The Issue The issue for consideration in this hearing is whether Respondent's license as a real estate broker in Florida should be disciplined because of the matters alleged in the Administrative Complaint filed herein.
Findings Of Fact At all times pertinent to the issues herein, the Petitioner, Division of Real Estate (Division), for the Florida Real Estate Commission, was the state agency responsible for the licensing of real estate professionals and the regulation of the real estate profession in Florida. Respondent was licensed as a real estate salesperson or broker in Florida. During pertinent portions of 1990, Respondent was licensed both as a real estate broker by the Division, and as a contractor by the Construction Industry Licensing Board of the State of Florida. During that period he handled numerous sales of real property for the United States Veterans Administration and received deposits of funds on those sales which he placed in his brokerage trust account with First Commercial Bank of Manatee County. At that time, the bank had a policy on availability of funds of seven business days for out-of- town checks and three business days for local checks. In January 1990, Respondent wrote five checks from his trust account, each in excess of $1,000.00. Three of these were to the VA for sales deposits, and two were to others. All five checks were dishonored for insufficient funds. Thereafter, on August 24, 1990, the Division filed an Administrative Complaint against the Respondent alleging the utterance of dishonored checks as misconduct. Respondent, at an informal hearing, admitted the utterance of the dishonored checks, and as a result, the Florida Real Estate Commission revoked his broker's license on October 16, 1990. Respondent's subsequent appeal of that action to the Second District Court of Appeal resulted in a per curiam denial of his petition for review. Sometime later, in 1991, Respondent appealed to the Commission for reinstatement. At a subsequent hearing before the Commission, an exculpatory letter of explanation from Respondent's accountant resulted in the Commission allowing Respondent to sit for the salesman's examination, as a result of which he was subsequently licensed as a salesman. Respondent was thereafter again licensed as a broker on December 6, 1993. In the interim, however, on June 4, 1992, Respondent's contractor's license was disciplined by the Construction Industry Licensing Board for misconduct involving his failure to properly supervise a construction project and allowing an unlicensed individual to do the work on a project for which he had pulled the permit. An informal hearing was held by the Board as a result of which it imposed an administrative fine of $2,000.00, and to assure the payment thereof, provided for suspension of Respondent's license if the fine was not paid within thirty days. Respondent admits he did not pay the fine. He contends he called the Board office to inquire what would happen were he not to pay the fine and was advised his license would be suspended. Since Respondent intended to cease working as a contractor anyway, he elected not to pay the fine and sent his license in to the Board. Respondent's contractor's license was suspended on July 22, 1992, though he claims he did not receive a copy of either the Board's Final Order or the notice of the suspension going into effect. Respondent had an obligation to pay the fine imposed as punishment for past misconduct. Voluntary relinquishment of his license, which he thought he could do without effect on him since he was getting out of the construction business, did not excuse his non-payment of the fine. On October 21, 1993, after Respondent's salesman's license had been reinstated, he applied for licensure as a broker, In his answer to the first part of question 13 on the application form, Respondent indicated he had had a license suspended. He noted thereon the prior case against his license by the Commission which dealt with the dishonored checks. He did not, however, list the action taken against his contractor's license. He listed the prior real estate case, he contends, upon the advice of someone in the Division office. He did not, at the time of his call to the Division indicate or inquire about the action taken by the Board on his contractor's license. He claims he did not list that action on the application form because the action taken by the Board was not based on fraud or dishonesty but merely a failure to supervise, and because he did not know his license had been suspended. He thought that voluntarily relinquishing his license ended the situation. Respondent claims he did not intend to conceal any misconduct or adverse action as he could not do so. It was a matter of public record, and he believed the information available to one regulatory board was available to all others that were under the Department. At some point thereafter, not further established, a complaint was filed with the Commission which resulted in the matter being referred to Mr. Pence for investigation. Mr. Pence assembled the documents relating to the allegation of concealment and sent a written notice of his inquiry to the Respondent. Upon receipt of that notice, Respondent telephoned Mr. Pence to discuss the matter. During the ensuing conversation, Pence asked Respondent if he was aware of his suspension by the Construction Board and claims Respondent indicated he was. Respondent allegedly indicated he was under the impression he had been fined by the Board and that the suspension was only to insure the fine was paid. Respondent further indicated that because of the depressed economy and because he was not much interested in keeping his contractor's license he had let it go. In evaluating the evidence presented, it must be noted that the interview between Pence and the Respondent took place about a year ago. Pence's investigative notes are no longer available and he testified from memory. It was evident that much of Mr. Pence's testimony was a reconstruction of how Mr. Pence, in retrospect, felt he would have handled the interview and what he feels sure he would have asked. Taken together, the evidence of record establishes that Respondent was disciplined by the Real Estate Commission for dishonored checks and his license revoked. Though, on the basis of his accountant's exculpatory letter, Respondent was allowed to be re-examined for a salesman's license, that evidence did not completely exonerate the Respondent. This is shown by the fact that the revocation of his broker's license was not reversed. He was merely allowed to reapply for licensure as a salesman. In addition, the accountant's letter does not explain or justify all the bad checks. In regard to the Construction Board's discipline, the evidence shows that Respondent pulled a permit and then allowed a non-licensed individual to do most of the work without proper supervision. Respondent contends that complaint was filed by his friend, the owner of the property, after the project in question was determined to be far more extensive than had been anticipated. The complaint, Respondent asserts, was not made because of any dissatisfaction arising out of his performance, but merely to preserve the owner's interest as to a possible insurance claim. That argument is not persuasive. The fact is that Respondent was disciplined because he had committed an act which authorized the imposition of discipline. His approach to the situation was cavalier, and that approach or attitude continues to raise a substantial question as to his fitness to have entrusted to him the money, property, transactions and rights of others.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: RECOMMENDED THAT the Florida Real Estate Commission enter a Final Order finding Respondent, Warren Up. Box, guilty of Misrepresentation and concealment in his application for a license as a real estate broker in Florida, and of having been twice guilty of misconduct which warrants suspension, and revoking his license as a real estate broker in this state. RECOMMENDED this 9th day of October, 1996, in Tallahassee, Florida. ARNOLD H. POLLOCK Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 9th day of October, 1996. COPIES FURNISHED: Christine M. Ryall, Esquire Department of Business and Professional regulation Division of real Estate Post Office Box 1900 400 West Robinson Street, N-308 Orlando, Florida 32802-1900 Terrence Matthews, Esquire 5190 26th Street West Bradenton, Florida 34207 Lynda Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Henry M. Solares Division Director Division of Real Estate Post Office Box 1900 400 West Robinson Street Orlando, Florida 32802-1900
The Issue The issues are whether Respondent properly conducted a sales and use tax audit of Petitioner's books and records; and, if so, whether Petitioner is liable for tax and interest on its purchases of materials used for improvements to real property.
Findings Of Fact During the audit period, Petitioner was a Florida corporation with its principal place of business located at 7820 Professional Place, Suite 2, Tampa, Florida. Petitioner's Florida sales tax number was 39-00-154675-58, and Petitioner's federal employer identification number was 59-3089046. After the audit period, the Florida Department of State administratively dissolved Petitioner for failure to file statutorily required annual reports and filing fees. Petitioner engaged in the business of providing engineering services and fabricating control panels. Petitioner fabricated control panels in a shop Petitioner maintained on its business premises. Petitioner sold some of the control panels in over-the- counter sales. Petitioner properly collected and remitted sales tax on the control panels that Petitioner sold over-the-counter. Petitioner used other control panels in the performance of real property contracts by installing the panels as improvements to real property (contested panels). Petitioner was the ultimate consumer of the materials that Petitioner purchased and used to fabricate the contested panels. At the time that Petitioner installed the contested panels into real property, the contested panels became improvements to the real property. Petitioner failed to pay sales tax at the time Petitioner purchased materials used to fabricate the contested panels. Petitioner provided vendors with Petitioner's resale certificate, in lieu of paying sales tax, when Petitioner purchased the materials used to fabricate the contested panels. None of the purchase transactions for materials used to fabricate the contested panels were tax exempt. The audit is procedurally correct. The amount of the assessment is accurate. On October 23, 2000, Respondent issued a Notification of Intent to Audit Books and Records (form DR-840), for audit number A0027213470, for the period of October 1, 1995, through September 30, 2000. During an opening interview, the parties discussed the audit procedures and sampling method to be employed and the records to be examined. Based upon the opening interview, Respondent prepared an Audit Agreement and presented it to an officer and owner of the taxpayer. Respondent began the audit of Petitioner's books and records on January 22, 2001. On March 9, 2001, Respondent issued a Notice of Intent to Make Audit Changes (original Notice of Intent). At Petitioner's request, Respondent conducted an audit conference with Petitioner. At the audit conference, Petitioner provided documentation that the assessed transactions involved improvements to real property. At Petitioner's request, Respondent conducted a second audit conference with Petitioner's former legal counsel. Petitioner authorized its former legal counsel to act on its behalf during the audit. At the second audit conference, the parties discussed audit procedures and sampling methods, Florida use tax, fabricated items, and fabrication costs. Respondent revised the audit findings based upon additional information from Petitioner that the assessed transactions involved fabricated items of tangible personal property that became improvements to real property. Respondent assessed use tax on the materials used to fabricate control panels in those instances where Petitioner failed to document that Petitioner paid sales tax at the time of the purchase. Respondent also assessed use tax on fabrication costs including the direct labor and the overhead costs associated with the fabrication process, for the period of October 1, 1995, through June 30, 1999. Respondent eliminated use tax assessed on cleaning services in the original Notice of Intent because the amount of tax was de minimis. On August 29, 2001, Respondent issued a Revised Notice of Intent to Make Audit Changes (Revised Notice of Intent). On September 18, 2001, Petitioner executed a Consent to Extend the Time to Issue an Assessment to File a Claim for Refund until January 25, 2002. On October 18, 2001, Petitioner executed a second Consent to Extend the Time to Issue an Assessment to File a Claim for Refund until April 25, 2002. On February 6, 2002, Respondent issued a Notice of Proposed Assessment for additional sales and use tax, in the amount of $21,822.27; interest through February 6, 2002, in the amount of $10,774.64; penalty in the amount of $10,831.12; and additional interest that accrues at $6.97 per diem. Petitioner exhausted the informal remedies available from Respondent. On April 29, 2002, Petitioner filed a formal written protest that, in substantial part, objected to the audit procedures and sampling method employed in the audit. Respondent issued a Notice of Decision sustaining the assessment of tax, penalty, and interest. Respondent correctly determined that the audit procedures and sampling method employed in the audit were appropriate and consistent with Respondent's statutes and regulations. Respondent concluded that the assessment was correct based upon the best available information and that Petitioner failed to provide any documentation to refute the audit findings. Petitioner filed a Petition for Reconsideration that did not provide any additional facts, arguments, or records to support its position. On May 16, 2003, Respondent issued a Notice of Reconsideration sustaining the assessment of tax and interest in full, but compromising all penalties based upon reasonable cause.
Recommendation Based upon the findings of fact and the conclusions of law, it is RECOMMENDED that Respondent enter a Final Order denying Petitioner's request for relief and sustaining Respondent's assessment of taxes and interest in full. DONE AND ENTERED this 10th day of December, 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 10th day of December, 2003. COPIES FURNISHED: Carrol Y. Cherry, Esquire Office of the Attorney General Revenue Litigation Section The Capitol, Plaza Level 01 Tallahassee, Florida 32399-1050 Michael E. Ferguson Control Design Engineering, Inc. 809 East Bloomingdale Avenue, PMB 433 Brandon, Florida 33511 Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue Whether Respondent committed the offenses set forth in the Administrative Complaints and Amended Administrative Complaints and, if so, what action should be taken.
Findings Of Fact At all times material hereto, Respondent was licensed by Petitioner as a certified residential contractor, having been issued license number CR C040917. He has been licensed since March 16, 1987. Respondent was the qualifying agent of KM Homes, Inc. (KMH) from June 10, 1995 through March 13, 1997, more than one year but less than two years. On or about February 3, 1997, KMH filed a voluntary bankruptcy petition under Chapter 7 in the U.S. Bankruptcy Court, Southern District of Florida, Case No. 97-30498, with an estimate of assets of less than $50,000.00 and an estimate of liabilities of between $1 million and $10 million. The petition was signed by Kenneth H. Maltz, as president of KMH. On or about February 4, 1997, the next day, Kenneth H. Maltz and his wife, Susan Maltz, filed a joint voluntary bankruptcy petition under Chapter 7. Case No. 01-3827PL On or about April 28, 1996, KMH contracted with Daniel L. Simons and Carol L. Stefanski for the sale of a lot to Simons and Stefanski and for construction of a house on the lot. The contract price for the lot was $45,000.00 and for the construction of the home was $141,000.00, totaling $186,000.00. Respondent's license number did not appear in the contract. In accordance with the contract, Simons and Stefanski made the following payments to KMH: on or about April 28, 1996, $5,000.00; on or about August 21, 1996, $40,000.00; and on or about August 30, 1996, $42,229.60 and $747.00, through their lender, First Federal Savings of the Palm Beaches, pursuant to an August 21, 1996, mortgage loan of $128,000.00. The payments totaled $100,976.60. KMH applied for a building permit from Martin County to build the home for Simons and Stefanski. Respondent's license number appeared on the application. The building permit was never obtained. Beginning on or about August 27, 1996, and at various times thereafter, until approximately January 9, 1997, the lot was cleared and fill was delivered to the lot by KMH's subcontractor, Tideway Construction Company, Inc. (Tideway). The work by Tideway was the only work performed by KMH pursuant to the contract with Simons and Stefanski. KHM did not pay Tideway and Tideway recorded a lien on the lot for $4,084.00. KMH failed to remove Tideway's lien. On or about November 23, 1997, Tideway filed suit to foreclose its lien. Sometime in May 1998, Tideway released the lien in exchange for payment from Simons and Stefanski in the amount of 65 percent of the lien amount. Simons and Stefanski's lender paid the 65 percent from additional funds the lender loaned to Simons and Stefanski to enable them to complete their home. Tideway wrote off the remaining 35 percent. KMH never explained to Simons and Stefanski why it did not complete their home. KMH's trustee in the bankruptcy never offered to complete the work. Simons and Stefanski never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. Simons considered KMH to have abandoned the job. Simons and Stefanski filed a proof of claim in KMH's bankruptcy for an unsecured non-priority claim in the amount of $58,000.00. They received nothing from the bankruptcy action. In the latter part of 1998, Simons and Stefanski had their home completed by another contractor, Murex, for $143,270.00. The house that Murex completed for Simons and Stefanski was essentially the same house that KMH was to construct, except that the roof structure was different and the garage and back porch were a little larger. KMH never provided Simons and Stefanski with notification of the Construction Industries Recovery Fund. Simons and Stefanski never had any direct dealings with Respondent personally. They attempted to sue Respondent but were unsuccessful. As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3827PL, excluding costs associated with an attorney's time, totaled $457.88. Case No. 01-3828PL On or about June 6, 1996, KMH contracted with Carol Morris for construction of a house on a lot owned by Morris. The contract price for the construction of the house was $287,940.00. Respondent's license number did not appear in the contract. In accordance with the contract, Morris made the following payments to KMH: on or about February 28, 1996, $1,000.00; on or about June 10, 1996, $27,000.00; and on or about August 2, 1996, $109,240.00. The payments totaled $137,240.00. Morris obtained a mortgage loan in the amount of $150,000.00 from First Bank of Florida to finance part of the contract price. On or about September 17, 1996, KMH applied for a building permit from Palm Beach Gardens to construct the home for Morris. Respondent's license number appeared on the application. On or about September 26, 1996, the building permit was approved and issued, bearing building permit number 28644. From approximately September to December 1996, KMH performed work pursuant to the contract and thereafter, did not perform any more work on the home. KMH failed to complete the construction of Morris' home. KMH never explained to Morris why it did not complete her home. KMH's trustee in the bankruptcy never offered to complete the work. Morris never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. Morris considered KMH to have abandoned the job. KMH's subcontractors/material suppliers recorded liens on Morris' property. The subcontractors/material suppliers recorded liens were as follows: on December 12, 1996, Tideway for $8,438.00; on January 16, 1997, Buckeye Plumbing, Inc. (Buckeye Plumbing) for $3,676.00; on January 22, 1997, Tarmac Florida, Inc. (Tarmac) for $6,296.40; on January 23, 1997, Electrical Express, Inc. (Electrical Express) for $450.00; on February 13, 1997, E. M. Brandon, Inc. (Brandon) for $2,164.00; on February 18, 1997, Tom Rawn Masonry, Inc. (TR Masonry) for $16,454.00; and on April 3, 1997, Spacerace Enterprises, Inc. (Spacerace) for $7,850.00. Morris paid KMH for all the work or materials pertaining to the liens. KMH failed to remove any of the liens. Morris never paid any monies directly to the lien holders to remove any of the liens. However, Morris' lender, First Bank of Florida, assisted her with the resolution of the liens, including allowing its attorney to act as Morris' representative in resolving the liens. In May 1998, Tideway released its lien in exchange for payment by Morris' lender in the amount of 65 percent of the lien amount. Tideway wrote off the remaining 35 percent. The evidence is unclear as to whether Morris was obligated to repay the lender. Buckeye Plumbing, Electrical Express, TR Masonry, Inc., and Spacerace never received any money on their liens and the entire amount of their liens was a complete loss. Tarmac sued to foreclose on its lien, but ultimately dismissed its lawsuit and wrote off the amount of its lien as a bad debt. No testimony was presented regarding the final result of the lien held by Brandon. Morris obtained the services of another contractor, Home Work Group, Inc. (Home Work), to complete the construction of her home. Morris used the original mortgage loan of $150,000.00, a shortfall loan from the same lender in the amount of $45,000.00, and her savings of approximately $43,000.00, to pay Home Work. On or about September 1998, Home Work completed the construction of Morris' house, which was essentially the same as the house which was to be constructed by KMH. Morris received notification of KMH's bankruptcy by mail. She filed a complaint with the bankruptcy court objecting to KMH's discharge. The bankruptcy court eventually dismissed Morris' complaint. Sometime during the year 2000, Morris received $900.00 from KMH's bankruptcy. KMH never provided Morris with notification of the Construction Industries Recovery Fund. During the transaction between KMH and Morris, she knew Respondent as the construction manager for KMH. As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3828PL, excluding costs associated with an attorney's time, totaled $478.70. Case No. 01-3829PL On or about February 23, 1996, KMH contracted with Fred W. Connell, Jr., and his wife, Celia M. Connell, for construction of a house on a lot that the Connells would purchase separately, not as a part of the contract. The contract price for the construction of the house was $258,870.00, which included $18,000.00 for a swimming pool. Respondent's license number did not appear in the contract. In accordance with the contract, the Connells made the following payments to KMH: on or about February 23, 1996, $5,000.00; on or about February 29, 1996, $30,000.00; on or about November 7, 1996, $8,687.00; on or about November 25, 1996, through their lender, First Bank of Florida, pursuant to a mortgage loan, $33,541.00; and on or about December 16, 1996, $24,393.00. The payments totaled $101,621.00. KMH applied for a building permit from the City of North Palm Beach to construct the home for the Connells. Respondent's name and license number appeared on the application. On or about November 5, 1996, the building permit was approved and issued, bearing building permit number 96-01386. From approximately November to December 1996, KMH performed work pursuant to the contract and thereafter, did not perform any more work on the home. KMH failed to complete the construction of the Connells' home. In December 1996, the City of North Palm Beach issued a stop work order due to voids in the concrete walls that made, according to the City of North Palm Beach, the structure of the house unsafe. After the issuance of the stop work order, KMH failed to resume work on the house. KMH never explained to the Connells why it did not complete their home. The Connells fired KMH only after they received notification of KMH's filing for bankruptcy. KMH's trustee in the bankruptcy never offered to complete the work. The Connells considered KMH to have abandoned the job. KMH's subcontractors/material suppliers recorded liens on the Connells' property. The subcontractors/material suppliers and recorded liens were as follows: on January 16, 1997, Palm Beach Masonry (PB Masonry) for $12,125.00; on January 17, 1997, Sasso Air Conditioning, Inc. (Sasso Air) for $550.00; on January 22, 1997, Tarmac for $4,239.21; on January 28, 1997, CPS Construction, Inc. (CPS Construction) for $2,580.00; on January 31, 1997, Gulf Stream Lumber Company (Gulf Stream Lumber) for $19,461.00; and on March 24, 1997, Waste Management of Florida, Inc. (Waste Management) for $276.50. The Connells paid KMH for all the work or materials pertaining to the liens. KMH failed to remove any of the liens. The Connells paid its lender, First Bank of Florida, $25,000.00 in exchange for the lender's assistance in resolving the liens. PB Masonry and Waste Management never received any money on their liens and the entire amount of their liens was a complete loss. On or about August 4, 1997, Sasso Air gave a partial release of its lien in return for payment in the amount of $275.00. Tarmac's notice to owner was untimely, so it chose to not pursue foreclosure proceedings and instead wrote the amount of its lien off as a bad debt. On or about November 11, 1997, Gulf Stream Lumber released its lien in return for payment of $5,000.00 from First Bank of Florida. On May 13, 1997, CPS Construction released its lien in exchange for payment from the Connells in the amount of $2,500.00. On or about April 22, 1997, the Connells obtained the services of another contractor, Villafranca Design and Development, L.C. (Villafranca Design), to complete the construction of their home for $221,000.00. The Connells, through their lender, paid Villafranca Design. Their home was completed shortly before Christmas 1997. The house completed by Villafranca Design was essentially the same as the house which was to be constructed by KMH. Because KMH failed to complete the Connells' home, the Connells, their two children and their two dogs were forced to live on the Connells' boat and to store their furniture for almost a year. During that year, the Connells had to pay dockage fees to live on their boat and storage fees for their furniture. The Connells estimate that the difference in the contract price of their home with KMH and what they eventually paid for their home was conservatively $100,000.00. The Connells did not receive any money from KMH's bankruptcy. KMH never provided the Connells with notification of the Construction Industries Recovery Fund. During the transaction between KMH and the Connells, the Connells knew Respondent as someone who worked in the KMH office. As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3829PL, excluding costs associated with an attorney's time, totaled $519.43. Case No. 01-3830PL On or about September 19, 1996, KMH contracted with William and Iceline Chang for the construction of a house on the lot owned by the Changs. The contract price for the construction of the home was $205,620.00. Respondent's license number did not appear in the contract. In accordance with the contract, the Changs made the following payments to KMH: on or about September 16, 1996, $10,000.00; and on or about October 10, 1996, $10,620.00. Pursuant to a change order for additional site preparation and fill, on or about October 7, 1996, the Changs paid KMH $9,400.00. On or about December 16, 1996, KMH applied for a building permit from Palm Beach County to build the Changs' home. Respondent's license number and Respondent's name as the qualifying agent for KMH appeared on the application. The building permit was never obtained due to KMH's failing to submit the construction plans to Palm Beach County's building department. On December 13, 16, and 19, 1996, the Changs' lot was cleared and fill was delivered to the lot by KMH's subcontractor, Tideway. The work by Tideway was the only work performed by KMH pursuant to the contract with the Changs. KHM did not pay Tideway and Tideway recorded a lien on the lot for $10,900.00. KMH failed to remove Tideway's lien. On or about June 6, 1997, Tideway agreed with the Changs to release the lien in exchange for payment from them in the amount of $9,810.00. The Changs paid Tideway in six monthly installments, June through November 1997, of $1,635.00. On or about November 26, 1997, Tideway gave the Changs a release of its lien. KMH never explained to the Changs why it did not complete their home. KMH's trustee in the bankruptcy never offered to complete the work. The Changs never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. The Changs considered KMH to have abandoned the job. The Changs had their home completed by another contractor, Villafranca Design, for $203,500.00. Villafranca Design submitted the same construction plans to Palm Beach County's building department that KMH was to use to construct the Changs' home. On or about May 7, 1997, a building permit was issued, bearing permit number B97012080. The house that Villafranca Design completed for the Changs was essentially the same house that KMH was to construct. On or about February 26, 2000, the Changs received $643.29 from KMH's bankruptcy. KMH never provided the Changs with notification of the Construction Industries Recovery Fund. The Changs never had any direct dealings with Respondent personally. As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3830PL, excluding costs associated with an attorney's time, totaled $714.11. Case No. 01-3831PL On or about July 30, 1996, KMH contracted with Harold and Jean Bell to sell them a lot and construct a house on the lot. The contract price for the lot was $53,000.00 and the construction of the home was $186,000.00, totaling $239,000.00. Respondent's license number did not appear in the contract. In accordance with the contract, on or about August 1, 1996, the Bells paid a deposit of $5,000.00 to KMH. On September 19, 1996, the Bells paid, as closing costs, $67,147.63 to Universal Land Title, Inc., which included the cost for the lot and an additional deposit toward construction in the amount of $13,600.00. Subsequently, the Bells received a deed to the lot. KMH never obtained a building permit to construct the house. On or about December 11, 1996, the Bells' lot was cleared and fill was delivered to the lot by KMH's subcontractor, Tideway. The work by Tideway was the only work performed by KMH pursuant to the contract with the Bells. KHM did not pay Tideway, and Tideway recorded a lien on the lot for $3,688.00. KMH failed to remove Tideway's lien. Tideway never received any money on its lien and the entire amount of its lien was a complete loss. KMH never explained to the Bells why it did not complete their home. KMH's trustee in the bankruptcy never offered to complete the work. The Bells never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. The Bells considered KMH to have abandoned the job. The Bells had their home, with extras, completed by another contractor, Villafranca Design, for approximately $208,000.00. On or about August 2, 2000, the Bells received $996.95 from KMH's bankruptcy. KMH never provided the Bells with notification of the Construction Industries Recovery Fund. On October 1, 2002, Mr. Bell obtained a civil judgment against KMH in the amount of $24,199.64, plus costs of $264.75; prejudgment interest of $21,664.88; and attorney's fees of $2,395.00, totaling $48,524.27. The Bells never had any direct dealings with Respondent personally. As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3831PL, excluding costs associated with an attorney's time, totaled $305.84. Case No. 01-3832PL On or about May 26, 1996, KMH contracted, in a revised contract, with Erol and Yildiz Aksoy for the sale of a lot and construction of a house on a lot. The contract price for the lot was $58,000.00 and construction of the house was $242,000.00, totaling $300,000.00. The revised contract entered into evidence at hearing was incomplete. No determination could be made as to whether Respondent's license appeared in the revised contract. In accordance with the contract, the Aksoys made the following payments to KMH: on or about October 28, 1994, $1,000.003; on or about June 5, 1996, $23,000.00; on or about August 14, 1996, $12,545.00; on or about October 4, 1996, $21,800.00; on or about October 17, 1996, $1,323.00; on or about November 2, 1996, $21,800.00; on or about November 20, 1996, $7,123.00 and $21,800.00; on or about November 22, 1996, $21,800.00; on or about December 13, 1996, $21,800.00; and on or about January 2, 1997, $21,800.00 and $5,000.00. The payments totaled $180,791.00. On or about July 26, 1996, KMH executed and delivered a deed to the Aksoys for the lot. KMH performed work pursuant to the contract, but only performed 55 percent to 60 percent of the construction contracted for. After January 1997, KMH failed to perform any further work on the Aksoys' home. KMH failed to complete the construction of Aksoys' home. KMH never explained to the Aksoys why it did not complete their home. KMH's trustee in the bankruptcy never offered to complete the work. The Aksoys never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. The Aksoys considered KMH to have abandoned the job. The Aksoys filed a proof of claim in KMH's bankruptcy for an unsecured non-priority claim in the amount of $85,000.00. Sometime in the years 2000 or 2001, they received $918.00 from the bankruptcy action. KMH's subcontractors/material suppliers recorded liens on the Aksoys' property. The subcontractors/material suppliers and recorded liens were as follows: on January 8, 1997, Buckeye Plumbing for $2,570.00; on January 14, 1997, J. W. Hodges Drywall Textures, Inc. (Hodges Drywall) for $3,500.00; on January 15, 1997, Griffin & Wilson Stucco, Inc. (GW Stucco) for $6,040.00; on January 16, 1997, Gallina Electric, Inc. (Gallina Electric) for $3,732.00; on January 17, 1997, Sasso Air for $2,925.00; on January 21, 1997, K. D. Installation, Inc. (KD Installation) for $2,789.00; and on February 5, 1997, Macshmeyer Concrete Company of Florida, Inc. (Macshmeyer Concrete) for $5,814.00. The Aksoys paid KMH for all the work or materials pertaining to the liens. KMH failed to remove any of the liens. The Aksoys paid the lien holders to remove the liens, as follows: on or about February 18, 1997, $2,570.00 to Buckeye Plumbing; on or about April 7, 1997, $1,400.00 to Hodges Drywall, with the remaining unpaid amount ($2,100.00) being a loss for the company; on or about August 6, 1997, $7,760.10 to GW Stucco, which included additional monies for attorney's fees; on or about March 12, 1997, $1,866.00 to Gallina Electric; on or about April 7, 1997, $2,975.00 to Sasso Air; $1,500.00 to KD Installation (date of payment unknown); on or about March 12, 1997, $2,616.00 to Macshmeyer Concrete. The Aksoys also paid for work for which another KMH subcontractor, Spacerace Enterprises, Inc., claimed that KMH had failed to pay. On or about February 18, 1997, the Aksoys obtained the services of another contractor, Villafranca Design, to complete the construction of their home. The Aksoys paid Villafranca Design $145,250.00. In or around May 1997, Villafranca Design completed the construction of the Aksoys' house, which was essentially the same as the house which was to be constructed by KMH. KMH never provided the Aksoys with notification of the Construction Industries Recovery Fund. The Aksoys never had any direct dealings with Respondent personally. As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3828PL, excluding costs associated with an attorney's time, totaled $606.48. Case No. 01-3833PL On or about December 11, 1995, KMH contracted with Milo and Jerolene Glass for construction of a house on a lot owned by the Glasses. The contract price for the construction of the house was $395,795.00. Respondent's license number did not appear in the contract. In accordance with the contract, the Glasses made the following payments to KMH: on or about November 13, 1995, $1,000.00; and on or about December 11, 1995, $39,079.00. The payments totaled $40,079.00. On or about May 21, 1996, KMH applied for a building permit from Palm Beach County to construct the home for the Glasses. Respondent's name as the qualifying agent for KMH and license number appeared on the application. Sometime thereafter in 1996, the building permit was approved and issued, bearing building permit number B96019588. From approximately November 1996 to January 1997, KMH performed work pursuant to the contract, but thereafter, did not perform any further work on the home. KMH failed to complete the construction of the Glasses' home. At the time KMH stopped working on the Glasses' home, a substantial amount of work remained to be completed. Furthermore, much of KMH's work had to be repaired or corrected. KMH never explained to the Glasses why it did not complete her home. KMH's trustee in the bankruptcy never offered to complete the work. The Glasses never fired KMH, never denied KMH access to the property to perform work, and never refused to pay KMH monies due under the contract. The Glasses considered KMH to have abandoned the job. KMH's subcontractors/material suppliers recorded liens on the Glasses' property. The subcontractors/material suppliers and recorded liens were as follows: on January 17, 1997, Sasso Air for $925.00; on January 23, 1997, Electrical Express for $750.00; and on January 28, 1997, R J G Masonry, Inc. (RJG Masonry) for $8,353.99. KMH failed to remove any of the liens. The evidence is unclear as to whether the Glasses paid KMH for all the work or materials pertaining to the liens. The Glasses paid to remove the liens. The Glasses paid the following: $925.00 to Sasso Air for which they received a final waiver of lien dated July 8, 1999; on or about February 14, 1997, $750.00 to Electrical Express for which they received a release of lien dated June 2, 1997; and on or about January 24, 1997, $8,353.99 to RJG Masonary. The Glasses did not obtain the services of another contractor to complete the construction of their home. Contractors whom they approached were very reluctant or unwilling to take over the project. Finally, the Glasses, who had prior experience as owners of other construction projects, became their own contractors and completed their home. They also received the assistance of a contracting firm, but the Glasses handled all the disbursements of funds to the suppliers for labor and materials. By September 2000, the Glasses had substantially completed their home and were living in it. At the time of the hearing, they had sold the house and moved to another location in Florida. The Glasses estimate that they expended $1,239,487.78 in the construction of their home. They maintain that this cost does not include approximately $80,000.00 that the Glasses claim that their original lender paid to KMH without their authorization. The amount paid by the Glasses exceeds the contract price because (1) KMH underbid the job; (2) the Glasses spent substantial sums to repair or correct KMH's work, which the Glasses estimate conservatively to be more than $200,000.00; and (3) the Glasses spent substantial sums on upgrades of contract allowance items. The Glasses received approximately $1,000.00 from KMH's bankruptcy. KMH never provided the Glasses with notification of the Construction Industries Recovery Fund. After the bankruptcy, Mrs. Glass contacted Respondent and requested the construction plans for the home. Respondent indicated that he did not have the plans. Mrs. Glass contacted Respondent again and he indicated that he may be able to locate the plans. Subsequently, Respondent contacted the Glasses and indicated that he had located the plans. The Glasses went to Respondent's place of business to retrieve the plans. After providing the plans, Respondent requested the Glasses to hire him to complete their home. The Glasses declined Respondent's offer because they considered Respondent's cost estimate to be too high and because of Respondent's association with KMH. As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3833PL, excluding costs associated with an attorney's time, totaled $628.33. Case No. 01-3834PL On or about December 8, 1995, KMH contracted with Suzanne Beck for construction of a house on a lot that Beck would acquire at a later date (in 1996), not as a part of the contract. The contract price for the construction of the house was $133,500.00. Respondent's license number did not appear in the contract. In accordance with the contract, Beck made the following payments to KMH: on or about December 8, 1995, $5,000.00; on or about July 31, 1996, $8,350.00 and 5,643.09; on or about August 7, 1996, $5,030.88; on or about September 4, 1996, $12,051.05; on or about September 18, 1996, $12,051.05; on or about October 1, 1996, $12,051.05; on or about October 11, 1996, $12,051.05; on or about November 7, 1996, $12,051.05; and on or about November 26, 1996, $12,051.05 and $12,051.05. The payments totaled $108,381.32. KMH applied for a building permit from the Town of Jupiter to construct the home for Beck. Respondent's name and license number appeared on the application as the contractor. On February 12, 1996, the building permit was approved and issued, bearing building permit number 96-29588. From approximately August to December 1996, KMH performed work pursuant to the contract and thereafter, did not perform any more work on the home. KMH failed to complete the construction of the Beck's home. KMH never explained to Beck why it did not complete her home. Around the end of December 1996 or in January 1997, Beck notified KMH that she was taking over the project. Progress by KMH had been slow and Beck discovered that KMH had closed the doors of its business for a second time and was not paying its subcontractors. Beck considered KMH to have abandoned the job. She obtained an owner's building permit and completed the project, making payments directly to the suppliers of labor and materials. On February 7, 1997, Beck obtained a certificate of occupancy from the Town of Jupiter. KMH's subcontractors/material suppliers recorded liens on the Beck's property. The subcontractors/material suppliers and recorded liens were as follows: on January 6, 1997, American Aluminum and Insulation FireProofing Company, Inc. (American Alum.) for $385.00; on January 6, 1997, Buckeye Plumbing for $2,625.00; on January 14, 1997, Hodges Drywall for $8,280.00; on January 14, 1997, Rizzo Tile & Marble, Inc. (R Tile & Marble) for $1,870.70; on January 15, 1997, James M. Webster d/b/a Rain Flow of South Florida (Rain Flow) for $75.00; on January 17, 1997, K. D. Installation, Inc. (KD Installation) for $520.40; on January 17, 1997, Q. C. Cabinet Systems, Inc. (QC Cabinets) for $3,207.00; on January 17, 1997, Paul Temple Painting (PT Painting) for $2,534.75; on January 17, 1997, Sasso Air for $3,360.00; on January 28, 1997, James Velix Bobcat Service (Bobcat Service) for $1,450.00; on February 4, 1997, Tideway for $279.00; on February 7, 1997, Florida Builder Appliances, Inc. (Builder Appliances) for $2,936.20; on February 7, 1997, Mc D Sprinklers, Inc. (McD Sprinklers)for $1,275.00; on February 11, 1997, Builder Direct Carpet Sales (Direct Carpet) for $1,959.26; and on February 12, 1997, Pollard Electric, Inc. (Pollard Electric) for $3,640.00. Beck paid KMH for all the work or materials pertaining to the liens. KMH failed to remove any of the liens. Beck paid to remove the liens as follows: on or about June 18, 1997, $2,625.00 to Buckeye Plumbing; on or about March 9, 1999, $10,125.00 to PT Painting, Hodges Drywall, R Tile & Marble, and Direct Carpet; and on or about October 19, 1999, $3,360.00 to Sasso Air. Hodges Drywall released its lien for $4,000.00 and the remaining amount of its lien was not paid, which represents a loss to the company. Builder Appliances, Rain Flow, McD Sprinklers, QC Cabinets, and Tideway did not receive payment from any source and the entire amounts of their liens were complete losses. After Beck took over construction of her home from KMH, she spent $19,203.00 to complete the home. Beck did not receive any money from KMH's bankruptcy. KMH never provided Beck with notification of the Construction Industries Recovery Fund. During the transaction between KMH and Beck, she met with Respondent at the job-site on one occasion to discuss some aspects of the project with which she was dissatisfied. Beck had expressed her dissatisfaction in a letter to KMH's owner. As of November 15, 2001, Petitioner's costs of investigation and prosecution for Case No. 01-3834PL, excluding costs associated with an attorney's time, totaled $534.57.
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: Dismissing the following counts: Count I of Case Nos. 01-3828PL, 01-3831PL, and 01-3833PL. Count IV of Case No. 01-3832PL. Finding that Glenn L. Mustapick committed all other violations in the counts of Case Nos. 01-3827PL, 01-3828PL, 01-3829PL, 01-3830PL, 01-3831PL, 01-3832PL, 01-3233PL, and 01-3834PL. Imposing a $25,000.00 administrative fine. Requiring Respondent to pay restitution not exceeding $25,000.00. Assessing $4,245.34 in costs for investigation and prosecution, excluding costs associated with an attorney's time, by the Department of Business and Professional Regulation, Construction Industry Licensing Board. Revoking the certified residential license, CR C040917, of Glenn L. Mustapick. DONE AND ENTERED this 3rd day of May, 2002, in Tallahassee, Leon County, Florida. ERROL H. POWELL 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 3rd day of May, 2002.
The Issue The issue posed for decision herein is whether or not the Respondent, Jose Milton, failed to qualify Joseph Enterprises, an entity through which it is alleged that the Respondent engaged in the business of contracting, in violation of Section 489.129(1)(j) and Sections 489.119(2) and (3), 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, the following relevant facts are found. By its Administrative Complaint dated September 17, 1981, Petitioner seeks to suspend, revoke or take other disciplinary action against the Respondent as licensee and against his licenses as a certified general contractor and a registered general contractor based on the fact that "he was acting in the capacity of a contractor under a name other than as it was issued" in violation of Section 489.129(1)(g) , Florida Statutes (1979), and also in violation of Section 489.129(1)(j) Florida Statutes (1979) to wit: Sections 489.119(2) and (3) in that he failed to properly qualify a company under which he was doing business. 1/ Documentary evidence introduced revealed that Respondent was first licensed as a registered general contractor in June of 1968 and was issued license No. RG0000195. During January of 1973, the license was changed to reflect International General Contractors, Inc. In June of 1977 a Change of Status application was submitted requesting the subject license be changed to reflect an individual status as well as a reinstatement. That license had been delinquent since July 1, 1975. The application was approved, processed and issued on an active status to Jose Milton, Individual. The subject license is delinquent as of July 1, 1981, and a Change of Status application requesting reinstatement had not been submitted to Petitioner as of September 23, 1982. Additionally, the records reveal that Jose Milton took and passed a state certification examination for general contractors in May of 1972. License No. CGC003859 was issued to Jose Milton, International General Contractors, Inc., in August of 1972. As of September 23, 1982, the subject license is active and issued for the 1981-83 licensing period; however, the certificate of issuance on file for that license expired effective October 1, 1981. Petitioner therefore considers the subject license invalid until Jose Milton has submitted evidence of general liability coverages as required (Petitioner's Exhibit No. 1). On September 7, 1979, Joseph Enterprises and Joseph Santa Maria entered into a Deposit Receipt and Sales Contract for the sale and purchase of a townhouse located at 19635 West Lake Drive, Miami, Florida. A certificate of occupancy was issued for the townhouse on approximately May 6, 1980. Respondent is not a signator to the subject Deposit Receipt and Sales Contract (Petitioner's Exhibit No. 2). According to Mr. Santa Maria, there was no construction on the subject site at the time he entered into the Deposit Receipt and Sales Contract with Joseph Enterprises on September 7, 1979. Respondent, on the other hand, takes the position that construction had in fact commenced on September 7, 1979, and that the permits for the townhouse for which Mr. Santa Maria agreed to purchase had been pulled by him on behalf of another entity that he owned, International General Contractors, Inc. In the subdivision in which Mr. Santa Maria purchased his townhouse, Respondent is the developer of a townhouse project referred to as Royal Singapore Lake which consists of some 174 townhouses. The permits for the construction of these townhouses were pulled by Jose Milton in the name of a construction company that he owned, International General Contractors, Inc., during April of 1978. As stated, Respondent has qualified International General Contractors. The plans, as approved by the Dade County building department, and the necessary building permits were posted at the construction site by International General Contractors (TR 47-48). Joseph Enterprises is a fictitious name for Jose Milton. The Respondent owns the property on which the townhouses are built and that property is registered under the fictitious name, Joseph Enterprises. That fictitious name is properly registered in Dade County and with the Secretary of State (TR 48-49). Respondent takes the position that Joseph Enterprises is not an entity through which he is doing contracting but rather it is merely "like qualifying [himself] because I am Joseph Enterprises." Finally, Respondent reiterated that the "Santa Maria building" was nearly completed at the time that the sales contract, in evidence herein, was signed. In support thereof, Respondent proffered a flood insurance policy dated May 29, 1979, covering the subject property. A premium payment of $152 per annum was paid for the flood policy. (Respondent's Exhibit No. 1). As stated, Respondent owns the construction company known as International General Contractors. International General Contractors is a qualified contractor, having been so qualified by Respondent, Jose Milton. According to Respondent, everybody is aware that he is responsible for the property generally known as Royal Singapore Lake. (TR 54). Concluding, Respondent takes the position that he was not even required to register Joseph Enterprises inasmuch as he is a licensed, registered architect in the State of Florida since 1953 (file No. AR0003327) and is therefore exempt from the registration requirements contained in Chapter 489, Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Administrative Complaint filed herein against Respondent, Jose Milton, be DISMISSED. RECOMMENDED this 30th day of November, 1982, 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 30th day of November, 1982. COPIES FURNISHED: Stephanie Daniel, Esquire 130 North Monroe Street Tallahassee, Florida 32301 Robert D. Korner, Esquire Korner & O'Brien 4790 Tamiami Trail (SW 8th Street) Coral Gables, Florida 33134 James Linnan Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202 Samuel R. Shorstein Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION CONSTRUCTION INDUSTRY LICENSING BOARD DEPARTMENT OF PROFESSIONAL REGULATION, Petitioner, vs. CASE NO. 5223 DOAH CASE NO. 82-1635 JOSE MILTON, Respondent. /
