STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 88-0678

)

JAMES C. MARSHALL, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on June 1, 1988 in Fort Lauderdale, Florida. The parties were allowed to submit post-hearing memoranda supportive of their respective positions.

Petitioner's counsel has submitted a proposed recommended order which is substantially incorporated in this Recommended Order.

APPEARANCES

For Petitioner: David L. Swanson, Esquire

Staff Attorney

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

For Respondent: James C. Marshall, pro se

6193 Rock Island Road 2l3 Tamarac, Florida 33319

ISSUE PRESENTED

The issue presented for decision herein is whether or not Respondent exhibited financial mismanagement, misconduct, diversion, gross negligence or incompetence, failed to properly supervise a construction project in violation of sections 489.129(1)(h), (j) and (m); 489.119 and 489.105(4), Florida Statutes.

FINDINGS OF FACT

Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received and the entire record compiled herein, I make the following relevant factual findings:

1. At times material herein, Respondent was a certified general contractor in Florida having been issued license number CG C016802.

2. On November 27, 1985, Respondent contracted with Dr. Blaine Woods, a chiropractor, to construct a residence at Lot 188, Whispering Woods Subdivision, 8020 NW 47th Drive, Coral Springs, Florida for a price of $248,307.00.

   According to the terms of the contract, the construction was to be completed in five months. (Petitioner's Composite Exhibit 16, Article 2) Construction commenced on the Woods' residence during December, 1985.

   
   

3. During construction, Dr. Woods made draw payments to Respondent totaling $211,44.00 or approximately 85% of the contract price.

   
   

4. The contract provided that the final draw payment, amounting to 15% of the contract price, was to be paid upon issuance of a Certificate of Occupancy (CO).

   
   

5. During the latter stages of construction, Respondent frequently was on the job site by himself. On several occasions, Dr. Woods personally assisted Respondent in the construction.

   
   

6. Dr. Woods had contracted to sell his home when construction commenced on his new home. He sold it in early August and was forced to move. Based on that fact, a temporary CO was issued on August 1, 1986 and Dr. Woods moved into the new home on August 2, 1986.

   
   

7. As of August 2, many of the contract items had not been installed or were defective including: the pool heater, two shower enclosures, cabinets in a game room, spa decking and floor tile at the entrances, three garage door openers, 13 ceiling fans, pantry shelving, a roof that leaks, numerous electrical outlet problems and the pool deck which was not installed as Respondent agreed by the contract.

   
   

8. Upon occupying the home, Dr. Woods began receiving phone calls and personal visits from subcontractors and materialmen who had supplied either services or materials, demanding payment. The majority of the subcontractors had been told by Respondent that they could not be paid because Dr. Woods had not paid him. Over the next several weeks, approximately twenty (20) subcontractors and materialmen approached Dr. Woods for payment of invoices totaling $71,451.37. Dr. Woods attempted, unsuccessfully, to have the subcontractors return to the house to finish the work. As a result, Dr. Woods was forced to hire additional subcontractors to complete his home. Dr. Woods spent a majority of the $37,000 final draw reserve completing his home.

   
   

9. Eleven liens have been filed against the Woods residence as a result of Respondent's failure to pay subcontractors and/or materialmen. Dr. Woods, through legal counsel, was able to remove most of the liens filed against his home based on legal technicalities. However, in so doing, he incurred legal fees in the amount of $12,791.76. At the time of hearing, four outstanding liens remained on the Woods' residence.

   
   

10. Jerry Hicks, a licensed architect and general contractor in Florida, was tendered as an expert in the areas of architecture and contracting. Hicks opined that Respondent significantly underbid the Woods' residence and was therefore grossly negligent or incompetent for entering into a contract which he could not perform. (Deposition of Jerry Hicks, Petitioner's Exhibit 5).

    
    

11. Julio Aldecocea, also a licensed architect and general contractor, was tendered as an expert in the fields of architecture and general contracting. Aldecocea also opined that when Respondent found himself unable to pay

    subcontractors because he underbid the project, he committed gross negligence or incompetence in entering into a contract he could not perform.

    
    

12. Aldecocea noted that it is standard procedure for contractors to monitor the progress of a job to ensure that costs are running within budget and to take corrective measures if costs begin to exceed budget. Respondent, by failing to take this step, committed financial mismanagement when he let outstanding bills to subcontractors in the amount of $71,451.37 remain unpaid.

    
    

13. During the hearing, Respondent admitted that he expected to make a profit of approximately $24,000.00 on the Woods residence when he entered into the contract.

    
    

14. Based on the amount of money outstanding to subcontractors and materialmen, Aldecocea opined that it was misconduct for Respondent to tell the subcontractors and supplies that they cannot be paid because Dr. Woods had not paid the final draw when he had been, in fact, paid.

    
    

15. Valid liens have been recorded against Dr. Woods' property for supplies and services ordered by Respondent for the Woods' project. Respondent has received funds from Woods to pay for those suppliers and services. Respondent failed to remove the liens from the Woods' property.

    
    

16. Respondent admitted, in a telephone conversation with Dr. and Mrs. Woods, that he could not pay subcontractors because he had made an investment which "went down the tubes". (Testimony of Dr. and Mrs. Woods).

    
    

17. Respondent appeared and testified that the Woods' residence was, in his opinion, more than what they had paid for and therefore he was due excess monies for items over and above what he contracted for. In the areas where there deficiencies, Respondent contends that such items were "service items" which were routine in any newly built house and could have been easily repaired if afforded an opportunity. In this regard, Respondent alluded to several areas where the Woods got more than they bargained for. Specifically, he mentioned that the property had to be regraded and needed a retention area and he refused to pay Mr. Allen, manager of Coral Springs Property Services Incorporated, for the additional grading and paving that was needed. Respondent also contends that the pool was larger than what was contracted for and that the Woods ordered several plants and shrubbery from Tropical Trees which was over and above the amount allotted under the contract. Finally, Respondent contends that the driveway was larger than what was called for in the plans and therefore he would not pay the difference which resulted from his having to build a larger driveway. Respondent, as a certified general contractor, was familiar with the manner in which a change order could be instituted in the contract and no change orders were completed respecting the above-referenced items. (Petitioner's Exhibits 11 and 12) Moreover, the Woods made a change in the contract and a change order was written for a brick wall and a sum of $4,941.00 was added to the contract price. Respondent was aware of this procedure and did not avail himself of the opportunity to effect a change order as provided in the contract. Since Respondent knew, or should have known that the proper procedure to be reimbursed for a charge in the plans, which is over and above what was originally included in the contract, is through the use of a change order, his claims that the Woods received more than they bargained for is without merit.

    CONCLUSIONS OF LAW

    
    

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

    
    

19. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

    
    

20. The authority of the Petitioner is derived from Chapter 489, Florida Statutes.

    
    

21. Respondent, a certified general contractor, is subject to the disciplinary provisions of Chapter 489, Florida Statutes.

    
    

22. Respondent, by telling contractors and materialmen that he had not been paid by Dr. Woods which caused the contractors and materialmen to contact Dr. Woods for payment and thereafter file liens against the Woods residence, engaged in misconduct in the practice of contracting in violation of section 489.129(1) (m), Florida Statutes (1985).

    
    

23. Respondent, by underbidding the Woods' job and entering into a contract which he could not perform and by failing to monitor the expenses of the project and/or failing to take corrective measures once it was discovered the project was over budget, committed gross negligence or incompetence in the practice of contracting in violation of section 489.129(1) (m), Florida Statutes (1985).

    
    

24. Respondent, by admitting to Dr. and Mrs. Woods, that he could not pay subcontractors because he had made an outside investment which had gone awry, constitutes an admission of diversion, in violation of section 489.129(1)(h), Florida Statutes (1985).

RECOMMENDATION 1/

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that:

1. Petitioner enter a final order imposing an administrative fine in the amount of $500.00 to be paid to Petitioner within 30 days of entry of the Petitioner's final order for Respondent's conduct found hereinabove which was violative of section 489.129(1)(m), Florida Statutes.

   
   

2. Petitioner also include in its final order imposition of an addition1 administrative fine against Respondent in the amount of $750.00, which amount shall be payable to Petitioner within 30 days of entry of its final order herein for Respondent's conduct found hereinabove for a diversion of funds in violation of section 489.129(1)(h), Florida Statutes.

   
   

3. Petitioner enter a Final Order finding that Respondent's license to practice contracting be suspended for a period of one (1) year with the further consideration that nine (9) months of that suspension be suspended provided Respondent reconcile the monetary differences he caused Dr. Woods to incur as a result of his activities in connection with the construction of their residence and that Petitioner's investigator assist Respondent and Dr. Woods in making such reconciliation. To the extent that Dr. Woods is made whole for any loss he

sustained based on Respondent's action, Respondent's license as a general contractor shall only be suspended for a period of ninety (90) days. Failure on Respondent's part to address this problem and provide the relief herein recommended, his license to practice shall remain suspended for a period of one

(1) year.

DONE and ORDERED this 7th day of October, 1988, in Tallahassee, Florida.

JAMES E. BRADWELL

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 7th day of October, 1988.

ENDNOTE

1/ These recommendations are in accord with sections 21E-17.002,.003 and .005, Florida Administrative Code.

COPIES FURNISHED:

David L. Swanson, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

Bruce D. Lamb, Esquire General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

Fred Seely, Executive Director

Construction Industry Licensing Board

Post Office Box 2 Jacksonville, Florida 32201

James C. Marshall

6193 Rock Island Road #213

Tamarac, Florida 33319

Docket for Case No: 88-000678

Orders for Case No: 88-000678