STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 82-1591

)

JOHN W. POWELL, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before R. L. Caleen, Jr., Hearing Officer with the Division of Administrative Hearings, on November 17, 1982, in Lake Wales, Florida.

APPEARANCES

For Petitioner: Jane Heerema, Esquire

217 South Adams Street Post Office Box 1386

Tallahassee, Florida 32302

For Respondent: David B. Higginbottom, Esquire

101 East Wall Street Post Office Box 697

Frostproof, Florida 33843

ISSUE

Whether respondent's license as a registered residential contractor and a registered plumbing contractor should be disciplined on charges that he unlawfully (1) diverted funds received for the purchase of a lot and construction of a home; (2) acted in the capacity of a contractor and used a name other than that appearing on his license; (3) aided and abetted an uncertified or unregistered person to violate the Construction industry Licensing Law; and (4) failed to properly qualify percent business organization.

BACKGROUND

By administrative complaint, dated May 7, 1982, as subsequently amended, petitioner Department of Professional Regulation, Florida Construction Industry Licensing Board ("Department"), charged respondent John W. Powell with violating Section 468.112(2)(e), Florida Statutes (Supp. 1978), by diverting funds given to him for purchase of a lot and construction of a home. He was also charged with violating Section 468.112(2)(b)(d) and (g), Florida Statutes (Supp. 1978), by acting in the capacity of a contractor in a name other than that appearing on

his license, by aiding and abetting an uncertified or unregistered person to violate provisions of Part II of Section 468 which prohibit contracting without a license, and by failing to properly qualify a business organization.

Respondent requested a Section 120.57 hearing on the charges and, on June 11, 1982, this case was forwarded to the Division of Administrative Hearings for assignment of a Hearing Officer. Hearing was set for November 17, 1982. At hearing, Petitioner's Exhibit Nos. 1 through 9 1/ were received in evidence.

Joseph D'Antoni, Wilbur Sheffer, Joseph Giardina and Richard Madaus testified for the Department. Respondent testified in his own behalf.

Based on the evidence presented at hearing, the following facts are determined:

FINDINGS OF FACT

1. Respondent Is a Licensed Contractor

   
   

   1. At all times material to the charges, respondent John W. Powell was licensed as a registered residential contractor (license no. RR 0002745) and a registered plumbing contractor (license no. RF 0038050). (Prehearing Stipulation; P-7)

      
      

2. Respondent's Sale and Conveyance of Real Property

   
   

   1. In October, 1978, Joseph J. D'Antoni, a resident of Baltimore, Maryland, visited Indian Lake Estates Subdivision ("Subdivision") in Polk County, Florida, with the intention of purchasing a lot. Respondent, who owned numerous lots in the Subdivision, agreed to sell two lots to Mr. D'Antoni (and his brother-in-law) for the sum of $7,500. Mr. D'Antoni gave him a $1,000 payment, then mailed him the $6,500 balance after returning to Maryland. (Testimony of D'Antoni; P-2)

      
      

   2. Respondent then executed and mailed a warranty deed conveying Lot 5, Block 340, Indian Lake Estates Subdivision, Unit II, to Mr. D'Antoni and his wife. He used a standard warranty deed form printed for Lawyers' Title Guaranty Fund, Orlando, Florida, and conforming to Section 689.02, Florida Statutes. As grantor, he "fully warrant[ed] the title to said land, and [promised to] defend the same against the lawful claims of all persons whomsoever." (Testimony of D'Antoni; P-2)

      
      

   3. The deed was prepared by John P. White, an attorney in Lake Wales, Florida. Although respondent, as grantor, did not limit his warranty except for a standard limitation relating to taxes, easements, restrictions, and conditions of record), the preparer of the deed included a personal disclaimer indicating that he (the preparer) was expressing no opinion as to the condition of title:

      
      

      The preparer of this instrument was neither furnished with or requested to

      review an abstract on the described property and therefore expresses no opinion as to the condition of title. (P-2)

      
      

   4. Mr. D'Antoni was unaware that the property was encumbered by a mortgage held by the First Highlands Service Corporation. The mortgage had been executed by respondent in 1973. It covered numerous lots in the Subdivision and secured a loan of $330,000. Mr. D'Antoni, who trusted respondent, thought that he was

      receiving the property free and clear of encumbrances. Respondent did not tell him otherwise. Although the title disclaimer was not read by Mr. D'Antoni, it, by its terms, applied only to Mr. White, the identified preparer of the deed.

      It did not affect the warranty of title given by respondent, the grantor. (Testimony of D'Antoni; P-2)

      
      

   5. A year later, in December, 1979, First Highlands Service Corporation sued the D'Antonis, Joseph Giardina, (his brother-in-law), and 19 other owners, seeking to foreclose its mortgage covering the Subdivision lots. In order to obtain release from the mortgage, the D'Antonis and Mr. Giardina paid First Highland Service Corporation $4,000 each. Respondent neither defended their title to the property, nor repaid them the $4,000. (Testimony of D'Antoni; P-4, P-5)

      
      

3. Respondent's Construction of a House for the D'Antonis

   
   

   1. On November 6, 1978, after the deed to lot 5 was executed and delivered, the D'Antonis executed a construction contract with J. W. Powell and Sons, Inc. Respondent, who signed as President of J. W. Powell and Sons, Inc., had not qualified

      that company with the Florida Construction Industry Licensing Board. (Testimony of D'Antoni; Prehearing Stipulation, P-6)

      
      

   2. Under the contract, respondent agreed-to build a house on lot 5, in accordance with certain specifications, for $42,000. Item 10 of Article 8 specifies that the price includes "city water." The home was built; the D'Antonis paid the purchase price, then moved in. Some time later, they were sued by Consolidated Utility Company for $425, the waterline connection fee. They subsequently paid that amount, plus court costs, to the utility company. (Testimony of D'Antoni; P-6)

      
      

   3. At the time respondent built the D'Antonis' house, Wilbur Sheffer was employed by Consolidated Utility Company to install waterlines along Fort Meyers Drive, the road where the D'Antonis' house was located. Mr. Sheffer installed the waterlines up to the individual property boundaries. It was standard practice for contractors to pay sewer charges and water meter deposit and connection (or tap-in) fees when they obtained their building permits, after which he would install the meter. The contractors would then lay waterline from the meter to the home, leaving the line uncovered for later inspection.

      Property owners were not allowed to connect to the adjacent waterlines unless fees were paid and the meters installed. Respondent paid the meter fee on the D'Antonis' home, but the meter was not installed because he did not pay the connection fee. Nevertheless, respondent, without authorization from the utility company, connected the D'Antonis' house to the utility's adjacent waterlines. (Testimony of Sheffer; P-8)

      
      

   4. On block 340 of the subdivision, where Ft. Meyers Drive was located, respondent was responsible for paying the water tap fees when the water was available. Records of the utility company show that respondent paid two of the four water tap fees he was billed for on block 340. At the time the D'Antonis' home was under construction, the utility company sometimes negotiated with contractors, who were building homes in the Subdivision, and waived tap fees in exchange for their constructing adjacent waterlines. However, such line extension agreements were usually handled through the office of the company's engineer, Richard Madaus. Mr. Madaus had no record of any agreement with respondent regarding waterline extensions to block 340, where the D'Antonis' home was being constructed. Instead, the records show that respondent was

      billed for connection fees on block 340 as early as October 26, 1978, and that, thereafter, he paid tap fees for two of the four homes on that block in March and July of 1979. (Testimony of Madaus; P-9a, P-9c, P-9d, P-9e)

      
      

   5. Respondent's testimony that he was never billed for water connection fees in block 340 and that it was not his responsibility to pay those fees because he had already paid for installing the adjacent waterline, is not credible given the fact that he paid two such connection fees and that the utility company requested these connection fees from him before he began building the D'Antonis' home. The only change in the utility company's policy occurring around the time the D'Antonis' home was constructed was to request the health department to notify the company when septic tank permits for homes in the Subdivision were paid for so that the company could request tap fees at the same time. (P-9a-F)

      
      

4. Respondent's Failure to Qualify J. W. Powell and Sons, Inc.

1. It is undisputed that respondent failed to qualify J. W. Powell and Sons, Inc. with the Construction Industry Licensing Board. He did not know that such action was required. The attorney who formed the corporation did not tell him of this requirement. Neither did the county tax collector who Issued him occupation licenses under both his and the corporation's name. (Testimony of respondent)

   
   

   CONCLUSIONS OF LAW

   
   

2. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Fla. Stat. (1981)

   
   

3. License revocation proceedings, such as this, are penal in nature. The prosecuting agency is required to prove its charges by clear and convincing evidence -- by evidence as substantial as the consequences facing the licensee. See, Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981); Walker v. State, 322 So.2d 612 (Fla. 3d DCA 1975); Reid v. Florida Real Estate Commission, 183 So.2d 846 (Fla. 2d DCA 1966).

   
   

4. Statutes authorizing revocation of licenses are strictly construed and must be strictly followed. Bach v State Board of Dentistry, 378 So.2d 34, 36 (Fla. 1st DCA 1980). A license cannot be revoked for any reasons other than those enumerated in the statute. Id.

   
   

5. Section 468.112(2)(e), Florida Statutes (Supp. 1978), now Section 489.129(1)(h), authorizes the Construction Industry Licensing Board ("Board") to discipline a licensed contractor for "diversion of funds or property received for prosecution or completion of a specified construction project or operation when as a result . . . the contractor is unable to fulfill the terms of his obligation or contract."

   
   

   Breach of Deed Warranty

   
   

6. The evidence in this case demonstrates that respondent breached his warranty to deliver unencumbered title to lot 5 to the D'Antonis and to defend their title against the subsequent foreclosure claim. Respondent may be civilly liable to the D'Antonis for his breach of warranty. See, Section 689.03, Florida Statutes (1981), General Properties Corporation v. Gore, 14 So.2d 411 Fla. 1943).

7. But the Construction Industry Licensing Board has no power to enforce contracts or provide remedies for their breach. See, Peck Plaza Condominium v. Div. of Fla. Land Sales and Condominiums, 371 So.2d 152, 154 (Fla. 1st DCA 1979); Section 489.129, Florida Statutes (1981). Further, the funds received by respondent in October, 1978, were for sale of real property, not for "prosecution or completion of a specified construction project or operation." Section 489.129(1)(h). The sale of real property and construction of the D'Antonis' house were separate legal events. The sale was completed, the warranty deed was executed and delivered, before the parties entered into the construction contract. Even assuming the land sale funds were received for completion of the subsequent construction project, the evidence does not show that respondent diverted these funds and, as a result, was unable to fulfill the terms of his construction contract. It is concluded that respondent's breach of deed warranty does not constitute a violation of Section 489.129(1)(h)

   
   

   Failure to Supply City Water

   
   

8. The evidence supports a construction that "city water," as used in the construction contract, included the payment of water connection fees. The respondent breached the contract by failing to provide the D'Antonis with city water. Funds received by respondent to cover this cost were diverted or used for other purposes. No evidence was presented, however, to establish an essential element of the alleged offense--that as a result of the diversion, respondent was unable to fulfill the terms of his contract. For an agency to prevail, all elements of a statutory violation must be proven. See, Henderson Signs v. Department of Transportation, 397 So.2d 769 (Fla. 1st DCA 1981). This element having not been proven, it is concluded that a violation of Section 489.129(1)(h) has not been shown.

   
   

9. This charge stems from a bona fide, long-standing dispute, between private persons, involving the meaning of ambiguous terms in a contract. The jurisdiction to interpret contracts and provide remedies for their breach is vested solely in the judiciary. See, Peck Plaza Condominium v. Division of Florida Land Sales and Condominiums, supra. Breach of a construction contract is not an enumerated ground for disciplining a contractor under Chapter 489, Florida Statutes (1981). Here, the Department seeks to exercise a power which it does not have.

   
   

10. It is undisputed that respondent contracted under the name of J. W. Powell and Sons, Inc., a company not qualified by the Construction Industry Licensing Board. He thus violated Section 468.112(2)(d), Florida Statutes (Supp. 1978), now Section 489.129(1)(g), because he acted as a contractor under a name other than that appearing on his license. He also violated Section 468.112(2)(b), Florida Statutes (1978), now Section 489.129(1)(e) by aiding and abetting an uncertified or unregistered contractor, J. W. Powell and Sons, Inc., to evade provisions of the construction industry licensing law which prohibit contracting without a license. Finally, respondent, by contracting in the name of J. W. Powell and Sons, Inc., violated Section 468.112(2)(g), Florida Statutes (Supp. 1978), now Section 489.129(1)(j), because he failed, in material respects, to comply with provisions of the construction industry licensing law by failing to properly qualify a business organization with which he was affiliated, as was required by Sections 468.107(2) and (3), Florida Statutes (1977), now Section 489.119(2) and (3).

    
    

11. These duplicative violations were unintentional and technical in nature. The penalty should be commensurate. An administrative fine of $500

    would be appropriate. See, Sections 468.112(3)(c), Florida Statutes (Supp. 1978) and 489.129(1), Florida Statutes (1981).

    
    

12. The parties' proposed findings of fact are adopted to the extent they are incorporated in this recommended order. Otherwise, they are rejected as unsupported by the evidence or unnecessary to resolution of the issues.

RECOMMENDATION

Based on the foregoing, it is RECOMMENDED:

That respondent be fined $500.

DONE and ENTERED this 16th day of February, 1983, in Tallahassee, Florida.

R. L. CALEEN, JR. 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 16th day of February, 1983.

ENDNOTE

1/ Petitioner's Exhibits will be referred to as "P-1," "P-2," etc.

COPIES FURNISHED:

Jane Heerema, Esquire

217 South Adams Street Post Office Box 1386

Tallahassee, Florida 32302

David B. Higginbottom, Esquire

101 East Wall Street Post Office Box 697

Frostproof, Florida 33843

James Linnan, Executive Director Construction Industry Licensing Board Post Office Box 2

Jacksonville, Florida 32202

Docket for Case No: 82-001591

Orders for Case No: 82-001591