Fla. Prepaid Coll. Bd. v. Intuition Coll. Sav. Solutions, LLC

• Citation: 330 So.3d 93
• Decision Date: 13 October 2021
• Docket Number: No. 1D20-3081,1D20-3081
• Parties: FLORIDA PREPAID COLLEGE BOARD, Appellant, v. INTUITION COLLEGE SAVINGS SOLUTIONS, LLC, Appellee.
• Court: Court of Appeal of Florida (US)

330 So.3d 93

FLORIDA PREPAID COLLEGE BOARD, Appellant,

v.INTUITION COLLEGE SAVINGS SOLUTIONS, LLC, Appellee.

No. 1D20-3081

District Court of Appeal of Florida, First District.

October 13, 2021

Rehearing Denied November 12, 2021

Andy V. Bardos, George T. Levesque, and Ashley Lukis of GrayRobinson, P.A., Tallahassee; Jason A. Zimmerman of GrayRobinson, P.A., Orlando, for Appellant.

J. Stephen Menton and Tana D. Storey of Rutledge Ecenia, P.A., Tallahassee, for Appellee.

Lewis, J.

The Florida Prepaid College Board appeals a final order from the Division of Administrative Hearings ("DOAH") declaring Florida Administrative Code Rules 19B-14.001, 19B-14.002, and 19B-14.003 an invalid exercise of delegated legislative authority. For the reasons that follow, we agree with the Board that the Administrative Law Judge ("ALJ") erred in finding the rules invalid.

BACKGROUND

The Board and Appellee, Intuition College Savings Solutions, LLC, have entered into a series of contracts over the past twenty-five years, most recently in July 2019, pursuant to which Intuition is to provide customer service and records administration services to the Board. The parties’ contract provides that "[t]he sole and exclusive manner of resolution of all claims, disputes or controversies related to or arising under or from this Contract shall be pursuant to Rules 19B-14.001, 19B-14.002, 19B-14.003, Florida Administrative Code, as amended from time to time." The possibility of an upcoming contract dispute involving $700,000 prompted Intuition to file a Petition to Determine the Invalidity of Florida Administrative Code Rules 19B-14.001, 19B-14.002, and 19B-14.003, in which it argued that the rules are an invalid exercise of delegated legislative authority under sections 120.52(8)(b)-(e), Florida Statutes (2020). The ALJ agreed and entered a final order declaring that each rule is an invalid exercise of delegated legislative authority. The ALJ specifically concluded that the Board exceeded its grant of rulemaking authority, that the rules enlarge, modify, and/or contravene the law implemented, and that the rules are arbitrary and capricious. This appeal followed.

ANALYSIS

We review the ALJ's findings of fact for competent, substantial evidence, but we review her conclusions of law and statutory interpretations de novo . MB Doral, LLC v. Dep't of Bus. & Prof'l Regulation, Div. of Alcoholic Beverages & Tobacco , 295 So. 3d 850, 853 (Fla. 1st DCA 2020) ; see also § 120.68(7)(b), (d), (10), Fla. Stat. (2020). "Whether an agency exceeded its rulemaking authority or enlarged the specific provisions of law implemented is reviewed de novo ." MB Doral, LLC , 295 So. 3d at 853 (noting that "[w]ith the passage of article V, section 21 of the Florida Constitution, the previously afforded deference to the agency's interpretation of the statutes it implements has been abolished").

The Board and the Challenged Rules

The Board was established by section 1009.971, Florida Statutes, to administer the Stanley G. Tate Florida Prepaid College Program and the Florida College Savings Program set forth in sections 1009.98 and 1009.981, Florida Statutes. §§ 1009.971(1), 1009.97(3)(d), (n), Fla. Stat. (2020). The Board was created "as a body corporate" that "shall perform essential governmental functions as provided in ss. 1009.97-1009.988" and "shall independently exercise the powers and duties specified in ss. 1009.97-1009.988." § 1009.971(1), Fla. Stat. "The board shall have the powers and duties necessary or proper to carry out the provisions of ss. 1009.97-1009.988, including, but not limited to, the power and duty to" sue and be sued, solicit proposals and contract, "[e]stablish other policies, procedures, and criteria to implement and administer the provisions of ss. 1009.97-1009.988," and "[a]dopt procedures to govern contract dispute proceedings between the board and its vendors." § 1009.971(4)(c), (l ), (w), (x), (y), (5), Fla. Stat. In 1996, the Board adopted rules 19B-14.001, 19B-14.002, and 19B-14.003, which cite sections 1009.971(1), (4), and (6) as the authority and section 1009.971 as the law implemented. Fla. Admin. Code R. 19B-14.001, 19B-14.002, 19B-14.003.

Rule 19B-14.001 defines the scope of the rules and provides in relevant part that "[t]hese rules shall apply to the resolution of all claims, disputes or controversies related to or arising from contracts, including any extensions of contracts, entered by the [Board]" and "shall constitute the sole procedure for the resolution of all claims under all such contracts." Fla. Admin. Code R. 19B-14.001.

Rule 19B-14.002 governs the initiation of proceedings related to contracts with the Board and states:

(1) Any person or firm that has entered into a contract with the Board and has been adversely affected by a decision of the Board or its employees concerning such contract shall file a written petition to contest the decision with the Board within 21 days of the date of the receipt by such person or firm of the decision. The notice of the decision shall be provided in writing to the person or firm by the Executive Director. The date of receipt of the notice shall be either the date on which the notice is received by the person or firm if the notice is sent by registered mail or by other means of delivery which results in a receipt for delivery or the date of the decision plus five days if the notice is sent by regular mail. Any person or firm who receives such written notice of the decision and who fails to request a hearing within twenty-one days, shall have waived his right subsequently to request a hearing on such matters.

(2) The petition shall include the following:

(a) The name and business address of the person or firm which claims to be adversely affected by a decision of the Board or its employees;

(b) A concise statement of the ultimate facts upon which the claim arose;

(c) The date and subject of the contract under which the claim arose;

(d) A statement of all disputed issues of material fact upon which the claim is based or, if there are none, the petition shall so indicate; (e) A concise statement which explains how the substantial interests of the person or firm are affected by the decision of the Board or the Board's employees;

(f) A concise statement of the provisions of the contract together with any federal, state and local laws, ordinances or code requirements or customary practices and usages in the industry asserted to be applicable to the questions presented by the claim;

(g) The demand for relief sought by the claimant;

(h) The date of the occurrence of the event or events which gave rise to the claim and the date and manner of the Contractor's compliance with the contract; and

(i) Any other material information the person or firm contends is material to its claim.

(3) The written petition shall be printed, typewritten or otherwise duplicated in legible form. The petition shall include copies of all documents which support the claim.

Fla. Admin. Code R. 19B-14.002.

Finally, rule 19B-14.003 governs the resolution of claims and provides in part:

(1) Upon receipt of a formal written petition, the Executive Director shall attempt to resolve the matters that are the subject of the petition by mutual agreement within fifteen (15) days, excluding Saturdays, Sundays, and legal holidays.

(2) If the petition is not resolved by mutual agreement within fifteen (15) days, excluding Saturdays, Sundays and legal holidays, the Executive Director shall deliver, within forty-five (45) days from the date such petition was filed, to the person or firm that filed the petition a determination that indicates the Board's written response to the claims or [sic] such person or firm.

(3) Unless the person or firm who filed the petition agrees to the determination of the Board and a consent order adopting the determination is entered within thirty (30) days from the receipt by the person or firm of the Board's determination, the Executive Director, if no disputed issues of material fact are involved, shall designate a hearing officer who shall conduct an informal proceeding pursuant to Section 120.57(2), F.S., and applicable Board rules. The hearing officer designated by the Executive Director shall be either a person who is a member in good standing of the Florida Bar or a person knowledgeable by virtue of education or practical experience with the subject matter of similar contracts involving state agencies.

(4) If there is a disputed issue of material fact, the Executive Director shall refer the petition to the Division of Administrative Hearings of the Department of Management Services for proceedings under Section 120.57(1), F.S.

(5) Once the Executive Director has referred the dispute to a hearing officer pursuant to subsection (3) or (4), no further information or amendment of the claims shall be permitted.

(6) The statements, facts, documents and materials contained in the petition filed pursuant to Rule 19B-14.002, F.A.C., or which are submitted to and received by the Executive Director prior to the determination made pursuant to subsection 19B-14.003(2), F.A.C., shall constitute the entire factual record submitted by a person or firm on which a claim against the Board may be sustained in any hearing under this Rule. A person or firm making a claim against the Board shall not be allowed to submit to a hearing officer any statements, facts, documents or materials to support any claim against the Board which were not submitted to the Executive Director by the person or firm making the claim prior to the Executive Director's determination pursuant to subsection 19B-14.003(2), F.A.C. The Board may submit statements, facts, documents or materials in response to the factual record submitted by a person or firm making a claim against the Board or to sustain the decision of the Executive Director which was made pursuant to subsection 19B-14.003(2), F.A.C.

Fla. Admin. Code R. 19B-14.003. The parties stipulated below that no...