89-001495 Pro Grading vs. Department Of Transportation Status: Closed Recommended Order on Friday, August 4, 1989.

Summary: DBE applicant demonstrated "capital" or expertise in disjunctive, which was OK; effect of agency "policy" discussed; "risk" counts as to assess capital

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PRO GRADING, )

)

Petitioner, )

)

vs. ) CASE NO. 89-1495

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on June 5, 1989, in

Ocala, Florida, before Ella Jane P. Davis, a duly assigned Hearing Officer of

the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Jean A. Bice, Esquire

Patillo & McKeever

Post Office Box 1450

Ocala, Florida 32678

For Respondent: Ruth Dillard, Esquire

Department of Transportation

Haydon Burns Building MS 58

Tallahassee, Florida 32399-0458

STATEMENT OF THE ISSUE

Whether or not Pro Grading, Inc., may be certified by the Department of

Transportation as a Disadvantaged Business Enterprise, pursuant to Chapter 14-78

F.A.C.

PRELIMINARY STATEMENT

At formal hearing, Petitioner presented the oral testimony of Ronnie James

Stephens, Joseph Ronk, and Bonnie Stephens. By stipulation of the parties,

affidavits of Doug Perryman, Rick Scott, Glen Benson, and Vivian Swanson were

admitted as Petitioner's Exhibits 1-4, respectively, in lieu of live testimony.

Inherent in the stipulation was Respondent's waiver of the right of cross-

examination of the affiants. Also, with regard to two of these affidavits,

there was waiver of a potential challenge to their notarization by an interested

party, the Petitioner's President and principal. Petitioner also had admitted

Petitioner's Exhibits 5 and 6.

Respondent presented the oral testimony of Pete Davis, and had one exhibit

admitted in evidence.

No transcript of proceedings was provided, but all timely-filed proposed

findings of fact have been ruled on, pursuant to Section 120.59(2), F.S., in the

Appendix to this Recommended Order.

FINDINGS OF FACT

1. On August 18, 1988, Bonnie Stephens (female), as principal and 100%

stockholder of Petitioner Pro Grading, Inc., a grading and grassing corporation,

applied to Respondent Department of Transportation (DOT) for certification as a

disadvantaged business enterprise (DBE).

2. The agency's grounds for the denial of that certification application

are based upon Rules 14-78.005(7)(c) and (e), F.A.C., and were set forth as

follows in its February 22, 1989, denial letter:

(c) The ownership and control exercised by

socially and economically disadvantaged

individuals shall be real, substantial, and

continuing, and shall go beyond mere pro

forma ownership of the firm, as reflected

in its ownership documents. The socially

and economically disadvantaged owners shall

enjoy the customary incidence of ownership

and shall share in the risks and profits

commensurate with their ownership

interests, as demonstrated by an

examination of the substance rather than

form of financial and managerial

arrangements

(e) The DBE shall be one in which the

socially and economically disadvantaged

owner shall also possess the power to

direct or cause the direction of the

management, policies, and operations of the

firm and to make day-to-day as well as

major business decisions concerning the

firm's management, policy, and operation.

3. By stipulation, the parties agreed that the basis for the denial

specified by letter is sufficiently broad so as to include evaluation of the

contribution of capital by Bonnie Stephen to Pro Grading, Inc., at the time of

the application and investigation. In addition to this consideration, the

undersigned has considered contributions through the date of formal hearing for

the reasons set out infra.

4. Except for the foregoing, it was stipulated that the

Petitioner/applicant currently meets all other requirements established by

statute or rule for DBE certification by DOT.

5. Upon the testimony of Pete Davis, DBE Certification Coordinator, DOT

Minority Programs Office, and Chairman of the DOT DBE Certification Committee

which initially reviewed the application and recommended its denial, a factor

given significant weight against certification by the committee was the members'

belief that Pro Grading, Inc., was listed with the federal Internal Revenue

Service and with the Securities and Exchange Commission as a "Subsection S"

corporation and that such an organizational framework would permit all corporate

income to pass through the corporation to its principal, Bonnie Stephens, and

thus, to her husband, Ronnie Stephens (male). However, this corporate status

was categorically denied by Bonnie Stephens at formal hearing, and no

documentary evidence was admitted which would tend to establish "Subsection S"

status of the corporation/applicant.

6. Ronnie Stephens had done grading and sodding since 1976, however, he

never incorporated a business. He had operated under the name, "Pro Grading"

for two years before July 1, 1987. On that date, the business was incorporated,

and all interest in the business was transferred to Bonnie Stephens. When

Ronnie Stephens ran the business, it was basically a two-man operation, with Mr.

Stephens managing, directing his single employee, Edgar Freytes, and actually

doing much of the field work himself. At the time he met Bonnie, Ronnie

Stephens had a substantial tax lien against himself, personally, due to another

business he had owned previously. This lien inhibited his being able to meet

"Pro Grading's" cash flow needs, inhibited his securing loans, and inhibited

"Pro Grading" from securing certain types of contracts which are let at bid.

During its last year of business under Mr. Stephens' control, "Pro Grading"

grossed approximately $87,000.

7. Bonnie Stephens' employment background prior to meeting Ronnie Stephens

in May 1986 was as a dental assistant and dental office manager. After meeting

and beginning to date Ronnie, the future Mrs. Stephens assisted Mr. Stephens

informally on nights and weekends with bookkeeping for his unincorporated

business, "Pro Grading." Somewhat later, she began doing part-time work for the

company in an administrative capacity, and in January 1987, she quit her full-

time job with a local dental professional association and began working full-

time (40 hours per week) in all aspects of Mr. Stephens' business, including

field work. By this method, she gained experience in the work done by the

grading, sodding, grassing, and seeding trades.

8. On or about July 1, 1987, the transfer of the business from Ronnie to

Bonnie took place. The liabilities of Pro Grading, Inc., under Ronnie were

offset by approximately the same amount of receivables, leaving net assets of

approximately $27,000 which were acquired by Bonnie as part of the business

without Bonnie having to make an outlay of that amount of cash to Ronnie or to

the corporation account. At the time of the transfer, there was no other

recorded arm's length payoff by mortgage, promissory note, or other payment from

Bonnie to Ronnie, then her husband, for this $27,000 difference.

9. Both Mr. and Mrs. Stephens testified that the corporate transfer

occurred after their marriage, was not in contemplation thereof, and neither of

them thought it necessary for Mrs. Stephens to pay the $27,000 since they were

married and since they jointly and severally considered the "trade-off" of the

debts for the receivables to be fair, even with the $27,000 net (profit) to Mrs.

Stephens.

10. Mr. and Mrs. Stephens' joint and mutual expressed purpose for the

incorporation and transfer of ownership via stock was that the tax lien against

Mr. Stephens impaired his being able to run the business successfully, while

Mrs. Stephens had clearly demonstrated the business sense to run the

corporation, was willing to take on the responsibility and stress of running the

business herself, and had established the credit rating necessary to keep the

corporation afloat. At formal hearing, Mrs. Stephens also indicated that she

had felt that since she had invested so much of herself in the business and

intended to invest more time and money in it, she had wanted "everything on

paper" to protect her investment if the marriage failed. Her viewpoint

evidences independence and control.

11. At the time that Mrs. Stephens made the August 18, 1988, application

to DOT for DBE status on behalf of Pro Grading, Inc., she had been sole owner

(100% stockholder) of the corporation, Pro Grading, Inc., for a little over one

year. In that period, the gross receipts of the corporation had increased to

$230,000 from the last full year that Mr. Stephens had run the predecessor

business through the first full year of Mrs. Stephens' administration. The

number of employees had increased from two to six, at least two of whom are

close relatives of Mrs. Stephens. The assets had reached a value of $135,000

above those transferred in 1987.

12. Although no documentary evidence was presented to show any

contribution of capital by Mrs. Stephens at the date of transfer of the stock or

thereafter, Bonnie Stephens' testimony is unrefuted that she has, since

acquiring the corporation in her own name, invested approximately $29,000 of her

own money in the corporation. Although Mr. Davis conjectured, on the basis of a

corporate income tax return he had reviewed, that the $29,000 had been loaned to

the corporation by Bonnie Stephens and may have been subsequently repaid by

corporate assets prior to the 1987 tax return, the scenario painted by this

testimony also was not corroborated by the introduction of the corporate tax

return. Contrariwise, Bonnie Stephens testified that her $29,000 investment in

the corporation after her July 1, 1987, acquisition of all the stock/business

assets was assembled by her personally from an $8,000 profit-sharing

distribution from her prior job with the dental professional association; $1,000

from her personal checking account; and $20,000 from a local bank credit line

obtained in the name of Pro Grading, Inc., by her putting a $10,000 second

mortgage on a home owned solely by herself in her own name. Mrs. Stephens

candidly acknowledged that her former accountant may have listed these foregoing

items as loans from her personally to the corporation on the corporate tax

return and further acknowledged that if he had, then she had indeed ratified the

corporate return when she signed it. However, she maintained she had fired the

former accountant over this and other matters and that these amounts had never

been intended by her as loans but as investments in the company that was now

solely hers. Also, according to the affidavit of Doug Perryman, Ford tractor

salesman in Ocala, Florida, payment for all equipment sold to Pro Grading, Inc.,

is guaranteed by Bonnie Stephens only. Testimony reflects several substantial

purchases of machinery have been made and guaranteed by her. See, infra.

13. Mr. Davis enunciated a Department of Transportation policy of viewing

all "loans" made by a minority applicant principal as other than investment and

of considering any "loans" between a minority owner and her corporate entity as

a liability of the corporation and not as equity that may be considered as

demonstrating "contribution of capital" by the minority owner/stockholder. This

policy has never been formally promulgated by the agency as a rule, and is,

therefore, subject to being proved up in each formal hearing. At formal

hearing, DOT demonstrated no basis in general accounting practices, by statute,

or by rule for this non-rule policy, and in this situation, where the credit

line is in the name of the Petitioner corporation backed by the 100% minority

stockholder's personal residence, the policy is capricious and unfair in its

application. Regardless of whether Mrs. Stephens' $29,000 represents a "loan"

or an "investment," it is a "risk" of personal money or credit by the minority

principal. The promulgated rules contemplate consideration of "risks." (See

Conclusions of Law).

14. Mr. Davis also expressed the DOT policy that only capitalization as of

the date of purchase/acquisition of the corporate stock should be considered.

That policy is also subject to being proved-up on a case-by-case basis. In this

instance, such a policy was not demonstrated to be equally applied in every

case. However, it was demonstrated that the policy is without a clear rule or

statutory basis. The agency's expressed purpose for such a policy is so that,

since certified DBEs will bid on DOT contracts, the agency may be certain that

there is adequate initial corporate capitalization to ensure that the minority

business will succeed financially and will complete all contracts it undertakes.

It is appropriate for the agency to be concerned with such matters, but in Mrs.

Stephens' situation, the agency appears to have applied capitalization as of the

date of purchase/acquisition of the corporate stock as a false indicator of

potential success. Clearly, the difference in gross yearly income of the

corporation under Mr. Stephens' management ($87,000) and under Mrs. Stephens'

management ($230,000), the tripling of the employee roster, and the increase by

$135,000 in assets above those held by Ronnie Stephens on July 1, 1987,

demonstrate considerable success and expertise of the new minority principal,

Mrs. Stephens, regardless of her initial minimal capitalization. Without

something more from the agency, it is appropriate to consider the capital risked

by the minority principal subsequent to incorporation but prior to application

for DBE status and/or prior to formal hearing.

15. DOT's committee analysis also placed great emphasis on the expertise

of the applicant at the time of the application. Although the agency reviewed a

variety of documents, most of which are not in evidence here, there was no

suggestion that the agency had made an on-site inspection of Pro Grading, Inc.'s

operation which disclosed some tangible lack of expertise or control in Mrs.

Stephens. No case law, other reasoning pursuant to statute or rule, or

persuasive equitable argument was offered to exclude the expertise evidenced by

Mrs. Stephens as of the date of formal hearing.

16. Mr. Davis' testimony that DOT does not normally equate clerical work,

bookkeeping, business office management, and billing in a dentist's office with

the administrative, executive, and authority/control necessary for running a

grassing and sodding business is accepted as reasonable, but it is noted that

there are some minimal similarities. Moreover, Mrs. Stephens already had

approximately one year's association with the grading and sodding business as of

the date she assumed control. Prior to assuming control, she had handled almost

all of "Pro Grading's" office, clerical, and bookkeeping types of work for Mr.

Stephens. Specifically, she had dealt with credit lending institutions,

reviewed tax matters, and learned how to bid contracts. She had far less field

experience at that point than Mr. Stephens did, but she had acquired some such

expertise, beginning in January 1987.

17. After acquiring the company on July 1, 1987, she has increasingly

worked in the field. Bonnie Stephens' "hands on" experience in the field

increased further over the full year before the DBE application was filed. Now,

after nearly two years, that expertise has been further enhanced. Mrs. Stephens

currently works approximately 70 hours per week in the business and has done so

since July 1987. Her testimony on this score is supported and unrefuted. Under

Mrs. Stephens' administration and control, the corporation currently offers not

only grading and sodding, as it did during Mr. Stephens' management/ownership,

but also handles increasing percentages of grassing and seeding work. By a

practical demonstration measuring project bluelines for quoting prices and for

estimating the different types of work for preparation of bids and/or for post-

job billing Bonnie Stephens demonstrated administrative and field expertise.

Through a comprehensive explanation of specific contracts won or jobs undertaken

and completed by the company while under her management and control, she

exhibited comprehensive knowledge and expertise with regard to the purchase and

operation of specialized machinery, including but not limited to crimpers,

seeders, spreaders, cultipackers, offset disks, hayblowers, and box blades,

which machinery had been either utilized or purchased by her for the

corporation. Accordingly, she exhibited substantial specialized expertise in

the grading, sodding, grassing, and seeding trades.

18. Although due to the nature of her trade, particularly with regard to

the broad geographical area served by the corporation, some types of managerial

authority have had to be delegated by Mrs. Stephens to other corporate

employees, including her husband, Ronnie Stephens, but the final authority for

all major corporate decisions rests with Bonnie Stephens.

19. Ronnie Stephens, Edgar Freytes, and Billy Huey supervise most jobs in

the field. Each job supervisor has more autonomy the further from the main

office the job is, but they stay in regular communication with Bonnie Stephens

by telephone. Any job done in the Ocala area is also overseen by Bonnie

Stephens, regardless of which of the foregoing men supervises in the field.

Edgar Freytes was Ronnie Stephens' sole employee prior to incorporation of the

business under Mrs. Stephens' control. Mr. Freytes and Mr. Stephens now have

the same authority to hire and fire on job-sites as site foremen in any other

business, but neither may fire each other. Presumably, this is a change from

when Mr. Stephens, as owner, could have fired Mr. Freytes, his sole employee, at

will, and evidences Mrs. Stephens' independence and control. Mr. Freytes' work

is now largely in the Ocala area, and with regard to field work, he works more

closely with Mrs. Stephens than do Ronnie Stephens or Billy Huey. Billy Huey is

Bonnie Stephens' brother and the chief mechanic for the company. His emphasis

on mechanical work somewhat limits the time he supervises grassing and sodding

in the field. He is paid at the rate of $9.00 per hour. Bonnie's mother is

also employed by her as an office worker at $200 per week. Bonnie's husband,

Ronnie Stephens, is paid $300 per week; he gets no other bonuses. Mr. Freytes

makes $10.00 per hour, and his income varies with the hours he works as does

that of the brother, Billy Huey. Lesser skilled employees earn at the rate of

$5.00 per hour. Mrs. Stephens signs all checks for the corporation. As to her

exclusive and independent control of employees and her husband's influence on

her corporate decisions Mrs. Stephens has personally fired one employee in the

field and has refused to fire her mother when Mr. Stephens asked her to do so.

This also evidences Mrs. Stephens' independent control. Mrs. Stephens took some

"draws" during the first year of Pro Grading, Inc.'s operation, but she now pays

herself a regular $3,000 per month salary.

20. Joseph Ronk, a former full-time salesman for Pro Grading, Inc.,

testified on behalf of the applicant and is found to be substantially credible,

particularly in light of the fact that as of the date of formal hearing, he was

no longer financially dependent upon Pro Grading, Inc., or upon Mr. and/or Mrs.

Stephens. As of the date of formal hearing, Mr. Ronk no longer worked

exclusively for Pro Grading, Inc., based in Ocala, but was employed full-time

for Lowe's Building supplies in Lakeland, Florida, and only solicited jobs for

Pro Grading, Inc., as sideline commission work. Upon Mr. Ronk's testimony and

that of other witnesses, it is determined that Mrs. Stephens established a price

list for corporate services, and she is the only one who may vary it. Within

the parameters of that price list, Mr. Ronk's duties were, when he was employed

exclusively by Pro Grading, Inc., to negotiate jobs with persons or companies

wanting to employ Pro Grading, Inc. Although Mr. Ronk had considerable

authority within the price range established by Mrs. Stephens, and although his

testimony was couched in excessively self-complimentary terms, it clearly

appears that Mr. Ronk was always required to keep in regular contact with Mrs.

Stephens by beeper and by telephone. It was she who calculated the bid items by

telephone on most occasions and she then and now who calculates Mr. Ronk's sales

commission and signs his commission checks. Sometimes, though, Mr. Ronk filled

out and signed bids on behalf of Pro Grading, Inc., and in those situations, the

corporation always honored Mr. Ronk's commitments as its agent, whether or not

he secured Bonnie Stephens' prior approval. Usually, Bonnie Stephens would sign

the actual contract. Sometimes Mr. Ronk signed contracts, but Mr. Ronk

volunteered that he always got Mrs. Stephens' signature on "big jobs," an

imprecise, undefined term. Before his change of status, Mr. Ronk's dealings on

behalf of Pro Grading, Inc., resulted in some friction between the corporation

and its customers (See infra). As a result, Mrs. Stephens now does

proportionately more of the sales negotiating.

21. According to the affidavit of Rick Scott, Boyce Company's job

supervisor on the City of Inglis waterlines, all his dealings with Pro Grading,

Inc., except for the initial contact made by Joe Ronk, has been with Bonnie

Stephens. According to the affidavit of Glen Benson, Branch Manager of Volt

Co., a pipe and telephone cable installation business, that company's executives

have declined to deal with Pro Grading, Inc., through Mr. Ronk, and Mr. Benson

now deals exclusively with Bonnie Stephens. According to the affidavit of

Vivian Swanson, current accountant-bookkeeper for Pro Grading, Inc., Mrs.

Swanson was hired by Bonnie Stephens and all business affairs with regard to

Mrs. Swanson's professional independent employment contract with Pro Grading,

Inc., are handled directly with Bonnie Stephens. Mrs. Stephens' instructions to

Mrs. Swanson have been to keep all corporate economic affairs confidential

between themselves. Such an instruction strongly militates against any finding

of "cloaked control" of the corporation by Mrs. Stephens' husband.

22. Consequently, the duties delegated by Mrs. Stephens to subordinates do

not reflect an absence of control by her, a pass-through control by her husband,

or any inability in Mrs. Stephens to perform the day-to-day tasks of running the

company. Mrs. Stephens exhibits the type of real, actual, and independent

executive and administrative control normally associated with the head of any

corporation of this size and type. She also enjoys the incidences of such

control and of sole ownership.

23. Bonnie Stephens possesses the power, knowledge, and independent

control to direct or cause the direction of the management, policies, and

operations of the firm. She makes day-to-day as well as major business

decisions concerning the firm's management, policy, and operation. Her control

is real and substantial and cannot legitimately be characterized as a "paper-

tiger."

CONCLUSIONS OF LAW

24. The Division of Administrative Hearings has jurisdiction over the

parties and subject matter of this cause pursuant to S120.57(1), Florida

Statutes.

25. The DOT rules with regard to the issues in this case provide in

pertinent part, as follows:

(c) To be certified under this rule chapter, a

DBE shall be an independent business entity.

The ownership and control exercised by socially

and economically disadvantaged individuals

shall be real, substantial, and continuing, and

shall go beyond mere pro forma ownership of the

firm, as reflected in its ownership documents.

The socially and economically disadvantaged

owners shall enjoy the customary incidence of

ownership and shall share in the risk and

profits commensurate with their ownership

interests, as demonstrated by an examination of

the substance rather than form of financial and

managerial arrangements. In assessing business

independence, the Department shall consider all

relevant factors, including the date the firm

was established, the adequacy of its resources,

and the degree to which financial

relationships, equipment leasing, and other

business relationships with non-DBE firms vary

from industry practice. (Emphasis supplied)

* * *

(e) To be certified under this rule chapter,

the DBE shall be one in which the socially and

economically disadvantaged owner shall also

possess the power to direct or cause the

direction of the management, policies, and

operations of the firm and to make day-to-day

as well as major business decisions concerning

the firm's management, policy, and operation.

The discretion of the socially and economically

disadvantaged owners shall not be subject to

any formal or informal restrictions (including,

but not limited to, by law provisions,

partnership agreements, trust agreements or

charter requirements for cumulative voting

rights or otherwise) which would vary

managerial discretion customary in the

industry.

In determining whether the socially and

economically disadvantaged owners also possess

the power of direct or cause the direction of

the management, policies and operations of the

firm and have the requisite decision-making

authority, the Department may look to the

control lodged in the owners who are not

socially and economically disadvantaged

individuals. If the owners where not socially

and economically disadvantaged individuals are

disproportionately responsible for the

operation of the enterprise or if there exists

any requirement which prevents the socially and

economically disadvantaged owners from making

business decisions without concurrence of any

owner or employee who is not a

economically disadvantaged individual, then the

enterprise, for purposes of this rule chapter,

is not controlled by social-ally and economically

disadvantaged individuals and shall not be

considered a DBE within the meaning of this

rule chapter. Where the actual management of

the enterprise is contracted out to individuals

other than the owner(s), those persons who have

the ultimate power to hire and fire the

managers can be considered as controlling the

enterprise for the purpose of this rule

chapter.

(f) To be certified under this rule chapter,

the DBE shall be one in which the contributions

of capital or expertise invested by the

socially and economically disadvantaged

individual owners are real and substantial.

Examples of insufficient contributions include,

but are not limited to, a promise to contribute

capital, a note payable to the DBE enterprise

or its owners who are neither socially and

economically disadvantaged individuals, or the

mere participation as an employee, rather than

as a decision-maker. (Emphasis supplied)

[This paragraph was not listed in the denial

letter, but see stipulation of the parties with

regard to capitalization].

* * *

(g) In addition to the above standards, the

Department shall give special consideration to

the following circumstances:

1. Newly formed firms and firms whose

ownership or control has changed shall be

closely scrutinized to determine the reasons

for the timing of the formation of or change in

the firm.

2. A previous or continuing employer-employee

relationship between or among present owners

shall be carefully reviewed to ensure that the

employee-owner has sufficient management

responsibilities and capabilities.

3. Any relationship between an applicant and a

non-DBE which has an interest in the enterprise

seeking certification shall be carefully

reviewed to determine if the interest or the

non-DBE conflicts with the ownership and

control requirements of this rule chapter . . . .

26. The fact that the corporation was formed and management passed to Mrs.

Stephens in 1987, a year before the DBE application was filed, militates against

a conclusion that the incorporation/acquisition was accomplished merely to

obtain DBE status.

27. The disjunctive use of the words "capital" or "expertise" is

significant. The element of control in the minority member qualifying the

corporation is paramount and may be measured by either factor.

28. The DOT non-rule policies with regard to loans from the minority

principal to the corporation and permitting consideration only of capitalization

as of the date of purchase/acquisition of the corporate stock are policies

subject to being proved-up in each formal hearing where they have been applied

in the free-form agency action stage. Such non-rule policies do not have the

presumption of validity accorded duly promulgated rules. Barker v. Board of

Medical Examiners, 428 So.2d 720 (Fla. 1st DCA 1983). These policies were not

demonstrated at formal hearing to be reasonable, nor were they fully explicated.

It is also appropriate, upon the foregoing findings of facts, to consider

expertise and capitalization as of the date of the de novo formal hearing. See,

McDonald v. Department of Banking and Finance, 346 So.2d 769 (Fla. 1st DCA

1977).

29. The $29,000 invested by Mrs. Stephens out of her own independent

monies after acquisition of all "paper" rights is a real and substantial "risk,"

whether it is in loan or other form. Without the tax return in evidence or some

other refutation that these amounts have somehow been recouped by Mrs. Stephens

from the corporation they remain "at risk," and her financial prospects rise or

fall with that of the corporation.

30. Although the prior relationship between Bonnie Stephens and Ronnie

Stephens might be characterized as employer-employee and currently could be

characterized the same way, it is interesting to note that when single, he was

the boss and once married, she is. Since Mrs. Stephens holds 100% of the

corporate stock, Mr. Stephens cannot be characterized as a non-minority "owner."

Assuming, but not ruling, that DOT has some legitimate interest in assuring that

monies do not simply flow from a successful wife to her husband, the absence of

"Sub Chapter S" corporate status would suggest this is not happening.

Additionally, assuming, and also ruling, that DOT has a legitimate interest in

insuring that the wife (minority) is not just a "front" for the controlling

husband (not disadvantaged male), nothing of that sort has been shown.

Contrariwise, as demonstrated by the foregoing findings of fact, Mrs. Stephens

exercises superior, and nearly complete, day-to-day control of all aspects of

the business and does not acquiesce in all suggestions of her husband. Moreover

the disparity of their salaries [$3,000 (hers) versus $900 (his) per month: and

the types of decisions they respectively regularly make typify Mrs. Stephens'

independent control and expertise. The minimal authority delegated by her to a

commission salesman and to various job foremen does not detract from this

conclusion.

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is

recommended that the Department of Transportation enter a final order certifying

Petitioner as a Disadvantaged Business Enterprise.

DONE and RECOMMENDED this 4th day of August, 1989, at Tallahassee, Florida.

__________________________________

ELLA JANE P. DAVIS, Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 4th day of August, 1989.

APPENDIX TO RECOMMENDED ORDER, DOAH CASE NO. 89-1495

The following constitute specific rulings upon the parties' respective

proposed findings of fact (PFOF) pursuant to 5120.59(2) F.S.

Petitioner's Proposed Findings of Fact Beginning on page one:

1, 8. Rejected, constitute potential conclusions of law, not proposed

facts.

2,7. Covered in introductory material.

3,4,5,6. Accepted

Beginning on page two:

1. Rejected as unnecessary.

2,4. Accepted as modified to conform to the record.

3. The proposed facts are accepted; but the argument of counsel and

potential conclusions of law are rejected as not proposed facts.

Beginning on page three:

Unnumbered Paragraph -- Accepted in substance but further analyzed.

5,6,7. Except as accepted within the RO's FOF, rejected as proposed

conclusions of law, not proposed facts.

8. Accepted in substance but modified to reflect more accurately the

evidence of record. What is otherwise rejected is rejected as mere argument of

counsel or as proposed potential conclusions of law, not proposed facts.

9. Rejected as cumulative, not a proposal of facts, unnecessary.

Respondent's Proposed Findings of Fact:

1,2,3,4,5,6,7,9,10. Except as subordinate or unnecessary, accepted, but

with modifications to more accurately reflect the evidence of record.

8,11. Rejected as an incorrect characterization of, or as contrary to, the

evidence.

COPIES FURNISHED:

Jean A. Bice, Esquire

Patillo & McKeever

Post Office Box 1450

Ocala, Florida 32678

Ruth Dillard, Esquire

Department of Transportation

Haydon Burns Building MS 58

Tallahassee, Florida 32399-0458

Kaye N. Henderson, Secretary

Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0450