93-006523 Construction Industry Licensing Board vs. Joseph W. Kaminsky Status: Closed Recommended Order on Wednesday, November 16, 1994.

Summary: Fine and probation proper where contractor did not qualify joint venture prior to engaging in construction project but where customer not harmed.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, CONSTRUCTION )

INDUSTRY LICENSING BOARD, )

)

Petitioner, )

)

vs. ) CASE NO. 93-6523

)

JOSEPH W. KAMINSKY, )

)

Respondent. )

_______________________________________)

RECOMMENDED ORDER

Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned

Hearing Officer of the Division of Administrative Hearings, on July 22, 1994, in

Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: John David Ashburn, Esquire

Department of Business and

Professional Regulation

Division of Regulation

3932 RCA Boulevard, Suite 3210

Palm Beach Gardens, Florida 33410

Diane Perera, Esquire

Department of Business and

Professional Regulation

401 Northwest 2nd Avenue, Suite N-607

Miami, Florida 33128

For Respondent: Peter Mineo, Jr., Esquire

8220 State Road 84

Fort Lauderdale, Florida 33324

STATEMENT OF THE ISSUE

The issue presented is whether Respondent is guilty of the allegations

contained in the Administrative Complaint filed against him, and, if so, what

disciplinary action should be taken, if any.

PRELIMINARY STATEMENT

Petitioner issued an Administrative Complaint alleging that Respondent had

violated the laws regulating his conduct as a certified general contractor, and

Respondent timely requested a formal hearing regarding those allegations. This

cause was thereafter transferred to the Division of Administrative Hearings to

conduct the formal proceeding.

At the commencement of the final hearing in this cause Petitioner

voluntarily dismissed Count VI of the Administrative Complaint with prejudice.

Petitioner presented the testimony of William R. DeFreitas, Patricia

DeFreitas, Glenn Owen, and Ronald Lewis. The Respondent Joseph W. Kaminsky

testified on his own behalf and presented the testimony of William R. DeFreitas.

Additionally, Joint Exhibit numbered 1, Petitioner's Exhibits numbered 1-21, and

Respondent's Exhibits numbered 1-9 were admitted in evidence.

Although both parties requested leave to file post-hearing proposed

findings of fact, only Petitioner did so. A specific ruling on each proposed

finding of fact can be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times material hereto, Respondent has been a certified general

contractor in the state of Florida, having been issued license number CG

C027718. At all times material hereto, Respondent has been the qualifying agent

for Classic Design Builders.

2. William R. DeFreitas describes himself as a broker of building

materials for third world countries. His wife is also employed in that same

business. They had their office building constructed for them. When they

subsequently determined to add an addition to their residence, they solicited

bids from that contractor and from two other persons.

3. Aaron Ware, who held himself out to be an architect and the president

of a company known as L. A. Designs, Inc., was one of the persons from whom the

DeFreitases solicited a bid.

4. He submitted a bid dated April 26, 1990, and a draw schedule on May 3,

1990. The extent of the work to be performed was finalized on June 6, 1990,

when Mr. DeFreitas initialed the changes to the initial bid. The construction

project contemplated under that contract was the addition of a family room, a

laundry room, a shower off the master bath, and a small bath at the front of the

house. The June 6, 1990, contract also called for replacement of the garage

door and "painting of some interior doors." The total contract price was

$50,000.

5. While Ware was negotiating with the DeFreitases, he was also discussing

with Respondent entering into a joint venture agreement between Classic Design

Builders and L.A. Designs for the DeFreitas construction project. Their verbal

agreement was memorialized in a written agreement dated June 18, 1990.

Thereafter, Respondent did not advise Petitioner that he had entered into a

joint venture agreement and, similarly, did not qualify the joint venture as a

separate business entity for licensure purposes.

6. Pursuant to instructions from Ware, Mr. DeFreitas directed a letter to

the City of Boca Raton advising the building department that he had entered into

a contract to construct an addition to his residence with "L.A. Designs/ Classic

Designs." On July 2, 1990, Respondent on behalf of Classic Design Builders

obtained a building permit from the City of Boca Raton for the DeFreitas

addition. On July 6, Ware began work on the addition.

7. Ware worked on the project from July of 1990 through the end of that

year. During the course of that construction, the DeFreitases made many changes

in the scope of the work contemplated by the original contract, which increased

the contract price to above $56,000. Additional work was performed, which was

not covered by the contract and which the DeFreitases agreed to pay for directly

to the supplier or subcontractor.

8. On February 4, 1991, the DeFreitases directed a letter to Ware advising

him that the construction was close to completion and that it was time for them

to "settle our account" as to the extras for which the DeFreitases had not paid.

In that letter, the DeFreitases also offered to produce the invoices for

materials and labor that they had agreed to pay to finish the job.

9. In July of 1991 the DeFreitases complained to the City of Boca Raton.

Respondent, as the holder of the building permit, was contacted and advised that

the DeFreitases were alleging that their contractor had failed to complete the

project. Respondent immediately went to the DeFreitases' business, met with Mr.

DeFreitas, inspected the home, and prepared a punch list of items to be

completed, many of which were not covered by the construction contract but were

done by Respondent in an attempt to achieve customer satisfaction. Respondent

completed the project, obtained the final inspections, and presented the

DeFreitases with a warranty and release of lien. The DeFreitases refused to

accept the warranty or release of lien.

10. As a result of the DeFreitases' complaints, Respondent and Ware were

charged with violating local ordinances. In those prosecutions, as well as in

this case, the DeFreitases have attempted to obtain $11,000 from Respondent as

"restitution" for moneys they have had to spend or will have to spend to

complete the work envisioned by their contract with L.A. Designs, Inc. Most of

the items listed as components of the claim for restitution are not even part of

the construction contract. Of those few items covered by the contract, the

money claimed is not. For example, the contract allocated $500 to be expended

on the bathroom cabinets. The DeFreitases spent $1,670 on the cabinets and,

surprisingly, are claiming that Respondent should pay them the difference

because they spent more than their contractual allowance. Finally, they have

claimed the cost of replacing inferior building materials provided by them, such

as wood French doors.

11. The DeFreitases paid to Ware approximately $4,000 less than they had

promised to pay him as a result of the work completed by L.A. Designs. Rather

than suffering a loss, the DeFreitases have actually received a windfall.

12. At no time material hereto was either Ware or L.A. Designs licensed in

the state of Florida as a contractor, architect, professional engineer, or

landscape architect. Respondent knew that Ware and L.A. Designs were not

licensed.

13. At the time that Classic Design Builders and L.A. Designs entered into

their written joint venture agreement and at all other times material hereto,

Respondent was not an officer, director, stockholder, or employee of L.A.

Designs, and Ware was not an officer, director, stockholder, or employee of

Classic Design Builders.

14. When Ware approached Respondent about entering into a joint venture

for the DeFreitas project, Respondent had already suffered a minor heart attack

and two mini-strokes. The joint venture agreement itself recites Respondent's

need to limit his activities due to health reasons. In July of 1990 Respondent

additionally tore an Achilles tendon in his left leg and was in a cast until

Christmas of 1990. Due to his immobility during that time period, Respondent

delegated all of his construction jobs to others, understanding that he was

ultimately responsible for those projects since he was the contractor of record

on them. In the same way, he delegated to Ware the day-to-day responsibility

for the DeFreitas project.

15. Other than "pulling the permit" for the DeFreitas project,

Respondent's only other involvement in the job until the time that he was

contacted as a result of the DeFreitases' complaints to the City of Boca Raton

in July of 1991, was right after the job was commenced regarding some problem

concerning the lot line. He was able to resolve that problem with the City of

Boca Raton by telephone.

16. The DeFreitases did not know that Respondent was the contractor for

their construction project and ultimately responsible for that work. Although

Ware had advised them that a "buddy" would somehow be involved in the

construction, and although Mr. DeFreitas referred to both L.A. Design and

Classic Design Builders in his letter to the City of Boca Raton authorizing a

building permit to be issued, the evidence is clear that had the DeFreitases

known of Respondent's responsibility, they would have been insisting that he

perform services months earlier.

17. In 1987 Respondent was charged with abandoning a construction project

and/or failing to timely complete it. Respondent entered into a settlement

stipulation admitting that fact and agreeing to pay a fine to the Construction

Industry Licensing Board in the amount of $1,000. A Final Order Approving

Settlement Stipulation was entered on June 8, 1988.

18. Respondent received no money from the DeFreitases or from Ware for the

work Respondent performed on the DeFreitas addition. Respondent's out-of-pocket

expenses for labor and materials on the DeFreitas residence between July of 1991

and June of 1992 total $1,747.50.

CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has jurisdiction over the

parties hereto and the subject matter hereof. Section 120.57(1), Florida

Statutes.

20. The Administrative Complaint filed in this cause contains seven

counts. At the commencement of the formal hearing Petitioner dismissed with

prejudice Count VI.

21. Count I alleges that Respondent has violated Section 489.129 (1)(e),

Florida Statutes, which prohibits

(e) Performing any act which assists a person

or entity in engaging in the prohibited uncertified

and unregistered practice of contracting, if the

certificate-holder or registrant knows or has

reasonable grounds to know that the person or

entity was uncertified and unregistered.

Petitioner has met its burden of proving that Respondent has violated this

statutory prohibition. Respondent entered into a joint venture agreement with

an unlicensed person or entity, failed to qualify the joint venture, obtained a

building permit, and permitted the unlicensed person or entity to perform the

construction project. The evidence reveals that Respondent was not

significantly involved in the job from shortly after the job commenced until a

year later. Respondent offered no evidence that he believed that Aaron Ware

and/or L.A. Designs were certified or registered to engage in the practice of

contracting in Florida. Further, it is reasonable to conclude that Respondent

knew that Ware and L.A. Designs were not licensed since the absence of licensure

would explain why Ware agreed to split his profits from the DeFreitas job with

Respondent.

22. Count II charges Respondent with violating Section 489.129(1)(f),

Florida Statutes, which reads as follows:

(f) Knowingly combining or conspiring with an

uncertified or unregistered person by allowing

his certificate or registration to be used by

the uncertified or unregistered person with intent

to evade the provisions of this part. When a

certificate holder or registrant allows his certi-

ficate or registration to be used by one or more

business organizations without having any active

participation in the operations, management, or

control of such business organizations, such act

constitutes prima facie evidence of an intent to

evade the provisions of this part.

Petitioner has met its burden of proof as to Count II of the Administrative

Complaint. The evidence is uncontroverted that neither Respondent nor Classic

Designs had any involvement in the operations, management, or control of L.A.

Designs.

23. Section 489.129(1)(c), Florida Statutes, prohibits a contractor from

violating any provision of Chapter 455. Section 455.227(1)(a), Florida

Statutes, prohibits a licensee from making misleading, deceptive, untrue, or

fraudulent representations in the practice of his profession. Count III alleges

that Respondent has violated Section 489.129(1)(c) by violating Section

455.227(1)(a). Petitioner argues that Respondent applied for a building permit

showing he was the contractor on the project but that Respondent did not have a

contract with the DeFreitases and did not serve as the contractor. Although

Petitioner is correct that Respondent had no contract with the DeFreitases, he

had a contract with L.A. Designs and L.A. Designs had a contract with the

DeFreitases. Further, Respondent did act as the contractor on the job: he

obtained the building permits, resolved a problem at the beginning of the

project, completed the project, obtained the final inspections, and gave the

DeFreitases a warranty and a release of lien. Since Petitioner has failed to

identify any misrepresentation made by Respondent, Petitioner has failed to meet

its burden as to Count III of the Administrative Complaint.

24. Section 489.129(1)(k) provides as follows:

(k) Abandoning 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 just

cause or without proper notification to the

prospective owner, including the reason for

termination, or fails to perform work without

just cause for 90 consecutive days.

The evidence reveals that Ware was on the job at least through February of 1991

when Mr. DeFreitas wrote to Ware that the construction was nearing completion.

That letter also references some type of agreement between Ware and the

DeFrietases as to who was responsible for completion of aspects of the job and

requests a final contractor's release of lien. Petitioner has failed to

enunciate when it alleges the project was abandoned. The evidence is clear,

however, that when Respondent was advised there were allegations that the work

was not completed he immediately responded by contacting the DeFrietases,

preparing a punchlist, and performing the work requested by them through the

obtaining of final inspections and offering them a warranty. Petitioner has

failed to prove that Respondent abandoned the project, as alleged in Count IV.

25. Count V of the Administrative Complaint alleges that Respondent has

violated Section 489.129(1)(h), Florida Statutes, by committing mismanagement or

misconduct in the practice of contracting that causes financial harm to a

customer. Petitioner has failed to meet its burden as to this Count. Not only

have the DeFreitases not been harmed financially, the evidence shows that they

paid as little as $4,000 and as much as $6,000 less than they agreed to pay for

the work that was performed. They admitted during the final hearing that most

of the items for which they were claiming "restitution" were not even covered by

the contract and the calculations concerning their alleged losses were "grossly

unfair." Lastly, the evidence indicates that the DeFreitases received much more

than they paid for. Since Respondent caused no financial harm to the

DeFreitases, he has not violated Section 489.129(1)(h), Florida Statutes, as

alleged in Count V of the Administrative Complaint.

26. Count VII alleges that Respondent is guilty of violating Section

489.129(1)(m), Florida Statutes. That Subsection prohibited, at the time

material hereto, committing fraud, deceit, gross negligence, incompetency, or

misconduct in the practice of contracting. Petitioner has proven that

Respondent's involvement with L.A. Designs on the DeFreitas project without

qualifying the joint venture as a separate legal entity constitutes misconduct

in the practice of contracting.

27. Respondent argues that he was not assisting in helping Ware and L.A.

Designs to engage in the practice of contracting without benefit of registration

or licensure because he was engaged in a joint venture with L.A. Designs and a

joint venture is permissible under the statutes and rules regulating the

practice of contracting. Respondent is correct that both Section 489.119(2),

Florida Statutes, and Rule 61G4-15.0022, Florida Administrative Code, provide

that a certified contractor can enter into a joint venture with an uncertified

business organization. Respondent, however, overlooks the requirement that the

joint venture itself must be qualified in accordance with the rules of the

Construction Industry Licensing Board, and Respondent did not do that.

28. Respondent also argues that Ware and L.A. Designs were exempt from the

contractor licensing statutes due to the exemption available to architects and

engineers who are rendering "design-build" services. That exemption, however,

is only available to persons who have been licensed, certified, or registered as

architects, landscape architects, or engineers by the state of Florida. The

evidence is uncontroverted that neither Ware nor L.A. Designs was so licensed,

registered, or certified.

29. One of Petitioner's exhibits admitted in evidence at the final hearing

is an affidavit that at that time the costs of prosecution in this case amounted

to $1,221. That affidavit was admitted without objection except as to relevancy

if the Respondent prevailed in this proceeding. Petitioner also submitted with

its proposed recommended order an undated affidavit which is not properly

notarized and which alleges that the costs of prosecution in this case total

$3,508.80. That second affidavit is not considered herein due both to its legal

deficiencies and to its submittal post-hearing without either the agreement of

Respondent or obtaining leave to submit evidence subsequent to the conclusion of

the final hearing.

30. Petitioner has also submitted post-hearing correspondence suggesting

that Respondent has been discharged in bankruptcy subsequent to the date of the

final hearing and that any debts therefore have been discharged. Petitioner has

not, however, suggested the impact, if any, of that discharge in bankruptcy on

any assessment of prosecution costs which the Petitioner claimed prior to

Respondent being discharged in bankruptcy.

31. In its proposed recommended order, the Department suggests that the

appropriate penalty to be assessed is revocation of Respondent's license, an

administrative fine in the amount of $5,000, restitution to the DeFreitases in

the amount of $11,236.17, and reimbursement of Petitioner's costs of $3,508.80.

However, Respondent has not been found guilty of all of the allegations brought

against him by the Department. Further, the statutory violations committed by

Respondent, although they appear to be multiple violations, all arise out of the

same act of Respondent: forming the joint venture with Aaron Ware and L.A.

Designs and failing to have that joint venture qualified as a separate entity.

Respondent did, however, consider himself ultimately responsible for the

DeFreitas project since he was the general contractor who obtained the building

permit and Respondent did assume responsibility as soon as he was advised there

was a problem. He met with the DeFreitases on a number of occasions; he

corrected all deficiencies related to the construction project, personally

paying the expense of doing so although he had received no money from the job;

and he obtained the final inspections from the City of Boca Raton. No credible

evidence was presented that the consumer suffered any financial harm as a result

of the project. On the other hand, the DeFreitases have already received the

benefit of the $1,747.50 which Respondent paid for materials and supplies

without reimbursement in his attempt to complete the project to their

satisfaction.

32. The range of penalties set forth in Rules 61G4-17.001 et seq., Florida

Administrative Code, is broad, especially considering the number of statutory

violations committed by Respondent's singular conduct. A harsh penalty is not

appropriate in this case where Respondent's prohibited conduct was failure to

qualify the joint venture as a separate business entity. There is no reason to

believe that Respondent would engage in such behavior again. It is more

appropriate that Respondent pay an administrative fine in the amount of $1,000

by a date certain and that his license be placed on probation for a period of

two years.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that a Final Order be entered:

(A) Finding Respondent guilty of Counts I, II and VII of the

Administrative Complaint filed against him;

(B) Finding Respondent not guilty of Counts III, IV, and V of the

Administrative Complaint filed against him;

(C) Requiring Respondent to pay an administrative fine in the amount of

$1,000; and

(D) Placing Respondent's license number CG C027718 on probation for a

period of two years.

DONE and ENTERED this 16th day of November, 1994, at Tallahassee, Florida.

___________________________________

LINDA M. RIGOT

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of November, 1994.

APPENDIX TO RECOMMENDED ORDER

1. Petitioner's proposed findings of fact numbered 2-10, 16-20, and 22

have been adopted either verbatim or in substance in this Recommended Order.

2. Petitioner's proposed findings of fact numbered 11-15, 21, and 24 have

been rejected as not being supported by the weight of the evidence in this

cause.

3. Petitioner's proposed finding of fact numbered 1 has been rejected as

not constituting a finding of fact but rather as constituting a conclusion of

law.

4. Petitioner's proposed finding of fact numbered 23 has been rejected as

being subordinate.

COPIES FURNISHED:

John David Ashburn, Esquire

Department of Business and

Professional Regulation

3932 RCA Boulevard, Suite 3210

Palm Beach Gardens, Florida 33410

Diane Perera, Esquire

Department of Business and

Professional Regulation

401 N.W. 2nd Avenue, Suite N-607

Miami, Florida 33128

Peter Mineo, Jr., Esquire

8220 State Road 84

Fort Lauderdale, Florida 33324

Copies furnished, continued

Richard Hickok, Executive Director

Construction Industry Licensing Board

7960 Arlington Expressway, Suite 300

Jacksonville, Florida 32211-7467

Jack McRay, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION

CONSTRUCTION INDUSTRY LICENSING BOARD

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION,

Petitioner,

Case No: 91-10077

vs. License No: CG C027718

DOAH Case No. 93-6523

JOSEPH W. KAMINSKY,

Respondent.

_____________________________/

FINAL ORDER

THIS MATTER came before the Construction Industry Licensing Board

(hereinafter referred to as the "Board") pursuant to Section 120.57(1)(b),

Florida Statutes, on January 12, 1995, in Palm Beach Gardens, Florida, for

consideration of the Recommended Order (a copy of which is attached hereto and

incorporated herein by reference). The Petitioner was represented by Cathleen

E. O'Dowd. The Respondent was neither present nor represented by counsel at the

proceedings.

Upon consideration of the Hearing Officer's Recommended Order, and the

arguments of the parties and after a review of the complete record in this

matter, and the exceptions filed, the Board makes the following:

FINDINGS OF FACT

1. The Hearing Officer's Findings of Fact are hereby approved and adopted

in toto.

2. There is competent, substantial evidence to support the Hearing

Officer's Findings of Fact.

CONCLUSIONS OF LAW

1. The Board has jurisdiction of this matter pursuant to the provisions of

Section 120.57(1), and Chapter 489, Florida Statutes.

2. The Hearing Officer's Conclusions of Law are hereby approved and

adopted except where they are in conflict with Petitioner's Exceptions to the

Recommended Order.

3. Petitioner's Exceptions to the Recommended Order are hereby approved,

adopted and incorporated herein by reference.

4. Respondent is guilty of violating Section 489.129(1)(e), (f), and (m),

Florida Statutes.

5. The penalty recommended by the Hearing Officer is hereby approved with

the exception of the requirement of two (2) years probation. Further,

Respondent is ordered to pay costs associated with investigation and prosecution

of this matter, as requested in Petitioner's Exceptions to the Recommended

Order.

6. There is competent, substantial evidence to support the Board's

findings and conclusions.

THEREFORE, IT IS HEREBY ORDERED AND ADJUDGED:

Counts III, IV, V, and VI of the Administrative Complaint are hereby

DISMISSED.

Respondent shall pay a fine of One Thousand dollars ($1,000) and costs of

Five Thousand One Hundred Ninety-One dollars and Twenty-Seven cents ($5,191.27)

to the Board, within thirty (30) days of the filing of this Order.

To assure payment of the fine and costs, it is further ordered that all of

Respondent's licensure to practice contracting shall be suspended with the

imposition of the suspension being stayed for thirty (30) days. If the ordered

fine and costs are laid within that thirty (30) day period, the suspension

imposed shall not take effect. Upon payment of the fine and costs after the

thirty (30) days, the suspension imposed shall be lifted. If the licensee does

not pay the fine and costs within said period, then immediately upon expiration

of the stay, the licensee shall surrender the license to the Department of

Business and Professional Regulation or shall mail it to the Board office.

In addition, the Respondent will be required to pay interest on fines due

to the Board at a rate of 18 percent per annum, beginning on the thirty-first

(31) day after the issuance of this Order.

Pursuant to Section 120.59, Florida Statutes, the Parties are hereby

notified that they may appeal this Order by filing one copy of a Notice of

Appeal with the Clerk of the Department of Business and Professional Regulation,

Northwood Centre, 1940 North Monroe Street, Suite 60, Tallahassee, Florida

32399-0792, and by filing the filing fee and one copy of the Notice of Appeal

with the District Court of Appeal within thirty (30) days of the effective date

of this Order.

This Order shall become effective upon filing with the Clerk of the

Department of Business and Professional Regulation.

DONE AND ORDERED this 26th day of January, 1995.

_____________________

ANDREA SERRAES, Chair

Construction Industry

Licensing Board

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order

has been provided via certified mail to Joseph W. Kaminsky, 8201 Cassia Trail,

Tamarac, Florida 33321 and via U.S. Mail to Peter Mineo, Esquire, 8220 State

Road 84, Ft. Lauderdale, FL 33324 and to the Board Clerk, Department of

Business and Professional Regulation and its counsel, Northwood Centre, 1940

North Monroe Street, Suite 60, Tallahassee, Florida 32399-0792 this 30th day of

January, 1995.

_____________________

DONNA C. KIRK

Deputy Agency Clerk