Hamilton Downs Horsetrack, LLC. v. State of Florida, Department etc. , 226 So. 3d 1046 ( 2017 )

IN THE DISTRICT COURT OF APPEAL
FIRST DISTRICT, STATE OF FLORIDA
HAMILTON DOWNS
HORSETRACK, LLC, NOT FINAL UNTIL TIME EXPIRES TO
FILE MOTION FOR REHEARING AND
Appellant, DISPOSITION THEREOF IF FILED
v. CASE NO. 1D16-3876
STATE OF FLORIDA,
DEPARTMENT OF BUSINESS
AND PROFESSIONAL
REGULATION, DIVISION OF
PARI-MUTUEL WAGERING,
Appellee.
_____________________________/
Opinion filed September 5, 2017.
An appeal from a Final Order of the Department of Business and Professional
Regulation, Division of Pari-Mutuel Wagering.
Seann M. Frazier and Marc Ito of Parker, Hudson, Rainer & Dobbs, LLP,
Tallahassee, for Appellant.
Jason L. Maine, General Counsel, Dwight O. Slater, Chief Appellate Counsel, and
Chevonne T. Christian, Assistant General Counsel, Tallahassee, for Appellee.
JAY, J.
Hamilton Downs Horsetrack, LLC (“Hamilton Downs”), appeals a final order
by the Florida Department of Business and Professional Regulation, Division of
Pari-Mutuel Wagering (“the Division”), rejecting certain factual findings and legal
conclusions made by an administrative law judge (“the ALJ”) following a formal
hearing. Because the ALJ properly concluded that a violation did not occur as
alleged in the administrative complaint, and because the Division should be estopped
from prosecuting Hamilton Downs even if it did, we reverse.
I.
Hamilton Downs is a relatively new horse racing establishment located in
rural Hamilton County, just south of the Florida-Georgia line. Glenn Richards is
owner and managing member of Hamilton Downs. Richards has ambitious plans to
turn Hamilton Downs into a first-class pari-mutuel facility complete with a
cardroom, slot machines, an oval race track, starting gates, and grandstands. For
now, however, Hamilton Downs exists as an L-shaped dirt track approximately 110
yards in length, in an open field, with a shed for betting, a covered box on stilts, and
a barn.
Hamilton Downs holds a pari-mutuel permit to conduct quarter horse races.
On March 15, 2013, the Division issued an Operating Day License (“the operating
license”), authorizing Hamilton Downs to conduct quarter horse barrel match racing
as in years past. The operating license set forth Hamilton Downs’ 2014 racing
schedule, which consisted of twenty quarter horse performances over a four-day
period in mid-June, at a rate of four performances per day, with each performance
consisting of eight individual races, for a total of 160 races.
Approximately six months before the 2014 meet was set to occur, the rule
authorizing barrel match racing was declared invalid as an unadopted rule. See Fla.
Quarter Horse Track Ass’n v. Dep’t of Bus. & Prof’l Reg., 133 So. 3d 1118 (Fla. 1st
DCA 2014). The Division advised Richards that Hamilton Downs would not be
permitted to conduct barrel match racing as in years past, but that it could conduct
“flag-drop” racing instead. According to Richards, he asked for information on the
applicable rules, but the Division advised him there were no rules governing flag-
drop racing.
Three weeks before the 2014 meet was scheduled to occur, a second
unforeseen circumstance arose. The organization on which Hamilton Downs relied
for its horses and riders pulled out of the event. Resolving that the show must go on,
Richards made alternative arrangements. He rounded up college students for riders
and an elderly herd of untrained horses as their racing steeds. The 2014 meet went
off on schedule. Each race consisted of two horses. The ALJ described this scene
very well:
22. The races must be seen to be believed. The 14 events for
which video evidence was received show a series of races
involving -- as a rule -- tired, reluctant, skittish, or disinterested
horses moving at a slow pace down the dust-choked path. There
was no marked starting line or finish line. The horses were often
yards apart when [a] red rag-on-a-stick was waved [starting the
race]. With one exception (performance 2, race 7), the gait of the
“racing” horses ranged between a slow walk and a canter. Horses
often simply stood at the starting line before slowly plodding
down the track. In one instance, a horse actually backed up, until
a bystander took it by the lead, thereafter giving the horse a
congratulatory slap on the rump when it began to move in a
forward direction. [Louis] Haskell noted races in which riders
fell off of their horses, or in which a horse left the course. He
described numerous races, aptly, as noncompetitive because one
or both of the entrants walked, including one race (day 3, card 3,
race 5) in which the racing steed took 1 minute and 45 seconds
to cover the 110-yard course. The overall quality of the
videotaped races was about what one would expect of an entry-
level campers’ horse show held at the conclusion of a two-week
YMCA summer camp.
The second race of the meet was a matchup between two horses owned by the
same owner, Amie Peacock. This is what is known as a coupled entry. Where there
is a coupled entry in a two-horse race, there can be no meaningful betting because a
coupled entry is “considered a single betting interest for purposes of wagering.” Fla.
Admin. Code R. 61D-7.001(12). A bet placed on one horse is necessarily a bet
placed on both horses, so every betting patron wins.
After this race occurred, a thirty-minute meeting was held between Richards
and race officials to discuss how the race should be treated. Among those present
was Charles Taylor—an investigative specialist for the Division—whose job it was
to verify compliance with all rules and statutes at racing events. Also present was
Louis Haskell, who, at the time, was a state steward for the Division. As a state
steward, Haskell supervised compliance with state law and performed the
responsibility of deciding whether each race should be declared official or a no
contest.
During the meeting, Richards tried to ensure that the race was not subtracted
from the 160 races he was required to conduct, or if it was, that he could make up
the race on a different day. As a possible solution, Richards offered to rerun the race.
However, the evidence established that this was not a recognized option;
consequently, the proposal was roundly rejected.
Richards also offered to accept a no contest declaration from Haskell. Where
a no contest is called, it is possible for a licensee to obtain a replacement race by
requesting from the Division an amendment to the racing schedule. Richards was
familiar with this procedure and was prepared to make the request to ensure that he
performed all of his required races. Richards testified that he was told by Taylor and
Haskell 1 that “there’s nothing wrong with these. There’s no rules. Let’s go, let’s
continue on, let’s finish them.” Richards asked about other races as well. Each time,
he was told “[t]here are no rules . . . go ahead with it.” Ultimately, Richards’ offer
to accept a no contest was rejected, and Haskell declared the race official.
Months later, the Division filed an administrative complaint alleging, among
other things, that Hamilton Downs failed to operate all the races scheduled in the
1
In response to a question from the Division’s attorney, Richards testified that
“[y]our two state people, Chuck and LP, said there’s nothing wrong with these.
There’s no rules. Let’s go, let’s continue on, let’s finish them.” “Chuck” refers to
Charles Taylor, the Division’s investigative specialist. We think it is clear that “LP”
refers to Haskell—the Division’s race steward—inasmuch as Taylor and Haskell
were the only “state people” to whom Richards could have been referring.
operating license, in violation of section 550.01215(3), Florida Statutes, which
requires each permitholder to “operate all performances at the date and time
specified on its license.” In other words, the Division alleged that Hamilton Downs
failed to conduct all of the 160 races at the 2014 meet. Based upon Hamilton Downs’
request, the matter proceeded to a formal administrative hearing.
At the hearing, the Division’s theory of prosecution was two-fold. First, the
Division argued that the quality of the races at the 2014 meet was so bad that, under
the law, they did not constitute races at all. In his recommended order, the ALJ
concluded that this argument was without merit, and, on appeal, the Division does
not dispute this part of the ALJ’s conclusions.
Next, the Division contended that the second race should not qualify as a race
because it was not a pari-mutuel race on which betting could occur. The ALJ rejected
this argument too, concluding as follows:
[T]he Division’s efforts to cobble together various statutory and
regulatory definitions to create a standard by which coupled entry races
are to be nullified does not meet the requirements that violations of law
be limited to those pled, and that statutes authorizing penal relief be
strictly construed, with any ambiguity construed against the Division.
The ALJ further concluded that the Division should be estopped from
sanctioning Hamilton Downs for the alleged violation—even if the violation did
occur—and ultimately recommended that the Division enter a final order dismissing
the amended complaint.
The Division entered a final order in which it rejected and modified certain of
the ALJ’s factual findings and legal conclusions. The Division concluded that an
alleged violation occurred because the second race was not a pari-mutuel race and
that estoppel did not apply to the facts of the case. Consequently, it imposed a
$1,000.00 fine against Hamilton Downs. This appeal followed.
II.
Section 120.57(1)(l), Florida Statutes, provides that the agency may not reject
or modify an ALJ’s findings of fact unless the agency first determines from a review
of the entire record that the findings of fact were not based upon competent,
substantial evidence or that the proceedings on which the findings were based did
not comply with the essential requirements of law. “When competent substantial
evidence in the record supports the ALJ’s findings of fact, ‘the agency may not reject
them, modify them, substitute its findings, or make new findings.’” Walker v. Bd.
of Prof’l Eng’rs, 946 So. 2d 604, 605 (Fla. 1st DCA 2006) (quoting Gross v. Dep’t
of Health, 819 So. 2d 997, 1001 (Fla. 5th DCA 2002)). “Credibility of the witnesses
is a matter that is within the province of the [ALJ], as is the weight to be given the
evidence.” Stinson v. Winn, 938 So. 2d 554, 555 (Fla. 1st DCA 2006). “The [ALJ]
is entitled to rely on the testimony of a single witness even if that testimony
contradicts the testimony of a number of other witnesses.” Id.An agency “may reject or modify the conclusions of law over which it has
substantive jurisdiction.” § 120.57(1)(l), Fla. Stat. When doing so, “the agency must
state with particularity its reasons for rejecting or modifying such conclusion of law
. . . and must make a finding that its substituted conclusion of law . . . is as or more
reasonable than that which was rejected or modified.” Id. An appellate court reviews
an agency’s conclusions of law de novo and “will defer to the agency’s conclusions
of law unless they are clearly erroneous or contrary to law.” U.S. Blood Bank, Inc.
v. Agency for Workforce Innovation, 85 So. 3d 1139, 1142 (Fla. 3d DCA 2012).
“[I]n doing so, this court must give ‘great deference to the agency’s interpretation
of the statutory policy it is to administer . . . [and] be moved to intervene only by
clearly erroneous interpretations of a statute.’” Murciano v. State, 208 So. 3d 130,
134 (Fla. 3d DCA 2016) (quoting Bethesda Healthcare Sys., Inc. v. Agency for
Health Care Admin., 945 So. 2d 574, 576 (Fla. 4th DCA 2006)).
The Division erroneously rejected the ALJ’s conclusion that the Division
failed to prove the alleged violation. While the second race may not have constituted
a pari-mutuel race, Hamilton Downs was not charged with failing to conduct a pari-
mutuel race. Instead, it was charged with failing to conduct a race. Specifically, the
administrative complaint alleged that Hamilton Downs violated section
550.01215(3) by “failing to make 20 performances between June 18, 2014 and June
22, 2014 at a rate of four performances per day.” “‘Performance’ means a series of
events, races, or games performed consecutively under a single admission charge.”
§ 550.002(25), Fla. Stat. (emphasis added). “Race” is defined as a “contest for purse,
stakes or entry fees, on an approved course, and in the presence of duly appointed
racing officials.” Fla. Admin. Code. R. 61D-2.001(15).
Here, it is undisputed that the second race occurred on a licensed, approved
course. Furthermore, it is undisputed that the race occurred between two horses in
the presence of duly appointed racing officials. Finally, the evidence demonstrated
that the winner of each race received a purse of $100, and second place received a
purse of $50. Therefore, the second race satisfied the definition of a “race” for
purposes of determining whether Hamilton Downs committed the alleged violation.
As the ALJ rightly observed, violations must be limited to those alleged in the
pleadings. Cottrill v. Dep’t of Ins., 685 So. 2d 1371, 1372 (Fla. 1st DCA 1996)
(“Predicating disciplinary action against a licensee on conduct never alleged in an
administrative complaint or some comparable pleading violates the Administrative
Procedure Act.”).
Moreover, even if a violation occurred as alleged, the ALJ properly concluded
that the doctrine of equitable estoppel precluded prosecution of Hamilton Downs.
“The elements which must be present for application of estoppel are: ‘(1) a
representation as to a material fact that is contrary to a later-asserted position; (2)
reliance on that representation; and (3) a change in position detrimental to the party
claiming estoppel, caused by the representation and reliance thereon.’” Council
Bros., Inc. v. City of Tallahassee, 634 So. 2d 264, 266 (Fla. 1st DCA 1994)
(quoting Dep’t of Revenue v. Anderson, 403 So. 2d 397, 400 (Fla. 1981)). Generally,
estoppel may only be applied in cases of misrepresentations of fact, not
misstatements of law. Id. at 266. “Equitable estoppel will apply against a
governmental entity ‘only in rare instances and under exceptional
circumstances.’” Id. (quoting N. Am. Co. v. Green, 120 So. 2d 603, 610 (Fla. 1959)).
One seeking to invoke the doctrine of estoppel against the
government first must establish the usual elements of estoppel, and then
must demonstrate the existence of affirmative conduct by the
government which goes beyond mere negligence, must show that the
governmental conduct will cause serious injustice, and must show that
the application of estoppel will not unduly harm the public interest.
Council Bros., 634 So. 2d at 266 (citing Alachua Cty. v. Cheshire, 603 So. 2d 1334,
1337 (Fla. 1st DCA 1992)).
The ALJ framed the basic issue as “whether estoppel as to the coupled entry
race is warranted as a result of the effect of the 30-minute meeting held after the
second race, and the decision by Mr. Haskell to declare the race to be ‘official.’”
After discussing the content of the “lengthy conversation” that took place during the
meeting, the ALJ answered this question in the affirmative, finding that “[b]ased on
the foregoing, by declaring the race to be official, the Division represented to
Hamilton Downs that the race would be counted among those required under the
terms of its permit, a representation of material fact that is contrary to the Division’s
position in this proceeding.” Although this was labeled as a conclusion of law, it was
in reality a finding of fact.
We conclude that the ALJ’s factual finding that Richards was misled was
supported by competent, substantial evidence and, consequently, could not be
disturbed by the Division. The evidence reflects that, during this meeting, Richards
made every effort to satisfy race officials and ensure compliance with state law. He
proposed at least two solutions, one of which was a viable course of action that
would have enabled Hamilton Downs to obtain an additional, replacement race.
However, according to Richards, Taylor and Haskell assured him there was “nothing
wrong” with the race and that there were “no rules” governing flag-drop racing—a
statement consistent with what Richards previously had been told by the Division.
After the race was declared official, the participants moved forward with the next
race. Months later, the Division changed its position. On this evidence, the ALJ
could properly find that the Division made an initial representation that was contrary
to its subsequent position.
It does not matter that Richards’ testimony included hearsay statements by
Taylor and Haskell. The statements were made by officials employed by the
Division in the scope of their employment, meaning that the statements would be
admissible in a civil action. See § 90.803(18)(d), Fla. Stat. (providing that “a
statement by the party’s agent or servant concerning a matter within the scope of the
agency or employment thereof, made during the existence of the relationship” is not
inadmissible). Therefore, the statements were sufficient to support the ALJ’s
finding. See Harris v. Game & Fresh Water Fish Comm’n, 495 So. 2d 806, 808 (Fla.
1st DCA 1986) (“In administrative hearings, hearsay evidence may be used for the
purpose of supplementing or explaining other evidence, but it shall not be sufficient
in itself to support a finding unless it would be admissible over objection in civil
actions.”) (emphasis added).
We further conclude that Richards relied on the Division’s representation to
his detriment. Richards testified that he would have requested an additional race but
for Haskell and Taylor’s assurance that the second race counted and but for Haskell’s
declaration that the race was official. Such a holding does not harm the public
interest and avoids a serious injustice. The public trust is undermined when the
government punishes people for violations the government causes.
Accordingly, the final order is REVERSED, and the case is REMANDED for
adoption of the recommended order. Prysi v. Dep’t of Health, 823 So. 2d 823, 826
(Fla. 1st DCA 2002).
B.L. THOMAS, C.J., and WOLF, J., CONCUR.