ALJDEC

00F-0239-ROC · Registrar of Contractors · 2000-01-06

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Pursuant to notice, a formal hearing was held in this case on January 4, 2000, in Phoenix, Arizona, before Neal H. Jordan, Administrative Law Judge of the Office of Administrative Hearings. APPEARANCES For Complainant: Charles D. Wetzel, Pro Se. For Respondent: Phillip Vratari, Qualifying Party, Pro Se.

FINDINGS OF FACT Based upon all the evidence of record, the following findings of fact are determined: Complainant hired Carousel Homes, Inc. (“Carousel”), as general contractor, to construct a custom home from plans and specifications prepared by other professionals for Complainant. Carousel hired Respondent as the subcontractor for the installation of the electrical services and facilities for Complainant’s custom home. Respondent completed the electrical installation to the rough-in phase and received a green tag approval after an inspection by a City of Scottsdale building official. Except for a single jobsite visit in December, 1998 to correct a location of a receptacle for an oven/stove outlet, Respondent’s last date of work occurred in August, 1998. At that time the rough-in electrical work had been completed with the finish installation yet to be scheduled. On or about January 28, 1999, Complainant terminated Carousel as the general contractor for this custom home construction project. On or about February 5, 1999, Complainant contracted with Barrcor Construction, Inc. (“Barrcor”), to replace Carousel as the general contractor to finish the construction of Complainant’s custom home. At no time subsequent to the termination of the services of Carousel was Respondent contacted, either by Complainant or by its replacement general contractor, Barrcor, to advise Respondent as to its continuing status as the electrical subcontractor for this project. Barrcor refused to retain Respondent as the electrical subcontractor, maintaining it prefers to work with its own cadre of approved subcontractors. In this regard, Barrcor subcontracted with J. F. Haase Electric, Inc. (“Hasse Electric”) to complete the electrical installation for this project. Jason Haase, a principal of Haase Electric, testified that a number of problems were discovered with the electrical installation work performed by Respondent. Complainant engaged Haase Electric separately to cure the alleged workmanship problems attributed to Respondent incurring an extra cost therefor in the amount of $7,415.55. At the time the alleged problems with the workmanship of Respondent was discovered, Respondent was not contacted or granted the opportunity to review and/or correct or repair these problems. The first time Respondent became aware of any workmanship complaints was when it was notified that the instant complaint was filed. By the time the instant complaint had been filed, any and all alleged electrical problems, resulting from a claim that such problems were attributable to the workmanship of Respondent, has been attended to by Haase Electric. Respondent asserts that at all times it was prepared to return to the jobsite to complete the electrical installation and to be available for the purpose of making any corrections or repairs that may have been determined to be necessary. Complainant claims restitutionary damages from Respondent in the total amount of $7,415.55. The Respondent was not given an opportunity to return and make any necessary repairs and corrections or to finish the work under its subcontract with Carousel. Since Complainants have hired other contractors to remedy any alleged problems caused by Respondent’s workmanship, there remains nothing for this Respondent to do relative to any final performance under its subcontract with Carousel.

CONCLUSIONS OF LAW The Office of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to A.R.S. §41-1092 - 1092.12 (1998). The Complainant has brought this complaint and accordingly bears the burden of proving by a preponderance of the evidence that the allegations contained therein are true. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (Ct. App. 1996); Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985), (the standard of proof is that of the “preponderance of evidence.”) The general contract for the construction of Complainant’s custom home was originally with Carousel. All subcontracts entered into with the various subcontractors were predicated upon the continuing viability and enforceability of the general contract. When Complainant terminated Carousel as the general contractor, this effectively terminated all subcontracts at that point in time unless Complainant, or a substitute general contractor, contacted each subcontractor for the purpose of accepting each subcontractor and subcontract for the balance of the work. When Carousel was terminated, the subcontract with Respondent was also effectively brought to an end. Even though Respondent’s electrical subcontract was effectively terminated, that fact does not relieve Respondent of the responsibility to have performed the work, to that point in time, in a workmanlike manner complying with plans and specifications, including all applicable codes and industry standards. Although Complainant’s concerns regarding the problems allegedly attributable to the workmanship of Respondent are understandable, it is not uncommon in the industry that corrections or repairs may be required due to possible poor workmanship prior to completion of a specified project, in order to bring the work product up to applicable industry standards. In this regard, unless a contractor is shown to be financially incapable or professionally incompetent to complete any work, including making repairs or corrections, it is a prerequisite to a finding of any statutory violation that a contractor be given a reasonable opportunity to complete necessary remedial work. Respondent, in this case, was not afforded that opportunity. Any resulting order that may be issued in cases such as presented herein typically involves a requirement that the Respondent return to the scene of the work and make corrective and remedial repairs to meet contractual and minimum workmanship requirements. However, in this case, Complainants have already attended to such repairs through the efforts of other contractors, thereby forcing the conclusion that there is no work remaining to be attended to by Respondent. Complainants recognize this fact and are seeking, in the alternative, restitutionary damages. When a complainant intends to seek restitutionary damages from a licensed contractor, it is incumbent on that complainant to present credible and adequate evidence to establish that firstly, the contractor is no longer able, financially or by reason of competence, to perform any work of the nature contracted for, and, secondly, that all costs being sought are a reasonable and necessary consequence of that contractor’s breach of contract. In this latter regard, it must be proven that the costs are only for remedial or corrective work and do not embellish, enhance, modify or change the intent and design of the work already completed. Such evidence may include testimony and written estimates from more than one contractor as to the costs associated with the corrective work, testimony from experts as to the exact nature of the problems involved and the corrective measures that are recommended, and testimony from suppliers of materials to be incorporated into the work. This is not to suggest that all of the above is necessary, but to submit by way of quality the nature of evidence that is required to meet the burden of proof when restitutionary damages are sought. The foregoing findings of fact determined that Respondent had commenced performance of its obligations under the subcontract to the point of completing the electrical rough-in work. This fact alone gives rise to an obligation on the part of Complainant to provide adequate prior notice to Respondent that deficiencies in workmanship exist, coupled with an opportunity to make any and all necessary or required repairs or corrections before Complainant may reasonably undertake to correct those deficiencies with other contractors. Since no prior notice of deficiencies or an opportunity to make any repairs or corrections was afforded Respondent, as a matter of law, it must be concluded that Complainant has failed to sustain the requisite burden of proof necessary to support a recommendation that restitutionary damages should be ordered in this case. For the foregoing reasons, Complainant has failed to sustain the burden of proof to establish that Respondent violated any of the provisions of A.R.S. §32-1154(A), as charged in the Citation and Complaint served in this case.

RECOMMENDED ORDER In view of the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that Citation and Complaint issued in this Case No. 00-0239 be dismissed. ENTERED this day, January 7, 2000.

______________________________________ Neal H. Jordan Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2000, to:

Registrar of Contractors Michael Goldwater, Director ATTN: Joyce Armijo 800 W. Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826