ALJDEC

00F-0825-ROC · Registrar of Contractors · 2000-03-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 27, 2000. APPEARANCES: Roy Hatch, Complainant’s representative, and Kent Stringham, Respondent. ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang. _____________________________________________________________________ Roy Hatch, President of Excel Construction Company, Inc., has established that Kent Stringham of Wing Teck wrongfully withheld reimbursement of a $700 down payment on a contract that Stringham breached. Therefore, I recommend that the Registrar of Contractors suspend Stringham’s license until the $700 is repaid. FINDINGS OF FACT 1. In April 1999, Hatch requested a bid for remodeling the interior of an elevator for Choice Hotels. Stringham’s proposal, submitted on April 6, 1999, asked for 50% down and bid the job at $1,400. Hatch paid Stringham the $700 accepting his bid. 2. On May 24, 1999, Stringham sent Hatch a letter stating that he could not do the job for the contracted price. He stated that he could re- bid the job or return the deposit. Hatch asked him for another proposal, which was over $5,000. Choice Hotels lost faith in Hatch as a result of this problem and hired another contractor to complete the elevator, declining to hire Hatch for any further general contracting work at all. This was after Hatch had earned approximately $100,000 per year in doing various jobs for the hotel. 3. Hatch requested his deposit back, and Stringham refused. Stringham claims that he is entitled to the cost of materials he purchased and an amount for the “benefit of the bargain”. The materials are of no use to Hatch because the job is done now and he was not involved with it anymore after Stringham breached the contract. CONCLUSIONS OF LAW 1. This matter is within the jurisdiction of the Registrar of Contractors pursuant to A.R.S. §§32-1104(A)(4), 32-1154(B) and 32-1156. 2. The Citation and Complaint issued by the Registrar of Contractors in this matter alleged potential violations of A.R.S. §32-1154(7), which provides for suspension or revocation of a contractor’s license for the “doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured”. 3. Stringham’s notification to Hatch that he could not perform the work as agreed was an anticipatory repudiation of the contract making him liable to Hatch for damages if he did indeed go through with the breach,[1] which he did. When Stringham repudiated the contract, Hatch had the option of either rescinding the contract (calling it off), compelling performance of it by court action, or considering it a breach and requesting damages.[2] Hatch’s actions indicate that he rescinded the contract and accepted the repudiation as final. 4. Rescission of a contract entitles both parties to be returned to their state prior to the existence of the contract.[3] Stringham argues that he is entitled to reimbursement for his purchase of materials for the job; however, he is the party who proposed the breach of contract. Further, he proposed to return the deposit as part of the terms of rescission. 5. While Stringham’s offer to return the deposit included another offer to re-bid the job, it is irrational to assume that a choice between the bid and the deposit was the sole term of the rescission. Bids are generally offered for prospective work for little or no money. As an option to receiving the deposit back, it is valueless. Therefore, the return of the deposit was the proper conclusion of the transaction. Stringham was not entitled to $700 for purchase of materials, benefit of the bargain, or any other item. He wrongfully withheld payment of the deposit, which caused a monetary loss to Hatch. Therefore, Stringham’s wrongful act cause substantial injury to Hatch and Stringham’s license should be suspended. RECOMMENDED ORDER Because he wrongfully withheld Complainant’s deposit, Kent Stringham, doing business as Wing Teck, should have his license suspended until he repays it. In view of the foregoing, I recommend, commencing on the effective date of the Registrar’s Order, (thirty-five [35] days after the date of mailing by the Registrar of Contractors) that Respondent’s Class L-05 license be temporarily and actively suspended until the Registrar receives proof that Respondent has paid $700 to Excel Construction Services Inc. I further recommend, in addition to the foregoing indefinite license suspension, if any, that Respondent’s Class L- license be placed on active suspension for a period of seven (7) days. This additional disciplinary penalty shall commence on the effective date of the Registrar’s Order or the date on which notice of Respondent’s compliance with the terms of this Order is filed with the Registrar, whichever is later. Done this day, March 29, 2000. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Dorinda M. Lang Administrative Law Judge

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

Registrar of Contractors Michael P. Goldwater Attn: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] Aboud v. DeConcini, 842 P.2d 1328, 173 Ariz. 315(Ariz. App. Div. 2 1992). [2] West Pinal Family Health Center, Inc. v. McBryde, 785 P.2d 66, 162 Ariz. 546 (Ariz. App.1989). [3] Reed v. McLaws, 110 P.2d 222, 56 Ariz. 556 (Ariz. 1941).

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