ALJDEC

01F-A0250-ROC · Registrar of Contractors · 2001-08-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 25, 2001. APPEARANCES: Eugene White appeared on his own behalf. Respondent was represented by its qualifying party, Shawn Edwards. ADMINISTRATIVE LAW JUDGE: Gregory L. Hanchett _____________________________________________________________________ This complaint involves allegations that Respondent Finishing Touch (hereinafter Respondent) violated A.R.S. §32-1154(A)(1) (abandonment of contract without legal excuse), A.R.S. §32-1154(A)(3) (failure to comport with any rule promulgated by the Registrar, namely, the workmanship standards prescribed in A.A.C. R4-9-108), A.R.S. §32-1154(A)(7) (committing a wrongful or fraudulent act that results in substantial injury to another), and A.R.S. §32-1154(A)(11) (failure by a licensee to pay amounts due and owing when he has the capacity to pay). Based upon the evidence and testimony presented at the hearing, the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. In February, 2000, Complainant Eugene White (hereinafter Complainant) and Respondent Finishing Touch (hereinafter Respondent ) entered into a contract whereby Respondent was to act as the general contractor to build Complainant’s new home. 2. The contract called for Respondent to provide material, labor, and equipment to complete the building of the new home. Respondent was to be paid $327,000. Complainant choose certain subcontractors to do some of the work, such as the insulation, electrical, plumbing, HVAC system, finish floor covering, roofing, electrical, and drywall. Complainant obtained bids form these subcontractors . Pursuant to the parties’ agreement, however, Respondent was to contract with the subcontractors and the subcontractors were to be paid by Respondent . 3. The contract quite clearly demonstrates that the bids for all of these subcontractors were considered by the parties when they entered into their agreement. Indeed, the specific amounts of the bids for the lighting and electrical, finish floor covering, drywall, appliances, and fireplace are set forth in the contract. The contract also references a specific bid from the roofing contractor, but does not set forth the dollar amount of the bid. The contract specifically requires that any changes that are to be made to the contract must be executed by a “contract change order.” Though not entirely clear, it appears from the context of the language of the contract that the parties intended that any such contract change orders be in writing. 4. It appears from the facts adduced at the hearing that the Respondent simply underbid the job. Soon after beginning the job, Respondent ran into cash flow problems. Respondent has admitted that he was obligated to pay but failed to pay three material suppliers: Lumbermen’s, Banker Insulation, and Waste Management. At the hearing, a representative from Lumbermen’s testified that despite providing over $17,000 dollars in materials, Respondent never paid any of the bill. Repeated calls to Respondent went unanswered. Finally, in order to keep materials flowing to the project, Complainant paid Lumbermen’s $11,080.00. Lumbermen’s then sought relief by taking Respondent’s bond in the amount of $5,000. Lumbermen’s then wrote off the balance, approximately $2,000. Respondent has never paid Banker Insulation. The amount owed to Banker is $3,878.00. In an effort to stave off any attempt to place a lien against Complainant’s property, Respondent offered to provide a promissory note to Banker Insulation. Banker Insulation refused to accept the promissory note but has not, as of yet, placed any lien against the Complainant’s home. Finally, Respondent has failed to pay Waste Management for charges incurred to remove trash and debris form the job site. The amount owed to this entity is $1,162.21. 5. Several areas of workmanship in the home were deficient and did not comport with the standards set forth in A.C.C. R4-9-108. Specifically, the drainage culvert clean outs in the yard did not meet Yavapai County requirements, the driveway of the home was not constructed as per the construction plans, and there is a large crack in a retaining wall on the property. Smaller items of poor workmanship include the fact that the stove top cut out in the linoleum countertop was too large, necessitating the replacement of that portion of the countertop. Respondent refused to pay for the replacement. As a result, Complainant incurred costs of $242.00 to have a different contractor come out and properly install the countertop. 6. The parties’ business relationship deteriorated to the point where Respondent no longer wished to communicate with Respondent other than in writing. 7. Complainant testified that he in essence loaned Respondent $18,000 which Respondent has failed to pay back to him. While there is evidence to suggest that this is so, this is not a forum that can award contract damages. The purpose of this forum is to ensure the protection of the public from poor workmanship. Complainant should pursue his contract matter in superior court. 8. At the hearing, Respondent testified that he refused to do any further work to Complainant’s residence because Complainant failed to pay him the entire amount of the purchase price. The weight of the evidence does not support this affirmative defense. The Complainant’s testimony is found to be credible on this point and supports the claim that Complainant has paid all amounts due and owing to Respondent. Accordingly, Respondent’s failure to correct the deficiencies was wrongful. 9. Respondent has indicated that he is ready, willing, and able to complete repairs, but had not done so because he believed he had not been paid the full amount of the contract amount 10. The undersigned has reviewed and considered Complainant’s two year complaint history in arriving at the recommended disposition in this matter. CONCLUSIONS OF LAW 1. A.R.S. § 32-1154(A) provides in pertinent part: A. The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: (1). Abandonment of a contract or refusal to perform after submitting a bid without legal excuse for the abandonment or refusal. * * * (3). Violation of any rule adopted by the registrar. * * * (7). The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. * * * (11). Failure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay . . . A.A.C. R4-9-108 specifically states that “[a]ll work shall be done in a workmanlike manner.” 2. The Complainant has the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996). A "preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not." Morris K. Udall, Arizona Law of Evidence, §5 (1960). It "is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not." Black's Law Dictionary, 1182 (6th ed. 1990). 3. The evidence as demonstrated in Findings of Fact Paragraph Eight above establishes that Respondent violated A.R.S. § 32-1154(A)(1) by refusing to return and complete repairs without legal excuse. 4. The evidence as demonstrated in Findings of Fact Paragraph Five above establishes that Respondent violated A.R.S. § 32-1154(A)(3) by failing to comply with the administrative requirement that work be performed in a workmanlike manner. 5. As shown by Findings of Fact Paragraphs Four , Five, And Nine above, the evidence shows that Respondent engaged in a wrongful act in violation of A.R.S. § 32-1154(A)(7). Respondent’s failure to pay some of the material suppliers for materials provided for construction of Complainant’s home caused economic injury to the materialmen not paid. Further, it has resulted in economic injury to Complainant because he has had to pay additional money out of his own pocket to keep materials flowing to the project. 6. The evidence, as shown by Findings of Fact Paragraph Four above demonstrates that Respondent violated A.R.S. § 32-1154(A)(11) by failing to pay monies in excess of seven-hundred fifty dollars when due and owing. RECOMMENDED DECISION In view of the foregoing, it is recommended that Respondent’s Class B License Number 137488 shall be suspended upon the effective date of the final order in this matter unless, prior to that time, written proof is submitted that (1) Respondent has completed appropriate and effective remedial work to the following items: (A). Install the driveway in accordance with the plans; (B). Remove spatters and overspray, complete all caulking, paint touch up, and painting that remain to be completed in the home; (C). Repair crack in concrete wall by stairs; (E). Finish installation of crawl space door; (F). Provide and install garage door openers; (G). provide and install garage cabinets; (2) Respondent has paid or tendered to Banker Insulation the amount of $3,878.00, (3) Respondent has paid or tendered to Waste Management the amount of $1,162.21; (4) Respondent has paid or tendered to Complainant the amount of $242.00 for costs incurred by Complainant in having the properly cut replacement stove countertop installed. In the event that written proof of the above is submitted on or before the effective date of the final order in this matter, then the above described license suspension should not take place and the citation and complaint against Respondent should be closed. It is further recommended that an additional sanction of a one year period of disciplinary probation be imposed against license number 137488. If Respondent’s license is suspended as a result of failing to submit the aforementioned written proof of compliance within the prescribed time limit, then the period of disciplinary probation shall not commence until such time as the suspension is lifted. If Respondent submits the aforementioned written proof within the prescribed time limit, then the disciplinary probation shall commence on the effective date of the final order entered in this matter. Done this day, August ___, 2001

______________________________________ Gregory L. Hanchett 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