The Issue Whether the Respondent Carlyn R. Kulick, d/b/a Carlyn's, failed to pay amounts owing to the Petitioner for the shipment of citrus fruit, as set forth in the Complaint dated April 30, 2001, and, if so, the amount the Petitioner is entitled to recover.
Findings Of Fact At all times material to this proceeding, Spyke's Grove and Carlyn's were "citrus fruit dealers" licensed by the Department. As part of its business, Carlyn's sells to its retail customers "gift fruit" consisting of oranges and grapefruit for shipment to third persons identified by the customers. Carlyn R. Kulick is the owner of Carlyn's and acted on its behalf with respect to the transactions that are the subject of this proceeding. Spyke's Grove is in the business of packaging and shipping "gift fruit" consisting of oranges and grapefruit pursuant to orders placed by other citrus fruit dealers. Barbara Spiece is the president of Spyke's Grove and acted on its behalf with respect to the transactions that are the subject of this proceeding. In November and December 1999, Spyke's Grove received a number of orders for "gift fruit" from Carlyn's. Most of the orders were for single shipments of fruit. One order was for six monthly shipments of fruit. This was the first year Carlyn's had done business with Spyke's Grove, and Carlyn's and Spyke's Grove did not execute a written contract governing their business relationship. On the night of Sunday, December 12, 1999, the Spyke's Grove's packinghouse was destroyed by fire, and its offices were substantially damaged. The fire could not have happened at a worse time because it was at the peak of the holiday fruit- shipping season. Spyke's Grove was able to move into temporary offices and to obtain the use of another packinghouse very quickly. It had telephone service at approximately noon on Tuesday, December 14, 1999, and it began shipping "gift fruit" packages on Friday, December 17, 1999, to fill the orders it had received. Carlyn R. Kulick, the owner of Carlyn's, learned of the fire at Spyke's Grove and attempted to contact the Spyke's Grove offices for an update on the orders Carlyn's had placed for shipment during the holidays. Mr. Kulick was unable to contact anyone at Spyke's Grove for three or four days after the fire, and he was worried that his customers' orders for "gift fruit" would not be shipped on time. Mr. Kulick called another packinghouse and placed orders duplicating some of the orders Carlyn's had placed with Spyke's Grove. Meanwhile, Spyke's Grove was giving priority to its smaller wholesale customers such as Carlyn's, and it shipped all of the orders it had received from Carlyn's. Carlyn's did not cancel its orders with Spyke's Grove or otherwise notify Spyke's Grove that it should not ship the fruit; Mr. Kulick assumed that Spyke's Grove would contact him if it intended to ship the fruit ordered by Carlyn's. Spyke's Grove sent numerous invoices and statements of account to Carlyn's Regarding the gift fruit at issue here. According to the statement of account dated June 1, 2001, as of that date Carlyn's owed Spyke's Grove $1,069.78 for the gift fruit at issue here. Most of the invoices to Carlyn's that were submitted by Spyke's Grove contain the following: "Terms: Net 14 days prompt payment is expected and appreciated. A 1½% monthly service charge (A.P.R. 18% per annum) may be charged on all past due accounts. . . ." Relying on this language, Spyke's Grove also seeks to recover a monthly service charge for each month that Carlyn's account was past due. Carlyn's does not dispute Spyke's Grove's claim that $1,069.78 worth of "gift fruit" was shipped by Spyke's Grove pursuant to orders Carlyn's placed in November and December 1999. Carlyn's' basic position is that it need not pay Spyke's Grove for the fruit because Spyke's Grove did not notify it after the December 12, 1999, fire that it would ship the orders and because Carlyn's had to make sure that its customers' orders were filled. The uncontroverted evidence establishes that Carlyn's was, at the times material to this proceeding, a Florida- licensed and bonded citrus fruit dealer; that, in November and December 1999, Carlyn's submitted orders to Spyke's Grove for the shipment of "gift fruit" consisting of oranges and grapefruit; that Spyke's Grove shipped all of the "gift fruit" ordered by Carlyn's in November and December 1999; that the price of the "gift fruit" shipped by Spyke's Grove pursuant to Carlyn's' orders totaled $1,069.78; and that Spyke's Grove timely filed its complaint alleging that Carlyn's failed to promptly pay its indebtedness to Spyke's Grove for citrus products shipped pursuant to orders placed by Carlyn's. Spyke's Grove is, therefore, entitled to payment of the principal amount of $1,069.78, plus pre-judgment interest. Based on the date of the last invoice which contained a charge for any of the gift fruit at issue here, the prehearing interest would run from May 1, 2000.
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 ordering Carlyn R. Kulick, d/b/a Carlyn's, to pay $1,069.78 to Spyke's Grove, Inc., d/b/a Fresh Fruit Express, Emerald Estate, Nature's Classic, together with pre-judgment interest calculated at the rate specified in Section 55.03, Florida Statutes, on the amounts owing. DONE AND ENTERED this 1st day of November, 2001, 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 1st day of November, 2001. COPIES FURNISHED: Carlyn R. Kulick, Owner Carlyn's 1601 Fifth Avenue, North St. Petersburg, Florida 33713 Barbara Spiece, President Spyke's Grove, Inc. 7250 Griffin Road Davie, Florida 33314 Western Surety Company Post Office Box 5077 Sioux Falls, South Dakota 57117 Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Brenda D. Hyatt, Bureau Chief Bureau of License and Bond Department of Agriculture and Consumer Services 541 East Tennessee Street India Building Tallahassee, Florida 32308
Findings Of Fact Petitioner, Deerfield Groves Company (Deerfield), is a licensed citrus fruit dealer under Chapter 601, Florida Statutes, and Chapter 20-34, Florida Administrative Code. As a licensee, Deerfield is subject to administrative and criminal prosecution for violation of the statutes and rules governing licensed citrus fruit dealers and was under administrative prosecution for alleged violations of Section 601.33, Florida Statutes, and Rule 20-34.11, Florida Administrative Code, at the time of the final hearing. Deerfield has legal standing as a party petitioner in this case. Respondent, Department Of Citrus (DOC), promulgated Rule 20-34.11, Florida Administrative Code, under the authority of Section 601.10, Florida Statutes. Rule 20-34.11 is designed to implement Section 601.33, Florida Statutes. Respondent, Department Of Agriculture And Consumer Services, (DACS), is the agency charged with the duty to enforce Section 601.33, Florida Statutes, and Rule 20- 34.11, Florida Administrative Code. Personnel of DACS' Division Of Fruit And Vegetable Inspection also are responsible for testing fresh citrus for maturity under Chapter 20-34, Florida Administrative Code. Licensees such as Deerfield furnish a testing room for DACS inspectors to perform maturity tests and certify fresh citrus, as required for marketing fresh fruit. DACS leases an extractor, used for squeezing juice from fruit samples, and subleases the extractor to the licensee. Under the sublease, the extractor is kept in the testing room for use by DACS inspectors and, when not being used by DACS inspectors, for use by the licensee in performing its own tests. Typically, the licensee furnishes the testing room with a table for two and a chair or two. When DACS inspectors perform maturity tests at the beginning of the early harvest, they bring most of the things they need for testing. The licensee provides the bins in which the fruit samples are carried into the testing room. The inspectors bring either a DACS slicing knife or their own. The licensee provides buckets it owns for use by the inspector during the test to collect juice extracted from fruit samples. The DACS inspectors also bring: a sizer to measure the fruit samples; a 2000 c.c. graduated cylinder to measure juice quantities; a 500 c.c. graduated cylinder to hold juice being tested for solids content and for temperature; aluminum pans to hold the graduated cylinders; a combination hydrometer for measuring juice solids content and temperature; a 25 m.1. pipet for transferring a measured amount of juice into a flask; the flask; a bottle of phenothaline with eyedropper top used for adding measured amounts of phenothaline to the flask of measured juice; a bottle of alkaline solution; and a burette for adding a measured amount of the alkaline solution to the flask of measured juice. During the harvest season, DACS leaves its equipment, instruments and solutions referred to in the preceding paragraph in the testing room. They are kept separate from the licensee's property and are not supposed to be used by the licensee. However, DACS allows the licensee to use its own bins and buckets and the extractor to conduct its own tests in the testing room when DACS inspectors are not using it. 1/ Some DACS inspectors request or allow licensees to assist during testing or to handle the fruit samples. 2/ Some allow licensees to attempt to influence the inspector's judgment by questioning the validity of the test or the accuracy of the inspector's observations or by comparing the inspector's results with the results of its own tests. Sometimes, this results in correction of an error the inspector otherwise would have made. It was not proved, however that there is an agency policy of requesting or allowing licensees to conduct themselves in those ways during testing. DACS has a policy to allow only one licensee representative in the testing room with the DACS inspector during testing. Violation of this policy is viewed as a violation of Section 601.33, Florida Statutes (1983). However, not all DACS inspectors strictly enforce this policy. Some allow more than one licensee representative in the testing room.
The Issue Whether Respondent, C & J Fruit and Melons, Inc. (C & J Fruit), a citrus fruit dealer and registered packer, owes Petitioner, John Stephens, Inc., a citrus dealer, a sum of money for grapefruit and oranges sold and delivered to C & J Fruit's citrus fruit-packing house for processing.
Findings Of Fact Petitioner, John Stephens, Inc., is a Florida-licensed citrus fruit dealer operating within the Department of Agriculture and Consumer Services' regulatory jurisdiction. Respondent, C & J Fruit & Melons, Inc., was a Florida- licensed citrus fruit dealer and operated a registered packing house in Frostproof, Florida, during the 2001-2002 citrus shipping season. Respondent, Auto Owners Insurance, was the surety for C & J Fruit's citrus fruit dealer's license in the amount of $14,000.00, for the 2001-2002 season. At the beginning of the 2001-2002 season, Petitioner and C & J Fruit entered into a verbal contract under which Petitioner agreed to contract with various grove owners and grove harvesters in the Polk County, Florida, area. The understanding was that Petitioner would obtain various varieties of grapefruit, oranges, and tangerines from the growers and harvesters and deliver the fruit to C & J Fruit's packing house. Petitioner was responsible for payment to the grove owners and harvesters. C & J Fruit would process the fruit, supply the citrus fruit to retail and wholesale suppliers, and account and pay for the fruit received from Petitioner. Petitioner and C & J Fruit had conducted business in this fashion for many years prior to this season. On October 23, 2001, C & J Fruit sought protection from creditors under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court, Middle District of Florida, Tampa Division, Case No. 01-19821-8W1. Following the filing of bankruptcy, no other supplier would provide C & J Fruit with citrus fruit. With Petitioner's consent, C & J Fruit filed an emergency motion to authorize a secured interest to Petitioner, if it would continue to supply C & J Fruit's packing house with fruit. The bankruptcy court granted the motion, and in November 2001, Petitioner began supplying C & J Fruit's packing house with fresh citrus fruit. The preponderance of evidence proves that Petitioner delivered to C & J Fruit's packing house during November 2001 pursuant to the contract: 540 boxes of grapefruit at $3.00 per box for a total of $1,620.00; 3,044 boxes of oranges at $4.00 per box for a total of $12,176.00; 330 boxes of tangerines at $3.50 per box for a total of $1,155.00; and 1,953 boxes of navel oranges at $2.00 per box for a total of $3,906.00. C & J Fruit was billed for this amount. Accordingly, C & J Fruit was obligated to pay Petitioner the total sum of $18,857.00 for the fruit. When payment was not received in a timely matter, shipment of citrus fruit to the packing house was discontinued. Petitioner performed all of its duties under the contract, and C & J Fruit failed to pay or account for the citrus fruit delivered to its packing house under the terms of the contract. C & J Fruit is, therefore, indebted to Petitioner in the amount of $18,857.00
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered requiring Respondent, C & J Fruit and Melons, Inc., to pay to Petitioner, John Stephens, Inc., the sum of $18,857.00. DONE AND ENTERED this 29th day of December, 2004, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 29th day of December, 2004. COPIES FURNISHED: Brenda D. Hyatt, Bureau Chief Bureau of License and Bond Department of Agriculture and Consumer Services 407 South Calhoun Street, Mail Station 38 Tallahassee, Florida 32399-0800 Honorable Charles H. Bronson Commissioner of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Clemon Browne, President C & J Fruit & Melons, Inc. Post Office Box 130 Lake Hamilton, Florida 33851-0130 John A. Stephens John Stephens, Inc. Post Office Box 1098 Fort Meade, Florida 33841 Jason Lowe, Esquire GrayRobinson, P.A. Post Office Box 3 Lakeland, Florida 33802
The Issue The issue in this case is whether proposed Florida Administrative Code Rule 64-4.002 (the “Proposed Rule”) is an invalid exercise of the legislative authority delegated to the Department of Health (the “Department”).
Findings Of Fact In order to better contextualize the facts presented at final hearing and discussed below, the following excerpts from the Proposed Rule and the underlying statutory provision are provided: Section 381.986, Florida Statutes (8) Medical Marijuana Treatment Centers.- (a) The department shall license medical marijuana treatment centers to ensure reasonable statewide accessibility and availability as necessary for qualified patients registered in the medical marijuana use registry and who are issued a physician certification under this section. * * * The department shall license as medical marijuana treatment centers 10 applicants that meet the requirements of this section, under the following parameters: [Previously denied applicants meeting certain requirements not relevant to the instant action.] [One applicant from a specific class pursuant to a federal lawsuit.] As soon as practicable, but not later than October 3, 2017, the Department shall license applicants that meet the requirements of this section in sufficient numbers to result in 10 total licenses issued under this subparagraph, while accounting for the number of licenses issued under sub-subparagraphs a. and b. For up to two of the licenses issued under subparagraph 2., the department shall give preference to applicants thatdemonstrate in their applications that they own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses and will use or convert the facility or facilities for the processing of marijuana. (Emphasis added). Florida Administrative Code Rule 64-4.002 (Proposed) (1)(f) For applicants seeking preference for registration as a medical marijuana treatment center pursuant to ss. 381.986(8)(a)3., F.S., the applicant must provide evidence that: The property at issue currently is or was previously used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses. In order to demonstrate the property meets this criteria, the applicant may provide documentation that the applicant currently holds or has held a registration certificate pursuant to section 601.40, F.S. A letter from the Department of Citrus certifying that the property currently is or was previously used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses will be accepted as sufficient evidence. The applicant as an individual holds, in his or her name, or the applicant as an entity holds, in the legal name of the entity, the deed to property meeting the criteria set forth in subparagraph 1. above; and A brief explanation of how the property will be used for purposes of growing, processing, or dispensing medical marijuana if the applicant is selected for registration. * * * Subject matter experts will substantively and comparatively review, evaluate, and score applications using [the Scorecard incorporated by reference]. * * * (a)7.(b) Scores for each section of the application will be combined to create an applicant’s total score. The department will generate a final ranking of the applicants in order of highest to lowest scores . . . . (c) In accordance with ss. 391.986(8)(a)3., F.S., the two highest scoring applicants that own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing of citrus fruit or citrus molasses and will use or convert the facility or facilities for the processing of medical marijuana will receive an additional35 points to their respective total score. Licenses will be awarded, subject to availability as set forth in ss. 381.986(8)(a)2. and 381.986(8)(a)4., F.S., based on the highest total score in the following manner: The highest scoring applicant that is a recognized member of the Pigford or [the Black Farmers Discrimination Litigation] will receive a license. The remaining highest scoring applicants, after the addition of the preference points for applicants pursuant to paragraph (7)(c) above, will receive licenses up to the statutory cap set forth in ss. 381.986(8)(a)2., F.S. The remaining highest scoring applications, after removing any preference points received under paragraph (7)(c), will receive licenses up to the statutory cap . . . . (Emphasis added). The Department is an agency of the State of Florida charged with administering and enforcing laws related to the general health of the people of the state. § 381.0011(2), Fla. Stat. As part of this duty, the Department is charged with implementing the Compassionate Medical Cannabis Act of 2014. See § 381.986, Fla. Stat. Favero is a Florida corporation in good standing since its incorporation in 1974, primarily engaged in the business of growing orchids. Favero aspires to file an application for licensure as a medical marijuana treatment center (“MMTC”). Following the passage of Senate Bill 8A by the 2017 Florida Legislature, which substantially rewrote section 318.986, Florida Statutes, Favero decided to seek the citrus preference described in section 381.986(3)(a)3. (hereinafter referred to as the “Preference Statute”). To that end, Favero purchased a citrus processing business in Safety Harbor, Florida, for approximately $775,000, including the business’s real property and all facilities located thereon. The purchase took place prior to publication of the Proposed Rule. The purchase of the Safety Harbor property reduced Favero’s financial liquidity but, presumably, not its net worth as the value of the property would replace the cash expenditure made for the purchase. It is Favero’s intent to convert the citrus processing facility located on the property into a medical marijuana processing facility if Favero receives the requisite license as a MMTC. Favero contends, as stated in the following paragraphs of its Petition Challenging the Invalidity of Proposed Rule 64-4.002: The Proposed Rule grants a preference to an applicant who owns “property” that was once used for citrus processing. The statute, however, clearly grants the preference only to applicants who “own one or more facilities that are, or were, used for the canning, concentrating, or otherwise processing ” By using the broader word “property” rather than “facility,” the Department is granting the citrus preference to a broader group of applicants than the statute permits, such as owners of packinghouses and other properties that fail to meet the definition of “processor” or were not used for “canning” or “concentrating.” The statute is clear and unambiguous. The use of the word “property” rather than the statutory term “facilities” renders the rule invalid because the use of that term exceeds the Department’s rulemaking authority, enlarges and modifies and contravenes the requirements of Section 381.986(8)(a)3., is vague, fails to establish adequate standards for agency decisions, vests unbridled discretion in the agency and is arbitrary and capricious. See § 120.52(8)., Fla. Stat. * * * The Proposed Rule allows for a preference to only some applicants that own a citrus processing facility. Under the scoring system, applicants demonstrating that they own a citrus processing facility may receive an additional 35 points. However, the Proposed Rule does not guarantee that any applicant owning a citrus processing facility will actually receive those points or get a license. The Proposed Rule merely grants an additional 35 points to two applicants. The Department of Citrus has indicated that more than a dozen companies will qualify for the citrus preference. Under the Proposed Rule, most of those applicants would receive no additional points despite qualifying for the statutory preference. Additionally, the Proposed Rule provides no assurance that any applicant qualifying for the citrus preference will actually receive a license. The Form adopted by the Proposed Rule allows Department evaluators to award a maximum of 1,150 points in several categories. The additional 35 points available under the Proposed Rule amount to an addition of just a 3% bonus. If those extra 35 points are not enough to exceed the scores of other applicants, then no citrus-preference qualifying applicant will receive a license. Favero contends that reduction of its liquid assets could have a negative impact on its overall financial condition when considered by the Department as it reviews Favero’s MMTC application. Favero is concerned that this negative impact may not be completely offset by the citrus preference it is seeking. Mecca is a Florida corporation located at 7965 Lantana Road, Lantana, Florida. It has existed since November 15, 1973, has operated in Florida since the early 1970s, and began citrus farming on approximately 2,000 acres in 1983. Mecca has been and is currently licensed as a citrus dealer and a regulated citrus processing plant and citrus packinghouse. The “processing” done by Mecca does not involve canning or concentrating citrus. Mecca “processes” citrus in its “fresh fruit form” (discussed more fully below). Mecca intends to convert its property and facilities for the purpose of growing, processing or dispensing medical marijuana if its application for an MMTC license is approved. Mecca contends the citrus preference in the Proposed Rule needs further clarification. Mecca also asserts the evaluation and scoring system with respect to the citrus preference constitutes an invalid exercise of the Department’s delegated legislative authority. The Scoring System The MMTC application has 16 separate sections. An applicant may be awarded up to 50 points on some sections, up to 100 points on other sections. The total number of points any application might receive is 1150, presuming a perfect score on each section. Each of the individual sections, whether for 50 or 100 points, is graded in accordance with an evaluation rubric. The rubric contains five categories of scores which are used by reviewers, allowing for a range of points in each section. The five categories each have a range depending on whether the section allows 50 or 100 points. The rubric directs that a category 5 response could be awarded between 40 and 50 points in the 50-point sections, or between 80 and 100 points in a 100-point section. A category 4 response could get between 30 and 39 points (or 60 to 79 points); a category 3 could award 20 to 29 points (or 40 to 59 points); a category 2 could be worth 10 to 19 points (or 20 to 39 points); and a category 1 might award 0 to 9 points (or 0 to 19 points). Thus, an applicant may be awarded points anywhere within the range in each category for each section of the application. By way of example, category 5 under the rubric (wherein a reviewer may give an application 40 to 50 or 80 to 100 points) directs the reviewer as follows: Applicant addressed all items. When necessary, each item has multiple, specific examples of experience and knowledge. Experience and knowledge are connected to specific, identifiable people in the application. Plans are clear, detailed, well documented, and thorough. All charts, photographs, maps, sketches, and other supplemental information are clear and legible. When necessary, applicant provides full documentation for representations of future performance. Responses related to financial reflect robust financial resources and clear lines of authority within the organizations. By comparison, under Category 3, which could award 20 to 29 or 40 to 59 points, the rubric directs the reviewer to consider: Either: Applicant responded to all items. Applicant responds to items addressing experience and knowledge, though answers tend to lack specificity. Plans are provided, but are lacking in clarity, documentation, or thoroughness. When necessary, some supplemental information is provided. Responses related to financials do not reflect robust financial resources, but do not raise doubts of applicant’s financial viability, or the organization has unclear lines of authority, or; Most responses are sufficient to be considered Category 4 or 5 Responses, but applicant fails to address some items. Favero asserts that allowing a reviewer to award points from an allowable range gives unbridled discretion to the Department. The argument misses the point that the ranges in each category direct the reviewer on how to score, while allowing some leeway in determining which applications are slightly better or worse than their competitors. Depending on the strength or weakness of one applicant’s response vis-à-vis another applicant, it is reasonable to assign more or fewer points in a comparative review. The rubric is quite descriptive and allows for a nuanced review of responses by the Department reviewers. The Preference The Preference Statute asserts a preference “for up to two of the licenses issued,” i.e., past tense. There are no licenses “issued” during the application review process, so the preference is actually assigned before licensure. The Preference Statute is somewhat confusing in this regard. The Proposed Rule attempts to reconcile this discrepancy by assigning preference points as a part of the application review process, while still approving the most qualified applicants. That approach is reasonable and has merit; it allows the preference to be assigned but does not attempt to insert it into the actual licensure process. The Proposed Rule assigns the preference points at the end of the review, i.e., after an application receives its “total score.” Thus, an applicant could conceivably be awarded 1185 points on the 0 to 1150 point scale. Regardless of how the points are assigned, Favero contends that the 35 preference points are too insignificant as compared to a possible (perfect) score of 1150 during application review. That number of points (35) would be only about three percent of a perfect score. The lower the average scores of all applications, however, the more the 35 points might come into play. If all applicants received an average score of 575 total points, the preference points would be twice as important as compared to perfect 1150 scores. The assignment of the preference points only after totaling the scores is a legitimate and acceptable method. Taking the 16 sections of the application separately, 35 points assigned in any one section could be quite significant. In fact, the Department arrived at the 35 points by taking the average number of possible points per section, i.e., 72, and assigning approximately half of that amount to reach the 35- point preference. The preference points are not just an arbitrary number assigned by the Department. Favero also objects that the Proposed Rule only assigns the 35 preference points to the two highest scoring, eligible applicants, i.e., those who will convert a citrus facility to process medical marijuana. If those two eligible applicants were more than 35 points below other, non-eligible applicants’ scores, assignment of the preference points would not result in the approval of any eligible applicants. The plain language in the Preference Statute and the Proposed Rule allows for a preference of “up to two” applicants. There is, therefore, no mandate that any applicants must receive the preference. While the Legislature can be presumed to have wanted preference points to be awarded (else why would the Preference Statute exist?), the language of the statute merely limits the number of entities which could get such a preference. The Department, interpreting a statute it is charged with implementing, interprets section 381.986(8)(a)3. to mean the issuance of available licenses to as many as two entities which are eligible for the preference. The Proposed Rule allows the Department to assess an applicant’s entitlement to the preference, to assign the preference, and to meet its statutory obligation. Property versus Facility The Legislature clearly intended to give a preference to applicants who “own . . . facilities that are, or were, used for canning, concentrating, or otherwise processing of citrus . . . and will use or convert the . . . facilities for the processing of medical marijuana.” The Legislature failed, however, to provide guidance by way of definitions. While the Legislature chose the words “facility or facilities” in the Preference Statute, the Department complicated the issue by using the word “property” for the most part, but also using the words “facility” and “facilities” at times. Favero contends that a property is much broader in scope than a facility, and the Department therefore exceeded its delegated legislative authority. The Department argues that facilities used to process citrus must be located on some property, obviously. But, facilities located on a property might be leased, so that the fee simple owner of the property is different from the leaseholder of that facility. Thus, if an applicant for a medical marijuana treatment center license wants to avail itself of the preference, it would need to own the facility. Whether that means the applicant must own the property on which the facility is located is not clear in the Preference Statute or in the Proposed Rule. The Department argues that the way to show ownership of a facility is by way of a deed to the property on which the facility is located. In fact, Favero will use a warranty deed to prove ownership of the facilities it purchased in order to obtain the preference. But if Favero purchased land on which citrus had been grown but not processed, i.e., if there had been no facilities on the land to can, concentrate or otherwise process the fruit, except in fresh fruit form, the preference would not apply. And if an applicant obtained a leasehold interest in a facility, it would not be able to “show ownership” by way of a deed to the property. The Preference Statute requires the applicant to convert the facility in order to gain the preference. It is unclear how a piece of unimproved property can be “converted” to another use; land is land. This begs the question of whether growing citrus on a piece of property, and then removing all the citrus trees in order to grow medical marijuana, is a “conversion” of a facility as contemplated by the Legislature. Neither the Preference Statute nor the Proposed Rule contain any definitional assistance to answer that question. An important question to be answered is whether the growing of citrus constitutes “processing” as alluded to by the Legislature. The Preference Statute provides no definition of the word. The Citrus Code (chapter 601, Florida Statutes) also does not define “processing,” but does describe a “processor” of citrus as: ‘[A]ny person engaged within this state in the business of canning, concentrating, or otherwise processing citrus fruit for market other than for shipment in fresh fruit form.” § 601.03(32), Fla. Stat. (Emphasis added). Processing must therefore mean something other than merely growing citrus and packing it up for shipment. That being the case, a property where citrus is grown that is “converted” to a property growing marijuana would not afford an applicant a preference. There must be some “facility” that is or has been used to process citrus, i.e., doing something more with the raw product, in order to constitute “processing.” Therefore, a “packinghouse,” i.e., “[a]ny building, structure, or place where citrus fruit is packed or otherwise prepared for market or shipment in fresh fruit form,” would not be engaged in “processing” citrus. See § 601.03(29), Fla. Stat. Mecca, which owns property where citrus was grown, picked, graded, sorted, polished, cleaned and packaged for transfer “in fresh fruit form,” would not be a processor, either. Mecca owns a packinghouse only, not a processing facility as that term seems to be used by the Legislature. Its operations were not part of the “canning, concentrating, or otherwise processing citrus fruit other than for shipment in fresh fruit form.”
The Issue The issues for determination in this case are whether Respondent, as a licensed citrus fruit dealer, misappropriated and marketed citrus fruit owned by Petitioner during the 1992-1993 shipping season, and further, whether such actions constitute a violation of the Florida Citrus Code for which proceeds of the citrus fruit dealer's bond executed by Co-Respondent should be paid to Petitioner in satisfaction of Petitioner's claim pursuant to Section 601.66, Florida Statutes.
Findings Of Fact Petitioner, Thompson Fruit Company, is a Florida company with an office in Winter Haven, Florida. Petitioner has been in the business of buying and selling citrus fruit for many years. James Thompson, Jr., (Thompson) is the President of Petitioner. Petitioner was actively engaged in the business of buying and selling citrus fruit during the 1992-1993 shipping season. Respondent, Golden Gem Growers, Inc., is a Florida corporation located in Umatilla, Florida, and was, at all material times, a licensed citrus fruit dealer under the provisions of chapter 601, Florida Statutes. Respondent is a cooperative organization comprised of citrus fruit grower members. Respondent offers various services to its members including harvesting and marketing services. Respondent enters into individual contracts with its grower members to accept and market citrus fruit. During the 1992-1993 shipping season Respondent entered into more than one hundred contracts with its grower members relating to the acceptance and marketing of citrus fruit. Co-Respondent, Fidelity & Deposit Company of Maryland, is a surety company qualified to do business in Florida, which, pursuant to section 601.61, Florida Statutes, during the 1992-1993 shipping season, executed a citrus fruit dealer's bond for Respondent in the amount of $100,000. E.J. Higgins (Higgins) at all material times hereto was a citrus fruit grower and member of Respondent's cooperative organization. On July 23, 1991, Higgins entered into a Revised Grower Member Agreement with Respondent. In accordance with its contract with Higgins, Respondent was obligated to provide citrus fruit harvesting and marketing services to Higgins. On July 5,1990, Higgins had entered into a Crop Agreement and a separate Lease Agreement relating to a citrus grove owned by Pomco Associates, Inc., (Pomco) in Manatee, County, Florida. The grove consisted of approximately 52 acres of red grapefruit trees. The Crop Agreement made no reference to the duration of the agreement. The separate Lease Agreement between Higgins and Pomco expressly stated that the lease ended one year from the date of signing. Higgins provided Respondent with a copy of his July 5, 1990 Crop Agreement and Lease Agreement with Pomco. Respondent thereafter accepted citrus fruit from Higgins which was harvested in the Pomco grove in the 1991-1992 season, and Respondent paid Higgins for the citrus fruit from the Pomco grove at that time. In 1992 and early 1993, Higgins informed Phillip Conant, a Vice- President and Director of the Grower Division of Respondent, that Higgins was a holdover lessee under the Pomco lease, and was entitled to harvest the fruit from the Pomco grove. Under Higgins' contract with Respondent, Respondent was required to provide Higgins with harvesting equipment including trailers and boxes. Respondent was further required under the contract to accept and market the citrus fruit on Higgins' behalf. Respondent advanced Higgins $2,400 toward the marketing of the citrus fruit from the Pomco grove. On January 23, 1993, Higgins requested that Respondent provide him with trailers and boxes to set up Higgins' crew for harvesting the Pomco grove. Respondent complied with Higgins' request, and dispatched a truck and trailer with a load of boxes to the Pomco grove. The truck, trailer and boxes were clearly marked and identified as belonging to Respondent. Prior to this time, on or about December 2, 1992, Petitoner, by and through its President, James Thompson, Jr., had entered into a Purchase Contract and Agreement for the citrus fruit on the same Pomco grove in Manatee County, Florida, for the 1992-1993 season. Under the terms of the contract, Petitioner advanced Pomco $3,000 toward the purchase of the citrus fruit from the Pomco grove. Shortly after Respondent dispatched its equipment to the Pomco grove on January 23, 1993, Thompson was informed that citrus fruit was being harvested from the Pomco grove. Thompson went to the grove, observed the boxes and trailers which were identified as belonging to Respondent, and called Phillip Conant to inform Conant that Thompson had a purchase contract and agreement for the citrus fruit from the Pomco grove. Thompson furnished Conant with a copy of the Petitioner's contract with Pomco. Thompson also contacted the Manatee County Sheriff's Department to remove Higgins' harvesting crew from the Pomco grove. Respondent, by and through its director, Conant, then contacted Higgins who stated that he had obtained a legal opinion that as a holdover lessee under his prior crop agreement and lease with Pomco, he had a right to harvest the fruit from the Pomco grove. Higgins further stated that he expected Respondent to fulfill its contractual obligations to provide harvesting services and to market the citrus fruit. Conant, by telephone, informed Thompson that in light of Higgins' representations, Respondent was unsure as to whether Higgins or Petitioner had a right to harvest the fruit. In response to this information, Thompson stated that he would pursue judicial remedies to resolve the dispute. By letter dated February 4, 1993, Conant confirmed to Thompson that Respondent was taking a "hands off" position as to the dispute between Petitioner and Higgins over the citrus fruit from the Pomco grove. On February 5, 1993, Conant also sent a facsimile copy of the February 4, 1993, letter to Thompson and reiterated to Thompson that Respondent was not knowledgeable of the facts of Petitioner's dispute with Higgins, and would not be involved in the dispute. Between February 7, 1993, and February 13, 1993, Respondent accepted three shipments of citrus fruit from the Pomco grove harvested by Higgins. The three shipments totalled 1,230 boxes. All the fruit accepted by Respondent from the Pomco grove was red grapefruit. At that point in the season, the market for red grapefruit was not good. The net value received by Respondent for the red grapefruit from the Pomco grove was $.9889 per box. A reasonable average price for red grapefruit at that time was $.97 per box. Respondent received a reasonable price per box for the red grapefruit from the Pomco grove during the 1992-1993 shipping season. Respondent received a total of $2,418.86 for the red grapefruit from the Pomco grove. The harvesting costs incurred by Respondent during the 1992- 1993 relating to the Pomco fruit were $1,402.40, leaving a balance of $1,216.34. Respondent has placed the funds received from the Pomco grove fruit during the 1992-1993 shipping season in its escrow account pending a determination as to who is the rightful owner of the funds. Respondent has provided an accurate accounting of the harvesting and marketing of the Pomco grove citrus fruit during the 1992-1993 season. There has not been a judicial resolution of the dispute between Petitioner and Higgins.
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 pursuant to Section 601.66(4), Florida Statutes, dismissing the proceeding. RECOMMENDED in Tallahassee, Leon County, Florida, this 18th day of May, 1995. RICHARD HIXSON Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 18th day of May, 1995. APPENDIX Respondent's Proposed Findings: Paragraphs 1 through 21 adopted and incorporated. Paragraphs 22 revised as to amount remaining due. COPIES FURNISHED: Commissioner Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Brenda Hyatt, Chief Department of Agriculture and Consumer Services Mayo Building, Room 508 Tallahassee, FL 32399-0800 Richard Tritschler, Esquire Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, FL 32399-0810 Jerri A. Blair, Esquire Post Office Box 130 Tavares, FL 32778 Ray Mattox, Esquire 170 East Central Avenue Post Office Box 917 Winter Haven, FL 33882-0917 Golden Gem Growers Post Office Box 9 Umatilla, FL 32784 Fidelity & Deposit Company of Maryland Post Office Box 1227 Baltimore MD 31203
The Issue The issue presented for decision is whether Proposed Rules 20-15.001, 20-15.002, and 20-15.003 constitute an invalid exercise of delegated legislative authority pursuant to Section 120.52(8)(a)-(e), Florida Statutes.
Findings Of Fact Based on the stipulated facts, and the entire record in this proceeding, the following findings of fact are made: The Florida Citrus Commission was established in 1935 to organize and promote the growing and sale of various citrus products, fresh and processed, in the State of Florida. The purpose of the Citrus Commission is today reflected in Section 601.02, Florida Statutes. The powers of the Florida Citrus Commission ("the Commission") and the Department, are set forth in full in Section 601.10, Florida Statutes. The powers of the Department include the power to tax and raise other revenue to achieve the purposes of the Department. In particular, Section 601.10(1) and (2), Florida Statutes, state: The Department of Citrus shall have and shall exercise such general and specific powers as are delegated to it by this chapter and other statutes of the state, which powers shall include, but shall not be confined to, the following: To adopt and, from time to time, alter, rescind, modify, or amend all proper and necessary rules, regulations, and orders for the exercise of its powers and the performance of its duties under this chapter and other statutes of the state, which rules and regulations shall have the force and effect of law when not inconsistent therewith. To act as the general supervisory authority over the administration and enforcement of this chapter and to exercise such other powers and perform such other duties as may be imposed upon it by other laws of the state. The Department is authorized to set standards by Section 601.11, Florida Statutes, as follows: The Department of Citrus shall have full and plenary power to, and may, establish state grades and minimum maturity and quality standards not inconsistent with existing laws for citrus fruits and food products thereof containing 20 percent or more citrus or citrus juice, whether canned or concentrated, or otherwise processed, including standards for frozen concentrate for manufacturing purposes, and for containers therefor, and shall prescribe rules or regulations governing the marking, branding, labeling, tagging, or stamping of citrus fruit, or products thereof whether canned or concentrated, or otherwise processed, and upon containers therefor for the purpose of showing the name and address of the person marketing such citrus fruit or products thereof whether canned or concentrated or otherwise processed; the grade, quality, variety, type, or size of citrus fruit, the grade, quality, variety, type, and amount of the products thereof whether canned or concentrated or otherwise processed, and the quality, type, size, dimensions, and shape of containers therefor, and to regulate or prohibit the use of containers which have been previously used for the sale, transportation, or shipment of citrus fruit or the products thereof whether canned or concentrated or otherwise processed, or any other commodity; provided, however, that the use of secondhand containers for sale and delivery of citrus fruit for retail consumption within the state shall not be prohibited; provided, however, that no standard, regulation, rule, or order under this section which is repugnant to any requirement made mandatory under federal law or regulations shall apply to citrus fruit, or the products thereof, whether canned or concentrated or otherwise processed, or to containers therefor, which are being shipped from this state in interstate commerce. All citrus fruit and the products thereof whether canned or concentrated or otherwise processed sold, or offered for sale, or offered for shipment within or without the state shall be graded and marked as required by this section and the regulations, rules, and orders adopted and made under authority of this section, which regulations, rules, and orders shall, when not inconsistent with state or federal law, have the force and effect of law. The Department is authorized to conduct citrus research by Section 601.13, Florida Statutes. To help pay for these duties of the Department, the Legislature first enacted the "box tax" in 1949. The box tax is now codified as Section 601.15(3), Florida Statutes. Section 601.15(3)(a), Florida Statutes, provides in relevant part: There is hereby levied and imposed upon each standard-packed box of citrus fruit grown and placed into the primary channel of trade in this state an excise tax at annual rates for each citrus season as determined from the tables in this paragraph and based upon the previous season's actual statewide production as reported in the United States Department of Agriculture Citrus Crop Production Forecast as of June 1. Section 601.15(3)(a), Florida Statutes, goes on to set forth specific rates for fresh grapefruit, processed grapefruit, fresh oranges, processed oranges, and fresh or processed tangerines and citrus hybrids. Section 601.15(1), Florida Statutes, sets forth the Department's authority to administer the box tax, as follows: The administration of this section shall be vested in the Department of Citrus, which shall prescribe suitable and reasonable rules and regulations for the enforcement hereof, and the Department of Citrus shall administer the taxes levied and imposed hereby. All funds collected under this section and the interest accrued on such funds are consideration for a social contract between the state and the citrus growers of the state whereby the state must hold such funds in trust and inviolate and use them only for the purposes prescribed in this chapter. The Department of Citrus shall have power to cause its duly authorized agent or representative to enter upon the premises of any handler of citrus fruits and to examine or cause to be examined any books, papers, records, or memoranda bearing on the amount of taxes payable and to secure other information directly or indirectly concerned in the enforcement hereof. Any person who is required to pay the taxes levied and imposed and who by any practice or evasion makes it difficult to enforce the provisions hereof by inspection, or any person who, after demand by the Department of Citrus or any agent or representative designated by it for that purpose, refuses to allow full inspection of the premises or any part thereof or any books, records, documents, or other instruments in any manner relating to the liability of the taxpayer for the tax imposed or hinders or in anywise delays or prevents such inspection, is guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083. The box tax was challenged in 1936 under various provisions of the Florida Constitution as well as the Export Clause, Article 1, s. 9, cl. 5, of the United States Constitution. The Florida Supreme Court issued an opinion in 1937 upholding the validity of the box tax. C.V. Floyd Fruit Company v. Florida Citrus Commission, 128 Fla. 565, 175 So. 248 (1937). In 1970, the Legislature enacted the "equalization tax," codified as Section 601.155, Florida Statutes. The statute mirrored Section 601.15, Florida Statutes, but added certain processors who were mixing foreign citrus products with Florida products. The purpose of the equalization tax was to have all Florida processors of citrus products help pay for the costs of the Department, rather than have the burden fall entirely on the Florida growers subject to the box tax. Section 601.155, Florida Statutes, provides, in relevant part: The first person who exercises in this state the privilege of processing, reprocessing, blending, or mixing processed orange products or processed grapefruit products or the privilege of packaging or repackaging processed orange products or processed grapefruit products into retail or institutional size containers or, except as provided in subsection (9) or except if a tax is levied and collected on the exercise of one of the foregoing privileges, the first person having title to or possession of any processed orange product or any processed grapefruit product who exercises the privilege in this state of storing such product or removing any portion of such product from the original container in which it arrived in this state for purposes other than official inspection or direct consumption by the consumer and not for resale shall be assessed and shall pay an excise tax upon the exercise of such privilege at the rate described in subsection (2). Upon the exercise of any privilege described in subsection (1), the excise tax levied by this section shall be at the same rate per box of oranges or grapefruit utilized in the initial production of the processed citrus products so handled as that imposed, at the time of exercise of the taxable privilege, by s. 601.15 per box of oranges. In order to administer the tax, the Legislature provided the following relevant provisions in Section 601.155, Florida Statutes: Every person liable for the excise tax imposed by this section shall keep a complete and accurate record of the receipt, storage, handling, exercise of any taxable privilege under this section, and shipment of all products subject to the tax imposed by this section. Such record shall be preserved for a period of 1 year and shall be offered for inspection upon oral or written request by the Department of Citrus or its duly authorized agent. Every person liable for the excise tax imposed by this section shall, at such times and in such manner as the Department of Citrus may by rule require, file with the Department of Citrus a return, certified as true and correct, on forms to be prescribed and furnished by the Department of Citrus, stating, in addition to other information reasonably required by the Department of Citrus, the number of units of processed orange or grapefruit products subject to this section upon which any taxable privilege under this section was exercised during the period of time covered by the return. Full payment of excise taxes due for the period reported shall accompany each return. All taxes levied and imposed by this section shall be due and payable within 61 days after the first of the taxable privileges is exercised in this state. Periodic payment of the excise taxes imposed by this section by the person first exercising the taxable privileges and liable for such payment shall be permitted only in accordance with Department of Citrus rules, and the payment thereof shall be guaranteed by the posting of an appropriate certificate of deposit, approved surety bond, or cash deposit in an amount and manner as prescribed by the Department of Citrus. * * * (11) This section shall be liberally construed to effectuate the purposes set forth and as additional and supplemental powers vested in the Department of Citrus under the police power of this state. In March 2000, certain citrus businesses challenged Section 601.155(5), Florida Statutes, as being unconstitutional. At the time of the suit, Section 601.155(5), Florida Statutes, read as follows: All products subject to the taxable privileges under this section, which products are produced in whole or in part from citrus fruit grown within the United States, are exempt from the tax imposed by this section to the extent that the products are derived from oranges or grapefruit grown within the United States. In the case of products made in part from citrus fruit grown within the United States, it shall be the burden of the persons liable for the excise tax to show the Department of Citrus, through competent evidence, proof of that part which is not subject to a taxable privilege. The citrus businesses claimed the exemption in Section 601.155(5) rendered the tax unconstitutionally discriminatory, in that processors who imported juice from foreign countries to be blended with Florida juice were subject to the equalization tax, whereas processors who imported juice from places such as California, Arizona and Texas enjoyed an exemption from the tax. The case, Tampa Juice Service, Inc., et al. v. Department of Citrus, Case No. GCG-00-3718 (Consolidated) ("Tampa Juice"), was brought in the Tenth Judicial Circuit Court, in and for Polk County. Judge Dennis P. Maloney of that court continues to preside over that case. In a partial final declaratory judgment effective March 15, 2002, Judge Maloney found Section 601.155, Florida Statutes, unconstitutional because it violated the Commerce Clause of the United States Constitution due to its discriminatory effect in favor of non-Florida United States juice. In an order dated April 15, 2002, Judge Maloney severed the exemption in Section 601.155(5), Florida Statutes, from the remainder of the statute. The court's decision necessitated the formulation of a remedy for the injured plaintiffs. While the parties were briefing the issue before the court, the Florida Legislature met and passed Chapter 2002-26, Laws of Florida, which amended Section 601.155(5), Florida Statutes, to read as follows: Products made in whole or in part from citrus fruit on which an equivalent tax is levied pursuant to s. 601.15 are exempt from the tax imposed by this section. In the case of products made in part from citrus fruit exempt from the tax imposed by this section, it shall be the burden of the persons liable for the excise tax to show the Department of Citrus, through competent evidence, proof of that part which is not subject to a taxable privilege. Chapter 2002-26, Laws of Florida, was given an effective date of July 1, 2002. By order dated August 8, 2002, Judge Maloney set forth his decision as to the remedy for the plaintiffs injured by the discriminatory effect of Section 601.155(5), Florida Statutes. Judge Maloney expressly relied on the rationale set forth in Division of Alcoholic Beverages and Tobacco v. McKesson Corporation, 574 So. 2d 114 (Fla. 1991)("McKesson II"). In its initial McKesson decision, Division of Alcoholic Beverages and Tobacco v. McKesson Corporation, 524 So. 2d 1000 (Fla. 1988), the Florida Supreme Court affirmed a summary judgment ruling that Florida's alcoholic beverage tax scheme, which gave tax preferences and exemptions to certain alcoholic beverages made from Florida crops, unconstitutionally discriminated against interstate commerce. The Florida Supreme Court also affirmed that portion of the summary judgment giving the ruling prospective effect, thus denying the plaintiff a refund of taxes paid pursuant to the unconstitutional scheme. The decision was appealed to the United States Supreme Court. In McKesson Corporation v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18 (1990), the United States Supreme Court reversed the Florida Supreme Court's decision as to the prospective effect of its decision. The United States Supreme Court held that: The question before us is whether prospective relief, by itself, exhausts the requirements of federal law. The answer is no: If a State places a taxpayer under duress promptly to pay a tax when due and relegates him to a postpayment refund action in which he can challenge the tax's legality, the Due Process Clause of the Fourteenth Amendment obligates the State to provide meaningful backward-looking relief to rectify any unconstitutional deprivation. 496 U.S. at 31 (footnotes omitted). The United States Supreme Court set forth the following options by which the state could meet its obligation to provide "meaningful backward-looking relief": [T]he State may cure the invalidity of the Liquor Tax by refunding to petitioner the difference between the tax it paid and the tax it would have been assessed were it extended the same rate reductions that its competitors actually received. . . . Alternatively, to the extent consistent with other constitutional restrictions, the State may assess and collect back taxes from petitioner's competitors who benefited from the rate reductions during the contested tax period, calibrating the retroactive assessment to create in hindsight a nondiscriminatory scheme. . . . Finally, a combination of a partial refund to petitioner and a partial retroactive assessment of tax increases on favored competitors, so long as the resultant tax actually assessed during the contested tax period reflects a scheme that does not discriminate against interstate commerce, would render Petitioner's resultant deprivation lawful and therefore satisfy the Due Process Clause's requirement of a fully adequate postdeprivation procedure. 496 U.S. at 40-41 (citations and footnotes omitted). The United States Supreme Court expressly provided that the state has the option of choosing the form of relief it will grant. In keeping with the United States Supreme Court opinion, the Florida Supreme Court granted the Division of Alcoholic Beverages and Tobacco (the "Division") leave to advise the Court as to the form of relief the state wished to provide. The Division proposed to retroactively assess and collect taxes from those of McKesson's competitors who had benefited from the discriminatory tax scheme. McKesson contended that a refund of the taxes it had paid was the only clear and certain remedy, because retroactive taxation of its competitors would violate their due process rights. McKesson II, 574 So. 2d at 116. The Florida Supreme Court remanded the case to the trial court for further proceedings on McKesson's refund claim, with the following instructions: While McKesson may not necessarily be entitled to a refund, it is entitled to a "clear and certain remedy," as outlined in the Supreme Court's opinion. Because nonparties, such as amici, will be directly affected by the retroactive tax scheme proposed by the state, all affected by the proposed emergency rule must be given notice and an opportunity to intervene in this action. Therefore, on remand, the trial court not only must determine whether the state's proposal meets "the minimum federal requirements" outlined in the Supreme Court's opinion, it also must determine whether the proposal comports with federal and state protections afforded those against whom the proposed tax will be assessed. We emphasize that the state has the option of choosing the manner in which it will reformulate the alcoholic beverage tax during the contested period so that the resultant tax actually assessed during that period reflects a scheme which does not discriminate against interstate commerce. Therefore, if the trial court should rule that the state's proposal to retroactively assess and collect taxes from McKesson's competitors does not meet constitutional muster and such ruling is upheld on appeal, the state may offer an alternative remedy for the trial court's review. However, any such proposal likewise must satisfy the standards set forth by the Supreme Court as well as be consistent with other constitutional restrictions. 574 So. 2d at 116. In the Tampa Juice case, Judge Maloney assessed the options prescribed by the series of McKesson cases and concluded that the only fair remedy was to assess and collect back assessments from those who benefited from the unconstitutional equalization tax exemption. His August 8, 2002, order directed the Department to "take appropriate steps, consistent with existing law, to assess and collect the Equalization tax from those entities which [benefited] from the unconstitutional exemption." On September 18, 2002, the Department promulgated the Emergency Rules that were at issue in DOAH Case No. 02-3648RE. The Emergency Rules were filed with the Department of State on September 24, 2002, and took effect on that date. Those emergency rules were held invalid in Peace River, and are not at issue in the instant case. In the November 15, 2002 issue of the Florida Administrative Weekly (vol. 28, no. 46, pp. 4996-4998), the Department published the Proposed Rules that were at issue in DOAH Case No. 02-4607RP. In the March 7, 2003, issue of the Florida Administrative Weekly (vol. 29, no. 10, p. 1036), the Department published amendments to the Proposed Rule. The Proposed Rules, as amended, read as follows: EQUALIZATION TAX ON NON-FLORIDA UNITED STATES JUICE 20-15.001 Intent. The Court in Tampa Juice Service, et al v. Florida Department of Citrus in Consolidated Case Number GCG-003718 (Circuit Court in and for Polk County, Florida) severed the exemption contained in Section 601.155(5), Florida Statutes, that provided an exemption for persons who exercised one of the enumerated Equalization Tax privileges on non-Florida, United States juice. The Court had previously determined that the stricken provisions operated in a manner that violated the Commerce Clause of the United States Constitution. On August 8, 2002, the Court ordered that the Florida Department of Citrus "take appropriate steps, consistent with existing law, to assess and collect the Equalization tax from those entities which [benefited] from the unconstitutional exemption." It is the Florida Department of Citrus' intent by promulgating the following remedial rule to implement a non- discriminatory tax scheme, which does not impose a significant tax burden that is so harsh and oppressive as to transgress constitutional limitations. These rules shall be applicable to those previously favored persons who received favorable tax treatment under the statutory sections cited above. Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, , 601.155 FS. History-- New . 20-15.002 Definitions. "Previously favored persons" shall be defined as any person who exercised an enumerated Equalization Tax privilege as defined by Section 601.155, Florida Statutes, but who was exempt from payment of the Equalization Tax due to the exemption for non-Florida, United States juice set forth in the statutory provision, which was ultimately determined to be unconstitutional and severed from Section 601.155(5), Florida Statutes. The "tax period" during which the severed provisions of Section 601.155(5), Florida Statutes, were in effect shall be defined as commencing on October 6, 1997, and ending on March 14, 2002. "Tax liability" shall be defined as the total amount of taxes due to the Florida Department of Citrus during the "tax period," at the following rates per box for each respective fiscal year: Fiscal Year Processed Rate Orange Grapefruit 1997-1998 .175 .30 1998-1999 .17 .30 1999-2000 .18 .325 2000-2001 .175 .30 2001-2002 .165 .18 Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, , 601.155 FS. History-- New . 20-15.003 Collection. The Florida Department of Citrus shall calculate the tax liability for each person or entity that exercised an enumerated Equalization Tax privilege outlined in section 601.155, Florida Statutes, upon non-Florida, United States juice based upon inspection records maintained by Florida Department of Agriculture and Consumer Services and the United States Department of Agriculture. Subsequent to adoption of this rule, the Florida Department of Citrus will provide to the previously favored persons by certified mail a Notice of Tax Liability which shall contain a demand for payment consistent with the above-referenced itemized statement. The Department will deem late payment of Equalization Taxes owed by previously favored persons to constitute good cause, and shall waive the 5 percent penalty authorized by Section 601.155(10), F.S., as compliance with either of the following is established by Department [sic]: Lump sum payment of the tax liability remitted with the filing of Department of Citrus Form 4R (incorporated by reference in Rule 20-100.004, F.A.C.) for the relevant years and then-applicable tax rate(s) per subsection 20-15.002(3), F.A.C., within 61 days of receiving Notice of Tax Liability; or Equal installment payments remitted with the filing of Department of Citrus Form 4R (incorporated by reference in Rule 20- 100.004, F.A.C.) for the relevant years and then-applicable tax rate(s) per subsection subsection [sic] 20-15.002(3), F.A.C., over a 60-month period, the first payment being due within 61 days of receiving Notice of Tax Liability pursuant to subsection 20- 15.003(2), F.A.C.; or The Good Cause provisions of 601.155(10), F.S., shall not apply to persons who do not comply with paragraph 20- 15.003(2)(a), F.A.C., or paragraph 20- 15.003(2)(b), F.A.C. Failure to pay the taxes or penalties due under 601.155, F.S. and Chapter 20-15, F.A.C., shall constitute grounds for revocation or suspension of a previously favored person's citrus fruit dealer's license pursuant to 601.56(4), F.S., 601.64(6), F.S., 601.64(7), F.S., and/or 601.67(1), F.S. The Florida Department of Citrus will not oppose the timely intervention of persons who previously enjoyed the subject exemption that wish to present a claim to the Court in the Tampa Juice Service, Inc., et al v. Florida Department of Citrus. However, the Florida Department of Citrus does not waive any argument regarding the validity of the calculation of the tax liability or that imposition of this tax is constitutional. Specific Authority 601.02, 601.10, 601.15, 601.155 FS. Law Implemented 601.02, 601.10, 601.15, 601.155 FS. History-- New . The Final Order in Peace River held that the Proposed Rules were not an invalid exercise of delegated legislative authority, for reasons discussed in the Conclusions of Law below. Judge Maloney has yet to rule on the backward-looking remedy proposed by the Department. On March 26, 2003, Judge Maloney entered an order extending until May 1, 2003, the time for interested parties to file motions to intervene with regard to the Department's proposed backward-looking relief. The order noted that the parties have stipulated to the suspension of the back tax as to plaintiffs and objecting non-parties until further order of the court. On February 19, 2003, Judge Maloney entered an "Order Granting Plaintiffs' Motion for Partial Summary Judgment-- Import-Export." The sole issue before Judge Maloney was "whether Section 601.155, Florida Statutes, (the 'Equalization Tax'), as it existed in 1997, violates Article I, Section 10, clause 2 of the Constitution of the United States (the 'Import- Export Clause')." (Emphasis in original) After setting forth the standard for analysis of whether a taxing scheme violates the Import-Export Clause under Michelin Tire Corp. v. Wages, 423 U.S. 276, 96 S. Ct. 535, 46 L.Ed.2d 495 (1976), Judge Maloney ruled as follows: It is precisely [the exemption for United States products found in 601.155(5), Florida Statutes] that causes the 1997 Equalization Tax to contravene the Import-Export Clause. Specifically, the court finds that because the statute exempts "citrus fruit grown within the United States," but does not exempt citrus fruit grown in foreign countries, the exemption causes the tax to "fall on imports as such simply because of their place of origin." Michelin, 423 U.S. at 286. Additionally, because the tax falls on foreign-grown citrus as such simply because of its origin but does not fall on domestic-grown citrus, the Equalization Tax, with the exemption, creates a "special tariff or particular preference for certain domestic goods." Id. (i.e. California, Arizona, and Texas citrus products). * * * In conclusion, because the court finds the exemption contained within the 1997 Equalization Tax violates both the first and third elements of the Michelin test,1 the court finds the 1997 Equalization Tax violates Article I, Section 10, clause 2 of the Constitution of the United States (the "Import-Export Clause"). On March 31, 2003, Judge Maloney entered an "Order Granting Plaintiffs' Motion for Partial Summary Judgment." In this order, Judge Maloney found that the box tax itself, Section 601.15, Florida Statutes, violates the First Amendment to the United States Constitution. Petitioners and Intervenor in the instant case are licensed citrus fruit dealers regulated by Chapter 601, Florida Statutes. As such, they are subject to the rules of the Department. Petitioners and Intervenor buy, sell, and manufacture citrus juices. They shipped products made with non- Florida U.S. juice during the tax period without paying equalization taxes. Petitioners and Intervenor have been notified by the Department that they are liable to pay back taxes pursuant to the Proposed Rules, as well as the invalid Emergency Rules.
The Issue Whether Respondent is indebted to Petitioner for Florida- grown citrus products sold to Respondent.
Findings Of Fact Petitioner and Respondent are Florida-licensed citrus fruit dealers operating within the Department's regulatory jurisdiction. Great American was the surety for J and G Citrus' fruit dealer's license for the 2006-2007 citrus shipping season. J and G Citrus is Petitioner's customer. Petitioner ships fruit on behalf of J and G Citrus under their name for a service charge and fee for fruit, the cost of packing, and shipping. Petitioner and Respondent entered a written contract on November 12, 2004, for such services. Cushman's replacements policy provides that a customer should notify Cushman of any problem and the company will refund the monies for the order or replace the package. Cushman guarantees to "honor all replacement requests in a timely manner at no cost to you." J and G Citrus utilized the policy during its contract with Cushman. Cushman delivered the following fruit orders for J and G Citrus from December 22, 2006, to February 16, 2007: 292 navel fruit trays at $3.35 a tray; 168 grapefruit trays at $3.35 a tray; 87 honeybells trays at $6.88 a tray; and 29 tangerine trays for $6.88 at tray. The costs for the fruit shipped totaled $2,339.00. J and G Citrus was invoiced this amount. Accordingly, Respondent was obligated to pay Petitioner the total sum for the fruit. After Cushman Fruit invoiced J and G Citrus for the outstanding balance, no payment was received. On March 28, 2007, Cushman informed J and G Citrus of its bill and told Respondent that "You need to get current." J and G Citrus responded on the same day that it would provide a payment schedule by Monday. On April 23, 2007, J and G Citrus confirmed by email that they were going to start paying and would provide a payment. On May 7, 2007, Cushman requested the payment schedule from J and G Citrus again and informed the company, "I need a response from you today." Cushman never heard further from Respondent regarding payment. To date, the invoices are unpaid and the monies are owed to Cushman. Petitioner performed all of its duties under the contract with J and G Citrus and Respondent failed to pay for the services. J and G Citrus is, therefore, indebted to Petitioner.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered requiring Respondent pay to Petitioner the sum of $2,339.00 DONE AND ENTERED this 11th day of February, 2009, in Tallahassee, Leon County, Florida. S JUNE C. McKINNEY 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 11th day of February, 2009. COPIES FURNISHED: Elizabeth Alvarez Cushman Fruit Company, Inc. 3325 Forest Hill Boulevard West Palm Beach, Florida 33406 Rob Brehm Great American Insurance Company Post Office Box 2119 Cincinnati, Ohio 45201 Christopher E. Green, Esquire Department of Agriculture and Consumer Services Office of Citrus License and Bond Mayo Building, M-38 Tallahassee, Florida 32399-0800 Brian D. Jerome Carla Dupleich J & G Citrus Groves 5781 Seminole Way Fort Lauderdale, Florida 33314 Honorable Charles Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services 407 South Calhoun Street, Suite 520 Tallahassee, Florida 32399-0800
The Issue The issue presented is whether Respondents Harbor Island Citrus, Inc., and Fidelity & Deposit Company of Maryland are indebted to Petitioner Rio Indio Fruit Company in the amount of $80,684.
Findings Of Fact Petitioner Rio Indio Fruit Company operates a citrus packinghouse located in St. Lucie County, Florida. Respondent Harbor Island Citrus, Inc., operates a citrus packinghouse in Indian River County, Florida. On approximately November 20, 1999, Albert Valdes from Harbor Island contacted Ralph Viamontes from Rio Indio to ascertain if Rio Indio might have a source that Harbor Island could use to obtain colored grapefruit for Harbor Island's annual fund-raising program. It was the industry practice, and Harbor Island's practice, for the fund-raising program to run from late-November through mid-December. During that time period, students in the north sell the fruit to raise money for their projects. The fruit used in such a fund-raising program can be a quality inferior to the quality demanded by the Japanese market, the primary market for Harbor's Island's citrus. Viamontes told Valdes he would see if he could find a grower with colored grapefruit suitable for Harbor Island's fund-raising program. Viamontes telephoned Valdes the following day and said he had located a grower. On that day or possibly the following day Valdes and two other Harbor Island employees, Dennis Downs and James Morris, met Viamontes at the Rio Indio facility. The four men drove in Viamontes' vehicle to the Sorge VII grove in Martin County to look at the grove's colored grapefruit. The amount of fruit in the grove was much larger than Harbor Island needed to fulfill its fund-raising program commitment. Viamontes estimated that the grove contained the equivalent of 30,000 boxes of colored grapefruit. Valdes told Viamontes that Harbor Island might need 18,000 to 20,000 boxes of the grapefruit for its fund-raising program. Viamontes told the Harbor Island employees that they could still make a deal for the grapefruit in the grove because since he had his own packing house, he would take the fruit that Harbor Island did not need. The men discussed that Harbor Island could take 2/3 of the colored grapefruit in the grove, and Rio Indio could take 1/3. They further discussed that the manager of Sorge VII wanted $5.50 a box for the fruit, that Viamontes would contract to take all the fruit in the grove, that Harbor Island would pay Viamontes $5.50 a box for the fruit Harbor Island took, and that Viamontes would pay the grower. James Morris from Harbor Island specifically asked Viamontes what would happen if Harbor Island wanted less than 18,000 to 20,000 boxes. Viamontes told the Harbor Island employees that there would be no problem if Harbor Island took less fruit because Viamontes would take whatever was left after Harbor Island took what it wanted. Valdes consulted with Donald Groves, Jr., the owner of Harbor Island to verify that Harbor Island would make the arrangement suggested by Viamontes, and Groves approved the arrangement. Thereafter, Viamontes entered into a written contact with the manager of Sorge VII to purchase all of the fruit for $5.50 a box, and that written contract included deadlines for 20,000 boxes of fruit to be picked by December 31, 1999, and the remainder to be picked by the end of February 2000. Rather than the 30,000 field boxes that Viamontes had estimated the grove contained, the grove contained substantially more grapefruit than Viamontes estimated. The record in this cause suggests that the grove may have contained as many as 43,762 boxes of colored grapefruit. In accordance with its understanding of the arrangement with Viamontes, Harbor Island began harvesting colored grapefruit from the Sorge VII grove on November 26, 1999, and completed all picking at the grove on December 8, 1999. During that time Harbor Island picked 9,000 boxes of colored grapefruit for which it was obligated to pay Viamontes $5.50 per box. Harbor Island paid Viamontes in full for the fruit it took. During the time Harbor Island was at the Sorge VII grove picking colored grapefruit, Rio Indio's crews were there picking grapefruit. Rio Indio's crews also picked fruit at the grove during the months after Harbor Island completed its picking. In addition to Rio Indio's crews knowing that Harbor Island had completed its picking, James Morris specifically told Viamontes that Harbor Island had taken all the fruit it wanted from the Sorge VII grove as of December 8, 1999. During the months of December 1999, January 2000, February 2000, and the first half of March 2000, Viamontes spoke with Valdes of Harbor Island several times a day to check on the status of other unrelated fruit being packed and sold by Harbor Island for Viamontes. In addition, Viamontes was present at the Harbor Island packinghouse on a weekly basis to pick up checks due to him or Rio Indio for the unrelated fruit being sold by Harbor Island for Viamontes. Yet, at no time between December 8, 1999, and the middle of March 2000 did Viamontes tell anyone that he believed Harbor Island had an obligation to harvest additional fruit from the Sorge VII grove. Rather, in late January 2000 Viamontes asked Valdes if Harbor Island were going to take any more fruit from Sorge VII. When Valdes said the fund-raising program was over, Viamontes told Valdes not to worry because Rio Indio would take the rest. Further, on or about March 1, 2000, during one of Viamontes' visits to the Harbor Island packinghouse, Dennis Downs of Harbor Island asked Viamontes how the harvesting in Sorge VII was proceeding. Viamontes responded that Rio Indio was harvesting the remaining colored grapefruit and that Harbor Island need not be concerned about any further harvesting at the Sorge VII grove. On or about March 15, 2000, the price and demand for colored grapefruit suddenly and dramatically dropped due to an oversupply of fruit for which the industry was not prepared. After the dramatic decline, Viamontes contacted Valdes from Harbor Island and inquired whether Harbor Island was going to pick any additional fruit at the Sorge VII grove. Valdes responded that Harbor Island had no obligation to pick any additional colored grapefruit from the Sorge VII grove based upon the agreements between Harbor Island and Rio Indio, specifically, Viamontes' continued representations that Harbor Island should not be concerned about picking any additional colored grapefruit from the grove because Rio Indio would take the remainder. In July 2000 Viamontes appeared at Harbor Island and advised Donald Groves, for the first time, that Harbor Island owed Rio Indio the amount of $80,684 for an additional 20,171 boxes of colored grapefruit from the Sorge VII grove, which Viamontes now contends Harbor Island should have harvested. Rio Indio claims that it suffered a loss of $4 per box for that additional fruit. The documentation presented by Rio Indio to support its demand is questionable and does not substantiate Rio Indio's claimed damages. First, the majority of the documents submitted by Rio Indio indicate that the fruit described therein was from a grove in St. Lucie County, and Sorge VII is in Martin County. Second, the majority of the documents indicate that the fruit described therein was from packinghouse eliminations although Viamontes alleges that the fruit went directly from the field to the cannery without going through a packinghouse. Third, the cannery records reflect that the "pound solids per box" are significantly less than what would be expected from fruit coming from the Sorge VII grove based upon the grove's historical production.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered finding that Harbor Island Citrus, Inc., is not indebted to Rio Indio Fruit Company and dismissing the Complaint filed by Rio Indio Fruit Company in this cause. DONE AND ENTERED this 12th day of December, 2001, in Tallahassee, Leon County, Florida. LINDA M. RIGOT Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of December, 2001. COPIES FURNISHED: Theodore W. Herzog, Esquire 1101 Simonton Street Key West, Florida 33040 Fred L. Kretschmer, Jr., Esquire Moss, Henderson, Blanton, Lanier, Kretschmer & Murphy, P.A. 817 Beachland Boulevard Post Office Box 3406 Vero Beach, Florida 32964-3406 Kathy Elves The Fidelity and Deposit Companies 300 Saint Paul Place Post Office Box 87 Baltimore, Maryland 21203 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services 500 Third Street, Northwest Post Office Box 1072 Winter Haven, Florida 33882-1072 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services 541 East Tennessee Street India Building Tallahassee, Florida 32308 Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810
