ALJDEC decisions subject to certification as final

07F-1226-ROC · Registrar of Contractors · 2007-08-08

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 8, 2007 APPEARANCES: Complainant : Katrina Lacey appeared pro se. Gloria Regensberg, Esq., RE/MAX Platinum Agent, testified. Respondent : Debbie Welch, President and wife of the Qualifying Party, represented Welch Companies, Inc. dba Welch Electric. ADMINISTRATIVE LAW JUDGE: Gary B. Strickland _____________________________________________________________________ A Hearing was convened to determine whether Respondent Welch Companies, Inc. (hereinafter also, “Respondent” or “Welch Electric” or “the Contractor”) violated state law as has been alleged by Complainant Lacey and as has been cited by the Arizona Registrar of Contractors (also, the “ROC”). Evidence and testimony were presented. Respondent holds a C-11 (Residential Electrical) license issued by the Registrar of Contractors. Complainant alleges that Respondent verbally agreed to a rate for electrician services but overcharged a project at Complainant’s home. Based upon an examination of the entire record,[1] the following Findings of Fact are made, Conclusions of Law rendered, and DECISION AND RECOMMENDED ORDER issued:

FINDINGS OF FACT 1. Respondent’s license (No. 208522) was initially issued on June 2005. Most recently renewed on June 28, 2007 with viability through June 30, 2009, the license was in active status at all times herein relevant.[2] 2. Thomas Allen Welch is the Qualifying Party identified on the Welch Electric license. 3. The project at issue involved electrical installation at a home situated in Tempe, Arizona. The verbal agreement upon which the disputed work was undertaken was entered into in Arizona; the Contractor is licensed by the State of Arizona; and the property on which the installation was to be undertaken is situated in Arizona. As such, the acts and omissions alleged fall within the requirements of Title 32, Article 3. 4. Complainant Lacey had a telephonic conversation with Thomas Welch of Welch Electric on or about October 23, 2006 whereby the Contractor agreed to perform unspecified electrical work at a rate of “$70.00 per hour.” 5. Complainant has been charged $662.64 (reduced by Respondent to $500.00)[3] for the work that was done at her home on October 28, 2006. Complainant alleges that she has been overcharged $233.53. 6. According to Ms. Lacey, Welch Companies overcharged her by billing at $70.00/hour per man working the project ($70.00 X’s 2) whereas she had understood that she would be charged $70.00 per hour for work on the project generally. Additionally, Complainant Lacey believes that she has been wrongly charged for supplies ostensibly purchased by a Welch Electric employee for use on the project ($161.47). Ultimately, it is her assessment that she should have only been charged for one (1) hour and thirty (30) minutes of service time. She also testified that she had been under an impression that the $70.00 per hour quote included materials. 7. Despite her impressions regarding intended charging, Complainant paid $500.00 to Welch Electric by check written on the day that the services were rendered. The $500.00 payment was made in compromise; payment has been negotiated by the processing financial institution. Complainant did not write any language on the memo portion of the $500.00 check to the effect that she had made payment “under protest.” 8. Gloria Regensberg, Esq., Complainant’s real estate agent in the purchase of her home, an agent for RE/MAX Platinum, and the party that referred Ms. Lacey to Welch Electric, testified. Ms. Regensberg related that she had spoken to Tom Welch prior to Ms. Lacey’s initial conversation with him. It was her impression, like that of Ms. Lacey, that the $70.00/hr. quote was general in nature, not intended to imply that, if more than one individual performed on the project, Welch Electric would multiply the labor charge. 9. Complainant is further upset that Respondent is unable to present receipt indicia itemizing the materials costs it claims. 10. Complainant filed a Complaint to the ROC on November 20, 2006 because of her disconcertion generated by the dispute. [4] 11. Thereafter, upon motion of Ms. Lacey because the dispute had not been resolved, the ROC issued a CITATION AND COMPLAINT against Welch Electric on March 28, 2007, alleging therein violations of A.R.S. § 32- 1154(A)(7) and (9). It is those allegations that are herein considered in light of the reliable evidence offered by the parties. . . . 12. Welch Companies filed an ANSWER to the CITATION AND COMPLAINT on April 11, 2007 specifically denying the allegations.[5] 13. Debbie Welch, President of Welch Electric and wife of Tom Welch, testified. She acknowledged that she could not add anything on the telephonic conversations that Mr. Welch may have had either with Ms. Lacey or Ms. Regensberg; she did not participate in those conversations. She did, however, call attention to the Contractor’s 25 year participation in the business, the most recent 9 years as Welch Electric’s “Qualifying Party.” Moreover, she related that it is common practice to cite rates correctly (otherwise only to enrage a disappointed consumer) and that it is Welch Electric’s practice to send two people on a job in the interest of efficiency (one can continue working while the other is out purchasing supplies). She further observed that the service call was made on a Saturday at Ms. Lacey’s request, while the charge reflected weekday rates. 14. Ms. Welch further testified that the charges included an assessment for labor + materials + “an ethical markup” (40% on materials purchased). She is unable, however, to present an itemized materials breakdown that would include receipt from Home Depot. 15. Ms. Lacey responded that Welch Electric had an obligation to inform her during negotiations that it was charging her a 40% materials markup. 16. The weight and sufficiency of the evidence establishes that Welch Electric had an obligation to present Complainant with a receipt for materials used on the project when requested so to do. The request was reasonable. Further, it was reasonable for one with zero experience in the industry to infer that a rate quote of $70.00/hr. comprehended the totality of labor on the project, absent specification otherwise. Particularly is this so when the agreement was verbal, without any written proposal.[6] The testimony of Ms. Regensberg, a trained and licensed lawyer, buttresses validity of the impression. The only question remaining is: What was the force and effect of the $500.00 payment in compromise upon Ms. Lacey’s right to raise a challenge seeking some form of restitution? [7] 17. Because it appears that there was a failure of a meeting of minds vis-à-vis a material term of the contract (labor costs), no contract was formed during the October 23, 2006 telephone conversation between Ms. Lacey and Mr. Welch. However, Ms. Lacey testified that she paid $500.00 to Welch Electric on October 28, 2006 after work had been performed, after a dispute had arisen, and after Mr. Welch lowered the “Work Order/Invoice” from $662.64 to $500.00, an effort to compromise his billing claim. When payment was made, without any indication of protest or allegation of duress noted on the instrument of payment, an enforceable agreement was formed. 18. It cannot be found on this record that Welch Electric acted wrongfully under A.R.S. § 32-1154(A)(7).[8] Mere impressions are insufficient to establish bad act and/or omission. Ms. Lacey accepted the Contractor’s performance by making her $500.00 payment. 19. No evidence of fraud was entered.[9] 20. It has not been established that Welch Electric failed to perform for the price stated in the contract. In fact, the payment of $500.00 mooted the question. 21. Therefore, it cannot be said, on this record, that Ms. Lacey has been substantially injured on this project.[10]

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent with possible violations of A.R.S. § 32-1154(A)(7) and (9). Those statutory sections require that a holder of a license or a person listed on a license not commit the following:

. . .

7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.

. . .

9. Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract. . . . CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over Complaint No. 07-1226 under A.R.S. § 32-1101, et seq., a section that authorizes the Registrar to impose disciplinary sanctions against licensees for violations identified at A.R.S. § 32-1154(A). Welch Electric was licensed at the time that the subject agreement for construction and installation work was undertaken. 2. The burden of persuasion generally at an administrative hearing falls to the party asserting a claim, right or entitlement, or an Agency seeking to impose a penalty.[11] Further, the standard of proof is that of the “preponderance of the evidence”.[12] Proof by a preponderance means that the evidence is sufficient to persuade the finder of fact that the proposition is “. . . more likely true than not.”[13] The evidence taken as a whole must convince the decision maker that the party who bears the overall burden of persuasion, in this case Complainant Lacey, is more probably correct on the issue(s) in dispute. . . . . . . 3. Observing these standards, Ms. Lacey has not satisfied her burden, by a preponderance of the evidence, that Respondent Welch Electric has violated (7) and (9) of A.R.S. § 32-1154(A) as charged in the CITATION AND COMPLAINT. 4. An examination of Welch Electric’s Complaint history[14] reveals that one (-1-) other Complaint has been filed against its license; the Complaint is identified “Resolved/Settled/Withdrawn.”[15] License history presents no basis for aggravation in an assessment of a proper penalty.

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors dismiss Complaint No. 07-1226. In the event of the certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will fall forty days from the date of that certification.

Done this 8th day of August 2007.

______________________________________ Gary B. Strickland Administrative Law Judge

Original transmitted by mail this 9th day of August 2007 to:

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

By ___________________________

----------------------- [1] The record consists of those documents found within the Agency’s case file, the contents of which the Administrative Law Judge has accorded Administrative notice, and the digital record of the proceedings under A.A.C. R2-19-121.

[2] See http://www.azroc.gov/clsc/AZROCLicenseQuery

[3] See Invoice 000282 within the Agency Hearing file.

[4] See COMPLAINT within the Agency Hearing file.

[5] See ANSWER within the Agency Hearing file.

[6] Given the presentation of the facts, it appears that there was a failure of mutual assent during the October 23, 2006 telephone conversation between Ms. Lacey and Mr. Welch; hence, no contract was formed until payment was made on October 28, 2006. [7] § 32-1156.01. Restitution

After a hearing pursuant to this article, an administrative law judge may recommend that a licensee provide restitution to any person who is injured or whose property is damaged by an action of the licensee.

See Bentivegna v. Powers Steel & Wire Prods., Inc., 206 Ariz. 581, 585; 81 P.3d 1040, 1044 App. 2004) (“[T]he sole issue in a proceeding before the ROC is whether a license should be suspended or revoked, and, if so, what conditions must be fulfilled before it is reinstated. See A.R.S. §§ 32- 1154, 1155. Although the ROC may order restitution as a condition of license reinstatement, it cannot issue an enforceable order or judgment for money damages against a contractor. See Sunpower of Ariz. v. Ariz. State Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990) (ROC may order payment of restitution as condition of license reinstatement); J.W. Hancock Enters. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (App. 1984) (finding that ‘the Registrar's power is limited to suspending or revoking a contractor's license, or attaching conditions to the license. Money damages may not be awarded.’). If a contractor subject to an ROC restitution order were to choose not to have his license reinstated, the restitution order would be ineffective. To fully protect a plaintiff's rights, he must be allowed to seek money damages in the courts in addition to any remedies available through the ROC complaint procedure.”)

“Restitution” is an ambiguous term. But, the concept generally refers to a compensation for injury done. See JOHN D. CALAMARI & JOSEPH M. PERILLO, THE LAW OF CONTRACTS § 9-23, at 376 (3d ed. 1987).

See also Murdock-Bryant Constr. v. Pearson, 146 Ariz. 48, 52; 703 P.2d 1197, 1201 (1985) (“Restitution began as an ancient remedy to enforce contractual rights which could not be enforced in common law courts due to lack of formality of the contract. D. Dobbs, Remedies § 4.2 at 233 (1973). Various forms of action evolved to permit recovery of goods or money on contracts implied in fact -- that is, those which the law implied from the conduct of the party rather than from any explicit words. Id. at 234.”)

See further, Restatement of the Law, Restitution § 1 cmt a. (1937):

a. A person is enriched if he has received a benefit (see Comment b). A person is unjustly enriched if the retention of the benefit would be unjust (see Comment c). A person obtains restitution when he is restored to the position he formerly occupied either by the return of something which he formerly had or by the receipt of its equivalent in money. Ordinarily, the measure of restitution is the amount of enrichment received (see Comment d), but as stated in Comment e, if the loss suffered differs from the amount of benefit received, the measure of restitution may be more or less than the loss suffered or more or less than the enrichment. (Emphasis added.)

[8] However, the allegations made both by Ms. Lacey and Ms. Regensberg that Mr. Welch verbally abused each of them over the telephone, once the dispute broke out, is disquieting. Further, Mr. Welch’s failure to appear at the Hearing to give testimony is disconcerting. Had payment not been made, the alleged conduct, unrebutted as it was, would have created an aggravating factor in the assessment.

[9] See Echols v. Beauty Built Homes, 132 Ariz. 498, 500; 647 P.2d 629, 631 (Ariz. 1982) (“A showing of fraud requires (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) the speaker's intent that it be acted upon by the recipient in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) the hearer's reliance on its truth; (8) the right to rely on it; (9) his consequent and proximate injury. (citation omitted). Each element must be supported by sufficient evidence. ‘Fraud may never be established by doubtful, vague, speculative, or inconclusive evidence.’ In re McDonnell's Estate, 65 Ariz. 248, 253, 179 P.2d 238, 241 (1947)”).

[10] Meaning, a material injury, one that is not illusory. See ”substantial”: WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 2280 (2002). [11] See Ariz. Admin. Code R2-19-119(B).

[12] Culpepper v. Arizona Board of Nursing, 187 Ariz. 431, 930 P.2d 508 (App. 1997); See also Ariz. Admin. Code R2-19-119(A).

[13] In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). See also J. LIVERMORE, R. BARTELS, & A. HAMEROFF, LAW OF EVIDENCE ( 301.1(4th ed. 2000) (One party bears the overall burden of persuasion on each fact material to the party’s claims and defenses. Further, the party with the burden of persuasion on a particular fact is required to satisfy the burden of production of enough qualitative evidence sufficient to support a finding of the existence of the fact, following a reasonable person standard.)

[14] See A.A.C. R4-9-117. Prior Record

In any disciplinary proceeding conducted by the Registrar, the licensee's entire license file including the record of prior citations and decisions may be considered by the Registrar in making a decision and order in the case.

[15] See http://www.azroc.gov/clsc/AZROCLicenseQuery

-----------------------

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