STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, ) CONSTRUCTION INDUSTRY LICENSING ) BOARD, )
)
Petitioner, ) Case Nos. 01-3827PL
) 01-3828PL
vs. ) 01-3829PL
) 01-3830PL
GLENN L. MUSTAPICK, ) 01-3831PL
) 01-3832PL
Respondent. ) 01-3833PL
) 01-3834PL
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in these cases on December 5-7, 2001, in West Palm Beach, Florida, before
Errol H. Powell, a designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Theodore R. Gay, Esquire
Department of Business and Professional Regulation
401 Northwest Second Avenue Suite N-607
Miami, Florida 33128 For Respondent: No Appearance
STATEMENT OF THE ISSUE
Whether Respondent committed the offenses set forth in the Administrative Complaints and Amended Administrative Complaints and, if so, what action should be taken.
PRELIMINARY STATEMENT
On April 27, 2001, the Department of Business and Professional Regulation, Construction Industry Licensing Board (Petitioner) filed five multi-count Administrative Complaints (Case Nos. 01-3829PL, 01-3831PL, 01-3832PL, 01-3833PL, and
01-3834PL) and three multi-count Amended Administrative Complaints (Case Nos. 01-3827PL, 01-3828PL, and 01-3830PL) against Glenn L. Mustapick (Respondent). In Case Nos. 01-3827, 01-3828PL, and 01-3831PL, Petitioner charged Respondent with the following violations: Count I--violating Subsection 489.129 (1)(h)1, Florida Statutes (1995)1, by committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer, that is, failure to remove valid liens, by payment or by bond, within 75 days after the date of such liens; Count II--violating Subsection 489.129(1)(j), by violating Subsection 489.119(5)(b), that is, failure to include contractor's license number in a contract; Count III--violating Subsection 489.129(1)(j), by violating Subsection 489.1425(1), that is, failure to give the customer written notification of rights under the Construction Industries Recovery Fund;
Count IV--violating Subsection 489.129(1)(k), by abandoning a construction project in which the contractor is engaged or under contract as a contractor; and Count V--violating Subsection
489.129(1)(p), by proceeding on a job without obtaining applicable local building department permits and inspections.
In Case Nos. 01-3829PL, 01-3833PL, and 01—3834PL, Respondent was charged with the following violations: Count I--violating Subsection 489.129(1)(h)1; Count II-violating Subsection 489.129(1)(h)3, by committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer, that is, the contractor's job has been completed and the customer has had to pay more for the contracted job than the original contract price, as adjusted for subsequent change orders; unless such increase in cost was the result of circumstances beyond the control of the contractor, was the result of circumstances caused by the customer, or was otherwise permitted by the terms of the contract between the contractor and the customer; Count III-- violating Subsection 489.129(1)(j), by violating Subsection 489.119(5)(b); Count IV--violating Subsection 489.129(1), by violating Subsection 489.1425(1); and Count V--violating Subsection 489.129(1)(k).
In Case No. 01-3830PL, Respondent was charged with the following violations:
Count I--violating Subsection 489.129(1)(h)1; Count II-- violating Subsection 489.129(1)(h)(3); Count III--violating Subsection 489.129(1)(j), by violating Subsection 489.119(5)(b); Count IV--violating Subsection 489.129(1)(j), by violating
Subsection 489.1425(1); Count V--violating Subsection 489.129(1)(k); and Count VI--violating Subsection 489.129(1)(p).
In Case No. 01-3832PL, Respondent was charged with the following violations: Count I--violating Subsection 489.129(1)(h)1; Count II--violating Subsection 489.129(1)(h)2, by committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer by abandoning 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; Count III--violating Subsection 489.129(1)(h)3; Count IV--violating Subsection 489.129(1)(j), by violating Subsection 489.119(5)(b); Count V--violating Subsection 489.129(1)(j), by violating Subsection 489.1425(1); and
Count VI--violating Subsection 489.129(1)(k).
Respondent disputed the allegations of fact in the Administrative Complaints and Amended Administrative Complaints and requested a hearing. These matters were referred to the Division of Administrative Hearings on October 1, 2001. By Order dated October 23, 2001, these matters were consolidated.
At the hearing, Petitioner presented the testimony of 34 witnesses and entered 139 exhibits (Petitioner's Exhibits
numbered 1-57, 59-82 and 84-140) into evidence. Only the last two pages of Petitioner's Exhibit numbered 39 were entered into evidence. Respondent failed to appear at the hearing.2
A transcript of the hearing was ordered. At Petitioner's request, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript. The Transcript, consisting of four volumes, was filed on December 28, 2001. Petitioner requested and was granted leave to exceed the 40-page limitation. Further, Petitioner requested and was granted an extension of time to file its post-hearing submission. Petitioner timely filed its post-hearing submission, which was considered in the preparation of this Recommended Order.
Respondent failed to file a post-hearing submission.
FINDINGS OF FACT
At all times material hereto, Respondent was licensed by Petitioner as a certified residential contractor, having been issued license number CR C040917. He has been licensed since March 16, 1987.
Respondent was the qualifying agent of KM Homes, Inc. (KMH) from June 10, 1995 through March 13, 1997, more than one year but less than two years.
On or about February 3, 1997, KMH filed a voluntary bankruptcy petition under Chapter 7 in the U.S. Bankruptcy Court, Southern District of Florida, Case No. 97-30498, with an estimate
of assets of less than $50,000.00 and an estimate of liabilities of between $1 million and $10 million. The petition was signed by Kenneth H. Maltz, as president of KMH. On or about
February 4, 1997, the next day, Kenneth H. Maltz and his wife, Susan Maltz, filed a joint voluntary bankruptcy petition under Chapter 7.
Case No. 01-3827PL
On or about April 28, 1996, KMH contracted with
Daniel L. Simons and Carol L. Stefanski for the sale of a lot to Simons and Stefanski and for construction of a house on the lot. The contract price for the lot was $45,000.00 and for the construction of the home was $141,000.00, totaling $186,000.00.
Respondent's license number did not appear in the contract.
In accordance with the contract, Simons and Stefanski made the following payments to KMH: on or about April 28, 1996,
$5,000.00; on or about August 21, 1996, $40,000.00; and on or about August 30, 1996, $42,229.60 and $747.00, through their lender, First Federal Savings of the Palm Beaches, pursuant to an August 21, 1996, mortgage loan of $128,000.00. The payments totaled $100,976.60.
KMH applied for a building permit from Martin County to build the home for Simons and Stefanski. Respondent's license
number appeared on the application. The building permit was never obtained.
Beginning on or about August 27, 1996, and at various times thereafter, until approximately January 9, 1997, the lot was cleared and fill was delivered to the lot by KMH's subcontractor, Tideway Construction Company, Inc. (Tideway). The work by Tideway was the only work performed by KMH pursuant to the contract with Simons and Stefanski.
KHM did not pay Tideway and Tideway recorded a lien on the lot for $4,084.00. KMH failed to remove Tideway's lien.
On or about November 23, 1997, Tideway filed suit to foreclose its lien. Sometime in May 1998, Tideway released the lien in exchange for payment from Simons and Stefanski in the amount of 65 percent of the lien amount. Simons and Stefanski's lender paid the 65 percent from additional funds the lender loaned to Simons and Stefanski to enable them to complete their home. Tideway wrote off the remaining 35 percent.
KMH never explained to Simons and Stefanski why it did not complete their home. KMH's trustee in the bankruptcy never offered to complete the work.
Simons and Stefanski never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. Simons considered KMH to have abandoned the job.
Simons and Stefanski filed a proof of claim in KMH's bankruptcy for an unsecured non-priority claim in the amount of
$58,000.00. They received nothing from the bankruptcy action.
In the latter part of 1998, Simons and Stefanski had their home completed by another contractor, Murex, for
$143,270.00. The house that Murex completed for Simons and Stefanski was essentially the same house that KMH was to construct, except that the roof structure was different and the garage and back porch were a little larger.
KMH never provided Simons and Stefanski with notification of the Construction Industries Recovery Fund.
Simons and Stefanski never had any direct dealings with Respondent personally. They attempted to sue Respondent but were unsuccessful.
As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3827PL, excluding costs associated with an attorney's time, totaled $457.88.
Case No. 01-3828PL
On or about June 6, 1996, KMH contracted with Carol Morris for construction of a house on a lot owned by Morris. The contract price for the construction of the house was $287,940.00.
Respondent's license number did not appear in the contract.
In accordance with the contract, Morris made the following payments to KMH: on or about February 28, 1996,
$1,000.00; on or about June 10, 1996, $27,000.00; and on or about August 2, 1996, $109,240.00. The payments totaled $137,240.00.
Morris obtained a mortgage loan in the amount of $150,000.00 from First Bank of Florida to finance part of the contract price.
On or about September 17, 1996, KMH applied for a building permit from Palm Beach Gardens to construct the home for Morris. Respondent's license number appeared on the application. On or about September 26, 1996, the building permit was approved and issued, bearing building permit number 28644.
From approximately September to December 1996, KMH performed work pursuant to the contract and thereafter, did not perform any more work on the home. KMH failed to complete the construction of Morris' home.
KMH never explained to Morris why it did not complete her home. KMH's trustee in the bankruptcy never offered to complete the work.
Morris never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. Morris considered KMH to have abandoned the job.
KMH's subcontractors/material suppliers recorded liens on Morris' property. The subcontractors/material suppliers
recorded liens were as follows: on December 12, 1996, Tideway for $8,438.00; on January 16, 1997, Buckeye Plumbing, Inc. (Buckeye Plumbing) for $3,676.00; on January 22, 1997, Tarmac Florida, Inc. (Tarmac) for $6,296.40; on January 23, 1997, Electrical Express, Inc. (Electrical Express) for $450.00; on February 13, 1997, E. M. Brandon, Inc. (Brandon) for $2,164.00; on February 18, 1997, Tom Rawn Masonry, Inc. (TR Masonry) for
$16,454.00; and on April 3, 1997, Spacerace Enterprises, Inc. (Spacerace) for $7,850.00.
Morris paid KMH for all the work or materials pertaining to the liens. KMH failed to remove any of the liens.
Morris never paid any monies directly to the lien holders to remove any of the liens. However, Morris' lender, First Bank of Florida, assisted her with the resolution of the liens, including allowing its attorney to act as Morris' representative in resolving the liens. In May 1998, Tideway released its lien in exchange for payment by Morris' lender in the amount of 65 percent of the lien amount. Tideway wrote off the remaining 35 percent. The evidence is unclear as to whether Morris was obligated to repay the lender. Buckeye Plumbing, Electrical Express, TR Masonry, Inc., and Spacerace never received any money on their liens and the entire amount of their liens was a complete loss. Tarmac sued to foreclose on its lien, but ultimately dismissed its lawsuit and wrote off the amount of
its lien as a bad debt. No testimony was presented regarding the final result of the lien held by Brandon.
Morris obtained the services of another contractor, Home Work Group, Inc. (Home Work), to complete the construction of her home. Morris used the original mortgage loan of
$150,000.00, a shortfall loan from the same lender in the amount of $45,000.00, and her savings of approximately $43,000.00, to pay Home Work. On or about September 1998, Home Work completed the construction of Morris' house, which was essentially the same as the house which was to be constructed by KMH.
Morris received notification of KMH's bankruptcy by mail. She filed a complaint with the bankruptcy court objecting to KMH's discharge. The bankruptcy court eventually dismissed Morris' complaint. Sometime during the year 2000, Morris received $900.00 from KMH's bankruptcy.
KMH never provided Morris with notification of the Construction Industries Recovery Fund.
During the transaction between KMH and Morris, she knew Respondent as the construction manager for KMH.
As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3828PL, excluding costs associated with an attorney's time, totaled $478.70.
Case No. 01-3829PL
On or about February 23, 1996, KMH contracted with Fred W. Connell, Jr., and his wife, Celia M. Connell, for
construction of a house on a lot that the Connells would purchase separately, not as a part of the contract. The contract price for the construction of the house was $258,870.00, which included
$18,000.00 for a swimming pool.
Respondent's license number did not appear in the contract.
In accordance with the contract, the Connells made the following payments to KMH: on or about February 23, 1996,
$5,000.00; on or about February 29, 1996, $30,000.00; on or about November 7, 1996, $8,687.00; on or about November 25, 1996, through their lender, First Bank of Florida, pursuant to a mortgage loan, $33,541.00; and on or about December 16, 1996,
$24,393.00. The payments totaled $101,621.00.
KMH applied for a building permit from the City of North Palm Beach to construct the home for the Connells. Respondent's name and license number appeared on the application. On or about November 5, 1996, the building permit was approved and issued, bearing building permit number 96-01386.
From approximately November to December 1996, KMH performed work pursuant to the contract and thereafter,
did not perform any more work on the home. KMH failed to complete the construction of the Connells' home.
In December 1996, the City of North Palm Beach issued a stop work order due to voids in the concrete walls that made, according to the City of North Palm Beach, the structure of the house unsafe. After the issuance of the stop work order, KMH failed to resume work on the house.
KMH never explained to the Connells why it did not complete their home.
The Connells fired KMH only after they received notification of KMH's filing for bankruptcy. KMH's trustee in the bankruptcy never offered to complete the work. The Connells considered KMH to have abandoned the job.
KMH's subcontractors/material suppliers recorded liens on the Connells' property. The subcontractors/material suppliers and recorded liens were as follows: on January 16, 1997, Palm Beach Masonry (PB Masonry) for $12,125.00; on January 17, 1997, Sasso Air Conditioning, Inc. (Sasso Air) for $550.00; on
January 22, 1997, Tarmac for $4,239.21; on January 28, 1997, CPS Construction, Inc. (CPS Construction) for $2,580.00; on
January 31, 1997, Gulf Stream Lumber Company (Gulf Stream Lumber) for $19,461.00; and on March 24, 1997, Waste Management of Florida, Inc. (Waste Management) for $276.50.
The Connells paid KMH for all the work or materials pertaining to the liens. KMH failed to remove any of the liens.
The Connells paid its lender, First Bank of Florida,
$25,000.00 in exchange for the lender's assistance in resolving the liens. PB Masonry and Waste Management never received any money on their liens and the entire amount of their liens was a complete loss. On or about August 4, 1997, Sasso Air gave a partial release of its lien in return for payment in the amount of $275.00. Tarmac's notice to owner was untimely, so it chose to not pursue foreclosure proceedings and instead wrote the amount of its lien off as a bad debt. On or about November 11, 1997, Gulf Stream Lumber released its lien in return for payment of $5,000.00 from First Bank of Florida. On May 13, 1997, CPS Construction released its lien in exchange for payment from the Connells in the amount of $2,500.00.
On or about April 22, 1997, the Connells obtained the services of another contractor, Villafranca Design and Development, L.C. (Villafranca Design), to complete the construction of their home for $221,000.00. The Connells, through their lender, paid Villafranca Design. Their home was completed shortly before Christmas 1997. The house completed by Villafranca Design was essentially the same as the house which was to be constructed by KMH.
Because KMH failed to complete the Connells' home, the Connells, their two children and their two dogs were forced to live on the Connells' boat and to store their furniture for almost a year. During that year, the Connells had to pay dockage fees to live on their boat and storage fees for their furniture.
The Connells estimate that the difference in the contract price of their home with KMH and what they eventually paid for their home was conservatively $100,000.00.
The Connells did not receive any money from KMH's bankruptcy.
KMH never provided the Connells with notification of the Construction Industries Recovery Fund.
During the transaction between KMH and the Connells, the Connells knew Respondent as someone who worked in the KMH office.
As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3829PL, excluding costs associated with an attorney's time, totaled $519.43.
Case No. 01-3830PL
On or about September 19, 1996, KMH contracted with William and Iceline Chang for the construction of a house on the lot owned by the Changs. The contract price for the construction of the home was $205,620.00.
Respondent's license number did not appear in the contract.
In accordance with the contract, the Changs made the following payments to KMH: on or about September 16, 1996,
$10,000.00; and on or about October 10, 1996, $10,620.00. Pursuant to a change order for additional site preparation and fill, on or about October 7, 1996, the Changs paid KMH $9,400.00.
On or about December 16, 1996, KMH applied for a building permit from Palm Beach County to build the Changs' home. Respondent's license number and Respondent's name as the qualifying agent for KMH appeared on the application. The building permit was never obtained due to KMH's failing to submit the construction plans to Palm Beach County's building department.
On December 13, 16, and 19, 1996, the Changs' lot was cleared and fill was delivered to the lot by KMH's subcontractor, Tideway. The work by Tideway was the only work performed by KMH pursuant to the contract with the Changs.
KHM did not pay Tideway and Tideway recorded a lien on the lot for $10,900.00. KMH failed to remove Tideway's lien.
On or about June 6, 1997, Tideway agreed with the Changs to release the lien in exchange for payment from them in the amount of $9,810.00. The Changs paid Tideway in six monthly installments, June through November 1997, of $1,635.00. On or
about November 26, 1997, Tideway gave the Changs a release of its lien.
KMH never explained to the Changs why it did not complete their home. KMH's trustee in the bankruptcy never offered to complete the work.
The Changs never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. The Changs considered KMH to have abandoned the job.
The Changs had their home completed by another contractor, Villafranca Design, for $203,500.00. Villafranca Design submitted the same construction plans to Palm Beach County's building department that KMH was to use to construct the Changs' home. On or about May 7, 1997, a building permit was issued, bearing permit number B97012080. The house that Villafranca Design completed for the Changs was essentially the same house that KMH was to construct.
On or about February 26, 2000, the Changs received
$643.29 from KMH's bankruptcy.
KMH never provided the Changs with notification of the Construction Industries Recovery Fund.
The Changs never had any direct dealings with Respondent personally.
As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3830PL, excluding costs associated with an attorney's time, totaled $714.11.
Case No. 01-3831PL
On or about July 30, 1996, KMH contracted with Harold and Jean Bell to sell them a lot and construct a house on the lot. The contract price for the lot was $53,000.00 and the construction of the home was $186,000.00, totaling $239,000.00.
Respondent's license number did not appear in the contract.
In accordance with the contract, on or about August 1, 1996, the Bells paid a deposit of $5,000.00 to KMH. On September 19, 1996, the Bells paid, as closing costs, $67,147.63 to Universal Land Title, Inc., which included the cost for the lot and an additional deposit toward construction in the amount of $13,600.00. Subsequently, the Bells received a deed to the lot.
KMH never obtained a building permit to construct the house.
On or about December 11, 1996, the Bells' lot was cleared and fill was delivered to the lot by KMH's subcontractor, Tideway. The work by Tideway was the only work performed by KMH pursuant to the contract with the Bells.
KHM did not pay Tideway, and Tideway recorded a lien on the lot for $3,688.00. KMH failed to remove Tideway's lien. Tideway never received any money on its lien and the entire amount of its lien was a complete loss.
KMH never explained to the Bells why it did not complete their home. KMH's trustee in the bankruptcy never offered to complete the work.
The Bells never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. The Bells considered KMH to have abandoned the job.
The Bells had their home, with extras, completed by another contractor, Villafranca Design, for approximately
$208,000.00.
On or about August 2, 2000, the Bells received $996.95 from KMH's bankruptcy.
KMH never provided the Bells with notification of the Construction Industries Recovery Fund.
On October 1, 2002, Mr. Bell obtained a civil judgment against KMH in the amount of $24,199.64, plus costs of $264.75; prejudgment interest of $21,664.88; and attorney's fees of
$2,395.00, totaling $48,524.27.
The Bells never had any direct dealings with Respondent personally.
As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3831PL, excluding costs associated with an attorney's time, totaled $305.84.
Case No. 01-3832PL
On or about May 26, 1996, KMH contracted, in a revised contract, with Erol and Yildiz Aksoy for the sale of a lot and construction of a house on a lot. The contract price for the lot was $58,000.00 and construction of the house was $242,000.00, totaling $300,000.00.
The revised contract entered into evidence at hearing was incomplete. No determination could be made as to whether Respondent's license appeared in the revised contract.
In accordance with the contract, the Aksoys made the following payments to KMH: on or about October 28, 1994,
$1,000.003; on or about June 5, 1996, $23,000.00; on or about August 14, 1996, $12,545.00; on or about October 4, 1996,
$21,800.00; on or about October 17, 1996, $1,323.00; on or about November 2, 1996, $21,800.00; on or about November 20, 1996,
$7,123.00 and $21,800.00; on or about November 22, 1996,
$21,800.00; on or about December 13, 1996, $21,800.00; and on or about January 2, 1997, $21,800.00 and $5,000.00. The payments totaled $180,791.00.
On or about July 26, 1996, KMH executed and delivered a deed to the Aksoys for the lot.
KMH performed work pursuant to the contract, but only performed 55 percent to 60 percent of the construction contracted for. After January 1997, KMH failed to perform any further work on the Aksoys' home. KMH failed to complete the construction of Aksoys' home.
KMH never explained to the Aksoys why it did not complete their home. KMH's trustee in the bankruptcy never offered to complete the work.
The Aksoys never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. The Aksoys considered KMH to have abandoned the job.
The Aksoys filed a proof of claim in KMH's bankruptcy for an unsecured non-priority claim in the amount of $85,000.00. Sometime in the years 2000 or 2001, they received $918.00 from the bankruptcy action.
KMH's subcontractors/material suppliers recorded liens on the Aksoys' property. The subcontractors/material suppliers and recorded liens were as follows: on January 8, 1997, Buckeye Plumbing for $2,570.00; on January 14, 1997, J. W. Hodges Drywall Textures, Inc. (Hodges Drywall) for $3,500.00; on January 15, 1997, Griffin & Wilson Stucco, Inc. (GW Stucco) for $6,040.00; on January 16, 1997, Gallina Electric, Inc. (Gallina Electric) for
$3,732.00; on January 17, 1997, Sasso Air for $2,925.00; on
January 21, 1997, K. D. Installation, Inc. (KD Installation) for
$2,789.00; and on February 5, 1997, Macshmeyer Concrete Company of Florida, Inc. (Macshmeyer Concrete) for $5,814.00.
The Aksoys paid KMH for all the work or materials pertaining to the liens. KMH failed to remove any of the liens.
The Aksoys paid the lien holders to remove the liens, as follows: on or about February 18, 1997, $2,570.00 to Buckeye Plumbing; on or about April 7, 1997, $1,400.00 to Hodges Drywall, with the remaining unpaid amount ($2,100.00) being a loss for the company; on or about August 6, 1997, $7,760.10 to GW Stucco, which included additional monies for attorney's fees; on or about March 12, 1997, $1,866.00 to Gallina Electric; on or about
April 7, 1997, $2,975.00 to Sasso Air; $1,500.00 to KD Installation (date of payment unknown); on or about March 12, 1997, $2,616.00 to Macshmeyer Concrete.
The Aksoys also paid for work for which another KMH subcontractor, Spacerace Enterprises, Inc., claimed that KMH had failed to pay.
On or about February 18, 1997, the Aksoys obtained the services of another contractor, Villafranca Design, to complete the construction of their home. The Aksoys paid Villafranca Design $145,250.00. In or around May 1997, Villafranca Design completed the construction of the Aksoys' house, which was
essentially the same as the house which was to be constructed by KMH.
KMH never provided the Aksoys with notification of the Construction Industries Recovery Fund.
The Aksoys never had any direct dealings with Respondent personally.
As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3828PL, excluding costs associated with an attorney's time, totaled $606.48.
Case No. 01-3833PL
On or about December 11, 1995, KMH contracted with Milo and Jerolene Glass for construction of a house on a lot owned by the Glasses. The contract price for the construction of the house was $395,795.00.
Respondent's license number did not appear in the contract.
In accordance with the contract, the Glasses made the following payments to KMH: on or about November 13, 1995,
$1,000.00; and on or about December 11, 1995, $39,079.00. The payments totaled $40,079.00.
On or about May 21, 1996, KMH applied for a building permit from Palm Beach County to construct the home for the Glasses. Respondent's name as the qualifying agent for KMH and license number appeared on the application. Sometime thereafter
in 1996, the building permit was approved and issued, bearing building permit number B96019588.
From approximately November 1996 to January 1997, KMH performed work pursuant to the contract, but thereafter, did not perform any further work on the home. KMH failed to complete the construction of the Glasses' home.
At the time KMH stopped working on the Glasses' home, a substantial amount of work remained to be completed. Furthermore, much of KMH's work had to be repaired or corrected.
KMH never explained to the Glasses why it did not complete her home. KMH's trustee in the bankruptcy never offered to complete the work.
The Glasses never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. The Glasses considered KMH to have abandoned the job.
KMH's subcontractors/material suppliers recorded liens on the Glasses' property. The subcontractors/material suppliers and recorded liens were as follows: on January 17, 1997, Sasso Air for $925.00; on January 23, 1997, Electrical Express for
$750.00; and on January 28, 1997, R J G Masonry, Inc. (RJG Masonry) for $8,353.99.
KMH failed to remove any of the liens. The evidence is unclear as to whether the Glasses paid KMH for all the work or materials pertaining to the liens.
The Glasses paid to remove the liens. The Glasses paid the following: $925.00 to Sasso Air for which they received a final waiver of lien dated July 8, 1999; on or about
February 14, 1997, $750.00 to Electrical Express for which they received a release of lien dated June 2, 1997; and on or about January 24, 1997, $8,353.99 to RJG Masonary.
The Glasses did not obtain the services of another contractor to complete the construction of their home. Contractors whom they approached were very reluctant or unwilling to take over the project. Finally, the Glasses, who had prior experience as owners of other construction projects, became their own contractors and completed their home. They also received the assistance of a contracting firm, but the Glasses handled all the disbursements of funds to the suppliers for labor and materials. By September 2000, the Glasses had substantially completed their home and were living in it. At the time of the hearing, they had sold the house and moved to another location in Florida.
The Glasses estimate that they expended $1,239,487.78 in the construction of their home. They maintain that this cost does not include approximately $80,000.00 that the Glasses claim that their original lender paid to KMH without their
authorization. The amount paid by the Glasses exceeds the contract price because (1) KMH underbid the job; (2) the Glasses spent substantial sums to repair or correct KMH's work, which the Glasses estimate conservatively to be more than $200,000.00; and
(3) the Glasses spent substantial sums on upgrades of contract allowance items.
The Glasses received approximately $1,000.00 from KMH's bankruptcy.
KMH never provided the Glasses with notification of the Construction Industries Recovery Fund.
After the bankruptcy, Mrs. Glass contacted Respondent and requested the construction plans for the home. Respondent indicated that he did not have the plans. Mrs. Glass contacted Respondent again and he indicated that he may be able to locate the plans. Subsequently, Respondent contacted the Glasses and indicated that he had located the plans. The Glasses went to Respondent's place of business to retrieve the plans. After providing the plans, Respondent requested the Glasses to hire him to complete their home. The Glasses declined Respondent's offer because they considered Respondent's cost estimate to be too high and because of Respondent's association with KMH.
As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3833PL, excluding costs associated with an attorney's time, totaled $628.33.
Case No. 01-3834PL
On or about December 8, 1995, KMH contracted with Suzanne Beck for construction of a house on a lot that Beck would acquire at a later date (in 1996), not as a part of the contract. The contract price for the construction of the house was
$133,500.00.
Respondent's license number did not appear in the contract.
In accordance with the contract, Beck made the following payments to KMH: on or about December 8, 1995,
$5,000.00; on or about July 31, 1996, $8,350.00 and 5,643.09; on or about August 7, 1996, $5,030.88; on or about September 4, 1996, $12,051.05; on or about September 18, 1996, $12,051.05; on or about October 1, 1996, $12,051.05; on or about October 11, 1996, $12,051.05; on or about November 7, 1996, $12,051.05; and on or about November 26, 1996, $12,051.05 and $12,051.05. The payments totaled $108,381.32.
KMH applied for a building permit from the Town of Jupiter to construct the home for Beck. Respondent's name and license number appeared on the application as the contractor. On February 12, 1996, the building permit was approved and issued, bearing building permit number 96-29588.
From approximately August to December 1996, KMH performed work pursuant to the contract and thereafter, did not
perform any more work on the home. KMH failed to complete the construction of the Beck's home.
KMH never explained to Beck why it did not complete her home.
Around the end of December 1996 or in January 1997, Beck notified KMH that she was taking over the project. Progress by KMH had been slow and Beck discovered that KMH had closed the doors of its business for a second time and was not paying its subcontractors. Beck considered KMH to have abandoned the job. She obtained an owner's building permit and completed the project, making payments directly to the suppliers of labor and materials. On February 7, 1997, Beck obtained a certificate of occupancy from the Town of Jupiter.
KMH's subcontractors/material suppliers recorded liens on the Beck's property. The subcontractors/material suppliers and recorded liens were as follows: on January 6, 1997, American Aluminum and Insulation FireProofing Company, Inc. (American Alum.) for $385.00; on January 6, 1997, Buckeye Plumbing for
$2,625.00; on January 14, 1997, Hodges Drywall for $8,280.00; on January 14, 1997, Rizzo Tile & Marble, Inc. (R Tile & Marble) for
$1,870.70; on January 15, 1997, James M. Webster d/b/a Rain Flow of South Florida (Rain Flow) for $75.00; on January 17, 1997,
K. D. Installation, Inc. (KD Installation) for $520.40; on January 17, 1997, Q. C. Cabinet Systems, Inc. (QC Cabinets) for
$3,207.00; on January 17, 1997, Paul Temple Painting (PT Painting) for $2,534.75; on January 17, 1997, Sasso Air for
$3,360.00; on January 28, 1997, James Velix Bobcat Service (Bobcat Service) for $1,450.00; on February 4, 1997, Tideway for
$279.00; on February 7, 1997, Florida Builder Appliances, Inc. (Builder Appliances) for $2,936.20; on February 7, 1997, Mc D Sprinklers, Inc. (McD Sprinklers)for $1,275.00; on February 11, 1997, Builder Direct Carpet Sales (Direct Carpet) for $1,959.26; and on February 12, 1997, Pollard Electric, Inc. (Pollard Electric) for $3,640.00.
Beck paid KMH for all the work or materials pertaining to the liens. KMH failed to remove any of the liens.
Beck paid to remove the liens as follows: on or about June 18, 1997, $2,625.00 to Buckeye Plumbing; on or about
March 9, 1999, $10,125.00 to PT Painting, Hodges Drywall, R Tile & Marble, and Direct Carpet; and on or about October 19, 1999,
$3,360.00 to Sasso Air. Hodges Drywall released its lien for
$4,000.00 and the remaining amount of its lien was not paid, which represents a loss to the company. Builder Appliances, Rain Flow, McD Sprinklers, QC Cabinets, and Tideway did not receive payment from any source and the entire amounts of their liens were complete losses.
After Beck took over construction of her home from KMH, she spent $19,203.00 to complete the home.
Beck did not receive any money from KMH's bankruptcy.
KMH never provided Beck with notification of the Construction Industries Recovery Fund.
During the transaction between KMH and Beck, she met with Respondent at the job-site on one occasion to discuss some aspects of the project with which she was dissatisfied. Beck had expressed her dissatisfaction in a letter to KMH's owner.
As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3834PL, excluding costs associated with an attorney's time, totaled $534.57.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes.
License revocation proceedings are penal in nature.
The burden of proof is on the Petitioner to establish by clear and convincing evidence the truthfulness of the allegations in the Administrative Complaints and Amended Administrative Complaints. Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company, 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292
(Fla. 1987).
A licensee is charged with knowing the practice act that governs his/her license. Wallen v. Florida Department of
Professional Regulation, Division of Real Estate, 568 So. 2d 975 (Fla. 3d DCA 1990).
Section 489.119, Florida Statutes (1995), entitled "Business organizations; qualifying agents," provides in pertinent part:
5(a) Each registered or certified contractor shall affix the number of his registration or certification to each application for a building permit. . . .
* * *
(b) The registration 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. For the purposes of this part, the term "advertisement" does not include business stationery or any promotional novelties such as balloons, pencils, trinkets, or articles of clothing. The board shall assess a fine of not less than $100 or issue a citation to any contractor who fails to include that contractor's certification or registration number when submitting an advertisement for publication, broadcast, or printing. In addition, any person who claims in any advertisement to be a certified or registered contractor, but who does not hold a valid state certification or registration, commits a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.
Section 489.129, Florida Statutes (1995), provides grounds for disciplinary action by Petitioner and provides in pertinent part:
The board may take any of the following actions against any certificate holder or registrant: place on probation or reprimand the licensee, revoke, suspend, or deny the issuance or renewal of the certificate, 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, a financially responsible officer or is a secondary qualifying agent responsible under s. 489.1195 is found guilty of any of the following acts:
* * *
(h) Committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer. Financial mismanagement or misconduct occurs when:
Valid liens have been recorded against the property of a contractor's customer for supplies or services ordered by the contractor for the customer's job; the contractor has received funds from the customer to pay for the supplies or services; and the contractor has not had the liens removed from the property, by payment or by bond, within 75 days after the date of such liens;
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; or
The contractor's job has been completed, and it is shown that the customer has had to pay more for the contracted job than the original contract price, as adjusted for subsequent change orders, unless such increase in cost was the result of circumstances beyond the control of the contractor, was the result of circumstances caused by the customer, or was otherwise permitted by the terms of the contract between the contractor and the customer.
* * *
Failing in any material respect to comply with the provisions of this part or violating a rule or lawful order of the board.
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 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.
* * *
(p) Proceeding on any job without obtaining applicable local building department permits and inspections.
Section 489.1425, Florida Statutes (1995), provides in pertinent part:
No later than the date a residential property owner makes the initial payment on a contract for repair, restoration, improvement, or construction to residential real property, and at the time final payment is made on the contract, the contractor shall
inform the residential property owner clearly and conspicuously in writing how and where to file a claim and an explanation of the consumer's rights under the Construction Industries Recovery Fund. The written statement must be on a form prepared by the Department of Legal Affairs and must contain a telephone number for the Department of Business and Professional Regulation which the residential property owner can contact to obtain information regarding the consumer's rights and obligations under this chapter.
The Department of Legal Affairs shall also prepare a concise and understandable explanation of the contractor's responsibilities regarding the written statement.
* * *
(3)(a) Upon the Construction Industry Licensing Board finding a first violation of subsection (1), the Construction Industry Licensing Board may fine the contractor up to
$500, and the moneys must be deposited into the Construction Industries Recovery Fund.
(b) Upon the Construction Industry Licensing Board finding a second or subsequent violation of subsection (1), the Construction Industry Licensing Board shall fine the contractor $1,000 per violation, and the moneys must be deposited into the Construction Industries Recovery Fund.
Petitioner demonstrated that Respondent committed the violations set forth in the Administrative Complaints and Amended Administrative Complaints, except for the following counts in the following cases:
Case No. 01-3828PL (Simons and Stefanski): Petitioner failed to demonstrate that Respondent committed the violation in
Count I (Subsection 489.129(1)(h)1), due to the lack of evidence of customer financial harm. The evidence was unclear as to whether Morris was obligated to repay the amount her lender paid to Tideway to remove the lien.
Case No. 01-3831PL (The Bells): Petitioner failed to demonstrate that Respondent committed the violation in Count I (Subsection 489.129(1)(h)1) due to the lack of evidence of customer financial harm. Tideway received no payment on its lien.
Case No. 01-3832PL (The Aksoys): Petitioner failed to demonstrate that Respondent committed the violation in Count IV (Subsections 489.129(1)(j) and 489.1452(1)) due to the revised contract entered into evidence being incomplete.
Case No. 01-3833PL (The Glasses): Petitioner failed to demonstrate that Respondent committed the violation in Count I (Subsection 489.129(1)(h)1) due to the evidence being unclear as to whether the Glasses paid KMH for all the work or materials pertaining to the liens and due to the failure of the Glasses to produce documentation to support their claim that their lender paid KMH approximately $80,000.00, payments which they did not authorize their lender to make.
Regarding penalty, Rule 61G4-17.001, Florida Administrative Code, provides in pertinent part:
The following guidelines shall be used in disciplinary cases, absent aggravating and 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.
* * *
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.
* * *
(j) 489.1425: Failure to notify residential property owner of recovery fund. First violation, $100 to $500; repeat violation,
$1,000 fine.4
* * *
489.129(1)(k): Abandonment. First violation, $500 to $2,000 fine; repeat violation, revocation and $5,000 fine.
* * *
(16) 489.129(1)(p): Proceeding on any job without obtaining applicable local building department permits and/or inspections.
(a) Late permits. Contractor pulls permit after starting job but prior to completion of
same and does not miss any inspections. First violation, $100 fine; repeat violation,
$500 to $1,000 fine.
* * *
For any violation occurring after October 1, 1989, the board may assess the costs of investigation and prosecution. The assessment of such costs may be made in addition to the penalties provided by these guidelines without demonstration of aggravating factors set forth in rule
61G4-17.002.[5]
For any violation occurring after October 1, 1988, the board may order the contractor to make restitution in the amount of financial loss suffered by the consumer. Such restitution may be ordered in addition to the penalties provided by these guidelines without demonstration of aggravating factors set forth in rule 61G4-17.002, and to the extent that such order does not contravene federal bankruptcy law.[6]
The absence of any violation from this Chapter shall be viewed as an oversight, and shall not be construed as an indication that no penalty is to be assessed. The Guideline penalty for the offense most closely resembling the omitted violation shall apply.[7]
Rule 61G4-17.002, Florida Administrative Code, provides in pertinent part:
Circumstances which may be considered for purposes of mitigation or aggravation of the 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 had 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 imposed.
Any efforts at rehabilitation.
Any other mitigating or aggravating circumstances.
Further, Subsection 455.227, Florida Statutes (Supp.
1994), provides in pertinent part:
(3) In addition to any other discipline imposed pursuant to this section or discipline imposed for a violation of any practice act, the board, or the department when there is no board, may assess costs related to the investigation and prosecution of the case excluding costs associated with the attorney's time.
Rule 61G4-17.001(10), Florida Administrative Code, was amended on September 3, 1996, to include subsection (10)(j). Consequently, subsection (10)(j) was not effective until September 3, 1996. Only one case, Case No. 01-3830PL (The Changs), involves a customer making the first payment on a contract on or after September 3, 1996, wherein Respondent failed to provide the customer information regarding the Construction Industries Recovery Fund. However, Subsections 489.1425(3)(a) and (b), Florida Statutes, provided for monetary penalties for a contractor’s failure to provide the customer with such information at the specified time.
The relationship between KMH’s debts and its bankruptcy is controlled by Lewis v. Department of Business and Professional Regulation, Construction Industry Licensing Board, 711 So. 2d 573 (Fla. 2d DCA 1998). Petitioner argues that the undersigned should interpret Lewis, supra., that the debts were not discharged by the bankruptcy action because "a bankruptcy discharge of debts is not granted if the debtor is not an individual." The undersigned is not persuaded by Petitioner's argument. The Second District Court of Appeal did not distinguish between a debtor who is an individual and one who is not. The court determined that a debt discharged in bankruptcy was void. The court further determined that, if the qualifying agent could show that the debts of the company, which he
qualified, had been discharged in bankruptcy, no disciplinary action could be taken against him for not satisfying a debt established by a judgment against the company.
In the case at hand, Respondent did not establish that the debts were discharged in bankruptcy. Consequently, until he does so, the debts are considered not discharged and, therefore, Respondent may be disciplined for the debts being outstanding.
Several aggravating circumstances exist in the case at hand. Customers in all the cases suffered monetary damages. A stop work order, due to the condition of the work performed by KMH, was issued by a local building department on one job-site. Taking the cases as consolidated cases, multiple repeat violations are present—several counts of financial misconduct, abandonment, failure to include license number in the construction contracts, failure to provide notification of the Construction Industries Recovery Fund, and proceeding on a job without obtaining the applicable local building department permits. Eight cases are filed against Respondent. The suppliers and subcontractors also suffered monetary losses. Even though Respondent was KMH's qualifier, no evidence was presented that he was aware of the actions by KMH.
Several mitigating circumstances exist. Respondent has been licensed for over 14 years. Petitioner did not present any evidence that Respondent has been disciplined before in his
14 years as a licensee. The incidents occurred within less than a two year period during the time that Respondent was the qualifier for KMH. No evidence was presented that Respondent somehow profited from the actions by KMH. No evidence was presented that Respondent, himself, was provided an opportunity to cure whatever was wrong with each of the customers. However, it should also be noted that the evidence demonstrates that only one of the customers knew or should have known what Respondent's responsibilities were as to constructing their homes.
Petitioner further argues that Respondent should pay restitution to the customers and that the restitution should be reasonable and not exact. The undersigned finds Petitioner's argument persuasive that restitution should be paid, but the evidence is insufficient to establish an amount that is exact. However, the evidence is sufficient to conclude that a reasonable amount can be established. The restitution should be no more than the statutory maximum, $25,000.00, recoverable from Petitioner's Construction Industries Recovery Fund. Subsection 489.143(1), Florida Statutes.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED that the Department of Business and Professional Regulation, Construction Industry Licensing Board enter a final order:
Dismissing the following counts:
Count I of Case Nos. 01-3828PL, 01-3831PL, and 01-3833PL.
Count IV of Case No. 01-3832PL.
Finding that Glenn L. Mustapick committed all other violations in the counts of Case Nos. 01-3827PL, 01-3828PL, 01-3829PL, 01-3830PL, 01-3831PL, 01-3832PL, 01-3233PL, and 01-3834PL.
Imposing a $25,000.00 administrative fine.
Requiring Respondent to pay restitution not exceeding
$25,000.00.
Assessing $4,245.34 in costs for investigation and prosecution, excluding costs associated with an attorney's time, by the Department of Business and Professional Regulation, Construction Industry Licensing Board.
Revoking the certified residential license, CR C040917, of Glenn L. Mustapick.
DONE AND ENTERED this 3rd day of May, 2002, in Tallahassee, Leon County, Florida.
ERROL H. POWELL
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of May, 2002.
ENDNOTES
1/ All of the statutory citations of the violations are Florida Statutes (1995), unless otherwise indicated.
2/ Neither Petitioner nor this Administrative Law Judge received any communication from Respondent or a representative of Respondent's regarding his appearance or nonappearance at the hearing.
3/ The deposit at the execution of the agreement (contract). The contract provided at hearing was a revised contract (Petitioner's Exhibit No. 98), but Erol Aksoy provided testimony regarding the revised contract and the payments (Petitioner's Exhibit No. 99).
4/ Rule 61G4-17.001(10), F.A.C., was amended on September 3, 1996, which included adding a guideline, "(10)(j)," for Section 489.1425, F.S.
5/ Rule 61G4-17.001(10), F.A.C., was amended on September 3, 1996, which included adding a new subsection"(20)" as in the text and re-numbering the old subsection "(20)" to subsection "(21)."
6/ Ibid.
7/ Rule 61G4-17.001(10), F.A.C., was amended on September 3, 1996, which included adding a new subsection"(20)" as in the text and re-numbering the old subsection "(21)" to subsection "(22)."
COPIES FURNISHED:
Theodore R. Gay, Esquire Department of Business and
Professional Regulation
401 Northwest Second Avenue Suite N-607
Miami, Florida 33128
Glenn L. Mustapick
3826 Buttercup Circle, South
Palm Beach Gardens, Florida 33410
Hardy L. Roberts, III, General Counsel Department of Business and
Professional Regulation Northwood Centre
1940 North Monroe Street Tallahassee, Florida 32399-2202
Robert Crabill, Executive Director Department of Business and
Professional Regulation Northwood Centre
1940 North Monroe Street Tallahassee, Florida 32399-2202
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.
| Issue Date | Document | Summary |
|---|---|---|
| Sep. 17, 2002 | Agency Final Order | |
| May 03, 2002 | Recommended Order | Respondent charged with several violations of practice of contracting involving eight cases and construction of homes in each case; committed majority of violations charged. Administrative fine, restitution, costs of investigation, and revocation. |
CONSTRUCTION INDUSTRY LICENSING BOARD vs. DAVID H. TINIUS, 01-003827PL (2001)
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CONSTRUCTION INDUSTRY LICENSING BOARD vs. DOUGLAS R. MCINTEE, 01-003827PL (2001)
CONSTRUCTION INDUSTRY LICENSING BOARD vs. RAMIRO PALMA, 01-003827PL (2001)
