14-001769 Dp Partners, Ltd vs. Sunny Fresh Citrus Export And Sales Co., Llc, And Hartford Fire Insurance Company, As Surety Status: Closed Recommended Order on Thursday, October 30, 2014.

Summary: Respondent owes Petitioner the amount claimed; agriculture bond should be attached to satisfy the debt.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DP PARTNERS, LTD ,

Petitioner,

vs. Case No. 14 - 1769

SUNNY FRESH CITRUS EXPORT AND

SALES CO., LLC, AND HARTFORD

FIRE INSURANCE COMPANY, AS

SURETY,

Respondent.

_______________________________/

RECOMMENDED ORDER

A duly - noticed final hearing was held in this matter on

August 27, 2014, in Lakeland, Florida, before Suzanne Van Wyk, a

designated Administrative Law Judge of the Division of

Administrative Hearings (Division) .

APPEARANCES

For Petitioner: Bert J. Harris, Esq u ire

Swaine, Harris, Sheehan and McClure, P.A.

401 Dal Hall Boulevard

Lake Placid, Florida 33852

For Respondent: Arthur C. Fulmer, Esquire

Fulmer and Fulmer, P.A.

1960 East Edgewood Drive

Lakeland, Florida 33813

STATEMENT OF THE ISSUE

Whether Sunny Fresh Citrus Export and Sales, Co., LLC, is

liable to Petitioner in the amount of $44,032.00 for delivery of

fruit which remains unpaid.

PRELIMINARY STATEMENT

On March 12, 2014, Petitioner filed an Amended Complaint

against Sunny Fresh Citrus Export and Sales Co., LLC, and

Hartford Fire Insurance Company with the Florida Department of

Agriculture and Consumer Services (Department) seeking payment

under two fruit purchase agreement s . The Department provided

Notice of the Amended Complaint to Sunny Fresh Citrus Export and

Sales Co., LLC , and to Hartford Fire Insurance Company.

Respondent answered the Amended Complaint on April 9, 2014;

denied the validity of the complaint; asserted that Sunny Fresh

Citrus Export and Sa les Co., LLC , had no valid contract with

Petitioner for purchase of fruit ; and requested a hearing . The

Department referred the matter to the Division on April 16,

2014, for conduct of the requested hearing. Hartford Fire

Insurance Company did not respon d to the Amended Complaint and

did not appear in these proceedings.

The matter was initially assigned to Judge William F.

Quattlebaum and scheduled for hearing on June 19, 2014 , by video

teleconference in Lakeland and Tallahassee, Florida. The final

heari ng was continued at the request of the parties and

rescheduled for August 26, 2014 , by video teleconference. Th e

matter was subsequently transferred to the undersigned an d

rescheduled to August 27, 2014, as a live hearing in Lakeland,

Florida.

The final h earing commenced as scheduled. Petitioner

offered the testimony of Daniel H. Phypers and Danielle Phypers

Daum , limited partner s in DP Partners, Ltd. , and Robert

Marinaro. Respondent offered the testimony of Joseph Paladin.

The parties stipulated to the introduction of Joint Exhibits 1

and 2 and PetitionerÓs Exhibi ts 3 through 51 and 5 4 through 59. 1/

Respondent introduced Exhibits 1 through 5.

At the conclusion of the final hearing, the undersigned

requested the parties to submit additional exhibits, wh ich were

timely provided, and are hereby designated as follows:

PetitionerÓs Exhibit 57 - Citrus Fruit

DealerÓs Bond No. 21BSBGH6607 .

RespondentÓs Exhibit 6 Î Florida Department

of State, Division of Corporations

Fictitious Name Filing for Sunny Fresh

C itrus Export and Sales Co.

RespondentÓs Exhibit 7 Î Florida Department

of State, Division of Corporations filing

for Sunny Fresh Citrus Export and Sales Co.,

LLC, as well as Articles of Organization

therefore, and Annual Reports thereof.

RespondentÓs Exh ibit 8 Î Florida Department

of State, Division of Corporations filing

for Sunny Fresh Packing, LLC, Electronic

Articles of Incorporation, Resignation of

Member, and Annual Reports related thereto.

RespondentÓs Exhibit 9 Î Florida Department

of State, Divi sion of Corporations filing

for Phoenix Packing, LLC, Electronic

Articles of Organization and an Annual

Report thereof.

RespondentÓs Exhibit 10 Î Durable Power of

Attorney executed by Kelly Marinaro on

November 4, 2011.

The parties did not order a transc ript of the proceedings.

The parties timely filed Proposed Recommended Orders pursuant to

the undersignedÓs Order on Post - Hearing Submissions, which have

been considered in the preparation of the Recommended Order.

FINDING S OF FACT

1 . Petitioner, DP Part ners, Ltd. (Partners) , is a Florida

L imited Partnership located in Lake Placid, Florida, engaged in

the business of citrus production. Daniel H. Phypers and

Danielle Phypers Daum, brother and sister, and their father Drew

Phypers, are limited partners in the business .

2 . Respondent, Sunny Fresh Citrus Export and Sales Co.,

LLC, (the LLC) is a Florida Limited Liability Company

headquartered in Vero Beach, Florida, engaged in the business of

exporting citrus for retail sale.

3 . The LLC was organized and re gistered with the State of

Florida Division of Corporations on November 3, 2011 . The

members of the LLC are Kelly Marinaro and Jean Marinaro, husband

and wife .

4 . Kelly Marinaro (Marinaro) formerly conducted business

in the name of Sunny Fresh Citrus Ex port and Sales Co. (the

DBA) , a fictitious - name entity regist ered with the Florida

Department of State, Division of Corporations, on October 23,

2007. The fictitious - name entity registration expired on

December 31, 2012.

5 . Marinaro suffered a massive he art attack in November

2011 and was incapacitated. He did not return to work until the

Spring of 2013 .

6 . On November 4, 2011, after suffering the heart attack,

and one day after organiz ing and registering the LLC, Marinaro

conveyed durable power of atto rney to Joseph Paladin (Paladin)

as his Agent. Among the authority granted to Paladin, was the

following:

2. To enter into binding contracts on my

behalf and to sign, endorse and execute any

written agreement and document necessary to

enter into such con tract and/or agreement,

including but not limited to . . .

contracts, covenants . . . and other debts

and obligations and such other instruments

in writing of whatever kind and nature as

may be.

* * *

9. To open, maintain and/or close bank

accounts, inc luding, but not limited to,

checking accounts . . . to conduct business

with any banking or financial institution

with respect to any of my accounts,

including, but not limited to, making

deposits and withdrawals, negotiating or

endorsing any checks . . . payable to me by

any person, firm, corporation or political

entity[.]

* * *

12. To maintain and operate any business

that I currently own or have an interest in

or may own or have an interest in, in the

future.

7 . In MarinaroÓs absence, Paladin conduc ted the usual

affairs of the business, including entering into contract s to

purchase citrus from several growers.

8 . On October 19, 2012, Paladin entered into contract

number 2033 with Partners to purchase approximately 6000 boxes

of Murcot s (a tangerine variety ) at $12.00 per box . 2/ The

contract is signed by Paladin as the Agent of ÐSunny Fresh

Citrus Export & Sales Company, License d Citrus Fruit Dealer

(Buyer).Ñ

9 . On December 13, 2012, Sunny Fresh entered into contract

number 2051 with Partners to pur chase Hamlins (a different fruit

variety ) at $6.50 per box. 3/ The contract price was for citrus

Ðon the tree,Ñ meaning it was the buyerÓs responsibility to

harvest the citrus. The contract is signed by Paladin as the

Agent of ÐSunny Fresh Citrus Export & Sales Company, Licensed

Citrus Fruit Dealer (Buyer).Ñ (Contract 2033 and 2051 are

hereinafter referred to collectively as Ðthe contractsÑ . )

10 . The contracts were prepared on pre - printed forms used

by MarinaroÓs businesses pre - dating PaladinÓs involveme nt. The

contract form is titled as follows:

Citrus Purchase Contract & Agreement

Sunny Fresh Citrus Export & Sales Company

Cash Fruit Crop Buyer

2101 15 th Avenue

Vero Beach, Florida 32960

11 . Paladin testified that he was not aware of more than

one com pany for MarinaroÓs fruit - dealing business. He testified

that he was not aware of any difference between Sunny Fresh

Citrus Export and Sales Company and Sunny Fresh Citrus Export

and Sales Co., LLC . Paladin was not aware of when the LLC was

created. Pal adinÓs testimony is accepted as credible and

reliable .

12 . Paladin testified that his intent was to enter into

the contracts for the benefit of ÐSunny Fresh . Ñ ÐSunny Fresh , Ñ

written in twelve - point bold red letters over an image of the

sun in yellow outl ined in red , is a trademark registered with

the Florida Division of Corporations. Marinaro first registered

the trademark in February 1998. In his trademark application,

Marinaro entered the applicantÓs name as ÐKelly Marinaro D/B/A

Sunny Fresh Citrus.Ñ Marinaro renewed the trademark

registration in 2007.

13 . Marinaro testified that the ÐSunny FreshÑ trademark is

Ðowned by the LLC.Ñ

14 . On February 20, 2012, Paladin, Marinaro and a third

partner, Gary Parris, formed another company, Sunny Fresh

Packing , LLC, the purpose of which was to run a fruit - packing

house in Okeechobee, Florida. Equipment for the packing house

was obtained from a packing house in Ft. Pierce, Florida, which

was indebted to Marinaro , in some capacity, and went Ðbelly up . Ñ

15 . In M arch 2013, the Okeechobee packing house was struck

by lightning.

16 . Shortly after the lightning strike, Marinaro, Paladin,

and Mr. Parris, signed a letter addressed ÐTo our valued

Growers.Ñ The letter explain ed that, due to both the lightning

strike, w hich shorted out all computers and electrical

components at the packing house, and reduced demand for product

due to severe weather in the northeastern United States, they

had made a Ðbusiness decision to end the year now and prepare

for next year.Ñ

17 . The letter further explain ed that, Ðrather than

spending thousands of dollars all at once, we feel, it makes

better sense to use our cash flow to pay our growers

f irst . . . . We will be sending out checks every week or every

other week until everyone i s paid or until we receive

supplemental cash infusions that we are working on. In that

case we would just pay everyone in full, from that.Ñ

18 . The letter was prepared on letterhead bearing the

ÐSunny FreshÑ trademark logo.

19 . Paladin made a number o f payments to Partners on the

contracts during 2012 and 2013. Each check shows payor name as

ÐSunny FreshÑ with an address of 2101 15 th Avenue, Vero Beach,

Florida 32960. Mr. Phypers met with Paladin a number of times

to collect checks and understood tha t Paladin was making

concerted efforts to pay all the growers. However, Partners did

not receive full p ayment on the contracts .

20 . Paladin drafted a Release of Invoices Agreement

(Agreement) by which creditor growers could receive partial

payment on the ir outstanding contracts in exchange for a full

release of liability from the buyer. The Agreement lists the

following entities and persons as being released from liability:

ÐSunny Fresh Packing, LLCÑ ; ÐSunny Fresh Citrus Export and Sales

Co., LLCÑ ; and Kelly Marinaro.

21 . Paladin presented the Agreement to Partners with an

offer to pay $36,449.45 in consideration for signing the

Agreement. Partners did not sign the Agreement.

22 . The parties stipulated that the amount owed Partners

under both contract s is $44,032.00.

23 . Respondent contends that Petitioner Ós claim is filed

against the wrong business entity. Respondent argues that

PetitionerÓs contracts were with the DBA , and that PetitionerÓs

claim is incorrectly brought against the LLC. Thus, Respo ndent

reasons, the LLC is not liable to Petitioner for the monies

owed.

24 . The DBA was registered with the State of Florida in

2007 and held an active fruit dealerÓs license through July 31,

2012. Marinaro owned and operated the DBA at 2101 15 th Avenue,

Vero Beach, Florida 32960.

25 . The DBA filed a citrus fruit dealerÓs bond with the

Department of Agriculture for the 2008 - 2009 shipping season.

26 . Marinaro registered the trademark ÐSunny FreshÑ logo

in the name of the DBA in 2007, and was still us ing the logo on

his business letterhead in 2013.

27 . Marinaro formed the LLC in 2011, which holds an active

citrus fruit dealerÓs license. Marinaro and his wife, Jean, are

the only members of the LLC. The principal address is 2101 15 th

Avenue, Vero Beac h, Florida 32960.

28 . The LLC filed citrus fruit dealerÓs bonds with the

Department of Agriculture on June 28, 2012 , for the shipping

season ending July 31, 2013, and on May 2, 2013, for the

shipping season ending July 31, 2014. Marinaro did not refile a

bond for the DBA after forming the LLC.

29 . At all times relevant hereto, MarinaroÓs fruit

dealerÓs business has been physically located at 2101 15 th

Avenue, Vero Beach, Florida 32960. The building at that address

bears the name ÐSunny Fresh.Ñ

30 . Mari naro testi fied that he formed the LLC shortly

after his heart attack to Ð protect his personal assets. Ñ

Marinaro explained that he had little revenue in the LLC Ð for

the next two years, Ñ and he plan ned for the LLC to conduct sales

for the packing company. He expected the LLC would be

purchasing fruit from other packing houses. In fact, he

testified that, during his absence, he was not aware that either

the DBA or the LLC were purchasing fruit.

31 . Marinaro was clearly upset about the financial state

of his business when he resumed control in the Spring of 2013.

He testified that, prior to his heart attack, he was running a

business with a typical $10 to $12 million yearly revenue, but

that he returned to a business in debt to the tune of roughly

$790,0 00.00. Marinaro lamented that Paladin entered into

contracts to buy citrus when that was not the plan for the LLC .

A lternately, he blamed Paladin for taking too much money out of

the LLC to set up the packing house.

32 . MarinaroÓs testimony was inconsis tent and unreliable.

He first testified that Paladin ha d full authority to purchase

fruit in his absence, but later professed to be Ð dismayed Ñ that

his company was purchasing fruit in his absence. The evidence

does not support a finding that the LLC was formed for any

reason other than to continue his fruit dealings in a legal

structure that would protect his personal assets.

33 . MarinaroÓs explanation that the purpose of the LLC was

to conduct sales for the packing company also lacks credibility.

The L LC was organized in November 2011, but the packing house in

Ft. Pierce from which he acquired the equipment to set up a

packing house in Okeechobee did not go Ðbelly upÑ until February

2012. Marinaro would have had to be clairvoyant to set up an

LLC for t he sole purpose of sales to a packing house about which

he was not aware until four months later.

34 . MarinaroÓs testimony that he was in the dark about the

running of his business and that he was somehow duped by Paladin

is likewise unreliable. Marinaro testified that, during his

absence, he was Ðconcerned that Paladin was entering into

contracts where a bond was required, but not secured.Ñ 4/ He

could not have been concerned about contracts to buy fruit

without posting the required bond if he was not ev en aware that

his company was purchasing fruit. Further, Marinaro n either

question ed Paladin about entering into the citrus contracts, n or

suggest ed Paladin use a different contract form for the LLC.

35 . The evidence establishes that Marinaro knew Pala din

was purchasing fruit during MarinaroÓs absence to continue the

regular fruit - dealerÓs business , and further, that Marinaro knew

Paladin was entering into contracts on behalf of the LLC, the

company formed just one day prior to Marinaro granting Paladin

full power o f attorney to run his business.

36 . Finally, Marinaro knowingly participated in the

formation of Sunny Fresh Packing, LLC, in February 2012, four

months after he became incapacitated. This required his

involvement in a complicated business s cheme in which his

company collected on a debt owed by a packing ho use in

Ft. Pierce, and acquired the equipment to run the new packing

house , with two partners, Parris and Paladin, located in

Okeechobee on property owned by a third party, Mr. Smith, who i s

not a member of Sunny Fresh Packing, LLC. It is unlikely

Marinaro was clueless as to the fruit dealings of the LLC in his

absence. Further, i t is disingenuous, at best, for Marinaro to

suggest that the contracts entered into in 2012 are not with the

LL C, the corporation he formed in 2011 to protect hi s personal

assets from his business obligations.

CONCLUSIONS OF LAW

37 . The Division has jurisdiction over the parties and the

subject matter of this proceeding. §§ 120.569 & 120.57(1),

604.21(6), Fla. St at. (2014).

38 . As the Petitioner, Partners bears the burden of

proving the allegations of its complaint by a preponderance of

the evidence. See DepÓt of Banking & Fin. , Div. of Sec. & Inv.

Prot. v. Osborne Stern & Co. , 670 So. 2d 932, 934 (Fla.

1996)(ÐT he general rule is that a party asserting the

affirmative of an issue has the burden of presenting evidence as

to that issueÑ); Fla. DepÓt of Transp. v. J.W.C. Co. , 396 So. 2d

778, 788 (Fla. 1st DCA 1981); Vero Beach Land Co., LLC v. IMG

Citrus, Inc. , Case No. 08 - 5435 (Fla. DOAH Mar. 4, 2009; DepÓt

Agric. & Consumer Serv. July 20, 2009), affÓd IMG Citrus, Inc.

v. Westc hester Fire Ins. Co. , 46 So. 3d 1014 (Fla. 4th DCA

2010).

39 . There is no dispute that the contracts are valid.

Likewise, there is no dispu te that Partners is owed $44,032.00

under the contracts. This dispute is about whether the LLC is

responsible for paying Partners under the contracts.

Respondent Ós sole argument is that the contracts are obligations

of the DBA, an entity which no longer exists and for which no

valid citrus bond is filed .

40 . Contrary to RespondentÓs assertions, the c ontracts are

with the LLC. RespondentÓs Agent, Paladin, was authorized to

enter into contracts to purchase fruit one day after Marinaro

organized and regist ered the LLC . Paladin made no distinction ,

with either Marinaro or the growers , between the DBA and the

LLC. Paladin had one banking account and made payments to a

host of growers. The company c hecks and company letterhead bore

the ÐSunny FreshÑ tradema rk logo, which Marinaro testified was

owned by the LLC. Further, the LLC acknowledged the contracts

were its obligations when it presented Partners with the

Agreement to accept $36,449.45 as full payment on the contracts

and release the LLC from its oblig ations.

41 . Assuming, arguendo, that Respondent is correct that

the contracts were liabilities of the DBA, the LLC is a mere

continuation of the business of the DBA and has assumed its

obligations under the contracts.

42 . Traditional corporate law holds that the liabilities

of a predecessor corporation may not be imposed on the successor

corporation unless:

(1) The successor expressly or impliedly

assumes obligations of the predecessor; (2)

the transaction is a de facto merger; (3)

t he successor is a me re continuation of the

predecessor; or (4) t he transaction is a

fraudulent effort to avoid the liabilities

of the predecessor.

Bernard v. Kee Mfg. Co. , 409 So. 2d 1047, 1049 (Fla. 1982);

Anders for Anders v. Jacksonville Elec. Auth. , 443 So. 2d 330

(Fla. 1st DCA 1983).

43 . The concept of continuation of business arises where

the successor corporation is merely a continuation or

reincarnation of the predecessor corporation under a different

name. See Munim v. Azar , 648 So. 2d. 145, 154 (Fla. 4th DCA

1994 )( n ewly - formed professional a ssociation with same sole

shareholder as forme r professional a ssociation is a continuation

of business, and thus, liable for the judgment against former

professional association ). In Munim , the court stated, ÐFor all

intents a nd purposes, the new P.A. is the old P.A. dressed up

with a new name and controlled by the same individual.Ñ Id .

44 . To avoid liability as a successor corporate entity,

t he Ðpurchasing corporation must not merely be a Ònew hatÓ for

the seller with the s ame or similar entity or ownership.Ñ Id .

While having common attributes does not automatically impose

liability on a successor corporation, merely repainting the sign

on the door and using new letterhead certainly gives the

appearance that the new corpor ation is simply a continuation of

the predecessor corporation. See Lab. Corp. of Am . v. ProfÓl

Recovery Network , 813 So. 2d 266, 270 (Fla. 5th DCA

2002)(citations omitted)(de facto merger occurred where the

corporations were governed by a sole officer and shareholder,

shared the same attorney and registered agent, conducted the

same business, had substantially the same employees and

customers, the same telephone and fax numbers, and the same

accounting system and computerized databases). The key element

o f a continuation is a common identity of the officers,

directors, and stockholders in the two corporations. Munim , 648

So. 2d at 154.

45 . In the case at hand, the LLC is a mere continuation of

the citrus - dealing business formerly operated by Marinaro d/b /a

Sunny Fresh Citrus Export and Sales Co. The LLC is operated out

of the same office, at the same address, and using the same

staff as the former DBA. Marinaro retains control of the

business as a managing member of the LLC . Contrary to

MarinaroÓs asse rtions at the final hearing, the LLC was engaged

in the same business as the DBA.

46 . In this case , the LLC is the DBA Ðdressed up with a

new name and controlled by the same individual.Ñ Marinaro did

not even bother to change the letterhead or the sign on the

door .

47. Both parties seek an award of attorneyÓs fees pursuant

to the contracts. 5/ The plain language of the contracts provides

for attorneyÓs fees at Ðboth trial and appellate court levels.Ñ

The parties have not cited any authority for an awar d of

attorneyÓs fees in this administrative proceeding.

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 approving the claim of DP

Partners, L td ., against Sunny Fresh Citrus Export and Sales Co.,

LLC , in the amount of $44,032.00.

DONE AND ENTERED this 30 th day of October , 2014 , in

Tallahassee, Leon County, Florida.

S

Suzanne Van Wyk

Administrative Law Judge

Division of Administrati ve 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 30 th day of October , 2014.

ENDNOTE S

1/ PetitionerÓs Exhibits 52 and 53 were withdrawn and replaced

by Joint Exhibit 1.

2/ The contract defines ÐboxÑ as 95 pounds net weight of

tangerines.

3/ The contract was not for a particular number of boxes, but

rather for fruit Ðload by load.Ñ In this case, the buyer

contracted to purchase all the fruit produced during the 2012 -

2013 growing season.

4/ This testimony is likewise inconsistent with MarinaroÓs

testimony that he was not aware that either the DBA or the LLC

was purchasing fruit in h is absence.

5/ The contracts provide for an award of attorneyÓs fees to the

buyer in the event of sellerÓs breach. PetitionerÓs request for

attorneyÓs fees relies upon section 57.105, Florida Statutes,

governing award of attorneyÓs fees in an action to enforce a

contract.

COPIES FURNISHED :

Mandy L. Medders, Bureau Chief

Department of Agriculture and

Consumer Services

Bureau of Agricultural Dealer's Licenses

Division of Marketing and Development

407 South Calhoun Street, MS 38

Tallahassee, Florida 32399 - 0800

(eServed)

Matt Grimes

Hartford Fire Insurance Company

1 Hartford Plaza T - 4

Hartford, Connecticut 06155

Jean Marinaro

Sunny Fresh Citrus Export and Sales Company, LLC

2101 15th Avenue

Vero Beach, Florida 32960

Bert J. Harris, Esquire

Swaine, Harris, Sheehan and McClure, P.A.

401 Dal Hall Boulevard

Lake Placid, Florida 33852

(eServed)

Arthur C. Fulmer, Esquire

Fulmer and Fulmer, P.A.

1960 East Edgewood Drive

Lakeland, Florida 33813

(eServed)

Lorena Holley, General Counsel

D epartment of Ag riculture and

Consumer Services

407 South Calhoun Street, Suite 520

Tallahassee, Florida 32399 - 0800

(eServed)

Honorable Adam Putnam

Commissioner of Agriculture

D epartment of Agriculture and

Consumer Services

The Capitol, Plaza Level 10

Tallahassee, Florida 32399 - 08 1 0

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.