The Issue The issue to be determined is whether the applicant, Kanter Real Estate, LLC (Kanter), is entitled to issuance of an Oil and Gas Drilling Permit, No. OG 1366 (the Permit).
Findings Of Fact The Parties Kanter is a foreign limited liability company registered to do business in the State of Florida. Kanter owns 20,000 acres of property in western Broward County, on which it seeks authorization for the drilling of a vertical exploratory well. The exploratory well is to be located on a five-acre site that is subject to an ERP (the Well Site). The Department is the state agency with the power and duty to regulate activities related to the management and storage of surface waters pursuant to chapter 373, Florida Statutes, and to regulate oil and gas resources, including the permitting of activities related to the exploration for and extraction of such resources, pursuant to chapter 377, Florida Statutes. Miramar is a Florida municipal corporation located in Broward County, Florida. Broward County is a political subdivision of the State of Florida with jurisdiction extending to the Kanter property and the Well Site. The Application On July 2, 2015, Kanter submitted its Application for Permit to Drill (Application) to the Department. The proposed Well Site is on land to which Kanter owns the surface rights and subsurface mineral rights. The Application contemplates the drilling of an exploratory well to a depth of approximately 11,800 feet. The Application is not for a production well. The well is to be drilled, and ancillary activities are to be performed on a fill pad of approximately five acres, surrounded by a three-foot high perimeter berm on three sides and the L67-A levee on the fourth. The pad is the subject of an ERP which, as set forth in the Preliminary Statement, is not being challenged. The pad is designed to contain the 100-year, three-day storm. The engineering design incorporates a graded area, berm, and containment with a water control structure and a gated culvert to manipulate the water if necessary. The entire pad is to be covered by a 20 mil PVC liner, is sloped to the center, and includes a steel and concrete sump for the collection of any incidental spills. The pad was designed to contain the full volume of all liquids, including drilling fluid, fuel, and lubricating oil, that are in tanks and containers on the facility. The Application includes technical reports, seismic data, and information regarding the geology and existing producing oil wells of the Upper Sunniland Formation, which Kanter filed for the purpose of demonstrating an indicated likelihood of the presence of oil at the proposed site. The third Request for Additional Information (RAI) did not request additional information regarding the indicated likelihood of the presence of oil at the proposed site. After it submitted its response to the third RAI, Kanter notified the Department of its belief that additional requests were not authorized by law. As a result, the Department completed the processing of the Application without additional RAI’s. On November 16, 2016, the Department entered its Notice of Denial of the Oil and Gas Drilling Permit. The sole basis for denial was that Kanter failed to provide information showing a balance of considerations in favor of issuance pursuant to section 377.241.1/ There was no assertion that the Application failed to meet any standard established by applicable Department rules, Florida Administrative Code Chapters 62C-25 through 62C-30. In particular, the parties included the following stipulations of fact in the Joint Prehearing Stipulation which are, for purposes of this proceeding, deemed as established: The structure intended for the drilling or production of Kanter’s exploratory oil well is not located in any of the following: a municipality; in tidal waters within 3 miles of a municipality; on an improved beach; on any submerged land within a bay, estuary, or offshore waters; within one mile seaward of the coastline of the state; within one mile seaward of the boundary of a local, state or federal park or an aquatic or wildlife preserve; on the surface of a freshwater lake, river or stream; within one mile inland from the shoreline of the Gulf of Mexico, the Atlantic Ocean or any bay or estuary; or within one mile of any freshwater lake, river or stream. The location of Kanter’s proposed oil well is not: within the corporate limits of any municipality; in the tidal waters of the state, abutting or immediately adjacent to the corporate limits of a municipality or within 3 miles of such corporate limits extending from the line of mean high tide into such waters; on any improved beach, located outside of an incorporated town or municipality, or at a location in the tidal waters of the state abutting or immediately adjacent to an improved beach, or within 3 miles of an improved beach extending from the line of mean high tide into such tidal waters; south of 26°00'00? north latitude off Florida’s west coast and south of 27°00'00? north latitude off Florida’s east coast, within the boundaries of Florida’s territorial seas as defined in 43 U.S.C. 1301; north of 26°00'00? north latitude off Florida’s west coast to the western boundary of the state bordering Alabama as set forth in s. 1, Art. II of the State Constitution; or north of 27°00'00? north latitude off Florida’s east coast to the northern boundary of the state bordering Georgia as set forth in s. 1, Art. II of the State Constitution, within the boundaries of Florida’s territorial seas as defined in 43 U.S.C. 1301. 19. The proposed oil well site does not contain Florida panther habitat and is located outside of the primary and secondary habitat zones for the Florida panther. 21. There are no recorded archaeological sites or other historic resources recorded within the area of the proposed oil well site. Kanter submitted a payment of $8,972.00 for its oil and gas permit application on June 30, 2016 pursuant to Rule 62C- 26.002(5)(c), F.A.C. Kanter’s application includes sufficient information and commitments for performance bonds and securities. DEP and Intervenors do not claim that the application lacks the information required in rule 62C-26.002, F.A.C. Kanter’s application includes an organization report that satisfies the requirements of rule 62C-26.003(3), F.A.C. Kanter’s engineering aspects of the site plan for the proposed project site, are appropriate. Kanter’s survey submitted to DEP in support of its application includes a suitable location plat which meets the minimum technical standards for land surveys. Kanter’s application includes an appropriate description of the planned well completion. DEP and Intervenors do not claim that the drilling application lacks the information required by rule 62C-26.003, F.A.C. Kanter’s Application proposes using existing levees to provide access to the proposed Kanter well site. Kanter did not propose to construct additional roads for access. Kanter’s proposed well site is located 332 feet from the L67-A levee, which serves as a roadway for trucks used to perform operations and maintenance on the levees and canals in the area. Kanter’s application does not lack any information required by DEP with respect to the location of roads, pads, or other facilities; nor does it lack any information regarding the minimization of impacts with respect to the location of roads. DEP and Intervenors do not contend that the permit should be denied based upon the proposed “spacing” of the well, or drilling unit, as that term is used in rule 62C-26.004, F.A.C. Kanter’s application includes appropriate plans for the construction of mud tanks, reserve pits, and dikes. Kanter agrees to a reasonable permit condition requiring that if water is to be transported on-site, that it will add additional tanks for the purpose of meeting water needs that would arise during the drilling process. Kanter’s design of the integrated casing, cementing, drilling mud, and blowout prevention programs is based upon sound engineering principles, and takes into account all relevant geologic and engineering data and information. Kanter’s proposed casing plan includes an additional casing string proposed in its response to DEP’s Third Request for Additional Information. This casing plan meets or exceeds the requirements of 62C-27.005, F.A.C. Kanter’s proposed casing and cementing program, as modified, meets or exceeds all applicable statutory and rule criteria.[2/] Kanter’s response and documents provided in response to DEP’s 3rd RAI satisfactorily resolved DEP’s concern regarding the risk of passage of water between different confining layers and aquifers resulting from the physical act of drilling through the layers of water and the intervening soil or earth. Kanter’s application includes a sufficient lost circulation plan. Kanter’s application is not deficient with respect to specific construction requirements which are intended to prevent subsurface discharges. Kanter’s drilling fluids plan is appropriate and is not deficient. Kanter’s blowout prevention equipment and procedures are appropriate and are not deficient. Kanter’s plans for blowout prevention are not insufficient. Kanter’s proposed oil pad is above the 100 year flood elevation and under normally expected circumstances would not be inundated by water if constructed as proposed in Kanter’s application. Kanter’s application includes a Hydrogen Sulfide Safety Plan that includes standards which are consistent with the onshore oil and gas industry standards set forth in the American Petroleum Institutes’ Recommended Practice. DEP and Intervenors do not claim any insufficiencies with respect to Kanter’s Hydrogen Sulfide Gas Contingency Plan, the sufficiency of secondary containment, its construction plans for a protective berm around the drilling site and storage tank areas of sufficient height and impermeability to prevent the escape of pad fluid, its pollution prevention plan, its safety manual, or its spill prevention and cleanup plan. DEP and Intervenors do not contend that the permitting of the well would violate section 377.242(1), F.S., regarding permits for the drilling for, exploring for, or production of oil, gas, or other petroleum products which are to be extracted from below the surface of the land only through the well hole(s). DEP and Intervenors do not contend that Kanter’s application violates the applicable rule criteria for oil and gas permitting set forth in Chapters 62C-25 through 62C-30, Florida Administrative Code. In addition to the foregoing, Kanter is not seeking or requesting authorization to perform “fracking,” and has agreed to a permit condition that would prohibit fracking. As a result of the foregoing, the parties have agreed that the Application meets or exceeds all criteria for an exploratory oil well permit under chapters 62C-25 through 62C-30. The Property Kanter owns two parcels of land totaling 20,000 acres in the area of the proposed Well Site: a northern parcel consisting of approximately 11,000 acres and a southern parcel consisting of approximately 9,000 acres. Kanter assembled its holdings through a series of acquisitions by deeds from 1975 to 1996. The Well Site is to be located within the southern parcel. On August 7, 1944, Kanter’s predecessor in title, Dallas Investment Co., acquired by tax deed all interests in a parcel within the 9,000-acre southern parcel described as “All Section 23 Township 51 South, Range 38 East, 640 Acres,” including, without reservation, the oil, gas, minerals, and phosphate. The evidence of title submitted as part of the Application indicates that a “Kanter” entity first became possessed of rights in Section 23 in 1975. By virtue of a series of transactions extending into 1996, Kanter currently holds fee title to all surface rights, and title to all mineral rights, including rights to oil, gas, and other mineral interests, within Section 23 Township 51 South, Range 38 East. The Well Site specified in the Application is within Section 23, Township 51 South, Range 38 East. Kanter’s property is encumbered by a Flowage Easement that was granted to the Central and Southern Flood Control District in 1950, and is presently held by the South Florida Water Management District (SFWMD). The Flowage Easement guarantees Kanter access to the entire easement property “for the exploration or drilling for, or the developing, producing, storing or removing of oil, gas or other . . . in accordance with sound engineering principles.” Kanter has the legal property right to locate and drill the well, and the exploratory well is consistent with Kanter’s ownership interest. The Well Site is located in a 160-acre (quarter section) portion of the 640-acre tract described above, and is within a “routine drilling unit,” which is the block of land surrounding and assigned to a well. Fla. Admin. Code R. 62C-25.002(20) and 62C-25.002(40). The Kanter property, including the Well Site, is in the historic Everglades. Before efforts to drain portions of the Everglades for development and agricultural uses, water flowed naturally in a southerly direction through land dominated by sawgrass and scattered tree islands. The tree islands were generally shaped by the direction of the water flow. Beginning as early as the late 1800s, dramatically increasing after the hurricane of 1947, and extending well into the 1960s, canals, levees, dikes, and channels were constructed to drain, impound, or reroute the historic flows. Those efforts have led to the vast system of water control structures and features that presently exist in south Florida. The Well Site, and the Kanter property as a whole, is located in Water Conservation Area (WCA)-3. WCA-3 is located in western Broward County and northwestern Miami-Dade County. It was constructed as part of the Central and Southern Florida Flood Control project authorized by Congress in 1948, and was created primarily for flood control and water supply. In the early 1960s, two levees, L67-A and L67-C, were constructed on a line running in a northeast to southwest direction. When constructed, the levees separated WCA-3 into WCA-3A to the west and WCA-3B to the southeast. The Well Site is in WCA-3A.3/ The area between L67-A and L67-C, along with a levee along the Miami Canal, is known as the “Pocket.” There is no water control in the Pocket. Although there is a structure at the south end of the Pocket, it is in disrepair, is rarely -- if ever -- operated, and may, in fact, be inoperable. The Well Site is located within the Pocket, on the southern side of L67-A. L67-A and L67-C, and their associated internal and external canals, have dramatically disrupted sheet flow, altered hydrology, and degraded the natural habitat in the Pocket. Water inputs and outputs are entirely driven by rainfall into the Pocket, and evaporation and transpiration from the Pocket. From a hydrologic perspective, the Pocket is entirely isolated from WCA-3A and WCA-3B. The Pocket is impacted by invasive species, which have overrun the native species endemic to the area and transformed the area into a monoculture of cattails. Vegetation that grows in the Pocket dies in the Pocket. Therefore, there is a layer of decomposing vegetative muck, ooze, and sediment from knee deep to waist deep in the Pocket, which is atypical of a functioning Everglades system. L67-A and L67-C, and their associated internal and external canals, impede wildlife movement, interfering with or preventing life functions of many native wildlife species. The proposed Well Site, and the surrounding Kanter property, is in a rural area where future residential or business development is highly unlikely. The property is removed from urban and industrial areas and is not known to have been used for agriculture. The Department has previously permitted oil wells within the greater Everglades, in areas of a more pristine environmental nature, character, and location than the Pocket. The Raccoon Point wellfield is located 24 miles west of the Proposed Project Site within the Big Cypress National Preserve. It is within a more natural system and has not undergone significant hydrologic changes such as the construction of canals, levees, ditches, and dikes and, therefore, continues to experience a normal hydrologic flow. Mr. Gottfried testified that at Raccoon Point, “you can see the vegetation is maintaining itself because the fact that we don’t have levees, ditches canals, dikes, impacting the area. So you have a diversity of plant life. You have tree islands still. You have the normal flow going down.” The greater weight of evidence shows that the Kanter Well Site is far less ecologically sensitive than property at Raccoon Point on which the Department has previously permitted both exploration and production wells. The Biscayne Aquifer The Biscayne Aquifer exists in almost all of Miami- Dade County, most of Broward County and a portion of the southern end of Palm Beach County. It is thickest along the coast, and thinnest and shallowest on the west side of those counties. The western limit of the Biscayne Aquifer lies beneath the Well Site. The Biscayne Aquifer is a sole-source aquifer and primary drinking water source for southeast Florida. A network of drainage canals, including the L-30, L-31, L-33, and Miami Canals, lie to the east of WCA-3B, and east of the Well Site. Those canals penetrate into the substratum and form a hydrologic buffer for wellfields east of the Well Site, including that operated by Miramar, and isolate the portions of the Biscayne Aquifer near public wellfields from potential impacts originating from areas to their west. The canals provide a “much more hydraulically available source” of water for public wellfields than water from western zones of the Biscayne Aquifer, and in that way create a buffer between areas on either side of the canals. The Pocket is not a significant recharge zone for the Biscayne Aquifer. There is a confining unit comprised of organic soils, muck, and Lake Flint Marl separating the Pocket and the Well Site from the Fort Thompson formation of the Biscayne Aquifer. There is a layer of at least five feet of confining muck under the L67-A levee in the area of the Well Site, a layer that is thicker in the Pocket. The Well Site is not within any 30-day or 120-day protection zones in place for local water supply wells. The fact that the proposed well will penetrate the Biscayne Aquifer does not create a significant risk of contamination of the Biscayne Aquifer. The drilling itself is no different than that done for municipal disposal wells that penetrate through the aquifer much closer to areas of water production than is the Well Site. The extensive casing and cementing program to be undertaken by Kanter provides greater protection for the well, and thus for the aquifer, than is required by the Department’s rules. A question as to the “possibility” that oil could get into the groundwater was answered truthfully in the affirmative “in the definition of possible.” However, given the nature of the aquifer at the Well Site, the hydrological separation of the Well Site and well from the Biscayne Aquifer, both due to the on-site confining layer and to the intervening canals, the degree of casing and cementing, and the full containment provided by the pad, the testimony of Mr. Howard that “it would be very difficult to put even a fairly small amount of risk to the likelihood that oil leaking at that site might possibly actually end up in a well at Miramar” is accepted. The Sunniland Formation The Sunniland Formation is a geologic formation which exists in a region of South Florida known as the South Florida Basin. It is characterized by alternating series of hydrocarbon-containing source rock, dolomite, and limestone of varying porosity and permeability and evaporite anhydrite or mudstone seal deposits. It has Upper Sunniland and Lower Sunniland strata, and generally exists at a depth of up to 12,000 feet below land surface (bls) in the area of the Well Site. Underlying the Sunniland Formation is a formation generally referred to as the “basement.” The basement exists at a depth of 17,000-18,000 feet bls. Oil is produced from organic rich carbonate units within the Lower Cretaceous Sunniland Formation, also known as the Dark Shale Unit of the Sunniland Formation. The oil produced in the Sunniland Formation is generally a product of prehistoric deposits of algae. Over millennia, and under the right conditions of time and pressure, organic material is converted to hydrocarbon oil. The preponderance of the evidence demonstrates that active generating source rock capable of producing hydrocarbons exists in the Sunniland Formation beneath the Kanter property. The preponderance of the evidence also indicates that the oil generated in the Sunniland Formation is at a sufficient depth that it is preserved from microbial degradation, which generally occurs in shallower reservoirs. The Upper Sunniland Formation was formed in the Cretaceous geological period, between 106 and 100 million years ago. Over that period, sea levels rose and fell dramatically, allowing colonies of rudists (a now extinct reef-building clam) and oysters to repeatedly form and die off. Over time, the colonies formed bioherms, which are reef-like buildups of shell elevated off of the base of the sea floor. Over millennia, the bioherms were exposed to conditions, including wave action and exposure to air and rainwater, that enhanced the porosity of the component rudist and oyster shell. Those “patch reefs” were subsequently buried by other materials that formed an impermeable layer over the porous rudist and oyster mounds, and allowed those mounds to become “traps” for oil migrating up from lower layers. A trap is a geological feature that consists of a porous layer overlain by an impervious layer of rock that forms a seal. A trap was described, simplistically, as an upside down bowl. Oil, being lighter than water, floats. As oil is generated in source rock, it migrates up through subterranean water until it encounters a trapping formation with the ability to create a reservoir, and with an impervious layer above the porous layer to seal the trap and prevent further migration, thus allowing the “bowl” to fill. The reservoir is the layer or structure with sufficient porosity and permeability to allow oil to accumulate with its pores. The thickness of the layer determines the volume of oil that the reservoir is capable of retaining. Although rudist mounds are generally considered to be more favorable as traps due to typically higher porosity, oyster mound traps are correlated to producing wells in the Sunniland Formation and are primary producers in the Felda field and the Seminole field. The Lower Sunniland Formation is a fractured carbonate stratum, described by Mr. Aldrich as a rubble zone. It is not a traditional structural trap. Rather, it consists of fractured and crumbling rock thought to be created by basement shear zones or deep-seated fault zones. It has the same source rock as the Upper Sunniland. There is little information on traps in the Lower Sunniland, though there are two fields that produce from that formation. A “play” is a group of prospects or potential prospects that have the same source rock, the same reservoir rock, the same trap style, and the same seal rock to hold in the hydrocarbons. The producing oil fields in the Sunniland Formation, including Raccoon Point, Sunniland, Felda, West Felda, and Lake Trafford are part of a common play known as the Sunniland Trend. The Sunniland Trend is an area of limestone of greater porosity within the Sunniland Formation, and provides a reasonable extrapolation of areas that may be conducive to oil traps. The Sunniland Trend extends generally from Manatee County on the west coast of Florida southeasterly into Broward County and the northwestern portion of Miami-Dade County on the east coast of Florida. The trend corresponds to the ancient Cretaceous shoreline where rudist and oyster bioherms formed as described above. In 2003, the “Mitchell-Tapping” report, named after the husband and wife team, identified two separate trends within the Sunniland Trend, the rudist-dominant West Felda Trend, and the more oyster-based Felda Trend. Both are oil-producing strata. The Felda Trend is more applicable to the Kanter property. Throughout the Sunniland Trend, hydrocarbon reservoirs exist within brown dolomite deposits and rudist and oyster mounds. Dolomite is a porous limestone, and is the reservoir rock found at the productive Raccoon Point oil wellfield. The evidence indicates that a brown dolomite layer of approximately 20 feet underlies the Well Site, and extends in all directions from the Well Site. A preponderance of the evidence indicates that the Kanter property, including the Well Site, is within the Sunniland Trend and its Felda Trend subset.4/ Oil produced from wells in the Sunniland Trend is typically thick, and is not under pressure. The oil does not rise through a bore hole to the surface, but must be pumped. The Raccoon Point Field, which is the closest productive and producing wellfield to the proposed Well Site, is located approximately 24 miles to the west of the Well Site, within the Sunniland Trend. Raccoon Point contains numerous well sites, of which four or five are currently producing, and has produced in the range of 20 million barrels of oil since it began operation in the late 1970s. Cumulative production of oil from proven fields in the South Florida Basin, including fields in the Sunniland Formation, is estimated to be in excess of 160 million barrels. Estimates from the U.S. Geological Service (USGS) indicate that 25 new fields capable of producing five million barrels of oil each are expected to be found within the Lower Cretaceous Shoal Reef Oil Assessment Unit, which extends into the Kanter property. Estimates of the potential reserves reach as high as an additional 200 million barrels of oil. The Dollar Bay Formation Another formation that has potential for oil production is the Lower Cretaceous Dollar Bay Formation, also in the South Florida Basin. The Dollar Bay Formation exists beneath the Kanter property at a shallower depth than the Sunniland Formation, generally at a depth of 10,000 feet in the vicinity of the Well Site. Most of the Dollar Bay prospects are on the east side of the South Florida Basin. Most of the wells in the South Florida Basin are on the west side. Thus, there has not been much in the way of exploration in the Dollar Bay Formation, so there is a lack of data on traps. Dollar Bay has been identified as a known oil-bearing play by the USGS. It is a self-source play, so the source comes from the Dollar Bay Formation itself. Dollar Bay exists both as potential and mature rock. It has known areas of very high total organic content (TOC) source rock; logged reservoir in the formation; and seal rock. There have been three oil finds in the Dollar Bay formation, with at least one commercial production well. Kanter will have to drill through the Dollar Bay Formation to get to the Upper Sunniland formation, thus allowing for the collection of information as to the production potential of the prospect. Although Dollar Bay is not generally the main “target” of the Permit, its potential is not zero. Thus, consideration of the Dollar Bay Formation as a factor in the calculation of risk/success that goes into the decision to drill an exploratory well is appropriate. Initial Exploratory Activities In 1989, Shell Western E&P, Inc. (Shell), conducted extensive seismic exploration in south Florida. Among the areas subject to seismic mapping were two lines -- one line of 36,000 feet mapped along the L67-A levee, directly alongside the Well Site, and the other of approximately 10 miles in length along the Miami Canal levee. The lines intersect on the Kanter property just north of the Well Site. The proposed exploration well is proposed to extend less than 12,000 feet deep. The seismic mapping performed by Shell was capable of producing useful data to that depth. The seismic methodology utilized by Shell produced data with a high degree of vertical and spatial resolution. Given its quality, the Shell data is very reliable. Shell did not use the seismic data generated in the 1980s, and ultimately abandoned activity in the area in favor of larger prospects, leaving the smaller fields typical of south Florida for smaller independent oil companies. The Shell seismic data was purchased by Seismic Exchange, a data brokerage company. In 2014, Kanter purchased the seismic data from Seismic Exchange for the lines that ran through its property. With the purchase, Kanter received the original field tapes, the support data, including surveyors’ notes and observer sheets which describe how the data was acquired, and the recorded data. As a result of advances in computer analysis since the data was collected, the seismic data can be more easily and accurately evaluated. It is not unusual for companies to make decisions on whether to proceed with exploration wells with two lines of seismic data. Mr. Lakin reviewed the data, and concluded that it showed a very promising area in the vicinity of the L67-A levee that was, in his opinion, sufficient to continue with permitting an exploratory oil well. Mr. Lakin described the seismic information in support of the Application as “excellent data,” an assessment that is well-supported and accepted. Mr. Pollister reviewed the two lines of seismic data and opined that the information supports a conclusion that the site is a “great prospect” for producing oil in such quantities as to warrant the exploration and extraction of such products on a commercially profitable basis. Seismic Data Analysis The seismic lines purchased by Kanter consist of line 970, which runs southwest to northeast along the L67-A levee, and a portion of line 998, which runs from northwest to southeast along the Miami Canal levee. The lines intersect at the intersection of the two levees. The data depicts, among others, the seismic reflection from the strata of the Sunniland Trend, and the seismic reflection from the basement. The depiction of the Sunniland Trend shows a discernable rise in the level of the strata, underlain by a corresponding rise in the basement strata. This rise is known as an anticline. An anticline is a location along a geologic strata at which there is an upheaval that tends to form one of the simplest oil traps that one can find using seismic data. In the South Florida Basin, anticlines are typically associated with mounded bioherms. A “closed structure” is an anticline, or structural high, with a syncline, or dip, in every direction. A closed structure, though preferable, is not required in order for there to be an effective trap. Most of the Sunniland oil fields do not have complete closure. They are, instead, stratigraphic traps, in which the formation continues to dip up and does not “roll over.” Where the rock type changes from nonporous to porous and back to nonporous, oil can become trapped in the porous portion of the interval even without “closure.” Thus, even if the “bowl” is tilted, it can still act as a trap. Complete closure is not necessary in much of the Sunniland Trend given the presence of an effective anhydrite layer to form an effective seal.5/ The seismic data of the Kanter property depicts an anticline in the Sunniland Formation that is centered beneath the Well Site at a depth in the range of 12,000 feet bls. Coming off of the anticline is a discernable syncline, or dip in the underlying rock. Applying the analogies used by various witnesses, the anticline would represent the top of the inverted bowl, and the syncline would represent the lip of the bowl. The evidence of the syncline appears in both seismic lines. The Shell seismic data also shows an anhydrite layer above the Sunniland Formation anticline. The same anticline exists at the basement level at a depth of 17,000 to 18,000 feet bls. The existence of the Sunniland formation anticline supported by the basement anticline, along with a thinning of the interval between those formations at the center point, provides support for the data reliably depicting the existence of a valid anticline. A basement-supported anticline is a key indicator of an oil trap, and is a feature commonly relied upon by geophysicists as being indicative of a structure that is favorable for oil production. The seismic data shows approximately 65 feet of total relief from the bottom to the top of the anticline structure, with 50 feet being closed on the back side. The 50 feet of closed anticline appears to extend over approximately 900 acres. There is evidence of other anticlines as one moves northeast along line 970. However, that data is not as strong as that for the structure beneath the Well Site. Though it would constitute a “lead,” that more incomplete data would generally not itself support a current recommendation to drill and, in any event, those other areas are not the subject of the permit at issue. The anticline beneath the well site is a “prospect,” which is an area with geological characteristics that are reasonably predicted to be commercially profitable. In the opinion of Mr. Lakin, the prospect at the location of the proposed Well Site has “everything that I would want to have to recommend drilling the well,” without a need for additional seismic data. His opinion is supported by a preponderance of the evidence, and is credited. Confirmation of the geology and thickness of the reservoir is the purpose of the exploratory well, with the expectation that well logs will provide such confirmation. Risk Analysis Beginning in the 1970s, the oil and gas industry began to develop a business technique for assessing the risk, i.e., the chance of failure, to apply to decisions being made on drilling exploration wells. Since the seminal work by Bob McGill, a systematic science has developed. In 1992, a manual was published with works from several authors. The 1992 manual included a methodology developed by Rose & Associates for assessing risk on prospects. The original author, Pete Rose,6/ is one of the foremost authorities on exploration risk. The Rose assessment method is a very strong mathematical methodology to fairly evaluate a prospect. The Rose method takes aspects that could contribute to finding an oil prospect, evaluates each element, and places it in its perspective. The Rose prospect analysis has been refined over the years, and is generally accepted as an industry standard. The 1992 manual also included a methodology for assessing both plays and prospects developed by David White. The following year, Mr. White published a separate manual on play and prospect analysis. The play and prospect analysis is similar to the Rose method in that both apply mathematical formulas to factors shown to be indicative of the presence of oil. Play and prospect analysis has been applied by much of the oil and gas industry, is used by the USGS in combining play and prospect analysis, and is being incorporated by Rose & Associates in its classes. The evidence is convincing that the White play and prospect analysis taught by Mr. Aldrich is a reasonable and accepted methodology capable of assessing the risk inherent in exploratory drilling. Risk analysis for plays and prospects consists of four primary factors: the trap; the reservoir; the source; and preservation and recovery. Each of the four factors has three separate characteristics. Numeric scores are assigned to each of the factors based on seismic data; published maps and materials; well data, subsurface data, and evidence from other plays and prospects; and other available information. Chance of success is calculated based on the quantity and quality of the data supporting the various factors to determine the likelihood that the prospect will produce flowable hydrocarbons. The analysis and scoring performed by Mr. Aldrich is found to be a reasonable and factually supported assessment of the risk associated with each of the prospects that exist beneath the proposed Well Site and that are the subject of the Application.7/ However, Mr. Aldrich included in his calculation an assessment of the Lower Sunniland Formation. The proposed well is to terminate at a depth of 11,800 feet bls, which is within the Upper Sunniland, but above the Lower Sunniland. Thus, although the Lower Sunniland would share the same source rock, the exploration well will not provide confirmation of the presence of oil. Therefore, it is more appropriate to perform the mathematical calculation to determine the likelihood of success without consideration of the Lower Sunniland prospect. To summarize Mr. Aldrich’s calculation, he assigned a four-percent chance of success at the Well Site for the Dollar Bay prospect. The assignment of the numeric scores for the Dollar Bay factors was reasonable and supported by the evidence. Mr. Aldrich assigned a 20-percent chance of success at the Well Site for the Upper Sunniland play. The assignment of the numeric scores for the Upper Sunniland factors was reasonable and supported by the evidence. In order to calculate the overall chance of success for the proposed Kanter exploratory well, the assessment method requires consideration of the “flip side” of the calculated chances of success, i.e., the chance of failure for each of the prospects. A four-percent chance of success for Dollar Bay means there is a 96-percent (0.96) chance of failure, i.e., that a commercial zone will not be discovered; and with a 20-percent chance of success for the Upper Sunniland, there is an 80-percent (0.80) chance of failure. Multiplying those factors, i.e., .96 x .80, results in a product of .77, or 77 percent, which is the chance that the well will be completely dry in all three zones. Thus, under the industry-accepted means of risk assessment, the 77-percent chance of failure means that there is a 23-percent chance of success, i.e., that at least one zone will be productive. A 23-percent chance that an exploratory well will be productive, though lower than the figure calculated by Mr. Aldrich,8/ is, in the field of oil exploration and production, a very high chance of success, well above the seven-percent average for prospecting wells previously permitted by the Department (as testified to by Mr. Linero) and exceeding the 10- to 15-percent chance of success that most large oil companies are looking for in order to proceed with an exploratory well drilling project (as testified to by Mr. Preston). Thus, the data for the Kanter Well Site demonstrates that there is a strong indication of a likelihood of the presence of oil at the Well Site. Commercial Profitability Commercial profitability takes into account all of the costs involved in a project, including transportation and development costs. Mr. Aldrich testified that the Kanter project would be commercially self-supporting if it produced 100,000 barrels at $50.00 per barrel. His testimony was unrebutted, and is accepted. The evidence in this case supports a finding that reserves could range from an optimistic estimate of 3 to 10 million barrels, to a very (perhaps unreasonably) conservative estimate of 200 barrels per acre over 900 acres, or 180,000 barrels. In either event, the preponderance of the evidence adduced at the hearing establishes an indicated likelihood of the presence of oil in such quantities as to warrant its exploration and extraction on a commercially profitable basis.9/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Environmental Protection enter a final order: Approving the Application for Oil and Gas Drilling Permit No. OG 1366 with the conditions agreed upon and stipulated to by Petitioner, including a condition requiring that if water is to be transported on-site, it will add additional tanks for the purpose of meeting water needs that would arise during the drilling process, and a condition prohibiting fracking; and Approving the application for Environmental Resource Permit No. 06-0336409-001. DONE AND ENTERED this 10th day of October, 2017, in Tallahassee, Leon County, Florida. S E. GARY EARLY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of October, 2017.
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint issued against him and, if so, what disciplinary action should be taken against him.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Respondent is now, and has been at all times material to the instant matter, registered as a septic tank contractor with the Department. In July 2002, Respondent entered into a contract with Pro Gold Investments Corp. (Pro Gold), whose president and sole owner is Emerico Kemeny Fuller. The contract provided that Respondent would install a "new septic system" for Pro Gold at 453 Blue Road in Coral Gables, Florida (Blue Road Property) for $4,600.00, a job that should have taken only a "few days" to complete. Pro Gold gave Respondent a "job deposit" of $2,300.00. In July 2003, Pro Gold, by Warranty Deed, conveyed title to the Blue Road Property to Maurits de Blank's company, Mortgage Lending Company LLC (MLC), and it also executed a Bill of Sale, Absolute and Assignments of Contracts, which read as follows: PRO GOLD INVESTMENTS CORP, as Seller, in consideration of Ten Dollars ($10.00) and other valuable consideration paid to it by MORTGAGE LENDING COMPANY, LLC, as Buyer, the receipt of which is acknowledged hereby sells, assigns, grants, transfers, and conveys to Buyer all of Seller's right, title, and interest in the following described goods, contracts and personal property: SEE ATTACHED EXHIBIT "A- PROPERTY" AND EXHIBIT "B- CONTRACTS ASSIGNED" Seller covenants and agrees that it is the lawful owner of goods, contracts, rights or interests transferred hereby; that they are free from all encumbrances, except for outstanding amounts due, if any, to those parties set forth on Exhibit "B," and that it has the right to sell, transfer and assign the goods, properties and rights set forth in the attached Exhibit "A," and the right to transfer and assign the contracts, rights or interests shown on Exhibit "B," and will warrant and defend same against the lawful claims and demands or all persons. The "attached Exhibit 'A- Property'" read, in pertinent part, as follows: (Regarding transfer of 453 Blue Road, Coral Gables, Florida, "the Real Property") (Mortgage currently in favor of Mortgage Lending Company, LLC "the Mortgage") All property rights of any kind whatsoever, whether in property that is real, fixed, personal, mixed or otherwise and whether in property that is tangible or intangible, including, without limitation, all property rights in all property of any kind whatsoever that is owned or hereafter acquired by the Company and that is associated with, appurtenant to or used in the operation of the Real Property or is located on, at or upon the Real Property and is associated with or used in connection with or in operation of any business activity conducted on, at or upon the Real Property, and including, without limitation, the following: * * * All right, title, and interest in those certain contracts and agreements [set] forth in the attached Exhibit "B," which are hereby transferred and assigned to Mortgage Lending Company LLC. Among the "contracts and agreements [set] forth in the attached Exhibit 'B,'" was the aforementioned July 2002, contract wherein Respondent agreed to install a "new septic system" for Pro Gold on the Blue Road Property (Septic System Contract). This contract was still executory. Respondent had not done any work on the site in the year that had passed since the contract had been signed. In the beginning of August 2003, Mr. de Blank met with Respondent and advised him that MLC was the new owner of the Blue Road Property and that MLC had also received an assignment of the Septic System Contract from Pro Gold. In response to this advisement, Respondent stated "he did not do assignments." Following this meeting, Mr. de Blank sent Respondent documentation supporting the assertions he had made regarding MLC's ownership of the Blue Road Property and its having been assigned the Septic System Contract. Mr. de Blank then attempted, unsuccessfully, to make contact with Respondent by telephone. He "left messages," but his telephone calls were not returned. These efforts to telephonically communicate with Respondent having failed, Mr. de Blank "decided that it may make some sense to start a letter writing program." As part of that "program," on September 8, 2003, Mr. de Blank sent Respondent the following letter: Re: 453 Blue Road, Coral Gables As background, and in chronological order: Pro Gold Investments purchased the above cited property and obtained a construction loan from our firm. One of the conditions was that all construction contracts would be assignable to our firm in the event of default. Pro Gold Investments entered into contract with your firm to install a new septic tank and drainfield at 453 Blue Road. Pro Gold Investments defaults and forfeits title in lieu of foreclosure. The deed was recorded on August 4, 2003, at Bk/Pg: 21484/4283. Not recorded but attached for your reference is an assignment of contracts to include the contract Pro Gold Investments entered into with your firm. See further attachment. The original can be inspected in my office. At this point, I request you proceed with the work as soon as practical and under identical conditions as originally agreed with Pro Gold Investments. Please call me at . . . to confirm a start date. Mr. de Blank did not receive any response to his letter. He finally was able, however, to reach Respondent on the telephone. During this telephone conversation, Mr. de Blank made arrangements to meet Respondent at the Blue Road Property to discuss Respondent's doing the work Respondent had agreed to do in the Septic System Contract. This meeting between Mr. de Blank and Respondent took place on September 11, 2003. During the meeting, Mr. de Blank went over with Respondent "what the job [was] going to be." Although Respondent indicated that he was "going to put in th[e] septic tank" per the Septic System Contract, Mr. de Blank had his doubts that Respondent would be true to his word. Following the meeting, Mr. de Blank sent Respondent the following letter: Re: 453 Blue Road, Coral Gables We met today to discuss the above referenced job. My understanding is: You will start the job no later than the first week of October and will complete the job no later th[a]n the last week of October. I will obtain a copy of the approved permit. You indicated you will not need a survey.[1] Should you change you[r] mind, you can always refer to a survey I keep on site. You will have your insurance agent mail to my address a certificate of insurance. Though not discussed: I would like a partial release of payments made to date for the job. See further the attachment. Assuming you concur, then please send a signed and notarized copy to Maurits de Blank, Mortgage Lending Company, Post Office Box 430336, Miami, Florida 33143. Note that I prefer for various legal reasons that you use the release form as provided. Once the job has been started, I would like a list of firms supplying materials to the job. Notwithstanding that he had promised Mr. de Blank that he would "start the job no later than the first week of October," by the middle of October Respondent had yet to even "pull a septic tank construction permit from the City of Coral Gables" (that was needed before any on-site work could begin).2 In an attempt to find out from Respondent what was the cause of the delay, Mr. de Blank started a "calling campaign," but Respondent neither answered the telephone when Mr. de Blank called nor returned Mr. de Blank's calls. On October 19, 2003, Mr. de Blank sent the following letter to Respondent (by certified United States Mail, return receipt requested): Re: 453 Blue Road, Coral Gables I need a firm commitment when you will start and finish septic tank at above address. If you cannot perform the work, then I will need a refund of the deposit given to your firm. Please call to discuss. The end of the month was fast approaching, and Respondent had neither contacted Mr. de Blank nor begun the Septic System Contract on-site work. After paying a visit to Coral Gables City Hall and learning that Respondent had still not even "pull[ed] a septic tank construction permit from the City of Coral Gables," Mr. De Blank found another septic tank contractor, Westland Septic Tank Corp., to do the installation work for MLC that Respondent was contractually obligated to perform. MLC paid Westland $4,400.00 to do the work. Westland completed the job some time prior to November 4, 2003. The work passed all of the necessary inspections. Upon learning that MLC had contracted with Westland, Respondent sent Mr. de Blank a letter complaining that Mr. de Blank had not given Respondent an adequate opportunity to meet his obligations under the Septic System Contract. In the letter, Respondent offered to return only $500.00 of the $2,300 down payment he had received from Pro Gold. Mr. de Blank subsequently informed Respondent that this was not satisfactory and that he wanted the "full deposit back." He added that if he did not get it, he would "go to court." Not having received any portion of the "deposit back," Mr. de Blank, acting on behalf of MLC, in mid-November 2003, filed suit against Respondent in Miami-Dade County Court. On May 14, 2004, a Final Judgment was entered in Miami-Dade County Court Case No. 0313813 in favor of MLC and against Respondent "in the amount of $1,675.00 plus court costs in the amount of $121.00." As of the date of the final hearing in this case, Respondent had not made any payments to MLC. In view of the foregoing, it is found that Respondent abandoned for 30 consecutive days, without any apparent good cause, a project in which he was under contractual obligation to complete; and his failure to go forward with the project, combined with his failure to return any of the deposit he had received, caused monetary harm to a party to whom he was contractually obligated.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby: RECOMMENDED that the Department issue a final order finding Respondent guilty of the misconduct alleged in the Administrative Complaint and disciplining him therefor by fining him $500.00 and suspending his registration for 90 days. DONE AND ENTERED this 4th day of February, 2005, in Tallahassee, Leon County, Florida. S 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 4th day of February, 2005.
The Issue The issue is whether Respondents are guilty of misrepresentation or breach of trust and, if so, what penalty should be imposed.
Findings Of Fact In October 1993, Respondent Sylvester (Respondent) took his daughter, whose last name was Rodriguez by marriage, to a real estate sales office that was selling units of a new condominium building. Respondent's daughter was 42 years old at the time. Speaking to the qualifying broker for the selling broker, Respondent advised her that he was a real estate salesperson for Respondent Lyric Realty Group, Inc. and wanted to show a unit to his daughter. Respondent referred to his daughter by name, rather than as his daughter, and did not mention to the broker that his customer was his daughter. Respondent gave the qualifying broker his card and signed his name in a log to protect his interest in the cooperating broker's sales commission. After touring a model unit, Mrs. Rodriguez expressed sufficient interest that Respondent obtained a form contract from the qualifying broker before leaving the premises. Respondent completed the contract, but left negotiations to Respondent Mitulinsky because Respondent was going out of town. Respondent Mitulinsky is the qualifying broker for Respondent Lyric Realty Group, Inc. Her involvement with the transaction was limited to contact with the listing broker, transmitting prices between Mrs. Rodriguez and the seller. Respondent Mitulinsky did not disclose that Mrs. Rodriguez was Respondent's daughter. But the evidence fails to suggest that Respondent Mitulinsky was in any way aware that the seller's broker was ignorant of the relationship between Respondent and Mrs. Rodriguez. The evidence also fails to suggest that the nature and extent of the conversations between Respondent Mitulinsky and the qualifying broker were such as to support an inference of concealment of the relationship by Respondent Mitulinsky. Prior to agreeing upon a final price, the seller's qualifying broker agreed to increase the commission to be paid Respondent Lyric Group Realty, Inc. by one percentage point to three percent. The listing price for the unit was $285,000. Mr. and Mrs. Rodriguez submitted the contract with a price of $240,000. Following verbal negotiations, the seller returned the same contract with a price of $268,000, which the buyers accepted on October 29, 1993. A salesperson employed by the listing broker admits that she knew of the relationship between Respondent and his daughter prior to closing. After the contract was signed but prior to closing, Respondent, Mrs. Rodriguez, a home inspector, and the salesperson visited the unit. As the inspector worked, Mrs. Rodriguez and her father spoke freely, as they had in past visits, with Mrs. Rodriguez referring to Respondent as "dad" and he referring to her by her first name. The salesperson immediately informed her broker, who immediately reported the information to the seller. However, the seller elected to do nothing with the information because he was satisfied with the sales price and net proceeds. Mr. and Mrs. Rodriguez were purchasing the first unit to be sold at the seller's project. This makes the first transaction especially risky for both the seller and the buyers. The purchase price represented the fair market value for the unit. The unit appraised at $271,000 at the time of the sale to Mr. and Mrs. Rodriguez. On January 6, 1994, the parties closed on the unit pursuant to the provisions of the contract. The $16,080 sales commission was split evenly between the listing broker and Respondent Lyric Realty Group, Inc.
Recommendation It is RECOMMENDED that the Division of Real Estate enter a final order dismissing the administrative complaint against all respondents ENTERED on September 30, 1996, 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 this September 30, 1996. COPIES FURNISHED: Henry M. Solares, Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Daniel Villazon, Senior Attorney Department of Business and Professional Regulation 400 West Robinson Street Orlando, Florida 32802 Peter Hobson, Esquire 606 East Madison Street Tampa, Florida 33602
The Issue The issue in this case is whether Petitioner's site, Circle K General, Inc., Store #2375, located at U.S. #1 and Pennekamp Park, is eligible for restoration pursuant to the Florida Petroleum Liability and Restoration Program (FPLIRP) set forth in Section 376.3072, Florida Statutes.
Findings Of Fact Petitioner, Circle K General, Inc., Store #2375 owns and operates a petroleum storage site located at U.S. #1 and John Pennekamp Park, Key Largo, Florida. The DER Facility ID Number for the site is 448624728. Circle K operates at the site three 10,000 gallon fiberglass tanks which contain gasoline. The tanks currently operated at the site were installed in 1987. Four monitoring wells for the site were installed at the same time as the Circle K tanks were installed in 1987. Monthly monitoring well reports were completed each month beginning on December 12, 1987, and ending on July 30, 1989, by Professional Services Industries on behalf of Circle K. Steve Belin is the individual at Circle K responsible for reviewing or supervising the review of the monitoring well reports for Store #2375. The November 26, 1988, monthly monitoring well report indicated the presence of petroleum odor in all four of the monitoring wells at the site. After receipt of the November 26, 1988, monthly monitoring report, neither Steve Belin nor any employee of Circle K filed a Discharge Notification Form with the Department. After receipt of the November 26, 1988, monthly monitoring report, neither Steve Belin nor any employee of Circle K undertook steps to investigate the source or cause of the petroleum odor. The monthly monitoring report dated March 20, 1989, indicates the presence of a petroleum odor in one of the four monitoring wells. After receipt of the March 20, 1989, monitoring well report, neither Steve Belin nor any employee of Circle K filed a Discharge Notification Form with the Department. After receipt of the March 20, 1989, monthly monitoring report, neither Steve Belin nor any employee of Circle K undertook steps to investigate the source or cause of the petroleum odor. The July 30, 1989, monthly monitoring well report indicates the presence of petroleum product in all four monitoring wells. The July 30, 1989, monthly monitoring well report was not received by Steve Belin until September, 1989. On July 31 and August 1, 1989, Combustion Engineering installed a set of four new compliance monitoring wells. Circle K contracted for the installation of new monitoring wells because the four existing monitoring wells were only 15 feet deep and were dry. By letter dated August 17, 1989, Combustion Engineering notified Steve Belin that a petroleum odor was detected in the soils retrieved while drilling one of the new monitoring wells and that a petroleum odor was also detected in one of the old monitoring wells. On August 21, 1989, Steve Belin filed a Discharge Notification Form with the Department for Circle K Store #2375. After the discharge notification was filed on August 21, 1989, none of the tanks were taken out of service. After the filing of the August 21, 1989 Discharge Notification Form, Circle K inspected the inventory records for the site beginning in October, 1988, through September, 1989, and detected no significant loss of petroleum product. On October 6, 1989, an inspection of Circle K Store #2375 was conducted by Leslie Rueth of the South District Office of the Department of Environmental Regulation. At the time of the October 6, 1989, DER inspection, free product was noted in two of the four new monitoring wells, and all of the wells contained a petroleum odor. On October 19, 1989, the South District Office of Department of Environmental Regulation notified Steve Belin of the October 6, 1989, inspection results and requested (1) that a tank and line tightness test be performed to determine if there was a leak in the petroleum storage system and (2), if free product was present, that an initial remedial action (IRA) be implemented as defined in F.A.C. Rule 17-70.006. An Initial Remedial Action consists of the removal of free product through the bailing or pumping of free product off the water table and may include the removal of excessively contaminated soil. On October 30, 1989, Steve Belin submitted tank tightness test results for the three 10,000 gallon tanks located at Circle K Store #2375. All three tanks passed the tank and line tests. By letter of October 17, 1989, Steve Belin requested ATEC Associates, Inc. to have all of the monitoring wells of Store #2375 bailed of free product once a week for one month. The free product present at Store #2375 resulted from old tanks and piping installed by Circle K's predecessor, U Under Florida Administrative Code Rule 17 presence of a layer or odor, or the positive report of a laboratory that the monitoring well sample contains pollutant, shall be treated as a discharge. A properly installed monitoring well should have at least one foot of water in the well in order to be able to take a water sample from the well. If a foot or less of water is present in a monitoring well, a vapor monitoring device should be used to test the wells. From December, 1987, until July, 1989, the Circle K monitoring wells were usually dry. Under Florida Administrative Code Rule 17 wells must be constructed such that the bottom of the casing is at least five feet below the water level at the time of drilling but no deeper than 25 feet. The monitoring wells constructed at Circle K Store #2375 did not meet the construction specifications set forth in Chapter 17-61, Florida Administrative Code. Florida Administrative Code Rule 17-61.050(b)(6) requires discharges to be reported to the Department within three working days of discovery. DER was not notified of a discharge subsequent to either the November 26, 1988, or the March 20, 1989, monitoring well reports, nor did Circle K contain the leak.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Environmental Regulation enter a Final Order denying the Petitioner's application for site restoration pursuant to the Florida Petroleum Liability and Insurance Program (FPLIRP). DONE and ENTERED this 27th day of August, 1990, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 1990. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-2065 To comply with the requirements of Section 120.59(2), Florida Statutes (1989), the following rulings are made on the Respondent's proposed findings of fact (the Petitioner not having filed any): 1.-27. Accepted and incorporated. Cumulative. Accepted; subordinate to facts found. 30.-33. Accepted but subordinate and unnecessary. 34.-38. Accepted and incorporated. 39. Cumulative. 40.-41. Accepted and incorporated. 42. Accepted but subordinate to facts found and unnecessary. 43.-44. Accepted but subordinate and unnecessary. Conclusion of law. Accepted but unnecessary. 47.-48. Accepted but subordinate and unnecessary. 49. Cumulative and unnecessary. COPIES FURNISHED: Steve Belin The Circle K Corporation Regional Environmental Director 500 South Faulkenburg Road Tampa, FL 33619 Janet E. Bowman, Esquire Assistant General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Dale H. Twachtmann, Secretary Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400 Daniel H. Thompson General Counsel Department of Environmental Regulation 2600 Blair Stone Road Tallahassee, FL 32399-2400
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that respondent Department of Highway Safety and Motor Vehicles enter a final order granting the application of petitioner Naughton Chrysler- Plymouth and Dodge, Inc., for a motor vehicle dealer license. RECOMMENDED this 18th day of September, 1985, in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of September, 1985.
The Issue The issue is whether Respondent discriminated against Petitioner on the basis of her gender or subjected her to a hostile work environment in violation of Section 760.10, Florida Statutes (2006).1
Findings Of Fact Petitioner is an aggrieved person within the meaning of Subsection 760.02(10). Petitioner is a female and filed a complaint with the Commission alleging that Respondent engaged in gender discrimination, sexual harassment, and the creation of a hostile work environment. Respondent is an employer within the meaning of Subsection 760.02(7). Respondent operates a car dealership and services new and used Chrysler-manufactured automobiles and trucks in the State of Florida. Respondent hired Petitioner as a lube tech in Respondent’s service department on July 26, 2006. Petitioner was the only female employee in the service department. Petitioner remained employed as a lube tech in the Quick Lube part of the service department throughout her employment and earned $7.50 per hour. Respondent did not raise or lower Petitioner’s compensation during her employment. Respondent terminated Petitioner’s employment on February 28, 2007. On March 22, 2007, Petitioner obtained employment at an automobile dealership in West Palm Beach, Florida, at an hourly rate of $13.00. Arrigo Dodge Chrysler Jeep (Arrigo) hired Petitioner as a pre-delivery inspection technician, but Petitioner voluntarily terminated that employment for personal reasons unrelated to this proceeding.2 On or about February 28, 2007, Petitioner filed a claim for unemployment compensation.3 Respondent responded to the claim on March 8, 2007. The response stated, in relevant part, that Mr. Richard Burton, the service manager and Petitioner’s immediate supervisor during her employment with Respondent, terminated Petitioner’s employment for violation of Respondent’s so-called “no-dating” policy. The no-dating policy prohibits Respondent’s employees who are managers or supervisors from dating non-management employees. The response to the unemployment compensation claim is an admission within the meaning of Subsection 90.803(18)(a). However, the admission contains two factual inaccuracies. First, Mr. Burton had no authority to hire or fire employees he supervised. Second, the no-dating policy was not a ground for the termination of Petitioner’s employment. As further described in subsequent findings, Respondent corrected the inaccuracies in the response to the claim for unemployment compensation through testimony at the administrative hearing in this proceeding. The fact-finder found the testimony to be credible and persuasive. August 3, 2007, when Petitioner filed the Charge of Discrimination, was the first time Petitioner alleged that Mr. Burton coerced her into having sexual intercourse with him on October 5 and 13, 2006, and harassed her thereafter. The Charge of Discrimination alleges in relevant part: On October 5, 2006, Richard Burton invited me out drinking with a group after work. After drinking, when all others left, he walked me to my car where he began to kiss me. I pushed him away, but he continued. I felt if I did not acquiesce, I would be fired. He grabbed my breast and put his hand down my pants. He then directed me to his car, drove across the street, exited his side of car, came to my side and had sexual intercourse with me. He then drove me back to my care [sic] and I went home crying. On October 13, 2006, Mr. Burton again invited me for drinks, and directed me to perform oral sec [sic] in the parking lot of the bar. He then attempted to have sexual intercourse with again, but could not. . . . I was invited out for drinks with Mr. Burton again, but refused. On two occasions, I was told by Richard Burton that if I did not continue our relationship, I would be fired. The treatment became terrible. Mr. Burton no longer protected me from the nasty comments of other employees, including other employees saying I was “stupid”, telling me to “go home and make babies” because that is what I was supposed to do and that I did not belong. Some of the worst comments came from Joseph Roadkit, technician, Dave Morgan, technician, Curtis, technician, and Devon, porter. I became friends with another technician, Wesley Wilkerson. On occasions when I was not busy, I would attempt to learn from him. I spend time with him as he was an experienced technician. Despite other lube techs talking to other employees when they are slow, I was disciplined in January 2007, for talking to Mr. Wilkerson. I transferred from an inside job with opportunities to learn and advancement to working outside with limited opportunities. This decision was made by Richard Burton and Tom Grabby [sic], Manager of Fixed Operations. Eventually, in February 2007, Joseph Roadkit was terminated due to his behavior. On February 24, 2007, Richard Burton invited me out for drinks for the first time in a while. I initially agreed until he advised I would have to drive him home. I advised him I could not. Mr. Burton assured me he would never fire me as I had hit his “soft spot”. I refused to go out with him. Four days later Richard Burton approached me at work with the manager of fixed operation’s wife, Patti Grabby [sic]. Mr. Burton advised me I was terminated as there was no room for me in the shop anymore. I was not the least qualified nor was I the last hired. Mr. Burton did not testify in the administrative hearing. Respondent terminated the employment of Mr. Burton, sometime after Respondent terminated the employment of Petitioner, because Mr. Burton was no longer licensed to drive, and a valid driver’s license is a job requirement of the position held by Mr. Burton. Petitioner’s testimony was the only testimony concerning the alleged coerced sexual intercourse and sexual harassment by Mr. Burton. The fact-finder finds the testimony of Petitioner to be less than credible and persuasive. Petitioner’s testimony that she was the victim of sexual coercion on October 5, 2006, is less than persuasive. Petitioner had a restricted driver’s license that authorized her to drive to and from work. Petitioner drove to a local Ale House to have drinks with Mr. Burton, Mr. Radtke, and Mr. Radtke’s wife. Everyone at the table was drinking alcoholic beverages. Petitioner consumed six alcoholic beverages in approximately four hours. Petitioner consumed two drinks identified in the record as Smirnoff Ice, a malted-rum, bottled drink, and four shots, identified in the record as vanilla vodka. After the fifth shot, Petitioner went to the bathroom, “puked up my cheeseburger and the rest of the drinks,” returned to the table, and consumed the sixth shot. The testimony of Petitioner during the hearing contains several inconsistencies with her deposition testimony, responses to discovery, and allegations in the Charge of Discrimination. Petitioner alleges in the Charge of Discrimination, “I felt if I did not acquiesce, I would be fired.” Petitioner found greater detail in her testimony during direct examination in the final hearing. Petitioner testified that after sexual intercourse in Mr. Burton’s vehicle, Mr. Burton said, “If you tell anybody, I will fire you.” The Charge of Discrimination does not allege that Mr. Burton used force to engage in sexual intercourse with Petitioner. The testimony of Petitioner during direct examination in the final hearing claims that Mr. Burton prevented Petitioner from exiting the vehicle by grabbing her hand each time she reached for the door handle. Petitioner did not seek medical treatment for rape and did not report a rape to any law enforcement agency. Petitioner viewed the alleged encounters with Mr. Burton as “dates.” Q. Did what happened between you and Richard Burton, did you consider that dating? A. Yes. Q. Why did you consider that dating? A. Because sex is sex. Transcript (TR) at 130, lines 5 through 9. The Charge of Discrimination alleges that Mr. Burton accompanied Petitioner to his vehicle on October 5, 2006, after Mr. Radtke and his wife had left the Ale House. Petitioner testified on direct examination in the final hearing that Mr. Radtke and his wife were at the restaurant while the alleged coerced sexual intercourse occurred. Petitioner testified that she agreed to meet Mr. Burton for drinks again on October 13, 2006. Mr. Radtke and his wife were again present at the restaurant. When Mr. Burton allegedly offered to accompany Petitioner to her vehicle, Petitioner did not ask Mrs. Radtke to accompany her. Petitioner testified that the alleged coerced sexual intercourse on October 5 and 13, 2006, occurred in Mr. Burton’s vehicle. Petitioner’s testimony lacks plausibility. Petitioner weighed 170 pounds at a height of five feet, six inches, and Mr. Burton weighed 194 pounds at a height of five feet, eight inches. Mr. Burton drove a Jeep Compass on both nights, the smallest of the sport utility vehicles manufactured by Jeep. On October 5, 2006, Petitioner testified that Mr. Burton placed Petitioner in the passenger side of the vehicle, told her not to open the door, walked to the other side of the car, sat in the driver’s seat, and drove to a construction site across the parking lot that was abandoned at that time of night. Q. So when he drove the car over to that construction area, how did he get you in the back seat? A. He threw me between the two seats.[4] Q. What happened next? A. Well, he went-–he came into the back. And he put my panties down to about my knees, and he put his dick in me. I’m screaming, “No. Stop.” Q. And what happened next? A. He finished and I ran pulling up my underwear to my car. The Charge of Discrimination alleges that Mr. Burton drove Petitioner back to her car after the sexual intercourse on October 5, 2006. Petitioner’s vehicle was parked in the parking lot at some distance from the construction area. The table where Mr. Radtke and his wife were sitting is in the outside bar area of the restaurant. Petitioner testified that her screams were not heard by patrons in the outside bar because the bar was crowded and noisy. Petitioner did not present the testimony of any witnesses in the outside bar who, more likely than not, would have observed Petitioner running from the construction area to her vehicle at some distance across the parking lot while Petitioner pulled her underwear up from her knees. On October 5 and 13, 2006, Petitioner remained in the passenger seat of Mr. Burton’s vehicle, with nothing preventing her from leaving the vehicle, while Mr. Burton allegedly walked from the passenger’s side to the driver’s side of the vehicle. Other inconsistencies further attenuate the testimony of Petitioner. During the final hearing, Petitioner claimed the coerced intercourse occurred on October 2 and 3, 2006. Although those dates correspond to telephone communications between Mr. Burton and Petitioner, Petitioner’s sworn Answers to Respondent’s First Set of Interrogatories, sworn statement in her Charge of Discrimination, and prior deposition testimony all allege that her contact with Mr. Burton was on October 5 and 13, 2006. Petitioner testified in the administrative hearing that on October 5, 2006, Petitioner contacted Mr. Burton to let him know that she would meet him for drinks. In her deposition, Petitioner testified that on the night of the first incident, Mr. Burton called her to confirm her attendance. Petitioner contends that Mr. Burton called her several times on the night of the second incident, both before and after the incident. The evidence clearly demonstrates that Petitioner received no telephone calls from Mr. Burton on either October 5 or 13, 2006. Petitioner testified in the final hearing that she was wearing a dress on the night of the first incident. However, in sworn Answers to Respondent’s First Set of Interrogatories, Petitioner alleges that Mr. Burton “put his hand down [her] pants.” The same allegation is reiterated by Petitioner in the Petition for Relief. In her deposition, Petitioner testified that Mr. Burton allegedly stuck his hand down her pants and that at the end of the first incident, Petitioner left pulling up her “pants and underwear.” (Emphasis supplied) Petitioner unpersuasively attempted to explain the apparent discrepancy by testifying in the final hearing that when she uses the term “pants” she is referring to her underwear. Petitioner did not avail herself of the procedures outlined in Respondent’s written No Harassment policy for complaining about discrimination, sexual harassment, or the creation of a hostile work environment. Written Equal Employment Opportunity and No Harassment policies are contained in Respondent’s Employee Handbook. The written policy specifically prohibits its employees from engaging in any verbal or physically offensive conduct and expressly prohibits offensive sexual remarks, advances, or requests. Further, the written policy explicitly describes the procedures available to a victim to report violations.5 Petitioner received the Employee Handbook and reviewed the Equal Employment Opportunity and No Harassment policies at the time of her hiring. Petitioner acknowledged in writing her receipt, review, and understanding of these policies. The evidence does not establish a prima facie showing that Respondent discriminated against Petitioner, harassed Petitioner, or created a hostile work environment. Respondent terminated Petitioner’s employment for valid business reasons unrelated to Petitioner’s gender or the alleged coerced sexual intercourse by Mr. Burton. When Respondent first employed Petitioner, Petitioner enrolled in the Chrysler Dealer Connect computer training system for Level I and II courses and examinations, which was the customary practice of new employees in the service department. Technicians such as Petitioner must complete each training course and examination to reach the next level of certification. Petitioner claims, in relevant part, that Respondent prevented Petitioner from talking to and learning from more experienced technicians. However, lube technicians such as Petitioner do not advance through the Chrysler training program by talking to service technicians. Respondent provided Petitioner with access to the Chrysler Dealer Connect training courses through a computer area in its service department. Petitioner, like other technicians, also had access to computers in management offices when available. Petitioner remained in the Chrysler Dealer Connect system up to and through February 2007. In eight months of employment, Petitioner completed Level I certification and several Level II courses. The average for Level I and II course completion and certification in the service department is three and one-half months. Respondent pays lube technicians and service technicians differently. Respondent pays lube technicians an hourly rate and pays service technicians a flat rate based on work actually completed. Respondent maintains a policy that requires lube technicians who are not busy to either clean their work area or train through the Chrysler Dealer Connect system. The policy prohibits lube technicians from training by talking to service technicians in lieu of Chrysler training. Lube technicians who socialize with service technicians reduce the production rates of service technicians and reduce the lube technicians’ Chrysler training time. Respondent repeatedly corrected Petitioner for spending her free time at work socializing with service technicians in their bays rather than utilizing the Chrysler Dealer Connect training system. The corrections were verbal, as are the majority of Respondent’s corrective measures. Chrysler requires Respondent to maintain a monthly Customer Service Index (CSI) of approximately 90 percent. A CSI is a manufacturer-distributed evaluation by consumers based on customer satisfaction with the service provided by the service department. The consequences of a low CSI is detrimental for Respondent. The Quick Lube portion of Respondent's service department has significant CSI implications because of the high volume of customer contact. Petitioner worked in the Quick Lube part of the service department during her employment with Respondent. Respondent repeatedly corrected Petitioner for noncompliance with Respondent’s “Personal Appearance” policy. Petitioner did not keep her shirt tucked in. Petitioner did not wash her hands after working on a customer’s vehicle. Petitioner did not wear a clean uniform despite having several in her possession. Petitioner did not wear her hat facing forward. Petitioner’s unprofessional appearance and her visibility at Respondent’s Quick Lube caused her to be singled out by customers to Mr. Tom Grabbe, the fixed operations manager for Respondent and the immediate supervisor of Mr. Burton. Respondent received numerous customer complaints about Petitioner’s poor quality of work and performance. In August 2007, Petitioner received three negative Customer Feedback Reports (CFRs) for poor job quality and performance. One customer waited an hour and a half for an oil change when the Quick Lube was not busy. Petitioner failed to put the oil cap back onto the engine of another customer’s vehicle. Petitioner put too much oil into the engine of another customer’s vehicle and soiled the fender of that vehicle with oil. On January 25, 2007, a fourth CFR complained about Petitioner’s poor quality of work and performance. Petitioner was using her cellular telephone while rotating tires. Petitioner also dropped a tool on the customer’s vehicle and dented the body of the vehicle. Petitioner received other customer complaints. Not every customer complaint regarding Petitioner’s poor work quality and performance was reduced to writing as a CFR. Some customer complaints that were made on-site to Respondent’s employees would not generate a CFR because the complaint was resolved immediately. Petitioner admitted to being reprimanded at least two times in addition to the previously discussed CFRs for getting grease on cars. Petitioner was also instructed to wipe dirt and grease off customer vehicles after customers complained. In January 2007, Mr. Grabbe transferred Petitioner from an interior lube bay to an exterior lube bay. The transfer was in response to complaints from service technicians that Petitioner’s numerous attempts to socialize with them was affecting their production. The transfer from an inside bay to an outside bay in the Quick Lube portion of the service department was not a demotion. Petitioner continued the duties of a lube tech. Petitioner received the same compensation she received prior to the transfer. Petitioner had the same access to the Chrysler Dealer Connect training system before and after the transfer. Respondent required male lube techs to work in both the inside and outside lube racks. In January 2007, service advisors informed Mr. Grabbe that customers continued to complain about Petitioner leaving grease on their vehicles. After Petitioner received her fourth CFR in January 2007, Mr. Grabbe instructed Ms. Wisty Fisher, the customer relations manager for the Service Department, to gather a sample of the customer complaints about Petitioner and to review the CFRs with Petitioner and Mr. Burton. Ms. Fisher and Mr. Burton both addressed the four CFRs with Petitioner in a meeting and informed Petitioner that she needed to “clean up her act” and be more aware and conscious of the customers’ vehicles. The four CFRs compiled by Ms. Fisher were put into Petitioner’s personnel file. Respondent continued to receive customer complaints regarding Petitioner. On the evening of February 27, 2007, Mr. Grabbe received a telephone call from a customer of Respondent complaining that grease and dirt had been left on his vehicle. Mr. Grabbe reviewed the service ticket number and discovered that Petitioner had been responsible for working on the vehicle. Mr. Grabbe instructed Mr. Burton to terminate Petitioner the following morning because of Petitioner’s inability to refrain from getting grease on customer vehicles. Mr. Grabbe was the sole decision-maker in terminating Petitioner’s employment with Respondent. Mr. Burton did not raise the issue of whether Respondent should terminate Petitioner’s employment. On February 28, 2007, Respondent terminated Petitioner’s employment based on Mr. Grabbe’s determination that Petitioner’s continued poor work quality and performance threatened Respondent’s CSI score. Respondent did not terminate Petitioner’s employment for violation of Respondent’s “No Dating” policy. Neither Respondent nor any of its employees had any knowledge of Petitioner dating any individual employed by Respondent until after Petitioner was terminated. Mr. Burton did not have authority to hire or fire any employee of Respondent. Mr. Burton had the authority to discipline Respondent’s employees subject to the prior approval of Mr. Grabbe. Respondent did not create or acquiesce in a hostile work environment for Petitioner. In September 2006, Petitioner was called a “stupid idiot” by one of Respondent’s employees, Mr. Richard Lawrence. Petitioner alerted Mr. Burton to the comment, and Mr. Burton reprimanded Mr. Lawrence. At the time, Petitioner lived with Mr. Lawrence. The comment by Mr. Lawrence was the only negative comment made to Petitioner prior to October 13, 2006. After October 13, 2006, the only comments which Petitioner was subjected to were from co-employees and pertained to Petitioner needing to “get back to work” and “do more stuff.” Petitioner never complained to any employee of Respondent regarding any alleged comments after October 13, 2006.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order finding that Respondent did not commit the factual allegations and violations alleged in the Charge of Discrimination and Petition for Relief. DONE AND ENTERED this 13th day of November, 2008, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of November, 2008.
Findings Of Fact On March 8, 1988, Seacrest Cadillac, Inc., filed an application with the Department for a motor vehicle dealer license to establish a new Cadillac dealership in Port Richey, Florida on U.S. Highway 19. Port Richey is located in Pasco County. Thereafter, pursuant to the provisions of Section 320.642, Florida Statutes, Larry Dimmitt Cadillac, Inc., a Cadillac dealer currently operating in Clearwater, Florida, filed a protest to the application with the Department and requested formal hearing. The general geographic area pertinent to the issue herein is the Cadillac, Tampa Multiple Dealer Area, (MDA). An MDA is an area in which more than one dealer of a line-make shares a contractual Area of Primary Responsibility, (APR), with one or more other dealers of the same line-make. The MDA is defined by contractual agreement between the manufacturer and its dealers: in this case Cadillac Motor Division of General Motors Corporation and the relevant Cadillac dealers within the area. The Cadillac, Tampa MDA is comprised of Hillsborough, Pinellas, Pasco and Hernando Counties. Three existing Cadillac dealers are in operation in this area. Dimmitt is located on U.S. Highway 19 north of State Road 60 in the Countryside Mall area of Clearwater in Pinellas County 21 miles south of the proposed Seacrest location and approximately 40 minutes driving time away. Dew Cadillac is located in downtown St. Petersburg, also Pinellas County, at Third Avenue South and Third Street, 40 miles south of the proposed Seacrest location and approximately 1 hour and 19 minutes driving time away. Morse Cadillac, (previously Bay Cadillac), is located in Tampa, Hillsborough County, at the intersection of Florida and Fletcher Avenues, 35 miles and approximately 58 minutes driving time away. There are also Cadillac dealers in Lakeland, Lake Wales, and Bradenton, but these dealerships are not included in the Cadillac, Tampa MDA and based upon sales and registration information concerned with Cadillac consumer behavior, these dealers and the areas they serve are not a part of the community or territory relevant to this hearing. The Cadillac, Tampa MDA is broken down into 5 separate Areas of Geographic Sales and Service Advantage (AGSSA). Each AGSSA represents an area wherein a dealer enjoys a competitive advantage over other dealers of the same line-make because of his geographic location. The 5 AGSSAs relevant here are: Northern Tampa plus eastern Pasco and Hernando Counties. (Morse) Southern Pinellas County (Dew) Northern Pinellas County (Dimmitt) Western Pasco and Hernando Counties.. (proposed for Seacrest) Eastern Tampa near Brandon (no dealership within) AGSSAs comprised of U.S. census tracts or otherwise well accepted geographic descriptions, are determined by the manufacturer who assigns each geographic piece to its nearest dealer or proposed dealer location unless there is some overriding consideration such as a natural or man made barrier, (Tampa Bay), or a demonstrated unwillingness by consumers to travel from one area to another. AGSSA sizes and the geographic areas are flexible and can be changed over time on the basis of changing population patterns and purposes. The geographic definition of AGSSA 4 has changed from time to time and may well change in the future. The greatest growth in Pinellas County is in the northern portion contiguous to Pasco County which, itself, can be expected to experience a substantial growth in the future. AGSSA 4 consists of census tracts and geographical pieces which are closer to the proposed Seacrest location than to any other existing Cadillac dealer or which, utilizing sound business judgement, should be assigned to AGSSA 4. Consumer research indicates that within the Cadillac, Tampa MDA there are two separate market areas generally separated by Tampa Bay. Those east of the bay, (AGSSAs 1 and 5, covering Tampa and Brandon), constitute one of the market areas. The area west and northwest of the bay, (AGSSAs 2, 3, and 4, consisting of St. Petersburg, Clearwater and Port Richey, respectively), constitutes the other. The eastern market area, made up of AGSSAs 1 and 5, are not only geographically but by consumer behavior, separated from the other three and do not constitute a part of the community or territory relevant to the issues herein. A Cadillac dealership is not currently located in Port Richey. For that reason, a determination whether AGSSAs 2, 3, and 4 comprise a single community or territory, or whether AGSSA 4 is separate and distinct is not easy to make. Indications are that it is a single community or territory and that the establishment of a dealership in Port Richey would not change this. Clearly there are two and Petitioner contends three separate auto shopping areas for high group or prestige/luxury cars along U.S. Highway 19 within the AGSSA 2, 3, 4 community or territory. One of these surrounds Dew Cadillac in St. Petersburg; one is in the area of Dimmitt Cadillac in Clearwater; and the third, if it exists as Petitioner claims, would be located near Port Richey in the area of the proposed Seacrest location. Numbers of people alone, however, do not necessarily determine the market for a particular brand of automobile. A demographic profile is often helpful in evaluating market potential and can play a significant part in the evaluation of adequacy of representation, the basic issue involved in this case. Studies run by and for General Motors Corporation indicate that 63% of Cadillac buyers are 55 years of age or older and over 60% of Cadillac buyers have household income in excess of $55,000.00. Survey statistics reflect that a large percentage of the population in AGSSAs 2, 3 and 4 are 65 and older. More than half the population in AGSSA 4 is over 55 and more people 65 or over reside in AGSSA 4 than in the other two AGSSAs within the community or territory. Age alone is not the determining factor, however. While older individuals generally have mode disposable income than younger people who have other needs for their money, the percentage of household income which is "disposable" is not necessarily indicative of the individual's ability to purchase a high group/luxury vehicle. Studies reveal that a higher percentage of people residing in AGSSA 4 have lower income levels than in the Florida zone. However, average household wealth in AGSSA 4 is about the same as in the 2,3,4 community or territory and only slightly lower than in the state as a whole. From this it might be inferred that because of the lower number of "well to do" people in AGSSA 4, the popularity or high group or luxury cars, when compared to all cars sold, may be lower than average. However, income does not have an overriding effect on Cadillac's share of the domestic high group market. The high group includes the Cadillac, the top of the line Buicks and Oldmobiles, the Lincoln Town Car, the top of the Chrysler line, and several imports. General Motors Corporation's quarterly CAMIP report which relates to average household income, marital status, sex, and education of purchase decision-makers, recognizes that even within the high group, certain vehicles do not compete. Within the high group, there are three competitive subgroups which, because of size, price, style, or image, compete more directly against one another. The three categories are the large luxury, the El Dorado/Mark, and the Seville/Continental. In the first are primarily the passenger sedans and coupes and included are three Cadillacs, (deVille, Fleetwood and Brougham); the upper line of Oldsmobile and Buick; the Lincoln Town Car; and the Chrysler Fifth Avenue. The "sport division" includes such vehicles as the El Dorado, the Mark VII, the Corvette, the Porsches and the Jaguars, and the third subcategory includes the Seville, the Continental, the Mercedes, the BMW and the upper line Volvos. Compared with both the Florida and the AGSSA 2,3,4 community or territory, more purchasers in AGSSA 4 selected cars from the large luxury subcategory and fewer from the other two. Since Cadillac generally dominates the large luxury group, it is appropriate, in an analysis of market penetration, to look at that sub group independent of the others. Market statistics indicate that during 1987, 1,309 high group cars were registered in AGSSA 4. Of this number, 76.5% were in the large luxury segment. This compares to 52.4% in the Florida zone. Within that Florida zone, Cadillac garners 46.3% of the large luxury segment, 11.73% of the ElDorado group segment, and 6.31% of the Seville group. When these percentages are applied to the 1,309 unit sales in the AGSSA 4 high group market, Cadillac could reasonably expect to sell 464 large luxury cars, 17 cars in the ElDorado group, and 9 cars in the Seville group for a total of 490 units. When the three segments are combined to reflect a single market share for Cadillac in AGSSA 4, an expectation of 38.3% share results. As it was, however, in 1987, Cadillac sold a total of only 333 in AGSSA 4 which represented a loss of 162 cars in the large luxury group and a combined gain of 5 from the other two for a net loss of 157 cars from expectation. In other words, Cadillac achieved 68.7% of what it could reasonably expect to have achieved in AGSSA 4. On the other hand, in AGSSAs 2 and 3, Cadillac met or exceeded 100% of its estimated large luxury group share. It should also be noted that almost every other domestic high group manufacturer represented in the large luxury group in AGSSA 4 also achieved better than 100% of its expectation for that segment. Further, the West Palm Beach, Miami, and Jacksonville Cadillac MDAs also met or exceeded 100% of their expected penetration. While the domestic high group models did well in AGSSA 4, the other high group manufacturers not represented by dealers in AGSSA 4 did not do as well. BMW, Mercedes, Volvo, and Acura all were below 100% as was Cadillac, and it is interesting to note that BMW, Mercedes and Volvo, with 83, 77 and 71% of expectation respectively, exceeded Cadillac's performance in AGSSA 4, (68.7%). From this, Petitioners claim it is obvious that Cadillac is under-represented in AGSSA 4 and that if it is to achieve its fair market share, it must be represented by a dealership within the AGSSA. This is not as certain as Petitioners would urge, however, since factors other than mere presence within the district contribute to the number of cars of a particular brand sold. Another factor to consider in analyzing Cadillac's adequacy of representation in the area is the ratio of Cadillac registrations in AGSSA 4 to registration of its legitimate competitors and to compare this ratio to the Florida zone and AGSSAs 2 and 3. Cadillac outsells Lincoln in the Florida zone by 160% and in AGSSAs 2 and 3 by 178%. However, in AGSSA 4, Cadillac sells only 87% of the number of cars that Lincoln does. The same relative comparison holds true for Cadillac's competitors among the large luxury cars. Almost without exception, Cadillac registrations in AGSSA 4 would have to increase two or three fold to equal its registration performance in the Florida zone and in AGSSAs 2 and 3. Another factor for consideration deals with the ability of the customer to secure competent service in a reasonable period of time at a convenient location. In the early 1980s, population figures showed the majority of people in the Pinellas/Pasco County areas were located in St. Petersburg, (Dew), Clearwater, (Dimmitt), and to a lesser degree, Port Richey. Between 1970 and 1988, the population defined not only by individual but by households has increased significantly in the Clearwater AGSSA and in the Port Richey AGSSAs, but not as much in the St. Petersburg area. People and households in the AGSSA 2,3,4 community or territory more than doubled. In AGSSA 4, alone, both individuals and households quintupled. It is generally accepted that vehicle registrations correspond to population density with registrations in the community or territory being concentrated primarily in the areas surrounding St. Petersburg, Clearwater and Port Richey, the three separate high group auto shopping areas identified herein previously. Cadillac has no representation in AGSSA 4. While population has increased radically, however, the number of Cadillac dealers in the community or territory has not increased at all. The two who were in business in 1940 are still operating. In 1970, Cadillac was represented by only two dealers, Dew and Dimmitt. Now, with the population increased between two and five times, Cadillac remains represented by only two dealers and is the only domestic high group manufacturer not represented in AGSSA 4. Pasco County, located in AGSSA 4, is the only county in Florida with a population over 100,000 that does not have a Cadillac dealer. This fact is meaningless, however, unless it relates to a lack of competition in sales or a lack of ability to provide service once a sale has been made. In that regard, at the present time, Cadillac owners in AGSSA 4 must travel an average of 28.4 miles to get to the nearest Cadillac dealer for service as compared to 7.4 miles average for other domestic high group brands. In AGSSA 2 and 3, the average distance for a Cadillac owner to get to the nearest dealer is 7 miles or less. This substantial difference between 28.4 miles and 7.4 miles is significant as it clearly impacts upon brand selection at purchase time. This is not to say that either Dimmitt or Dew are not providing quality service in a timely fashion to area Cadillac owners. To the contrary, the evidence present by Dimmitt establishes that it operates a quality service program with innovative and creative customer service benefits and no evidence was presented to indicate service quality or accessibility, at least as to Dimmitt, is lacking. A nationwide survey conducted in 1983 reflected that at least 36% of Cadillac buyers visited a dealer of at least one other brand before buying their Cadillac. Petitioner contends, and it appears reasonable, that this indicates that not all Cadillac buyers start out intending to buy a Cadillac and if a Cadillac dealer is not readily available, potential Cadillac customers may well select a competing brand rather than expend the extra effort to examine the Cadillac. The same survey also indicated that more than half of those who ultimately bought Cadillacs visited at least one other Cadillac dealership before making their purchase. Consequently, if a potential Cadillac buyer in AGSSA 4 desired to comparative shop among Cadillac dealers, he would have to travel on the average more than 85 miles to do so. This is significantly higher than for other domestic high group brands. Petitioner also contends that the community or territory has now outgrown a two dealer network located in the lower third of the geographical area involved. In light of the increasing population growth in AGSSA 4 and the fact that the lower disposable income situation there may well not remain static, there is some substance to Petitioner's argument. "Market share" and "sales penetration" are reliable measures of dealer representation. "Market share" measures a manufacturer's percentage of a given market based upon registration data obtained by R. L. Polk from the various states, and recorded monthly on a county-by-county, state-by-state, and national basis. "Sales penetration" measures actual unit sales compared with total sales potential using manufacturer warranty data, whether or not the vehicle is registered. The issue of "expected penetration" discussed previously, reflected that for the AGSSA 2,3 4 community or territory, Cadillac incurred a gross registration loss of 320 vehicles, that is, vehicle registrations shy of the expected number of registrations within the area. This shortfall, Petitioner contends, is compounded by an additional 484 vehicles registered in the AGSSA 2,3,4 community or territory which were sold to residents by Cadillac dealers from outside the community or territory. The total shortfall, then, is 804 vehicles. If it is assumed that a new dealer in Port Richey would penetrate the market at the same rate as the currently existing dealers in the community or territory, it should register 350 units which equates to 43% of the shortfall, leaving 454 units to Dew and Dimmitt to compete for. If the 804 shortfall figure is accurate, it would appear that adding another dealer to the community or territory would result in increased competition among the existing dealers for the shortfall sales which should, according to Petitioner, result in more sales and a reduction in shortfall. No evidence was introduced to show where the extra-community or territory vehicles were originally sold however. It well may be they were sold by Morse in Tampa, within the MDA, or by dealers from out of the MDA or the zone. How many of them could be recaptured is speculative. Throughout this discussion so far a distinction has been made between AGSSAs 2,3 and 4 and AGSSAs 1 and 5, considering them basically as independent sections within the Cadillac Tampa MDA. Respondent contends this is improper and prohibited by established case law. Respondent has not, however, shown that a consideration of the entire MDA as the community or territory, as it suggests, with AGSSA 4 as an identifiable plot, would result in a different conclusion. Respondent contests Petitioner's analysis of market representation with a thrust of its own asserting that AGSSA 4 has exceeded most of the established indicators or standards for the period 1985 - 1988 and when compared to the United States as a whole, has consistently outperformed the nation while currently exceeding the Florida zone average. Review of Respondent's own statistics, however, reveals that while AGSSA 4 has outperformed the national average, with the exception of the first six months of 1988, it has consistently trailed the Florida zone by several percentage points and the Tampa MDA by a narrower margin. In this one regard, Respondent's point of view is extremely short sighted. Comparison against a national average carries far less weight, considering the demographics, than does a comparison with a more localized and comparable population base. 34. Respondent further contends that while nationally Cadillac's registration penetration of high group vehicles has declined almost 10% during that period, AGSSA 4 has shown an increase of almost 5%. It is important to note as well that while the other comparables have been decreasing in percentage of penetration, with the exception of 1986, AGSSA 4's record has improved. Comparing AGSSA 4 with other AGSSAs in the Tampa MDA shows that AGSSA 4 has, during the last two years, shown a substantial gain in market share joined in gain only but to a lesser degree by AGSSA 2. It should be noted that these statistics are based on vehicle registrations, not sales. During she past two years, both Dimmitt in Clearwater and Morse in Tampa have relocated further north toward the area of AGSSA 4 and Morse underwent a change in ownership during the same period. Respondent asserts that these changes in dealership location and ownership "have had a profound impact in terms of what has and will happen in AGSSA 4." A review of Cadillac registrations in AGSSA 4 for the period 1985 through June, 1988 reflect that Morse increased its penetration from just over 10% to 25% within the AGSSA and this factor, when coupled with Dimmitt registrations in the AGSSA, make up approximately 87% of all Cadillacs registered in the AGSSA. While improvement has been shown, it is clear that those two dealerships, neither one of which is located within the AGSSA, account for a preponderance of Cadillac sales within the AGSSA. The fact remains that Cadillac sales within the AGSSA are still far below expected penetration. The fact that Cadillac's performance in AGSSA 4 would rank it 40th out of 148 markets nationwide, if it were an MDA in its own right, is not dispositive of any issue here. The question is not whether Cadillac is selling cars but whether Cadillac is selling the number of cars it should be selling. Comparing AGSSA 4 as it currently exists as a part of the Tampa MDA with other MDA's is invalid. Respondent presents evidence to indicate that based on 1988 registration data AGSSA 4 meets or exceeds in its Cadillac market share the performance of the Tampa MDA, the Tampa District, the Florida zone, the nation as a whole, and the median MDA average and that only AGSSA 2 and 3 in the Tampa MDA have performed as well as AGSSA 4. This is meaningless, however, if market conditions in the area indicate a substantially higher potential than is being achieved. If so, then the representation is inadequate. Accepting as accurate Respondent's assertion that many manufacturer's use 85% of a "standard" as the criteria to determine a dealer's acceptable efficiency or adequacy, and recognizing that AGSSA 4 achieves a Cadillac market penetration in excess of 85% of "the national average, the Florida zone, the Tampa District, and the Tampa MDA for 87 and 88," that figure, as well, is meaningless unless it is accompanied by an explanation of the "standard" applied by the manufacturer. Here, General Motors Corporation, by its intention to award a dealership within the geographical AGSSA 4 to Seacrest, is apparently not satisfied that its market share in AGSSA 4 is acceptable regardless of the fact that registrations within the AGSSA exceed 85% of the registrations in other geographic entities. Respondent suggests another test be used to evaluate the adequacy of representation of Cadillac in the AGSSA 4 area. This is based on gain/loss registrations compared to accepted retail penetration standards and is the difference between actual Cadillac retail registrations in an area and the number of registrations that would have occurred had it achieved the average penetration within that area be it national, zone, district, MDA or AGSSA. These analyses are theoretical and are based on percentages unadjusted to reflect reasonable expectations for the demographic makeup in the market. If adjusted for demography, Respondent contends, AGSSA 4 would reflect a lower penetration because of its relatively low household income. Utilizing this suggested analysis reflects that in each year between 1985 and 1987, when compared against the Florida zone, the Tampa District, or the Tampa MDA, AGSSA 4 lost sales. The maximum number occurred in 1986 when, as compared against the Florida zone, AGSSA 4 would have lost 69 sales. In each year, however, as compared to the national average, AGSSA 4 exceeded the national standard and in 1988, it exceeded not only the national figure but the other three categories as well. Since the number is so small, and since the trend is upward, Respondent urges, there is no justification to support a new single line Cadillac dealership and establishment of such a dealership would cannibalize the surrounding dealers. This argument is not persuasive, however, as it appears based on a less than adequate methodology. While comparisons against standards are used not only by automobile manufacturers but also by other product and service venders, and while both General Motors and USAI regularly use comparisons against the nation, zone, and MDA, those elements which make up the parts of the analysis must be supportable and those utilized here do not so appear. As was stated previously, Dimmitt has shown an increase in its sales in the AGSSA 4 area since its move to its current location closer to the boundary of the AGSSA. Part of the increase is undoubtedly related to the move but another part also may be related to the fact that it has substantially increased its advertising in the area. Dimmitt asserts it is one of the largest Cadillac facilities in the Florida zone and was built with a view toward servicing an increasing market. No doubt this is so. On balance, however, it would appear that with the increasing population in the Pasco County area of AGSSA 4, which is spreading to the north, away from Dimmitt rather than closer to the AGSSA 3 boundary, and considering the fluctuation in household income due to the attraction of different income groups by the construction of related residential areas, and the basic statistics which show that at the current time, AGSSA 4 is not achieving a reasonable potential expected of it, it would appear that AGSSA 4 is not adequately served by the exiting dealerships in AGSSA 1, 2 and 3. This is due primarily to the distance factor and not the caliber of service rendered by the existing dealers. Convenience to the customer, remembering that Cadillac customers are, for the most part, older citizens, is an important consideration and with the aforementioned expected population surge, it is considered unlikely that the establishment of a new dealership in AGSSA 4 would have a permanent or long lasting adverse effect on the dealers not serving the area.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that the application of Seacrest Cadillac, Inc. to establish a Cadillac dealership in the vicinity of AGSSA 4, (Port Richey), be granted. RECOMMENDED in Tallahassee, Florida this 13th day of March, 1989. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 13th day of March, 1989. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 88-2252 The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. FOR THE PETITIONERS: 1. & 2. Accepted and incorporated herein 3. - 5. Accepted and incorporated herein 6. - 15. Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein & 21. Accepted and incorporated herein Accepted and incorporated herein Accepted - 26. Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted Accepted and incorporated herein as pertinent - 33. Accepted and incorporated herein 34. - 36. Accepted and incorporated herein Accepted and incorporated herein - 41. Accepted and incorporated herein Not a Finding of Fact but a comment on the evidence - 45. Not a Finding of Fact but a comment on the evidence Accepted but not relevant Not a Finding of Fact but a comment on the evidence BY RESPONDENT DIMMITT: Accepted and incorporated herein Accepted and incorporated herein - 5. Accepted and incorporated herein 6. & 7. Accepted 8. - 10. Accepted and incorporated herein 11. & 12. Accepted and incorporated herein Accepted Accepted and partially incorporated herein & 16. Accepted and incorporated herein Accepted and incorporated herein Accepted & 20. Accepted and incorporated herein Accepted but qualified by the possibility of change in demographics. - 27. Accepted and incorporated herein Accepted & 30. Accepted Accepted Accepted and incorporated herein - 35. Not totally supported by the evidence. Accepted in part and rejected in part. 36. & 37. Accepted and incorporated herein Accepted Accepted and incorporated herein Accepted Accepted & 43. Accepted and incorporated herein Accepted & 46. Accepted and incorporated herein Accepted and incorporated herein - 50. Accepted Rejected as contra to the weight of the evidence & 53. Accepted but given limited weight due to questionable relevance Accepted and incorporated herein Accepted and incorporated herein Accepted and incorporated herein Accepted Repetitive of Findings of Fact 36. & 37. - 61. Accepted and incorporated herein but not an issue. Dimmitt's performance of service and customer satisfaction was not questioned. COPIES FURNISHED: Dean Bunch, Esquire 101 North Monroe Street, Suite 900 Tallahassee, Florida 32301 Edward Risko, Esquire Office of the General Counsel General Motors Corporation New Center One Building 3031 West Grand Blvd. Detroit, Michigan 48232 Michael A. Fogarty, Esquire Post Office Box 3333 Tampa, Florida 33601 Daniel D. Myers, Esquire 402 N. Office Plaza Drive Suite B Tallahassee, Florida 32301 Michael J. Alderman, Esquire Office of General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue The issues are whether Respondent violated Subsection 489.127(1)(f), Florida Statutes (2008), for the reasons stated in the Administrative Complaints and, if so, what, if any, penalty should be imposed.
Findings Of Fact Petitioner, the Department of Business and Professional Regulation (DBPR), is the state agency charged with regulating the practice of contracting in the State of Florida. It also has jurisdiction over the unlicensed practice of contracting pursuant to Section 455.228, Florida Statutes (2008). DBPR has filed two administrative complaints charging Respondent Frank Clardy with violating Subsection 489.127(1)(f), Florida Statutes (2008), by engaging in the business of, or acting as a contractor without a license. Mr. Clardy, was not a state certified or registered contractor licensed to engage in the practice of contracting pursuant to Part I, Chapter 489, Florida Statutes, at any time relevant to this proceeding. He maintains he did not need a license, because he was acting as a salesman and not himself engaging in the business of, or acting as a contractor. The other named Respondent charged in the complaint in DOAH Case No. 08-1108, O. E. Total Services, Inc. ("O.E."), is a Florida corporation with Onel Eschevarria as its registered officer/director. The state investigator assigned to this case testified that O.E. was listed as an inactive entity by the State Division of Corporations, so she did not check to see if O.E. was a general contractor licensed by DBPR. The testimony of two witnesses, Mr. Clardy and Herbert Neff, support a finding that, at all relevant times, Onel Eschevarria, the owner of O.E., was not a licensed general contractor. Therefore, O.E. could not have been an entity registered and qualified to use his license number. Daisy Green and her late husband, Herbert Green, entered into a contract listing O.E. as the corporate entity, signed by Frank Clardy, as salesman and officer, to pay $9,351 for the installation of hurricane shutters for 17 openings in their home in Boca Raton, Florida. The license numbers on the contract were CGC A23836 and CCC 057010, and belonged to Carlos Fulmann. According to Mr. Clardy, Mr. Fulmann notified O.E. that he was unable to work with O.E. at that time, and O.E. was looking to affiliate with another licensed contractor. Nevertheless, Mr. Clardy took the measurements for the shutters at the Greens' home and accepted a check for a deposit of $3740.40. The check, dated April 11, 2006, was payable to O.E. and was deposited in the account of O.E. The shutters were never delivered and the money has not been refunded. DBPR's investigator confirmed that no permit was ever issued for the installation of shutters at the Greens’ residence. On April 18, 2006, Mrs. Green wrote a check in the amount of $1700 made payable to Frank Clardy personally, with "Deposit Shutters" on the line indicating the purpose for the check. Mr. Clardy cashed that check. That brought the total amount paid by the Greens, apparently in connection with the contract for hurricane shutters, to $5440.40. At the hearing, Mrs. Green testified that she and her husband paid $7240 of the total contract amount of $9351, leaving a balance due of $2111, as indicated by handwritten notes made on the contract. No one was sure who made the notes and there was no other evidence of additional payments arguably for hurricane shutters over and above the two checks that total $5440.40. Mrs. Green could not explain the discrepancy between the total amount of the two checks and the note on the contract. There was also conflicting testimony over the purpose for the $1700 check. Mrs. Green testified that Mr. Clardy said that the first check (for $3740.40) had been a deposit and he needed the second one (for $1700) for materials, but that contradicts her note on the check that it was inexplicably a second deposit for shutters. Mr. Clardy testified the $1700 check was paid for him to hire two crews to perform other work for the Greens, including replacing a side door in the garage with a hurricane door, repairing woodwork around the door, repairing cement in the garage, replacing and painting fascia boards, and installing a pool rail. Mr. Clardy testified that he had a written contract for this work but was unable to find it. Mrs. Green testified that she and her husband paid $250 to Mr. Clardy to fix the side door to their garage, and that they also separately paid someone he recommended to install handrails for the pool. Mrs. Green's testimony appears to be more likely truthful than Mr. Clardy’s based on a handwritten and signed receipt that Mr. Clardy apparently gave the Greens that reads: Paid in full Side door facia boards hand rail to pool $250.00 Mr. Clardy acknowledged that his signature was on the receipt but claimed it was altered after he signed it. In support of his position, Mr. Clardy pointed out that his name, as printed on the receipt as "Claridy" is misspelled. Based on his acknowledgement of his signature, his claim that the receipt does not accurately represent work he performed for $250 is rejected. Ivan M. Rubin entered into a contract with Mr. Clardy on June 27, 2006, to pay $5600 for the installation of hurricane shutters at his home in Boynton Beach. The corporate entities listed on the Rubin contract were Access-Ability, Inc. (Access- Ability) & O. E. Total Services, Inc. Frank Clardy signed as salesman and officer. The license number on the contract was CGC 051895, which is registered with the State as the certified general contractor license number for Herbert John Neff and Access-Ability as a qualified business. Mr. Rubin gave Mr. Clardy a check for the deposit in the amount of $2600, made payable to Access-Ability. That check was given by Mr. Clardy to Mr. Neff at Access-Ability. Soon after, Mr. Rubin had additional questions about the shutters and called the telephone number on the contract. When he was unable to reach Mr. Clardy, Mr. Rubin stopped payment on the check. Although he remembered that the amount of the check was for $2500, not $2600, Mr. Neff acknowledges that he received the check from Mr. Rubin on which the bank payment was stopped. On July 11, 2006, Mr. Clardy explained, according to Mr. Rubin, that he had been in the hospital and had paid for the materials for the shutters from his personal funds. So, Mr. Rubin wrote another check for $2600 made payable to Frank Clardy personally. At hearing, Mr. Clardy admitted having never paid for shutters for the Rubins. Both Mr. and Mrs. Rubin said Mr. Clardy told them he owned O.E. and that they believed it because he signed the contract as “salesman” and "officer." Mr. Clardy testified that he ordered the hurricane shutters for the Green and Rubin projects, and that, as he had done with the Greens' deposit, he cashed Mr. Rubin's second check and gave the money to Onel Eschevarria, who took it and is now in jail. As a result of not being paid by O.E., the manufacturer refused to deliver the products. The Rubins did not receive the shutters and have not received a refund. There was never a permit application filed for the Rubin project. After not receiving the shutters and not getting help contacting Mr. Clardy after talking to his mother and stepfather, Mr. Rubin checked the license number, found it was issued to Mr. Neff, and contacted him. Mr. Neff told Mr. Rubin that he could find Mr. Clardy in the card room of a casino in Coconut Creek. Mr. Rubin went there to look for him, but Mr. Clardy was not there. Mr. Neff testified that he has been a licensed general contractor in Florida since 1990, that the only company he qualified for the use of his license was Access-Ability, and that he knew it was unlawful for an unlicensed person to subcontract with a licensed contractor. Mr. Neff was never qualified by the state to use his license to secure permits for O.E., nor for Access-Ability and O.E. as a joint venture. Mr. Neff confirmed that he and Mr. Clardy discussed a business proposal in which Mr. Clardy would get the business and arrange for the installation of shutters, and Mr. Neff would get the building permits. According to Mr. Neff, Mr. Clardy told him that he was a salesman for O.E., that O.E. was a licensed contractor, and that he was negotiating to acquire O.E. Mr. Neff testified that he never entered into a contract with Mr. Clardy and "[t]he arrangements we were making were just left up in the air because we couldn't conclude it." Mr. Neff's testimony is rejected as totally inconsistent with the evidence. He contradicted his claim that Mr. Clardy led him to believe that O.E. was licensed, when he also testified that he remembered reading a proposal from Mr. Clardy, and saying ". . . I couldn't sign it because it contained a built-in violation of my license," because O.E. was not licensed and was not owned by Mr. Clardy. At the hearing, he said it looks like his signature, that "it looks like he did" sign the following agreement: Date: Feb 20, 2006 To: ACCESS-ABILITY, INC Attn: Mr. HerbNeff 610 E. Sample RD Pompano Beach, FL 33064 Mr. Neff: We have decided to use your services of installing shutters and pulling permits for the clients we sign up with 0. E. Total Services, Inc. Our company will be the sales company for Access -Ability, Inc. This is the way we are going to work with your company. We will sign up the client take the deposit wait for the check to clear the bank and then issue you a cashiers check for the amount of the deposit. We will pay your company $3 .00 per square foot to install the HV Bertha shutters and pull the necessary permits. You will then issue O.E. a cashier's check back for the amount minus the $3.00 a square foot to install the HV Bertha Shutters and pull the permits needed for each job. Once the job is signed up and you issue us a cashier's check for that job, O.E. will order the material from our supplier(s) and give you a copy of the purchase order placed to our supplier with the date the product will be in stock for that particular job. Also O.E. will give Access-Ability a form that gives the clients name and address with the square footage of that job. It will also state the deposit of the job and the date the job should be installed. If Access - Ability, Inc. agrees on these terms please sign the bottom of this letter and return it back to us as soon as possible. I think this will be a profitable venture for both companies and look forward to working with you and your company. Respectfully and Sincerely, The letter was signed by Frank Clardy, as Vice President of Sales for O.E. Total services, Inc., and Herbert J. Neff, as Authorized Representative for Access-Ability, Inc. Mr. Neff agreed, regarding the letter, that [i]t provided [for] me to pull permits and then have someone else collect the money, and you're not allowed to do that. Now, the only way that could have been done is if Mr. Clardy had become licensed -- had a license, if O. E. Total Services was actually licensed. . . ." He acknowledged further that he knew ". . . they never had a license. . ." Mr. Neff testified that he never received any money for the work that was supposed to have been done for the Greens and the Rubins. He admitted having created a spreadsheet to keep track of money paid to him by O.E. to get permits for their customers, but claimed the money was not tied to or derived from any particular customer. According to Mr. Neff, funds were paid to him in advance by O.E. and held until O.E. provided him a permit application package to file. In addition to the checks, Mr. Neff admits having received cash from O.E. and from Mr. Clardy. The evidence, including his admissions, completely contradicts his claim of not having an illegal agreement with O.E. Mr. Neff’s testimony that he was not aware of the Green and Rubin contracts until they complained that their shutters had not been delivered is also rejected as inconsistent with the evidence. On his spreadsheet, Mr. Neff listed the name "Herb Green" with $500 in the column headed "Fee" and $100 in the column headed "Permit & NOC” (meaning notice of commencement), and Mr. Neff admitted that he received the check on which Mr. Rubin later stopped payment. Mr. Clardy placed advertisements soliciting business for Access-Ability, with Mr. Neff's license number on them and Mr. Clardy's telephone number as the contact for customers seeking free estimates. He signed an exhibit agreement and set up a booth at a shopping mall to promote sales for Access-Ability. Mr. Neff's claim that he was unaware of the advertisements is contradicted by his statement that he called Mr. Clardy to complain that the first advertisement violated the law, by having both the names of Access- Ability and O.E. on it. He testified that only the name of the company that was qualified to use his license number, Access-Ability should have appeared on the advertisements. Mr. Neff testified that Mr. Clardy told him that he would be setting up a mall kiosk, but unpersuasively claimed that he did not know that he would be advertising for Access-Ability until he arrived at the mall. Mr. Neff claimed he never authorized Mr. Clardy to use 4100 Power Line Road as his address, yet he used the same address in a notice of commencement after acknowledging, in a written proposal to install shutters that he submitted to a homeowner ". . . to complete and comply with the contract signed . . . with Frank Clardy." The evidence, including the contradictions by Mr. Neff, support Mr. Clardy's claim that O.E. and Mr. Clardy were authorized to use Mr. Neff's license number on contracts, advertisements, and business cards. Mr. Clardy testified that he worked as a salesman for Access-Ability, based on their agreement. He also worked, he claimed, as a salesman for O.E., from February to August 2006, when O.E. stopped paying him. He compared his role to that of any salesperson employed by a home improvement store. DBPR's investigator confirmed that neither Frank Clardy nor O.E. and Access-Ability as a joint venture is a state-licensed general contractor or a registered qualified business. DBPR's investigative costs were $280.62 for the Green case and $333.56 for the Rubin case.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a Final Order finding Respondent Frank Clardy guilty of violating Section 489.127(1)(f), Florida Statutes (2008); imposing an administrative fine in the amount of $5,000 and requiring the payment of investigative costs in the amount of $333.56 in DOAH Case No. 08-1084 (DBPR Case No. 2006-062380); and imposing an administrative fine in the amount of $5,000 and requiring the payment of investigative costs in the amount of $280.62 in DOAH Case No. 08-1108 (DBPR Case No. 2006-053353). DONE AND ENTERED this 18th day of February, 2009, in Tallahassee, Leon County, Florida. S ELEANOR M. HUNTER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of February, 2009. COPIES FURNISHED: Sorin Ardelean, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399 Frank Clardy 5830 Eagle Cay Lane Coconut Creek, Florida 33073 G. W. Harrell, Executive Director Construction Industry Licensing Board Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Nancy S. Terrel, Hearing Officer Office of the General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Ned Lucynski, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
