STATE DEPARTMENT OF INSURANCE v. FLORIDA BANKERS ASS'N, 1D99-1943.

• Decision Date: 17 May 2000
• Docket Number: No. 1D99-1943.,1D99-1943.
• Citation: 764 So.2d 660
• Parties: STATE of Florida, DEPARTMENT OF INSURANCE, Appellant/Cross-Appellee, v. FLORIDA BANKERS ASSOCIATION, Community Bankers of Florida, and Specialty Agents, Inc., Appellees/Cross-Appellant.
• Court: Florida District Court of Appeals

764 So.2d 660

STATE of Florida, DEPARTMENT OF INSURANCE, Appellant/Cross-Appellee, v. FLORIDA BANKERS ASSOCIATION, Community Bankers of Florida, and Specialty Agents, Inc., Appellees/Cross-Appellant.

No. 1D99-1943.

District Court of Appeal of Florida, First District.

May 17, 2000.

Michael H. Davidson, Florida Department of Insurance, Tallahassee, for Appellant/Cross-Appellee.

Virginia B. Townes of Akerman, Senterfitt & Eidson, P.A., Orlando, for Appellees Florida Bankers Association and Community Bankers Association.

Jed Berman of Infantino & Berman, Winter Park, for Appellee/Cross-Appellant Specialty Agents, Inc.

LAWRENCE, J.

The State of Florida, Department of Insurance (agency), appeals an administrative order awarding fees and costs after a successful challenge by various parties to proposed insurance rules; one party cross-appeals the denial of an attorney's fee. We reverse and remand the appeal; we affirm the cross-appeal.

The agency promulgated proposed rules attempting to establish parity between insurance agencies affiliated with financial institutions and unaffiliated agencies. The Florida Bankers Association and Community Bankers of Florida, represented by legal counsel (attorney-represented banks), and Specialty Agents, Incorporated, represented by a qualified non-attorney representative (non-attorney-represented party), successfully challenged the proposed rules; the agency did not appeal the administrative order finding the proposed rules invalid. The parties thereafter moved for attorneys' fees, and costs.

The administrative law judge below, based on a statute, awarded fees to the attorneys (up to the $15,000 limit), and costs to all, including $36,590.00 for the expert witness, Michael White, for a total of $66,882.83. The attorney fee request of the non-attorney qualified representative was denied. The judge, in order to meet statutory requirements for the awards, found merely that the "evidence fails to establish that the [agency] was substantially justified in promulgating the proposed rules"; "failed to establish the existence of a reasonable basis in law and fact" for the proposed rules; and "there are no special circumstances which make the award of fees and costs unjust." The agency appeals all the awards; the non-attorney-represented party appeals the denial of its motion for an attorney's fee.

THE APPEAL

Section 120.595(2), Florida Statutes (1999), provides:

Challenges to proposed agency rules pursuant to section 120.56(2).—If the court or administrative law judge declares a proposed rule or portion of a proposed rule invalid pursuant to s. 120.56(2), a judgment or order shall be rendered against the agency for reasonable costs and reasonable attorney's fees, unless the agency demonstrates that its actions were substantially justified or special circumstances exist which would make the award unjust. An agency's actions are "substantially justified" if there was a reasonable basis in law and fact at the time the actions were taken by the agency. If the agency prevails in the proceedings, the court or administrative law judge shall award reasonable costs and reasonable attorney's fees against a party if the court or administrative law judge determines that a party participated in the proceedings for an improper purpose as defined by paragraph (1)(e). No award of attorney's fees as provided by this subsection shall exceed $15,000.

(Emphasis added.) This court, interpreting a similar agency fee statute, tells us:

Once the party seeking fees under the statute proves it is a small business, as defined by section 57.111, and is the prevailing party, the burden shifts to the government agency to show that its action in initiating the proceeding was "substantially justified." "[I]t is the agency which must affirmatively raise and prove the exception." "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 commenting upon the analogous Federal Equal Access to Justice Act, the United States Supreme Court found "substantially justified" to mean:

"justified in substance or in the main"—that is, justified to a degree that could satisfy a reasonable person. That is no difference from the "reasonable basis both in law and fact" formulation adopted by ... the vast majority of other Courts of Appeals that have addressed this issue.... To be "substantially justified" means, of course, more than merely undeserving of sanctions for frivolousness; that is assuredly not the standard for Government litigation of which a reasonable person would approve.

Accordingly, in terms of Florida law, the "substantially justified" standard falls somewhere between the no justiciable

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