01-002417 Spyke`s Grove, Inc., D/B/A Fresh Fruit Express, Emerald Estate, Nature`s Classic vs. Dooley Groves, Inc., And Reliance Insurance Company Status: Closed Recommended Order on Friday, October 12, 2001.

Summary: Petitioner proved that Respondent had breached a series of sales contracts for citrus fruit gift boxes. It was recommended that Petitioner be awarded damages.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SPYKE'S GROVE, INC., d/b/a )

FRESH FRUIT EXPRESS; EMERALD )

ESTATE; NATURE'S CLASSIC, )

)

Petitioner, )

)

vs. ) Case No. 01 - 2417A

)

DOOLEY GROVES, INC., AND )

RELIANCE INSURANCE COMPANY, )

)

Respondents. )

)

RECOMMENDED ORDER

The parties having been provided proper notice,

Administrative Law Judge John G. Van Laningham of the Division

of Administrative Hearings convened a formal hearing of this

ma tter by telephone conference on September 21, 2001.

Petitioner and Respondent Dooley Groves, Inc. appeared at their

offices in Davie, Florida and Sun City, Florida, respectively,

and the Administrative Law Judge presided in Tallahassee,

Florida.

APPEARANC ES

For Petitioner: Barbara Spiece, President

Spyke's Grove, Inc.

7250 Griffin Road

Davie, Florida 33314

For Respondent Dooley Groves, Inc.:

Diane M. Houghtaling, Vice President

Dooley Groves, Inc.

1651 Stephens Road

Post Office Box 7038

Sun City, Florida 33586 - 7038

For Respondent Reliance Insurance Company:

No appearance

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent Dooley Groves,

Inc. owes Petitioner a sum of money for shipments of citrus

fruit.

PRELIMINARY STATEMENT

On April 30, 2001, Petitioner Spyke's Grove, Inc. ("Spyke's

Grove") filed a Complaint with the Department of Agriculture and

Consumer Services (the "Department") in which it alleged that

Respondent Dooley Groves, Inc. ("Dooley") had failed to pay in

full for gift fruit packages that Spyke's Grove had shi pped

during the 1999 - 2000 citrus shipping season pursuant to a series

of sales contracts between the parties. Spyke's Grove claimed

that Dooley owed a balance of $2,383.71. Respondent Reliance

Insurance Company was named in the Complaint as Dooley's sure ty.

In an Answer filed with the Department on June 13, 2001,

Dooley denied Spyke's Grove's allegations and requested a

hearing. Shortly thereafter, the Department forwarded the

matter to the Division of Administrative Hearings.

At the final hearing on S eptember 21, 2001, Spyke's Grove

was represented by its President, Barbara Spiece, who testified

on the company's behalf. Spyke's Grove introduced 20 exhibits

into evidence, and all were received. (Most of Spyke's Grove's

exhibits were composite exhibits comprising numerous separate

documents.)

On behalf of Dooley appeared its Vice President, Diane

Houghtaling. She testified, as did the company's Direct

Marketing Manager, Debra Thaxton. Dooley offered five exhibits,

mostly composites, alpha - numericall y identified as DG - 2, DG - 3,

DG - 5, DG - 7, and DG - 9. All were admitted into evidence.

Although a court reporter recorded the proceeding, none of

the parties ordered a transcript. Spyke's Grove and Dooley

submitted proposed recommended orders, and the unders igned

reviewed them judiciously.

FINDINGS OF FACT

The evidence presented at final hearing established the

facts that follow.

The Parties and Their Problem

1. Spyke's Grove and Dooley are "citrus fruit dealers"

operating within the Department's regulatory jurisdiction.

2. As a wholesale shipper, Spyke's Grove packages and

arranges for delivery of citrus products pursuant to purchase

orders that retail sellers such as Dooley submit. The packages

typically are labeled with the retail seller's name ( e.g.

Do oley), and thus the retail buyer (and the recipient, if the

citrus is purchased as a gift) usually will not be aware of

Spyke's Grove's involvement.

3. The instant case involves a series of orders that

Dooley placed with Spyke's Grove between November a nd December

1999 for packages of gift fruit. Under a number of informal,

largely unwritten contracts, Spyke's Grove agreed, each time it

received an order from Dooley, to ship a gift fruit box or

basket to the donee designated by Dooley's retail customer, for

which fruit shipment Dooley agreed to pay Spyke's Grove.

4. Spyke's Grove alleges that Dooley failed to pay in full

for all of the gift fruit packages that Dooley ordered and

Spyke's Grove duly shipped. Dooley contends (though not

precisely in these terms) that Spyke's Grove materially breached

the contracts, thereby discharging Dooley from further

performance thereunder. Dooley also claims, as an affirmative

defense, that the alleged debt was extinguished pursuant to an

accord and satisfaction.

The Transactions

5. From mid - November 1999 until around December 12, 1999,

Dooley faxed to Spyke's Grove approximately 150 individual

orders for gift fruit packages. Each order consisted of a

shipping label that identified the product ( e.g. the type of

gif t box or basket), the intended recipient, the destination,

and a proposed shipping date. Spyke's Grove manifested its

intent to fill these orders by faxing statements of

acknowledgment to Dooley.

6. Although the many contracts that arose from these

trans actions were thus documented, the writings left much

unsaid. For example, contrary to Dooley's assertion, the

parties did not agree in writing that Spyke's Grove would

deliver the subject gift baskets to the donees before Christmas,

nor did they make any express oral agreements to this effect.

7. Further, the parties did not specifically agree that

Spyke's Grove would be obligated to deliver the gift fruit into

the hands of the donees and bear the risk of loss until such

tender of delivery. Rather, th e contracts between Spyke's Grove

and Dooley were ordinary shipment contracts that required

Spyke's Grove to put the goods into the possession of carriers

(such as the U.S. Postal Service or United Parcel Service) who

in due course would deliver the packag es to the donees.

8. For several weeks, until early December 1999, Dooley

placed orders, and Spyke's Grove filled them, under the

arrangement just described, without controversy.

The Fire

9. On the night of Sunday, December 12, 1999, a

devastating fire a t Spyke's Grove's premises caused substantial

damage, temporarily disrupting its citrus packing and shipping

operations at the peak of the holiday season. Working through

and around the loss, Spyke's Grove soon recovered sufficiently

to reopen for busines s. By around noon on Tuesday, December 14,

1999, its telephone service had been restored, and activities

relating to shipping resumed on Friday, December 17, 1999.

Dooley's Response

10. Dooley did not immediately learn about the fire that

had interrupted Spyke's Grove's operations. Continuing with

business as usual on Monday, December 13, 1999, Dooley attempted

then and throughout the week to fax orders to Spyke's Grove but

consistently failed to connect because the lines were busy.

11. With unplaced orders piling up, Dooley began to worry

that the gift baskets its customers had ordered earlier in the

month —— orders that Sypke's Grove already had agreed to fill ——

would not arrive by Christmas, as Dooley had guaranteed when

taking those orders. Then, on December 16, word of the Spyke's

Grove fire reached Dooley. Dooley's worry escalated into alarm.

12. That same day, Dooley placed telephone calls to as

many of its retail customers or their donees as it could reach,

to ascertain whether Spyke's Grove had shipped any of the gift

fruit baskets that Dooley had ordered before December 12, 1999.

Dooley was unable to confirm the receipt of a single package ——

and it panicked.

13. Disregarding its existing contractual obligations and

with no advance notice to Spyke's Grove, Dooley made alternative

arrangements for filling all of the orders that it had faxed to

Spyke's Grove in December 1999. Dooley packaged and shipped

some of the subject gift boxes on its own, and it placed orders

for the rest with another wh olesale shipper. These substitute

packages were being shipped as early as December 17 or 18, 1999.

14. Even after the fact, Dooley failed to inform Spyke's

Grove that it had, in effect, repudiated the existing shipment

contracts between them. Having no knowledge of Dooley's

actions, Spyke's Grove packaged and shipped all of the gift

fruit that Dooley had ordered pursuant to the contracts entered

into before December 12, 1999.

The Inevitable Dispute

15. On January 27, 2000, Spyke's Grove sent three inv oices

to Dooley seeking payment for most of the citrus shipped

pursuant to Dooley's orders. These bills totaled $3,242.55. A

fourth and final invoice, for $70.57, was sent on February 18,

2000. Combined with the other bills, this last brought the

grand total to $3,313.12.

16. Each of these invoices contained the following

boilerplate "terms":

Net 14 days prompt payment is expected and

appreciated. A 1 1/2 % monthly service charge

(A.P.R. 18% per annum) may be charged on all

past due accounts. Custome r agrees to pay

all costs of collection, including attorneys

[sic] fees and court costs, should

collection efforts ever become necessary.

17. Dooley did not remit payment or otherwise respond to

Spyke's Grove's statements. Accordingly, on June 20, 2000,

Spyke's Grove sent a letter to the Department requesting

assistance. Dooley was provided a copy of this letter.

18. On June 30, 2000, Dooley sent a letter to Spyke's

Grove in which it explained the reasons why Dooley believed

Spyke's Grove was not entit led to full payment of $3,313.12.

Dooley had decided, unilaterally, that a deduction of $1,723.53

was in order. In its letter, Dooley described the remaining

balance of $1,589.59 as the "final total payment," and a check

for that amount was enclosed ther ewith.

19. Nothing in Dooley's letter fairly apprised Spyke's

Grove that the check for $1,589.59 was being tendered, in good

faith, in full satisfaction of Spyke's Grove's demand for

payment of $3,313.12. No language in that June 30, 2000, letter

so much as hinted that Spyke's Grove's acceptance of the check

would be considered a manifestation of assent to Dooley's

position or an agreement to accept the lesser sum in

satisfaction of a greater claim.

20. In short, the parties did not make a mutual agree ment,

either expressly or by implication, to settle Spyke's Grove's

claim for a total payment of $1,589.59.

21. Spyke's Grove was entitled to accept Dooley's check

for $1,589.59 as a partial payment against the total

indebtedness, and it did.

22. Shor tly thereafter, Spyke's Grove filed a Complaint

with the Department, initiating the instant proceeding.

Ultimate Factual Determinations

23. Dooley's refusal to pay in full for the goods it

ordered from Spyke's Grove constituted a breach of the contracts

b etween the parties. Spyke's Grove did not materially breach

the agreements, nor was the indebtedness discharged pursuant to

an accord and satisfaction.

24. Spyke's Grove has suffered an injury as a result of

Dooley's breach. Spyke's Grove's damages co nsist of the

principal amount of the debt together with pre - award interest at

the statutory rate, less the partial payment that Dooley made on

June 30, 2000.

25. Accordingly, Spyke's Grove is entitled to recover the

following amounts from Dooley:

Princ ipal Due Date Statutory Interest

$3,242.55 2/10/99 $ 18.66 (2/10/99 - 3/03/99)

$ 70.57 3/04/99

$3,313.12 3/04/99 $ 437.56 (3/04/99 - 6/29/00)

LESS: <$1,589.59>

$1,723.53 6/30/00 $ 86.89 (6/30/00 - 12/31/00)

$ 157.92 (1/01/01 - 10/ 31/01)

$1,723.53 $ 701.03

Interest will continue to accrue on the outstanding balance of

$1,723.53 in the amount of $0.52 per day from November 1, 2001,

until the date of the final order.

CONCLUSIONS OF LAW

26. The Division of Administrative Hearings has personal

and subject matter jurisdiction in this proceeding pursuant to

Sections 120.569 and 120.57(1), Florida Statutes.

27. Chapter 601, Florida Statutes, is known as "The

Florida Citrus Code of 1949." Section 601.01, Florida Statutes.

"Citrus fru it" is defined in Section 601.03(7), Florida

Statutes, as

all varieties and regulated hybrids of

citrus fruit and also means processed citrus

products containing 20 percent or more

citrus fruit or citrus fruit juice, but, for

the purposes of this chapter, shall not mean

limes, lemons, marmalade, jellies,

preserves, candies, or citrus hybrids for

which no specific standards have been

established by the Department of Citrus.

28. A "citrus fruit dealer" is defined in

Section 601.03(8), Florida Statutes, as

a ny consignor, commission merchant,

consignment shipper, cash buyer, broker,

association, cooperative association,

express or gift fruit shipper, or person who

in any manner makes or attempts to make

money or other thing of value on citrus

fruit in any mann er whatsoever, other than

of growing or producing citrus fruit, but

the term shall not include retail

establishments whose sales are direct to

consumers and not for resale or persons or

firms trading solely in citrus futures

contracts on a regulated commod ity exchange.

Both Spyke's Grove and Dooley are citrus fruit dealers under

this definition.

29. Citrus fruit dealers are required to be licensed by

the Department in order to transact business in Florida.

Section 601.55(1), Florida Statutes. As a condi tion of

obtaining a license, such dealers are required to provide a cash

bond or a certificate of deposit or a surety bond in an amount

to be determined by the Department "for the use and benefit of

every producer and of every citrus fruit dealer with whom the

dealer deals in the purchase, handling, sale, and accounting of

purchases and sales of citrus fruit." Section 601.61(3),

Florida Statutes.

30. Section 601.65, Florida Statutes, provides that "[i]f

any licensed citrus fruit dealer violates any provi sion of this

chapter, such dealer shall be liable to the person allegedly

injured thereby for the full amount of damages sustained in

consequence of such violation." This liability may be

adjudicated in an administrative action brought before the

Departme nt or in a "judicial suit at law in a court of competent

jurisdiction." Id.

31. Section 601.64(4), Florida Statutes, defines as an

"unlawful act" by a citrus fruit dealer the failure to pay

promptly and fully, as promised, for any citrus fruit which is

t he subject of a transaction relating to the purchase and sale

of such goods.

32. Any person may file a complaint with the Department

alleging a violation of the provisions of Chapter 601, Florida

Statutes, by a citrus fruit dealer. Section 601.66(1), F lorida

Statutes. The Department is charged with the responsibilities

of determining whether the allegations of the complaint have

been established and adjudicating the amount of indebtedness or

damages owed by the citrus fruit dealer. Section 601.66(5),

Florida Statutes. The Department shall "fix a reasonable time

within which said indebtedness shall be paid by the [citrus

fruit] dealer," and, if the dealer does not pay within the time

specified by the Department, the Department shall obtain payment

of t he damages from the dealer's surety company, up to the

amount of the bond. Section 601.66(5) and (6), Florida

Statutes.

33. The contracts at issue between Spyke's Grove and

Dooley were for the sale of goods. Accordingly, in addition to

being subject to the provisions of Chapter 601, Florida

Statutes, these transactions are governed by Florida's Uniform

Commercial Code ("UCC"). See Section 672.102, Florida Statutes

(describing scope of UCC's Article II on "sales"); Section

672.105(1), Florida Statutes (d efining "goods").

34. The informal nature of the subject agreements does not

adversely affect their enforceability. The parties intended to

form contracts, and reasonably certain grounds exist in the

record for giving an appropriate remedy. See , e.g. , Sections

672.204, 672.206, 672.207, and 672.208, Florida Statutes.

35. The contracts at issue contained no explicit

provisions allocating the risk of loss while the goods were in

the possession of a carrier, nor did they provide for any

delivery terms. Hence, these were ordinary shipment contracts,

not destination contracts, for the latter must be explicitly

agreed to. See Pestana v. Karinol Corp. , 367 So. 2d 1096, 1099

(Fla. 3d DCA 1979); Sig M. Glukstad, Inc. v. Lineas Aereas

Paraguayas , 619 F.2d 45 7, 459 (5th Cir. 1980)(absent specific

contrary terms, sales contract is a shipment contract).

36. Under a shipment contract, the seller is required to

tender the goods to a carrier for delivery to the buyer, and the

risk of loss passes to the buyer upon the carrier's receipt of

the goods. See Pestana , 367 So. 2d at 1099; Section 672.504,

Florida Statutes.

37. Spyke's Grove bore the burden of proving the

allegations in its Complaint against Dooley by a preponderance

of the evidence. See Florida Depart ment of Transportation v.

J.W.C. Co., Inc. , 396 So. 2d 778, 788 (Fla. 1st DCA 1981);

Florida Department of Health and Rehabilitative Services v.

Career Service Commission , 289 So. 2d 412, 415 (Fla. 4th DCA

1974); Section 120.57(1)(j), Florida Statutes. Do oley, however,

had the burden to establish any breach with respect to goods

accepted. See Section 672.607(4), Florida Statutes. The burden

was also on Dooley to prove its affirmative defense of accord

and satisfaction. See Nelson v. Ziegfeld , 131 So. 31 6, 317

(Fla. 1930).

38. Spyke's Grove carried its burden of proving that

Dooley has failed and refused to pay, as agreed, for citrus

fruit that Spyke's Grove properly tendered to various carriers

for delivery.

39. Dooley failed to establish that it re jected the tender

of goods by Spyke's Grove, or that it properly revoked the

acceptance of such goods. Having failed to make an effective

and timely rejection or revocation of acceptance, Dooley is

deemed to have accepted all of the citrus fruit for which

Spyke's Grove has sought payment. See Sections 672.601,

672.606, and 672.608, Florida Statutes.

40. Dooley did not demonstrate that Spyke's Grove had

breached the contracts relating to the accepted goods. See

Section 672.607(4), Florida Statutes. More over, Dooley failed

to prove that it had timely notified Spyke's Grove of any

breaches, and for that additional reason is barred from any

remedy therefor. See Section 672.607(3)(a), Florida Statutes.

41. Dooley failed to establish an accord and satisfac tion,

either as a matter of fact or as a matter of law. See St.

Mary's Hospital, Inc. v. Schocoff , 725 So. 2d 454, 455 - 56 (Fla.

4th DCA 1999); Section 673.3111, Florida Statutes.

42. Thus, Dooley is indebted to Spyke's Grove in the

principal amount of $1, 723.53. See Section 672.607(1), Florida

Statutes.

43. The amounts that Dooley owes Spyke's Grove came due as

provided in the invoices that Spyke's Grove sent to Dooley,

namely, 14 days after the date of the invoice. See Section

672.310, Florida Statute s.

44. Spyke's Grove is entitled to simple interest on the

outstanding balance at the statutory rate of ten percent per

annum until December 31, 2000, and at the rate of 11% per year

beginning January 1, 2001. See Section 687.01, Florida

Statutes; Sect ion 55.03, Florida Statutes;

http://www.dbf.state.fl.us/interest.html; see also United

Services Automobile Ass'n v. Smith , 527 So. 2d 281, 283 - 84 (Fla.

1st DCA 1988)(improper to award compound statutory interest).

Notwithstanding the boilerplate in its in voices, Sypke's Grove

is not entitled to recover interest at an annual rate of 18%,

because the parties did not make a special contract for that

rate. See Celotex Corp. v. Buildex, Inc. , 476 So. 2d 294, 296

(Fla. 3d DCA 1985), rev. denied , 486 So. 2d 595 (1986).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department enter a final order

awarding Spyke's Grove the sum of $1,723.53, together with pre -

award interest in the amount of $701.03 (through October 31,

2001), plus additional interest from November 1, 2001, until the

date of the final order, which will accrue in the amount of

$0.52 per day.

DONE AND ENTERED this 12th day of October, 2001, in

Tallahassee, Leon County, Florida.

__________ _________________________

JOHN G. VAN LANINGHAM

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.sta te.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 12th day of October, 2001.

COPIES FURNISHED :

Barbara Spiece, President

Spyke's Grove, Inc.

7250 Griffin Road

Davie, Florida 33314

Diane M. Houghtaling, Vice President

Dooley Groves, Inc.

1651 Stephens Road

Post Office Box 7038

Sun City, Florida 33586 - 7038

Reliance Insurance Company

Three Parkway

Philadelphia, Pennsylvania 19102

Honorable Charles H. Bronson

Commissioner of Agriculture

Department of Agriculture and

Consum er Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 0810

Richard Ditschler, General Counsel

Department of Agriculture and

Consumer Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 0810

Brenda D. Hyatt, Bureau Chi ef

Department of Agriculture

and Consumer Services

500 Third Street Northwest

Post Office Box 1072

Winter Haven, Florida 33882 - 1072

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the d ate of this recommended order. Any exceptions

to this recommended order should be filed with the agency that

will issue the final order in this case.