STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 88-5732

)

DAVID RICHEY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Don W. Davis, on February 22, 1989 in Tampa, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: David Bryant, Esquire

220 E. Madison Street, Suite 530 Tampa, Florida 33617

For Respondent: David Richey, Pro se

5124 Holland Avenue

Tampa, Florida 33617 BACKGROUND

This matter began when Respondent, a registered residential contractor, was charged by Petitioner in an administrative complaint with various violations of Chapter 489, Florida Statutes, in connection with certain jobs undertaken by the contracting firm for which Respondent was responsible as the qualifying agent.

The charges were that the jobs were abandoned; funds were diverted from the jobs; and the jobs were subjected to financial mismanagement and misconduct. Respondent was also charged with failure to properly supervise the financial or job site aspects of the contracting firm. Respondent requested a formal administrative hearing. This proceeding followed.

At hearing, Petitioner presented testimony of six witnesses and 11 evidentiary exhibits. Also, Petitioner was granted leave to submit a post hearing witness deposition no later than March 9, 1989. The deposition was timely received. Respondent presented testimony of one witness, himself.

Proposed findings of fact submitted by Petitioner are addressed in the appendix to this recommended order. No proposed findings were received from Respondent by the required deadline or at the time of the preparation of this recommended order.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Respondent is David Michael Richey, holder at all times pertinent to these proceedings of registered residential contractor licenses RR-A039309 and RR 0039309 issued by Petitioner. His address of record is Tampa, Florida.

   
   

2. Hometown Builders And Associates, Inc. (Hometown Builders) was formed in May of 1985. Respondent was the owner of 25 percent of the company's stock, president of the company and the qualifying agent for the company from inception until its bankruptcy on June 6, 1986.

   
   

3. On or about October 31, 1985, Mary L. Robke entered into a contract with Hometown Builders for extensive remodeling repairs to a house owned by her and inhabited by her daughter. Under terms of the agreement, Hometown Builders agreed to accomplish the remodeling tasks in return for a total payment of

   $35,000. The agreement required a down payment of $13,000. While dates were not specified in the written agreement, the remainder of the $35,000 was paid by Robke in three payments, the last payment occurring around March 14, 1986. It is undisputed by the parties that construction work on the Robke project was never completed. Also, the proof establishes that the electrical and air conditioning subcontractor hired by Respondent's company was eventually paid by Robke, after the subcontractor filed a lien for nonpayment. Robke paid the subcontractor over $4,000 when Respondent's company failed to pay him. Robke paid off other subcontractors who filed liens. Her total payments to subcontractors filing liens was approximately $7,000.

   
   

4. On or about December 12, 1985, Hometown Builders entered into a contract with a home owner named Mary Jane Parceneau to remodel her house for the total sum of $15,980. The work was to commence within two weeks and be finished within 30 days. Parceneau pulled the permits for the construction herself since the company had not obtained a local government license in her locale. Parceneau borrowed $16,000 to pay for the remodeling repairs. She paid

   $8,000 of this amount to Respondent's company. The company's workmen commenced the remodeling operation by entirely removing the inside plaster and all outside paint from the house. Respondent's workmen also removed at least two windows from the house. Then, the work ceased. The repairs were never completed and Parceneau, unable to meet payments on the remodeling loan, lost her home in the resultant mortgage foreclosure. Parceneau's attempts to regain some of the

   $8,000 paid to Respondent's company were rebuffed by Respondent who claimed that the work done by his company on this project equalled the amount previously paid. No proof was submitted by Respondent to support this assertion by him.

   Therefore, his testimony on this point is not credited. Respondent nor his company informed Parceneau why work on the project stopped. Her plaintive statement at hearing regarding the proposed remodeling of her home was "I would have been better off if I hadn't done anything".

   
   

5. On or about February 10, 1986, Hometown Builders contracted with Rachel Lareau to do extensive repairs to her home at a total price of $29,500. The agreement provisions stated that work would commence within 30 days and be completed within approximately 90 days after commencement. Lareau insisted that the contract with Hometown Builders provide a payment schedule. That schedule reflects that Hometown Builders would receive an initial payment of $200, followed by 30 percent of the total $29,500 when block walls to the home's addition were erected. An additional 30 percent of the contract price would be

   paid when the roof was completed. Another 30 percent would be paid when the drywall to the new addition was installed. The balance of the contract price would then be paid upon completion of the project.

   
   

6. At the behest of the salesman from Hometown Builders, Lareau borrowed

   $32,800 from a mortgage company recommended by him. Of that amount, $19,765 was left in escrow with the mortgage company. The escrow agreement, dated March 21, 1986 stated that $9,753 would be held until "block walls of addition are up." The remainder amount of approximately $10,000 would be disbursed only upon completion of all home improvements set forth in the contract between Hometown Builders and Lareau.

   
   

7. Two to three weeks after the execution of the escrow agreement by Lareau, workmen from Hometown Builders came to Lareau's residence as a result of her repeated telephone calls to the company complaining about the lack of progress on the project. The workmen put four holes in the ground, approximately 12 inches by 12 inches, to hold support beams for the construction of the addition to the residence which was supposed to follow. No beams were placed in the holes. The process of digging the holes took approximately one day. The workmen did not return.

   
   

8. Another two or three weeks passed. Lareau again became concerned. After repeated telephone calls, Lareau spoke with Respondent. Respondent explained that his company had been having problems, but that someone would be sent to do the work. He also disclosed that his company's employees had already received and spent approximately $10,000 of the escrowed funds. Respondent asked Lareau to provide another $10,000 for expenditure on the project. She refused. The telephone conversation concluded after Respondent told Lareau that other workmen would be sent to the site.

   
   

9. Receipt of the funds by Respondent's company was in direct contravention of provisions of the contract between Lareau and Hometown Builders as well as the Essex Mortgage Corporation escrow agreement with Lareau.

   
   

10. Other workmen sent to Lareau's home by Respondent were willing to do further work on the project only if they were provided additional funding. Respondent finally offered another workman who agreed to resume the project without additional finding being provided. However, Lareau was unable to confirm or elicit assurances from this individual that the amount of work would be consistent with what Lareau had been promised under terms of her agreement with Hometown Builders for the first payment of $9,753. In the absence of such assurance or confirmation, Lareau refused to permit this workman to commence work for fear she would unwittingly modify the original agreement and the workman left. In a later conversation with Lareau, Respondent confirmed that the amount of work he had contemplated the workman would perform was not quite as much as originally agreed upon with Lareau. No further work was undertaken on the Lareau project by Respondent. At hearing, he was unable to recall the exact amount of funds received from Lareau, but readily admitted to receiving a draw of approximately $7,000 to $8,000 for the project; an admission which lends further credence to Lareau's testimony that approximately $10,000 was paid to him by the escrow agent in violation of her agreements with the agent and Respondent's company.

    
    

11. Funds received from the Robke, Parceneau and Lareau projects were used for general day to day operations of Hometown Builders.

    CONCLUSIONS OF LAW

    
    

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

    
    

13. Petitioner is required to show by clear and convincing evidence that Respondent committed the violations alleged in the administrative complaint. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

14. As the qualifying agent for Hometown Builders, Respondent was responsible, pursuant to the definition of qualifying agent set forth in Section 489.105, Florida Statutes, for supervision, direction, management and control of the contracting activities of Hometown Builders.

    
    

15. Petitioner has proven by clear and convincing evidence that Respondent violated provisions of Section 489.129(1)(k), Florida Statutes, by abandoning the projects of Robke, Lareau and Parceneau.

    
    

16. Respondent also clearly committed misconduct in the practice of contracting in violation of Section 489.129(1)(m), Florida Statutes, and financial mismanagement and misconduct as defined by provisions of Section 489.129(1)(h), Florida Statutes. Such violations are clearly illustrated with regard to the Robke project where she paid $7,000 for a release of liens by subcontractors; and the Lareau project where the percentage of work completed by Respondent's company was far less than the amount of funds contractually authorized to be received and retained. Further, money from all three projects was diverted, according to Respondent, to the day to day operations of the business.

    
    

17. Such violations by Respondent also constitute failure to comply in a material respect with provisions of Part I, Chapter 489, Florida Statutes, which in turn affords an additional basis for the imposition of disciplinary sanctions against his license. Section 489.129(1)(j), Florida Statutes.

    
    

18. Counsel for Petitioner proposes the maximum penalty of revocation of Respondent's license together with the imposition of the maximum administrative fine in accordance with penalty guidelines set forth in Rule 21E-17.001, Florida Administrative Code. Such a sanction is amply justified in this case.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered revoking Respondent's license

and, in view of the repeated offenses in this case, imposing an administrative fine of $5000 in accordance with disciplinary guidelines set forth in section 21E-17.001 (19)(b), Florida Administrative Code.

DONE AND ENTERED this 23rd day of March, 1989, in Tallahassee, Leon County, Florida.

DON W. DAVIS

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 23rd day of March, 1989.

APPENDIX

The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by Petitioner.

PETITIONER'S PROPOSED FINDINGS

1. Rejected as obviously erroneous. 2.-10. Addressed.

COPIES FURNISHED:

David Bryant, Esquire

220 E. Madison Street, Suite 530 Tampa, Florida 33617

David M. Richey 5124 Holland Street

Tampa, Florida 33617

Fred Seely, Executive Director Construction Industry Licensing Board Department of Professional Regulation Post Office Box 2

Jacksonville, Florida 32201

Docket for Case No: 88-005732

Orders for Case No: 88-005732