STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

)

Petitioner, )

)

vs. ) Case No. 96-5353

)

JERRY LEE JOHNSON, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice, this cause came on for formal hearing on June 4, 1997, in Lake City, Florida, before Ella Jane P. Davis, a duly assigned Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: John O. Williams, Esquire

Boyd, Lindsey, Williams & Branch, P.A. 1407 Piedmont Drive East

Tallahassee, Florida 32317

For Respondent: Peter A. Robertson, Esquire

220 North Main Street, Suite A Gainesville, Florida 32601

STATEMENT OF THE ISSUES

1. Did Respondent abandon a construction project in violation of Section 489.129(1)(k), Florida Statutes (1992)?

2. Did Respondent violate Section 489.129(1)(h), Florida Statutes (1992), by committing mismanagement or misconduct in the

   practice of contracting which caused financial harm to a customer?

   
   

3. Did Respondent violate Section 489.129(1)(j), Florida Statutes (1992), and Section 489.119(5)(b), Florida Statutes (1992), by failing to include a license number on a proposal?

4. Did Respondent violate Section 489.129(1)(n), Florida Statutes (1992), by committing incompetency or misconduct in the practice of contracting?

PRELIMINARY STATEMENT

Respondent was charged in a four-count Administrative Complaint which framed the issues as set out above.

At the commencement of formal hearing, the Respondent admitted to violating Section 489.119(5)(b), Florida Statutes, by failing to place his contractor's number as required by law.

Petitioner presented the oral testimony of Dorie Crawford, Larry Strickland, and Jose Mitrani and had 10 exhibits admitted in evidence. Exhibit P-10 is a composite of photographs A—R.

Respondent testified on his own behalf and presented the oral testimony of Clinton Ford. Respondent had three exhibits admitted in evidence.

The Joint Prehearing Stipulation was admitted as Administrative Law Judge Exhibit A.

A transcript was provided in due course. The timely-filed Proposed Recommended Orders have been considered in preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner is the state agency charged with regulating the practice of contracting pursuant to Section 20.165, Florida Statutes, and Chapters 455 and 489, Florida Statutes.

2. At all times material, Respondent has been licensed as a Registered Building Contractor and a Registered Roofing Contractor in the State of Florida, having been issued license numbers RB 24424 and RC 26644.

3. In April 1993, Dorie Crawford and Respondent discussed constructing her residence.

4. Ms. Crawford prepared a sketch of the proposed residence and gave the sketch to Respondent.

5. Based on Ms. Crawford's sketch, Respondent had a set of Plans prepared for the construction of the proposed residence.

6. Based on Ms. Crawford's limited funds, the parties orally agreed that Respondent would construct a 768 square-foot residence for $21,504. This agreed price did not include some of the features shown in the Plans: specifically, a garage, a garage apron, and a utility room. Also, a smaller front porch than the one shown on the Plans was agreed upon.

7. Respondent prepared a Proposal dated April 14, 1993, for a stated price of $21,504, but it did not adequately reveal

   the agreed deviations from the Plans. Item 18 on the April 14, 1993 Proposal/Contract states, "Anything changed on Plans will be extra."

8. Ms. Crawford and Respondent entered into an agreement that Respondent would construct a residence pursuant to the April 14, 1993 Proposal, as written.

   However, Respondent filed the Plans with the local Building Department without their reflecting the orally agreed omissions/deviations.

9. Respondent admitted, and it is found, that, contrary to law, Respondent did not include his contracting license number on the April 14, 1993 Proposal.

10. Ms. Crawford orally requested several changes in construction before June 17, 1993. Respondent completed these changes without requiring any written change orders.

11. "Textbook" construction contracting requires that written change orders be executed before any changes of construction actually occur. I accept Respondent's expert's testimony to the effect that the custom of the trade does not always meet the textbook ideal, but common sense dictates that no major construction change from the plans or contract should occur unless written change orders authorize them. At the very least, written change orders which precede construction changes would establish that the parties had had a "meeting of minds" on what

    additional work was agreed to be done and for what approximate price.

12. Ms. Crawford never executed any written change orders. However, it is undisputed that on June 17, 1993, the parties did agree to some changes in the scope of the work. Upon all credible evidence, it is found that Ms. Crawford and Respondent agreed that any minor changes requested by Ms. Crawford up to that date, plus a carport, increased porch size, and patio would be added by Respondent for an increased total contract price of

    $32,533. Respondent provided Ms. Crawford with written calculations, but no new written Proposal was prepared or signed reflecting this revised contract amount.

13. Thereafter, Ms. Crawford continued to request changes in construction, Respondent continued to work on the project without written change orders, and Ms. Crawford paid him over time.

14. Both Respondent and Ms. Crawford testified that she had purchased a whirlpool tub herself and Respondent had credited her for the difference. Respondent's testimony that additional re-plumbing costs were incurred in satisfying this oral change order after the June 17, 1993 agreement is accepted, based on Ms. Crawford's dated check for the tub and Respondent's Exhibit 3, which agree on this issue within three days of each other.

15. At formal hearing, Ms. Crawford also acknowledged an oral order during this period to change the fireplace from wood

    to stone. She denied authorizing a small increase in its size. She also admitted requesting a reinforcement for the porch swing and some changes involving a utility closet.

16. In July, Ms. Crawford requested that Respondent prepare a Proposal which would cover the price to the construct the entire residence as shown on the original Plans.

17. Respondent presented a July 23, 1993 Proposal for

    
    

    $45,216. The only clearly identifiable difference between Respondent's July 23, 1993, Proposal at $45,216 and his original April 14, 1993, Proposal at $21,504 is substitution of cathedral ceilings and the addition of a carport and patio. It might be possible to infer from this Proposal that the porch had increased in size. This Proposal also did not bear Respondent's contractor's number.

18. Ms. Crawford refused to pay $45,216 and did not sign the July 23, 1993 Proposal. She and Respondent did not enter into a written contract on the basis of the July 23, 1993 Proposal.

19. At formal hearing, Respondent represented that his July 23, 1993 Proposal only covered the oral change orders Ms. Crawford had requested and that he had installed up to that date. Nonetheless, Respondent continued on the job until mid-September.

20. By September 13, 1993, Ms. Crawford had paid Respondent $27,500. On or about September 13, 1993, Respondent requested payment from Ms. Crawford in the amount of $5,316.14,

    which she refused to pay. He demanded approximately $16,900 to finish her house.

21. Respondent then removed all of his equipment from the work site, including equipment which he normally left there between his visits. At that time, the drywall stage was not yet complete, the carport apron had not been poured, and several subcontractors remained unpaid.

22. Based on the evidence as a whole, particularly the photographs of the condition in which Respondent left the premises, the intrinsic confusion within Respondent's own Exhibit

    3 and the extrinsic confusion between Respondent's Exhibit 3 and his testimony as to when various parts of the work were completed,1 Respondent's explanation that he was just removing his equipment to make way for a specific subcontractor is not credible.

    
    

23. On September 24, 1993, Ms. Crawford's attorney wrote Respondent, demanding that he complete the work as agreed on June 17, 1993, for a total of $32,533. By this letter, Ms. Crawford acknowledged the parties' June 17, 1993 oral modification to the original contract price and that she had additionally agreed to an oral change order on switching out an ordinary tub for a larger whirlpool tub and taking a $500 credit from Respondent on the smaller ordinary tub previously purchased by Respondent.

24. At formal hearing, Respondent claimed that Ms.

    Crawford still owed him $3,468.33 for the work he had done before September 13, 1993, including a total of 20 oral change orders over the course of construction. Even by his somewhat vague calculations, some of these changes pre-date the June 17, 1993 Proposal which was supposed to encompass all Respondent's work up to that date. There does not appear to be any dispute that Respondent actually performed most of the work claimed, but Ms.

    Crawford denied she authorized some of it.

    
    

25. When Respondent received Ms. Crawford's attorney's letter on September 26, 1993, Respondent contacted Ms. Crawford's attorney in an effort to resolve the dispute, but advised him he would not continue to work on Ms. Crawford's residence unless he was paid more money.

26. At the direction of Ms. Crawford, on September 28, 1993, her attorney wrote Respondent a letter, terminating him from the project. As of the date of termination, Ms. Crawford had paid Respondent $27,500.

    
    

27. On or about October 4, 1993, Respondent notified the Building Department that he was no longer responsible for the project due to his termination.

28. Ms. Crawford hired a replacement contractor to complete the project. It is not clear from the record whether she also had to pay the unpaid subcontractors; however, if she

    did not, her residence would be subject to any liens they might file.

29. Two expert construction contracting witnesses, Larry Strickland and Jose Mitrani, considered many factors, including historical job cost data within Respondent's Exhibit 3, which had been assembled by Respondent's construction contracting expert. They each testified credibly, using standard accepted methodology and nationally recognized databases, that neither the house described in the original Plans nor the house described in the original Proposal/Contract could have been built for Respondent's originally estimated $21,504 without significant loss to the builder.

30. Mr. Strickland also visited the site. He was able to trace through the changes actually constructed on the site and relate them back to, or compare them with, the original Plans and April 14, 1993 Proposal/Contract. He noted actual on-site changes in a bigger shower and tub, kitchen soffits, an increased porch size per the June 17, 1993 oral agreement, some changes to the deck, two vanities instead of one, a relocated utility closet, and cathedral ceilings. In his credible opinion, none of the "extras," including the addition of scissors trusses and cathedral or vaulted ceilings, should have significantly added to the cost of construction. The cathedral ceilings were, in his opinion, a "deviation" but not a significant change from the original Plans.

31. Messrs. Strickland and Mitrani each considered Respondent's original estimate of $21,504, either with or without the deck and/or garage and/or front porch to be either grossly incompetent or a deliberate underbid. Their respective estimates were between $55,000 to $60,414 for the same work.

32. Because Respondent's expert never visited the site, based his opinion on no standard methodology, and based his opinion solely upon Respondent's 1993 explanation of original, but now missing, documentation that gave rise to Respondent's Exhibit 3, Respondent's expert's opinion that all of the increased costs were the result of Ms. Crawford's oral change orders is not persuasive.

CONCLUSIONS OF LAW

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

2. Section 489.129(1)(k), Florida Statutes (1992), provides that the Board may take disciplinary action against a contractor if the contractor is found guilty of:

   [a]bandoning a construction project in which the contractor is engaged or under contract as a contractor. A project may be presumed abandoned after

   90 days if the contractor terminates the project without just cause or without proper notification to the owner, including the reason for termination, or fails to perform work without just cause for 90 consecutive days.

   While the statute creates a presumption of abandonment after 90 days of contractor inactivity, that provision does not require a

   homeowner to wait 90 days to hire another contractor when there is obvious, actual abandonment, as there was here. There is clear and convincing evidence of abandonment.

3. Section 489.129(1)(h), Florida Statutes (1992) provides that the Board may take disciplinary action against a contractor if the contractor is found guilty of:

   [c]ommitting mismanagement or misconduct in the practice of contracting that causes financial harm to a customer. Financial mismanagement or misconduct occurs when:

   
   

   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 . . .

   The original contract price of $21,504 had been renegotiated to

   
   

   $32,533 by oral change orders through June 17, 1993. As of September 13, 1993, Ms. Crawford had paid $27,500. Expert testimony shows the house could never have been constructed for either price. Upon expert testimony, the remainder of the house as agreed could not be constructed for less than $55,000, or another $27,500. Even Respondent's lowest estimate for completing the house was the $27,500 already paid plus $16,900, or approximately $44,400. By any witness's standard, almost the whole of the contract price had been paid and a similar percentage of construction work had not been completed. Ms.

   Crawford had to hire and pay additional money to others to

   complete her home. There is clear and convincing evidence of financial mismanagement.

4. Section 489.129(1)(j), Florida Statutes (1992), provides that the Board may take disciplinary action against a contractor if the contractor is found guilty of:

   [f]ailing in any material respect to comply with provisions of this part of violating a rule or lawful order of the board.

   
   

   Section 489.119(5)(b), Florida Statutes (1992), states that the:

   
   

   [r]egistration or certification number of each contractor shall appear in each offer of services, business proposal, bid, contract, or advertisement, regardless of medium, as defined by board rule, used by that contractor in the practice of contracting . . .

   
   

   Respondent has admitted failing to include his license number on his Proposals, thereby violating Section 489.129(1)(j) via Section 489.119(5)(b), Florida Statutes. Since this situation involves two successive proposals on the same job, and one was never accepted, the undersigned views this as a single offense.

5. Section 489.129(1)(n) provides that the Board may take disciplinary action against a contractor if the contractor is found guilty of:

   [c]ommitting incompetency or misconduct in the practice of contracting.

   
   

6. This case hinges on whether the undisputed oral change orders could have inflated the price of the home by approximately

   100 percent (from $21,504 to $44,400 or $45,216). Two qualified experts testified credibly that they could not have so grossly

   inflated the price, even after considering Respondent's job cost analysis. That is clear and convincing evidence of a violation of this statute. The disputed oral change orders are relatively minor and do not affect this conclusion.

7. The penalty guidelines are as follows: 61G4-17.001 - Normal Penalty Ranges

The following guidelines shall be used in disciplinary cases, absent aggravating or mitigating circumstances and subject to other provisions of this Chapter.

* * *

(8) 489.129(1)(h): Mismanagement or misconduct causing financial harm to the customer. First violation, $750 to $1,500 fine and/or probation; repeat violation,

$1,500 to $5,000 fine and/or probation, suspension, or revocation.

* * *

1. 489.129(1)(j): Failing in any material respect to comply with the provisions of Part I of Chapter 489.

   (e) 489.119: License number not appearing in advertisement. First violation, $100; repeat violation, reprimand and $250 to $1,000 fine.

   
   

   * * *

   
   

2. 489.129(1)(k): Abandonment. First violation, $500 to $2,000 fine; repeat violation, revocation and $5,000 fine.

* * *

(14) Misconduct or incompetency in the practice of contracting as set forth in Section 489.129(1)(n), Florida Statutes, shall include, but is not limited to:

(d) The following guidelines shall apply to cases involving misconduct or incompetency in the practice of contracting, absent aggravating or mitigating circumstances;

2. Violation of any provision of Chapter 61G4, Florida Administrative Code, or Chapter 489, Part I, F.S. First Violation, $500 to $1,000 fine; (emphasis supplied)

RECOMMENDATION

Upon the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Construction Industry Licensing Board enter a Final Order that

1. Finds Respondent guilty of violating Section 489.129(1)(k), Florida Statutes, and fines him $500 therefor;

2. Finds Respondent guilty of violating Section 489.129(1)(h), Florida Statutes, and fines him $750 therefor;

3. Finds Respondent guilty of violating Section 489.129(1)(j), Florida Statutes, and fines him $100 therefor; and

4. Florida Respondent guilty of violating Section 489.129(1)(n), Florida Statutes, and fines him $1,000 therefor.

RECOMMENDED this 2nd day of October, 1997, at Tallahassee, Florida.

ELLA JANE P. DAVIS

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 2nd day of October, 1997.

ENDNOTES

1 At formal hearing, Respondent was unable to explain almost any entry on Exhibit 3, most particularly why it represented that some work was done on days before obviously necessary preparatory work was completed; why work was done before permits and inspections were clear; and why numerous dates did not match the remainder of Respondent's testimony. Respondent retained none of the supporting documentation from which this exhibit was assembled, including but not limited to, his daily log of the project's progression. Moreover, specific dollar amounts therein, which either were intended to represent the job cost of work personally performed by Respondent in lieu of his hiring employees to do it, or which were intended to represent "draws" he did, or did not, take seem to have no clear basis.

COPIES FURNISHED:

John O. Williams, Esquire

BOYD, LINDSEY, WILLIAMS & BRANCH, P.A.

Post Office Box 14267 Tallahassee, Florida 32317

Peter A. Robertson, Esquire

220 North Main Street Suite A

Gainesville, Florida 32601

Lynda L. Goodgame, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Rodney Hurst, Executive Director Department of Business and

Professional Regulation 7960 Arlington Expressway

Suite 300

Jacksonville, Florida 32211-7467

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

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.

Docket for Case No: 96-005353

Orders for Case No: 96-005353