DEPARTMENT OF PROFESSIONAL ) REGULATION, CONSTRUCTION ) INDUSTRY LICENSING BOARD, )
vs. ) CASE NO. 87-5400
EDWARD W. HOLLENBECK, )
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal hearing on May 6, 1988, in Englewood, Florida, and May 26, 1988, by telephone in Tallahassee, Florida.
For Petitioner: David L. Swanson, Esquire
For Respondent: Edward W. Hollenbeck, pro se
The DEPARTMENT OF PROFESSIONAL REGULATION, Petitioner, filed an Administrative Complaint before the Construction Industry Licensing Board alleging that the Respondent, EDWARD W. HOLLENBECK, violated state law in the following manner: by authorizing the use of his contractor's license on a job for which he was not the contractor, in order to obtain a permit; by doing business under a name not on the license which the Respondent did not qualify; by failing to properly supervise the finances on the job.
EDWARD W. HOLLENBECK, the Respondent, disputed the allegations of fact contained in the Administrative Complaint and requested a formal administrative hearing.
During the hearing, the Petitioner presented six witnesses and submitted ten exhibits which were accepted into evidence. The Respondent presented one witness and testified in his own behalf. Thirteen Exhibits were submitted and accepted into evidence.
A transcript of the proceedings was not ordered. Both parties filed proposed recommended orders. Rulings on the proposed findings of fact are contained in the attached Appendix.
During the applicable time period, the Respondent was a certified building contractor in the state of Florida and held license number CB C026049.
On or about January 6, 1986, the Respondent was hired by West Coast Remodeling & Construction Company. The Respondent was hired as an employee to supervise a building project based on a contract between West Coast and Clarence Harrod for the building of a quadriplex in Rotunda West, Florida.
On January 17, 1986, the Respondent applied for a building permit for the Harrod project. The Respondent represented on the permit that he was the builder on the project instead of West Coast, who had the written contract with Harrod. Neither of the principals in West Coast, Gunnar Jacobsen or Gerald Hanley, held a building contractor's license and a licensed contractor was necessary to obtain the permit for the project.
After the application for the permit was completed, but before the building permit was issued, the Respondent received a document from West Coast evidencing that the Harrod contract was assigned to him as an individual.
At the time the Charlotte County Building Permit was actually issued, the Respondent was the assignee of the Harrod contract.
Although the assignment was in effect on January 22, 1986, West Coast continued to receive the funds from Mr. Clarence Harrod, who was not notified of the assignment of the contract. The Respondent either allowed or acquiesced in the continued management of the project and the building funds by West Coast until April 15, 1986.
Sometime between January 17, 1986, and January 31, 1986, the Respondent became a shareholder in West Coast. By April of 1986, the Respondent was a corporate officer and had a one-third interest in the corporation. The corporation had three shareholders: the Respondent, Gunnar Jacobsen, and Gerald Hanley. Although all three men were corporate officers, the Respondent was to supervise new construction projects, Jacobsen was to handle administrative affairs and solicit new work, and Hanley was to supervise the remodeling jobs obtained by Jacobsen.
In April of 1986, the Respondent determined that there were insufficient funds in the corporate accounts to complete the Harrod project if overhead costs were not reduced immediately. This insight was acquired by the Respondent around the same time the following events occurred: A. Mr. Harrod complained in early April that the job was taking too long. The project was still in the framing stage, and Mr. Harrod was asked for $15,000 of the
$25,184.44 draw which was set aside in the contract for the drywall phase of the project. B. Smaller projects that West Coast had in progress, such as three concrete jobs, were found to be unprofitable by the principals in the company.
C. Jacobsen was complaining to the Respondent and Hanley, the other two corporate officers, that framing costs were too high on the Harrod project. D. The Respondent and Hanley had decided, between themselves, that Jacobsen was not earning his salary with the corporation because he was not acquiring the new remodeling jobs for the company that he was supposed to under their business arrangements.
On April 15, 1986, Hanley and the Respondent locked Jacobsen out of the corporate offices and removed all the money in the corporate accounts, including the money involved in the Harrod project.
On April 22, 1986, an agreement was signed by Jacobsen, Hanley, and Respondent which dissolved their business relationships. Pursuant to the agreement, the Respondent resigned his position as an officer in West Coast and assigned his stock in the corporation to Jacobsen. The Respondent and Hanley were also required to make an accounting of the corporate funds removed from the corporate accounts on April 15, 1986. The agreement does not reveal whether the Harrod project was to remain with West Coast or the Respondent. However, the project did remain with West Coast, and the Respondent contacted the Charlotte County Building Department to remove his name from the building permit effective 8:00 a.m., April 23, 1986.
When the business relationship between the corporate principals was dissolving in April, the Respondent had contact with Mr. Clarence Harrod. He did not tell the owner about the assignment of the contract to him on January 22, 1986, nor did he advise the owner of the cost overruns which he now asserts were a reason for his resignation from the corporation.
The documents attached to the April 22, 1986, agreement reveal that the Respondent was aware of the need for two releases of lien totalling $40,185 on the Harrod project at the time he left the corporation and allowed the corporation to take back and continue with the Harrod project. The Respondent appears to have commingled corporate funds with the Harrod project funds when the funds were under his and Hanley's joint control. During the seven days the Respondent and Hanley had joint control of the $11,611.88 seized from West Coast, the Respondent was paid $2,026.30 and Hanley was paid $2,633. On April 22, 1986, $5,281.97 was returned to West Coast with a list of acknowledged outstanding bills totalling $1,711.17.
During the period of time between the assignment of the Harrod project to the Respondent on January 22, 1986, and the takeover of the project by West Coast on April 22, 1986, the Respondent accepted his legal responsibilities as a licensed contractor only on the occasions where it best served his most immediate personal interests.
CONCLUSIONS OF LAW
Based upon the foregoing findings of fact and on the applicable legal principles, I make the following conclusions of law:
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Section 120.57(1), Florida Statutes.
Section 489.129, Florida Statutes, empowers the Florida Construction Industry Licensing Board to revoke, suspend, or otherwise discipline the license of the Respondent if he is found guilty of any acts enumerated in Section 489.129, Florida Statutes.
A proceeding to discipline a license is penal in nature. Bach v. Florida Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1980). In such contests, the Petitioner has the burden of proof and must prove by clear and convincing evidence that the Respondent committed the violations set forth in the administrative complaint. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).
In paragraph five of the administrative complaint, the Petitioner alleged that the Respondent aided an improperly licensed contractor in obtaining a permit for the Harrod project in violation of Sections 489.129(1)(e), (m), (g), (j); 489.119, and 489.105, Florida Statutes. The facts presented at hearing revealed that the Harrod project contract had been assigned to the Respondent after the permit was applied for but before the permit was issued. Because the building permit was properly issued in the Respondent's name, there is no violation of Florida statutes as set forth in paragraph five of the administrative complaint.
Paragraph six of the administrative complaint alleges that the Respondent did business under a name not on his license and which he did not qualify, in violation of Sections 489.129(1), (g), (j), and 489.119, Florida Statutes. The evidence adduced at hearing shows that the Respondent ordered materials and contracted with labor under the name of West Coast Remodeling and Construction Inc. for the Harrod project after the assignment occurred. The owner of the property was never notified of the assignment of his contract, and the draws from the owner for the building project were made out to West Coast instead of the Respondent. The Respondent's actions created an artifice which allowed the corporation to have the privilege of being involved in the contracting business without satisfying the statutory requirements of Section 489.119, Florida Statutes. Such conduct constitutes violation of Section
489.119 and Sections 489.129(1)(g) and (j), Florida Statutes, and is clearly contrary to the public interest the Legislature seeks to protect through the provisions of Chapter 489, Florida Statutes. The Respondent is guilty of the violations set forth in paragraph six of the administrative complaint.
The last count in the complaint, paragraph seven, alleges that the Respondent failed to properly supervise the finances on the job in violation of Sections 489.129(1)(m), (j); 489.119; and 489.105(4), Florida Statutes. The Respondent took on the responsibility of supervising the finances on the job when he accepted the written assignment of the contract. The written assignment, Respondent's Exhibit #1, is clear in its intent. An equitable assignment does not require a particular form of instrument to effect an assignment. Giles v. Sun Bank, 450 So.2d 258 (Fla. 5th DCA 1984). The written contract between Mr. Harrod and West Coast did not preclude the assignment to a third party. Generally, all contractual rights are assignable unless the contract prohibits assignment, the contract involves obligations of a personal nature, or public policy dictates against assignment. Hall v. O'Neil Turpentine Co., 56 Fla. 324, 47 So. 609 (Fla. 1908); L. V. McClendon Kennels v. Investment Corp., 490 So.2d 1374 (Fla. 3d DCA 1986). Because Mr. Harrod had been notified that the Respondent was the licensed contractor who would supervise the project, the contract was not one of a personal nature and could be assigned to the Respondent.
Testimony and exhibits entered into evidence prove that the finances were not adequately supervised on the Harrod project. The Respondent had the duty to supervise the finances because of the assignment and because he was the licensed contractor who pulled the permit on the project. To find otherwise, even if the assignment had been invalid, would be contrary to the intent or purpose of Chapter 489, Florida Statutes, and the logic in Hunt v. Department of Professional Regulation, 444 So.2d 624 997 (Fla. 1st DCA 1983) and Alles v. Department of Professional Regulation, 423 So.2d 624 (Fla. 5th DCA 1982) which determined that a defense of "no responsibility" to a charge of failure to adequately supervise a construction project by a certified contractor would "completely circumvent" the legislative intent of Florida statutes regulating
the construction industry. The Respondent was unable to relinquish the responsibility for finances to Mr. Jacobsen or West Coast.
The Respondent left the project with the knowledge that too much of the money drawn from the Harrod funds was in the company's overhead instead of the building project. A proper, full accounting was not provided to Mr. Harrod after the Respondent left the project. There are still outstanding liens for materials which were contracted for while the Respondent was the licensed contractor on the project. As a result, the Respondent is guilty of the violation charged in paragraph seven of the administrative complaint.
Section 21E-17.001, Florida Administrative Code, provides in pertinent part:
The following guidelines shall be used in disciplinary cases, absent aggravating or mitigating circumstances and subject to other provisions of this Chapter.
(1) 489.129(1)(g), 489.119: Failure to
qualify a firm, and/or acting under a name not on license. First violation, letter of
guidance; repeat violation, $250 to $750 fine.
(19) 489.129(1)(m): Gross negligence, incompetence, and/or misconduct, fraud or deceit.
(b) Causing monetary or other harm to licensee's customer, or physical harm to any person. First violation, $500 to $1,500 fine; repeat violation, $1,000 to $5,000 fine and suspension or revocation.
Section 21E-17.004, Florida Administrative Code, sets forth instances in which a letter of guidance is inapplicable. The rule provides:
Where the above guideline states that the first violation shall be dealt with by letter of guidance, this is premised upon the assumption that the violation being discussed is the only violation for which probable cause exists. Where said assumption is not accurate, and there is probable cause on other violations in the same or other cases being concurrently considered, then the "letter of guidance" violations shall normally be charged by administrative complaint, and in such cases the portion of the penalty dealing with said violations shall be a reprimand.
Rule 21E-17.007, Florida Administrative Code, provides:
Probation may also be assessed in any case where, in the board's opinion, it is advisable for the public welfare, in order to assure that the licensee operates properly and within the law in the future, to require the licensee to report to the Board
periodically, or to otherwise serve a probationary period.
DONE AND ENTERED this 6th day of July, 1988, at Tallahassee, Florida.
VERONICA E. DONNELLY, Hearing Officer Division of Administrative Hearings The Oakland Building
Filed with the Clerk of the Division of Administrative Hearings this 6th day of July, 1988.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-5400
David L. Swanson, Esquire Department of Professional
Edward W. Hollenbeck
Fred Seely, Executive Director Construction Industry Licensing Board Post Office Box 2
