STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 88-3442

) DPR CASE NO. 0078328

CHARLES R. SCHELAH, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal hearing in the above-styled case on November 21, 1988, in Punta Gorda, Florida.

APPEARANCES

For Petitioner: Elizabeth R. Alsobrook, Esquire

Department of Professional Regulation 1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-0729

For Respondent: John Charles Heekin, Esquire

21202 Olean Boulevard, Suite C-2 Port Charlotte, Florida 33952

STATEMENT OF THE ISSUES

Whether the Respondent was validly disciplined by a local government, which causes the Respondent to be in violation of Section 489.129(1)(i), Florida Statutes (1985).

Whether the Respondent failed to perform the contracting job alleged in the Administrative Complaint in a reasonably timely manner, or abandoned the job, in violation of Section 489.129(1)(m), (k), Florida Statutes (1985).

Whether the Respondent exhibited financial mismanagement, misconduct or diversion, in violation of Section 489.129(1)(h), (m), Florida Statutes (1985).

Whether the Respondent committed gross negligence, incompetence or misconduct in connection with the job alleged in the Administrative Complaint, in violation of Section 489.129(1)(m), Florida Statutes (1985).

PRELIMINARY STATEMENT

The Department of Professional Regulation (hereinafter the Department) filed an Administrative Complaint before the Construction Industry Licensing

Board (hereinafter the Board) alleging that the Respondent, Charles R. Schelah (hereinafter Schelah) had violated state law in his capacity as a licensed contractor. The Department seeks to have disciplinary sanctions imposed on the Respondent Schelah.

In an Election of Rights Form signed July 1, 1988, the Respondent Schelah disputed the allegations of fact contained in the Administrative Complaint and requested a formal hearing.

Prior to hearing, the Respondent filed a Motion for Protective Order in which the Respondent objected to the Petitioner's requirement that he respond to Requests for Admissions and Interrogatories served upon him in order to assist the Petitioner in its presentation of its case against him. The motion was granted pursuant to State ex rel. Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973) and Sheppard v. Florida State Board of Dentistry, 369 So.2d 629 (Fla. 1st DCA 1979).

During the hearing, the Petitioner presented eight witnesses, and submitted five exhibits. The Respondent called two witnesses, testified in his own behalf, and submitted sixteen exhibits. All of the exhibits offered by both parties were received into evidence. The Respondent was permitted to file a copy of the complete transcript of the local government's disciplinary proceeding after the hearing. This exhibit was received by the Division of Administrative Hearings on December 14, 1988, and is admitted into evidence as Respondent's Exhibit 17.

A transcript of the proceedings was filed with the Division of Administrative Hearings on December 19, 1988. At hearing, the parties asked for and received until January 3, 1989, to file proposed recommended orders.

Rulings on the proposed findings of fact are in the Appendix to the Recommended Order. An order granting motion to supplement record was granted on January 4, 1989, and the parties were given time to respond to the supplement and until February 6, 1989, to prepare proposed recommended orders.

FINDINGS OF FACT

1. At all times material to these proceedings, the Respondent, Charles R. Schelah was licensed as a certified general contractor in Florida, and held license number CG C016841. Mr. Schelah was the qualifying agent for Schelah Construction, Inc.

   
   

2. On March 11, 1986, Schelah Construction, Inc., entered into a contract with Moner F. Green and Karen L. Green to construct a residence in Prairie Creek Park, Charlotte County, Florida A copy of the contract is Petitioner's Exhibit

1. Pursuant to the written agreement, construction would occur as per the signed construction drawings. The total contract price was to be $102,775.00. This quote was contingent upon a construction start on or before March 15, 1986. After that date, increases in supply and labor costs would be borne by the owners, Mr. and Mrs. Green. The contract further stated that there is no specific completion date, that an expected completion date was August 30, 1986.

   
   

   1. Construction began on the residence on April 4, 1986. Three revisions of the drawings were completed by the owner before a building permit was requested by the Respondent Schelah. Throughout the progress of construction, major and minor revisions were made by the owners. Many of these revisions delayed construction as the Respondent was required to obtain new special order materials and retrofit many of the changes into the existing construction phase.

      The Respondent recollected that thirty-five revisions were made to the construction plans by the owners during various phases of construction.

      
      

   2. In September 1986, the owners began to frequently telephone the Respondent in order to urge him to quickly complete the project as the owners were now required to pay the savings and loan association mortgage installments. The Respondent did not return the telephone calls. A letter was sent to the Respondent by the owners' attorney on November 3, 1986, notifying him that he needed to resume his responsibilities at the construction site. The Respondent did not reply to this letter. On November 7, 1986, the Respondent was removed as contractor of record by the owners. All but the final draw from the savings and loan had been given to the Respondent before his removal.

      
      

   3. After the Respondent was removed from the project, the owners were given notice of the following liens: $2,750.55 to Pre-Hung Doors of Florida for supplies delivered in August 1986; $700.00 to Paul Hartt Plastering and Stucco, Inc. for work completed in September 1986. The work completed by both subcontractors was performed during the Respondent's term as the prime contractor on the project. These two contractors were never paid by the Respondent out of draws received by him for that purpose through October 1986. These subcontractors, as well as others, testified that they were unable to communicate with Respondent after September 1986.

      
      

   4. The final draw from the savings and loan in the amount of $19,618.97, was used by the owners to complete the project themselves. The proof of payment submitted by the owner, Mr. Green, at hearing for completion under the direct contract was $6,149.14, in Respondent's Exhibit 14. The residence was completed by the owners in December 1986.

      
      

   5. Mr. Green, the owner, filed a complaint with the Charlotte County Building Board on October 29, 1986, alleging that the Respondent refused to call him, and was dragging completion of the job for unknown reasons hearing was held on February 19, 1987. At the conclusion of the hearing, the Charlotte County Building board suspended the permitting privileges of Schelah Construction, Inc., until such time as all jobs in progress were finished.

      
      

   6. During the administrative hearing, the Respondent admitted that a twenty-one day delay on the Green project occurred when he was unable to acquire a sheetrock hanger who would go to the hinterlands (Prairie Creek Park) where the residence was being built. He contends however, that the additional time delays were a result of changes in supply orders due to the changes made by the owners, and the requirement that subcontractors be rescheduled to accommodate these changes.

      
      

   7. Petitioner's experts in construction practices within Florida, Mr. Bernard Verse and Mr. Stanley Ink, were unable to render an opinion that the Green Construction project had been abandoned by Respondent Schelah, or that there had been a diversion of funds. However, Mr. Ink did render an opinion that the project was not completed in a reasonably timely manner, that the Respondent is guilty of financial mismanagement, and that the Respondent committed gross negligence, incompetence or misconduct on the job in that the Respondent did not use due diligence in completing the job, staying on the job, and paying the subcontractors as the contractor should.

      
      

   8. Mr. Verse opined that the Respondent committed financial mismanagement and gross negligence in the practice of contracting. It was gross negligence not to maintain contact with clients.

   9. The Respondent's own expert in construction practices in the Punta Gorda area, Mr. Larry Deirmeyer, noted that it is difficult to acquire unscheduled building supplies in the Punta Gorda area if a contractor runs a small construction company because the supply houses are in Fort Myers, where rapid growth is occurring. In addition, it is difficult to get subcontractors to work on construction in areas like Prairie Creek Park, which is remote from the developed areas of Charlotte County.

      
      

   10. After Mr. Deirmeyer was admitted as an expert in construction practices, the Hearing Officer learned that he had built a custom home for the owner Moner Frank Green in 1980. Mr. Green's removal of Mr. Deirmeyer's company from the construction project during the last draw of that project, and his continuous changes in those plans were not considered by the Hearing Officer in this case except for the purpose of weighing Mr. Deirmeyer's independence as an expert witness.

       
       

   11. Another expert witness in construction practices presented by the Respondent was James Anderson, a state certified contractor from the Port Charlotte area. Mr. Anderson acknowledged the local builder supply problem and rendered the opinion that nine months was a reasonable period of time in which to complete the Green project, based upon the construction plans, the change orders, and the travel required to the project, which is not in the immediate Port Charlotte area.

       
       

   12. The Respondent Schelah did not maintain communication with the owners regarding the progress of the project, even though he was telephoned repeatedly and received written communication from the Green's attorney. This failure to maintain communication resulted in the Respondent's dismissal from the project. The County's Building Director's requests for communication were also refused by the Respondent.

       
       

       CONCLUSIONS OF LAW

       
       

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

       
       

   14. 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 off any of the acts enumerated in Section 489.129, Florida Statutes.

       
       

   15. 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).

       
       

   16. In paragraph five of the administrative complaint, the Respondent is charged with having violated Section 489.129(1)(i), Florida Statutes, because of a disciplinary action by a local government. A review of the disciplinary action taken by the Charlotte County Building Board (Respondent's Exhibit 17), which requires a review of Sections 3-2-46 and 3-2-47 of the Charlotte County Code (Respondent's Exhibit 12), reveals that the discipline attempted to be imposed by the Charlotte County Building Board was not authorized in the local

       ordinances. As the Respondent was not validly disciplined by a local government, the Respondent cannot be found guilty of this violation.

       
       

   17. Paragraph six of the administrative complaint alleges that the Respondent failed to perform in a reasonably timely manner, or in the alternative, abandoned the Green project, in violation of Section 489.129(1)(m) and (k), Florida Statutes. Mr. Anderson, the expert in construction practices who was the most familiar with the Punta Gorda and Prairie Creek Park work area, gave the opinion that the Green project was completed within a reasonably timely manner, based upon the construction plans, the change orders, and travel required to the site. This opinion was given great weight by the Hearing Officer due to the expert's familiarity with the area and his experience in the field. Relying upon this opinion, the Respondent should be found not guilty of failing to perform in a reasonably timely manner.

       
       

   18. Evidence presented at hearing regarding the liens filed by Paul Hartt Plastering and Stucco, Inc. demonstrates that work was done on the Green project on September 3, 1986. The Respondent was removed, from the project by the owners on November 7, 1986. Section 489.129(1)(k), Florida Statutes, requires ninety days to pass before a contractor's termination of a project without notification to the owner will be considered abandonment. As barely sixty days had passed in this instance, the statutory criteria is not met, and the Respondent should be found not guilty of the alleged abandonment.

       
       

   19. The third charge is set forth in paragraph seven of the administrative complaint. It is alleged that the Respondent exhibited financial mismanagement, misconduct, or diversion of funds, in violation of Sections 489.129(1)(h) and (m), Florida Statutes. The statutes in effect at the time of the Green project did not include financial mismanagement or misconduct as statutory violations for which disciplinary proceedings could occur. There was no evidence presented to demonstrate that a diversion rendered the contractor unable to fulfill the terms of his contract. The Respondent presented evidence to the contrary which demonstrated that only $6,149.14 of the final draw of $19,618.97, was used by the owner to complete the project, as reflected in the contract. The lien notices were not sent until after the Respondent left the project. Accordingly, the Respondent should be found not guilty of the charges set forth in paragraph seven of the administrative complaint.

       
       

   20. The final violation, which is set forth in paragraph ten of the administrative complaint, alleges that the Respondent committed gross negligence, incompetence, or misconduct on the project, in violation of Section 489.129(1)(m), Florida Statutes. Although the Respondent's failure to communicate with the owners, the subcontractors, or the local building authorities does not rise to the level of gross negligence or incompetence, this activity is clearly misconduct. The Respondent failed to respond to the situations presented during this construction project when communication with the suppliers, subcontractors, owners and local authorities was necessary. The Respondent had a duty to preserve the schedule he was hired to maintain. His inaction was contrary to the requirements of the contract and the duties undertaken by him as the contractor on the project. Included in this misconduct is the Respondent's failure to pay workmen's and materialmen's bills which had been submitted to him for payment. Accordingly, the Respondent is guilty of this violation. No mitigation for his inaction which resulted in misconduct was presented by the Respondent.

   21. Rule 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)(m): Gross negligence, incompetence, and/or misconduct, fraud or deceit.

          1. Causing no monetary or other harm to licensee's customer, and no physical harm to any person. First violation, $250 to $750 fine; repeat violation $1,000 to $1,500 fine and three to nine month suspension.

             
             

   22. Rule 21E-17.002, Florida Administrative Code, sets forth circumstances which may be considered for purposes of mitigation or aggravation of penalties assessed against a contractor. There were no circumstances presented at hearing to assist in mitigation. Circumstances presented which may be used in aggravation of the underlying penalty in this case are as follows:

(d) The danger to the public.

* * *

(h) The actual damage, physical or otherwise, to the licensee's customer.

RECOMMENDATION

Based upon the foregoing, it is RECOMMENDED:

1. That the Respondent be found not guilty of having violated Section 489.129(1)(i), Florida Statutes, as alleged in paragraph five of the administrative complaint.

   
   

2. That the Respondent be found not guilty of having violated Sections 489.129(1)(m) and (k), Florida Statutes, as alleged in paragraph six of the administrative complaint.

   
   

3. That the Respondent be found not guilty of having violated Sections 489.129(1)(h) and (m), Florida Statutes, as alleged in paragraph seven of the administrative complaint.

   
   

4. That the Respondent be found guilty of having violated Section 489.129(1)(m), Florida Statutes, as alleged in paragraph ten of the administrative complaint in regard to misconduct by the Respondent on the Green project.

   
   

5. That the penalties assessed against the Respondent not include an aggravation of penalties under Rule 21E-17.002, Florida Administrative Code, and that the Respondent pay a fine of $750.00, as set forth in Rule 21E-17.001(5), Florida Administrative Code.

DONE and ENTERED this 9th day of June, 1989, in Tallahassee, Leon County, Florida.

VERONICA E. DONNELLY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 9th day of June, 1989.

APPENDIX TO RECOMMENDED ORDER CASE NO. 88-3442

Petitioner's proposed findings of fact are addressed as follows:

1. Accepted.

2. Accepted. See HO #1.

3. Accepted. See HO #1.

4. Rejected as to location of project. The rest is accepted. See HO #2.

5. Accepted.

6. Accepted. See HO #2.

7. Accepted. See HO #4.

8. Accepted. See HO #4.

9. Accepted. See HO #4.

10. Accepted. See HO #5.

11. Accepted. See HO #4.

12. Accepted. See HO #5.

13. Accepted. See HO #6.

14. Accepted.

15. Accepted. See HO #9.

16. Accepted. See HO #9 and #10.

17. Accepted. See HO #10.

18. Accepted.

19. Accepted. See HO #13.

20. Accepted.

21. Accepted.

22. Rejected. See HO #13 and #11.

23. Rejected. See HO #11.

24. Accepted. See HO #11.

25. Accepted.

26. Accepted.

27. Accepted. See HO #14.

28. Accepted. See HO #3 and #8.

29. Accepted. See HO #7.

Respondent's proposed findings of fact are addressed as follows:

1. Accepted. See HO #1.

2. Accepted. See HO #2.

3. Accepted. See HO #3 and #4.

4. Accepted. See HO #13.

5. Accepted. See HO #5.

6. Accepted. See HO #6.

7. Accepted. See HO #6.

8. Accepted. See HO #7.

9. Accepted. See HO #9, #10, #11, #12 and #13.

10. Rejected. Irrelevant to this proceeding.

COPIES FURNISHED:

Elizabeth R. Alsobrook, Esquire Department of Professional

Regulation

1940 North Monroe, Suite 60

Tallahassee, Florida 32399-0729

John Charles Heekin, Esquire 21202 Olean Boulevard, Suite C-2 Port Charlotte, Florida 33952

Kenneth E. Easley, Esquire General Counsel

Department of Professional Regulation

1940 North Monroe, Suite 60

Tallahassee, Florida 32399-0729

Fred Seely, Executive Director Florida Construction Industry Licensing Board

111 East Coastline Drive Post Office Box 2 Jacksonville, Florida 32202

Docket for Case No: 88-003442

Orders for Case No: 88-003442