STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DUNES OF PANAMA RENTAL )

ASSOCIATION, INC., )

)

Petitioner, )

)

vs. )

)

STATE OF FLORIDA, DEPARTMENT ) CASE NO. 81-232 OF STATE, )

)

Respondent, )

and )

)

DUNES OF PANAMA RENTAL ) MANAGEMENT ASSOCIATION, INC., )

)

Intervenor-Respondent. )

)

)

RECOMMENDED ORDER

Pursuant to notice the Division of Administrative Hearings by its designated Hearing Officer, Michael Pearce Dodson, held the final hearing in this case on May 27, 1981, in Panama City, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: J. Ernest Collins, Esquire

COLLINS & THOMPSON

703 Grace Avenue

Panama City, Florida 32401

For Respondent: William J. Gladwin, Esquire

Assistant General Counsel Department of State

The Capitol

Tallahassee, Florida 32301

For Intervenor- Stephen H. Kurvin, Esquire and Respondent: Douglas J. Sale. Esquire

SALE, BRYANT, THOMPSON & KURVIN

Post Office Box 426

Panama City, Florida 32401 BACKGROUND

These proceedings began on January 26, 1981 when Petitioner, Dunes of Panama Rental Association, Inc. (Rental) filed with Respondent, the Department of State, a request for an administrative hearing on the issuance of a corporate

charter to Intervenor-Respondent, Dunes of Panama Rental Management Association, Inc. (Management). On January 29, 1981 the case was forwarded to the Division of Administrative Hearings for the assignment of a Hearing Officer and the scheduling of a final hearing. Because of its obvious interest in these proceedings a Notice was sent by the Hearing Officer to Management to give it the opportunity to intervene pursuant to Section 28-5.107, Florida Administrative Code. In response to the Notice Management requested and received permission to become an Intervenor-Respondent in this case with the status of a party. Order March 25, 1981.

The final hearing was noticed for and held on May 27, 1981. Petitioner presented as its witnesses Thomas Rogers, William Hodges, Arlene Ellis, Don Hunter and John Russell Arnold. Petitioner offered Exhibits 1-7 which were received into evidence. Respondent presented neither witnesses nor offered exhibits. Intervenor-Respondent presented as its witnesses Stanford Coston, Jr., and Melvin Lauderdale. It offered Exhibits A-C which were received into evidence. During the hearing the parties stipulated that Management did not request and has not received consent from Rental to use Rental's corporate name or any name deceptively similar to "Dunes of Panama Rental Association, Inc."

At the conclusion of the hearing, pursuant to Section 12O.57(1)(b)4, Florida Statutes (Supp. 1980), the parties were given the opportunity to file proposed findings of fact and proposed recommended orders. Both Petitioner and Intervenor-Respondent filed excellent proposed orders. Their counsel are commended. To the extent that the proposed findings of fact submitted by the parties are not reflected in this Order they are rejected as being either not supported by admissible evidence or as being irrelevant to the issues determined here. Agrico Chemical Company v. Department of Environmental Regulation 356 So.2d 759, 763 (Fla. 1st D.C.A. 1978).

ISSUE

Are the corporate names, Dunes of Panama Rental Association, Inc. and Dunes of Panama Rental Management Association, Inc. deceptively similar to each other?

If the names are deceptively similar to each other, may the Department of State require the later chartered corporation to amend its Articles of Incorporation and registration to reflect a new name?

FINDINGS OF FACT

1. At 7205 Thomas Drive, Panama City Beach, Florida, there is a cluster of condominiums known colloquially as the Dunes of Panama. The Dunes is a phased condominium development constructed and sold by A. W. Hirshberg, Inc. At the time of hearing there were three units of the development completed and a fourth under construction. Each unit, known respectively as Phase I, Phase II, Phase III and Phase IV, is contained in a freestanding building approximately 100 feet apart from the next unit.

   
   

2. Construction of Phase 1 began in 1974. It was completed and sold by 1977. In that year the Dunes of Panama Phase I Association, Inc. was incorporated and chartered by the Department of State. As each succeeding unit was completed and sold a new owner's association was chartered until there are now Dunes of Panama Phase I Association, Inc., Dunes of Panama Phase II Association, Inc., and Dunes of Panama Phase III Association, Inc. Phase IV will be incorporated upon the completion of its building.

3. To provide a service to the condominium owners in Phase I the developer established a rental office to assist in renting the condominiums to third parties. On July 1, 1977, this service was incorporated and received a corporate charter from the Department of State in the name of Dunes of Panama Rental Association, Inc. In September of 1977, when the developer Hirshberg conveyed all condominium assets of Phase I to the new owner's association, Dunes of Panama Phase 1 Association, Inc., he also transferred to the association all the assets of Dunes of Panama Rental Association, Inc.

   
   

4. As each new phase of the development has been completed Rental has offered its rental management services to the new condominium owners in that phase.

   
   

5. During December, 1980, a rival rental office was established by some condominium owners (primarily those in Phase III) to offer rental services to all condominium owners in each phase of the Dunes of Panama. This office was later, incorporated on February 4, 1980, as Dunes of Panama Rental Management Association, Inc. The services it offers its clients are exactly the same as those offered by Rental.

   
   

6. All three existing units at the Dunes of Panama have the same street address, 7205 Thomas Drive. Each of the three buildings containing condominiums are designated by the letters "A," "B," and "C." The office of Rental is located in Building A. The office of Management is located in Building C. If the building letter is left off the address of mail to either Rental or Management, as frequently happens, there is considerable confusion among the postmen as to where the mail should be delivered. Frequently Management receives telephone calls for Rental and vice-versa. There is ample evidence that members of the public do not distinguish between the names of Rental and Management. Because the offices genrally cooperate with each other, the confusion from the similarity of their names is not always harmful but it does mean that, for instance, a person who made a rental agreement with Rental might send his deposit to Management, who may not be sure if that deposit is from one of its own customers or should be forwarded over to Rental.

   
   

7. Both Rental and Management presently represent owners in Buildings A (Phase I), B (Phase II), and C (Phase III).

   
   

8. The name Dunes of Panama Rental Management Association, Inc. is deceptively similar to the name Dunes of Panama Rental Association, Inc.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case. Section 120.57(1), Florida Statutes (Supp. 1980).

   
   

10. Section 607.024(1)(b), Florida Statutes (1979), which is part of the Florida General Corporation Act, provides in part that:

    
    

    1. The corporate name:

       * * *

       (b) Shall not be the same as, or deceptively similar to, the name of any domestic corporation existing under the laws of this state or any foreign corporation authorized to transact business in this

       state, a name the exclusive right to which is, at the time, reserved in the manner provided in this act, or the name of a corporation which has in effect a registration of its corporate name as provided in this act . . . .

       
       

11. By rule, Section 10-1.04, Florida Administrative Code (1980), the Department of State has defined "deceptively similar." The rule states:

    
    

    Corporate names are deceptively similar if on comparison of the names, written as above provided, there is an apparent difference, but the difference or

    differences are of such character that the names are likely to be confused by persons giving oral or written information to this office, or by persons in the Office of the Secretary of State who are attempting

    to enter into or retrieve from the records of this office corporate information, or by persons attempting to receive written or oral information from the Office of the Secretary of State, or by judicial or law enforcement officers, or by persons in the

    general public who are attempting to identify a corporation solely on the basis of written or oral communications concerning its name, or by consumers who could be easily confused by similar names. Confusion can exist even though one or both parties to an oral or written communication has information concerning only one of the names which might on comparison be found to be deceptively similar. Such names shall be rejected by the Division and shall not be filed.

    
    

12. Under the above statute and rule the corporate name Dunes of Panama Rental Management Association, Inc., chartered on February 4, 1981, is deceptively similar to Dunes of Panama Rental Association, Inc. 1/ See Florida Hotel and Motel Association, Inc. v. Florida Hotel and Motor Hotel Association, Inc. and Secretary of State, 3 FALR, 283A (Florida Secretary of State Final Order; December 29, 1980) and Grove Towers, Inc. v. Towers In The Grove, Inc. and Department of State, 3 FALR 285A (Florida Secretary of State Final Order; January 15, 1981).

    
    

13. There is no statute or rule which explicitly allows the Department of State to take any action once it has chartered corporations whose names are deceptively similar. 2/ The power to act in this case must be found by implication. That implication is bolstered by Section 607.371, Florida Statutes (1979) which states:

The department of state shall have the power and authority reasonably necessary to enable it to administer this chapter efficiently, to perform the duties therein

imposed upon it, and to promulgate reasonable

rules necessary to carry out its duties and functions under this chapter.

The scope of the Department's implied powers here are delineated by the decision of State Board of Education v. Nelson. 372 So.2d 114 (Fla. 1st D.C.A. 1979) where the court held that if the State Board of Education has the power to issue a certificate to a community college teacher it has the implied power to revoke that certificate. The court's reasoning is compelling here. The only way to give effect to Section 607.024, Florida Statutes (1979) once a corporate charter is issued, is to imply that the Department of State may require a corporation to amend its Articles of Incorporation and registration by replacing a deceptively similar name with a new name complying with the provisions of Section 607.024, Florida Statutes and Section 10-1.04, Florida Administrative Code. Hair Contempo, Inc. Charter No. F22352 v. Hair Contempo, Inc. Charter No. F22428 (Florida Division of Administrative Hearings. Recommended Order; July 21, 1981).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That the Secretary of State enter a final order requiring Intervenor- Respondent Dunes of Panama Rental Mangement Association, Inc. to amend its Articles of Incorporation and registration with the Department of State to reflect a name other than Dunes of Panama Rental Management Association, Inc.

DONE and RECOMMENDED this 14th day of August, 1981, in Tallahassee, Florida.

MICHAEL PEARCE DODSON

Hearing Officer

Division of Administrative Hearings 2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of August, 1981.

ENDNOTES

1/ Petitioner has argued that any use of the words "Dunes of Panama" by Intervenor-Respondent would violate Section 607.024, Florida Statutes. That is not necessarily true. A name such as "Sea Resorts at Dunes of Panama" would not be deceptively similar.

2/ Prior to incorporation the Department may under certain circumstances revoke the reservation of future corporate names. Section 607.027(3), Florida Statutes (1979). See also Section 607.031(5), Florida Statutes (1979) which authorizes the revocation of the name of foreign corporations under specified conditions.

COPIES FURNISHED:

J. Ernest Collins, Esquire COLLINS & THOMPSON

703 Grace Avenue

Panama City, Florida 32401

William J. Gladwin, Esquire Assistant General Counsel Department of State

The Capitol

Tallahassee, Florida 32301

Stephen H. Kurvin, Esquire and

Douglas J. Sale, Esquire

SALE, BRYANT, THOMPSON and KURVIN

Post Office Box 426

Panama City, Florida 32401

Docket for Case No: 81-000232

Orders for Case No: 81-000232