The Issue The issue in this case is whether Respondent Clark's Country Farmers Market, Inc. owes Petitioner a sum of money for shipments of citrus fruit.
Findings Of Fact The evidence presented at final hearing established the facts that follow. The Parties and Their Problem Spyke's Grove and Clark's are "citrus fruit dealers" operating within the Department's regulatory jurisdiction. As a wholesale shipper, Spyke's Grove packages and arranges for delivery of citrus products pursuant to purchase orders that retail sellers such as Clark's submit. The packages typically are labeled with the retail seller's name, and thus the retail buyer (and the recipient, if the citrus is purchased as a gift) usually will not be aware of Spyke's Grove's involvement. The instant case involves a series of orders that Clark's placed with Spyke's Grove between October and December 1999 for packages of gift fruit. Under a number of informal, largely unwritten contracts, Spyke's Grove agreed, each time it received an order from Clark's, to ship a gift fruit box or basket to the donee designated by Clark's' retail customer, for which fruit shipment Clark's agreed to pay Spyke's Grove. Spyke's Grove alleges that Clark's failed to pay in full for all of the gift fruit packages that Clark's ordered and Spyke's Grove duly shipped. Clark's contends (though not precisely in these terms) that Spyke's Grove materially breached the contracts, thereby discharging Clark's from further performance thereunder. The Transactions From mid-October 1999 until around December 12, 1999, Clark's faxed or e-mailed to Spyke's Grove approximately 350 individual orders for gift fruit packages. Among other information, each order consisted of a shipping label that identified the product (e.g. the type of gift box or basket), the intended recipient, and the destination. Spyke's Grove manifested its intent to fill these orders by faxing statements of acknowledgment to Clark's, by telephoning Clark's, or both. Although the many contracts that arose from these transactions were thus documented, the writings left much unsaid. For example, the parties did not explicitly agree in writing that Spyke's Grove would deliver the subject gift baskets to the donees before Christmas, nor did they make any express oral agreements to this effect.1 Further, the parties did not specifically agree that Spyke's Grove would be obligated to deliver the gift fruit into the hands of the donees and bear the risk of loss until such tender of delivery. Rather, the contracts between Spyke's Grove and Clark's were ordinary shipment contracts that required Spyke's Grove to put the goods into the possession of carriers (such as the U.S. Postal Service or United Parcel Service) who in due course would deliver the packages to the donees. For many weeks, until early December 1999, Clark's placed orders, and Spyke's Grove filled them, under the arrangement just described. The relationship was not completely trouble-free, for the parties had some problems with duplicate orders. Most, if not all, of these difficulties stemmed from the implementation of a computerized ordering system which allowed Clark's to "export" orders directly to Spyke's Grove's electronic database. The parties recognized at the time that errors were occurring, and they attempted contemporaneously to identify and purge unintended duplicates. Pursuant to the course of dealing between these parties, Spyke's Grove filled orders that were not affirmatively identified as errors prior to the scheduled shipment date. The Fire On the night of Sunday, December 12, 1999, a devastating fire at Spyke's Grove's premises caused substantial damage, temporarily disrupting its citrus packing and shipping operations at the peak of the holiday season. Working through and around the loss, Spyke's Grove soon recovered sufficiently to reopen for business. By around noon on Tuesday, December 14, 1999, its telephone service had been restored, and activities relating to shipping resumed on Friday, December 17, 1999. The Aftermath Meantime, Clark's contends, customers had begun calling Clark's on December 10, 1999, to complain that gift fruit packages were not being received as promised. None of the customers testified at hearing, however, and therefore no competent, non-hearsay evidence establishes the contents of their alleged out-of-court statements. On December 14, 1999, following several unsuccessful attempts to communicate with Spyke's Grove shortly after the fire (about which Clark's remained unaware), Denise Clark, acting on behalf of Clark's, reached Robert Spiece, a representative of Spyke's Grove, on his cell phone. At hearing, Ms. Clark and Mr. Spiece gave conflicting accounts as to the substance of their December 14, 1999, telephone conversation. Neither disputed, however, that during this conversation Ms. Clark and Mr. Spiece agreed, at Ms. Clark's request, that all orders of Clark's not yet shipped by Spyke's Grove would be canceled, effective immediately, as a result of the fire. Although Ms. Clark claimed that Mr. Spiece further informed her that Spyke's Grove could not identify which orders had been shipped, the factfinder does not believe that Mr. Spiece made such a sweeping negative statement. Rather, as Mr. Spiece explained at hearing, Ms. Clark probably was told that information regarding the filled orders would not be available that day. Without waiting for further information from Spyke's Grove, Clark's began calling its retail customers to ascertain whether they had received packages that were supposed to have been shipped by Spyke's Grove. Employees of Clark's who had participated in this process——which took four to five days—— testified at hearing about conversations between themselves and various customers. As uncorroborated hearsay, however, the out- of-court statements attributed to these customers were not competent substantial evidence upon which a relevant finding of fact, e.g. that any particular customer or customers had not received their gift fruit, could be based. Moreover, this hearsay evidence, even if competent, would still have been too anecdotal to establish persuasively any widespread failure on the part of the carriers to deliver the packages shipped by Spyke's Grove. On December 15, 1999, Spyke's Grove prepared three draft invoices for the gift fruit packages that Clark's had ordered and which Spyke's Grove had shipped before December 12, 1999. Numbered 1999113001, 1999121101, and 1999121201, the invoices sought payment of $688.72, $2,415.48, and $298.66, respectively. On the first page of Invoice #1999121201, Barbara Spiece, the President of Spyke's Grove, wrote: Some of these were lost in the fire. "A" day left in the morning. "Springfield" was on the floor to go out that night. I realize there are many duplicates in these shipped reports. We tried to watch for them but with different order numbers it was very difficult. Just cross them out [and] you will not be charged for them. I apologize for all of the problems we have had this season [illegible] wish you luck. These bills were faxed to, and received by, Clark's on December 16, 1999. Clark's did not pay the invoices, or dispute them, or cross out the unintended duplicate orders (as it had been invited to do) to effect a reduction in the outstanding balance. Instead, Clark's ignored Spyke's Grove's requests for payment. Not only that, in disregard of its existing contractual obligations and with no advance notice to Spyke's Grove, Clark's proceeded on its own to fill all of the orders that it had placed with Spyke's Grove before December 12, 1999——including those orders that Spyke's Grove, through its draft invoices, claimed to have shipped. Even after the fact, Clark's failed to inform Spyke's Grove that it had, in effect, repudiated its contractual promises to pay Spyke's Grove for the gift fruit packages already shipped as of December 12, 1999 (i.e. the orders not canceled on December 14, 1999). The Inevitable Dispute Having heard nothing from Clark's in response to its December 16, 1999, fax, Spyke's Grove sent its invoices out again, in final form, on January 25, 2000.2 This time, Ms. Spiece did not inscribe any instructions to cross out duplicates for a discount. Numbered 11063001 ($688.72), 11063002 ($2,449.14), and 11063003 ($195.52), these bills totaled $3,333.38. Each of these invoices contained the following boilerplate "terms": Net 14 days prompt payment is expected and appreciated. A 1 ½% monthly service charge (A.P.R. 18% per annum) may be charged on all past due accounts. Customer agrees to pay all costs of collection, including attorneys [sic] fees and court costs, should collection efforts ever become necessary. Clark's did not remit payment or otherwise respond to Spyke's Grove's statements. Accordingly, on June 20, 2000, Spyke's Grove sent a letter to the Department requesting assistance. Clark's was provided a copy of this letter. Shortly thereafter, Spyke's Grove filed a Complaint with the Department, initiating the instant proceeding. Ultimate Factual Determinations Clark's refusal to pay for the goods ordered from and shipped by Spyke's Grove constituted a breach of the contracts between the parties. Spyke's Grove did not materially breach the agreements. Further, Clark's did not object, within a reasonable period of time, to the statements of account that Spyke's Grove rendered preliminarily on December 16, 1999, and finally on January 25, 2000. Accordingly, these invoices amount to an account stated concerning the transactions between the parties. Clark's failed to overcome the presumption of correctness that attaches to an account stated, either by proving fraud, mistake, or error. Spyke's Grove has suffered an injury as a result of Clark's' breach. Spyke's Grove's damages consist of the principal amount of the debt together with pre-award interest at the statutory rate. Accordingly, Spyke's Grove is entitled to recover the following amounts from Clark's: Principal Due Date Statutory Interest $3,333.38 2/08/99 $ 298.66 (2/08/00 - 12/31/00) $ 335.56 (1/01/01 - 11/30/01) $3,333.38 $ 634.22 Interest will continue to accrue on the outstanding balance of $3,333.38 in the amount of $1.00 per day from December 1, 2001, until the date of the final order.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order awarding Spyke's Grove the sum of $3,333.38, together with pre- award interest in the amount of $634.22 (through November 30, 2001), plus additional interest from December 1, 2001, until the date of the final order, which will accrue in the amount of $1.00 per day. DONE AND ENTERED this 29th day of November, 2001, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of November, 2001.
The Issue The issue in DOAH Case No. 02-3648RE is whether Emergency Rules 20ER02-01, 20ER02-02, and 20ER02-03 constitute an invalid exercise of delegated legislative authority. The issue in DOAH Case No. 02-4607RP is whether Proposed Rules 20-15.001, 20- 15.002, and 20-15.003, Florida Administrative Code, constitute an invalid exercise of delegated legislative authority.
Findings Of Fact Based on the stipulated facts, and the entire record in this proceeding, the following findings of fact are made: The Florida Citrus Commission was established in 1935 to organize and promote the growing and sale of various citrus products, fresh and processed, in the State of Florida. The purpose of the Citrus Commission is today reflected in Section 601.02, Florida Statutes. The powers of the Florida Citrus Commission ("the Commission") and the Department, are set forth in full in Section 601.10, Florida Statutes. The powers of the Department include the power to tax and raise other revenue to achieve the purposes of the Department. In particular, Section 601.10(1) and (2), Florida Statutes, state: The Department of Citrus shall have and shall exercise such general and specific powers as are delegated to it by this chapter and other statutes of the state, which powers shall include, but shall not be confined to, the following: To adopt and, from time to time, alter, rescind, modify, or amend all proper and necessary rules, regulations, and orders for the exercise of its powers and the performance of its duties under this chapter and other statutes of the state, which rules and regulations shall have the force and effect of law when not inconsistent therewith. To act as the general supervisory authority over the administration and enforcement of this chapter and to exercise such other powers and perform such other duties as may be imposed upon it by other laws of the state. The Department is authorized to set standards by Section 601.11, Florida Statutes, as follows: The Department of Citrus shall have full and plenary power to, and may, establish state grades and minimum maturity and quality standards not inconsistent with existing laws for citrus fruits and food products thereof containing 20 percent or more citrus or citrus juice, whether canned or concentrated, or otherwise processed, including standards for frozen concentrate for manufacturing purposes, and for containers therefor, and shall prescribe rules or regulations governing the marking, branding, labeling, tagging, or stamping of citrus fruit, or products thereof whether canned or concentrated, or otherwise processed, and upon containers therefor for the purpose of showing the name and address of the person marketing such citrus fruit or products thereof whether canned or concentrated or otherwise processed; the grade, quality, variety, type, or size of citrus fruit, the grade, quality, variety, type, and amount of the products thereof whether canned or concentrated or otherwise processed, and the quality, type, size, dimensions, and shape of containers therefor, and to regulate or prohibit the use of containers which have been previously used for the sale, transportation, or shipment of citrus fruit or the products thereof whether canned or concentrated or otherwise processed, or any other commodity; provided, however, that the use of secondhand containers for sale and delivery of citrus fruit for retail consumption within the state shall not be prohibited; provided, however, that no standard, regulation, rule, or order under this section which is repugnant to any requirement made mandatory under federal law or regulations shall apply to citrus fruit, or the products thereof, whether canned or concentrated or otherwise processed, or to containers therefor, which are being shipped from this state in interstate commerce. All citrus fruit and the products thereof whether canned or concentrated or otherwise processed sold, or offered for sale, or offered for shipment within or without the state shall be graded and marked as required by this section and the regulations, rules, and orders adopted and made under authority of this section, which regulations, rules, and orders shall, when not inconsistent with state or federal law, have the force and effect of law. The Department is authorized to conduct citrus research by Section 601.13, Florida Statutes. To help pay for these duties of the Department, the Legislature first enacted the "box tax" in 1949. The box tax is now codified as Section 601.15(3), Florida Statutes. Section 601.15(3)(a), Florida Statutes, provides in relevant part: There is hereby levied and imposed upon each standard-packed box of citrus fruit grown and placed into the primary channel of trade in this state an excise tax at annual rates for each citrus season as determined from the tables in this paragraph and based upon the previous season's actual statewide production as reported in the United States Department of Agriculture Citrus Crop Production Forecast as of June 1. Section 601.15(3)(a), Florida Statutes, goes on to set forth specific rates for fresh grapefruit, processed grapefruit, fresh oranges, processed oranges, and fresh or processed tangerines and citrus hybrids. Section 601.15(1), Florida Statutes, sets forth the Department's authority to administer the box tax, as follows: The administration of this section shall be vested in the Department of Citrus, which shall prescribe suitable and reasonable rules and regulations for the enforcement hereof, and the Department of Citrus shall administer the taxes levied and imposed hereby. All funds collected under this section and the interest accrued on such funds are consideration for a social contract between the state and the citrus growers of the state whereby the state must hold such funds in trust and inviolate and use them only for the purposes prescribed in this chapter. The Department of Citrus shall have power to cause its duly authorized agent or representative to enter upon the premises of any handler of citrus fruits and to examine or cause to be examined any books, papers, records, or memoranda bearing on the amount of taxes payable and to secure other information directly or indirectly concerned in the enforcement hereof. Any person who is required to pay the taxes levied and imposed and who by any practice or evasion makes it difficult to enforce the provisions hereof by inspection, or any person who, after demand by the Department of Citrus or any agent or representative designated by it for that purpose, refuses to allow full inspection of the premises or any part thereof or any books, records, documents, or other instruments in any manner relating to the liability of the taxpayer for the tax imposed or hinders or in anywise delays or prevents such inspection, is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. The box tax was challenged in 1936 and the Florida Supreme Court issued an opinion in 1937 upholding the validity of the box tax. C.V. Floyd Fruit Company v. Florida Citrus Commission, 128 Fla. 565, 175 So. 248 (1937). In 1970, the Legislature enacted the "equalization tax," codified as Section 601.155, Florida Statutes. The statute mirrored Section 601.15, Florida Statutes, but added certain processors who were mixing foreign citrus products with Florida products. The purpose of the equalization tax was to have all Florida processors of citrus products help pay for the costs of the Department, rather than have the burden fall entirely on the Florida growers subject to the box tax. Section 601.155, Florida Statutes, provides, in relevant part: The first person who exercises in this state the privilege of processing, reprocessing, blending, or mixing processed orange products or processed grapefruit products or the privilege of packaging or repackaging processed orange products or processed grapefruit products into retail or institutional size containers or, except as provided in subsection (9) or except if a tax is levied and collected on the exercise of one of the foregoing privileges, the first person having title to or possession of any processed orange product or any processed grapefruit product who exercises the privilege in this state of storing such product or removing any portion of such product from the original container in which it arrived in this state for purposes other than official inspection or direct consumption by the consumer and not for resale shall be assessed and shall pay an excise tax upon the exercise of such privilege at the rate described in subsection (2). Upon the exercise of any privilege described in subsection (1), the excise tax levied by this section shall be at the same rate per box of oranges or grapefruit utilized in the initial production of the processed citrus products so handled as that imposed, at the time of exercise of the taxable privilege, by s. 601.15 per box of oranges. In order to administer the tax, the Legislature provided the following relevant provisions in Section 601.155, Florida Statutes: Every person liable for the excise tax imposed by this section shall keep a complete and accurate record of the receipt, storage, handling, exercise of any taxable privilege under this section, and shipment of all products subject to the tax imposed by this section. Such record shall be preserved for a period of 1 year and shall be offered for inspection upon oral or written request by the Department of Citrus or its duly authorized agent. Every person liable for the excise tax imposed by this section shall, at such times and in such manner as the Department of Citrus may by rule require, file with the Department of Citrus a return, certified as true and correct, on forms to be prescribed and furnished by the Department of Citrus, stating, in addition to other information reasonably required by the Department of Citrus, the number of units of processed orange or grapefruit products subject to this section upon which any taxable privilege under this section was exercised during the period of time covered by the return. Full payment of excise taxes due for the period reported shall accompany each return. All taxes levied and imposed by this section shall be due and payable within 61 days after the first of the taxable privileges is exercised in this state. Periodic payment of the excise taxes imposed by this section by the person first exercising the taxable privileges and liable for such payment shall be permitted only in accordance with Department of Citrus rules, and the payment thereof shall be guaranteed by the posting of an appropriate certificate of deposit, approved surety bond, or cash deposit in an amount and manner as prescribed by the Department of Citrus. * * * (11) This section shall be liberally construed to effectuate the purposes set forth and as additional and supplemental powers vested in the Department of Citrus under the police power of this state. In March 2000, certain citrus businesses challenged Section 601.155(5), Florida Statutes, as being unconstitutional. At the time of the suit, Section 601.155(5), Florida Statutes, read as follows: All products subject to the taxable privileges under this section, which products are produced in whole or in part from citrus fruit grown within the United States, are exempt from the tax imposed by this section to the extent that the products are derived from oranges or grapefruit grown within the United States. In the case of products made in part from citrus fruit grown within the United States, it shall be the burden of the persons liable for the excise tax to show the Department of Citrus, through competent evidence, proof of that part which is not subject to a taxable privilege. The citrus businesses claimed the exemption in Section 601.155(5) rendered the tax unconstitutionally discriminatory, in that processors who imported juice from foreign countries to be blended with Florida juice were subject to the equalization tax, whereas processors who imported juice from places such as California, Arizona and Texas enjoyed an exemption from the tax. The case, Tampa Juice Service, Inc., et al. v. Department of Citrus, Case No. GCG-00-3718 (Consolidated), was brought in the Tenth Judicial Circuit Court, in and for Polk County. Judge Dennis P. Maloney of that court continues to preside over that case. In a partial final declaratory judgment effective March 15, 2002, Judge Maloney found Section 601.155, Florida Statutes, unconstitutional because it violated the Commerce Clause of the United States Constitution due to its discriminatory effect in favor of non-Florida United States juice. In an order dated April 15, 2002, Judge Maloney severed the exemption in Section 601.155(5), Florida Statutes, from the remainder of the statute. The court's decision necessitated the formulation of a remedy for the injured plaintiffs. While the parties were briefing the issue before the court, the Florida Legislature met and passed Chapter 2002-26, Laws of Florida, which amended Section 601.155, Florida Statutes, to read as follows: Products made in whole or in part from citrus fruit on which an equivalent tax is levied pursuant to s. 601.15 are exempt from the tax imposed by this section. In the case of products made in part from citrus fruit exempt from the tax imposed by this section, it shall be the burden of the persons liable for the excise tax to show the Department of Citrus, through competent evidence, proof of that part which is not subject to a taxable privilege. Chapter 2002-26, Laws of Florida, was given an effective date of July 1, 2002. By order dated August 8, 2002, Judge Maloney set forth his decision as to the remedy for the plaintiffs injured by the discriminatory effect of Section 601.155(5), Florida Statutes. Judge Maloney expressly relied on the rationale set forth in Division of Alcoholic Beverages and Tobacco v. McKesson Corporation, 574 So. 2d 114 (Fla. 1991)("McKesson II"). In its initial McKesson decision, Division of Alcoholic Beverages and Tobacco v. McKesson Corporation, 524 So. 2d 1000 (Fla. 1988), the Florida Supreme Court affirmed a summary judgment ruling that Florida's alcoholic beverage tax scheme, which gave tax preferences and exemptions to certain alcoholic beverages made from Florida crops, unconstitutionally discriminated against interstate commerce. The Florida Supreme Court also affirmed that portion of the summary judgment giving the ruling prospective effect, thus denying the plaintiff a refund of taxes paid pursuant to the unconstitutional scheme. The decision was appealed to the United States Supreme Court. In McKesson Corporation v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18 (1990), the United States Supreme Court reversed the Florida Supreme Court's decision as to the prospective effect of its decision. The United States Supreme Court held that: The question before us is whether prospective relief, by itself, exhausts the requirements of federal law. The answer is no: If a State places a taxpayer under duress promptly to pay a tax when due and relegates him to a postpayment refund action in which he can challenge the tax's legality, the Due Process Clause of the Fourteenth Amendment obligates the State to provide meaningful backward-looking relief to rectify any unconstitutional deprivation. 496 U.S. at 31 (footnotes omitted). The United States Supreme Court set forth the following options by which the state could meet its obligation to provide "meaningful backward-looking relief:" [T]he State may cure the invalidity of the Liquor Tax by refunding to petitioner the difference between the tax it paid and the tax it would have been assessed were it extended the same rate reductions that its competitors actually received. . . . Alternatively, to the extent consistent with other constitutional restrictions, the State may assess and collect back taxes from petitioner's competitors who benefited from the rate reductions during the contested tax period, calibrating the retroactive assessment to create in hindsight a nondiscriminatory scheme. . . . Finally, a combination of a partial refund to petitioner and a partial retroactive assessment of tax increases on favored competitors, so long as the resultant tax actually assessed during the contested tax period reflects a scheme that does not discriminate against interstate commerce, would render petitioner's resultant deprivation lawful and therefore satisfy the Due Process Clause's requirement of a fully adequate postdeprivation procedure. 496 U.S. at 40-41 (citations and footnotes omitted). The United States Supreme Court expressly provided that the state has the option of choosing the form of relief it will grant. In keeping with the United States Supreme Court opinion, the Florida Supreme Court granted the Division of Alcoholic Beverages and Tobacco (the "Division") leave to advise the Court as to the form of relief the state wished to provide. The Division proposed to retroactively assess and collect taxes from those of McKesson's competitors who had benefited from the discriminatory tax scheme. McKesson contended that a refund of the taxes it had paid was the only clear and certain remedy, because retroactive taxation of its competitors would violate their due process rights. McKesson II, 574 So. 2d at 115. The Florida Supreme Court remanded the case to the trial court for further proceedings on McKesson's refund claim, with the following instructions: While McKesson may not necessarily be entitled to a refund, it is entitled to a "clear and certain remedy," as outlined in the Supreme Court's opinion. Because nonparties, such as amici, will be directly affected by the retroactive tax scheme proposed by the state, all affected by the proposed emergency rule must be given notice and an opportunity to intervene in this action. Therefore, on remand, the trial court not only must determine whether the state's proposal meets "the minimum federal requirements" outlined in the Supreme Court's opinion, it also must determine whether the proposal comports with federal and state protections afforded those against whom the proposed tax will be assessed. We emphasize that the state has the option of choosing the manner in which it will reformulate the alcoholic beverage tax during the contested period so that the resultant tax actually assessed during that period reflects a scheme which does not discriminate against interstate commerce. Therefore, if the trial court should rule that the state's proposal to retroactively assess and collect taxes from McKesson's competitors does not meet constitutional muster and such ruling is upheld on appeal, the state may offer an alternative remedy for the trial court's review. However, any such proposal likewise must satisfy the standards set forth by the Supreme Court as well as be consistent with other constitutional restrictions. 574 So. 2d at 116. In the instant case, Judge Maloney assessed the options prescribed by the series of McKesson cases and concluded that the only fair remedy was to assess and collect back assessments from those who benefited from the unconstitutional equalization tax exemption. His August 8, 2002 order directed the Department to "take appropriate steps, consistent with existing law, to assess and collect the Equalization tax from those entities which [benefited] from the unconstitutional exemption." On September 18, 2002, the Department promulgated the Emergency Rules at issue in DOAH Case No. 02-3648RE. The Emergency Rules were filed with the Department of State on September 24, 2002, and took effect on that date. They were published in the October 4, 2002 issue of the Florida Administrative Weekly (vol. 28, no. 40, pp. 4271-4272). The full text of the Emergency Rules is: EQUALIZATION TAX ON NON-FLORIDA UNITED STATES JUICE 20ER02-1 Intent. The Court in Tampa Juice Service, et al v. Florida Department of Citrus in Consolidated Case Number GCG-003718 (Circuit Court in and for Polk County, Florida) severed the exemption contained in Section 601.155(5), Florida Statutes, that provided an exemption for persons who exercised one of the enumerated Equalization Tax privileges on non-Florida, United States juice. The Court had previously determined that the stricken provisions operated in a manner that violated the Commerce Clause of the United States Constitution. On August 8, 2002, the Court ordered that the Florida Department of Citrus "take appropriate steps, consistent with existing law, to assess and collect the Equalization tax from those entities which [benefited] from the unconstitutional exemption." It is the Florida Department of Citrus' intent by promulgating the following remedial Rule 20ER02-01 and Chapter 20-15, F.A.C., to implement a non-discriminatory tax scheme, which does not impose a significant tax burden that is so harsh and oppressive as to transgress constitutional limitations. These rules shall be applicable to those previously favored persons who received favorable tax treatment under the statutory sections cited above. Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. 20ER02-2 Definitions. "Previously favored persons" shall be defined as any person who exercised an enumerated Equalization Tax privilege as defined by Section 601.155, Florida Statutes, but who was exempt from payment of the Equalization Tax due to the exemption for non-Florida, United States juice set forth in the statutory provision, which was ultimately determined to be unconstitutional and severed from Section 601.155(5), Florida Statutes. The "tax period" during which the severed provisions of Section 601.155(5), Florida Statutes, were in effect shall be defined as commencing on October 6, 1997, and ending on March 14, 2002. "Tax liability" shall be defined as the total amount of taxes due to the Florida Department of Citrus during the "tax period," at the following rates per box for each respective fiscal year: Fiscal Year Processed Rate Orange Grapefruit 1997-1998 .175 .30 1998-1999 .17 .30 1999-2000 .18 .325 2000-2001 .175 .30 2001-2002 .165 .18 Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. 20ER02-3 Collection. The Florida Department of Citrus shall calculate the tax liability for each person or entity that exercised an enumerated Equalization Tax privilege outlined in section 601.155, Florida Statutes, upon non-Florida, United States juice based upon inspection records maintained by Florida Department of Agriculture and Consumer Services and the United States Department of Agriculture. Additionally, the Florida Department of Citrus will provide notice of the calculation to the previously favored persons by certified mail. The notice of the calculation shall contain a statement including the following categories: (a) Tax liability; (b) Gallons; Brix; Type of product; (e) Total solids; (f) Conversion rate; (g) Total boxes; (h) Delineation of non-Florida, United States juice. (2)(a) Contained within the notice will be the various legal options available to those who previously enjoyed the exemption, set forth in proposed Rule 20- 15.003(2), F.A.C. (b) Persons who previously enjoyed the exemption may petition to intervene in the case of Tampa Juice Service, Inc., et al, Consolidated Case No. GCG-003718, presently pending before the Circuit Court of the Tenth Judicial Circuit in and for Polk County. A hearing to consider arguments made by any intervenor, the Plaintiffs and the Florida Department of Citrus is currently scheduled to be heard by the Honorable Dennis Maloney on November 12, 2002, in Bartow, Florida. (3) The Florida Department of Citrus will not oppose the timely intervention of persons who previously enjoyed the subject exemption that wish to present a claim to the Court in the Tampa Juice Service, Inc., et al v. Florida Department of Citrus. However, the Florida Department of Citrus does not waive any argument regarding the validity of the calculation of the tax liability or that imposition of this tax is constitutional. Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New 9-24-02. The Department's "Specific Reasons for Finding an Immediate Danger to the Public Health, Safety or Welfare" were set forth as follows: On March 18, 2002, the Court in the Tenth Judicial Circuit, State of Florida, in and for Polk County, entered a Partial Final Declaratory Judgment in the case of Tampa Juice Service, Inc., et al v. Florida Department of Citrus, Consolidated Case Number GCG-003718. In this order the Court ruled that the exemption in Section 601.155, F.S., for non-Florida, United States juice was unconstitutional. On or about April 15, 2002, the Court severed the exemption for non-Florida, United States juice from section 601.155(5), F.S. On August 8, 2002, the Court held that the Florida Department of Citrus was required to cure the invalidity of the equalization taxing scheme. To cure this invalidity, the Florida Department of Citrus promulgates Rule 20ER02-1, F.A.C., which will serve to implement the Court's order for a nondiscriminatory tax scheme and provide due process protections for the previously favored taxpayers. These rules are being promulgated on an emergency basis to meet time constraints associated with litigation and to establish guidelines which protect the public's and state's interest for the orderly and efficient collection and payment of the tax liability. Without these guidelines, the welfare of the citizens and the state would be adversely affected because of the immediate and widespread impact of the failure of previously favored persons to properly remit the tax. The Department's "Reason for Concluding that the Procedure is Fair Under the Circumstances" was set forth as follows: Promulgation of these guidelines using the emergency rule procedures is the only available mechanism which adequately protects the public interests under the circumstances which require collection and payment of the tax liability. This procedure is fair to the public and to the previously favored persons. It permits promulgation of the necessary guidelines within a time frame which allows the industry to be adequately informed of their duties, responsibilities and rights with respect to the tax liability. In the November 15, 2002 issue of the Florida Administrative Weekly (vol. 28, no. 46, pp. 4996-4998), the Department published the Proposed Rules at issue in DOAH Case No. 02-4607RP. The text of Proposed Rule 20-15.001, Florida Administrative Code, is identical to that of Emergency Rule 20ER02-1, set forth above. The text of Proposed Rule 20-15.002, Florida Administrative Code, is identical to that of Emergency Rule 20ER02-2, set forth above. The text of Proposed Rule 20- 15.003(1)&(3), Florida Administrative Code, is identical to that of Emergency Rule 20ER02-3(1)&(3), set forth above. The text of Proposed Rule 15.003(2), Florida Administrative Code, varies from the text of Emergency Rule 20ER02-3(2), and reads as follows: 20-15.003 Collection. Subsequent to adoption of this rule, the Florida Department of Citrus will provide to the previously favored persons by certified mail a Notice of Tax Liability which shall contain a demand for payment consistent with the above-referenced itemized statement. The Department will deem late payment of Equalization Taxes owed by previously favored persons to constitute good cause, and shall waive the 5 percent penalty authorized by Section 601.155(10), F.S., as compliance with either of the following is established by Department [sic]: Lump sum payment of the tax liability remitted with the filing of Department of Citrus Form 4R (incorporated by reference in Rule 20-100.004, F.A.C.) for the relevant years and then-applicable tax rate(s) per subsection 20-15.002(3), F.A.C., within 61 days of receiving Notice of Tax Liability; or Equal installment payments remitted with the filing of Department of Citrus Form 4R (incorporated by reference in Rule 20-100.004, F.A.C.) for the relevant years and then-applicable tax rate(s) per subsection subsection [sic] 20-15.002(3), F.A.C., over a 60-month period, the first payment being due within 61 days of receiving Notice of Tax Liability pursuant to subsection 20-15.003(2), F.A.C.; or The Good Cause provisions of 601.155(10), F.S., shall not apply to persons who do not comply with paragraph 20- 15.003(2)(a), F.A.C., or paragraph 20- 15.003(2)(b), F.A.C. Failure to pay the taxes or penalties due under 601.155, F.S. and Chapter 20-15, F.A.C., shall constitute grounds for revocation or suspension of a previously favored person's citrus fruit dealer's license pursuant to 601.56(4), F.S., 601.64(6), F.S., 601.64(7), F.S., and/or 601.67(1), F.S. Peace River is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Peace River is subject to the rules of the Department. Peace River buys, sells, and manufactures bulk citrus juices. By correspondence dated October 2, 2002, Peace River was notified by the Department that Peace River would be liable for payment of $86,242.41 in Equalization taxes for the tax period of October 6, 1997 through March 14, 2002 (the "tax period"), pursuant to the terms of the Emergency Rules. Fresh Juice is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Fresh Juice is subject to the rules of the Department. Fresh Juice buys, sells, and manufactures citrus juices. By correspondence dated October 2, 2002, Fresh Juice was notified by the Department that Fresh Juice would be liable for payment of $45,052.19 in Equalization taxes for the tax period, pursuant to the terms of the Emergency Rules. Sun Orchard is a Florida corporation and licensed citrus fruit dealer regulated by Chapter 601, Florida Statutes. As such, Sun Orchard is subject to the rules of the Department. Sun Orchard buys, sells, and manufactures citrus juices. By correspondence dated October 2, 2002, Sun Orchard was notified by the Department that Sun Orchard would be liable for payment of $45,052.19 in Equalization taxes for the tax period, pursuant to the terms of the Emergency Rules. During the tax period, Peace River, Fresh Juice, and Sun Orchard imported, stored and blended non-Florida, United States citrus juices. Neither Peace River, Fresh Juice, nor Sun Orchard is a party to the lawsuit styled Tampa Juice Service, Inc., et al. v. Department of Citrus, Case No. GCG-00-3718 (Consolidated). Peace River, Fresh Juice, and Sun Orchard contend that they relied on the tax exemption in making business decisions and had no notice that their activities regarding non-Florida, United States juice would be taxable upon the court's striking of the exemption in Section 601.155(5), Florida Statutes. Accordingly, Peace River, Fresh Juice, and Sun Orchard contend that, during the tax period, they had no opportunity to conform their conduct to avoid the tax or position themselves to claim a refund allowed by Section 601.155, Florida Statutes. Peace River, Fresh Juice, and Sun Orchard contend that they have not been obligated by Chapter 601, Florida Statutes, to keep specific records on their use of non-Florida United States citrus juices for the tax period, but admit they keep business records required by law, which may include some business records related to non-Florida United States juice during the tax period. Peace River, Fresh Juice, and Sun Orchard shipped products made with non-Florida, United States juice during the tax period without payment of the Equalization Tax.
The Issue The issues for determination in this case are whether Respondent, as a licensed citrus fruit dealer, breached an agreement with Petitioner relating to the purchase of citrus fruit during the 1993-1994 citrus shipping season; and further whether the breach of such agreement constitutes a violation of the Florida Citrus Code for which the proceeds of the citrus fruit dealer's bond executed by Co-Respondent should be paid to Petititioner pursuant to Section 601.66, Florida Statutes.
Findings Of Fact Petitioner, BBC & F Corporation, Inc., is a Florida corporation located in Zolfo Springs, Florida, which is in the business of buying and selling citrus fruit. Charles J. "Chuck" Young is the vice-president and a director of Petitioner. Respondent, Jim Robinette, is a citrus fruit dealer with an office in Lakeland, Florida, who was licensed during the 1993-1994 citrus shipping season by the Florida Department of Agriculture and Consumer Affairs. Co-Respondent, Aetna Casualty and Surety Company, is a surety company qualified to do business in Florida, which pursuant to Section 601.61, Florida statutes, executed Respondent's citrus fruit dealer's bond for the 1993-1994 citrus shipping season in the amount of $5,000.00. On or about March 1, 1994, Petitioner, by and through its director and representative, Charles J. "Chuck" Young, entered into an oral contract with Respondent for the sale and delivery of certain citrus fruit from Petitioner's grove in Dundee, Florida. At that time, Respondent had made a prior agreement with the Redi-Made Foods Corporation to supply citrus fruit to Redi-Made's facility in Tampa, Florida. Specifically, the contract between Petitioner and Respondent provided for the purchase of valencia oranges to be used as salad fruit. The fruit was to be delivered by Petitioner to Redi-Made's facility in Tampa, Florida. The initial terms of the contract provided for a purchase price of $10 per box for fruit delivered to Redi-Made. Of the $10 contract price, $7 was for the grower (Petitioner), $1.90 was to cover the harvesting costs, $.25 was a brokerage fee paid to James Porter of Redi-Made, and $.85 was for Respondent. The first few loads were delivered to Redi-Made and paid for at the contract price of $10 per box. Subsequent to the delivery of the initial few loads, the terms of the contract were amended to incorporate a deduction of $.20 per box of fruit delivered for the purpose of expediting the processing of the payments from Redi-Made. The Petitioner and Respondent agreed to share equally this reduction from the original price. Accordingly, under the amended terms of the contract, Petitioner would receive $6.90 per box delivered, the harvesting costs remained at $1.90 per box delivered, the payment to James Porter remained at $.25 per box delivered, and the Respondent would receive $.75 per box delivered. In accordance with the terms of the amended contract, Petitioner during March of 1994, delivered six loads of valencia oranges totalling 2210 boxes to Redi-Made for which payment has not been made by Respondent. Under the terms of the amended contract, Petitioner is owed $15,249 for the fruit delivered. In addition, Petitioner paid for the harvesting costs of the fruit, for which under the terms of the amended contract, Petitioner is owed $4,199. Respondent was paid by Redi-Made for three of the six loads. These loads are evidenced by trip tickets 70144, 70146 and 82960, and show that 930 boxes of fruit were delivered by Petitioner to Redi-Made; however, Redi-Made paid Respondent for only 890 boxes of this fruit, and did not pay Respondent for the remainder of the 2210 boxes of fruit delivered by Petitioner. There is an ongoing dispute between Respondent and Redi-Made regarding Redi-Made's failure to make payment for the remainder of the fruit; however, resolution of the Respondent's dispute with Redi-Made is independent of, and does not affect the obligations of the Respondent with respect to Respondent's contract with Petitioner.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Agriculture and Consumer Services enter a final order adjudicating that the amount of indebtedness owed to Petitioner from Respondent is $19,488.00, that Respondent shall have thirty (30) days in which to satisfy such indebtedness, and that upon failure of the Respondent to make satisfaction of this claim, the proceeds of the citrus fruit dealer's bond executed by Co-Respondent shall be distributed to Petitioner. RECOMMENDED in Tallahassee, Leon County, Florida, this 9th day of May, 1995. RICHARD HIXSON 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 9th day of May, 1995. APPENDIX Petitioner's Findings 1.-3. Adopted and Incorporated COPIES FURNISHED: Commissioner Bob Crawford Commissioner of Agriculture The Capitol, P1-10 Tallahassee, Florida 32399-0810 Brenda Hyatt, Chief Department of Agriculture and Consumer Services Mayo Building, Room 508 Tallahassee, Florida 32399-0800 Richard Tritschler, Esquire Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810 Allan L. Casey, Esquire Post Office Box 7146 Winter Haven, Florida 33883-7146 Jim Robinette 2025 Sylvester Road, Suite J4 Lakeland, Florida 33803
The Issue Whether Sunny Fresh Citrus Export and Sales, Co., LLC, is liable to Petitioner in the amount of $44,032.00 for delivery of fruit which remains unpaid.
Findings Of Fact Petitioner, DP Partners, Ltd. (Partners), is a Florida Limited Partnership located in Lake Placid, Florida, engaged in the business of citrus production. Daniel H. Phypers and Danielle Phypers Daum, brother and sister, and their father Drew Phypers, are limited partners in the business. Respondent, Sunny Fresh Citrus Export and Sales Co., LLC, (the LLC) is a Florida Limited Liability Company headquartered in Vero Beach, Florida, engaged in the business of exporting citrus for retail sale. The LLC was organized and registered with the State of Florida Division of Corporations on November 3, 2011. The members of the LLC are Kelly Marinaro and Jean Marinaro, husband and wife. Kelly Marinaro (Marinaro) formerly conducted business in the name of Sunny Fresh Citrus Export and Sales Co. (the DBA), a fictitious-name entity registered with the Florida Department of State, Division of Corporations, on October 23, 2007. The fictitious-name entity registration expired on December 31, 2012. Marinaro suffered a massive heart attack in November 2011 and was incapacitated. He did not return to work until the Spring of 2013. On November 4, 2011, after suffering the heart attack, and one day after organizing and registering the LLC, Marinaro conveyed durable power of attorney to Joseph Paladin (Paladin) as his Agent. Among the authority granted to Paladin, was the following: 2. To enter into binding contracts on my behalf and to sign, endorse and execute any written agreement and document necessary to enter into such contract and/or agreement, including but not limited to . . . contracts, covenants . . . and other debts and obligations and such other instruments in writing of whatever kind and nature as may be. * * * 9. To open, maintain and/or close bank accounts, including, but not limited to, checking accounts . . . to conduct business with any banking or financial institution with respect to any of my accounts, including, but not limited to, making deposits and withdrawals, negotiating or endorsing any checks . . . payable to me by any person, firm, corporation or political entity[.] * * * 12. To maintain and operate any business that I currently own or have an interest in or may own or have an interest in, in the future. In Marinaro’s absence, Paladin conducted the usual affairs of the business, including entering into contracts to purchase citrus from several growers. On October 19, 2012, Paladin entered into contract number 2033 with Partners to purchase approximately 6000 boxes of Murcots (a tangerine variety) at $12.00 per box.2/ The contract is signed by Paladin as the Agent of “Sunny Fresh Citrus Export & Sales Company, Licensed Citrus Fruit Dealer (Buyer).” On December 13, 2012, Sunny Fresh entered into contract number 2051 with Partners to purchase Hamlins (a different fruit variety) at $6.50 per box.3/ The contract price was for citrus “on the tree,” meaning it was the buyer’s responsibility to harvest the citrus. The contract is signed by Paladin as the Agent of “Sunny Fresh Citrus Export & Sales Company, Licensed Citrus Fruit Dealer (Buyer).” (Contract 2033 and 2051 are hereinafter referred to collectively as “the contracts”.) The contracts were prepared on pre-printed forms used by Marinaro’s businesses pre-dating Paladin’s involvement. The contract form is titled as follows: Citrus Purchase Contract & Agreement Sunny Fresh Citrus Export & Sales Company Cash Fruit Crop Buyer 2101 15th Avenue Vero Beach, Florida 32960 Paladin testified that he was not aware of more than one company for Marinaro’s fruit-dealing business. He testified that he was not aware of any difference between Sunny Fresh Citrus Export and Sales Company and Sunny Fresh Citrus Export and Sales Co., LLC. Paladin was not aware of when the LLC was created. Paladin’s testimony is accepted as credible and reliable. Paladin testified that his intent was to enter into the contracts for the benefit of “Sunny Fresh.” “Sunny Fresh,” written in twelve-point bold red letters over an image of the sun in yellow outlined in red, is a trademark registered with the Florida Division of Corporations. Marinaro first registered the trademark in February 1998. In his trademark application, Marinaro entered the applicant’s name as “Kelly Marinaro D/B/A Sunny Fresh Citrus.” Marinaro renewed the trademark registration in 2007. Marinaro testified that the “Sunny Fresh” trademark is “owned by the LLC.” On February 20, 2012, Paladin, Marinaro and a third partner, Gary Parris, formed another company, Sunny Fresh Packing, LLC, the purpose of which was to run a fruit-packing house in Okeechobee, Florida. Equipment for the packing house was obtained from a packing house in Ft. Pierce, Florida, which was indebted to Marinaro, in some capacity, and went “belly up.” In March 2013, the Okeechobee packing house was struck by lightning. Shortly after the lightning strike, Marinaro, Paladin, and Mr. Parris, signed a letter addressed “To our valued Growers.” The letter explained that, due to both the lightning strike, which shorted out all computers and electrical components at the packing house, and reduced demand for product due to severe weather in the northeastern United States, they had made a “business decision to end the year now and prepare for next year.” The letter further explained that, “rather than spending thousands of dollars all at once, we feel, it makes better sense to use our cash flow to pay our growers first . . . . We will be sending out checks every week or every other week until everyone is paid or until we receive supplemental cash infusions that we are working on. In that case we would just pay everyone in full, from that.” The letter was prepared on letterhead bearing the “Sunny Fresh” trademark logo. Paladin made a number of payments to Partners on the contracts during 2012 and 2013. Each check shows payor name as “Sunny Fresh” with an address of 2101 15th Avenue, Vero Beach, Florida 32960. Mr. Phypers met with Paladin a number of times to collect checks and understood that Paladin was making concerted efforts to pay all the growers. However, Partners did not receive full payment on the contracts. Paladin drafted a Release of Invoices Agreement (Agreement) by which creditor growers could receive partial payment on their outstanding contracts in exchange for a full release of liability from the buyer. The Agreement lists the following entities and persons as being released from liability: “Sunny Fresh Packing, LLC”; “Sunny Fresh Citrus Export and Sales Co., LLC”; and Kelly Marinaro. Paladin presented the Agreement to Partners with an offer to pay $36,449.45 in consideration for signing the Agreement. Partners did not sign the Agreement. The parties stipulated that the amount owed Partners under both contracts is $44,032.00. Respondent contends that Petitioner’s claim is filed against the wrong business entity. Respondent argues that Petitioner’s contracts were with the DBA, and that Petitioner’s claim is incorrectly brought against the LLC. Thus, Respondent reasons, the LLC is not liable to Petitioner for the monies owed. The DBA was registered with the State of Florida in 2007 and held an active fruit dealer’s license through July 31, 2012. Marinaro owned and operated the DBA at 2101 15th Avenue, Vero Beach, Florida 32960. The DBA filed a citrus fruit dealer’s bond with the Department of Agriculture for the 2008-2009 shipping season. Marinaro registered the trademark “Sunny Fresh” logo in the name of the DBA in 2007, and was still using the logo on his business letterhead in 2013. Marinaro formed the LLC in 2011, which holds an active citrus fruit dealer’s license. Marinaro and his wife, Jean, are the only members of the LLC. The principal address is 2101 15th Avenue, Vero Beach, Florida 32960. The LLC filed citrus fruit dealer’s bonds with the Department of Agriculture on June 28, 2012, for the shipping season ending July 31, 2013, and on May 2, 2013, for the shipping season ending July 31, 2014. Marinaro did not refile a bond for the DBA after forming the LLC. At all times relevant hereto, Marinaro’s fruit dealer’s business has been physically located at 2101 15th Avenue, Vero Beach, Florida 32960. The building at that address bears the name “Sunny Fresh.” Marinaro testified that he formed the LLC shortly after his heart attack to “protect his personal assets.” Marinaro explained that he had little revenue in the LLC “for the next two years,” and he planned for the LLC to conduct sales for the packing company. He expected the LLC would be purchasing fruit from other packing houses. In fact, he testified that, during his absence, he was not aware that either the DBA or the LLC were purchasing fruit. Marinaro was clearly upset about the financial state of his business when he resumed control in the Spring of 2013. He testified that, prior to his heart attack, he was running a business with a typical $10 to $12 million yearly revenue, but that he returned to a business in debt to the tune of roughly $790,000.00. Marinaro lamented that Paladin entered into contracts to buy citrus when that was not the plan for the LLC. Alternately, he blamed Paladin for taking too much money out of the LLC to set up the packing house. Marinaro’s testimony was inconsistent and unreliable. He first testified that Paladin had full authority to purchase fruit in his absence, but later professed to be “dismayed” that his company was purchasing fruit in his absence. The evidence does not support a finding that the LLC was formed for any reason other than to continue his fruit dealings in a legal structure that would protect his personal assets. Marinaro’s explanation that the purpose of the LLC was to conduct sales for the packing company also lacks credibility. The LLC was organized in November 2011, but the packing house in Ft. Pierce from which he acquired the equipment to set up a packing house in Okeechobee did not go “belly up” until February 2012. Marinaro would have had to be clairvoyant to set up an LLC for the sole purpose of sales to a packing house about which he was not aware until four months later. Marinaro’s testimony that he was in the dark about the running of his business and that he was somehow duped by Paladin is likewise unreliable. Marinaro testified that, during his absence, he was “concerned that Paladin was entering into contracts where a bond was required, but not secured.”4/ He could not have been concerned about contracts to buy fruit without posting the required bond if he was not even aware that his company was purchasing fruit. Further, Marinaro neither questioned Paladin about entering into the citrus contracts, nor suggested Paladin use a different contract form for the LLC. The evidence establishes that Marinaro knew Paladin was purchasing fruit during Marinaro’s absence to continue the regular fruit-dealer’s business, and further, that Marinaro knew Paladin was entering into contracts on behalf of the LLC, the company formed just one day prior to Marinaro granting Paladin full power of attorney to run his business. Finally, Marinaro knowingly participated in the formation of Sunny Fresh Packing, LLC, in February 2012, four months after he became incapacitated. This required his involvement in a complicated business scheme in which his company collected on a debt owed by a packing house in Ft. Pierce, and acquired the equipment to run the new packing house, with two partners, Parris and Paladin, located in Okeechobee on property owned by a third party, Mr. Smith, who is not a member of Sunny Fresh Packing, LLC. It is unlikely Marinaro was clueless as to the fruit dealings of the LLC in his absence. Further, it is disingenuous, at best, for Marinaro to suggest that the contracts entered into in 2012 are not with the LLC, the corporation he formed in 2011 to protect his personal assets from his business obligations.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order approving the claim of DP Partners, Ltd., against Sunny Fresh Citrus Export and Sales Co., LLC, in the amount of $44,032.00. DONE AND ENTERED this 30th day of October, 2014, in Tallahassee, Leon County, Florida. S Suzanne Van Wyk Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of October, 2014.
The Issue The issues are whether Respondent Delicious Citrus Packing, LLC (Respondent), as a citrus fruit dealer, has failed to pay Petitioner for citrus fruit, as required by section 601.64(4), Florida Statutes; and, if so, the amount that Respondent owes Petitioner.
Findings Of Fact Respondent holds a Citrus Fruit Dealer's License number 252, effective August 31, 2015, for the 2015-16 season. The surety is Respondent Platte River Insurance Company. During the 2015-16 season, Petitioner picked citrus fruit from the groves of various third parties and transported the fruit to Respondent, which cleaned, waxed, and graded the fruit prior to selling it to various retailers, primarily, it seems, in South Florida. During the 2014-15 season, Petitioner and Respondent entered into contracts covering their respective rights and obligations in connection with transactions identical to those set forth in the preceding paragraph. An example is a contract dated April 10, 2015, signed by Petitioner and Respondent, specifying that Petitioner would purchase from a named third party from a named portion of a grove approximately 2000 citrus fruit for a delivered price of $16 per box with payment due upon delivery. The contract provides that Petitioner makes no allowance for fruit not meeting Respondent's specifications because Respondent had examined and preapproved the fruit on the tree. The parties did not document their agreement during the 2015-16 season, but the conditions were identical, although the price per box decreased, as set forth below. As was their practice during the preceding season, prior to the purchase and delivery by Petitioner, representatives of both companies visited the grove with the fruit still on the tree, and Respondent's representative approved the fruit, so, again, the agreement permitted no allowances for nonconforming fruit. Petitioner produced trip tickets documenting the delivery of 791 boxes of citrus fruit--all oranges--from September 25, 2015, through October 24, 2015. At this point, representatives of Petitioner and Respondent met to discuss the price of the fruit. Respondent complained that the fruit was too expensive based on what it could charge its purchasers, so Petitioner went back to the grove owners and negotiated a reduction in price. On November 2, 2015, Petitioner agreed to reduce its price from an undisclosed price per box to $15.50 per box, so as to reduce the outstanding balance for the 7791 boxes already delivered to $120,760.50. At that time, Respondent paid $85,250.50, leaving a balance due of $35,510. The parties promptly resumed their business dealings. A trip ticket dated November 2, 2015, documented the delivery of 550 boxes, for which the agreed-upon price was the $15.50 that the parties had set for the previous deliveries. However, even this price proved too high for Respondent, so the next two trip tickets, dated November 3 and 4, 2015, for a total of 1072 boxes, were priced at $13.50 per box. At some point, Respondent made two payments totaling $8811, and Respondent processed other fruit for Petitioner, earning a total credit of $2486 to be applied to the outstanding balance. These transactions reduced the balance to $47,210, which is the amount that Respondent presently owes Petitioner. The finding in the preceding paragraph reduced Petitioner's claim by $7157. As shown on the invoice dated April 6, 2016, received into evidence as Petitioner Exhibit 5, this balance was carried forward from the 2014-15 season. As explained in the Conclusions of Law, this case is limited to the 2015-16 season due to the timing of the filing of the Complaint. The findings in the preceding paragraphs discredit the testimony of Respondent's witnesses as to bad fruit that could not be sold. First, Respondent bore the risk of fruit that could not be sold for any reason, including spoilage. Second, Respondent did not assert this complaint when it negotiated a new purchase price on November 2, 2015. Third, Respondent did not object to the series of invoices that Petitioner submitted to Respondent, culminating in the April 6 invoice. Fourth, the testimony of Respondent's owner was vague and confusing, but twice seemed to confirm the indebtedness.
Recommendation It is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order determining that Respondent has violated section 601.64(4) by failing to pay Petitioner the sum of $47,210 for citrus fruit that Petitioner sold to Respondent during the 2015-16 shipping season and fixing a reasonable time within which Respondent shall pay such sum to Petitioner. DONE AND ENTERED this 6th day of March, 2017, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 6th day of March, 2017. COPIES FURNISHED: W. Alan Parkinson, Bureau Chief Bureau of Mediation and Enforcement Department of Agriculture and Consumer Services Rhodes Building, R-3 2005 Apalachee Parkway Tallahassee, Florida 32399-6500 (eServed) Emmitt King, Jr. KAD Harvesting and Hauling, LLC 850 South 21st Street Fort Pierce, Florida 34950 Platte River Insurance Company Attn: Claims Department Post Office Box 5900 Madison, Wisconsin 53705-0900 Douglas A. Lockwood, Esquire Straughn & Turner, P.A. 255 Magnolia Avenue Southwest Post Office Box 2295 Winter Haven, Florida 33880 (eServed) Dwight Johnathan Rhodeback, Esquire Rooney & Rooney, P.A. 1517 20th Street Vero Beach, Florida 32960 (eServed) Lorena Holley, General Counsel Department of Agriculture and Consumer Services 407 South Calhoun Street, Suite 520 Tallahassee, Florida 32399-0800 (eServed) Honorable Adam Putnam Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: Citrus Hill Manufacturing Company (Citrus Hill) is a wholly owned subsidiary of Proctor and Gamble. Citrus Hill is in the business of producing, manufacturing, packaging and distributing citrus products throughout the United States. It's main product has been "Select" orange juice which is 100 percent orange juice. Its principle manufacturing facility is located in Frostproof, Florida. While Citrus Hill has four other manufacturing sites outside the State of Florida, its Florida plant is the only facility for manufacturing frozen products. While it can produce chilled products at its plants located outside Florida, Citrus Hill's Florida plant is necessary to supply the demand for its chilled products on a national basis. In an effort to expand its market, Citrus Hill developed three products which it produces and packs at its plant in Frostproof, Florida. These products are and have been labeled as follows: "Lite Citrus Hill Orange Juice Beverage 60 percent Orange Juice," "Lite Citrus Hill Grapefruit Juice Beverage 45 percent Grapefruit Juice," and "Plus Calcium Citrus Hill, Calcium Fortified Grapefruit Juice Beverage - 60 percent Grapefruit Juice." The "lite" beverages are reduced calorie diluted juice beverages with the addition of Nutrasweet. The third product is a diluted grapefruit juice beverage fortified with calcium. By a letter dated March 19, 1987, the Department of Citrus ordered Citrus Hill to change its diluted citrus products labels and informed Citrus Hill that the Department would enforce Rule 20-66.001(4), Florida Administrative Code. That rule provides "Labels for diluted citrus products shall not include the word "juice" in the name of the product." By a Final Order entered this same date, that Rule was declared to be an invalid exercise of delegated legislative authority. As noted above, Citrus Hill markets and sells its product line throughout the United States. It desires to utilize the names of its diluted juice products as indicated in paragraph two above for three reasons. First, Citrus Hill believes that its labeling is in compliance with federal law. Second, it believes that a product name which includes the word "juice" more fully informs the consumer of the nature of the product because it is more exact, descriptive and less ambiguous than any name not using the word "juice," such as "drink," "ade," or "beverage." Third, Citrus Hill fears that if it were unable to disclose through its product name that the product is primarily a juice product, it would be placed at a competitive disadvantage in the national marketplace where non-Florida producers of similar products would not be bound by the challenged Rule's ban on the use of the word "juice" in the name of diluted juice products. While Citrus Hill could move its packaging facilities outside the state and utilize two product labels (one for Florida shipment and one for the non-Florida market), this alternative would be extremely expensive and would constitute a "distribution nightmare." Many distributors and large retail grocery stores work in multi-state regions and may not be willing to segregate and keep track of petitioner's different product labels for shipment in Florida and in non-Florida states. No other state in the United States prohibits the word "juice" in the labeling of diluted citrus juice products. In the late 1960's and early 1970's, the subject of proper labeling of diluted fruit juice beverages was under discussion by both the Florida Department of Citrus and the Federal Food and Drug Administration (FDA) under the Food, Drug and Cosmetic Act. The FDA ultimately rejected the proposal of prohibiting the word "juice" from the name of any product that was not 100 percent pure juice, and also rejected the approach of defining different products through "standards of identity." This latter method of labeling products would have defined a product as "fades" only if containing more than 10 percent, but less than 20 percent, juice, and various other category names based upon the percentage of fruit juice contained in the product. The prohibition against the word "juice" and the "standards of identity" proposals for the labeling of diluted juice products were rejected by the FDA in favor of a common or usual name approach, with a percent declaration of any characterizing ingredient. The pertinent federal regulations addressing the labeling of food products are contained in 21 C.F.R. Chapter 1. The more general regulation appears in 21 C.F.R. 102.5(a) and (b), and states, in pertinent part, as follows: "Section 102.5 General Principles. The common or usual name of a food ... shall accurately identify or describe, in as simple and direct terms as possible, the basic nature of the food or its characterizing properties or ingredients. The name shall be uniform among all identical or similar products and may not be confusingly similar to the name of any other food that is not reasonably encompassed within the same name. Each class or subclass of food shall be given its own common or usual name that states, in clear terms, what it is in a way that distinguishes it from different foods. The common or usual name of a food shall include the percentage(s) of any characterizing ingredient(s) or component(s) when the . component(s) ... has a material bearing on ... consumer acceptance or when the labeling ... may otherwise create an erroneous impression that such ... component(s) is present in an amount greater than is actually the case. The following requirements shall apply unless modified by a specific regulation in Subpart B of this part. The percentage of a characterizing ingredient or component shall be declared on the basis of its quantity in the finished product... The percentage of a characterizing ingredient or component shall be declared by the words "containing (or contains) percent (or %) ---" ... with the first blank filled in with the percentage expressed as a whole number not greater than the actual percentage of the ingredient or component named and the second blank filled in with the common or usual name of the ingredient or component." The FDA has also promulgated regulations dealing with the labeling of specific nonstandardized foods, including diluted orange juice beverages and diluted fruit or vegetable juice beverages other than diluted orange juice beverages. With respect to diluted orange juice beverages, 21 C.F.R. Section provides as follows: "102.32. Diluted Orange Juice Beverages. The common or usual name of a non- carbonated beverage containing less than 100 percent and more than 0 percent orange juice shall be as follows: A descriptive name for the product meeting the requirements of Section 102.5(a)(e.g., diluted orange juice beverage or another descriptive phrase), and A statement of the percent of each juice contained in the beverage in the manner set forth in Section 102.5(b)(2). The percent of the juice shall be declared in 5 percent increments, expressed as a multiple of five not greater than the actual percentage of orange juice in the product, except that the percent of orange juice in products containing more than 0 percent but less than 5-percent orange juice shall be declared in the statement as "less than 5" percent." Diluted fruit or vegetable juice beverages other than diluted orange juice beverages are the subject of 21 C.F.R. Section 102.33, 1/ which provides as follows: "102.33 Diluted fruit or vegetable juice beverages other than diluted orange juice beverages. The common or usual name of a non- carbonated beverage containing less than 100 percent and more than zero percent fruit or vegetable juice(s), other than only orange juice, shall be as follows: A descriptive name meeting the requirements of Section 102.5(a)(e.g., "diluted grape juice beverage", "grape juice drink", or another descriptive phrase) and A statement of the percent of each juice contained in the beverage in the manner set forth in Section 102.5(b)(2). The percent of the juice shall be declared in five percent increments, expressed as a multiple of five not greater than the actual percentage of juice in the beverage except that the percentage of any juice in beverages containing more than zero percent but less than 5 percent of that juice shall be declared in the statement as "less than 5 percent." The Department of Citrus has conducted two consumer surveys for the purpose of determining whether the word "juice" in a product name of a diluted citrus juice product is confusing or misleading. The Drossler study was conducted in 1972, and concluded that consumers are confused by the word "juice." However, that conclusion appears to be founded on the premise that the only proper use of the word "juice" is in the technical sense of "100 percent pure juice." In other words, what was measured in the survey was the consumer's failure to use the word "juice" in a limited sense to mean "100 percent pure juice." The surveyed consumer was asked to look at several products, and then state "what kind of product is this?" The products viewed consisted of several different dairy products and a citrus beverage. If the consumer used the word "juice" to describe the kind of product pointed to, he was treated as being confused if the product was less than 100 percent juice. No follow-up questions were asked concerning the consumer's understanding of the content of the product. The Chelsea study was conducted at the request of the Department of Citrus in 1987. It, too, concludes that there would be less consumer confusion if the word "juice" were eliminated from products comprised of less than 100 percent pure citrus juice. However, there was evidence that this study attempted to address too many issues, including consumer preferences, and that "question contamination" could well have occurred. This refers to the intentional or unintentional biasing of the interviewees by the ordering or phraseology of the questions asked. Both the Burke study and the Chelsea study indicate that consumers are not confused by a beverage label using the word juice in the product name when it is accompanied by the declaration of the percentage of juice contained in the product. The Burke study was conducted on behalf of the petitioner in 1987. After conducting interviews of 1200 people from all age groups in six different cities throughout the United States, it concluded that there was no significant difference in consumer confusion between the use of the word "juice" and "beverage" in the product name when the percentage of citrus juice content is indicated on the label. In other words, whether the label identified the product as a "juice beverage" or a "beverage," the respondents were able to determine the amount of actual juice contained in the product.
Recommendation Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the Department of Citrus rescind its order or directive to the petitioner to discontinue the use of the word "juice" in its labels for diluted citrus juice beverages. Respectfully submitted and entered this 9th day of December, 1987, in Tallahassee, Florida. DIANE D. TREMOR 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 9th day of December, 1987.
The Issue The issues in this case are whether Respondent, a licensed citrus fruit dealer, violated the Florida Citrus Code by failing to pay Petitioner the full purchase price for grapefruit that the dealer had harvested from Petitioner's grove and sold in the ordinary course of business to its (the dealer's) customers; and, if so, the amount of the indebtedness owed by the dealer.
Findings Of Fact Petitioner Frontier Fresh of Indian River, LLC ("Seller"), is in the business of growing citrus fruit and hence is a "producer" as that term is defined in the Florida Citrus Code. § 601.03(33), Fla. Stat. Respondent United Indian River Packers, LLC ("Buyer"), is a "citrus fruit dealer" operating within the regulatory jurisdiction of the Department of Agriculture and Consumer Services (the "Department"). See § 601.03(8), Fla. Stat. On September 6, 2013, Seller and Buyer entered into a Production Contract Agreement (the "Contract") under which Buyer agreed to purchase and harvest red and flame grapefruit (both generally called "colored grapefruit") then growing in Seller's "Emerald Grove" in St. Lucie County. Buyer promised to pay Seller $7.75 per box plus "rise" for all colored grapefruit harvested from the Emerald Grove during the 2013/2014 season. ("Rise" is an additional payment due Seller if Buyer's net revenue from marketing the fruit exceeds the Contract price or "floor payment.") The Contract gave Buyer and its "agents, employees and vehicles" the right to "enter upon SELLER'S premises . . . from time to time for the purpose of inspecting, testing and picking fruit, and for the purpose of removing said fruit." Buyer was obligated to make scheduled payments to Seller totaling $250,000 between September and December 2013, with the balance of the floor payment "to be made within 45 days from week of harvest." The deadline for making the final rise payment was June 30, 2014. The Contract described the Seller's duties as follows: SELLER agrees to maintain the crop merchantable and free from Citrus Canker, Mediterranean fruit fly, Caribbean fruit fly, and any and all impairments which would alter the ability to market the crop. It is further agreed that in the event of such happening BUYER has the option to renegotiate with SELLER within 10 days of such find, or terminate contract and receive any monies that may be remaining from deposit. It is understood and agreed that the word "merchantable" as herein used, shall mean fruit that has not become damaged by cold, hail, fire, windstorm, insects, drought, disease or any other hazards to the extent it cannot meet all applicable requirements of the laws of the State of Florida and the Federal Government, including without limitation those relating to pesticides, and the regulations of the Florida Department of Citrus relating to grade and quality. With regard to default, the Contract provided: It is further agreed that in case of default by either the BUYER or SELLER the opposite party may, at his option, take legal action to enforce this contract or may enter into negotiations to carry out the terms and provisions thereof, in which event the party found to be in default shall pay reasonable costs in connection with either negotiation or litigation, such cost to include a reasonable attorney's fee to party prevailing in such controversy. The Contract acknowledged the existence of a "Citrus Fruit Dealers Bond" posted with the Department but cautioned that the bond "is not insurance against total 1iabilities that may be incurred if a citrus fruit dealer should default" and "does not necessarily insure full payment of claims for any nonperformance under this contract." Buyer began picking colored grapefruit from the Emerald Grove on October 17, 2013, and initially things went well. For the first month, Buyer achieved encouraging packout percentages of between 60% and 90%. (The packout percentage expresses the ratio of fruit deemed acceptable for the fresh market to the total fruit in the run. A higher packout percentage means fewer "eliminations" for the juice processing plant and thus a more valuable run.) On November 13, 2013, however, the packout rate plunged to around 38%. Although there were some good runs after that date, for the rest of the season the packout percentages of grapefruit picked from the Emerald Grove mostly remained mired in the 30% to 50% range, which is considered undesirably low. Everyone agrees that the 2013/2014 grapefruit crop in the Emerald Grove was disappointing. Representatives of Buyer and Seller met at the Emerald Grove in mid-November to discuss the reduced packout percentages. Mild disagreement about the exact reason or reasons for the drop-off in quality arose, but some combination of damage by rust mites and a citrus disease known as greasy spot is the likeliest culprit.1/ The problems were not unique to Emerald Grove, as the 2013/2014 citrus season was generally poor in the state of Florida. Seller's grapefruit crop was consistent with the statewide crop for that year. Despite the low packout percentages, and being fully aware of the crop's condition, Buyer continued to harvest colored grapefruit from the Emerald Grove, which it packed and exported for sale to its customers in Europe, Japan, and Southeast Asia. After picking fruit on February 3, 2014, however, Buyer repudiated the Contract and left the colored grapefruit remaining in the Emerald Grove to Seller. As a result, Seller sold the rest of the crop to another purchaser.2/ At no time did Buyer notify Seller that it was rejecting any of the grapefruit which Buyer had picked and removed from the Emerald Grove pursuant to the Contract. For months after Buyer stopped performing under the Contract, Seller endeavored to collect the amounts due for all the fruit that Buyer had harvested. By mid-April, however, Buyer still owed several hundred thousand dollars. At a meeting between the parties on April 22, 2014, Buyer proposed that Seller discount the purchase price given the disappointing nature of the crop, which Buyer claimed had caused it to lose some $200,000 in all. Buyer requested that Seller forgive around $100,000 of the debt owed to Buyer, so that Seller, in effect, would absorb half of Seller's losses. Buyer expected that Seller would agree to the proposed reduction in price and maintains that the parties did, in fact, come to a meeting of the minds in this regard, but the greater weight of the evidence shows otherwise. Seller politely but firmly——and unequivocally——rejected Buyer's proposal, although Seller agreed to accept installment payments under a schedule that would extinguish the full debt by August 31, 2014. This response disappointed Buyer, but Buyer continued to make payments to Seller on the agreed upon payment schedule. By email dated June 4, 2014, Buyer's accountant asked Seller if Seller agreed that the final balance due to Seller was $108,670.50. Seller agreed that this was the amount owing. After that, Buyer tried again to persuade Seller to lower the price, but Seller refused. Buyer made no further payments. At no time did Buyer notify Seller that it was revoking its acceptance of any of the fruit harvested from the Emerald Grove during the 2013/2014 season. Having taken physical possession of the fruit, Buyer never attempted to return the goods or demanded that Seller retrieve the fruit. Rather, exercising ownership of the goods, Buyer sold all the colored grapefruit obtained under the Contract to its customers for its own account. On October 14, 2014, Seller brought suit against Buyer in the Circuit Court of the Nineteenth Judicial Circuit, in and for Indian River County, Florida, initiating Case Number 31-2014-CA-001046. Buyer filed a counterclaim against Seller for breach of contract. On February 4, 2015, Seller filed a Notice of Voluntary Dismissal of its judicial complaint, opting to take advantage of available administrative remedies instead, which it is pursuing in this proceeding. As of the final hearing, Buyer's counterclaim remained pending in the circuit court.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order awarding Frontier Fresh of Indian River, LLC, the sum of $108,670.50, together with pre-award interest at the statutory rate from June 4, 2014, to the date of the final order, and establishing a reasonable time within which said indebtedness shall be paid by United Indian River Packers, LLC. DONE AND ENTERED this 27th day of August, 2015, in Tallahassee, Leon County, Florida. S JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of August, 2015.
The Issue The issue in this case is whether Respondent Dooley Groves, Inc. owes Petitioner a sum of money for shipments of citrus fruit.
Findings Of Fact The evidence presented at final hearing established the facts that follow. The Parties and Their Problem Spyke's Grove and Dooley are "citrus fruit dealers" operating within the Department's regulatory jurisdiction. As a wholesale shipper, Spyke's Grove packages and arranges for delivery of citrus products pursuant to purchase orders that retail sellers such as Dooley submit. The packages typically are labeled with the retail seller's name (e.g. Dooley), and thus the retail buyer (and the recipient, if the citrus is purchased as a gift) usually will not be aware of Spyke's Grove's involvement. The instant case involves a series of orders that Dooley placed with Spyke's Grove between November and December 1999 for packages of gift fruit. Under a number of informal, largely unwritten contracts, Spyke's Grove agreed, each time it received an order from Dooley, to ship a gift fruit box or basket to the donee designated by Dooley's retail customer, for which fruit shipment Dooley agreed to pay Spyke's Grove. Spyke's Grove alleges that Dooley failed to pay in full for all of the gift fruit packages that Dooley ordered and Spyke's Grove duly shipped. Dooley contends (though not precisely in these terms) that Spyke's Grove materially breached the contracts, thereby discharging Dooley from further performance thereunder. Dooley also claims, as an affirmative defense, that the alleged debt was extinguished pursuant to an accord and satisfaction. The Transactions From mid-November 1999 until around December 12, 1999, Dooley faxed to Spyke's Grove approximately 150 individual orders for gift fruit packages. Each order consisted of a shipping label that identified the product (e.g. the type of gift box or basket), the intended recipient, the destination, and a proposed shipping date. Spyke's Grove manifested its intent to fill these orders by faxing statements of acknowledgment to Dooley. Although the many contracts that arose from these transactions were thus documented, the writings left much unsaid. For example, contrary to Dooley's assertion, the parties did not agree in writing that Spyke's Grove would deliver the subject gift baskets to the donees before Christmas, nor did they make any express oral agreements to this effect. Further, the parties did not specifically agree that Spyke's Grove would be obligated to deliver the gift fruit into the hands of the donees and bear the risk of loss until such tender of delivery. Rather, the contracts between Spyke's Grove and Dooley were ordinary shipment contracts that required Spyke's Grove to put the goods into the possession of carriers (such as the U.S. Postal Service or United Parcel Service) who in due course would deliver the packages to the donees. For several weeks, until early December 1999, Dooley placed orders, and Spyke's Grove filled them, under the arrangement just described, without controversy. The Fire On the night of Sunday, December 12, 1999, a devastating fire at Spyke's Grove's premises caused substantial damage, temporarily disrupting its citrus packing and shipping operations at the peak of the holiday season. Working through and around the loss, Spyke's Grove soon recovered sufficiently to reopen for business. By around noon on Tuesday, December 14, 1999, its telephone service had been restored, and activities relating to shipping resumed on Friday, December 17, 1999. Dooley's Response Dooley did not immediately learn about the fire that had interrupted Spyke's Grove's operations. Continuing with business as usual on Monday, December 13, 1999, Dooley attempted then and throughout the week to fax orders to Spyke's Grove but consistently failed to connect because the lines were busy. With unplaced orders piling up, Dooley began to worry that the gift baskets its customers had ordered earlier in the month——orders that Sypke's Grove already had agreed to fill—— would not arrive by Christmas, as Dooley had guaranteed when taking those orders. Then, on December 16, word of the Spyke's Grove fire reached Dooley. Dooley's worry escalated into alarm. That same day, Dooley placed telephone calls to as many of its retail customers or their donees as it could reach, to ascertain whether Spyke's Grove had shipped any of the gift fruit baskets that Dooley had ordered before December 12, 1999. Dooley was unable to confirm the receipt of a single package—— and it panicked. Disregarding its existing contractual obligations and with no advance notice to Spyke's Grove, Dooley made alternative arrangements for filling all of the orders that it had faxed to Spyke's Grove in December 1999. Dooley packaged and shipped some of the subject gift boxes on its own, and it placed orders for the rest with another wholesale shipper. These substitute packages were being shipped as early as December 17 or 18, 1999. Even after the fact, Dooley failed to inform Spyke's Grove that it had, in effect, repudiated the existing shipment contracts between them. Having no knowledge of Dooley's actions, Spyke's Grove packaged and shipped all of the gift fruit that Dooley had ordered pursuant to the contracts entered into before December 12, 1999. The Inevitable Dispute On January 27, 2000, Spyke's Grove sent three invoices to Dooley seeking payment for most of the citrus shipped pursuant to Dooley's orders. These bills totaled $3,242.55. A fourth and final invoice, for $70.57, was sent on February 18, 2000. Combined with the other bills, this last brought the grand total to $3,313.12. Each of these invoices contained the following boilerplate "terms": Net 14 days prompt payment is expected and appreciated. A 1 1/2% monthly service charge (A.P.R. 18% per annum) may be charged on all past due accounts. Customer agrees to pay all costs of collection, including attorneys [sic] fees and court costs, should collection efforts ever become necessary. Dooley did not remit payment or otherwise respond to Spyke's Grove's statements. Accordingly, on June 20, 2000, Spyke's Grove sent a letter to the Department requesting assistance. Dooley was provided a copy of this letter. On June 30, 2000, Dooley sent a letter to Spyke's Grove in which it explained the reasons why Dooley believed Spyke's Grove was not entitled to full payment of $3,313.12. Dooley had decided, unilaterally, that a deduction of $1,723.53 was in order. In its letter, Dooley described the remaining balance of $1,589.59 as the "final total payment," and a check for that amount was enclosed therewith. Nothing in Dooley's letter fairly apprised Spyke's Grove that the check for $1,589.59 was being tendered, in good faith, in full satisfaction of Spyke's Grove's demand for payment of $3,313.12. No language in that June 30, 2000, letter so much as hinted that Spyke's Grove's acceptance of the check would be considered a manifestation of assent to Dooley's position or an agreement to accept the lesser sum in satisfaction of a greater claim. In short, the parties did not make a mutual agreement, either expressly or by implication, to settle Spyke's Grove's claim for a total payment of $1,589.59. Spyke's Grove was entitled to accept Dooley's check for $1,589.59 as a partial payment against the total indebtedness, and it did. Shortly thereafter, Spyke's Grove filed a Complaint with the Department, initiating the instant proceeding. Ultimate Factual Determinations Dooley's refusal to pay in full for the goods it ordered from Spyke's Grove constituted a breach of the contracts between the parties. Spyke's Grove did not materially breach the agreements, nor was the indebtedness discharged pursuant to an accord and satisfaction. Spyke's Grove has suffered an injury as a result of Dooley's breach. Spyke's Grove's damages consist of the principal amount of the debt together with pre-award interest at the statutory rate, less the partial payment that Dooley made on June 30, 2000. Accordingly, Spyke's Grove is entitled to recover the following amounts from Dooley: Principal Due Date Statutory Interest $3,242.55 2/10/99 $ 18.66 (2/10/99 - 3/03/99) $ 70.57 3/04/99 $3,313.12 3/04/99 LESS: <$1,589.59> $ 437.56 (3/04/99 - 6/29/00) $1,723.53 6/30/00 $ 86.89 (6/30/00 - 12/31/00) $ 157.92 (1/01/01 - 10/31/01) $1,723.53 $ 701.03 Interest will continue to accrue on the outstanding balance of $1,723.53 in the amount of $0.52 per day from November 1, 2001, until the date of the final order.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order awarding Spyke's Grove the sum of $1,723.53, together with pre- award interest in the amount of $701.03 (through October 31, 2001), plus additional interest from November 1, 2001, until the date of the final order, which will accrue in the amount of $0.52 per day. DONE AND ENTERED this 12th day of October, 2001, in Tallahassee, Leon County, Florida. COPIES FURNISHED: JOHN G. VAN LANINGHAM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of October, 2001. Barbara Spiece, President Spyke's Grove, Inc. 7250 Griffin Road Davie, Florida 33314 Diane M. Houghtaling, Vice President Dooley Groves, Inc. 1651 Stephens Road Post Office Box 7038 Sun City, Florida 33586-7038 Reliance Insurance Company Three Parkway Philadelphia, Pennsylvania 19102 Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services 500 Third Street Northwest Post Office Box 1072 Winter Haven, Florida 33882-1072
The Issue The issue presented is whether Respondents Harbor Island Citrus, Inc., and Fidelity & Deposit Company of Maryland are indebted to Petitioner Rio Indio Fruit Company in the amount of $80,684.
Findings Of Fact Petitioner Rio Indio Fruit Company operates a citrus packinghouse located in St. Lucie County, Florida. Respondent Harbor Island Citrus, Inc., operates a citrus packinghouse in Indian River County, Florida. On approximately November 20, 1999, Albert Valdes from Harbor Island contacted Ralph Viamontes from Rio Indio to ascertain if Rio Indio might have a source that Harbor Island could use to obtain colored grapefruit for Harbor Island's annual fund-raising program. It was the industry practice, and Harbor Island's practice, for the fund-raising program to run from late-November through mid-December. During that time period, students in the north sell the fruit to raise money for their projects. The fruit used in such a fund-raising program can be a quality inferior to the quality demanded by the Japanese market, the primary market for Harbor's Island's citrus. Viamontes told Valdes he would see if he could find a grower with colored grapefruit suitable for Harbor Island's fund-raising program. Viamontes telephoned Valdes the following day and said he had located a grower. On that day or possibly the following day Valdes and two other Harbor Island employees, Dennis Downs and James Morris, met Viamontes at the Rio Indio facility. The four men drove in Viamontes' vehicle to the Sorge VII grove in Martin County to look at the grove's colored grapefruit. The amount of fruit in the grove was much larger than Harbor Island needed to fulfill its fund-raising program commitment. Viamontes estimated that the grove contained the equivalent of 30,000 boxes of colored grapefruit. Valdes told Viamontes that Harbor Island might need 18,000 to 20,000 boxes of the grapefruit for its fund-raising program. Viamontes told the Harbor Island employees that they could still make a deal for the grapefruit in the grove because since he had his own packing house, he would take the fruit that Harbor Island did not need. The men discussed that Harbor Island could take 2/3 of the colored grapefruit in the grove, and Rio Indio could take 1/3. They further discussed that the manager of Sorge VII wanted $5.50 a box for the fruit, that Viamontes would contract to take all the fruit in the grove, that Harbor Island would pay Viamontes $5.50 a box for the fruit Harbor Island took, and that Viamontes would pay the grower. James Morris from Harbor Island specifically asked Viamontes what would happen if Harbor Island wanted less than 18,000 to 20,000 boxes. Viamontes told the Harbor Island employees that there would be no problem if Harbor Island took less fruit because Viamontes would take whatever was left after Harbor Island took what it wanted. Valdes consulted with Donald Groves, Jr., the owner of Harbor Island to verify that Harbor Island would make the arrangement suggested by Viamontes, and Groves approved the arrangement. Thereafter, Viamontes entered into a written contact with the manager of Sorge VII to purchase all of the fruit for $5.50 a box, and that written contract included deadlines for 20,000 boxes of fruit to be picked by December 31, 1999, and the remainder to be picked by the end of February 2000. Rather than the 30,000 field boxes that Viamontes had estimated the grove contained, the grove contained substantially more grapefruit than Viamontes estimated. The record in this cause suggests that the grove may have contained as many as 43,762 boxes of colored grapefruit. In accordance with its understanding of the arrangement with Viamontes, Harbor Island began harvesting colored grapefruit from the Sorge VII grove on November 26, 1999, and completed all picking at the grove on December 8, 1999. During that time Harbor Island picked 9,000 boxes of colored grapefruit for which it was obligated to pay Viamontes $5.50 per box. Harbor Island paid Viamontes in full for the fruit it took. During the time Harbor Island was at the Sorge VII grove picking colored grapefruit, Rio Indio's crews were there picking grapefruit. Rio Indio's crews also picked fruit at the grove during the months after Harbor Island completed its picking. In addition to Rio Indio's crews knowing that Harbor Island had completed its picking, James Morris specifically told Viamontes that Harbor Island had taken all the fruit it wanted from the Sorge VII grove as of December 8, 1999. During the months of December 1999, January 2000, February 2000, and the first half of March 2000, Viamontes spoke with Valdes of Harbor Island several times a day to check on the status of other unrelated fruit being packed and sold by Harbor Island for Viamontes. In addition, Viamontes was present at the Harbor Island packinghouse on a weekly basis to pick up checks due to him or Rio Indio for the unrelated fruit being sold by Harbor Island for Viamontes. Yet, at no time between December 8, 1999, and the middle of March 2000 did Viamontes tell anyone that he believed Harbor Island had an obligation to harvest additional fruit from the Sorge VII grove. Rather, in late January 2000 Viamontes asked Valdes if Harbor Island were going to take any more fruit from Sorge VII. When Valdes said the fund-raising program was over, Viamontes told Valdes not to worry because Rio Indio would take the rest. Further, on or about March 1, 2000, during one of Viamontes' visits to the Harbor Island packinghouse, Dennis Downs of Harbor Island asked Viamontes how the harvesting in Sorge VII was proceeding. Viamontes responded that Rio Indio was harvesting the remaining colored grapefruit and that Harbor Island need not be concerned about any further harvesting at the Sorge VII grove. On or about March 15, 2000, the price and demand for colored grapefruit suddenly and dramatically dropped due to an oversupply of fruit for which the industry was not prepared. After the dramatic decline, Viamontes contacted Valdes from Harbor Island and inquired whether Harbor Island was going to pick any additional fruit at the Sorge VII grove. Valdes responded that Harbor Island had no obligation to pick any additional colored grapefruit from the Sorge VII grove based upon the agreements between Harbor Island and Rio Indio, specifically, Viamontes' continued representations that Harbor Island should not be concerned about picking any additional colored grapefruit from the grove because Rio Indio would take the remainder. In July 2000 Viamontes appeared at Harbor Island and advised Donald Groves, for the first time, that Harbor Island owed Rio Indio the amount of $80,684 for an additional 20,171 boxes of colored grapefruit from the Sorge VII grove, which Viamontes now contends Harbor Island should have harvested. Rio Indio claims that it suffered a loss of $4 per box for that additional fruit. The documentation presented by Rio Indio to support its demand is questionable and does not substantiate Rio Indio's claimed damages. First, the majority of the documents submitted by Rio Indio indicate that the fruit described therein was from a grove in St. Lucie County, and Sorge VII is in Martin County. Second, the majority of the documents indicate that the fruit described therein was from packinghouse eliminations although Viamontes alleges that the fruit went directly from the field to the cannery without going through a packinghouse. Third, the cannery records reflect that the "pound solids per box" are significantly less than what would be expected from fruit coming from the Sorge VII grove based upon the grove's historical production.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Harbor Island Citrus, Inc., is not indebted to Rio Indio Fruit Company and dismissing the Complaint filed by Rio Indio Fruit Company in this cause. DONE AND ENTERED this 12th day of December, 2001, in Tallahassee, Leon County, Florida. LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of December, 2001. COPIES FURNISHED: Theodore W. Herzog, Esquire 1101 Simonton Street Key West, Florida 33040 Fred L. Kretschmer, Jr., Esquire Moss, Henderson, Blanton, Lanier, Kretschmer & Murphy, P.A. 817 Beachland Boulevard Post Office Box 3406 Vero Beach, Florida 32964-3406 Kathy Elves The Fidelity and Deposit Companies 300 Saint Paul Place Post Office Box 87 Baltimore, Maryland 21203 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services 500 Third Street, Northwest Post Office Box 1072 Winter Haven, Florida 33882-1072 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services 541 East Tennessee Street India Building Tallahassee, Florida 32308 Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810
The Issue The issues for determination in this case are whether Respondent, as a licensed citrus fruit dealer, breached the terms of an oral contract for the purchase of citrus fruit during the 1992-1993 shipping season, whether Respondent misappropriated certain other citrus fruit owned by Petitioner during the 1992-1993 shipping season, and further, whether such actions by Respondent constitute violations of the Florida Citrus Code for which the proceeds of the citrus fruit dealer's bond executed by Co-Respondent should be paid to Petitioner in satisfaction of Petitioner's claim pursuant to Section 601.66, Florida Statutes.
Findings Of Fact Petitioner, Riverfront Groves, Inc., is a corporation with an office in Vero Beach, Florida. At all material times, Petitioner was in the business of selling and marketing citrus fruit. At all material times, Daniel R. Richey was vice-president of Petitioner, in charge of the fresh fruit packing operation. Respondent, Bagaley Groves, is a business with an office in Vero Beach, Florida. At all material times, Respondent operated a citrus fruit gift shipping packinghouse. At all material times, Robert G. Bagaley was the owner of Respondent. Co-Respondent, Nationwide Mutual Insurance Company, is an insurance company, which was authorized to write surety bonds during the 1992-1993 citrus fruit shipping season. On December 10, 1992, Co-Respondent executed, as surety, Citrus Fruit Dealer's Bond No. 77-LP-007-245-0002, in the principal sum of $10,000.00, binding Co-Respondent as surety, to the Florida Commissioner of Agriculture. The terms and conditions of the bond were that Respondent, as the principal executing such bond, would comply with the provisions of the Florida Citrus Code during the 1992-1993 citrus fruit shipping season, and with the terms and conditions of all contracts relating to the purchase, handling, sale, and accounting of citrus fruit. Respondent held a valid citrus fruit dealer's license issued by the Department of Citrus for the 1991-1992 shipping season. On July 16, 1992, Respondent, by and through its owner Robert Bagaley, filed with the Department of Citrus an application for license as a citrus fruit dealer for the 1992-1993 shipping season. As indicated above, Respondent's bond required for licensure was not executed until December 10, 1992, and it was not until January 25, 1993, that Respondent was issued citrus fruit dealer's license No. 0269 for the 1992-1993 shipping season. The license is not specifically retroactive, and merely states that Respondent is ". . . granted a license to engage in the business of Citrus Fruit Dealer through July 31, 1993." At all material times Respondent, by and through its owner Robert Bagaley, held itself out as a licensed citrus fruit dealer in the state of Florida. In the fall of 1992, Respondent learned from a mutual friend, Henry Schacht, that Petitioner had navel oranges located in a grove in Indian River County, Florida, suitable for use in Respondent's fresh fruit packinghouse. In mid-November 1992, Petitioner, through its authorized representative Daniel R. Richey, and Respondent, through its owner Robert Bagaley, agreed that Respondent would purchase approximately 2,400 boxes of navel oranges from Petitioner at $7.00 per box. Respondent did not hold a valid license as a citrus fruit dealer in the state of Florida at the time this oral contract was entered into with Petitioner. Respondent harvested a total of 150 boxes of these navel oranges during the period of November 13 - 17, 1992, for which Respondent paid Petitioner the agreed upon price of $7.00 per box. This payment in the amount of $1,050.00 was made by check dated November 18, 1992. On December 3, 1992, Petitioner delivered a written contract to Respondent setting forth Petitioner's understanding of the terms of their agreement. The contract was executed by Petitioner. Respondent declined to sign the written contract, and the contract was returned to Petitioner on December 10, 1992. In early December 1992, Respondent learned from James Earl Brantley that some of the navel oranges in Petitioner's grove had green mold, a condition that would make the fruit unsuitable for fresh fruit packing. On December 10, 1992, Respondent repudiated the oral contract and notified Petitioner that Respondent could not use, and did not need, any more of Petitioner's navel oranges. Respondent did not inform Petitioner that some of the navel oranges had developed green mold, or that the navel oranges were otherwise not merchantable. At the time Respondent repudiated the oral contract, Respondent did not hold a valid license as a citrus fruit dealer in the state of Florida. By December 10, 1992, the marketing conditions for navel oranges were substantially deteriorating. From December 11 and 15, 1992, Petitioner harvested and processed the balance of the navel orange crop from the grove, some 2,785 boxes. Petitioner attempted to pack the oranges as fresh fruit. The packout ratio of these 2,785 boxes was approximately 18 percent, yielding Petitioner a net return of $78.01, ($129.38 return for 640 boxes picked December 11 and 12, 1992, and a loss of $51.37 on the remainder picked between December 12 and 15, 1992. Petitioner incurred a loss of $19,365.62, as result of Respondent's failure to pay the agreed upon contract price of $7.00 per box for the balance of the navel oranges. At the time Respondent (through Bagaley) notified Petitioner (through Richey) that Respondent did not intend to harvest the balance of the fruit, Petitioner informed Respondent that the remaining fruit would be harvested, that an accounting of the net proceeds for the remaining fruit would be made, and that the parties could then review the matter as to any outstanding indebtedness which might be due under the terms of the oral agreement. Respondent stated that a review after harvesting and accounting was acceptable. Within sixty days thereafter Petitioner (through Richey) received the accounting and met with Respondent (through Bagaley). At that time Respondent did not acknowledge the indebtedness, nor promise to pay the indebtedness to Petitioner. Subsequent to January 25, 1993, Respondent mistakenly picked red grapefruit from a grove owned by Petitioner, which was adjacent to a grapefruit block Respondent had purchased from a different owner. The parties agree that Respondent owes Petitioner $375.00 or $2.50 for 150 boxes of grapefruit picked from this grove. Respondent tendered a check to Petitioner in the amount of $375.00 for payment of the grapefruit; however, Petitioner declined to accept payment for the grapefruit pending resolution of Petitioner's claim for the navel oranges.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: The Department enter a Final Order adjudicating the amount of indebtedness owed Petitioner by Respondent in accordance with Section 601.66, Florida Statutes, is $375.00 for 150 boxes of grapefruit mistakenly harvested. It is further recommended that Petitioner's claim for damages resulting from the contract for navel oranges entered into prior to Respondent's licensure as a citrus fruit dealer during the 1992-1993 shipping season be dismissed. RECOMMENDED in Tallahassee, Leon County, Florida, this 4th day of August, 1995. RICHARD HIXSON 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 4th day of August, 1995. APPENDIX As to Petitioner's Proposed Findings: 1-9. Adopted and incorporated. Adopted, except to the extent that Respondent's repudiation of the contract was solely related to market conditions. Adopted except as to Respondent's promise to pay subsequent to January 25, 1993. 12-14. These paragraphs constitute conclusions of law. COPIES FURNISHED: Douglas A. Lockwood III, Esquire PETERSON, MYERS, CRAIG, CREWS BRANDON & PUTERBAUGH, P.A. Post Office Drawer 7608 Winter Haven, Florida 33883-7608 Eugene J. O'Neill, Esquire GOULD, COOKSEY, FENNELL, BARKETT, O'NEILL & MARINE, P.A. 979 Beachland Boulevard Vero Beach, Florida 32963 Brenda Hyatt, Chief Bureau of License & Bond Department of Agriculture Mayo Building, Room 508 Tallahassee, Florida 32399-0800 Mr. David Z. Cutright Nationwide Mutual Insurance Company 1324 16th Street Vero Beach, Florida 32960
