01-004830 Sunrise Citrus Groves, Inc. vs. Tuxedo Fruit Company And Continental Casualty Company Status: Closed Recommended Order on Monday, April 1, 2002.

Summary: Petitioner established that Respondent had failed to pay for grapefruit harvested at Petitioner`s grove pursuant to a written contract. Recommend Respondent pay Petitioner contract price for the citrus fruit.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SUNRISE CITRUS GROVES, INC., )

)

Petitioner, )

)

vs. ) Case No. 01 - 4830

)

TUXEDO FRUIT COMPANY AND )

CONTINENTAL CASUALTY 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 and completed a formal

hearing of this matter by video teleconference on March 15,

2002 . Petitioner, Respondent, and their witness appeared in

West Palm Beach, Florida, while the Administrative Law Judge

presided in Tallahassee, Florida.

APPEARANCES

For Petitioner: John Scarborough, General Manager

Sunrise Citrus Groves, Inc.

24 10 Southeast Bridge Road

Hobe Sound, Florida 33455

For Respondent Tuxedo Fruit Company:

John A. Scotto, President

Tuxedo Fruit Company

1110 North 2nd Street

Fort Pierce, Florida 34950

For Respondent Continental Casualty Company:

No appearance

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent citrus dealer

owes Petitioner citrus producer a sum of money for grapefruits

that Respondent harvested from Petitioner’s grove.

PRELIMINARY STATEMENT

On October 26, 2001, Petitioner Sunrise Citrus Groves, Inc.

filed a Complaint with the Department of Agriculture and

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

Respondent Tuxedo Fruit Company had failed to pay for 5,808

boxes of grapefruits that Respo ndent had harvested from

Petitioner’s grove during the 2000 - 01 citrus shipping season

pursuant to a contract between the parties. Petitioner claimed

that Respondent owed a balance of $23,232. Co - Respondent

Continental Casualty Company was named in the Co mplaint as

Respondent’s surety.

In correspondence filed with the Department on December 10,

2001, Respondent requested a hearing. The body of this letter,

in its entirety, stated: “Please note that we are in receipt of

the Complaint, Sunrise Citrus Grove s vs. Tuxedo Fruit Company

and request a hearing on the above matter.”

Shortly after receiving Respondent’s request for hearing,

the Department forwarded the matter to the Division of

Administrative Hearings, where it was assigned to an

administrative law judge and set for final hearing.

At the final hearing on March 15, 2002, Petitioner was

represented by its General Manager, John Scarborough, who

testified on the company's behalf. Petitioner introduced three

exhibits into evidence, and all were receive d.

On behalf of Respondent appeared its President, John A.

Scotto. He testified as the company’s only witness. Respondent

offered two composite exhibits, numbered 1 and 2, which were

admitted into evidence.

Although a court reporter recorded the procee ding, none of

the parties ordered a transcript. Petitioner and Respondent

each submitted proposed recommended orders, and the undersigned

reviewed them carefully.

FINDINGS OF FACT

The evidence presented at final hearing established

the facts that fo llow.

1. Sunrise Citrus Groves, Inc. (“Sunrise”) is a producer

of citrus, meaning that it grows citrus in this state for

market. It is also a Florida - licensed citrus fruit dealer

operating within the Department’s regulatory jurisdiction.

2. Tuxedo Frui t Company (“Tuxedo”) is a Florida - licensed

citrus fruit dealer.

3. On or about October 18, 2000, Sunrise and Tuxedo

entered into a contract under which Tuxedo agreed to harvest

“flame” grapefruits from Sunrise’s grove known as “Gulfstream.”

are a variety of grapefruit; the varieties are

distinguished by the color of the fruit’s meat, e.g. red, ruby,

pink.) Tuxedo agreed to pay $4.00 per box of fruit harvested at

the Gulfstream grove.

4. Between October 16, 2000 and March 14, 2001, Tuxedo

h arvested 5,808 boxes of flame grapefruits pursuant to its

contract with Sunrise. Accordingly, Tuxedo was obligated to pay

Sunrise $23,232 for the fruit.

5. Tuxedo did not pay for the grapefruits harvested from

the Gulfstream grove. On October 11, 2001, Sunrise sent Tuxedo

an invoice for the past due amount of $23,232. Tuxedo did not

object to this statement of account.

6. At hearing, Tuxedo admitted the above facts. Tuxedo’s

position was that Sunrise had breached a separate contract

relating to red grapefruits which Tuxedo had agreed to harvest

from a grove called “Sun Rock.” As a result of this alleged

breach, Tuxedo claimed to have suffered damages exceeding the

amount sought by Sunrise. It is not necessary to make detailed

findings of fact conce rning the Sun Rock transaction, however,

because the undersigned has concluded that the alleged breach of

contract action that Tuxedo attempted to prove is not properly

before the Division of Administrative Hearings (“DOAH”).

Ultimate Factual Determinati on

7. Tuxedo failed to pay for the citrus fruit harvested

from the Gulfstream grove that was the subject of a contract

between Sunrise and Tuxedo. Sunrise performed all of its duties

under that contract and is not in breach thereof. Tuxedo,

therefore, is indebted to Sunrise in the amount of $23,232.

CONSLUSIONS OF LAW

8. 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.

9. Chapter 601, F lorida Statutes, is known as "The Florida

Citrus 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

pro ducts 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.

Additionally, the term “grapefruit” is defined to mean “the

fruit Citrus paradisi Macf ., commonly called grapefruit and

shall include white, red, and pink meated varieties[.]” Section

601.03(22), Florida Statutes.

10. A "citr us 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 at tempts to 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 o r

firms trading solely in citrus futures

contracts on a regulated commodity exchange.

Both Sunrise and Tuxedo are citrus fruit dealers under this

definition. Sunrise also falls within the definition of

“producer.” See Section 601.03(29), Florida Statute s (defining

the term as “any person growing or producing citrus in this

state for market”).

11. 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 condit ion 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.

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

any licensed citrus fruit dealer violates any provis ion 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

Departmen t or in a "judicial suit at law in a court of competent

jurisdiction." Id.

13. 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

th e subject of a transaction relating to the purchase and sale

of such goods.

14. 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), Fl orida

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),

F lorida Statutes. If the complaining party proves its case, the

Department shall "fix a reasonable time within which said

indebtedness shall be paid by the [citrus fruit] dealer."

Thereafter, if the dealer does not pay within the time specified

by the Dep artment, 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.

15. Sunrise bore the burden of proving the allegations in

its Complaint against Tuxe do 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, 415 (Fla. 4th DCA 1974); Section 120.57(1)(j),

Florida Statutes.

16. Sunrise carried its burden of proving that Tuxedo has

failed and refused to pay, as agreed, for citrus fruit that

Tuxedo harvested from Sunrise’s Gulfstream grove.

17. Tuxedo’s allegation tha t Sunrise breached a contract

unrelated to the one upon which Sunrise has based its demand for

payment constitutes an independent cause of action and claim for

relief. See Storchwerke, GMBH v. Mr. Thiessen’s Wallpapering

Supplies, Inc. , 538 So. 2d 1382, 1 383 (Fla. 5th DCA 1989). In

the parlance of civil litigation, Tuxedo’s contentions would be

called a counterclaim. See Haven Federal Savings & Loan Ass’n

v. Kirian , 579 So. 2d 730, 733 (Fla. 1991)(“A counterclaim is a

cause of action that seeks affirmati ve relief[.]”). Had Sunrise

elected to pursue its claim in circuit court pursuant to Section

601.65, Florida Statutes, rather than before the Department,

then Tuxedo properly might have sought leave to bring its claim

relating to the Sun Rock transaction as a permissive

counterclaim. See Rule 1.170(b), Florida Rules of Civil

Procedure. But this is an administrative proceeding, and there

exists no procedural vehicle through which Tuxedo may assert a

permissive counterclaim for breach of contract.

18. Th e question whether Tuxedo’s claim of breach is

properly before DOAH is not merely procedural, but touches the

fundamental consideration of subject matter jurisdiction. To be

entitled to administrative remedies for Sunrise’s alleged breach

of contract, Tux edo must file a complaint with the agency having

jurisdiction in the matter; it cannot directly initiate

proceedings before DOAH. See Section 601.66, Florida Statutes.

DOAH’s jurisdiction does not attach until the agency refers the

dispute to this tribun al for adjudication. Tuxedo has not filed

a complaint against Sunrise with the Department, and thus

(obviously) the Department has not referred the matter to DOAH.

Therefore, DOAH does not have jurisdiction to entertain Tuxedo’s

claim for relief based on the alleged Sun Rock transaction.

19. In the alternative, Tuxedo’s allegations arguably

might be regarded —— and reached —— as an affirmative defense. See

Kirian , 579 So. 2d at 733 (“[A]n affirmative defense defeats the

plaintiff’s cause of action by a den ial or confession and

avoidance.”). Specifically, Tuxedo’s allegations, if

established, might provide the basis for a set off, which is a

recognized affirmative defense. See Kellogg v. Fowler, White,

Burnett, Hurley, Banick & Strickroot, P.A. , 807 So. 2d 669, 26

Fla. L. Weekly D2811, 2001 WL 1504231, *4 n.2 (Fla. 4th DCA Nov.

28, 2001)(“A set - off is an affirmative defense arising out of a

transaction extrinsic to a plaintiff’s cause of action.”). It

is concluded, however, that because DOAH does not have subject

matter jurisdiction over Tuxedo’s allegations as a counterclaim

for breach of contract, the same allegations cannot simply be

treated as an affirmative defense and adjudicated on that basis.

To be heard, the defense of set off must be within the

t ribunal’s jurisdiction. See Metropolitan Cas. Ins. Co. of New

York v. Walker , 9 So. 2d 361, 363 (Fla. 1942). A contrary

ruling would permit Tuxedo to bring in through the back door a

claim that was turned away at the front.

20. Even if Tuxedo’s claim w ere cognizable as an

affirmative defense, notwithstanding Tuxedo’s failure properly

to initiate such claim pursuant to Section 601.66, Florida

Statutes, the issue could not be reached for an independent

reason: implied waiver. In the context of a civil s uit, a

party’s failure to allege an affirmative defense in its

responsive pleading effects a waiver thereof. See Gause v.

First Bank of Marianna , 457 So. 2d 582, 585 (Fla. 1st DCA

1984)(“Affirmative defenses must be raised in the pleadings or

they are wai ved.”). Since a dealer who disputes the allegations

of a complaint filed with the Department under Section 601.66 is

required by that statute to submit an answer in writing, it is

concluded that a dealer - respondent, like a defendant in a civil

lawsuit, wa ives any affirmative defenses not raised in his

responsive pleading. Otherwise, a dealer - respondent could

sandbag the claimant at final hearing.

21. Having failed to plead the Sun Rock matter in its

response to Sunrise’s complaint, Tuxedo waived the affi rmative

defense of set off.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

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

awarding Sunrise the sum of $23,232.

DONE AND ENTERED this 1st day of April, 2002, in

Tall ahassee, 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 - 9 675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of April, 2002.

COPIES FURNISHED :

John Scarborough, General Manager

Sunrise Citrus Groves, Inc.

2410 Southeast Bridge Road

Hobe Sound, Florida 33455

John A. Scotto, President

Tuxedo Fruit Company

1110 North 2nd Street

Fort Pierce, Florida 34950

Sharon Sergeant

Continental Casualty Company

CNA Plaza

Floor 13 - South

Chicago, Illinois 60685

Honorable Charles H. Bronson

C ommissioner of Agriculture

Department of Agriculture and

Consumer 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 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 th e 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.