STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MICHAEL FISHER, )

)

Petitioner, )

)

vs. ) CASE No. 89-1527

)

OFFICE OF THE COMPTROLLER, )

DEPARTMENT OF BANKING AND ) FINANCE, DIVISION OF SECURITIES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Don W. Davis, held a formal hearing in the above- styled case on July 21, 1989, in Tampa, Florida.

APPEARANCES

For Petitioner: John L. Riley, Esquire

2325 Fifth Avenue North

St. Petersburg, Florida 33713

For Respondent: William W. Byrd, Esquire

Assistant General Counsel Office Of The Comptroller 1313 Tampa Street, Suite 615

Tampa, Florida 33602-3394 STATEMENT OF THE ISSUES

The issues for determination are whether Petitioner's application for a license as a home improvement contractor contained a misstatement of material fact sufficient to support Respondent's denial of licensure; or, whether the existence of unpaid judgments against Petitioner, and a federal tax lien against Petitioner' business partner, demonstrated a lack of financial responsibility sufficient to support denial of licensure.

PRELIMINARY STATEMENT

By letter dated January 13, 1989, Respondent's representative informed Petitioner of the denial of Petitioner's application for licensure as a home improvement contractor on the grounds of material misstatement of certain facts in the application and a demonstrated lack of financial responsibility by Petitioner.

Petitioner subsequently requested a formal administrative hearing regarding the application denial and the matter was transferred to the Division Of Administrative Hearings to conduct a formal hearing pursuant to Section 120.57(1), Florida statutes.

At the hearing, Petitioner presented the testimony of three witnesses and three evidentiary exhibits. Respondent presented testimony of no witnesses, but did offer two evidentiary exhibits. Neither party requested a transcript of the final hearing. Proposed findings of fact were submitted by the parties and are addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. Respondent is the state agency authorized to administer and enforce provisions of Chapter 520, Florida Statutes, regulating the granting or denial of applications for Home Improvement Contractor Licenses.

   
   

2. On November 30, 1988, Petitioner submitted an application on behalf of a corporation known as "The Durocoat Company" (Durocoat) to Respondent for licensure as a home improvement contractor. On that application, Petitioner disclosed the identity of the two principals of the corporation and the position held by those two individuals. Petitioner listed himself as the president of the corporation and another individual, Russell W. Black, as the corporation's vice-president. Each principal owns 50 percent of the corporation.

   
   

3. Following the section of the application providing for the disclosure of the identities and addresses of business principals, a number of questions are listed and the person executing the form is required to provide an "X" in a block to indicate a "yes" or "no" answer to each of those questions. Question number four reads as follows:

   
   

   Are there unpaid judgments against the applicant or any of the persons listed above? If "yes" attach a copy of the complaint and judgment(s).

   
   

4. Petitioner placed an "X" in the space allotted for a "yes" answer to the inquiry regarding unpaid judgments against the persons listed as business principals, namely himself and Mr. Black. Petitioner then attached a copy of a document entitled "Notice of Levy" issued by the Internal Revenue Service (IRS) of the United States Department of the Treasury. In sum, the notice certifies the existence of a tax lien against Mr. Black, Durocoat's vice-president, in the amount of $27,546.25.

   
   

5. It is undisputed by the parties that creditors held unpaid judgments against Petitioner at the time he submitted the application on November 30, 1988, and that he failed to attach copies of those judgments to the application. Further, Petitioner acknowledged at the final hearing that he was aware at the time of submittal of the application of the existence of one of these judgments. That judgement, entered in favor of The American Express Company (American Express) for $7,602, has existed since September of 1987.

   
   

6. In mitigation of his failure to disclose the American Express judgement, Petitioner testified at hearing that he didn't have a copy of the judgement at the time he filed the application and was unaware of the requirement that he should attach a copy. In view of his action in attaching a

   copy of the existing tax lien against Mr. Black to the application, Petitioner's testimony that he was unaware that he should attach copies of unpaid judgments is not credited.

   
   

7. A copy of Petitioner's credit report, introduced at final hearing by Petitioner, discloses that a business known as "Speeler Marine" obtained a judgement against him in the amount of $250 in March of 1986. Petitioner testified at hearing that he was unaware of the existence of this judgement. No settlement discussions have been initiated by him with the creditor.

   
   

8. Petitioner's credit report further discloses that an outstanding loan to Petitioner in 1985 in the amount of $36,000 by a financial institution identified as "Sun Bank" is classified as a "bad debt, placed for collection." Petitioner testified that this debt represents loan funds obtained in a previous business venture and is the subject of settlement negotiations and that he has repaid $4,000 of the amount at the present time.

   
   

9. Petitioner's testimony also establishes that the credit report's disclosure of a 1987 foreclosure certificate of title to real estate represented real property located in Gainesville, Florida, which Petitioner had taken in trade for money owed to him. In view of the distance to that city, Petitioner testified that he simply chose not to pay off the existing mortgage on the property or oppose foreclosure action by the mortgage holder.

   
   

10. A representative of Nationwide Chemical Coating Company (Nationwide) testified at the final hearing regarding that company's business relationship with Petitioner's corporation. Since February of 1988, Nationwide has sold supplies valued at $250,000 to Durocoat. The company has always paid charges within the 30 day required time limit and is considered to be a "class A" customer.

    
    

11. In regard to the federal tax lien which Petitioner attached to the application, Russell W. Black testified that the lien resulted from the disallowance by IRS of a tax shelter investment of $34,000 made by Black in 1977 or 1978. Black was notified by IRS in 1981 that the tax shelter was not considered to be a valid deduction for tax purposes. The amount owed by Black to IRS in 1981 was $20,630.64. The amount is now $27,546.25 and, according to Black, is still unpaid because he doesn't have the money. On advice of counsel, he has not contacted IRS to schedule payments on the debt.

    
    

12. Respondent denied Petitioner's application by letter dated January 13, 1989, stating that Petitioner's failure to attach copies of the unpaid judgments against himself constituted a material misstatement of fact sufficient to authorize the denial. The letter further stated that the unpaid judgments, along with the federal tax lien against Mr. Black, demonstrated a lack of financial responsibility by both individuals and constituted an additional ground for denial of the application.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter. Section 120.57(1), Florida Statutes.

    
    

14. A "person" may not engage in business as a home Improvement contractor without first obtaining a license from Respondent. Section 520.63(1), Florida Statutes. The definition of "person" includes an individual, group of individuals, or corporation. Section 520.61(17), Florida Statutes.

15. Respondent may deny issuance of a license if there is a material misstatement of fact in an initial application for licensure. Section 520.66(3)(a), Florida Statutes. Further grounds for licensure denial include an applicant's insolvency or "having a demonstrated lack of honesty or financial responsibility." Section 520.66(3)(d), Florida Statutes.

    
    

16. Respondent may also deny issuance of a license to a corporation on these same grounds of insolvency, lack of honesty or financial responsibility, if applicable to any officer or director of the business entity. Section 520.66(4), Florida Statutes.

    
    

17. Petitioner indicated on the application that unpaid judgments were outstanding against Durocoat or its business principals. To that extent, his application did not contain a material misstatement of fact. His failure to attach copies of the unpaid judgments in accordance with the instructions on the application, in the absence of any credible explanation, resulted in the filing of an incomplete application.

    
    

18. The proof establishes that Petitioner's application omitted significant information, but did not contain a material misstatement of fact. However, the proof also establishes that Petitioner and Durocoat's other principal, Mr. Black, have demonstrated a "lack of financial responsibility" through unpaid judgments and a federal tax lien which as authorized by Section 520.66(3)(d), Florida Statutes, constitutes a basis for Respondent's denial of licensure.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that a Final Order be entered denying Petitioner's application for licensure.

DONE AND ENTERED this 24th day of August, 1989, in Tallahassee, Leon County, Florida.

DON W. DAVIS

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of August, 1989.

APPENDIX

The following constitutes my specific rulings, in accordance with Section 120.59, Florida Statutes, on findings of fact submitted by the parties.

Petitioner's Proposed Findings.

Petitioner's proposed findings consisted of 10 unnumbered paragraphs which have been numbered 1-10 and are treated as follows:

1-8. Addressed in part, remainder rejected as unnecessary.

1. Rejected, unsupported by direct admissible evidence.

2. Rejected, unnecessary to result reached.

Respondent's Proposed Findings. 1-2. Addressed.

3-4. Rejected, unnecessary.

5-11. Addressed in substance.

COPIES FURNISHED:

John L. Riley, Esq. 2325 Fifth Avenue North

St. Petersburg, FL 33713

William W. Byrd, Esq. Assistant General Counsel Office Of The Comptroller 1313 Tampa Street, Suite 615

Tampa, FL 33602-3394

Hon. Gerald Lewis Comptroller, State of Florida

Department of Banking and Finance The Capitol

Tallahassee, FL 32399-0350

Charles Stutts, Esq.

General Counsel

Department of Banking and Finance The Capitol

Plaza Level, Room 1302 Tallahassee, FL 32399-0350

Docket for Case No: 89-001527

Orders for Case No: 89-001527