Findings Of Fact 5. The Division hereby adopts and incorporates by reference the Findings of Fact numbered 1 through 14 as set forth in the Recommended Order.
Conclusions The Director of the Division of Florida Land Sales, Condominiums, and Mobile Homes (Division) enters this Final Order in the above referenced matter.
Appeal For This Case Ye ee eee THIS FINAL ORDER CONSTITUTES FINAL AGENCY ACTION AND MAY BE THIS FINAL ORDER UCONN YI ES TINA eee e———EESeaeeweorose APPEALED BY_ANY PARTY SUBSTANTIALLY AFFECTED BY THIS FINAL ORDER APPEALED BY_ANY FARK] Y olUpolANyA.T oaoes--- Oo ——o PURSUANT TO SECTION 120.68, FLORIDA STATUTES, AND RULE 9.1 10, FLORIDA RULES OF APPELLATE PROCEDURE, BY FILING A NOTICE OF APPEAL CONFORMING TO THE REQUIREMENTS OF RULE 9.110(d), FLORIDA RULES OF APPELLATE PROCEDURE, BOTH WITH THE APPROPRIATE DISTRICT COURT _OF APPEAL, ACCOMPANIED BY THE APPROPRIATE FILING FEE, AND WITH THE AGENCY CLERK, DEPARTMENT OF BUSINESS _ AND PROFESSIONAL REGULATION, AT 1940 NORTH MONROE STREET, TALLAHASSEE, FLORIDA 32399-1007 WITHIN THIRTY (30) DAYS OF THE RENDITION OF THIS ORDER. Department of Business and Professional Regulation, Page 3 of 4 Division of Florida Land Sales, Condominiums, and Mobile Homes v. Fernando Fernandez DOAH Case No. 04-0771; BPR 2003089755 CERTIFICATE OF SERVICE | HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by U.S. Certified Mail to Fernando Fernandez, 15397 Southwest 168" Terrace, Miami, Florida 33187, this day of , 2004. Robin McDaniel, Docket Clerk Copies furnished to: Division of Administrative Hearings Janis Sue Richardson, Office of the General Counsel Robert Badger, Section Head, Yacht & Ship Regulation Department of Business and Professional Regulation, Page 4 of 4 Division of Florida Land Sales, Condominiums, and Mobile Homes v. Fernando Fernandez DOAH Case No. 04-0771; BPR 2003089755
Findings Of Fact From December 12, 1975, to June, 1976, Steiner was a registered real estate salesman in the employ of FAR, a registered corporate broker, located in Dade County, Florida. During that period of time, FAR was engaged in an enterprise whereby advanced fee listings were obtained from Florida property owners. Salesmen known as "fronters" or "qualifiers" were employed to place calls to Florida property owners where names and phone numbers had been provided to the salesmen by FAR. The prospects were asked if they cared to list their real estate with FAR in anticipation of resale. It was explained that there would be a refundable fee to be paid by the property owner for the listing. The refund was to occur upon sale of the property. If the prospect was interested, then certain literature was mailed out to them. Other salesmen were employed as "drivers" who would make the second contact of the prospect who indicated an interest in listing his property. The driver would secure a signed listing agreement along with a check for $375.00 which constituted the refundable listing fee. Steiner, although a salesman and not a broker, was the person responsible for running the operations of the FAR. A Mr. Lawrence Mann was employed as a figure-head broker for FAR and named as its president. Mann's only duties were to insure that all salesmen employed were properly licensed with the Real Estate Commission. Steiner hired and fired salesmen, sometimes took over difficult listing cases, provided the preplanned sales pitch for the salesmen and generally supervised the over-all operation. Steiner had a monitor in his office so that he could listen in on telephone calls being made to prospective clients. There was no evidence that any of the listings obtained by FAR were ever resold. There were, however, three parcels of land in negotiation for sale when the operations of FAR were terminated in June, 1976. There was to be a division separate and apart from the "fronters" and "drivers" to do the actual selling of the property. However, Steiner would set the listing price for the property after receiving a description of the property from the salesman. The listings were advertised in the Fort Lauderdale area but there was no evidence to establish whether or not other advertising occurred. There was a total absence of evidence and, hence, a failure of proof as to the allegations of misrepresentations by Steiner. FREC introduced no evidence to show that Steiner represented that the property could be sold for several times the purchase price, that it would be advertised nationwide and in foreign countries or that the company had foreign buyers wanting to purchase United States property listed with the company. There was no evidence introduced to show that Steiner either made the representations or knew them to be false. There was no evidence introduced to show that Steiner knew that no bona fide effort would be made to sell the property listed. There was no evidence of any nature introduced by FREC to show that Steiner was dishonest or untruthful.
The Issue Whether the Petitioners are liable for sales tax, penalties and interest as assessed by the Department of Revenue (the Department) and if so, in what amount?
Findings Of Fact The parties have stipulated to the facts stated in paragraphs 2-59.1/ The Department of Revenue is an agency of the State of Florida, pursuant to Section 20.21, Florida Statutes, and is authorized to administer the tax laws of the state, pursuant to Section 213.05, Florida Statutes. The Department was authorized to conduct an audit of each of the Petitioners and to request information to determine their liability for taxes pursuant to Chapter 212, Florida Statutes. Legendary Holding, Inc. (Holding) is a corporation organized under the laws of Florida effective October 23, 1996, and was so organized from 1999-2003. Holding's corporate address is 4100 Legendary Drive, Suite 200, Destin, Florida 32541. Holding was subject to the Internal Revenue Code of 1986 as amended and in effect (IRC) during 1999-2003 and for federal income tax purposes, Holding was a subchapter "s" corporation during this time. Holding was also subject to Chapter 212, Florida Statutes, during 1999-2003. Petitioner Harry T's, Inc. (Harry T's), is a corporation organized under the laws of Florida effective November 9, 1998, and was so organized during Harry T's Audit Period, defined as December 1, 1999 through March 31, 2003. Harry T's was a wholly-owned subsidiary of Holding. During its Audit Period, Harry T's corporate address was 4460 Legendary Drive, Suite 400, Destin, Florida. Harry T's was subject to the IRC and for federal income tax purposes was a qualified subchapter S subsidiary of the s-corporation parent, Holding. Petitioner Beachside Inn Destin, Inc. (Beachside) was a corporation organized under the laws of Florida effective March 6, 2000, and was so organized during the Beachside Audit Period, defined as May 1, 2000, through May 31, 2003. Beachside, a wholly-owned subsidiary of Holding, was administratively dissolved on October 14, 2004, for failure to file an annual report. During the Audit Period, Beachside's principle place of business was 2931 Scenic Highway 98, Destin, Florida, 32541. Its corporate address was 4460 Legendary Drive, Suite 400, Destin Florida. Beachside was subject to the IRC and for federal income tax purposes was a qualified subchapter S subsidiary of the s-corporation parent, Holding, during the Beachside Audit Period. Petitioner Legendary Restaurant Associates, Inc. (Restaurant) is a corporation organized under the laws of Florida effective October 7, 1999, and was so organized during Restaurant's Audit Period, defined as December 1, 1999, through March 31, 2003. During this time Restaurant was a wholly owned subsidiary of Holding and Restaurant's corporate address was 4460 Legendary Drive Suite 400, Destin, Florida. Restaurant was subject to the IRC and for federal income tax purposes was a wholly-owned, qualified subchapter S subsidiary of the s-corporation parent, Holding, during the Restaurant Audit Period. Legendary, Inc. (Legendary) is a corporation organized under the laws of Florida during 1999-2003, and its corporate address was also 4460 Legendary Drive, Suite 400, Destin, Florida, during this time. Legendary was also a wholly-owned subsidiary of Holding. Legendary was subject to the IRC and for federal income tax purposes, was a qualified subchapter S subsidiary of the s-corporation parent, Holding. Legendary Resorts, LLC (Resorts), is a limited liability company organized under the laws of Florida and was so organized during 2000-2003. Resorts, whose corporate address was also 4460 Legendary Drive, Suite 400, Destin, Florida, was administratively dissolved on September 16, 2005, for failure to file an annual report. Legendary entered into a cooperative business agreement (CBA) with certain subsidiaries of Holding prior to or during 1999-2003. The terms of the CBA between Legendary and these subsidiaries were identical other than the name of the "manager" subsidiary and the percentage of compensation paid to Legendary and the formula for sharing profits varied from time to time. Legendary also entered into a management agreement with certain other of Holding's subsidiaries, and the terms of these agreements were identical. FACTS RELATED TO PETITIONER HARRY T'S AUDIT Harry T's was a registered dealer who filed form DR- 15 (Sales Tax Return) with the Department for each month of Harry T's Audit Period. Harry T's used the cash basis of accounting during its Audit Period. The Department sent Harry T's a Notification of Intent to Audit Books and Records (Form DR-840) to conduct an audit of Harry T's books and records for this purpose. The Department and Harry T's entered into an Audit Agreement agreeing that a sampling method is the most effective, expedient, and adequate method in which to conduct an audit of Harry T's books and records. Gina Imm, a Department tax auditor, examined and sampled the available books and records of Harry T's to determine whether it properly collected and remitted sales and use tax in compliance with Chapter 212, Florida Statutes. Harry T's was the tenant party in a lease with Legendary for the property upon which Harry T's operated its business prior to January 1, 2000. Under the terms of the lease agreement between Harry T's and Legendary, Harry T's paid rent equal to eight percent of the gross sales to Legendary. On January 1, 2000, the lease was terminated. On January 1, 2000, Harry T's entered into a CBA with Legendary, which was effective throughout Harry T's Audit Period. Harry T's operated a business on property owned by Holdings during Harry T's Audit Period. Accounting entries were made each month during the Audit Period to record the amount of CBA compensation that was accrued by Harry T's to Legendary under the CBA. However, no rent was recorded on the income tax or accounting books of either Harry T's or Legendary during the Audit Period. Further, no amount of money labeled as CBA compensation was transferred from Harry T's to Legendary during Harry T's Audit Period and no payments labeled as "rent" were transferred from Harry T's to Legendary. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Harry T's to Legendary during the Audit Period. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was also transferred from Legendary to Harry T's. During Harry T's Audit Period cash was also transferred from Legendary to Holdings. These amounts were reflected as dividend distributions and varied in amount and time from (a) Holdings insurance and mortgage indebtedness obligations associated with the property used by Harry Ts and owned by Holding, and (b) the amounts accrued under the CBA's. Any amounts collected by Harry T's and not paid directly to third parties were distributed periodically to Holdings as corporate dividends. The Department determined that the transfers of cash from Harry T's to Legendary reflected rental consideration paid as CBA compensation, and directed the Department's auditor to assess sales tax against the amounts recorded as CBA compensation accounting entries. Harry T's paid ad valorem taxes due on the property on which Harry T's operated during each year of Harry T's Audit Period. The Department auditor assessed sales tax on the amounts of ad valorem taxes paid by Harry T's on behalf of Holding. The Department determined that Harry T's owed $58,844.02 in additional sales tax for the CBA compensation and ad valorem taxes paid, plus statutory interest and penalties. On September 5, 2003, the Department issued to Harry T's a Notice of Intent to Make Audit Changes (form DR- 1215) for Audit No. A0233016246, stating that Harry T's owed $69,249.79 in taxes, $29,422.03 in penalties, and $6,612.44 in interest for a total of $94,330.64, and that interest continued to accrue on the unpaid assessment. By letter dated October 9, 2003, Harry T's agreed to the portions of the assessment related to food and beverage, but objected to the assessment for all other amounts including the CBA fees. Harry T's paid $10,953.62 for the uncontested assessment amounts. The Department issued its Notice of Proposed Assessment (NOPA) for audit number A0233016246 on January 27, 2004. The NOPA stated that the total owed by Harry T's was $69,249.79 in taxes, $29,422.03 in penalties, and $11,831.88 for a total of $110,501.72. The NOPA reflected a payment of $10,953.62 paid for the uncontested amounts of the audit assessment, and showed a balance due of $99,548.10 as of the date of the NOPA. The Department received Harry T's formal written protest on April 23, 2004. FACTS RELATED TO RESTAURANT'S AUDIT Petitioner Restaurant was a registered dealer who filed form DR-15 (Sales and Use Tax Return) with the Department for each month of the Restaurant Audit Period. Restaurant used the cash basis of accounting. The Department sent Restaurant a Notification of Intent to Audit Books and Records (Form DR-840) to conduct an audit of Restaurant's books and records for the purposes of Chapter 212, Florida Statutes. The Department and Restaurant entered into an Audit Agreement stipulating that a sampling method is the most effective, expedient, and adequate method by which to conduct an audit of Restaurant's books and records. Gina Imm examined and sampled the available books and records of Restaurant to determine whether Restaurant properly collected and remitted sales and use tax in compliance with Chapter 212, Florida Statutes. Restaurant was the tenant party in leases for the property upon which Restaurant operated its business prior to January 1, 2000. On January 1, 2000, Restaurant terminated its leases for these properties. Restaurant entered a CBA with Legendary prior to the beginning of Restaurant's Audit Period, December 1, 1999 through March 31, 2003. The CBA between Restaurant and Legendary was effective throughout the Restaurant Audit Period. Restaurant operated the "Crystal Beach Coffee Company" and "Tony's By the Sea" on property owned by Floridian Homes of Crystal Beach, Inc. (FHCB), an unrelated third party, during the Restaurant Audit Period. Restaurant operated "Blues" on property owned by an individual, Mr. Peter H. Bos, during the Restaurant Audit Period. 37. Restaurant operated "Rutherford's 465" on property owned by Regatta Bay Investor, Ltd., a Florida limited partnership, during the Restaurant Audit Period. Accounting entries were made each month during the Restaurant Audit Period to record the amount of CBA compensation that was accrued by Restaurant to Legendary under the CBA; however, no rent was recorded on the income tax or accounting books of either Restaurant or Legendary during the Restaurant Audit Period. No amount of money labeled as CBA compensation was transferred from Restaurant to Legendary and no payments labeled as "rent" were transferred from Restaurant to Legendary. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Restaurant to Legendary, and cash was also transferred from Legendary to Restaurant during the Restaurant Audit Period. Any amounts collected by Restaurant during the Restaurant Audit Period and not paid directly to third parties were distributed periodically to Holdings as corporate dividends. The Department determined that the transfers of cash from Restaurant to Legendary reflected rental consideration paid as CBA compensation, and directed the Department's auditor to assess sales tax against the amounts recorded as CBA compensation accounting entries. Restaurant paid ad valorem taxes due on the property on which Restaurant operated during each year of the Restaurant Audit period. The Department assessed sales tax on the amounts of ad valorem taxes paid by Restaurant on behalf of Holding. The Department determined that Restaurant owed $17,880.71 in additional sales tax for the CBA compensation and ad valorem taxes paid, plus statutory interest and penalties. On September 5, 2003, the Department issued the Restaurant a Notice of Intent to Make Audit Changes (Form DR- 1215) for audit number A0231102584, stating that Restaurant owed $26,092.10 in taxes, $8,940.31 in penalties, and $1.808.87 in interest for a total of $36,841.28. The Department noted Restaurant's payment of $8,745.53 for the portions of the assessment related to food and beverage sales, leaving a balance due as of that date of $28,095.75. The Department informed Petitioner Restaurant that interest continued to accrue on the unpaid assessment. The Department issued its NOPA for audit number A0231102584 on March 17, 2004, to Restaurant. The total owed by Restaurant as stated in the NOPA was $26,092.10 in taxes, $8,940.34 in penalties, and $3,378.99 in interest for a total of $38,411.43, less the $8,745.53 already paid, for a total balance due on that date of $29,665.90. Restaurant protested the NOPA, and the Department referred the matter to the Department's Technical Assistance and Dispute Resolution Section. On March 28, 2005, the Department issued its Notice of Decision upholding the assessment of tax for the CBA fees and ad valorem taxes paid by Restaurant, and on April 6, 2005, the Department received the Restaurant's formal written protest. FACTS RELATED TO BEACHSIDE'S AUDIT Petitioner Beachside Inn Destin, Inc. (Beachside) was a registered dealer who filed form DR-15 (Sales and Use Tax Return) with the Department for each month during the Beachside Audit period, May 1, 2000, through May 31, 2003. Beachside used the cash basis of accounting during the Beachside Audit Period. Beachside and the Department entered into an Audit Agreement stipulating that a sampling method is the most effective, expedient, and adequate method by which to conduct an audit of Beachside's books and records. Gina Imm, a Tax Auditor for the Department, examined and sampled the available books and records of Beachside to determine whether Beachside properly collected and remitted sales and use tax during the Audit Period in compliance with the requirements of Chapter 212, Florida Statutes. Legendary Resorts, LLC (Resorts) entered into an Asset Purchase Agreement with FHCB and Lester J. Butler, Timothy Fulmer and Mitt Fulmer, three of Resorts' shareholders (the Shareholders), in April 2000, for the acquisition of the Beachside Inn assets by Resorts. Subsequent to the execution of the Asset Purchase Agreement, the parties discovered that a condition precedent to the agreement, i.e., the assumption by Resorts of the major indebtedness of FHCB could not be accomplished as contemplated because it would cause the existing lender to violate its loan consideration limits with respect to the Legendary Group. After discovering this problem, Resorts entered into a Triple-net Lease dated March 1, 2000, with the Shareholders for a beachfront lot and entered into a Triple-net Lease dated March 1, 2000, with FHCB for the Beachside Inn assets that were originally the subject of the Asset Purchase Agreement. These Triple-net Leases were designed to transfer control, and the benefits and burdens of ownership, of the Beachside Inn assets to Resorts pending resolution of the financing contingency and the closing under the Asset Purchase Agreement. Beachside entered into a CBA with Legendary prior to the beginning of the Beachside Audit Period, which was effective throughout the Beachside Audit Period. Although Resorts was the party entitled to all rights, and subject to all obligations, under the Triple-net Leases and Asset Purchase Agreement, the financial accounting and cash management functions and activities during the terms of the Leases were handled by and recorded in Beachside because these leases were designed to permit the Legendary Group to take over the operations of the Beachside Inn assets pending closing and because the Legendary Group intended to place the assets in Beachside under the Asset Purchase Agreement upon the closing of the asset purchase. Resorts and Beachside operated the Beachside Inn assets on property owned by FHCB and the Shareholders during the Beachside Audit Period. Accounting entries were made each month to record the amount of CBA compensation that was accrued by Beachside to Legendary under the CBA but no rent was recorded on the income tax or accounting books of either Beachside or Legendary during the Beachside Audit Period. No money labeled as CBA compensation was transferred from Beachside or Resorts to Legendary and no payments labeled as "rent" were transferred from Beachside or Resorts to Legendary. Based on the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Resorts and/or Beachside to Legendary and from Legendary to Resorts and/or Beachside during the Beachside Audit Period. After Resorts and Beachside operated the Beachside Inn assets for a period of time at a material loss, Resorts was not able to arrange for suitable substitute financing to close on the purchase of the Beachside Inn assets under the Asset Purchase Agreement. Resorts, FHCB and the Shareholders reached an agreement on or about August 15, 2003 (the Termination Date), whereby Resorts terminated its rights under the Asset Purchase Agreement and the two leases. In exchange, the Shareholders transferred ownership of the beachfront lot to Resorts. Federal income tax returns for calendar years 2000, 2001, and 2002 were filed by Resorts which reflected the results of operating the Beachside Inn assets. Following the Termination Date, all of the historic accounting entries made by Beachside reflecting the operation of the Beachside Inn assets were moved from its books and records to the books and records of Resorts for administrative reasons and consistency with the legal documents. Beachside and Resorts made insurance payments on behalf of the owners of the property upon which Resorts operated its business for each year of the Beachside Audit Period. They also made payments for loans on behalf of the owners of the property and paid ad valorem taxes due on the property upon which Resorts operated for each year of the Beachside Audit Period. The Department assessed Beachside sales tax on the amounts of ad valorem taxes, insurance payments and loan payments paid by Beachside on behalf of FHCB and the Shareholders. On October 27, 2003, the Department issued Beachside a Notice of Intent to Make Audit Changes (form DR- 1215) for audit number A030582778, stating that Beachside owed $69,436.01 in taxes, $30,606.77, and $7,635.33 for a total of $107,678.11. The Department noted Beachside's payment of $8,936.01 for the portions of the assessment related to sales of good and beverage, and reflected a balance due after payment of $98,742.10, with interest continuing to accrue.2/ Beachside made an additional payment of $8,936.01 toward the balance due on the uncontested amount of the assessment. On February 19, 2004, the Department issued its Notice of Proposed Assessment for audit number A030582778, stating that the total amount owed by Beachside was $69,436.01 in taxes, $30,606.77 in penalties and $8,917.55 in interest for a total of $108,960.33, less $17,872.02 previously paid by Beachside, for a balance as of that date of $91,088.31. On April 16, 2004, Beachside protested the NOPA, and the Department referred the matter to the Department's Technical Assistance and Dispute Resolution Section. On March 28, 2005, the Department issued its Notice of Decision upholding the assessment of tax for the payment of ad valorem taxes, insurance and loans by Beachside on behalf of Holding. On April 6, 2005, the Department received the Beachside's formal written protest of audit number A030582778. ADDITIONAL FACTS In addition to the Stipulated Facts submitted by the parties, the undersigned makes the following findings based upon the stipulated exhibits submitted. With respect to the CBAs, the documents provided "the Co-Operator and Manager have agreed to enter into this Agreement for each to provide certain assets to the Business and for Manager to provide, on a cost effective basis, Management Services as required from time to time by the Business." The Agreements state that "each have various assets including fixtures, employees, contractual relationships, knowhow and real estate which they wish to combine to operate a restaurant and bar (the Business)." The CBAs do not name a physical location and do not have provisions for care and repair of the premises; for rights of access and inspection; for eminent domain or condemnation; for default; for provision of utilities or for subletting, all provisions typically seen in a commercial lease. By contrast, the Triple-Net Lease for the Beachside Inn Assets (Stipulated Exhibit 10) contains all of these provisions. The CBAs provide for payment of management services, expenses of the business, and all services and assets necessary for the operations of the business. They are clearly not limited to provision of a location. With respect to the Beachside Assets, the Triple-Net Lease (the Beachside lease) was entered after the Asset Purchase Agreement and expressly acknowledges the existence of that document. However, the Beachside lease by its terms does not provide a right of purchase at a nominal sum at the end of the lease. It provides options to extend the term of the three-year lease for five additional terms of three years each, governed by the same terms and provisions. It also provides a right to purchase the premises at any time during the term of the lease and up to six months after any extensions of the lease which shall be exercised by affecting a closing under the Asset Purchase Agreement. The Beachside Lease for the Beachside Inn assets has other provisions that are relevant to these proceedings. For example, the Beachside Inn lease defines the term "rent" as including the base rent ($100 per month) plus any state sales tax imposed "upon any and all rents or other payments provided in this lease." It provides for surrender of the premises at the expiration of the lease, including terms for removal of any trade fixtures, personal property and signs. Most importantly, the Beachside Inn lease expressly states the following: 26. a. The Lease does not create the relationship of principal and agent or of partnership or of joint venture or of any association between Landlord and Tenant, the sole relationship between the parties hereto being that of Landlord and Tenant. * * * c. This Lease and the Exhibits, if any, attached hereto and forming a part hereof, constitute the entire agreement between Landlord and Tenant affecting the Premises and there are no other agreements, either oral or written, between them other than are herein set forth. . . .
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That the Department of Revenue enter a final order finding that: The Department's assessment for additional sales tax, penalties and interest against Petitioner Harry T's is sustained for the portion attributable to payment of ad valorem taxes only; The Department's assessment for additional sales tax, penalties and interest against Petitioner Legendary Restaurant Associates, Inc., is sustained for the portion attributable to payment of ad valorem taxes only; and The Department's assessment for additional sales tax penalties and interest against Petitioner Beachside Inn, Inc., be sustained in its entirety. DONE AND ENTERED this 27th day of July, 2006, in Tallahassee, Leon County, Florida. S ___________________________________ LISA SHEARER NELSON 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 27th day of July, 2006.
The Issue Whether the license of Respondents should be revoked or suspended or other discipline imposed.
Findings Of Fact Upon consideration of the evidence received, the testimony elicited at the hearing, argument of counsel and memoranda submitted by the parties, I find: Respondent, Florida Coast Realty, Inc., was issued License Number 0168325 as a registered real estate broker corporation. Respondent Steven R. Myer, holds license number 0110787 as a registered real estate broker. Respondent Myer is an Active Firm Member for Respondent, Florida Coast Realty, Inc. In general, the contention of the Petitioner Commission is that the Respondents failed to pay an employee, Sam Blumner, a real estate commission due him on two occasions contrary to certain provisions in Chapter 475, Florida Statutes. The contentions of the Respondents are that the dispute was contractual and not within the jurisdiction of the Petitioner, that they tried to avoid an information being filed against them, and that the alleged offense's are insufficient to justify suspension or revocation. On November 1, 1976, Florida Coast Realty, Inc., by Steven R. Myer, entered into a contract agreement with Sam Blumner whereby Mr. Blumner was to receive a fee earned as a result of service performed by Mr. Blumner as a real estate salesman with Florida Coast Realty, Inc. Subsequently, on January 13, 1977, Sam Blumner was terminated as a salesman with Florida Coast Realty, Inc., and a notice of registrant change was nailed by the corporation to the Pompano Beach-Deerfield Beach Board of Realtors and received by the Board on January 18, 1977. A transaction pertinent to subject hearing was entered into on or about November 11, 1976 in which Walter Ross and Sam Blumner were the "listing" salesmen for property owned by Frank S. Holsclaw and Florence Holsclaw. It was ultimately purchased by Dennis F. and Dione Dicataldo, but subsequent to the termination of the employment of Blumner by Respondents. Mr. Blumner made a claim for $297.00 which represented one-half the listing, or twelve and one-half percent of the office profit. He testified that he was listed on the office "log" as co-lister. Nothing was paid to Mr. Blumner although Mr. Walter Ross, a broker formerly associated with Respondent Florida Coast Realty, Inc. and the co-lister was paid twelve and one-half percent of the office profit. Mr. Ross estimated that he received between $250.00 and $260.00 as "half" listing commission. Mr. Blumner's name did not appear on the listing contract in the transaction because he had not yet been listed as a member of the Board, and only the name of Walter Ross was listed as "salesperson". Mr. Ross testified that he and Sam Blumner were listed together on the transaction and that he himself received half of the listing commission. A registered realtor associate who worked for Respondent, Florida Coast Realty, Inc. at the time, Dorothy E. Reagan, testified that Walter Ross and Sam Blumner were the listing salesmen on the Holsclaw-Dicataldo transaction. The Respondents did not dispute the fact that Walter Ross was paid but one-half the listing commission although they pointed out his was the only name on the written contract. No evidence was entered by the Respondent showing that the remaining one-half of the listing commission was paid by Respondents to anyone. A second transaction pertinent to this hearing was entered into on December 31, 1977 with Mr. and Mrs. Haarar as sellers, and Mr. and Mrs. Grimes as buyers. The closing was several months later and after Mr. Blumner had left the employment of Florida Coast Realty, Inc. Mr. Blumner was the salesman who first showed the purchaser the home later purchased by Mr. and Mrs. Grimes, and was the "procuring cause" of the sale. He made an offer to the seller and counter offer of the seller to the buyer. He related to the Grimes the offer of $27,000, which was the final purchase price of the home and showed these purchasers other property for sale. Mr. Blumner was not paid a commission for the sale of the home. Both Mr. Ross and Mrs. Reagan testified that Mr. Blumner was the salesman on the transaction. Mr. Jerome T. Myer of the Respondent Florida Coast Realty, Inc., stated that Mr. Blumner should have been paid, but not the full commission inasmuch as he had not done the follow-up work involved after the initial procurement of a purchaser for the property. The Respondent, Steven R. Myer and his brother Jerome T. Myer did the follow-up work on the sale of the property in the Haarar-Grimes transaction. Mr. Blumner contends that he made demands for his money both as a co- lister and a salesman, but that no money was paid him. He testified that he would have foregone his commission as a co-lister in the amount of some $260.00 had he received a commission as salesman in the Haarar-Grimes transaction, a sum of some $567.00. Mr. Blumner testified that he endeavored to talk to the Respondent Steven R. Myer about the commission but was interrupted by Jerome Myer, and that he told the Respondents he would have to seek redress through the Petitioner, Florida Real Estate Commission, if he did not receive a commission. A letter was sent to the Petitioner by Respondent Myer on April 7, 1977 requesting information as to the jurisdiction of Petitioner relative to "a dispute with one of my former associates regarding commission money". The Commission acknowledged the correspondence and Respondent Myer was informed that the Commission had received a complaint against him alleging he had failed to account or deliver a commission to a salesman, and that it was being assigned for investigation. The Respondents made little or no effort to settle the dispute prior to the hearing.
Recommendation Suspend the license of the Respondents until the commission has been paid to Sam Blumner as co-lister in the Holsclaw-Dicataldo transaction and a settlement has been made in regard to the Haarar-Grimes transaction. DONE and ENTERED this 21st day of November, 1978, in Tallahassee, Florida. DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings 101 Collins Building Mail: 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Joseph A. Doherty, Esquire Florida Real Estate Commission Post Office Box 1900 Orlando, Florida 32802 Steven L. Josias, Esquire P. 0. Box 23536 Fort Lauderdale, Florida 33308 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA FLORIDA REAL ESTATE COMMISSION FLORIDA REAL ESTATE COMMISSION, an agency of the State of Florida, Petitioner, vs. CASE NO. 78-812 Progress Docket No. 3321 FLORIDA COAST REALTY, INC., and Broward County STEVEN R. MYER, Respondents. /
Findings Of Fact Respondent, John E. Mitchell (Mitchell), was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0184919. Mitchell was the owner and qualifying broker for Respondent, Florida East Coast Management, Inc. (Florida East Coast), which was at all times material hereto a licensed real estate broker in the State of Florida under license number 0211550. Respondents are, inter alia, engaged in the business of managing rental apartments for landlords. On April 17, 1985, Mr. and Mrs. Joseph Chestnut executed an application to rent an apartment through Florida East Coast, and delivered to Florida East Coast a deposit of $460.00. Pertinent to this case, the agreement provided: Applicant has deposited the sum of $460.00 in partial payment of the first month's rent with the understanding that this application is subject to approval and acceptance by the Landlord. Upon approval and acceptance, the applicant agrees to execute the Landlord's standard agreement before possession of residence is given and to pay any balance due on the first month's rent and security deposit within five (5) days after the approval of application or the deposit will be forfeited to the Landlord. If this application is not approved, or if applicant cancels within five (5) days, the deposit will be refunded, the applicant hereby waiving any claim for damages by reason of non- acceptance. This application is for information only and does not obligate Landlord to execute a lease or deliver possession of the proposed residence. (Emphasis added) Within five days of the date of application, Mr. Chestnut spoke telephonically with Ms. Debra M. Best, the rental agent for Florida East Coast with whom he had dealt, and advised her that his anticipated job transfer to the area had not materialized and requested a refund of his deposit. 1/ Ms. Best promised to return his deposit. On April 29 or May 1, 1985, Mr. Chestnut telephoned Ms. Best to inquire of his deposit. At that time, Ms. Best advised Mr. Chestnut that it was company policy not to refund deposits. By letter of May 13, 1985, Florida East Coast responded to Mr. Chestnut's written inquiry of Hay 1, 1985, by stating: "... it is our policy NOT TO RETURN ANY DEPOSIT FOR ANY REASON WHATSOEVER." Following receipt of Florida East Coast's letter of May 13, 1985, Mr. Chestnut filed a complaint with the Department of Professional Regulation, Division of Real Estate (Department). Approximately seven months later, December 10, 1985, Florida East Coast refunded Mr. Chestnut's deposit.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That an administrative fine be imposed against Respondents, John E. Mitchell and Florida East Coast Management, Inc., jointly and severally, in the sun of one thousand dollars ($1,000.00). DONE AND ORDERED this 17th day of March, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 17th day of March, 1987.
Findings Of Fact From August 18, 1976 to December 30, 1977, the date of corporate resignation, O'Brien was President, broker and active firm member for Exclusively. O'Brien also had a separate broker operation which was, and continues to be, conducted at another location as William O'Brien Registered Real Estate Broker. During the August 1976 - December 1977 period, Cocoran was a real estate salesman for Exclusively, and continued to conduct brokerage operations as Exclusively after O'Brien's December 30, 1977 resignation. Corcoran became Exclusively's broker on January 24, 1978. Corcoran was apparently the sole owner of the corporation, although O'Brien understood he was to have been a 52 percent shareholder. On October 5, 1977, O'Brien, after being advised, instructed his staff to place all moneys received from rentals in Exclusively's escrow account. Checks on this account required the signature of both O'Brien and Corcoran; the operating account checks were signed by Corcoran. On October 10, 1977, O'Brien went into the hospital and was unable to operate Exclusively's business. After he found out that moneys were not being properly accounted for and handled in mid-December, O'Brien resigned from the corporation December 30, 1977. On February 9, 1978, in an attempt to satisfy some of the claims against Exclusively, O'Brien, on advice of his attorney, signed checks on Exclusively's escrow account. These checks were dishonored by the bank as that account had been frozen. O'Brien and/or Corcoran and Exclusively were involved in-the following 18 specific transactions: About October 4, 1977, Robert Seneca extended his lease with Edward "Whitey" Ford on a condominium unit located at Suite 274, 234 Hibiscus Avenue, Lauderdale-by-the-Sea, Florida, paying to Exclusively $275.00 for the additional one month's rent. The $275.00 was deposited into Exclusively's operating account In the Sun Bank of Wilton Manors. About November 28, 1977, a check was drawn by Corcoran on the operating account for $247.50, payable to Ford, said sum representing the rental less commission. The check was subsequently dishonored due to insufficient funds and at no time subsequent has Ford received the funds due him. About November 21, 1977, a check for $600.00 was received by Exclusively as payment for rental on Edward "Whitey" Ford's condominium unit located at Suite 274, 234 Hibiscus Avenue, Lauderdale-by-the-Sea, Florida, from Julius Zinn. This $600.00 was deposited to Exclusively's escrow account and on February 9, 1978 a check was issued on Exclusively's escrow account to Ford for $540.00. The check was subsequently dishonored and Ford has not received the funds due him. About November 12, 1977, Samuel Mathes entered into a contract to lease a home owned by Lester J. Grant. Mathes deposited with Exclusively $3,300.00, which represented the first and last month's rent, and the security deposit. About December 9, 1977, Exclusively issued an accounting to Grant showing $1,980.00 due him after deduction of the commission and a check on the operating account of Exclusively for this amount. The check was subsequently dishonored and Grant has not received the $51,988.08 due him. About December 16, 1977, Neale Murphy leased the residence located at 1533 Southeast 6th Street, Deerfield, Florida, from Sam Gillotti paying $51,188.88 to Exclusively, representing the first and last month's rent. About January 20, 1970, Exclusively issued an accounting which showed $440.00 owing to Gillotti after deduction of the real estate commission and issued a check drawn on Exclusively's operating account for that amount. That check was returned due to insufficient funds and Gillotti has not received delivery of the funds due him. About November 16, 1977, Joseph T. Scanlon entered into a lease for property owned by E. P. Goodrich located at 1000 South Ocean Boulevard, Pompano Beach, Florida, paying Exclusively $1,100.00 and about November 21, 1977, a second check was given Exclusively for $2,700.00. The checks were deposited into Exclusively's operating account. About December 14, 1977, Corcoran drew a check on Exclusively's operating account for $2,700.00, the amount due the Goodriches, less commission; that check was returned for insufficient funds. On February 9, 1978, a check was drawn in Exclusively's escrow account payable to Goodrich for $2,97O.00. The bank dishonored the check and Goodrich has not received the funds due him. A lease of property was negotiated between G. Porto and P. Franklin, and $51,980.00, representing the first and last month's rent and security deposit was paid. The lease arrangement subsequently broke down and Porto released his claim to the earnest money deposit held by Exclusively authorizing payment to Franklin. Abaut October 17, 1977, Exclusively transferred the $1,980.00 from its escrow account to its operating account and Franklin has not received the 1,980.00 due him. About December 31, 1977, Exclusively leased an apartment owned by Charles Hora to Cindy Noves and received payment for the first and last month's rent plus the security deposit for a total of $740.00. About January 12, 1978, Exclusively leased to Harry Maier another apartment owned by Charles Hora and received the first and last month's rent plus the security deposit for a total of $740.00. $640.00 was to he the total commission. To this date, Hora has received only $456.09 of the $840.00 due him. About February 9, 1978, a check drawn on Exclusively's escrow account for $202.00 to Charles Hora was subsequently dishonored and at no time subsequent has Hora received the funds due him. In October, 1977, Bernard Goldstein, lessee of an apartment owned by Basil de Verteuil, exercised an option to extend his lease. About November 16, 1977, Goldstein paid to Exclusively the sum of $500.00 by check which was deposited into Exclusively's operating account, the $500.00 representing the rental payment for the additional one month extension. About January 16, 1978, Corcoran wrote a check on the operating account of Exclusively in to amount of $450.00, said sum representing the rental payment less commission. That check was dishonored by the bank and at no time subsequent thereto has Verteuil received the funds due him. About December 9, 1977, Robert Reeder leased his rental property located at 1016 Northeast 17th Way, Apartment 4, Fort Lauderdale, Florida, to Meg Wilson. Exclusively issued an accounting about December 9, 1977, which stated that they had received $370.50 from Wilson. The accounting further stated that Exclusively owed Reeder $190.00 after the deduction of the $180.00 commission. On February 9, 1978, a check was drawn on Exclusively's escrow account in the amount of $190.00 to Reeder. That check was subsequently dishonored by the bank and at no time has Reeder received the funds due. About December 6, 1977, William McCormick entered into a lease to rent real property owned by Stephen Runkle for a period of six months. About December 12, 1978, Exclusively sent an accounting to Runkle showing that they had received $790.08 representing the first and last month's rent and security deposit. The $790.00 check from McCormick was deposited to Exclusively's operating account. The accounting showed that after deduction of commission and certain cleaning charges that $578.00 was due Runkle. About January 17, 1978, a check was drawn on exclusively's operating account in the amount of $578.00. That check was dishonored and at no time subsequent has Runkle received the funds due him. About November 15, 1977, George F. Meyer executed a check payable to Exclusively in the amount of $1,200.00, representing one month's rent plus a $600.00 security deposit on a residence located at 1824 Coral Ridge Drive, Fort Lauderdale, Florida, owned by Norf Petrucci. The security deposit was never forwarded to Petrucci. The premises were inspected by Petrucci at the termination of the lease and it was determined that Meyer was entitled to the return of his security deposit but at no time has Meyer received the funds due him. About November 20, 1977, Julius Volinsky leased his residence, known as Apartment 417, l Las Olas Circle, Fort Lauderdale, Florida, to Julius Burt for a term of 12 months, through Exclusively. Burt executed a check for $1,500.00 payable to Exclusively, said sum representing the first and last month's rent and security deposit. That check was deposited to Exclusively's operating account. An accounting prepared by Exclusively about December 12, 1977, showed $400.00 due Volinsky and a check was drawn on Exclusively's operating account to Volinsky. This check was returned due to insufficient funds and at no time has Exclusively delivered the $400.00 to Volinsky. About December 4, 1977, Exclusively leased an apartment owned by Michael Bombardier to Selma Schachter. The lease was for four months with a total rent of $3,100.00 which was paid to Exclusively. About December 19, 1977, a check was drawn on Exclusively's operating account for $2,790.00 payable to Bombardier, representing the amount due Bombardier less the real estate commission of $310.00. That check was returned due to insufficient funds. In January, 1978, Exclusively gave Bombardier $480.00 as partial payment but the remaining $2,310.00 is still due. In January, 1977, Exclusively secured Robert DiTacchio to rent a condominium unit owned by Robert Knack at 3000 Rio Marsh Street, Fort Lauderdale, Florida. Exclusively received from DiTacchio $900.00 representing the first and last month's rent and the security deposit; $300.00 was to be retained by Exclusively as the commission leaving a balance due Knack of $600.00. Knack has not received the $600.00 due him. In November, 1977, Joey Clark, salesperson for Exclusively showed an Apartment 4-G, in the Royal Park Condominium, Fort Lauderdale, Florida, to Jeannette Verboom. Verboom advanced $680.00 to Exclusively to secure a lease for Apartment 4-G. Apartment 4-H was, in fact, the apartment upon which Exclusively had its listing agreement. Upon being made aware of the mistake and viewing Apartment 4-H, Verboom requested the return of her money. On February 9, 1978, a check was issued to Verboom from Exclusively's escrow account for $680.00. That check was subsequently dishonored and Verboom has not received the funds due her. About November 4, 1977, William O'Brien, broker for Exclusively, leased an apartment at 101 Royal Park Drive, Oakland Park, Florida, belonging to Elizabeth Finn to Mr. and Mrs. Eric Whittel and issued a receipt for $600.00 received from the Whittels for the rental of the apartment. At no time has Finn received the funds due her. About November 29, 1977, Edward J. Pfleger leased his apartment located at Suite 4-H, Building 113, Royal Park Condominium, 1500 Northwest 38th Street, through Exclusively to Marie Pugliese and Barbara Foreman. Exclusively received $580.00 representing the first and last month's rent, plus $100.00 security deposit. The $680.00 was deposited to Exclusively's operating account. About January 4, 1978, a check on Exclusively's operating account was drawn for $332.00 payable to Pfleger, representing the rental monies due him less the real estate commission. The check was returned due to insufficient funds, and Exclusively has not paid Pfleger the $332.00 due him. Due to the above checks that were issued without sufficient funds, an overdraft on Exclusively's operating account at the Sun Bank of Wilton Manors in the amount of $3,367.88 was created. At no point has Exclusively paid Sun Bank for the overdraft.
Recommendation From the foregoing findings of fact and conclusions of law, it is RECOMMENDED that William O'Brien be fined the sum of $2,800.00 ($200.00 for each of 14 counts) . It is further RECOMMENDED that the licenses of Michael J. Cocoran and Exclusively Rentals and Management, Inc. be revoked. DONE AND ORDERED this 20th day of November, 1980, in Tallahassee, Florida. HAROLD E. SMITHERS Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of November, 1980. COPIES FURNISHED: John Huskins, Esquire Staff Attorney Department of Professional Regulation 2009 Apalachee Parkway Tallahassee, Florida 32301 Dewey A. F. Ries, Esquire 215 NorthEast Third Street Fort Lauderdale, Florida 33301 Michael J. Corcoran 3121 NorthEast 51st Street, Apt 106-E Fort Lauderdale, Florida 33306 William O'Brien t/a Choice Listings and Rentals 4290 Northeast 7th Avenue Fort Lauderdale, Florida 33334
The Issue The issues under consideration result from the attempt by The Beaches Leader, Inc., (Petitioner) to gain refund of sales tax paid to the State of Florida. That refund is sought from the State of Florida, Office of the Comptroller (Respondent). The theory of the pursuit of the tax claim is set forth in Section 212.08(6), Florida Statutes, in which there is provided an exemption from sales tax associated with the sale of newspapers. In this connection, the question is raised, whether Petitioner is a newspaper within the meaning of Rule 12A-1.08, Florida Administrative Code, in effect at the time that the refund was requested.
Findings Of Fact Petitioner, by this action, seeks a refund from Respondent for the payment of sales tax related to the cost of printing of the publication known as The Mirror. As publisher, Petitioner sought the refund in keeping with Section 215.26, Florida Statutes. The request dates from August 16, 1985. This application for refund is premised upon the Petitioner's belief that it is entitled to refund in that The Mirror is a newspaper within the meaning of Rule 12A-1.08(3), Florida Administrative Code, and as such is exempt from taxation associated with the cost of printing the publication. The statement of law dealing with exemptions from sales tax pertaining to newspapers is set forth in Section 212.08(6), Florida Statutes. Petitioner finds solace in the decision of Campus Communications vs. Dept. of Revenue, 473 So.2d 1290 (Fla. 1985). Petitioner believes the finding in that case in which the Florida Supreme Court upheld the claims of the publication, The Independent Florida Alligator, because it was a newspaper by definition found in the aforementioned rule and entitled to be exempt from sales tax requirements, applies to Petitioner's circumstance. The amount of refund claimed is $6,577.10. Having considered the request for refund, and being mindful of the case of Campus Communications, supra, Respondent denied the refund request upon the expressed belief that The Mirror is not a newspaper within the meaning of Rule 12A-1.08(3), Florida Administrative Code. This statement of denial dates from March 20, 1986. Petitioner made timely application for the tax refund ire question and has sought timely review of the Respondent's intent to deny that refund request. The Mirror is a civilian enterprise publication for the special interests of personnel of the United States Naval Station at Mayport, Florida. However, it does solicit and contain some news items of general interest to the community. The testimony of the witnesses and the documentary evidence, including the issues of The Mirror which were admitted into evidence, establish that The Mirror is published under a contract between Petitioner and the United States Navy. It is distributed free of charge to naval personnel at the Mayport Naval Station, Jacksonville, Florida. In addition to distribution throughout the Mayport Naval Station, it is available and is distributed to civilian employees of the United States Navy both on and off the naval base, and also to military dependents and visitors both on and off the Mayport Naval Station base. The Mirror is delivered to 1,200 off-base residences and distributed at the offices of the Beaches Leader, a newspaper sold to the general public. There, residents of the Duval County, Florida, beaches communities obtain copies of The Mirror. Finally, copies are mailed weekly to paid subscribers in Florida and five other states. The affected community served by and which is the principal audience for The Mirror is the United States Naval Station at Mayport and the surrounding beaches area. This community is composed of naval personnel, their dependents and civilian naval employees. There are other persons who have no direct connection to the Navy but who, as beaches communities residents, are affected by the naval presence in the beaches area and in the Jacksonville metropolitan area as a whole and who use The Mirror as a means of information and dissemination of information. Mr. Paul Henkemeyer, a civilian employee of the United States Navy who is responsible for maintaining and disseminating information concerning the economic and other impacts of the naval installations in the Jacksonville area, testified in the course of the hearing. He pointed out that the Navy has a very substantial economic and social impact upon the residents of metropolitan Jacksonville, Florida. The Navy employs over 37,000 military personnel in the Jacksonville area in addition to over 10,000 civilian employees. Its payroll in the Jacksonville area approaches $1.7 billion. The Navy and its related economic activity account for in excess of 10 per cent of the Jacksonville area economy. The witnesses Mr. Henkemeyer; Mr. Townsend Hawkes, a beaches area real estate broker; Mr. Simon A. Smith, Jr., former Chief Executive of the North Florida Council of the Boy Scouts of America; and Ms. Marion Perry, supervisor of services of the United Way, testified that The Mirror is considered by them to be a "newspaper" of general circulation and interest to the public in the Jacksonville beaches communities. They demonstrated that The Mirror disseminates information about local events, including the Boy Scouts, United Way, and other charitable interests, and religious news. This pertains to the beaches communities and is a routine activity within The Mirror. More specifically, Mr. Hawkes said that he regularly reads The Mirror to follow his interests and involvement with the Sea Cadets, a group of boys and girls from the community interested in sailing and nautical activities. He also promotes the activities of the Kiwanis Club related to a swim marathon sponsored by that club in the publication. He reads the publication in furtherance of his business as a real estate broker to determine current happenings in the beaches communities associated with the Navy as it affects his business interests. He is involved with paid advertisements in The Mirror. He noted several issues which are peculiarly beaches topics about the Navy. He referred to certain road development and transportation matters found in The Mirror. Mr. Smith indicated that he considers The Mirror to be a "newspaper" of general circulation to the beaches communities, because it provides extensive coverage of Boy Scout activities and is viewed by the Boy Scouts of America and other charitable and community institutions as a source of dissemination of news and press releases concerning their present and future activities. Ms. Perry, in her role with the United Way in which her unit serves several north Florida counties including Duval County, testified that The Mirror is considered by her and the United Way to be a "newspaper" of general circulation and public interest for the beaches communities. She indicated that it is included in the mailing lists for press releases by the Florida Press Association and the United Way. She testified that The Mirror is listed as a "newspaper" in the Media Guide prepared by her. She notes that The Mirror includes features and opinions to the editor pages. She explained that The Mirror regularly disseminates information about the activities and fund raising efforts of the United Way throughout Jacksonville and the beaches communities. Generally speaking, Mr. Hawkes, Mr. Smith and Ms. Perry testified that The Mirror is included among the list of newspapers to which information, including press releases is regularly and routinely distributed by the organizations with which they are now or have been affiliated. In summary, those individuals and their community organizations consider The Mirror to be a "newspaper" of general circulation which contains matters of current public interest to the general public, and of current events and news of interest to the general public. The testimony of Mr. Tom Wood, the chief executive officer of The Beaches Leader, Inc., which owns and publishes The Mirror, provided further insight into the operations and function of The Mirror. The publication has a designated employee who serves as editor and news reporter of The Mirror. This employee works on the base at the United States Naval Station Mayport where he collects news items from all sources, including not only those provided by the United States Navy, but also sources from the community at large and throughout Florida in the form of press releases. Mr. Wood's testimony was that The Mirror is a publication whose purpose and function is to disseminate the news. His testimony also established that it is not a "shopper" type of publication, and it is not given over principally to advertisements or personal classified advertisements. The Mirror contains a percentage of advertising which is less than the national average and regularly carries news items of general interest to the public and the beaches communities in particular. Mr. Wood conceded that the publication is decidedly directed to the special interests of the United States Naval Station Mayport, but he pointed out current events and news of current interest to the general public are found in the publication. Wood identified the fact that the Navy informs the publisher where it wishes to have its news items placed and indicates to the publisher which of those items must be placed in a given issue. Beyond this arrangement, the publisher may choose what it wishes to include in an issue based upon remaining available space. In this realm, the number of pages in each issue of the publication, as well as the advertising ratio, is controlled by contract between Petitioner and the Navy. In picking examples of issues of The Mirror presented at hearing, issues were selected which are particularly demonstrative of a broader base of news stories than would relate to the Navy. Wood describes Petitioner's contract with the Navy as allowing the Navy to take back articles that were initially provided for placement in The Mirror. Per the contract, no editorial cartoons can be used. The Navy may request to see the galley or paste-up of an issue of the publication but has yet to do so. As stated, The Mirror is published for the special interest of personnel of the U.S. Naval Air Station, Mayport, Florida. To this end, Mr. Wood explained that, "we do not expect to have readers, substantial number of readers who don't have some connection, interest in the Naval Air Station at Mayport." The Mirror does not contain any news stories gathered from either Associated Press (AP) or United Press International (UPI) wire service material. Mr. Wood indicated that The Mirror does not routinely cover news of the day; however, given that this is not a daily publication, this arrangement is not unexpected. A review of the issues of The Mirror admitted into evidence offered by both the Petitioner and the Respondent, reveals the nature of news of general interest to the public, including weekly religious and recreational columns and feature stories. The issues submitted include news reports about hurricane preparation, athletic events, Halloween safety programs, youth recreational league registration information, matters concerning important historical dates, information concerning the need for volunteers and other assistance in charitable works in the beaches communities, news concerning the public schools, news of Fire Prevention Week, news concerning Native American Week, as well as information pertaining to drug abuse and automobile safety, a recipe column, television information, as well as matters of national interest, including news concerning the disaster of the space shuttle Challenger, together with the efforts of the Navy associated with its recovery. The basic structure of the publication may be seen in Petitioner's Exhibits 1-12 and 17-19 and Respondent's Exhibits 1 and 2 admitted in evidence. Here are some subjects covered in those editions: The Mirror for the week of January 25, 1985, included religious columns, information on preventive dentistry and actions to be taken as precautions to colder weather, a story on African famine relief, reminders concerning taxes and matters pertaining to personal income tax, as well as an extensive classified section concerning both real property and personal property, in addition to the activities of the Boy Scouts in the beaches area. The Mirror issue of February 15, 1985, included feature story on the observation of Black History Month, as well as columns on recreation and religion. The issue of June 14, 1985, included articles on the restoration of the Statue of Liberty and a feature on Father's Day, in addition to the information on recreational activities and religious events. The Mirror issue of June 21, 1985, included coverage of religious activities. The Mirror issue dated June 28, 1985, included special features on the Fourth of July, a recreational feature on cave diving and safety measures, in addition to information on recreational and family activities and a feature on safety precautions concerning fireworks and their use. The September 6, 1985, issues of The Mirror contained features on square dancing, marriage counseling, carnival con-men and the surrender of the Japanese at the conclusion of World War II. The September 27, 1985, issue of The Mirror included a special feature on Native American Week, the dangers of cocaine, automobile safety and recreational and religious activities sections. The November 29, 1985, issue of The Mirror had a feature on toys for tots collections and year-end tax information, as well as the regular features on recreational, charitable and religious activities. The issues of The Mirror admitted in evidence for the dates January 31, 1986, and February 7, 1986, focused upon the disaster of the space shuttle Challenger and the extensive search efforts by the United States Navy and other vessels to locate the wreckage and to assist in determining the cause of the explosion. Extensive coverage of the shuttle disaster and NASA news was contained in those issues of The Mirror as well as in civilian newspapers which were introduced in evidence. The Mirror issue of February 21, 1986, contained a feature on Black Americans. The issue of August 8, 1986, focused upon the change in command of the United States Navy aircraft carrier Saratoga, which news was also the feature story of the local Jacksonville newspapers, The Florida Times Union and Jacksonville Journal, on that day. The issues of The Mirror regularly contain feature stories concerning the United States Navy and matters related to the Naval Station Mayport. The testimony of the witnesses makes it evident that naval happenings, especially as they relate to the activities and events at the Naval Station Mayport and other naval bases in Jacksonville, are news in metropolitan Jacksonville, Florida. Two issues of The Independent Florida Alligator, Petitioner's Joint exhibits 2 and 3, were admitted. A comparison of The Mirror and The Independent Florida Alligator shows in what ways they are similar and dissimilar. Both publications are publications of special interest to a particular community--the University of Florida in the case of The Independent Florida Alligator, and the United States Naval Station Mayport in the case of The Mirror. However, The Independent Florida Alligator has a much broader base in its reporting of news beyond its principal community and offers more extensive editorial comment. In addition, it serves the function of training student journalists in the newspaper business as the court in Campus Communications, supra, referenced in its favorable response to the claim for tax exempt status. No such role is played by The Mirror. The Independent Florida Alligator has a format that is more akin to a general circulation newspaper, whereas The Mirror is in many respects more of a news bulletin. The articles related to the Navy may preempt other news information and the reporting of other news events beyond the Navy's activities is secondary. The Navy exerts influence on the basic design and focus of The Mirror through the contract with its publisher. By contrast, the The Independent Florida Alligator has a wide-ranging set of topics in which there does not appear to be any outside entity predetermining space requirements or which has a say in what news is pursued by the student newspaper.
