13-003214F William P. Mccloskey vs. Department Of Financial Services Status: Closed DOAH Final Order on Friday, May 23, 2014.

Summary: Agency action substantially justified.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WILLIAM P. MCCLOSKEY,

Petitioner,

vs. Case No. 13 - 3214F

DEPARTMENT OF FINANCIAL

SERVICES,

Respondent.

_______________________________/

FINAL ORDER

On February 26, 2014, an admin istrative hearing was held in

Tallahassee, Florida, before William F. Quattlebaum,

Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: H. Richard Bisbee, Esquire

Danny L. Hart, Esquire

Law Office of H. R ichard Bisbee, P.A.

Suite 206

1882 Capital Circle, Northeast

Tallahassee, Florida 32308 - 4568

For Respondent: James A. Bossart, Esquire

Michael Davidson, Esquire

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

STATEMENT OF THE ISSUE

The issue in this case is whether the Petitioner is entitled

to an award of attorney ' s fees and costs pursuant to s ection

57.111, Florida Statutes (201 1 ) . 1/

PRELIMINARY STATEMENT

On August 20, 2013, William P. McCloskey ( Petitioner ) filed

an Application for Attorney ' s Fees and Costs Pursuant to Section

57.111, Florida Statutes (the " fee case " ).

In 2011, the Department of Financial Services (Respondent)

prosecuted the P etitioner for alleged violations of law in a

disciplinary proceeding designated as Division of Administrative

Hearings (DOAH) Case No. 11 - 3982PL (the " disciplinary case " ).

The Petitioner ultimately prevailed in the dispute following

an appeal of a Final Order entered by the Respondent in the

disciplinary case.

The fee case, designated as DOAH Case No. 13 - 3214F, was

initially assigned to the Administrative Law Judge (ALJ) who

conducted the hearing and rendered the Recommended Order issued

in the discipli nary case. On August 27, 2013, the fee case was

transferred to the undersigned ALJ, who scheduled a final hearing

for November 25, 2013. Upon the request of the parties, the

hearing was rescheduled to February 26, 2014.

At the hearing, the Petitioner tes tified on his own behalf

and had Exhibits A through E, H, I, M and O admitted into

evidence. The Respondent had Exhibits 1 through 4 admitted into

evidence. At the request of the parties, official recognition

was taken of various portions of the record f rom the disciplinary

case.

A T ranscript of the hearing was filed on February 14, 2014.

Both parties filed proposed orders that have been considered in

the preparation of this F inal O rder.

Section 57.111(4)(d)2 . provides that " [n]o award of

attorney ' s fe es and costs for an action initiated by a state

agency shall exceed $50,000. " The Petitioner has identified

total fees and costs in excess of $50,000. Although the

Respondent disputes the total amount sought by the Petitioner,

the Respondent does not dis pute that in the event that fees and

costs are awarded in this proceeding, an award up to the $50,000

cap would be reasonable.

FINDING S OF FACT

1. By a three - count Administrative Complaint dated June 7,

2011, the Respondent charged the Petitioner with all eged

violations of law related to the sale of certain products. The

allegations of the Administrative Complaint were prosecuted in

the disciplinary case.

2. A final hearing in the disciplinary case was conducted

on January 24 and 25, 2012.

3. On Apr il 18, 2012, the ALJ issued a Recommended Order

determining that the products referenced in the Administrative

Complaint were unregistered securities and that the Petitioner

" violated section 626.611(16) [Florida Statutes,] by selling an

unregistered secur ity that was required to be registered pursuant

to chapter 517. "

4. The Administrative Complaint also charged the Petitioner

with additional violations of statute including a " [d]emonstrated

lack of fitness or trustworthiness to engage in the business o f

insurance , " in violation of section 626.611(7). As set forth in

the Recommended Order, the ALJ determined that the evidence

failed to establish the additional violations.

5. Based on violation of section 626.611(16), the ALJ

recommended that the Peti tioner ' s license be suspended for a

total of six months, two months for each product sale alleged in

the three separate counts of the Administrative Complaint.

6. On July 6, 2012, the Respondent issued a Final Order

determining that in addition to the v iolation of section

626.611(16) found by the ALJ, the Petitioner had also violated

section 626.611(7). Despite finding the additional violation,

the Respondent adopted the penalty recommended by the ALJ.

7. The Petitioner took an appeal of the Final Or der to the

District Court of Appeal for the Fifth District.

8. The Court determined that the products sold by the

Petitioner were not securities that required registration at the

time they were sold by the Petitioner, and, on June 21, 2013,

issued an or der reversing the Final Order issued by the

Respondent.

9. The parties have stipulated that the Petitioner was the

prevailing party in the disciplinary case and is a " small

business party " as defined by section 57.111(3)(d).

CONCLUSIONS OF LAW

10. The Division of Administrative Hearings has

jurisdiction over the parties to and subject matter of this

proceeding. §§ 57.111, 120.569 and 120.57(1) , Fla. Stat (2013) .

11. The sole issue presented for determination in this

proceeding is whether the actions of the Respondent in the

disciplinary case were substantially justified or whether special

circumstances exist that would make an award of fees and costs

unjust.

12. Section 57.111 provides in relevant 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 business party in

any adjudicatory proceeding or administrative

proceeding pursuant to chapter 120 initiated

by a state agency, unless the actions of the

agency were substant ially justified or

special circumstances exist which would make

the award unjust.

13. 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 . " After a

party establishes that it is a " prevailing small business party, "

the agency has the burden of establishing that its action in

initiating the proceeding was " substantially justified. " Helmy

v. Dep ' t of Bus. & Prof ' l Reg ., 707 So. 2d 366, 368 ( Fla. 1st DCA

1998). The " substantially justified " standard falls somewhere

between the " no justiciable issue " standard and an automatic

award of fees to a prevailing party. Id . Accordingly, the issue

here is whether the Respondent had a reasonable basis in law and

fact to file the Administrative Complaint against the Petitioner.

14. A central issue in the disciplinary case and the appeal

was whether the Petitioner sold products that were " securities "

that were unregistered in Florida.

15. At the time the Respondent commenced prosecution of the

disciplinary case, the existing case law (which is set forth in

the Respondent ' s Proposed Final Order and not restated herein)

supported the Respondent ' s determination that the products being

sold by the Petitio ner were securities that were not properly

registered for sale in Florida and that such registration was

required by law. Accordingly, there was a reasonable basis in

law to prosecute the Administrative Complaint against the

Petitioner for the sale of the products.

16. The Petitioner has asserted that the Respondent lacked

a reasonable basis in fact to prosecute the Administrative

Complaint. In the disciplinary case, the ALJ found that the

product sales cited in the Administrative Complaint had occurred .

Those f indings have not been disturbed by any subsequent review

of the Recommended Order.

17. The Petitioner has also asserted that the investigation

conducted by the agency prior to filing the Administrative

Complaint against the Petitioner was inapp ropriate and that the

Petitioner had been " selectively " prosecuted. Nothing in section

57.111 authorizes an award of fees and costs as a sanction for

anything other than an agency action that was not substantially

justified, and even then, " special circum stances " may exist that

could make an award " unjust. " Accordingly, these assertions have

not been addressed herein.

ORDER

Based on the foregoing Findings of Fact and Conclusions of

Law, it is ORDERED that the Petitioner ' s Application for

Attorney ' s Fees and Costs Pursuant to Section 57.111, Florida

Statutes , is DENIED. The file of the Division of Administrative

Hearings is CLOSED.

DONE AND ORDERED this 23rd day of May , 2014 , in Tallahassee,

Leon County, Florida.

S

WIL LIAM F. QUATTLEBAUM

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 23rd day of May , 2014 .

ENDNOTE

1/ Unless otherwise noted, all statutory references are to

Florida Statutes (201 1 ).

COPIES FURNISHED:

H. Richard Bisbee, Esquire

Dannie L. Hart, Esquire

Law Office of H. Richard Bisbee, P.A.

Suite 206

1882 Capital Circle, Northeast

Tallahassee, Florida 32308 - 4568

James A. Bossart, Esquire

Michael Davidson, Esquire

Department of Financial Services

612 Larson Building

200 East Gaines Street

Tallahassee, Florida 32399 - 0333

Julie Jone s, Agency Clerk

Division of Legal Services

Department of Financial Services

200 East Gaines Street

Tallahassee, Florida 32399 - 0390

NOTICE OF RIGHT TO JUDICIAL REVIEW

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

to judicial review p ursuant 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 Admin istrative 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 District Court of Appeal in the appellate district where

the agency maintains its headquarters or where a party resides or

as otherwise provided by law.