The Issue Whether Respondent A & J Pak Ship, Inc., owes Petitioner $551.16 for "gift fruit,” as alleged in Petitioner's Complaint.
Findings Of Fact Based upon the evidence adduced at the final hearing and the record as a whole, the following findings of fact are made: At all times material to the instant case, Petitioner and A & J have been licensed by the Department of Citrus as "citrus fruit dealers." As part of its operations, A & J sells "gift fruit" to retail customers. The "gift fruit" consists of oranges or grapefruits, or both, that are packaged and sent to third parties identified by the customers. In November and December of 1999, A & J took orders for "gift fruit" from retail customers that it contracted with Petitioner (doing business as Fresh Fruit Express) to fill. Under the agreement between A & J and Petitioner (which was not reduced to writing), it was Petitioner's obligation to make sure that the "gift fruit" specified in each order was delivered, in an appropriate package, to the person or business identified in the order as the intended recipient at the particular address indicated in the order. Among the intended recipients identified in the orders that Petitioner agreed to fill were: the Uthe family, the Weckbachs, Mr. and Mrs. T. Martin, Angelo's, Susan Booth, Mr. and Mrs. E. Coello, Mr. and Mrs. Dalbey, Carol Baker and family, the Tarvin family, Shelly and Mark Koontz, Pamela McGuffey, Jerome Melrose, Russell Oberer, Mrs. Josephine Scelfo, Curt and Becky Tarvin, Heidi Wiseman, Kay and Artie Witt, and the William Woodard family, who collectively will be referred to hereinafter as the "Intended Recipients in Question." A & J agreed to pay Petitioner a total of $438.18 to provide "gift fruit" to the Intended Recipients in Question, broken down as follows: $21.70 for the Uthe family order, $21.70 for the Weckbachs order, $22.82 for the Mr. and Mrs. T. Martin order, $27.09 for the Angelo's order, $21.70 for the Susan Booth order, $31.67 for the Mr. and Mrs. E. Coello order, $17.50 for the Mr. and Mrs. Dalbey order, $21.70 for the Carol Baker and family order, $27.09 for the Tarvin family order, $21.70 for the Shelly and Mark Koontz order, $21.70 for the Pamela McGuffey order, $32.44 for the Jerome Melrose order, $21.70 for the Russell Oberer order, $17.60 for the Mrs. Josephine Scelfo order, $21.70 for the Curt and Becky Tarvin order, $17.50 for the Heidi Wiseman order, $17.50 for the Kay and Artie Witt order, and $31.67 for the William Woodard family order. All of these orders, which will be referred to hereinafter as the "Intended Recipients in Question 'gift fruit' orders," were to be delivered, under the agreement between A & J and Petitioner, by Christmas day, 1999. On Sunday night, December 12, 1999, fire destroyed Petitioner's packing house and did considerable damage to Petitioner's offices. With the help of others in the community, Petitioner was able to obtain other space to house its offices and packing house operations. By around noon on Tuesday, December 14, 1999, Petitioner again had telephone service, and by Friday, December 17, 1999, it resumed shipping fruit. Scott Wiley, A & J's President, who had learned of the fire and had been unsuccessful in his previous attempts to contact Petitioner, was finally able to reach Petitioner by telephone on Monday, December 20, 1999. After asking about the status of the Intended Recipients in Question “gift fruit” orders and being told by the employee with whom he was speaking that she was unable to tell him whether or not these orders had been shipped, Mr. Wiley advised the employee that A & J was "cancelling" all "gift fruit" orders that had not been shipped prior to the fire. Mr. Wiley followed up this telephone conversation by sending, that same day, the following facsimile transmission to Petitioner: As per our conversation on 12-20-99, please cancel all orders sent to you from A & J Pak-Ship (Fresh Fruit Express). After trying to contact your company numerous times on December 13, I called the Davie Police Department, who [sic] informed me that you had experienced a major fire. I tried to contact you daily the entire week with no luck. Since I had no way to contact you, it was your responsibility to contact me with information about your business status. Without that contact, I had to assume that you were unable to continue doing business. With Christmas fast approaching and with no contact from anyone on your end, I had no choice but to begin to issue refunds. While I understand the fire was devastating for you, understand that my fruit business is ruined, and will take years to reestablish. Please note that I will not pay for any orders shipped past the date of your fire, 12-13-99, as I have already issued refunds, and I will need proof of delivery for all those orders delivered before the fire. Again, cancel all orders including the remainder of multi-month packages, and honeybell orders. Your lack of communication has put me in a very bad situation with my customers. One short phone call to me could have avoided all this difficulty. Had I not tried your phone on 12-20, I would still have no information from you. Petitioner did not contact Mr. Wiley and tell him about the fire because it did not think that the fire would hamper its ability to fulfill its obligations under its agreement with A & J. By the time Mr. Wiley made telephone contact with Petitioner on Monday, December 20, 1999, Petitioner had already shipped (that is, placed in the possession of a carrier and made arrangements for the delivery of) all of the Intended Recipients in Question "gift fruit" orders (although it had not notified A & J it had done so). Petitioner did not ship any A & J "gift fruit" orders after receiving Mr. Wiley's December 20, 1999, telephone call. On or about February 18, 2000, Petitioner sent A & J an invoice requesting payment for "gift fruit" orders it had shipped for A & J. Among the orders on the invoice for which Petitioner was seeking payment were the Intended Recipients in Question "gift fruit" orders (for which Petitioner was seeking $438.18). The invoice erroneously reflected that all of these orders had been shipped on December 25, 1999. They, in fact, had been shipped on December 18, 1999, or earlier. 1/ Mr. Wiley, acting on behalf of A & J, wrote a check in the amount of $858.26, covering all of the invoiced orders except the Intended Recipients in Question "gift fruit" orders, and sent it to Petitioner, along with the following letter dated February 22, 1999: As per my conversation on 12/20/90 at 11:20 a.m. with Yvette we cancelled all orders shipped after the fire, and also followed up with a certified letter. We had to reorder all of those orders and also refunded a lot of orders as they were not there in time for Xmas as all orders are required to arrive before Xmas. As I said in my certified letter to you it was a[n] unfortunate fire but all you had to do was to inform me what was going on and we could have worked something out. Our fruit business has been ruined by this incident, and quite possibly our entire company. It is unbelievable that more than sixty days after the fire we still have had no correspondence from you whatsoever. We have deducted those orders that were cancelled and arrived well after Xmas and remitted the remainder. A & J has not yet paid Petitioner the $438.18 for the Intended Recipients in Question "gift fruit" orders.
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 Complaint. DONE AND ENTERED this 12th day of September, 2001, 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 12th day of September, 2001.
The Issue The issue is whether Respondent, Golden Gem Growers, Inc. (Golden Gem), owes Petitioner the money alleged in the Amended Complaint based on two written contracts between Petitioner and Golden Gem.
Findings Of Fact During the citrus growing season of 2000-2001, Golden Gem was a citrus fruit dealer defined in Subsection 601.03(8) and was licensed and bonded in accordance with Chapter 601. Golden Gem operated a packinghouse in Alturas, Florida, and regularly purchased citrus fruit for sale in the fresh fruit market. Fidelity & Deposit Company of Maryland (Fidelity) is the surety on the fruit dealer's bond issued to Golden Gem for the 2000-2001 season. On September 14, 2000, Petitioner and Golden Gem entered into Contract No. AS-7199. The contract provided, in relevant part, that Petitioner was to deliver Valencia oranges and other citrus fruit to Golden Gem and that Golden Gem was to handle, pack, ship, sell, and market the fresh fruit provided by Petitioner. On May 9, 2001, Petitioner and Golden Gem entered into Contract No. AS-7208. The contract provided, in relevant part, that Petitioner was to deliver Valencia oranges to Golden Gem and that Golden Gem was to handle, pack, ship, sell, and market the fresh fruit provided by Petitioner. Contracts AS-7199 and AS-7208 require Golden Gem to detail and account for all the Valencia oranges delivered by Petitioner and packed by Golden Gem. Each contract provides for attorney's fees to the prevailing party. Petitioner delivered 115,740 boxes of Valencia oranges to Golden Gem and Golden Gem processed all 115,740 boxes. Golden Gem packed the oranges into 182,650 cartons but accounted to Petitioner for only 159,731 cartons. Golden Gem collected $1,172,715.40 for 159,731 cartons of Petitioner's Valencia oranges. Golden Gem was entitled to deduct expenses for packing, shipping, and handling in the total amount of $630,475.10. Golden Gem owed a net payment to Petitioner of $542,240.30. Golden Gem paid $518,284.82 to Petitioner. The balance owed for the fruit accounted for by Golden Gem is $23,955.48. Golden Gem owes Petitioner an additional $85,757.36 for the proceeds of an additional 22,919 cartons of Valencia oranges for which Golden Gem has not accounted to Petitioner. The amount due is net after adjusting the gross price for handling charges that Golden Gem is entitled to under the terms of the contracts. Golden Gem owes Petitioner a total amount of $109,712.84 for Valencia oranges that Petitioner delivered to Golden Gem in the 2000-2001 shipping season. Petitioner is the prevailing party. Petitioner incurred reasonable attorney's fees of $10,570.00 and costs of $398.24.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order adopting the findings and conclusions in this Recommended Order and requiring Respondents to pay Petitioner the sum of $109,712.84. DONE AND ENTERED this 25th day of October, 2002, in Tallahassee, Leon County, Florida. DANIEL MANRY 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 25th day of October, 2002. COPIES FURNISHED: Kathy Alves Fidelity & Deposit Company of Maryland Post Office Box 87 Baltimore, Maryland 21203 Golden Gem Growers, Inc. Post Office Drawer 9 Umatilla, Florida 32784 Maggie Evans, Esquire 131 Waterman Avenue Mount Dora, Florida 32757 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services 500 Third Street, Northwest Post Office Box 1072 Winter Haven, Florida 33882-1072 Brandon J. Rafool, Esquire Post Office Box 7286 Winter Haven, Florida 33883-7286 Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Brenda D. Hyatt Bureau of License and Bond Department of Agriculture 407 South Calhoun Street Mayo Building, Mail Stop 38 Tallahassee, Florida 32399-0800
The Issue The issue in this case is whether Respondent owes Petitioner money on a citrus contract and, if so, how much.
Findings Of Fact Petitioner owns citrus groves in Wauchula and one is near Zolfo Springs. Due to its proximity to a homesite, the latter grove is called the homeplace grove. Respondent operates a citrus packinghouse and a small retail outlet for citrus. On October 7, 1994, Petitioner and Respondent entered into a contract under which Petitioner agreed to sell to Respondent naval oranges at the price of $6 per box on the tree. Petitioner insisted on the contract and supplied the form. The contract states that the fruit "will be picked by Dec. 20, 1994." This is handwritten in the blank space for quantity of fruit. Elsewhere the contract provides a space for a completion date for picking, but this space is left blank. The contract adds: "However, notwithstanding the foregoing provision, Buyer, at its sole discretion[,] shall determine the dates and times for accomplishing the picking, loading, or hauling of said fruit." The contract notes that there are an estimated 3000 boxes at the Wauchula grove and an estimated 500 boxes at the homeplace grove. The contract states: Buyer shall only be required hereunder to accept delivery of the estimated quantity of fruit set forth herein; however, Buyer may, at its sole option, elect to accept delivery of all fruit grown or being grown at the grove locations described above at the prices specified herein. After signing the contract, the price of navel oranges dropped considerably. Also, Respondent had been relying on a third party to purchase much of the fruit from him, but the third party did not do so. Through December 9, 1994, Respondent took delivery on 1662 boxes of navel oranges. Petitioner picked the first 820 boxes, for which Respondent paid an additional, agreed-upon $2 per box. Respondent picked the remainder of the 1662 boxes, for which Respondent paid $11,612, pursuant to the contract. Petitioner became increasingly concerned with Respondent's slow progress. They agreed to reduce the price to $5 per box for 60 boxes picked on December 13, 1994, and then $4 per box for 360 boxes picked after the December 20 picking date stated in the contract. Pursuant to their new agreement, Respondent paid $300 for the 60 boxes picked on December 13, 1994, and $1440 for the remaining 360 boxes picked between December 27, 1994, and January 11, 1995. Believing that Respondent was obligated to take the entire output from the two groves, which proved to be a total of 4232 boxes, Petitioner's principal concluded that Respondent could not meet its contractual obligations. Without notice to Respondent, Petitioner agreed with Mt. Dora Growers Cooperative to pick the remaining fruit. The growers coop picked 920 boxes on January 11, 1995, 900 boxes on January 12, 1995, and 330 boxes on January 16, 1995. For a total of 2150 boxes, the growers coop paid Petitioner $498.84, or $0.23 per box. Petitioner had better luck with the homeplace oranges. By contract dated January 24, 1995, again without notice to Respondent, Petitioner sold 500 boxes of navel oranges to Keith Watson, Inc. for $2 per box. Respondent took delivery of 1220 boxes in October, 122 boxes in November, 320 boxes through December 9, 380 boxes at reduced prices for the rest of December, and 40 boxes in the first 11 days of January. This declining trend suggests problems. However, this fact alone does not prove an anticipatory breach by Respondent. Nothing in the record establishes Respondent's intent to repudiate the contract. There was still time for Respondent or, more likely, a third party to pick the remaining boxes for which Respondent was liable (1418). The growers coop removed 1820 boxes in two days. Also, the price and urgency of the growers coop sale are undermined by the sale two weeks later of 500 boxes at $2 per box.
Recommendation It is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order dismissing the complaint. ENTERED on July 7, 1995, in Tallahassee, Florida. ROBERT E. MEALE 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 on July 7, 1995. COPIES FURNISHED: W. Ralph Durrance, Jr. P.O. Box 5647 Lakeland, FL 33807-5647 Gary Whidden Whidden Citrus & Packinghouse, Inc. 396 Country Road 630A Frostproof, FL 33843 Florida Farm Bureau General Insurance Company P.O. Box 147030 Gainesville, FL 32614-7030 Hon. Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard Tritschler, General Counsel Department of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Brenda Hyatt, Chief Bureau of Licensing and Bond Department of Agriculture 508 Mayo Building Tallahassee, FL 32399-0800
Findings Of Fact Based on the factual stipulations and the deposition testimony of Mr. Alfred Poucher, I hereby make the following findings of fact: During the 1982-1983 citrus fruit season Congen delivered various varieties of citrus fruit to Blue Prize. Congen is a grower as well as a processor, and the fruit which was delivered to Blue Prize was owned by Congen. During the 1982-1983 citrus season Blue Prize operated a fresh fruit packing house. The citrus fruit referred to in the preceding paragraph was delivered pursuant to an oral contract negotiated between Jack Neitzke on behalf of Congen and Alfred Poucher on behalf of Blue Prize. Neitzke served as general manager of Congen. Poucher served as president of Blue Prize. The contract provided that Congen would deliver citrus fruit to Blue Prize on an account sales basis and that Blue Prize would pay for the fruit in the following manner: For Novas delivered to Blue Prize by Congen and Packed by Blue Prize, Blue Prize agreed to pay an amount at least equal to the net return to Congen from its sale of Novas to A. S. Herlong during the same citrus season. Congen's sales to Herlong netted Congen $8.026 per packed box. For White Grapefruit delivered to Blue Prize by Congen, Blue Prize agreed to pay Congen the average net per box return Congen received during the same citrus season for White Grapefruit Congen sold for processing, inclusive of any applicable picking, roadside, and hauling charges incurred by Congen, for all field boxes delivered. The average return per box was $1.5475. For Temples, Hamlins, and Valencias delivered to Blue Prize by Congen, Blue Prize agreed to pay Congen for all field boxes delivered an amount at least equal to the average amount returned per box on the Citrus Belle processing plant seasonal pool. The Citrus Belle pool returned $.96 per pound of solids for early and mid-season fruit which includes Temples and Hamlins. The average pounds of solids per box for Temples was 6.1052, and the average pounds of solids per box for Hamlins was 5.4. The pool returned $1.10 per pound of solids for Valencias, and the average pounds of solids per box for Valencias was 6.0137. Congen agreed to give Blue Prize credit for all eliminations (fruit which could not be packed by Blue Prize as fresh fruit) which were either returned to Congen or which were sent to a processing plant and for which the proceeds from the processing plant were ultimately paid to Congen. The elimination credit was to be calculated according to the same formulae used by Congen to charge Blue Prize for the fruit. The Valencia eliminations totaled 4,038.63 pounds of solids. The Temple and Hamlin eliminations totaled 1,119.52 pounds of solids. The total elimination credit due Blue Prize was $5,517.23. During the 1982-1983 citrus season Congen delivered 5,920 field boxes of Novas, 920 field boxes of Temples, 1,380 field boxes of white Grapefruit, 120 field boxes of Hamlins, and 1,748 field boxes of Valencias to Blue Prize. 5,589 boxes of Novas, 682 boxes of Temples, 101 boxes of Hanlins, and 1,330 boxes of Valencias were packed. According to these figures and the agreed upon prices to be paid, Blue Prize owed Congen $44,857.31 for Novas which were packed, $5,462.769 for Temples which were delivered, $2,135.55 for white Grapefruit which were delivered, $622.080 for Hamlins which were delivered, and $11,597.753 for Valencias which were delivered. These amounts total $64,675.45. Blue Prize paid Congen $30,000 for the fruit delivered by Congen during the 1982-1983 citrus fruit season, and after giving Blue Prize credit for this amount and also giving Blue Prize credit for the eliminations and harvesting and trucking charges, the amount Blue Prize owes Congen is $25,278,86.
Recommendation Based on all of the foregoing, it is recommended that the Department of Agriculture and Consumer Services enter a Final Order concluding the Blue Prize Packers, Inc., is indebted to Congen Properties, Inc., in the total amount of $25,278.86, and ordering that the full amount of the debt be paid within 30 days from the date of the Final Order. DONE and ORDERED this 15th day of March, 1985, at Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1985. COPIES FURNISHED: H. Richard Bates, Esquire Anderson & Rush 322 East Central Blvd. P.O. Box 2288 Orlando, Florida 32802 M. David Alexander, III, Esquire Post Office Box 2376 Bartow, Florida 33830 Robert A. Chastain, Esquire General Counsel Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 McDonald Insurance Agency, Inc. Post Office Box 940 Winter Haven, Florida 33880 Blue Prize Packers, Inc. 1200 Highway 27, North Winter Haven, Florida 33880 Congen Properties, Inc. Post Office Box 847 Labelle, Florida 33935 Honorable Doyle A. Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32301
The Issue Is Petitioner entitled to all or part of $12,732.61 he claims as a result of eight loads of watermelons brokered by Respondent Sunny Fresh Citrus Export & Sales Company between June 17, 1996 and June 21, 1996?
Findings Of Fact Petitioner is a grower of watermelons and qualifies as a "producer" under Section 604.15(5), Florida Statutes. Respondent Kelly Marinaro d/b/a Sunny Fresh Citrus Export & Sales Company is a broker-shipper of watermelons and qualifies as a "dealer" under Section 604.15(1), Florida Statutes. Respondent American Bankers Insurance Company of Florida is surety for Respondent Sunny Fresh. Petitioner's father had long done business with Kelly Marinaro's father, Frank Marinaro, before each father's retirement. Upon what basis the fathers traded is not clear on the record. Petitioner approached Kelly Marinaro d/b/a Sunny Fresh on three occasions with written proposals, two of which involved some front money being put up by Kelly Marinaro to help Petitioner grow and sell watermelons. One proposal suggested a standard broker's fee to be taken off loads. In each instance, Kelly Marinaro rejected the proposals, explaining that he was not a grower or a buyer but only "brokered" melons other people grew. On or about June 15, 1996, Petitioner telephoned and requested that Kelly Marinaro d/b/a Sunny Fresh assist him in the sale of watermelons he had already grown on a 40 acre field near Wildwood, Florida. Earlier in the 1996 watermelon season, Carr Hussey had taken two loads of melons from Petitioner's field. Hussey had advanced Petitioner $3,000 for harvesting of the melons. Although Petitioner claimed that Mr. Hussey bought his melons in the field, he also conceded that the melons he sold Mr. Hussey did not net that amount when sold to the ultimate purchaser, and therefore, neither Mr. Hussey nor Petitioner made any profit on those two loads. Mr. Hussey did not require reimbursement of the $3,000 he had advanced and proposed that Petitioner and he "work it out" the following season. However, Mr. Hussey took no more loads of Petitioner's melons and "went off to Georgia." This left Petitioner in need of some immediate help in selling his remaining melons. In the June 15, 1996 phone call, Kelly Marinaro d/b/a Sunny Fresh agreed to "broker" Petitioner's remaining watermelons to ultimate buyers in the north and northeast United States whom Marinaro lined up by telephone before shipping the melons. That is, he agreed to use his best efforts to sell the watermelons on Petitioner's behalf to ultimate consumers, charging Petitioner one cent per pound or $1.00 per hundred weight sales charge. The parties' arrangement depended upon the sale of the watermelons and the price actually paid at the ultimate destination, rather than the price the watermelons ideally could be sold for on the day they left Petitioner's field. The parties' agreement by telephone was not reduced to writing, but Findings of Fact 8 and 9 are made contrary to Petitioner's assertion that "they (Sunny Fresh) inspected; they bought the melons as is" for the following reasons. Kelly Marinaro had previously rejected any different risk for his company than selling the melons at the ultimate destination. He produced a written notation he had made contemporaneously with his telephone negotiation with Petitioner. Despite Petitioner's vague testimony to the contrary, it appears that Petitioner had had arrangements with other brokers in the past whereby he knew no profit would be made if the melons did not arrive in good condition, and he should have been aware that the actual sale price received at the point of delivery was the standard of doing business. Petitioner did not dispute that the sales charge was to be deducted by Kelly Marinaro from the ultimate price obtained. This is consistent with a dealer selling on behalf of a grower at the ultimate destination. Petitioner relied on prices given in the standard "Watermelon Reports" as F.O.B. (F.O.B. usually signifies delivery at a certain price at the seller's expense to some location.) I also find that the parties agreed to the price of the melons being based upon the amount they netted at the melons' ultimate destination for the reasons set out in Findings of Fact 13 and 16-21. Frank Marinaro, the father of Kelly Marinaro, is retired and regularly resides outside the State of Florida. He is unable to drive himself due to age and infirmity. He has a hired driver named James Hensley. The senior Mr. Marinaro is not a principal or employee of Sunny Fresh, but he likes to visit his son and his old cronies in Florida's watermelon belt during the growing season, for old times' sake. He was visiting his son in June, 1996. Kelly Marinaro arranged for Frank Marinaro to be driven by Mr. Hensley to Wildwood. Kelly Marinaro then transferred $6,300 of Sunny Fresh's money to a Wildwood bank where it was withdrawn in cash by Frank Marinaro. Frank Marinaro, driven by Mr. Hensley, then delivered the cash in three incremental payments authorized by Kelly Marinaro to Petitioner to pre-pay Petitioner's harvesting costs. The senior Mr. Marinaro also helped with the incidental duties of meeting trucks at the Wildwood weighing station or local truck stops and directing them to Petitioner's farm. He was not paid by Sunny Fresh or by Petitioner for these services. Petitioner testified that Frank Marinaro was present in his field for the loading of several truckloads of melons on different days, that he cut open some melons in the field and pronounced them "good" after sampling them, and that Frank Marinaro asked Petitioner to pay Mr. Hensley $50.00 for helping around the field and with physically loading some melons while they were there. This testimony is not evidence of Frank Marinaro's "apparent agency" to engage in the more complicated and technical process of "grading" watermelons on behalf of Sunny Fresh. These activities of Frank Marinaro did not alter Petitioner's agreement with Kelly Marinaro on behalf of Sunny Fresh so that Frank Marinaro's and James Hensley's actions constituted a direct sale to Sunny Fresh of all the melons loaded at Petitioner's farm (the point of embarkation) because both Petitioner and Kelly Marinaro clearly testified that the $6,300 cash harvesting costs constituted advances against receipts of the sale of watermelons when sold by Sunny Fresh at the ultimate destination. Further, the request that Petitioner pay Mr. Hensley for helping load the watermelons is in the nature of Petitioner paying a casual laborer for harvesting rather than it is evidence that any Sunny Fresh authority resided in Mr. Hensley. Between June 17, 1996 and June 21, 1996, Petitioner loaded eight truckloads of watermelons onto trucks for sale to various customers in the north and northeast United States. Of the eight truckloads loaded, the breakdown of actual costs and expenses worked out as follows: ACCOUNTING OF R. BASS LOADS Sunny Fresh #93775 Sold to: Frankie Boy Produce Frankie Boys #96095 New York, NY Weight shipped: 41,250 Unloaded weight: 40,400 Initial price at shipment to grower for good watermelon: 5 - ½ cents/lb Net return $1,212.00 Sales charge: (404.00) Watermelon promotion board tax: (8.08) Return to R. Bass due to bad melons: 2 cents/lb $ 799.92 Sunny Fresh #93791 Sold to: Fruitco Corp. Fruitco #1880 Bronx, NY Weight shipped: 40.800 Unloaded weight: 39,180 Initial price at shipment to grower for good watermelon: 5 - ½ cents/lb Net return $ 974.71 Sales charge: (391.81) Watermelon promotion board tax: (7.84) Return to R. Bass due to bad melons: 2.49 cents/lb $ 575.06 Sunny Fresh #81312 Crosset Co. #67012 Sold to: Crosset Co. Cincinnati, OH Weight shipped: 45,860 Unloaded weight: Initial price at shipment to 41,762 grower for good watermelon: 5 cents/lb Gross return $4,134.42 Shipping charges (freight): (1,712.63) Net return: 2,421.79 Sales charge: (438.48) Watermelon promotion board tax: Return to R. Bass due to bad melons: 4.75 cents/lb (8.35) $1,974.96 Sunny Fresh #93804 Sold to: Tom Lange Co. Lange #3344 St. Louis, MO Weight shipped: 44,550 Unloaded weight: Initial price at shipment to grower for good watermelon: 39,760 5 cents/lb Gross return $2,584.40 Shipping charges (freight): (1,455.96) Net return: 1,128.44 Sales charge: (445.50) Watermelon promotion board tax: Return to R. Bass due to bad melons: 1.72 cents/lb (7.95) $ 674.99 Sunny Fresh #93802 M.A. Fruit #N/G Sold to: M.A. Fruit Trading Corp New York, NY Weight shipped: 40,130 Unloaded weight: 36,720 Initial price at shipment to grower for good watermelon: 5 cents/lb Gross return $3,797.40 Shipping charges (freight): (1,758.55) Net return: 2,038.85 Sales charge: (401.30) Watermelon promotion board tax: (7.34) Return to R. Bass due to bad melons: 4.46 cents/lb $1,630.21 Sunny Fresh #93817 Sold to: C. H. Robinson Company C.H. Robinson #379035 Cleveland, OH Weight shipped: 43,300 Unloaded weight: Initial price at shipment to 42,147 grower for good watermelon: 5 cents/lb Gross return $4,440.21 Shipping charges (freight): (1,930.27) Net return: 2,509.94 Sales charge: (411.02) Watermelon promotion board tax: Return to R. Bass due to bad melons: 5 cents/lb (8.43) $2,090.49 Sunny Fresh #93819 Sold to: Isenberg #N/G Joseph Isenberg, Inc. Buffalo, NY Weight shipped: Unloaded weight: Initial price at shipment to grower for good watermelon: 45,100 5 cents/lb Gross return $ 500.00 Shipping charges (freight): (1,877.98) Net return: (1,377.98) Sales charge: Return to R. Bass due to bad melons: 4.06 cents/lb (451.00) $(1,828.98) Sunny Fresh #81334 Sold to: Palazzola . Palazzola #N/G Memphis, TN Weight shipped: 47,700 Unloaded weight: Initial price at shipment to grower for good watermelon: 5 cents/lb Gross return $ 0.00 Shipping charges (freight): (1,553.30) Net return: (1,553.30) Inspection: (65.00) Bins: (30.00) Sales charge: Return to R. Bass due to bad melons: 4.46 cents/lb (477.00) $(2,125.90) Kelly Marinaro testified credibly that the resultant low prices paid by the ultimate purchasers was the result of the poor quality of Petitioner's melons upon their arrival at their ultimate destination. Exhibits admitted in evidence without objection verified the poor condition of five of the loads. In those instances in which there were United States Department of Agriculture Inspection Reports, I accept those reports as clearly dispositive of the issue of the melons' poor condition upon arrival. Petitioner's more vague testimony that he doubted any load could ever pass such an inspection as "A-1," does not refute them. Kelly Marinaro testified credibly and without contradiction that each time he was informed by a potential buyer that a load of melons was in poor condition upon arrival at their destination, he faxed, mailed, or telephoned Petitioner with the "trouble report" information as soon as feasible and tried to involve him in the decision as to what should be done. This is consistent with a sale at the ultimate destination. Kelly Marinaro further testified credibly and without contradiction that for two loads he recommended to Petitioner that they not obtain a federal inspection because it was not cost efficient. He made this recommendation for one of these two loads because it reached its destination on a Friday and the fruit would have to stand and deteriorate further in quality and price over the weekend if they waited on an inspection. Petitioner agreed to waive at least one inspection. Petitioner and Kelly Marinaro did not agree as to the number of times they spoke on the phone about "trouble reports", but Petitioner acknowledged at least four such phone conversations. Petitioner and Kelly Marinaro did agree that in each phone call, Petitioner told Kelly Marinaro to "do the best you can," and stated he did not want to pay any freight. This type of conversation is not indicative of a relationship in which the melons have been purchased outright at the site of embarkation, Petitioner's field. I have considered the testimony of Petitioner and of Kelly Marinaro, respectively, on the issue of whether or not Petitioner was required to pay the freight on the watermelons from their first oral contract by telephone call on June 15, 1996. Without attributing any ill-motive to either party- witness, I find they did not initially have a meeting of the minds as to how the cost of freight was to be handled, and that Petitioner assumed at some point he would not have to pay freight. However, it is clear from the evidence as a whole that Kelly Marinaro did everything possible to avoid freight charges to Petitioner and would not have meticulously informed and received oral waivers of inspections from Petitioner if there had been any clear agreement either that Sunny Fresh was purchasing the watermelons "as is" in Petitioner's field or that Sunny Fresh Produce was paying all the freight. Indeed, Petitioner was not charged for freight when Kelly Marinaro d/b/a Sunny Fresh provided the trucks. It is also clear from the evidence as a whole that Petitioner was informed on or about the date that each load arrived at its ultimate destination that he was going to be charged for at least some freight charges out of the ultimate price received for the melons. Bill Ward has acted as a broker of watermelons for many years. I accept his testimony that there can be varying grades of watermelon within one field or one harvest. The several "Watermelon Reports" admitted without objection show that the demand for Florida watermelons was light or fairly light in June 1996, that the price was down or to be established, and that all quotations were for stock of generally good quality and condition. There had been a lot of rain in Florida during the 1996 watermelon season and rain unfavorably affects the quality of melons. Melons from further north where there had been less rain were able to be shipped to northern and northeastern buyers in less time than were Florida melons. Northern and northeastern buyers did not have to select from inferior melons that year. Petitioner's testimony and supporting documentation that he sold to other purchasers two truckloads of good quality, top price melons from the same field between June 17 and June 21, 1996 does not overcome all the evidence that the majority of melons he sold through Sunny Fresh were of the poor quality reported by the ultimate buyers and federal inspectors or that the melons sold to Sunny Fresh deteriorated due to slow transport.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Agriculture enter a final order dismissing Petitioner's complaint.RECOMMENDED this 26th day of March, 1997, at Tallahassee, Florida. ELLA JANE P. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax FILING (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 26th day of March, 1997. COPIES FURNISHED: Ronald Bass 32510 Sumter Line Road Leesburg, FL 34748 Arthur C. Fulmer, Esquire Post Office Box 2958 Lakeland, FL 33806 Mr. Robert Waldman American Bankers Insurance Company Claims Management Services 11222 Quail Roost Drive Miami, FL 33157-6596 Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard Tritschler General Counsel The Capitol, PL-10 Tallahassee, FL 32399-0810 Brenda Hyatt, Chief Department of Agriculture and Consumer Services 508 Mayo Building Tallahassee, FL 32399-0800
The Issue The issue in this case is whether Respondent H & R Packing & Sales Company, LLC, must pay Petitioner the full contract price for citrus fruit that said Respondent accepted upon tender despite knowing that the goods were nonconforming.
Findings Of Fact Petitioner Betty H. Shinn, d/b/a Shinn Groves ("Shinn"), is in the business of growing citrus fruit and hence is a "producer" within the regulatory jurisdiction of the Department of Agriculture and Consumer Services ("Department"). Respondent H & R Packing & Sales Company, LLC ("HRPS"), is a "citrus fruit dealer" operating within the Department's jurisdiction. On November 3, 2004, Shinn and HRPS entered into a contract (the "Contract") whereby HRPS agreed to harvest "fresh fruit quality" navel oranges from a particular section of Shinn's grove, which oranges Shinn agreed to sell to HRPS for the price of $8.00 per field box. The Contract provided, in pertinent part, as follows: The SELLER [that is, Shinn] shall take all reasonable and normal precautions to maintain fresh fruit quality during the life of this agreement. Failure to exercise close control to mites and other pests shall constitute a violation of this agreement. Further, the BUYER [i.e. HRPS] may at his option cancel this contract or renegotiate the price to be paid and the conditions of sale. In addition, the parties agreed that HRPS would pick the fruit no later than January 1, 2005, and pay for the oranges "within 45 days of the week of the harvest." An agent of HRPS's named Frederick Gaines inspected the crop identified to the Contract on a couple of occasions in November and December 2004. At some point he notified Shinn that the oranges were being damaged by rust mites. Shinn arranged to have the crop sprayed with Thiolux (a miticide), which was done around December 6, 2004. HRPS harvested the crop on January 3, 2005. (HRPS's performance in this regard was nonconforming, because the oranges were to be picked no later than January 1, 2005. By allowing HRPS to proceed after the deadline, however, Shinn waived HRPS's untimely performance.) At or about the time of the harvest, Mr. Gaines orally notified Charles Shinn (who is the son——and an agent——of Petitioner Betty Shinn) that the oranges had been damaged by rust mites and consequently were not fresh fruit quality. Mr. Shinn suggested that the oranges be "run through" the packing house (where the fruit would be graded on its quality), after which the parties could renegotiate the price, if necessary, to adjust for any material deficiencies in the quality of the crop. This proposal was evidently acceptable to HRPS, for it proceeded to harvest the oranges with knowledge that the crop was (or might not be) fresh fruit quality. HRPS picked 790 field boxes of oranges from Shinn's grove pursuant to the Contract. When these oranges were graded at the packing house, an unusually small percentage (approximately 34%) could be "packed out," that is, packaged and delivered for sale as fresh fruit.i The rest "graded out," i.e. failed to meet the standards for sale as fresh fruit, and were sold, at a loss, to juice processors. HRPS was obligated under the Contract to pay Shinn for the oranges on or before February 22, 2005, but HRPS let the deadline pass without either paying for the oranges or notifying Shinn of a breach with respect thereto. By letter dated March 17, 2005, Shinn demanded that HRPS pay the full contact price of $6,320 for the fruit harvested under the Contract.ii HRPS responded to Shinn's demand-letter via correspondence dated March 24, 2005. In this letter, HRPS acknowledged the Contract's existence but disclaimed the duty to pay in full due to the fruit's generally poor quality. HRPS expressed some willingness to resolve the matter amicably but offered no payment. Shinn was not satisfied and initiated this administrative proceeding. Ultimate Factual Determinations HRPS harvested and hauled away the oranges identified to the Contract. This performance constituted acceptance of the goods, and such acceptance was made with knowledge of a (possible) nonconformity, namely that the oranges were not fresh fruit quality due to rust mite damage. The apparent nonconformity was made manifest to HRPS shortly after the harvest, when an unusually small percentage of the pertinent crop was "packed out." HRPS failed, however, to notify Shinn of the breach within a reasonable time after confirming the nonconformity. Consequently, HRPS is barred from any remedy for breach. HRPS's failure to pay for the oranges at the Contract rate constituted a breach of the Contract entitling Shinn to recover the full price, together with pre-award interest. Accordingly, HRPS is obligated to pay Shinn the principal amount of $6,320.00, together with statutory interest of $378.20 (for the period 02/22/05 - 12/31/05). Interest will continue to accrue on the outstanding balance of $6,320.00 in the amount of $1.56 per day from January 1, 2006, until the date of the final order.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order awarding Shinn the sum of $6,320.00, together with pre-award interest in the amount of $378.20 (through December 31, 2005), plus additional interest from January 1 2006, until the date of the final order, which will accrue in the amount of $1.56 per day. DONE AND ENTERED this 13th day of December, 2005, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM 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 13th day of December, 2005.
The Issue Does the Florida Department of Agriculture and Consumer Services (Department)'s proposed rule 5E-1.023 constitute an invalid exercise of delegated legislative authority?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings are made: On February 2, 1996, the Department published in the Florida Administrative Weekly, Volume 22, Number 5, the text of proposed rule to be known as Rule 5ER-1.023, which the Department indicated that it intended to adopt. The proposed rule reads: 5E-1.023 Fertilizer. Procedures for Landowners and Leaseholders to Submit the Notice of Intent to Comply with Nitrogen Best Management Practices (BMPs). Definitions "Interim Measures" means primarily horticultural practices consistent with the fertilizer recommendations published by the University of Florida or the Florida Agricultural and Mechanical University, or modified by the Department, to reflect public input. "Notice of Intent to Comply with BMPs" means a notice of intent to comply with nitrogen Interim Measures and/or BMPs, or to no longer apply fertilizers or other soil-applied nutritional materials containing nitrogen. Notice of Intent to Comply with Nitrogen BMPs and all document requests made of the department must be submitted to the Environmental Administrator, Florida Department of Agriculture and Consumer Services, Division of Agricultural Environmental Services, 3125 Conner Blvd., Tallahassee, Florida 32399-1650. Proof of providing Notice of Intent to the Department must be retained by the submitter. The Notice must contain the following information related to the implementation of the BMPs and Interim Measures: the name of the BMP or Interim Measures to be followed, the date of implementation, the name or other identification of the parcel or land unit upon which the practices will be implemented, the county(s) where said parcels are located, and the signature of the landowner(s) or leaseholder(s). The Department will consider requests to: (a) adopt Best Management Practices and Interim Measures as defined in this rule, other than those incorporated herein, in accordance with Section 576.045(3)(b), Florida Statutes; and, (b) modify adopted Best Management Practice and Interim Measures as defined in this rule based upon submission of adequate data in accordance with Section 576.045(3)(b), Florida Statutes. Approved Nitrogen BMPs Shadehouse Grown Leatherleaf Ferns. The BMP for Shadehouse grown leatherleaf ferns found in the University of Florida, Cooperative Extension Service, Institute of Food and Agricultural Sciences Bulletin 300 (published February 1995), Irrigation and Nutrient Management Practices for Commercial Leatherleaf Fern Production in Florida" is hereby adopted. Copies may be obtained from Central Florida Research and Education Center, Institute of Food and Agricultural Sciences, University of Florida, 2807 Binion Road, Apoka, Florida 32707. The associated record keeping requirements specified in "Record- keeping For The Nitrogen Best Management Practices For Shadehouse Grown Leatherleaf Ferns" dated 12-01-95 is also adopted. Copies are available from the Department of Agriculture and Consumer Services, Division of Agricultural Environmental Services, 3125 Conner Blvd., Doyle Conner Building, Tallahassee, Florida 32399-1650. (a) Approved Nitrogen Interim Measures. Citrus. [The approved "Nitrogen Interim Measure For Florida Citrus", dated 12-01-95], and the associated recordkeeping requirements dated 12-01-95 [are hereby adopted and incorporated by reference into this rule]. Copies may be obtained from the Department of Agriculture and Consumer Services, Division of Agricultural Environ- mental Services, 3125 Conner Blvd. Doyle Conner Building, Tallahassee, Florida 32399-1650. The foregoing documents are incorporated by reference into this rule. [Emphasis added] Specific Authority 576.045 FS. Law Implemented 576.045. History - New Section 576.011(2), Florida Statutes, provides: (2) "Best-management practices" means practices or combinations of practices determined by research or field testing in representative sites to be the most effective and practicable methods of fertilization designed to meet nitrate groundwater quality standards, including economic and technological considerations. Because of the lack of research or field testing with citrus to determine the most practicable methods of fertilization of citrus in conjunction with nitrate groundwater quality standards, the Department is proposing the Nitrogen Interim Measure for Florida Citrus rather than Best-management practices for citrus. Interim Measures is not defined by statute. However, the Department has defined Interim Measure in proposed rule 5E-1.023. For 1, 2, and 3 year old citrus groves, the Approved Nitrogen Interim Measure For Florida Citrus (Nitrogen Interim Measure), dated 12-01-95, provides for maximum nitrogen (N) rates per calendar year to be determined by set amounts of N per tree. The range of annual N rates for groves four years old or older is set out in pounds per acre. For oranges the range is 120 - 240 pounds of N per acre per year. For grapefruit the range is 120 - 210 pounds N per acre per year. On February 21, 1996, Petitioners filed a Petition challenging the Department's proposed rule 5E-1.023 on the basis that the proposed rule was an invalid exercise of delegated legislative authority. More specifically, the Petitioners challenges the Nitrogen Interim Measure dated 12-01-95, and more particularly, that portion of the Nitrogen Interim Measure setting the range of annual N rates for grapefruit and oranges in groves four years old or older which Petitioners contend is arbitrary and capricious. GBS Groves, Inc. is a Florida corporation which owns a grapefruit grove in Polk County, Florida and such corporation is solely owned by James T. Griffiths and Anita N. Griffiths. Withers and Harshman, Inc. is a Florida corporation owning grapefruit groves in Polk County and Highlands County, Florida with its principal place of business located in Sebring, Highlands County, Florida. Petitioners would be substantially affected by the adoption of this proposed rule and thereby have standing to bring this action. The parties have stipulated that: on November 5, 1993, the Department gave notice in the Florida Administrative Weekly of its intent to adopt proposed rule 5E-1.023; and proposed rule 5E-1.023 implements Section 576.045(6), Florida Statutes, by: establishing procedures for landowners and leaseholders to submit notice of intent to comply with nitrogen best management practices (BMPs) and interim measures; (2) adopting a specific BMP for shadehouse grown fern; and (3) adopting an interim measure for citrus. Petitioners concede that their challenge to the proposed rule is based solely on Section 120.52(8)(e), Florida Statutes, in that the proposed rule is arbitrary and capricious. Prior to, and independent of, the Department's work on proposed rule 5E-1.023, the faculty of the University of Florida, Institute of Food and Agricultural Sciences (IFAS), had begun work on revising IFAS's citrus fertilization guidelines. This revision eventually became SP 169, Nutrition of Florida Citrus Trees (SP 169), and supersedes the Agricultural Experiment Station Bulletin 536 series A through D, Recommended Fertilizers and Nutritional Sprays for Citrus (Bulletin 536), which had provided guidelines for Florida citrus fertilization since 1954. SP 169 is the official position of IFAS on the subject of nutritional requirements for citrus in Florida. Sometime around August 1994, Department met with and requested IFAS to provide the Department with a interim measure for citrus fertilization which could be adopted by the Department. The Department reviewed the first draft of the proposed interim measure for citrus fertilization prepared by IFAS and concluded that it would not be acceptable to the citrus industry because it was too detailed. Thereafter, the first draft was revised by IFAS and now appears as: 6. Fertilizer Guidelines, SP 169, pages 21 through 25. While IFAS's interim measure contains many recommendations, the recommendation most relevant to this proceeding is the recommended range of the annual rate of N for groves four years old or older. The recommended rates are expressed in pounds of N per acre per year. For oranges a range of 120 - 200 pounds of N per acre per year is recommended. For grapefruit a range of 120 - 160 pounds of N per acre per year is recommended. For other varieties a range of 120 - 200 pounds per acre per year is recommended. SP 169 also provides the criteria, including, but not limited to, soil load, varieties, leaf and soil analysis, fertilizer placement and application frequency and timing for determining a rate within the recommended range and to exceed the upper level of the range. Using these criteria a range of 120 - 180 pounds of N per acre per year for grapefruit can be supported and range of 120 - 240 pounds of N per acre per year for oranges can be supported. SP 169 also recommends that all available sources of N, including, but not limited to, organic sources and foliar applications, be included in the calculation of the annual N rate. Also recommended is that while the annual N rate may be exceeded in any given calendar year, the average annual rate over three years should not exceed the guidelines. Subsequent to receiving the proposed citrus interim measure from IFAS, the Department held a series of meetings and public workshops wherein growers and representatives from the fertilizer industry and grower organizations were given an opportunity to be heard and to make suggestions. In an effort to make the interim measure more flexible so as to gain industry acceptance, the Department compromised on several of the citrus fertilization guidelines set out in SP 169. The comprises were: (a) not to include any N from foliar application in the calculation of the annual N rate; (b) to include only fifty percent of the total N content of the source from all organic sources in the calculation of the annual rate of N; and (c) increase the recommended range of the annual rate of N for grapefruit and oranges to 120 - 210 pounds per acre and 120 - 240 pounds per acre, respectively, without considering the criteria set out in SP 169 for determining a rate within the recommended range or to exceed the upper limits of the range. In deciding not to include any N from foliar application in the calculation of the annual rate of N, the Department considered: (a) the fact that N from foliar application would be quickly absorbed through the leaf and reduce the likelihood of any N leaching into the ground water; (b) that the cost of foliar application of N would prevent the indiscriminate use of foliar application of N; and (c) that foliar application would give the grower wishing to obtain maximum yield a source of N not included in the calculation of the annual rate. However, the Department did not consider the additional cost of the N to the grower who heretofore had used sources of N other than foliar application for obtaining maximum yield. In making the decision to include only 50 percent of the content of the source of N from all organic sources the Department took into consideration the public policy of encouraging the use of municipal sludge and other similar products, and the fact that on an average only fifty percent of the content of the source of N would be an available source of N. Although IFAS disagreed with the Department on not counting all the N in organic sources, IFAS did agree that since it was not known how much of the N in organic sources was immediately available, the figure of 50 percent of the content of the source was as good a figure as any. Increasing the range of the annual rate of N per acre from 120 - 160 pounds to 120 - 180 pounds for grapefruit and from 120 - 200 pounds to 120 - 240 pounds for oranges came about as a result of a meeting on April 20, 1995, at Florida Citrus Mutual. Apparently, the justification for the increase was due to the recommendations contained in the Criteria for selecting a rate within the recommended rate set out in SP 169, Fertilizer Guidelines which provides: Crop load. Nitrogen requirements vary as crop load changes. Replacement of N lost by crop removal is the largest requirement for N. Groves producing low to average crops do no require high fertilizer rates. Higher rates may be considered for very productive groves. Rates for oranges up to 240 lb per acre may be considered for groves producing over 700 boxes per acre. However, rates above 200 lb per acre should be used only if there is a demonstrated need based on leaf analysis, and if optimal fertilizer placement, timing, and irrigation scheduling are employed. For grapefruit producing over 800 boxes per acre, 180 lb N may be considered. The increase in the range of the annual rate per acre of N from 120 - 180 pounds to 120 - 210 pounds for grapefruit came about as result of Dr. Koo's concern over a potassium deficiency. Most fertilizers are formulated on a 1 to 1 ratio of N and potassium, and the application of only 180 pounds of potassium could result in a potassium deficiency. The Department did not consider if citrus trees could absorb N and potassium in a ratio other than a 1 to 1 which would have allowed the proper application of potassium without increasing the annual N rate. The following language appears in SP 169, Fertilizer Guidelines, 6.2 Bearing Trees: Rates of 0.4 lb N per box for oranges land lb N per box for grapefruit were recommended previously. With good manage- ment, oranges frequently exceed 600 boxes per acre and grapefruit production is commonly above 800 boxes per acre. Use of lb N per box in groves producing over 500 boxes per acre results in application of over 200 lb N per acre. The advantage of rates above 200 lb has not been demonstrated. Economic benefits are quest- ionable, and the potential for groundwater contamination increases. A significant yield response to rates above 200 lb N per acre appears unlikely, and other management practices should be first evaluated if grove performance at 200 lb N per acre is not satisfactory. Experts, both growers and researchers, testifying for Petitioners and previous IFAS Research Bulletins on citrus fertilization, disagree with the statements: (a) that the advantage of annual rates of N above 200 pounds per acre has not been demonstrated; (b) that economic benefits of annual rates of N above 200 pounds per acre are questionable; and (c) that a significant yield response to annual rates of N above 200 pounds per acre appears unlikely. This language also appears to be in conflict the language quoted above dealing with the criteria, "Crop load". Petitioners' experts and previous IFAS Research Bulletins disagree with the conclusion that there is a basis for a higher annual rate of N per acre for oranges over grapefruit. On November 14, 1995, the Department presented the citrus Interim Measure which recommended a range of 120 - 210 pounds N per acre annual rate for grapefruit and a range of 120 - 240 pounds N per acre annual rate for oranges to the Fertilizer Technical Council. After hearing testimony on the merits of the citrus Interim Measure, the Fertilizer Technical Council voted to recommend changing the citrus Interim Measure to provide that oranges and grapefruit be treated the same with a range of annual N rate per acre of 120 - 240 pounds for both. The Commissioner of Agriculture did not accept the recommendation from the Fertilizer Technical Council. In addition to the Fertilizer Technical Council, a large segment of the citrus industry, including, but not limited to, growers and grower organizations, expressed their approval of using the same range of annual rates of 120 - 240 pounds of N per acre for both oranges and grapefruit. However, the Department had already compromised by increasing the maximum annual rate of nitrogen per acre for grapefruit by 30 pounds above the maximum annual rate suggested by IFAS in SP 169, while leaving the maximum annual rate of nitrogen per acre for oranges at 240 pounds, the maximum rate suggested by IFAS in SP 169.
The Issue The issue in DOAH Case No. 02-3648RE is whether Emergency Rules 20ER02-01, 20ER02-02, and 20ER02-03 constitute an invalid exercise of delegated legislative authority. The issue in DOAH Case No. 02-4607RP is whether Proposed Rules 20-15.001, 20- 15.002, and 20-15.003, Florida Administrative Code, constitute an invalid exercise of delegated legislative authority.
Findings Of Fact Based on the stipulated facts, and the entire record in this proceeding, the following findings of fact are made: The Florida Citrus Commission was established in 1935 to organize and promote the growing and sale of various citrus products, fresh and processed, in the State of Florida. The purpose of the Citrus Commission is today reflected in Section 601.02, Florida Statutes. The powers of the Florida Citrus Commission ("the Commission") and the Department, are set forth in full in Section 601.10, Florida Statutes. The powers of the Department include the power to tax and raise other revenue to achieve the purposes of the Department. In particular, Section 601.10(1) and (2), Florida Statutes, state: The Department of Citrus shall have and shall exercise such general and specific powers as are delegated to it by this chapter and other statutes of the state, which powers shall include, but shall not be confined to, the following: To adopt and, from time to time, alter, rescind, modify, or amend all proper and necessary rules, regulations, and orders for the exercise of its powers and the performance of its duties under this chapter and other statutes of the state, which rules and regulations shall have the force and effect of law when not inconsistent therewith. To act as the general supervisory authority over the administration and enforcement of this chapter and to exercise such other powers and perform such other duties as may be imposed upon it by other laws of the state. The Department is authorized to set standards by Section 601.11, Florida Statutes, as follows: The Department of Citrus shall have full and plenary power to, and may, establish state grades and minimum maturity and quality standards not inconsistent with existing laws for citrus fruits and food products thereof containing 20 percent or more citrus or citrus juice, whether canned or concentrated, or otherwise processed, including standards for frozen concentrate for manufacturing purposes, and for containers therefor, and shall prescribe rules or regulations governing the marking, branding, labeling, tagging, or stamping of citrus fruit, or products thereof whether canned or concentrated, or otherwise processed, and upon containers therefor for the purpose of showing the name and address of the person marketing such citrus fruit or products thereof whether canned or concentrated or otherwise processed; the grade, quality, variety, type, or size of citrus fruit, the grade, quality, variety, type, and amount of the products thereof whether canned or concentrated or otherwise processed, and the quality, type, size, dimensions, and shape of containers therefor, and to regulate or prohibit the use of containers which have been previously used for the sale, transportation, or shipment of citrus fruit or the products thereof whether canned or concentrated or otherwise processed, or any other commodity; provided, however, that the use of secondhand containers for sale and delivery of citrus fruit for retail consumption within the state shall not be prohibited; provided, however, that no standard, regulation, rule, or order under this section which is repugnant to any requirement made mandatory under federal law or regulations shall apply to citrus fruit, or the products thereof, whether canned or concentrated or otherwise processed, or to containers therefor, which are being shipped from this state in interstate commerce. All citrus fruit and the products thereof whether canned or concentrated or otherwise processed sold, or offered for sale, or offered for shipment within or without the state shall be graded and marked as required by this section and the regulations, rules, and orders adopted and made under authority of this section, which regulations, rules, and orders shall, when not inconsistent with state or federal law, have the force and effect of law. The Department is authorized to conduct citrus research by Section 601.13, Florida Statutes. To help pay for these duties of the Department, the Legislature first enacted the "box tax" in 1949. The box tax is now codified as Section 601.15(3), Florida Statutes. Section 601.15(3)(a), Florida Statutes, provides in relevant part: There is hereby levied and imposed upon each standard-packed box of citrus fruit grown and placed into the primary channel of trade in this state an excise tax at annual rates for each citrus season as determined from the tables in this paragraph and based upon the previous season's actual statewide production as reported in the United States Department of Agriculture Citrus Crop Production Forecast as of June 1. Section 601.15(3)(a), Florida Statutes, goes on to set forth specific rates for fresh grapefruit, processed grapefruit, fresh oranges, processed oranges, and fresh or processed tangerines and citrus hybrids. Section 601.15(1), Florida Statutes, sets forth the Department's authority to administer the box tax, as follows: The administration of this section shall be vested in the Department of Citrus, which shall prescribe suitable and reasonable rules and regulations for the enforcement hereof, and the Department of Citrus shall administer the taxes levied and imposed hereby. All funds collected under this section and the interest accrued on such funds are consideration for a social contract between the state and the citrus growers of the state whereby the state must hold such funds in trust and inviolate and use them only for the purposes prescribed in this chapter. The Department of Citrus shall have power to cause its duly authorized agent or representative to enter upon the premises of any handler of citrus fruits and to examine or cause to be examined any books, papers, records, or memoranda bearing on the amount of taxes payable and to secure other information directly or indirectly concerned in the enforcement hereof. Any person who is required to pay the taxes levied and imposed and who by any practice or evasion makes it difficult to enforce the provisions hereof by inspection, or any person who, after demand by the Department of Citrus or any agent or representative designated by it for that purpose, refuses to allow full inspection of the premises or any part thereof or any books, records, documents, or other instruments in any manner relating to the liability of the taxpayer for the tax imposed or hinders or in anywise delays or prevents such inspection, is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. The box tax was challenged in 1936 and the Florida Supreme Court issued an opinion in 1937 upholding the validity of the box tax. C.V. Floyd Fruit Company v. Florida Citrus Commission, 128 Fla. 565, 175 So. 248 (1937). In 1970, the Legislature enacted the "equalization tax," codified as Section 601.155, Florida Statutes. The statute mirrored Section 601.15, Florida Statutes, but added certain processors who were mixing foreign citrus products with Florida products. The purpose of the equalization tax was to have all Florida processors of citrus products help pay for the costs of the Department, rather than have the burden fall entirely on the Florida growers subject to the box tax. Section 601.155, Florida Statutes, provides, in relevant part: The first person who exercises in this state the privilege of processing, reprocessing, blending, or mixing processed orange products or processed grapefruit products or the privilege of packaging or repackaging processed orange products or processed grapefruit products into retail or institutional size containers or, except as provided in subsection (9) or except if a tax is levied and collected on the exercise of one of the foregoing privileges, the first person having title to or possession of any processed orange product or any processed grapefruit product who exercises the privilege in this state of storing such product or removing any portion of such product from the original container in which it arrived in this state for purposes other than official inspection or direct consumption by the consumer and not for resale shall be assessed and shall pay an excise tax upon the exercise of such privilege at the rate described in subsection (2). Upon the exercise of any privilege described in subsection (1), the excise tax levied by this section shall be at the same rate per box of oranges or grapefruit utilized in the initial production of the processed citrus products so handled as that imposed, at the time of exercise of the taxable privilege, by s. 601.15 per box of oranges. In order to administer the tax, the Legislature provided the following relevant provisions in Section 601.155, Florida Statutes: Every person liable for the excise tax imposed by this section shall keep a complete and accurate record of the receipt, storage, handling, exercise of any taxable privilege under this section, and shipment of all products subject to the tax imposed by this section. Such record shall be preserved for a period of 1 year and shall be offered for inspection upon oral or written request by the Department of Citrus or its duly authorized agent. Every person liable for the excise tax imposed by this section shall, at such times and in such manner as the Department of Citrus may by rule require, file with the Department of Citrus a return, certified as true and correct, on forms to be prescribed and furnished by the Department of Citrus, stating, in addition to other information reasonably required by the Department of Citrus, the number of units of processed orange or grapefruit products subject to this section upon which any taxable privilege under this section was exercised during the period of time covered by the return. Full payment of excise taxes due for the period reported shall accompany each return. All taxes levied and imposed by this section shall be due and payable within 61 days after the first of the taxable privileges is exercised in this state. Periodic payment of the excise taxes imposed by this section by the person first exercising the taxable privileges and liable for such payment shall be permitted only in accordance with Department of Citrus rules, and the payment thereof shall be guaranteed by the posting of an appropriate certificate of deposit, approved surety bond, or cash deposit in an amount and manner as prescribed by the Department of Citrus. * * * (11) This section shall be liberally construed to effectuate the purposes set forth and as additional and supplemental powers vested in the Department of Citrus under the police power of this state. In March 2000, certain citrus businesses challenged Section 601.155(5), Florida Statutes, as being unconstitutional. At the time of the suit, Section 601.155(5), Florida Statutes, read as follows: All products subject to the taxable privileges under this section, which products are produced in whole or in part from citrus fruit grown within the United States, are exempt from the tax imposed by this section to the extent that the products are derived from oranges or grapefruit grown within the United States. In the case of products made in part from citrus fruit grown within the United States, it shall be the burden of the persons liable for the excise tax to show the Department of Citrus, through competent evidence, proof of that part which is not subject to a taxable privilege. The citrus businesses claimed the exemption in Section 601.155(5) rendered the tax unconstitutionally discriminatory, in that processors who imported juice from foreign countries to be blended with Florida juice were subject to the equalization tax, whereas processors who imported juice from places such as California, Arizona and Texas enjoyed an exemption from the tax. The case, Tampa Juice Service, Inc., et al. v. Department of Citrus, Case No. GCG-00-3718 (Consolidated), was brought in the Tenth Judicial Circuit Court, in and for Polk County. Judge Dennis P. Maloney of that court continues to preside over that case. In a partial final declaratory judgment effective March 15, 2002, Judge Maloney found Section 601.155, Florida Statutes, unconstitutional because it violated the Commerce Clause of the United States Constitution due to its discriminatory effect in favor of non-Florida United States juice. In an order dated April 15, 2002, Judge Maloney severed the exemption in Section 601.155(5), Florida Statutes, from the remainder of the statute. The court's decision necessitated the formulation of a remedy for the injured plaintiffs. While the parties were briefing the issue before the court, the Florida Legislature met and passed Chapter 2002-26, Laws of Florida, which amended Section 601.155, Florida Statutes, to read as follows: Products made in whole or in part from citrus fruit on which an equivalent tax is levied pursuant to s. 601.15 are exempt from the tax imposed by this section. In the case of products made in part from citrus fruit exempt from the tax imposed by this section, it shall be the burden of the persons liable for the excise tax to show the Department of Citrus, through competent evidence, proof of that part which is not subject to a taxable privilege. Chapter 2002-26, Laws of Florida, was given an effective date of July 1, 2002. By order dated August 8, 2002, Judge Maloney set forth his decision as to the remedy for the plaintiffs injured by the discriminatory effect of Section 601.155(5), Florida Statutes. Judge Maloney expressly relied on the rationale set forth in Division of Alcoholic Beverages and Tobacco v. McKesson Corporation, 574 So. 2d 114 (Fla. 1991)("McKesson II"). In its initial McKesson decision, Division of Alcoholic Beverages and Tobacco v. McKesson Corporation, 524 So. 2d 1000 (Fla. 1988), the Florida Supreme Court affirmed a summary judgment ruling that Florida's alcoholic beverage tax scheme, which gave tax preferences and exemptions to certain alcoholic beverages made from Florida crops, unconstitutionally discriminated against interstate commerce. The Florida Supreme Court also affirmed that portion of the summary judgment giving the ruling prospective effect, thus denying the plaintiff a refund of taxes paid pursuant to the unconstitutional scheme. The decision was appealed to the United States Supreme Court. In McKesson Corporation v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18 (1990), the United States Supreme Court reversed the Florida Supreme Court's decision as to the prospective effect of its decision. The United States Supreme Court held that: The question before us is whether prospective relief, by itself, exhausts the requirements of federal law. The answer is no: If a State places a taxpayer under duress promptly to pay a tax when due and relegates him to a postpayment refund action in which he can challenge the tax's legality, the Due Process Clause of the Fourteenth Amendment obligates the State to provide meaningful backward-looking relief to rectify any unconstitutional deprivation. 496 U.S. at 31 (footnotes omitted). The United States Supreme Court set forth the following options by which the state could meet its obligation to provide "meaningful backward-looking relief:" [T]he State may cure the invalidity of the Liquor Tax by refunding to petitioner the difference between the tax it paid and the tax it would have been assessed were it extended the same rate reductions that its competitors actually received. . . . Alternatively, to the extent consistent with other constitutional restrictions, the State may assess and collect back taxes from petitioner's competitors who benefited from the rate reductions during the contested tax period, calibrating the retroactive assessment to create in hindsight a nondiscriminatory scheme. . . . Finally, a combination of a partial refund to petitioner and a partial retroactive assessment of tax increases on favored competitors, so long as the resultant tax actually assessed during the contested tax period reflects a scheme that does not discriminate against interstate commerce, would render petitioner's resultant deprivation lawful and therefore satisfy the Due Process Clause's requirement of a fully adequate postdeprivation procedure. 496 U.S. at 40-41 (citations and footnotes omitted). The United States Supreme Court expressly provided that the state has the option of choosing the form of relief it will grant. In keeping with the United States Supreme Court opinion, the Florida Supreme Court granted the Division of Alcoholic Beverages and Tobacco (the "Division") leave to advise the Court as to the form of relief the state wished to provide. The Division proposed to retroactively assess and collect taxes from those of McKesson's competitors who had benefited from the discriminatory tax scheme. McKesson contended that a refund of the taxes it had paid was the only clear and certain remedy, because retroactive taxation of its competitors would violate their due process rights. McKesson II, 574 So. 2d at 115. The Florida Supreme Court remanded the case to the trial court for further proceedings on McKesson's refund claim, with the following instructions: While McKesson may not necessarily be entitled to a refund, it is entitled to a "clear and certain remedy," as outlined in the Supreme Court's opinion. Because nonparties, such as amici, will be directly affected by the retroactive tax scheme proposed by the state, all affected by the proposed emergency rule must be given notice and an opportunity to intervene in this action. Therefore, on remand, the trial court not only must determine whether the state's proposal meets "the minimum federal requirements" outlined in the Supreme Court's opinion, it also must determine whether the proposal comports with federal and state protections afforded those against whom the proposed tax will be assessed. We emphasize that the state has the option of choosing the manner in which it will reformulate the alcoholic beverage tax during the contested period so that the resultant tax actually assessed during that period reflects a scheme which does not discriminate against interstate commerce. Therefore, if the trial court should rule that the state's proposal to retroactively assess and collect taxes from McKesson's competitors does not meet constitutional muster and such ruling is upheld on appeal, the state may offer an alternative remedy for the trial court's review. However, any such proposal likewise must satisfy the standards set forth by the Supreme Court as well as be consistent with other constitutional restrictions. 574 So. 2d at 116. In the instant case, Judge Maloney assessed the options prescribed by the series of McKesson cases and concluded that the only fair remedy was to assess and collect back assessments from those who benefited from the unconstitutional equalization tax exemption. His August 8, 2002 order directed the Department to "take appropriate steps, consistent with existing law, to assess and collect the Equalization tax from those entities which [benefited] from the unconstitutional exemption." On September 18, 2002, the Department promulgated the Emergency Rules at issue in DOAH Case No. 02-3648RE. The Emergency Rules were filed with the Department of State on September 24, 2002, and took effect on that date. They were published in the October 4, 2002 issue of the Florida Administrative Weekly (vol. 28, no. 40, pp. 4271-4272). The full text of the Emergency Rules is: EQUALIZATION TAX ON NON-FLORIDA UNITED STATES JUICE 20ER02-1 Intent. The Court in Tampa Juice Service, et al v. Florida Department of Citrus in Consolidated Case Number GCG-003718 (Circuit Court in and for Polk County, Florida) severed the exemption contained in Section 601.155(5), Florida Statutes, that provided an exemption for persons who exercised one of the enumerated Equalization Tax privileges on non-Florida, United States juice. The Court had previously determined that the stricken provisions operated in a manner that violated the Commerce Clause of the United States Constitution. On August 8, 2002, the Court ordered that the Florida Department of Citrus "take appropriate steps, consistent with existing law, to assess and collect the Equalization tax from those entities which [benefited] from the unconstitutional exemption." It is the Florida Department of Citrus' intent by promulgating the following remedial Rule 20ER02-01 and Chapter 20-15, F.A.C., to implement a non-discriminatory tax scheme, which does not impose a significant tax burden that is so harsh and oppressive as to transgress constitutional limitations. These rules shall be applicable to those previously favored persons who received favorable tax treatment under the statutory sections cited above. Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. 20ER02-2 Definitions. "Previously favored persons" shall be defined as any person who exercised an enumerated Equalization Tax privilege as defined by Section 601.155, Florida Statutes, but who was exempt from payment of the Equalization Tax due to the exemption for non-Florida, United States juice set forth in the statutory provision, which was ultimately determined to be unconstitutional and severed from Section 601.155(5), Florida Statutes. The "tax period" during which the severed provisions of Section 601.155(5), Florida Statutes, were in effect shall be defined as commencing on October 6, 1997, and ending on March 14, 2002. "Tax liability" shall be defined as the total amount of taxes due to the Florida Department of Citrus during the "tax period," at the following rates per box for each respective fiscal year: Fiscal Year Processed Rate Orange Grapefruit 1997-1998 .175 .30 1998-1999 .17 .30 1999-2000 .18 .325 2000-2001 .175 .30 2001-2002 .165 .18 Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. 20ER02-3 Collection. The Florida Department of Citrus shall calculate the tax liability for each person or entity that exercised an enumerated Equalization Tax privilege outlined in section 601.155, Florida Statutes, upon non-Florida, United States juice based upon inspection records maintained by Florida Department of Agriculture and Consumer Services and the United States Department of Agriculture. Additionally, the Florida Department of Citrus will provide notice of the calculation to the previously favored persons by certified mail. The notice of the calculation shall contain a statement including the following categories: (a) Tax liability; (b) Gallons; Brix; Type of product; (e) Total solids; (f) Conversion rate; (g) Total boxes; (h) Delineation of non-Florida, United States juice. (2)(a) Contained within the notice will be the various legal options available to those who previously enjoyed the exemption, set forth in proposed Rule 20- 15.003(2), F.A.C. (b) Persons who previously enjoyed the exemption may petition to intervene in the case of Tampa Juice Service, Inc., et al, Consolidated Case No. GCG-003718, presently pending before the Circuit Court of the Tenth Judicial Circuit in and for Polk County. A hearing to consider arguments made by any intervenor, the Plaintiffs and the Florida Department of Citrus is currently scheduled to be heard by the Honorable Dennis Maloney on November 12, 2002, in Bartow, Florida. (3) The Florida Department of Citrus will not oppose the timely intervention of persons who previously enjoyed the subject exemption that wish to present a claim to the Court in the Tampa Juice Service, Inc., et al v. Florida Department of Citrus. However, the Florida Department of Citrus does not waive any argument regarding the validity of the calculation of the tax liability or that imposition of this tax is constitutional. Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. The Department's "Specific Reasons for Finding an Immediate Danger to the Public Health, Safety or Welfare" were set forth as follows: On March 18, 2002, the Court in the Tenth Judicial Circuit, State of Florida, in and for Polk County, entered a Partial Final Declaratory Judgment in the case of Tampa Juice Service, Inc., et al v. Florida Department of Citrus, Consolidated Case Number GCG-003718. In this order the Court ruled that the exemption in Section 601.155, F.S., for non-Florida, United States juice was unconstitutional. On or about April 15, 2002, the Court severed the exemption for non-Florida, United States juice from section 601.155(5), F.S. On August 8, 2002, the Court held that the Florida Department of Citrus was required to cure the invalidity of the equalization taxing scheme. To cure this invalidity, the Florida Department of Citrus promulgates Rule 20ER02-1, F.A.C., which will serve to implement the Court's order for a nondiscriminatory tax scheme and provide due process protections for the previously favored taxpayers. These rules are being promulgated on an emergency basis to meet time constraints associated with litigation and to establish guidelines which protect the public's and state's interest for the orderly and efficient collection and payment of the tax liability. Without these guidelines, the welfare of the citizens and the state would be adversely affected because of the immediate and widespread impact of the failure of previously favored persons to properly remit the tax. The Department's "Reason for Concluding that the Procedure is Fair Under the Circumstances" was set forth as follows: Promulgation of these guidelines using the emergency rule procedures is the only available mechanism which adequately protects the public interests under the circumstances which require collection and payment of the tax liability. This procedure is fair to the public and to the previously favored persons. It permits promulgation of the necessary guidelines within a time frame which allows the industry to be adequately informed of their duties, responsibilities and rights with respect to the tax liability. In the November 15, 2002 issue of the Florida Administrative Weekly (vol. 28, no. 46, pp. 4996-4998), the Department published the Proposed Rules at issue in DOAH Case No. 02-4607RP. The text of Proposed Rule 20-15.001, Florida Administrative Code, is identical to that of Emergency Rule 20ER02-1, set forth above. The text of Proposed Rule 20-15.002, Florida Administrative Code, is identical to that of Emergency Rule 20ER02-2, set forth above. The text of Proposed Rule 20- 15.003(1)&(3), Florida Administrative Code, is identical to that of Emergency Rule 20ER02-3(1)&(3), set forth above. The text of Proposed Rule 15.003(2), Florida Administrative Code, varies from the text of Emergency Rule 20ER02-3(2), and reads as follows: 20-15.003 Collection. Subsequent to adoption of this rule, the Florida Department of Citrus will provide to the previously favored persons by certified mail a Notice of Tax Liability which shall contain a demand for payment consistent with the above-referenced itemized statement. The Department will deem late payment of Equalization Taxes owed by previously favored persons to constitute good cause, and shall waive the 5 percent penalty authorized by Section 601.155(10), F.S., as compliance with either of the following is established by Department [sic]: Lump sum payment of the tax liability remitted with the filing of Department of Citrus Form 4R (incorporated by reference in Rule 20-100.004, F.A.C.) for the relevant years and then-applicable tax rate(s) per subsection 20-15.002(3), F.A.C., within 61 days of receiving Notice of Tax Liability; or Equal installment payments remitted with the filing of Department of Citrus Form 4R (incorporated by reference in Rule 20-100.004, F.A.C.) for the relevant years and then-applicable tax rate(s) per subsection subsection [sic] 20-15.002(3), F.A.C., over a 60-month period, the first payment being due within 61 days of receiving Notice of Tax Liability pursuant to subsection 20-15.003(2), F.A.C.; or The Good Cause provisions of 601.155(10), F.S., shall not apply to persons who do not comply with paragraph 20- 15.003(2)(a), F.A.C., or paragraph 20- 15.003(2)(b), F.A.C. Failure to pay the taxes or penalties due under 601.155, F.S. and Chapter 20-15, F.A.C., shall constitute grounds for revocation or suspension of a previously favored person's citrus fruit dealer's license pursuant to 601.56(4), F.S., 601.64(6), F.S., 601.64(7), F.S., and/or 601.67(1), F.S. Peace River is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Peace River is subject to the rules of the Department. Peace River buys, sells, and manufactures bulk citrus juices. By correspondence dated October 2, 2002, Peace River was notified by the Department that Peace River would be liable for payment of $86,242.41 in Equalization taxes for the tax period of October 6, 1997 through March 14, 2002 (the "tax period"), pursuant to the terms of the Emergency Rules. Fresh Juice is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Fresh Juice is subject to the rules of the Department. Fresh Juice buys, sells, and manufactures citrus juices. By correspondence dated October 2, 2002, Fresh Juice was notified by the Department that Fresh Juice would be liable for payment of $45,052.19 in Equalization taxes for the tax period, pursuant to the terms of the Emergency Rules. Sun Orchard is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Sun Orchard is subject to the rules of the Department. Sun Orchard buys, sells, and manufactures citrus juices. By correspondence dated October 2, 2002, Sun Orchard was notified by the Department that Sun Orchard would be liable for payment of $45,052.19 in Equalization taxes for the tax period, pursuant to the terms of the Emergency Rules. During the tax period, Peace River, Fresh Juice, and Sun Orchard imported, stored and blended non-Florida, United States citrus juices. Neither Peace River, Fresh Juice, nor Sun Orchard is a party to the lawsuit styled Tampa Juice Service, Inc., et al. v. Department of Citrus, Case No. GCG-00-3718 (Consolidated). Peace River, Fresh Juice, and Sun Orchard contend that they relied on the tax exemption in making business decisions and had no notice that their activities regarding non-Florida, United States juice would be taxable upon the court's striking of the exemption in Section 601.155(5), Florida Statutes. Accordingly, Peace River, Fresh Juice, and Sun Orchard contend that, during the tax period, they had no opportunity to conform their conduct to avoid the tax or position themselves to claim a refund allowed by Section 601.155, Florida Statutes. Peace River, Fresh Juice, and Sun Orchard contend that they have not been obligated by Chapter 601, Florida Statutes, to keep specific records on their use of non-Florida United States citrus juices for the tax period, but admit they keep business records required by law, which may include some business records related to non-Florida United States juice during the tax period. Peace River, Fresh Juice, and Sun Orchard shipped products made with non-Florida, United States juice during the tax period without payment of the Equalization Tax.
The Issue Whether there is substantial justification or special circumstances to preclude Petitioner from receiving an award of attorneys’ fees and costs pursuant to section 120.595(2), Florida Statutes (2017).1/
Findings Of Fact Based on the oral and documentary evidence, written submissions from the parties following issuance of ALJ McKibben’s Final Order, and the entire record in this proceeding, the following Findings of Fact are made: Section 381.986(8), Florida Statutes and the Proposed Rule Section 381.986(8), Florida Statutes, establishes a mechanism for the licensing of medical marijuana treatment centers (“MMTC”). The statute was amended in 2017 to provide, in pertinent part, that: (8) MEDICAL MARIJUANA TREATMENT CENTERS. (a) The department shall license medical marijuana treatment centers to ensure reasonable statewide accessibility and availability as necessary for qualified patients registered in the medical marijuana use registry and who are issued a physician certification under this section. * * * The department shall license as medical marijuana treatment centers 10 applicants that meet the requirements of this section, under the following parameters: [Previously denied applicants meeting certain requirements not relevant to the instant action.] [One applicant from a specific class pursuant to a federal lawsuit.] As soon as practicable, but no later than October 3, 2017, the department shall license applicants that meet the requirements of this section in sufficient numbers to result in 10 total licenses issued under this subparagraph, while accounting for the number of licenses issued under sub-subparagraphs a. and b. For up to two of the licenses issued under subparagraph 2., the department shall give preference to applicants that demonstrate in their applications that they own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses and will use or convert the facility or facilities for the processing of marijuana. (emphasis added). The Proposed Rule was intended to implement the changes to section 381.986; but, where section 381.986(8)(a)3., uses the term “facility,” the Proposed Rule substitutes the term “property.” For instance, the Proposed Rule provides, in pertinent part, that: (1)(f) For applicants seeking preference for registration as a medical marijuana treatment center pursuant to ss. 381.986(8)(a)3., F.S., the applicant must provide evidence that: The property at issue currently is or was previously used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses. In order to demonstrate the property meets this criteria, the applicant may provide documentation that the applicant currently holds or has held a registration certificate pursuant to section 601.40, F.S. A letter from the Department of Citrus certifying that the property currently is or was previously used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses will be accepted as sufficient evidence; The applicant as an individual holds, in his or her name, or the applicant as an entity holds, in the legal name of the entity, the deed to property meeting the criteria set forth in subparagraph 1. above; and A brief explanation of how the property will be used for purposes of growing, processing, or dispensing medical marijuana if the applicant is selected for registration. * * * Subject matter experts will substantively and comparatively review, evaluate, and score applications using [the Scorecard incorporated by reference]. * * * (a)7.(b) Scores for each section of the application will be combined to create an applicant’s total score. The department shall generate a final ranking of the applicants in order of highest to lowest scores. . . . (c) In accordance with ss. 381.986(8)(a)3., F.S., the two highest scoring applicants that own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses and will use or convert the facility or facilities for the processing of marijuana will receive an additional 35 points to their respective total score. Licenses will be awarded, subject to availability as set forth in ss. 381.986(8)(a)2. and 381.986(8)(a)4., F.S., based on the highest total score in the following manner: The highest scoring applicant that is a recognized member of Pigford or [African American Farmers Discrimination Litigation] will receive a license. The remaining highest scoring applicants, after the addition of the preference points for applicants pursuant to paragraph (7)(c) above, will receive licenses up to the statutory cap set forth in ss. 381.986(8)(a)2., F.S. The remaining highest scoring applications, after removing any preference points received under paragraph (7)(c), will receive licenses up to the statutory cap set forth in ss. 381.986(8)(a)4., F.S. (emphasis added). The Parties The Department is the state agency charged with implementing the Compassionate Medical Cannabis Act of 2014. See § 381.986, Fla. Stat. Del Favero has been incorporated since 1974 and has been primarily engaged in the business of growing orchids. At the time of the final hearing in this matter, Del Favero aspired to apply for licensure as a medical marijuana treatment center. After Senate Bill 8A became law and substantially rewrote section 381.986, Del Favero elected to seek the citrus preference described in section 381.986(8)(a)3. In order to accomplish that goal, Del Favero purchased the real property and facilities of a citrus processing business in Safety Harbor, Florida, for approximately $775,000. The purchase occurred prior to the Proposed Rule’s publication. Del Favero intends to convert the citrus processing facility located on the Safety Harbor property into a medical marijuana processing facility if Del Favero becomes a licensed MMTC. Pertinent Portions of ALJ McKibben’s Analysis In ruling that the Proposed Rule was invalid, ALJ McKibben made the following findings: The Legislature clearly intended to give a preference to applicants who “own . . . facilities that are, or were, used for canning, concentrating, or otherwise processing of citrus . . . and will use or convert the . . . facilities for the processing of medical marijuana.” The Legislature failed, however, to provide guidance by way of definitions. While the Legislature chose the words “facility or facilities” in the Preference Statute, the Department complicated the issue by using the word “property” for the most part, but also using the words “facility” and “facilities” at times. Favero contends that a property is much broader in scope than a facility, and the Department therefore exceeded its delegated legislative authority. The Department argues that facilities used to process citrus must be located on some property, obviously. But, facilities located on a property might be leased, so that the fee simple owner of the property is different from the leaseholder of that facility. Thus, if an applicant for a medical marijuana treatment center license wants to avail itself of the preference, it would need to own the facility. Whether that means the applicant must own the property on which the facility is located is not clear in the Preference Statute or in the Proposed Rule. The Department argues that the way to show ownership of a facility is by way of a deed to the property on which the facility is located. In fact, Favero will use a warranty deed to prove ownership of the facilities it purchased in order to obtain the preference. But if Favero purchased land on which citrus had been grown but not processed, i.e., if there had been no facilities on the land to can, concentrate or otherwise process the fruit, except in fresh fruit form, the preference would not apply. And if an applicant obtained a leasehold interest in a facility, it would not be able to “show ownership” by way of a deed to the property. The Preference Statute requires the applicant to convert the facility in order to gain the preference. It is unclear how a piece of unimproved property can be “converted” to another use; land is land. This begs the question of whether growing citrus on a piece of property, and then removing all the citrus trees in order to grow medical marijuana, is a “conversion” of a facility as contemplated by the Legislature. Neither the Preference Statute nor the Proposed Rule contain any definitional assistance to answer that question. An important question to be answered is whether the growing of citrus constitutes “processing” as alluded to by the Legislature. The Preference Statute provides no definition of the word. The Citrus Code (chapter 601, Florida Statutes) also does not define “processing,” but does describe a “processor” of citrus as: ‘[A]ny person engaged within this state in the business of canning, concentrating, or otherwise processing citrus fruit for market other than for shipment in fresh fruit form.” § 601.03(32), Fla. Stat. (Emphasis added) (sic). Processing must therefore mean something other than merely growing citrus and packing it up for shipment. That being the case, a property where citrus is grown that is “converted” to a property growing marijuana would not afford an applicant a preference. There must be some “facility” that is or has been used to process citrus, i.e., doing something more with the raw product, in order to constitute “processing.” Therefore, a “packinghouse,” i.e., “[a]ny building, structure, or place where citrus fruit is packed or otherwise prepared for market or shipment in fresh fruit form,” would not be engaged in “processing” citrus. See § 601.03(29), Fla. Stat. (emphasis added). ALJ McKibben then made the following Conclusions of Law: In this instance, the Department interprets the statutory language concerning “facility or facilities” to include “property.” It is impossible to reconcile that interpretation, especially in light of the fact the Legislature contemplated conversion of the facilities. The Department’s interpretation is hereby rejected as being outside the range of permissible interpretations. See Cleveland v. Fla. Dep’t of Child. & Fams., 868 So. 2d 1227 (Fla. 1st DCA 2004).[2/] The test is whether the agency’s proposed rule properly implements specific laws. See § 120.52(8)(f), Fla. Stat. The Preference Statute specifically provided a preference for using or converting citrus facilities, not properties. The Proposed Rule does not implement that specific provision of the law. (emphasis added). The Department’s Rationale for Substituting “Property” for “Facility” The Department asserted during the final hearing that it consulted with the Citrus Department on how to interpret the phrase “otherwise processing.”3/ See § 381.986(8)(a)3. (providing that “the department shall give preference to applicants that demonstrate in their applications that they own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing of citrus fruit . . .”). (emphasis added). Ms. Shepp, the Citrus Department’s executive director, testified that activities such as picking, grading, sorting, polishing, and packing citrus fruit constitute “otherwise processing.” She also testified that a packinghouse conducts the aforementioned activities. Section 601.03(29), Florida Statutes, defines a “packinghouse” as “any building, structure, or place where citrus is packed or otherwise prepared for market or shipment in fresh form.” (emphasis added) See the Department’s Proposed Final Order at 9, 10, and 15. Because “a place” can be an area without a physical structure, the Department concluded that using the word “property” in the Proposed Rule rather than “facility” would enable applicants who engage in “otherwise processing” to be eligible for the preference. The Department also argued that this substitution is justified because “it is not uncommon in the citrus industry to conduct citrus operations in the open air or in a tent.” See Department’s Memorandum of Law in Opposition to Petitioner’s Motion for Attorney’s Fees at 9.4/ Ms. Coppola explained that the Department substituted “property” for “facility” in order to assist the distressed citrus industry. Finally, Ms. Coppola stated that using the term “property” serves the legislative intent to extend the preference to applicants that are not presently engaged in canning, concentrating, or otherwise processing but had been in the past.5/ As discussed below in the Conclusions of Law, the Department had no substantial justification for substituting the word “property” for “facility” and thus extending the citrus preference beyond what the Florida Legislature had intended. Moreover, there are no special circumstances that would make an award of attorneys’ fees to Del Favero unjust.
