96-005557 Adnan Investment And Development, Inc. vs. Department Of Transportation Status: Closed Recommended Order on Wednesday, April 16, 1997.

Summary: Applicant is not entitled to Disadvantaged Business Enterprise (DBE) certification where proof is insufficient to establish that applicant's sole owner was socially and economically disadvantaged.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ADNAN INVESTMENT AND )

DEVELOPMENT, INC., )

)

Petitioner, )

)

vs. ) CASE N O. 96-5557

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

__________________________________ )

RECOMMENDED ORDER

Pursuant to notice, a Section 120.569/57(1) hearing was

conducted in this case on March 17, 1997, by video teleconference

(at sites in West Palm Beach and Tallahassee, Florida) before

Stuart M. Lerner, a duly designated Administrative Law Judge of

the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Adnan K. Alghita, President

Adnan Development and Investment, Inc.

Post Office Box 517

Jensen Beach, Florida 34958

For Respondent: Murray M. Wadsworth, Jr.

Assistant General Counsel

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

STATEMENT OF THE ISSUE

Whether Petitioner is entitled to certification as a

Disadvantaged Business Enterprise (DBE) pursuant to Section

339.0805, Florida Statutes, and Rule Chapter 14-78, Florida

Administrative Code?

PRELIMINARY STATEMENT

By letter addressed to Adnan Alghita, Petitioner’s

president, dated August 7, 1996, the Department of Transportation

(Department) advised Petitioner of its intent to deny

Petitioner’s application for Disadvantaged Business Enterprise

certification on the following grounds:

(1) It does not appear that you have

established your eligibility to participate

in the DBE program in that: (1) you, as the

qualifying owner of the firm, have not

established that you are a member of any of

the groups identified in Rule 14-78.002(18),

Florida Administrative Code (F.A.C.), that

are presumed to be socially and economically

disadvantaged, as required in Rule 14-

78.005(7)(b)1. F.A.C.; or, (2) you have not

sufficiently documented instances of your

social and economic disadvantaged status as

required by Rule 14-78.005(7)(b)3., F.A.C. .

. .

By letter dated August 23, 1996, Petitioner requested an

administrative hearing on the Department’s proposed action. On

November 21, 1996, the matter was referred to the Division of

Administrative Hearings for the assignment of an Administrative

Law Judge.

As noted above, the final hearing in this case was held on

March 17, 1997. Two witnesses testified at the hearing: Adnan

Alghita, testifying on behalf of Petitioner, and Howard Jemison,

the Department’s DBE Certification Manager, testifying on behalf

of the Department. In addition to the testimony of these two

witnesses, 18 exhibits (Respondent’s Exhibits 1 through 18) were

offered and received into evidence.

At the conclusion of the evidentiary portion of the hearing,

the undersigned, on the record, advised the parties of their

right to file proposed recommended orders and established a

deadline (20 days from the date of the Division of Administrative

Hearings’ receipt of the transcript of the hearing) for the

filing of such proposed recommended orders.

The transcript of the hearing was filed on March 25, 1997.

On April 11, 1997, the Department filed its proposed recommended

order, which the undersigned has carefully considered. To date,

Petitioner has not filed a proposed recommended order. 1

FINDINGS OF FACT

1. Adnan Alghita, a licensed general contractor in the

State of Florida, is the president and sole owner of Adnan

Investment and Development, Inc. (Adnan's).

2. Alghita is a United States citizen 2 of Iraqi origin.

3. He came to the United States from Iraq in 1969 and

settled in Atlanta, Georgia, where he attended Georgia Tech.

4. He graduated from Georgia Tech after only 15 months.

5. After graduation, Alghita started his own construction

company (Adnan's) in Atlanta.

6. For a number of years, Alghita was a very successful

businessman. His company evolved into a multi-million dollar

business.

7. He and his company suffered a serious setback, however,

when the lending institution he had been dealing with on a

regular basis terminated his line of credit and severed its

relationship with him. 3

8. In 1984, Alghita filed for Chapter 11 bankruptcy.

9. Hoping that a change in location would revive his

business, Alghita moved (both his residence and business) from

Atlanta to Florida in 1990. At the time, he had very little

capital.

10. The change has not produced the results Alghita had

hoped it would. Like other owners of businesses of marginal

financial status, he has continued to have difficulty obtaining

bonding and credit for his business and expanding its customer

base. 4

11. Recently, Alghita, on behalf of Adnan's, submitted a

bid in response to a request for bids to undertake a construction

project for the South Florida Water Management District (SFWMD).

Adnan's bid was the lowest priced bid submitted, but it was

rejected by SFWMD as non-responsive. There is no indication that

Alghita's national origin played any role in SFWMD's decision to

reject the bid.

12. On May 2, 1996, Alghita filed an application requesting

that the Department certify Adnan's as a Disadvantaged Business

Enterprise.

13. On the application, Alghita indicated that the

"approximate value of the firm" was $300,000.00 and that its

inventory (which included two homes) was worth $460,000.00.

14. In a follow-up letter that he wrote to the Department,

Alghita advised that in 1989, 1990, 1991, 1993, 1994, and 1995,

his "personal income" was "below the minimum income to file an

Income Tax return."

15. In further support of the application, Alghita

submitted to the Department a statement of credit denial, dated

June 7, 1994, that he had received from the First Bank of

Indiantown. The statement indicated that he had been denied a

"$5,940 Letter of Credit to Bankers Insurance Co." because of

past "bankruptcy" and "lack of collateral."

16. By letter dated August 7, 1996, the Department notified

Alghita of its intent to deny the application for DBE

certification that he had filed on behalf of Adnan's.

17. Such proposed action (which Alghita has challenged) is

the subject of the instant administrative proceeding.

CONCLUSIONS OF LAW

18. The Department is authorized to certify disadvantaged

business enterprises pursuant to Section 339.0805(1)(c), Florida

Statutes, which provides as follows:

The [D]epartment shall certify a socially and

economically disadvantaged business

enterprise, which certification shall be

valid for 12 months, or as prescribed by 49

C.F.R. part 23. The [D]epartment’s initial

application for certification for a socially

and economically disadvantaged business

enterprise shall require sufficient

information to determine eligibility as a

small business concern owned and controlled

by a socially and economically disadvantaged

individual. For recertification of a

disadvantaged business enterprise, the

[D]epartment may accept an affidavit, which

meets [D]epartment criteria as to form and

content, certifying that the business remains

qualified for certification in accordance

with program requirements. A firm which does

not fulfill the [D]epartment’s criteria for

certification shall not be considered a

disadvantaged business enterprise. An

applicant who is denied certification may not

reapply within 6 months after issuance of the

denial letter or the final order. The

application and financial information

required by this section are confidential and

exempt from s. 119.07(1).

19. The “[D]epartment’s criteria for certification” are

found in Rule Chapter 14-78, Florida Administrative Code.

20. Rule 14-78.002, Florida Administrative Code, provides

definitions of various words and phrases used in Rule Chapter 14-

78, Florida Administrative Code.

21. Subsection (6) of Rule 14-78.002, Florida

Administrative Code, provides, that "'Disadvantaged' means

socially and economically disadvantaged, whenever used throughout

this rule chapter."

22. Subsection (18) of Rule 14-78.002, Florida

Administrative Code, defines “socially and economically

disadvantaged individuals" as follows:

"Socially and Economically Disadvantaged

Individuals" means those individuals:

(a) Who are citizens of the United States

(or lawfully admitted permanent residents)

and who are women, Black Americans, Hispanic

Americans, Native Americans, Asian-Pacific

Americans, or Asian-Indian Americans, and any

other minorities or individuals found to be

disadvantaged by the Small Business

Administration pursuant to Section 8(a) of

the Small Business Act (15 USC 637) and

implementing regulations. Individuals in the

following groups are presumed to be

disadvantaged; however, this presumption is

rebuttable:

1. "Black Americans," which includes

persons having origins in any of the black

racial groups of Africa;

2. "Hispanic Americans," which includes

persons of Mexican, Puerto Rican, Cuban,

Central or South American or other Spanish or

Portuguese culture or origin, regardless of

race;

3. "Asian-Pacific Americans," which

includes persons whose origins are from

Japan, China, Taiwan, Korea, Vietnam, Laos,

Cambodia, the Philippines, Samoa, Guam, the

U.Sust Territories of the Pacific, and

the Northern Marianas;

4. "Asian-Indian Americans," which

includes persons whose origins are from

India, Pakistan, and Bangladesh; and

5. "Native Americans," which includes

persons who are Eskimos, Aleuts, Native

Hawaiians, or persons who have origins in any

of the American Indian tribes prior to 1835.

6. Women.

(b) Who are not members of the presumptive

groups as defined in 14-78.002, but meet the

criteria set out in 14-78.005.

23. Rule 14-78.005, Florida Administrative Code, sets forth

the “Standards for Certification of DBE’s.” It provides, in

pertinent part, as follows:

(7) [A] firm seeking certification and

recertification as a DBE shall meet the

following standards. A firm which does not

fulfill all of the Department’s criteria for

certification shall not be considered a

Disadvantaged Business Enterprise. . . .

(b) The firm must be at least 51 percent

owned by one or more disadvantaged

individuals, or, in the case of a publicly

owned business, at least 51 percent of the

stock must be owned by one or more

disadvantaged individuals; and the

management and daily business operations must

be controlled by one or more of the

disadvantaged individuals who own the firms.

1. Members of the groups named in Rule 14-

78.002(18) are presumed to be disadvantaged;

however, this presumption is rebuttable and

may be challenged pursuant to Rule 14-

78.0071. Membership in those groups shall be

established on the basis of the individual's

claim that he or she is a member of one of

those groups and is so regarded by that

particular community. [T]o be considered a

member of one of these groups, the individual

must have held himself or herself out to be a

member, have acted as a member of that group,

and be capable of being identified by persons

in the population at large as belonging to

the disadvantaged group. However, the

Department is not required to accept this

claim if it determines the claim invalid. . .

(3)[I]ndividuals who are not member of the

presumed groups but wish to be certified as

disadvantaged must meet the following

criteria:

a. Elements of Social Disadvantage. In

order to determine that an individual is

socially disadvantaged, the Department must

conclude that the individual meets the

following standards:

(I) The individual's social disadvantage

must stem from his or her color; national

origin; gender; physical disability; long-

term residence in an environment isolated

from the mainstream of American society; or

other similar cause beyond the individual's

control. The individual cannot establish

social disadvantage on the basis of factors

which are common to small business persons

who are not socially disadvantaged. For

example, because of their marginal financial

status, many small businesses have difficulty

obtaining credit through normal banking

channels. An individual predicating a social

disadvantage claim on denial of bank credit

to his or her firm would have to establish

that the denial was based on one or more of

the listed causes, or similar causes -- not

simply on the individual's or the firm's

marginal financial status.

(II) The individual must demonstrate that

he or she has personally suffered social

disadvantage, not merely claim membership in

a non-designated group which could be

considered socially disadvantaged. This can

be achieved, for example, by describing

specific instances of discrimination which

the individual has experienced, or by

recounting in some detail how his or her

development in the business world has been

thwarted by one or more of the listed causes

or similar causes. As a general rule, the

more specific an explanation of how one has

personally suffered social disadvantage, the

more persuasive it will be. In assessing

such facts, the Department should place

substantial weight on prior administrative or

judicial findings of discrimination

experienced by the individual. Such

findings, however, are not necessarily

conclusive evidence of an individual's social

disadvantage; nor are they a prerequisite

for establishing social disadvantage.

(III) The individual's social disadvantage

must be rooted in treatment which he or she

has experienced in American society, not in

other countries.

(IV) The individual's social disadvantage

must be chronic, longstanding, and

substantial, not fleeting or insignificant.

Typically, a number of incidents illustrating

a person's social disadvantage, occurring

over a substantial period of time, would be

necessary to make a successful claim.

Usually, only by demonstrating a series of

obstacles which have impeded one's progress

in the business world can an individual

demonstrate chronic, longstanding, and

substantial social disadvantage.

(V) The individual's social disadvantage

must have negatively affected his or her

entry into, and/or advancement in, the

business world. The closer the individual

can link social disadvantage to impairment of

business opportunities, the stronger the

case. For example, the Department should

place little weight on annoying incidents

experienced by an individual which have had

little or no impact on the person's career or

business development. On the other hand, the

Department should place greater weight on

concrete occurrences which have tangibly

disadvantaged an individual in the business

world.

b. Evidence of Social Disadvantage. Any

evidence relevant to the applicant's claim

will be considered. In addition to a

personal statement from the individual

claiming to be socially disadvantaged, such

evidence may include, but is not limited to:

third party statements; copies of

administrative or judicial findings of

discrimination; and other documentation in

support of matters discussed in the personal

statement. Special emphasis will be given to

the areas of education, employment, and

business history. However, the applicant may

present evidence relating to other matters as

well. Moreover, the attainment of a quality

education or job should not absolutely

disqualify the individual from being found

socially disadvantaged if sufficient other

evidence of social disadvantage is presented.

(I) Education. The Department shall

consider, as evidence of an individual's

social disadvantage: denial of equal access

to business or professional schools; denial

of equal access to curricula; exclusion from

social and professional association with

students and teachers; denial of educational

honors; social patterns or pressures which

have discouraged the individual from pursuing

a professional or business education; and

other similar factors.

(II) Employment. The Department shall

consider, as evidence of an individual's

social disadvantage, discrimination in

hiring; discrimination in promotions and

other aspects of professional advancement;

discrimination in pay and fringe benefits;

discrimination in other terms and conditions

of employment; retaliatory behavior by an

employer; social patterns or pressures which

have channelled the individual into non-

professional or non-business fields; and

other similar factors.

(III) Business History. The Department

shall consider, as evidence of an

individual's social disadvantage, unequal

access to credit or capital; acquisition of

credit under unfavorable circumstances;

discrimination in receipt (award and/or bid)

of government contracts; discrimination by

potential clients; exclusion from business

or professional organizations; and other

similar factors which have retarded the

individual's business development.

c. Economic Disadvantage. [T]he Department

shall always make a determination of social

disadvantage before proceeding to make a

determination of economic disadvantage. If

the Department determines that the individual

is not socially disadvantaged, it is not

necessary to make the economic disadvantage

determination.

(I) Elements of Economic Disadvantage. The

applicants must show that they are socially

disadvantaged individuals whose ability to

compete in the free enterprise system has

been impaired due to diminished capital and

credit opportunities, as compared to others

in the same or similar line of business and

competitive market area who are not socially

disadvantaged.

(II) Evidence of Economic Disadvantage. In

determining the degree of diminished credit

and capital opportunities of a socially

disadvantaged individual, consideration will

be given to both the disadvantaged individual

and the applicant concern with which he or

she is affiliated. The test is not absolute

deprivation, but rather disadvantage compared

to business owners who are not socially

disadvantaged individuals and firms owned by

such individuals. Applicants must provide

information about their economic situation

when they seek eligibility as disadvantaged

businesses. The Department shall attempt to

become as knowledgeable as possible about the

types of businesses with which the Department

deals, so that the Department can make a

reasonably informed comparison between an

applicant firm and other firms in the same

line of business. The Department is not

required to make a detailed, point-by-point,

accountant-like comparison of the businesses

involved. The Department is expected to make

a basic judgment about whether the applicant

firm and its socially disadvantaged owner(s)

are in a more difficult economic situation

than most firms (including established firms)

and owners who are not socially

disadvantaged.

24. In determining whether an applicant is eligible for

certification as a Disadvantaged Business Enterprise, the

Department must examine the certification application in light of

the standards set forth in Rule Chapter 14-78, Florida

Administrative Code. See State v. Jenkins , 469 So.2d 733, 734

(Fla. 1985)("agency rules and regulations, duly promulgated under

the authority of law, have the effect of law"); Buffa v.

Singletary , 652 So.2d 885, 886 (Fla. 1st DCA 1995)("[a]n agency

must comply with its own rules"); Decarion v. Martinez , 537

So.2d 1083, 1084 (Fla. 1st 1989)(“[u]ntil amended or abrogated,

an agency must honor its rules").

25. An applicant for certification as a Disadvantaged

Business Enterprise whose application is preliminarily denied by

the Department is entitled to notice of the grounds for the

proposed denial of its application and to an opportunity to have

a Section 120.569/57 hearing on the Department’s proposed action.

See Section 120.60(3), Fla. Stat.

26. At the Section 120.569/57 hearing, the applicant has

the burden of proving by a preponderance of the evidence that it

is entitled to the certification it has requested. See

Department of Banking and Finance v. Osborne Stern and Company ,

670 So.2d 932, 934 (Fla. 1996); Pershing Industries, Inc., v.

Department of Banking and Finance , 591 So.2d 991, 994 (Fla. 1st

DCA 1991); Cordes v. Department of Environmental Regulation , 582

So.2d 652, 654 (Fla. 1st DCA 1991); Department of Transportation

v. J.W.C. Co., 396 So.2d 778, 787 (Fla. 1st DCA 1981);

Department of Health and Rehabilitative Services v. Career

Service Commission , 289 So.2d 412, 414-15 (Fla. 4th DCA 1974).

27. In the instant case, Petitioner has not met its burden

of proof.

28. It does not appear that Petitioner is "at least 51

percent owned by one or more disadvantaged individuals," as

required by Rule 14-78.005(7)(b), Florida Administrative Code,

inasmuch as the record does not establish that Petitioner's sole

owner, Alghita, is a member of any group that, pursuant to Rule

14-78.002(18), Florida Administrative Code, is presumed to be

"socially and economically disadvantaged," nor does it establish

that Alghita meets the criteria set forth in Rule 14-

78.005(7)(b)3, Florida Administrative Code, that must be met by

"individuals who are not members of the[se] presumed groups but

wish to be [on behalf of their businesses] certified as

disadvantaged." While Alghita and his business have struggled

financially in recent years, the record evidence is insufficient

to support a finding that these financial difficulties have been

the result of any chronic, long-standing, and substantial

discrimination against him on the basis of his national origin.

29. Because the evidence does not establish that its sole

owner is a "socially and economically disadvantaged individual,"

as defined in Chapter 14-78, Florida Administrative Code,

Petitioner “does not fulfill the [D]epartment’s criteria for

certification . . . as a [D]isadvantaged [B]usiness [E]nterprise”

and its application for such certification should therefore be

denied.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is hereby

RECOMMENDED that the Department issue a final order denying

Petitioner’s application for certification as a Disadvantaged

Business Enterprise

DONE AND ENTERED IN Tallahassee, Leon County, Florida, this

16th day of April, 1997.

___________________________________

STUART M. LERNER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of April, 1997.

ENDNOTES

1 On March 25, 1997, Petitioner filed for the undersigned's

consideration documents that were neither offered, nor received,

into evidence at the final hearing. No finding of fact may be

based upon any of these documents inasmuch as they are outside

the evidentiary record in this case. See General Development

Utilities, Inc., v. Hawkins, 357 So.2d 408, 409 (Fla. 1978);

Section 120.57(1)(h), Fla. Stat.("[f]indings of fact . . . shall

be based exclusively on the evidence of record and on matters

officially recognized"). In any event, the outcome of this case

would be the same regardless of whether these documents were

considered as a part of the evidentiary record (upon which

findings of fact may be based).

2 Alghita enjoys dual citizenship inasmuch as he is still a

citizen of Iraq.

3 Alghita surmises th at such action was the product of his lack

of support for the Iraqi government.

4 There is insufficient proof to establish that he has

experienced such difficulty because he is of Iraqi origin.

COPIES FURNISHED :

Adnan K. Alghita, President

Adnan Development and Investment, Inc.

Post Office Box 517

Jensen Beach, Florida 34958

Murray M. Wadsworth, Jr.

Assistant General Counsel

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

Ben G. Watts, Secretary

Department of Transportation

c/o Diedre Grubbs

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

Pamela Leslie, General Counsel

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

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.

1 On March 25, 1997, Petitioner filed for the undersigned's

consideration documents that were neither offered, nor received,

into evidence at the final hearing. No finding of fact may be

based upon any of these documents inasmuch as they are outside

the evidentiary record in this case. See General Development

Utilities, Inc., v. Hawkins, 357 So.2d 408, 409 (Fla. 1978);

Section 120.57(1)(h), Fla. Stat.("[f]indings of fact . . . shall

be based exclusively on the evidence of record and on matters

officially recognized"). In any event, the outcome of this case

would be the same regardless of whether these documents were

considered as a part of the evidentiary record (upon which

findings of fact may be based).

2 Alghita enjoys dual citizenship inasmuch as he is still a

citizen of Iraq.

3 Alghita surmises that such action was the product of his lack of

support for the Iraqi government.

4 There is insufficient proof to establish that he has experienced

such difficulty because he is of Iraqi origin