vs. ) CASE NO. 88-1956
JAMES C. CORDRAY, )
Respondent. )
A hearing was held in this case before Arnold H. Pollock, a Hearing Officer, in Tampa, Florida on July 12, 1988. The issue for consideration was whether Respondent's license as a registered mechanical contractor should be disciplined because of the misconduct alleged in the Administrative Complaint.
Petitioner: David L. Swanson, Esquire
Respondent: James C. Cordray, pro se
On December 3, 1987, Douglas A. Shropshire, for the Secretary, Department of Professional Regulation, (DPR), filed an Administrative Complaint in this case alleging that Respondent was guilty of several violations of Section 489.129, Florida Statutes, by diverting contract funds, by abandoning construction projects, and by being guilty of gross negligence, incompetence, or misconduct in the practice of contracting. Respondent requested a formal hearing. The file was forwarded to the Division of Administrative Hearings and on April 29, 1988, the undersigned set the matter for hearing in Tampa on May 25, 1988. On May 16, 1988, counsel for Petitioner filed a Motion to Continue on the basis of his recent assignment to the case, and on May 17, 1988, the undersigned entered an Order granting the continuance and setting the matter for hearing on July 12, 1988, at which time it was held as scheduled.
At the hearing, Petitioner presented the testimony of Gerald J. Upcavage, Robert Lee Johns, Jr., and Kathy Maria Rodriguez, all individuals who contracted with Sharp Construction Company, (Sharp), for the construction of residences; Sondra D. Thompson, former employee of Sharp; James D. Henry, former bookkeeper for Sharp; Kenneth R. Baker, an investigator for DPR; Bernard S. Verse, a
certified general contractor, home inspector, and construction consultant for DPR and an expert in home construction; and the Respondent, James Cordray.
Petitioner also introduced Petitioner's Exhibits One through Twenty.
A.
No transcript of the hearing was furnished. Subsequent to the hearing, the
Petitioner submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.
At all times pertinent to the allegations contained in the Administrative Complaint, the Respondent, James Cordray, was licensed as a registered mechanical contractor by the Florida Construction Industry Licensing Board, (Board), under license Number RM0016993, and Cordray Electric Company, Inc., was qualified by the Respondent under his license with the Board. Respondent was President of both Cordray Electric, Inc. and Sharp Construction.
The Florida Construction Industry Licensing Board is now and was at all times pertinent to the allegations contained in the Administrative Complaint, the state agency responsible for licensing of contractors in Florida.
On January 8, 1985, Robert Lee Johns entered into a contract with Sharp for the construction of a dwelling in Tampa, Florida. The contract was executed by Johns as owner and by Sondra D. Thompson Sharp's Vice President. Respondent was not present when the contract was signed. It was not until three days later, in Sharp's office, that Mr. Johns met Respondent and at that point, Ms. Thompson identified Respondent as President of the company. As a result of their conversations, Mr. Johns was led to believe that Respondent was to be the contractor on the construction of his house.
Mr. Johns arranged financing for the project through Amerifirst Savings Bank and construction was to begin on or about June 19, 1985. The terms of the contract provided that work was to be completed within 125 working days from the date of start of construction. During the period of construction, several draws against the construction loan were made by Respondent's firm with the last draw taking place on September 23, 1985. With that draw, $45,124.00 was paid to Sharp Construction Company.
When construction stopped before the house was completed, Mr. Johns first spoke with Ms. Thompson who indicated she would try to see what had caused the liens to be filed against the property and why construction had stopped. After two weeks without an answer, Mr. Johns went to see Respondent in person at his office on or about December 18, 1985. During the conversation, Respondent blamed Ms. Thompson for the difficulty, saying that she had paid bills on other projects with the draw money from the Johns account rather than paying the bills due on his property. At this point, according to Respondent, it was out of his hands and repeated questioning by Mr. Johns met with evasive answers.
As a result of this conversation, Mr. Johns immediately discharged Sharp. Thereafter, acting as his own general contractor, Mr. Johns arranged with other subcontractors to complete the items remaining to be done on the house. At this point, the kitchen cabinets had been installed and the exterior walls had been stuccoed, but neither the wiring nor the plumbing had been completed nor was the drywall installed. Though the contract cost for the
construction was supposed to be $56,830.00, by the time Mr. Johns finished paying for the work left undone by Sharp the total cost to build the residence was somewhat in excess of $61,000.00. This figure was arrived at by adding the total amount of unpaid bills for work done or materials furnished on the house unpaid at the time Sharp stopped work, ($20,225.00); the total amount of bills paid on the construction by Sharp while it was doing the work, ($26,205.99); and
$16,125.00 paid by Mr. Johns for work left undone.
On March 26, 1985, Kathy M. Rodriguez entered into a contract with Sharp for the building of a residence in Tampa with a purchase price of
$59,900.00. As in the previous case, Respondent was not present at the signing of the contract and it was executed on behalf of Sharp by Ms. Thompson. Ms.
Rodriguez made a down payment of $20,000.00. Because of some difficulty with the city, it was impossible to start work on this project right away. It was agreed that work was to start in August, 1985, when the difficulty with the city was supposed to be resolved. Construction did not begin as scheduled, however, and Ms. Rodriguez began repeated calls to Sharp's office, attempting to reach Respondent. She finally spoke with him in October, 1985, at which time he indicated that work would soon start. However, shortly after that conversation, Ms. Thompson advised Ms. Rodriguez there might be some problems with the building because Sharp was having financial difficulties.
At this point, Ms. Rodriguez and her attorney met Respondent at his office in early November, 1985. At this point, only the footers for the house had been dug and poured. Ms. Rodriguez asked if she could get her deposit back and deal with another contractor in light of the possibility that Sharp's financial problems might interfere with construction. Respondent then told her he had no intention of filing bankruptcy but, if she desired, would reimburse her the $20,000.00 she had placed as a deposit in December, 1985. He admitted he was having some difficulties and that her deposit had been used to buy material for other projects. Sharp did no further work on the project. Ms. Rodriguez was not given her deposit back and she thereafter filed a complaint with the police. In addition, she was required to pay a subcontractor $435.00 additional for digging and pouring the footer. Mr. Cordray is currently repaying Ms. Rodriguez the $20,000.00 consistent with an Order of the Circuit Court. His payments are current.
On July 23, 1985, Geralde J. Upcavage entered into a contract with Sharp for the building of a residence to be valued at $29,428.00. Though the contract was signed by Ms. Thompson for Sharp, Respondent was present at the signing as President of the company and the contractor with whom Mr. Upcavage was dealing. No deposit was called for in the contract nor was one given. Financing for the project was secured with Pioneer Savings Bank which agreed to pay all draws directly to Sharp.
Construction on the Upcavage residence started in either July or early August, 1985 and stopped at some date prior to November 13, 1985, probably in mid-September. Mr. Upcavage is not sure of the exact time. At the time construction was stopped, the slab was poured, the footers were in, and basic plumbing had been installed. The bank had issued one draw in the amount of
$4,153.00 on or about October 4, 1985.
When the construction was stopped, Mr. Upcavage contacted Ms. Thompson and the Respondent several times. Respondent stated that the work stoppage was due to a delay in delivery of certain materials but no additional work was ever done on this property. Mr. Upcavage also received several notices from subcontractors that they had not been paid. The subcontractors included
CastCrete, (concrete); the plumber; the fill dirt supplier; and others. When Mr. Upcavage received these notices, he spoke with Respondent who told him not to worry about it - this was a normal situation. At that time, Respondent said nothing to Mr. Upcavage about experiencing any financial difficulties.
On November 13, 1985, CastCrete Corporation filed a lien against the property for $351.50. When Mr. Upcavage was notified of this lien he immediately called Ms. Thompson who said that Cordray Electric Company was going bankrupt. At this point Mr. Upcavage prepared a handwritten release which he prevailed upon Respondent to sign, which he, Mr. Upcavage, believed released him from any further obligation to deal with Sharp. When he received the signed release, Mr. Upcavage paid the other suppliers off prior to their filing liens and he satisfied the lien filed by CastCrete plus a recording fee. The total amount he paid to satisfy the lien and the unpaid subcontractors and suppliers was somewhat in excess $2,000.00. After securing the release from Respondent, Mr. Upcavage contracted with another contractor who was recommended by Ms. Thompson. This contractor got the complete construction file from Sharp and completed the work for an additional $2,000.00. At no time was Mr. Upcavage ever reimbursed by Respondent for the amounts he had to spend over and above the contract price to have his house completed. At the time the Upcavage contract was signed in June, 1985, subcontractors and suppliers were already complaining. Ms. Thompson advised Respondent of this and it is clear Respondent was aware of the situation.
Ms. Thompson started working for Sharp in 1983 as a salesperson. At that time the company was owned by Mr. Sharp, a licensed builder. Respondent later took over the firm. As the vice president in charge of sales she was to negotiate with prospective purchasers, estimate the cost of construction, and enter into contracts for construction at that price, approved by Respondent. Once the contract was signed, it was also her responsibility to line up the subcontractors and supervise construction. She did all of this even though she had no experience in the construction business and was not licensed as a contractor. She solicited the contracts in issue here.
Under the routine practice in Sharp's office and that of Cordray Electric, Inc., when suppliers' subcontractors' bills were received, she would list the amount on a running account sheet she maintained for each construction project as appropriate, and then send them to Mr. Henry, the bookkeeper, to pay. She did not keep nor did she see the corporate books. The working arrangement she had with Mr. Henry for the payment of subcontractors and suppliers called for the oldest bills or those from suppliers who were currently providing supplies to be paid first. The others had to wait. Mr. Henry contends that he was instructed by Ms. Thompson as to what bills were to be paid and from which draw installment the payments were to come. Ms. Thompson denies this, stating that she did not receive the draw checks which went directly to Mr. Henry when the mail came in. In evaluating the relative merits of the testimony, it would appear, and it is found, that checks were delivered directly upon receipt to the bookkeeper who paid them in accordance with the above-described protocol. In any case, both Thompson and Henry told Respondent that bills could not be paid.
Ms. Thompson had authority in writing from Mr. Angel Gonzales, vice president of Sharp and a director of Cordray Electric, Inc., a licensed contractor, to pull permits on his license. He was, however, to have been told what projects his license was being used for. Ms. Thompson indicates that she would apply for permits under Sharp's name which had been qualified by Mr. Gonzales. In each of the cases involved here, however, the permits issued reflected Cordray Electric, Inc., as the contractor of record. Ms. Thompson
does not understand why this happened, and no evidence was introduced by any party to explain it.
Construction was stopped on the Johns' residence because the subcontractors and suppliers had not been paid on the prior job they had done for Sharp. When subcontractors would complain, Ms. Thompson would try to pacify and satisfy them. At the beginning, they were advancing credit to Sharp Construction but this practice quickly stopped.
Ms. Thompson's cost estimates were figured on a square foot basis in these three contracts, following a procedure she had always followed. Both Mr. Johns and Mr. Upcavage had their own plans, but Sharp provided the plans for the Rodriguez construction to her specifications.
Ms. Thompson ultimately resigned from her position with Mr. Cordray because she was uncomfortable with the way things were going. A lot of homeowners were being hurt and she was frustrated with her inability to get any work done.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes.
When an agency attempts to discipline a professional license, as here, it has the burden of establishing the misconduct upon which it relies by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292, (1987).
Respondent, as President and qualifying agent for Cordray Electric, Inc., and President of Sharp, was responsible for the contracting activities of the corporations.
Section 489.129(1), Florida Statutes, authorizes the Board to discipline a contractor when it finds the contractor is guilty of:
(h) Financial mismanagement or misconduct in the practice of contracting that causes financial harm to a customer....
(k) Abandonment of a construction project in which the contractor is engaged or under contract as a contractor....
(m) Fraud or deceit or gross negligence, incompetency, or misconduct in the practice of contracting.
Financial mismanagement, as defined in Section 489.129(1)(h) 1 - 3, includes such activity as permitting liens to be recorded against the property of the contractor's customer due to the failure to pay for supplies or services, and the failure to have them removed within 30 days; abandonment of a project prior to completion of the work contracted for; or the ultimate, unjustified cost to a customer above the original contract price.
In this case, the evidence shows that by failing to complete the construction of the Johns and Upcavage houses, without justification and with the resultant additional cost to the owners, Respondent is guilty of financial
mismanagement and misconduct as well as abandonment of a construction project. His acceptance of a substantial deposit from Ms. Rodriguez and his subsequent abandonment of her project after the most minimal work was done constitutes the offense as well.
The fact that liens were filed against all the properties in issue here because of Respondent's misconduct, which resulted in the owners having to pay the suppliers or subcontractors directly, over and above what they had, in good faith, paid him, also supports a conclusion that Respondent is guilty of financial mismanagement and misconduct.
Taken together, the cavalier approach Respondent took toward his clients, his misappropriation of their funds, and his unwillingness to assume responsibility for his actions until required to do so by a court constitutes, if not fraud and deceit, at least misconduct and gross negligence in the practice of contracting. This conclusion is supported by Respondent's attempts to lay off the responsibility for his clients' troubles on his staff. While Ms. Thompson's hands may not be as clean as she claims, the ultimate responsibility for the conduct of the contracting operation rested with the Respondent who cannot now seek to exculpate himself by laying all blame on a subordinate.
The Board is empowered by the statute to revoke or suspend the Respondent's license and to impose an administrative fine of $5,000.00 on him, as well as to impose lesser sanctions. Here the Board proposes to revoke Respondent's license. In light of the evidence presented at the hearing, that action appears appropriate. Because of Respondent's acute financial situation, a fine would not.
Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:
RECOMMENDED that Respondent's license as a registered mechanical contractor in Florida be revoked.
RECOMMENDED this 18th day of August, 1988, at Tallahassee, Florida.
ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 18th day of August, 1988.
David L. Swanson, Esquire Department of Professional
James C. Cordray 1526 Rivershores Way
