STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, CONSTRUCTION )

INDUSTRY LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 84-2009

)

FRANK D. GUTC, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on January 8, 1985, in Flagler Beach, Florida.

APPEARANCES

For Petitioner: Douglas A. Shropshire, Esquire

130 North Monroe Street Tallahassee, Florida 32301

For Respondent: Frank D. Gutc, pro se

Post Office Box 1658

Flagler Beach, Florida 32036 BACKGROUND

By administrative complaint filed on April 20, 1984, petitioner, Department of Professional Regulation, Florida Construction Industry Licensing Board, has charged that respondent, Frank D. Gutc, a registered building contractor, had violated various provisions within Chapters 455 and 489, Florida Statutes, for which disciplinary action against his license should be taken. Briefly, petitioner has alleged that respondent entered into a contract to construct a residence in Palm Court, Florida in December, 1982, that respondent diverted funds from the project which resulted in his failure to fulfill his obligation (Count I), and made misleading and untrue representations in the practice of his profession (Count II). By an amendment filed on July 3, 1984 petitioner has also charged that Gutc was guilty of incompetence or misconduct on the foregoing job (Count III). According to the complaint, this conduct collectively constituted a violation of Subsections 455.227(1)(a) and 489.129(1)(c), (h), and (m), Florida Statutes.

Respondent disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings by petitioner on June 5, 1984, with a request that a Hearing Officer be assigned to conduct a formal hearing.

Thereafter, Respondent filed a suggestion of bankruptcy in which he requested

this proceeding be stayed in view of respondent having filed bankruptcy in the United States Bankruptcy Court. The suggestion was denied by order dated June 28, 1984 on the ground a filing of bankruptcy does not operate as a stay of the filing of a disciplinary action by a governmental unit to enforce that unit's policy or regulatory power. By notice of hearing dated July 7, 1984, a final hearing was scheduled on September 19, 1984, in St. Augustine, Florida. At petitioner's request, the matter was rescheduled to November 19, 1984 at the same location. Thereafter, at respondent's request the final hearing was again rescheduled to January 8, 1985 in Flagler Beach, Florida.

At the final hearing petitioner presented the testimony of respondent, Robert H. Adams and Simon Lutterbach and offered petitioner's exhibits 1-12; all were received in evidence. Respondent testified on his own behalf and offered respondent's exhibits 1-6; all were received in evidence.

The transcript of hearing was filed on January 14, 1985. Proposed findings of fact and conclusions of law were filed by petitioner on January 21, 1985 and have been considered by the undersigned in the preparation of this order. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial or unnecessary.

During the course of the hearing petitioner voluntarily dismissed Count I of the administrative complaint which charged respondent with diverting funds from the project. Remaining at issue is whether respondent's license as a registered general contractor should be disciplined for the alleged violations set forth in Counts II and III of the administrative complaint.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Respondent, Frank D. Gutc, holds registered building contractor license number R80027543 issued by petitioner, Department of Professional Regulation, Florida Construction Industry Licensing Board. When the events herein occurred, Gutc resided in Flagler Beach, Florida where he was engaged in the business of constructing residential homes.

   
   

2. Simon and Doris Lutterbach were aware of Gutc's construction activities and approached him concerning the possibility of him building a house. The Lutterbachs had only 50,000 with which to buy a home and they conveyed this information to Gutc. Gutc showed them the plans for a three bedroom house which cost in excess of 550,000, but agreed to "downsize" the house to two bedrooms for a price of 550,000, including the lot.

   
   

3. Thereafter, on December 11, 1982, Gutc entered into a contract with the Lutterbachs to construct a two bedroom, two bath home at 16 Prince Patric Lane in Palm Coast, Florida at a cost of 550,000. The parties later agreed that Gutc would enclose the porch for an additional 51,700, or a total contract price of

   $51,700. The contract called for a closing date of March 1, 1983.

   
   

4. After the Lutterbachs gave an initial down payment of $10,000 to Gutc, Gutc obtained a $37,500 construction loan from Stockton Whatley Davin & Company. He later received an additional $1,314 from the Lutterbachs for minor changes in the plans. Construction commenced in early January, 1983, but the house was not completed by March 1. The closing date was accordingly reset to April 26, 1983.

   However, by that date a number of suppliers and subcontractors had filed liens totaling $28,005.37 on the house. The liens were filed even though Gutc had drawn the full amount of the construction loan from the lending institution, and had received almost $11,400 in cash from the Lutterbachs.

   
   

5. The Lutterbachs were unable to pay off the additional liens incurred by Gutc and were consequently unable to close on the house. They have never been reimbursed the $11,314 which they advanced to Gutc to construct the home. Since that time Gutc's financial condition has deteriorated, and he has been forced to file for bankruptcy.

   
   

6. An expert witness retained by petitioner established that the house constructed by Gutc was substantially underpriced, and that a competent contractor would have charged at least $53,800 for the house itself, exclusive of the cost of land. It was also established that a competent contractor normally prepares an itemized cost sheet whereby all costs are broken out in detail. By doing this, and using sound financial management procedures, a contractor could avoid the predicament which befell Gutc on this project.

   
   

7. Gutc himself acknowledged that he should have asked around $70,000 for the house instead of $50,000, that he never priced out construction costs on any of his projects including the Lutterbach project, and did not know if he had made a profit on a job until the proceeds were distributed at closing. Further, he had no one keeping his books, kept no financial records, and did not seek competitive bids on his jobs. In short, while Gutc's on-site competency is not questioned, his planning and financial practices are in contravention of competency standards for the construction industry.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

   
   

9. Respondent is charged with "making misleading and untrue representations in the practice of his profession" in violation of Subsections 455.227(1)(a) and 489.129(1)(c), Florida Statutes (Count II), and with "incompetence or misconduct" within the meaning of Subsection 489.129(1)(m), Florida Statutes (Count III).

   
   

10. The evidence fails to support a finding that Gutc made misleading or untrue representations on the Lutterbach job in contravention of Subsections 455.227(1)(a) and 489.129(1)(c). Indeed, petitioner concedes as much in its proposed order. Therefore, that portion of the administrative complaint should be dismissed.

    
    

11. The evidence is clear and convincing, however, that Gutc was "incompetent in the practice of contracting and has accordingly violated Subsection 489.129(1)(m), Florida Statutes. This conclusion is based upon Gutc's failure to adhere to industry standards for cost estimation and financial management of a construction business.

    
    

12. The penalty suggested by petitioner is appropriate under the circumstances of this case. Accordingly, respondent's license should be

suspended for two years, and reinstatement thereafter conditioned upon respondent showing proof that he has received adequate training or study in cost estimation and in the financial management of a construction business.

Respondent should also pay a $1,500 administrative fine.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating Subsection

489.129(1)(m), Florida Statutes, as set forth in Count III of the administrative complaint. All other charges should be dismissed. It is further

RECOMMENDED that respondent pay a $1,500 administrative fine, that his registered general contractor's license be suspended for two years, and that reinstatement of said license thereafter be conditioned on respondent demonstrating that he has received adequate training or study in cost estimating and in the financial management of a construction business.

DONE and ORDERED this 25th day of January, 1985, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 January, 1981.

COPIES FURNISHED:

Douglas A. Shropshire, Esquire

130 North Monroe Street Tallahassee, Florida 32301

Frank D. Gutc

P.O. Box 1658

Flagler Beach, Florida 32036

Docket for Case No: 84-002009

Orders for Case No: 84-002009