STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, ) CONSTRUCTION INDUSTRY )

LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 95-4534

)

MARK P. STANISH, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly-designated Hearing Officer of the Division of Administrative Hearings, on November 14, 1995, in Ocala, Florida.

APPEARANCES

For Petitioner: Donna Bass, Esquire

Department of Business and Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-0750

For Respondent: Mark P. Stanish, pro se

6041 Town Court

Springhill, Florida 34606 STATEMENT OF THE ISSUES

The issues to be resolved in this proceeding concern whether the Respondent violated Section 489.127(1)(f), Florida Statutes (1994 Supp.), by allegedly engaging in the practice of contracting without being duly registered or certified or by advertising himself, or a business organization, as available to engage in that business without being duly registered or certified.

PRELIMINARY STATEMENT

This cause arose upon the filing of an Administrative Complaint, which charged that the Respondent has violated Section 489.127(1)(f), Florida Statutes (1994 Supp.), by allegedly engaging in the business or acting in the capacity of a contractor without being duly registered or certified as a licensed contractor by the Florida Construction Industry Licensing Board. The Complaint also alleges that the Respondent advertised himself or a business organization as available to engage in contracting without being duly registered or certified.

The Petitioner seeks to impose a $5,000.00 penalty, pursuant to Section 455.228,

Florida Statutes (1994 Supp.). The Respondent challenged the allegations of the Administrative Complaint, and this formal proceeding ensued.

The cause came on for hearing as noticed. The Petitioner presented the testimony of 10 witnesses and had nine exhibits admitted into evidence. The Respondent adduced no live testimony. He introduced one exhibit and was allowed to submit a late exhibit, upon the condition that it be served upon the Petitioner and the Hearing Officer within five days of hearing. This exhibit, identified as Respondent's Exhibit 2, was not received by the Hearing Officer or the Petitioner. Therefore, it has not been admitted into evidence. Upon conclusion of the proceeding, a transcript thereof was obtained and filed. The parties requested an extended period of time to submit Proposed Recommended Orders containing proposed findings of fact and conclusions of law. Those have been submitted and are addressed in this Recommended Order and again in the Appendix attached hereto and incorporated by reference herein.

FINDINGS OF FACT

1. The Petitioner is an agency of the State of Florida charged with regulating the licensing of contractors in Florida and regulating the practice of contracting of all types. Specifically, the Petitioner is responsible for enforcing law which prohibits unlicensed persons from engaging in the business of contracting, or advertising themselves or business organizations as available to engage in contracting, without proper licensure.

   
   

2. The Respondent is a citizen of the State of Florida, who has embarked on a business of representing owners who desire to construct residences, acting as the agent of those owners in arranging for materials, labor, subcontractors, and the financing of construction. Upon the decision by the owner to construct a residence, the Respondent engages in drafting plans, to some extent, arranging for subcontractors, overseeing the details of the work and any changes or alterations in the work and plans as the project proceeds. The owner in this arrangement does not obtain workers' compensation coverage for the Respondent, as would be the case if the Respondent was an employee of the owner, nor does the owner withhold F.I.C.A. taxes from monies due the Respondent for his services. The Respondent is not licensed as a contractor in the State of Florida.

   
   

3. On May 11, 1995, the Respondent signed a contract (hereinafter the "Kassiris Contract") with owner Gus Kassiris, to oversee the erection and construction of a new residence for Mr. Kassiris. The Respondent was to perform the following duties, pursuant to the Kassiris Contract:

   
   

   1. to make recommendations as to which subcontractor to hire;

   2. to inspect progress and review payments;

   3. consultations and solutions on construc- tion project;

   4. to engage in manpower tracking and coor- dination of resources;

   5. monitoring of contract compliance;

   6. to provide punch list services; and

   7. to engage in the preparation and de- fense of change orders, as well as cost accounting.

      The "punch list services" mean that the Respondent was to engage in insuring that no work was left undone or done incorrectly at the end of the project.

      
      

4. The Respondent admitted that he conducted all inspections on the project and reviewed all requisitions for payment from the subcontractors. The amount he charged for his services was roughly equivalent to the amount a licensed contractor would charge for similar services.

   
   

5. The Kassiris Contract did not meet the conditions for a homeowner's exemption, found in Section 489.103(7), Florida Statutes. Specifically, the Kassiris Contract did not provide that the Respondent would work under the supervision of the homeowner. In fact, the Kassiris Contract provided that if the homeowner wanted changes made in the specifications, he could request a change order. The Kassiris Contract also did not provide that the homeowner would deduct F.I.C.A. and withholding taxes from the Respondent's fees or wages, as required in the homeowner's exemption standards. There was no provision requiring that the homeowner provide workers' compensation, as required by the statute, in order to make out the elements of the homeowner's exemption (from the requirement of having a contractor's license).

   
   

6. The conditions for exemption from licensure were also not met in the implementation of the Kassiris Contract. Specifically, the homeowner did not act as his own contractor and provide all of the material supervision himself. Although he denies it, in fact, the Respondent negotiated the contracts with the subcontractors and, during the course of performance of the Kassiris Contract, the Respondent approved plan changes for the project, without the involvement or consultation of the owner.

   
   

7. The Respondent acted in the capacity of a contractor in the implementation of the contract by overseeing most details of construction of the residence. He performed the on-site inspections, dealt with subcontractors, approved the manner in which work was being performed, approved payment of subcontractors, and, in general, closely managed all details of the contracting effort. Practically, the only involvement the owner had, other than being present on the site frequently, was that the owner actually wrote the checks to pay the subcontractors and delivered them to the Respondent, who, in turn, delivered them to the subcontractors. The owner obtained the building permit at the commencement of the project.

   
   

8. The Respondent advertised in the Citrus County Chronicle, a newspaper of general circulation, on or about June 25, 1995, that he offered services for hire as a construction consultant and for project management. On or about June 27, 1995, he entered into a contract with Paul and Valerie Stamper (hereinafter the "Stamper Contract"). The Respondent was thus charged with overseeing the erection and construction of a residence located at Lot 15 of Laurel Oak Estates Subdivision in Citrus County, Florida. He acted in the capacity of a contractor in the negotiation and formulation of this contract.

   
   

9. According to the Stamper Contract, the Respondent's responsibilities were to include the following:

   
   

   1. make recommendations as to which subcon- tractor to hire;

   2. conduct progress inspections and payment reviews;

   3. consult concerning construction problems and arrive at solutions;

   4. engage in manpower and tracking and coor- dination of resources;

   5. monitor contract compliance;

   6. provide "punch list" services;

   7. prepare and defend any change orders;

   8. engage in cost accounting.

      
      

10. The terms of the Stamper Contract indicate that the residence to be constructed was to be purveyed to the owner, rather than a case of the owner being the contractor actually creating the product. In order for the above- referenced exemption to apply, the homeowner must be the party functioning as a contractor on his own behalf. It is noteworthy in this regard that the Stampers gave the Respondent a $3,000.00 deposit. The Stampers later decided that they did not wish to proceed with the contract and requested return of that deposit. The Respondent refused to return the deposit money, although acknowledging that the Stamper Contract was no longer in effect. In his letter to the Stampers, responding to their request for return of the deposit, he proposed, instead, that they continue to proceed with the contract and the construction of the residence, which the Stampers no longer wished to own and occupy, in order that they could sell it. The intention to construct a residence for sale to another party directly belies the possibility that the homeowner can be his own contractor, constructing a residence for his own use in compliance with the homeowner-exemption law. It shows an intention to engage in contracting by the Respondent.

    
    

11. The existence of facts supporting this exemption is also belied because the Respondent, in his contract with the Stampers, did not contract to have F.I.C.A. or income taxes withheld from any paychecks due him from the Stampers, nor did the Stampers contract to provide workers' compensation coverage for the Respondent. The contract also did not provide that the owners, the Stampers, would act as their own contractors and provide all material supervision themselves. In fact, the Respondent was to provide supervision.

    
    

12. The Petitioner is responsible for enforcing the prohibition against unlicensed contracting in order to protect the public. There are frequent problems with unlicensed contractors in Florida in terms of their competence to provide quality work and their willingness to do so, as well as outright fraud and harm to the public. The contracts which unlicensed contractors enter into are illegal and unenforceable. Homeowners who contract with unlicensed contractors are not eligible for recovery under the Construction Industry Licensing Recovery Fund.

    
    

13. On July 2, 1995, the Respondent again advertised in the Citrus County Chronicle, advertising himself as available to manage the construction of residences. Based upon this notice and other information, the Petitioner issued a Notice to Cease and Desist to the Respondent, ordering him to cease and desist the unlicensed practice of contracting. The Respondent contends that he is not a contractor and that he is, instead, a project manager or consultant and, therefore, not governed by the statutory provision authorizing the Notice to Cease and Desist.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Section 120.57(1), Florida Statutes.

15. Section 489.127, Florida Statutes, provides that no person shall engage in the business or act in the capacity of a contractor or advertise himself or a business organization as available to engage in the business or in the capacity of a contractor without being duly registered or certified. Any unlicensed person who violates any of the provisions of Subsection (1) commits a misdemeanor of the first degree, punishable as provided in Section 775.082 or Section 775.083, Florida Statutes. Contractors are defined as follows:

    
    

    The person who is qualified for, and shall only be responsible for, the project contracted for and means, except as exempted in this part, the person who, for compensation, undertakes to, submits a bid to, or does himself or by others construct, repair, alter, remodel, add to, demolish, subtract from, or improve any build- ing or structure, including related improve- ments to real estate, for others or for resale to others; and whose job scope is substantially similar to the job scope described in one of the subsequent paragraphs of this subsection . . . .

    Contractors are subdivided into two divisions, Division I, consisting of those contractors defined in paragraphs (a)-(c), and Division II, consisting of those contractors defined in paragraphs (d)-(q):

    1. 'General contractor' means a contractor whose services are unlimited as to the type

       of work which he may do, except as provided in this part.

    2. 'Building contractor' means a contractor whose services are limited to construction of commercial buildings and single-dwelling or multiple-dwelling residential buildings, which commercial or residential buildings do not exceed three stories in height, and accessory use structures in connection therewith or a contractor whose services are limited to remodeling, repair, or improvement of any size building if the services do not affect the structural members of the building.

    3. 'Residential contractor' means a con- tractor whose services are limited to construc- tion, remodeling, repair, or improvement of

       one-family, two-family, or three-family resid- ences not exceeding two habitable stories above no more than one uninhabitable story

       and accessory use structures in connection therewith. . .

       
       

       Section 105(3)(1994 Supp.), Florida Statutes.

       
       

16. Section 489.105(6), Florida Statutes, provides, as follows:

    
    

    Contracting means, except as exempted in this part, engaging in business as a con- tractor and includes, but is not limited to, performance of any of the acts as set forth in

    subsection (3) which define types of con- tractors. The attempted sale of contracting services and the negotiation or bid for a con- tract on these services also constitutes con- tracting. If the services offered require licensure or agent qualification, the offering, negotiation for a bid, or attempted sale of these services requires the corresponding licensure. . .

    
    

17. The contracts in this case provide that the Respondent was to oversee the erection and construction of the residences. Oversee means to "watch over and direct; supervise." American Heritage Dictionary, 886 (Second College Edition 1991). Manage means "to direct or control the use of; to exert control over; to make submission to one's authority, discipline or persuasion; to direct or administer . . .". American Heritage Dictionary, 761 (Second College Edition 1991). Here, unrefuted evidence shows that the Respondent, indeed, acted as the supervisor of the project incorporated in the Kassiris Contract by overseeing the execution of nearly all details of the contracting effort, including the ordering and implementation of change orders, changes in plans, daily inspections and critiquing and correcting the quality of the subcontractors' work. The Respondent clearly acted in the capacity of a contractor, based upon the above Findings of Fact, in entering into the Kassiris and Stamper Contracts discussed herein and in the actual performance of the Kassiris Contract, as well as by placing the newspaper advertisements referenced in the above Findings of Fact.

    
    

18. The Respondent was not exempt from the licensure requirements of Chapter 489, Florida Statutes. The only exemptions to the licensure requirements are stated at Section 489.103, Florida Statutes, and the only exemption which could arguably apply to the instant case is Section 489.103(7), Florida Statutes, which provides the so-called "homeowner's exemption" for:

    
    

    Owners of property when acting as their own contractor and providing all material super- vision themselves, when building or improving farm outbuildings or one-family or two-family residences on such property for the occupancy or use of such owners and not offered for sale or lease, or building or improving commercial buildings at a cost of under $25,000 on such property for the occupancy or use of such owners and not offered for sale or lease. In an action brought under this part, proof of the sale or lease, or offering for sale or lease, of any such structure by the owner- builder within 1 year after completion of

    same creates a presumption that the construc- tion was undertaken for purposes of sale or lease. This subsection does not exempt any person who is employed by such owner and who acts in the capacity of a contractor. For the purposes of this subsection, the term "owners of property" includes the owner of a mobile home situated on a leased lot. To qualify

    for exemption under this subsection, an owner must personally appear and sign the building

    permit application. The local permitting agency shall provide the person with a dis- closure statement in substantially the following form:

    
    

    Disclosure Statement

    
    

    State law requires construction to be done by licensed contractors. You have applied for a permit under an exemption to that law.

    The exemption allows you, as the owner of your property, to act as your own contractor even though you do not have a license. You must supervise the construction yourself. You may build or improve a one-family or two-family residence or a farm outbuilding. You may also build or improve a commercial building at a cost of $25,000 or less. The building must

    be for your own use and occupancy. It may not be built for sale or lease. If you sell or lease a building you have built yourself with- in one year after the construction is complete, the law will presume that you built it for

    sale or lease, which is a violation of this exemption. You may not hire an unlicensed person as your contractor. It is your responsi- bility to make sure that people employed by you have licenses required by state law and by county or municipal licensing ordinances. Any person working on your building who is not licensed must work under your supervision and must be employed by you, which means that you must deduct F.I.C.A. and withholding tax and provide workers' compensation for that employee,

    all as prescribed by law. Your construction must comply with all applicable laws, ordinances, building codes, and zoning regulations.

    
    

19. The Kassiris Contract did not meet the terms of the exemption, in either its terms or its implementation, as shown by the above Findings of Fact, because the homeowner did not provide all material supervision. Moreover, the Respondent was not considered an employee but was considered as the manager. The homeowner did not deduct F.I.C.A. and withholding tax deductions from the pay due to the Respondent from the homeowner, nor did the homeowner provide

    workers' compensation coverage for the Respondent. Thus, these critical indicia of the elements required to make out the "homeowner's exemption", provided for in the above statutory reference, did not exist in the Kassiris Contract arrangement with the Respondent.

    
    

20. Section 489.103(7), Florida Statutes, addresses the situation which occurred with this contract and states very explicitly "this subsection does not exempt any person who is employed by such owner and who acts in the capacity of a contractor." The required disclosure statement, embodied in that statutory provision, further directs the homeowner "you may not hire an unlicensed person as your contractor." The above Findings of Fact clearly show that the Respondent was in sufficient control and in a sufficiently-supervisory capacity over even the smallest details of the work being performed for the Kassiris

    Contract. He was clearly acting in the capacity of a contractor as a factual matter. Moreover, the Stamper Contract, in terms of the duties and authority accorded the Respondent by the terms of the contract, even though the project was never carried out, clearly shows that it was contemplated by the parties to it that he act in the capacity of a contractor in terms of the duties and responsibilities he was to perform.

    
    

21. The Stamper Contract does not fit the terms of the exemption for these aforementioned reasons, either. Additionally, when the Respondent proposed to construct the Stamper residence and then sell it to third parties, he further violated the requirements for the so-called "homeowner's exemption". Therefore, in entering into the contract to oversee the erection and construction of the Stamper residence, the Respondent violated Section 489.127(1)(f), Florida Statutes, by acting in the capacity of a contractor. Section 489.128, Florida Statutes, provides:

    
    

    As a matter of public policy, contracts entered into on or after October 1, 1990, and performed in full or in part by any contractor who fails to obtain or maintain his license in accordance with this part shall be unenforceable in law or in equity. However, in the event the contractor

    obtains or reinstates his license, the provisions of this section shall no longer apply.

    
    

22. Homeowners are not eligible for relief from the Construction Industry Recovery Fund if a claim is based upon a construction contract in which the contractor did not hold a valid and current license at the time of the construction contract, because the contract is not legal. Section 489.141, Florida Statutes. Thus, in these situations, it is a frequent occurrence that members of the public who entered into such a contract and expended monies on the strength of it and in reliance upon the supposed "contractor" are often left with substantial pecuniary losses. Accordingly, public policy embodied in the above statutory authority is to protect the public by vigorous enforcement of such regulation applying to the business of contracting.

    
    

23. Section 455.228, Florida Statutes, provides that when the Department has probable cause to believe that any person not licensed by the Department has violated any provision of Chapter 489, Florida Statutes, the Department may issue and deliver to such person a Notice to Cease and Desist from such violation. That was done in this case, but the Respondent made it clear that he intended to continue operating as he was operating, which the above Findings of Fact show was actually in the capacity of a contractor. The Respondent apparently believes that by holding himself out as a "manager" or "consultant", the above statutory provisions do not apply to him or to his business. The unrefuted evidence of record culminating in the above Findings of Fact, however, shows that he was holding himself out and operating in the capacity of a contractor and without dispute, he is not licensed as such. The arrangement he had with the homeowners in question does not fit the parameters of the "homeowner-as-contractor" exemption, as outlined in the above-quoted statutory authority. Therefore, the Respondent is guilty of engaging in the business of contracting without proper licensure and by authority of Section 455.228(1), Florida Statutes, the Petitioner may file and prosecute the subject Administrative Complaint and seek the administrative fine sought in this proceeding of up to $5,000.00. It has been proven that the Respondent acted in the capacity of a contractor with regard to the Kassiris Contract and the Stamper Contract by entering into those arrangements, by engaging in the

performance of the Kassiris Contract in the manner in which he performed it, as well as with regard to the two newspaper advertisements referenced in the above Findings of Fact.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is

RECOMMENDED that a Final Order be entered imposing an administrative fine in the amount of $5,000.00 against the Respondent.

DONE AND ENTERED this 23rd day of February, 1996, in Tallahassee, Florida.

P. MICHAEL RUFF, 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 February, 1996.

APPENDIX TO RECOMMENDED ORDER CASE NO. 95-4534

Petitioner's Proposed Findings of Fact 1-9. Accepted.

10. Rejected, as constituting a conclusion of law.

11-14. Accepted.

15. Rejected, as being irrelevant. 16-17. Accepted.

18. Accepted, except for the next to the last sentence,

Respondent's Proposed Findings of Fact 1-2. Accepted.

1. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter.

2. Rejected, as contrary to the unrefuted evidence and

   as subordinate to the Hearing Officer's findings of fact on this subject matter.

3. Rejected, as not in accordance with the greater weight of the evidence and as subordinate to the Hearing Officer's findings of fact on this subject matter.

4. Rejected, as constituting a conclusion of law, but to the extent it might be a proposed finding of fact, as

   not in accord with unrefuted evidence of record and as subordinate to the Hearing Officer's findings of fact on this subject matter.

5. Rejected, as not representative of the unrefuted evidence of record and as subordinate to the Hearing Officer's findings of fact on this subject matter and as not itself being dispositive of material issues.

6. Rejected, as contrary to the greater weight of the evidence and as not being materially dispositive.

7. Rejected, as contrary to the greater weight of the evidence and as subordinate to the Hearing Officer's findings of fact on this subject matter and as, in part, being a conclusion of law and not a proposed finding of fact.

10-12. Rejected, as constituting a conclusion of law.

COPIES FURNISHED:

Donna Bass, Esquire Department of Business

and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0750

Mr. Mark P. Stanish 6041 Town Court

Springhill, FL 34606

Richard Hickok, Executive Director Construction Industry Licensing Board Department of Business

and Professional Regulation

7960 Arlington Expressway, Suite 300

Jacksonville, FL 32211-7467

Lynda L. Goodgame, General Counsel Department of Business

and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the agency 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 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: 95-004534

Orders for Case No: 95-004534