STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION (CONSTRUCTION )

INDUSTRY LICENSING BOARD), )

)

Petitioner, )

)

vs. ) CASE NO. 90-3034

)

MANUEL L. VALDES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on October

25 1990, in Miami, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Cathleen E. Lindsey, Esquire

Department of Professional Regulation 1940 North Monroe Street, Suite 341

Tallahassee, Florida 32399-0792

For Respondent: Manuel L. Valdes, pro se

705 Southwest 96th Court Miami, Florida 33174

STATEMENT OF THE ISSUES

1. Whether Respondent committed the offenses described in the administrative complaint?

   
   

2. If so, what disciplinary action should be taken against him?

PRELIMINARY STATEMENT

On October 17, 1989, the Department of Professional Regulation (Department) issued an administrative complaint charging that Respondent, a licensed general contractor, engaged in the following conduct in connection with a job undertaken by his contracting business:

On or about August 8, 1988, the Respondent contracted with Henry Rodriguez to add several room additions to his home at 9139 South West 69 Court, Miami, Florida, for the price of

$30,000.00.

The Respondent obtained permit number 87

035456 from the local building department to perform said work.

Mr. Rodriguez has paid approximately

$36,535.00 towards the contract and an additional $15,000.00 to have separate subcontractors redo and repair the Respondent's work.

The Respondent is in possession of an individual status certification and is doing business as Michelle Construction Corporation which he has failed to qualify.

According to the complaint, such conduct constituted "acting in the capacity of a contractor under any certificate issued [under Chapter 489, Florida Statutes] except in the name of the certificate holder as set forth on the issued certificate," in violation of Section 489.129(1)(g), Florida Statutes; "mismanagement or misconduct in the practice of contracting that causes financial harm to the customer," in violation of Section 489.129(1)(h), Florida Statutes; "fraud or deceit or . . gross negligence, incompetency, or misconduct in the practice of contracting," in violation of Section 489.129(1)(m), Florida Statutes.

Respondent denied the allegations of wrongdoing advanced in the complaint and requested a formal hearing. On May 17, 1990, the matter was referred to the Division of Administrative Hearings for the assignment of a Hearing Officer to conduct such a hearing.

At hearing, two witnesses testified on behalf of the Department: Henry Rodriguez, the allegedly aggrieved homeowner, and John Delaney, a code enforcement officer employed by Metro-Dade County. In addition to the testimony of these two witnesses, the Department offered eight exhibits into evidence, all of which were received by the Hearing Officer. Respondent presented his own testimony as well as that of Paulino Hernandez, a former employee of Michelle Construction Corp. who served as the foreman on the Rodriguez project, and Jose Antonio Lopez, a roofer who worked on the Rodriguez project as an independent contractor. Respondent also offered six exhibits into evidence, all of which were admitted by the Hearing Officer.

At the close of the hearing, the Hearing Officer advised the parties on the record that post-hearing submittals had to be filed no later than ten days after the Hearing Officer's receipt of the transcript of the hearing. The hearing transcript was received by the Hearing Officer on November 7, 1990. The Department filed a proposed recommended order on Monday, November 19, 1990.

Petitioner's proposed recommended order contains proposed findings of fact. These proposed findings of fact have been carefully considered and are specifically addressed in the Appendix to this Recommended Order. To date, Respondent has not filed any post-hearing submittal.

FINDINGS OF FACT

Based upon the record evidence, the following Findings of Fact are made:

1. Respondent is now, and has been since 1982, a general contractor licensed to practice in the State of Florida. He holds license number CG C020528. At all times material hereto, Respondent has been licensed as an individual general contractor, rather than as a qualifying agent for any business entity. 1/

   
   

2. Respondent is now, and has been at all times material hereto, the President of Michelle Construction Corp. (MCC).

   
   

3. On or about November 29, 1987, MCC, through Respondent, entered into a written contract with Henry Rodriguez and his wife Patricia, in which MCC agreed, for $30,000.00, to remodel the Rodriguez residence located at 9139 S.W. 69th Court in Miami, Florida. The work to be performed by MCC included, among other things, renovating the residence's two bathrooms, replacing most of the existing roof, doubling the size of the kitchen, and adding to the residence a back porch, living room, dining room, and master bedroom with a bathroom and walk-in closet. Respondent was to prepare the plans for the project.

   
   

4. The $30,000.00 contract price was exceptionally low for the type of work that was the subject of the contract.

   
   

5. On December 12, 1987, Respondent, using his general contractor's license, obtained a building permit from the Metro-Dade County Building and Zoning Department to perform the work specified in the contract.

   
   

6. Shortly thereafter, work began on the project. Although he hired Paulino Hernandez to serve as the project foreman, Respondent retained overall supervisory responsibility for the project and visited the worksite on various occasions.

   
   

7. Work on the project proceeded slowly. Changes had to be made to the plans originally prepared by Respondent because they were infeasible. Furthermore, the project was underfinanced, notwithstanding that Mr. and Mrs. Rodriguez made payments in accordance with their contractual obligations.

   
   

8. MCC last performed work on the Rodriguez residence on August 25, 1988. At the time it stopped working on the project, the project was not complete. To this date, it remains unfinished, despite Mr. Rodriguez's efforts to have MCC fulfill its obligations under the contract.

   
   

9. Among those portions of the project that MCC failed to complete was the roofing work described in the contract. Following MCC's abandonment of the project, Mr. Rodriguez contracted with Trans Continental Coating Co., Inc., to install over the entire residence a "Foamed-In-Place Urethane Insulated Roof and an elastomeric coating system" for $10,000.00.

   
   

10. The work that MCC and/or its subcontractors did perform in furtherance of its contract with Mr. and Mrs. Rodriguez was, at least in part, shoddily done in a manner reflecting either gross negligence or incompetence on the part of the workers who performed the work and those that supervised them. For example, the floors in the dining room and living room additions to the house

    were not level. Neither were the ceilings in the new master bedroom. Furthermore, the tiles that MCC installed were irregular and had depressions in them. Moreover, the dining room addition was several inches out of square.

    
    

11. The paint that had been applied to the exterior of the Rodriguez home as part of the project was already peeling off at the time MCC abandoned the project. Mr. and Mrs. Rodriguez had it repainted by Transcon Painting Co. at a cost of $1,900.00.

    
    

12. Mr. and Mrs. Rodriguez had paid MCC in excess of $30,000.00 at the time of MCC'S abandonment of the project. Initially payments were made to MCC or Respondent. Subsequently, in an effort to expedite the completion of the project, Respondent authorized Mr. and Mrs. Rodriguez to make payments directly to the job foreman, Hernandez, which they did. Hernandez was to use the money he received from Mr. and Mrs. Rodriguez to pay for the labor and supplies necessary for the project.

    
    

13. Although Mr. and Mrs. Rodriguez paid the contract price in full, MCC and Respondent lost money on the project.

    
    

14. Respondent has not been the subject of any prior disciplinary action by the Construction Industry Licensing Board.

CONCLUSIONS OF LAW

1. The Department of Professional Regulation has been vested with statutory authority to issue licenses to those qualified applicants seeking to engage in the construction contracting business in the State of Florida. Section 489.115, Fla. Stat.

   
   

2. Once a license is issued, it may be revoked or suspended by the Construction Industry Licensing Board if an administrative complaint is filed alleging that the licensee committed any of the acts proscribed by Section 489.129(1), Florida Statutes, and it is shown that the allegations of the complaint are true. Proof greater than a mere preponderance of the evidence must be submitted. Clear and convincing evidence is required. See Ferris v. Turlington, 510 So.2d 292 (Fla. 1987); Pascale v. Department of Insurance, 525 So.2d 922 (Fla. 3d DCA 1988). "The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established." Slomowitz v. Walker, 429 So.2d 797, 800 (Fla. 4th DCA 1983). Furthermore, the revocation or suspension of a license may be based only upon offenses specifically alleged in the administrative complaint. See Hunter v. Department of Professional Regulation, 458 So.2d 842, 844 (Fla. 2nd DCA 1984).

   
   

3. Section 489.129, Florida Statutes, provides in pertinent part as follows:

   
   

   1. The board may revoke, suspend, ... the certificate or registration of a contractor, require financial

restitution to a consumer, impose an administrative fine not to exceed

$5,000, place a contractor on probation, require continuing education, assess costs associated with investigation and prosecution, or reprimand or censure a

contractor if the contractor, or if the business organization for which the contractor is a primary qualifying agent . . . , is found guilty of any of the following acts:

* * *

1. Acting in the capacity of a contractor under any certificate or registration issued hereunder except in the name of the certificateholder or registrant as set forth on the issued certificate or registration, or in accordance with the personnel of the certificateholder or registrant as set forth in the application for the certificate or registration, or as later changed as provided in this part.

2. Committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer. Financial mismanagement or misconduct occurs when:

1. Valid liens have been recorded against the property of a contractor's customer for supplies or services ordered by the contractor for the customer's job; the contractor has received funds from the customer to pay for the supplies or services; and the contractor has not had the liens removed from the property by payment or by bond, within 30 days after the date of such liens.

2. The contractor has abandoned a customer's job and the percentage of completion is less than the percentage of the total contract price paid to the contractor at the time of abandonment, unless the contractor is entitled to retain such funds under the terms of the contract or refunds the excess funds within 30 days after the date the job is abandoned.

3. The contractor's job has been completed, and it is shown that the customer had to pay more for the contracted job than the original contract price, as adjusted for subsequent change orders, unless such increase in cost was the result of circumstances beyond the control of the contractor, was the result of circumstances caused by the customer, or was otherwise permitted by the terms of the contract between the contractor and the customer.

   * * *

   (m) Being found guilty of fraud or deceit or of gross negligence, incompetency, or misconduct in the practice of contracting.

   
   

4. The administrative complaint in the instant case charges that Respondent violated Section 489.129(1)(g), (h) and (m), Florida Statutes, in connection with his involvement in the home remodeling project that was the subject of the contract between MCC and Mr. and Mrs. Rodriguez. The evidence adduced at hearing clearly and convincingly establishes that Respondent committed these violations.

   
   

5. From the inception, Respondent acted on behalf of MCC in this matter as though he were its "qualifying agent," notwithstanding that he had not qualified MCC and that he held a license to engage in the contracting business only on behalf of himself as an individual, not as a "qualifying agent." 2/ In so doing, Respondent violated the provisions of Section 489.129(1)(g), Florida Statutes, as charged by the Department.

   
   

6. Although the license he held did not reflect that he was MCC's "qualifying agent," because of the extent of his involvement in the project, which included procuring the necessary building permit, Respondent should be held liable and disciplined for any statutory violation committed by MCC in connection with the project on the theory that he breached his duty to supervise, direct, manage and control. See Hunt v. Department of Professional Regulation, 444 So.2d 997, 999 (Fla. 1st DCA 1983). Pursuant to this theory of liability, Respondent should be held responsible for MCC's abandonment of the project after Mr. and Mrs. Rodriguez had paid the contract price in full. Such action constituted misconduct in the practice of contracting resulting in financial harm to a customer and, as such, was in violation of the provisions of Section 489.129(1)(h)2, Florida Statutes, and Section 489.129(1)(m), Florida Statutes, as charged by the Department. Respondent should also be held accountable for the poor quality of the construction work that was done on the project under his supervision. His failure to properly supervise these construction activities constituted a further violation of Section 489.129(1)(m), Florida Statutes.

   
   

7. Inasmuch as Respondent violated Section 489.129(1)(g), (h) and (m), Florida Statutes, disciplinary action against him is warranted.

   
   

8. In determining what disciplinary action should be taken against Respondent for his violation of these statutory provisions, it is necessary to consult Chapter 21E-17, Florida Administrative Code, which contains the Construction Industry Licensing Board's disciplinary guidelines. Cf. Williams v. Department of Transportation, 531 So.2d 994, 996 (Fla. 1st DCA 1988) (agency is required to comply with its disciplinary guidelines in taking disciplinary action against its employees).

   
   

9. Florida Administrative Code Rule 21E-17.001 provides in pertinent part:

   
   

   Normal Penalty Ranges. The following guidelines shall be used in disciplinary cases, absent aggravating or mitigating circumstances and subject to the other provisions of this Chapter.

   (1) 489.129(1)(g), 489.119: Failure to

   qualify a firm, and/or acting under a

   name not on license. First violation, letter of guidance; repeat violation,

   $250 to $750 fine.

   * * *

   (10) 489.129(1)(h) : Diversion of funds. First violation, $750 to $1500 fine; repeat violation, revocation.

   * * *

   1. 489.129(1)(m): Gross negligence, incompetence, and/or misconduct, fraud or deceit.

      1. Causing no monetary or other harm to licensee's customer, and no physical harm to any person. First violation,

         $250 to $750 fine; repeat violation,

         $1000 to $5000 fine and 3 to 9 month suspension.

      2. Causing monetary or other harm to licensee's customer, or physical harm to any person. First violation, $500 to

   $1500 fine; repeat violation, $1000 to

   $5000 fine and suspension or revocation. 3/

   
   

   Because Respondent's violation "harmed" Mr. and Mrs. Rodriguez, subsection (19)(b), rather than (19) (a), of Rule 21E-17.001 applies in the instant case.

   
   

10. "Repeat violation," as used in Chapter 21E-17, Florida Administrative Code, is described in Florida Administrative Code Rule 21E-17.003 as follows:

    
    

    1. As used in this rule, a repeat violation is any violation on which disciplinary action is being taken where the same licensee had previously had disciplinary action taken against him or received a letter of guidance in a prior case; and said definition is to apply

       (i) regardless of the chronological relationship of the acts underlying the various disciplinary actions, and (ii) regardless of whether the violations in the present or prior disciplinary actions are of the same or different subsections of the disciplinary statutes.

    2. The penalty given in the above list for repeat violations is intended to

       apply only to situations where the repeat violation is of a different subsection of Chapter 489 than the first violation. Where, on the other hand, the repeat violation is the very same type of violation as the first violation, the penalty set out above will generally be increased over what is otherwise shown for repeat violations on the above list.

11. Florida Administrative Code Rule 21E-17.005 provides that "[w]here several of the . . . violations [enumerated in Florida Administrative Code Rule 21E-17.001) shall occur in one or several cases being considered together, the penalties shall normally be cumulative and consecutive."

    
    

12. The aggravating and mitigating circumstances which are to be considered before a particular penalty is chosen are listed in Florida Administrative Code Rule 21E-17.002 . They are as follows:

    
    

    1. Monetary or other damage to the licensee's customer, in any way associated with the violation, which damage the licensee has not relieved, as of the time the penalty is to be assessed. (This provision shall not be given effect to the extent it would contravene federal bankruptcy law.)

    2. Actual job-site violations of building codes, or conditions exhibiting gross negligence, incompetence, or misconduct by the licensee, which have not been corrected as of the time the penalty is being assessed.

    3. The severity of the offense.

    4. The danger to the public.

    5. The number of repetitions of offenses.

    6. The number of complaints filed against the licensee.

    7. The length of time the licensee has practiced.

    8. The actual damage, physical or otherwise, to the licensee's customer.

    9. The deterrent effect of the penalty imposed.

    10. The effect of the penalty upon the licensee's livelihood.

    11. Any efforts at rehabilitation.

    12. Any other mitigating or aggravating circumstances.

        
        

13. Having considered the facts of the instant case in light of the provisions of Chapter 21E-17, Florida Administrative Code, it is the view of the Hearing Officer that the appropriate penalty in the instant case is the suspension of Respondent's license for a period of two months and the imposition upon Respondent of a fine in the amount of $3,000.00.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby

RECOMMENDED that the Construction Industry Licensing Board enter a final order finding Respondent guilty of the violations of Section 489.129, Florida Statutes, charged in the instant administrative complaint and suspending Respondent's license for a period two months and imposing upon him a fine in the amount of $3,000.00 for having committed these violations.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 28th day of November, 1990.

STUART M. LERNER

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 day of November, 1990.

ENDNOTES

1/ Respondent is also a professional engineer. In 1983, he was issued a certificate of competency by the Metro-Dade Construction Trades Qualifying Board-Engineering Section, pursuant to which he qualified Michelle Construction Corp. to render general engineering services in Dade County. At no time, however, did he qualify Michelle Construction Corp. to engage in general contracting activities.

2/ A business entity, like MCC, may obtain a license to engage in the contracting business in the State of Florida, but only through a "qualifying agent." The "qualifying agent" must be "legally qualified to act for the business organization in all matters connected with its contracting business and [have the] authority to supervise construction undertaken by such business organization." The license which authorizes the business entity to act as a construction industry contractor is issued "in the name of the qualifying agent, and the name of the business organization [is] noted thereon." Section 489.119, Fla. Stat. A "qualifying agent" has the statutory responsibility "to supervise, direct, manage, and control the contracting activities of the business entity with which [he] is connected." Section 489.105(4), Fla. Stat. This duty may not be delegated by the "qualifying agent to another licensed contractor."

3/ Pursuant to Florida Administrative Code Rule 21E-17.007, the Construction Industry licensing Board, in addition to imposing the foregoing penalties, may also place the licensee on probation if it determines that such action is required "to assure that the licensee operates properly and within the law in the future."

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-3034

The following are the Hearing Officer's specific rulings on the proposed findings of fact submitted by the Department in the instant case:

1-6. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Recommended Order.

7-8. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

9-11. Accepted and incorporated in substance.

12-13. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

14-16. Accepted and incorporated in substance.

17-18. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

19. Rejected because it is more in the nature of a summary of testimony than a finding of fact based upon such testimony.

COPIES FURNISHED:

Cathleen E. Lindsey, Esquire Department of Professional

Regulation

1940 North Monroe Street, Suite 341

Tallahassee, Florida 32399-0792

Manuel L. Valdes

705 Southwest 96th Court Miami, Florida 33174

Daniel O'Brien, Executive Director Construction Industry Licensing Board Post Office Box 2

Jacksonville, Florida 32201

Kenneth E. Easley, Esquire General Counsel

Department of Professional Regulation 1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-0792

Docket for Case No: 90-003034

Orders for Case No: 90-003034