Findings Of Fact K & B Enterprises, Respondent, purchased plants from Roy Amerson, Inc., Petitioner, and they were delivered to Respondent on February 19, 1980. Respondent had ordered Bottlebrush and Cuban laurel (Ficus Nitida) packaged in wire baskets to protect root ball in shipment. Upon arrival Respondent noted that the wires were mangled and some root balls appeared separated from the roots. Before the trees were unloaded Mrs. Benway telephoned the salesman for Petitioner and told him about the condition of the trees. The salesman advised her to accept the trees, water them, and they (Amerson) would make an allowance for the damage. This, he said, would be better and cause less damage to the trees than if they were sent back on the truck that brought them. The driver was requested by Mr. Benway to note the condition of the trees on the invoice accompanying the shipment (Exhibit 1). No such notation was made. The driver did note the date of delivery. Respondent Benway acknowledged receipt of the merchandise by signing Exhibit 1 below the following statement printed near the bottom of Exhibit 1: STOCK MAY BE REFUSED AT TIME OF DELIVERY FOR A DEFINITE REASON, BUT ONCE SIGNED FOR CUSTOMER ASSUMES RESPONSIBILITY FOR TOTAL AMOUNT OF INVOICE. OPEN ACCOUNTS PAYABLE BY THE 10TH OF THE MONTH. 1 1/2 PERCENT CHARGE ADDED IF NOT PAID BY THE 25TH WHICH IS ANNUAL RATE OF 18 PERCENT. Respondent is a plant retailer and landscape contractor. After accepting the February 19, 1980 delivery the Cuban laurel was planted as were the other plants. Attempts to settle the dispute with Petitioner's salesman were unsuccessful. Nine of the Bottlebrush died but all of the Cuban laurel have survived. At the instruction of the salesman these plants were watered but not trimmed or fertilized. Respondent paid for the other plants received on this invoice and for the damaged plants as they have been sold. As of the date of the hearing the balance owed on the stock delivered on Exhibit 1 was $1,494.90.
The Issue The issues in these consolidated cases are: (1) whether the decision by Respondent, Department of Transportation, to reject all bids for the contract at issue was illegal, arbitrary, dishonest, or fraudulent; and (2) if so, whether Respondent's actions in cancelling the notice of intent to award the contract at issue to Cyriacks Environmental Consulting Services, Inc., ("CECOS") and requiring the submittal of new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious.2/
Findings Of Fact The Parties Respondent is the state agency that issued the RFP to procure the Contract for Respondent's District IV. CECOS is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB is an environmental consulting and services firm that submitted a response to the RFP, seeking award of the Contract. DB was granted party status to DOAH Case No. 16-0769 by Order dated February 29, 2016, and by Order dated March 9, 2016, was determined to have standing in that case as a party whose substantial interests were affected by Respondent's decision to reject all proposals. Overview of the Procurement Process for the Contract Respondent issued the RFP on or about October 1, 2015. The RFP sought to obtain support services related to environmental impacts review for projects in Respondent's District IV work program; wetland mitigation design; construction, monitoring, and maintenance; permitting of mitigation sites; exotic vegetation control and removal in specified locations; relocation of threatened, endangered, or rare flora and fauna; permit compliance monitoring; and other services specified in the RFP. The RFP stated Respondent's intent to award the Contract to the responsive and responsible proposing vendor6/ whose proposal is determined to be most advantageous to Respondent. The responses to the RFP were scored on two components: a technical proposal, worth a total of 60 points, that addressed the proposing vendor's experience, qualifications, and capabilities to provide high-quality desired services; and a price proposal, worth a total of 40 points, that addressed the proposed price without evaluation of the separate cost components and proposed profit of the proposing vendor, compared with that proposed by other vendors. The price proposal evaluation was based on the following formula: (Low Price/Proposer's Price) X Price Points = Proposer's Awarded Points. The Special Conditions section of the Advertisement portion of the RFP, paragraph 3, stated in pertinent part: In accordance with section 287.057(23), Florida Statutes, respondents to this solicitation or persons acting on their behalf may not contact, between the release of the solicitation and the end of the 72- hour period following the agency posting the notice of intended award, . . . any employee or officer of the executive or legislative branch concerning any aspect of this solicitation, except in writing to the procurement officer or as provided in the solicitation documents. Violation of this provision may be grounds for rejecting a response. The period between the release of the solicitation and the 72-hour period after posting of the intended award is commonly referred to as the "cone of silence." The Special Conditions section of the Advertisement portion of the RFP, paragraph 19, informed vendors that Respondent reserved the right to reject any or all proposals it received. Exhibit B to the RFP, addressing compensation, limited compensation for all authorizations for work performed under the Contract to a total of $5,000,000. Exhibit B stated that the schedule of rates listed in the Price Proposal Form C (i.e., the rates submitted for the sections comprising Exhibit C to the RFP) would be used for establishing compensation. On October 7, 2015, Respondent issued Addendum 1 to the advertised RFP. Addendum 1 revised Exhibit A to the RFP, the Scope of Services; and also revised Exhibit C to the RFP, the Bid Sheet, to provide it in Excel format. As revised by Addendum 1, Exhibit C consists of an Excel spreadsheet comprised of six sections, each of which was to be used by the responding vendors to propose their rates for the specified services being procured in each section of the Bid Sheet. Section 6 of the Excel spreadsheet, titled "Trees, Schrubs [sic], and Ground Cover, consists of eight columns and 258 rows, each row constituting a plant item on which a price proposal was to be submitted. The columns are titled, from left to right: No.; Scientific Name; Common Name; Unit; Estimated of [sic] number of Unites [sic]; Rate; Extension (Unit X Rate); and Multiplier 2.5 (Price X 2.5). Each row of the spreadsheet in Section 6 identified, as a fixed requirement for this portion of the proposal, the specified type of plant, unit (i.e., plant size), and estimated number of units (i.e., number of plants). For each row of the Section 6 spreadsheet, only the cells under the "Rate" column could be manipulated. Vendors were to insert in the "Rate" cell, for each row, the proposed rate for each plant item. The cells under all other columns for each row were locked, and the RFP stated that any alteration of the locked cells would disqualify the vendor and render its proposal non-responsive. The instructions to Exhibit C, Section 67/ stated: Trees, Schrubs [sic], and Ground Cover Price of plants shall include project management, field supervision, invoicing, installation, mobilization of traffic, water throughout the warranty period, fertilizer and [sic] six (6) month and demobilization, minor maintenance guarantee. Installation of plant material shall be per the Scope of Services. All planting costs shall include the cost to restore area to pre-existing conditions (i.e., dirt, sod, etc.). On October 20, 2015, Respondent issued Addendum 2, and on October 29, 2015, Respondent issued Addendum 3. Both addenda changed Respondent's schedule for reading the technical proposal scores, opening the sealed price proposals, and posting the intended awards. Addenda 1, 2, and 3 were not challenged. However, a key dispute in these consolidated proceedings is whether the Addendum 1 Bid Sheet in Section 6 and the instructions for completing that Bid Sheet were ambiguous, or whether Respondent reasonably believed them to be ambiguous. The vendors were to submit their responses to the RFP, consisting of their technical proposals and price proposals, by October 16, 2015. CECOS, DB, and four other vendors timely submitted responses to the RFP. On November 2, 2015, the scores for the technical proposals submitted by the vendors were presented to the Selection Committee ("SC") at a noticed meeting. DB received the highest number of points on the technical proposal portion of the RFP. The SC met again on November 3, 2015. At that time, Respondent's Procurement Officer, Jessica Rubio, read the total awarded points for each vendor's price proposal, as well as each vendor's total combined points——i.e., total points for technical proposal and price proposal. CECOS received the highest number of points for the price proposal portion of the RFP, and also received the highest total combined points. Respondent recommended, and the SC concurred, that Respondent should award the Contract to CECOS. At 10:00 a.m. on November 3, 2015, Respondent posted the Proposal Tabulation, constituting its notice of intent that CECOS would be awarded the Contract.8/ CECOS submitted a price proposal of $4,237,603.70. DB submitted a price proposal of $9,083,042.50. The other four vendors' price proposals ranged between $4,540,512.90 and $5,237,598.55. The "cone of silence" commenced upon Respondent's posting of the Proposal Tabulation, and ended 72 hours later, on November 6, 2015, at 10:00 a.m. As discussed in greater detail below, after the Proposal Tabulation was posted, Respondent discovered an apparent ambiguity in Exhibit C, Section 6, regarding the instructions to that section and the inclusion of the "2.5 Multiplier" column on the Bid Sheet. After an internal investigation, Respondent decided to cancel its intent to award the Contract to CECOS. On November 5, 2015, Respondent posted a notice that it was cancelling the intent to award the Contract to CECOS. On November 5, 2015, DB filed a Notice of Protest, stating its intent to challenge the award of the Contract to CECOS. Thereafter, on November 9, 2015, DB contacted Respondent by electronic mail ("email") to withdraw its Notice of Protest.9/ Due to the apparent ambiguity in Exhibit C, Section 6, on November 9, 2015, Respondent issued Addendum 4 to the RFP. Addendum 4 required the responding vendors to submit new price proposals for all sections (i.e., sections 1 through 6) of Exhibit C to the RFP. Addendum 4 also established a new timeline for a mandatory pre-bid conference to be held on November 12, 2016; set a sealed price proposal due date of November 19, 2016; and identified new dates for opening the price proposals and posting the Notice of Intended Award of the Contract. On November 12, 2015, Respondent conducted a mandatory pre-bid conference to address Addendum 4. The participating vendors expressed confusion and posed numerous questions regarding the submittal of new price proposals and their technical proposals. Immediately following the pre-bid conference, Respondent issued Addendum 5, which consisted of a revised Exhibit A, Scope of Services; revised Exhibit C, Bid Sheet in Excel format for all six sections; and responses to the questions posed at the pre-bid conference.10/ The Addendum 5 Bid Sheet comprising Exhibit C, Section 6, was substantially amended from the version that was published in Addendum 1. Specifically, the column previously titled "Rate" was changed to "Rate Per Unit"; the "Extension (Unit X Rate)" and "Multiplier 2.5" columns were deleted; and a new column titled "Proposed Cost (Rate per Unit X Est. No. of Units)" was added. Additionally, the instructions for Section 6 were substantially amended to read: "'Rate Per Unit' must include all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, travel, invoicing, labor, maintenance of traffic, mobilization and demobilization, staking and guying, maintenance of planting site throughout the 180[-]day plant warranty." These amendments were intended to clarify that the proposed rate for each plant unit was to include all overhead costs associated with performance of the Contract with respect to that particular unit. On November 13, 2015, CECOS filed a Notice of Protest to Respondent's issuance of Addendum 4, requiring the vendors to submit new price proposals. Thereafter, on November 23, 2015, CECOS filed the First Petition challenging Respondent's decision, announced in Addendum 4, to require the responding vendors to submit new proposals for the price proposal portion of the RFP, and its decision to cancel the notice of intent to award the Contract to CECOS.11/ Once CECOS filed its Notice of Protest on November 13, 2015, Respondent ceased all procurement activity directed toward awarding the Contract. On December 17, 2015, Respondent posted notice that it was rejecting all proposals and that the Contract would be re- advertised through issuance of a new RFP. On December 22, 2015, CECOS filed a Notice of Protest, and on January 4, 2016, filed its Second Petition challenging Respondent's decision to reject all proposals and re-advertise the Contract. Bases for Respondent's Actions Shortly after Respondent posted the Proposal Tabulation noticing its intent to award the Contract to CECOS, Christine Perretta, owner and president of DB, sent an email to Respondent, then called Rubio to inquire about Respondent's decision to award the Contract to CECOS. The evidence shows that these contacts occurred sometime on or around November 3, 2016.12/ In her telephone discussion with Rubio, Perretta inquired about how to file a notice of protest13/ and also asked whether Respondent had reviewed the vendors' price proposals for correctness or accuracy, or had simply chosen the lowest price proposal. In the course of the discussion, Perretta informed Rubio that DB had submitted a "loaded" rate for each plant unit ——meaning that DB's rate proposed for each plant item in the "Rate" column on the Section 6 Bid Sheet consisted not only of the cost of the plant item, but also the cost for all associated overhead services listed in the instructions to Section 6 and in the RFP Advertisement, paragraph 18(v), plus compensation.14/ Rubio could not clearly recall whether, in the course of their discussion, Perretta had inquired about the use of the 2.5 multiplier, and there is conflicting evidence as to whether Perretta related her view that CECOS may not be able to perform the Contract based on the price proposal it had submitted. In any event, as a result of Rubio's discussion with Perretta, Rubio determined that she needed to review Exhibit C, Section 6. In the course of her investigation, Rubio called Wendy Cyriaks, owner and president of CECOS.15/ Cyriaks confirmed that CECOS had submitted an "unloaded" rate for each plant item—— meaning that it had included only the cost of each plant item in the "Rate" column on the Section 6 Bid Sheet, and had not included, in the proposed rate for each plant item, the cost of the associated overhead services listed in the instructions to Section 6 or RFP Advertisement, paragraph 18(v), or compensation. Cyriaks told Rubio that CECOS expected that its overhead costs and compensation for each item would be covered through use of the 2.5 multiplier. Also in the course of her investigation, Rubio asked Bogardus whether he had intended the 2.5 multiplier to be used to cover all costs, including vendor compensation, associated with obtaining, installing, and maintaining the plant items listed in Section 6. Bogardus initially confirmed that his intent in including the 2.5 multiplier on the Section 6 Bid Sheet was to cover all of the overhead costs and compensation. However, the persuasive evidence establishes that Bogardus subsequently agreed with Rubio that the 2.5 multiplier should not have been included in Section 6. Pursuant to her discussions with Perretta and Cyriaks, Rubio realized that the wide discrepancy between DB's and CECOS' price proposals was due to their differing interpretations of the instructions in Section 6 regarding plant item rates and the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet. Rubio testified, persuasively, that the inclusion of the "2.5 Multiplier" column rendered Exhibit C, Section 6, of the RFP ambiguous. To that point, the RFP does not contain any instructions or discussion on the use of the 2.5 multiplier. Therefore, to the extent the multiplier was intended to be used by the vendors to build overhead costs and compensation into their price proposals, the RFP fails to explain that extremely important intended use——leaving the significance and use of the multiplier open to speculation and subject to assumption by the vendors in preparing their price proposals. Rubio reasonably viewed DB's and CECOS' divergent interpretations of the instructions and the inconsistent use of the 2.5 multiplier as further indication that Section 6 was ambiguous. She explained that in order for Respondent to ensure that it is procuring the most advantageous proposal for the State, it is vitally important that the RFP be clear so that responding vendors clearly understand the type of information the RFP is requesting, and where and how to provide that information in their price proposals. Rubio persuasively testified that in her view, the instructions in Section 6 had, in fact, called for a loaded rate, but that CECOS had erroneously assumed, based on the inclusion of the "2.5 Multiplier" column in the Section 6 Bid Sheet, that overhead and compensation for each plant item would be covered through use of the 2.5 multiplier, and that as a consequence, CECOS incorrectly proposed unloaded rates for the plant items. In Rubio's view, CECOS' error was due to the ambiguity created by the unexplained and unsupported inclusion of the 2.5 multiplier in Section 6. Rubio testified that CECOS had been awarded the Contract because it had submitted the lowest price proposal, but that its proposal was based on an unloaded rate for the plant items, contrary to the instructions for Section 6. In Rubio's view, CECOS' price proposal was unresponsive, and CECOS should not have been awarded the Contract. Rubio also testified, credibly and persuasively, that the use of the 2.5 multiplier in Section 6 for compensation purposes rendered the RFP arbitrary. Respondent's District IV historically has not used a 2.5 multiplier for compensation purposes for commodities contracts, and no data or analyses exist to support such use of a 2.5 multiplier.16/ This rendered the RFP both arbitrary and unverifiable with respect to whether it was structured to obtain the most advantageous proposal for the State. To this point, Rubio credibly explained that Respondent's existing environmental mitigation services contract with Stantec was procured through the "Invitation to Negotiate" ("ITN") process. In that procurement, Respondent negotiated to obtain the best value for the State. The ITN bid sheet contained a 2.5 multiplier that was used only for weighting purposes to evaluate and determine which firms would be "short- listed" for purposes of being invited to negotiate with Respondent for award of the contract. Importantly——and in contrast to the RFP at issue in this case——the multiplier in the ITN was not used to determine the final prices, including compensation, to install trees, shrubs, and ground cover under that contract. Rubio also testified, credibly, that the Bid Sheet was structurally flawed because it did not allow the vendor to clearly indicate the "unit price" inclusive of all overhead costs, and that this defect would result in Respondent being unable to issue letters of authorization to pay invoices for the cost of installing the plant items or compensating for work performed. For these reasons, Respondent determined that it needed to cancel the intent to award the Contract to CECOS. As noted above, Respondent posted the cancellation of the intent to award the Contract on November 5, 2015. At a meeting of the SC conducted on November 9, 2015, Respondent's procurement staff explained that the intent to award the Contract had been cancelled due to ambiguity in the instructions and the Bid Sheet for Exhibit C, Section 6. Ultimately, the SC concurred with Respondent's cancellation of the intent to award the Contract to CECOS and agreed that the vendors should be required to submit new price proposals. Thereafter, on November 9, 2015, Respondent issued Addendum 4, announcing its decision to solicit new price proposals from the responding vendors. Respondent conducted a pre-bid meeting with the vendors on November 12, 2015, and immediately thereafter, issued Addendum 5, consisting of a revised Scope of Services and a substantially revised Bid Sheet for all six sections of Exhibit C. As previously discussed, the Section 6 Bid Sheet issued in Addendum 5 was revised to, among other things, delete the "2.5 Multiplier" column and the column previously titled "Rate" was changed to "Rate Per Unit." Also as discussed above, the instructions to Section 6 were revised to clarify that the "Rate Per Unit" provided for each plant unit must contain all costs associated with the purchase, installation, watering, fertilization, project management, field supervision, invoicing, labor, maintenance of traffic, and other costs specified in the instructions——i.e, constitute a loaded rate. All of these changes were made in an effort to clarify, for the benefit of all vendors, the specific information that Respondent needed to be provided in the price proposals. Rubio testified, credibly, that in requiring the vendors to submit new price proposals pursuant to revised Exhibit C, Respondent did not give, or intend to give, any vendor a competitive advantage over any of the other vendors, nor did Respondent place, or intend to place, CECOS at a competitive disadvantage by requiring the vendors to submit new price proposals pursuant to revised Exhibit C. As noted above, once CECOS filed its Notice of Protest, Respondent ceased all procurement activity directed toward awarding the Contract. Consequently, the vendors did not submit new price proposals and the scheduled meetings at which the new price proposals would be opened and the intended awardee announced were cancelled. On December 17, 2015, Rubio briefed the SC regarding the problems with the RFP and described her concerns about proceeding with the procurement. She explained that Respondent's procurement staff was of the view that the instructions in Section 6, as previously published in Addendum 1, were ambiguous because they did not clearly provide direction on how to complete the Bid Sheet for that section. Additionally, the Section 6 Bid Sheet, as structured in Addendum 1, did not allow the vendors to provide a plant unit rate that was inclusive of all overhead costs. To this point, she noted that unless the vendors provided a loaded rate——i.e., one that included all overhead costs——Respondent would not be able to issue work orders for any plant items in Section 6.17/ She explained that these flaws constituted the bases for Respondent's decision, announced on November 9, 2015, to require the submittal of new price proposals. Rubio further explained that in Respondent's rush to issue a revised Scope of Services as part of Addendum 5, mistakes had been made18/ and Respondent's Environmental Office needed more time to carefully review the Scope of Services and Bid Sheet, to ensure the RFP was correctly drafted and structured so that the Contract could be accurately solicited and procured. Additionally, the vendors——including Mark Clark of CECOS——had expressed confusion regarding the revised Bid Sheet and submitting new price proposals, and some vendors had inquired about submitting new technical proposals. Further, under the revised procurement schedule issued as part of Addendum 4 on November 9, 2015, the vendors had a very compressed timeframe in which to prepare and submit their new price proposals, heightening the potential for mistakes to be made. Because of these substantial problems and concerns with the RFP, Rubio recommended that Addendum 5 be rescinded, that all vendor proposals (both technical and price) be rejected, and that the entire procurement process be re-started. The SC concurred with her recommendation. As noted above, on December 17, 2015, Respondent rejected all proposals and announced that the Contract would be re-solicited in the future through issuance of another RFP. CECOS' Position CECOS takes the position that the RFP and the Section 6 Bid Sheet published in Addendum 1 were not ambiguous. Specifically, CECOS contends that the use of the 2.5 multiplier in Section 6 clearly indicated that Respondent was seeking an unloaded rate for the plant items listed on the Section 6 Bid Sheet. In support of this position, CECOS notes that all of the vendors other than DB had submitted unloaded rates for the plant items in Section 6. CECOS contends that this shows that Section 6 was not ambiguous, and that DB simply did not follow the RFP instructions——of which it was fully aware——in preparing and submitting its price proposal.19/ CECOS also contends that Rubio's failure to contact the other vendors to determine if they found the instructions or use of the 2.5 multiplier in Section 6 ambiguous evidences that Rubio's conclusion that Section 6 was ambiguous lacked any factual basis, so was itself arbitrary. CECOS asserts that Bogardus' intent to use a 2.5 multiplier for compensation purposes was evidenced by its inclusion on the Section 6 Bid Sheet, that its use on the Section 6 Bid Sheet did not render the RFP flawed, and that Bogardus' intent to compensate using the multiplier should control the structure of compensation paid under Section 6.20/ CECOS also notes that the use of the 2.5 multiplier on the Section 6 Bid Sheet mirrors the 2.5 multiplier in the existing environmental mitigation support services contract with the current contractor.21/ CECOs further contends that there was no material difference, with respect to structuring compensation for the plant items, between the ITN process used for procuring the existing contract and the RFP process used to procure this Contract. As additional support for its argument that the use of the 2.5 multiplier in Section 6 was valid, CECOS points to a request for proposal for environmental mitigation services issued by Respondent's District VI. In that contract, a 2.5 multiplier was used for compensation purposes, albeit for specific plant items that were not contained in the original list of specific plant items for which rate proposals had been solicited in the request for proposal. CECOS further contends that Respondent——and, most particularly, Rubio——did not conduct a thorough investigation into the historic use of 2.5 multipliers in Respondent's commodities contracts. CECOS argues that as a consequence, Respondent's determination that the use of the 2.5 multiplier rendered the Section 6 Bid Sheet structurally flawed and arbitrary was unsupported by facts, so was itself arbitrary and capricious. CECOS asserts that cancelling the notice of intent to award the Contract to CECOS and requiring the vendors to submit new price proposals placed CECOS at a competitive disadvantage and was contrary to competition because once the Proposal Tabulation was posted, the other vendors were informed of the price that CECOS had bid, so knew the price they had to beat when the Contract was re-solicited. CECOS also points to what it contends are procedural irregularities with respect to Respondent's treatment of, and communication with, CECOS and DB once Respondent decided to cancel the notice of intent to award the Contract to CECOS. Specifically, CECOS contends that Respondent did not respond to its calls or email asking why the intent to award the Contract to CECOS had been cancelled. CECOS also contends that Respondent communicated with DB on substantive matters during the "cone of silence." CECOS further notes that Respondent did not convene a resolution meeting within the statutorily- established seven-day period after CECOS filed its First Petition, but instead held the meeting over 60 days later, on January 28, 2015, and that even then, Respondent did not engage in good faith negotiation to resolve the challenge. Finally, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions (discussed above) that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. CECOS asserts that it followed the instructions in the RFP in preparing its price proposal, submitted the lowest price proposal, and is ready, willing, and able to perform the Contract at the rates it proposed in its response for Section 6. On that basis, CECOS contends that it is entitled to the award of the Contract. Findings of Ultimate Fact CECOS bears the burden in this proceeding to prove that Respondent's decision to reject all proposals was arbitrary, illegal, dishonest, or fraudulent.22/ Even if CECOS were to meet this burden, in order to prevail it also must demonstrate that Respondent's actions in cancelling the intent to award the Contract and requiring the submittal of new price proposals were clearly erroneous, arbitrary, capricious, or contrary to competition. For the reasons discussed herein, it is determined that CECOS did not meet either of these burdens. The Multiplier Rendered Section 6 Ambiguous, Arbitrary, and Structurally Flawed As discussed in detail above, Respondent decided to cancel the intent to award the Contract to CECOS and to require the submittal of new price proposals by the vendors only after it had conducted an extensive investigation that included a careful review of numerous provisions in the RFP and the instructions to Section 6 and had analyzed the structure of Section 6 in relation to other provisions in the RFP. That investigation showed that nowhere in the RFP was the use of the 2.5 multiplier in Exhibit C, Section 6, discussed or explained. Thus, to the extent the multiplier was to be used in determining reimbursement for overhead costs and compensation, the RFP failed to explain this extremely important point, leaving the multiplier's purpose, use, and significance open to speculation and assumption by the vendors in submitting their price proposals. This rendered the multiplier's use in Section 6 ambiguous. This ambiguity is further evidenced by DB's and CECOS's widely divergent price proposals for Section 6, and the credible testimony of Perretta and Cyriaks regarding their differing views of the purpose of the 2.5 multiplier. The credible, persuasive evidence establishes that the ambiguity in Section 6 caused the vendors to have differing interpretations of the manner in which they were to propose plant unit rates in Section 6; that the vendors submitted plant price proposals predicated on differing assumptions; and that this resulted in Respondent being unable to fairly compare the price proposals for purposes of obtaining the most advantageous proposal for the State. On these bases, Respondent reasonably concluded23/ that the inclusion of the 2.5 multiplier in Section 6, rendered that portion of the RFP ambiguous. As extensively discussed above, the credible, persuasive evidence also establishes that Respondent concluded, based on its investigation and review of Section 6, that inclusion of the 2.5 multiplier rendered Section 6 both arbitrary and structurally flawed.24/ The credible, persuasive evidence further establishes that Rubio investigated Respondent's use of multipliers in commodities procurements and contracts to the extent necessary and appropriate for her to reasonably conclude that the use of the 2.5 multiplier in Section 6 rendered this portion of the RFP ambiguous, arbitrary, and structurally flawed.25/ In sum, the credible, persuasive evidence establishes that Respondent engaged in a thorough and thoughtful investigation before concluding, reasonably, that the inclusion of the 2.5 multiplier in Exhibit C, Section 6 rendered that portion of the RFP ambiguous. Respondent's Actions Were Not Contrary to Competition Although the evidence shows that CECOS may suffer some competitive disadvantage because competing vendors were informed of the lowest "bottom line" price they would have to beat, it does not support a determination that Respondent's decisions to cancel the intent to award the Contract to CECOS and require the vendors to submit new price proposals were contrary to competition. To that point, in Addendum 5, Respondent substantially restructured the Section 6 Bid Sheet and also amended the Bid Sheet comprising the other price proposal sections in Exhibit C, so that CECOS' and the other vendors' price proposals submitted in response to Addendum 5 may have substantially changed from those submitted in response to Addendum 1. In any event, it cannot be concluded that Respondent's decisions to cancel the intent to award the Contract to CECOS and require submittal of new price proposals are contrary to competition such that they should be overturned in this proceeding. Procedural Irregularities CECOS also points to certain procedural irregularities in Respondent's treatment of, and communication with, CECOS once Respondent decided to cancel the notice of intent to award the Contract to CECOS and require submittal of new price proposals. CECOS apparently raises these issues in an effort to show that Respondent's actions were clearly erroneous, contrary to competition, arbitrary, or capricious. The undisputed evidence establishes that Rubio communicated with both DB and CECOS during the "cone of silence" following the posting of its intent to award the Contract to CECOS. The undersigned determines that the "cone of silence" applied to Rubio and her communications with DB and CECOS within the 72-hour period following Respondent's posting of the intent to award the Contract. Specifically, she is an employee of Respondent's District IV Office, so is an employee of the executive branch of the State of Florida. Further, the evidence shows that her communications with both DB and CECOS during the "cone of silence" period dealt specifically with substantive, rather than "administrative" issues regarding the RFP and the vendors' price proposals. Accordingly, it is determined that these communications did, in fact, violate the "cone of silence." However, this does not require that Respondent's decision to cancel the intent to award the Contract to CECOS be overturned. The credible, persuasive evidence shows that while DB's conversation with Rubio may have spurred Rubio to decide she should investigate the Section 6 instructions and use of the 2.5 multiplier, it was not the reason why Respondent ultimately determined that the intent to award the Contract should be cancelled. Rather, Respondent's discovery of the ambiguity and structural flaws in Section 6, through Rubio's investigation, was the reason that Respondent determined that the intent to award the Contract to CECOS should be cancelled. In sum, the credible, persuasive evidence shows that notwithstanding Rubio's communications on substantive matters during the "cone of silence" with both DB and CECOS, the integrity of the procurement process was not undermined such that Respondent's decision to cancel the intent to award the Contract to CECOS was clearly erroneous, contrary to competition, arbitrary, or capricious. CECOS failed to present persuasive evidence establishing that other procedural irregularities rendered Respondent's actions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decisions to Cancel Intent to Award the Contract and Require Submittal of New Price Proposals Based on the foregoing, it is determined that CECOS did not meet its burden to show that Respondent's decisions in cancelling the intent to award the Contract to CECOS and requiring the vendors to submit new price proposals were clearly erroneous, contrary to competition, arbitrary, or capricious. Respondent's Decision to Reject All Proposals As noted above, CECOS contends that Respondent's decision to reject all proposals and start the procurement process anew was predicated on a series of arbitrary and erroneous decisions that created confusion, so that Respondent's ultimate decision to reject all proposals was itself arbitrary and capricious. However, the credible, persuasive evidence shows that Respondent's ultimate decision to reject all bids was factually supported and was reasonable. As discussed above, Respondent initially decided to cancel the intent to award the Contract to CECOS and to require the vendors to submit new price proposals after it discovered the ambiguity and structural flaws resulting from the use of the 2.5 multiplier in Section 6. At that point, rather than rejecting all proposals, which would require the vendors to go to the time and expense of preparing completely new proposals, it decided to instead only require the vendors to submit new price proposals. Due to the interrelated nature of the six sections of Exhibit C comprising the complete price proposal for the RFP, Respondent determined revision of Section 6 would also require revision of the other five sections of Exhibit C, in order to ensure that they were internally consistent with each other. At the mandatory pre-bid meeting preceding the issuance of Addendum 5, the participating vendors had numerous questions about the sweeping revisions to all six sections of Exhibit C, and they expressed confusion about the revisions and their effect on preparation of new price proposals. Some vendors also expressed concern that they may have to change their personnel in order to be able to accurately prepare new price proposals, raising the question whether the technical proposals needed to be revised. As a result of vendor confusion and concern, and also because Respondent's Environmental Office needed additional time to carefully review and revise the RFP as needed, Respondent decided to reject all proposals and to start the procurement process anew. Respondent's decision to reject all bids was made after fully considering all of the pertinent information regarding the ambiguity and structural flaws in Section 6, vendor confusion and concern caused by Respondent's revisions to Exhibit C needed to address the ambiguity and flaws in Section 6, and Respondent's need for additional time to ensure that its RFP accurately and clearly solicited the needed environmental mitigation support services. Accordingly, Respondent did not act arbitrarily in deciding to reject all bids. Further, no persuasive evidence was presented to show that Respondent's decision to reject all bids was illegal, dishonest, or fraudulent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Transportation: Issue a final order in Case No. 16-0769 finding that the rejection of all proposals in response to Request for Proposal RFP-DOT-15/16-4004PM was not illegal, arbitrary, dishonest, or fraudulent; and Issue a final order in Case No. 16-3530 finding that the decisions to cancel the award of the Contract for Request for Proposal RFP-DOT-15/16-4004PM to CECOS and to require the vendors to submit new price proposals for Request for Proposal RFP-DOT-15/16-4004PM were not clearly erroneous, contrary to competition, arbitrary, or capricious. DONE AND ENTERED this 30th day of December, 2016, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS 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 30th day of December, 2016.
Findings Of Fact The Petitioners own and operate a farm in St. Johns County, Florida. During the 1991 potato-growing season, they grew atlantic chipping potatoes on their 400-acre farm, as well as on approximately 30 acres leased from another party by their daughter and son-in-law. The Petitioners' business is known as Pacetti Farms. Rubin is an Illinois corporation licensed to do business in Florida as a broker or dealer in agricultural products. Rubin customarily purchases potatoes from growers throughout the country at the appropriate season for resale, typically to various potato chip manufacturing companies. Mr. Rubin appeared at the hearing and testified on behalf of Rubin and as an adverse witness on behalf of the Petitioners. Rubin is licensed and bonded with a surety bond from Continental in accordance with the statutory authority cited below, enforced and regulated by the Department of Agriculture and Consumer Services ("Department"). On December 22, 1990, the Petitioners and Rubin entered into a written contract for the sale and purchase of 50,000 CWT of Florida atlantic chipping potatoes. That contract is in evidence as Exhibit 3 and is also known as the "set price contract". The contract called for shipment of the potatoes at a stated price of $6.35 per CWT, although the parties have stipulated and agreed that the actual contract price was intended as $6.00 per CWT. That figure is not in dispute in this proceeding. Shipment was to be made during the harvesting season between the dates of April 27, 1991 and June 15, 1991. The contract contained an escape clause or exception for "acts of God", with an explanatory parenthetic clause indicating that that was intended to mean circumstances beyond the control of the parties, such as flood, freeze, hail, etc. On or about February 15, 1991, severe cold weather struck the potato- growing area of St. Johns County, Florida. Temperatures ranged from 25 degrees to 19 degrees on that day, with a high wind blowing and very dry conditions. This resulted in soil being blown away from the newly-set potatoes under very cold temperatures. Because of this, the Petitioners had to work with tractors and cultivators far into the night to turn the blown-away soil back into the potato "sets". The Petitioners feared that this would cause some "dry eyes" and, therefore, lowered potato plant and potato production. In fact, however, upon observing the maturing plants during April of 1991, it appeared that the Petitioners would have a healthy, normal crop. The prior year the Petitioners had grown 133,000 CWT of potatoes on their 400 acres (excluding the Kirkers' 30 acres). With this background of an apparently-healthy crop in mind, the Petitioners were approached by Rubin on April 25, 1991 and negotiations ensued which resulted in the sale and purchase from Petitioners to Rubin of six additional loads of potatoes at the open market price of $19.50 per CWT. The six additional loads were in addition to the 50,000 CWT of potatoes agreed upon in the main contract entered into on December 22, 1990. This separate oral agreement for the six loads of potatoes at the market price of $19.50 per CWT was entered into prior to the Petitioners initiating delivery under the terms of the written contract of December 22, 1990. The parties thus agreed for the sale and purchase of six loads of potatoes at that market price to be delivered on Monday, Tuesday, and Wednesday of the following week, April 29th, April 30th, and May 1, 1991. Part of the consideration for that oral contract was the Petitioners' ability to furnish the six truckloads of potatoes on short notice, on the dates that Rubin required them. In other words, Rubin needed them in a hurry; and it was apparently worth $19.50 per CWT for him to get the potatoes delivered immediately on the dates requested. In the process of negotiating this oral contract, the Petitioners assured Rubin that he would have sufficient potatoes to meet his 50,000 CWT obligation under the written contract of December 22, 1990. This was not a misrepresentation on the part of the Petitioners, at this time, because the Petitioners, in good faith, believed they would be able to meet the 50,000 CWT set price contract and the oral contract for six additional truckloads, because of their belief concerning their crop estimate. This belief was based upon their observance of an apparently healthy crop and their knowledge that on their 400 acres, the year before, they had grown 133,000 CWT, as well as upon their knowledge that a normal crop estimate for the entire 430 acres at this location, under all of the prevailing circumstances, was 120,400 CWT. In fact, the Petitioners only contracted for 116,650 CWT of potatoes which, based upon a reasonable and appropriate crop estimate for this site and circumstances, would have allowed them to meet all their contracts, including the 50,000 CWT contract between the Petitioners and Rubin, although not all of the market sales for the Kirkers. After having thus assured Mr. Rubin that they could meet the contract of December 22, 1990 and still perform the oral contract for the six truckloads at market price, the Petitioners proceeded to carry out that oral agreement. It was a separate and distinct contract from the written contract dated December 22, 1990. Under the separate oral contract, they delivered the six truckloads of potatoes requested by Rubin. Rubin received them and paid $19.50 per CWT for them. On May 2, 1990, the Petitioners began delivering potatoes to Rubin under the terms and conditions of the written contract of December 22, 1990 and continued the deliveries throughout the remainder of the harvesting season. The first was shipped from Pacetti Farms on May 2, 1991 and the last load delivered to Rubin on that contract was shipped on June 1, 1991. During the 1991 growing and harvesting season, the area, including St. Johns County, experienced substantial crop damage due to excessive frost, rain, hail, and wind, which occurred during February of 1991 and then after April 25, 1991, with particular regard to excessive rainfall in May of 1991. This resulted in the area being declared an agricultural disaster area by the United States Department of Agriculture for that growing season. The Petitioners suffered damage to their crop as a result of these elements in February of 1991, as described above, and by excessive rainfall during May of 1991. Excessive rainfall caused root damage to their crop, which resulted in a lowered yield even though the plants viewed above ground appeared to be normal. This was aggravated by the fact that the Petitioners and other growers were legally unable to use the pesticide "Temik", for control of nematodes, during that growing season. Because of the nature of the crop involved, which grows underground, the potato yield is difficult to estimate at any given point in harvesting. The exact nature and extent of damage caused by weather conditions to a single crop is hard to estimate in advance. This difficulty is further compounded by differing soil types and climate conditions present within a particular growing area, especially with regard to farmers such as the Petitioners, who have their crops spread over multiple fields and farms. In mid-May of 1991, the Petitioners realized that there would be a crop shortage. The crop was damaged due to the weather-related factors mentioned above. The Petitioners notified Rubin that they expected their potato crop to fall short of expectations and that they would probably be unable to completely fill the contract with Rubin for the entire 50,000 CWT contracted for on December 22, 1990. In the meantime, before the 1991 planting season began, the Petitioners and Renee and Keith Kirker had entered into an agreement, whereby the Kirkers initiated their own farming operation on 30 acres of potato-growing land. The Kirkers leased that acreage from Diane Ross and received operating assistance from the Petitioners in the form of advances of all their operating costs, pursuant to an agreement between the Petitioners and the Kirkers, whereby the Petitioners would be repaid the estimated production costs for that 30-acre crop in the amount of $1,776.85 per acre, upon the sale of those 30 acres of potatoes. Potatoes are planted and harvested in the same sequence. Since the Petitioners assisted the Kirkers in planting their potatoes prior to the planting and completion of their own fields, the Petitioners borrowed some of the Kirkers' potatoes to fill their own contracts because those potatoes matured earlier, with the understanding that the Kirkers would be repaid in kind from the Petitioners' own fields during the remainder of the harvesting season. This is a common practice according to Ronald Brown, who testified for the Petitioners as an expert witness on farming practices. However, after the heavy rains in May of 1991, the Petitioners discovered that it would be necessary, in their view, to retain a portion of their last acreage in order to have potatoes to pay back the Kirkers for the potatoes borrowed. These potatoes would be sold by the Petitioners at market price, as agreed with the Kirkers. Upon discovering that their crop would not meet their contract obligations, the Petitioners attempted to prorate their remaining potatoes between their remaining contract customers in what they considered a fair and reasonable manner. On behalf of the Kirkers, the potatoes allocated for repayment to them were offered to Rubin, who, through its President, Mr. Rubin, declined to purchase them at the market price at which they were offered (higher than the contract price). The Petitioners' expert, Ronald Brown, established that, based upon accepted growers practices and his experience in the Hastings area, the Petitioners should have anticipated the yield for their 1991 crop at no more than 280 CWT per acre for the Petitioners' 430 acres (30 acres of which was the Kirkers' land). It is customary farming practice in the area, according to Brown, to enter into contracts for no more than 80% of the maximum anticipated yield of potatoes. The anticipated yield on the entire 430 acres of the Petitioners' and the Kirkers' land was, therefore, 120,400 CWT of potatoes. The principle of contracting no more than 80% of a maximum anticipated yield is designed to protect contracting parties in the event a smaller than anticipated yield occurs. A 280 CWT per acre yield is the generally-accepted yield amount under good growing conditions, according to Mr. Brown. The year before, the Petitioners had produced a total yield of 133,000 CWT on only 400 acres. The Petitioners entered into a total of six separate contracts for delivery of a total of 116,650 CWT of potatoes out of a reasonably anticipated maximum yield for the 430 acres of only 120,400 CWT. Thus, the Petitioners contracted 97% of the customary, accepted, anticipated maximum yield for the 430 acres for 1991. Thirty (30) of those acres, however, represent the potatoes which the Petitioners were obligated to the Kirkers to sell on their behalf at market price, rather than contract price. In spite of the fact that the Petitioners contracted 97% of the accepted, projected crop yield for 430 acres, the Petitioners, in fact, produced 117,000 CWT (approximate) on those 430 acres. Therefore, had they not diverted a certain amount of the crop to open market sales, they could have met their 116,650 CWT contractual obligations to the six contracting parties, including Rubin. It is also true, however, that that 117,000 CWT actual yield included the 30 acres of potatoes which the Petitioners were separately obligated to sell at open market price to repay the Kirkers. Notwithstanding the fact that the Petitioners had contracted 97% of the commonly-accepted, projected maximum yield, the Petitioners diverted 10,301.6 CWT of the 1991 crop on the entire 430 acres from contract sales to open market sales at much higher prices. Of those open market sales, 2,789.5 CWT were sold at market price after the last contract sales were made to Rubin. Had the Petitioners sold the entire 10,301.6 CWT of potatoes on contract, instead of at open market, all of the Petitioners' contractual requirements could have been met, including the contract with Rubin, although they would not then have been able to meet their obligations to the Kirkers. Based upon the above Findings of Fact supported by competent evidence, it is found that the preponderant evidence in this case does not support the Petitioners' contention that the Petitioners were unable to fulfill their contract obligation to Rubin due to an act of God. Although it is true that the Petitioners established that poor weather conditions, coupled with the absence of the ability to use the pesticide "Temik", had a deleterious effect on their crop production. The record shows that in spite of this, the Petitioners had the ability to fulfill their contract with Rubin if only approximately 5,000 CWT of the 10,301.6 CWT of potatoes sold on the open market had instead been allocated to the Petitioners' contract with Rubin to fill out the difference between the approximately 45,000 CWT honored under the contract and the contractual obligation to supply 50,000 CWT. The Petitioners produced on their own 400 acres 108,000 CWT. The remainder of the 117,582.5 CWT of potatoes from the total crop represented the potatoes grown on the Kirkers' 30 acres. Thus, the Kirkers' land produced approximately 8,600 CWT. The Petitioners supplied approximately 3,000 CWT under the separate, oral contract at market price and which were delivered to Rubin on April 29th, 30th, and May 1st (six loads at approximately 500 CWT per load). Then, the Petitioners sold the remainder of the total of 10,301.6 CWT of the entire Pacetti/Kirker crop or approximately 7,301.6 CWT on open market sales to others. The remainder of the 108,000 CWT grown on the Petitioners' own 400 acres, not sold to Rubin under the contract of December 22, 1990 or under the oral contract of April 25, 1991 (the six loads at market), were contracted out to other buyers. The ultimate effect of these contracts was that the Petitioners had contracted for 116,650 CWT. Thus, the Petitioners had imprudently contracted approximately 97% of the accepted, projected crop yield of 120,400 CWT, knowing that they were obligated to sell the Kirkers 8,600 or so CWT at market price and not on contract. Thus, the Petitioners clearly over- contracted the crop yield which they reasonably should have expected on the total 430 acres under the generally-accepted method of calculation of crop yield, under good growing conditions, of 280 CWT per acre, established by expert witness, Brown. This over-contracting practice, together with selling an excess amount of potatoes at market price (over and above those sold at market by the separate, oral contract with Rubin at the initial part of the harvesting season), is what actually prevented the Petitioners from fulfilling Rubin's contract of 50,000 CWT, rather than an act of God, predetermined condition for claiming impossibility of performance on that contract due to the above- described weather conditions. Even though the Petitioners were obligated to sell the Kirkers' entire 30 acres of yield, approximately 8,600 CWT, at market price, the Petitioners would still have had enough potatoes, even with their less-than-expected yield of 108,000 CWT represented by their own 400 acres, to have filled out the Rubin contract if they had not contracted out so many potatoes to other contracting buyers and had not sold as many potatoes at market price off contract as, indeed, they sold. Since the act of God condition is not what prevented the Petitioners from filling the written contract with Rubin for 50,000 CWT, it is clear that the Petitioners thus breached that contract. In this connection, it should be pointed out that the written contract with Rubin was entered into before any of the other contracts for the potato crop in question. The two contracts with Rubin are, however, separate contracts. The Petitioners established that there was a separate oral agreement entered into on April 25th between the Petitioners and Rubin and that the consideration flowing from the Petitioners to Mr. Rubin was that he needed the six loads of potatoes on short notice delivered on specific dates, April 29th, 30th, and May 1st, for which he was willing, therefore, to pay the $19.50 market price, knowing that it was for other potatoes that he contracted at $6.00. The Petitioners performed by providing the loads of potatoes when he wanted them and he paid for them in full. Thus, that contract was executed by consideration passing from each party to the other, and the contract was completed. The written contract with Rubin dated December 22, 1990 for the 50,000 CWT was the contract which the Petitioners breached for the above-found reasons. Rubin would, therefore, be entitled to damages for that breach based upon the facts proven in this case. There is no counterclaim or other action pending in this forum by Rubin against the Petitioners, however. Consequently, any damages proven by the breach of the written contract can only, at best, be applied against the amount due and owing the Petitioners for the billed, but unpaid, loads; that is, against the amount in controversy of $40,015.20. Rubin, however, has not produced any evidence to show what his damages might be. The record establishes, as found above, that, of the 48,361 CWT of potatoes delivered to Rubin, approximately 3,000 of which were delivered under the separate oral contract for six loads, Rubin only received approximately 45,000 CWT under the 50,000 CWT written contract. Thus, Rubin would appear to be entitled to damages caused by failing to get the last approximately 5,000 CWT of potatoes. The record, however, does not establish what those damages might be because it is not established whether Rubin had to purchase potatoes from another source at a higher price to meet the remainder of the 50,000 CWT amount, or, conversely, whether Rubin was able to purchase them from another source at a lower price than the $6.00 per CWT contract price, so that Rubin would actually benefit by the Petitioners' breach of that contract. Neither does the record reflect another possible scenario whereby Rubin might have simply accepted the approximate 5,000 CWT shortage and simply lost customers and potential profits represented by that amount of potatoes, or, finally, whether he simply did not purchase the shortage of 5,000 CWT from another source and had no missed sales for that amount of potatoes anyway and, therefore, no loss and no damage. The record simply does not reflect what Rubin's damages might have been because of the shortage under the written contract deliveries. In any event, the record evidence establishes that the oral contract was fully performed, with consideration flowing to each of the parties and that those potatoes were fully paid for at the market price. Then, the Petitioners delivered the written contract loads at $6.00 per CWT to Rubin represented by the claimed $40,015.00. That remains unpaid by Rubin. Rubin is obligated to pay that amount because Rubin was obligated to, and received those potatoes at the $6.00 contract price. Rubin would then appear to be entitled to claim damages if, indeed, any were suffered, for the breach of that written contract by the Petitioners' failure to supply the last (approximate) 5,000 CWT due Rubin under that contract. That resolution of their dispute, however, cannot be performed in this forum because of insufficient evidence, as delineated above, and remains to be resolved by another action by Rubin in another forum.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, RECOMMENDED that the Respondents, Jack Rubin & Son, Inc. and Continental Casualty Co., Inc. be found jointly and severally liable for payment of $40,015.20 to the Petitioners for potatoes delivered to the Respondent, Jack Rubin & Son, Inc., for which payment has not yet been made. DONE AND ENTERED this 20th day of November, 1992, in Tallahassee, Leon County, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of November, 1992. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-548A Petitioners' Proposed Findings of Fact 1-16. Accepted. Respondent's Proposed Findings of Fact 1. Accepted, in part, but subordinate to the Hearing Officer's findings of fact on this subject matter because the evidence establishes that 30 acres of potatoes belonged to the Kirkers even though Pacetti Farms was responsible for all operations with regard to planting and harvesting those 30 acres, furnishing costs, operational expertise, equipment and labor as an advance against the Kirkers' crop sale. 2-5. Accepted, except that it is not found that the entire 430 acres of potatoes were the Petitioners' potatoes. 30 acres of potatoes belonged to the Kirkers. Rejected, as not entirely in accordance with the preponderant weight of the evidence and subordinate to the Hearing Officer's findings of fact on this subject matter. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter and not entirely in accordance with the preponderant weight of the evidence, to the extent that the 97% of the accepted projected crop yield contracted for by the Petitioners represents an inclusion of the 30 acres of the Kirkers' potatoes in that percentage of crop yield projection. This is erroneous because the 30 acres were the Kirkers' potatoes which the Petitioners were handling for them. Accepted in concept, but subordinate to the Hearing Officer's findings of fact on this subject matter. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter and not entirely in accordance with the preponderant evidence of record. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter. Rejected, as not entirely in accordance with the preponderant weight of the evidence and as subordinate to the Hearing Officer's findings of fact on this subject matter. COPIES FURNISHED: Honorable Bob Crawford Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard Tritschler, Esq. General Counsel Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, FL 32399-0810 John Michael Traynor, Esquire Charles E. Pellicer, Esquire 28 Cordova Street St. Augustine, Florida 32084 C. Holt Smith, III, Esquire 3100 University Boulevard So. Suite 101 Jacksonville, FL 32016
The Issue The issue to be determined in this proceeding is whether Respondents Wilson and Son Sales, Inc. (Wilson), and Ohio Casualty Insurance Company, as surety, are indebted to Petitioner for certain Florida-grown agricultural products.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Petitioner is a producer of several vegetable crops in Hardee County. Wilson is a dealer in agricultural products. More specifically, Wilson operates an agricultural broker business in Plant City. Wilson’s surety is Ohio Casualty Insurance Company. Although Wilson has written contracts with some producers, Wilson does not have written contracts with all producers. In the absence of a contract, the terms of Wilson’s broker services are almost always the same; that is, Wilson gets a commission of 10 percent on the sale of the produce and $.35 per box for palletizing and pre-cooling the produce, in return for which Wilson makes a reasonable and good faith effort to sell Petitioner’s produce for the best price. Petitioner contacted Wilson in January 2007, about bringing flat beans to Wilson to sell. Wilson expressed interest and informed Petitioner about Wilson’s standards terms as described above. These terms were agreeable to Petitioner and he brought the beans to Wilson later that month. Although Petitioner and Wilson had no written contract, the parties’ mutual understanding of the terms of their agreement created an enforceable oral contract. Wilson sold Petitioner’s beans and no dispute arose from this first transaction. The parties’ subsequent transactions for other produce were undertaken pursuant to the same oral contract terms. Because Wilson works on a commission basis, it is generally in Wilson’s self-interest to sell growers’ produce for the best price. Petitioner contacted Robert Wilson, Wilson’s owner, by telephone in February 2007, and informed Wilson of his plans to grow wax beans and “hard squash.” It was not stated in the record whether all three varieties of hard squash later grown by Petitioner, butternut squash, acorn squash, and spaghetti squash, were discussed by Petitioner and Robert Wilson during their February 2007 telephone conversation. A major dispute in the case was whether the parties’ February discussion about hard squash created some obligation on the part of Wilson beyond the oral contract terms described above. Petitioner claims that Wilson encouraged him to plant the squash and that Petitioner would not have planted the squash otherwise. Petitioner never made clear, however, what additional obligation was created by Robert Wilson’s encouragement beyond the obligation to accept delivery of and make good faith efforts to sell Petitioner’s squash at the best price. Petitioner did not use the word “guarantee,” but his claim seems to be that Wilson became obligated to guarantee that the squash would be sold for a price close to the price published in the Columbia (South Carolina) Market Report, a periodic publication of produce prices. Such an obligation on the part of a broker is contrary to the general practice in the trade. Petitioner’s evidence was insufficient to prove more than that Robert Wilson thought he could sell Petitioner’s squash and had a genuine interest in acting as broker for Petitioner’s squash. The evidence was insufficient to prove the existence of a contractual guarantee that Wilson would obtain a certain price for Petitioner’s hard squash or do more than was promised with regard to the beans that Wilson had sold for Petitioner; that is, to try to sell the produce for the best price. When Petitioner’s wax beans were picked in late April, he brought them to Wilson to sell. No dispute arose regarding the sale of the wax beans. Petitioner brought squash to Wilson in five deliveries between May 12 and May 29, 2007. Petitioner said that on one of these deliveries, he had to leave the boxed squash in the parking lot of Wilson’s facility because there was so much cantaloupe that had been delivered ahead of him. Petitioner says he was told by a Wilson employee that the squash would not be put in the cooler. Petitioner thinks Wilson was more interested in moving the cantaloupe than the hard squash. Petitioner thinks his squash was not put in the cooler or was put in too late. Wilson denies that Petitioner’s squash was not put into the cooler or was put in late. Robert Wilson claims that he made many calls in an effort to sell Petitioner’s squash, but he could not find interested buyers for all of the squash because (1) the demand for hard squash dried up, (2) some of Petitioner’s squash was of low quality, and (3) the squash began to spoil. Petitioner denied these allegations. Petitioner received invoices and other paperwork from Wilson showing that Wilson sold Petitioner’s first delivery of 490 boxes of acorn squash for $10.18 per box. It sold Petitioner’s second delivery of 519 boxes of acorn squash for $2.08 per box. For Petitioner’s third delivery of 110 boxes of acorn squash and 240 boxes of spaghetti squash, Wilson “dumped” the acorn squash by giving it to away for free to the Society of St. Andrews food bank, and sold the spaghetti squash for $5.15 per box. Wilson sold petitioner’s fourth delivery of 279 boxes of butternut squash for $.55 per box.1 Competent substantial evidence in the record established that it is a regular occurrence for agricultural products awaiting sale to decay and become unsellable, and for the broker to dump the products in a landfill or give the products to a charitable organization and then provide the grower a receipt for tax deduction purposes. It was undisputed that Wilson did not notify Petitioner before disposing of his squash. Petitioner claims he should have been notified by Wilson if the squash was beginning to spoil. However, Petitioner did not prove that prior notification was a term of their oral contract. Petitioner claims further that the federal Perishable Agricultural Commodities Act required Wilson to notify Petitioner before dumping the squash and to have the squash inspected to determine whether, in fact, it was spoiled. As discussed in the Conclusions of Law below, this federal law is not applicable. Competent substantial evidence in the record established that the market for agricultural products fluctuates and, at times, can fluctuate rapidly. For hard squash, which is normally prepared in an oven, the market demand can drop dramatically due to the onset of warm weather simply because people tend not to cook hard squash dishes in warm weather. Petitioner’s squash was being marketed in May, which means the beginning of warm weather for most areas of the United States. This fact supports Wilson’s claim that the demand for hard squash had been good, but fell rapidly just at the time Wilson was trying to sell Petitioner’s squash. The problem with the claims made by Petitioner in this case is simply one of insufficient proof. It is not enough for Petitioner to offer theories about what he thinks happened or to raise questions which are not fully answered. Petitioner had no proof that his squash was not put in Wilson’s cooler, that his squash did not begin to decay, that the demand for hard squash did not fall rapidly, that Wilson did not make reasonable efforts to sell the squash, that Wilson had willing buyers for Petitioner’s squash at a better price, or that Wilson sold squash from other growers at a better price. Petitioner’s evidence for his claims consisted primarily of market price reports that he contends show the approximate price Wilson should have gotten for the hard squash. Market price reports have some relevance to the issues in this case, but competent evidence was presented that the prices quoted in the publications are not always reliable to indicate the price a grower can expect to get on any given day, because there are factors that cause the published market price to be an inflated price (and applicable to the highest grade of produce) and because the market price can change rapidly with a change in demand for the product. The oral contract between Petitioner and Wilson required Wilson to try to get the best price for Petitioner’s squash, not some particular price appearing in a particular market price report. Petitioner did not show that Wilson got a better price for hard squash of equal quality, or that other brokers in the area got a better price for hard squash of equal quality at the times relevant to this case. Petitioner’s evidence was insufficient to prove that Wilson did not make a reasonable and good faith effort to sell Petitioner’s squash at the best price.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order dismissing Petitioner’s amended claim. DONE AND ENTERED this 7th day of March, 2008, in Tallahassee, Leon County, Florida. BRAM D. E. CANTER 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 7th day of March, 2008.
The Issue The issue for determination at final hearing was whether Florida Diesel Truck and Industrial, Inc., has standing to protest the termination of its franchise agreement with Mitsubishi Fuso Truck of America, Inc.
Findings Of Fact William Dowdy is the President and owner of Florida Diesel Truck and Industrial, Inc. (Petitioner). He owns all of the stock and controls the day- to-day operation of the business. Dowdy bought out his family members' interest in the business. Petitioner is primarily engaged in industrial, marine and agricultural parts and service. Dowdy has been working with Petitioner as an administrator for approximately 20 years. He joined Petitioner in 1973 in the accounting office when it was Florida Diesel and Marine Service and was primarily engaged in marine repairs. Dowdy has no actual, hands-on repairing experience with Petitioner of any significance. In 1989, Mitsubishi Fuso Truck of America, Inc. (Intervenor), was searching for new dealerships, so it initiated contact with Dowdy. Intervenor's branch manager had numerous conversations, regarding a truck franchise, with Dowdy. At that time, Petitioner had two locations: one in Riviera Beach and one in Ft. Pierce. The Riviera Beach location was the original facility, the larger of the two locations, and the main office. As a result of the talks, in October 1989, Petitioner applied for a dealership. In December 1989, Petitioner entered into an Interim Sales and Service Agreement (Interim Dealer Agreement) with Intervenor, which was the dealership franchise agreement. The Interim Dealer Agreement was for a one-year period (December 1989 to December 1990) only. In order to become an authorized dealer, Petitioner had to comply with the Interim Dealer Agreement. A term and condition made a part of the Interim Dealer Agreement and incorporated by reference as "Exhibit B" was that Petitioner would "show a growth rate in the areas of net worth, working capital, retail sales, parts sales, service sales, and show a positive trend towards profitability at the end of this interim agreement." Also, a development plan was entered into setting forth, among other things, an annual minimum sales objective of 25 units or vehicles for 1990. Petitioner's interim dealership was located at its Ft. Pierce location. Intervenor provided the trucks, through its credit plan, and Petitioner purchased the parts. As a dealer, Petitioner needed a salesperson but did not have one. Dowdy decided that Petitioner's branch manager in Riviera Beach would double as a salesperson for the dealership in Ft. Pierce. In addition to handling parts and service at the Riviera Beach location, the branch manager was also now a truck and parts salesperson. Needing a full-time salesperson for the dealership, Dowdy continued to search for a salesperson. Sometime within the contract year, Petitioner hired a full-time salesperson. The salesperson had no truck sales experience but did have automobile sales experience and local contacts which Petitioner felt was an asset. However, because his sales were lacking, the salesperson was replaced. Intervenor provided Petitioner with assistance during its year of operation. Intervenor's district sales manager met periodically with Dowdy, visited the dealership frequently, assisted with sales and made contacts with customers and potential customers. In December 1990, at the end of its first year of operation as a dealer, Petitioner received written communication from Intervenor regarding deficiencies, among other things, in the submission of monthly financial statements and the timely payment of accounts. Notwithstanding, in December 1990, Intervenor renewed the Interim Dealer Agreement for a second year from December 1990 to December 1991. Petitioner's profit trend did not indicate to Intervenor that it should offer Petitioner a three-year dealer contract as opposed to a one-year interim dealer contract. During the second contract period, Petitioner continued to have a salesperson problem. Petitioner replaced its salesperson with someone who had truck sales experience. However, the new salesperson was not selling a satisfactory number of trucks, so he was dismissed. Again, Petitioner's branch manager in Riviera Beach became the Ft. Pierce dealership salesperson. Additionally, in the second contractual year, on more than one occasion, Petitioner received written communication from Intervenor regarding submission of monthly financial statements and timely payment of accounts. Finally, in December 1991, Intervenor notified Petitioner by written communication that payment for parts shipment would be thereafter on a C.O.D. basis. In January 1992, Intervenor again renewed the Interim Dealer Agreement for a third year from January 1992 to January 1993. Prior to the renewal, Intervenor discussed increased truck sales with Petitioner and both agreed that increased trucks sales were necessary. A term and condition made a part of the Interim Dealer Agreement and incorporated by reference as "Exhibit B" was that Petitioner agreed to [S]ell a minimum of fifteen (15) units during the term of this contract. [S]ubmit monthly financial statements. [P]ay monthly parts account according to MFTA [Intervenor's] terms. Prior to the third contractual year, Dowdy had been having financial difficulty, due to his purchase of his family members' interest in Petitioner. However, during the third contractual year, the financial difficulties worsened with the absence of a salesperson which lead to disappointing truck sales. In March 1992, Intervenor's credit department denied approval for the shipment of a vehicle to Petitioner's dealership because Petitioner had not submitted to Intervenor the 1991 year-end financial statement and monthly financial statement and had not paid prior interest charges. Additionally, in June 1992, Intervenor notified Petitioner by written communication that its floor plan insurance premium was past due, i.e., Petitioner had not paid the premium on its inventory. Also, in May 1992, because of financial concerns, Petitioner sold its Riviera Beach location. Since Petitioner had no full-time salesperson for its Ft. Pierce location, Petitioner's former branch manager, who had remained with the new Riviera Beach owners, agreed to continue to sell trucks for it. This arrangement continued for approximately two or three months before Petitioner's former branch manager severed his salesperson relationship. Petitioner was without a salesperson. The absence of a salesperson continued to plague Petitioner, which affected its sales and in return, its finances. In or around late August 1992, Intervenor's district sales manager who had been working with Petitioner during each of the yearly contractual periods, initiated the subject of Petitioner resigning its dealership. They engaged in several discussions on the subject of resignation; however, during those discussions, the subject of Intervenor terminating the dealership franchise came up. On or about August 31, 1992, Intervenor's district sales manager prepared a letter of resignation for Dowdy's signature. Even though the resignation letter was dated August 31, 1992, it was not presented to Dowdy for his signature until September 11, 1992, when the manager visited Petitioner in Ft. Pierce. On September 11, 1992, Dowdy reviewed the resignation letter, and after discussing it with the sales manager, he signed the letter and had it witnessed. That same day, Intervenor's district sales manager notified Intervenor's manager of dealer operations, who was located at its home office in New Jersey, of the resignation letter being signed, and when he returned to his office in Orlando, the district sales manager gave the resignation to the Regional Vice-President. Prior to signing the resignation letter, on or about September 3, 1992, Petitioner, with Intervenor's assistance, transferred two of its trucks to another dealer in Broward County. On September 15, 1992, Petitioner, by fax transmission, submitted its tool inventory to Intervenor, and shortly thereafter, Intervenor repurchased the tools from Petitioner. In a letter dated September 14, 1992, Intervenor notified Dowdy that it had accepted his "voluntary resignation" of the dealership, and included a proviso that the effective date of the franchise termination was October 11, 1992, 30 days from the date of resignation. The letter was mailed from Intervenor's home office in New Jersey. The Interim Dealer Agreement provides that any notice to be given under the agreement may be delivered, as it pertains to the case at hand, to the party of the agreement if a sole proprietor, to an officer of the party if a corporation, or may be given by sending the notice by registered mail or tested telex addressed to the principal office of the interim dealer or to Intervenor's principal office. It provides further that notice given as indicated is considered given when delivered or mailed. Intervenor's Dealer Sales and Service Agreement Standard Provisions (Standard Provisions) was incorporated by reference and made a part of the Interim Dealer Agreement. Section X.A. of the Standard Provisions provides that a dealer may terminate the agreement upon 30 days prior written notice to Intervenor. Further, Section X.C. provides that the date of the notice of termination is the date of mailing. Shortly after signing the letter of resignation, individuals wishing to invest in Petitioner's truck dealership contacted Dowdy. After receiving positive assurances from the investors, Dowdy attempted to rescind the resignation. He forwarded a witnessed letter dated September 18, 1992, to Intervenor by fax transmission requesting that his "voluntary resignation be abated." At that time, he had not received Intervenor's letter of September 14, 1992. By certified letter dated October 2, 1992, Intervenor notified the State of Florida, Department of Highway Safety and Motor Vehicles (DHSMV) of Petitioner's "voluntary resignation" of its dealership. In response to Dowdy's letter of September 18, 1992, by letter dated October 9, 1992, Intervenor refused to abate Petitioner's resignation and treated his letter of September 18, 1992, as an application for a new franchise. Intervenor indicated in its response that it was not interested in a new franchise. On October 21, 1992, Dowdy sent a letter by fax transmission to Intervenor's CEO regarding the resignation letter and his (Dowdy's) plan to reorganize the dealership. The CEO contacted Dowdy the same day by telephone and discussed the low and decreasing market for truck sales in the Ft. Pierce area and whether Dowdy had been coerced or forced to sign the letter of resignation. Responding to the inquiry of coercion or being forced, Dowdy responded that he was neither coerced nor forced to sign the letter of resignation. Subsequently, however, in a letter dated October 28, 1992, Dowdy informed Intervenor's CEO, among other things, that Intervenor terminated the dealership and that he was requesting a hearing before the DHSMV for unfair cancellation. By letter dated October 28, 1992, Dowdy requested such a hearing from DHSMV. By letter dated November 9, 1992, Dowdy informed the DHSMV that, among other things, he had signed the "voluntary resignation" prepared by Intervenor, but later changed his mind and requested Intervenor to cancel the "voluntary resignation" on September 18, 1992. By certified letter, dated November 12, 1992, the DHSMV notified Dowdy that its determination was that he lacked standing to protest a termination and that he had 21 days from the service of that letter to request a formal hearing. Dowdy received the DHSMV's letter on November 18, 1992. On December 9, 1992, Dowdy forwarded a letter, bearing the same date, by Federal Express to the DHSMV requesting a formal hearing, which was received by the DHSMV on December 10, 1992.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying Florida Diesel Truck and Industrial, Inc.'s, request for an unfair cancellation hearing in that it lacks standing for such a request. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st day of March 1994. ERROL H. POWELL 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 21st day of March 1994.
Findings Of Fact At all times material, the Respondent was licensed as a general contractor, holding license number CG C003564, qualifying WSCON Corporation. On or about September 27, 1990, the Respondent, acting on behalf of WSCON Corporation, entered into a contract with Emilio and Jennie Delgado to build an addition to the Delgado's residence at 13562 Southwest 286th Terrace, Miami, Florida, for a price of $12,756.00. On or about January 5, 1991, the parties to the contract agreed to a change order which increased the contract price by $1,248.00, to a total of $14,004.00. The Respondent obtained a building permit for the job from Dade County and the Respondent began work on the job about a month after signing the contract. The Delgados made payments to the Respondent pursuant to the contract in the total amount of $10,500.00. The final payment was due upon completion of the job. The Delgados never made the final payment because the Respondent never finished the job. After about September or October of 1991, the Respondent performed no further work under the contract. At that time, the Respondent had completed the majority of the work, but there was still some work that remained to be completed. 1/ The Respondent discontinued performing work called for by the contract because of financial problems he was having due to his not having received certain funds owed to him by Dade County. He offered to continue working on the job if the Delgados would advance him sums under the contract that were not yet due, but the Delgados refused to do so. The Delgados never discharged the Respondent. The Delgados completed the job themselves, paying a total of $6,046.21 to various suppliers of labor and materials other than the Respondent. 2/
Recommendation On the basis of all of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Construction Industry Licensing Board issue a Final Order in this case to the following effect: Dismissing the charges alleged in Counts II and III of the Administrative Complaint; Finding the Respondent guilty of a violation of Section 489.129(1)(k), Florida Statutes, as charged in Count I of the Administrative Complaint; and Imposing the following penalty: an administrative fine in the amount of one thousand dollars ($1,000.00) and a one year period of probation. DONE AND ENTERED this 23rd day of June 1994 in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 23rd day of June 1994.
Findings Of Fact The Respondent issued an Invitation to Bid by which sought to lease approximately 21,000 net useable square feet of office space to be located in Tampa, Florida. This Invitation to Bid is referred to as Lease Number 590:1946. Three bids were received in response to the Invitation to Bid, and they were opened on July 29, 1988. Bids were received from the Petitioner, Structures, Inc., and a third bidder that has not filed a protest, and is therefore not relevant to this proceeding. All bidders were initially determined to be responsive to the Invitation to Bid. Petitioner and Structures, Inc., submitted bids involving the same office space and real property. Petitioners' bid for this space was lower that the bid filed by Structures, Inc., when compared on a present value rental cost analysis. Despite Petitioners' lower bid, Respondent awarded this lease to Structures, Inc., due to the receipt of a letter dated August 2, 1988, from Intervenor, the owner of the subject property, stating that, "Mr. Hartley (Petitioner) has no right to propose this property to the Department as Mr. Hartley and I have no agreements with respect to my leasing the property to him." On the basis of this letter, the Respondent concluded that Petitioners had no legal interest in the subject property and therefore did not have the requisite control over the property to submit this bid. The Petitioners' bid was determined to be nonresponsive. Petitioners did not present competent substantial evidence to discredit or refute Intervenor's contention that they lacked any legal interest in this property. It is undisputed that Intervenor owns the property, and Intervenor was present at the hearing to confirm that the letter of August 2, 1988, was, in fact, his letter. The Petitioner, James C. Hartley, was not present at the hearing. The only evidence presented by Petitioners of any alleged interest in this property is a copy of a telecopy letter dated June 29, 1988, filed with its bid, which purports to express the intention of Intervenor and Petitioner Hartley to enter into a lease for certain property described on an Exhibit A, which was not presented in evidence. Thus, there is no indication on the face of this document that the telecopy letter relates to the subject property. However, even if the letter does relate to the property owned by Intervenor, the agreement specifically states that Intervenor's obligation to enter into a lease with Petitioner is expressly conditioned upon Intervenor's approval, In his sole discretion, of any sublease with the Respondent. If for any reason the Intervenor disapproved of the Petitioners' bid and lease with the Respondent, according to this agreement, he could simply refuse to enter into any lease of the subject property with Petitioners, and thus, Petitioners would have no interest or control over the property, and could not then sublease it to the Respondent. Finally, there is no recital of consideration in the purported agreement set forth in the telecopy letter. Based upon a complete review of the evidence presented, it is found that Petitioners did not have a valid, legal interest in the subject property which would be sufficient to allow them to file this bid and propose this lease to the Respondent. As such, Petitioners' bid was unresponsive.
Recommendation Based upon the foregoing, it is recommended that Respondent enter a Final Order dismissing Petitioners' protest Lease Number 590:1946. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 3rd day of November, 1988. DONALD D. CONN 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 3rd day of November, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4645BID Rulings on Petitioners' and Intervenor's Proposed Findings of Fact: Petitioners and Intervenor did not timely file a Proposed Recommended Order containing proposed findings of fact. Rulings on the Respondent' Proposed Finding of Fact: Adopted in Findings of Fact 1 and 2. Adopted in Finding of Fact 3. 3-5. Rejected as irrelevant and unnecessary. 6-8. Adopted in Finding of Fact 4. 9. Rejected in Finding of Fact 2, and as irrelevant. COPIES FURNISHED: Joseph D. McFarland, Esquire 520 Second Avenue, South St. Petersburg, Florida 33701 Robert L. Rocke, Esquire Post Office Box 3433 Tampa, Florida 33601 Jack Farley, Esquire W. T. Edwards facility 4000 West Buffalo Fifth Floor, Room 520 Tampa, Florida 33614 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint, and, if so, the penalty that should be imposed.
Findings Of Fact Petitioner is the state agency charged with the licensure and regulation of real estate brokers and salespersons in the State of Florida pursuant to chapters 455 and 475, Florida Statutes. At all times material to this action, Respondent was licensed a real estate sales associate in the State of Florida. On November 18, 2010, Petitioner filed an Administrative Complaint against Respondent, which reads in pertinent part: On or about October 5, 2007, Respondent prepared a sales purchase contract on behalf of Anne Vincent (Buyer) and Donald Gilchrest (Seller) for a property known as 6521 SW 9th Street, Pembroke Pines, Florida 33023 for $250,000. Respondent represented in the sales and purchase contract for the Subject Property that a $2,000 deposit was held in escrow by Title Sense Inc. Respondent communicated to the Sellers that he had received a check in the amount of $2,000 from the Buyer. * * * 10. Respondent failed to place with Respondent's registered employer any funds entrusted to Respondent by the Buyer for the Subject Property. * * * 12. Respondent failed to deliver a copy of the sales and purchase contract to Respondent's Broker, Edgar Rhenals. Based upon the foregoing, Petitioner alleged that Respondent violated section 475.25 (1)(b), (1)(e), and (1)(k), Florida Statutes, as well as Florida Administrative Code Rule 61J2-14.009. As discussed in the preliminary statement of this Recommended Order, Petitioner's sole witness at the final hearing was Ms. Krystal Cordo, an investigator employed with the Division of Real Estate. Other than Ms. Cordo's description of statements made by Respondent during the investigation——in which Respondent denied all wrongdoing——Ms. Cordo's testimony and investigative report consisted entirely of hearsay, with no applicable hearsay exceptions. In light of the complete absence of incriminating non-hearsay evidence, Petitioner properly conceded that Respondent's guilt could not be established in connection with any of the charges.2 Accordingly, the undersigned finds, as a matter of ultimate fact, that Respondent is not guilty of Counts I, II, and III of the Administrative Complaint.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a final order dismissing the Administrative Complaint against Respondent. DONE AND ENTERED this 28th day of March, 2011, in Tallahassee, Leon County, Florida. S EDWARD T. BAUER 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 28th day of March, 2011.
The Issue The issue is whether Rule 5J-10.001, Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority, pursuant to Section 120.52(8), Florida Statutes.
Findings Of Fact Pursuant to Sections 559.801(2) and 559.813(2), Florida Statutes, Respondent has exclusive administrative jurisdiction over the Sale of Business Opportunities Act, Chapter 559, Part VIII, Florida Statutes, and shares judicial enforcement over the Act with the Florida Department of Legal Affairs and the applicable office of the state attorney. (Unless stated otherwise, all references to "Sections" shall be to Florida Statutes, all references to the "Act" shall be to the Sale of Business Opportunities Act, and all references to "Rules" shall be to the Florida Administrative Code.) The Act governs the sale or lease of certain business opportunities in Florida. Sections 559.803 and 559.804 respectively require sellers of covered business opportunities to provide timely disclosures to prospective purchasers and to file annual disclosure statements with Respondent prior to advertising or offering covered business opportunities for sale. More relevant to this case, Section 559.801 sets forth the definitions that establish the coverage of the Act: 559.801 Definitions.--For the purpose of ss. 559.80-559.815, the term: (1)(a) "Business opportunity" means the sale or lease of any products, equipment, supplies, or services which are sold or leased to a purchaser to enable the purchaser to start a business for which the purchaser is required to pay an initial fee or sum of money which exceeds $500 to the seller, and in which the seller represents: That the seller or person or entity affiliated with or referred by the seller will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, currency or card operated equipment, or other similar devices or currency-operated amusement machines or devices on premises neither owned nor leased by the purchaser or seller; That the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using in whole or in part the supplies, services, or chattels sold to the purchaser; That the seller guarantees that the purchaser will derive income from the business opportunity which exceeds the price paid or rent charged for the business opportunity or that the seller will refund all or part of the price paid or rent charged for the business opportunity, or will repurchase any of the products, equipment, supplies, or chattels supplied by the seller, if the purchaser is unsatisfied with the business opportunity; or That the seller will provide a sales program or marketing program that will enable the purchaser to derive income from the business opportunity, except that this paragraph does not apply to the sale of a sales program or marketing program made in conjunction with the licensing of a trademark or service mark that is registered under the laws of any state or of the United States if the seller requires use of the trademark or service mark in the sales agreement. For the purpose of subparagraph 1., the term "assist the purchaser in finding locations" means, but is not limited to, supplying the purchaser with names of locator companies, contracting with the purchaser to provide assistance or supply names, or collecting a fee on behalf of or for a locator company. "Business opportunity" does not include: The sale of ongoing businesses when the owner of those businesses sells and intends to sell only those business opportunities so long as those business opportunities to be sold are no more than five in number; The not-for-profit sale of sales demonstration equipment, materials, or samples for a price that does not exceed $500 or any sales training course offered by the seller the cost of which does not exceed $500; or The sale or lease of laundry and drycleaning equipment. "Department" means the Department of Agriculture and Consumer Services. "Purchaser" includes a lessee. "Seller" includes a lessor. An important question in this case is the extent to which the Act addresses affiliates of a seller. In fact, the Act does so only once. In describing the various disclosure requirements imposed upon a "seller," Section 559.803 mentions an affiliate in Section 559.803(1), which requires the disclosure of "the name of any parent or affiliated company that will engage in business transactions with the purchasers or who takes responsibility for statements made by the seller." In describing the annual filings, Section 559.805 does not mention "affiliates." Nor do the main enforcement provisions of the Act mention "affiliates." Section 559.809 prohibits 14 specified acts by "sellers". Section 559.813(2)(a) specifies five violations by "a seller or any of the seller's principal officers or agents" that may result in the penalties set forth in Section 559.813(2)(b). In connection with the sale or lease of business opportunities, Respondent has adopted three rules at Chapter 5J-10, Florida Administrative Code. Petitioners have challenged, in its entirety, Rule 5J-10.001, which supplies several definitions. Rule 5J-10.001 states: 5J-10.001 Definitions. The definitions contained in Section 559.801, Florida Statutes, and the following apply: “Initial Fee or sum of money,” as used in Section 559.801(1)(a), F.S., shall include the total funds paid by the purchaser to the seller, including all monies paid for deposits, down payments, prepaid rents, equipment costs, materials, samples, products, training, services or inventory purchases. “Material change” shall include any fact, circumstance, or set of conditions which has a substantial likelihood of influencing a purchaser or a reasonable prospective purchaser in the making of a significant decision relating to a named business opportunity or which has any significant financial impact on a purchaser or prospective purchaser. “Sales program or marketing program” means: A written or oral procedure or plan provided by the seller to a purchaser of a business opportunity concerning products, equipment, supplies, services or training that the seller represents will be provided on how to sell or market the product or service; or Where the seller provides to the purchaser the following devices, techniques, training or materials which will assist the purchaser in deriving income from the business opportunity: Sales or display equipment or merchandising devices; Specific sales or marketing techniques; or Sales, marketing or advertising materials which are intended for use by the purchaser to influence a consumer to purchase a product or service. “Seller” includes any person who has an ownership interest of 10% or greater in an entity which sells or leases business opportunities. Specific Authority 570.07(23) FS. Law Implemented 559.801, 559.803, 559.805 FS. History–New 11-15-94, Amended 6-4-95. Respondent adopted Rule 5J-10.001 effective November 15, 1994, and amended it effective June 4, 1995. The specific authority cited for the rule, Section 570.07(23), provides only that Respondent "shall have and exercise the following functions, powers, and duties: To adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of law conferring duties upon it." However, in 1997, the Legislature adopted Section 559.813(8), which broadens Respondent's rulemaking authority under the Act by providing: "The department has the authority to adopt rules pursuant to chapter 120 to implement this part." In defining "seller" in Rule 5J-10.001(4), Respondent relied on the Federal Trade Commission (FTC) regulations at 16 Code of Federal Regulation (CFR) Part 436 (collectively, the "Franchise Rule"). In particular, Respondent relied on 16 CFR 436.2, explaining in a response to an interrogatory that Rule 5J-10.001(4) "was intended to clarify the identity of persons sufficiently affiliated with the sale of a business opportunity by virtue of their share ownership (16 C.F.R. 436.2) upon whom a duty should be imposed to make the required statutory disclosures in the sale of a business opportunity." In 16 CFR Sections 436.2(a)(1)(i) and (ii), the FTC identifies two types of franchises covered under the FTC Act: the package and product franchise and the business opportunity. As the name implies, the business opportunity described in 16 CFR Section 436.2(a)(1)(ii) bears the closer resemblance to the Act. Under 16 CFR Section 436.2(a), both types of franchises require an arrangement and, more importantly, "any continuing commercial relationship." For the business opportunity, 16 CFR Section 436.2(a)(1)(ii)(A) requires that a franchisee offer, sell, or distribute to a person other than the franchisor goods or services that are supplied by the franchisor, supplied by a third person with whom the franchisor requires the franchisee to do business, or supplied by an affiliate of the franchisor with whom the franchisee is advised by the franchisor to do business. In addition, for the business opportunity, 16 CFR Section 436.2(a)(1)(ii)(B) requires that the franchisor secure for the franchisee retail outlets or accounts, locations or sites for product sales displays (such as vending machines or rack displays), or the services of a person to secure these retail outlets, accounts, locations or sites. Also, 16 CFR Section 436.2(i) defines an "affiliated person" as a person that "directly or indirectly controls, or is controlled by, or is under common control with, a franchisor"; that "directly or indirectly owns, controls, or holds with power to vote, 10 percent or more of the outstanding voting securities of a franchisor"; or that "has, in common with a franchisor, one or more partners, officers, directors, trustees, branch managers, or other persons occupying similar status or performing similar functions." However, the definitions in 16 CFR Section 436.2 apply only to terms "used in this part," and 16 CFR Part 436 does not cover enforcement and liability issues--only disclosures and definitions, including coverage definitions. In fact, the sole purpose of the affiliate definition in 16 CFR Section 436.2 is to explain the disclosure requirements set forth in 16 CFR Sections 436.1(a)(7) (total funds required to be paid to franchisor or its affiliates), 436.1(a)(8) (recurring funds required to be paid to franchisor or its affiliates), 436.1(a)(9) (names of affiliates with which franchisee is required or advised to do business), 436.1(a)(11) (basis for calculating actual revenue to be received by franchisor or its affiliates), 436.1(a)(12) (financing conditions offered by franchisor or its affiliates), and 436.1(a)(14) (extent to which franchisee--or, if a corporate, franchisee's affiliates--to participate directly in the franchised operation). Nowhere in the Franchise Rule does the affiliate definition broaden the scope of the persons liable for violations of the federal law. On July 26, 2002, Respondent filed an Administrative Complaint against Petitioners and three allegedly related corporations and transmitted the matter to the Division of Administrative Hearings (DOAH) for a formal hearing. This proceeding was designated DOAH Case No. 02-3374. At the same time, Respondent imposed an Immediate Final Cease and Desist Order ordering that Petitioners and three allegedly related corporations discontinue the sale of business opportunities in Florida. (The First District Court of Appeal later stayed the enforcement of this order.) On October 11, 2002, Respondent served an Amended Administrative Complaint. The undersigned Administrative Law Judge completed the hearing in DOAH Case No. 02-3374 on November 25, 2002. As of the date of this final order, the parties have not yet filed their proposed recommended orders. In the Administrative Complaint, Amended Administrative Complaint, and Immediate Final Cease and Desist Order, Respondent relies on Rules 5J-10.001(3) and (4), but not Rules 5J-10.001(1) and (2). With respect to Rule 5J-10.001(3) ("Sales or Marketing Program Rule"), Respondent alleges that the business opportunities are covered by the Act because of the presence of a "sales program or marketing program." With respect to Rule 5J-10.001(4) ("Seller Rule"), Respondent alleges that Petitioners are liable as owners of one or more named corporations that are "sellers" who have violated the Act. With respect to Rules 5J-10.001(1) and (2), respectively, the regulatory definitions of an "initial fee or sum of money" or "material change" play no significant role in DOAH Case No. 02-3374. For this reason, Petitioners are not substantially affected by these rules, and the Conclusions of Law below determine that Petitioners lack standing to challenge Rules 5J-10.001(1) and (2), which are not further discussed in this final order.
