Findings Of Fact The Respondent, William C. Lovelace, has been a certified building contractor in the State of Florida since 1984, holding license number CB CO 29103. The Respondent has been a registered roofing contractor in the State of Florida since January, 1989, holding license number RC 0058368. Case No. 91-0390--The Clarks. On or about June 8, 1987, the Respondent, who was doing business as Lovelace Development Enterprises, Inc., at the time, entered into a contract with James and Nedra Clark, then residents of the State of Ohio, for residential contruction on a residential building lot they owned in a subdivision in Safety Harbor in Pinellas County, Florida. The contract price was $69,900, payable as follows: (1) $100 deposit; (2) $13,960 slab draw, paid August 9, 1987; (3) $17,450 frame draw, paid September 1, 1987; (4) $17,450 dry-in draw, paid September 16, 1987; (5) $13,960 dry wall draw, paid October 30, 1987; and (6) a $6,980 final payment, to be made when the certificate of occupancy was obtained, and paid on December 1, 1987. The contract the Respondent signed and sent to the Clarks in Ohio for their signatures provided for construction to begin within 30 days and to be substantially completed within six months of commencement. Before the Clarks signed and returned the contract to the Respondent by mail from Ohio, they modified the contract to provide for a completion date of November 1, 1987. The Respondent never commented on the Clarks' contract modification and never intimated that there would be any problem with having the Clark home ready for occupancy by November 1, 1987. The Clarks made arrangements to move to their new home one weekend in October, 1987. They flew down on the Saturday before their furnishings and belongings were to arrive by moving van. When the Clarks arrived on Saturday, they were shocked to find that the home was nowhere near ready for occupancy. The Respondent explained that he was having financial problems. The Clarks asked why he accepted their draw payments and never told them that he was having financial problems and was not progressing with construction as scheduled. The Respondent offered to, and did, put the Clarks up in an apartment building he owned until the Clark home was ready for occupancy. The Respondent did not pay three suppliers or subcontractors who worked on the Clark home and who subsequently filed claims of lien. The Clarks themselves satisfied the liens, plus the claimants' attorney fees, in addition to the contract price they had paid the Respondent. These additional payments amounted to approximately $7,000. On or about October 18, 1989, a criminal information was filed against the Respondent in Case No. CTC 8926280MMANO in the County Court for the Sixth Judicial Circuit, in and for Pinellas County, Florida. The information charged the Respondent with misapplication of the Clarks' real property improvement funds in violation of Section 713.345, Fla. Stat. (1989). After a non-jury trial, the Respondent was found and adjudicated guilty as charged and was sentenced to 60 days in jail, suspended, and placed on probation for one year. Conditions of probation included the requirement that the Respondent make restitution to the Clarks in the amount of $9,036.96, payable within one year, with minimum monthly payments set at $100. The Respondent appealed from the judgment of conviction. Execution of the sentence is stayed pending appeal. The appeal was pending at the time of the final hearing. Case No. 91-0391--The Parows. On or about December 28, 1987, the Respondent entered into a contract with George and Barbara Parow for residential contruction on a residential building lot they owned in a subdivision in Pinellas County, Florida, called Windsor Woods II. The contract price was $103,892, payable as follows: (1) $5,750 deposit; (2) $14,721 slab draw, paid February 17, 1988; (3) $14,721 lintel pour draw, paid February 23, 1988; (4) $14,721 frame draw, paid March 18, 1988; (5) $19,629 dry-in draw, paid April 22, 1988; (6) a $19,629 dry wall draw, paid May 11, 1988; and (7) $14,721 final payment to be paid when the certificate of occupancy was obtained. Construction on the Parow home was to begin on January 19, 1988, and actually began on or about February 5, 1988. The Respondent did not pay several suppliers and subcontractors who worked on the Parow home and who subsequently filed claims of lien. As construction progressed, the Parows became aware of liens and discussed them with the Respondent. The Respondent assured the Parows that they all would be taken care of. Instead, more liens of other suppliers and subs were filed. On advice of legal counsel, the Parows withheld the final draw. They also decided to refinance their property in order to finish construction themselves. To do so, they had to file a civil suit in Case Number 88-013508- 023 in Circuit Court, Sixth Judicial Circuit, in and for Pinellas County, Florida. They also had the bank deposit the last draw under the contract with the Respondent into the court registry. In the course of litigation, all valid liens were paid from the money in the court registry. In addition, the Parows were required to pay $957 for a certificate of occupancy, $1,254 that the Respondent was supposed to have paid for carpeting in the home, and $628 for appliances the Parows had paid for but did not get from the Respondent. Additional items were paid by the Parows to finish the house. All told, the Parows paid about $5,000 more out-of-pocket than they should have under the contract with the Respondent, as modified by extras and changes, to complete their home. On or about October 31, 1989, a criminal information was filed against the Respondent in Case No. CTC 8928044MMANO in the County Court for the Sixth Judicial Circuit, in and for Pinellas County, Florida. The information charged the Respondent with misapplication of the Parows' real property improvement funds in violation of Section 713.345, Fla. Stat. (1989). After a non-jury trial, the Respondent was found and adjudicated guilty as charged and was sentenced to 60 days in jail, suspended, and placed on probation for one year, to run concurrent with the probation imposed in Case No. 9826280MMANO (the Clark case). Conditions of probation included the requirement that the Respondent make restitution to the Parows in the amount of $10,178.73, payable $1,000 a month. The Respondent also appealed from the judgment of conviction in the Parow case. Execution of the sentence is stayed pending appeal. The appeal was pending at the time of the final hearing.
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: (1) finding the Respondent, William C. Lovelace, guilty as charged; (2) imposing an administrative penalty in the amount of $2,000, payable within 30 days; (3) requiring the Respondent to pay the costs associated with the investigation and prosecution of these matters, payable as determined by the Board in consideration of the amount of the costs; (4) requiring the Respondent to make full restitution to the Clarks and the Parows within two years; (5) placing the Respondent on probation for two years conditioned on (a) timely payment of the fine, of the costs, and of the restitution to the Clarks and the Parows, (b) successful completion of continuing education in the areas of financial or general business practices, and (c) such other conditions of probation as the Board may deem appropriate. RECOMMENDED this 19th day of June, 1991, in Tallahassee, Florida. J. LAWRENCE JOHNSTON 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 20th day of June, 1991. APPENDIX TO RECOMMENDED ORDER To comply with the requirements of Section 120.59(2), Fla. Stat. (1989), the following rulings are made on the Department's proposed findings of fact: 1.-4. Accepted and incorporated. The final draw was $14,721. Otherwise, accepted and incorporated. The $250 was designated "fines and costs," and is unnecessary. Otherwise, accepted and incorporated. 7.-8. Accepted and incorporated. 9. The $250 was designated "fines and costs," and is unnecessary. Otherwise, accepted and incorporated. COPIES FURNISHED: Robert B. Jurand, Esquire Senior Attorney Department of Professional Regulation Northwood Centre, Suite 60 1940 North Monroe Street Tallahassee, Florida 32399-0792 William C. Lovelace, pro se 1961 Cove Lane Clearwater, Florida 34624 Daniel O'Brien, Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202 Jack McRay, Esquire General Counsel Department of Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact At all times material hereto, Respondent has been a registered general contractor and registered roofing contractor in Florida, having been issued licenses numbered RG-0025491 and RC-0046293. Respondent has been a registered general contractor in the State of Florida since 1976, and there is no evidence in the record of any prior license disciplinary action involving Respondent. The Department is the state agency with responsibility to file and prosecute administrative complaints alleging violations of Chapters 455 and 489, Florida Statutes, in accordance with Chapter 120, Florida Statutes. On or about March 15, 1988, the Respondent executed a contract and agreement with Fred and Patricia Rogerson for the construction of a residence to be located at 9800 Indian River Drive (Lot 10, Block 6), Hobe Sound, Florida. The contract amount for this job was stated to be $70,000, and the time of completion was specified to be 15 weeks from commencement on April 11, 1988. While Respondent did redraw and improve the structural adequacy of the construction plans which the Rogersons provided, the contract amount and time of completion stated in his contract with the Rogersons were never modified by change order. Based upon the expert testimony offered by John Fix, called on behalf of the Department, and Donald Corbett, called on behalf of the Respondent, the true price to construct the Rogerson's residence in 1988 would have been between $105,000 and $114,700. There is no possibility that Respondent, or any other general contractor, could have completed this residence for the $70,000 contract price. The evidence clearly establishes that he substantially underbid this job, and that underbidding a job to the extent that Respondent did in this case constitutes incompetence in contracting. It is the responsibility of the general contractor to complete a job for the contracted amount, or to obtain written change order approval from the owner, prior to performing any work which will result in an increase to that contract price. This finding is based upon the expert testimony of Fix and Corbett presented at hearing. Respondent began work on the Rogerson residence in July, 1988, and proceeded until January, 1989, when the Rogersons terminated their contract with him. At the time of that termination, Respondent had not completed work on their residence, but he testified at hearing that if the Rogersons had continued to work with him, he could have completed the job at less cost to them than they subsequently had to pay in order to obtain a certificate of occupancy in March, 1989. During the course of construction, the Respondent complained to the Rogersons that the job was costing him more than he had estimated. When they brought apparent deficiencies and problems in construction to his attention, Respondent complained of not having enough money to complete the job, and that if he had known what he was getting into with this job, he would have submitted a higher bid. Despite the fact that Respondent contracted with the Rogersons to complete their residence for $70,000 within 15 weeks from a stated commencement date of April 11, 1988, he fulfilled none of these commitments under his contract with the Rogersons. Therefore, his assertion that he could have completed this job for less than the Rogersons subsequently had to pay is not credited. The Rogersons had paid a total of $45,732.20 to Respondent at the time of his termination in January, 1989. In addition, their bank had disbursed $10,710.80 to subcontractors and suppliers for work and supplies provided for this job. Subsequent to terminating Respondent, the Rogersons have spent an additional $18,981.31 for materials and supplies to complete additional work on their residence in order to obtain a certificate of occupancy. Specifically, they have repoured the driveway, replaced insulation batting, installed drywall, finished the siding sub-barrier, applied siding, restapled roofing, finished plumbing, and installed appliances. The Rogersons have also paid $4,894 for legal fees and to satisfy liens placed against their property by suppliers who were not paid by the Respondent. Thus, the Rogersons have had to pay a total of $80,318.31, for which receipts were introduced in evidence, for work on their residence. In addition, they credibly testified that they have also spent $5,000 for supplies for which they have no receipts, and that there are an additional $8,000 to $9,000 in outstanding liens which have been placed against their property.
Recommendation Based upon the foregoing, it is recommended that the Construction Industry Licensing Board enter a Final Order imposing an administrative fine on the Respondent in the amount of $3,000 and suspending his licenses for a period of six months, or until such time sooner as the Respondent makes full and complete restitution to the Rogersons for all funds which they have expended in excess of $70,000 in order to complete this residence and to remove liens placed against this property. DONE AND ENTERED this 29th day of January, 1991 in Tallahassee, Florida. DONALD D. CONN Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 29th day of January, 1991. APPENDIX Rulings on the Department's Proposed Findings of Fact: 1-2. Adopted in Finding of Fact 1. 3. Adopted in Finding of Fact 2. 4. Adopted in part in Finding of Fact 2, but otherwise Rejected as irrelevant and immaterial. 5. Adopted, substantially, in Findings of Fact 2 and 5. 6-7. Adopted in Finding of Fact 5. 8-10. Adopted, substantially, in Finding of Fact 7. 11. Adopted in Finding of Fact 4. Rulings on the Respondents' Proposed Findings of Fact: (Note that the Respondent included two paragraphs numbered 5 and the rulings shown below follow in the sequence of the Respondents' Proposed Findings of Fact.) This is an introduction and not a proposed finding. Adopted in Findings of Fact 2 and 3. Adopted, in part, in Finding of Fact 7. Adopted, substantially, in Findings of Fact 2 and 5. Adopted, in part, in Findings of Fact 5 and 7. Rejected in Finding of Fact 7, and as irrelevant and immaterial. Adopted in Finding of Fact 2, but otherwise Rejected as not based upon competent substantial evidence. Adopted in Finding of Fact 3. COPIES FURNISHED: Robert B. Jurand, Esquire 1940 North Monroe Street Suite 60 Tallahassee, FL 32399-0792 David J. Chesnut, Esquire 215 South Federal Highway Suite 200 Stuart, FL 34994 Jack McRay, Esquire General Counsel 1940 North Monroe Street Suite 60 Tallahassee, FL 32399-0792 Daniel O'Brien, Executive Director Construction Industry Licensing Board O. Box 2 Jacksonville, FL 32202
Findings Of Fact Respondent is a certified building contractor having been issued license No. CE C014020. Be was so licensed and was the qualifier for ARC Construction, Inc. at all times material to this proceeding. On July 25, 1980, Respondent, on behalf of ARC Construction, Inc., contracted with Mr. and Mrs. Richard Doyle to remodel a residence in St. Petersburg. The contract price was $43,180, plus extras of $1,525. Respondent was paid $1,500 initially and received draw payments of $4,318 on August 11, 1980, $8,636 on August 19, 1980, and $10,795 on September 3, 1980. These payments totaled $25,249, or about 58 percent of the basic contract amount and 56 percent of the contract price with add-ons. Respondent was obligated to pay suppliers and acknowledged this responsibility to the complainant, Mr. Richard Doyle, but advised him that he was having cash flow difficulties. Respondent's checks to Scotty's, dated August 10, 1980, for $2,518.28, and August 22, 1980, for $738.99, were dishonored by the bank. His check for approximately $5,000 to Florida Forest Products was likewise returned. Respondent failed to settle these accounts and the complainant was eventually obliged to do so in order to remove the liens on his property. Respondent ceased work on the project in mid-October, 1980, and was terminated by the complainant in January, 1981. At the time Respondent ceased work the project was 50 percent to 80 percent complete.
Recommendation Based on the foregoing, it is RECOMMENDED: That Petitioner enter a Final Order dismissing the Administrative Complaint. DONE and ORDERED this 29th day of April, 1983, in Tallahassee, Florida. R. T. CARPENTER, 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 29th day of April, 1983. COPIES FURNISHED: John O. Williams, Esquire 547 North Monroe Street Suite 204 Tallahassee, Florida 32301 James H. Thompson, Esquire 620 Madison Street Suite 2-C Tampa, Florida 33602 James Linnan, Executive Director Construction Industry Licensing Board Department of Professional Regulation Post Office Box 2 Jacksonville, Florida 32202 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
The Issue The issue is whether Respondent's license as a certified general contractor and certified roofing contractor should be disciplined for the reasons cited in the Amended Administrative Complaint.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: When the events herein occurred, Respondent, John V. McCrave, was licensed as a certified general contractor and certified roofing contractor having been issued license numbers CG C014083 and CC C056695 by Petitioner, Department of Business and Professional Regulation, Construction Industry Licensing Board (Board). Respondent was the licensed qualifying agent for American General Enterprises, Inc. (American General), a contracting firm with offices in Inverness, Florida. He has held a license since 1978. In 1980, Joan D. Branca relocated from New Jersey to Inverness, Florida, where she purchased a mobile home. Around 1982 or 1983, she became acquainted with Respondent through church activities. In 1987, Branca sold her mobile home and decided to build a new home in Inverness with the proceeds from the sale of her home in New Jersey and the mobile home. Because she was acquainted with Respondent, she selected him as the contractor. On July 29, 1987, the parties entered into an Agreement Between Owner and Contractor wherein Respondent agreed to construct a "Home for Joan D. Branca" for a cost of $79,900.00, "not counting land aquisition." Although the contract called for Branca to pay Respondent twenty percent at the time the contract was signed, with four equal draws during the construction process, on or about September 29, 1987, she gave him a check in the amount of $50,000.00, payable to American General Enterprises, Inc. Respondent was to hold that sum of money pending the construction of the new home. The contract also contained a handwritten provision that "[i]f property is not found by April 1, 1988, that is suitable to [illegible] the Deposit of $50,000 shall be returned on demand with all interest at normal bank rate." As to this provision, Respondent's testimony that the contract would "die" on April 1, 1988, unless Branca secured a lot, was not contradicted and is hereby accepted. Therefore, Respondent was obligated to build a new home if Branca purchased a lot by April 1, 1988. Otherwise, he was simply required to return her money "on demand," including interest. Despite this self-executing provision, however, the parties continued to act as if there were a viable construction contract between them until at least the spring of 1990. Branca did not own a lot for her new house when she signed the contract. The parties' understanding, however, was that Respondent would build the house when she secured a lot. Until she did so, Branca was offered a job (with free lodging) by Respondent as manager of an apartment complex in Ocala, which Respondent was then constructing. Branca accepted this offer and moved to Ocala in March 1988. While living in Ocala, Branca did not actively search for a lot since she was busy "managing apartments." Even so, Respondent was not authorized to use her money for any other purpose during this period of time since it was to be held strictly for the purpose of constructing her home. Using $5000.00 borrowed from her daughter, in September 1989, Branca purchased two vacant lots in Inverness, one on Diamond Street, the other on Apopka Street. It was her intention to have Respondent construct the new home on the Diamond Street lot. To this end, she made a rough sketch of the home to be constructed. Thereafter, at Respondent's suggestion, she had an architectural draftsman, David Pillsbury, finalize the plans. They were completed on October 14, 1989. Because Branca had to borrow money from her daughter in September 1989 to purchase the two lots, she asked Respondent to return $5,000.00 of her money. On November 29, 1989, Respondent returned $5000.00 to Branca, leaving $45,000.00 of her money still in his possession. Within a few months, Respondent had the Diamond Street lot cleared as if construction were about to begin. When no construction began within a reasonable period of time, Branca asked Respondent if the building permits had been pulled. He replied that the permitting process took time. Finally, at Respondent's direction, on March 13, 1990, Branca filled out a Notice of Commencement form and filed it in the Citrus County public records. Even so, construction was never begun. On March 14, 1990, Respondent unilaterally drew up another "Agreement Between Owner and Contractor" and presented it to Branca for her signature. It called for him to construct a new home within "within 120 days after permits are obtained" for a price of $53,000.00. The agreement acknowledged that "Joan Branca has already payed [sic] $45,000 towards the construction of this home." It further provided that "[t]he ballance [sic] of $8,000.00 shall be after home is complete." At the same time, Respondent orally asked Branca to borrow another $25,000.00 to complete the construction of the home. Respondent even carried her to a local bank in order for her to borrow the money. Branca became suspicious and declined to sign a new contract or borrow the money. By May 1990, Branca had left Ocala and was living in Homosassa, Florida, with a friend. On the morning of May 4, 1990, Respondent visited Branca and tearfully reported to her that he had spent her $45,000.00 on other construction projects. Because of this, on May 10, 1990, Branca drew up a "Legal Agreement" wherein Respondent acknowledged owing her $45,000.00. He also promised to pay that amount by November 1, 1990. The agreement further provided that if he were late in making the payment, Respondent would be liable for a late charge of $500.00 per day. As of May 10, 1990, Respondent had repaid Branca around $6,500.00. Between October 14, 1992, and September 1, 1993, Respondent made various payments to Branca by check and cash. As of September 1993, Branca had been repaid a total of $15,255.00. On June 15, 1993, Branca engaged the services of an attorney who prepared a promissory note which Respondent signed. It required Respondent to pay Branca the sum of $44,000.00 at a rate of $400.00 per month beginning on July 1, 1993, and various balloon payments so that the total debt would be retired by June 1, 2000. When Respondent failed to repay the money as required by the parties' agreement, Branca filed suit in circuit court and on July 2, 1994, received a final civil judgment against Respondent in the amount of $44,286.20. As of the date of hearing, or more than three years later, Respondent had failed to repay any money towards satisfaction of the civil judgment. Respondent offered into evidence an addendum to the original contract dated September 30, 1987. The addendum reflects the purported signature of Branca. In addition, it carries the signature of Respondent, and the signatures of his wife and sister, Phyllis McCrave and Sharon McCrave, and a subcontractor, James McIntire, as witnesses. According to the addendum, Branca agreed that "[n]o work [would] be done" on the project, all previous agreements regarding the $50,000.00 were "null and void," her deposit would be held by American General "to protect it from any claims or liens against it, that might develop, due to the actions of her son, Jim Branca," and Branca's money would be returned "upon her request." As noted below, however, the authenticity of Branca's signature is in dispute. Both sides presented expert testimony on the issue of whether the signature on the addendum dated September 30, 1987, is actually that of Branca. Although the experts sharply disagreed on the genuineness of Branca's signature, the testimony of Petitioner's witness DeRaker is accepted as being the most credible on this issue. Therefore, it is found that the purported signature of Branca has been simulated to appear as her own, and that Branca did not sign the addendum. At hearing, Respondent contended that Branca had entrusted her to keep the $50,000.00 as a result of Branca's seventeen-year-old son being involved in an automobile accident in 1987. According to Respondent, Branca feared that she might be sued and forced to pay a judgment on behalf of her son and therefore wished to hide her assets. Therefore, he asserted that Branca never intended to have him construct a home, and that the contract was simply a way to hide the money. Branca denied this, saying that the wrecked automobile was in her son's name, and not her name, and he had insurance covering the accident. Her explanation is accepted as being the most credible on this issue. Respondent also contended that he offered to return Branca's money in April 1988 but she declined the offer. In May 1989, Respondent claims that he again offered to return the money but Branca wanted Respondent to use the money as an investment in an apartment project in Daytona Beach, Florida. Respondent then says that he used $40,000.00 of Branca's money, but lost it after the project was later abandoned. While Respondent presumably used Branca's money for other purposes, his testimony that he offered to return the money, but that she encouraged him to invest it in other ventures, is not accepted.
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 finding that Respondent is guilty of the violations described in Counts I through V of the Amended Administrative Complaint. As to those violations, it is recommended that Respondent be fined $4750.00 to be paid by such date as may be determined by the Board, and that he be required to either pay Joan Branca $44,286.20, or that he satisfy the civil judgment entered against him on July 2, 1994, in Citrus County, Florida. DONE AND ENTERED this 30th day of January, 1998, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 30th day of January, 1998. COPIES FURNISHED: Gary L. Asbell, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Michael T. Kovich, Esquire 203 Courthouse Square Inverness, Florida 34450 Rodney Hurst, Executive Director Construction Industry Licensing Board 7960 Arlington Expressway, Suite 300 Jacksonville, Florida 32211-7467 Lynda L. Goodgame, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue At issue is whether Respondent committed the offenses set forth in the Amended Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact Petitioner, Department of Business and Professional Regulation, Construction Industry Licensing Board (Department), is a state agency charged with the duty and responsibility of regulating the practice of contracting pursuant to Chapters 20, 455 and 489, Florida Statutes. At all times material to the allegations of the Amended Administrative Complaint, Respondent was licensed in Florida as a Certified General Contractor, having been issued license number CG C018621, and authorized to engage in the practice of general contracting as an individual. At the time of the hearing, Respondent's license had been suspended. At no time material was Respondent licensed to practice contracting in Florida through Florida East Coast Properties, Inc. On or about November 13, 1995, Respondent, doing business as Florida East Coast Properties, entered into a contract with Kazimierz and Maria Charchut (the Charchuts) for construction of a single family residence to be located at 8 Farmsworth Drive, Palm Coast, Flagler County, Florida. The original contract price was $124,000. At the time of the signing of the contract, the Charchuts lived in Brooklyn, New York, and continue to reside there. The Respondent's license number does not appear on the contract. The Respondent's notification of the Construction Industries Recovery Fund does not appear on the contract. Between September 13 and November 28, 1995, the Charchuts paid Respondent a total of $44,000 of the contract price towards construction of the residence. This amount constituted more than 10% of the contract amount (10% of the contract amount would have been $12,400). A closing on the construction loan was scheduled for October of 1995. Respondent called Mr. Charchut a couple of days before the first scheduled closing telling him they could stop the closing so that they could get better interest rates. Between October 1995 and June of 1997, Respondent failed to appear at a total of three scheduled closings on the construction loan. The Charchuts wrote several letters and made several phone calls to Respondent expressing concern that the closing had not yet occurred although they had already paid him a substantial amount of money. The closing finally took place in October of 1997. Because of some change orders that were to be made to the house, including wooden floors and a longer driveway, the Charchuts paid an additional $14,813.75 at the closing bringing the total cost of the construction of the home to $138,813.75. Included on the Change Order form was an amount of $2,001.75 for water and sewer assessments, which comprised part of the $14,813.75 total additional moneys paid by the Charchuts. The closing agent testified that this closing was atypical, because the bank was concerned that Respondent held too much money in the construction project. She testified that the bank requires that builders have no more than ten percent deposit. Consequently, Respondent was required to reimburse the bank $16,786.25 of the Charchut's $44,000 deposit at the closing. This was accomplished by Respondent bringing a check to the closing in the amount of $25,000 and receiving a refund overage check from Flagler County Abstract Co., (written to Florida East Coast) in the amount of $8,213.75, resulting in Respondent paying a net amount of $16,786.25 at the closing. At the closing, the bank received a check from Flagler County Abstract Co. for $31,600 to put in the construction loan account. This amount was composed of the Charchut's payment of $14,813.75 plus Respondent's payment of $16,786.25. Mr. Charchut wrote to Respondent in March of 1998 expressing concern that the closing had taken place in October of 1997 but the construction of his home had not yet begun. Respondent replied to Mr. Charchut in a letter dated April 8, 1998, stating that he was sorry for the delay in beginning construction of the home and that he intended to begin construction the week of April 20, 1998. Respondent applied for the building permit on May 7, 1998. Respondent applied for water and sewer service on May 5, 1998. He began construction of the house in June or July of 1998. By the end of July 1998, Respondent finished the slab foundation and rough plumbing of the Charchut's home. Consequently, the mortgage company paid $14,769.40 out of the first draw payment on the construction loan to Respondent's company. Of that amount, $3,485.86 was for reimbursement for payment to subcontractors. In addition to the amounts paid to Respondent, the mortgage company paid Mastercraft Plumbing $1,894 and $5,656.60 to CRS Rinker Materials Corp. The total first draw was $22,320. After payment of the first draw in August of 1998, little if any work was done on the construction of the Charchut's home. After the initial work on the slab, Respondent stopped construction and told the Charchuts that he did not want to continue to build their home and was looking for another contractor to finish the house for them. After being told that Respondent did not want to work on the home, the Charchuts wrote to Respondent on October 5, 1998, notifying Respondent to stop doing further work on the property and asking him to notify the Building Department so a transfer of the construction permit to another builder could take place. The Charchuts subsequently engaged another contractor, Mr. V. M. Zarbo. Mr. Charchut testified that he paid approximately $160,000 for the house to be built, including the money paid to Respondent. Mr. Charchut testified that when Mr. Zarbo began his work, Palm Coast Utility asked him to pay the impact fee for water and sewer. Despite the Charchut's having paid Respondent $2,001.75 toward water and sewer assessments, Respondent's check for that amount made out to Palm Coast Utility Company was returned for insufficient funds. Consequently, the Charchuts had to pay $2,116.75 for this fee again through their subsequent general contractor, notwithstanding Respondent claiming that he had incurred this expense. When added together, the Charchuts paid Respondent a total of $51,650.50 for the work Respondent did on the house. The total is composed of the sum of $27,213.75 (the net Respondent retained on the original down payment), $14,769.40 paid to Respondent from the first draw, and $1,894 and $5,656.60 paid to Respondent's suppliers/subcontractors from the first draw. Additionally, the Charchuts paid $2,116.75 for payment of the utility impact fee that the Charchuts had to pay twice. The Charchuts asked their subsequent contractor to prepare an estimate of the cost of the work that Respondent performed on the home. His written estimate was for a total of $21,536.68. The Charchuts included that written estimate in a letter to Respondent dated November 16, 1998, asking for a refund of amounts they paid in excess of his costs. Roy Brand testified as an expert witness for Petitioner. Mr. Brand has been a certified commercial contractor for about 20 years. He reviewed the estimate of Respondent's expenses that was provided by the Charchut's subsequent contractor. It was Mr. Brand's opinion that the cost estimate was appropriate and, if anything, Respondent's expenses might have been less. Respondent testified that he spent more on some items that were listed in the estimate. Respondent, during the investigation leading up to this case, was given an opportunity to provide receipts to Petitioner's investigator of expenditures made to the house. The receipts supplied to Petitioner's investigator do not total an amount in excess of the estimate made by the Charchut's subsequent builder. Based upon Respondent's failure to provide receipts to prove that the estimate total was too low, Mr. Zarbo's good faith estimate of building expenses made after his inspection of the property, and testimony of Petitioner's expert witness as to the reasonableness of the estimate, the estimate of expenses for Respondent's work in the amount of $21,536.68 is accepted as appropriate. Thus, Respondent has failed to account for or return to the Charchuts $30,113.82, the difference between the amount paid by the Charchuts and the estimate of expenses.1 As of September 20, 2000, the Department's costs of investigation and prosecution, excluding legal costs, totaled $1,498.66. 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). The first occasion is reflected in the terms of a Final Order of the Board, (Final Order No. BPR-2000-01399) dated April 4, 2000, which found Respondent guilty of violating Section 489.129(1)(c), Florida Statutes, by making misleading, deceptive, or fraudulent representations to a client; Section 489.129(1)(g), Florida Statutes,2 by acting in the capacity of a contractor in a name other than as set forth on the issued certificate or registration; Section 489.129(1)(h)1, Florida Statutes, by committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer; Section 489.129(1)(l), Florida Statutes, by signing a statement with respect to a project or contract with false information; Section 489.129(1)(m), Florida Statutes, by committing fraud or deceit in the practice of contracting; and Section 489.129(1)(n), Florida Statutes, by committing incompetency or misconduct in the practice of contracting and imposing the penalties of placing Respondent on probation for two (2) years and payment of an administrative fine, costs and restitution to a customer. The second occasion that Respondent was subjected to disciplinary action is reflected in the terms of a Final Order of the Board, (Final Order No. BPR-2000-01443) also dated April 4, 2000, which found that Respondent violated Section 489.129(1)(g), Florida Statutes, by acting in the capacity of a contractor under a certificate or registration other than in the name of the certificateholder; Section 489.129(1)(h)1 and 3, Florida Statutes, by committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer; Section 489.129(1)(l), Florida Statutes, by signing a statement with respect to a project or contract falsely indicating that payment had been made for all subcontracted work; Section 489.129(1)(m), Florida Statutes, by committing fraud or deceit in the practice of contracting; and Section 489.129(1)(n), Florida Statutes, by committing incompetency or misconduct in the practice of contracting; and imposing the penalties of probation, payment of fines, costs and restitution. Respondent apparently did not satisfy the fines and costs imposed by the foregoing orders as Respondent's license was suspended on May 17, 2000, for non-payment of fines, costs or restitution.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Construction Industry Licensing Board enter a final order adopting the foregoing findings of fact and conclusions of law, and which, as penalty for the violations found, imposes an administrative fine in the total sum of $11,250, revokes Respondent's license, orders that Respondent pay restitution to the Charchuts in the amount of $30,113.82, and assesses costs of investigation and prosecution (through September 20, 2000) in the total sum of $1,498.66 against Respondent. DONE AND ENTERED this 12th day of December, 2000, in Tallahassee, Leon County, Florida. BARBARA J. STAROS 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 12th day of December, 2000.
