Judges: WILLIAM C. SHERRILL
Agency: Department of Business and Professional Regulation
Latest Update: Mar. 23, 1988
Summary: Administrative complaint against the respondent is dismissed because of the petitioner's lack of proof in the allegations therein.
87-5041STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF PROFESSIONAL ) REGULATION, CONSTRUCTION ) INDUSTRY LICENSING BOARD, )
)
Petitioner, )
)
vs. ) CASE NO. 87-5041
) CHARLES H. BUTLER, JR., )
)
Respondent. )
)
RECOMMENDED ORDER
The formal administrative hearing was held in this case before William C. Sherrill, Jr., in Tampa, Florida, on January 20, 1988. The issue in this case is whether the Respondent, Charles H. Butler, Jr., in the construction of a commercial building in Brandon, Florida, exhibited financial mismanagement, misconduct, or diversion, in violation of section 489.129(1)(h) and (m), Fla. Stat., and failed to properly supervise the finances of the job in violation of sections 489.129(1)(m), (j), 489.119, and 489.105(4), Fla. Stat., as alleged in the administrative complaint. Appearing for the parties were:
APPEARANCES
For Petitioner: Lee Sims, Esquire
Department of Professional Regulation
130 North Monroe Street Tallahassee, Florida 32399-0750
For Respondent: Charles H. Butler, Jr., Pro Se
8917 Maislin Drive
Tampa, Florida 33610
The Petitioner presented the testimony of Albert R. Harrelson and David J. Houston, and 16 exhibits which were admitted into evidence. The Respondent testified in his own behalf, and presented the testimony of Susan Diane Jackson. The Respondent presented 20 exhibits. Respondent's exhibits 1-10, 12-18, and 20 were admitted into evidence, but R. Ex. 12 was ruled to be hearsay. The Respondent stated an intention to submit an exhibit 19, but failed to do so after the hearing, and thus there is no R. Ex. 19. The Respondent offered R. Ex. 11 into evidence, and was to have provided the Petitioner and the Hearing Officer with page two of the exhibit, but failed to do so. Therefore, at this time R. Ex. 11 is excluded from evidence.
Only the Petitioner presented a proposed recommended order. There is no transcript.
FINDINGS OF FACT
The Respondent, Charles H. Butler, Jr., was for all periods relevant to this case a certified building contractor with the State of Florida, holding license number CB CA13872.
It is officially recognized that on September 17, 1987, the administrative complaint that is the subject of this case was filed against Charles H. Butler, Jr.
It is further officially recognized that the administrative complaint charges the Respondent with only two violations:
Exhibiting "financial mismanagement, misconduct, or diversion, in violation of 489.129(1)(h) and (m)."
Failing "to properly supervise the finances on said job, in violation of 489.129(1)(m), (j); 489.119; 489.105(4)."
In April, 1986, Charles H. Butler, Jr., entered into a contract with Albert R. Harrelson to construct a commercial building for $144,000. R. Ex. 20,
P. Ex. 6.
Article 1 of the contract provides that "this contract includes by reference the following: 1) contract agreement form, 2) specifications, 3) material lists, and 4) approved plans." (E.S.)
Article 3 of the contract stated that the "required plans and engineering to obtain a building permit are provided by the owner at his cost."
The specifications, material lists, and approved plans are not in evidence.
Pursuant to Article 7 of the contract, there was to have been a draw schedule for payments. The parties never agreed to a draw schedule as a part of their contract.
A large portion of the loan for the construction was provided by Sun Bank of Tampa Bay. Sun Bank established a draw schedule for disbursement of the loan to the contractor, Mr. Butler, as progress was made in construction. Mr. Butler was not consulted regarding this draw schedule, and had not agreed to it. Mr. Harrelson apparently did not either since he testified that he got a copy of the Bank's draw schedule several months after entering into the contract with Mr. Butler. It is concluded that the draw schedule used by the Bank was imposed by the Bank, and was not a part of the contract between Mr. Butler and Mr. Harrelson.
Sun Bank hired Inspection Service, Inc., to conduct inspections of the progress of the construction and in that manner to verify that construction had been completed, stage by stage, to justify disbursement of installments under the draw schedule.
Sun Bank required Mr. Harrelson to approve loan disbursements as disbursements were made.
In reliance upon progress reports of its inspector and Mr. Harrelson, Sun Bank made a total of $107,000 in disbursements under the loan. P. Ex. 9. Sun Bank had disbursed about $88,000 of this amount by February or March, 1987.
P. Ex. 9. The amount disbursed by Sun Bank was never intended to cover the entire cost of construction. Mr. Harrelson was required to come up with his own funds to meet the total contract price. Mr. Harrelson refused to make payments to Mr. Butler outside the draw schedule imposed by the Bank.
Mr. Harrelson discharged Mr. Butler for alleged breach of contract in March, 1987.
Mr. Harrelson testified at length concerning defects that he perceived in the construction of the project and resultant extra financial cost to himself. While Mr. Harrelson testified as to his perception of mistakes made by Mr. Butler, Mr. Harrelson's testimony did not clearly explain the exact scope of the contract. There is no evidence that Mr. Harrelson has any training in the construction of commercial buildings.
Mr. Butler testified at length about the delays and inadequacies in receipt of payments under the draw schedule, as well as disagreements he had with Mr. Harrelson concerning what was required by the contract.
From the testimony of Mr. Harrelson and Mr. Butler it is concluded that there were changes made in the original plans, changes made in the scope of the work, changes made during the construction due to problems encountered, and that these changes were by attempted oral agreement. For example, neither party could agree as to who was to submit plans, although the written contract clearly says that the owner is responsible. The plans were never placed in evidence. Mr. Butler insists that the contract had an addendum. R. Ex. 20. Mr. Harrelson was not recalled to confirm or deny this testimony, but the contract submitted by the Petitioner, P. Ex. 6, has no addendum. There was to have been a draw schedule, but none was ever agreed to by the parties. Thus, the testimony is too fragmented, confused, and unclear to make a finding as to the exact scope and schedule of the contract.
There was no testimony by the person who made the progress inspections for Sun Bank.
There was no testimony from any expert in the field of contracting.
During the formal administrative hearing, the Petitioner sought to voluntarily dismiss the charge of diversion of funds. The dismissal was sought without prejudice to refiling that charge at another date. The basis of the motion was that the witness from Sun Bank of Tampa did not bring files to answer questions from counsel, and was unprepared to answer from memory. It appeared during the course of the examination of the witness that counsel was not familiar with the documents in the possession of the witness, and that the witness was not prepared to present evidence. The motion was denied.
CONCLUSIONS OF LAW
The Division Administrative Hearings has jurisdiction of the subject matter and of the parties to this proceeding.
The request for formal administrative hearing was timely filed.
The Petitioner has the burden to prove the allegations of the administrative complaint by clear and convincing evidence.
The case was set for hearing on January 20, 1988, by notice of hearing dated November 18, 1987. Adequate time for preparation appears to have been allowed, and, in any event, there was no motion to continue. The motion to voluntarily dismiss was not made until well after the witness had begun his testimony, and was made only after counsel realized that the witness was unprepared to testify. For these reasons, the motion to voluntarily dismiss the charge of diversion should be denied.
The scope of the contract, and in particular, the schedule of completion and the schedule of payment, was not proved by clear and convincing evidence. Mr. Harrelson's testimony was too confused and incomplete to provide a record basis for a determination as to the exact contract between the parties, there were confused attempts at oral agreements between the parties, and the written documents were not placed in evidence. Findings of fact 7, 15-18. On this record, it is impossible to determine what the parties agreed was to be completed and when.
More significantly, the parties themselves never agreed to a draw schedule for payments. The draw schedule established by Sun Bank was for its own benefit, and was not an agreed element of the contract.
Without proof by clear and convincing evidence of the agreed construction schedule and the agreed draw schedule, Mr. Butler's contractual obligations to Mr. Harrelson cannot be determined.
There was no evidence, such as by expert opinion, to establish the professional standard of financial management applicable to this contract and to Mr. Butler.
Mr. Butler is charged by the administrative complaint with violation by financial mismanagement of the following provisions of section 489.129(1), Fla. Stat.:
Financial mismanagement of misconduct in the practice of contracting that causes financial harm to a customer. Financial mismanagement or misconduct occurs when:
Valid liens have been record against the property of a contractor's customer for supplies or services ordered by the contractor for the customer's job; the contractor has received funds from the customer to pay for the supplies or services; and the contractor has not had the liens removed from the property, by payment or by bond, within 30 days after the date of such liens.
The contractor has abandoned a customer's job and the percentage of completion is less than the percentage of the total contract price paid to the contractor as of the time of abandonment, unless the contractor is entitled to retain such funds under the terms of the contract or refunds
the excess funds within 30 days after the date the job is abandoned.
The contractor's job has been completed, and it is shown that the customer has had to pay more for the contracted job than the original contract price, as adjusted for subsequent change orders, unless such increase in cost was the result of circumstances beyond the control of the contractor, was the result of circumstances caused by the customer, or was otherwise permitted by the terms of the contract between the contractor and the customer.
* * *
(m) Upon proof that the licensee is guilty of fraud or deceit or of gross negligence, incompetency, or misconduct in the practice of contracting.
Absent proof of Mr. Butler's contractual and professional responsibilities, a finding of "financial mismanagement or misconduct" pursuant to section 489.129(1)(h), Fla. Stat., cannot be made. Under subparagraph (1) of that statute, proof must first be made that liens that have been filed were for supplies or services "ordered by the contractor for the customer's job," which cannot be determined until the "job" is defined by proof. Mismanagement Only occurs when "the contractor has received funds from the customer to pay for the supplies and services," which again depends upon an understanding of the contractual promises made by the contractor to the customer as to contract schedule, and the contractual purpose for which the funds have been transferred to the contractor by the customer. Without proof of an agreed construction schedule and payment schedule, a finding that payments were made "for the supplies and services" cannot be made.
Similarly, under subparagraph (2) of section 489.129(1)(h), "abandonment" of the job requires proof of percentage of completion. The percentage of completion cannot be determined until there is a determination of what constitutes 100 percent completion, and that requires proof as to what the total contract requires. It also requires proof of the agreed draw schedule, since the contractor is not guilty under this subparagraph if he "is entitled to retain such funds under the terms of the contract."
Finally, pursuant to subparagraph (3) of section 489.129(1)(h), until there is proof of what the total contract required, there cannot be a determination under that subparagraph that "[t]he contractor's job has been completed," or that the customer had to pay more than the contract price and that circumstances was not caused by the customer or "otherwise permitted by the terms of the contract
A finding of "fraud, or deceit or ... gross negligence, incompetency, or misconduct in the practice of contracting" pursuant to section 489.129(m), Fla. Stat., based upon "financial mismanagement, misconduct, or diversion" or upon a failure to "properly supervise the finances on said job" as alleged in the administrative complaint depends on proof of the contract and proof of the professional standard of care. The record lacks proof on either point. Findings of fact 7, 14, 15, 16, 17 and 18.
There was a considerable amount of testimony by Mr. Harrelson, and by Mr. Butler in defense, concerning alleged defects in the construction of the building. Petitioner's proposed recommended order recommends that Mr. Butler be found to have been "grossly negligent in his supervision of the job and incompetent in the performance of the work itself." The administrative complaint did not charge Mr. Butler with incompetence in the construction of the building. It charged him with financial mismanagement and failure to supervise finances. All of the evidence concerning defects in the construction of the building is irrelevant, and now is excluded from the record.
For these reasons, a final order should be issued dismissing the administrative complaint for lack of proof of the allegations therein by clear and convincing evidence.
RECOMMENDATION
It is therefore recommended that the Department of professional Regulation, Construction Industry Licensing Board, enter its final order dismissing the administrative complaint against Charles H. Butler, Jr.
DONE and RECOMMENDED this 23rd day of March, 1988, in Tallahassee, Florida.
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 23rd day of March, 1988.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-5041
The following are rulings upon proposed findings of fact which have either been rejected or which have been adopted by reference. The numbers used are the numbers used correspond to the numbered and unnumbered paragraphs and sentences in the findings of fact proposed by the Petitioner. (All paragraphs after paragraph 3 have been deemed to be numbered sequentially thereafter.)
Findings of fact proposed by the Petitioner:
3. The first sentence is subordinate to findings of fact that have been adopted. It is true, however, and is adopted by reference.
Since the entire contract was never proven by clear and convincing evidence, the relevance of this proposed finding of fact is unknown.
It is impossible to conclude that the Respondent caused a "self made deficit of $25,000" since the contract itself was never proven by clear and convincing evidence.
The administrative complaint did not charge Mr. Butler with failure to supervise the construction of the building. It charged him with financial mismanagement and failure to supervise finances. Moreover, the relevance of
evidence concerning Mr. Butler's presence on the job site was never tied into the charge of financial mismanagement.
No finding can be made on this record as to the percentage of completion on any date since the contract was never proven. With respect to the remainder of this proposed finding (the list of construction defects), the administrative complaint did not charge Mr. Butler with incompetence in the construction of the building. It charged him with financial mismanagement and failure to supervise finances.
Since the entire contract, including changes and alleged defects, was never proven by clear and convincing evidence, it is impossible to conclude that Mr. Harrelson paid more than the contract price. The last two sentences are not relevant to the charge of financial mismanagement.
The first sentence is not supported by the evidence. With respect to the next sentence of this proposed finding (the list of construction defects), the administrative complaint did not charge Mr. Butler with incompetence in the construction of the building. It charged him with financial mismanagement and failure to supervise finances. The last sentence is true, and adopted by reference.
Since the entire contract was never proven by clear and convincing evidence, the relevance of this proposed finding of fact is unknown.
No finding can be made on this record as to the percentage of completion on any date since the contract was never proven.
Findings of fact proposed by the Respondent: None.
COPIES FURNISHED:
Lee Sims, Esquire
Department of Professional Regulation
130 North Monroe Street Tallahassee, Florida 32399-0750
Charles H. Butler, Jr., Pro Se 8917 Maislin Drive
Tampa, Florida 33610
Fred Seely, Executive Director Construction Industry Licensing Board Post Office Box 2
Jacksonville, Florida 32201
Tom GallagherSecretary
Department of Professional Regulation
130 North Monroe Street Tallahassee, Florida 32399-0750
William O'Neil, General Counsel Department of Professional Regulation
130 North Monroe Street Tallahassee, Florida 32399-0750
Docket for Case No: 87-005041
Orders for Case No: 87-005041
| Issue Date |
Document |
Summary |
|
Dec. 12, 1988 |
Agency Final Order
|
|
|
Mar. 23, 1988 |
Recommended Order
|
Administrative complaint against the respondent is dismissed because of the petitioner's lack of proof in the allegations therein.
|
