The Issue The issues in each case are whether, pursuant to Sections 489.141 and 489.143, Florida Statutes (2003), a claimant is entitled to payment from the Construction Industries Recovery Fund, and, if so, whether, pursuant to Section 489.143(7), Florida Statutes (2003), Respondent may automatically suspend the residential contractor's license of Petitioner until Petitioner reimburses Respondent for the paid claim.
Findings Of Fact Petitioner is licensed as a certified residential contractor, holding license number CRC 013599. Respondent first issued a residential contractor's license to Petitioner in 1978, and Petitioner has been continually licensed since that time. Petitioner has never been disciplined by Respondent or any local governmental agency. On January 29, 2004, Respondent transmitted to the Division of Administrative Hearings seven files containing administrative complaints alleging disciplinary breaches against Petitioner for many of the transactions covered in the nine subject cases. These seven new cases have not yet been heard, and Respondent has not yet entered any restitution orders against Petitioner. In the past, Petitioner has placed his residential contractor's license with various corporations to qualify them to perform residential construction. In February 1999, Petitioner met with Lori Thomson, president of Thomson Homes, Inc., to discuss placing his license with her residential construction company. Now inactive, Thomson Homes, Inc., had been in the residential construction business since at least 1994, operating out of an office in Palm Beach County, which is also the location of all but one of the residential construction jobs that are the subject of these cases. Since 1994, Thomson Homes, Inc., had used the general contractor's license of Ms. Thomson's husband, Steven Thomson, to qualify to perform residential construction. During the time that his license qualified Thomson Homes, Inc., Mr. Thomson believed that he and his wife owned the corporation equally and that she served as the president and he served as the vice-president. In the summer of 1998, Mr. Thomson filed for divorce from Ms. Thomson. In February 1999, Ms. Thomson fired Mr. Thomson from Thomson Homes, Inc. Shortly thereafter, Mr. Thomson learned that Ms. Thomson had caused all of the stock to be issued to her when the corporation was formed, and that she had assumed all of the officer and director positions. In early March 1999, Mr. Thomson cancelled all of the building permits that he had obtained on behalf of Thomson Homes, Inc., and withdrew his general contractor's license from Ms. Thomson's corporation, effective March 20, 1999. When Mr. Thomson withdrew his license from Thomson Homes, Inc., it was in the process of building or preparing to build about ten homes. At no time during Petitioner's discussions with Ms. Thomson was he aware that Thomson Homes, Inc., was actively involved in construction. Eventually, Ms. Thomson and Petitioner agreed that Petitioner would place his residential contractor's license with Thomson Homes, Inc., and would supervise the corporation's construction activities. In return, Thomson Homes, Inc., would pay Petitioner $500 weekly and 35 percent of the profits. After filing the necessary documentation in April 1999, Petitioner qualified Thomson Homes, Inc. effective April 22 or 26, 1999. Petitioner advised Ms. Thomson that he had other work to do for another month, so he could not start with Thomson Homes, Inc. immediately. Ms. Thomson told him that she had to get financing arranged for several signed contracts and did not have any construction taking place at the time. The record is unclear whether this delay took place after the initial agreement between Petitioner and Ms. Thomson or after Petitioner formally placed his license with Thomson Homes, Inc. However, in either event, from the date that Petitioner formally placed his license with Thomson Homes, Inc., he never had a substantive conversation with Ms. Thomson about any construction activities of Thomson Homes, Inc. Not hearing from Ms. Thomson, Petitioner eventually called her to learn when he would start work. At first, Ms. Thomson took Petitioner's calls and kept explaining that the financing paperwork had been delayed. She promised to call Petitioner when construction was ready to proceed. However, Ms. Thomson never contacted Petitioner, and she later stopped taking or returning Petitioner's calls. In early August 1999, Petitioner called Thomson Homes, Inc., and learned that its telephone had been disconnected. He visited the office of Thomson Homes, Inc., but found it closed and the premises vacated. In fact, Thomson Homes, Inc., discontinued business on or about August 1, 1999. Between the date that Petitioner had qualified Thomson Homes and the point at which Thomson Homes ceased doing business, Thomson Homes, Inc., had entered into construction contracts, taken deposits and draws on construction loans, and performed residential construction--all unknown to Petitioner. Also unknown to Petitioner was the fact that Thomson Homes, Inc., had failed to perform its obligations under many, if not all, of its construction contracts during that period. The record is unclear when Petitioner withdrew his license from Thomson Homes, Inc. Petitioner sent Respondent a letter on August 30, 1999, advising of the withdrawal of his license from Thomson Homes, Inc. Later advised that he needed to file another form to effect the withdrawal, Petitioner did so in March 2000. The difference is not important in these cases. At no time did Petitioner receive any money from Thomson Homes, Inc., or any of the claimants who contracted with Thomson Homes, Inc. At no time did Petitioner enter into any contracts with any of the claimants. Only after Thomson Homes, Inc., had taken the claimants' money and abandoned work or failed to commence work did Petitioner learn that Thomson Homes, Inc., had done construction business under his license. DOAH Case No. 03-3540 involves the claim of Sandra Harvey. Ms. Harvey entered into a construction agreement with Thomson Homes, Inc., on September 9, 1998. Pursuant to the agreement, Ms. Harvey agreed to pay Thomson Homes, Inc., $25,500 for a lot and $115,260 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 120 days from the date of slab pour. After pouring the slab, constructing the shell, and completing the rough plumbing, air conditioning, and electrical, Thomson Homes, Inc., stopped work on Ms. Harvey's home in early 1999. Ms. Harvey learned of the problem when Mr. Thomson called her in early 1999 and said that he could not finish the home because Ms. Thomson had taken over the business. This call probably took place no later than late March 1999, when Mr. Thomas withdrew as the qualifier for Thomson Homes, Inc. The record does not reveal the extent of payments from Ms. Harvey or her lender or the extent of completed work at the time that Thomson Homes, Inc., abandoned the job. Although the complaint is not part of this record, Ms. Harvey commenced a legal action against Thomson Homes, Inc., but not Petitioner. She obtained a default final summary judgment against Thomson Homes, Inc., on March 30, 2001, for a total sum of $46,267.32, including attorneys' fees, costs, and prejudgment interest. The judgment states, in part: Subsequent to entering into the above referenced contract, Defendant breached its contract by accepting Plaintiff's deposits and construction loan disbursements and thereafter abandoning the project and failing to pay subcontractors and/or materialmen for their labor, services and material provided. As a result of Defendant abandoning the project, Plaintiff was compelled to retain a new contractor to complete her home at an additional cost over and above the original contract amount. As a direct result of Defendant abandoning the project, the misapplication of construction funds and financial mismanagement Plaintiff has been forced to borrow additional funds from the construction lender. On May 3, 2001, Ms. Harvey filed a claim with the Construction Industries Recovery Fund (Recovery Fund). In response to a question asking if she had made a diligent effort to collect payment from the contractor, Ms. Harvey answered "yes," explaining she had "filed lawsuit." Ms. Harvey probably filed her claim within two years of when Thomson Homes, Inc., abandoned her job. By the end of March 1999, Mr. Thomson informed Ms. Harvey that his wife had fired him, so he could not work on her home anymore. A change in qualifier does not mean that Thomson Homes, Inc., would necessarily abandon the job, but, as noted in the Conclusions of Law, abandonment presumptively arises upon the expiration of 90 days without work. No work took place on Ms. Harvey's home after Mr. Thomson withdrew as qualifier, so presumptive abandonment took place by the end of June 1999--after May 3, 1999, which is two years prior to the date on which Ms. Harvey filed her claim. By letter dated June 5, 2001, from James Brogan of WEI Consulting Group to Ms. Harvey, Mr. Brogan states that he had investigated the assets of Thomson Homes, Inc. Mr. Brogan found no bankruptcy filing by Thomson Homes, Inc., in Bankruptcy Court in the Southern District of Florida. Thomson Homes, Inc., was a party to 282 legal actions and owed tangible personal property taxes on furniture in a model home, but the furniture was no longer available. On February 28, 2003, Respondent issued an Order approving Ms. Harvey's claim of $25,000 against the Recovery Fund and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that Ms. Harvey is the Petitioner, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. On March 17, 2003, Petitioner filed a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on Ms. Harvey and Respondent, contests the payment to Ms. Harvey and the automatic suspension of Petitioner's license. The petition contests the payment of Ms. Harvey's claim because she had made insufficient efforts to satisfy the judgment; she had failed to submit all required exhibits with her claim; her judgment is against Thomson Homes, Inc., and not Petitioner; her judgment does not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes; and Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes. Additionally, the petition contests the automatic suspension because the payment to Ms. Harvey is not authorized, her claim is incomplete, and her judgment is not against Petitioner. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. DOAH Case No. 03-3541 involves the claim of John and Kathleen Whitesides. The Whitesides, who lived at the time in Juno Beach, Florida, entered into a construction contract with Thomson Homes, Inc., on February 7, 1999. Pursuant to the agreement, the Whitesides agreed to pay Thomson Homes, Inc., $154,094 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 120 days from the date of slab pour. After the Whitesides paid Thomson Homes, Inc., $5000 and secured a construction loan, Thomson Homes, Inc., never commenced construction. In a complaint filed April 3, 2000, the Whitesides commenced a legal action against Thomson Homes, Inc., but not Petitioner. The two-count complaint alleges a breach of contract, based on Thomson Homes' alleged "abandon[ment]" of the job "prior to any construction," and unjust enrichment, based on Thomson Homes' alleged receipt of funds and failure to complete construction. The Whitesides obtained a default final judgment against Thomson Homes, Inc., on December 21, 2000, for a total sum of $20,146.67, including attorneys' fees, costs, and prejudgment interest. The judgment states, in part: "Defendant is in breach of the Contract dated February 7, 1999, and has received unjust enrichment from Defendant's failure to fulfill the terms of the Contract to build a home for Plaintiffs." On August 9, 2001, David Tassell, the Whitesides' attorney in the circuit court action against Thomson Homes, Inc., stated, in an acknowledged statement, that he had performed "numerous" real property searches in Palm Beach and Martin counties' public records and determined that Thomas Homes, Inc., "owns no real property in Martin County." The omission of Palm Beach County in the statement is unexplained. Mr. Tassell's statement adds that he has retained a private investigator, who confirmed that Thomson Homes, Inc., owns no boats, planes, or automobiles. On August 10, 2001, the Whitesides filed a claim with the Recovery Fund. In response to a question asking if they had made a diligent effort to collect payment from the contractor, the Whitesides answered "yes," but did not supply an explanation in the following blank. The completed questionnaire accompanying the claim states that the Whitesides discovered the violation in September 1999 and that it occurred in July to August 1999. On September 17, 2002, Respondent issued an Order approving the Whitesides' claim of $18,526.67 against the Recovery Fund and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that the Whitesides are the Petitioners, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. The Whitesides probably filed their claim within two years of when they reasonably should have discovered that Thomson Homes, Inc., had wrongfully failed to commence construction, as is required for reasons set forth in the Conclusions of Law. As noted in the Conclusions of Law, presumptive abandonment arose when Thomson Homes, Inc., after entering the contract, performed no work for 90 days. Six months elapsed from the signing of the contract to the date that is two years prior to the filing of the claim. Although the record is not well-developed on the point, it is more likely than not that due diligence did not require that the Whitesides discover the abandonment within the first 90 days after it had presumptively arisen. The Whitesides' judgment is probably based on a violation of Section 489.129(1)(g), (j), or (k), Florida Statutes, as is required for reasons set forth in the Conclusions of Law. Although the record is not well-developed on this point either, it is more likely than not that the judgment is based on Thomson Homes' abandonment after entering into the contract. The judgment does not state this basis explicitly, but the complaint, on which the judgment is based, alleges abandonment. On December 23, 2002, Petitioner filed a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on Respondent and the Whitesides' attorney in the circuit court action against Thomson Homes, Inc., contests the payment to the Whitesides and the automatic suspension of Petitioner's license. The petition contests the payment of the Whitesides' claim because they did not file certified copies of the final judgment and levy and execution documents and their judgment did not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes. Additionally, the petition contests the automatic suspension because Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes; Petitioner received no notice of the hearing that resulted in the Order to pay the Whitesides and suspend Petitioner's license; the Whitesides' claim is incomplete; and the Whitesides' judgment is not against Petitioner. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. DOAH Case No. 03-3542 involves the claim of Richard and Kathleen Beltz. The Beltzes entered into a construction contract with Thomson Homes, Inc., on July 13, 1999. Pursuant to the agreement, the Beltzes agreed to pay Thomson Homes, Inc., $35,500 for a lot and $140,500 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 120 days from the date of slab pour. After the Beltzes paid Thomson Homes, Inc., $17,283.70, Thomson Homes, Inc., never appeared at the closing, which had been scheduled for August 10, 1999. Nor did Thomson Homes, Inc., ever commence construction. The record does not disclose the extent, if any, to which Thomson Homes, Inc., completed construction. The Beltzes' discovery of Thomson Homes' failure to commence construction was hampered by the fact that they resided in California at the time. However, the Beltzes had obviously discovered the wrongful acts and omissions of Thomson Homes, Inc., by September 29, 1999, when they sent a letter to Petitioner demanding that he return the money that they had paid Thomson Homes, Inc. On October 19, 1999, the Beltzes signed a claim under the Recovery Fund, but the record contains no indication when the claim was filed. The completed questionnaire attached to the claim does not ask if the claimants had made a diligent effort to collect payment from the contractor. For reasons set forth in the Conclusions of Law, a claim must follow a judgment, so, the Beltzes could not file a valid claim until they had obtained a judgment. Two years from September 29, 1999, at which point the Beltzes obviously knew of a violation, requires that they file the claim, on an already- secured judgment, prior to September 29, 2001. In a complaint filed February 4, 2002, the Beltzes commenced a legal action against Thomson Homes, Inc., but not Petitioner. The two-count complaint alleges a breach of contract, based on Thomson Homes' alleged "abandon[ment]" of the job "prior to any construction" and "fail[ure] and refus[al] to pay subcontractors and/or materialmen which resulted in Claims of Liens against Plaintiffs [sic] residence, which Defendant has failed and refused to satisfy," and unjust enrichment, based on Thomson Homes' alleged receipt of funds and failure to complete construction and pay for goods and services provided by subcontractors and materialmen. The Beltzes obtained a default final summary judgment against Thomson Homes, Inc., on May 22, 2002, for a total sum of $23,280.20, including attorneys' fees, costs, and prejudgment interest. The judgment states, in part: Subsequent to entering into the above referenced contract, Defendant performed some work on the project. However, Defendant breached its contract by accepting deposits and construction loan disbursements and thereafter abandoning the project and failing to pay subcontractors and materialmen for their labor, services and material provided. As a result of Defendant failing to pay Lienors who provided labor, service and materials to Plaintiffs [sic] real property, Construction Liens were recorded against same, which Plaintiffs had to satisfy. As a result of Defendant abandoning the project, Plaintiffs were compelled to retain a new contractor to complete their home at an additional cost over and above the original contract amount. As a direct result of Defendant abandoning the project, failing to pay Lienors, the misapplication of construction funds and financial mismanagement, Plaintiffs were forced to borrow additional funds from their construction lender. By unacknowledged statement dated August 23, 2002, Ms. Beltz declared that someone at the Florida Department of State advised her that Thomson Homes, Inc., was administratively dissolved on September 24, 1999. She also declared that she had found on the internet two pieces of real property owned by Thomson Homes, Inc., but they had been transferred within the past year. Ms. Beltz stated that she searched the database of the "Department of Motor Vehicles in Palm Beach County" in May 2000 and found no vehicles or boats registered to Thomson Homes, Inc. Lastly, she reported that she contacted the "Federal Aviation Association" at an unspecified time and found no "airplanes" registered to Thomson Homes, Inc. On November 26, 2002, Respondent issued an Order approving the Beltzes' claim of $17,222.78 against the Recovery Fund and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that the Beltzes are the Petitioners, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. On December 27, 2002, Petitioner filed a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on the Beltzes and Respondent, contests the payment to the Beltzes and the automatic suspension of Petitioner's license. The petition contests the payment of the Beltzes' claim because they did not submit all of the necessary exhibits with their claim; their judgment is against Thomson Homes, Inc., and not Petitioner; and their judgment does not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes. Additionally, the petition contests the automatic suspension because Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes; the Beltzes' claim is incomplete; and the Beltzes' judgment is not against Petitioner. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. DOAH Case No. 03-3543 involves the claim of Keith and Karen Deyo. The Deyos entered into a construction contract with Thomson Homes, Inc., on October 31, 1998. Pursuant to the agreement, the Deyos agreed to pay Thomson Homes, Inc., $25,500 for a lot and $123,400 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 120 days from the date of slab pour. Although the Deyos clearly suffered damages from the acts and omissions of Thomson Homes, Inc., the record does not disclose how much they paid the company, how much they had to pay unpaid suppliers and laborers, and how much construction the company completed before abandoning the job. Thomson Homes, Inc., began construction on the Deyos' home about 30-45 days after the parties signed the contract, but all work stopped in July 1999. In an undated complaint, the Deyos commenced a legal action against Thomson Homes, Inc., but not Petitioner. The two-count complaint alleges a breach of contract, based on Thomson Homes' alleged "abandon[ment] of the project prior to completion" and "fail[ure] and refus[al] to pay subcontractors and/or materialmen which resulted in Claims of Liens against Plaintiffs [sic] residence, which Defendant has failed and refused to satisfy," and unjust enrichment, based on Thomson Homes' alleged receipt of funds and failure to complete construction and pay for goods and services provided by subcontractors and materialmen. The Deyos obtained a final summary judgment against Thomson Homes, Inc., on March 15, 2000, for a total sum of $55,458.64, including attorneys' fees, costs, and prejudgment interest. The judgment states, in part: Subsequent to entering into the above referenced contract, Defendant partially performed work under the Contract. However, it breached its contract by accepting deposits and construction loan disbursements and thereafter abandoning the project and failing to pay subcontractors and materialmen for their labor, services and material provided. As a result of Defendant failing to pay lienors who provided labor, services and materials to Plaintiffs [sic] residence, construction liens were recorded against same, which Plaintiffs had to satisfy. As a result of Defendant abandoning the project, Plaintiffs were compelled to retain a new contractor to complete their home at an additional cost over and above the original contract amount. As a direct result of Defendant abandoning the project, failing to pay lienor's [sic], the misapplication of construction funds and financial mismanagement Plaintiffs have been forced to borrow additional funds from their construction lender. On April 27, 2000, the Deyos signed a claim under the Recovery Fund, but the record contains no indication when the claim was filed. A cover letter dated May 8, 2000, suggests that the Deyos mailed their claim a couple of weeks after signing it, so it was probably filed in mid-May 2000, although their questionnaire bears a revision date of November 2001, which would be beyond two years after the violation. In the questionnaire, the Deyos did not respond to the question asking if they had made a diligent effort to collect payment from the contractor. By an undated and unacknowledged statement, Mr. Deyo declared that someone at the Florida Department of State advised him that Thomson Homes, Inc., was administratively dissolved on September 24, 1999. He also declared that he had found on the internet two pieces of real property owned by Thomson Homes, Inc., but they had been transferred within the past year. Mr. Deyo stated that he searched the database of the "department of motor vehicles in Palm Beach County" in on April 14, 2000, and found no motor vehicles or boats registered to Thomson Homes, Inc. Lastly, he reported that he contacted the "Federal Aviation Association" on April 21, 2000, and found no "airplanes" registered to Thomson Homes, Inc. On January 22, 2003, Respondent issued an Order acknowledging the Deyos' claim of $55,458.64, approving the payment of the statutory limit of $25,000 against the Recovery Fund, and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that Mr. Deyo is the Petitioner, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. On February 3, 2003, Petitioner filed a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on Respondent and the Deyos' attorney who represented them in the action against Thomson Homes, Inc., contests the payment to the Deyos and the automatic suspension of Petitioner's license. The petition contests the payment of the Deyos' claim and suspension of Petitioner's license because Petitioner did not receive notice of the hearing at which Respondent entered the Order; the Deyos did not satisfy all requirements for payment from the Recovery Fund; their claim was not accompanied by certified copies of the levy and execution documents; their judgment is against Thomson Homes, Inc., and not Petitioner; their judgment does not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes; and Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. DOAH Case No. 03-3544 involves the claim of Sylvia Reinhardt. Ms. Reinhardt entered into a construction contract with Thomson Homes, Inc., on October 14, 1998. Pursuant to the agreement, Ms. Reinhardt agreed to pay Thomson Homes, Inc., $45,000 for a lot and $147,150 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 120 days from the date of slab pour. After Ms. Reinhardt paid Thomson Homes, Inc., $144,769, directly and indirectly, by way of her construction lender, the house was little more than half complete when Thomson Homes, Inc., abandoned the job. Thomson Homes also failed to pay various suppliers that filed liens, so Ms. Reinhardt had to pay $8550.41 to RTS Roofing, $882 to Palm Beach Garage Door, and $3421.32 to Woodworks, Inc. In an undated complaint filed in 1999 (actual date illegible), Ms. Reinhardt commenced a legal action against Thomson Homes, Inc., but not Petitioner. The two-count complaint alleges a breach of contract, based on Thomson Homes' alleged "abandon[ment]" of the job "prior to completion" and "fail[ure] and refus[al] to pay subcontractors and/or materialmen which resulted in Claims of Liens against Plaintiff's residence, which Defendant has failed and refused to satisfy," and unjust enrichment, based on Thomson Homes' alleged receipt of funds and failure to complete construction and pay for goods and services provided by subcontractors and materialmen. Ms. Reinhardt obtained a final summary judgment against Thomson Homes, Inc., on March 28, 2000, for a total sum of $61,471.15, including attorneys' fees, costs, and prejudgment interest. The judgment states, in part: Subsequent to entering into the above referenced contract, Defendant performed work under the Contract. However, it breached its contract by accepting deposits and construction loan disbursements and thereafter abandoning the project and failing to pay subcontractors and materialmen for their labor, services and materials provided. As a result of Defendant failing to pay lienors who provided labor, services and materials for the construction of Plaintiff's residence, construction liens were recorded against same, which Plaintiff had to satisfy. As a result of Defendant abandoning the project, Plaintiff was compelled to retain a new contractor to complete their [sic] home at an additional cost over and above the original contract amount. As a direct result of Defendant abandoning the project, failing to pay lienor's [sic], the misapplication of construction funds and financial mismanagement Plaintiff has been forced to borrow additional funds from her construction lender. On April 17, 2000, Ms. Reinhardt filed a claim with the Recovery Fund. In response to a question asking if she had made a diligent effort to collect payment from the contractor, Ms. Reinhardt answered "yes" and explained: "Telephone calls were unanswered. Certified mail requesting response were [sic] never answered. Our attorney made written and personal contact with the owner and there was no intention to pay." The claim states that the violation took place in July 1999. By acknowledged statement dated July 21, 2000, Ms. Reinhardt declared that she had completed a "reasonable search and inquiry" and had not found any property or assets against which to satisfy her judgment. Ms. Reinhardt stated that someone at the Florida Department of State advised her that Thomson Homes, Inc., was administratively dissolved on September 24, 1999. She also declared that she had found one parcel of property owned by Thomson Homes, Inc., and valued at $115,387, but this had been sold to "Joan Thomson" on February 1, 2000. Ms. Reinhardt stated that she had found tangible personal property worth $5000. She added that she had not found any motor vehicles registered with the Department of Highway Safety and Motor Vehicles, nor had she found anything registered with the "FAA." On November 26, 2002, Respondent issued an Order acknowledging Ms. Reinhardt's claim of $58,661.44, approving the payment of the statutory limit of $25,000 against the Recovery Fund, and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that Ms. Reinhardt is the Petitioner, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. On December 24, 2002, Petitioner served a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on Ms. Reinhardt and Respondent, contests the payment to Ms. Reinhardt and the automatic suspension of Petitioner's license. The petition contests the payment of Ms. Reinhardt's claim and suspension of Petitioner's license because Ms. Reinhardt did not submit certified copies of the levy and execution documents; her judgment is against Thomson Homes, Inc., and not Petitioner; her judgment does not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes; and Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. DOAH Case No. 03-3545 involves the claim of Louis and Ann Mahoney. The Mahoneys entered into a construction contract with Thomson Homes, Inc., on June 28, 1999, for the construction of a home in Martin County. Pursuant to the agreement, the Mahoneys agreed to pay Thomson Homes, Inc., $32,000 for a lot and $149,000 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 150 days from the date of slab pour. After the Mahoneys paid Thomson Homes, Inc., $14,500, directly and indirectly, by way of their construction lender, they suffered damages due to the acts and omissions of Thomson Homes, Inc., although, again, the record does not describe specifically how Thomson Homes caused them damage. In an undated complaint that bears no filing date, the Mahoneys commenced a legal action against Thomson Homes, Inc., but not Petitioner. The two-count complaint alleges a breach of contract, based on Thomson Homes' alleged "abandon[ment]" of the job "prior to completion" and "fail[ure] and refus[al] to pay subcontractors and/or materialmen which resulted in Claims of Liens against Plaintiffs [sic] residence, which Defendant has failed and refused to satisfy," and unjust enrichment, based on Thomson Homes' alleged receipt of funds and failure to complete construction and pay for goods and services provided by subcontractors and materialmen. The Mahoneys obtained a final summary judgment against Thomson Homes, Inc., on April 13, 2000, for a total sum of $43,084.49, including attorneys' fees, costs, and prejudgment interest. The judgment states, in part: Subsequent to entering into the above referenced contract, Defendant breached its contract by accepting Plaintiffs' deposits and construction loan disbursements and thereafter abandoning the project and failing to pay subcontractors and/or materialmen for their labor, and/or services provided. As a result of Defendant failing to pay lienor's [sic] who provided labor, services and materials for the construction of Plaintiffs [sic] residence, a construction lien was recorded against Plaintiffs' property, which Plaintiffs will have to satisfy. As a result of Defendant abandoning the project, Plaintiffs were compelled to retain a new contractor to complete their home at an additional cost over and above the original contract amount. As a direct result of Defendant abandoning the project, failing to pay lienor's [sic], the misapplication of construction funds and financial mismanagement Plaintiffs have been forced to borrow additional funds from their construction lender. On April 30, 2000, the Mahoneys signed a claim under the Recovery Fund. Although the claim form bears no filing date, the completed questionnaire attached to the claim was filed on May 3, 2000, so that is the likely filing date of the claim. In response to a question asking if they had made a diligent effort to collect payment from the contractor, the Mahoneys answered "yes" and explained: "This is explained in General Allegations, enclosed with this paperwork." Evidently, the reference is to a copy of the circuit court complaint. By acknowledged statement dated April 8, 2002, Mr. Mahoney declared that he had completed a "reasonable search and inquiry" and had not found any property or assets against which to satisfy his judgment. Mr. Mahoney stated that someone at the Florida Department of State advised him that Thomson Homes, Inc., was administratively dissolved on September 24, 1999. He also declared that an internet search had disclosed no property owned by Thomson Homes, Inc. Mr. Mahoney stated that the "department of motor vehicles in Palm Beach County" found no motor vehicles or boats registered to Thomson Homes, Inc., and that the "FAA" had found nothing registered to Thomson Homes, Inc. On February 28, 2003, Respondent issued an Order acknowledging the Mahoneys' claim of $38,185, approving the payment of the statutory limit of $25,000 against the Recovery Fund, and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that the Mr. Mahoney is the Petitioner, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. On March 17, 2003, Petitioner served a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on the Mahoneys and Respondent, contests the payment to the Mahoneys and the automatic suspension of Petitioner's license. The petition contests the payment of the Mahoneys' claim and suspension of Petitioner's license because they did not submit all of the required exhibits; their judgment is against Thomson Homes, Inc., and not Petitioner; their judgment does not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes; and Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. DOAH Case No. 03-3546 involves the claim of Dennis and Carolyn DeStefanis. The DeStefanises entered into a construction contract with Thomson Homes, Inc., on April 7, 1999. Pursuant to the agreement, the DeStefanises agreed to pay Thomson Homes, Inc., $137,455 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 150 days from the date of slab pour. After the DeStefanises paid Thomson Homes, Inc., $15,765, directly and indirectly, by way of their construction lender, Thomson Homes, Inc. never did any work, except to contract with a surveyor, who, unpaid, filed a claim of lien against the DeStefanises's lot. In an undated complaint bearing no filing date, the DeStefanises commenced a legal action against Thomson Homes, Inc., but not Petitioner. The two-count complaint alleges a breach of contract, based on Thomson Homes' alleged "abandon[ment]" of the job "prior to completion" and "fail[ure] and refus[al] to pay subcontractors and/or materialmen which resulted in Claims of Liens against Plaintiffs [sic] residence, which Defendant has failed and refused to satisfy," and unjust enrichment, based on Thomson Homes' alleged receipt of funds and failure to complete construction and pay for goods and services provided by subcontractors and materialmen. The DeStefanises obtained a final summary judgment against Thomson Homes, Inc., on March 15, 2000, for a total sum of $36,701.87, including attorneys' fees and costs. The judgment states, in part: Subsequent to entering . . . into the above referenced contract, Defendant, [sic] breached its contract by accepting Plaintiffs [sic] deposits and construction loan disbursements and thereafter abandoning the project. [sic] As a result of Defendant abandoning the project, Plaintiffs were compelled to retain a new contractor to complete their home at an additional cost over and above the original contract amount. As a direct result of Defendant abandoning the project, the misapplication of construction funds and financial mismanagement Plaintiffs have been forced to borrow additional funds from their construction lender. On April 19, 2000, the DeStefanises filed a claim with the Recovery Fund. In response to a question asking if they had made a diligent effort to collect payment from the contractor, the DeStefanises answered "yes" and explained: "Went to DBPR Investigative Services, hired Attorney Barry W. Taylor [attorney in circuit court action], got Final Summary Judgment against Thomson Homes, Inc." On March 20, 2003, Respondent issued an Order acknowledging the DeStefanises' claim of $34,965.52, approving the payment of $15,765 against the Recovery Fund, and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that the DeStefanises are the Petitioners, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. On April 7, 2003, Petitioner filed a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on the DeStefanises and Respondent, contests the payment to the DeStefanises and the automatic suspension of Petitioner's license. The petition contests the payment of the DeStefanises' claim and suspension of Petitioner's license because they did not submit all of the required exhibits; their judgment is against Thomson Homes, Inc., and not Petitioner; their judgment does not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes; and Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes. The petition contests the suspension of Petitioner's license on the additional ground that he was not the qualifier for Thomson Homes, Inc., when it and the DeStefanises entered into the construction contract. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. DOAH Case No. 03-3547 involves the claim of James and Donna Barr. The Barrs entered into a construction contract with Thomson Homes, Inc., on September 12, 1998. Pursuant to the agreement, the Barrs agreed to pay Thomson Homes, Inc., $30,000 for a lot and $140,900 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 120 days from the date of slab pour. The Barrs paid Thomson Homes, Inc., $8500 in the form of a down payment. They or their construction lender paid Thomson Homes, Inc., considerably more money and suffered the imposition of claims of lien by unpaid subcontractors and suppliers, but, after negotiating with the bank, emerged from the transaction having lost only the $8500 down payment. Thomson Homes, Inc., obtained permits in April 1999 and started construction in May 1999. Before abandoning the job, Thomson Homes, Inc., worked on the home in May, June, and July of 1999. The Barrs and their lender did not make additional payments after the Barrs found the Thomson Homes, Inc., office empty on August 1, 1999. In a complaint filed October 6, 1999, the Barrs commenced a legal action against Thomson Homes, Inc., but not Petitioner. The two-count complaint alleges a breach of contract, based on Thomson Homes' alleged "abandon[ment]" of the job "prior to completion" and "fail[ure] and refus[al] to pay subcontractors and/or materialmen which resulted in Claims of Liens against Plaintiffs [sic] residence, which Defendant has failed and refused to satisfy," and unjust enrichment, based on Thomson Homes' alleged receipt of funds and failure to complete construction and pay for goods and services provided by subcontractors and materialmen. The Barrs obtained a final summary judgment against Thomson Homes, Inc., on May 8, 2000, for a total sum of $45,435.62, including attorneys' fees, costs, and prejudgment interest. The judgment states, in part: Subsequent to entering into the above referenced contract, partially performed work under the Contract. However, Defendant breached the contract by accepting Plaintiffs [sic] deposits and construction loan disbursements and thereafter abandoning the project and failing to pay subcontractors and/or materialmen for their labor services and materials provided. As a result of Defendant failing to pay lienors who provided labor, services and materials for the construction of Plaintiffs [sic] residence, construction liens were recorded against same, which Plaintiffs will have to satisfy. As a result of Defendant abandoning the project, Plaintiffs will be compelled to retain a new contractor to complete their home at an additional cost over and above the original contract amount. As a direct result of Defendant abandoning the project, failing to pay lienors, the misapplication of construction funds and financial mismanagement Plaintiffs will be forced to borrow additional funds from their construction lender. On June 2, 2000, the Barrs filed a claim under the Recovery Fund. In response to a question asking if they had made a diligent effort to collect payment from the contractor, the Barrs answered "yes" and explained: "I have looked into the assets of Thomson Homes Inc. and they do not have any. My affidavit is attached." The completed questionnaire states that the Barrs discovered the violation on August 11, 1999. They therefore failed to file their claim within two years of the discovery of the violation. By acknowledged statement dated May 23, 2000, Ms. Barr declared that she had completed a "reasonable search and inquiry" and had not found any property or assets against which to satisfy her judgment. Ms. Barr stated that someone at the Florida Department of State advised her that Thomson Homes, Inc., was administratively dissolved on September 24, 1999. She also declared she had found no property owned by Thomson Homes, Inc., in Palm Beach County. Ms. Barr stated that the Department of Highway Safety and Motor Vehicles found no motor vehicles or boats registered to Thomson Homes, Inc., and that the internet site of the "FAA" had revealed nothing registered to Thomson Homes, Inc. On November 26, 2002, Respondent issued an Order approving the payment of the Barrs' claim of $8500 against the Recovery Fund and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that the Barrs are the Petitioners, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. On December 27, 2002, Petitioner served a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on the Barrs and Respondent, contests the payment to the Barrs and the automatic suspension of Petitioner's license. The petition contests the payment of the Barrs' claim and suspension of Petitioner's license because they did not submit a certified copy of the levy and execution documents; their judgment is against Thomson Homes, Inc., and not Petitioner; their judgment does not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes; and Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. DOAH Case No. 03-3633 involves the Joanne Myers. Ms. Myers entered into a construction contract with Thomson Homes, Inc., on February 7, 1999. Pursuant to the agreement, Ms. Myers agreed to pay Thomson Homes, Inc., $29,500 for a lot and $125,400 for a home, which Thomson Homes, Inc., agreed to construct to "substantial completion" within 120 days from the date of slab pour. Ms. Myers directly or indirectly paid Thomson Homes, Inc., $12,840. According to Ms. Myers' claim, Thomson Homes, Inc., never commenced construction before going out of business in August 1999. In an undated complaint bearing no filing date, Ms. Myers commenced a legal action against Thomson Homes, Inc., but not Petitioner. The two-count complaint alleges a breach of contract, based on Thomson Homes' alleged "abandon[ment]" of the job "prior to completion" and "fail[ure] and refus[al] to pay subcontractors and/or materialmen which resulted in Claims of Liens against Plaintiff's residence, which Defendant has failed and refused to satisfy," and unjust enrichment, based on Thomson Homes' alleged receipt of funds and failure to complete construction and pay for goods and services provided by subcontractors and materialmen. Ms. Myers obtained a final summary judgment against Thomson Homes, Inc., on May 31, 2000, for a total sum of $28,307.77, including attorneys' fees, costs, and prejudgment interest. The judgment states, in part: Subsequent to entering . . . into the above referenced contract, Defendant breached the contract by accepting Plaintiff's deposits and construction loan disbursements and thereafter abandoning the project and failing to pay subcontractors and/or materialmen for their labor services and materials provided. As a result of Defendant failing to pay lienor's [sic] who provided labor, services and/or materials for the construction of Plaintiff's residence, construction liens were recorded against same, which Plaintiff will have to satisfy. As a result of Defendant abandoning the project, Plaintiff will be compelled to retain a new contractor to complete her home at an additional cost over and above the original contract amount. As a direct result of Defendant abandoning the project, failing to pay lienor's [sic], the misapplication of construction funds and financial mismanagement Plaintiff will be forced to borrow additional funds from her construction lender. On September 18, 2000, Ms. Myers filed a claim with the Recovery Fund. In response to a question asking if she had made a diligent effort to collect payment from the contractor, Ms. Myers answered "yes" and explained: "Contractor closed corporate office--would not answer telephone calls." By letter dated November 30, 2000, from James Brogan of WEI Consulting Group to Ms. Myers, Mr. Brogan states that he had investigated the assets of Thomson Homes, Inc. Mr. Brogan found no bankruptcy filing by Thomson Homes, Inc., in the Southern District of Florida. Thomson Homes, Inc., was a party to 282 legal actions and owed tangible personal property taxes on furniture in a model home. On February 28, 2003, Respondent issued an Order approving the payment of Ms. Myers' claim of $14,080.66 against the Recovery Fund and automatically suspending Petitioner's license until he reimburses the Recovery Fund for the full amount of the paid claim. The Order, copies of which were served on all parties, states that Ms. Myers is the Petitioner, the Recovery Fund is a Respondent, and "Larry Shimkus, d/b/a Thomson Homes, Inc.," is a Respondent. The Order advises that "you" may seek a formal hearing, pursuant to Section 120.57(1), Florida Statutes, if material facts are in dispute. On March 17, 2003, Petitioner filed a Petition for Section 120.57 Formal Administrative Hearing. The petition, which was served on Ms. Myers and Respondent, contests the payment to Ms. Myers and the automatic suspension of Petitioner's license. The petition contests the payment of Ms. Myers' claim and suspension of Petitioner's license because she did not submit evidence of a diligent search for assets; she did not submit all of the required exhibits; her judgment is against Thomson Homes, Inc., and not Petitioner; her judgment does not find that Petitioner violated Section 489.129(1)(g), (j), or (k), Florida Statutes; and Ms. Thomson deceived Petitioner in violation of Section 489.132, Florida Statutes. Lastly, the petition seeks attorneys' fees under Section 57.111, Florida Statutes. On January 4, 2004, Ms. Myers died. However, the probate court of Lancaster County, Pennsylvania, issued letters testamentary on her estate to James W. Myers III, in whose name Ms. Myers' claim is now being prosecuted. At the hearing, Petitioner contended that most, if not all, of the claims failed because the claimants had not exercised reasonable diligence in searching for assets, although Petitioner has dropped this contention in its proposed recommended order. In his petitions for hearing, Petitioner raised this contention only as to Ms. Myers. Ms. Myers, as well as the remainder of the claimants, made or caused to be made a reasonable search and inquiry for the assets of Thomson Homes, Inc. It is obvious that Thomson Homes, Inc., had no assets by the first letter from Mr. Brogan, dated November 30, 2000, nor did it have assets when Mr. Brogan issued his later letter on June 5, 2001, or when the attorney issued his affidavit on August 9, 2001. What is reasonable, in terms of a search, is dictated here by the fact that Thomson Homes, Inc., had no discoverable assets against which it could be made to answer for the considerable fraud that it perpetrated against these nine claimants. Respondent provided all of the parties, including Petitioner, with notice of its hearings at which it entered Recovery Fund orders. The petitions contend that Petitioner received no such notice in the Whitesides and Deyos cases. Although not litigated at the hearing, the presumption of notice, pursuant to the recitations set forth in each of Respondent's orders, results in a finding that Petitioner received timely notice in all cases.
Recommendation It is RECOMMENDED that Respondent enter a final order dismissing the claims against the Recovery Fund of the Beltzes and Barrs; paying the claims against the Recovery Fund of the remaining claimants, pursuant to the provisions of the orders of Respondent already issued in these cases and pursuant to the provisions of Section 489.143(1)-(6), Florida Statutes; and dismissing Respondent's request for the automatic suspension of Petitioner's license, pursuant to Section 489.143(7), Florida Statutes, without prejudice to any separate disciplinary proceedings that Respondent has commenced or may commence against Petitioner or others for the acts and omissions involved in these nine cases. DONE AND ENTERED this 17th day of February, 2004, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 17th day of February, 2004. COPIES FURNISHED: Bruce G. Kaleita Law Office of Bruce G. Kaleita, P.A. 1615 Forum Place, Suite 500 West Palm Beach, Florida 33401 Adrienne C. Rodgers Assistant General Counsel Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-1023 Tim Vaccaro, Director Construction Industry Licensing Board Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Nancy Campiglia, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
Findings Of Fact During 1982 and 1983, Petitioner was licensed as a mortgage broker and real estate broker in the State of Florida. His mortgage broker's license expired in September, 1983. At all times material hereto, Petitioner utilized his mortgage broker's and real estate broker's license to engage in real estate development speculation. He worked closely with Jeffrey Graham, who was also licensed as a mortgage broker and who was a co-owner with Petitioner of Continental Development, Continental Mortgage Company and the Real Estate Spot. They were engaged in buying and selling existing residential properties and constructing new homes for sale. Financing for Petitioner's speculative real estate transactions was provided primarily by The Bank of Florida, located in St. Petersburg, Florida. The Bank provided financing on 80 to 85 percent of his transactions, but at some point in 1982 or 1983, Petitioner and Graham found themselves unable to obtain further construction financing from the Bank. In order to continue receiving financing from the Bank, Petitioner and Graham initiated the use of "stand-in" buyers. A "stand-in" buyer would not have to use any of his own money as a deposit or down payment, even though real estate contracts executed in connection with these transactions would show an earnest money deposit by such buyers. The buyer's role was simply to lend his credit to the transaction and to share in any profits on the eventual sale of the property. On or about March 25, 1983, Petitioner executed, as seller, a contract for sale of real estate and deposit receipt with Norman Tanner, buyer. The transaction involved the sale of real estate in Pinellas County, Florida, and reflects a total purchase price of $25,000, with an earnest money deposit of $5,000 which the contract specified was to be held by Petitioner, as seller, until closing. Petitioner also executed a Settlement Statement on March 29, 1983, in connection with a loan obtained by Tanner from The Bank of Florida which indicated that Tanner had paid an earnest money deposit of $5,000. Based upon the testimony of Norman Tanner at hearing, it is found that he did not provide the earnest money deposit indicated on the sales contract or Settlement Statement which Petitioner executed as seller. Petitioner testified that this transaction was carried out in his individual capacity as a personal investment, and not under the authority of his mortgage broker's license. In fact, Petitioner did not deal directly with Tanner in this transaction. Tanner's dealings were with Petitioner's partner, Jeffrey Graham. Nevertheless, the evidence and demeanor of the witnesses establishes that Petitioner was aware of the fact that Tanner had not paid the deposit reflected on the instruments he executed, and that such instruments were used to induce the Bank to make a mortgage loan to Tanner. Petitioner, as seller, received $19,665.56 cash at settlement from this transaction with Tanner. On or about February 24, 1982, Petitioner executed a contract for sale of real estate and deposit receipt with Joseph Armendinger, buyer. The transaction involved the sale of real estate in Pinellas County, Florida, and reflects a total purchase price of $48,000, with an earnest money deposit of $6,500 which the contract specified was to be held in escrow by The Real Estate Spot, Inc., until closing. Petitioner and Armendinger also executed an Affidavit of Purchaser and Vendor in connection with obtaining financing for this transaction, and said Affidavit also indicated the buyer's purported cash equity of $6,500 in the property. At the time, Petitioner was co-owner of The Real Estate Spot, and Armendinger was an electrician who was doing some work at The Real Estate Spot and became interested in the "stand-in" buyer transactions he observed while doing electrical work at Petitioner's office. On or about October 27, 1982, Petitioner and Armendinger executed another contract for sale and deposit receipt for a second piece of property, which reflects a total price of $85,000 and an earnest money deposit by Armendinger of $5,000. Thereafter, they executed an Affidavit of Purchaser and Vendor and Settlement Statement reflecting Armendinger's purported cash equity of $4,250.00. Petitioner used the proceeds from this transaction to pay off an existing mortgage and judgment on the property, and realized $1,607.46 in cash, which was shared with Jeffrey Graham, co-seller. Petitioner knew that the contracts for sale and Affidavits which he executed with Armendinger were to be presented to The Bank of Florida and used for the purpose of Armendinger obtaining financing for the purchase of these properties. Based upon the testimony of Joseph Armendinger at hearing, it is found he did not provide any earnest money deposit or downpayment in connection with these two transactions with Petitioner. Armendinger relied on Petitioner, a licensed mortgage broker and real estate broker, in these transactions, and was told by Petitioner that he would not have to put any money of his own into these transactions. Petitioner knew that Armendinger had not made any deposit or downpayments concerning these transactions at the time he executed the contracts for sale and deposit receipts, Affidavits and Settlement Statement. On December 16, 1982, Petitioner executed two mortgages in favor of Patricia G. Herren on property he had previously sold to Armendinger. These mortgages totalled $21,793.35, and were recorded in Pinellas County, Florida, on December 28, 1982. These mortgages were used by Petitioner, along with a $10,000 mortgage he executed in Herren's favor, to obtain a satisfaction from Herren of a mortgage she held on a piece of property she sold to Petitioner in October 1982 in St. Petersburg Beach. The $10,000 Herren mortgage was also recorded on December 28, 1982. Having obtained the satisfaction, Petitioner then sold the St. Petersburg Beach property to Juanita Murdaugh and Jeffrey Graham on December 17, 1982, prior to recording the $10,000 Herren mortgage. He did not disclose on the Affidavit of Purchaser and Vendor which he executed that he had an outstanding $10,000 mortgage in favor of Herren on this St. Petersburg Beach property, although this mortgage should have been disclosed as "secondary financing." In each of the Affidavits of Vendor and Purchaser executed by Petitioner in connection with sales of property as described herein, there is the following statement in Item VII: The certifications of this affidavit are for the purpose of inducing the Lender named above or its assignees to make or purchase the first mortgage described by this affidavit.... By signing the Affidavits of Vendor and Purchaser, Petitioner, as the "Property Vendor," made the following certification: The PROPERTY VENDOR hereby certifies that to the extent PROPERTY VENDOR is a party, the Financial Terms, including Total Purchase Price, and the Liens are as set forth in Items III and IV above, [and] hereby acknowledges the inducement purpose of this affidavit as set forth in Item VII above....
Recommendation Based upon the foregoing, it is recommended that Petitioner's application for licensure as a mortgage broker be DENIED. DONE AND ENTERED this 19th of October, 1987, in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of October, 1987. APPENDIX (DOAH No. 87-0033) Rulings on Petitioner's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 1.(a) Adopted in Findings of Fact 2, 4. 2.(a) Rejected as not based on competent substantial evidence. 2.(b) Rejected in Findings of Fact 5, 6. 2.(c) Rejected in Finding of Fact 10. 2.(d) Rejected in Findings of Fact 6-10. 2.(e), (f) Rejected in Finding of Fact 11. Rulings on Respondent's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 2. Adopted in Findings of Fact 2, 3. 3. Adopted in Finding of Fact 2. 4. Adopted in Findings of Fact 3, 4. 5-6. Rejected as not based upon competent substantial evidence. 7. Adopted in Finding of Fact 5. 8. Adopted in Findings of Fact 5, 6. 9. Adopted in Findings of Fact 7, 10. 10-11. Adopted in Findings of Fact 7, 9, 10. Adopted in Findings of Fact 8, 10. Adopted in Findings of Fact 8, 9, 10. 14-19. Adopted in Finding of Fact 11. Adopted in Finding of Fact 12. Adopted in Finding of Fact 13. Rejected as not based on competent substantial evidence. Adopted in Finding of Fact 11. Rejected as unnecessary and cumulative. COPIES FURNISHED: John Swisher, Esquire Dillinger & Swisher 5511 Central Avenue St. Petersburg, FL 33710 Stephen M. Christian, Esquire Office of Comptroller 1313 Tampa Street Tampa, FL 33602-3394 Honorable Gerald Lewis Department of Banking and Finance Comptroller, State of Florida The Capitol Tallahassee, FL 32399-0350 Charles L. Stutts General Counsel Plaza Level The Capitol Tallahassee, FL 32399-0350
The Issue Whether the Department of Corrections (DOC) acted arbitrarily or illegally in selecting ARC Developmental Companies, Inc. (ARC) as the intended lessee under a proposed lease, Lease No. 700:0606? Whether, as DOC now advocates in its proposed recommended order, DOC should award the lease to LFFO because ARC's proposal is non-responsive? Whether DOC's interests would be best served by starting over?
Findings Of Fact In a single headquarters complex in Tallahassee, DOC has decided to consolidate administrative offices now scattered among various buildings. To that end, DOC's RFP for Lease No. 700:0606 seeks 56,154 square feet of office space by January 1, 1994, and (after other current leases expire) an additional 149,651 square feet of adjoining office space for occupancy on March 31, 1995. The RFP requires that DOC have the right to renew for each of two successive five-year terms, after an initial ten-year term. ARC has an option to purchase land on which it proposes to build all the office space it would lease to DOC. The RFP assumes that the office buildings to be leased do not yet exist, and requires only that "turn key" facilities be available at the times specified in the RFP. LFFO owns one of the buildings housing DOC offices now, and proposes to borrow money at commercial rates to finance construction of additional office space on adjacent land it already owns. After evaluating the competing proposals, DOC concluded that they were both responsive to the RFP, and assigned each points. ARC received a score of 97.66 points and LFFO received a score of 96.66 points. Over the initial ten- year term, ARC's proposal would require DOC to pay $30,175,129.10, while LFFO's proposal calls for payments aggregating $30,718,454.30 over the initial ten-year term. Joint Exhibit No. 4. Problematic Undertaking The RFP calls for some form of monetary assurance that a proposer will contract with DOC, if selected. Specifically, Paragraph IV(L) states: All Proposals shall include a Proposal Security Fee which may be in the form of cash, a Cashier's Check or Proposal Bond, and shall be in the amount of Ten Thousand Dollars ($10,000), payable to the Department of Corrections. The agency reserves the right to reject any security tendered. The Proposal Security fee ties [sic] will be returned with[in] thirty (30) calendar days after the agency and the accepted proposer have executed a written lease. Joint Exhibit No. 1 at 32. The purpose in requiring a security fee or a proposal bond was to satisfy DOC of the proposers' good faith, "that they intended to enter into a contract" (T.72) with DOC, if given the opportunity. LFFO met the security fee requirement with a $10,000 cashier's check, while ARC submitted a bond issued by Highlands Insurance Company of Houston, Texas (Highlands), at the behest of Brown & Root Building Company (Brown & Root). Designated as principal on the bond, Brown & Root and, in the event of Brown & Root's default, Highlands, as surety, are obligated to pay DOC $10,000, on conditions stated in the bond, which, however, could never arise, because Brown & Root did not submit a proposal to DOC. The bond specifies the undertaking: [I]f the Obligee [DOC] shall accept the bid of the Principal [Brown & Root] and the Principal shall enter into a contract with the Obligee in accordance with the terms of such bid, and give such bond or bonds as may be specified in the bidding or contract documents with good and sufficient surety for the faithful performance of such contract and for the prompt payment of labor and material furnished in the prosecution thereof, or in the event of the failure of the Principal to enter such contract and give such bond or bonds, if the Principal shall pay to the Obligee the difference not to exceed the penalty hereof between the amount specified in said bid and such larger amount for which the Obligee may in good faith contract with another party to perform the work covered by said bid, then this obligation shall be null and void, otherwise to remain in full force and effect. Joint Exhibit No. 2. Signed by the president of Brown & Root and an attorney in fact for Highlands, the bid bond submitted with the ARC proposal misidentifies Brown & Root as the bidder for DOC's "State Headquarter Building," a reference to proposed Lease No. 700:0606. Joint Exhibit No. 2. Brown & Root is a general contractor named in ARC's proposal as a member of the "ARC Team." Joint Exhibit No. 2 at 41, and section entitled "Construction Phase Management Plan"; T.72, 239. But ARC is the bidder, the offeror making ARC's proposal, as Mr. Arthur R. Collins, the sole officer, director and shareholder of ARC, has clearly and consistently stated. Deposition of Collins, at 44-45. This is also clear from the four corners of the ARC proposal itself. There is no partnership or joint venture agreement between ARC and Brown & Root. Deposition of Collins, p. 42; T. 59-60, 255. Mr. Collins testified that a letter to ARC from Brown & Root constitutes "a letter agreement" between ARC and Brown & Root, which "essentially gives ARC Developmental Companies all rights to market and represent Brown & Root Building Company specifically as relates to this particular project." Deposition of Collins, p. 44. Otherwise stated, ARC and Brown & Root have an "agreement in principle" (T.239) under which Brown & Root is "responsible for design, build and finance, all three components." (T.240) There are, however, "ongoing negotiations as to some of the details" (Deposition of Collins, p. 44) and the "final terms and conditions are under negotiation," (T.255) or were at the time of the hearing. ARC's proposal did not contain the letter said to embody the agreement in principle between it and Brown & Root, nor did the letter come in evidence at hearing. Apparently nobody has ever signed anything on behalf of ARC purporting to bind ARC to any agreement, even in principle, between ARC and Brown & Root. Whether or not ARC contemplated that Brown & Root would perform all financing, designing and building, it is ARC to whom DOC had to look to accept responsibility to perform as DOC's contractor. The RFP specifies that the successful proposer cannot assign or transfer the contract "or his power to execute such contract" to any person without prior written consent of the agency. Joint Exhibit No. 1, p. 34, IV(T). The RFP also provides that a "transfer shall not be requested prior to completion of the facility and acceptance by the agency." Joint Exhibit No. 1, p. 34, IV(T). DOC would not have accepted a proposal without a security fee or proposal bond. T. 138. DOC concluded that the bid bond furnished with ARC's proposal provided the assurance the RFP sought. T. 138-139. But the bid bond does not assure that DOC will receive $10,000, in the event that ARC refuses to execute a lease, if its proposal is accepted. Although the bid bond represents ARC's effort to fulfill the security deposit requirement set out in paragraph IV(L) of the RFP, (Deposition of Collins at 42, 43), the bid bond does not purport to bind ARC in any way. The bid bond submitted with ARC's proposal makes no mention of ARC Developmental Companies, Inc. Joint Exhibit No. 2; T. 75. While LFFO suffered a detriment in submitting its security deposit: loss of use of $10,000 for a period already lasting several months; and the proposal bond ARC submitted cost it nothing (although Brown & Root presumably paid the premium), it is not clear that ARC enjoyed a material competitive advantage, as a result. But the RFP security requirement also sought to protect DOC's investment of time and money in evaluating proposals it solicited. The security deposit requirement cannot, under DOC policy not called into question here, be waived; and ARC's proposal is not responsive to the requirement. DOC's determination that the bid bond constitutes good security cannot withstand scrutiny. DOC's conclusion that the bond was sufficient was based on the bid bond itself, and on nothing else. T. 138-139. Construing the bid bond to meet the RFP's "earnest money" requirement is an arbitrary distortion of its terms. The purpose of requiring a security deposit or a proposal bond -- to provide the contracting agency some assurance that the successful bidder would in fact enter into a contract with the agency (T.72) -- was frustrated. The bid bond submitted by ARC provides no security whatsoever to DOC that ARC will enter into a contract with the agency. Ability, Financial Resources, History and References Paragraph V(H) of the RFP indicated that an evaluation committee would review all proposals to determine, among other things, the [c]omposition of the group submitting the proposal and their financial resources available to accomplish this project. Joint Exhibit No. 1, pp. 44-5. The RFP also speaks of financial criteria that the proposer itself must meet: S. Qualification of Proposers: Each proposer shall be required, before the award, to show to the complete satisfaction of the agency that he has the necessary facilities, ability and financial resources, to furnish the service and facilities as specified herein in a satisfactory manner, and he may also be required to show past history and references which will enable the agency according to the foregoing requirements and will justify the agency in assessing his the proposal. Joint Exhibit No. 1, p. 34, IV (strike through and emphasis in original). The RFP states that time is of the essence, which may account for the concern it evinces over the financial ability of proposers. ARC has furnished DOC no balance sheet, audited or otherwise. In its proposal, information ARC provided relating to its financial resources consisted of a single credit report dated September 22, 1992, which disclosed only: NO PUBLIC RECORDS OR OTHER INFORMATION IN FILE VER INC 01-13-92, NO CREDIT REFS GIVEN Joint Exhibit No. 2. The testimony at hearing did not establish what financial resources ARC has acquired, if any, since its incorporation last year. ARC is involved with one other project, for which financing is currently being sought (T.249-252), but otherwise has no real estate development experience. T.254. Among things lenders who finance real estate development consider are "the history and the experience of the borrower or borrowing entity, . . . their numbers, . . . their financial capacity . . . what type of equity injection [they] are going to put into the deal, whether it be cash or hard land . . . ." T.153. ARC did not demonstrate its ability to "inject" any equity into this project. Tax-Exempt Financing Proposed ARC's proposal contains a September 18, 1992, letter from the Donaldson, Lufkin & Jenrette Securities Corporation, addressed to Brown & Root, the body of which states in its entirety: Regarding the issuance of tax-exempt debt to finance the proposed facility to be leased to the Florida Department of Corrections, as their state headquarters office building. Donaldson, Lufkin & Jenrette is pleased to participate in the successful development of the proposed project. Based upon current market conditions and the procurement of credit enhancement or an investment grade rating for the issue, we are confident that we can successfully underwrite a public offering of tax-exempt bonds. Joint Exhibit No. 2. This is not a firm commitment, only an undertaking to use "best efforts." Deposition of Shirey, p.24. After receiving the proposals, DOC solicited additional financial information from LFFO and from ARC by letters dated October 19, 1992, which state: The request for proposal stipulated that additional information pertaining to your capabilities to perform the project to our satisfaction may be necessary. The Chief of the Bureau of Finance and Accounting is charged with gathering the necessary information for determining if your group can realistically perform the project. This is considered a pass/fail criteri[on]. Joint Exhibit No. 8. The letters instructed both proposers to "[p]rovide a plan to finance both the construction and subsequent operation of the facility," including detailed information on all financing arrangements, specifically: A description of all financing arrangements (i.e. - debt, equity, lease agreement, etc.). A description of the proposed sources of financing for the construction and operation of the facility. Documentation should include specific commitment statements from financiers. The principal amount of debt to be issued or equity to be committed to finance the project. The annual interest rate for each debt component. A debt amortization schedule. An analysis of projected cash flow for both the construction period and the term of the lease. A description and value of all collateral to be pledged. Joint Exhibit No. 8. DOC anticipated that the proposers would respond with the financing plan they actually intended to use to finance construction of the project. Deposition of Biddy, p. 18; T. 98. In response to DOC's October 19, 1992, letter, ARC submitted a second letter from Donaldson, Lufkin & Jenrette, dated October 22, 1992. Joint Exhibit No. 11. The second Donaldson, Lufkin & Jenrette letter stated, in part: The final amount of the debt will be dependent on the final plan and specifications provided by the contractor and architect and negotiations with the ultimate investor. The final debt amount will be made available prior to the closing. The financing will provide 100 percent of the funds necessary to construct the project. The final interest rate or rates. (See Number 3 above). Debt Ammorization schedule. (See numbers 3 & 4 above). An accompanying Memorandum of Terms summarized some of the RFP requirements, gave a brief description of the property on which ARC has an option, and stated: FINANCING: Construction/Permanent financing will be obtained by selling tax exempt certificates of participation (the "Certificates") in the Lease Agreement. Proceeds from the sale of the Certificates will fund construction and provide permanent financing for the Facility. . . . It is anticipated that the Certificates will be rated or credit enhanced by a policy of municipal bond insurance. SECURITY: Certificate holders will be secured by an undivided interest in payments received pursuant to the Lease. Certificate holders will be additionally secured by a deed on the Property recorded in the name of the trustee on behalf of Certificate holders. Joint Exhibit No. 11. DOC was evidently satisfied with LFFO's response to its letter of October 19, 1992. Joint Exhibit No. 11. Following ARC's October 22, 1992, response to DOC's October 19, 1992 letter, however, DOC wrote ARC requesting still more financial information. DOC's letter stated: Thank you for responding so promptly to our letter of October 19, 1992 concerning the financial viability of the proposal submitted by ARC Development Companies, Inc. However, we do not see in your response the level of detail that is necessary to alleviate the concerns we have. Joint Exhibit No. 14. In response to this letter, ARC wrote DOC a letter dated November 6, 1992. Joint Exhibit No. 15. The response included a cash flow analysis, which assumed a bond issue of $27 million repayable over 20 years, with interest at 8 3/4 percent; along with a resolution from the City of Midway, purporting to authorize the creation of a nonprofit corporation to issue some $29 million worth of revenue bonds to finance the construction of the project (in Tallahassee). Joint Exhibit No. 15. The cash flow analysis assumed $170,000 would be borrowed from some other, unidentified source, and did not indicate how cash flow shortfalls projected for 1994 and 1995 were to be covered. At ARC's October 23, 1992, oral presentation to DOC officials, Mr. Collins emphasized that ARC's proposal was based on tax-exempt financing. Joint Exhibit No. 7, pp. 9, 27, 60, 72-73. ARC's post-submittal correspondence with DOC concerning financial arrangements reiterated reliance on tax exempt financing. Joint Exhibits Nos. 11, 14, 17 and 18. Mr. Collins' testimony at hearing assumed tax exempt financing would be available to ARC to build and operate the proposed headquarters. Contingent Award On December 18, 1992, DOC announced its decision to award Lease No. 700:0606 to ARC, contingent upon ARC's "providing to the Department within 45 days of this notice, and to the Department's satisfaction, sufficient commitments to ensure ARC's ability to finance construction of the project as presented in their proposal." Joint Exhibit No. 16. The December 18, 1992, award letter shows on its face that the Department was not "completely satisfied" with ARC's financing proposal at the time it made the award. Mr. Kronenberger admitted as much in his testimony. T. 146. At hearing DOC's Mr. Kronenberger also testified that the award was made contingent so that DOC could satisfy itself that ARC's proposal did not contemplate a lease-purchase and that tax-exempt financing was appropriate for this project. T. 131-132. The contingent award letter made no reference, however, either to a lease-purchase or to the tax-exempt nature of the proposed financing. Joint Exhibit No. 16; T. 145, 147. Before December 18, 1992, ARC's proposed financing involved the City of Midway's authorizing a nonprofit corporation to issue bonds. Joint Exhibit No. 14. Mr. Collins' testimony at hearing suggested that ARC has now abandoned efforts to involve the City of Midway with financing the project. To allow ARC to substitute another financing proposal at this juncture would afford ARC a competitive advantage over LFFO, and would constitute an arbitrary departure from prescribed procedure. DOC's letters of inquiry during the proposal evaluation process were intended to elicit from the proposers "the financing plan" they actually intended to use. Deposition of Biddy, p. 18; T.98. Allowing ARC 45 additional days to submit an acceptable financing proposal gave it a material competitive advantage over LFFO. ARC could "shop around" for financing as the intended awardee, and not merely as a bidder. "[I]f a developer . . . had an award in hand, he would be in a very advantageous situation to shop [for] the best deal he could get . . . considering rate, term, structure, price, so forth " T.154. Governmental Lessee ARC's proposal to use tax-exempt financing raises "two types of concerns. One is the ability to get the tax opinion and do the deal, and then there's the issue of state law." Deposition of Kubik, p. 50. Unless reputable tax counsel are of the opinion that (possibly imputed) interest paid from lease payments to holders of bonds or certificates of participation sold (to raise the money needed to build DOC's headquarters building) as tax-exempt qualify for tax exemption under the Internal Revenue Code, the paper cannot be marketed as tax- exempt. The purpose of the pertinent Internal Revenue Code provisions is to subsidize state and local governments, not private developers, by allowing governmental borrowing at lower rates. Certain financing arrangements involving private developers may, however, entail issuance of tax-exempt securities where state or local government is, in economic effect, borrowing money, legal technicalities notwithstanding. Deposition of Piemont, p. 40. One such arrangement involves state or local government as a lessee under a lease including an agreement to purchase, so that the governmental entity is "building equity" (T.23) (or, if the facility depreciates, bearing the loss.) Certificates of participation in the stream of lease payments, or bonds to be retired by applying lease payments, are then sold as tax-exempt securities. The test is "that the income derived from the obligations be from the payment of governmental lessees to provide essential function facilities." Deposition of Arnspiger, p. 9 Brown & Root's financial consultant contemplates a lease under which DOC would have the option to purchase the property, after ten years, for "the amount remaining on the indebtedness." Deposition of Arnspiger, p. 14. In the twentieth year, the price "would be a dollar." Id. "For tax purposes the owner of the facility would be the lessee." Deposition of Harris, p. 11. A lease under which a governmental tenant expressly agrees to purchase the premises may be economically equivalent to a lease with an option to purchase at a nominal price so low as to be "irresistible." Florida law limits the circumstances under which state agencies can borrow money and pledge the state's taxing power to repay the debt. T.136. Section 255.25(1)(b), Florida Statutes (1992 Supp.) provides: (1)(b) When specifically authorized by the Appropriations Act and in accordance with s. 255.2501, if applicable, the Division of Facilities Management may approve a lease-purchase, sale-leaseback, or tax-exempt leveraged lease contract or other financing technique for the acquisition, renovation, or construction of a state fixed capital outlay project when it is in the best interest of the state. Specific authorization in an earlier Appropriations Act authorized the Division of Facilities Management to approve a tax-exempt financing technique for acquisition of office space for DOC, but that authorization expired unused. Here the RFP solicited offers by lessors to execute a standard state lease on a form drafted by the Department of General Services and attached as an appendix to the RFP. Under the standard state lease, the lessor retains ownership of the building at all times. The lessee is not obligated to file a form 8038 with the Internal Revenue Service or to monitor for compliance with arbitrage restrictions imposed by Section 148 of the Internal Revenue Code, both of which would be necessary if tax-exempt obligations were sold to finance the building. Deposition of Piemont, pp. 16-22. ARC's proposal amounts to an offer to employ a financing technique for the acquisition and construction of a state fixed capital outlay project that the legislature has not approved. ARC's proposal is not responsive to the RFP because the method of financing the proposal contemplates cannot be accomplished if the parties execute a standard state lease, as contemplated by the RFP.
Recommendation It is, accordingly, RECOMMENDED: That DOC reject ARC's proposal as nonresponsive and consider seeking the necessary approvals to draw an RFP soliciting proposals for a headquarters building that would eventually belong to the State of Florida. DONE AND ENTERED this 5th day of May, 1993, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 5th day of May, 1993. APPENDIX Petitioner's proposed findings of fact Nos. 1-6, 8, 11, 13-17, 19-36, 39- 41, 43, 44 and 46 have been adopted, in substance, insofar as material. With respect to petitioner's proposed finding of fact No. 7, DOC's determination of responsiveness was tentative, free-form action. Petitioner's proposed findings of fact Nos. 9, 10, 18, 38, 47, 48, 49 and 52 pertain to subordinate matters. With respect to petitioner's proposed finding of fact No. 12, the undertaking assumed Brown & Root had submitted a proposal. Petitioner's proposed finding of fact No. 37 pertains to an immaterial matter. With respect to petitioner's proposed finding of fact No. 42, the issuance of certificates can defeat tax exemption if certain requirements are not observed. With respect to petitioner's proposed finding of fact No. 45, the distinction between a lease including an agreement to purchase and a lease with the option to purchase is not necessarily dispositive for tax purposes. With respect to petitioner's proposed findings of fact Nos. 50 and 51, ARC's proposal contemplates a lease with an option to purchase. With respect to petitioner's proposed finding of fact No. 53, Mr. Piemont testified that one of the requirements for "on behalf of" financing "is that the governmental entity gets actual ownership." Deposition of Piemont, p. 41. Respondent's proposed findings of fact Nos. 1-11, 13, 14, 16, 17, 18, 20, 23, 25, 26, 27, 28, 30, 37, 38, 44-49, 58, 60, 64 and 65 have been adopted, in substance, insofar as material. With respect to respondent's proposed finding of fact No. 12, the exact cause of the differential was not proven. Respondent's proposed findings of fact Nos. 15, 32-36, 39-42, 51, 61, 62, 71, 72, 73 and 74 pertain to subordinate matters. Respondent's proposed findings of fact Nos. 19, 21, 22, 43, 63, 75 and 76 have been rejected as contrary to the weight of the evidence. With respect to respondent's proposed findings of fact Nos. 24 and 29, DOC witnesses testified that absent a bond the proposal would have been rejected as non-responsive; the bond ARC submitted was the equivalent of no bond at all. With respect to respondent's proposed finding of fact No. 31, the award letter shows on its face DOC's misgivings about ARC's ability to finance the project. With respect to respondent's proposed findings of fact Nos. 50, 52--57, 67, 68, 69 and 70 the proposed findings are correct only in the sense that "purchase", "ownership", and the like are understood to mean "for tax purposes." With respect to respondent's proposed finding of fact No. 66, if a government entity is lessee, a non-governmental lessor may issue certificates of participation in the lease payments. Intervenor's proposed findings of fact Nos. 1-4, 7, 9, 10, 13, 14, 19, 21, 23, 26 and 28 have been adopted, in substance, insofar as material. With respect to intervenor's proposed finding of fact No. 5, it is not clear what Brown & Root's contractual obligations are. With respect to intervenor's proposed finding of fact No. 6, the bond does not constitute an offer or proposal. Intervenor's proposed findings of fact Nos. 8 and 25 have been rejected as contrary to the weight of the evidence. Intervenor's proposed findings of fact Nos. 11, 12, 15, 16, 17, 22, 29, 30 and 31 pertain to subordinate matters. With respect to intervenor's proposed findings of fact Nos. 18 and 20, ARC's financing proposal was non-responsive, whether or not such an approach might be viable, if responsive to the RFP and otherwise lawful. With respect to intervenor's proposed finding of fact No. 24, insofar as it is not predicated on hearsay, there was no showing that any rating agency, insurer or bond fund is aware of applicable Florida law. With respect to intervenor's proposed finding of fact No. 27, what is required for tax purposes does not depend on whether the lessee has a legal right to forgo the purchase. COPIES FURNISHED: M. Christopher Bryant, Esquire Oertel, Hoffman, Fernandez & Cole, P.A. Post Office Box 6507 Tallahassee, FL 32314-6507 Stephen Ferst, Esquire Florida Department of Corrections 2601 Blair Stone Road Tallahassee, FL 32399-2500 Martha Harrell Chumbler, Esquire Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A. 215 South Monroe Street, #500 Tallahassee, FL 32301 Harry K. Singletary, Jr. Secretary Department of Corrections 2601 Blair Stone Road Tallahassee, FL 32399-2500 Louis A. Vargas, Esquire General Counsel 2601 Blair Stone Road Tallahassee, FL 32399-2500
The Issue Is Worldwide Investment Group, Inc. (Worldwide) entitled to apply to the State of Florida, Department of Environmental Protection (the Department) for funds to reimburse Worldwide for costs associated with petroleum clean-up at 500 Wells Road, Orange Park, Florida, Facility ID#108736319? See Section 376.3071(12), Florida Statutes.
Findings Of Fact The Property Howard A. Steinberg is a Certified Public Accountant, (CPA) licensed to practice in Florida. In addition to his work as a CPA, Mr. Steinberg has other business interests. Among those interests is Worldwide, a corporation which Mr. Steinberg formed for the purpose of acquiring certain assets, or properties, from Home Savings Bank and American Homes Service Corporation (Home Savings Bank). Worldwide became a corporation in July 1996. Mr. Steinberg is the sole shareholder of that corporation and has been since the inception of the corporation. In addition to controlling all of the assets within Worldwide, Mr. Steinberg is the sole officer of the corporation. The corporation has no other employees. Worldwide has its office in Hollywood, Florida, in the same physical location as Mr. Steinberg's accounting firm of Keystone, Steinberg and Company, C.P.A. Under its arrangement with Home Savings Bank, Worldwide acquired property known as Save-A-Stop at 500 Wells Road, Orange Park, Florida. Mr. Steinberg engaged the law firm of Burnstein and Knee, to assist Worldwide in the purchase of the Save-A-Stop property. The Save-A-Stop property is a commercial parcel that has experienced environmental contamination from petroleum products. To address that problem the firm of M. P. Brown & Associates, Inc., (Brown) was paid for services in rendering environmental clean-up of that site. Substantial work had been done by Brown to remediate the contamination before Worldwide purchased the property from Home Savings Bank. Home Savings had paid Brown for part of the costs of clean-up before Worldwide acquired the Save- A-Stop property. After the purchase, Mr. Steinberg paid Brown to finish the clean-up. Application for Reimbursement Mr. Steinberg, as owner of Worldwide, understood that the possibility existed that Worldwide could be reimbursed for some of the clean-up costs by resorting to funds available from the Department. On July 29, 1997, Bonnie J. Novak, P.G., Senior Environmental Geologist for Brown, wrote to Mr. Steinberg to provide a cost estimate for preparing a reimbursement application in relation to the Save-A-Stop property. The cost to prepare the application was $1,870.00. On August 27, 1996, Mr. Steinberg accepted the offer that had been executed by Brown by Mr. Steinberg signing a contract, and by calling for Brown to prepare an application, to be presented to the Department for reimbursement of costs expended in the clean-up. In furtherance of the agreement between Worldwide and Brown, $935.00 was paid as part of the costs of preparation of the application. This payment was by a check mailed on August 27, 1996. The balance of the fee was to be paid upon the completion of the preparation of the application. In 1996, outside the experience of his businesses, Mr. Steinberg was having difficulties in his marriage. To address the situation, Mr. Steinberg filed a Petition for Dissolution of Marriage. That Petition was filed in April 1996, at which time Mr. Steinberg assumed custody of the children of that marriage, with no right for their mother to unaccompanied visits. After filing for dissolution, Mr. Steinberg relied on others to assist him in dealing with his personal and business life. From December 1996 through January 6, 1997, Mr. Steinberg was particularly influenced by the upheaval in his personal life. It caused him to request extension of deadlines from the Internal Revenue Service for the benefit of his clients whom he served as a CPA. During December, Mr. Steinberg was only in his office for approximately 10 percent of the normal time he would have spent had conditions in his personal life been more serene. On January 6, 1997, the conditions in Mr. Steinberg's personal life took a turn for the worse when his wife committed suicide. In December 1996, attorney Jerrold Knee, who had assisted Mr. Steinberg as counsel in purchasing the Save-A-Stop property, spoke to someone at Brown concerning the status of the preparation of the application for reimbursement of funds expended in the clean-up. He was told that the application was being worked on. Mr. Knee was aware that the deadline for filing the application was December 31, 1996. Mr. Steinberg was also aware of the December 31, 1996, deadline for submitting the application. In that connection, Mr. Knee was familiar with the difficulties that Mr. Steinberg was having in Mr. Steinberg's marriage in 1996. Mr. Knee knew that Mr. Steinberg was infrequently in the office attending to business. Mr. Knee surmised that Mr. Steinberg was relying upon Mr. Knee to make certain that the application was timely submitted, and Mr. Knee felt personally obligated to assist Mr. Steinberg in filing the application, given the knowledge that Mr. Steinberg was not in the office routinely during December 1996. His sense of responsibility did not rise to the level of a legal obligation between lawyer and client. Although Mr. Knee was aware of the pending deadline for submitting the application for reimbursement, and had inquired about its preparation by Brown, and had discussed it with Mr. Steinberg, Mr. Knee never specifically committed to making certain that the reimbursement application was filed on time. As it had committed to do, Brown prepared the reimbursement application for the Save-A-Stop site. The application was for the total amount of $58,632.85, not including preparation charges and CPA Fees. Written notification of the preparation of the application was provided to Mr. Steinberg on December 12, 1996. The correspondence reminded Mr. Steinberg that the application needed CPA approval, an invoice and registration, and a signed certification affidavit. Most importantly, the notification reminded Mr. Steinberg that an original and two copies of the application must be sent to a person within the Department prior to December 31, 1996. The notification specifically indicated the name of that individual within the Department and set forth that person's address. The notification arrived in Mr. Steinberg's office during the week of December 12, 1996. That notification was not opened until late January or early February 1997. Mr. Steinberg opened the letter at that time. During December 1996 Mr. Steinberg was responsible for opening the mail received in his office. No other person was expected to open that mail for the benefit of Worldwide. Untimely Application On February 6, 1997, Worldwide submitted its application for reimbursement for clean-up at the Save-A-Stop location. That application was received by the Department on February 7, 1997. The Department has consistently interpreted the statutory deadline for submitting reimbursement applications in accordance with Section 376.3071(12), Florida Statutes, (Supp. 1996) to be absolute. Consequently, on February 11, 1997, the Department denied the Worldwide application because it had been filed beyond the December 31, 1996, deadline recognized by the statute. Worldwide contested that proposed agency action by requesting a hearing to examine the issue of the timing of the application submission. Consequences of Untimely Application In Florida, petroleum taxes are deposited for the benefit of the Inland Protection Trust Fund. The Florida Legislature allows monies to be appropriated from those deposited funds. In that budgetary process, the Governor's office serves as liaison in requesting the Legislature to appropriate monies from the Inland Protection Trust Fund in relation to the costs of cleanup of sites contaminated by petroleum products. To assist the Governor's office, the Department identifies the need for covering the costs of the clean-up and makes a recommendation to the Governor to provide to the Legislature concerning the amount to be appropriated for the clean-up. In the history of the clean-up program, in 1995, problems were experienced with fraudulent and inflated claims calling for reimbursement for the cost of clean-up. This led to a debt of approximately $550,000,000.00. There was a concern that that debt could not be repaid in a reasonable time frame. In response, the Department, as authorized by the Legislature in action taken in 1996, negotiated a bond transaction through the Inland Protection Financing Corporation. With the advent of the bond issue, $343,000,000.00, not to include the cost of funding the bond, was made available to pay for petroleum clean-up. That bond issue was designed to fund the payment of reimbursement applications that had been received before the end of the life of the petroleum clean-up reimbursement program in place. During the 1996 session, in which the Legislature approved the bond issue, the Legislature also made changes to the petroleum clean-up program. The changes were fundamental in that applicants were no longer reimbursed for clean-up work that had been performed. With the advent of the legislative changes, petroleum clean-up, under a system calling for payment from the fund, could only be conducted if an applicant was pre-approved to conduct the clean- up. As part of that process of gaining funds pursuant to the bond issue, the Department performed an analysis, as authorized by the Legislature, to determine that amount necessary to pay existing obligations that had accrued under the petroleum clean-up reimbursement program that predated the Legislative change in 1996. To ascertain the existing obligation, the Department totaled the known dollar amount associated with the existing reimbursement applications and a portion of unreviewed reimbursement applications that had been received. The Department adjusted the sum to be paid in association with applications that had not been reviewed to that point, having in mind prior experience in which only 82 percent of claims had been allowed. The overriding concern by the Department was that it needed to determine whether the bond issue would be sufficient to defease the backlog of applications for reimbursement previously filed. Information concerning the reimbursement obligations was made known to the Florida Supreme Court in bond validation proceedings held before that court. The Inland Protection Finance Corporation was also made aware of the reimbursement obligations. In 1997, the Department gave further information to the Inland Protection Financing Corporation, indicating that the amount of bond was sufficient for reimbursement obligations. The Department in association with the terms of the bond transaction agreed that the bond proceeds would not be used to fund claims that were received after January 3, 1997. The deadline for submitting applications had been extended until January 3, 1997, by virtue of a statutory amendment found at Section 376.3071(12), Florida Statutes, (1997). Therefore, consistent with the statutory change, the Department had allowed applications submitted after December 31, 1996, but before January 4, 1997, to be considered on their merits. The December 31, 1996, deadline had existed under Section 376.3071(12), Florida Statutes (Supp. 1996). The statutory change occurred because a number of applications that were filed pursuant to the December 31, 1996, deadline set forth in Section 376.3071(12), Florida Statutes (Supp. 1996) did not meet that deadline. The reason for this failure was due to weather conditions that caused overnight couriers, Federal Express and United Parcel Service, to be unable to deliver parcels to the Tallahassee, Florida, airport. These applications, as other applications, were sent to the Department at a Tallahassee, Florida, address. Based on the inability of the two couriers to deliver applications under the timeline anticipated, the Department did not receive that group of applications until January 2, 1997. Subsequently, the applications were accepted as timely based upon the amendment found in Section 376.371(12), Florida Statutes (1997) which extended the filing deadline until January 3, 1997. As a policy consideration, the Department believes it must strictly enforce the deadline for submission of reimbursement applications, as extended by the Legislature, to avoid the future accrual of debt for applications submitted after January 3, 1997, which the Department cannot reasonably anticipate. Apropos of the present case, the Department does not believe that it is well-advised to allow even a single claim for reimbursement, if that claim was received after January 3, 1997. To date, 64 applications have been received by the Department subsequent to December 31, 1996. All but six of those applications were received no later than January 3, 1997. Two of that six applications for reimbursement are still pending before the Department. Historically 22,000 applications for petroleum clean-up have been received by the Department since 1986. At the time of the hearing, 9,000 applications were pending before the Department. In December 1996, 3,000 applications were received calling for reimbursement of costs. At the time of hearing, approximately $340,000,000 in reimbursement claims had not been satisfied. Petitioner makes its claim to be excepted from the deadline for submitting its application based upon the doctrine of equitable tolling.
Recommendation Upon consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED that a Final Order be entered denying the application of Worldwide to participate in the reimbursement program for clean-up expenses as untimely. DONE AND ENTERED this 7th day of May, 1998, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS 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 Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1998. COPIES FURNISHED: P. Tim Howard, Esquire P. Tim Howard and Associates, P.A. 1424 East Piedmont Drive, Suite 202 Tallahassee, Florida 32312 Jeffrey Brown, Esquire Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Kathy Carter, Agency Clerk Department of Environmental Protection Douglas Building, Mail Station 35 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 F. Perry Odom, General Counsel Department of Environmental Protection 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000 Virginia B. Wetherell, Secretary Department of Environmental Protection 3900 Commonwealth Boulevard Tallahassee, Florida 32399-3000
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Construction Industry Licensing Board enter a final order imposing the following discipline for respondent John R. Gardner's violation of Section 489.129(1)(h), Florida Statutes (1983): Payment by respondent of a $500 administrative fine within thirty (30) days from entry of final order; and Indefinite suspension of respondent's license, effective six months from entry of final order with the suspension to be lifted upon respondent's satisfaction of the Lowenthals' judgment. DONE AND ENTERED this 27th day of June 1984 in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of June 1984.
The Issue Whether the certified general contractor's licenses and the registered roofing contractor's licenses held by Petitioner Robert J. Nali should be revoked.
Findings Of Fact The certified General Contractor's License number CG-C007395 and CG- CB07395, and the Registered Roofing Contractor's License number RC0028067, issued to Robert J. Nali are active and current. Respondent entered into a contract with Mr. Charles Rapp on June 1, 1977, to have a house constructed for the contract price of $29,500. The home was financed through the First Federal Savings and Loan Association of Leesburg for the sum of $27,730. Disbursed directly to Respondent Nali in five different draws was $16,638. These disbursements left a total of $11,092 in the bank account for completion of the home. Two bills remain unpaid, one for $500 and one for $560.92. Cost of the home was approximately $2,035.87 above the contract price. Two liens were filed against Mr. Rapp's property which were satisfied out of construction funds from the bank, one by Adobe Building Center, Inc., in the amount of $1,315 and one by Branch Garage Door Sales in the amount of $171.38. Respondent Nali admitted that the Kennedy Company supplied air conditioning duct work for the home, and that Yale Ogron Builders provided labor as a subcontractor; that he was paid for the supplies provided by the Kennedy Company on the second drawing, and for the labor provided by Yale Ogron Builders on the fourth draw. Respondent Nali admitted he did not pay these concerns although he did receive the funds for the material and labor supplied. Mr. Rapp fired Mr. Nali and completed the home himself. There was no date of completion in the contract, but Respondent did not actively pursue the completion. Respondent Nali entered into a contract with Mr. Charles Fosmoen in June of 1977, for the purpose of constructing a home. The contract price was $28,150. The home was financed through the First Federal Savings and Loan Association of Leesburg for the sum of $26,471. Disbursed to Nali under the contract was $19,845.75. The disbursement left a total of $6,625.25 to complete the house. Expended to complete construction of the home in accordance with the contract was $9,351.08, an excess of $2,725.83 of the contract price. A claim of lien was filed against the Fosmoen home by Lake Pre-Hung Door Manufacturing Company, Inc. Mr. Nali was fired from the job and, although no time was designated in the contract for completion, Respondent Nali did not actively pursue the construction of the home. A contract was entered into with Mrs. Ellen Haffey on November 16, 1977, to construct the shell of a home for the contract price of $17,600. Mrs. Haffey paid the sum of $10,000 directly to Respondent and expended a sum of $6,625.93 to complete the house as contracted. She has bills remaining unpaid in the amount of $3,620.50. Spent by Mrs. Haffey above the contract price was $2,648.43. Mrs. Haffey, a contractor, dismissed Mr. Nali, and the house is not yet completed. A claim of lien was filed against Mrs. Haffey's property on behalf of Leesburg Building Materials, Inc., in the amount of $4,384.47. The lien was for materials which had been delivered to the project site and should have been paid for out of the sum previously paid to Respondent. Mrs. Haffey paid $4,000 for the third draw instead of $6,000, as called for by the contract, a fact that prevented Respondent from timely payment of bills. A lien was filed on Mrs. Haffey's property by Keeman Brick of Central Florida, Inc., in the amount of $1,238.03. Respondent admitted he was charged with a criminal violation of misapplication of funds but pled nole contendere, and adjudication was withheld. A document entitled "Stipulation on Motion for Clarification and Modification" was received into evidence. The document constitutes an admission of Respondent that restitution was due from him to the complainants, Mr. and Mrs. Charles Rapp, Mrs. and Mrs. Charles Fosmoen, and Mrs. Ellen Haffey. Petitioner contends that Respondent diverted funds he had received to pay two subcontractors for the Rapp home; that although he may Waive underbid the Rapp and Fosmoen he later also underbid the Haffey contract, which caused these consumers inconvenience and loss and violated a contractor's position of trust. Respondent contends that he could have finished each of the houses within the contract terms, since time was not of the essence. He contended that increased building material costs contributed to the delay of the housing construction, and that he could have finished the houses were he not fired from each of the construction projects. Respondent denied that he had diverted any funds from construction projects. The Hearing Officer further finds: Both Mr. and Mrs. Rapp and Mr. and Mrs. Fosmoen gave Respondent Nali notice that they were dissatisfied because Mr. Nali was not actively finishing the construction of their respective homes. Both gave him notice and an opportunity to recommence active construction, which he did not resume; The dates of completion of homes were not specified in the contracts, but oral promises were given that the homes would be completed within a reasonable time. The delay caused each complainant much inconvenience; Liens were filed against these homes for nonpayment of bills. Respondent did not pay the liens; Each of the three homes cost more than the contracted price before said homes were completed by the parties contracting with Mr. Nali. Mr. Nali received money from Mr. Rapp for work and supplies provided by the Kennedy Company and Yale Ogron Builders, yet Respondent did not pay for these materials or work; and The complainants were justified in dismissing Respondent.
Recommendation Suspend the license of Respondent Robert J. Nali for a period of six months. DONE and ORDERED this 13th day of April, 1979, in Tallahassee, Leon County, Florida. COPIES FURNISHED: Michael Egan, Esquire 217 South Adams Street Post Office Box 1386 Tallahassee, Florida 32302 Joan L. Wollin, Esquire Post Office Box 236 Leesburg, Florida 32748 DELPHENE C. STRICKLAND Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32301 (904) 488-9675 ================================================================= AGENCY FINAL ORDER ================================================================= FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD, Petitioner, vs. DIVISION OF ADMINISTRATIVE HEARINGS, DOCKET NO. 78-2103 ROBERT J. NALI, Respondent. /
Findings Of Fact Abraham Scott, Jr., is a registered general contractor with the FCILB and holds general contractor's license no. RG0008305. Pursuant to an agreement entered during April, 1975, Respondent and Mrs. Ruth Jenkins of Lake Butler entered into a contract for construction of a home at a cost of $37,000. To finance the project, Mrs. Jenkins secured a loan from Guaranty Federal Savings & Loan Association of Starke, Florida in the amount of $30,600 and she additionally paid Respondent approximately $5,913.57. Guaranty Federal Savings & Loan had disbursed approximately 90 percent of the construction loan to Respondent when Mrs. Jenkins received liens filed against her property in the amount of approximately $9,579.53. The lienors included Lake City Industries, North Florida Concrete, Mayo Electric, Roy Ward Wholesale Distributors, Sawyer Slade Gas Company and a local carpet distributor. At that juncture, Mrs. Jenkins complained to Respondent regarding the liens filed against her property and the fact that the house was not completed as per their agreement to no avail. Thereafter, Mrs. Jenkins contacted Mr. Harold K. Davis, Branch Manager of Guaranty Federal Savings & Loan Association, who terminated all further disbursements of the construction loan. At that point, approximately $28,436.50 had been disbursed to Respondent. Mr. Hermon Cherry, investigator with FCILB investigated the Jenkins' complaint and discussed the matter with Respondent. Mr. Cherry testified that Respondent advised him that he had used part of the money from the Jenkins' project to complete a job in Hamilton County and that when the proceeds from that job were received, those receipts would be used to satisfy liens placed against the Jenkins property. Petitioner's Exhibit #3, is a statement given to investigator Cherry on March 22, 1976, by Respondent. The statement is somewhat corroborative of Cherry's testimony that Respondent used portions of the construction loan monies received from the Jenkins project to complete another job. Respondent acknowledged that he was having financial problems in another county "in which I have money from this job tied in the amount of $2,500. As soon as I can collect this money from these jobs, I will clear this matter up". (See Petitioner's Exhibit #3). Respondent acknowledged that he had monies due him from a project he had completed in Jasper, Florida and that this job was completed prior to the commencement of the Jenkins project. However, he failed to state that all obligations due and owing on that job in Jasper had been satisfied or that all unpaid subcontractors, materialmen, etc., who furnished materials, supplies or labor, in connection with the Jasper project had been paid. Based on that statement and Respondent's acknowledgement that the liens had been placed on the Jenkins project based on his financial difficulties with another project in which he clearly stated in Petitioner's Exhibit #3 that money from the Jenkins project had been tied up on another project, I find that the two matters, when coupled together provides proof positive that the Respondent diverted funds received for completion or the Jenkins project to another project and as a result thereof, he was unable to fulfill the terms of his obligation and contract with Mrs. Jenkins, in violation of Chapter 468.112(2)(e). During the course of the hearing, Respondent introduced evidence indicating that a settlement agreement was being worked out to resolve the differences with Mrs. Jenkins property and to satisfy all lien claimants who had filed liens against Mrs. Jenkins' property. Mrs. Jenkins acknowledged the settlement agreement and indicated her willingness to accept the terms thereof as full satisfaction of Respondent's obligations to her pursuant to the construction of her home. (See Respondent's Exhibit #1.) Respondent testified further that he intends to fulfill all of the remaining deficiencies that may exist with respect to the Jenkins property and that he at all times intended to fulfill his obligations to her. For these reasons, I shall recommend that the Respondent's registered general contractor's license be suspended rather than revoked.
Recommendation Based on the foregoing findings of fact and conclusions of law, I recommend that the Respondent's registered general contractor's license be suspended for a period of 90 days in accord with the authority contained in Chapter 468.112(3)(a), F.S. DONE AND ENTERED this 21st day of February, 1977, in Tallahassee, Florida. COPIES FURNISHED: Barry Sinoff, Esquire 1010 Blackstone Building Jacksonville, Florida 32202 J. K. Linnan Executive Director Florida Construction Industry Licensing Board Post Office Box 8621 Jacksonville, Florida 32211 Mr. Abraham Scott, Jr. Route 1, Box 503 Lake City, Florida JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675
Findings Of Fact At all times material hereto, respondent was licensed as a registered building contractor having been issued license number RB 00034797 by the State of Florida (see Petitioner's Exhibit 1). On or about January 11, 1982, respondent entered into a contract with Emil and Agnes Gerlt to construct a residence to be located at Singletary Road in Sarasota, Florida. The contract price was $57,420. The home construction agreement was to be part of a trade agreement between the contractor, the respondent, and the Gerlts. Under the terms of the trade agreement, respondent was to receive the Gerlts' existing home, located at 3376 South Seclusion Drive, Sarasota, Florida, in trade for constructing the Gerlts' home. The home was to be completed within one hundred fifty (150) days (see petitioner's Exhibit 6 and Transcript, page 105). By an addendum to the Home Construction Agreement executed by respondent and the Gerlts, the parties to the agreement further agreed that the contract price, $57,420.00, was to be paid as follows: $ 5,742.00 or 10 percent as a down payment $ 5,742.00 or 10 percent when slab is poured $ 8,613.00 or 15 percent when walls are up $14,355.00 or 25 percent when sub roof is on $14,355.00 or 25 percent when drywall is completed $ 8,613.00 or 15 percent when building is completed (see petitioner's Exhibit 6). Emil and Agnes Gerlt had contacted the respondent about construction of a new home through a newspaper ad placed in the Sarasota Herald Tribune. In the ad, respondent had offered to build residences in exchange for the purchaser's existing home. At the time, the Gerlts had been attempting to sell their existing home for some time without success. Mr. Gerlt's health required the relocation from the Gerlts' existing home, a multilevel home, to a single story home. After the Gerlts discussed their requirements with the respondent, a contract was drawn up by the respondent. The Gerlts submitted the contract to their attorney, Robert Johnson, and upon obtaining Johnson's approval, signed the Home Construction Agreement noted above. (See Transcript, pages 28-29). In or about February, 1982, Emil and Agnes Gerlt entered into a trade agreement with respondent to transfer the Gerlts' Seclusion Drive residence to Green. The agreement was subject to the construction, by respondent, of the Gerlts' new home on Singletary Road, in Sarasota County, Florida. As part of the agreement, respondent was to actively seek to sell the Seclusion Drive property. The first $70,000 received from the sale of that property was to go to the Gerlts. Respondent was to receive a 6 percent commission. Any amounts remaining were to go to the Gerlts. If respondent was unable to sell the Seclusion Drive property prior to June 30, 1982, or the date of occupancy for the Singletary Road residence, whichever occurred first, the Seclusion Drive property was to be the sole property of respondent subject to payment in the amount of $70,000 to the Gerlts. (See respondent's Exhibit 1). After the Gerlts and respondent signed the above described agreement, M. Daniel Poling, Nancy Poling and Ethel E. Weathers (Mrs. Poling's mother), came by the Seclusion Drive property, without an appointment, and asked if they could see the residence. Mrs. Gerlt showed the Polings and Weathers the home and then referred them to respondent as the person handling the sale of the home. (See Transcript, pages 37-38). After the Polings and Weathers contacted respondent, respondent drew up a Contract for Sale of Real Estate, dated February 4, 1982, whereby Ethel Weathers was to sell her residence to the Gerlts for the sum of $54,000. At this point a three-way trade was anticipated between the parties. The Gerlts would obtain Weathers' property as well as an additional cash payment in exchange for their own property which would be transferred to the Polings and Weathers. Then the Polings and Weathers' residence, located at Bouganvillea Street, in Sarasota, Florida, would take the place of the Seclusion Drive property in the transaction for construction of a new home between the Gerlts and respondent. The Contract for Sale of Real Estate, dated February 4, 1982, was never fully executed, because Robert Johnson, the Gerlts' attorney, did not approve the agreement. (See petitioner's Exhibit 10 and Transcript pages 109- 110). Subsequent to the time the February 4, 1982 Contract for Sale of Real Estate was prepared, Robert Johnson, as the Gerlts' attorney, prepared another Contract for Sale of Real Estate which was fully executed by the parties. The contract provided that the Gerlts would sell their Seclusion Drive property to the Polings and Weathers for the sum of $84,000. As a special condition of the contract the Polings and Weathers were to execute a Mortgage and Promissory Note in the sum of $42,000, at 15 percent per annum, on Weathers' residence located on Bougainvillea Street, Sarasota, Florida, in favor of the respondent and the Gerlts. In the event that the Mortgage and Promissory Note was not paid off by April 17, 1982, the Polings and Weathers would deed their Bougainvillea property to Green and the Gerlts as a $42,000 credit on the contract. (See petitioner's Exhibit 8). The contract described immediately above further provided that the closing should-occur on the entire transaction on April 17, 1982. However, the Polings and Weathers would remain in the Bougainvillea residence, and the Gerlts would remain in the Seclusion Drive residence until ten days after the respondent obtained a certificate of occupancy for the construction being performed on the Gerlts' Singletary Road residence. Upon completion of the Singletary Road residence the Gerlts were to either assign their interest in the mortgage or quit claim their interest in the Bougainvillea residence to James A. Green. (See petitioner's Exhibit 8). As compensation for his services in the transfer, Green received a transfer fee in the amount of $5,000. (See petitioner's Exhibit 9). On or about March 22, 1982, respondent applied for and obtained a building permit from the Sarasota County, Florida Building and Construction Department for the construction of the Gerlts' new residence at 16700 Singletary Road, in Sarasota County, Florida. (See petitioner's Exhibit 5). In April, 1982, respondent began to perform work on the Gerlts' new home. (See Transcript, page 47). On May 21, 1982, the Gerlts executed an Adjustable Mortgage Loan Note in the amount of $42,000 plus interest, at the rate of 15.75 percent per annum, in favor of Amerifirst Federal Savings and Loan Association. The mortgage was secured by the property located at 2304 Bougainvillea Street. The proceeds of the loan were to be used to pay for the construction of the Gerlts' new home. Under the terms of the original agreement between respondent and the Gerlts, dated February 1982, respondent was to pay all costs related to the financing of construction and he was to hold the Gerlts harmless from said construction mortgage and payments due thereon until the contract was fully completed. (See petitioner's Exhibits 4 and 8, respondent's Exhibit 1 and Transcript pages 48 and testimony of Robert Johnson). Although respondent made one payment of $1,669.02, on October 22, 1982, that check was dishonored and respondent made no further payments on the mortgage for the Bougainvillea property held by Amerifirst Savings and Loan Association. Under the terms of the Adjustable Mortgage Loan Note executed by the Gerlts, mortgage payments were to be made in monthly payments of $556.34 each. (See petitioner's Exhibit 4). Between approximately June 4, 1982 and December, 1982, respondent received the following payments from the Gerlts totaling $33,912: DATE AMOUNT June 4, 1982 $11,484 June 22, 1982 $ 8,613 June 23, 1982 $14,355 Unknown $14,355 (see petitioner's Exhibit 13 and Exhibit 12 and testimony of Johnson) In addition to the amounts noted above, respondent received payment for the following changes or "extras" in construction of the Gerlts' home: DATE AMOUNT WORK PERFORMED June 4, 1982 $ 250.00 Rough-in shower in workroom June 4, 1982 $2,250.00 Complete Porch Sept.3, 1982 $ 98.75 Change kitchen window from awning to slider Sept.3, 1982 $ 35.00 Change present kitchen window TOTAL $2,633.75 In addition to the changes or "extras" in construction noted above, respondent was to perform the following changes or "extras" in construction of the Gerlts home: The front porch area was removed making the front of the house straight across at no extra cost. The cabinets in the kitchen were changed. One set of cabinets and a countertop was changed to eighteen inches and another set was changed to twenty-four inches. There was also a change in the placement of the refrigerator. The Gerlts were to pay for this change. Completion of the shower in the workroom, at owner's expense. The family room was enlarged by two feet six inches resulting in two additional sheets of paneling, at owner's cost. There was an increased amount of tile in the guest bath area resulting in an additional cost of $18.00. The owners selected a more expensive tile for the master bathroom than specified in the contract specifications. The Gerlts were to pay Green $30-$40 to install the more expensive tile. The contractor was no longer obligated to furnish or install the floor covering or carpet. Therefore, the owner was to receive a $3,450 credit on the contract price. (See petitioner's Exhibit 26 and Transcript, pages 59 and 95-98). In approximately August 1982, a dispute arose between the Gerlts and respondent over the extras on the Gerlts new residence. The disputed items included the cost of renting an electric generator for one month, at a cost of $366.30. The Gerlts did not want to pay the rental fee because they had intended to furnish a generator for the project. At the time, Mr. Gerlt worked for a person who owned a distributorship and could easily have obtained a generator for the project. (See Transcript, page 92 and petitioner's Exhibit 21). Respondent asserted that there was a change in the fireplace which resulted in an increased cost on the Gerlts' project. From the beginning, both the Gerlts and the respondent had agreed that the fireplace was supposed to be placed directly on the slab. On March 18, 1982, the Gerlts sent respondent a letter confirming this fact. The respondent constructed the fireplace on a raised hearth and then attempted to charge the Gerlts for the cost of returning the hearth to its original position. (See Transcript, pages 61 and 98). On or about August 10, 1982, Overhead Door Company of Sarasota furnished two garage doors which were used in construction of the Gerlts' Singletary Road residence. The doors were furnished pursuant to an agreement with the respondent. Under the terms of his agreement with Overhead Door Company of Sarasota, respondent was to pay for the doors within thirty days of the invoice date. Inasmuch as respondent failed to timely pay for the doors, Overhead Door Company of Sarasota filed a Claim of Lien in the amount of $514.50 against the Gerlts' property. (See petitioner's Exhibits 17, 13, and 19, and Transcript, pages 76-82 and 132) The dispute between the Gerlts and Green brought work to almost a completed halt. After the receipt of the $14,355 payment due upon completion of the drywall, respondent did little work on the project. Eventually, Green hired an attorney, Frank Calabrese, to represent him in the dispute. On September 2, 1982, the parties and their attorneys met at the job site in an attempt to resolve the dispute. As a result of that meeting, the parties verbally agreed to the items which were changes or extras. The only items designated as changes resulting in an additional cost, to be borne by the Gerlts, were the shower in the workroom, cabinet changes, the additional paneling in the family room, and the changes in amount and quality of tile used in both the guest and master bathrooms. (See petitioner's Exhibit 26 and testimony of Johnson). Nothing was done on the project, despite the agreements of the Gerlts and respondent made on September 2, 1902. Although respondent had agreed to make certain corrections in the home, he did not do so. Finally, at this time the Gerlts discovered that respondent had made no payments on the Amerifirst Savings and Loan mortgage. Therefore, Robert Johnson wrote a letter to respondent's attorney, Calabrese, in attempt to obtain some satisfaction of the problems aforementioned. (See Transcript pages 116-117, 122 and petitioner's Exhibit Number 23). On September 20, 1982, the respondent wrote a letter to Robert Johnson wherein he stated that it was impossible to complete the Gerlts' home until two problems were resolved. Specifically, respondent wanted some written resolution of the amounts to be paid by the Gerlts for extra tile and the extra kitchen cabinets. Respondent further stated, falsely, that Interior Installation, from whom the original cabinets had been ordered, refused to build the cabinets because Mrs. Gerlt had threatened to sue the owner of Interior Installation. Respondent also asserted that the contract between the Gerlts and respondent was breached when the Gerlts refused to pay for the generator on the job. Finally, respondent said that the owners had requested additional outlets which had been installed, but for which the electrician had not been paid. (See petitioners Exhibit 24). In response to this letter from Green, Johnson drafted a letter to Calabrese, on October 4, 1982, on behalf of the Gerlts. By the letter, Johnson agreed to hold the extra amount owing because of changes in amount and quality of tile used on the Gerlts' home until completion of the job, at which time respondent would receive payment. Johnson denied categorically respondent's statements about Interior Installations. Interior Installations agreed to do the work if payment was made in advance. The Gerlts agreed to pay Interior Installations the cost of the cabinet changes. Finally, Johnson indicated that the generator problem could be dealt with in the final resolution of the contract. (See petitioner's Exhibit 25). At this time, respondent already had one other project where respondent had failed to pay Interior Installations for work performed. At the time, he was sixty days late in payment for that project. Inasmuch as Interior Installations was also aware of the conflict between the owners and contractor, they requested full payment prior to beginning the work. They did not receive payment and, therefore, did not do the work. There was no evidence that the Gerlts had threatened to sue the company. Subsequent to this time, a judgment was obtained against respondent for the full amount owing on the other project. (See Transcript, pages 84). On October 14, 1982, respondent talked with Robert Johnson and told him that respondent would order the cabinet work on October 14, 1982, and that the work would be done within two weeks. Respondent told Johnson that he would deliver the Gerlts' house for occupancy by November 4, 1982. Respondent also agreed to attend to the deficit with the Amerifirst Federal Savings and Loan Association Mortgage by October 15, 1982. (See petitioner's Exhibit 27 and Transcript, page 22). Despite his assurances, respondent did not complete those items which he told Johnson he would complete. Respondent did make one payment, by check dated October 18, 1982, to Amerifirst Savings and Loan Association of $1,669.02. However, the check was returned marked "insufficient funds". (See petitioner's Exhibit 4 and Transcript, pages 122-123). On October 28, 1982, Johnson again talked with the respondent. The respondent told Johnson that the paneling in the family room was supposed to be done that day. Respondent also told Johnson that the tile person was supposed to be at the job site that day. Respondent said that Amerifirst Federal Savings and Loan would be paid $1,660. Respondent further stated that he had hired R & M Cabinets to do the cabinetry work on the Gerlts' home. (See Transcript, page 124). Again respondent's promises were not fulfilled. Furthermore, when Johnson called R & M. Cabinets about the cabinetry work on the Gerlts' home, the company requested payment in advance before the work was performed. (See Transcript, page 124). On November 1, 1982, Johnson again spoke to Green about the construction of the Gerlts' residence. Respondent told Johnson that he would have to hire another bricklayer immediately and that the job would be finished by the following Wednesday. (See Transcript, page 124). Again the respondent did not do what he told Johnson he would do on the Gerlts' home. (See Transcript, page 124). On November 24, 1982, the Pollings and Weathers served an eviction notice on the Gerlts, who still resided in their Seclusion Drive residence. Although the Polings and Weathers had agreed to stay in their Bougainvillea residence until 10 days after a certificate of occupancy was issued on the Gerlts' new home, and to allow the Gerlts to remain in their Seclusion Drive residence until the same date, this was with the understanding that the Gerlts' new home would be finished by July, 1982. (See Transcript, page 125 and testimony of Mrs. Gerlt). After the Gerlts received the eviction notice, they contacted Robert Johnson who, in turn, contacted the respondent. According to respondent, the bathroom and the kitchen cabinets were ordered and would be installed by December 8, 1982. By December 10, 1982, the plumbing, air conditioning and cabinetry would be finished. Finally, respondent told Johnson that a certificate of occupancy would be issued by December 15, 1982 for the Gerlts' home. (See Transcript, page 126). On December 8, 1982, respondent told Johnson that the cabinetry in the Gerlts' home would be done by the following Wednesday. Again, however, the respondent failed to perform as promised. (See Transcript, page 127). Although attempts were made to delay eviction, the Gerlts were evicted from their home on December 16, 1982. (See testimony of Mrs. Gerlt). On December 17, 1982, Johnson wrote respondent a letter telling him to finish the Gerlts' home or to be prepared to deliver a cashiers' check. (See Transcript, page 127). On or about December 17, 1982, Generation Electric, Inc., filed a "Claim of Lien" against the Gerlts' Singletary Road property for electrical wiring performed on that residence between June 16, 1982 and December 14, 1982, pursuant to an agreement with the respondent. The Claim of Lien was for the sum of $852.50. (See petitioner's Exhibit 16). Respondent performed no further work on the Gerlts' home. Respondent furnished no notice to the Gerlts or their attorney of his intent to stop work on the Gerlts' home. (See testimony of the Gerlts and Johnson). The Gerlts assumed the completion of the construction project on or about January 14, 1983. At the time respondent ceased work on the Gerlts' home, the construction was only a little over 50 percent completed. The kitchen was not begun; the bathrooms were not begun, with the exception of one bathtub in one bathroom; there was no septic tank; and there was no heat or air conditioning installed in the Gerlts' home. (See Transcript, pages 23-24, 55 and 102). It cost the Gerlts approximately $10,611.60 in labor and materials to complete their home. Mr. Gerlt performed most of the actual work himself. (See Transcript, pages 63-64). At the time respondent ceased work on the Gerlts' property, the mortgage on the Bougainvillea property was in default. Respondent had made no payments on that mortgage even though payments were past due. The Gerlts had to satisfy the mortgage on the Bougainvillea property. (See petitioner's Exhibit 4 and testimony of Mrs. Gerlt).
Recommendation Based on the foregoing findings of Fact and Conclusions of Law, it is recommended that respondent's registered building contractor's license be suspended for a period of three (3) years. RECOMMENDED this 31st day of August, 1984 in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of August, 1984 COPIES FURNISHED: Stephanie A. Daniel, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. James A. Green 624 47th Street West Palmetto, Florida 33561 James Linnan Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202 Fred M. Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
