ALJDEC

02F-0025-ROC · Registrar of Contractors · 2002-02-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 30, 2002 APPEARANCES: Lou Marson, III appeared on behalf of Complainant Louis Marson and Sons, Inc. Manny Timm appeared on behalf on Respondent Timmco Renovations, Inc. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________

The issue presented by this matter is whether Respondent Timmco Renovations, Inc. is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154. Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: FINDINGS OF FACT Timmco Renovations, Inc. (“Timmco”) is the holder of a Class B license (No. 160057) issued by the Registrar of Contractors (“ROC”). Manny Timm is Timmco’s President and qualifying party. On or about October 16, 2000, Timmco entered into a contract with Complainant Louis Marson and Sons, Inc. (“Marson”) for the framing portion of the construction of a residence located at 1546 East Sharon Drive, in Phoenix, Arizona. Marson was acting in the capacity of general contractor for the project. The framing contract price was $60,100.00. This price was based in part on the cost of lumber at the then-going rate. On March 29, 2001, Marson approached Timmco with several revisions to the original contract. The credible evidence of record established that the requested changes included major structural revisions to the original plans that would have required substantial additional work performed and materials supplied by Timmco. The evidence of record established that Mr. Timm, Timmco’s President and qualifying party, signed off on the revisions to the contract without revising the contract price. Mr. Timm credibly testified that when he signed the revised contract on March 29, 2001, he was not aware of what he was signing because he did not view a revised set of plans at the time. He was not aware of the extensive scope of the structural changes. He further testified that he was “pushed into signing” the new document and that Marson and the homeowner, Mr. Martin Moore, “were trying to force him to do a job for an amount they knew he could not do it for”. Mr. Louis Marson, qualifying party for Marson, testified that he did in fact review the revisions to the contract with Mr. Timm. The Administrative Law Judge found Mr. Marson’s testimony to be less than credible. Mr. Timm testified that Marson requested a change order reflecting the new price based on the revisions to the contract. On June 26, 2001, Timmco submitted a change order to Marson with a revised contract price of $77,900.00. Mr. Timm testified that by this time, lumber prices had doubled, as approximately nine months had elapsed since the signing of the original contract. Marson would not accept the revised contract price submitted by Timmco and expected Timmco to perform the revised scope of the contract for the original contract amount. Timmco refused to perform under these terms. The evidence of record established that Marson expected the contract price to increase, but not by almost $18,000.00. 8. In August 2001, when Marson was actually ready to commence the framing portion of the project, Marson hired another framing subcontractor at a cost of $70,000.00, and is now requesting that Timmco reimburse Marson for the difference between Timmco’s original contract price and the price Marson paid to have the framing actually performed, an amount of $8,900.00. CONCLUSIONS OF LAW In this proceeding, Marson bears the burden to prove, by a preponderance of the evidence, that Timmco is subject to discipline for violations of A.R.S. § 32-1154(A)(1) and/or (A)(7) as charged by the ROC in its October 16, 2001 Citation and Complaint. 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). The Administrative Law Judge concludes that Marson failed to meet its burden of proof on either of the ROC’s charges. Under A.R.S. § 32-1154(A)(1), a contractor is subject to discipline for “abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” The Administrative Law Judge concludes that it was unreasonable and unconscionable for Marson to have expected Timmco to perform the revised scope of work under the original contract price when the evidence of record established that substantial additional work as a result of major structural revisions had been requested of Timmco. Further, when Timmco submitted its contract price of $61,100.00 to Marson in October 2000, that price was based on the cost of lumber at the then-going rate. Had Timmco been able to promptly commence construction on the Moore residence, its costs would have been comparable to the contract amount. Due to the subsequent changes by Marson to the original plans, and the amount of time that elapsed between the signing of the original contract and the time Timmco was expected to commence its work, the cost of construction had increased. Based on the evidence of record, the Administrative Law Judge concludes that Timmco justifiably refused to perform. Therefore, Timmco did not violate A.R.S. § 32-1154(A)(1). Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” 5. The Administrative Law Judge concludes, from the evidence presented, that Timmco should not have signed off on the revisions to contract without full knowledge and understanding. However, from the facts of this case, it cannot be said that Marson sustained injury from such action because the evidence of record established that due to the major structural changes and the increased cost of lumber, Marson would nevertheless have incurred these additional expenses for the framing portion of the residence. Therefore, the Administrative Law Judge concludes that Marson failed to establish that Timmco violated A.R.S. § 32-1154(A)(7). There is no credible evidence of record that Timmco committed any wrongful or fraudulent acts that substantially injured Marson. 6. Because Marson failed to prove that Timmco violated the provisions of A.R.S. § 32-1154(A), no grounds exist to impose discipline against Timmco’s license. The ROC’s Citation in Case Number 02-0025, and the Complaint upon which it is based, should be dismissed. RECOMMENDED ORDER Based on the foregoing, the Administrative Law Judge makes the following Recommended Order: It is recommended that no discipline be imposed against Timmco’s license, and that the Citation issued in Case Number 02-0025, together with the Complaint on which it is based, be dismissed. Done this day, February 14, 2002.

______________________________________ Sondra J. Vanella Administrative Law Judge

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

Michael P. Goldwater, Director Registrar of Contractors 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