Sch. Bd. of Palm Beach Cnty. v. Michael R. Bakst, Tr. in Bankr. for Eagle Arts Acad., Inc.

Decision Date15 April 2020
Docket NumberNo. 4D19-192,4D19-192
Citation294 So.3d 923
Parties SCHOOL BOARD OF PALM BEACH COUNTY, Appellant, v. Michael R. BAKST, TRUSTEE in Bankruptcy FOR EAGLE ARTS ACADEMY, INC., Appellee.
CourtFlorida District Court of Appeals

Sean Fahey of The School Board of Palm Beach County, Office of General Counsel, West Palm Beach, for appellant.

William J. Berger of Weiss, Handler & Cornwell, P.A., Boca Raton, for appellee.

Forst, J.

In this charter school termination proceeding, the Palm Beach County School Board appeals from the administrative law judge's ("ALJ's") final order awarding attorney's fees and costs to Eagle Arts Academy, Inc. ("Eagle")1 as the prevailing party.

The School Board tenders three reasons why we should reverse the attorney's fees and costs award: (1) the fee-shifting, prevailing party provision in the 2018 version of the charter school termination statute, which was to apply prospectively, could not be applied to this termination proceeding, which commenced and was partially litigated before the 2018 version of the statute took effect; (2) even if the 2018 statute applied, Eagle waived entitlement to attorney's fees and costs by failing to plead entitlement to fees and costs; and (3) even if the 2018 statute applied and Eagle did not waive entitlement to fees and costs, Eagle was not the "prevailing party" in the termination proceeding and thus not entitled to fees and costs under the statute.

For the reasons explained below, we conclude the first argument has merit. Because we find this issue dispositive, we need not address the School Board's second and third arguments.

Background

"Charter schools are nonsectarian public schools that operate under a performance contract (charter) with a public sponsor—either a district school board or a university." Sch. Bd. of Palm Beach Cty. v. Survivors Charter Sch., Inc. , 3 So. 3d 1220, 1228 (Fla. 2009) (citation omitted). Eagle formerly operated a charter school in Wellington, Florida, sponsored by the Palm Beach County School Board. The term of the charter school contract was five years, commencing July 1, 2014, and ending June 30, 2019.

Section 1002.33(8), Florida Statutes, governs the termination of a charter, and provides for two types of terminations: (1) the nonrenewal or termination of a charter within 90 days, and (2) immediate termination of a charter where the health, safety, or welfare of the students is threatened. Survivors Charter Sch., Inc. , 3 So. 3d at 1229 (citing 2005 version of the statute). The two types of terminations are treated in different subsections of 1002.33(8). See id.

"At least 90 days before renewing, nonrenewing, or terminating a charter, the sponsor shall notify the governing board of the school of the proposed action in writing. The notice shall state in reasonable detail the grounds for the proposed action and stipulate that the school's governing board may, within 14 calendar days after receiving the notice, request a hearing." § 1002.33(8)(b), Fla. Stat. (2017). On March 16, 2018, the School Board gave Eagle written notice of termination of the charter contract within 90 days pursuant to section 1002.33(8)(b), Florida Statutes (2017).

The School Board initiated the 90-day termination proceeding based on Eagle's alleged "[f]ailure to meet generally accepted standards of fiscal management." See § 1002.33(8)(a) 2., Fla. Stat. (2017). In its 90-day termination notice, the School Board detailed, among other things, Eagle's past due invoices, failure to pay rent for its school facility, declining enrollment, and failure to timely present a balanced budget. The School Board also informed Eagle of its right to request a hearing on the proposed termination.

Eagle filed a petition/request for a hearing with the School Board, on April 6, 2018. Under the version of the statute in effect at the time, the School Board had the option of conducting the hearing itself or to refer the matter to the Division of Administrative Hearings ("DOAH") for an administrative law judge ("ALJ") to conduct the hearing and enter a recommended order. § 1002.33(8)(b) 1. & 2., Fla. Stat. (2017). In either event, the hearing was to be held "within 60 days after receipt of the request for a hearing." See id.

The School Board referred Eagle's request for a hearing to DOAH on April 11, 2018, and the hearing was originally set for May 31 and June 1, 2018. After two continuances at Eagle's request, the hearing was ultimately reset for August 9 and 10, 2018.

Meanwhile, on July 1, 2018, the applicable termination provision of the charter school statute was amended in part. See Ch. 2018-6, § 9, Laws of Fla.; § 1002.33(8)(b), Fla. Stat. (2018). Instead of the sponsor having the option to conduct the hearing, it was to be conducted only by an ALJ, who was authorized to enter a final order. See id. The other key amendment—and the one at issue here—was the addition of a fee-shifting provision: "The [ALJ] shall award the prevailing party reasonable attorney fees and costs incurred during the administrative proceeding and any appeals." Id.

On August 1, 2018, while the 90-day termination proceeding was still pending, the School Board voted to immediately terminate Eagle's charter contract pursuant to section 1002.33(8)(c), Florida Statutes (2018). Under this statutory provision, immediate termination of a charter is authorized "if the sponsor sets forth in writing the particular facts and circumstances indicating that an immediate and serious danger to the health, safety, or welfare of the charter school's students exists." The primary grounds for immediate termination set forth in the immediate termination notice were Eagle's eviction from its school facility for nonpayment of rent, and failure to provide sufficient notice or proof that it had secured a new facility for the imminent start of school.

The School Board next filed a notice of dismissal of the 90-day termination proceeding as moot. Eagle filed a response in opposition to the notice of dismissal, and the ALJ held a hearing. During the hearing, Eagle advised that it "reserve[d] all its rights when a party takes a voluntary dismissal," but had no objection to the file being closed. Eagle then announced for the first time that it planned to move for attorney's fees "as the prevailing party." The School Board objected, arguing "nobody has prevailed." The ALJ subsequently entered an order granting the School Board's motion to dismiss the proceedings related to the no-longer pending 90-day termination. The ALJ reserved ruling on Eagle's entitlement to attorney's fees and costs and directed the parties to brief the issue.

In its subsequent filings, the School Board argued, among other things, that no statutory basis for fees and costs existed because the 2018 version of section 1002.33(8)(b), effective July 1, 2018, could not be retroactively applied in this case, which "arose in April 2018 when the School Board gave notice to [Eagle] that it was pursuing 90-day termination under the 2017 statute."

On September 17, 2018, the ALJ entered his order on Eagle's entitlement to attorney's fees and costs pursuant to the 2018 version of section 1002.33(8)(b). In his entitlement order, the ALJ concluded that, while the fee-shifting provision of the 2018 statute was not intended to be retroactive, the triggering event for Eagle's entitlement to fees was the entry of the ALJ's dismissal order, which occurred after the effective date of the 2018 statute. The ALJ further concluded that Eagle was the prevailing party in the proceeding by virtue of the School Board's voluntary dismissal of its administrative complaint.

The parties subsequently agreed to the amount of fees and costs, with the School Board maintaining its objection on the entitlement issue. The ALJ then entered his final order awarding attorney's fees and costs, "without prejudice to the [School Board's] right to appeal the issue of Eagle's entitlement ...." This appeal by the School Board followed.

Analysis

Prior to its 2018 amendment, section 1002.33(8)(b) did not contain a fee-shifting provision. See § 1002.33(8)(b), Fla. Stat. (2017). Effective July 1, 2018, the Legislature added the following fee-shifting provision: "The [ALJ] shall award the prevailing party reasonable attorney fees and costs incurred during the administrative proceeding and any appeals." § 1002.33(8)(b), Fla. Stat. (2018). Arguing the amendment was substantive and took effect after this case commenced, the School Board argues the amendment does not apply; thus, the ALJ erred by awarding attorney's fees and costs to Eagle under the 2018 version of the statute. We agree with the School Board and reverse.

Our review of this issue is de novo. See R.J. Reynolds Tobacco Co. v. Sheffield , 266 So. 3d 1230, 1232-33 (Fla. 5th DCA 2019) ("We apply the de novo standard to our review of the trial court's ruling on which version of the statute applied.").

"When the statutory language is clear and unambiguous and conveys a clear and definite meaning, there is no occasion for resorting to the rules of statutory interpretation and construction; the statute must be given its plain and obvious meaning." Id. at 1233 (citation and internal quotation marks omitted). "Likewise, a court cannot construe an unambiguous statute in a way which would extend, modify, or limit its express terms or its reasonable and obvious implications." Id. (citation, alteration and internal quotation marks omitted).

Regarding the application of statutory enactments or amendments, this court has reiterated:

As a general rule , procedural changes in the law are applied retroactively, while substantive changes are applied prospectively only . See Environmental Confederation of Southwest Florida, Inc. v. State , 886 So. 2d 1013, 1017 (Fla. 1st DCA 2004) (explaining that in the absence of clear legislative intent otherwise, the general rule is that procedural statutes apply retroactively while substantive statutes apply prospectively). The supreme
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