STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DAVID FEDERER, )

)

Petitioner, )

)

vs. ) Case No. 07-2942

)

CONSTRUCTION INDUSTRY )

LICENSING BOARD, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was conducted in this case pursuant to Sections 120.569 and 120.57(1), Florida Statutes,1 before Stuart M. Lerner, a duly-designated administrative law judge of the Division of Administrative Hearings (DOAH), on September 20, 2007, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Richard E. Benton, Esquire

1415 East Piedmont Drive, Suite 4

Tallahassee, Florida 32308

For Respondent: Thomas L. Barnhart, Esquire

Assistant Attorney General Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

STATEMENT OF THE ISSUE

Whether Petitioner's "change of status" application should be denied for the reasons set forth in the Notice of Intent to Deny.

PRELIMINARY STATEMENT

On April 18, 2007, the Board issued a Notice of Intent to Deny Petitioner's "change of status" application. Through his application, Petitioner is seeking approval to substitute Proshot Concrete, Inc., for Pressure Concrete, Inc., as the business organization for which he is authorized to act as the primary qualifying agent. In its Notice of Intent to Deny, the Board proposed to deny Petitioner's application for the following two reasons:

1. Applicant has outstanding liens which reflect upon financial responsibility and stability as required by Section 489.115, F.S., and

   
   

2. Applicant did not disclose the outstanding liens on his application which is a basis for denial under Section 455.227(1)(h), F.S.

Petitioner, through his attorney, requested a hearing on the matter. On July 2, 2007, the case was referred to DOAH for the assignment of an administrative law judge to conduct the hearing Petitioner had requested.

As noted above, the final hearing in this case was held on September 20, 2007. Petitioner was the lone witness to testify

at the hearing. In addition to his testimony, five exhibits (Respondent's Exhibits 1 through 5) were offered and received into evidence.

At the conclusion of the evidentiary portion of the hearing, the undersigned set the deadline for the filing of proposed recommended orders at 20 days from the date of the filing with DOAH of the hearing transcript.

The hearing Transcript (consisting of one volume) was filed with DOAH on October 1, 2007.

At the written request of Petitioner (made after the filing of the hearing Transcript), the deadline for the filing of proposed recommended orders was extended to October 23, 2007.

Petitioner and the Board both timely filed their Proposed Recommended Orders on October 23, 2007.

FINDINGS OF FACT

Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made:

1. Petitioner has an undergraduate and master's degree in civil engineering from the Georgia Institute of Technology (received in 1962 and 1964, respectively) and a law degree from Emory University (received in 1980).

2. In 1968, Petitioner went into the consulting business, and he has had his own business ever since.

3. Since 1968, Petitioner has been licensed as a professional engineer, at one time or another, in approximately

   20 different states, including Florida. He has held his Florida license since 1970. The other states in which he is currently licensed are Georgia, Alabama, New York, and Maryland.

4. Petitioner is licensed to practice law in Georgia, but is on inactive status.

5. Petitioner has been licensed as a real estate broker in Florida since 2001 or 2002.

6. Petitioner has been certified as a general contractor in Florida since 1980. He was the qualifier for McKinney Drilling Company from 1980 until 1994. Since 1994, he has been the qualifier for Pressure Concrete, Inc. (Pressure), which approximately a year ago was purchased by Proshot Concrete, Inc. (Proshot).

7. Petitioner has never received any discipline in connection with any of the professional licenses he has held over the years, including the certification allowing him to engage in general contracting in Florida; nor does he have any criminal record.

8. Petitioner has not undertaken any construction or consulting project that has resulted in a lawsuit, judgment, or lien being filed.

9. Petitioner has not been involved in any project where there has been a default triggering a claim against a payment or performance bond.

10. All of the vendors and suppliers he has used on construction projects have been paid.

11. Petitioner has never filed for bankruptcy.

    
    

12. There are no lawsuits now pending against Petitioner.

    
    

13. In or around September 2006, Petitioner completed and submitted an application to the Board seeking a "change of status" in his certification to enable him (as a general contractor) to qualify Proshot instead of Pressure.

14. Petitioner used a Board-generated form, DBPR CILB 4363-Change of Status Application From One Business Entity to Another (Form), to apply for such a "change of status."

15. The "Financial Responsibility" section of the Form contained the following questions and accompanying instructions:

    NOTE: If you answer "Yes" to any of the questions below, you must provide an explanation on DBPR 0060-General Explanatory Description form and attach legal documentation, i.e., satisfaction of lien, judgment, payment schedule, etc. If you have been convicted of a felony, you must submit proof of reinstatement of civil rights.

    
    

    The following persons must answer the financial responsibility questionnaire:

    
    

    Qualifying Agent All Owners/Partners

    Have you, or a partnership in which you were a partner, or an authorized representative, or a corporation in which you were an officer or an authorized representative ever:

    
    

    1. Undertaken construction contracts or work that a third party, such as a bonding or surety company, completed or made financial settlements?

       
       

    2. Had claims or lawsuits filed for unpaid past-due bills by your creditors as a result of construction operations?

       
       

    3. Undertaken construction contracts or work which resulted in liens, suits, or judgments being filed? (If yes, you must attach a copy of Notice of Lien and any payment agreement, satisfaction, Release of Lien or other proof of payment.)

       
       

    4. Had a lien filed against you by the U.S. Internal Revenue Service or Florida Corporate Tax Division?

       
       

    5. Made an assignment of assets in settlement of construction obligations for less than the debts outstanding?

       
       

    6. Been charged with or convicted of acting as a contractor without a license, or, if licensed as a contractor in this or any other state, been subject to any disciplinary action by a state, county, or municipality? (If yes, you must attach a copy of any state, county, municipal or out- of-state disciplinary order or judgment.)

       
       

    7. Filed for or been discharged in bankruptcy within the past five years? (If "yes," you must attach a copy of the Discharge Order, Order Confirming Plan, or if a Corporate Chapter 7 case, a copy of the Notice of Commencement.)

    8. Been convicted or found guilty of or entered a plea of nolo contendere to, regardless of adjudication, a crime in any jurisdiction? Note: If you, the applicant/licensee, have had a felony conviction, proof that your civil rights have been restored will be required prior to Licensure.

       
       

16. Petitioner answered "No" to all of these questions, believing, in good faith, that such information was accurate.

17. The final page of the Form contained the following "Attest Statement," which Respondent signed:

    I have read the questions in this application and have answered them completely and truthfully to the best of my knowledge.

    
    

    I have successfully completed the education, if any, required for the level of licensure, registration, or certification sought.

    
    

    I have the amount of experience required, if any, for the level of licensure, registration, or certification sought.

    
    

    I pledge to comply with the applicable standards of practice upon licensure, registration, or certification.

    
    

    I understand the types of misconduct for which disciplinary proceedings may be initiated.

    
    

18. As part of the application process, Petitioner made the necessary arrangements with Advantage Information Services, LLC (Advantage) to directly provide the Board with a credit report.

19. On or about October 26, 2006, Advantage sent the Board

    a two-page Transunion credit report (Transunion Report) containing Petitioner's "credit profile," along with a one-page report of the results of a "check[]" of public records at the "local, statewide, and national level" (Records Check Report).

20. The Transunion Report revealed a federal tax lien in the amount of $35,100.00 that had been filed against Petitioner in 1997 for unpaid personal income taxes. Petitioner was aware of this lien at the time he filled out the Form, but did not report it in response to Question 4 of the "Financial Responsibility" section because he did not understand the question to ask about liens such as this one which were unrelated to his business activities.

21. The Internal Revenue Service is withholding 15% of Petitioner's monthly Social Security benefit and applying it to reduce the amount Petitioner owes for his unpaid personal federal income taxes.

22. The Records Check Report read as follows:

    
    

    Public records have been checked on a local, statewide, and national level and are incorporated within the report. Additional records are as follows:

    
    

    Cheatham Register of Deeds, TN - Federal Tax Lien Release, 01/11/2005, Case #74147 - Book/Page 131/552 - $30,908.00 - Not Paid.

    Plaintiff: IRS

    Walton County Superior Court GA - County Tax Lien, 03/12/1998, $387.00 - Not Paid. Case Number - B3P253C, Book/Page - 3/253 Plaintiff: County Tax Assessor

    
    

    Dekalb County State Court, GA - Civil Judgment, 05/01/1991, $49,283.00 - Not Paid. Case Number - 814497

    Plaintiff: Bank South

    
    

23. The 1998 Walton County Tax lien noted in the Records Check Report concerned an assessment made on tangible personal property in the form of an airplane owned, not by Petitioner, but by a corporation of which he was the president. The lien did not arise out of any activities in which Petitioner was engaged as a general contractor.

24. The 1991 Dekalb County civil judgment noted in the Records Check Report required Petitioner to repay a bank loan Petitioner had co-signed for a friend. It too had nothing to do with his activities as a general contractor.

25. It was only after the Board had provided Petitioner with a copy of the Records Check Report that Petitioner first became aware of the existence of the 1998 Walton County Tax lien and the 1991 Dekalb County civil judgment.2

26. As noted above, on April 18, 2007, the Board issued its Notice of Intent to Deny Petitioner's "change of status" application.

    CONCLUSIONS OF LAW

    
    

27. DOAH has jurisdiction over the subject matter of the instant proceeding and of the parties hereto pursuant to Chapter 120, Florida Statutes.

28. "No person[3] may engage in the business of [construction] contracting in this state without first being certified or registered in the proper classification" by the Department of Business and Professional Regulation (Department) after having been deemed "qualified by the [B]oard."

    § 489.115(1), Fla. Stat.

    
    

29. To "engage in contracting on a statewide basis" an individual must be certified. An individual "who desires to engage in contracting on other than a statewide basis [must], as a prerequisite thereto, be registered . . . ." § 489.113(1), Fla. Stat.

30. A business organization, such as Proshot, may engage in construction contracting work only if it has obtained a "certificate of authority through a[n] [individual] qualifying agent." § 489.119, Fla. Stat. "The qualifying agent [must] be certified or registered . . . in order for the business organization to be issued a certificate of authority in the category of the business conducted for which the qualifying agent is certified or registered."4 § 489.119(3)(a), Fla. Stat.; see also Murthy v. N. Sinha Corp., 644 So. 2d 983, 984 n.1 (Fla.

    1994)("Chapter 489 requires a corporation or other business entity seeking to become a contractor to procure an individual licensed contractor as its qualifying agent."); Shimkus v.

    Department of Business and Professional Regulation, Construction Industry Licensing Board, 932 So. 2d 223, 223-224 (Fla. 4th DCA 2005)("The statute [Section 489.119, Florida Statutes] requires corporations engaged in construction to have licensed individuals serving as their qualifying agents."); and Mivan (Florida), Inc. v. Metric Constructors, Inc., 857 So. 2d 901, 903 (Fla. 5th DCA 2003)("The qualifying agent must be certified or registered in order for the business organization to obtain a certificate of authority to conduct the type of contracting business for which the qualifying agent is certified or registered.").

31. A certified or registered contractor who has qualified one business organization may seek to qualify a different, substituted business organization by submitting an application for a "change of status" to the Board. The application must be supplemented by "a credit report from a nationally recognized credit agency that reflects the financial responsibility of the applicant." § 489.115(7), Fla. Stat.5

32. The application for a "change of status" must be submitted on a Board form (DBPR CILB 4363) that contains a "Financial Responsibility" section. "Any [certificateholder]

    who answers 'yes' to any question contained in the Financial Responsibility section of the Application for Change of Status that is construction related must supply a complete explanation of the response, and include a statement detailing the steps taken by the [certificateholder] to prevent a recurrence of the circumstances leading to the conviction, discipline, judgment, bankruptcy, or other event leading to the response." Fla.

    Admin. Code R. 61G4-12.017(4).

    
    

33. Florida Administrative Code Rule 61G4-15.006 discusses the "financial responsibility grounds on which the Board [will] refuse to qualify an applicant." The rule currently6 provides as follows:

    1. For purposes of this rule, the phrase "financial responsibility" is defined as the ability to safeguard that the public will not sustain economic loss resulting from the contractor's inability to pay his lawful contractual obligations.

       
       

    2. The financial responsibility grounds on which the Board shall refuse to qualify an applicant shall include:

       
       

       1. Failure to submit any of the items required by Rule 61G4-15.005, F.A.C.[7]

       2. The existence, within the past five years preceding the application, of an unsatisfied court judgment rendered against the applicant based upon the failure of the applicant to pay its just obligations to parties with whom the applicant conducted business as a contractor.

       3. An unfavorable credit report or history as indicated by any of the documents submitted.[8]

          
          

       4. A determination by the Board that the applicant lacks the financial stability necessary to assure compliance with the standard set forth in subsection (1) of this rule. As guidelines for the determination of financial stability the Board shall consider the applicant's responses to the questions set forth in subsection 61G4- 15.005(4), F.A.C., and the applicant's financial statement submitted pursuant to subsection 61G4-15.005(2), F.A.C.

          
          

    3. The applicant's history of bankruptcy is included in the statutory definition of financial responsibility and shall be considered by the Board; however, the fact that an applicant has been or is a debtor in bankruptcy shall not be the sole basis of the Board's determination to deny the issuance of a license or a request for change of status to the applicant.

    
    

34. An applicant who establishes his "financial responsibility" may nonetheless have his application for a "change of status" denied pursuant to Section 455.227(1)(h), Florida Statutes, if it is shown that he made a "fraudulent misrepresentation" in his application.9 It is not enough to demonstrate that the applicant provided false or misleading material information in his application. There must also be proof that he knowingly did so with the intent to deceive or mislead the Board. See Koenig v. Department of Health, Board of

    Podiatric Medicine, No. 97-5057, 1998 Fla. Div. Adm. Hear. LEXIS 5703 *10 (Fla. DOAH April 24, 1998)(Recommended

    Order)("'Fraudulent misrepresentation' requires a showing of intent or a willful effort to deceive or mislead.").

35. In acting on an application for a "change of status," the Board must follow the requirements of Section 120.60, Florida Statutes, Subsection (3) of which provides as follows:

    Each applicant shall be given written notice either personally or by mail that the agency intends to grant or deny, or has granted or denied, the application for license. The notice must state with particularity the grounds or basis for the issuance or denial of the license, except when issuance is a ministerial act. Unless waived, a copy of the notice shall be delivered or mailed to each party's attorney of record and to each person who has requested notice of agency action. Each notice shall inform the recipient of the basis for the agency decision, shall inform the recipient of any administrative hearing pursuant to ss.

    120.569 and 120.57 or judicial review pursuant to s. 120.68 which may be available, shall indicate the procedure which must be followed, and shall state the applicable time limits. The issuing agency shall certify the date the notice was mailed or delivered, and the notice and the certification shall be filed with the agency clerk.

    
    

    In taking final action to deny an application, the Board may rely only on those grounds that the applicant was given appropriate notice of and the opportunity to contest. See Woodholly Associates v. Department of Natural Resources, 451 So. 2d 1002, 1004 (Fla. 1st DCA 1984).

36. In the instant case, in accordance with the requirements of Section 120.60, Florida Statutes, the Board provided Petitioner with "written notice" of its intention to deny Petitioner's application for a "change of status." The notice cited the following two reasons for the Board's intended action (referred to hereinafter as Reason 1 and Reason 2, respectively):

    1. Applicant has outstanding liens which reflect upon financial responsibility and stability as required by Section 489.115, F.S., and

       
       

    2. Applicant did not disclose the outstanding liens on his application which is a basis for denial under Section 455.227(1)(h), F.S.[10]

37. Petitioner requested an administrative hearing, and the Board referred the matter to DOAH for the assignment of an administrative law judge to conduct the requested hearing. The assignment was made and the hearing held.

38. The proof submitted at hearing does not support a recommendation that Petitioner's application for a "change of status" be denied for either of the two reasons cited by the Board in its Notice of Intent to Deny.

39. With respect to Reason 1, the Transunion Report and accompanying Records Check Report submitted to the Board on Petitioner's behalf by Advantage reveal no outstanding liens (nor unsatisfied judgments) resulting from Petitioner's

    contracting activities, and the record evidence affirmatively establishes that, in the more than a quarter of a century that Petitioner has been in the contracting business, he has consistently paid his contractual obligations. His having done so demonstrates his "financial responsibility," as that term is defined in the current version of Florida Administrative Code Rule 61G4-15.006(1).11

40. With respect to Reason 2, Petitioner did fail to correctly acknowledge, in response to Question 4 of the "Financial Responsibility" section of the Form, that he "[h]ad a lien filed against [him] by the U.S. Internal Revenue Service," but his unrebutted credible testimony, which the undersigned has credited, establishes that this was simply an honest mistake and Petitioner did not intend to deceive or mislead the Board. There thus was no "fraudulent misrepresentation" which would warrant the denial of Petitioner's application (or the taking of any other "disciplinary action" against him) under Section 455.227(1)(h), Florida Statutes.

41. In view of the foregoing, the Board should decline to take final action to deny, for the reasons set forth in its Notice of Intent to Deny, Petitioner's application for a "change of status."

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby

RECOMMENDED that the Board find Petitioner qualified for the "change of status" for which he has applied.

DONE AND ENTERED this 1st day of November, 2007, in Tallahassee, Leon County, Florida.

S

STUART M. LERNER

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 November, 2007.

ENDNOTES

1 All references to Florida Statutes in this Recommended Order are to Florida Statutes (2007).

2 Petitioner takes the position that the 1991 Dekalb County civil judgment is, under Georgia law, "no longer enforceable due to its age and the lack of activity on the part of the judgment holder to levy on the judgment." See O.G.C.A. §9-12.60.

3 A "person," as that term is used in Florida Statutes, "includes individuals, children, firms, associations, joint adventures, partnerships, estates, trusts, business trusts,

syndicates, fiduciaries, corporations, and all other groups or combinations." § 1.01(3), Fla. Stat.

4 A certified or registered contractor may qualify more than one business organization, but only with the approval of the Board. See Fla. Admin Code R. 61G4-15.0021(4) ("An individual must receive the approval of the Board to qualify more than one business organization.")

5 Subsection (5)(b) of Section 489.115, Florida Statutes, which the Board has cited in its Proposed Recommended Order, governs only applications for "the initial issuance of a certificate." Unlike Subsection (7) of the statute, it makes no mention of applications filed by certificateholders "requesting a change of status."

6 The Board has proposed amendments to Florida Administrative Code Rule 61G4-15.006, but the amendatory process has not been completed.

7 Florida Administrative Code Rule 61G4-15.005 was in effect when Petitioner submitted his application, but was repealed effective September 16, 2007, four days before the final hearing in this case. Both parties agree that this repealed rule cannot determine the outcome of the instant case. See Agency for Health Care Administration v. Mount Sinai Medical Center, 690 So. 2d 689, 691 (Fla. 1st DCA 1997)("Where there is a change in law in a licensure matter, the law at the time of the decision, rather than when the application was filed, determines whether the license should be granted."); Lavernia v. Department of Professional Regulation, Board of Medicine, 616 So. 2d 53, 53-54 (Fla. 1st DCA 1993)("Florida follows the general rule that a change in a licensure statute that occurs during the pendency of an application for licensure is operative as to the application, so that the law as changed, rather than as it existed at the time the application was filed, determines whether the license should be granted."); and Bruner v. Board of Real Estate, 399 So. 2d 4, 5 (Fla. 5th DCA 1981)("[T]he Department should have applied the licensing statute in effect at the time that it made its decision.").

8 An "unfavorable credit report or history," for purposes of this rule provision, is one that demonstrates a lack of "financial responsibility," as that term is defined in Subsection (1) of Florida Administrative Code Rule 61G4-15.006. See Forsythe v. Longboat Key Beach Erosion Control District, 604 So. 2d 452, 455 (Fla. 1992)("It is axiomatic that all parts of a

statute must be read together in order to achieve a consistent whole.").

9 Section 455.227(1)(h), Florida Statutes, provides as follows:

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

* * *

Attempting to obtain, obtaining, or renewing a license to practice a profession by bribery, by fraudulent misrepresentation, or through an error of the department or the board.

The instant case involves allegations, not of bribery or Department or Board error, but of fraudulent misrepresentation on Petitioner's part by failing to disclose "outstanding liens" on his application.

10 Having specified these reasons for its proposed action, the Board may not, in any final order denying Petitioner's application, rely on any other grounds, without giving Petitioner notice and the opportunity for further proceedings. See Woodholly Associates, 451 So. 2d at 1004.

11 A contractor may have unsatisfied financial obligations not related to his contracting business and still possess "financial responsibility," as that term is defined in Florida Administrative Code Rule 61G4-15.006(1).

COPIES FURNISHED:

Richard E. Benton, Esquire

1415 East Piedmont Drive, Suite 4

Tallahassee, Florida 32308

Thomas L. Barnhart, Esquire Assistant Attorney General Office of the Attorney General The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050

G. W. Harrell, Executive Director Construction Industry Licensing Board Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

Ned Luczynski, 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: 07-002942

Orders for Case No: 07-002942