STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ORRIN H. COPE PRODUCE, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 94-2554A

) MO-BO ENTERPRISES, INC., GENERAL ) ACCIDENT AND INSURANCE COMPANY OF ) AMERICA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on August 30, 1994 in Miami, Florida, before J. Stephen Menton, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Mitchell H. Stabbe, Esquire

Holland and Knight

2100 Pennsylvania Avenue, Northwest Suite 400

Washington, D.C. 20037

For Respondent: Lori A. Uhl, General Manager

Mo-Bo Enterprises, Inc.

2700 West Atlantic Boulevard, Suite 200 Pompano Beach, Florida 33069

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent, Mo-Bo Enterprises, Inc., is indebted to Petitioner, Orrin H. Cope Produce, Inc., as alleged in the complaint filed by Petitioner with the Department of Agriculture and Consumer Services dated March 14, 1994.

PRELIMINARY STATEMENT

Petitioner, Orrin H. Cope Produce, Inc. ("Cope") filed a sworn complaint (the "Complaint") dated March 14, 1994, with the Department of Agriculture and Consumer Services (the "Department") pursuant to Section 604.21, Florida Statutes (1993). The Complaint alleges that Respondent, Mo-Bo Enterprises, Inc. ("Mo-Bo") is indebted to Cope in the amount of $23,834.05 for tomatoes sold by Cope to Mo-Bo in December, 1993 and January, 1994. General Accident and Insurance Company of America (the "Surety Company"), which has posted a surety bond with the Department on behalf of Mo-Bo, was also named as a Respondent in the Complaint.

Mo-Bo timely filed an answer denying the claim, and the case was referred to the Division of Administrative Hearings which noticed and conducted a formal hearing pursuant to Section 120.57(1), Florida Statutes.

Attached to the Complaint filed by Petitioner were five invoices sent by Petitioner to Respondent in December 1993 and January 1994. At the commencement of the hearing, Petitioner advised that the parties had resolved their dispute over two of the invoices attached to the Complaint and only Invoice #26888 dated December 28, 1993 ("Invoice #1"), Invoice #27163 dated January 7, 1994 ("Invoice

#2"), and Invoice #27308 dated January 12, 1994 ("Invoice #3"), totalling

$18,819.80, remained at issue.

At the hearing, Petitioner presented the testimony of its president, Orrin Cope, and offered ten exhibits into evidence, all of which were accepted without objection.

Respondent presented the testimony of one of its salesmen, Martin Morgan, and its General Manager, Lori Uhl. Respondent offered six exhibits into evidence, all of which were accepted without objection.

The Surety Company did not make an appearance at the hearing and has not offered any evidence or presented any argument in this case.

A transcript of the hearing was filed on October 20, 1994. At the hearing, the parties were advised of their right to file proposed findings of fact and conclusions of law within ten days after the transcript was filed. As of the date of this Recommended Order, only Petitioner has filed proposed findings of fact and conclusions of law. A ruling on each of Petitioner's proposed findings of fact is included in the Appendix to this Recommended Order.

FINDINGS OF FACT

Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made:

1. At all times pertinent to this proceeding, Cope was a produce broker located in Homestead, Florida.

   
   

2. At all times pertinent to this proceeding, Mo-Bo was a purchaser of produce located in Pompano Beach, Florida. Mo-Bo is an agricultural dealer as defined by Section 604.15(1), Florida Statutes. As such, Mo-Bo is obligated to obtain a dealer's license from the Department and to post a surety bond executed by a surety corporation to insure that payment is made to producers for agricultural products purchased by the dealer.

   
   

3. At all times pertinent to this proceeding, General Accident Insurance Company of America was the surety for Mo-Bo pursuant to Section 604.20, Florida Statutes.

   
   

4. For several years prior to the growing season that began in the fall of 1993, Cope sold produce to Mo-Bo on an intermittent basis. As a result of Mo- Bo's alleged failure to pick up orders and because of its alleged unauthorized price adjustments, there were some disputes between the companies during this period.

5. At the beginning of the growing season in the Fall of 1993, a representative of Mo-Bo contacted Cope about buying cherry tomatoes. Cope agreed to sell cherry tomatoes to Mo-Bo provided the billing disputes that had occurred in the past were avoided.

   
   

6. Cope advised Mo-Bo that the parties should agree to a sales price for a shipment of produce before a truck was loaded. The next day, Cope would fax a manifest to Mo-Bo setting forth the terms of the sale, including the price. An invoice would be sent by Cope to Mo-Bo two or three days later. The reason for this delay in sending the invoice was to allow Mo-Bo an opportunity to review the manifest and put Cope on notice of any objections. The delay also allowed the parties to make price adjustments if the market had not settled.

   
   

7. Mo-Bo was supposed to immediately notify Cope if the invoice did not reflect the correct price so that the price could be verified and, if a mistake was made, a credit memo would be issued.

   
   

8. The price for cherry tomatoes varies according to their color. They are classified from lightest to darkest as follows: breakers, light pinks, pinks, or high color.

   
   

9. Cope would determine the color and the condition of the produce at the time the tomatoes were loaded on the truck.

   
   

10. If, after receiving the produce, Mo-Bo felt there were quality problems (which would include a dispute as to the color classification), Mo-Bo was required to order an USDA inspection. This requirement for an inspection was discussed between Mo-Bo's buyer and the president of Cope at the beginning of the growing season. In addition, the invoices issued by Cope include the following: "No claims accepted unless supported by USDA inspection within twenty-four hours from arrival and when confirmed by Adjustment Memo from our Sales Office. Notification by mailgram is required."

    
    

11. Between December 24, 1993, and January 10, 1994, Cope invoiced Mo-Bo for three shipments of cherry tomatoes.

    
    

12. Invoice #1 was for 576 loads of light pink cherry tomatoes at $8.75 per case and 480 cases of pink cherry tomatoes at $8.75 per case, for a total of

    $9,240. The order was placed and loaded on December 24, 1993. Mo-Bo did not notify Cope of any complaint or dispute with the invoice until approximately sixty days after shipment.

    
    

13. On or about February 2, 1994, Mo-Bo returned a marked-up copy of Invoice #1 to Cope along with a check in the amount of $8,414. The changes to the Invoice included a claimed credit of $298 for 149 damages boxes on an unrelated shipment and a reduction in the price per case from $8.75 to $8.25. Cope acknowledges that the $298 credit was authorized. However, the change in the unit price was never authorized by Cope.

    
    

14. Cope returned the check sent by Mo-Bo with the marked-up version of Invoice #1 and advised Mo-Bo that the practice of clipping, i.e., unilaterally reducing the price on invoices was not acceptable. Cope advised Mo-Bo that any price disputes had to be raised at the time the manifest was received or, at the latest, when the invoice was received. Mo-Bo's buyer indicated that he would review the situation. As of the date of the hearing in this matter, Mo-Bo had not made any further attempts to pay Invoice #1.

15. After considering all the evidence, it is concluded that Mo-Bo is indebted to Cope in the amount of $8,942 plus interest1 pursuant to Invoice #1.

    
    

16. Invoice #2 was for 372 cases of light pink cherry tomatoes at $6.90 per case and for 190 cases of pink cherry tomatoes at $6.90 per case, for a total of $3,877.80. The order was placed on January 8, 1994, and loaded on January 10, 1994.

    
    

17. Mo-Bo did not dispute the price or complain about the invoice until approximately one month after shipment. On February 7, 1994, Mo-Bo returned a marked-up version of Invoice #2 to Cope along with a check in the amount of

    $3,315.80. The change to the Invoice reflected a reduction in price from $6.90 to $5.90 per unit. The change in unit price was never authorized by Cope.

    
    

18. Cope refused to accept the price adjustment reflected on the marked-up version of Invoice #2 and returned the check to Mo-Bo. As of the date of the hearing in this case, Mo-Bo had not made any further attempts to pay the Invoice.

    
    

19. After considering all the evidence, it is concluded that Mo-Bo owes Cope $3,877.80 plus interest pursuant to Invoice #2.

    
    

20. Mo-Bo's buyer testified that he had a verbal agreement with Cope for the lower prices reflected on the marked-up versions of Invoices #1 and #2. This contention is rejected as not credible. In any event, alleged verbal agreements were not consistent with the procedures the parties had agreed upon for doing business.

    
    

21. Invoice #3 was for 960 cases of pink cherry tomatoes at $6.25 per case, for a total of $6,000. The order was placed on January 3, 1994, and loaded on January 5, 1994. The truck upon which the tomatoes were loaded was controlled by Mo-Bo. The shipment was sent to New Jersey where it arrived on January 10, 1994. This was an abnormally long shipping time to New Jersey. By the time the tomatoes reached New Jersey, the pink cherry tomatoes had ripened to high color.

    
    

22. No explanation was provided for the delay in shipping. Based upon the evidence presented, it is concluded that Mo-Bo should bear the responsibility for any over-ripening that occurred during the extended shipping time.

    
    

23. Mo-Bo claims that its customer wanted light pink tomatoes. This contention is rejected as not credible. Both the manifest and the invoice described the shipped tomatoes as "pink." Mo-Bo did not timely and properly object when it received the manifest and/or invoice.

    
    

24. On January 10, Mo-Bo's buyer contacted Cope and advised that the cherry tomatoes that had arrived in New Jersey were high color and had been rejected by the purchaser. Cope responded that, since the tomatoes were on the truck for five days, this development was not surprising. Mo-Bo's buyer stated that his customer no longer wanted the cherry tomatoes, but he would try to sell them to another customer. He asked Cope whether it wanted a federal inspection. Cope stated that no inspection would be necessary unless there was going to be a problem in receiving the price as invoiced. No federal inspection was obtained.

25. The cherry tomatoes included in the shipment reflected in Invoice #3 came from three different days of shipments from the same grower. Cope did not receive any complaints from other buyers who received portions of those shipments.

    
    

26. Mo-Bo contends that Cope agreed that the transaction would be converted to a consignment rather than a sale. This contention is rejected.

    Mo-Bo's buyer told Cope he would move the tomatoes and get a good price for them, but Mo-Bo's unilateral attempt to convert the transaction to a consignment was not accepted by Cope and was never confirmed in writing.

    
    

27. Mo-Bo delivered 104 cases to its original customer and the remaining 856 cases were sent by Mo-Bo to a second customer at a substantially reduced price. After freight expenses, Mo-Bo claims that it lost money on the transaction.

    
    

28. On or about February 7, 1994, Mo-Bo sent a marked-up version of Invoice #3 to Cope showing a zero balance due. As of the date of the hearing, Mo-Bo, has not made any further attempts to pay the invoice.

    
    

29. After considering all the evidence, it is concluded that Mo-Bo owes Cope $6,000 plus interest pursuant to Invoice #3.

    
    

30. At the conclusion of the hearing, Mo-Bo indicated that it was willing to pay Cope the amounts that were not in dispute without prejudice to Cope's right to collect any remaining amounts that are determined to be owed at the conclusion of this proceeding. There is, however, no proof of record that any such payment has been made.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

32. The complaint in this case arises under the provisions of Section 604.21, Florida Statutes (1993). Subsection (1) of that statute provides as follows:

    
    

    Any person claiming himself to be damaged by any breach of the conditions of a bond or certificate of deposit assignment or agreement given by a licensed dealer in agricultural products as herein before provided may enter complaint thereof against the dealer and against the surety, if any, to the department, which complaint shall be a written statement of the facts constituting the complaint. Such complaint shall be filed within six months from the date of sale in instances involving direct sales or from the date on which the agricultural product was received by the dealer in agricultural

    products, as agent, to be sold for the producer. . . .

33. Essentially, Section 604.21, Florida Statutes, establishes a procedure whereby a producer of agricultural products can assert a claim for alleged damages incurred as the result of a breach in an agreement by a licensed dealer in agricultural products. The statute provides that the dealer and its surety are parties to the action.

    
    

34. An agricultural dealer is defined by Subsection 604.15(1), Florida Statutes (1993), as:

    
    

    . . . any person . . . engaged within this state in the business of purchasing, receiving, or soliciting agricultural products from the producer or his agent or representative for resale or processing for sale; acting as an agent for such producer in the sale of agricultural products for the account of the producer on a net return basis; or acting as a negotiating broker between the

    producer or his agent or representative and the buyer.

    
    

35. Mo-Bo is a "dealer in agricultural products," as defined in Section 604.15(1), Florida Statutes.

    
    

36. Cope is a broker of agricultural products who is authorized to contract on behalf of the producers. As the complainant in this action filed pursuant to Section 604.21, Florida Statutes, Cope has the burden of proof. See, Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977); Department of Transportation v. J. W. C. Co., Inc., 396 So.2d 778, 786-789 (Fla. 1st DCA 1981).

    
    

37. The evidence in this case established that, with the exception of a

    $298 credit arising from an unrelated transaction, Mo-Bo is indebted to Cope for the full amount of Invoices #1 and #2. The contention that there was a verbal agreement to reduce the prices for the two transactions was not credible.

    Furthermore, in order to be enforceable, a verbal agreement to change the price should have been confirmed in writing. See, Section 672.207, Florida Statutes.

    
    

38. Similarly, the evidence established that Mo-Bo is indebted to Cope for the full amount of Invoice #3. Mo-Bo's contention that this transaction was converted to a consignment was not credible. Even if such a change had been agreed to, Mo-Bo had an obligation to issue a written confirmation of the alleged oral agreement. See, Section 672.207, Florida Statutes. Furthermore, Mo-Bo was obligated to obtain an USDA inspection to confirm that the shipment did not conform with the condition listed on the manifest and/or invoice. Finally, the evidence indicates that Mo-Bo was responsible for any losses incurred as a result of over-ripening that occurred during the five days it took for the produce to reach New Jersey.

    
    

39. While the statute does not specifically address whether interest can be awarded, the invoices clearly provide that interest begins to accrue at one and half per cent per month if the invoice is not paid after thirty days. This contractual provision should be enforced in determining the total amount owed by Mo-Bo to Cope.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter

a Final Order directing Mo-Bo Enterprises, Inc., to pay Orrin H. Cope Produce, Inc., a total of $18,819.80 for the shipments of cherry tomatoes reflected by Invoices #1, #2 and #3, along with interest in accordance with the Invoices. In the event Mo-Bo does not comply with this directive, the surety for the dealer should pay the amount due to the Department for the benefit of the producer in accordance with Section 604.21(8), Florida Statutes.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 30th day of November 1994.

J. STEPHEN MENTON 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 30th day of November 1994.

ENDNOTE

1/ The Invoices provide that payment is due within twenty days from the date of purchase and that interest at the rate of 1.5 percent per month (18 percent) annually will accrue on all invoices which are not paid within thirty days.

APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 94-2554A

Only Petitioner submitted a proposed recommended order. The following rulings are made with respect to the proposed findings of fact submitted by Petitioner.

Petitioner's proposed findings of fact

1. Adopted in substance in Finding of Fact 1.

2. Adopted in substance in Finding of Fact 2.

3. Adopted in substance in Finding of Fact 3.

4. Adopted in substance in Finding of Fact 4.

5. Adopted in substance in Finding of Fact 6.

6. Adopted in substance in Finding of Fact 10

7. Adopted in substance in Findings of Fact 6 and 10.

8. Adopted in substance in Finding of Fact 8.

9. Adopted in substance in Finding of Fact 11.

10. Adopted in substance in Findings of Fact 12, 13, 16, 17, 21, 26 and 28.

11. Adopted in substance in Finding of Fact 12.

12. Adopted in substance in Finding of Fact 12.

13. Adopted in substance in Finding of Fact 9.

14. Adopted in substance in Findings of Fact 12 and 13.

15. Adopted in substance in Finding of Fact 13.

16. Adopted in substance in Finding of Fact 13.

17. Adopted in substance in Finding of Fact 13.

18. Adopted in substance in Finding of Fact 14.

19. Adopted in substance in Finding of Fact 14.

20. Adopted in substance in Finding of Fact 16.

21. Adopted in substance in Finding of Fact 16.

22. Adopted in substance in Finding of Fact 9.

23. Adopted in substance in Finding of Fact 17.

24. Adopted in substance in Finding of Fact 17.

25. Adopted in substance in Finding of Fact 17.

26. Adopted in substance in Finding of Fact 18.

27. Adopted in substance in Finding of Fact 18.

28. Rejected as unnecessary.

29. Rejected as unnecessary.

30. Rejected as a summary of testimony rather than a finding of fact. This subject matter is addressed in Finding of Fact 20.

1. Rejected as unnecessary.

2. Rejected as unnecessary.

3. Adopted in substance in Finding of Fact 25.

4. Adopted in substance in Finding of Fact 21.

5. Rejected as unnecessary.

6. Subordinate to Finding of Fact 23.

7. Adopted in substance in Finding of Fact 28.

COPIES FURNISHED:

Mitchell H. Stabbe, Esquire

2100 Pennsylvania Avenue, N.W. Suite 400

Washington, D.C. 20037

Lori Uhl, General Manager Mo-Bo Enterprises, Inc.

Post Office Box 1899

Pompano Beach, Florida 33061

General Accident Insurance Company of America

436 Walnut Street Philadelphia, PA 19105-1109

Brenda Hyatt, Chief

Bureau of Licensing & Bond Department of Agriculture

508 Mayo Building

Tallahassee, Florida 32399-0800

Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10

Tallahassee, Florida 32399-0810

Richard Tritschler General Counsel Department of Agriculture

and Consumer Services The Capitol, PL-10

Tallahassee, Florida 32399-0810

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: 94-002554

Orders for Case No: 94-002554