What price frivolity? Section 57.105 comes to the APA.

• Author: Rimes, John

There are several statutory provisions in the APA providing for awards of attorneys' fees. An award can be made against a party for participating in a proceeding for an "improper purpose" or for having filed frivolous, harassing, or unnecessary papers or pleadings (F.S. [section][section] 120.595(1) and 120.569(2)(e)) or for discovery violations (F.S. [section] 120.569(2)(f)). If an appeal is frivolous or an agency rejects findings of fact of an administrative law judge (ALJ) and that decision is not upheld on appeal, fees will be awarded for the appeal and if findings of fact are erroneously rejected, fees are awarded for the underlying administrative proceeding as well (F.S. [section] 120.595(5)). Fees are awarded to parties who prevail in their challenge to an agency's proposed or existing rules or statements that should have been adopted as rules (F.S. [section] 120.595(2)(4)). (1) Other attorneys' fees provisions not contained in the APA also apply to administrative proceedings. Small businesses can be recompensed, at least in part, for attorneys' fees and costs incurred defending an agency-initiated administrative proceeding that is not "substantially justified" (F.S. [section] 57.111). In 2003, the legislature expanded the scope of F.S. [section] 57.105 to APA proceedings, thereby subjecting parties to paying fees and costs if they advance claims or defenses that are frivolous. This article examines the impact of the change on proceedings held under the APA.

F.S. [section] 57.105 is Applied to the APA

F.S. [section] 57.105 provides for an award of fees for claims or defenses advanced in pleadings that were frivolous when initially filed or which became frivolous at any time before trial. (2) This statute became applicable to administrative proceedings in 2003 when a new subsection (5) was added to F.S. [section] 57.105. It provided that fees "and damages" were now available in administrative proceedings "in the same manner and upon the same basis as provided [for in judicial proceedings]." (3)

Section 57.105 requires that all claims and defenses advanced by the parties must "[be] supported by the material facts necessary to establish the claim or defense," by the "application of then-existing law to those material facts" or by "a good faith argument for the extension, modification, or reversal of existing law or the establishment of new law, as it applied to the material facts, with a reasonable expectation of success." (4) If the claim or defense ever fails to meet or maintain this standard, a fees award is available.

Courts had earlier determined that the 1999 amendments to F.S. [section] 57.105 evidenced a legislative desire to expand the scope of exposure for fees in civil actions by increasing the scope of the statute's application to claims that became untenable during litigation even if they were valid when initially proffered. It is clear that the 2003 amendment bringing APA proceedings within the ambit of the statute will have a similar effect on fees exposure in administrative proceedings.

In that regard, F.S. [section] 57.105(5) has the potential to act as a broad deterrent to frivolous pleadings filed by agencies or private parties in administrative proceedings. Because of its open-ended nature, that is, the statute applies without limits to all parties whether private or governmental, it has no monetary cap, and it comes into play at any time during a proceeding. The potential of a claim under F.S. [section] 57.105(5) should be a consideration in any administrative proceeding.

Because F.S. [section] 57.105 has been subject to judicial scrutiny and labor since the 1999 amendments mentioned above, a considerable body of appellate law exists construing and applying the statute's terms. These decisions provide the framework upon which the application of F.S. [section] 57.105 to administrative proceedings will rest.

Triggering the Application of the Statute and the Availability of "Safe Harbor" Protections

In judicial proceedings, the triggering event that subjects parties to the strictures of F.S. [section] 57.105 is the filing of a complaint or petition with the court. Certain administrative proceedings in which the Division of Administrative Hearings (DOAH) has final order authority, such as rule challenges, commence in the same manner except the initiating document is filed at the DOAH.

In other administrative law contexts, however, the filing of an initiating document, such as an administrative complaint or other enforcement action, a notice of intent to deny or approve a license or permit, or a decision to approve or reject a rate application, does not commence an administrative proceeding. These proceedings are initiated by filing a petition with the agency.

If an agency persists in pursuing the allegations in an administrative complaint or in denying an application after a hearing is requested, then the complaint or the denial notice would appear to constitute a "pleading" for purposes of the statute. Once a proceeding commences, the provisions of F.S. [section] 57.105 attach to the parties and impose the statutory standard of care upon the petitioner and respondent in all of their pleadings, including those created before the proceeding, in a technical sense, began. (5)

Section 57.105 contains a "safe harbor" provision in subsection (4). This provision gives a pleader a last opportunity to withdraw a frivolous claim or defense or to reconsider a tactic taken...