ALJDEC

02F-A0180-ROC · Registrar of Contractors · 2002-04-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 9, 2002 APPEARANCES: Complainant appeared through one of its owners, Kara Rozendaal, and Respondent was represented by his attorney, Robert Miller. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

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 performed specified plumbing work on a new home construction project and contends that it has not been paid for a portion of the work performed. Complainant further contends that Respondent is responsible to pay the unpaid billing and Respondent denies that it has any responsibility in this regard. These issues are discussed in the findings below. . . . . . . 2. The following salient facts were adduced at the hearing and are important to note:

a. On or about March 15, 2001 Complainant was contacted by Gery Allen (“Gery”) of Allen Builders to perform specified plumbing work at a new home construction project located in an area known as Groom Creek (“Groom”). On March 22, 2001 Complainant submitted a bid to Allen Builders to perform the plumbing work at a price of $5,695.00. b. Complainant commenced work on the project on or about April 10, 2001. After completing the initial phase of the work, Complainant submitted a billing to Allen Builders for the sum of $3,330.00. This bill was paid via a check signed by Gery. c. The final phase of the plumbing work was performed by Complainant in the early part of July 2001 and completed on or about July 7, 2001. When this portion of the plumbing work was finished, Complainant submitted a final bill to Allen Builders for the sum of $3,128.34. This bill has not been paid. It should be noted that there was no adequate evidence presented to show that any of Complainant’s work was deficient or that Complainant refused to respond to any punch list warranty items. d. When the payment was not forthcoming, Complainant contacted Gery to determine the problem. According to Complainant, they claim that Gery advised them that there was some sort of “turmoil” going on between him and Respondent and that they should look to Respondent for payment on the job. e. Notwithstanding the fact that the initial bid was submitted to Allen Builders, evidence of record demonstrated that Respondent had some type of contractor type involvement in the project in question. f. Evidence of record showed that Respondent had sold the cabin kit to the homeowner in Groom. In addition, Respondent took out the permit to construct the cabin on the homeowner’s property. g. Respondent admits that it had a long-standing working relationship with Gery to have Gery handle the construction on a number of projects. Although Respondent had bid on the construction of the project, it ultimately contends that it referred the homeowner to Gery to have Gery accomplish the construction of the cabin. Therefore, Respondent denies that is was the general contractor on this project. h. Notwithstanding Respondent’s denial of any contractor involvement on the project, evidence at the hearing showed that it was in charge of dispersing the construction loan funds to Gery. Basically, Gery would submit progress payments to Respondent, with lien waivers, and Respondent would access the homeowner’s construction loan to pay the billings submitted by Gery. i. When asked why Respondent would pay out from the construction loan on a project where it claims not be contracting, Respondent could not provide any credible or rational answer. j. Respondent does admit that it and Gery had a serious working relationship and trust problem sometime shortly after the billing in question was issued and that ultimately Respondent “fired” Gery from work on another project. It is very important to note that Complainant also worked on this other project and although they had submitted a billing to Allen Builders on that project, they ultimately crossed Allen Builders’ name off the billing and put Respondent’s name on the bill. This bill was paid by Respondent. k. Complainant contends that Respondent advised them regarding both of the outstanding billings to cross out Allen Builders and put its name on the bill and it would pay the billings. Respondent denies ever agreeing to this. However, as mentioned in the aforementioned finding, Respondent did pay the one billing in this manner. l. Complainant submitted an affidavit from the Groom homeowner into evidence. Among other things, the homeowner’s affidavit shows that she believed she had hired Respondent, not Allen Builders or Gery, to construct her cabin kit. According to the homeowner she believed that Gery was merely a subcontractor for Respondent. She states that “Gery Allen never discussed any matters regarding this project with me which would have led me to believe that he was the general contractor and not Mr. Wardner” (Respondent’s owner). The affidavit goes on to state that “George Wardner dealt with our bank to obtain construction draws and disbursed the money…” In conclusion the homeowner states that “Gery Allen and I never discussed a contract between him and me and I never entered into a contract with Gery Allen. I understood that Mr. Wardner had a contract with Gery Allen and that my contract was with George Wardner.” m. Respondent admits that it was on the jobsite in question on a regular basis and that due to its concern that the project turn out an excellent product (this was his first sale of the cabin kit), he would give Gery punch lists for work that needed correction.

3. Notwithstanding Respondent’s protestations to the contrary, it is determined and held that the credible evidence presented at the instant hearing militates for the conclusion that Respondent was, in fact, acting as the prime contractor on this project. Respondent’s name was on the permit, Respondent selected Gery to accomplish the construction of the cabin kit, Respondent dispersed the construction loan proceeds to Gery, and Respondent gave Gery punch lists. All of these activities are what general or prime contractors typically do.

4. Under all of the facts and circumstances presented herein, Respondent is found to have set the force in motion for Complainant to have been injured by the failure of Allen Builders to pay the final plumbing work billing and, as such, has ultimate responsibility for the payment of said billing. In addition, Respondent, as the prime contractor, had a fiduciary duty to the homeowner to assure that all subcontractors on the project were paid, prior to dispersing the construction loan proceeds. Respondent’s failure to pay the billing at issue herein is found to constitute a violation of the applicable charged section of the State’s Contracting laws regarding a failure to pay for services performed in excess of $750.00. In addition, Respondent’s conduct is also found to constitute a wrongful act within the meaning of the applicable charged section of the State’s Contracting laws.

5. An appropriate condition to be included in the Order to be issued in this matter should require Respondent to pay Complainant the sum of $3,128.34 as a means to avoid the imposition of otherwise appropriate disciplinary sanctions.

CONCLUSIONS OF LAW

Respondent violated the provisions of A.R.S. §32-1154A (11) and (7).

RECOMMENDED ORDER

In view of the foregoing it is recommended, commencing on the effective date of the Order entered in this matter, that the Class B- license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has paid or tendered the sum of $3,128.34 to Complainant. It is further recommended that if Respondent pays or tenders the above-described sum of money to Complainant on or before the effective date of the Order entered in this matter, then the aforementioned license suspension shall not take place. It is further recommended, in addition to the foregoing license suspension, if any, that Respondent’s Class B- license be placed on a period of 120 days disciplinary probation. This additional disciplinary penalty shall commence on the effective date of the Order entered in this matter or the date on which notice of Respondent’s compliance with the terms of this Order is filed with the Registrar, whichever is later. It is further recommended, in addition to the above provided penalties, if any, that any continuation or restoration of Respondent’s contracting rights, whether or not probationary, shall be subject to a condition that Respondent first post an additional surety bond, cash deposit or alternative deposit for a period of twenty-four (24) months, including future renewal periods, in the amount of $1,500.00, such bond or deposit to be in addition to the required surety bond, cash deposit or recovery fund participation set forth in A.R.S. § 32-1152 (D). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two year period following the above- provided twenty-four (24) month period and only if no claims are then pending. Done this day, April 15, 2002

______________________________________ Mark A. Silver Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2002, 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