Judges: WILLIAM C. SHERRILL
Agency: Department of Business and Professional Regulation
Latest Update: Jul. 22, 1988
Summary: Respondent guilty of misconduct in contracting/diversion of funds/failing to supervise work as qualifying agent.
87-2809STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF PROFESSIONAL ) REGULATION, CONSTRUCTION ) INDUSTRY LICENSING BOARD, )
)
Petitioner, )
)
vs. ) CASE NOS. 87-2809
) 87-2810
RICHARD B. WOODLEY, )
)
Respondent. )
)
RECOMMENDED ORDER
The formal administrative hearing in these consolidated cases was held before William C. Sherrill, Jr., Hearing Officer, in Orlando, Florida, on April 12, 1988. The issue in these cases is whether the Respondent diverted funds received for a construction job, abandoned a construction job, committed misconduct, fraud, or deceit in the practice of contracting, and failed to discharge his supervisory duties as a qualifying agent. Appearing for the parties were:
For Petitioner: David Bryant, Esquire
1107 East Jackson, Suite 104
Tampa, Florida 33602 For Respondent: On his own behalf.
The Petitioner presented 15 exhibits which were admitted into evidence, and the testimony of Richard M. Woodley, Michelle Jernigan, Catherine Richardson, and Jonathan P. Richardson. The Petitioner intended to file the deposition of the Respondent, but has not filed it. The time having expired for filing proposed recommended orders, this order is prepared without that exhibit, and the exhibit is excluded from the record. The Respondent presented his own testimony and one exhibit. There is a transcript. The parties requested and were granted thirty days from the date of filing of the transcript in which to file proposed findings of fact and conclusions of law, but have not done so.
FINDINGS OF FACT
The Respondent, Richard M. Woodley has two inactive contracting licenses numbered CB CA 17970 and CB CO 17970, and was so licensed in 1986. The Respondent's license CB CA 17970 qualified "Woodley Builders, Inc." with the Florida Construction Industry Licensing Board.
At the time of the hearing, the Respondent was no longer in the construction contracting business as a licensed contractor.
With respect to case number 87-2809, on December 15, 1985, the Respondent, on behalf of Woodley Builders, Inc., entered into a contract with
Catherine M. Richardson and Jonathan P. Richardson to build a residence in or near Orlando, Florida. The contract price was $90,000, with $20,000 attributable to the land.
The contract specified that payments would be made to Woodley Builders, Inc. "in accordance with the disbursement schedule set forth by the construction lender." P. Ex. 1, paragraph 7. Woodley Builders, Inc. also agreed in the contract to furnish to the Richardsons lien waivers as required by the construction lender for disbursements.
The construction lender disbursed the following amounts on the indicated dates:
$10,200 | March 17, 1986 |
$10,200 | March 19, 1986 |
$17,000 | March 27, 1986 |
$17,000 | April 24, 1986 |
To induce these disbursements, a total of $54,400, the Respondent signed lien waivers stating that all bills for labor and materials used had been paid in full. P. Ex. 5.
At the time of signing, the Respondent told the construction lender that he had paid all bills due to that time, but had not paid bills not yet presented. T. 89. Thus, the lien waivers were intended to be a certification of the partial completion and payment for the work billed to the date of the waiver, and a promise to pay other bills for work already completed as such bills were presented.
Six claims of liens were filed by subcontractors. The Richardsons hired a lawyer, and the lawyer was able to defend against two of the liens for failure to properly comply with procedures for mechanic's liens. Four liens for the following amounts and for work beginning on the dates indicated ultimately had to be satisfied by the Richardsons:
$ 2,851.45 | March 19, 1986 |
$13,462.34 | March 7, 1986 |
$ 1,944.57 | April 8, 1986 |
$ 785.01 | April 9, 1986 |
These liens were for work commenced before the last lien waiver was signed on April 24, 1986. Thus, the Respondent failed to comply with the oral representations he made at the time of signing the lien waivers.
The Richardsons were forced to execute a second mortgage in excess of
$17,000 to pay off the unpaid liens. The Richardsons terminated the contract with Woodley Builders, Inc. when subcontractors quit working for lack of payment by Woodley Builders, Inc. Some money was obtained from family loans. It cost the Richardsons about $30,000 to have the house finished, which has added about
$325 per month to their mortgage obligations. The Respondent and Woodley Builders, Inc. have not paid anything on these liens.
Woodley Builders, Inc. filed bankruptcy. The Richardsons sued the Respondent as trustee for Woodley Builders, Inc. and obtained a default judgment for $149,839, which was a judgment of $32,380 in compensatory damages, trebled, plus costs, interest, and attorney's fees.
With respect to case number 87-2810, on June 11, 1986, Woodley Builders, Inc. entered into a contract with Tom Jamieson to construct an addition to his residence in Orlando, Florida.
The price of the work was $18,500. The contract specified that the price was a cash price, and that draws were to be made according to a schedule stated in the contract.
Mr. Jamieson paid to Woodley Builders, Inc. about $11,700 of the contract price.
At some time before completion of the addition, the owner, Mr. Jamieson, evidently became dissatisfied with the Respondent's work. Mr. Jamieson was given the Respondent's copy of the contract and refused to return it to the Respondent. Mr. Jamieson then owed the Respondent a draw of $3500, but refused to give it to him, and refused to have it put in escrow for the payment of subcontractors. The date that this occurred is not in evidence. T. 35-36, 39.
Since Mr. Jamieson had taken back the contract, the Respondent thought that he (the Respondent) no longer had any legal proof of the contract (either scope of work or amount due), and thus had no contract to complete the work. He also did not receive the draw that was due. The Respondent thus ceased work on the addition for fear that he would not be paid without a copy of his contract.
T. 36-37. The Respondent offered to complete the work. T. 51.
The drywall contractor, Rick's Drywall, Inc., filed a lien for $465 for work done from August 12, 1986 and August 20, 1986. The Respondent would have paid this lien had Mr. Jamieson not terminated the contract and refused to give the Respondent a draw still due of $3500. T. 49-50.
There may be a claim for unpaid electrical work in July, 1986, see P. Ex. 15, but it is impossible to tell if this occurred before or after Mr. Jamieson terminated the contract, or whether the Respondent had received draw money that should have paid this claim. The only evidence is that the Respondent had an agreement with the electrical subcontractor to pay that subcontractor at the time of the final draw, a draw never received as discussed above. T. 53.
P. Ex. 11 is insufficient evidence that there were unpaid claims for roof trusses. Moreover, it cannot be determined whether the Respondent received a draw before contract termination which should have been used to pay for roof trusses.
The Respondent had been a contractor for eight years before he began to have financial difficulties resulting in the problems with the Richardson's residence. There is no evidence of any prior discipline.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties and the subject matter of this proceeding.
With respect to case number 87-2809, the Respondent received funds to pay subcontractors for work performed on the Richardson's house, but diverted those funds and failed to pay the subcontractors, who then filed valid liens, causing substantial harm to the Mr. and Mrs. Richardson in the amount of the
judgment (discounting the treble damages). In so doing, the Respondent violated section 489.129(1)(m), Fla. Stat. (1986), misconduct in the practice of contracting, and violated sections 489.129(1)(j) and 489.119, Fla. Stat. (1986) by failure to supervise the construction in such a manner that funds were not improperly diverted.
The Petitioner has failed to prove by clear and convincing evidence the violations alleged in case number 87-2810. The evidence does not show abandonment of the job, but termination of the contract by the owner. The remaining violations (misconduct by diversion of funds, diversion of funds, and discharge of supervisory duties as a qualifying agent) were not proved by clear and convincing evidence as well.
Rule 21E-17.002 provides that the following may be considered to be either in mitigation or aggravation of the penalty:
Monetary or other damage to the licensee's customer, in any way associated with the violation, which damage the licensee has not relieved, as of the time the penalty is to be assessed. (This provision shall not be given effect to the extent it would contravene federal bankruptcy law.)
Actual job-site violations of building codes or conditions exhibiting gross negligence, incompetence, or misconduct by the licensee, which have not been corrected as of the time the penalty is being assessed.
The severity of the offense.
The danger to the public.
The number of repetitions of offenses.
The number of complaints filed against the licensee.
The length of time the licensee has practiced.
The actual damage, physical or otherwise, to the licensee's customer.
The deterrent effect of the penalty imposed.
The effect of the penalty upon the licensee's livelihood.
Any efforts at rehabilitation.
Any other mitigating or aggravating circumstances.
There was damage to Mr. and Mrs. Richardson, and thus factor 8 is involved in establishing the penalty. The Respondent's failure to pay for such damage is not a factor since the Respondent filed for bankruptcy. The Petitioner's license is inactive, and thus a suspension will have less impact upon his livelihood. There is no evidence of any other offenses or discipline during the eight years of contracting by the Respondent.
RECOMMENDATION
It is recommended that the Construction Industry Licensing Board enter its final order finding in case number 87-2809 that the Respondent, Richard M. Woodley, violated sections 489.129(1)(m), 489.129(1)(j), and 489.119, Fla. Stat.
(1986), misconduct in contracting by diversion of funds, and failure to supervise as a qualifying agent, and in case number 87-2810, dismissing the administrative complaint for failure of proof by clear and convincing evidence. It is further recommended for the violation set forth above that the license of the Respondent be suspended for one year.
DONE and ENTERED this 22nd day of July, 1988.
WILLIAM C. SHERRILL, JR.
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 22nd day of July, 1988.
COPIES FURNISHED:
Richard M. Woodley 2521 Tuscaloosa Trail
Maitland, Florida 32751
David Bryant, Esquire
1107 East Jackson, Suite 104
Tampa, Florida 33602
William O'Neil, Esquire General Counsel
Department of Professional Regulation
130 North Nonroe Street Tallahassee, Florida 32399-0750
Fred Seely, Executive Director Construction Industry Licensing
Board
Post Office Box 2 Jacksonville, Florida 32201
Docket for Case No: 87-002809
Orders for Case No: 87-002809
| Issue Date |
Document |
Summary |
|
Dec. 01, 1988 |
Agency Final Order
|
|
|
Jul. 22, 1988 |
Recommended Order
|
Respondent guilty of misconduct in contracting/diversion of funds/failing to supervise work as qualifying agent.
|
