The Issue The issue in this case is whether Respondent, Wayne H. Wagie, committed the offenses alleged in an Administrative Complaint filed with Petitioner, the Department of Business and Professional Regulation, on August 11, 2004, and, if so, what penalty should be imposed.
Findings Of Fact The Parties. Petitioner, the Department of Business and Professional Regulation (hereinafter referred to as the "Department"), is the agency of the State of Florida charged with the responsibility for, among other things, the licensure of individuals who wish to engage in contracting in the State of Florida; and the investigation and prosecution of complaints against individuals who have been so licensed. See Ch. 689, Fla. Stat (2005). Respondent, Wayne H. Wagie, is and has been at all times material hereto a licensed certified general contractor in Florida. Mr. Wagie was originally licensed as a certified general contractor on or about December 28, 1978, license number CGC 13331. At all times material hereto, the status of his license has been "Current, Active." At all times material, Mr. Wagie was the qualifying agent for Unified Construction Technologies, Inc (hereinafter referred to as "Unified Construction"), a Florida corporation. Unified Construction did not have a certificate of authority as a qualified business organization. The Department has jurisdiction over Mr. Wagie's license. The Spiegel Brothers. At the times material to this matter, Mr. Wagie engaged in a business arrangement with two brothers, Abraham and Yosef Spiegel (hereinafter referred to jointly as the "Spiegel Brothers), whereby Mr. Wagie allowed the Spiegel Brothers to use his general contractor's license number and qualifying number to pull permits for a company through which the Spiegel Brothers conducted construction business. The Spiegel Brothers' construction company was Mega Construction Group, Inc., d/b/a Mega Construction Group, Inc. (hereinafter referred to as "Mega Construction"). Pursuant to their agreement, Mega Construction, through the Spiegel Brothers, was to handle all aspects of any construction contracts the Spiegel Brothers were able to enter into, including negotiating the contract, handling funds received from customers, and performing all necessary work. The only function not to be carried out by the Spiegel Brothers or Mega Construction was to actually obtain the necessary building permits; that was Mr. Wagie's responsibility. In exchange for his services, Mr. Wagie was to receive a percentage of the sales price, with half paid upon execution of the contract and half after completion of the work. Neither of the Spiegel Brothers was a licensed general contractor in Florida. Nor was Mega Construction certified as a contractor qualified to do construction business in Florida. Mr. Wagie was aware of these facts. The Sicre Contract. In 2001, Candida Sicre owned and resided at a house located at 650 82nd Street, Miami Beach, Florida. Ms. Sicre was interested in adding a handicap accessible bathroom to her home and, when she received a flyer in the mail advertising Mega Construction, she contacted the Spiegel Brothers. On August 13, 2001, Ms. Sicre entered into a written contract with Mega Construction (hereinafter referred to as the "Sicre Contract"). Pursuant to the Sicre Contract, Mega Construction agreed to construct a new handicap-accessible bathroom for which Ms. Sicre agreed to pay a total of $15,762.00. As part of their contract, it was agreed that an air-conditioning unit would be relocated. While the relocation of the air-conditioning unit is listed as "1" and the construction of the new bathroom is listed as "2" in the Sicre Contract, in fact the relocation of the air-conditioning unit was a necessary component of the construction of the new bathroom, for the new bathroom was to be constructed from where the air-conditioning unit was to be relocated. Ms. Sicre paid a total of $7,762.00 on the agreed Sicre Contract price. On September 17, 2001, Mr. Wagie, pursuant to his agreement with the Spiegel Brothers, signed a building permit application required to complete the Sicre Contract. That application was filed with the City of Miami Beach building department on or about January 4, 2002. On the permit application, Unified Construction was listed as the "Company," Mr. Wagie was listed as "Qualifier," and Mr. Wagie's license number was listed as the "License No." under "Contractor Information". The permit application was approved by the City of Miami Beach on or about May 31, 2002, and permit number KB0201178 was issued. Pursuant to an agreement between the Spiegel Brothers and Ms. Sicre, the starting date for the Sicre Contract was postponed to August 15, 2002, just over a year after it had been entered into. At some time after the Sicre Contract was entered into, the air-conditioning unit was relocated as specified in the contract. Except for the relocation of the air-conditioning unit, no further work specified under the Sicre Contract was performed. The actual construction of the new bathroom was never started. Eventually, Ms. Sicre was told that the work would not be performed because Mega Construction was going to declare bankruptcy. After being told that the new bathroom would not be completed, Ms. Sicre sold her house. She attempted, however, to obtain a refund of some of the $7,762.00 she had paid Mega Construction. Eventually, Ms. Sicre learned of Mr. Wagie's involvement with the Spiegel Brothers and, through a series of negotiations, it was agreed that she would receive a refund of $2,000.00 through Mr. Wagie from the Spiegel Brothers. She was eventually given two $1,000.00 checks in furtherance of this agreement, but the checks ultimately "bounced." The only work performed on the Sicre Contract by Mega Construction was the drawing of a building permit and the relocation of the air-conditioning unit. For this work, Ms. Sicre paid a total of $7,762.00. Ultimately, Mega Construction, although beginning the project by relocating the air-conditioning unit, abandoned the project without its completion. Prior Disciplinary Action. On July 15, 1996, the Department filed a Final Order reflecting that a settlement stipulation had been approved by the Construction Industry Licensing Board (hereinafter referred to as the "Board"), pursuant to which Mr. Wagie agreed to pay an administrative fine in the amount of $250.00, plus investigative and legal costs in the amount of $368.30 to resolve charges against his license, which Mr. Wagie denied. The Department's Costs of Investigation and Prosecution. The Department has incurred $597.69 in the investigation and prosecution of this matter.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Department: Finding that Wayne H. Wagie violated Section 489.129(1)(i), Florida Statutes (2000), as alleged in Counts I and III of the Administrative Complaint; and violated Section 489.129(1)(d), Florida Statutes (2000), as alleged in Count II of the Administrative Complaint; Dismissing Counts IV and V of the Administrative Complaint; and Imposing an administrative fine in the total amount of $3,250.00; requiring that Mr. Wagie pay Ms. Sicre $2,000.00 in restitution; requiring that Mr. Wagie pay $597.69 as the costs of the investigation and prosecution of this matter; and that his license be suspended for a period of two years. DONE AND ENTERED this 31st day of August, 2005, in Tallahassee, Leon County, Florida. S LARRY J. SARTIN 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 31st day of August, 2005. COPIES FURNISHED: Theodore R. Gay Assistant General Counsel Department of Business and Professional Regulation 8685 Northwest 53rd Terrace, Suite 100 Miami, Florida 33166 Wayne H. Wagie 220 Northeast 45th Street Miami, Florida 33137 Tim Vaccaro, Executive Director Construction Industry Licensing Board Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Leon Biegalski, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue Whether Respondent violated the provisions of chapter 440, Florida Statutes (2016), by failing to secure the payment of workers' compensation coverage, as alleged in the Stop-work Order.1/
Findings Of Fact The Department is the state agency responsible for enforcing the requirement of chapter 440 that employers in Florida secure the payment of workers' compensation coverage for their employees and corporate officers. § 440.107, Fla. Stat. Respondent, M.C. Jennings Jr. Construction Corp., is an active Florida for-profit corporation with its principal office located at 3125 Mundy Street, Miami, Florida 33133. Miles Jennings, Jr., is Respondent's president and registered agent. Respondent admits that during the time period of January 8, 2014, to January 7, 2016, Respondent was a business engaged in the construction industry. The Investigation On January 6, 2016, the Department's compliance investigator, Humberto Rivero, conducted a compliance check at Respondent's business address in response to a public referral. Prior to visiting the business, Mr. Rivero checked the Division of Corporations' website to obtain the federal employee identification number and information on the corporate officers. After this, Mr. Rivero searched the Coverage and Compliance Automated System ("CCAS") to verify whether or not Respondent is covered with workers' compensation insurance and whether there is an exemption for the corporate officers. Mr. Rivero also searched the National Council on Compensation Insurance ("NCCI"). Mr. Rivero routinely checks for coverage before going out for a site visit in response to public referrals. Upon searching the NCCI database and the CCAS database, Mr. Rivero learned that Respondent had no workers' compensation coverage and so the referral appeared to be accurate. Mr. Rivero also determined there were no exemptions. Next, Mr. Rivero arrived at the business address for Respondent, went into a fenced yard, up the steps to a trailer, and identified himself and the reason he was there. Mr. Rivero described the office trailer as the type he goes into on construction projects. There was a desk, manuals, schedules, and drawings or blueprints on a rack. Mr. Rivero did not personally observe any construction activity at the site. Mr. Rivero spoke with Shawn Denise Welch-Perryman. Ms. Welch-Perryman indicated she did not have access to information on workers' compensation and could not get Mr. Jennings because he was in a meeting and could not to be disturbed. Ms. Welch-Perryman said Ms. Hallman, the property manager for Respondent, may be able to help. Mr. Rivero contacted Darlene Hallman by telephone. Ms. Hallman indicated she did not have access to information on workers' compensation. Ms. Hallman admitted she is an employee of Respondent and has been there for several years. Ms. Hallman said she gets paid by company check, but did not want to disclose how much. After this, Mr. Rivero interviewed Ms. Welch-Perryman, as he had with Ms. Hallman, and Ms. Welch-Perryman admitted to being an employee of Respondent. Ms. Welch-Perryman also gets paid by company check. Mr. Rivero was provided with the name Ed Fowler, Respondent's insurance agent. Mr. Rivero talked to Mr. Fowler to check on whether Respondent was covered. Mr. Fowler said the company did not have coverage, but it was working on it. This information was consistent with the searches Mr. Rivero performed prior to his visit at Respondent's business location. Mr. Rivero told Ms. Welch-Perryman to have Mr. Jennings call him by the end of that day, January 6th. Mr. Jennings did not call Mr. Rivero on the 6th. On January 7, 2016, Mr. Rivero spoke with Mr. Jennings by phone. During this conversation, Mr. Jennings confirmed that the two women were his employees and he did not have insurance, but was working on securing it. Mr. Jennings agreed to meet with Mr. Rivero at the office trailer at 1 p.m. When Mr. Rivero returned that afternoon, the site was locked with the fence closed by padlock. Mr. Rivero called Ms. Welch-Perryman and Ms. Hallman to see why the site was locked and left messages, but received no response. Mr. Rivero called his supervisor, Scarlet Aldana, to inform her of what he found. She advised Mr. Rivero to call Mr. Jennings and tell him of the consequences of not being there and not having insurance. Mr. Rivero called Mr. Jennings and left a message. After waiting about 15 minutes, Mr. Rivero called his supervisor again to explain the situation. Ms. Aldana authorized a Stop- work Order to be issued and posted in a prominent place. Mr. Rivero posted the Stop-work Order on Respondent's mailbox and photographed it. While at the business location, Mr. Rivero was with senior investigator Julio Cabrera. Mr. Rivero was directed by Mr. Cabrera to photograph a dump truck on site with a general contractor's number on it. According to Mr. Rivero, there were many more pieces of equipment, but he focused on photographing the posting of the Stop-work Order and the dump truck. According to the records of the Department of Business and Professional Regulation, an active general contractor license number belongs to Mr. Jennings and Respondent. On January 15, 2016, Mr. Jennings contacted Mr. Rivero to say he had come into compliance by purchasing coverage for nine employees. Mr. Rivero asked for the broker's name and phone number so he could verify coverage. Mr. Rivero spoke by phone with Stan Shelton at Madison Insurance Company. Mr. Shelton verified the company had coverage for nine employees, paid a down payment of $500, and the premium was $31,763. On January 19, 2016, Mr. Rivero met with Mr. Jennings and went over the business records request, informing Mr. Jennings that in order to calculate a penalty, the Department needed certain records. Mr. Jennings was informed of the ten business days he had to submit the records. Penalty Calculation Penalty Auditor Sarah Beal was assigned to calculate the penalty in this case. Ms. Beal did not receive any records from Respondent in response to the business records request. Without any records, Ms. Beal had to impute the gross payroll which is equal to two times the average weekly wage that was in effect when the Stop-work Order was issued. Ms. Beal determined the period of noncompliance to be the full two years of January 8, 2014, to January 7, 2016. Ms. Beal identified the employees on the penalty worksheet from the investigator's on- site observations and narrative. Based on Mr. Rivero's observations on January 6, 2016, and the information he had gathered, Ms. Beal initially used the classification code 8810 listed in the Scopes® Manual, which has been adopted by the Department through Florida Administrative Code Rule 69L-6.021(1). Classification codes are four-digit codes assigned to various occupations by the NCCI to assist in the calculation of workers' compensation insurance premiums. Classification code 8810 applies to clerical workers and Ms. Beal preliminarily used this code for Ms. Hallman, Ms. Welch-Perryman, and Mr. Jennings. Ms. Beal then utilized the corresponding approved manual rates for those class codes and the period of noncompliance to determine a penalty, which she submitted to her supervisor for review. Ms. Beal was subsequently directed to change the class code for Mr. Jennings to Scopes Code 5606, a construction class code for construction foreman/project manager. On April 8, 2016, based on Ms. Beal's re-calculation, using class code 5606 for Mr. Jennings, the Department issued an Amended Order of Penalty Assessment to Respondent. The Amended Order of Penalty Assessment assessed a penalty of $8,753.66.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a final order upholding the Stop-work Order and the Amended Order of Penalty Assessment and assess a penalty against Respondent in the amount of $8,753.66. DONE AND ENTERED this 27th day of June, 2016, in Tallahassee, Leon County, Florida. S MARY LI CREASY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of June, 2016.
The Issue The issue for determination at the formal hearing was whether Respondent allowed an uncertified and unregistered person to engage in prohibited contracting in violation of Subsections 489.129(1)(e), (f), and (m), Florida Statutes. 1/
Findings Of Fact Petitioner is the state agency charged, in conjunction with the Construction Industry Licensing Board, with the responsibility for prosecuting the Administrative Complaint in this proceeding pursuant to chapters 455 and 489, and the rules promulgated thereunder. In September, 1980, license number CG C015802 was issued to Respondent, Thomas J. Freese, as the qualifying agent for Tracy Industries, 728 St. Lucie Crest, Stuart, Florida 33494 ("Tracy"). Respondent was the licensed qualifying agent for Tracy Industries at all times material to this proceeding. At no time material to this proceeding was Robert Sherno licensed by Petitioner as a contractor. On or about May 30, 1988, Mr. Sherno contracted with William F. Meinking to construct a home for Mr. Meinking. The contract price was not to exceed $64,000.00. A building permit was issued for the construction of Mr. Meinking's home on June 8, 1988. The permit was obtained by Mr. Sherno as agent for Respondent. A notice of commencement was filed by Mr. Meinking on June 20, 1988, listing Respondent as the contractor, and listing Mr. Sherno as the person designated by the owner for service of notice and other documents. Respondent authorized Mr. Sherno to obtain the building permit by letter to the local building department dated June 21, 1988 ("authorization letter"). The authorization letter was requested by Robert Nelson who was Tracy's president. Mr. Nelson was personally acquainted with Mr. Sherno and dealt directly but separately with Mr. Sherno and Respondent. Mr. Sherno paid $200.00 to Mr. Nelson at the time of the authorization letter. Mr. Nelson told Respondent that the permit was for the construction of Mr. Meinking's home. Respondent initially questioned the need for a contractor to pull the permit when the owner could build his own house under an owner's permit. Respondent was told that Mr. Meinking and Mr. Sherno were going to develop a number of homes in the area Not only would the number of homes not qualify for an owner's permit, but it was anticipated by Mr. Nelson that the development plan proposed by Mr. Sherno and Mr. Meinking had excellent profit potential for all concerned. Based on that information from Mr. Nelson, Respondent signed the authorization letter. Respondent knew Mr. Sherno and knew that Mr. Sherno was not a licensed contractor. Neither Respondent nor any qualified person supervised the construction of Mr. Meinking's home. One person employed by Tracy in an administrative or clerical capacity visited the construction site occasionally. Respondent inquired of Mr. Nelson from time to time at the offices of Tracy as to the status of construction. Respondent drove by the construction site from time to time, but did not personally supervise construction in any capacity. Respondent did not inspect the progress of construction, provide insurance, discuss the progress of construction with Mr. Meinking, Mr. Sherno, or anyone at Tracy. Respondent assumed that construction was proceeding according to schedule and in a satisfactory manner as long as there were no complaints. Mr. Meinking paid Mr. Sherno the entire $64,000.00 pursuant to the terms of the contract. During the latter stages of construction in the first or second week of November, Mr. Meinking began receiving calls from subcontractors stating that they had not been paid. Mr. Meinking terminated his contractual relationship with Mr. Sherno on or about November 17, 1988. Mr. Meinking paid approximately $16,500.00 to eight subcontractors and an additional $10,000.00 to $12,000.00 to finish construction of his home.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent be found guilty of violating Subsections 489.129(1)(e), (f), and (m), Florida Statutes. It is further recommended that Respondent be fined $2,000.00 which represents the aggregate amount of the minimum fine for each violation. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 27th day of August, 1990. DANIEL MANRY 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 27th day of August, 1990.
The Issue The issue in this case is whether Respondent violated the provisions of chapter 440, Florida Statutes,1/ by failing to secure the payment of workers’ compensation, as alleged in the Stop-Work Order and Third Amended Order of Penalty Assessment, and if so, what is the appropriate penalty.
Findings Of Fact The Department is the state agency responsible for enforcing the statutory requirement that employers secure workers’ compensation coverage for the benefit of their employees. Respondent is a Florida, for-profit corporation with its principal office located at 3539 Apalachee Parkway, Suite 3-204, Tallahassee, Florida 32311. Respondent was incorporated on October 26, 2012, and has been engaged in the construction industry in Florida as a roofing company since October 31, 2012. From Respondent’s inception, Richard Paul Morejon has been Respondent’s president, secretary, and treasurer, and has received compensation from Respondent’s roofing contract proceeds. In July or August 2013, the Department received a complaint alleging that Respondent was not in compliance with Florida's Workers' Compensation Law. The Department assigned investigation of the complaint to then-Department investigator Carey Horn. Based upon materials apparently gathered and reports purportedly authored by Investigator Horn, the Department issued a stop-work order dated September 23, 2013, to Respondent alleging that Respondent did not secure workers’ compensation coverage for its employees as required. The Department, however, did not call Investigator Horn as a witness, and, despite Mr. Morejon’s attempt to subpoena her to testify in this case, Investigator Horn could not be found. The Department’s delay in referring this case for a final hearing either caused or contributed to Investigator Horn’s unavailability as a witness in this proceeding. The reports and conclusions of Investigator Horn were prepared in anticipation of litigation and are hearsay.2/ Therefore, they have not been used to support factual findings in this Recommended Order unless corroborative of non-hearsay evidence.3/ In addition, on October 20, 2014, the Department filed a document entitled "Joint Prehearing Stipulation" signed by the Department’s counsel and Mr. Morejon purporting to contain a number of stipulated facts and factual admissions by Mr. Morejon on behalf of Respondent. However, at the final hearing, the manner in which the Joint Prehearing Stipulation was procured was brought into question when Mr. Morejon advised that he was told to sign it and that the stipulation would be “ironed out” at the final hearing. The Department’s counsel confirmed that the conversation occurred regarding the correct classification code to be utilized in calculating the penalty against Respondent. Accordingly, it was ruled at the final hearing that the Joint Stipulation would not be used to support a finding regarding the classification. Upon further consideration of Mr. Morejon’s comments and the Department’s counsel’s admission as to the manner in which at least one of the stipulated facts was secured, the undersigned has not utilized and otherwise rejects as untrustworthy the document entitled "Joint Prehearing Stipulation" filed in this case on October 20, 2014, finding that it does not represent any bona fide stipulations or admissions. Nevertheless, in his testimony during his deposition and at the final hearing in this case, Mr. Morejon admitted a number of factual matters demonstrating that Respondent was not in compliance with Florida’s Workers’ Compensation Law on September 23, 2013. The factual findings in this Recommended Order are derived from Mr. Morejon’s testimony, non-hearsay evidence, and corroborative hearsay submitted during the final hearing. On September 23, 2013, Investigator Horn visited a jobsite at a residence located at 5747 Sioux Drive, Tallahassee, Florida (Jobsite), where Respondent, through employees, was performing roofing and related activities. On that date, Mr. Morejon was on the ground supervising two men on the roof engaged in roofing activities and two men on the ground picking up debris, for a total of five men, including Mr. Morejon, at the Jobsite working for Respondent. There was another man sitting in a vehicle at the Jobsite that day who never did any work for Respondent. There is no evidence that Respondent provided workers’ compensation coverage for any of the men working at the Jobsite that day. The two men working on the roof were Guadalupe Perez- Martinez and Hermilo Perez-Martinez. At the time, Guadalupe Perez-Martinez had an exemption from the requirements for workers’ compensation through his company, Lupe Builders, LLC. Although Hermilo Perez-Martinez previously had an exemption from the requirements of workers’ compensation through Perez Builders, LLC, that exemption expired the previous month, on August 3, 2013. There is no evidence that the two men picking up debris, Hermilo Pantaleon Paz and Timotio Aguilar, qualified for an exemption from workers’ compensation coverage that day. Although Mr. Morejon had an exemption from the requirements of Florida's Workers' Compensation Law for a separate and unaffiliated company, Comerxio, Mr. Morejon did not have an exemption from the coverage requirements of Florida's Workers' Compensation Law for Respondent on September 23, 2013, or during the relative time periods of this case. According to Mr. Morejon, other than Guadalupe Perez- Martinez, none of the other workers at the Jobsite that day had ever performed work for Respondent. Mr. Morejon also recalled that another person on the Jobsite that day, David Amaro- Rodriguez, just sat in a car and performed no work. Mr. Morejon’s recollections are unrefuted. The Department’s delay in referring this case undoubtedly affected the ability of either party to call other witnesses, including a number of the workers or the investigator, who were at the Jobsite that day. During the relevant time periods, Respondent did not maintain a bank account to pay its employees and it did not directly pay Mr. Morejon or other employees. Rather, historically, proceeds from roofing contracts performed by Respondent were deposited into a bank account held by another corporation named "A 2 Z Roofing, Inc." After paying various expenses, including permit fees, materials, and other costs associated with the roofing contracts, A 2 Z Roofing, Inc., paid Mr. Morejon, and any others performing work under the contracts, by check. On September 23, 2013, the Department personally served the Respondent with a stop work order (Stop Work Order) and a request for production of business records for penalty assessment calculation (Records Request). The Records Request requested Respondent’s corporate records, licenses, payroll documents, account documents, disbursements, contracts for work, employee leasing information, subcontractors, and workers' compensation coverage or exemptions "for the period from 10/31/2012 through 09/23/2013 [the Non- Compliance Period]." The Records Request further stated, in part: The employer should scan and email the records requested herein to the investigator with the Department of Financial Services, Division of Workers’ Compensation for examination within 5 business days after receipt of this Request for Production of Business Records. If the employer fails to provide the required business records sufficient to enable the Department of Financial Services, Division of Workers’ Compensation to determine the employer’s payroll for the period requested for the calculation of the penalty provided in section 440.107(7)(d), F.S., the imputed weekly payroll for each employee, corporate officer, sole proprietor, or partner shall be the statewide average weekly wage as defined in section 440.12(2), F.S. multiplied by 1.5. The Department shall impute the employer’s payroll at any time after ten, but before the expiration of twenty business days after receipt by the employer of a written request to produce such business records. (FAC 69L-6.028) If the employer is unable to scan and email these documents, please mail or deliver copies to our office located at 200 East Gaines Street Tallahassee, FL, 32399-4228. The next day, September 24, 2013, Mr. Morejon hand delivered Respondent’s business records to the Department in response to the Records Request. The business records delivered by Mr. Morejon included roofing permit applications; roofing permits issued to A to Z Roofing, Inc.; several contracts between homeowners and A to Z Roofing, Inc., identifying Mr. Morejon as project manager; five checks from A 2 Z Roofing, Inc. (not Respondent), payable to the City of Tallahassee; and 24 checks from A 2 Z Roofing, Inc., payable to "Mr. Morejon – Petty Cash." The 24 checks from A 2 Z Roofing, Inc., to Mr. Morejon totaled $55,955.4/ The checks, dated from November 17, 2012, to August 23, 2013, constitute all of the money paid to Mr. Morejon from Respondent’s roofing contract proceeds during the Non- Compliance Period. In addition to the 24 checks payable to Mr. Morejon, it is evident that the Department also received other checks from A 2 Z Roofing, Inc., from the records requests made in this case and in DOAH Case No. 14-2829, made payable to Lupe Builders, LLC, Gene Pfund, and perhaps others, during the Non- Compliance Period. The Department, however, did not utilize those records in its determinations in this case. In fact, the Department’s penalty auditor did not utilize payments made by A 2 Z Roofing, Inc., in calculating the penalty because, in the Department’s penalty auditor’s opinion, Respondent was not compliant because it did not have a bank account. Final Hearing Transcript, pp. 232-233. The determination of payroll, however, is not dependent on whether an employer has a bank account or whether the employer is the entity that pays its employees. Rather, the Department’s own rule defining payroll considers "[p]ayments, including cash payments, made to employees by or on behalf of the employer" in determining payroll. See Fla. Admin. Code Rule 69L-6.035(1)(b)(emphasis added). During the hearing, the Department, through counsel, stated that the payments from A 2 Z Roofing to Lupe Builders, LLC, or Gene Pfund were not considered because those entities had valid exemptions from the requirements of workers’ compensation. In addition, the Department complained that their receipt of bank records from A 2 Z Roofing, Inc., had been delayed and took the position that bank records from A 2 Z Roofing, Inc., would not be utilized in this case. The Department’s own discovery tactics, however, were responsible for delays in responses to its requests for records from A 2 Z Roofing, Inc.5/ Considering the records produced by Respondent introduced into evidence in this case, the testimony of Mr. Morejon regarding the checks payable to him from A 2 Z Roofing, Inc., the Department’s unwillingness to utilize other records from A 2 Z Roofing, Inc., in its possession, and evidence of the total payments to Mr. Morejon during the Non- Compliance Period, it is found that the Department’s decision to impute payroll is unfounded. Imputation of payroll would improperly allow the Department to benefit from its own lack of analysis. The imputed payroll determined by the Department in the amount of $347,334.69 exceeds Respondent’s total revenue for the Non- Compliance Period by more than $100,0006/ and is based, at least in part, upon hearsay evidence prepared by a witness whose unavailability was likely caused by the Department’s undue delay in referring Respondent’s Request for Hearing. Furthermore, the records produced by Respondent and the evidence in this case are sufficient to determine Respondent's payroll for use in the calculation of a penalty pursuant to section 440.107(7)(d)l. The evidence demonstrated that the $55,955 reflected in checks payable to Mr. Morejon from A 2 Z Roofing, Inc., represent all of the payments to Respondent’s employees who were not covered by workers’ compensation while performing services for roofing contracts during the Non-Compliance Period, other than payments reflected in records the Department may have in its possession but did not present at the final hearing. It was also shown, however, that the $55,955 was paid to Mr. Morejon without the maintenance of a cash log or cash journal and without securing the payment of workers' compensation coverage for Mr. Morejon or others receiving cash payments from those funds. And, there is no evidence that any of those employees were exempt from the requirements of workers’ compensation. Respondent was required to secure workers' compensation coverage and failed to secure that coverage under Florida’s Workers’ Compensation Law for its employees who were paid $55,955.00 during the Non-Compliance Period. Therefore, the Department was justified in issuing the Stop Work Order delivered to Mr. Morejon on September 23, 2013. Although the Department failed to show that Respondent’s payroll should be imputed, the evidence adduced at the final hearing demonstrated that a penalty should be imposed against Respondent for failure to pay workers’ compensation for its employees who were paid a total of $55,955 during the Non- Compliance Period. For determining the appropriate penalty, the Department has adopted a penalty calculation worksheet to aid in calculating penalties against employers pursuant to section 440.107, Florida Statutes. See Florida Administrative Code Rule 69L-6.027. The classification codes listed in the National Council on Compensation Insurance ("NCCI") Scopes® Manual have been adopted by the Department through Florida Administrative Code Rules 69L-6.021 and 69L-6.031. Classification codes are four-digit codes assigned to occupations by NCCI to assist in the calculation of workers' compensation insurance premiums. Under the descriptions listed in the NCCI Scopes® Manual, the proper classification code for Respondent’s employees is 5551, which corresponds to "Roofing - All Kinds and Drivers." The Department has adopted the approved manual rates in the Florida Administrative Code, as authorized by section 440.107(7). Rule 69L-6.027 adopts form number DFS-F4-1595, the Penalty Calculation Worksheet, which specifically incorporates approved manual rates. As accurately set forth in the Penalty Calculation Worksheets attached to the Amended Order of Penalty Assessment, the approved manual rates for the following periods of Non- Compliance were: From 10/31/2012 to 12/31/2012 the rate was 17.10; From 01/01/2013 to 06/30/2013 the rate was 18.17; From 07/01/2013 to 09/23/2013 the rate was 18.03. A breakdown of Respondent’s total payroll of $55,955 based upon check dates corresponding to the manual rates in effect during the Non-Compliance Period, is as follows: From 10/31/2012 to 12/31/2012 payroll totaled $6,300; From 01/01/2013 to 06/30/2013 payroll totaled $33,655; From 07/01/2013 to 09/23/2013 payroll totaled $16,000. Calculation of the penalty, using the Penalty Calculation Worksheet and Respondent’s payroll based on records (as opposed to imputed) during the Non-Compliance Period, results in a total penalty of $15,116.12, as follows: Calculation Method (a) Class Code (b) Non-Compliance period (c) Gross Payroll (d) /100 (e) Approved Rates (f) Premium (d)X(e) (g) Penalty (f)X 1.5 Records 5551 10/31/12 12/31/12 6,300 63 17.10 1,077.30 1,616.25 Records 5551 01/01/13 06/30/13 33,655 336.55 18.17 6,115.11 9,172.67 Records 5551 07/01/13 09/23/13 16,000 160 18.03 2,884.80 4,327.20 Totals: $55,955.00 $15,116.12 The clear and convincing evidence in this proceeding demonstrated that Respondent was in violation of Florida’s Workers’ Compensation law because it employed one or more uninsured employees in the construction industry throughout the Non-Compliance Penalty, and that the appropriate penalty, based upon Respondent’s payroll, is in the amount of $15,116.12.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department enter a Final Order consistent with this Recommended Order upholding the Stop Work Order, and reducing the penalty set forth in the Amended Order of Penalty Assessment to $15,116.12 by recalculating the penalty based upon Respondent’s payroll of $55,955.00 during the Non-Compliance Period. DONE AND ENTERED this 5th day of February, 2015, in Tallahassee, Leon County, Florida. S JAMES H. PETERSON, III Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of February, 2015.
The Issue At issue is whether Respondent committed the offenses set forth in the Amended Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact Petitioner, Department of Business and Professional Regulation, Construction Industry Licensing Board (Department), is a state agency charged with the duty and responsibility of regulating the practice of contracting pursuant to Chapters 20, 455 and 489, Florida Statutes. At all times material to the allegations of the Amended Administrative Complaint, Respondent was licensed in Florida as a Certified General Contractor, having been issued license number CG C018621, and authorized to engage in the practice of general contracting as an individual. At the time of the hearing, Respondent's license had been suspended. At no time material was Respondent licensed to practice contracting in Florida through Florida East Coast Properties, Inc. On or about November 13, 1995, Respondent, doing business as Florida East Coast Properties, entered into a contract with Kazimierz and Maria Charchut (the Charchuts) for construction of a single family residence to be located at 8 Farmsworth Drive, Palm Coast, Flagler County, Florida. The original contract price was $124,000. At the time of the signing of the contract, the Charchuts lived in Brooklyn, New York, and continue to reside there. The Respondent's license number does not appear on the contract. The Respondent's notification of the Construction Industries Recovery Fund does not appear on the contract. Between September 13 and November 28, 1995, the Charchuts paid Respondent a total of $44,000 of the contract price towards construction of the residence. This amount constituted more than 10% of the contract amount (10% of the contract amount would have been $12,400). A closing on the construction loan was scheduled for October of 1995. Respondent called Mr. Charchut a couple of days before the first scheduled closing telling him they could stop the closing so that they could get better interest rates. Between October 1995 and June of 1997, Respondent failed to appear at a total of three scheduled closings on the construction loan. The Charchuts wrote several letters and made several phone calls to Respondent expressing concern that the closing had not yet occurred although they had already paid him a substantial amount of money. The closing finally took place in October of 1997. Because of some change orders that were to be made to the house, including wooden floors and a longer driveway, the Charchuts paid an additional $14,813.75 at the closing bringing the total cost of the construction of the home to $138,813.75. Included on the Change Order form was an amount of $2,001.75 for water and sewer assessments, which comprised part of the $14,813.75 total additional moneys paid by the Charchuts. The closing agent testified that this closing was atypical, because the bank was concerned that Respondent held too much money in the construction project. She testified that the bank requires that builders have no more than ten percent deposit. Consequently, Respondent was required to reimburse the bank $16,786.25 of the Charchut's $44,000 deposit at the closing. This was accomplished by Respondent bringing a check to the closing in the amount of $25,000 and receiving a refund overage check from Flagler County Abstract Co., (written to Florida East Coast) in the amount of $8,213.75, resulting in Respondent paying a net amount of $16,786.25 at the closing. At the closing, the bank received a check from Flagler County Abstract Co. for $31,600 to put in the construction loan account. This amount was composed of the Charchut's payment of $14,813.75 plus Respondent's payment of $16,786.25. Mr. Charchut wrote to Respondent in March of 1998 expressing concern that the closing had taken place in October of 1997 but the construction of his home had not yet begun. Respondent replied to Mr. Charchut in a letter dated April 8, 1998, stating that he was sorry for the delay in beginning construction of the home and that he intended to begin construction the week of April 20, 1998. Respondent applied for the building permit on May 7, 1998. Respondent applied for water and sewer service on May 5, 1998. He began construction of the house in June or July of 1998. By the end of July 1998, Respondent finished the slab foundation and rough plumbing of the Charchut's home. Consequently, the mortgage company paid $14,769.40 out of the first draw payment on the construction loan to Respondent's company. Of that amount, $3,485.86 was for reimbursement for payment to subcontractors. In addition to the amounts paid to Respondent, the mortgage company paid Mastercraft Plumbing $1,894 and $5,656.60 to CRS Rinker Materials Corp. The total first draw was $22,320. After payment of the first draw in August of 1998, little if any work was done on the construction of the Charchut's home. After the initial work on the slab, Respondent stopped construction and told the Charchuts that he did not want to continue to build their home and was looking for another contractor to finish the house for them. After being told that Respondent did not want to work on the home, the Charchuts wrote to Respondent on October 5, 1998, notifying Respondent to stop doing further work on the property and asking him to notify the Building Department so a transfer of the construction permit to another builder could take place. The Charchuts subsequently engaged another contractor, Mr. V. M. Zarbo. Mr. Charchut testified that he paid approximately $160,000 for the house to be built, including the money paid to Respondent. Mr. Charchut testified that when Mr. Zarbo began his work, Palm Coast Utility asked him to pay the impact fee for water and sewer. Despite the Charchut's having paid Respondent $2,001.75 toward water and sewer assessments, Respondent's check for that amount made out to Palm Coast Utility Company was returned for insufficient funds. Consequently, the Charchuts had to pay $2,116.75 for this fee again through their subsequent general contractor, notwithstanding Respondent claiming that he had incurred this expense. When added together, the Charchuts paid Respondent a total of $51,650.50 for the work Respondent did on the house. The total is composed of the sum of $27,213.75 (the net Respondent retained on the original down payment), $14,769.40 paid to Respondent from the first draw, and $1,894 and $5,656.60 paid to Respondent's suppliers/subcontractors from the first draw. Additionally, the Charchuts paid $2,116.75 for payment of the utility impact fee that the Charchuts had to pay twice. The Charchuts asked their subsequent contractor to prepare an estimate of the cost of the work that Respondent performed on the home. His written estimate was for a total of $21,536.68. The Charchuts included that written estimate in a letter to Respondent dated November 16, 1998, asking for a refund of amounts they paid in excess of his costs. Roy Brand testified as an expert witness for Petitioner. Mr. Brand has been a certified commercial contractor for about 20 years. He reviewed the estimate of Respondent's expenses that was provided by the Charchut's subsequent contractor. It was Mr. Brand's opinion that the cost estimate was appropriate and, if anything, Respondent's expenses might have been less. Respondent testified that he spent more on some items that were listed in the estimate. Respondent, during the investigation leading up to this case, was given an opportunity to provide receipts to Petitioner's investigator of expenditures made to the house. The receipts supplied to Petitioner's investigator do not total an amount in excess of the estimate made by the Charchut's subsequent builder. Based upon Respondent's failure to provide receipts to prove that the estimate total was too low, Mr. Zarbo's good faith estimate of building expenses made after his inspection of the property, and testimony of Petitioner's expert witness as to the reasonableness of the estimate, the estimate of expenses for Respondent's work in the amount of $21,536.68 is accepted as appropriate. Thus, Respondent has failed to account for or return to the Charchuts $30,113.82, the difference between the amount paid by the Charchuts and the estimate of expenses.1 As of September 20, 2000, the Department's costs of investigation and prosecution, excluding legal costs, totaled $1,498.66. Previous disciplinary action At hearing, the Department offered proof that, on two prior occasions, Respondent had been subjected to disciplinary action by the Construction Industry Licensing Board (the Board). The first occasion is reflected in the terms of a Final Order of the Board, (Final Order No. BPR-2000-01399) dated April 4, 2000, which found Respondent guilty of violating Section 489.129(1)(c), Florida Statutes, by making misleading, deceptive, or fraudulent representations to a client; Section 489.129(1)(g), Florida Statutes,2 by acting in the capacity of a contractor in a name other than as set forth on the issued certificate or registration; Section 489.129(1)(h)1, Florida Statutes, by committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer; Section 489.129(1)(l), Florida Statutes, by signing a statement with respect to a project or contract with false information; Section 489.129(1)(m), Florida Statutes, by committing fraud or deceit in the practice of contracting; and Section 489.129(1)(n), Florida Statutes, by committing incompetency or misconduct in the practice of contracting and imposing the penalties of placing Respondent on probation for two (2) years and payment of an administrative fine, costs and restitution to a customer. The second occasion that Respondent was subjected to disciplinary action is reflected in the terms of a Final Order of the Board, (Final Order No. BPR-2000-01443) also dated April 4, 2000, which found that Respondent violated Section 489.129(1)(g), Florida Statutes, by acting in the capacity of a contractor under a certificate or registration other than in the name of the certificateholder; Section 489.129(1)(h)1 and 3, Florida Statutes, by committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer; Section 489.129(1)(l), Florida Statutes, by signing a statement with respect to a project or contract falsely indicating that payment had been made for all subcontracted work; Section 489.129(1)(m), Florida Statutes, by committing fraud or deceit in the practice of contracting; and Section 489.129(1)(n), Florida Statutes, by committing incompetency or misconduct in the practice of contracting; and imposing the penalties of probation, payment of fines, costs and restitution. Respondent apparently did not satisfy the fines and costs imposed by the foregoing orders as Respondent's license was suspended on May 17, 2000, for non-payment of fines, costs or restitution.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED: That the Construction Industry Licensing Board enter a final order adopting the foregoing findings of fact and conclusions of law, and which, as penalty for the violations found, imposes an administrative fine in the total sum of $11,250, revokes Respondent's license, orders that Respondent pay restitution to the Charchuts in the amount of $30,113.82, and assesses costs of investigation and prosecution (through September 20, 2000) in the total sum of $1,498.66 against Respondent. DONE AND ENTERED this 12th day of December, 2000, in Tallahassee, Leon County, Florida. BARBARA J. STAROS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 12th day of December, 2000.
