STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MAZDA MOTOR OF AMERICA, INC., ) and J. S. IMPORTS, INC., )

)

Petitioners, )

)

vs. ) CASE NO. 96-0734

) STEWART MAZDA, DELRAY MAZDA, ) and JUPITER DODGE MAZDA, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on November 12-15, 1996, at Tallahassee, before J. D. Parrish, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Dean Bunch, Esquire

Sutherland, Asbill and Brennan, L.L.P. 909 East Park Avenue

Tallahassee, Florida 32301

For Respondents: James D. Adams, Esquire

ADAMS & QUINTON, P.A.

7300 West Camino Real

Boca Raton, Florida 33433

Gary M. Dunkel, Esquire

Lewis, Vegosen, Rosenbach and Silber, P.A.

500 South Australian Avenue West Palm Beach, Florida 33401

STATEMENT OF THE ISSUES

Whether J.S. Imports, Inc. should be granted a new point

Mazda dealership at 631 South Military Trail, West Palm Beach, Florida, pursuant to Section 320.642, Florida Statutes.

PRELIMINARY STATEMENT

This case began on January 5, 1996, when a notice was published which announced a new point dealership sought by Petitioner, Mazda Motor of America, Inc. (Mazda) to be established by J.S. Imports, Inc. (JSI) at 631 South Military Trail, West Palm Beach, Florida. The proposed new point was timely opposed by Respondents, Stewart Mazda, Delray Mazda, and Jupiter Dodge Mazda, existing dealerships within the community or territory of the new dealer. The matter was forwarded to the Division of Administrative Hearings for formal proceedings on February 6, 1996.

Originally, based upon the joint response to initial order, the case was scheduled for hearing July 15-19, 1997. Thereafter, the hearing was continued and rescheduled for September 17-20, 1996. Based upon a stipulation of the parties, the hearing was again rescheduled for November 12-15, 1996. Later motions for change of venue and for continuance filed by Respondents were denied.

The motion for continuance was predicated on the need for additional discovery regarding an alleged impending sale of the proposed dealership site. Respondents were granted leave to take additional discovery and were granted leave, subsequent to the hearing, to late-file depositions in support of their position.

Respondents had filed a motion to dismiss related to the proposed dealership site and JSI's ability to control the location.

A prehearing stipulation was filed in this cause on September 10, 1996. Such stipulation recognized that JSI would not present a case in the dispute as Mazda bears the burden of proof. The stipulation further identified the issue to be resolved as “whether J.S. Imports will be permitted to establish a dealership for the sale of Mazda automobiles and trucks at 631 South Military Trail, West Palm Beach, Florida 33425.”

Mazda’s position on the controversy was stated as “the establishment of J.S. Imports is appropriate, in accordance with Section 320.642, Florida Statutes, and that a recommended order should be issued to the Department of Highway Safety and Motor Vehicles recommending that the establishment of the dealership be permitted.” In contrast, the Respondents’ position, as stated in the prehearing stipulation, argued “the existing Mazda dealers are providing adequate representation in the community or territory, and therefore, the establishment of J.S. Imports should not be permitted.” At the time of the prehearing stipulation, Respondents did not challenge the adequacy of the notice specifying the location of the proposed new point.

At the hearing, Mazda presented testimony from the following witnesses: John English, Vice President for Sales, Mazda Motor of America; and James A. Anderson, President of Urban Science Applications, Inc. Its exhibits numbered 1 through 18, 19 (pages

denoted by the record), 20, 23, and 24 through 64 were admitted into evidence.

Respondents offered the testimony of Dr. Ernest H. Manuel, President of the Fontana Group; Earl Douglas Stewart, Jr., owner of Stewart Mazda; Janet C. Goetz, an employee of Stewart Mazda; Anthony Marino, general manager of Jupiter Dodge Mazda; and Edward Morse, chairman of the board and CEO for Morse Operations. Respondents’ exhibits numbered 1 through 16, and 18 through 42 have also been admitted into evidence.

The transcript of the proceeding was filed on December 26, 1996. The depositions of Terry Taylor, John Staluppi, Jr., John Staluppi, Gary Busch, and William D. Goetze were filed by Respondents on February 11, 1997. Pursuant to the order extending time to file proposed recommended orders, the parties’ proposed orders were also filed February 11, 1997.

Prior to hearing, the Respondents filed motions seeking leave to allow additional discovery on an issue of whether the notice published in this cause adequately identified the subject location. More specifically, Respondents argued that developments between third parties who are indirectly linked to this case have materially affected JSI’s ability to secure the subject site for use as a Mazda dealership. In this regard, Respondents claimed that the property owner had entered into an agreement to sell the assets of businesses located at the Mazda site to a third party. Such agreement, according to Respondents,

impacted and perhaps negated JSI’s right to use the location identified in the notice. Moreover, such a sale would demonstrate that JSI was not the true applicant for the point but was, in effect, substituting for another person or entity. Accordingly, Respondents maintained that the case should be dismissed.

Following discovery on the issues, Mazda asserted that the transaction referenced by Respondents was no longer viable, and that the depositions of the individuals involved established that the owner of the property has not impaired JSI’s right to use the parcel described in the notice. More important, however, Mazda argues that the claim of a notice defect has been waived by Respondents since they failed to include same in the prehearing stipulation. Mazda maintains that Respondents knew of the relationship between JSI and the property owner, knew there was not a formal lease, and did nothing to challenge the sufficiency of the notice. In anticipation of trial, Respondents’ portion of the prehearing stipulation only indicated the issue as whether there is a need for an additional dealer point in the community or territory. Thus, alleges Mazda, Respondents are limited to the issue of whether there is adequate representation; any other evidence, they claim, is inadmissible.

On March 10, 1997, the Respondents filed a motion to reopen proceedings, allow additional discovery and to present testimony and evidence together with a request for oral argument on the

motion. Such motion was based, in part, on a newspaper article which Respondents claimed established additional location issues. After considering the written responses to the motion filed by opposing counsel, such requests were denied by order entered April 2, 1997. This recommended order addresses Respondents' motion to dismiss as well as the criteria for a new point dealer set forth in Section 320.642, Florida Statutes.

FINDINGS OF FACT

1. Petitioner, Mazda Motor of America, Inc., is a manufacturer of automobiles and trucks which are distributed and sold through a network of dealerships. Under Florida law Mazda is denoted a "licensee."

2. On January 5, 1996, a notice of publication for a new point franchise motor vehicle dealer was published which announced Mazda intends to allow the establishment of J.S. Imports, Inc., as a dealership for the sale of Mazda vehicles at 631 South Military Trail, West Palm Beach (Palm Beach County), Florida 33415.

3. The notice further provided, in pertinent part:

   
   

   Mazda Motor of America, Inc., intends to engage in business with J. S. Imports, Inc., as a dealership on or after February 1, 1996. The name and address of the dealer-operator and principal investor of J. S. Imports, Inc., is: John Staluppi, Jr., 42 Davidson

   Lane East, West Islip, New York 11795.

   * * *

   Dealerships of the same line-make which can establish standing to protest the

   establishment of the new point may do so by filing a written petition or complaint with the Florida Department of Highway Safety and Motor Vehicles.

   
   

4. Thereafter, on February 1, 1996, Respondents, Stewart Mazda, Delray Mazda, and Jupiter Dodge Mazda, filed a petition or complaint challenging the proposed new point dealer. Respondents are the existing Mazda dealerships located within Palm Beach County. There are no other same line-make motor vehicle dealerships which are physically located so as to meet or satisfy the requirements of Section 320.642(3), Florida Statutes. Thus, all dealers with the potential for standing have participated in this proceeding.

5. Palm Beach County is a county with more than 300,000 population.

6. Respondent, Stewart Mazda, is located at 2001 South Dixie Highway, West Palm Beach, Florida, and is within 12.5 miles of the proposed location for the new point site. In fact, the Stewart dealership is within five miles of the proposed new point.

7. Respondent, Delray Mazda, is not located within 12.5 miles of the proposed location. Nevertheless, Delray Mazda established that during any 12 month period of the 36 month period preceding the filing of the licensee's application for the proposed dealer Delray Mazda made 25% of its retail sales of new motor vehicles to persons whose registered household addresses were within a radius of 12.5 miles of the proposed site.

8. Respondent, Jupiter Dodge Mazda, is not within 12.5 miles of the location for the proposed new dealership yet it also met the sales standard described in paragraph 7.

9. The proposed new motor vehicle dealer, J.S. Imports, Inc., is owned by John Staluppi, Jr., the son of John Staluppi. No other person or entity owns more than a 10% interest in JSI.

10. It is proposed that J.S. Imports, Inc. will be located at 631 South Military Trail, West Palm Beach. Such real property is part of an automobile mall or auto mall (a cluster of automobile dealerships) which is owned or controlled by John Staluppi.

11. The new Mazda vehicle sales facility would be located at 631 South Military Trail; however, the service facility for the dealership would be located elsewhere within a shared space at 561 South Military Trail, West Palm Beach. Both parcels are owned or controlled by John Staluppi. Both parcels are part of the same auto mall.

12. As part of its documentation to establish the dealership, J.S. Imports, Inc. (JSI) submitted an unsigned lease for the subject property between John Staluppi and the proposed dealer.

13. On or about October 25, 1996, just prior to this case going to hearing, John Staluppi entered into an agreement to sell the assets of the automobile dealerships located within the auto mall. He also agreed to lease the real estate upon which they

    are located. The lease included the sites for the new Mazda point as well as the service location. Without going into details of the agreement which are not material to the issues of this case, and without listing all of the corporate entities involved in the transaction, the principals in this new agreement were John Staluppi and Terry Taylor.

14. Material to this case, however, is the covenant between Mr. Taylor and John Staluppi, Jr. Those parties reached an agreement to sublease the real estate at 631 South Military Trail and the service department at 561 South Military Trail, West Palm Beach. Such agreement to sublease was also executed October 25, 1996. Based upon the foregoing, as of October 25, 1996, the proposed site for the Mazda new point dealer continued to be 631 South Military Trail with service work to be at 561. These sites are identical to the information submitted by the applicant to the Department of Highway Safety and Motor Vehicles. This information was also disclosed to Respondents during discovery of the case, prior to the prehearing stipulation.

15. Subsequently, the transaction between Mr. Taylor and John Staluppi was abandoned. Mr. Taylor’s deposit on the transaction was refunded. Apparently, these parties no longer intend to abide by the terms of the asset purchase agreement.

16. JSI does not own the proposed site. If approved, JSI will lease the property from John Staluppi or entities he owns or

    controls. As of the time of hearing, JSI did not have a signed lease for the subject property.

17. Typically, Mazda does not submit applications for new point dealerships without some documentation substantiating control of the proposed site. A proposed dealer would normally either own or control the proposed site. Control of the site may be shown by a lease, an option to purchase or an option to lease.

18. In this instance, Mazda presumed the proposed site would be secured through the efforts of John Staluppi, Jr. on behalf of his company which would lease from his father. Moreover, Mazda believes its agreement with JSI (for the applicant dealer to reimburse it for costs or expenses incurred should the dealership effort fail due to an act or omission of JSI) adequately protected its interests in this regard.

19. As of the dates of filing the application for a new point dealership, the notice of same, and the hearing in this cause, no person or entity, other than John Staluppi, Jr., had a beneficial ownership interest in the proposed dealership.

20. To determine whether an additional same line-make dealer should be approved, the existing network of motor vehicle dealers must be evaluated to determine whether they are providing adequate representation to the community or territory.

21. The applicable statutory criteria do not define "adequate representation" nor the "community or territory."

22. Typically, sales data of past dealership performance is

    utilized by all parties to establish a community or territory (Comm/Terr) and to evaluate the dealers' effectiveness.

23. In this case how the Comm/Terr should be defined is disputed by the parties. Although entitled to weight in the consideration of how the Comm/Terr should be defined, the dealer agreements with the three existing dealers (Respondents) do not assign an area by geographical boundaries. Respondents believe the Comm/Terr, based upon their interpretation of their agreements, should be defined as Palm Beach County as a whole.

24. In contrast, Mazda studies have defined the market for these dealers in different ways; however, it believes the Comm/Terr should be Palm Beach County excluding the primary market area (PMA) ascribed to Jupiter Dodge Mazda.

25. In making this determination, Mazda constructed the PMAs for the existing dealers as well as the new point (or open point) which has been designated as the Staluppi PMA. Within the Staluppi PMA it is presumed that dealer would have a competitive advantage in the market. Similarly, within the Stewart PMA that dealer would have the competitive edge due to customer preference and convenience.

26. The actual shopping patterns of Mazda customers was also assessed. In this case, the three dealers are located in three distinct geographical areas: one toward the northern boundary of the county at Jupiter; one to the south at Delray; and one in the eastern central portion at downtown West Palm

    Beach. The proposed Staluppi/JSI site is west of the Stewart location.

27. Based upon the actual shopping patterns the majority of the sales by these three existing dealers are made to customers in the same county. Because few of Mazda's customers come from adjacent counties, the largest area which should be used to define the Comm/Terr is the county itself.

28. Within Palm Beach County there are also identifiable plots associated with the three dealers which show that while Stewart and Delray are connected to the JSI site (via established purchasing patterns), Jupiter is not. For this reason, Mazda's expert in rendering his initial opinions regarding this matter excluded Jupiter from the Comm/Terr. This approach has been deemed persuasive.

29. Currently, there are three clusters of automobile and truck dealerships within the Palm Beach Comm/Terr: Delray, where Mazda is now located; Military Trail/Okeechobee Boulevard, where Mazda wants to be located; and North Lake Boulevard.

30. Eighty percent of the customers who shop for new cars, regardless of brand, go to one of the three clusters. Mazda is not represented in two of these popular shopping venues. Mazda and Dodge are the only brands offered in Jupiter. Less than 5% of the customers from the remainder of Palm Beach County (away from the Jupiter PMA) went to Jupiter to purchase a new vehicle.

31. To determine a reasonable expected market penetration

    standard, it is appropriate to exclude certain factors, such as the consumer preferences for certain types of vehicles (independent of brand) over which the dealers have no control.

32. Market penetration is the traditional standard used to measure adequacy of representation because it reflects the competitive efforts of the competing dealers. Registration data of all brands is used to comprise a single indicator called market share, which is an objective and accurate measure of market activity.

33. Registration data reflects actual consumer purchases. Actual registrations account for demographic characteristics, including age, income, education, size-class preferences, and product popularity.

34. Market penetration for any area is computed utilizing all registrations to addresses in the area, regardless of the location of the selling dealer.

35. After registration data is compiled, the performance of the Comm/Terr can be compared to another market area (allowing for differences in segment popularity).

36. In this case, Mazda compared the Palm Beach Comm/Terr to the Miami/Ft. Lauderdale market.

37. Typically, manufacturers and companies which compile data regarding vehicle sales classify new vehicle sales into segments. These segments list models which are comparable to one

    another and are, presumably, competing for the same customer. Mazda classifies its vehicles into nine segments.

38. Although it could be argued Mazda is ineffective against Ford, General Motors, and Chrysler, part of that theoretical ineffectiveness is due to the lack or absence of entries from Mazda into markets or segments flooded by those make vehicles. For example, Mazda does not have a vehicle to compete with a Chevrolet Suburban.

39. Nevertheless, on a segment-by-segment basis where Mazda competes with an entry comparable to the other line-makes (in size and class) Mazda's effectiveness can be computed and demonstrated.

40. By measuring Mazda's penetration in each segment achieved in the Miami/Ft. Lauderdale area, applied to the industry data available in each segment in the Staluppi/JSI PMA, an appropriate standard is established for what could be expected if the latter were receiving adequate representation.

41. Similarly, by applying the penetration rate to the Palm Beach Comm/Terr as a whole it is possible to establish what could be expected if the Comm/Terr were receiving adequate representation.

42. By considering the segment analysis the process takes into account differences in consumer preferences between markets as to the popularity of segments, and thereby gives a more

    accurate measure of what Mazda's reasonably expected market penetration should be.

43. Utilizing this segment analysis, the reasonably expected 1995 Mazda market share in the Staluppi/JSI PMA was 5.97%. The actual penetration for Mazda in this PMA was 3.81%.

44. Similarly, in the Palm Beach Comm/Terr in 1995, Mazda's reasonably expected share in the segments was 6.21%. The actual penetration for Mazda in the Comm/Terr was 4.49%.

45. Alternatively, adding Jupiter to the Palm Beach Comm/Terr, Mazda's reasonably expected market share in 1995 was 6.19%.

46. The actual penetration in the Palm Beach Comm/Terr (adding Jupiter) was 4.65%.

47. Thus, in each analysis Mazda performance fell short of its reasonably expected penetration.

48. With a properly constructed dealer network, containing the appropriate number of dealerships in proper locations, it is reasonable to expect the dealer network in Palm Beach County to perform as well as the dealer network in Miami/Fort Lauderdale after adjusting for the local consumer patterns that make Palm Beach different from the other area.

49. Net shortfall is the number of additional Mazdas that would have to be registered in order to equal the expected level based on average performance across an area.

50. On the basis of the net shortfall in units, or units

    required to be registered in order to bring the Staluppi/JSI PMA up to the expected performance, the 1995 shortfall was 246 units.

51. In reviewing the Palm Beach Comm/Terr as a whole over the three year period from 1993 to 1995, the efficiency has changed from 70.1% to 72.4%. For the Comm/Terr plus Jupiter, the efficiency has changed from 68.6% to 75.2% during the three years immediately following the insertion of Jupiter Dodge Mazda.

52. Mazda was not receiving adequate representation from the standpoint of not achieving reasonably expected market share. That conclusion is the same whether the area under review is the Staluppi/JSI PMA, the larger Palm Beach Comm/Terr, or the Palm Beach Comm/Terr with Jupiter included.

53. Increases in performance in 1996 (after the existing dealers knew an additional dealer was being sought for the Palm Beach Comm/Terr) while commendable do not negate the historical pattern of providing inadequate representation.

54. The growth of population and households in Palm Beach County has been predominately to the west and central portions of the county and throughout the Delray Beach area. The proposed Staluppi/JSI PMA has also experienced rapid growth in households and population which is expected to continue.

55. Among Mazda buyers, 28.5% thought that the location of the dealer was extremely important; 35.1% thought it was very important; 22.8% thought it was somewhat important; whereas only 8.7% thought it was not important, and 4.9% not important at all.

56. The Military Trail auto mall into which JSI proposes to open the additional Mazda dealership, now contains Toyota, Jeep Eagle, Chrysler Plymouth, Nissan, Infiniti, Kia, GMC, Saturn, Ford and Isuzu. Other brands considered part of this cluster are on Okeechobee Boulevard. They are VW, Hyundai, Acura, Subaru, Volvo, Oldsmobile, Buick, Audi, BMW, Lexis, Lincoln Mercury, Chevrolet, Dodge, Mitsubishi and Mercedes Benz.

57. Mazda would be required to have 3.2 dealerships in order to have the same share of the franchises in the Palm Beach Comm/Terr as it has in the Miami/Ft. Lauderdale area.

58. Because Jupiter Dodge Mazda does not serve the Palm Beach Comm/Terr in a meaningful way, the Comm/Terr has two Mazda dealerships, and needs at least one more dealership to have a reasonable opportunity to receive adequate interbrand competition and gain expected market share.

59. The likely cause of the current inadequacy of performance for the Palm Beach Comm/Terr is insufficient dealer count and poor dealer location.

60. Without a dealer in the Staluppi/JSI PMA, consumers average 9.9 miles from the nearest Mazda dealer, which is higher than the major competitors located in the Staluppi/JSI PMA.

61. With the addition of a Mazda dealer in the Staluppi/JSI PMA customers will be 7.2 miles, on average, to the nearest Mazda dealer a distance which should be more competitive with other brands such as Ford (3.9 miles), Chevrolet (4.7 miles), Nissan

    (7.2 miles), and Toyota (7.2 miles).

    
    

62. Optimal location analysis also demonstrates that the proposed location would maximize customer convenience. If the J.

    S. Imports dealership is allowed to "float" in the Palm Beach Comm/Terr, while the other dealer locations are fixed, the location which would maximize customer convenience is near the proposed site.

63. The proposed location is near the optimal location, and in the midst of a cluster of dealerships where approximately 30% of the sales of all Palm Beach County dealers are made. The proposed site is good in terms of solving the customer convenience problem in the area, and providing Mazda a presence in the cluster where many sales are made.

64. The addition of a dealership will likely benefit consumers and the public interest. It will provide the growing population of the Staluppi/JSI PMA with a more convenient place to shop for Mazdas and more convenient Mazda service. It will take Mazda to a growing cluster of dealerships allowing customers a one stop opportunity to comparison shop Mazda and its competitors.

65. Moreover, with increased interbrand and intrabrand competition Mazda and the existing dealers should be able to improve sales penetration and take advantage of the available market for Mazda products.

66. Therefore, because of the large untapped opportunity

    for Mazda in the Palm Beach Comm/Terr as a whole, in the Comm/Terr plus Jupiter, and in the "identifiable plot" known as the Staluppi/JSI PMA, the addition of a new dealer should not cause a decrease in the existing Mazda dealers' sales over the long term. The addition should have a positive impact upon the overall sales opportunities for all the Mazda dealers.

67. If you compute the total lost opportunity for sales in this market (941 units) and allocate a portion of sales to the Staluppi/JSI PMA (555), the remainder would be available to the existing dealers of the Comm/Terr.

68. This remainder of the lost opportunity, (467 units utilizing the average penetration profile; 386 using the Jupiter profile), would be available for all Palm Beach Mazda dealers.

69. Therefore, the proposed addition of a dealership can take place without taking any sales from existing Mazda dealers. The existing dealers should increase their sales because a large number of customers are now shopping in the Northlake and Okeechobee/Military Trail clusters, and could not previously consider Mazda conveniently because of the lack of a dealer. Having a dealer in the Okeechobee/Military Trail cluster should stimulate interest in Mazdas.

70. All existing dealers have made substantial financial investments to perform their obligations under their dealers' agreements.

71. In Stewart's case, the total investment is close to

    $5,000,000. Stewart's real estate and building are valued at approximately $3,000,000.

72. Jupiter Dodge Mazda has about $1,000,000 invested in its dealership.

73. Delray Mazda has approximately $3,500,000 invested in its dealership.

74. All three existing dealerships should benefit from an increased Mazda presence in the market place.

75. The reasonably expected market penetration for Mazda should improve with an additional dealership at the Staluppi auto mall.

76. Mazda has not denied its existing dealers an opportunity for reasonable growth, expansion or relocation. In fact, Mazda urged Stewart to establish the dealership at the proposed location. Only when efforts with Stewart failed did Mazda go outside the existing dealers for an operator for the additional point.

77. Mazda has not attempted to coerce the existing dealers into consenting to the additional dealership. In reaching this conclusion the single incident complained of by one existing dealer (that Mazda withdrew some advertising support) has been considered but is not persuasive that Mazda has acted improperly in its efforts to establish the new point.

78. The distance travel time, considering traffic patterns and accessibility, between the proposed site and its nearest same

    line-make dealer (Stewart) is approximately ten minutes. While geographically closer than other dealers of same line-make vehicles, traffic and accessibility put the proposed site and Stewart at a reasonable distance.

79. No evidence in this case supports a conclusion that consumers could have the same benefits offered by the proposed dealership from other changes.

80. No evidence suggests the existing dealers are not in compliance with their dealer agreements.

81. Intrabrand and interbrand competition should improve with the establishment of the new point. Service and sales facilities will be more convenient to customers.

82. All existing dealers make sales into the area of the proposed site. With anticipated population growth and market availability, any sales lost to the new point should be offset by Mazda’s increased market presence, improved market penetration, and greater overall sales for all dealerships.

    CONCLUSIONS OF LAW

    
    

83. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

84. Section 320.642, Florida Statutes, sets forth the criteria which govern this proceeding. Such statute, provides, in part:

    1. Any licensee who proposes to establish an additional motor vehicle dealership . . . within a community or territory where the same line-make vehicle is presently represented by a franchised motor vehicle dealer or dealers shall give written notice of its intention by certified mail to the department. Such notice shall state:

       1. The specific location at which the additional . . . motor vehicle dealership will be established.

       2. The date on or after which the licensee intends to be engaged in business with the additional . . . motor vehicle dealer at the proposed location.

       3. The identity of all motor vehicle dealers who are franchised to sell the same line-make vehicle with licensed locations in the county or any contiguous county to the county where the additional . . . motor vehicle dealer is proposed to be located.

       4. The names and addresses of the dealer-operator and principal investors in the proposed additional . . . motor vehicle dealership.

          Immediately upon receipt of such notice the department shall cause a notice to be published in the Florida Administrative Weekly. The published notice shall state that a petition or complaint by any dealer with standing to protest pursuant to subsection

          1. must be filed not more than 30 days from the date of publication of the notice in the Florida Administrative Weekly. The published notice shall describe and identify the proposed dealership sought to be licensed, and the department shall cause a copy of the notice to be mailed to those dealers identified in the licensee's notice under paragraph (c).

             
             

             (2)(a) An application for a motor vehicle dealer license in any community or territory shall be denied when:

             
             

             1. A timely protest is filed by a presently existing franchised motor vehicle dealer with standing to protest as defined in subsection (3); and

             2. The licensee fails to show that the existing franchised dealer or dealers who register new motor vehicle retail sales or retail leases of the same line-make in the community or territory of the proposed dealership are not providing adequate representation of such line-make motor vehicles in such community or territory. The burden of proof in establishing inadequate representation shall be on the licensee.

          1. In determining whether the existing franchised motor vehicle dealer or dealers are providing adequate representation in the community or territory for the line-make, the department may consider evidence which may include, but is not limited to:

             1. The impact of the establishment of the proposed or relocated dealer on the consumers, public interest, existing dealers, and the licensee; provided, however, that financial impact may only be considered with respect to the protesting dealer or dealers.

             2. The size and permanency of investment reasonably made and reasonable obligations incurred by the existing dealer or dealers to perform their obligations under the dealer agreement.

             3. The reasonably expected market penetration of the line-make motor vehicle for the community or territory involved, after consideration of all factors which may affect said penetration, including, but not limited to, demographic factors such as age, income, education, size class preference, product popularity, retail lease transactions, or other factors affecting sales to consumers of the community or territory.

             4. Any actions by the licensees in denying its existing dealer or dealers of the same line-make the opportunity for reasonable growth, market expansion, or relocation, including the availability of line-make vehicles in keeping with the reasonable expectations of the licensee in providing an adequate number of dealers in the community or territory.

             5. Any attempts by the licensee to coerce the existing dealer or dealers into consenting to additional or relocated

                franchises of the same line-make in the community or territory.

             6. Distance, travel time, traffic patterns, and accessibility between the existing dealer or dealers of the same line- make and the location of the proposed additional or relocated dealer.

             7. Whether benefits to consumers will likely occur from the establishment or relocation of the dealership which the protesting dealer or dealers prove cannot be obtained by other geographic or demographic changes or expected changes in the community or territory.

             8. Whether the protesting dealer or dealers are in substantial compliance with their dealer agreement.

             9. Whether there is adequate interbrand and intrabrand competition with respect to said line-make in the community or territory and adequately convenient consumer care for the motor vehicles of the line-make, including the adequacy of sales and service facilities.

             10. Whether the establishment or relocation of the proposed dealership appears to be warranted and justified based on economic and marketing conditions pertinent to dealers competing in the community or territory, including anticipated future changes.

             11. The volume of registrations and service business transacted by the existing dealer or dealers of the same line-make in the relevant community or territory of the proposed dealership.

          (3) An existing franchised motor vehicle dealer or dealers shall have standing to protest a proposed additional or relocated motor vehicle dealer where the existing motor vehicle dealer or dealers have a franchise agreement for the same line-make vehicle to be sold by the proposed additional or relocated motor vehicle dealer and are physically located so as to meet or satisfy any of the following requirements or conditions:

          * * *

          (b) If the proposed additional or relocated motor vehicle dealer is to be located in a county with a population of more than 300,000 according to the most recent data of the United States Census Bureau or the data of the Bureau of Economic and Business Research of the University of Florida:

          1. Any existing motor vehicle dealer or dealers of the same line-make have a licensed franchise location within a radius of 12.5 miles of the location of the proposed additional or relocated motor vehicle dealer; or

          2. Any existing motor vehicle dealer or

          dealers of the same line-make can establish that during any 12-month period of the 36- month period preceding the filing of the licensee's application for the proposed dealership, such dealer or its predecessor made 25 percent of its retail sales of new motor vehicles to persons whose registered household addresses were located within a radius of 12.5 miles of the location of the proposed additional or relocated motor vehicle dealer; provided such existing dealer is located in the same county or any county contiguous to the county where the additional or relocated dealer is proposed to be located.

85. Rule 15C-7.004, Florida Administrative Code, sets forth criteria related to the notice which must be published pursuant to Section 320.642, Florida Statutes. The rule provides, in pertinent part:

    1. Purpose and Scope. The purpose of this rule is to provide guidelines and standards for the filing of a notice of intent to establish an additional point franchise motor vehicle dealer license and to establish the requirements for filing a preliminary application for a franchise motor vehicle dealer license. The rule addresses the requirement for notifying potentially affected dealers of their rights and provides for the handling and disposition of advanced

       letters of commitment either protesting or not protesting the establishment of a dealership. The rule further provides time frames within which certain actions must occur, clarifies the conditions for licensing a supplemental location and for the relocation and reopening of existing dealerships. The rule also specifies the manner and time frames for the reporting of minority recruitment efforts.

    2. Definitions.

       1. The words or terms "Department", "line- make", "dealer", and "minority dealer" as used in this rule shall have the meanings ascribed to them in Sections 320.60 -- 320.70, Florida Statutes.

       2. As used in this rule, the following words or terms shall have the meanings ascribed herein:

       1. Applicant -- means a business seeking a license as a franchise motor vehicle dealership.

       2. Contiguous county -- means a county having a point of common boundary with another county. Boundaries of counties which meet at a diagonal across the intersecting lines shall be deemed to be contiguous.

       3. Licensee -- means a motor vehicle manufacturer, importer or distributor.

       4. The terms petition, complaint, notice of protest, and letter of protest are interchangeable.

       5. Principal investor -- means any person, firm or entity having a ten percent (10%) or more financial interest in a proposed dealership. In the case of a publicly held corporation, principal investor shall mean the individuals or entities who manage the corporation.

       6. Specific location -- means a sufficiently identified piece of property that can be described by a physical location address assigned by the United States Postal Service or by a legal description, or both. In those instances where an address is unavailable, the legal description shall refer to generally known public streets and highways, including the distance from the nearest major cross street, for example: "North side of U.S. Highway 301, 1.3 miles

       east of intersection with State Road 60."

    3. Filing of Licensee's Notice and Applicant's Preliminary Application.

       1. Simultaneously with the filing of the notice by the licensee required by Section 320.642(1), Florida Statutes, the applicant, which is not currently a licensed dealer at the proposed location, may file a preliminary application for a franchised motor vehicle dealer license on form HSMV 84011, Application For A License As A Motor Vehicle, Mobile Home or Recreational Vehicle Dealer, which is hereby adopted by reference, furnished by the Department. The filing of a preliminary application is optional but if filed the application shall be completed in the same manner as a final application, except that the following items are not required at the time of the filing of the preliminary application:

          1. The physical inspection report of the

             facility completed by the Department.

          2. The surety bond or irrevocable letter of credit.

          3. Evidence of garage liability insurance.

          4. Evidence of completion by a dealership representative of the training offered by the Department.

          5. Evidence of registration for sales and use tax purposes with the Department of Revenue.

          6. A true copy of the lease of the property on which the dealership is to be located, if applicable.

          7. Evidence that a Federal Employer's Identification number has been applied for or obtained.

       2. The following items must accompany the completed preliminary application:

          1. A copy of the articles of incorporation to show that the corporate name has been reserved (if the business is to operate as a corporation).

          2. Fingerprint cards for all owners/partners/officers/directors whose names appear on the application.

          3. The initial application fee.

       3. If the notice by the licensee proposes to add a line-make to a dealership not previously franchised for that line-make, the

          licensed dealer shall, simultaneously with the filing of the licensee's notice, file an application on form HSMV 84011, Application For A License As A Motor Vehicle, Mobile Home or Recreational Vehicle Dealer, which is hereby adopted by reference, provided by the Department to amend its license to add that line-make to its license.

       4. If the notice by the licensee proposes a supplemental location to a currently licensed line-make dealership, the dealer shall, simultaneously with the filing of the licensee's notice, file an application for a supplemental license on form HSMV 84011, Application For A License As A Motor Vehicle, Mobile Home or Recreational Vehicle Dealer, which is hereby adopted by reference, provided by the Department in accordance with Section 320.27(5), Florida Statutes.

       5. A notice by the licensee may not be amended in any manner which alters the specific location of the proposed dealership, nor may a preliminary filing of an application be amended to be inconsistent with the specific location contained in the notice. Alteration of a specific location requires the filing of a new notice and a new preliminary application.

       * * *

       1. Filing of Petitions or Complaints by Existing Dealers.

          1. Petitions or complaints protesting the establishment or relocation of dealerships may be filed only after the publication of the notice required in Section 320.642(1), Florida Statutes.

          2. Petitions, complaints or notices protesting the establishment or relocation of a dealership must be filed with and received by the agency clerk not more than thirty calendar days from the date notice is published in the Florida Administrative Weekly.

          3. Any petitions or complaints, or correspondence indicating any intent to file or not to file a petition or complaint, which are filed prior to publication of the notice shall be returned to the sender.

             * * *

          4. If the proposed additional or relocated

       dealership is approved, construction on the dealership shall begin within twelve months of the date of final order. The applicant must complete construction and finalize its preliminary application for license within twenty-four months of the date of the final order. This period may be extended by the Department for good cause.

       * * *

       1. Transfer, Assignment or Sale of Franchise Agreements.

          1. Subsequent to the notification by a dealer to a licensee of a proposed transfer of a franchise as required by Section 320.643, Florida Statutes, the proposed transferee may file a preliminary application with the Department.

          2. This preliminary application shall fulfill all requirements of the final application with the exception of the provision of a copy of the franchise agreement between the proposed transferee and the licensee, a forfeiture statement by the transferor, an acceptance statement by the transferee, and the surrender of the license of the selling dealer.

          3. The Department shall immediately commence processing the application and, upon completion of processing, shall indicate to the proposed transferee whether its license will be issued if the licensee approves the transfer and the transfer is consummated between the selling dealer and the transferee.

          4. If the application complies with all requirements of law, it shall be issued, upon the consummation of the transfer, and the provision to the Department of:

             1. a copy of the transferee's franchise with the licensee;

             2. a forfeiture statement by the selling dealer;

             3. an acceptance statement by the transferee; and

             4. the license of the selling dealer.

       2. Computation of Sales. For the purpose of computing sales in compliance with Section 320.642(3)(a)3. and Section 320.642(3)(b)2., the thirty-six month period shall be deemed to expire on the last day of the month

       preceding the month in which the notice of the licensee is published in the Florida Administrative Weekly.

       
       

86. In this case, the Respondents have alleged that inadequate notice has rendered the instant action subject to dismissal. They claim that the notice published by the Department failed to disclose that the service facility would be located at an address other than as published. The facts are not disputed. The sales facility for the proposed new point will be located at the address specified in the notice. Service for the new point will be in a shared facility at a different dealership within the same auto mall. When the prehearing stipulation was filed on September 10, 1996, the Respondents knew the service facility would be at the second address but did not contest the notice which had been provided.

87. The challenge to the adequacy of the notice was first raised incidental to the claim that JSI did not control the property to be used for this new point. This allegation stemmed from an alleged sale of the subject site which was first discovered approximately two weeks before the hearing. The Respondents maintained that the subject property was being transferred to a third party who was, for all legal purposes, the true applicant in this cause. Mazda and JSI disputed the legal conclusions reached by Respondents and argued that all challenges to the notice and control of the property issues were waived by failing to include them in the prehearing stipulation.

88. The rule specifies that notice is to be provided in the manner and form designated. In this case, the notice accurately depicted the location of the new sales facility. That the service would be rendered at a nearby shared location does not result in defective notice. Notice allows all parties who may be adversely affected by the proposed new point an opportunity to participate in the administrative process. It affords a point of entry to any existing dealer who may allege standing under the statute to challenge the proposed addition. In this case, all dealers in the Comm/Terr who might have alleged standing and participated in this proceeding have, in fact, been parties to the action. Clearly, no existing dealers outside of the Comm/Terr could have established standing on the basis of mileage nor sales volume. No purpose would be served by re-advertising this proposal with the additional information of the service address being included. Thus, Respondents’ assertion of inadequate notice is rejected.

89. As to Respondents’ claim that John Staluppi, Jr. (JSI) is not the applicant, such argument is also rejected. JSI will have to abide by the terms of its application and, if approved, take steps to construct the dealership as set forth in the rule. Any transfer, assignment or sale of the franchise would also have to comply with the rule and Section 320.643, Florida Statutes.

    Nothing in the law prohibits an approved dealer from later transferring his interest. Accordingly, the motion to dismiss is denied.

90. Having weighed the statutory criteria found in Section 320.642, Florida Statutes, it is concluded that the existing Mazda dealers are providing inadequate representation to the Comm/Terr. Thus, a new point Mazda dealership located at the Okeechobee/Military Trail auto cluster as proposed by JSI will allow this market to achieve a greater sales presence which should translate into a greater number of sales and improved market penetration.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED

That the Department of Motor Vehicles and Highway Safety enter a final order approving the new point dealership sought by Mazda Motor of America on behalf of J.S. Imports, Inc.

DONE AND ENTERED this 1st day of May, 1997, in Tallahassee, Florida.

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1997.

COPIES FURNISHED:

Dean Bunch, Esquire

Sutherland, Asbill & Brennan, L.L.P. 909 East Park Avenue

Tallahassee, Florida 32301

James D. Adams, Esquire Adams & Quinton

7300 West Camino Real Camino Real Centre

Boca Raton, Florida 33433

Douglas E. Thompson Post Office Box 16480

West Palm Beach, Florida 33416

Dean J. Rosenbach

Lewis, Vegosen, Rosenbach & Silber, P.A. Post Office Box 4388

West Palm Beach, Florida 33402-4388

Michael J. Alderman, Esquire Division of Motor Vehicles

Neil Kirkman Building, Room A-432 Tallahassee, Florida 32399-0504

Charles J. Brantley, Director Division of Motor Vehicles

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

Enoch Jon Whitney, General Counsel Division of Motor Vehicles

Neil Kirkman Building Tallahassee, Florida 32399-0500

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 96-000734

Orders for Case No: 96-000734