STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA CONSTRUCTION INDUSTRY ) LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 76-834

)

HARRY AUDETTE, d/b/a ) AMBER CONSTRUCTION CO., INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in the above styled cause on November 4, 1976, in Pompano Beach, Florida.

APPEARANCES

For Petitioner: Barry Sinoff, Esquire

1010 Blackstone Building

Jacksonville, Florida 32202

For Respondent: James R. Eddy, Esquire

700 East Atlantic Boulevard Pompano Beach, Florida 33060

By administrative complaint filed April 6, 1976, the Florida Construction Industry Licensing Board (FCILB), Petitioner herein, seeks to revoke the building contractor's license of Harry Audette, (Respondent herein). As grounds therefor, it is alleged that Harry Audette, d/b/a Amber Construction Co., Inc., failed to qualify the corporation with the FCILB; entered into contracts with Frank Lawrence for the construction of a building, and Donald Able for construction of a residence; and diverted funds received for work on those projects to other projects. By these acts, violations of Sections 460.107(3)(c) and 468.12(2)(e), Florida Statutes, are alleged.

Based upon my observations of the witnesses and their demeanor while testifying, I make the following:

FINDINGS OF FACT

1. Harry Audette is a registered general contractor with the FCILB and holds general contractor's license no. RG0022B91.

   
   

2. Pursuant to an agreement entered during mid 1975, Harry Audette, Roy J. Lorenzi, Jr. and Roy S. Lorenzi, Sr., entered into an agreement whereby Audette was to receive upon demand 500 shares of Amber Construction Co., Inc., stock which was purportedly to be issued to Audette in consideration of Audette's

   obligation to commit himself to a $20,600 line of credit for the benefit of Amber Construction Co., Inc. Lorenzi Jr. was the chief administrative officer and supervisor of construction and devoted his full time to said corporation, including his labor, services and skill and Lorenzi Sr. provided financial assistance to Lorenzi Jr. and Amber Construction Co., Inc. Per the terms of this agreement, it appears that this stock represented one-half of the authorized stock for Amber Construction Co., Inc. Lorenzi and Audette testified categorically that the stock was never issued to Audette as per the agreement.

   
   

3. Roy Lorenzi, a home improvement salesman, testified that he was owner of Amber Construction Company and that the agreement as it turned out was one whereby he and Audette shared 50 percent of the profits from Amber Construction Co. He testified that during 1975, Audette was liable for 50 percent of Amber's obligations according to the above referenced agreement. However, Roy Lorenzi testified that Audette never performed under the contract, he was never an officer of the corporation nor did he set policy.

   
   

4. Amber used a common bank account at South Port American National Bank in Ft. Lauderdale. It is undisputed that Amber was not registered with the FCILB. In July, 1975, Lorenzi and Audette d/b/a Amber Construction Company entered into a contract with Frank Lawrence to erect a building at a cost of approximately $214,134.00.

   
   

5. Johnson had arranged financing for the construction of the building with South Federal Savings of Pompano Beach. Pursuant to the construction draw agreement, both Lorenzi and Audette were authorized to make draws as construction progressed. Draw checks were made payable to Johnson and Amber and in those instances where a draw was for payment of a subcontractor, the subcontractor would also be added as a payee. Of the checks representing draws against Lawrence's building which were admitted into evidence, most had been made payable to Amber and Johnson and some included a third party subcontractor. Lawrence's name was forged on these checks by either Lorenzi or Audette.

   Lorenzi testified that this procedure was explained to Lawrence when the checks were issued and that this was done in accordance with the construction loan agreement entered into by the parties. According to Lawrence, all of the proceeds were used for the purpose for which the checks were drawn and intended. Lawrence denied that he was advised of this procedure and that he objected to the issuing bank when the procedure came to his attention. Lawrence gave no authority to Audette to sign checks. He had no personal knowledge of Audette diverting funds from his project.

   
   

6. According to Lawrence, approximately $79,406 was drawn from the construction loan account prior to his takeover in December of 1975. Lawrence completed and sold the building to a Mr. Bardner for a sum of $560,000. Assuming the accuracy of all the figures testified to by Lawrence, it reveals that he paid approximately $214,000 for the construction of the building and

   $175,000 for the land. He paid approximately $55,000 in additional monies for the completion of the building. With these facts, it is clear that the building could have been completed very close to the bid price. In fact when Lorenzi advised Lawrence that Amber was financially unable to complete the building in accordance with the contract and that Johnson would have to obtain another contractor or complete the building himself, he attempted to get Johnson together with another contractor but Johnson declined to accept the substitute contractor. As an aside, it was noted (again assuming the accuracy of the figures testified to by Lawrence) that after the building was completed he was able to sell the building at a profit of approximately $105,000.

7. Mary Alice Turner, a bookkeeper and secretary, for Amber testified that bills were paid as they were submitted. She testified that one bill submitted by Federal Roofing Systems was paid twice by Audette's sister-in-law, Jill

   (last name unknown) because she was unfamiliar with the bookkeeping system for Amber Construction Co. She testified that the most irate subcontractors were paid first and that to the best of her ability, she drew checks paying all bills within 30 days after submission.

   
   

8. Lorenzi was recalled and testified that Audette was utilized as a consultant because of his expertise in the construction of large projects. He testified that he (Lorenzi) was primarily familiar with additions and remodeling of buildings and smaller projects.

   
   

9. Harry Audette testified that he was never an officer, director, etc., of Amber and that he was not familiar with an overdraw for the Federal Roofing System's bill. He testified that he instructed his sister-in-law, Jill, when to honor checks based on his release of funds pursuant to the construction loan agreement. He categorically denied that he diverted any funds and in fact testified that he received very little pay while serving as a consultant for Amber. He admitted signing Lawrence Mortgage Company's endorsement to checks made payable to Lawrence Mortgage Company and that he advised Lawrence of this fact without objection from him. He testified that he had no control over Amber's bookkeeping procedures or any other policy such as the payment of accounts. He sent the FCILB papers to qualify Amber in Lorenzi's name but the corporation never qualified due to the corporation's precarious financial status.

   
   

10. The complaint allegations that the Respondent entered into a contract to construct a residence for Donald Able was not supported by any evidence introduced at the hearing. Accordingly, those allegations are recommended for dismissal by the undersigned.

    
    

11. No specific evidence was submitted that Audette diverted to any project, any funds that he received from Lawrence. Evidence reveals that all monies received from Lawrence pursuant to the construction loan agreement were deposited in the common account of Amber and used to pay expenses, including Amber's overhead. Additionally, Audette flatly denied that any money received had been diverted to a project for which the money was not intended.

    
    

    CONCLUSIONS OF LAW

    
    

12. Subsection 468.112(2), F.S., provides grounds for revocation or suspension of a certificate of registration. It suffices to say that two conditions must occur to revoke or suspend a registration certificate pursuant to this statutory provision. First, it must be shown that funds were diverted and secondly, as a result thereof the contractor would be unable to fulfill the terms of the contract. There was no evidence of any proof of any diversion of funds and therefore there can be no violation of the above quoted statute. I shall therefore, based on the foregoing, recommend that this allegation of the complaint be dismissed.

13. Subsection 468.107(2), F.S. provides in pertinent part: "If the applicant proposing to engage in

    contracting is a partnership, corporation,

    business trust or other legal entity, the application shall state the name of the ...

    corporation and of its officers and directors, ... The registration or certi- fication, when issued upon application of a business organization, shall be in the name of such business organization and the name of the qualifying individuals or individuals shall be noted thereon."

    
    

14. Audette's testimony reveals that he attempted to qualify Amber with the FCILB after he was advised of Amber's failure to comply with the registration provisions of Chapter 468, F.S. However, based on the testimony presented, it was not established by competent evidence that Audette was obligated in any manner to qualify Amber with the FCILB within the meaning of Section 468.107(2), F.S. At best, the evidence shows that Audette was merely a consultant with no corporate responsibility. In these circumstances, it is concluded that no substantial competent evidence was presented to show Audette violated the provisions of Sections 468.107(2), F.S. It is therefore, RECOMMENDED that the administrative complaint filed herein be dismissed in its entirety.

DONE and ORDERED this 22nd day of December, 1976, in Tallahassee, Florida.

COPIES FURNISHED:

Barry Sinoff, Esquire 1010 Blackstone Building

Jacksonville, Florida 32202

James R. Eddy, Esquire

700 East Atlantic Boulevard Pompano Beach, Florida 33060

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings

530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675

Docket for Case No: 76-000834

Orders for Case No: 76-000834