STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SHARON GARDENS MEMORIAL PARK, )

)

Petitioner, )

)

vs. ) CASE NO. 79-918

)

OFFICE OF COMPTROLLER, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Fort Lauderdale, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton, II, on July 12, 1979. The parties were represented by counsel:

APPEARANCES

For Petitioner: Gary Frost, Esquire

3201 Griffin Road

Fort Lauderdale, Florida 33312

For Respondent: Franklyn J. Wollett, Esquire

Office of the Comptroller The Capitol

Tallahassee, Florida 32301

By letter dated March 15, 1979, respondent notified petitioner of an alleged deficit in its merchandise trust fund in the amount of $42,581 "for the sale of pre-need opening and closing services." Petitioner disputes the amount of the deficit.

FINDINGS OF FACT

1. Petitioner is perhaps the first cemetery in Florida to sell "opening and closing" of graves on a "pre-need basis." Joseph M. Erlich, deputy director of respondent's division of finance, learned that petitioner was making such sales in the spring of 1978. At that time, as head of the section in respondent's office regulating cemeteries, Mr. Ehrlich instructed field personnel in respondent's Tampa, Miami and Pensacola offices to find out how much it cost cemeteries in their areas to open and close graves. Intentionally excluded from this survey were cemeteries in the Jacksonville and Tallahassee areas, where soil conditions make digging graves more difficult than in most other areas of the state.

   
   

2. This inquiry yielded oral advice from persons connected with twelve of the 171 cemeteries regulated by respondent; of the twelve cost figures, which ranged from $35.00 to $125.00, the two highest were discarded. The ten remaining figures were averaged. Petitioner's cost was not among those

   averaged. This computation yielded a number between 70 and 75, which was rounded down to $70.00. The parties stipulated that the figures reported by these twelve cemeteries accurately reflected their individual costs for opening and closing graves, with one exception. Donald Farr, executive vice president of Hillsborough Memorial Gardens, originally reported a cost of $75.00, whereas the true cost, as subsequently determined by more rigorous cost accounting, amounted to $59.57. Using the lower figure for Hillsborough Memorial Gardens, the average of the ten lowest figures is still between 70 and 75.

   
   

3. On July 1 of every year petitioner has been in operation, respondent has published a "Merchandise Trust Fund Departmental Cost List." Each such list provided that "[a]ll items not listed but sold on a pre-need basis will be assessed at the invoice price plus 10%." Joint exhibit No.1. On the 1978 and 1979 lists appeared the item "pre-need opening and closing $77.00." Joint exhibit No. 1. On no previous list was there any mention of "pre-need opening and closing." Every list contained cost figures for, inter alia, a great variety of bronze grave markers.

   
   

4. Opening and closing graves on petitioner's grounds does not differ significantly from opening and closing graves at other cemeteries. The process ordinarily begins with a telephone call from a funeral home. In addition to answering the call, a secretary spends time filling out forms, checking records and notifying the supervisor where the grave is to be dug. Men use a backhoe to dig the grave. A truck brings a vault to the site where a lowering device deposits it in the grave. A tent, artificial grass and chairs are set up. Afterwards these things are removed and the grave is closed. Petitioner's cost for opening and closing a grave, including labor, insurance, gas, maintenance and depreciation of machinery and equipment comes to $37.72. Petitioner charges

   $125.00 for the opening and closing of a grave on a "pre-need" basis, which is substantially less than what petitioner and other cemeteries charge for the same service on an "at need" basis.

   
   

5. Petitioner has put no money in its merchandise trust fund on account of its sales of grave openings and closings on a "pre-need" basis.

   
   

   CONCLUSIONS OF LAW

   
   

6. A cemetery, like petitioner, contracting for "future delivery of burial vaults, . . . memorials . . . and . . . related services commonly sold or used in cemeteries and interment fees," Section 559.441(2), Florida Statutes (1978 Supp.), is required to "deposit into a trust fund established for that purpose

   100 percent of the cost of the personal property or services so sold for future use or delivery. . . ." Section 559.441(3)(a), Florida Statutes (1978 Supp.). The same statutes define cost as "wholesale purchase price plus 10 percent" and provides that "cost . . . shall be determined at time of deposit to the merchandise trust fund based upon cost determined by the director of cemeteries in accordance with subsection (4)." Section 559.441(3)(a), Florida Statutes (1978) Supp.).

   
   

7. In attacking respondent's policy of requiring a merchandise trust fund deposit of $77.00 ($70.00 plus 10%) for each "pre-need" sale of a grave opening and closing, petitioner raises no issue regarding rule promulgation under Chapter 120, Florida Statutes (1977 and 1978 Supp.). Petitioner simply contends that respondent has misconstrued the requirements of Section 559.441(4), Florida Statutes (1978 Supp.).

8. Subsection (4) of Section 559.441, Florida Statutes (1978 Supp.), provides:

   
   

   Each year, the director of cemeteries shall publish a list of the cost of the personal property or services affected hereby, which shall be computed by the department based upon its independent investigation and which shall include the actual wholesale purchase price plus 10 percent, and all deposits required hereunder must be determined based upon this annual cost determination.

   
   

   The parties stipulated that two issues require decision: (1) Whether, as petitioner contends, Section 559.441(4), Florida Statutes (1978 Supp.), requires respondent to determine the actual wholesale price to each cemetery or whether, as respondent contends, it complied with Section 559.441(4), Florida Statutes (1978 Supp.), in determining and utilizing the $70.00 figure? and (2) Whether, assuming the propriety of the $70.00 figure for contracts entered into after July 1, 1978, petitioner's actual cost may be utilized for contracts entered into before July 1, 1978, as petitioner contends, or whether, as respondent contends, the $70.00 figure should also apply to the earlier contracts?

   
   

9. Petitioner's principal argument is that the statute contemplates computation of a separate wholesale cost figure for each cemetery regulated. Although Section 559.441(4), Florida Statutes (1978 Supp.), uses the phrase "actual wholesale purchase price" instead of the words "average wholesale price," the provision as a whole clearly contemplates distribution of a single figure for each category to every cemetery regulated. Petitioner argues that the numerous different categories of bronze markers listed on the Merchandise Trust Fund Departmental Cost List have some bearing in this regard. Petitioner tries to analogize the variety of bronze marker prices to the variety of costs for opening and closing graves. Notwithstanding the number of marker categories, however, the listed wholesale cost for each category of marker is the same for all cemeteries, regardless of the actual wholesale price any individual cemetery in fact pays.

   
   

10. Petitioner also contends that using a separate cost figure for each cemetery would be better public policy than using an average figure. Petitioner argues that use of an average figure fails adequately to protect customers of cemeteries with above average costs and that using an average figure penalizes the efficiency of cemeteries with below average costs. These arguments misconceive the purpose of the governing statutory provisions. As long as a cemetery company is a going concern, money to open and close a grave will be available from operating revenues. Once the service has been performed (if it was sold on a "pre-need" basis), all the money deposited in the merchandise trust fund on account of the transaction, together with accrued interest, may be removed. Section 559.441(5)(a), Florida Statutes (1978 Supp.). Efficiency is rewarded, because the more efficient a cemetery company is, the greater its profits will be. Only in the event a cemetery company selling future services proves unable to perform is the merchandise trust fund looked to. In that event, presumptively average managers will perform the contracts. The managerial or other efficiencies of the contracting company, which, by hypothesis, is unable to perform, are not a relevant concern.

    
    

11. Petitioner points out that respondent relied on information supplied by cemeteries without checking the cemeteries' books and records, in gathering

    information about the cost of opening and closing graves. This does not comport with the requirement of Section 559.441(4), Florida Statutes (1978 Supp.), that respondent's investigation be "independent." Since petitioner stipulated to the accuracy of the cost figures, however, it is in no position to complain that their accuracy has not been satisfactorily established. Neither is petitioner in a position to complain that the survey was skewed geographically (even though the statute seems to authorize no such procedure) since the geographical restrictions operated to make the average lower than it would have been otherwise.

    
    

12. The average figure ($77.00) applies not only to contracts petitioner has entered into since July 1, 1978, but also to contracts petitioner entered into earlier. This is so because petitioner has never deposited anything on account of any of the contracts and "cost . . . shall be determined at time of deposit to the merchandise trust fund. . . ." Section 599.441(3)(a), Florida Statutes (1978 Supp.).

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That respondent's use of $77.00 for each contract for the future opening and closing of a grave, in calculating the deficit in petitioner's merchandise trust fund, be upheld.

DONE AND ENTERED this 13th day of August 1979 in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings Room 101 Collins Building Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 13th day of August 1979.

COPIES FURNISHED:

Gary Forst, Esquire 3201 Griffin Road

Fort Lauderdale, Florida 33312

Franklyn J. Wollett, Esquire Office of the Comptroller The Capitol

Tallahassee, Florida 32301

================================================================= AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF FINANCE

SHARON GARDENS MEMORIAL PARK,

Petitioner,

vs. CASE NO. 79-918

OFFICE OF COMPTROLLER,

Respondent.

/

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly- designated Hearing Officer, Robert T. Benton, II, held a public hearing in the above-styled case on July 12, 1979, in Fort Lauderdale, Florida.

APPEARANCES:

Franklyn J. Wollett, Esquire Office of the Comptroller The Capitol

Tallahassee, Florida 32301

Representing Respondent Gary Gorst, Esquire

3201 Griffin Road

Ft. Lauderdale, Florida 33312

Representing Petitioner

The Comptroller herein adopts, in toto, the Recommended Order of Hearing Officer, Robert T. Benton, II, dated August 13, 1979, a true copy of which is attached hereto and incorporated herein. The Comptroller specifically adopts the Findings of Fact and Conclusions of Law in the above-described Recommended Order. A Proposed Recommended Order was submitted by the Petitioner on or about August 6, 1979. No written exceptions to the Hearing Officer's Recommended Order were submitted by the parties.

Regarding the Petitioner's Proposed Findings of Fact, Conclusions of Law, and Recommended Order, the Department accepts Petitioner's proposed findings of fact numbered 1, 2, 3, 4, 5, 6(b), 9, 11, 14, 15, 17, 18 and 21 to the extent that they are not contrary to the Hearing Officer's Findings of Fact.

Petitioner's proposed finding of fact number 6(a) is accepted, except to the extent that it states or implies that the Department uses actual wholesale purchase price as to markers sold on a pre-need basis. Such is clearly not the case as the Hearing Officer specifically found at page 5, first paragraph, of his Recommended Order.

Petitioner's proposed finding of fact number 7 is accepted; however, the second sentence is rejected to the extent that it states or implies that a representative sampling of 12 cemeteries out of 171 per se demonstrates nonconformance with Section 599.411(4), Florida Statutes. Such contention was clearly rejected by the Hearing Officer.

Petitioner's proposed finding of fact number 8 is rejected to the extent that it states or implies that the Department uses actual cost to determine the price of markers sold on a pre-need basis. The portion of number 8 regarding submission of written schedules, charts or statements is accepted to the extent that it comports with the Hearing Officer's conclusion that Section 559.441(4), Florida Statutes, requires checking the cemeteries' books and records to make the investigation "independent." However, as pointed out by the Hearing Officer at page 6 of his Recommended Order, "since petitioner stipulated to the accuracy of the cost figures, it is in no position to complain that their accuracy has not been satisfactorily established.

Petitioner's proposed finding of fact number 10 is accepted, except that the last sentence is rejected as immaterial and irrelevant.

Petitioner's proposed finding of fact number 12 is accepted to the extent that it states or implies that the Department did not analyze each of the 12 cemeteries' cost figures.

Petitioner's proposed finding of fact number 13 is accepted to the extent that it states or implies that the pre-need opening and closing should have been assessed at the invoice price, plus ten percent.

Petitioner's proposed findings of fact numbered 16, 20, and 22 are rejected to the extent that they state or imply that it would be better public policy than using an average figure. The Hearing Officer's response to this contention is properly addressed at page 5 and 6 of the Recommended Order and is adopted herein.

Petitioner's proposed finding of fact number 19 is rejected as contrary to the Hearing Officer's Findings of Fact addressed at page 5, first paragraph, of the Recommended Order.

THEREFORE, it is

ORDERED that the Department's use of the figure $77.00 for each pre-need contract for opening and closing a grave, in calculating the deficit in Petitioner's Merchandise Trust Fund, is upheld.

The Respondent is hereby notified that this Final Order is final agency action; and pursuant to Section 120.68, Florida Statutes, the Respondent, as an adversely-affected party, is entitled to judicial review in accordance with the Florida Rules of Appellate Procedure (1977 Revision).

DONE and ORDERED this 26th day of September, 1979, in Tallahassee, Leon County, Florida.

GERALD A. LEWIS

State Comptroller and Head of the Department of Banking and Finance

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing was sent by

U.S. Mail to Robert T. Benton, II, Hearing Officer, Division of Administrative Hearings, Collins Building, Room 101, Tallahassee, Floreida, 32301, and Gary Forst, 3201 Griffin Road, Fort Lauderdale, Florida 33312, this 26th day of September, 1979.

Franklyn J. Wollett

Docket for Case No: 79-000918

Orders for Case No: 79-000918