05-002463 Gem Motors Of Panama City, Inc. vs. Global Electric Motorcars, Llc Status: Closed Recommended Order on Friday, January 6, 2006.

Summary: The evidence demonstrated that multiple customer paid-for orders were not placed and that Petitioner misrepresented such failure and failed to refund the money, using funds elsewhere. Recommend that Respondent`s termination agreement is appropriate.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GEM MOTORS OF PANAMA CITY, )

INC., )

)

Petitioner, )

)

vs. ) Case No. 05 - 2463

)

GLOBAL ELECTRIC MOTORCARS, LLC, )

)

Respondent. )

)

RECOMMENDED OR DER

Pursuant to notice, a formal hearing was held in this

matter before the Honorable Judge Diane Cleavinger,

Administrative Law Judge, Division of Administrative Hearings,

on October 25, 2005, in Panama City, Florida.

APPEARANCES

For Petitioner: Ji m Appleman, Esquire

Appleman, Shepard and Downing, P.A.

2211 Thomas Drive

Panama City, Florida 32408

For Respondent: George B. Abney, Esquire

Dean Bunch, Esquir e

Sutherland, Asbill and Brennan, LLP

3600 Maclay Boulevard, Suite 202

Tallahassee, Florida 32312 - 1267

STATEMENT OF THE ISSUE

Whether the proposed termination of GEM Motors of Panama

City, Inc.’s (GEM - PC) Dealer Sales and Service Agreement (SSA)

by Respondent Global Electric Motorcars, LLC (GEM) violated the

Florida Motor Vehicle Dealer Act Section 320.641(3), Florida

Statutes.

PRELIMINARY STATEMENT

By letter dated April 11, 2005 , GEM notified GEM - PC of its

intention to terminate the SSA between them based on: (1)

deceptive or fraudulent practices by GEM - PC; (2) impairment of

the reputation or financial standing of GEM - PC; and (3) GEM - PC’s

unqualified management.

By letter t o the Florida Department of Highway Safety and

Motor Vehicles dated July 7, 2005, GEM - PC requested a hearing to

determine whether GEM’s proposed termination of GEM - PC

constituted an unfair or prohibited discontinuance or

cancellation of the SSA pursuant to Section 320.641, Fl orida

Stat ute s. Petitioner’s request for hearing was forwarded to the

Division of Administrative Hearings.

At hearing, GEM - PC did not present any testimony since

relevant depositions were introduced by GEM. GEM - PC offered one

e xh ibit into evidence. GEM presented the testimony of five

witnesses, and Respondent offered the testimony of five

witnesses. GEM also introduced the transcripts of the

depositions of customer Jenny Countryman and GEM - PC owner and

President, Jeff Jones. Ad ditionally, GEM’s Exhibits 1 through

48 were admitted into evidence. After the hearing, both parties

filed Proposed Recommended Order’s on November 30, 2005.

FINDINGS OF FACT

1. Jeff Jones is the sole shareholder, pre sident and

dealer - operator of GE M - PC. Mr. Jones is responsible for all of

the business decisions at GEM - PC, and is responsible for all of

the sales of GEM vehicles by GEM - PC. GEM - PC is located at 647

Clara Avenue, Panama City, Florida. GEM - PC’s business bank

account, account number 25 01056201, is maintained at Coastal

Community Bank in Panama City Beach.

2. Mr. Jones is also the President and sole shareholder of

Aquatic Adventures of Northwest Florida, Inc. (Aquatic

Adventures). Aquatic Adventures is co - located with GEM - PC at

647 Clara Avenue. Aquatic Adventures business bank account,

account number 2501128901, is also maintained at Coastal

Community Bank in Panama City Beach.

3. Mr. Jones admits that he often transfers funds from

other bank accounts into the business ba nk accounts for GEM - PC

and Aquatic Adventures in order to meet his business

obligations. Mr. Jones also often transfers funds between GEM -

PC and Aquatic Adventures.

4. Between February and June of 2005, the time period

relevant to most the customer purchases involved here, Mr. Jones

made numerous transfers of funds to and from the GEM - PC and

Aquatic Adventures bank accounts, including five transfers

totaling $12,106.16, from the GEM - PC bank account to the Aquatic

Adventures account.

5. Between February and March of 2005, nineteen checks

written on the GEM - PC bank account were returned for

insufficient funds. Between January and June of 2005, forty -

nine checks written on the Aquatic Adventures account were

returned for insufficient funds. Such returns and transfers

indicate that GEM - PC was short of operating funds and in

financial difficulty. Importantly, as will be seen, the lack of

funds created problems when customer’s cancelled late orders and

demanded refund of the money they had paid for their vehicle.

6. On August 22, 2000, GEM and GEM - PC entered into a SSA.

Under the SSA, GEM - PC became an authorized dealer of GEM

products, including GEM’s electric vehicles. Among other

things, the SSA provided for termination of the agreement in

Section 13. In relevant part, Sections 13.3 (d), (e) and (h) of

the Standard Provisions of the SSA provide that GEM may

terminate the SSA upon the occurrence of the following:

(d) [T]he presence in the management of

Dealer of any person who, in GEM’s o pinion,

does not have or no longer has requisite

qualifications for such person’s position.

(e) Impairment of the reputation or

financial standing of Dealer or of any

Dealer Owner subsequent to the execution of

this Agreement.

* * * *

(h) Use by Dealer o f any deceptive or

fraudulent practice, whether willful,

negligent or otherwise, in the sale of any

GEM Product.

7. Additionally, the SSA requires GEM - PC to have a “floor -

plan” or a line of credit of at least $100,000, in order to

purchase inventory from GEM. Under a floor plan financing

arrangement, a car dealer purchases products, such as motor

vehicles with money the dealer has borrowed by using the

purchased products as collateral for the loan or line of credit.

GEM has historically permitted G EM - PC to operate without such

financing. GEM has not sought to terminate GEM - PC based on its

failure to maintain floor - plan financing. GEM does require

payment in full from GEM - PC for any vehicles ordered by GEM - PC

before it will manufacture or fill such vehicle orders. Indeed

the evidence showed, that once vehicles are ordered and paid for

by GEM - PC, GEM ships the ordered vehicles within six weeks to

the dealer. There was no credible evidence that any GEM - PC

customer’s order was delayed beyond six week s due to delays at

the factory.

8. In the summer of 2002, Russell Kiefer, the Director of

Sales and Marketing for GEM, traveled to Panama City Beach,

Florida, to visit GEM - PC and meet with Mr. Jones. The purpose

of Mr. Kiefer’s visit was to encourag e Mr. Jones to abide by the

terms of the SSA and obtain floor - plan financing.

9. After the visit Mr. Kiefer sent a letter to Mr. Jones

encouraging him to obtain floor - plan financing in order to stock

inventory on its lot and facilitate sales by havin g such

inventory on - hand.

10. Sometime after Mr. Kiefer’s visit, GEM - PC obtained a

line of credit to purchase vehicles for its lot. However, GEM -

PC lost the line of credit.

11. Darrell Russell lives in Rosemary Beach, Florida.

Rosemary Beac h is a residential development and planned

community that maintains a set of property restrictions to

ensure a particular atmosphere in the development. Certain

types of vehicles are prohibited in the development. However,

properly licensed GEM vehicles are allowed in Rosemary Beach and

one of Mr. Russell’s neighbors owns and operates a GEM electric

vehicle in the Rosemary Beach community. Mr. Jones’ claim that

Rosemary Beach’s restrictions did not allow GEM vehicles in the

development and that somehow t hat fact delayed Mr. Russell’s

purchase, outlined below, is not credible.

12. Around December 12, 2003, Mr. Russell paid $10,199.00

to GEM - PC for the purchase of a 2004 GEM truck. The payment

represented the total purchase price of the truck.

1 3. Mr. Jones advised Mr. Russell that he would order the

truck, that it would take approximately six weeks for it to

arrive, and that it would be delivered in January of 2004.

However, the truck did not arrive in January of 2004.

14. After January, Mr. Russell called and sent faxes to

GEM - PC on multiple occasions in order to determine the status of

his order.

15. At some time in early 2004, Mr. Jones asked

Mr . Russell if he would be willing to substitute a 2005 model

GEM truck for the 2004 mod el he had purchased. Acceptance of

the 2005 model would entail additional time to deliver the

vehicle.

16. Mr. Russell told Mr. Jones that he did not want a 2005

model, but wanted the 2004 model he had ordered. Mr. Jones

replied, “Okay fine.”

17. Later, Mr. Jones advised Mr. Russell that his 2004

truck had arrived, but that it had inadvertently been sold to a

police department. Mr. Jones advised Mr. Russell that he would

order another GEM truck for him, but that he would have to wait

longer a nd would have to accept a 2005 model. Mr. Jones stated

that ordering the 2005 model was “the only option at that

point,” since 2004 models were no longer being manufactured.

Mr. Jones did not explain why he could not purchase a 2004 model

from another de aler in order to meet the contract he had with

Mr. Russell.

18. At some point, Mr. Jones offered to loan Mr. Russell a

GEM vehicle, but Mr. Russell declined the offer because he did

not want to drive a GEM vehicle with a temporary tag at Rosemary

Bea ch, whose residents, according to Mr. Russell, are notorious

sticklers on Rosemary Beach restrictions and might protest such

a vehicle.

19. Eventually, Mr. Russell asked Mr. Jones to provide a

specific date for delivery of his GEM vehicle. Mr. Jones never

provided such a date.

20. Around the beginning of April of 2004, four and one -

half months after his initial purchase and well beyond the

promised six - weeks ’ delivery of that purchase, Mr. Russell was

exasperated with the multiple delays and un satisfactory manner

in which his order had been handled and demanded a refund of the

$10,199.00 he paid to GEM - PC for his 2004 GEM vehicle.

21. On April 13, 2004 , Mr. Russell faxed a letter to

Mr. Jones stating that he had not received his refund and that

he was considering taking legal action against GEM - PC and

Mr. Jones.

22. On April 19, 2004, Mr. Jones sent Mr. Russell a letter

that he was having difficulty obtaining a GEM vehicle from the

GEM factory, that he could not locate a GEM vehicle w ith other

GEM dealers, and that if Mr. Russell “could be patient a little

longer” Mr. Jones would “go ahead and start to process your

refund.” At this point, Mr. Jones seems to be desperately

trying to talk Mr. Russell into purchasing a 2005 model vehicle .

The evidence was not clear whether Mr. Jones had money available

to refund Mr. Russell’s purchase money to him since the bank

records for Mr. Jones’ businesses introduced at the hearing

post - date this transaction. The delay in refunding

Mr. Russell’s p urchase money was, at best, a very poor business

practice by Mr. Jones and GEM - PC and a disservice to GEM - PC’s

reputation.

23. Mr. Russell responded and faxed Mr. Jones a letter and

again demanded a refund. Mr. Russell also stated that he was

forwar ding the matter to his attorneys.

24. Mr. Russell’s attorney left dozens of messages for

Mr. Jones, but Mr. Jones never returned her phone calls.

25. In June of 2004, Mr. Russell sued GEM - PC in the County

Court for Walton County, Florida, case number 04 - CC - 000179, for

Breach of Contract, Unjust Enrichment, and Misrepresentation.

Mr. Jones did not defend the lawsuit.

26. On July 28, 2004, Mr. Russell obtained a Judgment

against GEM - PC for $10,199.00, plus seven percent interest.

27. On or about August 20, 2004, Mr. Russell received a

refund from GEM - PC for $10.199.00, but did not receive the

interest that was due on the judgment.

28. Mr. Russell paid fees of between $2,000 and $2,5000 to

his attorney for her services in this mat ter.

29. Some delay in processing Mr. Russell’s refund might

have been expected due to Mr. Jones’ duties in taking care of

his mother who had cancer and required a great deal of his time.

However, Mr. Jones simply had to write a check to Mr. Russe ll to

refund his money. In the time it would have taken to write a

check, Mr. Jones had time to write Mr. Russell at least two

letters. Therefore, the delay of several months in refunding

Mr. Russell’s money and forcing a lawsuit to obtain such a

refund was unwarranted even with the time constraints caused by

the illness of Mr. Jones’ mother. On these facts, forcing an

undefended lawsuit was detrimental to the reputation of GEM - PC.

30. On June 17, 2004, Brent Skipper, on behalf of the Town

of Alys Beach, Florida, ordered three GEM vehicles from GEM - PC.

At the time of the order, Mr. Skipper paid the entire purchase

price of $30,270 for the vehicles. Mr. Skipper did not ask that

delivery of the vehicles be delayed or staggered. Mr. Jones

claim that such a request was made is not credible since the

vehicles were fully paid for prior to delivery.

31. At the time of purchase, Mr. Jones advised Mr. Skipper

that it would take approximately four to six weeks for the

vehicles to be delivered.

32 . The vehicles did not arrive in six weeks, and

Mr. Jones advised Mr. Skipper that he could obtain the vehicles

“in a couple weeks” if he ordered them from another dealer.

33. Approximately three months passed and Mr. Skipper had

not received the ve hicles.

34. Mr. Jones delivered one vehicle in September of 2004

after obtaining it form another GEM dealer.

35. By late November of 2004, Mr. Jones had not delivered

the other two vehicles to Mr. Skipper.

36. Around November 23, 2004, Mr . Skipper complained to

GEM and stated that Mr. Jones was, “the most unresponsive,

irresponsible, and unprofessional person I have ever dealt

with.”

37. On November 29, 2004, Mr. Jones finally delivered the

last two GEM vehicles to Mr. Skipper. This transaction

demonstrates Mr. Jones inability, either through neglect or

incompetence, to reasonably comply with the terms of the

purchase contracts he had entered into with his customers.

38. Around September 28, 2004, William Cook paid $8,538.35

to GEM - PC for the purchase of a 2005 GEM truck.

39. Mr. Jones advised Mr. Cook that he would order the

truck and that it would arrive in approximately six weeks.

Mr. Jones claims that after Mr. Cook ordered and paid for his

vehicle he called Orlando D odge and learned that in January of

2005 they would be receiving a shipment of vehicles of the type

ordered by Mr. Cook. However, the delivery time was well beyond

the time period Mr. Jones had given to Mr. Cook. Mr. Jones

claims he intended to purchase a vehicle from Orlando Dodge to

fulfill his contract with Mr. Cook. Mr. Jones ’ version of the

transaction is not credible since no records of the call to

Orlando Dodge were introduced and Mr. Jones never told Mr. Cook

about his intentions to purchase the vehicle from Orlando Dodge

and the delay entailed by such.

40. In November of 2004, at the end of the six - week

period, Mr. Cook called Mr. Jones to inquire about the status of

his order.

41. Mr. Jones told him that his vehicle had not yet

arriv ed and that the GEM factory would not provide a delivery

date on orders until seventy - two hours in advance of shipment

because GEM was mad at him. Mr. Jones did not mention the

alleged January shipment of vehicles to Orlando Dodge.

42. Around Januar y 20, 2005, after not hearing anything

from GEM - PC or Mr. Jones regarding the status of his order,

Mr. Cook called GEM - PC and left a message for Mr. Jones stating

that he either wanted the GEM vehicle he had ordered, or he

wanted his money back.

43. Mr. Jones did not return Mr. Cook’s phone call.

44. On January 24, 2004, approximately four months after

Mr. Cook originally ordered a GEM vehicle from GEM - PC, Mr. Cook

saw a GEM vehicle at Orlando Dodge that was identical to the one

he had ordered.

45. Mr. Cook called GEM - PC to advise Mr. Jones that he was

going to purchase the GEM vehicle he had seen at Orlando Dodge,

and that he wanted a refund of the money he had paid to GEM - PC.

46. Mr. Jones agreed to refund Mr. Cook’s money.

47. Even though the vehicle was more expensive, Mr. Cook

purchased the GEM vehicle from Orlando Dodge. Mr. Jones

explanation of these events was not credible.

48. Around January 28, 2005, Mr. Cook received a refund

check in the amount of $8,538.35 fro m GEM - PC.

49. When he received the check, Mr. Jones told Mr. Cook

not to cash or deposit it immediately because the funds were not

available. Mr. Cook complied with Mr. Jones request and waited

to cash or deposit the check.

50. On February 1, 2005, Mr. Cook attempted to deposit or

cash the check but the bank on which the check was drawn would

not accept the check because funds were not available for the

transaction. The bank records corroborate the financial

difficulty of GEM - PC at this time.

51. Mr. Cook called GEM - PC and could only speak with the

receptionist about the insufficient funds. The receptionist

obtained the amount of the check and indicated the check would

be made good.

52. Several days later, Mr. Cook again presented the check

to the same bank. The bank accepted it and gave Mr. Cook a

money order for the amount of the check which he deposited in

his account.

53. In a letter dated February 5, 2005, Mr. Cook

complained to GEM of his dealings with GEM - PC and Mr. Jo nes.

Again, this transaction demonstrates Mr. Jones inability, either

through neglect or incompetence, to reasonably comply with the

terms of the purchase contracts he had entered into with his

customers.

54. In late June of 2002, Buzz Mitchell purc hased a 2002

GEM vehicle, vehicle identification number 5ASAC47412FO18132,

from GEM - PC.

55. On November 11, 2004, Mr. Mitchell ordered a new 2005

GEM vehicle from GEM - PC for a total price of $10,225.00.

56. At the time he ordered the 2005 GEM, Mr. Mitchell

traded in his 2002 GEM for $7,000 toward the purchase price of

the 2005 GEM. The 2002 vehicle was listed as a trade - in on the

purchase contract/invoice for the 2005 vehicle.

57. At no time did Mr. Jones or anyone else at GEM - PC

advise M r. Mitchell that GEM - PC was accepting his 2002 vehicle

on consignment. No one asked Mr. Mitchell for the title to his

2002 vehicle when he delivered it to GEM - PC’s lot. However,

Mr. J ones’ claim that the 2002 vehicle was taken on consignment

is not credi ble and not supported by the documents memorializing

this transaction.

58. Mr. Jones advised Mr. Mitchell that his 2005 GEM would

arrive in mid - December of 2004, approximately six weeks after

Mr. Mitchell ordered it. However, Mr. Jones failed to ord er the

vehicle.

59. Mr. Mitchell did not receive his vehicle by mid -

December.

60. A few days before Christmas, Mr. Mitchell called GEM -

PC to inquire about the status of his purchase. Mr. Jones did

not tell Mr. Mitchell that he had failed to or der his vehicle

and that such failure was the reason for the delay in delivery.

Instead, Mr. Jones advised Mr. Mitchell that the GEM factory had

shut - down early for Christmas, and that he should have his

vehicle by early January of 2005, falsely leaving t he impression

that it was the manufacturer ’ s fault that delivery of the

vehicle was delayed.

61. Mr. Mitchell did not receive his vehicle in early

January.

62. Mr. Mitchell called GEM - PC again, and Mr. Jones

advised him that the GEM factory had extended its down time in

order to prepare for new models and that he should have his

vehicle in a few weeks again falsely leaving the impression that

the delay was the manufacturer’s fault. No mention was made

regarding the sale or lack of sale of the 2 002 vehicle he had

traded - in.

63. After January passed and Mr. Mitchell still had not

received his vehicle, he was only able to speak with the

receptionist at GEM - PC.

64. In late February or early March 2005, after making a

number of demanding phone calls to determine when his vehicle

would arrive, the receptionist at GEM - PC advised Mr. Mitchell

that his vehicle had been inadvertently shipped to another

dealer in S outh Florida.

65. Approximately one week later, Mr. Mitchell called GEM -

PC a nd was advised that they had not gone to south Florida to

pick up his vehicle yet. The receptionist stated that it was a

long way down to South Florida to pick up one vehicle. Given

the earlier obfuscations about the manufacturer and order of the

vehicle , the representations that the vehicle had been

inadvertently delivered to South Florida is not credible.

66. Mr. Mitchell demanded that he either receive his

vehicle, or be given a refund of $7,000 for the amount of his

trade - in.

67. The next day, Mr. Mitchell called GEM - PC. Mr. Jones

indicated that his vehicle was being put on the truck as they

spoke. However, Mr. Mitchell no longer wished to do business

with GEM - PC and advised that he wanted out of the deal, that he

wanted a refund of $7,00 0, and that he wanted a check by

March 9, 2005. The bank records indicate that GEM - PC did not

have the money to pay the manufacturer for the vehicle or to

refund the value of Mr. Mitchell’s trade - in due to on - going

financial problems.

68. Mr. Mitche ll did not receive a refund check by

March 9, 2005. He contacted GEM to complain about GEM and

Mr. Jones.

69. Al McDougal at GEM advised Mr. Mitchell that GEM - PC

had never ordered his vehicle from the GEM factory and that he

would attempt to assist Mr. Mitchell in getting his money back

from GEM - PC. Mr. Jones, in fact admitted that he never ordered

Mr. Mitchell’s vehicle.

70. On March 11, 2005, approximately four months after he

had ordered his vehicle, Mr. Mitchell picked up a check from

GEM - PC for $7,000 and deposited it into his bank account.

71. Around October 18, 2004, Brett Butler ordered a new

GEM vehicle from GEM - PC. Mr. Butler paid the entire purchase

price of $12,311 for the GEM vehicle at the time he ordered it.

72. Mr. Jones advised Mr. Butler that it would take

approximately six weeks for his vehicle to arrive, and that he

should have it before the Christmas holidays.

73. Mr. Jones indicated to Mr. Butler that he would order

his vehicle directly from the GEM facto ry. Again, Mr. Jones

failed to order the vehicle even though he had been paid in full

for the vehicle and ostensibly had the funds to pay to the

manufacturer.

74. At the end of the six weeks ’ time period, nobody from

GEM - PC contacted Mr. Butler.

75. In December of 2004, Mr. Butler called GEM - PC to

inquire about the status of his GEM vehicle. He discovered GEM -

PC was closed for the holidays. He left a message asking that

someone call him regarding his vehicle.

76. No one from GEM - PC retu rned Mr. Butler’s call. He

called GEM - PC again in January of 2005 and left another message.

77. Again, no one from GEM - PC returned Mr. Butler’s call,

Mr. Butler began a “calling campaign” to try to reach someone at

GEM - PC, initially calling once per week, and eventually calling

once or twice per day.

78. Mr. Jones eventually returned Mr. Butler’s calls and

falsely told him that his vehicle was taking longer to build

because he ordered it before the Christmas holidays, but that it

would be forth coming and would arrive within approximately two

weeks.

79. Mr. Butler’s vehicle did not arrive within two weeks.

In late February or early March, 2005, Mr. Butler called GEM - PC

again. Mr. Jones told Mr. Butler, “I need to apologize to you,

I have not ordered your vehicle.”

80. In an effort to save the deal, Mr. Jones offered

Mr. Butler a discount on the vehicle. Mr. Butler rejected the

offer and advised Mr. Jones that he wanted to cancel his order

and receive his money back. Mr. Jones’ clai m that Mr. Butler

wanted to cancel the contract because of cost overruns on a

house he was building is not credible since Mr. Butler was not

building a house. Moreover, the claim does not excuse

Mr. Jones’ failure to order the vehicle, misrepresentations

about the delivery of the vehicle and unreasonable delay in

delivery of the vehicle.

81. Mr. Jones agreed to refund Mr. Butler’s money, but

stated that he needed a little time in order to transfer funds

into his account so that he could pay the refun d to Mr. Butler.

82. Mr. Butler agreed to allow Mr. Jones time to undertake

the necessary transfer.

83. Mr. Butler did not receive his refund. Therefore, he

continued to call GEM - PC and was told by Mr. Jones that he had

now ordered the GEM veh icle. Clearly, Mr. Jones was trying to

avoid coming up with the money to pay Mr. Butler.

84. Mr. Butler advised Mr. Jones that he did not want the

vehicle and that he wanted his money back, just as they had

agreed in their previous conversation.

85. Mr. Jones admitted that he did not have the money to

provide Mr. Butler with a refund.

86. In late March of 2005, Mr. Butler reported his

dealings with GEM - PC and Mr. Jones to the Bay County Sheriff’s

Office, the Panama City Beach Police Depar tment, and GEM.

87. After Mr. Butler contacted law enforcement authorities

and GEM, Mr. Jones called him and advised Mr. Butler that he

would provide a refund by March 25, 2005, and requested that

Mr. Butler, “call off the dogs.”

88. Finally o n April 1, 2005, approximately five and one -

half months after he ordered his GEM vehicle, Mr. Butler

received a refund from GEM - PC.

89. In April, 2005, once GEM received numerous customer

complaints regarding GEM - PC’s failure to timely deliver o r

deliver ordered and paid for vehicles and complaints about the

business practices of GEM - PC and Mr. Jones, GEM sought to

terminate the SSA.

90. In all these transactions, the testimony of GEM - PC’s

customers is supported by documentary evidence to support their

version of these transactions. Bank records revealed the poor

financial condition of GEM - PC, corroborate the testimony of GEM -

PC customers that Mr. Jones failed to order vehicles and provide

requested refunds in a timely manner. The fac t that Mr. Jones’

business had serious cash - flow problems demonstrates why

Mr. Jones did not order vehicles or provide refunds in a timely

manner. He did not have sufficient funds in his accounts to do

so, and incoming funds paid by customers for the purc hase of

their vehicles were being used to pay checks that had been

returned for insufficient funds or to fund other business

interests of Mr. Jones. These repeated problems with multiple

customers demonstrate that Mr. Jones either through neglect or

incom petence, did not manage GEM - PC appropriately, impaired the

financial condition of GEM - PC and was not qualified to continue

as a dealer with GEM. To make matters worse, the evidence

showed repeated instances where Mr. Jones was not honest with

customers in his dealings with them and either through omission

or commission, made material misrepresentations to multiple

customers. Clearly, GEM - PC and Mr. Jones treatment of customers

and business practices constitutes a material and substantial

breach of the SSA and are good cause for a terminating the SSA.

There was no evidence that the proposed termination was not done

in good faith. Since there is good cause for such termination

the proposed termination was done in good faith.

CONCLUSION S OF LAW

91. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. §§ 120.57 and 120.60, Fla. Stats. (2004).

92. Section 320.641(3), Florida Statutes, prohibits the

“unfair or prohibited” termination of a motor vehicle franchise

agreement. Section 320.641(3), Florida Statutes, further

provides that a termination of a franchise agreement is unfair

if, “it is not clearly permitted by the franchise agreement; is

not undertaken in good faith; is not unde rtaken for good cause;

or is based on an alleged breach of the franchise agreement

which is not in fact a material and substantial breach.

93. Section 320.64(3), Florida Statutes, states, in part:

A discontinuation, cancellation, of

nonrenewal of a f ranchise agreement is

unfair if it is not clearly permitted by the

franchise agreement; is not undertaken in

good faith; is not undertaken for good

cause; or is based on a alleged breach of

the franchise agreement which is not in fact

a material and substa ntial breach.

§ 320.641(3), Fla. Stat. (2000).

94. In 2001 Section 320.641, Florida Statutes, was amended

to include a fifth factor for determining if a termination was

unfair. Specifically, the statute now states that a termination

is unfair “if the grounds relied upon for termination,

cancellation, or nonrenewal have not been applied in a uniform

or consistent manner.” See § 320.641(3), Fla. Stat (2005). The

statute was also amended in 2001 to place the burden of proving

that the te rmination was fair and not prohibited on the

licensee, in this case GEM. Compare International Harvester Co.

v. Calvin , 353 So. 2d 144, 148 (Fla.1 st DCA 1977) (holding that

dealer has the initial burden of proof to show by a

preponderance of the evidence the unfairness of the proposed

termination of the franchise agreement). Thus the licensee,

GEM, has the burden to establish by a preponderance of the

evidence that its proposed termination was fair.

95. In the Notice of Termination, GEM alleged th at GEM - PC

violated Sections 13.3(h), (e), and (d), of the SSA by: (1)

engaging in deceptive and fraudulent practices; (2) having an

impaired reputation and financial standing; and (3) having

unqualified management, namely President Jones.

96. In th is case, GEM established that at least four

customers ordered GEM vehicles from GEM - PC and Mr. Jones, that

those customers provided funds or a trade - in vehicle to GEM - PC

at the time they ordered their vehicles, that GEM - PC failed to

deliver those vehicles to those customers in a timely manner,

that Mr. Jones made numerous false statements to those customers

when they inquired regarding the status of their orders, and

that Mr. Jones provided refunds only when those customer sued,

contacted law enforcement au thorities, or contacted GEM.

Clearly, these sorts of business practices violated the SSA.

Moreover, a manager of a motor vehicle dealership who repeatedly

accepts funds from customers and then does not order or provide

their vehicles is not qualified to serve as an employee or

manager of a dealership. Finally, repeatedly accepting funds

from customers and then not ordering or providing their vehicles

impairs the reputation of a dealer and demonstrates an impaired

financial status of GEM - PC. There is no doubt that GEM - PC and

Mr. Jones’ treatment of customers constitutes a material and

substantial breach of the SSA, was undertaken for good cause and

in good faith, and was clearly permitted by the SSA. Therefore,

the proposed termination of the SSA should be upheld.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is recommended that the termination of the SSA was

appropriate and should be upheld.

DONE AND ENTERED this 6 th day of January , 200 6 , in

Tallahassee, Leon Coun ty, Florida.

S

DIANE CLEAVINGER

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) 92 1 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 6 t h day of January , 200 6 .

COPIES FURNISHED :

Carl A. Ford, Director

Division of Motor Vehicles

Department of Highway Safety

and Motor Vehicles

Neil Kirkm an Building , Room B - 439

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 0500

Enoch Jon Whitney, General Counsel

Division of Motor Vehicles

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building

2900 Apalachee Parkway

Tallahassee, Flori da 32399 - 0500

Michael J. Alderman, Esquire

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building, Room A - 432

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 0500

Jim Appelman, Esquire

Appelman, Shepard, Downing, P.A.

2211 Thomas Dri ve

Panama City Beach, Florida 32408

George B. Abney , Esquire

Dean Bunch, Esquire

Sutherland, Asbill & Brennan, LLP

3600 Maclay Boulevard South,

Suite 202

Tallahassee, Florida 32312 - 1267

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.