STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RIVERFRONT GROVES, INC. )

)

Petitioner, )

)

vs. ) CASE NO. 94-6774

)

BAGALEY GROVES, INC. )

)

Respondent, )

and )

) NATIONWIDE MUTUAL INSURANCE CO. )

)

Co-Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Richard Hixson, scheduled a formal hearing in this case for April 20, 1995, in Lakeland, Florida. The parties thereafter agreed to submit this case on the record as transmitted to DOAH from the Department of Agriculture and Consumer Services, and the formal hearing was cancelled.

APPEARANCES

For Petitioner: Douglas A. Lockwood III, Esquire

PETERSON, MYERS, CRAIG, CREWS BRANDON & PUTERBAUGH, P.A.

Post Office Drawer 7608

Winter Haven, Florida 33883-7608

For Respondent: Eugene J. O'Neill, Esquire

GOULD, COOKSEY, FENNELL, BARKETT, O'NEILL & MARINE, P.A.

979 Beachland Boulevard Vero Beach, Florida 32963

For Co-Respondent No Appearance.

STATEMENT OF THE ISSUES

The issues for determination in this case are whether Respondent, as a licensed citrus fruit dealer, breached the terms of an oral contract for the purchase of citrus fruit during the 1992-1993 shipping season, whether Respondent misappropriated certain other citrus fruit owned by Petitioner during the 1992-1993 shipping season, and further, whether such actions by Respondent constitute violations of the Florida Citrus Code for which the proceeds of the citrus fruit dealer's bond executed by Co-Respondent should be paid to Petitioner in satisfaction of Petitioner's claim pursuant to Section 601.66, Florida Statutes.

PRELIMINARY STATEMENT

On July 12, 1993, Petitioner, Riverfront Groves, Inc., filed a Formal Complaint with the Department of Agriculture and Consumer Services, (Department), alleging that Respondent, Bagaley Groves, Inc., a licensed citrus fruit dealer under the provisions of Section 601.66, Florida Statutes, was indebted to Petitioner in the amount of $19,740.62, for citrus fruit purchased or otherwise taken by Respondent during the 1992-1993 shipping season.

Specifically, the complaint sought $375.00 for 150 boxes of grapefruit, and

$19,365.62 for 2,785 boxes of navel oranges. Co-Respondent, Nationwide Mutual Insurance Company, executed Respondent's citrus fruit dealer's bond for the 1992-1993 shipping season in the amount of $10,000.00.

Respondent and Co-Respondent were thereafter individually served by certified mail with a copy of the Formal Complaint, and notified of the time for response to the complaint. On August 10, 1993, Respondent filed a verified Answer to the Formal Complaint denying liability, and requesting a formal hearing on the allegations of the complaint. Co-Respondent did not file a separate answer to the complaint, nor otherwise appeared in these proceedings.

The case was referred to Robert R. Crittenden, a Hearing Officer assigned by the Department, who held a formal hearing in this case on April 12, 1994, in Winter Haven, Florida. A transcript of the formal hearing was filed with the Department on May 2, 1994.

Hearing Officer Crittenden issued his Recommended Order on May 24, 1994.

The Hearing Officer in his Recommended Order found that the Respondent was indebted to Petitioner for the claim of $375.00 relating to certain grapefruit mistakenly harvested from Petitioner's grove without permission; however, the Hearing Officer further found that all elements of the transaction relating to the claim of $19,365.62 for the purchase of navel oranges occurred prior to Respondent's licensure as a citrus fruit dealer for the 1992-1993 shipping season, which under the Hearing Officer's review of the applicable statutes and case law, deprived the Department of jurisdiction to consider the claim for the navel oranges as filed by Petitioner. The Hearing Officer recommended dismissal of this claim. The Hearing Officer in his Recommended Order also defaulted Co- Respondent for nonappearance.

By letter dated May 31, 1994, counsel for Petitioner requested reconsideration of the Recommended Order on the grounds that the Hearing Officer issued his Recommended Order prior to the time allowed for the parties to file Proposed Recommended Orders and Memoranda addressing the issues raised at hearing. Petitioner also filed a Proposed Recommended Order and a Memoranda.

On September 16, 1994, Petitioner filed Written Exceptions to the Recommended Order, and on September 30, 1994, the Department issued an Order of Remand directing the Hearing Officer to reconsider after allowing the parties to submit Proposed Recommended Orders and other Memoranda.

Due to the unavailability of Hearing Officer Crittenden, on December 2, 1994, the Department referred this case to the Division of Administrative Hearings, and transmitted to DOAH the record, including the transcript of the formal hearing previously conducted in this case. All parties, including Co- Respondent were notified by the Initial Order entered December 7, 1994, that the case had been referred to DOAH for hearing, and all parties were directed to file a response regarding the scheduling of a formal hearing. On December 21, 1994, Petitioner and Respondent filed a response in compliance with the Initial

Order. Co-Respondent did not make a separate appearance. The case was subsequently set for formal hearing to be held on April 20, 1995. Pursuant to the agreement of the parties, however, the case was submitted for consideration on the record transmitted to DOAH from the Department, and the formal hearing was accordingly cancelled. By order dated April 19, 1994, the parties were allowed thirty (30) days to file Proposed Recommended Orders and other Memoranda. Petitioner thereafter filed a Proposed Recommended Order and Memorandum of Law.

On April 24, 1995, counsel for Respondent filed a Motion to Withdraw.

Pursuant to Rule 60Q-207(3), Florida Administrative Code, the motion was properly served on Respondent. Respondent filed no objection to the motion and has not subsequently appeared in this case. On June 21, 1995, the Motion to Withdraw was granted, and Respondent was allowed additional time in which to file a Proposed Recommended Order, or any other memoranda. Respondent did not file a Proposed Recommended Order, or any other memoranda.

Accordingly, this case is considered on the record transmitted to DOAH from the Department, including the transcript of the previous hearing conducted by Hearing Officer Crittenden. At that hearing, Petitioner presented the testimony of Robert G. Bagaley, Daniel R. Richey, and Henry Schacht. Petitioner also presented five exhibits which were received into evidence. Respondent also presented the testimony of Robert G. Bagaley and James Earl Brantley.

Separate rulings on Petitioner's proposed findings of fact are set forth in the Appendix attached.

For the reasons set forth below, the recommendations of Hearing Officer Crittenden are adopted.

FINDINGS OF FACT

1. Petitioner, Riverfront Groves, Inc., is a corporation with an office in Vero Beach, Florida. At all material times, Petitioner was in the business of selling and marketing citrus fruit. At all material times, Daniel R. Richey was vice-president of Petitioner, in charge of the fresh fruit packing operation.

   
   

2. Respondent, Bagaley Groves, is a business with an office in Vero Beach, Florida. At all material times, Respondent operated a citrus fruit gift shipping packinghouse. At all material times, Robert G. Bagaley was the owner of Respondent.

   
   

3. Co-Respondent, Nationwide Mutual Insurance Company, is an insurance company, which was authorized to write surety bonds during the 1992-1993 citrus fruit shipping season. On December 10, 1992, Co-Respondent executed, as surety, Citrus Fruit Dealer's Bond No. 77-LP-007-245-0002, in the principal sum of

   $10,000.00, binding Co-Respondent as surety, to the Florida Commissioner of Agriculture. The terms and conditions of the bond were that Respondent, as the principal executing such bond, would comply with the provisions of the Florida Citrus Code during the 1992-1993 citrus fruit shipping season, and with the terms and conditions of all contracts relating to the purchase, handling, sale, and accounting of citrus fruit.

   
   

4. Respondent held a valid citrus fruit dealer's license issued by the Department of Citrus for the 1991-1992 shipping season.

5. On July 16, 1992, Respondent, by and through its owner Robert Bagaley, filed with the Department of Citrus an application for license as a citrus fruit dealer for the 1992-1993 shipping season.

   
   

6. As indicated above, Respondent's bond required for licensure was not executed until December 10, 1992, and it was not until January 25, 1993, that Respondent was issued citrus fruit dealer's license No. 0269 for the 1992-1993 shipping season. The license is not specifically retroactive, and merely states that Respondent is ". . . granted a license to engage in the business of Citrus Fruit Dealer through July 31, 1993."

   
   

7. At all material times Respondent, by and through its owner Robert Bagaley, held itself out as a licensed citrus fruit dealer in the state of Florida.

   
   

8. In the fall of 1992, Respondent learned from a mutual friend, Henry Schacht, that Petitioner had navel oranges located in a grove in Indian River County, Florida, suitable for use in Respondent's fresh fruit packinghouse. In mid-November 1992, Petitioner, through its authorized representative Daniel R. Richey, and Respondent, through its owner Robert Bagaley, agreed that Respondent would purchase approximately 2,400 boxes of navel oranges from Petitioner at

   $7.00 per box. Respondent did not hold a valid license as a citrus fruit dealer in the state of Florida at the time this oral contract was entered into with Petitioner.

   
   

9. Respondent harvested a total of 150 boxes of these navel oranges during the period of November 13 - 17, 1992, for which Respondent paid Petitioner the agreed upon price of $7.00 per box. This payment in the amount of $1,050.00 was made by check dated November 18, 1992.

   
   

10. On December 3, 1992, Petitioner delivered a written contract to Respondent setting forth Petitioner's understanding of the terms of their agreement. The contract was executed by Petitioner. Respondent declined to sign the written contract, and the contract was returned to Petitioner on December 10, 1992.

    
    

11. In early December 1992, Respondent learned from James Earl Brantley that some of the navel oranges in Petitioner's grove had green mold, a condition that would make the fruit unsuitable for fresh fruit packing. On December 10, 1992, Respondent repudiated the oral contract and notified Petitioner that Respondent could not use, and did not need, any more of Petitioner's navel oranges. Respondent did not inform Petitioner that some of the navel oranges had developed green mold, or that the navel oranges were otherwise not merchantable. At the time Respondent repudiated the oral contract, Respondent did not hold a valid license as a citrus fruit dealer in the state of Florida.

    
    

12. By December 10, 1992, the marketing conditions for navel oranges were substantially deteriorating.

    
    

13. From December 11 and 15, 1992, Petitioner harvested and processed the balance of the navel orange crop from the grove, some 2,785 boxes. Petitioner attempted to pack the oranges as fresh fruit. The packout ratio of these 2,785 boxes was approximately 18 percent, yielding Petitioner a net return of $78.01, ($129.38 return for 640 boxes picked December 11 and 12, 1992, and a loss of

    $51.37 on the remainder picked between December 12 and 15, 1992.

14. Petitioner incurred a loss of $19,365.62, as result of Respondent's failure to pay the agreed upon contract price of $7.00 per box for the balance of the navel oranges.

    
    

15. At the time Respondent (through Bagaley) notified Petitioner (through Richey) that Respondent did not intend to harvest the balance of the fruit, Petitioner informed Respondent that the remaining fruit would be harvested, that an accounting of the net proceeds for the remaining fruit would be made, and that the parties could then review the matter as to any outstanding indebtedness which might be due under the terms of the oral agreement. Respondent stated that a review after harvesting and accounting was acceptable. Within sixty days thereafter Petitioner (through Richey) received the accounting and met with Respondent (through Bagaley). At that time Respondent did not acknowledge the indebtedness, nor promise to pay the indebtedness to Petitioner.

    
    

16. Subsequent to January 25, 1993, Respondent mistakenly picked red grapefruit from a grove owned by Petitioner, which was adjacent to a grapefruit block Respondent had purchased from a different owner. The parties agree that Respondent owes Petitioner $375.00 or $2.50 for 150 boxes of grapefruit picked from this grove.

    
    

17. Respondent tendered a check to Petitioner in the amount of $375.00 for payment of the grapefruit; however, Petitioner declined to accept payment for the grapefruit pending resolution of Petitioner's claim for the navel oranges.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this action pursuant to Section 120.57(1), and Section 601.66, Florida Statutes.

    
    

19. Section 601.65, Florida Statutes, provides that if any licensed citrus fruit dealer violates a provision of Chapter 601, Florida Statutes, the dealer shall be liable for the full amount of damages sustained in consequence of such violation. Such liability may be enforced either by administrative complaint filed with the Department or by filing a judicial action; however, under the statute, the proceeds of the citrus fruit dealer's bond are only amenable to suit in a proceeding filed with the Department. The procedures for the filing, hearing and resolution of complaints filed with the Department are set forth in Section 601.66, Florida Statutes.

    
    

20. Section 601.64(4), Florida Statutes, provides:

    
    

    601.64 Citrus fruit dealers; unlawful acts. - It is unlawful in, or in connection with, any transaction relative to the purchase, handling, sale, and accounting of sales of fruit:

    (4) For any citrus fruit dealer to make, for a fraudulent purpose, any false or misleading statement concerning the condition, quality, quantity, or disposition of, or the condition of the market for, any citrus fruit which is received by such citrus fruit dealer or bought or sold or contracted to be bought or sold by such citrus fruit dealer; or the purchase or sale of which is negotiated by such citrus fruit dealer; or to fail or refuse truly and

    correctly to account and make full payment promptly in respect of any transaction in any such citrus fruit to the person with whom such transaction is had, or to fail or refuse on such account to make full payment of such amounts as may be due thereon, or to fail without reasonable

    cause to perform any specification or duty express or implied arising out of any undertaking in connection with any such transaction;

    
    

21. In this case, Respondent was not a licensed citrus fruit dealer at the time the oral contract for the purchase of navel oranges was entered into in

    mid-November of 1992, nor was Respondent a licensed citrus fruit dealer at the time the oral contract was repudiated by Respondent on December 10, 1992. In this respect, the factual circumstances of this case are very similar to the case of Gulf American Fire & Casualty Co. v. Davis, 172 So.2d 636 (Fla. 2d DCA 1965) cert. denied 180 So.2d 656 (Fla. 1965). In Gulf American the parties entered into a contract for the purchase of citrus fruit during the pendency of the buyer's application for a citrus fruit dealer's license. The buyer then repudiated the contract prior to the issuance of the license. In rejecting the seller's claim for the proceeds of the citrus fruit dealer's bond, the Second District Court of Appeal stated:

    
    

    The Florida statute contemplates the tender of a satisfactory bond as a prerequisite to the granting of a license, and it is not contemplated that said bond should become effective until a license has been issued.

    
    

    The statute sets standards for the issuance of a license, and requires bond for the protection of sellers of citrus fruit to licensed dealers, and provides means to prosecute those who buy fruit without a license. It is incumbent upon the seller of fruit for his protection to ascertain that he is dealing with a licensed buyer.

    The bond required to be filed by a licensed dealer does not cover the dealings of one to whom the State has not issued a license, nor is the bond intended to guarantee per-

    formance on the part of a non-licensed dealer.

    
    

    172 So.2d at 638.

    
    

22. In this case, as in Gulf American, the formation and repudiation of the oral contract for the purchase of navel oranges occurred prior to the effectiveness of the bond. Moreover, the evidence of record does not support a finding that the parties entered into any enforceable agreement relating to the sale, purchase, or accounting of the navel oranges after January 25, 1993, the date of Respondent's licensure. Respondent thereafter neither acknowledged an indebtedness to Petitioner nor promised to pay such indebtedness to Petitioner. While Petitioner may not have a statutory remedy before the Department, Petitioner is not foreclosed from appropriate judicial redress on his claim. As also noted by the court in Gulf American, Section 601.641, Florida Statutes, provides criminal penalties for making fraudulent claims with regard to being licensed as a citrus fruit dealer.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that:

The Department enter a Final Order adjudicating the amount of indebtedness owed Petitioner by Respondent in accordance with Section 601.66, Florida Statutes, is $375.00 for 150 boxes of grapefruit mistakenly harvested. It is further recommended that Petitioner's claim for damages resulting from the contract for navel oranges entered into prior to Respondent's licensure as a citrus fruit dealer during the 1992-1993 shipping season be dismissed.

RECOMMENDED in Tallahassee, Leon County, Florida, this 4th day of August, 1995.

RICHARD HIXSON

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 4th day of August, 1995.

APPENDIX

As to Petitioner's Proposed Findings:

1-9. Adopted and incorporated.

1. Adopted, except to the extent that Respondent's repudiation of the contract was solely related to market conditions.

2. Adopted except as to Respondent's promise to pay subsequent to January 25, 1993.

12-14. These paragraphs constitute conclusions of law.

COPIES FURNISHED:

Douglas A. Lockwood III, Esquire PETERSON, MYERS, CRAIG, CREWS

BRANDON & PUTERBAUGH, P.A.

Post Office Drawer 7608

Winter Haven, Florida 33883-7608

Eugene J. O'Neill, Esquire

GOULD, COOKSEY, FENNELL, BARKETT, O'NEILL & MARINE, P.A.

979 Beachland Boulevard Vero Beach, Florida 32963

Brenda Hyatt, Chief Bureau of License & Bond Department of Agriculture Mayo Building, Room 508

Tallahassee, Florida 32399-0800

Mr. David Z. Cutright

Nationwide Mutual Insurance Company 1324 16th Street

Vero Beach, Florida 32960

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to the 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 consult with the agency that will issue the Final Order in this case concerning their 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: 94-006774

Orders for Case No: 94-006774