STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, )

)

Petitioner, )

)

vs. ) CASE NO. 90-4180

)

DAVID KNAUS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Daniel M. Kilbride, on October 31, 1991 in Punta Gorda, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Robert B. Jurand, Esquire

Department of Professional Regulation

Northwood Centre

1940 North Monroe Street Suite 60

Tallahassee, FL 32399-0792

For Respondent: Jack McGill, Esquire

1101 South Tamiami Trail Suite 101

Venice, FL 34285 STATEMENT OF THE ISSUES

Whether Respondent violated Section 489.129(1)(h), Florida Statutes, by committing mismanagement or misconduct in the practice of contracting which causes financial harm to a customer.

Whether Respondent violated Section 489.129(1)(l), Florida Statutes, by signing false payment statements which resulted in financial loss to the owner or purchaser.

Whether Respondent violated Section 489.129(1)(b), Florida Statutes, by being convicted or found guilty of a crime which directly relates to the practice of contracting.

Whether Respondent violated Sections 489.129(1)(j), 489.119 and 489.105(4), Florida Statutes, by failing to properly supervise the contracting activities he was responsible for as qualifying agent.

PRELIMINARY STATEMENT

Respondent is a certified general contractor licensed by Petitioner.

Charged by Petitioner in a second amended administrative complaint, on June 21, 1990, incorporating six cases, without separating them into separate counts, alleging seven violations of statute, the Respondent requested a formal administrative hearing. The matter was referred to the Division of Administrative Hearings on July 3, 1990 and this proceeding followed.

At hearing, the Petitioner presented testimony of 10 witnesses and 32 exhibits were admitted in evidence. The Respondent did not testify and offered no exhibits in evidence. The transcript was filed with the Clerk of the Division on December 14, 1990. Proposed findings of fact submitted by the parties are addressed in the appendix to this recommended order. Proposed findings were not received from the Respondent by the required deadline but were received 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. The Petitioner is the Department of Professional Regulation charged, in conjunction with the Construction Industry Licensing Board, with the responsibility to prosecute administrative complaints pursuant to Chapters 489,

   455 and 120, Florida Statutes, and the Rules promulgated pursuant to the statutes.

   
   

2. At all times material to the Administrative Complaint, Respondent David Knaus was licensed as a certified general contractor in the State of Florida, holding License No. CG CO35153.

   
   

3. At all times material hereto, Respondent's licensure was registered at the Construction Licensing Board as the qualifying agent for Homes of Port Charlotte, Inc. The primary operating officers of said corporation were Respondent and Barclay Ryder.

   
   

   As to Case No. 105157

   
   

4. On or about April 17, 1987, Homes of Port Charlotte, Inc., the entity for which the Respondent was the qualifying agent, contracted with John W. Gunn to construct a house at 2474 Colon Lane, Port Charlotte, Florida, for the amount of $91,291.00.

   
   

5. After completion of the house, a certificate of occupancy was issued. The Respondent provided the customer with a final contractor's affidavit, which claimed that all subcontractors and suppliers were paid. Thereafter, a number of claims of lien were filed against the property, the claims were in excess of

   $10,000 for work and/or supplies for which the general contractor had already been paid by the escrow agent, Florida State Land Title Company.

   
   

6. Said claims were paid off by the owners of the property. Neither the Respondent, nor the company, had the liens removed within 30 days after the date of the filing of the liens.

   As to Case No. 105718

   
   

7. On or about September 28, 1987, Homes of Port Charlotte, Inc., the entity for which the Respondent was the qualifying agent, contracted with Wallace and Pamela Nichols to construct a house at 116 Peckham Street Southeast, Port Charlotte, Florida, for the amount of $90,027.00.

   
   

8. After virtual completion of the construction, Homes of Port Charlotte received all of the money due them under the contract.

   
   

9. The Respondent provided the Nichols with final contractor's affidavit which claimed that all subcontractors and suppliers were paid.

   
   

10. Thereafter, a number of claims of liens were filed against the property for services rendered and/or materials supplied by subcontractors during the construction of said home, but remained unpaid. The general contractor had already been paid for said supplies and/or services on previous draws by Naples Federal, the lending institution.

    
    

11. The Nichols had to pay approximately $5,000.00 additional in order to complete unfinished items and/or to bring the house to a state of completion called for in the original contract and to satisfy the liens. Neither the Respondent, nor the company, had the liens removed within 30 days after the date of the filing of the liens.

    
    

    As to Case No. 105774

    
    

12. On or about April 29, 1987, Homes of Port Charlotte, Inc., the entity for which the Respondent was the qualifying agent, contracted with Victor and Angelina Wasilow to construct a house at 7234 Bargello Street, Englewood, Florida, for the amount of $54,207.90.

    
    

13. After completion of the construction of the home, the Respondent furnished the Wasilows with final contractor's affidavit which claimed that all subcontractors and suppliers were paid.

    
    

14. Thereafter, a number of claims of lien were filed by subcontractors for services rendered and/or materials supplied in the construction of the home, but remained unpaid. The general contractor had already been paid for said supplies and/or services by the escrow agent, Florida Land Title Company.

    
    

15. The owners, Mr. and Mrs. Wasilow, had to pay extra for the completion of the cesspool, which was to have been included in the original contract, and incurred attorney fees in the amount of $300.00 for legal advice associated with the problems.

    
    

16. Neither the Respondent, nor the company, had the liens removed within

    30 days after the date of the filing of the liens.

    
    

    As to Case No. 016937

    
    

17. On or about April 20, 1987, Homes of Port Charlotte, Inc., the entity for which the Respondent is the qualifying agent, contracted with Chris and Lorraine D'Angelo to construct a house at 581 Queens Avenue, Port Charlotte, Florida, for the amount of $70,758.00.

18. When the house was approximately 60 to 65 percent complete, construction stopped, and the Respondent's company abandoned the project due to the company's declaration of bankruptcy.

    
    

19. The D'Angelos subsequently finished construction of the house on their own. However, a claim of lien was filed by Nicks Title Company in the amount of

    $846.12 for work that had been ordered by the general contractor and performed prior to the general contractor leaving the job.

    
    

20. The D'Angelos in completing their house according to the original specifications were required to spend approximately $10,000.00 in additional funds.

    
    

    As to Case No. 107168

    
    

21. On or about March 28, 1987, Homes of Port Charlotte, Inc., the entity for which the Respondent was the qualifying agent, contracted with Alfred and Adele Schmidt to construct a house at 1130 Birchcrest Boulevard, Port Charlotte, Florida, for the amount of $84,932.00.

    
    

22. In the early part of August, 1988, when the contractor had drawn all of its money due under the contract, with the exception of $7,542.50, the Schmidts attempted to move into their home only to find the house approximately only 60 percent complete and the job abandoned.

    
    

23. The Schmidts recommenced construction of the house on their own and expended the remainder of the money left in the escrow account (about $9,000.00) and an additional $25,622.00 in order to complete the house according to the original contract specifications.

    
    

24. Subsequently, a number of claims of lien were filed on their property by subcontractors for services performed and/or supplies furnished during the construction of the house, which work or supplies had already been paid for to the general contractor by the Schmidts. Neither the Respondents, nor the company, had the liens removed.

    
    

    As to Case No. 110301

    
    

25. On or about April 15, 1987, Homes of Port Charlotte, Inc., the entity for which the Respondent is the qualifying agent, contracted with Louis and Phyllis Silva to construct a house at 447 Carolyn Street, Port Charlotte, Florida, for the amount of $74,400.00.

    
    

26. After the contractor had received all monies due under the contract, including payment for all extras ordered, a number of claims of lien were filed against the property by subcontractors and/or suppliers for services performed and/or supplies furnished during the construction of the home.

    
    

27. The general contractor had already received payment for said supplies and services. The Respondent had provided the customer with final contractor's affidavit claiming all subcontractors and suppliers had been paid. Neither the Respondent, nor the company had the liens removed within 30 days after the date of the filing of the liens.

    As to All Cases

    
    

28. On June 1, 1990, after trial on a thirty count Amended Information before the Circuit Court for Charlotte County, Florida, a jury returned a verdict of guilty as to eight counts of grand theft, a felony, and nine counts of misuse of monies, a misdemeanor. Each count related to the practice of contracting. Motions to set aside the verdict are pending. A presentence investigation was ordered by the presiding judge, and disposition and sentencing was scheduled for a date subsequent to the date of the formal hearing.

    
    

    CONCLUSIONS OF LAW

    
    

29. 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.

    
    

30. The Petitioner is responsible, in conjunction with the Construction Industry Licensing Board, for the disciplining of licenses of general contractors. Section 489.129, Florida Statutes.

    
    

31. The burden of proof is on the Petitioner as to each count of the Administrative Complaint. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977). In revocation of license proceedings, the Petitioner must prove by clear and convincing evidence the violations alleged in the Complaint. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

32. Petitioner presented clear and convincing evidence that Respondent, as alleged in the Second Amended Administrative Complaint, violated Section 489.129(1)(h), Florida Statutes, by committing mismanagement or misconduct in the practice of contracting which causes financial harm to a customer. Upon six occasions, to-wit, the projects with the Wasilows, the Silvas, the Gunns, the Nichols, the D'Angelos, and the Schmidts, valid liens were recorded against the property of said customers for supplies or services ordered by the contractor for the customers' job; the contractor had received funds from the customers to pay for the supplies or services; and, the contractor had not had the liens removed from the property, by payment or by bond within thirty days after the date of such liens.

    
    

33. Petitioner presented clear and convincing evidence that Respondent, as alleged in the Second Amended Administrative Complaint, violated Sections 489.129(1)(l), Florida Statutes. On the projects with the Wasilows, the Silvas, the Guns, and the Nichols, the Respondent signed statements with respect to said projects or contracts falsely indicating that payment had been made for all subcontracted work, labor, and materials, and which resulted in a financial loss to the owner or purchaser, and thus violated the aforementioned statutes.

    
    

34. Petitioner did not present clear and convincing evidence that Respondent, as alleged in the Second Amended Administrative Complaint, violated Section 489.129(1)(b), Florida Statutes by being convicted or found guilty of a crime which directly relates to the practice of contracting. Although the crimes clearly related to the practice of contracting, as of the date of the hearing it was not proven that Respondent was convicted of a crime. The term "judgment" means the adjudication by the court that the defendant is guilty or not guilty. Fla.R.Crim.P. 3.650. The verdict of a jury is the foundation of the judgment, Myers v. State, 115 Fla. 627, 155 So. 797 (1934). A jury's verdict is made effective only by judgment of the court adopting its findings.

    Ellis v. State, 100 Fla. 27, 192 So. 106 (1930). As of the date of the hearing, the court had not adopted the findings of the jury, and Respondent cannot be considered "convicted or found guilty of a crime" under Section 489.129(1)(b), Florida Statutes, until the court has entered Judgment.

    
    

35. Petitioner did not present clear and convincing evidence that Respondent, as alleged in the Second Amended Administrative Complaint violated Section 489.129(1)(j); Section 489.119; and, Section 489.105(4), Florida Statutes, by failing to properly supervise the contracting activities he was responsible for as qualifying agent. On the projects for the Wasilows, the Silvas, the Guns, the Nichols, the D'Angelos, and the Schmidts, the Respondent, by not recognizing and allowing the situation to develop where the subcontractors of the project were not receiving payment, and in not taking corrective or preventive measures, demonstrated a failure to properly supervise the contracting activity he was responsible for as qualifying agent, thus violating the aforementioned statutes. The Respondent, as qualifying agent for Homes of Port Charlotte, clearly violated his statutorily imposed professional duty as sole qualifying agent of record of the contractor, to supervise all of the contractor's project. Alles v. Department of Professional Regulation, Construction Industry Licensing Board, 423 So.2d 624 (Fla. 5th DCA 1984).

    
    

36. Petitioner presented clear and convincing evidence that Respondent, as alleged in the Second Amended Administrative Complaint, violated Section 489.129(1)(m), Florida Statutes, by being guilty of gross negligence, misconduct, or incompetency in the practice of contracting. The Respondent was plainly derelict in his duties as a licensed contractor by not paying subcontractors while receiving payment for their services; by filing false affidavits stating that all labor and materials were paid for when in fact they were not fully paid for. The Respondent is therefore guilty of gross negligence, misconduct and/or incompetence in the practice of contracting and thus in violation of the aforementioned statute.

    
    

37. Rule 21E-17.001, Florida Administrative Code, establishes punishment guidelines for registrants found guilty of violations of Chapter 489, Florida Statutes, absent mitigating or aggravating circumstances:

    
    

    1. 489.129(1)(1): False payment statements.

       
       

       1. False payment statement, liens were filed or customer otherwise injured. First violation, $250 to $750 fine; repeat violation, one year suspension and $1,000 to $3,000 fine.

          
          

    2. 489.129(1)(h): Diversion of funds. First violation, $750 to $1,500 fine; repeat violation, revocation.

       
       

       (17) 489.129(1)(b): Convicted or found guilty of a crime relating to contracting.

       Use penalty for violation most closely resembling the act underlying the con- viction; repeat violation, revocation.

       
       

       (19) 489.129(1)(m): Gross negligence, incompe- tence and/or misconduct, fraud or deceit.

       1. Causing monetary or other harm to li- censee's customer, or physical harm to any person. First violation, $500 to

       $1,500 fine; repeat violation, $1,000 to $1,500 fine and suspension or revo- cation.

       
       

       (21) The absence of any violation from this Chap- ter shall be viewed as an oversight, and shall not be construed as an indication that no penalty is to be assessed.

       
       

38. Rule 21E-17.002, Florida Administrative Code, lists aggravating and mitigating circumstance which include: (1) monetary or other damage to the licensee's customer, in any way associated with the violation, which damage the licensee has not relieved, as of the time the penalty is to be assessed; (3) the severity of the offense; (5) the number of repetitions of offenses; and (6) the number of complaints filed against the licensee.

    
    

39. Rule 21E-17.005, Florida Administrative Code, states that "Where several of the above violations shall occur in one or several cases being considered together, the penalties shall normally be cumulative and consecutive."

    
    

40. In consideration of the foregoing penalty guidelines and in consideration of the aggravating circumstances in this case, to-wit, the number of complaints, the severity of the offenses, and the tremendous financial burden incurred by the customers in each of the five cases presented, together with consideration of what was clearly a pattern of egregious behavior on the part of the Respondent, with total disregard for the statutorily imposed responsibilities of a licensed contractor in the State of Florida, it is recommended that the Respondent's licensure be revoked.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent be found guilty of violating Section

489.129(1)(l), Florida Statutes, as to Case Nos. 105157, 105718, 105774 and

110301; violating Section 489.129(1), Florida Statutes, as to Case Nos. 105157, 105718, 105774, 016937 and 107168; violating Sections 489.129(1)(m) and 489.129(1)(j), 489.119 and 489.105(4), Florida Statutes, as to Case Nos. 105157, 105718, 105774, 016937 and 107168; and that Respondent be found not guilty of violating Section 489.129(1)(b), Florida Statutes.

FURTHER RECOMMENDED that a final order be entered revoking Respondent's contractor's license in accordance with disciplinary guidelines set forth in section 21E-17.001 (9), (10), and (19), Florida Administrative Code.

DONE AND ENTERED this 1st day of February, 1991, in Tallahassee, Leon County, Florida.

Daniel M. Kilbride 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

1st day of February, 1991.

APPENDIX

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

Petitioner's Proposed Findings of Fact.

Accepted in substance: paragraphs 1,2,3,4,5,6,7,8,9 and 10 (in part) Rejected as not supported by clear and convincing evidence: paragraph 10 (in part)

Respondent's Proposed Findings of Fact.

Accepted in substance: paragraphs 1,2,3,5,11 (#105157) 1,2,3 (#105718) 1,2,

(#105774) 1,2,3,4 (#106937) 1,2 (#107168) 1; (#110301) 1,2

Rejected as against the greater weight of the evidence: paragraphs 4,8,10, (#105157) 4, (#105718) 3 (#105774) 5, (#106937) 3, (#107168) 2; (#110301) 3

Rejected as not relevant: paragraphs 6,7,9

Copies furnished:

Robert B. Jurand, Esquire Department of Professional

Regulation Northwood Centre

1940 North Monroe Street Suite 60

Tallahassee, FL 32399-0792

Jack McGill, Esquire 1101 South Tamiami Trail Suite 101

Venice, FL 34285

Jack McRay General Counsel

Department of Professional Regulation

Northwood Centre

1940 North Monroe Street Suite 60

Tallahassee, FL 32399-0792

Daniel O'Brien Executive Director

Construction Industry Licensing Board Post Office Box 2

Jacksonville, FL 32202

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-004180

Orders for Case No: 90-004180