10-000498 Universal Tree Farm, Llc vs. Quality By Design, Inc., And The Ohio Casualty Insurance Company, As Surety Status: Closed Recommended Order on Wednesday, April 14, 2010.

Summary: Buyer of 45 palm trees obligated to pay seller full purchase price, where it accepted seller's tender of trees and did not timely revoke its acceptance or timely notify seller of any alleged nonconformity.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

UNIVERSAL TREE FARMS, LLC, )

)

Petitioner, )

)

vs. ) Case No. 10-0498

)

QUALITY BY DESIGN INC. and )

THE OHIO CASUALTY INSURANCE )

COMPANY, AS SURETY, )

)

Respondents. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, a hearing was conducted in this case

pursuant to Sections 120.569 and 120.57(1), Florida Statutes, 1

before Stuart M. Lerner, a duly-designated administrative law

judge of the Division of Administrative Hearings, on March 19,

2010, by video teleconference at sites in West Palm Beach and

Tallahassee, Florida.

APPEARANCES

For Petitioner: Sergio Cruz, Esquire

245 Southeast First Street, Suite 214

Miami, Florida 33131-1933

For Respondent Quality By Design, Inc.:

James M. Watson, President

38115 Yale Circle

Leesburg, Florida 34788

For Respondent Ohio Casualty Insurance Company:

No Appearance

STATEMENT OF THE ISSUE

Whether Respondent Quality By Design, Inc. (QBD) owes

Petitioner $2,166.75, or some lesser amount, for 45 Washingtonia

Palms it purchased from Petitioner in June 2009.

PRELIMINARY STATEMENT

On December 16, 2009, Petitioner filed a complaint with the

Department of Agriculture and Consumer Services (Department)

alleging that QBD had failed to pay for 45 Washingtonia Palms it

had purchased from Petitioner in June 2009. Ohio Casualty

Insurance Company (OCIC) was identified in the complaint as

surety for QBD. On January 7, 2010, Petitioner amended its

complaint by correcting items 11 ("Complete mailing address of

Co-Respondent"), 14 ("For Producer's Agent Only"), and 15

("Manner of Purchase").

By separate letters, each dated January 7, 2010, the

Department notified QBD and OCIC of the filing of Petitioner's

amended complaint and of their (QBD's and OCIC's) opportunity to

file a written answer to the amended complaint.

On or about January 26, 2010, QBD filed with the Department

an answer to Petitioner's amended complaint, in which it

admitted purchasing from Petitioner 45 Washingtonia Palms for

the amounts claimed by Petitioner ($45 each, plus tax), but

claimed that the "amount [it] owed . . . should be reduced by [a

total of] $1,625.00," $950.00 to offset the extra transportation

"cost[s]" it incurred and "loss of revenue" it suffered as a

result of Petitioner's not having had the trees ready for pick

up at the "pre-arranged" time 2 ; and $675.00 to offset the "cost"

of "rehabilitating" the trees after they had "go[ne] into severe

shock within a few days of arriving at [QBD's] holding yard."

In its answer, QBD also "request[ed] a hearing." OCIC neither

filed an answer to the amended complaint, nor requested a

hearing.

On February 1, 2010, the Department referred the matter to

the Division of Administrative Hearings to conduct the hearing

QBD had requested.

As noted above, the hearing was held on March 19, 2010.

Three witnesses testified at the hearing: Ivan Caro,

Petitioner's president; James Watson, QBD's president; and Buddy

Ward, a QBD employee. In addition to the testimony of these

three witnesses, one exhibit, Petitioner's Exhibit 1, was

offered and received into evidence.

At the conclusion of the evidentiary portion of the

hearing, the undersigned advised the parties, on the record,

that if they desired to file proposed recommended orders, they

had to do so within 14 days of the date of the hearing (that is,

no later than April 2, 2010). To date, no proposed recommended

order has been filed by any party.

FINDINGS OF FACT

Based on the evidence adduced at hearing, and the record as

a whole, the following findings of fact are made:

1. Petitioner is a producer of Washingtonia Palms and

other trees.

2. It grows these agricultural products on its 140-acre

tree farm located in Moore Haven, Florida.

3. The farm utilizes a ditch/canal irrigation system.

4. In June 2009, Petitioner received two separate orders

from QBD for a total of 45 Washingtonia Palms, ten-to-14 feet in

overall height: a June 16, 2009, order for 27 trees (Invoice

1081); and a June 24, 2009, order for 18 trees (Invoice 1083).

For both orders, the agreed-upon purchase price was $45.00 per

tree. Accordingly, the amount due, including sales tax (of

$85.05), for the trees ordered on June 16 was $1,300.05, and the

amount due, including sales tax (of $56.70), for the trees

ordered on June 24 was $866.70.

5. QBD took delivery of the trees at Petitioner's tree

farm.

6. David Lindsey and Buddy Ward were the truck drivers

dispatched by QBD to Petitioner's tree farm to take delivery of

the trees. Mr. Lindsey picked up the 27 trees that had been

ordered on June 16. Mr. Ward picked up the 18 trees that had

been ordered on June 24.

7. Petitioner readied the trees for delivery before they

were picked up. Among the things it did as part of the

preparation process was to wrap the root ball of each tree in

plastic sheeting to retain moisture.

8. After arriving at Petitioner's tree farm, Mr. Lindsey

and Mr. Ward each inspected the trees Petitioner had readied for

pick up and accepted them on behalf of QBD (Mr. Lindsey by

signing Invoice 1081, and Mr. Ward by signing Invoice 1083).

9. After being inspected and accepted, the trees were

loaded onto Mr. Lindsey's and Mr. Ward's semi-trailer trucks and

transported to QBD's tree farm in Umatilla Florida,

approximately five hours away (by truck). Each of the 45 trees

was in excellent condition when loaded.

10. Mr. Lindsey's trip to QBD's tree farm was uneventful.

Mr. Ward, on the other hand, was not so fortunate. As he was

leaving Petitioner's property, he drove his semi-trailer truck

into a ditch while making a turn. Mr. Ward was not seriously

injured, and none of the trees fell off the trailer bed as a

result of the mishap. A tow truck was called to the scene.

Within 15 minutes of the tow truck's arrival, Mr. Ward's truck

was pulled out of the ditch and he "went on [his] way," with his

load of 18 Washingtonia Palms.

11. The morning after they arrived at QBD's tree farm, the

trees on Mr. Lindsey's and Mr. Ward's trucks were offloaded and

"watered down." They were then put in the ground.

12. Subsequently, fronds on each of the trees "turned

brown."

13. QBD was able to "rehabilitate" the trees by cutting

off the outside row of fronds on each tree and "re-tying the

heads." The labor cost of this "rehabilitation" work was $13.50

per tree. The QBD employees who did the work used a piece of

equipment that QBD rented at the rate of approximately $75.00

per hour.

14. At no time prior to the initiation of the instant

litigation did QBD notify Petitioner that any of the 45 trees it

had purchased was defective or non-conforming, nor did it seek

to revoke its acceptance of the trees or to return the trees to

Petitioner.

CONCLUSIONS OF LAW

15. In accordance with Section 604.18, Florida Statutes, a

"dealer in agricultural products," must be licensed by the

Department to transact business in the State of Florida.

"Before any [such] license is issued, the applicant therefor

shall make and deliver to the [D]epartment a surety bond or

certificate of deposit in the amount of at least $3,000 or in

such greater amount as the [D]epartment may determine." §

604.20(1), Fla. Stat.

16. A "dealer in agricultural products," as that term is

used in Sections 604.15 through 604.24, Florida Statutes, is

defined in Section 604.15(2), Florida Statutes, as follows:

"Dealer in agricultural products" means any

person, partnership, corporation, or other

business entity, whether itinerant or

domiciled within this state, engaged within

this state in the business of purchasing,

receiving, or soliciting agricultural

products from the producer or the producer's

agent or representative for resale or

processing for sale; acting as an agent for

such producer in the sale of agricultural

products for the account of the producer on

a net return basis; or acting as a

negotiating broker between the producer or

the producer's agent or representative and

the buyer.

17. At all times material hereto, QBD was a "dealer in

agricultural products," as defined in Section 604.15(2), Florida

Statutes, and was licensed as required by Section 604.18,

Florida Statutes.

18. "Agricultural products," as that term is used in

Section 604.15(2), Florida Statutes, and elsewhere in Sections

604.15 through 604.24, Florida Statutes, is defined in Section

604.15(1), Florida Statutes, as follows:

"Agricultural products" means the natural

products of the farm, nursery, grove,

orchard, vineyard, garden, and apiary (raw

or manufactured); sod; tropical foliage;

horticulture; hay; livestock; milk and milk

products; poultry and poultry products; the

fruit of the saw palmetto (meaning the fruit

of the Serenoa repens); limes (meaning the

fruit Citrus aurantifolia, variety Persian,

Tahiti, Bearss, or Florida Key limes); and

any other nonexempt agricultural products

produced in the state, except tobacco,

sugarcane, timber and timber byproducts,

forest products as defined in s. 591.17, and

citrus other than limes.

19. Washingtonia Palms are "agricultural products, as

defined in Section 604.15(1), Florida Statutes.

20. "Any person, partnership, corporation, or other

business entity claiming to be damaged by any breach of the

conditions of a bond or certificate of deposit assignment or

agreement given by a dealer in agricultural products as

hereinbefore provided may enter complaint thereof against the

dealer and against the surety company, if any, to the

[D]epartment, which complaint shall be a written statement of

the facts constituting the complaint. Such complaint shall

include all agricultural products defined in s. 604.15(1), as

well as any additional charges necessary to effectuate the sale

unless these additional charges are already included in the

total delivered price. Such complaint [must] be filed within 6

months from the date of sale in instances involving direct sales

or from the date on which the agricultural product was received

by the dealer in agricultural products, as agent, to be sold for

the producer. No complaint shall be filed pursuant to this

section unless the transactions involved total at least $500 and

occurred in a single license year. Before a complaint can be

processed, the complainant must provide the [D]epartment with a

$50 filing fee. In the event the complainant is successful in

proving the claim, the dealer in agricultural products shall

reimburse the complainant for the $50 filing fee as part of the

settlement of the claim." § 604.21(1)(a), Fla. Stat.

21. "Upon the filing of such complaint . . . , the

[D]epartment [must] investigate the matters complained of;

whereupon, if, in the opinion of the [D]epartment, the facts

contained in the complaint warrant such action, the [D]epartment

shall serve notice of the filing of complaint to the dealer

against whom the complaint has been filed at the last address of

record. Such notice shall be accompanied by a true copy of the

complaint. A copy of such notice and complaint shall also be

served to the surety company, if any, that provided the bond for

the dealer, which surety company shall become party to the

action. Such notice of the complaint [must] inform the dealer

of a reasonable time within which to answer the complaint by

advising the [D]epartment in writing that the allegations in the

complaint are admitted or denied or that the complaint has been

satisfied. Such notice [must] also inform the dealer and the

surety company or financial institution of a right to a hearing

on the complaint, if requested." § 604.21(2), Fla. Stat.

22. Should there exist disputed issues of material fact, a

hearing conducted pursuant to Section 120.57(1), Florida

Statutes, will be held. § 604.21(6), Fla. Stat.; see also

Rosenzweig v. Department of Transportation , 979 So. 2d 1050,

1055 (Fla. 1st DCA 2008)("If an agency's action will determine

the substantial interests of a party and there are disputed

issues of material fact, a party is entitled to a formal

proceeding under section 120.57(1), Florida Statutes.").

23. At the hearing, the complainant has the burden of

proving the allegations of the complaint by a preponderance of

the evidence. See Department of Banking and Finance, Division

of Securities and Investor Protection v. Osborne Stern and

Company , 670 So. 2d 932, 934 (Fla. 1996)("'The general rule is

that a party asserting the affirmative of an issue has the

burden of presenting evidence as to that issue.'"); Espinoza v.

Department of Business and Professional Regulation, Florida

Board of Professional Engineers , 739 So. 2d 1250, 1251 (Fla. 3rd

DCA 1999)("The general rule is that, apart from statute, the

burden of proof is on the party asserting the affirmative of an

issue before an administrative tribunal."); Florida Department

of Health and Rehabilitative Services v. Career Service

Commission , 289 So. 2d 412, 415 (Fla. 4th DCA 1974)("As a

general rule the comparative degree of proof by which a case

must be established is the same before an administrative

tribunal as in a judicial proceeding - that is, a preponderance

fact shall be based upon a preponderance of the evidence, except

in penal or licensure disciplinary proceedings or except as

otherwise provided by statute . . . .").

24. If, following the hearing, the Department determines

that the complainant has met its burden of proof, the Department

must "enter its order adjudicating the amount of indebtedness

due to be paid by the dealer to the complainant," which order is

"final and effective on the date filed with the [D]epartment's

agency clerk." § 604.21(4),(5) and (6), Fla. Stat.

25. If payment is not made within 15 days after the

issuance of the Department's order, the Department must, "in

instances involving bonds, call upon the surety company to pay

over to the [D]epartment out of the bond posted by the surety

company for such dealer . . . the amount called for in the order

of the [D]epartment, not exceeding the amount of the bond or the

principal of the certificate of deposit." § 604.21(7) and (8),

Fla. Stat.

26. In the instant case, Petitioner timely filed an

amended complaint against QBD and its surety, OCIC, alleging

that QBD had failed to pay Petitioner $2,166.75 for 45

Washingtonia Palms QBD had purchased from Petitioner in June

2009. In its answer to the amended complaint, QBD disputed that

it was indebted to Petitioner in this amount.

27. The preponderance of the evidence establishes

Petitioner's entitlement to the amount claimed.

28. The transactions between the parties in this case are

generally governed by Chapter 672, Florida Statutes, known as

the "Uniform Commercial Code-Sales." See § 672.101, Fla. Stat.

29. Pursuant to Section 672.607(1), Florida Statutes,

"[t]he buyer must pay at the contract rate for any goods

accepted."

30. Section 672.606(1), Florida Statutes, describes

"[w]hat constitutes acceptance of goods." It provides as

follows:

(1) Acceptance of goods occurs when the

buyer:

(a) After a reasonable opportunity to

inspect the goods signifies 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

reasonable 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.

According to Section 672.602(1), Florida Statues, a "[r]ejection

of goods must be within a reasonable time after their delivery

or tender" and "[i]t is ineffective unless the buyer seasonably

notifies the seller."

31. "Acceptance of goods by the buyer precludes rejection

of the goods accepted . . . ." § 672.607(2), Fla. Stat.

32. An acceptance, however, may be revoked under certain

circumstances. "Revocation of acceptance must occur within a

reasonable time after the buyer discovers or should have

discovered the ground for it and before any substantial change

in condition of the goods which is not caused by their own

defects. It is not effective until the buyer notifies the

seller of it." § 672.608(2), Fla. Stat. "A buyer who so

revokes has the same rights and duties with regard to the goods

involved as if she or he had rejected them." § 672.608(3), Fla.

Stat.

33. "Where a tender has been accepted[,] [t]he buyer must

within a reasonable time after he or she discovers or should

have discovered any breach notify the seller of breach or be

barred from any remedy." § 672.607(3)(a), Fla. Stat.

34. If such timely notification is given, then, and only

then, may a buyer "deduct all or any part of the damages

resulting from any breach of the contract [by the seller] from

any part of the price still due [the seller] under the same

contract." § 672.717, Fla. Stat.; see also Shreve Land Co. v.

J & D Financial Corp. , 421 So. 2d 722, 724 (Fla. 3d DCA

1982)("Ordinarily, acceptance of the 55 doors would make Shreve

liable for payment under section 672.607(1), Florida Statutes

(1979). However, since Shreve notified both Pac-Dor and J & D

of the nonconformity within a reasonable time as required by

section 672.607(3)(a), Florida Statutes (1979), it was entitled

to deduct all or any part of the damages from the price of the

55 doors under section 672.717, Florida Statutes (1979).").

35. The record evidence in the instant case establishes

that Petitioner tendered to QBD, and QBD accepted, all 45

Washingtonia Palms that were the subject of their sales/purchase

agreement and that QBD did not timely revoke its acceptance, nor

timely notify Petitioner of any alleged nonconformity.

Moreover, no showing has been made that the trees tendered were

in fact nonconforming.

36. Under such circumstances, QBD is obligated to pay

Petitioner the full agreed-upon purchase price for each of the

45 trees, plus tax (or a total of $2,166.75).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Agriculture and Consumer

Services enter a final order (1) finding that QBD is indebted to

Petitioner in the amount of $2,166.75 for the 45 Washingtonia

Palms it purchased from Petitioner in June 2009; (2) directing

QBD to make payment to Petitioner in the amount of $2,216.75

($2,166.75, plus $50.00 for reimbursement of the filing fee

Petitioner paid) within 15 days following the issuance of the

order; (3) providing that Petitioner, upon receipt of this

payment, shall remit $141.75 to the appropriate taxing

authority; and (4) announcing that if QBD fails to make timely

payment in full, the Department will seek recovery from OCIC,

QBD's surety.

DONE AND ENTERED this 14th day of April, 2010, in

Tallahassee, Leon County, Florida.

S

___________________________________

STUART M. LERNER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 14th day of April, 2008.

ENDNOTES

1 All references to Florida Statutes in this Recommended Order

are to Florida Statutes (2009).

2 At the final hearing, QBD formally abandoned its claim that it

was entitled to this $950.00 offset.

COPIES FURNISHED:

Sergio Cruz, Esquire

245 Southeast First Street, Suite 214

Miami, Florida 33131-1933

James M. Watson, President

Quality By Design, Inc.

38115 Yale Circle

Leesburg, Florida 34788

Douglas Tribbe, AFSB, AIC

The Ohio Casualty Insurance Company

136 North third Street

Hamilton, Ohio 45025

Honorable Charles H. Bronson

Commissioner 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

407 South Calhoun Street, Suite 520

Tallahassee, Florida 32399-0800

Christopher E. Green, Chief

Bureau of License and Bond

Division of Marketing

Department of Agriculture and Consumer Services

407 South Calhoun Street, MS 38

Tallahassee, Florida 32399-0800

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.