STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

)

Petitioner, )

)

vs. ) CASE NO. 93-0267

)

DAVID ALLEN WILSON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on May 26, 1993, in Orlando, Florida.

APPEARANCES

For Petitioner: Tracy Sumner, Staff Attorney

Wellington Meffert, II Chief Construction Attorney Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-0792

For Respondent: Donald Karraker, Esquire

DeRenzo & Karraker, P.A.

251 Maitland Avenue, Suite 116 Altamonte Springs, Florida 32701-5577

STATEMENT OF THE ISSUES

An amended administrative complaint dated February 15, 1993 alleges that Respondent committed various violations of Chapter 489, F.S., as a contractor and qualifying agent. The issue is whether those violations occurred, and if so, what discipline or penalty is appropriate.

PRELIMINARY STATEMENT

This case was referred to the Division of Administrative Hearings on January 15, 1993 after Respondent answered an earlier-filed administrative complaint and requested a formal hearing. Thereafter the complaint was amended and was answered by Respondent.

At the hearing, the petitioner presented testimony of Rodney Horvat, Donna Thomason, Dan Richardson, Marian Bretz, Jacklyn Hobbs, Larry Fann, James France and Charles Steffey. Petitioner's exhibits 1-16 were received in evidence without objection.

Respondent testified in his own behalf, and presented exhibits 2-22, all received in evidence, with the exception of exhibit 22, a purported summary of various payments. This exhibit was taken under advisement pending the parties' stipulation that the summary adequately reflected those payments. The stipulation was never filed, and Respondent's exhibit 22 has not been considered.

A transcript of hearing was filed, and both parties submitted proposed recommended orders. The findings of fact proposed by both parties are addressed in the attached appendix.

FINDINGS OF FACT

1. Respondent, David A. Wilson, is, and has been at all times material hereto, a certified general contractor in the State of Florida, having been issued license numbers CG CO38767 and CG CA38767.

   
   

2. Under the latter license, from approximately July 1988 until March 1990, David Wilson (Wilson, or Respondent) was the qualifying agent for Bruce Fowler Homes, Inc. According to information provided to the Department of Professional Regulation (DPR) in June 1988, David Wilson was not an officer or shareholder in the corporation, but was to be remunerated on a biweekly basis for managing the contracting activities plus a bonus at the completion of each project.

   
   

3. On March 21, 1989, Bruce Fowler Homes and Rodney and Kim Horvat contracted for the sale and purchase of a home at 2196 Chantilly Terrace, in Oviedo, Florida. Bruce Fowler signed on behalf of the seller. Addenda to the contract reflect that it was for the purchase of a custom home to be constructed by Bruce Fowler Homes on the referenced lot, with $161,485.00 as the cost to build, and $35,000 for the lot, for a total cost of $196,485.00. The home was to be completed in six months.

   
   

4. The purchase was financed, in part, by a loan obtained by the Horvats through Barnett Bank in the amount of $150,000.00, to be disbursed in a series of draws.

   
   

5. David Wilson pulled the Seminole County building permit for the Horvat's home on April 10, 1989. His signature as contractor appears on this statement in the permit file:

   
   

   The named contractor/owner builder to whom the permit is issued shall have the responsibility for supervision, direction, management, and control of the construction activities on the project for which the permit was issued.

   (Petitioner's Exhibit #3)

   
   

6. Construction commenced in early April and progressed well through early June. In June, the Horvats were contacted by various subcontractors who complained that they were not being paid by Bruce Fowler. The Horvats then started making payments through checks written to Bruce Fowler and the subcontractors jointly, or directly to the subcontractors. Construction slowed

   down, but Bruce Fowler met with the Horvats, insisted the project would still be done by September 15th, and convinced them to pay the fifth draw. At that point, construction ceased.

   
   

7. On September 5, Bruce Fowler called Rodney Horvat and told him that he was filing for bankruptcy and was unable to complete the house. This was the last contact between these parties. Horvat's attempts to reach Bruce Fowler after that call were unsuccessful.

   
   

8. Throughout the construction of their home, the Horvats visited the site virtually daily, and some days more than once. They were excited about seeing their first home. In spite of David Wilson's claim that he visited the job site once or twice a week, the Horvats never saw him, nor did they know of his involvement in the project until after the call from Bruce Fowler when they hired an attorney who checked to see who pulled the permit.

   
   

9. The Horvats and their attorney walked through the site with Wilson around mid-September. They developed a list of items that needed to be completed. Later, Wilson gave them an estimate that the items could be completed for approximately $32,155.00. The Horvats' attorney drew up a contract for Wilson to complete the project but he retained his own attorney and the contract was never executed. Wilson did not finish the house nor supervise its completion.

   
   

10. The Horvats paid another contractor, Charles Steffey, $3900.00, plus costs for subcontractors' labor and material in the amount of $18,362.27, for a total of $22,262.27, for Mr. Steffey to finish the house.

    
    

11. This $22,262.27 is only a portion of what the Horvats had to pay to complete their home. At the time that Bruce Fowler Homes abandoned the project, numerous suppliers and subcontractors still had to be paid. Valid liens were filed by Air-flow Designs ($1,890.00), Seacoast Supply ($1,541.03), Aluminum Structures ($4,861.00), and Grand Illusions ($1,346.63). These liens, totalling

    $9,638.00, were satisfied by Rodney Horvat either directly or through his attorney.

    
    

12. In addition to the above, Rodney Horvat paid over $27,569.00 to suppliers and materialmen, as evidenced by cancelled checks produced at the hearing. This figure does not include $300.00 to Tri-City Electric (check #2048) and $173.00 to Quality Plumbing (check #1037) for extras or upgrades. (Petitioner's exhibit #14).

    
    

13. Payments made by the Horvats to Bruce Fowler, Bruce Fowler Homes or jointly to Bruce Fowler and various suppliers totaled $110,175.00. Those payments, with the payments made to Charles Steffey, satisfaction of liens and other payments for supplies, brought the construction costs to $169,644.00, or approximately $8,159.00 more than the contracted price. This total does not include the interest on the Horvats' construction loan and real estate commissions, both of which were to be paid by the seller. (Petitioner's exhibit #1.) Although Rodney Horvat apparently paid both the interest and the commission, the evidence does not clearly establish why he assumed these obligations.

    
    

14. Wilson claims that he tried to supervise the financial aspects of the Horvat job. He met weekly with Bruce Fowler to go over the bills and had the impression that the subcontractors would be paid by Bruce Fowler. While Wilson may have dispensed a few payments himself, he mainly left that up to Bruce

    Fowler. He received some remuneration from Fowler, but it was on a very informal basis, with checks from $500.00 or $750.00. Since more than one home was being built, the payments did not relate to a specific project. (Petitioner's exhibit #15, p. 8).

    
    

15. Wilson's testimony with regard to the extent of his financial supervision is conflicting. He insists that he reviewed bills and bank statements, but he also claims that, without his knowledge, Bruce Fowler closed the checking account on which Wilson was a signatory, and opened a different account in a different bank. Wilson had been added to the former checking account at the direction of the Construction Industry Licensing Board when he was approved as qualifying agent for Bruce Fowler Homes, Inc., in July 1988. That account was closed in May 1989, and he was never made signatory to any other account held in the name of Bruce Fowler Homes, Inc. Wilson claimed that he reviewed checks, bills and accounts at least weekly with Bruce Fowler up to the week of August 29th. He saw that Fowler was writing checks on the First,

    F.A. (closed) account from May 31st to August 29th. (Transcript, pp. 137-8).

    
    

16. If Wilson had been reviewing bank records and other financial records of Bruce Fowler Homes, he would have been aware of the closing of the account. It makes no sense that he was unaware that subcontractors were not being paid. Instead Wilson claims he had no idea that Bruce Fowler was in trouble until the end of August 1989 when some of the sub-contractors they were working with informed him that Fowler had pulled a permit in Lake County. After checking with the Lake County Building Department, Wilson learned that Fowler had used Wilson's office copy of his license to pull the permit. Wilson claims he then found out that Fowler had not paid the sub-contractors on that job either. Fowler went to Texas, and Wilson terminated the relationship.

    
    

17. On November 10, 1989, Wilson wrote to the Construction Industry Licensing Board requesting that his license qualifying Bruce Fowler Homes, Inc., be cancelled.

    
    

18. If Wilson had been supervising the construction work on the Horvat project he should have been aware that the subcontractors were not being paid and that work had stopped in August. He was not providing the financial or field supervision required of a qualifying agent. He abandoned the project when given the opportunity to complete the work left by Bruce Fowler.

    
    

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction in this matter pursuant to Sections, 120.57(1) and 455.225(5), Florida Statutes.

    
    

20. Petitioner must prove the material allegations against Respondent with evidence that is clear and convincing. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

21. These pertinent provisions of Chapter 489, Florida Statutes, (1988 Supplement) describe the violations with which Respondent is charged:

    
    

    489.129 Disciplinary proceedings.--

    
    

    (1) The board may revoke, suspend, or deny the issuance or renewal of 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, or reprimand or censure a contractor if the contractor, or if the business organization for which the contractor is a primary qualifying agent or is a secondary qualifying agent responsible under s. 489.1195, is found guilty of any of the following acts:

    (h) 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 as of 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 has 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.

    
    

    * * *

    1. Failing in any material respect to comply with the provisions of this part.

    2. Abandoning 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.

    
    

    * * *

    
    

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

       
       

       489.1195 Responsibilities.

       
       

       1. A qualifying agent is a primary qualifying agent unless he is a secondary qualifying agent under this section. All primary qualifying agents for a business organization are jointly and equally responsible for supervision of all operations of the business organization; for all field work at all sites; and for financial matters, both for the organization in general and for each specific job.

    
    

22. Petitioner met its burden of proof. Respondent does not dispute that he was the qualifying agent for Bruce Fowler Homes, Inc., the "seller" under contract with the Horvats. He also admits that he obtained the building permit for the job and was responsible for its supervision. That proper supervision was not provided, as evidenced by the abandonment of the project and the filing of valid liens by unpaid subcontractors. Wilson's culpability is not derived solely from that of Bruce Fowler. Wilson, as licensed qualifying agent failed to perform his duties under Section 489.1195, Florida Statutes, and he abandoned the project in September, causing financial harm to the customer. These underlying facts also establish the negligence, incompetency or misconduct, for violation of Section 489.129(1)(m), Florida Statutes.

    
    

23. Counsel for Petitioner has recommended a proposed penalty to include a fine of $5,000.00. That fine is within the range of penalties described in Rule 21E-17.001, Florida Administrative Code, and is included, therefore, in this recommended order. See section 489.129(4), Florida Statutes. The Petitioner's recommended restitution is not supported by clear and convincing evidence, or even an explanation as how it was derived. The recommendation made here is based on finding of fact #13, above. The provision regarding assessment of costs was added to Section 489.129(1), Florida Statutes, effective October 1, 1989. Chapter 89-374, Section 34, Laws of Florida. Its retroactive application is not appropriate.

RECOMMENDATION

Based on the foregoing, it is, hereby, RECOMMENDED:

That a Final Order be entered finding Respondent guilty of violating Sections 489.129(1)(h),(j),(k), and (m), Florida Statutes, and 489.1195(1), Florida Statutes, assessing a fine of $5,000.00 and requiring restitution in the amount of $8,159.00.

DONE AND RECOMMENDED this 1st day of October 1993, in Tallahassee, Leon County, Florida.

MARY W. CLARK

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 1st day of October 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-0267

The following constitute specific rulings on the findings of fact proposed by the parties:

Petitioner's Proposed Findings

1. Rejected as unnecessary.

2. Adopted in paragraph 1.

3. Adopted in part in paragraph 3. The construction cost reflected in the contract is $161,485.00, not $153,420.00.

4. Adopted in paragraphs 6 and 7.

5. Adopted in part in paragraphs 6 and 13; otherwise rejected as unnecessary or accumulative.

6. Adopted in part in paragraphs 10-13; otherwise rejected as unnecessary or unsupported by clear and convincing evidence. It is unclear how Petitioner arrived at the figures for costs to complete construction.

7. Adopted in substance in paragraph 11.

8. Adopted in part in paragraphs 14-17. The testimony of Wilson with regard to whether he was paid was conflicting and confused. He did receive some payment according to the greater weight of the evidence.

Respondent's Proposed Findings

With the following exceptions, Respondent's "proposed findings" are rejected as being numbered arguments, recitations of law or portions of the transcript. They have been considered, but are not addressed here as findings of fact.

Proposed paragraph 14 is adopted in paragraph 13.

Proposed paragraph 22 is adopted in substance in paragraph 5. Proposed paragraph 46 is adopted in part in paragraph 2.

Proposed paragraphs 68-69 are adopted in substance in paragraph 15.

COPIES FURNISHED:

Tracy Sumner, Staff Attorney Wellington Meffert, II

Chief Construction Attorney Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-0792

Donald Karraker, Esquire DeRenzo & Karraker, P.A.

251 Maitland Avenue, Suite 116 Altamonte Springs, Florida 32701-5577

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

Jacksonville, Florida 32202

Jack McRay, General Counsel Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-0792

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 contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 93-000267

Orders for Case No: 93-000267