The Issue At issue is whether Respondent committed the offenses set forth in the Administrative Complaints and, if so, what penalty should be imposed.
Findings Of Fact The parties Petitioner, Department of Business and Professional Regulation, Construction Industry Licensing Board (Department), is a state agency charged with the duty and responsibility for regulating the practice of contracting pursuant to Section 20.165, Florida Statues, and Chapters 455 and 489, Florida Statutes. Respondent, Richard M. Golfman, was, at all times material hereto, licensed by the Department as a certified general contractor, having been issued license number CG C032860, and authorized to engage in the practice of general contracting as an individual.1 The Feinstein project (DOAH Case No. 00-0599) On or about October 30, 1998, Respondent entered into a written contract with Norman and Sheila Feinstein to furnish the materials and perform the labor necessary to enclose and remodel the screened patio, and to build a rock garden, at their home located at 5468 Northwest 20th Avenue, Boca Raton, Florida, for the sum of $5,000. At the time, the Feinsteins paid Respondent $1,500 as the initial payment (deposit) under the terms of the contract. The contract Respondent presented and the Feinsteins executed on October 30, 1998, did not include Respondent's license number, nor did it contain a statement concerning consumers' rights under the Construction Industries Recovery Fund. Following execution of the contract, Respondent made repeated promises to construct the rock garden; however, it was not until November 10, 1998, that Respondent appeared on-site and constructed the rock garden, albeit not to the Feinsteins' satisfaction. Subsequently, Respondent had some high-hat electrical fixture cans and a bundle of furring strips delivered to the home for the patio project but, thereafter, despite repeated requests, refused to perform any work on the project or refund any money to the Feinsteins. The value of the labor and materials Respondent invested in the rock garden, as well as the cost of the building materials (the high-hat fixtures and furring strips) delivered to the job-site, was $250, a sum considerably less than the $1,500 the Feinsteins had entrusted to Respondent under the terms of their agreement. The Burres/Berger project (DOAH Case No. 00-0600) On or about November 23, 1998, Respondent submitted a written proposal to Tanya Burres to furnish the materials and perform the labor necessary to replace the existing roof on her home located at 7270 Montrico Drive, Boca Raton, Florida, for the sum of $22,125. The proposal was a one-page preprinted form. In the upper left there appeared, printed immediately following Respondent's handwritten name, the following: THE GOLFMAN GROUP, INC. P.O. Box 811926 Boca Raton, Florida 33431 The proposal did not include Respondent's license number, nor did it contain a statement concerning consumers' rights under the Construction Industries Recovery Fund. At the time the proposal was submitted, Tanya Burres was under contract to sell the home to Drs. Glenn Berger and Michelle Fiorillo, husband and wife (the Bergers), and Ms. Burres had agreed to split with the Bergers the cost of a new roof for the home. At the time, Ms. Burres had suggested the Respondent as a contractor to perform the work (because he had previously done satisfactory work for Ms. Burres); however, it was understood that the employment of any contractor was subject to the Bergers' approval. That the Bergers' agreement was required before any such employment would be accepted was clearly conveyed to Respondent. On November 23, 1998, Tanya Burres signed the proposal and gave Respondent a check payable to his order in the sum of $1,106.25, representing her half of the ten percent deposit called for by the proposal. The Bergers, however, declined to accept the proposal, and refused Respondent's request for the balance of the deposit. Rather, the Bergers, having received adverse information from the Department regarding Respondent's record, preferred to employ a different contractor, and Ms. Burres accorded the Bergers a monetary credit at closing (on the purchase of the home) for one-half the cost to re-roof the home. When the Bergers informed Ms. Burres (shortly after she signed the proposal on November 23, 1998) that they would not agree to use Respondent, Ms. Burres attempted to stop payment on her check; however, the check had already been cashed. Thereafter, Ms. Burres attempted on numerous occasions to contact Respondent by telephone and by his pager, but Respondent failed to return any of her calls or messages. To date, Respondent has failed to account for or return Ms. Burres' deposit of $1,106.25. The costs of investigation and prosecution As of February 25, 2000, the Department's costs of investigation and prosecution, excluding costs associated with any attorney's time, totaled $234.85 for DOAH Case No. 00-0599 (the Feinstein project) and $195.65 for DOAH Case No. 00-0600 (the Burres/Berger project.) Previous disciplinary action At hearing, the Department offered proof that, on two prior occasions, Respondent had been subjected to disciplinary action by the Construction Industry Licensing Board (the Board). (Petitioner's Exhibit 2.) The first occasion is reflected in the terms of a Final Order of the Board, dated August 4, 1987, which found Respondent guilty of the violations alleged in the Administrative Complaint (which were not revealed at hearing beyond what may be inferred from the terms of the Final Order), and resolved that Respondent suffer the following penalty: Respondent's licensure is hereby suspended for ten (10) years. Provided, Respondent may obtain termination of said suspension at anytime, without further action by the Board, upon providing the Board's Executive Director with a certified bank check in an amount sufficient to cover and pay a fine of five hundred dollars ($500), and the bad check alleged in the Administrative Complaint, and all service charges in connection therewith, and all other fees accruing as of the date Respondent seeks said termination of supervision. The second occasion Respondent was subjected to disciplinary action is reflected in the terms of a Final Order of the Board, dated July 18, 1997, which approved a stipulated settlement of certain complaints then pending before the Board. That Final Order approved the dismissal of a number of counts contained in five Administrative Complaints then pending before the Board and, as to the remaining counts, agreed (without Respondent admitting or denying the allegations of fact contained in the Administrative Complaints) to the following penalty: 3. FINE AND COSTS: Respondent shall pay a fine of Nine Hundred dollars ($900.00) and costs of Eight Hundred fifty One dollars ($851) to the Board within thirty (30) days of the filing of the Final Order. Said payment shall be in the form of a cashier's or certified check and shall be made payable to the "Construction Industry Licensing Board." To assure payment of the fine and costs, it is further ordered that all of Respondent's licensure to practice contracting shall be suspended with the imposition of the suspension being stayed for thirty (30) days. If the ordered fine and costs are paid in compliance with the terms set forth above, the suspension imposed shall not take effect. However, should payment not be timely made, the stay shall be lifted and Respondent's license shall be immediately suspended. Upon payment of the fine and costs in full, the suspension imposed shall be lifted. Respondent apparently satisfied the fines and costs imposed by the foregoing orders. (Petitioner's Exhibit 2.)
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be rendered adopting the foregoing findings of fact and conclusions of law, and which, as a penalty for the violations found, imposes an administrative fine in the total sum of $13,500.00, revokes Respondent's licensure, orders that Respondent pay restitution to Norman and Sheila Feinstein in the sum of $1,250.00 and to Tanya Burres in the sum of $1,106.25, and assesses costs of investigation and prosecution (through February 25, 2000) in the total sum of $430.50 against Respondent. DONE AND ENTERED this 22nd day of June, 2000, in Tallahassee, Leon County, Florida. WILLIAM J. KENDRICK 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 22nd day of June, 2000.
Findings Of Fact At all times material hereto, Respondent was the holder of general contractor's license number CG C007235, and certified residential contractor's license number CR C006769. On or about January 6, 1976, Respondent entered into a Building Agreement with Walter and Ellen Scott (hereinafter "owners") for construction of a residence to be located at 10244 Deerwood Club Road in Jacksonville, Duval County, Florida. Among the provisions contained in this agreement was the following: [Respondent] will construct house for actual Construction Costs plus $10,000 profit. Addendum to contract Number 19 contains construction estimate sheet and allowance sheet which is guaranteed by [Respondent] not to exceed $85,000, plus $10,000 profit. All construction costs above $85,000 will be absorbed by contractor resulting from faulty workmanship or incorrect overall estimate. Additional costs resulting from exceeding allowances or phases not covered by estimate, (Wallpaper, Light fixtures, etc.), will be paid by purchaser. [Respondent] will be compensated at $2,500.00 out of each of the last four construction draws. Purchaser will be refunded in difference of construction under $85,000.00. Purchaser has the right to examine cost of construction at any stage to determine how close cost [sic] are running to estimate. (Emphasis added.) In addition, the Building Agreement contains a listing of allowances for various items such as carpet, flooring, wallpaper, doors, fireplaces, appliances, plumbing fixtures, wiring and windows. These provisions of the contract deal with standard items to be included in the construction, absent some request and agreement between the parties to specific changes. With respect to changes, the agreement provides specifically that: Should the Purchaser at any time during the progress of said residence require any alterations to or deviations from, additions to, or omissions, in said Agreement, which are acceptable to the Contractor, they shall have the right and power to make such change or changes when practicable, and the same shall in no way make void the Agreement; but the differences shall be added to, or deducted from the amount of the Agreement as the case may be, by a fair and reasonable evaluation . . . (emphasis added.) Finally, the Building Agreement also provides that Respondent was to use his best effort to deliver the completed residence on or about 180 days from the start of construction, which, by terms of the agreement, is defined as the date on which footings are poured or the day rough plumbing was begun. Although Respondent obtained a building permit for construction of the residence, from the City of Jacksonville, Florida, dated February 5, 1976, there is nothing in the record of this proceeding on which a firm determination can be made as to when construction actually started. Although the actual starting date for construction is unclear, it is obvious from the record that Respondent and the owners began to experience problems from the outset. The owners received a notice of lien soon after the slab for the residence was poured. In addition, there appears to have been some miscalculation with respect to the size of the slab for the structure to which some additions had to be made. Respondent apparently failed to pay for the initial treatment for subterranean termites at the time of the pouring of the slab, and the termite bond on the residence was cancelled. In addition, the slab appears to have been poured in such a fashion as to require adjustments in the construction of the driveway to avoid rainwater runoff entering the residence. One of the more difficult problems in the initial stages of construction involved leaks in the roof of the structure. When it appeared that efforts to repair the leaks had not been entirely successful, the owners requested that Respondent delay work on the interior in order that repairs on the roof might be accomplished before proceeding in order to avoid interior damage. After an extended delay occasioned by an unusual period of dry weather which prevented a determination as to whether the roof would continue to leak, work on the interior was recommenced, only to discover that the roof had not been sufficiently repaired. As a result of continuing problems with the roof, work which had been completed in the interior of the structure was damaged by rainwater. In fact, as of the date of final hearing in this cause, it appears that final repairs to the roof had still not been accomplished. It appears from the record that construction delays attributable to roof leaks in the residence set the tone for the remainder of the business dealings between Respondent and the owners. From this point forward, the relationship between Respondent and the owners became virtually adversary in tone. This state of affairs was complicated by an extensive series of changes or substitutions in the original plans and specifications by the owners. As indicated above, the original Building Agreement contained provisions concerning allowances for various portions of the work, and optional items which could be added at additional charge to the owner. Unfortunately, the record is unclear as to exact dollar amounts attributable to extras selected by the owners, as well as to amounts actually received by Respondent in the course of construction draws on the original contract. However, it is clear that extras selected by the owners totalled between $20,000 and $25,000. These items, which were not contained in the original contract, included ceramic tile flooring; double oven; wooden window frames; extensive extra bricking work, including brick more expensive than that described in the original contract; a larger driveway; burglar alarms; simulated marble vanities, tubs and sinks instead of cast iron fixtures as originally contemplated; crown moldings and interior door moldings throughout the interior of the residence; more expensive plumbing fixtures; extensive parquet flooring; larger closet areas; and extensive changes in the location of plumbing fixtures and electrical outlets. In addition, what appears from the evidence to have been a handmade stairway was substituted at an additional cost of approximately $5,000. The construction of the staircase not only included additional expense, but for some reason not entirely apparent from the record, caused additional delay in construction of other areas in the residence. Respondent apparently did not maintain a separate checking account for construction draws on this project, instead comingling disbursements on the construction loan with other funds in his general checking account. Additionally, no documentation was submitted by either Petitioner or Respondent to establish dates on which draw requests were either submitted by Respondent to the owners or the financial institution financing construction, or the dates on which any such draw requests were funded, either in whole or in part. As a result, it is virtually impossible from the record in this proceeding to determine the basis for disbursements from the construction loan account, or the disposition of those sums once disbursed. Although there was some general testimony about the filing of liens by various subcontractors, no documentation of these liens was submitted into evidence. What is, however, apparent from the record is that in early 1977, almost one year after initial disbursement of construction funds to Respondent, almost the entire $95,000 constituting the construction account was depleted. At that time the residence was approximately 90 percent complete. Thereafter, by Agreement dated February 18, 1977, Respondent and owners agreed that an additional $25,000 would be necessary to complete construction of the residence. Respondent acknowledged that he was in default under the terms of the original Building Agreement, and agreed to reimburse owners for the additional $25,000 needed to complete construction of the residence, subject to certain adjustments. Respondent agreed to complete construction of the residence within 40 days, and further agreed that the financial institution holding the mortgage on the residence was authorized to disburse the additional $25,000 directly to subcontractors, materialmen and laborers for work performed for services rendered on the property. Respondent executed a note in the amount of $25,000, secured by certain property belonging to him as evidence of his obligation to complete construction. However, shortly after execution of the February, 1977, Agreement, Respondent and owners had a dispute over payment of certain laborers. As a result, Respondent was advised by owners not to return to the job site. After this notification, evidence in the record establishes that Respondent contacted the financial institution which held the mortgage on the property and advised them that he would not be completing construction of the residence. It is clear from the record that the owners had more than ample cause for dissatisfaction with both the quality of workmanship and the timeliness with which work was performed by Respondent. Those matters are not, however, at issue in this proceeding. It is also abundantly clear that both Respondent and owners conducted their dealings with one another in a most informal fashion. With the exception of the original Building Agreement, and the February, 1977, agreement, most of the dealings between Respondent and the owners were verbal. Additionally, the absence of detailed documentary evidence makes resolution of many of the factual disputes in this proceeding difficult at best. However, the record clearly establishes that Petitioner failed to request that official notice be taken of any of the provisions of the building codes or other laws of the City of Jacksonville, and that none of these codes or laws were offered into evidence in this proceeding. As a result, a motion to dismiss that portion of the Administrative Complaint alleging violation of applicable building codes was granted by the Hearing Officer at the close of Petitioner's case. Further, although the owner testified as to his belief that certain building materials were "floating" between the project which is the subject of this proceeding and other projects being constructed by Respondent, there is no direct evidence to establish that Respondent, in fact, diverted any funds or property improperly. Finally, as to the question of abandonment, it appears from the record that the owner dismissed the Respondent prior to the expiration of the 40-day period contemplated in the February, 1977, Agreement, and that Respondent advised both the owner and the financial institution financing construction of the project that he would not complete construction of the residence as contemplated in the various agreements between the parties.
Findings Of Fact At all times material to these proceedings, the Respondent, ROBERT MENSCHING, was a certified residential building contractor in Florida, and held license number CR C020166. Mr. Mensching was the owner and qualifying agent for Robert Mensching Homes. On or about July 10, 1986, a written proposal was submitted by the Respondent to Mr. and Mrs. Mangiardi for the construction of a single family dwelling in Cape Coral, Florida. The construction price was $60,000.00, with an additional $500.00 for the purchase of the house plans. Mr. and Mrs. Mangiardi paid for the plans on the date of the proposal. Revisions to the proposal were submitted to the Mangiardis in September, 1986. The purchase price and the payment schedule remained the same. The proposal was accepted by the Mangiardis, and the down payment of $5,000.00 required by the contract to start construction, was given to the Respondent. Construction commenced in November 1986. By March 26, 1987, the Respondent had been paid $53,750.00 of the total construction contract price. This included the fourth draw on a five draw payment schedule. Only $6,250.00 remained to be paid by the purchasers for the last phase of construction. In April 1987, the Respondent informed Mr. Mangiardi that he would not complete the final phase of construction. The Respondent informed Mr. Mangiardi that he would pay him $5,000.00. An accounting was not given to the purchasers of the monies disbursed by the Respondent pursuant to the construction schedule. After the Respondent left the project, the Mangiardis were given notice of an outstanding lien in the amount of $963.80, which was owed to Kirkland Electric, Inc. Another Notice to Owner was filed by Wallcrafters, another subcontractor, for $5,272.50. The work completed by both subcontractors was performed during the Respondent's term as the prime contractor on the project. These two subcontractors were never paid by the Respondent out of the draws received by him for that purpose. The Respondent did not pay the $5,000.00 he told Mr. Mangiardi he would pay in April of 1987. The evidence is unclear as to whether this amount of money was a payment of liquidated damages for the breach, the balance of funds entrusted to the contractor which had not been disbursed in the preceding construction phases, or the amount of unpaid liens known to the contractor at the time of breach. The Respondent filed for bankruptcy after a judgment was entered against him in a civil action by the Mangiardis for breach of contract. A Notice of Aggravation was not submitted during the formal hearing regarding the actual damage to the licensee's customers as a circumstance to be considered in aggravation of the penalty to be assessed. A copy of the Florida Construction Industry Licensing Board's previous letter of reprimand was not presented at hearing so that the hearing officer and the Board could use the prior violation for aggravation purposes.
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint and, if so, what disciplinary action should be taken against him.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: Respondent has been a Florida-licensed general contractor (holding license number CGC 062108) since February 5, 2001. At all times material to the instant case, JQC held a certificate of authority authorizing it to engage in contracting in Florida through a qualifying agent. At all times material to the instant case, Respondent was the primary qualifying agent for JQC. On or about May 10, 2007, JQC, through Respondent, entered into a written contract (Building Contract) with Marienne Cavalier, agreeing, for $95,000.00, to construct an addition to the Miami, Florida residence (Residence) of Ms. Cavalier and her husband, Wilfrid Pierre-Louis (Project). The Building Contract provided as follows: For Architectural, Engineering, Permit Expediting and Construction Services in the sum of Ninety Five Thousand Dollars ($95,000.00) based on the following criteria: Architectural services to be provided consist of the following: Bringing into compliance the existing residence with the Zoning & Building Department[']s Requirements for the City of North Miami Beach, in the State of Florida. Complete set of working drawings to include, Design Development, Site Plan/Floor Plan in compliance with the "Florida Building Code" & the Florida Accessibility Code (Handicapped). Exterior Elevations (Facades). Wall Sections & details as required to assure design intent and constructability. Engineering services to be provided consist of the following: Foundation plan and specifications. Plumbing plan and specifications. Electrical plan and specifications. Mechanical plan and specifications. Roof framing plan and specifications. Air conditioning system calculations as per the State of Florida. Home Energy calculations as per the requirements of the State of Florida. Hurricane Wind Load calculations as per the requirements of the Florida Building Code. Permit Expediting services to be provided consist of the following: Submitting of Plans and Application to the Building Department for processing. Going to the Building Department to pick up Plans each time there are revisions to be made, delivering the Plans to the Architect/Engineer for review and re-submitting the Plans to the Building Department. Coordinating plan review between Architect/Engineer and Building Department so as to obtain the Building Permit in a reasonable amount of time. Construction services to be provided consist of the following: Labor and materials included Relocating existing front door Entrance and construction of new Terrace. Demolition of existing Bathroom. Extension of kitchen wall. Relocation of existing Air Conditioning Unit and Duct Work. Demolition of Existing Partitions and Installation of new Partition work to include Dining Room, Living Room and Florida Room. Raising of concrete floor Slab at existing addition. Installation of tiles at new concrete floor. Construction of new Master Bedroom, Master Bathroom and Walk-In Closet. Construction of new Laundry Room. Construction of new Office Room. Demotion of existing flat roof addition. Raising existing tie-beam of flat roof to match the height of the house. Construction of new roof. Installation of new Doors and Windows. New concrete sidewalk at rear of house. Stucco and Painting of new Addition. Painting of Interior walls. Insulation of new Addition Walls and Ceiling. Mechanical work to existing addition as per plans. Plumbing work to existing addition as per plans. Electrical work to existing addition as per plans. Trash Container and Disposal of construction debris. Portable Toilet. Items not included: New Air Conditioner if required by Building Department. Any work related to the existing Septic Tank system. Driveway. Landscaping. Terms of Agreement First Payment (Initial Down Payment) $3,000.00 Second Payment $4,000.00 (Due at Submittal of Plans Building Department) to the Third Payment $24,000.00 (Due at Approval of Construction Permit) Fourth Payment $20,000.00 (Due after First Inspection) Fifth Payment (Due at 50% of $20,000.00 Work Completion) Sixth Payment (Due at 75% of $20,000.00 Work Completion) Seventh Payment $4,000.00 (Due upon Final Inspection) Total cost of Work $95,000.00 Items not specified in this agreement are not part of this contract. Fees for Permits and other Inspections (if required) are not included in the indicated cost above. There was no written statement in the Building Contract explaining a consumer's rights under the Construction Industries Recovery Fund, as then required by Section 489.1425, Florida Statutes (2006). JQC commenced work on the Project after the Building Contract was signed by Respondent and Ms. Cavalier. There were expenses that JQC incurred in connection with the Project that were "unexpected" and "not anticipated," including those related to the demolition work required by the Building Contract. In addition to doing work required by Building Contract (Project Work), JQC did extra work on the Residence (Extra Work), at Mr. Pierre-Louis's request, resulting in further "additional expenses being incurred that were not [contemplated] in the original contract." Respondent (acting on behalf of JQC) and Mr. Pierre-Louis verbally agreed that this Extra Work would be undertaken by JQC, but nothing was ever reduced to writing.2 There came a time, after he and his wife had made several payments to JQC, that Mr. Pierre-Louis became dissatisfied with the pace of the JQC's efforts. Mr. Pierre- Louis confronted Respondent and erroneously "accused [Respondent] of stealing the money" he and his wife had paid (instead of using it to do the work JQC had agreed to do on the Residence). In fact, "the money was being spent on the [improvements to the Residence]." Mr. Pierre-Louis "even called the police on [Respondent]." Respondent was interviewed by a police detective, who, following the interview, told Respondent that "this seem[ed] to be a civil case," not a "criminal" matter. No criminal charges were ever filed against Respondent. To avoid any similar misunderstanding on Mr. Pierre- Louis's part in the future, Respondent told Mr. Pierre-Louis that he and his wife should not give Respondent "a single dollar," but they, instead, should themselves directly pay the workers JQC had working on the job site and also "buy the necessary materials." In or around June 2009, JQC temporarily stopped working on the Residence because "there wasn't any money available" to pay for labor and materials. As of the date of the stoppage of work, approximately 50% of the Project Work and Extra Work had been completed, and Ms. Cavalier and Mr. Pierre-Louis had made the following payments for the Project Work and Extra Work: payments by check to JQC and Respondent, totaling $86,478.85; cash payments to Respondent, totaling $1,553.62; payments by check to JQC workers, totaling $7,835.00; cash payments to JQC workers, totaling $3,600.00; $1,000.00 for concrete; $600.00 for tar paper; and $500.00 for plywood. Respondent explained to Mr. Pierre-Louis that JQC was stopping work on the Residence because the money had "run out," and he assured Mr. Pierre-Louis that JQC would resume the work "whenever [Mr. Pierre-Louis] ha[d] some money available," an assurance that was sincerely made. Mr. Pierre-Louis, in turn, told Respondent that it was his intention to secure the funds necessary to finish the work. Three months later, when Mr. Pierre-Louis "did get some money," he let Respondent know. JQC thereupon began working on the Residence again (as Respondent had promised it would),3 and it has continued to work on the Residence (doing the Project Work and Extra Work) on an ongoing basis (with Ms. Cavalier and Mr. Pierre-Louis paying for labor and materials,4 as they had done immediately before the work had stopped). While Ms. Cavalier and Mr. Pierre-Louis have paid the workers doing the Project Work and Extra Work, these workers have at all times been under Respondent's supervision. As of the date of the final hearing in this case, at least 90% of the Project Work and Extra Work had been completed. Undertaking the Project Work and Extra Work has been a money-losing venture for JQC and Respondent. Petitioner has incurred a total of $297.10 in investigative and prosecutorial costs in connection with the instant case (excluding costs associated with any attorney's time).
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Board issue a Final Order: (1) dismissing Counts One and Two of the Administrative Complaint; (2) finding Respondent guilty of violating Section 489.129(1)(i), Florida Statutes, by failing to comply with Section 489.1425, Florida Statutes, as alleged in Count III of the Administrative Complaint; (3) fining him $375.00 for having committed this violation; and (4) ordering him to reimburse the Department for investigative and prosecutorial costs related to this violation. DONE AND ENTERED this 6th day of December, 2010, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of December, 2010.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are made: At all times material to this proceeding, Respondent Wilmon Ray Stevenson was licensed as a registered building contractor in the state of Florida, holding license numbers RB 0035005 and RB A035005. License number RB 0035005 was issued on an active status qualifying an Individual in March 1987 and is still in effect. License number RB 0035005 replaced license number RR 0035005 issued in December, 1980. License number RB A035005 was issued on an active status qualifying Yankee Construction, Inc. d/b/a Olympic Homes of Citrus County (Olympic) in June 1987 and replacing license number RR A035005 issued in August 1981. In October, 1988 Respondent submitted a change of status application which was not acted upon by Petitioner until February, 1989 when it was deleted. However, Petitioner's file (Petitioner's Exhibit 1, page 2) indicates the license was in effect only until October, 1988. The Marion County Building Department was advised of this status change in September, 1988. Findings As To Case No. 90-1637 On April 16, 1988, Frank and Margaret Orkwis entered into a contract with Olympic to construct a home for $37,900 which was later modified, increasing the contract price to $39,363.00. On July 26, 1988 a permit for the Orkwis job was obtained from the Marion County Building Department in accordance with the Respondent's letter dated January 25, 1985 authorizing certain individuals to "pull" permits on his license. There was a total of $27,583.20 paid to Olympic on the Orkwis contract which included $27,483.20 paid by draw schedules and $100.00 as a down payment. Olympic stopped work on the Orkwis home sometime around November 27, 1988 and failed to complete the work under the contract. Olympic gave no notice to Orkwis that it intended to terminate the work on the Orkwis job. In fact, Olympic kept putting Mrs. Orkwis off about completing the job until sometime in late January, 1989 or early February, 1989 when she decided to get a permit and complete construction. Olympic terminated the Orkwis job without just cause. The following liens were recorded against the Orkwis property for the failure of Olympic to timely pay for materials and labor furnished to Olympic for the Orkwis's job in accordance with Orkwis contract: (a) Florida A/C Sales and Services, Inc., filed December 13, 1988 and; (b) Florida Forest Products, Inc. filed December 15, 1988. The labor and materials had been furnished between October 24, 1988 and November 22, 1988. Olympic was contacted by Mrs. Orkwis concerning the liens, with no response. However there was insufficient evidence to establish that the liens had not been removed from the property, by payment or bond, within 30 days after the date of such liens. Sometime in early 1989, Mrs. Orkwis obtained a permit and she and her husband completed the home. Although Mr. Orkwis had obtained an estimate of $27,050.00 from a contractor to complete the home, she and her husband invested 466.5 hours of their time and $10,340.00 for materials to complete the home. In addition to the material, a reasonable amount for labor to complete the home would be $10,000.00. Findings As To Case No. 90-1889 John J. and Josephine Grillo and Madeline Chapman entered into a contract with Olympic for construction of a home on June 11, 1987. A permit was obtained for the Grillo/Chapman home under Respondent's license. The Grillo/Chapman home was completed and a certificate of occupancy issued January 13, 1989. Olympic was paid in full under the contract. Before the expiration of the one-year warranty under the contract, Olympic was advised of certain problems with the construction which Olympic attempted to correct. It is unclear whether the problems were satisfactorily corrected by Olympic but it appears that the only complaint not resolved was a water stain on the carpet that was the result of water seeping in under a door. Respondent was not aware of these problems until after the expiration of the one-year warranty and upon learning of the problems, commented that he was not obligated since the warranty had expired. There was insufficient evidence to establish that the problems were not corrected in accordance with contract. Findings As To Case No. 90-1890 Veronica McPherson entered into a contract with Olympic on March 1, 1989 to construct a home for the contract price of $36,450.00 which was later modified increasing the contract price to $37,775.00. All permits were obtained under the Respondent's license pursuant to a letter dated January 15, 1985 authorizing certain individuals to "pull" permits under Respondent's license. McPherson paid $26,442.50 to Olympic pursuant to a draw schedule in the contract as the home was being constructed. Additionally, McPherson paid a $100.00 down payment. All work performed by Olympic pursuant to the McPherson contract was prior to November 22, 1988. The exact date of termination of work is uncertain. Olympic notified McPherson that it had terminated work and would not complete construction of the home. The exact date of this notification is uncertain. There is no evidence that notice was not given within 90 after termination of work. Olympic terminated work without just cause. McPherson paid a roofing contractor $998.00 to complete the roof on her unfinished home in order to protect the interior. McPherson was financially unable to complete construction of the home. A reasonable estimate to complete construction of the McPherson home at the time work ceased would be $20,000.00. On December 15, 1988 Florida Forest Products, Inc. recorded a lien on December 15, 1988 against the McPherson property for building materials furnished to the McPherson job on order of Olympic on October 24, 1988 for construction of the home pursuant to the McPherson contract in the amount of $1,450.08. There was insufficient evidence to establish that this lien had not been removed from the McPherson property, by payment or bond, within 30 days after the date of such lien. There were three other claims of liens for labor and materials furnished to the McPherson job on order of Olympic between October 19, 1988 and December 2, 1988 for construction for the home pursuant to the McPherson contract as follows: (a) Florida A/C Sales and Services, Inc. dated December 8, 1988 for $1,059.00; (b) Masons Concrete of Crystal River dated December 14, 1988 for $354.97 and (c) Panning Lumber Company, a Division of Wheeler Consolidated, Inc. for $2,284.13. There is no evidence that any of the above liens were ever recorded against the McPherson property. Likewise, there is no evidence to establish that these liens had not been removed from the McPherson property, by payment or bond, within 30 days after the date of such lien, if in fact they were recorded. General Findings Respondent was advised by Larry Vitt in February, 1988 that Olympic was having financial problems. Respondent never supervised the financial aspects of Olympic. Respondent did not participate in the contract process or supervision of the construction of homes contracted to be built by Olympic. More specifically, he did not participate in the contract process or the supervision of the construction of the Orkwis, McPherson or Grillo/Chapman homes. Respondent's main purpose in being involved with Olympic was to use his license to qualify Olympic and to contract all of Olympic's concrete block work. In March, 1989 Respondent advised the Marion County Building Department that no one was authorized to "pull" permits under his license. However, at no time did Respondent withdraw the permits for the Orkwis and McPherson jobs that had been issued under his license. The record is clear that Respondent did not understand his relationship with Olympic nor did he understand the responsibility he incurred when he used his license to qualify Olympic. However, his inexperience or ignorance in this regard does not relieve him of his responsibility to those whose homes were built or not completely built pursuant to a permit issued under his license.
Recommendation Having considered the foregoing Findings of Facts and Conclusions of Law, the evidence of record, the demeanor of the witnesses and the disciplinary guidelines set out in Chapter 21E-17, Florida Administrative Code, it is RECOMMENDED: That the Board enter a final order finding Respondent guilty of violating Section 489.129(1)(k) and (m), Florida Statutes, and for such violations it is Recommended that the Board assess the Respondent with an administrative fine of $2,500.00. It is further Recommended that Counts I and II for the Administrative Complaint in Case Nos. 90-1637, 90-1889, and 90-1890 be Dismissed. DONE and ORDERED this 24th day of October, 1990, in Tallahassee, Florida. WILLIAM R. CAVE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of October, 1990. APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-1637 The following constitute my specific rulings pursuant to Section 120.59(20, Florida Statutes, on all of the proposed findings of fact submitted by the parties in this case. Rulings of Proposed Findings of Fact Submitted by the Petitioner 1. Covered in Conclusions of Law. 2.-8. Adopted in Findings of Fact 1, 2, and 3. 4.-6. Adopted in Findings of Fact 15, 16, and 17, respectively. 7. Adopted in Findings of Fact 19 and 20, but modified. 8.-12. Adopted in Findings of Fact 18, 4, 5, 6, and 8, respectively. 13.-14. Adopted in Findings of Fact 9 and 10, respectively, but modified. Adopted in Findings of Fact 21 through 25. Restatement of testimony; not stated as a Finding of Fact but see Findings of Fact 10 and 14. Adopted in Findings of Fact 13 through 15. Adopted in Findings of Fact 16, but modified. Rulings of Proposed Findings of Fact Submitted by Respondent 1. Covered in Preliminary Statement. 2.-8. Adopted in Findings of Fact 1, 2, 3, 3, 15, 15, and 16, respectively. 9. Adopted in Findings of Fact 19 and 20. 10.-11. Adopted in Findings of Fact 18 but modified. Adopted in Finding of Fact 4. Adopted in Findings of Fact 4 and 6. Adopted in Finding of Fact 5. Adopted in Findings of Fact 8 and 9. 16.-20. Adopted in Findings of Fact 7, 7, 11, 13 and 14, respectively, but modified. Not material. Adopted in Finding of Fact 3, but modified. Not material. Copies furnished to: Fred Seely, Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, FL 32202 Kenneth E. Easley, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 G. W. Harrell, Esquire Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, FL 32399-0792 Fred A. Ohlinger, Esquire P.O. Box 1007 Beverly Hills, FL 32665
The Issue Whether Jose Ramone Garcia obtained a building permit for the purpose of aiding an uncertified or unregistered person to evade the provisions of Part 2, Chapter 468, Florida Statutes.
Findings Of Fact Jose Ramone Garcia holds a license as a general contractor issued by the Florida Construction Industry Licensing Board and is licensed as doing business as Gabros Construction. Jose Ramone Garcia, on or about April 26, 1974, obtained a building permit No. 74-1006 issued by Collier County Building Department to build a home at 378 Seabee Avenue, Vanderbilt Beach, Florida. The home at 378 Seabee Avenue, Vanderbilt Beach, Florida, was built by Roger Dulaney, an unlicensed person, who had contracted verbally to build said home with Mr. William E. Young, the owner of the real property. Jose Ramone Garcia obtained the building permit No. 74-1006 with money given to him by Roger Dulaney, but Jose Ramone Garcia did not receive any compensation for his assistance to Roger Dulaney. Jose Ramone Garcia did not contract with William E. Young to build the home at 378 Seabee Avenue, Vanderbilt Beach, Florida. Jose Ramone Garcia did not contract with any of the subcontractors or materialmen for services or goods used in the construction of the home at 378 Seabee Avenue, Vanderbilt Beach, Florida. Jose Ramone Garcia was frequently at the construction site at 378 Seabee Avenue and did oversee the construction which Dulaney directed. Garcia did insure that all construction work done was in accordance with the specifications and plans and the building code of Collier County. All work on the home at 378 Seabee Avenue was inspected and approved by the building authorities of Collier County. With several minor adjustments, the construction was acceptable to the owners. The major problem involved with the house constructed at 378 Seabee Avenue involved the contract price of the home arrived at between Dulaney and Young. Garcia did not negotiate the contract of the construction of the house at 378 Seabee Avenue and had no knowledge of the contract price. The dispute between Dulaney and Young resulted in court action between these parties which resulted in a judgment by the court in the favor of Dulaney. Jose Ramone Garcia has been unable to obtain a building permit as a contractor in Collier County since the filing of the Administrative Complaint in January, 1976. Garcia currently resides in Collier County.
Recommendation Because the licensing privilege of Garcia has already been effectively suspended for 14 months, which is a substantial period of suspension, the Hearing Officer does not feel that a further suspension would be of any benefit. The Hearing Officer would recommend that a civil penalty of $500 be assessed against Garcia based upon the foregoing findings of fact and conclusions of law. DONE and ORDERED this 29th day of March, 1977, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Barry S. Sinoff, Esquire Jacobs, Sinoff, Edwards, Alford & Burgess Post Office Drawer I Fernandina Beach, Florida 32034 Jose Ramone Garcia 9341 S. W. 38th Street Miami, Florida J. K. Linnan Executive Director Florida Construction Industry Licensing Board Post Office Box 8621 Jacksonville, Florida 32211
Findings Of Fact At all times pertinent to the issues in this hearing, Respondent was a licensed building contractor, whose license is No. CBC014467. His certification as an individual by the Florida Construction Industry Licensing Board was initially dated August 16, 1979. In February, 1981, he requested his second license be registered qualifying Jeff Webb Homes, Inc.; and in September, 1982, the license was changed from Jeff Webb Homes, Inc., to Intervest Construction, Inc. On April 23, 1981, Anna Ray McClellan contracted with Regency Central, Inc., for the construction and purchase of a single family residence located at Lot 5, Devonwood Subdivision, Volusia County, Florida. David L. Martin is president of Regency Central, Inc., and neither he nor Regency Central, Inc., are or have ever been registered or certified by the Florida Construction Industry Licensing Board to engage in the business of contracting in the State of Florida. On June 5, 1981, Respondent applied for a residential construction permit for Lot 5, Devonwood Subdivision, listing Regency Central, Inc., as the owner of the property, and himself, with License No. CBC014467, as the contractor. Actual contracting for the construction at Lot 5, Devonwood Subdivision, was accomplished by Regency Central, Inc. Three separate addenda to the construction/purchase contract calling for modifications to the specifications of construction were signed, not by Respondent, but by David L. Martin for Regency Central, Inc. Major subcontracts on the construction including plumbing, electrical, and heating and air conditioning, were entered into between the subcontractors and Regency Central, Inc., and not Respondent. Subcontractors looked to Regency Central for payment, and not to Respondent. A claim of lien filed on ,September 9, 1981, for central air conditioning and heating work on the property in question reflects the work was done under contract with Regency Central, Inc., David L. Martin, President. During construction of the house, Ms. McClellan visited the construction site several times a week at different hours of the day. She recalls seeing Respondent in the area only twice, the first time being the day the contract for purchase was signed, and the second being the day the slab was poured. Her dealings at the site were with the supervisor, Dan Haley, who indicated to her that he worked for Regency Central, Inc. Respondent was interviewed by Philip T. Hundemann, an investigator for the Florida Department of Professional Regulation, in late March, 1982, at Respondent's home. During the course of the interview, Respondent admitted that he met David L. Martin when Martin rented office space in a building that Respondent had constructed and owned. During the course of conversations, Martin suggested to Respondent that he, Martin, had ninety-nine lots available for building and that if Respondent would pull the construction permit for the Lot 5 project, he would get a contract from Martin to build on the other ninety- nine lots. Respondent admitted that he did not supervise the contract, that he did pull the permit, and that he was in violation of the law and had prostituted his license. His defense was, at that time, that he was hungry to get a big construction contract with Martin. Though after he pulled the permits his agreement was to work on the site for the rate of ten dollars per day with the supervisor, Mr. Haley, he was there only infrequently. Respondent now modifies the admissions made previously to Mr. Hundemann. He now states he was heavily involved with the construction project on a daily basis either in his office or on the construction site, not only as a contractor, but also as sales broker. While he admits what he did was in violation of the law and was foolish, he did not intend to break the law. Respondent's involvement with Ms. McClellan's project was not as contractor as indicated in the permit he pulled. He had very little contact with that project until Martin abandoned the project and left the area.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That Respondent's, Dominic D'Alexander's, license as a certified building contractor be suspended for one year, but that, upon the payment of a $500 administrative fine, the execution of the suspension be deferred for a period of three years, with provision for automatic recission. RECOMMENDED this 21st day of March, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 1983. COPIES FURNISHED: Charles F. Tunnicliff, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. Dominic D'Alexander Post Office Box 4580 South Daytona, Florida 32021 Mr. James Linnan Executive Director Construction Industry Licensing Board Department of Professional Regulation Post Office Box 2 Jacksonville, Florida 32201 Mr. Fred Roche Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
The Issue The issues in this case are: whether Petitioners have standing to challenge the agency statements in the Division of Workers' Compensation Bulletin No. 234; whether the agency statements in Bulletin No. 234 constitute a "rule" as defined by Subsection 120.52 (15), Florida Statutes; and, if yes, whether the Department violated Subsection 120.54(1), Florida Statutes, by not adopting the statements in accordance with the rulemaking procedures.
Findings Of Fact Prior to the 2002 legislative session, pursuant to Sections 440.02 and 440.05, Florida Statutes (2001), certain persons in the construction industry could elect to be exempt from the provisions of Chapter 440, Florida Statutes (2001). Pursuant to Section 440.05(3), Florida Statutes (2001), upon receipt of proper notice and documentation, the Department issued certificates of exemptions to persons seeking the Workers' Compensation exemption, unless the Department determined that the information contained in the notice was invalid. Between July 1, 2000, and June 30, 2002, approximately 130,000 construction-related exemptions were active. Pursuant to Subsection 440.05(6), Florida Statutes (2001), a construction industry certificate of election to be exempt is valid for a period of two years after the effective date on the certificate, unless the certificate was properly revoked. Prior to July 1, 2002, the certificates of exemption were issued pursuant to Subsection 440.05(3), Florida Statutes (2001). These certificates of exemptions were applicable without regard to the value or cost of any particular building project on which the exemption holder may be working. During the 2002 legislative session, the Florida Legislature enacted Section 5, Chapter 2002-236, Laws of Florida. Portions of this law amended Section 440.02(14), Florida Statutes. These amendments ("2002 Amendments") state, in relevant part, the following: (14)(b) "Employee" includes any person who is an officer of a corporation and who performs services for remuneration for such corporation within this state, whether or not such services are continuous. Any officer of a corporation may elect to be exempted from this chapter by filing written notice of the election with the division as provided in Section 440.05. As to officers of a corporation who are actively engaged in the construction industry, no more than three officers may elect to be exempt from this chapter by filing written notice of the election with the division as provided in s. 440.05. However, any exemption obtained by a corporate officer of a corporation actively engaged in the construction industry is not applicable with respect to any commercial building project estimated to be valued at $250,000 or greater. An officer of a corporation who elects to be exempt from this chapter by filing a written notice of the election with the division as provided in s. 440.05 is not an employee. Services are presumed to have been rendered to the corporation if the officer is compensated by other than dividends upon shares of stock of the corporation which the officer owns. 1. "Employee" includes a sole proprietor or a partner who devotes full time to proprietorship or partnership and, except as provided in this paragraph, elects to be included in the definition of employee by filing notice thereof as provided in s. 440.05. Partners or sole proprietors actively engaged in the construction industry are considered employees unless they elect to be excluded from the definition of employee by filing written notice of the election with the division as provided in s. 440.05. However, no more than three partners in a partnership that is actively engaged in the construction industry may elect to be excluded. A sole proprietor or partner who is actively engaged in the construction industry and who elects to be exempt from this chapter by filing a written notice of the election with the division as provided in s. 440.05 is not an employee. For purposes of this chapter, an independent contractor is an employee unless he or she meets all of the conditions set forth in subparagraph (d)1. 2. Notwithstanding the provisions of subparagraph 1., the term "employee" includes a sole proprietor or partner actively engaged in the construction industry with respect to any commercial building project estimated to be valued at $250,000 or greater. Any exemption obtained is not applicable, with respect to work performed at such a commercial building project. "Employee" does not include: 1. An independent contractor, if: * * * Notwithstanding the provisions of this paragraph or any other provision of this chapter, with respect to any commercial building project estimated to be valued at $250,000 or greater, a person who is actively engaged in the construction industry is not an independent contractor and is either an employer or an employee who may not be exempt from the coverage requirements of this chapter. * * * (Amendments are underlined.) The above-quoted 2002 amendments became effective on July 1, 2002. After the legislature enacted Chapter 2002-236, Laws of Florida, but prior to its effective date, the Department issued Bulletin No. 234 ("Bulletin No. 234" or "Bulletin"), which states in relevant part the following: TO: All Exemption Holders FROM: Annemarie Craft, Interim WC Administrator DATE: June 20, 2002 SUBJECT: Law Changes Regarding Exemptions On July 31, 2002, important changes in the workers' compensation law regarding exemptions take effect. This Bulletin is intended to notify you of some of those changes. Exemption holders working on a commercial building project valued at $250,000 or greater must purchase workers' compensation coverage, or be covered under a valid Florida Workers Compensation policy. The changes apply to you if you are: A corporate officer of a corporation that is actively engaged in the construction industry; A sole proprietor or partner who is actively engaged in the construction industry; or A person who is actively engaged in the construction industry as an independent contractor. Beginning July 1, 2002, if you are a corporate officer of a corporation that is actively engaged in the construction industry, or a sole proprietor or partner who is actively engaged in the construction industry, then your exemption will not apply to any work performed at a commercial building project valued at $250,000 or greater. If you work at a commercial building project valued at $250,000 or greater, then you must secure workers' compensation coverage in accordance with s. 440.38. The value of the project is the value of the entire project and not merely the value of a part, such as the amount attributed to a particular subcontract. This applies to projects in existence on July 1, 2002, as well as projects to be started on or after July 1, 2002. * * * 5. If you are a sole proprietor, partner, or corporate officer, you are permitted to maintain a certificate of election to be exempt issued pursuant to s. 440.05, F.S., while actively working on a commercial building project valued at $250,000 or greater; however, that exemption is not applicable with respect to work performed at a commercial building project valued at $250,000 or greater. In summary, Bulletin No. 234 states unequivocally the Department's practice which limits the use of exemption certificates for workers' compensation insurance. According to the Bulletin, beginning July 2, 2002, "exemption holders working on a commercial building project valued at $250,000 or greater must purchase workers' compensation coverage, or be covered under a valid Florida Workers' Compensation policy." Next, the Bulletin states that, beginning July 1, 2002, "if you are a corporate officer of a corporation that is actively engaged in the construction industry, or a sole proprietor or partner engaged in the construction industry, then your exemption will not apply to any work performed at a commercial building project valued at $250,00 or greater." Finally, the Bulletin provides that, "this applies to projects in existence on July 2002, as well as projects to be started on or after July 1, 2002." The Department contends that the Bulletin is only for informational and notification purposes and that it merely paraphrases the provisions of Section 5, Chapter 2002-236, Laws of Florida. Furthermore, the Department asserts that the Bulletin was never intended to create any obligations or requirements that the Department will enforce in any action that the Department engages in regarding the applicability of exemptions. Based on the Department's belief that Bulletin No. 234 was only for the purpose of notifying all exemption holders of changes in the law, the Department did not adopt the Bulletin in accordance with rulemaking procedures in Section 120.54, Florida Statutes. Notwithstanding the Department's argument in paragraph 11, as reflected within the four corners of the Bulletin, exemption holders actively engaged in the construction industry working on commercial building projects valued at $250,000 or greater after July 1, 2002, must be covered by workers' compensation insurance, pursuant to the requirements of Chapter 440, Florida Statutes (2002), regardless of when the exemption certificates were obtained. Contrary to the Department's view, the agency statements in Bulletin No. 234 adversely affect the rights of some exemption holders and require compliance with the provisions contained therein. Implicit in the terms of the Bulletin is that an exemption holder who fails to comply with its terms, will be subject to enforcement actions under Chapter 440, Florida Statutes. The extrinsic evidence presented by the Department, that it will not take such action in reliance of the Bulletin, is not controlling. The Florida Home Builders' Association ("FHBA") is a Florida corporation, comprised of approximately 15,000 members. Of those members, approximately 5,000 to 6,000 are builder members that are actively engaged in the construction of housing or other developments. Hundreds of the builder members are involved in commercial construction activities. The remaining members are associate members comprised of industries, trades, and services that do business with the builder members. Associate members who are construction subcontractors are engaged in commercial building activities. Most commercial construction projects that are new construction (as opposed to renovations) which FHBA members work on exceed $250,000 in value. FHBA members who are providing services at commercial building projects with a value over $250,000 have a reasonable expectation that they will continue to provide such services in the future. Over 2500 member companies of FHBA have active workers' compensation exemption certificates for at least one employee each, issued, prior to July 1, 2002, pursuant to Section 440.05, Florida Statutes (2001). These members are involved in commercial building projects estimated to be valued at $250,000 or greater and which started prior to July 1, 2002. Several dozen FHBA members affected by the limitations on the exemptions stated in Bulletin No. 234 have contacted the FHBA for advice. FBHA members who are contractors, whose exemptions are limited based on Bulletin No. 234, must attempt to secure workers' compensation insurance. Subcontractors to these members whose exemptions are limited must obtain insurance. To the extent the subcontractor has workers' compensation insurance obligations under existing contracts, either the subcontractor, the prime contractor or the owner of the project must absorb the cost of workers' compensation insurance premiums. The possibility also exists that the subcontractor may be forced off the job if he does not obtain the insurance and/or the cost of premiums cannot be accounted for. The FHBA lobbies the Florida Legislature and executive agencies on issues that effect the construction industry, including workers' compensation insurance. The Florida Associated General Contractors' Council ("A.G.C. Council") is a Florida corporation which has approximately 2,000 members. Of these members, approximately 800 are contractors and subcontractors actively engaged in the construction industry in Florida. The remaining members are involved in construction-related businesses. The approximately 800 A.G.C. Council members engaged in construction activities are all commercial builders. Most of the projects on which they work on are valued at over $250,000. Of the approximately 800 A.G.C. Council members engaged in construction, 48 have active exemption certificates for from one to three employees each. Approximately twenty to thirty A.G.C. Council members who worked on commercial projects valued at over $250,000 and who were under prime contracts before July 1, 2002, have contacted the A.G.C. Council's office in response to Bulletin No. 234. These subcontractors were concerned that they would have to obtain workers' compensation insurance at costs that were not anticipated when they signed their contracts. The general contractors who called the A.G.C. Council Office were concerned because they had subcontractors who were going to have to obtain insurance and the general contractors were being asked to cover the costs. In some cases, subcontractors were unable to obtain insurance and the general contractor had to remove them from the job, which created an increased cost to the contractor by having to find a replacement subcontractor. The A.G.C. Council represents its members before the Florida Legislature on a number of issues of interest to the construction industry, including codes, licensing, and workers' compensation insurance. Moreover, the A.G.C. Council represents its members in administrative and judicial proceedings. The Parrish Group is a Florida corporation which provides construction, design/build, development, and realty services to its clients. It has a number of subsidiary companies which also provide construction, development, and real estate services. The companies are all commonly owned and the finances are combined and reported on a single financial statement. The Parrish Group is involved commercial construction projects, most of which have a value of over $250,000, and it intends to continue developing such commercial projects. The Parrish Group uses subcontractors for all of its construction activities, including site construction, foundation, structure, build-out, and internal build-outs. The Parrish Group has relationships with 40 to 50 subcontractors and generally uses approximately 30 of these subcontractors on any given project. The Parrish Group does not have a valid exemption, but six of the Parrish Group's regular subcontractors, including Mark Madonia, d/b/a Chop's Acoustical Ceilings, hold active exemption certificates issued prior to July 1, 2002, pursuant to Subsection 440.05(3), Florida Statutes (2001). The Parrish Group's subcontractors who held active exemption certificates issued prior to July 1, 2002, if required to obtain workers' compensation insurance, would try to pass the cost of premiums to the primary contractor, a Parrish Group subsidiary, Parrish Builders. If the subcontractor is successful in passing the cost to the primary contractor, the primary contractor would try to pass the costs on to the owner, i.e., the Parrish Group. If the subcontractor were unable to obtain the workers' compensation insurance, the primary contractor would have the subcontractor removed from the job. Alternatively, the prime contractor could retain the subcontractor as an employee, in which case the primary contractor would have to bear the cost of the additional insurance under its policy. These increased costs would not have been accounted for in the prime contract, if that contract was in effect prior to July 1, 2002. Mark Madonia is one of Parrish Group's regular subcontractors. When faced with the prospect of having to obtain workers' compensation insurance, Mr. Madonia sought a change order from Parrish Builders. The Parrish Group, as owner, agreed to the change order and bore the additional costs. When the Parrish Group's subcontractors, who had certificates of exemption, made bids used in prime contracts that were effective before July 1, 2002, the cost of workers' compensation insurance was not included in the bid. Mark Madonia, d/b/a Chop's Acoustical Ceilings, is a sole proprietor who installs ceiling grade systems. Mr. Madonia provides these services as a subcontractor to the Parrish Group and other developers. Mr. Madonia works primarily on commercial building projects, most of which are valued at over $250,000. Mr. Madonia expects to continue to work on commercial building projects valued at over $250,000 in the future. Mr. Madonia is a member of FHBA and has a valid workers' compensation exemption certificate that was issued prior to July 1, 2002. Mr. Madonia has had an exemption since 1994 and his current certificate is in effect until May 25, 2003. Prior to July 1, 2002, Mr. Madonia had not obtained workers' compensation insurance because of his exemption. When Mr. Madonia received Bulletin No. 234 on or about July 12 through 14, 2002, he attempted to obtain workers' compensation insurance. Three companies denied him coverage because he did not have a sufficient number of employees. Mr. Madonia risked being removed from jobs had he not obtained the workers' compensation coverage required by the Bulletin. Mr. Madonia eventually contracted with an employee leasing company. In order to do so, he had to make his subcontractors his employees. The cost of the employee leasing service, including workers' compensation coverage is $27.00 per $100.00 of payroll. Mr. Madonia could have been responsible for these costs, although in this case, the Parrish Group agreed to absorb the extra costs. If a valid workers' compensation insurance exemption is limited and no longer applies to commercial construction projects with a value of $250,000 or more, the general contractor for such projects will require that the affected persons provide proof of coverage or they cannot lawfully be allowed on the job site. In the event a subcontractor with an exemption needs to obtain insurance, the subcontractor would have to obtain workers' compensation insurance. If the primary contract has already been signed by the owner and the general contractor, then the costs of the job have already been set. The subcontractor may absorb the costs or, alternatively, the subcontractor could attempt to pass the additional costs of insurance premiums to the general contractor. The general contractor could then try to pass the additional costs on to the owner. In any event, either the subcontractor, the general contractor, or the owner will have to absorb the unanticipated costs of workers' compensation insurance.
