90-005830 Maribel Mackey Landscaping vs. Department Of Transportation Status: Closed Recommended Order on Thursday, January 24, 1991.

Summary: Disadvantaged Business Enterprise certification properly denied where inexperienced hispanic woman's business not separate and independent of husband's well-established business.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARIBEL MACKEY LANDSCAPING, )

)

Petitioner, )

)

vs. ) CASE NO. 90-5830

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned

Hearing Officer from the Division of Administrative Hearings, on November 1,

1990, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Maribel Mackey, pro se

5032 Southwest 121st Avenue

Cooper City, Florida 33330

For Respondent: William Peter Martin

Assistant General Counsel

Department of Transportation

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458

STATEMENT OF THE ISSUE

The issue in this cause is whether Petitioner is entitled to certification

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

Administrative Code.

PRELIMINARY STATEMENT

The Petitioner, Maribel Mackey Landscaping, filed with Respondent

Department of Transportation, a Schedule "A" application dated May 17, 1990, for

certification as a Disadvantaged Business Enterprise. By letter dated August

28, 1990, the Department informed Petitioner that its application had been

denied. By letter dated September 6, 1990, Maribel Mackey requested a formal

hearing regarding that denial, and this matter was referred to the Division of

Administrative Hearings for conduct of that formal proceeding.

At the hearing, Petitioner presented the testimony of Maribel Mackey and

Robert Mackey, husband of Maribel Mackey. Petitioner did not submit any

documentary evidence as exhibits. Respondent presented the testimony of Kathy

Garner, Sylvia Grinan-Chatmon, and Ruth B. Dillard. Additionally, Respondent's

Exhibits numbered 1-3 were admitted in evidence.

Both parties submitted post-hearing proposed findings of fact. A ruling on

each proposed finding of fact can be found in the Appendix to this Recommended

Order.

FINDINGS OF FACT

1. Maribel Mackey is the sole proprietor of Petitioner Maribe1 Mackey

Landscaping. As a woman of Hispanic heritage (Cuban), she falls into two of the

presumptive categories of socially and economically disadvantaged individuals.

2. Petitioner is a landscaping company started in April, 1990, by Maribel

Mackey as its sole owner. The company does not itself perform either irrigation

or sod work as was sworn to on its application; rather, it subcontracts those

items of work when they are required under a contract.

3. Petitioner conducts business out of the home of Maribel and Robert

Mackey at 5032 S.W. 121 Avenue, Cooper City, Florida.

4. Robert and Maribel Mackey were married in March, 1988.

5. Maribel Mackey had no prior experience in the landscaping business

prior to starting her business.

6. Robert Mackey is the sole shareholder of a landscaping company known as

Robert Mackey Landscaping, Inc., incorporated in 1988. Prior to the formation

of that business entity, Robert Mackey was the sole proprietor of Robert Mackey

Landscaping from approximately 1982 to 1988. In total, Robert Mackey has been

in the landscaping business for approximately 17-18 years.

7. Robert Mackey also conducts his 1andscaping business out of the home he

shares with Maribel.

8. Both businesses share the same office in the Mackey home and share the

same office equipment, which includes: a desk, a phone (which doubles as their

home phone), a file cabinet, a copying machine and a fax machine.

9. Robert Mackey acts in more than an advisory capacity with Petitioner.

Robert Mackey also assisits Maribel Mackey with bid estimating and in the

supervision of field operations. Robert Mackey has also helped Maribel Mackey

Landscaping to obtain credit for the purchase of landscaping supplies at

nurseries and in the leasing of equipment used in the landscaping business.

10. Robert Mackey performed and/or assisted Maribel Mackey in putting

together a Proposal on the Kathcar Building. The original of this Proposal was

done on a form of Robert Mackey Landscaping and was signed by Robert Mackey.

The copy forwarded to the Department and admitted as an exhibit during the final

hearing had been altered to reflect Petitioner's name and the signature of

Maribel Mackey had been added to that of Robert.

11. Robert and Maribel Mackey maintain a line of credit in the amount of

$100,000. This line of credit is available to both of them for either personal

or business purposes and requires both signatures. This line of credit is

secured by a mortgage on the Mackeys' personal residence.

12. Maribel and Robert Mackey have an informal, oral agreement not to

compete with each other in the landscaping business. Maribel Mackey is prepared

to forfeit substantial profits on behalf of Petitioner by referring potential

landscaping jobs to her husband's company.

13. Maribel and Robert Mackey, as part of this agreement, have agreed that

Petitioner will concentrate exclusively on public or government projects, while

Robert Mackey Landscaping will concentrate exclusively on private projects.

Petitioner has, however, done private work, and Robert Mackey Landscaping has

done public work and currently has a bid in on another public project. In

addition, Maribel Mackey's business card states on its face that Petitioner

performs "residentia1 and interior" work.

14. Petitioner is currently certified as a Women's Business Enterprise

and/or a Minority Business Enterprise with the following governmental entities:

Broward County, The School Board of Broward County, and Palm Beach County.

Broward County, in its evaluation of Petitioner's application to be certified as

a WBE/MBE, did not visit Petitioner's place cf business to conduct an on-site

interview with Maribel Mackey. Broward County, when it certified Petitioner as

a WBE/MBE, did not know that Petitioner shared the same office space and

equipment with Robert Mackey Landscaping. Broward County also did not know that

Robert Mackey had his own landscaping business or that he had been in the

landscaping business for approximately 17-18 years.

CONCLUSIONS OF LAW

15. The Division of Administrative Hearings has jurisdiction over the

subject matter of and the parties to this proceeding. Section 120.57(1),

Florida Statutes (1990).

16. The Department administers a certifiation program which certifies

applicants as Disadvantaged Business Enterprises (hereinafter "DBEs") . DBEs

are accorded competitive advantages and preferential treatment because they are

eligible to participate in the Department of Transportation's set-aside program

under DBE contract goals. DBEs are small business concerns that are owned and

controlled by socially and economically disadvantaged individuals, as defined by

the Federal Surface Transportation and Uniform Relocation Assistance Act of

1987, 23 U.S.C. 101, et seq. The United States Department of Transportation

has promulgated 49 C.F.R., Part 231, to implement that Act and provide

guidelines for state "recipients" who receive federal highway funds. Chapter

14-78, Florida Administrative Code, implements that Act at the state level.

17. Petitioner must prove by a preponderance of the evidence that it is

entitled to certification as a DBE. Rule 14-78.005(7) sets forth the standards

for certification of a DBE. Rule 14-78.005(7)(c) requires that the DBE be an

"independent business entity" and that the ownership and control exercised by

the socially and economically disadvantaged individual must be "real,

substantial, and continuing . . . and go beyond mere pro forma ownership. . ."

18. Rule 14-78.005(7)(e) requires that the socially and economically

disadvantaged owner have "the power to direct or to 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" in these areas. This subsection further provides, in part, as

follows:

In determining whether the socially and

economically disadvantaged owners also

possess the power to 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 who are 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 socially and economically

disadvantaged individual, then the

enterprise, for purposes of this rule

chapter, is not controlled by socially and

economically disadvantaged individuals and

shall not be considered a DBE within the

meaning of this rule chapter.

19. Maribel and Robert Mackey are wife and husband, and Petitioner was

established approximately two years after they were married. Robert Mackey's

extensive background and experience in the landscaping business, when compared

to Maribel Mackey's total lack of experience and coupled with the timing of

their marriage and the commencement of Petitioner, clearly show that Maribel

Mackey did not and does not have the requisite background or experience to start

and conduct a landscaping business without the participation and assistance of

Robert Mackey. Robert Mackey assists Maribel Mackey in obtaining credit for the

purpose of purchasing materials at nurseries, which is perhaps the only area of

the business requiring substantial capital investment. Robert Mackey

participates in the operations of Petitioner by assisting Maribel Mackey with

estimating, the leasing of equipment and supervising field operations. The two

businesses share the Mackey home for their office space and share all their

office equipment. The Mackeys have a joint line of credit in the amount of

$100,000 for either personal or business use, which is secured by a mortgage on

their home, and which requires both signatures.

20. The Department's task in assessing DBEs pursuant to state and federal

rules includes analyzing those business relationships between the applicant and

a non-DBE business to determine whether or not they vary from normal industry

practice. More particularly, is the applicant enjoying some advantage from a

private source that other small businesses do not similarly enjoy. In the case

of Petitioner, it has been afforded opportunities and advantages unknown to

other minority businesses due solely to the fact that its owner is married to

someone who owns the identical type of business and has vast experience in the

field.

21. The Rule requires that the DBE be an "independent" business entity.

Petitioner is not an independent business entity pursuant to the rule. In

addition to sharing office space and equipment, the Mackeys have an informal,

oral agreement not to compete in the landscaping business. More specifically,

they have agreed that Petitioner will bid on public or governmental work, while

Robert Mackey Landscaping will continue bidding on private work. In support of

this agreement, Maribel Mackey is prepared to forego substantial profits on

behalf of Petitioner, in order to refer private contracts to her husband's

business. However, it is worth noting that both Petitioner and Robert Mackey

Landscaping have performed contracts in the other's field.

22. Rule 14-78.005(7)(c), Florida Administrative Code, provides, in part,

as follows:

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.

23. Maribel Mackey formed Petitioner approximately two years after her

marriage to Robert Mackey. Petitioner's application for DBE certification was

filed approximately one month after the creation of the business. It cannot be

seriously argued that it is normal industry practice for one company to refer

potentially lucrative contracts to another company for no consideration. The

weight of credible evidence is that Maribel Mackey set up a business identical

to that of her husband in order to enjoy the benefits of his experience,

technical knowledge, and contacts in the business and to take advantage of

public contracts as a DBE. While Petitioner and Robert Mackey Landscaping have

been legally established as two separate businesses, it is in form only and not

in substance. Common sense and the weight of the credible evidence require the

conclusion that Petitioner and Robert Mackey Landscaping are operating as one

business entity, and Petitioner has failed to prove that it qualifies as a DBE,

pursuant to the applicable rules.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered denying Petitioner Maribel Mackey

Landscaping certification as a Disadvantaged Business Enterprise.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 24th day of

January, 1991.

___________________________________

LINDA M. RIGOT

Hearing Officeer

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 24th day of January, 1991.

APPENDIX TO RECOMMENDED ORDER

DOAH CASE NO. 90-5830

1. Petitioner's proposed findings of fact numbered 1-3 and 5 have been

adopted either verbatim or in substance in this Recommended Order.

2. Petitioner's proposed findings of fact numbered 4 and 6-8 have been

rejected as not being supported by the weight of the credible evidence in this

cause.

3. Petitioner's proposed findings of fact numbered 9-11 have been rejected

as not constituting findings of fact but rather as constituting argument.

4. Respondent's proposed findings of fact numbered 1-15 have been adopted

either verbatim or in substance in this Recommended Order.

COPIES FURNISHED:

William Peter Martin

Assistant General Counsel

Department of Transportation

605 Suwannee Street, M.S. #58

Tallahassee, Florida 32399-0458

Maribel Mackey

5032 Southwest 121 Avenue

Cooper City, Florida 33330

Ben G. Watts, Secretary

Department of Transportation

605 Suwannee Street, M.S. #58

Tallahassee, Florida 32399-0458

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some allow a larger period within which to submit written

exceptions. You should contact the agency that will issue the final order in

this case concerning agency rules on the deadline for filing exceptions to this

Recommended Order. Any exceptions to this Recommended Order should be filed

with the agency that will issue the final order in this case.