Fleischer; and by way of deposition Mark E. Demsky and Calvin W. Tinsley. Additionally, Petitioner's Exhibits numbered 1-36 were admitted in evidence.
No evidence was presented on Respondent's behalf.
Petitioner submitted post hearing proposed findings of fact in the form of a proposed recommended order. Specific rulings on each proposed finding of fact can be found in the Appendix to this Recommended Order.
At all times material hereto, Respondent has been licensed as a Certified General Contractor, holding license numbers CG C008004 and CG CA08004. At all times material hereto, Respondent was the qualifying agent for Asher Melzer Construction Corporation (hereinafter "AMCC").
DOAH CASE NO. 86-4732
At all times material hereto, Mr. and Mrs. Victor M. Franzese resided at 8880 Southwest 182nd Terrace, Miami, Florida 33157.
On March 29, 1985, the Franzeses contracted with AMCC to construct a home in the Cutler Glen development for $279,000. The Franzeses made payments to AMCC totalling $32,901.
Construction of the Franzese residence began almost immediately after the contract was signed. However, after the foundation was poured and the walls were put up, AMCC abandoned the project.
During the time that the initial work was performed, Victor Franzese stopped by the construction site almost every day. Although he met the foreman on the job, he never met with, spoke to, or heard of the Respondent.
Throughout the fall of 1985, Franzese wrote to Asher Melzer, the owner of AMCC, regarding the lack of work at the construction site. He received no responses to his letters.
In January of 1986, Melzer indicated to Franzese that the roof trusses which had been lying on the ground at the Franzese project for many months would be installed. Franzese hired an engineer to inspect the trusses due to their obviously-deteriorated condition. The engineer reported that the trusses would need substantial bracing in order to be used. Additionally, a Dade County structural engineer told Franzese and Melzer after inspecting the trusses that no matter what bracing was added, the trusses would never pass inspection.
AMCC did not begin construction again, and a foreclosure action was brought by Amerifirst Savings & Loan Association against Melzer, AMCC, the Franzeses, and others. The Franzeses lost all rights to the property which their house was being built on and lost all of the money which they had paid AMCC.
During the entire time that the Franzeses were dealing with AMCC, they never heard of, spoke to, or saw the Respondent. The Franzeses lost approximately $38,000 in their dealings with AMCC.
At all times material hereto, Mr. and Mrs. James R. Cross were the owners of property located at 9990 Southwest 127th Terrace, Miami, Florida.
On March 25, 1985, the Crosses contracted with AMCC to construct a home on their property. The total contract price including extras subsequently agreed upon was approximately $152,400. The Crosses paid AMCC approximately
$29,000 in deposit and draw monies.
Although AMCC began construction of the Cross residence, the project was only completed through the tie beam phase. During the time that construction was being performed, James Cross visited the construction site on a daily basis. Although he met the foreman at the job site, he never spoke to, heard of, or met the Respondent.
Construction at the Cross project ceased on approximately September 11, 1985, and was never resumed by AMCC. By that time, Cross had begun receiving Notices to Owner that liens would be placed on his property for failure to be paid by AMCC, and one lien had already been placed. The liens placed on his property were from the architect Ronald J. Dorris, Rinker Construction Company, ASP Construction Equipment Company, and Distrito Trucking Corporation.
After receiving the first Notice to Owner, Cross contacted AMCC. He was told not to worry, that things would be taken care of by AMCC. All of the subcontractors and materialmen who filed liens on the Cross property were to have been paid by AMCC pursuant to the contract between the Crosses and AMCC. AMCC never provided the Crosses with any money nor posted any bonds to clear the liens. In fact, Melzer gave the Crosses a check to pay one of the liens, but the check bounced. Melzer never attempted to repay the money to them, and they were forced to pay off these liens personally for a total amount of $4,666.
While James Cross was attempting to have AMCC pay the liens which were placed on his property, he never spoke to or heard from the Respondent. On December 7, 1985, after no work had been performed on the project for over 90 days, Cross served notice on AMCC that he considered the project abandoned. Cross hired another general contractor to complete the project and paid approximately $14,000 more than the original contract price to finish the project.
During Cross' visits to the project, it did not appear that anyone was in control. Concrete blocks were being cemented into places where sliding glass doors were supposed to be placed, and windows were being built at improper sizes.
Dade County, Florida, follows the South Florida Building Code as well as Chapter 10 of the Dade County Code, which regulates the conduct of contractors doing construction work within the limits of Dade County and all municipalities. In reference to the Cross project, Respondent obtained a permit for the construction. However, that permit did not include any plans for mechanical work, and no mechanical permit for the air conditioning system was ever obtained. Additionally, although an electrical permit was obtained, no inspections were ever called for by Respondent or anyone else. It is a violation of the South Florida Building Code and a violation of Dade County Code Chapter 10 to perform work without a permit, and it is the obligation of the qualifying agent pursuant to Chapter 10 to supervise, direct, and to control all work that is done under any permits that he has obtained The failure to obtain a mechanical permit for the Cross project indicates that Respondent was improperly supervising the job site activities.
The numerous liens placed on the Cross property by subcontractors and materialmen indicate that there was a lack of supervision by Respondent. Under the Dade County Code, such actions would be considered diversion of funds.
At all times material hereto, Mr. and Mrs. Mark E. Demsky resided at 7601 Southwest 162nd Street, Miami, Florida 33157.
On May 16, 1985, the Demskys entered into a contract with AMCC to construct a home in the Cutler Glen development for $221,000. The Demskys paid AMCC a total of $28,000 towards the construction of that home.
Work at the construction site began in late July or early August of 1985. Mark Demsky was concerned that the project did not begin immediately after the deposit money was paid and spoke to Melzer several times. When the work finally began, it proceeded very slowly. Although Demsky continued to ask questions regarding the pace of the work, he received only excuses from Melzer. Construction ceased after the foundation was poured.
Construction ceased completely by December of 1985. By that time, numerous liens had been placed on the Demsky property. Because no money was
placed in an escrow account at the beginning of construction, Demsky had required that Melzer sign a letter agreement on July 9, 1985, allowing Demsky to rescind the contract with 45-days notice prior to the closing. By March 18, 1986, after no work had been performed for over a three-month period, Demsky exercised that right of rescission and attempted to obtain the $28,000 deposit money he paid Melzer. Melzer gave Demsky a promissory note in the amount of
$28,000 and executed a Release of Contract for Sale and Purchase.
Although the promissory note from AMCC and Melzer became due on September 18, 1986, the Demskys have never received any payments on that promissory note. They filed suit to recover the $28,000 and received a final judgment against Melzer and AMCC for repayment of the promissory note, which final judgment remains unsatisfied.
During the time that construction was being performed at the Demsky project, Mark Demsky visited the construction site almost every day. Although he met one of the supervisors on the job, and some of the workers, Demsky never met with, heard of, or spoke to the Respondent. Additionally, during all of the time that problems arose at the construction site and during the time that the job was abandoned, Demsky never heard from or spoke to the Respondent. The Demskys lost a total of approximately $29,250 in their dealings with AMCC.
DOAH CASE NO. 88-5764
At all times material hereto, Mr. and Mrs. Calvin W. Tinsley resided at 14123 Southwest 66th Street, Miami, Florida. They now reside at 585 Shadowwood Lane, Titusville, Florida.
On October 2, 1984, the Tinsleys contracted with AMCC to construct a home in the Cutler Glen development for $242,908. The Tinsleys paid AMCC approximately $32,000 in deposit money.
Although the contract was signed in October of 1984, construction did not begin until February of 1985. The Tinsleys immediately noticed that things were not proceeding on schedule and the work was taking longer than promised. After a while, the subcontractors were placing liens on the Tinsley property. During all of the conversations with Melzer regarding the construction project, Calvin Tinsley never spoke to, heard of, or met with the Respondent. In fact, Calvin Tinsley believed that Asher Melzer was the general contractor for AMCC.
Amerifirst Savings & Loan Association filed a foreclosure action against AMCC and Melzer, as well as the Tinsleys. A final summary judgment was entered against the Tinsleys, and their property was sold at an auction. The Tinsleys never recovered any of the $32,000 deposit money they paid AMCC.
DOAH CASE NO. 89-0133
At all times material hereto, Mr. and Mrs. Warren W. Lovell, Jr., resided in Miami, Florida. They now reside at 16630 Southwest 87th Place, Miami, Florida 33157.
On February 8, 1985, the Lovells contracted with AMCC to construct a home in Cutler Glen development for $195,000. The Lovells paid AMCC a total of
$168,000 for the work which was performed at 16630 Southwest 87th Place in Miami.
In August of 1985, construction stopped on the Lovell project for at least three months. Numerous liens had been placed on Lovell's property as well as the other properties within Cutler Glen. Lovell attempted to help Melzer complete the Cutler Glen project and arranged a meeting among Melzer and many of the homeowners and subcontractors. During this period of time, as well as when the construction was being performed, Lovell never met with, spoke to, or heard of the Respondent.
In order to help AMCC begin construction again, Lovell released the claims of lien which he had placed on four homes owned by AMCC in the Cutler Glen development. Unfortunately, Lovell's efforts proved fruitless, and AMCC was never able to complete the development. Lovell ultimately had to pay to have the claims of liens which had been placed on his property released. Lovell then had to pay the subcontractors approximately $30,074 to complete his house.
In 1986, Lovell discovered that the mortgage he had entered into with Melzer on the Lovell property was not a first mortgage as Melzer had represented. Lovell discovered that there were two previous mortgages filed on his property that were superior to his mortgage. Lovell was forced to pay an additional $70,000 to satisfy those mortgages to obtain title to his property. At the time those mortgages were discovered, Lovell had already paid $168,000 to AMCC for the construction of his house and the purchase of the property. In exchange for Lovell paying off the prior mortgages, Melzer gave Lovell three promissory notes totalling $70,000. These notes are past due and have not been paid, even in part. Lovell's out-of-pocket costs to complete his house were approximately $87,500.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties hereto and the subject matter hereof. Section 120.57(1), Florida Statutes.
As to DOAH Case No. 86-4732 involving the Franzese, Cross, and Demsky construction projects the Amended Administrative Complaint charges Respondent, as the qualifying agent for AMCC, with violating Section 489.129(1)(m), Florida Statutes, which prohibits a licensee from committing fraud, deceit, gross negligence, incompetency, or misconduct in the practice of contracting in that Respondent failed to manage or supervise those construction projects, and failed to protect the interests of the subcontractors, materialmen, and homeowners.
The Amended Administrative Complaint also charges Respondent with violating Section 489.129(1)(k), Florida Statutes, by abandoning those projects and with violating Section 489.129(1)(j), Florida Statutes, by failing to comply with the statutory requirements pertaining to his capacity as qualifying agent for AMCC pursuant to Sections 489.115(4) and 489.119, Florida Statutes. Petitioner has proven by uncontroverted competent, substantial evidence that Respondent violated Subsections (k) and (m) as to the Franzese, Cross, and Demsky construction projects. However, Petitioner has failed to prove that Respondent violated Section 489.129(1)(j) by violating Sections 489.115(4) and 489.119, Florida Statutes, since those latter provisions in the statutory version in effect at the time of those construction projects merely related to the requirement that a construction contracting business have a qualifying agent, which AMCC did have. Accordingly, Respondent did not violate those statutory provisions by failing to qualify as an agent to act on behalf of that company.
As to DOAH Case No. 88-5764 relating to the Tinsley project, Petitioner has proven by uncontroverted competent, substantial evidence that
Respondent violated Section 489.129(1)(k) and (m), Florida Statutes, by abandoning that project and by committing gross negligence, incompetency, misconduct in the practice of contracting, fraud, and deceit as prohibited by those subsections and as charged in the Administrative Complaint filed in that cause. That Administrative Complaint also charges Respondent with violating Section 489.129(1)(h), Florida Statutes, by causing or allowing the diversion of funds received for a specified construction project when as a result of the diversion the contractor is unable to fulfill the terms of his obligations.
Petitioner has proven this violation by uncontroverted competent, substantial evidence. However, Petitioner has failed to prove Respondent guilty of violating Section 489.129(1)(j), Florida Statutes, by violating Sections 489.105(4) and 489.119, Florida Statutes. Section 489.105(4) simply contains the definition of a "qualifying agent", and Section 489.119 sets forth the procedure for a company qualifying an agent in order for a business to engage in construction contracting. As discussed above, Respondent was the qualifying agent for AMCC, and there is no evidence that Respondent did not have the responsibility for supervising the day-to-day activities of the corporation; rather, the evidence is uncontroverted that Respondent failed to exercise that responsibility.
As to DOAH Case No. 89-0133 relating to the Lovell construction project, Petitioner has proven by uncontroverted competent, substantial evidence that Respondent violated Section 489.129(1)(m), Florida Statutes, by failing to supervise that construction project thereby committing gross negligence, incompetency, and misconduct in the practice of contracting and that Respondent violated Section 489.129(1)(k), Florida Statutes, by abandoning that project. Additionally, Petitioner has proven that Respondent violated Section 489.129(1)(h), Florida Statutes, by causing or allowing the diversion of funds received for a construction project so that Respondent was unable to fulfill the terms of his obligations to the homeowners involved. As to the last allegation, that Respondent violated Section 489.129(1)(j) by violating Section 489.105(4), Florida Statutes, Petitioner has failed to meet its burden of proof for the reason that Section 489.105(4) simply contains the definition of a qualifying agent.
Although Petitioner in its administrative complaints and in its proposed recommended order urges that Respondent be found guilty of violating statutory language contained in statutory enactments subsequent to the time of the construction projects under consideration in this cause, Petitioner has cited no legal authority for the proposition that a licensee may be found guilty of violating construction contracting laws not in effect at the time of the alleged violation. Accordingly, all statutory citations relied on in this Recommended Order are to that version of the Florida Statutes in effect during the time period relevant hereto, i.e., late 1984 to early 1986.
Section 489.129(1), Florida Statutes, authorizes the Construction Industry Licensing Board to take disciplinary action against a contractor who violates the provisions contained in that statutory section, and Rule 22E- 17.002, Florida Administrative Code, contains disciplinary guidelines to be considered in determining the appropriate disciplinary action to be taken, if any, against a licensee who violates the statutory prohibitions. Many of the aggravating circumstances to be considered are present in this case, and the mitigating circumstances to be considered are absent. In its proposed recommended order, Petitioner recommends that Respondent be required to pay a
$60,000 civil fine ($5,000 for each of the twelve violations charged), that Respondent's license be immediately and permanently revoked, and that Respondent never again be allowed to reapply for a license within the State of Florida.
It is appropriate that Respondent be fined, but it is more appropriate that the bulk of that fine be paid to the homeowners who suffered substantial damage as a result of Respondent's lack of involvement, rather than that a substantial fine be paid to the State of Florida with no restitution being made to the injured homeowners. It is further appropriate that Respondent's license be revoked. It is not appropriate that Respondent be prohibited from filing an application for licensure in the future, but it is appropriate that Respondent be required to make restitution to the injured homeowners prior to any application for relicensure being approved.
The clear inference to be made from the evidence adduced in this proceeding is that Respondent had no day-to-day involvement in the business activities of AMCC but that he merely "loaned" his license to AMCC to utilize. It is further reasonable to infer that Respondent realized financial gain by allowing AMCC to engage in the construction contracting business by utilizing his license; yet, there is no evidence upon which an inference can be made that the substantial damages incurred by the homeowners in these cases represented monies received by the Respondent. However, by "loaning" his license to AMCC, Respondent enabled Asher Melzer to induce the homeowners to enter into contracts with AMCC, to which company substantial sums of money were paid by the homeowners involved in this proceeding. Accordingly, the major portion of the civil fine recommended by Petitioner to be paid by Respondent in this case should instead be paid as partial restitution to the homeowners injured by Respondent's conduct.
