Findings Of Fact Petitioners, Leon Motor Lodge, Houston Motor Lodge, and Taylor Motor Lodge, are three Georgia corporations operating motels located in Leon County, Florida, Taylor County, Florida and Escambia County, Florida, respectively. In 1982, 1983 and 1984, each hotel corporation held a franchise from Howard Johnsons. All three corporations were wholly owned by David Shapiro and Company, Inc. David Shapiro and Company, Inc., is also a Georgia corporation with its principal office in Valdosta, Georgia. David Shapiro, Victor Shapiro and Carl Shapiro are officers and directors of the parent corporation, David Shapiro and Company, Inc., and are also officers and directors of each of the three subsidiary hotel corporations. David Shapiro and Company also engages in other business activities not related to the hotel corporations. All four corporations use the accounting services of Gerald Henderson, C.P.A. Charles Hanlon, an employee of the Department, conducted an audit of David Shapiro and Company, Inc., and its wholly owned subsidiaries, Leon Motor Lodge, Houston Motor Lodge, and Taylor Motor Lodge. The audit concerned the taxable years ending September, 1982, 1983 and 1984. Mr. Hanlon's audit determinations did not treat Petitioners as a unitary business group. Paul Craft, C.P.A., was Mr. Hanlon's audit supervisor. Mr. Craft reviewed Mr. Hanlon's audit workpapers and determined that Hanlon's audit improperly disallowed Petitioners the use of a federally reported deduction and overlooked the existence of a unitary business group. After determining that Mr. Hanlon's original audit work was flawed, Mr. Craft made arrangements with the Petitioners' designated representative, Gerald Henderson, C.P.A., to personally redo Hanlon's field audit work. The field audit work was performed at Mr. Henderson's office in Valdosta, Georgia. Over a one week period, Mr. Craft reviewed the Petitioners' computer printouts of journals and ledgers as well as Petitioners' summary business records. Mr. Henderson was consulted for assistance in explaining the Petitioners' accounting controls, records organization, and in locating various records. As a result of the audit, on April 18, 1986, the Department issued revised notices of intent to make audit changes, with supporting workpapers, and delivered the same to the Petitioners' representative, Gerald Henderson. Afterwards, Gerald Henderson and Paul Craft discussed the revised audit determinations and Mr. Craft explained the audit changes to Mr. Henderson. The Department's revised notices of intent to make audit changes involved basically four audit determinations or issues. The audit determinations were: a determination that the Petitioners had not properly used three factor apportionment; a determination that David Shapiro and Company, Inc., Leon Motor Lodge, Inc., Taylor Motor Lodge, Inc. and Houston Motor Lodge, Inc. constituted a "unitary business group" for the taxable years ending 1983 and 1984; a determination that interest earned on installment sales income should be excluded from the sales factor of the apportionment formula, and; a determination that Taylor Motor Lodge could not carry-forward its net operating loss to the 1982 taxable year. 1/ The Department subsequently issued its notices of proposed assessment based upon these four revised audit changes. 2/ The Department's notices of proposed assessment were based on the revised audit work of Paul Craft and not on Ray Hanlon's original audit work. These notices of proposed assessment were timely mailed to the Petitioners. The Petitioners protested the notices of proposed assessment. Upon review of the protest, the Department issued and timely mailed a Notice of Decision to the Petitioners which sustained the Department's position on all issues. The Petitioners' petition for reconsideration resulted in the timely issuance and mailing of a Notice of Reconsideration which again sustained the Department's position and rejected the Petitioners' protest position. After the filing of the Petitioners' request for a formal administrative hearing, but prior to hearing, the Department revised the original proposed assessments. The revisions consisted of the following: the inclusion of interest on installment sales income in the apportionment fraction; and, the correction of a math error. The revisions served to reduce the total sums originally assessed by approximately $18,000.00. No new tax liability was created by these "revisions". Revised notices of proposed assessments were prepared and timely mailed to Petitioners. During taxable years ending 1982, 1983 and 1984, the Petitioners had payroll, property and sales in Florida. The payroll was attributable to employees involved in the operation of Leon Motor Lodge, Taylor Motor Lodge and Houston Motor Lodge. The sales consisted primarily of motel rents and receipts from the sale of food in the restaurants which adjoined the motels. Sales also included some installment sales income from the earlier sale of apartments and motels. The property factor consisted of the three motels and the restaurants associated with those motels. All such property was located in Florida. During the tax years in question, multi-state corporations, such as the corporations involved in this case, were subject to an income tax based on the share of that taxpayer's adjusted federal income tax which was attributable to Florida. In order to determine the amount of a taxpayer's adjusted federal income tax attributable to Florida, the legislature established a statutory three factor apportionment method whereby a taxpayers' "adjusted federal income" is apportioned among the states by reference to a weighted formula consisting of payroll, property and sales factors. The "apportioned" share of a taxpayers' "adjusted federal income" is then taxed by Florida. A taxpayer must use the statutory three factor apportionment formula unless the taxpayer can establish that the statutory three factor apportionment formula "does not fairly represent" the degree of that taxpayer's economic activity in Florida and that whatever apportionment method the taxpayer used fairly represents that taxpayers degree of economic activity in Florida. See, Sections 220.13, 214.71, Florida Statutes (1983). Petitioners used a three factor apportionment method similar to the statutory three factor apportionment method used by the Department. However, the Petitioners' method was not precisely the same method as the statutory three factor apportionment method used by the Department. The Petitioners' method, in fact, yielded a lower tax for Petitioners. No substantive evidence was submitted which demonstrated that Petitioners' departure from the statutory three-factor apportionment method was justified. Therefore, since the evidence demonstrated that Petitioners deviated from the statutory three factor apportionment method and since the evidence did not demonstrate any reason for not utilizing that statutory method, the Department's revised assessment on this issue should be sustained. For taxable years ending 1983 and 1984, Florida had enacted Section 220.03(1)(bb), Florida Statutes (1983). That section established a special type of apportionment for businesses which constituted a "unitary business group." A "unitary business group" was defined as "a group of taxpayers related through common ownership whose business activities are integrated with, are dependent upon, or contribute to a flow of value among members of the group." Factors to be looked at in determining whether a group of taxpayers constituted a unitary business group included, but were not limited to, whether there was common purchasing of equipment, common accounting facilities, common legal representation, intercompany financing, joint efforts in expanding the business, shared officers and directors, submission of monthly financial statements, a uniform management theory, or an interchange of knowledge and expertise among the companies. See Rule 12C-1.51, Florida Administrative Code, and DR-Form F- 1061, "Instructions for Filing Under the Unitary Reporting Method". When, as in this case, a parent company owns or controls 50 percent or more of the outstanding voting stock of its subsidiaries, then the taxpayers have the burden to clearly establish that they are not a unitary business. Section 220.03(1)(bb), Florida Statutes. In this case, there was common ownership among the subsidiaries in that during the pertinent taxable years ending 1983 and 1984, David Shapiro and Company, Inc., owned or controlled all of the issued and outstanding voting stock of Leon Motor Lodge, Inc., Houston Motor Lodge, Inc. and Taylor Motor Lodge, Inc. Additionally, the directors and officers of the parent corporation and the subsidiary corporations were the same individuals and these dual officers made the decisions regarding the selection of managers, and the employment and replacement of managers. The hotel corporations did not maintain offices at the motel site for any of the officers or directors of the parent corporation or any of the officers of the individual hotel corporations. When these officers visited the motels, they would use whatever office or facilities were available. Local managers were responsible for the day to day operations of that manager's hotel. The day to day operations included decisions on the hiring and firing of employees, the disciplining of employees, the salaries of employees, and the hours, duties and responsibilities of employees. The managers made all decisions with regard to the advertising and public relations for that manager's motel 3/ Each manager was authorized to write checks from the manager's account associated with that manager's hotel. Each manager wrote all checks paying for the normal operational expenses incurred by that manager's hotel. Disbursements which were typically made by the local managers included soap, toilet tissue, replacement linens, maid's uniforms, kleenex and other minor purchases such as the purchasing of one television, as well as, minor repairs to rooms if needed. Each hotel had a bookkeeper or auditor who kept the books and recorded the sales receipts and disbursements for the hotel. The evidence was not clear whether such purchases and decisions were made independently by the local manager of each hotel or whether such purchases above a certain amount of money required the local manager to confer with the officers or directors of David Shapiro and Company, Inc., in Valdosta. Additionally, there was no substantial exchange of personnel between the hotel corporations. The parent corporation did not have a training program for its managers or employees. However, Howard Johnsons' did require that the managers attend a Howard Johnsons' management school to become acquainted with the requirements of Howard Johnsons' franchise agreements. Finally, each of the hotel corporations was represented by local counsel in each of the cities where that corporation was located. However, it should be noted that the Petitioners were commonly represented at the hearing by Larry Levy. The evidence also established that the corporate minute books of Petitioners and of the parent company were commonly maintained by one law firm, Kilpatrick and Cody, in Atlanta Georgia. The cost of these common legal services was included in the management fee which David Shapiro and Company charged each of the Petitioners. Considering all of the above factors, it would appear that, at least on the surface, each hotel corporation was a separate entity from its parent corporation and from its sister corporations. However three very important pieces of evidence substantially erode the reality of this surface independence. First, all major decisions regarding the three hotel corporations were made by David Shapiro and Company, Inc. Specifically, these decisions were made by the principal officers of the Shapiro company, each of whom were members of the Shapiro family. In the words of Carl Shapiro, "all the major purchases, we did ourselves." For example, the decision to buy cash registers from NCR, rather than from another supplier, and the shopping of such a purchase was made by either Victor Shapiro or Carl Shapiro. Major purchases such as fifteen beds, television sets, air conditioners, or the decision to incur the expenses involved in refurbishing one of the hotels to conform to Howard Johnsons' standards 4/ were made by the officers of the Shapiro company and not by the local managers of the three hotel corporations. Major repairs and purchases such as was caused at the Leon Motor Lodge by severe flooding were also made by the officers of the parent corporation. 5/ One prime example of the control of the parent corporations over the hotel subsidiaries occurred when the hotel corporations purchased the restaurant associated with that hotel. Originally, the Petitioners only operated the motels. The restaurant at each motel was operated by Howard Johnsons. However, prior to the period of the audit, Howard Johnsons, for business reasons, decided it would no longer operate the restaurants associated with its hotel franchises. While the purchase of the restaurants was not required by Howard Johnson's, the franchise owner/operators were forced to purchase and take over the operation of the restaurants in order to avoid having an empty and closed restaurant in front of the motels. David Shapiro and Company, Inc., believed that such closed restaurants in front of the motels would cause the operation of the motels to suffer drastically. Therefore, the Shapiros' decided that each hotel corporation would purchase and assume operation of that motel's adjoining restaurant. After the restaurants were acquired and operation commenced the restaurants were at all times managed by a manager who was a different person from the manager of the motel. Each restaurant manager had authority and control over that restaurant's operation similar to the managers of each hotel. Likewise, separate bank accounts and separate books of receipts and expenditures were maintained for each restaurant. Second, the bank accounts of each motel in each city consisted of (1) the manager's account which was sometimes referred to as a petty cash account; (2) the main account which was the account into which receipts from sales and rental of rooms were deposited on a daily basis; and (3) the bank credit card account which received credit card deposits. As indicated earlier, the managers of each subsidiary motel only had the ability to sign checks on a separate subsidiary account which was referred to as a petty cash account or managers account. The normal operational expenses incurred by the motel were written by the managers out of these manager's accounts. Funds in the manager's accounts varied and could range from $7,500.00 to as high as $12,000.00 or $15,000.00. Importantly, the manager's account for each hotel would be reimbursed from the hotel's main account on a regular basis. The checkbook for each hotel's main account, was maintained at the offices of David Shapiro and Company, Inc. in Valdosta, Georgia. The managers lacked any authority to write checks upon these accounts. The managers would ordinarily exhaust all funds in that manager's account in one week to ten days. Therefore, replenishment of the funds in a manager's account occurred every week to ten days. The manager's accounts required replenishment because deposits from sales and rentals were made daily into the main accounts. All of the main accounts were controlled in Valdosta by David Shapiro and Company. Daily, each manager or bookkeeper submitted a list of receipts and disbursements together with statements of purchases to Jerri Tomlinson, the office manager for Shapiro and Company, Inc. Ms. Tomlinson would mathematically verify the information she received from the hotels and computer code these records. These accounting reports and ledgers were then compiled by David Shapiro and Company's C.P.A. into computer printouts. These printouts were then delivered to Shapiro and Company, in Valdosta Georgia, which retained the data compilations for its records. Gerald Henderson's firm not only compiled the data described above, but it also functioned as the auditor for the parent and its subsidiary corporations. By this uniform system of management and integrated accounting controls, David Shapiro and Company, Inc. not only had access to vital management information, but also exercised the ability to control the level or amount of cash in each manager's petty cash account. In addition to the daily data it received, David Shapiro and Company, Inc., regularly reviewed a weekly report submitted by each hotel's manager and then determined how much money to transfer into that manager's account from the main account and whether the amount requested by management was "warranted." There is no question that by maintaining main accounts at the parent level, David Shapiro and Company, Inc. was able to directly control the expenditures of each hotel. That is, the main accounts were not only used to replenish the managers' operating accounts, but also, to directly control that manager's ability to make purchases for the hotel. Third, the parent corporation and its subsidiaries engaged in financially helping each other out when one corporation's sales were not sufficient to meet its overhead. This intercompany financing took the form of loans between and among the parent corporation and the subsidiary corporations. All the loans were interest bearing loans and met Federal IRS requirements. All of these loans were made at below market rate. An example of this intercompany financing occurred during the audit period. Leon Motor Lodge was losing money, and Taylor and Houston Motor Lodges were making money. There were several loans back and forth between the subsidiary companies. In referencing these loans, Carl Shapiro stated in his deposition that "there was a lot of them, and there were some big ones. I guess ten or fifteen or twenty thousand sometimes. It could amount to that much." This intercompany financing creates a material "flow of value" between and among the parent corporation and the subsidiary companies and demonstrates the unitary nature of Petitioners' businesses. Additionally, all three of the facts mentioned above, demonstrate that Petitioners applied a routine management theory to the hotel corporations in that routine day to day decisions were delegated to subsidiary managers but ultimate control over the family business was retained at the David Shapiro and Company level. This uniform management was accomplished through family control over main accounts, control over major purchasing or expansion decisions, control over the hiring and firing of local on site managers, and the level of funds to be entrusted to any given manager. Likewise, the shared officers of the subsidiary companies resulted in an interchange of knowledge and expertise among the corporations since the experiences learned by the Shapiro family in managing one hotel could be directly applied to the operations of the other corporations. Finally because of the Shapiro's uniform management and integrated accounting controls, significant economies of scale resulted. To begin with, the companies had the ability to make intercompany loans at below market rates. In addition, by maintaining the bank accounts of each hotel at the same bank, the companies enjoyed an economy of scale which resulted in discounts on banking service charges in excess of the discounts available to any of the subsidiaries individually. Similar economies of scale resulted in discounts to Petitioners on insurance rates. These discounts create a "flow of value" resulting from the unitary operations or pooling of resources by Petitioners. Clearly when all the facts are considered, Petitioners constituted a unitary business group as defined in Section 220.03(1)(bb), Florida Statutes. Therefore, the Department's revised assessments on this issue should be sustained.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is accordingly recommended that the Department of Revenue enter a Final Order sustaining the Department's revised assessments against Leon Motor Lodge, Inc., Taylor Motor Lodge, Inc., and Houston Motor Lodge, Inc., with the exception of the corporate income tax assessment against Taylor Motor Lodge, for the taxable year ending 1982, which has already been withdrawn. RECOMMENDED this 31st day of May, 1991, in Tallahassee, Florida. DIANE CLEAVINGER 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 31st day of May, 1991.
The Issue The issue posed for decision herein is whether or not Respondent failed to fulfill contractual obligations; willfully or deliberately disregarded and violated applicable local building codes and made misleading representations by issuing a warranty which he later refused to honor in violation of Section 489.129(1)(c), (d) and Section 455.277(1)a, Florida Statutes.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following relevant findings of fact: By its Administrative Complaint filed herein, Petitioner seeks to take disciplinary action against Respondent, as licensee and against his license to practice contracting in the state of Florida. Respondent is a certified general contractor having been issued license number CBC006481. On June 6, 1981, Respondent, as qualifier for Behr Contracting, Inc., entered into a contract with Mrs. Susan Fuller to reroof her home at 811 Santiago Street, Coral Gables, Florida. (Petitioner's Exhibit 1) Respondent guaranteed to Mrs. Fuller that all materials furnished by Behr Contracting would be of standard quality, type and condition, free from defects, and that said labor and materials would be guaranteed against structural and material defects. Respondent pulled the required building permit and commenced the reroofing off Mrs. Fuller's residence on June 11, 1981. (Petitioner's Exhibit 2) During the course of construction, several defects became apparent. As example, the tile was installed approximately two months after the contract was entered (August, 1981) and during the next month, September, 1981, leaks started which damaged the ceiling, pecky cypress, plaster in the dining and bedrooms, the kitchen walls, and other interior furnishings of the Fuller residence. When Mrs. Fuller observed the leaks in the roof, she immediately notified the Respondent that there was a problem with the roof and requested that he return to the site to inspect the roof and to correct same. Despite repeated demands, Behr refused to repair the interior damage to Mrs. Fuller's residence. During approximately June, 1982, Behr installed a solar system on the Fuller's residence. Respondent guaranteed the roof on the Fuller residence for a period of fifteen years including the texture coating to the roof and the slide of the residence. Respondent also agreed to abide by all ordinances, rules and regulation of the Building Department of the City of Coral Gables, Florida. Mrs. Fuller filed a formal complaint against Respondent on approximately May 24, 1982. Following the installation of the roof on the Fuller residence, several leaks lasted for extended periods of time and the Fullers including her roommate, Heather Stever, had to repeatedly place buckets in and around the Fuller residence to attempt to contain water which was entering the roof through various cracks in the roof. Evidence of the leakage was evident in at least three rooms of the Fuller residence. (Testimony of Robert Harvilla and Heather Stever) The Respondent contends that there was no defective workmanship or materials used or performed by him in the reroofing of the Fuller residence and that the cause of the leakage in the Fuller residence was precipitated by nuts, bolts and other foreign materials which were strewn over the roof when the solar system was installed. Respondent contends that the foundation of the roof was penetrated by the solar system which destroyed the integrity of the roof. In this regard, it is found herein that the leakage to the Fuller residence occurred immediately after the Respondent installed the new roof to that residence and that the leakage persisted until it was corrected months later after Mrs. Fuller had her home reroofed in December of 1982. Evidence adduced herein failed to establish that the leakage to the Fuller residence which ultimately caused damage to the interior of their residence, was a result of foreign matter attributable to any cause other than the installation of the new roof by Respondent. Finally, Respondent refused to complete other items he specifically contracted to perform for Mrs. Fuller including painting of the interior trim and to completely texture coat the exterior of the Fuller residence.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED that the Respondent's certified general contractor's license number CBC006481 be suspended for a period of one (1) year. 2/ DONE and ORDERED this 2nd day of November, 1983, in Tallahassee, Florida. JAMES E. BRADWELL, 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 2nd day of November, 1983.
Findings Of Fact The Petitioner, Isidoro Carrillo, sat for Part II of the residential contractors examination administered in June, 1992. The Petitioner received a raw score of 62 on Part II of this examination which was amended to a grade of 63. A minimum passing score is 70. Each correct answer was worth 4 points. The Petitioner originally challenged questions numbered 8, 11, 15, 16, 18, 19, and 25 on the examination. At the hearing, the Petitioner conceded the Department's answer to questions no. 18 was correct. The Petitioner did not present any evidence with regard to questions numbered 8, 19, and 25 at the hearing. The Petitioner challenged questions numbered 11, 15, and 16. Questions numbered 11, 15, and 16 were labeled as the Hearing Officer's Exhibit and determined to be confidential pursuant to Section 455.229, Florida Statutes. A set of plans was introduced and labeled as Respondent's Exhibit 1. These plans are also determined to be confidential pursuant to Section 455.229, Florida Statutes. Question No. 11 required the computation of the square area of the foyer. The portion of the house to be included within the computation of the area of foyer was to include "all adjacent interior cased openings and door ways." Sheet 3 of 6 of the plans for the structure reveal notes relating to the foyer. The annotations regarding the foyer state: "See Note No. 18" and "See Note No. 19." Sheet 1 of 6 contains the specific notes relating to the plans. Note No. 18 states: "40 (width) x 68 (height) cased opening (See (Floor Plan)." Note No. 19 states, "58 (width) x 68 (height) cased opening (See Floor Plan)." The Petitioner failed to compute the correct answer for question No. 11 because he excluded from his computations the area between the foyer and the living room which was subject to note No. 19. The Petitioner's excluded this area from his calculation because the area between the foyer and living room lacks jams and is not a cased opening. The Petitioner and Respondent's expert both agreed that a cased opening was "Any opening finished with jams and trim, but without doors." A jam is defined as a vertical structure with depth. Referring to the plans in question, the opening between the foyer and the living room lacks jams. Respondent's expert explained that the area between the foyer and living room was included in the computation purely on the basis of Note 19, defining the area as a cased opening. Petitioner challenged question No. 15 which required the examinee to compute the amount of time required "to lift and place all single wood trusses with a span of 21' 4" given that the truck can lift and place one full-span, single, roof truss every 15 minutes. Sheet 5 of 6 of the plans depicts the roof truss layout for the house. On the plan, there are three single roof trusses with an overall length of 25' 4" and a span of 21' 4" and one gable end truss with a span of 21' 4" which is placed on top of and runs the length of the south wall of the building. This gable end truss has a span of 21' 4" but does not span any distance because it sits atop the wall. The response expected by the Respondent was one hour with the truck lifting four trusses: the three 25' 4" trusses plus the gable end truss. The Petitioner's answer was 45 minutes because he excluded the gable end truss which sits atop the wall and does not span any distance. The Petitioner challenges question No. 16 which asks the examinee to calculate the total cost for the pressure treated 4 x 8 and 2 x 6 lumber required to construct the wood deck, excluding wood rails, and given the price per 100 board feet of the 4 x 8 and the 2 x 6 pressure treated lumber. The expected response was answer A. The candidate's response was answer D because the candidate had included 4 x 8 beams running along and parallel to the wall of the house in his calculation of the cost figures. However, the detailed drawings of the wooden deck at the top of Sheet 3 of 6 and on Sheet 2 of 6 reveal that there are no 4 by 8 beams running along and parallel to the side of the house.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, the Hearing Officer concludes that the Petitioner was successful in challenging only one of three of the questions involved. The Petitioner's score of 67 points is insufficient for him to pass the examination. The Petitioner's records should be corrected; however, the Petitioner has not demonstrated a passing grade of 70, and therefore should not be licensed. DONE and ENTERED this 30th day of April, 1993, in Tallahassee, Florida. STEPHEN F. DEAN 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 30th day of April, 1993. APPENDIX A The Petitioner did not file proposed findings. The Respondent filed proposed findings which were read and considered. The following states which of those findings were adopted, and which were rejected and why: Respondent's Findings: Proposed Order: Paragraph 1-5 Paragraph 1-3 Paragraph 6 Paragraph 4-8 Paragraph 7 Paragraph 9,10 Paragraph 8 Paragraph 11 COPIES FURNISHED: Isidoro Carrillo Post Office Box 1896 New Smyrna Beach, Florida 32170 Vytas J. Urba, Esquire Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Daniel O'Brien, Executive Director DPR - Construction Industry Licensing Board Post Office Box 2 Jacksonville, FL 32202 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
Findings Of Fact Petitioner is the state agency charged, in conjunction with the Land Surveying Licensing Board, with the responsibility to prosecute Administrative Complaints pursuant to Chapter 472, 455 and 120, Florida Statutes, and the rules promulgated pursuant thereto. At all times material to the Administrative Complaint, Respondent, Lars Dohm, was licensed as a land surveyor in the State of Florida, having been issued license number LS0002358. Nona Chubboy, in January 1989, was the owner of a lot described as Lot 25, Block J, Tierra Verde, Unit 1, Fourth Replat, Pinellas County, Florida, also known as 727 Columbus Drive East, Tierra Verde, Florida. Ms. Chubboy intended to build a dwelling on the lot, and secured building plans for the dwelling. She was to be her own contractor. In early 1988, she brought the building plans to the Respondent, and asked him to stake out only the lot at that time. Respondent copied the dimensions of the lot and dwelling from the building plans, and returned them to her. In early 1989, Respondent was retained to do a stakeout survey of the house and lot. Respondent requested that a site plan be prepared. Mrs. Chubboy secured it from the house designed, and delivered it to the Respondent. 6 The site plan shows a set back of 20 feet to a series of dotted lines, then a total of the length of the building from front to back of 63 feet, and footage of 37 feet to the rear of the property, which totals the exact distance of the length of the lot, 120 feet. With the site plan and the dimensions of the foundation of the building in his possession, the Respondent proceeded to stake out the foundation of the dwelling on or about January 10, 1989, and prepared a stakeout survey, thereafter. Construction began almost immediately on the project upon the completion of Respondent's stakeout. The masonry work was completed, and the framing of the home began. On or after January 23, 1989, Mrs. Chubboy was concerned the dwelling was too close to the street, and she measured the distance between the foundation and the street. She found it to be set back 20 feet and not 24 feet as intended. As prescribed by Pinellas County, the front set back in the zoning category for 727 Columbus Drive East was 20 feet. Such restriction would preclude the construction of a four foot in depth balcony supported by vertical columns as planned by Mrs. Chubboy in the setback area. Pinellas County did permit her to put in three foot deep balconies but without vertical columns. Mrs. Chubboy was required to redesign the front portions of the second floor of her home by adding beams for balcony supports, because vertical columns could not be used for support. These changes added to the cost of construction. The balconies constructed were not as functional as originally designed and resulted in their restrictive use. On or after January 23, 1989, Respondent provided Mrs. Chubboy with a signed, sealed and certified stakeout survey dated January 23, 1989, showing that the foundation was staked 20 feet from the front of the property, and further indicated that the building stakeout was 59 feet in depth. However, this is at variance with the site plan showed a total building length of 63 feet. When Respondent was confronted with the discrepancy between the actual stakeout and the site plan, he indicated that Mrs. Chubboy should have checked his work, and he was not going to do anything about the discrepancy. The stakeout survey contained the dimensions of the foundation layout, as contained in the building plans (59 feet), which were not contained in the site plan (63 feet). The as-built survey showed where the building was actually constructed, and the foundation was constructed exactly where Respondent staked the foundation. The site plan was inconsistent with the stakeout survey. The site plan clearly shows that the stakes should have been placed 20 feet from the front of the lot to a projection on the building, and the building should have a 63 foot depth from that point. The back of the lot was shown as 37 feet, which totals the length of the lot or 120 feet. The total dimensions of the building could not have been laid out from the site plan, as there is insufficient information on the site plan to give proper dimensions for the building. The dimensions of the building staked out were in accord with the dimensions on the building plan, as evidenced by the stakeout survey. The site plan does conflict with the building plan, as the site plan shows the layout of the building from front to back totals 63 feet. However, it also includes a projection which was intended to represent the second floor balconies in dotted lines. The stakeout survey indicates that the building length was 59 feet. In any event, the back of the building in the site plan is 83 feet from the front of the lot, but as it was staked, it was 79 feet. A skillful surveyor exercising ordinary prudence should have ascertained from the site plan and dimensions on the building plans that there was a 20 foot setback to a vague object. If you then examine the 63 feet shown on the site plan, and sketch out the 59 feet shown on the building plan, there is a four foot discrepancy between the 20 foot setback and where the building is supposed to start. The site plan was vague, and a skilled surveyor would have contacted his client for more specific information, and under such circumstances, should not have proceeded with the job until he had more specific information. A contractor or property owner has a right to rely on the professional ability of a surveyor to stake out the building site in accordance with the site plan or building plan. It is not the client's responsibility to check on the accuracy of the work of a professional. The purpose of a building's stakes is to mark the corners of the building in such a manner that construction can proceed from the stakes. The stakes were not to be moved. An "envelope-type" stakeout is a stakeout where the builder is free to move the building around. It is used where expert builders set their own offsets. It is not the type of stakeout required here. Such stakeouts were not for use by a person of Mrs. Chubboy's experience, nor is it indicated that Respondent was asked to do anything but stake specific corners. Respondent's assertion that the offset stakes were set so that the building could be moved is not credible. The "as-built" survey indicated that the building was placed directly where the stakes were placed by Respondent. Respondent further indicated that he was aware of the discrepancy of four feet between the building plan and the site plan, and chose to proceed with staking the house with a 20 feet set back and 59 feet in depth which added four feet to the back yard. This error by Respondent constitutes negligence.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED: That Respondent pay an administrative fine of $1,000. That Respondent be placed on probation for one year subject to such reasonable conditions as the Board may specify. DONE AND ENTERED this 21st day of May, 1992, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 21st day of May, 1992. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's proposed findings of fact. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11(in part), 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 30, 31, 32, 33. Rejected as not supported by clear and convincing evidence: paragrahs 11(in part: cost of change orders in the design of the home), 12, 13, 34. Rejected as argument: paragraph 28, 29 Respondent's proposed findings of fact. Accepted in substance: paragraphs 1, 2, 3(in part), 5. Rejected: paragraph 3(in part), 4, 6. COPIES FURNISHED: William S. Cummins, Esquire Senior Attorney Department of Professional Regulation 1940 N. Monroe Street Tallahassee, FL 32399-0792 Angel Gonzalez Executive Director Board of Professional of Land Surveyors 1940 N. Monroe Street Tallahassee, FL 32399-0792 Jack McRay, Esquire General Counsel 1940 N. Monroe Street Tallahassee, FL 32399-0792 Mr. Lars Dohm Apartment #611 5790 34th St. St. Petersburg, FL 33711
The Issue The issue to be determined is whether Respondent's proposed award for ITB 09-22 for Building 14B renovation is contrary to law, against the University's governing statutes, rules or policies or the specifications of the invitation to bid.
Findings Of Fact The University of North Florida published its Notice of Bid/Request for Proposal in reference to ITB #09-22 entitled "GC's for Building 14B Renovation" on December 19, 2008, with a submission deadline of January 27, 2009. The opening date was eventually extended to January 30, 2009. There were four addendums to the ITB #09-22 Project. The Notice of Bid/Request for Proposal document contained the following provisions: This project consists of the following scope of work: The work includes all labor, supervision, equipment, and materials required to execute the Contract Documents in two phases for the tenant build-out of the existing UNF Building 14-B (approximate square footage 9742). The work includes, but is not limited to, demolition of all interior walls, finishes, mechanical, electrical, plumbing and communication components as well as a new exterior curtain wall system. Exterior construction will include new glazing in aluminum curtain wall. Interior construction will include new gypsum wallboard partitions with metal stud walls, millwork, suspended acoustical and gypsum wallboard ceilings, wood and metal doors in hollow metal frames, coiling overhead grilles, toilet partitions and vanities. Interior finishes include carpeting, resilient tile, ceramic tile, painting, and window treatments. Mechanical work includes installation of new Owner provided HVAC units with ductwork and all necessary connections to the UNF Central Plant chilled water system. Plumbing includes new piping and fixtures for the tenant build-out and renovation of the group male and female restrooms. Electrical work includes new wiring, devices and lighting for the new tenant build-out. Successful bidders must have demonstrable previous experience with the described systems and technical requirements. All bidders must be qualified at the time of the bid opening in accordance with the Bidders Qualification within the ITB 09-22 Bid documents. . . Article I, Section 2 includes a heading in bold stating "Qualification Criteria." This section states: Participants must qualify to bid on this project. UNF will utilize the following criteria to qualify the general contractors within this ITB. The information must be completed on the UNF Qualifications Form provided (page 10-11): Bonding: Demonstrates a bonding capacity of at least $2 million dollars and has an A.M. Best Rating of "A-V" or better. Licenses: Company is licensed to do business in the state of Florida and approved by the US Department of Treasury listing as an acceptable surety. Project references: Company has successfully completed at least 3 commercial construction projects of more than $1 million dollars each in the past three (3) years. List 3 such projects to include project name, client name, completion date, location, project value, role in project. Reference: Project name, owner, owner's representative name/phone number, completion date and construction cost. Years of experience: Company has a minimum five (5) years of GC experience under the current company name. The directions for the General Contractor's Qualification Summary, under Related Experience, reiterated that the bidder was to list "No more than 4 projects of comparable type, size and complexity. (1) Project must be for a college/university)." Addendum I for the Project, issued January 9, 2009, clarified that the requirement for having completed successfully a project of similar size and scope at a Florida University in the last three years is a qualification factor for this project. Addendum II, issued January 12, 2009, removed the requirement for bidders to have completed one project for a college or university. The other two addenda did not address contractor qualifications. Petitioner, Core Construction Company (Core Construction or Petitioner) bid in response to the ITB. Approximately 19 other bidders also responded. Core Construction was the apparent low bidder on the project, with a bid of $1,073,000. There was some concern expressed by the architect reviewing the bids because the bids were all within ten percent of each other for the top bidders, with the bidders 2-10 being within six percent of each other. In an e-mail to Dianna White, the Senior Buyer for UNF purchasing, Mr. Norman stated: Overall there was a 20% range in bid prices which I attribute to a significant difference in the size, quality and abilities of the contractors that bid this project. The apparently low bidder was $60,516 below the second low bidder and $83,000 below the third low bidder. This is a significant concern since there is only $46,484 between the second and fifth low bidders. I suggest the apparent low bidder be contacted and asked if they feel comfortable with their bid, because it appears to me they are missing something significant in their pricing. Purchasing should also carefully review their current financials and current bonding capacity if this is allowed. Project reference checks, price verification against the architect's construction estimate and bonding checks were performed with respect to the four lowest bidding companies: Core Construction, Pooley Contracting, Rivers & Rivers and Warden Construction. Pooley Contracting, the second-lowest bidder, was disqualified as non-responsive because its bid package did not include a bonding letter. Core provided the names of three completed projects that were valued at over one million dollars. Dianna White called each of the references provided, not only for Core but for three of the four lowest bidders. The same questions were asked of each reference for each company: 1) Was the project on time and within budget; 2) Did the project run smoothly; 3) Were project issues handled; and 4) Would you use the contractor again. Calls related to Pooley Contracting were not completed because it was disqualified as non-responsive. While the references for Rivers & Rivers and Warden were consistently good, two of the three references received for Core were not. Ms. White described them as the most "strongly negative" references she had ever received. In particular, the references indicated difficulty in completing jobs within budget and on time, which the Respondent viewed as the basis for determining whether a contractor had successfully completed a project. Two of the references indicated that they would not use the contractor again, or as one put it, "not if there was any way around it." Based on the recommendations received, the Purchasing Office for the University recommended that Core Construction be disqualified for failing to demonstrate successful completion of three projects over one million dollars that were similar in scope. Because Pooley Construction was also disqualified, the Purchasing Department recommended that the Project be awarded to the third-lowest bidder, Rivers & Rivers. The recommendation to award the project to Rivers & Rivers was accepted by the Vice President of Administration and Finance, and on February 18, 2009, a Notice of Award issued identifying Rivers & Rivers as the company receiving the award. On February 19, 2009, Core Construction notified Respondent that it intended to protest the award of the Project to Rivers & Rivers. On February 24, 2009, Core Construction provided a $10,000.00 surety bond and a written protest of the award. The basis of the protest was two-fold. First, Core Construction contended that Rivers & Rivers did not meet the qualification criteria set out in the ITB, because it was did not have a minimum of five years of general contractor experience under the current company name. Second, Core felt that the poor references received should not be a basis for disqualification. Upon receiving the bid protest, Respondent contacted Rivers & Rivers to verify its licensure status. Upon inquiry, it was determined that while the principals of the company had over 30 years of experience, the Rivers & Rivers entity had not been licensed under that name for the requisite five years. While no action has been taken while this bid protest is pending, Respondent indicated its intention to withdraw the award from Rivers & Rivers and award the contract instead to the next lowest bidder. The procedures used by the University in determining the appropriate award were not contrary to law, against the University's governing statutes, rules or policies or the specifications of the invitation to bid. It was consistent with University policy to check references for projects of similar scope and size. Therefore, it was appropriate to ask for and check references for projects of over one million dollars. There is no indication that any bidder questioned what the University would consider as successful completion of a project. The time for questioning this issue would have been when the specifications were issued, consistent with Article I, Section 7 of the ITB. Having a project come in on time and within budget is a reasonable measure of successful completion. It is not the same as "substantial completion," which generally refers to a point of time in the construction process, not the final completion of the project.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That the President of the University of North Florida, pursuant to his authority under Board of Governor's Regulation 18.002, enter a final order dismissing Petitioner's written protest. DONE AND ENTERED this 30th day of April, 2009, in Tallahassee, Leon County, Florida. S LISA SHEARER NELSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2009. COPIES FURNISHED: Jay H. Chung Core Construction Company, Inc. 4940 Emerson Street, Suite 205 Jacksonville, Florida 32207 Paul Christopher Wrenn, Esquire University of North Florida J.J. Daniel Hall, Suite 2100 1 University of North Florida Drive Jacksonville, Florida 32224 John A. Delaney, President University of North Florida J.J. Daniel Hall, Suite 2800 1 University of North Florida Drive Jacksonville, Florida 32224
