03-002420PL Department Of Business And Professional Regulation, Construction Industry Licensing Board vs. Edward Midgett Status: Closed Recommended Order on Tuesday, October 28, 2003.

Summary: Recommended that contractor, who took $70,000, did not build the house, and did not return the money, have his license revoked, pay restitution, costs, and be fined $5,000.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

CONSTRUCTION INDUSTRY LICENSING )

BOARD, )

)

Petitioner, )

)

vs. ) Case No. 03 - 2420PL

)

EDWARD MIDGETT, )

)

Respondent. )

)

RECOMMENDED ORDER

Administrative Law Judge (ALJ) Daniel Manry conducted the

administrative hearing of this case on August 26, 2003, in Fort

Myers, Florida, on behalf of the Division of Administrative

Hearings (DOAH).

AP PEARANCES

For Petitioner: Kimberly Clark Menchion, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

For Re spondent: Darrin R. Schutt, Esquire

Seeman & Schutt, P.A.

1105 Cape Coral Parkway, East

Suite C

Cape Coral, Florida 33904

STATEMENT OF THE ISSUE

The issue is whether Respondent violat ed Subsections

489.129(1)(g), (i), (j), and (m), Florida Statutes (2001), by

allegedly engaging in financial mismanagement, abandoning a

construction project, engaging in misconduct or being

incompetent, and failing to disclose the rights of the consumer

i n a contract. (Statutory references are to Florida Statutes

(2001).)

PRELIMINARY STATEMENT

On or about July 1, 2003, Petitioner filed an

Administrative Complaint against Respondent. Respondent

requested an administrative hearing. Petitioner referred the

matter to DOAH to conduct the hearing.

At the hearing, Petitioner offered the testimony of three

witnesses and submitted eight exhibits for admission into

evidence. Respondent testified and submitted three exhibits for

admission into evidence.

The iden tity of the witnesses and exhibits, and any

attendant rulings, are set forth in the Transcript of the

hearing filed with DOAH on September 23, 2003. Petitioner

timely filed its Proposed Recommended Order (PRO) on October 1,

2003. Respondent did not file a PRO.

FINDINGS OF FACT

1. On July 18, 1984, the Construction Industry Licensing

Board (the Board) licensed Respondent as a Florida State

Certified General Contractor pursuant to license number CG

C028520. Respondent registered with the Board as doing b usiness

in the name of "Midgett Development Inc." (Midgett Development).

2. Respondent conducted business as Midgett Development in

2001. In 2001, Respondent also conducted business as a licensed

real estate broker through Sundial Group Enterprises, Inc .

(Sundial).

3. On February 20, 2001, Respondent executed a contract

with Ms. Linda Luck (Luck) requiring Midgett Development to

build a residential home on a vacant lot located at 1510

Northeast 11th Street, Cape Coral, Florida, that Sundial was to

purch ase from a third party (the contract). The contract

identifies Midgett Development as the contractor and Sundial as

the purchaser of the lot.

4. The contract violates Subsection 489.129(1)(i). The

contract does not contain a written statement explaining the

consumer rights to which Luck is entitled under the Construction

Industry Recovery Fund.

5. The contract requires the contractor to use its best

efforts to deliver the completed residence "on or about 120

days" from the start of construction. The start of construction

is defined as the day footings are poured; or the day rough

plumbing is begun if the contractor uses monolithic footings and

slab. The contract provides that time is of the essence.

6. The contract price is $70,000.00 and pays the cost of

purchasing the lot and the cost of constructing the residence.

The contract requires Luck to pay $20,000 at the signing of the

contract and an additional $50,000 at the closing for the

purchase of the lot.

7. Luck paid Midgett Development th e total contract price

on February 20, 2001. Luck issued two separate checks to

Midgett Development for $20,000 and $50,000. Each check is

dated February 20, 2001.

8. Sundial closed on the purchase of the lot and deducted

a buyer's real estate commissio n from the closing proceeds.

Sundial or Respondent took title to the lot. Respondent

testified that he did not apply for the building permit until he

had clear title to the lot. The closing date for the lot

acquisition is not in evidence.

9. Responde nt and Midgett Development failed to begin

construction of the residence within 90 days of the date of the

contract within the meaning of Section 489.129(1)(j).

Respondent applied for a building permit from the City of Cape

Coral, Florida (Cape Coral) on January 10, 2002, approximately

324 days after executing the contract.

10. Respondent provided no credible and persuasive

explanation for his delay in applying for a permit. On direct

examination, Respondent testified that he expended $19,000 of

the $7 0,000 shortly after he executed the contract, in relevant

part, to purchase the lot. Respondent later testified that he

did not apply for a building permit before January 10, 2002,

because he did not have clear title to the lot before that date.

Responde nt's testimony is not supported by other evidence and is

neither credible nor persuasive.

11. Cape Coral issued a building permit for the residence

on March 11, 2002, approximately 394 days after Respondent

executed the contract. By May 2002, approxima tely 80 days after

receiving the building permit, no evidence of construction

activity could be observed on the lot. By July 30, 2002,

approximately 533 days after executing the contract, Respondent

and Midgett Development "began construction," as that ph rase is

defined in the contract. On July 30, 2002, Cape Coral issued

favorable foundation and plumbing inspections.

12. Respondent and Midgett Development abandoned the

construction project while each was under contract as a

contractor within the meani ng of Subsection 489.129(1)(j).

Assuming arguendo that Respondent and Midgett Development had

legitimate reasons for not beginning construction prior to

July 30, 2002, Respondent and Midgett Development abandoned the

construction project on October 30, 20 02, approximately 90 days

after July 30, 2002, without just cause, and without notice to

Luck. After July 30, 2002, Respondent and Midgett Development

did not engage in any further construction activity, and Cape

Coral rescinded the inspection approval.

13. When Respondent and Midgett Development abandoned the

construction project, they committed mismanagement and

misconduct in the practice of contracting within the meaning of

Subsection 489.129(1)(g)2. At the time Respondent and Midgett

Development aba ndoned the project, the percentage of completion

was less than the percentage of the total contract price paid by

Luck. Respondent and Midgett Development caused financial harm

to Luck. As of the date of hearing, Respondent and Midgett

Development had no t completed the project and had not refunded

any of the money paid to them.

14. Respondent provided no credible and persuasive

explanation for the failure to either construct the residence or

refund the money paid by Luck. Respondent's testimony that L uck

requested Respondent to stop construction is not supported by

other evidence, including Luck's testimony. Luck's testimony is

credible and persuasive.

15. If it were found that Luck asked Respondent not to

complete construction, the purported reques t is not material to

this proceeding. Respondent began construction on July 30,

2002. Respondent testified that Luck asked Respondent on

April 1, 3, and 12, 2003, not to complete construction.

Respondent had ample time between July 30, 2002, and April 1 ,

2003, to complete construction. He also had ample time between

February 20, 2001, and July 30, 2003, to complete construction.

16. Respondent and Midgett Development misallocated funds

entrusted to them by Luck within the meaning of Subsection

489.129 (1)(m). Neither Respondent nor Midgett Development has

reimbursed Luck or paid restitution to her.

17. Between November 15, 2002, and August 18, 2003,

Respondent paid approximately $13,074 to third parties for

living expenses incurred by Luck, incl uding rent, utilities, and

similar expenses. Those amounts do not constitute restitution

or reimbursement of part of the $70,000 paid by Luck for the

construction of her residence. Luck paid Respondent $70,000 to

build a house and not to pay her living e xpenses.

18. Luck is a single parent and would have been evicted

and "out on the street" unless Respondent paid her living

expenses. Luck was unable to pay her living expenses because

Respondent had $70,000 of Luck's money. The payments made by

Respo ndent may, or may not, be treated by the circuit court as a

set off against a judgment obtained by Luck in circuit court.

That determination, however, is beyond the scope of this

proceeding.

19. Respondent testified that he spent another $19,000 for

Luck . However, Respondent expended most of that sum purchasing

a lot owned either by Sundial or Midgett Development, earning a

commission for Sundial, and constructing some improvements on

the lot. None of that money is restitution or reimbursement to

Luck.

20. Petitioner previously disciplined Respondent for

violations of Chapter 489 in Department of Business and

Professional Regulation Case Numbers 200003354 and 200108551.

Petitioner conducted each matter as an informal hearing before

the agency. In the former case, Petitioner and Respondent

entered into a written Stipulation on October 29, 2001.

Respondent agreed to satisfy a civil judgment against him but

neither admitted nor denied the allegations against him. In the

latter case, Petitioner entered a default judgment against

Respondent on March 4, 2003, for failure to satisfy another

civil judgment against Respondent and placed Respondent on

probation for two years.

21. Petitioner has incurred investigative costs in the

instant proceeding that exclu de costs associated with the time

expended by attorneys for Petitioner (investigative costs). The

total investigative costs incurred by Petitioner are $1,429.61.

CONCLUSIONS OF LAW

22. DOAH has jurisdiction over the parties and subject

matter of this p roceeding. Sections 120.569 and 120.57, Florida

Statutes (2003). DOAH provided adequate notice of the

administrative hearing.

23. Petitioner has the burden of proof in this proceeding.

Petitioner must show by clear and convincing evidence that

Responde nt committed the acts alleged in the Administrative

Complaint and the reasonableness of any proposed penalty.

Section 120.57(1)(h), Florida Statutes (2003); Department of

Banking and Finance v. Osborne Stern and Co. , 670 So. 2d 932

(Fla. 1996); Ferris v. Turlington , 510 So. 2d. 292 (Fla. 1987).

24. Petitioner satisfied its burden of proof. For reasons

stated in the Findings of Fact and incorporated here by

reference, Petitioner showed by clear and convincing evidence

that Respondent and Midgett Developme nt violated Subsections

489.129(1)(g)2, (j), and (m).

25. Subsection 489.129(1) authorizes the Board to impose a

range of penalties for the violations committed by Respondent

and Midgett Development. The penalties include revocation,

administrative fi nes, and restitution.

26. Florida Administrative Code Rules 61G4 - 17.001, 17.002,

and 17.003 authorize Petitioner to consider certain aggravating

or mitigating factors in determining the appropriate penalty in

this case. Petitioner proposes a penalty th at includes

revocation of all licenses and registrations, a requirement for

restitution to Luck, the imposition of an administrative fine of

$5,000 for each of the violations committed by Respondent and

Midgett Development, and an award of investigation co sts.

27. The aggravating and mitigating factors evidenced in

this case support a penalty that includes revocation,

restitution, and an award of investigative costs. However, a

single administrative fine of $5,000 is appropriate because all

of the viola tions arose from the same act or omission.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of

law, it is

RECOMMENDED that Petitioner enter a Final Order finding

that Respondent and Midgett Development are guilty of the

violations a lleged in the Administrative Complaint; revoking the

license and registration of Respondent and Midgett Development;

imposing an administrative fine of $5,000; and ordering

Respondent and Midgett Development to make full restitution to

Luck and to pay inve stigative costs in the amount of $1,429.61.

DONE AND ENTERED this 28th day of October, 2003, in

Tallahassee, Leon County, Florida.

S

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto B uilding

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 28th day of October, 2003.

COPIES FURNIS HED :

Kimberly Clark Menchion, Esquire

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Darrin R. Schutt, Esquire

Seeman & Schutt, P.A.

1105 Cape Coral Parkway, East

Suite C

Cape Coral, Florida 33904

Nancy P. Campiglia, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Tim Vaccaro, Executive Director

Construction Industry Licensing Board

Departmen t of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Reco mmended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.