Judges: K. N. AYERS
Agency: Department of Highway Safety and Motor Vehicles
Latest Update: Jun. 22, 1990
Summary: Respondent entitled to motor vehicle dealer license because petitioner inadequately represented AMC in the area.
82-2751.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BURRUSS MOTOR COMPANY, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 82-2751
) NEW PORT LINCOLN MERCURY, INC., ) d/b/a NEW PORT AMC-JEEP-RENAULT, ) DEPARTMENT OF HIGHWAY SAFETY AND ) MOTOR VEHICLES, and AMERICAN ) MOTORS SALES CORPORATION, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled case on 2 March 1983 at New Port Richey, Florida.
APPEARANCES
For Petitioner: William L. Vinson, Esquire
Gregory G. Gay, Esquire Post Office Box 1146
New Port Richey, Florida 33552
For Respondent, W. Lowell Bray, Jr., Esquire New Port Lincoln 123 West Nebraska Avenue Mercury, Inc.: New Port Richey, Florida 33552
For Respondent, Daniel P. Rock, Esquire American Motors 4929 U.S. Highway 19 North Sales Corp.: North Holiday, Florida 33590
By letter dated June 11, 1982, Burruss Motor Company, Inc., (Burruss) , Petitioner, advised the Department of Highway Safety and Motor Vehicles that it was protesting New Port Lincoln Mercury, Inc. (New Port), Respondent's application for an American Motors-Jeep-Renault dealership in the New Port Richey area. Subsequently, Burruss filed a Petition which alleged that Petitioner is in compliance with its franchise agreement and provides adequate representation in the West Pasco County area and an additional dealer should not be authorized. American Motors Sales Corporation was subsequently joined as a necessary party respondent to these proceedings.
In a Prehearing Stipulation dated 17 January 1983 the parties stipulated to certain facts and to the legal conclusions that the application of New Port should not be granted unless it sustains the burden of showing that Burruss does not adequately represent AMC in the area the proposed dealership intends to serve.
Although the case is styled with Burruss as Petitioner, the hearing was conducted with the applicant, New Port, and American Motors Sales Corporation having the burden of proof that Burruss was not adequately representing American Motors Sales corporation in the West Pasco County area, which is the service area proposed to be served by the applicant.
At the hearing American Motors Sales Corporation called two witnesses, New Port called three witnesses, Burruss called four witnesses, and 39 exhibits were admitted into evidence. Objections to some of these exhibits on grounds of hearsay were overruled; however, no finding has been based solely on such hearsay evidence.
Proposed findings submitted by the parties and not included herein were not supported by the evidence or were deemed immaterial to the results reached.
FINDINGS OF FACT
Burruss is a licensed and franchised American Motors dealer. Burruss has been the sole AMC dealer in the Tarpon-West Pasco County area since 1960.
Burruss is in compliance with its franchise agreement with American Motors Sales Corporation.
Both Burruss and New Port are located on U.S. Highway 19, a distance of six miles from each other.
U.S. Highway 19 is the only major north-south thoroughfare in the Tarpon-West Pasco area.
Portions of U.S. Highway 19 have been improved in the past years so that much of the highway is six-laned in the Tarpon-West Pasco area; the unimproved portions of the highway are four-laned.
The recent improvements to U.S. Highway 19 in the Tarpon-West Pasco area have improved the traffic flow along U.S. Highway 19. (Findings 1 through
6 are contained in the Prehearing Stipulation.)
Burruss is located in Tarpon Springs, which is in the northernmost part of Pinellas County. New Port is located in New Port Richey, which is in Pasco County. There is presently no AMC dealer in Pasco County. The closest AMC dealer to the north of Burruss his in Brooksville, some 35 miles to the north. The AMC dealers in the area are in Tampa, some 27 miles south of New Port Richey; in Clearwater, some 25 miles south of New Port Richey; and Burruss in Tarpon Springs, some six miles south of the proposed location.
New Port has been a franchised Lincoln Mercury automobile dealer for three and a half years and is fully qualified to operate the proposed franchise. New Port has agreed to build a 1600 square foot showroom, to have mechanics factory-trained, and to spend in excess of $41,000 in advertising the AMC products during its first year of operation. It has also agreed to maintain a 60-day supply of automobiles in stock.
Pasco County has been one of the fastest growing Florida counties in the past ten years, with most of this growth in the western part of the county near U.S. 19. In 1970 Pasco County had a population of 76,000, which increased to 193,643 in 1980 (Exhibit NP-1).
In 1981 a study was conducted in the Pasco County area to determine if there was an open point in this area. A copy of this report was submitted as Exhibit NP-2. From this study AMC determined that the area previously serviced by Burruss should be divided into two areas with the southern area comprising the areas containing the zip codes of Tarpon Springs, Crystal Beach, Holiday, Ozone, and Palm Harbor. This is designated the new Tarpon Springs area. All of these communities are in Pinellas County except Holiday, which is in Pasco County. The northern area, which comprises west Pasco County and is the area in which it is contended that AMC is inadequately represented, includes the zip codes for New Port Richey, Aripeka, Elfers, Odessa, and Port Richey. After obtaining the results of this study, American Motors Sales Corporation solicited dealers in this area to apply for an AMC franchise.
Burruss became an AMC dealer in 1960, a Jeep dealer in 1970, and a Renault dealer in 1979. Burruss also sells Datsun vehicles, the sale of which runs 25 to 30 percent, by number of units, above its sales of the AMC-Jeep- Renault line, despite the fact that a competing Datsun dealer is located in Pasco County approximately three miles north of Burruss on U.S. 19.
During the past ten years ten major shopping malls or plazas have been built in the New Port Richey-West Pasco area, the number of banks or savings and loan institutions have grown from ten to more than 65, and six new car dealerships have been established, to bring the total to nine. Burruss' sales of AMC vehicles reached a peak of 200 per year in 1975 and have steadily declined since that time.
Cross-sales figures show that from 45 percent to 75 percent of the AMC-Jeep-Renault vehicles sold in the New Port Richey area are sold by dealers other than Burruss. Of the three AMC dealers in Pinellas County, Burruss has
consistently sold the fewest vehicles. Since the population has been greater in the service area of the other two AMC dealers in Pinellas County, this lower rate would be expected. However, Burruss sales have not kept pace with the population growth in the New Port Richey-West Pasco area.
In 1977 AMC automobiles accounted for 1.8 percent of domestic new car sales in this Central Florida district, 2.6 percent of the sales in the Tarpon Springs area, and 1.7 percent of the sales in the New Port Richey area. In 1982 AMC automobiles accounted for 1.4 percent of the district sales, 1.0 percent of the Tarpon Springs area sales, and 0.9 percent of the New Port Richey area sales.
In 1977 Jeep automobiles accounted for 14.1 percent of the four-wheel drive vehicle sales in the Central Florida district, 13.5 percent of the sales in the Tarpon Springs area, and 13.8 percent of the sales in the New Port Richey area. In 1982, Renault vehicles accounted for 1.4 percent of the district sales, 1.0 percent of the Tarpon Springs area sales, and 0.5 percent of the New Port Richey area sales.
Thus, while AMC penetration in the Tarpon Springs area is comparable to district penetration (although Tarpon Springs penetration seems to be declining), the penetration in the New Port Richey area is well below the district average.
Not only has Burruss spent less on advertising than other dealers, but also it has not maintained a 60-day supply of vehicles based on "planning potential." (A minimum estimated number of sales a dealer should make in a
year.) Based on the planning potential for the combined Tarpon Springs and New Port Richey areas, Burruss should stock 14 AMC, 10 Jeep, and 36 Renault vehicles. As of January 31, 1982, Burruss had in stock 8 AMC, 3 Jeep and 17 Renault vehicles. AMC consistently allots Burruss more vehicles than it purchases.
AMC has received more complaints directly from customers in the West Pasco service area about the products they purchased, but not necessarily from Burruss, than from other service areas in the same district. This is indicative that insufficient attention is paid to providing warranty services in the area by the franchised dealer.
That a separate market area in Pasco County exists and has been recognized by several other automobile manufacturers was admitted by Herman Burruss, the principal stockholder of Burruss Motor Company, who was the chief operations officer for Burruss for some 45 years until approximately five years ago when he turned the job over to his son and retreated into semi retirement.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Section 320.642, Florida Statutes, establishes the following standards for issuance of a motor vehicle license:
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 dealers have complied with licensee's agreement and are providing adequate representation in the community or
territory for such license. The burden
of proof in showing inadequate representation shall be on the licensee.
Since the parties stipulated that Burruss is in compliance with its franchise agreement, the sole issue here presented is whether AMC is adequately represented in the New Port Richey-West Pasco service area.
Evidence presented by Burruss, which was not objected to by New Port or American Motors Sales, relating to the adverse economic impact on existing dealers by the installation of the new AMC dealership six miles north of Burruss has been disregarded. Section 320.642, above-quoted, assumes the introduction of competition will have a potentially adverse impact on an existing dealer or dealers in the service area, and the only issue is whether the existing dealer or dealers is adequately representing the manufacturer in the service area. In Bill Kelly Chevrolet, Inc. v. Calvin, 322 So.2d 50 (Fla. 1st DCA 1975) the court commented on Section 320.642, Florida Statutes, as follows:
The purpose of 320.642, F.S.1973, is to prevent powerful manufacturers from
taking unfair advantage of their dealers by overloading a market area with more dealers than can be justified by the legitimate interests of the manufacturer
and its dealers, existing and prospective. Plantation Datsun, Inc. v. Calvin, 275 So.2d 26 (Fla. 1 DCA 1973). Its purpose is not to foster combinations to prevent the introduction of dealer competition which is reasonably justified in terms
of market potential. Antitrust laws have proscribed such combinations in the United States since 1890 and in this State since 1915. (Citations omitted.) Assuming as we do that the legislature in enacting 320.642 intended 'to serve the best interests of the people and the general welfare of the State' consistent with
the purposes of the antitrust laws [Abood v. City of Jacksonville, 80 so.2d 443, 445 (Fla. 1955)], we decline to transform the nonexclusive multiple dealer area of Dade
and Broward into an exclusive territory in which twelve existing dealers are
protected from border to border from further competition notwithstanding their inadequate representation of Chevrolet in an identifiable part of the territory.
In the West Pasco area the population has increased come 250 percent in the decade from 1970 to 1980, yet in the latter part of that decade Burruss' annual sales decreased and AMC's market penetration in the New Port Richey area was below the district average and over one-half of the sales into the area were cross-sales by dealers outside the service area.
In Bill Kelly, supra, the court was faced with a multiple dealer situation where each dealer serving the metropolitan area was adequately representing the licensee in his primary area. In the Metropolitan market the licensee was adequately represented in overall penetration, yet within the metropolitan area an identifiable area was not being adequately serviced. The court said at p. 52:
Within the territory described in the non-exclusive franchise agreement there remains an identifiable plot not yet cultivated, which could be expected to
flourish if given the attention which the others in their turn received. . . .
In the instant case the area proposed to be served by New Port has a penetration by AMC automobiles well below the district average, it is an area of expanding population, and AMC is not being adequately represented by Burruss in this area. The location of the proposed new dealer is near the densest population in the New Port Richey area and is in the vicinity of other new car dealers. This location represents a window of opportunity in an inadequately cultivated identifiable plot.
From the foregoing it is concluded that AMC is not adequately represented in the New Port Richey area of West Pasco County by the protestant Burruss Motors Company, Inc., located in Tarpon Springs in Pinellas County, that
New Port is fully qualified by experience and resources to provide adequate representation in this area, and that the application should be granted. It is
RECOMMENDED that a Final Order be entered approving the application of New Port Lincoln Mercury, Inc., d/b/a New Port AMC-Jeep-Renault for a new motor vehicle dealer license in New Port Richey, Florida.
ENTERED this 28th day of April, 1983, at Tallahassee, Florida.
K. N. AYERS, 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 28th day of April, 1983.
COPIES FURNISHED:
William L. Vinson, Esquire Gregory G. Gay, Esquire CHASE & GAY
Post Office Box 1146
New Port Richey, Florida 33552
W. Lowell Bray, Jr., Esquire ALLGOOD, McPHERSON, BRAY & MISEMFER
123 West Nebraska Avenue
New Port Richey, Florida 33552
Daniel P. Rock, Esquire 4929 U.S. Highway 19 North
Holiday, Florida 33590
Judson M. Chapman, Esquire Assistant 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: 82-002751
Orders for Case No: 82-002751
| Issue Date |
Document |
Summary |
|
Jul. 08, 1983 |
Agency Final Order
|
|
|
Apr. 28, 1983 |
Recommended Order
|
Respondent entitled to motor vehicle dealer license because petitioner inadequately represented AMC in the area.
|
