ALJDEC

01F-T0218-ROC · Registrar of Contractors · 2001-02-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: Tuesday, February 27th, 2001; 9:00 a.m. APPEARANCES: The complainant, Mr. Arturo Carrera, represented himself. The respondent, Kory Engineering, Inc., was represented by the qualifying party, Mr. Alexander Kory. ADMINISTRATIVE LAW JUDGE: Grant Winston. _____________________________________________________________________ The administrative hearing of this matter was held in the Office of Administrative Hearings, Tucson, Arizona. Testimony was heard and other evidence admitted to the record, and, based on the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made. FINDINGS OF FACT 1. The respondent in this case, Kory Engineering, Inc., is, and during all times material hereto was, a contractor licensed by and doing business in the State of Arizona, holding Class C-41 License number 128385. 2. The complainant, Mr. Arturo Carrera, signed a purchase and sale agreement with Dominguez Realty of Nogales, Arizona, in February of 2000. Pursuant to the agreement, complainant was to purchase lot #78 in a subdivision in or near Rio Rico, Arizona, on which his new home was to be constructed. At no time did the complainant and respondent have any contractual relationship. 3. Respondent had contracted with Dominguez Realty much earlier, in April of 1999, to perform the required percolation test on the lot, for the purpose of obtaining the necessary permit to install the septic system for the lot. 4. Initially, respondent and complainant did not know each other. Both were working in their separate way with Dominguez Realty. 5. Respondent was dealing primarily with Cristina Carrillo, of Dominguez Realty, and according to what she told respondent, lot #78 belonged to her and was to have her house built on it. 6. Respondent performed the percolation test in April, 1999, and the test results were positive; the water did percolate. However, there was present in the lot a substantial amount of fractured rock and clay. This meant that the original septic system designed for the lot would not be approved by Santa Cruz County. Respondent learned of this through a letter from Santa Cruz County authorities sent to complainant sometime in May of 2000. This was the first respondent knew that complainant had become the owner of the lot. 7. Respondent advised Ms. Carrillo of the snag, and advised that she pursue an application for an alternative system permit with the Arizona Department of Environmental Quality. This meant added costs and application to the ADEQ for permission to install the alternative system. He also inquired of her as to the identity of the complainant. Ms. Carrillo informed him that she had sold the lot to complainant. 8. Respondent’s contractual partner, Dominguez Realty, through Ms. Carrillo, instructed respondent to pursue permission from the ADEQ to install the alternative system. Respondent was unwilling to perform additional work for Dominguez Realty at that time because Dominguez Realty had not paid the respondent money owed on their contracts up to that time. 9. So that is where matters stood in May of 2000, approximately three months after the complainant had purchased lot #78 from Dominguez Realty. Respondent had performed the percolation test, and the results were positive, but it would be more costly to obtain a permit and design and build an alternative system, and Dominguez Realty had not paid respondent to do that, or even what it owed respondent to date. All the meanwhile, respondent could not install any septic system on the lot because no permit for the original, or any other, system had been obtained. 10. Respondent notified complainant of the situation and discussed with him what needed to be done to move the project forward. 11. Complainant’s lending institution, National Bank of Arizona, eventually began foreclosure proceedings on his mortgage, sometime in late September, or October of 2000. The lot is now noticed for public auction in May of 2001. 12. Complainant filed the instant complaint with the Registrar of Contractors on September 1st, 2000. Respondent’s written answer was filed on September 20th, 2000. Pursuant to complainant’s request for administrative hearing, Citation and Complaint issued from the registrar’s office on November 17th, 2000. The respondent was charged with possible violations of A.R.S. §32-1154.A.1., 7., and 3 (citing A.A.C. R4-9-108, Workmanship Standards). 13. Complainant made known his position at the hearing that the respondent is to blame for not obtaining the permit to install the alternative septic system soon enough to avoid the foreclosure. However, the facts are that the complainant had no contract with the respondent; the contract respondent had with Dominguez Realty could not possibly be performed because no permit could be obtained from the authorities for installation of the original design; a new design would have to be made and it permitted at additional costs, and the respondent’s contractual partner had not paid respondent for the work it had performed up to that time. CONCLUSIONS OF LAW 1. The administrative hearing of this matter was held under authority of and pursuant to A.R.S. §32-1156, and A.R.S. §41-1092. 2. The respondent is charged in the instant Citation and Complaint with possible violations of A.R.S. §32-1154.A.1, 7., and 3. 3. A.R.S. §32-1154.A.1. prohibits a licensed contractor from abandoning or refusing to perform after submitting a bid on work without legal excuse for the abandonment or refusal. First of all, in this case, respondent had no contract with the complainant. Respondent’s contract was with a third party. In the second place, the contract was not abandoned nor was respondent refusing to perform on it. Performance of the contract between respondent and Dominguez Realty became legally impossible due to the presence of the fractured rock preventing issuance of a required permit for installation of the contracted system. 4. A.R.S. §32-1154.A.7. prohibits a licensed contractor from engaging in any wrongful or fraudulent act as a contractor which results in another person being substantially injured. There is no evidence of fraudulent conduct on respondent’s part. Although complainant has been substantially injured in that he lost the lot to foreclosure proceedings, there is no evidence that this calamity resulted from any wrongful act by the respondent. 5. A.R.S. §32-1154.A.3. prohibits a licensed contractor from violating any rule adopted by the registrar. The rule cited in the Citation and Complaint is A.A.C. R4-9-108, Workmanship Standards. There is no provision of the workmanship standards of that rule that respondent violated. RECOMMENDED ORDER In view of the foregoing Findings of Fact and Conclusions of Law, it is hereby recommended that Citation and Complaint number T01-0218, together with the complaint on which it is based, be dismissed. Done this day, March 8th, 2001.

________________________________ GRANT WINSTON Administrative Law Judge

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

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

By _______________________________ -----------------------

Office of Administrative Hearings 100 N. Stone Ave., Suite 704 Tucson, Arizona 85701 (520) 628-5488