STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION,

Petitioner,

vs.

LAWRENCE HARTWELL RACIES AND THE HARTWELL GROUP, INC.,

Respondent.

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) Case No. 07-0781

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RECOMMENDED ORDER

Pursuant to notice this cause came on for formal proceeding and hearing before P. Michael Ruff, a duly-designated Administrative Law Judge of the Division of Administrative Hearings in Deland, Florida. The appearances were as follows:

APPEARANCES

For Petitioner: Sorin Ardelean, Esquire

Department of Business and Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399

For Respondent: Michael C. Huddleston, Esquire

Clayton, Teal & Huddleston, P.A. 817 West New York Avenue Deland, Florida 32720

STATEMENT OF THE ISSUES

The issues to be resolved in this proceeding concern whether the Respondent committed the offenses set forth in the Administrative Complaint and if so, what if any sanction is warranted.

PRELIMINARY STATEMENT

This cause arose upon the filing of a three-count Administrative Complaint on October 30, 2006, in which it is alleged that the Respondent engaged in contracting without being licensed. The Complaint charged the Respondent with violating Section 489.127(1)(f), Florida Statutes, by contracting, or advertising himself or a business organization as available to engage in contracting, without being certified or registered.

It also charged that he violated Section 455.227(1)(q), Florida Statutes, by engaging in the practice of unlicensed contracting after the Department had issued two previous Orders to Cease and Desist from the unlicensed practice of contracting to the Respondent. The Respondent chose to dispute the allegations in the Complaint and elected to seek a formal administrative proceeding. Thereafter, the case was referred to the Division of Administrative Hearings and ultimately to the undersigned administrative law judge to conduct a formal proceeding and hearing in accordance with Sections 120.569 and 120.57, Florida Statutes (2007).

The cause came on for hearing as noticed. The Petitioner offered the testimony of four witnesses at the hearing:

David Hakojarvi, County Investigator with the Volusia County Building Department; Nelson Goodreau, the complaining witness; Michael Zent, whose state certified general contractor's license number was used and placed in the advertisement published by the Respondent; and the Department's Investigator, Kathy Arundel.

The Petitioner's Exhibits 1-9 were admitted into evidence. The Respondent testified on his own behalf and offered three exhibits which were admitted into evidence.

During the course of the hearing, the complaining witness, Nelson Goodreau refused to answer several questions. The Petitioner's counsel admonished him that he should answer the questions but he still refused. At that point, the undersigned directed the witness Goodreau to respond to the questions on pain of his entire testimony being stricken if he failed to do so. He still refused. The undersigned then called a brief recess and instructed counsel Ardelean, for the Petitioner, to go outside the hearing room and confer with his witness regarding the necessity for answering questions. Upon the reconvening of the hearing, witness Goodreau answered the previously unanswered questions and the matter proceeded.

However, upon cross-examination by the Respondent's counsel, witness Goodreau again refused to answer a particular question.

Again, the undersigned instructed Goodreau to answer the question on pain of his entire testimony potentially being stricken. At that point, the Respondent's counsel moved for his testimony to be stricken. After allowing the Petitioner's counsel to argue against the motion, it was determined that ruling would be reserved thereon and the parties were allowed to address the issue in post-hearing memoranda.

Memoranda on the issue of the motion to strike Goodreau's testimony were filed by both counsel after the hearing, and the time for submitting proposed recommended orders was tolled until ruling was made on the motion. After the memoranda were received and ruling was made on the motion, the parties were advised, in the order deciding the motion, that Goodreau's entire testimony would not be stricken, but that the subject matter of the unanswered question would be deemed established as true. It was deemed unduly prejudicial to the Petitioner's case to strike the witness's entire testimony.

It is also true that the witness Goodreau had previously had a deck constructed without securing a permit from the municipality or county, that he stopped payment on a $1,200.00 check he owed the Respondent, given the Respondent the day before witness Goodreau ordered him off the job; that after he ordered the Respondent off the premises and off the job, he secured an unlicensed contractor to finish the deck project and

never filed a complaint against that contractor. When he ordered the Respondent off the job he seized possession of the Respondent's trailers and other equipment. He then lied to a deputy sheriff concerning the whereabouts, and his right to possession, of the trailers and equipment when a deputy was dispatched to search for it. This ultimately resulted in the Respondent filing a civil lawsuit against Goodreau. Under these circumstances, Goodreau's testimony is entitled to little weight or credibility.

Upon conclusion of the proceeding a transcript was filed and, after ruling was made on the above-referenced motion, the parties were allowed time to submit proposed recommended orders. The Proposed Recommended Order were timely filed on November 21, 2007, and have been considered in the rendition of this

Recommended Order.

FINDINGS OF FACT

1. The Petitioner is an agency of the State of Florida charged, as pertinent hereto with enforcing the provisions of Chapter 455 and Chapter 489, Florida Statutes (2007), regulating the licensure, registration or certification of contractors in the State of Florida and regulating the standards of contracting practice, as well as regulating unlicensed construction and contracting pursuant to those statutory chapters.

2. The Respondent has not been licensed to engage in contracting in Florida. On June 13, 2005, the Respondent was previously issued two notices and orders to cease and desist from practicing or performing contracting work in violation of Section 489.127(1), Florida Statutes, for performing or offering to perform contracting work without licensure.

3. On May 10, 2006, the Respondent submitted a "Contract" to Nelson Goodreau calling for the Respondent to build a deck at Goodreau's residence located at 45 South Shell Road in DeBary, Florida.

4. Mr. Goodreau had contacted the Respondent by calling a phone number he saw listed on an advertisement placed by the Respondent in a local newspaper. The advertisement was placed by the Respondent, holding himself out as the licensed contractor, with license number CBC 058448, and advertising to build custom decks. The Respondent had the permission of Zent Construction, Inc., through Michael Zent (hereinafter Zent), the holder of that license number CBC 058448 to reference that license number in advertising. The permission of Zent, however, was approval to advertise for contracting work, but only in the name of and on behalf of Zent Construction, Inc. In any event, the Respondent did not have any permission from Zent Construction, Inc. to use that license or license number to

   advertise for contracting projects on behalf of the Respondent's own business.

5. The Respondent met with Mr. Goodreau at Goodreau's home and showed him a portfolio of pictures of his previous deck projects. The Respondent and Goodreau entered into an agreement or contract which contained the following paragraph:

   This project is being proposed with you, the owner acting as 'owner contractors' and as such are responsible for all municipal compliance issues relevant. The Hartwell Group, Inc. is a construction subcontracting entity and not a Florida state certified general contractor as specified in Florida law.

   
   

   Under this agreement, it would appear that Goodreau was to obtain any necessary permits from the municipality or county as the case may be. No permits were ever obtained for the deck project.

6. The Respondent drew a sketch of the deck contemplated, following discussions between the Respondent, Goodreau, and Goodreau's wife, Donna. Goodreau's input in designing the deck was limited to choosing the location of benches and stairs and the shape and form of the deck railing as well as choosing composite timber as the decking material. Mr. Goodreau paid the Respondent approximately $10,600 to build the deck.

7. Goodreau and the Respondent contemplated that he would be retained pretty much as a contractor to build the deck

   although the agreement stated that Goodreau was to be the "owner-contractor." Goodreau did not hire the Respondent as merely a laborer to work under Goodreau's supervision. Goodreau hired the Respondent to build a turn-key deck project. Goodreau did not contemplate nor did he closely supervise the Respondent during the construction. He occasionally did point out to the Respondent certain problems with the quality of the work of the deck which he observed and requested the Respondent to correct the problems. The Respondent did not look to Goodreau for any instructions on how to build the deck during the deck's construction.

8. Although the contract between them indicated that Goodreau would be responsible for securing any regulatory compliance from the municipality, no permit was ever obtained for the project. Ultimately, the City of DeBary, Florida, cited Goodreau for the unpermitted deck work.

9. On May 23, 2006, Goodreau sent an email to the Respondent asking him to correct a number of quality problems with the deck. In the email, Goodreau identified those problems and indicated to the Respondent the solutions Goodreau preferred for the correction of the problems.

10. In responding to Goodreau's request to use a new full length board or timber for the ledger board of the deck where it attached to the house instead of wood scraps, as the Respondent

    had used, the Respondent answered Goodreau saying that "although this is a micromanagement request over the line," he informed Goodreau he would still accommodate the request with "no change order."

11. The Respondent also requested Goodreau to be patient because Goodreau has "seen the up close final products of [Respondent's] recent work on decks and docks in portfolio, and know [sic] that the final products are not sloppy." When Goodreau asked the Respondent to straighten the deck joist, the Respondent replied that he would do that as part of his "already existing quality control standard and practices." Finally, when Goodreau asked to see the receipts for the materials bought by the Respondent, the Respondent angrily threatened to stop the project explaining that he does not like "controlling spirits crossing that far across the line into our inner system." This kind of language, terminology and dialogue indicates a person independently charged with completing their project and not a person employed as an employee, laborer or sub-contractor subject to the hourly and daily supervision by the owner.

12. The Respondent's behavior during construction of the deck shows that he was not acting as a laborer but as a contractor. He did not ask Goodreau for any instructions on how to build the deck. He demanded payment like a contractor, for materials and a lump sum for the job, payable in draws for each

    construction phase. He resisted Goodreau's attempts to "micromanage him" and bluntly refused to account for the money paid by Goodreau for materials, justifying that such an accounting was a severe violation of his work autonomy. The entire time the Respondent acted as if, in exchange for the money paid by Goodreau, that he would deliver a satisfactory "final product" and clearly resisted Goodreau's attempts to discuss decking issues before the "final product" was delivered. His conduct shows clearly that he did not consider himself to be an employee, but rather an independent contractor.

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to this proceeding. §§ 120.569 and 120.57(1), Fla. Stat. (2007).

14. The Department of Business and Professional Regulation (Department), is the state agency charged with regulating the practice of unlicensed construction and contracting pursuant to Chapters 455 and 489, Florida Statutes.

15. Pursuant to Section 455.228, Florida Statutes, the Department is empowered to discipline any person found guilty of any of the grounds enumerated in Sections 489.127(1) and 489.531(1), Florida Statutes.

16. The Petitioner has the burden of proving by clear and convincing evidence the allegations against the Respondent.

    § 120.57(1)(h), Fla. Stat.; Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); and Department of Banking and Finance v. Osborne

    Stern and Co., 670 So. 2d 932 (Fla. 1996).

    
    

17. The Respondent is charged with violating Section 489.127, Florida Statutes, which provides in pertinent part:

    (1). No person shall:

    
    

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    (f) Engage in the business or act in the capacity of a contractor or advertise himself or herself or a business organization as available to engage in the business or act in the capacity of a contractor without being duly registered or certified or having a certificate of authority; . . . .

    
    

18. Section 489.105(3), Florida Statutes, defines a contractor as:

    . . . the person who, for compensation, undertakes to, submits a bid to, or does himself or herself or by others construct, repair, alter, remodel, add to, demolish, subtract from, or improve any building or structure, including related improvements to real estate, for others or for resale to others . . . .

    
    

19. Section 489.105(6), Florida Statutes, provides in relevant part:

    (6) "Contracting" means, except as exempted in this part, engaging in business as a contractor and includes, but is not limited to, performance of any of the acts as set forth in subsection (3) which define types of contractors. The attempted sale of contracting services and the negotiation or

    bid for a contract on these services also constitutes contracting. If the services offered require licensure or agent qualification, the offering, negotiation for a bid, or attempted sale of these services requires the corresponding licensure.

    
    

20. Section 489.103(7), Florida Statutes, provides in pertinent part:

    489.103 Exemptions.--This part does not apply to:

    
    

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    1. Owners of property when acting as their own contractor and providing direct, onsite supervision themselves of all work not performed by licensed contractors:

       
       

       1. When building or improving farm outbuildings or one-family or two-family residences on such property for the occupancy or use of such owners and not offered for sale or lease, or building or improving commercial buildings, at a cost not to exceed $75,000, on such property for the occupancy or use of such owners and not offered for sale or lease.

    
    

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    This subsection does not exempt any person who is employed by or has a contract with such owner and who acts in the capacity of a contractor. The owner may not delegate the owner's responsibility to directly supervise all work to any other person unless that person is registered or certified under this part and the work being performed is within the scope of that person's license. For the purposes of this subsection, the term "owners of property" includes the owner of a mobile home situated on a leased lot. To qualify for exemption under this subsection, an owner must personally appear and sign the

    building permit application and must satisfy local permitting agency requirements, if any, proving that the owner has a complete understanding of the owner's obligations under the law as specified in the disclosure statement in this section. If any person violates the requirements of this subsection, the local permitting agency shall withhold final approval, revoke the permit, or pursue any action or remedy for unlicensed activity against the owner and any person performing work that requires licensure under the permit issued.

    
    

21. The Administrative Complaint also charges the Respondent with having violated Section 455.227(1)(q), Florida Statutes, which provides in pertinent part, as follows:

    1. The following acts shall constitute grounds for which the disciplinary actions specified in subsection (2) may be taken:

       
       

       (q) Violating any provision of this chapter, the applicable professional practice act, a rule of the department or the board, or a lawful order of the department or the board, or failing to comply with a lawfully issued subpoena of the department.

       
       

22. Section 455.227(2), Florida Statutes, also provides, in relevant part:

    When the board, or the department when there is no board, finds any person guilty of the grounds set forth in subsection (1) or of any grounds set forth in the applicable practice act, including conduct constituting a substantial violation of subsection (1) or a violation of the applicable practice act which occurred prior to obtaining a license, it may enter an order imposing one or more of the following penalties:

    (d) Imposition of an administrative fine not to exceed $5,000 for each count or separate offense.

    
    

23. The Petitioner has established that the Respondent violated Section 489.127(1)(f), Florida Statutes, by practicing contracting or advertising himself or a business organization as available to engage in contracting without a certification or registration. He agreed to perform contracting work at Goodreau's residence in Volusia County, Florida, although he did not possess a contracting license or certification.

24. The Respondent's attempt to disguise his unlicensed contracting as being work as a laborer or sub-contractor for Goodreau, as owner contractor, is unpersuasive. Factually, the type of work and the manner of work performed by the Respondent was in the nature of contracting. Although Goodreau signed the contract document presented to him by the Respondent which states that he agreed to be owner contractor and to ensure all municipal compliances (i.e., permits), the persuasive evidence of record indicates that Goodreau did not care what status the Respondent occupied and what that particular language in the contract provided for. Rather, Goodreau executed the contract and paid the Respondent so that he could get the work on the deck started.

25. There was no close, detailed supervision by Goodreau of the Respondent's work. Goodreau expected the Respondent to

    turn out a finished product, the deck, according to the design they had agreed upon being paid to do so. Although Goodreau made numerous objections regarding the quality of various aspects of the Respondent's work and even, upon realizing that the deck would clearly fall short of his expectations as a customer, gave the Respondent specific instructions on how to correct the mistakes, he still did not supervise the Respondent during the details of the deck construction. When he perceived the work to be of inferior quality in his view, he started to tell the Respondent to do certain things he contended any professional contractor should have done. Goodreau, in other words, hired the Respondent to provide him a final turn key product, the finished deck, and started to give the Respondent instructions only when he realized that mistakes had been made and he wanted to see that the mistakes were corrected in order to get the product that he believed he paid for.

26. The Respondent's behavior during the construction of the deck shows that he was not acting as a laborer but as a contractor. The Respondent did not ask Goodreau for any detailed instructions on how to build the deck. He demanded payment like a contractor, for materials and a lump sum for the job, payable on draws for each construction phase. He resisted Goodreau's attempts to "micromanage" him and bluntly refused to account for the money paid by Goodreau for materials, justifying

    that such an accounting was a violation of his work autonomy. During their relationship, the Respondent behaved in a manner showing that he contemplated that in exchange for the money paid that he would deliver a satisfactory completed deck as a "final product." He resisted Goodreau's attempts to discuss issues about the deck before the "final product" was delivered. His conduct shows that he did not consider himself an employee, but rather an independent contractor.

27. Additionally, the Respondent's use of the Zent Construction, Inc., license to advertise for the Respondent's own decking business and projects, was illegal. The Respondent should have refrained from using the contractor's license to advertise his own business, or should have referred the Goodreau project to Zent Construction, Inc. In reality, the Respondent advertised Zent's license number and when Goodreau called the Respondent to obtain his services for the decking project, the Respondent contracted for the job on his own. Zent Construction was not involved in the Goodreau project, as shown by the testimony of Michael Zent. Zent had given the Respondent no permission to advertise its license number for the Respondent's own business and projects.

28. The Petitioner has established that the Respondent violated Section 455.227(1)(q), Florida Statutes, by violating a lawful order of the Department. The Respondent received two

previous notices and orders to cease and desist from the practice of unlicensed contracting in DBPR Case Nos. 2004-054232 and 2004-055137. However, he subsequently engaged in the practice of unlicensed contracting in the present case and has thus violated a lawful order of the Department to cease and desist from further unlicensed contracting. In accord with Section 455.228, Florida Statutes, the Department may impose an administrative penalty not to exceed $5,000.00 per incident as well as being entitled to recover the cost of investigation.

The investigative costs have not been proven by competent

evidence.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore,

RECOMMENDED that a final order be entered by the Department of Business and Professional Regulation finding that the Respondent violated Section 489.127(1)(f), Florida Statutes, and Section 455.227(1)(q), Florida Statutes (2007), and that an administrative penalty of $2,000.00 be imposed.

DONE AND ENTERED this 1st day of February, 2008, in Tallahassee, Leon County, Florida.

S

P. MICHAEL RUFF 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 1st day of February, 2008.

COPIES FURNISHED:

Michael C. Huddleston, Esquire Clayton, Teal & Huddleston, P.A. 817 West New York Avenue Deland, Florida 32720

Charles Tunnicliff, Esquire Department of Business &

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-2202

Sorin Ardelean, Esquire Department of Business and

Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399

Ned Luczynski, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Nancy S. Terrel, Hearing Officer Office of the General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

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: 07-000781

Orders for Case No: 07-000781