STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF BANKING AND )
FINANCE, DIVISION OF )
FINANCE, )
)
Petitioner, )
)
vs. ) CASE NO. 94-4246
) AUTO PLAZA, INC. and DANNY'S ) AUTO SALES, INC., )
)
Respondent. )
)
RECOMMENDED ORDER
Final hearing in the above-styled case was held in Tampa, Florida, on December 8 and 9, 1994, before James E. Bradwell, Hearing Officer of the Division of Administrative Hearings. The parties were advised of the reassignment of the case to Hearing Officer Robert E. Meale by Notice of Unavailability of Hearing Officer and Order of Assignment of New Hearing Officer issued May 16, 1995.
APPEARANCES
The parties were represented at the hearing as follows: For Petitioner: Susan Steinberg Sandler
Assistant General Counsel
Office of Comptroller 1313 Tampa St., Suite 615
Tampa, Florida 33602-3394
For Respondent: James H. Harris
Mitchell & Associates, P.A. Post Office Box 1655
Tampa, Florida 33601-1655 STATEMENT OF THE ISSUE
The issue in this case is whether Respondents are guilty of violations of provisions of Chapter 520, Florida Statutes, and, if so, what penalty should be imposed.
PRELIMINARY STATEMENT
By Administrative Complaint served May 27, 1994, Petitioner alleged that Respondent Danny's failed to credit retail buyer Demetria M. Kelley with a payment that it received. Petitioner alleged that Respondent Auto Plaza failed to credit retail buyer David M. Reel with a payment that it received and failed
to refund deposits to prospective retail buyers Antonio DeOliveira, Jung M. Choi, and Jeffrey Yawn and his fianc,.
The Administrative Complaint alleges that in August and September 1993 Respondent Auto Plaza failed to maintain and keep available for examination by Petitioner all documents required by law, that in September 1993 Auto Plaza refused to allow Petitioner to examine its books and records during an investigation, and that on September 24, 1993, Respondent Auto Plaza refused to comply with a subpoena served by Petitioner.
The Administrative Complaint alleges that Respondents acted as one entity.
Based on these factual allegations, the Administrative Complaint alleges that Respondents are guilty of fraud, misrepresentation, deceit, or gross negligence in any retail installment transaction, in violation of Section 520.995(1)(b), Florida Statutes; fraudulent misrepresentation, circumvention, or concealment of any matter required to be disclosed to a retail buyer under Chapter 520, in violation of Section 520.995(1)(c); willful imposition of illegal or excessive charges in any retail installment transaction, in violation of Section 520.995(1)(d); failure to maintain, preserve, and keep available for examination all books, accounts, and other documents required by Section 520.997, in violation of Section 520.995(1)(f); refusal to permit inspection of books and records in an investigation or examination by Petitioner or refusal to comply with a subpoena issued by Petitioner, in violation of Section 520.995(1)(g); criminal conduct in the course of a person's business as a sales finance company, in violation of Section 520.995(1)(h); refusal to allow a buyer to exercise his right to rescind prior to delivery of the retail installment contract and vehicle, in violation of Section 520.07(1)(c); and demonstration of a lack of honesty, in violation of Section 520.995(3)(d).
Respondents denied the material allegations and requested a formal hearing. In the answer, Respondent requested the severance of the charges against the two Respondents so that each Respondent would receive a separate hearing or recommended order. The request is denied.
Petitioner presented no evidence concerning the Choi transaction and did not address the Choi transaction in its proposed recommended order. The allegations regarding the Choi transaction are dismissed.
At the hearing, Petitioner called ten witnesses and offered into evidence
36 exhibits. Respondents called four witnesses and offered into evidence 21 exhibits, including the transcript filed after the hearing of the deposition of Charlie B. Footman. All exhibits were admitted in the absence of objection (Tr.
12.), although Respondents' Choi exhibits are now excluded as irrelevant.
The transcript was filed January 10, 1995. The evidentiary record closed with the filing on January 23, 1995, of the Footman deposition.
In its response filed May 25, 1995, to the Notice of Unavailability of Hearing Officer and Order of Assignment of New Hearing Officer, Petitioner asked for leave to file its proposed recommended order by July 21, 1995. By Order entered June 12, 1995, the parties were given until July 21, 1995, to file proposed recommended orders. Rulings on the parties' proposed recommended orders are in the appendix.
FINDINGS OF FACT
Each Respondent is a Florida corporation. Nader Dayani is the president of both corporations. He owns all of the stock of Respondent Danny's Auto Sales, Inc. (Danny's), and he and his brother own all of the stock of Respondent Auto Plaza, Inc. (Auto Plaza). Mr. Dayani's brother takes no part in the management of the company.
Each Respondent is registered with Petitioner as a motor vehicle retail installment seller. Danny's has held license number MV 593025286 since September 25, 1990. Auto Plaza holds license number MV 593155057 since March 8, 1993.
Each corporation owns and operates used-car lots and sales offices at separate locations in Tampa. Both companies specialize in "buy here/pay here" transactions where the purchasers buy both a car and financing from the seller, which immediately sells the retail installment contract to a finance company. In these transactions, the buyer's decision is often influenced less by the purchase price and more by the appeal of the car and the amount of credit available.
The first two transactions involve a common issue-- whether Danny's and Auto Plaza properly credited buyers for side notes. Side notes are short-term, interest-free notes that the seller takes from a buyer when the buyer has borrowed as much as the lender will lend on the transaction. The seller holds the side note, which makes up the difference between the gross purchase price and the loan proceeds paid to the seller.
In February 1993, Crawford Johnson and Demetria Kelley visited Danny's to look at cars. They purchased a used Mitsubishi Galant. Within a day or two of taking delivery, the car broke down. They contacted Mr. Dayani, who refused to give them a refund but agreed to exchange the car for another car.
Mr. Johnson and Ms. Kelley returned the Mitsubishi to the car lot. Two or three weeks later, they found a BMW at Danny's that they liked. Mr. Dayani told them that the BMW cost more than the Mitsubishi, but that the finance company would not lend them more than $4000 due to their credit.
Mr. Johnson and Ms. Kelley had already paid Danny's $1100 by payments of $900 on February 15 and $200 on February 18. The receipts for these payments showed that they were applied to the Mitsubishi.
On March 5, 1993, Mr. Johnson and Ms. Kelley decided to purchase the BMW. Mr. Dayani informed them that they would have to pay another $1900 down. They paid $1000 on March 5 and received a receipt for the payment. The receipt states that the remaining $900 will be secured by jewelry, which Mr. Johnson and Ms. Kelley agreed to pledge as collateral. Mr. Dayani took the jewelry, and Danny's sales manager, Tony Vianni, gave Mr. Johnson and Ms. Kelley a signed receipt for the collateral.
On March 5, 1993, Mr. Johnson and Ms. Kelley signed a retail installment contract for the BMW. The contract shows that the cash price for the car is $6800, less cash downpayment of $2100, for an unpaid balance of
$4700. With lender closing costs--mostly credit life, health, and disability insurance--the amount financed is $5106.
On the same date, Mr. Johnson and Ms. Kelley signed two other documents. One was a purchase order, which discloses a purchase price of
$6973.11, less jewelry of $900, for a "cash trading difference" of $6073.11. From the "cash selling price" of $6073.11, the purchase order deducts $2100 as the "total down" for a balance of $3973.11. After seller costs of tax, tag, title, and credit work, the total cash balance due comes to $4700, which is the same number shown on the retail installment contract.
The other document is a side note for $900, which bears no interest and is payable in full on April 1, 1993. Mr. Johnson and Ms. Kelley paid $170 on March 19, $166 on March 12, $166 on March 26, $166 on April 17, and $240 on June 3, for a total of $908. Despite paying two payments late, they received all the jewelry back and the side note was marked "paid in full."
Mr. Johnson and Ms. Kelley made the payments at the Auto Plaza office, which is also where they went to regain possession of the jewelry. In all other respects, the transaction took place at Danny's facility with Danny's employees.
There is no fraud or misrepresentation in the Johnson/Kelley transaction. Both purchasers testified that Mr. Dayani told them that the lender would lend them only $4000, they had paid $1100 down on the Mitsubishi, they paid another $1000 down on the BMW, and they collateralized a side note of
$900 with jewelry. This totals $7000, which approximates the $6973.11 purchase price disclosed on the purchase order, which clearly was signed by Mr. Johnson. They knew they were paying about $7000 for the BMW.
It is irrelevant that the retail installment contract does not reflect the additional $900 in the down payment. The important thing is that the $4700 unpaid balance of the purchase price on the retail installment contract agrees with the $4700 total cash balance due on the purchase order.
On June 8, 1993, David Reel visited the Auto Plaza lot and found a Chevrolet Blazer that he liked. Mr. Reel and a salesman named Jessie soon agreed on a purchase price of about $8000. The salesman offered to check if Mr. Reel qualified for financing, but said he needed $100 down in order to show Mr. Reel's good faith. Mr. Reel paid $100 and received a form receipt, which identifies the vehicle by stock number and states: "Deposit is non-refundable if financed or cash purchased. $50.00 application fee." Mr. Reel and the salesman signed the receipt.
The next day, the salesman called Mr. Reel and said he needed another
$2000 because the finance company required another $2000 for the deal to be financed. Mr. Reel brought the salesman $2000 cash and received a receipt as before.
Later on the same day, someone from Auto Plaza called Mr. Reel and told him that he could come in and sign the papers. But when he got there that evening, he found that an expensive stereo radio had been removed from the vehicle, and no one at Auto Plaza had any idea where the radio was. Mr. Reel declined to sign the papers and said he would return the next day when he could speak to someone in charge.
The next morning someone named Norman called Mr. Reel and told him that the salesman and a finance person, with whom Mr. Reel had spoken the previous evening, had been fired, and the business manager had sold the vehicle. Norman asked Mr. Reel if he would come in and check out a Ford Explorer.
After driving the Explorer on June 14, Mr. Reel agreed to transfer the
$2100 deposit to the Explorer. The asking price in the rear window of the Explorer was about $14,750, and Mr. Reel agreed to pay the asking price.
The next day, Norman called Mr. Reel and said that the finance company would finance the purchase of the more expensive Explorer, but it wanted another
$1500 down. Mr. Reel replied that he had only $500, but could get another $1000 in a couple of weeks. Norman agreed, and, on June 15, Mr. Reel gave Auto Plaza another $500, for which he received a receipt. They agreed that Mr. Reel would pay the additional $1000 by July 6.
Later, on the evening of June 15, Mr. Reel returned to Auto Plaza to sign the papers and take delivery of the Explorer. He and his wife signed the papers, including a retail installment contract reflecting a cash price of
$15,100, down payment of $2600, unpaid balance of $12,500, and amount financed of $12,544.10.
At the closing, the finance representative produced a blank note, explaining that the secretaries had gone home before typing information in the blanks. At the request of the finance representative, Mr. Reel signed the blank note and gave it to the finance representative. Later, the note blanks were properly filled in to reflect a principal sum due of $1000, no interest, and a July 6 repayment date.
The next day, Mr. Reel realized that he had not gotten a copy of the blank note or the odometer statement. When he was unable to obtain a copy of either document after trying for several days, Mr. Reel complained to the Division of Motor Vehicles.
On July 5, 1993, Mr. Reel delivered to Auto Plaza a check in the amount of $1000 in satisfaction of the side note. The same finance representative was at the lot, but he was unable to provide Mr. Reel with the original $1000 side note.
Mr. Reel returned to Auto Plaza and encountered a man described to him as a brother of the owner. Whoever he was, the man, obviously identifying with the interests of Auto Plaza, was angry at Mr. Reel for calling the Division of Motor Vehicles. If the man was in fact Mr. Dayani's brother, he departed from his role as a silent partner long enough to denounce Mr. Reel as a "worthless piece of shit." The evidence revealed other, less graphic instances of persons who were clearly employees or agents of Auto Plaza practicing this "scorch-the- earth" approach to customer relations.
Through the date of the final hearing, Mr. Reel had never received the original note. He eventually filed a complaint in small claims court, won a
$1000 default judgment, and garnisheed a bank account of Auto Plaza in order to satisfy the judgment.
Despite the unprofessionalism and haphazard business practices of Auto Plaza representatives and the uncontested judgment, the purchase order and retail installment contract do not support Mr. Reel's assertion that he has been defrauded of $1000 in the calculation of the down payment or amount financed. It is more likely than not that the successful execution on the default judgment resulted in a $1000 windfall for Mr. Reel.
Mr. Reel's claim of fraud requires establishing the purchase price of the Explorer. Unlike the situation in the Crawford/Kelley transaction, where
the purchase price was reasonably ascertainable, the purchase price in the Reel transaction is unclear.
Mr. Reel could not state the purchase price of the vehicle. At one point (Tr. p. 223), he responded at the final hearing to a question whether he negotiated something off the asking price:
It was something less than the $14,750. I think is what it was that was on there, but they weren't bargaining too much because they said that was a primo car and they wouldn't even bargain with the metal broken arm rest. He said that I would have to get that fixed myself. It would cost a couple of hundred dollars. So it wasn't significantly lower than what was on the rear windshield.
On direct examination by Petitioner's counsel, Mr. Reel discussed Petitioner Exhibit 8, which is the purchase order. After testifying that he did not recall seeing the document but might have seen it, Petitioner's counsel asks him about the $13,939.15 cash selling price. Mr. Reel testified:
Yes. It was--as I had mentioned, it was around
$14,700 and I've forgotten what it was that made the difference to be lowered down to $13,939, but that is--that is all in the ballpark of what my NADA book said and what I had remembered.
This was not part of what was given to me in my envelope. I have not seen this. I must have seen it the night I signed it, but I notice my wife didn't sign it so I don't know why that is.
The purchase order and retail installment contract balance in the Reel transaction, just as they did in the Crawford/Kelley transaction. The unpaid balance of the cash price in both documents is $12,500. The retail installment contract reaches that number by reducing the cash price of $15,100 by total downpayments of $2600. The purchase order reaches that number by reducing the cash selling price of $13,939.15 by downpayments of $2600. The result is then increased by seller closing costs to $12,500.
The key is how Auto Plaza came up with $13,939.15 in the purchase order--a reduction of $820.85 in the purchase price that Mr. Reel could not explain. There is no more likely explanation than that the reduction in price reflects a credit for the $1000 note and a debit of $179.15 (representing a combination of a purchase price over $14,750 plus other expenses). The only difference in the Crawford/Kelley and Reel transactions is that the Crawford/Kelley purchase order explicitly applied the side note to the gross purchase price and the Reel purchase order showed a "gross" purchase price after reduction for the side note.
After receiving a complaint from Mr. Reel, a representative of Petitioner visited Auto Plaza and met David Gonzalez, who was the general manager of Auto Plaza. Mr. Gonzalez produced a receipt showing receipt of $2000 on June 10, but showing $1000 cash and $1000 check. Mr. Reel's receipt was the same, but it lacked the breakdown between the cash and check.
Clearly, someone at Auto Plaza added the itemization following the execution of the receipt by Mr. Reel. Post- execution document preparation seems to be not atypical of Auto Plaza's business methods. It is certainly not surprising that someone at Auto Plaza would add detail to a receipt when they would fill in an entire side note that had already been executed in blank by a customer.
However, as in the case of the side note, there was no fraud in the addition of the detail to the receipt. This receipt is for the second downpayment on the Chevrolet Blazer, about which there has never been any dispute
Following up on the altered receipt, Petitioner's representative asked for deposit slips documenting the deposit of Reel payments. Mr. Gonzalez provided the representative with a deposit slip for June 14 that listed several items and had been obviously altered. The alterations added a nonexistent deposit of $1000 on account of Mr. Reel and, to offset this nonexistent $1000 deposit, reduced a legitimate deposit on account of an unrelated party by $1000.
When Petitioner's representative asked for a copy of the deposit slip, Mr. Dayani entered the room and refused to provide a copy until he had conferred with his attorney. The altered June 14 deposit slip was never again seen by Petitioner's representatives.
The June 14 deposit slip was fraudulent. The only payment in the amount of $1000 that Mr. Reel ever made to Auto Plaza was three weeks later on July 5 when he paid off the side note. Mr. Reel paid $100 on June 8 and $2000 on June 9, for which he received accurate receipts. Despite its haphazard business practices, Auto Plaza would have no reason not to deposit these sums promptly. There were no other payments prior to or on June 14. The next day, Mr. Reel gave Auto Plaza $500 and the $1000 side note.
Interestingly, Mr. Dayani admits that a deposit slip was altered by someone (Tr. p. 462). But he testified that it was a deposit slip dated June 21, 1993. This slip shows a deposit of $11,500 on the Reel transaction, rather than the $12,500 due under the purchase order and retail installment contract. (The difference is due to the discount that the finance company routinely demands in purchasing the note from Auto Plaza, does not involve Mr. Reel, and has no bearing on this case.) But before Mr. Dayani explained the discrepancy, he immediately denied that anyone altered the deposit slip and launched into a loosely organized diatribe about the "negative energy" generated by Petitioner's representative and how Auto Plaza complained to the representative's boss and tried to resolve the matter because "we love to negotiate everything so it would not go further." Except for the admission of the alteration of a deposit slip, Mr. Dayani's identification of the altered deposit slip is discredited and is probably the result of confusion on his part.
Someone at Auto Plaza probably added the fictitious Reel deposit to try to document a credit for the "uncredited" $1000 side note, and thereby quickly satisfy Petitioner's representative. This approach probably seemed preferable to an attempted explanation of a detailed transaction, rendered more complicated by the failure of the Reel purchase order to document explicitly the
$1000 credit on the purchase price that Mr. Reel had in fact received.
The last two transactions involve a common issue-- whether Auto Plaza improperly refused refunds to buyers.
On May 2, 1993, Jeffrey Yawn, the principal of a Tampa alternative school, and his wife, Andrea, visited Auto Plaza to look at cars. They were interested in a Jeep Cherokee and spoke with a salesman, Charlie Footman. The asking price was $8900, and Mr. Yawn told him that he would not pay over $7000.
Mr. and Mrs. Yawn were about to leave when Mr. Footman offered to do a credit check with no obligation on the Yawns' part to purchase a car. Mr. Yawn was interested in his credit status because he had recently filed for bankruptcy. Mr. Footman asked the Yawns for a personal check for $2000 to show the finance company that the Yawns were earnest buyers and borrowers. He also asked them for the title to Mr. Yawn's Chevrolet Nova that they were planning to trade in if they made a deal.
Thinking that they were not obligating themselves to purchase the Jeep or any other vehicle, the Yawns gave Mr. Footman a check dated May 2 in the amount of $2000 and their car title. At his request, they left the payee blank, assured by Mr. Footman that he would not cash the check. They believed that their only risk was a $50 fee for a credit check and that they would not have a deal to purchase the Jeep unless they later negotiated the purchase price and credit terms.
Upon receipt of the check, Mr. Footman gave the Yawns a receipt dated May 2 for the $2000. The receipt was on Auto Plaza's standard form and states: "Deposit is non-refundable if financed or cash purchased. $50.00 application fee." Mr. Yawn signed the receipt.
Mr. Yawn also signed a purchase order for the Jeep. The purchase order is dated May 3. It shows the cash trading difference is $7000 and deposit is
$2000. Although bearing the title, Auto Plaza, Inc., the document contains a blank at the bottom for a signature of a representative of Danny's Auto Sales. This signature line is blank, and nowhere is the purchase order signed by Auto Plaza or anyone else on behalf of the seller. When Mr. Yawn signed the purchase order, it did not contain the description of accessories that it now has and may not have contained other information presently contained in the document.
The next day, the Yawns supplied Auto Plaza with information to complete a credit application. However, at no time did the Yawns, or either of them, sign an retail installment contract. No such contract was ever prepared for the Yawn transaction.
The day after giving Mr. Footman the check and title, Mrs. Yawn, who is a bank teller, called up her checking account on the bank computer. She was surprised to see that Mr. Footman had already cashed the check. She called him and asked him for an explanation, but he could not give her one. In the meantime, representatives of Auto Plaza informed the Yawns that they had not had the time to run the credit check.
Four or five days after giving Mr. Footman the check and title, Mr. and Mrs. Yawn found a car they preferred at another car lot. They called Mr. Footman and asked for their money and title back. He refused to give it to them. They returned to Auto Plaza and spoke with James Vinci, the sales manager, who informed them that they had purchased the Jeep, and they needed to get into the finance office and complete the paperwork.
It is unclear how the Yawns could have completed the purchase. On May 4, 1993, the finance company issued a notice to Mr. Yawn that his credit
application was rejected. Mr. Yawn never received the notice and was not told of the action by anyone at Auto Plaza.
Refusing to deliver his Chevrolet to Auto Plaza despite threats from Mr. Vinci that he would just pick it up, Mr. Yawn obtained a duplicate title to his car and completed the deal with the other car lot.
After pressing their claims through a variety of means, the Yawns eventually settled their dispute with Auto Plaza for $1500 through mediation in small claims court. The settlement was reached and money paid a short time prior to the final hearing. The Yawns thus lost $500 of their $2000 deposit.
Two documents reflect the understanding of the parties as to a refund of the Yawns' $2000 deposit. The receipt provides that the deposit in a noncash transaction is nonrefundable only if the financing were approved. The Yawns' financing was not approved, and Auto Plaza had no contractual right to retain the $2000, except for $50 for a credit report.
Also, the purchase order was never signed by the seller so as to indicate its acceptance of the buyer's offer. As shown in the alteration of and subsequent sale of the Chevrolet Blazer after Mr. Reel but not Auto Plaza had signed a purchase order, Auto Plaza was not contractually obligated to sell a vehicle merely because a customer signed a purchase order if Auto Plaza did not also sign the purchase order. Auto Plaza thus improperly retained the Yawns' deposit under circumstances amounting to gross negligence.
The second transaction involves a sale of a Jeep Cherokee to Antonio DeOliveira, who did not testify at the final hearing.
The evidence of the DeOliveira transaction consists of a $3000 receipt dated August 23, 1993, in the usual form and apparently signed by Mr. DeOliveira. There is also a purchase order of the same date reflecting a purchase price of $12,500 and a down payment of $3000. The purchase order is apparently signed by the purchaser, but not by the seller. The form states Auto Plaza, Inc. on the top. At the bottom, Danny's Auto Sales is blacked out, but there is no signature next to the seller.
The remaining relevant evidence concerning the DeOliveira transaction consist of two letters dated September 7 and 14, 1993, from separate lenders rejecting Mr. DeOliveira's credit application; a Division of Motor Vehicles complaint form dated September 1, 1993, apparently filled out by Mr. DeOliveira; and a letter dated September 20, 1993, signed by a representative of Auto Plaza stating that Mr. DeOliveira purchased the Jeep but changed his mind and the Jeep was still waiting for him.
Mr. Dayani eventually repaid the $3000 to Mr. DeOliveira.
The DeOliveira documents disclose that the transaction was the same as the Yawn transaction. The form receipt did not authorize Auto Plaza to retain the deposit because Mr. DeOliveira was not approved for financing. The purchase order was signed by Mr. DeOliveira, but not by Auto Plaza. For these reasons, Auto Plaza retained Mr. DeOliveira's deposit under circumstances amounting to gross negligence. However, the documents admitted into evidence and testimony do not preclude the possibility that Auto Plaza delivered to Mr. DeOliveira a copy of the retail installment contract prior to his attempt to rescind.
On September 24, 1993, Petitioner served a subpoena on Mr. "Dayan" at Auto Plaza demanding all bank account records and also all "books, accounts, records pertaining to . . David Reel and Antonio DeOliveira." Auto Plaza produced only some of the documents requested, willfully refusing to produce the altered deposit slip of June 14.
Auto Plaza had actual knowledge of the acts and omissions of its employees and agents. With such knowledge, Auto Plaza retained the profits and benefits of these acts and omissions and subsequently ratified these acts and omissions.
There is insufficient evidence to justify disregarding the separate existence of each corporation. The two corporations had separate staffs and separate locations. The only significant blurring of the distinction between the two companies was when Auto Plaza employees received payments on the side note and returned the jewelry in the Crawford/Kelley transaction. Less significant is an inadvertent failure to delete Danny's name from an Auto Plaza purchase order form and the involvement of the president of both corporations in the management of both businesses, which is to be expected. There is no other evidence that the two corporations shared employees or facilities or otherwise acted as one entity. On balance, Petitioner has failed to show why the two corporations should be treated as one.
Mr. Dayani closed Danny's and no longer allows Auto Plaza employees or representatives to hold the deposits of prospective buyers.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes.)
Petitioner must prove the material allegations against Respondent by clear and convincing evidence. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
Section 520.995(1) provides in relevant part:
The following acts are violations of this chapter and constitute grounds for the
disciplinary actions specified in subsection (2):
Failure to comply with any provision of this chapter . . .;
Fraud, misrepresentation, deceit, or gross negligence in any . . . retail installment transaction, regardless of reliance by or damage to the buyer or owner;
Fraudulent misrepresentation, circumvention, or concealment of any matter required to be stated or furnished to a retail buyer or owner pursuant
to this chapter, regardless of reliance by or damage to the buyer or owner;
Willful imposition of illegal or excessive charges in any retail installment transaction . . .;
* * *
Failure to maintain, preserve, and keep available for examination, all books, accounts,
or other documents required by this chapter . . .;
Refusal to permit inspection of books and records in an investigation or examination by the department or refusal to comply with a subpoena issued by the department; or
Criminal conduct in the course of a person's business as a seller, as a . . . sales finance company.
Although omitted from the Administrative Complaint, Section 520.995(1)(a) fairly provides a basis for finding violations because the Administrative Complaint alleges violations of statutory provisions besides those contained in Section 520.995(1). Violation of these substantive provisions outside Section 520.995(1) is merely incorporated into Section 520.995(1)(a) as a basis for imposing discipline. Additionally, the power of Petitioner to enter cease and desist orders and impose administrative fines is derived from Section 520.994(3) and (4), as well as Section 520.995(2).
Section 520.995(2) provides that, for a violation of any provision of Section 520.995(1), Petitioner may revoke or suspend a license, place a license on probation, place permanent restrictions on a license, issue a reprimand, and impose an administrative fine of not more than $1000 per each act.
Section 520.07(9) authorizes Petitioner to order a seller "to refund any amounts assessed and charged on a retail installment contract which exceed the maximum charges provided by this act "
Under Section 520.994(3), Petitioner is authorized to issue a cease and desist order for any violation of any provision of Chapter 520. Section 520.994(4) authorizes Petitioner to impose an administrative fine of $1000 for each violation of any provision of Chapter 520.
Section 520.995(3) adds that, in addition to the acts specified in Section 520.995(1), revocation, suspension, or the imposition of restrictions may be imposed for "having a demonstrated lack of honesty."
Section 520.07(1)(c) provides:
The seller shall deliver to the buyer, or mail to him at his address shown on the contract, a copy of the contract signed by the seller.
Before the transaction is consummated, a copy of the retail installment contract, or a separate statement by which the disclosures required by this section are made and on which the buyer and seller are identified, shall be delivered to the buyer. Until the seller has delivered or mailed to the buyer a copy of the retail installment contract, a buyer who has not received delivery of the motor vehicle shall have the right to rescind his agreement and to receive a refund of all payments made and return of all goods traded to the seller on account of or in contemplation of the con- tract or, if such goods cannot be returned, the value thereof. Any acknowledgement by the
buyer of delivery of a copy of the contract, if
contained in the contract, shall appear directly above or adjacent to the buyer's signature.
Section 520.31(10) defines "retail installment contract" as an instrument reflecting one or more retail installment transactions, not including an instrument reflecting a sale.
Section 520.997(1) requires licensees to maintain such books, accounts, and records "as will enable [Petitioner] to determine whether the business of the licensee contemplated by this chapter is being operated in accordance with the provisions of this chapter. "
Section 520.13 prohibits a waiver of the provisions of Sections 520.01-520.10, 520.12, 520.13, 520.993, 520.994, or 520.995.
Section 520.995(5) provides that each licensee is responsible for the "acts of its employees or agents, if, with actual knowledge of such acts, it retained profits, benefits, or advantages accruing from such acts or if it ratified the conduct of its employee or agent as a matter of law or fact."
Section 520.995(4) states:
It is sufficient cause for [Petitioner] to take any of the actions specified in subsection (2) as to any . . . corporation ..., if [Petitioner] finds grounds for such action as to any . . .
officer or director of the corporation ,
or as to any person with power to direct the management or policies of the . . . corporation . . ..
Petitioner failed to prove that Danny's violated any provision of law in the transaction involving Mr. Crawford and Ms. Kelley or in any other respect.
Petitioner failed to prove that Auto Plaza violated any provision of law in the transaction involving Mr. Reel except with respect to the June 14 deposit slip.
Petitioner proved that Auto Plaza violated Section 520.995(1)(b) in refusing, due to gross negligence, to refund to the Yawns and Mr. DeOliveira their deposits. Even ignoring the absence of a retail installment contract and the statutory relief thus afforded the Yawns, the contractual arrangements between Auto Plaza, on the one hand, and the Yawns and Mr. DeOliveira, on the other hand, did not allow Auto Plaza to retain their deposits.
First, Auto Plaza did not sign the purchase order, nor did it treat the execution of the purchase order by a prospective buyer as a binding act, as evidenced by the sale of the Chevrolet Blazer that Mr. Reel had "obligated" himself to pay. Second, the condition precedent to each buyer's contractual obligation was that the buyer obtain financing. The buyers never obtained financing, Auto Plaza clearly knew or should have known that they did not, and Auto Plaza refused to refund their deposits, in the Yawns' case, continuing to press them to close the transaction despite the absence of financing. These acts and omissions constitute separate wrongdoing on the part of Auto Plaza not described in the ensuing paragraph regarding the Yawn transaction.
Petitioner proved that Auto Plaza violated Section 520.07(1)(c) in the Yawn transaction, but not the DeOliveira transaction. The Yawns were entitled to rescind because they never entered into a retail installment contract. The evidence does not establish that Auto Plaza failed to deliver a retail installment contract to Mr. DeOliveira prior to his attempt to rescind.
Petitioner proved that Auto Plaza violated Section 520.995(3)(d) by demonstrating a lack of honesty in the alteration of the June 14 deposit slip.
Petitioner proved that Auto Plaza violated Section 520.995(1)(g) by failing to permit an inspection of its books and records. This failure occurred when Mr. Dayani refused to allow Petitioner's representative to photocopy the altered June 14 deposit slip. Inspection includes the right to make copies.
Petitioner proved that Auto Plaza violated either Section 520.995(1)(f) by failing to maintain the altered June 14 deposit slip, which is a document required to be kept under Section 520.997(1), or Section 520.995(1)(g) by refusing to comply with the September 24, 1993, subpoena to produce records, including the altered June 14 bank slip. If Auto Plaza destroyed the bank slip, it violated Section 520.995(1)(f). If Auto Plaza did not destroy the bank slip but refused to produce it, it violated Section 520.995(1)(g).
Petitioner has not proved any criminal conduct by Auto Plaza in the course of its business in violation of Section 520.995(1)(h). Petitioner has not proved any independent violations of Section 520.995(1)(c) and (d) except to the extent that such violations are more aptly covered by other statutory provisions discussed in this recommended order.
Petitioner has proved that, in the above-described violations, Auto Plaza should be held responsible, under Section 520.995(5), for the wrongful acts and omissions of its employees and agents.
Petitioner has not proved that Danny's should be held responsible for Auto Plaza's acts and omissions. The two companies did not act, as alleged, as one. Section 520.995(4) does not authorize Petitioner to punish Danny's simply because Mr. Dayani was president of both Danny's and Auto Plaza. Petitioner failed to prove by clear and convincing evidence the extent of Mr. Dayani's personal involvement in the wrongdoing of employees and agents of Auto Plaza or the extent to which the wrongdoing was committed by other persons with the power to direct the management or policies of Danny's.
The severity of the penalty imposed upon Auto Plaza must be tempered by several facts. The violations in this case are that Auto Plaza improperly refused to allow two customers to rescind their purchases through gross negligence, not fraud. And Auto Plaza exercised poor judgment as to the June 14 deposit slip. The deposit-slip misadventure was fraudulent, but did not mask any underlying fraud on Mr. Reel; rather, it revealed a casual attitude toward paperwork by Auto Plaza employees. The refusal to allow rescission was mitigated somewhat by refunds, although the Yawns were refunded $500 less than they paid. Auto Plaza's customer relations were poor, but there is no evidence that it willfully deprived customers of their money or, except for its handling of the June 14 deposit slip, otherwise engaged in dishonest dealing with customers or Petitioner.
It is
RECOMMENDED that the Department of Banking and Finance enter a final order dismissing the charges against Danny's, dismissing the charges that Auto Plaza violated Section 520.995(c), (d), and (h), dismissing the charges against Auto Plaza in the Reel transaction (except for the violations involving the June 14 deposit slip), dismissing the charge that Auto Plaza violated Section 520.07(1)(c) (and thus Section 520.995(1)(a)) in the DeOliveira transaction, finding Auto Plaza guilty of violating Section 520.995(1)(b) in the DeOliveira transaction, finding Auto Plaza guilty of violating Section 520.07(1)(c) (and thus Section 520.995(1)(a)) and Section 520.995(1)(b) in the Yawn transaction, finding Auto Plaza guilty of violating Section 520.995(3)(d) in altering the June 14 deposit slip, finding Auto Plaza guilty of violating Section 520.995(1)(g) by refusing Petitioner permission to inspect records, and finding Auto Plaza guilty of violating either Section 520.995(1)(f) by failing to maintain the altered June 14 deposit slip or Section 520.995(1)(g) by failing to comply with Petitioner's subpoena by producing the altered June 14 deposit slip.
The final order should impose the following penalties: Auto Plaza shall cease and desist from further violations of Chapter 520, Auto Plaza shall pay an administrative fine of $6000 ($1000 for each of the six violations), Auto Plaza shall refund $500 to the Yawns, and Auto Plaza's license shall be placed on probation for a period of five years, during which time Auto Plaza's license shall be restricted by the requirement that Petitioner shall approve all documents used by Auto Plaza to ensure that the documents clearly disclose the point at which the purchaser is contractually obligated to purchase a vehicle or risk loss of a deposit and to ensure that the documents do not attempt to impose such a contractual obligation on the purchaser: a) until the seller is also contractually obligated and b) prior to the point at which the statutes and rules allow the purchaser to become contractually obligated.
ENTERED on July 28, 1995, in Tallahassee, Florida.
ROBERT E. MEALE
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 on July 28, 1995.
APPENDIX
Rulings on Petitioner's Proposed Findings
1-8 (first sentence): adopted or adopted in substance.
8 (remainder): rejected as unsupported by the appropriate weight of the evidence.
9-13: adopted or adopted in substance. 14: rejected as unnecessary.
15-18: adopted or adopted in substance. 19: adopted except as to date.
20: adopted except that Auto Plaza did refunded only $1500 of the $2000. 21-29: adopted or adopted in substance.
30: rejected as unsupported by the appropriate weight of the evidence.
31 (first sentence): adopted or adopted in substance.
31 (remainder): rejected as unsupported by the appropriate weight of the evidence.
32: rejected as unsupported by the appropriate weight of the evidence.
33 (first sentence): rejected as unsupported by the appropriate weight of the evidence.
33 (remainder): adopted or adopted in substance. 34-37: adopted or adopted in substance.
38: rejected as unsupported by the appropriate weight of the evidence. 39-41: adopted or adopted in substance.
42: rejected as subordinate.
43-48: adopted or adopted in substance.
49: adopted except that the evidence fails to establish the extent to which Mr. Dayani directed the management and policies of Auto Plaza with respect to the violations proved in this case.
50: adopted or adopted in substance to the extent noted in the recommended order.
Rulings on Respondent's Proposed Findings
1-11: adopted or adopted in substance. 11.1: rejected as subordinate.
11.2: rejected as irrelevant. Auto Plaza did not sign the purchase order. 11.3-11.5: rejected as subordinate, unnecessary, and irrelevant.
11.6: rejected as unsupported by the appropriate weight of the evidence. 11.7: adopted or adopted in substance.
11.7.1-11.7.5: rejected as recitation of evidence and subordinate. 11.8-11.8.1: adopted or adopted in substance.
11.8.2-11.8.5: rejected as recitation of evidence. 11.9: rejected as subordinate and irrelevant.
11.10: adopted or adopted in substance. 12: adopted or adopted in substance.
12.1: rejected as irrelevant. Auto Plaza did not sign the purchase order. 12.2: adopted or adopted in substance.
12.3: rejected as unsupported by the appropriate weight of the evidence. 12.4: rejected as subordinate and irrelevant.
12.5-14: adopted or adopted in substance. 14.1-14.3: rejected as subordinate.
: adopted or adopted in substance.
: adopted or adopted in substance based on the cash price on the retail installment contract.
: adopted or adopted in substance. 14.5.2: rejected as recitation of evidence.
14.5.3: adopted or adopted in substance.
14.5.4-14.5.6: rejected as unnecessary, although these findings may be an alternate means of describing the Reel transaction in the same way as described in the recommended order.
14.6-14.6.6: rejected as subordinate. 14.7: rejected as recitation of evidence. 14.8-14.8.4: rejected as subordinate.
14.9: rejected as subordinate and irrelevant. 14.9.1-14.9.4: rejected as subordinate.
14.9.5: rejected as unsupported by the appropriate weight of the evidence. 14.10: adopted or adopted in substance.
15-15.6: adopted or adopted in substance. 15.7: rejected as irrelevant.
15.8: rejected as recitation of evidence. 16: adopted or adopted in substance.
16.1-16.5: rejected as subordinate and irrelevant. 16.6-16.6.2: adopted or adopted in substance.
16.6.3: rejected as irrelevant.
COPIES FURNISHED:
Susan Steinberg Sandler Assistant General Counsel Office of Comptroller 1313 Tampa St., Suite 615
Tampa, FL 33602-3394
James H. Harris
Mitchell & Associates, P.A.
P.O. Box 1655
Tampa, FL 33601-1655
Hon. Robert F. Milligan Comptroller
The Capitol, Plaza Level Tallahassee, FL 32399-0350
Harry Hooper, General Counsel Department of Banking and Finance The Capitol
Plaza Level, Room 1302 Tallahassee, FL 32399-0350
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.
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE
DEPARTMENT OF BANKING AND FINANCE, DIVISION OF FINANCE,
Petitioner, Administrative Proceeding No. 3197-F-12/93
vs. DOAH Case No. 94-4246
AUTO PLAZA, INC., AND DANNY'S AUTO SALES, INC.,
Respondents.
/
FINAL ORDER
This matter has come before the undersigned as head of the Department of Banking and Finance (the "Agency"), for entry of a final order in the above- referenced proceeding. On July 28, 1995,Robert E. Meale, a hearing officer from the Division of Administrative Hearings ("DOAH"), in substitution of James E. Bradwell, the hearing officer at hearing, submitted his Recommended Order to the Agency, a copy of which is attached hereto as Exhibit "A."
References to the transcript of the proceedings before DOAH are specified by "TR" or "Tr." followed by the number which denotes pages of the transcript.
RULINGS ON EXCEPTIONS
Pursuant to Florida Administrative Code Rule 3-7.012(1), both parties were permitted to submit exceptions to the Hearing Officer's Recommended Order within
15 days of the filing of the Recommended Order with the Agency. The deadline for submissions was August 14, 1995. Petitioner, the Department of Banking and Finance (the "Department"), timely submitted its exceptions, numbered one through ten, on August 14, 1995.
Respondents filed a Verified Motion for Extension of time to File Exceptions to Recommended Order of Hearing Officer on August 18, 1995, after the deadline for submission of exceptions. The Deputy General Counsel, as representative of the Agency, granted Respondents' Motion for Extension of Time by order dated August 23, 1995, granting Respondents until August 28, 1994 (sic), to file exceptions. Respondents submitted their exceptions to the General Counsel's Office on August 25, 1995, with an attached Memorandum of Law in Support of Recommended Order, which addressed each of Petitioner's exceptions. In order that the Petitioner is not prejudiced by not having the same opportunity to file a reply to Respondents' exceptions, the agency will not consider Respondents' memorandum in rendering its decision in this Final Order. See Department of Envtl. Protection v. Puckett Oil Comp., 577 So 2d 988,994
(Fla. 1st DCA 1991)(party filing response after filing deadline may be held to have waived right to file response if there is a showing of prejudice to other party).
In Heifetz v. Department of Business Regulation, 475 So. 2nd 1277, 1281 (Fla. 1st DCA 1985), the District Court of Appeal explained the respective roles of hearing officers and state agencies in deciding factual issues as follows:
Factual issues susceptible of ordinary methods of proof that are not infused with policy considerations are the prerogative of the hearing officer as the finder of fact.
McDonald v. Department of Banking and Finance,
346 So. 2d 569 (Fla. 1st DCA 1977). It is the hearing officer's function to consider
all the evidence presented, resolve conflicts, judge credibility of witnesses, draw permissible inferences from the evidence,
and reach ultimate findings of fact based on competent, substantial evidence. State Beverage Department v. Ernal, Inc., 115 So.2d
566 (Fla. 3d DCA 1959). If, as is often the case, the evidence presented supports two inconsistent findings, it is the hearing officer's role to decide the issue one way or the other. The agency may not reject the hearing officer's finding unless there is no competent, substantial evidence from which the finding could reasonably be inferred. The agency is not authorized to weigh the evidence presented, judge credibility of witnesses, or otherwise interpret the evidence to fit its desired ultimate conclusion.
RULING ON DEPARTMENT1S EXCEPTIONS
First Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 3, wherein the Hearing Officer found that "In these [`buy here/pay here'] transactions, the buyer's decision is often influenced less by the purchase price and more by the appeal of the car and the amount of credit available." The Department argues that no competent, substantial evidence supports this finding and, therefore, it should be rejected, citing Clark v.
Department of Professional Regulation, 463 So.2d 328 (Fla. 5th DCA 1985).
The Hearing Officer's characterization of "buy here/pay here" automobile transactions, as stated in paragraph 3 of the Recommended Order, could be deduced from the record as to particular transactions in this case. Andrea Yawn stated, regarding her purchase of the Jeep, that Auto Plaza was going to run a credit check and determine if she qualified, then they were going to negotiate a price. (TR at 146.) However, David Reel stated that he had agreed upon a price before discussing the financing of the Blazer. (TR at 217,223.) It is the Hearing Officer's prerogative to weigh the evidence. As long as a finding of fact is based upon some competent, substantial evidence, the agency cannot overrule it. Heifetz, 475 So. 2d at 1281. Therefore, the Department's First Exception is rejected.
Second Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 8, wherein the Hearing Officer found that a receipt was given by "Danny's sales manager, Tony Vianni." The Department argues that Ms. Kelley testified that Tony was Nader Daiani, and this finding should be corrected to indicate that Tony Vianni is Nader or Danny Daiani.
Petitioner does not assert that this finding of fact is not supported by competent, substantial evidence.
Ms. Kelly did in fact testify that Danny and Tony were the same individual. (TR at 324.) Furthermore, Mr. Johnson identified Mr. Daiani in the formal hearing as Tony, the man who signed and gave him and Ms. Kelley a receipt for the jewelry held as collateral. (TR at 308.) However, the Hearing Officer did not did not make a finding that was not based on competent, substantial evidence. Although it may be more correct to state that Vianni and Daiani are the same person, this is not the standard applicable to findings of fact. Gong
v. Department of Community Affairs, 17 F.A.L.R. 290, 292 (FLA. Dept. of Community Affairs 1994). Therefore, the Department's Second Exception is rejected.
Third Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 14, wherein the Hearing Officer found that "It is irrelevant that the retail installment contract does not reflect the additional
$900 in the down payment." The Department argues that in the testimony of its employees, Kevin Gonzalez and Arthur James, they stated that failure to state material information, such as the down payment of a consumer, is a violation of chapter 520, Florida Statutes.
Based upon the testimony of Johnson and Kelley, as noted in the Recommended Order in the corresponding findings of fact, the Hearing Officer has weighed the evidence as to what is relevant for his finding of an absence of fraud or misrepresentation. It is the Hearing Officer's prerogative to weigh the evidence. Heifetz, 475 So.2d at 1281. As Finding of Fact, paragraph 14, is based upon competent, substantial evidence, the Department's Third Exception is rejected.
Fourth Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 19, wherein the Hearing Officer found that Reel agreed to pay an asking price of about $14,750 for the Ford Explorer. The Department argues that Mr. Reel testified that the price agreed upon was the price in the retail installment contract for the Explorer.
The Hearing Officer states, in paragraph 19, "The asking price in the rear window of the Explorer was about $14,750, and Mr. Reel agreed to pay the asking price." The Hearing Officer's finding is correct in that the asking price on the rear window of the automobile was about $14,750, according to Mr. Reel's testimony. (TR at 222.) Mr. Reel stated that he agreed to pay "something less than" the asking price displayed on the vehicle, but "it wasn't significantly lower." (TR at 223.) Furthermore, when asked by counsel for the Department, "Did you feel like at that point in time you had reached an agreement as far as price and it was just a matter of getting financing?" Mr. Reel responded, "Absolutely." Mr. Reel states further that, when asked if the $13,939.15 listed as the cash price on Pet. Exhibit 8 was "the number you had agreed on for the cash selling price?" Mr. Reel responded, "Yes. It was -- as I had mentioned, it was around $14,700. and I've forgotten what it was that made the difference to be lowered down to $13,939." (TR at 245.) The Hearing Officer notes the confusion displayed by Mr. Reel in stating the purchase price in Findings of Fact paragraphs 27, 28, 29, and 30. Given the confusion as to what price Mr.
Reel agreed to pay, it was within the Hearing Officer's function to weigh and interpret the evidence. Heifetz, 475 So.2d at 1281. Therefore, the Hearing Officer's Finding of Fact, paragraph 19, was based upon competent, substantial evidence. Id The Department's exception is rejected.
Fifth Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 27, wherein the Hearing Officer found that "the purchase order and retail installment contract do not support Mr. Reel's assertion that he has been defrauded of $1000 in the calculation of the down payment or amount financed." The Department argues that the evidence showed that after applying the down payments received to the cash price, Mr. Reel financed
$12,544.10.
The retail installment contract, (Pet. Exh. 4), shows that the amount financed by Reel was $12,544.10, which is the cash price of $15,100, less a down payment of $2,600, less documentary stamps of $44.10. Additionally, the purchase order, (Pet. Exh. 8), shows that the cash price was $13,939.15, cash down of $2,600, tax of $861.35, and other expenses of $299.50. As calculated by the Hearing Officer in Finding of Fact paragraph 32, it could be determined based upon the evidence presented that Mr. Reel was given credit for the $1,000. Therefore, the Recommended Order's Finding of Fact, as stated in the first sentence of paragraph 27, was based upon competent, substantial evidence.
Heifetz, 475 So.2d at 1281. The Department's exception is rejected to the extent it conflicts with this finding of fact.
Sixth Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 27, wherein the Hearing Officer found that "It is more likely than not that the successful execution on the default judgment resulted in a $1000 windfall for Mr. Reel." The Department argues that the evidence showed that Mr. Reel was not properly given credit for the $1000 on the amount financed.
Based upon the rulings with regard to the Department's Fourth and Fifth Exceptions, it is held that the Hearing Officer's finding of fact in the second sentence of paragraph 27 was based upon competent, substantial evidence.
Heifetz, 475 So.2d at 1281. The Department's Sixth Exception is rejected.
Seventh Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 32. The Department argues that this finding is not supported by competent, substantial evidence.
For the reasons stated in the rulings with regard to the Department's Fourth and Fifth Exceptions, it is held that the Hearing Officer's finding of fact in paragraph 32 was based upon competent, substantial evidence. Heifetz,
475 So.2d at 1281. The Department's Seventh Exception is rejected.
Eighth Exception: The Department takes exception to the Recommended Order's Finding of Fact, paragraph 40, in which the Hearing Officer found:
Someone at Auto Plaza probably added the fictitious Reel deposit to try to document a credit for the `uncredited' $1000 side note, and thereby quickly satisfy Petitioner's representative. This approach probably seemed preferable to an attempted explanation of a detailed transaction, rendered more complicated by the failure of the Reel
purchase order to document explicitly the
$1000 credit on the purchase price that Mr. Reel had in fact received.
The Department argues that this finding is not supported by competent, substantial evidence.
The Hearing Officer is entitled to draw permissible inferences from the evidence presented. Heifetz, 475 So.2d at 1282. Therefore, the Department's Eighth Exception is rejected.
Ninth Exception: The Department takes exception to the Recommended Order's Conclusion of Law, paragraph 89, wherein the Hearing Officer found that "there is no evidence that it [Auto Plaza] willfully deprived customers of their money or, ... otherwise engaged in dishonest dealing with customers or Petitioner.
The Department argues that based upon the Findings of Fact relating to Yawn, and the testimony relevant to Reel, Auto Plaza willfully withheld refunds and/or credits from these customers until these customers filed lawsuits to recover funds wrongfully kept by Auto Plaza.
The Findings of Fact do not support the conclusion that Auto Plaza willfully withheld refunds and/or credits from Yawn or Peel. The only item willfully withheld relating to the Reel transaction appears to have been a copy of the June 14th deposit slip, which the Hearing Officer found was fraudulent, but only in the sense that it reflected a "casual attitude" on the part of Auto Plaza. (Rec. Ord. 89.)
With regard to the Yawn transaction, the Hearing Officer found that the Yawns did not complete the purchase of the Jeep because Mr. Yawn's application for credit was denied. (Rec. Ord. 50.) The Hearing Officer also found that two documents showed that the Yawn's were entitled to a refund of their deposit.
First, the receipt provided that the deposit was a "noncash transaction [which was] nonrefundable only if the financing were approved." (Rec. Ord. 53.) As noted above, the Yawns did not obtain financing.
Second, the Hearing Officer found that Auto Plaza never signed the purchase order, even though Mr. Yawn did sign the document. Thus, the Hearing Officer found that Auto Plaza was "not contractually obligated to sell a vehicle." (Rec. Ord. 54.) The Hearing Officer, in summing up his finding, determined that Auto Plaza's withholding of the deposit was an act of gross negligence, not willfulness. Therefore, since the Petitioner cites the Hearing Officer's Findings of Fact as support for a conclusion of willfulness on the part of Auto Plaza in withholding customer deposits, but the Hearing Officer made a finding of gross negligence based upon competent, substantial evidence, Petitioner's Ninth Exception is rejected.
Tenth Exception: The Department takes exception to paragraph two of the Recommendation to the Recommended Order wherein the Hearing Officer recommends that "Auto Plaza's license shall be placed on probation for a period of five years ..." and imposes probationary restrictions on the license. The Department seeks revocation of Auto Plaza's license. The Department argues that revocation of the license is within the permissible statutory range, and that it is within the Department's discretion to impose revocation in this particular case based on the facts and circumstances presented.
In Criminal Justice Standards and Training Comm'n v. Bradley, the supreme court discussed the authority of a licensing agency to modify recommended
penalties. 596 So.2d 661 (Fla. 1992). In Bradley, the court stated that nothing in section 120.57(1)(b)(10), Florida Statutes, requires an agency to reject one of the hearing officer's findings of fact or conclusions of law before it states the particular reasons for the imposition of a different penalty. Id. at 664. The only duty required of an agency in modifying recommended penalties is an articulation of the reasons for the change by citing to the record. Id., citing s. 120.57(1)(b)(10), Fla. Stat.
Florida Administrative Code Rule 3D-85.lll(2) sets forth the minimum and maximum penalties for violations of chapter 520. Counsel for the Department is correct in so far as revocation is within the permissible range of penalties for violation of sections 520.995(1)(b), (1)(c), (1)(f), and (1)(g). The maximum penalty allowed for violation of section 520.07(1) is probation. The minimum penalty allowed for violations of these provisions, including violation of section 520.07(1)(c), is a $1,000 fine. As counsel for the Department failed to state with particularity the basis for revocation of Respondent's license, the Agency rejects the Department's exception calling for revocation, as revocation would be more appropriate for a finding of willfulness on the part of Respondent. Given that the Hearing Officer made a finding of gross negligence, a higher fine would be appropriate. However, Section 520.995(5), Florida Statutes, limits the amount of a fine that can be imposed to $1,000 for each violation. Therefore, the recommended penalties, which fall somewhere between the maximum and minimum, are acceptable and are adopted by the agency. 1/
RULINGS ON RESPONDENTS EXCEPTIONS
First Exception: (Part 1.1) Respondents take exception to the Recommended Order's Conclusion of Law, Paragraphs 80 and 81, wherein the Hearing Officer concluded that the Petitioner proved that Auto Plaza violated section 520.995(1)(b), Florida Statutes, "in refusing, due to gross negligence, to refund to the Yawns and Mr. DeOliveira their deposits." Respondents argue that Auto Plaza did not engage in gross negligence in the Yawn transaction in this instance.
As noted in the ruling pertaining to Petitioner's Ninth Exception, the Hearing Officer found, in Finding of Fact paragraphs 50 through 54, that Auto Plaza acted with gross negligence in the Yawn transaction for the reasons stated therein. As to the DeOliveira transaction, the Hearing Officer found in Finding of Fact, paragraphs 55 through 59, that "Auto Plaza retained Mr. DeOliveira's deposit under circumstances amounting to gross negligence." Therefore, the Recommended Order's Findings of Fact support Conclusions of Law, paragraphs 80 and 81, to the extent of a finding of gross negligence and violation of section 520.995(1)(b), Florida Statutes, in the Yawn and DeOliveira transactions.
Respondents' First Exception, part 1.1, is rejected.
(Part 1.2) The first sentence of part 1.2 of Respondents' First Exception is rejected as repetitious of the conclusions of law in the Recommended Order. Britt v. Department of Professional Regulation, 492 So.2d 697, 699-700 (Fla. 1st DCA 1986) . As for the remainder of this part, Respondents' First Exception, part 1.2, is rejected for the reasons stated in the ruling on Respondents' First Exception, part 1.1.
(Part 1.3) Respondents take exception to the Recommended Order's Conclusion of Law, paragraph 81, sentence 1, in which the Hearing Officer concluded that Auto Plaza did not sign the purchase order or treat it as binding, "as evidenced by the sale of the Chevrolet Blazer that Mr. Reel `obligated' himself to pay."
Respondent argues that the Hearing Officer made no finding of fact that a purchase order was executed for the Blazer.
The Agency agrees with Respondents that there is not a finding of fact specifically holding that there was a purchase order on the Blazer for which Reel put down a deposit. A review of the exhibits fails to disclose a purchase order for the Blazer, only for the Explorer, which was signed by Reel and a representative of Auto Plaza. (Pet. Exh. 8.) The only evidence of the transaction appears to be receipts for deposits paid by Reel. However, the Agency is convinced that the conclusion in paragraph 81 is correct, even though the Hearing Officer made an error.
The evidence does support the statement that Auto Plaza sold the Blazer out from under Reel, who had put down a deposit for the vehicle. (TR at 214-15; Pet. Exh. 3.) The Hearing Officer is using the Reel transaction to demonstrate that while in that instance Auto Plaza did not honor its agreement with Reel to hold the Blazer for consideration of the deposit, Auto Plaza was attempting to bind Yawn and DeOliveira under the purchase orders which were not signed by a representative of Auto Plaza.
The first part of the first sentence in paragraph 81 refers to the conclusions in the previous paragraph, 80. The Hearing Officer concluded in paragraph 80 that the Department proved gross negligence in Auto Plaza's failure to make refunds to Yawn and DeOliveira. Then, in paragraph 81, the Hearing Officer continues his reference to the Yawn and DeOliveira transactions by citing reasons other than the fact that Auto Plaza failed to refund the monies in violation of section 520.07(1)(c), as to the Yawns, and kept the Yawns' and Mr. DeOliveira's money even though the parties had not entered into a retail installment contract. Exhibit 14 is the purchase order for the Jeep for DeOliveira. It is signed by DeOliveira, but not by any representative of Auto Plaza. This fact is noted by the Hearing Officer in paragraph 56. Thus, in addition to failing to refund DeOliveira's money, which is an act of gross negligence, Auto Plaza acted with gross negligence in relying on the non-binding purchase order to withhold DeOliveira's money.
As to Yawn, the Hearing Officer found, (Rec. Ord. 46, 54), that Yawn signed a purchase order for his Jeep, but no one from Auto Plaza signed it. The Hearing Officer also noted, (Rec. Ord. 46), that the purchase order signed by Yawn did not contain a description of accessories. No formal retail installment contract was ever signed. Thus, regardless of the fact that Auto Plaza never delivered a written contract, as required by section 520.07(1)(c) in order to keep the funds, Respondent committed an act of gross negligence by relying upon the unsigned purchase order to withhold the Yawns refund. The Hearing Officer's reference to the Reel deposit demonstrates that Respondent Auto Plaza sought to enforce non-binding agreements in its favor while failing to honor agreements that would be in the customer's favor. Therefore, the Agency accepts the Respondents' First Exception, part 1.3, only as to the lack of a purchase order in the Reels' attempt to purchase the Blazer, but rejects the remainder of this part.
(Part 1.4) Respondents take exception to the Recommended Order's Conclusion of Law, paragraph 81, second and third sentences, wherein the Hearing Officer states: "Second, the condition precedent to each buyer's contractual obligation was that the buyer obtain financing. The buyer never obtained financing, Auto Plaza clearly knew or should have known that they did not,." Respondents argue that the only violation of chapter 520, Florida Statutes, found by the Hearing Officer is the failure to allow the Yawns to rescind and recover their deposit,
which Respondent contends is not a "separate wrongdoing" from the finding that Respondent Auto Plaza failed to sign the purchase order.
The reasoning stated in the ruling on part 1.3 of Respondents' First Exception is also applicable to this part. Auto Plaza's attempt to bind its customers to agreements that could not be completed without obtaining financing, which Respondent knew was a condition precedent to any binding agreement, (Rec. Ord. 45, 46, 50; Pet. Exh. 19), was in and of itself an act of gross negligence. Therefore, the Agency rejects part 1.4 of Respondents' First Exception.
Second Exception: (Parts 2.1 and 2.2) Respondents take exception to the Recommended Order's Conclusion of Law in paragraph 84 in which the Hearing Officer held that Petitioner proved that Auto Plaza violated section 520.995(1)(g) by failing to permit an inspection of its books and records, particularly Auto Plaza's failure to provide a copy of the altered June 14 deposit slip. Respondent argues that the Hearing Officer ignored its right to counsel during the Department's on-site investigation of Auto Plaza.
In support of this argument, Respondents cite section 120.62(2), Florida Statutes, which states that "[a]ny person compelled to appear, or who appears voluntarily, before any hearing officer or agency in an investigation or in any agency proceeding has the right, at his own expense, to be accompanied, represented, and advised by counsel ...." This right to counsel, however, is not the same as that recognized by the Constitution. The constitutional right to counsel does not apply in administrative proceedings involving revocation of a license issued by the state to a regulated business. Santacroce v. Department of Banking and Finance, 608 So.2d 134, 136 (Fla. 4th DCA 1992); Thompson v.
Department of Professional Regulation, 488 So.2d 103 (Fla. 1st DCA 1986); Woodham v. Williams, 207 So.2d 320 (Fla. 1st DCA 1968); 33 A.L.R.3d 229, "Administrative Hearings--Aid of Counsel," s 6(b)(1995 Supp.), citing Haines v. Askew, 368 F. Supp. 369 (M.D. Fla. 1973) , affd 417 U.S. 901, 94 S.Ct. 2596, 41
L.Ed.2d 208 (1974)(right to counsel does not extend to preliminary investigatory proceedings). The right to counsel in chapter 120 proceedings is "only a right in the sense that the agency cannot prevent [affected] person[s] from obtaining and utilizing counsel." Thompson, 488 So.2d 103, 105. If the constitutional right to have counsel present does not apply to administrative proceedings, as held in Woodham and its progeny, then it certainly does not apply in preliminary investigatory visits to a licensee, as stated in Haines. Therefore, Respondents Second Exception, parts 2.1 and 2.2, are rejected.
(Parts 2.3 and 2.4) Respondents take exception to the Recommended Order's Conclusion of Law, paragraph 85, in which the Hearing Officer held that Auto Plaza had violated section 520.995(1)(g), Florida Statutes, by refusing to comply with a subpoena issued by the Department. Respondents argue that Auto Plaza could not be punished for failure to comply with the subpoena without the Department having sought compliance in circuit court, citing Carrow v.
Department of Professional Regulation, 453 So.2d 842 (Fla. 1st DCA 1984)
Respondents are correct in their argument that the proper method for enforcement of a subpoena is to seek an order from a court. Nathanson v. Department of Labor and Employment Security, 620 So.2d 1066 (Fla. 1st DCA 1993); Carrow, 453 So.2d 842, 843 (Fla. 1st DCA 1984). Section 520.994(1), Florida Statutes, authorizes the Department to issue subpoenas. In order to enforce a subpoena, the Department "may present its petition to a court of competent jurisdiction in or for the county in which such person [who refuses to comply] resides or has its principal place of business ...." Fla. Stat. s 520.994(1)(emphasis supplied). However, the Department does not have to seek
enforcement of the subpoena in order to obtain an administrative penalty for a licensees failure to comply with a subpoena issued by the Department under chapter 120 or chapter 520. See Department of Banking and Finance v. Barat Co.,
15 F.A.L.R. 1550, 1556-57 (Fla. Dept. of Banking and Fin. 1993)(Department imposed fine and revoked license of company which was statutorily required to produce records to Department whether in course of "investigation" or "examination"). Section 520.995(1) states that any of the acts listed thereunder are "violations of this chapter and constitute grounds for ... disciplinary actions ...." Furthermore, Florida Administrative Code Rule 3D- 85.111(2)(bbbb) sets forth that the maximum administrative penalty for violation of section 520.995(1)(g) is revocation. Thus, the Department can seek an administrative penalty against Auto Plaza for its refusal to comply with the subpoena. 2/ Respondents' Second Exception, parts 2.3 and 2.4, are rejected.
Third Exception: Respondents' Third Exception, although more of a summation, states that the Hearing Officer's findings of fact support only two violations by Auto Plaza. As stated above, the Agency finds that there were a total of at least six violations of the Act by Auto Plaza. Therefore, the Agency rejects Respondents' Third Exception.
FINAL AGENCY ACTION
UPON review and consideration of the Recommended Order and the complete record of this proceeding,
IT IS THEREFORE ORDERED that:
The Hearing Officer's Findings of Fact, Conclusions of Law and Recommendation, as set forth in the attached Recommended Order, are hereby adopted and incorporated herein, except as modified by the rulings on the exceptions, as the Findings of Fact and Conclusions of Law of this Final Order; and
Respondent Auto Plaza is hereby ordered to:
CEASE and DESIST from further violations of chapter 520, Florida Statutes, as particularly set forth in the Hearing Officer's Recommended Order;
refund $500 to the Yawns within thirty (30) days of issuance of this Final Order, and submit proof of that refund simultaneously to the Department; (c) pay an administrative fine of Six Thousand Dollars ($6,000), payable to the "Regulatory Trust Fund,' within thirty (30) days of issuance of this Final Order; and (d) submit to five years of probation, during which period Respondent shall submit for approval by the Department all documents used by Auto Plaza to ensure that the documents clearly disclose the point at which the purchaser is contractually obligated to purchase a vehicle or risk loss of a deposit and to ensure that the documents do not attempt to impose such a contractual obligation on the purchaser: (I) until the seller is also contractually obligated and (ii) prior to the point at which the statutes and rules allow the purchaser to become contractually obligated.
DONE and ORDERED this 24th day of October, 1995, in Tallahassee, Leon County, Florida.
ROBERT F. MILLIGAN, as Comptroller of the State of Florida and Head of the Department of Banking and Finance
ENDNOTES
1/ See infra note 2.
2/ Contrary to the Hearing Officer's recommendation, the Department could impose a separate fine for Respondent's violations of sections 520.995(1)(f), failure to maintain books and records, and 520.995(1)(g), failure to comply with a subpoena. Barat, 15 F.A.L.R. 1550, 1556 (Fla. Dept. of Banking and Fin.
1993). However, based upon the facts of this case, the Department will impose only one fine for violation of either section 520.995(1)(f) or 520.995(1)(g) , consistent with the Hearing Officer's recommendation.
COPIES FURNISHED:
Robert E. Meale Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
James H. Harris, Esquire Post Office Box 45137 Tampa, Florida 33677
Susan Steinberg-Sandler, Esquire Department of Banking and Finance 1313 Tampa Street, Suite 615
Tampa, Florida 33602-3394
Gene Hawkins, Director Division of Finance Office of the Comptroller
Tallahassee, Florida 32399-0350
NOTICE OF RIGHT TO JUDICIAL REVIEW
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING
FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order and Notice of Rights has been furnished by regular U.S. mail to James H. Harris, Esquire, Post Office Box 45137, Tampa, Florida 33677, this 24th day of October, 1995.
J. STRATIS PRIDGEON Assistant General Counsel
| Issue Date | Proceedings |
|---|---|
| Oct. 25, 1995 | Final Order filed. |
| Aug. 23, 1995 | (Respondent) Verified Motion for Extension of Time to File Exceptions to Recommended Order of Hearing Officer filed. |
| Aug. 22, 1995 | (Respondents) Verified Motion for Extension of Time to File Exceptions to Recommended Order of Hearing Officer filed. |
| Jul. 28, 1995 | Recommended Order sent out. CASE CLOSED. Hearing held 12/08-09/94. |
| Jul. 21, 1995 | (Petitioner) Proposed Recommended Order filed. |
| Jun. 12, 1995 | Order Allowing Proposed Recommended Orders to be Filed on or Before July 21, 1995 sent out. |
| May 25, 1995 | Department's Response to Order of Assignment of New Hearing Officer filed. |
| May 16, 1995 | Notice of Unavailability of Hearing Officer And Order of Assignment of New Hearing Officer sent out. |
| Apr. 18, 1995 | (Respondents) Notice of Change of Address filed. |
| Apr. 17, 1995 | (Respondents) Notice of Change of Address filed. |
| Jan. 30, 1995 | Post-Hearing Memorandum of Proposed findings of fact, Proposed conclusions of law, and Proposed Recommended Order (Respondent) filed. |
| Jan. 23, 1995 | Deposition of Charlie B. Footman filed. |
| Jan. 10, 1995 | (Respondents) Notice of Taking Depositions Duces Tecum filed. |
| Jan. 10, 1995 | Transcripts (Volumes I, II, III/tagged) filed. |
| Jan. 03, 1995 | (Respondents) Notice of Taking Deposition Duces Tecum filed. |
| Dec. 30, 1994 | Respondents' Counsel's Notice of Change of Address filed. |
| Dec. 22, 1994 | Verified Petition for Enforcement of Administrative Subpoena; Subpoena Duces Tecum; Affidavit of Service; Letter to C. Footman, Jr. from J.Harris filed. |
| Dec. 22, 1994 | Letter to HO from J. Harris regarding copies of pleadings filed in Hillsborough County; Exparate Motion for Order Requiring Compliance with Administrative Subpoena; Subpoena Duces Tecum; Affidavit of Service; Letter to C. Footman From J. Harris; Order on |
| Dec. 19, 1994 | (Petitioner) (1) Subpoena Duces Tecum filed. |
| Dec. 14, 1994 | (3) Subpoena Ad Testificandum; (3) Subpoena Duces Tecum filed. |
| Dec. 09, 1994 | (1) Subpoena Ad Testificandum; (2) Subpoena Duces Tecum w/routing & transmittal slip filed. |
| Dec. 08, 1994 | CASE STATUS: Hearing Held. |
| Dec. 08, 1994 | (Petitioner) Notice of Filing Deposition of Michael Patterson; Deposition of Michael Patterson filed. |
| Dec. 08, 1994 | Department's Amended Witness And Exhibit Lists filed. |
| Dec. 07, 1994 | (Respondent) Witness List; Notice Of Service Of Final List Of Trial Exhibits filed. |
| Dec. 05, 1994 | (Petitioner) Subpoena Ad Testificandum; Routing & Transmittal Slip filed. |
| Dec. 02, 1994 | (Petitioner) Notice of Filing the Deposition of Michael Patterson; (Telephonic) Deposition of Mike Patterson filed. |
| Nov. 28, 1994 | Department's Witness and Exhibit List filed. |
| Nov. 28, 1994 | (Petitioner) Notice of Taking Depositions; (Respondents) Amended Notice of Taking Deposition filed. |
| Nov. 28, 1994 | (Respondents) Notice of Service of Exhibits; Witness List; (2) Notice of Taking Depositions Duces Tecum filed. |
| Nov. 28, 1994 | Amended Notice of Taking Deposition filed. |
| Nov. 23, 1994 | (Petitioner) Amended Notice of Taking Deposition Duces Tecum filed. |
| Nov. 23, 1994 | (Petitioner) Notice of Appearance of Counsel; Notice of Taking Deposition Duces Tecum filed. |
| Nov. 21, 1994 | Amended Notice of Hearing (as to location of hearing only) sent out. (hearing set for Dec. 8-9, 1994; 9:00am; Tampa) |
| Nov. 16, 1994 | Witness, Jung Choi`s Motion for Protective Order And Sanctions; Notice of Appearance filed. |
| Oct. 28, 1994 | (Respondent) Notice of Taking Depositions Duces Tecum filed. |
| Oct. 05, 1994 | Notice of Hearing sent out. (hearing set for Dec. 8-9, 1994; 9:00am; Tampa) |
| Aug. 29, 1994 | Order Denying Respondent's Motion to Shorten Time for Discovery Responses sent out. (respondent's motion to shorten time for discovery request responses is denied) |
| Aug. 11, 1994 | Joint Response to Initial Order filed. |
| Aug. 05, 1994 | Initial Order issued. |
| Jul. 28, 1994 | Petitioner`s Response and Objections to Respondents Motion to Shorten Time for Response to Request for Production and To Respondents Request for Production; (Respondent) Request for Production filed. |
| Jul. 28, 1994 | Agency referral letter; Administrative Complaint for Order to Cease and Desist, Refund Order; Imposition of Administrative Penalties and Notice of Rights; Petition for Formal Hearing Pursuant to F.S. 120.57; (Respondent) Motion to Shorten Time for Respons |
| Issue Date | Document | Summary |
|---|---|---|
| Oct. 24, 1995 | Agency Final Order | |
| Jul. 28, 1995 | Recommended Order | 6 violations in motor vehicle sale transactions result in $6000 fine, cease and desist, refund, probation and restrictions. |
