STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

In re) The revocation of the ) certified builder contractor's ) license of ROY J. LORENZI d/b/a )

AMBER CONSTRUCTION COMPANY, INC. ) CASE NO. 76-929 CB C 008279, 1731 S. E. 13TH )

Street, Fort Lauderdale, )

Florida 33316 )

)

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 cause on July 20, 1976, at Ft. Lauderdale, Florida.

APPEARANCES

For Petitioner: Barry Sinoff, Esquire

1010 Blackstone Building

Jacksonville, Florida 32202

For Respondent: Charles A. Goff, Esquire Roy J. Lorenzi CASORIA & GOFF, P.A.

Suite 316 Bayview Building 1040 Bayview Drive

Ft. Lauderdale, Florida

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 Roy J. Lorenzi, Respondent. As grounds therefor it is alleged that Roy J. Lorenzi, d/b/a Amber Construction Company, Inc., failed to qualify the corporation with the FCILB; entered into contracts with Frank Johnson for the construction of a building, and Donald Abel for construction of a residence; and diverted funds received for work on those projects to other projects. By these acts violations of subsections 468.12(2)(e) and 468.107(3)(c) are alleged. Three witnesses were called by Petitioner, six witnesses, including Respondent, testified on behalf of Repondent, and 12 exhibits were admitted into evidence.

FINDINGS OF FACT

1. Roy J. Lorenzi (Lorenzi) employed an attorney to incorporate Amber Construction Company, Inc. (Amber) in the State of Florida and appropriate papers to do so were prepared. Amber was undercapitalized at the time of incorporation.

   
   

2. Lorenzi was President of Amber and he and Harry J. Audette were the sole owners of the company.

   
   

3. Both Lorenzi and Audette are registered contractors by the FCILB.

4. Amber was not registered with the FCILB.

   
   

5. In July, 1975 Lorenzi and Audette d/b/a Amber Construction Company, entered into a contract with Frank Johnson to erect a building at a cost of approximately $213,000.

   
   

6. Johnson had arranged financing for the construction of the building with Southern Federal Savings of Pompano Beach. Both Lorenzi and Audette were authorized to make draws on the bank as the erection of the building progressed. Draw checks were made payable to Johnson and Amber and, if the draw was to pay a subcontractor, the subcontractor would also be added as a payee.

   
   

7. Eight checks representing draws against Johnson's building were admitted into evidence. All of these checks had been made out to Amber and Johnson with some including a third party. On all of these checks Johnson's signature had been forged by either Lorenzi or Audette. Lorenzi admitted placing Johnson's name on Exhibit 8, a check made payable to Johnson, Amber, and a subcontractor named Gordon. He denied signing Johnson's name to any other check. The endorsement forged on Exhibit 8 by Lorenzi was placed on the check December 24, 1975 at the insistence of the irate subcontractor for whose benefit the check had been made. All of the proceeds from that check went to the subcontractor for whom it was intended. After cashing the check and giving the money to Gordon, Lorenzi, according to his testimony, called Johnson by phone and advised him of what he had done. Johnson denied ever receiving such a call. In any event, when Johnson learned that his name had, without his knowledge or consent, been placed on checks representing draws, he cancelled the authority of Amber to obtain the draws.

   
   

8. Shortly thereafter Lorenzi called Johnson and advised him 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. Lorenzi attempted to get Johnson together with another contractor but Johnson declined to accept the substitute contractor.

   
   

9. When submitting the bid to erect Johnson's building Amber accepted Johnson's statement that he had received a bid from a prospective subcontractor to do stone work on the building for $19,000. Amber used this figure in submitting its bid to Johnson. When Amber submitted the plans and specification to the subcontractor for the stone work for a quote he received a bid of

   $42,000. It appears that the difference was due to the fact that the price Johnson quoted included only two sides of the building whereas the plans and specifications called for stone work on all sides of the building.

   
   

10. Amber also in July 1975 entered into a contract with Donald Abel for the construction of a residence at a contract price of some $35,000. This work progressed until late December, 1975 when Abel was advised that Amber would be unable to complete the contract. At the time Amber and Lorenzi defaulted on the contract several subcontractors had not been paid and Abel was required to pay approximately $6,000 over the contract price to complete the house and satisfy the liens of the subcontractors.

    
    

11. During this same period Amber was engaged in the construction of Spring Tree Shopping Plaza. The builder of this project apparently insisted that all payments due subcontractors and suppliers be paid with each draw taken.

    
    

12. During the period herein involved, i.e. July - December, 1975, prices for materials were increasing rapidly.

13. In order to get business and keep a good cash flow Amber bid too close on some of its contracts.

    
    

14. The contract for the construction of the Johnson building could have been completed very close to the bid price despite the large error in that portion of the bid reflected by the stone work. The residence for Abel was underbid. Even with the $6,000 additional which had to be supplied by Abel, the cost of Abel's house came to less than $17 per square foot.

    
    

15. No specific evidence was submitted that Lorenzi diverted to another project any funds he received from Johnson or Abel. All monies received from Johnson and Abel were deposited in a common account of Amber and used to pay expenses, including Amber's overhead.

    
    

16. Lorenzi flatly denied that any money received had been diverted to a project for which the money was not received.

    
    

17. Books and records of Amber reflect that both Lorenzi and Audette received less than a minimal salary during the calendar year 1975.

    
    

    CONCLUSIONS OF LAW

    
    

18. Subsection 468.112(2) F.S. provides grounds for revocation or suspension of a certificate or registration to include:

    
    

    "(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.

    * * *

    (g) Failure in any material respect to comply with the provisions of this part."

    
    

19. To revoke or suspend a registration pursuant to this statutory provision two conditions must occur. First, funds must be diverted and second, as a result of the diversion, the contractor must be unable to fulfill the terms of the contract.

    
    

20. Here the only evidence from which diversion of funds could be inferred is from the admitted fact that all revenues received by Amber were placed in one account and this account was used to satisfy Amber's indebtedness.

    
    

21. The fact that this account proved inadequate to satisfy the obligations of the contracts is not, standing alone, sufficient to prove diversion of funds from these projects.

    
    

22. Similarly, absent proof of a diversion of funds, a violation of the above quoted statute does not occur simply because the contractor has insufficient funds to complete the contract.

23. 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 individual or individuals shall be noted thereon."

    
    

24. Here Lorenzi failed to qualify Amber with the FCILB and subsection 468.112(2)(g) above quoted provides that action against a registration may be taken if the registrant fails to comply with the provisions of Chapter 468. F.S.

    
    

25. Lorenzi acknowledged that he was aware of the requirement for registration of Amber and even went to the point of completing the application. However, the precarious financial condition of Amber led him to believe that the FCILB would not register such a financially insecure corporation.

    
    

26. From the foregoing it is concluded that substantial competent evidence of a diversion of funds was not presented to prove Lorenzi guilty of a violation of subsection 468.112(2)(e) F.S. It is further concluded that substantial competent evidence was presented to show Lorenzi violated the provisions of 468.107(2) F.S. It is therefore,

RECOMMENDED that the registration of Roy J. Lorenzi be suspended for a period of six (6) months.

DONE and ENTERED this 3rd day of August, 1976 in Tallahassee, Florida.

K. N. AYERS Hearing Officer

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

COPIES FURNISHED:

Barry Sinoff, Esquire 1010 Blackstone Bldg.

Jacksonville, Fla. 32202

Charles A. Goff, Esquire Suite 316 Bayview Bldg. 1040 Bayview Drive

Ft. Lauderdale, Florida

================================================================= AGENCY FINAL ORDER

=================================================================

BEFORE THE FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD

FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD,

Petitioner,

vs. CASE NO. 76-929

ROY J. LORENZI dba ABBER CONSTRUCTION CO., INC., CB C008279,

1731 S. E. 13th Street, Fort Lauderdale, Florida 33316

Respondent.

/

FINAL ORDER OF FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD

This cause came before the FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD at its regular meeting on September 10, 1976.

Respondent was sent the Hearing Officer's findings and recommendations and was given at least 10 days to submit written exceptions to the recommended order. Respondent was notified of the meeting so that respondent or counsel might appear before the Beard. Respondent did not appear.

The FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD on September 10, 1976

after consideration of the findings of fact and the recommendations of the recommended order, by motion duly made and seconded voted to suspend respondent's license for the period of one year. It is therefore,

ORDERED that the certification of respondent ROY J. LORENZI, Number CB C008279 be and is hereby suspended for a period of one year.

Respondent is hereby notified that he has 30 days after the date of this final order to appeal pursuant to Chapter 120, Florida Statutes, and the Florida Appellate Rules.

Harold Haimowitz President

FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD

Docket for Case No: 76-000929

Orders for Case No: 76-000929