STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CURTIS A. GOLDEN, STATE ) ATTORNEY, FIRST JUDICIAL CIRCUIT, )

)

Petitioner, )

)

vs. ) CASE NO. 85-0725

)

GULF COAST MOTORS, INC., ) MARK S. TURNER, DAVID TURNER ) and JOSEPH MERGER, )

)

Respondents. )

)

RECOMMENDED ORDER

This matter came on for final hearing in Pensacola, Florida, before Robert T. Benton, II, Hearing Officer of the Division of Administrative Hearings on July 31, 1985.

APPEARANCES

For Petitioner: William P. White, Jr., Esquire

Assistant State Attorney Post Office Box 12726 Pensacola, Florida 32501

For Respondents Gulf Coast Motors, Inc., Mark S. Turner and David Turner:

Alan H. Rosenbloum, Esquire

417 Canterbury Lane

Gulf Breeze, Florida 32561 For Respondent Joseph Mercer:

T. David Mann, Esquire

41 North Jefferson Street Pensacola, Florida 32575

By complaint issued January 28, 1985, petitioner alleged that respondents do business in Pensacola, in a single judicial

circuit and that they "sell used automobiles [and] finance . . . such sales . . . utiliz[ing] various contract forms some of which indicate that a late charge will accrue when payment of an installment is in default for ten (10) days or more"; that one of the contract forms respondents use is "deceptive, unfair, confusing, and/or unconscionable in that it is complex, lengthy, composed of fine print . . . [and is] adhesive . . . particularly in respect to authorization of repossession, addition of charges for repossession and late fees"; that respondents "sometimes accept late payments . . . then without prior notice, claim the contract to have been accelerated and .

. . repossess the automobile; that a form contract respondents use "requires that the consumer waive notice of any demand or intention . . . to repossess the automobiles"; that respondents, on occasion, after repossession "lead the consumer to believe that he . . . can reinstate the contract . . . by continued payments and then refuse . . . to honor such representations"; "fail to give adequate notice of intended sales of repossessed automobiles and otherwise fail to comply with statutory requirements for such sales"; "fail to properly disclose the terms of financing arrangements or contract terms"; "employ deceptive pricing tactics or include improper charges"; "procure the [unwarranted] repossession of automobiles . . . and then fail or refuse to promptly return the automobile without charger; "cause an automobile to be repossessed and fail or refuse to promptly return personal property contained in the automobile"; "cause a breach of the peace in the course of repossession"; "employ coercive or abusive practices towards consumers"; "fail to properly account to the purchaser debtors as to the proceeds of the disposition of repossessed motor vehicles"; "fail to honor express or implied warranties"; "misrepresent the quality, condition, mileage, or previous ownership and usage of automobiles"; "fail to properly prepare, process and collect fees for titles and tags, or fail to provide title to vehicles"; fail to provide proper documentation regarding mileage"; "sell vehicles which are in unsafe condition"; and "improperly care for, use, and/or abuse vehicles left in their care for repairs."

The complaint alleges that these practices "violate the law and public policy of the United States and the State of Florida as established by Sections 501.204, 520.01-520.13, and 679.501- 679.507, Florida Statutes, common law and/or case law," and that they "constitute unfair and/or deceptive trade practices" in that they are unlawful, "unethical, immoral or unscrupulous; and

. . . [h]ave damaged consumers, competitors or other business

men," all in violation of Part 11, Chapter 501, Florida Statutes.

At the hearing petitioner abandoned paragraphs 3H and 3V of the complaint, as to all parties. As to respondent Joseph Mercer, petitioner abandoned the complaint in its entirety.

With the agreement of the parties, August 21, 1985, was established as the deadline for filing posthearing submissions. Petitioner filed a memorandum on August 19, 1985. Neither party filed proposed findings of fact.

ISSUE

Whether there is probable cause for petitioner to bring an action against respondents, or any of them, for violation of the Florida Deceptive and Unfair Trade Practices Act?

FINDINGS OF FACT

1. Mark Sherwood Turner started working for Gulf Coast Motors in 1982. At the time, Charles E. Pace owned all of the inventory and other assets of the business, a used car lot at

   301 Beverly Parkway in Pensacola, Florida. When Mark Turner's name was added to the fictitious name papers, it was not because he had acquired an ownership interest in the business; it was done in order to effectuate an agreement between him and Mr. Pace: They had agreed that Turner could use the lot to display his own cars and otherwise to operate his own, independent used car sales business, without incurring the expense of obtaining his own motor vehicle dealer's license. In exchange, Turner was to run Pace's business in Pace's absence. They kept separate books, and neither Turner had an ownership interest in the cars sold to Messrs. Hayes, Allen and Crutchfield, or Ms. Youmans.

   
   

2. Later Pace sold one Richardson the accounts receivable generated by Gulf Coast Motors. Richardson subsequently assigned to Mark Turner everything he had acquired from Pace. On March 11, 1983, the corporate respondent was organized and Mark Turner acquired an interest in Gulf Coast Motors, Inc.

   
   

3. Mark's brother David Jerry Turner began working at the used car lot a year or two before the final hearing. He came in three days a week, worked in the office and occasionally acted as a salesman. On June 25, 1984, he also acquired an interest in Gulf Coast Motors, Inc.

   
   

   Crutchfield

   
   

4. On March 15, 1984, Joel Harold Crutchfield bought a Dodge Monaco for $1531 after Joe Smith told him it was in good mechanical condition. He signed a form contract that had "GULF COAST MOTORS" at the top with "Charlie Pace" and "Mark Turner," printed underneath. Respondent's Exhibit No. 1. Nobody else signed this undated form contract, which provided, among other things:

   
   

   Any payment late will include a late charge of $5.00 for every three days late . . .

   GULF COAST MOTORS has full rights to repossess any vehicle with a payment three days late. If any vehicle is repossessed the buyer has up to 10 days in which to pay the vehicle off in full and a $100.00 repossession charge to redeem the vehicle.

   
   

   Mr. Crutchfield also signed a form warranty disclaimer, stating "THIS USED MOTOR VEHICLE IS SOLD AS IS WITHOUT ANY WARRANTY . .

   .". Respondent's Exhibit No. 2. Mark Turner and Glen Padgett witnessed his signature on the warranty disclaimer. Mr.

   Crutchfield understood that he was buying the car "as is."

   
   

5. Under the agreement, Mr. Crutchfield made a downpayment of $250 and undertook bi-weekly payments of $60 to retire a balance of $1281. Joe Smith signed an undated receipt for $250 on which "GULF COAST MOTORS" was stamped. David J. Turner signed a similarly stamped receipt for $60 on March 31, 1984. Mark Turner's and David Turner's names were on front of the office building at the car lot.

   
   

6. The night following the purchase, Mr. Crutchfield had to buy a new starter for the car. When he drove the car home, he discovered that the brakes, the brake lights and the horn did not work. Only three lug nuts held each tire to its wheel. About a month after he had the car, the front end dropped and the car was "so low it looked like it would hit the road"; the frame was broken.

   
   

7. Eventually Mr. and Mrs. Crutchfield decided to give the car back because Joe Smith and Charlie Pace refused to fix the frame. They made their last payment on or about September 17, 1984. Mrs. Crutchfield left the car on the lot and walked off ignoring calls to come back. A couple of days later the car was gone. The Crutchfields never received any correspondence in connection with the car thereafter.

   
   

   Youmans

   
   

8. Frances Gayle Youmans also purchased a car on March 15, 1984, and also made a down payment of $250.00. She also dealt with Joe Smith. For a sales price of $1495.00, which with the dealer handling charge of $25.00, tag and title transfer fees, came to $1636.00, Ms. Youmans acquired a 1974 Buick that had been driven 78,482 miles. She agreed to pay the balance of

   $1380.00 in $25.00 weekly installments. On the vehicle registration certificate "GULF OOAST MOTORS" is shown as the "SELLER, FLORIDA DEALER, OR OTHER PREVIOUS OWNER," and as the

   first lienholder. Joe Smith, C. E. Pace, David J. Turner, Mark Turner and Lisa Russo signed receipts for various weekly payments she made.

   
   

9. The day she bought the car it backfired on a test drive. Mr. Smith told her that it was the carburetor and that he would get a mechanic to fix it. Ms. Youmans is not an automobile mechanic; she works as a maid. She signed an "as is" disclaimer, which she did not understand. On March 16, 1984, she spoke to Joe Smith about fixing the car. He promised her repeatedly that he would arrange for a mechanic to fix it and told her not to take it to anybody else. She left the car parked at her home for more than two months, making weekly payments the while, on the strength of these assurances.

   
   

10. On March 16, 1984 Ms. Youmans made application for a temporary license tag. A form application for vehicle registration was partially completed on April 19, 1984. Petitioner's Exhibit No. 4.

    
    

11. Ms. Youmans asked Joe Smith to arrange for the car to be picked up and taken to the car lot, because she was afraid to drive it. After she had made the last in an unbroken series of weekly payments, on June 15, 1984, the car was towed. The next day Joe Smith told her to continue the weekly payments so that she could have the car back when she paid the mechanic's bill. About a week later the car "ran," and about a week after that she appeared with $155.00, enough to pay for the mechanic, for towing ($50.00) and to bring payments (with late charges) current. Mark Turner refused the money, pounded his fist on a table, and told her to leave. Still later she noticed that the car was no longer on the lot.

    
    

    Allen

12. On March 24, 1984, Donald Gene Allen purchased a 1973 Volkswagen from a salesman named Smith, making a down payment of

    $300.00 and agreeing to weekly payments of $35.00 to retire a balance of $2180.00. He signed a form contract that had "GULF COAST MOTORS" at the top with "Charlie Pace" and "Mark Turner" printed underneath. Respondent's Exhibit No. 4. Nobody else signed the form contract, which provided, among other things:

    
    

    Any payment late will include a late charge of $5.00 for every three days late . . . .

    GULF OOAST MOTORS has full rights to repossess any vehicle with a payment three days late. If any vehicle is repossessed the buyer has up to 10 days to pay the vehicle off in full and a $100.00 repossession charge to redeem the vehicle. Respondent's Exhibit No. 4.

    
    

    Mark Turner and C. E. Pace witnessed Mr. Allen's signature on a form warranty disclaimer, which stated, "THIS USED MOTOR VEHICLE IS SOLD AS IS WITHOUT ANY WARRANTY . . ." Respondent's Exhibit No. 3.

    
    

13. A week and a half after he had acquired the Volkswagen, the transmission failed and Mr. Allen called for the car to be towed back to the used car lot. He asked that the car be repaired and the car was taken to a Volkswagen mechanic's shop. This shop refused to release the car to Mr. Allen without payment of the repair bill. He was refused, when he asked that his down payment be returned. Mr. Allen dealt only with Charlie Pace and Joe Smith and never spoke to the Turners.

    
    

    Hayes

    
    

14. Willie Hayes, Jr. bought a car from Gulf Coast Motors in 1982 or 1983 for about $1200.00. He fell behind in his bi- weekly payments once in a while, but always let somebody know when he would be unable to make a payment. In May of 1984, when he was $60.00 or $70.00 behind, he told Mr. Pace that he would bring payments current in a week's time. He showed up at the used car lot with all but $20.00 of what he had intended to bring, but was told that he had to pay everything he still owed on the car, a balance of $420.00. Mark Turner asked him for the key to the car when it became clear that he could not pay. Mr. Hayes refused, got into his car and started to leave. Mark Turner got into another car and blocked his egress while another driver pulled another car in front of Mr. Hayes, penning his

    car. Eventually a Highway Patrolman arrived, wrote Mr. Hayes a ticket for having backed into the car Mr. Turner had placed in his way, determined that Mr. Turner had no judicial process authorizing repossession, and sent Mr. Hayes on his way.

    
    

    Motley

    
    

15. Burtis O. Motley bought a 1980 Ford Granada from Gulf Coast Motors on October 11, 1984. He dealt with a Jerry Murph who signed an odometer mileage statement reciting that the odometer "now reads 131,527 miles . . . [and that] the odometer reading . . . reflects the actual mileage." Petitioner's Exhibit No. 6. In fact, however, the odometer read 131,528, understating the mileage by 99,999 miles, a point on which Mr. Motley, a retired carpenter, was confused. During negotiations he commented to the salesman, "I see the low mileage."

    Cataracts impair Mr. Motley's vision. He did not read the odometer mileage statement or the other documents he signed when he paid $500.00 down, traded in his old car, and undertook to retire a balance of $3206.75 with monthly payments of $70.00.

    He realized he was buying the car "as is," however, and signed a disclaimer to that effect.

    
    

16. Two or three days after the purchase, Mr. Motley began having repairs done, first on the brakes: the front brakes pulled to the left and the back brakes "went haywire." Grease seals were replaced at K-Mart. New shock absorbers were needed. Mr. Motley decided that he had had enough. On the telephone he told one of the Messrs. Turner that he was going to stop making payments and that he would "turn the car in." On November 24, 1984, somebody took the car. Mr. Motley later saw it on the Gulf Coast Motors lot, but there was never any communication as to its disposition after November 24, 1984.

    
    

    Pugh

    
    

17. On July 7, 1984, a Saturday, Marshall Everett Pugh bought a 1972 Toyota from David Turner purporting to act as a salesman for Gulf Coast Motors. Most of the paperwork he signed in blank but he was aware of the import of the form warranty disclaimer he signed, and acknowledged at hearing that he purchased the car "as is," after David told him that the car "ran good." At the time of the purchase he was aware that the driver's door did not open and that the ignition key was prone to stick in a way that kept the starter operating even after the engine was running.

18. On the 9th or 10th of July, after he had taken the car to mechanics to be looked at, Mr. Pugh learned that only one cylinder was functioning properly. On July 10, 1984, he took the car back to the used car lot and asked Mark Turner where David was. Mark pointed out that Pugh had bought the car "as is," ending his remarks on an obscene note that precipitated a tussle. The fight ended with David pulling Pugh off Mark by the hair. Pugh left without the car and never heard further from the Turners or Gulf Coast Motors about the car. He had given them an erroneous address at the time of purchase and left town shortly afterward.

    
    

    Castello

    
    

19. Under her then (married) name of Graves, Cathy Sheree Castello bought a 1979 Cougar from a salesman named Bill on the Gulf Coast Motors lot. He told her it was a good car. She had effected a few repairs when, two weeks after the purchase, she was told that the car needed a new engine, because the one it had was "totally blown." The car would only go about 30 miles per hour. She, too, had signed an "as is" warranty disclaimer.

    
    

20. Ms. Castello returned the car to the lot where it was offered for sale while she and the used car lot personnel tried to reach a settlement. Without notice to her, the car was sold and somebody forged her stepfather's signature in transferring title to the new buyer. Before the final hearing in this case, she had settled her claim against respondents amicably.

    
    

    CONCLUSIONS OF LAW

    
    

21. Under the Florida Deceptive and Unfair Trade Practices Act, Sections 501.201 et seq. Florida Statutes (1983), an "enforcing authority" is authorized to bring an action "to obtain a declaratory judgment that an act or practice violates [Chapter 501, Part 11, Florida Statutes (1983)]," Section 501.207(1)(a), Florida Statutes (1983), or an "action on behalf of one or more consumers for . . . damages . . .," Section 501.207(11(c), Florida Statutes (1983). Before instituting judicial proceedings for declaratory judgment or for damages, however, "the enforcing authority shall, pursuant to an administrative hearing, determine that there is probable cause to bring the action." Section 501.207(2), Florida Statutes (1983).

    
    

22. The "enforcing authority" is the Department of Legal Affairs when a violation "occurs in or affects more than one

    judicial circuit or if the office of state attorney fails to act upon a violation within 90 days after a written complaint has been filed with the state attorney." Section 501.203(4) Florida Statutes (1983). Where the violation occurs solely within or affects only a single judicial circuit, as here, the Office of the State Attorney is the "enforcing authority," whether the complaint is filed directly with the Office of the State Attorney -or whether it is referred by the Department of Legal Affairs.

    
    

23. On the merits, the question is whether there has been "adequate proof of probable cause for the institution of a civil suit." Kasha v. Department of Legal Affairs, 375 So. 2d 43, 44 (Fla. 3d DCA 1979). The quantum of proof is less than a preponderance of the evidence. Id. There must be a showing only that there is reason to believe that respondents have been guilty of "unfair or deceptive acts or practices." Section 501.204(1), Florida Statutes (1983). This language has been held not to apply to real estate transactions, State ex ref. Herrine v. Murdock, 345 So. d 759 (Fla. 4th DCA 1977), and certain provisions have been limited to "consumer transactions." Black v. Department of Legal Affairs, 353 So. 2d 655 (Fla. 2nd DCA 1977). Neither of these limitations pertain here. The Black court recognized an "express limitation in the . . . definition of 'consumer transaction' which limits the business opportunity within the protection of the act to one in which the consumer has not been previously engaged.'" 353 So. 2d at 656 (emphasis supplied) In the present case, each of the automobile sales in question was "to an individual for purposes that are primarily personal, family, or household." In construing the language "unfair or deceptive acts or practices,"

    
    

    due consideration and great weight shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to s.5(1)(1) of the Federal Trade Commission Act (15 U.S.C. 45(a)(1), as from time to time amended. Section 501.204(2), Florida Statues (1981).

    
    

    The United States Supreme Court quoted with approval the following formulation by the Federal Trade Commission:

    
    

    1. Whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the

       common law, or otherwise--whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).

       Statement of Basis and Purpose of Advertising and Labeling of Cigarettes in Relation to the Health Hazards of Smoking.

       29 Fed Reg 8355 (1964). FTC v. Sperry Hutchinson Co., 405 v. S. 233, 244 n. 5 (1972). (quotation marks omitted).

       
       

24. The Department of Legal Affairs has adopted Rule 2- 19.05, Florida Administrative Code, which proscribes any "activity that is misleading or deceptive." Rule 2-19.05(21) Florida Administrative Code. Section 501.203(1), Florida Statutes (1983). Respondent has filed no challenge to any portion of Rule 2-19.05 Florida Administrative Code.

    
    

25. By request for judicial notice filed August 19, 1985, petitioner has requested that notice be taken of the findings of the Federal Trade Commission with respect to its adoption of the Federal Trade Commission's rule on credit practices, as published in Volume 49, Nos. 42 and 224 of the Federal Register. Pursuant to Rule 221-6.20, Florida Administrative Code, official recognition may be had "of any matters which may be judicially noticed by the courts of this state." Section 90.202(3), Florida Statutes (1983) authorizes the taking of judicial notice of the "[c]ontents of the Federal Register." Respondents have interposed no objection, and official recognition is accordingly granted.

    
    

26. Certainly with respect to paragraphs G, K, M, N, O, Q, T and U petitioner has amply met its burden to show probable cause to believe that respondents, or one of them, has been guilty of "unfair or deceptive acts or practices." Section 501.204(1), Florida Statutes (1983). Although the evidence showed that some of the cars involved were owned by C. E. Pace, the evidence also showed that Mark Turner was a de facto manager and agent for Mr. Pace, with respect to used car sales from the Gulf Coast Motors lot, even before he acquired the accounts receivable and organized Gulf Coast Motors, Inc. David Turner worked closely with his brother, even before he became a part

owner of the business, but there was not probable cause connecting him with each of the early transactions.

Upon consideration of the foregoing, it is RECOMMENDED:

That petitioner find probable cause to initiate judicial proceedings against respondents Gulf Coast Motors, Inc., Mark S. Turner, and David Turner, pursuant to Section 501.207(1), Florida Statutes (1983).

DONE and ENTERED this 29th day of December, 1985, in Tallahassee, Florida.

ROBERT T. BENTON, II

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 29th day of December, 1985.

COPIES FURNISHED:

William P. White, Jr., Esquire Assistant State Attorney

P.O. Box 12726 Pensacola, Florida 32501

Alan H. Rosenbloum, Esquire

417 Canterbury Lane

Gulf Breeze, Florida 32561

T. David Mann, Esquire

41 North Jefferson Street

P.O. Box 12768 Pensacola, Florida 32575

Curtis A. Golden, Esquire

State Attorney

First Judicial Circuit of Florida

P. O. Box 12726

190 Governmental Center Pensacola, Florida 32501

Docket for Case No: 85-000725

Orders for Case No: 85-000725