ALJDEC decisions subject to certification as final

07F-1018-ROC · Registrar of Contractors · 2007-07-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 16, 2007 APPEARANCES: Michelle Wells, on behalf of Complainant; Trevor Berg and Brian Johnson, on behalf of Respondent. ADMINISTRATIVE LAW JUDGE: Michael K. Carroll _____________________________________________________________________ On October 31, 2006, a Complaint was filed with the Registrar of Contractors (ROC) alleging that Respondent had failed to complete a house remodeling project for Complainant at an agreed price. On March 12, 2007, a Citation was issued by the ROC alleging that Respondent had violated A.R.S. §32-1154A (1), (7) and (9). FINDINGS OF FACT AND CONCLUSIONS OF LAW Findings of Fact: (1) Complainant is in the business of remodeling and selling homes.

(2) In September, 2006, Respondent agreed to remodel a home for Complainant in preparation for resale. (3) At the time of the agreement, Complainant informed Respondent that its budget for the project was $30,000. (4) Respondent replied that it did not believe it could accomplish the remodeling project for the amount of Complainant’s budget. Nevertheless, the parties made a verbal “agreement” to go forward with the project. (5) There was nothing in writing between the parties which specified either the anticipated final cost of the project or what Respondent would be required to do to complete the project. Because the arrangement was so vague, Respondent suggested that they proceed on a “cost plus” basis – i.e. Respondent would be paid 10% over the actual costs incurred in completing the project at Complainant’s direction. Complainant admitted that the parties decided to proceed on a “cost plus” basis, but Complainant “assumed” the total amount for the project would not exceed $30,000. Exhibit C2. (6) Complainant paid Respondent $15,000 a few days after the project was commenced. (7) In the middle of October, 2006, Respondent requested an additional $20,000 from Complainant for work on the project. Complainant paid Respondent an additional $15,000, but refused to pay more than its original “budget” amount of $30,000. (8) On October 23, 2006, Respondent presented Complainant with a detailed invoice for work completed through October 22, 2006. That invoice listed a total of $50,984.24, which included actual costs plus a 10% “markup.” Exhibit C3. After Complainant questioned some of the entries on the invoice, Respondent made revisions and presented Complainant with an amended invoice of $48,147.87, to which it attached the receipts for materials purchased in connection with the project. Exhibit C6. (9) Between October 22, 2006 and October 25, 2006, the parties exchanged correspondence regarding Respondent’s invoices and the nature of their original “agreement.” During the time that correspondence was being exchanged, Respondent stopped work on the project. However, Respondent informed Complainant that it would complete the project as soon as the parties were able to resolve their financial dispute. Exhibit C4. (10) A few days after Respondent’s last correspondence with Complainant, a sign was placed in front of the house advising prospective buyers that it would be offered for sale soon. A few days after seeing the sign, Respondent filed a lien against the property for $21,000, the amount Respondent claimed to be owed by Complainant for the work already completed. Exhibit C1. No work was completed by Respondent after the lien was filed.

Conclusions of Law: Complainants have the burden of proof and must establish statutory violations by a preponderance of the evidence. Arizona Administrative Code, Section R2-19-119. A “preponderance of the evidence” is proof sufficient to persuade the fact finder that a proposition is more likely true than not. Complainant failed to meet its burden in this case. A.R.S. §32-1154 A (1): Complainant alleged that Respondent had abandoned the contract. However, the verbal “agreement” between the parties lacked sufficient definition to constitute a contract which was capable of being abandoned. It did not include either a final price for the project or any specificity regarding the work necessary to complete the project. Additionally, Respondent did not abandon the project. It simply stopped work on the project while the parties attempted to reach some mutual understanding as to what was originally contemplated by their “agreement.” Exhibit C4. A.R.S. §32-1154A (7): A violation of this statute is classified as a criminal offense under A.R.S. §32-1164A (1). There was no evidence of any criminal conduct by Respondent in connection with this matter. A.R.S. §32-1154 (9): There was no “price stated in the contract” which Respondent failed to honor by not completing the project. The verbal “agreement” between the parties consisted of nothing more than Complainant’s statement that its budget was limited to $30,000, and Respondent’s offer to proceed with the work on a “cost plus” basis. Complainant acknowledged that the parties did proceed on a “cost plus” basis. Exhibit C2. That acknowledgment contradicts Complainant’s claim that the parties initially contemplated a fixed dollar amount to complete the project.

RECOMMENDED ORDER For the reasons stated above, it is recommended that the Citation, together with the Complaint upon which it is based, be dismissed.[1] Done this day, July 17, 2007.

______________________________________ Michael K. Carroll Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2007, to:

Fidelis V. Garcia, Director Registrar of Contractors Legal Department 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] Pursuant to A.R.S. §41-1092.08D, failure by the Registrar of Contractors to accept, reject or modify this Decision within 30 days of receipt by the agency will result in this Decision being certified by the Office of Administrative Hearings as the final administrative decision. In the event of certification of this Decision by the Office of Administrative Hearings, the effective date of the Order in this matter will be 40 days from the date of that certification.

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