17-003727 Summer Jai-Alai Partnership vs. Department Of Business And Professional Regulation, Division Of Pari-Mutuel Wagering Status: Closed Recommended Order on Tuesday, December 12, 2017.

Summary: Agency may not withdraw operating license for mistake but must revoke it on statutory ground. Attempt to restrict holder of converted permit under s. 550.0745 from using s. 550.475 to relocate summer jai-alai to different county is unadopted rule.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION,

DIVISION OF PARI - MUTUEL

WAGERING , 1 /

Petitioner,

Case No. 1 7 - 3 727

vs.

SUMMER JAI - ALAI PARTNERSHIP ,

Respondent.

_______________________________/

RECOMMENDED ORDER

On October 17 , 2017 , Robert E. Meale, Administrative Law

Judge of the Division of Administrative Hearings (DOAH),

conducted the final hearing in Tallahassee, Florida.

APPEARANCES

For Petitioner: Louis Trombetta, Esquire

Charles LaRay Dewrell, Esquire

Department of Business and

Professional Regulation

Capital Commerce Center, Fifth Floor

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

For Respondent : John M. Lockwood , Esquire

Thomas J. Morton, Esquire

Devon Nunneley, Esquire

The Lockwood Law Firm

106 East College Avenue, Suite 810

Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

The issue is whether Petitioner's Notice of Intent to

Withdraw License should be granted or dismissed.

PRELIMINARY STATEMENT

By Notice of Intent to Withdraw License filed June 1, 2017

(NOI), Petitioner informed Respondent of Petitioner's intent to

withdraw a license that it had recently issued to Respondent.

The NOI states that Respondent holds Pa ri - Mutuel Permit

(Permit ). The Permit deriv es from Respondent's conversion , over

35 years ago, of a greyhound racing permit in Dad e County to a

summer jai - alai permit in Dade County.

The NOI alleges that, on December 26, 2016, Respondent

applied for a 2017 - 18 operating license for the Permit . The

application identifies the proposed location of the summer jai -

alai performances as 301 East Dania Bo ulevard, Dania , Florida

(Dania) . On March 10, 2017, Petitioner issued the requested

operating license.

The NOI alleges that Petitioner subsequently realized that

it had issued the 2017 - 18 o perating license in error because

Respondent was not authorized to operate summer jai - alai

performances outside of Dade County. Designating its error as a

mistake of law, the NOI explains that the plain language of the

conversion statute, chapter 80 - 88, Laws of Florida, 284, limits

Respondent to jai - al ai performance s in Dade County. The NOI

does not refer to section 550.475 , Florida Statutes .

Consequently, the NOI announces Petitioner's intent to withdraw

the 2017 - 18 operating license. Attached to the NOI is a Notice

of Rights , warning Respondent tha t, if it fails to request a

hearing within 21 days, it will have "waived [its] right to any

hearing."

Respondent timely requested a formal hearing. In its

Petition for Formal Administrative H earing, which it filed with

Petitioner , Respondent requested a hearing pursuant to

sections 120.569, 120.57(1), and 120.57(1)(e) .

At the hearing, Petitioner called one witness and offered

into evidence no exhibits . Respondent called two witness es and

offered into evidence one exhib it : Respondent Exhibit 1. The

p arties jointly offered 21 exhibits: Joint Exhibits 1 - 21. All

exhibits were adm itted .

The court reporter filed the transcript on November 1,

2017. The parties filed proposed recommended order s on

December 8 , 2017 .

FINDINGS OF FACT

1. At all material times, Respondent has held The Permit ,

which authorizes Respondent to condu ct summer jai - alai

performances in Dade County. In 1980, Respondent converted a

greyhound racing permit into the P ermit, as authorized by a

predecessor to section 550 .0745, which is discussed in the

Conclusions of Law. Each year, as required by section 550.0115 ,

Respondent has obtained an operating license under the Permit to

conduct performances , which it has done at the same location

named in the Permit .

2. On December 26, 2016, Respondent filed an application

for an operating li cense for 2017 - 18. This application sought a

license to conduct performances in Dania, which is in Broward

County. The new location is less than 35 miles from the Dade

County location mentioned in the preceding paragraph.

3. Petitioner's employee assigned to examine applications

attached a large post - it note to the portion of the application

advising of the change in operating location from Dade to

Broward county. The note is still at tached to the file, which

was p resented at the final hearing. T he note is impossible to

miss.

4. On March 10, 2017, Petitioner granted the operating

license, which authorizes Respondent to conduct summer jai - alai

performance s in Dania for the 2017 - 18 sea son . In reliance on

the 2017 - 18 operating license, Respondent has terminated its

lease for the Dade County facility and entered into a lease for

the Dania facility.

5. Following a complaint from the lessor of Respondent's

Dade County location, the Division of Pari - Mutuel Wagering

(Division) concluded that it had issued the operating license in

error , determined that an operatin g license for a converted

permit must be limited to the county named in the converted

permit, and issued the NOI on June 1, 2017 . D irected to

Respondent, the NOI does not allege that Respondent has violated

any statute or rule. Instead, the NOI states only that

Petitioner issued the operation license "in error as

[Respondent] is not authorized t o operate summer jai - alai

performances via The Permit outside of Miami - Dade County." The

NOI never mentions section 550.475.

6. At one time , Petitioner construed section 550.475,

which is discussed below, to allow a holder of a county - specific

permit to relocate performances to a facility located within

35 miles from the facility , but in another county, and a circuit

court has sustained this construction . In the past, Petitioner

issued operating licenses to holders of converted or created

permits that authorized performances at the licensed location or

a facility leased pursuant to section 550.475. It is unclear,

though, when Petitioner changed its positio n. Division

d irectors changed between the issuance of the 2017 - 18 operating

license and the NOI, and it is unlikely that the former director

missed the proposed out - of - county relocation described in the

application for the 2017 - 18 operation license. Howe ver, t hese

two facts do not preclude a mistake of law, as Petitioner

contends, so that the NOI is not necessarily a statement that

represents a change in longstanding policy. The NOI states that

the operating license is based on a mistake of law, but

Petitioner's proposed recommended order states that the

operating license is a mistake of law -- the same conclusion that

the Administrative Law Judge reaches in the Conclusions of Law.

CONCLUSIONS OF LAW

7 . DOAH has jurisdiction of the sub ject matter.

§§ 120.569 and 120.57(1), Fla. Stat. (2016 ). The effect of the

NOI was to revoke the operating license that Petitioner i ssued

on March 10, 2017. Thus, the NOI determines the subs t antial

interests of Respondent; Petit ioner bears the burden of proof ,

see Osborne Stern v. Dep't of Bank. & Finance , 670 So. 2d 932

(Fla. 1996); and the standard of proof is clear and convincing

evidence due to the penal nature of the proceeding .

§ 120.57(1)(j), Fla. Stat. ; Osborne Stern , supra .

8. As P etitioner argues, the NOI i s not a proposed

revocation of the operating license because the NOI does not

allege wrongdoing by Respondent and does not meet the

requirements imposed on an administrati ve complaint. However,

the NOI operates lik e an administrative compliant because it

notifies Respondent of Petitioner's intent to invalidate

Respondent's license . The clear point of entry contained in the

NOI suggests that the only impediment to the invalidation of

Respondent's license would be Respondent's request for a

hearing.

9 . Petitioner seems to claim a special right to invalidate

the license , as though it had never been issued . There are at

least two problems with this argument . First, Petitioner 's

unilateral invalidation of the license at this time would

circumvent the statute that provides for the issuance of a

default license if an agency fails to ac t promptly on an

application. A s noted above, Petitioner issued the operating

license shortly before the expiration of the 90 days authorized

by section 120.60(1) for the agency to act on an application and

issued the NOI long after the 90 days had expire d . If

Petitioner were able unilaterally to invalidate a license on

these facts, after the 90 days had run , Petitioner would be

allowed effectively to declare a time - out on the 90 - day clock

that runs under section 120.60(1) and, thus, defeat the purpose

of this statute .

10 . More importantly, a purported "withdrawal" of an

alr eady - issued permit or license has previously been held to be

a nullity, unless the invalidation of the license is authorized

by statute or rule. See B d . of Tr s . v. Barrett , 533 So. 2d

1202, 1205 (Fla. 3d DCA 1988). A purported withdrawal of an

a lready - issued permit or license is a revocation, which must be

based on grounds " clearly within the ambit of [th e agency's]

statutory authority " and must provide the holder of the permit

or license with a n opportunity for a hearing . Id. at 1206. If

an agency errs in issuing a permit or license for a reason that

does not constitute a ground for revocation, the agency may not

withdraw or revoke its prior action, or else there would be no

fina lity to agency action. Id. at 1207 ( citing Tri - State Sys .

In c. v. Dep ' t of Transp . , 500 So. 2d 182, 183 (Fla. 1st DCA

1986) ) (agency's error in determining nature of surrounding area

before granting sign permit is no basis for revoking the

already - issued permit). F inality of agency action in this case

justified Respondent to make substantial business plans based on

the 2017 - 18 operating license that Petitioner issued.

11 . Petitioner lacks statutory grounds for withdraw ing or

revoking the 2017 - 18 operating license. S ection 550.0 745(1)

addresses permits , e xcept for one provision that is irrelevant

to the present case. Section 550.0745(1) generally authorizes

a n eligible holde r of a pari - mutuel permit to convert to a

summer jai - alai permit within the same county. A permittee is

eligible to convert if, for the two years immediately preceding

the conversion , the permittee has generated the smallest play or

total pool among at least five pari - mutuel permittees in the

s ame county. If an eligible permittee declines to convert, a

new permit for summer jai - alai games is created in the eligible

permittee's county.

12 . Section 550.0 745(2) addresses licenses for permits

that have been converted or created under section 550 .0745(1) .

Section 550.0745(2) provides that the holder of a converted or

created permit is entitled to a license to operate summer jai -

alai, but only at a jai - alai fronton. Section 550.0745(2) adds

that the license "authorizes the permittee to operate at any

jai - alai permittee's plant it may lease or build within such

county."

13. As Petitioner contends, section 550.0745(1) and (2) is

county - specific. Although secti o n 550.0745(1) and (2) is not

entire ly clear on the point , th is section has been held not to

permit the holder of a converted or created permit to relocate

its performances from its original licensed location following

conversion or creation to another location within the same

county -- unless the permit holder complies with section 550.054,

which requires, among other things, a local ratification

election . Summer Jai - Alai Partners v. Dep't of Bus. & Prof' l

Reg . , 125 So. 3d 304 , 308 (Fla. 3d DCA 2013) (court sustained

Petitioner's construction of section 550.0745(2) t o prevent the

holder of a converted summer jai - alai permit "to continuously

relocate its permit" within the county in which the permit was

converted) .

14. However, applicable to almost all pari - mutuel permits,

including jai - alai permits, s ection 550.475 authorizes a holder

of a ny pari - mutuel permit to lease its facility to "any other

hold er of the same class valid pari - mutuel permit . . . when

located within a 35 mil e radius of each other." (Section

550.475 is unmentioned in Summer Jai - Alai Partners , presumably

because the new location to which the permittee sought to

relocate did not host performances under the same class of pari -

mutuel permit.) As Respondent conte nds, nothing in section

550.475 suggests that it is inapplicable to summer jai - alai

permits converted or created under section 550.0745. The

reference to "jai - alai games" in section 550.475 is similar to

the references to "jai - alai games" in other statute s, such as

section 550.70, which clearly applies various restrictions, such

as the availability of a chief judge and a limit on the

consecutive performance days for players, to all jai - alai games,

including summer jai - alai games.

1 5 . In the present case, Petitioner has applied s ection

550.0745(1) and (2) without regard to section 550.475 , at least

regarding the relocation of performances under a converted or

created permit to a different county. ( It is unknown whether

Petitioner construes section 5 50.475 to authorize the relocation

of performances under a converted or created permit within the

original county , but this recommended order will not assume such

a construction , even though the NOI's failure even to mention

section 550.475 is consistent w ith an interpretation that this

statute does not even apply to a converted or created permit .)

Petitioner's determination relies on an unenacted exception to

section 550.475 : as applied to converted or created permits,

section 550.475 authorizes relocati on up to 35 miles, but not

outside of the original county.

16 . The doctrine of in pari materia requires that these

statutes be harmonized by giving meaning to both of them , see ,

e.g. , Dep't of State v. Martin , 916 So . 2d 763, 768 (Fla. 2005),

and does not allow the provisions of one statute to be

disregarded. See e.g. , Sch. Bd. v. Dep't of Educ. , 317 So. 2d

68, 74 (Fla. 1975). A reasonable construction of sections

550.0745 and 550.475 would trim each statute, rather than fully

preserve section 550.0745 and carve a large exception out of

section 550.475 . W ithout regard to county limits, a lessor

could enter into a qualifying lease of a facility with the

holder of a converted or created permit, as long as the leased

f acility were not more than 35 miles from the original licensed

facility (or current licensed facility within the original

county, if the permittee has already used section 550.475 for an

intra - county relocation), but , to give effect to the county -

specific provisions of section 550.0745 , the lessee could not

effect a second relocation under section 550.475 to another

leased, out - of - county facility that is more than 35 miles from

the original licensed facility (or the most recently licensed

facility within th e original county, if the permittee had

already used section 550.475 for an intra - county relocation).

1 7 . By i nvoking section 120.57(1)(e), Respondent would

remove the Administrative Law Judge's construction of sections

550.0745(1) and (2) and 550.475 from section 120.57(1)(l),

which, as between the agency and the Administrative Law Judge,

assigns to the agency the responsibility of construing the

statutes within its substantive jurisdiction or expertise , such

as sections 550.0745 and 550.475 . Instead, Respondent contends

that Petitioner's construction is or depends upon an unadopted

or invalid rule, on which neither the Administrative Law Judge

nor t he agency may base agency action that determines

Respondent's substantial interests -- here, the revocatio n of the

2017 - 18 operating license. If so, section 120.57(1)(e)4.

authorizes the agency to reject the Administrative Law Judge's

determination about an unadopted rule, but only if the

Administrative Law Judge's determination is "clearly erroneous"

or "doe s not comport with the general requirements of law."

Obviously, the overall effectiveness of this strategy depends on

whether it also generates a n appellate standard of review that

is more favorable than the deferential clearly erroneous

standard applicab le in the typical adjudicatory case to statutes

within the jurisdiction of the agency . See , e.g. , Summer Jai -

Alai Partners , supra at 307.

1 8 . Section 120.57(1)(e)1. prohibits an agency or

Administrative Law Judge from basing agency action that

determines the substantial interests of a party "on an unadopted

rule or a rule that is an invalid exercise of delegated

legislative authority." Regardless of whether a nonagency party

raises the issue, in any proceeding to determine the substantial

interests of a party, the agency and Administrative Law Judge

are barred from basing agency action on an unadopted or invalid

rule. I f a nonagency party raises the issue as a defense ,

sectio n 120.57(1)(e)2.a. applies the procedures of section

120.56(1)(b), and sect i on 120.57(1)(e)2.c. applies section

120.56(4)(c) to a challenge alleging an unadopted rule.

1 9 . Section 120.56(1)(b) provides that Respondent must

show that it is substantially affected by the unadopted rule and

state the grounds for determining that the rule is invalid.

Section 120.56(4)(c) imposes upon Respondent the burden of

proving these matter s, and, upon such proof, section

120.56(4)(c) impose s upon Petitioner the burden of proving that

rulemaking is not feasible or practicable.

20 . Due to the imminent revocation of its 2017 - 18

operating license, Respondent has proved that it is

substantially affected by the alleged change in agency position,

as discussed in the Finding s of F act, that Respond ent cites as

the unadopted rule. Standing is determined on a forward - looking

basis that does not disappear based on the final outcome of the

proceeding. See , e.g. , Peace River/Manasota Reg'l Water Supply

Auth. v. IMC Phosphates Co. , 18 So. 3d 1079, 1083 (Fla. 2d DCA

2009). Respondent is also substantially affected by the NOI

itself. It is uncontested that Petitioner has not adopted the

alleged rule that is the subject of this proceeding.

21 . The close r issue is whether Responde nt has identified

an unadopted statement that qualifies as a rule. A rule is an

"agency statement of general applicability that implements,

interprets, or prescribes law or policy ." § 120.52(16).

Section 120.57(1)(e)1. warns that an agency's application of

rules and statutes to facts is not a rule. Accord Envtlust

v. Dep't of Envtl. Prot. 714 493, 498 (Fla. 1st DCA 1998). I f

the facts are not in dispute, the agency's interpretation of th e

law drives its adjudication, bu t a n agency's interpretation of a

statute that is "readily apparent" from a literal reading of the

statute is not a rule. St. Francis Hosp. v. Dep't of Health &

Rehab. Servs. , 553 So. 2d 1351, 1354 (Fla. 1st DCA 1989)

(dictum). Of course, Petitioner's im plying a broad exception in

section 550.475 for created or converted permits is not readily

apparent from a literal reading of this statute.

22. A rule is an agency statement that requires compliance

and has the direct and consistent effect of law. Dep 't of

Admin. v. Harvey , 356 So. 2d 323, 325 (Fla. 1st DCA 1977)

(citing McDonald v. Dep't of Banking & Fin. , 346 So. 2d 569, 581

(Fla. 1st DCA 1977)). If it "sets out categoric requirements as

a prerequisite for obtaining certification," an agency statement

may meet these criteria for being a rule , even though it is

directed to a single regulated person. McCarthy v. Dep't of

Ins. & Treasurer , 479 So. 2d 135, 137 (Fla. 2d DCA 19 85) (agency

statement was a letter voiding a fire safety inspector

certificate because the agency had erroneously allowed the

person to sit for the certification examination).

23. In Fla. Quarter Horse Trac k Ass'n v. Dep't of Bus. &

Prof' l Reg . , 133 So. 3d 1118 (Fla. 1st DCA 2014) (per curiam) ,

the court held that the agency's "policy" of treat ing barrel

racing as a form of quarter horse racing for issuing permits and

licenses was an unadopted rule. Citing the Administrative Law

Judge's final order, the court agreed that Florida

administrative law "does not allow the agency to establish such

a policy stealthily by the issuance of . . . licenses." Id. at

1119. Undisclosed in the appellate opinion, the license at

issue in the administrative proceeding was the first time a

holder of a quarter horse racing permit had applied for a

license for barrel racing. Fla. Quarter Horse Racin g Ass'n v.

Dep't of Bus. & Prof' l Reg . , DOAH Cas e No. 11 - 5796RU,

https://www.doah.state.fl.us/ROs/2011/11005796.pdf , ¶¶ 24 et

seq.

24 . In granting a license , the agency in Florida Quarter

Horse determined, as a matter of law that was not readily

apparent from a literal reading of the statute , that barrel

racing was included within quarter horse racing. Similarly, in

"withdrawing" the 2017 - 18 operating license , Petitioner

determined, as a matter of law, that section 550.475 does not

apply to a converted or created permit, at least when the ho lder

seeks a license to conduct performances outside of the original

county. As in McCarthy and Florida Quarter Horse , the agency

statement in this case was directed to a single person, but is a

categoric declaration of law that governs all persons simila rly

situated.

25. The NOI is a rule that deprives holders of converted

and created permits of the benefit of section 550.475 -- either

entirely, as suggested by the omission of the statute from the

statement , or partially in terms of any attempt to relocate

performances to compliant locations that are outside of the

original counties named in the permit. Respondent is entitled

to the formal adoption of such a rule , so that it may be

determined whether such a rule would be an invalid exercise of

d ele gated legislative authority, as well as the de novo

appellate standard of review that applies to the final orders

determining legal issues in rule challenges. See , e.g. , Dep't

of Health v. Bayfront Med. Ctr., Inc. , 134 So. 3d 1017, 1018

(Fla. 1st DCA 2012 ).

26. In its proposed recommended order, Petitioner argued

that rulemaking at this time is neither feasible nor

practicable. Rulemaking is feasible unless Petitioner proves

that it has not had sufficient time to acquire the knowledge and

experience re asonably necessary for rulemaking or related

matters remain pending, so that rulemaking cannot proceed at

this time. § 120.54(1)(a)1. The construction of sections

550.0745(1) and (2) and 550.475 is not a new issue, nor is the

need for an authoritative de termination of how to harmonize

these sections. Petitioner instead argues that it may not

choose one of these statutes in a rule, although that is exactly

what Petitioner through a confusing statement that Petitioner

maintains is , not only no threat to Respondent's operating

license, but also insulated from a rule challenge. Appellate

review of a final order adjudicating a challenge of an adopted

rule is the proper means of obtaining an authoritative

construction of these statutes.

27. Rulemaking is pr acticable unless Petitioner proves

that detail in the establishment of principles, criteria, or

standards for agency decisions is not reasonable under the

circumstances or that the issues are of such a narrow scope that

more specific resolution of the matt er is impossible outside of

case - by - case adjudication to determine the substantial interests

of individual parties. Clearly, Petitioner's adoption of a

broad exception to section 550.475 does not raise any

practicability concerns.

RECOMMENDATION

It is

REC OMMENDED that Petitioner enter a final order dismissing

the Notice of Intent to Withdraw License .

DONE AND ENTERED this 12th day of December , 2017 , 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 12th day of December , 2017 .

ENDNOTE

1/ The agency has been redesignated as Petitioner because it has

the burden of proof.

COPIES FURNISHED:

John M. Lockwood, Esquire

Thomas J. Morton, Esquire

Devon Nunneley, Esquire

The Lockwood Law Firm

106 East College Avenue, Suite 810

Tallahassee, Florida 32301

(eServed)

Louis Trombetta, Esquire

Charles LaRay Dewrell, Esquire

Department of Business and

Professional Regulation

Capital Commerce Center, Fifth Floor

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Jason Maine, General Counsel

Department of Business and

Professional Regulation

Capital Commerce Center

2601 Blair Stone Road

Tallahassee, Florida 32399 - 2202

(eServed)

Tony Glover, Director

Division of Pari - Mutuel Wagering

Departm ent of Business and

Professional Regulation

Capital Commerce Center

2601 Blair Stone Road

Tallahassee, Florida 32399

(eServed)

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.