Agenda 10/28/2014 Item #10B10/28/2014 103.
EXECUTIVE SUMMARY
Recommendation that the Board of County Commissioners direct staff to prepare an
extension to the bank services agreement with 5/3 Bank to allow the county to re- solicit the
county's bank services contract under the Board of County Commissioners, and to
recognize that the bank services contract with First Florida Integrity is void since it was
procured illegally. 5/3 Bank notified the County Manager ahead of the 9/23/14 Board
meeting that it agreed to a month -month extension which information was placed on the
record by Commissioner Hiller at the 9/23/14 board meeting. Contrary to the County
Attorney's statement, no extenuating circumstances existed to justify waiving the County's
Purchasing ordinance and procurement irregularities committed by the Clerk of Courts in
his solicitation of the banking services contract. Further, that the public record reflects
that the Clerk of Courts allowed First Florida Integrity Bank to modify its solicitation
response after all bank responses were a matter of public record and the candidate banks
had been interviewed, so as to make First Florida Integrity Bank the lowest net cost bank, a
fact known to and ignored by the County Attorney. No other bank was allowed to modify
its' response. That additionally, First Florida Integrity Bank provided a non - conforming
response in that it did not have a trust company, a requirement to custody the county's
securities; and instead, First Florida Integrity Bank intended to custody the county
securities with a broker - dealer; that no custody agreement with the third party custodial
provider was submitted as required by the solicitation; that the County Attorney had not
even considered this material deficiency in his review of the First Florida Integrity Bank
contract presented by the Clerk and approved by the Board on 9/23/14. That all these facts
were known by Commissioners Henning, Nance and Fiala before their vote in favor of First
Florida Integrity Bank on 9/23/14 since the evidence was in the back up material provided
by the Clerk, as attachments to his agenda items. For these and other reasons already
noted on the public record, 513 Bank, Wells Fargo and Sun Trust, which competed against
First Florida Integrity Bank, have been irreparably harmed by the sham procurement of
banking services by the Board of County Commissioners and the Clerk of Courts.
OBJECTIVE: That the Board of County Commissioners recognizes that the Clerk of Courts
illegally selected First Florida Integrity as the county's bank services provider and that it redirect
the County Manager re- solicit the contract to cure the harm caused.
CONSIDERATIONS: At the 9/23/14 Board meeting, the County Attorney incorrectly advised
the Board that it could proceed with the ratification of the Clerk's contract with First Florida
Integrity Bank, waiving the County's Purchasing Ordinance and the irregularities committed by
the Clerk of Courts in selecting First Florida Integrity Bank as the contract award winner. 5/3
Bank, on 9/22/14, in response to the County Manager's request for a month -month extension,
stated they would be willing to go forward with such an extension as the sole provider until a
new bank was selected pursuant to a new county solicitation. See Ochs letter and e -mails
attached. The 5/3 Bank response was placed on the record ahead of the vote by Commissioner
Hiller at the 9/23/14 board meeting. The County Attorney ignored this and other facts in
evidence. Additionally, material irregularities in the solicitation by the Clerk were intentionally
ignored by the three commissioners, Henning, Nance and Fiala, all evidenced in the back up
Packet Page -301-
10/28/2014 10.B.
material provided by the Clerk on the public record as part of the agenda for that and earlier
board meetings. Among the more significant irregularities was the fact that Clerk allowed First
Florida Integrity Bank to modify its' bid to provide a competitive cost advantage by eliminating
the compensating balance requirement it had originally made a part of its' solicitation response,
and further that the Clerk ignored that First Florida Integrity Bank's response was non-
conforming in that it did not have a trust company to custody the county's securities. No third
party custodial agreement was provided to the Clerk, nor to the Board. No financial information
about the broker - dealer was provided. The contract with First Florida Integrity Bank makes no
mention of the broker - dealer custodial arrangement. The County Attorney negligently
overlooked these deficiencies in his legal review of the transaction, and instead overzealously
and incorrectly sought to find any means to try to legally validate the vote of three
commissioners so as to protect them from personal liability which would result if they voted
against his opinion had it been that the contract and procurement were legally insufficient. As
such, the contract with First Florida Integrity Bank is void, and the county must re- solicit
through the Office of the County Manager. Since 5/3 Bank is willing to extend its current
contract monthly until a new bank is selected, there will be no interruption of bank services to
the county.
FISCAL IMPACT: None
LEGAL CONSIDERATIONS: The First Florida Integrity Bank services contract is void due
to illegality evidenced by material facts on the public record. There will be no interruption of
essential banking services to the county. By re- soliciting, the board cures the harm against all
banks that competed against First Florida Integrity Bank for the county's banking services
contract. The County Attorney correctly opined that he could not find legal sufficiency with the
Clerk's procurement process at the 9/9/14 Board meeting, and, then incorrectly opined that
exigent circumstances existed when in fact they did not exist, to justify waiving the Clerk's
procurement irregularities and the county's own Purchasing Ordinance so as to permit the Board
to ratify the Clerk's selection of First Florida Integrity Bank as the county's bank service
provider.
RECOMMENDATION: Recommendation that the Board of County Commissioners direct
staff prepare an extension to the bank services agreement with 5/3 Bank to allow the county to
re- solicit the county's bank services contract under the Board of County Commissioners, and to
recognize that the bank services contract with First Florida Integrity is void since it was procured
illegally. 5/3 Bank notified the County Manager ahead of the 9/23/14 Board meeting that it
agreed to a month -month extension which information was placed on the record by
Commissioner Hiller at the 9/23/14 board meeting. Contrary to the County Attorney's statement,
no extenuating circumstances existed to justify waiving the County's Purchasing ordinance and
procurement irregularities committed by the Clerk of Courts in his solicitation of the banking
services contract. Further, that the public record reflect that the Clerk of Courts allowed First
Florida Integrity Bank to modify its solicitation response after all bank responses were a matter
of public record and the candidate banks had been interviewed, so as to make First Florida
Integrity Bank the lowest net cost bank, a fact known to and ignored by the County Attorney.
NO other bank was allowed to modify its response. That additionally, First Florida Integrity
Bank provided a non - conforming response in that it did not have a trust company, a requirement
Packet Page -302-
10/28/2014 10. B.
to custody the county's securities; and instead, First Florida Integrity Bank intended to custody
the county securities with a broker - dealer; that no custody agreement with the third party
custodial provider was submitted as required by the solicitation; that the County Attorney had
not even considered this material deficiency in his review of the First Florida Integrity Bank
contract presented by the Clerk and approved by the Board on 9/23/14. That all these facts were
known by Commissioners Henning, Nance and Fiala before their vote in favor of First Florida
Integrity Bank on 9/23/14 since the evidence was in the back up material provided by the Clerk,
as attachments to his agenda items. For these and other reasons already noted on the public
record, 5/3 Bank, Wells Fargo and Sun Trust which competed against First Florida Integrity
Bank have been irreparably harmed by the sham procurement of banking services by the Board
of County Commissioners and the Clerk of Courts.
PREPARED BY: Commissioner Georgia Hiller - District 2
See Clerk's 9/23/14 Banking Services Contract Agenda Item Back/Up Material - accepted into
the record by the BCC on 9/23/14
Attached Emails - County Attorney e -mail communications, County Manager Letter to 5/3 Bank,
5/3 Bank Email Confirmation
Packet Page -303-
10/28/2014 10. B.
COLLIER COUNTY
Board of County Commissioners
Item Number: 10.10.B.
Item Summary: Recommendation that the Board of County Commissioners direct staff to
prepare an extension to the bank services agreement with 5/3 Bank to allow the county to re-
solicit the county's bank services contract under the Board of County Commissioners, and to
recognize that the bank services contract with First Florida Integrity is void since it was
procured illegally. 5/3 Bank notified the County Manager ahead of the 9/23/14 Board meeting
that it agreed to a month -month extension which information was placed on the record by
Commissioner Hiller at the 9/23/14 board meeting. Contrary to the County Attorney's
statement, no extenuating circumstances existed to justify waiving the County's Purchasing
ordinance and procurement irregularities committed by the Clerk of Courts in his solicitation of
the banking services contract. Further, that the public record reflects that the Clerk of Courts
allowed First Florida Integrity Bank to modify its solicitation response after all bank responses
were a matter of public record and the candidate banks had been interviewed, so as to make
First Florida Integrity Bank the lowest net cost bank, a fact known to and ignored by the County
Attorney. No other bank was allowed to modify its' response. That additionally, First Florida
Integrity Bank provided a non - conforming response in that it did not have a trust company, a
requirement to custody the county's securities; and instead, First Florida Integrity Bank
intended to custody the county securities with a broker - dealer; that no custody agreement
with the third party custodial provider was submitted as required by the solicitation; that the
County Attorney had not even considered this material deficiency in his review of the First
Florida Integrity Bank contract presented by the Clerk and approved by the Board on 9/23/14.
That all these facts were known by Commissioners Henning, Nance and Fiala before their vote
in favor of First Florida Integrity Bank on 9/23/14 since the evidence was in the back up
material provided by the Clerk, as attachments to his agenda items. For these and other
reasons already noted on the public record, 5/3 Bank, Wells Fargo and Sun Trust, which
competed against First Florida Integrity Bank, have been irreparably harmed by the sham
procurement of banking services by the Board of County Commissioners and the Clerk of
Courts. (Commissioner Hiller)
Meeting Date: 10/28/2014
Prepared By
Packet Page -304-
Approved By
Name: OchsLeo
10/28/2014 10.B.
Title: County Manager, County Managers Office
Date: 10/20/2014 12:26:36 PM
Packet Page -305-
10/28/2014 10.B.
Office Of the County' Manager
Leo E. Ochs, Jr.
3299 Tamierni Trail East, Sure 202 • Napin Florida 34112- 5746 • (239) 2524383 • FAX 252 4010
September 12, 2014
Mr. Jim Miitciiell
Fifth Third Bank
13350 Metro Parkway
Ft. Myers FL 33912
Dear Mr. Mitchell:
Thank you for taking my call yesterday in reference to the County, s banking service IIeeds. As
we discussed, the County Commission has directed-me to solicit a banking services agreement
for Board funds. Addition4y, I have been asked to research options for provisions of banking
and merchant services to the Board on a month to month basis until such time as our solicitation,
evaluation and contract award process is finalized. Specifically. I would like to know if your
institution would be interested in providing these services on a temporary basis under the same
general terms and conditions under which you have rendered services to the Clerk to the Board.
J
_. T look forward to hearing from you at your earliest convenience.
Sincarely,
Leo E. Ochs, Jr.
County Manager
J
Packet Page -306-
i
10/28/2014 103
ren
From: Ray, Jim [Jim.Ray053.comj
Sent: Monday, October 13, 2014 3:29 PM
To: HillerGeorgia
Cc: Ayers, Derrick; Mitchell, James
Commissioner Hiller Fifth Third is willing to enter into a month to month contract with th4
BOCC under similar conditions as the existing contract with the Clerk of Courts to allow y u
time to conduct an RFP process. We will need written direction from the BOCC with regards o
any conflicting direction we receive from the Clerk regarding the BOCC funds during the tite
is such contract.
This is the same information that Jim Mitchell and I gave to the County Manager after
of his letter.
James C. Ray Jr.
Senior Vice President
Commercial Banking Executive
Fifth Third Bank, South Florida
200 East Las Olas
Suite 1200 MD BMME2A
Fort Lauderdale, FL 33301
iim.rayk153.com
954 514 -3014
954 858 -1985 fax
This e-mail transmission contains information that is confidential and may be privileged.
It is intended only for the addressee(s) named above. If you receive this e-mail in error
please do not read, copy or disseminate it in any manner. If you are not the intended
recipient, any disclosure, copying, distribution or use of the contents of this informati
is prohibited. Please reply to the message immediately by informing the sender that the
message was misdirected. After replying, please erase it from your computer system. Your
assistance in correcting this error is appreciated.
Packet Page -307-
10/28/2014 10.B
HayesKaren
From:
HillerGeorgia
Sent:
Saturday, October 04, 2014 12:00 PM
To:
HayesKaren
Subject:
Fwd: Purchasing Ordinance - Bank Services Contract Motion
Follow Up Flag:
Follow up
Flag Status:
Flagged
Please print out this chain of communications.
Sent from my Wad
Begin forwarded message:
From: GEORGIA HILLER <geor�iq!)a ff�' n)3C._c T >
Date: October 3, 2014 at 1:53:26 PM EDT
To: KlatzkowJeff ue.rtK .ir.rKOw Ei�CC�ilieov�nFt>
Cc: HillerGeorgia
Subject: Re: Purchasing Ordinance - Bank Services Contract Motion
Seriously?
Henning said Leo said nothing to him.
I stated what Leo told me.
And you didn't think you should ask Leo whether 5 /3rd was willing to extend when I stated so during the
board discussion.
Don't you have a duty to verify when a material fad that would void the motion as presented comes to
your attention?
On Oct 3, 2014, at 1:46 PM, KlatzkowJeff wrote:
Commissioner.
My recollection is that there was no evidence as to whether or not Fifth -Third was
willing to extend. There was only what you said Leo told you, and what Henning said Leo told
him. If Leo had an extension agreement he should have taken it to the Board on Executive
Summary.
Jeffrey A. Klatzkow
County Attorney
(239) 252 -2614
From: GEORGIA HILLER
Sent: Friday, October 03, 2014 1:42 PM
To: 10atzkow3eff
Packet Page -308-
10/28/2014 10.B.
Cc: HIIIerGeorgia
Subject: Re: Purchasing Ordinance - Bank Services Contract Motion
Except that you needed to ensure there really were exigent circumstances to warrant
the waivers before you signed off on the motion as legally sufficient. I made it clear that
5/3 was willing to extend w/ board direction /approval. Why did you ignore the evidence
I introduced that clearly invalidated the basis for the motion?
From: KlatzkowJeff
Sent: Friday, October 03, 2014 1:35 PM
To: GEORGIA HILLER; HillerGeorgia
Subje= RE: Purchasing Ordinance - Bank Services Contract Motion
Commissioner:
You are asking the wrong person. If any response was warranted it should have come from Leo, not me. I would have had no
idea what recent discussion Leo may had with Fifth - Third; I would have had no idea what discussions Leo may have had with the
Chair, l would have had no idea what discussions Leo may have had with you. I certainly had no discussion with Fifth - Third, as I waa
not the one tasked by the Board to do so.
Jeffrey A. Klatzkow
County Attorney
(239) 252 -2614
Front: GEORGIA HILLER [
Sent: Friday, October 03, 2014 1:19 PM
To: Klatzkow]eff; HillerGeorgia
Subject: Re: Purchasing Ordinance - Bank Services Contract Motion
But what you knew from the county manager about 5 /3rd was contrary to what Henning said. Why didn't you speak up?
Then I raised it before the vote. Why didn't you say something at that point?
On Oct 3, 2014, at 1:10 PM, KlatzkowJeff < > wrote:
We have reviewed on on -line video. Commissioner Henning's statement was as follows:
"OK, I'm going to speak on the motion. I'm going to support the motion because it would prevent any
delay of payment not only to our employees, but to our vendor. I've asked the County Manager several times to get
back to me on if the bank, 5/3, would extend the contract; he has not done that, so I'm assuming the answer is no.
Any other contract between the Board and any other bank at this time in what I consider an emergency would take a
waiver of our policy, our purchasing policy. This went out to bid and it was scrutinized by several people and you
know we must get on and do the public's business. So, is there any other questions or comments on the motion ?"
I have no idea what conversations the County Manager had with the Chair. Any correction to this
statement, or explanation as to the discussions with Fifth - Third, should have come from the County Manager.
Packet Page -309-
10/28/2014 10.B.
All l know is that there was no Executive Summary requesting the Board send a letter to Fifth - Third,
which absence spoke volumes to me.
Jeffrey A. Klatzkow
County Attorney
(239) 252 -2614
From: GEORGIA HILLER [
Sent: Friday, October 03, 2014 12:14 PM
To: Klatzkowleff; HillerGeorgla
Subject: Re: Purchasing Ordinance - Bank Services Contract Motion
So, why didn't you tell the board what you knew about 5 /3rd when Henning improperly stated that
5 /3rd would not provide an extension?
On Oct 3, 2014, at 12:01 PM, Klatzkow)eff < > wrote:
So, to clarify, you didn't know that 5/3rd agreed to go month to month with board approval. ' ;ly
Please provide the list of irregularities that the board waived at your direction.
Did you ever talk with Sen. Richter regarding this solicitation/contract?
Jeffrey A. Klatzkow
County Attorney
(239) 252 -2614
From: GEORGIA HILLER [
Sent: Friday, October 03, 2014 11:52 AM
To: Klatzkowleff, HillerGeorgia
Subject: Re: Purchasing Ordinance - Bank Services Contract Motion
Thank you Jeff.
So, to clarify, you didn't know that 5 /3rd agreed to go month to month with board
approval.
Please provide the list of irregularities that the board waived at your direction.
Did you ever talk with Sen. Richter regarding this solicitation /contract?
On Oct 3, 2014, at 11:16 AM, KlatzkowJeff < > wrote:
Commissioner.
With respect to Item 13A of September 23`d's Board meeting, in which
the Clerk "Recommended the Board of County Commissioners (Board) approve
the attached newly proposed three -party agreement for Banking Services
between the Clerk, the Board and First Integrity Bank and acknowledge any
waivers of the Board's Purchasing Policy as the solicitation was made in
2
Packet Page -310-
10/28/2014 10. B.
accordance with the Clerk's purchasing policy," my thought process was as
follows:
1. The Florida Supreme Court in Frankenmuth determined that a
governing body has the ability to ratify an unauthorized contract provided that
(1) the Board initially has the power to enter into such an agreement; (2) that the
ratification be conducted in the same manner as if the agreement had initially
come to the Board; and (3) that the Board has full knowledge of the material
facts related to the agreement.
2. The Purchasing Ordinance, which was derived from the County's
long - standing Purchasing Policy, provides in relevant part as follows:
Sec. 2 -195. - Competitive Bid Process.
E. Waiver of Irregularities: The Board of County Commissioners shall have the
authority to waive any and all irregularities in any and all formal bids within
lawful guidelines. (Ord. No. 2013 -69, § 10)
Sec. 2 -215. - Waiver of Ordinance.
The Board of County Commissioners shall have the authority to waive any and
all Purchasing Ordinance provisions within lawful guidelines and upon formal
Board action. (Ord. No. 2013 -69, § 30)
Lawful guidelines as forth in Florida Statutes include (by analogy):
Florida Statute Sec. 255.20 Local bids and contracts for public construction
works; specification of state- produced lumber.
(c) The provisions of this subsection do not apply:
1. If the project is undertaken to replace, reconstruct, or repair an existing
public building, structure, or other public construction works damaged or
destroyed by a sudden unexpected turn of events such as an act of God, riot, fire,
flood, accident, or other urgent circumstances, and such damage or destruction
creates:
a. An immediate danger to the public health or safety;
b. Other loss to public or private property which requires emergency
government action; or
C. An internrotion of an essential governmental service
Moreover, the Purchasing Ordinance grants the County Manager great
discretion to enter into agreements if exigent circumstances or an emergency
exists. Since the County Manager has only that power delegated to him by the
Board, the Board also has like power to act.
Sec. 2 -210. - Exigent Circumstances, Emergency and Board Absence Purchases.
In case of an exigent circumstance, which is defined as any circumstance
requiring immediate action or attention, a valid public emergency, or during the
Board's extended recess session(s) (all efforts should be made to obtain Board
approval prior to anticipated recesses) whereby a purchase is necessary, the
County Manager shall authorize the Purchasing Director to secure by open
market procedure as herein set forth, any commodities or services. The County
Manager shall have the authority to take actions including, but not limited to the
issuance of contracts, change orders, and/or supplemental agreements. Any
action shall be reported at the first available meeting of the Board of County
Commissioners. The County Manager under the same consultations noted above
shall further be authorized to approve payment(s) to vendors at the time of or
shortly after purchase should the circumstances warrant. These payments shall
be reported at the first available meeting of the Board. (Ord No. 2013 -69, § 25)
Packet Page -311-
It is my opinion that a bank depository is an essential governmental
service, and that facing the expiration of an existing depository agreement
without a replacement depository bank in place constitutes an exigent
circumstance.
I had several discussions with the County Manager prior to this
September 23'd meeting. I asked Leo several times whether he could secure an
extension of the current agreement with Fifth - Third. At the time of the
September 23rd meeting, my understanding was that the best Mr. Ochs could
then do was to get the Board at the September 23'd meeting to sign a letter
requesting Fifth -Third grant an extension, which Fifth -Third would consider
with no assurance that they would positively act on it. There was no Executive
Summary on the published September 23rd attends seeking such a letter nor
was such a request made on the Change Sheet.
When the Clerk initially came forward with an agreement between the
Clerk and First Integrity, asking in essence that the Board ratify his agreement, I
stated that I would not sign off for legality. In that agreement the Board was not
a party, and there was no protection for the Board should it take the requested
action. When the Clerk amended the agreement to include the Board as a party,
the agreement then fell within the confines of both the Frankenmuth decision
and the Board's Purchasing Ordinance. The alleged irregularities of the process
were discussed in detail during two public meetings. The Board, with full
knowledge of the irregularities, had the lawful ability to waive any and all
requirements and irregularities under the Purchasing Ordinance. The Board's
decision was fwther bolstered by the fact that there was no substitute depository
bank in place (which constituted an exigent circumstance as well as the loss of
an essential government service), nor was there any requested action on the
Agenda that the Board send a letter request to Fifth Third seeking an extension,
which requested action would have given the Board the opportunity to continue
this item one meeting.
With this background, I prepared a proposed motion that the Chair
could use provided the public hearing be consistent with the above. The purpose
of the motion was to capture the considerations set forth above, in order to give
the Board maximum protection against any claim should the Clerk's request be
approved by majority vote.
With respect to your question regarding the meeting, at Commissioner
Fiala's request Leo and I met with Crystal and Derek Johnsen on September
15th. The primary issue was what could be done to get an acceptable Bank
depository agreement to the Board. The three party agreement, as modified with
staffs' input, resulted from this meeting.
Jeffrey A. Klatzkow
County Attorney
(239) 252 -2614
-Original Message-- -
From: HillerGeorgia
Sent: Friday, October 03, 2014 7:55 AM
To: Klatzkowleff
Cc: HayesKaren
Subject: Purchasing Ordinance - Bank Services Contract Motion
Jeff,
Please email the specific section of the purchasing ordinance that you relied on
for allowing the board to waive the purchasing ordinance by motion due to
exigent circumstances.
Packet Page -312-
10/28/2014 10.B.
Did you verify that exigent circumstances existed? If so, how?
Please provide the specific law that you relied on to allow the board to waive
Procurement MM;alarities with respect to the bank services solicitation and
contract.
Please provide a memo detailing your conversation in the meeting with you, Leo
and the CIerk's staff ahead of the last board meeting where you determined how
to craft the motion you then advised Commissioner Henning to make. When and
where was that meeting held? Who was in attendance?
With thanks,
Commissioner Georgia Hiller
Sent from my iPad
Under Florida Law, e-mail addresses are public records. Ifyou do not want
your e-mail address released in response to a public records request, do not send
electronic mail to this entity. Instead, contact this office by telephone or in
writing.
<Frankenmuth.doc>
5
Packet Page -313-
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Packet Page -315-
10/28/2014 10.B.
BrockMaryJo
From:
KlatzkowJeff
Sent
Thursday, September 04, 2014 8.09 AM
To:
OchsLeo
Cc:
TeachScott
Subject:
FW: REQUEST FOR FORMAL OPINION, FLORIDA ATTORNEY GENERAL,
CONTRACT/PURCHASING
Attachments:
PURCHASING AGO REQUEST APP FINAL 9.3.2014.doc
Follow Up Flag:
Follow up
Flag Status:
Flagged
Leo:
This just came in. Please have your staff review and forward any comments or concerns to me.
Jeffrey A. Klatzkow
County Attorney
(239) 252 -2614
From: Anthony Pires [
Sent: Thursday, September 04, 2014 7:45 AM
To: KlatzkowJeff
Cc: Dwight E. Brock
Subject: REQUEST FOR FORMAL OPINION, FLORIDA ATTORNEY GENERAL, CONTRACT /PURCHASING
f
t
0
1
Packet Page -316-
10/28/2014 10.B.
September - - - -, 2014
Honorable Pam Bondi
Attorney General of Florida
Department of Legal Affairs
The Capitol PLOL
Tallahassee, Florida 32399 -1050
Re: Request for Formal Legal Opinion, Collier County, a Non - Charter
County, Re: Section 125.74(1)(m) Fla. Stat.; Legality and validity of contracts
entered into by the Collier County Administrator or his designee(s) and not
approved by vote or action of the Collier County Board of County
Commissioners; Ability of the Clerk of Courts to make payment without
Collier County Commission determination of valid public purpose.
Dear General Bondi:
This is a joint request by Dwight E. Brock as Clerk of the Circuit Court
of Collier County, Florida (the "Clerk ") and the Board of County
Commissioners of Collier County, Florida (the "Board ") for a formal legal
opinion. The Board authorized this request at its meeting of April 22, 2014
(see Transcript, Exhibit "A ").
A formal legal opinion is requested regarding the issues outlined in the
questions listed below.
QUESTIONS:
Question 1:
May the Board of County Commissioners of Collier County, Florida
(the "Board ") delegate its discretionary spending authority to the Collier
County Administrator (the "Administrator ") or his designees (which designees
include any and all County employees under the Administrator regardless of
position or title, collectively "Designees ")?
Question 2:
May the Board delegate to the Administrator or his Designees the
Board's decision making authority to enter into binding contracts or
agreements?
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10/28/2014 10.B.
Question 3:
May the Board of County Commissioners of Collier County, Florida
create contract thresholds, i.e. contracts of a value of less than $50,000, and
delegate to the Administrator or his Designees the Board's power to execute
contracts of a value of less than $50,000, without Board approval or without a
Board determination of public purpose?
Question 4:
Are any contracts or agreements, entered into by the Administrator or
his Designees, without either Board approval, Board vote or a Board
determination of the existence of a valid public purpose, valid contracts or
agreements?
Question 5:
May the Clerk lawfully make payments to persons under contracts
entered into by the Administrator or his Designees without a Board approval
or vote and without a Board determination of the existence of a valid public
purpose?
BACKGROUND
THE CLERK
Dwight E. Brock is the duly elected Clerk of Courts of Collier County, Florida.
Collier County is a non - charter county under Article VIII, Section 1(f), Florida
Constitution. The Clerk is a county officer pursuant to Article VIII, Section
1(d), Florida Constitution, ex- officio clerk of the Board of County
Commissioners, auditor, recorder and custodian of all county funds. The
Clerk by law possesses certain pre -audit functions and powers that require
the Clerk to refuse to make expenditures or authorize disbursement of public
funds that are illegal, and if there is any question as to the legality of
payment, the Clerk cannot make such payment.
Pursuant to the provisions of Section 129.09, F.S. (2013), if the Clerk of
Courts, acting as county auditor, signs any warrant to pay any illegal charge
against the County or to pay any claim against the County not authorized by
law, or County ordinance, the Clerk shall be personally liable for such
amount, and if the Clerk signs the warrant willfully and knowingly, the Clerk
is guilty of a second degree misdemeanor. Thus the Clerk is both civilly and
criminally liable for any improper payment.
2
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10/28/2014 10.B.
THE BOARD
The Board is the governing body of Collier County. Collier County is a non -
charter county. Section 125.01, F.S. outlines various powers and duties of
the Board as the governing body of Collier County. In that light, section
125.01(3)(a), F.S. provides, as to the powers of the Board, that:
"(3)(a) The enumeration of powers herein shall not be deemed exclusive or
restrictive, but shall be deemed to incorporate all implied powers necessary or
incident to carrying out such powers enumerated, including, specifically, authority to
employ personnel, expend funds, enter into contractual obligations, and purchase
or lease and sell or exchange real or personal property."
THE ADMINISTRATOR
Part III of Chapter 125, F.S. is the "County Administration Law of 1974"
Section 125.74(1)' F.S. outlines the powers and duties of the Administrator
and in pertinent part Section 125.74(1)(m) F.S provides:
"125.74 County administrator; powers and duties. —
(1) The administrator may be responsible for the administration of all
departments responsible to the board of county commissioners and for the
proper administration of all affairs under the jurisdiction of the board. To that
end, the administrator may, by way of enumeration and not by way of
limitation, have the following specific powers and duties to:
(m) Negotiate leases, contracts, and other agreements, including
consultant services, for the county, subject to approval of the board, and
make recommendations concerning the nature and location of county
improvements."
As clearly stated in Section 125.74(2), F.S., none of the governmental power
of the Board as the governing body is delegated to the Administrator:
"(2) It is the intent of the Legislature to grant to the county
administrator only those powers and duties which are administrative
or ministerial in nature and not to delegate any governmental power
imbued in the board of county commissioners as the governing body
of the county pursuant to s. 1(e), Art. VIII of the State Constitution. To that
end, the above specifically enumerated powers are to be construed as
administrative in nature, and in any exercise of governmental power the
administrator shall only be performing the duty of advising the board of
county commissioners in its role as the policy- setting governing body of the
county"
Section 125.74, F.S. will be referred to as the "Administrator's Statute ".
3
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10/28/2014 10. B.
Pointedly, there is no provision in Part III of Ch. 125, F.S. that grants the
Administrator, in non- emergency situations, the Board's power or ability to
enter into contractual obligations.
Consistent with the language in Section 125.74(1)(m), F.S., the Board
adopted its Ordinance No. 2013 -40, the "Collier County Administrator's
Ordinance" (the "Administrator's Ordinance "). A copy of the Administrator's
Ordinance is attached as Exhibit ".Collier County has hired an
individual to serve as the Administrator.
Consistent with the statutory limitations in the Administrator's Statute, the
Administrator's Ordinance grants to the Administrator only those powers and
duties which are administrative or ministerial in nature and does not delegate
to the Administrator any governmental power imbued in the board of county
commissioners as the governing body of the county pursuant to the Florida
Constitution. See Section 3 of the Administrator's Ordinance:
"To this end, the below specifically enumerated powers are to be construed
as administrative in nature, and in any exercise of governmental power the
County Administrator shall only be performing the duty of advising the Board
of County Commissioners in its role as the policy- setting governing body of
the county and carrying out its directives and policies."
The Administrator has hired numerous individuals and placed them in
various positions under the Administrator. Notwithstanding the
Administrator's Statute and Administrator's Ordinance, the Administrator has
"delegated" to numerous such individuals, his Designees, the ability to enter
into contracts or agreements on behalf of the County.
THE PURCHASING ORDINANCE
In 2013 the Board, in the context of the County's purchase or procurement of
goods or services, consistent with both the powers of the Board outlined in
Section 125.01, F.S. and the limitations on the Administrator contained in
both Section 125.74(1)(m), F.S. and the Administrator's Ordinance, adopted
Ordinance No. 2013 -69 as a substantially revised "Purchasing Ordinance
the "Purchasing Ordinance ". (See attached Exhibit" ").
In pertinent part, the Purchasing Ordinance provides (in the noted Sections):
A. the Purchasing Director has the authority to negotiate all
purchases for all County agencies except as required by State,
Federal or Local Law. (See Section 5, Purchasing Ordinance).
B. in keeping with Ch. 125, F.S., the Purchasing Ordinance grants to
the Purchasing Director only those powers and duties which are
ministerial in nature and does not delegate any governmental power
4
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10/28/2014 10.B.
imbued in the Board of County Commissioners as the governing body
of the County pursuant to Fla. Const. Art. Vlll, § 1(e) and to this end,
the specifically enumerated powers are to be construed as ministerial
in nature, for the purpose of carrying out the Board's directives and
policies. (See Section 5, Purchasing Ordinance).
C. the Board shall, prior to payment, approve all expenditures with a
finding that such expenditures serve a valid public purpose. (See
Section 7, Purchasing Ordinance).
D. all contracts for commodities and services shall be authorized by
the Board of County Commissioners. (See Section 19.F, Purchasing
Ordinance).
E. the Purchasing Department may prepare and recommend a
Purchasing Manual for adoption by the Board. (See Section 6.4,
Purchasing Ordinance).
THE PURCHASING MANUAL
Notwithstanding the limitations contained in the Administrator's Statute,
Administrator's Ordinance and the Purchasing Ordinance, the Administrator
and Purchasing Department have prepared a Purchasing Manual that,
contrary to Section 125.74(1)(m), F.S., purports to delegate, vest and grant
to the Administrator, the Purchasing Director and Designees, the ability to: A.
not only negotiate but to execute contracts on behalf of the Board; and, B.
enter into binding contracts on behalf of the Board- all without any review,
action or approval of the Board. A copy of the proposed Purchasing Manual
is attached as Exhibit
The proposed Purchasing Manual also provides that purchases less than
$50,000 may be entered into by the Purchasing Director, as the designee of
the Administrator, without any review or approval of the Board and without a
Board determination of the existence of a valid public purpose. As an
example:
8:5 Non - Standard Agreements
For purchases under $50,000, and for vendors who require a signed non-
standard agreement, memorandum of understanding, contract, etc. the
Purchasing Staff will complete negotiations with the vendor and forward to
the County Attorney for final review and approval. The Purchasing Director
shall execute the agreement on behalf of the Board of County
Commissioners, and report the purchase pursuant to Section Seven.
Purchases in General.
An approved non - standard agreement may be approved by the Purchasing
Director as long as the cumulative annual expenses are less than $50,000.
5
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10/28/2014 10.B.
ISSUE
CONTRACTS AND AGREEMENTS EXECUTED BY THE
ADMINISTRATOR OR THE DESIGNEES
The Administrator and his Designees (several other County personnel in the
Administrator's agency) have signed contracts and agreements on behalf of
the County even though: 1. the contracts or agreements were neither
reviewed by nor approved by the Board; and, 2. the Board did not make any
determination that the subject of these contracts served a valid public
purpose.
Some examples of these contracts and agreements, signed by County
personnel, are attached as Exhibit " " to this request. In addition to the
issue as to the validity of such contracts per se, as raised in this request,
outlined above, some of the contracts or agreements appear on their face to
suffer additional legal infirmities. z In addition, on several occasions after the
Board has reviewed and approved the specific terms and conditions of a
contract, County staff modified substantive terms and provisions without
obtaining Board approval of the amended substantive terms or provisions.
Attached you will find a Memorandum of Law from counsel to the Clerk
(Exhibit "_ ") and a Memorandum of Law from the Office of the County
Attorney (Exhibit "_ ").
As outlined in the attached Memorandum of Law from counsel to the Clerk,
the Clerk's attorney is of the opinion that:
1. the Board of County Commissioners of Collier County, Florida may
not delegate its discretionary spending authority to the Administrator
or his Designees.
2. the Board of County Commissioners of Collier County, Florida may
not delegate its discretionary decision - making authority to the
Administrator or his Designees.
3. the Board of County Commissioners of Collier County, Florida may
not establish contract thresholds for the Administrator or his
Designees to execute contracts without Board approval or vote or a
Board determination of the existence of a valid public purpose; i.e.,
the Administrator or his Designees do not and cannot possess the
2 By way of example: A. the "Interlocal Agreement" between the County and
the City of Naples dated February 8, 2011, signed by the Administrator
(Exhibit _ - -�; B. the "Agreement for Visa Commercial Credit Card', dated
October 7, 2008 (Exhibit C.
6
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10/28/2014 103.
authority or power to enter into any binding contracts, regardless as to
whether the contract is of a value less than $50,000.
4. contracts entered into by the Administrator or his Designees without
either Board approval or vote, i.e, a Board determination of the
existence of a valid public purpose, are not valid contracts.
5. the Board does have the ability to ratify and approve a contract that
was initially an unauthorized agreement, provided that the three -prong
test outlined in Frankenmuth Mutual Insurance Company vs. Magaha,
769 So.2d 1012 (Fla. 2000) has been satisfied.
6. the Clerk may not lawfully make payments to persons under
contracts entered into by the Administrator or his Designees without
Board approval or vote and a Board determination of the existence of
a valid public purpose.
7. the Clerk may not lawfully make payments to persons under
contracts entered into by the Administrator or his Designees where the
Board has not made the determination of the existence of a valid
public purpose.
8. approval by the Board of a summary "disbursement list" pursuant to F. S.
136.06(1) does not validate agreements or contracts which have not been
reviewed and approved by the Board. (See Ramsey v. City of Kissimmee,
139 Fla. 107, 190 So. 474 (Fla.1939), Frankenmuth Mutual Insurance
Company vs. Magaha, 769 So.2d 1012 (Fla. 2000).
We have attached a number of documents that we believe will assist you in
your consideration of this request, including the above referenced
Memorandums Of Law outlining the Clerk's counsel's legal opinion, legal
positions of the County Attorney, copies of the applicable ordinances and
current policies, various contracts and agreements, as well as various
County Commission meeting Executive Summaries.
Your expeditious review and consideration of this request, and
issuance of a formal opinion would be greatly appreciated.
Thank you in advance for your consideration. Should you have
additional questions, or require additional information please contact me or
Crystal K. Kinzel, Director of Finance and Accounting at 239 -252 -6299.
Packet Page -323-
7
4� LexisNexis�
FOCUS - 20 of 24 DOCUMENTS
FRANKENMUTH MUTUAL INSURANCE COMPANY, etc., Appellant, vs. ERNIE
LEE MAGAHA, etc., et al., Appellees.
No. SC96384
SUPREME COURT OF FLORIDA
769 So. 2d 1012; 2000 Fla. LEXIS 1889; 25 Fla. L. Weekly S 697
September 21, 2000, Decided
PRIOR HISTORY: [ * *1] Certified Question of
Law from the United States Court of Appeals for the
Eleventh Circuit - Case No. 98 -2962.
COUNSEL: J. Lofton Westmoreland and William R.
Mitchell of Moore, Hill, Westmoreland, Hook & Bolton,
P.A. for Appellant.
Paula G. Drummond, Pensacola, Florida, on behalf of
Appellee Ernie Lee Magaha; and David G. Tucker, Ja-
net Lander, and James M. Messer, Pensacola, Florida, on
behalf of Appellee Escambia County, Florida, for Ap-
pellees.
Carole Sanzeri, Senior Assistant County Attorney, Pi-
nellas County Attorney's Office, Clearwater, Florida, for
the Florida Association of County Attorneys, Inc., Ami-
cus Curiae.
JUDGES: LEWIS, J., WELLS, C.J., and SHAW,
HARDING, ANSTEAD, PARIENTE and QUINCE, JJ.,
concur.
OPINION BY: LEWIS
OPINION
[*1014] LEWIS, J.
We have for review two questions of Florida law
certified by the United States Court of Appeals for the
Eleventh Circuit as determinative of a cause pending
before that court and for which there is no controlling
precedent. Specifically, the Eleventh Circuit has certified
the following questions to this Court:
10/28/2014 10.B.
Page 1
(1) UNDER FLA. STAT. §
125.031, WHICH REQUIRES AP-
PROVAL OF THE BOARD OF
COUNTY COMMISSIONERS FOR
CERTAIN LEASE - PURCHASE [ * *2]
AGREEMENTS, CAN A COUNTY BE
HELD TO HAVE APPROVED A
CONTRACT ABSENT FORMAL RES-
OLUTION AND BASED SOLELY ON
ACTS AND OMISSIONS OF THE
COUNTY COMMISSION? IF SO,
WHAT STANDARD GUIDES THE
CONSIDERATION OF WHETHER A
COUNTY COMMISSION HAS "AP-
PROVED" A CONTRACT OR
AGREEMENT? (2) IF THE
LEASE - PURCHASE AGREEMENT
HAS BEEN APPROVED, DOES THE
NON - SUBSTITUTION CLAUSE IN
THE LEASE - PURCHASE AGREE-
MENT THAT PROVIDES FOR A
PENALTY UPON
NON - APPROPRIATION AND EX-
PLICITLY DISCLAIMS USE OF REV-
ENUES FROM AD VALOREM TAXA-
TION VIOLATE ARTICLE VII, § 12,
OF THE FLORIDA CONSTITUTION?
Frankenmuth Mutual Insurance Co. v. Magaha, slip
op., No. 98 -2962, slip op. at 10 (11th Cir. Aug. 25,
1999). We have jurisdiction. See art. V, § 3(b)(6), Fla.
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10/28/2014 10. B.
Page 2
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla. L. Weekly S 697
Corrt. As more fully explained below, we answer the
Note 2: One payment
first certified question in the affirmative and determine
of $ 200,000, two pay -
that a board of county commissioners may approve a
ments of $ 120,000, three
lease- purchase agreement under section 125.031, Florida
payments of $ 134,964,
Statutes (1999), even absent formal resolution, if such
and a final payment of $
board is not required by local ordinance or charter to take
319,743.
action by formal resolution, as is the status of the local
charter here. Further, we outline a three -prong test to
Note 3: One payment
[ * *3] guide courts in determining whether an approval
of $ 200,000, six payments
without formal resolution has occurred. Finally, we also
of $ 419,008 and a final
answer the second certified question in the affirmative,
payment of $ 827,860.
as rephrased below, and determine that the
nonsubstitution clause implicates article VII, section 12
of the Florida Constitution, notwithstanding the attempt-
Flowers signed each of these agree -
ed disclaimer.
ments as " Escambia County Comptroller."
Although he warranted in paragraph 20 of
1. FACTS AND PROCEDURAL HISTORY
the master lease that he had obtained a
On September 6, 1995, Frankenmuth Mutual In-
resolution of the "governing body" of the
surance Company (Frankenmuth) filed a two -count
jurisdiction authorizing him to execute the
complaint in the [* 10 15] United States District Court
lease, in fact, Flowers neither requested
for the Northern District of Florida, Pensacola Division,
nor obtained the permission of the Es-
against both Escambia County, Florida, and Ernie Lee
cambia County Board of County Com-
Magaha (Magaha), the Clerk of the Circuit Court for
missioners ( "the Board" or "the County
Escambia County. Frankenmuth sought declaratory
Commission ") before signing the agree -
relief in Count I of the complaint and injunctive relief in
ment.
Count It. All three parties moved for summary judgment
The master lease contains a number
after participating in discovery, and the federal district
of provisions relevant [. * *5] to this dis-
court set forth the following facts in considering the par-
pute. Paragraph 21 includes a
ties' motions:
"non- appropriation clause," which pro-
vides the lease will terminate in any given
year if the "legislative body or funding
authority" fails to appropriate funds to
In May 1992 Escambia County
make the lease payments. The same para-
Comptroller Joe Flowers signed a master
graph also contains a "non- substitution
lease agreement with Unisys Leasing
clause," providing that, in the event of
Corporation ( "Unisys "), under schedule
non - appropriation, Flowers agrees not to
01 of which, Flowers agreed to
purchase or rent any substitute computer
lease - purchase a Unisys Model A -] l
equipment for the balance of the appro-
mainframe computer. [ * *4] ' The
priation period and the one following it.
schedule called for seven annual pay-
Finally, an addendum clarifies that noth -
ments totaling $ 2,353,814.1 In July 1993,
ing in the lease shall be construed to con -
the parties signed a second schedule
stitute a pledge of ad valorem taxes and
agreeing to add a Unisys imaging system
that, in the event of default, the Lessor has
for eight annual payments totaling $
no right to compel the County Commis -
1,164,635.2 In May 1994, the parties
sion to appropriate funds to make the
signed a third schedule adding further
lease payments.
equipment and restructuring the finance
arrangement for schedule 01. This third
The agreement continued without in-
schedule called for eight annual payments
cident for several years after it was exe-
totaling $ 3,541,408.3
cuted. Flowers used the equipment for a
variety of municipal functions, including
Note 1: Six payments of
county payroll and central data processing
$ 304,112 and one pay-
services for the County Commission as
ment of $ 529.142.
well as the Road, Mass Transit and Solid
Waste Departments. (Ken Gardner Depo.
Packet Page -325-
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla. L. Weekly S 697
23 -24). In 1992 Unisys sold and assigned
the lease to Chicorp Financial Services,
Inc. Chicorp, in turn, sold it to Franken-
muth Mutual Insurance [ * *6] Company
( "Frankenmuth ") - -the [ *1016] current
owner of the lease and the plaintiff in this
case.
Although the County Commission
and Flowers both regarded the Comptrol-
ler to be a fee officer 4 rather than a
budget officer, the evidence shows Flow-
ers submitted his budget to the County
Commission each year setting forth the
fees he anticipated collecting, the expens-
es he anticipated incurring and any antic-
ipated shortfall between the two. Each
year Flowers requested [that] the County
Commission appropriate funds to cover
the shortfall, which for fiscal years ending
1992, 1993 and 1994, amounted to
roughly half the Comptroller's total budg-
et. In each of those years, Flowers listed,
respectively, $ 301,563, $ 304,561 2 and $
304,113 as a budget expense titled "Debt
Service -- Computer." Each year, the Board
appropriated Flowers' requested funds
without question. '
Note 4: Under Florida law, "fee of-
ficers" are ones "assigned specialized
functions within county government and
whose budgets are established inde-
pendently of the local governing body,
even though said budgets may be reported
to the local governing body or may be
composed of funds either generally or
specifically [ * *7] available to a local
governing authority involved." §
218.31(8), Fla. Stat. (1993).
The County Commission had no di-
rect knowledge of the Unisys computer
equipment, however, until it began dis-
cussing implementing its own computer
network system in 1993. By letter dated
August 3, 1993 Flowers wrote to the
Board's chairperson explaining his office
already had a central data processing sys-
tem and that the Board should adjust its
plans to integrate that system. At a June
28, 1994 meeting the County Commission
voted to amend its technology plan to
make use of the Comptroller's computer
equipment.
10/28/2014 10.B.
Page 3
In late 1994, Flowers became the
subject of considerable controversy when
Escambia County lost millions of dollars
in bad derivative investments made by
Flowers' office. The political uproar led to
a grand jury investigation and, eventually,
a four -count indictment charging Flowers
with malfeasance. Count Four specifically
charged Flowers with malfeasance for
entering into the Unisys lease in violation
of Florida law. Flowers pled no contest
and resigned from office.
Thereafter, on August 1, 1995, the
Florida Legislature abolished the Office
of Escambia County Comptroller [ * *8]
by repealing the Special Act that had cre-
ated it. See Ch. 95 -529, Laws of Fla. As a
result, Escambia County's elected Clerk of
the Circuit Court, Ernie Lee Magaha,
became responsible for the constitutional
duties formerly held by the Office of
Comptroller. 5 In the aftermath of these
events, Magaha and the County Commis-
sion obtained and reviewed, for the first
time, the Unisys master lease and sched-
ules signed by Flowers. After investiga-
tion and discussion, the County Commis-
sion determined the Unisys equipment
was too old, too big, too expensive and
too ineffective to serve the County's
needs. The County Commission therefore
advised Frankenmuth it [ *1017]
would not make the 1995 schedule 02 and
schedule 03 payments of, respectively, $
120,000 and $ 419,000. The Commission
further advised Frankenmuth it consid-
ered the lease void and unenforceable due
to Flowers' failure to obtain approval be-
fore signing it
Note 5: In most Florida
counties, the Clerk of the
Circuit Court serves a dual
function: he or she manag-
es the circuit and county
court system and serves as
"ex officio clerk of the
board of county commis-
sioners, auditor, recorder
and custodian of all county
funds." [ * *9] See Fla,
Const. art. VIII, § 1(d).
The Florida Constitution
also provides, however,
that individual counties
may choose to divide the
Packet Page -326-
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla. L. Weekly S 697
'Clerk's duties between two
county officers, one man-
aging the courts and the
other serving as custodian
of county funds. Fla.
Const. art. V, § 16. In
1972, Escambia County
chose to divide the duties
between two elected offic-
ers: a Clerk of the Circuit
Court and a Comptroller.
See Ch. 73455, Laws of
Fla. When the Legislature
abolished that Act, the du-
ties of the Comptroller re-
verted to the Clerk of
Court.
Consequently, in September 1995,
Frankenmuth filed this suit asking the
court to declare the lease agreement valid
and enforceable and to enjoin the County
Commission and the Clerk of Court (as
constitutional successor to the Comptrol-
ler) from breaching the agreement. While
the case proceeded through discovery, the
County Commission purchased, in April
1996, a replacement computer system. As
a result, Frankenmuth now seeks declar-
atory relief only. These motions for sum-
mary judgment followed.
Frankenmuth Mut. Ins. Co. v. Magaha, 1996 U.S. Dist.
LEXIS 15930, 10 Fla. L. Weekly Fed, D 340, D 340
(N.D. Fla. Aug. 30, 1.996).
1 According to the master lease agreement, ti-
tle to the computer equipment vested in Flowers,
the lessee, with Unisys retaining a security inter-
est in the equipment and the right to repossess the
equipment. Also under the master lease agree-
ment, Flowers generally accepted responsibility
for all risks related to the equipment. An adden-
dum executed by the parties in September 1992
abolished Unisys' security interest in the equip-
ment and its right to repossess the equipment, in-
stead substituting other available remedies in the
event of default, including seeking compensatory
damages from the lessee should the lessee refuse
to (1) sell the equipment; or (2) voluntarily return
10/28/2014 10.B.
Page 4
the equipment (with Iegal and beneficial title) to
the lessor.
[ * *10]
2 The actual amount listed in Flowers' letter to
the Board of County Commissioners dated May
8, 1992, for "Debt Service - Computer" actually
was $ 301,561, not $ 304,561.
3 Flowers' budget request for the fiscal year
ending September 30, 1992, was made by letter
dated June 6, 1991, almost one year before the
agreement with Unisys was executed. Further, the
amount listed in the 1991 budget request for
"Debt Service - Computer" was $ 301,563, simi-
lar to the annual payments called for under the
Unisys lease agreement. Finally, Flowers' budget
request for the fiscal year ending September 30,
1993, was made by letter dated May 8, 1992, also
before the agreement with Unisys was executed.
As noted in footnote 2, supra, the amount listed
in the 1992 budget request for "Debt Service -
Computer" was $ 301,561, similar to the annual
payments called for under the yet- to -be- executed
Unisys lease agreement.
After considering the above - listed facts, the federal
district court made several determinations. See 1996 U.S.
Dist. LEXIS 15930, * 19 -24, 10 Fla. L. Weekly Fed. at D
34143. First, [* * ] 1 ] the court determined that even
though the County Commission had not approved the
lease - purchase agreement prior to its execution as re-
quired by section 125.031, Florida Statutes (1993), the
Commission had subsequently approved the agreement
by (1) appropriating funds to pay for computer equip-
ment; (2) voting to change its own technology plan to
integrate the computer equipment; and (3) taking no ac-
tion after learning that an elected official in Escambia
County had entered into a lease- purchase agreement in
possible violation of section 125.031. ' See Franken-
muth, 1996 U.S. Dist. LEXIS 15930, *20, 10 Fla. L.
Weekly Fed. at D 341. Second, the court determined that
the agreement's nonsubstitution clause rendered illusory
both the nonappropriation clause and the express dis-
claimer regarding ad valorem taxation, thus causing the
agreement to be void as violative of article VII, section
12 of the Florida Constitution. See Frankenmuth, 1996
U.S. Dist. LEXIS 15930, *20 -22, 10 Fla. L. Weekly Fed.
at D 341 -42. Third, the court determined that the
nonsubstitution clause was void as against public policy
because the clause "effectively contracted [ * *12] away
the taxpayers' right to a central data processing [ *1018]
system for up to two years." See 1996 U.S. Dist. LEXIS
15930, *22, 10 Fla. L. Weekly Fed. at D 342. However,
the court further determined that the nonsubstitution
clause was properly severable from the remainder of the
agreement. See id Finally, the court determined that
Magaha had no contractual obligations to Franken-
Packet Page -327-
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla. L. Weekly S 697
Muth. See 1996 U.S. Dist. LEXIS 15930, *23 -24, 10
Fla. L. Weekly Fed. at D 343. In accordance with theses
determinations, the district court declared:
Escambia County's Board of
County Commissioners ratified the lease
and all schedules between Unisys and Joe
Flowers, the Comptroller of Escambia
County. As the County Commission has
failed to appropriate funds to make the
lease payments, Frankenmuth may exer-
cise its rights under the non - appropriation
clause in paragraph 21 [of the
lease - purchase agreement]. Franken-
muth may not enforce the
non - substitution clause, however, because
it is void for violation of Article VII, § 12
of the Florida Constitution and for viola-
tion of public policy. Frankenmuth has
no contractual rights against Ernie Lee
Magaha, Escambia County's [ * *13]
Clerk of the Circuit Court.
1996 U.S. Dist. LEXIS 15930, *23 -24, 10 Fla. L.
Weekly Fed. at D 343. Frankenmuth appealed to the
Eleventh Circuit, and Escambia County cross - appealed.
See Frankenmuth, No. 98 -2962, slip op. at 2
4 To support this third finding, the federal dis-
trict court stated: "The evidence shows the ac-
counting firm of Saltmarsh, Cleveland & Gund
advised the County Commission through a 1994
independent audit that an elected official of the
county had entered into a long -term lease agree-
ment in possible violation of section 125.031."
Frankenmuth Mut. Ins. Co. v. Magaha, 1996
U.S. Dist. LEXIS 15930, 10 Fla. L. Weekly Fed.
D 340, D 341 (N.D. Fla. Aug. 30, 1996). The
record shows that the independent auditing report
stated, "Elected officials of the County have en-
tered into lease purchase arrangements to obtain
need property and equipment ... [that] appear to
fall within the category of transactions which
must be approved by the governing body of the
County." This language is almost identical to that
contained in the same auditing firm's 1991 report,
which also did not specify what officials had en-
tered into lease- purchase agreements in possible
violation of section 125.031.
10/28/2014 10. B.
Page 5
[ * *14] Or. appeal, the Eleventh Circuit discussed
the issues regarding the execution of the lease- purchase
agreement and the validity of the nonsubstitution clause.
See id. at 5 -9. After discussing these issues, that court
certified for this Court's consideration the two questions
of law set forth above. Id. at 10. We now address those
questions in turn.
II. ISSUES AND ANALYSIS
A. THE FIRST CERTIFIED QUESTION
In the first certified question, the Eleventh Circuit
has asked us to determine whether, consistent with the
requirements of section 125.031, Florida Statutes, a
board of county commissioners may approve a
lease - purchase agreement absent formal resolution, and,
if so, what standards guide consideration of whether such
an approval has occurred. As explained below, we de-
termine that a board of county commissioners may ap-
prove a lease - purchase agreement under section 125.031,
even absent formal resolution, if a governing charter or
ordinance does not require the board to take action by
formal resolution, as is the situation here. i Further, we
provide a three -prong [ * *15] test to guide the determi-
nation process as to whether an approval without formal
resolution has occurred. Before we reach the first certi-
fied question, however, we must fast address Franken-
muth's argument that Flowers, as the Comptroller of
Escambia County, had the independent authority to enter
into the agreement with Unisys even absent any approval
whatsoever by the Escambia County Board of County
Commissioners (the Board). If Frankenmuth's argu-
ment on this point is correct, then we need not reach the
first question certified by Eleventh Circuit.
5 The parties have not referred us to any provi-
sion in the Escambia County Code requiring the
Board to take action in some specified manner.
After careful consideration, we find Frankenmuth's
argument regarding Flowers' independent authority to
bind the governmental entity to be without merit. It is
clear that Flowers, as Comptroller of Escambia County,
was a constitutional officer under the Florida Constitu-
tion. See art. V, § 16, Fla. Const.; art. VIII, § [ * *16]
1(d), Fla. Const,; see also Alachua County v. Powers,
351 So. 2d 32, 35-43 (Fla. 1977). It does not follow,
however, that Flowers had the independent authority to
enter into the agreement at issue here. As we noted in
Powers, the clerk of the circuit court-or the comptroller
if duties are divided between two offices- derives author-
ity and responsibility from both "constitutional and stat-
utory provisions." Powers, 351 So. 2d at 35; see also
Escambia County v. Flowers, [ *1019] 390 So. 2d 386,
387 (Fla. 1st DCA 1980) (stating that Flowers' duties as
Packet Page -328-
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, **
25 Fla. L. Weekly S 697
comptroller were enumerated by legislative prerogative);
cf. State v. Walton County, 93 Fla. 796, 800, 112 So.
630, 632 (1927) (noting that "[T]he board of county
commissioners of each county are constitutional officers,
and under the terms of the Constitution their powers and
duties shall be fixed and prescribed the Legislature. ");
Weaver v. Heidtman, 245 So. 2d 295, 296 (Fla. 1st DCA
1971) (observing that counties are "subject to legislative
prerogatives in [ * *17] the conduct of their affairs "). By
enacting section 125.031, the Legislature clearly estab-
lished that agreements such as the one at issue here may
not be entered into without approval by a board of coun-
ty commissioners. This is not an instance where the
clerk of the circuit court is acting as an arm of the judi-
cial branch and thus under judicial control and not the
control of the Legislature. See Times Publishing Co. v.
Ake, 660 So. 2d 255, 257 (Fla. 1995). Therefore, the
Legislature's pronouncement in section 125.031 is con-
trolling here, and Flowers did not have the independent
authority to enter into the agreement with Unisys without
the approval of the Board. b
6 It is interesting to note that Flowers entered a
polo contendere plea to the charge of violating
section 125.031, Florida Statutes; if Franken-
muth's argument were correct, then Flowers' plea
would have responded to a charge having abso-
lutely no basis in law. Further, Frankenmuth's
argument on this point is inconsistent with lan-
guage contained in the underlying agreement,
which stated in paragraph 20(b): "Lessee [Flow-
ers] has been duly authorized by the Constitution
and laws of the applicable jurisdiction and by
resolution of its governing body (which resolu-
tion, if requested by Lessor, is attached hereto), to
execute and deliver this Lease and to carry out its
obligations hereunder." If Frankenmuth's argu-
ment regarding Flowers' authority were correct,
the language in the agreement regarding a resolu-
tion by the governing body of the jurisdiction
would be superfluous and meaningless.
[ * *18] Turning now to the first question certified
by the Eleventh Circuit, we must consider the text of
section 125.031, Florida Statutes (1999):'
Counties may enter into leases or
lease - purchase arrangements relating to
properties needed for public purposes for
periods not to exceed 30 years at a stipu-
lated rental to be paid from current or
other legally available funds and may
make all other contracts or agreements
necessary or convenient to carry out such
10/28/2014 10. B.
objective. The county shall have the right
to enter into such leases or lease - purchase
arrangements with private individuals,
other governmental agencies, or corpora-
tions. When the term of such lease is for
longer than 60 months, the rental shall be
payable only from funds arising from
sources other than ad valorem taxation.
Such leases or lease- purchase arrange-
ments shall be subject to approval by the
board of county commissioners, and no
such lease or lease - purchase contract shall
be entered into without said approval.
Page 6
It is undisputed in this case that Flowers failed to obtain
the express or formal "approval" [ * *19] of the Es-
cambia County Board of County Commissioners (the
Board) before entering into the agreement with Unisys.
Therefore, the initial question we must answer is whether
the Board had the power to approve the agreement after
it was executed. We determine that Florida law clearly
establishes that the Board had the power to approve, or,
stated another way, ratify, that which was initially an
unauthorized agreement after it had been executed. See,
e.g., Ramsey v. City of Kissimmee, 139 Fla. 107, 111 -13,
190 So. 474, 476 -77 (1939); Brown v. City of St. Peters-
burg, 111 Fla. 718, 720, 153 So. 140, 140 (1933); cf.
City of Panama City v. T & A Util. Contractors, 606 So.
2d 744, 747 (Fla. [ *1020] 1st DCA 1992) (holding
that city ratified city manager's unauthorized termination
of contract between city and third party); Tolar v. School
Board of Liberty County, 398 So. 2d 427, 428 -29 (Fla.
1981) (finding that municipality's action taken in viola-
tion of Sunshine Law could be later ratified if taken in
accordance with such law); see generally l0A Eugene
McQuillin, The Law of Municipal Corporations, §
29.104 at 63 [ * *20] (3d ed. 1999) ( "It is a general rule
that whatever acts public officials may do or authorize to
be done in the first instance may subsequently be adopt-
ed or ratified by them with the same effect as though
properly done under previous authority. "). The diaposi-
tive question thus becomes, what constitutes "approval"
by the Board within the meaning of section 125.031?
7 We quote the current version of the statute
because the Legislature has not amended the stat-
ute since 1989. See ch. 89 -103, § 1, at 279, Laws
of Fla. Thus, the current version of the statute is
the same as the version in effect at the time the
events in the present case transpired.
Section 125.031 does not define the term "approval"
as used in the statute, nor does the legislative history
underlying the statute shed any light on the matter. 8 Un-
der such circumstances, we must give the statutory Ian-
Packet Page -329-
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla. L. Weekly S 697
guage its plain and ordinary meaning. See, e.g., [ * *21]
Green v. State, 604 So. 2d 471, 473 (Fla. 1992) ( "One of
the most fundamental tenets of statutory construction
requires that we give statutory language its plain and
ordinary meaning, unless words are defined in the statute
or by the clear intent of the legislature. "). In ascertaining
the plain and ordinary meaning of a term, reference may
be made to a dictionary. See id. ( "If necessary, the plain
and ordinary meaning of the word can be ascertained by
reference to a dictionary. ").
8 The Legislature created section 125.031,
Florida Statutes, in 1971, see chapter 71 -240,
section 1, at 1318 -19, Laws of Florida, and, as
stated in footnote 6, supra, has amended the stat-
ute only once since that time. See Ch. 89 -103, §
1, at 279, Laws of Fla. (increasing time period
implicating statute from 24 to 60 months). How-
ever, no legislative history surrounding these
amendments sheds light on the meaning of the
term "approval" as used in the statute.
[ * *22] In its opinion, the federal district court de-
fined "approve" as "to have or express a favorable opin-
ion of or "to accept as satisfactory." Frankenmuth, 10
Fla. L. Weekly Fed. at D341 (quoting Webster's Ninth
New Collegiate Dictionary at 98 (Merriam- Webster Inc.
1991)). In addition to the definition adopted by the fed-
eral district court, the dictionary definition of "approve"
also includes "to give formal or official sanction to."
Webster's Tenth Collegiate Dictionary at 57 (Merri-
am-Webster Inc. 1996). Thus, the dictionary shows that
the term "approve" may consist of either an informal or
formal expression of assent.
Florida case taw 9 also establishes that an approval
or ratification can occur without formal resolution. For
example, in Deutsche Credit Corp. v. Peninger, 603 So.
2d 57, 58 (Fla. 5th DCA 1992), the court stated, "Ratifi-
cation of an agreement occurs where a person expressly
or impliedly adopts an act or contract entered into in his
or her behalf by another [ * *23] without authority."
Similarly, in City of Panama City, the First District de-
termined that the city commission had ratified the city
manager's unauthorized termination of a contract be-
tween the city and a third party-even though the city
commission did not pass a formal resolution terminating
the contract -where the city commission knew the reasons
for the termination and then voted to award the contract
to a third party. See 606 So. 2d at 747; see generally I OA
McQuillin, § 29.106 at 82 (stating that ratification of a
municipal contract may occur "by the affirmative action
of the proper officials, or by any action or non - action
which in the circumstances amounts to approval of the
contract "); cf. Killearn Properties, Inc. v. City of Tal-
lahassee, 366 So. 2d 172 (Fla. 1st DCA 1979) (employ-
10/28/2014 10. B.
Page 7
ing doctrine of estoppel to bar city from challenging va-
lidity of agreements on grounds of lack of proper formal-
ities in the passage [*1021] of such agreements). Asa
result, we determine that the term "approval" as used in
section 125.031 does not require a board [ * *24] of
county commissioners to pass a formal resolution, unless
passage of such a resolution is required by the governing
law of the county. 10 We do note, however, that several
principles must be satisfied before a board of county
commissioners may be deemed to have approved an
agreement absent formal resolution.
9 See, e.g., State v. Mitro, 700 So. 2d 643, 645
(Fla. 1997) ( "In the absence of a statutory defini-
tion, resort may be had to case law or related
statutory provisions which define the term ....
11).
10 We recognize that in reaching its decision in
City of Panama City, the First District distin-
guished the process of ratifying entry into an
agreement from the process of ratifying the ter-
mination of an agreement. See 606 So. 2d at 747.
However, the different policy concerns implicat-
ed in those distinguishable processes does not al-
ter the conclusion that an approval or ratification
of an agreement may occur absent formal resolu-
tion where the governing law of the county does
not require action by formal resolution.
[ * *25] First, we determine that an approval absent
formal resolution must be made in compliance with
Florida's Sunshine Law, which is of both constitutional
and statutory dimension. See art. 1, § 24(b), Fla Const.; §
286.011 (1), Fla. Stat. (1999). Under the Sunshine Law,
any meeting at which official acts are to be taken must be
open to the public, and no "resolution, rule or formal
action shall be considered binding except as taken or
made at such meeting." § 286.01 1(1), Fla. Stat. (1999);
see also, e.g., Zorc v. City of Vero Beach, 722 So. 2d
891, 896 (Fla. 4th DCA 1998) (interpreting Sunshine
Law). As we previously have stated, "The intent of [the
Sunshine Law] is to cover any gathering of the members
of the Board where the members deal with some matter
on which foreseeable action will be taken by the Board."
Tolar, 398 So. 2d at 428. Thus, for a board of county
commissioners to approve a lease or lease- purchase
agreement in accordance with section 125.031, we find it
necessary that such approval [ * *26] be made "in the
sunshine."
If an "approval" by a board of county commissioners
of a lease or lease purchase agreement under section
125.031 must be made in accordance with the Sunshine
Law, it necessarily follows that any subsequent ratifica-
tion of such an agreement must also be made in compli-
ance with the Sunshine Law. This is so because we have
Packet Page -330-
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla. L. Weekly S 697
recognized that for a local government to properly ratify
a previously executed, unauthorized agreement, the
agreement must be ratified "in the same manner ... in
which it might have been originally adopted." Ramsey,
139 Fla. at 113, 190 So. at 477; see also Broward County
v. Conner, 660 So. 2d 288, 290 (Fla. 4th DCA 1995)
(interpreting Sunshine Law) ( "If the county could not
have entered into this contract without action taken at a
meeting, it necessarily follows that the actions of the
county's attorneys could not bind the county to specific
performance of a contract in the absence of proper com-
mission approval. "). As stated by the First District in
City of Panama City, the apparent policy justification
[ * *27] for the requirement set forth in Ramsey is that
"taxpayers should not be held accountable on a contract
unless the contract has been entered into according to the
strict letter of the law. Otherwise, corrupt (or merely
inept) public officials could subject the public to untold
financial liability." 606 So. 2d at 747.
Second, in addition to the requirement that a subse-
quent approval in the form of ratification be made "in the
sunshine" in the same manner that a formal approval
would have required, there are several other general
principles undergirding the concept of ratification war-
ranting our attention. In the vintage opinion of Ball v.
Yates, 158 Fla. 521, 527, 29 So. 2d 729, 732 (1946), this
Court stated, "Before ratification will be implied of an
act of an unauthorized agent it must be made to appear
that the principle has been fully informed and that he has
approved." In Peninger, 603 So. 2d at 58, the Fifth Dis-
trict Court of Appeal expounded upon the general pro-
nouncement made by this Court in Ball:
[ * *28] [ *1022] An agreement is
deemed ratified where the principal has
full knowledge of all material facts and
circumstances relating to the unauthorized
act or transaction at the time of the ratifi-
cation. G & M[v. Tropical Music Serv.],
161 So. 2d [556] at 558. See also Ball v.
Yates, 158 Fla. 521, 29 So. 2d 729 (1946),
cert. den., 332 U.S. 774, 68 S. Ct. 66, 92
L. Ed. 359 (1947); Pedro Realty Inc. v.
Silva, 399 So. 2d 367 (Fla. 3d DCA
1981); Bach v. Florida State Bd. of Den-
tistry, 378 So. 2d 34 (Fla. 1st DCA 1 979).
An affirmative showing of the principal's
intent to ratify the act in question is re-
quired. [Carolina- Georgia Carpet &
Textiles, Inc. v. J Pelloni, 370 So. 2d 450
at 452. Moreover, the issue of whether an
agent's act has been ratified by the princi-
10/28/2014 10.B.
Page 8
pal is a question of fact. One Hour 'Valet
ofAmerica, Inc. v. Keck,
157 So. 2d 83 (Fla. 2d DCA 1963).
Regarding the "full knowledge" requirement discussed in
Peninger, the First District stated the following in Bach
v. Florida State Board of Dentistry, 378 So. 2d 34, 36 -37
(Fla. 1 st DCA 1979):
[ * *29] Before one may infer that a
principal ratified an unauthorized act of
his agent, the evidence must demonstrate
that the principal was fully informed and
that he approved of the act. Ball v. Yates,
158 Fla. 521, 29 So. 2d 729, 732 (1946).
It is generally the rule that the doctrine of
constructive knowledge does not apply to
bring about ratification. The principal is
charged only upon a showing of full
knowledge, and not because he had notice
which should have caused him to make
inquiry, which in turn would have brought
to his attention the knowledge of the un-
authorized act of the employee. 2 Fla. Jur.
2d, Agency and Employment, § 52 at page
204 (1977).... There is no duty imposed
upon the principal to make inquiries as to
whether his agent has carried out his re-
sponsibilities. The principal "has a right to
presume that his agent has followed in-
structions, and has not exceeded his au-
thority." Oxford Lakeline v. First Nat.
Bank, 40 Fla. 349, 24 So. 480, 483
(1898). And, [ * *30]
Packet Page -331-
[w]henever he is sought
to be held liable on the
ground of ratification, ei-
ther express or implied, it
must be shown that he rati-
fied upon full knowledge
of all material facts, or that
he was willfully ignorant,
or purposely refrained
from seeking information,
or that he intended to adopt
the unauthorized act at all
events, under whatever
circumstances. Id.
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla. L. Weekly S 697
Based on the above principles well established in
Florida jurisprudence, we determine that a three -prong
test is appropriate for determining whether an af-
ter -the -fact "approval," or ratification, has occurred in
satisfaction of section 125.031, Florida Statutes. First, a
board of county commissioners must have the power to
approve the agreement. " See, e.g., P.C.B. Partnership v.
City of Largo, 549 So. 2d 738, 740 (Fla. 2d DCA 1989)
(determining that city did not have authority to enter into
an agreement that effectively contracted away the city's
police powers). Second, a board of county commission-
ers must ratify an agreement in the same manner in
which the agreement would have been [ * *31] initially
approved. For example, as we stated above, the approval
must be made in accordance with the "Sunshine Law."
Additionally, where a charter or ordinance requires a
board of county commissioners to take action in a speci-
fied manner, such as by passing a formal resolution (un-
like the circumstances here), [* 1023] then an af-
ter -the -fact approval must satisfy the specified manner to
be valid. See Ramsey, 190 So. at 476 -77, 139 Fla. at
111 -13 (involving city charter requiring the city com-
mission to take action on certain contracts by ordinance
or resolution). Finally, in ratifying the agreement in the
same manner in which it initially could have been ap-
proved, a board of county commissioners must have full
knowledge of the material facts relative to the agreement.
As we have not been asked to determine whether a prop-
er ratification occurred in this case, we leave that ques-
tion open for determination by the Eleventh Circuit
based on the principles set forth above.
11 As will be addressed in our discussion con-
cerning the second certified question, Escambia
County argues that the first prong of this test has
not been met here because the Escambia County
Board of County Commissioners allegedly did
not have the power to initially approve the
agreement. Specifically, Escambia County argues
that (1) the agreement, based on its
nonsubstitution clause, required approval by vot-
er referendum due to its alleged practical
long -term impact on ad valorem taxes; and (2)
the nonsubstitution clause is not severable from
the agreement.
[ * *32] B. THE SECOND CERTIFIED QUESTION
The second certified question presented by the
Eleventh Circuit has asked us to determine whether the
nonsubstitution clause contained in the underlying
10/28/2014 10.B.
Page 9
agreement violates article VII, section 12 of the Florida
Constitution, which provides:
Counties, school districts, munic-
ipalities, special districts and local gov-
ernmental bodies with taxing powers may
issue bonds, certificates of indebtedness
or any form of tax anticipation certifi-
cates, payable from ad valorem taxation
and maturing more than twelve months
after issuance only:
(a) to finance or refinance capital
projects authorized by law and only when
approved by vote of the electors who are
owners of freeholds therein not wholly
exempt from taxation ....
To more accurately reflect the procedural posture and
underlying facts of this case, we rephrase the second
certified question to read:
DOES THE
NONSUBSTITUTION CLAUSE IN THE
LEASE - PURCHASE AGREEMENT,
WHICH REQUIRES UP TO A
TWO -YEAR LAPSE IN COMPUTER
SERVICES UPON
NONAPPROPRIATION, VIOLATE
ARTICLE VII, SECTION 12, OF THE
FLORIDA CONSTITUTION, [ * *33]
EVEN THOUGH THE AGREEMENT
ALSO EXPRESSLY DISCLAIMS USE
OF REVENUES FROM AD VALOREM
TAXATION?
After careful consideration, we answer the second certi-
fied question, as rephrased, in the affirmative.
The 1968 revision to the Florida Constitution, which
produced article VII, section 12 of the Florida Constitu-
tion, became effective on January 7, 1969. 12 See State v.
County of Dade, 234 So. 2d 651, 652 (Fla. 1970). Since
that time, we have addressed the constitutional provision
on several occasions. Escambia County asserts that our
decisions in County of Volusia v. State, 417 So. 2d 968
(Fla. 1982), and Nohrr v. Brevard County Educational
Facilities [ *1024] Authority, 247 So. 2d 304 (Fla.
1971), 13 support a finding that the nonsubstitution clause
implicates article VII, section 12, while Frankenmuth
Packet Page -332-
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25 Fla. L. Weekly S 697
10/28/2014 10.B.
Page 10
attempts to distinguish Nohrr and County of Volusia,
compelling the lessee to continue to ap-
primarily relying on our decisions in Murphy v. City of
propriate funds throughout the full lease
Port St. Lucie, 666 So. 2d 879 (Fla. 1995); State v.
term, thereby rendering the optional fea-
School Board of Sarasota County, 561 So. 2d 549, 553
tures of the nonappropriation and nonre-
(Fla. 1990); State v. Brevard County, 539 So. 2d 461
newal clauses illusory." Id. [ * *36] This
(Fla. 1989); [ * *34] City of Palatka v. State, 440 So. 2d
court agrees a non - substitution clause may
1271 (Fla. 1983); and State v. Alachua County, 335 So.
render a non - appropriation clause illusory,
2d 554 (Fla. 1976). In federal district court, the parties
thereby requiring a lease to undergo Arti-
presented arguments similar to those presented here, and
the court there determined that the nonsubstitution
cle VII, § 12 voter referendum. While
clause
contained in Paragraph 21 of the agreement implicates
Florida's courts have not addressed the
issue,
article VII, section 12 of the Florida Constitution, and
precise several decisions lead to
that conclusion. In Nohrr v. Brevard
thus the agreement could not have been approved absent
County Educational Facilities Authority,
a voter referendum. See Frankenmuth, 10 Fla. L.
247 So. 2d 304 (Fla. 1971), [ * *37] the
Weekly Fed. at D342. In essence, the court determined
court validated non - referendum revenue
that the inclusion of the nonsubstitution clause trans-
bonds that had been authorized to raise
formed the agreement into a long -term certificate of in-
money to build educational facilities. The
debtedness pledging ad valorem taxes. See id. at D341.
court deleted from the bonds, however,
In making this determination, the district court engaged
certain provisions that created a mortgage
in the following analysis:
on the property, allowing the bondholders
Like many long -term municipal lease
to foreclose in the event of default. The
court reasoned the mortgage would "mor-
agreements, the Unisys master lease con-
ally compel" the governing body to levy
tains a non - appropriation clause, provid-
taxes to avoid foreclosure in the event
ing that, if in any given year the govern-
bond payments could not be made from
ing body fails to appropriate funds to
non -ad [ *1025] valorem revenue. Id.
make the lease payments, the lease will
at 311. In effect, the mortgage provision
terminate. (Master Lease P 21). Such
amounted to a pledge of ad valorem taxes,
non - appropriation or non - renewal clauses
which is invalid absent approval by the
are essential to prevent long -term munic-
electorate.
ipal financing arrangements from being
classified as debt under state law, thus
Similarly in State v. Brevard County,
triggering state -law requirements such as
539 So. 2d 461 (Fla. 1989), the court ap-
voter referendum. See M. David Gelfand,
proved a long -term lease - purchase ar-
State & Local Government Debt Financ-
rangement which included an annual "re-
ing, § 3:17 at 32 (Clark Boardman & Cal-
newal option" similar to the annual
laghan 1993).
non- appropriation clause in the Unisys
lease. The court rejected an argument that
The Unisys lease [ * *35] also con -
the financing arrangement violated Nohrr,
tains a non - substitution clause, providing
but specifically noted the deal allowed the
that, in the event of non - appropriation, the
county to "terminate the lease without
Lessee agrees not to procure substitute
further obligation" in any given year. Id.
computer equipment [or equivalent ser-
at 463. Thus, the court reasoned, "with its
vices] for the remainder of the appropria-
annual renewal option' under the lease,
tion period and the one following it.
[ * *38] the county maintains full budget -
(Master Lease P 21). Such clauses are a
ary flexibility."
common method by which the lessor cre-
ates an economic disincentive for the mu-
In contrast, a non - substitution clause
nicipality to exercise its non - appropriation
denies the county "full budgetary flexibil-
rights. Gelfand § 3:17 at 32. As one
ity" because it renders the
commentator has noted, however, "there
non - appropriation clause illusory by
is considerable doubt about the enforcea-
compelling the municipality to make the
bility of the non - substitution clause and
lease payments or suffer a penalty. The
its effect on the validity of the lease." Id.
Attorney General of at least one State has
at 33. "The inclusion of the
opined a non - substitution clause compels
nonsubstitution clause may be viewed as
lease payments and creates debt. See La.
Packet Page -333-
sm
10/28/2014 10.B.
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769 So. 2d 1012, *; 2000 Fla. LEX1S 1889, * *;
25 Fla. L. Weekly S 697
Atty Gen. Op. No. 86 -517, 1986 WL
Nothing herein shall
236994;
constitute a pledge by the
Accordingly, the court must address
Lessee of the full faith and
credit of the Lessee, nor
two issues to determine the validity of the
does the Lessee pledge any
non - substitution clause in this case: (1)
ad valorem taxes or other
whether the risk of non - substitution would
moneys other than moneys
morally compel the County Commission
lawfully appropriated by
to appropriate funds for the lease pay-
the County Commission of
ments; and (2) whether those funds would
Escambia County from
come from ad valorem tax dollars.
time to time. .. . Lessor
A. Moral Compulsion
shall [ * *40] not have the
make the lease payments to avoid the risk
right to require or compel
Had funds not been appropriated to
the exercise of the ad val-
make the Unisys lease payments, the evi-
orem taxing power of, or
dence is undisputed the consequences of
the appropriation of any
non - substitution would have been disas-
funds by the County
trous. The Unisys equipment provided the
Commission to obtain the
primary means for county payroll and
payment or performance of
central data processing for the County
any of the Lessees obliga-
Commission and numerous other county
tions created by this
offices. At deposition, Flowers made the
agreement.
following comments regarding
2d at 463 (refusing to apply County
non - substitution:
[ * *41] of Volusia to a case in which the
Q: [ * *39] What would happen? (Addendum P 1).
A: If they took the equipment out,
Regardless of the above provision,
then we would be shut down. We would-
the court finds the lease, and in particular
n't be able to operate.
the non - substitution clause, would inevi-
Q: Why is that?
tably require the County Commission to
appropriate ad valorem tax dollars to
A: Because everything was on that
make the lease payments. The case is
computer.
[ *1026] similar to County of Volusia v.
(Flowers Deno. at 65). Given these
State, 417 So. 2d 968 (Fla. 1982), in
facts, the court wastes little time finding
which the municipality sought to secure
the County Commission would feel mor-
bonds by pledging "All legally available
ally compelled to appropriate funds to
sources of unencumbered county revenue
make the lease payments to avoid the risk
other than ad valorem taxes." The su-
of running county government without a
preme court reasoned this pledge, along
central data processing ability for up to
with Volusia County's promise to do all
two years. In this regard, the
things necessary to continue to receive the
non - appropriation clause is rendered illu-
non -ad valorem revenue, would inevitably
sory and the lease creates a multi -year
lead to higher ad valorem taxes during the
debt.
life of the bonds. The court denied valida-
tion, reasoning, "that which may not be
B. Ad Valorem Taxes
done directly may not be done indirectly."
A municipal debt does not trigger Ar-
Id. at 972.; cf. Brevard County, 539 So.
ticle VII, § 12, however, unless it pledges
2d at 463 (refusing to apply County
ad valorem tax dollars as its source of
[ * *41] of Volusia to a case in which the
payment. E.g. State v. School Bd of
municipality, unlike Escambia County in
Sarasota County, 561 So. 2d 549, 552
this case, "reserved the right to terminate
(Fla. 1990). In this case, the addendum to
the lease without further obliga-
the master lease specifies no ad valorem
tion. ")County of Volusia applies squarely
taxes are pledged:
to these facts. The size of the lease pay-
ments together with the consequences of
Packet Page -334-
769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla. L. Weekly S 697
non - substitution indicate the County
Commission would inevitably be forced
to spend ad valorem taxes dollars to fund
this lease. The addendum clause pledging
otherwise is illusory. For these reasons,
the court finds the non - substitution clause
violates Article VII, § 12 of the Florida
Constitution and is therefore unenforcea-
ble.
Frankenmuth, 10 Fla. L. Weekly Fed. at D341 -42
(footnote omitted).
12 The predecessor constitutional provision to
article VII, section 12, was article IX, section 6 of
the Constitution of 1885, which was effective
from 1930 until January 7, 1969. See State v.
County of Dade, 234 So. 2d 651, 654 (Fla. 1970).
That section provided:
The Legislature shall have
power to provide for issuing State
bonds only for the purpose of re-
pelling invasion or suppressing
insurrection, and the Counties,
Districts, or Municipalities of the
State of Florida shall have power
to issue bonds only after the same
shall have been approved by a
majority of the votes cast in an
election in which a majority of the
freeholders who are qualified
electors residing in such Counties,
Districts, or Municipalities shall
participate, to be held in the man-
ner to be prescribed by law; but
the provisions of this act shall not
apply to the refunding of bonds
issued exclusively for the purpose
of refunding of the bonds or the
interest thereon of such Counties.
Districts, or Municipalities.
Art. IX, § 6, Fla. Const. (1885). In numerous
decisions, this Court held that various kinds of
debts were not "bonds" for the purposes of the
referendum requirement. See, e.g., State v. Miami
Beach Redevelopment Agency, 392 So. 2d 875,
895 -98 (Fla. 1980) (discussing this Court's cases
const ruing the predecessor constitutional provi-
sion); see generally Patricia M. Lee, Note, Bond
10/28/2014 10. B.
Page 12
Financing and the Referendum Requirement:
Harmless Creative Financing or Assault on the
Constitution ?, 20 Stet. L. Rev. 989, 992 -98
(199 1) (same).
13 In State v. School Board of Sarasota Coun-
ty, 561 So. 2d 549, 553 (Fla. 1990), this Court in-
dicated that our prior decision in Nohrr construed
the predecessor to article VII, section 12 of the
Florida Constitution. However, after reviewing
the opinion in Nohrr, it is clear that (1) the facts
in that case took place after the 1968 constitu-
tional revision became effective; and (2) this
Court was construing the new constitutional pro-
vision in that case.
We agree with the federal district court's thorough
analysis regarding the nonsubstitution clause in the pre-
sent agreement. While the addendum to the master lease
agreement states that there is to be no pledge of ad val-
orem taxes to fund the payments due under the agree-
ment, and further disclaims any right to compel the pro-
curement of ad valorem taxes, this is not a case where
there is a pledge of a specifically demarcated source of
revenue to satisfy the underlying obligation. See Murphy,
666 So. 2d at 881 [ * *42] (upholding bond validation
where non- ad valorem taxes were pledged as a supple-
ment to specifically demarcated source of revenue); City
of Palatka, 440 So. 2d at 1273 (validating bond where
two specific non -ad valorem sources of revenue were
pledged); Alachua County, 335 So. 2d at 556 -58 (vali-
dating bonds funded by pledge of revenue sharing funds
and race track proceeds). More importantly, this is not a
case where the county has retained "full budgetary flexi-
bility." See School Board of Sarasota County, 561 So. 2d
at 552 -53 (noting that school board could maintain "full
budgetary flexibility" under terms of agreement); " Bre-
vard County, 539 So. 2d at 464 (noting that "annual re-
newal option" under lease- purchase agreement would
allow county to maintain "full budgetary flexibility").
Instead, due to the expense and functionality of the
computer equipment covered by the agreement here, the
nonsubstitution clause interrelates with other lease provi-
sions, see County of Volusia, 417 So. 2d at 972, to "mor-
ally compel" the county to pledge ad valorem taxes to
fulfill the obligations of the lease. See [ * *43] Nohrr,
247 So. 2d at 311. Accordingly, we answer the second
certified question, as rephrased, in the affirmative. 't
14 In School Board of Sarasota County, we
noted that the school board's failure to appropri-
ate funds would result in "lease penalties," but
that even with such penalties, the board main-
tained its "full budgetary flexibility." See 561 So.
2d at 552 -53. As set forth in our opinion in that
case, the lease penalties included either purchas-
ing the constructed facilities or surrendering pos-
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769 So. 2d 1012, *; 2000 Fla. LEXIS 1889, * *;
25 Fla, L. Weekly S 697
session of the facilities and the land upon which
those facilities stood for the remainder of the
lease term. See id. at 551. We emphasized, how-
ever, that the school board was "free to substitute
other facilities for those surrendered." See id.
Clearly, the presence of a nonsubstitution clause
here distinguishes this case from our decision in
School Board of Sarasota County, insofar as "full
budgetary flexibility" is concerned.
15 The federal district court determined that
the nonsubstitution clause is severable from the
remainder of the agreement, seeFrankenmuth,
10 Fla. L. Weekly Fed. at D342, but the Eleventh
Circuit has not asked us to make a determination
regarding severability. We decline to address the
severability issue here, given that the issue is not
novel and has not been fully briefed in this Court.
We do note, however, that if the nonsubstitution
clause is not severable from the remainder of the
agreement, then the entire agreement must be in-
validated as violative of article VII, section 12 of
the Florida Constitution.
[ * *44] III. CONCLUSION
As we have analyzed, the first certified question is
answered in the affirmative [*1027] upon our deter-
mination that a board of county commissioners may ap-
prove in the form of ratification a lease- purchase agree-
ment under section 125.031, Florida Statutes, even ab-
sent formal resolution, where the board is not required by
local ordinance or charter to take action by formal reso-
lution. Further, we have established a three -prong test to
guide the determination of whether an approval without
formal resolution has occurred. Finally, we have re-
sponded to the second certified question as rephrased in
the affirmative upon the determination that, based on the
particular facts in this case, the nonsubstitution clause
implicates article VII, section 12 of the Florida Constitu-
tion. Accordingly, we return the record in this case to the
United States Court of Appeals for the Eleventh Circuit.
It is so ordered.
WELLS, C.J., and SHAW, HARDING, ANSTEAD,
PARIENTE and QUINCE, JJ., concur.
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FOCUS - 4 of 24 DOCUMENTS
FRANKENMUTH MUTUAL INSURANCE COMPANY, Plaintiff - Appellee,
Cross - Appellant, versus ESCAMBIA COUNTY, FLORIDA, Defendant - Appellant,
Cross - Appellee.
No. 01 -12976
UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
289 F.3d 723; 2002 U.S. App. LEXIS 7493; 15 Fla. L. Weekly Fed. C 507
April 24, 2002, Decided
April 24, 2002, Filed
SUBSEQUENT HISTORY: Appeal after remand at
Frankenmuth Mut. Ins. v. Magaha, 2003 U.S. App.
LEXIS 27185 (11th Cir., Dec. I6, 2003)
PRIOR HISTORY: [ * *1] Appeals from the
United States District Court for the Northern District of
Florida. D. C. Docket No. 95- 30412 -CV -3 -LAC. Judge:
Lacey A. Collier.
Frankenmuth Mut. Ins. Corp. v. Magaha, 1996
U.S. Dist. LEXIS 15930 (N.D. Fla. 1996).
Frankenmuth Mut. Ins. Corp. v. Magaha, 1996 U.S.
Dist. LEXIS 15930 (N.D. Fla., Aug. 30, 1996)
DISPOSITION: Affirmed in part, vacated and re-
manded in part.
COUNSEL: For County of Escambia, Florida, Appel-
lant: Tucker, David G., Escambia County Attorney's Of-
fice, Pensacola, FL.
For Frankenmuth Mutual Insurance Company, Appel-
lee: Westmoreland, J. Lofton, Moore, Hill & West-
moreland, Pensacola, FL. Beall, Charles Franklin Jr.,
Moore, Hill, Westmoreland, Hook & Bolton, P.A., Pen-
sacola, FL.
JUDGES: Before BARKETT, HULL and KRAVITCH,
Circuit Judges.
OPINION BY: BARKETT
OPINION
[ *725] BARKETT, Circuit Judge:
The Board of County Commissioners of Escambia
County, Florida ( "the County") appeals from a summary
judgment in favor of Frankenmuth Mutual Insurance
Company ( "Frankenmuth "). The summary judgment
order declared enforceable a computer lease - purchase
agreement ( "the Lease ") between the County and Unisys
Leasing Corporation, Frankenmuth's predecessor in
interest. Frankenmuth cross - appeals the district court's
denial of its motion for costs and attorneys' fees. We
AFFIRM the summary judgment declaring the Lease
enforceable and VACATE the denial of Frankenmuth's
motion for attorneys' fees and costs.
FACTS
In 1992, the Escambia County Comptroller, Joe
Flowers, signed a lease - purchase agreement with Unisys
Leasing Corporation to lease a mainframe computer. In
subsequent years, he added additional computer equip-
ment and an imaging system to the Lease under a series
of lease schedules. Paragraph 21 of the lease- purchase
agreement contained a "non- appropriation clause, [ * *2]
" which provided that the agreement would terminate in
any given [ *726] year if the "legislative body or
funding authority" should fail to appropriate funds to
make the Lease payments. ' Additionally, paragraph 21
contained a non - substitution clause, which provided that
in the event the County refused to appropriate the requi-
site funds ( "non- appropriation "), the County agreed not
to purchase or rent any substitute computer equipment
for the balance of the appropriation period and for one
full period following the termination of the agreement. In
Packet Page -337-
289 F.3d 723, *; 2002 U.S. App. LEXIS 7493, * *;
15 Fla. L. Weekly Fed. C 507
a separate addendum, the agreement provided that noth-
ing in the Lease would be construed to constitute a
pledge of ad valorem taxes and that, in the event of de-
fault, the lessor had no right to compel the County to
appropriate funds to make the lease payments.
1 The non - appropriation clause allowed the
County to be released from the lease if certain
conditions were met, including lack of funding
for the lease from any source, proper notice, re-
turn of equipment in substantially the same con-
dition in which it was. received, payment of any
amount due under the lease during the appropria-
tions period in which the default occurred, for-
feiture of any security deposits, and payment of
any termination charges.
[ * *3] Flowers made scheduled payments under
the lease - purchase agreement for several years without
incident, during which the computer equipment was used
for a variety of municipal functions, including county
payroll and central data processing services, and to ser-
vice the Road, Mass Transit and Solid Waste Depart-
ments. For the years 1992, 1993, and 1994, Flowers
submitted his budget requests to the County and included
in the Comptroller's budget a line item for "Debt Service
on Computer Equipment." 2 Each year the County ap-
proved in excess of $ 300,000.00 to cover this expendi-
ture without any specific inquiry into the details of the
lease agreement. During this period, Unisys conveyed its
interest in the Lease to Chicorp Corporation, and Chicorp
subsequently conveyed its interest in the Lease to
Frankenmuth.
2 The budgets that Flowers submitted request-
ed $ 301,563.00 for the computer leases in 1992,
$ 304,561.00 in 1993, and $ 304,113.00 in 1994.
In early 1994, the County began studying the advis-
ability of a county -wide [ * *4] computer network.
Flowers suggested integrating the County's computer
network with the Comptroller's system, and provided the
County with information about the Unisys equipment,
although he did not send to the County specific infor-
mation regarding the terms of the lease with Unisys. The
County affirmed the decision to integrate the systems at a
public meeting held on June 28, 1994.
Later in 1994, the County lost millions of dollars in
bad derivative investments made by Flowers' office.
Flowers was criminally indicted for various acts of mal-
feasance, one of which was his decision to enter into the
Lease with Unisys without County approval. Flowers
pled no contest and resigned from office. In 1995, the
Florida legislature abolished the Escambia County Office
of the Comptroller, and the Escambia County Clerk of
the Circuit Court, Ernie Lee Magaha, became responsi-
10/28/2014 10.B.
Page 2
ble for the constitutional duties formerly held by the Of-
fice of Comptroller. Magaha and the County reviewed
the Lease and determined that the County should reject
the Lease because the Unisys equipment was too old,
expensive, and ineffective to serve the County's needs.
Consequently, in mid -1995, the County notified Frank-
enmuth [ * *5] that it would not make its remaining
Lease payments for that year and that the Lease was void
and unenforceable because Flowers had not been author-
ized to enter into the agreement [ *727] without Coun-
ty approval, and he had failed to secure such approval.
In September 1995, Frankenmuth brought this
lawsuit seeking both a declaration that the Lease was
valid and enforceable and an injunction prohibiting the
County from breaching the agreement. During the dis-
covery period, the County purchased a replacement
computer system, and Frankenmuth amended its claim
to seek only declaratory relief. All parties moved for
summary judgment. The district court ruled in part for
Frankenmuth, finding that although the
non - substitution clause in the Lease was void and unen-
forceable under Article VII, § 12 of the Florida Constitu-
tion, ' the clause was severable, and, because the County
had ratified the Lease, the contract was enforceable
without the non - substitution clause.
3 Article VII, § 12, prohibits ad valorem taxes
from being used for this purpose. It reads:
Counties, school districts, mu-
nicipalities, special districts and
local governmental bodies with
taxing powers may issue bonds,
certificates of indebtedness or any
form of tax anticipation certifi-
cates, payable from ad valorem
taxation and maturing more than
twelve months after issuance only:
(a) to finance or refinance
capital projects authorized by law
and only when approved by vote
of the electors who are owners of
freeholds therein not wholly ex-
empt from taxation; or
(b) to refund outstanding
bonds and interest and redemption
premium thereon at a lower net
average interest cost rate.
[ * *61 The County appealed the district court's de-
cision and this Court certified two questions to the Flor-
ida Supreme Court, namely: (1) whether a county board
Packet Page -338-
289 F.3d 723, *; 2002 U.S. App. LEXIS 7493, * *;
15 Fla. L. Weekly Fed. C 507
of commissioners may approve a lease - purchase agree-
ment under Fla. Stat. ch. 125.031 absent formal resolu-
tion, ' and, if so, what standards guide consideration of
whether such an approval has occurred; and (2) whether
the non - substitution clause contained in the Lease vio-
lates Article VII, § 12 of the Florida Constitution.
Frankenmuth v. Magaha, 769 So. 2d 1012 (Fla. 2000).
The Florida Supreme Court ruled that a county board
may approve an agreement absent an express resolution,
and outlined a three -part test for determining whether,
under Fla. Stat. ch. 125.031, a Board has ratified an
agreement after the fact ( "the Frankenmuth test "). The
Florida Supreme Court also ruled that the
non - substitution clause violated the Florida Constitution
and was therefore unenforceable. 5
4 Fla. Stat. ch. 125.031 gives the County gen-
eral authority to contract for goods, services, and
equipment needed for a public purpose as long as
the contract does not exceed thirty years.
[ * *7]
5 The Florida Supreme Court explained that
"the inclusion of the nonsubstitution clause may
be viewed as compelling the lessee to continue to
appropriate funds throughout the full lease term,
thereby rendering the optional features of the
nonappropriation and nonrenewal clauses illuso-
ry.... [A] non - substitution clause may render a
non - appropriation clause illusory, thereby re-
quiring a lease to undergo Article VII, § 12 voter
referendum." Frankenmuth, 769 So. 2d at 1024.
In accordance with the Florida Supreme Court's de-
cision, this Court vacated the district court's original
summary judgment in favor of Frankenmuth, and re-
manded the case for a determination of whether the
County had ratified the agreement under the Franken-
muth test, and was therefore liable under the contract.
On remand, the district court again held that the uncon-
stitutional non - substitution clause was severable, and
therefore did not invalidate the entire lease. The court
concluded that the County had ratified the agreement
under the Frankenmuth test and that, accordingly, the
contract was enforceable [ * *8] against the county. The
district court further held that neither Escambia nor
Frankenmuth was entitled to attorneys' [ *728] fees.
The County now appeals, arguing that the district court
erred in concluding both that the non - substitution clause
was severable and that the county had ratified the lease
agreement. Frankenmuth cross - appeals from the denial
of its motion for attorneys' fees and costs.
The interpretation of an agreement under traditional
contract principles is a question of law subject to de novo
review. See Brewer v. Muscle Shoals Bd. of Educ., 790
F.2d 1515, 1519 (11th Cir. 1986). We review a district
10/28/2014 103.
Page 3
court's decision interpreting a contractual attorneys' fee
provision de novo. BankAtlantic v. Blythe Eastman
Paine Webber, Inc., 955 F.2d 1467, 1477 (11th Cir.
1992).
DISCUSSION
I. The County's Appeal
The Florida Supreme Court held that the
non - substitution clause in the Lease violates the Florida
Constitution. Frankenmuth, 769 So. 2d at 1023. Ac-
cordingly, unless the non - substitution clause is severable,
the Lease is not enforceable. The County first argues that
the district court erred in [ * *9] concluding that the
Lease's non - substitution clause is severable. The County
further argues that, even if the non - substitution clause is
severable, the district court erred in finding that the
County ratified the Lease. We first address the severabil-
ity question.
A. Whether the Lease's Non - Substitution Clause
Is Severable
In determining whether a contract provision is sev-
erable, Florida courts look to the entirety of the agree-
ment. Wilderness Country Club v. Groves, 458 So. 2d
769, 771 (Fla. 2d Dist. Ct. App. 1984) ( "[A] contract is
indivisible where the entire fulfillment of the contract is
contemplated by the parties as the basis of the arrange-
ment.") (quoting Local No. 234 v. Henley & Beckwith,
66 So. 2d 818 (Fla. 1953)). On review of a bilateral con-
tract' such as the one at issue here, the governing rule is
that
a bilateral contract is severable where
the illegal portion of the contract does not
go to its essence, and where, with the il-
legal portion eliminated, there still re-
mains of the contract valid legal promises
on one side which are wholly supported
by valid legal promises on the other.
Williston on Contracts, [ * *10] rev. ed., Vol. 6, §
1782; see also Vineberg v. Brunswick Corp., 391 F.2d
184, 186 (5th Cir. 1968) ( "an illegal contract provision,
or one contrary to public policy, when invalidated, will
be severed from the remainder of the contract if it is pos-
sible to do so without leaving the remainder of the con-
tract meaningless.") '; Wilderness, 458 So. 2d at 771 (a
bilateral contract is severable where the illegal provision
does not go to its essence). Whether a contract is entire
or divisible depends upon the intention of the parties.
Ireland v. Craggs, 56 F.2d 785 (5th Cir. 1932). The par-
ties' intention is a matter that may be determined "by a
fair construction of the terms and provisions of the con-
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15 Fla. L. Weekly Fed. C 507
tract itself, and by the subject matter to which it has ref-
erence." 12 Am. Jur. 2d, Contracts, § 415.
6 Black's Law Dictionary defines a bilateral
contract as "[a] contract in which each party
promises a performance, so that each party is an
obligor on that party's own promise and an obli-
gee on the other's promise." Black's Law Dic-
tionary 319 (7th ed. 1999).
[ * *11]
7 In Bonner v. Prichard, 661 F.2d 1206, 1209
(11th Cit. 198 1) (en banc), the Eleventh Circuit
adopted as binding precedent all Fifth Circuit de-
cisions handed down prior to the close of busi-
ness on September 30, 1981.
[ *729] Here, the fact that the contract itself con-
tains a severability provision demonstrates that the par-
ties intended for the contract to be severable. ° Further-
more, the non - substitution clause does not go to the es-
sence of the contract. The primary promises between the
parties remain unchanged in the absence of this clause:
the County agreed to pay in excess of $ 300,000.00 each
year to lease the computer equipment, and Franken-
muth and Unysis continued to supply the City with offi-
cial title to the property and use of the equipment for the
lease term. In this case, the non - substitution clause did
not go to the essence of the contract between the parties.
The essential terms remain intact without the
non - substitution clause and the remainder of the contract
remains meaningful and viable. Thus, the district court
did not err in determining that the non - substitution
[ * *12] clause in this lease was severable.
8 Paragraph 30 of the contract reads: "Severa-
bility: Any provision of this Lease which is pro-
hibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability, without
invalidating the remaining provisions hereof. To
the extent permitted by applicable law, Lessee
hereby waives any provision of law which pro-
hibits or renders unenforceable any provision
hereof in any respect."
Having found that the district court correctly deter-
mined that the non - substitution clause was severable, we
turn to the question of whether the county ratified the
lease - purchase agreement.
B. Whether the County Ratified the Lease Purchase
Agreement
In Frankenmuth v. Magaha, the Florida Supreme
Court established a three -part test to determine whether a
county has ratified an agreement within the definition of
Fla. Stat. ch. 125.031:
10/28/2014 10.B.
First, a board of county commissioners
must have the power to approve [ * *13]
the agreement. Second, a board of county
commissioners must ratify [the] . . .
agreement in the same manner in which
the agreement would have been initially
approved. For example, as we stated
above, the approval must be made in ac-
cordance with the "Sunshine Law." Addi-
tionally, where a charter or ordinance re-
quires a board of county commissioners to
take action in a specified manner, such as
by passing a formal resolution (unlike the
circumstances here), then an after- the -fact
approval must satisfy the specified man-
ner to be valid. Finally, in ratifying the
agreement in the same manner in which it
initially could have been approved, a
board of county commissioners must have
full knowledge of the material facts rela-
tive to the agreement.
Page 4
Frankenmuth, 769 So. 2d at 1022 -23. The County ar-
gues that none of the three prongs of the Frankenmuth
test can be satisfied, and thus, that the district court erro-
neously concluded that the County ratified the agree-
ment. We discuss each part of the test in turn.
1. Whether the County Had Authority to Enter into
the Lease
The County's only argument regarding the first
prong of the Frankenmuth test is that the [ * *14]
County did not have the authority to enter into the Lease
because the non - substitution clause in the agreement
violated Article VII, § 12 of the Florida Constitution. In
other words, the County argues that it could not have
ratified the contract because it could not have ratified the
non - substitution clause absent a voter referendum as
required by Article VII, § 12 of the Florida Constitution.
As discussed in Part A, supra, we [ *730] agree with
Frankenmuth that the illegal lease term was a severable
or non - essential part of the agreement, and therefore the
County could have approved the agreement pursuant to
its authority under Fla. Stat. ch. 125.031. We recognize
that in Frankenmuth, the Florida Supreme Court indi-
cated that a government entity commits an ultra vires act
when it enters into a contract that violates its constitu-
tional obligations, and in this case the Florida Supreme
Court concluded that the non - substitution clause con-
flicted with the constitutional requirement that the
County conduct a voter referendum before entering into
a contract that would require a levy of taxes to satisfy its
obligations. See Frankenmuth, 769 So. 2d at 1022 (ex-
Packet Page -340-
289 F.3d 723, *; 2002 U.S. App. LEXIS 7493, * *;
15 Fla. L. Weekly Fed. C 507
plaining that [ * *15] a city government may not enter
into an agreement that purports to contract away the
city's police powers); P.C.B. Partnership v. City of Lar-
go, 549 So. 2d 738, 740 (Fla. 2nd Dist. Ct. App. 1989)
(same). However, unlike P.C.B., where the purpose of
the contract was itself unconstitutional, the unconstitu-
tional non - substitution clause here was not a central part
of the Lease. Here, the Lease payment terms and sched-
ule were the central parts of the agreement. The
non - substitution clause merely served as a supplemen-
tary penalty provision that was designed to discourage
the County from deciding to cancel the lease before its
full term. Therefore, the district court properly ruled that
the County's ratification of the agreement was within the
County's authority under Fla. Stat. ch. 125.031, and that
Frankenmuth had satisfied its burden under the first
prong of the ratification test.
2. Whether the County Ratified the Agreement in the
Same Manner in which the Agreement Would Have
Been Initially Approved
The district court concluded that the only statutory
requirement necessary for the County to lawfully ap-
prove the Lease in the first instance was compliance
[ * *16] with the Florida Sunshine law. Because the
County reviewed the lease arrangement and agreed to
continue using the leased computer systems at public
meetings in May and June 1994, the district court con-
cluded that the County had complied with the Sunshine
Law. We find no error in this conclusion.
Florida law does not require that the County issue a
formal resolution to enter into a lease agreement. Con-
ceding that no rule requires that a contract be approved
by formal vote or resolution, the County nonetheless
argues that common law requires some functional equiv-
alent to establish that the County intended to adopt the
lease - purchase agreement. However, the Florida Su-
preme Court has not articulated any specific requirement
for such a functional equivalent. Indeed, in explaining
the second prong of the Frankenmuth test, the Florida
Supreme Court stated:
In its opinion, the federal district court
defined "approve" as "to have or express a
favorable opinion of or "to accept as sat-
isfactory." In addition to the definition
adopted by the federal district court, the
dictionary definition of "approve" also in-
cludes "to give formal or official sanction
to." Thus, the dictionary [ * *17] shows
that the term "approve" may consist of ei-
ther an informal or formal expression of
assent.
10/28/2014 10. B.
Page 5
Frankenmuth, 769 So. 2d at 1020 (internal citations
omitted). The County voted in June 1994 to adopt a
computer networking plan that used the leased equip-
ment. Whether deemed to be a formal or informal ex-
pression, there is no question that this action signified the
County's assent to the use of the leased equipment.
[ *731] The County, however, argues that before it
can assent to any contract, either formally or informally,
Florida law requires that the specific terms and condi-
tions of the contract be presented to the county commis-
sion at its public meeting. We are unable to find support
in the cases cited by the County, or in Florida law gener-
ally, for such a proposition. For example, the County's
reliance on Hoskins v. City of Orlando, 51 F.2d 901 (5th
Cir. 193 1) is misplaced. In Hoskins, the mayor of the city
of Orlando had signed a lease for an apartment building.
Id. at 902. That lease was later repudiated by the city. Id.
The court invalidated the lease because it had not been
made for a legitimate municipal purpose and was [ * *18]
thus beyond the city's power. Id. at 904 -05. Further-
more, unlike the case at bar, the lease at issue in Hoskins
involved real property and thus implicated specific stat-
utory requirements, including the unanimous vote of the
city council. Id. While the city council had initially ap-
proved the lease unanimously, the lease ultimately
signed by the mayor was so different from the original
lease "as to amount to another transaction." Id. at 906.
Ramsey v. City of Kissimmee, 190 So. 474 (Fla.
1939), is likewise inapplicable. There, the court held that
the city had not ratified an engineering contract because
the city charter expressly required that all such contracts
"be evidenced by resolution or ordinance." 139 Fla. at
112. Thus, ratification under that city charter was not
possible absent formal resolution. There is no evidence
in this case that Escambia County's Code requires a sim-
ilar formal resolution to approve or ratify a contract.
Frankenmuth, 769 So. 2d at 1021. B
9 The County also relies on Town of Madison
v. Newsome, 39 Fla. 149, 22 So. 270 (Fla. 1897),
which is likewise inapposite. The Newsome Court
rejected an argument that the town had ratified a
fixed -term employment contract for a night
watchman. In that case, the town council had
continued to approve the item listed as the
watchman's compensation each month. However,
this was the same compensation which had been
paid to each of the plaintiffs predecessor night
watchmen who had not been employed under a
fixed -term contract and there had been nothing in
the record by which the council could have real-
ized that there had been any change in the status
of the night watchman solely from his monthly
Packet Page -341-
289 F.3d 723, *;2002 U.S. App. LEXIS 7493, * *;
15 Fla. L. Weekly Fed. C 507
compensation. Newsome turns on a question of
knowledge, the third prong of the Frankenmuth
test, rather than the manner of ratification, the
second prong.
[ * *19] We conclude that the district court did not
err in determining that the County's ratification of the
lease complied with the Florida Sunshine Law and that
such compliance was the only statutory requirement
necessary for the County to lawfully approve a contract.
Since the Board in 1994 initially considered whether to
integrate the Unisys system into its new computer net-
work at a public meeting, and ultimately agreed to adopt
a technology plan that included this equipment at a pub-
lic meeting, the approval process satisfied the Sunshine
Law's requirements. 11 Thus, the district court did not err
in finding that the [ *732] County had informally or
implicitly adopted the lease agreement at these public
meetings "in the same manner in which the agreement
would have been initially approved."
10 The County alternatively argues that the
1994 meetings cannot be used to satisfy the Sun-
shine Law requirement, as the County was not
aware of all of the material terms of the lease
purchase agreements at these meetings and, con-
sequently, they do not count as part of the formal
review process. This argument, however, misses
the mark. The Sunshine Law requires only that
the approval of the lease occur in public and has
no relevance to the level of information that the
County must have in order to enter into a con-
tractual agreement. The inquiry into whether the
County was aware of the material terms of the
agreement is more properly considered under the
third prong of the ratification test. Franken-
muth, 769 So. 2d at 1022.
[ * *20] 3. Whether the County Was Aware of the
Material Terms of the Lease
The final prong of the Frankenmuth test requires
the Board to have been aware of the agreement's material
terms at the time it adopted or accepted the lease agree-
ment. Frankenmuth, 769 So. 2d at 1022 -23 ("whenever.
.. [an entity] is sought to be held liable on the ground of
ratification, either express or implied, it must be shown
that he ratified upon full knowledge of all material
facts. "). The district court concluded that the County had
"full knowledge of the material terms" of the computer
lease because: (1) over a three year period, the County
had approved the Comptroller's budget, which consist-
ently included a line item requesting funding for the
lease payments; (2) the County had voted to change its
technology plan to include the Unisys computer systems;
and (3) in two separate audits, an independent auditing
10/28/2014 10. B.
Page 6
company had informed the County that it appeared that
an official in its employ had entered into an unauthorized
lease, and the County failed to investigate or repudiate
the lease. The County argues that it was not aware of all
of the material terms of the lease - purchase [ * *21]
agreement because: (1) it was unaware of the
non - substitution clause; (2) some equipment and pricing
terms were added to the agreement after the 1994 meet-
ings; and (3) it voted to use the computer systems with-
out knowledge of the high financing costs associated
with the lease agreement.
The record reflects that between 1993 and 1994, the
County was fully aware of the equipment and costs asso-
ciated with the lease. Specifically, in August 1993,
Flowers sent the Board Chairman and members of the
Board a letter informing them about the installation of
the Unisys mainframe computer, describing the comput-
er's components, and disclosing his relationship with
Unisys. Later, in May 1994, Flowers sent the County
Board a letter indicating that the equipment had been
updated, and suggesting that the County integrate his
computers with the County's other computers to create an
area network. By the June 1994 Commission meeting,
when the Commission affirmed the plan to integrate the
Comptroller's computer system into the County's net-
work, the County Commissioners knew that Flowers had
acquired new computer equipment and they knew about
the characteristics of that equipment. Moreover, the
County [ * *22] approved budget expenditures to pay the
Lease for three consecutive years between 1992 and
1994, and therefore generally knew about the Lease's
costs. Although the County correctly points out that the
costs that Flowers budgeted for computer equipment
before Flowers signed the Unisys Lease were substan-
tially similar to the cost budgeted after he signed that
particular lease, there is no question that the Commission
was aware of the new lease because Flowers informed
the County that he had acquired new computer equip-
ment in his letter of August 1993.
We are satisfied that the evidence supports the con-
clusion that the County was aware of the material terms
of the Lease, both because of the information specifically
presented to the Commission and because the actual
Lease was at all times available to the Commission for
reference. While Frankenmuth stated that the ratifying
body "is charged only upon a showing of full
knowledge" and not because it had information before it
that should have prompted an inquiry, it further recog-
nized [ *733] that sometimes a petitioner can show that
a party ratified an agreement because he "was willfully
ignorant, or purposely refrained from seeking infor-
mation, [ * *23] or that he intended to adopt the unau-
thorized act [or agreement] at all events, under whatever
circumstances." Frankenmuth, 769 So. 2d at 1022 (em-
Packet Page -342-
289 F.3d 723, *; 2002 U.S. App. LEXIS 7493, * *;
15 Fla. L. Weekly Fed. C 507
phasis added). The evidence in this case suggests that the
County intended to adopt the Lease regardless of its
terms, as it made a long term commitment to use the
equipment when it integrated the system into its network
without inquiring into the Lease's specific financing re-
quirements or penalties. Also, the County consistently
granted the Comptroller funds to make the Lease pay-
ments for the three years before this dispute, and only
challenged the arrangement after discovering that Flow-
ers had committed other errors in running the Comptrol-
ler's office and deciding that he should be removed. Ap-
proval of the Comptroller's budget alone may not have
been enough to prove an intent to ratify the lease agree-
ment, particularly given the similarity of the pre- and
post- Unisys lease budget requests. Nevertheless, the
budget approval, combined with the facts that the County
knew Flowers had acquired a new computer system and
agreed to integrate this system into its own computer
system, is sufficient to prove intent to ratify. [ * *24] In
sum, the evidence clearly supports the conclusion that
the County intended to be bound by the agreement. Con-
sequently, the Board's actions show that it made itself
aware of the material aspects of the agreement that it
believed were of primary concern, and therefore its ac-
tions satisfy the third part of the Frankenmuth test.
11. Frankenmuth's Cross Appeal
In its cross - appeal, Frankenmuth argues that the
district court erred by using a statutory "prevailing party"
analysis to deny its motion for attorneys' fees and costs.
Frankenmuth argues that it was entitled to attorneys'
fees and costs under the terms of the lease and that the
lease grants attorneys' fees under a less stringent standard
than the statutory "prevailing party" test. Paragraph 6 of
the lease agreement provides that "Lessee shall pay Les-
sor all costs and expenses, including reasonable attor-
neys' fees, incurred by Lessor in enforcing any terms,
conditions, or provisions of this Lease." In denying
Frankenmuth's request for attorneys' fees, the court
made no reference to the fee - shifting provision contained
in the lease. The court simply stated, "it is further the
judgment of this Court that neither [ * *25] Plaintiff nor
10/28/2014 10.B.
Page 7
Defendant Escambia County has prevailed in this action
for the purposes of an award of attorneys' fees and
costs."
Under Florida law, a "contractual attorney's fee pro-
vision must be strictly construed." B & H Constr. &
Supply Co. v. District Bd. of Trustees of Tallahassee
Cmty. Coll., Fla., 542 So. 2d 382, 387 (Fla. 4th Dist. Ct.
App. 1989). Determining whether to grant fees pursuant
to a contractual provision is a separate and distinct in-
quiry from the statutory "prevailing party" analysis that
is otherwise used to disburse fee awards. Fixel Enter-
prises v. Theis, 524 So. 2d 1015 (Fla. 1988) (refusing to
apply prevailing party standard when contract granted
attorneys' fees to "prevailing party" because contract
standard was separate and distinct from statutory pre-
vailing party inquiry); First Atlantic Bldg. Corp. v.
Neubauer Constr. Co., 352 So. 2d 103 (Fla. 4th Dist. Ct.
App. 1977) (recognizing that attorneys' fee provision in a
contract provided for a different standard than the pre-
vailing party analysis).
We review the district court's denial of attorneys'
fees for abuse of discretion. In re Application to Ad-
judge Trinity [ *734] Industries, Inc., 876 F.2d 1485,
1496 (11th Cir. 1989). [ * *26] From the district court's
brief discussion of this issue, it is impossible to deter-
mine whether the court erroneously relied on the statu-
tory prevailing party standard or properly applied the
contract terms in rejecting Frankenmuth's request for
fees. Id. (remanding issue of denial of fees because "it is
impossible for us to discern the correctness of the district
court's judgment "). We therefore remand for determina-
tion of whether Frankenmuth is entitled to attorneys'
fees pursuant to the lease provision.
CONCLUSION
In summary, we AFFIRM the summary judgment in
favor of Frankenmuth but VACATE and REMAND
the district court's decision denying Frankenmuth at-
torneys' fees and costs for clarification.
Packet Page -343-
IV LexisNexis@
G. R. RAMSEY AND A. B. HERNDON, Co- partners Doing Business as Ram-
sey- Herndon & Company, v. CITY OF KISSIMMEE
[NO DOCKET NUMBER]
SUPREME COURT OF FLORIDA, Division B
139 Fla. 107; 190 So. 474; 1939 Fla. LEXIS 1631
July 7, 1939
PRIOR HISTORY: [ * * *1] A Writ of Error from
the Circuit Court for Osceola County, Frank A. Smith,
Judge.
COUNSEL: Ellis F. Davis and Dickinson & Dickinson,
for Plaintiffs in Error;
O. S. Thacker and G. P. Garrett, for Defendant in Error.
JUDGES: WHITFIELD, P.J., and BROWN and
CHAPMAN, J.J., concur; TERRELL, C.J., concurs in
opinion and judgment; Justices BUFORD and THOMAS
not participating as authorized by Section 4687, Com-
piled General Laws of 1927, and Rule 21 -A of the Rules
of this Court.
OPINION
[* *475] [ *108] PerCuriam.
This is the second appearance of this case here. For
its former appearance see Ramsey v. City of Kissimmee,
111 Fla. 387, 149 So. 553.
On December 5, 1927, plaintiffs filed their
decharation embodying a special count, and four com-
10/28/2014 10.B.
Page 1
mon counts, seeking to recover for certain engineering
services claimed to have been rendered the City of Kis-
simmee, during the latter stages of the real estate
"boom," under an alleged contract between plaintiffs and
the City.
The first amended count, on the contract, alleged the
execution of the contract between plaintiffs and defend-
ant on December 2, 1925, and set forth the terms of the
contract in haec verba. It also alleged [ * * *2] that in
pursuance of said contract and employment plaintiffs did
all work and performed all things, at the time and in the
manner required; and that they filed with the City at the
time and in the manner provided the estimated cost of the
paving, which estimate was received by the City. The
streets included in the paving project were then listed
together with the width of each and the estimated cost.
Then followed separate lists of streets on which (1) ex-
tensions of water mains, (2) sanitary sewers, (3) house
laterals and (4) street sewer improvements were alleged
to have been made, together with allegations relating to
the performance of all duties in regard thereto under the
contract. The count alleged the amount due plaintiffs as
follows: [*109]
"Total estimated cost of project
$823,972.50
Total estimated cost less Engineering Serv-
ices $792,281.25 at 1 1/2%
11,884.22
To professional and engineerning services ren-
dered account storm sewers, water mains,
sanitary sewers, as per contract
18,629.70
Total
$ 30,514.52
Packet Page -344-
10/28/2014 10.B.
Page 2
139 Fla. 107, *; 190 So. 474, * *;
1939 Fla. LEXIS 1631, * **
Less credit of $18,616.56
Less credit of $1,000.00
Balance due $10,897.96."
To the common counts defendant pleaded [ * * *3]
"never was indebted as alleged," and placed itself upon
the country. To the amended first count defendant
pleaded (1) never promised as alleged, (2) payment, (3)
that plaintiffs did not perform any services under the
contract sued upon and (4) that plaintiffs did not do any
work for defendant under said contract. Issue was
joined on these four pleas.
After taking writ of error to the Supreme Court, and
having the ruling of the trial court, refusing to admit the
contract in evidence, reversed, see Ramsey v. City of
Kissimmee, I l l Fla. 387, 149 So. 553, a new trial was
had.
On the second trial, at the conclusion of plaintiffs'
evidence, defendant made a motion to require plaintiffs
to elect whether they were suing under the amended first
count or under the common counts: and a motion for a
directed verdict in favor of defendant. In denying both
motions, [* *476] the court said, in effect, that even
though he was denying both motions at that time, he
would probably grant a directed verdict for the defendant
on the first amended count at the close of all the testi-
mony. A recess was then taken, after which Mr. Garrett
announced that defendant rested without introducing any
evidence, [ * * *4] and renewed his motion for a di-
rected verdict in favor of defendant. After the court
stated that it would have to grant the motion for a
[*110] directed verdict as to the first amended count,
Mr. Dickinson withdrew the common counts from con-
sideration of the jury, and then took a voluntary non -suit
as to the first amended count.
Thereafter, the court entered its judgment of
non -suit, reciting the substance of all of these proceed-
ings and containing among other things, the following:
"Whereupon the plaintiffs, by their attorneys, elected
to stand and submitted to go on trial upon their amended
first count of the declaration and withdrew from consid-
eration of the jury the common counts, and thereupon the
defendant renewed its motion for a directed verdict in its
behalf on the amended first count of plaintiffs declara-
tion, and the court did then and there upon consideration
announce that he would grant said motion to direct a
verdict for the defendant upon said amended first count
of plaintiffs declaration to which ruling the plaintiffs did
then and there except and did thereupon, before retire-
ment of the jury, move the Court for a non -suit with bill
of exceptions which said [ * * *5] motion the court did
then and there grant."
From this final judgment writ of error was taken.
Since plaintiffs withdrew the common counts from
consideration of the jury before taking their non -suit, the
only count remaining was the first amended count on the
contract, on which the court announced it would direct a
verdict for the defendant.
The result of this procedure in the trial court limits
the question for review here as to whether or not the trial
court, in announcing that he would direct a verdict for
the defendant on the first amended count of the declara-
tion, committed reversible error.
The condition of the transcript of testimony included
in this record is such that the case could have been sum-
marily dismissed, as being in violation of the Rules of
this Court, [*I I I ] because it is typed on a very thin,
translucent quality of paper, and in addition to that is
apparently a third or fourth carbon copy of the transcript.
However, in order to avoid further delay in the disposi-
tion of this litigation which has been in the courts of this
State for over eleven years and to save additional costs to
the parties, we have taken the time and patience to read
this record, [ * * *6] including the improperly prepared
transcript of the testimony, and give our considered
judgment to this case though we do not by so doing in-
tend that it shall induce other attorneys to violate the
Rules of this Court in subsequent cases brought here.
Under the plea of "did not promise as alleged,"
plaintiffs had the burden of proving due execution of the
contract, and we believe their evidence in this regard was
deficient.
The charter of the City of Kissimmee provided that
the City Commission shall make all contracts involving
the expenditure of more than $300.00, and further pro-
vided that "the action of the City Commission shall be
expressed by ordinance or resolution and a record of the
same shall be kept." This Special Charter of the City of
Kissimmee was ratified, validated and confirmed by
Chapter 9808, Special Acts of 1923. See Ramsey v.
City of Kissimmee, 1 I I Fla. 387,149 So. 553. When this
case was before us in Ramsey v. City of Kissimmee, 111
Fla. 387, 149 So. 553, we denominated the action of the
City Commission of October 6, 1925, authorizing the
entry into the contract with Ramsey Hemdon & Co. as a
resolve, meaning a resolution, and the city charter was
Packet Page -345-
139 Fla. 107, *; 190 So. 474, * *;
1939 Fla. LEXIS 1631, * **
satisfied [ * * *7] so far as authorizing the entry into a
contract with Ramsey Herndon & Co. was concerned.
The contract as drawn by Ramsey Herndon & Co.
was presented to the City Commission at the meeting of
December 2, 1925, for approval. The record before us
fails to show that there was any motion, resolution or
ordinance [*112] adopted approving the contract or
putting it into effect. The charter provisions requiring
the making of contracts involving this amount of money
to be evidenced by resolution or ordinance were not
complied with in this instance. The testimony of plain-
tiffs' witnesses, which is the only testimony in the record,
shows that at the meeting of the City Commission on
December 2, 1925, after the proposed contract was read
in [* *477] open meeting, Mr. Katz, one of the Com-
missioners, said to Mr. Johnston, Mayor- Commissioner,
to go ahead and sign the contract. No vote was taken on
the question so far as this record shows. Mr. Johnston
signed the contract as Mayor- Commissioner and turned it
over to Mr. Steed, the City Attorney, and told him "to
examine the contract that he had just signed as to its le-
gality and if he found it all right, to submit it to" Ram-
sey- Herndon [ * * *8] & Co. for their signatures. Mr.
Steed made some changes in paragraph 4 of the contract,
which changes were made in the form of a rider as well
as by making some marks on the original paragraph 4.
The contract with rider enclosed were the mailed to
Ramsey Herndon & Co., and A. B. Herndon signed it for
Ramsey Herndon & Co. The rider, which changed par-
agraph 4 of the contract, was never submitted to the City
Commission for its approval or disapproval, and was
never passed on or adopted by the City Commission in
any manner. Such altered paragraph 4 should have been
approved and adopted by the City Commission in the
same manner required by the charter for making a con-
tract involving this amount of money. Even assuming for
the purpose of illustration here that the
Mayor- Commissioner had authority to bind the City by
his signature, the contract signed by him was not the
contract signed by A. B. Herndon for Ramsey Herndon
& Co., and consequently there was no execution by the
parties of the contract relied on for recovery.
[ *113] It is contended that the payment of
$1,000.00 on the contract ratified it. This is not sound
because the contract must be ratified by the City Com-
mission [ * * *9] in the same manner (by resolution or
ordinance) in which it might have been originally
adopted. The mere issuance of a warrant on motion of
the City Commission is not such a ratification of the
contract as will, under the provisions of the Clarter, bind
the City of Kissimmee. See 3 McQuillan on Municipal
Corporations (2d. ed.) pp. 970 -971, Sec. 1360, and cases
there cited.
10/28/2014 10. B.
Page 3
Persons contracting with a municipality must, at
their peril, inquire into the power of the municipality,
and of its officers, to make the contract contemplated.
See Brown v. City of St. Petersburg, 111 Fla. 718, 153
So. 141; Lassiter v. Taylor, 99 Fla. 819, 128 So. 14, 69
A.L.R. 689.
When this case was before us in Ramsey v. City of
Kissimmee, 111 Fla. 387, 149 So. 553, we said:
"Under the charter, the City of Kissimmee was, by
its City Commission alone, authorized to make a contract
of the kind sued on in this case. And the plaintiffs, in
dealing with the City of Kissimmee, and in accepting a
paper signed by the Mayor - Commissioner alone, were
bound to ascertain the nature and extent of the Authority
of the Mayor- Commissioner to sign the contract sued on,
in behalf of the City. Town of Madison [ * * *10] v.
Newsome (39 Fla. 149, 22 So. 270), supra. If in the first
instance there was no such authority given to the
Mayor - Commissioner to sign, or if the contract original-
ly unauthorized, but nevertheless signed, has never been
ratified by the City Commission so as to bind the City,
plaintiffs cannot recover, and the jury should be so in-
structed."
We find from an examination of the record, that
proof of the authority of the Mayor - Commissioner to
sign the contract and thereby bind the City is not shown,
even [* 114] assuming for the moment that the City
Charter gave the power to the Mayor - Commissioner
alone to sign contracts in behalf of the City, because the
City Commission did not, so far as this record shows,
take any vote on adoption of the contract when presented
to the City Commission in open meeting on December 2,
1925. Neither is there any showing of any formal rati-
fication of the act of signing the contract by the
Mayor- Commissioner in the manner required by the City
Charter. Applying the above quoted portion of the former
decision in this case to the evidence adduced on the se-
cond trial, there was nothing left for the trial judge to do
except to direct a verdict in [ * * *11] favor of the de-
fendant on the first amended count.
The evidence showed that none of the paving was
ever done because the bond market went down and the
City could not realize enough from the sale of bonds at
the prevailing prices to do all the work contemplated.
The extension of an old contract with Southern Clay
Manufacturing Co. to do the paving work under consid-
eration was ordered by the City Commission on the same
date that plaintiffs were ordered by resolve to be em-
ployed as engineers, so plaintiffs' estimates of costs
could not have been of any assistance [* *478] to
Southern Clay Manufacturing Co. in putting in its bid for
the work. Many of the streets selected to be paved were
not selected in a lawful manner. Some were selected at
Packet Page -346-
139 Fla. 107, *; 190 So. 474, * *;
1939 Fla. LEXIS 1631, * **
one time and some at another by City Commissioners
individually, by civic organizations, or by interested
groups and plaintiffs notified of the designated streets to
be added to the original list. Plaintiffs did work under
this purported contract on sanitory sewers, storm sewers
and water main extensions, for which they were paid
$18,616.56. Much of the engineering work done on the
sewer and water main projects could be used on the pav-
ing [ * * *12] projects and plaintiffs could employ the
data for [ *] 151 which they had been paid on the pav-
ing project without doing additional work. A. B. Hern-
don, one of the plaintiffs, testified that there was no way
10/28/2014 10. B.
Page 4
the work done on the sewers and water mains could be
separated from the work done on the paving, so as to
ascertain the amount of work actually done on the paving
exclusive of all other work.
The remedy of plaintiffs, if any they have, is on
quantum meruit, and not on the contract, and direction of
a verdict for the defendant on the count based on the
contract would have been proper. Therefore the judg-
ment of non -suit is affirmed.
Affirmed.
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WOODWARD, PIRES, & LOMBARDO, P.A.
ATTORNEYS AT LAW
August 28, 2014
TO: Dwight E. Brock, Clerk of the Circuit Court (Clerk)
FROM: Anthony P. Pires, Jr.
RE: A. Ability of the Clerk to lawfully: I. make payments under contracts entered
into by the County Administrator ( "Administrator ") or his designee(s) without the prior
vote or approval of the Board of County Commissioners of Collier County ( "Board "); 2.
make payments under contracts entered into by the Administrator or his designee(s)
without a Board determination of the existence of a valid public purpose; and, B. Ability of
the Board to: 1. delegate spending authority to the Administrator or his designee(s); 2.
Establish contract thresholds for the Administrator or his designee(s) to execute contracts
without either Board approval, Board vote or a Board determination of public purpose.
You have asked for my legal opinion as to: 1. the ability of the Board to delegate
discretionary spending authority to the Collier County Administrator ( "Administrator ") or his
designee(s) (which designees include any and all County employees under the Administrator,
regardless of position or title, collectively, "Designees "); 2. the ability of the Board to delegate to
the Administrator or his Designees the Board's decision making authority to enter into binding
contracts or agreements; 3. the ability of the Board to create contract thresholds, i.e. contracts
of a value of less than $50,000, and delegate to the Administrator or his Designees the Board's
power to execute such contracts without Board approval, Board vote or a Board determination of
public purpose; 4, the validity of contracts entered into by the Administrator or his Designees
without the approval or vote of the Board or a Board determination of public purpose; and, 5. the
legality of payments by the Clerk under such contracts, i.e. the ability of the Clerk to make
payments on contracts where the Board has neither approved nor voted on the contract nor made
a determination of valid public purpose.
In preparing and rendering my opinion, I have reviewed the request for a formal Attorney
General's opinion to which this Memorandum is attached, the documents and materials
referenced therein and other documents and materials germane to this Memorandum and
request. This Memorandum incorporates in toto the contents of the request for a formal Attorney
General's opinion to which this Memorandum is attached.
THE CLERK
The Clerk of the Circuit Court of Collier County, Florida, is the ex officio clerk of the board of
county commissioners, auditor, recorder and custodian of all county funds. See Article VIII,
section 1(d) of the Florida Constitution; Section 28.12, F.S. (2013). Collier County does not
operate under a county charter and is a non - charter county under Article VIII, Section 1(f), Florida
Constitution. The Clerk by law possesses certain pre -audit and post payment review functions
and powers that requires the Clerk to refuse to make expenditures or authorize disbursement of
public funds that are illegal, and if there is any question as to the legality of payment, the Clerk
can not make such payment. Alachua County vs. Powers, 351 So.2d 32 (Fla. 1977); Brock v.
Board of County Commissioners of Collier County, 21 So.3d 844 (Fla. 2ND DCA 2004; Mayes
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Printing Company vs. Flowers, 154 So.2d 859, (Fla. 1st DCA 1963); and W and F Limited vs.
Dunkie, 444 So.2d 554 (Fla. 4"' DCA 1984). Checks or warrants drawn on county accounts are
issued and "attested by the clerk." Section 136.06(1), F.S. (2013).
As stated in Alachua County vs. Powers: "The clerk, as auditor, is required by law to refuse
to sign and deliver a county warrant for an unlawful expenditure, even though approved by the
board of county commissioners."
Pursuant to the provisions of Section 129.09, F.S. (2013) if the Clerk of Courts, acting as
county auditor, signs any warrant to pay any illegal charge against the County or to pay any claim
against the County not authorized by law, or County ordinance, the Clerk shall be personally liable
for such amount, and if the Clerk signs the warrant willfully and knowingly, the Clerk is guilty of a
second degree misdemeanor. Thus the Clerk is both civilly and criminally liable for any improper
payment.
THE BOARD
The Board is the governing body of Collier County. Collier County is a non - charter county. Section
125.01, F.S. outlines various powers and duties of the Board as the governing body of Collier
County. In that light, section 125.01(3)(a), F.S. provides, as to the powers of the Board, that:
"(3)(a) The enumeration of powers herein shall not be deemed exclusive or restrictive, but shall
be deemed to incorporate all implied powers necessary or incident to carrying out such powers
enumerated, including, specifically, authority to employ personnel, expend funds, enter into
contractual obligations, and purchase or lease and sell or exchange real or personal property."
THE ADMINISTRATOR
Part III of Chapter 125, F.S. is the "County Administration Law of 1974. Section 125.74(1)' F.S.
outlines the powers and duties of the Administrator. In pertinent part, Section 125.74(1)(m) F.S
provides:
"125.74 County administrator; powers and duties.—
(1) The administrator may be responsible for the administration of all departments
responsible to the board of county commissioners and for the proper administration of
all affairs under the jurisdiction of the board. To that end, the administrator may, by way
of enumeration and not by way of limitation, have the following specific powers and
duties to:
(m) Negotiate leases, contracts, and other agreements, including consultant services,
for the county, subject to approval of the board, and make recommendations concerning
the nature and location of county improvements."
In addition, Section 125.74(2), F.S. clearly states that none of the governmental power of the
Board as the governing body is delegated to the Administrator:
"(2) It is the intent of the Legislature to grant to the county administrator only those
powers and duties which are administrative or ministerial in nature and not to delegate
any governmental power imbued in the board of county commissioners as the governing
body of the county pursuant to s. 1(e), Art. VII I of the State Constitution. To that end, the
Section 125.74, F.S. will be referred to as the "Administrator's Statute ".
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above specifically enumerated powers are to be construed as administrative in nature,
and in any exercise of governmental power the administrator shall only be performing
the duty of advising the board of county commissioners in its role as the policy- setting
governing body of the county"
Consistent with the language in Section 125.74(1)(m), F.S., the Board adopted its Ordinance No.
2013 -40, the "Collier County Administrator's Ordinance" (the "Administrator's Ordinance "). A
copy of the Administrator's Ordinance is attached as Exhibit "A ".
In line with the limitations in Part III of Chapter 125, F.S., the Administrator's Ordinance granted
to the Administrator only those powers and duties which are administrative or ministerial in nature
and does not delegate to the Administrator any governmental power imbued in the board of
county commissioners as the governing body of the county pursuant to the Florida Constitution.
Section 3 of the Administrator's Ordinance provides:
"To this end, the below specifically enumerated powers are to be construed as
administrative in nature, and in any exercise of governmental power the County
Administrator shall only be performing the duty of advising the Board of County
Commissioners in its role as the policy- setting governing body of the county and
carrying out its directives and policies."
THE PURCHASING ORDINANCE
In 2013 the Board, in the context of the County's purchase or procurement of goods or services,
consistent with both the powers of the Board outlined in Section 125.01, F.S. and the limitations
on the Administrator contained in both Section 125.74(1)(m), F.S. and the Administrator's
Ordinance, adopted Ordinance No. 2013 -69 as a substantially revised "Purchasing Ordinance
(the "Purchasing Ordinance "). See attached Exhibit "B ").
In pertinent part, the Purchasing Ordinance provides:
A. the Purchasing Director has the authority to negotiate all purchases for all County
agencies except as required by State, Federal or Local Law. (Section 5, Purchasing
Ordinance).
B. in keeping with Ch. 125, F.S., the Purchasing Ordinance grants to the Purchasing
Director only those powers and duties which are ministerial in nature and does not
delegate any governmental power imbued in the Board of County Commissioners as the
governing body of the County pursuant to Fla. Const. Art. VIII, § 1(e) and to this end, the
specifically enumerated powers are to be construed as ministerial in nature, for the
purpose of carrying out the Board's directives and policies. (Section 5, Purchasing
Ordinance).
C. the Board shall, prior to payment, approve all expenditures with a finding that such
expenditures serve a valid public purpose. (Section 7, Purchasing Ordinance).
D. all contracts for commodities and services shall be authorized by the Board of County
Commissioners. (Section 19.F, Purchasing Ordinance).
E. the Purchasing Department may prepare and recommend a Purchasing Manual for
adoption by the Board. (Section 6.4, Purchasing Ordinance).
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THE PURCHASING MANUAL
However, notwithstanding the clear language in the Administrator's Statute, the Administrator's
Ordinance and the Purchasing Ordinance, the Administrator and Purchasing Department have
prepared a Purchasing Manual that delegates, vests and grants to the Administrator and
Purchasing Director blanket power to: A. execute contracts on behalf of the Board; and, B. enter
into binding contracts on behalf of the Board;, without any prior review, action or approval of the
Board. A copy of the proposed Purchasing Manual is attached as Exhibit "C ".
The proposed Purchasing Manual also provides that purchases less than $50,000 may be
entered into by the Purchasing Director, as the designee of the Administrator, without any review
or approval of the Board and without a Board determination of the existence of a valid public
purpose. As an example:
8:5 Non - Standard Agreements
For purchases under $50,000, and for vendors who require
a signed non - standard agreement, memorandum of understanding,
contract, etc. the Purchasing Staff will complete negotiations with the
vendor and forward to the County Attorney for final review and approval.
The Purchasing Director shall execute the agreement on behalf of the
Board of County Commissioners, and report the purchase pursuant
to Section Seven. Purchases in General.'
An approved non - standard agreement may be approved by the Purchasing
Director as long as the cumulative annual expenses are less than $50,000.
CONTRACTS AND AGREEMENTS EXECUTED BY THE ADMINISTRATOR /OTHER COUNTY
PERSONNEL
The Administrator and several other County personnel in the Administrator's agency have signed
contracts and agreements on behalf of the County even though the contracts or agreements were
not reviewed by or approved by the Board and even though the Board did not make a
determination that the subject of the contracts served a valid public purpose. Some examples of
these contracts and agreements are attached as Exhibit "D ". In addition to the issue as to the
validity of such contracts per se, as raised in this request, some of the contracts or agreements
may suffer from other legal infirmities. 3
In addition, on several occasions after the Board has reviewed and approved the specific terms
and conditions of a contract, County staff have modified substantive terms and provisions without
obtaining Board approval of the amended provisions.
l It is important to note however that the stated "Procedures" under the referenced Section
Seven appear to be an undisguised effort to evade the Board making the requisite findings and
to improperly delegate the public purpose determination to the Clerk.
3 Examples of these are referenced and included in the request for the formal opinion.
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ANALYSIS
The Board, by Section 125.01(3)(a), F.S., has been granted the power and authority to expend
funds and enter into contractual obligations. 'When the Legislature has prescribed the mode, that
mode must be observed. When the controlling law directs how a thing shall be done that is, in
effect, a prohibition against its being done in any other way ". See Alsop v. Pierce, 19 So. 2d 799,
805 -806 (Fla. 1944); Thayer v. State, 335 So. 2d 815, 817 (Fla. 1976).
The applicable decisional law is that in the absence of statutory authority a public officer cannot
delegate his /her powers even with the approval of the court. State v. Inter - American Center
Authority, 84 So.2d 9 (Fla. 1955); Nicholas v. Wainwright, 152 So.2d 458 (Fla. 1963); Florida Dry
Cleaning and Laundry Board v. Economy Cash & Cary Cleaners, Inc., 197 So. 550 (Fla. 1940);
Wright v. Knight, 381 So. 2d 729 (Fla 31d DCA 1980); AGO's 073 -380, 074 -57, 074 -116, 075-
306 and 077 -31. See also AGO 2012 -31, footnote 12; Op. Att'y Gen. Fla. 88-61 (1988), (citing
Op. Att'y Gen. Fla. 74 -116 (1974) and 67 C.J.S. Officers s. 194)).
The Constitution does not contemplate that essential governmental powers or authority may be
exercised by one not a duly commissioned officer. Florida Dry Cleaning and Laundry Board v.
Economy Cash & Cary Cleaners, Inc., supra at page 872.
Thus, it is very clear that absent specific statutory provisions, the Board may not delegate its
powers or authority to the Administrator to make determinations that the expenditure of funds
serves a county purpose or to enter into contracts which obligate the County:
" "The county commission must make a determination that an expenditure serves a county
purpose prior to the clerk of court issuing a warrant for payment."
and
"...the county commission may not delegate its governmental duty to make a
determination that an expenditure serves a county purpose." [See Advisory Legal Opinion,
AGO 2001 -29, April 23, 2001]
Further:
"It appears that the authority to execute contracts which obligate the county involve the
exercise of independent discretion and judgment which may not be delegated absent
statutory authority."
and
"In the absence of any statutory authority therefor, I am unable to conclude that the power
to execute contracts on� behalf of the county commission may be delegated to a county
administrator." [See Advisory Legal Opinion, AGO 88 -61, December 30, 1988 and also,
Advisory Legal Opinion, AGO 74, April 10, 1974]
From the foregoing it is clear that the Board alone has the authority to authorize payment of bills
and to make the required determination that an expenditure serves a valid public purpose.
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By the clear and unequivocal language of Section 125.74(2), F.S. the Florida Legislature has
specifically provided that the Administrator's powers are limited to administrative or ministerial
duties. As it relates to leases, contracts and other agreements, the Legislature has made it clear
in Section 125.74(1)(m), F.S. that the Administrator is limited to negotiating leases, contracts and
other agreements, "subject to the approval of the board ". Consistent with the statutory provisions,
these limitations on the Administrator are contained in the Administrator's Ordinance and as to
purchases, in the Purchasing Ordinance.
Public policy requires that a governmental body's contracts must conform to the "strict letter of
the law" to avoid corruption and waste of taxpayer money. See Walbum v. City of Naples 2005
WL 2322002, ( U.S. District Court, M.D. Florida, Sept. 22, 2005)
Furthermore, one who contracts with a governmental body is bound to know the limitations of
the governmental body's contracting authority. See Town of Indian River Shores v. Coll, 378
So.2d 53 (41' DCA 1980); Ramsey v. City of Kissimmee, 139 Fla. 107, 190 So. 474 (Fla. 1939)
I have not found nor has anyone brought to my attention any statutory authority which would allow
the Administrator to be delegated the Board's discretionary powers to contract and obligate the
County or to make the determination that an expenditure of funds serves a county or public
purpose.
Similar to the situation in Frankenmuth Mutual Insurance Company vs. Magaha, 769 So.2d 1012
(Fla. 2000), by the enactment of Section 125.74(1)(m) and(2), F.S., the Legislature clearly
established that contracts may not be entered into and expenditures may not be made without
approval of the Board. As in Frankenmuth, the Administrator has no independent authority to
enter into any contracts and bind the Board.
Several Florida courts have determined that "Agreements entered into by public bodies which fail
to comply with statutory requirements are void ". Palm Beach County Health Care Dist. v.
Everglades Meml Hosp., Inc., 658 So.2d 577, 581 (Fla. 4th DCA 1995) (lease agreement
involving a public hospital was void because it was contrary to Florida Statute 155.40); City of
Hollywood v. Witt, 789 So.2d 1130, 1132 (Fla. 4th DCA 2001) (same); Town of Indian River
Shores v. Coll, 378 So.2d 53, 55 (Fla. 4th DCA 1979) (Court refused to enforce an employment
contract between the mayor and an individual because an ordinance required that the type of
contract at issue be authorized by the entire town council).
However, under Frankenmuth, the Board does have the ability to ratify and approve a contract
that was initially an unauthorized agreement and outlined the necessary steps that must be taken.
Approval may take the form of a formal resolution by the Board. If not made by formal resolution,
approval by the Board: 1. must be made in compliance with Florida's Sunshine Law, in the same
manner that a formal approval would have required; and, 2. the Board must be fully informed and
have full knowledge of all material facts and circumstances relating to the unauthorized act or
transaction. The courts apply a three -prong test for determining whether an after - the -fact
"approval," or ratification, has occurred:
1. The Board must have the power to approve the agreement.
2. The Board must ratify an agreement in the same manner in which the agreement would
have been initially approved. For example, the approval must be made in accordance with
the "Sunshine Law." Additionally, where a law or an ordinance requires the Board to take
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action in a specified manner, such as by passing a formal resolution then an after - the -fact
approval must satisfy the specified manner to be valid.
3. Finally, in ratifying the agreement in the same manner in which it initially could have
been approved, the Board must have full knowledge of the material facts relative to the
agreement.
CONCLUSION
Therefore, based upon the foregoing, it is my opinion until judicially or administratively
determined to the contrary:
1. the Board of County Commissioners of Collier County, Florida may not delegate its
discretionary spending authority to the Administrator or his Designees.
2. the Board of County Commissioners of Collier County, Florida may not delegate its
discretionary decision - making authority to the Administrator or his Designees.
3. the Board of County Commissioners of Collier County, Florida may not establish
contract thresholds for the Administrator or his Designees to execute contracts without
Board approval or vote or a Board determination of the existence of a valid public purpose;
i.e., the Administrator or his Designees do not and cannot possess the authority or power
to enter into any binding contracts, much less than contracts of a value less than $50,000
4. any contracts entered into by the Administrator or his Designees without either Board
approval or vote, i.e., a Board determination of the existence of a valid public purpose, are
not valid contracts.
5. the Board does have the ability to ratify and approve a contract that was initially an
unauthorized agreement, provided that the three -prong test outlined in Frankenmuth has
been satisfied.
6. the board can enter into "master contracts" or project contracts and thereby determine
the public purpose of the expenditure of public funds and thereafter authorize purchases
through project budgeting or budget line items (such as office supplies contracts and
budgeting for office supplies), whereupon expenditures can then be made without further
board action.
7. the Clerk may not lawfully make payments to persons under contracts entered into by
the Administrator or his Designees without Board approval or vote and a Board
determination of the existence of a valid public purpose.
8. approval by the Board of a summary "disbursement list' pursuant to F. S. 136.06(1)
does not validate agreements or contracts which have not been reviewed and approved
by the Board. (See Ramsey v. City, of Kissimmee, 139 Fla. 107, 190 So. 474 (Fla. 1939),
Frankenmuth Mutual Insurance Company vs. Magaha, 769 So.2d 1012 (Fla. 2000)
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