vs. ) CASE NO. 76-588
Respondent. )
Pursuant to notice a hearing was held before Charles C. Adams, Hearing Officer with the Division of Administrative Hearings at 6501 Arlington Expressway, Jacksonville, Florida at 9:00 A.M., July 27, 1976.
For Petitioner: Barry S. Sinoff, Esquire
For Respondent: John W. Tanner, Esquire
Suite one, 434 N. Halifax Avenue Daytona Beach, Florida 32018
Pursuant to a stipulation and agreement between the parties, the following facts are established:
Neil Wayne Smith holds a certified general Contractor's license no. CG C003076. On July 22, 1974, Mr. and Mrs. W. H. Turner, Route 3, Box 269-A, St. Augustine, Florida, 32084, signed a contract with Wayne Smith Construction for construction of a home. The contract price was $25,900. Neil Wayne Smith and/or Wayne Smith Construction was paid four draws totalling $20,720 in connection with the contract with Mr. and Mrs. W. H. Turner. The Turners were awarded an $11,250 unit judgement against Wayne Smith Construction Company and Wayne Smith individually.
On August 1, 1974, Mr. and Mrs. Robin L. Linsley, 1743 Jacobs Road, South Daytona, Florida, 32019, signed a contract with Wayne Smith Construction Company for the construction of a home. The contract price was $31,000. On September 19, 1974, and September 30, 1974, Neil Wayne Smith and/or Wayne Smith Construction Company made two draws totalling $9,674.18 in connection with his construction contract with the Linsleys. A final judgement was awarded in the Circuit Court, Seventh Judicial Circuit, Volusia County, Florida for the Linsleys against Wayne Smith Construction Company and Wayne Smith individually in the sum of $8, 239.09 plus $34.00 cost.
After entering into the stipulation and agreement on the aforementioned facts, testimony was presented by both parties.
Subsequent to signing the contract with Wayne Smith Construction Company, which is Petitioner's Exhibit number 1, admitted into evidence, the Linsleys became concerned about the Respondent's payment of certain subcontractors and materialmen. This suspicion was promoted by a certain conversation with a Mr. Croft of the Linsley's lending institution. Mr. Croft advised the Linsleys to contact the Respondent and ascertain if the Respondent was in fact paying the subcontractors and materialmen. The Respondent had filed two lien waiver forms with the lending institution which are Petitioner's Exhibits number 2 and number 3, admitted into evidence, and these lien waiver forms indicated that his obligations to materialmen and subcontractors were current as of the date of the filing of those lien waivers. The Linsleys spoke with the Respondent on October 10, 1974, about the status of the bills and came away from the conversation with Mr. Smith's comments that the bills were being satisfactorily met. In fact the following subcontractors and materialmen were not fully paid. Between October 10 and October 14, 1974 the Linsleys contacted these subcontractors and materialmen, in view of the comments of Mr. Croft that certain bills were unpaid as of September 30, 1974. In the course of this contact they spoke with Walter G. Nangaro, who was the air conditioning contractor, and was owed $825 for the work. This $825 was subsequently paid by the lending institution to the claimant. The Linsleys contacted Rinker Materials Corporation who was owed $2,485.67 as of the date of contact, and who was subsequently paid that amount of money by the lending institution. Giles Electric Service was contacted in that period and it was discovered that $600 was owed to Giles Electric. Again this payment was rendered by the lending institution. A Mr. Bert Black was contacted about excavation work and he was owed $140 at that moment, which was paid by the lending institution. Sherwin Williams Paint Company was contacted and the amount of $44.46 was outstanding to them, which was paid by the lending institution. Alexander Plumbing, Inc. claimed to be owed $1,575 which was paid by the lending institution. However, at the time of the contact, Alexander Plumbing was only entitled to two thirds of the $1,575. The Halifax Roofing Company was contacted and was owed as of that date $1,088 which was paid by the lending institution. Phillips, Wine and Phillips, Surveyors were owed $195 which was paid by the lending institution. Another contact made by the Linsleys in this time frame, was the Bruce Terminex Company, who was owed the amount of $30 which was paid by the lending institution. The Reserve Supply of Volusia, Inc. claimed to be owed $1,101.62 for work done at the home and they were paid $990.94 by the lending institution. Subsequent testimony by the Respondent indicated that the amount which was being claimed by the Reserve Supply of Volusia, Inc. was inaccurate, because the total cost of the windows which they were supplying would not exceed three or four hundred dollars. This testimony of the Respondent is accepted and the amount of duly authorized cost due to Reserve Supply of Volusia, Inc. for this project should not exceed $400.
Subsequent to discovering that these subcontractors and materialmen were owed the aforementioned amount of money, as of the date of contact in the period October 10, through October 14, 1974 the Linsleys terminated their association with the Respondent as contractor to build their home. This statement of termination is found in Respondent's Exhibit number 1 admitted into evidence. At the time the Linsleys terminated their arrangement with the Respondent, the roof of the house was finished, the house was ready for plastering and the first and second roughs of the plumbing had been completed and the electric work completed. A record of the disbursements of the lending institution to the subcontractors and materialmen discussed, is found in
Petitioner's Exhibit number 51 admitted into evidence. The judgement which has been awarded to the Linsleys in the amount of $8,239.09 plus $34.00 court cost has been satisfied by the Respondent as reflected in Respondent's Exhibit number 2, admitted into evidence. The amount of extra money expended by the Linsleys to complete the project over and above the contract price was $3,250.
The Turners' contract is shown in Petitioner's Exhibit number 6. After entering into that contract, Respondent drew four separate checks in the amount of $5,180 each, beginning on August 30, 1974 with the last draw being on October 3, 1974. At that point in time the Respondent left the job indicating that he would be back in a couple of weeks or a month. The departure from the project occurred at about the time the Respondent had received his October 3, 1974 draw, which was deposited in his bank account along with other monies totalling between $11,000 and $12,000. Subsequent to that deposit the Internal Revenue Service levied his business checking account, taking some of the amount of between $11,000 and $12,000 for tax purposes and the Respondent's bank took the balance of funds remaining. After the Respondent departed the Turner project, Mr. Turner discovered an insufficient funds check paid from the Respondent to the electrician on the project in the amount of $300 which Mr. Turner had to make good. A similar occurrence was discovered for certain excavation work in the amount of $350 which had been the subject of a check for insufficient funds from Mr. Smith to the excavation contractor in the amount of $350. Mr. Turner had to make it good. In addition a lien was placed in the amount of $2,423.51 by Townsend Lumber, a lien by Volusia Plastering in the amount of $1,700.80 and a lien by Fairway Tile and Marble Company in the amount of $746. These liens are still in existence. The St. Augustine Cement Company was paid $193.82 by the Turners to have work completed, the Reserve Supply Company was paid $63.00 by Mr. Turner to have work completed, and A. R. Enterprises was paid $60.00 by Mr. Turner to have work completed. The Turners expended $9,529.39 out of their pocket to complete the project. The award of $11,000 against the Respondent in behalf of the Turners has been satisfied as reflected in Respondent's Exhibit number 4, admitted into evidence.
At the time the Linsley and Turner homes were being constructed the Respondent had four or five projects underway and was operating out of two business bank accounts. The first bank account was to pay off subcontractors and materialmen and the second bank account to pay off his employees. Funds between those accounts were interchangeable and the projects underway were not kept by separate bank accounts, such that any funds received from the various projects were intermingled with funds from other projects.
CONCLUSIONS OF LAW
In the beginning of the hearing a motion was made to strike paragraph 8 of the Administrative Complaint and that motion was granted.
At the conclusion of the presentation by the Petitioner, a motion to dismiss the Complaint was made by the Respondent which was premised on the theory that a lack of proof had been shown to establish a violation of Section 468.112(2)(e), Florida Statutes. Upon reviewing the testimony offered in behalf of the Petitioner, the motion to dismiss at the conclusion of the Petitioner's case is denied.
Upon the review of the entire testimony of the proceedings, it is concluded as a matter of law that the Petitioner has failed to establish a violation of Section 468.112(2)(e), Florida Statutes, in that there is insufficient evidence to show that the Respondent has diverted funds or property
received for prosecution or completion of the specified construction projects or operations where, as a result of those diversions, the Respondent is or will be unable to fulfill the terms of his obligations or contracts.
It is recommended that the Florida Construction Industry Licensing Board dismiss the Respondent from further responsibility to answer to the Administrative Complaint.
DONE and ENTERED this 25th day of August, 1976, in Tallahassee, Florida.
CHARLES C. ADAMS
Barry S. Sinoff, Esquire 1010 Blackstone Building
John W. Tanner, Esquire
Suite One. 434 N. Halifax Avenue Daytona Beach, Florida 32018
