STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CLASSIE SALES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 96-1776A

) TONY and ROBERT TOLAR, d/b/a TOLAR ) FARMS, and PREFERRED NATIONAL ) INSURANCE COMPANY, )

)

Respondents. )

)

RECOMMENDED ORDER

A hearing was held in this case in Bradenton, Florida on June 21, 1996, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Hywel Leonard, Esquire

Carlton, Fields, Ward, Emmanuel, Smith and Cutler, P.A.

One Harbour Place Post Office Box 3239 Tampa, Florida 33601

For Respondent: Scott R. Teach, Esquire Tolar Farms Meuers and Associates, P.A.

2590 Golden Gate Parkway, Suite 109

Naples, Florida 33942

For Respondent: David A. Higley, Esquire Preferred Higley and Barfield, P.A. National Ins. 2600 Lake Lucien Drive, Suite 237 Company Maitland, Florida 32751

STATEMENT OF THE ISSUE

The issue for consideration in this matter is whether Petitioner, Classie Sales, Inc. (Classie), is entitled to be compensated for produce sold and delivered to Respondent, Tolar Farms (Tolar), and if so, in what amount.

PRELIMINARY STATEMENT

By Complaint dated January 31, 1996, as amended by Complaint dated February 28, 1996, filed with the Florida Department of Agriculture and Consumer Sales (Department), against Tolar as Respondent and Preferred National Insurance Company (Preferred), as surety and co-Respondent, Petitioner, Classie, claims the amount of $172,559.27 in payment for sales of watermelons and tomatoes sold

by Harloff Farms, through Classie, to Tolar, for which, it is alleged, Classie, as Harloff's agent, and Harloff have not been paid. Respondent, Tolar, denied owing any amount to the claimant and in explanation asserted that Classie is not a producer or grower of produce and, therefore, not entitled to payment under the bond posted by Preferred on behalf of Tolar. This defense was withdrawn at hearing by both Respondents who now admit Classie is a proper claimant, though neither admits the obligation alleged. Though the Answer submitted by Tolar did not have the request for hearing statement checked, the matter was nonetheless forwarded to the Division of Administrative Hearings for formal hearing and this hearing ensued.

In the interim, however, on April 12, 1996, Preferred filed its own Answer to the Complaint in which it defined three defenses to the Complaint. The second thereof asserts Preferred's contention that any liability under the bond issued by it on behalf of Tolar is strictly limited by the terms of said bond. Counsel stipulated at hearing that in the event a finding was made that Preferred was liable under the bond, its liability would be limited to the bond amount, $75,000.00.

Petitioner presented the testimony of John Allen Tipton, an employee of all of Harloff entities, including Classie Sales, Inc., of which he is Secretary.

It also introduced Petitioner's Composite Exhibit 1. Neither Respondent presented any evidence on the merits.

No transcript of the proceedings was furnished to the Hearing Officer.

Subsequent to the hearing, counsel for all parties submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. On June 30, 1990, Roger Harloff, on behalf of Roger Harloff Farms, and John A. Tipton, Secretary of Classie Sales, Incorporated, a sales agent founded by Harloff, entered into a written agreement whereby Classie would serve as sales agent for all sales of produce grown by or on Roger Harloff Farms.

   
   

2. Between October 17, 1995 and December 9, 1995, Classie, on behalf of Roger Harloff Farms, sold watermelons with a total net sales price of

   $170,839.27 and tomatoes with a total net value of $1,720.00 to Tolar Farms. These sales were not direct sales to Tolar but transactions wherein Tolar was to sell the produce to whomever would buy it at an agreed price and would withhold its 3/4 per pound commission from the sales price, remitting the balance to Classie.

   
   

3. Trucks arranged for by Tolar picked the produce up at the growing field and at the time of pickup, Classie issued to Tolar a packet jacket for each load sold. As the loads were sold Tolar would issue a ticket for that load which bore the shipping date, the lot number, the farmer, the transporting trailer's tag, the truck broker, the truck driver, and the weight of the product.

   Sometime later, when the produce was sold, Tolar issued an invoice bearing Classie Sales' logo, reflecting Tolar as the buyer and showing the lot number which corresponded to the load ticket, the shipping date, a description of the produce, the quantity, the unit price for that load, and the extended price from which was deducted Tolar's commission and an unspecified assessment. These documents were then forwarded to Classie.

   
   

4. The terms of the sale between Tolar and Classie, on behalf of Harloff, were loose. The invoice documents reflected a net due 21 days after invoice

   date. The first delivery in issue here was made on October 17, 1995, and 21 days after that is November 7, 1995. The amount reflected by the deliveries made after that date is $27,509.72. Respondent, Preferred, claims that since Classie continued to make deliveries to Tolar's drivers after it was not paid within 21 days after the first shipment, it failed to mitigate its damages and should not be paid for any deliveries made after November 7, 1995.

   
   

5. Classie was not paid for any of the instant invoices by Tolar, but Classie did not become concerned about Tolar's failure to make timely payment until January 1996. Tolar's payment and pricing practices were no different during this time than in years past. Typically, Tolar would start out quickly notifying Classie of the sales. As the number of shipments grew, however, the time for notification grew longer. It must be noted that less than two months transpired from the date of the first shipment in issue to the last.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

   
   

7. Section 604.21, Florida Statutes, provides:

   
   

   1. Any person claiming himself to be damaged by any breach of the conditions of a bond ... given by a licensed dealer in

      agricultural products as hereinbefore provided may enter complaint thereof against the dealer and against the surety, if any, to the depart- ment, which complaint shall be a written state- ment of the facts concerning the complaint.

      
      

8. In the instant case the facts are not in issue. The Petitioner, on behalf of its principal, delivered watermelons and tomatoes to the Respondent who was to broker them in the market and remit to Petitioner the sales amount received for the produce less a stipulated commission. The product was sold and the Respondent failed to remit the net sales price to the Petitioner. No legitimate reason for nonpayment was given.

   
   

9. Respondent claims that because Petitioner did not timely act to mitigate its damages and continued to make deliveries to the Respondent even after the payment was due on the first deliveries and not made, (21 days after the first delivery on October 17, 1995, or November 7, 1995), Petitioner cannot recover for any of the amount due as a result of those latter deliveries.

   
   

10. By Respondent's reasoning, only the deliveries indicated on Exhibits 1A through 10A and 46A through 49A in Petitioner's Composite Exhibit 1, in the total amount of $27,509.72, are compensable because, Respondent claims, Classie "failed to take all reasonable means to protect itself and mitigate its damages." Respondent cites the "loose" terms and conditions of sales which transpired between it and Classie, but overlooks the evidence that such "loose" terms and practices had been the normal course of business between those parties in the past and Respondent had always previously paid what it owed. There is no legal or factual basis to support Preferred's position, and under the circumstances, Classie's failure to insist upon a strict compliance with the 21- day terms in the sales agreements does not constitute a waiver of its right to collect from Respondent.

11. The legalities and the equities of this situation all redound in the favor of Classie which is entitled to recover the entire sum claimed in its amended complaint. The parties have agreed, however, that any liability by Preferred would be limited to the amount of its bond.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Agriculture enter a Final Order in this matter directing Tony and Robert Tolar, d/b/a Tolar Farms, to pay Classie Sales, Inc., the sum of $172,559.27. In the event this sum is not paid by Tolar, the Department should apply the bond posted by Preferred National Insurance Company in the amount of $75,000.00.

DONE and ENTERED this 15th day of July, 1996, in Tallahassee, Florida.

ARNOLD H. POLLOCK, 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 15th day of July, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-1776A

To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact.

1. - 13. Accepted and incorporated herein.

1. Accepted and incorporated herein as the testimony of the witness.

2. Not a Finding of Fact but a comment on the issues.

3. Accepted and incorporated herein.

Respondent Preferred's Proposed Findings of Fact.

Preferred accepted all of Classie's Proposed Findings of Fact but suggested an amendment to Number 14. The suggested amendment was made a part of the Findings of Fact made by the Hearing Officer.

Respondent Tolar's Proposed Findings of Fact:

Tolar consented and agreed to all Petitioner's Proposed Findings of Fact except for Number 9. The substance of Tolar's objection to Classie's Number 9, relating to a provision for a commission, has been made a part of the Findings of Fact of the Hearing Officer.

COPIES FURNISHED:

Hywel Leonard, Esquire Carlton Fields

Post Office Box 3239 Tampa, Florida 33601-3239

Scott R. Teach, Esquire Meuers and Associates, P.A.

2590 Golden Gate Parkway, Suite 109

Naples, Florida 34106

David A. Higley, Esquire Higley and Barfield, P.A. The Maitland Forum

2600 Lake Lucien Drive, Suite 237

Maitland, Florida 32751-7234

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

Tallahassee, Florida 32399-0810

Richard Tritschler General Counsel Department of Agriculture The Capitol, PL-10

Tallahassee, Florida 32399-0810

Brenda Hyatt, Chief

Bureau of Licensing and Bond Department of Agriculture

508 Mayo Building

Tallahassee, Florida 32399-0800

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: 96-001776

Orders for Case No: 96-001776