STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner. )

)

v. ) CASE NO. 85-0672

)

WILLIAM P. PEARSON, JR., )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice, a formal hearing in this cause was held before Ella Jane P. Davis, the duly designated Hearing Officer of the Division of Administrative Hearings, on August 20, 1985, in Fort Myers, Florida.

APPEARANCES

For Petitioner: W. Douglas Beason, Esquire

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

For Respondent: John C. Heekin, Esquire

C-2 Olean Plaza 21202 Olean Boulevard

Port Charlotte, Florida 33952

Petitioner presented the testimony of William P. Pearson, Jr., Jack Malone, John R. Vlasek, and Richard Hartog.

Petitioner had admitted in evidence three exhibits [P-1 (a portion of the document originally tendered as P-1), P-2, P-4, and P-53. Petitioner proffered the testimony of Madilyn Vlasek and also proferred the item marked for identification only as P- 3.

Respondent presented the testimony of William P. Pearson, Jr. and Jack Malone, and had admitted in evidence Exhibit R-1.

Petitioner filed the transcript of proceedings on September 3, 1985. Thereafter, each party applied for and received extensions of time for filing proposed findings of fact and conclusions of law, accordingly, the 30 day period for entry of this Recommended Order is deemed waived. The proposals of both parties have been considered in this Recommended Order and are ruled on in the Appendix hereto.

ISSUES

Respondent seeks by a two count administrative complaint to discipline Respondent's license. By Count I, Respondent is charged, under Section 489.129(1)(c) Florida Statutes, with violation of Section 455.227(1)(a) Florida Statutes by allegedly making misleading, deceptive, untrue or fraudulent representations in the practice of his profession. By Count II, Respondent is charged, under Section 489.129 (l)(d) Florida Statutes with willful or deliberate disregard in violation of the applicable building codes or laws of the state or of any municipalities or counties thereof by noncompliance with the escrow requirements of Section 501.1375(2) Florida Statutes and thereby violating Section 489.129(1)(m) Florida Statutes in that same constituted gross negligence, incompetence, of misconduct in the practice of contracting.

FINDINGS OF FACT

1. Respondent is a licensed contractor having been issued license number RB 0024983. Respondent is both qualifying agent and president of Pearson Construction Company, Port Charlotte, Florida.

   
   

2. At all times material to the administrative complaint, Jack R. Malone was the sales manager for Pearson Construction Company. The complainant herein, John R. Vlasek was a salesman of Pearson Construction Company and had actual knowledge of the authority and duties of the various other employees of Pearson Construction Company at the time that the contract hereafter described was entered into and at all pertinent times thereafter. On or about April 12, 1984 John R. Vlasek was employed as a commission salesman for Pearson Construction Company. Vlaseck's responsibilities included the sale of model homes. He, like John R. Malone, was paid on a purely commission basis. Vlasek was employed with Pearson Construction Company until approximately June 1, 1984.

3. On April 12, 1984 John and Marilyn Vlasek contracted with Peasrson Construction Company for the purchase of a home in Port charlotte, Florida. At the time the contract was entered into the home was approximately 75 percent complete. The contract specified a $2,000 escrow deposit on the purchase price of $68,500. On April 12, 1984, the Vlaseks provided Pearson Construction Company with a check in the amount of $1,800 toward the escrow deposit. The contract specified the deposit was to be held in escrow pending closing of the transaction.

   
   

4. The Pearson Construction Company sales agent/sales manager, Jack R. Malone, negotiated and drew up this contract. The contract resulted from Mr. Malone filling in various blanks on a form he had obtained from a local stationary store. The original closing date of the transaction was projected as June 12, 1984.

   
   

5. The contract referred to above was not contingent on the buyer obtaining financing.

   
   

6. Pearson Construction Company also received from the Vlaseks a warranty deed for a lot in Port Charlotte Subdivision. In return, the Vlaseks received an allowance of $9,400 toward the purchase price of the home.

   
   

7. Jack Malone negotiated and prepared the contract. However, Respondent also reviewed and signed the contract. In the course of negotiating the contract, John Vlasek understood that the $2,000 deposit would be maintained in escrow. However, the deposit was not placed in escrow as specified in the contract and as required under the terms of the contract.

   Instead, it was

   used by the Respondent in purchasing lighting fixtures, carpeting, tiling, and other accouterments in colors and styles selected by John R. Vlasek.

   
   

8. Vlasek was to finance the purchase of the home by assuming an existing construction loan. The construction loan originated from First Federal Savings and Loan Association of Charlotte County and was in the name of Pearson Construction. On April 23, 1984, the Vlaseks executed the loan transfer commitment. The loan commitment was valid only for 45 days and

   expressly provided, "time is of the essence." By interpretation, this `.ould mean that the loan commitment from First Federal would be valid only until and including June 7, 1984. The loan balance was approximately $52,000 payable at an interest rate of

   11.5 percent.

   
   

9. After executing the loan transfer commitment, Vlasek realized that the commitment would expire prior to the June 12, 1984 closing date. Vlasek then notified Pearson Construction Company of the discrepancy between the expiration date of the loan commitment and the actual closing date. Upon being informed of the discrepancy, Jack R. Malone agreed to modify the closing date. Malone expressly modified the contract by changing the closing date from June 12 to June 1, 1984. Malone initialed the change on the Vlaseks' copy of the original contract. Although Respondent was not present at the time the contract was expressly modified, Vlasek subsequently informed the Respondent of the change of the closing date. When informed of the change, Respondent indicated the home would be substantially completed by June 1, 1984.

   
   

10. Respondent and Jack Malone both testified with some elaboration that Jack Malone had no specific authority from Respondent or on behalf of Pearson Construction Company to make such contract modifications and that Vlasek had every reason to know that Jack Malone was without such specific authority. Vlasek testified that in addition to Malone being designated as sales manager for Pearson Construction Company, he personally observed Malone operating as manager and sales agent and that Malone had held himself out to be an officer of the corporation in his discussions with Vlasek. Malone was never an officer of Pearson Construction Company.

    
    

11. Although there is some confusion in Respondent's mind as to when he was made aware that Malone had re-negotiated the contract, and although Respondent never formally executed or acknowledged an acceptance of the new contract terms, Respondent admits that before the change in the contract he told Vlasek that "I'd take care of it." He also admits telling Vlasek that he would get an extension on Vlasek's loan commitment and that such was a normal procedure. He admits making a phone call to the bank and states that he received a written letter extending Vlasek's loan commitment for 30 days. Jack Malone testified that the saw this letter signed by Tom Hannon, whom he knew to be an officer of the bank. Malone testified that he felt certain that Vlasek saw this letter while it was on his desk in the sales office. There is no credible explanation by anyone as to what became of this letter if it ever existed. Vlasek testified that he personally approached the bank concerning getting an extension but was informed that he would not get one. Vlasek testified that his loan commitment was never extended by the bank. There is no corroboration for these statements.

    Petitioner argues that Respondent only received an extension on the original construction loan to Pearson Construction Company, however that allegation or suggestion is also nowhere supported in the record. Without an extension, the original loan commitment would have expired on June 7, 1984 and the projected closing date remained at June 12, 1984. Vlasek knew this.

    
    

12. Vlasek became concerned and made numerous attempts to obtain reassurance from Pearson Construction Company personnel that his home would be completed by the new closing date of June 1, 1984. Vlasek was repeatedly assured by Malone and other members of the construction team (not Pearson) that the home would be completed by June 2, 1984.

    
    

13. Vlasek requested in mid May 1984 that the contract be rescinded. His reasons for doing so are part of the controversy. Vlasek testified that he wished the contract rescinded because he felt certain that the home would not be completed by the projected closing date of June 2, 1984. Malone and Respondent testified that Vlasek's dissatisfaction with the home under construction found its origin in his disappointment over Respondent's refusal to construct a home for Vlasek's daughter which would match Vlasek's specifications while not rendering Respondent a profit.

    
    

14. There is considerable discrepancy in the testimony of the various witnesses concerning the condition of the house covered by the contract under consideration on June 1, 1985.

    For reasons relating to the candor and demeanor of the witnesses and the credibility and weight of their respective versions of the house's condition it is found that the house was not fully completed by June 1, 1984. According to Vlasek, as of June 1, the following items remaining to be completed were: the septic tank was not installed; the plumbing and lighting fixtures were not installed and the lot was neither sodded nor graded. This analysis is bolstered by the fact that on June 11, 1984 Pearson Construction Company contracted to sell the home to Mr. John Thompson. The contract price of $68,500 included an escrow deposit of $6,400. The closing date of this sale was July 11, 1984. The contract form utilized in this sale is identical to the contract form previously utilized with regard to Mr. Vlasek.

    
    

15. On June 1, 1984, Vlasek met with Jack Malone after inspecting the construction site and requested the contract be rescinded because of Respondent's failure to timely complete the home. Malone fired Vlasek upon being informed of this request.

    The eventual sale to Mr. Thompson suggests the Vlasek contract was rescinded.

    
    

16. Pearson Construction Company, Inc. and William P. Pearson constructed a total of 8, possibly 9, houses during the calendar year 1984. In most previous years he has constructed in excess of 20 houses per year.

    
    

17. Respondent returned the unrecorded deed for the Vlaseks' $9,400 lot to them.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Pursuant to Section 120.57(1) Florida Statutes.

    
    

19. Section 489.129 Florida Statutes (1983), provides that the Florida Construction Industry Licensing Board may revoke, suspend, or otherwise discipline a contractor found guilty of any of the following acts:

    
    

    1. Violation of Chapter 455

       
       

       * * *

       
       

    2. Willful or deliberate disregard in violation of the applicable building codes or laws of the state or any municipalities or county thereof.

       
       

       * * *

       (m) Upon proof that the licensee is guilty of fraud or deceit or gross negligence, incompetency, or misconduct in the practice of contracting.

       
       

20. Section 455.227(1) Florida Statutes (1983) provides in pertinent part:

    
    

    1. The Board shall have the power to revoke, suspend or deny the renewal of the license, or to reprimand, censor, or otherwise discipline a licensee if the Board finds that

       
       

       1. The licensee has made misleading, deceptive, untrue, or fraudulent representations in the practice of his profession:

    
    

21. Section 501.1375(2) Florida Statutes (1983) provides in pertinent part:

    
    

    501.1375 - deposits received for purchase of residential dwelling units: placement in escrow required: exceptions.

    
    

    1. DEFINITIONS ----

       
       

       1. "Building Contractor" means any person who, for compensation, constructs and sells one-family or two-family residential dwelling units, except for a person who sells or constructs less than 10 units per year state wide.

          
          

       2. "Developer" means either a building contractor who offers new residential dwelling units for sale or any person who offers a new one-family or two-family dwelling unit for sale except a person who sell or constructs less than 10 units per year state wide.

       
       

    2. NOTICE TO BUYER OF RIGHT TO HAVE DEPOSIT PLACED IN ESCROW ACCOUNT. --- In all offers to purchase, sales agreements, or written contracts made between a building contractor

    or a developer and a prospective buyer of a one-family or two-family residential dwelling unit, the building contractor or developer shall notify the prospective buyer that any deposit (up to 10 percent of the purchase price) made by the buyer to the building contractor or developer shall, unless waived in writing by the buyer, be deposited in an escrow account with a savings and loan association, bank, or trust company, an attorney who is a member of The Florida Bar, a licensed Florida real estate broker, or a title insurance company authorized to insure title to real property in this state. The escrow funds may be deposited in separate accounts or commingled with other escrow or trust accounts. Any such offer, agreement or contract used by the building contractor or developer with respect to the sale of a one-family or two- family residential dwelling unit shall contain the following legend in conspicuous type: THE BUYER OF A ONEFAMILY OR TWO-FAMILY RESIDENTIAL DWELLING UNIT HAS THE RIGHT TO HAVE ALL DEPOSIT FUNDS (UP TO 10 PERCENT OF THE PURCHASE PRICE) DEPOSITED IN AN

    INTEREST-BEARING ESCROW ACCOUNT. THIS RIGHT MAY BE WAIVED, IN WRITING, BY THE BUYER.

    
    

22. Because the original contract did not specify a closing date of prior to June 12, 1984, and was not contingent on finance arrangements being secured by the buyer, Respondent would have been entirely within his rights in neither altering the contract so as to provide an earlier closing date and/or in not initiating any attempt to secure an extension of the buyers' loan transaction commitment. However, it appears that both promises were made.

    
    

23. Without becoming unduly embroiled in a discussion of the differences between actual and apparent authority in an agency situation, it is clear that despite a clear and obvious misrepresentation by John R. Malone that he was an officer of the corporation, Pearson Construction Company, nonetheless, Malone had apparent authority to re-negotiate the Vlasek contract to provide for an earlier closing date. Vlasek's reliance on this apparent authority in light of the contract

    alterations not being reviewed and signed by Pearson, however, is not credible.

    
    

24. This brings us to whether or not there were misrepresentations by Pearson himself which may amount to fraud or deceit. Pearson admits that he represented that the loan extension would be granted to Vlasek. If the extension had been granted, there would be no misrepresentation. There is no evidence that the extension was granted except for Pearson's and Malones' testimony, but Respondent bears no burden of proof in that regard. Vlasek did not rely on Respondent to get his loan extension. He pursued it himself and was aware the savings and loan had not granted it. If the extension was not granted, then the misrepresentation is either consequential or non- consequential, but in a neutral balance of proof, that issue need not be reached. Vlasek admits he knew for some time before June 1 that the commitment would not be extended by the savings and loan company and it must be concluded, therefore, that Vlasek did not rely to his detriment on Respondent's misrepresentation, if there was a misrepresentation at all. Certainly, what occurred with regard to the loan agreement was more in the nature of a

    misunderstanding than it was in the nature of fraud or deceit. The evidence of record involving the alteration of the contract and the representations concerning the loan extension is insufficient under the circumstances, including the obvious recission of the contract when the house was not ready on June 1, to establish clearly and convincingly that there has been misleading, deceptive or fraudulent representations in the practice of the contracting profession as proscribed by Section 455.227(1)(a).

    
    

25. Count II charges willful or deliberate disregard of Section 501.1375(2) Florida Statutes and resultant fraud, deceit, or gross negligence, incompetency, or misconduct in the practice of contracting by a failure to escrow.

    
    

26. Pursuant to the contract itself, there was a requirement and understanding that Vlasek's deposit would be escrowed. It was not. The fact that it was expended by Respondent in order to satisfy certain requirements of the potential purchaser, Vlasek, is not sufficient in and of itself to excuse Respondent's failure to escrow as provided in the contract and as required by a law of the State of Florida, Section 501.1375(2) Florida Statutes. It is, however, a pretty good indicator of no evil or vicious intent by Respondent.

27. In analyzing Respondent's responsibility, if any, under Section 501.1375(2) Florida Statutes, the initial question must be: does Respondent meet either of the definitions contained in 501.1375(1)(a), (l)(b) The fact that Respondent is a licensed contractor under Chapter 489, Florida Statutes does not necessarily mean that he is a "building contractor" or "developer" as defined under Chapter 501 Florida Statutes. Definitions in one statute are not necessarily controlling for purposes of another statute, but Respondent's view that because Respondent only built and sold nine homes in 1984, he was not required to escrow Vlasek's $2,000 is unreasonable. It is admitted that in most years, Respondent constructs in excess of

    20 homes per year and apparently he has done so since the October 1, 1980 effective date of Section 501.1375 Florida Statutes. If Respondent's view of the statute is accepted, it would not be until December 31 of any given year when any contractor or developer might be able to determine the number of homes which had been contracted for and sold in that year or at least he could not determine whether the statute applied to him until after ten homes had been constructed each year. Either way, every contract would have to be retroactively amended. To apply the statutory construction urged by Respondent would be to undermine a clear legislative intent to protect consumers. (See legislative history for Section 501.1375 Florida Statutes Annotated).

    
    

28. In the instant case, the April 12, 1984 contract between Respondent and the Vlaseks provided that the $2,000 deposit should be escrowed but did not include the language mandated by Section 501.1375 Florida Statutes. The money was not escrowed and the language employed in a contract must be construed in any case of doubt against the party originating it, in this case, Respondent. Therefore, with regard to Count II, Petitioner has established by clear and convincing evidence that Respondent was obligated to comply with and did not comply with the escrow requirements of Section 501.1375(2) Florida Statutes, upon which non-compliance the charge of a violation of Sections 489.129(1)(d) and (m) hang. Although there is a certain degree of fraud, deceit and misconduct inherent in a failure to escrow as provided by contract, this record is devoid of an evidence of a gross negligence or incompetency in the practice of contracting, or of willful or deliberate disregard of a Florida law, as those charges are normally understood. Only a minimal violation of the Section 429.129(1)(m) language of "fraud or deceit. . .or misconduct" has been established within Count II.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law it is recommended that the Construction Industry Licensing Board enter a final order assessing Respondent an administrative fine in the amount of $500 and suspending his contracting license for one year; provided however, the period of suspension shall be terminated upon the submission to the Board by Respondent of competent and substantial evidence that restitution of $2,000 has been made to John and Madilyn Vlasek.

DONE and ORDERED this 20th day of December, 1985, in Tallahassee, Florida.

ELLA JANE P. DAVIS

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 20th day of December, 1985.

APPENDIX

Petitioner's Proposed Findings of Fact

1. Accepted

2. Accepted first sentence

3. Accepted second sentence rejected as not supported by the record as a whole.

4. Accepted.

5. Sentences 1 and 2 are accepted.

   Sentence 3 is rejected as not supported by the credible competent substantial evidence in the record as a whole. Sentence 4 is accepted.

6. Accepted.

7. Accepted.

8. Accepted.

9. Sentence 1 and 2 are rejected as not supported by the credible competent substantial evidence in the record as a whole Sentence 3 is accepted. The remainder of the paragraph are accepted but rephrased and elaborated upon

10. Sentence 1 is rejected as not supported by the credible competent substantial evidence in the record as a whole. Sentence 2 is accepted. Sentence 3 is rejected as not supported by he credible competent substantial evidence in the record as a whole.

11. Sentence 1 is accepted. Sentence 2 is rejected as cumulative. Sentence 3 is accepted.

12. Rejected as subordinate and unnecessary.

13. Accepted.

Respondent's Proposed Findings of Fact

1. Accepted.

2. Accepted.

3. Accepted but the portions not specifically adopted are deemed subordinate and unnecessary.

4. Accepted.

5. Rejected as not supported by the credible competent, substantial evidence in the record as a whole.

6. Sentence 1 is accepted.

   Sentence 2 is accepted but not adopted as not dispositive of any issue at bar.

7. Accepted.

8. Accepted.

9. Accepted.

10. Accepted.

11. This proposal constitutes a conclusion of law and as such requires no ruling.

12. This proposal constitutes a conclusion of law and as such requires no ruling.

COPIES FURNISHED:

W. Douglas Beason, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

John C. Heekin, Esquire C-2 Olean Plaza

21202 Olean Boulevard

Port Charlotte, Florida 33952

James Linnan, Executive Director

P. O. Box 2

Jacksonville, Florida 32202

Fred Roche, Secretary

130 North Monroe Street Tallahassee, Florida 32301

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

=

AGENCY FINAL ORDER

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

=

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL REGULATION CONSTRUCTION INDUSTRY LICENSING BOARD,

Petitioner,

1. CASE NO. 0050676

   DOAH CASE NO. 85-0672

   WILLIAM P. PEARSON, JR.

   License No. RB 0024983,

   
   

   Respondent.

   /

   
   

   FINAL ORDER

   
   

   THIS MATTER came before the Construction Industry Licensing Board pursuant to Section 120.57(1)(b)9., Florida Statutes, on February 13,1986, in Miami, Florida for consideration of the Recommended Order (a copy of which is attached hereto and incorporated herein by reference). The petitioner was represented by Douglas A. Shropshire. The Respondent was present and was represented by John C. Heekin, Esquire.

   
   

   Upon consideration of the hearing officer's Recommended Order, no exceptions filed and the arguments of the parties and after a review of the complete record in this matter, the Board makes the following findings:

   
   

   FINDINGS OF FACT

   
   

   1. The hearing officer's findings of fact are hereby approved and adopted in toto.

      
      

   2. There is competent, substantial evidence to support the hearing officer's findings of fact.

      
      

      CONCLUSIONS OF LAW

      
      

   3. The Board has jurisdiction of this matter pursuant to the provisions of Section 120.57(1), and Chapter 489, Florida Statutes.

      
      

   4. The hearing officer's conclusions of law are hereby REJECTED.

      
      

   5. Respondent is not guilty of violating Section 489.129(1)(d),(m), Florida Statutes.

6 The penalty recommended by the Hearing Officer is hereby REJECTED.

7. There is competent, substantial evidence to support the Board's findings and conclusions.

WHEREFORE, IT IS HEREBY ORDERED AND ADJUDGED:

The Administrative Complaint is hereby DISMISSED.

Pursuant to Section 120.59, Florida Statutes, the parties are hereby notified that they may appeal this final order by filing one (l) copy of a notice of appeal with the clerk of the agency and by filing the filing fee and one (l) copy of a notice of appeal with the District Court of Appeal within thirty (30) days of the filing of this Order.

This Order shall become effective upon filing with the Clerk of the Department of Professional Regulation.

DONE AND ORDERED this 17th day of March 1986.

John Fix, Chairman

Construction Industry Licensing Board

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order has been provided by certified mail to

William P. Pearson, Jr. & John C. Heekin, Attorney 2415 Sprague Ave. C-2 Olean Plaza

Port Charlotte, FL 33952 21202 Olean Bvd.

Port Charlotte, FL 33952

and by hand delivery/United States mail to the Board Clerk, Department of Professional Regulation and its Counsel, 130 North Monroe Street, Tallahassee, Florida 32301, on or before 5:00 p.m., this 1st day of April, 1986.

JAMES B. POWELL

Docket for Case No: 85-000672

Orders for Case No: 85-000672