92-006942 Conley Subaru, Inc., And Subaru Of America, Inc. vs. Performance Motors, Inc., D/B/A Lindell Subaru, And Department Of Highway Safety And Motor Vehicles Status: Closed Recommended Order on Wednesday, November 3, 1993.

Summary: Doctrine of equitable tolling should apply to the 12-month time limit of section 320.642(5) F.S.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CONLEY SUBARU, INC. and )

SUBARU OF AMERICA, INC. )

)

Petitioners, )

)

vs. ) CASE NO. 92-6942

)

PERFORMANCE MOTORS, INC., )

d/b/a Lindell Subaru and )

DEPARTMENT OF HIGHWAY )

SAFETY AND MOTOR VEHICLES, )

)

Respondents. )

___________________________________)

RECOMMENDED ORDER

Upon due notice, the Division of Administrative Hearings by its duly

assigned Hearing Officer, William R. Cave, held a formal hearing in the above-

captioned case on May 4, 1993 in Bradenton, Florida.

APPEARANCES

For Petitioner, John M. Brennan, Esquire

Subaru of America, Inc.: Post Office Box 285

Orlando, Florida 32802-0285

For Petitioner, Damian M. Ozark, Esquire

Conley Subaru, Inc.: 2401 Manatee Avenue West

Bradenton, Florida 34205

For Respondent, J. Michael Lindell, Esquire

Performance Motors, Inc. 620 Blackstone Building

d/b/a Lindell Subaru: 233 East Bay Street

Jacksonville, Florida 32202

For Respondent, No appearance.

Department of Highway

Safety And Motor Vehicles:

STATEMENT OF THE ISSUE

Whether Subaru of America, Inc. (Subaru) is entitled to an exemption under

Section 320.642(5)(a), Florida Statutes (1991), from the protest filed by

Performance Motors, Inc., d/b/a Lindell Subaru (Lindell) to Subaru's appointment

of Conley Subaru, Inc. (Conley) as the successor motor vehicle dealer to Tom

Stimus Chrysler Plymouth, Inc., d/b/a Tom Stimus Subaru (Stimus) in Bradenton,

Manatee County, Florida.

PRELIMINARY STATEMENT

This proceeding arises out of a protest filed by Lindell with the

Department of Highway Safety and Motor Vehicles (Department), pursuant to

Section 320.642, Florida Statutes (1991), to Subaru's appointment of Conley as

the successor motor vehicle dealer to Stimus in Bradenton, Manatee County,

Florida. In accordance with a joint stipulation of the parties an order was

entered wherein the issues of this case were bifurcated. The order provided for

an evidentiary hearing to be held first on the issue of Subaru's entitlement to

an exemption from protest under Section 320.642 (5)(a), Florida Statutes (1991).

The evidentiary hearing on the issue of Subaru's entitlement to an exemption

from protest under Section 320.542(5(a), Florida Statutes, was held in

Bradenton, Florida on May 4, 1993.

At the hearing, Subaru presented the testimony of Douglas Knapp and Jeffery

A. Conley. No other witnesses testified. The parties' Joint Composite Exhibit

1 (Stipulated Statement Concerning Subaru's Claim Of Statutory Exemption From

Protest, with attachments identified as Exhibit A through Exhibit L) was

received as evidence in this case.

A transcript of this proceeding was filed with the Division of

Administrative Hearings on May 13, 1992. Subaru timely filed a proposed

findings of fact and conclusions of law. Lindell timely filed a memorandum of

law which contained a statement of facts in unnumbered paragraphs. The other

parties to this proceeding elected not to file any proposed findings of fact and

conclusions of law. On August 24, 1993, before a Recommended Order was entered,

Lindell's Notice of Supplemental Authority Of Law And Motion For Reopening of

Evidentiary Hearing was filed with the Division of Administrative Hearings.

Subaru filed a response to Lindell's notice and motion and a telephonic hearing

was held on Lindell's notice and motion. During the telephonic hearing, the

parties stipulated to the introduction of additional evidence and filed Joint

Exhibit 2 (Supplement To Stipulated Statement Concerning Subaru's Claim Of

Statutory Exemption From Protest, with attachments identified as Exhibits A

through Exhibit C), which was received as evidence in this case. A ruling on

each proposed finding of fact submitted by the parties has been made as

reflected in an Appendix to the Recommended Order.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the

hearing, the following relevant findings of fact are made:

1. Lindell is a Subaru dealer located at 3480 Bee Ridge Road, Sarasota,

Sarasota County, Florida.

2 Conley has been approved by Subura to be a Subaru dealer if Conley's

application is approved by the Department. Conley will be located at 800

Cortes Road West, Bradenton, Manatee County, Florida.

3. Stimus was a previous Subaru dealer located 2503 First Street West,

Bradenton, Manatee County, Florida.

4. Stimus's former location and Conley's present location are within two

miles of each other.

5. Stimus was a Subaru dealer with an area responsibility consisting of

Manatee County, Florida, pursuant to a dealership agreement with Subaru dated

June 8, 1990.

6. Before the termination of its Subaru dealership agreement, Stimus filed

a petition under Chapter 11 of the United States Bankruptcy Code in the case of

In re Tom Stimus Chrysler Plymouth, Inc., in the United States Bankruptcy Court

for the Middle District of Florida, Tampa Division, Case No. 91-7864-8P1. Upon

Stimus filing its petition with, and the petition being accepted by, the United

States Bankruptcy Court (bankruptcy court), all of Stimus' assets came under the

jurisdiction of the bankruptcy court.

7. On June 14, 1991, the day that Stimus filed its bankruptcy petition,

stay relief was ordered.

8. Stimus' bankruptcy petition operated as a stay of any action by Subaru

to terminate Stimus' dealership agreement, until such time as the bankruptcy

court granted relief from the stay to Subaru.

9. On August 19, 1991, the bankruptcy court entered an order directing

Stimus not move, sell, transfer or otherwise dispose of any of its assets and to

cease all business operations effective immediately. Stimus ceased operations

of its Subaru dealership more than 12 months prior to August 28, 1992, the date

the successor dealer's (Conley) application for a license was submitted to the

Department. Subaru was aware of the bankruptcy order and that Stimus had ceased

doing business.

10. On August 28, 1991, the Department cancelled Stimus' license as a

dealer in franchised motor vehicles.

11. On October 30, 1991, Stimus filed a motion to assume and assign

executory contract (Subaru of America). By this motion, Stimus sought

bankruptcy court permission to assign its Subaru franchise to Joseph Iacuone.

12. Subaru filed its response to Stimus' motion on November 12, 1991, and

its supplemental response on December 2, 1991.

13. On January 2, 1992, bankruptcy court entered an order granting Stimus'

motion to assume and assign, allowing Subaru 45 days to approve or disapprove of

the proposed franchise.

14. On February 12, 1992, Subaru filed its notice of the disapproval of

the proposed franchise transfer to Joseph Iacuone.

15. Thereafter, on March 12, 1992, Subaru filed a motion for relief from

the automatic stay to terminate Stimus' dealer sales and service agreement.

16. On May 13, 1992, the bankruptcy court entered an Order Modifying

Automatic Stay to Permit Subaru of America - Southeast Region to Terminate its

Dealership Agreement with Debtor (Stimus).

17. Pursuant to the bankruptcy court order, Subaru, by letter dated May

20, 1992, terminated Stimus' dealership agreement effective June 4, 1992.

18. By letter to the Department dated August 27, 1992, and received by the

Department on September 1, 1992, Subaru approved of the appointment of Conley as

the successor Subaru dealer to Stimus in Bradenton, Manatee County, Florida. By

this letter, Subaru requested that the appointment of Conley be exempt from

protest pursuant to Section 320.642(5)(a), Florida Statutes (1991).

19. On August 28, 1992, Conley submitted its application for license as a

motor vehicle dealer to the Department at its Region VIII office located at 323

10th Avenue West, Palmetto, Florida 34221. Region VIII includes Manatee

County, Florida.

20. The Department refused to accept Conley's application package on

August 28, 1992, and the application was not filed on that date, for the

following reasons: (a) the package did not include an original dealer bond as

required by the Department, but only a copy thereof; (b) the package did not

include a filed copy of the applicant's articles of incorporation as required by

the Department, but only an unfiled copy thereof; (c) the package did not

include evidence of completion of the dealer training program, as required by

the Department and; (d) the package did not include a facility inspection

report, as required by the Department. The Department subsequently accepted

Conley's application package on December 8, 1992.

21. By letter dated October 19, 1992, the Department issued a notice to

Lindell, among others, of proposed agency action, i.e., the issuance of a motor

vehicle dealer license to Conley to operate as a Subaru dealer in Bradenton,

Manatee County, Florida.

22. Lindell filed a notice of protest with the Department on or about

November 3, 1992.

23. The Department has refused to issue a motor vehicle dealer license to

Conley based upon the protest by Lindell.

24. Lindell is the only Subaru dealer located in Sarasota County, Florida.

Stimus was the only Subaru dealer located in Manatee County, Florida.

Presently, there is no Subaru dealer located in Manatee County, Florida. Should

a license be issued to Conley, it would be the only Subaru dealer located in

Manatee County, Florida.

25 Conley's Subaru dealership will be located on the premises (10 acres)

where Conley's Buick dealership is presently located. Conley will service the

Subaru automobiles in it existing service area and display new Subaru

automobiles in its existing showroom. The balance of the Subaru automobiles not

in the showroom will be located in a specific area on the premises. The

specific area has yet to be designated by Conley.

26. Conley is ready, willing and able to open as the successor Subaru

dealer to Stimus in Bradenton, Manatee County, Florida, except for the issuance

of its motor vehicle dealer license.

CONCLUSIONS OF LAW

27. The Division of Administrative Hearings has jurisdiction over the

parties to, and the subject matter of, this proceeding pursuant to Section

120.57(1), Florida Statutes.

28. Section 320.642(5)(a), Florida Statutes (1991), provides as follows:

(5) The opening or reopening of the same or

a successor motor vehicle dealer within 12

months shall not be considered an additional

motor vehicle dealer subject to protest

within the meaning of this section, if:

(a) The opening or reopening is within the

same or adjacent county, is within 2 miles of

the former motor vehicle dealer location.

29. Pursuant to the authority delegated to the Department by the

legislature, the Department adopted Rule 15C-7.004(4)(a), Florida Administrative

Code, which provides as follows:

(4) Applications for Reopening or

Successor Dealership, or for Relocation of

Existing Dealership.

(a) 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 supplied)

30. Since the location of the successor dealer (Conley) is in the same

county and is within two miles of the former dealer (Stimus), the condition of

Section 320.642(5)(a), Florida Statutes (1991), has been met by Subaru.

However, Lindell contends that the application for a license to permit the

successor dealer (Conley) to reopen the dealership was not received by the

Department before the end of the 12-month time period and therefore, Subaru is

not exempt from protest by Lindell under Section 320.642(5), Florida statutes.

31. On June 14, 1991, Stimus filed its bankruptcy petition placing this

matter, which logically includes Stimus' license, under the jurisdiction of the

bankruptcy court. A stay of relief was ordered by the bankruptcy court on June

14, 1991. On August 19, 1991, the bankruptcy court ordered Stimus to cease

doing business immediately. On August 28, 1991, the Department cancelled

Stimus' license. The bankruptcy court having previously exercised its

jurisdiction over this matter, including Stimus' license, it is would appear

that the Department is precluded from taking any action in regard to Stimus'

license unless authorized by the bankruptcy court. There is nothing in the

record to indicate that the bankruptcy court had authorized the Department's

action against Stimus' license. Therefore, it is questionable whether the

Department had the authority to revoke or cancel Stimus' license during the time

the matter was under the jurisdiction of the bankruptcy court. See: In Re Tom

Stimus Chrysler-Plymouth, Inc., 134 B. R. 676 (Bankr. - M.D. Fla. 1991).

32. Assuming arguendo that the Department had the authority to cancel

Stimus' license, the literal construction and application of Rule 15C-

7.004(4)(a), Florida Administrative Code, proposed by Lindell, would require

Subaru to select a successor dealer and further require that an application for

license be made within 12 months of August 28, 1991, the date the Department

cancelled Stimus' license, in order for Subaru to be entitled to the exemption

from protest provided for in Section 320.642(5)(a), Florida Statutes. Such a

construction and application of the rule does not take into account the

impediment of the bankruptcy proceeding wherein Subaru is prevented from

asserting its right to terminate the dealership agreement with Stimus and

proceed to timely select and negotiate with a successor dealer until some nine

months after the 12-month time limit had begun to run. The result of such a

construction and application of the rule are rather harsh considering that

Subaru, through no fault of its own, was prevented by the bankruptcy proceeding

from timely moving forward to meet the time limit set out in the rule.

33. This is clearly a case where the doctrine of equitable tolling is

applicable. As set forth by the Supreme Court in Machules v. Department of

Administration, 523 So.2d 1133 (Fla. 1988), the doctrine of equitable tolling

has generally been applied when a party has been misled or lulled into inaction,

has in some extraordinary way been prevented from asserting his right, or has

timely asserted his right mistakenly in the wrong forum and, serves to

ameliorate harsh results that sometimes flow from a strict, literalistic

construction and application of administrative time limits contained in statutes

and rules.

34. In applying the doctrine of equitable tolling in this case, the 12-

month time period would begin to run on June 4, 1992, the effective date of the

termination of Stimus' dealership agreement by Subaru, the first date on which

Subaru could begin the process of selecting and negotiating with a successor

dealer. The Department having accepted Conley's application on December 8,

1992, the 12-month time period set out in Section 320.642(5), Florida Statutes,

and more clearly defined in Rule 15C-7.004 (4)(a), Florida Administrative Code,

was met by Subaru.

35. The result would be the same even assuming arguendo that the

Department lack jurisdiction in this matter and therefore, was without authority

to cancel Stimus' license. The logical time to begin the 12-month period would

again be June 4, 1992, the date Subaru terminated it dealership agreement with

Stimus and the first date Subaru could begin to select and negotiate with a

successor dealer.

36. Subaru, as the party asserting the affirmative of an issue before an

administrative tribunal, has the burden to prove by a preponderance of the

evidence that it is entitled to the exemption from protest provided for in

Section 320.642(5)(a), Florida Statutes. Subaru has sustained its burden in

this regard.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

recommended that the Respondent, Department of Highway Safety and Motor

Vehicles, enter a Final Order granting Petitioners exemption from protest in

accordance with Section 320.642(5)(a), Florida Statutes, and dismissing the

protest filed by Lindell.

DONE AND ENTERED this 3rd day of November, 1993, in Tallahassee, Florida.

___________________________________

WILLIAM R. CAVE

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 3rd day of November, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-6942

The following constitutes my specific rulings, pursuant to Section

120.59(2), Florida Statutes, on all of the proposed findings of fact submitted

by the parties in this case.

Petitioner Subaru's Proposed Findings of Fact:

1. Proposed findings of fact 1 through 19 have been adopted in substance

as modified in Findings of Fact 1 through 26.

Respondent Lindell's Proposed Findings of Fact:

Respondent Lindell presented its proposed findings of fact in unnumbered

paragraphs contained in its memorandum of law under the title "Statement of

Facts". The paragraphs have been numbered 1 through 9 for purposes of this

Appendix.

1. Proposed finding of fact 1 is covered in the Preliminary Statement.

2. Proposed findings of fact 2 through 9 have been adopted in substance as

modified in Findings of Fact 1 through 26.

COPIES FURNISHED:

Charles J. Brantley, Director

Division of Motor Vehicles

Room B439, Neil Kirkman Building

Tallahassee, Florida 32399-0500

John M. Brennan, Esquire

Post Office Box 285

Orlando, Florida 32802-0285

Damian M. Ozark, Esquire

2401 Manatee Avenue

Bradenton, Florida 34205

J. Michael Lindell, Esquire

620 Blackstone Building

233 East Bay Street

Jacksonville, Florida 32202

Enoch Jon Whitney, Esquire

General Counsel

Neil Kirkman Building

Tallahasse, Florida 32399-0500

Mike Alderman, Esquire

Office of thew General Counsel

Neil Kirkman Building

Tallahassee, Florida 32399-0500

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.