STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LOSADA TRUCK AND EQUIPMENT, INC. ) and VOLVO WHITE TRUCK CORPORATION, )

)

Petitioners, )

)

vs. ) CASE NO. 82-3050

) McCASLAND TRUCK CENTER SOUTH, ) INC. and DEPARTMENT OF HIGHWAY ) SAFETY AND MOTOR VEHICLES, )

DIVISION OF MOTOR VEHICLES, )

)

Respondents. )

)

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 April 19, 20 and 21, 1983, in Coral Gables, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: William S. Dufoe, Esquire Volvo White C. Kenneth Stuart, Esquire Truck HOLLAND & KNIGHT

Corporation 600 North Florida Avenue

Post Office Box 1288 Tampa, Florida 33601

For Petitioner: Sheldon R. Rosenthal, Esquire Losada Truck 721 City National Bank Building and Equipment, 25 West Flagler Street

Inc. Miami, Florida 33130

For Respondent: Jack B. Gerber, Esquire McCasland Truck 4143 Southwest 74 Court, Ste. B Center South, Miami, Florida 33155

Inc.

For Respondent: Judson Chapman, Esquire Department of Assistant General Counsel Highway Safety Neil Kirkman Building

and Motor Tallahassee, Florida 32301 Vehicles,

Division of Motor Vehicles

BACKGROUND

These Proceedings began on August 25, 1982 when Respondent McCasland Truck Center South, Inc. (McCasland) filed a letter of protest to object to the granting of a motor vehicle dealer license to Petitioner Losada Truck and Equipment, Inc. (Losada). By a letter dated November 4, 1982 the Director of the Division of Motor Vehicles forwarded the case to the Division of Administrative Hearings for the assignment of a Hearing Officer and the scheduling of a final hearing. On November 19, 1982 a Notice of Proceedings was sent to Petitioner Volvo White Truck Corporation (Volvo White) to inform it of the commencement of this case. By an Order dated December 6, 1982 Volvo White was allowed leave to intervene in these proceedings with the rights of a party. Subsequently on December 16, 1982 Volvo White filed a Motion challenging the standing of Respondent McCasland to participate in this proceeding. That Motion was denied on January 5, 1983. The final hearing which was initially scheduled for March 9 and 10, 1983 was continued until April 19, 20 and 21, 1983.

At that hearing the parties except for Respondent Department of Highway Safety and Motor Vehicles, which did not appear, presented the the testimony of witnesses. Petitioner Volvo White offered exhibits 2, 3, 4, 9, 10, 18, 24, 26,

32, 33, 35, 36, 37, 38, 40, 42, 45 and 49 which were received into evidence. Respondent McCasland offered exhibits A through X into evidence and exhibits A through J, L, N through U, V and X were so received. At the hearing a ruling on the admissibility of exhibit M was reserved but it is now received.

Subsequent to the final hearing Petitioner Volvo White and Respondent McCasland submitted Proposed Recommended Orders containing proposed findings of fact which have been been carefully considered here. To the extent that the proposed findings are not reflected in this Order, they are specifically rejected as being either not supported by the weight of admissible evidence, or as being irrelevant to the issues determined here. 1/

FINDINGS OF FACT

1. By an application dated October 19, 1982 Petitioner Losada applied for a license to engage in the business of buying, selling, or dealing in motor vehicles bearing the name plates of Volvo, White, Autocar and Western Star in the State of Florida with an area of responsibility (AOR) of Dade County. The address of the dealership to be franchised by Petitioner Volvo White is 6000 Northwest 77 Court, Miami, Florida 33166.

   
   

2. Volvo White came into existence as a corporate entity in the United States in June of 1981. It began business operations in September of the same year. Volvo White distributes trucks under the name plates of Volvo, White and Autocar throughout the Continental United States. The company previously distributed Western Star trucks until March 1983, at which time its agreement with the manufacturer terminated.

   
   

3. Prior to September 1981 Volvo trucks were distributed in the United States by the Freightliner Corporation. White, Autocar and Western Star trucks were distributed by the White Motor Corporation which Subsequently went into Chapter 11 bankruptcy proceedings.

   
   

4. McCasland and Volvo White entered into a Dealer Sales and Service Agreement on September 1, 1981. According to that Agreement Volvo White granted to McCasland the non-exclusive right to purchase White, Western Star and Autocar trucks and parts. In a subsequent Dealer Sales and Service Agreement dated

   January 1, 1982 Volvo White granted to McCasland a franchise right to purchase Volvo trucks and parts. Both agreements specify that the geographical area of responsibility in which McCasland is required to fulfill its dealer's obligation are the counties of Broward, Collier, Glades, Monroe and Palm Beach in Florida.

   
   

5. Prior to entering into an agreement with Volvo White, McCasland had been selling the same products as a dealer for both the now defunct White Motor Corporation and the Freightliner Corporation.

   
   

6. McCasland has two facilities. One is in Broward County and the other is in Dade County. The Broward County facility located at 2431 State Road 7 in Fort Lauderdale is its headquarters from which it sells and services the vehicles listed above. In Dade County it operates a parts sales facility at 7388 Northwest 72nd Avenue, Miami, Florida. In the summer of 1982 Volvo White and McCasland discussed an application by McCasland to increase its area of responsibility to include Dade County. In July of 1982 McCasland submitted a Marketing and Sales Action Plan for Dade County which included proposals to hire additional truck salesmen, parts counter people and mechanics. The plan did not include financial information acceptable to Volvo White however. As indicated by the subsequent application of Losada for a dealership license, Volvo White later determined that Losada was better able to serve the Dade County AOR. This decision was based on Losada's existing facilities on a one and one-half acre site, shop facilities of approximately 15,000 square feet, and personnel including five new truck salesmen, nine mechanics, and seven parts men. Another consideration was the capitalization of Losada which was very sound as compared to McCasland's. McCasland had fallen so far behind on payments for his parts ordered from Volvo White that the dealership had to be placed on a C.O.D. status for parts. That status remained in effect as of the date of the final hearing. Both the area of responsibility already assigned to McCasland and the Dade County territory are each larger than the average area of responsibility usually franchised by Volvo White. If the two were combined under a single dealer, the resulting AOR would be the second largest in the southeast region, and would be the largest area of responsibility served by a franchise dealer rather than by a factory branch. It would be extremely difficult for an independent dealer to obtain the necessary capital to adequately serve a market as large as Dade County and McCasland's AOR combined.

   
   

7. Due to the size of the Dade County area in terms of population and potential truck sales Volvo White's determination that it should be a separate area of responsibility is not an unreasonable one. The company's primary competitors, International Harvester, General Motors Corporation, Ford Motor Company and Mack Trucks have dealerships both in Broward County and Dade County. McCasland's Fort Lauderdale AOR and an AOR composed of Dade County would each constitute reasonably separate and independent markets capable of supporting independent Volvo White dealerships. The potential growth in both markets, while higher in the existing Fort Lauderdale AOR, is more than adequate for two dealerships.

   
   

8. Since truck manufacturers are in the business of selling trucks and truck parts, the primary method of evaluating the adequacy of a dealer's representation in a particular community or territory is to examine the sales made by that dealer. These evaluations are usually competitive. That is, a dealer's sales are compared with the sales of all other competing dealers who sell competing truck lines. Such an evaluation is usually based on a percent of market share. 2/

9. The following table illustrates Volvo White's percentage of market share for the year of 1982 in the areas indicated:

   
   

   VOLVO WHITE 1982 PERCENT OF MARKET SHARE

   
   

   Ft. Laud National S.E. Region AOR

   Class 3/ 8 5.77 8.67 1.53

   Class 7 1.69 2.42 0.00

   Orlando Ft. Pierce

   AOR Dade AOR

   Class 8 8.45 20-25 13.64

   0.67 /4 0.00

   Tampa AOR

   Class 8 6.53

   Class 7 0.00

   
   

10. As can be seen on the above table the percentage of market share for Dade County is from 20 to 25 percent. This high figure is the result of a large sale by McCasland to Metro-Dade County of 56 units. This sale, because of its magnitude, was certainly an unusual event. Because of its size Volvo White was willing to accommodate the county's specifications and to make unusually large concessions on the purchase price. The probability that such a large sale will be made by McCasland in the Dade County area in the future is not high. Nevertheless the sale was most definitely in the interest of Volvo White as the franchising manufacturer.

    
    

11. During the 1982 sales year McCasland sold seven Volvo White trucks in the Fort Lauderdale AOR to a total of five customers. Only two of these were new customers. Of the sales made in Dade County only six customers were involved and of these only two were new customers. This is an inadequate development of what is known in the industry as a customer base for Volvo White products.

    
    

12. When compared with dealers in Florida having comparable areas of responsibility, the Volvo White sales of truck parts in the Fort Lauderdale AOR is below standard. The sale of truck parts is a significant portion of Volvo White's overall income and is important to the company's interests.

    
    

13. The poor sales performance of McCasland in both the Fort Lauderdale area of responsibility for trucks and truck parts and for truck parts in the Dade County area can be explained in a large part by McCasland's not employing sufficient truck salesmen and parts sales personnel. Additionally McCasland's efforts at advertising have been less than minimal in spite of joint participation plans sponsored by Volvo White. At the final hearing Mr. Merritt McCasland explained that if prospective truck customers sincerely wanted to purchase a truck they would discover his facility on their own. For instance, McCasland's salesmen do not contact potential customers in any of the counties within his assigned area of responsibility other than Broward County and to a lesser extent in Palm Beach County. His only advertising is one obsolete mailer. While McCasland does have a yellow page listing for the Broward County

    telephone directory, Mr. McCasland wasn't sure if he had one for Dade County and remembered that he does not have one for Palm Beach, Glades, Collier and Monroe counties. Mr. McCasland was particularly apathetic about developing customers among the Hispanic community. He saw no need to have salesmen of a Hispanic background able to speak Spanish. In his opinion if someone of a Hispanic background wants to buy a truck, they are only interested in the truck and don't care what language the salespeople speak. This attitude is extremely detrimental to properly representing the interest of Volvo White in Dade County which is the fifth largest Hispanic market in the United States.

    
    

14. Volvo White offers training programs for both dealer sales personnel and maintenance people, yet during the period of its franchise, McCasland has not sent any of its staff to any Volvo White sponsored training school. Mr. McCasland believes that they are a waste of time.

    
    

15. The agreements between Volvo White and McCasland require McCasland:

    
    

    1. to diligently and aggressively promote the sale of covered products within the AOR;

    2. to advertise and promote the sale of covered products throughout the AOR, making maximum use of advertising, sales promotion, and merchandising materials and programs provided by the company;

    3. to provide a full range of service for covered products and maintain equipment and tolls which are required or desirable to provide economical and efficient service to users;

    4. to handle customer complaints in a manner which will secure the goodwill of customers

       and the public toward the dealer, the company, and its products;

    5. to maintain its premises in good repair and appearance;

    6. to maintain adequate working capital;

    7. to employ and compensate trained and competent employees, trained sales and service personnel, and send reasonable numbers of employees to company-sponsored training schools or programs; and

    8. to maintain and timely furnish to the company the records and reports specified in the agreements.

       
       

       The terms of paragraphs (1), (2) and (7) of the agreements have been breached by McCasland by its failure to aggressively promote the sale of Volvo White products throughout the entire Fort Lauderdale area of responsibility; by McCasland's failure to advertise Volvo White products and to participate in the company-sponsored cooperative programs for advertising; and by McCasland's failure to send a reasonable number of employees to company-sponsored training schools or programs.

       CONCLUSIONS OF LAW

       
       

16. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

17. Losada has applied for a motor vehicle dealer license pursuant to Section 320.27, Florida Statutes, et seq., (1981). Where such an application is being considered for an area already served by an existing dealer for the same vehicle, the terms of Section 320.642, Florida Statutes apply to provide:

    
    

    The department shall deny an application for a motor vehicle dealer license in any community or territory where the licensee's presently licensed franchised motor vehicle dealer or dealers have complied with licensee's agreements and are providing adequate representation in the community or territory for such licensee. The burden of proof in showing inadequate representation shall be on the licensee.

    
    

18. Throughout these proceedings Volvo White has asserted that McCasland is not within the protection of the statute because Dade County is not listed within McCasland's area of responsibility as defined in the contracts between the parties. As discussed in the Order on Motion to Determine Standing dated January 5, 1983, what actually constitutes a community or territory served by McCasland may exceed the counties set out in the agreements between the parties. The evidence here shows that in the sales year of 1982 McCasland sold 71 trucks in Dade County. Such sales constitute a sufficiently substantial interest of McCasland to require a determination of whether or not Losada and Volvo White have met the conditions set out in Section 320.642 for the establishment of a new dealer.

    
    

19. Once the proof shows that the area sought for the new dealer is already being served by an existing dealer the manufacturer must demonstrate that: (1) the present dealer has not complied with the terms of the manufacturer's agreements, or (2) the dealer is not providing adequate representation for Volvo White in the community or territory in issue.

    
    

20. While McCasland's derelictions may not amount to a sufficient breach of contract to support an action in circuit court for damages by Volvo White, it is determined here that for purposes of Section 320.642 McCasland has failed to comply with Volvo White's agreements. As mentioned above in the Findings of Fact McCasland has not sent its employees to Volvo White training schools, has not vigorously advertised Volvo White products, has not participated in Volvo White joint advertising programs, and has not vigorously pursued sales of Volvo White products throughout McCasland's entire area of responsibility.

    
    

21. If McCasland were to tend its allocated plot, the Fort Lauderdale AOR more carefully, the dealership would flourish and be profitable for both Volvo White and McCasland.

    
    

22. There is no evidence here that a powerful manufacturer is using its economic might to take unfair advantage of McCasland by overloading the Fort Lauderdale/Dade County area with more dealers than can be justified by the legitimate interest of Volvo White and its dealers, either existing or

    perspective. Bill Kelley Cheverolet, Inc. v Calvin, 322 So.2d 50, 52 (Fla. 1st DCA 1975).

    
    

23. This conclusion is supported by the fact that in McCasland's assigned area of responsibility Volvo White has not achieved a percentage of market share comparable with that achieved by in similar areas of responsibility in Florida or similar to that achieved by Volvo White in the southeast region or nationally. With respect to the community or territory of Dade County, the evidence shows that McCasland has achieved a truly remarkable percentage of the market share for the sales year of 1982. The probability that such a feat will occur in the future however, is not strong. McCasland's performance is based on a one-time sale of 56 units to Metro-Dade County. While Volvo White attempted to entirely discount the effect of the sale on its interests, it must be recognized that the sale was immensely profitable to the manufacturer. However, the percentage of market sale for the year is not the sine qua non of McCasland's representation of Volvo White in Dade County. In other respects McCasland's performance and potential to perform are dismal.

    
    

24. Mr. Merritt McCasland shows a complete insensitivity to the potential of the Spanish origin or Spanish speaking market in the Dade County area. His arrogant attitude of "They'll find me, we don't have to find them" is detrimental to a vigorous sales campaign on behalf of Volvo White in that region. His belief that company sponsored training schools and programs are of no value is similarly contrary to the manufacturer's interests. These attitudes have borne little fruit in terms of new customers. For the sales year of 1982 McCasland has solicited only two new Volvo White customers in the Fort Lauderdale AGR and only two new customers in the Dade County area.

    
    

25. I therefore conclude that Volvo White is justified in establishing a new dealer point in Dade County, Florida, and that the establishment of such a dealer point will not be contrary to the interest of McCasland as protected by Section 320.642, Florida Statutes (1981).

RECOMMENDATION

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

That the Director of the Division of Motor Vehicles enter a Final Order approving the application of Losada Truck and Equipment, Inc. to become a motor vehicle dealer in Dade County, Florida, under a dealer sales agreement with Volvo White Truck Corporation.

DONE and RECOMMENDED this 2nd day of November, 1983, in Tallahassee, Florida.

MICHAEL P. DODSON

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 2nd day of November, 1983.

ENDNOTES

1/ Sonny's Italian Restaurant v. Department of Business Regulation, 414 So.2d 1156, 1157 (Fla. 3d DCA 1982); Sierra Club v. Orlando Utilities Commission, 436

So.2d 383 (Fla. 5th DCA 1983).

2/ See Dave Zinn Toyota, Inc. v. Department of Highway Safety and Motor Vehicles, 432 So.2d 1320, 1321 (Fla. 3d DCA 1983).

3/ A Class 8 vehicle weighs over 33,000 pounds. Class 7 trucks are between 33,000 pounds and 26,000 pounds gross vehicle weight.

4/ No credible evidence of a percentage of market share for Class 7 trucks was presented but because of the poor Class 7 sales by Volvo White dealers in Florida, figures for Class 7 sales are not considered significant here. Three Class 7 Volvo White trucks were registered in Dade County.

COPIES FURNISHED:

William S. Dufoe, Esquire

and C. Kenneth Stuart, Esquire HOLLAND & KNIGHT

600 North Florida Avenue Post Office Box 1288 Tampa, Florida 33601

Sheldon R. Rosenthal, Esquire 721 City National Bank Building

25 West Flagler Street Miami, Florida 33130

Jack B. Gerber, Esquire

4143 Southwest 74 Court, Ste. B

Miami, Florida 33155

Judson Chapman, Esquire Assistant General Counsel Department of Highway Safety

and Motor Vehicles Neil Kirkman Building

Tallahassee, Florida 32301

Paul Rowell, Esquire General Counsel

Department of Highway Safety and Motor Vehicles

Neil Kirkman Building Tallahassee, Florida 32301

Robert A. Butterworth, Executive Director, Department of Highway

Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32301

Docket for Case No: 82-003050

Orders for Case No: 82-003050