vs. ) Case No. 97-1956
ROBERT E. POINDEXTER, )
Respondent. )
A formal hearing was held by the Division of Administrative Hearings, before Administrative Law Judge, Daniel M. Kilbride, in Melbourne, Florida, on August 22, 1997. The following appearances were entered:
For Petitioner: John L. Chaves, Esquire
For Respondent: Robert E. Poindexter, pro se
Whether disciplinary action should be taken against Respondent's license to practice contracting under license number CR C056639, based on violations of subsections 489.129(1)(h)(2), (m), (n), and (k), Florida Statutes, as charged in the
Administrative Complaint.
Petitioner filed an Administrative Complaint on January 17, 1997, alleging that the Respondent had violated the laws regulating his professional activities as a Certified Residential Contractor in the State of Florida. The four-count Administrative Complaint charged the Respondent with: committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer in violation of Section 489.129(1)(h)(2), Florida Statutes (Supp. 1994); committing fraud or deceit in the practice of contracting in violation of Section 489.129(1)(m), Florida Statutes (Supp. 1994); committing incompetency or misconduct in the practice of contracting in violation of Section 489.129(1)(n), Florida Statutes (1995); and abandoning a construction project in which the contractor is engaged or under contract as a contractor in violation of Section 489.129(1)(k), Florida Statutes (Supp. 1994).
At the hearing the Petitioner presented the testimony of one witness and offered fourteen (14) exhibits into evidence.
Respondent was present at the hearing and testified in his own behalf. No other evidence was presented.
A transcript of the proceeding was prepared and filed on September 8, 1997. A motion for extension of time to file proposed findings of fact and conclusions of law was filed by the Petitioner on September 11, 1997. The motion was granted and the
parties were directed to file their proposed orders on or before September 29, 1997. Petitioner filed its proposals on
September 29, 1997. Respondent has not filed his proposals as of the date of this order.
Based on the evidence and the testimony of the witnesses presented and the entire record in this proceeding, the following facts are found.
At all times pertinent to this proceeding, Respondent was a contractor, having been issued license number CR C056639, by the Florida Construction Industry Licensing Board on January 22, 1993.
Respondent is the licensed qualifier for Accurate Development Inc., a Florida corporation.
On or about December 23, 1994, the Respondent contracted with Joseph and Kathleen Hauser to construct a 2,000 square foot house on lot 15 of the Iroquois South Subdivision, (606) Jillotus Street in Merritt Island, Florida.
The contract between Respondent and the Hausers was for the construction of a house only. The real estate upon which a house was to be built was already owned by the Hausers.
The construction contract between the Hausers and Accurate Development was executed on December 23, 1994. Respondent presented the contract to the Hausers, who affixed
their signatures to the contract first. They then gave the contract back to Respondent for his signature, whereupon he signed it and then he inserted the six percent commission provision in favor of Castle Real Estate.
The contracted price for the construction was
$147,800.00. The Hausers paid the Respondent $6,940.00 by check as a deposit when they signed the contract on December 23, 1994. The check was payable to Accurate Development.
At no time during the transaction between Accurate Development and the Hausers did the Hausers meet a representative of Castle Real Estate in any capacity, nor were the Hausers ever represented by a real estate agent of their own choosing or one furnished by Accurate Development or Castle Real Estate.
The Hausers did not discuss a six percent commission for the benefit of Castle Real Estate with the Respondent at any time prior to signing the contract, and they did not initial the six percent provision to approve it. But the Hausers did not object to the insertion of the commission at the time of the signing of the contract or at a later time.
The check was endorsed and deposited by Accurate Development on December 23, 1994.
On or about February 2, 1995, the construction contract was amended to increase the size of the house.
Mr. And Mrs. Hauser applied for a construction loan in
the amount of $150,750.00 from the Space Coast Credit Union in Melbourne, Florida. Upon approval of said loan, they paid Accurate Development an additional deposit of $6,940.00 on March 3, 1995.
On or about March 3, 1995, the construction contract was revised to separate the construction contract from the spa contract with Aqua-Blue Pools to build a pool.
On the date the construction loan was closed, a payment was made by Space Coast Credit Union directly to Castle Real Estate in the amount of $9,045.00 as a six percent commission on the construction contract between Accurate Development and the Hausers. This amount was shown on the closing statement, and no objection was raised by the Hausers.
The Respondent was at all material times a director of and closely affiliated with Castle Real Estate. Respondent's spouse was the owner/broker of the real estate company. All of Accurate Development's sales went through Castle Real Estate who provided sales personnel at the Respondent's company's model homes.
Respondent did not pull the permit to construct the Hauser's home.
During several meetings between the Respondent and the Hausers in May and June 1995, Respondent informed the Hausers that he was having financial difficulties and cash flow problems. At that time, he asked the Hausers if they would pull the permit
for the construction of their home or if they would become an owner/builder. Respondent stated that he did not have the money to pull the permit and begin construction.
On May 26, 1995, at a meeting between Respondent and the Hausers, Respondent suggested that the Hausers become owner/builder or that they have their home built by Andy Barber, a general contractor and friend of the Respondent or that they take a second or third mortgage on other property that Respondent owned for the amount of the deposit.
On or about June 10, 1995, the Hausers contacted Andy Barber about building their home, but he informed them that he was too busy and would not be able to build their house.
The Hausers contracted with another builder (Gary Shaul) to build their house, and Mr. Shaul pulled the permit and constructed the house.
On June 7, 1995, the Hausers asked the Respondent for an itemized list of what had been done with their up-front money. Respondent informed the Hausers that he had paid general bills. Respondent did not provide an itemized list of his expenses.
On August 7, 1995, Mr. Hauser informed the Brevard County Building Department that Respondent was no longer their contractor.
Respondent did not object to the Hausers' notice to the Brevard County Building Department that Gary Shaul of Shaul Builders would be constructing the Hausers' home.
Respondent has not refunded any portion of the monies paid to him by the Hausers as deposits or the six percent commission paid to Castle Real Estate.
Respondent is defending the disciplinary action against him by relying on paragraph 16 of the contract, a liquidated damages clause, to justify retaining the Hausers' deposit money. Paragraph 16 of the contract upon which the Respondent relies, provides in part that "In the event of Purchaser's default hereunder, contractor shall have the option to terminate this contract and retain all monies previously paid by purchaser as its liquidated damages upon five (5) days written notice to purchaser, or contractor may sue for damages or pursue any other legal remedy it may have."
Respondent never notified the Hausers in writing that he considered them to be in breach of their contract with him and that he therefore intended to retain the $13,880 deposit they had paid.
The Hausers were ready, willing and able to live up to their contract responsibilities.
Respondent abandoned the Hausers' job without just cause causing them financial harm.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Section 120.57(1), Florida Statutes.
Pursuant to Section 489.129, Florida Statutes (1993), the Florida Construction Industry Licensing Board is empowered to revoke, suspend, or otherwise discipline the license of a contractor who is found guilty of any of the grounds enumerated in Section 489.129(1), Florida Statutes.
Respondent is a Certified Residential Contractor in the State of Florida, having been issued number CR C056639 by the Florida Construction Industry Licensing Board on January 22, 1993.
Under Section 489.1195, Florida Statutes (1993), Respondent is responsible for the supervision of all operations of the business organization; for all field work at all sites,
and for financial matters, both for the organization and for each specific job.
Petitioner has the burden of proving by clear and convincing evidence the allegations against Respondent. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); Evans Packing Co. V. Department of Agriculture and Consumer Services, 550 So. 2d 112 (Fla. 1st DCA 1989). Evans Packing, supra, 550 So. 2d 112, 116, fn.5, provides the following relative to the clear and convincing evidence standard:
That standard has been described as follows: [C]lear 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 evidence 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 the fact the firm belief of (sic) conviction, without hesitancy, as to the truth of the allegations sought to be established. Solomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).
Additionally, the disciplinary action may only be based upon the offenses specifically alleged in the Administrative Complaint. See Sternberg v. Department of Professional Regulation, Board of Medical Examiners, 465 So. 2d 1324, 1325 (Fla. 1st DCA 1985); Kinney v. Department of State, 501 So. 2d 129, 133 (Fla. 5th DCA 1987); Hunter v. Department of Professional Regulation, 458 So. 2d 842, 844 (Fla. 2d DCA 1984).
Section 489.129(1), Florida Statutes, authorizes the Petitioner to discipline contractors in the State of Florida and provides, in part, that:
The Board may take any of the following actions against any certificateholder or registrant: place on probation or reprimand the license, revoke, suspend, or deny the issuance or renewal of the certificate or registration, require financial restitution to a consumer, impose an administrative fine not to exceed $5,000 per violation, require continuing education, or assess costs associated with investigation and prosecution, if the contractor, financially responsible officer, or 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:
(h)(2) By committing mismanagement or misconduct in the practice of contracting
that causes financial harm to a customer. Financial mismanagement or misconduct occurs when 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 the 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.
By committing fraud or deceit in the practice of contracting.
By committing incompetency or misconduct in the practice of contracting.
(k) By abandoning 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 terminated 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.
Additionally, Section 489.129(1) and 455.227(3), Florida Statutes, and Section 61G4-17.001(19), Florida Administrative Code, authorize Petitioner to assess costs of investigation and prosecution, in addition to the penalties set forth above.
Petitioner has proved by clear and convincing evidence that Respondent violated Section 489(1)(h)(2), Florida Statutes, by committing mismanagement in the practice of contracting that causes financial harm to a customer.
In this case the Respondent contracted in 1994 to build the Hausers a 2,000 square foot house. The Respondent received a
total of $13,880.00 from the Hausers as a deposit toward the price of the house. Respondent did not even begin construction of the Hausers' home, and has not provided an itemized list of costs or expenses which he expended on this project. Neither has he returned the $13,880 he received from the Hausers. Therefore, the percentage of the total contract performed as of the time of abandonment was zero, resulting in financial mismanagement or misconduct by the Respondent.
Respondent contends that he did not abandon the Hausers' job, that he was willing and able to build their home, yet by his own testimony he suggested other options that the Hausers might use to get their house built. To wit:
Become owner/builders.
Get another contractor, who is a friend of his, to build their home.
Take a second or third mortgage on his other property.
When the Hausers chose not to become owner/builders or to take second or third mortgages on other property the Respondent owned and when the Respondent's friend, Andy Barber, would not build
their home, Respondent gave up the contract. The Hausers then hired a new contractor to build their home.
Respondent contends that because the Hausers hired another builder that they breached the contract with him to build their home and therefore, pursuant to paragraph 16 of their agreement, he is entitled to retain the $13,880 as liquidated
damages. However, the Respondent, not the Hausers, breached their contract when he did nothing in futherance of the project to build their home from December 1994 to June 1995, and used the deposit money for other purposes. Therefore, Respondent is not entitled to retain monies paid to him as he contends. Further, even if the Respondent might have been entitled to retain the Hausers' money as liquidated damages, he was required by the same provision he relies on to keep their money to give the Hausers five (5) days written notice of his intention to do so. This he did not do. Nor did he object to the Hausers' notification to the Brevard County Building Department that the Hausers had chosen a new contractor to build their home.
Respondent cannot have it both ways. He cannot breach the contract by doing nothing, suggest other ways that the Hausers could get their house built, and then keep their money, without complying with the requirement that paragraph 16 imposes on him to provide notice of his intention to keep their money.
Petitioner has proved by clear and convincing evidence that Respondent violated Section 489(1)(m), Florida Statutes, by committing fraud or deceit in the practice of contracting. By adding the provision requiring that a six percent commission on the Hausers' construction contract be paid to Castle Real Estate after the Hausers executed the contract the Respondent engaged in deceitful conduct in the practice of contracting. Prior to the execution of the contract the parties had never discussed any
commission to Castle Real Estate. The Hausers owned the land upon which their land was to be built. During their transaction with the Respondent the Hausers never met or talked to any real estate agent generally or a representative of Castle Real Estate in particular. Respondent testified under oath that his wife was the incorporator of Castle Real Estate; that at the time of the transaction with the Hausers he was a director of Castle Real Estate; and that he always added a percentage commission to his contracts without regard to whether he sold the property upon which a home was to be built or not. Respondent is directly linked to Castle Real Estate now and he was at the time he entered into the contract with the Hausers. Even though Respondent testified that Accurate Development did not receive the $9,400 (the six percent commission), he stood to gain from the payment of the commission to a company to which he was directly linked as a director and by virtue of his marital relationship to its incorporator. Respondent's failure to disclose up front to the Hausers that a commission would be paid to Castle Real Estate, when Castle Real Estate had no part whatsoever in negotiating the contract to build their home, constitutes deceit in the practice of contracting.
Petitioner has proved by clear and convincing evidence that Respondent violated Section 489.129(1)(k), Florida Statutes. Respondent, without just cause, failed to perform work for ninety consecutive days. Further, Respondent failed to give the Hausers
proper notice that he did not intend to build their house. Respondent contracted with the Hausers on or about December 23, 1994, to build a house for the Hausers, but for a period of at least five months failed to perform work on the house.
Accordingly, there is a rebuttable presumption that Respondent committed abandonment and the Respondent has not rebutted that presumption. On the other hand, the Petitioner has proven clearly and convincingly by competent substantial testimony that Respondent committed abandonment by failing to begin construction for a period of five (5) months.
Petitioner has proved by clear and convincing evidence that Respondent violated Section 489(1)(n), Florida Statutes, by committing incompetence or misconduct in the practice of contracting. Respondent's actions in this matter indicate his incompetence in the practice of contracting. His financial inability to build the Hauser's home after receiving monies from them to do so, his financial inability to pull the permit, his failure to begin construction, and his keeping the Hausers' money indicate that he is incompetent to practice contracting and that he has committed misconduct in the practice of contracting.
Rule 61G4-17.001, Florida Administrative Code (1995), provides in part the normal penalty ranges that are relevant to this proceeding:
The following guidelines shall be used in disciplinary cases, absent aggravating or mitigating circumstances and subject to the 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.
(11) 489.129(1)(k): Abandonment. First violation, $500 to $2,000 fine; repeat violation, revocation and $5,000.
489.129(1)(m): Committing fraud or deceit in the practice of contracting.
Causing no monetary or other harm to licensee's customer, and no physical harm to any person. First violation, $500 to $1,000 fine; repeat violation, $1,000 to $1,500 fine and/or probation, suspension, or revocation.
Causing monetary or other harm to licensee's customer or physical harm to any person. First violation, $500 to $2,000 fine and/or probation, suspension, or revocation; repeat violation, $2,000 to $5,000 fine and/or probation, suspension, or revocation.
489.129(1)(n): Being found guilty of incompetency or misconduct in the practice of contracting.
Misconduct by failure to honor warranty. First violation, $500 to $1,000 fine; repeat violation, $1,000 to $2,000 fine and/or probation, suspension, or revocation.
Violation of any provision of Chapter 61G4, Florida Administrative Code. First violation $500 to $1,000 fine; repeat violation, $1,000 to $5,000 fine and/or probation, suspension, or revocation.
Any other form of misconduct or incompetency. First violation, $250 to $1,00 fine and/or probation; repeat violation,
$1,000 to $5,000 fine and/or probation, suspension or revocation.
Rule 61G4-17.002, Florida Administrative Code (1995), provides that:
Circumstances which may be considered for the purposes of mitigation or aggravation of
penalty shall include, but are not limited to the following:
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.)
Actual job-site violations 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.
The severity of the offense.
The danger to the public.
The number of repetitions of offenses.
The number of complaints filed against the licensee.
The length of time the licensee has practiced.
The actual damage, physical or otherwise, to the licensee's customer.
The deterrent effect of the penalty imposed.
The effect of the penalty upon the licensee's livelihood.
Any efforts at rehabilitation.
Any other mitigating or aggravating circumstances.
Respondent has committed violations which, pursuant to the penalty guidelines, absent aggravating factors, could result in a maximum fine of $6,500 and probation.
Petitioner is of the opinion, however, that there are aggravating circumstances in this case that justify increasing the penalty imposed on the Respondent. They are:
RECOMMENDED that the Construction Industry Licensing Board enter a Final Order finding Respondent guilty of violating subsections 489.129(1)(h)(2), (k), (m) and (n), Florida Statutes; it is FURTHER RECOMMENDED that the Board impose an administrative fine in the amount of $6,500, require Respondent to make restitution to the Hausers in the amount of $13,880, require Respondent to pay the costs incurred in the investigation and prosecution of this case, and that Respondent's license be SUSPENDED for five years.
RECOMMENDED this 16th day of October, 1997, at Tallahassee, Leon County, Florida.
John L. Chaves, Esquire Department of Business and Professional Regulation Northwood Centre
1940 N. Monroe Street Suite 60
DANIEL M. KILBRIDE
Filed with the Clerk of the Division of Administrative Hearings this 16th day of October, 1997.
Robert E. Poindexter 2545 Burns Avenue
Lynda L. Goodgame General Counsel
Rodney Hurst, Executive Director Construction Industry Licensing Board 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.
