ALJDEC

00F-M0722-ROC · Registrar of Contractors · 2000-07-06

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 6, 2000.

APPEARANCES: Tom Bryan Concrete (herein called “Bryan”) appeared through its owner and qualifying party, James Thomas (“Tom”) Bryan. Seiter Construction, Inc. (herein called “Seiter”) appeared through its President and qualifying party, Dwayne L. Seiter.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

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 above-entitled matters were consolidated for the purposes of hearing since both appeared to be related to the same underlying subject matter or matters, and both would predictably entail the use of the same witnesses and documentary evidence.

2. Pursuant to numerous verbal proposals and contracts, Bryan performed concrete work at several residential jobsites in Gilbert and in Casa Grande on which Seiter was serving as the projects’ general contractor.

3. Upon or soon after conclusion of the specified work at each separate jobsite, Bryan would transmit an invoice to Seiter setting forth the agreed cost price for the concrete work at the identified locations. An ongoing relationship was demonstrated under which periodic payments were sent from Seiter, often combining the billed costs for two or more separately invoiced jobs.

4. The evidence presented at the hearing with respect to the cumulative total billings and remittances to and from the respective parties was largely inconclusive and somewhat confusing. It did, however, appear that the aggregate amount of all invoices for Bryan’s concrete work, encompassing three different locations or subdivisions, was over $90,000.00, and it further appeared that all but approximately $15,000.00 of the billed amounts had been paid by Seiter at the time of the hearing. Some of the payments ware admittedly transmitted after the previously agreed respective due dates.

5. Various invoice amounts were not paid in full by Seiter, claiming either that certain off-sets or back-charges were appropriate or that portions of the invoice billed as extra work were to have been included in the stated cost prices for the proposed work. Additionally, a further disagreement as to responsibility for correcting the concrete at

one of the projects prompted Seiter, in anticipation of a substantial remedial work expense, to withhold payment against some of the invoiced amounts by Bryan that were not otherwise objectionable to Seiter.

6. The Registrar of Contractors is not empowered to adjudicate and award contractual damages. Since it appeared that the balances of the unpaid amounts assertedly due under the various verbal subcontract agreements were subject to a dispute, which can not be held to have been arbitrary or asserted in bad faith by Seiter, it was determined by the Administrative Law Judge that this instant hearing was not the appropriate forum in which to resolve the parties’ monetary dispute. Moreover, Bryan would be unable to establish a “liquidated” amount past due and owing, which is an essential element of the contracting law violation charged against Seiter.

7. Until and unless the properly outstanding monetary amount payable to Bryan from Seiter, if any, is reduced to a sum certain by way of obtaining a judgment from a civil court of competent jurisdiction which thereafter remains partially or wholly unpaid, no finding of any failure-to- pay violation is supportable. Similarly, to the extent that Seiter is asserting its possible entitlement to receive a payment of monies from Bryan in the nature of restitution for expenses incurred to accomplish corrective work though sources other than Bryan, this tribunal is once again the inappropriate forum to make such determination. Especially in light of the uncertain amount potentially payable to Bryan as a balance under the parties’ subcontractual arrangements, it would be incongruous and unfair to attempt to evaluate and compute the extent of reimbursement for some or all of Seiter’s expenses while ignoring the possibility of unpaid subcontract balances that are perhaps properly due to Bryan from Seiter.

8. The testimonial and documentary evidence revealed that Seiter was utilizing the business name of Century Builders, Inc. or Century Land Development, Inc. on

various letterheads, FAX transmittals, memos, ledger sheet summaries and promotional materials. The fact that most or all of the key operative contracting documents contained both the licensee’s proper name together with one of the other aforementioned names does not excuse or minimize the impropriety. It is determined, especially in view of the need to confine the business name used in construction-related activities solely to the name appearing on the contractor’s license and on its bond, that Seiter had violated the applicable rule and statute. By way of a mitigating circumstance, Seiter wholly discontinued all use of any of the names not appearing on its license after being informed by the Registrar’s office of the probability of an improper name usage, or at least the fact that the usage created a gray area.

9. With respect to the concrete work performed by Bryan on the Jake’s Ranch residential project, the credible evidence tended to indicate that the slabs installed for both the tennis courts and the basketball court have developed a compound cracking condition, and such slabs also contain areas where edges were poorly tooled and the overall surface finishing was visibly inconsistent. Additionally, the amount and placement of control joints were shown to be inadequate and improper for the size of the slab sections, and at several cracked locations there was some degree of vertical deflection, thereby creating tripping hazards.

10. The evidence of record sufficiently demonstrated that the above- described deficiencies rendered Bryan’s concrete work on the tennis and basketball courts substandard and unacceptable, reflecting adversely upon its workmanship. Additionally, Bryan’s failure or refusal to undertake and complete effective remedial measures subjected Seiter to the withholding of otherwise payable progress payments from the property owner, thereby constituting a wrongful act on the part of Bryan to Seiter’s substantial financial damage.

11. A written directive was sent to Bryan by the Registrar’s assigned Inspector indicating the need for repairing or replacing the concrete installed both at the tennis court and at the basketball court. However, disagreeing with the determination by the Inspector as to his responsibility for corrections, Bryan did not accomplish or even commence performance of the identified corrective work in the time allotted. It is determined that Bryan’s failure or refusal to take timely remedial action on the tennis and basketball courts was violative of the charged violation based upon non-compliance with written agency directives.

12. No merit is found to Bryan’s contention that he was required to do his concrete work in an improper or questionable manner as a result of the contents of or omissions in the applicable plans and specifications furnished by Seiter as the project’s general contractor who additionally had failed to provide its subcontractor with a soils report. It is found and determined that Bryan, by proceeding with his agreed work as the selected specialty subcontractor, had effectively accepted the ground surfaces and subsurfaces as being adequate to achieve results that are structurally and aesthetically acceptable for concrete installations. A licensed specialty subcontractor must not perform construction work in its own specialty field in any manner not calculated to produce proper results, irrespective of any instructions or insistence by a general contractor or a property owner.

13. The deficiencies in the concrete work on the tennis and basketball courts was ultimately corrected by Seiter through others after having afforded adequate advance notice and a reasonable opportunity for Bryan to have accomplished remedial measures. Any general contractor need not await the conclusion of these administrative proceedings or potential further judicial review actions prior to undertaking corrective action on its own. In point of fact, such remedial action may be necessary in order to satisfy a requirement to mitigate potential damages. Seiter’s

resort to other contractors to accomplish remedial measures under all the circumstances was both prudent and fully justified.

CONCLUSIONS OF LAW

1. The demonstrated existence of a bona fide monetary dispute with respect to the balance, if any, of monies past due and owing by Seiter renders the instant claim by Bryan unliquidated. Consequently, Seiter was not sufficiently proven to have violated either the wrongful act or the non- payment provisions contained in A.R.S. §32-1154 (7) or (11). However, the evidence of record adequately established that Seiter has violated the provisions of A.R.S. §32-1154 (15) by using a name in conducting its contracting business activities which was neither on its license nor on its bond. See also, Rule R4-9-109(A), A.A.C.

2. Any dismissal by the Registrar of the charges based upon allegations of non-payment of monies for services or materials furnished should be and must be wholly without prejudice to the rights of the parties to assert and pursue their respective claims, counterclaims or set-offs before a civil forum.

3. The Registrar is empowered, as contemplated by the provisions of A.R.S. §32-1152 (H), to increase the license bond of a contractor up to ten times the otherwise applicable amount after a hearing and a finding that contracting law violations have been committed. At least a portion of such power may be properly exercised in this case against Seiter. The exercise of such power by the Registrar is especially appropriate in this case in light of the evidence of record tending to indicate that Seiter was actively participating in a healthy volume of residential construction on no less than three separate jobsite locations and that Seiter has posted only the minimum amount of license bond, authorizing an annual gross volume of no more than $150,000.00.

4. The evidence of record adequately established violations on the part of Bryan of the provisions of A.R.S. §32-1154A (7), (23) and (3); namely Rue R4-9-108.

RECOMMENDED ORDER

In view of the foregoing, it is recommended, with respect to Case Number M00-0722 against Seiter, that all charges based upon the alleged failure by Seiter to pay monies when due to Bryan in possible violation of A.R.S. §32-1154(A)(11) and upon the alleged commission by Seiter of a possibly wrongful act to the detriment of Bryan in violation of A.R.S. §32- 1154(A)(7) be dismissed without prejudice to the rights of either party to assert and pursue potential claims, counterclaims or set-offs in another, more appropriate civil forum.

It is further recommended, also with respect to Case Number M00-0722 against Seiter, by way of imposing an appropriate disciplinary penalty for the proven violation by Seiter of the provisions of A.R.S. §32- 1154A(A)(15), that commencing on the effective date of this Order, any continuation of Seiter’s contracting rights under its Residential Class B license shall be subject to a condition that Seiter first post an additional surety bond, cash deposit or alternative deposit for a period of months, including future renewal periods, in the amount of $10,000.00, such bond or deposit to be in addition to the required surety bond, cash deposit or recovery fund participation set forth in A.R.S. §32-1152. Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two year period following the above- provided 36-month period and only if no claims are then pending. Such bond shall be posted on or before the effective date of this Order. Failure to timely post such bond shall result in the immediate suspension of Seiter’s residential Class B license.

It is further recommended, with respect to Case Number M00-0841 against Bryan, that commencing on the effective date of this Order, the Class C-09 license of Bryan be actively suspended for a period of seven (7) days, followed immediately by a period of disciplinary probation for ninety (90) days.

Dated: July 13, 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 Street (6th Floor) Phoenix, AZ 85007

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

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