STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PERFORMANCE MOTOR CARS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 91-0484

)

DEPARTMENT OF HIGHWAY )

SAFETY AND MOTOR VEHICLES, )

)

Respondent. )

)

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing in the above-styled matter was held on April 3, 1991, in Cocoa Beach, Florida, before Joyous D. Parrish, a designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:

APPEARANCES

For Petitioner: Steven J. Jacovitz

43 S. Atlantic Avenue Cocoa Beach, Florida 32931

For Respondent: Michael J. Alderman

Assistant General Counsel Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building, Rm. A432 Tallahassee, Florida 32399-0504

STATEMENT OF THE ISSUES

The central issue in this case is the Department's cancellation of a duplicate vehicle title which showed a first lien status asserted by Petitioner for a 1985 Porsche automobile, title no. 41645698.

PRELIMINARY STATEMENT

This case began on August 24, 1990, when the Department of Highway Safety and Motor Vehicles (Department) advised Petitioner, Performance Motor Cars, Inc. (Performance), that the duplicate certificate of title issued by the Department on January 12, 1990, contained an error. That letter further notified Petitioner that a lien claimed by Performance was, according to the records maintained by the Division of Motor Vehicles, a second lien and not a first lien as erroneously stated on the duplicate title. Following subsequent communications with the Department, the Petitioner filed a letter on December 14, 1990, which sought an administrative review of the lien determination.

Thereafter, the case was forwarded to the Division of Administrative Hearings for formal proceedings on January 18, 1991.

At the hearing, the Petitioner presented the testimony of Wayne Scott Moore, president of Performance; and Leonard Melton, chief of the bureau of title lien services for the Department's division of motor vehicles. The Petitioner's exhibits numbered 1 and 2 were admitted into evidence. Mr. Melton also testified on behalf of the Department and its exhibit numbered 1 for identification was admitted into evidence.

The transcript of the hearing was filed with the Division of Administrative Hearings on April 12, 1991. The parties filed proposed recommended orders which have been considered in the preparation of this order. Specific rulings on the proposed findings of fact are included in the attached appendix.

FINDINGS OF FACT

Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made:

1. On or about June 28, 1989, the Petitioner sold a 1985 Porsche automobile, VIN WP0AA0945FN452920, Florida title no. 41645698, to an individual identified in this record as William H. Moulton.

   
   

2. Also on that date, Wayne Scott Moore, as president of Performance, filed an application for certificate of title for the subject vehicle with the Brevard County tax collector. That application provided that Kennedy Space Center Federal Credit Union (KSCFCU) was the first (and only described) lienholder on the vehicle to be titled in Mr. Moulton's name.

   
   

3. On December 20, 1989, a second notice of a lien on the subject vehicle was filed by the Petitioner. That notice was also filed with the tax collector's office in Brevard County, Florida. This notice described Petitioner's lien to be a "2nd Lien."

   
   

4. Based upon a coding error entered at the tax collector's office, the lien filed by Performance was mistakenly coded and identified as a first lien. Prior to that date a satisfaction of the KSCFCU lien had not been filed. As a result of the coding error, when a duplicate title was processed it described Performance as a first lienholder instead of a second lienholder.

   
   

5. On or about August 24, 1990, the Department discovered the coding error and cancelled the duplicate title which had omitted the KSCFCU first lien. A corrected title was issued which was sent to KSCFCU.

   
   

6. When Mr. Moulton failed to remit monies owed to Petitioner, it sought to foreclose its lien interest on the subject vehicle and, on August 1, 1990, obtained a final judgment of foreclosure against William Hodgman Moulton.

   KSCFCU was not named a party to that suit and the court presumed (final judgment paragraph 13) that Petitioner was the first lienholder on the subject vehicle.

   
   

7. Petitioner was aware of the first lien status claimed by KSCFCU for the subject car on or about June 28, 1989.

   
   

8. When Performance filed the documentation to perfect its security interest, the documentation stated it was to be a second lien.

9. Petitioner presented no evidence that the first lien of KSCFCU has been satisfied either in fact or as a matter of law. Petitioner's first lien status is claimed only by virtue of the coding error in the tax collector's office.

   
   

10. The Department first discovered the error regarding the duplicate title (which had been issued in January, 1990) just prior to its notice to Petitioner dated August 24, 1990. That letter advised Performance of the error and directed it to send the incorrect title to the Department.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these proceedings pursuant to Section 120.57, Florida Statutes, which provides, in pertinent part:

    
    

    The provisions of this section apply in all proceedings in which the substantial interests of a party are determined by an agency, unless such proceedings are exempt pursuant to subsection (5).

    
    

12. In this proceeding, the agency action complained of was the cancellation of a duplicate certificate of title which described Petitioner as the first lienholder regarding a motor vehicle.

    
    

13. Pursuant to Chapter 319, Florida Statutes, priority for motor vehicles liens is determined by the date of filing with the Department. First filed would therefore dictate a first lien interest. In this case, the lien filed by Petitioner on behalf of KSCFCU was the first lien filed related to the subject vehicle. The notice of lien later filed by Performance, described on its face as a second lien, was, in fact, the second lien filed on the vehicle. In the interim no other lien had been filed. More important to this case, however, is the fact that no satisfaction of lien had been filed by KSCFCU.

    
    

14. Section 319.25(1), Florida Statutes, provides, in part:

    
    

    If it appears that a certificate of title has been improperly issued, the department shall cancel the certificate. Upon cancellation of any certificate of title, the department shall notify the person to whom the certificate of title was issued, as well as any lienholders appearing thereon, of the cancellation and shall demand the surrender of the certificate of title, but the cancellation shall not affect the validity of any lien noted thereon.

    
    

15. In this case, it is concluded that as a matter of law, the Department is not estopped from asserting its statutory obligation to cancel the certificate of title. The coding error committed by a tax collector's employee cannot be utilized to advance Petitioner's lien status. Based upon the guidelines governing the Department's actions (Section 319.27(5), Florida Statutes), the prior filed lien had priority and should have retained and been described as the first lien on the title. Petitioner has not shown that the KSCFCU lien was satisfied by either the payment of the debt by the debtor (or another) or the release of the lien by the lienholder.

16. Secondly, the Department timely corrected the error upon discovery of it. In order to establish estoppel, Petitioner must show (1) a representation as to a material fact that is contrary to a later-asserted position; (2) reliance on that representation; and (3) a change in position detrimental to the party claiming estoppel, caused by the representation and reliance thereon.

Tri-State Systems, Inc. v. Department of Transportation, 500 So.2d 212, 215 (Fla. 1st DCA 1986). In this case, Petitioner sought to foreclose a lien based upon an erroneous title but did not verify the correctness of its position prior to the institution of the suit. Had the Petitioner ordered a copy of the Department's records (as one might order a search of title in real property foreclosures), the error would have been readily discoverable. Curious to this case was Petitioner's pursuit of a lien foreclosure after the incorrect duplicate title was issued. Performance had filed for a second lien on the vehicle, and did not include KSCFCU in its suit to foreclose on that lien.

Unquestionably, Performance knew that KSCFCU had been a first lienholder on the subject vehicle. Petitioner's assertion that the debtor told him the first lien had been satisfied constitutes uncorroborated hearsay. In any event, Petitioner's account regarding his assumption that the first lien had been satisfied was unpersuasive and not deemed credible given Mr. Moore's knowledge of the first lien. Absent more, Petitioner may not rely on a clerical error to claim estoppel against the Department. Taking Petitioner's argument would reap a potential windfall for every creditor who could advance lien positions as a result of clerical error. Petitioner's expenses in foreclosing the lien and storing the vehicle were at its own election. Petitioner has failed to establish the Department is estopped from cancelling the incorrect duplicate title and issuing the corrected title.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That the Department of Highway Safety and Motor Vehicles enter a final order confirming the cancellation of the incorrect duplicate title and issuance of the corrected certificate of title for the subject motor vehicle.

DONE and ENTERED this 24th day of May, 1991, in Tallahassee, Leon County, Florida.

JOYOUS D. PARRISH

Hearing Officer

Division of Administrative Hearings

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32301

(904)488-9675

Filed with the Clerk of the Division of

Administrative Hearings this 24th day of May, 1991.

APPENDIX TO RECOMMENDED ORDER

RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE PETITIONER:

1. Paragraph 1 is accepted.

2. Paragraph 2 is rejected as contrary to the weight of the evidence. Why Petitioner refers to a "tax lien" is unknown. Petitioner filed a notice of lien for a motor vehicle, that notice described the lien as a "2nd lien" for a 1985 Porsche automobile which is the subject vehicle in these proceedings.

3. Paragraph 3 is rejected as contrary to the weight of the evidence. The tax collector processed the notice of lien as the Department's agent. In the coding process an error was committed which was not readily picked up which resulted with the Department issuing a duplicate title wherein it erroneously described Petitioner's lien as the first lien. The lien filed by KSCFCU has not been "replaced" or satisfied based upon this record.

4. Paragraph 4 is rejected as argument or contrary to the weight of the credible evidence.

5. With regard to paragraph 5 it is accepted that the letter of cancellation for the incorrect duplicate title was issued approximately 8 months after the incorrect duplicate title had been issued. Otherwise, the paragraph is rejected as argument, a conclusion of law not supported by the record, or, if fact, unsupported by the record in this case.

6. Paragraph 6 is rejected as self-serving and uncorrobated hearsay. Mr. Moore's contention that the first lien to KSCFCU had been paid was not supported by any credible evidence. Mr. Moore's testimony to the contrary was not deemed credible. If the first lien shown on the Department's records has been paid, Performance should have presented evidence to that fact. Certainly bank records for the loan transaction could be subpoenaed. In point of fact, Mr. Moore knew of the first lien because he had filed the original paperwork to give notice of that interest.

7. Paragraph 7 is rejected as not supported by the weight of credible evidence.

8. Paragraph 8 is rejected as irrelevant or immaterial to the resolution of this case. The Department, upon discovery of the error, took reasonable steps and timely corrected the problem.

RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE DEPARTMENT:

1. Paragraphs 1 through 5 are accepted.

2. With the deletion of the phrase "replacing the first lien of Kennedy Space Center Federal Credit Union" paragraph 6 is accepted. That phrase is rejected as contrary to law or unsupported by the record in this case.

3. Paragraphs 7 through 10 are accepted.

COPIES FURNISHED:

Michael J. Alderman Assistant General Counsel Department of Highway Safety and Motor Vehicles

Neil Kirkman Building, Rm. A432 Tallahassee, Florida 32399-0504

Steven J. Jacovitz

43 S. Atlantic Avenue

Cocoa Beach, Florida 32931

Kennedy Space Center FCU

415 Fortenberry Road

Merritt Island, Florida 32952

Charles J. Brantley, Director Division of Motor Vehicles

Room B439, Neil Kirkman Building Tallahassee, Florida 32399-0500

Enoch Jon Whitney General Counsel Department of Highway

Safety and Motor Vehicles Neil Kirkman Building

Tallahassee, Florida 32399-0500

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 91-000484

Orders for Case No: 91-000484