11-006219F Two Four Nine, Llc, D/B/A Central Avenue Seafood Company vs. Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco Status: Closed DOAH Final Order on Thursday, April 26, 2012.

Summary: Petitioner entitled to fees for dispute related to calculation of beverage license transfer fee.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TWO FOUR NINE, LLC, d/b/a )

CENTRAL AVENUE SEAFOOD COMPANY , )

)

Petitioner , )

)

vs. ) Case No. 11 - 6219F

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC BEVERAGES )

AND TOBACCO , )

)

Respondent . )

)

FINAL ORDER

On February 9, 2012, an administrative hearing was held in

Tallahassee, Florida, before William F. Quattlebaum,

Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Harold Purnell, Esquire

Rutledge, Ecenia and Purnell, P.A.

Post Office Box 551

119 South Monroe Street, Suite 202

Tallahassee, Florida 32302

For Respondent: Thomas J. Morton, Esquire

De partment of Business and

Professional Regulation

1940 North Monroe Street, Suite 40

Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

The issue in this case is whether the Petitioner is

entitled to an award of attorney ' s fees and co sts pursuant

to s ection 57.111, Florida Statutes (2011) . 1/

PRELIMINARY STATEMENT

Two Four Nine, LLC, d/b/a Central Avenue Seafood Company

(Petitioner) , filed an application to transfer an alcoholic

beverage license from the licensee to the Petitioner in 20 10. In

connection with the transfer, the Petitioner paid a $5,000 fee

that was calculated by the Department of Business and

Professional Regulation, Division of Alcoholic Beverages and

Tobacco (Respondent), but the Petitioner disagreed with the

Respondent ' s computation of the fee and subsequently requested a

partial refund of the transfer fee.

The Petitioner also paid an additional $50 tobacco sales fee

that was not disputed.

The Respondent denied the Petitioner ' s refund request, and

the Petitioner fil ed a Petition for Hearing to challenge the

denial.

The Respondent forwarded the Petition to the Division of

Administrative Hearings and the case (DOAH Case No. 11 - 4637) was

scheduled for hearing. Prior to the hearing, the parties

resolved the dispute wi th the Petitioner receiving a partial

refund of the transfer fee, though not in the amount originally

requested.

On December 12, 2011, the Petitioner filed a Motion for

Attorney ' s Fees pursuant to section 57.111 . A hearing on the

Motion took place on Fe bruary 8, 2012. Neither party presented

testimony at the hearing. The Petitioner had Exhibits 1

through 15 admitted into evidence.

The hearing T ranscript was filed on February 28, 2012.

Pursuant to the schedule adopted by the parties at the hearing,

P roposed Final Orders were filed on March 19, 2012.

FINDING S OF FACT

1. The parties have stipulated that the Petitioner is

a " small business party " as the term is defined at

section 57.111(3)(d) .

2. On June 21, 2010, the Petitioner applied to acquire an

e xisting alcoholic beverage " quota " license from another

licensee.

3. The Petitioner had to pay a fee to transfer the license

pursuant to s ection 561.32(3)(a), Florida Statutes (2010), which

provides as follows:

Before the issuance of any transfer of

lic ense herein provided, the transferee shall

pay a transfer fee of 10 percent of the

annual license tax to the division, except

for those licenses issued pursuant to

s. 565.02(1) and subject to the limitation

imposed in s. 561.20(1), for which the

transfer f ee shall be assessed on the average

annual value of gross sales of alcoholic

beverages for the 3 years immediately

preceding transfer and levied at the rate of

4 mills, except that such transfer fee shall

not exceed $5,000; in lieu of the 4 - mill

assessment , the transferor may elect to pay

$5,000 . Further, the maximum fee shall be

applied with respect to any such license

which has been inactive for the 3 - year

period. Records establishing the value of

such gross sales shall accompany the

application for tra nsfer of the license, and

falsification of such records shall be

punishable as provided in s. 562.45. All

transfer fees collected by the division on

the transfer of licenses issued pursuant to

s. 565.02(1) and subject to the limitation

imposed in s. 561.2 0(1) shall be returned by

the division to the municipality in which

such transferred license is operated or, if

operated in the unincorporated area of the

county, to the county in which such

transferred license is operated. ( e mphasis

added ) .

4. License transfer applicants are required to provide

gross sales records pursuant to Florida Administrative Code

Rule 61A - 5.010(2)(b) , which provides as follows:

An applicant for a transfer of a quota liquor

license shall provide records of gross sales

for the past 3 years or for the period of

time current licensee has held license in

order that the division may compute the

transfer fee. An applicant may, in lieu of

providing these records, elect to pay the

applicable transfer fee as provided by

general law.

5. T he gross sales records provided to the Respondent by

the Petitioner were for the five - month period between January 21

and June 21, 2010 , and totaled $573,948.94 for th e period.

6. To compute the transfer fee, the Respondent divided the

reported gross sale s ($573,948.94) by five to estimate an average

monthly gross sales figure of $114,789.79. 2 / The Respondent

multiplied the estimated average monthly gross sales by 12, to

estimate annual gross sales of $1,377,477.48. The Respondent

then applied the 4 - mill rate to the estimated annual gross sales

and determined the transfer fee to be $5,509.91.

7. The Respondent also calculated the transfer fee through

a formula set forth on a form that had been challenged as an

unadopted rule by an applicant in a 2008 pro ceeding. While the

2008 rule challenge was pending, the Respondent commenced to

adopt the form as a rule, but the dispute was ultimately resolved

without a hearing, after which the Respondent discontinued the

process to adopt the rule. According to the f ormula on the form,

the transfer fee was $5,599.50.

8. Because both of the Respondent ' s calculations resulted

in transfer fees in excess of $5,000, the Respondent required the

Petitioner to pay th e statutory maximum of $5,000.

9. The Petitioner paid th e $5,000 transfer fee under

protest. The Petitioner asserted that the appropriate transfer

fee should have been $765.27. The Petitioner ' s calculation used

the reported five months of gross sales ($573,948.94) as the

total annual gross sales for the licen see. The Petitioner

divided the $573,948.94 by three to determine a three - year

average of $191,316.31 and then applied the 4 - mill rate to the

three - year average to compute a transfer fee of $765.27.

10. On March 17, 2011, the Petitioner filed an Applicati on

for Refund of $4,234.73, the difference between the $5,000 paid

and the $765.27 that the Petitioner calculated as the appropriate

fee.

11. The Application for Refund was filed pursuant to

s ection 215.26, Florida Statutes, which governs requests for

re payment of funds paid through error into the State Treasury,

including overpayment of license fees. Section 215.26(2)

requires that in denying an application for a tax refund, an

agency ' s notice of denial must state the reasons for the denial.

12. As au thorized by s ection 72.11(2)(b)3, Florida

Statutes, the Respondent has adopted rules that govern the

process used to notify an applicant that a request for refund has

been denied. Florida Administrative Code Rule 61 - 16.002(3)

states as follows:

Any tax re fund denial issued by the

Department of Business and Professional

Regulation becomes final for purposes of

Section 72.011, Florida Statutes, when final

agency action is taken by the Department

concerning the refund request and taxpayer is

notified of this decision and advised of

alternatives available to the taxpayer for

contesting the action taken by the agency.

13. By letter dated May 9, 2011, the Respondent notified

the Petitioner that the request for refund had been denied and

stated only that " [w]e reviewed the documentation presented and

determined that a refund is not due. " The Respondent ' s notice

did not advise that the Petitio ner could contest the decision.

14. On May 16, 2011, the Petitioner submitted a Request for

Hearing to the Respondent, as serting that the Respondent

improperly calculated the transfer fee by projecting sales

figures for months when there were no reported sales.

15. On August 4, 2011, the Respondent issued a letter

identified as an " Amended Notice of Denial " again advising th at

the Petitioner ' s refund request had been denied. The letter also

stated as follows:

The Division cannot process your refund

application due to the fact that the

transferee has not provided the Division

records which show the average annual value

of gro ss sales of alcoholic beverages for the

three years immediately preceding the

transfer.

16. On September 14, 2011, the Respondent forwarded the

Petitioner ' s Request for Hearing to the Division of

Administrative Hearings (DOAH Case No. 11 - 4637).

17. By letter dated October 10, 2011, the Respondent issued

a " Second Amended Notice of Denial " which stated as follows:

We regret to inform you that pursuant to

Section 561.23(3)(a), Florida Statutes, your

request for refund . . . i n the amount of

$4,234.73 is denied. However, the Division

has computed the transfer fee and based upon

the records submitted by you pursuant to Rule

61A - 5.010(2)(b), F.A.C., the Division will

issue the Applicant a refund in the amount of

$2,704.20.

18. The records referenced in t he letter were submitted

with the original application for transfer that was filed by the

Petitioner on March 17, 2011.

19. The Respondent ' s recalculated transfer fee was the

result of applying the 4 - mill levy directly to the reported five

months of gross sales reported in the transfer application,

resulting in a revised transfer fee of $2,295.80 and a refund of

$2,704.20.

20. On October 11, 2011, the Respondent filed a Motion for

Leave to Amend the Amended Notice of Denial, which was granted ,

over the Pe titioner ' s opposition, on October 21, 2011.

21. DOAH Case No. 11 - 4637 was resolved by execution of a

Consent Order wherein the parties agreed to the refund of

$2,704.20 " solely to preclude additional legal fees and costs , "

but the Consent Order also stat ed that the " Petitioner expressly

does not waive any claim for attorneys ' fees in this matter

pursuant to F.S. 57.111. "

22. The Petitioner is seeking an award of attorney ' s fees

of $8,278.75 and costs of $75, for a total award of $8,353.75.

23. The parti es have stipulated that the amount of the

attorney ' s fees and costs sought by the Petitioner are

reasonable.

24. The Respondent fail ed to establish that the original

calculation of the applicable transfer fe e was substantially

justified.

25. The evidence fails to establish that there are special

circumstances that would make an award unjust.

CONCLUSIONS OF LAW

26. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 57.111, 120.569 , and 12 0.57(1), Fla . Stat .

27. Section 57.111 provides in relevant part as follows:

57.111 Civil actions and administrative

proceedings initiated by state agencies;

attorneys ' fees and costs. --

(1) This section may be cited as the

" Florida Equal Access to Just ice Act. "

(2) The Legislature finds that certain

persons may be deterred from seeking review

of, or defending against, unreasonable

governmental action because of the expense of

civil actions and administrative proceedings.

Because of the greater resour ces of the

state, the standard for an award of

attorney ' s fees and costs against the state

should be different from the standard for an

award against a private litigant. The

purpose of this section is to diminish the

deterrent effect of seeking review of, or

defending against, governmental action by

providing in certain situations an award of

attorney ' s fees and costs against the state.

(3) As used in this section:

(a) The term " attorney ' s fees and costs "

means the reasonable and necessary attorney ' s

f ees and costs incurred for all preparations,

motions, hearings, trials, and appeals in a

proceeding.

(b) The term " initiated by a state agency "

means that the state agency:

* * *

3. Was required by law or rule to advise a

small business party of a clear point of

entry after some recognizable event in the

investigatory or other free - form proceeding

of the agency.

(c) A small business party is a " prevailing

small business party " when:

* * *

2. A settlement has been obtained by the

small bu siness party which is favorable to

the small business party on the majority of

issues which such party raised during the

course of the proceeding: . . .

* * *

(e) A proceeding is " substantially

justified " if it had a reasonable basis in

law and fact at the time it was initiated by

a state agency.

* * *

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

award of attorney ' s fees and costs shall be

made to a prevailing small business party in

any adjudicatory proceeding or administrative

proceeding pur suant 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.

28. The parties have stipulated that the fees and costs

sought in this case are reasonable.

29. The underlying proceeding was initiated by the

Respondent when the Respondent denied the Petitioner ' s refund

request, after which the Petitioner filed a Request for Hearing.

30. The Petitioner is a prevailing small business party.

The primary issue in the underlying case was the Petitioner ' s

assertion that the Respondent improperly calculated the transfer

fee by including sales figures for months when there were no

reported sales. The settlement of the case reflected calculation

of a transfer fee based only upon the gross sales figures

reported by the Petitioner.

31. The evidence fails to establish that the Petitioner ' s

original calculation of the transfer fee had a substantial basis

in law or fact at the time the calculation occu rred. The

Petitioner offered no credible evidence to support the original

calculation of the fee.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that the Petitioner is awarded fees in the

amount of $8,278.75 and cost s of $75, for a total award of

$8,353.75.

DONE AND ORDERED this 26th day of April , 2012 , in

Tallahassee, Leon County, Florida.

S

WILLIAM F. QUATTLEBAUM

Administrative Law Judge

Division of Administrative Hearings

The DeS oto 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 26th day of April , 2012 .

ENDNOTE S

1/ Unless other i ndicated, all statutory references are to

Florida Statutes (2011).

2 / Oddly enough, $114,789.79 was also the exact sales figure

reported by the Petitioner for the month of March 2010.

COPIES FURNISHED:

Ken Lawson, Secretary

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399

Layne Smith, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399

Harold Purnell , Esquire

Rutledge, Ecenia and Purnell, P.A.

Post Office Box 551

119 South Monroe Street, Suite 202

Tallahassee, Florida 32302

Allen Douglas, Director

Department of Business and

Professional Regulation

Division of Alcoholic Beverages

and Toba cco

1940 North Monroe Street, Suite 40

Tallahassee, Florida 32399

Thomas J. Morton, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 40

Tallahassee, Florida 32399

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant to section 120.68, Florida Statutes.

Review proceedings are governed by the Florida Rules of Appellate

Procedure. Such proceedings are commenced by filing the original

notice of administrative appeal with the agency clerk of the

Division of Administrative Hearings within 30 days of rendition

of the order to be reviewed, and a copy of the notice,

accompanied by any filing fees prescribed by law, with the clerk

of the Dist rict Court of Appeal in the appellate district where

the agency maintains its headquarters or where a party resides or

as other wise provided by law.