ALJDEC decisions subject to certification as final

07F-A0215-ROC · Registrar of Contractors · 2007-06-11

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 7, 2007 APPEARANCES: Complainant : Eileen M. Sullivan appeared pro se. Respondent : Thomas Beahm, Qualifying Party, represented Wizard of Odd Construction, Inc. In addition to Mr. Beahm, Robert Donnelly testified. ADMINISTRATIVE LAW JUDGE: Gary B. Strickland _____________________________________________________________________ A Hearing[1] was convened to determine whether Respondent Wizard of Odd Construction, Inc. (hereinafter also, “Respondent” or “Wizard of Odd Construction” or “the Contractor”) violated state law as has been alleged by Complainant Sullivan and as has been cited by the Arizona Registrar of Contractors (also, the “ROC”). Evidence and testimony were presented. Respondent holds a B-03 (General Remodeling and Repair Contractor) license issued by the Registrar of Contractors. Complainant alleges that Respondent accepted money from Complainant for the refinishing of a deck and repair of its railings at Complainant’s home and that Respondent has not completely performed. Based upon an examination of the entire record,[2] 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. 214167) was initially issued on December 7, 2005. The license was in active status at all times herein relevant.[3] 2. Thomas Richard Beahm is the Qualifying Party identified on the Wizard of Odd Construction, Inc. license. 3. The project at issue involved the refinishing of a deck and repair of its railings at the Sullivan home situated at 4113 South Adeline Drive, in Prescott, Arizona. The contract was entered into in Arizona; the Contractor is licensed by the State of Arizona; and the property on which the construction 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 Sullivan entered into her contract with Wizard of Odd Construction on or about October 3, 2006 whereby the Contractor agreed to perform the refinishing and repair work for a $1,200. contract price.[4]

5. Complainant has paid $800. on the contract; a $400. deposit and a second payment of $400. thereafter. 6. According to Ms. Sullivan, Wizard of Odd Construction stopped work on the project without legal excuse and refused to fulfill its contractually agreed upon duties. . . . 7. Wizard of Odd Construction, having commenced construction, admits that it suspended its work pending Ms. Sullivan’s payment of a “Change Order.” However, the Contractor believes that he was justified in his cessation because Ms. Sullivan had breached her obligations first by not accepting the terms of the written “Change Order.” 8. Disconcerted because of Wizard of Odd Construction’s alleged contract abandonment and breach, Ms. Sullivan filed a Complaint to the ROC on October 26, 2006.[5] 9. Thereafter, upon motion of Ms. Sullivan, the ROC issued a CITATION AND COMPLAINT against the Wizard of Odd Construction license on February 6, 2006, alleging therein violations of A.R.S. § 32-1154(A)(1), (7), and (9). It is those allegations that are herein considered in light of the parties’ presentations of evidence and argument. 10. Wizard of Odd Construction filed an ANSWER to the CITATION AND COMPLAINT on February 12, 2007 wherein it alleged as a defense that Complainant had altered the contract thereby nullifying its enforceability.[6] 11. Ms. Sullivan testified that she was drawn to hire Wizard of Odd Construction through its advertising,[7] its comparatively low quote,[8] and the urgent necessity to have the work done. 12. The contract entered into by the parties on October 3, 2006 required a down-payment of $400., another payment of $400. once work commenced, and a further payment of $400. upon completion. As previously noted, the first two installments have been paid. The contract further included the following provision:

No Allowances: Customer will be given a copy of the materials required to complete the work and the cost will be added to the balance in the final payment.[9] 13. Additionally, the contract included the following terms and conditions:

9. CHANGES IN THE WORK. . . . Modifications or addition to the work shall be executed only when both the Owner and the contractor has signed a contract Change Order.[10]

10. RIGHT TO STOP WORK. Contractor shall have the right to stop work if any payment shall not be made, when due, to Contractor under this agreement. Contractor may keep the job idle until all payments due are received. . . . Such failure to make payments when due, is a material breach of this agreement.[11] (Italics added.)

14. On or about October 20, 2006, Respondent Wizard of Odd Construction presented Complainant Sullivan with a “Change Order”[12] wherein and whereby Respondent was demanding an additional $850. payment for specified work. The “Change Order” appears to have required payment for materials and labor. There is a dispute concerning when and how the “Change Order” was delivered to Complainant. However, it is clear that Complainant did not accept the demand in the form in which it had been offered. By latticework exclusionary notation, Complainant reduced the scope of work, and payment therefor, to one item at a cost of $200. Complainant signed the “Change Order” on October 23, 2006. Complainant contends that Mr. Beahm became rather contentious when presented with the modified “Change Order” and left the scene in disgust. In support of her accusation, Complainant presented a notarized statement from a neighbor who reportedly witnessed the incident and verified Complainant’s assertion of Mr. Beahm’s argumentativeness.[13] Mr. Beahm denies that he was contentious and that he had left the scene in a huff. 15. With or without the neighbor’s statement, it is determined probable that Ms. Sullivan’s recounting of what occurred when she presented the signed “Change Order” to Mr. Beahm is accurate. At the Hearing, Mr. Beahm manifested a demeanor fraught with traits of volatility and irascibility. He does not appear open to reasonable discussion of variance of opinion. 16. It is further probable that Wizard of Odd Construction ceased work on the project after October 23, 2006. Albeit, Mr. Beahm believes that he was justified in doing so, cessation of work because the “Change Order” had been modified by Ms. Sullivan constituted breach. On the other hand, Mr. Beahm is wrong to suppose that Ms. Sullivan’s modification of the “Change Order” constituted a breach. This is so for two quite evident reasons: (1) the contract required that the balance of payments due would be paid “upon completion” (§10); and (2) the contract stipulated that any “Change Order” modifying its terms be in writing and signed by both parties (§9). By October 23, 2006, the work had not been completed and the “Change Order” had not been signed by Ms. Sullivan accepting all of the terms offered therein. 17. Having ceased construction at the project after October 23, 2006 without legal excuse, Wizard of Odd Construction breached its contract with Ms. Sullivan. 18. Ms. Sullivan presented evidence[14] that she was caused to expend $935. to a licensed Contractor (Lic. No. 152705) to have the work on the deck and railings completed. Without controverting evidence, and there was none, it is presumed that the $935. constituted a fair and customary charge. 19. The weight and sufficiency of the evidence establishes that Wizard of Odd Construction abandoned its contract with Ms. Sullivan, without legal excuse. 20. The evidence persuades that the breach was wrongful under A.R.S. § 32-1154(A)(7). 21. No evidence of fraud was entered.[15] 22. The wrongful action and omission of Wizard of Odd Construction vis-à-vis its contract breach was injurious to Ms. Sullivan.[16] 23. It is also persuasive that Wizard of Odd Construction has refused to complete the contract for the price stated therein and any modification thereof. Ms. Sullivan’s refusal to sign off on the full modification offered in the “Change Order” constitutes the essence of Wizard of Odd Construction’s argument. However, Wizard of Odd Construction has not persuaded that Ms. Sullivan was under any legal obligation to accept the “Change Order” as written. The parties may possibly have had discussions that led to the terms of the offer. Nonetheless, Ms. Sullivan counter-offered. That counteroffer did not provide Wizard of Odd Construction with legal excuse to abandon its contractual obligations. It simply meant that further negotiations were required. 24. Ms. Sullivan is entitled to a restitutionary award under (A.R.S. § 32-1156.01).[17] A reasonable sum required to put her in the position had her contract with Wizard of Odd been completed is $335. ($800. paid to Wizard of Odd + $935. paid to the substitute Contractor = $1,735. - $1,200. original Contract price + the $200. potentially agreed-upon modification = $335. (making allowance that No. 2 of the “Change Order” was done, as so testified by Mr. Donnelly).

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent with possible violations of A.R.S. § 32-1154(A)(1) and (7). Those statutory sections require that a holder of a license or a person listed on a license not commit the following:

1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

. . .

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. A07-0215 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). Wizard of Odd Construction, Inc. was licensed at the time that the subject agreement for construction 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.[18] Further, the standard of proof is that of the “preponderance of the evidence”.[19] 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.”[20] 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 Sullivan, is more probably correct on the issue(s) in dispute. 3. Observing these standards, Ms. Sullivan has satisfied her burden, by a preponderance of the evidence, that Respondent Wizard of Odd Construction has violated (1), (7), and (9) of A.R.S. § 32-1154(A) as charged in the CITATION AND COMPLAINT. . . . 4. An examination of Wizard of Odd Construction’s Complaint history[21] reveals that no (-0-) other Complaint has been filed against its license during the brief period of licensure. Therefore, license history presents no basis for aggravation in an assessment of a proper penalty for the violations herein found.[22]

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors suspend Lic. No. 214167 unless the parties provide written confirmation to the ROC prior to the effective date of the Registrar’s Order that Wizard of Odd Construction, Inc. has paid $335. to Ms. Sullivan. 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 June 2007.

______________________________________ Gary B. Strickland Administrative Law Judge

Original transmitted by mail this 11th day of June 2007 to:

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

By ___________________________

----------------------- [1] The Hearing was conducted via videoconferencing technology with the parties situated at the offices of the ROC in Prescott and the Administrative Law Judge located in Phoenix. [2] 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, the exhibits offered by the Complainant and Respondent, and the digital record of the proceedings under A.A.C. R2-19- 121. Complainant offered 17 exhibits identified as C-1 through C-17; Respondent offered 17, marked R-1 through R-17. Each exhibit was received.

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

[4] See “Home Improvement Contract,” Exhibit C-3.

[5] See COMPLAINT within the Agency Hearing file.

[6] See ANSWER within the Agency Hearing file.

[7] See Exhibit C-2.

[8] See Exhibit C-3.

[9] Id.

[10] Id.

[11] Id.

[12] See Exhibit C-4.

[13] See Exhibit C-16.

[14] See Exhibit C-15.

[15] 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)”).

[16] Meaning, a material injury, one that is not illusory. See ”substantial”: WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 2280 (2002).

[17] § 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.)

[18] See Ariz. Admin. Code R2-19-119(B).

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

[20] 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.)

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

[22] 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.

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