ALJDEC

01F-P0185X-ROC-RES · Registrar of Contractors · 2002-03-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 13, 2002 at 8:30 a.m. APPEARANCES: Complainants Paul and Mary Wade appeared on their own behalf; Respondent Woodland Homes did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky ________________________________________________________________

Complainants presented evidence on whether Respondent violated A.R.S. § 32-1154(A)(1), (2), (7), (20), (23), or (3) in constructing Complainants’ residence. Based the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order to the Registrar of Contractors. FINDINGS OF FACT Procedural and License Background On July 22, 1996, the Registrar issued License No. 116021, Class B-, to Respondent Woodland Homes, a corporation. The persons listed on Respondent’s License No. 116021 were Steven Lowell Allen, qualifying party, and Lester Todd Johnson. On February 27, 2001, the Registrar issued License No. 162347, Class B- to Woodland Homes, LLC, a limited liability company. The persons listed on Woodland Homes, LLC’s License No. 162347 were Lester Todd Johnson and Steven Lowell Allen, members. On February 27, 2001, Respondent’s License No. 116021 was canceled and its responsibilities and liabilities were assumed by Woodland Homes LLC under License No. 162347. Neither the Registrar nor Complainants were parties to the assumption agreement. On March 1, 2001, Complainants Paul and Mary Wade made a complaint against Woodland Homes LLC’s contractor’s license, alleging a claim based on an amended contract for construction of their residence and alleging that Woodland Homes LLC owed them $20,000 under the contract. Attached to Complainants’ complaint was a list of 10 specific workmanship deficiencies or breach-of-contract claims. The Registrar designated Complainants’ complaint against Woodland Homes, LLC’s License No. 162347 Case No. P01-0185 and their complaint against Respondent’s License No. 116021 Case No. P01-0185X. The complaint was assigned to the Registrar’s Inspector Tom Sandoval to investigate. After Inspector Sandoval investigated the complaint and issued a corrective work order, Complainants requested a hearing. On May 2, 2001, the Registrar issued a Citation and Complaint, charging both Respondent and Woodland Homes, LLC with violations of A.R.S. § 32- 1154(A)(1), (2), (7), (20), (23), and (3). A single written answer was filed on behalf of both Respondent and Woodland Homes, LLC. The matter was referred to the Office of Administrative Hearings and a hearing was scheduled for August 14, 2001 before Administrative Law Judge Dorinda M. Lang. At the August 14, 2001 hearing, Complainants appeared and testified on their own behalf and Messrs. Allen and Johnson appeared and testified on Respondent’s and Woodland Homes, LLC’s behalf. Judge Lang issued a Recommended Decision on August 30, 2001, which the Registrar substantially adopted on September 25, 2001. On October 30, 2001, Complainants requested a rehearing based on alleged irregularities on the hearing and the judge’s alleged failure to consider evidence that contradicted her factual findings. Although the motion for rehearing was sent to Messrs. Allen and Johnson, neither Respondent nor Woodland Homes, LLC responded to the motion. Judge Lang did receive notice Woodland Homes, LLC had filed for protection under the United States Bankruptcy Code. On November 9, 2001, Judge Lang recommended to the Registrar that, in light of Woodland Homes, LLC’s bankruptcy and the automatic stay under 11 U.S.C. § 362(a), no further action should be taken until the bankruptcy case was dismissed or closed, Complainants obtained relief from the stay, or the license was no longer the property of the bankruptcy court. Judge Lang did not address the merits of Complainants’ motion for rehearing. On November 28, 2001, the Registrar accepted Judge Lang’s recommendation with respect to the complaint against Woodland Homes, LLC’s License No. 162347 and closed Case No. P01-0185. With respect to Case No. P01-0185X, however, the Registrar rejected Judge Lang’s recommendation on the motion for rehearing and remanded Case No. P01- 0185X, Complainants’ complaint against Respondent’s License No. 116021, to the Office of Administrative Hearings for “a hearing in the normal course of docketing.” On December 24, 2001, the Registrar issued a notice of rehearing, setting a hearing on March 13, 2002 before the undersigned Administrative Law Judge. The notice was sent to Woodland Homes at P.O. Box 2680, Show Low, AZ 85901-2680, its address of record with the Registrar and the same address that the previous Citation and Complaint and original Notice of Hearing had been sent. A rehearing lasting approximately 2½ hours was held on March 13, 2002, at which Complainants testified and had admitted into evidence six exhibits. Although the beginning of the scheduled hearing was delayed fifteen minutes to allow Respondent additional travel time, it neither appeared, through a duly authorized employee or attorney, requested a continuance or that the beginning of the hearing be further delayed, nor presented any evidence in its own defense. The Administrative Law Judge explained on the record that, since Case No. P01-0185 had been closed before the Registrar’s final order took effect and since the Registrar had granted an unconditional rehearing to Complainants in Case No. P01-0185X, she would not give Judge Lang’s recommended decision and the Registrar’s adoption thereof any preclusive effect on any issue. Complainants were required to present evidence to establish each of Respondent’s alleged statutory violations. Facts Established at Hearing Notice to Respondent of Rehearing Inspector Sandoval testified that the post office box that was Respondent’s address of record had been closed some time ago. A week before the hearing, Mr. Allen had requested a change of address for the license that he was currently using to conduct contracting business, No. 166530, Class B-, which the Registrar had issued to Lakeshore Development Corporation. The Registrar had not yet processed the change of address for Lakeshore Development Corporation when the rehearing in this matter was held. Complainant Mr. Wade testified that, two or three weeks before the hearing, he saw Mr. Allen at Precision Lumber. Mr. Allen had asked to speak to Mr. Wade outside. Mr. Allen apologized for the problems in construction of Complainants’ residence and said Mr. Johnson was working for another contractor in Bullhead City. Mr. Wade asked Mr. Allen if he was aware of the rehearing scheduled in this matter. When Mr. Allen said he was not, Mr. Wade told him that the rehearing had been scheduled on March 13, 2002, at 8:30 a.m., at the Registrar’s Show Low office. Workmanship Deficiencies Complainants offered into evidence an Apache County Building Inspection Department Report dated October 30, 2000, initialed “HR,” that required correction of the rafters and ridge beams at Complainants’ residence, in relevant part as follows: 24. Need to engineer headers where ridge beams rest.

25. Need TJI’s approval for rafters and where they rest on outside wall and beam.

Inspector Sandoval testified that he had performed a jobsite inspection and, on March 20, 2001, had directed Respondent to perform certain corrective work, in relevant part as follows: 27. Poor workmanship. . . . .

AB. Ventilation at roof, over great room. Contractor to provide venting if required by local jurisdiction or provide paperwork showing not needed. . . . .

6. Failure to resolve defect in roof construction. Contractor must correct by appropriate means and to current and local codes.

[Emphasis in original.] After the initial inspection, Inspector Sandoval contacted Homer Roger, the head of inspections at the Apache County Building Inspection Department. Mr. Roger informed Inspector Sandoval that the County required vents for the kind of roof installed at Complainants’ residence. Complainant Mr. Wade contacted TJI, or Truss Joist MacMillan, the engineering firm that had designed the truss and roof on the residence. As a courtesy to Complainants, it prepared engineering drawings to correct the problems in the rafters and ridge beam identified in the County’s inspection report, which it furnished to Complainants on March 22, 2001. TJI told Mr. Wade that Respondent had not contacted it after Inspector Sandoval had issued the corrective work order. Shortly thereafter, Mr. Wade provided TJI’s drawings to Respondent. Respondent’s representative told Mr. Wade that it did not like TJI’s proposed fix and thought there was a better way to fix the problem. Respondent promised to contact TJI about the counter-proposal. After five months, Mr. Wade called TJI and was told that Respondent still had not contacted it about the plan to fix the rafters and ridge beams. Inspector Sandoval performed a pre-hearing jobsite inspection on August 13, 2001, which Messrs. Wade and Johnson attended. Inspector Sandoval testified that, as to the defects identified in the corrective work order, (1) although Respondent had begun repairs by applying bird boards under the eaves, it had not installed a ridge vent; and (2) Respondent had placed hangers at the wall, but otherwise had not performed any work to correct the defects identified in the County’s October 30, 2000 inspection report. Complainants testified that Respondent had made no further attempts to remedy workmanship defects or to comply with Inspector Sandoval’s corrective work order after August 13, 2001. Breach of Contract On May 26, 2000, Respondent contracted with Complainants to construct a residence for a total contract price of $168,240.00. Remaining payments required by the contract were $15,000.00 on or before June 10, 2000; $33,648.00 upon completion of the stem wall; $58,884.00 upon completion of rough framing; $33,648.00 upon the installation of the rough electrical and rough plumbing; $16,824.00 upon the installation of the doors and hardware; and $8,412.00 upon “the completion of described work to be completed by the contractor.” The original contract was based on a five-page proposal that Respondent prepared, which reflected the parties’ previous negotiations. The proposal provided that Complainants would supply certain construction materials and perform jobsite cleanup. When they signed the original contract, Complainants were living in Minnesota, where they had just sold their house, and anticipated moving into their new house in Apache County by the end of July 2000. Pursuant to the original contract, Complainants paid Respondent $7,000.00 on May 26, 2000. Pursuant to the original contract, Complainants paid Respondent $15,000.00 on June 9, 2000. Complainants moved to Arizona at the end of July 2000. They were disheartened to find that Respondent had made very little progress in construction of their residence. They installed a trailer on their property in which they could live until the residence was constructed. On August 6, 2000 Complainants paid Respondent $33,648.00, even through it had not completed the stem wall, because it demanded more money to continue construction. However, even after Respondent completed construction of the stem wall, it was not constructed properly and had to be repaired. By September 6, 2000, Complainants were “totally frustrated” with the slow progress of construction. Although they had hoped to move into the new residence before winter, it appeared likely that they would remain in the trailer. The trailer had little insulation and no running water. Messrs. Allen and Johnson apologized to Complainants for the slow pace of construction and explained that Respondent was experiencing money problems. Messrs. Allen and Johnson told Complainants that Respondent had used some of the money that Complainants had given it for other purposes. Messrs. Allen and Johnson promised Complainants that, if they stuck with Respondent, it would complete the job and make everything right. On September 6, 2000, the parties entered into an addendum to the contract, in relevant part as follows: Woodland Homes agrees to commence the rough framing component of the contract on or before September 11, 2000. Work on the framing will continue at a reasonable rate until completed, allowing for reasonable delays due to weather, acts of God, etc.

With regards to the contract installments, Item 7 for $8412 is hereby adjusted downward by $3231 so that the final installment due in the contract will be for $5181. (This adjustment is due to an initial overpayment of $3131, and an interest payment of $100 on the $33648 installment payment.)

Respondent’s employees did not appear at the jobsite between September 6, 2000 and September 11, 2000. During this time, the concrete subcontractor told Complainants that it had not received payment from Respondent, even though Complainants had paid it for the stem wall and other concrete work. Although Complainants still wanted Respondent to complete the project, they felt that they needed more control over their payments in light of Respondent’s financial problems and the slow pace of construction. On September 12, 2000, the parties agreed to another addendum, which replaced the payments set forth in the May 26, 2000 contract with a “pay as you go” contract, as follows: Contractor stipulates that they are in violation of the spirit and terms of the original contract dated May 26, 2000, as well as the subsequent addendum dated September 6, 2000, in that Contractor failed to

• perform preliminary site work as described in the Proposal dated May 26, 2000 • perform construction in a first-class, workmanlike, and timely manner as per the above proposal • received payment number 3 in the sum of $33,648 on August 6, 2000, when in fact this sum was not payable because the stemwall was not properly completed. • use monies provided by the Owners to pay subcontractors for work completed • perform to the addendum dated September 6, 2000 which required the rough framing to commence on or before September 11, 2000

In the spirit of cooperation, and in an effort to resolve these contract violations, Contractor and Owners covenant and agree to amend the original Construction Contract and Proposal dated May 26, 2000 as follows:

1. Deficiencies in construction of the stemwall will be corrected at Contractor’s expense and will consist of materials and labor to raise the height of the foundation and deck piers to their proper heights. Mislocation of the outermost deck piers will be accommodated by extending the decking on the garage side of the deck, and by building a deck-to-ground stair at the sun room end of the deck. This stair will be of the same type and construction of the main deck-to-ground stair, although it may be overall smaller in size. 2. Contractor agrees to relocated crawl space from its present location at the rear of the foundation wall to the front sun room side of the foundation wall. This will better accommodate a final grade around the house. This work will also be done at Contractor’s expense. Owners will perform the final grade around the foundation wall. Cost for this work will be deducted from the total cost of construction. 3. Contractor agrees to provide at their expense all materials and labor necessary to add an exterior door to the rear of the garage. This includes any alterations to the foundation wall to accommodate such a door. 4. Contractor agrees to provide Owners a copy of lien waivers from all subcontractors at the completion of each phase of construction, and before any further monies will be provided by Owners to Contractor. This includes all work that has been performed to date. 5. The parties agree that the cost of materials for the decking will be subtracted from the total cost of construction should the Owners be successful in ongoing negotiations to acquire Fibrex decking material from Aspen Research Corporation. Such material may be provided free of charge by Aspen, and may also include the labor cost to install it. 6. Fiberglass tub/shower and faucet will not be provided for the master bath. Owners will acquire and install a tub/shower unit of their own choosing in the master bath. Contractor agrees to deduct the cost of materials and labor for the fiberglass unit from the total cost of construction.

Terms of Payment

The parties agree that the Terms of Payment shall be adjusted as follows:

1. Owners stipulate that Contractor is due a reasonable profit margin for its efforts, and such profit margin may have been included in the $55,648.00 already provided by Owners to Contractor. 2. Contractor agrees to provide Owners with a full accounting of all work performed and all materials provided to date and their costs. Furthermore, Contractor will provide to Owners a full accounting of all monies paid out for materials and labor to date, as well as any and all outstanding debts incurred by Contractor in the construction of Owners residence. 3. Before Owners provide any further monies to Contractor, both parties must agree in writing that the $55,648.00 already provided by Owners to Contractor has been properly spent on the owners residence. 4. Owners will pay Contractor on an “as needed” basis for any future materials, labor, and profit. Payment for labor charges can be requested on a weekly or biweekly basis as such labor is completed. Payment for materials will be made at such time as contractor requires these materials to continue construction. Contractor will provide Owners with an itemized listing of the required materials and their total cost, plus any profit due Contractor. Owner will then issue a personal check written jointly to Woodland Homes and the appropriate materials vendor. 5. This “pay as you go” payment schedule assures Woodland Homes of its rightfully due profit, while it assures Owners that its monies are being properly spent for their residential construction.

[Emphasis added (by bold italics) and in original (bold only).] On October 20, 2000, Complainants paid Respondent $10,000.00 to pay the labor costs for the framing crew. Respondent told Complainants that it was having a hard time keeping crews because they feared they would not be paid. On October 23, 2000, as noted above, Respondent’s framing and roof construction failed the County’s inspection. Complainants then learned that Respondent owed Precision Lumber more that $22,000.00 for materials used on the job. Respondent demanded money to pay this bill and to complete framing, roof construction, plumbing, electrical, and other construction. On October 26, 2000, Complainants gave Respondent a check for $48,884.00, made jointly payable to Precision Lumber. On November 7, 2000, there was a hard freeze. The water froze in Complainants’ trailer. There was no sign of Respondent’s principals or workmen. On November 11, 2000, Respondent’s workman returned to install shingles on the roof and insulation and drywall in the residence. Respondent did not complete construction of the plumbing or electrical systems. Complainants shortly thereafter moved into the residence. Complainants paid Respondent’s subcontractors to finish construction of the electrical and plumbing systems in the residence. By December 21, 2000, the electrical and plumbing systems were complete. The only contact between Respondent and Complainants between November 11, 2000 and December 21, 2000 was when Respondent’s workmen attempted, unsuccessfully, to repair the framing to pass the County’s inspection. On January 2, 2001, Mr. Allen told Complainants that Respondent was ready to move forward on construction, but that it would need more money. Complainants felt that Respondent owed them about $20,000 because they had to pay for the electrical and plumbing subcontractors to complete their work, even though they had paid Respondent for this, Respondent still had not provided an accounting and lien waivers, and Respondent still had not performed all the corrections required by the September 12, 2000 addendum or necessary to pass the County’s framing inspection. On February 27, 2001, Complainants received a letter from Respondent’s attorney, threatening to sue them if they did not make the $33,648.00 payment due under the original May 26, 2000 contract after completion of the electrical and rough plumbing. Complainants retained an attorney of their own. Complainants’ attorney wrote a letter to Respondent’s attorney, informing him of the September 6, 2000 and September 12, 2000 addenda and their complaints that Respondent had failed to comply with any of the parties’ agreements. On March 1, 2001, Complainants made their complaint to the Registrar against Respondent’s contractor’s license. On March 20, 2001, Inspector Sandoval directed Respondent “to provide a full accounting and lien waivers as per contract agreement.” The directive allowed Respondent fifteen days, or until April 4, 2001, to perform corrective work. On April 5, 2001, Respondent provided Complainants with lien waivers from all but one of its subcontractors or material suppliers. Respondent also provided an accounting, which showed that it had received payment in full from Complainants for the electrical and plumbing construction, but had failed to pay its subcontractors. Respondent demanded that Complainants pay it $15,000.00 for it to repair the rafters and ridge beam and to continue construction. Instead, Complainants requested an administrative hearing. Aggravation 55. The Registrar’s Citation and Complaint advised Respondent that, in the event of a finding of a violation, its prior disciplinary record of final Registrar of Contractors’ orders might be considered in mitigation or aggravation. Accordingly, notice is taken of the Registrar’s records, which reveal five complaints which were found to state valid claims against Respondent, one of which caused the Registrar to revoke Respondent’s license.[1] Therefore, Respondent’s poor prior record is viewed as a matter in aggravation of any disciplinary penalties to be imposed in this case. CONCLUSIONS OF LAW The notice of the hearing that Registrar mailed to Respondent at its address of record was reasonable and it is deemed to have received it.[2] In addition, Respondent’s qualifying party, Mr. Allen, received actual notice of the hearing from Complainant Mr. Wade. Complainants bear the burden of proof and must establish statutory violations by a preponderance of the evidence.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “evidence which is of greater weight or more convincing than 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.”[5] The revoked status of Respondent’s license does not preclude Complainants from pursuing their administrative remedy or preclude the Registrar from conducting this disciplinary proceeding.[6] If the Registrar accepts this recommended decision, it will furnish additional grounds for revocation if the prior revocation is set aside, which in due course will lead to revocation of License No. 166530 and any other license on which Respondent or Messrs. Allen and Johnson may be listed.[7] But the revoked status of Respondent’s license makes imposition of a penalty conditioned on Respondent’s failure to perform corrective work or to pay restitution inappropriate in this case.[8] Neither the Registrar nor Complainants were parties to the agreement by which Woodland Homes LLC assumed Respondent’s responsibilities and liabilities under the contracting statutes. The assumption agreement between the two contractors and Woodland Homes LLC’s subsequent bankruptcy therefore also does not prevent the Registrar from penalizing Respondent for its proven statutory violations.[9] Complainants established that Respondent violated A.R.S. § 32- 1154(A)(2),[10] (7),[11] (23),[12] and (3)[13] in its construction of and failure to repair the rafters and ridge beams and failure to install a ridge vent at Complainant’s residence. In the September 12, 2000 addendum, Respondent admitted it had breached the original May 26, 2000 contract and the September 6, 2000 addendum by failing to perform in a timely manner, receiving payment without performing the work required by the contract completely or in a professional and workmanlike manner, using monies received from Complainants for work other than construction of their residence, and failing to pay subcontractors and suppliers, despite having received full payment from Complainants. At that point, Respondent’s admitted breach of the parties’ agreement would have allowed Complainants to terminate the contract and seek damages from Respondent.[14] Instead, the parties modified the contract, as Arizona law allows.[15] The September 12, 2000 addenda supersedes all previous agreements between the parties. The only enforceable agreement between the parties when Complainants made their complaint to the Registrar was the September 12, 2000 “pay-as-you-go” agreement. At a minimum, Respondent breached the September 12, 2000 agreement by refusing to work unless it received additional payment from Complainants, despite having failed to provide an accounting or lien releases, failing to complete the work and repairs that it had promised to perform at its own expense, and by failing to pay the electrical and plumbing subcontractors, despite having received payment from Complainants for this work. Complainants were substantially injured, at least in the amounts they were forced to pay the electrical and plumbing subcontractors directly to finish the work. The evidence therefore establishes that Respondent abandoned the September 12, 2000 addendum without legal excuse, to Complainants’ substantial injury, in violation of A.R.S. § 32-1154(A)(1)[16] and (7).[17]

Because the Administrative Law Judge recommends that the Registrar unconditionally revoke Respondent’s contractor’s license for the statutory violations that Complainants have established, she does not attempt to identify the full extent of Complainants’ injuries or to liquidate the full monetary damages that Complainants may have suffered as a result of Respondent’s abandonment and breach of contract. Complainants should be allowed to submit proof of actual damages in their claim to the Residential Contractors’ Recovery Fund under A.R.S. § 32-1131 et seq. The evidence does not show that this Respondent violated A.R.S. § 32- 1154(20),[18] although the Registrar may consider the statutory violations found in this case and in Case No. P01-0288W as evidence of a violation in an action against Lakeshore Development Corporation’s License No. 166530, which has the same persons listed on it as Respondent’s license.[19] RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar revoke Respondent Woodland Homes’ License No. 116021, Class B-. Done this day, March 20, 2002.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of March, 2002, to:

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

By ___________________________ ----------------------- [1] See P01-0300, asserted by Paul S. and Janet S. Stevanovich; P01-0318, asserted by Susan Kjerstad; P02-0018, asserted by A 1 Glass & Mirror, Inc.; P02-0039, asserted by Arthur and Cindy Hellernd and Danny Saymore; P02- 0045, asserted by Dale L. Phillips; and P01-0288W, asserted by Craig L. Sharer. The last case resulted in the Registrar revoking Woodland Homes’ contractor’s license on January 2, 2002.

[2] See A.R.S. § 41-1061(A).

[3] See A.A.C. R2-19-119; see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App. 1996).

[4] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

[5] Black’s Law Dictionary at page 1064 (6th ed. 1990).

[6] See A.R.S. § 32-1154.C.

[7] See A.R.S. § 32-1154.A.21. [8] “The goals and objectives of the registrar of contractors are to protect the public health, safety and welfare by licensing, bonding and regulating contractors engaged in residential construction . . . .” Laws 1985, Ch. 334, § 1. “[T]he Registrar is charged with the overall responsibility of protecting the welfare of the public dealing with persons engaged in the building contracting vocations and afford the public protection against incompetent, inexperienced, unlawful and fraudulent acts of building contractors.” Burrows v. Taylor, 129 Ariz. 212, 214, 630 P.2d 35, 37 (Ct. App. 1981) (citation omitted). These statutory purposes would not be served by allowing contractors with poor records, like Respondent, unlimited opportunities to remedy their repeated statutory violations.

[9] Cf. Redewill v. Matzenauer, 32 Ariz. 13, 17, 255 P. 486 (1927), which found that the following jury instructions correctly stated the law:

[T]he jury must find that there was a new a valid contract between all the parties, and that it extinguished the original contract; that it was not enough that the plaintiff knew that Conlon had agreed to pay for her services unless she expressly or impliedly agreed with the defendant to release defendant; that to constitute a novation by substitution of creditors or debtors there must be a mutual agreement among three or more of the parties, whereby the debtor and the original creditor agree that a new party may be substituted for the original debtor.

These instruction are criticized, but it seems to us that they fairly state the law. Steinfeld v. Wing Wong, 14 Ariz. 336, 128 Pac. 354 [(1912)] . . . .

Ariz. at 17; see also Steinfeld, 14 Ariz. at 340 (“[W]hen one assumes and agrees to pay the debt of another, both are liable to the creditor, in the absence of an agreement to relieve the original debtor, and that the creditor may collect from either or both, and that an effort made by rendering statements to and attempting to collect of the one who assumed to pay the debt authorizes no inference that the original debtor had been released.”).

[10] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[d]eparture from or disregard of plans or specifications or any building codes of any state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.”

[11] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

[12] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving written directive from the registrar.”

[13] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar.” The rule violated here was A.A.C. R4-9-108, which requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”

[14] See Mohave County v. Mohave-Kingman Estates, 120 Ariz. 417, 422, 586 P.2d 978, 983 (1978) (“Where the time for performance is material to a contract, failure of one party to perform . . . warrants treatment of the contract as ended.”).

[15] The Arizona Court of Appeals has summarized this law:

A written agreement may be subsequently modified by the parties, even where one party has failed to perform by the contract deadline. Coronado Co., Inc. v. Jacome’s Dept. Store, Inc., 129 Ariz. 137, 139, 629 P.2d 553, 555 (App. 1981); In re McDonald’s Estate, 4 Ariz. App. 94, 97, 417 P.2d 718, 731 (1966). “Parties to an unperformed contract may, by mutual consent modify it.” Nationwide Resources Corp. v. Massabni, 134 Ariz. 557, 563, 658 P.2d 210, 216 (App. 1982). . . .

Ancell v. Union Station Associates, Inc., 166 Ariz. 457, 460, 803 P.2d 450, 453 (App. 1990).

[16] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

[17] See note 10, supra.

[18] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[s]ubsequent discovery of facts which if known at the time of issuance of a license or the renewal of a license would have been grounds to deny the issuance or renewal of a license.” [19] See A.R.S. § 32-1122(D).

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