South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

Lawn Builders, Inc vs. DOT

South Carolina Department of Transportation

Lawn Builders, Inc

South Carolina Department of Transportation



This matter came before this court on May 25, 2004 for a contested case hearing. Lawn Builders, Inc. (hereinafter “Lawn Builders” or “Petitioner”) seeks certification as a Disadvantaged Business Enterprise (“DBE”) pursuant to S.C. Code Ann. § 12-28-2930 (2000) and 25A S.C. Code Ann. Regs. 63-700 (Supp. 2003), et seq. The South Carolina Department of Transportation ("SCDOT" or “Respondent”) denied the requested certification after review of Lawn Builders’ application. Lawn Builders filed a request for a contested case hearing with the Administrative Law Court Footnote (“ALC” or “Court”). This court has jurisdiction of the matter pursuant to S.C. Code Ann. § 1-23-600(B) (Supp. 2003) and 25A S.C. Code Regs. 63-704(K) (Supp. 2003).

Shannon T. Bass, President of Lawn Builders, Inc., appeared on behalf of the Petitioner at the hearing. Attorney Linda C. McDonald appeared on behalf of Respondent SCDOT.


The issue before the Court is whether Lawn Builders has shown that Mrs. Shannon Bass “owns” and “controls” the business in accordance with the DBE regulations. The State’s standards for DBE eligibility are the same as those set forth in the federal regulations in 49 CFR Part 26. The State DBE regulations incorporate the federal regulations by reference. See 25A S. C. Code Ann. Regs. 63-700(D) (Supp. 2003).

As to ownership of the business, SCDOT contends that Petitioner did not meet its burden of proving that Mrs. Shannon Bass “owns” the business because she did not show she made a real and substantial contribution to acquire her majority interest in the business, as required by 49 CFR 26.69(e). Petitioner contends that Mrs. Bass made a “real and substantial contribution” by contributing money to the business, jointly with her husband, and by the expertise she brought to the company. Mrs. Bass’s expertise consisted of five and one-half years of work with her husband’s business and her Bachelor of Arts Degree from Coastal Carolina University, which she obtained in May 2002.

As to control of the business, SCDOT contends that Petitioner did not meet its burden of proving that Mrs. Bass “controls” the business because Mr. Bass started the business, purchased the majority of the equipment for the business and continues to be significantly involved in the business. Respondent SCDOT contends that Mr. Bass controls the business or, at best, that Mr. and Mrs. Bass jointly controls the company. Petitioner contends that Mrs. Bass is in control of the company because she does most of the administrative work of the company in addition to work in the field.

After careful review of the entire record, this Court finds that the application of Lawn Builders, Inc. for certification as a Disadvantaged Business Enterprise is denied.


Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following findings of fact by a preponderance of the evidence:


1.The ALC has personal and subject matter jurisdiction over the parties.

2.Notice of the date, time, place and nature of the hearing was timely given to the parties.

3.Shannon Bass is married to Dwight T. Bass. They live together in Horry County, South Carolina with their four-year old daughter.

4.Dwight Bass has been in the landscaping and lawn maintenance business for ten years. He started in business in January 1994 as a sole proprietor under the name of “Landscapes Unlimited.” In 1998, after he married Shannon Bass, he changed the name of his business to “Big Grounds Maintenance Co.” Shannon Bass began to work in the business with him, doing administrative work as well as work in the field.

Lawn Builders, Inc.

5.In August 2003, Shannon and Dwight Bass incorporated a new business called “Lawn Builders, Inc.” The type of work offered by the business includes hydroseeding, erosion control, horticulture planting, landscape installation, grading, grounds maintenance and pesticide application. The type of work performed by Lawn Builders is not significantly different than the type of work performed by Big Grounds Maintenance Co.

6.Shannon and Dwight Bass jointly contributed the money to set up the Lawn Builders’ business account. Both Shannon and Dwight Bass’s names appear on the corporate checking account. Both can sign checks for the company. The business account is the only asset of the company. No equipment is held in the name of the company.

7.Shannon and Dwight Bass are the sole members of the Board of Directors of Lawn Builders, Inc. Shannon Bass serves as the President and Secretary. Dwight Bass serves as the Vice President and Treasurer. Dwight Bass is listed as the registered agent of the corporation with the Secretary of State’s office in Columbia. They share the voting power 50%/50%. (See Application, question 20, Respondent’s Exhibit #1, Tab 2.) The business cards of the corporation show Dwight & Shannon Bass as the “Owner/Operators.” (See Respondent’s Exhibit #1, Tab 13.)

8.Upon incorporation the new corporation issued 51 shares of stock to Shannon Bass and 49 shares to Dwight Bass.

9.Mrs. Bass testified that she was issued the majority interest in the new business because of her expertise, which consisted of five and one half years of experience working with Big Grounds Maintenance Co. and a Bachelor of Arts degree from Coastal Carolina University. Her contribution of expertise is not noted in the corporate records as payment for the issuance of the stock.

10.According to Lawn Builders’ application, Dwight Bass contributed his Pesticide Certification and ten years of experience to the business. (See Application, Question 2, Respondent’s Exhibit #1, Tab 2.) Mrs. Bass testified that application of pesticides is a significant part of the business of Lawn Builders.

11.Although it was incorporated in August 2003, Lawn Builders did no business in 2003. It began doing business in January 2004.

12.Over the years, Dwight Bass acquired $131,061 worth of lawn maintenance and landscaping equipment for his businesses. (See Respondent’s Exhibit #1, Tab 8.) Most of the equipment was acquired and financed solely by Mr. Bass and is titled in his name. An exception to this is the 2000 F-450 dump truck, which is titled in Mr. and Mrs. Bass’s joint names. Mr. Bass made the down payments on the truck and the other equipment. The monthly payments for the truck and other equipment are made from the business accounts. Lawn Builders uses this equipment to perform its work. Mrs. Bass testified that they intend to transfer the equipment into the name of Lawn Builders in the future.

13.Mrs. Bass acquired a F-350 truck in her sole name in January 2004. She and her husband traded in an old, jointly owned truck as part of the consideration. She is making the monthly payments on the lien on the truck from the salary she earns from Lawn Builders. She uses this truck for both personal use and business use and claims the business mileage as a business expense. The company reimburses her for her mileage expenses.

14.Mrs. Bass also acquired an aerator for the business; it is titled in her sole name.

15.Mr. and Mrs. Bass both draw a salary of $2250 per month from the new business.

16.Mrs. Bass has taken on duties since the formation of the new company different from what she was doing before the business was incorporated. The duties consist of dealing with customer complaints, purchasing, and doing more of the bidding and estimating. Mr. Bass still assists her in doing the bidding and estimating, and they consult on other corporate matters, including financial decisions.


Based upon the foregoing Findings of Fact, I conclude, as a matter of law, the following:

1.The South Carolina Administrative Law Court has subject matter jurisdiction in this action pursuant to S.C. Code Ann. §§ 1-23-310 et seq. (1986 & Supp. 2003), and §§ 1-23-600 et seq. (1986 & Supp. 2003). Pursuant to S.C. Code Ann. § 48-39-150(D) (Supp. 2003), the ALC is authorized to hear contested cases arising under Chapter 39 of Title 48 of the 1976 Code.

2.The Administrative Law Judge is the fact finder in this matter for purposes of administrative and judicial review and does not sit in an appellate capacity. Brown v. S. C. Dep’t of Health and Envtl. Control, 348 S.C. 507, 560 S.E.2d 410 (2002).

3.The standard of proof in weighing the evidence and making a decision on the merits in a contested case hearing is “a preponderance of the evidence.” Nat’l Health Corp. v. S.C. Department of Health and Envtl.Control, 298 S.C. 373, 380 S.E.2d 841 (Ct. App. 1989). Furthermore, the burden of proof in a contested case hearing is upon the moving party. See 2 Am. Jur. 2d Administrative Law § 360 (1994); Alex Sanders, et al., South Carolina Trial Handbook § 9:3 Party With Burden, Civil Cases (1999) (In civil cases, generally, the burden of proof rests upon the party who asserts the affirmative on an issue.).

4.A firm seeking certification as a DBE has the burden of demonstrating, by the preponderance of the evidence, that it meets the requirements of 49 C.F.R. Part 26 concerning ownership and control by a woman or minority. (See 49 C.F.R. § 26.61.) The Petitioner in this case has not met its burden of proving by a preponderance of the evidence that Mrs. Bass owns and controls the business as required by the regulations.

5.The regulations at 49 CFR 26.69(c) require Mrs. Bass’s ownership to be “real, substantial, and continuing, going beyond pro forma ownership of the firm as shown in the ownership documents.” She must “enjoy the customary incidents of ownership, and share in the risks and profits commensurate with her ownership interest, as demonstrated by the substance, not merely the form of the arrangements.” Although Mrs. Bass owns 51% of the stock of the company, there is no evidence that she made a contribution to justify the issuance of the majority share of the stock. Mr. and Mrs. Bass jointly contributed the money to establish the Lawn Builders business account and it is the only asset of the company. There is no evidence that Mrs. Bass bears a greater risk in the success of the business than her husband. In fact, because Mr. Bass has purchased most of the equipment used by the business, it is he, rather than Mrs. Bass, who would stand to lose more if the business could not make the payments.

6.Mrs. Bass relies on her expertise as part of the consideration to justify the acquisition of the majority interest in Lawn Builders. Her expertise, which consists of five and one-half years of experience with Mr. Bass’s business and a Bachelor of Arts degree from Coastal Carolina University, is insufficient consideration under the DBE regulations to acquire the majority ownership interest. The DBE regulations require that when expertise is relied upon as part of the consideration for the acquisition of majority ownership, it must be:

a)In a specialized field;

b)Of outstanding quality;

c)In areas critical to the firm’s operations;

d)Indispensable to the firm’s potential success;

e)Specific to the type of work the firm performs; and

f)Documented in the records of the firm.

[See 49 CFR Section 26.69(f).] Petitioner has not shown that Mrs. Bass’s expertise meets these requirements.

7.Petitioner has not shown that Mrs. Bass controls the business. The DBE regulations provide that if you cannot determine that the socially and economically disadvantaged owner – as distinct from the family as a whole – controls the business, then the socially and economically disadvantaged owner has failed to carry her burden of proof concerning control, even though they may participate significantly in the business activities. [See 49 CFR 26.71(k)(2).] Both Mr. and Mrs. Bass are involved in making the financial decisions of the business, doing the estimating and bidding and purchasing equipment and supplies. Mr. and Mrs. Bass are both directors of the board and share the voting power of the corporation 50%/50%. The business cards of the company list both Mr. and Mrs. Bass as its “Owner/Operators.”

8.Lawn Builders is not an independent business as required by the DBE regulations. Pursuant to 49 CFR 26.71(b), only an “independent business” may be certified as a DBE. An independent business is one the viability of which does not depend on its relationship with another firm or firms. In determining whether a potential DBE is an independent business, you must scrutinize relationships with non-DBE firms in such areas as personnel, facilities, equipment, financial and or bonding support. [See 49 CFR 26.71(b)(1).] Lawn Builders is highly dependent upon Mr. Bass’s old business, Big Grounds Maintenance Co., which was established as a sole proprietorship. The same personnel are involved in Lawn Builders as were with Big Grounds Maintenance Co. Mr. and Mrs. Bass and Lawn Builders utilizes equipment owned by Mr. Bass which was previously used by Big Grounds Maintenance Co. Lawn Builders is merely an extension or continuation of the Big Grounds Maintenance business, with Mrs. Bass as its titular head.


Accordingly, based upon the above Findings of Fact and Conclusions of Law, it is hereby

ORDERED that the application of Lawn Builders Inc. for certification as a Disadvantaged Business Enterprise is denied.



Marvin F. Kittrell

Chief Administrative Law Judge

June 14, 2004

Columbia, South Carolina

Brown Bldg.






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