06-003725 Leonard Vito Mecca Farms vs. Emerald Packing Company, Inc. And Old Republic Surety Company, As Surety Status: Closed Recommended Order on Tuesday, January 23, 2007.

Summary: Petitioner failed to care for the grove. Respondent rightfully rejected the fruit under the uniform commercial code after the fruit failed inspection.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LEONARD VITO MECCA FARMS, )

)

Petitioner, )

)

vs. ) C ase No. 06 - 3725

)

EMERALD PACKING COMPANY, INC. )

AND OLD REPUBLIC SURETY )

COMPANY, AS SURETY, )

)

Respondent s . )

)

RECOMMENDED ORDER

This case came before Administrative Law Judge

Eleanor M. Hunter of the Division of Administrative

Hearings, by video teleconference at sites in Orlando and

Tallahassee, Florida, on November 28 , 2006.

APPEARANCES

For Petitioner: Louis L. Hamby, III, Esquire

Eric Severson, Esquire

Alley, Maass, Rogers & Lindsay, P.A.

340 Royal Poinciana Way, Suite 321

Palm Beach, Florida 3348 0 - 0431

For Respondent Emerald Packing Company, Inc. :

Franklin T. Walden, Esquire

Law Offices of Franklin T. Walden

1936 Lee Road, Suite 100

Winter Park, Florid a 32789

For Respondent Old Republic Surety Company:

No appearance

STATEMENT OF THE ISSUE

Whether Respondent, a citrus dealer, owes Petitioner,

a citrus producer/ grower, compensation for breach of a

contract to buy, pick, hau l, and sell fruit from

Petitioner’s grove. If so, what is the reasonable amount

of compensation.

PRELIMINARY STATEMENT

Leonard Mecca, the owner of a Murcott tangerine grove,

one of the Leonard Vito Mecca Farms groves (Petitioner or

Mecca) contracted with Emerald Packing Company, Inc.

(Respondent or Emerald) to buy, pick, haul, and sell fruit.

The contract provided for the fruit “. . . to be moved from

trees by April 10, 2006.” The fruit, 500 boxes of it, was

not picked until April 19, 2006, then failed i nspection.

Emerald terminated the cont ract by written notice on

April 20, 2006, based on the condition of the fruit.

Mecca then contracted with another company that picked

2,106 boxes of fruit, of which 69 pe rcent passed inspection

and was sold as fresh f ruit . T he remainder was sold for

juice for approximately half the value of the fresh fruit .

Mecca filed a Grower Complaint Form with the Office of

Citrus License and Bond, Florida Department of Agriculture ,

on May 23, 2006, and an amended complaint on Jul y 25, 2006 ,

seeking compensation for the remaining fruit that was not

picked. In a letter dated September 22, 2006, Emerald

denied owing the debt . On October 2, 2006, the Department

of Agriculture , Office of Citrus License and Bond, referred

the matter t o the Division of Administrative Hearings

(DOAH) to assign an administrative law judge to conduct a

hearing pursuant to Section 120.57, Florida Statutes

(2006) , as provided by Chapter 601.66, Florida Statutes

(2006).

At the formal hearing, Petitioner prese nted the

testimony of Leonard Mecca, Donald Owens , and Bill Turner.

Petitioner’s Exhibits A, C, F, and G were received in

evidence .

Respondent presented the testimony of Keith Emmett and

Stuart Arost. Respondent’s Exhibit A was received in

evidence.

The transcript of the hearing was filed on

November 28, 2006. Pet itioner’s and Respondent Emerald ’s

Closing Arguments and Proposed Recommended Orders were

filed on January 8, 2007.

FINDINGS OF FACT

1. Mecca include s a thirty - six acre Murcott tangerine

grove in Lakeworth, Florida, purchased by Leonard Mecca in

2003. Murcott tangerines are primarily sold as fresh

fruit.

2. Through its owner, Mr. Mecca, Petitioner entered

into a contract, on January 3, 2006, Emerald to pick fruit

from the grove by April 10, 2 006.

3. Old Republic Surety Company is surety on the

contract performance bond for $59,000.00, the maximum

amount of compensation that can be recovered, if any.

4. On behalf of Emerald, Keith Emme tt, a fruit buyer

with 25 years of experience, personally visited the Mecca

grove and, on January 3, 2006, estimated the number of

boxes of fruit at 5,000 boxes and sales price at $14.00 a

box. Mr. Emmett’s estimate was the basis for the terms of

the contract that was accepted by Mr. Mecca.

5. Mr. Mecca also te stified that he contracted with

an other organization, River Citrus , to be the caretaker of

the grove. Mr. Mecca’s contract with Emerald included the

statement that “[g]rower agrees to keep said fruit clean

and to protect said fruit against fire, and to du st, spray

and fertilize the same in such a manner that will not cause

injury to said fruit or groves.” Emerald was, under the

terms of the contract, required to pay for all

“merchantable” fruit at picking time.

6. At sometime in February or March, Mr. Me cca (not

his caretaker) discovered that the irrigation system at the

grove was not working. Mr. Mecca testified that he had the

system repaired within two days. Weed control at the grove

was to be done by the use of herbicides and mowing.

Mr. Mecca test ified that he had a conversation about the

condition of the g rove with Mr. Emme tt, but only about

water.

7. Mr. Emme tt visited the Mecca grove in late

February or early March to see if the fruit was ready to

pick to fil l pending orders. He described the condition of

the grove as having a “hard wilt ,” meaning leaves curled,

with soft, spongy green fruit. The weeds indicated to him

an absence of mowing and herbicides.

8 . Mr. Emme tt returned to the grove in April and

described the fruit as still soft to th e touch with a green

cast. He also testified that he notified Mr. Mecca, in

conversations through the month of March, that the grove

needed watering and that the fruit was soft and needed more

time.

9. Mr. Mecca testified that he cont acted Mr. Emm e tt

sev eral times in March and April to find out when the fruit

would be picked because he believed it was getting

overripe. Mr. Mecca testified that Mr. Em m e tt was waiting

to pick the fruit late in the season when market prices

rose enough to justify the $14.00 a box contract price.

10. Mr. Mecca also testified regarding when he

decided to stop negotiating with Emerald and to use another

packing house, as follows:

It had to be th e day that Keith

Emmett had his man, Bill Turner, call

me to tell me that he was not going to

be able to use the fruit unless I

wanted -- to wait another two weeks.

So -- which would have been around the

20th of April.

Q. So that would have been the -- on

or about the time that the -- you were

informed that the fruit couldn’t be

used as fresh fruit; is that correct?

By Emerald?

A. I was informed -- I was informed

by Emerald that they didn’t want to

pick any more fruit unless I wanted to

wait two more weeks and try again,

which was the story I heard every two

weeks.

11. Bill Turner, who was in charge of harvesting the

fruit for Ridge Harvesting, previously had visited and

inspected the Mecca grove in February, after Emerald

received a report that the well was broken. He testified

that he found wilted trees and lots of weeds. By the time

he talked to Mr. Mecca about the condition of the grove, he

recalled that the well had already been fixed.

12 . One load of 500 boxes of Mecca fruit was picked

by R idge Harvesting for Emerald on April 19, 2006, but

failed to pass state inspec tion.

13. Emerald , nevertheless, paid Mecca $14.00 a box

for the 500 boxes, or $7,000.00 , and on April 20, 2006,

sent a letter to Mecca releasing the fruit back to Mecca

and, in effect, terminating the January contract based on

the poor condition of the f ruit. The letter specified that

the fruit was “. . . spongy, soft and indented from the

weight of the fruit in the box.”

14. Mr. Emmett testified that he suggested that

Mr. Mecca agree to sell the fruit at lower prices for

juice, rather than as fres h fru it. He testified that

Mr. Mecca declined the offer and notified Mr. Emmett that

he was going to use a different packing house.

15 . Donald Owens, a field buyer for Rio Citrus (Rio)

had driven by the Mecca grove some time in April, and

noticed that the fru it had not been picked. He was

familiar with the grove, having picked it in prior years

before it changed ownership.

16 . Mr. Owens search ed out the new grower and called

Mr. Mecca about picking the fruit, but was told that the

fruit was under contract wi th another picker.

17 . On or about April 20, 2006, after Emerald’s

r epresentative notified him that they were not going to use

the fruit, Mr. Mecca called Donald Owens back, met him at

the grove and entered into a verbal contract for Rio to

pick the fruit in what Mr. Mecca and Mr. Owens described as

a “salvage operation.”

18 . When Donald Owens saw the grove, on or about

April 20, 2006, he testified that the grass was high, the

fruit was small but, he believed, within the criteria that

you can pack as fres h fruit and otherwise merchantable. He

testified that he told Mr. Mecca that, before he did

anything, the grass had to be mowed.

19 . Mr. Owen’s company picked a total of 2,106 boxes

of tangerines on April 24, April 25, May 1, and May 4,

2006, based on th e dates on the trip tickets . Of those,

according to Donald Owens and his settlement statement s,

69 percent passed inspection and were packed to sell as

fresh fruit, but 31 percent were so - called “eliminations”

and had to be taken to a canning processing p lant to be

juiced.

20 . Mr. Owens testified that his company, Rio,

stopped picking fruit because the canning processing plant

stopped taking Murcotts. If Rio had continued, then he

estimated that from 25 to 30 percent of the fruit would

have ended up in cow pastures at a significant financial

loss, considering the expense of picking, loading, hauling,

separating, and hauling fruit by grade to a cow pasture.

21 . Rio paid Mecca approximately $12,000 for the

fruit it picked and sold.

22 . The remaining fru it in the grove fell to the

ground.

23 . In 2004, Emerald picked 9,000 boxes of fruit from

the Mecca grove.

24. Donald Owens , whose Rio company picked 2,106

boxes from a part of one of the three divisions of the

grove, estimates that each of the three sec tions could have

provided about 3,000 boxes each, or a n approximate total of

9,000 boxes of fruit from the Mecca grove , of which

approximately 6,000 remained after Rio stopped picking the

fruit .

25 . In 2005, Mecca produced only 600 boxes of fruit

due to h urricane damage and also because Murcott tangerines

produce in large volumes every other year.

26 . In the Mecca contract with Emerald in 2006,

Mr. Emmett estimated the number of boxes at 5,000

merchantable boxes for the 2006 growing season. Although

Emer ald picked 9,000 boxes in 2004, it is reasonable to

believe that the yield would be lower after some trees were

damaged during the hurricane s of 2005. The estimate and

agreement made prior to this contractual dispute, 5,000

boxes, is accepted as the most reasonable estimate for the

2006 growing season.

27 . Stuart Arost, the owner of Emerald, testified

that he had contracts to sell elimination Murcott

tangerines through April and into the first part of May to

canning plants in Umatilla and H a ines City. On e of those

plants, he testified, is cooperative - owned and will take

Murcotts as long as the owners are still harvesting the

fruit, even into June . Emerald, more likely than not,

could have sold the fruit for juice for $10.00 a box with

net proceeds to Mec ca of $8.00 a box if allowed to further

revise the contract or mitigate damages.

28 . Mr. Arost testified that further damages could

have been mitigate d if Don Owens and Rio had continued to

pick fruit and use d the available processors for the

elimination , but there is no evidence that Mr. Owens was

aware of the alternative .

29 . The evidence, based on the testimony of all of

the witnesses who entered the grove , supports a conclusion

that some of the fruit in the grove was damaged due to lack

of proper ca re , and that, more likely than not, resulted in

the initial failure to pass inspection and the subsequent

rate of eliminations .

30 . Although 500 boxes taken by Emerald failed USDA

inspection, the fact that 2,106 boxes subsequently passed

inspection indica tes that Emerald correctly advised

Mr. Mecca to wait another two weeks until about the time

that Rio harvested the fruit rather than insisting that

Emerald resume harvesting before the fruit was firm.

31. While Mr. Mecca had agreed to the two - week

extensi ons in the past, his refusal to agree on or about

April 20, 2006, resulted in Emerald’s termination of the

contract and his decision to use a different packing house.

CONCLUSIONS OF LAW

32 . The Division of Administrative Hearings has

jurisdiction over the parties and subject matter over the

parties and subject matter in this proceeding pursuant to

Sections 120.569 and 120.57(1), Florida Statutes (2006) .

33. Chapter 601, Florida Statutes (2006) , is known as

“The Florida Citrus Code of 1949.” See § 601.01, Fla.

Stat . (2006). “Citrus fruit” is defined in Section

601.03(7), Florida Statutes (2006) , as

all varieties and regulated hybrids of

citrus fruit and also means processed

citrus products containing 20 percent

or more citrus fruit or citrus fruit

juice, but, for the purposes of this

chapter, shall not mean limes, lemons,

marmalade, jellies, preserves, candies,

or citrus hybrids for which no specific

standards have been established by the

Department of Citrus.

34. The term “citrus fruit dealer” is define d in

Section 601.03(8), Florida Statutes (2006) , to mean:

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 to mak e 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 tradi ng solely in

citrus futures contracts on a regulated

commodity exchange.

Emerald is a citrus fruit dealer under this definition.

35. Citrus fruit dealers are required to be licensed

by the Department in order to transact business in Florida.

See § 601.5 5(1), Fla. Stat. (2006). 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 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.” § 601.61(3), Fla. Stat. (2006).

36. The term “produce r” is also defined in Section

60 1.03(29), Florida Statutes (2006) , to mean “any person

growing or producing citrus in this state for market.”

37. Mecca bore the burden of proving the allegations

in the Complaint against Emerald by a preponderance of the

evidence. See Florida Dept. of Transp. v. J.W.C. Co.,

In c. , 396 So. 2d 778, 788 (Fla. 1st DCA 1981); Florida

Dept. of Health and Rehabilitative Services v. Career

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

1974); § 120.57(1)(j), Fla. Stat. (2006) . Specifically,

Mecca had to establish the existence o f its contract with

Emerald, a breach by Emerald, and the adequacy of its

subsequent mitigation efforts. Emerald had the burden of

establishing its rightful rejection of the fruit and

adequate notice to Mecca.

38. Under the terms of the contract, Mecca, as the

producer, had a duty to care for the fruit so that it would

be merchantable at picking time. The evidence indicates

Mecca failed to meet the requirements of contract

concerning care of the fruit and the grove.

39. Mecca demonstrated that Emerald f ailed to meet

the contract picking date, but at regular, two week

intervals, Mecca waived the time for Emerald to perform.

See Shinn Groves v. H & R Packing And Sales and Old

Republic Surety Company , DOAH Case No. 05 - 3540 (12/13/05),

dismissed after settl ement in Final Order (05/03/06).

40 . Section 672.606, Florida Statutes (2006) ,

describes what constitutes acceptance of goods as follows:

(1) Acceptance of goods occurs when

the buyer:

(a) After a reasonable opportunity

to inspect the goods signifi es to the

seller that the goods are conforming or

that the buyer will take or retain them

in spite of their nonconformity; or

(b) Fails to make an effective

rejection (s. 672.602(1), but such

acceptance does not occur until the

buyer has had a reasona b l e opportunity

to inspect them ; or

(c) Does any act inconsistent with

the seller’s ownership; but if such act

is wrongful as against the seller it is

an acceptance only if ratified by her

or him. (Emphasis added.)

41 . An effective or rightful rejectio n is also

described in the Statutes:

[Section] 672.602 Manner and effect of

rightful rejection. --

(1) Rejection of goods must be

within a reasonable time after their

delivery or tender. It is ineffective

unless the buyer seasonably notifies

the seller .

42 . As distinguished from the packing house in Shinn ,

after hauling one load of the tangerines that failed

inspection on April 19, 2006, Emerald properly, promptly,

and effectively notified Mecca of their rejection on

April 20, 2006 , as required by Sec tions 672.606(1)(b) and

672.602(1), Florida Statutes (2006) .

RECOMMENDATION

Based on the foregoing Findings of Fact and

Conclusions of Law it is RECOMMENDED that a final order be

entered denying any recovery by Petitioner Mecca Farms from

Respondents Emera ld Packing Company, Inc. and O ld Republic

Surety Company, as S urety.

DONE AND ENT ERED this 23rd day of January, 2007 , in

Tallahassee, Leon County, Florida.

S

ELEANOR M. HUNTER

Administrative Law Judge

Division of Adminis trative 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 23rd day of J anuary, 2007 .

COPIES FURNISHED :

Christopher E. Green

Department of Agriculture and

Consumer Services

Office of Citrus License and Bond

Mayo Building, M - 38

Tallahassee, Florida 32399 - 0800

Franklin T. Walden, Esquire

Law Offices of Franklin T. Walden

1936 Lee Road, Suite 100

Winter Park, Florida 32789

Eric Severson, Esquire

Alley, Maass, Rogers & Lindsay, P.A.

340 Royal Poinciana Way, Suite 321

Palm Beach, Florida 33480 - 0431

Old Republic Surety Company

Post Office Box 1635

Milwaukee, Wisconsin 532 01

Richard Ditschler, General Counsel

Department of Agriculture and

Consumer Services

407 South Calhoun Street, Suite 520

Tallahassee, Florida 32399 - 0800

Honorable Charles H. Bronson

Commissioner of Agriculture

Department of Agriculture and

Cons umer Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 0810

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 Recom mended Order should be filed

with the agency that will issue the Final Order in this

case.