01-002495 Five Star Packing vs. William G. Roe &Amp; Sons, Inc., And United States Fidelity &Amp; Guaranty Company Status: Closed Recommended Order on Tuesday, March 5, 2002.

Summary: 01-2495-Petitioner presented sufficient evidence to show Respondent owed Petitioner for citrus fruit as alleged. 01-2496-Petitioner failed to show that contract for ruby red grapefruit sold to Respondent was a valid contract.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FIVE STAR PACKING, )

)

Petitioner, )

)

vs. ) Case No. 01 - 2495A

)

WILLIAM G. ROE & SONS, INC., )

AND UNITED STATES FIDELITY & )

GUARANTY COMPANY, )

)

Respondents. )

_______________________________ )

)

W ILLIAM G. ROE & SONS, INC., )

)

Petitioner, )

)

vs. ) Case No. 01 - 2496A

)

FIVE STAR PACKING AND AUTO )

OWNERS INSURANCE COMPAN Y, )

)

Respondents. )

)

RECOMMENDED ORDER

Upon due notice, William R. Cav e, an Administrative Law

Judge for the Division of Administrative Hearings, held a formal

hearing in these matters on November 7, 2001, in Winter Haven,

Florida.

APPEARANCES

Case No. 01 - 2495A

For Petitioner: H. Christopher Tompkins, II, Esquire

1706 South Kings Avenue

Brandon, Florida 33509 - 6216

For Respondent: Douglas A. Lockwood, III, Esquire

W. G. Roe & Peterson & Myers, P.A.

Sons, Inc. 141 5th Street, Northwest

Post Office Drawer 7608

Winter Haven, Florida 33883

For Respondent: No appearance

United States

Fidelity &

Guaranty Co.

Case No. 01 - 2496A

For Petitioner: Douglas A. Lockwood, III, Esquire

W. G. Roe & Peterson & Myers, P.A.

Sons, Inc. 141 5th Street, Northwest

Post Office Drawer 7608

Winter Haven, Florida 33883

For Respondent: H. Christopher Tompkins, II, Esquire

Five Star 1706 South Kings Avenue

Packing Brandon, Florida 33509 - 6216

For Respondent: Jack P. James, Esquire

Auto Owners Post Office Box 3

Insurance Co. Lakeland, Florida 33802

STATEMENT OF THE ISSUES

Case No. 01 - 2495A

Does Respondent, William. G. Roe & Sons, Inc. (Roe & Sons)

owe Five Star Packing (Five Star) monies as alleged in the

Complaint for citrus contracted for under various written

contracts entered into by the parties?

Case No. 01 - 2496A

Does Respondent Five Star owe Roe & Sons monies as alleged

in the Complaint for damages sustained by Roe & Sons as a result

of the breach of alleged oral contracts between the parties by

Five Star?

PRELIMINARY STATEMENT

Case No. 01 - 2495A

By a Complaint dated August 22, 2000, and filed with the

Office of Citrus License and Bond, Florida Department of

Agriculture and Consumer Services (Department) on September 12,

2000, and a First Amended Complaint dated January 5, 2001, and

filed with the Department on January 10, 2001, Five Star seeks

payment of an alleged balance due from Roe & Sons under various

written contracts between the parties for the sale of

tangerines, white grapefruit, and temple oranges. Roe & Sons

denied the allegations within the Complaint and a lleged the

affirmative defenses of settlement, breach of a written

contract, and breach of oral contract. Additionally, Roe & Sons

filed a counterclaim in the amount of $97,000.00 for breach of

contract in Five Star's failure to purchase a certain quantit y

of ruby red grapefruit under alleged oral contracts.

Case No. 01 - 2496A

By a Complaint dated November 10, 2000, and filed with the

Department on November 15, 2000, Roe & Sons seeks payment from

Five Star for alleged damages suffered due to the failure of

Five Star to perform under two alleged oral contracts with Roe &

Sons for the purchase of a certain quantity of ruby red

grapefruit.

By letter dated June 25, 2001, the Department referred

these matters to the Division of Administrative Hearings

(Division) for the assignment of an Administrative Law Judge and

for the conduct of a formal hearing. The cases were

consolidated for hearing on July 17, 2001.

At the hearing, Five Star presented the testimony of Larry

Thompson. Five Star's Exhibits 1 - 4 were admitted in evidence.

Roe & Sons presented the testimony of W. A. Alford, Morgan Roe,

and William Roe. Roe & Sons' Exhibits 1 - 12 were admitted in

evidence.

A Transcript of this proceeding was filed with the Division

on November 28, 2001. The parties fil ed their Proposed

Recommended Orders under an extended time frame with the

understanding that any time constraint imposed under Rule 28 - 106

(1), Florida Administrative Code, was waived in accordance with

Rule 28 - 106(2), Florida Administrative Code.

FINDIN GS OF FACT

Upon consideration of the oral and documentary evidence

adduced at the hearing, the following relevant findings of fact

are made:

1. At all times pertinent to this proceeding, Five Star

was a citrus fruit dealer as that term is defined in Subse ction

601.03(8), Florida Statutes, and was licensed and bonded in

accordance with Chapter 601, Florida Statutes.

2 . At all times pertinent to this proceeding, Roe & Sons

was a citrus fruit dealer as that term is defined in Subsection

601.03(8), Florida St atutes, and was licensed and bonded in

accordance with Chapter 601, Florida Statutes.

3. At all times pertinent to this proceeding, both Five

Star and Roe & Sons were subject to the provisions of

Chapter 601, Florida Statutes.

4. Five Star bought, sold, and delivered citrus fruit to

various citrus processing facilities and packing houses in

Central Florida during the 1999 - 2000 citrus fruit season.

5. During the 1999 - 2000 citrus fruit season, Roe & Sons

operated a packing house in Winter Haven, Florida, and regularly

purchased citrus fruit for the fresh fruit market, and sold

citrus fruit that it had purchased to other citrus fruit dealers

such as Five Star.

6. The Complaint in Case No. 01 - 2495A was filed with the

Department by Five Star on September 12, 2000, and was timely

filed in accordance with Subsection 601.66(1), Florida Statutes.

On January 5, 2001, before the Department referred this matter

to the Division, Five Star filed its First Amended Complaint

with the Department.

7. The Complaint in Ca se No. 01 - 2496A was filed with the

Department by Roe & Sons on November 10, 2000, and was timely

filed in accordance with Subsection 601.66(1), Florida Statutes.

8. On December 6, 1999, Roe & Sons and Five Star entered

into a Participation Marketing Agr eement, Contract No. B233Q,

for tangerines wherein Roe & Sons was to purchase Sunburst

Tangerines from Five Star. Roe & Sons purchased 2,124 boxes of

Sunburst Tangerines from Five Star for which Roe & Sons paid

Five Star $23,534.84. There is no disagreem ent as to these

tangerines. However, Five Star contends that the tangerines

supported by Trip Ticket Nos. 225488, 225489, 225490, 225491,

and 225492 were delivered to Roe & Sons but that Five Star did

not receive payment. Roe & Sons has no Trip Ticket re ceipts or

any other record indicating that these tangerines were delivered

to Roe & Sons. However, Larry Thompson of Five Star testified

that Trip Ticket Nos. 225488, 225489, and 225490 were filled out

by the harvester and that he was present when the tan gerines

represented by those Trip Tickets were delivered to Roe & Sons.

Thompson also testified that he filled out Trip Ticket Nos.

225491 and 225492 and was present when the tangerines

represented by those Trip Tickets were delivered to Roe & Sons.

The Trip Tickets indicate that the tangerines were being

delivered to Roe & Sons under Contract No. B233Q. Copies of the

Trip Tickets along with the testimony of Larry Thompson, which

is credible, is sufficient to show that the tangerines

represented by Trip Tickets Nos. 225488, 225489, 225490, 225491,

and 225492 were delivered to Roe & Sons, notwithstanding that

Roe & Sons has no records of these tangerines being delivered to

Roe & Sons by Five Star. Therefore, Roe & Sons owes Five Star

$8,645.67 for the tan gerines represented by Trip Ticket Nos.

225488, 225489, 225490, 225491, and 225492. However, Five Star

stipulated that it owed Roe & Sons $2,667.60 for 684 boxes of

tangerines delivered to Five Star by Roe & Sons on January 13,

2000. The adjusted amount owed Five Star by Roe & Sons for

tangerines is $5,978.07.

9. On February 11, 2000, Roe & Sons and Five Star entered

into a Fresh Cash Purchase Agreement, Contract No. B333S,

wherein Roe & Sons agreed to purchase an estimated 25,000 boxes

of Marsh whi te grapefruit from Five Star for an agreed price of

$1.35 Per Pound Solids (PPS) Gross. Contract No. B333S

contained the following Special Clauses: "FRUIT MUST BE A

MINIMUM 10.00 BRIX AND 9.00 RATIO. PRICE FOR FRUIT NOT MEETING

THIS MINIMUM SCORE WILL BE NEGOTIATED AS THE LOADS ARE

RECEIVED." The "Movement Date" under Contract No. B333S was to

be "SEASONAL," which the parties stipulated meant that there was

no specified date for delivery, only that the grapefruit was to

be delivered during the 1999/2000 season. Contract No. B333S

also contained the following clause: "Fruit not meeting

contract ratio or brix requirements but otherwise suitable to

BUYER will be discounted by .10 per unit measure P/S or returned

to SELLER at BUYER's sole discretion."

10. On March 31, 2000, Roe & Sons entered into a second

Agreement, Contract No. B376B, wherein Roe & Sons agreed to

purchase an estimated 7,000 boxes of Marsh white grapefruit from

Five Star for an agreed price of $1.50 PPS Gross. Contract No.

B376B contained the following special clause: "Must be 10 Brix

and 9 Ratio minimum or $0.15 PPS Penalty." Although Contract

No. B376B contained no Movement Date, the parties agreed that

the grapefruit was to be delivered during the 1999/2000 season.

11. Morgan Roe tes tified that when Roe & Sons entered into

multiple contracts with the same party to furnish citrus fruit

during same season, Roe & Sons had an unwritten internal policy,

which required the other party to the multiple contracts with

Roe & Sons to fulfill the requirements of the first contract

before Roe & Sons would accept citrus fruit under any subsequent

contract. Roe & Sons did not make Five Star aware of this

unwritten internal policy at the time that either the first or

second contract was executed by F ive Star. Likewise, neither

the first nor the second contract contained any language which

would require Five Star to fulfill the first contract before Roe

& Sons would be required to accept grapefruit under the second

contract.

12. Between March 28, 200 0 and May 9, 2000, Five Star

delivered 7,649 boxes of white grapefruit to Roe & Sons. Five

Star contends that Roe & Sons owes Five Star $43,614.77 after

adjustments for unloading charges and research and advertising

taxes for the grapefruit delivered. Ro e & Sons contends that it

owes Five Star $40,106.96 after adjustments for unloading

charges and research and advertising taxes for the grapefruit

Five Star delivered. Five Star contends that the majority of

the grapefruit was delivered under Contract No. B376B and that

Five Star should have been paid $1.50 PPS for the grapefruit

delivered under Contract No. B376B. However, only Trip Ticket

Nos. 48433, 48434, 77569, 77570, 77571, 77572, and 77573 were

specifically marked as being delivered under Contract N o. B376B,

which Five Star contends it should have been paid $1.50 per

pound solids since this grapefruit met all the specifications of

the contract. However, Roe & Sons contends that since Five

Star's commitment under Contract No. B333S had not been total ly

fulfilled, Roe & Sons was only required to pay Five Star $1.35

per pound solids for all of the grapefruit delivered between

March 28, 2000 and May 9, 2000, notwithstanding that some of the

Trip Tickets indicated that the grapefruit was being delivered

u nder Contract B376B. Roe & Sons' contention was based on its

internal policy that the first contract, Contract No. B333S, had

to be fulfilled before Roe & Sons was required to honor the

second contract, Contract No. B376B. There is insufficient

evidence to support Roe & Sons' contention that its internal

policy is an industry standard, notwithstanding the testimony of

W. A. Alford to the contrary, which lacks credibility. Roe &

Sons has failed to show that Five Star was required to fulfill

Contract No. B 333S before Roe & Sons was required to accept

fruit under Contract No. B376B. Roe & Sons should have allowed

Five Star $1.50 PPS for the grapefruit delivered under Contract

No. B376B. Five Star conceded that none of the other Trip

Tickets indicated that the grapefruit was being delivered under

Contract No. B376B. Therefore, Roe & Sons' Net Return amount

should be adjusted upwards to account for the difference ($0.15)

in the price PPS for the above listed Trip Tickets. After

adjustment (13,497.78 PS x $0 .15 PPS = $2,024.67), Roe & Sons

owes Five Star the sum of $42,131.63 ($40,106.96 $2,024.67)

for the grapefruit delivered under Contract Nos. B333S and

B376B. Other than the adjustment for the difference in PPS, Roe

& Sons Net Return amount is correct. Five Star's Net Return

amount incorrectly takes credit for grapefruit at $1.50 PPS that

was not delivered under Contract B376B and fails to take credit

for grapefruit delivered to Roe & Sons on May 9, 2000, under

Trip Ticket Nos. 4134 and 212720.

13. Fiv e Star contends that Roe & Sons' cull adjustment

was excessive and that Roe & Sons owed Five Star $1,688.52 for

excessive cull adjustment. Five Star's contracts with Roe &

Sons provides that Roe & Sons has the right to reject unsuitable

fruit. Although Five Star presented testimony as to what might

constitute "excessive cull adjustment," it failed to present

sufficient evidence to show that the "culled fruit" was suitable

and that Roe & Sons' "cull adjustment" was excessive.

Therefore, Five Star is not entitled to any adjustment for cull

adjustment.

14. Roe & Sons contends that sometime around April 11,

2000, Larry Thompson for Five Star and William Roe for Roe &

Sons entered into an oral contract wherein Five Star was to

purchase 30,000 boxes of field run ruby red grapefruit with a

9.00 ratio at a price of $1.20 PPS. Roe & Sons reduced these

terms to writing and designated it as Contract S2057. Roe &

Sons also contends that sometime around April 14, 2000, Larry

Thompson for Five Star and William Roe f or Roe & Sons entered

into an oral contract wherein Five Star was to purchase 15,000

boxes of elimination red grapefruit at a price of $1.10 PPS.

Roe & Sons reduced these terms to writing and designated it as

Contract S2060. Larry Thompson testified that he refused to

agree to, or to sign, either of these alleged contracts on the

basis that he did not agree to handle any specific quantity

(number of boxes) of red grapefruit for Roe & Sons. Larry

Thompson testified that he agreed to handle some (no specif ic

quantity) of red grapefruit for Roe & Sons at the price and

specifications stated. Based on Larry Thompson's testimony,

which is credible, there was never any valid contract, oral or

otherwise, wherein Five Star agreed to purchase a specific

quantity ( boxes) of red grapefruit from Roe & Sons,

notwithstanding William Roe's testimony to the contrary, which

lacks credibility in this regard, or the fact that Five Star did

purchase a number of boxes of red grapefruit from Roe & Sons,

for which Five Star agre es that it owes Roe & Sons.

15. Between April 12, 2000 and April 20, 2000, Five Star

purchased some 2,760 boxes of red grapefruit at a price of $1.10

PPS, represented by ticket nos. 71146, 71149, 64019, 64024, and

64585. The total PPS of the boxes was 13 ,094.44 for a gross

price of $14,403.88 (13,094.44 PS x $1.10 PPS = $14,403.88).

After adjusting the gross price for hauling and unloading

charges and advertising tax, the total amount owed Roe & Sons by

Five Star was $10,972.86.

16. Between April 12, 20 00 and April 20, 2000, Five Star

purchased some 4,355 boxes of red grapefruit at a price of $1.20

PPS, represented by ticket nos. 214720, 214721, 71147, 71148,

71150, 214722, 214723, 214724, and 214725. The total PPS of the

boxes was 21,387.92 for a gros s price of $25,665.50 (21,387.92

PS x $1.20 PPS = $25,665.50). After adjusting the gross price

for hauling and unloading charges and research and advertising

tax, the total amount owed Roe & Sons by Five Star was

$21,621.11.

17. Five Star alleged that it owed Roe & Sons the sum of

$32,593.97. However, Five Star stipulated that Roe & Sons

should be given credit for $4,336.37 in hauling charges paid by

Roe & Sons, which brings the total owed to Roe & Sons for red

grapefruit by Five Star to $36,930.34.

18. Subsequent to the purchase of the above red grapefruit

by Five Star from Roe & Sons, Five Star advised Roe & Sons that

Five Star would not be purchasing any more red grapefruit from

Roe & Sons. As a result of this decision by Five Star, Roe &

Sons advised Five Star that Five Star could continue to deliver

white grapefruit under Contract Nos. B333S and B376B, but that

any monies due Five Star for grapefruit delivered on theses

contracts would be applied against any damages suffered by Roe &

Sons for Five St ar's failure to honor the alleged oral contracts

to purchase red grapefruit from Roe & Sons.

19. As a result of Roe & Sons' position concerning the

alleged oral contracts, Five Star made no further deliveries of

white grapefruit to Roe & Sons under Contra ct Nos. B333S and

B376B. Instead, Five Star sold the white grapefruit that was to

be delivered to Roe & Sons under Contract Nos. B333S and B376B

to Silver Springs Citrus at a much reduced rate PPS due to the

decline in the grapefruit market in what Five S tar described as

an attempt to mitigate damages under Contract Nos. B333S and

B376B.

20. Five Star alleged that Roe & Sons owed Five Star

$4,822.31 for 840 boxes of temple oranges purchased by Roe &

Sons. However, Five Star stipulated that Roe & Sons was

entitled to a credit of $355.58 due to an accounting error by

Five Star. The adjusted amount owed to Five Star for temple

oranges by Roe & Sons is $4,466,73.

21. Roe & Sons alleged in its First Affirmative Defense to

Five Star's Complaint that the parti es had reached a settlement

of their respective claims. However, based on the testimony of

Larry Thompson denying that a settlement had been reached, which

is credible in this regard, and the fact that the check for the

amount of the alleged settlement wa s never received or

negotiated by Five Star, supports Five Star's position that the

parties had not reached a settlement.

22. In its Second Affirmative Defense, Roe & Sons alleged

that Five Star breached Contract No. B333S by failing to deliver

white gra pefruit in accordance with the specifications set forth

in the contract. Roe & Sons failed to present sufficient

evidence to support this affirmative defense.

23. Roe & Sons' Third Affirmative Defense, Setoff, and

Counterclaim to Five Star's Complaint is based on Five Star's

breach of the alleged oral red grapefruit contracts. Roe & Sons

failed to present sufficient evidence to show that the alleged

oral red grapefruit contracts were in fact valid contracts.

24. Roe & Sons alleges in its Complaint filed in

Case No. 01 - 2496A that Five Star breached the alleged oral

contracts for red grapefruit. Roe & Sons failed to present

sufficient evidence to show that the alleged oral red grapefruit

contracts were in fact valid contracts.

CONCLUSIONS OF LAW

25. The Division has jurisdiction over the parties and the

subject matter of this proceeding pursuant to Section 120.57(1),

Florida Statutes.

26. The burden of proof is on the party asserting the

affirmative of an issue before an administrative tribunal.

Florida Department of Transportation v. J.W.C. Company, Inc. ,

396 So. 2d 778 (Fla. 2d DCA 1981). Therefore, Five Star must

prove by a preponderance of the evidence the allegations

contained in its First Amended Complaint. Likewise, Roe & Sons

must prove by a p reponderance of the evidence the allegations

contained in its Complaint. Department of Banking and Finance,

Division of Securities and Investor Protection v. Osborne Stern

and Company , 670 So. 2d 932 (Fla. 1996), and Subsection

120.57(1)(j), Florida Statu tes.

27. There was no mutual agreement as to the material terms

of the alleged red grapefruit contracts between Five Star and

Roe & Sons. Particularly, there was no agreement as to the

quantity of red grapefruit that Five Star was to purchase under

the alleged contract. Therefore, there was no valid enforceable

contract as to the red grapefruit. See Winter Haven Citrus

Growers Association v. Campbell & Sons Fruit Company , 773 So. 2d

96 (Fla. 2d DCA 2000). Without a valid contract, Roe & Sons'

request for a Setoff or Counterclaim claimed in its answer to

Five Star's First Amended Complaint fails. Likewise, Roe &

Sons' Complaint alleging damages due to Five Star's breach of

the red grapefruit contact for its failure to purchase a certain

quantity of red grapefruit fails.

28. Five Star has met its burden to show that it is

entitled to payment from Roe & Sons as follows:

Tangerines $ 5,978.07

White Grapefruit $42,131.63

Temple Oranges $ 4,466,73

Total $52,576.43

Minus Amount Owed Roe

& Sons for red

grapefruit $36,930.34

Net owed to Five Star

by Roe & Sons $15,646.09

29. Five Star claims that it is entitled to damages due to

the breach of Contract Nos. B333S and B376B for the purchase of

a certain number of boxes of white grapefruit by Roe & Sons.

However, assuming arguendo that Roe & Sons breached the above

referenced contracts, Five Star's attempt to mitigate damages

was inappropriate . Since Roe & Sons agreed to continue

accepting the white grapefruit from Five Star under Contract

Nos. B333S and B376B with the account showing a credit to Five

Star for damages under the alleged red grapefruit contracts, the

more appropriate approach wo uld have been to continue delivery

of the white grapefruit and receive a credit for the full price

under the contracts, and negotiate or litigate the validity of

the alleged red grapefruit contracts and Roe & Sons alleged

breach of the white grapefruit con tracts. Due to a declining

red grapefruit market, Five Star's approach to mitigation of

damages resulted in damages being created rather than mitigated.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is recommended that the Department of Agriculture and

Consumer Services enter a final order requiring Roe & Sons to

pay Five Star the sum of $15,646.09 and denying Five Star any

damages in regard to Contract Nos. B333S and B376B. It is

further recommended that Roe & Sons be denied any relief in

regards to the alleged red grapefruit contracts.

DONE AND ENTERED this 5th day of March, 2002, in

Tallahassee, Leon County, Florida.

____________________________________

WILLIAM R . CAVE

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 - 6947

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 5th day of March, 2002.

COPIES FURNISHED :

Hank B. Campbell, Esquire

Gray, Harris, Robinson, Lane, Trohn

Post Office Box 3

Lakeland, Florida 33802

United States Fidelity & Guaranty Company

4311 West Waters Avenue, Suite 401

Tampa, Florida 33614

Brenda D. Hyatt, Bureau Chief

Bureau of License and Bond

Department of Agriculture

and Consumer Services

541 East Tennessee Street

India Building

Tallahassee, Florida 32308

Richard Ditschler, Gen eral Counsel

Department of Agriculture

and Consumer Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 0810

Douglas A. Lockwood, III, Esquire

Peterson & Myers, P.A.

141 5th Street, Northwest

Post Office Drawer 7608

Winter Haven, Florida 33883

H. Christopher Thompkins, II, Esquire

1706 South Kings Avenue

Brandon, Florida 33509 - 6216

Jack P. James, Esquire

Post Office Box 3

Lakeland, Florida 33802

Honorable Charles H. Bronson

Commissioner of Agriculture

Department of Agriculture

an d Consumer Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 0810

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit exceptions within 15 days

from the date of this Recommended Order. Any exceptions to this

Recomme nded Order should be filed with the agency that will

issue the Final Order in this case.