vs. ) Case No. 99-3232
Respondent. )
Pursuant to notice, a formal hearing was held in this case on October 5, 1999, in Largo, Florida, before Carolyn S. Holifield, a duly-designated Administrative Law Judge for the Division of Administrative Hearings.
For Petitioner: William J. Owens, Executive Director
For Respondent: G. Barry Wilkinson, Esquire
Lefter, Cushman & Wilkinson, P.A. 696 First Avenue North, Suite 201 St. Petersburg, Florida 33701
The issues in this case are: (1) whether Respondent contracted to perform certain marine specialty construction services and, if so, whether Respondent failed to obtain a building permit before starting such work; and (2) whether
Respondent abandoned the job, thereby committing mismanagement or misconduct and causing financial harm to the owner.
On or about July 2, 1999, the Pinellas County Construction Licensing Board (Petitioner), filed a four-count Administrative Complaint against Clayton Kettles (Respondent).
Count One alleges that Respondent entered into two contracts with homeowner, Leo Calzadilla, to perform certain marine specialty construction services, was paid for the contracted work, and failed to obtain a building permit before beginning the work as required by Section 104, Standard Building Code, 1997 Edition, as amended (Standard Building Code).
Count Two charges that Respondent abandoned the aforementioned job and thereby committed mismanagement or misconduct causing financial harm to the owner in violation of Chapter 89-504, Section 24(2)(h), Laws of Florida, as amended.
Count Three of the Administrative Complaint alleges that Respondent contracted with a second homeowner to replace a dock. This count further alleges that Respondent was paid a deposit by the homeowner but failed to obtain a building permit as required by Section 104, Standard Building Code.
Count Four alleges that Respondent abandoned the job, causing financial harm to the second homeowner in violation of Chapter 89-504, Section 24(2)(h), Laws of Florida, as amended.
Finally, Petitioner charges that the allegations contained in the Administrative Complaint constitute violations of Chapter 89-504, Section 24(2),(d),(h),(j),(m), and (n), Laws of Florida, as amended.
Respondent timely filed his Election of Rights response in which he disputed the factual allegations and requested a formal hearing. By letter dated July 26, 1999, the matter was referred to the Division of Administrative Hearings for assignment of an administrative law judge to conduct the hearing.
At hearing, Petitioner presented the testimony of two witnesses and had six exhibits received into evidence.
Respondent testified on his own behalf and presented the testimony of two witnesses. Respondent offered and had one exhibit received into evidence. Following the presentation of evidence, Petitioner moved to withdraw Counts Three and Four of the Administrative Complaint. The undersigned granted Petitioner's request to withdraw Counts Three and Four of the Administrative Complaint but held that such withdrawal was with prejudice.
The hearing was recorded by electronic tape recorder but was not transcribed. Respondent filed Proposed Findings of Fact and Conclusions of Law and a Memorandum of Law. Petitioner did not file a proposed recommended order.
Respondent, Clayton Kettles, is a certified marine specialty contractor who holds license number C-4046 (RX0062838). Respondent is and, at all times relevant hereto, was the qualifying contractor for and has done business as Kettles Construction Company, Inc. (Kettles Construction). In addition to being the qualifying contractor for Kettles Construction, Respondent is also the sole shareholder, officer, and director of the company. The principal place of business of Kettles Construction is 2401 17th Street South, St. Petersburg, Florida.
Respondent has been employed in the marine construction business for a total of 46 years. For the last 16 years, Respondent has been self-employed by Kettles Construction.
At all times relevant hereto, David Lee (Lee) was an estimator for Kettles Construction, having been hired by Respondent in December 1998. Before Lee was hired, Respondent spoke with Lee's father, Harry Lee, owner of Gulfcoast Marine Construction, Eugene Birney, and a long-time superintendent of Kettles Construction, to discuss the hiring of Lee. On the basis of these discussions, Respondent was convinced that Lee would be a good employee for Kettles Construction.
At all times relevant hereto, Leo Calzadilla (Calzadilla) owned and resided in a single-family waterfront dwelling located at 16116 4th Street East, Redington Beach, Florida.
Calzadilla was somewhat familiar with Kettles Construction, having first heard of the company from one of his neighbors. The neighbor told Calzadilla that he had used Kettles Construction to do some work on his seawall. Calzadilla also had seen trucks in the neighborhood with "Kettles Construction Company" painted on the sides of them.
In January 1999, Lee went to Calzadilla's house, apparently to solicit business. Lee informed Calzadilla that he was doing other work in the neighborhood and had extra materials. Lee gave Calzadilla a business card from Kettles Construction that indicated Lee was an "estimator" for the company. Although the business card clearly identified Lee only as an estimator, Lee told Calzadilla that he was a "partner" with Kettles Construction.
During or soon after his initial discussions with Lee, Calzadilla decided to have Lee perform certain work. Pursuant to these discussions, Calzadilla negotiated with Lee and eventually they agreed upon terms that were memorialized in a written contract (Contract I). The contract was dated and signed by Calzadilla and Lee on January 25, 1999.
Contract I was on a Kettles Construction contract form and provided spaces for the following: a description of the services that would be provided; the date the work was to commence and to be completed; the total cost of providing the specified services, including labor and materials; and the
signature of the owner of the property and the representative of Kettles Construction.
Contract I provided for the removal of Calzadilla's existing tie pole and the replacement of the tie pole at a cost of $198.00, and for the rebuilding of Calzadilla's dock at a cost of $900.00.
Contract I did not include the dates on which the work was to commence and be completed. Although the contract form contained spaces on which to provide the dates for commencement and completion of the work, these spaces were left blank.
On January 25, 1999, the day Contract I was executed, Calzadilla paid Lee a deposit of $100.00 for the removal and replacement of the tie pole. That same day Calzadilla gave Lee a deposit of $800.00 for the rebuilding of the dock. Calzadilla paid both the $100.00 deposit and the $800.00 deposit to Lee in cash.
The reason that Calzadilla paid the aforementioned deposits in cash was that Lee told him that Respondent wanted all payments made in cash.
At or near the time Contract I was executed, but prior to January 26, 1999, Lee began working at Calzadilla's property. At this time, Lee's work appeared to be limited to tearing down Calzadilla's old dock. After Lee tore down the dock, he asked Respondent if he could use a Kettles Construction truck. According to Lee, he had a personal job repairing Calzadilla's
dock and needed the truck to remove the debris. Respondent acquiesced and allowed Lee to use the truck to remove the debris from Calzadilla's property. Respondent even went to Calzadilla's property and assisted Lee in removing the debris and loading it onto the truck.
Respondent did not find Lee's request to use a company truck unusual. Even though Lee worked as an estimator with Kettles Construction, he was not precluded from taking on independent projects not associated with his duties as an estimator for Kettles Construction. Furthermore, based on his statements to Respondent, the work that Lee was performing, repairing Calzadilla's dock, could be properly performed by Lee because such a project did not require a permit.
While Respondent was on Calzadilla's property to assist Lee in loading the debris onto the Kettles Construction truck, Calzadilla asked Respondent about constructing a 50-foot seawall cap replacement at Calzadilla's residence.
After Calzadilla expressed an interest in Respondent's constructing a seawall, Respondent did several things in contemplation of constructing the seawall replacement project for Calzadilla. First, Respondent prepared a proposed contract for the Calzadilla seawall project and gave the contract to Lee for delivery to Calzadilla. Next, Respondent sent a notarized letter to Pinellas County officials in which he authorized Lee to pick up the permit for the proposed Calzadilla seawall project.
Finally, on January 31, 1999, Respondent obtained an engineer's sealed drawing for the Calzadilla seawall project from a professional engineer.
The notarized letter referred to in paragraph 16 was dated January 27, 1999, and signed by Respondent. In the letter, Respondent, acting on behalf of Kettles Construction authorized Lee to pick up the permits for two projects: the proposed Calzadilla seawall project; and a project for Calzadilla's next door neighbor. The letter notified appropriate Pinellas County officials that Lee was authorized to pick up permits for projects at two sites in Redington Beach, Florida: 16116 4th Street East, Calzadilla's address, and 16114 4th Street East, the address of Calzadilla's neighbor. Respondent's letter expressly stated that the authorization was limited to "these job addresses only" and requested that all inquiries regarding the authorization be directed to Respondent at his pager number.
The authorization for Lee to pick up the permits was contingent on the homeowners' accepting Respondent's proposals for the specified projects and then on Respondent's successfully applying for the required permits. Apparently, Calzadilla's neighbor referred to in the authorization letter entered into an agreement with Respondent. Thereafter, Respondent applied for the required permit and after officials at the Pinellas County Authority verified that Lee was authorized to pick up the permit, he was given the permit for the 16114 4th Street East project.
However, Respondent never applied for a permit for the proposed Calzadilla project because Calzadilla never accepted Respondent's written offer regarding the project.
Respondent prepared the January 27, 1999, authorization letter because Pinellas County Water and Navigation Control Authority (Pinellas County Authority) required specific authorization from Respondent, as qualifying contractor for Kettles Construction, in order to allow Lee or anyone else to pick up permits for Kettles Construction projects.
Lee never delivered to Calzadilla the proposal prepared by Respondent that offered to have Kettles Construction build a seawall on Calzadilla's property. Moreover, Lee never informed Respondent that he had failed to do so. Calzadilla never saw Respondent's proposed agreement, was unaware that it existed, and thus, never signed the agreement.
Rather than his delivering Respondent's proposal to Calzadilla, Lee met with Calzadilla on January 26, 1999, and discussed performing certain work for Calzadilla, including construction of a seawall. Following this discussion, Lee and Calzadilla entered into a second contact (Contract II). The contract was signed by Lee and Calzadilla on January 26, 1999.
Contract II was on a Kettles Construction contract form identical to the form described in paragraph 8 above.
Pursuant to Contract II, Lee agreed to perform the following work at Calzadilla's property: (1) remove and replace
the existing seawall cap; (2) install tie backs; and (3) install a personal water craft lift system manufactured by Dolphin Marine Equipment. This work required permits and Contract II provided that the "contractor" would obtain these permits.
Contract II provided that the work required under the agreement would commence approximately 10 days from the contract date and be completed approximately 14 days thereafter. A hand- written note next to this provision indicated that "there will be
$100.00 deducted per day if the job is not completed 2-12-99."
The total amount to be paid by Calzadilla under Contract II was $4,213.00. According to the terms of the contract, $1,615.00 of the total contract amount, the price of the water craft lift, was to be paid "with check payable directly from homeowner [Calzadilla] to Dolphin Marine Equipment, Inc."
With regard to Contract I, Lee had instructed Calzadilla to make all payments in cash. However, on January 26, 1999, when Calzadilla told Lee that he did not have enough cash to make the payments required under the Contract II, Lee agreed to accept checks, but told Calzadilla to make the checks payable to Lee. Calzadilla complied and, except for the check to Dolphin Marine, made all payments under Contract II payable to Lee, rather than to Respondent or Kettles Construction.
It is unclear when work under Contract II commenced and what, if any, work was performed by Lee. However, under the terms of the Contract II, 50 percent of the contract amount was
to be paid when the contract was executed, with the remaining balance due upon completion of the project.
On January 26, 1999, the day Contract II was executed, Calzadilla gave Lee two checks: one for $1,615, made payable to Dolphin Marine; and a check in the amount of $1,500.00, made payable to David Lee. Three days later, on January 29, 1999, Calzadilla gave Lee a check payable to Lee in the amount of
$1,000.00. After the January 29, 1999, payment, the remaining balance owed by Calzadilla under the terms of Contract II was
$98.00.
The last time that Calzadilla had personal contact with Lee was January 29, 1999, the date Calzadilla made the last payment to Lee. The only work performed by Lee was demolition of Calzadilla's existing dock.
Based on misrepresentations made to him by Lee and because the name Kettles Construction was printed on the contract form presented to him by Lee, Calzadilla mistakenly believed that he had entered into contract with Kettles Construction. Despite this belief, at no time during the negotiations and execution of Contracts I and II did Calzadilla have any contact with Respondent.
The telephone number of Kettles Construction was printed on both the business card and Contracts I and II that Lee gave Calzadilla. Nevertheless, Calzadilla made no effort to contact Respondent at the business number to verify that it was
proper to make payments to Lee in cash or by check made payable to Lee rather than to Kettles Construction.
Calzadilla first contacted Respondent in late February 1999 to complain that Lee was no longer working at Calzadilla's home. This was several weeks after Lee had obtained the funds from Calzadilla and abandoned the work at Calzadilla's home. Prior to Calzadilla's telephoning him, Respondent was unaware that Lee had prepared and signed Contracts I and II and had no knowledge that the contracts existed.
When Calzadilla notified Respondent that Lee had abandoned the work at the Calzadilla property, Lee was no longer an employee of Kettles Construction. Before Respondent was initially contacted by Calzadilla, Respondent had learned of another unrelated incident where Lee had acted outside the scope of his authority as an estimator for Kettles Construction. Upon learning of Lee's actions, Respondent had fired Lee. Subsequently, Respondent cooperated with the Pinellas County law enforcement authorities to incarcerate Lee.
Contrary to Calzadilla's mistaken belief, Respondent never entered into a contract with Calzadilla to perform any work. Accordingly, Respondent was not required to apply for or pull required permits for work to be done on Calzadilla's property. Because there was never a contract between Respondent and/or Kettles Construction, Respondent was neither required to nor did he perform work on Calzadilla's property.
Notwithstanding Lee's misrepresentation, Respondent never delegated to Lee nor has he ever delegated to anyone the authority to negotiate or sign contracts on behalf of Kettles Construction or Respondent. In the 16 years that Respondent has been in business, he has always signed every contract on behalf of Kettles Construction.
Respondent never authorized Lee to speak for him except to prepare proposed work estimates. These estimates were to be used by Respondent to prepare proposed contracts which would be executed by Respondent and the owner if the parties agreed to the terms of the agreement.
Respondent never gave Lee authority to accept funds from anyone on behalf of Respondent or Kettles Construction. Moreover, Respondent never instructed Lee to advise customers that all payments to Kettles Construction should be paid in cash or by check made payable to Lee. Respondent has always requested that customers make checks for work performed by Kettles Construction payable to Kettles Construction. Respondent was unaware that Calzadilla had given money to Lee and never received funds from Calzadilla, either directly or indirectly.
Respondent never approved or ratified any of the statements made to Calzadilla by Lee or the written agreements executed by Lee and Calzadilla.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter in this proceeding pursuant to Sections 120.57(1) and 120.68(8), Florida Statutes.
Petitioner, the Pinellas County Construction Licensing Board, is statutorily empowered to discipline the license of building contractors based upon any of the grounds enumerated in Chapter 75-489, Laws of Florida, as amended by Chapter 89-504, Section 24, Laws of Florida.
Petitioner has adopted the Standard Building Code, pursuant to Chapter 89-504, Section 28, Laws of Florida.
Respondent, a certified marine specialty contractor, is required to comply with all applicable building codes and regulations adopted by Petitioner. Likewise, Respondent is subject to disciplinary guidelines of Chapter 89-504, Section 24, Laws of Florida.
The allegations in this case are that Respondent is guilty of violating the following provisions of Chapter 89-504, Section 24, Laws of Florida:
(d) Willfully or deliberately disregarding and violating the applicable building codes or laws of the state, this board, or any municipality or county of this state;
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(h) Committing mismanagement or misconduct in the practice of contracting that causes
financial harm to a customer. Financial mismanagement or misconduct occurs when:
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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.
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(j) Failing in any material respect to comply with the provision of this part.
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Being found guilty of fraud or deceit or of gross negligence, incompetency, or misconduct in the practice of contracting.
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Proceeding on any job without obtaining applicable local building department permits and inspections.
To prevail in a licensure disciplinary proceeding, the charging party must prove the allegations in the Complaint by clear and convincing evidence. Department of Banking & Finance, Division of Securities and Investor Protection vs. Osborne, Stern and Company, 670 So. 2d 932 (Fla. 1996).
In Smith vs. Department of Health and Rehabilitative Services, 522 So. 2d 956, 958 (Fla. 1st DCA 1988), the term "clear and convincing evidence" is defined as follows:
"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.
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Clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify 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.
Based on the foregoing, to prevail in this proceeding, Petitioner must prove by clear and convincing evidence that Respondent: (1) entered into Contracts I and II with Calzadilla or ratified the contracts; (2) proceeded with Calzadilla's work without obtaining a permit; and (3) was paid money by Calzadilla and then abandoned Calzadilla's job.
In this case, it is undisputed that Respondent made no effort to obtain permits or to begin or complete work on the two contracts which were signed by Calzadilla and Lee. Respondent never agreed to Contracts I or II, either before or after they were executed.
Petitioner failed to prove that Respondent knowingly entered into Contracts I and II with Calzadilla and that Respondent was bound by these agreements.
The evidence established that Calzadilla did not deal directly with Respondent in either the negotiations or the
execution of Contracts I or II. Furthermore, it is undisputed that Respondent was unaware that the contracts existed until a month after they were executed and Calzadilla had paid Lee and Lee had absconded with the money. Thus, Respondent is obligated by the terms of the contracts negotiated and executed by Lee only if Lee's actions were within the scope of Lee's actual or apparent authority as estimator for Kettles Construction or if Respondent ratified the contracts.
The subject of actual and apparent authority of an agent is addressed in Stiles vs. Gordon Land Company, 44 So. 2d
417 (Fla. 1950), as follows:
The authority of an agent may be real or it may be apparent only, and members of the public acting in good faith may rely on either, unless in the case of apparent authority the circumstances are such as to put a reasonable person on inquiry. (Cite omitted) By apparent authority is meant, such authority as the principal wrongfully permits the agent to assume or which the principal by his actions or words holds the agent out as possessing.
Stiles, 44 So. 2d at 421.
According to Stiles, apparent authority is created by the actions or statements of the principal, not the actions or statements of the agent.
Applying the principle of apparent agency to this case, it is clear that Lee did not have apparent authority to negotiate and enter into contracts on behalf of Kettles Construction. The evidence failed to show that Respondent authorized Lee to enter
into contracts on behalf of Kettles Construction or that he made any representations to Calzadilla that could cause him to reasonably believe that Lee had such authority. There is no evidence that Respondent made representations to Calzadilla that Lee's role with Kettles Construction expanded beyond that of estimator, as was reflected on a company business card. Here, the uncontroverted evidence is that Respondent made absolutely no representations to Calzadilla and that in executing Contracts I and II, Calzadilla relied solely on misrepresentations made by Lee.
Petitioner has not established that Lee had apparent authority to negotiate and execute contracts on behalf of Respondent or Kettles Construction.
To establish that there was an actual agency relationship between Respondent and Lee, the following elements must exist: (1) acknowledgement by principal that agent will act for him; (2) agent's acceptance of the undertaking; and (3) control by the principal over the actions of the agent. Ilgen vs. Henderson Properties, Inc., 683 So. 2d 513, 514 (Fla. 2d DCA 1996), citing Goldschmidt vs. Holman, 571 So. 2d 422, 424 (Fla. 1990).
The evidence in this case established that Respondent hired Lee to be an estimator for Kettles Construction. Furthermore, there is no dispute that Lee accepted the job of estimator with Kettles Construction and that Respondent had
control over Lee's actions in that role. Therefore, an actual agency relationship existed between Respondent and Lee, but the extent of that agency was limited.
Where an actual agency relationship exists, a principal may limit the authority of the agent and such limitations or restrictions are binding on a third party who has notice of them or who is put on inquiry provided the principal does nothing to waive them. 2 Fla. Jur. 2d, Agency, Section 52.
In the instant case, the evidence established that an actual agency relationship existed between Respondent and Lee. However, the evidence also established that the authority granted to Lee by Respondent by virtue of that agency was limited to preparing job estimates for Respondent, a responsibility typically performed by an estimator, and to occasionally pulling permits when specifically authorized, in writing, to do so. The evidence demonstrated that Lee's role at Kettles Construction was clearly stated on the business card as that of estimator. This business card provided notice of Lee's limited area of agency.
In absence of any evidence that Respondent waived the limitations or restrictions on Lee's actions that as an estimator for Kettles Construction, such limitations or restrictions are binding Calzadilla because he had notice of them.
Moreover, the evidence clearly established Lee's actions would put a reasonable person on notice that Lee was acting outside the reasonable scope of his agency. A reasonable
person would be suspicious when an agent bearing the business card of the corporation that states his position a that of "estimator" describes his role as "partner" of the corporation.
A reasonable person would be suspicious when a corporate employee with a job title of estimator requests that payments to the corporation should be made in cash or by check made payable to the agent personally and not to the corporation. Finally, a reasonable person would be suspicious about requests for payments by a contractor when little or no actual work was actually done on the job.
The evidence failed to establish that Lee had either actual or apparent authority to enter into contract on behalf of Kettles Construction. Accordingly, Respondent is bound by the terms of Contracts I and II only if he ratified the agreements.
Ratification is the express or implied adoption by a person of an act or contract entered into on his behalf by another without authority. In Port Largo Club, Inc. vs. Warren,
476 So. 2d 1330 (Fla. 3rd DCA 1985). However, before one may infer that a principal ratified an unauthorized act of his agent, the evidence must demonstrate that the principal was fully informed and that he approved the act. United Parcel Services vs. Buchwald Jewelers, 476 So. 2d 772, 773 (Fla. 3rd DCA 1985), citing Ball vs. Yates, 158 Fla. 521, 29 So. 2d 729 (1946), cert. denied, 332 U.S. 774, 68 S.Ct. 66, 92 L.Ed. 359 (1947).
Respondent must be proven to have expressly and knowingly adopted Calzadilla's contracts before ratification could be possible. Here, the evidence demonstrated that Respondent knew nothing of Calzadilla's contracts with Lee until Lee left with the money given to him by Calzadilla. Moreover, after Lee was contacted by Calzadilla, Respondent was not aware of the extent of Lee's actions and never agreed to adopt the acts of Lee. Thus, Respondent did not ratify Contracts I or II.
Petitioner has failed to meet its burden of proof in regard to Counts One and Two of the Administrative Complaint. The evidence did not establish that there was an agreement between Respondent and Calzadilla or that Lee's agreement with Calzadilla was binding on Respondent. Therefore, Respondent was
under no obligation to work on Calzadilla's project and to obtain the required permits to do so.
RECOMMEND that Petitioner, Pinellas County Construction Licensing Board enter a final order that:
DONE AND ENTERED this 30th day of December, 1999, in Tallahassee, Leon County, Florida.
CAROLYN S. HOLIFIELD
Filed with the Clerk of the Division of Administrative Hearings this 30th day of December, 1999.
William J. Owens, Executive Director Pinellas County Construction
G. Barry Wilkinson, Esquire Lefter, Cushman & Wilkinson, P.A. 696 First Avenue North, Suite 201 St. Petersburg, Florida 33701
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.
