Tate, Brigitte Teschke, Donald M. Pence, Jr., Larry A. Blockinger, Carman Pike, Jerry Bruce, Guy Neal Miller, Robert Beard, James W. Snead Jr., Cathy Smith, and Klaus Teschke. Petitioners Exhibits Nos. 1-28 were received into evidence.
Respondent Clarence S. Tate presented no testimony on his behalf.
Respondents Exhibits Nos. 1-3 were received into evidence.
There were no pending motions to be considered at the time of the hearing.
The parties did not submit posthearing proposed findings of fact and conclusions of law pursuant to Section 120.671(1)(b)(4), Florida Statutes, (Supp. 1984).
Upon consideration of the oral and documentary evidence adduced at the hearing, the following facts were found:
That respondent was at all times material to this proceeding, a certified general contractor license No. CG C009484 and a registered roofing contractor license No. RC 0043155(2).
That on or about July 1, 1983, Respondent contracted with Klaus Teschke, the owner, to remodel the Blue Boy Sandwich Shop (Blue Boy). The contract price was 98,480.00.
The Respondent began work on the remodeling of the Blue Boy in August, 1983 and received two draw payments in August in the sum of $22,158 each for a total draw of $44,316.00.
In September, 1983, Duval Septic Tank Co. (Duval) informed the owner that there was an unpaid balance of $1,621.60 and that they would have to remove their materials if not paid in full. The owner, Klaus Teschke, paid Duval in full and deducted that amount from the next draw due to the Respondent.
Respondent received a third draw in October, 1983 which was for
$22,158.00 minus the $1,621.60 that the owner had paid to Duval, for a net draw of $21,536.40.
In October, 1983, Respondent wrote to owner advising him that the job would cost $141,659.00 or $43,179.00 more than the original contract price.
Subsequent to the execution of the contract, Robert Beard (Beard) an architect as requested by the parties, prepared a detailed set of plans using the specifications set out in the contract. Beard's plans were in more detail than Respondent's one page drawing that was used in preparing the contract. Certain changes made by Beard, but agreed upon by the parties, resulted in increased cost in the remodeling. In addition, certain changes requested by the owner resulted in increased cost in the remodeling. Beard "guesstimated" the increased cost to be approximately $15,900 to $16,000, whereas Respondent was asking for $43,000.00 plus for extras. The record is clear that there was additional cost above the contract but the evidence is insufficient to determine a specific amount. It was agreed by all parties that the $10,000.00 allowance in the contract for paving the parking area would be used to help pay for the additional cost. As of the date of the hearing, the parking area had not been paved and the money allowed for paving under the contract had been used in remodeling and expanding the Blue Boy.
The owner and his wife executed a Construction Loan Agreement (first loan) on August 11, 1983 in the sum of $105,000.00 to expand and remodel the Blue Boy and on October 27, 1983 had to secure an additional $40,000.00 second loan so that the expansion and remodeling of the Blue Boy could be completed.
Between August 25, 1983 and September 10, 1983, Holmes Lumber Company (Holmes), using the credit of Donald M. Pence, Jr., furnished lumber and related material in the sum of $4,133.96 to the Respondent for remodeling the Blue Boy. Respondent's failure to pay Holmes timely for this material resulted in Holmes filing a Claim of Lien on November 3, 1983 which was later released on November 30, 1983 after Holmes was paid in full by the owner. It is not clear if these funds came from the first or second loan or from both loans.
Between September 30, 1983 and October 20, 1983 Abe Sheet Metal (Abe) fabricated or installed in the Blue Boy for Respondent the following: (a) 1 - stainless steel kitchen exhaust hood (12' x 6' x 2') with filter racks and filters; (b) 6 - lights with globes and guard; (c) 2 - exhaust fans; (d) 1 - make-up air fan with filters; (e) ductwork for exhaust fans and make-up fans;
(f) insulated thimbles for ducts; and (g) a fire extinguisher system. The total price of the above was $10,522.50.
Respondent's failure to timely pay Abe for the above resulted in Abe filing a Claim of Lien which was later released by Abe after being paid in full by the owner from funds out of the original loan and partly from funds out of the second loan.
As of October 6, 1983, Respondent owed Coleman Electric Co. (Coleman) certain monies but the record is not clear on the amount owed on October 6, 1983, for electrical work and supplies on the Blue Boy which had not been paid. The Respondent's failure to timely pay resulted in Coleman filing a Claim of Lien which was later released by Coleman after being paid in full by the owner from funds out of both the first and second loan.
As of October 6, 1983, Respondent owed H. J. Granger and Company the sum of $5,017.52 for materials and supplies furnished to the Blue Boy remodeling job prior to the above date. Respondent paid $4,000 of this bill as of October 7, 1983 with the balance of $1,017.52 being paid by the owner at a later date. The record is not clear on whether these funds came from the first or second loan or from both loans.
John Poeschl began furnishing labor and services on October 6, 1983 and completed his work on the roof on October 10, 1983. This bill was paid by a cashier's check which was drawn out of the funds from the first loan.
On September 30, 1983, Donald Pence and Larry A. Blockinger served a notice of Intent to Claim Lien for past salaries, expenses and lumber from Holmes in the sum of $10,163.00 on the owner. This matter was resolved with the Respondent by Respondent agreeing to pay the past salaries within 30 days. On this assurance by Respondent, Pence and Blockinger signed the waiver of lien. The record indicates that they were never paid in full for their salaries and expenses. However, the Holmes bill was later paid by the owner as indicated in paragraph 9 above.
On October 6, 1983, after some urging from the owner's wife, Brigitte Teschke, the Respondent executed under oath and delivered to the owner a Release of Liens indicating, among other things that the persons, firms and corporations
who had executed the release of lien were all the persons, firms and corporations who had furnished or were under contract to furnish, services, labor or materials in the remodeling of the Blue Boy.
While several of the subcontractors or materialmen were listed on the Release of Lien, the Respondent was the only person to sign the Release of Lien. Respondent signed for Allstate (Allstate Roofing and Construction). The Release of Lien did not list anyone as furnishing lumber, or having furnished materials or labor in regard to electrical wiring or air conditioning and heating. The Release of Lien listed David Spradley Plumbing (Spradley) as having been paid
$3,666.00 for plumbing and plumbing materials.
Several witnesses testified that funds from other jobs were being deposited in the bank during the remodeling the Blue Boy but no total amount could be determined from their testimony.
While Respondent received funds from other jobs during the remodeling of the Blue Boy, the Respondent also received $66,478.00 from the owner in the first three draws during August and October of 1983 which was deposited in the bank.
Considering: (a) the total amount of all three draws by the Respondent; (b) the possibility of increased costs due to changes by either Snead or the owner; (c) monies owed to subcontractors, materialmen or laborers for labor or material that was furnished before the third draw; (d) the stage of completion at the time of the third draw; (e) the monies expended by Respondent on remodeling the Blue Boy up until the third draw, as indicated by Petitioners Exhibits Nos. 6, 7 and 16; and (f) that Respondent was without any funds to proceed with the job, it is clear that funds received from the owner by the Respondent for remodeling and expanding the Blue Boy were diverted to unknown uses inasmuch as the owner had to borrow an additional $40,000 plus use the
$10,000.00 paving funds to complete the job, and not all of these additional funds could be attributed to the additional cost due to the changes, and as a result the Respondent was unable to proceed under the contract.
The record clearly shows: (a) that on several occasions Respondent informed the owner and his wife, either individually or together, that subcontractors on the job had been paid when they had not: (b) that subcontractors would be back on the job when he knew they would not due to his failure to pay them: (c) that all laborers had been paid when they had not; (d) that Respondent intentionally mislead the owner and his wife in regard to completion date; (e) that Respondent intentionally mislead subcontractors and materialmen in regard to their payment for services or materials; and (f) that Respondent intentionally mislead Pence and Blockinger when he agreed to pay their past salaries in return for their waiver of the lien.
The evidence was insufficient to show that Respondent failed to pay Spradley which required owner to satisfy a lien filed by Spradley as alleged in paragraph 15 of Count II.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject of, this proceeding.
Section 489.129, Florida Statutes (1981), empowers the Construction Industry Licensing Board to revoke, spend, or otherwise discipline the license
of Respondent if he is found to be guilty of any one of those enumerated acts listed in Section 489.129, Florida Statutes (1981). The Administrative Complaint charges Respondent with 3 basic violations of Section 489.129, Florida Statutes (1981).
Count I charges Respondent with violation of Section 489.129(1)(h), Florida Statutes (1981), in that he diverted funds received for completion
of a specified construction project and as a result was unable to fulfill the terms of the contract.
Count II charges Respondent with violation of Section 489.129(1)(1), Florida Statutes (1981), by signing a statement falsely indicating payment for labor and materials.
Count III charges Respondent with violation of Section 455.227(1)(a), Florida Statutes (1981), in that he made misleading or untrue representations in
the practice of profession and thereby violated Section 489.129(1)(c), Florida Statutes (1981).
Section 489.129(1)(h), Florida Statutes (1981), provides as grounds for discipline:
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.
Petitioner has shown Respondent failed to apply all the funds received from the owner in the first three draws for the remodeling of the Blue Boy to that project and as a result subcontractors and laborers refused to continue working on the project and materialmen refused to supply materials to the project. Therefore Respondent was unable to fulfill the terms of the contract and the owner was required to hold Respondent in default under the contract and complete the project himself.
Petitioner has shown that Respondent violated Section 489.129(1)(h), Florida Statutes (1981), and has met its burden to prove Respondent guilty of the violation charged in Count I of the Administrative Complaint.
Section 489.129(1)(h), Florida Statutes (1981), provides as grounds for discipline:
Signing a statement with respect to a project or contract. . .falsely indicating that payment has been made for all subcontracted work, labor, and materials which results in a financial loss to the owner, purchaser or contractor...
The Respondent falsely attested that all subcontractors and materialmen had been paid in the Release of Lien (Petitioner's Exhibit 8) signed October 6, 1983. While some of the subcontractors and materialmen who had subcontracted work or furnished materials, were not listed on the Release of Lien or had not been paid, there was no clear showing of a financial loss to the
owner as a result of this misrepresentation as contemplated by Section 489.129(1)(1), Florida Statutes (1981). Therefore, Petitioner has failed to meet its burden to prove Respondent guilty of the violation charged in Count II of the Administrative Complaint.
Section 489.129(1)(c) Florida Statutes (1981), provides as grounds for discipline the violation of Chapter 455, Florida Statutes.
Section 455.227(1)(a) Florida Statutes (1981), provides as follows:
The Board shall have the power to revoke suspend or deny the renewal of the license, or to reprimand, censor, or otherwise discipline a licensee if the Board finds that:
The licensee made misleading, deceptive, untrue or fraudulent representations in the practice of his profession.
Section 455.120, Florida Statutes (1981), defines the term "board" to mean any board or commission within the Department of Professional Regulation. The Construction Industry Licensing Board is a board within the Department of Professional Regulation. Section 489.105, Florida Statutes (1981).
The Petitioner has clearly shown that Respondent violated Section 489.129(1)(c) Florida Statutes (1981), when Respondent violated Section 455.227(1)(a), Florida Statutes (1981), and therefore has met its burden to prove that Respondent is guilty of the violation as charged in Count III of the Administrative Complaint.
