STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LAMONT SILAS AND CLAUDETTE ) SILAS, )

)

Petitioners, )

)

vs. ) Case No. 02-0464

) DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, ) CONSTRUCTION INDUSTRY LICENSING ) BOARD, CONSTRUCTION INDUSTRIES ) RECOVERY FUND AND LOUIS )

SCLEASE, III, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on August 29, 2002, in Miami, Florida, before Errol H. Powell, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Robert M. Sondak, Esquire

Cohen, Chase & Hoffman, P.A.

9400 South Dadeland Boulevard, Suite 600

Miami, Florida 33156

For Respondent

Sclease: Franklin L. Hileman, Esquire 2937 Southwest 27th Avenue Suite 203 Grove Forest Plaza Miami, Florida 33133

For Respondent

Department: Elise Matthes, Esquire

Department of Business and Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-1039

STATEMENT OF THE ISSUE

Whether Petitioners' claim for recovery from the Construction Industries Recovery Fund should be approved.

PRELIMINARY STATEMENT

Lamont Silas and Claudette Silas (Petitioners) filed a claim for recovery from the Construction Industries Recovery Fund (Recovery Fund) for $43,199.67. The claim was granted for

$25,000.00, the maximum amount allowed. Louis Sclease, III (Respondent Sclease) disputed the award and requested a hearing, contending that Petitioners failed to allege or show that Respondent Sclease had violated Subsection 489.129(1)(g), (j), or (k), Florida Statutes, as required by Subsection 489.141(1)(a), Florida Statutes.1 However, at the hearing before the Division of Administrative Hearings, it was determined that the 1997 statutory provision of Section 489.129, Florida Statutes, was the correct statutory provision and, therefore, Respondent Sclease contested whether he had violated Subsection 489.129(1)(d), (h), (k), or (l), Florida Statutes (1997).

The Department of Business and Professional Regulation, Construction Industry Licensing Board (Board) reviewed Respondent

Sclease’s request and determined that no issues of material fact existed and held an informal hearing. At the informal hearing, the Board determined that disputed issues of material fact existed and ended its informal hearing to allow the matter to be referred to the Division of Administrative Hearings. On February 6, 2002, this matter was referred to the Division of Administrative Hearings. By agreement of the parties, the focus of the hearing included whether Respondent Sclease violated Subsection 489.129(1)(d), (h), (k), or (l), Florida Statutes (1997).

At hearing, Petitioners presented the testimony of two witnesses, including Respondent Sclease, and entered nine exhibits (Petitioner's Exhibits numbered 1-9) into evidence. Respondent Sclease entered seven exhibits (Respondent’s Exhibits numbered 1, 2(a)-(i), and 3-7) into evidence, with one exhibit (Respondent’s Exhibit 1) being deposition testimony. The role of counsel for the Department of Business and Professional Regulation, Construction Industry Licensing Board, Construction Industries Recovery Fund was only as a resource to the parties and the undersigned, not as a party participant.

A transcript of the hearing was ordered. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript.

The Transcript, consisting of one volume, was filed on

September 12, 2002. Only Petitioners filed a post-hearing submission, which was considered in the preparation of this

Recommended Order.

FINDINGS OF FACT

1. At all times material hereto, Respondent Sclease was a licensed certified general contractor.

2. In 1995, Petitioners and Respondent Sclease entered into a contract for Respondent Sclease to make repairs to Petitioners’ home, which was damaged by Hurricane Andrew. The repair work was completed in May 1996, and a certificate of completion was issued on May 16, 1996. Petitioners subsequently discovered that problems existed with the work and filed suit in the Circuit Court of Dade County, Florida, Eleventh Judicial Circuit, against Respondent Sclease and the company that he had qualified.

3. A non-jury trial was held and all parties were represented by counsel. The court’s final judgment was entered on January 7, 1999, and filed on January 13, 1999. The findings of the court were in pertinent part as follows:

   The claim in the complaint is that Defendants [Sclease Construction Company, Inc., a dissolved Florida corporation, and Louis Sclease] breached the contract to make repairs to the plaintiffs’ [Lamont J. Silas and Claudette Silas] home after Hurricane Andrew. The defective construction work caused substantial damage to the home. . . .

   
   

   It is undisputed that the parties entered into a contract in June, 1995 under which

   Defendants promised to make repairs to the property. The total contract price, as subsequently amended, was $45,758.37, all of which has been paid to defendants. In April, 1996, Defendants represented that the work was completed.

   
   

   It is also undisputed that within six (6) months of the completion of the construction work, several rooms of the home had evidence of mildew on the walls and other damage, including damage caused by water. The property, which is income producing rental property, was, by the Fall of 1996, uninhabitable. Plaintiffs lost their tenant and could not re-rent the premises for eight

   (8) months until the damage was repaired. The Defendant [sic] based its [sic] defense upon allegations that the tenants caused the damage from growing marijuana plants in the residence.

   
   

   Plaintiff’s [sic] evidence clearly showed defects in the workmanship of Defendant’s [sic] installation of a shower pan as well as defective installation of tiles. Plaintiff’s [sic] expert further testified that he had inspected prior homes wherein marijuana was grown and the instant residence bore no evidence which should have otherwise existed if marijuana had, in fact, been growing (e.g. moisture all over the walls; black ceilings, etc.).

   
   

   Defendant [sic] did not provide any competent evidence showing existence of growing marijuana and provided no evidence concerning faulty tiles.

   
   

   Clearly, the Defendant [sic] substantially breached his contract with Plaintiff [sic] and Plaintiff [sic] is entitled to recover its reasonable damages which the Court determines as follows:

   1. Cost to repair $30,364.93 [Amount paid to another

      contractor to fix the home]

      
      

   2. Loss of rental income $ 7,200.00 Total Damages $37,564.93

   Plaintiffs are entitled to prejudgment interest in the amount of $5,634.74.

   Therefore, judgment is entered . . . in the amount of $43,199.67 . . . .

   
   

4. Petitioners had insurance on the home. Prior to the final judgment, they received $9,583.22 from their insurance company. No insurance proceeds were received subsequent to the final judgment and no claim with their insurance company is pending.

5. On April 18, 2000, the Department of Business and Professional Regulation (Department) filed an Administrative Complaint against Respondent Sclease before the Board. The Administrative Complaint alleged, among other things, that on or about January 13, 1999, Petitioners had obtained a final judgment against Respondent Sclease, relating to the practice of contracting, in the amount of $43,199.67; that no payment had been made nor had an agreement been made to satisfy the judgment; and that Respondent Sclease had violated Subsection 489.129(1)(q), Florida Statutes.

6. By Final Order dated January 3, 2001, and filed January 12, 2001, the Board found, among other things, that the

   facts of the Administrative Complaint were not contested and that Respondent Sclease was represented by counsel before the Board.

   The Board concluded, among other things, in the Final Order that the allegations of fact and conclusions of law in the Administrative Complaint were adopted as the Board’s findings of fact and conclusions of law; and that the violations warranted disciplinary action. Finally, the Board ordered in the Final Order, among other things, that Respondent Sclease either pay restitution to Petitioners in the amount of $43,199.67 or submit proof that he had satisfied the civil judgment obtained by Petitioners.

7. Petitioners filed a claim with the Recovery Fund. No dispute exists as to the timeliness of Petitioners’ claim.

8. By Order dated January 3, 2001, which was the same date as the Board's Final Order as to restitution, and filed

   January 4, 2001, the Recovery Fund Committee and the Board ordered, among other things, that Petitioners had satisfied all the requirements for payment from the Recovery Fund and that their claim was granted in the maximum amount of $25,000.00.

9. In February 2001, Respondent Sclease filed an amended request for a formal hearing challenging the Board's order of payment from the Recovery Fund, which challenge included the contention that he had not violated Section 489.129, Florida

   Statutes, as required by Section 489.141, Florida Statutes, for a claim to be considered.

10. At the time of hearing on the instant case, the final judgment was not satisfied by Respondent Sclease. There is no dispute that Petitioners earnestly attempted to execute on the final judgment but had been unsuccessful.

11. The evidence presented at hearing on the instant case established that the installation of the shower pan was not in accordance with the requirements of the 1994 South Florida Building Code (Building Code), was defectively installed, and was the cause of water damage to the home. Respondent Sclease admitted that the purpose of the Building Code, regarding the installation of the shower pan, was to prevent water from leaking out of the shower. The failure to install the shower pan in accordance with the Building Code was willful.

12. Also, the evidence presented at hearing on the instant case established that insulation was not placed on all of the exterior walls of the home, which was required by the Building Code, and that such failure was a violation of the Building Code. Respondent Sclease admitted that the failure to put insulation on the exterior walls would be a violation of the Building Code.

    The failure to put insulation on the exterior walls in violation of the Building Code was willful.

13. Even though a Certificate of Completion was issued, the evidence presented at hearing on the instant case does not support a finding that the work completed by Respondent Sclease was in accordance with the Building Code.

14. Additionally, the evidence presented at hearing on the instant case established that Respondent Sclease failed, in accordance with the Building Code, to pull all the proper permits for the work performed. The failure to pull the proper permits was willful.

    CONCLUSIONS OF LAW

    
    

15. 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.

16. Respondent Sclease is prevented by the principles of res judicata and collateral estoppel from relitigating issues in the instant case that were litigated in the court case. Wager v. City of Green Cove Springs, 261 So. 2d 827 (Fla. 1972); United

    States Fidelity and Guaranty Co. v. Odoms, 444 So. 2d 78, 80 (Fla. 5th DCA 1984); Jet Air Freight v. Jet Air Freight Delivery, Inc., 264 So. 2d 35 (Fla. 3d DCA 1972); Carol City Utilities, Inc. v. Miami Gardens Shopping Plaza, 165 So. 2d 199 (Fla. 3d DCA 1964).

17. Section 489.143, Florida Statutes, entitled “Payment from the fund,” provides in pertinent part:

    1. Any person who meets all of the conditions prescribed in s. 489.141(1) may apply to the board to cause payment to be made to such person from the Construction Industries Recovery Fund in an amount equal to the judgment or restitution order, exclusive of postjudgment interest, against the licensee or $25,000, whichever is less, or an amount equal to the unsatisfied portion of such person's judgment or restitution order, exclusive of postjudgment interest, or

       $25,000, whichever is less, but only to the extent and amount reflected in the judgment or restitution order as being actual or compensatory damages. The fund is not obligated to pay any judgment or restitution order, or any portion thereof, which is not expressly based on one of the grounds for recovery set forth in s. 489.140(1).

       
       

       * * *

       
       

       (3) Payments for claims arising out of the same transaction shall be limited, in the aggregate, to $25,000, regardless of the number of claimants involved in the transaction.

       
       

       * * *

       
       

       (7) Upon the payment of any amount from the Construction Industries Recovery Fund in settlement of a claim in satisfaction of a judgment or restitution order against a licensee as described in s. 489.141(1), the license of such licensee shall be automatically suspended, without further administrative action, upon the date of payment from the fund. The license of such licensee shall not be reinstated until he or she has repaid in full, plus interest, the amount paid from the fund. A discharge of bankruptcy does not relieve a person from the

       penalties and disabilities provided in this section.

       
       

18. Section 489.141, Florida Statutes (1997), entitled “Conditions for recovery; eligibility,” provides in pertinent part:

    1. Any person is eligible to seek recovery from the Construction Industries Recovery Fund after having made a claim and exhausting the limits of any available bond, cash bond, surety, guarantee, warranty, letter of credit, or policy of insurance, if:

       
       

       1. Such person has received final judgment in a court of competent jurisdiction in this state in any action wherein the cause of action was based on a construction contract or the Construction Industry Licensing Board has issued a final order directing the licensee to pay restitution to the claimant based upon a violation of s. 489.129(1)(d), (h), (k), or (l), where the contract was executed and the violation occurred on or after July 1, 1993, and provided that:

          1. At the time the action was commenced, such person gave notice thereof to the board by certified mail; except that, if no notice has been given to the board, the claim may still be honored if the board finds good cause to waive the notice requirement;

          2. Such person has caused to be issued a writ of execution upon such judgment, and the officer executing the writ has made a return showing that no personal or real property of the judgment debtor liable to be levied upon in satisfaction of the judgment can be found or that the amount realized on the sale of the judgment debtor's property pursuant to such execution was insufficient to satisfy the judgment; or

          3. If such person is unable to comply with subparagraph 2. for a valid reason to be determined by the board, such person has made all reasonable searches and inquiries to

          ascertain whether the judgment debtor is possessed of real or personal property or other assets subject to being sold or applied in satisfaction of the judgment and by his or her search has discovered no property or assets or has discovered property and assets and has taken all necessary action and proceedings for the application thereof to the judgment but the amount thereby realized was insufficient to satisfy the judgment; or

          
          

       2. The claimant has made a diligent attempt, as defined by board rule, to collect the restitution awarded by the board; and

          
          

       3. A claim for recovery is made within 2 years from the time of the act giving rise to the claim or within 2 years from the time the act is discovered or should have been discovered with the exercise of due diligence; however, in no event may a claim for recovery be made more than 4 years after the date of the act giving rise to the claim; and

          
          

       4. Any amounts recovered by such person from the judgment debtor, or from any other source, have been applied to the damages awarded by the court or the amount of restitution ordered by the board; and

          
          

       5. Such person is not a person who is precluded by this act from making a claim for recovery.

          
          

    2. A person is not qualified to make a claim for recovery from the Construction Industries Recovery Fund, if:

       
       

       1. The claimant is the spouse of the judgment debtor or licensee or a personal representative of such spouse;

          
          

       2. The claimant is a certificateholder or registrant who acted as the contractor in the transaction which is the subject of the claim;

          
          

       3. Such person's claim is based upon a construction contract in which the certificateholder or registrant was acting with respect to the property owned or controlled by the certificateholder or registrant;

          
          

       4. Such person's claim is based upon a construction contract in which the contractor did not hold a valid and current license at the time of the construction contract; or

          
          

       5. Such person was associated in a business relationship with the certificateholder or registrant other than the contract at issue.

          
          

       6. Such person has suffered damages as the result of making improper payments to a contractor as defined in chapter 713, part I.

          
          

19. 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).

20. Section 489.129, Florida Statutes (1997), entitled “Disciplinary proceedings,” provides in pertinent part:

    1. The board may take any of the following actions against any certificateholder or registrant: place on probation or reprimand the licensee, revoke, suspend, or deny the issuance or renewal of the certificate, registration, or certificate of authority, require financial restitution to a consumer for financial harm directly related to a violation of a provision of this part, 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 a secondary qualifying agent responsible under s.

       489.1195 is found guilty of any of the following acts:

       
       

       * * *

       
       

       (d) Knowingly violating the applicable building codes or laws of the state or of any municipalities or counties thereof.

       
       

       * * *

       
       

       (h) Committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer. Financial mismanagement or misconduct occurs when:

       1. 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;

       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; or

       3. 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.

       
       

       * * *

       
       

       1. 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.

          
          

       2. Signing a statement with respect to a project or contract falsely indicating that the work is bonded; falsely indicating that payment has been made for all subcontracted work, labor, and materials which results in a financial loss to the owner, purchaser, or contractor; or falsely indicating that workers' compensation and public liability insurance are provided.

       
       

21. Petitioners’ claim against the Recovery Fund is timely.

    
    

22. Petitioners received a final judgment from a court of competent jurisdiction in the State of Florida based on a construction contract.

23. Furthermore, Petitioners demonstrated that Respondent Sclease violated Subsections 489.129(1)(d) and (h)3., Florida Statutes (1997).

24. As the construction issues in the court suit and the instant case are the same, the undersigned also concludes that Petitioners demonstrated a violation of Subsections 489.129(1)(d) and (h)3., Florida Statutes (1997), in both actions.

25. The Board's Administrative Complaint and its Final Order are based upon Respondent Sclease’s failure to satisfy the final judgment in the court action. Consequently, the basis for the Board’s Administrative Complaint and Final Order includes a violation of Subsections 489.129(1)(d) and (h)3., Florida Statutes (1997).

26. Petitioners have otherwise satisfied all requirements for a Recovery Fund claim under Section 489.141, Florida Statutes.

27. The maximum recovery allowable to Petitioners from the Recovery Fund is $25,000.00. Section 489.143, Florida Statutes. Petitioners received an insurance payment of $9,583.22. Petitioners argue that the insurance payment should not be considered because the insurance payment was received prior to the entering of the final judgment in the court case. It is clear that Section 489.141, Florida Statutes, intends for insurance proceeds to be applied to the damages. Subsection 489.141(1)(d), Florida Statutes (1997). No distinction is made as to insurance proceeds received prior to or after a final judgment. The undersigned determines that the insurance proceeds of $9,583.22 should be applied to the award made by the final judgment, thereby, reducing Petitioners’ claim made against the Recovery Fund to $33,616.45. However, such reduction of the claim made against the Recovery Fund should not reduce the

maximum amount payable to Petitioners by the Recovery Fund, i.e.,

$25,000.00.

RECOMMENDATION

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, Construction Industries Recovery Fund enter an order approving the claim of Lamont Silas and Claudette Silas against the Construction Industries Recovery Fund and granting them the maximum allowable recovery amount of $25,000.00.

DONE AND ENTERED this 4th day of December, 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 4th day of December, 2002.

ENDNOTE

1/ Respondent Sclease refers to Section 489.129, F.S., as it appeared effective May 25, 2000, i.e., Subsection 489.129(1)(g), (j), or (k), F.S. However, Petitioners filed their claim is

1998, prior to the effective date of the subsections referred to by Respondent Sclease. The pertinent statutory provisions in effect at the time of the filing of the claim were Subsections 489.129(1)(d), (h), (k), or (l), F.S.

COPIES FURNISHED:

Robert M. Sondak, Esquire Cohen, Chase & Hoffman, P.A.

9400 South Dadeland Boulevard, Suite 600

Miami, Florida 33156

Franklin L. Hileman, Esquire 2937 Southwest 27th Avenue Suite 203 Grove Forest Plaza Miami, Florida 33133

Elise Matthes, Esquire Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-1039

Hardy L. Roberts, III, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-1039

Robert Crabill, Executive Director Construction Industry Licensing Board Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-1039

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 02-000464

Orders for Case No: 02-000464