STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FORD MOTOR COMPANY, )
)
Petitioner, )
)
vs. ) CASE NO. 89-2611
) BOLTON-HOOLEY, INC., d/b/a ) LUKE BOLTON FORD, LUKE H. ) BOLTON, MICHAEL E. HOOLEY, ) and BYRON M. HUTCHINSON, )
)
Respondents. )
)
RECOMMENDED ORDER OF DISMISSAL
THIS CAUSE came on for consideration upon Petitioner's Motion for Summary Recommended Order for Lack of Jurisdiction filed on December 13, 1989.
Respondent, Michael E. Hooley ("Hooley"), filed his Response to and Memorandum of Law in Opposition to Petitioner, Ford Motor Company's (sic) Motion for Summary Recommended Order on December29, 1989. 1/
A telephone conference was conducted at 2:00 p.m. on January 4, 1990, to answer questions posed by the Hearing Officer for the purpose of clarifying allegations in the Motion and Response. During the telephone conference, Petitioner amended the title of its Motion, ore tenus and without objection, to a Motion for A Recommended Order of Dismissal for Lack of Jurisdiction (the "Motion to Dismiss"). Accordingly, this Order treats the original motion as a Motion to Dismiss and Hooley's response as a Response to the Motion to Dismiss.
Motion to Dismiss. The Motion to Dismiss asserts that the grant of authority in Section 320.643, Florida Statutes, 2/ limits jurisdiction in this proceeding to a determination of whether a "proposed transferee" is qualified to be a "transferee". Similarly, authority in Section 320.643 to file a verified complaint is limited to a verified complaint for a determination of whether a "proposed transferee" is qualified to be a "transferee".
The Motion to Dismiss further alleges that a Stock Purchase Agreement entered into by Respondents on February 28, 1989, transferred an interest in Bolton-Hooley, Inc. ("Bolton Ford") before a determination could be made of whether the "proposed transferee" was qualified to be a "transferee" in accordance with Section 320.643. 3/ A copy of the Stock Purchase Agreement and letters from Ford Motor Company ("Ford") to Respondent, Luke H. Bolton ("Bolton"), are attached to the Motion to Dismiss as exhibits A and C respectively. 4/
The Motion to Dismiss concludes that there is "no longer a proposed transfer of interest to be adjudicated", and that the Department is without jurisdiction under Section 320.643 to "consider the complaint filed herein." The Motion to Dismiss requests a determination of law that a transfer of an
interest within the meaning of Section 320.643 has taken place during the pendency of this proceeding in violation of Section 320.643, and that Petitioner's complaint should be dismissed for lack of jurisdiction. 5/
Response to the Motion to Dismiss. The Response to the Motion to Dismiss does not deny the factual allegations in the Motion to Dismiss and its attached exhibits. Instead, the Response opposes the Motion to Dismiss on the basis of four legal arguments.
The first argument correctly points out that no procedure exists for a "summary recommended order" in a proceeding such as this where the Division of Administrative Hearings ("DOAH") has no final order authority. However, the original motion for summary recommended order expressly requests dismissal of the Complaint 6/ for lack of jurisdiction and is being treated in this Order as a Motion to Dismiss. The procedural argument in the response to the original motion for summary order, therefore, is moot. Any implied argument that no procedure exists in the administrative rules to grant the Motion to Dismiss is rejected. Fla. Admin. Code Rules 22I-6.016(3) and 22I-6.024.
The second argument in opposition to the Motion to Dismiss asserts that the Motion requires the undersigned to either perform functions in excess of those requested in the letter of referral from the Department of Highway Safety and Motor Vehicles (the "Department"), determine contractual rights of private parties, or perform functions that are unconstitutional (the "jurisdictional issue"). The undersigned has no jurisdiction to determine constitutional issues and no ruling is made with respect to such issues. Carrolwood State Bank v.
Lewis, 362 So.2d 110, 113-114 (Fla. 1st DCA 1978); Dept. of Environmental Regulation v. Leon County, 344 So.2d 298 (Fla. 1st DCA 1977). The remaining issues raised in the second argument are disposed of in this Order.
The third argument in the Response to the Motion to Dismiss addresses the merits of the Motion to Dismiss. The Response in substance argues that the Stock Purchase Agreement does not operate to either transfer legal title in the stock of Bolton Ford or to change executive management control of Bolton Ford.
The fourth argument in opposition to the Motion to Dismiss asserts that no legal authority exists for the remedy requested by Ford. Instead, this argument concludes that the appropriate remedy is for Ford to seek to stay or set aside the transfer pending the results of the formal hearing in this proceeding (the "remedy issue").
Statement of the Issues. The issues for determination in this Order are whether:
the applicable law limits the jurisdiction of the Department in this proceeding to a determination of whether a "proposed transferee" is qualified to be a "transferee";
the Department may consider the Stock Purchase Agreement for the purpose of determining the Department's jurisdiction without violating limitations on the power of an agency to determine contractual rights among private parties;
the Stock Purchase Agreement operated for purposes of the applicable law to transfer an interest in Bolton Ford prior to the conclusion of this proceeding; and
the interest transferred, if any, is an interest that falls within the scope of the applicable law.
Jurisdiction Established by Applicable Law.
Applicable Law. Section 320.643 authorizes determinations regarding the transfer of both a franchise agreement and an interest in a motor vehicle dealer. Subsection 320.643(1) applies to a transfer of a franchise agreement. Subsection 320.643(2) applies to a transfer of an interest in a motor vehicle dealership. Section 320.644 authorizes a determination regarding a change in "executive management control" of a dealership.
The Motion to Dismiss and the Response to the Motion to Dismiss raise issues regarding the transfer of an interest in Bolton Ford, the transfer of the franchise agreement, and a change in executive management control of Bolton Ford. Specific allegations in the Complaint, however, are limited to the transfer of an interest in a motor vehicle dealership within the meaning of Subsection 320.643(2). 7/ Therefore, no ruling is made regarding issues pertaining to either a transfer of the franchise agreement or a change in executive management control within the meaning of either Subsection 320.643(1) or Section 320.644.
Subsection 320.643(2) prohibits a manufacturer ("licensee") from contesting the sale, assignment, transfer, alienation, or other disposition ("transfer") of part or all of the equity interest in a motor vehicle dealership unless the licensee proves at a hearing that such a transfer is to a person who is not, or whose controlling executive management is not, of good moral character. 8/ A person who desires to transfer such an interest in a motor vehicle dealership must notify the licensee (or cause the "proposed transferee" to notify the licensee) of the identity and address of the "proposed transferee".
A licensee who receives the notice required in Subsection 320.643(2) may file a verified complaint for a determination that the "proposed transferee" is not a person qualified to be a "transferee" under Section 320.643. 9/ The Department is then authorized by Subsection 320.643(2) to do one of the following: determine, and enter an order providing, that the "proposed transferee" either is qualified or is not and cannot be qualified for specified reasons; or provide the conditions under which a "proposed transferee" would be qualified.
Jurisdictional Limits Imposed By Applicable Law. An agency has only that power which is expressly or by necessary implication granted by legislative enactment. Lewis Oil Co., Inc. v. Alachua County, 496 So.2d 184,
187 (Fla. 1st DCA (1986); Dept. of Highway Safety & Motor Vehicles v. German,
451 So.2d 1013 (Fla. 3d DCA 1984); State, Department of Environmental v. Falls Chase Special Taxing District, 424 So.2d 787, 793 (Fla. 1st DCA 1983); Fiat Motors of North America, Inc. v. Calvin, 356 So.2d 908, 909 (Fla. 1st DCA 1978); See also Yamaha Parts Distributors, Inc. v. Ehrman, 316 So.2d 557 (Fla. 1975)(holding that statute did not delegate authority to agency to impair contractual rights of private parties). The Department has no power to determine whether a "transferee" is qualified to be a "transferee" unless such power is granted to the Department either expressly or by necessary implication.
Express Power. Subsection 320.643(2) expressly grants the Department the power to make a determination of whether a "proposed transferee" is qualified to be a "transferee" and to permit the filing of a verified complaint for such a determination. Subsection 320.643(2) does not expressly
grant the Department the power to make a determination of whether a "transferee" is qualified to be a "transferee" or to permit the filing of a verified complaint for such a determination. The express power to make a determination in Subsection 320.643(2) is limited to making a determination of whether a "proposed transferee" is qualified to be a "transferee". Similarly, the express power to accept a verified complaint is limited to accepting a verified complaint for such a determination.
Express Power Not Expanded by Necessary Implication. Administrative agencies are without power to expand their jurisdiction. Lewis
v. Bank of Pasco County, 346 So.2d 53 (Fla. 1976); Florida Department of Law Enforcement v. Hinson, 429 So.2d 723, 724 (Fla. 1st DCA 1983); Swebilius v. Florida Construction Industry Licensing Board, 365 So.2d 1069 (Fla. 1st DCA 1979). Any reasonable doubt as to the lawful existence of a particular power should be resolved in favor of arresting the further exercise of that power. Edgerton v. International Company, 89 So.2d 488 (Fla. 1956) and State v. Atlantic Coast Line R. Co., 56 Fla. 617, 47 So 969 (Fla. 1908); Fraternal Order of Police, Miami Lodge v. City of Miami, 492 So.2d 1122, 1124 (Fla. 3d DCA 1986).
The power expressly granted in Subsection 320.643(2) is not expanded by necessary implication to include the power to determine whether a "transferee" is qualified to be a "transferee" or to accept a verified complaint for such a determination. Such an implication would reduce the term "proposed transferee" and the requirement for notice of the name and address of a "proposed transferee" to a legislative nullity. Furthermore, it would ignore the plain and unambiguous meaning of statutory terms. Finally, such an implication would frustrate legislative intent underlying the requirement in Subsection 320.643(2)(b) for an expedited determination of whether a "proposed transferee" is qualified to be a "transferee" within the meaning of Subsection 320.643(2)(a).
The Legislature is presumed not to intend its enactments to be a nullity. Terms within a statute are to be construed in accordance with their plain and unambiguous meaning whenever possible and in a manner that accords significance and effect to each and every term. Villery v. Florida Parole and Probation Commission, 396 So.2d 1107 (Fla. 1980); State v. Gale Distributors, 349 So.2d
150 (Fla. 1977); Ozark Corp. v. Pattishall, 185 So. 633 (Fla. 1933); Topeka Inn Management v. Pate, 414 So.2d 1184 (Fla. 1st DCA 1982).
The Response to the Motion to Dismiss recognizes the holding of the Florida Supreme Court in Barrow v. Holland, et al., 125 So.2d 749, 752 (Fla. 1960):
It is a well established rule of constitutional law that an enactment delegating administrative power to an agency of government should define the limits of the power by including in the enactment reasonable standards which enable the affected public to meet the requirements of the enactment. These standards at the same time preclude the exercise of arbitrary power by the enforcement agencies of the government.
Limiting jurisdiction under Subsection 320.643(2) to a determination of whether a "proposed transferee" is qualified to be a "transferee" is consistent with the judicial requirement in Barrow for reasonable limits on power delegated to administrative agencies. 10/ At the same time, the limitation on jurisdiction in Subsection 320.643(2) precludes the exercise of any power by the Department greater than the power to determine whether a "proposed transferee" is qualified to be a "transferee". As the Response to the Motion to Dismiss
acknowledges at page 9, issues outside the scope of jurisdiction granted in Subsection 320.643(2) should not be addressed by the Department or the undersigned.
A person ceases to be a "proposed transferee" and becomes a "transferee" if part or all of an equity interest in a motor vehicle dealership is transferred to that person prior to or during the pendency of a proceeding under Subsection 320.643(2). 11/ When a person ceases to be a "proposed transferee" prior to or during the pendency of a proceeding under Subsection 320.643(2), the statutory prerequisite for jurisdiction is lost irrespective of that person's qualifications to be a "transferee". In addition, notice of the name and address of a "proposed transferee" is not adequate to invoke the jurisdiction of the Department under Subsection 320.643(2) if a person ceases to be a "proposed transferee" prior to such notice. 12/
The status of a person as a "proposed transferee" is an indispensable prerequisite to jurisdiction under Subsection 320.643(2). Without a "proposed transferee", neither the subject matter nor procedural prerequisites for jurisdiction can be satisfied.
Issues of Jurisdiction and Remedy Raised in the Response to the Motion to Dismiss. The Response to the Motion to Dismiss raises two issues challenging the authority of the undersigned to grant the relief requested in the Motion to Dismiss. 13/ First, the Response asserts that the Hearing Officer does not have authority to perform functions in excess of those functions authorized in the letter of referral by the Department. Second, the Response asserts that the Motion to Dismiss requires the Hearing Officer to exceed his jurisdiction by determining private contractual rights. The remedy suggested in the Response to the Motion to Dismiss is for Petitioner to seek to set aside the Stock Purchase Agreement or to seek a stay of the Stock Purchase Agreement.
The Letter of Referral. The letter of referral by the Department submits the matter to DOAH for the purpose of "determining those issues which may be raised under Section 320.643." For reasons previously stated in paragraph 4(b) of this Order, the issues to be determined under Subsection 320.643(2) include determinations of: (1) whether the licensee has received notice of the name and address of the "proposed transferee"; and (2) whether the "proposed transferee" is qualified to be a "transferee". Whether Hooley is a "proposed transferee," for purposes of Subsection 320.643(2), is an issue that must be resolved as a jurisdictional prerequisite to performing the functions authorized in the letter of referral from the Department to DOAH. 14/
Limits On Authority to Interpret and Enforce Private Contractual Rights. Administrative agencies and DOAH Hearing Officers do not have authority to interpret and enforce contractual rights of private parties where the terms of the contract are ambiguous. Point Management v. Department of Business Regulation, Division of Florida Land Sales and
Condominiums, 449 So.2d 306, 307 (Fla. 4th DCA 1984); Peck Plaza Condominium v. Division of Florida Land Sales and Condominiums, Department of Business Regulation, 371 So.2d 152, 154 (Fla. 1st DCA 1979). See also, Dwynal & Ional Pettingill v. State, Department of Environmental Regulation, No. 82-294, 4 FALR 1912-A (Final Order; September 6, 1982). Jurisdiction to determine contractual rights among private parties resides exclusively in the circuit courts. Fleischman v. Department of Professional Regulation, 441 So.2d 1121, 1122-1123 (Fla. 3d DCA 1983).
The facts in this proceeding are distinguishable from those in Peck Plaza,
371 So.2d 152, supra. In Peck Plaza, the terms of the contract at issue were ambiguous. In this proceeding, the Response to the Motion to Dismiss consistently alleges at pages 11-13, 19, and 21 that the terms of the Stock Purchase Agreement are clear and unambiguous. The factual allegations of the Respondent are accepted as true for the purpose of disposing of Petitioner's Motion to Dismiss. Since the terms of the Stock Purchase Agreement are clear and unambiguous, the holding in Peck Plaza does not apply to this proceeding.
The purpose of considering the contract in this proceeding is distinguishable from the purpose for which the contract was construed in Peck Plaza. In Peck Plaza, the purpose of construing the contract was to "enforce contractual rights." In this proceeding, there is no attempt to "enforce contractual rights." An agency and DOAH Hearing Officer may consider contractual rights of private parties for the purpose of determining violations of statute as long as neither the agency nor the DOAH Hearing Officer attempt to "enforce contractual rights" of private parties. Roberts v. Ayers, 380 So.2d 1057, 1059 (Fla. 1st DCA 1980); See also, Biltmore Constr. Co. v. Dept. of Gen. Servs., 363 So.2d 851, 854 (Fla. 1st DCA 1978) (holding that an agency may not order specific performance of a contract).
Administrative agencies regularly construe contracts ranging from agreements between growers and wholesalers to large construction contracts.
J.R. Sales, Inc. v. Dick, 521 So.2d 366 (Fla. 1st DCA 1988); Graham Contracting, Inc. v. Department of General Services, 363 So.2d 810 (Fla. 1st DCA 1978), cert. den. sub nom., Department of General Services v. Graham Contracting, Inc., 373 So.2d 457 (Fla. 1979). To the extent other court decisions 15/ may not be distinguishable from the facts in this proceeding or from the purpose for which the Stock Purchase Agreement is considered in this proceeding, those cases are in apparent conflict with decisions upholding the right of an agency to construe contractual rights of private parties. 16/
Power of an Agency to Determine Its Own Jurisdiction. Every court has the judicial power to hear and determine the question of its own jurisdiction. Re Constructors of Florida, Inc., 349 F.2d 595 (5th Cir. 1965) cert den 383 US 912 (1966); Wade v. Cocoa, 145 So.2d 481 (Fla. 1962); Sun Ins. Co. v. Boyd, 105 So.2d 574 (Fla. 1958). DOAH Hearing Officers have quasi judicial power. State Department of Administration, Division of Personnel v. State Department of Administration, Division of Administrative Hearings, 326 So.2d 186 (Fla. 1st DCA 1976). An administrative agency such as the Department may also exercise quasi judicial power. Cf. Biltmore, 363 So.2d 851, supra at
12 (holding that the quasi judicial power of an administrative agency does not include the power to grant equitable relief). Accordingly, the undersigned and the Department each have power to hear and determine the question of their own jurisdiction under Subsection 320.643(2).
Agency's Power to Determine Its Own Jurisdiction and Limitations on Its Power to Determine Private Contractual Rights. A determination of the prerequisites to jurisdiction under Subsection 320.643(2) does not determine or regulate private contractual rights of the parties under the Stock Purchase Agreement. 17/ Such a determination merely applies the provisions of the Stock Purchase Agreement for the limited purpose of determining the prerequisites to jurisdiction under Subsection 320.643(2).
The Stock Purchase Agreement is not considered for any of the following purposes: determining the legality of the Stock Purchase Agreement; enforcing
the rights of the parties to the Stock Purchase Agreement; awarding money damages; enjoining performance; ordering specific performance; or granting other equitable relief. The power to consider the Stock Purchase Agreement for such purposes is the exclusive jurisdiction of the appropriate circuit court. 18/
The Response to the Motion to Dismiss recognizes at pages 11 and 12 that courts cannot indulge in construction or interpretation of clear and unambiguous terms of a contract. BMW of North America, Inc. v. Krathen, 471 So.2d 585, 587 (Fla. 4th DCA 1985); National Health Laboratories, Inc. v. Bailmar, Inc., 444 So.2d 1078, 1080 (Fla. 3d DCA 1984). Absent a judicial determination to the contrary, the Stock Purchase Agreement is presumed to be a legal and enforceable contract. The clear and unambiguous terms of the contract are applied for the limited purpose of hearing and determining the prerequisites to jurisdiction under Subsection 320.643(2).
Respondent contends that the Department is required to proceed with a determination of the merits in this proceeding and leave the consideration of private contractual rights to the appropriate circuit court. That contention is specifically rejected. A court lacks discretion to consider the merits of a case over which it is without jurisdiction. Firestone Tire & Rubber Co. v.
Risjord, 449 US 368 (1981). An agency, in the exercise of its quasi judicial power, also lacks discretion to consider the merits of a proceeding over which it is without jurisdiction.
A determination of whether the Stock Purchase Agreement operates as a transfer of part or all of the equity interest in Bolton Ford is necessary to determine the prerequisites to jurisdiction under Subsection 320.643(2). The prohibition against determining private contractual rights does not preclude the Department or this Hearing Officer from applying the Stock Purchase Agreement for the limited purpose of determining whether the prerequisites to jurisdiction under Subsection 320.643(2) have been met.
Remedy. The remedy requested in the Motion to Dismiss is an appropriate remedy pursuant to the Department's power to determine its own jurisdiction. The remedy suggested in the Response to the Motion to Dismiss is also appropriate pursuant to the power of circuit courts to determine contractual rights of private parties. The remedy suggested in the Response to the Motion to Dismiss is an alternative remedy that either Petitioner or Respondent may pursue at their election. In the absence of appropriate circuit court intervention, the remedy sought by Petitioner is proper. 19/
Failure of the Department to determine its own jurisdiction would make any determination of the merits in this proceeding problematic. A determination of the merits would be void if the appropriate circuit court subsequently decided that the Stock Purchase Agreement transferred part or all of the equity interest in Bolton Ford in violation of Subsection 320.643(2). Cf. Florida Nat. Bank v. Kassewitz, 156 Fla 761, 25 So. 2d 271 (Fla. 1945); Miller v. Eatmon, 177 So.2d
523 (Fla. 1st DCA 1965).
Failure of the Department to determine its own jurisdiction would also make any appeal of this proceeding problematic. If the Department has no jurisdiction, any determination of the merits of this proceeding by the appellate court would also be void. Cf. Stuart v. Green, 23 So.2d 831 (Fla.
1945). If the Department does not determine its own jurisdiction, the appellate court may either hold that the Department was without jurisdiction to determine the merits of this proceeding, remand the case to the Department for a
determination of its own jurisdiction, or decide that the Department had jurisdiction to determine the merits of the proceeding.
Florida Administrative Code Rule 22I-6.024 authorizes the Hearing Officer to issue any order necessary to promote the "just, speedy and inexpensive determination of all aspects of the case." The remedy suggested in the Motion to Dismiss determines all aspects of the case without the delay and expense of a formal hearing on the merits if the Department has no jurisdiction under Subsection 320.643(2) to determine whether a "transferee" is qualified to be "transferee". If the Department has no such jurisdiction, the remedy requested in the Motion to Dismiss is the most just, speedy and inexpensive determination of all aspects of the case within the meaning of Rule 22I-6.024.
Operation of Stock Purchase Agreement as a Transfer. Allegations of lack of jurisdiction are properly dealt with on the pleadings except in rare cases. State, Department of Environmental v. Falls Chase Special Taxing District, 424 So.2d at 794 supra. The "pleadings" pertaining to the Motion to Dismiss consist of the Motion to Dismiss and attached exhibits, the Response to the Motion to Dismiss and attached exhibit, the undenied allegations in the Complaint, and stipulations made by counsel during the telephone conference on January 4, 1990, (the "pleadings").
The Response to the Motion to Dismiss acknowledges at page 11 that the Stock Purchase Agreement should be considered to determine the intent of the parties to the agreement. If the contract language is clear and unambiguous, then the intent of the parties should be derived from the four corners of the document. Robert C. Roy Agency, Inc. v. Sun First National Bank of Palm Beach,
468 So.2d 399, 405 (Fla. 4th DCA 1985). The undersigned accepts the allegations at pages 11-13, 19, and 21 in the Response to the Motion to Dismiss that the terms of the Stock Purchase Agreement are clear and unambiguous. Therefore, the intent of the parties to the Stock Purchase Agreement is properly derived from the four corners of the document. 20/
The factual allegations in the pleadings are uncontroverted. Instead, the Response to the Motion to Dismiss disputes the conclusion that the Stock Purchase Agreement operates as a transfer.
Business Purpose for the Stock Purchase Agreement. 21/ Bolton Ford (the "Corporation") is a licensed motor vehicle dealer within the meaning of Section 320.60(11)(a). On October19, 1984, all of the outstanding shares of the Corporation were owned by the individual Respondents in the following percentages: Bolton (49 percent), Hooley (49 percent), and Byron M. Hutchinson (2 percent) ("Hutchinson").
Pursuant to a Shareholder Agreement dated October 19, 1984, the Corporation was given an option to purchase the shares of stock held by Bolton and Hutchinson on December31, 1989, at a predetermined price. If the Corporation failed to exercise its option, Hooley was given the option to purchase the stock of Bolton and Hutchinson on December31, 1989, at the predetermined price. In either event, it was always the contemplation of the parties to the Shareholder Agreement that in December, 1989, either the Corporation or Hooley would exercise the appropriate option, and Hooley would become the sole shareholder of the Corporation. 22/
Operational management and control of the Corporation was exercised by Hooley for substantially the entire period since the inception of the Shareholder Agreement on October 19, 1984. Late in 1988, Bolton became concerned
about the continued operation of the business of the Corporation as a result of certain actions by Ford Motor Company ("Ford") including letters from Ford to Bolton dated October 25, 1988, and December 16, 1988. Those letters expressed Ford's decision not to approve a transfer to Hooley. Copies of both letters are attached to the Stock Purchase Agreement.
Given Ford's expressed disapproval of Hooley as a transferee, Bolton, Hooley, and Hutchinson desired to obtain assurances that their rights under the Shareholder Agreement were protected. The parties set out to accomplish an expedited purchase of the stock of Bolton and Hutchinson that would result in Hooley owning all of the outstanding shares of the stock of the Corporation as soon as possible rather than waiting until December31, 1989. 23/ To that end, Bolton, Hooley, and Hutchinson entered into a Stock Purchase Agreement on February28, 1989.
General Provisions of the Stock Purchase Agreement. The Stock Purchase Agreement generally provides for the purchase of the stock of Bolton and Hutchinson by either the Corporation or Hooley at a prescribed purchase price. The sale proceeds, stock certificates, and other specified documents were required by the terms of the Stock Purchase Agreement to be delivered into two independent escrows until May7, 1989. On May 7, 1989, the sale proceeds were to be disbursed from one escrow to Bolton and Hutchinson, and all documents except the stock certificates were to be disbursed from the other escrow to Hooley. 24/ May 7, 1989, was selected as the date for transfer from escrow because that date was more than 60 days from the date of the notice of proposed transfer received by Ford on March 3, 1989. The terms of the Stock Purchase Agreement are described more specifically in paragraphs 5(c)-5(e) of this Order.
Escrow of Sale Proceeds. The sale proceeds were paid into escrow until May7, 1989, and immediately thereafter transferred to Bolton and Hooley. The escrow of the sale proceeds was subject to no condition except the mere passage of time. May7, 1989, was chosen as the date for the transfer of the sale proceeds from escrow because that date was more than 60 days after the date Respondents determined they had complied with the notice requirements of Subsection 320.643(2). An amount equal to approximately three times the purchase price must be paid by Hooley or the Corporation if either contests the transfer of the sale proceeds from escrow. 25/
Escrow of Stock Certificates and Other Documents. Certificates representing all of the stock of Bolton and Hutchinson were transferred into escrow on February28, 1989.
Other documents simultaneously transferred into the same escrow included:
Irrevocable Powers of Attorney executed by Bolton and Hutchinson in blank;
irrevocable proxies from Bolton and Hutchinson entitling Hooley to all of the rights and powers of Bolton and Hutchinson as shareholders; and (3) written resignations of Bolton and Hutchinson from the Corporation's Board of Directors and as officers of the Corporation.
The escrow of documents other than the stock certificates was subject to no condition except the mere passage of time. May7, 1989, was chosen as the date for the transfer of documents from escrow because that date was more than 60 days after the date Respondents determined they had complied with the notice requirements of Section 320.643. An amount equal to approximately three times the sale proceeds must be paid by Bolton and Hutchinson if either contests the transfer of any documents from escrow. 26/ Transfer of the stock certificates from escrow was subject to the approval of Ford. 27/
Record Stock Ownership. Bolton and Hutchinson were required by the terms of the Stock Purchase Agreement to remain as record owners of their stock until the Corporation submitted a proposed transfer of stock to Ford. Thereafter, the Stock Purchase Agreement requires the stock of Bolton and Hutchinson to be transferred to either Hooley (or the Corporation) or a third party with whom the Stock Purchase Agreement grants Hooley the exclusive right to negotiate a sale of the stock and retain the sale proceeds. 28/
Other Interests in the Corporation. The Stock Purchase Agreement further provides that:
Hooley is the exclusive manager of the business of the Corporation and has all rights in that regard;
Bolton and Hutchinson are prohibited from taking any action in their capacities as shareholders in regard to the right of Hooley as the exclusive manager of the Corporation;
Shareholder loans from Bolton and Hutchinson to the Corporation are to be paid off as of February 28, 1989;
Irrevocable Powers of Attorney executed in blank by Bolton and Hutchinson are not subject to escrow after May 7, 1989;
Directors | (5) and | Written resignations by Bolton and Hutchinson from the Board of as officers of the Corporation are not subject to escrow after May |
7, 1989; | ||
Plan; | (6) | Bolton must resign as Trustee of the Bolton-Hooley Profit Sharing |
(7) | The parties are to receive their proportionate shares of |
Subchapter S income on February 28, 1989, cause the Corporation to make the election required under the Internal Revenue Code to end the tax year on February 28, 1989, and make the election required under Subchapter S of the Internal Revenue Code for the subsequent tax year;
The parties must cause any transferee of the stock of the Corporation to comply with the terms of the Stock Purchase Agreement;
The parties must cause the Lease Agreement to be amended to reflect the transfers required in the Stock Purchase Agreement;
Bolton must remove himself and his personal belongings from the Corporation within 60 days of February 28, 1989; and
The Corporation must amend its Articles of Incorporation as soon as possible after February 28, 1989, and change its name to eliminate any reference to Bolton subject only to the prior approval of Ford, "if required".
In addition to the documents required by the Stock Purchase Agreement to be placed in escrow, irrevocable proxies in favor of Hooley were transferred to the same escrow. These proxies entitle Hooley to all of the rights of Bolton and
Hutchinson as shareholders.
None of the documents in escrow had been transferred from escrow as of January 4, 1990. The fact that documents remain in escrow after May 7, 1989, evidences a voluntary act on the part of Hooley rather than an act required by the terms of the Stock Purchase Agreement. If part or all of an equity interest in Bolton Ford has been transferred to Hooley pursuant to the Stock Purchase Agreement, the transfer is not avoided because Hooley chooses not to enforce the rights transferred to him. The transfer of such an interest without more precludes jurisdiction under Subsection 320.643(2).
The Stock Purchase Agreement is presumed to be a legal and enforceable contract until a court with competent jurisdiction determines otherwise.
Pursuant to the authority granted by necessary implication in Subsection 320.643(2) and for the limited purpose of determining the prerequisites to jurisdiction under Subsection 320.643(2), it is determined that the Stock Purchase Agreement operated to sell, assign, transfer, alienate, or otherwise dispose of part or all of the equity interest in Bolton Ford on February 28, 1989.
Interest Transferred.
Subsection 320.643(2) applies to the transfer of part or all of the "equity interest" in a motor vehicle dealership. The Response to the Motion to Dismiss focuses on whether the Stock Purchase Agreement transferred legal title to either the stock of Bolton and Hutchinson or the franchise agreement, or changed executive management control. 29/ No ruling is made regarding the issue of whether the Stock Purchase Agreement transferred the franchise agreement. That issue is one for determination under Subsection 320.643(1) rather than Subsection 320.643(2). The undersigned agrees that the Stock Purchase Agreement did not transfer legal title to the Stock of Bolton and Hutchinson. An "equity interest" in a motor vehicle dealership, however, is not limited to legal title to the stock of the dealership.
Chapter 320 does not define the "equity interest" referred to in Subsection 320.643(2). An "equity interest" may properly be defined as either an interest in the equitable ownership of Bolton Ford, an interest in the gain or loss from disposition of part or all of the stock or assets of Bolton Ford, or an interest in the profit or loss of the Corporation for either financial or federal tax purposes. The Stock Purchase Agreement operates to sell, assign, transfer, alienate, or otherwise dispose of part or all of the "equity interest" in Bolton Ford under any of the foregoing definitions of an "equity interest". Bolton and Hutchinson retain bare legal title to their stock, but the right to direct the sale of their stock to a third party and retain the sale proceeds is transferred to Hooley pursuant to the Stock Purchase Agreement. Prior to such a sale, the right to vote the stock of Bolton and Hutchinson is transferred to Hooley pursuant to the irrevocable powers of attorney and proxies. The right to retain the proceeds of a sale of part or all of the assets of the Corporation is transferred to Hooley pursuant to the Stock Purchase Agreement. Finally, the right to determine corporate distributions with respect to the stock of Bolton and Hutchinson is transferred to Hooley pursuant to the Stock Purchase Agreement. 0
The equity interest transferred to Hooley pursuant to the Stock Purchase Agreement is not diminished while the stock certificates remain in escrow.
Proceeds from the sale of the equity interest attributable to the stock of Bolton and Hutchinson have been transferred to Bolton and Hutchinson pursuant to
the Stock Purchase Agreement. If either Bolton or Hutchinson contests the transfer of any documents from escrow, the Stock Purchase Agreement requires the contesting party to pay substantially more than he received for the sale of his stock.
The equity interest transferred to Hooley pursuant to the Stock Purchase Agreement is not diminished while Bolton and Hutchinson are record owners of their respective shares of stock. Hooley has the right to retain the proceeds of the sale of any of the Respondents' stock to a third party.0 If part or all of the assets of the Corporation are sold to a third party, Hooley has the right to receive the sale proceeds either directly or in the form of corporate distributions. Bolton and Hutchinson are prohibited by the Stock Purchase Agreement from interfering with the executive management of the Corporation in their capacities as record owners of stock. Finally, Bolton and Hutchinson have submitted their resignations from the Board of Directors of the Corporation and as officers of the Corporation.
Conditions in the Stock Purchase Agreement other than the mere passage of time or other ministerial acts apply to legal title to the stock of Bolton and Hutchinson. Documents other than the stock certificates of Bolton and Hutchinson are no longer subject to any condition in the Stock Purchase Agreement, even the mere passage of time. No conditions in the Stock Purchase Agreement, other than the mere passage of time or other ministerial acts, ever restricted the transfer to Hooley of part or all of the equity interest in Bolton Ford within the meaning of Subsection 320.643(2).
Accordingly, it is
RECOMMENDED that a Final Order be entered by the Department dismissing the Complaint for lack of jurisdiction on the following grounds:
Part or all of the "equity interest" in Bolton Ford was sold, assigned, transferred, alienated, or otherwise disposed of, within the meaning of Subsection 320.643(2), during the pendency of this proceeding without affording the licensee an opportunity to contest the qualifications of Hooley as a transferee and before the Department determined whether the "proposed transferee" was qualified to be a "transferee" in accordance with Subsection 320.643(2);
Hooley is not a "proposed transferee" within the meaning of Subsection 320.643(2).
The notice of proposed transfer to Ford on March 3, 1989, was inadequate under Subsection 320.643(2) because part or all of the equity interest in Bolton Ford was transferred to Hooley on February 28, 1989; and
The sale, assignment, transfer, alienation, or other disposition of part or all of the "equity interest" in Bolton Ford under the circumstances described in the preceding paragraphs violates Subsection 320.643(2).
DONE and ENTERED this 16th day of January, 1990, in Tallahassee, Leon County, Florida
DANIEL S. MANRY
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 16th day of January, 1990.
COPIES FURNISHED:
James D. Adams, Esquire Feaman, Adams, Harris,
Fernandez & Deutch, P.A.
4700 N.W. 2d Avenue, Suite 400 Boca Raton, FL 33431
Dean Bunch, Esquire and
Robert L. Hessman, Esquire Rumberger, Kirk, Caldwell,
Cabaniss, Burke & Wechsler
101 N. Monroe, Suite 900 Tallahassee, FL 32301 Bruno Di Giulian, Esquire
P.O. Box 14576
Fort Lauderdale, FL 33302-4576
Case No. 89-2611
Bruno L. Di Giulian, Esq.
888 South Andrews Avenue, Suite 210 Fort Lauderdale, FL 33316
Jack Stein, Esquire
Stein, Rosenberg & Winikoff 2691 E. Oakland Park Blvd. Suite 400
Fort Lauderdale, FL 33306
Daniel E. Myers, Esquire Myers & Forehand
402 N. Office Plaza Dr. Suite B
Tallahassee, FL 32301
Michael J. Alderman, Esquire Office of the General Counsel Department of Highway Safety
and Motor Vehicles
A432 Neil Kirkman Building Tallahassee, FL 32399-0500
Enoch Jon Whitney, Esq. General Counsel
Department of Highway Safety and Motor Vehicles
Division of Motor Vehicles Neil Kirkman Building Tallahassee, FL 32399-0500
Charles J. Brantley, Director Department of Highway Safety
and Motor Vehicles Division of Motor Vehicles
Room 8439, Neil Kirkman Building Tallahassee, FL 32399-0500
| Issue Date | Proceedings |
|---|---|
| Aug. 28, 1992 | (4DCA) Order filed. (Re: Dismissal) |
| Jan. 16, 1990 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 20, 1990 | Agency Final Order | |
| Jan. 16, 1990 | Recommended Order | No jurisdiction to hear petition to approve proposed transferree of auto dealer franchise where franchise was already transferred in substance. |
DIVISION OF REAL ESTATE vs. FUTRELL COMPANY, ELEANOR VAN TREESE, AND MARY CAPPS, 89-002611 (1989)
EDWARD SCOTT KIES vs FLORIDA REAL ESTATE COMMISSION, 89-002611 (1989)
DIVISION OF REAL ESTATE vs. MARK D. BOARDMAN, 89-002611 (1989)
DIVISION OF REAL ESTATE vs RETHA JO WALLMAN, T/A CONCORD FINANCIAL REALTY COMPANY, 89-002611 (1989)
