03-001993PL Department Of Business And Professional Regulation, Construction Industry Licensing Board vs. Mike H. Kargar Status: Closed Recommended Order on Friday, August 22, 2003.

Summary: Pet. failed to apply for a certificate of authority through a qualifying agent; failed to include a written statement in contract about Construction Industry Recovery Fund; and acted under name not on license. Fine and issuance of notice of noncompliance.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

CONSTRUCTION INDUSTRY )

LICENSING BOARD, )

)

Petitioner, )

)

vs. ) Case No. 03 - 1993PL

)

MIKE H. KARGAR, )

)

Respondent. )

_________________ _______________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held on July 18,

2003, by video teleconference in Tallahassee and Daytona

Beach, Florida, before the Division of Administrative Hearings

by its designated Administrative Law Judge, Barbara J. Staros.

APPEARANCES

For Petitioner: Brian A. Higgins, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

For Respondent: Barry E. Hughes, Esquire

2001 South Ridgewood Avenue

South Daytona, Florida 32119

STATEMENT OF THE ISSUE

At issue is whet her Respondent committed the offenses set

forth in the Administrative Complaint and, if so, what penalty

should be imposed.

PRELIMINARY STATEMENT

Petitioner, Department of Business and Professional

Regulation, Construction Industry Licensing Board

(Depa rtment), filed an Administrative Complaint on June 7,

2002, which contained four counts of professional violations

against Respondent, Mike H. Kargar. Specifically, the

Department charged Respondent with violations of Subsections

489.129(1)(f), (i) and (m ), Florida Statutes, by acting in the

capacity of a contractor under a certificate or registration

issued except in the name of the certificate - holder or

registrant as set forth on an issued certificate or

registration; by failing to include in a contract a written

statement explaining the consumer's rights under the

Construction Industries Recovery Fund as required by Section

489.1425, Florida Statutes; by failing to apply for a

certificate of authority through a qualifying agent and under

a fictitious nam e as required by Section 489.119(2), Florida

Statutes; and by committing incompetency or misconduct in the

practice of contracting.

Respondent disputed the allegations of the Administrative

Complaint and requested an administrative hearing. The case

was referred to the Division of Administrative Hearings on or

about May 28, 2003. A formal hearing was set for July 18,

2003.

At hearing, Petitioner presented the testimony of Scott

Steger and Richard Kushner. Petitioner's Exhibits numbered 1

through 9 we re admitted into evidence.

Respondent presented the testimony of Robert Fleming and

testified on his own behalf. Respondent's Exhibits numbered 2

through 4 were admitted into evidence. 1/

A Transcript, consisting of one volume, was filed on

July 31, 20 03. On August 11, 2003, the parties timely filed

Proposed Recommended Orders which have been considered in the

preparation of this Recommended Order. All citations are to

Florida Statutes (1999) unless otherwise indicated.

FINDINGS OF FACT

1. Petitio ner, the Department, is the state agency

charged with the duty and responsibility of regulating the

practice of contracting pursuant to Chapters 20, 455 and 489.

2. At all times material to the allegations of the

Administrative Complaint, Mike H. Kargar, d/b/a Kargar

Construction, Inc., was licensed as a Florida State Certified

Building Contractor and a Florida State Certified Pool/Spa

Contractor, having been issued license numbers CBC 37867 and

CPC 52530 respectively. His licensure status for each licens e

is designated as "Current, Active."

3. The Department's records establish that at no time

material hereto did Kargar Construction apply for or obtain a

Certificate of Authority as a Contractor Qualified Business in

the State of Florida.

4. On or about July 14, 1999, Respondent, doing business

as Premier Pools, entered into a contract with Ronald and Gina

Steger (the Stegers) for construction of a residential

swimming pool to be located at 466 Champagne Circle, Port

Orange, Florida. The contract price w as $26,469.00.

5. Respondent was paid in full by the Stegers for the

construction of the swimming pool at their residence.

6. While Respondent verbally informed Mr. Steger about

the Construction Industries Recovery Fund, the contract does

not contain a written statement explaining the consumer's

rights under the Construction Industries Recovery Fund.

7. Respondent has constructed thousands of residential

pools during his career. Respondent proceeded with the

construction of the Stegers' pool in the sam e manner as with

all other pools he constructed. That is, he reviewed the

contract documents, visited the job site to inspect the site

during the various stages of construction, and was in charge

of scheduling. As is his typical practice, Respondent also

had superintendents who oversaw the project and subcontractors

who performed most of the actual work on the excavation and

construction of the pool.

8. Respondent visited the Stegers' job site at least

twice. He went to the pool site before the pool was "shot."

During that visit, he did not observe anything that raised

concerns regarding the soil conditions that existed at the

Steger residence. He inspected the Stegers' job site after

the shell was poured and did not observe any problems. He

also obse rved the control joints for the concrete for the pool

deck. The spacing of the control joints at the Stegers' job

site was the same as his company usually utilizes in

constructing pool decks.

9. Robert Fleming is the owner/operator of Fleming

Excavating, which is in the business of excavating for

swimming pools. He has been in the business of excavating

pools for about ten years and has excavated between 5,000 and

6,000 pools. He and persons who work for him performed the

excavation of the Stegers' pool .

10. As is typical on a pool excavation job, Mr. Fleming

performed what he refers to as "LDS" on the Stegers' pool.

That is, layout, dig, steel, and be ready for inspection. He

staked out the pool, determining its shape, then excavated the

dirt. Aft er the dirt was excavated, he and his workers put in

the steel for inspection.

11. In digging the Stegers' pool, Mr. Fleming did not

encounter any unusual subsurface soil conditions to give him

any indication that there would be problems for the pool in

t he future.

12. About two weeks after the project was completed,

Mr. Steger observed what he perceived to be a half inch

rotation of the pool shell in the ground. When the pool was

initially filled with water, the water level followed the

grout line of th e tile around the pool. After a couple of

weeks, the water level against the pool tile furthest from the

home was at a different level than the tile toward the area of

the pool closest to the home. This was reported to

Respondent. Mr. Steger then notice d a crack in the pool deck

on the backside of the pool. He described the shape of the

initial crack to be the same shape as the backside of the pool

shell in the decking. Other cracks formed. One is evident

where pieces of tile around the pool shell hav e come off at

the place where the crack in the pool deck meets the pool

shell. The cracking is all on the deck, not in the pool

itself.

13. A representative of Respondent's company went to the

Stegers' home in March of 2000 and documented on a warranty

f orm as follows:

Southwest deck, [less than] 1/32 separation

around the perimeter south of beam.

Northwest near expansion tile needs to be

regrout. Watch for further expansion

northeast. Near expansion tile needs to be

regrout. Watch for further expans ion.

14. Between December 1999 and March 2000, Mr. Steger

made two other requests for warranty work. These conditions

were corrected by Respondent and signed off as satisfactorily

completed by Mr. Steger.

15. Sometime in the year 2000, Respondent bec ame aware

of the cracking problems in the Stegers' deck. He went to the

Stegers' home and met with Mr. Steger. He observed that the

cracks were in a circular type of pattern following the pool

shape.

16. Respondent offered to repair the deck cracks by "v -

ing" out the cracks and inserting a urethane 500 product to

stop the cracks from coming through. Once that process was

completed, Respondent proposed that he would then "respray and

re - acrylic the affected area of the deck." Respondent has

used this process numerous times to cover cracks in decks, and

once it is used, the cracks do not show.

17. Mr. Steger did not agree to Respondent's proposal to

repair the cracking of the deck area as illustrated by his

testimony at hearing:

Mr. Kargar came out and told me that he

would, in fact, grind out the concrete in

the cracks themselves, fill them in with

some sort of epoxy substance in order to

mask the cracking. However, that does not

address the original problem of the pool

shell shifting and the deck moving away

from the pool. So, no, I did not accept

that as a solution to the problem.

18. Richard Kushner is a civil engineer with a

concentration in geotechnical engineering and construction

engineering. He works for Universal Engineering Science

(Universal). Mr. Steger called Universal which conducted an

investigation as to why the pool deck was cracking.

19. A field representative from Universal went to the

Stegers' home and performed four manual auger borings into the

soil to test the type and condition of the soil under the pool

deck, ran density and compaction tests to see how tight the

soils were underneath the pool deck, and observed the cracking

and the cracking patterns in the concrete. Mr. Kushner did

not personally go to the Stegers' a s it is customary in the

field of geotechnical and construction engineering to review

data, do whatever analysis is necessary, and come to a

conclusion using an investigative report.

20. Regarding the cause of the pool deck cracking,

Mr. Kushner had three concerns: the compaction of the soil

underneath the concrete slab was less than 90 percent, whereas

the industry standard is 95 percent; evidence of wood rot was

found at one of the auger borings, indicating that the

original soils were not well stripped and cleared of debris,

such as sticks and roots; and insufficient spacing of control

joints in the concrete. Mr. Kushner concluded that the

contractor and subcontractors who constructed the pool deck

were responsible for the cracking in the pool deck.

21 . Mr. Kushner acknowledged that two of the three

concerns, i.e. , the soil compaction and the evidence of

organic debris, are circumstances that may cause future

problems but were not the cause of the current problems with

the deck cracking.

22. Mr. Kushn er also acknowledged that the pool cracking

is a problem which is cosmetic or aesthetic in nature and that

the cracks in the pool deck are not structural problems.

23. Universal's investigation and Mr. Kushner's report

relate exclusively to the pool dec k, not to the pool shell or

the subsoil conditions under the pool shell. Mr. Kushner was

not aware when he wrote the report relied upon by Petitioner

that there was an issue regarding whether the pool shell was

shifting; was not involved in any discussion s about the pool

shell; and was not aware that the cracks in the pool deck

follow the shape of the pool.

24. Mr. Kushner acknowledged that any shifting of the

pool shell could be caused by soil conditions underneath the

pool shell and could be the cause of deck cracking that

followed the shape of the pool. However, the investigation

conducted by Universal and his report were exclusively related

to the cracking of the pool deck and did not examine anything

regarding the pool shell itself.

25. As of Jul y 18, 2003, the Department's costs of

investigation and prosecution, excluding legal costs, totaled

$384.63.

CONCLUSIONS OF LAW

26. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter in this case.

Sections 120.5 69, 120.57(1), and 120.60(5), Florida Statutes

(2002).

27. Petitioner has the burden of proving by clear and

convincing evidence the specific allegations of the

Administrative Complaint. See Ferris v. Turlington , 510 So.

2d 292 (Fla. 1987); D epartment of Banking and Finance v.

Osborne Stern & Co. , 670 So. 2d 932 (Fla. 1996).

28. The clear and convincing standard has been described

as follows:

[C]lear and convincing evidence requires

that the evidence must be found to be

credible; the facts t o which the witnesses

testify must be distinctly remembered; the

evidence must be precise and explicit and

the witnesses must be lacking in confusion

as to the facts in issue. The evidence

must be of such weight that it produces in

the mind of the trier of fact the firm

belief of conviction, without hesitancy, as

to the truth of the allegations sought to

be established.

Evans Packing Co. v. Department of Agriculture and Consumer

Services , 550 So. 2d 112, 116, fn. 5 (Fla. 1st DCA 1989)

quoting Slomowitz v. Walker , 429 So. 2d 797, 800 (Fla. 4th DCA

1983).

29. Section 489.129(1) reads in pertinent part as

follows:

(1) The board may take any of the

following actions against any

certificateholder or registrant: place on

probation or reprimand the licensee,

revoke, suspend, or deny the issuance or

renewal of the certificate, registration,

or certificate of authority, require

financial restitution to a consumer for

financial harm directly related to a

violation of a provision of this part,

impose an administr ative fine not to exceed

$5,000 per violation, require continuing

education, or assess costs associated with

investigation and prosecution, if the

contractor, financially responsible

officer, or business organization for which

the contractor is a primary q ualifying

agent, a financially responsible officer,

or a secondary qualifying agent responsible

under s. 489.1195 is found guilty of any of

the following acts:

* * *

(f) Acting in the capacity of a contractor

under any certificate or registration

issue d hereunder except in the name of the

certificateholder or registrant as set

forth on the issued certificate or

registration, or in accordance with the

personnel of the certificateholder or

registrant as set forth in the application

for the certificate or registration, or as

later changed as provided in this part.

* * *

(i) Failing in any material respect to

comply with the provisions of this part

or violating a rule or lawful order of

the board.

(m) Committing incompetency or misconduc t

in the practice of contracting.

30. Section 489.119 reads in pertinent part as follows:

489.119 Business organizations; qualifying

agents. --

* * *

(2) If the applicant proposes to engage in

contracting as a business organization,

including any partnership, corporation,

business trust, or other legal entity, or

in any name other than the applicant's

legal name or a fictitious name where the

applicant is doing business as a sole

proprietorship, the business organization

must apply for a certifica te of authority

through a qualifying agent and under the

fictitious name, if any.

* * *

(6)(e) The board shall issue a notice of

noncompliance for the first offense, and

may assess a fine or issue a citation for

failure to correct the offense within 3 0

days or for any subsequent offense, to any

contractor or business organization that

fails to include the certification,

registration, or certificate of authority

number as required by this part when

submitting an advertisement for

publication, broadcast, or printing or

fails to display the certification,

registration, or certificate of authority

number as required by this part.

31. Section 489.1425 reads in pertinent part as follows:

489.1425 Duty of contractor to notify

residential property owner of recovery

fund. --

(1) Any agreement or contract for repair,

restoration, improvement, or construction

to residential real property must contain a

written statement explaining the consumer's

rights under the Construction Industries

Recovery Fund, excep t where the value of

all labor and materials does not exceed

$2,500. . . .

* * *

(2)(a) Upon findings a first violation of

subsection (1), the board may fine the

contractor up to $500, and the moneys must

be deposited into the Construction

Industri es Recovery Fund.

32. The contract entered into between Respondent and the

Stegers reads in pertinent part as follows:

(8) LIMITED WARRANTY: Contractor agrees

to substantially complete the work

contracted for in a workmanlike manner.

Any warranty h ereinafter described is

strictly limited in the manner set forth. .

. .

(A) LIMITED STRUCTURAL WARRANTY: The pool

structural shell is warranted not to leak

due to cracking for a lifetime, so long as

the original owner resides at the place of

construct ion. This limited structural

warranty does not extend to or cover any

loss or damage to the pool shell due to

lack of maintenance, soil conditions, soil

settlement, damage due to or caused in

whole or inpart by other construction at

the site or in the are a, or an Act of God

or natural phenomenon. . . .

* * *

(C) LIMITED EQUIPMENT AND MATERIAL

INSTALLATION WARRANTY: Contractor warrants

the tile, electrical and plumbing

installation and any appurtenant structures

or equipment pursuant to the Contract to be

free from defects in material or

workmanship under normal use and service

for a period of two (2) years from date of

original chlorinating of the pool; . . .

Contractor warrants the pool deck slab to

be free from defects of material and

workmanship and bondage under normal use

and service for two

(2) years from the date of initial

chlorinating of the pool. Owner

understands that the pool slab will crack

due to settling and/or weather changes.

Contractor does not warrant either

expressly or impliedly any cracks in the

pool slab of one quarter (1/4") inch width

or less so long as no substantial disparity

of elevation exists and then only in the

event of defects in material or

workmanship. This limited warranty does

not extend to or cover any loss or da mage

due to or caused in whole or in party by

lack of maintenance, soil conditions, soil

settlement, other construction at the site

or in the area, or any Act of God or

natural phenomenon.

33. The Administrative Complaint charges Respondent with

viol ating Section 489.129(1)(f) by acting in the capacity of a

contractor under any certificate or registration except in the

name of the certificate holder or registrant as set forth on

the issued certificate or registration. As Respondent was

licensed as Mi ke H. Kargar, d/b/a Kargar Construction Inc.,

and yet acted in the capacity of a contractor through Premier

Pools, Petitioner met its burden that Respondent violated this

provision.

34. The Administrative Complaint charges Respondent with

violating Section 489.129(1)(i) by failing in any material

respect to comply with the applicable statutes and rules by

failing to apply for a certificate of authority through a

qualifying agent und under a fictitious name as required by

Section 489.119(2). As Respondent d id not apply for a

certificate of authority through a qualifying agent,

Petitioner met its burden that Respondent violated this

provision.

35. The Administrative Complaint charges Respondent with

violating Section 489.129(1)(i) by failing in any material

respect to comply with applicable statutes and rules by

failing to include in the contract with the Stegers a written

statement explaining the consumer's rights under the

Construction Industries Recovery Fund as required by Section

489.1425. Respondent d id not include any such written

statement in the contract with the Stegers. Petitioner's oral

statement to Mr. Steger gave the Stegers actual notice of this

provision but does not comply with the statute's requirement.

Accordingly, Petitioner has met its burden that Respondent

violated this provision.

36. The Administrative Complaint charges Respondent with

violating Section 489.129(1)(m) by committing incompetency or

misconduct in the practice of contracting. Petitioner has not

met its burden of proof regarding this charge. The evidence

presented does not clearly and convincingly establish that the

cracking of the pool deck was due to incompetency or

misconduct of Respondent. The complainant firmly believes

that the pool shell shifted. Petitioner's e xpert witness did

not undertake any examination of whether or not the pool shell

shifted and acknowledged that any such shifting could have

resulted in the pool deck cracking. Moreover, Respondent

proposed a method of repairing the deck as contemplated in

paragraph 8 of the contract, but this proposal was rejected.

37. Regarding Respondent's failure to apply for a

certificate of authority, Section 489.119(6) specifies that

the board shall issue a notice of noncompliance for the first

offense, and may as sess a fine or issue a citation for failure

to correct the offense within 30 days. Accordingly, this

appearing from the record to be Respondent's first offense,

the only appropriate penalty is the issuance of a notice of

noncompliance by the Construction Industry Licensing Board.

38. Section 489.1425(2) specifies that upon finding a

first violation of failure to include a written statement

explaining

the consumer's rights under the Construction Industries

Recovery Fund, the Board may fine the contract or up to

$500.00. Rule 61G4 - 17.001(10)(j), Florida Administrative

Code, specifies a range of $100.00 to $500.00 for a first

offense. Rule 61G4 - 17.002, Florida Administrative Code,

allows for consideration of mitigating circumstances.

Respondent's oral r epresentation to Mr. Steger regarding the

Construction Industries Recovery Fund constitutes mitigation.

Accordingly, a fine of $100.00 is appropriate in this

instance.

39. Rule 61G4 - 17.001(7), Florida Administrative Code,

specifies the penalty range for a repeat violation of failure

to qualify a firm and/or acting under a name not on the

license is $750.00 to $1,5000.00 fine. However, the rule does

not reference any penalty for a first violation. There being

no evidence in the record of any other previo us violation,

imposition of a fine is inappropriate here.

40. The Department seeks probation for five years,

imposition of fines in the total amount of $3,000.00, and

restitution. As the charge of incompetency or misconduct was

not proven, any term of pr obation is not warranted from the

offenses that were proven. The fines sought by the Department

are not supported by the applicable statutes and rules. As to

restitution, there is no evidence in the record that the

Stegers have paid any moneys to another pool company for

repairs. 2/

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions

of Law set forth herein, it is

RECOMMENDED:

That the Construction Industry Licensing Board enter a

final order imposing a $100.00 fine to be depo sited in the

Construction Industries Recovery Fund for a violation of

Section 489.1425, issue a notice of noncompliance pursuant to

Section 489.119(6)(e), and require Respondent to pay $384.63

in costs of investigation and prosecution.

DONE AND ENTERED th is 22nd day of August, 2003, in

Tallahassee, Leon County, Florida.

S

___________________________________

BARBARA J. STAROS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 22nd day of August, 2003.

ENDNOTES

1/ Respondent's Exhibit numbered 1 was marked for

identification but not offered into evidence.

2/ The Department's Exhibit numbered 8 regarding a proposal

for repairs by another pool company was ad mitted into evidence

pursuant to Section 120.569(2)(g). However, it is hearsay and

is not sufficient in itself to support a finding of fact as

contemplated by Section 120.57(1)(c).

COPIES FURNISHED:

Brian A. Higgins, Esquire

Departm ent of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Barry E. Hughes, Esquire

2001 South Ridgewood Avenue

South Daytona, Florida 32119

Robert Crabill, Executive Director

Construction Indu stry Licensing Board

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Stre et

Tallahassee, Florida 32399 - 2202

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any exceptions

to this recommended order should be fi led with the agency that

will issue the final order in this case.