ALJDEC

01F-M1266-ROC · Registrar of Contractors · 2001-12-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 21, 2001 APPEARANCES: Complainant was represented by its general manager, Julia Dye, and its president and qualifying party, Wayne Wales. Respondent was represented by its owner and qualifying party, Robert La Ganke. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ 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. Complainant is a licensed commercial air conditioning and refrigeration contractor. 2. Respondent is the holder of License Number 113126, a Class B-01 general commercial contractor license, issued by the Registrar of Contractors. 3. Respondent was the general contractor for the Laser Vision Institute project located at 3851 East Thomas Road, Phoenix, Arizona. 4. On or about October 10, 2000, Complainant and Respondent entered into a Subcontract Agreement. Under that agreement, Complainant agreed to “furnish all labor, material, supplies, equipment, services, machinery, hoisting equipment, tools and other facilities of every kind and description required for the prompt and efficient execution of Complainant’s specified scope of work. 5. Pursuant to Section B of the agreement, Complainant’s scope of work included, but was not limited to, furnishing all labor, material and equipment to complete HVAC work as follows:

a) Units are existing. b) Install exhaust fans with ducts and roof caps. c) Install thermostats per plans. d) Install ¾” X 48” walkway on roof. e) Install all supply and return air ducts complete with supply registers and return air grills as per plans. f) Install new filters at completion of project. g) Install all 24 volt wiring for contracted work.

6. Section C of the agreement further provided that “(t)he prime contract contains a liquidated damages clause in the amount of $500.00 per day for which the Subcontractor shall be liable as provided in Article 9 of the General Terms[1]”. 7. Complainant was to receive the sum of $20,000.00, subject to the provisions of the General Terms. 8. The parties’ original agreement did not specify a commencement date. Respondent subsequently provided Complainant with two separate work schedules. 9. There were three different sets of plans used during the project. 10. The job did not start on time due to issues between Respondent and the project’s owner. The commencement of the job was delayed for approximately five days. 11. The delay in the job’s commencement is found to have delayed Complainant’s ability to timely commence its work. 12. Complainant was also delayed in the performance of its work due to it being supplied incorrect HVAC equipment by the owner. The owner-supplied equipment was not designed for the Arizona climate. Complainant had completed the fabrication of duct work for the original units, but could not install them because the units had to be replaced. 13. When the correct Liebert machines were delivered, one unit had a freon leak and a burnt transformer which was repaired by Complainant at no additional cost. Complainant also fabricated a filter rack for the system as well as new duct work. That additional work, not originally contemplated by the parties, delayed Complainant’s work schedule. 14. On or about November 10, 2000, Complainant submitted a written change order to Respondent covering the following described work:

a) Additional return grills; b) Supply registers; c) Filter rack for Liebert unit; d) Ducts; and e) Lift rental

The scope of work under the change order was requested by Respondent and was not included in the original plans. The price for the change order, which included labor and materials, was $2,289.50. Although Complainant performed the scope of work under the change order as verbally requested by Respondent, Respondent never signed the change order. 15. On November 6, 2000, Complainant’s HVAC rough-in work passed inspection. 16. On or about November 7, 2000, Respondent’s superintendent sent Complainant a written urgent housekeeping notice to properly clean up its work on the jobsite. Complainant agrees that it needed to clean its work area. 17. Complainant also supplied and installed dampers in both return and supply grills off the roof -top unit and replaced a thermostat as verbally requested by Respondent. After the work was completed, Complainant submitted a written change order covering that work. Respondent never signed the second change order. 18. Respondent certified in an application for payment submitted to the project’s owner that Complainant’s HVAC work, including the change order work, had been completed. 19. The project’s owner paid Respondent in full for the HVAC work. 20. A dispute developed between the project owner and Respondent as to Respondent’s liability for liquidated damages as a result of the project not being timely completed. 21. Respondent contends that it was entitled to retain a portion of funds owed to Complainant for liquidated damages claimed by the owner. Respondent claimed that Complainant was responsible for some of the delays in completion. 22. There is no credible evidence of record to establish that Complainant caused any unreasonable delays in completion of the project. 23. On or about March 23, 2001, Respondent tendered a check in the amount of $1,138.50 to Complainant. However, that check could not be cashed by Complainant due to insufficient funds in Respondent’s bank account. 24. Respondent later paid the $1,138.50 to Complainant. 25. Although Respondent had been paid in full for Complainant’s work but retained a portion of it as liquidated damages, Complainant was eventually paid in full by the project owner. Respondent later reimbursed the owner for the funds paid to Complainant.

26. Respondent’s failure to timely pay Complainant in full after receiving funds for the HVAC work and its tender of a check with insufficient bank funds to Complainant are deemed wrongful acts which have substantially injured the Complainant.

CONCLUSIONS OF LAW

1. The evidence of record is adequate to establish that Respondent has violated the provisions of A.R.S. § 32-1154(A)(7) and (11).

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the entered Order in this matter that Respondent’s Class B-01 license be placed on disciplinary probation for a period of 90 days.

Done this day, December 10, 2001

______________________________________ Brian Brendan Tully Administrative Law Judge

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

Registrar of Contractors Michael P. Goldwater, Director ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] Although there was some testimonial evidence pertaining to the General Terms, the actual document was not offered as evidence.

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