STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA CONSTRUCTION INDUSTRY ) LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 76-576

) RICHARD J. HUNT d/b/a R. J. ) HUNT CONSTRUCTION CO., INC. )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on September 27, 1976, at Ft. Lauderdale, Florida.

APPEARANCES

For Petitioner: Barry S. Sinoff, Esquire

Blackstone Building, Suite 1010 Jacksonville, Florida 32202

For Respondent: Edward Fine, Esquire

1920 Palm Beach Lakes Blvd. West Palm Beach, Florida

By administrative complaint filed February 23, 1976 the FCILB seeks to suspend the general contractor's license of Richard J. Hunt and licensee's right to practice thereunder. As grounds therefor it is alleged that after entering into a contract with Richard D. McCarty to construct a motel addition for

$53,700 and having been paid in full under the contract, the licensee diverted funds to another project in violation of Section 468.112(2)(e) F.S., and as a result was unable to fulfill the terms of his obligation or contract.

Four witnesses were called by Petitioner, two witnesses testified on behalf of licensee and one exhibit, the contract, was admitted into evidence.

FINDINGS OF FACT

1. On September 29, 1975 Respondent, R. J. Hunt Construction Company, through its President and qualifying general contractor, Richard J. Hunt, entered into a contract with Richard McCarty to construct two Second Story Additions to Palm Ocean Villas, Pompano Beach, Florida for a price of $53,700. The contract provided that the contractor would complete the building within 8 weeks of the issuance of a building permit and, if not completed, a 5 percent penalty would be deducted until December 10, 1975 and thereafter, if not complete, an additional 5 percent of the contract price would be deducted each week until complete.

2. Building permits were issued on October 3 and 6, 1975 and work proceeded satisfactorily until the end of the 8 weeks contract period on December 1, 1975 when the project was 90 percent to 95 percent complete. At this time the contractor stopped work on the project and transferred his employees to another job.

   
   

3. One of the contract provisions not completed was the application of waterproofing on a deck. Despite Hunt's assurances that he would get a subcontractor to complete this waterproofing, it still had not been completed by Christmas and McCarty employed a contractor to apply the waterproofing material in early January for which he paid $1,000 allowed by the contract. Subsequent thereto McCarty received notice of liens filed against his property from 4 subcontractors. These were American Metal Products Company, J. P. Electric Company, Ole Eds Construction, and Margate Plumbing. In order to get a certificate of occupancy it was necessary for McCarty to pay some of these subcontractors.

   
   

4. American Metal Products installed an aluminum railing around the balcony for which they filed a notice of lien for $1,200 and subsequently filed a petition in bankruptcy. The present status of this lien was not ascertained.

   
   

5. J. P. Electric Company had split their draw into three parts and they were paid by Hunt $700 for the initial work. When they refused to allow final inspection Hunt asked McCarty to pay them and take it off his last draw. McCarty paid $2,000 to J. P. Electric, leaving a balance owed of $781.92.

   
   

6. Hunt also asked McCarty to pay Margate Plumbing and take this payment off the draw. Margate had been paid $1,000 upon completion of the rough work. In order to get occupancy McCarty paid Margate $1,800 which satisfied the lien of Margate.

   
   

7. Ole Ed installed the septic tank and drain field for which they have filed a lien for $2,500 which is unpaid to date.

   
   

8. Numerous miscellaneous items included in the contract for which McCarty advanced funds to keep work progressing amounted to $671.54. Hunt also requested McCarty to order the appliances which were included in the contract price since he (McCarty) could get them at contractor's price. For these appliances (stoves, air conditioners and refrigerators) McCarty expended

   $2,373.28.

   
   

9. Total expenditures made by McCarty are as follows:

   
   

   McCarty paid	to Hunt in draws	$48,400.00
   McCarty paid	to J. P. Electric	2,000.00
   McCarty paid	to Margate Plumbing	1,800.00
   McCarty paid	for waterproofing deck	1,000.00
   Misc. items	paid for by McCarty	671.54

   Appliances for which McCarty paid 2,373.28 Total paid by McCarty under contract $56,244.82

   Balance owed to subcontractors.

   
   

   American Metals Corporation	$ 1,200.00
   J. P. Electric	781.92
   Ole Ed's Construction	2,500.00
   Total cost of project	$61,736.74

   
   

10. At the time licensee stopped work on the project the railing around the balcony had not been installed, top decking had not been approved by building inspectors and waterproofing of deck had not been done.

    
    

11. Extra costs not included in the contract price which were agreed to by McCarty included $300 to $500 extra for larger electric wire and $400 to $500 for larger septic tank than contract called for. These costs totaled approximately $800 which would bring the total contract price to $54,500.

    
    

12. The working foreman on the job for the first three or four weeks of the contract, who testified on behalf of Respondent, was unfamiliar with all terms of the contract or with the finances of Hunt. When the existing roof was removed for the second floor addition to be added, conduits had to be replaced and some 2 x 12 joists had to be replaced. This work unexpectedly increased the cost of the contract to the contractor.

    
    

13. The septic tank could not be placed where originally intended, and as a result, about 100 fee of sidewalk had to be torn up and replaced. Further, a larger septic tank than originally planned had to be installed. This latter increase was agreed to and paid for by McCarty.

    
    

14. One character witness testified that Richard J. Hunt enjoys a good reputation in the construction industry.

    
    

    CONCLUSIONS OF LAW

15. Section 468.112 F. S. provides in pertinent part that the FCILB may: "take appropriate disciplinary action if the

    contractor is found to be guilty of or has committed any one or more of the following acts or omissions constituting cause for disciplinary action set out herein or adopted as rules or regulations by the board.

    * * *

    (e) Diversion of funds or property received for prosecution or completion of a specified construction project or operation where as a result of the diversion the contractor is or will be unable to fulfill the terms of his obligation or contract."

    
    

16. Here the evidence is clear that licensee was paid, either directly to the licensee or to subcontractors whose payment was requested by the licensee, more than the original contract price. The evidence is further unrebutted that additional liens totaling some $4,500 are still owed on the project. No evidence was submitted that any of the funds paid directly to Hunt were diverted to another project or to a purpose unrelated to the contract for which the funds were intended. The sums paid by McCarty directly to the subcontractors were obviously used for the project and not diverted.

17. The burden is on the Petitioner to establish the charges alleged in the complaint. The crux of the complaint is that Hunt diverted funds from the McCarty project but no evidence was presented to show the monies paid by McCarty went for anything unrelated to the contract. A prima facie case of a violation of Section 468.112(2)(e) F. S. cannot be established only by proof that the contracting party paid the contractor the full contract price yet the construction was not completed or all subcontractors were not fully paid.

    
    

18. From the foregoing it is concluded that licensee must be found not guilty of the allegation. It is, therefore,

RECOMMENDED that the charges contained in the administrative complaint filed against Richard J. Hunt and R. J. Hunt Construction Company be dismissed.

DONE and ENTERED this 15th day of October, 1976, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304

COPIES FURNISHED:

Barry S. Sinoff, Esquire

Suite 1010 Blackstone Building Jacksonville, Florida 32202

Edward Fine, Esquire

1920 Palm Beach Lakes Blvd. West Palm Beach, Florida

Docket for Case No: 76-000576

Orders for Case No: 76-000576