STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CONLEY SUBARU, INC. and )

SUBARU OF AMERICA, INC. )

)

Petitioners, )

)

vs. ) CASE NO. 92-6942

)

PERFORMANCE MOTORS, INC., )

d/b/a Lindell Subaru and )

DEPARTMENT OF HIGHWAY )

SAFETY AND MOTOR VEHICLES, )

)

Respondents. )

)

RECOMMENDED ORDER

Upon due notice, the Division of Administrative Hearings by its duly assigned Hearing Officer, William R. Cave, held a formal hearing in the above- captioned case on May 4, 1993 in Bradenton, Florida.

APPEARANCES

For Petitioner, John M. Brennan, Esquire Subaru of America, Inc.: Post Office Box 285

Orlando, Florida 32802-0285

For Petitioner, Damian M. Ozark, Esquire Conley Subaru, Inc.: 2401 Manatee Avenue West

Bradenton, Florida 34205

For Respondent, J. Michael Lindell, Esquire Performance Motors, Inc. 620 Blackstone Building d/b/a Lindell Subaru: 233 East Bay Street

Jacksonville, Florida 32202

For Respondent, No appearance. Department of Highway

Safety And Motor Vehicles:

STATEMENT OF THE ISSUE

Whether Subaru of America, Inc. (Subaru) is entitled to an exemption under Section 320.642(5)(a), Florida Statutes (1991), from the protest filed by Performance Motors, Inc., d/b/a Lindell Subaru (Lindell) to Subaru's appointment of Conley Subaru, Inc. (Conley) as the successor motor vehicle dealer to Tom Stimus Chrysler Plymouth, Inc., d/b/a Tom Stimus Subaru (Stimus) in Bradenton, Manatee County, Florida.

PRELIMINARY STATEMENT

This proceeding arises out of a protest filed by Lindell with the Department of Highway Safety and Motor Vehicles (Department), pursuant to Section 320.642, Florida Statutes (1991), to Subaru's appointment of Conley as the successor motor vehicle dealer to Stimus in Bradenton, Manatee County, Florida. In accordance with a joint stipulation of the parties an order was entered wherein the issues of this case were bifurcated. The order provided for an evidentiary hearing to be held first on the issue of Subaru's entitlement to an exemption from protest under Section 320.642 (5)(a), Florida Statutes (1991). The evidentiary hearing on the issue of Subaru's entitlement to an exemption from protest under Section 320.542(5(a), Florida Statutes, was held in Bradenton, Florida on May 4, 1993.

At the hearing, Subaru presented the testimony of Douglas Knapp and Jeffery

A. Conley. No other witnesses testified. The parties' Joint Composite Exhibit

1 (Stipulated Statement Concerning Subaru's Claim Of Statutory Exemption From Protest, with attachments identified as Exhibit A through Exhibit L) was received as evidence in this case.

A transcript of this proceeding was filed with the Division of Administrative Hearings on May 13, 1992. Subaru timely filed a proposed findings of fact and conclusions of law. Lindell timely filed a memorandum of law which contained a statement of facts in unnumbered paragraphs. The other parties to this proceeding elected not to file any proposed findings of fact and conclusions of law. On August 24, 1993, before a Recommended Order was entered, Lindell's Notice of Supplemental Authority Of Law And Motion For Reopening of Evidentiary Hearing was filed with the Division of Administrative Hearings.

Subaru filed a response to Lindell's notice and motion and a telephonic hearing was held on Lindell's notice and motion. During the telephonic hearing, the parties stipulated to the introduction of additional evidence and filed Joint Exhibit 2 (Supplement To Stipulated Statement Concerning Subaru's Claim Of Statutory Exemption From Protest, with attachments identified as Exhibits A through Exhibit C), which was received as evidence in this case. A ruling on each proposed finding of fact submitted by the parties has been made as reflected in an Appendix to the Recommended Order.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made:

1. Lindell is a Subaru dealer located at 3480 Bee Ridge Road, Sarasota, Sarasota County, Florida.

2 Conley has been approved by Subura to be a Subaru dealer if Conley's application is approved by the Department. Conley will be located at 800 Cortes Road West, Bradenton, Manatee County, Florida.

1. Stimus was a previous Subaru dealer located 2503 First Street West, Bradenton, Manatee County, Florida.

   
   

2. Stimus's former location and Conley's present location are within two miles of each other.

3. Stimus was a Subaru dealer with an area responsibility consisting of Manatee County, Florida, pursuant to a dealership agreement with Subaru dated June 8, 1990.

   
   

4. Before the termination of its Subaru dealership agreement, Stimus filed a petition under Chapter 11 of the United States Bankruptcy Code in the case of In re Tom Stimus Chrysler Plymouth, Inc., in the United States Bankruptcy Court for the Middle District of Florida, Tampa Division, Case No. 91-7864-8P1. Upon Stimus filing its petition with, and the petition being accepted by, the United States Bankruptcy Court (bankruptcy court), all of Stimus' assets came under the jurisdiction of the bankruptcy court.

   
   

5. On June 14, 1991, the day that Stimus filed its bankruptcy petition, stay relief was ordered.

   
   

6. Stimus' bankruptcy petition operated as a stay of any action by Subaru to terminate Stimus' dealership agreement, until such time as the bankruptcy court granted relief from the stay to Subaru.

   
   

7. On August 19, 1991, the bankruptcy court entered an order directing Stimus not move, sell, transfer or otherwise dispose of any of its assets and to cease all business operations effective immediately. Stimus ceased operations of its Subaru dealership more than 12 months prior to August 28, 1992, the date the successor dealer's (Conley) application for a license was submitted to the Department. Subaru was aware of the bankruptcy order and that Stimus had ceased doing business.

   
   

8. On August 28, 1991, the Department cancelled Stimus' license as a dealer in franchised motor vehicles.

   
   

9. On October 30, 1991, Stimus filed a motion to assume and assign executory contract (Subaru of America). By this motion, Stimus sought bankruptcy court permission to assign its Subaru franchise to Joseph Iacuone.

   
   

10. Subaru filed its response to Stimus' motion on November 12, 1991, and its supplemental response on December 2, 1991.

    
    

11. On January 2, 1992, bankruptcy court entered an order granting Stimus' motion to assume and assign, allowing Subaru 45 days to approve or disapprove of the proposed franchise.

    
    

12. On February 12, 1992, Subaru filed its notice of the disapproval of the proposed franchise transfer to Joseph Iacuone.

    
    

13. Thereafter, on March 12, 1992, Subaru filed a motion for relief from the automatic stay to terminate Stimus' dealer sales and service agreement.

    
    

14. On May 13, 1992, the bankruptcy court entered an Order Modifying Automatic Stay to Permit Subaru of America - Southeast Region to Terminate its Dealership Agreement with Debtor (Stimus).

    
    

15. Pursuant to the bankruptcy court order, Subaru, by letter dated May 20, 1992, terminated Stimus' dealership agreement effective June 4, 1992.

    
    

16. By letter to the Department dated August 27, 1992, and received by the Department on September 1, 1992, Subaru approved of the appointment of Conley as the successor Subaru dealer to Stimus in Bradenton, Manatee County, Florida. By

    this letter, Subaru requested that the appointment of Conley be exempt from protest pursuant to Section 320.642(5)(a), Florida Statutes (1991).

    
    

17. On August 28, 1992, Conley submitted its application for license as a motor vehicle dealer to the Department at its Region VIII office located at 323 10th Avenue West, Palmetto, Florida 34221. Region VIII includes Manatee County, Florida.

    
    

18. The Department refused to accept Conley's application package on August 28, 1992, and the application was not filed on that date, for the following reasons: (a) the package did not include an original dealer bond as required by the Department, but only a copy thereof; (b) the package did not include a filed copy of the applicant's articles of incorporation as required by the Department, but only an unfiled copy thereof; (c) the package did not include evidence of completion of the dealer training program, as required by the Department and; (d) the package did not include a facility inspection report, as required by the Department. The Department subsequently accepted Conley's application package on December 8, 1992.

    
    

19. By letter dated October 19, 1992, the Department issued a notice to Lindell, among others, of proposed agency action, i.e., the issuance of a motor vehicle dealer license to Conley to operate as a Subaru dealer in Bradenton, Manatee County, Florida.

    
    

20. Lindell filed a notice of protest with the Department on or about November 3, 1992.

    
    

21. The Department has refused to issue a motor vehicle dealer license to Conley based upon the protest by Lindell.

    
    

22. Lindell is the only Subaru dealer located in Sarasota County, Florida. Stimus was the only Subaru dealer located in Manatee County, Florida.

Presently, there is no Subaru dealer located in Manatee County, Florida. Should a license be issued to Conley, it would be the only Subaru dealer located in Manatee County, Florida.

25 Conley's Subaru dealership will be located on the premises (10 acres) where Conley's Buick dealership is presently located. Conley will service the Subaru automobiles in it existing service area and display new Subaru automobiles in its existing showroom. The balance of the Subaru automobiles not in the showroom will be located in a specific area on the premises. The specific area has yet to be designated by Conley.

1. Conley is ready, willing and able to open as the successor Subaru dealer to Stimus in Bradenton, Manatee County, Florida, except for the issuance of its motor vehicle dealer license.

   
   

   CONCLUSIONS OF LAW

   
   

2. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding pursuant to Section 120.57(1), Florida Statutes.

   
   

3. Section 320.642(5)(a), Florida Statutes (1991), provides as follows:

   
   

   1. The opening or reopening of the same or a successor motor vehicle dealer within 12

      months shall not be considered an additional motor vehicle dealer subject to protest within the meaning of this section, if:

      1. The opening or reopening is within the same or adjacent county, is within 2 miles of the former motor vehicle dealer location.

         
         

4. Pursuant to the authority delegated to the Department by the legislature, the Department adopted Rule 15C-7.004(4)(a), Florida Administrative Code, which provides as follows:

   
   

   1. Applications for Reopening or Successor Dealership, or for Relocation of Existing Dealership.

      1. If the license of an existing franchised motor vehicle dealer is revoked for any reason, or surrendered, an application for a license to permit the reopening of the same dealer or a successor dealer within twelve months of the license revocation or surrender shall not be considered the establishment of an additional dealership if one of the conditions set forth in Section 320.642(5) is met by the proposed dealer. (Emphasis supplied)

   
   

5. Since the location of the successor dealer (Conley) is in the same county and is within two miles of the former dealer (Stimus), the condition of Section 320.642(5)(a), Florida Statutes (1991), has been met by Subaru. However, Lindell contends that the application for a license to permit the successor dealer (Conley) to reopen the dealership was not received by the Department before the end of the 12-month time period and therefore, Subaru is not exempt from protest by Lindell under Section 320.642(5), Florida statutes.

   
   

6. On June 14, 1991, Stimus filed its bankruptcy petition placing this matter, which logically includes Stimus' license, under the jurisdiction of the bankruptcy court. A stay of relief was ordered by the bankruptcy court on June 14, 1991. On August 19, 1991, the bankruptcy court ordered Stimus to cease doing business immediately. On August 28, 1991, the Department cancelled Stimus' license. The bankruptcy court having previously exercised its jurisdiction over this matter, including Stimus' license, it is would appear that the Department is precluded from taking any action in regard to Stimus' license unless authorized by the bankruptcy court. There is nothing in the record to indicate that the bankruptcy court had authorized the Department's action against Stimus' license. Therefore, it is questionable whether the Department had the authority to revoke or cancel Stimus' license during the time the matter was under the jurisdiction of the bankruptcy court. See: In Re Tom Stimus Chrysler-Plymouth, Inc., 134 B. R. 676 (Bankr. - M.D. Fla. 1991).

   
   

7. Assuming arguendo that the Department had the authority to cancel Stimus' license, the literal construction and application of Rule 15C- 7.004(4)(a), Florida Administrative Code, proposed by Lindell, would require Subaru to select a successor dealer and further require that an application for license be made within 12 months of August 28, 1991, the date the Department cancelled Stimus' license, in order for Subaru to be entitled to the exemption from protest provided for in Section 320.642(5)(a), Florida Statutes. Such a construction and application of the rule does not take into account the

   impediment of the bankruptcy proceeding wherein Subaru is prevented from asserting its right to terminate the dealership agreement with Stimus and proceed to timely select and negotiate with a successor dealer until some nine months after the 12-month time limit had begun to run. The result of such a construction and application of the rule are rather harsh considering that Subaru, through no fault of its own, was prevented by the bankruptcy proceeding from timely moving forward to meet the time limit set out in the rule.

   
   

8. This is clearly a case where the doctrine of equitable tolling is applicable. As set forth by the Supreme Court in Machules v. Department of Administration, 523 So.2d 1133 (Fla. 1988), the doctrine of equitable tolling has generally been applied when a party has been misled or lulled into inaction, has in some extraordinary way been prevented from asserting his right, or has timely asserted his right mistakenly in the wrong forum and, serves to ameliorate harsh results that sometimes flow from a strict, literalistic construction and application of administrative time limits contained in statutes and rules.

   
   

9. In applying the doctrine of equitable tolling in this case, the 12- month time period would begin to run on June 4, 1992, the effective date of the termination of Stimus' dealership agreement by Subaru, the first date on which Subaru could begin the process of selecting and negotiating with a successor dealer. The Department having accepted Conley's application on December 8, 1992, the 12-month time period set out in Section 320.642(5), Florida Statutes, and more clearly defined in Rule 15C-7.004 (4)(a), Florida Administrative Code, was met by Subaru.

   
   

10. The result would be the same even assuming arguendo that the Department lack jurisdiction in this matter and therefore, was without authority to cancel Stimus' license. The logical time to begin the 12-month period would again be June 4, 1992, the date Subaru terminated it dealership agreement with Stimus and the first date Subaru could begin to select and negotiate with a successor dealer.

    
    

11. Subaru, as the party asserting the affirmative of an issue before an administrative tribunal, has the burden to prove by a preponderance of the evidence that it is entitled to the exemption from protest provided for in Section 320.642(5)(a), Florida Statutes. Subaru has sustained its burden in this regard.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Respondent, Department of Highway Safety and Motor Vehicles, enter a Final Order granting Petitioners exemption from protest in accordance with Section 320.642(5)(a), Florida Statutes, and dismissing the protest filed by Lindell.

DONE AND ENTERED this 3rd day of November, 1993, in Tallahassee, Florida.

WILLIAM R. CAVE

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 3rd day of November, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-6942

The following constitutes my specific rulings, pursuant to Section 120.59(2), Florida Statutes, on all of the proposed findings of fact submitted by the parties in this case.

Petitioner Subaru's Proposed Findings of Fact:

1. Proposed findings of fact 1 through 19 have been adopted in substance as modified in Findings of Fact 1 through 26.

Respondent Lindell's Proposed Findings of Fact:

Respondent Lindell presented its proposed findings of fact in unnumbered paragraphs contained in its memorandum of law under the title "Statement of Facts". The paragraphs have been numbered 1 through 9 for purposes of this Appendix.

1. Proposed finding of fact 1 is covered in the Preliminary Statement.

2. Proposed findings of fact 2 through 9 have been adopted in substance as modified in Findings of Fact 1 through 26.

COPIES FURNISHED:

Charles J. Brantley, Director Division of Motor Vehicles

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

John M. Brennan, Esquire Post Office Box 285

Orlando, Florida 32802-0285

Damian M. Ozark, Esquire 2401 Manatee Avenue

Bradenton, Florida 34205

J. Michael Lindell, Esquire 620 Blackstone Building

233 East Bay Street Jacksonville, Florida 32202

Enoch Jon Whitney, Esquire General Counsel

Neil Kirkman Building Tallahasse, Florida 32399-0500

Mike Alderman, Esquire

Office of thew General Counsel 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: 92-006942

Orders for Case No: 92-006942