STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PAUL HERNANDEZ,

Petitioner,

vs.

FIVE BROTHERS PRODUCE, INC., AND OLD REPUBLIC SURETY COMPANY, AS SURETY,

Respondent.

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) Case No. 10-5700

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RECOMMENDED ORDER

Administrative Law Judge Eleanor M. Hunter held a formal hearing in this case on September 9, 2010, as previously scheduled, by video teleconference between sites in Tallahassee

and Miami, Florida.

APPEARANCES

For Petitioner: Paul Hernandez, pro se

18690 Southwest 168th Street Miami, Florida 33187-5006

For Respondent Five Brothers Produce, Inc.:

Tracy Cash, Finance Manager Five Brothers Produce, Inc. Post Office Box 349168 Homestead, Florida 33034-9168

For Respondent: Old Republic Surety Company:

No Appearance

STATEMENT OF THE ISSUE

Whether the Respondent Five Brothers Produce owes Petitioner an additional $13,965.00 for snap beans that Five Brothers Produce received, sold, and shipped to buyers as Petitioner's agent/broker.

PRELIMINARY STATEMENT

This is an action under the Agricultural Bond and Licensure Law, Sections 604.15-604.34, Florida Statutes (2010).1 On

June 14, 2010, Petitioner filed an Amended Agricultural Products Dealer Claim Form with the Department of Agriculture and Consumer Services ("the Department"), in which he claimed Respondent owed him an additional $13,965.00 for snap beans he delivered to Respondent as his agent/broker. Respondent and its surety company received notice of the claim and a copy of the amended claim. In an Answer, notarized on July 2, 2010, Respondent disputed the claim. The surety company did not respond and did not appear in this proceeding. On July 15, 2010, the Department transferred the matter to the Division of Administrative Hearings for assignment of an administrative law judge to conduct a hearing. Pursuant to notice, the final hearing was held September 9, 2010.

At the hearing, Petitioner testified on his own behalf.

Tracy Cash and Wayne Mertens testified on behalf of Respondent. There were no objections to consideration of all the documents

provided by the Department or to Respondent's Exhibits 1-10, all of which were received in evidence. The parties declined to order the transcript. Proposed findings of fact and conclusions of law were filed by Petitioner on September 14, 2010, and by Respondent on September 10 and 15, 2010.

FINDINGS OF FACT

1. Respondent Five Brothers Produce, Inc. ("Respondent" or "Five Brothers") accepts agricultural products from growers for sale or consignment and acts as an agent/broker for the growers. It has a surety bond issued by Old Republic Surety Company to secure payment of sums owed to agricultural producers.

2. Petitioner Paul Hernandez ("Petitioner" or "Mr. Hernandez") grows snap beans. On March 26, 2010,

   Mr. Hernandez delivered 400 boxes of hand-picked snap beans to Five Brothers to sell. On March 27, 2010, Mr. Hernandez delivered an additional 750 boxes of snap beans to Five Brothers to sell for him.

3. Five Brothers' Marketing Agreement and Statement included on the Grower Receipt was given to Mr. Hernandez on March 26 and 27, 2010. It provided in relevant part:

   The grower gives Five Brothers Produce the right to sell or consign to the general trade. No guarantees as to sales price are made and only the amounts actually received by Five Brothers Produce, less selling charges, cooler charges, and any other charges will be paid to the grower. Final

   
   

   settlement will be made within a reasonable length of time and may be held until payment is received from the purchaser.

   
   

4. On March 27, 2010, Five Brothers' invoice showed that it shipped 336 of the first 400 boxes of Mr. Hernandez' beans to Nathel and Nathel, Inc., at the New York City Terminal Market. From that shipment, Five Brothers received $12.00 a box, or a total of $4,032.00. After deducting its fee of $1.60 a box, Five Brothers paid Mr. Hernandez net proceeds of $3,494.40. On the next day, Five Brothers' records show it sold the remaining

   64 boxes to Tolbert Produce, Inc., for $22.70 a box. On March 26, 2010, the United States Department of Agriculture ("USDA") Fruit and Vegetable Market News Portal reported sales prices ranging from $24.85 to $25.85 a box for round green handpicked snap beans grown in Central and South Florida.

5. Mr. Hernandez had reason to question the accuracy of Five Brother's invoice, given the USDA data and the Tolbert Produce sale. Nathel and Nathel also documented the sales of the 336 boxes of beans and 160 boxes of squash it received from Five Brothers. By the time of its settlement with Five Brothers, it paid a total of $5,643.50, of which $4,032.00 came from the sales of beans as reported on the Five Brothers' invoice.

6. On March 29, 2010, Five Brothers shipped all 750 boxes of beans it received from Mr. Hernandez on March 27, 2010, to A

   
   

   and J Produce, Inc., at the New York City Terminal in the Bronx. Five Brothers' invoice indicated that it received $9.00 a box, or a total of $6,750.00 from A and J. Five Brother's fee for that shipment was also $1.60 a box, or a total of $1,200.00, leaving Mr. Hernandez with a net return of $5,550.00. USDA market data showed prices for the handpicked snap beans, on March 29, 2010, ranged from $20.00 to $20.85 a box.

7. The actual cost of production for Mr. Hernandez, including seeds, water, fertilizer, and labor can range from

   $6.00 to $10.00 a box. He would not have paid for the labor to hand-pick beans if he had known he could not get an adequate return on his investment. Relying on the USDA data,

   Mr. Hernandez reasonably expected his net return to be

   
   

   $13,965.20, higher than it was.

   
   

8. Five Brothers sold the beans in a rapidly declining market. Pointing to the same USDA data, Five Brothers showed the drop towards the end of March and into April 2010. On March 30, the price was down to $16.85 to $18.85. On March 31, the price was $14.85 to $16.85. And, from April 1 through April 6, a box of snap beans was selling for $10.00 to $12.85.

9. Mr. Hernandez alleged that Five Brothers' invoice for the sale of the 750 boxes was not correct. He pointed to an exhibit that showed Five Brothers shipped A and J Produce 1344 boxes of beans, including the 750 boxes grown by him, and

   
   

   another exhibit that appeared to show that A and J received the 1344 boxes, on March 31, 2010, and paid Five Brothers $20.00 a box. That same A and J document, however, tracks the declining prices as each part of the shipment was sold. In the end the value was 68.82 percent of the target price of $20.00, which equals an average sales price of $13.76. After Five Brothers deducted the $1.60 a box fee, proceeds for Mr. Hernandez were approximately $12.00 a box consistent with that reported as A and J's final settlement with Five Brothers.

10. The evidence that there was no guarantee of a sales price in the agreement, that market prices were declining rapidly, and that the receivers' documents support those of the shipper, Five Brothers, is sufficient to rebut any evidence that Mr. Hernandez is entitled to additional payments for the beans delivered to Five Brothers on March 26 and 27, 2010.

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties in this proceeding, pursuant to Sections 120.569 and 120.57(1), Florida Statutes.

    
    

    part:

12. Section 604.15, Florida Statutes, provides in relevant

    
    

    For the purpose of ss. 604.15-604.34, the following words and terms, when used, shall be construed to mean:

    
    

    1. "Agricultural products" means the natural products of the farm, nursery, grove, orchard, vineyard, garden, and apiary (raw or manufactured); sod; tropical foliage; horticulture; hay; livestock; milk and milk products; poultry and poultry products; the fruit of the saw palmetto (meaning the fruit of the Serenoa repens); limes (meaning the fruit Citrus aurantifolia, variety Persian, Tahiti, Bearss, or Florida Key limes); and any other nonexempt agricultural products produced in the state, except tobacco, sugarcane, timber and timber byproducts, forest products as defined in s. 591.17, and citrus other than limes.

       
       

    2. "Dealer in agricultural products" means any person, partnership, corporation, or other business entity, whether itinerant or domiciled within this state, engaged within this state in the business of purchasing, receiving, or soliciting agricultural products from the producer or the producer's agent or representative for resale or processing for sale; acting as an agent for such producer in the sale of agricultural products for the account of the producer on a net return basis; or acting as a negotiating broker between the producer or producer's agent or representative and the buyer.

       
       

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       1. "Producer" means any grower of agricultural products produced in the state.

          
          

       2. "Producer's agent" means the seller of agricultural products for the account of a producer or group of producers on a net return basis, wherein the producer's agent acts as the agent for the producer or group of producers and pays the producer of such products all of the net proceeds after subtracting all authorized and allowable

       
       

       deductions. Allowable deductions may include, but are not limited to: packing charges, shipping charges, boxes, crates, billing, commission fees, cooling charges, pallets, and other deductible charges or fees agreed upon by the producer and producer's agent.

       
       

13. Five Brothers is a dealer in agricultural products and a producer's agent, and Mr. Hernandez is a producer, as described in Subsections 604.15(2), (9), and (10), Florida Statutes.

14. Dealers in agricultural products are required to be licensed by the Department of Agriculture and Consumer Services. See § 604.16, Fla. Stat. In order to be licensed, dealers must deliver a surety bond or certificate of deposit to the Department of Agriculture and Consumer Services, which "shall be conditioned to secure the faithful accounting for and payment to producers or their agents or representatives of the proceeds of all agricultural products handled or purchased by such dealer.”

    § 604.20(1), Fla. Stat. Five Brothers Produce has a surety bond issued by Old Republic Surety Company.

15. As a producer, Mr. Hernandez is permitted to file a complaint against dealers and their sureties to recover payments he could be owed. See § 604.21(1), Fla. Stat.

16. Petitioner, as the complainant in a proceeding initiated pursuant to Section 604.21(1), has the burden of proving by a preponderance of the evidence the entitlement to

    
    

    the amounts sought to be recovered. See Florida Department of Transportation v. J.W.C. Co., Inc., 396 So. 2d 778, 787 (Fla. 1st DCA 1981). However, even though the complainant bears the ultimate burden of proving the truth of the claim, once the complainant has made a prima facie case of entitlement to recover, the dealer has the obligation to come forward with evidence to refute that entitlement. See id.

17. Mr. Hernandez met his burden by presenting a prima facie case of entitlement to recover by showing the USDA marketing and the Tolbert Produce sales price.

18. Five Brothers, nonetheless, produced sufficient evidence to refute the implications of the market data based on its Marketing Agreement and Statement on the Grower Receipts, the declining market as shown by the same USDA data, and the corroborating sales documents from the companies that received the beans.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order dismissing the complaint of Paul Hernandez against Five Brothers Produce, Inc.

DONE AND ENTERED this 20th day of September, 2010, in Tallahassee, Leon County, Florida.

S

ELEANOR M. HUNTER

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 20th day of September, 2010.

ENDNOTE

1. Unless otherwise indicated citations to Florida Statutes are to the 2010 version.

COPIES FURNISHED:

Christopher E. Green, Esquire Department of Agriculture and

Consumer Services

Office of Citrus License and Bond Mayo Building, M-38

Tallahassee, Florida 32399-0800

Richard D. Tritschler, General Consel Department of Agriculture and

Consumer Services

407 South Calhoun Street, Suite 520 Tallahassee, Florida 32399-0800

Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and

Consumer Services

The Capitol Plaza Level 10 Tallahassee, Florida 32399-0810

Jeffrey Passafaro

Old Republic Surety Company Post Office Box 1635

Milwaukee, Wisconsin 53201-1635

Tommy Torbert, Jr.

Five Brothers Produce, Inc.

P.O. Box 349168 Homestead, Florida 33034

Paul Hernandez

18690 Southwest 168th Street Miami, Florida 33187-5006

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 10-005700

Orders for Case No: 10-005700