12-000433F Landmark Funeral Home, Inc. vs. Department Of Financial Services, Division Of Funeral, Cemetery, And Consumer Services Status: Closed Settled and/or Dismissed prior to entry of RO/FO on Friday, October 26, 2012.

Summary: Petitioner is entitled to attorney's fees and costs incurred in defending 1 count on which it prevailed in a disciplinary proceeding that Respondent brought against it without substantial justification.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LANDMARK FUNERAL HOME, INC., )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF FINANCIAL ) Case No. 12 - 0433F

SERVICES, DIVISION OF FUNERAL, )

CEMETERY, AND CONSUMER )

SERVICES, )

)

Respondent. )

)

FINAL ORDER

On May 11, 2012, Robert E. Meale, Administrative Law Judge

of the Division of Administrative Hearings, conducted the final

hearing by videoconference in Tallahassee and Miami, Florida.

APPEARANCES

Petitioner: Edward F. Holodak, Esquire

Law Office of Edward F. Holodak, P.A.

Suite 212

2500 Hol lywood Boulevard

Hollywood, Florida 33020

Respondent: Thomas A. David, Esquire

Department of Financial Services

Division of Legal Services

612 Larson Building

200 East Gaines Street

Tallahas see, Florida 32399 - 0333

STATEMENT OF THE ISSUE

The issue is whether Petitioner is entitled to recover its

attorneys ' fees and costs, pursuant to section 57.111, Florida

Statutes, incurred in the defense of a disciplinary proceeding

styled D epartment of Financial Servic es, Division of Funeral,

Cemetery , and Consumer S ervices v. Landmark Fun eral Home, Inc. ,

DOAH Case No. 11 - 3693 .

PRELIMINARY STATEMENT

On January 10, 2012, the Board of Funeral, Cemetery, and

Consumer Services (Board) issued a Final Order adopting without

alteration a Recommended Order in DOAH Case No. 11 - 3693 . On

January 30, 2012, Petitioner filed with the Division of

Administrative Hearin gs (DOAH) a Motion for Attorney ' s Fees. By

Order entered February 20, 2012, the Administrative Law Judge

struck all of the statutory grounds cited in the motion for

attorneys ' fees, except section 57.011, Florida Statutes.

At the hearing, the parties offe red, and the Administrative

Law Judge accepted, a stipulation that Petitioner is a small

business party and that, if it prevailed on the issues discussed

below, it incurred at least $50,000 in attorneys ' fees and costs

covered by section 57.111, Florida St atutes.

Petitioner called no witne sses and offered into evidence no

exhibits. Respondent called two witnesses and offered into

evidence four exhibits: Respondent Exhibits 1 - 4. All exhibits

were admitted. The Administrative Law Judge took official

notice of DOAH Case No. 11 - 3693.

The partie s did not order a transcript. Choosing not to

file proposed final orders, the parties submitted post - hearing

filings on May 16, 2012.

FINDING S OF FACT

1. On May 9, 20 09 , the Board issued to Petitioner an

unconditional funeral establishment license. On April 6, 2010,

a probable - cause panel of the Board authorized Respondent to

file a two - count Administrative Complaint against Petitioner.

On May 3, 2010 , Respondent exe cuted a two - count Administrative

Complaint and served the complaint on Petitioner shortly

thereafter . After Petitioner requested a formal hearing,

Respondent transmitted the file to DOAH on July 25, 2011 , thus

commencing DOAH Case No. 11 - 3693.

2. Count I of the Administrative Complaint alleged an

advertising violation. Petitioner never disputed this

allegation and did not expend significant tim e at or prior to

the hearing defending this count . At the start of the hearing,

the parties announced a stipulation in which Pet itioner admitted

the violation. T he Recommended Order incorporated the

stipulation and recommended a small fine, which was included in

the Final Order.

3 . Count II of the Administrative Complaint alleged that a

principal of Petiti oner misrepresented to the Board that two

individuals (Pancieras) would not be involved in the operations

of Petitioner; that the Board issued the license in reliance on

this misrepresentation, but e rroneously failed to incorporate

into the license a condi tion restricting the Pancieras from

involvement with the operations of the licensee (Panciera

Condition); and that , after starting operations, Petitioner

failed to restrict the activities of the Pancieras.

4. Petition er defended C ount II by disputing the

contention that it induced the Board to issue the license with

false representations or that the Board erroneously failed to

attach the Panciera C ondition (Main Defense). In the event that

the Main Defense failed, Petitioner defended Count II by

dispu ti ng that the Panciera Condition was violated (Backup

Defense).

5. Petitioner prevailed as to Count II due to the Main

Defense. Although consideration of the Backup Defense was thus

unnecessary, the Recommended Order addressed the Backup Defense

for th ree reasons: 1) if the Final Order materially alte red the

portion of the Recommended Order addressing the Main Defense ,

the alternative findings on the Backup Defense might avoid the

necessity of a remand; 2) the alternative findings would not

take long t o make; and 3) the alternative findings presented an

opportunity for humor.

6. All of the facts needed to adjudicate the Main Defense

and this fee case are derived from the minutes of Board

meetings . All of these meetings took place 11 - 16 months pri or

to the determination of probable cause , so the minutes were

available to the probable - cause panel when it took action .

7. O n November 7, 2008, the Board received an application

for a funeral establishment license from Presidential Circl e,

Inc. (PC Application I). Valerie Panciera - Rieth was the

principal of the corporate applicant.

8 . Prior to the Board meeting on December 3, 2008, at

which the Board was to take up PC Application I, the Division of

Funeral, Cemetery , and Consumer Services (Division ) recommended

the issuance of the license , and Ms. Panciera - Rieth ' s brother,

Mark Panciera, filed a complaint against the " applicant. " This

marked the start of two themes in the runup to the license

eventually issued to Petitioner: 1) the ongoing dispute s

between the siblings, which arose (or sharpened) after their

father gave one of them (Ms. Panciera - Rieth) the location at

which he (or his corporation) had operated a funeral

establishment for many years and gave the other of them

( Mr. Panciera) the name of this establishment; and 2) a failure

to differentiate between a corporate entity and its principal.

9. At the December 3 Board meeting, the Board deferred

action on PC Application I , so that the Division could conduct

an investigation. The ensuing in vestigation uncovered some

violations, probably not of Presidential Circle, Inc., as it had

recently been incorporated. The Division concluded that the

violations were not of such gra vity as to justify denying the PC

A pplication I , so it agreed that " the Respondent " would pay an

administrative fine of $1000. It is unclear who or what " the

Respondent " was.

10 . But t he identity of " the Respondent " quickly became

irrelevant. A t its February 4, 2009, meeting, the Board

rejected the settlement and denied PC Application I.

11 . Prior to the Board meeting on April 8, 2009, three

events occurred. In order, Ms. Panciera - Rieth filed a request

for a formal hearing on the denial of PC Application I ;

Ms. Panciera - Rieth conveyed her Presidentia l Circle stock to

Jonathan Shaw; and Presidential Circle, Inc., filed a new

application for the same license at the same location (PC

Application II).

12 . At its April 8 meeting, t he Board members appeared to

treat PC Application II as " Mr. Shaw ' s application. " More to

the point, the Board members were also concerned that they could

not act on PC Application II while PC Application I was pending.

During the discussion, t he advocate for Presidential Circle,

Inc., told the Board that there was no relationship between

Ms. Panciera - Rieth and Mr. Shaw, who owned businesses along

Hollywood Boulevard in the vicinity of the proposed location of

the funeral establishment to be operated by Presidential Circle,

Inc.

13 . During the April 8 meeting, the Board considered the

difficul t question s of whether Presidential Circle, Inc., could

withdraw the request for hearing that Ms. Panciera - Rieth had

filed on its behalf or could withdraw PC Application I after the

Board had denied it . There was some concern that, if

Presidential Circle, Inc., could withdraw its request for

hearing, but not PC Application I, then the Board ' s denial of PC

Application I would become final and serve as a form of prior

discipline that could impede the granting of PC Application II.

14 . A nother advocate for Presidential Circle, Inc.,

repeated the earlier representation that Ms. Panciera - Rieth and

Mr. Shaw had no relationship and added that Mr. Shaw did not

intend to employ Ms. Panciera - Rieth in the new funeral

operation. Mr. Shaw himself more or less joined in these

assertions.

15 . The Board then voted not to allow Presidential Circle,

Inc., to withdraw PC Application I. The advocate for

Presidential Circle, Inc., responded by advising that

Ms. Panciera - Rieth had authorized the withdrawal of the request

for hearing that she had filed on behalf of Presidential Circle,

Inc.

16 . The advocate for Mr. Panciera (or an entity with which

Mr. Panc iera was associated) had taken a prominent role in Board

discussions about PC Applications I and II. At this point,

Mr. Panciera ' s advocate declared her sa tisfaction with the

resolution because her primary concern had been to ensure that

Ms. Panciera - Rieth, her husband, and her father would not be

able to control the new business in some way. But no one on the

Board took u p this point, so it remained the personal opinion of

the advocate of Mr. Panciera.

1 7 . Instead, someone whose capacity is not disclosed in

the minutes restated the concern that the denial of PC

Application I would have a negative effect on PC Appl ication II

because, even if Mr. Shaw is a new principal, the applicant

itself remains the same. The Division Director agreed, warning

Mr. Shaw that, if the Board considered PC Appli cation II,

Presidential Circle, Inc., would have to reveal this past denial

as a f orm of discipline.

1 8 . After his offer of a corporate name change

understandably sparked no interest among the Board members, the

advocate of Presidential Circle, Inc., asked whether " the

applicant " should form a new corporation. Clearl y, he did not

mean a subsidiary; he was asking if the principal of

Presidential Circle, Inc., Mr. Shaw, should form a new

corporation. Liking this idea, the Division Director

recommended that the Board table action on PC Application II to

give Mr. Shaw ti me to form a new corporation. Th e Board did so,

and th is essentially concluded the April 8 Board meeting.

19 . Prior to the next Board meeting on May 6, 2009,

Mr. Shaw caused the formation of Petitioner , and it filed an

application for a funeral establishment license. All of the

other details remain unchanged from PC Application II.

2 0 . At the May 6 meeting, the Board approved the license

without conditions. The minutes erroneously refer to Petitioner

as form erly Presidential Circle, Inc.; the application as PC

Application II; and the new application as a resubmissi on of PC

Application II. M ore importantly, though, nothing took place at

the meeting that would suggest that the Board intended to attach

the Panc iera Condition to the license that it was issuing. The

advocate of Mr. Panciera mentioned the representations at the

preceding meeting that Ms. Panciera - Rieth would have no role

with the business , but the Board completely ignored this

comment.

2 1 . A ny re presentations from Mr. Shaw or the advocate of

Presidential Circle, Inc., during the Board meeting of April 8

attached to PC Application II, not the application that the

Board granted unconditionally on May 6. Minor confusion

concerning the entity or appl ication that was before the Board

on May 6 does not support even an inference of an intention to

condition the resulting license. Clearly, the formation of a

new corporation spared the Board members the necessity of

considering prior discipline imposed on a prior applicant (that,

at the time of the offense , was controlled by Ms. Panciera -

Rieth, not Mr. Shaw). O ver the continued protest of the

advocate of Mr. Panciera , the Board granted the new application

and issued the license to the new applicant, Petit ioner.

2 2 . T he probable - cause panel lacked substantial

j ustification when it found probable cause to initiate the

proceeding against Petitioner that ultimately took the form of

Count II. It is irrelevant whether the moment for determining

substantial jus tification is the date on which the Board ' s

probable - cause panel voted or the later date on which Respondent

filed the Administrative Complaint with the Division of

Administrative Hearings, as nothing material took place between

these two actions.

2 3 . I t is difficult to find anything in the record on

which the probable - cause panel may have relied in determining

that probable - cause existed for Count II. Demands from

Mr. Panciera ' s advocate for the Panciera Condition are strewn

throughout the minutes, but the advocate was not a member of the

Board, which increasingly tended to ignore her.

2 4 . The probable - cause panel discussed exclusively the

advertisin g violation alleged in Count I and ignored the

misrepresentation issue alleged in Count II. As for Count II,

the panel relied on a presentation by the author of a memorandum

from Respondent ' s Division of Legal Services . Her presentation

disregarded the distinction between Presidential Circle, Inc .,

and Petitioner; misstated that the Board issued the license at

the Apri l 8 meeting; and failed to address the omission of the

Panciera Condition from the license. Her memorandum states that

the Board took up Petitioner ' s application at its April 8, 200 9,

meeting, even though Petitioner was not formed until after that

meeting; that Mr. Shaw said that the Pancieras would not be

involved with Petitioner, even though Petitioner was not formed

until after that meeting; and that the Board approved

Petitioner ' s application at its April 8, 2009, meeting, which is

flatly untrue. Like the presentation , the memorandum also fails

to address the omission of the Panciera Condition from the

license . The probable - cause panel had copies of the Board

minutes for its Apr il 8 and May 6, 2009, meetings, but the

minutes of April 8 meeting are incomplete. If anyone had read

these minutes, they would have seen that they ended at the

announcement of a ten - minute break for Presidential Circle,

Inc., to explore other options; th e omitted minutes documented

the approach of forming a new corporation, as described above.

2 5 . Additionally, no special circumstances exist that

would render an award of attorneys ' fees and costs unjust.

CONCLUSIONS OF LAW

2 6 . The Division of Administrative Hearings has

jurisdiction over the subject matter. §§ 57.111(4)(d), 120.569

and 120.57(1), Fla. Stat.

2 7 . Section 57.111 authorizes an award of attorneys ' fees

and costs, up to $50,000, incurred by a " prevailing small

business party " in a proceeding initiated by a state agency,

" unless the actions of the agency were substantially justified

or special circumstances exist which would make the award

unjust. " The quoted language identifies the sole issues that

remain in dispute following the acceptance of the stipulation

noted in the Preliminary Statement .

2 8 . Section 57.111(3 )( c) defines a " prevailing small

business party " as:

A small business party is a " prevailing

small business party " when:

1. A final judgment or order has been

entered in favor of the small business party

and such judgment or order has not been

reversed on appeal or the time for seeking

judicial review of the judgment or order has

expired;

2. A settlement has been obtained by the

small business party which is favorable to

the small business party on the majority of

issues which such party raised during the

course of the proceeding; or

3. The state agency has sought a voluntary

dismissal of its complaint.

29 . The burden of proof is generally on Petitioner,

although t he burden of going forward is on Respondent as to a

claim of substantial justification or special circumstance s .

See , e.g. , Dep ' t of Heal th & Rehab. Services v. South Beach

Pharm. Inc. , 635 So. 2d 117, 121 (Fla. 1st DCA 1994).

3 0 . To determine if Petitioner prevailed in DOAH Case

No. 11 - 3693, it is necessary to determine whether it meets the

requireme nts of section 57.111(3)(c)1. As Respondent argues,

neither s ection 57.111(3)(c)2. or 3. is applicable to this case

because the parties did not settle the disciplinary proceeding,

nor did Respondent voluntarily dismiss the disciplinary

proceeding. This means that the determination of whether

Petitioner is a prevailing party cannot be based on whether it

prevailed on a majority of the issues, as a pplies under section

57.111(3)(c)2. when the parties settle a case.

3 1 . The Fi nal Order is a split decision. Respondent

prevailed on Count I, and Petitioner prevailed C ount II. Citing

a DOAH Final Order, Respondent argues that Petitioner is not a

prevailing party because it lost on one of the counts. However,

higher authority exists. I n a fee case arising out of a

multicount complaint, in which each count is capable of

supporting an independent proceedin g, it is necessary to

identify the prevailing party on each count and award attorneys '

fees accordingly . Folta v. Bolton , 493 So. 2d 440, 442 (Fla.

1986) (former section 768.56, Florida Statutes) .

3 2 . Petitioner is thus entitled to fees and costs for

d efending Count II , unless Respondent prove s substantial

justification or special circumstance s . Because Petitioner

n ever defended the advertising count, there is no need to look

behind the stipulation that Petitioner incurred at least $50,000

in attorneys ' fees and costs to apportion attorneys ' fees and

costs between the two counts.

3 3 . Section 57.111(3)(e) provides that 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. " This

is an intermediate standard between an automatic award of fees

and the no - justiciable - issue standard of section 57.105, Florida

Statutes . See , e.g. , Helmy v. Dep ' t of Bus. & Prof ' l

Reg ulation , 707 So. 2d 366, 368 (Fla. 1st DCA 1998).

3 4 . Respondent argues that " the time it was initiated by a

state agency " is the time of the finding of probable cause by

the Board. Because no facts emerged between the finding of

probable cause and the filing of the Administrative Complaint,

for the sake of argument, the Administrative Law Judge will

adopt Respondent ' s argument. Although the initiation of the

proceeding does not appear to be the determination of probable

cause, perhaps this distinction is typically meaningless, as

suggested in the followi ng statement.

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.

[Citation omitted.] Generally, in resolving

whether there was substantial justification

for filing an admi nistrative complaint

against the licensee, 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 Kibler v. Dep ' t of Prof ' l

Regulation. 418 So. 2d 1081, 1084 (Fla. 4th

DCA 1982).

Fish v. Dep ' t of Health , 825 So. 2d 421, 423 (Fla. 4th DCA

2002).

3 5 . The minutes of the Board meetings clearly reveal no

intent by the Board to impose the Panciera Condition on the

license that it issued to Petitioner. The minutes of the Board

meetings clearly reveal that any discussions of PC Application

II at the April 8 Board meeting were superseded by the formation

of a new corporation , which would file a new application -- an

approach endorsed by the Division Director at the April 8

meeting.

3 6 . Regardless of whether t he failure of a Board member at

the April 8 meetin g to object to the recommendation of the

Division Director suggests the Board ' s tacit approval of this

approach , it is impossible to infer from this failure an intent

to impose the Panciera Condition on the new application from the

new corporation. Obviou sly, the failure of any Board member to

mention at the May 6 meeting any restrictions on the license

that the Board was issuing does not support an inference of an

intent to impose the Panciera Condition. Nothing in the minutes

supports the key allegation s of Count II -- namely, that the Board

erroneously issued the license at the May 6 meeting without the

Panciera Condition in reliance on representations made to it at

the April 8 meeting when it was considering a different

application from a different corpo ration.

3 7 . Nor can substantial justification be found in t he

complaints of Mr. Panciera ' s advocate or error - strewn

presentation and memorandum from the representative of the

Division of Legal Services . An accurate rendering of the fact s

was available in the minutes of two meetings of the Board that

were readily available to the probable cause panel . Dep ' t of

Health & Rehab. Services v. S. G. , 613 So. 2d 1380, 1387 (Fla.

1st DCA ) (no substantial justification from a " totally

irresponsible in vestigation " ). The failure to include a full

set of the April 8 minutes in the packet provided to the

probable - cause panel does not excuse the panel's failure to

inform itself of Board action taken merely one year earlier.

3 8 . Additionally, n o special circumstances exist ed at the

time of the determination of probable cause that would render an

award unjust.

ORDER

I t is ORDERED that , pursuant to section 57.111, Florida

Statutes, Respondent pay Petitioner the sum of $50,000 for its

attorneys ' fees an d c osts incurred in the defense of Count II of

the Administrative Complaint in DOAH Case No. 11 - 3693 .

DONE AND ORDERED this 14th day of June, 2012 in

Tallahassee, Leon County, Florida.

S

ROBERT E. MEALE

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 14th day of June, 2012 .

COPIES FURNISHED :

Brady J. Cobb, Esquire

Tripp Scott

15th Floor

110 Southeast 6th Street

Fort Lauderdale, Florida 33301

[e-mail]

Thomas A. David, Esquire

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

[e-mail]

Edward F. Holodak, Esquire

Edward F. Holodak, P.A.

Suite 212

2500 Hollywood Boulevard

Hollywood, Florida 33020

[e-mail]

Doug Shropshire, Director

Div ision of Funeral, Cemetery

and Cons umer S e rvices

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0361

Julie Jones, CP, FRP, Agency Clerk

Department of Financial Services

Division of Legal Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

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 thi s case.