) Case Nos. 96-1492
vs. ) 96-1493
Respondent. )
Pursuant to notice, a final hearing was conducted in this case on September 10, 1996, at Fort Lauderdale, Florida, before Judge Michael M. Parrish, an Administrative Law Judge of the Division of Administrative Hearings.
For Respondent: J. Cameron Story, III, Esquire
Mahoney, Adams & Criser, P.A.
In both of these two consolidated cases the Petitioner seeks to take disciplinary action against the Respondent on the basis of allegations of misconduct set forth in two Administrative
Complaints. In Case No. 96-1492 the Respondent is charged with four counts of violations of several paragraphs of Section 489.129(1), Florida Statutes. In Case No. 96-1493 the Respondent is charged with three counts of such violations.
At the final hearing on September 10, 1996, the Petitioner presented the testimony of five witnesses, including the testimony of the Respondent. The Petitioner also offered nineteen exhibits, eleven of which were received in evidence.
Following the presentation of the Petitioner’s case in chief, the Respondent testified further on his own behalf, but did not call any other witnesses. The Respondent also offered eleven exhibits, ten of which were received in evidence.
At the commencement of the final hearing, the Petitioner also announced the voluntary dismissal of Count III of the Administrative Complaint in Case No. 96-1493.1
At the conclusion of the final hearing the parties requested, and were granted, thirty days from the filing of the transcript within which to file their proposed recommended orders. The transcript was filed with the Division of Administrative hearings on October 21, 1996. Thereafter, the Respondent filed a motion seeking an extension of the deadline for filing proposed recommended orders. The motion was granted and a new deadline of December 10, 1996, was established. Both parties filed proposed recommended orders on December 10, 1996. The parties proposals have been carefully considered during the preparation of this recommended order.
At all times material to the allegations in the Administrative Complaints in these consolidated cases, the Respondent held a certified building contractor’s license issued by the Florida Construction Industry Licensing Board. His license number is CB-CO31896.
At all times material to the allegations in the Administrative Complaints in these consolidated cases, the Respondent was aware that he was responsible for the acts of any business entity for which he became the qualifying agent.
Since being licensed as a certified building contractor, the Respondent has been the qualifying agent for at least four corporations. He was the qualifying agent for Chrisdon Development Corporation from April 30, 1985, until some time in April of 1989. He was again the qualifying agent for Chrisdon Development Corporation from May 16, 1989, until June 30, 1992.
The Respondent was the qualifying agent for Chrisdon Housing Corporation from April 25, 1989, until September 21, 1992.
The Respondent was the qualifying agent for Chrisdon Custom Homes Corporation from July 1, 1989, until June 30, 1992.
Since November 4, 1992, the Respondent has been the qualifying agent for MKS Construction, Inc.
The Respondent did not have an ownership interest in any of the Chrisdon corporations for which he was the qualifying
agent. The Respondent does have an ownership interest in MKS Construction, Inc.
At all times material to the allegations in the Administrative Complaints in these consolidated cases, the three Chrisdon corporations for which the Respondent was the qualifying agent were all owned by Mr. Donald McKnought. Mr. Donald McKnought was also the owner of Breckenridge Estates Corporation and several other corporations.2 Mr. Donald McKnought was also the Respondent's father-in-law.
The Respondent first went to work with the Chrisdon corporations in 1984 as a construction superintendent. Approximately a year later, the Respondent became a qualifying agent for one of the Chrisdon corporations, Chrisdon Development Corporation. At that time there was apparently at least one other qualifying agent for the Chrisdon family of corporations.3
When the Respondent first started working with the Chrisdon corporations in 1984, it appeared to be a very successful business enterprise. The Chrisdon corporations had a good reputation, appeared to have good relationships with lending institutions, and were doing a very large volume of business.
The financial operations of the Chrisdon corporations were in the hands of experienced businessmen and certified accountants and the corporations appeared to be financially sound and well- managed. During the period from 1984 until mid-1989, the Respondent was not involved in the financial affairs of the Chrisdon companies and did not have any appreciable amount of information about those financial affairs.
In April of 1989 a Mr. James Morgan was fired from his position as president of one or more of the Chrisdon corporations. Mr. Morgan was fired because he had done several things contrary to the best interests of the Chrisdon corporations. Among other things, the actions of Mr. Morgan had a serious negative impact on the cash flow of the Chrisdon corporations.
Shortly after Mr. Morgan was fired, the Respondent was appointed to the position of vice president of some or all of the Chrisdon corporations. At about the same time, the Respondent became the sole qualifying agent for three of the Chrisdon corporations; Chrisdon Development Corporation, Chrisdon Housing Corporation, and Chrisdon Custom Homes Corporation.
When the Respondent became the sole qualifying agent for three of the Chrisdon corporations, he did not make any inquiry into the financial circumstances of any of the Chrisdon corporations. He simply continued to assume that all was well in that regard. In the Respondent's own words:
Essentially, on reflection, I had stepped into qualifying Chrisdon in 1989 not knowing what the financial situation of the company was despite the fact that everything looked incredibly rosy. Chrisdon was building a tremendous amount of houses. It had a lot of employees, etcetera, etcetera, etcetera. On reflection later, about a year later, essentially a lot of problems surfaced that I then could see had been there for many years.
During the next year, until about the middle of 1990, the Respondent continued to have little or no involvement in the financial affairs of the Chrisdon corporations and had minimal
information about the status of those affairs. He assumed those matters were being handled adequately by the businessmen and accountants assigned to handle the financial affairs of the Chrisdon corporations.
By the middle of 1990, the cash flow problems of the Chrisdon corporations had reached crisis proportions. In July of 1990 the officers of the Chrisdon corporations held a meeting with the subcontractors. At that meeting the Chrisdon financial problems were candidly discussed and efforts were made to try to avoid or minimize any financial loss to any of the subcontractors, while at the same time attempting to maintain the Chrisdon corporations as viable businesses.
Late in 1990 and early in 1991, as the financial prospects of the Chrisdon corporations continued to worsen, the Respondent and other officers of the Chrisdon corporations made numerous efforts to avoid or minimize financial loss to the customers whose houses were not yet finished. In a number of cases, the Chrisdon corporations were able to arrange for other builders to finish the houses at little or no additional cost to the customers. In some cases the Chrisdon corporations were able to take other actions to fulfill their obligations to customers. And in some cases the Chrisdon corporations were unsuccessful in their efforts to fulfill their obligations to their customers. The Chrisdon corporations ceased doing business in March or April of 1991.
As part of his personal efforts to fulfill obligations
to Chrisdon customers, the Respondent contributed $88,000.00 of
his own money towards the satisfaction of Chrisdon corporate obligations. The Respondent also worked for three or four months without salary trying to resolve problems for Chrisdon customers as the business activities of the Chrisdon corporations were coming to a close.
Findings regarding the Lattanzio transaction
Mr. and Mrs. Lattanzio entered into a contract for the purchase of a lot and a house to be built in Breckenridge Estates. The evidence in this case does not reveal the name of the corporation with which Mr. and Mrs. Lattanzio entered into the contract. The house they contracted for was built by Chrisdon Housing Corporation.4 The Respondent pulled the permit for the house that was built for Mr. and Mrs. Lattanzio. The Respondent oversaw the construction of that house.
Mr. and Mrs. Lattanzio paid for the construction of their house with their own cash. They paid over $100,000.00 for the construction of the house.5 Eventually, the house that was built for Mr. and Mrs. Lattanzio was finished and a certificate of occupancy was obtained. Mr. and Mrs. Lattanzio never closed on the purchase of the house. This was due at least in part to the fact that numerous liens were filed against the house. The Chrisdon corporations disputed the validity of many of the liens. In an effort to bring about a closing, the Chrisdon corporations arranged to have some of the liens removed and arranged certain other financial inducements for Mr. and Mrs. Lattanzio. Mr. and Mrs. Lattanzio were apparently not satisfied with these arrangements and declined to close.
Findings regarding the Nicotra/Greco transaction
On or about July 18, 1990, Chrisdon Housing Corporation contracted with Ms. Nicotra and Ms. Greco for the sale and purchase of Lot 6, Block 1, Winston Park, in Fort Lauderdale, Florida. The contract also included the construction of a single-family home on the lot for a total contract price of
$135,055.00. On or about July 10, 1990, Ms. Nicotra paid a
$5,000.00 deposit to Chrisdon Housing Corporation. On or about August 2, 1990, Ms. Nicotra paid an additional $9,000.00 deposit to Chrisdon Housing Corporation.6
Construction on the Nicotra/Greco house was commenced, but it was never finished before the Chrisdon corporations ceased business operations in March or April of 1991. The Respondent and other representatives of the Chrisdon corporations made efforts to obtain another house to take the place of the one they never finished building for Ms. Nicotra and Ms. Greco. Those efforts were unsuccessful. Ms. Nicotra never received a refund of any of her deposit money and never received anything else of value from any of the Chrisdon corporations.
Findings regarding the Morales transaction
On or about November 17, 1989, Mr. and Mrs. Morales signed a contract for the sale and purchase of Lot 21, Block 18, in Breckenridge Estates subdivision, in Coconut Creek, Florida. The contract also included the construction of a single-family home on the lot for a total contract price of $178,813.00. It was understood by Mr. Morales that one of the Chrisdon corporate entities would build the house he was purchasing. At that time
the only Chrisdon entity building houses in Breckenridge Estates subdivision was Chrisdon Housing Corporation.
It is not exactly clear which corporate entity entered into a contract with Mr. and Mrs. Morales. The basic contract form signed by Mr. and Mrs. Morales identifies the seller as Breckenridge Estates Corporation. Attached to the basic contract form are six addenda, some of which identify the seller as Breckenridge Estates Corporation, some of which identify the seller as Chrisdon Housing Corporation, and some of which contain ambiguous references to Breckenridge Estates Corporation, Chrisdon Housing Corporation, and another corporate entity named Breckenridge Estates Development Corporation. Some of the advertising material given to Mr. and Mrs. Morales bears the name of Breckenridge Estates, but also includes laudatory statements about the quality of Chrisdon homes and Chrisdon communities. When Mr. Morales inquired about the relationship between Breckenridge Estates Corporation and Chrisdon, the sales agent told him that the former was a subsidiary of Chrisdon.
On or about November 17, 1989, Mr. and Mrs. Morales
paid a $5,000.00 deposit. On or about April 2, 1990, Mr. and Mrs. Morales paid an additional $12,881.00 deposit. The sales agent instructed Mr. Morales to make both checks payable to "Chrisdon," and he did so.
Construction on the Morales house was commenced, but it was never finished before the Chrisdon corporations ceased business operations in March or April of 1991. Mr. and Mrs. Morales never received a refund of any of their deposit money and
never received anything else of value from any of the Chrisdon
corporations.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of these two consolidated proceedings. Section 120.57(1), Florida Statutes.
In a license discipline proceeding of this nature the Petitioner bears the burden of proving its charges by clear and convincing evidence. See Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987). The nature of clear and convincing evidence has been described as follows in Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983):
We therefore hold that clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.
See also, Smith v. Department of Health and Rehabilitative Services, 522 So. 2d 956 (Fla. 1st DCA 1988), which, at page 958, quotes with approval the above-quoted language from Slomowitz. The Smith case also includes the following at page 958:
'Clear and convincing evidence' is an intermediate standard of proof, more than the 'preponderance of the evidence' standard used in most civil cases, and less than the
'beyond a reasonable doubt' standard used in criminal cases. See State v. Graham, 240 So. 2d 486 (Fla. 2d DCA 1970).
The extent to which the Petitioner's evidence is sufficient to meet the clear and convincing standard discussed above is addressed in the paragraphs which follow.
Section 489.129(1), Florida Statutes (1989), provides as follows, 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, or if the business organization for which the contractor is a primary qualifying agent or is a secondary qualifying agent responsible under s. 489.1195, is found guilty of any of the following acts:
* * *
(g) Acting in the capacity of a contractor under any certificate or registration issued hereunder except in the name of the certificateholder or registrant as set forth on the issued certificate or registration, or in accordance with the personnel of the certificateholder or registrant as set forth in the application for the certificate or registration, or as later changed as provided in this part.
* * *
(k) Abandoning a construction project in which the contractor is engaged or under contract as a contractor. A project is to be considered abandoned after 90 days if the contractor terminates the project without notification to the prospective owner and without just cause.
* * *
(m) Being found guilty of fraud or deceit or of gross negligence, incompetency, or misconduct in the practice of contracting.
The Administrative Complaint in Case No. 96-1492
Count I of the Administrative Complaint in Case No. 96- 1492 charges the Respondent with violation of Section 489.129(1)(m), Florida Statutes, by reason of having committed "misconduct in the practice of contracting." In this regard it is alleged that the contractor failed to remove extensive liens that were filed against the subject property and then allowed the bank that held the original construction loan to foreclose on the subject property.
The evidence regarding Count I is insufficient to prove the alleged violation by clear and convincing evidence. Some of the essential evidence is completely missing. For example; there is no evidence of the contract amount, there is no evidence of the total amount paid by the customers, and there is no evidence as to which corporation the customers entered into a contract with. There is also no evidence that the liens against the subject property were valid liens or that the Respondent or any of the three corporations for which he was the qualifying agent were responsible for those liens. Other evidence is vague or unpersuasive. Because of the insufficiency of the evidence, the charges in Count I of this Administrative Complaint should be dismissed.
Count II of the Administrative Complaint in Case No.
96-1492 charges the Respondent with violation of Section 489.129(1)(g), Florida Statutes, by reason of practicing
contracting under a business name for which he was not certified or registered to practice contracting. In this regard it is alleged that the Respondent practiced contracting under the name of Breckenridge Estates Corporation, a business entity for which he was not the qualifier.
The evidence in this case is insufficient to prove the allegations of Count II. There is simply no evidence in this case that the Respondent entered into a contract under the name of Breckenridge Estates Corporation or otherwise engaged in the practice of contracting under that name. Because of the insufficiency of the evidence, the charges in Count II of this Administrative Complaint should be dismissed.
Count III of the Administrative Complaint in Case No. 96-1492 charges the Respondent with violation of Section 489.129(1)(k), Florida Statutes, by reason of "abandoning a construction project in which the contractor is engaged or under contract as a contractor." In this regard it is alleged that the Respondent left a house unfinished without notice or just cause after being under contract to build the house and after customers had paid deposits totaling $14,000.00.
The violation alleged in Count III has been proved by clear and convincing evidence. The customer, Ms. Nicotra, paid a total of $14,000.00 to Chrisdon Housing Corporation, for which she never received anything as of the time the Chrisdon corporations ceased business operations. Inasmuch as the Respondent was the sole qualifying agent for Chrisdon Housing Corporation at the time of the contract with Ms. Nicotra, he is
responsible for the corporation's abandonment of Ms. Nicotra's project. Accordingly, the Respondent should be found guilty of the violation alleged in Count III of this Administrative Complaint.
Count IV of the Administrative Complaint in Case No. 96-1492 charges the Respondent with violation of Section 489.129(1)(m), Florida Statutes, by reason of "misconduct in the practice of contracting." The factual allegations relied on for this count are the same as those relied upon in Count III discussed immediately above. The abandonment of Ms. Nicotra's project also constitutes misconduct in the practice of
contracting. The Respondent is responsible for the corporation's misconduct in this regard. Accordingly, the Respondent should be found guilty of the violation alleged in Count IV of this Administrative Complaint.
The Administrative Complaint in Case No. 96-1493
Count I of the Administrative Complaint in Case No. 96- 1493 charges the Respondent with violation of Section 489.129(1)(k), Florida Statutes, by reason of "abandoning a construction project in which the contractor is engaged or under contract as a contractor." In this regard it is alleged that the Respondent left another house unfinished without notice or just cause after being under contract to build the house and after customers had paid deposits totaling $17,881.00.
The violation alleged in Count I has been proved by clear and convincing evidence. Although the evidence in this case is a bit confusing as to which corporate entity purported to
be entering into a contract to build a home for Mr. and Mrs. Morales, it is clear that Chrisdon Housing Corporation undertook to build the house for Mr. and Mrs. Morales and someone on behalf of the Chrisdon family of corporations instructed Mr. Morales to make his deposit checks payable to "Chrisdon," which he did.
Inasmuch as Mr. Morales paid his money to one of the Chrisdon corporations and Chrisdon Housing Corporation undertook to build a house for Mr. and Mrs. Morales, Chrisdon Housing Corporation was responsible for either building the agreed-upon house or returning the deposit payments to Mr. and Mrs. Morales. Mr. and Mrs. Morales never received anything as of the time the Chrisdon corporations ceased business operations. Inasmuch as the Respondent was the sole qualifying agent for Chrisdon Housing Corporation at the time of the contract with Mr. and Mrs.
Morales, he is responsible for the corporation's abandonment of the Morales' project. Accordingly, the Respondent should be found guilty of the violation alleged in Count I of this Administrative Complaint.
Count II of the Administrative Complaint in Case No. 96-1493 charges the Respondent with violation of Section 489.129(1)(m), Florida Statutes, by reason of "misconduct in the practice of contracting." The factual allegations relied on for this count are the same as those relied upon in Count I of the Administrative Complaint in Case No. 96-1493 discussed immediately above. The abandonment of Mr. and Mrs. Morales' project also constitutes misconduct in the practice of
contracting. The Respondent is responsible for the corporation's
misconduct in this regard. Accordingly, the Respondent should be found guilty of the violation alleged in Count II of this Administrative Complaint.
Count III of the Administrative Complaint in Case No. 96-1493 charges the Respondent with violation of Section 489.129(1)(p), Florida Statutes, by reason of failing to satisfy a judgment. At the commencement of the final hearing the Petitioner announced a voluntary dismissal of this count and did not offer any evidence of the charges alleged in this count. Accordingly, Count III of the Administrative Complaint in this case should be dismissed.
In reaching the foregoing conclusions the undersigned has not overlooked the Respondent's arguments to the effect that he should not be held accountable for financial losses suffered by customers of the Chrisdon corporations, because it was not the Respondent's conduct that caused the financial failure of the Chrisdon corporations. The Respondent's arguments in this regard are not persuasive. Even though it appears that the financial problems of the Chrisdon corporations were caused by others, as qualifying agent for three of those coporations, the Respondent had a duty to be aware of the financial circumstances of those corporations and to avoid causing any loss to the customers of those corporations. If the Respondent had made himself aware of the financial circumstances of the Chrisdon corporations when he first became the sole qualifying agent for those corporations, he could have taken more effective action to prevent financial losses by customers.
The Respondent also argues that the Petitioner should be estopped from taking any disciplinary action on the basis of the subject charges by reason of the statute of limitations or the doctrine of laches. The argument fails. The Florida appellate courts have concluded that, in the normal course of events, administrative prosecutions are not barred by statutes of limitation or by the doctrine of laches. See, Farzad v. Department of Professional Regulation, 443 So. 2d 373 (Fla. 1st DCA 1983); Donaldson v. State Department of Health and Rehabilitative Services, 425 So. 2d 145 (Fla. 1st DCA 1983); Landes v. Department of Professional Regulation; 441 So. 2d 686 (Fla. 2d DCA 1983).
On the basis of all of the foregoing, it is RECOMMENDED that a final order be issued in these consolidated cases to the following effect:
DONE AND ENTERED this 27th day of June, 1997, in Tallahassee, Leon County, Florida.
MICHAEL M. PARRISH
Filed with the Clerk of the Division of Administrative Hearings this 27 day of June, 1997.
1/ See page 6 of the transcript of the final hearing. Count III of the Administrative Complaint in DOAH Case No. 96-1493 has also been referred to as DBPR Case No. 91-13991.
2/ The evidence in this case does not present a clear and complete picture of the family of corporations owned and controlled by Mr. Donald McKnought. For example, there was also a corporation known as Chrisdon Communities, Inc. The evidence in this case does not reveal the nature of the relationship of Chrisdon Communities, Inc., to the three Chrisdon corporations for which the Respondent was the qualifying agent.
3/ Although the matter is not entirely free from doubt, the Respondent does not appear to have become the sole qualifying agent for any of the Chrisdon corporations until 1989, after the president of the Chrisdon family of corporations was terminated for cause.
4/ Although the house was built by Chrisdon Housing Corporation, the Lattanzios did not necessarily have a contract with Chrisdon Housing Corporation. Breckenridge Estates Corporation, which was also owned by Mr. Donald McKnought, also entered into contracts to sell lots and houses in the Breckenridge Estates subdivision and would then arrange with Chrisdon Housing Corporation to build the houses that Breckenridge Estates Corporation had sold.
5/ The evidence in this case does not show the exact amount paid by the Lattanzios. The evidence in this case does not show which corporation the Lattanzios paid their money to nor does it show what was done with the money. The evidence also fails to show whether the Lattanzios lost all of the money they paid for the construction of a house or whether they received some of the money back or whether they received anything else of value for their money.
6/ Although Ms. Nicotra and Ms. Greco both signed the contract as buyers, Ms. Greco did not pay any of the deposit money. The entire $14,000.00 of deposit money was paid by Ms. Nicotra.
J. Cameron Story, III, Esquire Mahoney, Adams & Criser, P.A.
Rodney Hurst, Executive Director Construction Industry Licensing Board 7960 Arlington Expressway, Suite 300
Lynda L. Goodgame, General Counsel Department of Business and
All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.
