The Issue Whether Respondent violated Sections 489.129(1)(e), (h)1., (l), (n), and (r), Florida Statutes (1995), and if so, what penalty should be imposed.
Findings Of Fact At all times material to this proceeding, Respondent, Luis Delgado (Delgado), was licensed by Petitioner, Department of Business and Professional Regulation, Construction Industry Licensing Board (Department), as a certified roofing contractor and as qualifying agent for Strong Roof, Inc. (Strong), having been issued license number CCC057175. The Lago Plaza Shopping Center (Lago) is a 154,000 square foot multi-tenant shopping center located in Hialeah, Florida. At all times material to this proceeding, it was owned by a New York real estate company named Emmes & Company through its subsidiary ABI Property Partners L.P. XIX (ABI). In 1996, the roof of Lago was in need of replacement. On February 5, 1996, ABI through its agent and property manager, Atlantic Western Asset Management (Atlantic Western), entered into a written contract with Strong to replace the roof for $185,000. On or about February 5, 1996, Strong provided Atlantic Western with a performance and payment bond for $185,000, as required by Article 21 of the contract between ABI and Strong. Unbeknownst to Atlantic Western at the time the bond was delivered, the performance and payment bond was not genuine, and Delgado knew that the bond was not genuine. The roof replacement work was completed by June 17, 1996. Unbeknownst to Atlantic Western, Delgado allowed Alberto Rodriguez (Rodiguez) and Galaxy Remodeling, Inc. (Galaxy) to use Delgado's contractor's license to obtain the building permit for the Lago project and to perform the work necessary to complete the project. At all times material to this proceeding, neither Rodriguez nor Galaxy was licensed to practice contracting in Florida, and Delgado knew they were not licensed. Pursuant to the contract, Atlantic Western made payments to Strong with seven checks payable to Strong in the total amount of the contract price of $185,000. The amounts and dates of the payments were as follows: $9,250 dated 2/14/96; $9,250 dated 3/13/96; $37,000 dated 4/2/96; $55,500 dated 4/11/96; $37,000 dated 4/27/96; $27,000 dated 6/13/96; and $10,000 dated 6/13/96. In exchange for each of the checks, Strong gave a signed release of lien representing that it had paid for all labor and materials used in the project Within 30 days after the last payment to Strong, Bradco Supply Corporation (Bradco), filed a claim of lien against Lago for $65,891.23 for roofing and/or siding materials ordered by "Galaxy Remodeling, Inc./Strong Rfg. Inc." On July 12, 1996, at the request of Atlantic Western, Delgado met at the shopping center with representatives of Atlantic Western and an attorney for the owner of the property to discuss the lien filed by Bradco. At the meeting, Delgado agreed to remove the lien, but he never did. Later Bradco sued to foreclose the lien, and the owner of Lago paid $60,000 to Bradco to have the lien removed. The owner unsuccessfully sought recourse against the payment bond, which turned out to be fraudulent. On or about June 17, 1996, when the work was completed, Strong gave a ten-year written warranty, which included correcting any leaks due to poor installation. Leaks were discovered, and Atlantic Western and the attorney for the owner reported the leaks to Strong, who failed to perform any correction work or otherwise investigate to determine whether its warranty would be applicable. Atlantic Western retained another roofing company to repair the leaks, at a cost of several hundred dollars. On or about September 27, 1996, the owner of Lago filed a lawsuit against Delgado, Strong, and others, alleging that the defendants breached the contract and committed various other civil wrongs related to the practice of contracting in reference to the roof replacement at Lago. On April 23, 1997, the lawsuit was mediated, resulting in a settlement agreement which was signed by Delgado individually and as president of Strong. Pursuant to the settlement agreement, Delgado admitted most of the factual allegations in the civil complaint and agreed to the entry of a judgment in the amount of $73,755.25. The settlement agreement provided that Delgado, Strong, Rodriguez, and Galaxy were to pay the plaintiff $2,500.00 by April 25, 1997; $2,500.00 by July 25, 1997; and $20,000.00 by August 25, 1997. The settlement agreement further provided that if the payments were not made, the plaintiff could execute on the judgment. On May 15, 1997, an Agreed Final Judgment was entered in accordance with the terms and conditions of the settlement agreement. The first $2,500.00 payment was made but no further payments have been made. The plaintiff garnished two bank accounts, totaling $3,084.28. At the time of the final hearing, there have been no other payments or collections toward satisfying the judgment, and the judgment remains unsatisfied. The judgment was not appealed and has not been discharged in bankruptcy. A motion for relief from judgment was never filed, and there has not been an agreement to receive periodic payments, other than as stated in the settlement agreement. As of August 10, 1999, the Department's costs of investigation and prosecution of this case, other than costs associated with attorneys' fees, totaled $473.25.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Construction Industry Licensing Board enter a final order as follows: Finding that Luis Delgado violated Sections 489.129 (1)(e), (h)1., (l), (n), and (r), Florida Statutes (1995), as alleged in the Administrative Complaint. Imposing administrative fines for each count in the Administrative Complaint as follows: Count I $750 Count II $500 Count III $3,000 Count IV $500 Count V $250 Count VI $500 Assessing Luis Delgado $473.25 for the costs of the investigation and prosecution incurred in this case through August 10, 1999. Requiring Luis Delgado to make restitution to ABI Property Partners L.P. XIX in the amount of $68,170.97 or, in the alternative, provide proof of satisfaction of the May 15, 1997, Agreed Final Judgment in Case No. 96-19621 CA (06) in the Eleventh Judicial Circuit in and for Dade County, Florida. Revoking Luis Delgado's certified roofing contractor license number CCC057175. DONE AND ENTERED this 17th day of September, 1999, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of September, 1999. COPIES FURNISHED: Luis Delgado 344 Northwest 136th Place Miami, Florida 33182 Theodore R. Gay, Esquire Department of Business and Professional Regulation 401 Northwest Second Avenue Suite N-607 Miami, Florida 33128 Rodney Hurst, Executive Director Construction Industry Licensing Board Department of Business and Professional Regulation 7960 Arlington Boulevard, Suite 300 Jacksonville, Florida 32211-7467 William Woodyard, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue is whether the Petition to Determine the Invalidity of Agency Statements should be dismissed.
Findings Of Fact Petitioner is a licensed insurance agent, and was the subject of the Administrative Complaint filed by the Department that became DOAH Case No. 07-1218PL. The Administrative Complaint alleged that Petitioner violated Section 626.611(16), Florida Statutes, by selling unregistered viatical settlement contracts to four elderly individuals in 2003. Most pertinent to this case, the Administrative Complaint alleged: Viatical settlement contracts are investment contracts within the meaning of section 517.021(21)(q), Florida Statutes, and are therefore securities requiring registration pursuant to section 517.07, Florida Statutes. As to each of the transactions described below, the viatical settlement contracts sold by [Petitioner] . . . were unregistered securities.[3] The Administrative Complaint also alleged that Petitioner violated a number of other statutes (e.g., Sections 626.611(5), (7), and (9), and 626.621(9), Florida Statutes) based upon misrepresentations made by Petitioner in connection with the sales of the viatical settlement contracts. On October 9, 2007, Judge Canter issued a Recommended Order in DOAH Case No. 07-1218PL finding that Petitioner violated Sections 626.611(5), (7), (9), and (16) and 626.621(9), Florida Statutes, and recommending that the Department revoke Petitioner’s license.4 The Recommended Order included the following findings and conclusions pertinent to the issue framed by the petition: [Petitioner] misrepresented the risk character of viaticals in his discussions with the investors involved in this case. He had a motive to downplay the true risk character of the viaticals, because if he received a commission for every sale of a viatical. If [Petitioner] had informed the investors of the true risk character of viaticals, the investors might not have purchased the viaticals. The definition of "security" in Section 517.021, Florida Statutes, was amended in 2006 to specifically identify "viatical settlement investment" as a type of security. [Petitioner] does not dispute that a viatical is a security. There is no dispute that the viaticals sold by [Petitioner], which are the subject of this case, were not registered securities when [Petitioner] sold them in 2003. * * * [Petitioner] objects to being charged with selling unregistered securities, because viaticals were not specifically defined as securities until 2006. [The Department] claims that, although viaticals were not specifically defined as securities in Section 517.021, Florida Statutes, in 2003, the prior definition, which included "investment contracts," was sufficient to include viaticals. [The Department] further asserts that viaticals have all the elements of a security as established by the case law. [The Department] is correct that a viatical met the definition of a security under the law that existed in 2003. However, the Administrative Law Judge does not agree with [the Department]'s argument that this interpretation of the law was clear and settled in 2003. The regulation of viaticals under the insurance code was a cause of confusion. Under Florida Administrative Code Rule 69B-231.080, the penalty for each violation of Subsections 626.611(5) and (7), Florida Statutes, is a six-month suspension; the penalty for each violation of Subsection 626.611(9), Florida Statutes, is a nine month suspension; and the penalty for each violation of Subsection 626.611(16), Florida Statutes, is a 12-month suspension. * * * 56. [U]nder Florida Administrative Code Rule 69B-231.040(1)(a), the “penalty per count” cannot exceed the highest penalty for any violation under the count, which in this case is the 12-month suspension for sale of an unregistered security. Therefore, based on the four counts of the Administrative Complaint, the “total penalty” would be four years. * * * 58. A mitigating factor is the unsettled state of the law in 2003 regarding the legal status of viaticals as securities. However, even if the penalty for the sale of unlicensed securities were eliminated altogether and the penalty per count were reduced to a nine-month suspension, the total penalty would be suspension for 36 months. Subsection 626.641(1), Florida Statutes, does not permit Petitioner to suspend a license for more than two years. Therefore, the required penalty in this case is revocation of [Petitioner]’s license. Petitioner has filed exceptions to the Recommended Order, and the Department has not yet entered a Final Order.
Findings Of Fact At all times pertinent to the allegations herein, Respondent was a registered building contractor licensed under the laws of Florida under License No. RB 0033604. During July, 1980, William Wheeler Duncan saw Respondent's advertisement in the newspaper and called him regarding the construction of a home to be financed under the Department of Housing and Urban Development's (HUD) FHA 235 program. As a result of this call, Respondent came to Mr. Duncan's home and, on July 21, 1980, they entered into a written contract for Respondent to build a home for Mr. Duncan for $35,000 on Lot 21, Sunset Street, Golden Heights subdivision, Mount Dora, Florida. That same date, Respondent took Mr. Duncan to look at that lot on which the house was to be built, and Mr. Duncan entered into a contract to buy the lot for $8,800 from Mr. Andrew Lenhardt, which Respondent witnessed. It was Mr. Duncan's understanding that the $35,000 contract price for the house covered the land as well--a package deal. In any case, Mr. Duncan gave Respondent a check that same day for $250 as a down payment, which check was subsequently deposited and the face amount taken from Mr. Duncan's account. After about six weeks, during which time no construction was started, Mr. Duncan called Respondent, who advised him that all was well, that Mr. Duncan's loan had been approved, but that 235 funds were short. He assured Mr. Duncan that more was coming, however. Every couple of weeks or so thereafter, Mr. Duncan would call Respondent, who always told him no money was available yet. Finally, after several months of this, during which no work was done on the house, Respondent finally admitted to Mr. Duncan that no 235 funds ware available and he could not build the house. He stated he had lost a lot of money on several of these contracts he had entered into and he needed time to pay back the deposit. Mr. Duncan agreed to this. After several more calls by Mr. Duncan to Respondent, over a several- month period, Respondent advised Mr. Duncan he would only pay back a portion of tile deposit since he had lost money on these transactions. Mr. Duncan neither agreed nor argued. In any case, as of the present date, Respondent has neither commenced construction nor refunded Mr. Duncan's deposit. M. Jeannette Porter, Supervisor of the Orlando suboffice of HUD, whose duties include administering the FHA program for the immediate nine-county area, recalls that the 235 program which existed at the time in question called for all deposits and application fees to be returned if the loan is not approved. Here, a conditional commitment was issued for this property on October 17, 1980, but the funds for 235 loans, to be covered by this and other commitments, was never forthcoming. This was through no fault of either Mr. Duncan or Respondent, but was the result of factors within the United States Government's control. However, her office is not involved in dealings between the client and the builder. Respondent does not contest any of the comments of Mr. Duncan and agrees that everything he says is true. However, he contends he had several contracts for 235 homes like this and as a result of FHA's inability to provided funds over an extended period at the time or to give him a straight answer to questions he posed to that agency, he lost a considerable amount of money. He is currently holding Mr. Duncan's funds and the funds of others similarly situated. At the time in issue, he did not return the funds because (1) he did not then have the money; (2) it was his belief that he should not lose money because the Federal Government changes its mind; (3) he did all he could to see the house was built; and (4) he was advised by an acquaintance, a county court judge, not to return any funds unless told to do so by a court. He is prepared to return Mr. Duncan's deposit and those of the others if someone who has the authority to do so tells him to return it.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Board enter a final order dismissing the Administrative Complaint. RECOMMENDED this 19th day of August, 1983, in Tallahassee, Florida. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of August, 1983. COPIES FURNISHED: Douglas A. Shropshire, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. Donald G. Hodges 1014 East Alfred Street Tavares, Florida 32778 Mr. James Linnan, Executive Director Construction Industry Licensing Board Department of Professional Regulation Post Office Box 2 Jacksonville, Florida 32202 Mr. Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
