ALJDEC

01F-G0262-ROC · Registrar of Contractors · 2001-03-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 27, 2001. APPEARANCES: COMPLAINANT: by Stewart Hoover, Esq., with Joe Jones, president and qualifying party. RESPONDENT: by Roy Jensen, president and authorized representative.

ADMINISTRATIVE LAW JUDGE: Anthony Halas _____________________________________________________________________ Hearing was convened to determine whether Respondent Beach Products violated state law as alleged by Complainant Sancado Construction, Inc. and as cited by the Registrar of Contractors. Evidence and testimony were presented, and based on the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Decision are made:

FINDINGS OF FACT 1. Complainant Sancado Construction (Sancado Construction) is a corporation doing business as a licensed Arizona contractor specializing in residential and commercial remodeling. Joe Jones (Jones) is an officer in the corporation and qualifying party for the license. 2. Respondent Beach Products (Beach Products), which holds Arizona Contracting License No. 069832, is a subdivision of APA Industries Inc., a corporation. Roy Jensen (Jensen) is a corporate officer, and qualifying party for the license. 3. On September 11, 2000, Complainant filed a complaint with the Registrar of Contractors (Registrar) alleging that on a school bathroom renovation on which Sancado Construction was the general contractor, Respondent Beach Products, as its subcontractor, had supplied and installed metal bathroom toilet partitions instead of the plastic partitions ordered, and had not finished installing the partitions on time. 4. In responding to the complaint, Beach Product’s representative Jensen contended that Sancado Construction had failed to specify “plastic” (i.e., “polymer”) in the layout it had provided Respondent, such that Respondent’s bid proposal had quoted its standard floor-mounted, headrail- braced metal partitions for $1875.00, with the metal painted with a powder- coat finish, and that the proposal had been marked OK and returned by Sancado’s representative (Vicki Jones). 5. When the matter was not resolved administratively, the Registrar issued CITATION AND COMPLAINT to Respondent on December 1, 2000, charging the licensee with possible violations of A.R.S. § 32-1154.A.3 (and A.A.C. R4-9-108, the workmanship rule), and A.7. 6. Upon Respondent’s timely answer, the matter was set for hearing, and based on the testimony and evidence adduced therein, and administrative notice of the record, the following chronology of events and circumstances is found to be relevant to the complaint: 7. Sometime after April 26, 2000, Sancado Construction was soliciting bids from subcontractors in order to submit a sealed bid on a general contract to be let by the Wickenburg Unified School District No. 9 (the District) for restroom renovation work to be done at the Hassayampa Upper Middle School (the School), based on specifications provided by the District in Bid Call 00-012, issued April 26, 2000 (Exhibit 1, the Bid Call). Due date for any general contract bid was 2:00 p.m., May 16, 2000. 8. A portion of the overall restroom renovation contract was for installation of new bathroom toilet partitions based on the specification that: Partition walls shall be Metpar HDPE partition wall system as manufactured by Metpar Corp. Westbury, New York.

(Emphasis added. See, Exhibit 1, page 12: Section E. “Equipment/Material Specification”, Item 9. Hereinafter, “Specification E.9”)

9. Ty Springer, building director for the District, testified to explain that partitions of this “plastic”-based material had been installed (by a contractor whose name he did not know) on a recently-constructed high school in the District, and were known for resistance to graffiti and ease of cleaning, and so were included in Bid Call specification E.9 for that reason. 10. So, when he was contacted with questions by Jones for Sancado Construction after the District released the Bid Call with specification E.9, Springer had searched the Internet for information on Metpar, the manufacturer of the partitions used in the high school. He then called Metpar, and was given the name of Beach Products as local distributor of the “HDPE” (i.e., plastic or polymer) partition. 11. Springer stated that “a week or two” before the May 16, 2000 deadline for the sealed bids he had called Beach Products and spoken to Jensen about the bathroom renovation project to confirm the company could provide the plastic partitions. 12. Springer did not recall whether he had given Jensen the name of Sancado Construction or Joe Jones as the possible contractor, and he did not know whether anyone had provided Beach Products with a copy of Bid Call specification E.9 for use in its proposal (which proposal he had not seen before this dispute arose). 13. Joe Jones testified to describe his 20 years experience in the construction trades, and the residential and commercial work done by Sancado Construction, Inc. 14. Jones explained his review of the bathroom renovation Bid Call specifications and stated that because he had no experience in bathroom toilet partitions and specifically Metpar HDPE partitions, he had called Springer, who gave him a Metpar advertisement (Exhibit 2) and the name of Beach Products as the distributor of that type of partition. Jones had also gone to the high school to view the HDPE partitions already installed there. 15. Based on that information, Jones then contacted Beach Product’s estimator (Blair Peterson) “a couple weeks” before the May 16, 2000 bid due date. Jones stated that in that conversation, he had discussed the bathroom renovation project with Peterson and then read him specification E.9, after which Peterson explained that the HDPE partition was a polymer product. 16. Jones stated that he had no idea Metpar made (or Beach Products distributed) any other type of partition. Jones also denied any awareness that “powder coating” was a process used to paint metal, or knowledge that the color of the HDPE was part of the manufacturing process, rather than a paint applied later. 17. Jones stated that in that same conversation he had advised Peterson to come (from Phoenix) to the site (in Wickenburg) to measure the existing partitions which were to be replaced in the renovation, but that a day or two later Peterson had called back to say it would be easier if Jones made the measurements and faxed them to Beach Products as a “layout” (Exhibit 4), which he did. Jones stated Peterson did not say any further information was necessary for Beach Products to make a proposal. 18. Jones also thought, but could not confirm, that at some point, presumably when he had faxed the layout, he had also faxed specification E.9 to Peterson, since that was his practice in soliciting proposals from subcontractors, generally and on this project (See, Exhibit 7). 19. Jones stated that the District’s bidding process required that Sancado Construction (and anyone else) submit its sealed bid by 2:00 p.m. on May 16, 2000. Because Jones did not yet have a proposal from Beach Products as the possible subcontractor to supply and install the bathroom partitions, he had his wife, Vicki Jones, an occasional helper and secretary in his home-based office, telephone Peterson at Beach Products that morning for a price quote. 20. Vicki Jones testified that Peterson quoted her $1875.00 to supply and install the partitions, which information she gave to Joe Jones. Because Jones thought the price sounded low, he had her call back to have Peterson confirm it, which he did, joking that he could raise the price if she wished. In the second call, as with the first, Vicki Jones stated that only the price was discussed, with nothing said about materials. 21. Jones then included that amount in his sealed bid, which he submitted to the District about fifteen minutes before the deadline at 2:00 p.m. on May 16, 2000, and which bid was accepted by the District a short time later. 22. Beach Products then faxed Joe Jones a “QUOTATION “ dated May 18, 2001(Exhibit 5), for the Wickenburg School which provided in pertinent part:

TOILET PARTITIONS METPAR MANUFACTURE FLOOR MOUNTED, HEADRAIL BRACED, POWDER COAT (5) COMPARTMENTS (2) WALL HUNG SCREENS

INSTALLED PRICE. . .$1,875.00

23. In her testimony, Vicki Jones confirmed that sometime shortly after receiving the QUOTATION, she had faxed it back to Beach Products with certain annotations over her signature (Exhibit 6): Work must be done in this time frame June 12th to July 28th. OK /s/ Vicki J. Jones

24. As per the terms of the QUOTATION, one-half the price (or $937.50) was to be paid prior to installation, and it is undisputed that Sancado Construction did so. However, no further significant communications occurred (other than Vicki Jones’ request that Beach Products provide a color chart, which it did on May 23, 2000) between Sancado Construction and Beach Products for several months until Beach Products’ was advised of the District’s color choice on July 20, 2000. 25. Then, on August 2, 2000, when Beach Products’ workman was actually installing the partitions, Joe Jones discovered that the partitions were metal rather than the plastic or polymer HDPE per spec. He had the installation halted until Beach Products confirmed that HDPE partitions would not be available for several weeks. Since the school was to open for the new school year in the near future, there was not time to wait, so Jones had the installation completed as started, and as it now stands. 26. The rationale of Sancado Construction in pursuing this complaint is that any error or mistake in the terms of the contract formed, and upon which Sancado Construction relied in making its sealed bid to the school, was unilateral on the part of Beach Products in assuming, and therefore quoting, supplying, and installing metal partitions instead of HDPE partitions as specified by the District. 27. Sancado Construction further asserts that Beach Products was unreasonably late in performing installation, such that Sancado Construction was left without time to correct the error in material once discovered. 28. Finally, Sancado Construction therefore asserts that Beach Products should be required to remove the metal partitions and replace them with HDPE partitions at the original contract price of $1875.00 (of which $937.50 has been paid), or be subject to discipline by the Registrar of Contractors. 29. Roy Jensen testified for Beach Products to describe the business done by the company under its specialty contractor’s license in subcontracting to supply and install bathroom partitions, which were primarily used in commercial projects, rather than residential. 30. Jensen explained that the company offered the Metpar product line of partitions (Exhibit A), but that partitions made of the polymer HDPE (“High Density PolyEthylene”) were always a factory order and took 6 to eight weeks because color choice was part of the manufacturing process. He stated that although HDPE partitions had been available for some years from other manufacturers, that material had only been offered by Metpar for about two years. 31. Jensen stated that HDPE partitions were significantly more expensive than metal and comprised only about 5 - 8% of the partitions his company supplied (with metal comprising 90% such that Beach Products maintained several metal colors always in stock. Other materials comprised the few remaining percent). For that reason, Beach Products’ “default” practice - generally understood by the trades and contractors it dealt with, and as was done in this instance - was to quote for metal partitions unless another material was named in the plans or specifications provided by the contractor. 32. Jensen did not dispute that he had spoken with Springer on Springer’s inquiry about Metpar HDPE products for a school bathroom renovation project, or that Jones had called and spoken on the same subject with Beach Products’ estimator Peterson, with such conversations some weeks before the May 18, 2000 QUOTATION, and with such general conversations just two of many such conversations his estimators would have over any several- week period of time. 33. In reviewing Beach Products’ paperwork relative to this project, Jensen denied that his company had been provided any written specification or information that the partitions in question should be HDPE rather than metal at any time through the QUOTATION on May 18, 2000, or any information that the QUOTATION was to be made a part of a sealed bid by Sancado Construction to the District. 34. Jensen stated that the only two pieces of written information Sancado Construction had provided were the hand-drawn “layout” by Joe Jones (Exhibit 4), which had no indication the partitions were to be plastic, and the annotations made by Vicki Jones and returned on the QUOTATION indicating “OK”, with the time frame in which the work would be done (Exhibit 6). 35. Jensen thought the reference to “powder coat” in his company’s May 18, 2000 QUOTATION to Joe Jones would have placed any experienced contractor on notice that the partitions described would be metal, since “powder coat” described a method of painting metal and not HDPE polymer, in which the color was an integral part of the manufacturing process rather than painted on. In addition, Jensen thought the terms used in the color chart later provided Sancado Construction, and from which the District chose the color of the partitions, should have further indicated that the product was metal, not plastic. To those ends, Jensen also presented the testimony of Craig Maxwell, a manufacturer’s rep, and Bob Rowlands, a licensed general contractor. 36. The position of Beach Products is that Sancado Construction failed to provide the essential written specification for HDPE during contract formation, in contrast to the subject matter of the casual conversations some weeks earlier, which should not be deemed to be part of the contract. 37. Beach Products considered the choice of materials to be an essential term, contending that if it had been properly provided specification E.9, and therefore known that the partitions were to be HDPE rather than metal, it would have presented (and later in August 2000, after finally being provided that specification, did present) a quotation of $4286.00 with “solid plastic” indicated, instead of its original QUOTATION for $1875.00 with “powder coat” indicated. 38. In addition, Beach Products asserts that its QUOTATION and subsequent color chart should have placed Sancado Construction on sufficient notice that the partitions would be metal rather than HDPE. 39. Beach Products further contends that it was not late in performing installation of the partitions, but instead relied on the timetable of Sancado Construction in providing the District’s color choice on July 20, 2000, with installation then reasonably beginning on August 2, 2000. 40. Beach Products therefore asserts that unilateral mistake, if any, was on the part of Sancado Construction, and that the contract should be enforced in which the metal partitions were supplied and installed for $1875.00, or that bilateral mistake prevented any contract formation, all such that its license should not be disciplined.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent with possible violations of A.R.S. § 32-1154.A.3 (and A.A.C. R4-9-108, the workmanship rule), and A.7. Those statutory sections require that a holder of a license or a person listed on a license shall not commit the following:

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.

(A.A.C. R4-9-108 provides that all work shall be done in a professional and workmanlike manner, and in accordance with any applicable building codes and professional industry standards.)

CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction to consider this matter, pursuant to A.R.S. § 32-1101, et. seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. To warrant such sanctions by the Registrar, Complainant must demonstrate by a preponderance of the evidence that Respondent violated either, or both, of the statutory sections cited. Culpepper v. State of Arizona, 187 Ariz. 431, 930 P.2d 508 (App. 1996). Proof by a “preponderance” means that “the evidence is sufficient to persuade the finder of fact that the proposition is more likely true than not.” In re: Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994. 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 (Rev. 6th ed. 1990).

3. On due consideration of the evidence and testimony presented, it is concluded by this tribunal that this record does not demonstrate any failure by Beach Products in meeting workmanship standards. Therefore, no violation of the workmanship rule, A.A.C. R4-9-108, and A.R.S. § 32- 1154.A.3 has been proven. 4. It is further concluded that the preponderance of the evidence does not demonstrate that Respondent Beach Products was otherwise late in performing installation, as alleged in the complaint, so no wrongful act in that respect has been proven pursuant to A.R.S. § 32-1154.A.7. 5. Relative to the question of the contract terms and formation, it is readily apparent to this tribunal that both parties intended to enter into a contract in which Sancado Construction would pay Beach Products to supply and install bathroom toilet partitions. 6. Beyond that general agreement, however, it is further apparent that the essential term for the material Beach Products ambiguously defined as metal but no doubt intended to supply as metal was not the term Sancado Construction had in mind for the material it had failed to adequately specify as plastic but no doubt intended to accept as plastic. 7. It is a basic prerequisite to the formation of a binding contract that there must be mutual assent, or a meeting of the minds, of both parties on all essential elements and terms. In that regard, different meaning attached by the parties to ambiguous language used by either of them may preclude the meeting of the minds required in forming the contract. 8. So, for purposes of this disciplinary proceeding, when an offerer such as Beach Products - using language of latent ambiguity in its proposed QUOTATION, i.e., “powder coat” to mean metal and not plastic - reasonably means one thing based on industry standard, and an offeree such as Sancado Construction reasonably understands that another thing was meant based on a specification for HDPE plastic it had clear knowledge of but had only casually discussed with Beach Products, there is no meeting of the minds. Without such, there is no contract, and it is so concluded herein. 9. In addition, assuming for the sake of argument that any mistake was unilateral on the part of Beach Products such that sufficient contract formation occurred to be enforceable, it must be noted that the principals of contract law hold that one who accepts a written contract is conclusively presumed to know its contents and to assent to them, in the absence of fraud or misrepresentation by the other party. 10. In this instance, the testimony and evidence adduced relative to the proposed QUOTATION (Exhibit 5) confirms that only the price term quoted by Beach Products elicited a telephonic request for clarification by Sancado Construction, which when provided ended the inquiry. (Whether that inquiry should have perhaps piqued the curiosity of one party more than the other is debatable, but deemed not determinative of the issue herein.) 11. Furthermore, by signature (Exhibit 6) there is assent, without question and with at least apparent authority, by Sancado Construction’s representative to the enigmatic terms of the QUOTATION describing the toilet partitions to be supplied and installed, about which quote there is no indication of wrongful act or fraud, or misrepresentation. For that reason, the undersigned finds and concludes that the presumption that Sancado Construction accepted the terms proposed by Beach Products has not been rebutted. 12. Therefore, it is concluded by the undersigned that the evidence does not demonstrate, by a preponderance, that Respondent Beach Products acted wrongfully or fraudulently in its dealings with Complainant Sancado Construction, so no violation of A.R.S. § 32-1154.A.7 is proven. // //

RECOMMENDED DECISION On the basis of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors dismiss the CITATION in Case No. G01-0262, and the COMPLAINT upon which it is based. Done this day, March 13, 2001.

______________________________________ Anthony Halas 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