produced by

One Watergate to show that the referenced minutes were not

accurate. No motion was made or adopted regarding the effect of

the "buy back" provisi on on the new applicant screening process.

The issue was discussed at the meeting, but no action was taken

by the Board.

30. The undersigned found no evidence that any member of

the Board or the screening committee discriminated against

Mr. Bhayat due to his race, national origin, or for any other

reason. Most of them never met Mr. Bhayat and were unaware of

his race or national origin during the period in dispute.

Mr. Bhayat simply declined to submit a complete application to

One Watergate, which, in turn, declined to consider his

incomplete application.

31. Prior to filing its Petition for Relief, the

Commission did not interview either of the Farrs or any Board

member aside from Ms. Gillett. Such interviews might have

caused the Commission to ques tion the credibility and/or

accuracy of the information provided by Mr. Bhayat, Ms. Gillett,

and Ms. Hess. However, nothing that the Farrs or the Board

members stated would necessarily have led the Commission to

conclude that it lacked cause to proceed. The Commission would

have had to make a judgment as to the credibility of the

witnesses, as did the undersigned at the final hearing.

32. A more detailed investigation might have revealed that

there was a dispute as to whether Mr. Bhayat submitted the full

credit report or merely the first two pages. However, at the

time the Commission found cause, neither the Commission nor One

Watergate apparently realized there was an issue regarding the

report. The Commission assumed that One Watergate received th e

full 13 - page report and had no reason to believe otherwise. One

Watergate assumed that the two pages it received constituted the

full report until Mr. Bhayat produced the full report at the

hearing. The matter was resolved at the hearing, essentially a s

a matter of witness credibility. Mr. Bhayat was adamant that he

submitted the full report, but Ms. Farr and Mr. Plant

convincingly testified that they received only the first two

pages.

33. It is not clear how extensive the Commission's

investigation w ould have to have been in order to learn that the

published minutes of the Board's April 16, 2002, meeting were

not accurate. According to the published minutes, no applicant

would be rejected until the Board voted on the repeal of the

"buy back" provisio n of the One Watergate by - laws, yet

Mr. Bhayat was rejected (or more precisely, his application was

not considered) prior to any such vote being taken. Thus, the

published minutes were a very significant factor in the

Commission's judgment that One Waterg ate was treating Mr. Bhayat

differently than other applicants, and the Commission continued

to rely on the minutes throughout the underlying proceeding.

The Commission argued, strenuously and not unreasonably, that

the undersigned should not credit One Wa tergate's self - serving

testimony and documentary evidence indicating that the minutes

were inaccurate.

34. An interview with Mr. Farr would have revealed that he

disputed Ms. Hess' account of their conversation, but this again

would have been a matter of witness credibility and the weighing

of corroborating evidence to determine the facts. The

Commission had Mr. Farr's written statement of denial in its

possession at the time the Petition for Relief was filed

indicating that the Commission did not fin d Mr. Farr persuasive.

The mere fact that Mr. Farr denied the allegation would not

render the Commission's reliance on Ms. Hess' testimony

unreasonable per se .

35. From the outset of the underlying proceeding, the

Commission made it clear that it did not intend to rely solely

on the alleged statement of Mr. Farr, or the hearsay statements

of Ms. Gillett, to establish that One Watergate had

discriminated against Mr. Bhayat. Counsel for the Commission

acknowledged in her opening statement that this would b e a case

based on circumstantial evidence of discriminatory motive on the

part of One Watergate. The Commission's theory of the case, in

a nutshell, was that Renters Reference's "bread and butter" lay

in assisting organizations such as One Watergate to ke ep out

"undesirables ," and that Renters Reference was always going to

find some reason not to accept Mr. Bhayat's application because

One Watergate had labeled him an "undesirable."

36. Because Mr. Bhayat was a successful realtor, was

financially able t o purchase the condominium in question, and

lacked a criminal record or other disqualifying attribute, the

Commission concluded that the reason for not accepting his

application must have been his color or national origin, which

was the only obvious distin ction between Mr. Bhayat and those

applicants whose applications were accepted and approved by

Renters Reference and One Watergate.

37. Based on the information before it at the time it

found reasonable cause to believe that an act of discrimination

occur red, the Commission had a reasonable basis in law and fact

to proceed with the case. The Commission's investigation was

not perfect, but the overriding factor in the underlying case

was witness credibility. The Commission was substantially

justified in f inding the statements and testimony of Mr. Bhayat,

Ms. Hess, and Ms. Gillett credible during its investigation,

despite the fact that the undersigned ultimately chose to credit

the testimony of One Watergate's witnesses, in light of all the

evidence produc ed at the hearing.

CONCLUSIONS OF LAW

38. 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 Subsections

120.57(1) and 57.111(4), Florida Statutes (2004) .

39. Section 57.111, Florida Statutes (2002) , the Florida

Equal Access to Justice Act, provides in pertinent part as

follows:

(4)(a) Unless otherwise provided by law,

an award of attorney's fees and costs shall

be made to a prevailing small busi ness party

in any adjudicatory proceeding or

administrative proceeding pursuant to

chapter 120 initiated by a state agency,

unless the actions of the agency were

substantially justified or special

circumstances exist which would make the

award unjust.

40. In proceedings to establish entitlement to an award of

attorney's fees and costs pursuant to Section 57.111, Florida

Statutes (2002) , the initial burden of proof is on the party

requesting the award to establish by a preponderance of the

evidence that it prevailed in the underlying disciplinary action

and that it was a small business party at the time the

disciplinary action was initiated. Once the party requesting

the award has met this burden, the burden of proof shifts to the

agency to establish that it was substantially justified in

initiating the disciplinary action. See Helmy v. Department of

Business and Professional Regulation , 707 So. 2d 366, 368 (Fla.

1st DCA 1998); Department of Professional Regulation, Division

of Real Estate v. Toledo Realty , Inc. and Ramiro Alfert , 549

So. 2d 715, 717 (Fla. 1st DCA 1989).

41. One Watergate prevailed in the underlying proceeding.

§ 57.111(3)(c)3 . , Fla . Stat . (2003) .

42. The Commission conceded that One Watergate is a "small

business party" as contemplated by Subsection 57.111(3)(d),

Florida Statutes (2002) , which provides in relevant part as

follows:

(d) The term "small business party"

means:

1.a. A sole proprietor of an

unincorporated business, including a

professional practice, whose principal

off ice is in this state, who is domiciled in

this state, and whose business or

professional practice has, at the time that

action is initiated by a state agency, not

more than 25 full - time employees or a net

worth of not more than $2 million, including

both p ersonal 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 not more than 25 full - time

employees or a net worth of not more than $2

million. . . .

43. The sole disputed issue for decision in this case is

whether the Commission's actions were "substantially justified."

Subsection 57.111(3)(e), Florida Statutes (2002) , provides that

a proceeding is "sub stantially justified" if it had a

"reasonable basis in law and fact at the time it was initiated

by a state agency ." (Emphasis added.) The "substantially

justified" standard falls somewhere between the "no justiciable

issue" standard of Section 57.105, F lorida Statutes (2002) , and

an automatic award of fees to a prevailing party. Helmy , 707

So. 2d at 368.

44. In Department of Health v. Cralle , 852 So. 2d 930, 932

(Fla. 1st DCA 2003), the court set forth the following temporal

limitation on the required analysis, quoting from Fish v.

Department of Health , 825 So. 2d 421, 423 (Fla. 4th DCA 2002):

In resolving whether there was substantial

justification or a reasonable basis in law

and fact for filing an administrative

complaint, "one need only examine the

information before the probable cause panel

at the time it found probable cause and

directed the filing of an administrative

complaint."

See also Agency for Health Care Administration v. Gonzalez , 657

So. 2d 56 (Fla. 1st DCA 1995)(proper inquiry is whethe r evidence

before probable cause panel was sufficient for institution of

disciplinary action). 1/

45. The evidence established that the Commission had a

reasonable basis in law and fact to find cause to believe that

One Watergate discriminated against Mr. Bhayat on the basis of

national origin and color. While it did not extensively

interview One Watergate's Board members and employees, the

Commission did afford One Watergate multiple opportunities to

respond to the allegations prior to arriving at its fi nding. It

was not unreasonable for the Commission to believe Mr. Bhayat

and his supporting witnesses as against One Watergate's

information. Department of Health v. Thomas , 890 So. 2d 400,

401 (Fla. 1st DCA 2004)(a decision to prosecute that turns on a

c redibility assessment has a reasonable basis in fact and law);

Gentele v. Department of Professional Regulation , 513 So. 2d

672, 673 (Fla. 1st DCA 1987).

46. A prima facie showing of housing discrimination could

be made by establishing that Mr. Bhayat was a member of a

protected class , that he applied for and was qualified to

purchase an available unit , that One Watergate rejected him , and

that the unit remained available, thereafter, or was sold or

rented to a person not in a protected class. Though it

u ltimately failed to make its prima facie case, because it could

not establish that One Watergate "rejected" an application that

was never properly completed, the Commission had a reasonable

basis for its reasonable cause findings, based on the

information available at that time.

CONCLUSION

Based on the foregoing Findings of Fact and Conclusions of

Law, One Watergate's Motion for Attorneys' Fees and Costs is

denied.

DONE AND ORDERED this 7th day of June, 2005, in

Tallahassee, Leon County, Florida.

S

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) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 7th day of June, 2005.

ENDNOTE

1/ Though no party contested the applicability of the cited

cases, the undersigned notes that the instant case does not

involve an agency engaged in imposing discipline on the licensed

professionals under its jurisdiction, as do the cited cases.

The burden of proof in the underlying proceedings was different

(a preponderance of the evidence in the instant case and cle ar

and convincing evidence in the professional licensure cases),

but this distinction appears to make no obvious difference in

terms of the application of Section 57.111, Florida Statutes

(2002) , to the facts of the instant case.

COPIES FURNISHED :

Den ise Crawford, Agency Clerk

Florida Commission on Human Relations

2009 Apalachee Parkway, Suite 100

Tallahassee, Florida 32301

Cecil Howard, General Counsel

Florida Commission on Human Relations

2009 Apalachee Parkway, Suite 100

Tallahassee, Florida 3230 1

Mary R. Hawk, Esquire

Porges, Hamlin, Knowles & Prouty, P.A.

1205 Manatee Avenue West

Bradenton, Florida 34205

Derrick Bhayat

101 South Gulfstream Avenue, No. 7E

Sarasota, Florida 34236

Harry W. Haskins, Esquire

Law Office of Harry W. Haskins

3400 S outh Tamiami Trail, Suite 201

Sarasota, Florida 34239

Elizabeth A. Miller, Esquire

Florida Commission on Human Relations

2009 Apalachee Parkway, Suite 100

Tallahassee, Florida 32301 - 4830

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely a ffected by this Final Order is

entitled to judicial review pursuant to Section 120.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing the original Notice of Appeal w ith the agency Clerk of

the Division of Administrative Hearings and a copy, accompanied

by filing fees prescribed by law, with the District Court of

Appeal, First District, or with the District Court of Appeal in

the Appellate District where the party resi des. The notice of

appeal must be filed within 30 days of rendition of the order to

be reviewed.