STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

In re: The suspension of the ) registered builder's contractor's ) license of WILLIAM T. SELNER ) (RB 0012552), 8899 N.W. 66th )

Lane, R. R. 1, Box 185C Parkland, ) CASE No. 76-575 Pompano Beach, Florida )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled cause on July 20, 1976, at Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Barry Sinoff, Esquire

Suite 1010, Blackstone Building Jacksonville, Florida 32202

For Respondent: William T. Selner was not present.

By Administrative Complaint filed January 19, 1976, the Florida Construction Industry Licensing Board (FCILB) seeks to suspend the license of William T. Selner, Respondent, and the licensee's right to practice contracting thereunder. As grounds for the proposed action it is alleged that Respondent diverted funds received from Francis T. Kent for the construction of a residence to another project, and, as a result, was unable to complete the Kent project.

One witness testified and two exhibits were admitted into evidence.

FINDINGS OF FACT

1. In March, 1974 Respondent entered into a contract with Mr. and Mrs. Francis T. Kent for the construction of a residence for a price of $46,700.

   
   

2. After Kent had paid Respondent $26,000 he became aware of a problem in satisfying claims of subcontractors with the resulting possibility of liens against the house.

   
   

3. At the time the Kents were in Michigan preparing to move to Florida. They came to Florida in September and met with Selner at their attorney's office at which time a secondary agreement was entered into whereby Kent would make checks payable to Respondent and subcontractor jointly. An additional

   $18,589.93 was paid to Selner pursuant to this secondary agreement. This made a total payment to Respondent of $44,589.93 as of December 31, 1974.

   
   

4. After crediting Respondent for sewer hookup and crediting Kent with allowances provided in the contract for carpets, landscaping, etc. the Kents had paid $46,552.44 of the total contract price of $46,700.

5. Thereafter four liens totaling $3,348.63 were filed against the residence. Kent paid one in full, settled a second lien at a discount and two remain pending. The total still owned to lienors is approximately $1,700.

   
   

   CONCLUSIONS OF LAW

   
   

6. Section 468.112(2)(e) F.S. provides that the FCILB may take appropriate disciplinary action against the registration of a contractor who is guilty of:

   
   

   "Diversion of funds on property received for prosecution or completion of a specified construction project or operation where as a result of the diversion the contractor is, or will be, unable to fulfill the terms of his obligation or contract."

   
   

7. The evidence is clear and undisputed that Respondent was unable to complete the contract with the Kents at the agreed price. It is also clear that Respondent has failed to satisfy the claims of subcontractors on the project, and that four of these subcontractors and suppliers have filed liens' against the property.

   
   

8. No evidence was presented to show that funds provided by Kent for labor and materials on his residence were diverted to another use.

   
   

9. The sole issue for determination is whether a diversion of funds to another project may be inferred from Respondent's failure to satisfy all liens against the project from the funds supplied in accordance with the contract.

   
   

10. Disciplinary actions against a licensee are penal in nature, Kozerowitz v. Florida Real Estate Commission, 289 So.2d 391 (1974) and statutes providing grounds for revocation of licenses are to be strictly construed. 20 Fla. Jur. 132 and cases there cited.

    
    

11. In order to find a contractor guilty of a violation of Section 468.112(2)(e) above quoted there must (1) be a diversion of funds and (2) as a result of the diversion the contractor is unable to complete the project. The fact that funds were unavailable to the contractor to complete the project, even though the party injured thereby had paid to the contractor the full contract price, does not prove diversion of funds. Such a conclusion can be made only when that is the only reasonable and logical result that can flow from such facts. Had the contractor experienced unexpected costs or had underbid the job he could find himself with insufficient funds to complete the project even though he received the full contract price and all funds received were applied to the project. Accordingly no inference of diversion of funds can be drawn solely from lack of funds to complete the contract.

    
    

12. From the foregoing it is concluded that absent evidence of a diversion of funds received for the Kent project, Respondent must be found not guilty of a violation of Section 468.112(2)(e) F.S. as charged. It is therefore

RECOMMENDED that the complaint against Frank T. Selner be dismissed.

DONE and ENTERED this 3 day of August, 1976, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

COPIES FURNISHED:

Barry Sinoff, Esquire Blackstone Building Jacksonville, Florida 32202

Mr. William T. Selner 8899 N. W. 66th Lane RR1, Box 185C Parkland Pompano Beach, Florida

Docket for Case No: 76-000575

Orders for Case No: 76-000575