ALJDEC

01F-2679-ROC · Registrar of Contractors · 2001-10-26

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

This matter came on for hearing on Monday, October 22, 2001 at 9:00 a.m. pursuant to advance notice duly mailed to both parties. Complainant appeared through its Vice President, Bob Booth, and Respondent failed to appear. Based upon the entire record in the matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT

1. The start of the scheduled hearing was delayed for approximately thirty minutes so as to afford additional time for Respondent to appear. However, Respondent did not appear either through any authorized individual or through any proper legal representative.

Complainant’s uncontroverted evidence revealed that Respondent was the selected landscape subcontractor for an elementary school project on which Complainant was serving as the general contractor. The contemplated work consisted of preparing and grading the ground surface, providing and installing the planting

materials and the sod, and providing and installing all components for a operational watering system around four buildings.

3. The accepted proposal price of $121,000.00 was subsequently reduced by deleting a portion of the proposed work through a change order credit for $24,849.00, thereby adjusting the contract total to $96,151.00.

4. Complainant was shown to have paid either to Respondent, or directly to certain suppliers for Respondent’s benefit, the aggregate monetary sum of $86,459.00 against the adjusted contract price, and a $1,089.00 back-charge, necessitated by Respondent’s failure to promptly and properly clear and remove landscape debris from the premises, was found not to have been unreasonable or unwarranted under the circumstances. The combined amounts of all payments plus back-charges ($87,548.00), when applied to the adjusted contract price ($96,151.00), resulted in an unpaid balance of $8,603.00.

5. The agreed work by Respondent was performed without adequate manpower and contained numerous deficiencies around each of the four separate buildings in the project. Respondent’s ongoing unresponsive course of conduct in the correcting of deficiencies brought to its attention generated avoidable delays in the project’s completion and exposed Complainant to potential liability under its time-sensitive agreement with the School District.

6. Examples of the Respondent’s work deficiencies included improper grading and compaction of soils after installing irrigation lines, dead or dying plantings and sod traceable to an inadequately installed and functioning water supply system and the failure to clear landscape debris. Additionally, Respondent’s grading was shown to be contrary to the express requirements of applicable plans and specifications.

7. The Registrar’s assigned Inspector issued a lengthy and detailed written directive to Respondent following a scheduled jobsite inspection that Respondent had not attended. Most all of the items specified in the filed complaint were confirmed by the Inspector to be substandard and to be the responsibility of Respondent. However, little or no remedial efforts were accomplished or even commenced by Respondent, who is determined not to have not substantially or even minimally complied with the Inspector’s issued directive.

8. Due to existing contractual commitments to its customer, the School District, Complainant justifiably and prudently resorted to the services of another successor landscape specialty contractor for the proper completing of the project and for the correction of all identified deficiencies. Additionally, direct payments had to be transmitted by Complainant to several of Respondent’s suppliers. Credible testimonial and documentary evidence tended to indicate that the overall combined completion and correction cost incurred by Complainant, through a successor specialty contractor, was over $27,100.00, an amount that was not shown to have been unreasonable or excessive. The result of these expenditures on the part of Complainant, made necessary by and attributable to Respondent’s acts or omissions, resulted in the sustaining of monetary damages by Complainant of approximately $18,500.00 (after reducing the incurred correction/completion costs by the $8,603.00 amount remaining unpaid under the parties’ contract). The sum of $5,000.00 was ultimately recovered by Complainant from Respondent’s bonding company in partial satisfaction of the total demonstrated losses.

The nature and quantity of landscape-related deficiencies are found to reflect adversely upon Respondent’s workmanship as well as to demonstrate unauthorized departures from the plans and specifications. Moreover, Respondent’s prolonged lack

of effective responses to communicated problems and its proven breaches of applicable subcontractual obligations are further determined to constitute wrongful acts to the detriment of Complainant within the meaning of another charged statutory subsection.

10. By the failure of Respondent to appear at and participate in the scheduled hearing of this matter, no evidence in defense or in mitigation of the charged violations was presented to the tribunal.

11. In this case, the evidentiary proof established that the net monetary losses of Complainant that are traceable to Respondent’s acts or omissions and that were not recovered from other sources were not less than $13,500.00.

Notice is taken of the Registrar’s license records which reveal that, very recently, Respondent’s Class A-21 license has been suspended by operation of law since October 12, 2001 for lack of a proper bond, and has additionally been disciplinarily suspended since October 11, 2001 and October 24, 2001, respectively, following prior administrative proceedings until compliance with the payment conditions set forth in two separate final Orders. Respondent’s suspended license status does not preclude the pursuit by Complainant of its administrative remedies nor the conducting of these disciplinary proceedings before the Registrar of Contractors. Moreover, the presently suspended status of the license must be considered when formulating an appropriate Order in this action. Since little or no motivation would exist for any contractor to undertake and complete any remedial measures or to pay any monies in order to avoid the imposition of a suspension of an already-suspended license, the non-compliance by Respondent with any condition deemed proper for inclusion in the Order to be entered hereunder should result in the revocation of Respondent’s license, which,

in turn and in due course, should also lead to the initiation of appropriate disciplinary action pursuant to A.R.S. §32-1154A(21) against any and all other licenses issued to Respondent’s corporate entity or on which any of the same individuals are listed as a “person” as defined in A.R.S. §32-1101A(5).

CONCLUSIONS OF LAW

1. The undisputed evidence of record sufficiently established that Respondent has violated the provisions of A.R.S. §32-1154(A)(2),(7),(23) and (3); namely Rule R4-9-108, A.A.C. However, no violations by Respondent of A.R.S. §32-1154(A)(6) was adequately proven.

2. Although it is not a proper function of either the Office of Administrative Hearings or the Registrar of Contractors to adjudicate and award money damages which must be recovered, if at all, through pursuit of a civil court action, the Registrar is empowered by statute to impose reasonable conditions which may serve to reduce or eliminate any otherwise appropriate disciplinary penalties for proven violations of the State’s contracting laws. Whenever the performance of corrective or remedial measures on a jobsite is no longer warranted or possible, the inclusion of a condition in the nature of restitution, total or partial, is fully appropriate and equitably justified. Such authorization to provide for restitution from a contractor to a prevailing party in an administrative action has been legally upheld in Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (1990), and subsequently was expressly confirmed by the statutory enactment of A.R.S. §32-1156.01.

By utilizing a restitutionary condition in the Registrar’s Order when deemed appropriate, a Complainant in an administrative action who has sustained the burden of

proving contracting law violations does not have to await the outcome of protracted civil litigation in order to recover at least a portion of a demonstrated loss and, of equal or perhaps greater significance, a licensed contractor/Respondent is given the means to control, to some extent, the severity of any disciplinary penalty. Moreover, any amounts paid in satisfaction of a condition affecting licensure may properly be evaluated, credited or applied against any civil judgment ultimately obtained in favor of either party.

4. In this case, an appropriate restitutionary condition would consist of the payment by Respondent to Complainant of the amount of $13,500.00, a sum that is approximately equal to the minimum amount of demonstrated losses attributable to Respondent’s actions or inaction.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class A- license shall be revoked on the effective date of the Order entered in this matter.

It is further recommended that if Respondent pays or tenders the sum of $13,500.00 to Complainant on or before this Order’s effective date, then no license revocation shall be imposed, but instead, Respondent’s Class A- license shall be placed on active suspension for a period of fifteen (15) days followed immediately by a period of disciplinary probation for ninety (90) days. This alternative penalty shall commence, if at all, on the effective date of the Registrar’s Order.

If the above-provided payment condition is not timely satisfied by Respondent, resulting in the revocation of its Class A-21 license, it is further recommended that the

Registrar promptly consider the propriety of initiating separate administrative disciplinary proceedings against any and all other licenses held by Respondent’s corporate entity or by any person listed on its license.

Dated: October 30, 2001. 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