Pinnacle Hous. Grp., LLC v. Fla. Hous. Fin. Corp., 3D17–1244

• Decision Date: 10 August 2017
• Docket Number: No. 3D17–1244,3D17–1244
• Citation: 239 So.3d 722
• Parties: PINNACLE HOUSING GROUP, LLC, et al., Petitioners, v. FLORIDA HOUSING FINANCE CORPORATION, Respondent.
• Court: Florida District Court of Appeals

239 So.3d 722

PINNACLE HOUSING GROUP, LLC, et al., Petitioners,

v.FLORIDA HOUSING FINANCE CORPORATION, Respondent.

No. 3D17–1244

District Court of Appeal of Florida, Third District.

Opinion filed August 10, 2017

Carlton Fields, and Peter D. Webster (Tallahassee); Alan Rosenthal, Natalie J. Carlos, and David L. Luck, for petitioners.

Ausley McMullen, Michael J. Glazer, and Erik M. Figlio, (Tallahassee); Marisa G. Button, Assistant General Counsel (Tallahassee), for respondent.

Before ROTHENBERG, C.J., and LOGUE and LUCK, JJ.

LOGUE, J.

Pinnacle Housing Group, LLC, PHG Builders, LLC, and their principals, Felix Braverman, David O. Deutch, Mitchell M. Friedman, Michael M. Friedman, and Louis Wolfson, III (the Companies and their Principals) seek review of a temporary order of suspension entered by the Florida Housing Finance Corporation (the Agency). The order suspends the ability of the Companies and their Principals to participate in the Agency's funding programs until entry of a final order in the Agency's administrative action charging the Companies and their Principals with misrepresentation and fraud. We deny the petition.

Facts

The Companies and their Principals are in the business of developing affordable housing by obtaining funding from government sources. The Agency, a corporation created by the State of Florida and subject to the Administrative Procedures Act, is in the business of providing such funding for affordable housing. The temporary order of suspension bars the Companies from receiving funding from the Agency.

The temporary order of suspension stems from the circumstances in which the Companies and their Principals created and used a related company, DAXC, LLC, in its contracts with the Agency. In March 2017, the United States Attorney for the Southern District of Florida filed an indictment against DAXC. The indictment charged that DAXC "did knowingly and willfully embezzle, steal, purloin, and convert to its own use" Agency money by submitting inflated construction estimates.

In February 2017, DAXC entered into a deferred prosecution agreement with the U.S. Attorney in which DAXC agreed to pay a fine of $1 million and forfeit $4,212,825. In the agreement, DAXC admitted it "was a shell construction subcontractor, which was set up to inflate the cost of four low-income housing contracts and obtain excess federal funds that ultimately went for the personal benefit of five individuals associated with DAXC and its affiliates."

Upon learning of these circumstances, the Agency conducted a meeting pursuant to Florida Administrative Code Rule 67–48.004(2)(a), which provides that applicants for funding to the Agency will be ineligible if "the Applicant or any Principal, Financial Beneficiary, or Affiliate of the Applicant has made a material misrepresentation or engaged in fraudulent actions in connection with any Application for a[n Agency] program." The Rule further provides:

Before any such determination can be final or effective, the Corporation must serve an administrative complaint that affords reasonable notice to the Applicant of the facts or conduct that warrant the intended action, specifies a proposed duration of ineligibility, and advises the Applicant of the opportunity to request a proceeding pursuant to Sections 120.569 and 120.57, F.S. Upon service of such complaint, all pending transactions under any program administered by the Corporation involving the Applicant, or any Principal, Financial Beneficiary or Affiliate of the Applicant shall be suspended until a final order is issued or the administrative complaint is dismissed.

Fla. Admin. Code R. 67–48.004(2)(b).

At the meeting, the Companies and their Principals appeared through David Deutch, Mitchell M. Friedman, and Louis Wolfson, III. Mr Deutch spoke at length. Mr. Deutch conceded the existence of the deferred prosecution agreement, but indicated he merely conceded to inflating costs—not stealing money. At the end of the meeting, the Agency entered the temporary order of suspension at issue and filed and served the required administrative complaint. In addition to contesting the administrative complaint, the Companies and their principals filed the instant petition for review.

Analysis

The Companies and their Principals seek review of the temporary order of suspension under section 120.68(1)(b), Florida Statutes, which provides that a "preliminary, procedural, or intermediate order of the agency or of an administrative law judge of the Division of Administrative Hearings is immediately reviewable if review of the final agency decision would not provide an adequate remedy."

The Companies and their Principals first argue that the temporary order of suspension is fundamentally flawed because the suspension includes five named projects already in the pipeline that the Agency Board expressly voted to exclude from the suspension. While the order was stayed and this matter was pending, the Agency requested that jurisdiction be relinquished so this issue could be addressed. We granted the motion and the Agency entered an amended temporary suspension order which removed from the suspension those five projects. The Companies and their Principals nevertheless argue that this change itself was irregular. We decline to review their complaint in this regard because the pending administrative procedure provides an adequate forum to address those concerns.

The Companies and their Principals next argue that Rule 67–48.004(2) is facially unconstitutional because it "provides no procedural safeguards." "A facial challenge to a legislative Act is ... the most difficult challenge to mount successfully, since the challenger must establish that no set of circumstances exist under which the Act would be valid." Fla. Dep't of Revenue v. DIRECTV, Inc., 215 So.3d 46, 50 (Fla. 2017) (quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987) ). In making their facial challenge, the Companies and their Principals fail to demonstrate that no set of circumstances exist under...