11-003389 Ferman Motor Car Company, Inc., D/B/A Ferman Chevrolet And Gordon Stewart Chevrolet, Inc., D/B/A Gordon Chevrolet vs. General Motors, Llc And Daniels Chevrolet, Inc., D/B/A Daniels Chevrolet Status: Closed Recommended Order on Thursday, December 1, 2011.

Summary: Respondent Daniels Chevrolet is a successor dealer within the meaning of s. 320.642, and Petitioners lack standing to challenge whether Respondents are in compliance with s. 320.645.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FERMAN MOTOR CAR COMPANY, INC., )

d/b/a FERMAN CHEVROLET AND )

GORDON STEWART CHEVROLET, INC., )

d/b/a GORDON CHEVROLET , )

)

Petitioners , )

)

vs. ) Case No. 11 - 3389

)

GENERAL MOTORS, LLC AND DANIELS )

CHEVROLET, INC., d/b/a DANIE LS )

CHEVROLET , )

)

Respondents . )

)

RECOMMENDED ORDER

Pursuant to notice, on October 18 and 19, 2011, a formal

hearing in this cause was held in Tallahassee, Florida , before

the Division of Administrative Hearings by its designated

Administrative Law Judge Linzie F. Bogan.

APPEARANCES

For Petitioners: J ohn W. Forehand, Esquire

R. Craig Spickard, Esquire

Kurkin Forehand Brandes, LLP

800 N orth Cal houn Street, Suite 1B

Tallahassee, Florida 32303

For Respondents: J. Andrew Bertron, Esquire

Nelson, Mullins, Riley & Scarborough, LLP

3600 Maclay Boulevard South, Suite 202

Tallahassee, Florida 32312

Eric Scott Ada ms, Esquire

Shutts & Bowen, LLP

4301 West Boy Scout Boulevard, Suite 300

Tampa, Florida 33607

STATEMENT OF THE ISSUE S

Whether Daniels Chevrolet, Inc. , is a successor dealer

within the meaning of section 320.642, Florida Statutes (20 10), 1/

and whether Daniels Chevrolet , Inc., and General Motors, LLC,

are in compliance with the requirements of section 320.645 .

PRELIMINARY STATEMENT

In April 2011, Respondent, General Motors, LLC (GM),

informed the Department of Highway Safety and Mot or Vehicles,

Division of Motor Vehicles (Department), that Respondent,

Daniels Chevrolet, Inc. (Daniels Chevrolet) , had been appointed

as successor dealer to University Chevrolet, Inc. (University

Chevrolet), and that the appointment of the said dealer was

exempt from protest pursuant to section 320.642(5)(a)1. Within

days of GM contacting the Department, Petitioners , Ferman

Chevrolet and Gordon Chevrolet (Petitioners), filed notice

(protest notice) with the Department advising that they wished

to protest the appointment of Daniels Chevrolet as a successor

to University Chevrolet. Subsequent to the filing of the

protest notice by Petitioners, Daniels Chevrolet submitted to

the Department an application for license to operate as a motor

vehicle dealer at th e location previously occupied by University

Chevrolet . Because of the protest notice filed by Petitioners,

the Department placed Daniels Chevrolet ' s pending application in

abeyance and referred the matter to the Division of

Administrative Hearings for a disputed fact hearing and the

issuance of a recommended order.

A Notice of Hearing was issued setting the case for formal

hearing on October 18 and 19, 2011. At the hearing, Petitioners

presented the testimony of Albert Parziale, Preston Farrior, and

Gor don Stewart. Petitioners ' Exhibits 15, 19, and 57 were

admitted into evidence. Respondents presented the testimony of

Nalini Vinayak, Garrett Dvorsky, William J. Reineck, Piermichele

Robazza, and Roland C. Daniels. Respondents ' Exhibits 1, 3, 6,

7, 10 t hrough 15, 23, 24, 30, 32 through 38, 40 through 42,

44 through 46, 48 through 50, 52 through 54, 56, 58, 60 through

62, 62a, and 77 were admitted into evidence.

A four - volume Transcript of the proceeding was filed with

the Division of Administrative Hea rings on November 3, 2011.

The parties timely filed Proposed Recommended Orders, which have

been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioners and Respondents stipulate to the following

facts as set forth in this paragraph:

( A) Petitioners , Ferman Chevrolet and Gordon

Chevrolet , are licensed motor vehicle dealers in

Tampa, Florida, and are authorized to sell and

service Chevrolet motor vehicles.

( B) GM is a licensed manufacturer and distributor of

Chevrolet motor vehicles. GM owns 81.9 percent

of Daniels Chevrolet.

( C) Roland C. Daniels (Mr. Daniels) is an African -

American and owns 18.1 percent of Daniels

Chevrolet.

( D) University Chevrolet was previously licensed as a

motor vehicle dealer at 11300 North Florida

Avenue, Tampa, Florida (Florida Avenue Location),

and was authorized to sell and service Chevrolet

motor vehicles.

( E) On April 19, 2010, University Chevrolet filed

articles of dissolution with the Florida

Department of State, stating " the date of

dissolution: April 6, 2010. "

( F) On May 12, 2010, the Dealer Sales and Service

a greement s between University Chevrolet and

GM were terminated.

( G) On June 30, 2010, University Chevrolet submitted

a Voluntary Relinquishment of License form to the

Depart ment.

( H) On July 1, 2010, the Department entered a Final

Order cancelling University Chevrolet ' s motor

vehicle dealer license , effective July 2, 2011.

( I) On April 27, 2011, GM sent a letter to the

Department giving notice that GM was approving

the appo intment of Daniels Chevrolet, Inc.,

d/b/a S ummit Chevrolet , as a Chevrolet dealer at

the Florida Avenue Location and that the

dealership was exempt from notice and protest

pursuant to section 320.642(5)(a) 1 .

( J) On May 4, 2011, counsel for Petitioners sen t a

letter to the Department asserting, among other

things, that the establishment of Daniels

Chevrolet was not exempt and that Petitioners

were entitled to notice and an opportunity to

protest. The Department treated the May 4, 2011,

letter as a request for administrative hearing

and forwarded the letter to the Division of

Administrative Hearings, where the matter was

assigned DOAH Case N os. 11 - 2273 and 11 - 2274. On

June 22, 2011, Administrative Law Judge William

Quattlebaum entered an Order Granting Moti on to

Relinquish Jurisdiction and Closing Files on the

basis that there was no dispute as to any

material facts.

( K) On May 24, 2011, GM sent a letter to the

Department substantially identical to its

April 27, 2011, letter, but changing the proposed

" d/b/ a " to " Daniels Chevrolet. "

( L) On May 24, 2011, the Department accepted the

license application filed by Daniels Chevrolet.

( M) On June 1, 2011, the Department determined that

Daniels Chevrolet ' s license application was

complete.

( N) On June 27, 2011, P etitioners filed an Amended

Petition with the Department , which was forwarded

to the Division of Administrative Hearings and is

the present petition in this case.

2. University Chevrolet, during all times relevant hereto,

operated as a Florida limited li ability company.

3. By correspondence dated May 24, 2010, University

Chevrolet was advised by GM that as of that date, all of the

conditions described in the wind - down agreement between GM and

University Chevrolet had been satisfied.

4. As part of the process associated with University

Chevrolet ' s petition to voluntarily relinquish its motor vehicle

dealer ' s license, the dealership represented to the Department

that: ( 1) all electronic filing system transactions were

finalized at the tag office; ( 2) th ere were no outstanding

consumer complaints; ( 3) there were no outstanding sales

transactions; ( 4) there were no pending title and registration

applications pending at the dealership or tag office; ( 5) there

were no unsatisfied vehicle liens on trade - in ve hicles; and

( 6) there was no remaining vehicle inventory as of June 21, 2010

( six critical tasks). Had University Chevrolet not completed

these six critical tasks to the satisfaction of the Department,

its petition seeking to relinquish its license would have been

denied.

5. On May 13, 2011, Mr. Daniels, on behalf of Daniels

Chevrolet, attempted to file with the Department an application

for a license as a motor vehicle dealer. Acceptance of the

application was initially refused by the Department, in part,

because of the May 4, 2011, protest letter filed with the

Department by Petitioners ' counsel.

6 . Prior to May 5, 2011, the date upon which Mr. Daniels

received a copy of Petitioners ' May 4, 2011, protest letter,

Daniels Chevrolet hired a general sa les manager and service

director to assist with dealership operations. Additionally, in

anticipation of opening for business by June 15, 2011, Daniels

Chevrolet, prior to May 5, 2011, interviewed and selected a

general contractor. The basic plan for gett ing Daniels

Chevrolet operational by June 15, 2011, included engaging in

cosmetic remodeling activities that could be completed within

the timeframe of about a month. Th e operational plan provided

that the portions of the dealership that customers would

i nteract with the most and that did not require the issuance of

any building permits (e.g. , painting), would be front - loaded in

the remodeling process so as to accommodate the June 15 , 2011,

targeted opening date.

7 . The initial cost to capitalize the ope ration of Daniels

Chevrolet i s $2,761,800.00. In order to fund the capital

requirements, Mr. Daniels has invested $500,000.00 in Daniels

Chevrolet, which represents an initial ownership interest of

18.1 percent. Motors Holding, an entity within GM, has i nvested

$2,261,800.00, which represents initial ownership interests in

Daniels Chevrolet of 81.9 percent. For his initial investment,

Mr. Daniels received 5 , 000 shares of common stock from Daniels

Chevrolet. For its initial investment, Motors Holding rec eived

22,618 shares of preferred stock from Daniels Chevrolet.

8 . As to the issue of stock dividends and the redemption

by Mr. Daniels of the preferred stock held by Motors Holding,

the terms of the agreement between the parties provide as

follows:

Eac h quarter, [Daniels Chevrolet] will pay

out dividends and redeem preferred stock if

earnings are available for that purpose

(that is, if earnings are not needed to make

up prior losses). Generally, the amount

available to pay dividends will be one half

of [Daniels Chevrolet ' s] net after - tax

earnings for the quarter. [Daniels

Chevrolet] will pay dividends only on its

preferred stock, and the amount of the

dividend will be a pro rata share of the

amount available for dividends. All

remaining after - tax earn ings are available

to redeem shares of preferred stock at a

price of $100 per share, increasing

[Mr. Daniel ' s] ownership of [Daniels

Chevrolet]. There are no dividends paid on

the common stock.

When [Daniels Chevrolet] has used its

operating earnings t o reduce the preferred

stock held by Motors Holding to 20% of the

originally issued preferred shares, it is

required to redeem the remaining preferred

shares at a price of $100 per share, using

any available source of funds. At this

time, the Motors Holdi ng representatives

will resign from the board of directors and

the company will be owned solely by

[Mr. Daniels].

9 . Th e agreement between Mr. Daniels and GM also allows

for the expedited purchase of the dealership pursuant to the

following contractual terms:

Notwithstanding any other terms or

conditions of the Investment Agreements or

any terms or conditions in the GM memorandum

dated August 12, 2004, and March 1, 2005,

respecting early buyout parameters, Operator

[Mr. Daniels] is not precluded from a n

expedited purchase of the preferred shares

using a monetary source other than profits

from the dealership ' s operation. Operator

may purchase GM ' s shares of preferred stock

of the Dealer Company [Daniels Chevrolet]

using any legal source of funds at any time

within ten (10) years after the date that

the dealership opens for business with the

public, regardless of the percentage of

preferred stock that has been redeemed.

1 0 . The agreement between Mr. Daniels and GM also provides

as follows:

Candidate /Operator understands that the

performance and profitability of the

dealership will be affected by not only the

Operator ' s performance, but also by factors

outside the control of the dealership,

including without limitation, general and

local economic cond itions, industry auto

sales, General Motors ' auto sales, and any

and all types of risks affecting businesses

of the relevant size and type.

As with any entrepreneurial activity,

Candidate/Operator ' s and GM ' s investments in

the proposed business forecast ed here are at

risk. Candidate/Operator acknowledges and

understands the potential that he or she

could lose some or all of

Candidate/Operator ' s investment if he or she

invests in an unprofitable dealership.

Candidate/Operator acknowledges and agrees

t hat GM shall have no obligation to provide

compensation, payment or reimbursement for

any losses, and Candidate/Operator shall

have no right to reimbursement for any

losses.

1 1 . The revenue projections for Daniels Chevrolet show

that during the first yea r of operations, the dealership is

estimating that it will sustain a loss, before deducting for any

bonus and taxes, of $130,800.00. In the second year of

operations, Daniels Chevrolet is projecting, before deducting

for any bonus and taxes, that it will earn a net profit of

$110,370.00. In operational years three through ten , Daniels

Chevrolet is projecting an average annual net profit, before

deducting for any bonus and taxes, of $1,294,050.00. Based upon

these projections, the preferred stock owned by Motors Holding

will be redeemed in approximately 6.25 years.

1 2 . Prior to joining the automobile industry, Mr. Daniels

worked in a managerial capacity for the Sears Corporation for

approximately 17 years. At one point during his career with the

Sears Co rporation, Mr. Daniels became a national buyer for

women ' s apparel. As a national buyer, Mr. Daniels was

responsible for forecasting the women ' s apparel needs for some

750 stores throughout the United States of America. After

leaving the Sears Corporatio n, Mr. Daniels became involved with

the automobile industry in 1985 , when he entered GM ' s dealer

development program. After successfully completing the dealer

development program, Mr. Daniels, in 1987, became part owner of

an automobile dealership in Colo rado. The Colorado dealership

ceased operations sometime around the latter part of 1988. In

1991 , Mr. Daniels relocated to S outh Florida where for a period

of about five years , he worked as general manager for two Saturn

dealerships. In his capacity as general manager, Mr. Daniels

was involved in managing vehicle inventory issues and developing

forecasts regarding future vehicle sales. Subsequently,

Mr. Daniels left S outh Florida and moved to Gainesville,

Florida , where he owned and operated a Saturn de alership for

more than ten years. When GM ceased manufacturing the Saturn

line of vehicles, Mr. Daniels switched to selling Mitsubishi

vehicles until such time as he sold his dealership around

March 2011. Mr. Daniels, through training and experience, is

skilled at making forecasts regarding the future sales of

automobiles.

1 3 . In support of its revenue forecast, Daniels Chevrolet,

relying upon the experience of Mr. Daniels and GM, projects that

during its first year of operations , it will sell 500 new

ve hicles. For the second year of operations , Daniels Chevrolet

is projecting 600 new vehicle sales. For the remaining relevant

operational period, Daniels Chevrolet is projecting that it will

average 850 new vehicle sales per year. The number of vehicles

sold by Daniels Chevrolet will not reduce the number of new

vehicles allocated to Petitioners by GM.

1 4 . What is generically referred to as " additions and

deductions " provides another source from which Daniels Chevrolet

expects to generate income. Incom e from additions and

deductions can be derived from sources such as insurance

recoveries, factory incentive money, and tax adjustments.

During its first year of operations , Daniels Chevrolet is

projecting $400,000.00 in income from additions and deduction s.

In its second year of operations, Daniels Chevrolet is

projecting that the amount of income derived from additions and

deductions will be $851,000.00. Commencing with its third year

of operations , Daniels Chevrolet is projecting that its annual

averag e for income derived from additions and deductions will be

$1,099,000.00.

1 5 . For the period January 2001 through November 2009,

dealers that occupied the Florida Avenue Location had annual new

vehicle sales, not including fleet vehicles, as follows:

Ye ar 2001 Î 890 vehicles

Year 2002 Î 863 vehicles

Year 2003 Î 921 vehicles

Year 2004 Î 915 vehicles

Year 2005 Î 977 vehicles

Year 2006 Î 698 vehicles

Year 2007 Î 674 vehicles

Year 2008 Î 367 vehicles

1/2009 - 11/2009 Î 348 vehicles

1 6 . Mr. Dennis Slater, fr om 2005 through approximately

April 2010, oversaw business operations and served as either

chief financial officer or executive manager for University

Chevrolet. During this period, Mr. Slater became very familiar

with University Chevrolet ' s day - to - day bu siness operations , as

well as the conditions of the market in which University

Chevrolet competed. According to Mr. Slater, for the period

October 2006 through December 2008, the dealer/operator in

charge of University Chevrolet encountered significant se lf -

imposed challenges that compromised the dealer/operator ' s

ability to successfully manag e dealership operations. Those

challenges eventually lead to Mr. Slater taking over the

day - to - day operation of University Chevrolet in January 2009.

1 7 . After havi ng been affiliated with University Chevrolet

for approximately five years , and having worked in the auto

industry for more than 35 years, Mr. Slater submitted a proposal

to GM to operate the Florida Avenue Location as a successor to

University Chevrolet . As a part of his proposal, Mr. Slater

estimated that during his first year of operations he could sell

916 new vehicles. During his second year of operations,

Mr. Slater projected that he could sell 1 , 119 new vehicles.

Additionally, Mr. Slater projected that during his first year of

operations , he would generate $718,998.00 in income from

additions and deductions.

1 8 . Albert E. Parziale, CPA, CFF, CFE, Petitioners '

expert, testified that in his opinion, Daniels Chevrolet would

not be able to achieve pro fits sufficient to allow the

dealership to obtain full ownership of the company within ten

years of commencing operations. In reaching his conclusion,

Mr. Parziale looked at new vehicle sales data in the aggregate

for the Florida Avenue Location for the y ears 2001 through 2009.

Mr. Parziale then " averaged " the data and determined that the

Florida Avenue Location annually averaged 740 new vehicle sales

during the period in question. Mr. Parziale also analyzed the

new vehicle sales data for a narrower peri od of time (2006

through 2009) and found that the Florida Avenue Location during

these later years annually average d 521 new vehicle sales. 2/

19 . Mr. Parziale also noted that during the broader period

between 2001 and 2009, previous operators at the Flo rida Avenue

Location averaged $1,194,717 in income from additions and

deductions , but it would be unreasonable for Respondent Daniels

Chevrolet to rely on this income source to meet its buy - out

obligation to Motors Holding because of the erratic nature of

income flow derived from this source. 3/ Currently, the average

Chevrolet dealer in the Southeastern region of the United

States, which includes Tampa, Florida, receives 1.1 million

annually in net income from additions and deductions and the

average Chevr olet dealer in the Tampa market receives

$914,000.00 annually in net income from additions and

deductions. Mr. Parziale acknowledges that it would not be

unreasonable for Respondents to project that Daniels Chevrolet

will average $1,099,000.00 in income f rom additions and

deductions for the next ten years.

CONCLUSIONS OF LAW

20 . The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of this

proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2011).

A. Burden of Proof

2 1 . At the commencement of the final hearing in this

matter, the parties advised that there was disagreement as to

which party bears the ultimate burden of persuasion and the

initial burden of going forward with the evidence. By

stipulation, the partie s agreed that they would argue the issue

in their respective proposed recommended orders and, in order to

facilitate the orderly presentation of evidence during the final

hearing, Respondent would go first with the presentation of its

evidence. As set for th in the Amended Petition, there are two

primary issues in the case. The first issue concerns section

320.642(5) and the second issue concerns section 320.645. Both

sections are silent as to which party carries the burden of

proof.

2 2 . When a licensee proposes to establish an additional

motor vehicle dealership or relocate an existing dealership " to

a location within a community or territory where the same

line - make vehicle is presently represented by a franchised motor

vehicle dealer or dealers, " the l icensee is required to give

written notice of its intention to the Department so that

existing motor vehicle dealers with standing may, if they so

desire, protest the establishment or relocation of the

dealership. 4/ § 320.642. Section 320.642(5), however ,

establishes an exemption from the general protest process , and

it is upon this exemption that Respondents rely.

2 3 . Section 320.642(5)(a) provides as follows:

The opening or reopening of the same or a

successor motor vehicle dealer within 12

month s is not considered an additional motor

vehicle dealer subject to protest within the

meaning of this section, if:

1. The opening or reopening is within the

same or an adjacent county and is within

2 miles of the former motor vehicle dealer

location;

2. There is no dealer within 25 miles of

the proposed location or the proposed

location is further from each existing

dealer of the same line - make than the prior

location is from each dealer of the same

line - make within 25 miles of the new

location;

3 . The opening or reopening is within

6 miles of the prior location and, if any

existing motor vehicle dealer of the same

line - make is located within 15 miles of the

former location, the proposed location is no

closer to any existing dealer of the same

lin e - make within 15 miles of the proposed

location; or

4. The opening or reopening is within

6 miles of the prior location and, if all

existing motor vehicle dealers of the same

line - make are beyond 15 miles of the former

location, the proposed location i s further

than 15 miles from any existing motor

vehicle dealer of the same line - make.

(b) Any other such opening or reopening

shall constitute an additional motor vehicle

dealer within the meaning of this section.

(c) If a motor vehicle dealer has been

opened or reopened pursuant to this

subsection, the licensee may not propose a

motor vehicle dealer of the same line - make

to be located within 4 miles of the previous

location of such dealer for 2 years after

the date the relocated dealership opens.

2 4 . According to the Amended Petition, subparagraphs

1 through 4 of paragraph (a) , and paragraph (c) of section

320.642(5), are not at issue in the instant case. What is at

issue are the predicate requirements set forth in paragraph (a),

subsection 5, of section 320.642, to wit : whether the planned

opening of Daniels Chevrolet was scheduled to occur within

12 months of the closing of University Chevrolet. 5/

2 5 . The general rule is that " the burden of proof, apart

from statute, is on the party asserting the affirmative of an

issue before an administrative tribunal. " Balino v. Dep ' t of

HRS , 348 So. 2d 349, 350 (Fla. 1st DCA 1977). Also, as a

general rule, " an applicant for a license or permit carries the

' ultimate burden of persuasion ' of entitlement th rough all

proceedings, of whatever nature, until such time as final action

has been taken by the agency. " Dep ' t of Transp. v. J.W.C. Co. ,

396 So. 2d 778, 787 (Fla. 1st DCA 1981).

2 6 . On or about May 13, 2011, Daniels Chevrolet, pursuant

to section 320.27 , submitted to the Department a preliminary

application for licensure as a motor vehicle dealer. Daniels

Chevrolet ' s application was supplemented by correspondence from

GM to the Department wherein GM advised that Daniels Chevrolet

" is exempt from protest under Section 320.642(5)(a)1 . , Florida

Statutes. " 6/ Clearly, GM and Daniels Chevrolet are affirmatively

asserting entitlement to the cited exemption as part and parcel

of the preliminary application for licensure as a motor vehicle

dealer. In accordance with Balino and J.W.C. Co. , Respondents,

therefore, have the burden of proof as to this issue.

2 7 . With respect to section 320.645, Petitioners allege

the following:

Upon information and belief, there is no

reasonable basis to expect that dealership

prof its will be sufficient to permit the

independent investor in Daniels to purchase

full ownership of the dealership within 10

years. Additionally, upon information and

belief, the independent investor in Daniels

has not made a significant investment in the

dealership.

Amended Petition, ¶ 25.

2 8 . Section 320.645(1) provides as follows:

No licensee, distributor, manufacturer, or

agent of a manufacturer or distributor, or

any parent, subsidiary, common entity, or

officer or representative of the licensee

s hall own or operate, either directly or

indirectly, a motor vehicle dealership in

this state for the sale or service of motor

vehicles which have been or are offered for

sale under a franchise agreement with a

motor vehicle dealer in this state. A

license e may not be issued a motor vehicle

dealer license pursuant to s. 320.27.

However, no such licensee will be deemed to

be in violation of this section:

(a) When operating a motor vehicle

dealership for a temporary period, not to

exceed 1 year, during th e transition from

one owner of the motor vehicle dealership to

another;

(b) When operating a motor vehicle

dealership temporarily for a reasonable

period for the exclusive purpose of

broadening the diversity of its dealer body

and enhancing opportuniti es for qualified

persons who are part of a group that has

historically been underrepresented in its

dealer body, or for other qualified persons

who the licensee deems lack the resources to

purchase or capitalize the dealership

outright, in a bona fide rela tionship with

an independent person, other than a licensee

or its agent or affiliate, who has made a

significant investment that is subject to

loss in the dealership within the

dealership ' s first year of operation and who

can reasonably expect to acquire f ull

ownership of the dealership on reasonable

terms and conditions; or

(c) If the department determines, after a

hearing on the matter, pursuant to

chapter 120, at the request of any person,

that there is no independent person

available in the communit y or territory to

own and operate the motor vehicle dealership

in a manner consistent with the public

interest.

In any such case, the licensee must

continue to make the motor vehicle

dealership available for sale to an

independent person at a fair and r easonable

price. Approval of the sale of such a motor

vehicle dealership to a proposed motor

vehicle dealer shall not be unreasonably

withheld.

2 9 . In Bayview Buick - GM Truck, Inc. v. General Motors Co. ,

597 So. 2d 887, 889 - 90 (Fla. 1st DCA 1992), the court noted,

with respect to section 320.645(1), that " [t]he first two

exceptions apply to the temporary operation -- not ownership -- of a

dealership, and the third exception applies only when there is

no independent person available to own the dealership. " 7 / In the

instant case, the thrust of Petitioners ' challenge, as set forth

in the Amended Petition, focuses on paragraph (b) of section

320.645(1).

30 . Because paragraph (b) of section 320.645(1) addresses

the temporary operation of a dealership by a licen see, like GM,

it is reasonable to conclude that the Legislature intended for

the provisions governing the temporary operation of a dealership

to be self - executing and requiring intervention by the

Department only in instances where a manufacturer temporari ly

operates a dealership outside of the parameters established by

the statute. 8 / This determination is supported by paragraph (c)

of section 320.645(1), which, unlike the other paragraphs found

in subsection (1), expressly provides for a chapter 120 heari ng

in instances where there is no independent person available to

" permanently own " a dealership. By expressly providing for a

chapter 120 hearing in one paragraph while not expressly

providing for a similar process in other paragraphs found in the

same s ubsection, it is reasonable to conclude that the

L egislature intended for issues related to the temporary

operation of a dealership to be treated differently from those

related to permanent ownership. Accordingly, in light of the

statutory framework in wh ich section 320.645(1)(b) is found, the

undersigned concludes that Petitioners, by alleging that GM and

Daniels Chevrolet are not in compliance with the requirements of

section 320.645(1)(b), are asserting the affirmative. See

generally Young v. Dep ' t of Cmty. Aff. , 625 So. 2d 831 , 835

(Fla. 1993)( " While the instant case involves a development

permit, we find that the statutory framework . . . distinguishes

this case from J.W.C. " and the Department, as the party

asserting the affirmative, has the ultimate burden of persuasion

and the initial burden of going forward.). Therefore, in

accordance with Balino , Petitioners have the ultimate burden of

persuasion with respect to issues related to section 320.645(1)

and the temporary operation of the subject dealer ship.

B. Section 320.642

3 1 . Section 320.642(5)(a) provides, in relevant part, that

the opening of a successor motor vehicle dealer within 12 months

is not considered an additional motor vehicle dealer subject to

protest if certain enumerated conditions are satisfied . Florida

Administrative Code Rule 15C - 7.004(4)(a), as it relates to the

instant matter, clarifies that the successor motor vehicle

dealer must submit " an application for a license to permit the

opening of . . . a successor dealer within 12 m onths of the

license revocation or surrender " by the previous franchised

motor vehicle dealer. University Chevrolet is the previous

franchised motor vehicle dealer.

3 2 . On April 19, 2010, University Chevrolet filed Articles

of Dissolution for a limited l iability company (Articles) with

the Florida Department of State, Division of Corporations. The

Articles provide that April 6, 2010, is the date of dissolution

for University Chevrolet. On June 30, 2010, University

Chevrolet filed with the Department, a petition of voluntary

relinquishment of license. On July 1, 2010, the Department

issued a Final Order wherein it granted University Chevrolet ' s

petition for voluntary relinquishment.

3 3 . Petitioners contend that because April 6, 2010, is

the date upon w hich University Chevrolet ceased to exist as a

corporate entity, this date, as a matter of law, should ,

therefore , be the start date for calculating the 12 - month period

provided for in section 320.642. Petitioners ' argument in this

regard is unfounded in light of section 608.4431 , Florida

Statutes, which provides, in part, that " [a] dissolved limited

liability company continues its existence but may not carry on

any business except that appropriate to wind up and liquidate

its business and affairs, includi ng . . . [d]oing every other

act necessary to wind up and liquidate its business and

affairs. " ( e mphasis added ).

3 4 . In order to determine what constitutes appropriate

" wind - up " activity, consideration must be given to the context

in which the purported wind - up activity occurs. In the context

of the 12 - month period provided for in section 320.642(5)(a) and

rule 15C - 7.004(4)(a), as applied in the instant case, there are

six wind - up activities that are critical to the analysis. As

previously noted, Univer sity Chevrolet, in support of its

petition to voluntarily relinquish its motor vehicle license,

represented to the Department that it completed the required six

critical tasks. University Chevrolet was engaged in wind - up

activity as it completed each of t he six critical tasks , and it

was also engaged in wind - up activity when it filed its petition

for relinquishment with the Department on June 30, 201 0 . The

Department ' s Final Order of July 1, 2010, granting University ' s

petition for relinquishment was the last " wind - up " activity

associated with the dissolution of University Chevrolet as

contemplated by sections 320.642(5)(a) and 608.4431.

Accordingly, July 1, 2010, is the start date for purposes of

calculating the 12 - month time frame provided for in sectio n

320.642(5)(a).

3 5 . On or about May 13, 2011, Daniels Chevrolet attempted

to file with the Department a preliminary application for

licensure as a motor vehicle dealer. Acceptance of Daniels

Chevrolet ' s application was initially refused by the Departmen t

because of a preemptive letter submitted on or about May 4,

2011, to the Department by Petitioners ' counsel. However, on or

about May 26, 2011, the Department, upon further consideration

of the matter, accepted for filing Daniels Chevrolet ' s

preliminary application , but stayed processing of the same in

light of Petitioners ' instant challenge.

3 6 . Petitioners argue that because Daniels Chevrolet was

not open for business within the statutory 12 - month window, it

should not be considered a successor deale r. It is disingenuous

of Petitioners to suggest that Daniels Chevrolet failed to open

for business within 12 months of the closing of University

Chevrolet when the uncontroverted evidence shows that the only

reason why Daniels Chevrolet did not open for b usiness by

June 30, 2011, was because of Petitioners ' instant challenge.

As was the case in Young , 625 So. 2d at 835, Petitioners '

challenge in the instant case had the practical effect of

staying the issuance of Daniels Chevrolet ' s motor vehicle

license , thereby , preventing the dealership from opening its

business within 12 months of the closing of University

Chevrolet. Petitioners cannot complain about the non - occurrence

of an event that was occasioned as a direct result of its

actions.

3 7 . Respondents have carried their burden of proving that

Daniels Chevrolet, as contemplated by section 320.642(5)(a), is

a successor motor vehicle dealer. Accordingly, the planned

opening of Daniels Chevrolet is not subject to protest within

the meaning of section 320. 642.

C. Sections 320.699, 320.645, and Standing

3 8 . Section 320.699, provides as follows:

(1) A motor vehicle dealer, or person

with entitlements to or in a motor vehicle

dealer, who is directly and adversely

affected by the action or conduct of an

a pplicant or licensee which is alleged to

be in violation of any provision of

ss. 320.60 - 320.70, may seek a declaration

and adjudication of its rights with respect

to the alleged action or conduct of the

applicant or licensee by:

(a) Filing with the dep artment a request

for a proceeding and an administrative

hearing which conforms substantially with

the requirements of ss. 120.569 and 120.57;

or

(b) Filing with the department a written

objection or notice of protest pursuant to

s. 320.642.

(2) If a written objection or notice of

protest is filed with the department under

paragraph (1)(b), a hearing shall be held

not sooner than 180 days nor later than

240 days from the date of filing of the

first objection or notice of protest, unless

the time is extended by the administrative

law judge for good cause shown. This

subsection shall govern the schedule of

hearings in lieu of any other provision of

law with respect to administrative hearings

conducted by the Department of Highway

Safety and Motor Vehi cles or the Division of

Administrative Hearings, including

performance standards of state agencies,

which may be included in current and future

appropriations acts. ( e mphasis added ).

3 9 . In Braman Cadillac, Inc. v. Department of Highway

Safety and Motor Vehicle , 584 So. 2d 1047, 1050 - 1051 (Fla. 1st

DCA 1991), the court held that section 320.699 provides

" standing to any directly and adversely affected party who can

assert a violation of Sections 320.60 - 320.70 which is

substantive in nature. " 9 /

40 . Becau se Daniels Chevrolet is a successor dealer whose

planned dealership is not subject to protest, it can reasonably

be said that Daniels Chevrolet is in essence " stepping into the

competitive shoes " of its predecessor, University Chevrolet. By

Daniels Chevro let donning the competitive shoes previously worn

by University Chevrolet, Petitioners, by having to compete with

Daniels Chevrolet for customers, would be in no worse position

than they were when they had to compete with University

Chevrolet. Consequent ly, issues related to " competition

dynamics " are not necessarily material to a determination

regarding whether Petitioners will be directly and adversely

affected by Respondents ' alleged non - compliance with section

320.645.

41. In reviewing the Amended Pe tition, it is alleged, with

respect to section 320.645, that " there is no reasonable basis

to expect that dealership profits will be sufficient to permit

the independent investor in Daniels to purchase full ownership

of the dealership within 10 years " and that " the independent

investor in Daniels has not made a significant investment in the

dealership. " (Amended Petition, ¶ 25). Assuming that these

allegations concern matters that are substantive in nature,

Petitioners have neither alleged, nor have they offered any

proof as to how Daniels Chevrolet ' s purported inability to

purchase the dealership in ten years, or the alleged failure to

make a significant investment in the dealership, will " directly

and adversely " affect their business interests. Petition ers

suggest that if Respondents are allowed to open the dealership

in question, then the opening of the same will impact

Petitioners ' ability to secure new vehicles from GM. Contrary

to Petitioners ' assertion, new vehicle allocations from GM to

Petitioner s will not be diminished as a result of the

establishment of Daniels Chevrolet as a successor dealership.

This assertion by Petitioners is pure speculati on and is

insufficient to establish a direct and adverse affect on

Petitioners ' business operations. 10 / Also, if Petitioners '

doomsday forecasts regarding Daniels Chevrolet ' s inability to

meet its revenue projections prove accurate, then Daniels

Chevrolet will be out of business in a relatively short period

of time , and Petitioners will arguably benefit f rom the demise

of Daniels Chevrolet by having one less competitor to contend

with. This hardly seems like an " adverse " impact on

Petitioners ' business interests.

4 2 . Petitioners have failed to prove that Respondents

alleged conduct " directly and advers ely " affects their business

interests and , therefore , Petitioners lack standing to challenge

the proposed temporary operation of Daniels Chevrolet by

Respondents.

4 3 . Notwithstanding the above, even if Petitioners were

able to successfully overcome the issue of standing and

otherwise demonstrate entitlement to a hearing pursuant to

chapter 120, their cause would nevertheless fail because the

evidence does not establish that Respondents are in

non - compliance with the requirements of section 320.645.

Pet itioner s contend that GM has not " entered into a bona fide

relationship with an independent person with respect to

Daniels[.] " Section 320.645(2)(a) provides that an

"' [i]ndependent person ' is a person who is not an officer,

director, or employee of the l icensee. " Petitioners offered no

evidence to support their allegations that the contractual

relationship between Mr. Daniels and GM is not bona fide or that

Mr. Daniels is an officer, director, or employee of GM . 1 1 /

Accordingly, Petitioners have not sati sfied their burden of

proof as to this issue .

4 4 . Next, Petitioners contend that Mr. Daniels has not

" made a significant investment in Daniels [Chevrolet] that is

subject to loss within the dealership ' s first year of

operation. " Section 320.645(2)(c) pro vides that a

"' [s]ignificant investment ' means a reasonable amount,

considering the reasonable capital requirements of the

dealership, acquired and obtained from sources other than the

licensee or any of its affiliates and not encumbered by the

person ' s in terest in the dealership. " Mr. Daniels has committed

$500,000.00 of his personal resources towards the operation of

Daniels Chevrolet. This amount represents 18.1 percent of the

capitalization requirements for Daniels Chevrolet. This

investment of 18.1 percent by Mr. Daniels towards the capital

requirements of Daniels Chevrolet represents a significant

investment. Additionally, Mr. Daniels ' agreement with

GM clearly provides that his entire initial investment is

subject to loss during Daniel Chevrolet ' s first year of

operation.

4 5 . Petitioners also contend that " profits from the

dealership [cannot] be reasonably expected to be sufficient to

allow full ownership of Daniels [Chevrolet] by the independent

person within a reasonable time period not to e xceed ten

years[.] " Petitioners ' expert testified that for years 2001 to

2009, University Chevrolet sold an average of 740 vehicles.

According to the expert, Respondents ' projection, showing annual

vehicle sales averaging 850 units, is unreasonable becau se

between years 2001 and 2009 , none of the other dealers that

occupied the North Florida Avenue Location performed at this

level. However, a review of yearly sales data from University

Chevrolet shows the following: in 2001 , the dealer sold 890

units ; i n 2002 , it sold 863 units ; in 2003 , it sold 921 units ;

in 2004 , it sold 915 units ; and in 2005 , it sold 977 units.

Though past performance is not an indicator of future success,

it is certainly within the realm of reasonable possibility that

Daniels Chevr olet can produce a yearly average of 850 new

vehicles sold for eight of the next ten years. If Daniels

Chevrolet meets or exceeds its projections then, through the use

of profits, it will be able to secure full ownership of the

dealership in approximately six and a - half years. Obviously if

it fails to hit its mark , then it will take longer. However, it

cannot be said that Respondents ' projections are so far afield

as to be deemed unreasonable within the meaning of section

320.645(1)(b).

4 6 . Finally, P etitioners contend that " [Mr. Daniels is]

excluded from expediting the purchase of full ownership of

Daniels [Chevrolet] using a monetary source other than profits

from the dealership ' s operations[.] " Contrary to Petitioners '

allegation, the a greement bet ween Roland C. Daniels and General

Motors, LLC, expressly provides that Mr. Daniels " is not

precluded from an expedited purchase of the preferred [stock]

shares using a monetary source other than profits from the

dealership ' s operation. "

4 7 . The greater weight of the competent and substantial

evidence establishes that the terms and conditions of the

contract between Mr. Daniels, GM, and Daniels Chevrolet, comply

with the requirements of section 320.645.

RECOMMENDATION

Based on the foregoing Findings o f Fact and Conclusions of

Law set forth herein, it is

RECOMMENDED that the Department of Highway Safety and Motor

Vehicles, Division of Motor Vehicles, enter a final order

granting Respondent, Daniels Chevrolet ' s , licensure application

to operate as a suc cessor motor vehicle dealer at 11300 North

Florida Avenue, Tampa, Florida, and denying the relief sought by

Petitioners , Ferman Chevrolet and Gordon Chevrolet, in their

Amended Petition.

DONE AND ENT ERED this 1st day of December , 2011 , in

Tallahasse e, Leon County, Florida.

S

LINZIE F. BOGAN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of December , 2011 .

ENDNOTES

1/ All references to Florida Statutes are to the 2010 edition ,

unless otherwise indicated.

2/ The average for this period i s somewhat skewed by the fact

that effective May 2009 , University Chevrolet was no longer able

to buy cars from GM and , accordingly, annual sales data for year

2009 only covers 11 months.

3/ The high amount of $2,187,741.00 was received by University

Che vrolet in additions and deductions in the year 2001.

Conversely, in year 2008, University Chevrolet received only

$562,182.00 in additions and deductions.

4/ Section 320.60 defines a licensee as " any person licensed or

required to be licensed under sect ion 320.61. " Section 320.61

establishes certain licensing requirements for a " manufacturer,

factory branch, distributor, or importer. " Therefore, unless

otherwise indicated, a licensee, for purposes of section

320.645, is a manufacturer, factory branch, distributor, or

importer.

5/ Rule 15C - 7.004(4)(a) provides that:

If the license of an existing franchised

motor vehicle dealer is revoked for any

reason, or surrendered, an application for a

license to permit the reopening of the same

dealer or a succ essor dealer within twelve

months of the license revocation or

surrender shall not be considered the

establishment of an additional dealership if

one of the conditions set forth in Section

320.642(5), Florida Statutes, is met by the

proposed dealer.

6/ R ule 15C - 7.004(4)(b) requires that in the application for

successor dealership, " [ t ]he dealer shall indicate which

provision of section 320.642(5), Florida Statutes, if any, it

contends exempts the proposed location from consideration as an

additional deale rship. " Additionally, rule 15C - 7.004(4)(c)

requires that " [a]n application for a dealership intended as a

successor dealership shall be accompanied by a letter from the

licensee clearly stating that the applicant is intended as a

successor dealership and shall identify the prior dealership to

be replaced. "

7/ Section 320.645 has been amended subsequent to 1991, the year

that Bayview Buick - GM Truck was decided. The amendments do not,

however, affect the instant analysis.

8 / Nalini Vinayak is the Depart ment ' s administrator for the

dealer license section. Ms. Vinayak testified, with respect to

section 320.645, that when a manufacturer, like GM, asserts that

it is involved in the temporary operation of a dealership, the

Department accepts the manufacturer ' s representation as true ,

a nd does not investigate the accuracy of the manufacturer ' s

representations .

9 / Generally, if there is an alleged substantive violation of

sections 320.60 through 320.70, section 320.699, subject to

standing, allows for either " an administrative hearing which

conforms substantially with the requirements of section 120.569

and 120.57 " or, after " filing with the department a written

objection or notice of protest, " a challenge proceeding pursuant

to section 320.642. As applied to the instant case, it may

reasonably be suggested that section 320.699 creates a

presumption in favor of a chapter 120 hearing. However, when

considering the language found in section 320.645(1)(c), which

deals with the permanent ownership of a dealership and provides

expressly for chapter 120 review , and comparing it to language

found in 320.645(1)(a) and (b), which make no specific reference

to chapter 120, a question remains as to whether the Legislature

intended for entit ies other than temporary dealer ship operators

to have access to a chapter 120 hearing when the provisions of

section 320.645(1)(a) and (b) are at issue . Inclusio unius est

exclusion alterius is the Latin maxim which instructs that the

inclusion of one thing implies the exclusion of ano ther. Smith

v. State , 982 So. 2d 69, 70 (Fla. 1st DCA 2008)( citing Rivera v.

Singletary , 707 So. 2d 326 (Fla. 1988)). Furthermore, " [i]t is

axiomatic that statutes must be read with other related statutes

and other related portions of the same statute. " State v.

Negrin , 306 So. 2d 606, 607 (Fla. 1st DCA 1975). In light of

the fact that Petitioners have failed to show that they have

standing to proceed under section 320.645, and that a disputed

fact hearing was actually held in the instant matter, the

un dersigned has determined that this issue need not be addressed

in the instant proceeding. See The City of Delray Beach, Fla .

v. Dharma Prop . , Inc. , 809 So. 2d 35 (Fla. 4th DCA 2002)(A court

lacks subject matter jurisdiction once a determination is made

th at a party lacks standing to proceed . ) .

10 / Section 320.64(18) provides a mechanism for challenging

issues related to the equitable allocation of new vehicles by an

automobile manufacturer.

1 1 / Chapter 320 does not define the phrase " bona fide. "

Accor ding to Black ' s Law Dictionary, the phrase means " in or

with good faith; honestly, openly, and sincerely; without deceit

or fraud. " Black ' s Law Dictionary , pg. 160 (5th ed. 1979)

COPIES FURNISHED :

Sandra C. Lambert, Dir ector

Division of Motor Vehicles

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building , Room B - 439

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 0 635

Steve Hurm, General Counsel

Department of Highway Safety

and Motor Vehicles

Neil Kirkman Building

2900 Apalachee Parkway

Tallahassee, Florida 32399 - 0500

J. Andrew Bertron, Esquire

Nelson, Mullins, Riley,

and Scarborough, LLP

3600 Maclay Boulevard South, Suite 202

Tallahassee, Florida 32312

John W. Forehand, Esquire

R. Craig Spickard, Esquire

Kurkin Forehand Br andes, LLP

800 North Calhoun Street, Suite 1B

Tallahassee, Florida 32303

James K. Fisher, Esquire

Department of Highway Safety

and Motor Vehicles

2900 Apalachee Parkway, Room A430

Mail Station 61

Tallahassee, Florida 32399

Eric Scott Adams, Esquire

S hutts & Bowen, LLP

4301 West Boy Scout Boulevard , Suite 3 00

Tampa, Florida 3360 7

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 thi s Recommended Order should be filed with the agency that

will issue the Final Order in this case.