19-000499RU All Seasons Landscape Contractors, Inc. vs. Department Of Transportation Status: Closed DOAH Final Order on Monday, March 18, 2019.

Summary: Petitioner failed to prove that the alleged agency statement was an unadopted rule.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALL SEASONS LANDSCAPE

CONTRACTORS, INC.,

Petitioner,

vs. Case No. 19 - 0499RU

DEPARTMENT OF TRANSPORTATION,

Respondent.

_______________________________/

FINAL ORDER

Pursuant to n otice and a stipulated record, this matter is

before Yolonda Y. Green , a duly assigned Administrative Law

Judge (ÑALJÑ) of the Division of Administrative Hearings

(ÐDivisionÑ).

APPEARANCES

For Petitioner: Brant Hargrove, Esquire

Law Offic e of Brant Hargrove

1291 Cedar Center Drive

Tallahassee, Florida 32301

For Respondent: Susan Schwartz, Esquire

Kimberly Clark Menchion, Esquire

Department of Transportation

Mail Station 58

605 Suwanee Street

Tallahassee, Florida 32399 - 0458

STATEMENT OF THE ISSUE

Th e issue in this case is w hether a liquidated damages term

in the DepartmentÓ s specification for Invitation t o Bid (ÐITB Ñ)

constitutes an unadopted rule, as defined in section 120.52 (20) ,

Florida Statutes , in vio lation of section 120.54(1)(a).

PRELIMINARY STATEMENT

On January 28, 2019, Petitioner, All Seasons Landscape

Contractors, Inc. (ÐPetitionerÑ or ÐAll SeasonsÑ ), file d its

Petition for Rule Challenge Under Section 120.56, Florida

Statutes , requesting an administrative determination that a

statement in Respondent, Department of TransportationÓs

(ÐRespondentÑ or ÐDepartmentÑ) , standard constr uction and

maintenance contra ct cons titutes a rule under section 120.52 and

imposes liquidated damages without promulgating any rule to do

so, in violation of section 120.54(1)(a).

On February 5, 2019, the undersigned conducted a status

conference , during which the parties agreed that this case was

appropriate for a summary final order based on a stipulated

record and motions for summary final order.

On February 12, 2019, the parties filed their Joint

Pre - hearing S tipulation with Stipulated Exhibits 1 through 5.

On the same date , the parties filed their respective Motions for

Summary Final Order . All filings have been considered in the

preparation of this Final Order.

On February 15, 2019, oral argument on the partiesÓ motion

for summary final order was held in Tallahassee, Flor ida.

References to statutes are to Florida Statutes ( 2017) ,

unless otherwise noted.

FINDING S OF FACT

Parties

1 . All Seasons is a licensed maintenance contractor with

more than 30 years of experience bidd ing on and performing

Department maintenance contr acts. All Seasons is currently

performing on Department projects and intends to bid on future

projects.

2 . The Department i s a state agency authorized by

s ection 337.11, Florida Statutes, to contract for the

construction and m aintenance of roads within the s tate h ighway

s ystem, the state p ark road s ystem, and roads placed under its

supervision.

Applicable Statute

3. The statute at issue in this proceeding, section

337.18(2), provides in pertinent part.

337.18 Surety bonds for construction or

maintena nce contracts; requirement with

respect to contract award; bond

requirements; defaults; damage assessments.

* * *

(2) The department shall provide in its

contracts for the determination of default

on the part of any contractor for cause

attribut able to such contractor. The

department shall have no liability for

anticipated profits for unfinished work on

a contract which has been determined to be

in default. Every contract let by the

department for the performance of work

shall contain a provisi on for payment to

the department by the contractor of

liquidated damages due to failure of the

contractor to complete the contract work

within the time stipulated in the contract

or within such additional time as may have

been granted by the department. T he

contractual provision shall include a

reasonable estimate of the damages that

would be incurred by the department as a

result of such failure. The department

shall establish a schedule of daily

liquidated damage charges, based on

original contract amou nts, for construction

contracts entered into by the department,

which schedule shall be incorporated by

reference into the contract. The

department shall update the schedule of

liquidate d damages at least once every

2 years, but no more often than once a

year. The schedule shall, at a minimum, be

based on the average construction,

engineering, and inspection costs

experienced by the department on contracts

over the 2 preceding fiscal years. The

schedule shall also include anticipated

costs of project - rel ated delays and

inconveniences to the department and

traveling public. Anticipated costs may

include, but are not limited to, road user

costs, a portion of the projected revenues

that will be lost due to failure to timely

open a project to revenue - produci ng

traffic, costs resulting from retaining

detours for an extended time, and other

similar costs. Any such liquidated damages

paid to the department shall be deposited

to the credit of the fund from which

payment for the work contracted was

authorized.

4 . The statute requires that the Department adopt

regulations for determination of default.

Background

5. On February 6, 2018, the Departme nt issued an ITB for

Contract No. E3R69 - R0, to perform mechanical sweeping of

designated roads and bridges in addit ion to edging and sweeping

of sidewalks and curb edgings on designated locations in Gadsden

and Leon counties. A specification p ackage was included with

the ITB referencing the January 2018 Edition of the DepartmentÓs

Standard Specifications for Road and Bridge Construction

(ÐStandard Specification s Ñ) . The Standard Specifications are

revised two times each year.

6 . T he specifications p ackage included a 37 - page ÐSpecial

ProvisionsÑ supplement to the Standard Specifications.

A rticle 5 - 1.7 of the Spe cial P rovisions provided a work

schedule, requiring the successful bidder to begin work within

14 calendar da ys from receipt of the initial work d ocument, and

within five working days from receipt of any subsequent work

d ocument, and states:

If the Contractor d oes not begin work by

the end of the date specified in this

Subarticle, or the assignment of work in

the Work Document is not complete within

the number of days stipulated in the Work

Document, then the Contractor and the

Department agree that the Departme nt will

assess the Contractor, per day, not as a

penalty but as liquidated damages, 1% of

the total Work Document amount or th e

amount shown in Subarticle 8 - 10.2 (Amount

of Liquidated Damages), whichever is less.

7 . The Department Ós contract solicitation s incorporate the

DepartmentÓs Standard Specifications. Sections 8 - 10.1 and

8 - 10.2 of the Standard Specificat ions for January 2018 provided :

Section 8 - 10.1 Highway Code Requirements

Pertaining to Liquidated Damages:

Section 337.18, paragraph (2) of t he

Florida Statutes, requires that the

Department adopt regulations for the

determination of default and provides that

the Contractor pay liquidated damages to

the Department for any failure of the

Contractor to complete the Contract work

within the Contra ct Time. These Code

requirements govern, and are herewith made

a part of the Contract.

Section 8 - 10.2 Amount of Liquidated

Damages: Applicable liquidated damages are

the amounts established in the following

schedule:

Original Contract Amount Daily C harge Per

Calendar Day

$50,000 and under. . . . . . . . . . . $956

Over $50,000 but less than $250,000 ... $964

$250,000 but less than $5 00,000... . .. . $1,241

$500,000 but less than $ 2,500,000... . . $1,665

$2,500,000 but less tha n $5,000,000... $2,712

$5,000 ,000 but less th an $10,000,000.. $3,447

$10,000,000 but less than $15,000,000 . $4,866

$15,000,000 but less than $20,000,000. $5,818

$20,000,000 and over. . . . . . . . . $9,198

plus 0.00005 of any amount over $20 million

(Round to nearest whole dollar).

8 . On March 8, 2018, All Seasons submitted a bid on

Contract No. E3R69 - R0.

9. I n April 2018, Respondent awarded All Seasons C ontract

No. E3R69 - R0 , which All Seasons accepted . In the contract, All

Seasons agreed to perform the work as described in the I TB as

follows:

[I] n the manner and to the full extent as

set forth in the Proposal, Standard

Specifications as Amended by the

Specifications Package and any Supplemental

Specifications Packages, and the Plans,

under security as set forth in the attached

bond, all of which are adopted and made a

part of this Contract and incorporated by

reference herein, and to the satisfaction

of the duly authorized representatives of

the Department of Transportation, who shall

have at all times full opportunity to

inspec t the materials to be furnished and

the work to be performed under this

contract.

10. All Seasons did not protest the terms, conditions, or

specifications of the contract during the timeframe provided for

such challenges.

11. The Standard Specificat ions has not been adopted as a

rule pursuant to the rulemaking procedures in section 120.54.

12 . The liquidated damages clause has not been adopted as

a rule pursuant to the rulemaking procedures in section 120.54.

Challen ged Statement

13 . On January 2 8, 2019 , Petitioner initiat ed this

proceeding by filing a p etition for Rule Challenge Under Section

120.56, Florida Statutes, which alleged tha t the li quidated

damages clause in the specifications for Contract No. E3R69 - R0

was an unadopted rule that violat es section 1 20.54(1)(a)

(ÐChallenged S tatementÑ).

Standing

14 . Petitioner p erforms on Department projects and intends

to bid on future projects . The liquidated damages clause is

included in each contract. As a result, Petitioner is

substantially affect ed by the Challenged S tatement .

Feasibility and Practicability of Rulemaking

15 . Although Respondent asserts that rulemaking for the

Challenged Statement is not feasible or practicable, it did not

present evidence to support its arg u ment.

CONCLUSIONS OF LAW

16 . The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding pursuant to sections 120.56(4), 120.569, and

1 20.57(1) , Florida Statutes (2018 ).

17 . Based on the Findings of Fact above, it is d etermined

that Petitioner is a substantially affected entity who has

standing to contest the Challenged Statement as an unadopted

rule in this proceeding.

18 . The sole issue for consideration in this proceeding is

whether the Challenged Statement is a Ðru le,Ñ as that term is

defined in section 120.52(16).

19 . Section 120.52(16) defines a rule as:

[E] ach agency statement of general

applicability that implements, interprets,

or prescribes law or policy or describes the

procedure or practice requirements of any

agency and includes any form which imposes

any requirement or solicits any information

not specifically required by statute or by

an existing rule.

20 . An Ð unadopted rule Ñ is defined as an agency statement

that meets the definition of the term Ð rul e, Ñ but that has not

been adopted pursuant to the requirements of section 120.54.

§ 120.52(20), Fla. Stat.

21 . Agencies must adopt, as rules, those statements

meeting the definition of a rule. As set forth in section

120.54(1) (a) :

Rulemaking is not a matter of agency

discretion. Each agency statement defined

as a rule by s. 120.52 shall be adopted by

the rulemaking procedure provided by this

section as soon as feasible and practicable.

22 . When a person is substantially affected by an

unadopted rul e, a remedy to challenge the application of the

unadopted rule is established in section 120.56(4), which

provides, in pertinent part, that:

(a) Any person substantially affected by an

agency statement may seek an administrative

determination that the sta tement violates

s. 120.54(1)(a). The petition shall include

the text of the statement or a description

of the statement and shall state with

particularity facts sufficient to show that

the statem ent constitutes a rule under

s. 120.52 and that the agency h as not

adopted the statement by the rulemaking

procedure provided by s. 120.54.

* * *

(d) If an administrative law judge enters a

final order that all or part of an agency

statement violates s. 120.54(1)(a), the

agency must immediately discontinue all

reliance upon the statement or any

substantially similar statement as a basis

for agency action.

23 . Petitioner has the burden in this proceeding to prove

that the Challenged S tatement regarding liquidated damages

meets the definitio n of a rule, an d that the Department has not

adopted the statement by rulemaking procedures. Ag. for Pers.

with Disab. v. C.B. , 130 So. 3d 713, 717 (Fla. 1st DCA 2013);

see also Sw. Fla. Water Mgmt. Dist. v. Charlotte Cnty . , 774 So.

2d 903, 908 (Fla. 2d DCA 2001).

24 . The standard of proof is by a preponderance of the

evidence. § 120.56(1)(e), Fla. Stat.

25 . Whether an agency statement is a rule turns not on

the agencyÓs characterization of the statement by some

appellation other than Ðrule,Ñ but, rather, on the ef fect of

the statement. DepÓt of Admin. v . Harvey , 356 So. 2d 323, 325

(Fla. 1st DCA 1977).

26 . The fundamental issue of whether the alleged

statement is a ÐruleÑ centers around the statementÓs Ðgeneral

applicab ility . Ñ

27 . An agency statement is Ðgener ally applicableÑ if it

is intended by its own effect Ðto create rights, or to require

compliance, or otherwise have the direct and consistent effect

of law.Ñ Coventry First, LLC v. Off. of Ins. Reg. , 38 So. 3d

200 (Fla. 1st DCA 2010) (quoting McDonald v. DepÓt of Banking &

Fin. , 346 So. 2d 569, 581 (Fla. 1st DCA 1977)). Furthermore:

Ð[a]n agency statement that either requires

compliance, creates certain rights while

adversely affecting others, or otherwise

has the direct and consistent effect of

law, is a rule.Ñ When deciding w hether a

challenged action constitutes a rule, a

court analyzes the action's general

applicability, requirement of compliance,

or direct and consistent effect of law.

Fla. Dep't of Fin. Servs. v. Cap. Collateral Reg'l Counsel

Mid dle Region , 969 So. 2d 527, 530 (Fla. 1st DCA 2007)

(citations omitted); see also State Bd. of Admin. v. Huberty ,

46 So. 3d 1144, 1147 (Fla. 1st DCA 2010).

28 . The circumstances in t his matter involve a

contractual term within the Standard Specifications that has

been incorporated into a contractual agreement. Both parties

rely upon Department of Transportation v. Blackhawk Quarry Co. ,

528 So. 2d 447 (Fla. 5th DCA 1988) , in support of their

positions. In Blackhawk , at issue was whether the definition

of material contained within the DepartmentÓ s Standard

Specification s constituted an unadopted rule. 1/ Id. In

considering whether the provisions examined therein were a

rule , the court noted :

[T] he First District found that wage rate

determinations applica ble to a public

construction contract were not rules

because each determination was applicable

only to construction of the particular

public building specified in the

determination and had no prospective

application to any other contract.

528 So. 2d at 4 49 ( quoting from State Department of Commerce v.

Matthews Corp. , 358 So. 2d 256 , 258 (Fla. 1st DCA 1978) ) . T he

court reversed the finding that the s tatement was an unadopted

rule because the section at issue set out specifica tions which

were considered a contractual term between the Department and

the contractor.

29 . A similar case that involved an unadopted rule

challenge to a specification provision, which was incorporated

into construction contracts for the Orlando - Orange County

Expressway , was addr essed by ALJ Robert Meale in Hubbard

Constr uction Company v. Orlando - Orange County Expressway

Authority , Case No. 95 - 3903RU ( Fla. DOAH Nov. 7, 1995), affÓ d

(on other grounds) , 682 So. 2d 566 (Fla. 5th DCA 1996).

ALJ Meale Ós analysis is adopted and incorpo rated herein as

follows :

22. The Gray Book, including Article 3 - 8,

applies to parties only after it has been

incorporated into a contract. Thus Article

3 - 8 is not Ðgenerally applicableÑ because

it is not, in the words of the court in

McDonald v. Departm ent of Banking and

Finance , 346 So. 2d 569, 581 (Fla. 1st DCA

1977) a statement that is Ðintended by

[its] own effect to create rights, or to

require compliance, or otherwise to have

the direct and consistent effect of law.Ñ

Based on this reasoning, two c ourts have

consequently held that the Standard

Specification for Road and Bridge

Construction of the Department of

Transportation does not constitute a rule

when incorporated by reference into

construction contracts. Department of

Transportation v. Blackh awk Quarry Company

of Florida, Inc. , 528 So. 2d 447 (Fla. 5th

DCA), rev. den. 536 So. 2d 243 (Fla. 1988)

and San Marco Contracting Company v.

Department of Transportation , 386 So. 2d

615 (Fla. 1st DCA 1980).

30 . The Petition in this matter must be dism issed as the

evidence does not demonstrate that the Challenged Statement

meets t he definition of an unadopted rule. Similar to the wage

determinations, the liquidated damages clause a pplies to

specific contracts to address failure to meet timeline . The

c lause is only applicable to the specified contract, for a

specified project, and for a specified time period. By the

description of the work performed in each contract , it is clear

that the contract provision is specified for the particular

project, i.e. , clean up in Leon and Gadsden County. Moreover,

the contractor here was permitted to challenge the liquidated

damages formula by way of a specification challenge.

See § 120.57(3) , Fla. Stat . Furthermore, while the clause is

incorporated into each constr uction and maintenance contract, it

applies after the parties enter a contract. Once the parties

enter the agreement, the liquidated damages clause has no effect

beyond the four corners of that contract. Thus, o utside of the

respective contract, the Chal lenged Statement does not have its

own effect to create rights, or to require compliance, or

otherwise have the direct and consistent effect of law.

31 . Based on the foregoing, Petitioner has failed to

demonstrate the existence of an agency statement th at meets the

definition of an unadopted rule to establish that Respondent

violated section 120.56(4).

32 . Given the undersignedÓs conclusion reached regarding

whether the Challenged Statement is an unadopted rule, it is not

necessary to address whether r ulemaking would be feasible here.

33 . Respondent also argues that the liquidated damages

clause goes beyond the authority of section 337.18(2), by

developing a schedule without any set criteria and applying it

to maintenance contracts. However, this pro ceeding was brought

pursuant to section 120.56(4), which is limited to whether the

agency statement is a rule that has not been adopted pursuant to

rulemaking procedures in violation of section 120.54(1)(a) .

Whether the statement was an invalid exercise o f delegated

legislative authority is a challenge that is not applicable

here.

ORDER

Based on the foregoing Findings of Fact and Conclusion s of

Law, it is

ORDERED th at All SeasonsÓ Rule Challenge U nder Section

120.56, Florida Statutes , is hereby DISMIS SED.

DONE AND ORDE RED this 1 8 th day of March , 2019 , in

Tallahassee, Leon County, Florida.

S

YOLONDA Y. GREEN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 48 8 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1 8 th day of March , 2019 .

ENDNOTE

1/ In Blackhawk , the mine owner also challenged the Standard

Operating P rocedure used to approv e source material for

Department roadways, which is not critical to the germane issue

in this matter.

COPIES FURNISHED:

Brant Hargrove, Esquire

Law Office of Brant Hargrove

1291 Cedar Center Drive

Tallahassee, Florida 32301

(eServed)

Susan Schwartz , Esquire

Department of Transportation

Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399 - 0458

(eServed)

Kimberly Clark Menchion, Esquire

Department of Transportation

Haydon Burns Building

Mail Station 58

605 Suwannee Street

Tallahassee, Flor ida 32399 - 0458

(eServed)

Andrea Shulthiess

Clerk of Agency Proceedings

Department of Transportation

Haydon Burns Building

Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399 - 0450

(eServed)

Erik Fenniman, General Counsel

Department of Tran sportation

Haydon Burns Building

Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399 - 0450

(eServed)

Kevin J. Thibault, P.E., Secretary

Department of Transportation

Haydon Burns Building

Mail Station 57

605 Suwannee Street

Tallahassee, Florida 32399 - 0450

(eServed)

Ken Plante, Coordinator

Joint Admin istrative Proced ures Committee

Room 680, Pepper Building

111 West Madison Street

Tallahassee, Florida 32399 - 1400

(eServed)

Ernest Reddick, Program Administrator

Anya Grosenbaugh

Florida Administra tive Code & Register

Department of State

R. A. Gray Building

500 South Bronough Street

Tallahassee, Florida 32399 - 0250

(eServed)

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is

entitled to judicial review pu rsuant to section 120.68, Florida

Statutes. Review proceedings are governed by the Florida Rules

of Appellate Procedure. Such proceedings are commenced by

filing one copy of a Notice of Administrative Appeal with the

agency clerk of the Division of Admin istrative Hearings and a

second copy, accompanied by filing fees prescribed by law, with

the District Court of Appeal, First District, or with the

District Court of Appeal in the appellate district where the

party resides. The Notice of Administrative App eal must be

filed within 30 days of rendition of the order to be reviewed.