STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its designated Administrative Law Judge, David M. Maloney, held a formal hearing in the above-styled case on December 17, 1996, in Bartow, Florida.

APPEARANCES

For Petitioner: Linda T. Lawton

Vice President/Secretary Dixie Growers, Inc.

Post Office Box 1686

Plant City, Florida 33564-1686

For Respondent: Martin Shield, President

Veg Service, Inc.

150 SW 12th Avenue, Suite 370 Pompano Beach, Florida 33069

STATEMENT OF THE ISSUES

Whether Respondents Veg Service, Inc., and Western Surety Company are justly indebted to Dixie Growers, Inc., for Florida- grown agricultural products which Dixie Growers, as the agent for the producers of the products; sold to Veg Service?

PRELIMINARY STATEMENT

On August 26, 1996, the Division of Administrative Hearing received copies of the complaints filed with the Department of Agriculture by Dixie Growers against Veg Service in three cases together with the answers filed by Veg Service. The documents were under cover of a letter dated August 23, 1996, through which the Commissioner of Agriculture requested assignment of a hearing officer to conduct formal proceedings pursuant to Section 120.57, Florida Statutes. In each of the three complaints, Dixie Growers alleged that Veg Service was indebted to it for Florida-grown agricultural products sold to by Dixie Growers, as the agent for the producers of the products ("growers,") to Veg Service. The three complaints were assigned to a hearing officer and later

reassigned to the undersigned in Case Nos. 96-3994A, 3995A and 3996A, with amounts in dispute, respectively, being: $1,284, $1,664 and $3,430.50.

Little more than one month later, a fourth complaint by Dixie Growers against Veg Service, together with Veg Service's answer, was filed with the Division of Administrative Hearings, again under cover of a letter from the Commissioner of Agriculture requesting assignment of a hearing officer to the conduct formal proceedings. The case was assigned Case No. 4727A, assigned to an administrative law judge, consolidated with the first three cases, and ultimately reassigned to the undersigned. The amount in dispute is $3,961.00. During final hearing, the parties settled Case No. 96-3994A. Attempts were made to settle the other three cases off the record the afternoon of final hearing. The attempts did not succeed.

FINDINGS OF FACT

The Parties

1. Dixie Growers, located in Plant City, Florida, is a producer, packer, and seller of Florida-grown agricultural products. It also acts as a sales agent for growers of Florida agricultural products, and in that capacity is a producer of agricultural products. Ms. Linda T. Lawton is the Vice President/Secretary for Dixie Growers, Inc. Mr. George Locklear is a salesman for the company. It is the practice of Dixie Growers, Inc., to pay the growers who provide it with agricultural products to be sold on the open market within

   10 to 14 days of shipment unless the broker or purchaser to whom the products are sold notifies Dixie of a problem. This practice was made known to Veg Service before the incidents which led to these proceedings. Whenever Dixie receives notice of a problem with the shipment prior to payment of the grower, Dixie places a "trouble" memorandum on the top of the file. In such a case, Dixie does not usually pay the grower until the problem has been resolved with the broker and then only in an amount that does not exceed what Dixie receives from the broker or purchaser.

   
   

2. Veg Services, Inc., is a negotiating broker of Florida agricultural products, some of which it has purchased from Dixie Growers. In this capacity Veg Services is a dealer in agricultural products. The company is located in Pompano Beach, Florida.

   
   

3. Western Surety Company is the issuer of bonds to Veg Services, Inc., in amounts sufficient to cover the disputes involved in this proceeding.

   
   

   Case No. 96-3995A

   
   

4. On June 1, 1996, Dixie Growers sold 260 boxes, (1 and 1/9th bushels each), of fancy eggplant to Veg Services. The price was $8.00 per box for a price of $2,080 for the entire shipment.

   
   

5. On June 5, 1996, the U. S. Department of Agriculture, at a cost of

   $278, conducted an inspection of the 260 boxes of eggplant in Providence, Rhode Island at the premises of Tourtellot and Company, Inc. Under the section marked "Grade" in the inspection certificate, the eggplant was found to fail "to grade

   U.S. No. 1."

   
   

6. On the same day as the inspection, Dixie Growers received by fax a copy of the inspection, Inspection Certificate K-195345-4. In accord with its customary practice, Dixie Growers placed a "trouble" memorandum in its file so that it would not pay the grower of the eggplant until the trouble was resolved.

7. On June 17, 1996, Dixie Growers received a fax of the invoice from Veg Services marked, "OK." Interpreting the "OK," to mean that payment would be in full, George Locklear called Veg Service to double-check. He talked with Martin Shield and Marcie, a member of the office staff. First Marcie and then Mr. Shield stated that the invoice would be paid in full.

   
   

8. Before the growers were paid on the strength of the representations of the two Veg Service employees made June 17, however, Deborah Lawton, Dixie's bookkeeper asked Mr. Locklear to inquire as to whether the cost of the inspection ($278,) would be deducted from the payment. Marcie told Mr. Locklear that payment would be in full with nothing deducted for the inspection.

   
   

9. With the understanding that payment would be made in full with nothing deducted for the cost of the inspection, Dixie Growers paid the growers of the eggplant in full.

   
   

10. On July 1, 1996, after payment had been made by Dixie Growers to the growers of the eggplant, it received a fax from Veg Services that it would be paid only $1.60 per box instead of the full $8.00 per box. When Mr. Locklear called to inquire about the fax, Marcie told him that Veg Services had made a mistake when it said that payment would be in full.

    
    

11. Dixie Growers received payment in the amount of $416.00 leaving

    $1,664.00 still due.

    
    

    Case No. 96-3996A

    
    

12. On April 27, 1996, Dixie Growers sold 65 boxes of medium squash, 200 boxes of select cucumber and 60 boxes of cabbages to Veg Service. No trouble with the produce was ever reported by Veg Service to Dixie Growers. Nor was there ever made a federal inspection of the produce. The total bill for the sale was $2610.00.

    
    

13. On May 9, 1996, another sale was made by Dixie Growers to Veg Service:

    154 boxes of medium zucchini, 72 boxes of small squash, 72 boxes of medium squash, 50 boxes of choice cucanelle and 120 boxes of large cucumbers. No trouble with any of the produce was ever reported by Veg Service to Dixie Growers. Nor was there a federal inspection conducted. The bill for the sale was $4,360.00.

    
    

14. On June 12, 1996, payment was received for the April 27 sale in the amount of $1,280 leaving a balance of $1,330. The same day payment was received for the May 9 sale in the amount of $2,259.50 leaving a balance due of

    $2,100.50.

    
    

15. Invoices showing the balances due for the two sales were mailed by certified mail to Veg Service. Following phone calls by Dixie Growers, at the request of Veg Service staff, the invoices were later faxed twice to Veg Service. The two balances, totalling $3,430.50, had not been paid as of final hearing.

    
    

16. Had any trouble with either sale been communicated to Dixie Growers prior to the payment it made to the growers of the produce, then Dixie Growers would not have paid the growers until the problem was resolved. Since Veg Service did not communicate any problem with either sale in any way, Dixie Growers paid the growers.

    Case No. 4727A

    
    

17. On June 6, 1996, Dixie Growers sold Veg Service 500 boxes of fancy eggplant, 200 boxes of choice eggplant, 600 boxes of large bell peppers, 200 boxes of extra large bell peppers and 50 boxes of long hot peppers.

    
    

18. The invoice for the sale shows $14,200 due for the produce and a charge of $23.50 listed for "Temp.Recrd," for a total invoiced amount of

    $14,223.50.

    
    

19. On July 17, 1996, Dixie Growers received a check from Veg Services for

    $10,262.50 for the June 6 sale leaving a balance of $3,961.00.

    
    

20. When George Locklear of Dixie Growers inquired of Veg Service as to why the invoiced amount had not been fully paid, he was told that a federal inspection had shown that the peppers were smaller than as represented by Dixie Growers. This was the first time that Dixie Growers had received any notice from Veg Service that there was any trouble with the June 6 sale. The inspection was faxed to Dixie Growers on July 31, 1996, long after Dixie Growers had paid the growers of the produce.

    
    

21. The fee for the inspection by the U.S. Department of Agriculture was

    $111.00. That fee had been deducted by Veg Service when it paid the invoice amount so that the amount claimed due by Dixie Growers in this case ($3,961) is the sum of the inspection fee ($111) and a balance not paid on the produce sold, ($3,850).

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Sections 604.21(6) and 120.57(1), Florida Statutes. Dixie Growers is the agent of "producers" as that term is defined in Section 604.15(5), Florida Statutes, and Veg Service, Inc., is a "dealer in agricultural products," as that term is defined in Section 604.15(1), Florida Statutes.

    
    

23. The Petitioner, Dixie Growers, Inc., has established the allegations in its complaints in Case Nos. 96-3995A, 96-3996A, and 96-4727A, in which it claims due $1,664.00, $3,430.50 and $3,961.00. In Case No. 96-3995A, Dixie Growers was made aware of a problem in a timely fashion by Veg Service but, thereafter, Veg Service, both through Martin Shield and another employee led Dixie Growers to believe that the problem had been resolved without the necessity to deduct any of the payment, including the cost of the federal inspection. Dixie Growers was justified in relying on these representations by employees of Veg Service. In the other two cases a reasonable time passed before Dixie Growers paid the growers of the produce in question. During these periods of time, it was incumbent upon Veg Service consistent with custom and practice to notify Dixie Growers of any problems with the produce. Veg Service did not do so in either case. Consistent with its custom and practice of payment to the growers, a custom and practice of which Veg Service was aware, Dixie Growers paid its growers. The failure by Veg Service to notify Dixie Growers of any problems prior to payment to the growers after a reasonable period of time had passed from the date of sale establishes Veg Services indebtedness to Dixie Growers in both cases in the amount of payment in full.

24. For the three cases, Veg Service, Inc., is indebted to Dixie Growers, Inc., in the total amount of $9,055.50.

RECOMMENDATION

Based on the foregoing, it is, hereby, RECOMMENDED:

That the Department of Agriculture and Consumer Services enter a final order adjudicating Veg Service, Inc., to be indebted to Dixie Growers, Inc., in the amount of $9,055.50.

DONE AND ENTERED this 31st day of December, 1996, in Tallahassee, Leon County, Florida.

DAVID M. MALONEY

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 31st day of December, 1996.

COPIES FURNISHED:

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

Tallahassee, Florida 32399-0350

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

Tallahassee, Florida 32399-0810

Brenda Hyatt, Chief

Bureau of Licensing & Bond Department of Agriculture

508 Mayo Building

Tallahassee, Florida 32399-0800

Charles E. Lawton, President Dixie Growers, Inc.

Post Office Box 1686

Plant City, Florida 33564-1686

Herbert Shield, President Veg Service, Inc.

150 SW 12th Avenue, Suite 370 Pompano Beach, Florida 33069

Western Surety Company Legal Department

101 South Phillips Avenue

Sioux Falls, South Dakota 57102

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: 96-003994

Orders for Case No: 96-003994