The Issue Whether Respondent, Department of Transportation (DOT), properly denied Petitioner's Application for Qualification to perform work on DOT contracts which exceed $250,000.00 pursuant to Chapter 337, Florida Statutes, and Rule Chapter 14-22, Florida Administrative Code.
Findings Of Fact Petitioner, Morse Diesel Civil, LLC ("Morse Diesel"), is a new company created to perform heavy civil construction, in particular large road and bridge projects. Morse Diesel is owned 80 percent by Morse Diesel Civil, Inc., and 20 percent by KPG, Inc. Morse Diesel Civil, Inc., is owned by AMEC Holdings, Inc. KPG, Inc., is owned by Richard Kelly ("Kelly") and Jack Palmer ("Palmer"). Together, Kelly and Palmer have over 50 years' experience in heavy civil construction. On October 8, 1998, Morse Diesel filed an application for qualification with the Florida Department of Transportation ("DOT") to perform all classes of road and bridge work except for bascule bridge rehabilitation. Since the company was new and had not yet performed any work, the letters of recommendation provided in the application related to Morse Diesel International, Inc. ("MDI"). MDI is a large commercial construction management company owned by AMEC Holdings, Inc. Through DOT requests for additional information, Morse Diesel learned that DOT was interested in the experience of its principals and recommendations regarding their work. The work experience of Kelly, Palmer, John Zito, and Grant Ralston was provided to DOT in response to those requests. Under Rule 14-22.003, Florida Administrative Code, DOT thoroughly evaluated Morse Diesel and awarded it an Ability Score of 75 out of 100. DOT found that Morse Diesel had the necessary organization and management, adequate equipment, and a satisfactory work performance record which included an evaluation of the quality of completed work, any history of payment of liquidated damages, untimely completion of projects for which liquidated damages were not paid, cooperative attitude, contract litigations, claims, and defaults. Their score of 75 also included an evaluation of their integrity and responsibility. To date, Morse Diesel's ability score remains unchanged and in effect. On January 11, 1999, Morse Diesel was granted a Certificate of Qualification to perform all classes of work requested except major bridges and provided a maximum capacity rating of $200,000,000; that is, the total aggregate dollar amount of uncompleted work a contractor may have in progress at any time. Thereafter, Morse Diesel applied for a revised Certificate of Qualification to include major bridge classifications. DOT requested and was supplied additional information regarding the work experience of Kelly, Palmer, Zito and Ralston. DOT served a Notice of Intent to Deny the application for additional classes of work and Morse Diesel filed a request for a Section 120.57, administrative hearing. That case was dismissed as moot when Morse Diesel did not renew its Certificate of Qualification. On February 2, 2000, Morse Diesel applied for a Certificate of Qualification for all classes of road and bridge work except for bascule bridge rehabilitation. DOT denied its application on March 3, 2000. The decision to deny an application for Qualification is a very serious matter and each application is thoroughly evaluated by DOT. Less than one percent of all applications are denied. The decision to deny the February 2, 2000, application of Morse Diesel was made by the DOT pre-qualification engineer, Lewis Harper. The Notice of Intent to Deny the Application ("Notice of Intent") was written by Mr. Harper and Brian McGrail of the legal staff and identified the factual bases for the denial of the application and all the statutory and rule criteria utilized in the review of the application. Summary of Allegations The grounds for denial identified by DOT in the written Notice of Intent are: (a) a record of contract litigation, claims, uncooperative attitude, untimely completion of projects without payment of liquidated damages, and defaults by the management of Morse Diesel (Kelly and Palmer) when they worked for S. J. Groves and Sons, Inc., and Balfour Beatty Construction, Inc., on major bridge projects in Alabama, West Virginia, and Florida; (b) S. J. Groves was defaulted on the Cochrane Bridge Project by the State of Alabama; (c) Kelly and Palmer had substantial supervisory and management responsibilities for the Cochrane Bridge project and contributed substantially to the difficulties experienced by the Alabama Road Department; (d) The answer to Question 19-2 of the application regarding Kelly's and Palmer's involvement in the Cochrane Bridge project does not accurately reflect their role and is considered false, deceptive or fraudulent; (e) Kelly and Palmer had responsibility for prosecuting work and making decisions for filing claims on the Wierton-Stubenville Bridge project in the State of West Virginia and there were substantial delays and disputes over settlement of claims; (f) Kelly and Palmer were litigious and claims-oriented when they were associated with Balfour Beatty in Florida; (g) MDI is an affiliate of Morse Diesel because Norm Fornella is an officer is both companies and MDI was not listed in the application as an affiliate; (h) Morse Diesel did not advise DOT of the default of MDI; and (i) KPG is an affiliate of Morse Diesel because Kelly is an officer in both companies and KPG was not listed in the application as an affiliate. The application was not denied due to a lack of adequate experience or equipment. Although Morse Diesel listed the same affiliates in its 1998 application as it did in its 2000 application, the 1998 application was partially granted and the failure to list affiliates was not a ground for denial of the request for additional classes. Allegations (a)-(d): Record of Contract Litigation, Claims, Uncooperative Attitude, Untimely Completion of Projects and Defaults by Management of Morse Diesel The right to submit a claim is a valuable right of the contractor. If a contractor contends he/she is due additional time and money, it is common for him/her to pursue his/her claims rights. If the liability for unforeseen circumstances falls on the owner, the contractor typically pursues claims based upon the increased cost associated with the extra time and expense occasioned by the unforeseen circumstances. Kelly and Palmer have been involved in very difficult, highly technical jobs throughout their careers. It is common for these projects to involve a number of problems and related change items. Industry-wide, complex projects often involve change item costs ranging between 12 percent and 20 percent of the contract price. The Cochrane Bridge Project; Kelly's and Palmer's Involvement; and Application Question 19-2 Construction on the Cochrane Bridge was begun in 1985. Kelly was an executive vice president of S. J. Groves at the time and was also responsible for 30 or 40 other projects. At the same time, Palmer was a vice president of operations for S. J. Groves responsible for 10 to 12 projects. The project manager for the Cochrane Bridge project reported to Palmer and Palmer visited the project every two weeks, mainly to solve problems. The Cochrane Bridge was one of the first cable-stayed bridges built in the United States. It was designed by an Italian design firm and could not be built in accordance with the method of construction proposed by the designer. Moreover, each time there was a design problem, the Italian design firm had to be consulted, which took a great deal of time and caused delays. The Cochrane Bridge was designed to withstand a certain maximum load after construction was completed. The bridge, however, was undergoing greater stress while it was under construction. Consequently, disagreement ensued over the sequence of erection, whose responsibility it was to develop the erection sequencing, whether additional strengthening was needed during construction and, if so, who would pay for it. While these issues were addressed, S. J. Groves stopped work on the project. The State of Alabama requested Groves to work on other areas of the project during the down-time, but Mr. Groves refused for economic reasons. Alabama threatened to default Groves if they did not return to work. Kelly and Palmer attended several high-level company meetings where the issue of whether to continue the project was discussed by Franklin Groves, the owner of S. J. Groves, as well as the company's president and general counsel. Although Kelly and Palmer recommended that S. J. Groves remain on the project, their recommendation was overruled and a default was entered by the State of Alabama. Kelly and Palmer left S. J. Groves within 6 months of the default and formed their own company, RNE, in 1989. There is no reliable evidence that they "contributed substantially to the difficulties experienced by the Alabama Road Department" as charged in the Notice of Intent to Deny. S. J. Groves pursued litigation against the Alabama road department regarding the default and a settlement was reached. The contractor chosen to take over the job after the Groves default, filed claims of approximately $10,000,000 to $12,000,000, and also wound-up in litigation with the State of Alabama. There were thirty to forty vice presidents of S. J. Groves. Neither Kelly nor Palmer understood that they served as a corporate officer of S. J. Groves until after Morse Diesel had filed the 1998 application and were shown corporate forms filed with the Secretary of State. In response to Question 19-2 in the application, Morse Diesel stated: "Richard Kelly and Jack Palmer were denominated vice presidents of S. J. Groves, which defaulted on a job in Alabama in 1989. S. J. Groves had a number of people denominated as Vice Presidents and neither Mr. Kelly nor Mr. Palmer was at the level of management responsible for the decision to abandon the Cochrane Bridge Project. Both Mr. Kelly and Mr. Palmer recommended against abandoning the project and were overruled. They then left the company." There is no evidence which contradicts this finding. Allegation (e): Kelly's and Palmer's Involvement in the Wierton- Stubenville Project DOT presented no evidence to support its charge in the Notice of Intent that Kelly and Palmer were responsible for making the decision to file claims on the Wierton-Stubenville Bridge in the State of West Virginia and that there were substantial delays and disputes over settlement of claims. The only direct evidence is that Kelly was not involved in the preparation of claims or claims settlement on the Wierton- Stubenville project. The record is silent as to Palmer's involvement, if any. Allegation (f): Kelly's and Palmer's Involvement in Litigation and Claims at Balfour Beatty Kelly and Palmer were involved in Balfour Beatty's initial foray into the heavy civil construction business in Florida. In the early 1990's, Kelly met with DOT on Balfour Beatty's application for qualification to bid. At that time, DOT was on notice and inquired about Kelly's and Palmer's involvement in the S. J. Grove's default in Alabama. The Cochrane Bridge project was discussed in detail during a meeting held at DOT headquarters in Tallahassee. After being qualified, Balfour Beatty bid $82,000,000 on a large I-95 project in Broward County and was the successful low bidder by $1,000,000. In the beginning of the project Kelly and Palmer acquired staff and equipment, wrote purchase orders for materials, and supervised the project. On December 31, 1991, Dan White was hired as the project manager and Palmer visited the site every couple of weeks until problems on the project escalated. As the project manager, Dan White was in charge of the job and was responsible for the filing of claims. There were right-of-way problems and contaminated soil which delayed the project from the beginning. An initial design problem resulted from the project having been designed by two different design firms operating from different types of surveys. Consequently, the road was not aligned at the same elevation to match existing structures. These elevation problems shut down the project for months. None of the design, right-of-way, or soil contamination problems was the fault of Balfour Beatty. Nonetheless, DOT rejected all change items and required Balfour Beatty to file claims. A lawyer for DOT eventually became involved in the project in an attempt to settle the disputes which resulted in the preparation of Supplemental Agreement Number 73. SA-73 settled the claims up to that date, set new dates for project completion and paid money for completion by those dates. SA-73 was entered into based upon DOT's assurance that a constructibility review had been completed to make sure that the remainder of the project could be constructed in accordance with the existing plans and there would be no further design problems. However, the constructibility review was not complete and new design problems occurred immediately. The design of the parking lots was changed as they were being built. Core holes, used to determine the depth and density of the pavement had not been drilled. This caused more delays and claims. Balfour Beatty filed a lawsuit against DOT, Morrison Knudsen, the CEI on the project, and DOT personnel on site. The case was settled against DOT and its personnel for $4,750,000 and a jury awarded $4,300,000 against Morrison Knudsen. Balfour Beatty remains qualified to bid on DOT projects and was awarded a contract to build the Fuller Warren Bridge in Jacksonville. Kelly and Palmer, as consultants to Balfour Beatty, participated in preparing the bid for the Fuller Warren Bridge and that project is currently staffed with many of the same personnel who worked on the Broward County I-95 project, including the project manager, Dan White. The Broward County I-95 project was awarded on a bid of $82,000,000. DOT paid Balfour Beatty $97,000,000. The completion of the I-95 project was one to two years late and resulted in over 100 claims being filed. The Fuller Warren Bridge project was awarded on a bid of $81,000,000 and has cost to date approximately $94,000,000 to $96,000,000. None of the problems on the I-95 project were caused by Kelly or Palmer. Neither Kelly nor Palmer was involved in the preparation of the lawsuit or its settlement. ALLEGATION (g): Statements in the Application on Affiliations According to DOT's application, "The term 'affiliate' means a predecessor or successor of a contractor under the same, or substantially the same, control or a group of business entities which are connected or associated so that one entity controls or has the power to control each of the other business entities. The term 'affiliate' includes the officers, directors, executives, shareholders active in management, employees and agents of the affiliate. The ownership by one business entity of a controlling interest in another business or a pooling of equipment or income among business entities shall be prima facie evidence that one business entity is an affiliate of another." In its application for bid qualification, Morse Diesel listed Morse Diesel Civil, Inc. and AMEC Holding, Inc. as its affiliates. Morse Diesel did not identify either MDI or KPG as "affiliated companies" in response to question number 8 in the application. The application was prepared under the direction of Morse Diesel's President, Mitchell Becker who has a master's degree in civil engineering and a law degree. Based upon his interpretation of the definition, he determined in good faith that MDI and KPG were correctly omitted from the response to question 8 because neither met the criteria for "affiliate" as defined in the application. The answer to question 8 is the same in both the 1998 application and the 2000 application and DOT did not request additional information in the 1998 application related to the response nor did it list the failure to name MDI and KPG as affiliates as a ground for denial of the additional classes of work in 1999. There was a notation on page 2 of 19 in the 1998 application referring to MDI as a "sister company." The question requested letters of recommendation. Morse Diesel was a newly formed company, and did not have recommendations for projects it had completed. Instead, it supplied the recommendations of MDI. It became apparent to Morse Diesel through subsequent requests for additional information that DOT was interested in recommendations about the principals and management of Morse Diesel, not MDI. Consequently, when filing its 2000 application, Morse Diesel did not supply MDI letters of recommendation and instead provided recommendations on previous work completed by Morse Diesel personnel while associated with other companies. The only entities that are predecessor entities or have any control over Morse Diesel are Morse Diesel Civil, Inc. and AMEC Holding, Inc. KPG is not a predecessor or successor of Morse Diesel and has no ability to control it with 20 percent ownership. Similarly, MDI is not a predecessor or successor entity and has no controlling interest in Morse Diesel. There was no intent to hide the nature of Morse Diesel's relationship with MDI or KPG. The fact that Mr. Becker and Mr. Fornella are officers of both Morse Diesel and MDI is clearly stated in their résumés in the application. It is DOT's policy to deny application for misrepresentation only when it is intentional. Morse Diesel listed MDI as an affiliate in its Virginia application because the definition of "affiliate" in that application was broader and appeared to encompass MDI. Footnote 3 on page 7 of the audited financial statements refers to a transfer of funds from MDI to Morse Diesel. Mr. Becker, as president of Morse Diesel testified that the footnote in the financial statement attached to the application was a mistake. MDI has never advanced money to Morse Diesel. The advances made to Morse Diesel were made by Morse Diesel Civil, Inc. Mr. Becker as president of Morse Diesel is aware of the financial condition of the company and reviews the financial statements each month. There is no pooling of equipment or income between Morse Diesel and MDI. Allegation (h): Notice of the MDI Default Question 19-2 on page 16 of 23 of the application asks whether "any officer or partner of your organization has ever been an officer, partner or owner of some other organization that has failed to complete a construction contract?" In response to that question, Morse Diesel explained in the application that Kelly and Palmer had been associated with S. J. Groves when it defaulted on the Cochrane Bridge project in Alabama, but otherwise answered the question "no." Although Mr. Becker and Mr. Fornella are officers of both MDI and Morse Diesel, the application did not reveal the default of MDI on a project in St. Louis because the company is contesting the default and has not as yet failed to complete that construction contract; it is in litigation. There is no credible evidence that Morse Diesel or Mr. Becker intentionally omitted any information from the 2000 application. Allegation (i): See Findings for Allegation (g). Morse Diesel has demonstrated that it is competent and has experience to prosecute the work requested in the application. DOT has allowed at least one other applicant to amend its application to identify related companies as affiliates after DOT has denied certification on that basis. The résumés in the application and evidence presented at hearing reflect the work experience of the management of Morse Diesel and indicate extensive experience in heavy civil construction, including highly complex projects. The management of Morse Diesel has experience constructing all the types of road and bridges for which qualification is sought. Morse Diesel has been qualified in New Jersey, North Carolina, South Carolina, Virginia, Delaware, and Pennsylvania. Furthermore, Pennsylvania qualified Morse Diesel on the condition that Mr.Palmer remain associated with Morse Diesel and involved in any project awarded there.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Morse Diesel be permitted to supply DOT with corrections to the unintentional inaccuracies in its application and be pre-qualified in the classifications for which it applied. DONE AND ENTERED this 5th day of July, 2000, in Tallahassee, Leon County, Florida. WILLIAM R. PFEIFFER 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 5th day of July, 2000. COPIES FURNISHED: Cynthia S. Tunnicliff, Esquire Brian A. Newman, Esquire Pennington, Moore, Wilkinson, Bell & Dunbar, P.A. Post Office Box 10095 Tallahassee, Florida 32302-2095 Brian F. McGrail, Esquire Brian A. Crumbaker, Esquire Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458 Pamela Leslie, General Counsel Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458 James C. Myers Clerk of Agency Proceedings Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwannee Street Tallahassee, Florida 32399-0458
The Issue Whether Petitioner's conduct, omissions or actions in failing to execute and provide required documentation regarding roadway maintenance contracts awarded by Respondent, warrants a finding that Petitioner is "non-responsible" for a two-year period and prohibited from contracting with the state for that period of time.
Findings Of Fact The undersigned makes the following findings of relevant and material facts: M&B bid on Department Contract E7J12 let on October 9, 2013. M&B bid on Department Contract E1N43 let on January 16, 2014. M&B bid on Department Contract E3082 let on August 13, 2015. M&B bid on Department Contracts E6K44, E6K45, E6K46, and E6K51 let on January 28, 2016. M&B bid on Department Contract E4R75 let on February 5, 2016. M&B does not have a certificate of qualification from the Department, nor is it required to have one. The Department is the state agency responsible for coordinating the planning of a safe and efficient state transportation system. To accomplish that, the Department relies on qualified contractors to provide roadway mowing and other landscaping maintenance services in order to meet Florida's transportation needs. Jonathan McIntyre owns and operates M&B, a company that provides mowing and landscaping maintenance services for the Department. The company was previously owned by his father. The company has been a contractor for the Department for over 30 years and has adequately performed many mowing and landscaping maintenance contracts for the state. "One hundred percent" of M&B's business is derived from mowing and landscaping maintenance contacts with the Department, and the state is its exclusive client. During the hearing, Alan Autry, manager of Contract Administration for the Department, provided an overview of the bidding process. The bidding process begins with a bid solicitation notice which is also known as the advertisement. The solicitation outlines the requirements for bidders and includes project specific information. It also establishes when bids will be received. Resp. Ex. 46. The next step in the bidding process is for the Department to receive and open bids on the date and time identified in the solicitation. Depending upon the nature of the bid, a technical review is done. Once the contract is awarded, the vendor is notified and sent an award letter along with the contract and other pertinent documents for execution. The award letter identifies the date for which the signed contract along with other documents are to be returned to the Department for review to ensure conformance with the solicitation and specifications. Subsequently, the Department has a specific timeframe to execute and enter into the agreement. After being awarded several maintenance contracts as the low bidder, the Department issued a Notice of Intent to Declare Non-responsible ("Notice") to M&B on March 28, 2016, concerning its failure to "execute" eight contracts that had been awarded.1/ A noteworthy document that must be returned to the Department, along with the signed contract, is a payment performance bond, also known as a contract bond (a document that is signed by or executed by the vendor, and the vendor's surety). Other documents that must be promptly returned include a contract affidavit and insurance confirmation, such as policies and certificates as required by the contract specifications or "specs." Resp. Ex. 46–48. According to contract specifications 3-6 and 3-7, if the Department does not receive the executed documents from the vendor within ten days, excluding weekends and holidays, the Department may annul the contract, award it to another vendor, or perform the work by other means. Resp. Ex. 47. The solicitations for the contracts in this case expressly incorporated contract specifications 3-6 and 3-7. Resp. Exs. 1, 5, 10, 16, 22, 28, 35, 40. The contracts at issue in this case are considered "low bid" contracts, meaning that the award of these contracts is made to the vendor that submits the lowest cost bid in response to the solicitation, without further inquiry or analysis. Resp. Ex. 48. Concerning Department Contract E7J12, M&B was the initial lowest bidder. The Department awarded the contract to M&B; however, M&B failed to return a signed contract form, contract bond, contract affidavit, and/or sufficient insurance documentation within the ten-day time period. Resp. Exs. 3, 4, 4b. Concerning Department Contracts E1N43, E3082, E6K46, and E4R75, M&B was also the initial lowest bidder. The Department awarded the contracts to M&B; however, M&B failed to return a signed contract form and required documents within the allotted time period. Resp. Exs. 7–9, 12-15, 30-33, 42–45. Concerning Department Contracts E6K44, E6K45, and E6K51, M&B was not the initial lowest bidder according to preliminary bid tabulations. However, the initial lowest bidder (another company) was found to be non-responsive, and M&B subsequently became the lowest bidder and was awarded those contracts as well. However, M&B also failed to return the executed contract and accompanying documents to the Department within the ten-day period. Resp. Exs. 18-21, 24-27, 36–39. There was no dispute regarding the calculation of the ten-day timeframe for M&B to sign the contract(s) and return the required contract documents. McIntyre admitted during testimony to never signing these contracts or obtaining bond approval "certificates" in a timely fashion for the subject contracts. In enforcement actions like this, the Department considers several factors to determine the appropriate length of time to declare a contractor non-responsible. The Department considers the severity of the situation and makes an evaluation on a case-by-case basis. Maintaining the integrity of the bidding process is also a focus of concern. Typically, the Department will impose six months to a year of non-responsibility per incident. Resp. Ex. 48. Throughout all the evidence and testimony presented, it was clear to the undersigned that a lack of contract work performance or anticipated work performance by M&B was not the ground(s) for finding M&B "non-responsible." Rather, it was M&B's failure to (1) sign the subject contracts and (2) provide required supporting documents that formed the basis for finding M&B non-responsible. Despite his candid testimony that he did not sign or timely provide the supporting documents, M&B raised several defenses claiming there was not sufficient cause to hold M&B "non-responsible." McIntyre explained that a series of events with the Department regarding another maintenance contract prevented him from complying with the bonding requirement. He argued that other conduct of the Department, inextricably intertwined with these contracts, belies any finding that M&B was at fault, or non-responsible.2/ More specifically, M&B asserted that the failure on the part of M&B to "execute" the 2016 contracts cited in the Department's Notice was caused by the Department's failure to timely pay M&B for five months of work which M&B had completed for the Department on a prior contract, Department Contract E4Q26. Stated differently, M&B argued that it did not obtain required performance bonds on the subject contracts let in 2016 because M&B did not have the funds needed to pay the performance bonds on those contracts. This in turn was due to the Department's failure to pay M&B for five months of work it had completed for the Department on a prior contract, Department Contract E4Q26.3/ As a part of this defense, evidence was presented that on March 8, 2016, M&B, through its counsel, sent a letter to the Department demanding payment that was overdue on Department Contract E4Q26. Pet. Ex. 1. This included a claim for payment for five months of work M&B had already completed for the Department. After M&B retained counsel and demanded payment, the Department, on March 28, 2016, mailed notice to M&B that the Department was declaring M&B "non-responsible." McIntyre testified that when M&B bid on the subject contracts in 2016, he anticipated that the Department would have timely and regularly paid it the monies the Department owed it on Department Contract E4Q26. The undersigned finds that based on his longstanding relationship with the Department and its practice of paying M&B each month on Department Contract E4Q26, this reliance was not unreasonable. By all accounts and the reasonable inferences drawn from the evidence and testimony of McIntyre, M&B would have been in a solvent financial position to post performance bonds on the subject contracts let in 2016, but for the fact that the Department had delayed monthly payments for work M&B had performed on Department Contract E4Q26. There was no persuasive or credible evidence presented to dispute this. Likewise, there was no persuasive evidence presented to show or suggest that there were any performance issues related to Department Contract E4Q26 which would have justified a material or significant offset or deduction of what was due to M&B on that contract. When Autry was reviewing the file and evaluating the enforcement options available to the Department, he was not aware that counsel for M&B had already written the Department and asserted that M&B had not been paid for five months of work M&B had performed on a prior contract, Department Contract E4Q26. The Department's ongoing monthly payment for work M&B had completed on Department Contract E4Q26 was interrupted and significantly delayed because of problematic language in the E4Q26 contract prepared by the Department. More specifically, the Department had been paying M&B for work on Department Contract E4Q26 on a monthly basis, for seven months. At some point, the Department was audited by the Department of Financial Services and learned that monthly payments were not permitted under that contract's language, as written. In a legitimate and good faith effort to correct the payment delay, the Department drafted and requested that M&B sign a supplemental contract that it felt would have corrected the payment delay. As it turned out, when it submitted the supplemental contract to M&B, nearly all 12 months of the work under Department Contract E4Q26 had been completed, and only a few weeks remained on that contract. McIntyre, not being particularly skilled at understanding supplemental contracts, was skeptical and concerned that signing a supplemental contract could jeopardize his ability to insist on getting all the money he was due on Department Contract E4Q26. While McIntyre grappled with how to respond to the supplemental contract proffered by the Department, Michael E. Sprayberry was aware and mulling over the March 8, 2016, letter from M&B's counsel demanding that the Department pay M&B $66,666.65 owed for the five months of work it had completed. In M&B's counsel's March 8, 2016, letter to the Department, which attached M&B's Invoice No. 8 for $66,666.65, he asked for an explanation as to why payment was not being made to M&B and why the Department was asking M&B to sign a supplemental contract when the contract had been completed by M&B. The Department failed to provide any detailed explanation before issuing its Notice on March 28, 2016. Other important events are worth noting. Prior to issuance of the Notice declaring it non-responsible, M&B had obtained four necessary Bond Approval Advisories dated March 10 and 14, 2016, which verified that all the subject contract bonds were pre-approved by the insurer and were ready to be issued pending receipt of the premium payments. Pet. Composite Ex. 4.4/ Payment to M&B on Department Contract E4Q26 in the amount of $48,102.65 finally came from the Department on May 16, 2016. Pet. Ex. 5.5/ Sprayberry acknowledged that the Department quit paying M&B after the seventh month on Department Contract E4Q26, which was a 12-month contract. Sprayberry testified that the Department was "very surprised" when the Department of Financial Services directed the Department to discontinue paying M&B because of the language of the contract entitling M&B to be paid monthly.6/ Sprayberry forthrightly acknowledged that M&B should have been paid on contract #E4Q26 and that he had difficulty understanding the language of the contract which prompted the Department of Financial Services to suddenly direct the Department to stop paying M&B on a monthly basis. See generally Pet. Ex. 6. Sprayberry also acknowledged that the "snafu" the parties experienced with the payment provisions of Department Contract E4Q26 was, indeed, "a problem" that "we need to get solved." Insofar as the interruption in monthly payments under Department Contract E4Q26 was concerned, Sprayberry went on to add that the Department was "very surprised" by the audit response by the Department of Financial Services and "didn't count on that." He went on to explain that the Department was also certain that "McIntyre didn't count on that" (meaning the abrupt discontinuation in monthly payments). Once M&B was paid the monies that the Department owed on Department Contract E4Q26, M&B was awarded two additional Department contracts for which it timely returned all required documents and the performance bonds.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation reconsider its preliminary decision and reverse its determination that M&B was non-responsible. DONE AND ENTERED this 5th day of December, 2016, in Tallahassee, Leon County, Florida. S ROBERT L. 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 5th day of December, 2016.
The Issue Did Respondent violate Section 489.129(1)(h), Florida Statutes, and, if so, what discipline should be imposed?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: The Department is the agency of the State of Florida vested with statutory authority to regulate the practice of contracting under Chapters 455 and 489, Florida Statutes. Respondent is a licensed certified residential contractor in the State of Florida. Respondent's license number, as certified by Julie Odom, Department's Alternate Records Custodian, is CRC 20166. However, the Administrative Complaint alleges the license number to be CR C020166. Respondent's licensure status is "Delinquent, Active." On May 18, 1989, the Department entered a Final Order in DOAH Case No. 88-3308 wherein Respondent was found guilty of violating Section 489.129(1)(h),(j),(k), and (m), Florida Statutes. On September 27, 2000, the City of Cape Coral, Florida, Contractor's Regulatory Board (Board) entered into a Settlement Agreement (Agreement) with Respondent, in regard to a complaint, Case No. 00-01, wherein Respondent was charged with violating the following Sections of the City of Cape Coral Code of Ordinances: 6-10.1:, To make misleading, deceptive, untrue, or fraudulent representations in the practice of his contracting profession; 6-10.8: Diversion of funds or property received for prosecution or completion of a specified construction project or operation when as a result of the diversion, the contractor is or will be unable to fulfill the terms of his obligation or contract; 6-10.10: Failing in any material respect to comply with the provisions of the Code; 6-10.11: Abandoning of a construction project in which the contractor is engaged or under contract as a contractor. A project is to be considered abandoned after 90 days if the contractor terminates the project without notification to the prospective owner and the City and without just cause; and 6-10.13: Being found guilty of fraud or deceit or of gross negligence, incompetence, or misconduct in the practice of contracting. The Agreement provided that Respondent was pleading No Contest to the charges that he violated the aforementioned sections of the City of Cape Coral's Code of Ordinances and that Respondent's plea did not act as an admission of guilt as to the above mentioned charges. The Agreement provided for Respondent's permit pulling privileges to be revoked for a period of 90 days starting August 23, 2000. By an Order dated December 29, 2000, the Board, after hearing and discussing the charges made against Respondent, voted to accept and approve the Agreement. By this Agreement, Respondent's contracting license was disciplined by the City of Cape Coral. The total investigative and prosecution costs to the Department, excluding costs associated with any attorney's time, is $967.09.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, and a review of Chapter 61G4-17, Disciplinary Guidelines, Florida Administrative Code, with consideration for the repeat violation of Section 489.129(1)(h), Florida Statutes, it is RECOMMENDED that the Department enter a final order finding Respondent, Robert Mensching guilty of violating Subsection 489.129(1)(h), Florida Statutes, and for such violation: (a) impose an administrative fine in the amount of $5,000.00; (b) assess costs in the amount of $967.09; and (c) revoke Respondent's Certified Residential Contractor's License. DONE AND ENTERED this 21st day of March, 2003, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 21st day of March, 2003. COPIES FURNISHED: Kimberly V. Clark, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-2202 Robert Mensching 1719 Northeast 23rd Terrace Cape Coral, Florida 33909 Robert Crabill, Executive Director Construction Industry Licensing Board Department of Business and Professional Regulations Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202
The Issue Whether or not Respondent's certified general contractor's license should be disciplined because he aided or abetted an uncertified or unregistered person, knowingly combined or conspired with an uncertified or unregistered person by allowing his certificate or registration to be used by an uncertified or unregistered person with the intent to evade Chapter 489; acted in the capacity of a contractor under an unregistered or uncertified name; engaged in fraud, deceit, or gross negligence, incompetence, or misconduct in the practice of contracting as alleged, in violation of Subsections 489.129(1)(e),(f),(g) and (m), Florida Statutes.
Findings Of Fact Petitioner is the state agency charged with the responsibility to investigate construction activities in Florida and, where indicated, to file Administrative Complaints pursuant to Chapters 489, 455 and 120, Florida Statutes, and other rules and regulations promulgated pursuant thereto. During times material, Respondent, Richard L. Melvin, was licensed as a general contractor, having been issued license number CG C022926. During times material, Respondent did not qualify Jeffrey Gaston or Tropical Exteriors & Services, Inc. (TESI), nor did said entity or contractor's name appear on Respondent's license. During times material, Jeffrey Gaston d/b/a TESI, was never licensed nor qualified to do business as a contractor in Florida. During times material, Respondent was not a licensed roofing contractor. On or about March 31, 1987, Jeffrey Gaston contracted with Deborah and Clinton Weber to repair a roof and renovate a bathroom at their residence for the sum of $5,000.00. Respondent's name, license number, address and telephone number was listed on the Gaston/Weber contract. Jeffrey Gaston d/b/a TESI entered into a contract with Wilfred Butler on January 12, 1987, to replace a back porch at his residence. Respondent's general contractor's license number was listed at the top of the agreement between Gaston-TESI/Butler. Checks drawn by Butler were made payable to Respondent/TESI. Respondent obtained a permit for Jeffrey Gaston d/b/a TESI for the Butler project. (Petitioner's Exhibit 7.) Respondent admitted to authorizing Gaston or TESI to use his name and certificate number on contracts. Respondent was aware of approximately 20 contracts and several other permits wherein Gaston/TESI obtained the contracts or permits by using Respondent's name and license number. Respondent admitted receiving approximately $2,000.00 for supervising TESI. Respondent never disassociated himself from Jeffrey Gaston until May 31, 1987. Petitioner introduced ten contracts for work in Pinellas County from December 1986 to May 1987, with Respondent's name and state certification number with Jeffrey Gaston d/b/a TESI listed as the contractor. (Petitioner's Exhibit 9.) Respondent obtained a permit for Jeffrey Gaston d/b/a TESI for the installation of aluminum soffit and fascia on the Stitches' home situated at 111 Aurora Avenue North, Clearwater, Florida. Respondent did not supervise the installation of aluminum soffit and fascia on the Stitch's residence. Respondent, as a general contractor, is responsible for all phases of work for which he contracted for and/or obtained permits. Respondent was aware that Jeffrey Gaston was not a licensed contractor in Florida. Jimmy Jimenez has never been a licensed contractor in Florida. J & J Construction Company was qualified in February 1988, under Respondent's license number, CG C022926. Thereafter, during February 1989, J & J Construction was qualified under Respondent's license number RC 0058448. Respondent did not attempt to qualify J & J Construction until he was cautioned by Petitioner's investigators Steven Pence and Dennis Force, that his construction activities amounted to "aiding and abetting an unlicensed contractor." On or about December 11, 1987, Wiley Parks, Jr., entered into a contract with J & J Construction to perform construction work and remodel a home for Parks located at 1722 West Arch Street, Tampa, Florida. In conjunction with that contract, a second contract was submitted by J & J Construction for Mr. Parks, although unbeknownst to him, which utilized Respondent's name and contractor's license number at the top of the agreement. Wiley Parks spent a great deal of his time observing the construction and remodeling work by J & J. Respondent was only seen by Wiley Parks when they met at a local bank to cash a check which represented a draw submitted by Respondent for construction work done at the Arch Street construction project. Respondent obtained a permit for the Parks job on January 6, 1988, which was prior to the time he qualified J & J Construction as the entity through which he would conduct construction business. Respondent, although required to do so, never called for a final inspection on the Parks job. The floor joists at the Parks job were disapproved by the Hillsborough County Building Department and were never repaired by Respondent. Employees of J & J were observed working at the Parks job site on January 4 and 8, 1988. Respondent was, on two occasions, the subject of prior disciplinary action by Petitioner during 1987. On one occasion, probable cause was found on August 12, 1987 and the case was closed by issuing a letter of guidance to Respondent. On the second occasion, probable cause was found on October 7, 1987. Final action was taken on February 11, 1988, whereby an administrative fine of $1,000.00 was imposed against Respondent or, alternatively, a 30-day suspension of his license. Respondent paid the administrative fine within the allotted time.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that Respondent's general contractor's license number CG C022926 be REVOKED. 1/ RECOMMENDED this 26th day of March, 1990, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL 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 26th day of March, 1990.
The Issue The issue is whether Respondent's construction activities violated Department standards and created an unsafe road condition, as alleged in the Department's Amended Violation and Notice to Show Cause - Non-Compliance with Permit Conditions (Notice to Show Cause) issued on March 1, 2016.
Findings Of Fact Background The Department is the state agency responsible for regulating access to the state highway system. See § 335.182, Fla. Stat. To ensure that the motoring public is safe, the Department has adopted and incorporated by reference design standards, standard specifications, and a Plans Preparation Manual (PPM) that must be adhered to by contractors when working on state roads. See Fla. Admin. Code R. 14-96.008. Respondent is an Orlando engineering firm whose principal is Zhi "George" Guo, a registered professional engineer. The Guo family is the fee simple owner of a 37-acre tract of land located at 5615 Recker Highway (State Road 655) in an unincorporated part of the County. Around eight years ago, Mr. Guo began the process of developing the family property as a business park to be known as the Recker Highway Business Park Development. To provide access to the property from State Road 655, Mr. Guo was required to construct turn lanes, widen from two lanes to four lanes around 1,700 feet of roadway, construct paved and unpaved shoulders, and install guardrails and sod. The Department considers road widening to be a major project. Because all work was within the Department's right-of-way, a driveway connection permit and drainage connection permit were required. The project begins at Station 594.00 and ends at Station 611.00 on State Road 655. On October 16, 2008, Mr. Guo submitted to the Department an Access Application for a driveway connection permit. Among other things, the Access Application identifies the engineer of record (EOR), general contractor (GC), and certified engineer inspector (CEI) on the project. The EOR signs the plans and verifies that all work will be in accordance with Department standards. The GC is essentially the manager of the project and is responsible for its overall coordination. The CEI is responsible for making all inspection work on the project to ensure that the GC is performing work according to the permitted plans. This requires that the CEI be on the job site to observe and verify work done by the GC. The CEI must also submit daily reports to the Department documenting activities that take place each day while work is being performed. When all work is completed, the CEI requests that the Department make a final inspection and issue a final acceptance of the work. Although the CEI is normally one person, the CEI can be a combination of multiple people if they have a Construction Training and Qualification Program (CTQP) certification required to complete the components of the work, e.g., earthwork, asphalt, and maintenance of traffic (MOT). Mr. Guo's Access Application indicated he would serve as EOR and GC. It did not identify who would be the CEI, but Mr. Guo does not deny that he served as CEI. Notably, Mr. Guo submitted daily reports and assumed the duties and responsibilities normally associated with that position. Mr. Guo has never managed a highway construction project such as this, although he has done design work on several highway projects, mainly related to drainage-improvement work. As the GC, Mr. Guo signed and sealed the permitted drawings. As a general rule, different individuals serve as the EOR, GC, and CEI. If the CEI is also the GC, there are no checks and balances to ensure the project is built according to the permitted plans. According to the Department's expert, it is unethical for one person to serve as GC, EOR, and CEI on the same project. However, the expert had no explanation as to why the Department issued a permit to Mr. Guo under these circumstances, and the Department cited no rule or statute that prohibits this arrangement. The charging document does not allege any wrongdoing in this respect. Mr. Guo was concerned about an apparent conflict of interest created by him being the owner of the property, EOR, GC, and CEI. Accordingly, he hired two outside laboratories to perform materials testing, and he used two of his employees, one certified in earthwork and the other in MOT, but neither in asphalt, to act in his stead. There is no evidence that Mr. Guo informed the Department that he had delegated any CEI inspection responsibilities to other individuals. Although he asserts a request was made for the Department to inspect the paving progress as it was installed, there is no record of such a request. Indeed, Mr. Guo had no reason to assume, as he did, that the Department permit inspector would "fully perform the inspection work." If this were so, there would be no need for the CEI to perform any inspections on asphalt work. After being informed by the Department that a drainage construction permit was required, on January 28, 2009, Mr. Guo filed a second application for that type of permit. After additional information was provided by the applicant, on December 14, 2012, or around four years later, the Department issued to Mr. Guo Driveway/Connection Permit No. 2008-A-190-0071 and Drainage Connection Permit No. 2009D- 190-0003. The permit conditions required, among other things, that all work be performed in accordance with current Department standards, specifications, and permit provisions; the driveway connection not be used until final acceptance was given by the Department; the applicant be totally responsible for the cost of all work performed inside the Department's right-of-way; and the applicant accept all conditions of the permit, once work began. At hearing, Mr. Guo agreed that he must comply with all permit conditions. A pre-construction meeting was conducted on January 2, 2014. Mr. Guo attended the meeting and acted as the EOR, GC, and CEI for the applicant. Among other things, the purpose of a pre-construction meeting is to discuss the conditions in the permit and to answer any questions that an applicant may have before work begins. See also Fla. Admin. Code R. 14-96.003(2). At the meeting, Mr. Guo was given a copy of the construction guidelines, which spell out exactly what a contractor must do before, during, and after construction. He was also given a copy of "Minimum CEI On Site Inspections and Notifications," which identifies the specific duties of the CEI. These documents are also attached to his permits. At the heart of this controversy is a dispute over the actions taken by the Department's permit inspector while monitoring the project. A permit inspector is assigned to monitor the work on all state highway projects. The Department's Bartow District Office has only one permit inspector, Steve Logan, who is responsible for 400 lane miles of road in the County. Mr. Logan must drive through all the jobs that are under construction in the County and bring matters to the attention of the CEI on each project to ensure compliance with the Department's permitted plans, including items such as traffic control, lane closures, and spot slope measurements. He must also observe and verify the work done by the CEI, accept and review the daily reports submitted by the CEI, forward those reports to the permits director at the District Office, and work as the Department's communication contact with the contractor. He also receives asphalt mix designs from the CEI and forwards them to the Materials Department for approval. Mr. Logan replaced another permit inspector in February 2015, or just before the friction course of asphalt was placed on the roadway. The friction course is the third and final layer of road surface. When he assumed the position, Mr. Logan understood the Department had previously inspected the first two layers of road surface, i.e., the installation of an eight-inch lime rock base and a one and one-half inch structural asphalt layer. However, he knew that no final acceptance had been given since all work was not yet completed. Mr. Logan holds an asphalt level 1 CTQP certification, is currently an engineer intern, and is scheduled to take the professional engineer examination in April 2017. The certification means that Mr. Logan is qualified to perform acceptance tests for asphalt work on highways. Mr. Logan does not have authority to accept or reject any of the roadway construction on a permitted project. Authority to issue a final acceptance letter lies with the permits director in the District Office. A letter is normally issued after the permits director, permit inspector, CEI, contractor, and Department maintenance team jointly inspect the project after all work is completed. Mr. Logan himself made no final inspection. The Work To Date The asphalt paving work began in March 2014, the final course was laid in March 2015, and the last corrective work was completed in July 2015. Mrs. Asphalt, LLC, was the paving contractor used on the job. Although a final inspection was never performed, one of Respondent's employees made final payment and released Mrs. Asphalt after the July 2015 corrective work was completed. A release and final payment are normally given after all paving work has been approved and accepted by the Department. Although he was not on the site in July 2015, Mr. Guo contends Mr. Logan gave final approval for the work at that time. In April, May, October, and November 2015, the Department sent a punch list of items to Mr. Guo to be completed by his firm. A punch list identifies deficiencies that need to be corrected before a final inspection is made. It does not inform the CEI on how to resolve the deficiencies, and it places the permittee on notice that final acceptance will not be given until the items on the list are corrected. Slope deficiencies were not noted until several months after the corrective work was completed when a Department project administrator happened to be driving on the road after a heavy rain and observed ponding on many sections of the roadway. Mr. Guo met with the Department in early December 2015 in an effort to address not only the items in the punch lists but also the sloping concerns. On December 11, 2015, he submitted an alternative solution of spot repair. The Department rejected this proposal, as the proposed repairs would negatively impact surrounding asphalt that was constructed at a different slope. Mr. Guo submitted a second alternative solution, which would allow him to mill out (remove) 1.5 inches of pavement and overlay the friction course at 1.5 inches with a two percent slope. The Department rejected this proposed solution, as the best solution was to "remove what was out there." The Department has never issued a final acceptance letter for the project. The Notice to Show Cause, as amended, was issued on March 1, 2016. The Charges The Department is authorized to initiate an enforcement action whenever work on a state road does not conform to the permitted plans or violates the PPM. See Fla. Admin. Code R. 14-96.007(8). The Notice to Show Cause alleges that "the majority of paved areas, paved and unpaved shoulders, slopes, guardrail and other items" do not comply with Department standards or abide by the permitted plans. It further alleges this creates "an unsafe road condition" and constitutes a violation of Department rules. The Department estimates the cost to correct these violations is between $430,000.00 and $650,000.00. Although Respondent disputes this amount, it is unnecessary to resolve that issue at this time. State Road 655 is an undivided, two-lane arterial highway probably built around 100 years ago when different design standards applied. According to current PPM standards, a two-lane state highway must have a minimum eight-foot-wide shoulder that includes a minimum five-foot-wide paved section constructed with a two percent negative slope for the turn lane and a six percent negative slope for the paved shoulder area. See Dep't Ex. 8. The negative slopes allow water to drain off the road. A construction tolerance of no more than .2 percent is allowed. Id. To conform to these standards, Respondent's permitted plans call for the same slopes on travel lanes and shoulders. Although State Road 655 probably had a slope of one to one and one-half percent when it was first built, and paving slopes on the pre-existing lanes being widened are not exactly two percent, any current overlaying of the road requires a two percent slope. Mr. Guo contends he was told by two permit inspectors, "Chris" and Steve, that a slope of two percent or less was acceptable. Mr. Logan denies this assertion. There are nine items in the charging document, which identify necessary changes to reduce the hazardous roadway conditions and correct the improper construction. Items one, two, four, and seven relate to improper pavement slopes and improper paved and unpaved shoulder slopes on both the east and west sides of the roadway. Item three identifies a missing paved shoulder on the west side of the roadway. Items five and six identify the absence of a stabilized shoulder (material placed adjacent to a paved shoulder) on the east side of the roadway and the lack of any sod on the same shoulder. Item eight alleges the guardrail in front of the cross drain is deficient. To avoid flooding, item nine alleges the shallow ditch on the east side of the roadway should be relocated closer to the Department's right-of-way line and the roadside slopes should be modified, as shown in the permitted drawings. While not containing a specific charge, a tenth item warns Respondent that other issues may arise before final acceptance is given. The more persuasive evidence supports a finding that the slopes and shoulders identified in items one, two, four, and seven do not conform to the plans or PPM. Mr. Guo's own daily reports for the friction course corroborate this finding. Those reports reflect the slopes are two percent or less for the travel lanes and four percent for the shoulder slopes. This is contrary to the plans, which call for a two percent slope for travel lanes and a six percent slope for shoulders, with not more than a .2 percent deviation. The absence of appropriate negative slopes can create dangerous ponding conditions on the highway. Therefore, the charges in items one, two, four, and seven have been proven. The more persuasive evidence supports a finding that the work described in items five, six, and eight has not been performed. If not completed, these deficiencies can create a safety hazard and cause soil erosion. Therefore, the charges in these three items have been proven. At hearing, Respondent admitted that this work has not been performed and agrees to complete the work after the paving dispute is resolved. The more persuasive evidence supports a finding that the charge in item nine has been proven. When a roadway is widened, and a drainage ditch is located adjacent to the original roadway, to avoid possible flooding, the ditch must be relocated closer to the Department's right-of-way and roadside slopes must be modified. Although Mr. Guo contends otherwise, this work is an integral part of any road construction project. Mr. Guo has proposed an alternate design to address this item. Respondent's Contentions Respondent first contends that sections of other nearby state roads are not built to current standards and therefore the exact standards required by the PPM should not apply. Respondent identified various locations on State Road 655 and other state roads within a five-mile radius of the project that do not have an exact two percent slope. See Resp. Ex. C1, pp. 1-6; Resp. Rebut. Ex. 2. Because of this slope variation, Respondent asserts strict compliance with the PPM and plans should not be required. Consistent with this argument, Respondent admits that any pre-existing travel lanes on State Road 655 with slopes of 1.6 to 1.8 percent were overlaid with new asphalt using the same slope measurements. But this concern should have been raised at the pre-construction meeting before work began, and not after the paving was completed and a Notice to Show Cause issued. The contention is rejected, as the evidence supports a finding that a permittee is required to build to current standards, regardless of the condition of the existing roadway. In its PRO, Respondent argues the Department is equitably estopped from enforcing the requirement that the final paved surface have a slope of exactly two percent; the Department waived the requirement that the final paved surface have a slope of exactly two percent through representations made by Department employees; its liability, if any, was extinguished because Mr. Logan accepted the work; and the actions and representations of Mr. Logan render the Department liable for the as-built conditions.1/ These contentions are based mainly on the premise that Mr. Logan made representations to the subcontractor and/or Respondent's employees regarding the quality of the paving work and gave final approval after the corrective work was completed in July 2015. The friction course was installed over a three-day period during the week of March 18, 2015. The asphalt was installed by Mrs. Asphalt. On the first day, Mr. Guo arrived on site two hours after work began and on the other days he was not on site at all times. However, James Bearden, who is Respondent's foreman, and one other employee, Kerry Bearden, were on site at all times. Neither is certified to inspect asphalt. Except for the afternoon of the second day, Mr. Logan was present at all times. Using a four-foot calibrated smart level, Mr. Logan performed spot checks on the slopes while the asphalt was being laid, while James Bearden made slope checks every 25 feet or so. Mr. Bearden confirmed that Mr. Logan did not "check it as often" as he did. Although the spot checks he made appeared to be "acceptable," Mr. Logan did not perform any spot checks after the rolling was completed, and he did not write down any measurements that he took. At one point, Mrs. Asphalt's foreman requested information regarding the target slope. Mr. Logan informed him he should check with the client to obtain that information. Mr. Logan did not advise anyone that the work would pass final inspection. During the March paving work, Mr. Guo took no measurements, but after the paving was completed, he was observed making a few sloping measurements. Normally, the CEI will make numerous checks while the paving is being laid to ensure that the subcontractor is providing quality work and the equipment is adequate to perform the job. Respondent asserts, unpersuasively, that by allowing Mr. Logan to inspect the asphalt paving, function as the asphalt inspector on site, and give final approval, the Department interfered with the road construction. The facts belie this contention. At no time did Mr. Logan interfere with, or prevent, the contractor from taking slope or depth measurements. Although Mr. Logan would sometimes tell the subcontractor that work was not acceptable, he did not order the subcontractor to fix the unacceptable work. This is the responsibility of the CEI. Mr. Logan told Mrs. Asphalt's foreman that the July 2015 corrective work looked "good," but he was not asked by anyone if the subcontractor could be paid and released, or if his characterization of the work as "good" constituted final acceptance of the work. Contrary to Respondent's assertion, no representation was made by Mr. Logan that he was giving final approval. In fact, there has never been a request by the CEI for the Department to make a final inspection. It is evident from Mr. Guo's testimony that he either misunderstood the type of oversight provided by a permit inspector, or he never sought clarification on that issue before the work began. It is the CEI's responsibility to be present on the job site to observe and verify the GC's work. This means that Mr. Guo, or his certified designees, if any, and not the Department, are responsible for all inspections and to provide daily reports documenting the work activities that take place each day. Mr. Guo believed the subcontractor "only listen[s] to Steve," and the subcontractor "report[ed] directly to Mr. Logan" for "quality [control] decisions" rather than the CEI. As to the July 2015 corrective work, Mr. Guo instructed "the subcontractors [to] completely follow the instruction[s] from Steve" in making the necessary corrections to the slopes. He also believed, incorrectly, that all asphalt inspection work had been delegated to Mr. Logan and assumed that Mr. Logan was essentially supervising the project. In other words, he turned over all responsibility for inspecting the asphalt to the permit inspector. But as the record shows, Mr. Logan only made sporadic measurements, he had no authority to approve the work, and he did not direct the subcontractor's performance, reject its work, or put a stop work order on the project. James Bearden attended a meeting with Department personnel in November 2015. He recalled telling John Hayes, a Department construction engineer, that he paid and released the subcontractor after Mr. Logan "okayed the work." Mr. Hayes responded that "Steve didn't have authority to authorize that asphalt." Mr. Hayes did not testify, and Mr. Bearden's representation to Mr. Hayes that the work had been approved is incorrect.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter a final order sustaining the charges in the Notice to Show Cause and requiring Respondent, within 60 days, to demonstrate satisfactory progress in completing the road construction. Otherwise, the Department may initiate action to effect the satisfactory completion of the work at Respondent's expense. DONE AND ENTERED this 12th day of October, 2016, in Tallahassee, Leon County, Florida. S D. R. ALEXANDER 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 12th day of October, 2016.
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 Respondent committed the violations alleged in the Administrative Complaint? If so, what punitive action should be taken against him?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: Respondent is a building contractor. He obtained his license (License Number CB C028158) to engage in the contracting business in the State of Florida in 1984. Respondent's license expired on August 31, 1996, without Respondent having made any effort to renew it. On September 1, 1996, the Department placed Respondent's license on "a delinquent status for non-renewal." 5/ It considers the license to be invalid for the 1996-98 licensing period. At all times material to the instant case, Respondent was the primary qualifying agent for Loma Linda Homes Corporation (Loma Linda). In late 1993 or early 1994, Loma Linda entered into a written contract (Contract) with Carmen Bennett and her daughter-in-law, Virginia Bennett, in which it agreed to construct a residence for the Bennetts at 5403 Loma Vista Loop in the Loma Vista subdivision in Davenport, Florida. The Contract had a "[t]ime is of the essence" provision. 6/ The Contract further provided that is was "conditioned upon Purchaser[s, the Bennetts] obtaining a mortgage loan commitment within sixty days from the date of this contract for a term not to exceed thirty (30) years at the prevailing market interest rate at time of closing." The Bennetts timely obtained such a commitment. Prior to the execution of the Contract, Loma Linda had received a $1,000.00 deposit from the Bennetts. At or around the time the Contract was executed, the Bennetts provided Loma Linda with an additional deposit in the amount of $9,813.00. The Contract provided that "[i]f Seller [Loma Linda] fails, neglects, or refuses to perform this Contract, the Purchasers [the Bennetts] shall receive the return of all sums paid to the Seller." Loma Linda failed to meet its obligations under the Contract. Construction of the residence that Loma Linda agreed to build for the Bennetts never commenced. All that Loma Linda did in furtherance of its contractual obligations was to clear the lot on which the home was to be built. The Bennetts have not received back any of the $10,813.00 in deposit monies that they paid Loma Linda.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Board enter a final order: (1) finding Respondent guilty of the violations alleged in Counts I, III and V of the Administrative Complaint; (2) penalizing Respondent for having committed these violations by imposing on him a fine in the amount of $1,000.00 and requiring him to pay $10,813.00 in restitution to the Bennetts and to reimburse the Department for all reasonable costs, excluding attorney's fees, associated with the Department's investigation and prosecution of the charges set forth in Counts I, III and V of the Administrative Complaint; 10/ and (3) dismissing Counts II and IV of the Administrative Complaint. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of January, 1997. STUART M. LERNER 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 January, 1997.
