Findings Of Fact By his plea of guilty Respondent admitted the violations alleged and no additional evidence was presented by Petitioner. Respondent is a licensed wine distributor operating principally in Tallahassee and the surrounding area. He buys his merchandise from the various wineries at the same price paid by the large statewide distributors. By the testimony of the President and sole owner of Respondent it is acknowledged and admitted that special deals were made to his regular customers to be competitive with deals offered by Jax Distributors and other large distributors located in Jacksonville and other cities than Tallahassee. His testimony that these large distributors offered deals in Tallahassee and other parts of his "territory" that they do not offer in Jacksonville was unrebutted. In order to retain his customers it was necessary for him to offer the same deal offered by the large distributors. Operating from a small office the paper work required by various regulatory agencies is difficult to accomplish making it more difficult to prepare deal sheets in time to meet the competition. Without offering the same deals other distributors offer in his territory Respondent would lose his customers and be forced out of business. Respondent's witness contends that the entire alcoholic beverage distribution industry is crooked and that the various laws and regulations are continually being violated. In order to compete with others Respondent has likewise continually violated these laws and rules.
Findings Of Fact During the tomato growing season involved in this case (November 1982) Max Frosteg, Respondent, was salesman for Isom, Petitioner, under the terms and conditions of the contract admitted into evidence as Exhibit 1. The tomatoes were grown by Isom and sent to the packing house where Frosteg's agent, Boyd, acted as salesman for the grower. Boyd contacted various buyers and obtained prices for tomatoes of specified grade at destination and took orders for these tomatoes. The tomatoes were shipped from the packing house and, upon arrival at destination, the buyer did not always pay the invoice price. It is the difference in invoice price and price paid by the buyer that is here in dispute. The contract (Exhibit 1) authorized the salesman to make adjustments in the price that may be necessary, to assign the contract, or use price arrivals in selling the product. The duty of the salesman is to get the best price possible for the grower. The contract further provided, and it is customary in the business, that the salesman apprise the grower of all situations where the buyer fails to pay the invoice price because of alleged grade discrepancies in the product or for any other reason. This gives the grower the option of requesting an inspection of the product at destination to determine if the product, in fact, meets or does not meet specifications; and the option of refusing the offering price if the product does not meet specifications. On the invoices here in question the salesman accepted less than invoice price for the tomatoes but failed to notify the grower and give the grower the option of accepting or refusing the lower price. The money paid for the tomatoes was forwarded to Frosteg, who remitted to Isom his portion of the money received. The amount received by Isom was $9,529.43 less than Isom would have received if the invoice price had been paid for the tomatoes. By failing to notify the grower that he was accepting a less-than- invoice price, the salesman, Boyd, breached his duty to the grower, Isom. No inspection reports were submitted to show that the tomatoes shipped met specifications for the classification shown on the invoices and no inspection reports were submitted to show that the tomatoes failed to meet said invoice specifications at destination. Since neither party was represented by an attorney at this hearing, available evidence may not have been submitted.
The Issue Whether the Department of General Services should disqualify Savin Corporation's bid for failure to submit a separate supply price list.
Findings Of Fact On April 26, 1984, DGS issued ITB 402-600-38-B entitled "Walk-up Convenience Copiers, Plain Bond Paper" to establish a state contract for the purchase of walk-up convenience copiers. The ITB contains general and special conditions and specifications. The specifications provide for four types and twelve classes of copiers with four acquisition plans -- one-year lease, two- year lease, three-year lease, and outright purchase. Vendors may submit a bid for each type, class, and acquisition plan. Savin submitted a bid for all acquisition plans in Type I, Classes 1-10; Type II, Classes 1-3; Type III, Classes 1-10; and Type IV, Classes 1-10. /4 The special conditions of the ITB require that a price sheet (page 14 of the ITB) be submitted for each machine bid. The price sheets are used to evaluate the bids, and contracts are awarded in each category to the bidder submitting the lowest cost per copy. The cost per copy is determined by a cost formula set for in the special conditions which consist of three factors: machine cost, labor cost, and supply cost. The following special conditions of the Invitation To Bid relates to supply costs: C) SUPPLY COST- The bidder shall compute supply costs on the Manufacturer's Brand. If there is an existing state contract for supplies for the manufacturer's brand equipment; the state contract price may be substituted. Supply costs will be rounded to six (6) decimal points. All other costs will also be rounded off to six (6) decimal points. The volume price used by the vendor to compute supply cost shall be based on the monthly median volume of the type and class being bid. Supply cost submitted shall be firm for the contract period, except for paper, and all supply costs shall be current market price, verifiable. The price list shall also include the manufacturer's standard test pattern as the original document. Vendor must complete the supply price list (See page 13) and include it with his bid and must submit a separate supply price list reflecting volume discount prices to substantiate that correct price volumes were used unless state contract prices were used. A contract award may include supplies during the term of this contract if deemed in the best interest of the State. By electing to substitute state contract supplies, the vendor is certifying that his equipment, using said supplies, will meet all performance requirements of this bid and of the equipment manufacturer. Failure to include the supply price lists and manufacturer's guaranteed yields with your bid shall automatically disqualify the bid. NOTE: In the event of a variance between supply prices listed on the bid sheet and the supply price list submitted with the bid, the supply price list prices shall prevail, and the bidder's cost per copy will be adjusted accordingly. NOTE: All cost formulas will be verified by the Division of Purchasing and errors in extension will be corrected. In the event incorrect supply costs volumes are used by a bidder, the Division of Purchasing will adjust these costs to the median volume range. The above quoted portion of the ITB makes it absolutely clear that each vendor had to submit two supply price lists: the supply price list set forth on page 13 and a separate supply price list, reflecting quantity discounts which was to be used to "substantiate that correct price volumes were used." Further, it was specifically stated that the failure to include both supply price lists with the bid would result in the bid being automatically disqualified. The page 13 supply price list consists of a list of various supplies and two columns for the bidder to complete entitled "Net Delivered Price (per carton)" and "Manufacturer's Guaranteed Yield". Page 13 was included in the ITB to cure a problem the Department had in the 1983-84 contract year with the manufacturer's guaranteed yield. A note at the bottom of page 13 reminds the bidder that a separate supply price list must be submitted with the bid. It states: NOTE: Bidders must submit their quantity discount prices for supplies on a separate sheet for verification and inclusion in the contract should the State elect to award supplies. The separate supply price list reflecting quantity discounts was required to verify the prices submitted by the bidder on pages 13 and 14 and to prevent the practice of low-balling". "Low-balling" occurs when a bidder uses a large quantity supply cost to determine the cost per copy on a low volume machine. This results in an artificially low cost per copy and gives the "low- balling" bidder an advantage over other bidders who use the correct supply price based on the median volume of the machine being bid. To verify that the proper cost per copy is submitted the prices on the separate supply price list are compared to the prices on the bid sheet. If there is a conflict, the prices on the separate supply price list prevail, and the prices on the bid sheet and on page 13 are adjusted to conform to the prices on the separate supply sheet. Prior to the 1984 Invitation to Bid Savin historically offered the state volume discount pricing for supplies. However, for the 1984-85 Invitation to Bid Savin decided to offer set pricing for supplies rather than volume discount pricing. Under set pricing the price of the supply item remains the same regardless of the quantity purchased. By offering a set price for supplies, at the lowest published discount pricing level offered to the Federal government, Savin felt it would gain a competitive advantage in Florida and other states that had competitive bidding. In states where competitive bidding was not used Savin did not offer set pricing but used published quantity discount pricing. In response to the 1984 Invitation to Bid, Savin completed the Supply Price List on page 13 and the bid sheet on page 14 for each machine bid. However, Savin did not submit the separate supply price list for each bid as required by the note at the bottom of page 13 and the underlined portion of the special conditions relating to supply cost. Because the separate supply price lists were not submitted with the bids, the Department determined that Savin's bids were unresponsive. The Department also disqualified three or four other vendors, including Royal, Panasonic, and Southern Copy Products, because they did not submit the separate supply price lists. Savin did not submit the separate supply price list because it interpreted the terms and conditions of the ITB as requiring a separate supply price list only when quantity discount pricing was being offered. Because Savin was offering set pricing, it did not consider that the separate supply price list was necessary. However, the only way the Department could determine whether a vendor was offering set pricing or quantity discount pricing was by referring to the separate supply price list. Several other vendors that offered set pricing including Canon, Mita Copy Star America, Pitney Bowes, Monroe and A. B. Dick, submitted separate supply price lists with their bids which indicated that set pricing was being offered. The separate supply price list not only indicated whether quantity discount pricing or set pricing was being offered, as stated above, it was used by the Department to verify the prices submitted on the bid sheets and on page 13. In one case where the bidder offered set pricing, the supply prices for toner and developer listed on the bid sheets and on page 13 differed from the prices on the separate supply price list, and the prices on the bid sheets and page 13 were adjusted to conform with the prices on the separate supply price list. Therefore, the inclusion of the separate supply price list was not necessary only when discount pricing was offered, it was necessary when set pricing was offered. The separate supply price list established that set pricing was being offered; it established the price at which the bidder must sell the supplies; and it was used to verify the prices on the bid sheet and page 13. /5 Therefore, the omission of the separate supply price list from the response to the ITB cannot be considered a minor irregularity which may be waived. Although a separate supply price list is required by the ITB, the list does not have to follow any particular format. The separate list sufficiently indicates that set pricing is being offered if only one price is quoted for a given supply. If varying prices are offered for a given supply, based on the amount ordered, then quantity discount pricing is being offered. Many of the proposed findings of fact submitted by the Petitioner have been rejected in whole or in part. The majority have been rejected by way of making contrary findings of fact as set forth above. Others have not been addressed in the findings of fact because they are conclusions of law or argument on the issue. However, other proposed findings are rejected for the reasons stated in the subparagraphs below: Paragraphs 17 and 18 are rejected as irrelevant, immaterial and not supported by competent substantial evidence. When Mr. Hittinger was asked whether he assumed that Savin was offering quantity discount pricing, he answered "I didn't assume. I didn't make any assumptions." (T-266). Mrs. Hayes stated: "I am afraid on a bid situation, we can't assume what their pricing would have been if they had submitted it." (T-245) Mr. Nee did indicate that the disqualification of Savin did not make any sense, but explained that statement by stating: "The phrase that didn't make any sense was talking about Savin's failure to submit a quantity discount price list... Because Savin had always done it in the past, and they -- they never left -- if we asked them to cross every T, they crossed every T and it didn't make any sense that something apparently looked to be omitted". Paragraph 15 is rejected as not supported by competent substantial evidence. The evidence indicates that the primary purpose of page 13 was not to establish the price at which vendors would be obligated to sell their supplies, but was included in the ITB for the submission of manufacturer's guaranteed yields (T-144, T-146; T-158-16O, T-166-167, T-242). Further, the witnesses who testified that the vendor would be bound by the prices on page 13 all qualified their answers. In response to the question of whether the bidder would be bound by the prices on page 13, Mrs. Hayes responded, "...if he did submit a substantiating document that he is offering a set price, and that set price agrees with the price that is on page 13, yes." (T-242); Mr. Hittinger responded: "If he receives an award, yes"; "If he had a responsive bid" (T- 264); and "No, in itself it does not. It would have to have a supporting verification sheet to complete that offer." (T-268); Mr. Barker responded, "If they are correct," (T-163). Virtually all the witnesses testified that it was the separate supply price list that established the prices by which the vendors would be bound. Paragraph B is rejected as irrelevant, however, the evidence supports a finding that some state agencies utilize volume discounts on copier supplies and some state agencies do not purchase in sufficient quantities to utilize volume discounts.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that Savin's bids be disqualified. DONE AND ENTERED this of 7th June 1985, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway The Oakland Building Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of June, 1985.
The Issue The issue in this case is whether Respondent is guilty of dishonest dealing by trick, scheme or device in any business transaction in violation of Subsection 475.25(1)(b), Florida Statutes (2008),1 and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for issuing real estate sales associate licenses and monitoring compliance with all statutes, rules, and regulations governing such licenses. Respondent was at all times relevant to this proceeding a licensed real estate sales associate in the State of Florida and held License No. 3115665. In March 2006, Respondent was introduced to Willie Belle Lewis (Lewis) by a mutual acquaintance. Lewis was interested in selling her house, and Respondent agreed to work for Lewis in that regard. On March 13, 2006, Lewis and Respondent entered into an Exclusive Right of Sale Listing Agreement (the "Agreement"). Under the Agreement, Respondent was to act as Lewis' sales agent for sale of the house. Pursuant to paragraph 7 of the Agreement, Respondent was to receive a commission of six percent of the purchase price. Respondent initially requested a seven percent commission which was the ordinary and customary amount at that time, but agreed to six percent in deference to Lewis' request (and due to the fact that Lewis had recently lost her grandmother and Respondent empathized with her, having just lost her mother). In one version of the Agreement admitted into evidence, there is a notation that any cooperating real estate agent (presumably a buyer's agent) would receive a commission equal to three percent of the purchase price, i.e., one-half of Respondent's six percent commission. Another version of the Agreement admitted into evidence did not address sharing the commission with a cooperating agent. At some point in time (which was not clearly defined during testimony at final hearing) Lewis and Respondent re-negotiated the amount of Respondent's commission.2 Lewis maintains that the re-negotiated commission was three percent; Respondent says the re-negotiated commission was four percent. Respondent's testimony was more credible on this point. The amount of the new commission was not reduced to writing or indicated on either version of the Agreement. There is no indication, for example, what Respondent's commission would have been if a cooperating agent had been involved. It is highly unlikely that Respondent or any other agent would agree to a two percent commission, i.e., one-half of four percent (or 1.5 percent, one-half of three percent). Once the Agreement was signed, Respondent immediately began efforts to sell the Lewis house. Respondent invited Lewis to her (Respondent's) house and offered Lewis plants and flowers from Respondent's yard. Respondent and Lewis dug up various plants and transferred them to Lewis' yard to generate some "curb appeal," i.e., to dress it up for potential buyers. Within days, a potential buyer was found. A Contract for Sale and Purchase (the "Contract") was entered into between Lewis and Mrs. Bibi Khan. Respondent was listed as the seller's agent; no agent was indicated for the buyer. In fact, Respondent agreed to act as buyer's agent as well, performing services as both an agent and a broker. Again, there were two versions of the sales Contract admitted into evidence. On one version, Respondent's signature included only her first name; on the other it included her first and last name. On one version of the Contract, there appears to be "white-out" on Respondent's signature line. Contained and legible under the whited-out portion of the signature is the phrase "3%." Respondent admits she whited out the three percent figure, but that it was done after the closing occurred. The three percent figure appearing at that place in the Contract is confusing. It only makes sense if that was meant to represent Respondent's portion of a six percent commission split between a buyer's agent and a seller's agent. Respondent explained that she whited out the figure because it was not written in both places it was supposed to be. Rather than going through the process of re-doing the entire Contract and re-distributing it to all pertinent parties, she whited it out in one place. The explanation is plausible. However, it seems an unnecessary action inasmuch as the closing had already occurred. When the parties arrived at closing on April 17, 2006, the closing documents--including the HUD Settlement Statement-- indicated a six percent commission for Respondent (as originally stated on the Agreement). Lewis vehemently objected to the commission, saying that it should be three percent as verbally agreed to by her and Respondent.3 Respondent acquiesced at closing and, in front of witnesses, said the commission should be three percent. She asked that a letter be drafted by the closing agent reflecting a three percent commission. In effect, Respondent re-negotiated her commission at that time. She rues having done so and says she was confused, but she did so nonetheless. The closing was only the third closing Respondent had taken part in since becoming licensed. She was not very experienced with the process and seemed to be thinking she was getting a four percent commission, even when three percent was being discussed.4 It is clear, however, that Respondent did verbally agree to a three percent commission during the closing. The closing agent told Lewis to return on Monday and she would re-calculate the commission and provide Lewis with a final check in the appropriate amount. Meanwhile, Respondent attempted to contact Lewis over the weekend to discuss the discrepancy. Respondent wanted to remind Lewis they had agreed on four percent despite what she said at the closing. All attempts at communication with Lewis over the weekend were futile. When Lewis returned to the closing office on the following Monday, she found the check to still be in error as it reflected a four percent commission instead of a three percent commission. Apparently when Respondent advised the closing agent about her mistake regarding the amount of the commission, Respondent still maintained that the verbal agreement was for four percent. This was contrary to her statements during the closing and is not substantiated by any written documentation. Respondent directed the closing agent to issue a check reflecting a four percent commission, instead of the six percent commission reflected on the Agreement. Lewis ultimately, under protest, accepted her $74,264.92 check reflecting a four percent commission to Respondent. The check contained a shortage of $1,600, if a three percent commission had been applied. Lewis continued to seek repayment of the $1,600 she believed she was entitled to receive. Subsequently, Respondent discussed the entire dispute with her sales team and decided that the disputed amount ($1,600) was not worth fighting about. A check was then sent to Lewis in that amount.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Real Estate, imposing a fine of One Thousand Dollars ($1,000) against Respondent, Marian Lemon Coaxum. DONE AND ENTERED this 26th day of November, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 26th day of November, 2009.
The Issue The issue herein is whether the Department of Revenue's sales tax assessment against West Broward Chamber of Commerce as a result of the purchase of promotional books by the Chamber from Creative Public Relations and Marketing, Inc., is valid.
Findings Of Fact The West Broward Chamber of Commerce (Petitioner) entered into an oral contract with Mr. Randy Avon, a representative of Creative Public Relations, to purchase a promotional booklet pertaining to the West Broward area for distribution to the public. (Petitioner's Exhibit #1). Creative Public Relations in turn contracted with International Graphics to print the booklet. Mr. Bernard Fox, the Department of Revenue's (Respondent Area Manager in the Fort Lauderdale office and Mr. James W. Darrow, who worked with International Graphics during the time the transaction in question took place, testified and established that Mr. Randy Avon secured a sales tax number for the purchase of the promotional books in issue and presented the sales tax number to International Graphics. International Graphics sold the books to Mr. Avon for resale, without tax. The Department of Revenue issued an assessment against Petitioner for sales tax, penalty and interest due on the purchase of the books in question by Petitioner in the total amount of $1,307.56. Evidence reveals that said assessment was due as of December 20, 1978, and that since that time interest is accruing at a daily rate of $.31. This assessment was based on a total purchase price of $24,214.10, which, according to Mr. Fox and the statements contained in Respondent's Exhibit #1, was the price that Mrs. Gail Duffy, Petitioner's Executive Director informed the Respondent that the Chamber paid for the promotional booklets. Petitioner's treasurer, Helen Kerns, also testified that the total purchase price paid by Petitioner for the books was $22,104 and that part of the purchase price was paid directly to Creative Public Relations due to a dispute with an officer of the contracting entity, International Graphics. Mrs. Kerns testified that commissions were, however, paid by the Petitioner to Creative Public Relations, which commissions were not included in the purchase price as testified to by Mrs. Kerns. James W. Darrow, a witness who was allegedly privy to the agreement and understanding between the Petitioner and the seller, Creative Public Relations, testified that the oral contract price specifically included sales taxes on the transaction. Additionally, Mrs. Duffy testified that in her opinion, the sales taxes due on the purchase by Petitioner had been paid because she under stood that the total purchase price paid to Creative Public Relations by Petitioner included the sales tax. No sales invoices, receipt, or other tangible evidence of sales were offered into evidence at the hearing herein. Petitioner contends that the sales tax in question was included in the total purchase price. Based thereon, Petitioner contends that Creative Public Relations is now liable for the tax. Respondent, on the other hand, takes the position that the taxes from the sales transaction can be imposed on either the seller or the purchaser.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Revenue's sales tax assessment against Petitioner be upheld. DONE AND ENTERED this 10th day of September 1979 in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of September 1979. COPIES FURNISHED: James T. Moore, Esquire 1265 Northwest 40th Avenue Lauderhill, Florida 33313 Cecil L. Davis, Jr., Esquire Assistant Attorney General The Capitol, Room LL04 Tallahassee, Florida 32301 Robert A. White, Esquire 5460 North State Road #7, Suite 220 Fort Lauderdale, Florida 33319
The Issue Whether proposed Rules 61A-7.003, 61A-7.007, 61A-7.008, and 61A-7.009 constitute invalid exercises of delegated legislative authority, pursuant to Section 120.52(8), Florida Statutes,1/ for the reasons described by Petitioner in its Petition.
Findings Of Fact Petitioner and Intervenor are companies whose substantial interests will be affected by the proposed rules and they have standing to bring this rule challenge. The State of Florida, Department of Business and Professional Regulation (the Department), is the state agency responsible for adopting the proposed rules which are the subject matter of this proceeding. The Division of Alcoholic Beverages and Tobacco (the Division) is vested with general regulatory authority over the alcoholic beverage industry within the state. The Division issues both general and special alcoholic beverage licenses. See Chapters 561-565, Fla. Stat. The general licenses which permit consumption on the premises are: 1COP licenses which permit consumption of beer and certain wine and distilled spirit products; 2COP licenses which permit consumption of beer, wine, and certain distilled spirit products; and 4COP licenses which permit the consumption of beer, wine, and all distilled spirits. See §§ 563.02(1)(b)-(f), 564.06(5)(b), and 561.20(1), Fla. Stat. The 4COP licenses are known as quota licenses, are issued based on the population of the county, and are limited in number. § 561.20(1), Fla. Stat. Quota liquor licenses range in value, depending on the county involved, from a low of approximately $20,000, to a high of approximately $300,000. (stipulation of parties) The SBX or special bowling license is issued by the Division pursuant to Section 561.20(2)(c), Florida Statutes. The owner or lessee of a bowling establishment having 12 or more lanes and necessary equipment to operate them may obtain this special license which permits consumption of beer, wine, and distilled spirits. Alcohol can only be sold for consumption on the licensed premises. Another special alcoholic beverage license listed in proposed Rule 61A-7.003 is the 12RT license. The holder of such a license must be a caterer at a dog track, horse track, or jai alai fronton. In this context, Section 565.02(5), Florida Statutes, reads in pertinent part as follows: (5) A caterer at a horse or dog racetrack or jai alai fronton may obtain a license upon the payment of an annual state license tax of $675. Such caterer’s license shall permit sales only within the enclosure in which such races or jai alai games are conducted, and such licensee shall be permitted to sell only during the period beginning 10 days before and ending 10 days after racing or jai alai under the authority of the Division of Pari- mutual Wagering of the Department of Business and Professional Regulation is conducted at such racetrack or jai alai fronton. . . . Petitioner participated, to some degree, in the rule development process. The extent of that participation is unclear from the record. The text of the proposed rules as published in their final form in the Florida Administrative Weekly on October 10, 2003, is as follows: 61A-7.003 Premises Not Eligible For Smoking Designation. Licensed premises shall not be designated as a stand-alone bar if the qualifications for licensure require the premises be devoted predominantly to activities other than the service of alcohol. The following licenses are not eligible for a stand-alone bar designation: S = Special Hotel SH = Special Hotel in counties with population of 50,000 or less SR = Special Restaurant issued on or after January 1, 1958 SRX = Special Restaurant SBX = Special Bowling SAL = Special Airport SCX = Special Civic Center SCC = Special County Commission SPX = Pleasure, Excursion, Sightseeing, or Charter boats X = Airplanes, Buses, and Steamships IX = Railroad Cars XL = Passenger Waiting Lounge operated by an airline PVP = Passenger Vessels engaged in foreign commerce FEX = Special Public Fairs/Expositions HBX = Special Horse Breeders HBX = Special County Commission 11AL = American Legion Post permitted to sell to general public 11C = Social, Tennis, Racquetball, Beach, or Cabana Club 11CE = Licensed vendors exempt from payment of surcharge tax 11CS = Special Act Club License 11CT = John and Mable Ringling Museum 11GC = Golf Club 11PA = Symphony, Live Performance Theatre, Performing Arts Center 12RT = Dog or Horse Track or Jai Alai Fronton 13CT = Catering Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695 FS. History--New 61A-7.007 Formula For Compliance With Required Percentage of Gross Food Sales Revenues. In order to determine compliance, the division shall use the formula of gross food sales revenue, including but not limited to non-alcoholic beverages, divided by gross total sales revenue, in any consecutive six- month period. The results of the formula will represent the percentage of food sales revenues as defined herein and in s. 561.695, Florida Statutes. Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695(6) FS. History--New 61A-7.008 For Percentage of Gross Alcohol Sales Revenue Formula. In order to determine compliance, the division shall use the formula of gross alcohol sales revenue divided by gross total sales revenue, in any consecutive six-month period. Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695(6) FS. History--New 61A-7.009 Method Used to Determine Whether an Establishment is Predominantly Dedicated to the Serving of Alcoholic Beverages. In order to determine whether an establishment, other than one holding a specialty license designated in Rule 61A- 7.003, F.A.C., is predominantly dedicated to the serving of alcoholic beverages, the division shall compare the percentage of gross food sales revenue with the percentage of gross alcohol sales revenue. If the percentage of gross alcohol sales revenue is greater than that of the gross food sales revenue, an establishment is deemed predominantly dedicated to the serving of alcoholic beverages. Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695(1)(9) FS. History--New Article X, Section 20, Florida Constitution, was adopted by the electorate in 2002, and generally prohibits smoking in enclosed indoor workplaces. This constitutional provision includes certain exceptions from this general prohibition including the "stand-alone bar" exception. Section 20(d) instructs the Florida Legislature to adopt legislation to implement its provisions and specifies that the Legislature is not precluded from enacting any law constituting or allowing a more restrictive regulation of tobacco smoking than is provided in Section 20. The legislature implemented the constitutional amendment by amending Part II, Chapter 386, Florida Statutes. Section 386.204 prohibits smoking in enclosed indoor workplaces, except as provided in Section 386.2045. Section 386.2045 enumerates exceptions to the general prohibition, including the exception of a stand-alone bar. Section 386.2045(4), Florida Statutes, reads as follows: (4) STAND-ALONE BAR- A business that meets the definition of a stand-alone bar as defined in s. 386.203(11) and that otherwise complies with all applicable provisions of the Beverage Law and this part. A stand-alone bar is defined in Section 386.203(11) as follows: (11) 'Stand-alone bar' means any licensed premises devoted during any time of operation predominately or totally to serving alcoholic beverages, intoxicating beverages, or intoxicating liquors, or any combination thereof, for consumption on the licensed premises; in which the serving of food, if any, is merely incidental to the consumption of any such beverage; and the licensed premises is not located within, and does not share any common entryway or common indoor area with, any other enclosed indoor workplace, including any business for which the sale of food or any other product or service is more than an incidental source of gross revenue. A place of business constitutes a stand-alone bar in which the service of food is merely incidental in accordance with this subsection if the licensed premises derives no more than 10 percent of its gross revenue from the sale of food consumed on the licensed premises. Deborah Pender is the chief of licensing for the Division. According to Ms. Pender, the Division included the SBX or special bowling license in the list of special licenses that cannot qualify for stand alone bar status in proposed Rule 61A- 7.003 because its predominant business is a bowling alley. Similarly, the 12RT license was included because its predominant business is a racetrack: "Because that’s a specialty license that is issued at race tracks, and if it wasn’t a race track business, the caterer . . . couldn’t have a license anywhere else." Marie Carpenter is the chief of the Bureau of Auditing of the Division. According to Ms. Carpenter, the provision regarding the six consecutive months in proposed rules 61A-7.007 and 61A-7.008 was intended to give the Division enough of a period of time to get a good picture of whether the business met the criteria for compliance and to give licensees an opportunity to build up business records that were not previously required to be kept.2/ The licensee would be required to keep daily records. Ms. Carpenter acknowledged that in using the six month auditing period in the proposed rule, a licensee could exceed the 10 percent requirement on one or more occasions during the audit period. Sandy Finkelstein is President of Petitioner and is the operating partner of Shore Lanes Bowling Center in Merritt Island, Florida. According to Mr. Finkelstein, there is at least one bowling facility in Florida that was issued a 4COP license. A bowling facility with a 4COP license is not automatically excluded from the stand-alone bar designation, whereas a bowling facility with an SBX license is automatically excluded from the stand-alone bar designation by virtue of proposed rule 61A-7.003.
The Issue Whether the proposed Rules 61A-7.006, 61A-7.007, 61A-7.008, and 61A-7.009, constitute a valid exercise of delegated legislative authority, as such term is defined in Subsection 120.52(8), Florida Statutes (2004).
Findings Of Fact Based on the evidence, the following findings of fact are determined: The State of Florida, Department of Business and Professional Regulation (Respondent), is the state agency responsible for adopting the proposed rules which are the subject matter of this proceeding. The Division is vested with general regulatory authority over the alcoholic beverage industry within the state. The Division issues both general and special alcoholic beverage licenses. The general licenses which permit consumption of alcoholic beverages on the premises of a business are: 1-COP licenses which permit consumption of beer and certain wine and distilled spirit products; 2-COP licenses which permit consumption of beer, wine, and certain distilled spirit products; and 4-COP licenses which permit the consumption of beer, wine, and all distilled spirits. Quota licenses are issued based on the population of the county and are limited in number. In addition, a quota license allows consumption on the premises of beer, wine, and distilled spirits. Standing and/or Identification of the Parties The parties stipulated in the Joint Pre-Hearing Stipulation to the standing of Bowling Centers Association of Florida, Inc. (BCAF), Shore Lanes, Inc., and Sanford Finklestein. The parties agreed at hearing that Sarah Lynch would be voluntarily dismissed as a Petitioner. BCAF is a non-profit Florida corporation with its principle place of business in Orlando, Florida. It is composed of owners of bowling centers throughout the State of Florida. Its purpose is representing the interests of its member bowling centers. This purpose includes matters of rule adoptions that would affect or concern bowling centers. All members of BCAF are bowling centers that may hold either a special bowling license (SBX) or a general alcoholic beverage license. Shore Lanes, Inc., is the owner/operator of a bowling center located in Merritt Island, Florida. Shore Lanes, Inc., currently holds an SBX license, but is eligible to hold a general alcoholic beverage license. Sanford Finklestein is the general manager and part- owner of Shore Lanes, Inc., as well as the current president of BCAF. Finklestein is substantially affected because establishments holding general alcoholic beverage licenses are classified as enclosed indoor workplaces. Florida Clean Indoor Air Act Article X, Section 20 of the Florida Constitution, "the Florida Clear Indoor Act," was adopted by the electorate in May 2002, as "a Florida health initiative to protect people from the health hazards of second-hand tobacco smoke." It contains a far-reaching prohibition against smoking in enclosed indoor workplaces. A very limited exception from this general prohibition was provided for "stand-alone bars," as such term was defined in subsection (c)(8) of the amendment. (8) "Stand-alone bar" means any place of business devoted during any time of operation predominately or totally to serving alcoholic beverages, intoxicating beverages, or intoxicating liquors, or any combination thereof, for consumption on the licensed premises; in which the serving of food, if any, is merely incidental to the consumption of any such beverage; and that is not located within, and does not share any common entryway or common indoor area with, any other enclosed indoor workplace including any business for which the sale of food or any other product or service is more than an incidental source of gross revenue. The amendment further provided in subsection (d) for legislative implementation of this amendment in a manner which could be more, but not less, restrictive than the provisions of the amendment. On June 23, 2003, the Governor of Florida signed House Bill 63-A into law to implement Article X, Section 20 of the Florida Constitution. It was denominated as Chapter 2003-398, Laws of Florida, and this statute substantially revises Chapter 386, Florida Statutes (2002), which is commonly referred to as the Florida Clean Indoor Air Act. Section 386.2125, Florida Statutes (2003), requires the Department of Health and Respondent, in consultation with the state fire marshal, to adopt rules pursuant to Subsection 120.536(1) and Section 120.54, Florida Statutes (2003), to implement the provisions of Chapter 386, Part II, Florida Statutes (2003), within each agency's specific areas of regulatory authority. The Legislature, in implementing Article X, Section 20 of the Florida Constitution, enacted Section 386.204, Florida Statutes (2003), which prohibits smoking in enclosed indoor workplaces, except as provided in Section 386.2045, Florida Statutes (2003). Section 386.2045, Florida Statutes (2003), provides that smoking may be permitted in a: (4) Stand-Alone Bar--A business that meets the definition of a stand-alone bar as defined in s. 386.203(11) and otherwise complies with all applicable provisions of the Beverage Law and this part. A stand-alone bar is defined in Subsection 386.203(11), Florida Statutes (2003), as follows: (11) "Stand-alone bar" means any licensed premises devoted during any time of operation predominantly or totally to serving alcoholic beverages, intoxicating beverages, or intoxicating liquors, or any combination thereof, for consumption on the licensed premises; in which the serving of food, if any, is merely incidental to the consumption of any such beverage; and the licensed premises is not located within, and does not share any common entryway or common indoor area with, any other enclosed indoor workplace, including any business for which the sale of food or any other product or service is more than an incidental source of gross revenue. A place of business constitutes a stand-alone bar in which the service of food is merely incidental in accordance with this subsection if the licensed premises derive no more than 10 percent of its gross revenue from the sale of food consumed on the licensed premises. Prior Litigation The Division previously was involved in rule challenge proceedings concerning the stand-alone bar exemption. Bowling Centers Association of Florida, Inc. v. Department of Business and Professional Regulation, Division of Alcoholic Beverages and Tobacco, Case No. 03-4776RP (DOAH March 26, 2004). In that case, ALJ Staros concluded that the Division exceeded its grant of rulemaking authority in three of the four rules proposed at the prior hearing. ALJ Staros found three of the proposed rules to be arbitrary by failing to take into consideration a licensee's predominate business and, also, by permitting the use of gross revenue from sources other than the sale of food and alcoholic beverages to render the provision "predominately or totally devoted" to serving alcoholic beverages. The text of the invalidated proposed rules as published in their final form in the Florida Administrative Code Weekly on October 10, 2003, is as follows: 61A-7.007 Formula for Compliance With Required Percentage of Gross Food Sales Revenues In order to determine compliance, the division shall use the formula of gross food sales revenue, including but not limited to non-alcoholic beverages, divided by gross total sales revenue, in any consecutive six- month period. The results of the formula will represent the percentage of food sales revenues as defined herein as in s. 561.695, Florida Statutes. Specific Authority 386.2125, 561.695(9), FS. Law Implemented 386.203(11), 561.695(6), FS. History-New 61A-7.008 For Percentage of Gross Alcohol Sales Revenue Formula. In order to determine compliance, the division shall use the formula of gross alcohol sales revenue divided by gross total sales revenue, in any consecutive six-month period. Specific Authority 386.2125, 561.695(9), FS. Law Implemented 386.203(11), 561.695(6), FS. History-New 61A-7.009 Method Used to Determine Whether an Establishment is Predominantly Dedicated to the Serving of Alcoholic Beverages. In order to determine whether an establishment, other than one holding a specialty license designated in Rule 61A-7.003, F.A.C., is predominantly dedicated to the serving of alcoholic beverages, the division shall compare the percentage of gross food sales revenue with the percentage of gross alcohol sales revenue. If the percentage of gross alcohol sales revenue is greater than that of the gross food sales revenue, an establishment is deemed predominantly dedicated to the serving of alcoholic beverages. Specific Authority 386.2125, 561.695(9) FS. Law Implemented 386.203(11), 561.695(6), FS. History-New 29 Fla. Admin. W. 4021-4022 (October 10, 2003). The Proposed Rules The revised proposed Rules 61A-7.006, 61A-7.007, 61A-7.008, and 61A-7.009 were drafted in response to legislation that implemented Article X, Section 20 of the Florida Constitution. The basis for the proposed rules is information derived from telephone calls, committee hearings, legislative staff interaction, town hall meetings, rule workshops, rule hearings, senators, and representatives. The text of the proposed rules as published in their final form in the Florida Administrative Weekly on March 11, 2005, is a follows: 61A-7.006 Records Required to Maintain the Designation Stand-alone bars holding an "ss" or "ssf" designation shall maintain records to substantiate reports, affidavits and designation qualifications. Records of all purchases of food, all gross retail sales of alcohol for consumption on the licensed premises, all gross retail sales of alcohol for consumption off the licensed premises, all gross retail sales of food sold for consumption on the premises, all gross retail sales of food sold for consumption off the premises, and gross revenue from all other sales shall be separately documented. Stand-alone bars holding an "ss" or "ssf" designation shall maintain complete and accurate records of all sales and purchases. Records shall include, but are not limited to, purchase invoices, sales tickets, inventory records, receiving records, cash register journal tapes, on premises food sales records, computer records generated from automatic dispensing devices, Department of Revenue Sales Tax Returns, and any other record documenting sales. Sales records shall be sequentially organized by month and year and include a monthly statement summarizing the total sales revenue, food revenue and percentage of food revenue for each month. Specific Authority 386.2125, 561.695(9), FS. Law Implemented 386.203(11), 561.695(6), FS. History-New 61A-7.007 Formula for Compliance With Required Percentage of Gross Food Sales Revenues. In order to determine compliance, the division shall use the formula of gross food sales revenue from the sale of food the licensee sells for consumption on premises, including but not limited to non-alcoholic beverages, divided by gross total sales revenue, in any consecutive two month period. The results of the formula will represent the percentage of food sales revenues as defined herein and in Section 561.695, Florida Statutes. Specific Authority 386.2125, 561.695(9), FS. Law Implemented 386.203(11), 561.695(6), FS. History-New 61A-7.008 For Percentage of Gross Alcohol Sales for Consumption on the Licensed Premises Revenue Formula In order to determine compliance, the division shall use the formula of gross alcohol sales revenue from the sale of alcohol the licensee sells for consumption on premises, divided by gross total sales revenue, in any consecutive two-month period. Specific Authority 386.2125, 561.695(9), FS. Law Implemented 386.203(11), 561.695(6), FS. History-New 61A-7.009 Method Used to Determine Whether an Establishment is Predominately Dedicated to the Serving of Alcoholic Beverages. In order to determine whether an establishment, other than one holding a specialty license designated in rule 61A-7.003, F.A.C., is predominately dedicated to the serving of alcoholic beverages for consumption on the licensed premises, the division shall compare the percentage of gross alcohol revenue from the sale of alcohol the licensee sells for consumption on the premises with the following categories of revenue: For stand-alone bars holding the "ss" designation: the percentage of gross alcohol sales revenue from the sale of alcohol the licensee sells for consumption off the premises where the purchaser is required to enter, the percentage of gross alcohol sales revenue from the sale of alcohol the licensee sells for consumption off the premises where the purchaser is not required to enter the premises, and the percentage of gross revenue from any source not included in the alcohol categories above. If the percentage of gross alcohol sales revenue from the sale of alcohol the licensee sells for consumption on premises is greater than that of the gross sales revenue from each individual category of gross sales in 61A-7.009(1)(a)-(c), an establishment is deemed predominately dedicated to the serving of alcoholic beverages. For stand-alone bars holding the "ssf" designation: the percentage of gross food sales revenue from the sale of food the licensee sells for consumption on premises, the percentage of gross food sales revenue from the sale of food the licensee sales for consumption off premises, the percentage of gross alcohol sales revenue from the sale of alcohol the licensee sells for consumption off the premises, and the percentage of gross revenue from any source not included in the food and alcohol categories above. If the percentage of gross alcohol sales revenue from the sale of alcohol the licensee sells for consumption on premises is greater than that of the gross sales revenue from each individual category of gross sales in 61A-7.009(2)(a)-(d), an establishment is deemed predominately dedicated to the serving of alcoholic beverages. Specific Authority 386.2125, 561.695(9), FS. Law Implemented 386.203(11), 561.695(6), FS. History-New 31 Fla. Admin. W. 964-965 (March 11, 2005). Applicable Statutes The provision within the Florida Statutes that outlines the "12-month affidavit" reads as follows: After the initial designation, to continue to qualify as a stand-alone bar the licensee must provide to the division annually, on or before the licensee's annual renewal date, an affidavit that certifies, with respect to the preceding 12-month period, the following: No more than 10 percent of the gross revenue of the business is from the sale of food consumed on the licensed premises as defined in s. 386.203(11). Other than customary bar snacks as defined by rule of the division, the licensed vendor does not provide or serve food to a person on the licensed premises without requiring the person to pay a separately stated charge for food that reasonably approximates the retail value of the food. The licensed vendor conspicuously posts signs at each entrance to the establishment stating that smoking is permitted in the establishment. The division shall establish by rule the format of the affidavit required by this subsection. § 561.695(5), Fla. Stat. (2005). The provision within the Florida Statutes that outlines the "36-month certified public accountant evaluation" reads as follows: Every third year after the initial designation, on or before the licensee's annual license renewal, the licensed vendor must additionally provide to the division an agreed upon procedures report in a format established by rule of the department from a Florida certified public accountant that attests to the licensee's compliance with the percentage requirement of s. 386.203(11) for the preceding 36-month period. Such report shall be admissible in any proceeding pursuant to s. 120.57. This subsection does not apply to a stand-alone bar if the only food provided by the business, or in any other way present or brought onto the premises for consumption by patrons, is limited to nonperishable snack food items commercially prepackaged off the premises of the stand-alone bar and served without additions or preparation; except that a stand-alone bar may pop popcorn for consumption on its premises, provided that the equipment used to pop the popcorn is not used to prepare any other food for patrons. § 561.695(6), Fla. Stat. (2005). The provision within the Florida Statutes that authorizes the Division to promulgate rules regarding the enforcement and administration of Section 561.695, Florida Statutes (2005), and Chapter 386, Part II, Florida Statutes (2005), reads as follows: (9) The division shall adopt rules governing the designation process, criteria for qualification, required recordkeeping, auditing, and all other rules necessary for the effective enforcement and administration of this section and part II of chapter 386. The division is authorized to adopt emergency rules pursuant to s. 120.54(4) to implement the provisions of this section. § 561.695(9), Fla. Stat. (2005). The provision within the Florida Statutes that defines an "invalid exercise of delegated legislative authority" reads, in pertinent part, as follows: (8) "Invalid exercise of delegated legislative authority" means action which goes beyond the powers, functions, and duties delegated by the Legislature. A proposed or existing rule is an invalid exercise of delegated legislative authority if any one of the following applies: * * * (c) The rule enlarges, modifies, or contravenes the specific provisions of law implemented, citation to which is required by s. 120.54(3)(a)1.; * * * (e) The rule is arbitrary or capricious. A rule is arbitrary if it is not supported by logic or the necessary facts; a rule is capricious if it is adopted without thought or reason or is irrational; . . . . § 120.52(8), Fla. Stat. (2005). Objections of Petitioner Petitioners challenge the proposed rules in the present case as constituting an invalid exercise of delegated legislative authority. Petitioners argue that Subsection 386.203(11), Florida Statutes (2005), limits a stand-alone bar to selling only alcoholic beverages and food for consumption on the premises. Petitioners assert that proposed Rule 61A-7.006 constitutes an invalid exercise of delegated legislative authority by authorizing the receipt of gross revenues from and the consideration of records regarding sales by a stand-alone bar received from other than the sale of food or alcoholic beverages for consumption on the premises. Petitioners also assert that proposed Rules 61A-7.007 and 61A-7.008 are invalid exercises of delegated legislative authority for the reason that the two-month period for determining compliance with the stand-alone bar requirement of Subsection 386.203(11), Florida Statutes (2005), is contrary to such statute's directive that compliance must be maintained "at any time"; would permit a stand-alone bar to violate on repeated occasions during the audit period, the "incidentals sales" requirement that no more than 10 percent of gross revenues be from the sale of food for consumption on the premises; and is contrary to the prior Final Order in DOAH Case No. 03-4776RP, which found that a substantially identical proposed rule, in which the audit period was six months, constituted an invalid exercise of delegated legislative authority. Petitioners further assert that proposed Rule 61A-7.009 is an invalid exercise of delegated legislative authority in that it violates the statutory requirements of Subsection 386.203(11), Florida Statutes (2005), that a stand- alone bar sell only alcoholic beverages and food for consumption on the premises; permits a stand-alone bar to derive approximately 25 percent or less of its gross revenue from the sale of alcoholic beverages for consumption on the premises and be deemed by the Division to be "predominantly devoted" to the sale of alcoholic beverages for consumption on the premises, and is only a non-substantive, cosmetic change from the previous proposed Rule 61A-7.009 held invalid in DOAH Case No. 03-4776RP. Based on the testimony of Brenda Olsen, assistant CEO for the American Lung Association of Florida and director of Governmental Affairs, during the 2003 legislative session in which House Bill 63-A was passed, the Florida House of Representatives and Senate had conflicting views of the legislation at first. The House version contemplated eliminating the stand-alone bar exemption while the Senate version would allow 25 percent food sales. Tampa Lanes is a bowling alley in the Tampa area that has purchased a quota liquor license in order to operate as a stand-alone bar, and is a 50-lane bowling center that consists of around 175 game machines, which is one of the larger machine set-ups in the bowling industry. The Division's Position The Division's proposed two-month auditing period is analogous to the method in which the Division currently audits SRX licensed premises. There are statutory restrictions on what may be sold in some establishments licensed to sell alcoholic beverages, but no statutory limits exist specifically for stand-alone bars. Richard Law has been a CPA in Florida since 1977 and has been qualified as an expert in accountancy in state administrative hearings, federal administrative hearings, federal district court, and the circuit court. Law was recognized as an expert. Based on his testimony, the typical audit period is a year. A yearly audit is a true and accurate representation of a business's practice. A daily audit would be susceptible to skewed results. For example, a tour bus may stop alongside a bar resulting in that particular days' food sales being abnormally high. Those particular days' sales would not be representative of the true nature of the bar's business practices. Michael Martinez, special counsel to the Department of Business and Professional Regulation, was involved with the legislative process in drafting legislation that implemented Article X, Section 20 of the Florida Constitution. In addition to the input received from the Legislature, there was input from public workshops, public hearings, and numerous telephone calls from concerned business owners.
Findings Of Fact Petitioner is the owner and operator of Quality Inn Royal in Clearwater, Florida, and is the owner of an adjacent building that housed AGE Royal Pub, Inc., doing business as Royal Pub Lounge and Restaurant on July 1, 1983. In 1983 Royal Pub Lounge and Restaurant was operated by Glenn H. Hatch, M.D. (retired), under a lease from Petitioner. During this same period Petitioner, as a special promotion, had accepted guests under an arrangement which included breakfast as part of their package. It also had members of the Philadelphia Phillies baseball team as guests, with arrangement with the team to allow the players to charge their meals at the restaurant to their rooms. On July 12, 1983, eighty-three rooms were occupied. On July 12, 1983, Hatch failed to open the restaurant. When contacted he advised he was not going to continue operating the restaurant and pub. At this time Hatch was in arrears in rent by more than $11,000 and the food and liquor inventory totaled $2,787.15 (Exhibit 1). In order to allow it to comply with its contractual agreements with its guests, Petitioner, on July 12, 1983, entered into an agreement with Hatch (Exhibit 2) whereby Hatch surrendered his right to occupy the premises, Petitioner released Hatch from all liabilities under the lease, and Hatch agreed to hold Petitioner harmless from all liens perfected against Hatch before July 12, 1983. At this time, Petitioner was primarily concerned with providing breakfast to its guests as it had contracted to do and needed the restaurant open to comply with these contracts. The restaurant and lounge remained closed on July 12, but Petitioner purchased additional supplies, hired personnel, and opened the restaurant on July 13, 1983, and operated the restaurant, serving breakfast and lunch to guests, for approximately one week, when a new tenant was obtained to take over the restaurant and lounge. During the period the restaurant was operated by Petitioner it closed each afternoon around 2:00 p.m. Total sales during this period was $1,352.54. The food consumed at the restaurant during this one-week operation cost approximately $500 and labor costs were approximately $1,000. Pursuant to a city ordinance making the landlord responsible for unpaid utility bills of a tenant, Petitioner was required to pay the City of Clearwater $2,469.21 for electricity used on the premises before July 13, 1983. On or about August 2, 1983, the Department of Revenue filed a warrant for collection of Sales and Use taxes against AGH Royal Pub, Inc., d/b/a Royal Pub Lounge and Restaurant for unpaid Sales and Use taxes for a period of time ending July 12, 1983, in an amount of approximately $17,000. This warrant became a lien on the supplies at the facility on August 19, 1983, when recorded. On December 23, 1983, Petitioner satisfied this lien by paying $17,389.12 in order that the new tenant could get a liquor license. On June 30, 1983, Petitioner served upon Hatch at Royal Pub Restaurant and Lounge a Notice of Delinquency in Rent in the amount of $7,825 through June 30, 1983. This notice required lessee to pay this sum within 30 days or give up possession of the premises. Petitioner had a statutory lien upon the inventory of food and liquor of the lessee superior to any lien acquired subsequent to the bringing of the property on the leased premises. Following successful negotiations with the new tenant to operate the restaurant and lounge, Petitioner became aware of the sales tax liability incurred during Hatch's operation of the facility when the new tenant was denied a liquor license because of the unpaid sales tax by his predecessor. In order to get the restaurant and lounge in operation by an independent operator, Petitioner paid the taxes under protest. Prior to the denial of the liquor license to the successor operator of Royal Pub Lounge and Restaurant, Petitioner was not aware of a tax liability incurred by Hatch nor could it have ascertained the existence of such liability by the exercise of due diligence. Records of delinquent sales taxes are confidential and not available to persons in the position of the landlord (Stipulation). Petitioner is a limited partnership which owns several motels. These motels are operated by McClellan Marsh Management Corp., which has interlocking directors, with some officers common to Petitioner. Although many of these motels have restaurant facilities on the premises, these facilities are' always operated by lessees who are wholly independent of the lessor.
The Issue Whether Respondent's tax assessment against Petitioner should be sustained.
Findings Of Fact Petitioner, Mark Benson, was the owner of both B.I. Sub Shop and B.I. Auto Parts which were small business enterprises in Miami, Florida. B.I. Sub Shop was in the business of selling retail food, while B.I. Auto Parts sold retail automobile parts. Neither business is currently in operation. In December 1986, sales and use tax collections by the enterprises had not been received by Respondent. When Petitioner was notified in December 1986 by Respondent that he had not submitted the required sales tax collections, he contacted Respondent. An audit by Respondent ensued in the first quarter of 1987 resulting in the issuance of a Notice of Assessment against B.I. Auto Parts totalling $9,237.42 and a Notice of Assessment against B.I. Sub Shop totalling $1,421.33. To record sales for B.I. Auto Parts, Petitioner kept copies of sequentially numbered invoices of his sales, some of which were missing at the time of the audit, and of vendor receipts. For B.I. Sub Shop, Petitioner calculated sales by subtracting the amount of money in the cash drawer at the beginning of the day from the amount remaining at the end of the day. The amount was then entered in a daily log. Invoices of vendor sales were also maintained. Petitioner admitted that the records he kept did not meet acceptable business standards but contended that his records were adequate for his needs. Finding that the bookkeeping practices of both of Petitioner's enterprises were inadequate, Respondent made an estimate of the sales and use taxes owed. During the audit, Respondent requested certain records, including bank statements and certain income tax returns from Petitioner. Petitioner was given a date certain in which to provide the records but failed to timely comply with the request. To calculate the estimate for B.I. Auto Parts, Respondent calculated a gross taxable sales amount by adding an additional taxable sales amount to the gross sales amount noted on the invoices. The additional taxable sales amount was found by a calculation of an average monthly sales figure determined from the deposits noted on the available bank statement (10 months). The average monthly sales figure was then applied to the number of months covered in the estimate yielding an estimated gross sales amount. The gross sales taken from the invoices was subtracted from the estimated gross sales amount, resulting in additional taxable sales. To calculate the estimate for B.I. Sub Shop, Respondent took a sample (4 months) of the invoices of vendor sales. An average of the invoices was taken to obtain estimated purchases per month. The gross was calculated. Then, a 20% spoilage factor was deducted from the gross purchase and a 250% markup factor was applied, yielding an estimated gross sales. Certain other appropriate credits were given. In view of the inadequacy of Petitioner's records, Respondent's methodology to assess the monies owed was reasonable, and Petitioner has failed to demonstrate any error in such assessment.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent enter a Final Order sustaining the subject assessments. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 15th day of August 1989. JANE C. HAYMAN 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 August 1989. COPIES FURNISHED: Mark Benson, B.I. Sub Shop and B.I. Auto Parts, 8250 N.W. 58th Street Miami, Florida 33166 Linda G. Miklowitz, Esquire Department of Legal Affairs Tax Section, The Capitol Tallahassee, Florida 32399-1050 Katie D. Tucker, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 William D. Moore, Esquire General Counsel Department of Revenue 203 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issues for resolution in this proceeding are whether the Respondent committed the violations alleged in an administrative complaint, as amended, and if so, what discipline is appropriate.
Findings Of Fact Respondent, Mano's, Inc., doing business as Sea Port (Mano's) is now and has at all relevant times been a licensee of the Division of Alcoholic Beverages and Tobacco (DABT) holding a 4 COP SRX special restaurant license. Mano's operates a restaurant and lounge located in Cape Canaveral, Brevard County, Florida. Mano's license requires that at least 51 of its gross retail sales be served from food and non-alcoholic beverages. Mano's license application clearly acknowledges this and the requirement that it maintain a bona fide restaurant with 4000 square feet of floor space and seating for 200 patrons. Raymond Joseph Cascella is the president, sole corporate officer, and sole stockholder of Mano's. Attached to his license application dated May 14, 1991, is his sketch of the licensed premises. The instructions on the application provide that the sketch must include all specific areas which are part of the premises sought to be licensed. The sketch provided by Mr. Cascella includes the bar, restrooms, dining rooms, and kitchen. On September 10, 1996, Sam Brewer, then a special agent with DABT, conducted an inspection of Mano's licensed premises. Special Agent Brewer found several violations on his visit; he spoke with Mr. Cascella and gave Mr. Cascella a copy of the inspection report and three notices related to the violations. The violations observed and noted by Special Agent Brewer were improper display of the facility license (in the office rather than conspicuously displayed), insufficient seating (160 seats rather than 200), and failure to maintain sales receipts or other records to document that the 51 percent non- alcoholic beverages and food requirement was met. One of the notices provided to Mr. Cascella stated that no later than September 25, 1996, he must bring to the Rockledge DABT office records pertaining to total sales of food, non- alcoholic, and alcoholic beverages for the period June 1, 1996, through September 10, 1996. Mr. Cascella came to the Rockledge office on September 25, 1996, but the records he brought were computerized summaries of credit card transactions and did not reflect a break-out of sales of alcoholic beverages and non-alcoholic beverages and food. There were no guest receipts nor register tapes (also called "z-tapes") provided. On September 30, 1996, Special Agency Brewer issued another notice to Mano's. The notice, signed by Mr. Cascella, directs the licensee to produce these records to the Rockledge DABT district office no later than October 15, 1996, or administrative changes would be brought against the alcoholic beverage license: All records relating to gross retail sales of food and non-A/B and all records relating to gross retail sales of A/B (including source documents) (i.e., Z-tapes, waitress order checks), for the period June 1, 1996 thru September 10, 1996. All records relating to purchases of food and non-A/B and all records relating to purchases of A/B, for the period June 1, 1996, thru September 10, 1996. (Petitioner's Exhibit No. 4) Mr. Cascella returned to the Rockledge office on October 15, 1996, with a box of papers. These papers were records of purchases made from different vendors but there were no records of any retail sales by Mano's. In spite of letters to Special Agent Brewer from Mano's counsel promising full compliance and in spite of Mr. Cascella's several efforts, Mr. Cascella never produced all of the required records for the relevant period (June 1, 1996 through September 10, 1996). At the hearing in this proceeding Mr. Cascella submitted a large plastic ziplock bag stuffed with register receipts from June 1, 1996, through September 10, 1996. Mr. Cascella thought he had shown these or copies to Special Agent Brewer but was not sure. Mr. Cascella also conceded that the tapes were not complete, as they were only from the cash register at the bar, and none were from the register in the restaurant. Thus, the receipts reflected mostly liquor sales for each day, and very little food. (Transcript pp. 231-238) On February 7, 1997, Special Agent Brewer sent an official notice to Mano's informing the licensee that DABT intended to file administrative charges for failure to produce records as requested, in violation of Section 561.29(1)(j), Florida Statutes. On March 8, 1997, Special Agent Brewer, two other DABT agents, and several officers or agents from other law enforcement agencies appeared at Mano's licensed premises in Cape Canaveral. Mr. Cascella, who lived upstairs with his wife, was summoned by the bartender and came downstairs immediately. Mr. Cascella was very upset and told the officers that they had no right to be there without a search warrant. Throughout the inspection he remained very vocal and argumentative. Special Agent Brewer was looking for food items as part of his inspection and he requested that Mr. Cascella grant access to a locked area within the kitchen, a walk-in cooler or freezer. When Mr. Cascella refused, Special Agent Brewer informed him that the refusal was a violation of the law and he could be arrested. Eventually during the inspection the agents gained access to the area only after they cut the lock. Mr. Cascella was arrested for his refusal to stop interfering with the inspection and for his persistent and obstreperous comments during the agents' questioning of the bartender. Between October 1996, and December 1996, Jane Davis, an auditor with DABT conducted a surcharge audit of Mano's for the period July 1, 1993, through June 30, 1996. Mr. Cascella was cooperative and had the records available for Ms. Davis' review. She did not conduct an SRX audit requested by Special Agent Brewer, as she was being transferred from Rockledge to Lakeland and she could not take on the task of reviewing all of the Z- tapes for a long period of time. The surcharge audit Ms. Davis conducted was for a purpose different from the determination of percentage of alcohol sales and non-alcohol sales; her audit period, and consequently the records she reviewed, were not the June 1, 1996, through September 10, 1996, period addressed in the notices of violation issued by Special Agent Brewer.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the agency enter its final order finding that Respondent violated Rule 61A-3.0141, Florida Administrative Code, and Section 562.41(3), Florida Statutes, and imposing civil penalties of $250 and $1,000, respectively, for a total of $1,250. DONE AND ENTERED this 29th day of August, 2000, in Tallahassee, Leon County, Florida. MARY CLARK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of August, 2000. COPIES FURNISHED: James D. Martin, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Allen C. D. Scott, II, Esquire Scott & Sheppard, P.A. 101 Orange Street St. Augustine, Florida 32084 Barbara D. Auger, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Joseph Martelli, Director Division of Alcoholic Beverages and Tobacco Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
