01-002920 Spyke`s Grove, Inc., D/B/A Fresh Fruit Express, Emerald Estate, Nature`s Classic vs. Clark`s Country Farmers Market, Inc., And Contractors Bonding And Insurance Company Status: Closed Recommended Order on Thursday, November 29, 2001.

Summary: Petitioner established that Respondent had breached a series of sales contracts by failing to pay for citrus fruit gift boxes ordered and shipped. 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 - 2920A

)

CLARK'S COUNTRY FARMERS MARKET, )

INC., AND CONTRACTORS BONDING & )

INSURANCE COMPANY, )

)

Respondent s. )

)

RECOMMENDED ORDER

The parties having been provided proper notice,

Administrative Law Judge John G. Van Laningham of the Division

of Administrative Hearings conven ed a formal hearing of this

matter by telephone conference on October 25, 2001. Petitioner

appeared in Fort Lauderdale, Florida. Respondent Clark's County

Farmers Market, Inc. appeared, and the Administrative Law Judge

presided, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Barbara Spiece, pro se

Spyke's Grove, Inc.

7250 Griffin Road

Davie, Florida 33314

For Respondent Clark's County Farmers Market, Inc. :

Denise B. Clark, pro se

Clark's Country Farmers Market, Inc.

18440 U.S. Highway 19, North

Hudson, Florida 34667

For Respondent Contractors Bonding & Insurance Company:

No appearance

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent Clark's

Country Farmers Market, 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 Clark's Country Farmers Market, Inc. ("Clark's") had

failed to pay for gift fruit packages that Spyke 's Grove had

shipped during the 1999 - 2000 citrus shipping season pursuant to

a series of sales contracts between the parties. Spyke's Grove

claimed that Clark's owed a balance of $4,803.55. Respondent

Contractors Bonding & Insurance Company was named in the

Complaint as Clark's' surety.

In an Answer filed with the Department on July 19, 2001,

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

hearing. Shortly thereafter, the Department forwarded the

matter to the Division of Administrative Hearin gs.

At the final hearing on October 25, 2001, Spyke's Grove was

represented by its president, Barbara Spiece, who testified on

the company's behalf, as did her husband, Robert Spiece.

Spyke's Grove introduced Petitioner's Exhibits 1 - 4; 6 - 10; 11;

13; 14 - 17; 19 - 22; 27; 28; and 30 into evidence, and all were

received. (Most of Spyke's Grove's exhibits were composite

exhibits comprising numerous separate documents.)

On behalf of Clark's appeared an officer of the company,

Denise B. Clark. She testified, as did employees Denise Bosse

and Milia Julian. Clark's offered exhibits, mostly composites,

alphabetically identified as Respondent's Exhibits A - I; L - N; T;

and U. All were admitted into evidence.

Although a court reporter recorded the proceeding, none o f

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

submitted proposed recommended orders, and the undersigned

reviewed them judiciously.

FINDINGS OF FACT

The evidence presented at final hearing established the

facts that follow.

The Parties an d Their Problem

1. Spyke's Grove and Clark's 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 Clark's submit. The packages

typically are labeled with the retail seller's name, 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

Clark's placed with Spyke's Grove between October and December

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

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

received an or der from Clark's, to ship a gift fruit box or

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

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

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

full for all of the gift fruit p ackages that Clark's ordered and

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

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

the contracts, thereby discharging Clark's from further

performance thereunder.

The Transactions

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

Clark's faxed or e - mailed to Spyke's Grove approximately 350

individual orders for gift fruit packages. Among other

information, each order consisted of a shipping label that

identified the product ( e.g. the type of gift box or basket),

the intended recipient, and the destination. Spyke's Grove

manifested its intent to fill these orders by faxing statements

of acknowledgment to Clark's, by telephoning Clark's, or both.

6. Although the many contrac ts that arose from these

transactions were thus documented, the writings left much

unsaid. For example, the parties did not explicitly 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. 1

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, the contracts between Spyke's Grove

and Clark's 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 packages to the donees.

8. For many weeks, until early December 1999, Clark's

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

arrangement just described. The relationship was not completely

trouble - free, for the parties had some problems wit h duplicate

orders. Most, if not all, of these difficulties stemmed from

the implementation of a computerized ordering system which

allowed Clark's to "export" orders directly to Spyke's Grove's

electronic database. The parties recognized at the time tha t

errors were occurring, and they attempted contemporaneously to

identify and purge unintended duplicates. Pursuant to the

course of dealing between these parties, Spyke's Grove filled

orders that were not affirmatively identified as errors prior to

the s cheduled shipment date.

The Fire

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

devastating fire at 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 business. By around noon on Tuesday, December 14,

1999, its telephone service had been restored, and activities

relating to shipping resumed on Friday, December 1 7, 1999.

The Aftermath

10. Meantime, Clark's contends, customers had begun

calling Clark's on December 10, 1999, to complain that gift

fruit packages were not being received as promised. None of the

customers testified at hearing, however, and therefore no

competent, non - hearsay evidence establishes the contents of

their alleged out - of - court statements.

11. On December 14, 1999, following several unsuccessful

attempts to communicate with Spyke's Grove shortly after the

fire (about which Clark's remained unaware), Denise Clark,

acting on behalf of Clark's, reached Robert Spiece, a

representative of Spyke's Grove, on his cell phone. At hearing,

Ms. Clark and Mr. Spiece gave conflicting accounts as to the

substance of their December 14, 1999, telephone conv ersation.

Neither disputed, however, that during this conversation Ms.

Clark and Mr. Spiece agreed, at Ms. Clark's request, that all

orders of Clark's not yet shipped by Spyke's Grove would be

canceled, effective immediately, as a result of the fire.

Alt hough Ms. Clark claimed that Mr. Spiece further informed her

that Spyke's Grove could not identify which orders had been

shipped, the factfinder does not believe that Mr. Spiece made

such a sweeping negative statement. Rather, as Mr. Spiece

explained at h earing, Ms. Clark probably was told that

information regarding the filled orders would not be available

that day .

12. Without waiting for further information from Spyke's

Grove, Clark's began calling its retail customers to ascertain

whether they had re ceived packages that were supposed to have

been shipped by Spyke's Grove. Employees of Clark's who had

participated in this process —— which took four to five days ——

testified at hearing about conversations between themselves and

various customers. As uncor roborated hearsay, however, the out -

of - court statements attributed to these customers were not

competent substantial evidence upon which a relevant finding of

fact, e.g. that any particular customer or customers had not

received their gift fruit, could be based. Moreover, this

hearsay evidence, even if competent, would still have been too

anecdotal to establish persuasively any widespread failure on

the part of the carriers to deliver the packages shipped by

Spyke's Grove.

13. On December 15, 1999, Spyke' s Grove prepared three

draft invoices for the gift fruit packages that Clark's had

ordered and which Spyke's Grove had shipped before December 12,

1999. Numbered 1999113001, 1999121101, and 1999121201, the

invoices sought payment of $688.72, $2,415.48, an d $298.66,

respectively. On the first page of Invoice #1999121201, Barbara

Spiece, the President of Spyke's Grove, wrote:

Some of these were lost in the fire. "A"

day left in the morning. "Springfield" was

on the floor to go out that night. I

realize t here are many duplicates in these

shipped reports. We tried to watch for them

but with different order numbers it was very

difficult. Just cross them out [and] you

will not be charged for them. I apologize

for all of the problems we have had this

season [illegible] wish you luck.

These bills were faxed to, and received by, Clark's on

December 16, 1999.

14. Clark's did not pay the invoices, or dispute them, or

cross out the unintended duplicate orders (as it had been

invited to do) to effect a reductio n in the outstanding balance.

Instead, Clark's ignored Spyke's Grove's requests for payment.

Not only that, in disregard of its existing contractual

obligations and with no advance notice to Spyke's Grove, Clark's

proceeded on its own to fill all of the orders that it had

placed with Spyke's Grove before December 12, 1999 —— including

those orders that Spyke's Grove, through its draft invoices,

claimed to have shipped.

15. Even after the fact, Clark's failed to inform Spyke's

Grove that it had, in effect, repudiated its contractual

promises to pay Spyke's Grove for the gift fruit packages

already shipped as of December 12, 1999 ( i.e. the orders not

canceled on December 14, 1999).

The Inevitable Dispute

16. Having heard nothing from Clark's in response t o its

December 16, 1999, fax, Spyke's Grove sent its invoices out

again, in final form, on January 25, 2000. 2 This time, Ms.

Spiece did not inscribe any instructions to cross out duplicates

for a discount. Numbered 11063001 ($688.72), 11063002

($2,449.14 ), and 11063003 ($195.52), these bills totaled

$3,333.38.

17. Each of these invoices contained the following

boilerplate "terms":

Net 14 days prompt payment is expected and

appreciated. A 1 ½% monthly service charge

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

past due accounts. Customer agrees to pay

all costs of collection, including attorneys

[sic] fees and court costs, should

collection efforts ever become necessary.

18. Clark's did not remit payment or otherwise respond to

Spyke's Grove's stateme nts. Accordingly, on June 20, 2000,

Spyke's Grove sent a letter to the Department requesting

assistance. Clark's was provided a copy of this letter.

Shortly thereafter, Spyke's Grove filed a Complaint with the

Department, initiating the instant proceedi ng.

Ultimate Factual Determinations

19. Clark's refusal to pay for the goods ordered from and

shipped by Spyke's Grove constituted a breach of the contracts

between the parties. Spyke's Grove did not materially breach

the agreements.

20. Further, Clar k's did not object, within a reasonable

period of time, to the statements of account that Spyke's Grove

rendered preliminarily on December 16, 1999, and finally on

January 25, 2000. Accordingly, these invoices amount to an

account stated concerning the tr ansactions between the parties.

Clark's failed to overcome the presumption of correctness that

attaches to an account stated, either by proving fraud, mistake,

or error.

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

Clark's' breach. Spyke's Gr ove's damages consist of the

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

the statutory rate.

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

following amounts from Clark's:

Principal Due Date Statutory Interest

$3,333.38 2/08/99 $ 298.66 (2/08/00 - 12/31/00)

$ 335.56 (1/01/01 - 11/30/01)

$3,333.38 $ 634.22

Interest will continue to accrue on the outstanding balance of

$3,333.38 in the amount of $1.00 per day from December 1, 2001,

until the date of the final order.

CONCLUSIONS OF LAW

23. 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.

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

Florida Citru s Code of 1949." Section 601.01, Florida Statutes.

"Citrus fruit" 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 frui t 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.

25. A "citrus fruit dealer" is defined in

Section 601.03(8), Florida Statutes, as

any 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 t o make

money or other thing of value on citrus

fruit in any manner 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 commodity exchange.

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

this definition.

26. Citrus fruit dealers are required to be licensed by

the Department in order to transact busin ess in Florida.

Section 601.55(1), Florida Statutes. As a condition 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 ben efit 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.

27. Section 601.65, Florida Statutes, provid es that "[i]f

any licensed citrus fruit dealer violates any provision 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

ad judicated in an administrative action brought before the

Department or in a "judicial suit at law in a court of competent

jurisdiction." Id.

28. 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

the subject of a transaction relating to the purchase and sale

of such goods.

29. 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), Florida

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

spec ified by the Department, the Department shall obtain payment

of the damages from the dealer's surety company, up to the

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

Statutes.

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

Clark's 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 (defining "goods").

31. 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.

32. The contracts at issue contained no explicit

provisions allocating the risk of loss while the goods were in

the pos session 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 197 9); Sig M. Glukstad, Inc. v. Lineas Aereas

Paraguayas , 619 F.2d 457, 459 (5th Cir. 1980)(absent specific

contrary terms, sales contract is a shipment contract).

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

tender the goods to a carrier for del ivery 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.

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

allegations in its Complaint agai nst Clark's by a preponderance

of the evidence. See Florida Department 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, 4 15 (Fla. 4th DCA

1974); Section 120.57(1)(j), Florida Statutes. Clark's,

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 Clark's, which had failed to object to

Spyke's Grove's invoices within a reasonable time after having

received them, to overcome the presumption of correctness with

which an account stated is cloaked. E.g. Home Health Services

of Sarasota, Inc. v. McQuay - Garrett, Sullivan & Co. , 462 So. 2d

605, 606 (Fla. 2d DCA 1985); see also Robert C. Malt & Co. v.

Kelly Tractor Co. , 518 So. 2d 991, 992 (Fla. 4th DCA

1988)("Generally, an account stated is established where a

debtor does not object to a bill from his creditor within a

reasonable period of time."); Rauzin v. Kupper , 139 So. 2d 432,

432 (Fla. 3d DCA 1962)("The account stated generally arises from

the rendition of a statement of transactions between the parties

with a failure on the part of the party to whom the account was

rendered to object within a reasonable time . . . .").

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

Clark's has failed and refused to pay, as agreed, for citrus

fruit that Spyke's Grove properly tendered to various carriers

for delivery.

36. Clark's failed to esta blish that it rejected 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,

Clark's is deemed to have accepted all of the citru s fruit for

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

672.606, and 672.608, Florida Statutes.

37. Clark's did not demonstrate that Spyke's Grove had

breached the contracts relating to the accepted goods. See

Section 672.607(4), Flori da Statutes. Moreover, Clark's 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.

38. Clark's failed to prove fraud , mistake, or error in

connection with Spyke's Grove's invoices. As a result, the

presumed correctness of these invoices was not defeated, and

became conclusive. 3 Gendzier v. Bielecki , 97 So. 2d 604, 608

(Fla. 1957)("This presumed correctness [of an acco unt stated]

may be overcome by proof of fraud, mistake, or error. However,

the burden of establishing [these defenses] is upon the party

asserting [them] and unless he disposes of this burden, the

presumptive correctness of the stated account becomes

conc lusive."); Home Health Services of Sarasota , 462 So. 2d at

606.

39. Thus, Clark's is indebted to Spyke's Grove in the

principal amount of $3,333.38. See Section 672.607(1), Florida

Statutes.

40. The amounts that Clark's owes Spyke's Grove came due

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

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

672.310, Florida Statutes.

41. 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 percent per

year beginning January 1, 2001. See Section 687.01, Florida

Statutes; Section 55.03, Florida Statutes;

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

Services Automob ile 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 invoices, Sypke's Grove

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

percent, 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 REC OMMENDED that the Department enter a final order

awarding Spyke's Grove the sum of $3,333.38, together with pre -

award interest in the amount of $634.22 (through November 30,

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

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

$1.00 per day.

DONE AND ENTERED this 29th day of November, 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.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of Novembe r, 2001.

ENDNOTES

1 / The promises that Clark's made to its retail customers must,

of course, be distinguished from those made by Spyke's Grove to

Clark's. That Clark's, in a separate contractual undertaking

with a retail buyer, may have obligated itself to deliver a

package before a certain date ( e.g. by guaranteeing delivery by

Christmas) is not determinative of whether Spyke's Grove

concomitantly committed itself to su ch a promise; rather,

Spyke's Grove's obligations are governed by the various

contracts between Spyke's Grove and Clark's.

2 / Spyke's Grove sent seven other invoices to Clark's at around

the same time. Four of these were bills for catalogs that

Clark's had purchased from Spyke's Grove, and a settlement was

reached at the final hearing with respect to them. Also at

hearing, Spyke's Grove withdrew its claims concerning three

additional invoices. Thus, the three invoices discussed in the

text are the only statements presently in dispute.

3 / The UCC displaces the common law to the extent the latter

conflicts with the statutory provisions; unless displaced,

common law principles of law and equity supplement the code.

See Section 671.103, Florida Statutes; Burtman v. Technical

Chemicals and Products, Inc. , 724 So. 2d 672, 676 (Fla. 4th DCA

1999). None of the parties took a position, one way or the

other, as to whether the UCC displaces any action on an account

stated in transactions involving the sales of goods. Although

the discussion in the text assumes that the common law of

accounts supplements the UCC, that premise was not outcome

determinative; rather, it gave rise to an alternative rationale

in support of a result that would have been reached regard less.

COPIES FURNISHED :

Barbara Spiece, President

Spyke's Grove, Inc.

7250 Griffin Road

Davie, Florida 33314

Denise B. Clark

Clark's Country Farmers Market, Inc.

18440 U.S. Highway 19, North

Hudson, Florida 34667

Patty St. George

Con tractors Bonding & Insurance Company

Post Office Box 9271

Seattle, Washington 98109

Honorable Charles H. Bronson

Commissioner of Agriculture

Department of Agriculture and

Consumer Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 0810

R ichard Ditschler, General Counsel

Department of Agriculture and

Consumer Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 0810

Brenda D. Hyatt, Bureau Chief

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 date 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.