The Issue Whether Respondent, Chase Landscaping and Nursery, Inc. (Chase Landscaping), and its surety, Fidelity & Deposit Company of Maryland (Fidelity), are liable for funds due to Petitioners from the sale of agricultural products.
Findings Of Fact Petitioners Dr. R.H. Biggs and Dr. Susan V. Kossuth own and do business as BK Cedars. BK Cedars is a producer of agricultural products as defined by Section 604.15(5), Florida Statutes. Respondent Chase Landscaping is a licensed and bonded dealer in agricultural products as defined by Section 604.15(1), Florida Statutes. During the time period covered by the transaction in question Chase Landscaping was covered by bond number 7507757 issued by Fidelity. On May 24, 2005, Petitioners received a phone message from Chase Nurseries, Inc. (Chase Nurseries) inquiring about the possible purchase of 157 five to six feet Leyland cypress trees. Chase Nurseries is a separate entity from Chase Landscaping, although both are owned by the same person, Jan Chase. Chase Nurseries is also located at the same address as Chase Landscaping, but apparently is not licensed and has no bond. Jan Chase's customer wanted Leyland cypress trees that were six feet tall. BK Cedars sold Leyland cypress five- to-six feet tall for $23.00 each. Trees six-to-seven feet tall were offered for sale priced at $27.00 each. Chase opted to purchase the trees five-to-six feet tall at the lower price. On June 1, 2005, Mike Bruns and another employee from Chase Nurseries came out to pick up the trees. Bruns declined the offer to choose, measure and flag the trees himself, and instead watched Susan Kossuth do so. Mike Bruns loaded the trees into the truck, paid for the trees with a Chase Nurseries check that he asked Petitioners to hold for a day, and left. The cypress trees were billed for $3,611.00. Although a check was tendered for that amount, it was returned to Petitioners marked "insufficient funds." Shortly thereafter, Jan Chase stopped payment on the check. Mr. Chase claimed that he was refusing to pay for the trees because his customer indicated that they were far from six feet tall and refused them. It is irrelevant how tall the trees actually were. Chase Nurseries had the opportunity to measure them and chose not to do so before accepting them. If they were significantly shorter than six feet, as claimed, Mike Bruns should have been able to tell that they were not tall enough when he loaded them into the truck. Further, Petitioners did not represent the trees as being six feet or over. They represented them as being five- to-six feet tall, which would not have met the specifications of Chase Nurseries' client in any event. Petitioners made several efforts to collect the funds due them for purchase of the trees. Dr. Biggs made numerous telephone calls to Mike Bruns in an effort to receive payment. After Chase Nurseries stopped payment on the check, Petitioners filed a complaint with the State Attorney's office in addition to filing a claim through the Department of Agriculture and Consumer Services. All responses by Jan Chase were through Chase Nurseries. When Petitioners filed their original complaint with the Department of Agriculture, they listed the respondent as "Chase Landscaping and Nursery, Inc.," and listed "Chase Nurseries" as a trade or d/b/a name for Chase Landscaping. The Department directed Petitioners to remove this designation from the complaint filed by Petitioners, because Department staff advised that Chase Landscaping did not have a "d/b/a" name. When Jan Chase filled out the Answer for Respondent, he listed the Respondent as "Jan Chase d/b/a Chase Nurseries, Inc." He did not indicate that Petitioners had named the wrong party. He also indicated on the form Answer that the trees were purchased by Jan Chase. Chase testified that his current bond for Chase Landscaping is being held up by Fidelity because of this case, but that Chase Landscaping had nothing to do with this case. He claimed Chase Nurseries did not meet the threshold amount required to hold a bond. This transaction alone exceeds the threshold required by the Department of Agriculture for an agricultural dealer to be licensed and bonded. Petitioners came to hearing believing that the entity with which they dealt was covered by the Fidelity bond. They did not realize that Chase Landscaping was a separate entity from Chase Nurseries.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That Petitioners' Amended Complaint against Respondents Chase Landscaping and Fidelity be dismissed. DONE AND ENTERED this 28th day of July, 2006, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON 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 28th day of July, 2005. COPIES FURNISHED: Dr. Robert H. Biggs Dr. S. V. Kossuth 20874 Northwest 91st Street Alachua, Florida 32615 Jan Chase Chase Landscaping and Nursery, Inc. 10675 Southwest 100th Avenue Ocala, Florida 34481-7321 Robert L. Lawrence Fidelity & Deposit Company of Maryland 3910 Keswick Road Baltimore, Maryland 21211 Kathy Alves Fidelity & Deposit Company of Maryland Post Office Box 87 Baltimore, Maryland 21203 Chris Green, Chief Bureau of License and Bond Department of Agriculture and Consumer Services 407 South Calhoun Street, MS 38 Tallahassee, Florida 32399-0800 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services 407 South Calhoun Street, Suite 520 Tallahassee, Florida 32399-0800
The Issue The issue in this case is whether the Respondent, R & R Sod Contractors, Inc., owes the Petitioner for sod purchased from the Petitioner and, if so, the amount presently owed.
Findings Of Fact The Petitioner is in the business of raising and selling sod in the State of Florida. During the past few years, R & R has been a frequent customer of the Petitioner and has purchased large amounts of sod from the Petitioner. Prior to April of 1998, R & R had a credit account with the Petitioner. The terms of the credit agreement included the following: "In the event the account becomes delinquent, and will be referred to a licensed collection agency or an attorney, Customer agrees to pay all costs and expenses of collection including reasonable attorney's fees, court costs, and costs incurred on appeal." During April of 1998, R & R's account with the Petitioner became delinquent. The Petitioner referred the delinquent account to an attorney. The attorney filed a lawsuit against R & R and also filed a complaint with the Department to collect the delinquency by asserting a claim against the bond posted by R & R. The 1998 account delinquencies were resolved in December of 1998, when the Department issued a check to the Petitioner in the amount of $48,431.00. That check paid the full amount of all unpaid invoices from the Petitioner to R & R as of December of 1998. In the process of collecting the $48,431.00 debt from R & R during 1998, the Petitioner incurred costs and attorney's fees in the amount of $1,644.00. These costs and attorney's fees were in addition to the $48,431.00 debt that was paid by the check from the Department. In January of 1999, the Petitioner again began to sell sod to R & R, but only on a cash basis. In the latter part of February of 1999, R & R bought approximately $2,500.00 of sod from the Petitioner which they paid for with a $2,500.00 cashier's check payable to the Petitioner. Although the cashier's check was given to the Petitioner by R & R, the face of the cashier's check identified the remitter as "Ely Sod, Inc." 3/ At the time the Petitioner received the $2,500.00 cashier's check described above, the Petitioner had an unsatisfied judgment against Ely Sod, Inc. When the cashier's check first went through the Petitioner's bookkeeping system, it was treated as a payment by Ely Sod, Inc., to the Petitioner, and was applied to reduce the amount of the judgment owed by Ely Sod, Inc. Consequently, none of the $2,500.00 cashier's check was initially applied towards the amounts owed by R & R. The misapplication of the proceeds of the $2,500.00 cashier's check discussed above apparently produced a great deal of confusion between the Petitioner and R & R regarding the status of R & R's account with the Petitioner. In this regard the Petitioner was especially concerned about the fact that R & R, which was supposed to be on a "cash only" basis, appeared to be $2,500.00 in arrears in its payments to the Petitioner. During the course of resolving the issue of the misapplied cashier's check, the Petitioner became aware of the fact that R & R had never paid the Petitioner's costs and attorney's fees related to the 1998 litigation. Ultimately, it was agreed between the attorneys representing the Petitioner and R & R that the proceeds of the $2,500.00 cashier's check should be applied to pay the costs and attorneys fees in the amount of $1,644.00 incurred by the Petitioner in the 1998 litigation, and that the balance of $856.00 would be paid to R & R or would be applied to any outstanding debts of R & R. Consistent with the agreement, $1,644.00 was applied to pay the Petitioner's costs and attorneys fees, and $856.00 was applied towards the unpaid amounts owed by R & R for sod purchased from the Petitioner Review of the invoices, payments, and accounts between the Petitioner and R & R reveals that, after the agreed application of funds described in paragraph 7, above, R & R still owes the Petitioner the amount of $1,844.00 for sod purchased from the Petitioner. 4/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order (1) finding that R & R is indebted to the Petitioner in the amount of $1,844.00; (2) directing R & R to make payment to the Petitioner in the amount of $1,844.00 within 15 days following the issuance of the order; and (3) announcing that if payment in full of this $1,844.00 indebtedness is not timely made, the Department will seek recovery from ICNA, R & R's surety. DONE AND ENTERED this 7th day of April, 2000, in Tallahassee, Leon County, Florida. MICHAEL M. 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 7th day of April, 2000.
The Issue This is a license discipline proceeding in which the Petitioner seeks to take disciplinary action against the two Respondents, one individual and one corporation, on the basis of alleged violations set forth in an eight-count1 Administrative Complaint. The Respondents are charged with violation of Section 475.25(1)(b), Florida Statutes, and with multiple violations of Section 475.25(1)(e), Florida Statutes.
Findings Of Fact The Petitioner is a state government licensing and regulatory agency charged with responsibilities and duties which include the prosecution of Administrative Complaints against licensees under Chapter 475, Florida Statutes. Respondent Hilda H. Bell is now, and was at all times material hereto, a licensed Florida real estate broker, having been issued license number 0349586 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker at Sharmic Realty, Inc., at the following address: 8701 Willes Road, Unit 16-308, Coral Springs, Florida 33067. Respondent Sharmic Realty, Inc., is now, and was at all times material hereto, a corporation registered as a Florida real estate broker, having been issued license number 0243150 in accordance with Chapter 475, Florida Statutes. The last license issued was at the following address: 8701 Willes Road, Unit 16- 308, Coral Springs, Florida 33067. At all times material hereto, Respondent Hilda H. Bell was licensed and operating as the qualifying broker of, and an officer of Respondent Sharmic Realty, Inc. On September 27, 1994, Petitioner's Investigator Margaret R. Hoskins audited Respondents' escrow accounts. The audit revealed that the Respondents maintained Property Management Escrow Account Number 00300066617 at Glendale Federal Bank, Fort Lauderdale, Florida. A total trust liability for the Respondents' Property Management Escrow Account could not be determined because the Respondents did not have complete and accurate records. On August 11, 1992, the Respondents deposited $20,000.00 into their Property Management Escrow Account for a person who did not have a checking account. On August 11, 1992, the Respondents issued escrow check number 0972 in the amount of $20,000.00. On August 18, 1992, the Respondents loaned Cecil Sailsman $500.00 from the Property Management Escrow Account. On January 12, 1993, the Respondents deposited $22,496.91 in personal funds into the Property Management Escrow Account. The Respondents subsequently disbursed $15,045.00 of the personal funds from the Property Management Escrow Account.
Recommendation On the basis of all of the foregoing, it is RECOMMENDED that the Florida Real Estate Commission issue a final order in this case to the following effect: Dismissing Counts III and IV of the Administrative Complaint; Concluding that the Respondents are guilty of the violations charged in Counts I, II, V, VI, VII, and VIII of the Administrative Complaint; and Imposing administrative penalties consisting of the following: An administrative fine against Respondent Hilda H. Bell in the amount of three thousand dollars ($3,000.00); A six month suspension of the real estate brokerage license of Respondent Hilda H. Bell; A one year period of probation for the Respondent Hilda H. Bell, to begin immediately following the period of suspension; A requirement that the Respondent Hilda H. Bell complete additional education in the form of a seven hour course in real estate brokerage escrow management during her period of probation; and A reprimand of Respondent Sharmic Realty, Inc. DONE AND ENTERED this 2nd day of April 1996 in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH, 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 2nd day of April 1996.
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.
Findings Of Fact At all times pertinent to the allegations in issue, the Respondent was licensed as a real estate broker in Florida. However, since April 28, 1989, his broker's license has been nonactive. The Petitioner, Division of Real Estate, is the state agency responsible for the policing of and administration of rules governing the real estate profession in Florida. In May, 1987, Mary Louise Hockman and her husband, Elden D. Hockman, now deceased, were interested in purchasing a flea market somewhere in Florida. A requirement was that it have additional acreage on which a recreational vehicle park could be established. At just about that time, Rickey L. Reynolds, a family friend, told them of the Cypress Hut, a Florida corporation, which owned and operated a flea market near Okeechobee, Florida. The property in question was sufficiently large to accommodate a recreational vehicle park. The Hockmans went to look at the property in question and, satisfied with what they saw, made an offer to buy it through the Respondent who was the agent for the owner, Mr. James Evans. This offer was memorialized in a purchase and sale agreement executed on May 23, 1987, signed by Mrs. Hockman and Mr. Reynolds, her partner, as buyers, and the Cypress Hut Flea Market, through James H. Evans, as seller. The purchase price was $550,000.00. Ten Thousand dollars was paid by Mrs. Hockman to the Respondent as an initial down payment. An additional $117,500.00 was to be paid at time of closing, and the remaining $422,500.00 was to be payable on a semiannual basis at 8% interest. The agreement also called for a commission of $27,500.00 to be paid to the Respondent, secured by a note between the buyer and the broker. Closing was to take place at a reasonable time after all contingencies, outlined separately, were fulfilled. These contingencies were memorialized in an addendum to the purchase and sale agreement signed by both the buyer and the seller on May 29, 1987. They included: Buyer's inspection and approval of all books and records of the corporation, Approval of a 55 unit recreational vehicle camp ground by county and city zoning officials, including environmental approval, and Seller's providing a survey proving that 17.2 acres was contained in the total real estate parcel to be conveyed. The addendum also provided that in the event these contingencies could not be satisfied to the buyer's "full satisfaction", all earnest money would be returned immediately to the buyer upon written demand. To satisfy these requirements, the seller provided the Hockmans with several sheets of paper containing yearly figures for the operation of the flea market. These figures did not constitute the full books and records of the corporation relating to the flea market operation and were not satisfactory to the Hockmans. The Hockmans were also provided with several 1983 applications submitted by Cypress Hut corporation to the county zoning officials, which were subsequently approved, for the establishment of a mobile home park on the property. A mobile home park approval is sufficient approval for the establishment and operation of a recreational vehicle park. However, the Hockmans were never provided with a survey clearly defining the extent of the real property in question. On September 21, 1987, Mrs. Hockman wrote to the Respondent indicating that if the formal contract for the sale was not signed by October 1, 1987, they would consider their offer withdrawn and demand a return of the earnest money paid, plus interest. This letter, sent to the Respondent by certified mail, was received by Respondent's wife who signed for it. Respondent claims, however, that he never received it. He and his wife were separated at the time, he was not living with her, and she neither gave it to him nor told him it had arrived. Respondent's wife was not called to verify his claim, but Petitioner was unable to present any evidence to disprove it, and it is accepted as fact. Nonetheless, on or about September 27, 1987, Mrs. Hockman personally spoke with the Respondent at the Cypress Hut Flea Market and directly reiterated to him the substance and terms of that letter she had sent him. In response, Respondent indicated he would speak to Mr. Evans about the Hockmans' demand. Shortly thereafter, Respondent wrote to Mr. Hockman, referring to an alleged statement by Hockman's attorney that all contingencies had been satisfied, and acknowledging that Cypress Hut was ready and willing to close as of October 1, 1987. No independent evidence of such an opinion by Hockman's attorney was forthcoming and that claim is found to be without merit. Enclosed with Respondent's letter, was a letter he had received from Evans making a demand upon him for the disbursement of the earnest money, based on Hockman's indication of no further interest in going through with the purchase. Notwithstanding this direct notice, neither Mr. Evans nor the Respondent contacted the Hockmans prior to October 1, 1987, and after that date, the Hockmans made several telephone calls to the Respondent which went unanswered. Finally, because they had made plans to go on vacation, they departed the area and were assured by Mr. Reynolds, their partner in the proposed purchase, that he would contact Respondent in their absence. Respondent denies he did and there is, again, no evidence to the contrary. When the Hockmans returned to the area, they contacted Respondent and advised him again that they wanted their earnest money refunded as they were considering the agreement void. Respondent did not repay the money in question. Instead, on October 13, 1987, he withdrew the $10,000.00 paid to him by the Hockmans, which he had placed in his escrow account pending closing, and on October 15, 1987, purchased a cashier's check in the amount of $5,000.00 payable to James H. Evans. This represented one-half of the earnest money paid by the Hockmans. He converted the other $5,000.00 to his own use. Respondent justifies doing this on the basis of a previous phone call he claims to have made to the Division of Real Estate in which he outlined the circumstances and sought the Division's guidance. He states he was advised by a gentleman, further unidentified, who indicated he had two options: to forward the money to the Division for agency arbitration of the dispute between the Hockmans and Mr. Evans, or to adhere to the terms of the agreement, consider the deposit forfeited, disburse the funds to the seller and himself, and rely upon the courts to determine, upon claim filed by the buyer, who was entitled to the funds. He chose the latter though it is found to be unlikely he got such advice. Suit was thereafter filed by Mrs. Hockman against not only the Respondent but also the Cypress Hut. Respondent chose not to retain counsel but to rely on counsel for his co-defendant to represent him. Prior to hearing, however, the claim against Cypress Hut was abandoned, its counsel released, and Respondent was left as sole defendant. He still did not seek a delay to retain counsel and at the very brief hearing held before the Circuit Judge in December, 1988, a Judgement was entered against him in favor of Mrs. Hockman for the full $10,000.00, plus interest and costs. With knowledge of the terms of the Judgement, Respondent still has not satisfied it through reimbursement of Mrs. Hockman, claiming he has no assets with which to do so. Discovery in aid of execution revealed he had no assets, either realty or personalty, upon which to execute since all his assets were transferred to his wife prior to suit. When Mrs. Hockman filed her initial complaint with the Division, an investigation was conducted by Mr. Maye who recommended that action be taken against Respondent based on evidence of violations. However, it would appear that a contrary position was taken by the Division which advised Respondent, in writing, that a determination of no probable cause had been made. However, after the judgement was entered against Respondent, the Division reversed itself and filed the instant Administrative Complaint.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED that Respondent, GEORGE RICHARD MCKOWEN's license as a real estate broker in Florida be suspended for three years, that he pay an administrative fine of $3,000.00, and that he be reprimanded. RECOMMENDED this 20th day of March, 1990, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 20th day of March, 1990. COPIES FURNISHED: Steven W. Johnson, Esquire DPR-Division of Real Estate 400 W. Robinson Street P. O. Box 1900 Orlando, Florida 32802 George Richard McKowen 3503 14th Street, West, #76 Bradenton, Florida 34205 Kenneth E. Easley General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller, Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801
The Issue Whether, under the provisions of sections 604.15 - 604.34, Florida Statutes, Lester Towell Distributors, Inc., is entitled to recover $2,098 for agricultural products ordered by and delivered to VBJ Packing, Inc
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made. Lester Towell is a dealer in Florida-grown agricultural products. VBJ is a dealer in Florida-grown agricultural products. On May 22, 1995, VBJ placed an order with Lester Towell to purchase a quantity of extra-large green bell peppers. Lester Towell delivered 200 boxes of such peppers to VBJ on May 23, 1995. To fill this order, Lester Towell purchased 63 boxes of peppers from producer Ott Farms, Inc., in Estero, Florida, and 137 boxes from producer Thomas Produce, in Boca Raton, Florida. Lester Towell did not act as agent for these producers; it purchased the products outright. On May 22, 1995, VBJ placed an order with Lester Towell to purchase a quantity of yellow corn. Lester Towell delivered 100 boxes of such corn to VBJ on May 24, 1995. To fill this order, Lester Towell purchased 100 boxes of corn from producer Wilkinson-Cooper, in Belle Glade, Florida. Lester Towell did not act as agent for this producer; it purchased the products outright. On May 24, 1995, VBJ placed an order with Lester Towell to purchase a quantity of jalapeno peppers, white corn, and red radishes. Lester Towell delivered two boxes of jalapeno peppers, 26 boxes of white corn, and 20 boxes of red radishes to VBJ on May 25, 1995. To fill this order, Lester Towell purchased 2 boxes of jalapeno peppers from producer Ott Farms, Inc., in Estero, Florida, and 26 boxes of white corn and 20 boxes of red radishes from producer American Growers in Belle Glade, Florida. Lester Towell did not act as agent for these producers; it purchased the products outright. Lester Towell filed its complaint with the Department of Agriculture and Consumer Services ("Department") pursuant to the provisions of section 604.21(1), Florida Statutes, because VBJ did not pay for the products identified above. There is, however, no evidence to establish that Lester Towell was a producer or the agent or representative of a producer with respect to the products for which it seeks payment. It is, therefore, not a "person" entitled to file a complaint with the Department against VBJ and its surety.
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 dismissing the complaint of Lester Towell Distributors, Inc. DONE AND ENTERED this 3nd day of July 1996 in Tallahassee, Leon County, Florida. PATRICIA HART MALONO 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 3rd day of July 1996
The Issue An administrative complaint dated March 18, 1992 alleges that Respondent violated Section 475.25(1)(b), F.S., by fraud, misrepresentation, false promises, concealment, dishonest dealing and breach of trust in a business transaction with George and Mable Bush. The issue in this proceeding is whether that violation occurred and if so, which discipline is appropriate.
Findings Of Fact Respondent, Dilsa M. Fish, was at all times material hereto a licensed real estate salesperson in the State of Florida, having been issued license number 0356415 in accordance with Chapter 475, Florida Statutes. The last license issued was as a salesperson, c/o Josef Heinrich Augustin, 25 NE 22nd Street, Miami, Florida 33127. At all times material hereto, Respondent was an officer and was the sole owner of I.E.P. Construction Company, Inc. (hereinafter, "IEP"). George Bush and his wife Mable Bush met Respondent in October 1989 at Respondent's office in Lehigh Acres, Florida. The Bushes were interested in buying property. Neither of the Bushes had previously bought real estate, and neither of them had completed high school. The Respondent had a map. Using the map, she gave the Bushes directions, and the Bushes, following those directions, found and looked at some lots in Lehigh Acres. The Bushes found a lot they liked on the corner of East 12th and Joel Boulevard. They went back to Respondent, and she marked their selection on her map. The Bushes gave her a check for $50 for a deposit on the lot. The idea was that IEP was going to build a house for the Bushes on the lot. The Bushes did not sign a contract. Respondent told them that when they returned home to New Jersey, they were to send an additional $2,950, and then she would send them a deed for the lot. The Bushes returned to their home in New Jersey and sent Respondent a check for $2,950 shortly thereafter. In March 1990 the Bushes returned to Lehigh Acres. At that time, the Bushes signed a contract with IEP. The contract was prepared by Respondent and was entitled "Contract of Purchase and Sale Property With Improvements To Be Constructed," and was dated March 14, 1990. The Bushes made selections concerning the decor of their house, and they gave Respondent a cashier's check for an additional $15,000. The lot specified in the contract was not the same lot as the lot which the Bushes had selected in October 1989. The lot specified in the contract was on East 8th and Hamilton. Respondent told the Bushes she changed lots in order to save money on fill dirt, and the Bushes agreed to the change. Later the Bushes were apprised that Respondent changed lots because the lot originally chosen by the Bushes was commercial property. During the Bushes' March 1990 visit to Lehigh Acres, the Bushes applied for financing at BancFlorida, a local bank selected by the Respondent. The Bushes' application was approved August 30, 1990. Paragraph 3 of the Bushes' contract with IEP, Petitioner's Exhibit 1, provided as follows: 3. TIME: Construction is to be completed within 120 days starting from the date of financial approval unless delayed by strike, act of God, material or labor shortages, or other causes beyond control of contractor. Around August 1990, the Respondent called the Bushes and told them that she was changing the lot again, this time to one on Lake and 6th Street, because it would be closer to where Respondent lived. The Bushes agreed to the change in order to get started with construction and because it was closer to Lehigh. The Respondent sent them a new contract page one to sign and return, which they did. In October 1990 George Bush and a co-worker of his, John Volk, came to Florida and stayed at Lehigh Resort Center, where Mr. Bush had a timeshare. Mable Bush did not come because she was in the hospital. Mr. Bush came because he wanted to see why construction of the Bushes' house was being delayed. Mr. Bush stayed for approximately one week. During that time dirt was placed on the lot on Lake and 6th Street, but there was no other visible construction progress. After Mr. Bush's return to New Jersey, the Bushes received two letters from the Respondent. The first, dated October 12, 1990, stated that "The construction of your home is under way." In the letter the Respondent promised to provide the Bushes with accommodations and storage pending completion of the Bushes' house, at no charge for the initial period November 15-December 15, 1990. The second letter, dated October 25, 1990, advised the Bushes that there was ". . . a title problem on the property." The letter also advised that "We can not have the house ready by the deadline." and that "They (the title company) are not telling me how long it will take to clear title. Therefore, my timing and schedule will be totally off." After receiving the October 26, 1990 letter, the Bushes discussed the possibility of cancelling the contract with IEP, and Mr. Bush called the Respondent and asked her how much it would cost ". . . to just forget the whole thing." The Respondent told him it would cost about $1,500, but then she persuaded the Bushes not to cancel by offering to change lots again, this time to a lot on East 5th and Greenwood. The Bushes agreed. They felt that since the Respondent had their money they didn't have much choice. The Bushes moved to Florida on November 13, 1990, and initially they stayed in a house in Lehigh Acres owned by the Respondent and which the Respondent also used as an office. It was the same office where the Respondents had originally met the Respondent in October of 1989. The Respondent promised to clear off the lot on East 5th and Greenwood, but she never did, and a "For Sale" sign continued to be displayed on the lot. After moving to Florida, the Bushes received correspondence from BancFlorida indicating that the bank was still under the impression that the Bushes were buying the lot on East 8th and Hamilton. Mable Bush called the bank and was told there would be a fee of $250 to change lots. The Bushes asked Respondent to pay the fee and she refused. After this incident the Bushes decided that they did not want to continue doing business with the Respondent. On December 14, 1990, the Bushes moved out of the Respondent's house/office, and on December 15, 1990 they moved into a nearby house in Lehigh Acres which they bought. The Bushes requested that the Respondent return the $18,000 they paid her, but, through and including the date of the hearing, she failed or refused to return any portion of it. During the course of the transaction between the Bushes and the Respondent, the Bushes did not have an attorney representing them because the Respondent told them they didn't need an attorney and because the Bushes trusted the Respondent.
Recommendation Based upon the foregoing, it is hereby, RECOMMENDED that the Florida Real Estate Commission enter a Final Order finding the Respondent Dilsa M. Fish guilty of violating Subsection 475.25(1)(b), Florida Statutes, imposing an administrative fine in the amount of $1,000 and revoking the Respondent's license. DONE AND RECOMMENDED this 9th day of August, 1993, 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 9th day of August, 1993. COPIES FURNISHED: Dilsa M. Fish 612 James Avenue Lehigh Acres, Florida 33936 Dilsa M. Fish c/o Eric Rivera 7291 N.W. 37th Streeet, Apt. C-6 Hollywood, Florida 33024 Theodore R. Gay, Senior Attorney Department of Professional Regulation 401 N.W. 2nd Avenue, Suite N-607 Miami, Florida 33128 Jack McRay, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller, Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900
Findings Of Fact Respondents Jo Ann Cunningham, her husband, Ben G. Cunningham, and their partnership, Cunningham Real Estate, are eached licensed by petitioner as real estate brokers. They have offices in Clermont, Florida. In March of 1976, Orrin C. Barr spoke to respondent Jo Ann Cunningham by telephone from his home in Minnesota and inquired about the availability of orange groves. As a result of this telephone conversation, Mrs. Cunningham wrote Mr. Barr a letter, dated March 4, 1976, in which she recommended an orange grove. Of this grove, she wrote, in part: It is 10 years old, hamlin oranges, picked 17,000 boxes 1975-76, selling price $2,000.00 per acre or $160,000.00, owner wants cash. Petitioner's exhibit No. 2. Mrs. Cunningham inserted the figure 17,000 into the blank she had originally typed, because Mr. Cunningham told her that figure was approximately correct. The grove which Mrs. Cunningham recommended in her letter to Mr. Barr belonged to Hubbard Construction Company (Hubbard) at the time. Hubbard had entered into an agreement with Hi-Acres Groves, Inc. (Hi-Acres), under which Hi- Acres managed the property, fertilizing, spraying, picking fruit and selling the fruit to the Coca Cola Company. At the time Hubbard enlisted respondents' assistance in selling the grove, respondents were told they would be given the legal description and the price but no other information about the property. Mr. Barr and his partner, Reynold Anderson, travelled to Clermont from Minnesota and visited the grove with Mrs. Cunningham. After they had seen the property, Mrs. Cunningham introduced Messrs. Barr and Anderson to Irvin Barwick, general manager of Postal Colony Company, another Clermont firm in the business of managing orange groves. Out of the Cunninghams' presence, Messrs. Barwick, Barr and Anderson discussed citrus farming in general terms. On April 23, 1976, Messrs. Anderson and Barr signed an agreement, on behalf of Zaeco, Inc., to purchase the orange grove about which Mrs. Cunningham had written and which she had shown them. In July of 1976, on the morning of the day the transaction had been scheduled to close, Messrs. Barwick, Barr and Anderson drove out to the property. Mr. Barwick expressed the opinion that the fruit then on the orange trees would not fill more than 10,000 boxes. This raised a question in the minds of Messrs. Barr and Anderson as to whether they had been accurately informed about the grove's yield during the 1975-76 growing season. When Messrs. Barr and Anderson next saw Mrs. Cunningham, they asked her for verification of the 17,000 figure. She called Mr. Cunningham and asked him to verify the figure. Over the telephone, Mr. Cunningham told first his wife, then Mr. Anderson, that he might be unable to furnish verification, but that he would try. It was agreed at the closing that respondents' commission (six thousand dollars cash and a two year promissory note in the amount of ten thousand dollars), would be left with Arthur Roberts, the lawyer in whose office the closing took place, and would be disbursed to respondents only upon verification of the 17,000 figure. After the closing, Messrs. Barr and Anderson left Clermont. Mr. Cunningham inquired of Lester Austin at Hi-Acres' Clermont office about getting production and caretaking records for the grove. He understood from Mr. Austin that a company policy prohibited disclosure of such records without a release from the (former) grove owner, and that the records were kept at Hi-Acres' Forest City office. The following Tuesday, Mr. Cunningham visited Hubbard's offices and obtained a letter from Hubbard's president, J. Edward Greaves, authorizing release of production and cultivation records. When he arrived at Hi-Acres' Forest City office with the Greaves letter, Mr. Cunningham was introduced to Jean Suggs, to whom he gave the letter. In response to Mr. Cunningham's request, Mrs. Suggs consulted a computer printout and, on a scrap of white paper, wrote down the figure 9,431, which she said was the number of boxes of oranges the grove had yielded in the 1975-76 season. Mr. Cunningham then asked for stationery with Hi-Acres' letterhead and Mrs. Suggs gave him two or three sheets. Mr. Cunningham drove to his office from Forest City. When he arrived, he placed a yellow sheet of paper on a secretary's desk along with the stationery and cultivation records he had obtained from Mrs. Suggs. On the yellow sheet was written the figure 16,976. When Mrs. Cunningham learned what the yellow sheet purported to be, she said, "Frank Hubbard would shoot her doing business that way." On a sheet of Hi-Acres' letterhead, Mrs. Cunningham typed: July 13, 1976 INFORMATION requested by CUNNINGHAM REAL ESTATE Released by letter from Edward Graves [sic], Vice [sic] President, HUBBARD CONSTRUCTION COMPANY. 1975-76 Season Production EARLY & MID SEASON ORANGES 16,976 Boxes Bookkeeping Dept. Enclosures - Grove care records for all of 1975 and 1976 through sale of grove. Mr. Cunningham delivered this document to Arthur Roberts who, after seeing it, released the commission to Mr. Cunningham.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That petitioner suspend Mr. Cunningham's registration as a real estate broker for a period of two (2) years. That petitioner suspend the registration of the partnership, Cunningham Real Estate, as a real estate broker for a period of two (2) years. That petitioner dismiss the administrative complaint against Mrs. Cunningham. DONE and ENTERED this 1st day of August, 1978, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 APPENDIX Paragraph one of respondents' proposed findings of fact accurately reflects the evidence and has been adopted, in substance, insofar as relevant, except that the Commission records introduced in evidence reflect different addresses on Highway 50. Paragraph two of respondents' proposed findings of fact accurately reflects the evidence and has been adopted, in substance, insofar as relevant, except that any partnerships would have had to have been with Zaeco, Inc., rather than Barr-Anderson. Paragraphs three, five, six, seven, eight, eleven, twelve and thirteen of respondents' proposed findings of fact accurately reflect the evidence and have been adopted, in substance, insofar as relevant. Paragraph four of respondents' proposed findings of fact accurately reflects the evidence and has been adopted, in substance, insofar as relevant, except for the exchange of proposed contracts. Paragraph nine of respondents' proposed findings of fact accurately reflects the evidence and has been adopted, in substance, insofar as relevant, except that the buyers did not refuse to close "until and unless the production figure of 17,000 boxes was verified." Paragraph ten of respondents' proposed findings of fact accurately reflects the evidence and has been adopted, in substance, insofar as relevant, except to the extent it is predicated on hearsay. Paragraph fourteen of respondents' proposed findings of fact accurately reflects the evidence and has been adopted, in substance, insofar as relevant, except that the mistaken belief of Mrs. Cunningham and Pat McGregor that the yellow sheet had the authentic production figure was based on what Mr. Cunningham had told them. Paragraph one of petitioner's proposed findings of fact accurately reflects the evidence and has been adopted, in substance, insofar as relevant, except that the Commission records introduced in evidence reflect different addresses on Highway 50 and neither Mr. nor Mrs. Cunningham testified that they were active firm members in those words. Paragraphs two, three and five of petitioner's proposed findings of fact accurately reflect the evidence and have been adopted, in substance, insofar as relevant. Paragraph four of petitioner's proposed findings of fact was not established by the evidence. Paragraph six of petitioner's proposed findings of fact accurately reflects the evidence and has been adopted, in substance, insofar as relevant, except for the amount of Hi-Acres' stationery given to Mr. Cunningham. COPIES FURNISHED: Kenneth M. Meer, Esquire Post Office Box 1900 Orlando, Florida 32802 George E. Hovis, Esquire Post Office Box 848 Clermont, Florida 32711 ================================================================= AGENCY FINAL ORDER ================================================================= FLORIDA REAL ESTATE COMMISSION FLORIDA REAL ESTATE COMMISSION Plaintiff CD 15380 vs. PROGRESS DOCKET NO. 3275 DOAH 78-886 BENJAMIN G. CUNNINGHAM LAKE COUNTY JOANN CUNNINGHAM and CUNNINGHAM REAL ESTATE Defendants. /
The Issue The issues presented are whether Respondent, Smallwood Design Group/Smallwood Landscape, Inc. (Smallwood or the company), owes Petitioner $12,817.17 for agricultural products and, if so, whether the surety is liable for any deficiency.
Findings Of Fact Petitioner is a Florida corporation licensed by the Department as a “dealer in agricultural products,” within the meaning of Subsection 604.15(2), Florida Statutes (2006) (agricultural dealer).1 The license number and business address of Petitioner are 68954 and 3930 14th Street North, Naples, Florida 34103. Smallwood is a Florida corporation licensed by the Department as an agricultural dealer pursuant to license number 68513. The sole shareholder and registered agent for Smallwood is Ms. JoAnn Smallwood. The business address for Smallwood is 2010 Orange Blossom Drive, Naples, Florida 34109. Hartford Fire Insurance Company (Hartford) is the surety for Smallwood pursuant to bond number 21BSBCI1473 issued in the amount of $100,000 (the bond). The term of the bond is December 9, 2005, through December 9, 2006. Petitioner conducts a garden center business that, in relevant part, sells agricultural products, defined in Subsection 604.15(1). Petitioner sells products at wholesale and retail to businesses and consumers in the Naples area. Smallwood purchased agricultural products from Petitioner from 1983 until sometime in 2006. The purchases were made in the ordinary course of Smallwood's architectural landscape construction and horticultural management business (landscape business). The terms of purchase required payment from Smallwood within 30 days. Any monthly balance that remained unpaid after 45 days was subject to interest at a monthly rate of 1.5 percent and an annual rate of 18 percent.2 With one exception, Smallwood paid Petitioner within 60 days of delivery. The exception to Smallwood's payment history with Petitioner is the subject of this proceeding. From May 11 through September 26, 2006, Smallwood did not pay Petitioner $12,817.17 for 66 invoices involving 440 items (pallets or pieces) of sod that Petitioner delivered to Smallwood.3 The sod consisted of varieties identified in the record as: Floratam, Seville, Zoysia, Croton, and Fountain Grass.4 Smallwood does not deny that Petitioner should be paid $12,817.17. However, Smallwood alleges that Petitioner has filed its claim against the wrong party. Smallwood alleges that, on June 13, 2006, another corporation purchased the assets of Smallwood, including the right to conduct the landscape business in the name of Smallwood, and assumed Smallwood's liability to Petitioner for any prior purchases. Subsequent purchases are allegedly the obligation of the successor corporation. Ms. Smallwood filed a Response to Amended Claim with the Department on January 7, 2007 (the Response). The Response identifies the successor corporation as Spartan Partners, Inc., an Illinois corporation, located at 350 Pfingsten Road, Suite 109, Northbrook, Illinois 60062 (Spartan), and alleges that Petitioner’s claim is not valid because: [Smallwood] sold its assets and has not been engaged in business since June 13, 2006. Specifically, pursuant to an Asset Purchase Agreement, [Smallwood] sold its assets (including its name) to Spartan . . . , and thereafter, Spartan continued operating the business for a period of time and then sold some of the assets and ceased operations. (emphasis supplied) Smallwood . . . does not have knowledge of the accounts of Spartan, which continued doing business under the Smallwood name after the sale of assets on June 13, 2006. If items purchased from [Petitioner] have not been paid for, Spartan is the responsible and liable party. (emphasis supplied) The Response filed in January of 2007 was not the first time Petitioner had seen the Smallwood defense. Smallwood sent Petitioner a form letter, dated September 14, 2006, that: contained a salutation addressing “All Vendors of [Smallwood],” referenced the "Termination of Credit Arrangements and Guaranties," and was signed by Ms. Smallwood on behalf of Smallwood (notice letter). The notice letter provided in relevant part: The purpose of this letter is to advise you that the assets of [Smallwood], including the company name, were sold to Spartan . . . as of June 13, 2006. Since [Smallwood] sold all of its assets, that corporate entity is no longer actively engaged in any business. The business known as [Smallwood] is now conducted by [Spartan]. (emphasis supplied) As a result of the sale of assets and the fact that [Smallwood] is no longer actively engaged in business, the relationship or agreement you had with that particular corporate entity is hereby terminated and of no further force and effect. If you are continuing to do business with [Spartan], you should, if you have not done so already, make or confirm your business arrangements with that entity. Furthermore, if I signed any document that could be construed as a personal guaranty of payment for any obligations of [Smallwood], please consider this letter to be a formal revocation, cancellation and termination of any such document. (emphasis supplied) Petitioner's Exhibit 3 (P-3). Part of the Smallwood defense is supported by the evidence. Smallwood did sell its assets to Spartan. The Asset Purchase Agreement between Smallwood and Spartan was admitted into evidence as Petitioner’s Exhibit 2 (P-2). The Agreement shows that Spartan purchased the assets of Smallwood on June 13, 2006, for $1.030 million, of which $883,602.11 was allocated to accounts receivable due the seller. The seller is identified in the Asset Purchase Agreement as Ms. Smallwood and the company. The seller received $895,500.00 in cash at the closing. The remaining part of the Smallwood defense involves two allegations. First, Smallwood alleges that Spartan assumed a liability of $3,834.43 for 23 purchases of sod by Smallwood from May 11 through June 13, 2006. Second, Smallwood alleges that Spartan owes Petitioner $8,982.74 for 43 purchases of sod from June 14 through September 26, 2006. If the evidence were to support both allegations, the result may effectively deprive Petitioner of an administrative remedy. The corporate documents attached to the Asset Purchase Agreement do not show that Spartan complied with the bond and license requirements in Subsection 604.19 prior to conducting the landscape business in the name of Smallwood. Spartan sold the assets needed to satisfy a judgment against Spartan, Spartan is a foreign corporation, and Spartan no longer conducts the landscape business in Florida. It would be unnecessary to determine whether Smallwood or Spartan is liable for the $12,817.17 if: the terms of the bond were to allow an assignment of the bond to Spartan, and the Asset Purchase Agreement were to show that the bond was one of the contracts assigned to Spartan or one of the assets purchased by Spartan. The bond would cover both Smallwood and Spartan in such a case, and a determination of which shell hid the proverbial pea would be moot. A copy of the bond did not find its way into the record. Petitioner did not submit a copy of the bond for admission into evidence, and the Department did not transmit a copy of the bond when the agency referred the matter to DOAH. The copy of the Asset Purchase Agreement admitted into evidence does not include a schedule of the contracts assigned to Spartan or a schedule of the assets sold to Spartan. A finding that Spartan expressly assumed Smallwood's liability to pay Petitioner $3,834.43 for sod delivered from May 11 through June 13, 2006, is not supported by the evidence. In relevant part, the Asset Purchase Agreement provides: At Closing, Purchaser shall assume those liabilities of Company specifically defined and listed on the Schedule 1.6(b) attached hereto (“Assumed Liabilities”), and Purchaser shall not assume, incur, guarantee, or be otherwise obligated with respect to any liability whatsoever of Company other than as so stated. . . . (emphasis not supplied) Purchaser shall cause Stockholder [Ms. Smallwood] to be released as guarantor or obligor under the Assumed Liabilities. . . . P-2 at 2. Schedule 1.6(b) is missing from the copy of the Asset Purchase Agreement that was admitted into evidence. Even if a complete exhibit were to show that Spartan assumed Smallwood's liability to Petitioner, neither of the respondents submitted evidence or cited legal authority to support a finding that such an assumption released Smallwood from its obligation to Petitioner or otherwise extinguished that obligation. Nor is there any evidence that Petitioner acquiesced in an assumption by Spartan or otherwise released Smallwood from the obligation to pay Petitioner for sod delivered prior to June 13, 2006. The remaining allegation in the Smallwood defense is that Spartan, rather than Smallwood, purchased the sod Petitioner delivered between June 13 and September 26, 2006. It allegedly is Spartan that owes Petitioner $8,982.74. The remaining allegation implicitly argues that, after June 13, 2006, Smallwood was no longer a viable corporation with the legal capacity to purchase sod from Petitioner because the asset sale resulted in what courts describe as a “de facto merger” of Smallwood into Spartan or a “mere continuation of business” by Spartan. The law pertaining to these two doctrines is discussed in the Conclusions of Law, but certain factual findings are relevant to both doctrines. The Smallwood defense is a mutation of the doctrines of "de facto merger" and "mere continuation of business," either of which have been utilized by courts to hold a successor corporation liable for the obligations of the corporate predecessor. The Smallwood defense takes the relevant judicial doctrines a step further. The defense implicitly assumes that if a "de facto merger" or "mere continuation of business" occurred as a result of the asset sale, Smallwood "merged" into Spartan, and Smallwood was no longer a viable corporate entity with the legal capacity to purchase sod from Petitioner. Two facts preclude the application of either judicial doctrine to the sale of Smallwood's assets. First, there is no commonality or continuity of ownership interests between Smallwood and Spartan. Spartan did not acquire some or all of the stock of Smallwood, and Ms. Smallwood did not become a shareholder in Spartan. The two corporations do not share common directors or officers. The second fact involves the purchase price paid for the Smallwood assets. The purchase price does not suggest a cozy relationship between Smallwood and Spartan that otherwise may have persuaded a court to disregard the separate corporate existence of Smallwood after the asset-sale. No evidence suggests that the price paid was not the fair market value of the Smallwood assets negotiated at arms length between a willing buyer and a willing seller. Smallwood remained in existence as a viable Florida corporation after the asset-sale on June 13, 2006. No legal impediment prevented Smallwood from purchasing sod from Petitioner, and Smallwood had the legal capacity to do so. The purchases may have breached the terms of the Asset Purchase Agreement, but the legal capacity of Smallwood to purchase sod from Petitioner is not driven by contractual arrangements between Smallwood and private third parties. Smallwood remained in existence as a Florida corporation at least through January 7, 2007, when Ms. Smallwood filed the Response with the Department. The Response does not allege as a factual matter that Smallwood had been liquidated and was no longer in existence as a Florida corporation; or that the $895,500 the seller received for the sale of assets was not in corporate solution and available to pay invoices submitted by Petitioner. The Response merely states that Smallwood was not actively engaged in the conduct of business. Smallwood was actively engaged in the landscape business after June 13, 2006. Smallwood maintained its customary banking account; continued to issue checks imprinted with the company name; paid Petitioner for goods that Petitioner delivered to Smallwood before May 11, 2006; accepted without objection or disclaimer 43 invoices totaling $8,982.74 that were billed to the company for sod delivered to the company at the company's business address; issued the notice letter to its creditors; and purported to terminate credit agreements and guarantees. Prior to receiving the notice letter, Petitioner had no reason to believe that Smallwood was not conducting the landscape business. The face of Smallwood remained unchanged. Ms. Smallwood continued to operate the landscape business pursuant to a long-term employment contract with Spartan. Spartan signed Mr. Keith Whipple, another key employee of Smallwood, to a similar contract. Copies of the employment contracts are attached to the Asset Purchase Agreement.5 Between June 13 and September 14, 2006, Ms. Smallwood continued to sign Smallwood checks imprinted with the company name and issued on the Smallwood business account. Ms. Smallwood signed the checks as the authorized representative of Smallwood. Smallwood accepted 35 invoices issued to the company for $7,007.13 and deliveries of the sod at the company's customary business address. The notice letter was dated September 14, 2006, but Petitioner received the letter on or about September 26, 2006. Between September 14 and 26, 2006, Smallwood accepted eight invoices for sod purchased for $1,975.61. The evidence does not show when Smallwood actually mailed the notice letter, and Petitioner did not stamp the notice letter with the date it was received. The chief operating officer for Petitioner testified at the hearing but does not recall the date Petitioner actually received the notice letter. However, the witness testified that Petitioner stopped all sales to Smallwood immediately upon receipt of the notice letter to allow time for Petitioner to complete a credit check of Spartan. The trier of fact finds the relevant testimony to be credible and persuasive. The failure to timely disclose the identity of Spartan as a successor entity operating in the name of Smallwood misled Petitioner, if not other creditors.6 Between June 13 and September 26, 2006, Petitioner extended credit for purchases of $8,982.74 before Petitioner had the opportunity to ensure the credit worthiness of Spartan and, if desired, to obtain a written guarantee from the individual officers and shareholders.7 Smallwood, rather than Spartan, purchased sod from Petitioner from May 11 through September 26, 2006. Smallwood owes Petitioner $12,817.17. Hartford does not claim that the terms of the bond do not ensure payment of the purchases made by Smallwood. Hartford’s sole objection in its PRO is that the bond proceeds must be paid directly to the Department rather than to Petitioner. Hartford correctly cites Subsection 604.21(8) in support of its objection.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order directing Smallwood to pay $12,817.17 to Petitioner, and, in accordance with Subsection 604.21(8), requiring Hartford to pay over to the Department any amount not paid by Smallwood. DONE AND ENTERED this 15th day of August, 2007, 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 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of August, 2007.
