93-004957 Department Of Agriculture And Consumer Services vs. Sweetwater Athletic Club, Inc. Status: Closed Recommended Order on Friday, May 13, 1994.

Summary: Health club that did not provide alter racquetball facilities on closing is liable for membership refund to members who used racquetball exclusively.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF AGRICULTURE )

AND CONSUMER SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 93-4957

)

SWEETWATER ATHLETIC CLUB, INC., )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly

designated Hearing Officer, Mary Clark, held a formal hearing in the above-

styled case on February 9, 1994, in Orlando, Florida.

APPEARANCES

For Petitioner: Isadore Rommes, Senior Attorney

Department of Agriculture and

Consumer Services

515 Mayo Building

Tallahassee, Florida 32399-0800

For Respondent: James S. Byrd, Jr., Esquire

Shoene, Byrd & Palmer

Post Office Box 2187

Winter Park, Florida 32790-2187

STATEMENT OF THE ISSUES

The issue for disposition in this proceeding is whether, as required by

subsection 501.017(1)(b)1., F.S., and rules 5J-4.003(1) and 5J-4.012, F.A.C.,

Respondent, a health studio, provided its patrons a facility of equal quality,

within five driving miles, at no extra cost, when Respondent's facility closed

in January, 1993.

PRELIMINARY STATEMENT

In response to notice that claims for membership refunds were made,

Sweetwater Athletic Club, Inc., petitioned for a formal administrative hearing

on April 11, 1993. On May 7, 1993, the Department of Agriculture and Consumer

Services sent a follow up letter stating the basis for its determination that

upon closing, Sweetwater Athletic Club had not provided a facility of equal

quality to its members.

The case was referred to the Division of Administrative Hearings on August

27, 1993.

At the hearing, Petitioner presented testimony of its consumer complaint

consultant, Joseph Alexionok, and testimony of the following complainants:

Christ Derato, Christine Kirkham, Ian Robertson, Ken Samsudean, James Hadley,

Kent Cofoid and Alex Jack. Petitioner's exhibits #1-7 were received in evidence

without objection; however, certain complaints included in composite exhibit #7

were objected to on the basis of hearsay, when the complainants did not appear

at hearing to testify. Those complaints have not been considered as a basis for

finding of fact in this recommended order. See subsection 120.58(1)(a), F.S.

Respondent presented the testimony of Marshall Cohn, Kim Byrd and Harry

Meeks. Respondent's exhibit #1 was received in evidence without objection.

After hearing, the transcript was prepared and filed, and the parties

submitted proposed recommended orders. The findings of fact proposed by each

are addressed in the attached appendix.

FINDINGS OF FACT

1. Sweetwater Athletic Club was approximately thirty years old when it was

acquired in July 1992 by Kim Byrd. The facility (Sweetwater) was located in

Longwood, Seminole County, Florida. The facility, in its corporate capacity,

registered as a health studio in accordance with sections 501.102-501.019, F.S.,

and it posted a surety bond, as required.

2. Sweetwater had Nautilus machines and other exercise equipment, a steam

room, sauna, two racquetball courts and aerobics. The steam room and sauna were

almost always broken, and Kim Byrd was continually trying to refurbish the club.

Very few people, mostly five or six men, regularly used the racquetball courts,

and Ms. Byrd had considered converting them to aerobics space, as there was a

greater demand for aerobics.

3. Paramount Health Club, (Paramount), also a health studio under Florida

law, is located within five miles of Sweetwater. It is a much larger and newer

facility than Sweetwater. It has a larger aerobics room and more experienced

personal trainers. Sweetwater lost many of its members to Paramount.

4. On or about January 8, 1993, Sweetwater closed, and transferred its

membership obligations to Paramount. Members of Sweetwater and appropriate

staff of the Department of Agriculture and Consumer Services were notified of

the closing and transfer.

5. Paramount has honored all prepaid Sweetwater memberships. Paramount

already had its own equipment but bought and refurbished every piece of

Sweetwater's athletic equipment and has, thus, increased accessibility to its

members. Paramount is a family-owned and operated facility. Its owner, Harry

Meeks, affirmatively sought out Sweetwater's members to make them feel welcome

and to help them understand that there was no financial obligation to use up

their prior membership term. Paramount's sauna, steam room, and other equipment

are all in good working order. It has more aerobics classes than Sweetwater and

includes special classes for seniors and other age or ability groups. In every

way, save one, Paramount's facility is equal to, or better than Sweetwater;

Paramount has no racquetball courts.

6. Eleven complaints from former Sweetwater members were filed with the

Department of Agriculture and Consumer Services.

7. Some members who complained did not even visit Paramount. In some

cases, they felt it was too far or inconvenient; in other cases, they knew it

had no racquetball and that was the only reason they went to Sweetwater. Other

members visited Paramount but perceived it to be crowded or too intimidating

because of a younger aged clientele and body-building focus.

8. With the exception of the lack of racquetball courts, the perception

that Paramount is not equal to Sweetwater is not valid. Harry Meeks' testimony

regarding the availability of equipment and broad appeal to all ages and skill

levels was persuasive. Sweetwater was less crowded because it had lost its

members already to Paramount.

9. Former Sweetwater members, Ian Robertson, Ken Samsudean and James

Hadley, utilized the Sweetwater facility exclusively for its racquetball courts.

Former member, Chris Derato, used the facility primarily for the racquetball

courts, but also used the other equipment at Sweetwater. James Byrd, former co-

owner of Sweetwater, has agreed to refund the unused membership fees of those

members who exclusively used the racquetball courts and to refund a portion of

the unused fees to Chris Derato. (transcript, p.76) This stipulation

effectively resolves the only valid complaints regarding Sweetwater's closing.

CONCLUSIONS OF LAW

10. The Division of Administrative Hearings has jurisdiction in this

proceeding pursuant to section 120.57(1), F.S.

11. The Department of Agriculture and Consumer Services is a state agency

created pursuant to section 20.16, F.S. and is responsible for enforcing the

provisions of sections 501.012-501.019, F.S., regulating health studios. It is

uncontroverted that Sweetwater is a health studio subject to those provisions.

12. Section 501.017(1)(b), F.S. provides that a contract for health studio

services must include:

(b)1. A provision for the cancellation and

refund of the contract if the contracting

business location of the health studio goes

out of business, or moves its facilities more

than 5 driving miles from the business

location designated in such contract and fails

to provide within 30 days, a facility of equal

quality located within 5 driving miles of the

business location designated in such contract

at no additional cost to the buyer.

. . .

3. A provision that if the department

determines that a refund is due the buyer,

the refund shall be an amount computed by

dividing the contract price by the number of

weeks in the contract term and multiplying

the result by the number of weeks remaining

in the contract term.

. . .

13. Rules adopted by the Department of Agriculture and Consumer Services

to implement sections 501.102-501.109, F.S. provide, in pertinent part:

5J-4.003 Definitions. The definitions in

Section 501.0125, Florida Statutes, and the

following shall apply:

(1) Alternate facility - means a health

studio of equal quality offered by a health

studio which goes out of business or moves

its facilities more than 5 driving miles from

the business location designated in any

contract used by the health studio.

. . .

5J-4.012 Facility of Equal Quality. For

purposes of Section 501.017, Florida Statutes,

and this chapter, the Department shall

consider the following factors in determining

equal quality among health studios:

(1) A comparison of equipment and facilities;

(2) The intended use of equipment and

facilities by the consumer;

(3) The availability of the equipment and

facilities for use on the same days and times

by the consumer;

(4) The distance between the facilities.

14. Although certain members complained about the inconvenience of

Paramount, it is plainly within the 5 mile driving distance required by the

statute and rules. The testimony of complainants who never visited Paramount or

who visited the facility only once or twice, very superficially assessing its

quality, is outweighed by the testimony of Paramount's owner, Sweetwater's owner

and one former Sweetwater member who transferred to Paramount. With the

exception of the lack of racquetball courts, Paramount's equipment and

facilities are of equal or better quality than Sweetwater's. In some regard,

they are precisely the same, though Paramount refurbished Sweetwater's

equipment. There is no requirement in the law or rules that a member should

never have to wait to use equipment any time he or she patronizes the facility.

There was no waiting at Sweetwater for the very reason it closed: it had too few

members.

15. The Sweetwater members who testified about their exclusive use of the

racquetball courts were credible. The sign-in sheets received into evidence as

Respondent's exhibit #1 are not reliable evidence of non-use, as the sheets are

for the last few days that Sweetwater remained open. As provided in finding of

fact #9, above, Respondent has agreed to make pro-rated membership refunds to

the racquetball users.

RECOMMENDATION

Based on the foregoing, it is, hereby,

RECOMMENDED:

That the Florida Department of Agriculture and Consumer Services enter a

final order denying the complaints against Respondent, with the exception of the

complaints by Chris Derato, Ian Robertson, Ken Samsundean and James Hadley; and

granting thirty (30) days for Respondent to provide refunds to those members,

before proceeding against Respondent's surety as provided in section 501.016(1),

F.S.

DONE AND RECOMMENDED this 13th day of May, 1994, in Tallahassee, Leon

County, Florida.

____________________________________

MARY CLARK

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 13th day of May, 1994.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4957

The following constitute specific rulings on the findings of fact proposed

by the parties.

Petitioner's Proposed Findings

1. and 2. Adopted in paragraph 1.

3. Adopted in paragraph 4.

4. Adopted in paragraph 6 and in preliminary statement.

5. Addressed in preliminary statement.

6. - 9. Adopted in paragraph 5.

10. - 12. Adopted in paragraph 7.

13. Adopted in substance in paragraph 9.

14. - 15. Rejected as statements in of testimony, but addressed in

conclusions of law, paragraph 14.

16. Rejected as contrary to the greater weight of evidence.

Respondent's Proposed Findings

1. Adopted in paragraphs 1 and 4.

2. Adopted in paragraphs 3 and 4.

3. Adopted in paragraph 5.

4. Adopted in paragraphs 3 and 5.

5. Adopted in paragraph 5.

6. Adopted in paragraph 9.

7. - 8. Adopted in paragraphs 3 and 7.

9. & 10. Adopted in substance in paragraph 2.

11. Rejected as immaterial. Upon review of the factors in rule 5J-

4.012, F.A.C. it appears that the lack of racquetball courts at Paramount is a

material defect, as to those members who used the courts at Sweetwater. As

noted in Mr. Rommes' letter, as long as the health studio is still in existence,

its members might have a cause of action for breach of contract. The purpose of

the statutes and rules seems to be the protection of those members who may

otherwise be without practical recourse if the studio closed.

COPIES FURNISHED:

Isadore Rommes, Sr. Atty.

Department of Agriculture

and Consumer Services

515 Mayo Building

Tallahassee, Florida 32399-0800

James S. Byrd, Jr., Esquire

Post Office Box 2187

Winter Park, Florida 32790-2187

Richard Tritschler, General Counsel

Department of Agriculture

and Consumer Services

The Capitol, PL-10

Tallahassee, Florida 32399-0810

Honorable Bob Crawford

Department of Agriculture

and Consumer Services

The Capitol, PL-10

Tallahassee, Florida 32399-0810

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.