STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BUSINESS AND PROFESSIONAL )

REGULATION, CONSTRUCTION )

INDUSTRY LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 92-7413

) DAVID P. MILLER, d/b/a GREAT ) SOUTHERN CONSTRUCTION AND )

DEVELOPMENT, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Sanford, Florida on October 5, 1993, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Tracy Sumner, Esquire

William Cummins, Esquire

Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792

For the Respondent: Kurt R. Borglum, Esquire

366 East Graves Avenue, Suite B Orange City, Florida 32763

STATEMENT OF THE ISSUES

The issue for consideration in this hearing is whether Respondent's license as a certified building contractor should be disciplined because of the matters set out in the Administrative Complaint.

PRELIMINARY MATTERS

By Administrative Complaint dated June 24, 1991, Petitioner, Construction Industry Licensing Board, seeks to discipline the Respondent's license as a certified building contractor in Florida because, it is alleged, he falsely signed documentation incorrectly indicating his bonding status and that subcontracted work had been paid for; failed to pay subcontractors and material suppliers which resulted in liens being filed against the property under construction; and was, thereby, guilty of fraud, deceit, gross negligence, incompetence or misconduct in the practice of contracting, all in violation of several subsections of Section 489.129(1), Florida Statutes.

On November 18, 1991, Respondent denied the allegations against him and requested formal hearing. The matter was subsequently referred to the Division of Administrative Hearings where, on February 15, 1993, Hearing Officer Mary W. Clark set the matter for hearing in Sanford on April 15, 1993. However, the matter was thereafter placed in abeyance at the request of the Petitioner and by Second Notice of Hearing dated July 12, 1993, Hearing Officer Clark reset the matter for hearing on October 5, 1993 at which time it was held as scheduled by the undersigned to whom the case was transferred in the interim.

At the hearing Petitioner presented the testimony of Robert L. Crowley, the individual who retained Respondent to build the structures in issue; Rebecca W. Strange, Vice President and Commercial Lending Officer of the bank which financed the construction; James L. Bagwell and Dale T. Aldrich, Sr., materialmen; and William A. Wilcockson, an architect. Petitioner also introduced Petitioner's Exhibits 1, 3-5, 7, 10 - 17, 21 - 23 and 48. Respondent testified in his own behalf and presented the testimony of Valerie Anne Crowley, wife of Robert Crowley, and John T. Day, site preparation contractor for the project in issue. Respondent also introduced Respondent's Exhibits A through C.

Subsequent to the hearing both counsel submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the allegations herein, Petitioner was the state agency responsible for the regulation of the construction industry in Florida. Respondent, David P. Miller, was licensed as a certified building contractor under license number CB C039127 and was doing business as Great Southern Construction and Development, Inc.

   
   

2. On March 14, 1988, Robert Crowley, a semi-retired real estate broker and promoter, and Treasurer of Enterprise Industrial Park, Inc., (EIP), entered into contracts with the Respondent to construct three buildings, A, B, and H, for it within the park boundaries. Building A was to house offices and retail space; building B was to house warehouse and offices; and building C was to house garage space. The construction was to be financed by an infusion of shareholders' money and by a construction loan from the Southland bank in the amount of $375,000.00. The loan was ultimately increased to $614,000.00 so that EIP could begin development of phase II of the park. The contracts provided for Respondent to be paid $110,000.00 for Building A, $67,000.00 for Building B, and

   $52,807.00 for Building H.

   
   

3. The loan was obtained in phases. The developers had outlined the project to bank officials who approved it, initially, for development of the park and construction of four buildings. Phase one was to include the roadway and one building. When that was completed, the other buildings were to be erected. Site preparation was accomplished by John T. Day. Most of the site preparation was completed before Respondent started construction. Thereafter, as work progressed, Respondent periodically certified to the bank what work had been done and that suppliers had been paid.

   
   

4. Upon receipt of that certification, the bank would issue a check for the appropriate amount to EIP which would, thereafter, issue its own check to Respondent. There was an exception, however, in the case of payments to Ludwig Steel. Whereas that supplier would bill Respondent for small items delivered, it demanded payment by cashiers' check upon delivery for major structural steel

   fabrications. These checks, for steel for Buildings A and B, were for

   $18,511.84 and $17,716.84, were issued by Southland Bank, at the request of EIP.

   
   

5. During the course of his performance of the contracts for the construction of Buildings A, B, & H, Respondent executed several of the above

   mentioned certification forms. For Building H:	These included:
   a. August 30, 1988	$ 9,505.00
   b. October 4, 1988	9,505.00
   c. October 17, 1988	9,505.00
   d. December 28, 1988	11,881.50
   e. January 31, 1989	9,437.50
   TOTAL	$49,834.00

   
   

6. Prior to these certificates, the bank also released $90,000 in advances for start up costs and the loan in March, April and May, 1988. In addition to the certificates listed above, Respondent also signed certificates for Building A totalling $91,446.00 as follows:

   
   

   a. August 30, 1988	$ 19,800.00
   b. October 4, 1988	19,800.00
   c. October 17, 1988	19,800.00
   d. December 28, 1988	24,750.00
   e. January 31, 1989	7,296.00

   
   

   TOTAL $ 91,446.00

   
   

7. Respondent also signed additional certificates for Buildings B as follows:

   
   

   a. December 28, 1988	$ 46,642.00
   b. January 31, 1989	28,031.00
   c. March 1, 1989	28,031.00

   
   

   TOTAL $102,704.00

   
   

8. These certificates were also signed by the architect, Mr. Wilcockson. In fact, they were not correct in that not all the work had been done and not all suppliers had been paid. Respondent admits to falsely signing the certificates but claims he was urged to do so by representatives of EIP who indicated to him it was just a routine procedure. Consequently, even knowing the certificates were not accurate, he signed them because he wanted to get paid. It is found, however, that Respondent has been a licensed contractor for a number of years and knew the implications of his actions. His attempts at justification for his actions are neither credible nor impressive.

   
   

9. Construction progressed satisfactorily and without major problems up to the time for the last draw. At that point, the bank declined to issue a check to EIP for the construction of Building C, also to be erected on the site, when it became aware that numerous liens had been filed by subcontractors and

   materialmen indicating Respondent's failure to make satisfactory payment for buildings A, B, and H. These liens included claims by:

   
   

   American Roll-Up Door Co.		$ 3,630.00
   B & B Painting Contractors		3,020.00
   Blackton, Inc.,		5,820.73
   Brownie Septic Tank Contractors	#1	1,025.00
   Brownie Septic Tank Contractors	#2	1,025.00
   Brownie Septic Tank Contractors	#3	1,635.00
   Don Alan Dinora		930.00
   Energy Savings Systems, Inc.		10,750.00
   Florida Mining & Materials		2,388.31
   Mid Florida Air Conditioning, Inc.		3,982.00
   Neeley-Built Structures, Inc.,		4,995.78
   Residential Building Supply		7,857.11

   
   

   Total $47,058.93

   
   

10. Mr. Crowley claims the above liens were satisfied by EIP, and it is so found. He claims EIP also paid some subcontractors who did not file liens because of a desire to help small contractors who otherwise would not have been paid. No figures were available to support that latter claim, however, and it is not considered to be probative of any issue.

    
    

11. It is found, however, that Respondent paid Neeley-Built the amount of

    $4,995.78 and the claim of lien form included within Petitioner's exhibit of filed liens refers to property other than that in issue here. In addition, the

    $10,750.00 lien of Energy Savings Systems is not totally attributable to services or materials for the instant project. It is estimated that 60 percent of that amount relates to work done outside the three contracts in issue here. Further, only $1,700.00 of the lien of Residential Building Supply relates to material provided for the work done by Respondent under these contracts. The balance relates to work done outside the original contract limits.

    
    

12. Over the course of the contracts, EIP paid Respondent, in addition to a deposit of $25,786,99 for Bldgs. A & H, the sums below, for a total of

    $259,006.72 for Bldgs. A, B, & H:

    
    

    a. Aug.	31,	1988	$19,800.00	for	Bldg.	A
    b. Aug.	31,	1988	9,505.00	for	Bldg.	H
    c. Oct.	05,	1988	10,793.16	for	Bldg.	H & A
    d. Oct.	17,	1988	29,305.99	for	Bldg.	A & H
    e. Dec.	14,	1988	19,000.00
    f. Dec.	29,	1988	49,417.06
    g. Feb.	06,	1989	7,296.00	for	Bldg.	A
    h. Feb.	06,	1989	28,310.00	for	Bldg.	B
    i. Feb.	06,	1989	9,473.50	for	Bldg.	H
    j. Feb.	10,	1989	2,350.00	for	misc.
    k. Feb.	15,	1989	20,000.00
    l. Mar.	03,	1989	28,031.00	for	Bldg.	B

13. In addition to those payments, EIP also paid $16,000.00 to Benson Drywall on December 12, 1988 at the request of Respondent. The total paid by EIP, either to or on behalf of the Respondent, was:

    
    

    $ 25,786.00	deposit
    233,280.72	to Great Southern
    16,000.00	Benson Drywall
    36,228.68	Ludwig Steel

    
    

    $311,295.40 TOTAL

    
    

14. Mr. Crowley was not the main source of corporate funds. The President of the company is a Mr. Nelson who was the "money man." Contractor selection was by agreement between Nelson and Crowley, but Crowley was the supervisor of the contracts and did most of the negotiating with Respondent.

    
    

15. The work stipulated in the contracts between EIP and Respondent was not the only work called for in their relationship. The contracts provided for the basic construction but Mr. Crowley requested Respondent to perform additional work in or around buildings A, B, and H, which included:

    
    

    1. Tenant improvements in buildings A and B valued at $23,000 excluding labor;

    2. Additional site work including electrical, telephone, grading and filling, berm modification, concrete sidewalks and parking buffers, and repair of damaged concrete (all but the repair of concrete was the result of the failure of the original site preparation contractor to properly complete his work);

    3. Negotiations and discussions with Volusia County regarding the sewer/septic system necessary for the project.

       
       

16. In addition to the $23,000.00 for tenant improvements mentioned in the paragraph next above, Respondent also paid out of pocket to the following contractors and suppliers for work outside the scope of the original contracts:

    
    

    a. Ludwig Metal	Buildings	$ 3,000.00
    b. Concrete		3,840.00
    c. John Bates &	family	6,497.73
    d. Four Seasons		1,190.00
    e. Will Cox		975.00
    f. Riley		3,100.00

    1. All Star Electric 4,705.32

    2. Jerry's Concrete Service 1,350.00 TOTAL $24,658.05

17. Though the contracts referenced in this proceeding pertain to construction of Buildings A, B, & H, Respondent was also retained to erect a metal building to be designated C. Respondent received a total of $253,000.00 from EIP to construct those buildings for which he had the initial contracts and also to put up the metal building, C. The cost to complete Building C was

    $45,500.00 but EIP had remaining only slightly over $6,000.00 to pay for that work.

18. Respondent did substantial work for EIP which was over and above the services called for under the contracts for Buildings A, B, & H as amended by the change orders for which he was not paid because Mr. Crowley advised him no additional monies were available. For example, he and his brother, Thomas, did additional site work valued by him at $24,260.00; and additional labor and services on the septic and sewer system problems valued by him at $5,600.00 and for tenant improvement, valued by him at $5,000.00. Here, however, it must be noted that the figures cited are not documented by any supporting material and contain significant amounts for his labor which he priced at $90.00 per hour.

    
    

19. Mr. Miller, during his relationship with EIP, purchased a 10 percent interest in the firm. He originally filed his own lien on the property for

    $80,364.00 based on the contracts he had in hand and the site work which he valued at $18,000.00. He claims he subsequently withdrew his lien without being paid so that the limited funds available could be used to pay the subcontractors. No corroborating evidence on this point was introduced, however.

    
    

20. Mr. Miller's contracting license was, subsequent to the incidents herein, placed in inactive status and currently remains so. He is not now engaged in contracting and claims he does not intend to do so in the future. His motivation in contesting the allegations against him is, he claims, solely to clear his good name and reputation.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

22. Petitioner has alleged that Respondent is guilty of several violations of Section 489.129(1), Florida Statutes by: (1) signing false AIA certificates of work done and suppliers paid which resulted in a financial loss to the owner, (Section 489.129(1)(l)); failing to pay all subcontractors and materialmen which resulted in liens being filed against the property which had to be satisfied by the owner, (Section 489.129(1)(h)); and being guilty of fraud, deceit, gross negligence, incompetency or misconduct in the practice of contracting, (Section 489.129(1)(m)).

    
    

23. The burden of proof in this case rests with the Petitioner which must establish its allegations against the Respondent by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

24. There can be little doubt from the evidence that Respondent signed the AIA certificates in issue then well knowing that all subcontractors and materialmen had not been paid. He admitted his actions and his explanation he was encouraged to do so by the owners' representative who indicated the form was a mere formality is, in light of his experience in the contracting field, non- persuasive. The owner's actions, if true, would be in the area of mitigation, but would not go to the issue of guilt or innocence of the offenses alleged.

    
    

25. By the same token, Respondent also admits he failed to pay a number of subcontractors and materialmen. One of the liens clearly related to another property and is not pertinent here, and there may be some question as to one or two of the other liens. Clearly, though, the weight of the evidence indicates that of the list of liens shown, the majority were correct and were not paid by

    the Respondent as he was required to do. In addition, the evidence clearly shows that the owner, EIP, was required to satisfy the obligations reflected by the liens to the extent filed, plus interest. His detailing of extra work done without reimbursement as a justification or excuse for his misconduct, again, is no more than mitigation.

    
    

26. The evidence presented by Petitioner does not demonstrate fraud or deceit by clear and convincing evidence, and the incompetency shown relates more to Respondent's abilities as a businessman than to his technical competence. Therefore, it cannot reasonably be said he is guilty of incompetency, either. Respondent was, however, grossly negligent in the conduct of his affairs in not insuring his subcontractors and material suppliers were paid, and his false certification that they were constitutes misconduct in violation of the statute.

    
    

27. Petitioner seeks to impose an administrative fine of $5,000.00 against Respondent, justifying the amount above the cumulative $3,750.00 fine called for on first offenses under the provisions of Rule 21E-17.001(9), (10), (19), and (22), F.A.C., by showing that the owner of the property in question was financially injured by Respondent's misconduct. Rule 21E-17.002, F.A.C., provides that monetary damage to the licensee's customer, as shown in this case, may be circumstances justifying aggravation of penalty.

    
    

28. Petitioner also seeks to require Respondent to make restitution to the owner in the amount of $54,130.00, allegedly the amount EIP was required to pay to satisfy the mechanics liens filed against its property as a result of Respondent's failure to pay all that was required. Respondent's testimony as to the extra time and expense he was put to as a result of EIP's non-reimbursed change orders and additional work requests is, primarily made up of his own recollection and his own estimate of the value of his time and labor. As such, it does not constitute sufficient evidence clearly to offset the owner's evidence of damage. However, it is clear that Respondent was placed in a difficult position, financially, by the actions of the owners, and the testimony of the owners' representative at hearing raised many unanswered questions. Though the law gives the Board the authority to assess restitution, here the evidence is not sufficiently clear to allow an accurate determination of actual damage to support such an assessment or to increase the fine.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED THAT the Respondent, David P. Miller, d/b/a Great Southern Construction and Development, Inc. pay an administrative fine of $3,750.00 and be reprimanded.

RECOMMENDED this 9th day of November, 1993, in Tallahassee, Florida.

ARNOLD H. POLLOCK, 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 9th day of November, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-7413

The following constitutes my specific rulings pursuant to

Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.

FOR THE PETITIONER:

1. & 2. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted.

3. & 6. Accepted and incorporated herein.

7. - 14. Accepted and incorporated herein.

15. - 17. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted.

3. & 21. Accepted and incorporated herein.

22. - 24. Accepted and incorporated herein.

25. & 26. Accepted.

FOR THE RESPONDENT:

1. Accepted and incorporated herein.

2. & 3. Accepted and incorporated herein.

1. Rejected as the total amount paid by EIP for the buildings constructed by Respondent. The figure is somewhat higher due to deposit and amounts paid to suppliers by EIP.

2. Accepted and incorporated herein.

* At this point, Respondent's proposed Findings of Fact become misnumbered. There are two numbers 5. The subsequent numbers are as reflected in Respondent's submittal.

5. - 9. Accepted and incorporated herein.

10. - 12. Accepted and incorporated herein.

13. - 15. Accepted and incorporated herein.

16. Accepted.

17 & 18. Accepted.

1. Alleged but not proven.

2. Accepted.

3. Rejected as contra to the weight of the evidence.

4. Accepted and incorporated herein.

COPIES FURNISHED:

Tracy Sumner, Esquire William S. Cummins, Esquire

Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792

Kurt R. Borglum, Esquire

366 East Graves Avenue, Suite B Orange City, Florida 32763

Jack McRay General Counsel

Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792

Daniel O'Brien Executive Director

Construction Industry Licensing Board Post Office Box 2

Jacksonville, Florida 32202

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency which will issue the Final Order in this case concerning its rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency which will issue the Final Order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION CONSTRUCTION INDUSTRY LICENSING BOARD

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION,

Petitioner,

DOAH Case No: 92-7413

vs. Case No: 90-95478

License No: CB C039127

DAVID P. MILLER,

Respondent.

/

FINAL ORDER

THIS MATTER came before the Construction Industry Licensing Board (hereinafter referred to as the "Board") pursuant to Section 120.57(1)(b), Florida Statutes, on April 14, 1994, in Tampa, Florida, for consideration of the

Division of Administrative Hearings Hearing Officer's Recommended Order (a copy of which is attached hereto and incorporated herein by reference). The Petitioner was represented by Cathleen E. O'Dowd. The Respondent was present and represented by counsel at the proceedings.

Upon consideration of the Hearing Officer's Recommended Order, the arguments of the parties, and after a review of the complete record in this matter, and the exceptions filed, the Board makes the following:

FINDINGS OF FACT

1. The Hearing Officer's Findings of Fact are hereby approved and adopted in toto.

   
   

2. There is competent, substantial evidence to support the Hearing Officer's Findings of Fact.

   
   

   CONCLUSIONS OF LAW

   
   

3. The Board has jurisdiction of this matter pursuant to the provisions of Section 120.57(1), and Chapter 489, Florida Statutes.

   
   

4. The Hearing Officer's Conclusions of Law are hereby approved and adopted except where they are in conflict with Respondent's Exceptions to Recommended Order which is hereby approved and adopted and incorporated herein by reference.

   
   

5. Respondent is guilty of violating Section 489.129(1)(1), (h), and (m), Florida Statutes.

   
   

6. The penalty recommended by the Hearing Officer is hereby approved, in part.

   
   

7. There is competent, substantial evidence to support the Board's findings and conclusions.

THEREFORE, IT IS HEREBY ORDERED AND ADJUDGED:

Respondent is hereby REPRIMANDED.

Respondent shall pay a fine of Two Thousand dollars ($2,000) to the Board, within thirty (30) days of the filing of this Order.

To assure payment of the fine, it is further ordered that all of Respondent's licensure to practice contracting shall be suspended with the imposition of the suspension being stayed for thirty (30) days. If the ordered fine is paid within that thirty (30) day period, the suspension imposed shall not take effect. Upon payment of the fine after she thirty (30) days, the suspension imposed shall be lifted. If the licensee does not pay the fine within said period, then immediately upon expiration of the stay, the licensee shall surrender the license to the Department of Business and Professional Regulation or shall mail it to the Board office.

In addition, the Respondent will be required to pay interest on fines due to the Board at a rate of 18 percent per annum, beginning on the thirty-first

(31) day after the issuance of this Order.

Pursuant to Section 120.59, Florida Statutes, the Parties are hereby notified that they may appeal this Order by filing one copy of a Notice of Appeal with the Clerk of the Department of Business and Professional Regulation, Northwood Centre, 1940 North Monroe Street, Suite 60, Tallahassee, Florida

32399-0792, and by filing the filing fee and one copy of the Notice of Appeal with the District Court of Appeal within thirty (30) days of the effective date of this Order.

This Order shall become effective upon filing with the Clerk of the Department of Business and Professional Regulation.

DONE AND ORDERED this 5th day of July 1994.

WARREN SUTTON, Chair

Construction Industry Licensing Board

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order has been provided via certified mail to David P. Miller, c/o Kurt R. Borglum,

366 East Graves Avenue, Suite B, Orange City, Florida 32763 and David P. Miller, 1133 East Fowler Drive, Deltona, Florida 32725 and via U.S. Mail to the Board Clerk, Department of Business and Professional Regulation and its counsel, Northwood Centre, 1940 North Monroe Street, Suite 60, Tallahassee, Florida

32399-0792 this 8th day of July, 1994.

Brandon L. Moore Deputy Agency Clerk

APPENDIX TO RESPONDENT'S EXCEPTIONS TO THE HEARING OFFICER'S RECOMMENDED ORDER

Number One (1) Accepted and incorporated herein.

Number Two (2) Rejected as contra to the weight of the evidence.

Number Three (3) Accepted and incorporated herein. Number Four (4) Accepted and incorporated herein.

Docket for Case No: 92-007413

Orders for Case No: 92-007413