15-002376 Orange Bend Harvesting, Inc. vs. Ridge Island Groves Inc., And Old Republic Surety Company, As Surety Status: Closed Recommended Order on Thursday, August 20, 2015.

Summary: Petitioner proved that Respondent owes Petitioner $435.00 under a Standard Fruit Contract.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ORANGE BEND HARVESTING, INC.,

Petitioner,

vs. Case No. 15 - 2376

RIDGE ISLAND GROVES , INC., AND

OLD REPUBLIC SURETY COMPANY, AS

SURETY,

Respondent s .

_______________________________/

RECOMMENDED ORDER

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

June 18, 2015, in Wildwood, Florida, before Suzanne Van Wyk, a

designated Administrative Law Judge of the Division of

Administrative Hearings (Division).

APPEARANCES

For Petitione r Orange Bend Harvesting, Inc :

Cornelius Caldwell

Ruben Caldwell

Orange Bend Harvesting, Inc.

Post Office Box 490197

Leesburg, Florida 34749 - 0197

For Respondent Ridge Island Groves, Inc. :

Douglas A. Lockwood, Esquire

Straughn and Turner, P.A.

255 Magno lia Avenue, Southwest

Winter Haven, Florida 33880 - 2902

For Respondent Old Republic Surety Company:

No Appearance

STATEMENT OF THE ISSUE

Whether Respondent, Ridge Island Groves, Inc., is liable to

Petitioner, Orange Bend Harvesting, Inc., on a contract to

purchase citrus fruit, and , if so, the amount owed.

PRELIMINARY STATEMENT

On March 31, 2015, Petitioner filed a Complaint against

Ridge Island Groves, Inc., and Old Republic Surety Company with

the Florida Department of Agriculture and Consumer Services

(Department) seeking payment under a fruit purchase contract.

The Department provided Notice of the Complaint to Ridge Island

Groves, Inc., and to Old Republic Surety Company. Respondent ,

Ridge Island Groves, Inc., answered the Complaint on April 23,

20 15, denied the validity of the C omplaint, and requested a

hearing. The Department referred the matter to the Division of

Administrative Hearings on April 27, 2015, for conduct of the

requested hearing. Old Republic Surety Company did not respond

to the C omplaint and did not appear in these proceedings.

The matter was scheduled for hearing on June 18, 2015, in

Wildwood, Florida, and commenced as scheduled. Petitioner

offered the testimony of Ruben Caldwell, Cornelius Caldwell, and

Jerry Mincey. Petitione r's E xhibits P1 through P6 were admitted

in evidence. Respondent offered the testimony of Archie M.

Ritch. Respondent's E xhibits R1, R2, R4, and R6 through R8 were

admitted in evidence.

The parties did not order a transcript of the proceedings.

The par ties timely filed Proposed Recommended Orders, pursuant to

the undersigned's Order on Post - Hearing Submissions, which have

been considered in the preparation of th is Recommended Order.

FINDING S OF FACT

1. Petitioner, Orange Bend Harvesting, Inc. (Petition er or

Orange Bend), is a Florida for - profit corporation located in

Leesburg, Florida, engaged in the business of citrus harvesting

and management of citrus groves. Joyce D. Caldwell is the

president and registered agent of Orange Bend.

2. Ruben Caldwell and Cornelius Caldwell are Ms. Caldwell's

brothers and co - owners of the business. Ruben Caldwell is Orange

Bend's harvesting manager.

3. Respondent, Ridge Island Groves, Inc. (Respondent or

Ridge Island), is a Florida for - profit corporation headquartered

in Haines City, Florida, engaged in the business of buying and

packing fresh fruit for retail sale and gift - fruit shipping.

Ridge Island is known in the industry as a "packing house."

4. Although Ridge Island produces some fruit juice for

sample and sal e at the packing house, Ridge Island is not a juice

processing plant.

5. Respondent, Old Surety Insurance Company, holds the bond

for Ridge Island, which has been assigned to the Department as

security pursuant to section 601.61, Florida Statutes (2014).

6. Orange Bend and Ridge Island first transacted business

in 2010, and Ridge Island purchased fruit from Orange Bend "off

and on" from 2010 through 2014.

7. On October 17, 2014, Respondent entered into a contract

with Petitioner to purchase fruit from f ive different citrus

groves. The "Standard Fruit Contract" provided that Respondent

would purchase from Petitioner the "entire crop of citrus fruit

blooming in the year 2014 and merchantable at the time of picking

on the grove blocks listed below . . . on the following terms."

8. More specifically, Respondent was entitled to purchase

the following described citrus from Petitioner:

Variety Block Approximate Price per Moving Date

number of unit

boxes

Red Navels Ronco 300 - $15 on tree 12/31/14

Red Navels Sweet 1500 - $20 on tree 12/31/14

Blossom

Navels Powers 400 - $15 on tree 12/31/14

Navels YMCA 400 - $15 on tree 12/31/15

Satsuma Weatherspoon 400 - $12 on tree 01/31/15

Prior to entering into the contract, Mr. Ritch visited the named

grove bloc ks with Ruben Caldwell, inspected the blocks, and

estimated the number of boxes to be picked from each block. The

two men agreed on the price for each type of fruit.

9. Ridge Island paid Orange Bend $2,500 in deposit on the

contract.

10. Pursuant to the contract, Orange Bend was responsible

to "pick and haul" the fruit only from the Sweet Blossom grove.

Respondent was responsible to pick and haul from the remaining

groves.

11. In the industry, the "on tree" price for fruit does not

include the harveste r's cost to pick and haul. If the harvester

is to be paid his or her pick - and - haul costs, the pick - and - haul

price is separate from the "on tree" price.

12. Orange Bend and Ridge Island agreed on a pick - and - haul

price of $3.25 per box.

13. Orange Bend pi cked the Sweet Blossom block on

December 8, 2014, yielding 225 boxes of red navels, which Orange

Bend delivered to Ridge Island. Orange Bend picked the Sweet

Blossom block again on December 9, 2014, and delivered another

217 boxes to Ridge Island.

14. Th ese first two deliveries "packed out" at nearly

100 percent, meaning there were few eliminations from the load.

15. Citrus intended for the fresh market must be visually

appealing, as well as free from insects, disease, and other

damage. Fruit that is di scolored, diseased, or damaged is

eliminated from the packed fruit because it is unsuitable for the

fresh fruit market.

16. Ridge Island paid Orange Bend the full contract price

per box for the first two deliveries of red navels from the Sweet

Blossom blo ck.

17. Orange Bend picked the Sweet Blossom block again on

December 26, 2014, yielding 447 boxes of red navels, which were

delivered to Ridge Island.

18. This delivery packed out at around 50 percent.

Mr. Ritch sold the eliminations to a juice processe r in Peace

River, Florida. 1/

19. Ridge Island paid Orange Bend the pick - and - haul price

of $3.25 per box for eliminations from Orange Bend's deliveries

of red navels from the Sweet Blossom block.

20. Decisions regarding eliminations are made by the

pack ing house. Generally, a harvester is unaware of the packing

rate of fruit delivered.

21. Ruben Caldwell contacted Mr. Ritch via text message on

January 1, 2015, and asked whether Ridge Island was ready for

another shipment of red navels from Sweet Blosso m. Mr. Caldwell

indicated the growers were anxious to get the fruit off the tree.

22. Mr. Ritch responded, as follows:

The last load of red navels packed out less

than 50%. I tried degreening them but the

greening fruit would not color. You can

bring me another load but I just want you to

know that the greening fruit will only return

the cost of the pick and haul.

23. Orange Bend picked the Sweet Blossom block several

times between January 5 and 14, 2015, delivering an additional

1,295 boxes of fruit to Ridge Island. Ridge Island paid Orange

Bend the contract price for 679 boxes.

24. Orange Bend claims it is owed $16,820 from Ridge Island

under the contract for red navels from the Sweet Blossom block.

25. Ridge Island picked the YMCA block on Jan uary 15, 2015.

The pick yielded 216 boxes of navels, of which 169 were

eliminations. Ridge Island paid Orange Bend $705 for 47 boxes at

$15 per box.

26. Ridge Island picked the Powers block on November 15,

2014, and January 15, 2015. The picks yielded 284 boxes of

navels, of which 119 were eliminations. Ridge Island paid Orange

Bend $4,260 for 165 boxes at $15 per box.

27. Ridge Island picked the Ronco block in February 2015. 2/

Ridge Island picked 91 boxes , of which 62 boxes were

eliminations , and pa id the block owner, rather than Orange Bend,

for 29 boxes at $15 per box.

28. No evidence was introduced regarding whether the

Weatherspoon block was picked by either party or whether Ridge

Island paid any amount to Orange Bend under the contract for

sats umas from the Weatherspoon block.

29. Orange Bend maintains Ridge Island owes $27,540 for

boxes of fruit picked by, or otherwise delivered to, Ridge

Island, pursuant to the contract for fruit from the YMCA, Powers,

and Ronco blocks.

30. Orange Bend conte nds that the "on the tree" price

quoted in the contract obligated Ridge Island to purchase every

piece of fruit on the trees in the specified blocks and to assume

the cost of eliminations.

31. Ridge Island contends it was obligated to purchase only

the fruit which was "merchantable at the time of picking,"

pursuant to the contract, and that the greening fruit was not

merchantable.

32. Petitioner offered the testimony of Jerry Mincey, owner

of Southern Citrus Growers, who has operated as a harvester,

fru it buyer, grove manager, and intermediary in the Florida

citrus industry at various times throughout the past 50 years.

Mr. Mincey testified that when a packing house buys fruit "on the

tree," the packing house assumes all costs, including

eliminations, a s well as pick and haul.

33. However, Mr. Mincey also testified that , while a buyer

may make an offer to buy a crop "in bulk" (i.e., $x for the

entire crop), the industry standard is "on the tree."

34. The undersigned fails to see the difference between

"in bulk" and "on the tree" under Petitioner's interpretation.

If "on the tree" means the buyer is purchasing every piece of

fruit produced on the trees in the specified block (blocks are

just sections of groves), as Petitioner contends , the "in bulk"

op tion would be render ed meaningless.

35. Further, Petitioner's interpretation is contrary to the

plain language of the contract, which entitles Respondent to the

"entire crop of citrus fruit blooming in the year 2014 and

merchantable at the time of picking ." If Respondent was

obligated to purchase all fruit on the trees in the named blocks,

the phrase "and merchantable" would be meaningless.

36. Having weighed all the testimony and evidence

introduced, the undersigned finds the "on the tree" price in the

subject contract means the buyer assumes the pick - and - haul costs.

In the case at hand, Ridge Island purchased fruit in the Ronco,

Powers, and YMCA blocks, absorbing its own costs to pick and haul

the fruit. Ridge Island paid Orange Bend for Orange Bend's pick

and haul costs for deliveries of fruit from the Sweet Blossom

block.

37. Pursuant to the contract, Ridge Island contracted for

merchantable fruit. The contract does not define the term

"merchantable."

38. Citrus greening, or greening, is by all ac counts a

devastating disease caused by bacteria - infected insectsees

affected with greening produce hard, knotty, fruit, which never

fully colors (i.e., remains green on the bottom, or bottom half,

of the fruit).

39. Greening fruit is not fit for the purpose of fresh

fruit packaging and gift shipping.

40. Petitioner challenged Respondent's contention that

fruit from the Sweet Blossom block was infected with greening.

Petitioner presented the testimony of Mr. Mincey on this point.

Mr. Mincey testifie d that he inspected the Sweet Blossom block in

early October and made an offer to buy the navels for $18 per

box. Mr. Mincey was back in the block in early November and

testified that, although the tangerines in that grove were

infected with greening, he saw no problem with the navels, which

were of good size and on which color was beginning to break.

41. On cross - examination however, Mr. Mincey admitted that,

upon inspection, the red navel trees in the Sweet Blossom block

did show some signs of greening. Further, Mr. Mincey testified

that greening is a devastating disease that has infected almost

every tree in Florida.

42. Greening does not manifest itself early in the ripening

process. While the fruit may color at the top, it usually does

not color al l the way to the bottom. Thus, a color break on the

fruit in early November is not proof that the trees were not

affected by greening.

43. Despite the fact that some of the blocks were not

picked by the moving date specified in the contract, neither

part y objected. In fact, Mr. Ritch testified that the fruit was

late maturing throughout the region.

44. Neither party ever terminated the subject contract.

CONCLUSIONS OF LAW

45. The Division has jurisdiction over the parties and the

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

604.21(6), Fla. Stat. (2015).

46. Chapter 601, Florida Statutes (2014), is known as the

" Florida Citrus Code of 1949" (the Code). 3/

47. The Code regulates, among other things, the activities

of "citrus fruit deale rs."

48. "Citrus fruit," as that term is used in the Code, is

defined in section 601.03(7) as follows:

'Citrus fruit' means all varieties and

regulated hybrids of citrus fruit and also

means processed citrus products containing 20

percent or more citrus f ruit or citrus fruit

juice. The term does not, for purposes of

this chapter, mean limes, lemons, marmalade,

jellies, preserves, candies, or citrus

hybrids for which specific standards have not

been established by the department.

The navels and red navels referenced in the subject "Standard

Fruit Contract" are "citrus fruits," as defined by the statute.

49. A "citrus fruit dealer" is defined in section

601.03(8), as follows:

'Citrus fruit dealer' means any consignor,

commission merchant, consignment shippe r,

cash buyer, broker, association, cooperative

association, express or gift fruit shipper,

or person who in any manner makes or attempts

to make money or other thing of value on

citrus fruit in any manner whatsoever, other

than of growing or producing cit rus fruit.

The term does not include retail

establishments whose sales are direct to

consumers and not for resale or persons or

firms trading solely in citrus futures

contracts on a regulated commodity exchange.

Respondent is a "citrus fruit dealer" as d efined by the statute.

50. Pursuant to section 601.55(1 ), a "citrus fruit dealer"

must be licensed by the Department of Citrus to transact business

in this State. At all times material to the instant case,

Respondent was licensed as required by section 6 01.55.

51. With certain exceptions not applicable to the instant

case, "before the approval of a citrus fruit dealer's license,

the applicant therefor must deliver to the Department of

Agriculture and Consumer Services a good and sufficient cash

bond, ap propriate certificate of deposit, or a surety bond

executed by the applicant as principal and by a surety company

qualified to do business in this state as surety, in an amount as

determined by the department." § 601.61(1), Fla. Stat.

52. "Said bond shal l be to the Department of Agriculture

[and Consumer Services], for the use and benefit of every

producer and of every citrus fruit dealer with whom the dealer

deals in the purchase, handling, sale, and accounting of

purchases and sales of citrus fruit." § 601.61(3), Fla. Stat.

53. Section 601.64 describes "unlawful acts" in which

"citrus fruit dealers" may not engage "in connection with, any

transaction relative to the purchase, handling, sale, and

accounting of sales of citrus fruit." Among these "unlaw ful

acts" is the failure to "make full payment promptly in respect of

any such transaction in any such citrus fruit to the person with

whom such transaction is had[.]"

54. "Any person may complain of any violation of any of the

provisions of [the Code] by any citrus fruit dealer during any

shipping season, by filing of a written compliant with the

Department of Agriculture [and Consumer Services] at any time

before May 1 of the year immediately after the end of such

shipping season." § 601.66(1), Fla. Sta t.

55. As the Petitioner, Orange Bend bears the burden of

proving the allegations of its complaint by a preponderance of

the evidence. See Dep't of Banking & Fin., Div. of Sec. & Inv.

Prot. v. Osborne Stern & Co. , 670 So. 2d 932, 934 (Fla. 1996)

("The ge neral rule is that a party asserting the affirmative of

an issue has the burden of presenting evidence as to that

issue"); Fla. Dep't 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; Dep't Agric. &

Consumer Serv. July 20, 2009), aff'd , IMG Citrus, Inc. v.

Westchester Fire Ins. Co. , 46 So. 3d 1014 (Fla. 4th DCA 2010).

56. There is no dispute that the subject contract is valid.

The dispute is whether th e term "merchantable" in the contract

obligated Respondent to purchase all the fruit in the named

blocks, thus obligating Respondent to pay Petitioner for all the

fruit picked under the contract.

57. The contract does not define the term "merchantable."

5 8. Section 672.314, Florida Statutes, governs

merchantability of goods under the Uniform Commercial Code. That

section reads, in pertinent part, as follows:

(1) Unless excluded or modified (s.

672.316), a warranty that the goods shall be

merchantable is implied in a contract for

their sale if the seller is a merchant with

respect to goods of that kind. . . .

(2) Goods to be merchantable must be at

least such a s:

(a) Pass without objection in the trade

under the contract description; and

(b) In the case of fungible goods, are of

fair average quality within the description;

and

(c) Are fit for the ordinary purposes for

which such goods are used[.]

59. Rub en Caldwell has been in the citrus fruit harvesting

business for at least seven years and had transacted business

with Mr. Ritch in prior years. Mr. Caldwell was aware that

Mr. Ritch was a fresh fruit packer, thus Respondent was

contracting to purchase fr uit fit for packing and gift - fruit

shipping, rather than for juicing. Greening fruit, whether

harvested by Petitioner's crew or Respondent's crew, was not

passable without objection in the fresh fruit packing trade.

Thus, Respondent was not obligated to purchase the eliminated

fruit.

60. Petitioner failed to prove that Respondent owes

Petitioner for boxes of fruit harvested by Petitioner, but

rejected by Respondent as unfit for its intended purpose.

61. However, pursuant to the contract, Respondent was

obligated to purchase from Petitioner merchantable fruit from the

Ronco block. Respondent admitted that he harvested the fruit

from that block, although well past the move date. Respondent

did not terminate the contract. Respondent failed to pay

Petitio ner for the merchantable fruit from the Ronco block,

29 boxes at $15 per box, or $435.

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 o rder approving the claim of

Orange Bend Harvesting, Inc., against Ridge Island Groves, Inc.,

in the amount of $435.

DONE AND ENTERED this 20th day of August , 2015 , in

Tallahassee, Leon County, Florida .

S

SUZANNE VAN WYK

A dministrative 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 He arings

this 20th day of August , 2015 .

ENDNOTE S

1/ It is a standard practice in the industry for a packing house

to sell eliminations to a juice processing plant.

2/ The delay in harvesting the Ronco block was due to the owner's

unwillingness to coope rate with the harvesters.

3/ Except as otherwise provided herein, all references to the

Florida Statutes are to the 2014 version.

COPIES FURNISHED:

Honorable Adam Putnam

Commissioner of Agriculture

Department of Agriculture

and Consumer Services

The Capital, Plaza Level 10

Tallahassee, Florida 32399 - 0810

Lorena Holley, General Counsel

Department of Agriculture

and Consumer Services

407 South Calhoun Street, Suite 520

Tallahassee, Florida 32399 - 0800

(eServed)

Cornelius Caldwell

Ruben Caldwel l

Orange Bend Harvesting, Inc.

Post Office Box 490197

Leesburg, Florida 34749 - 0197

Paul J. Pagano , Bureau Chief

Bureau of Mediation and Enforcement

Department of Agriculture

and Consumer Services

Rhodes Building, R - 3

2005 Apalachee Parkway

Tallahassee , Florida 32399 - 6500

(eServed)

Old Republic Surety Co mpany

445 South Moorland Road

Brookfield, Wisconsin 53005 - 4254

Douglas A. Lockwood, Esquire

Straughn and Turner, P.A.

255 Magnolia Avenue, Southwest

Winter Haven, Florida 33880 - 2902

(eServed)

N OTICE 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 i n this case.