Findings Of Fact At all times material hereto, Respondent has been licensed as a certified general contractor and certified mechanical contractor, having been issued licenses numbered CG-C011731 and CM-C011116. On or about February 16, 1983, building permit number 1-83-01-01119 was issued as a result of an application signed by Respondent, as qualifier, for interior work at a vacant retail store site in Aventura Mall. The building contractor shown on the permit application was R. M. Horton Construction Corporation. On or about April 1, 1983, Respondent applied for a second building permit at the same job site, which was issued as permit number 1-83-01- 02871. The owner of the business located at the job site in Aventura Mall for which Respondent pulled these permits is Don Kaufman. Mr. Kaufman is co-owner and President of Pants Plus, Inc., and was in the process of opening a new retail store at Aventura Mall to be known as "Don Richards." On February 17, 1983, Kaufman entered into a contract on behalf of Pants Plus, Inc., with Rowley-Dees Construction Company. This contract was in the amount of $92,490 and was for all construction necessary to complete the new store, "Don Richards." Mark Rowley was shown as construction manager on the contract, and Kaufman assumed that Rowley was properly licensed to do this work and would obtain all necessary permits. The permits obtained by Respondent, referenced above, were for this same job for which Kaufman originally contracted with Rowley-Dees Construction Company. After work was begun on Kaufman's job it was "red tagged" by the Dade County Building Inspection Department, and all work was delayed for approximately two weeks until Kaufman could execute a new contract with a properly licensed contractor. Kaufman executed a contract with Respondent on March 30, 1983, showing R. M. Horton Construction Corporation as the contractor, at which time Respondent pulled the second permit for this job on or about April 1 and work resumed. The contract executed by Respondent with Kaufman on March 30, 1983, stated as to contract sum: The Owner shall pay the Contractor in current funds for the performance of the Work, subject to additions and deductions by Change Order as provided in the Contract Documents the Contract Sum of Ninety-Two Thousand Four- Hundred Ninety ($92,490.00) Dollars: provided, however, Contractor acknowledges that the sum of $41,620.50 has already been paid Rowley-Dees Construction Co., Inc., in connection with Phase 1 and Phase 2 of Article 5 Progress Payments, and Contractor acknowledges that Contractor shall have no claim to said sum. The amount due Respondent for completing the job would therefore be $50,869.50. Respondent received payments from Kaufman on behalf of Pants Plus, Inc., on April 21 and May 3, 1983, under this contract in the total amount of $40,000, leaving an unpaid balance of $10,869.50. Respondent has received no further payments under this contract. The store, "Don Richards," opened on May 1, 1983, but Kaufman testified that Respondent had not completed various construction items which he referred to as "minimal" incompletion of less than the ten percent of the job. Specifically, Kaufman testified that various cabinets, including a large jewelry display cabinet, lighting, carpeting and the water sprinkler system were all left incomplete by Respondent. In addition a four liens were filed by subcontractors in connection with the work they performed at "Don Richards." These liens were in the total amount of $19, 986.18. Respondent contends that he had to provide many items that Kaufman, as owner, should have provided under the contract and that these "extras" increased his costs, but that the job was substantially complete when he left it. He testified that he was willing to forego the amount due him under the contract and to absorb the costs resulting from the "extras" in return for Kaufman satisfying the liens. However, there is no evidence that Respondent discussed this arrangement with Kaufman or that Kaufman agreed to it. Respondent did not offer any competent substantial evidence to corroborate his testimony about the "extras" or his contention that he was forced to absorb costs on the job which Kaufman should have paid. On March 30, 1983, Kaufman and the officers of Rowley-Dees Construction Company executed a Guarantee and Indemnification Agreement which states, in pertinent part: Rowley-Dees, Construction, Co., Inc., Thomas G. Rowley and David Dees, jointly and severally agree that the written acknowledge of Pants Plus, Inc. that R.M. Horton Construction Corporation has failed or refused to perform any of the terms and conditions required to be performed by it in accordance with the attached Exhibit "A" shall bind each of them and; furthermore, Rowley-Dees Construction Co., Inc., Thomas G. Rowley and David Dees jointly and severally agree that any extension of time granted by Pants Plus, Inc. to R. M. Horton Construction Corporation in connection with R. M. Horton Construction Corporation's obligations required to be performed . . . shall in no manner whatsoever release Rowley-Dees Construction Co., Inc., Thomas G. Rowley and David Dees from any liability hereunder. Rowley-Dees Construction Co., Inc., Thomas G. Rowley and David Dees, jointly and severally agree that upon demand of Pants Plus, Inc., each of them, jointly and severally promise to pay any amount due and owing to Pants Plus, Inc. without any action or proceeding being taken by Pants Plus, Inc. against R. M. Horton Construction Corporation. Kaufman never filed a written notice of Respondent's failure to complete the terms of his contract, nor did Kaufman ever file a demand for payment against Rowley-Dees Construction Company, Thomas G. Rowley or David Dees in connection with the liens filed by the subcontractors. Respondent's contract with Kaufman required the job to be "substantially complete" by April 20, 1983, which was the original opening day of Aventura Mall. However the Mall did not open until May 1 and no stores could open before that date. "Don Richards" opened on May 1 which was the first day it could have opened. Posthearing proposed findings of fact submitted pursuant to Section 120.57(1)(b)4, F.S., have been considered. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial or unnecessary.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that a Final Order be entered suspending Respondent's certified general contractor's license number CG-C011731 for a period of sixty (60) days. DONE AND ENTERED this 6th day of June 1985 at Tallahassee, Florida. DONALD D CONN Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 6th day of June 1985. COPIES FURNISHED: W. Douglas Beason, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Richard M. Horton 11455 Southwest 104th Court Miami, Florida 33176 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 James Linnan, Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202
The Issue The issue in this case is whether Respondent failed to include his professional license number on contractual documents, committed mismanagement or misconduct in the performance of contracting services, abandoned construction projects, and was incompetent or mismanaged work he performed.
Findings Of Fact Petitioner is the state agency responsible for, inter alia, licensing general construction contractors in the State of Florida. Its headquarters is located in Tallahassee, Florida. Respondent is a certified general contractor, who has qualified two businesses under his license: Arizen Homes, Inc., and Islander Builders, Inc. Respondent's two licenses, both of which are currently active, are Nos. CG-C1104399 and CG-C1204399. Respondent has two addresses of record with Petitioner: 1862 Pier Point Street, North Port, Florida, and 2700 West Cypress Creek Road, No. B-111, Ft. Lauderdale, Florida. Shanahan Project On or about December 21, 2005, Respondent contracted with Steve Shanahan to build a home at 3416 6th Street Southwest, Lehigh Acres, Florida. (An amended contract was prepared on January 23, 2006, and an addendum was added on February 8, 2007.) The contract price was $292,300. The contract did not contain Respondent's license number on it. Shanahan paid Respondent a deposit on the contract amount by way of four checks totaling $14,865. Shanahan did not own the lot on which the house was to be built by Respondent. One of the checks (in the amount of $250) Shanahan sent to Respondent was for "lot evaluation." That is, Shanahan paid Respondent to determine the adequacy of the lot for the proposed house, which Respondent presumably did. Shanahan was relying on Respondent to assist him (Shanahan) with the purchase of the lot. Early in 2006, Shanahan began calling Respondent to ascertain why no work was being done on the site. He was advised by "Michael" at Respondent's office that the project was going to take a little longer than expected. An addendum to the contract was prepared in February 2008, extending the deadline for completion from two years to three years. Shanahan signed the Addendum. No work has been done on Shanahan's house. The contract with Respondent was never terminated. None of Shanahan's deposit money was returned to him. Respondent is not financially able to do any work on Shanahan's home at this time. Hall Project By contract dated October 22, 2006, Respondent agreed to construct a house for Dornant Hall at 1017 State Avenue, Lehigh Acres, Florida. The contract amount was $372,960. The contract did not include Respondent's license number. Hall paid Respondent a deposit of $17,648 by way of two separate checks. The contract between Hall and Respondent was never terminated. No work has been done on the proposed house, nor is Respondent financially able to work on the project at this time. Hall did not receive any of his deposit back from Respondent. Gordon/Suarez Project On June 10, 2006, Respondent contracted with Arthur Gordon and Alma Suarez to construct a house for them at 1311 Southwest 38th Terrace, Cape Coral, Florida. The contract amount was $404,039 for the lot, the house, and a pool. The contract between Gordon/Suarez and Respondent did not include Respondent's license number. Gordon/Suarez paid for the lot on which the home was to be built. An additional deposit of $44,411 was paid to Respondent either by way of checks or draws from the construction loan. Some of that amount may have been for impact fees or permits relating to construction, but the permits were never picked up from the city or county by Respondent. The contract between Respondent and Gordon/Suarez was never terminated. The house called for in the contract was never built. Gordon/Suarez did not receive their deposits back. Gordon/Suarez ultimately contracted with another builder to construct a home on the site. The house built for Gordon/Suarez had more options than the one planned by Respondent and cost less. However, Gordon/Suarez never got their money back from Respondent. Respondent's Position Respondent has been a builder since 1972 and a licensed general contractor in Florida since at least 1990 (the date Island Builders, Inc., was licensed). Respondent was building homes in Lee and Charlotte counties for many years. In total, Respondent built approximately 200 to 300 homes in that geographic area and had plans to expand to other counties as well. For most of its existence, Respondent relied upon a line of credit from lenders to fund construction projects. Once a contract with a client was finalized, Respondent would take a small deposit, then begin construction using money from the line of credit. The line of credit was sometimes also used to purchase lots on which to build the homes. From September 2006 through July 2007, Respondent began to experience great difficulty closing construction projects. The real estate boom had reached its climax and was beginning to quickly diminish. Appraisals of projects were going down. Respondent could not match competitors which owned their own lots. It was a difficult time for Respondent financially. In 2007, Respondent had approximately 100 houses in various stages of development. About one-half of those homes had received Certificates of Occupancy so that the buyers could move in once the closing was held. However, many buyers did not close on the deals for a number of reasons. Some could not get an appraisal of the home high enough to justify the mortgages for which they had applied. Others simply got "cold feet" as a result of the economic situation in the state. Many buyers simply did not show up at the scheduled closing. Buyers began to ask Respondent for discounts at closing, meaning that Respondent was losing money on many projects. In response, Respondent began negotiating with its lenders, seeking for a discount from them to match the discounts being requested by buyers. Respondent asked its bank for a 30-percent discount; the request was denied. Respondent asked for 16-percent; that was also denied. Finally, in May 2008, negotiations between Respondent and its lenders ended. The banks refused to give Respondent any leeway on the amounts owed on the construction loan lines of credit. The banks refused to enter into an agreement to purchase the houses with Certificates of Occupancy in order to generate capital to pay off the line of credit. The effect of termination of discussions between Respondent and the banks was to place Respondent in bankruptcy. That effectively ended Respondent's ability to do any further work on its clients' houses. And because all of Respondent's funds were tied up in bankruptcy, Respondent could not offer any refunds to his aggrieved clients. Respondent also offered to finish all the pending projects for the banks, allowing the banks to then negotiate settlements with the buyers, but that offer was refused as well. Respondent did not refund the deposits paid by Shanahan, Hall, and Gordon/Suarez. Based on the pending bankruptcy, Respondent does not have the current ability to make such refunds.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department of Business and Professional Regulation, Construction Industry Licensing Board, finding Respondent guilty of violating Subsection 489.129(1), Florida Statutes, and that: (1) a fine of $9,750 be imposed and that Respondent be required to pay $841.09 in costs; and (2) Respondent's license be suspended until such time as all fines and costs have been paid. All claims for restitution by the aggrieved parties will need to be filed in the bankruptcy court proceeding. DONE AND ENTERED this 13th day of April, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 13th day of April, 2009. COPIES FURNISHED: G. W. Harrell, Executive Director Construction Industry Licensing Board Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Ned Luczynski, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Val L. Osinski, Esquire Law Offices of Val L. Osinski 9600 West Sample Road, Suite 304 Coral Springs, Florida 33065 Lisa Livezey Comingore, Esquire Tiffany A. Harrington, Esquire Sorin Ardelean, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 42 Tallahassee, Florida 32399-2202
The Issue The issue is whether Respondent violated Subsections 489.129(1)(g), (i), (j), and (m), Florida Statutes (2001), by allegedly engaging in financial mismanagement, abandoning a construction project, engaging in misconduct or being incompetent, and failing to disclose the rights of the consumer in a contract. (Statutory references are to Florida Statutes (2001).)
Findings Of Fact On July 18, 1984, the Construction Industry Licensing Board (the Board) licensed Respondent as a Florida State Certified General Contractor pursuant to license number CG C028520. Respondent registered with the Board as doing business in the name of "Midgett Development Inc." (Midgett Development). Respondent conducted business as Midgett Development in 2001. In 2001, Respondent also conducted business as a licensed real estate broker through Sundial Group Enterprises, Inc. (Sundial). On February 20, 2001, Respondent executed a contract with Ms. Linda Luck (Luck) requiring Midgett Development to build a residential home on a vacant lot located at 1510 Northeast 11th Street, Cape Coral, Florida, that Sundial was to purchase from a third party (the contract). The contract identifies Midgett Development as the contractor and Sundial as the purchaser of the lot. The contract violates Subsection 489.129(1)(i). The contract does not contain a written statement explaining the consumer rights to which Luck is entitled under the Construction Industry Recovery Fund. The contract requires the contractor to use its best efforts to deliver the completed residence "on or about 120 days" from the start of construction. The start of construction is defined as the day footings are poured; or the day rough plumbing is begun if the contractor uses monolithic footings and slab. The contract provides that time is of the essence. The contract price is $70,000.00 and pays the cost of purchasing the lot and the cost of constructing the residence. The contract requires Luck to pay $20,000 at the signing of the contract and an additional $50,000 at the closing for the purchase of the lot. Luck paid Midgett Development the total contract price on February 20, 2001. Luck issued two separate checks to Midgett Development for $20,000 and $50,000. Each check is dated February 20, 2001. Sundial closed on the purchase of the lot and deducted a buyer's real estate commission from the closing proceeds. Sundial or Respondent took title to the lot. Respondent testified that he did not apply for the building permit until he had clear title to the lot. The closing date for the lot acquisition is not in evidence. Respondent and Midgett Development failed to begin construction of the residence within 90 days of the date of the contract within the meaning of Section 489.129(1)(j). Respondent applied for a building permit from the City of Cape Coral, Florida (Cape Coral) on January 10, 2002, approximately 324 days after executing the contract. Respondent provided no credible and persuasive explanation for his delay in applying for a permit. On direct examination, Respondent testified that he expended $19,000 of the $70,000 shortly after he executed the contract, in relevant part, to purchase the lot. Respondent later testified that he did not apply for a building permit before January 10, 2002, because he did not have clear title to the lot before that date. Respondent's testimony is not supported by other evidence and is neither credible nor persuasive. Cape Coral issued a building permit for the residence on March 11, 2002, approximately 394 days after Respondent executed the contract. By May 2002, approximately 80 days after receiving the building permit, no evidence of construction activity could be observed on the lot. By July 30, 2002, approximately 533 days after executing the contract, Respondent and Midgett Development "began construction," as that phrase is defined in the contract. On July 30, 2002, Cape Coral issued favorable foundation and plumbing inspections. Respondent and Midgett Development abandoned the construction project while each was under contract as a contractor within the meaning of Subsection 489.129(1)(j). Assuming arguendo that Respondent and Midgett Development had legitimate reasons for not beginning construction prior to July 30, 2002, Respondent and Midgett Development abandoned the construction project on October 30, 2002, approximately 90 days after July 30, 2002, without just cause, and without notice to Luck. After July 30, 2002, Respondent and Midgett Development did not engage in any further construction activity, and Cape Coral rescinded the inspection approval. When Respondent and Midgett Development abandoned the construction project, they committed mismanagement and misconduct in the practice of contracting within the meaning of Subsection 489.129(1)(g)2. At the time Respondent and Midgett Development abandoned the project, the percentage of completion was less than the percentage of the total contract price paid by Luck. Respondent and Midgett Development caused financial harm to Luck. As of the date of hearing, Respondent and Midgett Development had not completed the project and had not refunded any of the money paid to them. Respondent provided no credible and persuasive explanation for the failure to either construct the residence or refund the money paid by Luck. Respondent's testimony that Luck requested Respondent to stop construction is not supported by other evidence, including Luck's testimony. Luck's testimony is credible and persuasive. If it were found that Luck asked Respondent not to complete construction, the purported request is not material to this proceeding. Respondent began construction on July 30, 2002. Respondent testified that Luck asked Respondent on April 1, 3, and 12, 2003, not to complete construction. Respondent had ample time between July 30, 2002, and April 1, 2003, to complete construction. He also had ample time between February 20, 2001, and July 30, 2003, to complete construction. Respondent and Midgett Development misallocated funds entrusted to them by Luck within the meaning of Subsection 489.129(1)(m). Neither Respondent nor Midgett Development has reimbursed Luck or paid restitution to her. Between November 15, 2002, and August 18, 2003, Respondent paid approximately $13,074 to third parties for living expenses incurred by Luck, including rent, utilities, and similar expenses. Those amounts do not constitute restitution or reimbursement of part of the $70,000 paid by Luck for the construction of her residence. Luck paid Respondent $70,000 to build a house and not to pay her living expenses. Luck is a single parent and would have been evicted and "out on the street" unless Respondent paid her living expenses. Luck was unable to pay her living expenses because Respondent had $70,000 of Luck's money. The payments made by Respondent may, or may not, be treated by the circuit court as a set off against a judgment obtained by Luck in circuit court. That determination, however, is beyond the scope of this proceeding. Respondent testified that he spent another $19,000 for Luck. However, Respondent expended most of that sum purchasing a lot owned either by Sundial or Midgett Development, earning a commission for Sundial, and constructing some improvements on the lot. None of that money is restitution or reimbursement to Luck. Petitioner previously disciplined Respondent for violations of Chapter 489 in Department of Business and Professional Regulation Case Numbers 200003354 and 200108551. Petitioner conducted each matter as an informal hearing before the agency. In the former case, Petitioner and Respondent entered into a written Stipulation on October 29, 2001. Respondent agreed to satisfy a civil judgment against him but neither admitted nor denied the allegations against him. In the latter case, Petitioner entered a default judgment against Respondent on March 4, 2003, for failure to satisfy another civil judgment against Respondent and placed Respondent on probation for two years. Petitioner has incurred investigative costs in the instant proceeding that exclude costs associated with the time expended by attorneys for Petitioner (investigative costs). The total investigative costs incurred by Petitioner are $1,429.61.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a Final Order finding that Respondent and Midgett Development are guilty of the violations alleged in the Administrative Complaint; revoking the license and registration of Respondent and Midgett Development; imposing an administrative fine of $5,000; and ordering Respondent and Midgett Development to make full restitution to Luck and to pay investigative costs in the amount of $1,429.61. DONE AND ENTERED this 28th day of October, 2003, in Tallahassee, Leon County, Florida. S DANIEL MANRY 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 28th day of October, 2003. COPIES FURNISHED: Kimberly Clark Menchion, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Darrin R. Schutt, Esquire Seeman & Schutt, P.A. 1105 Cape Coral Parkway, East Suite C Cape Coral, Florida 33904 Nancy P. Campiglia, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202 Tim Vaccaro, Executive Director Construction Industry Licensing Board Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
