The Issue The issue is whether Nissan North America, Inc.'s (Nissan) rejection of the proposed transfer of the equity interest in Love Nissan, Inc. (Love), from Robert Halleen and Chad Halleen to Marilyn Halleen, is in violation of the laws regulating the licensing of motor vehicle dealers and manufacturers, maintaining competition, providing consumer protection and fair trade and providing minorities with opportunities for full participation as motor vehicle dealers, as set forth in Sections 320.61-320.70, Florida Statutes.
Findings Of Fact Nissan is a "licensee" as defined by Section 320.60(8), Florida Statutes. Love is a "motor vehicle dealer" as defined by Section 320.60(11)(a)1, Florida Statutes. Love serves a territory centered on Homosassa, Florida. Nissan and Love are parties to a Dealer Sales and Service Agreement (Agreement), which is an "agreement" or "franchise agreement," as defined by Section 320.60(1), Florida Statutes. Robert Halleen and Chad Halleen became owners of Love as the result of a 1999 gift of the equity of Love from Robert's father and Chad's grandfather. Subsequent to the donation, Robert became a 90 percent owner of Love and Chad became a ten percent owner. Robert Halleen and Chad Halleen entered into the Agreement with Nissan on March 4, 1999. Since that time Robert Halleen has served as the Dealer Principal and Principal Owner of Love Nissan, and Chad Halleen has served as the Executive Manager and Other Owner. The Agreement has never been amended. The Agreement clearly states that Nissan relied on the personal qualifications of the Principal Owner, Other Owner, and Executive Manager in entering into the Agreement. In addition to personal qualifications, the Agreement recites expertise, reputation, integrity, experience, and ability, as characteristics expected of the Principal Owner, Other Owner, and Executive Manager. Since Robert and Chad Halleen became owners of Love the dealership has never met the regional average sales penetration. The regional average sales penetration is the measurement used by Nissan to evaluate the sales performance of each of its dealers. Subsequent to the inception of the Agreement, Nissan has issued multiple Notices of Default to Love citing Love's poor sales performance. In an effort to facilitate Love's success, Nissan contracted their primary market area on several occasions. This and other efforts to bolster Love's performance failed. As a result, Nissan issued a Notice of Termination of the Dealer Sales and Service Agreement between itself and Love, dated April 1, 2004. This precipitated a protest and a formal hearing before Administrative Law Judge Ella Jane Davis who recommended that DHSMV dismiss the protest and ratify the Notice of Termination. As noted above, DHSMV has not issued a final order. Because it has not, and because an appeal could follow, Nissan has not yet entered into a franchise with a new dealer for the Homosassa primary market area. It is Nissan's intention to award the area to a qualified minority candidate. Eleven days after the issuance of Judge Davis's order, on July 25, 2005, Robert and Chad Halleen notified Nissan of their intent to sell all of their stock in Love to Marilyn Halleen. In a short letter to Nissan, the selling price was said to be $100 with an increase to $5,000,000 should the sale ultimately be made to a third party. The dealership, if sold on the open market, would bring much more than $100. It could sell for as much as five million dollars. The letter also averred that there would not be a change in the executive management. The decision to sell all of the stock in Love to Marilyn Halleen was made by Robert Halleen. Chad Halleen was instructed by his father to comply with his decision to sell and he did as instructed. Prior to the issuance of Judge Davis's Recommended Order, Robert and Chad Halleen decided that if the termination case had an unfavorable outcome, they would avoid it by selling Love to a family member. They attempted to give effect to this course of action by discussing with Robert Halleen's father the possibility of transferring ownership to him. Robert and Chad Halleen desired to keep the dealership in the family and to ensure that Chad remained employed. Pursuant to the contemplated transfer to Robert Halleen's father, Chad Halleen would continue as Executive Manager, which was also the case in the proposed transfer to Marilyn Halleen. The discussion with Robert Halleen's father did not ripen into a course of action. During their tenure at Love, Robert and Chad Halleen informally divided the operational responsibilities between themselves. Chad Halleen was primarily responsible for the sales department and Robert Halleen focused on supervising the day-to-day operations of the parts, service, and accounting departments. However, it is clear that Robert Halleen, has been since the inception of the Agreement, and was, at least up to the date of the formal hearing, in ultimate overall charge of all of the operations of Love. Robert Halleen asserted at the hearing that he would abandon his role in the management of Love. Love attempted to prove that Chad Halleen was capable of successfully managing the operation without the aid of his father. However, the evidence taken as a whole, indicated that he had never operated the dealership without the assistance of Robert Halleen and that he would have difficulty doing so without that assistance. Subsequent to the proposed transfer, the management of Love would, allegedly, consist of Marilyn Halleen and Chad Halleen. They would be, under the Agreement, the "executive management," which is the term used in the Agreement to describe the Dealer Principal and the Executive Manager. It is not necessary under the Agreement, for a Dealer Principal to be actively involved in the daily business of the dealership, and because a Dealer Principal may own dealerships in more than one geographical area, it is not unusual to find a Dealer Principal who is not active in the day-to-day management of dealerships she or he owns. However, in this case it is contemplated, and Marilyn Halleen has so stated, that she and Chad Halleen would operate the business together. Currently, Marilyn Halleen's participation in the operation of the dealership has been working as a bookkeeper in the accounting department. Marilyn Halleen stated that should the transfer be approved, she would make the decisions about running the dealership, how the dealership is capitalized, new car sales, used car sales, allocation and ordering, marketing, management of the parts and service departments, and all of the other myriad responsibilities incumbent on a manager of an automobile dealership. However, her work experience does not qualify her to successfully accomplish all of these tasks and this plan is contrary to the assertion in the notice to Nissan that there would be no change in executive management. Marilyn Halleen has never owned a dealership or any other business. Her management experience is limited to filling a position as an office manager in a Buick dealership many years ago. In various automobile dealerships she has worked as a title clerk, receptionist, cashier, and in a warranty department. Prior to becoming bookkeeper at Love she worked full-time selling cosmetics for Mary Kay. Nissan was unaware of the details of Marilyn Halleen's business experience, or lack of it, at the time they determined that they would reject the proposed transfer. However, the notice to Love that the proposed transfer was rejected, dated September 20, 2005, recited in the attachment that the rejection was based on Nissan's belief the transfer was a sham. Marilyn Halleen's lack of experience is evidence tending to prove that the transfer was a sham. To find as a fact that Robert and Chad Halleen were really going to give Marilyn Halleen complete ownership and control over Love would require a suspension of disbelief. Having observed the lackluster performance of Robert and Chad Halleen over a five-year period, Nissan reasonably concluded that Marilyn Halleen was unlikely to ramp up Love's performance. Although Section 320.943(2), Florida Statutes, does not require that a transfer of an equity interest be at arms- length, the fact that a purported transfer is not an arms-length transaction, when considered with other evidence, may tend to demonstrate, as it does in this case, that the purported transfer is a sham. The fact that the purchase price is remarkably below market value does not in every case mean that a purported transfer is a sham. Under the facts of this case, however, the below market sales price tends to prove that the purported transfer is illusory. The evidence, taken as a whole, proves that the purported transfer is an artifice or device designed to avoid the consequences of the poor performance of Love while under the command of Robert and Chad Halleen. Thus the proposed transfer is not a real transfer; it is a sham designed to avoid Judge Davis's Recommended Order upholding the termination. Marilyn Halleen, although a human being separate from her spouse and off-spring, cannot be considered "any other person or persons." She is the alter ego of Robert and Chad Halleen and, should the transfer be approved, the evidence demonstrates she will be a mere agent or tool of the current owners and the inept management of Love will continue. It was not proven that Marilyn Halleen lacked good character as that term is used in Section 320.643(2), Florida Statutes, which governs the transfer of an equity interest in a dealership. The question of whether or not the proposed transfer involved a change in executive management at Love, which might trigger consideration of Section 320.643(1) or 320.644, Florida Statutes, a question advanced by Nissan, at the hearing, and in Nissan's Proposed Recommended Order, need not be addressed for the reasons set forth in paragraph 23, above. In order for those sections to be invoked there must first be a valid transfer.
Recommendation Based upon the Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a Final Order stating that pursuant to Nissan's verified Petition for Determination of Invalid Proposed Transfer Pursuant to Section 320.643, Florida Statutes, and Notice of Rejection of Proposed Transfer, no transfer under Section 320.643, Florida Statutes, is proposed and Nissan's rejection of it was proper. Further, the Department of Highway Safety and Motor Vehicles should enter a Final Order dismissing Robert Halleen and Chad Halleen's Petition for Determination of Wrongful Turndown. DONE AND ENTERED this 18th day of January, 2006, in Tallahassee, Leon County, Florida. S HARRY L. HOOPER 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 18th day of January, 2006. COPIES FURNISHED: Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 S. Keith Hutto, Esquire Nelson, Mullins, Riley & Scarborough, LLP 1320 Main Street Columbia, South Carolina 29201 Dean Bunch, Esquire Sutherland, Asbill & Brennan, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312-1267 John W. Forehand, Esquire Lewis, Longman & Walker, P.A. 125 South Gadsden Street, Suite 300 Tallahassee, Florida 32301-1525 Alex Kurkin, Esquire Pathman Lewis, LLP One Biscayne Tower, Suite 2400 Two South Biscayne Boulevard Miami, Florida 33131 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 Tallahassee, Florida 32399-0600 Enoch Jon Whitney, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-1701
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint dated August 23, 2007, and, if so, the penalty that should be imposed.
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: The Department is the state agency responsible for registering and regulating motor vehicle repair shops. See §§ 559.904, .920, and .921, Fla. Stat. Ms. Gore is the current president and sole shareholder of American Auto Glass. She is also its only employee. American Auto Glass's physical address is 873 Orchid Drive, Plantation, Florida 33317, which is Ms. Gore's residence. American Auto Glass's business records are kept at this address, and its invoices and billings to various insurance companies are prepared there. All business correspondence and payments go to Post Office Box 17484, Fort Lauderdale, Florida 33318; and its the business telephone is Ms. Gore's cell phone. American Auto Glass is a "Sub-Chapter S" corporation. Prior to June 2006, Ms. Gore and Ana Diaz jointly owned American Auto Glass; Ms. Gore purchased the business in June 2006, and Ms. Diaz has not been involved in the business since that time. American Auto Glass is an approved vendor of automobile glass replacement claims for several insurance companies, and it acts as a broker handling automobile glass replacement claims for persons insured by those insurance companies. When an insurance company receives a claim from an insured for replacement of damaged automobile glass, the insurance company assigns the claim to American Auto Glass. American Auto Glass receives the assignment either through a telephone call from the insurance company's claims department or in a facsimile transmission from a glass vendor, that is, an administrator under contract with the insurance company to sub- contract automobile glass replacement claims to other agents in the field. The insurance company or glass vendor tells its insureds that it will handle the assignment of the claims and does not refer its insureds to American Auto Glass. Rather, it advises the insureds that they will be contacted by the person who will do the work of replacing the glass. Once American Auto Glass receives the claim referral, Ms. Gore contacts an independent sub-contractor who will do the installation of the automobile glass replacement. The sub- contractors used by American Auto Glass also work for other companies. As part of the assignment, American Auto Glass receives complete information regarding the type of vehicle, the damages, and the materials that need to be replaced, which Ms. Gore transmits to the sub-contractor. The sub-contractor assigned the installation job contacts the insured and arranges an appointment with the insured to bring in the car to the sub-contractor for the replacement installation. American Auto Glass does not, at any time, have possession of the vehicles for which it arranges automobile glass replacement installations, nor does it share a business location with the sub-contractors it engages to do the automobile glass replacement installations. Some sub-contractors used by American Auto Glass for automobile glass replacement installations furnish both parts and labor. If the sub-contractor does not furnish the parts but only the labor, the sub-contractor orders the necessary parts from AGS Auto Glass Export or another parts supplier. American Auto Glass has an account with AGS Auto Glass Export. The sub-contractor picks up the necessary parts for a job, and AGS Auto Glass Export bills American Auto Glass directly for these parts. Once the glass replacement installation is completed, the sub-contractor either sends an invoice to American Auto Glass or contacts Ms. Gore and provides the vehicle information required by the insurance company and the cost of the installation. American Auto Glass bills the insurance company for the work done, and the insurance company pays American Auto Glass. American Auto Glass pays the sub-contractors for parts and labor if the sub-contractor has furnished the parts necessary for the replacement or for labor only if the sub- contractor has ordered the parts from AGS Auto Glass Export, the cost of which are billed directly to American Auto Glass. Ms. Gore adds a certain percentage to these charges when she bills the insurance company. American Auto Glass's primary sub-contractor does not furnish parts, and he has a negotiated price with American Auto Glass for each installation. American Auto Glass acts exclusively as a broker arranging with independent sub-contractors for the automobile glass replacement installations on behalf of insurance companies.2 American Auto Glass at no time has any contact with the insurance company's insureds or their vehicles. At one time prior June 2006, when Ms. Gore purchased sole interest in the business, American Auto Glass employed an "installer" who did the actual work of installing automobile glass replacements. During this time, American Auto Glass was registered with the Department as a motor vehicle repair shop. The registration expired on May 29, 2007.3 The evidence presented by the Department is not sufficient to establish that American Auto Glass is a motor vehicle repair shop whose business is motor vehicle repairs. Rather, American Auto Glass acts as a middleman between insurance companies and motor vehicle repair shops that do the actual glass replacement installation. Its only physical location is Ms. Gore's residence, and the business activities that take place at that location do not include any activities related to the actual work of motor vehicle repair.
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 Administrative Complaint filed against American Auto Glass Network, Inc. DONE AND ENTERED this 11th day of March, 2008, in Tallahassee, Leon County, Florida. S PATRICIA M. HART 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 11th day of March, 2008.
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Said Order Closing File was predicated upon Respondent’s withdrawal of his objection to the establishment of a new dealership, filed April 5, 2011. Accordingly, it is hereby ORDERED and ADJUDGED that Petitioner, Scott Koster d/b/a Sunrise Scooters, Inc., be granted a license for the sale of motorcycles manufactured by Taizhou Chuan! Motorcycle Manufacturing Co. Ltd. (CHUA) at 1923 South Federal Highway, Fort Lauderdale (Broward County), Florida 33316, upon compliance with all applicable requirements of Section 320.27, Florida Statutes, and all applicable Department rules. Filed April 19, 2011 12:28 PM Division of Administrative Hearings DONE AND ORDERED this Sh day of April, 2011, in Tallahassee, Leon County, Sandra C. Lambert, Seon Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Florida. Filed with the Clerk of the Division of Motor Vehicles this_+Y day of April, 2011. alias Virogsl ‘Ramninistrator NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. SCL:vlg Copies furnished: Noel Farbman USA Wholesale Scooters, Inc. 4316 North Dixie Highway Oakland Park, Florida 33334 * eel \ “FotattainimbA eango 1elsa ,AByeniV ini Scott Koster Sunrise Scooters, Inc. 300 Southwest 7 Street Fort Lauderdale, Florida 33316 Gloria Ma EI Sol Trading, Inc. 19877 Quiroz Court City of Industry, California 91789 Robert E. Meale Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Section
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File by R. Bruce McKibben, Administrative Law Judge of the Division of Administrative Hearings, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File as its Final Order in this matter. Said Order Closing File was predicated upon Respondent’s Notice of Withdrawal of Notice of Establishment and Motion to Dismiss, filed March 16, 2011. Accordingly, it is hereby ORDERED and that this case is DISMISSED. Filed March 25, 2011 9:39 AM Division of Administrative Hearings DONE AND ORDERED this a 7 day of March, 2011, in Tallahassee, Leon County, Florida. Sandra C. Lambert, Interim Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399 Filed with the Clerk of the Division gf Motor Vehicles this_2&/ day of March, 2011. fe labies Cirmnpale as NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. SCL:vlg Copies furnished: John W. Forehand, Esquire Kurkin Forehand Brandes, LLP 800 North Calhoun Street, Suite 1B Tallahassee, Florida 32303 J. Andrew Bertron, Esquire Nelson Mullins Riley & Scarborough, LLP 3600 Maclay Boulevard South, Suite 202 Tallahassee, Florida 32312 James L. Ferman, Jr. Ferman on 54, Inc. 24252 State Road 54 Lutz, Florida 33559 R. Bruce McKibben Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399 Nalini Vinayak Dealer License Section
The Issue The issue in this case is whether Respondents committed the offenses described in an Administrative Complaint entered by Petitioner on or about January 10, 1997.
Findings Of Fact Petitioner, The Department of Agriculture and Consumer Services (hereinafter referred to as the "Department"), is an agency of the State of Florida. The Department is charged with responsibility for enforcing the Florida Motor Vehicle Repair Act, Sections 559.901-559.9221, Florida Statutes (hereinafter referred to as the "Act"). Respondent, Adam's Street Muffler Shop and Service Center, Inc. (hereinafter referred to as "Adam's Street Muffler"), is a dissolved Florida corporation. Adam's Street Muffler is located at 1401 South Adam's Street, Tallahassee, Leon County, Florida. Adam's Street Muffler is registered with the Department under the Act as a motor vehicle repair shop. The Department has assigned registration number MV-15484 to Adam's Street Muffler. Respondent, Tim Tanner, is the owner and operator of Adam's Street Muffler. At the time that Adam's Street Muffler register pursuant to the Act, a registration packet, including a copy of the Act, was provided to Adam's Street Muffler. On July 24, 1995, Robert Dan Drake, an investigator with the Department's Bureau of Motor Vehicle Repair, went to Adam's Street Muffler. Mr. Drake performed a compliance audit to determine whether repair estimate statements and invoices for services were in compliance with Sections 559.905 and 559.911, Florida Statutes. A copy of the repair invoice provided by Adam's Street Muffler personnel to Mr. Drake was determined not to be in compliance with Sections 559.905 and 559.911, Florida Statutes. See Petitioner's Exhibit 9. Mr. Drake discussed the requirements of the Act pertaining to repair estimates and invoices with Peggy Folsom, the secretary for Adam's Street Muffler. Mr. Drake also provided an On-Site Inspection Report/Citation (Petitioner's Exhibit 7), and a Compliance Checklist/Citation (Petitioner's Exhibit 8), to Ms. Folsom. These forms described the deficiencies with the repair estimate and invoice form being used by Adam's Street Muffler. Adam's Street Muffler was given thirty days to correct the repair estimate and invoice. A revised form was submitted to the Department. See Petitioner's Exhibit 10. The corrected form was accepted by the Department. On July 1, 1996, Mr. Drake returned to Adam's Street Muffler. Mr. Drake discovered that the repair estimate and invoice used by Adam's Street Muffler for a complaining customer was the same form that he had found to be deficient on July 24, 1995. See Petitioner's Exhibit 12. Mr. Drake issued a second On-Site Inspection Report/Citation to Adam's Street Muffler as a result of the July 1, 1996 visit. Petitioner's Exhibit 11. The report again described the specific deficiencies with the repair estimate and invoice form being used by Adam's Street Muffler. On October 1, 1996, Mr. Tanner paid a $300.00 fine for violating Sections 559.905 and 559.911, Florida Statutes. On December 1, 1996, two months after Mr. Tanner paid the fine, and approximately six months after the second violation of the Act, Dan Keller, an employee of the Department, visited Adam's Street Muffler. Mr. Keller examined forms titled "Repair Orders" in the files of Adam's Street Muffler. The forms discovered by Mr. Keller were determined not to be in compliance with Sections 559.905 and 559.911, Florida Statutes. Petitioner's Exhibits 1-5. The forms copied by Mr. Keller on December 1, 1996, were used as repair estimates and invoices for services performed. The evidence failed to prove when the vehicles at issue were brought to Adam's Street Muffler, that they were not brought to Adam's Street Muffler by person other than the owner, or that Adam's Street Muffler did not notify the customer pursuant to Section 559.909(1), Florida Statutes. None of the owners of the vehicles to which Petitioner's Exhibits 1-5 relate have filed a complaint with the Department concerning work performed by Adam's Street Muffler. The repairs evidence by Petitioner's Exhibits 1-5 were for repair work costing in excess of $50.00. The forms taken from Adam's Street Muffler on July 24, 1995, July 1, 1996, and December 1, 1996 are incorporated into this Recommended Order by reference. On or about January 10, 1997, the Department entered an Administrative Complaint against Adam's Street Muffler and Mr. Tanner. The Administrative Complaint contains two counts against Respondents: one for alleged violations of Section 559.905, Florida Statutes, and one for alleged violations of Section 559.911, Florida Statutes. Both counts relate the forms obtained by the Department in December of 1996.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered by the Department of Agriculture and Consumer Services finding that Adam's Street Muffler Shop and Service Center, Inc., a Florida Corporation, and Tim Tanner, individually and as Director of Adam's Street Muffler Shop and Service Center, Inc., violated Section 559.911, Florida Statutes, as alleged in the Administrative Complaint entered January 10, 1997. IT IF FUTHER RECOMMENDED that Respondents be required to pay an administrative fine of $1,000.00 within thirty days of the date that the Final Order becomes final and the motor vehicle repair shop registration, MV-15484, issued to Respondents be suspended for a period of two weeks. DONE AND ENTERED this 27th day of June, 1997, in Tallahassee, Leon County, Florida. LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 27th day of June, 1997. COPIES FURNISHED: Lawrence J. Davis, Senior Attorney Department of Agriculture and Consumer Services Room 515, Mayo Building Tallahassee, Florida 32399-0800 J. Joseph Hughes, Esquire 1017-A Thomasville Road Tallahassee, Florida 32303-6221 Honorable Bob Crawford Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810 Richard Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810 Brenda Hyatt, Chief Department of Agriculture and Consumer Services Bureau of Licensing and Bond 508 Mayo Building Tallahassee, Florida 32399-0800
The Issue As to Case No. 96-5539, whether the Respondent, Dynotech Automotive, Inc., committed the violations alleged in the administrative complaint dated October 22, 1996; and, if so, what penalty should be imposed. As to Case No. 96-5463, whether Supertech Automotive, Inc. (the alleged successor to Dynotech) is entitled to registration as a motor vehicle repair shop under the provisions of Section 559.904, Florida Statutes.
Findings Of Fact At all times material to the allegations in this matter, Respondent Dynotech was a motor vehicle repair shop registered under the provisions of Section 559.904, Florida Statutes, located at 2240 North Military Trail, West Palm Beach, Florida. At all times material to the allegations of this matter, Respondent Supertech was an applicant for registration as a motor vehicle repair shop charged with doing business without being appropriately registered, which was also located at 2240 North Military Trail, West Palm Beach, Florida. The Petitioner is the state agency charged with the responsibility of regulating and disciplining motor vehicle repair shops under Florida law. At all times material to the allegations in this matter, Theodore (Ted or Teddy) Russo was the president and manager of Dynotech. Mr. Russo’s home address is listed as 1604 Hollyhock Drive, Wellington, Florida. Prior to June 18, 1996, the Department commenced an investigation of Dynotech based upon suspected acts in violation of Chapter 559, Florida Statutes. In furtherance of the investigation the Department sent investigators with three vehicles to West Palm Beach for use in the operation. One vehicle driven by Investigator Tony Golino went to the Dynotech premises on June 18, 1996. After giving Mr. Russo a story about having just inherited the vehicle and being on the way back to New York, Investigator Golino requested an oil change and Dynotech’s free air conditioner inspection. Immediately prior to taking the vehicle to Dynotech, Investigator Golino’s vehicle had been thoroughly evaluated by a certified mechanic for any repair which might be needed to the air conditioning system. The vehicle, a 1989 Buick, checked out with no problems. On June 19, 1996, when Investigator Golino returned to Dynotech to pick up the vehicle, he was charged $358.94 for the requested oil change, the free air conditioner inspection, and for an evac and recharge together with an “acculmater.” Of the foregoing work, only a charge of $14.95 was required for this vehicle (the oil change cost). Investigator Golino had been verbally advised that if the evac and recharge were necessary the cost for same would be approximately $105.00 or $110.00. No estimate was given to him for the “acculmater” which was charged. Investigator Golino had not been given any written estimate for the work which was to be performed on the Buick. When the Buick was returned for inspection by the Department, Mr. Bullard found that the oil had been changed and that a new accumulater had been installed. Donald Bullard is a certified mechanic with 30 years of experience. An evac and recharge of the air conditioning system is appropriate if the system is not performing within acceptable standards. The evac and recharge is the process of cleaning the freon in order to allow it to do its work more efficiently. The freon is removed from the vehicle (evac), run through a machine for cleaning, then returned to the vehicle (recharge). This process takes less than an hour. An accumulator is a device which takes moisture out of the vehicle. The Buick driven by Investigator Golino did not need a new accumulator. On June 20, 1996, Jack Hill, another investigator with the Department, took a Plymouth van to Dynotech for an oil change and free air conditioner inspection. This vehicle had also been inspected beforehand and had been fully repaired so that it was in proper working order prior to being driven to Dynotech. Dynotech billed Investigator Hill $95.45 for the work performed on the van and alleged that it had added freon to the air conditioning system. No cost should have been billed for the van as a coupon for a free oil change was used. Additionally, the van did not require an evac and recharge nor freon. A third vehicle, a Ford Tempo, was taken to Dynotech by the Department’s investigator Fred Barnsdale on June 19, 1996. Like the others, prior to being driven to Dynotech the Tempo was inspected and evaluated by Mr. Bullard. The air conditioning system worked properly and did not require an evac and recharge. With regard to the Tempo, Dynotech billed for an evac and recharge which were unnecessary. Glen Eakin, Louis Vincent Zauss, and Michael David Baranowsky are certified mechanics formerly employed by Dynotech. All were hired and supervised by Mr. Russo. During their employment with Dynotech, each was instructed by Mr. Russo to perform work which was unnecessary. In some instances customers were billed for work which was not performed. In some instances customers who were to receive free services were advised work had been performed which was not done. Dynotech paid mechanics a flat hourly rate based upon service work performed. Mechanics did not receive compensation for parts sold in connection with repairs. Dynotech billing was reviewed and approved by Mr. Russo. Mr. Russo was aware of the work performed or not performed by Dynotech’s mechanics. Johnni Angel began working at Dynotech to help Mr. Russo out. Ms. Angel came on board as the receptionist/secretary for the company. She resides with Mr. Russo and decided to incorporate Supertech one day after Dynotech was suspended from doing business by the Department. Ms. Angel intended to operate Supertech from the same business location and retained Mr. Russo to continue the management of the premises. All of the mechanics formerly employed by Dynotech now worked for Supertech and continued to answer to Mr. Russo regarding the day-to-day activities of the business. Ms. Angel is the sole owner of Supertech, she obtained a new tax identification number for the business, and opened new bank accounts. All other aspects of the business operation remained as it had when under the Dynotech name. Ms. Angel filed an application for registration as a motor vehicle repair shop with the Department on November 7, 1996. Estimates and invoices from Supertech established that the company had been operating without being registered as required by law. The invoice forms used by Supertech did not contain a statement indicating what, if anything, was guaranteed in connection with the repair work. Such forms also did not contain the time and mileage period for which the guarantee was effective. Supertech’s written motor vehicle repair estimate and disclosure statements did not contain the proposed work completion date; the customer’s intended method of payment; the name and telephone number of another person who may authorize repair work, if the customer desired to designate such person; a statement allowing the customer to indicate whether replaced parts should be saved for inspection or return; or a statement indicating the daily storage charge for the customer’s vehicle after the customer had been notified that the repair work had been completed. Supertech’s application for registration did not contain a State of Florida tax identification number.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter final orders confirming the suspension and revoking the registration for Dynotech, imposing an administrative fine in the amount of $3,000.00, and denying Supertech’s application for registration as a motor vehicle repair shop. DONE AND ENTERED this 2nd day of June, 1997, in Tallahassee, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 2nd day of June, 1997. COPIES FURNISHED: Lawrence J. Davis Senior Attorney Department of Agriculture and Consumer Services Room 515, Mayo Building Tallahassee, Florida 32399-0800 James R. Merola, Esquire JAMES R. MEROLA, P.A. 11380 Prosperity Farms Road, Suite 204 Palm Beach Gardens, Florida 33410 Brenda Hyatt, Chief Department of Agriculture and Consumer Services 508 Mayo building Tallahassee, Florida 32399-0800 Richard Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810
Findings Of Fact Originally this case was an action for formal hearing filed by the Petitioner against the initial notice of proposed assessment of tax, penalties and interest under Chapter 212, Florida Statutes. This notice of proposed assessment was dated June 19, 1975 and can be found as Petitioner's Exhibit #2, admitted into evidence. Since that time a second revised notice of proposed assessment of tax, penalties and interest under Chapter 212, Florida Statutes, has been made. The date of that second revision is December 14, 1977 and may be found as Petitioner's Exhibit #1, admitted into evidence. Although the case started as a challenge to the proposed assessment without paying it, the Petitioner has subsequently paid the entire amount of assessment under protest. Therefore this action has become a request for refund and the refund request only encompasses a portion of the alleged assessment. The details of the true nature of these proceedings i.e., refund request versus action without payment, became evident at the date of the hearing in this cause, At that time the undersigned advised the parties to the effect that the State of Florida, Office of Comptroller, was felt to be the true Respondent in interest. This position was founded on the impression that the Office of the Comptroller has the responsibility for making refund payments where the occasion demands. The parties were further advised by the undersigned, that the Comptroller, in deciding on the refund question, was was acting in the exercise of his discretion and not merely performing a ministerial act. Counsel for the Respondent stated for the record that the Office of Comptroller had not been noticed of the hearing, nor had they been informed of any refund request. In keeping with his suggestion, the record was left open at the conclusion of the hearing for 20 days to allow Mr. Purnell, counsel for the Respondent, to contact the Office of Comptroller to see if that office would be willing to join in the case post-hearing. The idea was that Mr. Purnell would consult with the Office of Comptroller and determine whether or not that office wished him to represent them in the hearing and to allow the record of the hearing to stand as a record which the Comptroller could consider in deciding the refund question. Mr. Purnell felt that the Comptroller might be amenable to such a resolution because attorneys from the Attorney General's Office often represent the Comptroller in tax cases. The recommended order being written could then become a recommendation on the question of the refund. The same amount of time which would be allowed to Mr. Purnell to confer on the question of appearances for the Comptroller was allowed for the Petitioner to file a refund request with the Office of Comptroller. The extra time allowed at the conclusion of the evidence in the hearing of December 15, 1977 was granted with the caveat from the undersigned that the Office of Comptroller might not wish to enter the case on a post-hearing basis, and with the understanding that a hearing held without the Comptroller's participation might become advisory in nature and not binding. By this, it was further explained that the Comptroller could choose to have a further de nova hearing on the same issues if he did not make a post-hearing appearance and adept the record to use as a basis of a recommended order from the undersigned. Nonetheless, counsel for the Petitioner and Respondent wished to to proceed with the hearing based upon the prior agreements which the Attorney General's office had with the Comptroller to represent them in tax matters, and a feeling that Mr. Purnell, as a member of the Attorney General's staff would be able to promote the joinder of the Office of Comptroller post-hearing. Counsel for the Petitioner's response to the need to file a request for refund, was that the refund could he summarily denied at the time of the joinder, thereby facilitating the utilization of the information produced at the de novo hearing of December 15, 1977. In summary the parties agreed to proceed to hearing, in spite of the fact that the Comptroller had not been joined, the refund request had not been made, and the existing possibility of a second de novo hearing to perfect the rights of the Office of Comptroller in considering the refund request. Subsequent to the hearing Mr. Purnell has not made an appearance for the Office of Comptroller, and the Comptroller is not joined as a party. To this date a refund request has not been filed by the Petitioner and the succeeding Findings of Fact and Conclusions of Law and Recommendation shall be governed by those arrangements which are made by the parties and/or the Office of Comptroller subsequent to their receipt of this recommended order. (The discussion of the procedural questions under consideration related here may be found in pages 7 - 18 of the transcript of the hearing.) As stated before the Petitioner has paid the tax claim under Chapter 212, Florida Statutes, per the second revised notice of proposed assessment, dated December 14, 1977. Specifically, the payment has been $556,772.62, the amount set at the time of the payment. There remains in controversy an amount of $201,635.56, exclusive of interest. This amount in controversy may be found in the position of the parties in their January 20, 1978, letter of stipulation that sets out the amount in dispute. A copy of this letter is admitted and made a part of the record herein, and attached to this recommended order. The claim for refund is governed by the provisions of Section 215.26 Florida Statutes. More particularly it is a claim for refund where payment was made and where it is alleged that no tax was due. That part of the tax that is still at issue is being assessed under the authority of Chapter 212, Florida Statutes. In particular the Respondent is claiming the right to tax certain transactions between the Petitioner and two railroad car companies, the companies being: Fruit Growers Express Company, Inc., A Delaware corporation and Trailer Train Company, Inc., a Delaware corporation. The Petitioner, Florida East Coast Railway Company, Inc., is a Florida corporation. The theory the Respondent used in its second revised notice of assessment of tax that pertains to the aforementioned transactions between the Petitioner and Fruit Growers Express Company, Inc., and Trailer Train Company, Inc. is found in Sections 212.02(6) (g) and 212.05(4), Florida Statutes. Respectively those provisions provide: 212.02(6) (g) "Lease", "let" or "rental" also means the leasing or rental of angible personal property and the possession or use thereof by the lessee or rentee for a consideration, without transfer of the title of such property, except as expressly provided to the contrary herein. Provided that, where two taxpayers, in connection with the interchange of facilities, rent or lease property, each to the other, for use in providing or furnishing any of the services mentioned in s. 167.431, the term "lease" or "rental" shall mean only the net amount of rental involved. 212.05(4) At the rate of 4 percent of the lease or rental price paid by lessee or rentee, or contracted or agreed to be paid by lessee or rentee, to the owner of the tangible personal property. In view of the language found in the above cited sections, the Respondent has taken the position that the Petitioner owes the amount of the disputed tax, which constitutes 4 percent of the lease or rental price paid by the lessee or rentee (Petitioner), for those transactions within the audit period, November 1,1971 through October 31, 1974 entered into between the Petitioner and Fruit Growers Express Company, Inc., and Trailer Train Company, Inc. More particularly, in the process of examining the records of the Petitioner, related to the audit period, the Respondent concluded that on those occasions where the Fruit Growers Express Company, Inc., and Trailer Trains Company, Inc. provided refrigerated cars through the former corporation and railroad flat cars through the latter corporation, pursuant to the request of the Petitioner; this constituted a taxable privilege within the meaning of Section 212.05, Florida Statutes. Through its refund petition the Petitioner challenges the assessment by several theories of argument. The first theory claims that the transactions in question do not constitute taxable transactions within the meaning of Chapter 212, Florida Statutes. The second theory asserts that the Respondent, by virtue of its assessment against the Petitioner, was promulgating a "rule" within the meaning of Chapter 120, Florida Statutes, and that the promulgation was not in keeping with the provisions of said chapter. The final theory in argument is comprised of constitutional arguments to the effect that the assessment denies the petitioner equal protection of the laws, due process of law, and constitutes an undue burden upon interstate commerce, in violation of the Federal and Florida Constitution. The parties have submitted memoranda in the argument of the case and under the first point of its memorandum the Petitioner considers the alleged inapplicability of Chapter 212, Florida Statutes to the transactions between the Petitioner and Trailer Train Company, Inc., and Fruit Growers Express Company Inc. (This argument is found on pages 14 - 46 of the Petitioner's memorandum.) The theory of the Petitioner's position on this point is to the effect that the transactions in question between the Petitioner and Trailer Trains Company, Inc. and Fruit Growers Express Company, Inc. do not constitute sales, storage or use upon which a 4 percent rate of tax may be imposed. This feeling is held because the Petitioner is persuaded that the transactions in question are not the result of some lease or rental between the Petitioner and the aforementioned car companies. Therefore, because the 4 percent tax under Section 212.05(4), Florida Statutes, applies to leases or rentals only, there can ha no tax. In advancing this argument the Petitioner relies on the attitude of the Respondent in concluding that the transactions found in the audit period which pertain to payments by the Petitioner to other railroads for per diem and mileage, for the usage of the rolling stock belonging to the other railroads, did not constitute transactions for which some tax is owed by the Petitioner under the theory set forth in Chapter 212, Florida Statutes. The Petitioner contends that the determination not to tax the transactions between the Petitioner and the other railroads was a correct determination, and in view of the fact that the arrangements between the Petitioner and Trailer Train Company, Inc. and Fruit Growers Express Company, Inc. constitute virtually the same type of agreement entered into with the other railroads; it was incorrect for the Respondent to tax the payments to the private car companies. The Petitioner, by its position suggests that the Respondent apparently relied on the opinion of the Interstate Commerce Commission in the case of Chicago, Burlington & Quincy R. Co., et al., v. New York, Susquehanna & Western Railroad Co. et al., 332 I.C.C. 176, is not taxing the one client. The case held that the per diem and mileage arrangements between the various railroads to pay each other for the usage of cars belonging to the sending railroad that were traveling as a part of the trains on the receiving railroad's track had been, and should be, uniform. In the opinion of the Commission, the per diem and mileage charges were in the nature of a reciprocal charge and were designed to represent the average cost of car ownership. Moreover, the idea was that the charge should be equivalent to what the average car ownership would be users would have to bear if they owned the car themselves. Using the rationale of Burlington, supra, the Petitioner advances the theory that because the common rates for per diem and mileage between the railroads are in the nature of a reciprocal charge and do not include any element of profit, they do not constitute rent within the meaning of Chapter 212, Florida Statutes. The Petitioner makes further reference to Section 212 of the 4R Act, Amended Section (l) (14) (a) of the Interstate Commerce Act, which discusses the intention of the Congress to encourage the purchase, acquisition and efficient utilization of freight cars. To that end the Interstate Commerce Commission has allowed pooling arrangements in which the railroads are allowed to use the equipment belonging to concerns such as Trailer Train Company, Inc. The significance of this, according to the Petitioner is found in the case of American Rail Box Car Company and Trailer Train Company, Inc. et al., 347 I.C.C. 862 (1974) The case of American Rail Box, supra, discusses the fact that the Commission has the authority to fix the compensation to be paid by a railroad for the use of the freight cars that are not owned by the railroad, whether those freight cars belong to another railroad or to a car company such as Trailer Train Company, Inc. The Petitioner urges that this decision would also have application to the use of cars belong to Fruit Growers Express Company, Inc. According to the Petitioner although the decision holds that the Interstate Commerce Commission is not presently setting the per diem and mileage charge of Trailer Train Company, Inc., it makes clear that it will act to change the policies of the Board of Directors of Trailer Train Company, Inc. who set the mileage and per diem, If the Commission concludes that the policies on mileage and per diem costs are inconsistent with the purposes of pooling arrangements and the overall purpose of the Interstate Commerce Act. What the Petitioner tries to demonstrate after discussing the involvement of the Interstate Commerce Commission in the matters of using the equipment from other railroads or equipment from car companies, which does not belong to the Petitioner; is that there is sufficient similarity between transcations involving the Petitioner and other railroads and transactions such as those at issue here between the Petitioner and the car companies, to warrant the conclusion that the Petitioner should not be taxed on the transactions in the latter category. The Petitioner contends that the considerations which go into making up the rate structure For per diem and mileage payments that have application to transactions between the railroads for the use of a competing carrier's cars, are the same considerations that are examined in determining the per diem and mileage payments between the Petitioner and Trailer Train Company, Inc. and the mileage paid to Fruit Growers Express Company, Inc. For this proposition the Petitioner uses as authority those decisions of Burlington and American Rail Box, supra, entered by the Interstate Commerce Commission. There is some attendant argument made to the effect that the controls which the Petitioner would have over railroad cars belonging to competing railroads and those controls which it would have over the cars belonging to Trailer Trains Company, Inc. and Fruit Growers Express Company, Inc. are the same for those cars which are not covered by Car Service Rules 1 and 2 or assigned to a pool point. Cars involved with Car Service Rules 1 and 2 pertain to railroad cars belonging to competing railroads which must be directed toward the home road once they have been off-loaded by the Petitioner. The designated cars refer to those belonging to Trailer Train Company, Inc. which are "car rack carriers" that have a designated usage and must be dealt with consistent with that usage to the exclusion of the rights of the railroad should a conflict arise. The Petitioner's argument also states that the interchange process by which the Petitioner receives cars belonging to other railroads or car companies, is mandated by the Interstate Commerce Commission and the Petitioner may not refuse to accept those cars which come on its road. In summary, in the eyes of the Petitioner, the control which the Interstate Commerce Commission has ever the question of per diem and mileage payment pertaining to transactions between railroads and car companies; the considerations which go into making up what constitutes a reasonable per diem and mileage allowance, when examining the transactions between railroads and railroads and car companies; and the similarity of the degree of control which a receiving railroad has over cars belonging to another railroad or car company; taken in the context of the Respondent's failure to tax the Petitioner for its transactions involving per diem and mileage payments to other railroads for the transactions between them, demonstrates that the tax at issue is not owed. In countering the argument offered by the Petitioner on its first point, Respondent, through its memorandum, points to the contracts between the Petitioner and Trailer Train Company, Inc. and Fruit Growers Express Company, Inc. The copy of the contracts may be found as Petitioners Exhibits 4 and 5, admitted into evidence. The Petitioner's Exhibit 4 is a copy of the contract with Fruit Growers Express Company, Inc. and Petitioner's Exhibit 5 is a copy of the contract with Trailer Trains Company, Inc. Under the Respondent's theory the contracts represent agreements between the Petitioner and separate entities to provide rolling stock to the Petitioner on an as-needed basis; notwithstanding the fact that the Petitioner is a part owner in the Trailer Train Company, Inc.,, (The Petitioner is in fact one of the 29 railroads which own that company.) From the point of view of the Respondent, these contracts constitute the basis for the Petitioner to rent the equipment belonging to those two car companies, and consequently when the equipment is rented the Petitioner becomes subject to the requirements of the payment of a sales tax in the amount of 4 percent under the authority of Chapter 212.05(4), Florida Statutes. Moreover, the Respondent is of the persuasion that Section 212.02(6) (g), Florida Statutes, which states that rental is defined as meaning the rental of tangible personal property and the possession or use thereof by the rentee for consideration, that does not involve the transfer of the title of such property, would cover the subject disputed transaction. To address the contention of the Petitioner that the failure of the Respondent to tax the transactions between the Petitioner and other railroads stands as authority for not taxing the transactions between the Petitioner and the aforementioned car companies; the Respondent argues that the failure to tax in one given area does not create an excuse for the Petitioner not to pay the tax in another unrelated area. This means that the Respondent believes that even if it could tax the transaction between railroads for per diem and mileage payments and chose not to, it does not follow that it may not tax the transactions between the Petitioner and the car companies, because of its failure to impose a tax on the transactions between the Petitioner and another railroad. The Respondent cites the case of Louis K. Liggett Company v. Lee 288 U.S. 517, 53 S.Ct. 481, 77 L.Ed. 929, 1933, in support of that position. The Respondent tries to establish the difference in the nature of the business of Trailer Train Company, Inc. and Fruit Growers Express Company, Inc. contrasted with the business of the Petitioner who is a common carrier by rail. In the mind of the Respondent, one of the operations is the business of hauling freight by rail, i.e., the Petitioner, or either common carriers; whereas the car companies in this matter are in the business of purchasing, maintaining and supplying the railroads with cars. The Respondent attempts to minimize the affect of the Petitioner's argument on the similarity of the nature of the items that go into making up the per diem and mileage rates which are involved between railroads or involved between railroads and car companies. In the Respondent's analysis, the car companies are in the business of making a profit and the rental charges are set up in such a fashion that the car companies may gain retained earnings and this is not the real purpose for mileage and per diem charges between railroads. Finally, the Respondent argues that the control which the Petitioner has over the cars belonging to the care companies that were received under the terms of the contracts, is much greater than the control that it would have over cars belonging to competing railroads, especially those cars which are subject to Car Service Rules 1 and 2. The Respondent's belief is that the Petitioner has almost unfettered control over classes of equipment received under the terms of the contract from the car companies, by contrast with the necessity to reroute the equipment belonging to the other railroads which is subject to Car Service Rules 1 and 2. A second point in this argument by the Petitioner is the matter of the alleged non-compliance by the Respondent with the provisions of Chapter 120, Florida Statutes. The Petitioner argues that Section 212.05, Florida Statutes, has been law since 1968, and to the knowledge of the Petitioner, this is the first instance in which the Respondent attempts to impose a tax under that section, which tax would pertain to transactions such as those at issue. The Petitioner feels that the Respondent has attempted to adopt a rule for imposing a tax of this sort without going through the requirements of Section 120.53, Florida Statutes, which set forth the conditions for adoption of administrative rules of general applicability. Furthermore, the Petitioner feels that the efforts made by the Respondent were of the sort which were held to be a violation of Chapter 120, Florida Statutes, in the decision of Straughn v. O'Rierdan, 338 So.2d 832 (Fla. 1976). This course of non-compliance with the role making provisions was established in the mind of the Petitioner by the actions of the Respondent's employees making numerous telephone calls among the staff to determine whether a tax should be imposed and in setting forth a policy statement by its remarks found in a document which was prepared by the Respondent, all without following the provisions of Section 120.53, Florida Statutes. A copy of this document is Petitioner's Exhibit 3, admitted into evidence. The Respondent argues that the Chapter 212, Florida Statutes, allowed for the imposition of a tax of the nature which is at issue herein; even though the tax had not been imposed in the past. The actions of the phone calls and the written comments Petitioner's Exhibit 3, constituted the "work product" opinion of the employees of the Petitioner and did not constitute an attempt to adopt a rule within the meaning of Section 120.53, Florida Statutes. Finally, in examining the third argument of the Petitioner, it is contended that the action of the Respondent denies the Petitioner equal protection of the laws, due process of law and constitutes an undue burden upon interstate commerce, in violation of the Federal and Florida Constitution. These arguments were allowed to be advanced in the record in the form of a limited proffer; however, the undersigned was of the persuasion that no decision could be rendered on the constitutionality of the action taken by the Respondent because the undersigned was without authority to make those determinations. The reason for this approach by the undersigned is due to the statement found in Department of Revenue, et al. v. Young American Builders, 330 So.2d 864, (Fla. 1 St. DCA, 1976). That case holds that the Administrative Procedures Act does not relegate Fourteenth Amendment questions to administrative determination. Consequently, although the parties through their memoranda, argue the constitutionality of the action taken by the Respondent, those matters will not be addressed in this recommended order. The remaining two points which have been raised by the Petitioner will be considered in reverse order for purposes of clarity. The question of whether the action taken by the Respondent, by its phone calls between employees of the Respondent and by its statement of the employees found in Petitioner's Exhibit 3, constitutes an effort to promulgate a rule within the meaning of Section 120.53, Florida Statutes, must be answered In the negative. The employees in acting in the fashion that they did were acting under the inherent authority found in Chapter 212, Florida Statutes, which was sufficient to render a notice of proposed assessment without the necessity for the promulgation of any rule which would implement the authority found in that statute. Those contacts that were made between employees during the audit process were made within the scope of authority found in Chapter 212, Florida Statutes, and the Petitioner's Exhibit 3, constitutes the "work product" of the Respondent and is not an abortive attempt at promulgating a rule in the sense described in Straughn, supra. In considering the factual applicability of Chapter 212, Florida Statutes, to the transactions between the Petitioner and the two car companies, it is not necessary to consider the propriety or impropriety of the Respondent's decision not to attempt an assessment of the transactions between the Petitioner and competing railroads, on the question of the utilization of the cars belonging to those railroads. That part of the audit process is not at issue. Moreover, although the authority and rights of the Interstate Commerce Commission to consider the arrangements between Petitioner and any car company may not be denied, the Commission's attitude about the imposition of the tax that is being contemplated cannot be evaluated by the undersigned and must be left for the study of another forum. Therefore, when the transactions are examined purely on the basis of their inherent nature, they constitute rentals within the meaning of Section 212.02(6)(g), Florida Statutes, and a tax must be paid on the transactions at the rate of 4 percent In keeping with the provisions of Section 212.05(4), Florida Statutes. This conclusion is reached because the documents, Petitioner's Exhibits 4 and 5, clearly establish the method by which the car companies, upon request of the Petitioner, will provide equipment to the Petitioner and when the Petitioner receives this equipment it is renting the equipment at the rate fixed for per diem and mileage. Upon this finding and in keeping with the stipulation entered into between the parties the Petitioner is responsible for the payment of $201,635.58 In tax exclusive of interest. The amount of interest should be computed consistent with the provisions of Chapter 212, Florida Statutes.
Recommendation Pursuant to notice, a hearing was held before Charles C. Adams, a Hearing Officer with the Division of Administrative Hearings, at the Conference Room, Suite 205, Building "B", 6501 Arlington Expressway, Jacksonville, Florida at 10:00 A.M., December 15, 1977.
