Findings Of Fact Respondent Heidt Neil "Cap" Fendig, Jr., and his corporate alter ego, Go Fish, Inc., do business under the name Golden Isles Charter Company. Aside from operating the marina he leases on St. Simons Island, Georgia, Mr. Fendig hires out as a captain (for $175 a day), arranges charters, and acts as a yacht broker in Georgia. When Kirby J. Bourgeois acquired the Westwind, a 55-foot "Ocean Super Sportfisherman," the man to whom the boat had previously belonged recommended respondent to Mr. Bourgeois, an Oklahoman who knew little about boats, as somebody who could assist him. When Messrs. Fendig and Bourgeois met on October 5 or 6, 1990, respondent agreed to register the Westwind in the name of a corporation (Mandela Corp.) Mr. Bourgeois specified, and to equip the boat in accordance with Coast Guard requirements. Later he took Mr. Bourgeois out on "training trips." For each of these services, respondent prepared invoices which Mr. Bourgeois paid in due course. Around Thanksgiving of 1990, Mr. Fendig acted as the Westwind's captain on a cruise Mr. Bourgeois took to the Bahamas. They left the boat docked in Marsh Harbor. In January of 1991, Mr. Bourgeois told Mr. Fendig on the telephone that he wanted to sell the Westwind. At that time, if not before, Mr. Fendig mailed Mr. Bourgeois a packet of information about selling boats, which included a form yacht brokerage agreement. Instead of signing the yacht brokerage agreement, Mr. Bourgeois decided to show the Westwind at the Third Annual Brokerage Yacht Show in Miami Beach, one of the alternatives Mr. Fendig had suggested. Mr. Fendig, who had once inquired of petitioner DBR about obtaining a Florida yacht broker's license, and been told he was ineligible because he lived and worked out of state, advised Mr. Bourgeois that he was not licensed in Florida and could not act as a yacht broker in Florida. From conversations he had with petitioner's employees at the time he discussed obtaining a Florida license, Mr. Fendig understood that Florida law permitted him to accompany and assist yacht owners in the sale or purchase of yachts in Florida so long as he did not buy or sell as an owner's agent. Mr. Fendig agreed to bring the Westwind over from Marsh Harbor for the show, which began on February 14, 1991, a Thursday. On January 23 or 24, 1991, respondent sent Mr. Bourgeois a facsimile transmission, described as confirmation of a telephone conversation, in which he wrote: "As per your instructions, I will transport the boat to the Miami show and look for your arrival in Miami at [sic] sometime during the show." Petitioner's Exhibit No. 4. Although Mr. Bourgeois had informed respondent "that he would not be able to be there the first day" (T.24), Mr. Fendig arrived before the show began. He also filled out a form application and a contract for exhibit space, Petitioner's Exhibit No. 3, which, together with the application fee, had reached Yachting Provisions, Inc. in Ft. Lauderdale, on February 1, 1991. Mr. Bourgeois, whose name did not appear on the application and contract, later reimbursed him the fee. Reportedly delayed by a snowstorm, Mr. Bourgeois did not reach Miami before Saturday evening. Until Mr. Bourgeois arrived, Mr. Fendig stayed with the boat, moored at slip 221 on Collins Avenue. Available to anybody who visited the Westwind while he was on board were copies of his business card, which included the words "YACHT SALES-YACHT MANAGEMENT." Petitioner's Exhibit No. 6. Also available to show goers (including those to whom respondent never spoke) were one page fliers describing the Westwind and concluding: "Asking $350,000 Looking for serious offers contact H. N. "Cap" Fendig, Golden Isles Yacht Sales & Charter Co. 912 638-7717 St. Simons Island, Ga." Petitioner's Exhibit No. 5. Respondent had asked his brother to make up this flier. Like other paid captains, respondent told anybody who inquired the owner's asking price. When, on the first day of the boat show, investigators in petitioner's employ posed as potential buyers, Mr. Fendig told them they would have to speak to the owner, who would be arriving later in the show. He told "everybody that, if they wanted to make an offer, the owner was coming and they could drop by later in the show and . . . talk to him." T. 36. While at the boat show, Mr. Fendig slept on the boat, which was an economic benefit for him, at the same time it afforded the vessel a measure of security, which was an economic benefit for the owner. Mr. Bourgeois paid him for bringing the boat to Miami Beach, but not for the time he spent there. He had wanted to go to the boat show for his own purposes, in any event. The yacht show closed on Monday without the Westwind's changing hands. Mr. Bourgeois still owned the Westwind on March 11, 1991, when he signed a yacht brokerage agreement with respondent Fendig. Petitioner's Exhibit No. 7. Before that time Mr. Fendig had no agreement for or expectation of any compensation on account either of the Westwind's sale or of his efforts to accomplish a sale (other than bringing the boat to Miami, for which he received a fixed amount.)
Recommendation It is, accordingly recommended that petitioner dismiss the notice to show cause. RECOMMENDED this 5th day of December, 1991, in Tallahassee, Florida. ROBERT T. BENTON, II 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 5th day of December, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-3108 Petitioner's proposed findings of facts Nos. 1, 2, 3, 4, 5, 8, 9, 11, 12, 13, and 14 have been adopted, in substance, insofar as material. With respect to petitioner's proposed finding of fact No. 6, he was off and on the boat during the last two days. Before Mr. Bourgeois' arrival, it had been necessary to stay with the boat for security reasons. With respect to petitioner's proposed finding of fact No. 7, the proof did not show that anybody asked the owner's name, address or phone number. Respondent testified he did not distribute this information because it "wasn't necessary, because the owner was going to be there." T.36. With respect to petitioner's proposed finding of fact No. 10, the taking of evidence had closed and respondent was making legal argument. With respect to petitioner's proposed finding of fact No. 15, respondent (who appeared pro se) answered a speculative question about what "could" happen. COPIES FURNISHED: Thomas Bell, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1007 H. N. "Cap" Fendig 205 Marina Drive St. Simons Island, GA 31522 Henry M. Solares, Director Florida Land Sales, Condominiums and Mobile Homes 725 South Bronough Street Tallahassee, FL 32399-1000 Donald D. Conn, General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1000
The Issue Whether Petitioner owes sales and use tax (plus penalties and interest) to the Department of Revenue (Department), as alleged in the Department's December 22, 1999, Notice of Decision.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the numerous stipulations set forth in the parties' Joint Stipulation of Facts and Second Joint Stipulation of Facts: 23/ Mr. Wheeler is a very successful entrepreneur, who has numerous investments and businesses. His interest in Petitioner represents only a small fraction of his wealth, and, consequently, he pays little or no attention to its business operations. He has let Captain Ernest exercise day-to-day control over these operations. No one other than Captain Ernest has been delegated such authority. When the "Destiny" was purchased by Petitioner, Mr. Wheeler intended for it to be used, for a time, as a charter boat (on a bare boat basis) and then sold, hopefully for a profit. From the time that Petitioner purchased the "Destiny" until the end of the Audit Period, Petitioner was not "involved in any business other than chartering the 'Destiny.'" Captain Ernest was the one who "picked [the "Destiny"] out." He did so pursuant to Mr. Wheeler's instructions that he "make sure" to select a "good charter platform." Aside from giving Captain Ernest these instructions, Mr. Wheeler did not participate in the selection process. The "Destiny" had a "perfect" configuration for chartering. In fact, it was "originally designed as a charter boat." It had last been used for chartering approximately five years before it was purchased by Petitioner. Rob Maas (the "Mr. Maas" referred to in the parties' Stipulation of Fact 26) is the attorney who represented Petitioner at the time the "Destiny" was purchased. At the request of Mr. Wheeler, who was "interested in satisfying all conditions for the Florida use tax exemption," Mr. Maas advised Mr. Wheeler and Captain Ernest as to "what was necessary to maintain the exemption." He told them that "bare boat charter forms" needed to be used when the vessel was chartered and that "any time the boat ever moved . . . [it had to be for] a business reason." After being given such advice, Mr. Wheeler specifically instructed Captain Ernest to use the "Destiny" exclusively for bare boat chartering and no other purpose, instructions that Captain Ernest followed. Captain Ernest accepted delivery of the "Destiny" on behalf of Petitioner in the Bahamas, 1/ notwithstanding that the purchase agreement between Petitioner and the seller indicated that delivery of the vessel was to be made at Pier 66 in Fort Lauderdale, Florida. Petitioner did not pay any sales tax on its purchase of the boat. Mr. Wheeler was not present at the time delivery of the vessel was accepted. After accepting delivery, Captain Ernest brought the boat to Fort Lauderdale. He did so because Fort Lauderdale was "the easiest place to get repairs done," a "good place to pick up crew . . . and finding things that you need for boats," and "the place you want to be" to charter a boat; however, he "probably [would] not" have entered Florida waters if had known that doing so would subject Petitioner to use tax liability. Upon arriving in Fort Lauderdale, Captain Ernest took the "Destiny" directly to Bradford Marine Shipyard (Bradford Marine), a Fort Lauderdale repair facility, where it was "outfitted . . . specifically for charter." On those occasions that Mr. Wheeler was on the "Destiny" during the Audit Period, he was aboard in the capacity of a paying charterer pursuant to a bare boat charter agreement that he and Petitioner had entered into on July 21, 1995. This bare boat charter agreement provided that Petitioner (as the "Owner") would make the "Destiny" available to Mr. Wheeler (as the "Charterer") "for charter on a 'stand-by' basis" and further provided, in pertinent part, as follows: Vessel Availability. Charterer understands the Vessel is scheduled to undergo significant repairs and improvements during 1995 and will not be available when such work is scheduled. Charterer further understands and agrees its charter is on a non-exclusive basis and Owner intends to charter the Vessel through the use of a charter broker to other parties. In the event of a scheduling conflict between Charterer and another charterer, Charterer agrees Owner may "bump" Charterer from using the Vessel during the conflicting period. Charter Broker. Owner and Charterer acknowledge that this is a direct charter without a charter broker. Accordingly, the charter rate is a discounted rate. Term, Hire, & Payment. Subject to the Vessel's availability, Owner agrees to let, and Charterer to hire, the Vessel on such days and for such term as Owner and Charter[er] agree at the rate of $3,000.00 per day, plus state sales tax, if applicable. There will be an accounting at the end of each calendar year to determine Charterer's usage during the preceding year. Due to the Vessel's repair schedule in 1995, the first accounting shall occur at the end of 1996 for Charterer's usage from the date of this Agreement. Charterer shall pay Owner the charter hire determined by the accounting by January 31st of next year. In addition to the charter hire, Charterer shall be responsible for all remaining expenses during charter, including but not limited to food, beverage, fuel, dockage, and accommodations. . . . 5. Control. The Vessel is chartered on a demise basis. Owner hereby transfers to Charterer full authority regarding operation and management of the Vessel for the charter terms. Charterer is solely responsible for retaining a master and crew and it is agreed that said Captain and/or crew are agents and employees of Charterer and not Owner. . . . On July 21, 1995, Mr. Wheeler and Petitioner also entered into a separate agreement for the services of the "Destiny's" captain and crew. This agreement between Mr. Wheeler (as "Charterer") and Petitioner (as "Contractor") for use of the "Destiny's" captain and crew provided, in pertinent part, as follows: Term, Hire & Payment. Charterer hereby retains Contractor to provide crew services to the Vessel during the charter period at the rate of $500.00 per day. In addition, Charterer shall provide the master and crew with food and quarters aboard the Vessel while retained. There will be an accounting at the end of each calendar year to determine Charterer's usage during the preceding year. Due to the Vessel's repair schedule in 1995, the first accounting shall occur at the end of 1996 for Charterer's usage from the date of this Agreement. Charterer shall pay Owner the charter hire determined by the accounting by January 31st of the next year. Provisions. Charterer, before any charter use, shall advance an expense deposit for running expenses. The master shall use these funds to pay for food, liquor, laundry, fuel and lubricants, harbor fees, communication expenses, and any other required supplies or services. If the deposit is insufficient to cover all charges, Charterer shall advance further funds, as needed, during the charter. Upon conclusion of a charter, the master shall provide an accounting to the Charterer of sums received and disbursed. Crew Services. Contractor, on those days Charterer is to use the Vessel, shall provide a full-time, qualified captain and crew. Each crew member shall hold any required license and shall be properly uniformed. . . . Navigation. The master shall act at the Charterer's direction; provided, however, that the master shall not have to carry out any order that jeopardizes the safety of the Vessel or those on board. Relationship. Contractor is retained by Charterer only for the purposes and to the extent set forth in this Agreement, and Contractor's relationship to Charterer shall be that of an independent contractor. Neither the execution or performance of this Agreement shall render the parties partners or co-venturers for any purposes. . . . Mr. Wheeler chartered the "Destiny" pursuant to the July 21, 1995, bare boat charter agreement (and utilized the services of the "Destiny's captain and crew pursuant to the separate July 21, 1995, employment agreement) on the following dates during the Audit Period: September 12, 1995, through September 15, 1995; December 21, 1995, through January 4, 1996; March 4, 1996, through March 7, 1996; July 21, 1996, through July 28, 1996; and August 19, 1996, through August 25, 1996. 2/ These charters all occurred outside of Florida. Mr. Wheeler was billed (in accordance with his agreements with Petitioner) for his use of the "Destiny," for the services performed for him by the "Destiny's" captain and crew, and for all "running expenses" incurred during his charters, and he paid Petitioner the full amount he was billed. Mr. Wheeler was not the only one to charter the "Destiny" during the Audit Period. There were seven other charters: by Ryder Systems, Inc., of Miami, Florida, from 2:00 p.m. to 7:00 p.m. on January 22, 1996; by Barry Zekelman, from noon on April 6, 1996, to noon on April 13, 1996; by William Boardman, from noon on May 20, 1996, to noon on May 31, 1996; by David Cole, from noon on June 29, 1996, to noon on July 7, 1996; by the Robert E. Morris Company, from 4:00 p.m. on July 9, 1996, to 4:00 p.m. on July 12, 1996; by Thomas Russell, from 9:00 a.m. to 8:00 p.m. on July 30, 1996; and by Richard Dvorak, from 3:00 p.m. on August 4, 1996, to 3:00 p.m. on August 18, 1996. Each of these charters, like Mr. Wheeler's charters of the "Destiny," occurred pursuant to a bare boat charter agreement (on a form containing provisions standard in the bare boat chartering industry, including, among others, one obligating the charterer to pay all "running expenses" during the charter), with the captain and crew being provided in accordance with the terms of a separate employment agreement entered into by the charterer. (These separate employment agreements, unlike Mr. Wheeler's agreement for the services of the "Destiny's" captain and crew, were with Captain Ernest, not Petitioner.) The arrangements made for the payment of the "Destiny's" captain and crew for services performed by them while the "Destiny" was under charter during the Audit Period were "customary in the industry." Only one charter during the Audit Period, the Ryder Systems, Inc., of Miami, Florida, charter, took place in Florida. Florida is not considered a preferred destination in the bare boat chartering industry. A considerable amount of time was spent during the Audit Period marketing and promoting the "Destiny" to rebuild the reputation it had previously enjoyed as a charter boat. 3/ It was not until 1997 that Petitioner's bare boat chartering business "really took off as far as . . . charter numbers went." Although the "Destiny" was under charter only for a small portion of the Audit Period, at no time during the remainder of the Audit Period (when it was not under charter) was it used for any purpose unrelated to Petitioner's bare boat chartering business. The "Destiny" was used to house 4/ and feed Captain Ernest and the other members of the crew 5/ at all times during the Audit Period, whether the "Destiny" was under charter or not. Such use of the "Destiny" was in furtherance of Petitioner's bare boat chartering operations. Having a full-time captain and crew aboard a "mega" yacht available for bare boat charter, even when the yacht is not under charter, is essential to conduct successful chartering operations. The captain and crew must be available, on the vessel, to host the charter brokers and prospective charterers who come aboard between charters (sometimes with little or no advance notice) and to perform those everyday tasks necessary to maintain the vessel. To attract and keep qualified onboard personnel, it is necessary to provide them with, as part of their compensation package, free room and board on the "mega" yacht. Doing so is the standard practice in the bare boat chartering industry. When it was not under charter during the Audit Period, the "Destiny" was heavily promoted and marketed in an attempt to attract bare boat charter business. "[A] lot of promotion" and marketing was needed because the "Destiny" was reentering the charter market after a five year hiatus and Captain Ernest "was new to the charter industry." The promotional and marketing efforts included entering the "Destiny" in boat shows, hosting luncheons for charter brokers aboard the "Destiny," taking charter brokers and their guests on "fam" trips on the "Destiny," and showing the "Destiny" to prospective clients. Captain Ernest and the crew always tried to make the "Destiny" look its best when charter brokers and prospective charterers came aboard. Flowers were purchased and used to enhance the appearance of the "Destiny." When charter brokers came aboard the "Destiny," they were wined and dined and otherwise shown the type of service Captain Ernest and the crew were capable of delivering to charterers. (The reputation of the captain and crew for quality service determines "what charters [a "mega" yacht bare boat chartering business is] going to get and how [the] business is going to go.") It was particularly important "in the early days" for Captain Ernest and his crew to "make an impression on the brokers" because they were not known in the broker community. During the Audit Period, when not under charter, the "Destiny" was stocked with supplies and provisions purchased for use in connection with Petitioner's bare boat chartering operations. These supplies and provisions included fuel and various food and beverage items. Some of the food and beverage items were for use during promotional and marketing activities aboard the vessel. The chef (who specialized in European-style dishes) would often serve rack of lamb or roast duck (as a main course) to visiting charter brokers. There were also food and beverage items on the vessel for the members of the crew. In addition, items that could not readily be obtained in the Caribbean islands (at a reasonably competitive price) were purchased before the "Destiny" departed for the Caribbean. These items were stored on the vessel so that they would be available for any charter that Captain Ernest might be able to obtain while the vessel was located in Caribbean. (Charterers paid Petitioner for the items they and their guests consumed during the charter.) It was "common" for Petitioner to buy large quantities of meats and seafood and store these items for later use in the seven freezers on the "Destiny." For example, on one occasion, Petitioner bought 71.49 pounds of leg of lamb (from a company that would "cryovac" the meat so that it would keep for a very long time). There were many occasions during the Audit Period, when the "Destiny" was not under charter, that it was moved from one location to another. All such movements, however, were in furtherance of Petitioner's bare boat chartering operations. For example, it was moved from time to time to attend boat shows and to pick up charter brokers and prospective charterers who wanted to look at the vessel. On other occasions, it was taken to repair facilities and other places ("mainly . . . in Florida"), such as Pier 66, to have repair and maintenance work done. It was also taken out on "quite a few" sea trials. In addition, there were times it was moved to avoid the problems that can arise if a boat just "sit[s] at the dock." "It's very important for a boat to stay moving and stay running" in order for it to remain in good working order. Another reason it was moved was to be in "the prime areas for [charter] pick-ups." 6/ In summary, during the Audit Period, the "Destiny" was either chartered on a bare boat basis (with captain and crew furnished under a separate employment agreement) or used in a manner reasonably designed to further Petitioner's bare boat chartering business, and for no other purpose. Furthermore, every tax-free Florida purchase of tangible personal property made by Petitioner under its Florida sales tax exemption certificate from the time of its acquisition of the "Destiny" until the end of the Audit Period (including the purchase of Yamaha WaveRunners on August 14, 1995, for $12,770.00 7/) was made in furtherance of Petitioner's bare boat chartering business. 8/ By letter dated October 11, 1996, the Department informed Petitioner that it was going to audit Petitioner's "books and records" for the Audit Period. Petitioner was selected for audit because it had reported only a relatively small amount of taxable charter revenue on the Florida sales and use tax returns it filed during the Audit Period. The Department began its review of Petitioner's "books and records" on January 23, 1997, at Mr. Maas' office. The Department's "audit findings" were that the "Destiny" "was purchased for [a] dual purpose, for leasing and to be used by the shareholder" and therefore "the vessel and other purchases [made by Petitioner during the Audit Period under its sales tax exemption certificate] are taxable at the cost price." Based upon these audit findings, the Department issued a Notice of Intent to Make Audit Changes, in which it advised Petitioner that Petitioner owed $250,744.18 in sales and use taxes, $125,325.07 in penalties, and $56,948.55 in interest through July 18, 1997, for a total of $433,017.80, "plus additional interest of $82.44 per day . . . from 07/18/97 through the date [of] payment." By letter dated April 22, 1998, Petitioner protested the Department's proposed assessment. On December 22, 1999, the Department issued its Notice of Decision sustaining the proposed assessment and announcing that, as of December 22, 1999, Petitioner owed the Department $506,142.08, with "interest continu[ing] to accrue at $82.44 per day from 12/23/99." Petitioner subsequently filed a Petition for Chapter 120 Administrative Hearing on the Department's proposed action.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order finding that its assessment against Petitioner is incorrect in its entirety. DONE AND ENTERED this 24th day of September, 2002, in Tallahassee, Leon County, Florida. STUART M. LERNER 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 24th day of September, 2002.
The Issue Whether Respondent, a licensed yacht broker, committed the offenses set forth in the Notice to Show Cause dated June 20, 1994, and the penalties, if any, that should be imposed.
Findings Of Fact Petitioner is the agency of the State of Florida charged with the responsibility to administer and to enforce the Florida Yacht and Ship Brokers' Act, Chapter 326, Florida Statutes. At all times pertinent to this proceeding, Respondent has been a licensed Yacht and Ship Broker pursuant to the provisions of Chapter 326, Florida Statutes. Respondent resides in and has his principal place of business in Martin County, Florida. Respondent's corporation, Rampage of Stuart, Inc., has been licensed by Petitioner at all times pertinent to this proceeding. The parties stipulated that Respondent's corporation was, at times pertinent to this proceeding, doing business as Stuart Cay Marina, a fictitious name that had not been registered with the Petitioner. The parties stipulated that Respondent was guilty of violating the provisions of Section 326.004(2), Florida Statutes, as alleged in the Notice to Show Cause dated June 20, 1994. The parties also stipulated that the appropriate penalty for this violation is an administrative fine in the amount of $500.00. James Withers began working for Respondent at Stuart Cay Marina in January 1994. At the time he began working at Stuart Cay Marina, Mr. Withers was not licensed under the Yacht and Ship Brokers' Act. Respondent knew or should have known that Mr. Withers was not licensed when he first became employed at Stuart Cay Marina. On January 27, 1994, Mr. Withers attended an educational seminar sponsored by Petitioner where the attendees received instruction as to the requirements for licensure as a salesman or a broker under the Yacht and Ship Brokers' Act. The successful applicant must submit a completed application form, a completed fingerprint card, the proper application fee, and a surety bond. The Petitioner's processing of the application includes having the Federal Bureau of Investigation (FBI) run a fingerprint check on the applicant. The attendees of the educational seminar were told that the application fee had increased from $538.00 to $539.00 as of December 20, 1993, due to a $1.00 increase in the fee charged by the FBI to process fingerprint cards. Mr. Withers and the Respondent knew, or should have known, that Mr. Withers could not act as a salesman until after his license had been issued. In late January 1994, Mr. Withers applied for licensure as a salesman pursuant to the Yacht and Ship Brokers' Act. Because the application form used by Mr. Withers reflected the old application fee, Mr. Withers submitted a check in the amount of $538.00 with his application and fingerprint card. There was no evidence as to where Mr. Withers had obtained this application form. Mr. Wither's application package was received by Petitioner's Finance and Accounting Office on February 4, 1994. The check for the application was deposited and the application forwarded for further processing. On February 7, 1995, Mr. Withers was advised by mail that his application was deficient since the application fee was short by $1.00. This letter, from the Petitioner's Yacht and Ship Section, advised Mr. Withers that the $1.00 was needed to continue the application process. Mr. Withers forwarded his $1.00 check, dated February 9, 1994, to the Petitioner to correct this deficiency. This check was received and deposited by Petitioner's Finance and Accounting Office, which is located in the John's Building in Tallahassee, on February 17, 1994. The Finance and Accounting Office released the application package for further processing on February 18, 1994. From the Finance and Accounting Office, the application package went to the Division Director's Office located in the Warren Building in Tallahassee. From that office the application package was sent to the Yacht and Ship Section located in the Bloxham Building in Tallahassee, where it was received February 21, 1994. Licenses are not completely processed until after the Yacht and Ship Section receives notification that the entire application fee has been paid. Processing of Mr. Withers' application was completed by the Yacht and Ship Section and his license was issued on February 21, 1994. Mr. Withers and the Respondent knew, or should have known, that Mr. Withers had not received his license from the Petitioner as of February 18, 1994. 1/ There was no evidence that either man had reason to believe as of February 18, 1994, that the license had been issued and was being forwarded by mail. Both men correctly believed that Mr. Withers had substantially complied with the licensure requirements as of February 18, 1994, and that the license would be issued at some juncture since the only deficiency had been corrected. Mr. Withers represented Respondent at the Sixth Annual Miami Brokerage Yacht Show on February 18, 1994, where he acted as a salesman within the meaning of the Yacht and Ship Brokers's Act. Respondent permitted Mr. Withers to use his company name at this show. On Friday, February 18, 1994, James Courchaine and Peter Butler, in their official capacities as employees of the Petitioner, located Mr. Withers at the boat show and inquired as to whether he was licensed. Mr. Withers told them that he had completed his application package and was merely waiting to receive his license in the mail. Mr. Butler thereafter called his office in Tallahassee and learned that Mr. Withers' check for $1.00 may have been received, but that the application had not been received by the Yacht and Ship Section and that the license had not been issued. Mr. Butler informed Mr. Withers that the earliest his license could be issued was Monday, February 21, 1994.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order adopting the findings and conclusions contained herein, that imposes an administrative fine in the amount of $500.00 against Respondent for the violation of Section 326.004(2), Florida Statutes, and that imposes an additional administrative fine in the amount of $500.00 against Respondent for the violation of Section 326.06(2)(e)7, Florida Statutes. DONE AND ENTERED this 8th day of January 1996 in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, 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 8th day of January 1996.
The Issue The issue presented is whether HMY New Yacht Sales, Inc., is liable for the payment of use tax, together with penalty and interest, on a yacht which it purchased for resale and for use as a demonstrator.
Findings Of Fact Petitioner HMY New Yacht Sales, Inc., is a Florida cor-poration located in Dania, Florida. It is a franchise and an authorized dealer for several lines of new boats. Petitioner is registered as a dealer for Florida sales tax purposes and has a dealer decal. Petitioner became an authorized dealer for Davis Yachts, a manufacturer located in North Carolina, in 1985. In January 1990 Petitioner purchased a boat from Davis Yachts to be used for demonstration and promotional activities and for resale. The boat was a 47-foot fiberglass sports fisherman named "The Bandit." When the boat was delivered, Petitioner outfitted The Bandit with extensive electronics and fishing equipment, including a tuna tower, outriggers, a fighting chair, rocket launchers, and live wells. It took approximately two months (until the second week in March 1990) to outfit the boat to have it ready for its intended sports fishing purpose. The type of equipping done by Petitioner is typical of that done on every such boat when it is sold since such a boat cannot be used for its intended purpose without the electronics and other equipment. Petitioner, however, wanted the boat to be "ready to go," when Petitioner sold it rather than having the purchaser wait for the outfitting to be done before the purchaser could use the boat. Petitioner paid the factory approximately $520,000 for the boat. Petitioner's payments to local vendors for services and materials used in outfitting the boat brought Petitioner's cost to approximately $590,000. The Bandit was never documented or registered in the state of Florida. It was only operated under Petitioner's dealer registration and decal, as provided in Section 327.13, Florida Statutes. The boat was purchased with the intent to sell it, and it was always for sale from the first moment it was outfitted and ready to be shown. It was never Petitioner's intent to keep the boat. As soon as it was outfitted, the boat had on board, at all times, a file containing a complete inventory of the boat's equipment, including custom and standard options, and a color brochure with pictures of the boat to be given to potential customers. While Petitioner was attempting to sell the boat, it was also used by Petitioner as a sales promotional tool. Petitioner took the boat to various fishing tournaments and exhibited it at boat shows and open houses. Davis Yachts bore some of the expense of those activities since promoting the boat inured to the benefit of Davis as well as of Petitioner. When the boat was being used for promotional or sales activities, it would always have on board employees or salespersons of Petitioner or of Davis Yachts and customers. On occasion, family members accompanied Petitioner's salespersons on board the boat. The manner in which The Bandit was marketed--taking it to fishing tournaments and boat shows and having open house at various events--is typically the way new sport fisherman yachts are sold throughout the industry. The boat was shown to prospective customers at least once a month. Approximately 50 customers were taken on sea trials. The boat was never loaned or rented to anyone. It was used only under the direction of Petitioner or Davis Yachts. The only compensation received by Petitioner relating to the boat resulted from the occasions when Davis Yachts split some of the expenses for the promotional or sales activities. The boat did not sell as quickly as Petitioner hoped. In October 1990 Petitioner placed the boat on the Buck System, a multiple listing service which distributes information to other yacht brokers concerning boats which are for sale. Generally, boat dealers would not put new inventory in the multiple listing system. Petitioner did so in this instance, however, in order to quickly sell the boat because the government had announced a luxury tax proposal which Petitioner feared would result in a downturn in the boat market. Even with all the effort put into attempting to sell the boat, it did not sell until November 1991. In July 1992 the Department began a routine sales tax audit of Petitioner. The audit was completed in September 1992 and covered the period of time from March 1987 through February 1992. The Department auditor determined that Petitioner owed use tax on The Bandit because in November 1990, on the advice of its accountant, Petitioner took the boat out of its inventory account and placed it in its fixed assets account in order to take depreciation for federal income tax purposes. Based solely on Petitioner's treatment of the vessel on its corporate books, the auditor determined that Petitioner converted The Bandit to its own use and was, therefore, responsible for payment of the statutory use tax rate of 6 percent of the value of the boat as reflected on Petitioner's records. Based upon the audit, the Department issued its Notice of Proposed Assessment, assessing Petitioner $33,921.94 in tax, $8,480.50 in penalty, and $7,085.52 in interest through September 16, 1992. Interest continues to accrue at $11.15 per day.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered determining that Petitioner is not liable for payment of use tax, penalty, or interest on The Bandit, and withdrawing the assessment which is the subject of this proceeding. DONE and ENTERED this 2nd day of August, 1995, at Tallahassee, Florida. LINDA M. RIGOT, 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 2nd day of August, 1995. APPENDIX TO RECOMMENDED ORDER Petitioner's proposed findings of fact numbered 1-12, 15, and 19 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed findings of fact numbered 13, 14, and 18 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Petitioner's proposed findings of fact numbered 16, 17, and 20 have been rejected as being unnecessary to the issues involved herein. Respondent's proposed findings of fact numbered 1-3, 6, 8, and 9 have been adopted either verbatim or in substance in this Recommended Order. Respondent's proposed findings of fact numbered 4, 5, and 10 have been rejected as not being supported by the weight of the competent evidence in this cause. Respondent's proposed finding of fact numbered 7 has been rejected as being unnecessary to the issues involved herein. COPIES FURNISHED: Cynthia S. Tunnicliff, Esquire Pennington & Haben, P.A. Post Office Box 10095 Tallahassee, Florida 32302-2095 Mark T. Aliff, Esquire Office of the Attorney General Tax Section, The Capitol Tallahassee, Florida 32399-1050 Linda Lettera General Counsel Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100 Larry Fuchs Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue The issue is whether Respondent, a Florida-licensed yacht salesman, should be disciplined for violation of Rule 61B- 60.006(2), Florida Administrative Code, as alleged in the Administrative Complaint dated May 10, 2000.
Findings Of Fact At all times pertinent to the issues herein, DBPR, through its Division of Florida Land Sales, Condominiums and Mobile Homes (the Division) was the state agency in Florida responsible for the licensing and discipline of yacht salespersons and brokers in this state and the regulation of the yacht-brokering profession. Respondent, Justo Lamar (Lamar), has been licensed as a yacht salesperson since November 1976. Prior to this action, Lamar has never been the subject of disciplinary action arising out of the practice of his profession. This action was precipitated by a yacht owner, Juan A. Galan (Galan), who unsuccessfully attempted to sell his yacht to a client of Lamar's. In July 1998, Galan listed his yacht, the Caliente, for sale through Ardell Yacht and Ship Brokers (Ardell). The listing resulted in negotiations for the purchase of the Caliente by one Larry Griggs (Griggs), a prospective customer represented by Lamar. At all times relevant to this case, Lamar was acting as a sales agent for Allied Marine and its broker, Dwight Tracy (Tracy). As set forth in more detail below, the negotiations between Galan and Griggs took place over a three-month period from October 1998 through December 1998 with no meeting of the minds. On July 12, 1999, some seven months after negotiations between Griggs and Galan terminated, Galan lodged a complaint with DBPR. Although the complaint was ostensibly directed against salesman Lamar and broker Tracy, each and every allegation in the complaint was directed to the broker's conduct, not Lamar's. Galan, who did not testify at final hearing, alleged in his complaint that "Broker presented a contract representing that deposit had been received/deposited (upon acceptance). In fact, broker never deposited check and we wasted our time and money on survey/sea trial as buyer was not (at that time or any time later) financially capable of buying boat @ $1.75 million." Galan provided some, but by no means all, of the documents which revealed the details of the prolonged and ultimately unsuccessful negotiations between Galan and Griggs. In the narrative portion of his complaint, Galan asserted that he lost money on sea trials and implied, without actually stating, that the Caliente had been taken off the market during the pendency of negotiations with Griggs. For reasons which remain unclear, the Division did not focus its investigation on Tracy, who was the obvious target of Galan's complaint. Instead, it targeted Lamar, who was an obvious add-on target of Galan's ire. The exhibits reveal a complex series of offers and counteroffers and jockeying for negotiating advantage, not just between Galan and Griggs as prospective Seller and Buyer of the Caliente, but also between Lamar and the two brokers, all three of whom stood to profit if the transaction were consummated. Negotiations for the Caliente began in late October 1998. On October 30, 1998, Lamar's client Griggs, through a corporation he controlled, issued a $150,000 check for "Deposit, 72' (sic) Caliente Sportfisherman." This check accompanied a Brokerage Purchase and Sale Agreement dated October 29, 1998, offering to purchase the Caliente for $1,500,000. That same day, Galan's representatives faxed Lamar to advise that Griggs' offer was insufficient. Lamar forthwith provided the check to his broker, Tracy. Negotiations between Galan and Griggs continued in November. Galan chose to by-pass his own Broker and negotiate directly with Lamar over lunch on November 18, 1998. Lamar wrote Galan's demands on the back of a restaurant placemat. The primary sticking point was Galan's insistence on a "bottom line" of $1,665,000 to him, after all commissions and other expenses, if any, were paid. Griggs nevertheless persevered in his effort to buy the Caliente for $1,500,000. On November 24, 2000, Griggs executed another Brokerage Purchase and Sale Agreement in which he offered an entity called Majua, Inc., of which Galan was President, the opportunity to sell the Caliente to Griggs for $1,500,000. Galan signed the November 24 agreement, but added an addendum which materially changed the terms. The addendum unilaterally purported to raise the sales prices to Galan's previously stated "bottom line" of $1,665,000. Thanksgiving passed, and negotiations wore on. On December 4, 1998, Griggs executed a third Brokerage Purchase and Sale Agreement, raising his offer to $1,755,000. The new offer expressly stipulated that Griggs' $150,000 earnest money check could be deposited when and if all parties executed this new proposed agreement. Like the October 29 and November 24 brokerage purchase and sale agreements, the December 4 document never ripened into a contract. The December 4 document was a clear and unembarrassed reminder from Griggs that an earnest money check had been written by Griggs, but was not on deposit, and was not going to be on deposit until such time as Galan had signed off on the contract as written by Griggs. Galan nevertheless permitted a sea trial of the Caliente in furtherance of negotiations, now in their fifth week. Also as part of the negotiating process, Galan permitted some, but not all, of the inspections requested by Griggs. Expenses for the sea trial and inspections were borne entirely by Griggs. By Christmas Eve, relations between the parties had deteriorated to the point where Lamar retrieved the check from the Allied Marine corporate files and returned it to Griggs. At no time did negotiations with Lamar's client Griggs preclude or interfere with efforts by Galan to negotiate with and sell the Caliente to any other prospective purchaser.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that DBPR enter a final order dismissing the Administrative Complaint against Respondent. DONE AND ENTERED this 1st day of March, 2001, in Tallahassee, Leon County, Florida. FLORENCE SNYDER RIVAS 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 1st day of March, 2001.
