96-003150F Pinellas Rebos Club, Inc. vs. Department Of Revenue Status: Closed DOAH Final Order on Tuesday, May 6, 1997.

Summary: Though petitioner is small business party and prevailed at hearing it did not show agency action was not substantially justified so as to support award of attorney fees

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PINELLAS REBOS CLUB, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-3150F

)

STATE OF FLORIDA, DEPARTMENT OF )

REVENUE, )

)

Respondent. )

_________________________________)

FINAL ORDER GRANTING RESPONDENT’S MOTION FOR

PARTIAL SUMMARY JUDGMENT AND DENYING PETITION FOR

ATTORNEY’S FEES AND COSTS

This matter came before the undersigned on Petitioner,

Pinellas Rebos Club’s, Petition for Attorney’s Fees and Costs.

This matter was initiated when the Department of Revenue sought

to revoke the Petitioner’s consumer’s certificate of exemption

issued in 1989, which permitted Petitioner to purchase, free of

tax, goods, rentals and services which would otherwise be subject

to Florida sales tax.

After a formal hearing on the issue convened under Section

120.57(1), Florida Statutes , the undersigned, on February 8,

1996, issued a Recommended Order to the effect that the Pinellas

Rebos Club’s application for reissue of the exemption certificate

be granted. Thereafter, on May 8, 1996, the Executive Director

of the Department of Revenue, by Final Order, directed the

approval of the application for exemption certificate, and that

the Club be issued a consumer certificate of exemption as a

charitable institution.

On July 2, 1996, the Pinellas Rebos Club timely filed its

Petition For Attorney’s Fees and Costs Pursuant to Section

57.111, Florida Statutes , claiming that the Department’s action

denying the application for renewal of the exemption certificate

“lacked a reasonable basis in law and fact”, and the Department

immediately requested an evidentiary hearing. On July 22, 1996,

the Department filed its Counter-Affidavit and its Response to

the Petition.

On August 6, 1996, the undersigned set the matter for an

evidentiary hearing to be held in St. Petersburg on September 26,

1996, but On August 23, 1996, by letter, Petitioner’s counsel

asked for a continuance. When, on September 5, 1996, counsel for

the Department objected to a continuance, a hearing was

subsequently held by telephone conference on the question of the

continuance and thereafter, on September 19, 1996, the

undersigned entered an order continuing the hearing until October

10, 1996.

On September 23, 1996, the parties filed an Agreed Motion to

Continue Hearing, and by Order dated September 25, 1996, the

undersigned entered an Order canceling the October 10, 1996

hearing and placing the matter in abeyance until the Proposed

Respondent’s Motion For Summary Order was filed and responded to.

On October 18, 1996, the Department filed its Motion for Partial

Summary Judgment. On November 1, 1996, the parties filed a Joint

Stipulation as to the timetable for filing pleadings relating to

the Motion for Partial Summary Final Judgment.

Thereafter, on November 14, 1996, Petitioner filed its

Response to the Department’s Motion For Partial Summary Final

Judgment and Counter Motion for Partial Summary Final Judgment.

On November 25, 1996, the Department filed its Response to

Petitioner’s Reply to Respondent’s Motion for Partial Summary

Judgment and its Reply to Petitioner’s Counter-motion for Partial

Summary Judgment. That same date, the Respondent also filed an

Affidavit in Support of its Motion for Partial Summary Judgment.

No further pleadings have been forthcoming from either party

since that date and the resolution of this case is made on the

record.

Section 57.111, Florida Statutes , also known as the Florida

Equal Access to Justice Act, allows a prevailing small business

party to seek reimbursement of attorney’s fees and costs from the

state in certain circumstances where it has been successful in

seeking review of or defending against government action. A

small business party is a “prevailing small business party” when,

inter alia , a final judgment or order has been entered in favor

of the small business party and has not been successfully

appealed.

Unless otherwise provided by law, an award of attorney’s

fees and costs will be made to a prevailing small business party

in an adjudicatory or administrative proceedings initiated by a

state agency unless the actions of the state agency action were

substantially justified when initiated. A proceeding is

“substantially justified” if it had a reasonable basis in law and

fact at the time it was initiated by a state agency.

In the instant case, Petitioner submitted its Petition for

Attorney’s Fees and Costs on the basis that it had prevailed in

the administrative proceedings before the undersigned, that a

final order had been entered in its favor and had not been

appealed, and, in substance, that the Department’s initial denial

of its application for re-issuance of its certificate of

exemption was not reasonably based in law and fact and was,

therefore, not substantially justified.

In proceedings under Section 57.111, Florida Statutes , the

Petitioner bears the initial burden of proving that it is a small

business party, that it prevailed, and that the underlying

adjudicatory process was initiated by the state agency. Once

this is done, the burden shifts to the agency to demonstrate its

actions were substantially justified. Gentele vs. Department of

Professional Regulation, Board of Optometry , 513 So.2d 672 (Fla.

1DCA 1987). The mere fact that a non-governmental party prevails

in an administrative hearing does not, by itself, mean that the

agency was not substantially justified in its initial position

which gave rise to the agency action.

Here, the Department of Revenue’s action denying

Petitioner’s application for renewal of its exempt status was the

underlying adjudicatory process which gave rise to the dispute,

and it is clear that at the previous administrative hearing the

Petitioner prevailed. It is undisputed that Petitioner is a

“small business party” as defined in Section 57.111(3)(d),

Florida Statutes .

The record shows, however, that the appropriate statute and

agency rules in effect at the time the initial decision was made

to deny the Petitioner’s exemption, as reasonably applied,

precluded Petitioner from receiving the exemption. Petitioner

sought an independent hearing under Chapter 120, at which it was

able to convince the Hearing Officer, through the presentation of

evidence not previously provided to the Department, that the

Department’s interpretation of the facts were incorrect. The

Recommended Order of the Hearing Officer thereafter convinced the

agency head to conclude that, in light of the matters presented

at the hearing, an award of an exemption to the Petitioner was

appropriate.

Section 212.084, Florida Statutes , authorizes the Department

to review all sales tax exemption certificates every five years

to ensure that the institution, organization or individual

possessing the certificate is actively engaged in an exempt

endeavor as stipulated in the statute. It is not bound in any

review cycle by a determination made regarding a specific entity

in a previous cycle.

Considering the evidence presented at the hearing, and

relating it to the matters before the agency at the time it made

its initial decision to not renew Petitioner’s exemption

certificate, it is impossible to conclude other than that at the

time that initial determination was made, it was substantially

justified. It is, therefore:

ORDERED THAT

The Department of Revenue’s Motion for Partial Summary

Judgment is granted, and Petitioner’s Petition for Award of

Attorney’s Fees and Costs is hereby DENIED.

DONE and ORDERED in Tallahassee, Florida this 6th day of,

May, 1997.

___________________________________

ARNOLD H. POLLOCK

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 6th day of May, 1997.

COPIES FURNISHED :

Carl A. Schuh, Esquire rd

256 3 Street North

St. Petersburg, Florida 33701

Olivia P. Klein, Esquire

Office of the Attorney General

Tax Section

The Capitol, PL-01

Tallahassee, Florida 32399-1050

Larry Fuchs

Executive Director

Department of Revenue

104 Carlton Building

Tallahassee, Florida 32399-0100

Linda Lettera

General Counsel

Department of Revenue

204 Carlton Building

Tallahassee, Florida 32399-0100

NOTICE OF RIGHT TO JUDICIAL REVIEW

A party who is adversely affected by this Final Order is entitled

to judicial review pursuant 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 appeal with the Clerk of the Division of Administrative

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 appeal must be filed within 30 days

of rendition of the order to be reviewed. Alternatively, a party

adversely affected by this Final Order may bring a civil action

filed in Circuit Court under Section 230.23(4)(m)5., Florida

Statutes , or bring a civil action in Federal Court.