ALJDEC

00F-1983-ROC · Registrar of Contractors · 2000-06-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 15, 2000. APPEARANCES: Complainants appeared personally. Respondent was represented by Larry Benson, an officer of partner LSB Development Corp. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT

1. The Respondent is a partnership consisting of Wimberly Development Corp. and LSD Development Corp. 2. At the outset of the hearing the parties agreed to amend the Citation and Complaint to include David G. Wasinger, the husband of Melinda Wasinger, as a co-complainant in this matter. 3. In October of 1998, Complainants entered into a written agreement dated October 18, 1998, with Caravac, LLC, for the purchase of a residential lot and the construction of home upon it in Scottsdale, Arizona. The original contract price was the sum of $339,000.00. 4. Complainants paid a down payment in the amount of $5,000.00 at the time they signed the contract. They subsequently paid an additional cash down payment of $28,900.00. Those funds were paid into an escrow account at Chicago Title, the authorized escrow agent, who in turn released those funds to Respondent. 5. The written contract provided, among other things, that Complainants could cancel the contract and receive the return of all payments made if construction of the residence was not completed within one year of the contract date. 6. Respondent was the general contractor responsible for constructing Complainants’ residence. 7. The evidence of record does not explain the relationship between Caravaca, LLC, and the Respondent. 8. Respondent began construction of the Complainants’ home and continued work until construction ceased due to Respondent’s inability to provide additional capital required by the mortgage company representing Respondent’s construction lenders. 9. Complainants subsequently authorized the escrow agent to pay a $2,500.00 down payment to one of Respondent’s subcontractor for synthetic granite countertops. The subcontractor has retained those funds in an account under Respondent’s name. 10. On at least two separate occasions after one year from the date of the written agreement, Complainants requested return their payments due to Respondent’s failure to complete construction of the house. Respondent responded by advising Complainants that it was insolvent and could not repay those funds. 11. Complainants are found to have performed their contractual obligations under the parties’ written agreement. 12. Respondent’s construction lender subsequently undertook foreclosure proceedings, which involved both the residential lot and the non- completed home on that lot. On June 14, 2000, a third party’s bid was accepted in a foreclosure sale. Title to the property either has been or will be conveyed to the third party. 13. Respondent is found to have abandoned its contractual obligations owed to the Complainants without legal excuse for the abandonment. It is noteworthy that of the 11 homes that Respondent had under construction while constructing Complainants’ home, the only one not completed by Respondent and also foreclosed upon was the home intended to be constructed for Complainants. 14. Respondent’s abandonment and breach of its contractual obligation to construct Complainants’ home is a wrongful act which has resulted in the Complainants being substantially injured. The Complainants have paid, through their escrow agent, a total sum of $33,900.00 on this project. With the possible exception of the $2,500.00 deposit being held by a countertop subcontractor, the Complainants have lost the money paid for this project. The partially constructed home and lot are now owned by a third party. 15. A review of the official records of the Registrar of Contractors reveals that subsequent to the hearing in this matter the Respondent’s Class B license was revoked by the Registrar in Docket No. 00F-M0589-ROC on June 28, 2000. Notwithstanding the Registrar’s revocation of Respondent’s Class B license and in light of the ordeal that the Complainants have been put through by the Respondent in this matter, it is determined that the Complainants are entitled to an administrative decision based upon the evidence of record. 16. The Registrar’s records also show that Larry Stuart Benson was Respondent’s Qualifying Party until his resignation on September 1, 1999. … … …

CONCLUSIONS OF LAW

1. The evidence of record is sufficient to establish that Respondent has violated the provisions of A.R.S. § 32-1154(A)(1) and (7). 2. A.R.S. § 32-1154(C) provides that the revocation of a license by a decision and order from the Registrar does not deprive the Registrar of jurisdiction to render a subsequent decision revoking such a license. Pursuant to A.R.S. § 32-1161(C), if a license is revoked for violations of A.R.S. § 32-1154, such a license may not be renewed or reissued for one year after the final determination of revocation. Under all the circumstances, the revocation of Respondent’s license by the Registrar of Contractors in this matter would be an appropriate disciplinary penalty which would lengthen the period of time for Respondent or persons appearing on its license to become eligible to apply for renewal or re- issuance of a contractor’s license.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the Registrar of Contractors impose revocation of Respondent’s Class B license on the effective date of the Order entered in this matter as the disciplinary penalty for Respondent’s above-provided violations of the State’s contracting laws. Done this day, July 3, 2000.

______________________________________ Brian Brendan Tully Administrative Law Judge

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

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

By ___________________________ -----------------------

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