ALJDEC (decisions subject to certification as fin)

03F-G0418-ROC · Registrar of Contractors · 2003-04-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 3, 2003 APPEARANCES: Robert Murphy, Esq. appeared on behalf of Complainant; Lawrence Slater, Esq. appeared on behalf of Respondent ADMINISTRATIVE LAW JUDGE: Wendy S. Morton _____________________________________________________________________ The issue presented by this matter is whether Respondent Fairbank’s Contracting and Development, L.L.C. 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 1. Fairbank’s Contracting and Development, L.L.C. (“Fairbank’s”) is the holder of a Class B-02 license (No. 111181) issued by the Registrar of Contractors (“ROC”). Martin Fairbanks is Fairbank’s Managing Member. Gene Valocchi is Fairbank’s Project Manager. 2. Complainant CBC Holdings, L.L.P. (“CBC”) owns a College Book Centers,

located at 9189 N. 59th Avenue in Glendale, Arizona. David Vanyo owns CBC. CBC leased extra space in its building to the Army Corps of Engineers (“the Corps”). 3. CBC engaged in a bidding process to secure a contractor for certain tenant improvements to the extra space at the bookstore which was to be occupied by the Corps. Fairbank’s took part in the bidding process, which consisted of walking the site with Mr. Vanyo. Mr. Valocchi walked the site with Mr. Vanyo and discussed his desires and requirements for the improvements prior to submitting a bid. Mr. Vanyo testified that he walked all bidders through Suite 6, an empty suite on the property to use it as an example of the features that he wanted for the improvements on the unfinished suites. (At the time of the bid, the space to be improved was a shell with an 18” flat ceiling and raw block walls. All framed block walls were insulated). Mr. Vanyo testified that he specifically requested the following: R-30 insulation, 12 foot ceilings, Decora rocker switches, air conditioning units to match the others on the top of the building and the electrical panels painted to match the walls. Mr. Vanyo testified that he advised Mr. Valocchi of these requirements and also listed those items on Schedule B, which was provided to all bidders.[1] 4. The Corps selected Fairbank’s to complete the work. On July 17, 2002, CBC contracted with Faibank’s to build tenant improvements for the Corps. The parties executed a six page contract (“the Contract”) and a separate four page Work Scope agreement (“the Work Scope”). The total contract price was $99,765.30. None of the items Mr. Vanyo discussed during the pre-bid walk-through were included in the contract. The contract specifically stated that “this agreement represents and contains the entire agreement between the parties. Prior discussions or verbal representations by the parties that are not contained in this Agreement are not a part of this Agreement”. 5. Mr. Vanyo argued that the contract also included the Work Scope by reference; however, the Work Scope (See Exhibit 15) does not include the items listed in Finding of Fact 3. 6. In mid-July, Fairbank’s began construction. In late August, 2002, Mr. Vanyo realized that Fairbank’s had not installed R-30 insulation. According to Mr. Vanyo, he raised this issue with Mr. Valocchi and Mr. Valocchi said that he would “look into it.” Ultimately, the parties could not reach an agreement as to whether the contract called for R-30 insulation and Fairbank’s did not install same. 7. Fairbank’s substantially completed its work on or about September 9, 2002. 8. On September 20, 2002, CBC filed a complaint against Fairbank’s with the ROC. 9. On January 13, 2003, the ROC issued Citation and Complaint Number G03-0418 alleging violations of A.R.S. § 32-1154(A)(2), (A)(7), (A)(9) and/or (A)(13). 10. Mr. Vanyo testified that he started to receive Change Orders from Fairbank’s in retaliation for CBC’s compliant. The Administrative Law Judge finds that the Change Orders in question were faxed to Mr. Vanyo on September 19, 2002, the day before CBC filed its complaint with the ROC. 11. There are five Change Orders in question: a) Change Order 1: Replace and install missing insulation b) Change Order 2: Extend All Walls up to 12” from 10” c) Change Order 3: Furr out the west block wall, laminate block on east front walls, furr out and insulate east wall d) Change Order 4: Decora Rocker Switches e) Change Order 5: Paint extension of walls

12. Aside from the R -30 insulation, it is undisputed that Fairbank’s completed the aforementioned work at Mr. Vanyo’s request, despite the fact that there were no executed Change Orders at the time the work was completed. Mr. Vanyo does not dispute the manner in which the work was done, but rather CBC’s obligation to pay for the work pursuant to the Change Orders. Mr. Vanyo argued that all of the items subject to Change Orders were discussed during the pre-bid walk-through and were included in the Contract. Fairbank’s maintained that the aforementioned items were discussed after the contract was signed and were not part of the bid price or the contract. Fairbank’s maintained that it should be paid for the additional work pursuant to the Change Orders. The Administrative Law Judge agrees. 13. ROC Inspector Jack McKim was assigned to investigate the Complaint. Inspector McKim examined the contract and found that it was silent as to the Change Order items and the items set forth in Finding of Fact 3. Inspector McKim testified that contractual disputes are not within the ROC’s jurisdiction. 14. The Administrative Law Judge finds, based upon the weight of the evidence presented at hearing, that this matter is purely a contractual dispute between the parties and that it is inappropriate for the ROC to impose discipline against Fairbank’s license under the circumstances set forth herein. CONCLUSIONS OF LAW 1. In this administrative proceeding CBC bears the burden to prove, by a preponderance of the evidence, that Fairbank’s violated A.R.S. § 32-1154(A)(2), (A)(7), (A)(9) and/or (A)(13) as charged by the ROC in its January 13, 2003 Citation and Complaint. See A.A.C. R2-19-119. 2. 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). 3. The Administrative Law Judge concludes that CBC has not sustained its burden to prove that Fairbank’s violated A.R.S. §32-1154(A)(2) as no evidence was presented that Fairbank’s disregarded plans, specifications or building codes in the construction of the Home. Fairbank’s completed the work required under the contract. 4. The Administrative Law Judge concludes that CBC failed to meet its burden to prove that Fairbank’s violated A.R.S. § 32- 1154(A)(7) as charged by the ROC. CBC specifically alleged that Fairbank’s issuance of Change Orders constituted a “wrongful act that substantially injured CBC”. The Administrative Law Judge finds that Fairbank’s issued Change Orders for work it had legitimately completed at Mr. Vanyo’s request. Fairbank’s is entitled to be paid for its work. 5. Under A.R.S. § 32-1154(A)(9), a contractor is subject to discipline for “failure in a material respect… to complete a construction project…for the price stated in the contract….” The Administrative Law Judge concludes that CBC has not met its burden to prove that Fairbank’s violated A.R.S. § 32-1154(A)(9). CBC substantially complied with the terms of its contract 6. Under A.R.S. § 32-1154(A)(13), a contractor is subject to discipline for “failure in any material respect to comply with the provisions of this chapter.” The Administrative Law Judge finally concludes that CBC failed to sustain its burden to prove that Fairbank’s violated A.R.S. § 32-1154(A)(13). RECOMMENDED ORDER In view of the foregoing, it is recommended that no discipline be imposed against Fairbank’s Class B-02 license (No. 111181) and that the Citation in Case Number G03-0418, together with the Complaint upon which it is based, should be dismissed.

Done this day, April 21, 2003.

______________________________________ Wendy S. Morton Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2003, to:

Registrar of Contractors Israel G. Torres, Director ATTN: Jennifer Brown 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] The parties dispute what was written on Schedule B. Each party submitted various versions of this document. Neither party submitted a true and accurate copy of Schedule B as it appeared when it was presented to the bidders, therefore, the Administrative Law Judge cannot ascertain what written information Fairbank’s relied on when it submitted its bid.

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