Murphy, Respondent. As grounds therefor it is alleged that Respondent on May 26, 1977 filed a petition of bankruptcy before the U.S. District Court for the Northern District of Florida. Three witnesses were called by Petitioner, five witnesses were called by Respondent, and six exhibits were admitted into evidence.
Respondent's Motion to Dismiss the complaint on grounds that Section 468.112(7) Florida Statutes is unconstitutional was denied. Respondent stipulated that he holds General Contractor's License Number CG C003548 issued by FCILB.
Frank M. Murphy, Respondent, on May 26, 1977, filed a voluntary petition of bankruptcy in the U.S. District Court for the Northern District of Florida and was discharged November 4, 1977.
At the time of the filing of the Administrative Complaint Respondent's license had lapsed by reason of his failure to renew, but the license was subsequently reinstated and is now current.
Since his discharge by the bankruptcy court Respondent has continued doing work under his general contractor's license and no complaints against him have been received by Petitioner.
Respondent's creditors whose debts were discharged in the bankruptcy proceedings continue to do business with Respondent on a cash basis.
The First City Bank in Gainesville, Florida has, since his discharge in bankruptcy, extended Respondent credit in the amount of $3,000 and the account is current in accordance with the terms of the loan.
The billings of the accountant who has done Respondent's account work since his discharge are current.
Delores J. Mathys loaned Respondent in excess of $10,000 prior to his charge in bankruptcy and has loaned him additional money subsequent to his discharge. She is currently negotiating with him for the construction of a new home.
Keller Building Products has, since Respondent's discharge in bankruptcy, extended Respondent credit to the extent of $5,000 and this account is current.
Other suppliers have extended Respondent credit since his discharge and his accounts with them are curent.
Subcontractors who have done work on projects for which Respondent is general contractor since his discharge have been paid.
Other customers for whom Respondent has done work since his discharge are satisfied with his work and will continue to employ him as their contractor.
Exhibit 2, a financial statement dated April 25, 1978 shows Respondent to have a current net worth in excess of $85,000, some $78,000 of which consists of real property owned jointly with his wife.
Respondent's reputation in the business community in which he utilizes his certification is good.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of this cause.
Section 468.112(7) Florida Statutes provides:
The filing of a petition in bankruptcy, either voluntarily or involuntarily, or the making of a composition of creditors or the appointment of a receiver for the business of the registrant or certificate holder may be considered by the board as just cause for suspension of a certificate of registration.
The purpose of the Construction Industry Licensing Law, Chapter 468 Florida Statutes, is contained in Section 468.101 which provides:
It is hereby declared to be the public policy of the state that, in order to safeguard the life, health, property and public welfare of its citizens, the business of construction and home improvements is a matter affecting the public interest, and any person desiring to obtain a certificate to engage in the business as herein defined on a statewide basis shall be required to establish his competency and qualifications to be certified as herein provided.
Prior to issuing an initial certificate section 468.106(3) Florida Statutes provides that upon receipt of the fee and application the board shall investigate the financial responsibility and credit and business reputation of the applicant, and subsection (4) thereof requires the applicant to submit satisfactory evidence that he has obtained public liability and property damage insurance.
It is clear that the thrust of Chapter 468 is to regulate the construction industry in order to protect the public from incompetent and financially irresponsible contractors and Section 468.112(7) should be read in this light.
While the statutory provision here involved is not as clear as it might be with respect to its purpose it should be noted that no reference is made to debts that may be discharged by the bankruptcy proceeding or to any protection for the creditors from whom relief by bankruptcy may be sought.
Respondent's Motion to Dismiss the Administrative Complaint on grounds that Section 468.112(7) is unconstitutional as being violative of the supremacy clause of the U.S. Constitution although beyond the jurisdiction of this Hearing Officer to consider, would have merit if a certificate of registration were suspended solely by reason of a registrant filing a petition in bankruptcy without regard to his ability to continue to work in his chosen occupation without danger to the general public. Perez v. Campbell, 402 U.S. 637 (1971).
The Perez case involved an Arizona statute which provided for the suspension of drivers licenses of uninsured motorists involved in accidents until judgments rendered against them resulting from such accidents were paid. It further provided that suspension would continue until the judgment was paid and that a "discharge in bankruptcy following the rendering of any such judgment shall not relieve the judgment debtor from any of the requirements of this article." The court held this provision of the Arizona statute repugnant to the Supremacy Clause of the U.S. Constitution and therefore void; however, validity of another provision of the Arizona statute that such registration shall remain suspended and shall not be renewed until the person gives proof of financial responsibility was not questioned. Id at p. 642. Previous cases upholding the validity of State financial responsibility laws were overruled "to the extent they are inconsistent with the controlling principle that any state legislature which frustrates the full effectiveness of federal law is rendered invalid by the Supremacy Clause". Id at p. 652.
If Section 468.112(7) Florida Statutes is interpreted to authorize the board to inquire into the financial ability of a registrant to continue his business in the construction industry following the filing of a petition in
bankruptcy the ratio decidendi of the Perez case is not violated. In the event a registrant is unable to show financial responsibility following his bankruptcy proceeding it would comport with the intent of the legislature as expressed in Section 468.101 above quoted to suspend his registration until such time as he is able to demonstrate that he is financially capable of continuing his occupation as a contractor without undue risk to the public. Such a construction in no way serves to Infringe upon the purpose of the Bankruptcy Act to give debtors "a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt." Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S. Ct. 695, 699 (1934)
In this connection it should be noted that other provisions of the Construction Industry Licensing Law provide for disciplinary action against a registrant who diverts funds received for a specific project to another where as a result of the diversion the registrant is or will be unable to fulfill the terms of the contract. A registrant on the verge of bankruptcy, i.e., one whose debts exceed his assets, would seem to be very vulnerable to violating this provision of the statute and would likely have to follow the bankruptcy route or be subjected to charges of diverting funds. In either case the board is authorized to take action to protect the public from such a financially irresponsible registrant. The fact that Section 468.112(7) by use of the word "may" gives the board discretion to suspend a license further reinforces the interpretation that the legislature intended only those registrants, not financially able to continue in the construction business without danger to the public, be suspended.
Applying the interpretation of Section 468.112(7) to the facts of this case it is clear that Respondent has demonstrated that degree of financial responsibility necessary to show that he can continue as a general contractor without undue risk to the public. So interpreted the statute does not operate in derogation of the Bankruptcy Act or conflict with it to the extent it may rightly be said to violate the Supremacy Clause. Perez supra at p. 664.
From the foregoing it is concluded that Frank W. Murphy has demonstrated that he has the experience and financial ability to continue to operate as a general contractor in this state without danger to the public. It is therefore,
