Court Opinion

ID: 4525462
Source: CourtListenerOpinion
Date Created: 2020-04-15 15:02:59.173333+00
Date Added: 2024-06-11T12:14:48.928532
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                              FOURTH DISTRICT

              SCHOOL BOARD OF PALM BEACH COUNTY,
                           Appellant,

                                      v.

     MICHAEL R. BAKST, Trustee in Bankruptcy for EAGLE ARTS
                       ACADEMY, INC.,
                           Appellee.

                               No. 4D19-192

                               [April 15, 2020]

   Appeal from the State of Florida, Division of Administrative Hearings;
L.T. Case No. 18-1883.

  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

1  By order dated April 25, 2019, Michael R. Bakst, Trustee in Bankruptcy for
Eagle, was substituted for Eagle as appellee.
“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.

                                     2
   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

                                     3
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. 4th DCA 2019) (“We apply the
de novo standard to our review of the trial court’s ruling on which version

                                      4
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 court has held that “rights to
      attorney’s fees granted by statute are substantive rather than
      procedural.” Moser v. Barron Chase Sec., Inc., 783 So. 2d 231,
      236 (Fla. 2001), citing with approval, U.S. Sec. Ins. Co. v.
      Cahuasqui, 760 So. 2d 1101, 1107 (Fla. 3d DCA 2000); see
      also Timmons v. Combs, 608 So. 2d 1, 2–3 (Fla. 1992) (“it is
      clear that the circumstances under which a party is entitled
      to costs and attorney’s fees is substantive”), and Leapai v.
      Milton, 595 So. 2d 12 (Fla. 1992).

Hampton v. Cale of Ft. Myers, Inc., 964 So. 2d 822, 824–25 (Fla. 4th DCA
2007) (quoting with emphasis Walker v. Cash Register Auto Ins. of Leon
Cty., Inc., 946 So. 2d 66, 71 (Fla. 1st DCA 2006)); see also Bionetics Corp.
v. Kenniasty, 69 So. 3d 943, 948 (Fla. 2011) (“Substantive statutes are
presumed to apply prospectively absent clear legislative intent to the
contrary.”).

    Here, the Legislature did not express a clear intent that the amendment
to section 1002.33(8)(b) apply retroactively. Thus, the ALJ correctly agreed
with the School Board that the fee-shifting provision in section
1002.33(8)(b) was not intended to, and should not be, applied
retroactively. However, the ALJ concluded that his application of the 2018
amendment in this case was prospective because the “controlling moment”

                                     5
for fee entitlement was the “order dismissing complaint”—which occurred
after the effective date of the amended statute. As the ALJ put it: “[F]rom
the vantage point of the statute’s effective date, where Eagle’s victory has
yet to happen, the statute’s operation is prospective in nature.” 2

   The School Board argues the ALJ did retroactively apply the 2018
amendment, and did so erroneously, because the case commenced
months before the amendment took effect. The School Board further
argues, as it did below, that the ALJ should have applied Young v.
Altenhaus, 472 So. 2d 1152 (Fla. 1985), by analogy, and declined to impose
a new, unexpected obligation on the parties that did not exist when the
case commenced.

   In Young, the plaintiff suffered injuries from a malpractice incident that
occurred in 1979. The Court was asked whether a new statute, “which
authorizes the trial court to award a reasonable attorney’s fee to the
prevailing party in a malpractice action,” applied to a cause of action that
accrued prior to the statute’s effective date. 472 So. 2d at 1153. First, the
Court determined that “a statutory requirement for the non-prevailing
party to pay attorney fees constitutes ‘a new obligation or duty,’ and is
therefore substantive in nature.” Id. at 1154 (citation omitted). The Young
Court did not apply the statute retroactively because the plaintiff’s right to
enforce his cause of action for malpractice vested in 1979, prior to the
statute’s effective date. When the cause of action “accrued,” the Court
explained, “neither party was statutorily responsible for the opposing
party’s attorney’s fee nor entitled to such an award.” Id.

    Relying on Young by analogy, the School Board argued “[t]he cause of
action in the instant case arose in April 2018 when the School District
gave notice to Eagle . . . that it was pursuing 90-day termination under
the 2017 statute.”3 The ALJ rejected this argument, reasoning that Young
did not apply because the School Board had no “cause of action” against
Eagle like the plaintiff had against the defendant in Young; rather, this
termination proceeding was an “agency enforcement action whose purpose
is . . . to revoke a license.” The ALJ concluded: “The upshot is that,

2  As we noted earlier, we need not and do not address the ALJ’s determination
that Eagle was the “prevailing party” in the proceeding.
3 The School Board actually notified Eagle on March 16, 2018 that it was

pursuing termination, and Eagle requested a hearing on April 6, 2018. The case
was then referred to DOAH on April 11, 2018. In any event, the ALJ incorrectly
stated in his order on entitlement to fees that “[t]he [School Board] has not
identified a date upon which the controlling moment supposedly fell.” The School
Board clearly identified the commencement of the case as the operative date.

                                       6
because the [School Board] does not have a cause of action against Eagle
under section 1002.33(8), the controlling moment here simply cannot have
been, as in [Young], the accrual of the underlying cause of action, to which
the right to recover fees might be subordinate.”

    Eagle argues the ALJ correctly determined that he was applying the
statute prospectively, and recites the ALJ’s reasoning for rejecting Young,
almost verbatim. However, the ALJ rejected Young’s application to this
case simply because this was an administrative (versus a civil) proceeding,
citing no authority which compels such a conclusion. 4 Furthermore, the
ALJ relied on cases interpreting statutes having different wording and
requirements and therefore are not dispositive of the issue before us.

   For example, the ALJ cited Gaston v. Department of Revenue, 742 So.
2d 517 (Fla. 1st DCA 1999), to support his conclusion that entry of the
dismissal order was the “controlling moment” in the case for purposes of
the retroactivity analysis. Unlike in this case, however, the statutory
amendment in Gaston expressly stated that it “applies to future and
pending cases.” 742 So. 2d at 520. Moreover, the court held that the 1999
amendment did not apply to the case before it because the final order in
the case had issued in 1998. Id. The court stated in relevant part:
“Gaston’s right to attorney fees vested in September 1998, when [the
agency] issued its final order . . . . Because the case was not pending
before [the agency] on the effective date of the 1999 amendment, we
conclude that the amendment is not applicable.” Id. Gaston is therefore
inapposite.

    The cases cited by the parties which concern statutes governing offers
of judgment and offers of settlement are also distinguishable. See Leapai
v. Milton, 595 So. 2d 12, 15 (Fla. 1992) (finding offer of settlement statute
was “not applied retroactively since the right to recover attorney fees
attaches not to the cause of action, but to the unreasonable rejection of
an offer of settlement,” i.e., if the statute was adopted before the rejection
of the offer, it was applicable to the rejection of the offer); accord Buchanan
v. Allstate Ins. Co., 629 So. 2d 991, 992-93 (Fla. 1st DCA 1993); see also
Hemmerle v. Bramalea, Inc., 547 So. 2d 203, 204 (Fla. 4th DCA 1989) (“The
question . . . is: What event triggers the remedy provided by the statute?
We do not agree . . . that the triggering event is accrual of the cause of
action. Neither do we think that it is the commencement of the litigation.
Rather, the operative event, the only event crucial to operation of the

4  We note that, while a charter school termination proceeding is an
administrative proceeding, it is still an adjudicative proceeding, presided over by
an administrative law judge.

                                        7
statute, is the making of an offer of settlement.”).

   The offer of judgment statute “clearly authorizes attorney fees for only
those fees incurred after the date the offer was served upon the rejecting
party, not from the date the offering party’s counsel agreed to undertake
the representation. § 768.79(6)(a), (b), Fla. Stat.” Sarkis v. Allstate Ins.
Co., 863 So. 2d 210, 224 (Fla. 2003) (Wells, J., concurring). Here, in
contrast, the statute authorizes fees incurred from the commencement of
the litigation. Again, the statute provides: “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) (emphasis added). This was a substantive change in the law and
therefore did not apply to proceedings commenced before its effective date.
Accordingly, we hold that its application in this case was an improper
retroactive application.

    We also agree with the School Board that treating the commencement
of the case as the operative date makes the most sense, as that is the point
where both parties can decide whether and how to proceed if potential
liability exists for attorney’s fees and costs. Cf. Fla. Patient’s Compensation
Fund v. Rowe, 472 So. 2d 1145, 1149 (Fla. 1985) (“The statute [which
provided attorney’s fees for the prevailing party in medical malpractice
cases] may encourage an initiating party to consider carefully the
likelihood of success before bringing an action, and similarly encourage a
defendant to evaluate the same factor in determining how to proceed once
an action is filed.”). The sponsoring school board must make the initial
choice to notice a charter school for termination, after which the charter
school must evaluate the sponsor’s reasons for termination and decide
whether to contest the termination. § 1002.33(8)(b), Fla. Stat. (2018). The
presence of a prevailing party provision informs these decisions.

                                 Conclusion

    “Elementary considerations of fairness dictate that individuals should
have an opportunity to know what the law is and to conform their conduct
accordingly; settled expectations should not be lightly disrupted.”
Landgraf v. USI Film Products, 511 U.S. 244, 265 (1994). The 2018
amendment created a new obligation that was not required by the version
of the statute in effect when the School Board commenced the 90-day
termination proceeding. Indeed, the parties had been litigating the
termination proceeding for several months when the amendment took
effect. Accordingly, the ALJ’s application of the 2018 statute was error,
and the award of attorney’s fees and costs to Eagle is reversed.

                                      8
CONNER and KLINGENSMITH, JJ., concur.

                         *        *       *

  Not final until disposition of timely filed motion for rehearing.

                                  9