ALJDEC

00F-2008-ROC · Registrar of Contractors · 2000-05-25

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 22, 2000.

APPEARANCES: Complainant appeared through its authorized employee, Dan Wierek.

Respondent was represented by its attorney, Aaron Kizer, Esq.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

At the outset of the scheduled hearing, counsel for Respondent renewed its previously filed motion to dismiss, additionally presenting documentary exhibits in support of same. Said motion sought the dismissal of both specified portions of the filed complaint in this matter based (a) upon an asserted lack of jurisdiction by the Registrar over the first item and (b) upon the fact that the complaint and citation was issued against the wrong licensed entity with respect to the second item. Complainant strongly opposed the granting of the motion on either ground, also presenting supporting documentary exhibits.

During oral argument in support of and in opposition to the granting of Respondent’s motion, certain avowals were made by the respective parties as to the purported content of testimonial evidence that could or would be introduced at any hearing on the merits. Upon further review and reconsideration of all aspects of the motion and response, as well as of the entire case file, the following recommendations have been formulated and are hereby submitted to the Registrar of Contractors for approval and adoption. With respect to the portion of the filed complaint seeking either engineering calculations for certain identified trusses furnished on the project, or the cost of obtaining such calculations, it appeared that these trusses were ordered by Complainant and were furnished pursuant to a written agreement with Madiera Component Systems, Inc., an entity not possessing any contractor’s license but owned and controlled by the same individuals who had been and still are persons listed on Respondent’s license. However, all contractual duties related to the fabrication and delivery of the specified product to the jobsite, and the agreement did not encompass the installation of the trusses by the manufacturer. Consequently, it must be held that, even if the contracting entity did hold a license, and even if the two corporate entities are sufficiently capable of being treated as identical for purposes of liability, the truss- related complaint item does not involve “contracting” as defined by statute and is not an appropriate subject matter for a complaint with the Registrar who lacks proper jurisdiction. The result is unchanged even if some field adjustments or corrections to the delivered trusses are made at the jobsite by or on behalf of the manufacturer. No administrative remedy is available to Complainant on this item of complaint, but relief may be possible in another forum. A granting of this portion of Respondent’s motion to dismiss is warranted under the circumstances.

The balance of the motion to dismiss related to the remaining complaint item alleging breaches of contract and warranty obligations, as well as workmanship deficiencies, arising under a separate agreement for carpentry trim work concluded between Complainant and Madiera Trim, Inc. This corporate entity was licensed in a specialty field under the name of Sinco Trim, Inc. but apparently not doing business under such name. The basis for this part of Respondent’s motion was that both the complaint and citation issued against Sinco Construction Corp. had been issued against the wrong licensee. By way of repeating the analysis used in the prior ruling of this tribunal, and once again, as required, viewing all facts and circumstances in a light most favorable to Complainant as the non-moving party, it appears appropriate to reaffirm the prior ruling by the undersigned Administrative Law Judge and to deny such portion of Respondent’s motion to dismiss on the asserted grounds. Regardless of Respondent’s contention that Sinco Construction Corp. is separate and distinct from Sinco Trim, Inc., an entity also comprised of the same individual owners and officers, operating from the same address and using or at least required to use substantially similar business names, it is determined that questions of fact still exist with respect to whether the involvement and ongoing conduct of the principals of these entities generated a reasonable belief by others dealing with them that the companies were not truly separate. It is deemed possible, if not probable, to be able to successfully demonstrate sufficient operational cross-overs so as to warrant treatment as a single organization, especially in light of an avowal that evidence would be presented tending to indicate that one of Respondent’s corporate officers, who also served as its qualifying party, caused and directed one of the purportedly separate companies not to deliver or perform under another agreement until or unless a balance payment was made to such allegedly separate company. Notwithstanding the foregoing analysis, it became clear that Complainant was seeking recovery of monetary losses incurred in order to timely satisfy the entitlements

of its own customers by prudently and understandably completing or correcting the contractual trim work after Respondent communicated its position that it was not the responsible entity. Another corporation and licensee was named in the underlying contract and Respondent, as a purportedly separate license holder and entity, further claimed it was not otherwise obligated to perform remedial work that was the potential responsibility of Sinco Trim, Inc., doing business possibly improperly under the name of Madiera Trim, Inc. and admittedly then about to terminate its business activities. Although the Registrar is empowered to insert restitution conditions as part of a disciplinary Order in certain cases so as to recognize obligations in certain situations that can not and should not await the results of prolonged administrative or judicial proceedings, the exercise of such power is not always appropriate and warranted. It did appear that the total amount of any and all claims would be impacted by potential counterclaims and set-offs to be asserted on behalf of the specialty contractor, effectively claiming monetary losses attributable to Complainant’s actions or omissions. Therefore, it is determined that the monetary sum claimed by Complainant is unliquidated since it is subject to a significant dispute, the grounds for which can not be held either to have been arbitrary or to have been asserted by Respondent other than in good faith. A civil court of competent jurisdiction and not the Registrar of Contractors is the more appropriate forum in which to have the amount of damages, if any, adjudicated and awarded. If and after the Complainant is able to have its claim liquidated by reducing it to a formal judgment as a result of pursuing available remedies before a civil tribunal, and if all or any part of any such judgment is allowed to remain unpaid, the Registrar may take proper disciplinary action against the judgment debtor or other entities shown to have or to share responsibility. On this latter basis, Respondent’s motion to dismiss should be granted without prejudice to the rights of either party to seek and obtain relief in another more

appropriate civil forum. Stated alternatively, this ruling is not a determination on the merits of the dispute nor on any alleged wrongful use of a business name by another entity not cited in this administrative action. Conversely, nothing in this ruling should be construed as condoning the actions of any licensed individual or entity that are designed to avoid or postpone the timely satisfying of valid payment or construction obligations or responsibilities, if any, of a related entity by awaiting the imposition of disciplinary penalties or recovery fund payouts against such other entity, either of which could and should ultimately or immediately lead to appropriate future action against such licensee, by operation of law or otherwise. Accordingly, it is recommended that Respondent’s motions to dismiss be granted and that the entire complaint and citation in Case Number 00-2008 against Sinco Construction Corp. be dismissed without prejudice. Dated: May 31, 2000. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

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

Attn: Joyce Armijo -----------------------

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