STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, CONSTRUCTION )

INDUSTRY LICENSING BOARD, )

)

)

Petitioner, )

)

vs. ) CASE NOS. 91-0390

) 91-0391

WILLIAM C. LOVELACE, )

)

)

)

Respondent. )

)

RECOMMENDED ORDER

On April 18, 1991, a formal administrative hearing was held in this proceeding in Clearwater, Florida, before J. Lawrence Johnston, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Robert B. Jurand, Esquire

Senior Attorney

Department of Professional Regulation

Northwood Centre, Suite 60 1940 North Monroe Street

Tallahassee, Florida 32399-0792

For Respondent: William C. Lovelace, pro se

1961 Cove Lane

Clearwater, Florida 34624 STATEMENT OF THE ISSUES

The issues in these consolidated cases are whether the Construction Industry Licensing Board should discipline the Respondent, William C. Lovelace, on charges set out in the Amended Administrative Complaint in Case No. 91-0390 (DPR Case No. 89-010370) and in the Second Amended Administrative Complaint in Case No. 91-0391 (DPR Case No. 109703).

Both the Amended Complaint in Case No. 91-0390 and the Second Amended Complaint in Case No. 91-0391 allege essentially that the Respondent, a certified building contractor and registered roofing contractor, accepted payments under a contract for residential construction (with the Clarks in Case No. 91-0390 and with the Parows in Case No. 91-0391) and did not pay all suppliers and subcontractors on the job, some of whom filed claims of lien against the property. They allege that, in each case, the Respondent was found

guilty of misapplying real property improvement funds in violation of Section 713.345(1), Fla. Stat. (1989). Based on the allegations, they charge violations in three counts. In each case, Count I charges a violation of Section 489.129(1)(h), Fla. Stat. (1989), for mismanagement or misconduct in the practice of contracting that causes financial harm to the customer. Count II charges a violation of Section 489.129(1)(b), Fla. Stat. (1989), for being convicted or found guilty of a crime which directly relates to the practice of contracting or the ability to practice contracting. Count III charges a violation of Section 489.129(1)(m), Fla. Stat. (1989), for being guilty of fraud or deceit or of gross negligence, incompetence, or misconduct in the practice of contracting.

PRELIMINARY STATEMENT

Sometime before May 25, 1990, the Petitioner, the Department of Professional Regulation (the Department), filed an administrative complaint against the Respondent, William C. Lovelace, in DPR Case No. 109703. The Respondent filed an Election of Rights form denying the charges and requesting formal administrative proceedings under Section 120.57(1), Fla. Stat. (1989). However, the Respondent also advised the Department that criminal charges were pending and that the Respondent preferred to defer the administrative proceeding until the resolution of the criminal matter. The Department complied with the Respondent's wishes, and the administrative complaint was not referred to the Division of Administrative Hearings (DOAH) at that time.

Sometime before June 11, 1990, the Department filed an administrative complaint against the Respondent, William C. Lovelace, in DPR Case No. 89- 010370. The Respondent again filed an Election of Rights form denying the charges and requesting formal administrative proceedings under Section 120.57(1), Fla. Stat. (1989). The Respondent advised the Department that criminal charges also were pending in this matter and that the Respondent also preferred to defer the administrative proceeding in this case until the resolution of the criminal matter. The Department again complied with the Respondent's wishes, and the administrative complaint was not referred to DOAH at that time.

Subsequently, the administrative complaints were amended. On or about January 14, 1991, an Amended Complaint was filed and served in DPR Case No. 89- 010370, and a Second Amended Administrative Complaint was filed and served in DPR Case No. 109703. These pleadings, together with the earlier election of rights forms, were forwarded to DOAH on or about February 5, 1991. These were the first referrals to DOAH on these matters.

On receipt of the referrals, DOAH assigned DOAH Case No. 91-0390 to DPR Case No. 89-010370 and assigned DOAH Case No. 91-0391 to DPR Case No. 109703. After assignment to the Hearing Officer, the cases were consolidated for final hearing scheduled for April 18, 1991, in Clearwater, Florida.

At the outset of the final hearing, the Respondent made an ore tenus request for a continuance on the ground that the criminal convictions in the Clark and Parow matters were on appeal and were not final. The request for a continuance was denied.

During the final hearing, the Department called three witnesses and had Petitioner's Exhibits 1 through 12 admitted in evidence. The Respondent chose not to put on any evidence in his behalf.

At the conclusion of the final hearing, the Department ordered the preparation of a transcript of the final hearing. The deadline for proposed recommended orders was set at ten days after the filing of the transcript. The transcript was filed on May 29, 1991, making proposed recommended orders due on or before June 10, 1991. Only the Department filed a proposed recommended order. Explicit rulings on the proposed findings of fact contained in the Department's proposed recommended order may be found in the attached Appendix to Recommended Order, Case Nos. 91-0390 and 91-0391.

FINDINGS OF FACT

1. The Respondent, William C. Lovelace, has been a certified building contractor in the State of Florida since 1984, holding license number CB CO 29103. The Respondent has been a registered roofing contractor in the State of Florida since January, 1989, holding license number RC 0058368.

   
   

   1. Case No. 91-0390--The Clarks.

      
      

2. On or about June 8, 1987, the Respondent, who was doing business as Lovelace Development Enterprises, Inc., at the time, entered into a contract with James and Nedra Clark, then residents of the State of Ohio, for residential contruction on a residential building lot they owned in a subdivision in Safety Harbor in Pinellas County, Florida.

   
   

3. The contract price was $69,900, payable as follows: (1) $100 deposit;

   (2) $13,960 slab draw, paid August 9, 1987; (3) $17,450 frame draw, paid September 1, 1987; (4) $17,450 dry-in draw, paid September 16, 1987; (5) $13,960 dry wall draw, paid October 30, 1987; and (6) a $6,980 final payment, to be made when the certificate of occupancy was obtained, and paid on December 1, 1987.

   
   

4. The contract the Respondent signed and sent to the Clarks in Ohio for their signatures provided for construction to begin within 30 days and to be substantially completed within six months of commencement. Before the Clarks signed and returned the contract to the Respondent by mail from Ohio, they modified the contract to provide for a completion date of November 1, 1987.

   
   

5. The Respondent never commented on the Clarks' contract modification and never intimated that there would be any problem with having the Clark home ready for occupancy by November 1, 1987.

   
   

6. The Clarks made arrangements to move to their new home one weekend in October, 1987. They flew down on the Saturday before their furnishings and belongings were to arrive by moving van. When the Clarks arrived on Saturday, they were shocked to find that the home was nowhere near ready for occupancy. The Respondent explained that he was having financial problems. The Clarks asked why he accepted their draw payments and never told them that he was having financial problems and was not progressing with construction as scheduled. The Respondent offered to, and did, put the Clarks up in an apartment building he owned until the Clark home was ready for occupancy.

   
   

7. The Respondent did not pay three suppliers or subcontractors who worked on the Clark home and who subsequently filed claims of lien. The Clarks themselves satisfied the liens, plus the claimants' attorney fees, in addition to the contract price they had paid the Respondent. These additional payments amounted to approximately $7,000.

8. On or about October 18, 1989, a criminal information was filed against the Respondent in Case No. CTC 8926280MMANO in the County Court for the Sixth Judicial Circuit, in and for Pinellas County, Florida. The information charged the Respondent with misapplication of the Clarks' real property improvement funds in violation of Section 713.345, Fla. Stat. (1989). After a non-jury trial, the Respondent was found and adjudicated guilty as charged and was sentenced to 60 days in jail, suspended, and placed on probation for one year. Conditions of probation included the requirement that the Respondent make restitution to the Clarks in the amount of $9,036.96, payable within one year, with minimum monthly payments set at $100.

   
   

9. The Respondent appealed from the judgment of conviction. Execution of the sentence is stayed pending appeal. The appeal was pending at the time of the final hearing.

   
   

   1. Case No. 91-0391--The Parows.

   
   

10. On or about December 28, 1987, the Respondent entered into a contract with George and Barbara Parow for residential contruction on a residential building lot they owned in a subdivision in Pinellas County, Florida, called Windsor Woods II.

    
    

11. The contract price was $103,892, payable as follows: (1) $5,750 deposit; (2) $14,721 slab draw, paid February 17, 1988; (3) $14,721 lintel pour draw, paid February 23, 1988; (4) $14,721 frame draw, paid March 18, 1988; (5)

    $19,629 dry-in draw, paid April 22, 1988; (6) a $19,629 dry wall draw, paid May 11, 1988; and (7) $14,721 final payment to be paid when the certificate of occupancy was obtained.

    
    

12. Construction on the Parow home was to begin on January 19, 1988, and actually began on or about February 5, 1988. The Respondent did not pay several suppliers and subcontractors who worked on the Parow home and who subsequently filed claims of lien. As construction progressed, the Parows became aware of liens and discussed them with the Respondent. The Respondent assured the Parows that they all would be taken care of. Instead, more liens of other suppliers and subs were filed.

    
    

13. On advice of legal counsel, the Parows withheld the final draw. They also decided to refinance their property in order to finish construction themselves. To do so, they had to file a civil suit in Case Number 88-013508- 023 in Circuit Court, Sixth Judicial Circuit, in and for Pinellas County, Florida. They also had the bank deposit the last draw under the contract with the Respondent into the court registry. In the course of litigation, all valid liens were paid from the money in the court registry.

    
    

14. In addition, the Parows were required to pay $957 for a certificate of occupancy, $1,254 that the Respondent was supposed to have paid for carpeting in the home, and $628 for appliances the Parows had paid for but did not get from the Respondent. Additional items were paid by the Parows to finish the house. All told, the Parows paid about $5,000 more out-of-pocket than they should have under the contract with the Respondent, as modified by extras and changes, to complete their home.

    
    

15. On or about October 31, 1989, a criminal information was filed against the Respondent in Case No. CTC 8928044MMANO in the County Court for the Sixth Judicial Circuit, in and for Pinellas County, Florida. The information charged the Respondent with misapplication of the Parows' real property improvement

    funds in violation of Section 713.345, Fla. Stat. (1989). After a non-jury trial, the Respondent was found and adjudicated guilty as charged and was sentenced to 60 days in jail, suspended, and placed on probation for one year, to run concurrent with the probation imposed in Case No. 9826280MMANO (the Clark case). Conditions of probation included the requirement that the Respondent make restitution to the Parows in the amount of $10,178.73, payable $1,000 a month.

    
    

16. The Respondent also appealed from the judgment of conviction in the Parow case. Execution of the sentence is stayed pending appeal. The appeal was pending at the time of the final hearing.

    
    

    CONCLUSIONS OF LAW

    
    

17. Section 489.129, Fla. Stat. (1989), provides in pertinent part:

    
    

    The board may revoke, suspend, or deny the issuance or renewal of the certificate or registration of a contractor, require financial restitution to a consumer, impose an administrative fine not to exceed $5,000, place a contractor on probation, require continuing education, assess costs associated with investigation and prosecution, or reprimand or censure a contractor if the contractor . . . is found guilty of any of the following acts:

    * * *

    (b) Being convicted or found guilty, regardless of adjudication, of a crime in any jurisdiction which directly relates to the practice of contracting or the ability to practice contracting.

    * * *

    (h) Committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer. Financial mismanagement or misconduct occurs when:

    1. Valid liens have been recorded against the property of a contractor's customer for supplies or services ordered by the contractor for the customer's job; the contractor has received funds from the customer to pay for the supplies or services; and the contractor has not had the liens removed from the property, by payment or by bond, within 30 days after the date of such liens.

    2. The contractor has abandoned a customer's job and the percentage of completion is less than the percentage of the total contract price paid to the contractor as of the time of abandonment, unless the contractor is entitled to retain such funds under the terms of the contract or refunds the excess funds within 30 days after the date the job is abandoned.

    3. The contractor's job had been completed, and it is shown that the customer has had to pay more for the contracted job than the original contract price, as adjusted for subsequent change orders, unless such

    increase in cost was the result of circumstances beyond the control of the contractor, was the result of circumstances caused by the customer, or was otherwise permitted by the terms of the contract between the contractor and the customer.

    * * *

    (m) Being found guilty of fraud or deceit or of gross negligence, incompetency, or misconduct in the practice of contracting.

    
    

18. The evidence in this case is clear that the Respondent is guilty, as charged, of violations of Section 489.129(1)(b),(h) and (m), Fla. Stat. (1989), as to both the Clarks and the Parows.

    
    

19. F.A.C. Rule 21E-17.001 sets out the following pertinent guidelines to be used in this case, absent aggravating or mitigating circumstances:

    
    

    (10) 489.129(1)(h): Diversion of funds. First violation, $750 to $1500; 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 conviction; repeat violation, revocation.

    * * *

    (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 $1500 fine; repeat violation, $1000 to $5000 fine and suspension or revocation.

    
    

    Under the definition set out in F.A.C. Rule 21E-17.003, there is no evidence that the charges in this case are repeat violations.

    
    

20. Aggravating and mitigating circumsances are set out in F.A.C. Rule 21E-17.002 and 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. (This provision shall not be given effect to the extent it would contravene federal bankruptcy law.)

    2. Actual job-site violation of building codes, or conditions exhibiting gross negligence, incompetence, or misconduct by the licensee, which have not been corrected as of the time the penalty is being assessed.

    3. The severity of the offense;

    4. The danger to the public.

    5. The number of repetitions of offenses.

    6. The number of complaints filed against the licensee.

    7. The length of time the licensee has practiced.

    8. The actual damage, physical or otherwise, to the licensee's customer.

    9. The deterrent effect of the penalty imposed.

    10. The effect of the penalty upon the licensee's livelihood.

    11. Any efforts at rehabilitation.

    12. Any other mitigating or aggravation circumstances.

        
        

21. F.A.C. Rule 21E-17.005 provides that, where several of the violations occur in one or several cases being considered together, the penalties shall normally be cumulative and consecutive. However, in this case, there are only two separate factual bases for all of the violations--the Clark case and the Parow case.

    
    

22. F.A.C. Rule 21E-17.007 provides that, if advisable for the public welfare, in order to assure that the licensee operates properly and within the law in the future, the Board can place a licensee on probation in addition to the other penalties. See also Section 489.129(1), Fla. Stat. (1989).

    
    

23. Section 489.129(8), Fla. Stat. (1989), provides that, if the board finds a licensee guilty of a violation involving financial or general business practices, the Board may, as part of its disciplinary action, require the licensee to obtain continuing education in the areas of financial or general business practices.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Construction Industry Licensing Board enter a final order:

(1) finding the Respondent, William C. Lovelace, guilty as charged; (2) imposing an administrative penalty in the amount of $2,000, payable within 30 days; (3) requiring the Respondent to pay the costs associated with the investigation and prosecution of these matters, payable as determined by the Board in consideration of the amount of the costs; (4) requiring the Respondent to make full restitution to the Clarks and the Parows within two years; (5) placing the Respondent on probation for two years conditioned on (a) timely payment of the fine, of the costs, and of the restitution to the Clarks and the Parows, (b) successful completion of continuing education in the areas of financial or general business practices, and (c) such other conditions of probation as the Board may deem appropriate.

RECOMMENDED this 19th day of June, 1991, in Tallahassee, Florida.

J. LAWRENCE JOHNSTON 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 20th day of June, 1991.

APPENDIX TO RECOMMENDED ORDER

To comply with the requirements of Section 120.59(2), Fla. Stat. (1989), the following rulings are made on the Department's proposed findings of fact:

1.-4. Accepted and incorporated.

1. The final draw was $14,721. Otherwise, accepted and incorporated.

   
   

2. The $250 was designated "fines and costs," and is unnecessary. Otherwise, accepted and incorporated.

7.-8. Accepted and incorporated.

9. The $250 was designated "fines and costs," and is unnecessary. Otherwise, accepted and incorporated.

COPIES FURNISHED:

Robert B. Jurand, Esquire Senior Attorney

Department of Professional Regulation

Northwood Centre, Suite 60 1940 North Monroe Street

Tallahassee, Florida 32399-0792

William C. Lovelace, pro se 1961 Cove Lane

Clearwater, Florida 34624

Daniel O'Brien, Executive Director Construction Industry Licensing Board Post Office Box 2

Jacksonville, Florida 32202

Jack McRay, Esquire General Counsel

Department of Professional Regulation

Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

ALL PARTIES HAVE THE RIGHT TO SUBMIT TO THE CONSTRUCTION INDUSTRY LICENSING BOARD WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST TEN DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONSULT WITH THE CONSTRUCTION INDUSTRY LICENSING BOARD CONCERNING ITS RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER.

Docket for Case No: 91-000390

Orders for Case No: 91-000390