Ip WOM STATE OF FLORIDA DEPARTMENT OF BUSINESS & PROFESSIONAL REGULATION CONSTRUCTION INDUSTRY LICENSING BOARD LARRY E. SHIMKUS , A foc Petitioner, QE”) “ul UO? v. DOAH NO.: 03-3540, 03-3541, 03-3542, 03-3543, 03-3544, 03-3545, 03-3546, 03-3547, 03-3633 AP DBPR Case Nos.: 01C-0062 (Sandra Harvey); 01C-0100, (John & Kathleen Whitesides); 99C- 0189, (Kathleen & Richard Beltz); 00C-0138, (Keith Deyo); 00C-0083, (Sylvia Reinhardt); 00C-0082, (Louis Mahoney); 00C-0054, Dennis & Carolyn Destefanis); 00C-0157, (James & Donna Barr), 00C-0204, (Joanne K. Myers). STATE OF FLORIDA, DEPARTMENT OF BUSINESS & PROFESSIONAL REGULATION, Final Order No. BPR-2004-02092 Datf: CONSTRUCTION INDUSTRY LICENSING BOARD, nee eM rofess 6- v Respondent. Department of Business and Pro essional Regulation AGENCY CLERK — Sarah Wachmgan, Agency Clegk | FINAL ORDER py: Y } The State of Florida, Department of Business & Professional Regulation. Construction Industry Licensing Board (“Board”), pursuant to section 120.57(1)(1), Florida Statutes (2003), enters this Final Order in the above-captioned matter. This matter came before the Board on April 16, 2004, in Orlando, Florida for consideration of the Recommended Order from the Administrative Law Judge (a copy of which is attached as Exhibit A). At the hearing, the Petitioner was represented by his attorney, Bruce Kalieta, and the Respondent was represented by its attorney, Adrienne C. Rodgers. Upon consideration of the Recommended Order, the arguments of the parties, and a review of the complete record, the Board makes the following rulings, findings of fact, and conclusions of law: RULINGS ON EXCEPTIONS 1. Pursuant to Rule 28-106.217(4), Florida Administrative Code, the Respondent filed Exceptions to the Recommended Order on March 5, 2004 (a copy of which is attached as Exhibit B), objecting to the Conclusions of Law contained in paragraphs 100, 101, 103, 104, 105, 113, 114, 117, 118, 119, 120, 124, 125, 126, 127, 128, 129, 130, 131, 132, and 133 of the Administrative Law Judge’s Recommended Order. 2. Respondent's exceptions to the Recommended Order are denied as to paragraphs 100, 101, 103, 104, 105, 113 and 114. 3. Respondent's exceptions to the Recommended Order are accepted as to paragraphs 117, 118, 119, 120, 124, 425, 126, 127, 128, 129, 130, 131, 132, and 133. The Conclusions of Law in the Recommended Order are modified accordingly as set out more fully below. 4. Petitioner did not file any exceptions to the Administrative Law Judge’s Recommended Order. FINDINGS OF FACT 1. The Administrative Law Judge's findings of fact are supported by a preponderance of the evidence. 2. No exceptions were made to the Administrative Law Judge’s recommended findings of fact; therefore, the Findings of Fact set forth in the Recommended Order are approved, adopted in full, and incorporated herein by reference. CONCLUSIONS OF LAW The Board has jurisdiction over this matter pursuant to the provisions of section 120.57(1) and chapter 489, Part I, Florida Statutes. In light of the above rulings on Respondent's Exceptions, the Conclusions of Law in the Administrative Law Judge's Recommended Order are hereby approved and adopted in full and incorporated herein by reference, except for those conclusions in paragraphs 117, 118, 119, 120, 124, 125, 126, 127, 128, 129, 130, 131, 132, and 133. The Board finds that it has substantive jurisdiction over the Fund statutes, section 489.140 through section 489.144, Florida Statutes, and that its conclusions of law are more reasonable than the conclusions recommended by the Administrative Law Judge (the "ALJ") for the following reasons: 1. The Board rejects the conclusions of faw stated in paragraphs 117, 118, 119 and 420 of the ALJ's Recommended Order that conclude the standard of proof for the Construction Industries Recovery Fund (the "Fund") proceedings is a combination of preponderance of the evidence and clear and convincing evidence. The interpretation of these statutes made by this Board is as or more reasonable than the interpretation made by the ALJ. The Board finds that the correct standard of proof in Fund proceedings is a preponderance of the evidence. 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). Section 120.57(1)(j), Florida Statutes, establishes that the standard of proof is by the preponderance of the evidence, except in penal or licensure disciplinary cases, or except as provided by law. The Fund statutes do not establish a higher standard of proof by law, nor are Fund proceedings penal or disciplinary in nature. The interpretation of these statutes made by this Board is as or more reasonable than the interpretation made by the ALJ. 2. The Board rejects the conclusions of law in paragraphs 124, 125, 126, 127, 128, 129, 130, 131 and 132 that the Board lacks the statutory authority to suspend Petitioner's license upon payment of Fund monies to claimants. The interpretation of these statutes made by this Board is as or more reasonable than the interpretation made by the ALJ. This Board will not follow the letter of a statute when it leads away from the true intent and purpose of the Legislature and leads to conclusions that are inconsistent with the general purpose of the statute. See Forsythe v. Longboat Key Beach Erosion Control Dist., 604 So. 2d 452 (Fla. 1992). But here, the letter of the law is clear and upholds the Legislative intent. The legislature created a comprehensive regulatory scheme governing the licensing and discipline of several professions. The regulatory scheme requires the application of chapter 455, Florida Statutes, to the professional standards found in the various licensing statutes. In construction, this requires the application of chapter 489, Florida Statutes, the regulations specific to contracting. The statutes that govern the Fund are found at section 489.140, et seq., Florida Statutes But, the particular statutes that provide for an award of restitution from the Fund must be read in the context of chapters 455 and 489, Florida Statutes. Chapter 455 governs the regulation of all professions by the department and defines the essential terms found in the Fund statutes. Chapter 489, Florida Statutes, defines and shapes the terms used to sculpt the prerequisites for payment from the Fund. The following are definitions of terms used in the Fund statutes. "Licensee" means any person issued a permit, registration, certificate, or license by the department. §455.01(5), Fla. Stat. "Business organization" means any legal entity that engages in the business of contracting or acts as a contractor. § 489.105(13), Fla. Stat. "Contracting" means engaging in business as a contractor, and contracting services require agent qualification and corresponding agent licensure. § 489.105(6), Fla. Stat. Finally, a business organization is granted a certificate of authority to act under a licensee; the business entity itself is not licensed. § 489.119(2), Fla. Stat. (“If the applicant proposes to engage in contracting as a business organization . . . the business organization must apply for a certificate of authority through a qualifying agent”). Therefore, only a person can be licensed. A licensee is required to make reparation to the Fund. § 489.143(7), Fla. Stat. The Fund is a last resort to natural persons who have suffered monetary damages committed by any contractor, financially responsible officer, or business organization, licensed under the provisions of chapter 489, Florida Statutes, at the time the violation was committed. § 489.140, Fla. Stat. The terms of the Fund statutes, once viewed in conjunction with chapter 455 and the remaining parts of chapter 489, Florida Statutes, are clear. If a claimant meets the eligibility requirements to file a claim as set forth in section 489.141, Florida Statutes, then the Fund, pursuant to the procedures set out in rule 61G-21 and in accordance with section 489.143, Florida Statutes, determines if a claim shall be paid. The Board finds that the provisions of section 489.143, Florida Statutes, clearly set out the standards for a disbursement from the Fund and determines that its interpretation of that statute is as or more reasonable than the interpretation made by the ALJ. A prima facia case that justifies payment of a claim is made when the claimant presents: (1) a final judgment, (2) based on a construction contract, (3) obtained and filed within the applicable time frames, (4) where the claimant made all reasonable searches and inquiries to ascertain whether the judgment debtor or licensee is possessed of assets subject to being sold or applied in satisfaction of the judgment but any assets found were not sufficient to satisfy the judgment, (5) and the judgment is based upon allegations that the judgment debtor performed activities enumerated under sections 489.129(1)(g), (ij), or (k), Florida Statutes. § 489.141, Fla. Stat. Once these prerequisites have been met, funds are disbursed and the Fund takes action to assure its repayment. Section 489.143(7), Florida Statutes, states: 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 licensee as described in s. 489.141(1), the license of such licensee shall be automatically suspended, without further administrative action, upon the date of payment from the fund. The license of such licensee shall not be reinstated until he or she has repaid in full, plus interest, the amount paid from the fund. A discharge of bankruptcy does not relieve a person from the penalties and disabilities provided in this section. (Emphasis added). The justification for the automatic suspension of the license of a licensee pursuant to section 489.143(7), Florida Statutes, cannot be taken out of context of the licensing scheme. This analysis is in keeping with section 489.1195(1)(a), Florida Statutes, which holds the qualifying agent responsible for all activities of the qualified company, including field work and for the financial management of the business qualified. When entering an order for the suspension of a licensee's license, the Board does not make a determination of a licensee’s liability. The legislature already made the determination by statutorily holding the qualifying agent responsible for all of the debts of the qualified company. A qualifying agent is a person who holds the construction license through which a contracting company operates. A qualifying agent is responsible for supervising, managing, and controlling construction activities. 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. § 489.1195(1)(a), Fla. Stat. The statutory scheme set out by the legislature is clear and a licensee is charged with knowing the practice act that governs his/her license. Wallen v, Florida Department of Professional Regulation, Division of Real Estate, 568 So. 2d 975 (Fla. 3d DCA 1990). The Fourth District Court of Appeals held: The obvious purpose of these statutes allowing a company to act as a contractor through a licensed contractor is to insure that projects undertaken by a company are to be supervised by one certified and licensed by the board. To allow a contractor to be the “qualifying agent” for a company without placing any requirement on the contractor to exercise any supervision over the company’s work done under his license would permit a contractor to loan or rent his license to the company. This would completely circumvent the legislative intent that an individual, certified as competent, be professionally responsible for supervising construction work on jobs requiring a licensed contractor. Thus, the Board was correct in determining that appellant had a statutorily imposed professional duty, as sole qualifying agent of Univel, to supervise all of Univel’s projects. Alles v. Department of Business and Professional Regulation, Construction Industry Licensing Board, 423 So. 2d 624, 627 (Fla. 5th DCA 1982). The fact that a licensee may have his license suspended because of a Fund claim places no new duties or responsibilities upon the licensee. The issue of the substantial interest of a licensee as regards the suspension of his license pursuant to a Fund claim was tangentially addressed by the Fourth District Court of Appeals in Ryan v. Department of Business and Professional Regulation. 798 So. 2d 36 (Fla. 4th DCA 2001). The appeal arose from a final order issued by the Board following an administrative claim filed with the Fund by Stephan Humphrey over problems associated with the construction of his home by Personalized Homes, Inc. ("PHI"). The court stated as undisputed facts that Ryan was the qualifying agent for PHI, Humphrey filed suit against Personalized Homes, f/d/b/a Personalized Homes Corp., PHI, Personalized Homes of Brevard, Inc. and its principals, Ryan was not a party to the civil suit and the parties entered into a stipulation for settlement agreeing to the entry of judgment only against Personalized Homes and its principals and Personalized Homes of Brevard, Inc. The court did not question whether Ryan might not be liable to the Fund for repayment since he was not named in the suit. The court raised only the issue of whether Ryan was afforded an opportunity to present evidence of his available defenses to the claim. There is no issue that the suspension provisions are vague. Contractors are on notice that they may be disciplined if the business that they qualify fails to pay a judgment. § 489.129(1)(q), Fla. Stat. The fact that a contractor may be suspended as a result of payment of a Fund claim places no new duties or responsibilities upon a contractor. The provisions of section 489.129(1)(q) are clear, so too are those of section 489.143(7), Florida Statutes. The Legislature intended that the Fund be repaid. The suspension of a defunct business entity until it repays the Fund leads to an absurd result and a result that flies in the face of the Legislative intent. Claimants sue the entity with which they contracted and generally cannot sue the qualifying agent for mismanagement of a contract because there is no privity. Furthermore, the qualifying agent is immune from civil liability to private parties as a result of noncompliance with chapter 489, Florida Statutes. Murthy v. N. Sinha Corp., 644 So. 2d 983 (Fla. 1994). By far the majority of Fund claims are filed by persons with civil judgments against the entity with which they contracted. Many times civil actions are protracted while the parties prove the case. To require that every claimant with a civil judgment then have his claim further delayed by forcing him to file disciplinary proceedings against a licensee so that the Fund can be reimbursed is patently ridiculous. Only the certainty that the licensed contractor, who is generally immune from civil liability to a private party, can be held accountable makes the regulatory scheme meaningful. The ALJ made a determination that the letter of the statute as he read it should prevail and in doing so he created a scheme with inconsistent results. However, the unambiguous language of the statute says "in settlement of a claim in satisfaction of a judgment . . . the license of such licensee shall be automatically suspended". § 489.143(7), Fia. Stat. There was no reason for the Legislature to include the words “in settlement of a claim in satisfaction of a judgment" if the Legislature meant that only claims with orders of restitution are to be repaid by the licensee. There is no doubt that the Fund was established as a remedial measure to benefit persons who have suffered financial harm because of a contractor. In its elementary sense the word remedial is defined as a descriptive term for an act or thing intended as a remedy. “Remedial” Miriam Webster On-line Dictionary (2004) http://;www.merriam-webster.com (4 March 2004). The Third District Court of Appeals recognized the remedial nature of the Fund and described it as a remedy for persons who have suffered financial harm and not a right to which there is entitlement. [Thhis is a remedial statute and it should be liberally construed to achieve its intended purpose. See Irven v. Department of Health and Rehabilitative Servs., 790 So. 2d 403, 405 (Fla. 2001); Hutchison v. Prudential Ins. Co., 645 So. 2d 1047, 1049 (Fla. 3d DCA 1994). "As a remedial act, the statute should be construed liberally in favor of granting access to the remedy." Martin County v. Edenfield, 609 So. 2d 27, 29 (Fla. 1992) (citation omitted). (emphasis added) Chappell v. Construction Industries Recovery Fund, 835 So. 2d 339 (Fla. 3rd DCA 2003). There is no doubt that the Legislature intended the repayment of the Fund. The intent of the Legislature is clear from the language in section 489.143(7), Florida Statutes. There is no doubt that the Legislature intended the Fund to be easily accessible for claimants. Addressing a different issue in House Bill No. 4439, the analysis of the bill states: Section 141(1)(c), F.S. is amended to allow filing of claim (sic) up to one year after the conclusion of civil/administrative action. These amendments all adjust the claim’s (sic) process to encompass more claimants and provide greater access by harmed consumers. Therefore, any conclusion that serves to make access or repayment more difficult is contrary to the expressed intent of the Legislature. The inability of an injured party to collect a debt is the basis for section 489.1195, Florida Statutes. As a precondition to the Fund paying a claim, the claimant must have established that the judgment debtor could not pay the debt and had no assets upon which to levy. In many instances, the judgment debtor is an insolvent entity. However, its qualifying agent is usually still available and has the resources to make reparation. The suspension of a defunct business entity until it repays the Fund is an absurd result when as a precondition to the Fund paying a claim at all the entity must be shown to be totally unable to pay. Since a statute should not be construed in a way that would lead to an illogical result, Wakulla County v. Davis. 395 So. 2d 540 (Fla. 1981); State ex vel. Register v. Safer, 368 So. 2d 620 (Fla. 1st DCA 1979), the licensee, not the defunct business entity must be held accountable for the payment of the unsatisfied judgment. The way to have section 489.143(7), Florida Statutes, make sense is to have the qualifying agent meet his statutorily imposed duty and be held responsible for repayment of the Fund disbursement which is based upon the underlying unsatisfied judgment. Only the certainty that this licensee can be held accountable makes the complete regulatory scheme meaningful. The statutory scheme makes certain specified affirmative defenses available to the licensee and provides the protection of the Administrative Procedure Act. For example, where there is a civil judgment, the qualifying agent has the opportunity to avoid the consequences imposed by payment from the Fund by proving that there was no violation of section 489.129(1)(g), (i) or (k), Florida Statutes. Other defenses to a civil judgment could be that the licensee was not the qualifying agent at the time of the violation, there was no restitution ordered in a discipline case, the claim was filed outside of the statute of limitations period, or the amount of damages claimed is not related to actual or compensatory damages. 3. The Board rejects the conclusions of law in paragraphs 133 that Petitioner had previously filed a motion for attorney's fees pursuant to section 57.111, Florida Statutes. The interpretation of these statutes made by this Board is as or more reasonable than the interpretation made by the ALJ. On October 23, 2003, the Board received Petitioner's Motion for Award of Prevailing Party Attorney Fees Against Respondent and its Attorney, Pursuant to Section 57.105(5), Florida Statutes. No other motion for attorney fees has been filed. Petitioner sought to re- characterize his Motion at the formal hearing by an attempt to establish his status as a small businessperson. Petitioner also made mention of his entitlement to section 57.111, Florida Statutes, attorney fees in his Memorandum of Law. ORDER Based on the foregoing Findings of Fact and Conclusions of Law, the Administrative Law Judge’s Recommendation is approved and adopted in part and rejected in part, all as set out above. Therefore, it is ORDERED AND ADJUDGED that (1) The following awards of restitution from the Construction Industries Recovery Fund shall be made: Sandra Harvey $25,000.00 John and Kathleen Whitesides $18,526.67 Keith Deyo $25,000.00 10 Syivia Reinhardt $25,000.00 Louis Mahoney $25,000.00 Dennis and Caroline DeStefanis $15,765.00 Joanne Myers $14,080.66 (2) The awards to Kathleen and Richard Beltz and James and Donna Barr shall be set aside, (3) Petitioner's license shall be automatically suspended, without further administrative action, upon the date of payment from the fund and Petitioner's license shall not be reinstated until he has repaid in full, plus interest, the amount paid from the fund. DONE AND ORDERED this Z ND SH W Edward Weller, Chair Construction Industry Licensing Board Department of Business & Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399 11 JUDICIAL REVIEW PURSUANT TO SECTION 120.68, F.S. A party who is adversely affected by final agency action is entitled to judicial review. A preliminary, procedural, or intermediate order of the agency or an administrative law judge of the Division of Administrative Hearings is immediately reveiwable if review of the final agency decision would not provide an adequate remedy. This final order constitutes final agency action and may be appealed by Respondent pursuant to section 120.68, Florida Statutes, and Rule 9.1110, Florida Rules of Appellate Procedure, by filing a notice of appeal conforming to the requirements of Rule 9.110, Florida Rules of Appellate Procedure, both with the appropriate District Court of Appeal, accompanied by the appropriate filing fee, and with the agency clerk for the Department of Business & Professional Regulation, at 1940 North Monroe Street, Tallahassee, Florida 32399-0782, within thirty (30) days of the rendition of this final order. The filing of the petition does not itself stay enforcement of the agency decision, but if the agency decision has the effect of suspending or revoking a license, supersedeas shall be granted as a matter of right upon such conditions as are reasonable, unless the court, upon petition of the agency, determines that a supersedeas would constitute a probable danger to the health, safety or welfare of the state. The agency also may grant a stay upon appropriate terms, but, whether or not the action has the effect of suspending or revoking a license, a petition to the agency for a stay is not a prerequisite to a petition to the court for supersedeas. In any event the court shall specify the conditions, if any, upon which the stay or supersedeas is granted. CERTIFICATE OF SERVICE | HEREBY CERTIFY that a true and correct copy of the foregoing Final Order has been furnished by U.S. Certified Mail has been sent by U.S. mail to: Bruce Kalieta, 1615 Forum Place, Suite 500, West Palm Beach, Florida 33401; Sandra Harvey — 6347 Robinson Street, Jupiter, FL 33458-6419; John and Kathleen Whitesides — 420 Starlight Lane, Juno Beach, F! 33408; Kathleen and Richard Beltz — 1201 South Eads Street, Apt. 1018, Arlington, Virginia; Keith Deyo — 6359 Dania Street, Jupiter, FL 33458; Sylvia Reinhardt — 280 Feather Pt. N., Jupiter, FL 33458; Louis Mahoney — 9072 SE Pomona Street, Hobe Sound, Florida 33455; Dennis and Caroline DeStefanis - 6084 Leslie Street, Jupiter, Florida 33458; James and Donna Barr — 6038 Kendrick Street, Jupiter, FL 33458; The Estate of Joanne K. Myers, 170 W. Kendig Road, Willow Street, Pennsylvania 17584; Administrative Law Judge Robert Meale, Division of Administrative Hearings, The DeSoto Building, 1230 Apalachee Parkway, Tallahassee, FL 32399-3060 and the Gpnstruction Industry Licensing Board, 1940 N. Monroe Street, Tallahassee, FL 32399 this nd day of June 2004.

Docket for Case No: 03-003545

Orders for Case No: 03-003545