The Issue The issue in the case is whether an application for a motor vehicle dealer license filed by Lambretta International, LLC, and Retro Unlimited, Inc., should be approved.
Recommendation Based on the foregoing Finding of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying the application for establishment of the motor vehicle dealer franchise at issue in this case. DONE AND ENTERED this 26th day of August, 2008, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 26th day of August, 2008. COPIES FURNISHED: Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Caroline Khurana Lambretta International, LLC 14339 Lake City Way Northeast Seattle, Washington 98125 Chris Densmore Scooter Escapes, LLC, d/b/a Scooter Escapes 1450 1st Avenue North St. Petersburg, Florida 33705 Edward G. Dreyer, III Retro Unlimited, Inc. 3200 Dr. Martin Luther King, Jr. Street North St. Petersburg, Florida 33704 Carl A. Ford, Director Division of Motor Vehicles Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
The Issue The issue in this cause is whether Petitioners are entitled to a motor vehicle dealership that is proposed to be located in Panama City Beach, Florida.
Findings Of Fact On November 4, 2008, a Notice of Hearing setting the date, time and location of final hearing was issued in this case. The Notice of Hearing was mailed to the last known, valid addresses of the Petitioners, which were also the addresses provided in Petitioners' Notice of Publication. Neither Notice of Hearing was returned. This cause came on for hearing as noticed. After waiting more than 15 minutes, Petitioners failed to appear to prosecute their claim. There has been no communication from the Petitioners, before, during, or since the hearing to indicate that they would not be attending the final hearing. Because of Petitioners' failure to appear, there was no evidence to demonstrate that Petitioners are entitled to a franchise motor vehicle dealership in Panama City Beach, Florida. Absent such evidence, the establishment of the proposed dealership should be denied.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Florida Department of Highway Safety and Motor Vehicles denying the establishment of Petitioners' proposed franchise. DONE AND ENTERED this 15th day of April, 2009, in Tallahassee, Leon County, Florida. S DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of April, 2009. COPIES FURNISHED: Jack Lin Moto Dealer Import, LLC 4998-B South Royal Atlanta Drive Tucker, Georgia 30084 Wayne Wooten Moto Import Distributors, LLC 12202 Hutchison Boulevard, Suite 72 Panama City Beach, Florida 32407 Rap Peavy Big Boys Toys Florida, LLC 1312 Thomas Drive Panama City Beach, Florida 32408 Michael J. Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
The Issue Whether the Petitioners' proposed dealership should be approved.
Findings Of Fact On October 17, 2008, in the Florida Administrative Weekly, Volume 34, Number 42, a Notice of Publication for a New Point Franchise Motor Vehicle Dealer in a County of More than 300,000 Population was published. The notice provided that Snyder Computer Systems, Inc., d/b/a Wildfire Motors intended to allow the establishment of Beach Cycle of Fort Lauderdale, Inc., as a dealership for the sale of motorcycles manufactured by Zhejiang Summit Huawin Motorcycle Co. Ltd. (POPC) at Ravens Wood Road, Fort Lauderdale (Broward County), Florida 33312, on or after November 5, 2008. On November 12, 2008, the Respondent timely filed a protest of the establishment of the Petitioners' dealership. Respondent alleged that it currently services customers for the line-make proposed by the Petitioners and that its location is within 12.5 miles of the location proposed by the Petitioners. The evidence presented established that the Respondent's dealership is within 8.5 miles of the proposed site. Mr. McMahon verified the driving distance and presented the measured distance as computed by the website Mapquest. Further, the driving time between the two points is less than 30 minutes. The Respondent has served the area for not less than 2 years and has successfully promoted the vehicles proposed to be sold by the line-make proposed by the Petitioners. The Respondent established that its sales are within 12.5 miles of the proposed dealership. The Respondent established that it currently markets the motorcycle to be sold by the proposed dealership. More specifically, the Respondent offered testimony that it has an agreement for the same line-make vehicle to be sold by the proposed dealer. Notice of the formal hearing was provided to all parties of record at their addresses of record.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Department of Highway Safety and Motor Vehicles enter a Final Order denying the approval of the Petitioners' proposed dealership. DONE AND ENTERED this 18th day of February, 2009, in Tallahassee, Leon County, Florida. J. D. PARRISH Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 18th day of February 2009. COPIES FURNISHED: Electra Theodorides-Bustle Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Paul J. Lane, Esquire 2755 East Oakland Park Boulevard, Suite 300 Fort Lauderdale, Florida 33306 Joel Ribler Beach Cycle of Fort Lauderdale, Inc. 2190 Southwest 31st Avenue Fort Lauderdale, Florida 33312 Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344 Ronald Gardner Snyder Computer Systems, Inc., d/b/a Wildfire Motors 11 Technology Way Steubenville, Ohio 43952
The Issue The issue is whether Petitioner's applications to establish new dealerships for the sale of motorcycles manufactured by Shanghai Motorcycle Co., Ltd. (JMSTAR), and Shanghai Shenke Motorcycle Co., Ltd. (SHEN), should be granted. PRELIMANARY STATEMENT In the Florida Administrative Weekly, Volume 34, Number 21, May 23, 2008, the Department of Highway Safety and Motor Vehicles (DHSMV) published two Notices of Publication for a New Point Franchise Motor Vehicle Dealer in a County of Less than 300,000 Population. Said notices advised that Petitioner Gator Moto, LLC and Gator Moto, LLC (Petitioner) intended to establish new dealerships for the sale of motorcycles manufactured by Shanghai Motorcycle Co., Ltd. (JMSTAR), and Shanghai Shenke Motorcycle Co., Ltd. (SHEN). On or about June 3, 2008, Respondent Austin Global Enterprises, LLC, d/b/a New Scooters 4 Less (Respondent) filed two complaints with DHSMV about the proposed new motorcycle dealerships. DHSMV referred both complaints to the Division of Administrative Hearings on June 10, 2008. On July 2, 2008, Respondent filed its Compliance with Initial Order. On July 7, 2008, Petitioner filed Petitioner's Compliance with Initial Order Division of Administrative Hearings (DOAH) Case Nos. 08-2735 and 08-2736. This is the only communication that DOAH has received from Petitioner. On July 23, 2008, Administrative Law Judge Barbara J. Staros entered an Order of Consolidation for DOAH Case Nos. 08-2735 and 08-2736. On July 24, 2008, Judge Staros issued a Notice of Hearing, scheduling a final hearing on December 4, 2008. On November 26, 2008, Respondent filed its Compliance with Pre-hearing Instructions. Petitioner did not respond to the Order of Pre-hearing Instructions. On December 1, 2008, Judge Staros issued an Amended Notice of Hearing. The amended notice only changed the commencement time for the hearing. DOAH subsequently transferred these consolidated cases to the undersigned. On the morning of the December 4, 2008, hearing, DHSMV advised the undersigned's office that DHSMV had failed to arrange for the appearance of a court reporter at the hearing. Accordingly, the undersigned issued an Order Granting Continuance and requiring the parties to confer and provide DOAH with mutually-agreeable dates for re-scheduling the hearing. On December 17, 2008, Respondent filed its unilateral Compliance with Order Granting Continuance. Respondent filed this pleading after an unsuccessful attempt to confer with Petitioner. On December 18, 2008, the undersigned issued a Notice of Hearing and Order of Pre-hearing Instruction. The notice scheduled the hearing for February 9, 2008. On February 3, 2007, Respondent filed its unilateral Compliance with Order of Pre-hearing Instructions. Petitioner did not file a response to the Order of Pre-hearing Instructions. When the hearing commenced, Petitioner did not make an appearance. Respondent made an appearance and presented the testimony of Colin Austin, Respondent's Managing Member. Respondent did not offer any exhibits. The hearing transcript was not filed with DOAH. Neither party filed proposed findings of fact and conclusions of law.
Findings Of Fact Respondent has standing to protest Petitioner's applications pursuant to Section 320.642(3)(a)2., Florida Statutes (2008). According to DHSMV's published notice, Petitioner intended to establish two new motorcycle dealerships at 2106 Northwest 67th Place, Suite 15, Gainesville, Florida, on or after May 9, 2008. This location is only 4.5 miles from Respondent's place of business. At some point in time, Petitioner relocated its business to 7065 Northwest 22nd Street, Suite A, Gainesville, Florida. This location is only 5.3 miles from Respondent's place of business. Petitioner's application indicated that Petitioner intended to establish itself as a dealer of SHEN and JMSTAR motorcycles. Currently, Respondent sells those motorcycles under License No. VF/1020597/1. Respondent currently supplies itself with SHEN and JMSTAR products from a United States distributor. Respondent has a good faith belief that Petitioner intends to import the motorcycles and related products directly from the Chinese manufacturers. In that case, Petitioner would be able to sell the products at a lower price than Respondent and thereby deny Respondent the opportunity for reasonable growth. Petitioner did not notify DOAH about a change of address. DOAH's notices and orders directed to Petitioner at its address of record have not been returned. Petitioner has not communicated with DOAH since filing a response to the Initial Order. Petitioner did not make an appearance at the hearing. Apparently, Petitioner has abandoned its applications to establish the new dealerships.
Recommendation Based on the forgoing Findings of Fact and Conclusions of Law, it is ORDERED: That the Department of Highway Safety and Motor Vehicles enter a final order denying Petitioner's applications. DONE AND ENTERED this 16th day of February, 2009, in Tallahassee, Leon County, Florida. S SUZANNE F. HOOD 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 16th day of February, 2009. COPIES FURNISHED: Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344 Collin Austin Austin Global Enterprise, LLC 118 Northwest 14th Avenue, Suite D Gainesville, Florida 32601 Justin Jackrel Gator Moto, LLC 4337 Northwest 35th Terrace Gainesville, Florida 32605 Justin Jackrel Gator Moto, LLC 2106 Northwest 67th Place, Suite 15 Gainesville, Florida 32653 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
The Issue The issue for determination in this proceeding is whether Proposed Rules 15C-7.004(4)(a), (4)(b), and (7)(d) and Florida Administrative Code Rule 15C- 1.008 each constitute an invalid exercise of delegated legislative authority.
Findings Of Fact The Parties The Department of Highway Safety and Motor Vehicles (the "Department") is the agency responsible for promulgating and administering the rules challenged in this proceeding. The Department administers Chapter 320, Florida Statutes, 2/ which governs the operation of motor vehicle dealers and manufacturers in Florida. General Motors Corporation ("GM") is a corporation incorporated in Delaware and registered to do business in Florida. GM's corporate address and principal place of business is 3044 West Grand Boulevard, Detroit, Michigan 48202. GM is licensed by the Department, pursuant to Section 320.60, Florida Statutes, as a manufacturer of motor vehicles. GM has entered into and will enter into dealer sales and service agreements to authorize motor vehicle dealers to sell GM vehicles at locations in Florida. The Florida Automobile Dealers Association (??FADA??) and the South Florida Auto Truck Dealers Association ("SFATDA") are trade associations composed of both domestic and foreign line-make franchised motor vehicle dealers. FADA is composed of more than 800 franchised motor vehicle dealers licensed in the state. SFATDA is composed of virtually all franchised motor vehicle dealers in Palm Beach, Broward, Dade, and Monroe Counties. The Motor Vehicle Manufacturers Association of the United States, Inc. ("MVMA") is a trade association whose member companies manufacture motor vehicles produced in the United States. MVMA members include Chrysler Corporation, Ford Motor Company, GM, Honda of America MFG., Inc., Navistar International Transportation Corporation, PACCAR Inc., and Volvo North America Corporation. The principal place of business for MVMA is 7430 Second Avenue, Suite 300, Detroit, Michigan 48202. All of the members of MVVA, including Ford Motor Company ("Ford"), are licensed pursuant to Section 320.61, Florida Statutes. The Association of International Automobile Manufacturers, Inc. ("AIAM") is a trade association of manufacturers and manufacturer-authorized importers which import motor vehicles for sale in the United States. AIAM members and associates affected by the challenged rules include: American Honda Motor Company, Inc.; America Suzuki Motor Corporation; BMW of North America, Inc.; Daihatsu America, Inc.; Fiat Auto U.S.A., Inc.; Hyundai Motor America; Isuzu Motors America, Inc.; Jaguar Cars, Inc.; Mazda Motor of America, Inc., Mitsubishi Motor Sales of America, Inc.; Nissan North America, Inc.; Peugeot Motors of America, Inc.; Porsche Cars North America, Inc., Rolls-Royce Motor Cars, Inc.; Rover Group USA, Inc.; Saab Cars, USA, Inc.; Subaru of America, Inc.; Toyota Motor Sales, U.S.A., Inc.; Volkswagen of America, Inc., Volvo North America Corporation; and Yugo America, Inc. The principal place of business for AIAM is 1001 19th Street North, Suite 1002, Arlington, Virginia 22209. Each member of AIAM is either licensed as an importer, pursuant to Section 320.61, Florida Statutes, or maintains a contractual relationship with a distributor which is licensed pursuant to Section 320.61. Toyota Motor Sales, U.S.A., Inc. ("Toyota"), for example, is not licensed in the state as an importer. Toyota, however, maintains a contractual relationship with Southeast Toyota, Inc., which is licensed as a distributor for the purpose of marketing motor vehicles in Florida. Hyundai Motor America ("Hyundai") is an importer of motor vehicles. Hyundai's principal place of business is 10550 Talbert Avenue, Fountain Valley, California 92728. Members of MVMA and AIAM, as well as Ford and Hyundai, have entered into and will continue to enter into dealer sales and service agreements to authorize motor vehicle dealers to sell GM vehicles at locations in Florida. Ed Morse Chevrolet of Seminole, Inc. ("Morse") is an applicant for a license as a franchised motor vehicle dealer. The application of Morse was approved after a hearing pursuant to Section 320.642, Florida Statues. Morse's facility, however, is not yet completed and it would be adversely affected by the enforcement of Proposed Rules 15C-7.004(7)(d) and Rule 15C-1.008. The portions of the proposed and existing rules challenged in this proceeding will affect the substantial interests of the parties to this proceeding. The Challenged Rules Proposed Rule 15C-7.004 was published in the Florida Administrative Weekly, Vol. 17, NO. 16, at page 1721, on April 19, 1991 (the "Proposed Rule"). The particular portions of the Proposed Rule challenged in this proceeding are hereinafter identified by the underlining in the quoted portion of the Proposed Rule. Proposed Rule 15C-7.004(4)(a) provides: Application for Reopening or Successor Dealership, or for Relocation of Existing Dealership. If the license of an existing franchised motor vehicle dealer is revoked for any reason, or surrendered, an application for a license to permit the reopening of the same dealer or a successor dealer within twelve months of the license revocation or surrender shall not be considered the establishment of an additional dealership if one of the conditions set forth in Section 320.642(5) is met by the proposed dealer. (emphasis added) Proposed Rule 15C-7.004(4)(b) provides: Application for Reopening or Successor Dealership, or for Relocation of Existing Dealership. An application for change of address by an existing dealer under this section shall be filed on form HSMV 84712, Application For Change of Location (Address) Of Dealer In Motor Vehicles, Mobile Homes or Recreational Vehicles, which is hereby adopted by reference, provided by the Department. The dealer shall indicate which provision of Section 320.642(5) Florida Statutes, if any, it contends exempts the proposed location from consideration as an additional dealership. (emphasis added) Proposed Rule 15C-7.004(7)(d) provides: (7) Hearing and Post-Hearing Procedures. (d) If the proposed additional or relocated dealership is approved construction on the dealership shall begin within 12 months of the date of the final order. The applicant must complete construction and finalize its preliminary application for license within twenty-four months of the date of the final order. This period may be extended by the Department for good cause. (emphasis added) Florida Administrative Code Rule 15C-1.008 provides: Any person who contemplates the establishment of a motor vehicle business for the purpose of selling new motor vehicles, for which a franchise from the manufacturer, distributor or importer thereof is required, shall, in advance of acquiring building and facilities necessary for such an establishment, notify the Director of the Division of Motor Vehicles of his intention to establish such motor vehicle business. Such notice shall be in the form of a preliminary filing of his application for license and shall be accompanied by a copy of any proposed franchise agreement with, or letter of intent to grant a franchise from, the manufacturer, distributor or importer, showing the make of vehicle or vehicles included in the franchise; location of the proposed business; the name or names of any other dealer or dealers in the surrounding trade areas, community or territory who are presently franchised to sell the same make or makes of motor vehicles. Upon receipt of such notice the Director shall be authorized to proceed with making the determination required by Section 320.642, Florida Statutes, and shall cause a notice to be sent to the presently licensed franchised dealers for the same make or makes of vehicles in the territory or community in which the new dealership proposes to locate, advising such dealers of the provisions of Section 320.642, Florida Statutes, and giving them and all real parties in interest an opportunity to be heard on the matters specified in that Section. Such notice need not be given to any presently licensed notice dealer who has stated in writing that he will not protest the establishment of a new dealership which will deal in the make or makes of vehicles to be included in the proposed franchise in the territory or community in which the new dealership proposes to locate. Any such statements or letters of no protest shall have been issued not more than three months before the date of filing of the preliminary application. The Director may make such further investigation and hold such hearing as he deems necessary to determine the questions specified under Section 320.642. A determination so made by the Director shall be effective as to such license for a period of twelve (12) months from the date of the Director's Order, or date of final judicial determination in the event of an appeal, unless for good cause a different period is set by the Director in his order of determination. (emphasis added) Rulemaking authority for Proposed Rule 15C-7.004 is found in Sections 320.011 and 320.27(3), Florida Statues. The law implemented by the proposed rule is found in Sections 320.27 and 320.60-320.70. Rulemaking authority for Florida Administrative Code Rule 15C-1.008 is found in Sections 320.011, 320.27(3), and 320.69. The law implemented by the existing rule is found in Sections 320.27 and 320.642.
The Issue The issue in these cases is whether an application for motor vehicle dealer licenses filed by SunL Group, Inc., and Auto Stop, Inc., d/b/a Motorsports Depot, should be approved.
Findings Of Fact There was no evidence presented at the hearing to establish that Scooter Depot has a franchise agreement to sell or service Chunl Motorcycle Manufacturing Co. Ltd. (CHUA) motor vehicles, a line-make to be sold by Motorsports Depot. There was no evidence presented at the hearing to establish that Scooter Depot has a franchise agreement to sell or service Shanghai Meitan Motorcycle Manufacturing Co. Ltd. (MEIT) motor vehicles, a line-make to be sold by Motorsports Depot. There was no evidence presented at the hearing that the Scooter Depot dealership is physically located so as to meet the statutory requirements for standing to protest the establishment of the new point franchise motor vehicle dealerships.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order dismissing the protests filed by Mobility Tech, Inc., d/b/a Charlie's Scooter Depot, in these cases. DONE AND ENTERED this 5th day of March, 2009, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 5th day of March, 2009. COPIES FURNISHED: Michael James Alderman, Esquire Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-432 2900 Apalachee Parkway Tallahassee, Florida 32344 Mei Zhou SunL Group, Inc. 8551 Ester Boulevard Irving, Texas 75063 Carlos Urbizu Mobility Tech, Inc., d/b/a Charlie’s Scooter Depot 5720 North Florida Avenue, Unit 2 Tampa, Florida 33604 Robert L. Sardegna Auto Shop, Inc., d/b/a Motorsports Depot 17630 US 41 North Lutz, Florida 33549 Carl A. Ford, Director Division of Motor Vehicles Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
The Issue The issue in the case is whether an application for a new point franchise motor vehicle dealership filed by El Sol Trading, Inc., and Eco-Green Machine, LLC (Petitioners), should be approved.
Findings Of Fact There was no evidence presented at the hearing to establish that the Respondent has a franchise agreement to sell or service ZLMI motor vehicles, the line-make to be sold by Eco-Green Machine, LLC. There was no evidence presented at the hearing that the Respondent's dealership is physically located so as to meet the statutory requirements for standing to protest the establishment of the new point franchise motor vehicle dealership.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order dismissing the protest filed in this case by Finish Line Scooters, LLC, and granting the Petitioners' request to establish a new point franchise motor vehicle dealership for the sale of ZLMI motorcycles. DONE AND ENTERED this 9th day of March, 2010, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 9th day of March, 2010. COPIES FURNISHED: Patcharee Clark ECO Green Machine, LLC, d/b/a ECO Green Machine 7000 Park Boulevard, Suite A Pinellas Park, Florida 33781 John V. Leonard Finish Line Scooters, LLC 6600 Gulf Boulevard St. Pete Beach, Florida 33706 Jennifer Clark Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-308 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Gloria Ma El Sol Trading, Inc., d/b/a Motobravo, Inc. 19877 Quiroz Court City of Industry, California 91789 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0500 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
The Issue Whether the application of Snyder Computer Systems, Inc., d/b/a Wildfire Motors and PC Scooter and Cycle, L.L.C., to establish an additional franchised dealership for the sale of Zhejiang Summit Huawin Motorcycle Co. Ltd. (POPC) motorcycles to be located at 3401 East Business Highway 98, Panama City, Bay County, Florida 32401, should be granted.
Findings Of Fact Respondent is a licensed motor vehicle dealer in Florida and an existing POPC dealer located at 12202 Hutchison Boulevard, Suite 72, Panama City Beach, Florida 32407. There was no evidence which demonstrated Petitioners’ market share in the motorcycle market. There was no evidence presented analyzing the motorcycle market in the Panama City area. Likewise, there was no evidence presented regarding anticipated growth in the market area. This type of evidence is generally presented by the distributor or manufacturer of the product. As indicated, Petitioners did not appear at the hearing. Given this lack of evidence, the market share for Petitioners’ motorcycles cannot be established. Mr. Wooten, Respondent’s CEO, established that Petitioners’ proposed location is within 25 miles of Respondent’s current location. Respondent has the ability to adequately serve the needs of the population of Bay County, including Panama City and Panama City Beach through its sales and service of the POPC motorcycles. In the current economy, the entry of Petitioners into the POPC marketplace would have a significant negative financial impact on Respondent’s ability to maintain its sales, service, and customer base. Respondent has expended significant sums on advertising, both in print and online, and could not afford to continue to advertise the POPC line if Petitioners’ application were approved. Respondent already works seven days a week to maintain his market share, and would suffer significant financial losses if Petitioners’ application were approved. Respondent provides low prices for the products it sells and would be forced out of business if Petitioners’ application were approved. Petitioners seek to sell the identical motorcycles sold by Respondent, and the Bay County market is not sufficiently large to support a new entrant. If Petitioners’ application is approved, Respondent will be forced to close its business in Panama City Beach. Respondent is in good standing with the distributors of the products it sells. Respondent’s license with the State of Florida is active and in good standing. There are no barriers to access for customers seeking to purchase the products offered by Respondent. Respondent’s location is centrally located for customers in Bay County, including Panama City and Panama City Beach.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying the establishment of Petitioners’ dealership at 3401 East Business Highway 98, Panama City, Florida. DONE AND ENTERED this 6th day of July, 2009, in Tallahassee, Leon County, Florida. S ROBERT S. COHEN 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 6th day of July, 2009. COPIES FURNISHED: Jennifer Clark Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A-308 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Donald Watts PC Scooter & Cycle, LLC 1903 Brown Avenue Panama City, Florida 32405 Dan Vogel Snyder Computer Systems, Inc., d/b/a Wildfire Motors 11 Technology Way Steubenville, Ohio 43952 Barry Wayne Wooten Moto Import Distributors, LLC 12202 Hutchison Boulevard, Suite 72 Panama City Beach, Florida 32407 Carl A. Ford, Director Division of Motor Vehicles Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room B-439 2900 Apalachee Parkway Tallahassee, Florida 32399-0635 Robin Lotane, General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building 2900 Apalachee Parkway Tallahassee, Florida 32399-0500
Findings Of Fact Based on the stipulations of the parties, on the exhibits received in evidence, on the deposition testimony received in evidence, and on the testimony of the witnesses at the hearing, I make the following findings of fact. Facts Stipulated To The Petitioner, Mike Smith Pontiac GMC, Inc., ("Dealer"), is a corporation organized and existing pursuant to the laws of the State of Florida. Dealer is engaged in the business of operating an automobile dealership with its place of business located in Daytona Beach, Florida. The Respondent, Mercedes-Benz of North America, Inc. ("MBNA"), is a corporation organized and existing pursuant to the laws of the State of Delaware. BNA has the exclusive license in the United States, its territories and possessions, to distribute, sell, and service Mercedes-Benz passenger cars, parts, and products. MBNA's principal place of business is located in Montvale, New Jersey. In addition, MBNA has seven zone offices within the United States, each of which oversees the operations of the Mercedes-Benz dealerships located within the zone. The zone office responsible for dealership operations in Daytona Beach, Florida, is located in Jacksonville, Florida. On or about January 1, 1984, MBNA and Dealer entered into a Mercedes- Benz Passenger Car Dealer Agreement which granted the Dealer the right to sell and service Mercedes-Benz passenger cars and parts through December 31, 1985. That agreement was extended by MBNA until January 31, 1986, by letter dated October 23, 1985. On or about June 21, 1985, Michael Smith left the dealership and no longer functions as dealer-operator of Dealer. Litigation between Michael Smith and Dealer and Jerome Ginsburg is presently pending in the Circuit Court in and for Volusia County, Florida, wherein Michael Smith presently claims to continue to own a 25 percent interest in Dealer. Pending disposition of this proceeding, MBNA has continued its business relationship with Dealer to date. Other Background Facts MBNA is a wholly owned subsidiary of Daimler-Benz Aktiengesellschaft, a corporation of the Federal Republic of Germany, which manufacturers Mercedes- Benz passenger cars. Dealer was formed by Jerome Ginsburg ("Ginsburg") and Michael D. Smith ("Smith") for the purpose of operating an automobile dealership named "Mike Smith Pontiac," located in Daytona Beach, Florida. Jerome Z. Ginsburg is both a lawyer and a businessman of substantial means. In late 1982, Jerome Ginsburg negotiated the purchase of an automobile dealership in Daytona Beach, Florida, from the owner, Mr. Roger Holler. At the time of purchase of the dealership, Ginsburg had absolutely no experience in the automobile field and, to this day, has never managed the day-to-day operations of an automobile dealership. It was not Ginsburg's original intent to personally operate the dealership. Ginsburg did not consider it prudent for him to enter into the automobile business without the aid of a person experienced in that business. The buy-sell agreement between Ginsburg and Holler required, as a condition of sale, that Holler approve the qualifications of the dealer- operator, i.e., the person who would actually be in charge of managing the day- to-day operations of the dealership. The buy-sell agreement between Ginsburg and Holler also provided that Ginsburg would lease the real property on which the dealership was situated and contained a guaranteed option to purchase that property at a value set by an agreed :AI appraiser, which option could be exercised by Ginsburg beginning one year after the dealership purchase. Ginsburg set out to find an experienced dealer- operator to run the Daytona Beach dealership and he picked Michael D. Smith. Ginsburg was aware that the manufacturers were highly selective with respect to whom they would approve as dealer-operators. The investigative focus of MBNA differs with respect to evaluating a potential dealer-operator as opposed to a dealer-owner. MBNA looks to the financial status and ability to capitalize the dealership of the proposed owner. With respect to a proposed operator, however, MBNA seeks an individual who has proven automobile dealership management experience. Smith submitted a resume outlining his automotive experience and employment history to Ginsburg and Ginsburg hired a detective agency to check the validity of the information submitted. The agency confirmed Smith's automobile experience. Although Smith had extensive experience in the automobile business, he did not possess any unique qualities which made him substantially different from many other dealer-operators. There are a large number of other people with similar experience. Ginsburg, as majority shareholder and president of Dealer, assumed that Smith would operate the day-to-day business of Dealer subject to the usual controls of the board of directors and himself as chief executive officer of Dealer. There is nothing to the contrary in either of the franchise agreements between Dealer and MBNA giving the dealer-operator special independent status or legal rights vis-a-vis Dealer. Smith, like Ginsburg, was not a party to the franchise agreements. The two principals in Dealer were Ginsburg and Smith. Ginsburg provided all of the money for the business. Ginsburg was president of Dealer and has always held at least 75 percent of the stock of Dealer. Smith operated Dealer on a day-to-day basis. In both of the franchise agreements entered into by MBNA and Dealer, Ginsburg is shown as a "Dealer Owner" and Smith is shown as both a "Dealer Owner" and a "Dealer Operator." Ginsburg loaned Smith all of the money to buy stock in Dealer and was never repaid by Smith. A Mercedes-Benz automobile is one of the most expensive cars sold in the United States, the price to the consumer being as high as $70,000.00 for some models. Thus, MBNA's standards are higher than those of many other manufacturers, and MBNA expects its dealers to provide facilities and service commensurate with the quality and cost of the product they represent. MBNA's emphasis on service rather than sales distinguishes MBNA from most other automobile manufacturers. Because MBNA does not have a problem with sales, MBNA has a philosophy of going to the ultimate to try to satisfy its customers. It is important to MBNA that the ownership experience be as positive as is possible while the customer owns a Mercedes- Benz automobile. Thus, MBNA prefers, at a minimum, a Mercedes- Benz service reception area isolated from other car lines, with a covered area where the customer can bring his car in, be greeted, and have his order written. Moreover, MBNA expects all of its dealerships to provide a lounge wherein a customer can wait comfortably and be treated in a manner consistent with the cost of the car. If MBNA terminates Dealer, Dealer will not be paid for the value of good will or going concern value of its business but rather would receive a liquidation value of Dealer's MBNA franchise. MBNA franchises are very valuable. If Dealer is terminated and MBNA thereafter selects another dealer, less investment will have to be made by the successor dealer and MBNA could expect to more easily obtain concessions from the new dealer. Dealer continues to operate a dual franchise by also selling Alfa Romeo and Pontiac automobiles. Dealer does not insist on continuing to operate the MBNA franchise in Daytona even though MBNA wants to get rid of Dealer and, in fact, Dealer became contractually bound to sell to third parties unconnected to Dealer in October 1986. The third party, Mr. Cutler, agreed to pay $3.3 million for the dealership. A sale to a qualified candidate acceptable to MBNA would accomplish MBNA's sole objective in this termination proceeding by changing its representation in Daytona Beach. At all times material to this case, Dealer was treated fairly with respect to its allocation of vehicles by MBNA. Dealer's allocation was increased while Smith was operating Dealer. The Agreement Between Smith and Ginsburg In Mid-February of 1983, Jerome Ginsburg and Michael Smith entered into a written agreement titled "Operating Financial Agreement." The agreement contemplated the formation of a Florida corporation for the purpose of purchasing Lamb Pontiac, GMC, Mercedes-Benz, in Daytona Beach, Florida. The agreement also contemplated that Ginsburg would advance all of the funds necessary four the business venture and that Smith's primary role would be in the day to day on-site management of the business subject to the general supervisory control of Ginsburg. With respect to ownership of the corporation to be formed, the agreement provided in Paragraph 3: 3. That the stock of said corporation shall be owned 75 percent by JZG [Ginsburg] and 25 percent by MDS [Smith]. The 25 percent stock owned by NDS shall be placed in escrow until the provisions of this contract are met, together with properly executed stock transfer documents executed in blank so that said stock can be transferred to JZG or his appointee and undated but executed letters of resignation from any position as an officer or director, all in the event of a default as outlined in this Agreement. With respect to the distribution of the profits of the corporation to be formed, the agreement between Ginsburg and Smith provided in paragraph 6: Disregarding any modifications that may be made for tax purposes, to net income earned, said distributable income defined as prior to any salary or compensation to the parties, (less any cash requirements for the operations of the business) shall be distributed in accordance with stock ownership. To MDS -- 25 percent, however, 50 percent of any monetary compensation in excess of One Hundred Thousand and 00/00 ($100,000.00) shall be paid to JZG to the extent required to balance the capital and loan accounts in the corporation to the ratio of 75 percent JZG and 25 percent MDS. To JZG -- 75 percent. The parties can elect to take said compensation in any form desired provided that it includes compensatory charges for any tax effect on the corporation or the other party. With respect to Smith's basic obligations and salary under the agreement with Ginsburg, Paragraph 7 provided: 7. MDS [Smith] agrees to operate the dealership on a daily basis in accordance with the highest standards in the industry and to devote his full time to the operation of the dealership and shall not engage in any other work activity without JZG's [Ginsburg's] prior consent nor shall he invest or aid anyone else in investing or engaging in the automobile business or any related business without JZG's prior consent. MDS shall be employed by the Corporation at a salary of $60,000 per year. Paragraph 11 of the agreement provided: 11. In view of the large capital expenditure of JZG, MDS and his wife both agree to execute a promissory note in favor of JZG for 25 percent of the cash required not to exceed $225,000. Said promissory note shall be due in the event there is a default by MDS under this Agreement. The note shall be cancelled and returned upon the balancing of the capital and loan accounts as provided in Paragraph 6A. Said note shall bear interest at the rate of 10 percent per year compounded annually until paid. Said note shall be due at the end of the 54 months after purchase and unless fully paid, shall accrue interest at the highest rate allowed in the State of Florida and shall provide for waiver of presentment, dishonor and notice, the payment of full legal costs of collection, etc. The agreement between Smith and Ginsburg also contained the following provision in Paragraph 15: 15. In the event in the future, any franchisor requires that MDS have the right to purchase or obtain a greater interest than provided herein, then in that event, MDS agrees that he will not exercise any such right. In the event a franchisor actually requires the transfer of such greater interest to MDS then in that event, compensating adjustments will be made in the ownership of the other franchises and or other assets to maintain the agreed upon ratio of ownership of assets and distribution of profits. In addition to the foregoing, the agreement between Smith and Ginsburg contained numerous specific obligations and agreements as to the manner in which Smith would operate the business as well as a lengthy definition of what constituted a default by Smith under the agreement. Included in the definition of default by Smith was the failure of Smith to achieve specified amounts of distributable income during each of the first five years of operation of the business. The terms contained in the agreement were drafted by Ginsburg and Ginsburg made the stock escrow arrangement a condition of Smith's ability to participate in the dealership. Ginsburg had Smith sign blank stock transfer forms and blank resignation forms in February 1983, on which the date was left blank. After Smith signed these documents, they were kept by Ginsburg in his office. Twenty-five per cent of Dealer's stock was issued to Smith, but, immediately after Smith signed his stock certificates, Ginsburg took back Smith's stock and held it. Ginsburg and Smith never advised MBNA of the existence of this agreement. The Application Process After executing the foregoing agreement, Ginsburg and Smith contacted MBNA with a view toward obtaining approval of Dealer as a franchisee. MBNA requested that Ginsburg and Smith provide certain information, including business experience, financial data, and information related to stock ownership in Dealer. As part of the pre-application process, in response to MBNA's request for background information, on April 26, 1983, Ginsburg sent to MBNA copies of applications which had been submitted to the GM Pontiac Division. Ginsburg intended that MBNA utilize the information contained in the GM Pontiac Division materials in the evaluation of Dealer's application. Ginsburg's cover letter of that date stated that the dealership would be owned by a corporation, ". . . 75 percent of which will be owned by me and 25 percent by Michael Smith." The documents submitted to GM Pontiac Division and forwarded to MBNA with Ginsburg's letter of April 26, 1983, included a form titled "Applicant's Source Of Funds Statement." That form, filled out and signed by Smith, contains a detailed list of assets owned by Mr. Smith which he describes as being the assets which will constitute the source of his funds to acquire a 25 percent interest in the dealership. That detailed list does not include mention of any loan of money from Ginsburg. Another portion of the documents submitted to GM Pontiac Division and forwarded to MBNA requested the following information: "Would any funds you plan to invest be borrowed or be otherwise encumbered? If yes, state from whom, terms, restrictions and repayment program." Both Smith and Ginsburg answered the question, "no," and neither provided any information regarding from whom funds were to be borrowed, the conditions of the loan, or the repayment schedule. At MBNA's initial meeting with Ginsburg and Smith, on May 27, 1983, discussions were had regarding remodeling of the dealership service facility. At that time, the dealership's Mercedes-Benz reception area was the same one used for Pontiac and there were no adequate facilities for customer waiting. Under date of June 23, 1987, Smith and Ginsburg submitted an Application For Dealer Agreement to MBNA on behalf of Mike Smith Pontiac, GMC, Inc. The application form included a portion titled "Statement Of Finances And Ownership." That statement showed that Mike Smith Pontiac, GMC, Inc., had a maximum authorized capital stock of $1,000.00, that Ginsburg owned 75 shares for which he paid $750.00, and that Smith owned 25 shares for which he paid $250.00. In the column titled "Amount Borrowed for this Investment," both Ginsburg and Smith reported, "None." Subsection 6 of the Statement of Finances And Ownership states: "Information is given below when it is indicated that stockholders, partner, or owner have borrowed funds to make their individual investment in this business." No information was provided regarding funds borrowed for the investment in Mike Smith Pontiac, GMC, Inc., with regard to either Smith or Ginsburg. At the time of Dealer's original application and at all other times material to this case, MBNA had a written policy regarding absentee ownership. That policy read as follows in pertinent part: It is our intent to avoid "absentee management" and to ensure operating control of the dealership by the resident owner/operator and, therefore, it will be the policy of MBNA that the owner/operator of the dealership shall have: 51 percent stock interest in the dealership, or a minimum of 20 percent ownership coupled with the absolute right to purchase up to 51 percent of the dealership during the term of the Dealer Agreement, evidenced by a written Agreement between the shareholders to that effect. COMMENT Although MBNA may, in exceptional circumstances, approve the application of a newly formed enterprise where the owner/operator has less than 51 percent of the shares because of his financial inability at he outset to acquire 51 percent, it is the goal of MBNA to ensure that the owner/operator does acquire operating control during the term of the dealer agreement. Notwithstanding the foregoing written policy regarding absentee ownership, NBNA does not appear to have been very concerned about the application or enforcement of that policy. When representatives of MBNA met with Smith and Ginsburg during the application stage of the relationship, the NBNA representatives told Smith and Ginsburg about the 20 percent minimum ownership requirement with respect to dealer-operators, but did not discuss with Smith and Ginsburg the requirement of a right to purchase up to 51 percent of the stock. Further, the MBNA representative did not provide Smith and Ginsburg with a copy of the written absentee ownership policy and did not ask them to provide MBNA with a copy of a written agreement between the shareholders showing that the dealer-operator had the absolute right to purchase up to 51 percent of the dealership during the term of the dealer agreement. MBNA did not ask Ginsburg or Smith about any other agreements between those two individuals. The MBNA absentee ownership policy is not incorporated as one of the provisions of the agreement between MBNA and Dealer. During the application process neither Ginsburg nor Smith made any mention of their written "Operating - Financial Agreement," nor did either of them show that document to any representative of MBNA. Similarly, neither Ginsburg nor Smith told MBNA that Ginsburg was holding Smith's stock certificate and signed, undated, resignation and stock transfer documents. The "Operating - Financial Agreement" was not brought to MBNA's attention because Ginsburg did not feel it was necessary to tell them about it. MBNA assumed that the information submitted by Ginsburg and Smith was true. The First Agreement Between The Parties The first written agreement entered into between MBNA and Dealer was an agreement titled "Mercedes-Benz Passenger Car Dealer Agreement." This agreement was filled out by representatives of MBNA and was then reviewed by Ginsburg and Smith. Ginsburg and Smith confirmed that the statements inserted in the agreement were true. The agreement had an effective date of July 5, 1983, and remained in effect through December 31, 1984. This agreement was entered into by MBNA and Dealer as corporations. The first agreement included a section titled "Dealer Operating Requirements Agreement, also referred to as "DORA." The DORA portion of the first agreement included the following language: Additionally Dealer agrees that the following changes and/or improvements recommended by Mercedes-Benz of North America, Inc., in the course of an analysis of Dealer's service department are necessary to the proper functioning of Dealer's service department. Dealer agrees that it will complete the following within the period indicated: The foregoing was followed by a typed itemization which included the following: "Provide plans for an acceptable M-B service reception area and customer lounge," which had an agreed completion date of 10-1-83, and "Complete renovation of service facility in accordance with approved plans, as mentioned above," which had an agreed completion date of 12-31-83. These same DORA commitments were also contained in the application materials reviewed and signed by Ginsburg and Smith. In early October of 1983, Ginsburg wrote to MBNA and, among other things, sought to defer compliance with the DORA items quoted above until after the purchase of the real property on which the dealership was located, which purchase could not take place until one year after acquisition of the dealership. The condition that the property be purchased prior to completing renovations had not been mentioned by Ginsburg or Smith at the time the parties initially discussed and agreed to the DORA commitments and deadlines for completion. MBNA acquiesced in Dealer's request and agreed to extend the completion dates for the above-quoted DORA items in the DORA provisions of the next agreement. The Second Agreement Between The Parties Under date of January 1, 1984, MBNA and Dealer entered into a second written agreement titled Mercedes-Benz Passenger Car Dealer Agreement. Like the first agreement, this agreement was entered into by MBNA and Dealer as corporations. This is the existing and presently effective agreement. This agreement replaced the initial franchise agreement. Like the first franchise agreement between the parties, this agreement was drafted entirely by MBNA personnel without negotiation. Among the specific provisions of this existing agreement pertinent to this case are the following: FIRST: MBNA appoints Dealer as a dealer of Mercedes-Benz Passenger Cars and as a dealer of Mercedes-Benz Parts in accordance with the provisions of this Agreement. Dealer accepts this appointment and assumes the obligation of an authorized Mercedes-Benz dealer, as specified in this Agreement. SECOND: Subject to the terms and conditions hereof, MBNA will sell to Dealer and Dealer will buy from MBNA Mercedes-Benz Passenger Cars and Parts and assumes the obligation of selling and promoting the sale of Mercedes-Benz Passenger Cars and Parts and performing service, including Warranty Service, for Mercedes-Benz Passenger Cars in the following non-exclusive area: Counties of Volusia and Flagler in the State of Florida. MBNA may alter the area described above at any time by written notice to Dealer. THIRD: The accompanying Dealer Operating Requirements Agreement (Form No. MB-903-O) and the Dealer Agreement Standard Provisions (Form No. MB-902-F) are hereby made a part of this Dealer Agreement. Dealer acknowledges receipt of the Dealer Agreement Standard Provisions and declares that it has examined the provisions and that it is fully familiar with them. FOURTH: This is a personal service agreement and has been entered into by MBNA in reliance upon, and in consideration of, the personal qualification and representations with respect thereto of the following named persons, hereinafter called Dealer Operators, who participate full time in the management of the Dealer and have full managerial authority and responsibility for the operations of Dealer: Name Address Title Michael Smith D. 1 River Ridge Trail, Ormond Secretary/ Treasurer/ Beach, FL 32074 General Manager and the following named persons, hereinafter called Dealer Owners who participate in the ownership of Dealer: Percentage Name Address of Ownership Jerome Z. Ginsburg 8 Boulder Trail, Armonk, 75 percent NY 10504 Michael D. Smith 1 River Ridge Trail, Ormond Beach, FL 32074 25 percent Except as may be otherwise provided in this Agreement, neither Dealer nor the persons named above shall permit any change in the ownership or management of Dealer without the prior written approval of MBNA, which approval shall not be unreasonably withheld. No representative of MBNA has authority to give verbal approval to a change in ownership or management. FIFTH: MBNA hereby approves the following locations for the Dealer's business pursuant to this Agreement: a salesroom at 833 Volusia Avenue, Daytona Beach, Florida; facilities for the sale of used cars with space provided for used Mercedes-Benz Passenger Cars at same and service and parts department at same Facilities at these locations shall correspond as to style, size, layout, color, equipment, and identification by MB Signs as required by MBNA in accordance with the applicable provisions of this Agreement and with such reasonable directives and suggestions as MBNA may issue from time to time. Without the prior written consent of MBNA, Dealer shall neither change the location of its salesroom, storage facilities, service department, or used car facilities, nor establish for use in its Mercedes-Benz business, pursuant to this Agreement, any additional salesroom, storage facilities, service department, or used car facilities. . . . . SEVENTH: This Agreement is to be governed by, and construed according to, the laws of the State of New Jersey. It is understood, however, that it is a general form of agreement designed for use in any state; and it is therefore agreed that any provision herein contained which in any way contravenes the laws of any state or constituted authority which may apply to this Dealer Agreement shall be deemed to be deleted here from in accordance with the applicable provision of the accompanying Dealer Agreement Standard Provisions. . . . . EIGHTH: This Agreement terminates and supersedes all prior written or oral agreements, if any, between MBNA and Dealer, relating to the subject matter hereof, except with respect to any trade indebtedness which may be owing by either MBNA or Dealer to the other, and except that this Agreement shall not operate to cancel any of Dealer's unfilled orders with MBNA for any Mercedes- Benz Passenger Cars, Parts, and Products placed with MBNA pursuant to the provisions of any agreement terminated or superseded by this Agreement. Except as herein otherwise provided, the Dealer, upon execution of this Agreement and in consideration of the execution thereof by MBNA, releases MBNA from any and all claims, demands, contracts, and liabilities (including statutory liabilities) of any kind and nature whatsoever, if any, arising from or out of or in connection with any such prior agreements. . . . . TENTH: This Agreement shall become effective as of the day and year first above written and shall continue in effect until December 31, 1985, when it shall terminate, unless otherwise previously terminated in accordance with the applicable provisions of this Agreement. The agreement described immediately above incorporated a document titled Dealer Operating Requirements Agreement (hereinafter "DORA"). Paragraph II,E. of the DORA provisions stated: "The minimum inventory of Mercedes-Benz vehicles in Dealer's stock will be 18 units." And as the last item under Section IV of the DORA, it is provided "In 1984/85, after purchase of real property, provide M-B identified reception area and customer lounge." The agreement entered into between the parties also incorporated a separate document known as the "Standard Provisions," which document is a part of every Mercedes-Benz Passenger Car Dealer Agreement. Among the provisions of the Standard Provisions are the following: Paragraph 15.D. Dealer and MBNA agree that the following acts or events, all within the control of Dealer or originating from actions taken by Dealer or its management or owners, are so contrary to the spirit and purposes of this Dealer Agreement as to warrant its termination . . . . Removal, resignation, withdrawal or elimination from Dealer for any reason of any person listed in Article Fourth; provided, however, that if the person leaving is a non- owner Operator who left without notice, Dealer will be given such reasonable time as circumstances may require to replace the Operator with an Operator satisfactory to MBNA; Any change, whether voluntary or involuntary, in the management or ownership of Dealer as set forth in Article Fourth without the prior written approval of MBNA; . . . . Any disagreement between or among the Dealer Operators or Owners of Dealer which in MBNA's opinion may adversely affect the conduct of Dealer's business or the interests of MBNA, providing the disagreement continues three (3) months after notice to Dealer by MBNA that the disagreement must be resolved; Any misrepresentation by Dealer or by any Dealer Operator or Owner in applying for this Dealer Agreement, or regarding the source of funds or capitalization of Dealer; Submission by Dealer of false applications or claims for reimbursement, refund or credit, or of false reports of the delivery or transfer of MB Passenger Cars if such applications, claims or reports are fraudulent or part of a pattern of false applications, claims or reports; When MBNA learns that any of the above events or acts have occurred MBNA will endeavor to discuss it with Dealer. Thereafter, MBNA may terminate this Agreement by giving Dealer written notice of such termination, to be effective upon receipt of such notice. . . . . Paragraph 15.E. If MBNA determines that Dealer has failed to provide adequate facilities or to fulfill the sale and service obligations Dealer assumed under this Agreement, MBNA will advise Dealer of such failure and attempt to discuss it with Dealer. Thereafter, MBNA shall notify Dealer in writing by Certified Mail of the nature of the failure, of the acceptable remedy and of the period of time (not less than six months) during which Dealer will be expected to remedy the failure. If the failure has not been substantially remedied at the end of the period, MBNA may terminate this Agreement by giving Dealer three months written notice. Paragraph 16. This Agreement can be extended or renewed only through an express written instrument to that effect and only if such instrument is duly executed on behalf of MBNA by one of the persons referred to in Article Ninth of the Mercedes-Benz Dealer Agreement. Any business relations of any nature whatsoever between MBNA and Dealer after the expiration of this Agreement or after its proper termination pursuant to Paragraph 15 of this Agreement, without such written extension or renewal shall not operate as an extension or renewal of this Agreement. Nevertheless, all such business relations, so long as they are continued, shall be governed by terms identical with the provisions of this Agreement. Concerns About Smith's Performance During the spring of 1985; Ginsburg began to have some serious concerns about the manner in which Smith was managing the dealership. An area of primary concern was that expenses had increased significantly and the financial statements were not showing profits that should have been there. Because of these concerns, Ginsburg and Paul Richards flew to Florida for two days at the end of April of 1985. Paul Richards was an accountant who had been providing accounting services for Ginsburg and who shortly thereafter was hired full-time by Ginsburg. During the two-day visit in April of 1985, Ginsburg and Richards met with Smith, and Richards also met with the office manager. Expenses were extremely high at that time. There appeared to be no control over expenses or cash flow. There were indications that Smith had obligated the dealership for contingent liability under recourse repurchase type obligations. The dealership had not been making money for a couple of months at that time. They discussed these problems with Smith. They tried to establish control over the dollars being spent and tried to set up a purchase order system. They established a budget for the month of May of 1985. On May 13, 1985, Ginsburg and Richards returned to Florida to do a closer review of Dealer's books and records. During the- week of May 13, 1985, they discovered further serious problems with the operations of the dealership. During this week Ginsburg and Richards first discussed the possible removal of Smith as dealer-operator. Later in that same week Ginsburg and Richards met with Smith and discussed with him all of the problems they had discovered. Smith did not deny the problems, but asked for a chance to correct them and to continue as the dealer-operator. Ginsburg wrote a document which had the effect of modifying the "Operating - Financial Agreement," and at the end of the week of May 13, 1985, Ginsburg presented the modifying document to Smith, discussed it with Smith, and told Smith that the only way Smith could remain as the dealer-operator was to sign the modification to their previous agreement. Ginsburg also required that Smith sign a new undated resignation and a new undated stock transfer authorization. The modification document listed all of the problems that were known to Ginsburg and Richards at the time the document was prepared. Neither Ginsburg nor Richards threatened Smith in any way in conjunction with obtaining Smith's signature on the modification document. Specifically, they did not threaten Smith with criminal prosecution. Ginsburg let Smith take the modification document home so that Smith could consider it further or consult with an attorney. At the time Ginsburg presented Smith with the modification document, Ginsburg felt that the financial viability of Dealer was threatened and was concerned that Dealer might go bankrupt. On May 31, 1985, Smith met with Richards and signed the modification of his agreement with Ginsburg in the presence of Richards. At the same time Ginsburg signed an undated resignation document and an undated stock transfer authorization. Smith was not asked to sign any document whereby he specifically agreed to resign as the individual named as the dealer-operator at Paragraph Fourth of the franchise agreement between MBNA and Dealer. He has never signed such a document. Modifications to the Ginsburg/Smith Agreement The modification to the agreement recited, among other things, that Smith had failed to meet the minimum distributable income goals in the original agreement and set new monthly distributable income goals for the period July 1, 1985, through June 30, 1986. Specific provisions of the modified agreement in this regard read as follows: Whereas the parties acknowledge that the goal set forth in Par. 4C(i) of minimum distributable income for the first 12 month period has not been met also the second 12 month period will not be met and Whereas MS wants to remedy the default and JG has agreed based on the following terms and conditions (a) The deficiency for the first 12 month period is $83,338. The deficiency for the second 12 month period shall be determined at the end of the period by Paul Richards. Copies of his computation shall be sent to the parties. MS agrees to prepay JG 75 percent of the total deficiency for these 2 periods. Until such repayment is completed Par 6a shall continue in effect. Par 3 is amended to extend the escrow until such payment is made. The parties hereby agree that in all other respects the agreement shall continue in effect except as set forth above & following. MS has prepared a monthly profit projection for the third 12 month period a copy of which is attached hereto as Exhibit A. Said profit projection shall total $900,000 & shall be agreed to by JG. MS agrees that failure to meet the profit projection for any one month which is not corrected by achieving the next month's profit projection plus the deficiency for the prior month shall constitute a default under this amendment and the original agreement. . . . Paragraph 2(d) of the modification to the prior agreement contained the following additional provisions with respect to the possibility of default: 2.(d) In the event of a default under the original agreement or this amendment by MS, he shall immediately turn over day to day operation of the dealership to JG or his designee cooperate in the orderly transition of all businesses to the new management execute any additional documents required for such transition by any franchisor i.e. GM, GMC, Pontiac, M.B., Alfa Romeo etc. or by any lendor i.e. GMAC, Barnett Bank. In the event of a default provided MS complies with the terms set forth herein, he shall be paid his salary for 90 days after default. The amendment to the agreement further provided in Paragraph 2(g) that Smith would submit a schedule for repayment of monies owned by Smith to the business and in Paragraph 2(h) stated: "MS acknowledges that he has willingly executed assignment and resignation papers which are to be effective upon default." The amendment to the agreement also included an observation that in view of current problems listed further down in the amendment to the agreement, Smith's performance would be evaluated on a continuous basis for the next 120 days. That observation was followed by an itemization of fifteen problems that were described as requiring immediate and continued corrective action. Those fifteen items read as follows: Excess new vehicle inventory Aged new vehicle inventory New vehicle inventory purchased in excess of cost New vehicle inventory purchased without RDR cards Excess inventory of used cars Aged inventory of used cars Used vehicles purchased or traded in at excess of value Purchases made in excess of the cash flow ability to pay Used vehicle purchases made in spite of already existing excess inventory Nonmonitoring of payables, receivables & credit extensions Excess advertising costs and non- monitoring of results Employment of excess personnel Payment of personnel in excess of that required and without consideration of economic return Failure to monitor the fleet rental car lease program & dispose of vehicles on return Failure to achieve income levels as projected The amendment to the agreement concluded with the following language: "Repetition or continuation of these problems, failure to take corrective actions or doing any act that creates further losses shall be considered an immediate default." The Termination of Smith's Involvement With Dealer During the latter part of May and the first three weeks of June of 1985, the dealership continued to experience problems and Ginsburg and Richards discovered new problems. Among the new problems was discovery of the fact that Smith had entered into recourse obligations to facilitate the sale of cars. Those recourse obligations exposed Dealer to contingent liability for which there was no reserve in the dealership books and records. The recourse obligations were not reflected anywhere in the dealership's books and records. It was also discovered that Smith had failed to inform Ginsburg of another serious problem, namely, the fact that GMAC had threatened to terminate the dealership's floorplan. Termination of the floorplan would have put the dealership out of business. By June 21, 1985, Ginsburg determined that it was no longer feasible for Smith to remain in control of Dealer's operations because of the numerous problems summarized above. On that day, Ginsburg met with Smith and told Smith that things were not working out and that Ginsburg was asking Smith to leave. Ginsburg told Smith that Smith was in default under the terms of the modifications to their "Operating - Financial Agreement" and that Ginsburg was exercising his rights under the modified agreement to date Smith's resignation and to transfer Smith's stock. Ginsburg thereafter dated Smith's resignation June 21, 1985. Ginsburg also dated Smith's stock transfer authorization June 21, 1985, and transferred all of Smith's stock to Ginsburg. When Smith left the dealership on June 21, 1985, Ginsburg knew that Smith was disappointed, but thought that they had parted on friendly terms. When Smith left, Ginsburg expected that Smith would cooperate in an orderly transition as provided in paragraph 2.(d) of the modification to their agreement. Ginsburg even allowed Smith to retain possession of two demonstrators (one for Smith and one for Smith's wife) for several months after June 21, 1985. It was not long before Ginsburg was disabused of any notion that he still had a friendly relationship with Smith. Prior to the termination of Smith, Ginsburg had not advised MBNA of any of the problems at the dealership. Following Smith's termination, Ginsburg did not immediately notify MBNA of the termination. By letter dated June 26, 1985, Ginsburg advised MBNA that Smith was on vacation, that Smith had submitted his resignation, and that Dealer intended to accept. Ginsburg did not forward copies of the resignation and stock transfer authorization with the letter. Instead, Ginsburg was trying "to buy time" by not fully informing MBNA of the circumstances. Ginsburg was concerned that had he told MBNA the entire truth, they would have become concerned that there was no dealer- operator on the premises. Ginsburg's letter of June 26, 1985, was received by MBNA on June 27, 1985. By that time MBNA had already heard through the "grapevine" that Smith had been terminated from his position as dealer-operator. On June 27, 1985, the MBNA zone manager also received a phone call from Smith and a telegram from Smith which made him aware that Ginsburg and Smith had a dispute and that Smith was still claiming to be the "dealer of record." The telegram read: THIS IS TO PUT YOU ON NOTICE AND INFORM YOU THAT I AM STILL DEALER OF RECORD IN DAYTONA BEACH FLORIDA AND ANY AND ALL CORRESPONDENCE RECEIVED FROM JEROME Z GINSBURG OR ASSOCIATES IN REGARD TO MIKE SMITH PONTIAC INC WERE NOT EXECUTED LEGALLY AND WERE NOT AGREED UPON BY MYSELF THEREFORE THEY ARE TO BE TOTALLY DISREGARDED By letter dated June 28, 1985, Smith confirmed his earlier notification to MBNA. The letter included the following: This will further confirm my mailogram to you on June 27 regarding the papers filed. I hereby put you on notice of the documents being invalid and any signatures were obtained through duress some time ago and no action should be taken on any request of Mr. Ginsburg in relation to this dealership. He does not have the authority to act in this capacity in regard to the franchise. When the MBNA zone manager received the conflicting communications from Ginsburg and Smith, he felt that MBNA's only option was to invoke the provisions of the franchise agreement which required the principals to resolve their differences within 90 days. By memo to the home office, he recommended invocation of that option because of the dispute as well as because of other matters mentioned in the memo. The Warning Letter To Dealer By letter dated July 1, 1985, MBNA followed the zone manager's recommendation and invoked paragraph l5D(g) of the franchise agreement by advising Dealer that the dispute between Ginsburg and Smith must be resolved within 90 days under pain of possible termination of the franchise agreement. The letter included the following: It has come to our attention that a dispute is underway at your dealership among the owners of the corporation. We have received conflicting correspondence concerning the employment status of Mr. Smith and we are very concerned as to the effects this disagreement will have on the Mercedes-Benz customers in the Daytona Beach market. This internal dispute conceriing ownership interest in your corporation is compounded by the recent events which have transpired concerning your lack of or unwillingness to conform to your Dealer Operating Requirement Agreement as well as misleading DDR reporting practices in conjunction with your leasing operation in St. Petersburg, Florida. These various incidents along with the current serious disagreement among corporate officers is unacceptable. At the time of sending the July 1, 1985, letter, MBNA did not know, as between Ginsburg and Smith, which was telling the truth. MBNA also felt that it had no way of determining which of the two was telling the truth. Further, MBNA felt that it had no obligation, contractual or otherwise, to referee a dispute between Ginsburg and Smith. Further Events Following Smith's Termination Shortly after Smith's termination, Ginsburg sought to remedy the management vacuum resulting from Smith's departure by locating a replacement dealer-operator. To that end, in Ginsburg's letter of June 26, 1985, he asked MBNA to assist him in trying to find a new dealer-operator. MBNA did not provide any assistance in this regard. With the many financial problems facing the dealership and with MBNA threatening termination, it is difficult to find a competent dealer-operator who wants to leave a reasonable job and move into that uncertain situation. As an interim measure, in July of 1985 Ginsburg arranged for a Mr. Lawrence Rigby, the dealer-operator of another dealership owned by Ginsburg, to temporarily fill the role of dealer-operator or general manager. Rigby is an experienced automobile dealer-operator. Since approximately July of 1985, Rigby has been spending roughly 70 to 75 per cent of his time managing Dealer. Rigby's name has never been submitted to MBNA for approval as a dealer-operator to replace Smith. Since his telegram of June 27, 1985, and his letter of June 28, 1985, Smith has continued to contend that he still has an ownership interest in Dealer and that he still has the right to manage the day-to-day operations of Dealer. In this regard, Smith claims that he continues to be the dealer-operator of Dealer because he is so designated in the franchise agreement. Smith, through his attorneys, has put MBNA on notice of his contentions in this regard and has threatened to join MBNA in a lawsuit if MBNA takes any action inconsistent with Smith's contentions without first obtaining Smith's consent. Smith continues to contend that he has not agreed to sell or transfer his stock in Dealer to Ginsburg or anyone else. Smith continues to contend that he has not agreed to, and that he in fact objects to, the assignment or transfer of Dealer's Mercedes-Benz franchise to anybody. Specifically, Smith contends that he has not authorized the sale of Dealer or the transfer of Dealer's franchise to Mr. Cutler. All of Smith's contentions in this regard were communicated to MBNA. In September of 1985, Smith filed suit in circuit court against Ginsburg, Dealer, and Advantage Leasing to enforce the claims described in the preceding paragraph. After the suit was filed, an injunction was entered which allowed Smith to return to the dealership for a few days. Smith's return was disruptive to Dealer's activities, but the injunction was soon stayed by an appellate court. The appellate court ultimately determined that whatever rights Smith might have against the defendants in his lawsuit, those rights did not include the right to manage Dealer or be employed by Dealer. As of the date of the formal hearing in this case, no final decision had been rendered in the circuit court litigation between Ginsburg and Smith, and the disputes between Smith and Ginsburg had not been resolved. MBNA did not undertake any investigation or inquiry into the facts and circumstances surrounding Smith's departure from the dealership. MBNA did not try to find out if Smith had actually resigned (as Ginsburg claimed) or if he had been involuntarily ejected (as Smith claimed). MBNA did not try to find out if there was any good reason for removing Smith, if in fact he had been removed involuntarily. Instead, without any investigation into what the actual facts might be, and with full awareness that under any version of the facts Ginsburg owned at least 75 percent of Dealer's stock, MBNA took the position that Smith continued to be an owner of 25 percent of the stock of Dealer and continued to be the general manager until such time as MBNA approved a change in the ownership and/or management of Dealer. MBNA persisted in this position even after it was clear to MBNA that Smith was no longer performing any management functions at Dealer after June 21, 1985. MBNA's position was based on language in the franchise agreement to the effect that there will be no changes in the ownership or management of Dealer without prior approval of MBNA. Because of the foregoing position, MBNA has also taken the position that it will not approve any changes in the management or ownership of Dealer, absent the consent of Smith. By letter dated August 28, 1985, Ginsburg asked MBNA to accept him as Dealer's dealer-operator. With that letter he provided copies to MBNA of Smith's resignation and cancelled stock certificate, together with corporate minutes. The letter of August 28, 1985, stated, inter alia, that Ginsburg had become a Florida resident and intended to become the dealer-operator of Dealer. This statement was not true because Ginsburg was not and never became a Florida resident. Moreover, Ginsburg is the chief executive officer and a substantial investor in several other businesses which have offices in New York, Ohio, South Carolina, and Texas. It is most unlikely that Ginsburg would ever devote full- time attention to the management of Dealer to the exclusion of his several other business ventures. Ginsburg's letter of August 28, 1985, did not provide MBNA with any information regarding his experience in the automotive field. Ginsburg has never been the day-to-day operator of an automobile dealership. Upon consideration of Ginsburg's letter of August 28, 1985, MBNA was of the opinion that Ginsburg had neither the experience nor the time to manage the day-to-day operations of Dealer. Accordingly, MBNA responded to Ginsburg's letter of application with a summary denial in a letter dated September 10, 1985. This summary rejection was repeated in the termination letter of October 23, 1985. MBNA has no written criteria to determine whether a candidate for dealer-operator is satisfactory. Individual discretion is exercised with judgmental factors in lieu of written criteria. Ginsburg has continued to look for a permanent replacement for Smith, but has been unable to find anyone acceptable to himself. Other than Ginsburg's proposal of himself as dealer-operator, no dealer-operator candidate has been submitted to MBNA for approval since the departure of Smith. Since June of 1985, MBNA has continued to provide cars to Dealer and to treat Dealer in an ordinary fashion despite the departure of Smith. The Termination Letter By letter dated October 23, 1985, MBNA advised Dealer that it intended to terminate Dealer's Mercedes-Benz Passenger Car Dealer Agreement on January 31, 1986, a date more than 90 days from the date of the letter. The letter of October 23, 1985, also stated: The Mercedes-Benz Dealer Agreement expires on December 31, 1985. In order to provide sufficient notice to effect the termination of the Agreement, we will extend the Dealer Agreement until January 31, 1986. This notice and extension is pursuant to the provisions of Paragraphs 15 and 16 of the Mercedes-Benz Passenger Car Dealer Agreement. The termination letter of October 23, 1985, stated that there had been "numerous deficiencies" and "material breaches" of the Mercedes-Benz Passenger Car Dealer Agreement dated January 1, 1984. The specified deficiencies and breaches were described as follows in the termination letter: Your corporation has reported on past occasions what appears to be inaccurate sales reports, referred to as DDR cards. This was done apparently for the purpose of gaining an unfair advantage by abusing the allocation system by which Mercedes-Benz vehicles are distributed in the United States. Improper reporting on sales documents impairs our ability to have the proper customer information available for the administration of the warranty and, in the event of a recall, does not enable us to forward proper documentation to the ultimate user of the vehicle. Under section IV, titled Service Department, of the Dealer Operating Requirement Agreement, (DORA), executed as part of the Dealer Agreement, your corporation agreed and committed: "in 1984/85, after purchase of real property, (to) provide Mercedes-Benz identified reception area and customer lounge". This commitment has not been met. In addition, your corporation has attempted to make a change in management by the attempted dismissal of the Dealer Operator, Mr. Michael D. Smith as General Manager. This is in direct viola- tion of Paragraph FOURTH of the Mercedes-Benz Dealer Agreement which states "...neither dealer nor the persons named above shall permit any change in the ownership or management of dealer without the prior written approval of Mercedes- Benz of North America..." This has resulted in a situation where the dealership has been functioning without any approved management. As we stated previously in our letter of September 10, 1985, we are not willing to approve Mr. Jerome Z. Ginsburg as a dealer operator as he appears to be a New York based attorney and is not experienced in the management of a dealership. Mr. Ginsburg was never approved as a Dealer Operator and his name is listed under Paragraph FOURTH of the Mercedes-Benz Dealer Agreement solely as a dealer owner who participates in the ownership of the dealer. This non-approved change in management has resulted in a management dispute. We advised you in our corporate communication of July 1, 1985 that we were invoking the provisions of Paragraph 15D(g) of the Mercedes-Benz Passenger Car Dealer Agreement thereby giving you 90 days to resolve this internal management dispute. This dispute is anything but resolved as demonstrated by the Transcript of Proceedings of Mike D. Smith, Plaintiff vs. Mike Smith Pontiac, GMC, Inc., a Florida Corporation; Advantage Leasing and Rental Corporation, a Florida Corporation; and Jerome Z. Ginsburg, Defendants in the Circuit Court Seventh Judicial Circuit of Florida in and for Volusia County, Case : 85-3034- CA-01, Division F, as well by Mr. Smith's recent appearance at the dealership and the attempted arrest of him by other parties at the dealership. It has also come to our attention that in review of the aforementioned Transcript that Mr. Ginsburg and Mr. Smith misrepre- sented the ownership interest each was required to have as a condition precedent to the execution of the Dealer Agreement. In addition to the foregoing material breach alluded to in Paragraph 3 of this letter, this misrepresentation as to the owner- ship of the corporation also constitutes a material breach of the Dealer Agreement, thus justi- fying the termination of that Agreement and relationship between us. We believe that we have given your corporation sufficient time to remedy the many problems which have occurred at your dealership. As Mr. Korman, our Dealer Organization Manager, indicated to one of your attorneys, Mr. Crocker, our previous corporate communications were designed to indicate to you the seriousness of the situation at your dealership and the need to take the appropriate timely actions to remedy them. You have not done so. Inaccurate Sales Reports (DDR cards) All of MBNA's dealers are required to fill out a DDR card, or sales report, for each Mercedes-Benz car sold. It is not infrequent that DDR cards have mistakes on them. Accurate reporting of sales by way of DDR cards is very important to MBNA. The purpose of having cards completed accurately is threefold: (1) to determine the starting date of the retail customer's vehicle warranty, (2) to advise MBNA of the address and name of the purchaser or lessee in the event of a vehicle recall, and (3) to determine the dealer's future allocation of vehicles. With regard to the last of these three purposes, Mercedes-Benz vehicles are in great demand and they are usually easily sold by Mercedes-Benz dealers. Generally, demand exceeds supply and dealers want more cars than are allocated to them. Each dealer's allocation is derived by way of a mathematical formula based on his actual sales as a percentage of the zone's sales. No inaccurate sales reports by Dealer (referred to as "DDR cards") have been discovered by MBNA to have existed prior to January of 1985. Because of the importance of the DDR policy, Dealer was provided with a copy of that policy at the inception of the relationship, and was provided additional copies thereafter. Representatives of MBNA also explained the DDR policy to Dealer on several occasions. The explanations were not always the same. The totality of the DDR card problem at Dealer up to the time of the termination letter consists of one incident in February of 1985 involving six cars that were sold to Advantage Leasing, a leasing company owned by Smith and Ginsburg. The Dealer reported (via DDR cards) a sale of six Mercedes-Benz cars to the leasing company before the cars were removed from Dealer's premises. Those DDR cards did not contain the names of the ultimate lessees. When representatives of MBNA communicated with Dealer about the February 1985 incident and provided Dealer with a copy of the DDR policy, Dealer indicated that it would comply with the policy. Dealer's explanation for part of the February 1985 DDR problem was that the removal of the cars was unexpectedly delayed by a truck breakdown. Ultimately MBNA's representative McDonough was satisfied with Dealer's response to MBNA's communications regarding the February 1985 DDR card incident. MBNA suffered no prejudice as a result of the DDR card problem in February 1985 and Dealer did not receive any advantage in the MBNA allocation system as a result of that problem. Specifically, Dealer did not receive any accelerated DDR credit due to reporting the cars sold at an early date. The DDR policy appears to be ambiguous in some respects and is certainly complex. MBNA has not previously terminated a dealer for making mistakes on DDR cards. The first stated ground for termination in MBNA's October 23, 1985, termination letter in essence accuses Dealer of intentionally submitting inaccurate DDR cards for an improper purpose. However, MBNA did not conduct any investigation into Dealer's motives in this regard and there is no evidence in this case that Dealer had any improper motive or purpose when it submitted inaccurate DDR cards in February of 1985. The Reception Area And Customer Lounge The Dealer Operating Requirements Agreement, or DORA, is a part of the franchise agreement. The purpose of the DORA is to apply MBNA expertise to individual local circumstances. The DORA is drafted by MBNA according to what MBNA thinks is necessary in order for the dealership to operate efficiently and effectively. When Dealer applied for the franchise in 1983, MBNA filled in the application form for Dealer and included non- negotiated provisions related to a customer lounge and a reception area. The provisions in the MBNA application then were put into the initial franchise agreement of MBNA and Dealer. On November 1, 1983, Mr. McDonough became Jacksonville zone manager for MBNA with authority over Dealer, and he determined at that time there were unfulfilled "service requirements" for Dealer. In 1983, Dealer provided a separate customer reception area for Mercedes customers and renovated an existing customer lounge. Dealer's DORA commitment in the existing franchise agreement regarding the reception area and lounge has as a condition precedent ". . . after purchase of real property. . . ." The real property referred to is the property on which the dealership is located. At the time of purchasing the dealership, Mr. Ginsburg also received an option to purchase the dealership premises. The earliest date on which the option could be exercised was one year after the purchase of the dealership. Mr. Ginsburg exercised the option to purchase the property, but the sale has never taken place because Ginsburg and the property owner became embroiled in a dispute about the appraised value of the property, which value determines the purchase price. That dispute resulted in litigation which is still pending. Accordingly, there having been no purchase of the real property, the condition precedent has not occurred. Further, as of the date of the termination letter, the time limit for these commitments ("1984/85") had not expired. Paragraph l5E of the Standard Provisions in the franchise agreement requires that MBNA give a dealer certain notice prior to initiating a termination based on inadequate facilities. No such notice was given by MBNA to Dealer regarding the reception area and customer lounge. MBNA does not terminate a dealer every time a DORA commitment is not met but rather exercises judgment. Where termination involves a DORA provision, then the dealership agreement procedure is followed. The zone manager, Mr. McDonough, was not aware of any complaints regarding Dealer's customer lounge. MBNA did not perform its own study as to whether or how long customers waited at Dealer. However, a scientific study was commissioned by MBNA. That study contains no indication of dissatisfaction with Dealer's service facilities. Instead, it shows that persons purchasing cars from Dealer returned for service or went elsewhere because of the distance to Dealer. Ginsburg was not made aware that the customer lounge represented any major problem with respect to MBNA. Nothwithstanding the assertions in the second stated ground for termination, Dealer's failure to comply with the DORA provisions regarding the reception area and customer lounge was not one of the reasons for the proposed termination. MBNA's real concern in this regard was much broader; it was MBNA's perception that throughout the entire period of the relationship between the parties, Dealer had failed to act in a manner consistent with the "M-B Service Concept." This broader concern was not stated in the termination letter. Throughout the greater part of the relationship between the parties from its inception until the termination letter of October 23, 1985, there seems to have been a continuing concern on the part of MBNA with respect to Dealer's failure to perform in a manner consistent with the "M-B Service Concept. Although the record in this case suggests that the "M-B Service Concept" may be set forth in some document, that document does not appear among the many exhibits offered in this case and the most that can be said about what constitutes the "M-B Service Concept" is that there appears to be some sort of article of faith amongst the functionaries of MBNA to the effect that because Mercedes-Benz cars are such expensive and high quality cars, the entire ownership experience should be a high quality experience, i.e., that Mercedes- Benz car owners are entitled to more than the owners of lesser cars. Aspects of this article of faith include concerns about such matters as the size and quality of the facilities, the staffing of the facilities, and the attitude of those operating the facilities. MBNA seems to have been disappointed with anything less than what might be described as a "gung-ho" commitment to the "M-B Service Concept" and appears to have expected Dealer to take an enthusiastic attitude toward making all sorts of changes in its facilities and operations even at times when MBNA seemed to be having difficulty providing Dealer with enough Mercedes-Benz automobiles to sell. Numerous Dealer Contact Reports show that the Dealer had an inadequate inventory of Mercedes-Benz cars even though Dealer seems to have rather constantly sought to receive more cars than MBNA was able or willing to provide. The location from which Dealer was doing business seems to have been ill suited to the operation of a Mercedes-Benz dealership in conjunction with other lines of cars, because not only was MBNA dissatisfied with Dealer's efforts at implementing the "M-B Service Concept" at that location, but MBNA had been similarly dissatisfied with several previous Mercedes-Benz dealers who had attempted to do business at that same location. MBNA's frustration with Dealer's failure to live up to their ill- defined "M-B Service Concept" should not have come as any real surprise, because MBNA seems to have been similarly frustrated in its efforts to have two or three previous dealers implement the "M-B Service Concept" at that same location.
Recommendation On the Basis of all of the foregoing, it is hereby recommended that the Department of Highway Safety And Motor Vehicles enter a final order to the following effect: Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 1 of the termination letter would be unfair; Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 2 of the termination letter would be both unfair and prohibited; Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 3 of the termination letter would be prohibited; Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 4 of the termination letter would be fair; Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 5 of the termination letter would be both unfair and prohibited; and Concluding that the relief request in the Dealer's verified complaint should be denied. DONE AND ENTERED this 1st day of May, 1987, at Tallahassee, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-0271 The following are my specific rulings on each of the proposed findings of fact submitted by each parties. Findings proposed by Petitioner/Dealer (The numbers which follow correspond to the paragraph numbers of the proposed findings of fact contained in the proposed recommended order filed by the Petitioner/Dealer.) Accepted in substance. Accepted in substance. First, second, and third sentences are rejected as irrelevant. Fourth sentence is accepted. Fifth sentence is rejected as irrelevant. Sixth and seventh sentences are rejected as argument. Accepted in substance. Rejected as subordinate and unnecessary details. Also portions rejected as not fully supported by the evidence and as constituting editorial excesses. Rejected as subordinate and unnecessary details and as a summary of testimony rather than proposed findings. Rejected as subordinate and unnecessary details. Also, some details not fully supported by the evidence. Rejected as subordinate, unnecessary details. Rejected as irrelevant, subordinate, or unnecessary details. (Findings have been made as to the provisions of the termination letter.) Accepted. Rejected because this entire paragraph consists of a summary of or quotation of testimony and does not propose a fact based on any testimony. Rejected as irrelevant and immaterial. First sentence is accepted. Second and third sentences are rejected as constituting argument rather than a proposed finding. (The merits of the argument are addressed in the conclusions of law portion of this recommended order.) Accepted in substance. Accepted. Accepted. Accepted in substance. Rejected as irrelevant or subordinate details. Accepted in substance. Rejected because this entire paragraph consists of a summary of testimony and does not propose a fact based on any testimony. Rejected as subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Substance of last sentence accepted. The remainder of this paragraph is rejected as constituting unnecessary details. Last sentence rejected as unnecessary. The remainder of this paragraph is accepted. Substance of the fourth sentence is accepted. The remainder of this paragraph is rejected as constituting unnecessary details. Accepted. Accepted in substance. Rejected as argument. The merits of the argument are addressed elsewhere. Rejected as argument and as unnecessary details. Rejected, primarily because much of it is irrelevant. Also rejected because much of it constitutes argument about credibility rather than proposed findings. Rejected because it is all legal argument. Such arguments belong in a separate brief or in the conclusions of law portion of a proposed recommended order--not in the middle of the proposed findings of fact. Accepted. First two sentences are accepted. The last sentence is rejected: the first clause because it consists of unnecessary detail and the second clause because it is a legal conclusion. First two sentences are accepted. Last sentence is rejected as irrelevant. The essence of this paragraph is accepted with the deletion of the quotations of testimony and other unnecessary details. Rejected as a totally unnecessary quotation of testimony which contains not a single proposed finding of fact and ends in an unnecessary snippy remark. Rejected as irrelevant or subordinate details. Rejected as irrelevant or subordinate details. Rejected as irrelevant or subordinate details. Rejected as irrelevant or subordinate details. Rejected as irrelevant or subordinate details. The first sentence is rejected as argument. The quotation from the contract is accepted. The first sentence following the quotation is rejected as irrelevant. The last sentence is rejected as constituting a legal conclusion. Rejected as irrelevant or subordinate details. Rejected as irrelevant or subordinate details. Accepted in substance. Rejected as irrelevant, subordinate, and unnecessary. Rejected as irrelevant, subordinate, and unnecessary. Rejected as irrelevant, subordinate, and unnecessary. Accepted. Rejected as subordinate and unnecessary details. Accepted in substance. Accepted. Accepted. Accepted. Accepted in substance. Rejected as subordinate and unnecessary details. Rejected as irrelevant and subordinate details. Also rejected because portions are not consistent with the greater weight of the evidence. Finally, portions rejected as constituting argument. Rejected as constituting legal argument. The merits of the argument are addressed elsewhere in this recommended order. Rejected as constituting legal argument. Rejected as subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Accepted. Accepted. Accepted in substance with unnecessary details and quotations omitted. Second sentence accepted in substance. The remainder of this paragraph is rejected as irrelevant. All of this paragraph is rejected as irrelevant details with the exception of the portion to the effect that MBNA was not told about the problem. Rejected as subordinate and unnecessary details. Accepted in substance. Accepted in substance. Accepted in substance with many irrelevant details omitted and some further findings for clarification. Rejected as constituting irrelevant details. Accepted in substance with many irrelevant details omitted. Also omitted are certain editorial excesses. Accepted in substance with certain editorial excesses omitted. Accepted in substance with a lower percentage figure more consistent with the evidence. First three sentences accepted in substance. Fourth and fifth sentences rejected as subordinate, unnecessary and cumulative details. Sixth and seventh sentences rejected as constituting argument or legal conclusions. Rejected as subordinate and unnecessary details, not all of which are warranted by the evidence. The substance of the first sentence and the substance of the quoted language in the last three lines are accepted. The remainder is rejected as irrelevant or subordinate details. Rejected as subordinate, unnecessary details, not all of which are warranted by the evidence. Accepted in substance. Accepted in substance. First sentence is accepted. Second sentence is rejected as irrelevant. Rejected as irrelevant or subordinate details, not all of which are supported by the evidence. Rejected as irrelevant or subordinate details, not all of which are supported by the evidence. Accepted. All but last sentence accepted. Last sentence rejected as argument. Rejected as subordinate and unnecessary details, as well as argument. First sentence accepted. Last two sentences rejected as cumulative or as irrelevant and subordinate details. Rejected for the most part because it consists of subordinate and unnecessary details. Also rejected because portions are not supported by persuasive competent substantial evidence or are contrary to the greater weight of the evidence. Rejected as constituting primarily argument rather than proposed findings of fact. Accepted. Rejected because it is primarily argument rather than proposed findings. Rejected as subordinate and unnecessary details. Rejected as argument. Rejected as argument. Rejected as argument. Rejected as argument. Rejected as argument. Rejected as argument. Accepted. Rejected as argument rather than proposed findings. Rejected as subordinate details, some of which are not supported by the persuasive evidence. Rejected as constituting a mixture of subordinate details and argument. Accepted in substance. Rejected as constituting a mixture of subordinate details and argument. First three sentences accepted in substance. Penultimate sentence rejected as argument. Last sentence rejected as argument and as containing inferences not warranted by the evidence. Rejected as constituting primarily argument. Rejected as argument rather than proposed findings. Rejected as argument rather than proposed findings. Rejected as subordinate and unnecessary detail. Accepted. First and third sentences rejected as unnecessary commentary about the record. Second sentence rejected as erroneous argument. Fourth sentence rejected as cumulative. Quoted material rejected as cumulative. Last two sentences rejected as cumulative. Rejected as argument. Rejected as argument. The relevant terms of the agreement between Smith and Ginsburg are included in the findings. The remainder of this paragraph is rejected as subordinate details and argument. First sentence accepted. Second and third sentences rejected as cumulative. Fourth sentence rejected as contrary to the greater weight of the evidence. Fifth sentence rejected as cumulative. Sixth sentence rejected as contrary to the greater weight of the evidence. Seventh sentence accepted. First sentence is rejected as contrary to the greater weight of the evidence. Second and third sentences are accepted in substance. The remainder of the paragraph is rejected as irrelevant and subordinate details. First sentence rejected as contrary to the greater weight of the evidence. Second sentence rejected as conclusion of law. First part of third sentence accepted; last part rejected as argument. Findings proposed by Respondent/MBNA (The numbers which follow correspond to the paragraph numbers of the proposed findings of fact contained in the proposed recommended order filed by the Respondent/MBNA.) Accepted. Accepted. Accepted. Accepted. Accepted. Accepted. Rejected in part as misleading, because the franchise agreement was entered into by two corporations. Rejected in part for reasons stated immediately above. Accepted. Covered in introductory material. Accepted. Rejected as imprecise statement of reasons. Exact stated reasons are included in findings of fact. Accepted. Accepted. Accepted. Accepted in substance. Accepted. Accepted. Accepted in substance. Accepted in substance. Rejected as irrelevant. Rejected as irrelevant. Rejected as irrelevant. Accepted in substance with some subordinate and unnecessary details omitted. First two lines and quoted contract language accepted. The remainder of this paragraph is rejected as irrelevant or subordinate and unnecessary details. Accepted in substance. Accepted in part to the extent of including the text of the written policy. Remainder rejected as contrary to the greater weight of the evidence. Rejected as irrelevant. Accepted in substance. Accepted. Rejected as subordinate or unnecessary details. Rejected as constituting irrelevant or subordinate details, some of which are not fully consistent with the greater weight of the evidence. First sentence rejected as contrary to the greater weight of the evidence. Remainder of the paragraph rejected as irrelevant. Accepted in substance. Accepted in substance. Rejected as irrelevant. Accepted in substance with numerous irrelevant details omitted. Accepted in substance. Rejected as a mixture of irrelevant or subordinate details and argument. Accepted in substance. Accepted. First sentence accepted in substance. The remainder of this paragraph is rejected as constituting irrelevant or subordinate and unnecessary details. First sentence accepted in substance. The remainder of this paragraph is rejected as constituting irrelevant or subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Rejected as irrelevant or as subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Rejected as subordinate and unnecessary details. Accepted in substance. Accepted. Rejected primarily because of consisting of irrelevant or subordinate details. Also rejected because several details, including final sentence, are not supported by persuasive evidence. Rejected as irrelevant to this proceeding. Rejected as a summary of testimony and not a proposed finding and, in any event, as subordinate and unnecessary details. First two sentences accepted in substance. Last sentence rejected as irrelevant. Rejected as subordinate and unnecessary details. Accepted in substance. Rejected as irrelevant or subordinate and unnecessary details. First two sentences are rejected as contrary to the greater weight of the evidence. Last two sentences are accepted in substance. First sentence rejected as not fully supported by competent substantial evidence. Second sentence rejected as subordinate and unnecessary details. Third sentence rejected as not supported by competent substantial evidence. Fourth and fifth sentences rejected as irrelevant. Sixth sentence rejected as not supported by competent substantial evidence. Accepted in substance. All but last sentence accepted in substance. Last sentence rejected as contrary to the greater weight of the evidence. First sentence rejected as constituting an over- simplification. Other findings have been made regarding this matter. Second sentence is rejected as unnecessary details. The last sentence is accepted in substance. Accepted in substance. Accepted in substance. Rejected as irrelevant or subordinate and unnecessary details. Rejected as irrelevant or subordinate and unnecessary details. Rejected as irrelevant or subordinate and unnecessary details. Accepted in substance. First three sentences accepted in substance. Last two sentences rejected as irrelevant. Accepted in substance with some adverbs and adjectives omitted in the interest of accuracy. All but last sentence accepted in substance with some unnecessary details omitted. Last sentence rejected as contrary to the greater weight of the evidence. Rejected as irrelevant in view of other evidence regarding MBNA's position with regard to a successor dealer/operator. Accepted in substance. Rejected as irrelevant or subordinate and unnecessary details. Accepted. First two sentences accepted in substance. Remainder of this paragraph rejected as subordinate and unnecessary details. Rejected as cumulative and unnecessary. Accepted in substance. Rejected as constituting argument rather than proposed findings of fact. Rejected as constituting argument rather than proposed findings of fact. Rejected because of having argument inextricably intertwined with any proposed findings in this paragraph. Rejected as argument about other party's position and not proposed finding of fact. First sentence is rejected as ambiguous and as subordinate and unnecessary. Second sentence is rejected as ambiguous and as constituting argument. Third sentence rejected as irrelevant. Fourth sentence rejected as ambiguous and as not fully consistent with the evidence. Fifth sentence rejected in part as irrelevant and in part as contrary to the greater weight of the evidence. Rejected as argument rather than proposed findings. First sentence accepted in substance. Second sentence rejected as not supported by persuasive competent substantial evidence. Rejected as argument rather than proposed findings. First three sentences rejected as contrary to the greater weight of the evidence. Fourth sentence rejected as ambiguous rhetorical excess; too broad to be meaningful and not fully supported by the evidence. Fifth sentence rejected as irrelevant or subordinate details. Sixth and seventh sentences rejected as not supported by persuasive competent substantial evidence. Rejected as primarily constituting argument or legal conclusions; what few facts are included are repetitious and cumulative. Rejected as primarily constituting argument or legal conclusions; what few facts are included are repetitious and cumulative. Accepted in substance. Rejected as contrary to the greater weight of the evidence; there were inaccurate cards, but not "false" cards. The first three sentences are rejected in part as an argumentative over-simplification that omits the crux of the matter, and as also constituting subordinate details which are irrelevant in light of other evidence. The remainder of the paragraph is rejected as constituting subordinate and unnecessary details, some of which are not fully supported by the evidence. The first sentence is rejected as exaggeration not supported by the evidence. Also largely irrelevant in light of other evidence. The remainder of the paragraph is rejected as constituting argument or legal conclusions. Rejected as not supported by persuasive evidence and as, in any event, being such a broad, vague, statement as to be virtually meaningless. First three sentences rejected as irrelevant argument; the statements of counsel are not evidence. The remainder of this paragraph is rejected as irrelevant. Rejected because it consists mostly of argument. To the extent it incorporated proposed facts, most of them are irrelevant, subordinate, or unnecessary. What few relevant facts are proposed have been included elsewhere. Rejected as argument instead of proposed findings. All but last sentence rejected as primarily constituting argument. Last sentence accepted in substance. Rejected. This is primarily a description of the issues the Dealer seeks to litigate and argument about legal issues. What few facts are proposed here have been found elsewhere to the extent relevant. Accepted in substance. Rejected as argument or conclusions of law rather than proposed findings of fact. Rejected as an argumentative 0ver-simplification which is in part irrelevant and in part not supported by persuasive evidence. Rejected as argument or conclusions of law rather than proposed findings of fact. COPIES FURNISHED: Henry L. Kaye, Esquire STIERER, AMENDOLA, KAPLAN, HYMAN & KAYE 1401 Harvey Building 224 Datura Street West Palm Beach, Florida 33401 John Radey, Esquire AURELL, FONS, RADEY & HINKLE Post Office Drawer 11307 Tallahassee, Florida 32301 William J. Dunaj, Esquire Teresa Ragatz, Esquire MERSHON, SAWYER, JOHNSTON, DUNWODY & COLE Southeast Financial Center Suite 4500 200 South Biscayne Boulevard Miami, Florida 33131 Leonard R. Mellon, Executive Director Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue The issue in these cases is whether two applications for new point franchise motor vehicle dealerships filed by Puma Cycles Corporation and Wild Hogs Scooters and Motorsports, LLC (Respondents), should be approved.
Recommendation Based on the foregoing Finding of Facts and Conclusions of Law, it is RECOMMENDED that the Department of Highway Safety and Motor Vehicles enter a final order denying the two applications filed by the Respondents to establish new point franchise motor vehicle dealerships at Wild Hogs Scooters and Motorsports, LLC, for the sale of line-make FSTI motorcycles. DONE AND ENTERED this 22nd day of February, 2012, in Tallahassee, Leon County, Florida. S WILLIAM F. QUATTLEBAUM 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 22nd day of February, 2012.
