STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, CONSTRUCTION )

INDUSTRY LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 82-2416

)

AUBREY E. CLARK, )

)

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 February 9, 1983, at Orlando, Florida.

APPEARANCES

For Petitioner: John S. Kalil, Esquire

2400 Independent Square One Independent Drive

Jacksonville, Florida 32202

For Respondent: Royce D. Pipkins, Esquire

Post Office Box 965

Fern Park, Florida 32730

By Administrative Complaint filed 24 March 1982, the Department of Professional Regulation, Construction Industry Licensing Board, Petitioner, seeks to revoke, suspend, or otherwise discipline the license of Aubrey E. Clark as a certified building contractor. As grounds therefor it is alleged that, after entering into contracts to build residences for Raymond J. Kelly and Richard M. and Cheryl Haines, he abandoned these projects, diverted funds from these projects, aided or abetted an unlicensed person to evade the provisions of the Construction Industry Licensing Law, and failed to place his license number on the construction contracts. It is further alleged that by agreeing to pay loan discount points and subsequently being unable to do so, Respondent made false, misleading, and untrue statements in the practice of contracting.

At the hearing seven witnesses were called by Petitioner, Respondent testified in his own behalf, and 18 exhibits were admitted into evidence. Proposed findings submitted by the parties and not included below were not supported by the evidence or were deemed immaterial to the results reached.

FINDINGS OF FACT

1. Aubrey E. Clark's license as a building contractor was first renewed in 1975 (Exhibit 2). He was so licensed at all times here relevant and has been a licensed building contractor for approximately nine years.

   
   

2. In 1979 Clark was building homes for Development Corporation of Orlando (DCO) who was in the land-development business. He ran into difficulties in getting paid by DCO and agreed to take over the home building on his own with the company selling the lot and Clark building the home. At this time he was doing business as A & L Builders. A & L Builders was not incorporated and Clark, who held a building contractor's license, was simply doing business as A & L Builders. Subsequently, and during the time material to these charges, A & L Builders became incorporated. Clark remained the licensed building contractor who pulled the permits for construction but failed to license the corporation. At the time Clark was doing business as A & L Builders there was no legal entity but himself, and A & L Builders did not require a license. Clark failed to recognize or understand the different legal entities created when A & L Builders, Inc., came into existence and required licensing.

   
   

3. Respondent had completed some 50 to 60 homes in the subdivision and had approximately 20 under construction, including those of the two complaining witnesses, when he suffered a stroke on March 21, 1981, and was placed in intensive care for 21 days followed by another eight days in the hospital before being able to leave the hospital. In addition to the stroke, he had a dilated left ventricle to his heart.

   
   

4. While Clark was in the hospital the foreman he had employed to supervise the construction quit. Clark's brother, a trim carpenter, came to the job site to keep the projects going but did not have sufficient experience to properly schedule the subcontractors and get them on the job when needed.

   
   

5. When Clark was released from the hospital he had someone drive him to the job site where he attempted to get things in proper order. After a few hours on the site he collapsed and had to be taken home and put to bed. The following day he again tried to go to the job site but his physical condition would not allow him to even supervise at the site. His doctor told him that if he did not stay away from the job site for at least six months to one year he could have another stroke and perhaps suffer permanent paralysis.

   
   

6. A & L Builders, Inc., contracted to build a home for the Haineses for

   $33,450, of which $31,750 was to be paid in progress payments as the construction of the home progressed (Exhibit 3). At the time of Clark's stroke A & L Builders had drawn some $24,163 (Exhibit 5) under this draw schedule.

   After Clark was unable to complete the residence, Haines contracted with Lifestyle Pool & Construction to complete the residence in accordance with specifications for $7,624 (Exhibit 6) This was almost exactly the amount remaining in the construction loan for this house.

   
   

7. A & L Builders contracted with Kelly to build a home for $44,475 (Exhibit 11) , of which $42,250 was to be paid to A & L Builders in progress payments (Exhibit 11). At the time Respondent became unable to complete this contract he had drawn slightly more than $30,000 (Exhibit 16). This contract further provided that the seller would pay discount points on mortgage loan up to three points. After Clark became ill Kelly ultimately had to pay these points.

8. When A & L Builders abandoned the site, the bank arranged with Kelly to enter into a contract with another builder to complete the project. Kelly entered into a contract with Winchester (Exhibit 17) on July 3, 1981, and the home was finished with a total cost to Kelly about the same as it would have been had the home been completed by A & L Builders. Clark testified that he could have completed the Kelly house in accordance with the contract for an amount significantly less than Winchester was paid.

   
   

9. Liens were placed on both Haines' and Kelly's houses by subcontractors and material men. However, none of these lienors brought action against either Kelly or Haines and all considered the amounts represented by these liens to be owed to them by Clark. At the time of the hearing all of these liens had lapsed and were no longer valid liens against the property of Haines and Kelly. Clark considers these debts represented by these liens to be debts he owes and which he expects to repay some day. He has not filed bankruptcy proceedings although during the time he was unable to work up until the time of this hearing his liabilities far exceeded his assets.

   
   

10. Respondent did not keep separate bank accounts for each house he had under construction in the project. Draws received from the Kelly contract, for example, were placed in the A & L Builders, Inc., bank account and checks were written on this account to pay for labor and materials used on all of the houses under construction in this project. No evidence was presented that such funds were used on any project outside the subdivision of homes Respondent had contracted to build.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

12. Section 489.129(1), Florida Statutes, provides the board may take disciplinary action against the license of a building contractor for any of the following acts:

    
    

    (c) Violation of chapter 455.

    1. Aiding or abetting any uncerti- fied or unregistered person to evade any provision of this act.

    2. Knowingly combining or conspiring with an uncertified or unregistered person by allowing one's certificate or registra- tion to be used by any uncertified or un- registered person with intent to evade

    the provisions of this act.

    (h) Diversion of funds or property received for prosecution or completion of a specified construction project or operation when as a result of the diver- sion the contractor is or will be

    unable to fulfill the terms of his obli- gation or contract.

    (k) Abandonment of a construction project in which the contractor is engaged or under contract as a contractor. A project is to be considered abandoned after 90 days if the contractor termin-

    ates said project without notification of the prospective owner and without just cause.

    (m) Upon proof and continued evi- dence that the licensee is guilty of fraud or deceit or of gross negli- gence, incompetency, or misconduct in the practice of contracting.

    
    

13. It is clear that Respondent abandoned the contracts between A & L Builders, Inc., and Kelly and Haines. It is also clear and undisputed that at the time work was stopped on these contracts Clark was recuperating from a debilitating stroke and heart condition and was physically incapable of continuing on those contracts. Although he did not personally notify either Kelly or Haines that he was unable to complete their contracts, the word of his illness reached the real estate office that handled these transactions as well as the bank that financed the construction. Through one or both of these sources both Kelly and Haines were advised that A & L Builders would not finish the contracts.

    
    

14. As noted above a project is considered abandoned if the contractor stops work for more than 90 days without notifying the other party to the contract and without just cause. Here, there was just cause for Respondent abandoning these contracts, viz, impossibility of performance or a life threatening situation if he tried to complete these projects. The situation here involved is not the type of abandonment envisioned by the abandonment proscription of this statute.

    
    

15. Respondent pulled permits for A & L Builders, Inc., and the latter was not licensed. The evidence was uncontradicted that Clark and A & L Builders were synonymous both before and after the incorporation. Before incorporation there was no violation whereas after incorporation a new entity was created which required a license. This violation by Respondent was more technical than venal and there was absolutely no evidence to show Respondent to have knowingly conspired with an unlicensed person by allowing his certificate to be used by A & L Builders, Inc.

    
    

16. No evidence was submitted that funds were diverted from the construction of the houses of Kelly or Haines as a result of which Respondent was unable to complete these contracts other than Clark's own testimony that he intermingled funds for all contracts in this subdivision. The only evidence from which such an inference can be made is from the unpaid subcontractors and material men who filed mechanic liens against both Kelly's and Haines' property. This fact standing alone will not support a finding that funds were diverted from these projects. Diversion contemplates being used for another purpose and no other purpose was shown. Under the circumstances where the person who made all of the decisions, engaged and scheduled the work of subcontractors, and was the only one capable of performing these functions is removed and not replaced, it is not surprising that the contracts were unable to be completed. However, this does not equate to diversion of funds as the reason for noncompletion.

    
    

17. It is also undisputed that Respondent contracted to pay the discount points on Kelly's mortgage and failed to do so. While this is another breach of contract resulting from Respondent's stroke, it does not constitute fraud, deceit, gross negligence, or incompetence or misconduct in the practice of contracting. Since none of these elements are present, the offense of violating the provisions of Section 455.227(1)(a) Florida Statutes, is not proven.

18. Since Respondent failed to place the number of his registration on all of his contracts to construct houses and, specifically, for those houses which A & L Builders, Inc., contracted with Haines and Kelly, Respondent is in violation of Section 489.119(5), which requires this be done. Again, this is a technical violation which is perhaps more honored in its breach than in its enforcement. In any event, failure to include this number in no way affected any of the parties here involved, with the possible exception of Respondent, who failed to comply with this statutory provision.

    
    

19. From the foregoing it is concluded that Respondent failed to qualify A & L Builders, Inc., as a contractor; failed to complete contracts entered into between A & L Builders, Inc., and Kelly and Haines because it was physically impossible for him to do so; failed to place his license number on these contracts with Kelly and Haines; that the evidence is insufficient to show that Respondent was guilty of fraud or deceit by failing to pay the discount points for which he contracted with Kelly; and that insufficient evidence was presented to find that Respondent diverted funds from the Kelly and Haines contracts so as to result in these projects not being completed. Under the circumstances, intermingling the funds received for the construction of the homes in this one subdivision and using these funds to pay for labor and materials used exclusively in the subdivision does not constitute diversion of funds as intended by Section 489.129(1)(h) , Florida Statutes. It is therefore

RECOMMENDED that Aubrey Clark's license be suspended for a period of ninety

(90) days and that he be issued a letter of reprimand.

ENTERED this 28th day of March, 1983, at Tallahassee, Florida.

K. N. AYERS, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 28th day of March, 1983.

COPIES FURNISHED:

John S. Kalil, Esquire Royce D. Pipkins, Esquire 2400 Independent Square Post Office Box 965

One Independent Drive Fern Park, Florida 32730 Jacksonville, Florida 32202

James Linnan, Executive Director Fred M. Roche, Secretary Construction Industry Licensing Department of Professional

Board Regulation

Post Office Box 2 130 North Monroe Street Jacksonville, Florida 32202 Tallahassee, Florida 32301

Docket for Case No: 82-002416

Orders for Case No: 82-002416