STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, FLORIDA CONSTRUCTION ) INDUSTRY LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 81-3042

)

CATHERINE W. GRABHORN, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above-captioned matter, after due notice, at Palatka, Florida, on March 10, 1982, before Thomas C. Oldham, Hearing Officer.

APPEARANCES

For Petitioner: James Quincey, Esquire

Post Office Box 1090 Gainesville, Florida 32602

For Respondent: William N. Gambert, Esquire

630 North Wild Olive Avenue Daytona Beach, Florida 32018

ISSUE PRESENTED

Whether Respondent's license as a residential contractor should be suspended, revoked, or the licensee otherwise disciplined for alleged violation of Subsections 468.112(2) (h) and 489.129(1)(k), F.S. as set forth in the Administrative Complaint dated July 7, 1981.

This case was consolidated for purposes of hearing with DOAH Case No. 81- 2491 involving an administrative complaint by the Board of Real Estate against the same Respondent arising out of the same transaction.

The complaint herein alleges that Respondent, a licensed residential contractor and qualifying registrant for CAT Development Inc., contracted to build a dwelling for Jenny Soto, received full payment under the contract, but abandoned construction prior to completion, and has not corrected continuing deterioration of the property. It is therefore alleged that Respondent violated Subsection 468.112(2)(h), Florida Statutes, (Supp. 1978) and its successor statute Subsection 489.129(1)(k) F.S. (1979).

FINDINGS OF FACT

1. Respondent Catherine W. Grabhorn is a licensed real estate broker, doing business as CAT Realty Company at East Palatka, Florida. She was so licensed at all material times alleged in the Administrative Complaint. (Testimony of Respondent)

   
   

2. Respondent is also a certified residential contractor operating as CAT Development, Inc. at East Palatka, Florida, and was so licensed at all material times alleged in the Administrative Complaint. (Testimony of Respondent)

   
   

3. In October, 1978, Jenny Soto, Bronx, N. Y., accompanied other prospective land purchasers to Palatka, Florida, where she was shown and purchased a lot for $10,000 at a development known as P & B Ranchettes. The group had traveled to Florida in a van. After the land purchase, the driver of the van took Soto and the others to Respondent's combination real estate and construction firm office where Respondent showed the group a catalog of various homes for possible construction on the lots which had been purchased. Soto saw a split level design that she liked, and Respondent told her that she could build it for $43,000, with the garage and the below ground level part of the split level to be unfinished, and without appliances. A contract was entered into between Respondent as President of CAT Development, Inc. and Soto on October 22, 1978. The contract provided for payments of $13,000 on October 24th, $25,700 on November 12th and the balance of $4,300 due on completion of the house. However, no completion date was stated in the contract. (Testimony of Respondent, Soto, Petitioner's Exhibits 16-19)

   
   

4. On October 24, 1978, Respondent flew to New York City to obtain the initial payment under the contract. Soto met her at the airport and paid

   $13,000. At that time, Soto asked Respondent when house construction would commence, and Respondent indicated that she needed additional money for materials. On November 30, 1978, the parties entered into a new contract to add additional features to the house, including a finished downstairs and garage, and appliances. The new contract price was $47,600, which reflected that

   $13,000 had been paid, $20,000 was due on December 1, 1978, $10,000 due on January 15, 1979, and the balance of $4,600 due on completion of the house. Again, no time for completion was stated in the contract. Pursuant to the agreement, Soto paid Respondent $20,000 on December 1, 1978 in New York City where the contract was signed. At some undisclosed date thereafter, Soto decided she wanted to upgrade the carpeting and appliance allowances, and the parties entered into an oral agreement for a total contract price of $53,000. (Testimony of Respondent, Soto, Petitioner's Exhibits 19-22)

   
   

5. On January 4, 1979, Respondent obtained a Putnam County building permit for the Soto project, and plumbing and electrical permits were obtained by subcontractors later that month. Construction commenced on the house and it was discovered that the ground water table was close to the surface of the land and there would be drainage problems. However, Respondent told Soto that she would be able to cure the problem by pumping out the standing water in the area. On January 26, Respondent again went to New York and obtained a $10,000 payment from Soto. In February, Soto visited the construction site and observed that standing water near the house was "like a lake". Soto visited the house again in March and gave Respondent the final $10,000 payment on the contract price.

   At that time, the house was substantially completed and there was no apparent water damage. Respondent told Soto that it would take a couple of months to finish construction. It appeared to Soto then that the only remaining work to be done was to install carpeting, light fixtures, and appliances. Several

   county inspections were made as the work progressed during January and February, 1979, and it was determined, after certain minor corrective measures, that the work was being performed satisfactorily. (Testimony of Durbin, Michaels, Soto, Respondent, Petitioner's Exhibits 1-3, 23-24)

   
   

6. During ensuing months, Soto periodically telephoned Respondent to ascertain when the home would be completed, and on these occasions Respondent promised that the house would be completed within thirty days. However, no further work has been done by Respondent, except to obtain approval of a temporary electrical pole in June, 1981. At that time, the county building inspector observed that there was a considerable amount of standing water around the house, and that the outside of the building had deteriorated. Siding was warped and pulled away, the front door was open, and some wrought iron was located in a nearby ditch. (Testimony of Soto, Respondent, Durbin, Petitioner's Exhibit 3)

   
   

7. In response to a request by Soto in 1980 concerning the market value of the house, Respondent wrote her on July 1, 1980 that the home was 90 to 95 percent complete and that completion was anticipated "as soon as possible". On May 28, 1981, the building permit was extended by the county to August 31, 1981. In July of that year, Soto visited the property and observed that a lock was missing from the door, mud was present in the lower level, sheetrock on the walls had rotted out, and the kitchen cabinets were missing, apparently due to vandalism. Soto saw the Respondent and asked her why the property was in that condition, and Respondent told her that she had no money because workmen on the project whom she had paid had "run off" with the money. During this visit, Respondent provided Soto with a written statement that the said house would be completed within sixty days, which would be September 20, 1981, unless prevented by "some act of God". (Testimony of Respondent, Soto, Michaels, Petitioner's Exhibits 14, 15, 25)

   
   

8. On September 1, 1981, the county building official wrote to Respondent and advised her that the permit extension had expired the previous day and that new permits would be required to complete the work. The letter also stated that if substantial work was not evident within ten days from her receipt of the letter, he would be forced to conclude that she had effectively abandoned the project and he would bring the matter to the attention of the county contracting board, and to the Florida Construction Industry Licensing Board. Complaints by Soto to the building official of Putnam County resulted in a letter written to him on January 14, 1982 by Respondent wherein she stated that she had not been able to do anything about the Soto house due to her financial situation, but that she hoped to be able to finish the project within the next thirty to sixty days. (Testimony of Michaels, Petitioner's Exhibits 10, 11)

   
   

9. On February 18, 1982, the county building officials went to the project site and found further evidence of deterioration, but no indication that any corrective or preservative work had been accomplished. Doors and windows were missing from the house, siding and fascia board were warped and pulled away, and several panels had fallen from the side of the house. A ditch had been dug around the house and there was standing water in it. Inside, it was observed that gypsum board had been removed from the walls, and in the lower level water stains were evident sixteen to eighteen inches above the flooring. Roof trusses had been broken and structural integrity had deteriorated with rotted 2 x 4 lumber forming bearing walls. It was further noted that kitchen cabinets had been removed from the property. (Testimony of Durbin, Michaels, Petitioner's Exhibits 4-9)

10. Although construction of the house was substantially completed at the time Respondent ceased work, the remaining cost of installing heating and air conditioner units, kitchen appliances, washer/dryer, bathroom and lighting fixtures, pump for septic tank, and carpeting is estimated at approximately

    $13,000. Additionally, to correct the present deficiencies and procure new windows, kitchen cabinets, and other vandalized property, would require a substantial, but unknown additional cost. Respondent estimates that it would take about $10,000 to $15,000 to complete the house. (Testimony of Michaels, Respondent)

    
    

11. Since commencing construction on the Soto house in January, 1979, Respondent has obtained permits and completed construction on nine single family homes, the last permit being issued as recently as January 20, 1982. No complaints have been received by the Putnam County building department on these projects. (Testimony of Michaels, Petitioner's Exhibit 12)

    
    

12. Respondent testified at the hearing and conceded that she had not completed the Soto house, but attributed her failure to "cash flow" problems which had resulted in financial inability to complete the work. Respondent had deposited all of the money paid to her by Soto in her general banking account. This account was used for expenditures on the Soto house, as well as other concurrent projects. Respondent produced a statement of expenditures on the Soto house in the amount of $47,000. However, this statement reflected that Respondent had included airplane fare for two trips in the total amount of $434. These trips were made to pick up checks from Soto in New York. Respondent stated that other costs for fill, construction of a ditch, and rock would not have been necessary if she had followed later advice as to the water problem on the property, and installed a sump pump and "french" drains. She further stated that on various occasions she would lock the house, but each time when she went back the locks would have been stolen, and that although she reported vandalism to the police, the problem continued. Respondent admitted that she had made promises to Soto to complete the house which she had not kept, but that she had never intended to take her money and not perform the work under the contract. She underestimated the cost of building the house due in part to her unfamiliarity with the particular design of the Soto house. (Testimony of Respondent, Petitioner's Exhibits 13, 29)

    
    

    CONCLUSIONS OF LAW

    
    

13. The Administrative Complaint alleges that Respondent abandoned the construction project and therefore should be disciplined under Subsections 468.112(2)(h), Florida Statutes (Supp. 1978) and Subsection 489.129(1)(k), Florida Statutes (1979). These provisions are identical in language and authorize the board to take disciplinary action for:

    
    

    489.129 Disciplinary proceedings.--

    (k) Abandonment of a construction project in which the contractor is

    engaged or under contract as a contractor. A project is to be considered abandoned after 90 days if the contractor terminates said project without notification to the prospective owner and without just cause.

    
    

14. The evidence presented at the hearing establishes that Respondent ceased work on the unfinished home of Jenny Soto in March, 1979 without

    notification to her and without just cause. No work has been done on the project since that time. Respondent's non-action in the above respects constitutes abandonment within the meaning of the statute, and her stated reason for not completing the house, i.e. a poor financial condition, is not considered just cause for failure to complete the work.

    
    

15. At the hearing, Petitioner sought to amend the Administrative Complaint to add diversion of funds under Subsection 489.129(h), Florida Statutes, as an additional ground for discipline. Respondent objected to any such amendment on the basis that such a charge was not embraced within the Administrative Complaint and that she was not in a position to defend against proposed charge. Petitioner on the other hand, claimed that the complaint could be amended in such respect in order to have the charges conform to the proof, and that the evidence showed that Respondent had, in fact, diverted funds received for construction of the Soto house. The motion to amend the complaint was denied. Statutes authorizing disciplinary action with regard to professional licenses are penal in nature and must be strictly construed. It is obvious that the statute alleged concerning abandonment of the project does not embrace diversion of funds, nor was such an issue raised by the pleadings. Therefore, no notice was given to Respondent that she was charged with such a violation. To permit such an amendment of the complaint at the final hearing would have amounted to a denial of due process. Lester v. Department of Professional and Occupational Regulations et al., 348 So.2d, 923 (Fla. 1st DCA 1977). In determining an appropriate penalty to be assessed against Respondent it is noted that no evidence concerning prior disciplinary action has been presented. Further, it appears that her problems are precipitated by poor financial planning and experience in constructing the type home in question. Although this does not excuse her misconduct in abandoning the projects it is considered that the serious penalty of license revocation is unwarranted, but that suspension of her residential contractor's license for a period of six months is a sufficient penalty.

RECOMMENDATION

That Respondent's license as a residential contractor be suspended for a period of six months.

DONE and ENTERED this 25 day May, 1982, in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 25th day of May, 1982.

COPIES FURNISHED:

James Quincey, Esquire Post Office Box 1090 Gainesville, Florida 32602

William N. Gambert, Esquire 630 North Wild Olive Avenue Daytona Beach, Florida 32018

Mr. James Linnan Executive Director

Florida Construction Industry Licensing Board

P. O. Box 2

Jacksonville, Florida 32202

Samuel R. Shorstein Secretary

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

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AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION CONSTRUCTION INDUSTRY LICENSING BOARD

DEPARTMENT OF PROFESSIONAL REGULATION/CONSTRUCTION INDUSTRY LICENSING BOARD,

Petitioner,

vs. Case No. 0011847

DOAH No. 81-3042

CATHERINE W. GRABHORN, RR0031779

Cat Development, Inc. Highway 17 South

East Palatka, Florida 32077

Respondent.

/

FINAL ORDER

This case came for final action by the Construction Industry Licensing Board on August 13, 1982, in Tampa, Florida. An administrative hearing held pursuant to Section 120.57(1), Florida Statutes, resulted in the issuance of a Recommended Order (attached hereto as Exhibit A), which was reviewed by the Board. The Department of Professional Regulation filed exceptions to said Order which were considered by the Board. Following a review of the Recommended Order, the Exceptions to the Recommended Order, and the complete record of the proceedings, it is

ORDERED

1. The findings of fact contained in the Recommended Order are approved and adopted and incorporated herein by reference.

   
   

2. The conclusions of law contained in the Recommended Order are approved and adopted and incorporated herein by reference.

   
   

3. The Recommendation of the Hearing Officer be and is hereby rejected as inappropriate under the circumstances. The Board adopts the exceptions to said Recommendation filed by the Department as modified herein.

THEREFORE

It is ORDERED and ADJUDGED that the registered residential contractor's license of the Respondent be and is hereby suspended for five (5) years; provided, however, that said license may be reinstated after a period of two (2) years if the Respondent submits satisfactory proof to the Board and staff of restitution to the consumer named in the administrative complaint. It is further Ordered that the Respondent shall pay a civil penalty in the amount of

$1000. Said penalty shall be paid prior to the reinstatement of the Respondent's license.

DONE and ORDERED this 25th day of August , 1982.

FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD

John Henry Jones, Chairman

Docket for Case No: 81-003042

Orders for Case No: 81-003042