STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JOHN PROCIDA, AND DEPARTMENT OF ) AGRICULTURE AND CONSUMER AFFAIRS, )

)

Petitioners, )

)

vs. ) CASE NO. 95-5360

) VALHOLLOW ENTERPRISES, INC., d/b/a ) CELEBRITY BALLROOM, )

)

Respondent. )

)

RECOMMENDED ORDER

On April 23, 1996, a formal administrative hearing was held in this case in New Port Richey, Florida, before Richard Hixson, Hearing Officer for the Division of Administrative Hearings.

APPEARANCES

For Petitioner: William Rambaum, Esquire

622 Bypass Drive, Suite 101 Clearwater, Florida

For Department: Lawrence J. Davis, Senior Attorney

Department of Agriculture and Consumer Services

Mayo Building, Room 515 Tallahassee, Florida 32399-0800

For Respondent: Mark A. Goettel, Esquire

THORNTON, TORRENCE and GONZALES, P.A.

6645 Ridge Road

Port Richey, Florida 34668 STATEMENT OF THE ISSUE

The issues for determination in this case are: 1) whether Respondent, VALHOLLOW ENTERPRISES, INC., d/b/a CELEBRITY BALLROOM, violated the provisions of the Florida Dance Studio Act, Sections 501.143 et seq., Florida Statutes; 2) whether Petitioner, JOHN PROCIDA, sustained compensable injury as the result of such violations; and 3) whether the proceeds of a guaranty agreement secured by a $15,000 certificate of deposit which was posted by Respondent should be disbursed by the DEPARTMENT OF AGRICULTURE AND CONSUMER AFFAIRS to Petitioner JOHN PROCIDA for injuries sustained.

PRELIMINARY STATEMENT

By letter dated October 2, 1995, Petitioner, the DEPARTMENT OF AGRICULTURE AND CONSUMER AFFAIRS, notified Respondent, VALHOLLOW ENTERPRISES, INC., d/b/a

CELEBRITY BALLROOM, that the DEPARTMENT had received claims against Respondent and intended to make a demand on the security posted by the Respondent to satisfy such claims. The security posted by Respondent was in the form of a guaranty agreement secured by a certificate of deposit in the amount of $15,000 held by Barnett Bank of Pasco County, Florida. On October 2, 1995, the DEPARTMENT also requested Barnett Bank to send the certificate of deposit to the DEPARTMENT. Barnett Bank complied with this request, and the DEPARTMENT received, and currently holds the certificate of deposit. On October 18, 1995, Respondent filed a timely Petition for Formal Administrative Hearing pursuant to Section 120.57(1), Florida Statutes. On November 3, 1995, the case was referred to the Division of Administrative Hearings.

Formal Hearing was initially scheduled for February 29, 1996. Pursuant to the Prehearing Order, the parties filed a Prehearing Stipulation on February 19, 1996. Formal Hearing was thereafter continued until April 23, 1996.

At Formal Hearing, and with the agreement of the parties, JOHN PROCIDA and the DEPARTMENT OF AGRICULTURE AND CONSUMER AFFAIRS were redesignated as Petitioners, and VALHOLLOW ENTERPRISES d/b/a CELEBRITY BALLROOM was redesignated as Respondent. Petitioner, JOHN PROCIDA, testified in his own behalf and presented eight exhibits which were received in evidence. Petitioner also presented the testimony of Gregg Duncan, an owner of Respondent who testified as an adverse witness. The DEPARTMENT called no witnesses, but presented two exhibits which were received in evidence.

Respondent, VALHOLLOW ENTERPRISES INC., d/b/a CELEBRITY BALLROOM, presented the testimony of owner Gregg Duncan, as well as two other customers of CELEBRITY BALLROOM, Naomi Harper and Mary Davis. Respondent presented two exhibits which were received in evidence.

A transcript of the proceedings was not filed. The parties were allowed fifteen days from hearing in which to file proposed recommended orders. On May 3, 1996, the DEPARTMENT filed its Proposed Recommended Order. On May 10, 1996 Petitioner JOHN PROCIDA filed his Proposed Recommended Order. Respondent did not file a Proposed Recommended Order.

Explicit rulings on the proposed findings of fact contained in the parties' proposed recommended orders may be found in the attached Appendix to Recommended Order, DOAH Case No. 95-5360.

FINDINGS OF FACT

1. Petitioner, JOHN PROCIDA, is eighty-four years old, retired, and currently resides in Pasco County, Florida. Petitioner has been a widower for six years. Petitioner has three children. Petitioner's children do not reside in Florida.

   
   

2. The DEPARTMENT OF AGRICULTURE AND CONSUMER AFFAIRS (DEPARTMENT) is the agency of the State of Florida vested with the statutory authority to enforce the provisions of the Florida Dance Studio Act, Sections 501.143, Florida Statutes.

   
   

3. At all material times, Respondent, VALHOLLOW ENTERPRISES INC., d/b/a CELEBRITY BALLROOM (CELEBRITY BALLROOM), is and was a "ballroom dance studio" as defined in Section 501.143(2)(a), Florida Statutes. CELEBRITY BALLROOM is

   located in Pasco County, Florida, and opened in June of 1993. At all material times, CELEBRITY BALLROOM was owned and operated by Gregg Duncan and his wife, Valerie Duncan.

   
   

4. Sometime in late 1991 or early 1992, approximately one and one-half years after his wife's death, JOHN PROCIDA met Valerie Duncan at the Arthur Murray Dance Studio in Pasco County, Florida, where Mrs. Duncan was employed as an instructor, and Mr. Procida was a customer. At this time Mr. Procida was lonely, and had no friends or family in Florida. Mr. Procida thereafter met Gregg Duncan who also had been associated with the Arthur Murray Dance Studio. Thereafter, Mr. Procida and Mr. and Mrs. Duncan became close friends, socialized several times a week, and came to regard each other as family.

   
   

5. In June of 1993, Gregg and Valerie Duncan opened CELEBRITY BALLROOM. Mr. Procida assisted Mr. and Mrs. Duncan with the opening of CELEBRITY BALLROOM by performing labor, such as painting tables, and also by loaning Mrs. Duncan

   $5000 for the purpose of constructing an additional bathroom at the ballroom dance studio.

   
   

6. On May 23, 1993, immediately prior to the opening of CELEBRITY BALLROOM, Gregg Duncan as owner of Respondent, CELEBRITY BALLROOM, and Petitioner, JOHN PROCIDA, signed a handwritten agreement which stated that Mr. Procida agreed to pay $5000 as a down payment for 500 hours of discounted private dance lessons at $25 per hour and for participation in other unspecified activities at CELEBRITY BALLROOM (The agreement actually uses the term "Celebrity Social Club"). The total price for all the services listed in this agreement was $50,000. The agreement was handwritten by Mr. Duncan, and signed at a kitchen table in the Duncan home. At hearing, Mr. Procida did not specifically remember, and did not acknowledge signing this handwritten agreement; however, the weight of the evidence supports the finding that Mr. Procida signed this agreement. The customary cost of dance lessons at CELEBRITY BALLROOM was $125 per hour; however, in the agreement, Mr. Duncan offered Mr. Procida a discount on dance lessons and other activities because of their close friendship, and because Mr. Duncan was concerned about Mr. Procida's loneliness. Mr. Duncan reduced the agreement to writing because Mr. Procida did not want to appear to be attending CELEBRITY BALLROOM for free.

   
   

7. Subsequent to the opening of CELEBRITY BALLROOM, Petitioner, JOHN PROCIDA, entered into three additional written contracts with Respondent, CELEBRITY BALLROOM. The contracts are dated June 10, 1993, August 26, 1993, and November 24, 1994. The second contract is actually dated August 23, 1983; however, the parties agreed at hearing that the actual date of the contract was August 23, 1993.

   
   

8. Unlike the handwritten agreement of May 23, 1993, the three subsequent written contracts are printed on form Student Enrollment Agreements with CELEBRITY BALLROOM which contain specified terms and conditions. The three subsequent contracts were entered into at the ballroom dance studio. Mr. Procida acknowledges entering into each of these contracts with CELEBRITY BALLROOM.

   
   

9. The first contract of June 10, 1993, provides for 325 hours of private lessons, 250 hours of group lessons, 65 hours of group practice parties, and all studio functions. The first contract also includes a one year and three month studio package diamond Millionaire Club, a Life Time Celebrity Club Membership, all local competitions up to $1000, and all trips up to $1500. The total tuition cost for the first contract is stated at $38,672, with a discount of

   $33,672, leaving a balance owed from Mr. Procida of $5000 on the first contract which was due by June 14, 1993. The June 10, 1993, contract does not contain a written statement of the hourly or lesson rate charged for each type of lesson for which Mr. Procida contracted, nor does the contract state that CELEBRITY BALLROOM is registered with the DEPARTMENT. The contract does not contain a registration number for CELEBRITY BALLROOM.

   
   

10. The second contract of August 26, 1993, provides for 700 half hours of private dance lessons, and 150 hours of group lessons. The second contract, in describing the course, goes on to provide for the following activities: "V.I.P. (4 limo parties, 3 catered dinner in studio, 3 cocktail dances on town) Gold Key (privilege room, gold key, 1 chore routine, 3 limo parties, 6 theme parties..." The second contract also makes reference to a "hotel comp" for December 8-12, 1993. The second contract recites a tuition cost of $12,085 with a discount of

    $3500, for a total cost of $9,085. The second contract reflects that Mr. Procida paid a deposit of $3085, leaving a balance due of $6000, which was to be paid in two installments, the first due on December 1, 1993, and the final payment due on August 1, 1994. The August 26, 1993, contract does not contain a written statement of the hourly or lesson rate charged for each type of lesson for which Mr. Procida contracted, nor does the contract state that CELEBRITY BALLROOM is registered with the DEPARTMENT. The contract does not contain a registration number for CELEBRITY BALLROOM.

    
    

11. The third contract dated November 23, 1994, does not relate to dance lessons, but instead provides for "special services" described as a "V.I.P. yr/Bahama Cruise 3 days, Feb showcase weekend Escape 2 days" at a cost of

    $10,430.00. The third contract reflects a discount of $643, a deposit of $4000, leaving a balance of $5,787 due from Mr. Procida by November 25, 1994. The third contract does not state that CELEBRITY BALLROOM is registered with the DEPARTMENT, nor does the contract contain a registration number for CELEBRITY BALLROOM.

    
    

12. CELEBRITY BALLROOM was not registered as a ballroom dance studio with the DEPARTMENT until mid-1994. Accordingly, at the time of the May 23, 1993, handwritten agreement, and at the times the first and second contracts dated June 10, 1993, and August 26, 1993, were executed CELEBRITY BALLROOM was not registered with the DEPARTMENT. CELEBRITY BALLROOM was registered with the DEPARTMENT at the time the third contract dated November 23, 1994, was executed. As indicated above, none of the contracts include a phrase stating that CELEBRITY BALLROOM is registered with the DEPARTMENT, nor do any of the contracts contain a registration number issued to CELEBRITY BALLROOM by the DEPARTMENT.

    
    

13. From June of 1993 until November of 1994, Petitioner, JOHN PROCIDA, was a regular patron of CELEBRITY BALLROOM. At first, Mr. Procida did not consider himself a "customer" of the ballroom dance studio because Valerie Duncan invited him to attend dance studio functions and, as a favor, to dance with female instructors due to a lack of male patrons. As time went on Mr. Procida agreed to take, and actually received, at least 348 hours of private dance lessons. Mr. Procida also attended other dance studio social activities, including a trip to Jamaica. Mr. Procida was satisfied with the services received and signed private lesson registers indicating his satisfaction. Mr. Procida's picture appeared in a newspaper advertisement for CELEBRITY BALLROOM. Mr. Procida agreed to pay for these dance lessons and other activities.

    
    

14. In 1994 Petitioner, JOHN PROCIDA, pursuant to the November 23, 1994 contract, participated in a cruise to the Bahamas which was sponsored by

    CELEBRITY BALLROOM. Mr. Procida was not satisfied with the cruise accommodations, the services he received nor his dance studio instructor during this cruise. As a result of his dissatisfaction, Mr. Procida's conduct during the Bahamas cruise created problems for CELEBRITY BALLROOM with some of the other dance studio customers.

    
    

15. After the Bahamas cruise, and as a result of the problems which arose during the cruise, CELEBRITY BALLROOM terminated the November 23, 1994, contract with JOHN PROCIDA. The contract's termination occurred prior to the completion of Mr. Procida's one year V.I.P. membership, the February Showcase, and the Weekend Escape. CELEBRITY BALLROOM owes JOHN PROCIDA $4,200 for services not provided under the November 23, 1994 contract.

    
    

16. On January 4, 1995, Petitioner, JOHN PROCIDA, paid $10,000 by cashier's check to CELEBRITY BALLROOM. Mr. Procida considered this payment a loan to Valerie Duncan, which was to be repaid by February 15, 1995. The Duncans considered the $10,000 as payment on account for services provided to Mr. Procida by CELEBRITY BALLROOM.

    
    

17. Petitioner JOHN PROCIDA has paid CELEBRITY BALLROOM a total of

    $36,590.00. CELEBRITY BALLROOM applied all of the $36,590 paid by Mr. Procida to the $50,000 due under the May 23, 1993 handwritten agreement. In a civil action between these parties, CELEBRITY BALLROOM has filed a countersuit for the recovery of an additional $38,822 from Mr. Procida for services provided.

    
    

18. The total contract price of all services which were included in the subsequent three written contracts entered into by JOHN PROCIDA and CELEBRITY BALLROOM was $21,430.00.

    
    

19. Respondent, CELEBRITY BALLROOM, has not refunded any amount paid by Petitioner, JOHN PROCIDA.

    
    

20. Pursuant to Section 501.143(5), Florida Statutes, CELEBRITY BALLROOM posted with the DEPARTMENT a guaranty agreement secured by a $15,000 certificate of deposit. The DEPARTMENT has received and now holds the $15,000 certificate of deposit.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

22. Respondent, CELEBRITY BALLROOM, is a "ballroom dance studio" within the meaning of Section 501.143(2)(a), Florida Statutes, and Respondent is subject to regulation by the DEPARTMENT in accordance with the provisions of the Florida Dance Studio Act, Sections 501.143, et seq., Florida Statutes.

    
    

23. The Florida Dance Studio Act is a consumer protection statute. See Chapter 92-133, Laws of Florida.

    
    

24. Under the provisions of Section 501.143(3)(a), Florida Statutes, CELEBRITY BALLROOM is required to register on an annual basis with the DEPARTMENT. CELEBRITY BALLROOM is also required to submit to the DEPARTMENT a copy of all contracts offered to the public.

25. Under Section 501.143(3)(c), Florida Statutes, each contract of CELEBRITY BALLROOM is required to include a phrase stating that CELEBRITY BALLROOM is registered with the DEPARTMENT and each contract is also required to contain the registration number issued by the DEPARTMENT.

    
    

26. Section 501.143(4), Florida Statutes, sets forth the contract requirements for ballroom dance studios, and provides in pertinent part:

    
    

    1. CONTRACT REQUIREMENTS.-Every contract for ballroom dance studio services or lessons shall be in writing and shall be subject to this section. All provisions, requirements, and prohibitions which are mandated by this section shall be given to the customer at the time the customer signs the contract.

       1. Every contract for ballroom dance studio services or lessons shall set forth the customer's total payment obligation for services or lessons to be received pursuant

          to the contract and shall contain a written statement of the hourly or lesson rate charged for each type of lesson for which the customer has contracted.

       2. If the contract includes ballroom dance studio lessons which are sold at different hourly or lesson rates, the contract shall contain separate hourly or lesson rates for each different type of lesson sold.

       3. If the contract for dance studio ser- vices or lessons calls for payment in install- ments, the studio shall comply with all the provisions of the Retail Installment Sales Act, part II of chapter 520.

       4. All charges for dance studio services or lessons for which the customer has con- tracted which are not capable of an hourly rate shall be set forth in writing in specific terms.

          
          

27. The burden of proof in this proceeding is on the Petitioners, JOHN PROCIDA and the DEPARTMENT, to establish facts by a preponderance of the evidence which demonstrate a statutory entitlement to a claim on the proceeds of the security posted by the Respondent, CELEBRITY BALLROOM. Florida Department of Transportation v. J.W.C. Company, Inc., (Fla. 2d DCA 1981).

    
    

28. In this respect, Petitioners have met their burden. The preponderance of the evidence establishes that CELEBRITY BALLROOM violated the provisions of Sections 501.143(3)(a) and (c), and 501.143(4)(a) and (b), Florida Statutes. It is established that CELEBRITY BALLROOM conducted business as a ballroom dance studio prior to registration, and that neither the handwritten nor the printed contracts entered into by CELEBRITY BALLROOM and JOHN PROCIDA did contain statements reflecting registration with the DEPARTMENT, nor a registration number issued by the DEPARTMENT. It is further established that CELEBRITY BALLROOM did not comply with the specific statutory contract requirements set forth in Sections 501.143(4)(a) and (b), Florida Statutes, relating to hourly or lesson rates. Accordingly, Petitioners have met their burden of demonstrating a statutory violation.

29. As to the disbursement of the security posted by CELEBRITY BALLROOM, Section 501.143(5)(a) provides in pertinent part that "(t)he bond shall be in favor of the state for the benefit of any person injured as a result of a violation of this section."

    
    

30. Petitioners take the position that the contracts are void because of these statutory violations, and therefore Petitioner, JOHN PROCIDA, is entitled to a refund of all amounts paid to CELEBRITY BALLROOM. In support of this position Petitioners cite several cases construing the Florida Motor Vehicle Repair Act, Sections 559.901 et seq., Florida Statutes.

    
    

31. Respondent takes the position that Mr. Procida actually received ballroom dance studio services valued in excess of the amounts he paid, that Mr. Procida was satisfied with these services, that Mr. Procida sustained no compensable injury as a result of the alleged statutory violations, and that under the principle of quantum meruit Mr. Procida is not entitled to any of the proceeds of the security filed with the DEPARTMENT.

    
    

32. All of the parties recognize that there is no case law expressly construing the provisions of the Florida Dance Studio Act.

    
    

33. Although Petitioners' position in this case imposes a harsh result, it appears that under Florida law, Petitioners' position is well-taken. The Florida Dance Studio Act is a broad-based consumer protection statute. The act requires disclosure in specific terms to a ballroom dance studio customer of all contractual obligations. The act requires that every contract be written and that the written contract contain all of the provisions mandated by the statute, including a penalty-free cancellation period. Section 501.143(4), Florida Statutes. The act contains a wide array of enforcement provisions for violations including: administrative penalties and fines (Section 501.143(7) Florida Statutes; criminal penalties (Section 501.143(8), Florida Statutes); civil actions for treble damages by a customer (Section 501.143, Florida Statutes); and, as in this case, an administrative action to recover on the proceeds of the security filed by the ballroom dance studio (Section 501.143(5)(a), Florida Statutes). Because the Florida Dance Studio Act is a consumer protection statute, the same principles applicable to the Florida Motor Vehicle Repair Act should be applied. In construing that act, it has been held that consumer protection statutes necessarily limit the principle of quantum meruit. As the court stated in Osteen v. Morris, 481 So. 2d 1287, 1289-1290, (Fla. 5th DCA 1986):

    
    

    Quantum meruit is the name for the legal doctrine which, in the absence of an express agreement, imposes legal liability on a con- tract that the law implies from facts where one receives goods or services from another under circumstances where in the normal course of common affairs a reasonable person

    receiving such benefit would ordinarily expect to pay for it. This consumer protection statute must necessarily be construed to be a limitation on the common law principle of quantum meruit because the recognition of a

    quasi-contractual obligation by the law in this situation would necessarily circumvent the very dictates of the statute by enabling

    a motor vehicle repair shop to ignore the statutory requirements of providing a written estimate or obtaining a written waiver.

    
    

34. The principles of this holding have also been applied in other circumstances where a contract has been entered into in violation of a statute. In Spence, Payne, Masington and Grossman P.A. v. Phillip M. Gerson, P.A., 483 So.2d 775 (Fla. 3d DCA 1986), the Court declined to apply the principle of quantum meruit where an attorney had entered into a contract in violation of Section 877.02(1), Florida Statutes, prohibiting solicitation of business. The Court in Gerson stated:

    
    

    Gerson also suggests that, even if the evidence demonstrates, as it does, that his contract is void for illegality, he should nevertheless recover by way of the equitable remedy of quantum meruit. He cites no authority to support this suggestion because, quite understandably, one exists. To approve such a suggestion would be to condemn unlawful conduct on the law side of the court and

    approve the same unlawful conduct on the equity side of the court. Clearly, as long as solicitation is against the law, an attorney who engages in it is entitled to no fruit

    from the forbidden tree on any theory of recovery recognized in law or equity.

    
    

35. Because all of the contracts entered into by JOHN PROCIDA and CELEBRITY BALLROOM violate the provisions of the Florida Dance Studio Act, the contracts are void. As indicated above, the principle of quantum meruit is not applicable under these circumstances. In this respect, JOHN PROCIDA has sustained compensable injury in that he was not afforded the specific protections afforded to ballroom dance studio customers as required by the Florida Dance Studio Act.

    
    

36. Under the provisions of Section 501.143(5)(a), Florida Statutes, Petitioner, JOHN PROCIDA, is accordingly entitled to the benefit of the security filed by CELEBRITY BALLROOM, and to recover those funds in the amount of $21,430 which were paid to CELEBRITY BALLROOM under the terms of the three written contracts which are clearly under the regulatory jurisdiction of the DEPARTMENT, and which are void and in violation of the Florida Dance Studio Act. No determination is made regarding the remaining issues of dispute between the parties which are the subject of the pending civil litigation.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the DEPARTMENT OF AGRICULTURE AND CONSUMER AFFAIRS enter a final order finding in favor of JOHN PROCIDA on his claim against VALHOLLOW ENTERPRISES d/b/a CELEBRITY BALLROOM and disbursing the full amount of $15,000 of the security filed in satisfaction of his claim.

DONE and ENTERED this 13th day of May, 1996, in Tallahassee, Florida.

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 13th day of May, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-5360

To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact:

As to Petitioner JOHN PROCIDA's Proposed Findings of Fact. 1.-10. Accepted and incorporated.

11. Rejected as irrelevant. 12.-14. Accepted and incorporated.

As to the DEPARTMENT's Proposed Findings of Fact. 1.-17. Accepted and incorporated.

COPIES FURNISHED:

Brenda Hyatt, Chief

Bureau of Licensing and Bond Department of Agriculture

and Consumer Services

508 Mayo Building

Tallahassee, Florida 32399-0800

Richard Tritschler General Counsel The Capitol, PL-10

Tallahassee, Florida 32399-0810

William Rambaum, Esquire 622 Bypass Drive, Suite 101 Clearwater, Florida

Lawrence J. Davis Senior Attorney

Department of Agriculture and Consumer Services

Mayo Building, Room 515 Tallahassee, Florida 32399-0800

Mark A. Goettel, Esquire

THORNTON, TORRENCE and GONZALES, P.A.

6645 Ridge Road

Port Richey, Florida 34668

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: 95-005360

Orders for Case No: 95-005360