The Issue Whether Stella Chevrolet, Inc., should be granted a license to establish and operate a new Chevrolet dealership at 1180 South Blanding Boulevard, Orange Park, Clay County, Florida, because of inadequate representation by existing Chevrolet dealers in the relevant territory or community.
Findings Of Fact Stella filed an application with the Department for a license to establish and operate a Chevrolet dealership at 1180 South Blanding Boulevard, Orange Park, Clay County, Florida. Roberts and Nimnicht filed a letter with the Department protesting Stella's application. Stella's proposed location is within an area designated by Chevrolet as the Jacksonville multiple dealer area (hereinafter referred to as "MDA"). The Jacksonville MDA is comprised of Duval County and parts of Clay, Nassau and St. Johns Counties. The Jacksonville MDA is an appropriate starting point in determining the appropriate "community or territory" which will govern in this case. There are five Chevrolet dealerships located within the Jacksonville MDA: Nimnicht Chevrolet, Conrad Hawkins Chevrolet, Jerry Hamm Chevrolet, Steve Hull Chevrolet and Moore Chevrolet. There are seven Chevrolet dealerships located in the area which surrounds the Jacksonville MDA: Roberts Chevrolet (located in Green Cove Springs), Wilson Chevrolet (located in St. Augustine), St. Johns Chevrolet (located in Palatka), Ken Reagh Chevrolet (located in MacClenny), Wells Chevrolet (located in Starke), Gasgarth Chevrolet (located in Fernandina Beach) and Bennett Chevrolet (located in Kingsland, Georgia). The Jacksonville MDA is divided by Chevrolet into six "Areas of Geographic Sales and Service Advantage" (hereinafter referred to as "AGSSA"). AGSSA's are comprised of census tracts. If a census tract cannot be used in determining the boundaries of an AGSSA, the AGSSA's boundaries are designated by Chevrolet based upon other geographic descriptions such as zip codes, C-towns and NTC's. Five of the six AGSSA'S in the Jacksonville MDA have a Chevrolet dealership located within the AGSSA's boundaries: AGSSA Chevrolet Dealership Hull Hawkins Nimnicht Hamm Moore The Chevrolet dealerships located within the Jacksonville MDA are given a competitive advantage within the AGSSA that the dealership is located in because of the geographic location of the dealership. AGSSA 6 does not have a Chevrolet dealership located within its boundaries. Stella is proposing to operate a Chevrolet dealership within AGSSA 6. Roberts has been assigned primary responsibility by Chevrolet for servicing Clay County. When consumer buying habits, as evidenced by vehicle sales and registration locations, are considered, Roberts is the only dealer located on the fringes of the Jacksonville MDA whose market area should be considered as part of an interconnected homogeneous shopping area with the Jacksonville MDA. The area surrounding Roberts should be included as part of the relevant "community or territory" in this case. Taking into account geographic factors which are considered in defining an AGSSA, an area identified by GM as "Area 14" should be assigned to Roberts for inclusion as part of the relevant "community or territory" in this case. GM and the Chevrolet dealerships located within the Jacksonville MDA have entered into Dealer Sales and Service Agreements (hereinafter referred to as the "Dealer Agreement"). The Dealer Agreement establishes the terms of the business relationship between GM and a dealer. Among other things, a Dealer Agreement provides the following general explanation of the purpose of the Dealer Agreement: The purpose of this Agreement is to establish Dealer as an authorized dealer for Chevrolet motor vehicles, to establish the location from which Dealer will operate and to identify the individual Dealer Operator and owner(s) of Dealer on whom General Motors relies in entering into this Agreement. This is a personal service contract setting forth the rights and obligations of Dealer and its approved Dealer Operator and owner(s) and of General Motors relating to the sale and service of Chevrolet motor vehicles and related Parts and Accessories. Among other things, the Dealer Agreement establishes a method of evaluating the performance of a dealer for purposes of determining the dealer's compliance with the Dealer Agreement. The Dealer Agreements entered into with the Respondent dealers do not specifically deal with the question of what constitutes the "community or territory" for purposes of this case or provide that the Jacksonville MDA should be considered the "community or territory" in this case. Nor did the evidence presented in this case establish that the relevant "community or territory" in this case should be limited to the Jacksonville MDA. GM conducted a survey of the Jacksonville MDA. The results of the survey were issued in 1987. In the survey GM concluded that an additional dealership was needed in AGSSA 6. The geographic area of AGSSA 6 for purposes of the survey was different from the geographic area of AGSSA 6 relied upon by GM during the formal hearing of this case. The evidence failed to prove, however, that AGSSA 6 as defined by GM during the formal hearing was not a proper designation for purposes of this case. AGSSA 6 as defined during the formal hearing was proper and should be included within the relevant "community or territory." AGSSA's 1 through 6 and Area 14 constitute a single interconnected market for Chevrolets, based upon consumer buying habits. Based upon this fact and a consideration of vehicle shopping areas and road networks, AGSSA's 1 through 6 and Area 14 (hereinafter referred to as the "Territory"), constitutes the "community or territory" for purposes of the this proceeding. GM has not contended nor proved that the dealers in the Territory have not complied with the terms of their Dealership Agreements with GM. Instead, GM has contended and proved that existing dealers are not providing adequate representation in AGSSA 6. Chevrolet's market penetration in the nation as a whole is represented by national averages. Chevrolet's national averages include adequately and inadequately represented markets. National average market penetration rates are an appropriate starting point to develop a standard to determine whether Chevrolet dealers located in the Territory are providing adequate representation. The Respondents have argued that use of national average penetration rates is improper. Although it is true that Single Dealer Areas, which are included in determining national penetration rates, have a higher penetration rate than MDAs such as the Jacksonville MDA, the evidence proved that national averages are a proper standard to apply in this case. National averages include adequately and inadequately represented Single Dealer Areas and MDAs. Approximately one-half of Chevrolet's Florida markets exceeded national average penetration rates during 1987 and the first six months of 1988. National averages are therefore achievable by Florida Chevrolet markets. AGSSA 6 ranked near the bottom of all Florida markets in penetration rates for cars and trucks. The Territory also ranked in the bottom half. The market penetration rates for AGSSA 6 and the Territory during 1987 and the first six months of 1988 were below national average: AGSSA 6's rate during 1987 was only 59% of national average for cars and 77% for trucks; AGSSA 6's rate during the first six months of 1988 was only 55% of national average for cars and 75% for trucks. Any given market, including the Territory and/or AGSSA 6, can have unique characteristics which affect the buying habits of the population of the market. GM presented evidence concerning a number of these characteristics: product popularity, age and income. Product preference, age and income statistics of AGSSA 6 and the Territory are not significantly different from product popularity, age and income nationally. This supports a conclusion that national averages are an appropriate standard to apply in this case. The relative popularity of various types of vehicles in AGSSA 6 and the Territory is almost the same as popularity of the same vehicles nationally. This fact suggests that unique demographic characteristics in AGSSA 6 or the Territory do not justify or explain the difference in penetration rates for AGSSA 6 and/or the Territory compared with national averages. When the various age groups of new vehicle buyers are compared with the same age groups nationwide, there is no significant difference which explains the lower penetration rate of AGSSA 6 and/or the Territory. This supports a conclusion that national averages are an appropriate standard to apply in this case. A comparison of the income of residents of AGSSA 6 and the Territory with incomes nationwide also supports a conclusion that national averages are an appropriate standard to apply in this case. Various parts of the Territory have equaled or exceeded national penetration rates, supporting application of national averages as the appropriate standard. AGSSA 6 has ranked last in the Territory since 1985. AGSSA 6's averages have been below the national averages, Florida averages and the Territory's averages. A significant difference between AGSSA 6 and the rest of the Territory is the difference in the distances which residents of AGSSA 6 have to travel to a Chevrolet dealership compared to the distances other residents of the Territory must travel. AGSSA 6 residents must travel, on average, almost twice as far. When AGSSA 6's performance is compared with national averages, AGSSA 6's efficiency from 1985 through the first six months of 1988 was only 65 to 70%. Increases in truck penetration during 1987 and the first six months of 1988 were offset by decreases in car penetration. If fleet opportunities, expected penetration, Florida averages, or Territory averages are taken into account the same lack of efficiency is evidenced in AGSSA 6. The population in the Territory has steadily increased since 1970. Households have nearly doubled. In AGSSA 6 households have increased four times. The density of the registration of vehicles generally follows the density of population and households. Between 1982 and 1987, new vehicle registrations have increased 74% in the Territory and 84% in AGSSA 6. During 1988 household income in the Territory generally exceeded $15,000.00. AGSSA 5, an AGSSA with a Chevrolet dealership, had the highest household income of $38,844.00. AGSSA 5 also had the highest penetration rate for Chevrolet. AGSSA 2 was the lowest AGSSA with a Chevrolet dealership with household income of $24,237.00. AGSSA 2 still had the second highest penetration rate for Chevrolet. AGSSA 6, without a Chevrolet dealership, had household income of $39,874.00. Despite its high household income, AGSSA 6 had the lowest Chevrolet penetration rate. Since 1980, the employment rate for an area roughly equivalent to the Territory increased 42%. The employment rate for an area roughly equivalent to AGSSA 6 increased 69%. The increases in population, households and employment in AGSSA 6 represent greater opportunity for vehicle sales. Despite this growth in AGSSA 6 and the population, household and employment increases in the Territory, the number of Chevrolet dealerships in the Territory has remained the same since 1960: six (five in the Jacksonville MDA). When all Florida markets are looked at, the number of markets in which Chevrolet has exceeded national averages has decreased if industry registrations as a whole increased above 6,000 retail industry registrations per dealer. In markets between 1,500 and 6,000 retail industry registrations per dealer, Chevrolet registrations are slightly above national average. Using 6,000 retail registrations as a guideline supports a conclusion that there is need for an additional Chevrolet dealership in the Territory. Looking at just AGSSA 3 and 6 and Area 14 supports the same finding. Competition in the Territory is extremely high. Chevrolet dealers in the Jacksonville MDA maintain one of the largest advertising budgets of any group of Chevrolet dealers. The boundaries of the AGSSA's within the Territory do not prevent the existing dealers from selling Chevrolets to residents of other AGSSA's or even from outside the Territory. The distance of residences from a dealership, however, does affect the ability of a dealer to effectively penetrate those residences. The distances from existing dealerships to the proposed new Chevrolet dealership in AGSSA 6 range from ten miles to over twenty miles. These distances adversely affect Chevrolet's ability to penetrate AGSSA 6. Locating a new Chevrolet dealership in AGSSA 6 would significantly improve the convenience in AGSSA 6 for Chevrolet over competing brands and improve its market share. AGSSA 6 is an identifiable plot. AGSSA 6 is not receiving adequate representation by existing dealers. GM presented evidence of four markets in Florida where the introduction of a new dealership was followed by an increase in Chevrolet penetration rates: Crystal River, Eustis, West Palm Beach and Hudson. The introduction of a new Chevrolet dealership into AGSSA 6 should increase Chevrolet's penetration rate in AGSSA 6. There are sufficient lost sales opportunities in AGSSA 6 to warrant an additional Chevrolet dealership. The Respondents unsuccessfully attempted to prove that there was no lost opportunity. The Respondents' evidence failed to take into account truck lost opportunities. The Respondents presented evidence in an effort to prove that Chevrolet performs well in areas where the population has certain characteristics and that AGSSA 6's population does not have those characteristics. The Respondents conclude from their analysis that Chevrolet sales in AGSSA 6 are as high as can be expected because of the characteristics of the residents of AGSSA 6. The Respondents' position is rejected. The Respondents identified an area as AGSSA 6 which was different from the area designated as AGSSA 6 for this proceeding. The Respondents also assumed that Stella would be located at a site different from the site it is proposing. The Respondents presented evidence concerning efforts by other Chevrolet dealerships to relocate within the Jacksonville MDA. Whether there are better methods of improving Chevrolet's performance in AGSSA 6 is not at issue in this proceeding. The only issue is whether existing Chevrolet dealerships are providing adequate representation in the Territory for Chevrolet. The Respondents also presented evidence in an effort to prove that Stella was selected to provide the new dealership because of Mr. Stella's relationship with officials at Chevrolet. The Respondents' continued arguments concerning this point ignore the evidence in this case and are rejected.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be issued approving the application of Stella to establish a new Chevrolet dealership at 1180 South Blanding Boulevard, Orange Park, Clay County, Florida. DONE and ENTERED this 30th day of January, 1990, in Tallahassee, Florida. LARRY J. SARTIN 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 30th day of January, 1990. APPENDIX TO RECOMMENDED ORDER GM and Roberts and Nimnicht have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted. GM's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1 3-7. 2 12. 3 8-9 and 13. 4 19. 5 22. 6 23. 7 24. 8 25. 9 Hereby accepted. 10-11 26. 12 27. 13 29-30. 14 See 44. 15 29. 16 29-30. 17 See 31. 18-19 32. 20 33. 21 34. 22 35. 23 See 36-37. 24 See 39. 25 See 38-40. 26-27 See 44. Not supported by the weight of the evidence. See 43. Hereby accepted. See 44. 32 See 14-17. 33 45. See 18. 34 Hereby accepted. 35 See 21. 36-43 Hereby generally accepted. Dr. Matthews' analysis was not persuasive. 44 45. 45 Statement of a witnesses position or not supported by the weight of the evidence. 46 See 18 and 45. 47-48 Hereby accepted. 49-50 Summary of testimony and argument. 51-54 Although partially true, the issue in this case is not whether there is a better way for GM to achieve greater representation through the existing dealers. These proposed findings of fact are not relevant to the issue in this proceeding. Roberts' and Nimnicht's Proposed Findings of Fact Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection 1-2 No proposed findings of fact were identified as paragraphs 1 or 2. 3 See 14-17. The last sentence is not relevant to this proceeding. 4 4. 5 See 14-17. The last sentence is not relevant to this proceeding. 6 18. 7-8 Not relevant. 9-10 Not supported by the weight of the evidence. 11 Although the second sentence is correct, the weight of the evidence does not support this proposed finding of fact. 12-17 Although there are portions of Dr. Ostlund's and Dr. Matthews' testimony that was acceptable, the overall finding of facts which the Respondent's argue Dr. Ostlund's and Dr. Matthews' testimony proved are rejected in favor of Mr. Anderson's testimony. 18-20 Not supported by the weight of the evidence. Although generally true, Chevrolet's penetration in the Territory and AGSSA 6 is still below national averages. Although generally true, this proposed finding of fact does not prove the ultimate facts it is suggested it proves. Not supported by the weight of the evidence. The first sentence is accepted. The last sentence is not supported by the weight of the evidence. 25 38. 26 6-7. 27 Hereby accepted. 28-29 Not relevant to this proceeding. 30 See 38. The last two sentences are not relevant. 31-33 Although generally true, not relevant to this proceeding. 34-35 Not supported by the weight of the evidence. 36-38 Not supported by the weight of the evidence. Not relevant. Not relevant or supported by the weight of the evidence. 41-42 Not supported by the weight of the evidence. 43-44 Although generally true, the conclusion reached by the Respondents is not supported by the weight of the evidence. 45-48 Not supported by the weight of the evidence. 49--50 Although partially true, the conclusion reached by the Respondents is not supported by the weight of the evidence. 51 Although GM did make such an argument, it was not a "fallback position." Nor was the argument "unavailing." 52-53 Not supported by the weight of the evidence. See 21. 54 Not relevant or not supported by the weight of the evidence. 55-59 See 21. Not supported by the weight of the evidence. Summary of GM position or not supported by the weight of the evidence. Does not prove the position advanced by the Respondents based upon the weight of the evidence. 62-68 Although partially true, the conclusions reached by the Respondents are not supported by the weight of the evidence. 69 Hereby accepted. 70-71 Although partially true, the conclusions reached by the Respondents are not supported by the weight of the evidence. 72-73 Not supported by the weight of the evidence. 74-78 Although partially true, the conclusions reached by the Respondents are not supported by the weight of the evidence. 79 Not supported by the weight of the evidence. 80-89 The conclusions reached by the Respondents based upon regression analysis were not supported by the weight of the evidence. 90-101 Although these proposed findings of fact may be generally true, the issue in this case is not whether there is a better way for GM to achieve greater representation through the existing dealers. These proposed findings of fact are not relevant to the issue in this proceeding. 102 Not supported by the weight of the evidence. 103-113 Not supported by the weight of the evidence. Although parts of these findings of fact were proved, the conclusion that the Respondents' argue should be reached ignores the reality of the evidence presented. 114-116 Although partially true, the conclusions reached by the Respondents are not supported by the weight of the evidence. COPIES FURNISHED: Charles J. Brantley, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Room B-439, Neil Kirkman Building Tallahassee, Florida 32399-0500 William Kelley, Esquire David Brown, Esquire 55 East Monroe Street Suite 4620 Chicago, Illinois 60603 Dean Bunch, Esquire 101 North Monroe Street Suite 900 Tallahassee, Florida 32301 Edward W. Risko, Esquire Office of General Counsel General Motors Corporation New Center One Building 3031 West Grand Boulevard Detroit, Michigan 48232 Stephen J. Calvacca, Esquire Vasilis C. Katsafans, Esquire Post Office Box 1873 Orlando, Florida 32802 Louis H. Anders, Jr., Esquire D. Frank Davis, Esquire Joseph W. Letzer, Esquire Robert H. Rutherford, Esquire Burr & Forman 3000 Southtrust Tower Birmingham, Alabama 35203 Michael J. Alderman, Esquire Office of General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500 Dealer License Section Room A310 Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue 1. Whether the applications which are the subjects of DOAH Case Nos. 96-4970 and 96-4971 should be granted. 2a. Whether the respondents in DOAH Case No. 96-5525 committed the violations alleged in the Amended Administrative Complaint issued in that case. 2b. If so, what sanctions should be imposed.
Findings Of Fact Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made: The Department is a state government licensing and regulatory agency, which, among other things issues motor vehicle retail installment seller (MVRIS) licenses. Jack Bowshier Buick-Pontiac-GMC Trucks, Inc. (Bowshier Buick) is a corporation organized under the laws of the State of Florida. Bowshier Buick formerly operated an automobile dealership at 2445 Southeast Federal Highway in Stuart, Florida, and held a MVRIS license issued by the Department. At all times material to the instant cases, Jack A. Bowshier, Sr., in his capacity as owner/director/president, and Jack D. Bowshier, Jr., in his capacity as general manager/director, exercised control over the policies and practices of Bowshier Buick. On or about October 25, 1995, the Department began an investigation into the business affairs of Bowshier Buick. The Department's investigation revealed, among other things, that Bowshier Buick engaged in the practice of reselling "trade-ins" without timely satisfying the existing liens on the vehicles. Such practice, which was the product of cash flow problems the dealership was experiencing, adversely affected the credit ratings of those who had "traded-in" these vehicles and prevented the ultimate purchasers of the vehicles from timely obtaining new certificates of title. In the "deal jackets" that the dealership created to place the paperwork relating to the transactions involving these "traded-in" vehicles, the Department's investigators found copies of checks which were made payable to those who held the liens on these "trade-in" vehicles. The investigators subsequently discovered, however, that these checks had not been timely sent to the lienholders, but instead had been placed in the desk drawer of the dealership's office manager, Christine Casale. On several occasions, when customers who had "traded-in" vehicles complained to the dealership that the liens on their vehicles had not been satisfied, they were told by Casale that the checks to satisfy the liens had been mailed to the lienholders, when in fact they had not been. Such misrepresentations were made in an effort to mislead and deceive these complaining customers. In making these fraudulent misrepresentations, Casale acted pursuant to instructions that had been given to her by Jack A. Bowshier, Sr., and Jack D. Bowshier, Jr. On November 3, 1995, the Department issued an Emergency Immediate Temporary Final Order to Cease and Desist and Suspension of [Bowshier Buick's] Motor Vehicle Retail Installment Seller's License (Emergency Order) in Administrative Proceeding Nos. 4287-F-11/95, 4287a-F-11/95, and 4287b-F-1195. Bowshier Buick, Jack A. Bowshier, Sr., and Jack D. Bowshier, Jr., were named as respondents in the Emergency Order. The Department alleged in the Emergency Order that they had committed the following violations of the law for which they are subject to the penalties as set forth in Section 520.995, Florida Statutes: Violation of Section 520.995(1)(b), Florida Statutes, in that they have perpetrated fraud, misrepresentation, deceit, or gross negligence in retail installment transactions, regardless of reliance by or damage to the buyer. Violation of Section 520.995(1)(b), Florida Statutes, in that they have committed criminal conduct in the course of their Motor Vehicle Retail Installment Sellers business. Violation of Section 520.995(3)(d), Florida Statutes, in that they have demonstrated a lack of financial responsibility. On November 13, 1995, an Administrative Complaint for Imposition of Sanctions was filed against Bowshier Buick, Jack A. Bowshier, Sr., and Jack D. Bowshier, Jr. Jack A. Bowshier, Sr., subsequently engaged in negotiations with William Chamberlain, the owner and president of WAFC Holdings, Inc. (WAFC) concerning the sale of the assets of Bowshier Buick to WAFC in return for, among other things, the assets of two Chamberlain-owned corporations, South Florida Auto Exchange, Inc., d/b/a Palm Beach Motors, and Stuart Motors, Inc., d/b/a Stuart Motors, that were in the business of selling pre- owned motor vehicles in the West Palm Beach and Stuart areas, respectively. On December 5, 1995, Jack A. Bowshier, Sr., and Chamberlain signed paperwork (Sale/Purchase Agreements) in which their corporations agreed to consummate such a transaction. On that same date, they also, on behalf of their corporations, executed Interim Management Agreements, pursuant to which WAFC took over the management of Bowshier Buick's dealership at 2445 Southeast Federal Highway in Stuart and Bowshier Buick assumed responsibility for the management of Palm Beach Motors and Stuart Motors, effective December 5, 1995. Later that month, WPAS, Inc. (WPAS) and DAB, Inc. (DAB) were formed. At all times material to the instant case, Jack A. Bowshier, Sr., has been the sole owner, president and director of WPAS, and, as such, has directed the operations of the corporation. At all times material to the instant case, WPAS maintained its principal place of business at 2815 Okeechobee Boulevard in West Palm Beach, the location of Palm Beach Motors. At all times material to the instant case, Jack D. Bowshier, Jr., was the general manager of Palm Beach Motors. At all times material to the instant case, Jack A. Bowshier, Sr., has been the sole owner, president and director of DAB, and, as such, has directed the operations of the corporation At all times material to the instant case, DAB has maintained its principal place of business at 2695 Southeast Federal Highway in Stuart, the location of Stuart Motors. At all times material to the instant case, Todd Bowshier, has been the general manager of Stuart Motors. A Stipulation for Settlement and Consent to Final Order in Administrative Proceeding Nos. 4287-F-11/95, 4287a-F-11/95, and 4287b-F-1195 (Stipulation) was executed by Jack A. Bowshier, Sr., on behalf of Bowshier Buick and on his own behalf, and by Jack D. Bowshier, Jr., on January 31, 1996, and by Thomas Stouffer, the Regional Director of the Department's Southeast Florida Regional Office, on behalf of the Department, on February 2, 1996. It provided as follows: The State of Florida, Department of Banking and Finance, Division of Finance (hereinafter "Department"), and Respondents Jack Bowshier Buick-Pontiac-GMC Trucks, Inc. (hereinafter "Bowshier Buick"), Jack A. Bowshier (hereinafter "JA Bowshier"), and Jack D. Bowshier (hereinafter "JD Bowshier"), in consideration of the mutual promises herein contained and other good and valuable consideration hereby agree to enter into this Stipulation for Settlement and Consent to Final Order as follows: At all times material hereto Bowshier Buick has been a Florida corporation with its principal place of business located at 2445 SE Federal Highway, Stuart, FL 34994. On or about December 25, 1988 Bowshier Buick was issued a Motor Vehicle Retail Installment Seller's License by the Department, which remains active to date. At all times material hereto JA Bowshier has been a Director, owner and control person of Bowshier Buick. In these capacities JA Bowshier creates, controls, formulates, directs and personally participates in the acts, practices and affairs of Bowshier Buick. At all times material hereto JD Bowshier has been a Director and General Manager of Bowshier Buick. In these capacities JD Bowshier creates, controls, formulates, directs and personally participates in the acts, practices and affairs of Bowshier Buick. On or about October 25, 1995, the Department received information that it believed indicated that Bowshier Buick had accepted motor vehicles as "trade-ins" and resold these vehicles without first satisfying their existing liens. The Department was concerned that purchasers of these motor vehicles could not be issued Certificates of Title. As a result of this information, Department examiners/investigators, on three occasions, visited Bowshier Buick's principal office pursuant to Section 520.996, Florida Statutes. They concluded that Bowshier Buick was engaging in acts and/or practices constituting violations of Chapter 520, Florida Statutes. On November 3, 1995, the Department filed an Emergency Immediate Temporary Final Order to Cease and Desist and Suspension of Motor Vehicle Retail Installment Seller's License (hereinafter "Emergency Order") which was followed, on November 13, 1995, with an Administrative Complaint for Imposition of Sanctions and Notice of Rights (hereinafter "Complaint"). Respondents agree that they have been duly served with both the Emergency Order and Complaint and that the Department has jurisdiction over them and this case. The Department agrees that Respondents timely filed their Answer, Affirmative Defenses and Petition for Formal Proceedings in response to the Complaint. The Department herein makes the following findings of fact, upon which the penalties imposed are based, but which findings Respondents neither admit nor deny: There were approximately thirty trade-ins taken by Bowshier Buick for which the dealership had not satisfied existing liens. Some of these vehicles were resold without first satisfying their existing liens. Some customers who traded in their motor vehicles suffered adverse credit ratings because of the failure of Bowshier Buick to pay off the existing lienholders. Bowshier Buick was experiencing severe cash flow problems. For the month of September, Bowshier Buick incurred a monthly bank charge of $5,000 for dealership bank overdrafts. A total estimated amount of $125,000 in outstanding insufficient funds checks was evident as of November, 1995. Bowshier Buick did not remit premiums collected to the insurance company for credit life, accident & health insurance policies which had been purchased by Bowshier Buick customers. They had not forwarded said premiums for policies purchased by customers since January, 1995. Bowshier Buick records were misleading in that copies of checks made payable to lienholders and in the amount due to satisfy liens were contained within the files for months, when the checks were never delivered and/or funds were never disbursed to the payee. Respondents maintain that subsequent to the Department's filing of its Emergency Order, Bowshier Buick has cooperated with the Department to resolve the lien, title, and premium problems. In an effort to avoid litigation and costs associated therewith, the Department and Respondents now voluntarily agree to enter into this Stipulation for Settlement and Consent to Final Order (hereinafter "Stipulation") addressing the violations raised by the Emergency Order and the Complaint. The Respondents and the Department agree as follows: Respondents will bring and keep all books and records up to date and maintain them accurately and in compliance with the law. Respondents will maintain and keep current all forms required by the automobile dealer's manual, Department of Motor Vehicles and the Department, including the title log. Respondents will keep all title work and registrations current and in compliance with the law. Respondents will write any and all insurance policies and remit all premiums in compliance with the law, including but not limited to credit life, accident and health insurance. Respondents will dismiss with prejudice any and all actions pending in Circuit Court and the District Court of Appeal, not file any further actions in any court which in any fashion or respect arise or tend to arise out of the facts presented by the Emergency Order or the Complaint (see paragraph 6 herein) and, indemnify and hold the Department harmless if such further actions are filed. Respondents shall, within 30 days from the date of execution of this stipulation, reimburse any and all customers who made payment(s) on past due liens which they did not owe. Within 45 days, verifiable proof of reimbursement shall be provided to the Department. Respondent shall, within 90 days from the date of execution of this stipulation, assist any and all customers who have been affected by Respondents untimely payment of liens in repairing their credit. Their assistance shall include, but shall not be limited to, sending letters to lenders wherein Respondents assume all responsibility for the late lien payments. Within 105 days, verifiable proof of such assistance shall be provided to the Department. Respondents shall, within 30 days from the date of execution of this stipulation, reimburse any and all customers due refunds on credit life, accident and health insurance. Within 45 days, verifiable proof of such assistance shall be provided to the Department. Respondents shall, immediately upon execution of this stipulation, pay off any and all outstanding past due customer liens, as well as all liens that have been improperly levied upon customers. Upon repayment, verifiable proof thereof shall be provided to the Department. Respondents shall operate the dealership, at all times in compliance with the law. Respondents shall pay to the Department by cashiers check, within 30 days of the date of execution of this stipulation, $5,000, representing costs of the Department's examination/investigation in this case. Respondents agree to sell Bowshier Buick to WAFC Holdings, Inc., its agents, nominees or assigns. If the sale is cancelled or not consummated within 6 months from the date of the Final Order herein, for any reason: 1.) Respondents will immediately notify the Department, Diane Leeds, Esq., in writing via certified mail, return receipt requested, of that fact. 2.) Respondents' Departmental license(s) shall be placed upon and remain on probation for a period of three (3) years, commencing on the date the sale is cancelled or not consummated. For the duration of the probationary period, Respondents agree to: Provide the Department, on a monthly basis, prior to the 10th day of each month, a copy of the dealership "finance log" attached hereto and made a part hereof as Exhibit "A." Allow the Department to make unannounced visits to the dealership, as frequently as the Department deems necessary, to assure that Respondents are operating in compliance with the law. Prior to the termination of the probationary period the dealership shall have, in reserve, a minimum of three (3) weeks supply of operating capital, to be computed based upon the operating expenses of the dealership at that time, and provide verifiable proof thereof to the Department. The Final Order incorporating the terms of this stipulation constitutes final agency action by the Department for which the Department may seek enforcement pursuant to the provisions of Chapters 120 and 520, Florida Statutes, and Respondents knowingly and voluntarily agree to waive any right to: 1. A formal hearing; 2. To contest the finality of the Final Order; 3. To contest the validity of any term, condition, obligation or duty created hereby; 4. To separately stated Findings of Fact and Conclusions of Law; and 5. To administrative or judicial review hereof. Respondents acknowledge, concur and stipulate that their failure to comply with any of the terms, obligations and conditions of this stipulation and the Final Order adopting it, shall result in their being deemed to be in violation of a written agreement and Final Order issued pursuant to the provisions of Chapters 120 and 520, Florida Statutes, and Respondents stipulate and agree to the issuance of an emergency suspension of their license(s) and a cease and desist order. Respondents waive all rights to prior notice and hearing before entry of such order. However, nothing herein limits Respondents' right to contest any finding or determination made by the Department concerning their alleged failure to comply with any of the terms and provisions of this stipulation or of the Final Order. Respondents waive and release the Department and its agents, representatives, and employees from any and all causes of action they may have including without limitations, any right to attorney fees arising out of this proceeding; libel; slander; violation of a constitutionally protected right; intentional tortious interference with advantageous contractual relationship and the like; arising prior to or out of the filing of the Complaint, Emergency Order, the execution of the stipulation and entry of the Final Order. The Department agrees to accept this release without acknowledging, and expressly denies, that any such causes of action may exist. Respondents further agree that nothing contained herein shall be construed to waive or restrict the Department's right to initiate any legal action based upon facts or information which come to the Department's attention subsequent to the execution of this stipulation and the Department further agrees that nothing contained herein shall be construed to waive or restrict the Respondents' rights to defend any subsequent legal action. The Department and Respondents each agree to bear their own costs and attorneys' fees incurred in connection with this proceeding and entry of the Final Order, except as stated in paragraph 11k. herein. The Department and Respondents represent that the officer(s) executing this stipulation are authorized to act on behalf of the corporations and agency for settlement purposes. The Department and Respondents acknowledge that they have read this stipulation and fully understand the rights, obligations, terms, conditions, duties, and responsibilities with respect to its contents. Execution of this stipulation by the Department shall not be construed as a final acceptance of its terms and conditions absent entry of a Final Order by the Comptroller adopting same, however, the existing Emergency Order shall be null and void immediately upon entry of the Final Order by the Comptroller. The undersigned parties hereby acknowledge and agree to the terms and conditions of the foregoing stipulation by written consent on the last date executed below, subject to final approval by the Comptroller. On February 16, 1996, a Final Order was issued in Administrative Proceeding Nos. 4287-F-11/95, 4287a-F-11/95, and 4287b-F-1195 adopting the parties' Stipulation and requiring the parties to comply with the Stipulation's terms and conditions. The purchases of the assets of Bowshier Buick, South Florida Auto Exchange, Inc., and Stuart Motors, Inc., were finalized in March of 1996. On March 18, 1996, WPAS filed with the Department an Application for Motor Vehicle Retail Installment Seller License (WPAS's Application). In its Application, WPAS indicated that it was doing business as Palm Beach Motors at 2815 Okeechobee Boulevard in West Palm Beach. In response to Question 10 on the application form, which read as follows, WPAS answered "yes" and appended to its completed Application a copy of the Stipulation filed in Administrative Proceeding Nos. 4287-F-11/95, 4287a-F- 11/95, and 4287b-F-1195: Has the applicant, any of the persons listed herein, or any person with power to direct the management or policies of the applicant had a license, registration, or the equivalent, to practice any profession or occupation revoked, suspended, or otherwise acted against? Yes No (If yes, list such persons, give details, and provide a copy of the allegations and documentation of the final disposition of the case.) WPAS's Application was signed by Jack A. Bowshier, Sr. On April 8, 1996, DAB filed with the Department an Application for Motor Vehicle Retail Installment Seller License (DAB's Application). In its Application, which was signed by Jack A. Bowshier, Sr., DAB indicated that it was doing business as Stuart Motors at 2695 Southeast Federal Highway in Stuart. In response to Question 10 on the application form, DAB mistakenly answered "no." Neither a copy of the Stipulation filed in Administrative Proceeding Nos. 4287-F-11/95, 4287a-F-11/95, and 4287b-F-1195, nor a copy of the Final Order entered in these proceedings, was appended to DAB's completed Application. The Department granted DAB's Application and issued DAB a MVRIS license, effective April 11, 1996. On May 1, 1996, Jack A. Bowshier, Sr., sent the following letter to the Department: I am voluntarily surrendering my license from the Department of Banking and Finance issued to DAB, Inc., D/B/A Stuart Motors to you today due to the fact that we have made an honest mistake in the application for the license. I apologize for this mistake. I am reapplying for the license for this corporation. I ask that you please reconsider your position. On that same day, May 1, 1996, Jack A. Bowshier, Sr., on behalf of WPAS, and William Chamberlain, on behalf of South Florida Auto Exchange, Inc., executed an agreement (WPAS Use of License Agreement), which provided as follows: AGREEMENT made this 1st day of May, 1996 by and between SOUTH FLORIDA AUTO EXCHANGE, INC., DBA PALM BEACH MOTORS, INC., a Florida corporation ("PBM") AND WPAS, INC., a Florida corporation ("Operator"). WHEREAS, PBM and Operator, or Operator's affiliate, entered into an agreement for sale and purchase of assets dated December 5, 1995 (the "Asset Purchase Agreement") for the purchase and sale of certain assets of PBM located at 2815 Okeechobee Blvd., West Palm Beach, Florida (the "Dealership"); and WHEREAS, PBM and Operator closed on the sale and purchase on or about the 19th day of March, 1996; and WHEREAS, Operator has submitted an application (the "Application") to the State of Florida, Comptroller's Office, Department of Banking (the "Department") for a license to originate financing in connection with the sale of automobiles at the Dealership, which Application remains pending with the Department; and WHEREAS, Operator has not yet received a license from the Department pursuant to the Application; and WHEREAS, Operator has requested PBM to allow Operator to continue to use PBM's license (the "PBM License") from the Department at the Dealership pending the Department's action on Operator's Application; and WHEREAS, PBM, after obtaining the verbal approval of the Department, has agreed to allow Operator to utilize PBM['s] License at the Dealership on a temporary basis. NOW, THEREFORE, for and in consideration of Ten dollars ($10.00) paid by Operator to PBM, as well as other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged by PBM, the parties agree as follows: The foregoing recitals are true and correct and incorporated herein by reference. PBM hereby authorizes Operator to originate finance paper under the PBM license at the Dealership until the earlier of: PBM notice to Operator of the revocation of such authority, which notice may be given [by] PBM, in PBM's sole and absolute discretion, at any time upon three (3) days prior notice to Operator, upon the Department's disposition of Operator's application, whether such disposition is a granting of a license or the denial of a license, any demand by the Department that Operator cease the use of the PBM license, upon the infraction of any rule or regulation by Operator applicable to the PBM License. Operator agrees to utilize the PBM License only in strict compliance of all applicable rules and regulations, including, but not limited to the rules and regulations of the Department. Operator does hereby agree to indemnify and hold PBM harmless against any claim arising out of the Dealership or Operator's use of the PBM License. This Agreement contains the entire understanding of the parties and may not be changed or modified orally, but only by written instrument signed by the parties hereto. Any notice required or permitted to be given under this Agreement shall be in writing, delivered by certified mail, return receipt requested, or by a national overnight courier service, such as Federal Express, and mailed to the parties at the following address: PBM: c/o Stuart Buick Pontiac GMC 2445 S.E. Federal Highway Stuart, Florida 34994 Operator: 2815 Okeechobee Blvd. West Palm Beach, Florida 33409 This agreement shall be binding upon the parties, their successors and assigns. This Agreement shall be governed by the laws of the State of Florida. In the event litigation is instituted in connection with the enforcement of the terms of this Agreement, the prevailing party shall be entitled to an award of costs and attorneys fees, including attorneys fees and costs on appeal. The "PBM License" referenced in the WPAS Use of License Agreement had an "expiration date" of December 31, 1996. An agreement between DAB and Stuart Motors, Inc. (DAB Use of License Agreement) containing provisions substantially identical to those in the WPAS Use of License Agreement was executed by Jack A. Bowshier, Sr. (on behalf of DAB) and Chamberlain (on behalf of Stuart Motors, Inc.) also on May 1, 1996. The MVRIS license which was the subject of the DAB Use of License Agreement, like the "PBM License," had an expiration date of December 31, 1996. The WPAS and DAB Use of License Agreements were both drafted by Chamberlain's attorney, Michael Botos. Before drafting these agreements, Botos had spoken to Diane Leeds, an attorney with the Department. Botos erroneously believed that Leeds, acting on behalf of the Department, had given the "verbal approval" referenced in the agreements. On May 6, 1996, Jack A. Bowshier, Sr., filed a corrected Application for Motor Vehicle Retail Installment Seller License on behalf of DAB (DAB's Second Application). Department investigators visited Palm Beach Motors on July 19, 1996. They discovered, from an examination of WPAS's records, that WPAS (acting through Jack D. Bowshier, Jr., the general manager of Palm Beach Motors) had been involved in retail installment transactions with retail buyers of its vehicles, notwithstanding that it did not have a license from the Department authorizing it to engage in such activity. Ten retail installment contracts (signed by Jack D. Bowshier, Jr., on behalf of WPAS) were found and reviewed. In four of these ten retail installment transactions, the buyer was charged a simple interest rate in excess of 18 percent per annum. By letter mailed on July 19, 1996, the Department notified WPAS of its intention to deny WPAS's Application for a Motor Vehicle Installment Seller License. In its notice, the Department advised that its proposed denial was based upon, among other things, WPAS's engaging in the business of a motor vehicle retail installment seller without a license, in violation of Section 520.03(1), Florida Statutes. Department investigators visited Stuart Motors on July 22, 1996. They discovered, from an examination of DAB's records, that DAB (acting through Todd Bowshier, the general manager of Stuart Motors) had been involved in retail installment transactions with retail buyers of its vehicles, notwithstanding that it did not have a license from the Department authorizing it to engage in such activity. Ten retail installment contracts (signed by Todd Bowshier on behalf of DAB) were found and reviewed. In all of these ten retail installment transactions, the buyer was charged a simple interest rate of 19.95 percent per annum. On or about July 26, 1996, Jack A. Bowshier, Sr., met with Department representatives, including Diane Leeds, to discuss the Department's proposed action. At the meeting, Jack A. Bowshier, Sr., was told that "he could not finance without a license at that time under anybody's license." Nonetheless, following the meeting, WPAS (doing business as Palm Beach Motors) and DAB (doing business as Stuart Motors), relying on the legal advice of their attorney (and acting through their general managers), continued to operate as motor vehicle retail installment sellers without having MVRIS licenses of their own (as they had done since May of that year, following the execution of the WPAS and DAB Use of License Agreements). In addition, they continued to knowingly charge buyers simple interest rates in excess of 18 percent per annum. Jack A. Bowshier, Sr., was at all material times aware of these activities, which continued at Palm Beach Motors until approximately September or October of 1996, when the used car operation was sold,1 and continued at Stuart Motors until early 1997. By letter mailed on October 1, 1996, the Department notified DAB of its intention to deny DAB's Second Application for a Motor Vehicle Installment Seller License. In its notice, the Department advised that its proposed denial was based upon, among other things, DAB's engaging in the business of a motor vehicle retail installment seller without a license, in violation of Section 520.03(1), Florida Statutes. Department investigators returned to Stuart Motors on October 6, 1996, to examine DAB's records. Their examination revealed nine retail installment contracts that DAB had entered into since the investigators' July 22, 1996, visit. These contracts were signed by Todd Bowshier on behalf of DAB. In all but one of these retail installment transactions, the buyer was charged a simple interest rate of more than 18 percent per annum. In late January of 1997, personnel from the Office of the State Attorney, 19th Judicial Circuit, assisted by Department personnel, conducted a search (pursuant to a search warrant) of the records maintained by DAB at Stuart Motors. Sixty-four retail installment contracts (signed by Todd Bowshier on behalf of DAB) that DAB had entered into from August 10, 1996, to January 25, 1997, (including eight of the nine contracts that Department investigators had discovered during their October 6, 1996, visit to Stuart Motors) were seized. Thirty-seven of these 64 retail installment transactions took place from August 10, 1996, to October 16, 1996. In all but one of these 37 transactions, the buyer was charged a simple interest rate of more than 18 percent per annum. In all of the post-October 16, 1996, transactions (including eight which occurred after the expiration of the MVRIS license which was the subject of the DAB Use of License Agreement), the buyer was charged a simple interest rate of 17.99 percent. It was not until the Bowshiers received a copy of the following letter, dated February 13, 1997, the Office of the State Attorney, 19th Judicial Circuit, sent to the Department regarding the "Jack Bowshier investigation" that DAB stopped engaging in the business of a motor vehicle retail installment seller: This letter is in response to your investigation of DAB, Inc. d/b/a Stuart Motors etc. As you are aware I have spent the last three weeks reviewing the events between your Department, which began on March 18, 1996, and the above named suspect. It is apparent from the outset of your investigation that Mr. Bowshier and associates have done everything in their power to continue operating a business and finance automobiles without the appropriate Retail Installment Sellers license. However, it is my opinion that I would have insurmountable proof problems in a criminal prosecution based on the events that have occurred to date. Mr. Bowshier maintains that he can continue writing installment loan contracts because the validity of the denial of his application continues to be the subject of litigation. Mr. Bowshier continues to suggest that this is his position at the advi[c]e of his attorney, Mr. Ronald LaFace. After speaking with Mr. LaFace regarding the above I can see why the suspect would reasonably rely on his attorney's advice. Even to me, Mr. LaFace continues to maintain the position that the denial of the licensure application is "nonfinal." While we know this position is irrelevant to both the Department of Banking and Finance, and the criminal prosecution, it still creates the appearance of a defense which would remove the "criminal intent" aspect of our case. I have an ethical obligation to only prosecute cases in which I believe, based on my training and experience, there is a reasonable chance for a conviction at trial. Because this case has become so diluted in "my attorney told me" and "my understanding was . . .," I cannot ethically go forward with a criminal prosecution and still meet my burden of proof at trial. However, I understand the frustration in wanting to go forward in a case of this nature. With that in mind this letter will serve two purposes. While my declination to prosecute this case up through the date of this letter is final, it is not absolute. This letter will be sent to both Mr. Bowshier (and associates) and Mr. Ronald LaFace. In doing so, it will serve a very particular purpose. It will inform the above (including Mr. LaFace), that I will not prosecute the criminal acts that Mr. Bowshier and associates have committed to date because of the above explained proof problems. However, I will prosecute from this date forward any and all financing that occur[s] by the suspect and his associates without a license. I should make it perfectly clear to Mr. Bowshier and his attorney that it does not matter what their position is regarding the "appeal" of the denial of license, they cannot finance automobiles. Mr. Bowshier and associates should also know that the advice of their attorney to continue writing contracts during the pendency of the licensure "appeal" is wrong. If the suspect and his associates continue to write contracts, it will constitute a criminal act despite the advice of his attorney. I will prosecute Mr. Bowshier and associates if he continues to write contracts without the appropriate licenses pr[e]scribe[d] by law. The "appeal" referenced in the letter was taken after the Department, by letter mailed October 1, 1996, advised DAB of its intention to deny DAB's Application for a Motor Vehicle Installment Seller License. In its letter, the Department advised that its proposed denial was based upon, among other things, DAB's engaging in the business of a motor vehicle retail installment seller without a license, in violation of Section 520.03(1), Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order (1) finding the Bowshiers guilty of the violations alleged in the Amended Administrative Complaint; (2) directing the Bowshiers to cease and desist from committing such violations; (3) imposing jointly and severally upon WPAS, Jack A. Bowshier, Sr., and Jack D. Bowshier, Jr., an administrative fine in the amount of $7,000.00; (4) imposing jointly and severally upon DAB, Jack A. Bowshier, Sr., and Todd Bowshier an administrative fine in the amount of $61,500.00; and (5) denying WPAS's and DAB's applications for licensure. DONE AND ENTERED this 28th day of May, 1998, in Tallahassee, Leon County, Florida. STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 28th day of May, 1998.
The Issue The issues presented herein concern the standing of the Intervenors to challenge the licensure of Caruso Chrysler-Plymouth, Inc., to sell Chrysler- Plymouth automobiles in the State of Florida, particularly in Duval County, Florida. See Section 320.642, Florida Statutes. In considering the standing question, specific attention is given to the meaning of the term "real party in interest" as set forth in Rule 15C-1.08, Florida Administrative Code. 1/ WITNESSES AND EXHIBITS The following witnesses testified in the course of the proceedings: John Caruso, President, Caruso Chrysler-Plymouth, Inc.; John McLeod, Dealer Placement Specialist, Orlando, Florida, zone, Chrysler Corporation; Thomas McMenamy of G. T. Automobile Leasing; Michael Gratiano, Jr., school teacher, Sandalwood High School; Paula Bass, customer of Massey Dodge; Charles Cooper, customer of Westside Dodge and owner of Chrysler-Plymouth products and former Chrysler dealer; Robert E. Keel, used car dealer; Ralph Sarotte, Director of Marketing, Planning and Strategy, Chrysler Corporation; John Burnett, President, Massey Dodge; William Shore, President and owner of Westside Dodge; and George Hanlon, Vice President, Rebuilding Services, Inc., which owns two (2) Chrysler- Plymouth dealerships and (1) Dodge dealership. He is also President of River City Chrysler-Plymouth. Petitioners presented Exhibit 6, brochures related to Chrysler Corporation automobiles. Intervenors presented a series of exhibits; Intervenors' A is a copy of September 3, 1982, correspondence from Benry Noxtine, Dealer/License Supervisor, Division of Motor Vehicles to John E. Caruso as President of Caruso Chrysler- Plymouth, Inc.; Intervenors' 1, Chrysler Corporation brochures related to automobiles for the 1983 model year (disregard numbers which appear on the face of the brochures, in that these exhibits were taken from the materials Intervenors had Provided in responding to an interlocutory motion by Petitioners to close the Division of Administrative Hearings' file); Intervenors' 5, parts and service catalogs issued or made for Chrysler Corporation for the 1983 model year; Intervenors' 7, photographs taken of charts related to sales made by Westside Dodge, Inc., in Duval County, Florida; Intervenors' 9, statistics compiled by Chrysler Corporation referencing market penetration and dealer productivity in Jacksonville, Florida, and the zone which includes Jacksonville; Intervenors' 10 is constituted of descriptions of various groups and packages and options related to select Chrysler Corporation automobiles and is found as an attachment to the deposition of John R. McLeod, excerpts of which are part of the record of the final hearing; Intervenors 11, an advertising flyer related to select 1980 Chrysler Corporation automobiles; Intervenors' 12, photographs of some of the automobiles which were viewed, depicting offerings by Dodge and Chrysler-Plymouth; Intervenors' 13, January, 1983, NADA used car reference guide for Southeast United States, and Intervenors' 14, Black Book on used specialty vehicles and trucks for December, 1982, national. (Other exhibits were identified in the Prehearing Stipulation but were not involved in the presentation related to the standing of the Intervenors to challenge the licensure of Caruso Chrysler-Plymouth.) CASE HISTORY In August, 1982, Caruso Chrysler-Plymouth, Inc., made application for Florida Motor Vehicle Dealer licenses to sell Chrysler-Plymouth products and Imperial automobiles. This followed Chrysler Corporation's stated intent to grant franchises to Caruso to sell the aforementioned automobiles. 2/ Prior to the preparation of the application, River City Chrysler-Plymouth, Inc., which is located in Jacksonville, Florida, on Cassat Avenue, had made known its intention to protest the licensure of Caruso. Caruso would locate its facility on Southside Boulevard in Jacksonville, Florida. A copy of the application and the protest letter, together with a request that the Division of Administrative Hearings conduct a formal hearing was forwarded to the Director of the Division of Administrative Hearings on September 7, 1982. The Division of Administrative Hearings' file was then opened to consider the request of Petitioners in the face of the challenge by River City Chrysler-Plymouth. On September 17, 1982, Intervenors filed a direct petition with the Division of Administrative Hearings and a motion to intervene in the ongoing action. This request was honored by order of September 28, 1982, notwithstanding the position of Henry C. Noxtine, Dealer/License Supervisor for the Division of Motor Vehicles, as found in Intervenors' Exhibit A. In that correspondence, which was made known to the Hearing Officer subsequent to the September 28, 1982, order, Noxtine, in correspondence addressed to the President of Caruso and copied to counsel for Intervenors, states "also, letters of protest has (sic] been received by and through its counsel, for Massey Dodge, Inc., 3333 Main Street, Jacksonville, Florida, and Westside Dodge, Inc., 1672 Cassat Avenue, Jacksonville, which will not be considered." Prior to being informed of the contents of the September 3, 1982, correspondence, the Hearing Officer also attempted to ascertain the Division of motor Vehicles' Director's position on the rights of Intervenors. This occurred after September 28, 1982. No change was made as a result of this inquiry. Further treatment of standing was described in the November 16, 1982, order which has been mentioned before. The November 16, 1982, order was entered in response to a motion to close the Division of Administrative Hearings' file in view of the withdrawal from the action of the original protestant, River City Chrysler-Plymouth. It was determined that the withdrawal did not prejudice the rights of the Intervenors. In particular, the withdrawal did not bar the Intervenors' rights to seek consideration of their opposition to the licensure of Caruso Chrysler-Plymouth. The latter portion of the order identified how those claims of Intervenors would be addressed. Ultimately, a final hearing was held on January 10, 1983, leading to a ruling on the record that Intervenors did not have the requisite standing to challenge the licensure of Caruso to sell Chrysler-Plymouth automobiles in Jacksonville, Florida, as augmented by this Recommended Order.
Findings Of Fact John E. Caruso, owner of the applicant, Caruso Chrysler-Plymouth, Inc., is also the owner of Regency Dodge. The Dodge dealership sells Dodge cars and trucks and services Chrysler products at a location which is approximately one (1) mile from the location of the proposed Caruso Chrysler-Plymouth dealership. Caruso is also part owner of a Dodge, AMC and Renault car store in Green Cove Springs, Florida, Caruso Motors. John Caruso has operational responsibility for Regency Dodge and would have some managerial involvement with Caruso Chrysler- Plymouth. We is not involved in the management of Caruso Motors. Caruso motors and the other automobile dealers in Green Cove make a substantial number of automobile sales in Duval County, Florida, the county in which Regency Dodge and the proposed dealership are to be found. Both Regency and Caruso Chrysler- Plymouth would be in the immediate vicinity of the shopping center known as Regency Square and are both found on the south side of Jacksonville, Florida, also referred to as east Jacksonville. In the past, Chrysler-Plymouth sales have been made from a location which was one block away from the present location of Regency Dodge. That store has closed, and there has been no dealership in that location in the last three years. There was also a Chrysler-Plymouth dealership on Phillips Highway on the south side of Jacksonville until February, 1982, when that organization went out of business. At present, the only Chrysler-Plymouth dealership in Jacksonville, Florida, is River City Chrysler-Plymouth which is on the west side of Jacksonville, Florida, on Cassat Avenue. In 1982, of the approximately 1,000 sales of Dodge products made from Regency Dodge, 600 of those were fleet sales. Regency Dodge does warranty work on Chrysler-Plymouth automobiles as well as Dodge. Chrysler's treatment of warranty claims on all automobiles is uniform. Regency Dodge and other Dodge dealers are required to do warranty work on Dodge products and may do warranty work on Chrysler-Plymouth products at their option. Presently, there are three Dodge dealerships in Duval County, Florida, which are constituted of Regency Dodge and the two Intervenors. Ideally, Chrysler Corporation feels that the best balance would be to have two Dodge dealers and two Chrysler-Plymouth dealers in Duval County, Florida, or Jacksonville, which is essentially the same market area. This is borne out by excerpts of a document dealing with prognostication by Chrysler Corporation on the subject of automobile sales in Jacksonville, Florida, found as a part of Intervenors' Exhibit No. 9. Realization of the marketing goals of Chrysler Corporation in the Orlando, Florida, zone, of which Jacksonville is a part, is discussed in the excerpted portions of the deposition of John R. McLeod taken on January 6, 1983. This deposition is being transmitted with the Recommended Order and the excerpts are fully identified in the transcript of the hearing. As the excerpted testimony in the deposition points out, should Massey Dodge, which is located on Main Street in North Jacksonville, Florida go out of business, at that location, it is not the intention of Chrysler Corporation to open up another Dodge dealership at that location. In that same deposition, McLeod establishes that, with the exception of the Caruso arrangement, there are no Dodge and Chrysler- Plymouth dealerships owned by the same individual within the Orlando zone. McLeod identifies in his deposition that the idea of having two Chrysler- Plymouth and two Dodge dealers in Jacksonville, is premised upon information from industry registrations of automobiles and other basic factors involved in the analysis of the metropolitan market. This did not include a survey of the general public. Finally, McLeod indicated that Chrysler Corporation felt that it needed a Chrysler-Plymouth dealership on the east side of Jacksonville, which would include the Regency area, an area also referred to as southside. This led to Chrysler offering Caruso the opportunity to be Chrysler's dealer. Intervenors' Exhibit 10, which is an attachment to the McLeod deposition, demonstrates the interchangeability of parts for Plymouth Reliant and Dodge Aries; Chrysler Cordoba and Dodge Mirada, and Plymouth Turismo/Horizon and Dodge Charger/Omni. These vehicles are manufactured in the same facility. Thomas McMenamy works for a car leasing firm in Jacksonville, Florida, and indicated the similarity between Chrysler K-Cars and Dodge Sportsman and Plymouth Voyagers in his efforts to satisfy lease customers. Michael Gratiano, Jr., a local teacher in Jacksonville, Florida, is the owner of a 1981, Ram Charger, a vehicle he found to be similar to a Plymouth Trail Duster. He also owns a 1982 Dodge 400 Convertible which he purchased from Massey Dodge. Paula Bass bought a 1982 Dodge 400 from Massey Dodge and in her shopping felt that the Dodge 400 and Chrysler LeBaron were similar automobiles. Charles Coopers who was a Chrysler Corporation dealer from 1940 through 1950, owns a 1977 Chrysler New Yorker and 1980 Plymouth Volare which he has serviced at Westside Dodge at their Cassat Avenue premises. Robert E. Keel gave testimony in this hearing. Mr. Keel is a used car dealer in Jacksonville, Florida, and recalls a conversation with John E. Caruso in which Caruso indicated that he might wish to sell Chrysler-Plymouth and Dodge products in the same location, a comment which Caruso denies. Ralph Sarotte, Chrysler Director of Marketing, Planning and Strategy, gave a break-out of the similarities and dissimilarities between various offerings in the Chrysler Corporation product line. These automobiles are depicted in Intervenors' Exhibit 1 and Petitioners' Exhibit 6. These product lines have formerly been advertised by one firm, an arrangement which is now in transition, with the intention to have a second advertising firm involved, at which point Chrysler-Plymouth products would be advertised by one firm and Dodge products by a second firm. At present, there are some ads that are common to all Chrysler Corporation products, to include comments by the Chairman of the Board of Chrysler Corporation, Lee Iacocca, and advertisements related to financing and warranty matters. There is common advertising for performance Parts for Dodge and Chrysler-Plymouth automobiles. The Colt advertising is a common pursuit for Dodge and Chrysler-Plymouth. The emphasis on the future advertisements of Chrysler Corporation would be that Chrysler-Plymouth products represent value, America's way to get its money's worth and economy. The thrust of the Dodge advertising would depict Dodge as a "driving machine" represented by driving excitement and excellence. Chrysler Corporation offers subcompact cars which are depicted in Petitioners' Exhibit 6, as are all models to be discussed through this Recommended Order. The subcompact Plymouth is referred to as the Horizon and the Dodge is the Omni. There are approximately six unique parts on these automobiles which have to do with the grill, tail light assembly, and name plates, out of approximately 3,500 parts. A speciality type of automobile within the Horizon and Omni families would be the Plymouth Turismo and Dodge Charger whose principal differences have to do with the facia, tail lamps, name plates and graphics such as tape strips. Chrysler Corporation sells compact models referred to as the Dodge Aries and Plymouth Reliant which are known as K-Cars of a five or six passenger capacity in two and four door sedans and a five door wagon. The grills, tail lights and name plates of the two automobiles are the unique features. A more luxurious compact offering by Chrysler Corporation would be the Dodge 400 and Chrysler LeBaron lines which are five and six passenger automobiles. This represents Chrysler Corporation' a contribution to the "middle market" and these automobiles have facia, tail light and body side molding differences with Chrysler automobiles carrying a three to five hundred dollar ($300.00 to $500.00) increase in base unit price. In particular, Dodge offers a two door, four door and convertible version of its 400 series. Chrysler offers a two door, four door, basic convertible and Mark Cross designer series convertible, a town and country wagon and a town and country convertible. The latter three models have no Dodge counterpart. Chrysler Corporation intends to market, as a 1983 1/2 model, an automobile known as a Shelby Charger which is a unique product offered through Dodge affiliates. Its body appearance, wheels and tires and engine are distinguishing features of this automobile. In the front-wheel drive line, in the up-market automobiles, Dodge sells a 600 series to include the 600-ES. In the same market, Chrysler offers the E-Class automobile. Basically, there are differences in the appearances of these automobiles related to the front end, tail lights, name plates and fender designs. Also Dodge 600-ES has a unique transmission/engine combination offering a five speed transaxle. Moreover, it has unique exterior graphics, hood ornament and road wheels. Chrysler, in its E-Class automobiles, intends to offer a Chrysler New Yorker and Executive Sedan as 1983 1/2 models in addition to its current E-Class sedan. There are no comparable Dodge models to the New Yorker or Executive Sedan. The New Yorker has a landau roof treatment, special instrument panel and trim and name plate differences. The Executive Sedan has extended wheel base differences when compared to the Dodge line and offers greater seating capacity. The roof, doors and quarter panels and interior are also unique. Chrysler Corporation offers two cars in the mid-specialty line which are rear wheel drive cars. They are the Chrysler Cordoba and Dodge Mirada whose principal differences are the front end design, tail lights, roof adornment, wheels, tires and instruments. Chrysler Corporation offers rear wheel drive mid-price cars. The Dodge Diplomat is offered in two price classes known as the Salon and Medallion. A Plymouth Gran Fury is sold as a Salon, but not as a Medallion. A third model is the New Yorker Fifth Avenue which is unique to the Chrysler-Plymouth line. Dodge is the truck division of Chrysler Corporation. It is the intent of Chrysler Corporation to sell trucks only through its Dodge affiliates. In 1983, Chrysler-Plymouth dealers will only be able to sell 1982 Voyaoers and Arrow Pick-ups which are found at the dealers and 1983 Voyagers. In 1984, the Voyager truck line will be discontinued at Chrysler-Plymouth dealerships. Chrysler Corporation merchandises automobiles, with a utility feature which are sold as cars and known as Plymouth Scamps and Dodge Rampages. There are minimal differences in these vehicles and those differences are of the types described in its Turismo and Charger. Chrysler Corporation markets import models from Mitsubishi Motors Corporation, a Japanese manufacturer. These are two and four door automobiles whose sole differences are designations which indicate that they are imported for sale by Dodge or Plymouth. These automobiles are known as Colts, and are subcompacts. Chrysler Corporation also offers the Mitsubishi automobiles known as Sapporo and Challenger which are rear wheel drive automobiles whose differences relate to grill and tail light and interior appointments. The Challenger is a Dodge product and the Sapporo a Plymouth product. In 1984, Chrysler Corporation will offer sport automobiles known as G- 24s in both the Dodge and Chrysler-Plymouth line to compete with General Motors' Pontiac Firebird, Chevrolet Camaros, and Ford Mustangs. Dodge will offer an individual performance model known as the Turbo Z which will not be available in the Chrysler-Plymouth line. The Chrysler-Plymouth version will be offered with electronic instrumentation which is unique. In 1984, the T-115 series station wagon will be offered by both Dodge and Plymouth and a Dodge van version of that automobile will be offered. Loan values for the similar product lines in the Chrysler Corporation line are the same. Presently, the marketing and sales functions of Dodge and Chrysler- Plymouth are separate groups. Product development of the corporation is not a separate function between the two lines; however, it is intended that these two lines compete with each other. Reliant is the best selling Chrysler-Plymouth product and the Aries is the best selling Dodge product. John Burnett, the President of Massey Dodge, pointed out that twenty Percent (20 percent) of the sales of his company are in the southside area where Caruso would locate his dealership. The north side of Jacksonville is the main sales area. The Massey dealership can and does work on all Chrysler Corporation products with the exception of Imperial and the information related to all warranty work is sent to the same zone or same location in Detroit, Michigan. The dealership has experienced decreased sales in 1902, as compared to 1981, which has been an industry experience and its officials have been counseled to increase its minimum sales responsibility in 1982. This relates to the Chrysler Corporation's expectations on the number of units sold by its dealer. The dealership at Massey sells sixty percent (60 percent) used cars and half of its new car sales relate to Dodge trucks. William Shore, the President and owner of Westside Dodge, who has been in the car business for thirty-two years, established that approximately twenty percent (20 percent) of his automobile sales are in the southside area which would be the area in which Caruso would be opening its business to sell Chrysler-Plymouths. In 1982, Westside sold 234 Colts and Challengers, 154 Aries Ks, and 86 Omnis, to include Chargers and 71 Dodge 400s, up to the month of December for a total of 545 units and for the total year sold 597 new units. Relating again to automobile sales by Westside, 464 trucks were sold by Westside in 1982, out of a total of 1,061 sales. In 1981, 808 cars out of 1,215 sales were recorded; in 1980, 533 cars out of 983 sales were recorded and in 1979, 487 cars and 344 trucks were sold. The opening of the Caruso Chrysler-Plymouth dealership is felt by Shore to be a negative influence on the sale of its K and Colt cars. Moreover, the close proximity of the existing Regency Dodge and applicant Caruso Chrysler- Plymouth would promote a competitive advantage related to service, parts, body work and sale of new and used cars, as shown by Shore's testimony. Ninety-five percent (95 percent) of Westside sales are in Duval County with five percent (5 percent) out of the county. Within the ninety-five percent (95 percent) in Jacksonville, in addition to the twenty percent (20 percent) sales in southside, ten percent (10 percent) would be in the north side and seventy percent (70 percent) in the west side. The distance between Westside Dodge and River City Chrysler-Plymouth is approximately 250 to 300 feet on the same side of the street. George Hanlon, who is a Vice President of Rebuilding Services, Inc., which owns River City Chrysler-Plymouth, and is President of River City, gave testimony. Rebuilding also has a joint dealership in Tallahassee, Florida, which sells Dodge and Chrysler-Plymouths in one location. The availability of Chrysler-Plymouth and Dodge products from the same premises in Tallahassee, Florida, has been an advantage as it relates to overhead in the operation of that business. The Chrysler-Plymouth franchise in that facility is permanent and the Dodge franchise is for a two-year period with the expectation that the Dodge franchise will be relocated in a separate facility in the future. The Rebuilding Corporation had been involved with Ray Mixon Chrysler- Plymouth on Phillips Highway in Jacksonville, Florida, but that business failed. By way of explanation, Hanlon stated that Rebuilding was unable to successfully run both the Phillips Highway store and the River City operation. River City sells primarily in Duval County and in Baker County, which latter county is west of Jacksonville and Hanlon feels that the Dodge product line is the primary competition to Chrysler-Plymouth dealerships. Reference has been made to the utilization of the same facility to construct certain Chrysler Corporation automobiles which are sold as Dodges or Chrysler-Plymouths. In particular, as shown in the response to reguest for admissions made by the Petitioners to the Intervenors, at paragraph 14 of the first request for admissions; 1983 Plymouth Voyagers and 1983 Dodge Ram Wagons; 1983 Dodge Aries and 1983 Plymouth Reliant; 1983 Dodge 400 and 1983 Chrysler LeBaron; 1983 Dodge Challenger and 1983 Plymouth Sapporo; 1983 Dodge Mirada and 1983 Chrysler Cordoba; 1983 Dodge Omni and 1983 Plymouth Horizon; 1983 Dodge 600 and 1983 Chrysler E Class; and 1983 Dodge Rampage and 1983 Plymouth Turismo/Scamp and 1983 Dodge Diplomat and 1983 Plymouth Gran Fury are produced in the same assembly plants. Responses to the second set of admissions made from the Intervenors to Petitioners also connote similarities between various products within these automobiles within the product lines offered by Dodge and Chrysler-Plymouth, of a type previously described. The request for admissions and responses are transmitted with this Recommended order.
The Issue Whether the proposed dealership should be approved.
Findings Of Fact On August 1, 2008, in the Florida Administrative Weekly, Volume 34, Number 31, a Notice of Publication for a New Point Franchise Motor Vehicle Dealer in a County of Less than 300,000 Population was published. The notice provided that Vento North America, LLC, intended to allow the establishment of H. Long Investments Corp. d/b/a Tropical Scooters of Vero, as a dealership for the sale of motorcycles manufactured by Qianjaing Motorcycle Group Corp. (QINJ) at 4901 North U.S. Highway 1, Unit J, Vero Beach (Indian River County), Florida. On August 12, 2008, the Respondent timely filed a protest of the establishment of the Petitioner's dealership and represented that 25 percent of its retail sales were within a 20-mile straight line distance of the proposed dealership during any 12-month period out of the 36-month period immediately preceding the filing of the protest. Based upon the Petitioner's evidence, its proposed dealership location is not less than 21.51 miles from the Respondent's dealership. The Respondent did not establish that any of its sales are within 20 miles of the proposed dealership. The Respondent did not establish that it currently markets any motorcycle to be sold by the proposed dealership. More specifically, the Respondent did not offer evidence that it has an agreement for the same line-make vehicle to be sold by the proposed dealer. Vento North America, the distributor of the motorcycle brand/model to be sold at the proposed dealership, did not attend the hearing. Notice of the formal hearing was provided to all parties of record at their addresses of record. The Respondent did not timely contest the location, date, or time for the hearing.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Department of Highway Safety and Motor Vehicles enter a Final Order dismissing the protest filed by the Respondent and approving the dealership proposed by this Petitioner. DONE AND ENTERED this 16th day of December, in Tallahassee, Leon County, Florida. J. D. PARRISH 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 16th day of December, 2008. COPIES FURNISHED: Electra Theodorides-Bustle, Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Jim Buchheit Best Buy Vehicles, Inc. 3525 South US Highway 1 Fort Pierce, Florida 34982 Heidi S. Long H. Long Investments, Corp. Tropical Scooters of Vero 4901 North US highway 1, Unit J Vero Beach, Florida 32967 Alma Gonzalez Vento North America 6190 Cornerstone Court E, Suite 200 San Diego, California 92121
Findings Of Fact Burruss is a licensed and franchised American Motors dealer. Burruss has been the sole AMC dealer in the Tarpon-West Pasco County area since 1960. Burruss is in compliance with its franchise agreement with American Motors Sales Corporation. Both Burruss and New Port are located on U.S. Highway 19, a distance of six miles from each other. U.S. Highway 19 is the only major north-south thoroughfare in the Tarpon-West Pasco area. Portions of U.S. Highway 19 have been improved in the past years so that much of the highway is six-laned in the Tarpon-West Pasco area; the unimproved portions of the highway are four-laned. The recent improvements to U.S. Highway 19 in the Tarpon-West Pasco area have improved the traffic flow along U.S. Highway 19. (Findings 1 through 6 are contained in the Prehearing Stipulation.) Burruss is located in Tarpon Springs, which is in the northernmost part of Pinellas County. New Port is located in New Port Richey, which is in Pasco County. There is presently no AMC dealer in Pasco County. The closest AMC dealer to the north of Burruss his in Brooksville, some 35 miles to the north. The AMC dealers in the area are in Tampa, some 27 miles south of New Port Richey; in Clearwater, some 25 miles south of New Port Richey; and Burruss in Tarpon Springs, some six miles south of the proposed location. New Port has been a franchised Lincoln Mercury automobile dealer for three and a half years and is fully qualified to operate the proposed franchise. New Port has agreed to build a 1600 square foot showroom, to have mechanics factory-trained, and to spend in excess of $41,000 in advertising the AMC products during its first year of operation. It has also agreed to maintain a 60-day supply of automobiles in stock. Pasco County has been one of the fastest growing Florida counties in the past ten years, with most of this growth in the western part of the county near U.S. 19. In 1970 Pasco County had a population of 76,000, which increased to 193,643 in 1980 (Exhibit NP-1). In 1981 a study was conducted in the Pasco County area to determine if there was an open point in this area. A copy of this report was submitted as Exhibit NP-2. From this study AMC determined that the area previously serviced by Burruss should be divided into two areas with the southern area comprising the areas containing the zip codes of Tarpon Springs, Crystal Beach, Holiday, Ozone, and Palm Harbor. This is designated the new Tarpon Springs area. All of these communities are in Pinellas County except Holiday, which is in Pasco County. The northern area, which comprises west Pasco County and is the area in which it is contended that AMC is inadequately represented, includes the zip codes for New Port Richey, Aripeka, Elfers, Odessa, and Port Richey. After obtaining the results of this study, American Motors Sales Corporation solicited dealers in this area to apply for an AMC franchise. Burruss became an AMC dealer in 1960, a Jeep dealer in 1970, and a Renault dealer in 1979. Burruss also sells Datsun vehicles, the sale of which runs 25 to 30 percent, by number of units, above its sales of the AMC-Jeep- Renault line, despite the fact that a competing Datsun dealer is located in Pasco County approximately three miles north of Burruss on U.S. 19. During the past ten years ten major shopping malls or plazas have been built in the New Port Richey-West Pasco area, the number of banks or savings and loan institutions have grown from ten to more than 65, and six new car dealerships have been established, to bring the total to nine. Burruss' sales of AMC vehicles reached a peak of 200 per year in 1975 and have steadily declined since that time. Cross-sales figures show that from 45 percent to 75 percent of the AMC-Jeep-Renault vehicles sold in the New Port Richey area are sold by dealers other than Burruss. Of the three AMC dealers in Pinellas County, Burruss has consistently sold the fewest vehicles. Since the population has been greater in the service area of the other two AMC dealers in Pinellas County, this lower rate would be expected. However, Burruss sales have not kept pace with the population growth in the New Port Richey-West Pasco area. In 1977 AMC automobiles accounted for 1.8 percent of domestic new car sales in this Central Florida district, 2.6 percent of the sales in the Tarpon Springs area, and 1.7 percent of the sales in the New Port Richey area. In 1982 AMC automobiles accounted for 1.4 percent of the district sales, 1.0 percent of the Tarpon Springs area sales, and 0.9 percent of the New Port Richey area sales. In 1977 Jeep automobiles accounted for 14.1 percent of the four-wheel drive vehicle sales in the Central Florida district, 13.5 percent of the sales in the Tarpon Springs area, and 13.8 percent of the sales in the New Port Richey area. In 1982, Renault vehicles accounted for 1.4 percent of the district sales, 1.0 percent of the Tarpon Springs area sales, and 0.5 percent of the New Port Richey area sales. Thus, while AMC penetration in the Tarpon Springs area is comparable to district penetration (although Tarpon Springs penetration seems to be declining), the penetration in the New Port Richey area is well below the district average. Not only has Burruss spent less on advertising than other dealers, but also it has not maintained a 60-day supply of vehicles based on "planning potential." (A minimum estimated number of sales a dealer should make in a year.) Based on the planning potential for the combined Tarpon Springs and New Port Richey areas, Burruss should stock 14 AMC, 10 Jeep, and 36 Renault vehicles. As of January 31, 1982, Burruss had in stock 8 AMC, 3 Jeep and 17 Renault vehicles. AMC consistently allots Burruss more vehicles than it purchases. AMC has received more complaints directly from customers in the West Pasco service area about the products they purchased, but not necessarily from Burruss, than from other service areas in the same district. This is indicative that insufficient attention is paid to providing warranty services in the area by the franchised dealer. That a separate market area in Pasco County exists and has been recognized by several other automobile manufacturers was admitted by Herman Burruss, the principal stockholder of Burruss Motor Company, who was the chief operations officer for Burruss for some 45 years until approximately five years ago when he turned the job over to his son and retreated into semi retirement.
The Issue The issue is whether Petitioners are entitled to a proposed motor vehicle dealership in Seminole County, Florida.
Findings Of Fact DOAH provided the parties with adequate notice of the final hearing. On December 3, 2008, DOAH mailed a Notice of Hearing to each of the parties, scheduling the final hearing for April 8, 2009. No Notice was returned as undelivered. No party objected to a final hearing on April 8, 2009. On December 3, 2008, DOAH also issued an Order of Pre- hearing Instructions that, in relevant part, required the parties to file a pre-hearing stipulation, which was to include a list of witnesses and exhibits to be called and submitted at the final hearing. No party complied with the Order. The documents forwarded to DOAH by the Department support the findings. The Notice of Publication for a New Point Franchise Motor Vehicle Dealer in a County of More than 300,000 Population was published in the Florida Administrative Weekly, Volume 34, Number 43, on October 24, 2008. On behalf of Respondent, Mr. James Sursely timely filed a protest letter dated November 7, 2008, with Ms. Nalini Vinayak, the administrator at the Department responsible for receiving such protests. The remaining facts are undisputed in this proceeding. The proposed new point franchise motor vehicle dealer is for a line-make identified in the record as Chongqing Lifan Industry Group Co. Ltd. (CHOL) motorcycles. The proposed location is in Seminole County, Florida. Seminole County has a population in excess of 300,000. The proposed new point franchise motor vehicle dealer is located at 3311 West Lake Mary Boulevard, Lake Mary, Florida. Respondent owns and operates an existing CHOL dealership that is located at 306 West Main Street, Apopka, Orange, County, Florida 32712. The proposed dealership is within a 12.5-mile radius of Respondent's dealership. Respondent has standing to protest the establishment of the proposed dealership. The petitioners submitted no evidence that Respondent is "not providing adequate representation" of the same line-make motor vehicles in the community or territory.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order denying the establishment of the proposed franchise dealership. DONE AND ENTERED this 23rd day of April, 2009, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 23rd day of April, 2009.
The Issue Whether Daniels Chevrolet, Inc., is a successor dealer within the meaning of section 320.642, Florida Statutes (2010),1/ and whether Daniels Chevrolet, Inc., and General Motors, LLC, are in compliance with the requirements of section 320.645.
Findings Of Fact Petitioners and Respondents stipulate to the following facts as set forth in this paragraph: Petitioners, Ferman Chevrolet and Gordon Chevrolet, are licensed motor vehicle dealers in Tampa, Florida, and are authorized to sell and service Chevrolet motor vehicles. GM is a licensed manufacturer and distributor of Chevrolet motor vehicles. GM owns 81.9 percent of Daniels Chevrolet. Roland C. Daniels (Mr. Daniels) is an African- American and owns 18.1 percent of Daniels Chevrolet. University Chevrolet was previously licensed as a motor vehicle dealer at 11300 North Florida Avenue, Tampa, Florida (Florida Avenue Location), and was authorized to sell and service Chevrolet motor vehicles. On April 19, 2010, University Chevrolet filed articles of dissolution with the Florida Department of State, stating "the date of dissolution: April 6, 2010." On May 12, 2010, the Dealer Sales and Service agreements between University Chevrolet and GM were terminated. On June 30, 2010, University Chevrolet submitted a Voluntary Relinquishment of License form to the Department. On July 1, 2010, the Department entered a Final Order cancelling University Chevrolet's motor vehicle dealer license, effective July 2, 2011. On April 27, 2011, GM sent a letter to the Department giving notice that GM was approving the appointment of Daniels Chevrolet, Inc., d/b/a Summit Chevrolet, as a Chevrolet dealer at the Florida Avenue Location and that the dealership was exempt from notice and protest pursuant to section 320.642(5)(a)1. On May 4, 2011, counsel for Petitioners sent a letter to the Department asserting, among other things, that the establishment of Daniels Chevrolet was not exempt and that Petitioners were entitled to notice and an opportunity to protest. The Department treated the May 4, 2011, letter as a request for administrative hearing and forwarded the letter to the Division of Administrative Hearings, where the matter was assigned DOAH Case Nos. 11-2273 and 11-2274. On June 22, 2011, Administrative Law Judge William Quattlebaum entered an Order Granting Motion to Relinquish Jurisdiction and Closing Files on the basis that there was no dispute as to any material facts. On May 24, 2011, GM sent a letter to the Department substantially identical to its April 27, 2011, letter, but changing the proposed "d/b/a" to "Daniels Chevrolet." On May 24, 2011, the Department accepted the license application filed by Daniels Chevrolet. On June 1, 2011, the Department determined that Daniels Chevrolet's license application was complete. On June 27, 2011, Petitioners filed an Amended Petition with the Department, which was forwarded to the Division of Administrative Hearings and is the present petition in this case. University Chevrolet, during all times relevant hereto, operated as a Florida limited liability company. By correspondence dated May 24, 2010, University Chevrolet was advised by GM that as of that date, all of the conditions described in the wind-down agreement between GM and University Chevrolet had been satisfied. As part of the process associated with University Chevrolet's petition to voluntarily relinquish its motor vehicle dealer's license, the dealership represented to the Department that: (1) all electronic filing system transactions were finalized at the tag office; (2) there were no outstanding consumer complaints; (3) there were no outstanding sales transactions; (4) there were no pending title and registration applications pending at the dealership or tag office; (5) there were no unsatisfied vehicle liens on trade-in vehicles; and (6) there was no remaining vehicle inventory as of June 21, 2010 (six critical tasks). Had University Chevrolet not completed these six critical tasks to the satisfaction of the Department, its petition seeking to relinquish its license would have been denied. On May 13, 2011, Mr. Daniels, on behalf of Daniels Chevrolet, attempted to file with the Department an application for a license as a motor vehicle dealer. Acceptance of the application was initially refused by the Department, in part, because of the May 4, 2011, protest letter filed with the Department by Petitioners' counsel. Prior to May 5, 2011, the date upon which Mr. Daniels received a copy of Petitioners' May 4, 2011, protest letter, Daniels Chevrolet hired a general sales manager and service director to assist with dealership operations. Additionally, in anticipation of opening for business by June 15, 2011, Daniels Chevrolet, prior to May 5, 2011, interviewed and selected a general contractor. The basic plan for getting Daniels Chevrolet operational by June 15, 2011, included engaging in cosmetic remodeling activities that could be completed within the timeframe of about a month. The operational plan provided that the portions of the dealership that customers would interact with the most and that did not require the issuance of any building permits (e.g., painting), would be front-loaded in the remodeling process so as to accommodate the June 15, 2011, targeted opening date. The initial cost to capitalize the operation of Daniels Chevrolet is $2,761,800.00. In order to fund the capital requirements, Mr. Daniels has invested $500,000.00 in Daniels Chevrolet, which represents an initial ownership interest of 18.1 percent. Motors Holding, an entity within GM, has invested $2,261,800.00, which represents initial ownership interests in Daniels Chevrolet of 81.9 percent. For his initial investment, Mr. Daniels received 5,000 shares of common stock from Daniels Chevrolet. For its initial investment, Motors Holding received 22,618 shares of preferred stock from Daniels Chevrolet. As to the issue of stock dividends and the redemption by Mr. Daniels of the preferred stock held by Motors Holding, the terms of the agreement between the parties provide as follows: Each quarter, [Daniels Chevrolet] will pay out dividends and redeem preferred stock if earnings are available for that purpose (that is, if earnings are not needed to make up prior losses). Generally, the amount available to pay dividends will be one half of [Daniels Chevrolet's] net after-tax earnings for the quarter. [Daniels Chevrolet] will pay dividends only on its preferred stock, and the amount of the dividend will be a pro rata share of the amount available for dividends. All remaining after-tax earnings are available to redeem shares of preferred stock at a price of $100 per share, increasing [Mr. Daniel's] ownership of [Daniels Chevrolet]. There are no dividends paid on the common stock. When [Daniels Chevrolet] has used its operating earnings to reduce the preferred stock held by Motors Holding to 20% of the originally issued preferred shares, it is required to redeem the remaining preferred shares at a price of $100 per share, using any available source of funds. At this time, the Motors Holding representatives will resign from the board of directors and the company will be owned solely by [Mr. Daniels]. The agreement between Mr. Daniels and GM also allows for the expedited purchase of the dealership pursuant to the following contractual terms: Notwithstanding any other terms or conditions of the Investment Agreements or any terms or conditions in the GM memorandum dated August 12, 2004, and March 1, 2005, respecting early buyout parameters, Operator [Mr. Daniels] is not precluded from an expedited purchase of the preferred shares using a monetary source other than profits from the dealership's operation. Operator may purchase GM's shares of preferred stock of the Dealer Company [Daniels Chevrolet] using any legal source of funds at any time within ten (10) years after the date that the dealership opens for business with the public, regardless of the percentage of preferred stock that has been redeemed. The agreement between Mr. Daniels and GM also provides as follows: Candidate/Operator understands that the performance and profitability of the dealership will be affected by not only the Operator's performance, but also by factors outside the control of the dealership, including without limitation, general and local economic conditions, industry auto sales, General Motors' auto sales, and any and all types of risks affecting businesses of the relevant size and type. As with any entrepreneurial activity, Candidate/Operator's and GM's investments in the proposed business forecasted here are at risk. Candidate/Operator acknowledges and understands the potential that he or she could lose some or all of Candidate/Operator's investment if he or she invests in an unprofitable dealership. Candidate/Operator acknowledges and agrees that GM shall have no obligation to provide compensation, payment or reimbursement for any losses, and Candidate/Operator shall have no right to reimbursement for any losses. The revenue projections for Daniels Chevrolet show that during the first year of operations, the dealership is estimating that it will sustain a loss, before deducting for any bonus and taxes, of $130,800.00. In the second year of operations, Daniels Chevrolet is projecting, before deducting for any bonus and taxes, that it will earn a net profit of $110,370.00. In operational years three through ten, Daniels Chevrolet is projecting an average annual net profit, before deducting for any bonus and taxes, of $1,294,050.00. Based upon these projections, the preferred stock owned by Motors Holding will be redeemed in approximately 6.25 years. Prior to joining the automobile industry, Mr. Daniels worked in a managerial capacity for the Sears Corporation for approximately 17 years. At one point during his career with the Sears Corporation, Mr. Daniels became a national buyer for women's apparel. As a national buyer, Mr. Daniels was responsible for forecasting the women's apparel needs for some 750 stores throughout the United States of America. After leaving the Sears Corporation, Mr. Daniels became involved with the automobile industry in 1985, when he entered GM's dealer development program. After successfully completing the dealer development program, Mr. Daniels, in 1987, became part owner of an automobile dealership in Colorado. The Colorado dealership ceased operations sometime around the latter part of 1988. In 1991, Mr. Daniels relocated to South Florida where for a period of about five years, he worked as general manager for two Saturn dealerships. In his capacity as general manager, Mr. Daniels was involved in managing vehicle inventory issues and developing forecasts regarding future vehicle sales. Subsequently, Mr. Daniels left South Florida and moved to Gainesville, Florida, where he owned and operated a Saturn dealership for more than ten years. When GM ceased manufacturing the Saturn line of vehicles, Mr. Daniels switched to selling Mitsubishi vehicles until such time as he sold his dealership around March 2011. Mr. Daniels, through training and experience, is skilled at making forecasts regarding the future sales of automobiles. In support of its revenue forecast, Daniels Chevrolet, relying upon the experience of Mr. Daniels and GM, projects that during its first year of operations, it will sell 500 new vehicles. For the second year of operations, Daniels Chevrolet is projecting 600 new vehicle sales. For the remaining relevant operational period, Daniels Chevrolet is projecting that it will average 850 new vehicle sales per year. The number of vehicles sold by Daniels Chevrolet will not reduce the number of new vehicles allocated to Petitioners by GM. What is generically referred to as "additions and deductions" provides another source from which Daniels Chevrolet expects to generate income. Income from additions and deductions can be derived from sources such as insurance recoveries, factory incentive money, and tax adjustments. During its first year of operations, Daniels Chevrolet is projecting $400,000.00 in income from additions and deductions. In its second year of operations, Daniels Chevrolet is projecting that the amount of income derived from additions and deductions will be $851,000.00. Commencing with its third year of operations, Daniels Chevrolet is projecting that its annual average for income derived from additions and deductions will be $1,099,000.00. For the period January 2001 through November 2009, dealers that occupied the Florida Avenue Location had annual new vehicle sales, not including fleet vehicles, as follows: Year 2001 – 890 vehicles Year 2002 – 863 vehicles Year 2003 – 921 vehicles Year 2004 – 915 vehicles Year 2005 – 977 vehicles Year 2006 – 698 vehicles Year 2007 – 674 vehicles Year 2008 – 367 vehicles 1/2009 - 11/2009 – 348 vehicles Mr. Dennis Slater, from 2005 through approximately April 2010, oversaw business operations and served as either chief financial officer or executive manager for University Chevrolet. During this period, Mr. Slater became very familiar with University Chevrolet's day-to-day business operations, as well as the conditions of the market in which University Chevrolet competed. According to Mr. Slater, for the period October 2006 through December 2008, the dealer/operator in charge of University Chevrolet encountered significant self- imposed challenges that compromised the dealer/operator's ability to successfully manage dealership operations. Those challenges eventually lead to Mr. Slater taking over the day-to-day operation of University Chevrolet in January 2009. After having been affiliated with University Chevrolet for approximately five years, and having worked in the auto industry for more than 35 years, Mr. Slater submitted a proposal to GM to operate the Florida Avenue Location as a successor to University Chevrolet. As a part of his proposal, Mr. Slater estimated that during his first year of operations he could sell 916 new vehicles. During his second year of operations, Mr. Slater projected that he could sell 1,119 new vehicles. Additionally, Mr. Slater projected that during his first year of operations, he would generate $718,998.00 in income from additions and deductions. Albert E. Parziale, CPA, CFF, CFE, Petitioners' expert, testified that in his opinion, Daniels Chevrolet would not be able to achieve profits sufficient to allow the dealership to obtain full ownership of the company within ten years of commencing operations. In reaching his conclusion, Mr. Parziale looked at new vehicle sales data in the aggregate for the Florida Avenue Location for the years 2001 through 2009. Mr. Parziale then "averaged" the data and determined that the Florida Avenue Location annually averaged 740 new vehicle sales during the period in question. Mr. Parziale also analyzed the new vehicle sales data for a narrower period of time (2006 through 2009) and found that the Florida Avenue Location during these later years annually averaged 521 new vehicle sales.2/ Mr. Parziale also noted that during the broader period between 2001 and 2009, previous operators at the Florida Avenue Location averaged $1,194,717 in income from additions and deductions, but it would be unreasonable for Respondent Daniels Chevrolet to rely on this income source to meet its buy-out obligation to Motors Holding because of the erratic nature of income flow derived from this source.3/ Currently, the average Chevrolet dealer in the Southeastern region of the United States, which includes Tampa, Florida, receives 1.1 million annually in net income from additions and deductions and the average Chevrolet dealer in the Tampa market receives $914,000.00 annually in net income from additions and deductions. Mr. Parziale acknowledges that it would not be unreasonable for Respondents to project that Daniels Chevrolet will average $1,099,000.00 in income from additions and deductions for the next ten years.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles, enter a final order granting Respondent, Daniels Chevrolet's, licensure application to operate as a successor motor vehicle dealer at 11300 North Florida Avenue, Tampa, Florida, and denying the relief sought by Petitioners, Ferman Chevrolet and Gordon Chevrolet, in their Amended Petition. DONE AND ENTERED this 1st day of December, 2011, in Tallahassee, Leon County, Florida. S LINZIE F. BOGAN 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 1st day of December, 2011.
The Issue The issue is whether Petitioners are entitled to a motor vehicle dealership that is proposed to be located in Melbourne, Florida.
Findings Of Fact Respondent is an existing franchised dealer of motorcycles manufactured by ZHNG. Petitioners have proposed the establishment of a new dealership to sell the same line and make of motorcycles as those sold by Respondent. Respondent's dealership is located at 234 Highway A1A, Satellite Beach, Florida 32937. Petitioners' proposed dealership would be located at 6370 North Highway US 1, Melbourne Florida 32940. The proposed dealership is within a 12.5-mile radius of Respondent's dealership. Satellite Beach and Melbourne are both in Brevard County. Petitioners admitted that they did not provide the name of Respondent's business to the Department for purposes of notifying the existing dealer of Petitioner's intent to establish a new dealership of the same line-make. For this reason, Respondent never received the standard letter of notice from the Department. Respondent filed its petition as soon as its ownership learned of the proposed new ZHNG dealership. Orestes Nunez, principal owner of House of Scooters, testified that he had no way of knowing the names of every dealer that is selling the ZHNG line-make because the scooters are brought into this country by four different importers and sold under different names. None of the scooters are marketed under the name "ZHNG." Mr. Nunez' proposed dealership would sell the scooters under the name "Italica," whereas other dealers sell the ZHNG scooter under other names. Mr. Nunez testified that he was able to provide the Department the names of other "Italica" dealers, but could not provide the names of every dealer selling ZHNG scooters. Petitioners conceded that they could not establish that Respondent is not providing adequate representation of the ZHNG line-make within the territory at issue. Petitioners' only basis for disputing the protest was that it was not timely filed. Under all the circumstances, it is found that Respondent's protest was timely filed and that Respondent has standing to protest the establishment of the proposed dealership.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Department of Highway Safety and Motor Vehicles enter a final order denying the establishment of Petitioners' proposed franchise. DONE AND ENTERED this 8th day of April, 2009, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 8th day of April, 2009. COPIES FURNISHED: Electra Theodorides-Bustle, Executive Director Department of Highway Safety and Motor Vehicles 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Adriana De Lima Italica Motors, Inc. 5001 Southwest 135 Avenue Miramar, Florida 33027 Greg G. Shonk Loon’s Lagoon, LLC 234 Highway A1A Satellite Beach, Florida 32937 Orestes Nunez Orestes Nunez, d/b/a House of Scooters 6370 North Highway US 1 Melbourne, Florida 32940 Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344
The Issue Whether Beacon Motors, Inc., is entitled to be established as an additional Chevrolet dealer in Miami, Dade County, Florida.
Findings Of Fact Petitioner, General Motors Corporation, Chevrolet Division, is a manufacturer of automobiles and trucks and is a "licensee" pursuant to Section 320.642, Florida Statutes. Petitioner, Beacon Motors, Inc., is a proposed Chevrolet dealer to be established at 12th Street and 89th Court Northwest, in Miami, Dade County, Florida. Respondents, Anthony Abraham Chevrolet, Co. (Abraham), Tropical Chevrolet, Inc. (Tropical), and Potamkin Chevrolet, Inc. (Potamkin), are existing Chevrolet dealers located in Dade County, Florida. Each has standing to protest the proposed new dealership. All other existing dealers in the community or territory who opposed the proposed dealership have withdrawn their contests. The area described in this record as the Sweetwater Community or Territory (Sweetwater Comm/Terr) is the appropriate geographical area to evaluate this case pursuant to Section 320.642, Florida Statutes. The Sweetwater Comm/Terr includes all of Dade County and part of the southern tip of Broward County, Florida. Typically, the area wherein a dealer maintains a competitive advantage over all other same line dealers is designated an "area of geographic sales and service advantage" (AGSSA). This advantage is presumed because the dealer is closer to consumers within the AGSSA than is any other same line dealer. In this case, Chevrolet is represented in eight of the nine AGSSAs which encompass the Sweetwater Comm/Terr. The proposed additional point would be located in AGSSA 15, currently un-represented by Chevrolet. AGSSAs 7 (Potamkin), 9 (Tropical), 11 (Abraham), 12 (Sun Chevrolet, Inc.), 15 (Proposed Point), and 16 (Grand Prize Chevrolet) comprise an area described as the Miami Multiple Dealer Area ("MDA"). The Miami MDA is the contractual Area of Primary Responsibility ("APR") for these dealers. The Miami MDA and AGSSA 15 are identifiable plots within the Sweetwater Comm/Terr. Chevrolet's share of industry registrations or its "market penetration" in Florida lagged behind Chevrolet's national market penetration for the period 1993 to 1995. In 1995, Chevrolet's national penetration was 16.43%, while its Florida penetration was only 12.18%. In 1995, Florida ranked 44th out of 50 states in Chevrolet market share. Vehicle preferences of Florida consumers for particular sizes and types ("product segments") accounted for only 1.39 percentage points of the 4.25 percentage-point shortfall between the Florida and national penetration rates in 1995. After adjusting for product segment preference, Florida's Chevrolet registration effectiveness compared to the expected average ranked 43rd out of 50. The shortfall between its Florida and national averages is due to deficiencies in Chevrolet's statewide dealer network. The principal deficiency with the dealer network, which would explain the shortfall between Chevrolet's penetration in Florida and its expected penetration, is dealer count, i.e., the number of Chevrolet dealers available to serve the public. Other possible deficiencies include dealer locations and operational performance. Chevrolet's share of competitive franchises in Florida is below national average. This factor correlates to Chevrolet's ability to achieve a reasonably expected market share. In roughly half of all states, Chevrolet's share of franchises equals or exceeds national average. Florida, on the other hand, ranks 46th of 50 states in Chevrolet franchises as a percentage of industry franchises. In this case, the national average (the sum of all adequate, inadequate, and non-represented markets) adjusted for local product segment preferences in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15, provides a reasonable standard for measuring the performance of the Chevrolet dealer network in the three areas. Mr. Anderson's assessment in this regard has been deemed persuasive. Using national average adjusted for local product segment preferences produces an expected penetration (hereinafter "expected penetration" or "expected average") in 1995 of 14.07% for the Sweetwater Comm/Terr, 13.96% for the Miami MDA, and 14.31% for AGSSA 15. Actual Chevrolet penetration, however, was only 8.97% in the Sweetwater Comm/Terr, 7.86% in the Miami MDA, and 7.64% in AGSSA 15. The shortfall between expected and actual penetration described above demonstrates the level of the dealer network inadequacy in these areas. From 1993 to 1995, Chevrolet's registration effectiveness fell below expected average in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15. The disparity in performance noted above is not due to a disproportionately high percentage of Hispanics. While the Sweetwater Comm/Terr has a significant Hispanic population, it cannot be concluded that a domestic manufacturer will not perform well in this market. Ford, a domestic competitor of Chevrolet, exceeded or very nearly met its expected penetration from 1993 to 1995 in AGSSA 15 and the Sweetwater Comm/Terr, notwithstanding their large Hispanic populations. Nationally, Chevrolet performs much better against Ford than it does in the Sweetwater Comm/Terr, AGSSA 15, or the Miami MDA. If Chevrolet performed as well as Ford in the Sweetwater Comm/Terr, Chevrolet would have registered 5,364 more vehicles in 1995. Chevrolet currently has 8 dealers in the Sweetwater Comm/Terr; Ford has 10. The applicant for the proposed point, Mr. de la Cruz, who is a Cuban-born Hispanic, acquired Sunshine Ford in Miami in 1993. Since 1993, Sunshine Ford has risen from bankruptcy to become a top Ford dealer in Miami, selling mostly to Hispanics. Mr. de la Cruz also owns Miami Honda. Sunshine Ford and another Ford dealer in Miami, Machado Ford, which is also Hispanic owned, outsell Miami Honda every month in essentially the same market area. Ford also outsells Honda in Hialeah which has large Hispanic population. Mr. de la Cruz, who has actual experience with this market, determined that Hispanic buying preferences are driven more by model of car than by whether the car is an import or a domestic. Potamkin sells most of its Chevrolets to Hispanics. Of the eight Ford dealers in Miami, including the top two in sales, five are Hispanic owned. Of the top three Honda dealers in Miami, two are Hispanic owned, and the third, which is partially Hispanic owned, is managed by an Hispanic. None of the existing Chevrolet dealers in the Sweetwater Comm/Terr is Hispanic. There is no evidence in the record that Hispanics as an ethnic group have an inherent bias in favor of imports against domestics, including Chevrolet. Dade County has been a growing market through 1995, and the demographics forecast that it will continue to grow through the year 2000. It is projected that the population in AGSSA 15 will grow at a rate of over 6% with households growth over 12% from 1995 to 2000. Household growth in the Sweetwater Comm/Terr is to the west along the north/south corridor of the community. Chevrolet's current dealer network in Dade County is located mostly to the east along the ocean side of the market. Abraham and Potamkin are located in areas of high household and population density. Typically, such areas support sales and service opportunity. The population and household density south of the proposed location is also high. Since 1980, the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15 have experienced dramatic growth in total population, driver-age population, and households. Increases in households and population may indicate an increase in car-buying potential. During the same time frame, however, Chevrolet's dealer count in the Sweetwater Comm/Terr has decreased from ten to eight. A comparison of Chevrolet's dealer count and population in Dade County as a percentage of national averages of those factors suggests that Chevrolet's dealer count for this area has lagged behind its population growth. Considering only population, Chevrolet would need two more dealers in Dade County. AGSSA 15 and the Sweetwater Comm/Terr have a good distribution of income levels with very few pockets of extremely low or extremely high income. Because a majority of the population in the Sweetwater Comm/Terr and AGSSA 15 have incomes in the range of the median income of the average Chevrolet buyer, lack of income does not contribute to Chevrolet's poor performance in these areas. Employment trends in Dade County from 1980 through 1995 also reflect growing opportunity to make new car sales. This growing opportunity, coupled with Chevrolet's continued decline in performance, suggest that it is the dealer network causing a problem, and not the local economy or economic variables associated with income. Retail registrations have grown in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15 from 1991 to 1995. Registrations per dealer is a measure of the level of opportunity available in a market. Without the proposed dealer, the existing Chevrolet dealer network in the Sweetwater Comm/Terr and the Miami MDA has the second largest opportunity in the entire State of Florida. Even with the addition of the proposed dealer, the Miami MDA still remains the second largest opportunity in the State of Florida, while the Sweetwater Comm/Terr will have the fourth highest opportunity in the State of Florida. Other factors which may be beyond the control of the dealers, such as product availability, do not explain the poor performance demonstrated in this record. Additionally, share of voice, a measure of advertising, cannot explain the performance problems demonstrated in this record. Although import dealers utilize aggressive advertising, it cannot be concluded that such efforts produce increased sales. The quality of the advertising, the market that is targeted, the message conveyed, and the timing of the advertisement all play a role in determining the effectiveness of advertising. Other factors which affect advertising effectiveness include the appearance of the dealership, word of mouth from other people as to their experience with the dealership, and the community presence of the dealer. The purpose of advertising is to create awareness and consideration. If a manufacturer already has awareness and consideration, then more advertising may not increase its market share. Share of voice does not necessarily correlate to market share. For example, Chevrolet's factory expenditures for advertising in South Florida increased from 1993 to 1995. And, although the South Florida Chevrolet Dealer Association raised its contribution to the dollars being spent on advertising directed to the Hispanic market, Chevrolet's market share declined. Finally, other factors that might explain Chevrolet's poor performance (such as brand preference, product quality, product design, changes in the economy, age, and income variations of consumers purchasing vehicles) in the same segments and education levels have been accounted for in the segment adjustment process. The growth in households, population and registrations in the study areas, coupled with a decline in Chevrolet's dealer count, the strong correlation between share of franchises and market share, and the inability of existing dealers to adequately penetrate the market in AGSSA 15, explain why Chevrolet is performing poorly in the Sweetwater Comm/Terr, the Miami MDA, and AGSSA 15. The existing dealer network has failed to adequately serve consumers in those areas. Given the need to add another dealer to the Sweetwater Comm/Terr dealer network and the fact that there is no dealer in AGSSA 15, the best solution to Chevrolet's representation problem is to add another dealer to AGSSA 15. The proposed Beacon site is a good location for a dealership because of its high visibility from the Dolphin Expressway, which is the main east/west expressway; its substantial frontage on 12th Street; and its location in an area that is becoming an auto cluster or row. Based upon Mr. Anderson's assessment of the gross registration losses together with the insell from outside dealers, which is accepted, there should be enough lost opportunity available in this market to ensure that the proposed dealer will not take sales from existing dealers. Further, it is concluded that under these conditions a concept known as stimulated competitive response should benefit the surrounding Chevrolet dealers. By enhancing their competitive efforts, either by advertising more, improving their service departments, carrying more inventory, cutting their prices, or by having better salesmen, they will gain sales by responding positively to enhanced competition. Abraham and Potamkin are profitable Chevrolet dealerships whose financial well-being will not be threatened by the proposed new point. The addition of the proposed dealer in the Sweetwater Comm/Terr will increase customer convenience for both sales and service. Consumers should also benefit from the increased level of competition among dealers who should offer consumers more selection and better prices and service for their vehicles needs. Raising competition and increasing brand awareness for Chevrolet in the marketplace should benefit the existing dealers. Adding the proposed dealer would give Chevrolet an opportunity to correct one of its dealer deficiencies by increasing its number and improving its location. Further, Chevrolet would have an Hispanic dealer/operator, which it currently does not have. Having an Hispanic dealer with strong business ties to the region would be a favorable cultural development for the community. Adding the proposed dealer would serve the public interest by increasing employment, taxes, and money being spent in the area. Increased convenience serves the public interest. Adding a minority dealer would serve the public interest as expressed in the state franchise law. The proposed dealership will fit in well with the mix of commercial and industrial uses in the proposed area, and it will generate involvement by the dealer in the community and charitable affairs in the area. The proposed location is not so close to Abraham that distance alone must preclude the addition of the new point. The addition of Beacon should benefit consumers and public interest by providing more competitive and convenient sales and service to a growing population. The addition of an Hispanic dealer to the Chevrolet family will direct sales to a market which is largely Hispanic and will continue community involvement by this dealer. The existing dealers' abilities to perform their obligations under their dealer agreements should not be impaired by the addition of a new dealer at AGSSA 15. Based upon the demographic factors of the community or territory, it is expected the market penetration which is currently below reasonably expected levels, would be improved by an additional dealer at AGSSA 15. Chevrolet does not deny its existing dealers opportunities for reasonable growth, market expansion or relocation. Given the market opportunity in this community or territory, all dealers should benefit from the establishment of an additional point. Chevrolet did not attempt to coerce existing dealers into consenting to an additional dealership. With the addition of the Chevrolet point at AGSSA 15, the distance, travel time, and accessibility for this line-make will be improved. Other dealers are closer together than the proposed site is to its nearest Chevrolet competitor (Abraham) without adversely affecting one another. It is expected Chevrolet dealers will react similarly. Although Abraham and Potamkin have failed in specific obligations of their dealer agreements, they are in substantial compliance with such agreements. The existing dealership network has failed to perform at a reasonably expected level. The economic and marketing conditions for this community or territory warrant an additional Chevrolet dealer at AGSSA 15. While Chevrolet has begun efforts to improve performances in the Sweetwater Comm/Terr, the additional dealer at AGSSA 15 will best address the inadequacy of the dealer count in this market.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the additional dealership in AGSSA proposed by Beacon Motors, Inc., be granted. DONE AND ENTERED this 5th day of September, 1997, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 5th day of September, 1997. COPIES FURNISHED: Charles J. Brantley, Director Division of Motor Vehicles Neil Kirkman Building, Room B439 Tallahassee, Florida 32399-0500 Enoch Jon Whitney, General Counsel Division of Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500 Michael J. Alderman, Esquire Division of Motor Vehicles Neil Kirkman Building, Room A432 Tallahassee, Florida 32399-0500 James Williams, Esquire Michael A. Gruskin, Esquire General Motors Corporation Post Office Box 33122 Detroit, Michigan 48202 Fred J. Lotterhos, III, Esquire Scott D. Makar, Esquire Holland & Knight, LLP 50 North Laura Street, Suite 3900 Jacksonville, Florida 32202 Manual Kadre, Esquire de la Cruz Companies 3201 Northwest 72 Avenue Miami, Florida 33122 James D. Adams, Esquire A. Edward Quinton, III, Esquire Adams & Quinton, P.A. Camino Real Centre 7300 West Camino Real Boca Raton, Florida 33433 Gerald B. Wald, Esquire Murai, Wald, Biondo & Moreno 9th Floor Ingraham Building 25 Southeast 2nd Avenue Miami, Florida 33131
The Issue The issues in this case are whether Petitioner has standing to protest the establishment of an additional motorcycle dealership; and, if so, whether Petitioner is adequately representing this line of motorcycles in the relevant territory or community pursuant to section 320.642, Florida Statutes (2018).1/
Findings Of Fact Tropical Scooters is located at 11594 Seminole Boulevard, Largo, Florida 33778. It has been in the business of selling scooters and other motorized vehicles for ten years. Michele Stanley is the owner and manager of Tropical Scooters and she has knowledge regarding its purchasing and franchise agreements, inventory, and sales figures. Although no franchise agreement was offered into evidence, Ms. Stanley testified Petitioner has an agreement with a distributor, Pacific Rim International, d/b/a Ice Bear ATV (Ice Bear), to sell YNGF motorcycles. Ice Bear has been supplying Petitioner with YNGF motorcycles for approximately two and a half years. Tropical Scooters has had a good relationship with this distributor and has encountered no problems selling the YNGF line. In the last 18 months, Tropical Scooters has sold 137 YNGF units and currently has 23 units at its showroom. Ms. Stanley discovered that Respondents had applied with the Department to establish a YNGF motorcycle dealership at 9145 66th Street North, Pinellas Park, Florida 33782, from the February 22, 2018, notice published by the Department in the Florida Administrative Register.2/ Subsequently, Tropical Scooters filed a timely complaint with the Department challenging Respondents’ application. Ms. Stanley was familiar with the proposed location of the new dealership and stated that it was four miles “as the crow flies” from the Tropical Scooters showroom. Tropical Scooters is an existing dealership that sells YNGF motorcycles and is within 12.5 of the location proposed by Powersports and Motrac for the new dealership. Therefore, Tropical Scooters has standing to bring this challenge pursuant to section 320.642(3). There was no evidence that Tropical Scooters’ representation of the YGNF line of motorcycles was inadequate in its community or territory as described in section 320.642(2)(b).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department denying the new dealership application of Respondents for the sale and service of Sanmen County Youngfu Machine Co., Ltd., vehicles at 9145 66th Street North, Pinellas Park, Pinellas County, Florida. DONE AND ENTERED this 27th day of July, 2018, in Tallahassee, Leon County, Florida. S HETAL DESAI 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 27th day of July, 2018.
