STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DANIEL J. and DORIS S. JOHNSON, )

)

Petitioners, )

)

vs. ) CASE NO. 96-4693

) MICHAEL R. HARVEY, KLINGSHIRN ) AND ASSOCIATES, INC., AND ) CONSTRUCTION INDUSTRIES RECOVERY ) FUND, )

)

Respondents, )

)

RECOMMENDED ORDER

An administrative hearing was conducted in this case on December 10, 1996, in Cocoa Beach, Florida, before Daniel Manry, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioners: David N. Glassman, Esquire

Watson, Soileau, DeLeo and Burgett, P.A. 1970 Michigan Avenue, Building C

Cocoa, Florida 32923

For Respondent, Stuart F. Wilson-Patton Construction Assistant Attorney General Industries Office of the Attorney General Recovery Fund: The Capitol, Plaza Level 01

Tallahassee, Florida 32399-1050

For Respondent, Klingshirn and

Associates, Inc: No Appearance

For Respondent,

Michael R. Harvey: No Appearance

STATEMENT OF THE ISSUE

The issue for determination is whether Respondent, Construction Industries Recovery Fund ("Respondent"), should reimburse Petitioners for damages caused by a contractor.

PRELIMINARY STATEMENT

On March 29, 1996, Petitioners filed a claim for reimbursement of $58,534.461 in unrecovered damages caused by a contractor who violated Sections 489.129(1)(d), (h), and (k), Florida Statutes,2 while constructing Petitioners' home.

Respondent denied Petitioners' claim on August 20, 1996. Petitioners timely requested an administrative hearing.

Petitioners and Respondent were the only parties who appeared at the administrative hearing (the "parties"). The parties submitted 15 joint exhibits. Petitioners testified in their own behalf. Respondent called no witnesses.

The identity of the witnesses and exhibits, and the rulings regarding each, are set forth in the transcript of the hearing filed with the undersigned on January 21, 1997. Petitioners and Respondent timely filed their respective proposed recommended orders ("PROs") on February 14 and 20, 1997.

FINDINGS OF FACT

1. Respondent is the governmental agency responsible for processing claims against it pursuant to Sections 489.140 through

489.143. Petitioners are natural persons within the meaning of Section 489.140(1). Except for the matters to be determined in this proceeding, Petitioners are otherwise eligible to seek

recovery from Respondent within the meaning of Section 489.141.

1. Initial Agreement

2. On June 10, 1993, Petitioners entered into a written contract of sale with Klingshirn & Associates, Inc. ("Klingshirn") to construct a home at 6617 Southfork, Titusville, Florida (the "initial agreement"). The total purchase price was

   $134,000. The home was to be completed by November 24, 1993.

3. The initial agreement required Petitioners to pay

   $24,000 of the total purchase price from their own funds3 and to make a good faith effort to obtain financing for the remaining

   $110,000. If Petitioners were unable to obtain financing, Klingshirn reserved the option to provide financing.

4. The terms of financing were prescribed in paragraph 3 of the initial agreement. Paragraph 3 stated:

   . . . MORTGAGE PROVISION . . . within five (5)

   days [Petitioners] will make a good faith application with . . . a lender approved by [Klingshirn] for a mortgage loan in the amount set forth above at the prevailing interest rate not to exceed 8 1/2% 30 year and terms of the lender as of closing. If [Petitioners are] not approved for the mortgage within 30 days or any extension [Klingshirn gives them], or if [Petitioners] application is rejected, [Klingshirn] can either

   1. provide [Petitioners] with the mortgage on the same terms and conditions as the lender [Petitioners] applied with, or (ii) refund [Petitioners] deposits . . . and terminate this contract. . . .

5. Petitioners and Klingshirn changed the printed text in the initial agreement. They struck through the phrase, "at the prevailing interest rate," and inserted the phrase, "not to

exceed 8 1/2% 30 year."

1. Condition Precedent

   1. A condition precedent is one which calls for the performance of some act, or the happening of some event, after a contract is entered into upon the performance or happening of which an obligation to perform depends.4 The initial agreement was subject to a condition precedent by its express terms and by oral agreement.

   2. The express terms of the initial agreement made the agreement subject to a condition precedent. Petitioners' obligation to perform was expressly dependent on the procurement of financing for $110,000, over a 30 year term, at an interest rate not to exceed 8 1/2 percent per annum.

   3. Even if the initial agreement were not expressly subject to a condition precedent, it was subject to such a condition by oral agreement. Prior to and at the time that Klingshirn and Petitioners signed the initial agreement, Petitioners and Klingshirn agreed that the initial agreement would become operative only upon the occurrence of financing.

   4. Even if the initial agreement were not subject to a condition precedent, the requisite financing was part of a contemporaneous oral agreement that induced Petitioners to enter into the initial agreement. There was no mutual intent for Petitioners to be obligated unless they procured the prescribed financing from either a commercial lender or Klingshirn.

2. Construction Contract

   1. The condition precedent to the initial agreement was never satisfied. The initial agreement never became operative.

   2. On July 7, 1993, Petitioners obtained a financing commitment from Harbor Federal Savings & Loan Association in Fort Pierce, Florida ("Harbor"). Harbor agreed to provide financing for $105,000 rather than the $110,000 prescribed in the initial agreement. Petitioners agreed to increase their cash investment.

   3. On August 4, 1993, Petitioners and Klingshirn executed a Construction Loan Agreement for $105,000 (the "construction loan agreement"). The construction loan agreement stated:

      [Klingshirn] hereby . . . agrees to the terms and conditions of the [construction loan], and further agrees that where the [construction loan] conflicts with the terms and provisions of any construction contract existing with Borrower, that the [construction loan] shall control.

   4. Petitioners executed the construction loan agreement as borrowers. Klingshirn executed the builder's assent to the construction loan agreement.

   5. On August 4, 1993, Petitioners and Klingshirn executed a construction contract within the meaning of Section 489.141(1)(a) (the "construction contract"). The construction contract included the construction loan agreement and those terms in the initial agreement which did not conflict with the construction loan agreement and which Petitioners and Klingshirn adopted when they executed the construction contract.5

   6. The construction contract was executed after July 1, 1993. It controlled the construction of Petitioners' home until it was modified on December 9, 1993.

   7. On December 9, 1993, Petitioners agreed to extend the completion date to March, 1994. Klingshirn agreed to repair specified defects and to increase the landscaping allowance.

3. Mismanagement And Misconduct

   1. Petitioners did not know that Klingshirn was a corporation engaged in contracting without a qualifying agent in violation of Section 489.119. Mr. Michael R. Harvey, a financially responsible officer of Klingshirn and one of its employees, was licensed as a certified building contractor (the "contractor" or "licensee"). However, the contractor neglected to qualify Klingshirn.

   2. The contractor illegally used his license to obtain the necessary building permit on behalf of Klingshirn. He procured the building permit in his own name on August 27, 1993.

   3. The contractor knowingly violated Section 489.129. He committed mismanagement and misconduct in the practice of contracting that caused financial harm to Petitioners in the amount of $58,534.46.

   4. The contractor failed to ensure that the home was constructed according to either the plans and specifications of the project or the Southern Building Code. He also failed to remedy the violations.

   5. The contractor failed to satisfy subcontractor liens after Petitioners gave him the funds to do so. He obtained at least three draws of unspecified amounts from Harbor.

   6. The contractor abandoned the job. He failed to perform work without just cause for over 90 consecutive days when the percentage of completion was less than the total contract price paid to him at the time of abandonment.

   7. The project was not completed on November 24, 1993. On December 9, 1993, Petitioners and Klingshirn entered into an Addendum to the initial agreement. The Addendum extended the completion date to March, 1994.

   8. The contractor failed to meet the extended deadline. On April 4, 1994, construction ceased. On April 14, 1994, the contractor removed himself and his license from the project.

4. Final Order

   1. On August 11, 1995, the Department of Business and Professional Regulation filed an Administrative Complaint against the contractor alleging violations of Sections 489.129(d), (h), and (k). The Construction Industry Licensing Board (the "Board") entered a Final Order on January 16, 1996.

   2. The Final Order found the contractor guilty of the allegations in the Administrative Complaint. The Board directed the licensee to pay restitution to Petitioners in an unspecified amount based on violations of Sections 489.129(d), (h), and (k) that occurred on or after July 1, 1993.

5. Civil Action

   1. On October 23, 1995, Petitioners filed a civil action against the contractor. Petitioners filed the civil action in the Circuit Court of the Eighteenth Judicial Circuit in and for Brevard County, Florida. Daniel J. Johnson and Doris S. Johnson v. Michael R. Harvey, Case Number 95-16601-CA-F.

   2. On December 1, 1995, the contractor filed a Suggestion of the Pendency of Bankruptcy in the civil case. On November 25, 1994, the contractor had filed for bankruptcy in the United States Bankruptcy Court, Middle District of Florida. In Re: Michael R. Harvey, Debtor, Case Number 94-11514-8B7.

   3. On March 8, 1995, the Bankruptcy Court entered a Discharge of Debtor Order. On December 1, 1995, the bankruptcy trustee notified Petitioners that no assets were available for distribution from the bankruptcy estate except exempt assets.

6. Claim Against Respondent

   1. On March 29, 1996, Petitioners filed a claim against Respondent. On June 13, 1996, the Construction Industries Recovery Fund Committee (the "Committee") denied the claim.

   2. The Committee determined that Petitioners are required by law to execute a construction contract on or after July 1, 1993, to recover from Respondent. The Committee found that Petitioners executed the required contract on June 10, 1993.

   3. On June 14, 1996, the Board ratified the Committee's action. The Board entered a Final Order on August 20, 1996.

7. Payment To Respondent

1. Petitioners paid money to Respondent in statutorily prescribed amounts through a surcharge of one-half cent per square foot of the project. The surcharge is imposed pursuant to Sections 489.140(2) and 468.631.

2. Petitioners received no reimbursement from Respondent. Nor did Petitioners receive restitution from the licensee.

   CONCLUSIONS OF LAW

3. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. The parties were duly noticed for the formal hearing.

4. The burden of proof is on Petitioners. Petitioners must show by a preponderance of the evidence that they are entitled to recover from Respondent. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981); Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

5. Most of the factual issues in this case were not disputed by the parties. The decision in this case rests, in large part, on relevant provisions in Sections 489.140(1), 489.141(1)(a), and 489.143.

6. Section 489.140(1) establishes the grounds for disbursement6 of funds by Respondent and limits the grounds to those that satisfy prescribed conditions.7 Section 489.141(1)(a) establishes the grounds for eligibility to claim reimbursement and limits the grounds to those that satisfy prescribed

   conditions. Section 489.143 establishes limits on reimbursements to eligible claimants.

   9. Section 489.140(1)

7. Section 489.140(1) mandates, inter alia, that the Florida Construction Industries Recovery Fund:

   . . . shall be disbursed as provided in s. 489.143, on order of the board, as reimbursement to any natural person adjudged by a court of competent jurisdiction to have suffered monetary damages, or to whom the licensee has been ordered to pay restitution by the board, where the judgment or restitution order is based on a violation of s. 489.129(1)(d), (h), (k), or (l), committed by any contractor, financially responsible officer, or business organization licensed under the provisions of this part at the time the violation was committed, and provided that the violation occurs after July 1, 1993. (emphasis supplied)

8. In its broadest sense, Section 489.140(1) authorizes two disjunctive grounds for disbursement. There must be either: an adjudication by a court (the "first ground for disbursement"); or a restitution order by the Board (the "second ground for disbursement"). Respondent is required to disburse funds to reimburse Petitioners on either ground if the particular ground satisfies statutorily prescribed conditions.

9. Some of the conditions prescribed in Section 489.140(1) apply to the first ground but not to the second. For example, the adjudication required in the first ground must be made by a court of competent jurisdiction and must find that the claimant suffered monetary damages.

10. Other conditions apply only to the second ground. For example, the restitution order must be one that orders a licensee to pay restitution to the claimants.

11. A third group of conditions apply to both grounds for disbursement. For example, both the adjudication and restitution order must be based on specific statutory violations, committed by certain licensees, and the violation or violations must have occurred after July 1, 1993.

12. It is unclear whether disbursement is authorized in this case on the basis of the second ground for disbursement. Although Petitioners filed a civil action, the evidence does not reveal the adjudication or judgment entered in the civil action.

13. Disbursement is authorized on the basis of the second ground for disbursement. Petitioners are natural persons to whom the licensee has been ordered by the Board to pay restitution based on violations of Sections 489.129(1)(d), (h), and (k) that occurred after July 1, 1993. The licensee who committed the violations was a contractor and a financially responsible officer of Klingshirn. Respondent is required by the terms of Section 489.140(1) to disburse funds to reimburse Petitioners if Petitioners are eligible for reimbursement within the meaning of Section 489.141(1)(a).8

    10. Section 489.141(1)(a)

14. Section 489.141(1)(a) provides, inter alia, that Petitioners are eligible to recover from Respondent if:

    . . . [Petitioners] received final judgment in a court of competent jurisdiction in this state in any action wherein the cause of action was based on a construction contract or the . . . Board has issued a final order directing the licensee to pay

    restitution to the claimant based upon a violation of s. 489.129(1)(d), (h), (k), or (l), where the contract was executed and the violation occurred on or after July 1, 1993. (emphasis

    supplied)

15. Section 489.141(1)(a) is conceptually similar to Section 489.140(1). In its broadest sense, Section 489.141(1)(a) authorizes two disjunctive grounds for eligibility. To be eligible to recover from Respondent, Petitioners must have either: a final judgment entered by a court (the "first ground for eligibility"); or a final order issued by the Board (the "second ground for eligibility"). Petitioners are eligible to recover from Respondent on either ground if the particular ground satisfies statutorily prescribed conditions.

16. Some statutorily prescribed conditions apply to the first ground but not to the second ground. For example, the final judgment must be entered by a court of competent jurisdiction, and the cause of action underlying the final judgment must be based on a construction contract.

17. Other conditions apply only to the second ground. For example, the final order must direct a licensee to pay restitution based upon specific statutory violations.

18. Another condition limits both grounds to a specific time. The construction contract required in the first ground

    must be executed on or after July 1, 1993. Similarly, the violation required as the basis for the final order of restitution in the second ground must have occurred on or after July 1, 1993.9

19. The second ground for eligibility in Section 489.141(1)(a) operates on substantially the same subject as the second ground for disbursement in Section 489.140(1).10 The first ground for eligibility is unique to Section 489.141(1)(a).

20. The first ground for eligibility differs from the first ground for disbursement. The first ground for eligibility requires a final judgment rather than an adjudication.11 The final judgment must involve a cause of action based on a construction contract. The adjudication must involve monetary damages caused by specific statutory violations.

21. It is unclear whether Petitioners are eligible to recover from Respondent on the basis of the second ground in Section 489.141(1)(a). Although Petitioners filed a civil action, the contractor's prior bankruptcy rendered him judgment proof. Petitioners may, or may not, have abandoned the case prior to final judgment.

22. Petitioners are eligible to recover from Respondent on the basis of the second ground for eligibility. The Board issued the final order required in Section 489.141(1)(a).

1. Statutory Construction

   1. Like the disjunctive grounds for disbursement in Section 489.140(1), both grounds for eligibility in Section

      489.141(1)(a) are limited in time. The operative phrase in Section 489.141(1)(a) states, ". . . where the contract was executed and the violation occurred on or after July 1, 1993

      . . . ." (emphasis supplied)

   2. Respondent asserts a different statutory construction. Respondent construes the quoted phrase as meaning that

      Petitioners are not eligible to recover from Respondent on the basis of the second ground in Section 489.141(1) unless the Board issued the requisite final order and: Petitioners executed the construction contract required in the first ground for eligibility; and the construction contract was executed on or after July 1, 1993.

   3. Respondent cites no express authority to support its statutory construction and no such authority has been discovered. Rather, Respondent relies on one of two implicit premises.

   4. One premise is that the conjunctive "and" in the quoted phrase supersedes the disjunctive "or" that authorizes alternative grounds for eligibility. If such a premise were valid, it would follow that the grounds for eligibility require a final judgment based on a construction contract "and" a final order. Such a construction would require Petitioners to have executed a construction contract on or after July 1, 1993, "and" to have received a final order of restitution based on specific violations that occurred on or after July 1, 1993.

   5. The alternative premise presumably does not assume that the conjunctive "and" in the quoted phrase supersedes the

      disjunctive "or" used to authorize alternative grounds for eligibility. Rather, it assumes that the conjunctive "and" implicitly limits the final order of restitution in the second ground to a final order that is based on specific violations "and" on a construction contract. Based on such a premise, Petitioners would not be eligible to recover from Respondent unless the Board issued a final order of restitution based on: specific violations that occurred on or after July 1, 1993; "and" a construction contract executed on or after July 1, 1993.

   6. The statutory construction asserted by Respondent is not supported by the express terms of the statute. The second ground for eligibility does not require a contract of any kind irrespective of the contract's execution date. The second ground requires only a final order of the Board that satisfies other conditions. The final order must direct the licensee to pay restitution to Petitioners, based on specific statutory violations, that occurred on or after July 1, 1993.

   7. The statutory construction asserted by Respondent is not required by necessary implication. Such an implication is not supported by ordinary rules of grammar. It fails to give significance and effect to the statute as a whole. It ignores: disjunctive and conjunctive terms; the remedial nature of the statute construed; and statutory consistency.

      1. Qualifiers And Antecedents

   8. A relative or qualifying phrase, including the quoted phrase in Section 489.141(1)(a), is properly construed as

      referring to its nearest antecedent. Rich Electronics, Inc. v. Southern Bell Telephone & Telegraph Company, 523 So.2d 670, 672 (Fla. 3d DCA 1988). An antecedent is the word, phrase, or clause to which a pronoun refers. Webster's New Twentieth Century Dictionary Unabridged 77 (2d ed. 1980) [hereinafter, "Webster's"]. The word "where" is used as a pronoun in Section 489.141(1)(a) to describe a situation to which the first and second grounds are limited in time. Webster's, at 2082.

   9. The quoted phrase in Section 489.141(1)(a) includes two qualifiers. Each qualifier has a separate antecedent.

   10. The antecedent to the first qualifier, ". . . where the contract was executed . . . on or after July 1, 1993 . . .," is the construction contract in the first ground. The antecedent to the second qualifier, ". . . where the . . . violation occurred on or after July 1, 1993 . . .," is the violation in the second ground.

   11. The first ground for eligibility is an antecedent to the first qualifier. It is not an antecedent to the second qualifier. Similarly, the second ground for eligibility is an antecedent to the second qualifier. It is not an antecedent to the first qualifier.

   12. Relative and qualifying words, phrases, and clauses are to be applied to the words or phrase immediately preceding the qualifier. They are not to be construed as extending to or including other, more remote words and phrases. Kirksey v. State, 433 So. 2d 1236, 1241 (Fla. 1st DCA 1983).

   13. The first qualifier does not extend the requirement for a construction contract to the second ground for eligibility. Similarly, the second qualifier does not extend the requirement for a final order to the first ground for eligibility.

       1. Significance And Effect

   14. Section 489.141(1)(a) uses the word "or" to authorize two disjunctive grounds for eligibility. The statute uses the word "and" to limit both grounds to a specified time. The statute does not use the word "and" to nullify the word "or" and to transform disjunctive grounds for eligibility into conjunctive grounds.

   15. Whenever possible, separate provisions in a statute, including the terms "or" and "and" in Section 489.141(1)(a), must be accorded significance in a manner that gives effect to the statute as a whole. Villery v. Florida Parole and Probation Commission, 396 So.2d 1107, 1111 ( Fla. 1980); State v. Gale Distributors, 349 So.2d 150, 153 (Fla. 1977); Ozark Corporation v. Pattishall, 185 So 333, 337 (Fla. 1938); Topeka Inn Management v. Pate, 414 So.2d 1184, 1186 (Fla. 1st DCA 1982). Respondent's statutory construction fails to accord significance to the legislature's use of the word "or" and fails to give effect to Section 489.141(1)(a) as a whole. The legislature is not presumed to use meaningless terms in its enactment’s. Sharer v. Hotel Corporation of America, 144 So.2d 813, 817 (Fla. 1962).

       1. Disjunctive And Conjunctive Terms

   16. When the legislature intends to authorize two disjunctive grounds for eligibility, the disjunctive "or" is used. When the legislature intends to limit both grounds to a specified time, the conjunctive "and" is used. Sparkman v. McClure, 498 So.2d 892 (Fla. 1986); McKnight Tank Lines, Inc. v. McCauley, 418 So.2d 1177, 1180 (Fla. 1st DCA 1982); U.S. v. Garcia, 718 F.2d 1528 (11th Cir. 1983) aff'd 469 U.S. 70 (1984).

   17. Courts do not have the power to change "or" to "and" unless it is necessary to effectuate the clear intent of the legislature. Pompano Horse Club, Inc. v. State, 111 So 801 (Fla. 1927). Section 489.141(1)(a) contains no clear expression of legislative intent to change "or" to "and."

   18. Such a change would be necessary to make a construction contract a requirement of the second ground for eligibility. Such a change would effectively nullify the legislature's use of the disjunctive "or."

   19. Amendment of a statute by implication is generally not favored. State v. J.R.M., 388 So.2d 1227, 1229 (Fla. 1980); Woodgate Development Corp. v. Hamilton Trust, 351 So.2d 14, 16 (Fla. 1977). The presumption is that no change is intended unless a statute is explicit and clear in that regard. Thornber v. City of Fort Walton Beach, 568 So.2d 914, 918 (Fla. 1990).

       1. Remedial Statutes

   20. The presumption against statutory amendment by implication has particular force in the case of a remedial statute. Section 489.141(1)(a) is a remedial statute because it

       is intended to provide a remedy to individuals directly. The statute benefits the public only indirectly.

   21. As a remedial statute, Section 489.141(1)(a) should be construed, whenever possible, to afford relief rather than to deny it. Neville v. Leamington Hotel Corporation, 47 So.2d 8, 9 (Fla. 1950). A construction of Section 489.141(1)(a) that changes "or" to "and" would deny relief to individuals who

       satisfy the requirements of only one ground for recovery. A statutory construction that does not change "or" to "and" affords relief to those individuals and does not deny relief.

       1. Statutory Consistency

   22. The second ground for disbursement and the second ground for eligibility in Sections 489.140(1) and 489.141(1)(a), respectively, operate on substantially the same subject. Where two statutes operate on the same subject, they should be construed in a manner that preserves both without inconsistency or repugnancy. Mann v. Goodyear Tire and Rubber, 390 So.2d 666, 668 (Fla. 1974). Every effort must be made to find a harmonious construction of both statutes. Agrico Chemical Company v. State, 365 So.2d 759, 765 (Fla. 1st DCA 1979).

   23. The second ground for disbursement does not require a contract. A requirement for a construction contract in the second ground for eligibility would be inconsistent with, and repugnant to, the second ground for disbursement. A construction

       of the second ground for eligibility that does not require a contract preserves consistency in both statutes and avoids any repugnancy in the two statutes.

2. Section 489.143

   1. Section 489.143(1) provides, in relevant part:

      Any person who meets all of the conditions prescribed in s. 489.141(1) may apply to the board to cause payment to be made to such person from the Construction Industries Recovery Fund in an amount equal to the judgment . . . or $25,000, whichever is less, or an amount equal to the unsatisfied portion of such person's judgment . .

      . or $25,000 whichever is less, but only to the extent and amount reflected in the judgment as being actual or compensatory damages. The fund is not obligated to pay any portion of any judgment, or any judgment, which is not expressly based on one of the grounds for recovery set forth in s.

      489.140(1).

   2. The quoted statute does not encompass claims based on a final order of restitution. It is limited to claims based on a final judgment.

   3. The phrase, "Any person who meets all of the conditions prescribed in s. 489.141(1). . . ," is reasonably construed as meaning any person who meets all of the conditions in Section 489.141(1) that apply to: claims based on a final judgment; and the facts and circumstances surrounding the particular claim. The quoted phrase does not amend, by implication, conditions in Section 489.141(1) which, by their own terms, apply only to one or the other disjunctive grounds for eligibility.

   4. Amendment of a statute by implication is generally not favored. Thornber, 568 So.2d at 918; J.R.M., 388 So.2d at 1229; Hamilton Trust, 351 So.2d at 16. The presumption against statutory amendment by implication has particular force in the case of remedial statutes such as Sections 489.140, 489.141, and

      489.143. Such statutes should be construed, whenever possible, to afford relief rather than to deny it. Neville, 47 So.2d at 9.

   5. Section 489.141(6) replicates the notion that the grounds for eligibility in Section 489.141(1) are disjunctive grounds. In relevant part, Section 489.141(6) provides:

      Upon the payment of any amount from the Construction Industries Recovery Fund in settlement of a claim in satisfaction of a judgment or restitution order against a certificate holder as described in s. 489.141(1), the license of such certificate holder shall be automatically suspended, without further administrative action, upon the date of payment from the fund. . . . (emphasis supplied)

   6. A statutory construction that limits Section 489.143(1) to claims based on a final judgment preserves Sections 489.140(1), 489.141(1)(a), 489.143(1), and 489.143(6) without inconsistency or repugnancy. Mann, 390 So.2d at 668; Agrico, 365 So.2d at 765. Such a construction accords significance to the respective statutory terms in a manner that gives effect to each section. Villery, 396 So.2d at 1111; State v. Gale Distributors,

      349 So.2d 150, 153 (Fla. 1977); Ozark Corporation, 185 So at 337; Topeka Inn Management, 414 So.2d at 1186.

   7. Respondent's statutory construction would effectively nullify the disjunctive terms used by the legislature in Sections 489.140(1), 489.141(1)(a), and 489.143(6). The legislature is not presumed to use meaningless terms in its enactment’s.

   Sharer, 144 So.2d at 817. Courts do not have the power to change "or" to "and" unless it is necessary to effectuate the clear intent of the legislature. Pompano, 111 So 801.

3. Construction Contract

   1. Even if the second ground for eligibility required execution of a timely construction contract, Petitioners would satisfy such a requirement. On August 4, 1993, Petitioners executed a construction contract within the meaning of 489.141(1)(a).

   2. The construction contract consisted of the construction loan agreement and any consistent terms in the initial agreement.

      The construction contract was executed after July 1, 1993, and remained in effect until it was modified on December 9, 1993.

   3. The initial agreement the Petitioners signed on June 10, 1993, never became operative in its original form. It became operative in a modified form on August 4, 1993.

4. Parol Evidence

1. Respondent objected to the admissibility of evidence concerning the conditional delivery of the initial agreement. Ruling was reserved for disposition in this Recommended Order. Respondent's objection is overruled.

2. The parol evidence rule generally prohibits the admission of evidence that contradicts, adds to, subtracts from, or affects the construction of a valid, complete, and unambiguous written instrument. Wickenheiser v. Ramm Vending Promotion, Inc., 560 So.2d 350, 352 (Fla. 5th DCA 1990). As a threshold matter, parol evidence is not required to show that the initial agreement was subject to financing. The express terms of the initial agreement made it subject to a condition precedent.

3. Even if parol evidence were required to prove the condition precedent, the parol evidence rule would not preclude such evidence. Parol evidence is admissible to show that a valid, complete, and unambiguous written instrument was delivered subject to a condition precedent. Ramm Vending, 560 So.2d at 352; Ketchian v. Concannon, 435 So.2d 394 (Fla. 5th DCA 1983).

4. Oral evidence of a condition precedent:

   . . . is generally permitted to be introduced to show that the parties, prior to or at the time they made a written contract of sale, entered into an agreement that such contract . . . should become operative only on the occurrence of a certain condition or contingency, the theory being that such evidence only goes to prove that the instrument never matured as a valid obligation, and hence there could be no modification or variance or contradiction. . . .

   Ketchian, 435 So.2d at 395.

5. A condition precedent is one which calls for the performance of some act, or the happening of some event, after the contract is entered into upon the performance or happening of which an obligation to perform depends. Cohen v. Rothman, 127

   So.2d 143, 147 (Fla. 3d DCA 1961). The initial agreement was subject to such a condition. Neither party intended Petitioners to continue with the home-building project unless Petitioners were able to obtain financing that satisfied the specifications prescribed in the initial agreement. See, e.g., Young v.

   Johnston, 475 So.2d 1309, 1312 (Fla. 1st DCA 1985).

6. Even if the initial agreement were not subject to a condition precedent, it was subject to a contemporaneous oral agreement that induced Petitioners to execute the initial agreement. Parol evidence of such an agreement is admissible even if it varies, changes, or reforms the written instrument. Healy v. Atwater, 269 So.2d 753, 755 (Fla. 3d DCA 1972).

7. Petitioners and Klingshirn orally agreed that the contract would not become operative until Petitioners obtained the requisite financing. The oral agreement induced Petitioners to execute the contract.

8. The testimony presented by Petitioners' witness concerning the contemporaneous oral agreement satisfied the judicial test imposed in Healy. It was clear, precise, and indubitable. See, e.g., Healy, 269 So.2d at 755. The witness was credible. He directly remembered the facts to which he testified. He narrated the details exactly, and the statements he made under oath were true.

9. Even if the initial agreement were not subject to a condition precedent and no contemporaneous oral agreement induced Petitioners to execute the initial agreement, Petitioners

   executed a contract after July 1, 1993, when they modified the initial agreement. They first modified the initial agreement on August 4, 1993, when they executed the construction loan agreement. They modified the initial agreement a second time on December 9, 1993.

10. Each modification is evidenced by the express terms of the written modification. Parol evidence is not required to prove either modification. Even if required, parol evidence is admissible to show that a written instrument has been modified by subsequent oral agreement of the parties. Barile Excavating & Pipeline Co, Inc., v. Vacuum Under-Drain, Inc., 362 So.2d 117,

    119 (Fla. 1st DCA 1978).

    15. Section 489.141(2)(d)

11. Section 489.141(2)(d) precludes a claim if it:

    . . . is based upon a construction contract in which the contractor did not hold a valid and current license at the time of the construction contract. . . .

12. Petitioners' construction contract was not with the contractor. It was with Klingshirn. Klingshirn did not hold a valid and current license as a contractor.

13. Petitioners' claim is not based upon a construction contract irrespective of whether the other party to the contract was a licensed contractor. Petitioner's claim is based upon a final order of the Board that satisfies the requirements of the second ground for eligibility authorized in Section 489.141(1)(a).

16. Illegality

101. Respondent argues that the construction contract was illegal and unenforceable due to statutory violations committed by the contractor and because Klingshirn was not a licensed contractor. As previously stated, Petitioners' eligibility is not based on a contract irrespective of its legality or illegality. Petitioners' eligibility is based on a final order that satisfies the requirements of the second ground for eligibility in Section 489.141(1)(a).

RECOMMENDATION

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

RECOMMENDED that Respondent enter a Final Order and therein

GRANT Petitioners' claim for recovery against Respondent.

RECOMMENDED this 20th day of March, 1997, in Tallahassee, Florida.

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 20th day of March, 1997.

ENDNOTES

1/ Sec. 489.143(1) limits the claim to $25,000.

2/ All chapter and section references are to Florida Statutes (1995) unless otherwise stated.

3/ Petitioners were to pay $6,700 on June 10, 1993, when they signed the initial agreement, an additional $6,700 when they obtained financing, and $10,600 at closing.

4/ Cohen v. Rothman, 127 So.2d 143, 147 (Fla. 3d DCA 1961).

5/ Among other items, the construction contract did not include the terms of financing prescribed in the initial agreement.

6/ The last sentence in Sec. 489.143(1) uses the phrase "grounds for recovery" in reference to Sec. 489.140(1). Sec. 489.140(1) addresses the grounds for disbursement. Sec. 489.141(1)(a) addresses the grounds for eligibility to claim reimbursement.

7/ Sec. 489.143(1) uses the term "conditions" in referring to Sec. 489.141(1).

8/ The parties do not dispute Petitioners' eligibility under Secs. 489.141(1)(a)1-3, and (b)-(e). With the exception of Sec. 489.141(2)(d), the parties do not dispute Petitioners' eligibility under Sec. 489.141(2).

9/ Compare: Sec. 489.140(1)(authorizing disbursement if the required violations occurred "after" July 1, 1993) with Sec. 489.141(1)(a)(making claimants eligible if the violations occurred "on" July 1, 1993). A literal interpretation of Sec. 489.140(1) would not authorize disbursement for violations that occurred on July 1, 1993, even though the claimants were eligible according to the terms of Sec. 489.141(1)(a).

10/ With one exception, the differences in the two are differences in form rather than substance. The exception is that a restitution order does not become final until the requirements for a final order in Ch. 120 are satisfied.

An adjudication of monetary damages may occur prior to entry of a final judgment. For example, parties who wish to litigate only the issue of liability may stipulate to damages and obtain an adjudication of damages prior to a final judgment on the merits of liability. Alternatively, the parties may stipulate to some monetary damages, such as general, actual, or compensatory damages, and obtain an adjudication of those damages prior to a final judgment on other monetary damages, such as consequential, continuing, and punitive damages. Issues of liability and of different types of monetary damages may be determined in

bifurcated proceedings. The distinction in types of damages is recognized in Sec. 489.143(1).

An adjudication of monetary damages may not ripen into a final judgment until other issues in the case, including issues of liability or the amount of damages other than actual or compensatory damages, have been adjudicated. Alternatively, an adjudication of monetary damages may not ripen into a final judgment until interlocutory appeals or stays have been resolved or until the time for appeal has expired.

COPIES FURNISHED:

Rodney Hurst, Executive Director Construction Industry Licensing Board Department of Business and

Professional Regulation

7960 Arlington Expressway, Suite 300

Jacksonville, Florida 32211-7467

Lynda L. Goodgame, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

David N. Glassman, Esquire Watson, Soileau, DeLeo and

Burgett, P.A.

1970 Michigan Avenue, Building C Cocoa, Florida 32923

Stuart F. Wilson-Patton Assistant Attorney General Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

1. Sec. 489.143(1) limits the claim to $25,000.

2. All chapter and section references are to Florida Statutes (1995) unless otherwise stated.

   
   

3. Petitioners were to pay $6,700 on June 10, 1993, when they signed the initial agreement, an additional $6,700 when they obtained financing, and $10,600 at closing.

4. Cohen v. Rothman, 127 So.2d 143, 147 (Fla. 3d DCA 1961).

5. Among other items, the construction contract did not include the terms of financing prescribed in the initial agreement.

   
   

6. The last sentence in Sec. 489.143(1) uses the phrase "grounds for recovery" in reference to Sec. 489.140(1). Sec. 489.140(1) addresses the grounds for disbursement. Sec. 489.141(1)(a) addresses the grounds for eligibility to claim reimbursement.

   
   

7. Sec. 489.143(1) uses the term "conditions" in referring to Sec. 489.141(1).

   
   

8. The parties do not dispute Petitioners' eligibility under Secs. 489.141(1)(a)1-3, and (b)-(e). With the exception of Sec. 489.141(2)(d), the parties do not dispute Petitioners' eligibility under Sec. 489.141(2).

   
   

9. Compare: Sec. 489.140(1)(authorizing disbursement if the required violations occurred "after" July 1, 1993) with Sec. 489.141(1)(a)(making claimants eligible if the violations occurred "on" July 1, 1993). A literal interpretation of Sec. 489.140(1) would not authorize disbursement for violations that occurred on July 1, 1993, even though the claimants were eligible according to the terms of Sec. 489.141(1)(a).

   
   

10. With one exception, the differences in the two are differences in form rather than substance. The exception is that a restitution order does not become final until the requirements for a final order in Ch. 120 are satisfied.

    
    

11. An adjudication of monetary damages may occur prior to entry of a final judgment. For example, parties who wish to litigate only the issue of liability may stipulate to damages and obtain an adjudication of damages prior to a final judgment on the merits of liability. Alternatively, the parties may stipulate to some monetary damages, such as general, actual, or compensatory damages, and obtain an adjudication of those damages prior to a final judgment on other monetary damages, such as consequential, continuing, and punitive damages. Issues of liability and of different types of monetary damages may be determined in bifurcated proceedings. The distinction in types of damages is recognized in Sec. 489.143(1).

An adjudication of monetary damages may not ripen into a final judgment until other issues in the case, including issues of liability or the amount of damages other than actual or compensatory damages, have been adjudicated. Alternatively, an adjudication of monetary damages may not ripen into a final judgment until interlocutory appeals or stays have been resolved or until the time for appeal has expired.

30

Docket for Case No: 96-004693

Orders for Case No: 96-004693