The Issue Whether Respondent, Greenway Nursery, Inc. (“Greenway”), is liable to Petitioner, Huntsman Tree Supplier, Inc. (“Huntsman”), for the purchase of landscaping trees, and, if so, in what amount.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following Findings of Fact are made: Huntsman is a Florida corporation for profit, located in Lake City, and engaged in the business of commercial tree farming. Its owners are James and Michelle Huntsman. Mr. Huntsman is the president of the company and Ms. Huntsman is the secretary. Greenway is a Florida corporation for profit, located in Morriston, and engaged in the business of commercial nursery and landscaping. Its owner and president is Brian D. Love. At issue in this proceeding are two deliveries of trees from Huntsman to Greenway, one on March 12, 2015, and one on June 23, 2015. The invoice for the March 12 delivery indicates that it was billed to Greenway. It is for 12 East Palatka holly trees, 65 gallons each. The trees are billed at the rate of $240 each, for a total bill of $2,880. The invoice indicates that Greenway took delivery of the trees by customer pick-up. The invoice for the June 23 delivery also states that it was billed to Greenway. The invoice includes one ligustrum, eight feet in height, for $200; one 2.5-inch DBH1/ slash pine for $130; two 4-inch live oaks with a height of 14 to 16 feet for $250 each; and one cypress for $240. The total amount of the invoice is $1,070. Again, the invoice indicates that Greenway took delivery by picking up the trees. All of the trees in both invoices were destined for a landscaping project at Adena Golf and Country Club in Ocala (“Adena”). Both parties were involved in planting trees in different areas of the Adena property. The parties’ course of dealing until June 2015, was not completely explained at the hearing. It was clear that Huntsman would directly bill Greenway for the trees and that Greenway would take delivery of the trees by pick-up. It was unclear whether Huntsman expected to receive payment directly from Adena or whether Greenway would pay Huntsman for the trees from payments Greenway received from Adena. In any event, Greenway accepted the billings and took delivery of the trees in each instance, thus accepting ultimate responsibility for payment to Huntsman. In its answer to the Complaint, and again at the final hearing, Greenway admitted liability for the $2,880 stated in the March 12 invoice. Mr. Love agreed to pay Huntsman that amount within 15 days of entry of the final order in this case. However, Greenway denied liability for the $1,070 stated in the June 23 invoice. Mr. Love stated that his company was not liable for these trees because they were not part of his project with Adena. He stated that he installed these trees to replace trees on the Adena property that had died, but that the dead trees had not been the responsibility of his company. Ms. Huntsman denied that the dead trees had been installed in the area of the Adena property where her company was working. She testified that Adena’s representative told her that she should seek payment from Greenway because the June 23 tree delivery constituted “warranty work.” Greenway had planted trees on the Adena property that had died, and Adena considered Greenway the warrantor of those trees and therefore liable for their replacement. Based on all of the testimony, it appears that Huntsman found itself in the middle of a dispute between Greenway and Adena as to whether Greenway had warranted the trees that died, and became aware of the dispute only after it had billed and delivered the trees to Greenway in accordance with the parties usual course of dealing. The evidence was insufficient to establish that Huntsman had any responsibility for, or prior knowledge of, the dead trees. It will be left to one or the other of these parties to take up the issue of payment with Adena. Fundamental fairness dictates that this burden should fall to Greenway. Greenway had the warranty dispute with Adena that caused this controversy. Greenway accepted the bill of lading and the invoice for the June 23 shipment, and took delivery of the trees in accordance with the parties usual course of business. As the innocent supplier of the trees, Huntsman should be made whole.
Recommendation Based on the foregoing, it is, therefore, RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order approving the claim of Huntsman Tree Supplier, Inc., against Greenway Nursery, Inc., in the amount of $4,000. DONE AND ENTERED this 12th day of April, 2016, 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 12th day of April, 2016.
The Issue Whether Respondent has violated Section 627.8405, Florida Statutes.
Findings Of Fact Respondent, Capital National Financial Corporation (Capital), is transacting the business of insurance premium financing pursuant to a certificate of authority issued by the Petitioner, Florida Department of Insurance (Department). The Department is responsible for regulating the premium finance business affairs of Capital. On August 30, 1994, the Department issued a Notice of Intent to Non- renew Capital's certificate of authority to transact premium financing in Florida pursuant to Section 627.829, Florida Statutes. As authority for issuing the Notice of Intent to Non-renew, the Department cited two grounds. First, the Department alleged that Capital was illegally financing the purchase of automobile club memberships in conjunction with an insurance transaction, a violation of Section 627.8405, Florida Statutes. Second, the Department alleged that Capital was utilizing a form in conjunction with the premium financing transaction without the requisite Departmental approval, a violation of Section 627.838, Florida Statutes. The parties have stipulated that the only issue to be determined is whether there was a violation of Section 627.8405. Capital finances insurance premiums and has agreed to collect installment payments for automobile club memberships which the insurance agent sells to the customer when the customer is buying automobile insurance. The customer makes a down payment on the automobile club membership. Capital does not advance the remainder of the membership cost to the insurance agent. The customer executes a billing service disclosure form. The billing service disclosure form contains the following language: In conjunction with your insurance, you have purchased through your insurance agent the supplemental service disclosed above. The amount which you are charged for this supplemental service, after deduction of any down payment which you have paid, will be divided equally into monthly installments payable to Capital National Financial Corporation due at the same time, and in addition to, your monthly installment payable to Capital National for the financing of the purchase of your insurance. Capital National is acting as a collection agent for your insurance agent and is not charging any interest or other fee for collecting and processing the amount due for your purchase of this supplemental service. The monthly installment you will pay for the supplemental service will be added to the payment amount for your insurance and this aggregate amount will be reflected on your payment coupon. However, your insurance can not be cancelled by reason of your failure to pay the amount of the monthly installment attributable to the purchase of the supplemental service. The billing service disclosure form used by Capital is executed by the customer on the same day the premium finance agreement is executed. The billing disclosure form is a separate document from the premium finance agreement.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Capital National Financial Corporation did not violate Section 627.8405, Florida Statutes. DONE AND ENTERED this 8th day of January, 1996, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 8th day of January, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-1944 To comply with the requirements of Section 120.59(2), Florida Statutes, the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Paragraphs 1-4: Accepted in substance. Paragraphs 5-19: Rejected as unnecessary. Paragraph 20: Rejected as not supported by the record. Capital disputes that they are "financing" the automobile club fees. Paragraphs 21-23: Accepted in substance. Paragraphs 24-29: Rejected as unnecessary. Respondent's Proposed Findings of Fact. Paragraphs 1-4: Accepted in substance. Paragraphs 5-6: Rejected as unnecessary. Paragraphs 7-11: Accepted in substance. Paragraphs 12-13: Rejected as unnecessary. COPIES FURNISHED: Alan J. Leifer, Esquire Department of Insurance/Legal Services East Gaines Street Tallahassee, Florida 32399-0333 Alberto R. Cardenas, Esquire Matias R. Dorta, Esquire Tew & Garcia-Pedrosa South Biscayne Boulevard Miami, Florida 33131-4336 Bill Nelson State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Dan Sumner Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399
The Issue The primary issue in this proceeding is whether Respondent committed the alleged multiple violations of Chapter 626 F.S. through misrepresentation and fraud relating to the surrender and issuance of certain policies to Melvin and Clara Smith. The ancillary issue raised by Respondent's motion to dismiss is whether this proceeding, filed approximately ten years after the questioned events, is barred by a statute of limitations or laches, or is a violation of due process or right to a speedy trial.
Findings Of Fact Prior to hearing, in a Prehearing Statement filed on April 21, 1987, Bonafide admitted the following allegations or the amended administrative complaint: You, RICHARD ANTHONY BONAFIDE, are currently eligible for licensure and licensed in this state as an Ordinary- Variable Annuity, including Health Agent and as an Ordinary Life, including Health Agent. At all times pertinent to the dates and occurrences referred to in this Administrative Complaint you, RICHARD ANTHONY BONAFIDE, were eligible for licensure and licensed as an insurance agent in this state. You, RICHARD ANTHONY BONAFIDE, were licensed in this state to represent Jefferson Standard Life Insurance Company (hereinafter referred to as "Jefferson Standard") from January 1, 1972 through December 31, 1978. You, RICHARD ANTHONY BONAFIDE, were licensed in this state to represent Jefferson National Life Insurance Company (hereinafter referred to as "Jefferson National") from August 31, 1976 through June 23, 1978. References in this Administrative Complaint to you, RICHARD ANTHONY BONAFIDE, includes persons acting under your direct supervision and control. Sometime during October 1976 Melton H. Smith of Orlando, Florida contacted the Orlando office of Jefferson Standard concerning two life insurance policies issued to Melton H. Smith and his wife, Clara B. Smith. At that time Jefferson Standard had in force policy number 945382 insuring the life of Melton H. Smith which was issued in 1947; and policy number 1144867 insuring the life of Clara B. Smith which was issued in 1951. Melvin Smith's purpose in contacting Jefferson Standard was to determine the cash value of the two policies and to purchase paid-up life policies for himself and his wife with the accumulated funds. Bonafide was the Jefferson Standard regional agency manager. He went to the Smith's home and assisted them in getting the information they needed and in obtaining cash surrender checks for the two policies. Those checks were issued by Jefferson Standard on October 26, 1976, and were mailed to the regional agency office. On or about November 1, 1976, Bonafide visited the Smiths again. He had the checks: No. 419184 payable to Melton H. Smith in the amount of $8,608.22 and No. 419186 payable to Clara B. Smith in the amount of $5,208.73. He gave the Smiths the checks and took their two surrendered policies. In their discussions with Bonafide, the Smiths indicated their desire to have the funds utilized for paid up policies which would not require periodic premiums. Bonafide recommended that the couple go with Jefferson National life insurance rather than Jefferson Standard, as Jefferson Standard was in the process of merger with Pilot Life and rates were not available for the type of policy they were seeking. On the occasion of that same visit, Bonafide prepared two applications for Jefferson National life insurance for the Smiths, a $25,000.00 whole life policy for Melton Smith, and a $20,000.00 whole life policy for Clara Smith. The application forms signed by the Smiths clearly indicate an annual mode of premium payment and the amount of the premium: $1,061.00 for Melton Smith's policy, $592.20 for Clara Smith's policy. The application forms were filled out by Bonafide, who explained that the only way the policies could be written was in this manner, as it was difficult to come up with premium rates for a paid-up policy. Bonafide told the couple that he would handle the premium payments for paid up policies. The couple endorsed their two cash surrender checks and gave them to Bonafide. In return he gave them a check in the amount of $735.78, which he said represented the difference between the premiums for the paid up insurance and the cash surrender checks they turned over to him. The $735.78 check was written on Atlantic Bank of Orlando account No. 272-04-155-9, printed with "Richard Bonafide, 2699 Lee Road, Winter Park, Florida 32789". In his testimony at hearing, Melvin Smith stated that Bonafide had secured their trust with his very cordial and helpful manner. He had visited their home on several occasions in working with them to obtain the Jefferson Standard refunds. The Smith's two checks, totalling $13,816.95 were deposited in Bonafide's account No. 272-04-155-9 on November 2, 1976. Bonafide, alone, had the authority to draw on this account. It was not the account maintained by the Jefferson Standard regional office for the deposit of premiums nor was it the account maintained by the office for the payment of office expenses. The address printed on the checks and maintained on bank records was the address for the Jefferson Standard regional office. Bonafide claimed that the account was for his business as an insurance agent, that he used the account to make premium payments to the various companies he represented and for business expenses. He could also write checks to himself on that account. Copies of the checks and deposit slips are kept by the bank for seven years and have been destroyed. Copies of the signature card for the account and copies of monthly statements were available and were admitted into evidence at the hearing. Bonafide forwarded the Smiths' two applications to Jefferson National along with ten percent of the annual premium due on each policy, for a total of $165.32. A debit in this amount appears in the December 9, 1976 bank statement for account No. 272-04-155-9. It was customary, and in accordance with company policy, for the agent to retain his commission portion of the premium payment. Subsequently, Jefferson National issued two policies to the Smiths: No. 00278718, effective November 17, 1976, for Clara E. Smith; and No. 00278717, effective December 9, 1976, for Melton H. Smith. The policies were mailed to the agent, Bonafide, who in turn delivered them to the Smiths at their home. The policies, as delivered to the Smiths, included standard terms, copies of the signed application forms and policy specifications. Those specifications, in computer-generated type, establish an annual premium amount, and alternate schedule of premiums for annual semi-annual and quarterly payments. However, on both policies, at the bottom of the policy specifications page, is found this language, in typewritten form: *Premium schedule amended Premiums paid in advance as of 11-7-76 full term of contract. [Petitioner's exhibits No. 4 and No. 5] Bonafide explained carefully and in detail, the provisions of the policies to the Smiths. In particular in response to Melvin Smith's question, Bonafide explained the type- written notation regarding premiums. He said that the computers were not set up to handle a paid up full life policy and there was difficulty getting premium rates because this was an unusual occurrence. He assured the Smiths that they had paid up policies. The typewritten notation is not the sort of notation the home office would have added. For some reason that is not clear, Jefferson National sent two letters dated May 5, 1977 to the Smiths on each policy indicating that they understood the Smiths did not want their policies and including refund checks in the amounts of $106.10 and $59.22. The Smiths, upon receipt of the letter immediately called Bonafide. He assured them that the home office made an error and that he would get an explanation. A few days later the Smiths received a memo on a green Jefferson National Life Insurance memo form, purportedly from Robert Jackson, Underwriting Division, to Dick Bonafide. The memo explained the error and asked Bonafide to have the checks returned for cancellation. At the bottom of the memo was Bonafide's handwritten note to Melvin Smith asking that he return the checks in the furnished self-addressed, stamped envelope. Mr. Smith called Bonafide again and was told to put the checks in the envelope. He did this on May 17, 1977. Jefferson National's cash journal transaction register, virtually the only company records remaining of these policies, indicate that the entries made on May 5, 1977 were reversed in June 1977, and the policies were approved and issued. The memo received by the Smiths was neither signed nor generated by Robert Jackson. It does not reference policy numbers, a practice unheard of at the company, and it references a company division and section that never existed. The memo forms were available to company agents, such as Bonafide, in the field. The Smith's next and final contact with Bonafide was in November 1979 when he visited them and tried unsuccessfully to sell them some more life insurance. In October or November 1985, Mr. Smith's income status had changed and he was curious about the cash surrender value of the Jefferson National policies. If enough, he thought he might take the money and invest it elsewhere. He wrote to the company and the immediate response was that the policies had lapsed. Further correspondence and the investigation which led to this proceeding ensued. The Smiths also filed a civil suit, presumably still pending. Unknown and uninitiated by the Smiths, the company processed a change of address notice for them in October 1977. The address was changed from 1101 Powers Drive, Orlando, where they lived, to 100 Partridge Circle, Maitland, where Bonafide lived. All Company notices regarding the Smith's policies were sent to the 100 Partridge Circle address, including premium notices, late payment offers and lapse notices. Annual premiums on the policies were due in November and December, 1977, and were not paid. In due course, after a series of notices were sent and not answered, the polices were lapsed and dividend checks of $48.50 and $24.00 were issued to the Smiths and presumably sent to the Partridge Circle address. The checks were never cashed by anyone. When Jefferson National makes a policyholder address change, a notice of that change is also sent to the agent. It was not the company practice to send policyholder's notices to their agents' home addresses. Neither Jefferson standard nor Jefferson National Life Insurance Company records reveal policies for the Smiths other than the ones addressed above. In 1976, while employed by Jefferson Standard Life Insurance Company under a contract which prohibited the representation of other companies, Bonafide had contacts with or represented several other insurance companies. As agent, Bonafide would have received copies of lapse notices sent to his policyholders. Depending on various factors, including the amount of the business, he would have followed up with a contact to the policyholder. In Bonafide's view, in those days the $20,000 and $25,000 policies for the Smiths were "a sizable sale". [Tr-293]
Recommendation Based on the foregoing, it is hereby, RECOMMENDED: That Richard Anthony Bonafide be found guilty of violations of sections 626.561(1), 626.611(5), (7), (9), and (10), and 626.621(6) F.S. and that his licenses and eligibility for licensure as an insurance agent in this state be revoked. DONE and RECOMMENDED this 10th day of August, 1987 in Tallahassee, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 10th day of August, 1987. COPIES FURNISHED: Honorable William Gunter State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Don Dowdell, Esquire General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, Florida 32399-0300 William W. Tharpe, Jr., Esquire 413-B Larson Building Tallahassee, Florida 32399-0300 James R. Lavigne, Esquire 541 South Orlando Avenue Maitland, Florida 32751
Findings Of Fact THE REBUILD PROGRAM The DOT rebuild program began approximately ten years ago. Prior to that time, DOT replaced its heavy equipment about every seven or so years. However, the cost of replacing the equipment increased whereas the budget did not. Therefore, DOT began the rebuild program. The purpose of the rebuild program is to restore existing used equipment to its original condition. The rebuild consists of replacing or repairing, depending upon the need, all mechanical components of the equipment, including, among other things, the engine, transmission, electrical systems and hydraulic systems. Rebuilding the equipment is an extensive job, and DOT is not staffed to do it. A piece of equipment is usually seven to ten years old when it is rebuilt. When it is determined that a piece of equipment needs to be rebuilt, the district fleet manager goes over the equipment to decide what is wrong with it and writes detailed specifications for the work to be done. An Invitation to Bid is then issued which includes a description of the equipment to be rebuilt and the repair specifications for each piece of equipment. Bidders are advised that the purpose of the specification "is to obtain a finished rebuilt vehicle product equal to the original (or new) level of reliability, appearance and safety." Bidders are also advised that the warranty on the rebuilt vehicle must cover six months or 500 hours/6,000 miles, whichever comes first. The contract to rebuild the equipment is awarded to the low bidder. Recently, independent rebuilders, i.e., individuals or entities that are not factory-authorized dealers, have been the low bidders on wheel loader and wheel tractor contracts. However, despite DOT's efforts to ensure quality through the terms and conditions of the ITB, the work produced by independent rebuilders has been consistently substandard. PROBLEMS WITH INDEPENDENT REBUILDERS In recent years, DOT has encountered numerous problems with independent rebuilders. The basic problem is that the rebuilt equipment has not performed satisfactorily. The rebuild program is based on an expectation that rebuilding will extend the equipment's life by approximately 75 percent, or approximately five to seven years. However, of the engines rebuilt by independents, 80 percent have failed within the warranty period or shortly thereafter. The best work performed by an independent rebuilder could only be considered "mediocre." Other work performed by independent rebuilders has been totally incompetent. The problems with the product produced by the independent rebuilders are caused, in general, by the following: Monitoring Difficulties. Although DOT can make inspection visits during the rebuilding period, monitoring of independent rebuilders is difficult because some of the work is subcontracted out. One independent rebuilder has six subcontractors located in different counties. The result is that DOT cannot monitor the work in progress, and the independent rebuilder often does not inspect the work that it has subcontracted. Although DOT inspects the equipment prior to acceptance, the final inspection cannot reveal all defects that may exist. Lack of Financial Stability. Although the rebuilder is required to provide a six-month warranty, the warranty is useless if the rebuilder goes out of business. On several occasions independent rebuilders have gone out of business after delivering shoddy equipment. Materials Used. In the past, independent rebuilders have installed unauthorized parts and have used low grade materials in rebuilding the equipment. Lack of Experience with Product. The major problem with independent rebuilders is that they are not familiar with the product. The equipment rebuilt by DOT is very complicated. Most independent rebuilders do not have sufficient experience or training to perform a competent job. Further, most independents do not have the proper tools to perform the work. Some do not even have the general repair manuals required to perform the work. The problems with the independent rebuilders of wheel loaders and wheel tractors have been so severe that they threaten the continuation of the rebuild program. Many districts will not put equipment in the rebuild program because of the problems with the rebuilt products. The sloppy workmanship results in increased cost to DOT. Even when the rebuilt equipment breaks down within the warranty period and the rebuilder is still in business, the breakdown costs DOT because the equipment cannot be used while it is being repaired. This results in "downtime" in the field for DOT maintenance crews, a loss of productivity, and additional expense for DOT. If the rebuilder goes out of business, DOT has the added expense of performing the repair work. THE ITB LIMITATION In an effort to save the wheel tractor and wheel loader rebuild program, DOT determined that something had to be done. Defaulting individual contractors would not solve the problem. Default can only be determined after the equipment is rebuilt. Therefore, even if DOT does find a dealer in default, DOT still has the poorly rebuilt equipment. Further, defaulting individual contractors would not address the cause of the problem. The basic cause of the problem is that independent rebuilders simply do not have the experience, training, tools, or resources to perform a satisfactory job on this type of complicated equipment. In comparison, independent rebuilders have performed adequately on truck rebuilds. Having recognized the cause of the problem, DOT decided that the best way to salvage the rebuild program would be to ensure, to the greatest degree possible, that bidders on future wheel tractor and wheel loader rebuild projects have the training, tools, resources and experience necessary to perform the job. Therefore, when the ITB in this case was prepared for the rebuild of two John Deere wheel loaders and one John Deere wheel tractor, the following requirement was added: BIDS TO REBUILD THIS EQUIPMENT WILL BE AWARDED ONLY TO JOHN DEERE INDUSTRIAL DEALERS WHO ARE FACTORY-AUTHORIZED TO SELL AND SERVICE NEW JOHN DEERE INDUSTRIAL PRODUCTS. ALL PARTS USED MUST BE GENUINE JOHN DEERE PARTS. USED JOHN DEERE PARTS IN GOOD CONDITION MAY SOMETIMES BE USED, IF PRIOR APPROVAL FROM D.O.T. HAS BEEN OBTAINED. JOHN DEERE INDUSTRIAL DEALERS There are thirteen John Deere industrial dealerships in Florida, ten in Alabama, and twelve in Georgia. Each dealership covers a 60 to 70 mile radius. Although one dealer may own more than one dealership, Florida has eight different dealers operating the dealerships in this state. Each of these dealers has eight to ten million dollars in assets. John Deere requires certain financial resources before it will authorize a dealer. Only three John Deere dealers in the Eastern United States have ever gone out of business. When that occurred, the John Deere Corporation stepped in to ensure that the obligations of the dealer were fulfilled and all warranty work was performed. John Deere supports its dealers through a variety of programs. It has a factory training school to train mechanics how to repair and service John Deere equipment and also provides regional training schools. John Deere offers refresher courses as well as training on new equipment. It also provides training and repair manuals that are available only to John Deere dealers. In addition, John Deere has available for use by its dealers a computerized information bank which can be used to resolve unique repair problems. John Deere also provides a specialized equipment and tool list to advise dealers of tools which are necessary or will speed repairs for certain types of work on John Deere equipment. Although John Deere dealers stock many of the standard parts needed in rebuilding, John Deere provides an overnight service for any needed part that is not in stock. John Deere dealers provide a special service with their warranty work. Warranty service includes infield service trucks which go to the equipment and repair it, when possible, rather than bringing the equipment to the shop for all repair work. This means that there is less downtime on the equipment. Although John Deere dealers are not required to take advantage of the many support services offered by John Deere Corporation, as a practical matter all dealers do. Each John Deere dealer has to be concerned about the competency of its work and its service because John Deere Corporation can deauthorize a dealer and remove the dealer's franchise if there are problems. THE DECISION TO LIMIT BIDDERS The specification limiting bidders on the rebuild of two John Deere wheel loaders and one John Deere wheel tractor was included in the ITB by DOT with the intent of eliminating the problems associated with independent rebuilders and making the bid competitive. DOT knew that John Deere industrial dealers have a substantial financial base, have John Deere trained mechanics, have experience in rebuilding John Deere equipment, have the specialized tools and equipment needed to rebuild John Deere equipment, and have manuals and technical information on John Deere equipment. Further, DOT was aware that a John Deere dealer would have a strong motivation to perform quality work since the dealer could lose its franchise if it did not meet its obligations. DOT also determined that the specification limiting the bid to John Deere industrial dealers would still provide for competitive bidding. The number of dealers in Florida, Georgia and Alabama are sufficient to provide a competitive bid. Further, DOT has issued other rebuild ITBs limited to authorized dealers and they have resulted in competitive bids. The decision to limit the bidders in this case to authorized John Deere industrial dealers was a well-reasoned decision based on DOT's past experience and its desire to salvage the wheel loader and wheel tractor rebuild program. The decision clearly was not arbitrary or capricious. Indeed, the decision to limit the bidding to authorized dealers appeared to be the only viable solution to the problem with the wheel tractor and wheel loader rebuild program. Further, there was no evidence presented to indicate that the limitation would result in noncompetitive bids. Indeed, three bids had been received in response to the ITB at the time of this protest. USE OF JOHN DEERE PARTS The ITB specifications state that genuine John Deere parts must be used in the rebuild. Genuine John Deere parts are superior to many other brands. A great deal of time is spent on the design of even the smallest John Deere part. John Deere also uses superior material. Thus, the specification of genuine John Deere parts sets a standard of quality that must be met. It does not preclude the use of an equivalent product. Paragraph 7 of the General Conditions of the ITB provides: MANUFACTURER'S NAMES AND APPROVED EQUIVALENTS: Any manufacturer's names, trade names, brand names, information and/or catalog numbers listed in a specification are for information and not intended to limit competition. The bidder may offer any brand for which he is an authorized representative, which meets or exceeds the specifications for any item(s)... If bids are based on equivalent products, indicate on the bid form the manufacturer's name and number. Bidder shall submit with his bid, cuts, sketches, and descriptive literature and/or complete specifications... The State of Florida reserves the right to determine acceptance of item(s) as an approved equivalent... Bids lacking any written indication of intent to bid an alternative brand will be received and considered in complete compliance with the specifications as listed in the bid form. The purchaser is to be notified of any proposed changes in (a) materials used ... However changes shall not binding upon the State unless evidenced by a Change Notice issued and signed by the State. (e.s.) The above provision establishes that equivalent parts may be substituted for John Deere parts. Petitioner relies on the DOT Purchasing Manual to support its position that the ITB precludes the use of equivalent parts. The purchasing manual provides guidelines for writing bid specifications. It states that the words "or equivalent" should be used after a brand name. DOT did not put the words "or equivalent" after the words "genuine John Deere parts" as suggested by the manual. However, the manual also states that when the specification is meant to be restrictive, the words "no substitute" should be added. The specification in the ITB did not include the words "no substitute." THE PETITIONER Ken-Core Enterprises, Inc., is an independent rebuilder. Ken-Core is located in Sorrento, Florida, which is near Mount Dora. Ken-Core also has a shop in Tallahassee. Ken-Core has previously bid on rebuild equipment work and has received contracts for rebuild work from DOT. The provision in the ITB limiting the bidders to authorized John Deere dealers eliminates Ken-Core as a bidder on this project. There was no competent evidence presented to establish that petitioner would not be qualified to bid on the project were it not for the challenged specification. Petitioner first received notice of the ITB on October 9, 1987. Petitioner filed a notice of protest on October 12, 1987, and its formal protest on October 14, 1987.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered finding that the challenged provision in ITB OC2787E1, restricting the award of the bid to authorized John Deere industrial dealers, is not invalid and dismissing the protest filed by Ken-Core Enterprises, Inc. DONE AND ORDERED this 28th day of January, 1988, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of January, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 887-4706BID Rulings on respondent's proposed findings of fact: Accepted. Accepted generally. Accepted, except as to last sentence which is rejected for lack of competent, substantial evidence. 1/ First sentence rejected for lack of competent substantial evidence, remainder accepted generally. Accepted generally that default of individual contractors would not solve the problem. Accepted generally. Accepted. Accepted generally. Accepted. Accepted. 11-13. Accepted generally. Accepted. Rejected in that evidence presented at hearing did not establish that petitioner had been notified of the alleged default under procedures set forth in Rule 13A-1.006, F.A.C. APPENDIX ENDNOTE 1/ In that a transcript of the hearing was not filed, a rejection of a finding for lack of competent substantial evidence means only that the notes of the hearing officer do not reflect that such evidence was given and that the hearing officer does not specifically recall such evidence. It does not mean that there was contrary evidence or that such evidence was rejected as not credible or reliable. COPIES FURNISHED: Ken Evans, President Ken-Core Enterprises, Inc. 222A Wolf Branch Road Sorrento, Florida Jay O. Barber, Esquire Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0458 Kaye N. Henderson, P.E. Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 ATTN: Eleanor F. Turner, Mail Station 58 Thomas H. Bateman, III, Esquire General Counsel Department of Transportation Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32399-0458
The Issue The issue is whether Respondent, Mo-Bo Enterprises, Inc., or its sureties are indebted to Petitioner, Suwanee Farms, for corn sold to Mo-Bo Enterprises, Inc.
Findings Of Fact Based upon consideration of the testimony of witnesses and the documentary evidence, the following relevant findings of fact are determined: Petitioner, Suwanee Farms, is a producer of agricultural products in Florida. At all times relevant to this proceeding, Respondent, Mo-Bo Enterprises, was licensed by the Department of Agriculture and Consumer Services as a dealer of agricultural products. During the period between September 20, 1994 and October 12, 1994, inclusive, Respondent, Mo-Bo Enterprises, was bonded by Co-Respondent, General Accident Insurance Company of America. Between October 13, 1994 and October 29, 1994, inclusive, Respondent, Mo-Bo Enterprises, was bonded by Co-Respondent, Armor Insurance Company. Petitioner sold corn to Respondent, Mo-Bo Enterprises, between the period September 20, 1994 and October 29, 1994. Respondent was given a Bill of Lading for each order of corn it received. Petitioner sent an invoice to Mo-Bo Enterprises for each shipment of corn that was delivered to Mo-Bo Enterprises. The amount of each invoice represented the price of the corn to which Petitioner and Respondent, Mo-Bo Enterprises, had agreed. Petitioner received a complaint from Mo-Bo Enterprises regarding corn which Petitioner had shipped to Mo-Bo Enterprises on October 4, 1994. Based on this complaint, Petitioner reduced the price of the corn by seventy-five cents (.75) per crate. As a result of this reduction, the adjusted total price for the shipment of corn reflected on Invoice No. 002392 is $1050.00, rather than the $1,200.00 shown. The terms of payment are set forth on the face of the invoice and require payment within thirty (30) days of the invoice date. The total amount of the invoices for shipments of corn sold and delivered to Mo-Bo Enterprises by Petitioner between September 20, 1994 and October 12, 1994, is $23,950.00. The total amount invoiced by Petitioner to Mo-Bo Enterprises, for corn sold and shipped to Mo-Bo Enterprises between October 13, 1994 and October 29, 1995, is $13,716.00. Despite repeated demands by Petitioner, Mo-Bo Enterprises has refused to pay for any of the shipments of corn. As of the date of the formal hearing, the invoice for each shipment of corn made between September 20, 1994 and October 29, 1994, remained due and owing and unpaid.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a Final Order (1) requiring Respondent, Mo-Bo Enterprises, Inc., or its surety Co-Respondent, General Accident Insurance Company of America, to pay Petitioner $23,950.00, and (2) further directing Respondent, Mo-Bo Enterprises, Inc., or its surety, Co-Respondent Armor Insurance Company, to pay Petitioner $13,716.00. DONE and ENTERED this 17th day of October, 1995, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD 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 17th day of October, 1995. APPENDIX To comply with the requirements of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted. Petitioner's proposed findings of fact. Paragraph 7. Accepted and incorporated to the extent not subordinate and unnecessary. COPIES FURNISHED: Richard Tritschler, Esquire Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810 Mo-Bo Enterprises, Inc. P.O. Box 1899 Pompano Beach, Florida 33061 Don Bieda, Esquire Legal Department General Accident Insurance Co. 436 Walnut Street Philadelphia, Pennsylvania 19105-1109 Joseph S. Hall & R. P. Wight Suwanee Farms Route 2 Box 3641 O'Brien, Florida 32071 Mark J. Albrechta, Esquire Legal Department Armor Insurance Company P.O. Box 15250 Tampa, Florida 33684-5250 Brenda Hyatt, Chief Department of Agriculture and Consumer Services 508 Mayo Building Tallahassee, Florida 32399-0800 Bill Reinhardt, Esquire Rob Reinhardt, Esquire P.O. Box 1287 Tipton, Georgia 31793 Charles Barnard, Esquire 200 SE 6th Street Ste. 205 Ft. Lauderdale, Florida 33301 Bradford A. Thomas, Esquire Suite 900 Brickell Centre 799 Brickell Plaza Miami, Florida 33131-2805 Honorable Bob Crawford Commissioner Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810
Findings Of Fact Respondent, Ronald T. Pascale (Pascale), was at all times material hereto licensed by the State of Florida as a general lines agent and health agent. Pertinent to these proceedings, Pascale was licensed by Fortune Life Insurance - Company (Fortune Life) as a health insurance agent, but not as a life insurance agent. Respondent Leonard C. Chandler (Chandler), was at all times material hereto licensed by the State of Florida as a general lines agent, and as a life and health agent. Pertinent to these proceedings, Chandler was licensed by Fortune Life as a health insurance agent, but not as a life insurance agent. Pascale and Chandler did business through Briar Bay Insurance Agency, Inc. (Briar Bay). Briar Bay is an incorporated general lines insurance agency selling general lines insurance products through licensed agents and unlicensed sales people acting under the supervision and control of a licensed general lines agent. Briar Bay conducted business from two agency locations: 14229 South Dixie Highway, Miami, Florida (the Dixie Highway office); and 13061 North Kendall Drive, Miami, Florida (the Kendall office). Pascale is the president and a director of Briar Bay, and the general lines agent for its Kendall office. Chandler is the general lines agent for the Dixie Highway office. Pascale did, however, frequently visit the Kendall office to oversee and manage the writing of insurance. As the general lines agent for their respective offices, Pascale and Chandler were required to be in active full time control of their operations. The parties have stipulated that, pursuant to Section 626.734, Florida Statutes, Pascale and Chandler are personally and fully liable and accountable for any wrongful acts, misconduct, or violations of any provisions of this code by them or any person who sold the insurance cover ages at issue in this proceeding. David Trudnak (Pascale Complaint-Count I) On January 18, 1986, David Trudnak called the Kendall office to get a quote for automobile insurance on his 1984 Gran Prix. Mr. Trudnak's automobile was financed through GMAC, and he informed the salesperson, Ernesto Martinez, that he wanted the minimum coverage necessary to satisfy that company. Mr. Trudnak was given a quote of approximately $1,230. Late that afternoon, near closing time, Mr. Trudnak went to the Kendall office and was waited on by Mr. Martinez. Mr. Trudnak again told Mr. Martinez that he wanted the minimum coverage necessary to satisfy GMAC. Mr. Martinez laid a number of papers before Mr. Trudnak and told him to "sign here, here, here, and here". Among the papers he signed were two applications to Fortune Life for accidental death policies and an application to Nation Motor Club, even though he never asked for or desired such additional coverages. 2/ The two Fortune Life policies generated a premium of $250, and the motor club member- ship a premium of $20. Mr. Trudnak was misled to believe that the quote he was given, and the premium he paid, was for the minimum coverage he had requested. Had he been accorded the minimum coverage he requested, Mr. Trudnak's premium would have been $1,006 instead of the $1,276 he was charged. Juan M. Leon (Pascale Complaint-Count II) Late in the afternoon of January 20, 1986, Juan M. Leon went to the Kendall office and was waited on by Mr. Martinez. Mr. Leon informed Mr. Martinez that he had just purchased a new van, and that he needed automobile insurance to satisfy the financing agency. Mr. Martinez laid a number of papers before Mr. Leon to sign. Among the papers he signed were three applications to Fortune Life for accidental death policies and an application to Nation Motor Club, even though he never asked for or desired such additional coverages. The three Fortune Life policies generated a premium of $400, and the motor club membership a premium of $20. Mr. Leon was misled to believe that the quote he was given, and the premium he paid, was for the automobile coverage he had requested. Had he been accorded the coverage he requested, Mr. Leon's premium would have been $1,367 instead of the $1,787 he was charged. Carol Lynn Wilson (Pascale Complaint-Count III, Chandler Complaint-Count I) On January 22, 1986, Carol Lynn Wilson went to the Dixie Highway office, along with her father, to purchase automobile insurance. She was waited on by a man named Bill, but Pascale also participated in the transaction. Ms. Wilson advised the salesman that she wanted the least expensive full coverage policy she could get. The salesperson laid a number of papers before Ms. Wilson to sign. Among the papers she signed was an application to Fortune Life for a life insurance policy 3/ and an application to nation Motor Club, even though she never asked for or desired such additional coverages. 4/ The Fortune Life policy generated a premium of $35, and the motor club membership a premium of $20. Ms. Wilson was misled to believe that the quote she was given, and the premium she paid, was for the least expensive policy she had requested. She was never informed that the life insurance policy or motor club membership were separate from, and in addition to, the basic coverage she desired. Had she been accorded the coverage she requested, Ms. Wilson's premium would have been $593 instead of the $748 she was charged. David Peters (Pascale Complaint-Count IV, Chandler Complaint-Count II) On January 23, 1986, David Peters went to the Dixie Highway office to purchase automobile insurance. After explaining to the salesperson that he needed full coverage because his car was financed, the salesperson laid a number of papers before him to sign. Among the papers he signed was an application to Fortune Life for a life insurance policy and an application to Nation Motor Club, even though he never asked for or desired such additional coverages. 5/ The Fortune Life policy generated a premium of $150, and the motor club membership a premium of $20. Mr. Peters was misled to believe that the quote he was given, and the premium he paid, was for the automobile coverage he had requested. Had he been accorded the coverage he requested, Mr. Peter's premium would have been $1,686 instead of the $1,856 he was charged. Herbert Cone (Pascale Complaint-Count V, Chandler Complaint-Count III) On January 21, 1986, Herbert Cone went to the Dixie Highway office to purchase automobile insurance. After explaining to the salesperson that he desired liability coverage, the salesperson laid a number of papers in front of him to sign. Among the papers Mr. Cone signed was an application to Fortune Life for a life insurance policy and an application to Nation Motor Club, even though he never requested or desired such additional coverages. The Fortune Life policy generated a premium of $50, and the motor club membership a premium of $20. Mr. Cone was misled to believe that the quote he was given, and the premium he paid, was for the automobile coverage he had requested. Had he been accorded the coverage he requested, Mr. Cone's premium would have been $425 instead of the $495 he was charged. Briar Bay Agency Forms In each of the foregoing transactions the Briar Bay agency representative obtained the signature of the customer on numerous forms, including the auto binder application, the Nation Motor Club application, and the Fortune Life application. Each of these applications were printed on what is commonly referred to as NCR paper, which consists of an original and two copies. The original is designed to be submitted to the issuing company, a copy retained by the agency, and a copy given to the customer. The Briar Bay representatives consistently failed to provide their customers with a copy of any of these applications, and thereby further obscured their deceptions. The Briar Bay representative also secured the signature of its customers on its own form. This form, consisting of one sheet of paper printed front and back, contained spaces for the customer's signature in up to 5 places. By signing the form, the customer was ostensibly acknowledging the rejection of certain coverages, the limitation on who would be covered in the operation of the vehicle, and an explanation of the coverages and their costs (the "Coverage and Cost Breakdown"). While the customers in each of the foregoing transactions signed the "Coverage and Cost Breakdown" portion of Briar Bay's form, as well as other sections, the proof established that such acknowledgment was routinely obtained in blank, or without the cost portion of the breakdown completed. The customers were routinely told to sign where the representative had marked an "X, and were led to believe that what they signed comported with the coverage they had requested. Under such circumstances, the customer's signature did not constitute an informed or meaningful acknowledgement. 6/ Policy Mixing The proof further established that Briar Bay representatives would routinely assemble the automobile insurance policies to include the Fortune Life policy and the Nation Auto Club "auto rental reimbursement riders. This practice further obscured the fact that such cover ages were not part of the automobile insurance its customers had sought to purchase. Commission Schedules An agent's commission on the sale of automobile insurance coverage (such as liability, PIP, comprehensive and collision) averages between 10-15 percent. The commission paid by Fortune Life on its policies was 90 percent, and the commission paid by Nation Motor Club was 80 percent. In the instant case, between January 18, 1986, and January 23, 1986, Briar Bay's representatives generated $796.50 in commissions on Fortune Life policies and $80 in commission on Nation Motor Club memberships through only five customers. 7/ Clearly, Respondents had a strong financial motive to push these products.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the licenses and eligibility for licensure as an insurance agent of Respondents, Ronald T. Pascale and Leonard C. Chandler, be REVOKED. DONE AND ORDERED this 24th day of June, 1987, in Tallahassee, Florida. WILLIAM J. KENDRICK Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of June, 1987.
