95-002964 Department Of Agriculture And Consumer Services vs. Miami Fitness, Inc. Status: Closed Recommended Order on Friday, September 22, 1995.

Summary: Health studio to which memberships of defunct health studio were transferred were not of equal quality.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT )

OF AGRICULTURE AND CONSUMER )

SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 95-2964

)

MIAMI FITNESS, INC., )

)

Respondent. )

__________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly

designated Hearing Officer, Susan B. Kirkland, held a formal hearing in this

case on August 22, 1995, in Miami, Florida.

APPEARANCES

For Petitioner: Lawrence J. Davis

Senior Attorney

Department of Agriculture and

Consumer Services

Room 515, Mayo Building

Tallahassee, Florida 32399-0800

For Respondent: Lloyd B. Silverman, Esquire

2880 West Oakland Park Boulevard

Number 103, Suite 201

Fort Lauderdale, Florida 33311

STATEMENT OF THE ISSUES

Whether Respondent, a health studio, provided its members a facility of

equal quality, within five driving miles, at no extra cost, when Respondent's

business ceased operations in February, 1995.

PRELIMINARY STATEMENT

By letter dated May 9, 1995, Petitioner, Department of Agriculture and

Consumer Services (Department), notified Patty Kinast, President of Respondent,

Miami Fitness, Inc. (Miami Fitness), that the Department had received claims

against Miami Fitness' letter of credit and intended to make a demand under the

terms of the security. Miami Fitness requested an administrative hearing, and

the case was forwarded to the Division of Administrative Hearings on June 13,

1995 for assignment to a Hearing Officer.

At the final hearing, the Department called the following witnesses: Joe

Alexionok, Karen Booher, Florence Brookmire, Lisa Hartman, Maria Ricco-Brizard,

Karen Rosenfeld, Arlice Whiting-Larkin, Delilah Storey, Renay Rossi, and Mary Jo

Weinberg. Department's Exhibits 1-27 were admitted in evidence.

At the final hearing, Miami Fitness called the following witnesses: Jason

Gonzalez, Anna Asavida, Carmen Dorrschuck, John Andrew Seymour, and Patti

Kinast. Miami Fitness' Exhibits 1-9 were admitted in evidence.

The parties agreed to file proposed recommended orders within ten days

after the date of the filing of the transcript. The transcript was filed on

September 5, 1995. The parties timely filed their proposed recommended orders.

The parties' proposed findings of fact are addressed in the Appendix to this

Recommended Order.

FINDINGS OF FACT

1. Respondent, Miami Fitness, Inc. (Miami Fitness), advised Petitioner,

the Department of Agriculture and Consumer Services (Department), by letter

dated October 30, 1993, that Miami had purchased the assets of Body Mystique, a

health studio, and would honor all of its memberships. Miami Fitness was to

begin operations as of November 1, 1994.

2. Miami Fitness registered with the Department as a health studio and

posted an irrevocable standby letter of credit for $50,000. The letter of

credit was amended on July 26, 1994, to extend the expiration date to October

29, 1995.

3. The purpose of the letter of credit is to protect the members of the

health studio. Money would be available to compensate members if Miami Fitness

went out of business or the members' contracts were not assigned to a facility

of equal quality within a five mile radius of Miami Fitness. Refunds would be

made on a pro rata basis.

4. Body Mystique had been a women's only health studio as was it

predecessor My Fair Lady. At one time Body Mystique had requested permission

from the Department to turn the all women's facility into a coed health studio,

but the Department denied the request. When Miami Fitness purchased Body

Mystique, it continued to operate the facility as an all women health studio.

The facilities occupied by Miami Fitness had been an all women's health studio

for 23 years.

5. Miami Fitness advertised and promoted the health studio as the "total

fitness studio for women." It also advertised that its weight room was for

women by stating: "Our weight training area is unique in that it is

specifically designed for women."

6. Miami also promoted its wet area. One advertisement stated: "We have

all the amenities that a woman needs: sauna, steamroom, eucalyptus room,

showers, dressing area; and great aerobic classes on a suspended wood floor,

with a fully equipped weight room and cardiovascular area specifically designed

for women."

7. The contracts between Miami Fitness and its members included a

provision that the member may cancel and receive a refund if Miami Fitness

closes and does not provide the member with "similar facilities of equal

quality" within a five mile radius of the closed facility.

8. On February 10, 1995, Joe Alexionok, a consumer services consultant

with the Department, was notified that Miami Fitness had closed its doors. By

letter dated February 26, 1995, Mr. Alexionok requested Miami Fitness to advise

the Department whether Miami Fitness was going to provide services or make pro-

rata refunds. By letter dated March 10, 1995, Patty Kinast, President of Miami

Fitness, notified the Department that Miami Fitness had made an agreement with

U.S. 1 Fitness to assume Miami Fitness memberships.

9. Having determined that U.S. 1 Fitness was not a facility of equal

quality, the Department sent certified letters to the bank holding the letter of

credit and to Patty Kinast that the Department would make a demand upon the

letter of credit to refund members who filed a complaint against Miami Fitness

because U.S. 1 Fitness was not of equal quality.

10. A notice was also published in the Miami Post advising that anyone

having a claim against Miami Fitness must file the claim with the Department by

September 30, 1995.

11. U.S. 1 Fitness is a coed health studio which is located within a five

mile radius of Miami Fitness. U.S. 1 Fitness does not have a sauna, steamroom

or eucalyptus room.

12. U.S. 1 Fitness has approximately 2,500 members with approximately 900

active members. Miami Fitness had a membership of about 1,000 with

approximately 400 members who were active.

13. U.S. 1 Fitness' facility has approximately 11,000 square feet. Miami

Fitness' facility had approximately 4,600 square feet.

14. Miami Fitness was open during the following hours: Monday and

Tuesday, 7:00 a.m. - 9:30 p.m.; Wednesday-Friday, 7:00 a.m - 9:00 p.m.;

Saturday, 9:00 a.m. - 5:00 a.m.; and Sunday 10:00 a.m. - 5:00 p.m. U.S. 1

Fitness is open during the following hours: Monday-Friday, 5:00 a.m. - 11:00

p.m. and Saturday and Sunday, 7:00 a.m. - 8:00 p.m.

15. U.S. 1 Fitness offers 38 exercise-type classes each week, including a

yoga class on Tuesday and Thursday mornings. Miami Fitness offered 32 exercise-

type classes each week with a yoga class on Tuesday and Thursday mornings and on

Wednesday evening. The yoga classes at U.S. 1 Fitness are taught by the same

instructor who taught morning yoga classes at Miami Fitness. U.S. 1 Fitness has

exercise classes which are equal in quality to those provided by Miami Fitness.

16. As part of the agreement with U.S. 1 Fitness, Miami Fitness

transferred some of its equipment to U.S. 1 Fitness. U.S. 1 has equipment which

is newer than the Miami Fitness' equipment. U.S. 1 Fitness has as good or

better equipment than Miami Fitness did.

17. U.S. 1 Fitness has babysitting services as did Miami Fitness. U.S. 1

Fitness' babysitting services are as good as or better than the babysitting

services at Miami Fitness.

18. U.S. 1 Fitness is located in well-lighted shopping center area and has

as good or better security as Miami Fitness.

19. After Miami Fitness closed, the Department received 12 written

complaints from Miami Fitness members. The majority of the complaints were

based on a lack of wet facilities at U.S. 1 Fitness and U.S. 1 Fitness not being

an all women's facility. Most of the complainants had joined Miami Fitness

because it was a women's only facility. They felt uncomfortable and self

conscious exercising in a coed facility. They liked the facility because it was

small, not crowded, and had a friendly, intimate atmosphere. At least two of

the complainants had visited U.S. 1 Fitness before signing up with Miami Fitness

and preferred Miami Fitness over U.S. 1 Fitness.

20. While Miami Fitness was operating, between 25 and 50 members regularly

used the wet facilities each week.

21. U.S. Fitness 1 is not a facility of equal quality to Miami Fitness as

it relates to the wet area and the membership being exclusively women.

CONCLUSIONS OF LAW

22. The Division of Administrative Hearings has jurisdiction over the

parties to and the subject matter of this proceeding. Section 120.57(1),

Florida Statutes.

23. The Department of Agriculture and Consumer Services, is the state

agency responsible for administering and enforcing the provisions of Sections

501.012-501.019, Florida Statutes, regulating health studio contracts.

24. Section 501.107, Florida Statutes, requires health studio contracts to

have a provision for cancellation and refund if the health studio goes out of

business and fails to provide within 30 days a facility of equal quality located

within five driving miles of the closed health studio.

25. A facility of equal quality is determined pursuant to Rule 5J-4.012,

Florida Administrative Code as follows:

(1) For purposes of Section 501.017,

Florida Statutes, and this chapter, the

Department shall consider the following

factors in determining equal quality

among health studios:

(a) A comparison of equipment, facilities

and health studio-related services offered or

available to members;

(b) The availability of the equipment and

facilities for use on the same days and times

by the consumers;

(c) The distance between the facilities.

(2) The Department shall consider the factors

listed above and make a determination of whether

a health studio is a facility of equal quality,

which determination shall apply to all applicable

members.

26. The exercise equipment at U.S. 1 Fitness is of equal quality with the

equipment which was offered at Miami Fitness. In fact, some of Miami Fitness'

equipment was transferred to U.S. 1 Fitness.

27. With the exception of the wet area, the U.S. 1 Fitness physical

facility is of equal quality to Miami Fitness. U.S. 1 Fitness does not have a

sauna, steamroom or eucalyptus room; thus, the facility at U.S. 1 Fitness is not

of equal quality to the facilities at Miami Fitness. The availability of the

equipment and facilities for use on the same days and times by the consumers at

U.S. 1 Fitness is of equal value to Miami Fitness.

28. The distance between Miami Fitness and U.S. 1 Fitness is less than

five miles; therefore, the two businesses are of equal value as it relates to

distance.

29. Section 501.0125(2), Florida Statutes, defines "health studio

services" as "privileges or rights offered for sale or provided by a health

studio."

30. Miami Fitness marketed itself as a women's only health studio. The

emphasis of its advertising was that the facility and the equipment were geared

for women. The majority of the women who filed written complaints were unhappy

because they joined Miami Fitness because it was for women only and they did not

want to work out in a coed facility. The restriction of memberships to women is

a health studio service as defined by Section 501.0125(2), Florida Statutes.

The members of Miami Fitness bought the privilege of working out with only

women. U.S. 1 Fitness is a coed facility and not of equal quality to Miami

Fitness.

31. Considering the factors in Rule 5J-4.012, Florida Administrative Code,

U.S. 1 Fitness is not a facility of equal quality to Miami Fitness.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered finding that Miami Fitness, Inc.

did not provide its members with a facility of equal quality and that the twelve

written claims made by the members of Miami Fitness, Inc., because it was not a

facility of equal quality be certified as valid claims against the irrevocable

standby letter of credit given to the Department of Agriculture and Consumer

Services by Miami Fitness, Inc., and that any written claims filed on or before

September 30, 1995 by members on the basis their contracts were not assigned to

a facility of equal quality be certified as valid claims against the irrevocable

standby letter of credit.

DONE AND ENTERED this 25th day of September, 1995, in Tallahassee, Leon

County, Florida.

___________________________________

SUSAN B. KIRKLAND

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 25th day of September, 1995.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 95-2964

To comply with the requirements of Section 120.59(2), Florida Statutes

(1993), the following rulings are made on the parties' proposed findings of

fact:

Petitioner's Proposed Findings of Fact.

1. Paragraphs 1-14: Accepted in substance.

2. Paragraph 15: Rejected as unnecessary detail.

3. Paragraphs 16-21: Accepted in substance.

4. Paragraph 22: The first, fifth, sixth, seventh, ninth, and eleventh

sentences are accepted in substance. The remaining is rejected as unnecessary

detail.

5. Paragraph 23: The first, fourth, and sixth sentences are accepted in

substance. The remaining is rejected as unnecessary detail.

6. Paragraph 24: The first, fourth, fifth and sixth sentences are

accepted in substance. The remaining is rejected as unnecessary detail.

7. Paragraph 25: The first, second, third, sixth, and eleventh sentences

are accepted in substance. The remaining is rejected as unnecessary detail.

8. Paragraph 26: Rejected as unnecessary.

9. Paragraph 27: Accepted in substance.

10. Paragraph 28: The first, third, sixth, and seventh sentences are

accepted in substance. The eighth sentence is rejected as not supported by

the greater weight of the evidence. The remaining is rejected as unnecessary

detail.

11. Paragraph 29: The first, third, fourth, fifth, seventh, eighth, and

fourteenth sentences are accepted in substance. The remaining is rejected as

unnecessary detail.

12. Paragraph 30: The first and third sentences are accepted in

substance. The second sentence is rejected as unnecessary detail.

13. Paragraph 31: Accepted in substance.

14. Paragraph 32: The first and third sentences are accepted in

substance. The remaining is rejected as unnecessary detail.

15. Paragraph 33: The last sentence is rejected as unnecessary. The

remainder is accepted in substance.

16. Paragraph 34: Rejected as unnecessary.

17. Paragraph 35: Accepted in substance.

18. Paragraph 36: The fourth sentence is accepted in substance. The

remaining is rejected as unnecessary detail.

19. Paragraphs 37-40: Rejected as subordinate to the facts found.

20. Paragraph 41: The third, fourth, eighth, ninth and tenth sentences

are accepted in substance. The fifth sentence is accepted in substance as it

relates to equipment and number of classes but not as to atmosphere. The

remainder is rejected as unnecessary.

21. Paragraphs 42-43: Rejected as unnecessary.

22. Paragraph 44: The fifth sentence is accepted in substance. The

remainder is rejected as unnecessary.

23. Paragraph 45: The first, fourth, sixth, seventh, eighth, eleventh,

and twelfth sentences are accepted in substance. The ninth sentence is

rejected as it relates to those women who filed complaints because U.S. 1

Fitness was coed. The remainder is rejected as unnecessary detail.

24. Paragraph 46: Rejected that the facilities were comparable.

25. Paragraph 47: Accepted in substance except U.S. 1 Fitness had 38

classes. 26. Paragraph 48: Accepted in substance.

Respondent's Proposed Findings of Fact.

1. Paragraphs 1-14: Accepted in substance.

2. Paragraph 15: The first sentence is accepted. The second sentence is

rejected to the extent that it implies that the wet facility at Miami Fitness

was not a reason for choosing Miami Fitness and was not used or enjoyed by it

members.

3. Paragraphs 16-17: Accepted in substance.

4. Paragraph 18: Rejected as subordinate to the facts found.

COPIES FURNISHED:

Lawrence J. Davis, Esquire

Office of the General Counsel

Florida Department of Agriculture

& Consumer Services

The Capital, Mayo Building, Room 515

Tallahassee, Florida 32399-0800

Lloyd B. Silverman, Esquire

2800 West Oakland Park Boulevard, Suite 201

Oakland Park, Florida 33311

Honorable Bob Crawford

Commissioner of Agriculture

The Capitol, PL-10

Tallahassee, Florida 32399-0810

Richard Tritschler

General Counsel

Department of Agriculture

and Consumer Services

The Capitol, PL-10

Tallahassee, Florida 32399-0810

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended

order. All agencies allow each party at least ten days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this recommended order. Any exceptions to this recommended order should be

filed with the agency that will issue the final order in this case.