Court: District Court of Appeal of Florida; November 12, 1996; Florida; State Appellate Court
The Federation of Mobile Home Owners of Florida, Inc. and the Florida Department of Business and Professional Regulation appeal a final administrative order that found the proposed repeal of Rule 61B-31.001(5) to be an invalid exercise of legislative authority and in violation of Florida statutes. The appeal addresses whether the repeal constitutes 'rulemaking' and if it violates specific statutory provisions. The court agrees with the hearing officer's finding that eliminating the approval procedure for amendments to prospectuses improperly grants the Division excessive discretion, thus violating statutory obligations. Additionally, the court affirms that the repeal also improperly introduces non-rule policies, contradicting section 120.535. However, the court disagrees with the hearing officer's interpretation regarding the length of viability of a prospectus, ruling that this aspect does not violate section 120.54(4).
The Florida legislature enacted Chapter 723 to protect mobile home owners in their dealings with park owners, establishing a unique tenancy relationship. The high costs associated with moving mobile homes create a power imbalance favoring park owners. One protective measure is the mandate for park owners to provide an approved prospectus to tenants and prospective tenants, which serves as a foundational element of the legislative intent to safeguard mobile home owners by ensuring they receive full disclosure of residency terms before entering into rental agreements.
A prospectus for a mobile home park must contain specific information, including a description of the park property, recreational facilities, management arrangements, required improvements by homeowners, utility service provisions, rent and fee increase procedures with advance notice, and the process for establishing or changing park rules (Sections 723.012(4)-(10)). The validity period of the prospectus and the amendment process are not defined in Chapter 723. Rule 61B-31.001(5), originally adopted in 1985, states that a prospectus is binding for the duration of the homeowner's tenancy, which is not explicitly defined in the statute. Amendments to the prospectus are allowed under certain conditions, including mutual consent and compliance with statutory procedures. Following the decision in Herrick v. Florida Department of Business Regulation, the Division interpreted "tenancy" as aligning with the term of a lot rental agreement. Concerned about potential misinterpretations limiting the prospectus's validity, the Division decided to repeal Rule 61B-31.001(5) and published the notice of repeal in the Florida Administrative Weekly. The Florida Manufactured Housing Association, Inc. represents the interests of mobile home park owners in Florida.
FMHA challenged the proposed repeal of Rule 61B-31.001(5), arguing its invalidity on multiple grounds. The organization contended that the Division's replacement of a clear standard for prospectus terms and amendment procedures with ambiguous non-rule policies violated section 120.535. These non-rule policies would leave the prospectus valid for an indefinite period beyond individual rental agreements and eliminate the requirement for the Division to review amendments. FMHA asserted that these policies also contravened section 120.56, as they improperly expanded or altered the law as interpreted by the District Court of Appeal, First District.
Additionally, FMHA claimed the repeal itself constituted invalid rulemaking under section 120.54(4) for four reasons: (1) noncompliance with rulemaking procedures, (2) exceeding rulemaking authority by conflicting with established law, (3) vagueness granting excessive discretion to the Division regarding prospectus amendments, and (4) being arbitrary and capricious contrary to prior rulings affirming the rule's consistency with chapter 723.
The hearing officer ruled that the repeal was an invalid exercise of delegated legislative authority, agreeing that it conflicted with prior interpretations of tenancy and failed to set adequate standards for agency decisions. However, the officer did not explicitly address the validity of the non-rule policies under section 120.56. The court was asked to determine whether the repeal itself could be challenged through the rulemaking process. Although section 120.52(16) includes rule amendments and repeals within its definition, it remains unclear whether this allows for challenges to repeals not effectively creating new rules. The court cited a case highlighting the difference between a rule repeal and the introduction of new rules, indicating that a repeal alone without the establishment of new policies may not qualify as a rule subject to challenge.
In Balsam v. Florida Department of Health and Rehabilitative Services, the court determined that a moratorium on certificate of need applications constituted a "rule" under the definition that any agency statement creating rights or affecting others is a rule, thereby requiring adherence to chapter 120's rulemaking procedures. The court contrasted this with Florida Bd. of Trustees of the Internal Improvement Trust Fund v. Lost Tree Village Corp., which found that a moratorium on applications for submerged lands was not a rule since acceptance wasn't mandated by law.
In the current case, the hearing officer invalidated part of a 'rule' concerning the amendment process due to its allowance for excessive agency discretion and its contradiction with chapter 723, which requires a prospectus as part of the contract between mobile home park owners and tenants. There was ambiguity in the statute regarding the prospectus's validity duration and amendment procedures. Recent legislative action aimed to clarify this confusion.
The court acknowledged that the mobile home park owner must obtain approval for prospectus amendments, as previously recognized in Village Park Mobile Home Ass'n, Inc. v. Florida Dep't of Business Regulation. Rule 61B-31.001(5), which governs prospectus amendments and affirms its binding nature throughout the tenancy, has been previously upheld. The hearing officer concluded that repealing the amendment process improperly granted the agency unchecked discretion, qualifying it as a rule that violates section 120.54. The final issue to address is whether the repeal defining the prospectus's viability period is arbitrary and capricious, conflicting with existing statutes.
The ruling by the hearing officer that the repeal of the rule allowing a prospectus to remain viable for the length of a 'tenancy' was arbitrary and capricious is based on a flawed interpretation of the court's decisions in Herrick and Hobe Associates, Ltd. v. Florida Department of Business Regulation. The officer incorrectly believed that Herrick defined 'tenancy' as the term of a rental agreement, whereas Herrick explicitly declined to define 'tenancy' for this purpose. The court noted that while the Division cited various provisions from Chapter 723 to argue that the prospectus should remain effective beyond the rental agreement's expiration, none specified the duration of viability for the prospectus. The court emphasized the need for legislative clarity on this matter.
Furthermore, the hearing officer found that the Division's acknowledgment of the prospectus being binding beyond the rental agreement and its assertion of lacking statutory authority to review amendments constituted agency statements of general applicability. The Division failed to demonstrate that rulemaking on this issue was unreasonable or impractical, thus violating section 120.535. The court upheld the invalidation of the repeal, noting that the Division’s actions represented a non-rule policy regarding prospectus validity and that the discontinuation of the review mechanism for amendments also required proper rulemaking.
On the issue of standing, the court concluded that the Florida Mobile Home Association (FMHA) had standing to challenge these non-rule policies due to the significant impact on mobile home park owners' interests. The absence of a clear approval process for prospectus amendments and the ambiguity surrounding the prospectus's effective term directly affect business decisions, affirming FMHA's substantial interest in the matter.
The court examined the statutory responsibilities of mobile home park owners and the Division regarding the approval of prospectuses. Owners are required to provide tenants with an 'approved' prospectus before entering rental agreements. The court found that the elimination of the process for approving amended prospectuses resulted in a significant injury-in-fact for mobile home park owners, as it created non-rule policies that contravened established statutory obligations. The court noted that the Division's repeal of the rule undermined the defined process for review and approval of amendments, thereby granting excessive discretion to the Division and violating section 120.54(4). The Division failed to demonstrate the impracticality of rulemaking or a good faith attempt to utilize those procedures. Consequently, the court affirmed the invalidation of the repeal of Rule 61B-31.001(5) of the Florida Administrative Code, while also clarifying that the appellant’s claim under section 120.56 was without merit, as the prior case established that section 120.535 was the exclusive method for challenging the agency's failure to adopt rules.
