ALJDEC

01F-1982-ROC · Registrar of Contractors · 2001-08-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 2, 2001. APPEARANCES: Tom Baumer, Complainant’s representative; Gerald Alston, Respondent’s attorney; Nancy Brunkhorst, Respondent’s witness; and Alan Brunkhorst, Respondent’s witness. ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang. _____________________________________________________________________ Complainant completed subcontracting work on a new home project after Respondent, the general contractor, informed it that Respondent had been fired from the job. Under the facts of the case, the Complainant had a duty to suspend further work, as instructed, or to mitigate its damages by stopping work. Therefore, Complainant has failed to establish that the final contract payment it demands is due and payable and has thereby failed to establish a violation of the statutes governing licensees with the Registrar of Contractors. Therefore, this complaint should be dismissed. FINDINGS OF FACT 1. On or about April 5, 2000, the Complainant and Respondent entered into a contract whereby Complainant would work as a subcontractor on construction of a new home. Respondent was to be the general contractor on the job. Complainant submitted invoices as the job progressed for work done to that point and Respondent paid them all except the last one. 2. On September 21, 2001, Respondent sent a letter to all of the subcontractors on the project stating, “As you have been informed, Nance Construction is no longer the general contractor on the Jacobs job at 23005 North Via Ventosa. Should you make an agreement directly with Jeff Jacobs to do work at that site, you should be charging him sales tax and remitting it to the proper agencies. Nance Construction is no longer responsible for remitting sales tax on behalf of this job.” Respondent’s witness, Nancy Brunkhorst, also told Mr. Baumer, Complainant’s qualifying party, not to do any more work unless he had an agreement for payment from the homeowner. 3. Clearly, the Respondent had been fired from the job and was, by this letter, either firing the subcontractors or suspending their performance on the project as well. Complainant, on the advice of its attorney, continued to do work on the job without a written agreement from the homeowner for payment. When the homeowner refused to pay, Complainant submitted its final bill to Respondent for $21,409.00 on October 11, 2000. Complainant corrected the amount due at hearing. There had been a mathematical error. He now states that the correct amount due on his contract with the Respondent is $20, 890.00. Complainant completed warranty work at the home on later dates as well but did not charge for these. 4. Respondent argued that it was fired from the job after the homeowner demanded that Respondent give him a credit of $300,000 and refused to pay any further on the construction. As of September 19, 2000, the Respondent was not allowed to return to the property for the purpose of construction. Respondent notified all of the subcontractors shortly after it was fired and advised them to make their own arrangements for payment with the homeowner. Respondent also filed a complaint in the Superior Court of the State of Arizona against the homeowner for payment of the amounts still due on the home, but does not believe that it is obligated to pay for work done after Respondent was fired. 5. Complainant argues that he has a legal contract with the Respondent that has nothing to do with their dealings with the homeowner. He maintains that he should be paid in full on the contract. In response to Respondent’s testimony that he was told to stop working, Complainant argued that the remaining work on the contract consisted only of dropping in a marble slab hearth, fitting tile for shower escutcheons, and installing decorative tiles for a backsplash. These were special items that had been ordered and received by the Complainant. 6. Respondent alleged that it had paid $16,626.00 more to Complainant than it was paid by the homeowner but withheld the final payment as accruing after they were fired and had notified the subcontractors. 7. The Respondent’s license record was irrelevant to this matter. The Respondent holds no other licenses with the Registrar of Contractors. 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(A)(7) and (11). 3. The Arizona Revised Statutes at § 32-1154(A)(7) 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”. 4. The Arizona Revised Statutes at § 32-1154(A)(11) provides grounds for suspension or revocation of a contractor’s license for failure to pay monies when due in excess of $750 for materials or services rendered in connection with a contracting project when the licensee has the capacity to pay or, if she or he lacks that capacity, when the licensee has received sufficient monies as payment for that project for which the materials or services were purchased or rendered. 5. The burden of proof at an administrative hearing is generally upon the Complainant. Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). Further, the standard of proof at hearing is a “preponderance of the evidence”. Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). This standard “allows both parties to ‘share the risk of error in roughly equal fashion’… Any other standard expresses a preference for one side’s interests.“ Herman & MacLean v. Huddleston, 459 U.S. 375, 390, 74 L.Ed.2d 548, 103 S. Ct. 683 (1983) quoting Addington v. Texas, 441 U.S. 418, 423, 60 L.Ed.2d 323, S. Ct. 1804 (1979). 6. In this case, the Complainant has established that he had a contract with the Respondent. Complainant’s representative has admitted, however, that the Respondent notified him that Respondent had been fired from the job and was instructing subcontractors to do no further work without an agreement for payment by the homeowner. Respondent was clearly either suspending or terminating the contract by its action. Complainant wishes to enforce the contract nonetheless. A party injured by breach of contract has a duty, however, to minimize the damages from that breach. West Pinal Family Health Center, Inc. v. McBryde, 785 P.2d 66, 162 Ariz. 546, review denied (Ariz. App. 1989). Complainant’s insistence on continuing to work only complicated the situation of the homeowner’s refusal to pay and aggravated rather than mitigated its damages. This was also a refusal to abide by the instructions of the general contractor. As for Complainant’s argument that the remaining work was negligible, Complainant has not established what portion, if any, of the final bill was earned prior to being notified to stop work. Thus, Complainant has not established that the monies in question were due, and in failing this, has not established a violation of the above statute. 7. The Registrar of Contractors may consider the prior record of a contractor in any disciplinary proceeding provided the records are introduced into evidence. A.A.C. R4-9-117. On standing motion by the Registrar of Contractors, the computer records of the Registrar of Contractors may properly be considered to be evidence in the event the Administrative Law Judge finds a violation of any of the statutory provisions cited in the Citation and Complaint. Since the Complainant has failed to establish a violation of the above statute, the Respondent’s record may not be considered as evidence and is not relevant. RECOMMENDED DECISION Based on the above considerations, it is recommended that this complaint be dismissed in its entirety.

Done this day, August 8, 2001. OFFICE OF ADMINISTRATIVE HEARINGS

____________________________________ Dorinda M. Lang Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2001, to:

Registrar of Contractors Michael P. Goldwater ATTN: Joyce Armijo 800 West 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