98-004610 Construction Industry Licensing Board vs. Richard J. Kosalka Status: Closed Recommended Order on Wednesday, September 29, 1999.

Summary: Licensed general contractor guilty of acting in the capacity of a contractor in a name not on his license and engaging in contracting activity beyond that permitted by his license.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

CONSTRUCTION INDUSTRY LICENSING )

BOARD, )

)

Petitioner, )

)

vs. ) Case No. 98-4610

)

RICHARD J. KOSALKA, )

)

Respondent. )

_________________________________)

RECOMMENDED ORDER

Pursuant to notice, a hearing was conducted in this case in

accordance with the provisions of Section 120.57(1), Florida

Statutes, on April 9 and 23, 1999, by video teleconference at

sites in West Palm Beach and Tallahassee, Florida, before Stuart

M. Lerner, a duly-designated Administrative Law Judge of the

Division of Administrative Hearings.

APPEARANCES

For Petitioner: Theodore R. Gay, Esquire

Department of Business and

Professional Regulation

Ruth Rohde Building

401 Northwest Second Avenue, Suite N-607

Miami, Florida 33128

For Respondent: Richard Kosalka, pro se 1/

150 Southwest Port St. Lucie Boulevard

Port St. Lucie, Florida 34984

STATEMENT OF THE ISSUES

1. Whether Respondent committed the violations alleged in

the Administrative Complaint?

2. If so, what punitive action should be taken against

Respondent?

PRELIMINARY STATEMENT

On May 26, 1998, the Department of Business and Professional

Regulation (Department) issued an 11-count Administrative

Complaint in which it alleged that Respondent violated: Section

489.129(1)(j), Florida Statutes, "in that he held himself out to

be and/or acted as a roofing contractor in the context of his

contractual relationship with [Rita] Maciuba," contrary to the

provisions of Section 489.113(3)(g), Florida Statutes, "and

related provisions of Part I of Chapter 489, Florida Statutes"

(Count I); Section 489.129(1)(g), Florida Statutes, "by acting in

the capacity of a contractor under any certificate or

registration issued under Chapter 489 except in the name of the

certificateholder or registrant as set forth on the issued

certificate or registration in the context of his contractual

relationship with [Rita] Maciuba" (Count II); Section

489.129(1)(h)1, Florida Statutes, "by committing financial

mismanagement or misconduct in the context of his contractual

relationship with [Rita] Maciuba" (Count III); Section

489.129(1)(j), Florida Statutes, "in that he held himself out to

be and/or acted as a roofing contractor in the context of his

contractual relationship with [ Larkin] Dunbar," contrary to the

provisions of Section 489.113(3)(g), Florida Statutes, "and

related provisions of Part I of Chapter 489, Florida Statutes"

(Count IV); Section 489.129(1)(g), Florida Statutes, "by acting

in the capacity of a contractor under any certificate or

registration issued under Chapter 489 except in the name of the

certificateholder or registrant as set forth on the issued

certificate or registration in the context of his contractual

relationship with [ Larkin] Dunbar" (Count V); Section

489.129(1)(j), Florida Statutes, "in that he held himself out to

be a roofing contractor in the context [of] . . . 'yellow pages'

advertisements," contrary to the provisions of Section

489.113(3)(g), Florida Statutes, "and related provisions of Part

I of Chapter 489, Florida Statutes" (Count VI); Section

489.129(1)(g), Florida Statutes, "by acting in the capacity of a

contractor under any certificate or registration issued under

Chapter 489 except in the name of the certificateholder or

registrant as set forth on the issued certificate or registration

in the context of the above-noted 'yellow pages' advertisements"

(Count VII); Section 489.129(1)(j), Florida Statutes, "in that he

held himself out to be and/or acted as a roofing contractor in

the context of his contractual relationship with [Clara]

Masters," contrary to the provisions of Section 489.113(3)(g),

Florida Statutes, "and related provisions of Part I of Chapter

489, Florida Statutes" (Count VIII); Section 489.129(1)(g),

Florida Statutes, "by acting in the capacity of a contractor

under any certificate or registration issued under Chapter 489

except in the name of the certificateholder or registrant as set

forth on the issued certificate or registration in the context of

his contractual relationship with [Clara] Masters" (Count IX);

Section 489.129(1)(l), Florida Statutes, "by signing a statement

with respect to a project or contract falsely indicating that

payment has been made for all subcontracted work, labor and

materials, which results in financial loss to the owner,

purchaser, or contractor" (Count X); and Section 489.129(1)(h)1,

Florida Statutes, "by committing financial mismanagement or

misconduct in the context of his contractual relationship with

[Clara] Masters" (Count XI).

Respondent subsequently executed an Election of Rights form

disputing the allegations made in the Administrative Complaint.

On October 16, 1998, the matter was referred to the Division of

Administrative Hearings for the assignment of an Administrative

Law Judge to conduct a hearing on the matter pursuant to Section

120.57(1), Florida Statutes.

As noted above, the hearing was held on April 9 and 23,

1999. The following witnesses testified at the hearing: David

Harris, Rita Maciuba, Edward Garcia, Respondent, Joseph Masters,

and Larry Thomas. In addition to the testimony of these

witnesses, the following exhibits were offered and received into

evidence: Petitioner's Exhibits 1-5, 8-13, 15-23, 25-30, and 32;

and Respondent's Exhibits 1, 3-13, 15, 24-26, and 28-30.

At the conclusion of the evidentiary portion of the hearing,

the undersigned, on the record, announced that proposed

recommended orders had to be filed no later than 30 days from the

date of the filing of the complete transcript of the hearing.

The complete transcript of the hearing was filed on June 10,

1999. The deadline for the filing of proposed recommended orders

was twice extended (first to August 11, 1999, and then to August

20, 1999), upon Respondent's written requests (filed July 8,

1999, and August 11, 1999). The Department and Respondent filed

their proposed recommended orders on August 20, 1999, and August

23, 1999, respectively. These post-hearing submittals have been

carefully considered by the undersigned.

FINDINGS OF FACT

Based upon the evidence adduced at hearing, and the record

as a whole, the following findings of fact are made:

1. Respondent is now, and has been since 1981, a Florida-

licensed general contractor (holding license number CG C019787).

2. At all times material to the instant case, Respondent

has been licensed as an individual in his own name, not as a

qualifying agent 3/ or under a fictitious name.

3. At no time has Respondent been licensed in the State of

Florida as a roofing contractor or as any other type of

contractor other than a general contractor.

4. Larry Thomas is now, and has been at all times material

to the instant case, the sole owner and president of Home

Improvement Time, Inc. (HIT), a corporation that he formed in or

around December of 1995. Mr. Thomas, in naming his company,

hoped that the public, when hearing the company's name, would

associate it with the popular "Home Improvement" television

program.

5. There are not now, nor have there ever been, any other

owners, officers, or directors of the company.

6. Until late in 1998, HIT was actively engaged in the

business of soliciting home improvement work, including room

additions and the installation of roofs, hurricane shutters, and

screens. To solicit such work, HIT used telemarketers who

contacted homeowners over the telephone from HIT's office

(located in a shopping center in Jensen Beach, Florida and having

the mailing address of 867 Northeast Jensen Beach Boulevard,

Jensen Beach, Florida), and it also employed salespersons who

visited homeowners at their homes. Among the salespersons who

worked for HIT were Vince Ketchum and Bob Andrews.

7. At no time material to the instant case did HIT have a

licensed contractor serve as its certified qualifying agent. 4/

8. Mr. Thomas has never been licensed as a general

contractor. Some time after 1996, he obtained aluminum structure

and concrete contracting licenses from the City of Port St. Lucie

and from Martin County.

9. In or around January of 1996, shortly after the

formation of HIT, Respondent met with Mr. Thomas at HIT's office

and observed HIT's operations.

10. As a result of this meeting, Respondent hired HIT, on a

commission basis, to solicit home improvement work for him.

11. Respondent was the only general contractor for whom HIT

solicited business.

12. When a HIT telemarketer made contact with a prospect,

the telemarketer indicated that he or she was with HIT. If asked

who would be doing the home improvement work, the telemarketer

advised the prospect that the work would be done by Respondent.

13. If a prospect contacted by a HIT telemarketer was

interested in having home improvement work done, a HIT

salesperson was dispatched to the prospect's home.

14. Respondent provided HIT salespersons with training and

instructions as to what to do when calling on prospects.

15. On their visits to prospects' homes, the salespersons

brought with them preprinted form contracts for the prospects to

sign. These form contracts were jointly developed by Mr. Thomas

and Respondent (using, as a model, a form contract that was

published in a "Better Homes and Gardens" magazine article).

16. On the top right hand corner of these form contracts

were the words "licensed" and "insured." To the left of these

words, in large, stylized lettering, were either the words "Home

Improvement," "Home Improvement Inc.," "Home Improvement Time,

Inc.," or "Home Improvement by Richard Kosalka" (depending on the

time frame). These words were included on the form because

Respondent wanted homeowners to make the connection between him

and HIT and the television program after which HIT was named.

Underneath these words appeared the following:

667 N.E. Jensen Beach Boulevard

Jensen Beach, FL 34957

Richard Kosalka State License # CGCO19787

17. Among the provisions in the form contracts was the

clause, "This agreement subject to office approval."

18. When they returned from their sales calls, the

salespersons brought any signed contract to Mr. Thomas at HIT's

office. Depending on the nature of the work involved, Mr. Thomas

approved or disapproved the contract himself or he gave the

contract to Respondent 5/ to approve or disapprove (pursuant to

the "subject to office approval" clause in the contract). Any

contract that Respondent approved became Respondent's contract to

perform. Although he did perform some contract work himself,

most often he used subcontractors who worked under his general

supervision.

19. HIT received a commission for every approved contract

its salespersons procured for Respondent. Its commission (the

amount of which was established by agreement between Mr. Thomas

and Respondent) was included in the contract price offered to the

homeowner. Typically, payment from the homeowner was not due

until the contract work was completed. Payment was made by the

homeowner to HIT, which then paid Respondent by check in an

amount equal to the contract price minus HIT's previously

established commission.

20. In an effort to make the public aware of the services

it offered, HIT, in or around August of 1996, placed an

advertisement in the Bell South Yellow Pages for Port St. Lucie

and Stuart. In the advertisement, which was placed without

Respondent's knowledge or authorization, HIT's name and telephone

number appeared, along with a listing of home improvement

services. Among the services listed was "roofing." Appearing at

the bottom of the advertisement was the following: "Licensed &

Insured KOSALKA CGC 019787."

21. Among the homeowners who had signed the above-described

preprinted form contracts that HIT's salesperson's brought back,

for "office approval," to the HIT office in 1996 were the

following three Port St. Lucie residents: Larkin Dunbar (whose

residence was located at 114 Dorchester); Clara Masters (whose

residence was located at 246 Northeast Mainsail); and Rita

Maciuba (whose residence was located at 733 Southwest Curry

Street).

22. The Dunbar, Masters and Maciuba contracts were dated

February 19, 1996, May 28, 1996, and June 14, 1996, respectively.

23. On the top of the Dunbar contract, in large stylized

lettering, were the words "Home Improvement Inc."

24. On the top of both the Masters and Maciuba contracts,

in the same large stylized lettering, were the words "Home

Improvement by Richard Kosalka."

25. The Dunbar contract provided for the "furnish[ ing of]

the following materials, improvements, labor, and/or services"

for the price of $3,600.00: the installation of a "new fascia

and soffit system," the "repair [of the] master bedroom walls,"

the "repair [of] roof leaks," and the "paint[ ing of the] gutter

and garage door to match [the] fascia and soffit."

26. No work was performed pursuant to this contract (nor is

there any evidence that the homeowner made any payments for the

performance of such work).

27. The Masters contract was signed by Ms. Masters and

Vince Ketchum, the HIT salesperson who had negotiated with her at

her home.

28. At the time she signed the contract, Ms. Masters was

approximately 85 years of age.

29. The contract provided for the "furnish[ ing of] the

following materials, improvements, labor, and/or services":

installation of a "new roof" with "shingles to be selected by

Clara Masters" for $3,255.00; the repair and painting of the

"interior ceiling" for $627.00; and the "pressure clean[ ing] and

paint[ ing] of [the] exterior of [the] home" and the driveway for

$2,628.00.

30. After his mother had signed the contract (and before

any contract work had started), Ms. Masters' son, Joseph Masters,

who lived next door to his elderly mother and looked after her

business affairs, telephoned Respondent, who was an acquaintance

of his. Mr. Masters asked Respondent to come by his mother's

home to discuss the contract his mother had signed.

31. Respondent went to Ms. Masters' home as Mr. Masters had

requested. Upon Respondent's arrival, Mr. Masters informed

Respondent that he (Mr. Masters) and his mother wanted the roof

work to be done first.

32. Respondent and Mr. Masters then discussed the matter

further. Their discussions lead to the contract being modified

to provide that only the roof work would be done (for a price of

$3,255.00).

33. The modification was made by lining out the other work

listed in the contract, having Ms. Masters put her initials next

to the line-outs, and adding contract language to reflect that

the total contract price was $3,225.00 for the "roof only."

34. Before leaving Ms. Masters' home, Respondent told Mr.

Masters that he would have "some roofers [come] around to get the

estimate on the roof." Mr. Masters assumed that these roofers

would be subcontractors.

35. Respondent brought the modified contract back to the

HIT office.

36. The Sunday after his visit to Ms. Masters' home,

Respondent's wife suffered a stroke and was hospitalized.

Respondent remained in the hospital with his wife and stayed

there for three days.

37. David Harris is a licensed general, residential, and

roofing contractor and the owner of David Harris Construction

( DHC). He has had his roofing license (for work in Martin and

St. Lucie Counties) since 1992.

38. In 1996, and for several years prior thereto,

Respondent used Mr. Harris as a subcontractor for concrete and

roofing work (mostly on new residential construction).

39. At the time he reviewed the modified Masters contract,

Mr. Thomas was familiar with Mr. Harris and DHC. Mr. Harris used

HIT to follow up on leads generated by DHC's Yellow Pages'

advertising. Moreover, Respondent had spoken favorably to Mr.

Thomas about Mr. Harris as a roofer. Accordingly, Mr. Thomas

telephoned Mr. Harris and told him about the Masters re-roofing

project.

40. On the Monday after Respondent's wife was admitted to

the hospital, DHC workers went to Ms. Masters' home and began to

remove the old roof. A young child (around nine or ten years of

age) was on the roof with the workers. Some time later that day,

while the workers were still removing the old roof, Mr. Masters

came by his mother's house and noticed the workers and the child

on the roof. Mr. Masters was dissatisfied with the manner in

which the workers were acting and with the quality of their work.

He therefore "chased" them off the roof and told them to leave

the property. Mr. Harris was not at the site at the time the

workers (and the child) were directed to leave, but he later

telephoned Mr. Masters "want[ ing] to know what was wrong." Mr.

Masters told Mr. Harris why he had removed the workers from the

property. He further advised Mr. Harris to "not come back

anymore," explaining that he would hire another roofer to

complete the job (which he subsequently did). Mr. Masters

assured Mr. Harris that payment would be made for the work that

had been done by DHC on the roof that day, but there was no

agreement reached as to the amount of the payment.

41. A few days later, Mr. Harris telephoned Mr. Masters

again, inquiring "if he [Mr. Harris] was going to get paid." In

response to this inquiry, Mr. Masters replied that he was "going

to get with [Respondent] to figure out the amount of work that

was done" and he (Mr. Masters) would pay Mr. Harris accordingly.

42. Subsequently (some time on or after June 4, 1996), Mr.

Masters received in his mailbox a copy of an "invoice" (in an

unstamped, unsealed envelope) from DHC which read as follows:

DAVID HARRIS CONSTRUCTION

TO: Home Improvement

Date: 6/4/96

RE: 246 NE Mainsail, PSL (Masters)

DESCRIPTION : Labor & Materials 1 DAY

PRICE: $863.39

43. Thereafter, Mr. Masters telephoned Respondent and told

Respondent about the bill he had received (the amount of which

Mr. Masters thought was excessive).

44. In response to Mr. Masters' telephone call, Respondent,

on June 18, 1996, visited with Mr. Masters and his mother at the

latter's home. There, Mr. Masters showed Respondent the copy of

the "invoice" he (Mr. Masters) had received. Based upon his

knowledge of the prices that Mr. Harris typically charged,

Respondent determined that a fair price for the work that the DHC

workers had done on Ms. Masters' roof was only $480.00.

Respondent so advised Mr. Masters and then telephoned Mr. Harris

(from Ms. Masters' home) in an effort to persuade Mr. Harris to

accept that amount. Respondent and Mr. Harris, however, were

unable to reach agreement on the matter. After hanging up,

Respondent told the Masters that he and Mr. Harris "would work

something out and get it straightened out." Thereafter, at

Respondent's suggestion, Ms. Masters made out and signed a check

to "Home Improvement" in the amount of $480.00, which she gave to

Respondent, who told the Masters that he would "take care of" the

matter. In addition to giving the Masters this assurance,

Respondent also provided Ms. Masters, in exchange for the $480.00

check, a receipt marked "paid in full" and a release of lien

signed by him. In the release of lien, Respondent identified

himself as "Richard Kosalka of Home Improvement, a Florida

corporation doing business in the State of Florida."

45. Respondent delivered Ms. Masters' $480.00 check to Mr.

Thomas and asked Mr. Thomas to issue an HIT check in that same

amount payable to DHC.

46. Mr. Thomas did as he was requested by Respondent. The

$480.00 check signed by Mr. Thomas was received and deposited by

DHC.

47. Nonetheless, thereafter, on August 19, 1996, DHC filed

a claim of lien for $383.39 (the difference between $480.00 and

the amount of DHC's original invoice) on Ms. Masters' home. The

$383.39 (which DHC claimed it was owed) was never paid; however,

DHC took no action with respect to the lien and the lien expired.

48. The Maciuba contract was signed by Ms. Maciuba and Bob

Andrews, the HIT salesperson who had negotiated with her at her

home. It provided for the "furnish[ ing of] the following

materials, improvements, labor, and/or services" for the price of

$3,600.00: "Tear off existing shingles- Replace rotten facia

and roof sheets. Shingle color: Shasta white (lightest color).

4 lengths of ridge vents."

49. HIT contacted DHC to do the work described in the

contract. DHC obtained a re-roofing permit for the work on June

21, 1996.

50. DHC hired Jerry Poston to work as subcontractor on the

project. Mr. Poston and his crew worked on the project during

the period from June 21 through July 29, 1996. Mr. Harris also

made an appearance at the work site.

51. Ms. Maciuba made an initial down payment of $300.00,

which she gave to Mr. Thomas. Subsequently, after the work had

been completed, she gave Mr. Thomas three checks that were

payable to herself and which she endorsed. Two of these checks

were for $1,000.00, and the remaining check was for $800.00, for

a total payment, including the down payment she had made, of

$3,100.00, which was less than the $3,600.00 contract price. Ms.

Maciuba refused to pay any more because of the damage she claimed

her property had sustained as a result of re-roofing work.

52. On August 23, 1996, Mr. Harris filed a claim of lien on

Ms. Maciuba's home, in which he alleged that, "in accordance with

a contract with Home Improvement Time, Inc.," he had "furnished

labor, services or materials" in the amount of $2,565.00, and had

not received any payment therefor. On October 15, 1996, Mr.

Harris executed a Sworn Statement of Account acknowledging that

he was owed only $1,873.18 inasmuch as the "contractor" had made

direct payments to Mr. Harris' suppliers, thereby reducing the

amount he (Mr. Harris) was owed.

53. Ms. Maciuba, in small claims court, sought to have the

lien removed. On November 19, 1996, a mediation session was held

at which Ms. Maciuba, Mr. Harris, Mr. Thomas, and Respondent were

present. At the session, Mr. Harris agreed to remove the lien in

exchange for $1,450.00, of which amount $800.00 was to be paid by

Ms. Maciuba and the remaining $650.00 was to be paid by HIT.

That very same day, November 19, 1996, Ms. Maciuba and HIT made

these agreed-upon payments, and Mr. Harris executed and recorded

a release of lien.

54. Ms. Masters and Ms. Maciuba filed complaints that were

investigated by Edward Garcia, an investigator with the

Department.

55. As part of his investigation, Mr. Garcia spoke with

Respondent by telephone on November 7, 1996. Respondent told Mr.

Garcia that HIT was a telemarketing business owned by Mr. Thomas;

he (Respondent) hired HIT to solicit business for him; he

(Respondent) advertised as "Home Improvement" in order to "play

off the name of Home Improvement Time"; the contract with Ms.

Maciuba was for a re-roofing project and he (Respondent)

subcontracted the work to DHC; and he (Respondent) was not aware,

that he was not authorized, as a licensed general contractor, to

enter into contracts for re-roofing projects.

56. Mr. Garcia also visited HIT's office and met with Mr.

Thomas. During this meeting, Mr. Thomas signed a document

agreeing not to violate the provisions of Chapter 489, Part I,

Florida Statutes, by engaging contracting activities without an

appropriate license.

CONCLUSIONS OF LAW

57. The Department has been vested with the statutory

authority to issue licenses to those qualified applicants seeking

to engage, on a statewide basis, in the building contracting

business in the State of Florida. Section 489.115, Florida

Statutes.

58. At all times material to the instant case, the term

"contracting," as used in Chapter 489, Part I, Florida Statutes,

was defined in Section 489.105(6), Florida Statutes, as follows:

"Contracting" means, except as exempted in

this part, engaging in business as a

contractor and includes, but is not limited

to, performance of any of the acts as set

forth in subsection (3) which define types of

contractors. The attempted sale of

contracting services and the negotiation or

bid for a contract on these services also

constitutes contracting. If the services

offered require licensure or agent

qualification, the offering, negotiation for

a bid, or attempted sale of these services

requires the corresponding licensure.

However, the term "contracting" shall not

extend to an individual, partnership,

corporation, trust, or other legal entity

that offers to sell or sells completed

residences on property on which the

individual or business entity has any legal

or equitable interest, if the services of a

qualified contractor certified or registered

pursuant to the requirements of this chapter

have been or will be retained for the purpose

of constructing such residences.

59. At all times material to the instant case, subsection

(3) of Section 489.105, Florida Statutes, provided, in pertinent

part, as follows:

"Contractor" means the person who is

qualified for, and shall only be responsible

for, the project contracted for and means,

except as exempted in this part, the person

who, for compensation, undertakes to, submits

a bid to, or does himself or by others

construct, repair, alter, remodel, add to,

demolish, subtract from, or improve any

building or structure, including related

improvements to real estate, for others or

for resale to others; and whose job scope is

substantially similar to the job scope

described in one of the subsequent paragraphs

of this subsection. . . . :

(a) "General contractor" means a contractor

whose services are unlimited as to the type

of work which he may do, except as provided

in this part.

(b) "Building contractor" means a contractor

whose services are limited to construction of

commercial buildings and single-dwelling or

multiple-dwelling residential buildings,

which commercial or residential buildings do

not exceed three stories in height, and

accessory use structures in connection

therewith or a contractor whose services are

limited to remodeling, repair, or improvement

of any size building if the services do not

affect the structural members of the

building.

(c) "Residential contractor" means a

contractor whose services are limited to

construction, remodeling, repair, or

improvement of one-family, two-family, or

three-family residences not exceeding two

habitable stories above no more than one

uninhabitable story and accessory use

structures in connection therewith. . .

(e) "Roofing contractor" means a contractor

whose services are unlimited in the roofing

trade and who has the experience, knowledge,

and skill to install, maintain, repair,

alter, extend, or design, when not prohibited

by law, and use materials and items used in

the installation, maintenance, extension, and

alteration of all kinds of roofing,

waterproofing, and coating, except when

coating is not represented to protect,

repair, waterproof, stop leaks, or extend the

life of the roof. . . .

60. As a reading of the foregoing statutory definitions

reveal, the mere attempt or offer to sell contracting services

(even if it does not result in a binding contract) constitutes

"contracting" activity for which an appropriate "contractor"

license is required.

61. A business entity, like HIT or DHC, may obtain a

building contracting license, but only through a licensed

"qualifying agent." Section 489.119, Florida Statutes.

62. There are two types of "qualifying agents": "primary

qualifying agents," and "secondary qualifying agents."

63. At all times material to the instant case, "primary

qualifying agent" was defined in subsection (4) of Section

489.105, Florida Statutes, as follows:

"Primary qualifying agent" means a person who

possesses the requisite skill, knowledge, and

experience, and has the responsibility, to

supervise, direct, manage, and control the

contracting activities of the business

organization with which he is connected; who

has the responsibility to supervise, direct,

manage, and control construction activities

on a job for which he has obtained the

building permit; and whose technical and

personal qualifications have been determined

by investigation and examination as provided

in this part, as attested by the

[D] epartment.

64. At all times material to the instant case, "secondary

qualifying agent" was defined in subsection (5) of Section

489.105, Florida Statutes, as follows:

"Secondary qualifying agent" means a person

who possesses the requisite skill, knowledge,

and experience, and has the responsibility to

supervise, direct, manage, and control

construction activities on a job for which he

has obtained a permit, and whose technical

and personal qualifications have been

determined by investigation and examination

as provided in this part, as attested by the

[D] epartment.

65. The "responsibilities" of "qualifying agents" were, at

all times material to the instant case, further described in

Section 489.1195, Florida Statutes, in pertinent part, as

follows:

(1) A qualifying agent is a primary

qualifying agent unless he is a secondary

qualifying agent under this section.

(a) All primary qualifying agents for a

business organization are jointly and equally

responsible for supervision of all operations

of the business organization; for all field

work at all sites; and for financial matters,

both for the organization in general and for

each specific job.

66. Subsection (3) of Section 489.113, Florida Statutes,

imposes certain restrictions on the activities in which licensed

contractors may engage. At all times material to the instant

case, it provided, in pertinent part, as follows:

A contractor shall subcontract all

electrical, mechanical, plumbing, roofing,

sheet metal, swimming pool, and air-

conditioning work, unless such contractor

holds a state certificate or registration in

the respective trade category, however:

(a) A general, building, or residential

contractor, except as otherwise provided in

this part, shall be responsible for any

construction or alteration of a structural

component of a building or structure . . . .

(g) No general, building, or residential

contractor certified after 1973 shall act as,

hold himself out to be, or advertise himself

to be a roofing contractor unless he is

certified or registered as a roofing

contractor. . . .

67. At all times material to the instant case, subsection

(9) of Section 489.113, Florida Statutes, provided as follows:

Nothing in this part shall be construed to

prevent any contractor from acting as a prime

contractor where the majority of the work to

be performed under the contract is within the

scope of his license and from subcontracting

to other licensed contractors that remaining

work which is part of the project contracted.

68. At all times material to the instant case, the

Construction Industry Licensing Board (Board) has been authorized

to take any of the following punitive actions against a licensed

contractor if (a) an administrative complaint is filed alleging

that the contractor (or the business entity the contractor

qualified) committed any of the acts proscribed by Section

489.129(1), Florida Statutes, and (b) it is shown that the

allegations of the complaint are true: revoke or suspend the

contractor's license; place the contractor on probation;

reprimand the contractor; deny the renewal of the contractor's

license; impose an administrative fine not to exceed $5,000.00

per violation; require financial restitution to the victimized

consumer(s); require the contractor to take continuing education

courses; or assess costs associated with the Department's

investigation and prosecution. Proof greater than a mere

preponderance of the evidence must be submitted. Clear and

convincing evidence of the contractor's guilt is required. See

Department of Banking and Finance, Division of Securities and

Investor Protection v. Osborne Stern and Company , 670 So. 2d 932,

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

1987); McKinney v. Castor , 667 So. 2d 387, 388 (Fla. 1st DCA

1995); Tenbroeck v. Castor , 640 So. 2d 164, 167 (Fla. 1st DCA

1994); Nair v. Department of Business and Professional

Regulation , 654 So. 2d 205, 207 (Fla. 1st DCA 1995); Pic N' Save

v. Department of Business Regulation , 601 So. 2d 245 (Fla. 1st

DCA 1992); Munch v. Department of Professional Regulation , 592

So. 2d 1136 (Fla. 1st DCA 1992); Newberry v. Florida Department

of Law Enforcement , 585 So. 2d 500 (Fla. 3d DCA 1991); Pascale v.

Department of Insurance , 525 So. 2d 922 (Fla. 3d DCA 1988);

Section 120.57(1)(h), Florida Statutes ("Findings of fact shall

be based on a preponderance of the evidence, except in penal or

licensure disciplinary proceedings or except as otherwise

provided by statute."). "'[C] lear and convincing evidence

requires that the evidence must be found to be credible; the

facts to which the witnesses testify must be distinctly

remembered; the testimony 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 a firm belief or conviction, without

hesitancy, as to the truth of the allegations sought to be

established.'" In re Davey , 645 So. 2d 398, 404 (Fla. 1994),

quoting, with approval, from Slomowitz v. Walker , 429 So. 2d 797,

800 (Fla. 4th DCA 1983). Furthermore, the punitive action taken

against the contractor may be based only upon those offenses

specifically alleged in the administrative complaint. See

Cottrill v. Department of Insurance , 685 So. 2d 1371, 1372 (Fla.

1st DCA 1996); Chrysler v. Department of Professional Regulation ,

627 So. 2d 31 (Fla. 1st DCA 1993); Klein v. Department of

Business and Professional Regulation , 625 So. 2d 1237, 1238-39

(Fla. 2d DCA 1993); Arpayoglou v. Department of Professional

Regulation , 603 So. 2d 8 (Fla. 1st DCA 1992); Willner v.

Department of Professional Regulation, Board of Medicine , 563 So.

2d 805, 806 (Fla. 1st DCA 1992); Celaya v. Department of

Professional Regulation, Board of Medicine , 560 So. 2d 383, 384

(Fla. 3d DCA 1990); Kinney v. Department of State , 501 So. 2d

129, 133 (Fla. 5th DCA 1987); Sternberg v. Department of

Professional Regulation , 465 So. 2d 1324, 1325 (Fla. 1st DCA

1985); Hunter v. Department of Professional Regulation , 458 So.

2d 842, 844 (Fla. 2d DCA 1984).

69. The Administrative Complaint issued in the instant case

alleges that punitive action should be taken against Respondent

for violations of Section 489.129(1)(g), Florida Statutes (Counts

II, V, VII, and IX), Section 489.129(1)(h)1, Florida Statutes

(Counts III and XI), Section 489.113(3)(g), Florida Statutes, and

therefore Section 489.129(1)(j), Florida Statutes (Counts I, IV,

VI, and VIII), and Section 489.129(1)(l), Florida Statutes (Count

X), as more specifically described in the Preliminary Statement

contained in this Recommended Order.

70. In its Proposed Recommended Order, the Department

concedes that the evidence adduced at hearing was "insufficient

to sustain" the allegations made in Counts III, IV, VI, VII, X,

and XI of the Administrative Complaint. Inasmuch as both parties

are in agreement that these counts of the Administrative

Complaint should be dismissed, no further discussion on the

matter is warranted.

71. At all times material to the instant case, Section

489.129(1)(g), Florida Statutes, has authorized the Board to take

punitive action against a contractor if the contractor or the

business entity the contractor qualified is found guilty of:

Acting in the capacity of a contractor under

any certificate or registration issued

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.

72. At all times material to the instant case, Section

489.129(1)(j), Florida Statutes, has authorized the Board to take

punitive action against a contractor if the contractor or the

business entity the contractor qualified is found guilty of

"[f]ailing in any material respect to comply with the provisions

of [Part I of Section 489, Florida Statutes]," including those in

Section 489.113(3)(g), Florida Statutes, set forth above.

73. The foregoing statutory provisions are "in effect,

. . . penal statute[s] . . . This being true the[y] must be

strictly construed and no conduct is to be regarded as included

within [them] that is not reasonably proscribed by [them].

Furthermore, if there are any ambiguities included such must be

construed in favor of the . . . licensee." Lester v. Department

of Professional and Occupational Regulations , 348 So. 2d 923, 925

(Fla. 1st DCA 1977); see also Whitaker v. Department of Insurance

and Treasurer , 680 So. 2d 528, 531 (Fla. 1st DCA 1996)("Because

the statute [Section 626.954(1)(x)4, Florida Statutes] is penal

in nature, it must be strictly construed with any doubt resolved

in favor of the licensee.").

74. An examination of the evidentiary record in the instant

case reveals that the Department clearly and convincingly proved

that the violations alleged in Counts I, II, V, VIII, 6/ and IX

of the Administrative Complaint were committed either by

Respondent personally or by authorized agents acting, within the

scope of their authority, on Respondent's behalf . Punitive

action against Respondent is therefore warranted. 7/ Cf . Tampa

Sand and Material Company v. Davis , 125 So. 2d 126, 127 (Fla. 2d

DCA 1960)("The power of an agent to bind his principal may rest

on real or actual authority conferred in fact by the principal or

may be founded on apparent or ostensible authority arising when

the principal allows or causes others to believe the agent

possesses such authority, as where the principal knowingly

permits the agent to assume such authority or where the principal

by his actions or words holds the agent out as possessing it.").

75. In determining the particular punitive action the

Department should take against Respondent for having committed

these proven violations, it is necessary to consult Chapter 61G4-

17, Florida Administrative Code, which contains the Board's

"disciplinary guidelines." Cf . Williams v. Department of

Transportation , 531 So. 2d 994, 996 (Fla. 1st DCA 1988)(agency

required to comply with its disciplinary guidelines when taking

disciplinary action against its employees).

76. Rule 61G4-17.001, Florida Administrative Code,

provides, in pertinent part, as follows:

Normal Penalty Ranges. The following

guidelines shall be used in disciplinary

cases, absent aggravating or mitigating

circumstances and subject to the other

provisions of this Chapter. . . .

(7) 489.129(1)(g), 489.119: Failure to

qualify a firm, and/or acting under a name

not on license. Repeat violation $750 to

$1,500 fine. 8/ . . .

(10) 489.129(1)(j): Failing in any material

respect to comply with the provisions of Part

I of Chapter 489. . . .

(b) 489.113, 489.117: Contracting beyond

scope of practice allowed by license, no

safety hazard. First violation, $500 fine,

repeat violation, $500 to $2,500 fine and

suspension or revocation. . . .

(20) For any violation occurring after

October 1, 1989, the board may assess the

costs of investigation and prosecution. The

assessment of such costs may be made in

addition to the penalties provided by these

guidelines without demonstration of

aggravating factors set forth in rule 61G4-

17.002.

77. "Repeat violation," as used in Chapter 61G4-17, Florida

Administrative Code, is described in Rule 61G4-17.003, Florida

Administrative Code, as follows:

(1) As used in this rule, a repeat violation

is any violation on which disciplinary action

is being taken where the same licensee had

previously had disciplinary action taken

against him or received a letter of guidance

in a prior case; and said definition is to

apply ( i) regardless of the chronological

relationship of the acts underlying the

various disciplinary actions, and

(ii) regardless of whether the violations in

the present or prior disciplinary actions are

of the same or different subsections of the

disciplinary statutes.

(2) The penalty given in the above list for

repeat violations is intended to apply only

to situations where the repeat violation is

of a different subsection of Chapter 489 than

the first violation. Where, on the other

hand, the repeat violation is the very same

type of violation as the first violation, the

penalty set out above will generally be

increased over what is otherwise shown for

repeat violations on the above list.

78. Rule 61G4-17.005, Florida Administrative Code, provides

that "[w]here several of the . . . violations [enumerated in

Rule 61G4-17.001, Florida Administrative Code] shall occur in one

or several cases being considered together, the penalties shall

normally be cumulative and consecutive."

79. The aggravating and mitigating circumstances which are

to be considered before a particular penalty is chosen are listed

in Rule 61G4-17.002, Florida Administrative Code. They are as

follows:

(1) Monetary or other damage to the

licensee's customer, in any way associated

with the violation, which damage the licensee

has not relieved, as of the time the penalty

is to be assessed. (This provision shall not

be given effect to the extent it would

contravene federal bankruptcy law.)

(2) Actual job-site violations of building

codes, or conditions exhibiting gross

negligence, incompetence, or misconduct by

the licensee, which have not been corrected

as of the time the penalty is being assessed.

(3) The severity of the offense.

(4) The danger to the public.

(5) The number of repetitions of offenses.

(6) The number of complaints filed against

the licensee.

(7) The length of time the licensee has

practiced.

(8) The actual damage, physical or

otherwise, to the licensee's customer.

(9) The deterrent effect of the penalty

imposed.

(10) The effect of the penalty upon the

licensee's livelihood.

(11) Any efforts at rehabilitation.

(12) Any other mitigating or aggravating

circumstances. 9/

80. Having considered the facts of the instant case in

light of the provisions of Chapter 61G4-17, Florida

Administrative Code, it is the view of the undersigned that there

is no reason to deviate from the "normal penalty ranges"

prescribed by Rule 61G4-17.001, Florida Administrative Code. 10/

Accordingly, the undersigned finds that the appropriate punitive

action to take against Respondent in the instant case is to

require him to: (a) pay a fine in the amount of $1,000.00

($500.00 for each violation of Section 489.113(3)(g), Florida

Statutes, alleged and proven); and (b) reimburse the Department

for all reasonable costs associated with the investigation that

led to the filing of the charges set forth in the Administrative

Complaint 11/ and for all reasonable costs associated with its

successful prosecution of these charges. (Because Respondent's

violations of Section 489.129(1)(g), Florida Statutes, appear to

be "first violations," he should receive no formal discipline

therefor; however, Respondent should be advised that any

subsequent violation of this statutory provision will be treated

as a "repeat violation," as described in Rule 61G4-17.003,

Florida Administrative Code, and punished accordingly.)

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department issue a final order (1)

finding Respondent guilty of the violations alleged in Counts I,

II, V, VIII, and IX of the Administrative Complaint;

(2) disciplining Respondent for having committed these violations

by requiring him to pay a fine in the amount of $1,000.00 and to

reimburse the Department for all reasonable costs associated with

the Department's investigation and prosecution of these charges;

and (3) dismissing the remaining counts of the Administrative

Complaint.

DONE AND ENTERED this 29th day of September, 1999, in

Tallahassee, Leon County, Florida.

___________________________________

STUART M. LERNER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 29th day of September, 1999.

ENDNOTES

1/ Johnathan Ferguson, Esquire, filed a notice of appearance on

behalf of Respondent on August 11, 1999, after the conclusion of

the final hearing in this case, and he subsequently filed a

Proposed Recommended Order on Respondent's behalf.

2/ The hearing was originally scheduled to commence on

December 22, 1998, but was continued, at Respondent's request.

3/ From August 24, 1988, to April 11, 1991, prior to the events

that are the subject of the instant case, Respondent was the

certified qualifying agent for Flamingo Builders, Inc.

4/ On an occupational license (to conduct marketing activities)

that Mr. Thomas received from Martin County for his company,

Respondent was mistakenly listed as the company's qualifying

agent. Although Mr. Thomas and Respondent at one time did

discuss the possibility of Respondent becoming HIT's certified

qualifying agent, they ultimately decided not to pursue such a

course of action.

5/ There was a box in HIT's office where Mr. Thomas placed all

signed contracts that Respondent needed to review and to accept

or reject.

6/ It is not inconsistent to find Respondent guilty of Counts I

and VIII, but not Count IV, of the Administrative Complaint. As

the Department explained in its Proposed Recommended Order:

It should be noted that although the Dunbar

agreement also included roof work ("repair

roof leaks"), under Section 489.113(9),

Florida Statutes, a general contractor could

lawfully enter into a contract of this nature

and subcontract the roof work as long as

". . . the majority of the work to be

performed under the contract is within the

scope of . . ." the general contractor's

license. In the Maciuba and Masters

contracts, however, Section 489.113(9),

Florida Statutes, has no application because

none of the work to be performed under those

contracts was within the scope of the

Respondent's general contracting license.

7/ The undersigned finds persuasive the following argument made

by the Department in its Proposed Recommended Order concerning

these counts of the Administrative Complaint:

According to the statutory definition of

contracting set forth above, the offering or

attempted sale of contracting services is

itself an activity which constitutes the

practice of contracting. Under the factual

circumstances of this case the Respondent

"marketed" (i.e., offered or attempted to

sell) contracting services and therefore

acted in the capacity of a contractor, using

names (Home Improvement Time, Inc., Home

Improvement, Inc., and/or Home Improvement by

Richard Kosalka) other than the name on his

license, and he is thus subject to discipline

by the CILB as alleged in Counts II, V, and

IX of the Administrative Complaint, for

violation of Section 489.129 (1)(g), Florida

Statutes. In addition' with respect to the

Clara Masters and Rita Maciuba transactions,

the contracting services which the Respondent

sold or attempted to sell were services which

required licensure as a roofing contractor.

Accordingly, the Respondent is also subject

to discipline by the CILB for violation of

Section 489.113(3)(g) and 489.129(1)(j),

Florida Statutes, as alleged in Counts I and

VIII of the Administrative Complaint.

8/ There is no penalty prescribed for a "first violation" of

these statutory provisions. This is of significance in the

instant case because there is no evidence that the violations of

Section 489.129(1)(g), Florida Statutes, alleged in Counts II, V,

and IX of the Administrative Complaint (which the evidence

clearly and convincingly establishes that Respondent committed)

are "repeat violations," as described in Rule 61G4-17.003,

Florida Administrative Code.

9/ A licensee's penalty may not be increased beyond the "normal

penalty ranges" based upon acts of misconduct that are not

alleged in the administrative complaint. See Klein v. Department

of Business and Processional Regulation , 625 So. 2d 1237, 1238-39

(Fla. 2d DCA 1993); Bernal v. Department of Professional

Regulation, Board of Medicine , 517 So. 2d 113, 114 (Fla. 3d DCA

1987), approved , 531 So. 2d 967 (Fla. 1988).

10/ The Department has not shown that the circumstances

surrounding Respondent's violations are significantly more

"aggravating" than those which are typically present when a

contractor engages in the type of misconduct in which it has been

alleged and proven Respondent has engaged.

11/ Pursuant to Rule 61G4-12.018, Florida Administrative Code,

the Department is required

to submit to the Board an itemized listing of

all costs related to investigation and

prosecution of an administrative complaint

when said complaint is brought before the

Board for final agency action.

Fundamental fairness requires that the Board provide a respondent

with an opportunity to dispute and challenge the accuracy and/or

reasonableness of the Department's itemization of investigative

and prosecutorial costs before determining the amount of costs a

respondent will be required to pay.

COPIES FURNISHED:

Theodore R. Gay, Esquire

Department of Business and

Professional Regulation

Ruth Rohde Building, Suite N-607

401 Northwest Second Avenue

Miami, Florida 33128

Johnathan A. Ferguson, Esquire

GONANO, HARRELL & FERGUSON

1600 South Federal Highway, Suite 200

Fort Pierce, Florida 34950

Richard Kosalka

150 Southwest Port St. Lucie Boulevard

Port St. Lucie, Florida 34984

Rodney Hurst, Executive Director

Construction Industry Licensing

7960 Arlington Expressway, Suite 300

Jacksonville, Florida 32211-7467

Barbara D. Auger, General Counsel

Department 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 R ecommended O rder. Any exceptions to

this R ecommended O rder should be filed with the agency that will

issue the F inal O rder in this case.