PALM BEACH COUNTY SCHOOL BOARD v. MICHAEL R. BAKST, TRUSTEE IN BANKRUPTCY FOR EAGLE ARTS ACADEMY, INC.

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.

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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

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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

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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”

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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.

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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.

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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.

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CONNER and KLINGENSMITH, JJ., concur.

* * *

Not final until disposition of timely filed motion for rehearing.

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