CHARLES POWELL and NORMA R. ) POWELL, )
vs. )
) DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, ) CONSTRUCTION INDUSTRY LICENSING ) BOARD, CONSTRUCTION INDUSTRIES ) RECOVERY FUND, )
Respondent. )
Case No. 04-1066
Pursuant to notice, a final hearing was held in this case on June 3, 2004, by means of a video teleconference with sites in Tallahassee and West Palm Beach, Florida, before Administrative Law Judge Michael M. Parrish of the Division of Administrative Hearings.
Norma R. Powell, pro se
For Respondent: Adrienne C. Rodgers, Esquire
The basic issue in this case concerns whether the Petitioners are entitled to reimbursement from the Construction Industries Recovery Fund.
This case had its beginning when the Petitioners filed a claim seeking reimbursement from the Construction Industries Recovery Fund. Following notice that the Construction Industry Licensing Board ("CILB") intended to deny their request for reimbursement, the Petitioners filed a petition seeking an evidentiary hearing on the matter. In due course the matter was referred to the Division of Administrative Hearings to conduct the hearing.
At the final hearing on June 3, 2004, the Petitioner Charles Powell testified on behalf of the Petitioners and offered two exhibits, both of which were received in evidence. The Petitioners did not call any additional witnesses. The Respondent did not call any witnesses at the hearing, but did offer ten exhibits, all of which were received in evidence.
Subsequent to the final hearing, the Petitioners sought to have three additional exhibits received in evidence. The Respondent objected to the three additional exhibits on grounds of tardiness and relevance. The objections were sustained in a Post-Hearing Procedural Order issued on July 21, 2004.
At the conclusion of the hearing neither party arranged for a transcript of the hearing. Due to certain personal circumstances, the Petitioners requested that they be allowed
45 days from the date of the final hearing within which to prepare their proposed recommended orders. Without objection, the request was granted and all parties were allowed 45 days from the date of the hearing within which to submit their proposed recommended orders. All parties submitted timely proposed recommended orders containing proposed findings of fact, proposed conclusions of law, and arguments in support of their respective positions. The proposals of the parties have been carefully considered during the preparation of this Recommended Order.
On or about December 5, 1994, the Petitioners entered into a contract with an entity named James Plumbing, Inc., pursuant to which James Plumbing, Inc., agreed to perform specified plumbing work for a two-story duplex the Petitioners were building. The total contract price for the plumbing work was $10,000.00. Article 4 of the contract, titled "Progress Payments," contained the following language:
On completion of rough-in plumbing $4,000.00 is due, at top out of all riser pipes and runs for plumbing an additional $4,000.00.
The final payment of $2,000.00 to be paid upon final completion and hookup of all
plumbing items and approval of same by City of Delray Building Department. A lien release will be required upon final payment by James Plumbing, Inc. Owner's (sic) will furnish lien release to James Plumbing, Inc., for execution.
The contract described above also included language to the effect that the work to be performed under the contract would be commenced "as per owner/builder schedule," and the work would be substantially completed in the spring or summer of 1995 "as per schedule of owners."
At the time of the signing of the contract described above, and at all other times material to this case, James Plumbing, Inc., was a Florida corporation that had been administratively dissolved by the Florida Department of State.
At the time of the signing of the contract described above, and at all other times material to this case, an individual named James West was licensed by the CILB as a "Certified Plumbing Contractor." At the time of the signing of the contract described above, and at all other times material to this case, James West purported to be the "qualifier" for the entity known as James Plumbing, Inc. James West was the original incorporator of the corporation named James Plumbing, Inc. At all times material to this case, James West was the only person who had any ownership interest in, or had any
control over the affairs of, the corporation named James Plumbing, Inc.
James West, doing business under the name of the defunct corporation named James Plumbing, Inc., finished the "rough-in" in June of 1995 and finished the "top out" in March of 1996. Consistent with the terms of the contract, he was paid
$4,000.00 in June of 1995 and he was paid $4,000.00 in March of 1996.1
For several reasons not material to the issues in this case, progress on other aspects of the construction project took longer than expected and in was not until the spring of 1999 that the Petitioners contacted James West to schedule the completion of the plumbing work under the contract signed in December of 1994. As a result of disagreements regarding the scheduling of the plumbing work, by letter dated April 12, 1999, the Petitioners advised James West that they had elected to terminate the plumbing contract dated December 5, 1994. Neither James Plumbing, Inc., nor James West individually ever performed the work that remained to be performed under the contract dated December 5, 1994, after the "top out" that was completed in March of 1996.
In order to finish the plumbing work that remained to be done under the contract dated December 5, 1994, the Petitioners hired another plumbing contractor, Lee Wilder
Plumbing, Inc. ("Wilder"). During the course of finishing the plumbing work, Wilder discovered that some of the work done by James West was incomplete and that some of the work done by James West had been done improperly and had to be redone.
Wilder finished the work that remained to be done under the contract dated December 5, 1994, and also corrected the mistakes in the work that James West had done. For these services the Petitioners paid Wilder a total of $2,967.50.
In order to correct the mistakes made by James West, it was also necessary to remove portions of existing interior walls and to then rebuild and paint those portions of the interior walls. This work on the interior walls cost the Petitioners an additional $1,000.00.
As a result of the matters described in paragraphs 6, 7, and 8, above, the completion of the Petitioners' building was delayed. By reason of the delay, the Petitioners lost rental income in the amount of $4,350.00.
The Petitioners filed a civil action in the County Court in Palm Beach County, Florida, against James West seeking to recover compensation for the harm caused by the failure of James West to properly perform his obligations under the contract of December 5, 1994. On September 3, 2002, the Petitioners obtained a final judgment against James West,
individually. The judgment was in the total amount of
$8,082.35, comprised of the following elements:
Plumbing completion and repairs $2,967.50 Demolition and repair of walls $1,000.00 Cost of water heaters2 $400.00
Loss | of rental income | $4,350.00 |
| Subtotal | $8,717.50 |
Less | $2,000.00 set off | ($2,000.00) |
Plus | prejudgment interest | $1,364.85 |
Total Judgment $8,082.35
The final judgment includes the following language:
Under the contract, work was to be completed by spring or summer, 1995. The Defendant actually finished the top-out installation in 1996 but the project was delayed due to a dispute the Plaintiffs had with the city in regard to paving an alley. The Plaintiffs contacted the Defendant in 1999 to finish the work, however, the Defendant requested additional money which he wanted up front. The Plaintiffs did not mind the additional money but objected to paying up front. They terminated the 1994 contract and hired Lee Wilder Plumbing, Inc., to complete the job of installing the fixtures.
In May, 2000, the Plaintiffs discovered there was no hot water. The Defendant refused to come out and check on the problem so Lee Wilder Plumbing, Inc., was called.
The evidence showed that cuts had to be made in the walls and floor to find the problem. While the Defendant asserts that the problem was crossed pipes which was easy to correct, he never came out to look at the job site.
Instead, the evidence showed that there was a hot water pipe missing, that the two cold water pipes were not connected to anything and a new pipe had to be installed getting
hot water to the second floor. The evidence further showed that the Defendant did all of the rough plumbing under the slab and top- out plumbing inside of the walls.
Pursuant to F.S. 95.11(3)(c), the Court finds the plumbing defect to be a latent defect. Further, the Court finds that the Defendant is responsible for that latent defect. In addition to damages to correct the latent defect, the Plaintiffs seek damages for the cost of hot water heaters and loss of rent/loss of use for three months delay to correct the plumbing problem.
It is well settled that the purpose of damages are (sic) to place the injured party in the position it would have been. Tucker v. John Galt Ins. Agency Corp., 743 So. 2d
108 (Fla. 4th DCA 1999). The Court finds that Plaintiffs are entitled to [re]cover the cost of repairing the latent defect in the amount of $2,967.50 and $1,000.00 for the cost of repairing the walls and floor. Further, the Plaintiffs are entitled to recover for the cost of the water heaters of
$400.00 and loss of rental income for one unit at $4,350.00. In addition, the Defendant is entitled to a set off of
$2,000.00, as the Plaintiffs agreed to pay the Defendant $10,000.00 for the plumbing work in which they actually paid the Defendant $8,000.00. The measure of damages is the cost to complete contract price because parties already agreed to pay contract price for completed work. American Structural Systems, Inc. v. R. B. Gay Const. Co., Inc., 619 So. 2d 366 (Fla. 1st DCA
1993). Measure of damages is contract price diminished only by damages suffered.
Fleming v. Urdl's Waterfall Creations, Inc., 549 So. 2d 1057 (Fla. 4th DCA 1989).
In addition to the final judgment described above, the Petitioners also received a judgment for costs against James
West in the amount of $972.27. The amounts of the final judgment ($8,082.35) and the judgment for costs ($972.27) total
$9,054.62.
Following the entry of the judgments against James West, the Petitioners made numerous unsuccessful efforts to satisfy the judgment. Despite diligent search and inquiry, the Petitioners were never able to locate any property of James West that could be applied to the satisfaction of the judgments against James West.
On or about November 27, 2002, the Petitioners signed a claim form seeking restitution from the Construction Industries Recovery Fund. Their claim was received by the CILB on or about December 3, 2002. Following consideration of the Petitioners' claim, the CILB voted to deny the claim. An order to that effect was issued and filed on January 28, 2004. In that order the CILB gave the following reasons for its denial of the claim:
Upon consideration of the documentation and testimony submitted, it is ORDERED:
Claimants filed to satisfy all requirements for payment from the Recovery Fund.
There is no evidence in the file to support the amount of actual damages suffered.
Section 489.141(2)(c), states that a person is not qualified to make a claim for recovery from the Construction Industries Recovery Fund, if such person has suffered damages as the result of making improper
payments to a contractor as defined in part I of chapter 713.
There is no evidence in the file that the liens filed by subcontractors were valid liens under Chapter 713, Florida Statutes.
At the beginning of the final hearing the Respondent stated on the record that it was still relying on the reason set forth in subparagraph a, above, but that it was abandoning the reasons for denial set forth in subparagraphs b and c, above. The Respondent also stated on the record that it was of the view that there were two additional reasons for denying the subject claim. The two additional reasons were described as follows:
That the underlying court judgment on which the Petitioners' claim is based is not a judgment based on an act that constitutes a violation of subsections (g), (j), or (k) of Section 489.129, Florida Statutes, and
That the corporation for which the individual contractor purported to be the qualifier was not licensed at the time of the violations that caused financial harm to the Petitioners.
The Petitioners' first notice of the CILB's change in position appears to have been when these two new reasons were stated during the opening moments of the final hearing.
In its proposed recommended order the Respondent raises for the first time a third new reason for denying the subject claim. This third new reason is set forth in the underscored portion of the following language from paragraph 28 of the Respondent's proposed recommended order:
29. An asset search indicates that there are no assets from which the judgment can be satisfied. However, James West held at the time of the judgment, and still holds today, an active license. There is no proof that Petitioners exhausted all efforts and demonstrated an inability to collect the judgment as required by Rule 61G4-21.003(2), Florida administrative Code.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this case. §§ 120.569 and 120.57(1), Fla. Stat.
Petitioners have the burden of proof in this proceeding. 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). Petitioners must show by a preponderance of the evidence that they are entitled to the reimbursement they seek.
Reimbursement of the type sought by the Petitioners is available only where it is shown that the Petitioners meet all of the statutory criteria for such reimbursement. Statutory provisions relevant to the disposition of this case include Section 489.140(1), Florida Statutes, which reads as follows:
(1) 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)(g), (j), or (k), 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 providing that the violation occurs after July 1, 1993.
Also relevant to the disposition of this case is the following language of Section 489.141(1), Florida Statutes:
Any person is eligible to seek recovery from the Construction Industries Recovery Fund after having made a claim and exhausting the limits of any available bond, cash bond, surety, guarantee, warranty, letter of credit, or policy of insurance, if:
Such person has 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 Construction Industry Licensing Board has issued a final order directing the licensee to pay restitution to the claimant based upon a violation of s.
489.129(1)(g), (j), or (k), where the contract was executed and the violation occurred on or after July 1, 1993. [3]
And Section 489.143(1), Florida Statutes, reads as follows:
(1) 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 restitution order, exclusive of postjudgment interest, against the licensee or $25,000, whichever is less,
or an amount equal to the unsatisfied portion of such person's judgment or restitution order, exclusive of postjudgment interest, or $25,000, whichever is less, but only to the extent and amount reflected in the judgment or restitution order as being actual or compensatory damages. The fund is not obligated to pay any judgment or restitution order, or any portion thereof, which is not expressly based on one of the grounds for recovery set forth in s.
489.140(1).
Section 489.129(1), Florida Statutes, describes the acts for which disciplinary action may be taken by the CILB against licensees. Paragraphs (g), (j), and (k) of Section 489.129(1) read as follows:
(g) Committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer. Financial mismanagement or misconduct occurs when:
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 75 days after the date of such liens;
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; or
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.
* * *
Abandoning a construction project in which the contractor is engaged or under contract as a contractor. A project may be presumed abandoned after 90 days if the contractor terminates the project without just cause or without proper notification to the owner, including the reason for termination, or fails to perform work without just cause for 90 consecutive days.
Signing a statement with respect to a project or contract falsely indicating that the work is bonded; falsely indicating that payment has been made for all subcontracted work, labor, and materials which results in a financial loss to the owner, purchaser, or contractor; or falsely indicating that workers' compensation and public liability insurance are provided.
As noted in the foregoing findings of fact, the CILB has abandoned two of the three reasons it originally stated as being the bases for its notice that it intended to deny the Petitioners' claim for reimbursement. The abandoned reasons require no further discussion. The remaining original reason was stated as follows: "a. There is no evidence in the file to support the amount of actual damages suffered." In this regard, attention is directed to Section 489.143(1), Florida Statutes, which provides, in pertinent part, that a person who meets all of the statutory conditions for reimbursement is entitled, with limitations and qualifications not relevant here, to "an amount equal to the judgment. . . ." The evidence in this case shows that the Petitioners have obtained a final judgment and a judgment for costs against James West in the total amount of
$9,054.62. Where, as here, the amount of the judgment has been proved, it is not necessary for the Petitioners to offer additional evidence of the amount of the damages they suffered which provided the factual basis for the amount of the judgment entered in their favor. On the record in this case, the nature and the amount of the damages suffered by the Petitioners are sufficiently proved and documented.
Attention is now directed to the Respondent's three new grounds for which it argues that the Petitioner's application should be denied.4 The Respondent's last-raised argument will be addressed first because it can be most easily and quickly disposed of. The Respondent argues: "There is no proof that Petitioners exhausted all efforts and demonstrated an inability to collect the judgment as required by Rule 61G4- 21.003(2), Florida Administrative Code." The cited rule requires, in pertinent part, that an application of the type at issue here be accompanied by "proof of all efforts and inability to collect the judgment or restitution order." A related statutory provision, Section 489.141(1)(a)1.b., Florida Statutes, requires, in pertinent part, a showing that a person seeking reimbursement from the Construction Industries Recovery Fund
". . . has made all reasonable searches and inquiries to ascertain whether the judgment debtor or licensee is possessed of real or personal property or other assets subject to being sold or applied in satisfaction of the judgment and by his or her search has discovered no property or assets. . . .
The Petitioners have made reasonable searches and inquiries for property of James West and have not found any property that could be seized to satisfy their judgment. Their efforts in this regard are sufficient to comply with the applicable rule and statutory requirements.
One of the remaining new reasons is also quickly resolved. There is no merit to the Respondent's argument based on the unlicensed status of the corporation for which the individual contractor purported to be the qualifier. It does not make any difference whether the corporation was licensed when, as here, the purported qualifier was licensed at all material times. Section 489.140(1), Florida Statutes, is written in the disjunctive and allows for recovery for certain acts committed by a licensed "contractor, financially responsible officer, or business organization. "
Therefore, in this case it is sufficient to satisfy the requirements of the statute to show, as Petitioners have, that James West was licensed at all material times.
The final issue to be addressed concerns the Respondent's argument that the Petitioner's final judgment against James West is not a judgment based on an act that constitutes a violation of paragraphs (g), (j), or (k) of Section 489.129. Florida Statutes. The clear language of the statute limits claims against the Recovery Fund to those cases
"where the judgment or restitution order is based on a violation of s. 489.129(1)(g), (j), or (k). . . ." § 489.140(1), Fla.
Stat.
A review of the subject final judgment promptly reveals that the Judgment is not based on a violation of paragraph (k).5 Similarly, it is clear from the terms of the final judgment that it is not based on a violation of paragraph (j).6
Turning now to paragraph (g) of Section 489.129(1), Florida Statutes, this statutory provision authorizes disciplinary action against a contractor who is guilty of "[c]omitting mismanagement or misconduct in the practice of contracting that causes financial harm to a customer." The meaning of the phrase "financial mismanagement or misconduct" is clarified in three separate numbered subparagraphs of the statute, each of which describes circumstances that constitute "financial mismanagement or misconduct." The first two numbered subparagraphs clearly have no bearing on the disposition of this case.7 The third of the numbered subparagraphs describes "financial misconduct and misconduct" as including the following circumstances:
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.
The final judgment in this case is based on facts that meet all of the criteria of Section 489.129(1)(g)3, Florida Statutes. From that conclusion it follows that the Petitioners' final judgment and the related cost judgment meet the criteria for reimbursement from the Construction Industries Recovery Fund. In this regard it is noted that the plumbing contractor's job has been completed, albeit by a successor contractor, that the customer had to pay more than the original contract price, and that the increase in cost was not for one of the exculpatory reasons listed in the statute. As noted in the final judgment, there was a latent defect in the work performed by James West, James West declined an opportunity to correct the latent defect, and all of the damages awarded to the Petitioners were consequences of the latent defect that James West caused and failed to correct.
In view of all of the foregoing, it is RECOMMENDED that a final order be issued in this case concluding that the Petitioners are entitled to reimbursement from the Construction Industries Recovery Fund in the amount of their final judgment
$9,054.62.
DONE AND ENTERED this 30th day of July, 2004, in Tallahassee, Leon County, Florida.
MICHAEL M. PARRISH
Filed with the Clerk of the Division of Administrative Hearings this 30th day of July, 2004.
1/ The Petitioners also paid James West an additional $288.32 for materials related to a change order.
2/ The evidence in this case does not clearly explain why the Petitioners sought to recover $400.00 "for the cost of hot water heaters." Nevertheless, the judgment in favor of the Petitioners against James West included $400.00 "for the cost of the water heaters." And it is clear from the language of the judgment that the portion of the judgment related to the water heaters, like all other damages awarded by the judgment, was a consequence of the latent defect that James West caused and failed to correct.
3/ The quoted language is followed by several provisos, none of which appear to be relevant to the disposition of this case.
4/ In addition to addressing the merits of the Respondent's three new reasons for which it argues the subject claim should be denied, the undersigned feels constrained to make note of some matters concerning the procedural sufficiency and the fundamental fairness of identifying issues for the first time at the commencement of the final hearing or at the time of filing one's proposed recommended order. At the very least, such practices create the appearance of a denial of sufficient notice and of a departure from basic notions of fundamental fairness.
For that reason alone such practices should be discouraged and avoided. By way of contrast, attention is directed to Section 120.60(3), Florida Statutes, which requires an agency that proposes to deny an application for a "license" to issue a written notice in which the agency "must state with particularity the grounds or basis for" its proposed action.
The application at issue here does not appear to involve matters encompassed by the statutory definition of the term "license," but it would nevertheless appear to be a beneficial practice for agencies to set forth with particularity, at the earliest practicable time, the basis for their proposed denial of any application for agency action.
5/ Subsection (k) authorizes disciplinary action for several specified types of false statements. Although the Petitioners assert that James West made one or more false statements of the types described in Subsection (k), there is no evidence in this case that James West made any such false statements that caused harm to the Petitioners. Further, the final judgment against James West is not based on any conduct encompassed by subsection (k).
6/ This is not a case in which the contractor abandoned a construction project. Following unusual delays in the project which were not expected by anyone concerned, the Petitioners and James West had a disagreement regarding the terms and conditions under which the work should proceed and the Petitioners then terminated the contract with James West.
7/ The first of the numbered subparagraphs addresses circumstances involving liens on the customer's property and the failure of the contractor to promptly have the liens removed.
The second of the numbered subparagraphs addresses circumstances arising from abandonment of a construction project. The final judgment entered against James West did not involve any issues regarding liens or abandonment.
Adrienne C. Rodgers, Esquire Department of Business and
Charles Powell Norma R. Powell
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.
