Findings Of Fact Respondent Bruce G. Alles, is a certified general contractor, license number CGC C014472, and has been so licensed since the summer of 1979. At that time, he became the qualifying agent for Univel, Inc., Melbourne Beach, Florida, a general contracting firm. Prior to Respondent becoming the qualifier for Univel, Inc., one David Boland had been the qualifying agent for the company, and no apparent action was taken by Univel to remove Boland as a qualifier for an undisclosed period of time after Respondent assumed that function. (Pleadings, testimony of Respondent, K. Alles) The only project of Univel that Respondent supervised from 1979 until subsequent to April, 1981 was the renovation of several buildings called Ocean Landings. During the period of March or April, 1980 until April, 1981, he had no involvement in any of Univel's projects. Since April, 1981 he has pulled permits and supervised some small renovation or alteration projects. (Testimony of Respondent, K. Alles, Stipulation) For the past three and one-half years, Lawrence M. Stoner, a certified general contractor and qualifying agent for Dynamic Construction Company, Inc. has engaged in joint construction projects with Univel, Inc. In such instances, Stoner obtains the building permits and supervised construction of the projects. At some undisclosed point in time, Kenneth Alles, Vice President of Univel, Inc. consulted with and obtained assurances from legal counsel that, based upon Univel's relationship with Stoner and Dynamic Construction Company, it was unnecessary for Stoner to file a formal application as qualifying agent for Univel. In fact, Alles was of the opinion that at one point Univel had three qualifying agents simultaneously who were Respondent, Stoner, and Boland. (Testimony of K. Alles) At some undisclosed time subsequent to Respondent becoming the qualifying agent for Univel, that firm entered into a construction contract with Palm Harbor West, Inc. to construct a condominium building called Harbour Cay. Stoner supervised the construction of the building. There was an on-site superintendent of construction who was employed by Univel. Stoner and Univel co-signed a bank loan agreement for the project. (Testimony of K. Alles) Respondent was not involved in the Harbour Cay project in any respect. He did not affix his license number to the contract nor did he supervise of have any connection with the project. (Testimony of K. Alles, Stipulation) On March 27, 1981, the Harbour Cay building collapsed causing multiple deaths and injuries. (Testimony of K. Alles, pleadings)
Recommendation That the Construction Industry Licensing Board administer a written public reprimand to Respondent Bruce Alles for violation of Subsection 489.119(5), F.S., pursuant to Subsection 489.129(j), F.S. DONE and ENTERED this 23rd day of December, 1981, in Tallahassee, Florida. THOMAS C. OLDHAM 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 23rd day of December, 1981. COPIES FURNISHED: Michael Egan, Esquire 217 South Adams Street Post Office Box 1386 Tallahassee, Florida 32302 Joe Teague Caruso, Esquire Post Office Box 757 Cocoa Beach, Florida 32931 James K. Kinnan Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202
Findings Of Fact The Respondent holds certified general contractor's license no. CG CA03134. On or about February 3, 1973, Respondent, d/b/a John B. Roberts Construction Company, entered into a contract with Dominick A. Conte, 4319 Tranquility Drive, Highland Beach, Florida to construct a home for $58,000. It is this contract which is the subject of the Administrative Complaint. In addition to that contract, the Respondent entered into another contract with Mr. Conte to build a triplex for a total contract price of approximately $152,000. Specifically, the Administrative Complaint filed on or about April 6, 1976, copy of which was duly served on the Respondent and incorporated herein by reference, alleges that the owner paid the contractor $57,000 and he left the home partially built with no work started on the triplex. Additionally, the complaint alleges that the contractor issued a check on a closed account to Mr. Conte for $16,000 and Respondent never made good on that check. The Respondent and Mr. Conte applied for and received a construction loan commitment from Delray Beach National Bank to construct the house for Mr. Conte. The above parties also applied for a construction loan commitment to construct the triplex in the total amount of $151,000. The Respondent and Mr. Conte received a construction loan commitment for that project in the amount of $131,000. Respondent suggested that Mr. Conte deposit $16,000 as equity for the construction loan commitment for the triplex in the form of a check which was given to Respondent, drawn on Delray Beach National Bank. According to the evidence, this check drawn in the amount of $16,000 was never deposited by Roberts as was the understanding that Mr. Conte had received from him to the effect that the $16,000 was to be utilized for equity for the triplex agreement. When Mr. Conte encountered difficulties with Respondent in the construction of his personal home, Mr. Conte demanded the return of the $16,000 check. The Respondent gave him a check drawn on a closed account. Respondent admitted that the account had a nominal amount i.e., less than $100 on deposit when the $16,000 check was given to Mr. Conte. When Mr. Conte could not obtain the $16,000 from the Respondent, he instituted a civil suit and received a judgement in the amount of $18,500 against the Respondent. In December, 1972, Mr. Conte advanced Respondent $1,000 to obtain various permits and on January 5, 1973, he advanced Respondent an additional $3,000. Respondent commenced construction of the home in March, 1973 and according to the contract he was scheduled to complete it in November, 1973. At that time, according to Mr. Conte, Respondent was only about 50 percent complete at that juncture. At that time the mortgage construction loan was approximately $58,800 and Respondent had received draws of approximately $36,904. Mr. Conte advised the contractor during October that construction would have to speed up or he would be unable to meet the scheduled completion date. Sometime in late October or early November, Respondent abandoned the house. Mr. Conte admits that there were some modifications to the house that he agreed to pay and they were approximately $600 for stone work and approximately $1,300 for additional air conditioning and heating capacity. He received a roofing bill in the amount of $6,000 and when it was not paid, he received a notice of intent to file a lien. He received other bills totalling approximately $800 of which approximately $300 was for window glass and $500 represented an additional amount owed for plumbing expenses. He withdrew the balance of the mortgage commitment (approximately $22,000) and he paid an additional amount of between $20,000 to $25,000 to complete the construction. Further in his testimony he recalled adding approximately $600 for stone work and approximately $500 for marble work. He testified that there were no further additions to the house. He completed the house in February, 1974. At the time the Respondent abandoned the house, he had completed the foundation, the concrete block work, framing, stucco work, the roof was partially completed and the walls were erected. For this work, the contractor received approximately $40,000 from Mr. Conte. Respondent testified that there was a problem with the mortgage commitment on the triplex and that he later returned a check for the $16,000. Respondent testified that when he left the Conte project, he had expended approximately $52,000 from the construction loan draws and that his total expenditures for the project amounted to $86,083, including his profit. It is undisputed that the parties have entered an agreement to construct a house for a total price of $58,000. Mr. Conte testified without contradiction that he made some changes in the plans which amounted to approximately ($1,900) nineteen hundred dollars which he paid over and above the contract price. Although Respondent argues that at the time that he abandoned the Conte project, he had expended approximately eighty-six thousand dollars ($86,000), there was no proof of that testimony despite the agreement and stipulation of all parties that the undersigned would consider such proof when submitted within a stated period of time. Respondent submitted a portion of his checking account which he maintains establishes his position, however, it suffices to say that the documents submitted only establish that monies were paid but the critical link of tieing such amounts to the Conte's project was not established. The undersinged has considered the various additions to the project. Additionally it was noted that Respondent is a custom home builder and is experienced in the making of contracts for homes such as the one he undertook to construct for Mr. Conte. Since he takes the position that the contract price did not cover, according to him, the numerous changes in the Conte home, he is obliged to establish via some contract or Quantum Merit theory that Mr. Conte got more than he paid for as per their agreement. For it is easy to project that according to Mr. Conte's figures, the contract price would not have been adequate to complete the house based on the draw schedule and the construction progress. Thus at this rate, the project under Respondent's cost-basis, would have exceeded ($172,000) one hundred seventy-two thousand dollars. Clearly Respondent being well versed in the construction of custom homes, knew or should have known that in order to proceed with this project, he would need to renegotiate the contract based on the cost projections at the stage when he abandoned the project. Instead he did not attempt to renegotiate the contract and abandoned the job. He left the project subject to materialmen liens which Mr. Conte paid. Based on these facts, I find and conclude that Respondent failed to account for the amount of money that he drew from the Conte construction loan. Having done so, in view of the record evidence establishing that the project could not be completed within the contract price and the failure of Respondent to establish that the amounts withdrawn from the construction loan account were utilized on the Conte project or that he would be able to fulfill the terms of his contractual obligations, I find that he has engaged in a diversion of funds as alleged.
Recommendation Having found that the Respondent has engaged in a diversion of funds as alleged, I recommend that his certified general contractor's license be suspended for a period of six (6) months. DONE and ENTERED this 20th day of September, 1976, in Tallahassee, Florida. COPIES FURNISHED: Barry Sinoff, Esquire 1010 Blackstone Building Jacksonville, Florida 32202 John B. Roberts 5172 Northeast 14th Avenue Pompano Beach, Florida 33060 JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 ================================================================= AGENCY FINAL ORDER ================================================================= Mr. John B. Roberts c/o Glenwood Builders 261 E. Palmetto Park Rd. Boca Raton, Florida 33432 Dear Mr. Roberts: At a formal hearing held in Pompano Beach, Florida on July 21, 1976, by the Division of Administrative Hearings, it was recommended that John B. Roberts' certified general contractor's license be suspended for a period of sixty days. On March 4, 1977, at the Florida Construction Industry Licensing Board's montly meeting, the Board voted to dismiss the case against you, therefore the Administrative Complaint is hereby dismissed. Your Certified General Contractor's License remains in full force and effect. Sincerely, FLORIDA CONSTRUCTION INDUSTRY LICENSING BOARD J. K. LINNAN Executive Director cc: Barry S. Sinoff, Esquire 1010 Blackstone Building 229 E. Bay Street Jacksonville, Florida 32202 Mr. James C. Brady, Esquire Zealy & Brady 2691 East Oakland Park Boulevard Suite 400, Mercede West Building Ft. Lauderdale, Florida 33306
The Issue The primary factual issue was whether the company which the Respondent had qualified was in fact the contractor on the job from which the allegations in the Amended Administrative Complaint arose. The Petitioner submitted post hearing findings of fact in the form of a proposed recommended order. To the extent that the proposed findings of fact have not been included in this order, they are specifically rejected as being irrelevant, not being based upon the most credible evidence, or not being findings of fact.
Findings Of Fact The Respondent, Edward Ryan, is a certified building contractor holding license number C3 C006481 and was the qualifying agent for Behr Contracting, Inc. (thereafter "Behr Contracting"), at all times relevant to the allegations of the Amended Administrative Complaint. Behr Contracting was, and is a business engaging in, contracting, selling building materials, and mortgage brokerage. Its operations as a mortgage broker are now carried on under a separate corporation; however, at the time involved in these proceedings, its mortgage brokerage operation was carried out in the name of Behr Contracting, Inc. Willie Mae Williams resides at 1451 Northwest 92nd Street, Miami, Florida. In 1980, Ms. Williams had extensive modifications made to her house at the foregoing address. With regard to the work on her house, Ms Williams' initial contact was with S. J. (Jerome) Farmer. Farmer was an independent contractor who was doing home repairs in early 1980 to several homes close to the Williams home. He was not doing these jobs as an employee of Behr Contracting, and no evidence was introduced that at said time he was an employee of Behr Contracting. After he had already begun working on the Williams home, Farmer approached the Respondent and requested Respondent's assistance in helping him estimate additional repairs and modifications to Ms. Williams' home and assistance in obtaining the financing for this job. Farmer was not affiliated in any manner with Behr Contracting. The Respondent arranged for an estimator to assist Farmer in estimating the cost of the project and in obtaining financing for the project. (Testimony of Ryan, Tr. 58 et seq.) This estimator had two contract forms signed by Ms. Williams, one for financing and one for construction. These documents were identified by Ms. Williams and were received into the record. (See Petitioner's Exhibits 2 and 3.) Petitioner's Exhibit 2 is the contract between Behr Contracting and Ms. Williams for the financing of the modifications to the Williams house. Financing for the project was obtained through the mortgage brokerage operation of Behr Contracting and the money funneled through Behr Contracting to pay for materials purchased through Behr's building materials operation. Ms. Williams has made payments and is making payments as required under said contract to the finance company, Uni Credit of Jacksonville, Florida. Behr Contracting provided cabinets, windows and certain appliances, to include a dishwasher. The Respondent was at Ms. Williams' house approximately three times prior to the delivery of building materials from Behr Contracting. (Testimony of Ryan, Tr. 23.) On none of these occasions was the Respondent there as a building contractor qualifying Behr Contracting. At all times, Farmer was in charge of the project. (See testimony of Williams, Tr. 184.) Farmer was the contractor in fact. Subsequent to installation of the dishwasher, the Respondent was present at the Williams house often because of Ms Williams' complaints about the dishwasher. The Respondent replaced this dishwasher and had Ms. Williams' septic tank pumped in order to solve the drainage problem which was causing the dishwasher to malfunction. This was done to honor the warranty on the dishwasher. (Supra, Tr. 45-51.) A salesman for Behr Contracting gave Ms. Williams an estimate on both the contracting and on the financing for the modifications and remodeling of the Williams house. Under its business practices, Behr Contracting disapproved or rejected the contract for construction, yet approved the financing contract. Approval of a construction contract in the amount of the instant contract, over $11,000, would have required an officer's approval. (See testimony of Stanley Weiss, Tr. 21-28.) Although Ms. Williams identified her signature on the purported construction contract (Petitioner's Exhibit 3), she could not identify the signature appearing on the lefthand side of the page at the bottom of the contract in the area of "Agent" and "Officer." This signature also could not be identified by Stanley Weiss or Margaret Behr, officers of Behr Contracting. It was not the signature of Weiss, Ms Behr or the Respondent, who were the only officers of the corporation authorized to approve a contract of this amount at the time that this contract was prepared. This contract (Petitioner's Exhibit 3) was never accepted by Behr Contracting (See testimony of Weiss, Tr. 35.) Although a copy of Petitioner's Exhibit 3 was discovered by Weiss in the files of Behr Contracting, this was a photo copy given to Weiss by the Respondents who had received it from the Board's investigators when the Respondent first spoke to them about this case. (See page 8, deposition of Ryan taken September 17, 1982; see pages 3, 4 and 8, deposition of Weiss; testimony of Ryan, Tr. 70-75; testimony of Weiss, Tr. 10-12.) The Respondent's involvement in this matter was "limited to providing gratuitous advice to Farmer at Farmer's request on one occasion, concerning a broken major waste drain, and representing Behr Contracting who was a major supplier of materials and appliances for the job. It is specifically found that the Petitioner failed to establish the existence of a construction contract between Ms. Williams and Behr Contracting. Regarding the allegations that the Respondent abandoned the job, the Respondent caused the dishwasher supplied by Behr Contracting to be replaced under warranty service. The septic tank at the Williams house was pumped and cleaned at the request of Uni Credit in an attempt to solve the problem. Finally, over a year after the job had begun, the Respondent had the septic tank and drainfeild rebuilt and solved Ms. Williams' drainage problems. This last action was taken under threat of prosecution by the Board's investigators and was done in spite of the fact, which is uncontroverted, that the construction did not address modifications to the plumbing in the house. After the Respondent had taken these actions, Ms. Williams than wanted the cabinets and other work, which had been done by Farmer, replaced because of water damage caused by the drainage problem.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Amended Administrative Complaint against the Respondent, Edward Ryan, be dismissed. DONE and RECOMMENDED this 20th day of September, 1983, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, 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 20th day of September, 1983 COPIES FURNISHED: Michael J. Cohen, Esquire Kristin Building, Suite 101 2715 East Oakland Park Boulevard Fort Lauderdale, Florida 32206 Mr. Edward Ryan 19762 Bel Aire Drive Miami, Florida 33138 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 James Linnan, Executive Director Construction Industry Licensing Board Post Office Box 2 Jacksonville, Florida 32202
The Issue Whether disciplinary action should be taken against Respondent’s license to practice contracting, license number CGC1507637, based on the violations alleged as follows: By committing mismanagement or misconduct in the practice of contracting that causes financial harm to a customer in violation of Subsection 489.129(1)(g)2., Florida Statutes (2006)1; By abandoning a construction project in which the contractor is engaged or under contract as a contractor, in violation of Subsection 489.129(1)(j), Florida Statutes; and By committing incompetency or misconduct in the practice of contracting, in violation of Subsection 489.129(1)(m), Florida Statutes, and, if so, what penalty should be imposed.
Findings Of Fact Based on the evidence, the following facts are found: At all times material, Respondent was a certified general contractor, having been issued license number CGC1507637 by the Florida Construction Industry Licensing Board (CILB). At all times material, Respondent was the qualifier of Pro-Tech Building Systems, LLC. On September 14, 2006, Respondent entered into a contract with the owner, Alvin Coiner, to erect the walls of the residence that Coiner was building on a lot he owned in St. James City, Florida. The price of the contract with Respondent was $38,253.00. It called for the erection of reinforced concrete walls, using insulated concrete Integra-Spec® forms produced by the Canadian manufacturer Phil-Insul Corporation. Initially, Coiner planned to build the house using concrete blocks for the outer walls, and engineering plans were submitted to the County building department, which were approved. At some time before September 14, 2006, Respondent, Michael Dalla Costa and Coiner met at Respondent’s office and agreed to construct the walls using the Integra-Spec® Insulated Concrete forms (ICF) system instead of regular concrete blocks. All parties agreed that the transitioning from concrete blocks to Integra-Spec® ICF should not present any issues if the slab was code-compliant. Integra-Spec® insulated concrete forms are a technology used to build steel-reinforced concrete walls. It uses Styrofoam Lego®-like interlocking inner and outer panels, locked together with a web of plastic ties, between which the rebar is installed inside, vertically and horizontally. After the forms are installed and the rebar is put in place, raw concrete is then pumped in the space between the panels, thus forming the concrete insulated walls after the concrete cures. Coiner discussed with a representative of the Phil- Insul Corporation the requirements to build a home using the Integra-Spec® forms. To do so required a trained professional. Respondent assured Coiner that he was fully trained to install Phil-Insul products and that he had completed several jobs in the Ft. Myers area. Respondent claimed that he was very experienced with both Integra-Spec® forms and with Greenblock concrete forms, and he was also very knowledgeable as to the building code requirements for insulated concrete forms in Lee and Collier Counties. The Integra-Spec® walls were to be constructed in compliance with all local building codes and requirements and were to be certified by the design engineer. Coiner hired Gary Harvey Engineering of Ft. Myers as the engineer of record. Michael Dalla Costa supervised and coordinated the work on behalf of Coiner during Coiner’s absence from the area. In the fall of 2006, Respondent submitted to Dalla Costa some plans that were not approved by Harvey Engineering. Through an error, the plans were submitted to the Lee County Building Department. The building department denied the plans, as they were not approved by the engineer of record, Harvey Engineering. On November 20, 2006, and January 30, 2007, Harvey Engineering submitted revised plans that were approved by the building department. The revised plans by Harvey Engineering were the official documentation to show how the job should proceed. Between October and December 2006, the relationship deteriorated between Respondent, and the building inspector, Dalla Costa and Coiner. Respondent repeatedly argued with the others over whether an additional quantity of rebar, required by the building department, had to be installed. The building inspector did not approve work done by Respondent. Based on his inspection and determination that rebar was missing, the building inspector advised the owner that, in the inspector’s opinion, Respondent did not do a proper job in preparing the walls for the pouring of the concrete into the walls. Respondent installed the Integra-Spec® ICF forms and the additional rebar, and then stopped work at some point in the beginning of December 2006. Dalla Costa had paid Respondent a total of $34,955.00 up to this point. Respondent sent a proposed change order and asked Coiner to pay him an additional $9,239.44, in addition to the agreed contract price. He threatened to completely stop work and leave the job. Coiner did not agree to the proposed change order or to pay additional money over the original contract price. According to Respondent the slab was not level, which created additional work for Respondent to properly install the Integra-Spec® forms. However, there is no dispute that the slab was code-compliant and passed inspection. The contract between parties does not provide for contract price adjustments based on additional work incurred due to slabs that are out of level. According to the Integra-Spec® installation manual, there are two methods of adjustment when the slabs are out of level, including provision for tolerances in excess of one inch. The manual recommends that when the slab is in excess of one inch out of level, shaving the bottom course of the form units at highest point of slab. Respondent testified that he was familiar with the adjustment methods when the slab is out of level. Due to lack of work on the construction site between the second half of December 2006, and the end of March 2007, Coiner hired an attorney to help him deal with Respondent. Coiner’s attorney contacted Respondent in writing on April 2 and April 13, 2007, requesting that Respondent resume work. He did not return to the job. Based on advice from the attorney, Coiner hired contractor Scott White as a consultant to oversee the project and advise Coiner as to how to proceed on the project. As the project situation deteriorated further due to Respondent ceasing work completely, failing inspections and Integra-Spec® forms falling down, Coiner hired White to finish the job for the price of $17,250.00. White erected the walls and finished the job in a professional manner, which passed inspection. According to testimonies by Coiner and Respondent himself, Respondent completed between 75% to 90% of the job. However, due to Respondent’s abandoning the job site for months, the Integra-Spec® forms had been blown down by winds and had to be re-installed or re-aligned by White. The concrete pre-pour inspection was never completed. Respondent never poured the concrete and he never finished the walls. Due to Respondent’s abandonment of the job, Coiner incurred additional expenses of $26,550.00 as follows: an additional six months of construction loan interest at $200.00 per month, $6,500.00 in legal fees, $1,500.00 for consulting fees, about $100.00 for failed inspections fees, and $17,250.00 paid to White to finish Respondent’s job. The total investigative costs of this case to Petitioner, excluding costs associated with an attorney’s time, were $351.47. Respondent’s reasons for abandoning the job are not persuasive.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that a final order be rendered by the CILB as follows: Finding Respondent guilty of having violated Subsection 489.129(1)(g)2., Florida Statutes, as alleged in Count I of the Administrative Complaint, and imposing as a penalty an administrative fine in the amount of $2,500.00; Finding Respondent guilty of having violated Subsection 489.129(1)(j), Florida Statutes, as alleged in Count II of the Administrative Complaint, and imposing as a penalty an administrative fine in the amount of $1,000.00; Finding Respondent guilty of having violated Subsection 489.129(1)(m), Florida Statutes, as alleged in Count III of the Administrative Complaint, and imposing as a penalty an administrative fine in the amount of $1,000.00; Suspending Respondent’s license to practice contracting (CGC1507637) for three months, followed by probation for two years; Requiring Respondent to pay financial restitution to the consumer, Alvin Coiner, in the amount of $13,952.00 for consumer harm suffered due to payment of additional money to complete the job abandoned by Respondent. The consumer damages are calculated by adding the total payments to Respondent ($34,955.00) to the payment for the completion of the contract to Scott White ($17,250.00), and then subtracting the contract price ($38,253.00); Requiring Respondent to pay Petitioner’s costs of investigation and prosecution, excluding costs associated with an attorney’s time, in the amount of $351.47; and Requiring Respondent to complete continuing education hours and to meet such other conditions the CILB may require. DONE AND ENTERED this 31st day of March, 2010, in Tallahassee, Leon County, Florida. S DANIEL M. KILBRIDE 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 31st day of March, 2010.
The Issue The issue is whether Respondent violated Subsections 489.129(1)(g)2., (j), and (m), Florida Statutes (2005),1 by allegedly engaging in financial mismanagement or misconduct in the practice of contracting that causes financial harm to a customer, abandoning a construction project, or committing misconduct or incompetence in the practice of contracting.
Findings Of Fact Petitioner is the state agency responsible for regulating the practice of contracting in the state. Respondent is licensed in the state as a certified general contractor pursuant to license number CGC59204. Respondent is the qualifier of South West Florida Development Corporation (South West) doing business as Back Bay Homes (Back Bay). On February 7, 2006, Respondent executed a contract with Gail and Gary Veith to build a residential home on a vacant lot located at 3218 Southwest 11th Place, Cape Coral, Florida. The contract price was $276,983.00 (the initial contract). The initial contract provided for the construction of a sea wall at a cost of $17,257.00 in addition to the contract price of $276,983.00. On February 7, 2006, Respondent entered into a second contract with Mr. and Mrs. Veith. The only difference between the initial and second contracts was the contract price of each contract. The second contract price was $289,686.00, excluding the sea wall cost of $17,257.00. Mr. and Mrs. Veith secured payment of the construction project with a construction loan from Market Street Mortgage Corporation (Market Street) in the original approximate amount of $412,000.00. The total loan amount was intended to be sufficient to cover the second contract price of $289,686.00 and the amount contracted by Mr. and Mrs. Veith for acquisition of the vacant lot (construction site), which was $128,000.00.2 Clear and convincing evidence shows that Respondent engaged in financial mismanagement or misconduct in the practice of contracting that caused financial harm to his customers in violation of Subsection 489.129(1)(g)2. Clear and convincing evidence also shows that Respondent committed incompetence and mismanagement in the practice of contracting. The percentage of completion of the residence, which was zero, was less than the percentage of the contract price paid to Respondent, which was 29 percent. Respondent received approximately $84,655.00 in construction loan proceeds from Market Street in two draws. Market Street paid the first draw at closing on May 5, 2006, in the amount of $42,901.20 and paid the second draw to Respondent on June 26, 2006, in the amount of $41,754.00. However, Respondent never commenced construction of the residence. Respondent reported a profit of $48,637.72 on the Veith property and completed only the sea wall at a cost of $17,257.00. Respondent paid the cost of the sea wall and other expenses on the Veith property to keep the net profit at $48,637.72. Other expenses included $420.00 for surveys, $34.34 for blue prints, $1,707.75 for plan drafts, $350.00 for septic engineering, and $3,138.19 for construction loan interest. Respondent was not entitled by the terms of the contract to retain the funds paid to Respondent by Market Street. The loan agreement provided that draws were to be made at the discretion of Market Street based on work completed and materials incorporated into improvements. Respondent never commenced construction of the residence. Respondent did not obtain permits for the job. Mr. Winston testified that when Market Street transferred a single, lump sum deposit to his company in the amount of $41,754.00 on June 26, 2006, he did not know that he was appropriating funds he was not entitled to under the contract. When that testimony is weighed against evidence that the work Mr. Winston had performed was limited to a sea wall costing only $17,257.00, the testimony is persuasive evidence to the trier of fact that Respondent engaged in mismanagement.3 Respondent billed Market Street for payment of the sea wall when Respondent completed the sea wall. However, the draw schedule in the loan documents does not provide a draw payment for the sea wall. Respondent stopped paying construction interest that Respondent was obligated to pay under the terms of the construction loan. Thereafter, Mr. and Mrs. Veith paid construction interest of approximately $13,800.00. Clear and convincing evidence shows that Respondent abandoned the construction project within the meaning of Subsection 489.129(1)(j). Respondent failed to perform any work on the residence for 90 consecutive days without just cause. Respondent did not notify Mr. and Mrs. Veith that Respondent had abandoned the project. Rather, Mr. and Mrs. Veith started receiving requests for payment of construction loan interest. Respondent failed to conduct any construction activity on the project site for more than 90 consecutive days. On May 13, 2008, Mr. and Mrs. Veith received notice that their loan had been assigned from Market Street to Gulf Coast Bank & Trust Company (Gulf Coast). Gulf Coast sent Mr. and Mrs. Veith repeated demands for payment of the construction loan principal and interest. Mr. and Mrs. Veith entered into a transaction identified in the record as a "short sale" in which they sold the construction site, which they originally purchased for $128,000.00, for $20,000.00. The $20,000.00 sale proceeds were paid to Gulf Coast. Mr. and Mrs. Veith have been financially unable to make payments to Gulf Coast. They remain liable for the full amount of the loan, including delinquent principal and interest. Mr. and Mrs. Veith brought a civil action against Respondent. They were unable to sustain the action because they could not afford the attorney fees. Petitioner incurred investigative costs in this matter of $204.26. The investigative costs do not include attorney time.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petitioner enter a final order finding that Respondent is guilty of the violations alleged in the Administrative Complaint; imposing the fines enumerated in paragraph 24 of this Recommended Order; requiring Respondent to pay investigative costs in the amount of $204.26; and requiring Respondent to make full restitution to Mr. and Mrs. Veith in the amount of $61,747.72. DONE AND ENTERED this 12th day of July, 2010, 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 12th day of July, 2010.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Construction Industry Licensing Board enter a final order imposing the following discipline for respondent John R. Gardner's violation of Section 489.129(1)(h), Florida Statutes (1983): Payment by respondent of a $500 administrative fine within thirty (30) days from entry of final order; and Indefinite suspension of respondent's license, effective six months from entry of final order with the suspension to be lifted upon respondent's satisfaction of the Lowenthals' judgment. DONE AND ENTERED this 27th day of June 1984 in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of June 1984.
