DEPARTMENT OF PROFESSIONAL ) REGULATION, CONSTRUCTION ) INDUSTRY LICENSING BOARD, )
vs. ) Case No. 85-2424
ROBERT J. KNIGHT, )
Respondent. )
Final hearing in the above-styled action was held on February 11, 1987, in Cocoa, Florida, before Hearing Officer Mary Clark.
For Petitioner: W. Douglas Beason, Esquire
For Respondent: Robert J. Knight (pro se)
This action commenced with a three-count administrative complaint filed by Petitioner on April 17, 1985. Respondent requested a formal hearing. The complaint was amended in August 1986, and in January 1987. Petitioner's motion for leave to file a second amended complaint (the January 1987 complaint) was granted at the final hearing, with no objection from the Respondent. The second amended complaint was further amended at the final hearing to delete paragraphs 4. and 5., relating to complaining witnesses who did not appear at the hearing.
At the hearing, Petitioner presented the testimony of Louis Phoebus, Jose Fuenmajor and Debra Rose Fuenmajor. Thirty exhibits were produced and admitted. Respondent testified in his own behalf and submitted one exhibit.
Petitioner's first and second requests for admissions, submitted on August 12, 1986 and August 29, 1986, were deemed admitted in the absence of any response. Petitioner's motion to deem admitted was filed on November 24, 1986. An Order to Respond was issued to Respondent on December 9, 1986. That order included a copy of Florida Rule of Civil Procedure 1.370 and gave Respondent an additional fifteen days to answer. There was still no response, and counsel for Petitioner renewed his motion to deem admitted. Respondent conceded that he received the first request for admissions, but claims he did not receive the second request or the Order to Respond. The file reflects that the documents were sent to the proper mailing address and were not returned.
After the hearing Petitioner submitted proposed findings of fact and conclusions of law. A specific ruling on the proposed findings of fact is provided in the attached appendix.
At all times material to the administrative complaint, Robert J. Knight was a certified general contractor in the State of Florida, having been issued license number CG CA20770. ( Petitioner's First Request for Admissions.)
D & B General Contractors, Inc. ("D & B") was incorporated in 1983. Robert J. Knight was the president, the license holder and the qualifying agent for the corporation. Knight's former partner, David Hawk, was vice-president and treasurer. The company operated in the Brevard County area and was dissolved in 1986. (Transcript, pp. 145, 152-153, 161.)
In March 1984, Mr. and Mrs. Louis Phoebus, who were living in Virginia, contracted with D & B for the construction of a single-family residence in Sunnyland Beach, Florida. The contract price was $74,100.00 (Petitioner's exhibits #2, 3, 4; transcript, pp. 17, 29.)
The construction loan was approved in June or July 1984, and the Phoebus' sent a check for a deposit of $7,500.00 to D & B on July 25, 1984. (Petitioner's exhibit #5, transcript
p. 35) Mr. Phoebus immediately stopped payment on the check the same day it was mailed because a friend in Melbourne informed him by phone that there were problems between the D & B owners, Robert Knight and David Hawk. (transcript, p. 37.)
In early August Robert Knight called Louis Phoebus to find out what happened to the check and told him that, while he had problems with Mr. Hawk, Hawk was no longer part of the organization. He said that he would start work on the house around October 1st, and probably finish by the end of December, 1984. On that assurance Louis Phoebus wired $7,500.00 to a bank account in Merritt Island, as instructed by Robert Knight. (Petitioner's exhibit #6, transcript pp. 37-40.)
That was the last contact Louis Phoebus had with Robert Knight. Letters and phone calls from Virginia were unanswered between August and October 15, 1984. The letters were sent to the D & B business address and to a post office box number given by a telephone answering service. The telephone calls to the business were answered by the answering service but the calls were never returned. Phone calls to Mr. Xnight's residence were answered by a machine identifying the residence. Messages were left but never returned. In the latter part of October, Louis Phoebus traveled to Florida and again tried unsuccessfully to reach Mr. Knight by telephone He went to his house but no one was home; the business office was closed. (Transcript' pp. 42- 52.)
Construction never commenced on the Phoebus house, and no portion of the $7,500.00 was returned until a criminal complaint was filed. The circuit court has ordered restitution and Robert Knight is currently making incremental payments to Mr. and Mrs. Phoebus.
J & J Investments ("J & J") is a Florida general partnership owned by Jose and Debra Rose Fuenmayor and Jose Salazar. On February 27, 1987, J & J contracted with D & B for the construction of a single family residence in Satellite Beach Florida. The contract price was $62,412.00. The home was intended to be resold by J & J as a business venture. (Petitioner's exhibit #7, transcript pp. 58-61.)
A construction loan from First Federal Bank of Osceola closed on March 26, 1984, and construction commenced shortly after. (Petitioner's exhibit #8, transcript pp. 62-63.) The first draw on the construction loan, in the amount of
$11,541.20, was made on May 24, 1984. At that point the house
was framed and the trusses were up. (Petitioner's exhibit #9, transcript p. 64)
By the end of June, 1984, the work on the J & J project had slowed to a virtual stand-still. Mr. Fuenmajor was concerned and tried to contact Robert Knight at D & B's office. Mr. Fuenmayor did not want to sign the second draw check but was assured, first by David Hawk, and then later in a phone call from Robert Knight, that their problems would be worked out. The second draw payment was made around July 13, 1984, in the amount of $17,311.80. (Petitioner's exhibit #12, transcript, pp. 7075.)
The signature on the affidavits for both draws appears to be David Hawk but the signatures were not proven at the hearing. Robert Knight did not sign the draw affidavits. (Petitioner's exhibits #10 and 11.)
After the second draw there was no construction on the property, with one minor exception. In response to the Fuenmayor's anxious calls, Robert Knight went out to the site one weekend with a helper to work on a gable. (Transcript, p. 175.)
The Fuenmayor's contacts with Robert Knight occurred in the beginning when the contract was negotiated and signed. They visited the job site daily and, except for the weekend addressed above, they never saw Robert Knight at the site. They dealt with David Hawk, but after the second draw payment, they never saw Hawk again. (Transcript, pp. 65, 74, 76.)
Attempts by the Fuenmayors to reach Robert Knight at the office and by phone were unsuccessful, and in August the Fuenmayors found him at his home. At that time he explained that he was having family problems and that Mr. Hawk had messed up the business. He agreed to go to the bank and sign a release so that the Fuenmayors could proceed with another contractor on the same loan. He did not follow through, however, and when the Fuenmayors came to his home again in mid-September to try to work things out, he ordered them off the property. (Transcript, pp. 76-80.)
Convinced that the relationship with D & B was irreparably breached, J & J Investments paid off the loan to First Federal of Osceola and in October contracted with another individual to complete construction. (Transcript, pp.-82, 85, 136.) J & J was also required to pay for services of
subcontractors and suppliers who had furnished labor and materials but were not paid by D & B. Over $4,400.00 was paid by J & J to release liens against their property by materialmen. (Petitioner's exhibits #16, 19, 20, 24, 28 and 29.)
As the result of other legal actions, Robert Knight is currently making restitution to J & J Investments. (Transcript' pp. 113-117.)
Robert Knight was going through a divorce from December 1983, through February or March 1984, and during this period shared an apartment with his business associate, David Hawk. Robert Knight knew Hawk had a drinking problem and when he became aware that Hawk also had a drug problem, Knight moved out. Around this same time, early 1984, Knight learned that Mr. Hawk was forging his name on checks and was depleting the assets of the corporation. (Transcript, pp. 145, 154, 155.) He learned that Mr. Hawk wrote checks to non-existent sub- contractors and to himself. (Transcript, pp. 163-164.)
In May 1984, Robert Knight took a full-time job at the Harris Corporation in Brevard County and turned over the management of D & B to David Hawk. Hawk is not a licensed contractor. (Transcript, pp. 153, 160, 164.) Sometime in August 1984, Hawk closed the corporation office. He was later arrested and imprisoned. (Transcript, p. 167.)
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this proceeding. Section 120.57(1), F.S., Section 455.225(4) F.S.
In the second amended administrative complaint Robert Knight is charged with the following violations of Chapter 489
F.S. regulating construction contractors:
489.129 Disciplinary proceedings.--(1) The board may revoke, suspend, or deny the issuance or renewal of the certificate or registration of a contractor and impose an administrative fine not to exceed $5,000, place a contractor on probation, or reprimand or censure a contractor if the contractor, or if the business entity or any general partner, officer, director, trustee, or member of a business entity for which the contractor is a qualifying agent, is found guilty of any of the following acts:
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(h) 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.
* * *
Failure in any material respect to comply with the provisions of this act.
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 terminates the project without notification to the prospective owner and without just cause.
Signing a statement with respect to a project or contract falsely indicating that
the work is bonded; 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; or falsely indicating that workers' compensation and public liability insurance are provided.
(m) Upon proof that the licensee is guilty of fraud or deceit or of gross negligence, incompetency, or misconduct in the practice of contracting.
For a violation of Section 489.129(1)(h) F.S. it must be proven that funds for a specific project were diverted, and because of that diversion the contractor could not fulfill his obligations. The ultimate disposition of Mr. Phoebus' $7,500.00 was never explained. No work was done on the project but no competent evidence attributed that to the lack of funds.
The J & J project (Fuenmayor's) was partially completed by D & B. No competent evidence was adduced to show that the level of completion was less than the funds provided for the project. Materialmen were not paid; however, without some evidence as to the funds expended by D & B on the project, it is impossible to determine that payments made by J & J were actually diverted. The two photographs of the project, admitted into evidence as Petitioner's exhibits #25 and 26, show the exterior of a house that is clearly unfinished but with walls, roof, windows and doors in place. Mr. Fuenmayor's testimony regarding the level of completion is inconclusive:
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Q. [by Mr. Beason] Do these photographs accurately represent the status of the construction of June 30, 1984?
A. [by Mr. Fuenmayor] Yes.
Q. And did you ever have an estimate performed as to the percentage of construction completed by D & B General Contractors?
A. Yes. At that point the house was probably supposed to be at thirty thousand dollars and out of that seventeen was paid.
* * *
The violation of Section 489.129(1)(j) F.S., as alleged in the second amended complaint, is based upon Robert Knight's failure to perform his obligations as "qualifying agent" for D & B.
Robert Knight had a statutorily imposed professional duty, as sole qualifying agent of record of D & B, to supervise all of D & B's projects. This responsibility could not be relieved by the attempt to transfer it to an individual who was not registered as a qualifying agent for the company. Section 489.105(4) P.S.; Section 489.119 F.S.; Alles v. DPR, Construction Industry Licensing Board, 423 So. 2nd 624, 626-7. (Fla. 5th DCA 1982); Hunt v. DPR, Construction Industry Licensing Board, 444 So. 2nd 997 (Fla. 1st DCA 1983); Gatwood v. McGee, 475 So. 2nd 720 (Fla. 1st DCA 1985.)
Robert Knight failed to supervise the J & J Project; he admitted he turned the management over to David Hawk. This admission is all the more egregious in light of his knowledge of Hawk's problems with alcohol, drugs and misappropriation of funds. Even if Hawk were otherwise fully competent to handle D & B's projects, he was not a licensed contractor, much less a "qualifying agent."
The violation of Section 489.129(1)(j) F.S. was established.
744. Both the Phoebus project and the J & J project were abandoned. No work was done on the Phoebus project after the contract was executed and the down payment was made. Although the actual length of time between the last work on the J & J project and the Fuenmayor's last encounter with Robert Knight was never established, the tenor of that final meeting clearly evidenced Knight's intent to proceed no further with his contractual obligations to J & J. Knight failed to prove just cause for the abandonment of either project and clear violations of Section 489.129(1)(k) F. S. were established.
There was no proof that Robert Knight signed a statement that payment was made for the work, labor and materials on the J & J project. Knight, as qualifying agent, could be held responsible for Hawk's false statement, but no
competent evidence demonstrated that Hawk actually signed the draw affidavits. No violation of Section 489.129(1)(1) F.S was established.
The practice of contracting is defined in Section 489.105(5) F.S. as ". . . engaging in business as a contractor." Robert Knight was guilty of gross negligence and misconduct in the practice of contracting when he walked away from the obligations of D & B and left the business in the hands of someone he admitted he knew was wholly incapable. Robert Knight was guilty of deceit and misconduct when he induced the Phoebus' to send their 57,500.00 down payment for a project that, by then he was aware, D & B could never complete. The violation of Section 489.129(1)(m) F.S. was established.
RECOMMENDED: That a final order be entered finding Robert Knight not guilty of violations of Section 489.129(1)(h) and (1) F.S., and guilty of violations of Section 489.129(1)(j)(k) and
(m) F.S., and revoking his general contractor's license.
Filed with the Clerk of the Division of Administrative Hearings this 24th day of March, 1987.
The following constitute my specific rulings on the findings of fact proposed by Petitioner.
6. and 7. Adopted in paragraph 4.
8. and 9. Adopted in paragraph 5.
P. O. Box 2
W. Douglas Beason, Esquire Department of Professional
Robert J. Knight 3433 Wilderness Lane
Robert J. Knight
P. O. Box 783
