10-009282 Gerald J. Carey, Ii vs. Department Of Transportation Status: Closed Recommended Order on Monday, February 28, 2011.

Summary: Facts show that Petitioner "flipped a house" rather than reestablish his rental property business. Recommend that DOT affirm denial of Petitioner's reestablishment expenses.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GERALD J. CAREY, II , )

)

Petitioner , )

)

vs. ) Case No. 10 - 9282

)

DEPARTMENT OF TRANSPORTATION , )

)

Respondent . )

)

RECOMMENDED ORDER

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

on December 17 , 2010, by video teleconference in Tallahassee,

Florida, and Tampa, Florida , before Thomas P. Crapps, a

designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Stephen Tabano, Esquire

Trenam, Kemker, Scharf, Barkin,

Frye, O'Neill & Mullis, P.A.

101 East Kennedy Boulevard, Suite 2700

Post Office Box 1102

Tampa, Florida 33601 - 1102

For Respondent: Matthew F. Childs, Esquire

Department of Tra nsportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE S

Whether Petitioner is entitled to reimbursement for

expenses incu rred in relocating and reestablishment of his small

business pursuant to section 421.55, Florida Statutes (2009), 1/

as implemented by Florida Administrative Code Rule 14 - 66.007,

which , in turn, incorporates by reference the provisions of

49 Code of Federal Regulations Part 24, Uniform Relocation

Assistance and Real Property Acquisition for Federal and

Federally - Assisted Programs (effective October 1, 2006), 2/

and the Florida Department of Transportation Right of Way

Manual 9.3.15 , and , if Petitioner is entitled to reimbursement,

the amount owed to him.

PRELIMINARY STATEMENT

On June 8, 2010, Respondent, Department of Transportation

(Department) , informed Petitioner, Gerald J. Carey, II

(Mr. Carey) , that it was affirming its district offi ce's denial

of his application for "relocation benefits for landlord

reestablishment expenses in the amount of $7,654.56."

On August 3, 2010, Mr. Carey filed with the Department an

A mended Request for Formal Administrative Hearing, requesting a

formal admi nistrative hearing concerning the Department's

decision to deny him reimbursement expenses related to the

relocation and reestablishment of his small business.

On September 23, 2010, the Department forwarded the request

to the Division of Administrative H earings for an administrative

hearing. The case was assigned to Thomas P. Crapps,

Administrative Law Judge, for a final hearing set on

December 17, 2010.

At the December 17, 2010 , video teleconference hearing,

Mr. Carey testified in his own behalf and off ered E xhibits A

through F, which were admitted into evidence. The Department

presented the testimony of Andrew Nappi (Mr. Nappi) and Robert

Knight (Mr. Knight) and offered E xhibits 1 and 3 through 9,

whic h were admitted into evidence.

A T ranscript of the hearing was ordered and filed with the

Division of Administrative Hearings on January 31, 2011. Both

parties submitted P roposed R ecommended O rders , which the

undersigned considered in pre paring this Recommended Order.

FINDINGS OF FACT

Based on the evidence and witnesses' testimony, the

undersigned found the following facts:

1. The Department is the state agency that has

responsibility for paying certain relocation and reestablishment

expenses of businesses that have been displaced because of a

publ ic transportation project. See § 421.55 , Fla. Stat .

2. Sometime in 1999 to 2000, Mr. Carey purchased eight

rental units in Hillsborough County, Florida , as an investment

property. Mr. Carey managed the rental property and testified

that he would advertise vacancies through "word of mouth." The

record shows that these rental units were rented weekly and

included written and verbal leases.

3. In 2005, the Department informed Mr. Carey that his

rental property would be subject of an eminent domain taking and

informed Mr. Carey about the law authorizing the Department to

pay certain expenses in relocating and reestablishing a small

business. On December 6, 2005, Mr. Carey filled out a Business

Survey Questionnaire for the Department , stating his des ire to

relocate his rental business.

4. The Department acquired Mr. Carey's property on

April 18, 2009.

5. By mid July 2009, Mr. Carey contacted Mr. Nappi to

determine whether or not he was still eligible to receive

relocation and reestablishment reimbur sement for his small

business. Mr. Nappi determined that Mr. Carey remained eligible

to apply for reimbursement and informed him of that fact.

6. On August 28, 2009, Mr. Carey purchased a replacement

property located at 19002 Apian Way, Lutz, Florida , for

$300,000.00 . The replacement property contained a house that had

been the homestea d property of the prior owner.

7. Mr. Carey credibly testified that the purpose of

purchasing this replacement property was "to get back into the

rental business " and t hat he advertised the replacement property

for rent by "word of mouth ." Receipts introduced into evidence

show that Mr. Carey began making repairs and purchasing materials

as early as the first week in September.

8. Mr. Carey testified, on cross - examinat ion, that he could

not remember the exact date when he listed the replacement

property for sale, or the exact date when he entered into a

contract for the sale of the replacement property. Mr. Carey

testified that he would speculate that the contract for sale of

the replacement property occurred in earl y October 2009.

9. On October 15, 2009, Mr. Nappi went to the replacement

property with Mr. Carey to review the work that Mr. Carey had

already begun on the replacement property and to discuss the

expens es eligible for reimbursement.

10. In reviewing Mr. Carey's claimed expenses, Mr. Nappi

found that the following expenses would be eligible for

reimbursement: ( 1) the drywall work detailed in Exhibit A;

( 2) $561.00 worth of the receipts of materials purchas ed from

Home Depot; and ( 3) the painting expenses detailed in Exhibit C.

Mr. Nappi also testified that in reviewing the claimed expenses

that Mr. Carey would be eligible for reimbursement of a portion

of the replacement property's ad valorem taxes. Accord ing to

Mr. Nappi, Mr. Carey would have been eligible to receive the

difference of the amount of the property taxes between the

acquired property and the replacement property in the amount of

$849.56. The only expenses that Mr. Nappi identified as not

bein g reasonable were for hauling away yard waste contained in

Exhibit D. According to Mr. Nappi, the Department questioned the

amount of the charges and determined that an appropriate amount

would be $1,200.00 as opposed to the $2,450.00 sought by

Mr. Carey. Consequently, the majority of the expenses claimed by

Mr. Carey were eligible items for reimbursement.

11. On November 4, 2009, the Department sent Mr. Carey a

letter denying his eligibility to receive reimbursement for

expenses in relocating and reestablishing his small rental

business. The Department denied Mr. Carey's eligibility because

the updated TRIM notice for the property tax , that Mr. Carey

provided the Department , showed the replacement property was

homestead property. Because the repl acement property was

homestead, the Department reasoned that Mr. Carey had not

r eestablished a small business.

12. Mr. Carey informed Mr. Nappi that the replacement

property was not homestead property and that the TRIM notice was

wrong. In response, on N ovember 9, 2009, Mr. Nappi wrote the

Hillsborough County Tax Collector to determine whether or not

Mr. Carey's replacement property was homestead property.

13. On November 23, 2009, while the Department waited for a

response from the Hillsborough County T ax Collector, Mr. Carey

closed on the sale of the replacement property for $332,500.00.

14. Mr. Carey did not inform the Department that the

repla cement property had been sold.

15. In February 2010, the Hillsborough County Tax Collector

informed the Depa rtment that the replacement property was not

homestead. Also, t he Department learned for the first time that

Mr. Carey had sold the replacement property.

16. After learning that Mr. Carey had sold the replacement

property, Mr. Nappi contacted his supervi sor Elbert Johnson

(Mr. Johnson). Mr. Nappi informed Mr. Johnson that "it did not

appear that the reestablishment status of the landlord had been

in fact established[,]" and the claim would be denied.

17. Mr. Nappi testified the Department attempted to

d etermine whether or not Mr. Carey had reestablished his rental

business by examining Mr. Carey's efforts to rent the replacement

property. Mr. Nappi directed a right - of - way specialist for the

Department to contact realtors, who were associated with the

pr operty, to determine if Mr. Carey had listed the property for

rent; to contact the local newspaper to learn if the property had

been advertised for rent; and to conduct an in ternet search of

the property.

18. According to Mr. Nappi, the realtor indicated that she

was not aware of whether or not Mr. Carey listed the property for

rent and learned nothing from the newspaper or internet search.

Mr. Nappi admitted that the Department did not contact Mr. Carey

to ask him about his e fforts to rent the property.

19. The Department did not contact Mr. Carey or ask him to

provide any information about his efforts to rent the property.

Consequently, the Department did not have before it any

information concerning Mr. Carey's efforts as to "word of mouth "

advertisin g of the property.

20. Mr. Knight , the s tate a dministrator of Relocation

Assistance, testified that asking Mr. Carey about his efforts to

rent the property would have been helpful information to have in

considering the reimbursement. However, Mr. Knight acknowledged

that Mr. Carey's selling of the home prior to determination of

whether or not he was entitled to reimbursement made the issue

moot. In the Department's estimation, Mr. Carey had simply

"flipped a house" and had n ot reestablished his business.

21. On March 25, 2010, the Department informed Mr. Carey

that it was denying his application for reimbursement because he

was not eligible because he had not reestablished his small

rental business at the replacement property.

CONCLUSIONS OF LAW

22. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of this

proceeding. § 120.57 , Fla. Stat. (2010) .

23. The burden of proof is on the party asserting the

affirmative of an issue before an administrative tribunal . Fl a.

Dep ' t of Transp . v. J.W.C. Corp . , Inc. , 396 So. 2d 778 (Fla. 1st

DCA 1981); Balino v. Dep ' t of H RS , 348 So. 2d 349 (Fla. 1st DCA

1977). Accordingly, Mr. Carey bears the burden of proof in this

proceeding by a preponderance of the evidence that he is

entitled to receive relocation and reestablishment expenses and

the reasonableness of those expenses.

24. Sections 339.09(2) and (3) and 421.55, Florida

Statutes, provide the Department with authorization to pay

certain expenses for the relocation and reestablishment of a

small business displaced by the Department's acquisition of real

property for a public transportation project.

25. Florida Administrative Code Rule 14 - 66.007 implements

sections 339.09 and 421.55, as the Relocation Assistance

Program. The purpose of r ule 14 - 66.007 is to:

[G] overn the provision of relocation

services, moving costs, replacement housing

costs, and other related expenses and to

ensure that each person displaced as a

direct result of a transportation project is

treated fairly, consistently, and equitably,

so that such person will not suffer

disproportionate injury as a result of

projects designed for the benefit of the

public as a whole, and to ensure that the

Department implements these regulations in a

manner that i s efficient and cost effective.

In furtherance of t his purpose, the Department incorporated the

"provisions of 49 C.F.R. Part 24, Uniform Relocation Assistance

and Real Property Acquisition for Federal and Federally - Assisted

Programs (effective October 1, 2006) . " Fla. Admin. Code. R . 14 -

66.007(1).

26. Ru le 14 - 66.007(7) provides, in pertinent part, that

"[a]ny displaced person is entitled to payment of his or her

actual moving and related expenses, as the Agency determines to

be reasonable and necessary, as outlined in 49 C.F.R. Part 24,

subject to [provis ions listed in the r ule] . . . ." 3/

27. The federal Department of Transportation implemented

the Uniform Relocation Assistance and Real Property Acquisition

Policies Act of 1970 (42 U.S.C. s ection 4601 et seq. ), as

amended, in 49 C.F.R. s ection 24.1 et seq. Because r ule 14 -

66.007 incorporates the federal rule in determining Mr. Carey's

eligibility for relocation and reestablishment expenses, we turn

to 49 C.F.R. Part 24.

28. Federal Regulation 49 C.F.R. s ection 24.304 provides

for payment of reestablis hment expenses for a small business.

Specifically, the regulation provides, in relevant part:

In addition to the payments available under

§§ 24.301 and 24.303 of this subpart, a

small business, as defined in § 24.2(a)(24),

farm or nonprofit organization i s entitled

to receive a payment, not to exceed $10,000,

for expenses actually incurred in relocating

and reestablishing such small business, farm

or nonprofit organization at a replacement

site.

The regulation provides that the "[r]establishment expenses must

be reasonable and necessary, as determined by the Agency," and

then provides a list of eligible and ineligible expenses for

guidance. Id.

29. The question presented by this case is whether

Mr. Carey presented sufficient evidence to demonstrate that he

relocated and reestablished his small business of renting

property at the replacement site. The resolution of this issue

turns on the definitions of "small business" and to

"reestablish . "

30. First, 49 C.F.R. s ection 24.2(a)(24) defines a "small

busin ess" as :

[A] business having not more than 500

employees working at the site being acquired

or displaced by a program or project, which

site is the location of economic activity.

Sites occupied solely by outdoor advertising

signs, displays, or devices do not qualify

as a business for purposes of § 24.304.

The second pertinent definition is of the term to "reestablish."

The term "reestablish" is not defined in 49 C.F.R. Part 24, or in

r ule 14 - 66.007. A canon of statutory construction requires that

the term be given its plain and ordinary meaning which can be

ascertained by reference to dictionary definitions. See Arnold,

Matheny & Eagan, P.A. v. First Am. Holdings, Inc. , 982 So. 2d

628, 633 (Fla. 2008) ; Rollins v. Pizzarelli , 761 So. 2d 294, 298

(Fla. 2000) . "Re" is a prefix meaning "again" or "anew," while

"establish" means to "set up," "found" or "to bring into

existence." Merriam - Webster Online 15 February 2011 ,

http://www.merriam - webster.com/dictionary/ . As shown earlier, a

"small business" is defined as "a business having not more than

500 employees at the site being acquired or displaced by a

program or project, which site is the location of economic

activity." 49 C.F.R. § 24.2(24). Thus, in order to

"reestablish" the "small business" at the replaceme nt site,

there must be some economic activity occurring at the

replacement property. If there is no economic activity at the

replacement site, then the applicant has not reestablished the

small business and is not entitled to reimbursement.

31. Applying the law to the facts here, Mr. Carey failed to

prove by a preponderance of evidence that he reestablished his

rental business at the replacement site. Although the record

shows that Mr. Carey intended to reestablish his rental business

at the replacement site and that he advertised by "word of

mouth , " these facts are outweighed by the specific time - line

concerning the sale of the replacement property. The key facts

here showed that Mr. Carey purchased his replacement property on

August 28, 2009 , for $300,000. 00. He began repairs and listed

the replacement property for sale sometime in September 2009. By

early October, Mr. Carey had entered into a contract for the sale

of the replacement prop erty. On October 15, 2009, Mr. Carey met

with Mr. Nappi to discuss the reimbursement for the

reestablishment expenses of his rental business. Clearly,

Mr. Carey would not be reestablishing his rental business at the

replacement site , because he had alrea dy entered a contract to

sell the property. Moreover, since Mr. Carey had already entered

into a contract to sell the property , there would not be any

economic activity to support the reestablishment of the rental

business at the replacement site. The fi nal key fact is that on

November 23, 2009, Mr. Carey closed on the sale of the

replacement property for $332,500.00; thus, supporting the

Department's conclusion that Mr. Care y had simply "flipped a

house , " rather than reestablishing his rental business.

3 2. The Department's interpretation of 49 C.F.R.

s ection 24.304 that Mr. Carey had not "reestablished" his small

business is permissible, and its decision that Mr. Carey was not

eligible for reimbursement of expenses is accorded wide

discretion and defere nce. See Bd. o f Podiatric Med. v . Fla .

Med. Ass'n. , 779 So. 2d 658, 660 (Fla. 1st DCA 2001)(it is

fundamental that a n agency is accorded wide discretion and

deference in the interpretation of statutes which it administers

and that an agency's interpretation of a rule it administers

should be upheld when it is within the range of permissible

interpretations). The Depart ment's interpretation of

"reestablish" as it applies under the facts here is permissible.

33. One area of concern was that the Department failed to

contact Mr. Carey to ascertain the efforts that he had made to

market the replacement property for rental. Federal Regulation

49 C.F.R. s ection 24.207(b) requires t hat the "claimant shall be

promptly notified as to any additional documentation that is

required to support the claim." 49 C.F.R. § 24.207(b).

Mr. Knight candidly admitted that the Department could have done

a better job by requesting the information from Mr. Carey. This

failure, however, does not change the outcome of the

r ecommendation. Even if Mr. Carey had brought forward the

evidence that he advertised the rental property through "word o f

mouth," by October 15, 2009, the date when he was meeting with

the Department about the reimbursement expenses, this fact would

be outweighed by the time - line that he had already entered into

a contract to sell the replacement property. Thus, it is clea r

that Mr. Carey did not bring forward evidence showing that he

reestablished his rental property bu siness at the replacement

site.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Tran sportation

enter a final order affirm i n g its denial of Mr. Carey's

application for reimbursement of reestablishment expenses.

DONE AND ENTERED this 28th day of February , 2011 , in

Tallahassee, Leon County, Florida.

S

THOMAS P. CRAPPS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 28th day of February , 2011 .

ENDNOTES

1/ Unless otherwise indicated, all references to the Florida

Statutes are to the 2009 version.

2/ The provisions of 49 Code of Federal Regulations, Part 24,

Uniform Relocation Assistance and Real Property Acquisition for

Federal and Federally - Assisted Programs (effective October 1,

2006), shall be referred to as 49 C.F.R. Part 24, with

designation of the specific section number for Part 24 when

referenced.

3/ The Department al so uses the Florida Department of

Transportation Right of Way Manual . The undersigned took

judicial recognition of Right of Way Manua l section 9.3.15 ,

which mirrors 49 C.F.R. s ection 24.304 in setting out the

eligibility for reestablishment expenses. Lik e the federal

regulation, the Right of Way Manual provides "a small business,

farm or nonprofit organization may be eligible to receive a

payment, not to exceed $10,000, for expenses actually incurred

in relocation and reestablishing such small business."

A review of section 9.3.15 and 49 C.F.R. s ection 24.304 yielded

t wo differences in the listing of ineligible expenses. The

Right of Way Manual provides two ineligible expenses not found

in the federal regulation. Section 9.3.15(B)(3) provides that

that interior and exterior refurbishment at a replacement site

for aesthetic purposes is not an eligible expense and that a

person is ineligible to receive a "re - establishment expense that

has already been paid to the di splaced person through a business

damage claim." Neither of those differences is relevant for the

decision in this case.

COPIES FURNISHED :

Matthew F. Childs, Esquire

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 5 8

Tallahassee, Florida 32399

Stephen Tabano, Esquire

Trenam, Kemker, Scharf, Barkin,

Frye, O ' Neill & Mullis, P.A.

101 East Kennedy Boulevard, Suite 2700

Post Office Box 1102

Tampa, Florida 33601 - 1102

Deanna Hurt, Clerk of Agency Proceedings

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399 - 0450

Gerald B. Curington , General Counsel

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahass ee, Florida 32399 - 0450

Stephanie C. Kopelousos, Secretary

Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 57

Tallahassee, Florida 32399 - 0450

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 Recommended Order should be filed with the agency that

will issue the Final Order in this case.