STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FIAT MOTORS OF NORTH AMERICA, ) INC., and CROWN PONTIAC, INC., ) d/b/a CROWN SPORTSCAR CENTER, )

)

Petitioners, )

)

vs. ) CASE NO. 80-1266

) B & L MOTORS, INC., d/b/a BERT ) JACKSON IMPORTS and STATE OF ) FLORIDA, DEPARTMENT OF HIGHWAY ) SAFETY AND MOTOR VEHICLES, )

DIVISION OF MOTOR VEHICLES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before Charles C. Adams, a Hearing Officer with the Division of Administrative Hearings. This hearing was conducted in Courtroom "C", Judicial Building, 545 First Avenue, St. Petersburg, Florida, commencing at 9:30 a.m., December 4, 1980. 1/

APPEARANCES

For Petitioner, Harold L. Ward, Esquire

Fiat: 501 City National Bank Building

25 West Flagler Street Miami, Florida 33130

For Petitioner, David A. Bacon, Esquire Crown: Bacon & Bacon, P.A.

Post Office Box 13576 2959 First Avenue North

St. Petersburg, Florida 33733

For Respondent, Donald McFarland, Esquire B & L: 311 South Missouri Avenue

Clearwater, Florida 33516

For Respondent, Division of

Motor Vehicles: No Appearance

STATEMENT OF THE ISSUES

The issue presented here concerns the question of whether the Respondent, State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, should grant the Petitioner, Crown Pontiac, Inc., a motor vehicle dealer license in accordance with Section 320.642, Florida Statutes

(1979), on the basis that the Petitioners in this cause, in the face of the challenge to Crown's licensure offered by the Respondent, B & L Motors, Inc., d/b/a Bert Jackson Imports, have proven that the existing Fiat automobile dealers in the proposed territory or community for licensure are providing inadequate representation for Fiat.

FINDINGS OF FACT

1. On May 5, 1980, the Petitioner Fiat Motors of North America, Inc., issued a letter of intent to grant a Fiat franchise to the Petitioner Crown Pontiac, Inc., d/b/a Crown Sportscar Center to sell Fiat automobiles. (See Petitioner Fiat's Exhibit No. 13 admitted into evidence.) The Fiat dealership would be located at the sportscar facility of Petitioner Crown's overall operation which is found at 5301 34th Street North, St. Petersburg, Florida.

   The Respondent B & L Motors, Inc., d/b/a Bert Jackson Imports, having learned of Fiat's intentions to grant the franchise to Crown, protested Crown's licensure before the Respondent, State of Florida, Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, that protest having been made in keeping with the terms of Section 320.642, Florida Statutes (1979). 2/

   
   

2. After receiving the Respondent, B & L Motors' Petition in protest, the Division of Motor Vehicles forwarded the case to the State of Florida, Division of Administrative Hearings for hearing pursuant to Section 120.57(1), Florida Statutes. That formal hearing was held on December 4, 1980.

   
   

   PARTIES

   
   

3. Petitioner Fiat is an automobile distributor that offers Fiat motorcars for sale in the United States through its several franchise retail outlets. Its model line includes two sedans; the Brava and Strada, and two sports convertibles; the X1-9 and the Spider.

   
   

4. The Petitioner Crown Pontiac is a retail outlet for the General Motors, Pontiac automobile, JRT-British Leyland, MG, Triumph, Jaguar and Rover, Peugeot, Nissan, and Honda, through its stores in St. Petersburg, Florida. It is the intention of Crown to sell the Fiat line through the sportscar part of its operation which now handles JRT-British Leyland products.

   
   

5. The Respondent B & L Motors, is a retail outlet for Volkswagen automobiles, Fiats and Lancias. That dealership is located in Clearwater, Florida, within Pinellas County, Florida, the county in which St. Petersburg is found.

   
   

6. The Respondent, Division of Motor Vehicles is an agency of the State of Florida with regulatory responsibility and authority, among those duties being the requirement to approve or disapprove the application for new motor vehicle dealer licenses in Florida sought by the prospective franchisees of the various automobile manufacturers and distributors.

   
   

   HISTORY OF FIAT DEALERSHIPS IN PINELLAS COUNTY, FLORIDA

   
   

7. From 1965 through March 1, 1979, Fiat Motors of North America, Inc., had a licensed franchisee in St. Petersburg, Florida, the last of those Fiat dealers in St. Petersburg being Fifth Avenue Motors, Ltd., d/b/a International Motor Cars Limited. Notice of termination of the franchise of International was

   sent from Fiat on December 1, 1978, leading to the ultimate cancellation of the Florida license on March 2, 1979.

   
   

8. Beginning 1967, Fiat has had a licensed franchise outlet in Clearwater, Florida, with B & L Motors becoming the franchise outlet in Clearwater in late 1974, and continuing to operate as a franchise outlet up through the time of the final hearing in this cause.

   
   

9. Subsequent to the loss of the franchise by International and the cancellation of its Florida license on or about March 2, 1979, there has been no Fiat dealership in St. Petersburg, Florida. Crown had attempted to obtain the Fiat franchise by acquiring the Fiat franchise and Mercedes franchise held by Fifth Avenue Motors, Ltd., d/b/a International Motor Cars Limited. This agreement was to be consummated through an asset purchase agreement, a copy of which may be found as Petitioner Crown's Exhibit No. 2 submitted into evidence. This agreement was executed on November 1, 1978, but its terms and conditions were never carried out due to difficulty which Crown had in coming to terms with Mercedes on the purchase of that franchise. At present there is an ongoing law suit on that subject. In addition, vandalism and theft of certain parts that Crown was to purchase from Fifth Avenue has held up the contract.

   
   

10. Fiat and Crown had begun their negotiations in October 1978 leading Fiat to make overtures to Crown to offer a franchise in early 1979, which was rejected by Crown at that time for reasons discussed above. There was contact between Crown and Fiat from March 1979 through March of 1980, and sometime in April or May Crown determined to go forward with the franchise agreement, notwithstanding the International dispute. This led to the May 5, 1980, intent to grant by Fiat and the ensuing request by Crown that the State of Florida, Division of Motor Vehicles issue a dealer license.

    
    

    (In connection with the question of a grant of a license to operate a Fiat dealership in St. Petersburg, the Respondent Division of Motor Vehicles had had a past policy of allowing a manufacturer to replace a dealer, within one year of the cancellation of the prior license, without entertaining protests from other competing dealers provided, further, the prior dealer lost its franchise agreement with the manufacturer. In this case, the one year grace commenced on or about March 2, 1979, and expired on or about March 2, 1980. See Joint Exhibit No. 1, affidavit of Henry C. Noxtine.)

    
    

    FIAT'S MARKET SHARE IN THE UNITED STATES, MAJOR MARKETS, PINELLAS

    COUNTY, ST. PETERSBURG AND CLEARWATER

    
    

11. Petitioner Fiat's Exhibits Nos. 1 through 4, admitted into evidence are charts which depict the sale of import automobiles in the United States, with particular emphases on the sale of Fiat automobiles in the United States, Florida, Clearwater and St. Petersburg.

    
    

12. Exhibit No. 1 shows the number of import auto sales as a percentage of total automobile sales in the years 1977, 1978, 1979, and the first nine months of 1980, for given market areas. From this chart, it can be seen that import automobile sales range from 17.3 percent through 18.4 percent, in 1977, depending on whether the study related to the United States, Florida, Clearwater or St. Petersburg to 27.6 percent through 28.9 percent for the first nine months of 1980, depending on which of the above referenced market areas was under consideration.

13. Although the trend within the import market for automobiles showed an upturn as a percentage of total sales from 1977, through the first nine months of 1980, Exhibit No. 2 demonstrates that Fiat's percentage of total import sales range from a high United States percentage of 3.2 percent in 1977, to 1.6 percent in September 1980, thereby depicting a decline in overall sales of Fiat automobiles as a percentage of total imports sold in the United States. Of particular significance is the fact that the number of Fiat automobiles sold as a percentage of total imports in St. Petersburg is 2 percent in 1977, and 1.9 percent in 1978, at a time when a separate Fiat dealer was located in St. Petersburg and with the advent of the failure of the St. Petersburg dealership in 1979, the sales were 1.2 percent and in the first nine months of 1980, in which B & L was the sole Pinellas County dealer, those sales were only .5 percent in St. Petersburg. In the successive years, 1977 through the first nine months of 1980, Fiat sales in Clearwater were 2.7 percent, 2.2 percent, 2.7 percent and 1.8 percent, respectively. The figures related to Fiat sales in Clearwater in the years 1979 and 1980 and sales of Fiats in St. Petersburg in those two reporting years show a disparate break out in numbers of sales in Clearwater and St. Petersburg in those reporting years when contrasted with the 1977 and 1978 reporting years, which show the percentage of sales in Clearwater and St. Petersburg to be much closer.

    
    

14. There are approximately 800,000 people in Pinellas County, Florida, with approximately 250,000 of those persons residing in St. Petersburg and 350,000 in the overall St. Petersburg area, which is in the southern part of the county. There is another major population center in the northern part of the county. Clearwater is the principle municipality in that area. St. Petersburg and Clearwater constitute separate and identifiable trading areas and territories within Pinellas County, Florida. In this connection, Exhibit No. 3 admitted into evidence shows Fiat's performance in 1979, in similar markets to that of Clearwater or St. Petersburg, outlining the Fiat registrations and the percentage of registrations of Fiat automobiles in those communities. This chart should be read in conjunction with Exhibit No. 4, which is admitted into evidence which shows the number of import sales in the St. Petersburg and Clearwater territories and the number of Fiat sales in those territories, together with the number of Fiat sales necessary to gain the 3.5 percent penetration and the increase in number of units sold to achieve that goal.

    There is a further hypothetical to demonstrate sales penetration at 5 percent and the number of prospective sales if the goal is achieved. Again, this is for the year 1979.

    
    

15. Although the last reporting period, i.e., the first nine months of 1980, shows that the overall Fiat sales nationwide are 1.6 percent and the Florida sales are 2.2 percent, sales in what Fiat has called its "major markets" approximated 2.7 percent in 1979. It is within the "major markets" that Fiat intends to offer its future emphasis and these areas are felt to be crucial to the continued success of Fiat Motors. Sales in Clearwater and St. Petersburg, which are considered "major markets," range from .5 percent in St. Petersburg to

    1.8 percent in Clearwater for the reporting period 1980, far below the 2.7 percent or even the national and Florida figures for 1980, when examining performance in St. Petersburg.

    
    

16. The balance of Exhibits Nos. 1 through 4 by the Petitioner Fiat, although not discussed in this Recommended Order are found to be factually correct.

    COMPETITION

    
    

17. Within Pinellas County, Volkswagen has two franchise dealers; British Leyland has two franchise dealers; Honda has two franchise dealers; Toyota has three franchise dealers; Dodge has three franchise dealers; Plymouth has three franchise dealers; Subaru has three franchise dealers; and Chevrolet and Ford have four franchise dealer outlets. Again referring to the charts Exhibits Nos.

    1 through 4, they would show an increase in percentage of market share by the import automobile industry at a time when the overall numbers of automobile sales have declined, and of those automobile sales in decline, at lease two competitive import product lines, Volkswagen and British Leyland, have been part of the picture of general decline. Nonetheless, they have continued to have two franchises within Pinellas County.

    
    

    EFFECT OF INCREASING FIAT DEALERSHIPS IN PINELLAS COUNTY

    
    

18. By increasing the number of Fiat dealerships from one to two, it increases the presence of the Fiat name in the territory by 100 percent. It adds a dealership with proper facilities for furnishing warranty and other repair services, by an organization that has already gained familiarity with the Fiat line; it creates the opportunity for the exchange of vehicles and parts between dealers in the county; it creates the opportunity for the public to engage in comparison shopping and it reduces the amount of time which South County owners must travel to receive factory approved service which now ranges from thirty minutes to an hour if the service is to be obtained from B & L Motors. All of these items relate to the success of Fiat and its franchisees in marketing the Fiat product. In this regard, the statistics offered in this hearing demonstrate that the Respondent B & L has continued to keep pace with Fiat's needs in the market in Clearwater, but it has failed take up the slack that occurred when International lost its franchise. The Petitioner Crown is in a position to assist Fiat in regaining this market share without undue detriment to the Respondent B & L. Crown, in its other automobile sales activities, has primarily concentrated on the southern half of Pinellas County, which is the St. Petersburg area or territory and it would use that experience in the market area in attempting to sell Fiat automobiles to the consuming public.

    
    

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. See Section 120.57(1), Florida Statutes (1979).

    
    

20. In the course of the hearing, ruling was reserved on the admission of Respondent B & L's Exhibits Nos. 4 through 7. Upon consideration of those matters, those Exhibits are denied admission as evidence. Petitioner Fiat's Exhibit No. 14 was withdrawn from consideration and Petitioner Crown's Exhibit as discussed in the record carrying the identification NO. 1 and now attached to this record was not offered for consideration in deliberating these matters.

    
    

21. Section 320.642, Florida Statutes (1979), supra, makes it incumbent on the manufacturer and its prospective franchisee to prove that these dealerships in the community or territory for which the license is sought are failing to provide adequate representation in that community or territory. This precondition for licensure is further refined by agency policy as accepted by the Courts of Florida in Southside Motor Company, etc. v. Askew, 332 So.2d 613 (Fla. 1976). This refinement allows the manufacturer a grace period to replace

    an ongoing dealer located at a "dealer point" and this is not considered licensure subject to the purview of Section 320.642, Florida Statutes (1979).

    
    

22. The Division of Motor Vehicles' agency policy is more completely stated as allowing this replacement to occur outside the confines of the related law, if it occurs within one year of the loss of the former dealership's franchise with the manufacturer and cancellation of its license before the Division of Motor Vehicles. Applying that policy to the current situation, the grace period ran from approximately March 2, 1979, through March 2, 1980. The determination to offer a franchise to Crown Pontiac, as made by Fiat, occurred on May 5, 1980, roughly fourteen (14) months beyond the time of the cancellation of the dealership license for the former Fiat franchisee trading in St. Petersburg, Florida. The question then becomes whether this fourteen (14) month hiatus is sufficiently removed from the rationale expressed in Southside, supra, and the unwritten policy of the agency to be no longer considered an exception to the statutory scheme set forth in Section 320.642, Florida Statutes (1979). Notwithstanding the fact that the time period between the cancellation of the dealer license of International and the traditional one year grace period, in keeping with the rationale expressed in the unwritten policy of the agency and the opinion of Court in Southside, supra, the facts at issue demonstrate that this is a replacement dealer and not a new dealer. Therefore, Section 320.642, Florida Statutes (1979), is inapplicable.

    
    

23. On the other hand, if it is determined that the passage of time which is the additional two months over and above the usual one year grace period, causes this case to fall within the purview of Section 320.642, Florida Statutes (1979), B & L Motors and other dealers who may be servicing the clearly identified territory which is the St. Petersburg market, are found to have inadequately represented that community or territory, i.e., St. Petersburg and its surrounding area of South Pinellas County. Greater St. Petersburg is an identifiable, distinct and separate retail marketing area within Pinellas County, with St. Petersburg proper being the central population center of that territory or community. The Petitioner's Fiat's Exhibits Nos. 1 through 4 demonstrate that although Fiat has shown a general decline in sales and its percentage of market share in all markets depicted, the decline in the St. Petersburg community or territory far exceeds this general trend to the extent that when taken in conjunction with the other findings made in this Recommended Order, would demonstrate the inadequacy of the present representation of the manufacturer in the St. Petersburg area. Greater St. Petersburg or the south Pinellas County area not only is an identifiable plot subject to cultivation, it is a plot which has been cultivated before and it needs only the additional tilling to be offered by a second dealership in Pinellas County to have that plot flourish. See Bill Kelly Chevrolet, Inc. v. Calvin, 322 So.2d 50 (Fla. 1 DCA 1975). The continuing need of a Fiat dealership in the South Pinellas County area to promote adequate representation to achieve the sale of Fiat automobiles and the inconvenience associated with having Fiat customers in South Pinellas County area drive to B & L's dealership for service underline the finding of inadequate representation. Where legitimate market potential is found, the purpose of Section 320.642, Florida Statutes (1979), is not that of frustrating, impeding, or preventing the reestablishment or establishment of Crown Pontiac as a Fiat dealer in St. Petersburg, Florida. See Bill Kelly, supra.

    
    

24. Finally, the purpose of Section 320.642, Florida Statutes (1979), was to furnish dealers with protection against unfair treatment by the manufacturer/franchisor. See Plantation Datsun, Inc. v. Calvin, 275 So.2d 26 (Fla. 1 DCA 1973). In keeping in mind that purpose, there is no evidence in

this case which would demonstrate that the action taken by Fiat in opening a St. Petersburg dealership at the Crown facility promotes unfair treatment of the existing dealers in the vicinity of the community or territory.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the application of Crown Pontiac, Inc., d/b/a Crown's Sportscar Center, to be licensed as a Fiat dealer in St. Petersburg, Florida, be GRANTED.

DONE AND ENTERED this 13th day of February 1981 in Tallahassee, Florida.

CHARLES C. ADAMS

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 13th day of February 1981.

ENDNOTES

1/ By prior agreement of the parties, it was anticipated that the transcript would be filed with the Hearing Officer on or before December 29, 1980, and that subsequent to that filing, the Recommended Order would be issued within thirty

(30) days. It was also anticipated that further argument, memoranda or proposed findings of fact, conclusions of law and recommendations would be submitted within ten (10) days of December 29, 1980. The transcript of the hearing was not received by the Division of Administrative Hearings until January 19, 1981, and the time for submitting further matters in argument and proposals was extended through Tuesday, January 13, 1981, due to certain logistical problems experienced by the parties. This Order is being entered in keeping with the intent of the parties to allow an opportunity for the submission of memoranda and proposals and to afford the Hearing Officer ample opportunity to review the transcript of record, and in any event is being entered within thirty (30) days of the receipt of the transcript.

2/ "Dealer Licenses in areas previously served.--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 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 is showing inadequate representations shall be on the licensee."

COPIES FURNISHED:

Harold L. Ward, Esquire

501 City National Bank Building

25 West Flagler Street Miami, Florida 33130

David A. Bacon, Esquire Bacon & Bacon, P.A. Post Office Box 13576 2959 First Avenue North

St. Petersburg, Florida 33733

Donald McFarland, Esquire

311 South Missouri Avenue Clearwater, Florida 33516

Enoch J. Whitney, Esquire Department of Highway Safety

and Motor Vehicles

The Neil Kirkman Building Tallahassee, Florida 32301

Docket for Case No: 80-001266

Orders for Case No: 80-001266