STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) PROFESSIONAL REGULATION, FLORIDA ) CONSTRUCTION INDUSTRY LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 84-0992

) DPR CASE NO. 0035928

CLARENCE S. TATE, )

)

Respondent. )

)

RECOMMENDED ORDER

Notice was given and a hearing was held before a Charles C. Adams, Hearing Officer with the Division of Administrative Hearings. This was conducted on July 19, 1984 in the Richard P. Daniel Building, 111 East Coast Line Drive, Jacksonville, Florida. A transcript has been filed with the Division of Administrative Hearings and that transcript was considered prior to the entry of this recommended order. In addition, petitioner's counsel has offered a proposed recommended order which has been reviewed prior to the entry of the recommended order. To the extent that the proposal conforms to the recommended order it has been utilized. Otherwise the proposed recommended order is rejected as contrary to facts found, or as being irrelevant, or immaterial.

APPEARANCES

For Petitioner: H. Reynolds Sampson, Esquire

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

For Respondent: Clarence S. Tate, pro se

Post Office Box 70

Orange Park, Florida 32067-0070 ISSUES

The issues are those promoted by an administrative complaint brought by the petitioner against the respondent alleging that the respondent violated Subsection 49.129 (1)(h), Florida Statutes, by diverting funds from a specified construction project, namely a project related to Wayne Lackey and his wife, Charlene Lackey.

FINDINGS OF FACT

1. Respondent holds certification with the Florida Construction Industry Licensing Board as a general contractor and a registered roofing contractor, having been issued license numbers CG C009484 and RC0043155, respectively. Tate has qualified a company known as Allstate Roofing and Construction, Co., under the terms of the aforementioned licenses, and at times relevant to this inquiry, operated under that company name.

   
   

2. On February 17, 1983, respondent through his business name, Allstate Roofing and Construction, contracted with Wayne Lackey to furnish the necessary labor and materials to build a 28' by 78'brick-veneered housing shell in Clay County, Florida. The specified amount of the contract was $34,365 to be paid in four equal draws, or installments, in the amount of $8,591.25, following the completion of work related to each of the phases. In accordance with the contract terms, Lackey paid the respondent three draws in the amount of

   $8,591.25, upon assurances that respondent had satisfied the expenses related to subcontractors, suppliers, and materialmen. Respondent requested advance payment of the final draw and indicated to Lackey that this money was to be used to pay for materials related to the construction of the housing shell. Lackey complied with this request and made two advanced payments on the fourth draw in the amount of $2,700 and $500. The total amount of the three draws and the advance payments related to the fourth draw was $28,973.75. At the point of paying the advance on the fourth draw, Tate had also told Lackey that all subcontractors, materialmen and suppliers had been paid, and indicated to Lackey that a written lien affidavit acknowledging that all the costs had been satisfied would be provided to Lackey at the conclusion of the construction.

   
   

3. While respondent was still obligated under the terms of the contract, Lackey began to receive phone calls and statutory notices of intentions on the part of materialmen, subcontractors and suppliers indicating that they would lien the homesite of the owner, Lackey. These demands were made on the basis that several of these claimants had not been paid for services or' supplies. When Lackey confronted the respondent, the respondent initially told Lackey to ignore those notices and that they had been paid on checks drawn on the Allstate account. In fact, the claimants had either not been paid, or had been paid with checks upon which insufficient funds were available to honor the checks drawn on respondent's business account. Under the circumstances, the claimants continued to press Lackey for satisfaction of their claims for labor and supplies. As a consequence the Lackey's had to expend money of their own to satisfy the contract conditions on the subject of costs for services by subcontractors, materialmen, and suppliers. These costs should have been defrayed by respondent pursuant to the terms of the contract. Some of the expenses, which are recounted below, were expenses incurred prior to the respondent's entitlement to his fourth draw. Payments by the owners to the claimants are as follows:

   
   

   Acorn Windows Mr. Silvers, carpenter Mr. Bruning for fill material Joe Williamson, brickmason & concrete	=$1,875.50 =$1,183.57 =$ 551.00 =$1,100.00
   Taylor Concrete	=$1,629.85
   Mr. Karneol, clean-up	=$ 200.00
   United Electric	=$1,523.00
   SUBTOTAL PAID BY CHECK BY THE LACKEYS	=$8,060.92

   Cash payments for which receipts were given:

   
   

   Williamson =$1,000.00

   United Electric =$ 800.00

   door hardware =$ 136.08

   TOTAL EXPENDITURE BY THE OWNERS =$10,003.00

   
   

4. When the amount paid by the Lackeys to subcontractors, materialmen, and suppliers is added to the $28,973.75 paid directly to the respondent, the expenditure on the part of the Lackeys' was $38,976.75. Respondent is due credits for extras in the amount of $200 for rear concrete slab, $160 for extra brick, and $70 for an interior door. That sum of $430 when subtracted from the overall payments of the Lackeys leaves $38,546.75 expended by the Lackeys, which exceeds the agreement, or contract price, between the respondent and the Lackeys by $4,181.75.

   
   

5. From the facts presented, it is evident that the Lackeys did not receive the performance from the respondent which they were entitled to under the terms of the contract, and as a consequence, had to pay an additional

   $4,181.75 above the contract price, before receiving what they had bargained for. This was at some considerable inconvenience in time as well as money. The proof is not clear on whether the respondent diverted monies or property which he had received to carry out the contract with the Lackeys into some other pursuit or whether respondent made a bargain with the Lackeys which could not be concluded with the amount of available funds which the respondent had accepted by contract as being sufficient for the Lackeys to perform their obligation under the contract.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. See Subsection 120.57(1), Florida Statutes.

   
   

7. Respondent is accused of having violated the provisions of Subsection 489.129(1)(h), Florida Statutes, which reads:

Diversion of funds or

property received for prosecution or completion of a specified construction project or operation when as a result of the diversion the contractor is or will be unable to fulfill the terms of his obligation or contract.

While it is evident that respondent has failed to stay within the terms of the contract agreement with the Lackeys, thereby causing them to expend an additional $4,181.75 to complete the project, the proof does not demonstrate that the respondent diverted funds or property for prosecution or completion of the Lackey project and thus was unable to fulfill the terms of the obligation or contract. The proof did not establish whether the money and property received to conclude the Lackey project was utilized for the project but was insufficient to conclude the project or whether funds and property were diverted into other pursuits, leaving the respondent unable to fulfill the terms of the contract obligation. Therefore, the petitioner has failed to meet its burden and respondent is not answerable or subject to discipline.

Upon a full consideration of the facts and the conclusions of law, it is, RECOMMENDED:

That a final order be entered which dismisses the administrative complaint against respondent.

DONE and ENTERED this 31st day of August, 1984, in Tallahassee, Florida.

CHARLES C. ADAMS

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the of Administrative Hearings this 31st day of August, 1984.

COPIES FURNISHED:

H. Reynolds Sampson, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Clarence S. Tate Post Office Box 70

Orange Park, Florida 32067-0070

Fred Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

James Linnan, Executive Director Construction Industry Licensing

Board

Post Office Box 2 Jacksonville, Florida 32202

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF PROFESSIONAL REGULATION CONSTRUCTION INDUSTRY LICENSING BOARD

DEPARTMENT OF PROFESSIONAL REGULATION,

Petitioner,

vs. CASE NO. 35928

DOAH CASE NO. 84-0992

CLARENCE S. TATE

P.O. Box 7O

Orange Park, Florida 32067

/

ORDER

Respondent, Clarence S. Tate, holds Florida license Nos. CG CO 09484 and RC 0043155 as a certified general and registered roofing contractor. Petitioner filed an Administrative Complaint seeking suspension, revocation, or other disciplinary action against the license.

Respondent requested a formal hearing and one was held before the Division of Administrative Hearings. A Recommended Order has been forwarded to the Board pursuant to Section Section 120.57(1), F.S.; it is attached to and made a part of this Order.

The Construction Industry Licensing Board met on November 15, 1984, in Gainesville, Florida, to take final agency action. The Petitioner was represented by Douglas Shropshire, Esquire. The Respondent was not present or represented. The Board has reviewed the entire record in the case.

The Board adopts the Findings of Fact of the Recommended Order, with the addition of the following finding which was conclusively established by testimony presented by the Petitioner and by the Respondent's own testimony.

"In his second draw the Respondent received from the owner money designated for the compacted fill under the floor slab as well as money designated for the concrete to pour that slab. Although Respondent represented to the owner that all work had been paid for, he knowingly permitted the owner to pay the materialman and sub contractor directly to

prevent liens from attaching to the job. This constitutes a double payment for these specific construction operations. Respondent admitted to some amount due the owner, Wayne Lackey."

CONCLUSIONS OF LAW

The evidence establishes that respondent received the contract amount or draw for the specified construction operation, namely, $8,591.25 for completion of the concrete floor slab. Within this contract amount was an amount to pay for compacted fill and concrete for the slab itself. The evidence of Hank Bruning and Marilyn Haddock corroborated Wayne Lackey's testimony that the amount for these items was $551.00 and $1,629.85 respectively. The total of

$2,180.85 is $6,410.40 less than the $8,591.25 for which the parties contracted.

Respondent, Tate, when advised that liens were being threatened if payment for these items was not forthcoming, permitted the owner, Wayne Lackey, to pay the subcontractor and material supplier directly. By this payment, respondent retained in his own account $2,180.85 which was due to the owner.

The testimony of Departmental Investigator Carroll together with repondent's own testimony establishes an admission against his own pecuniary interest that the money was not repaid to Lackey.

This evidence is sufficient to establish that respondent diverted funds received for a specified construction operation to his own account and constitutes the violation of subsection 489.129(1)(h), F.S, as charged.

The proof did not establish whether the money received by respondent was sufficient to conclude the specific construction operation, however, it does establish the facts alleged by petitioner and respondent; in effect, admits that the allegations are true. If then the money was somehow insufficient that would constitute an admission of the petitioner's allegations and seek to avoid or defend against them. That would be an affirmative defense and the burden of alleging and establishing such a defense would be upon the respondent. The evidence treated in the light most favorable to respondent does not meet that burden.

PENALTY

Based upon its review of the entire record, and because of its conclusion that the Respondent did, in fact, violate Chapter 489, Part I, F.S., the Board imposes the following penalty.

The respondent shall pay a fine of $500.00 within 180 days of the date of this Order.

The respondent shall pay restitution of $4181.75 to Mr. and Mrs. Wayne Lackey within 180 days.

The respondent's licenses are hereby SUSPENDED effective 180 days from the date of this Order. If the respondent makes payment as stated above within the required time, the suspension will not be imposed. If he does not make payment timely, he shall immediately, mail his licenses to the Board Office at Post Office Box 2, Jacksonville, Florida 32201, or shall surrender the license to an investigator of the Department of Professional Regulation. If imposed, the suspension will be lifted upon payment.

Within 30 days of its filing, this Order may be appealed by filing notices of appeal and a filing fee, as set out in Section 120.68(2), F.S., and Florida Rule of Appellate Procedure 9.110(b) and (c).

DONE AND ORDERED in Jacksonville, Florida, this 26th day of December, 1984.

FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD

Donald W. Stobs, Chairman

Docket for Case No: 84-000992

Orders for Case No: 84-000992