ALJDEC decisions subject to certification as final

07F-M2122-ROC · Registrar of Contractors · 2008-03-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 10, 2008 APPEARANCES: Complainant appeared through its credit manager, Bonnie Williams (“Bonnie”) and Respondent appeared through its president and qualifying party, Ron Carlson (“Ron”). ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record in this matter, the following Findings of Fact, Conclusions of Law, and Recommended Order are made:

FINDINGS OF FACT

1. Pursuant to contract, Complainant provided specified interior finishes, such as flooring materials and window coverings for a development, wherein Respondent was acting as the general contractor to construct the new homes for said project. Complainant contends that Respondent has failed to pay outstanding invoices on three (3) of the lots in question and these issues are discussed in the findings below.

2. The following salient facts were adduced at the hearing and are important to note:

a. Complainant submitted into evidence a large book of documents (Complainant’s exhibit no. 1) showing the course of billings on the project in question. The documents clearly reflect that all billings, for Complainant’s work and materials, were submitted directly to Respondent. Nevertheless, all payments that Complainant received for its labor and materials were paid by another entity, Tuscan Springs, L.L.C. (“Tuscan”). b. Not only is Ron the president and qualifying party of Respondent, but in addition he is the managing member for Tuscan. c. Notwithstanding the fact that Respondent was the general contractor on the project, Ron claims that Respondent had no responsibility to pay any of the bills for work performed by any of the subcontractors on the project. According to Ron, although Respondent received all invoices from the subcontractors on the project in question, it merely reviewed these invoices to determine whether or not they were appropriate and then forwarded them to Tuscan for payment. d. Neither party was able to present a copy of the applicable contract for Complainant’s work on this project. e. Bonnie testified that Complainant properly submitted the billings to Respondent, since Respondent was the general contractor on the project and despite the fact that Tuscan paid the other bills, Complainant was looking to Respondent for payment. According to Bonnie, it did not matter to Complainant where payment was actually coming from, as long as payment was made. f. Complainant showed unpaid invoices on three (3) lots, totaling the sum of $8,170.00. Two of the invoices were for window coverings and one was for remedial work necessitated by Respondent altering Complainant’s carpet installation, thereby requiring Complainant to return and re-tack the carpet edge to the floor. The actual amount of the outstanding invoices was not contested by Respondent at the instant hearing.

3. Absent specific contractual arrangements to the contrary, it is generally the responsibility for a general contractor on a building project to select, hire, supervise and pay subcontractors. In the event that the parties intend to make any other arrangements in this regard, there should be specific written contract language, showing that another entity will have the full responsibility for payment to the subcontractor. The evidence presented herein was inadequate to support a finding that the parties herein entered into a specific contract provision which would relieve Respondent of the typical responsibility of a general contractor to pay its own subcontractors.

4. Under all of the facts and circumstances it is determined and held that Respondent, in its capacity as the general contractor on the project, failed to pay Complainant, its subcontractor, for services rendered. Respondent’s failure to pay Complainant the above described sum of $8,170.00 is found to not only be a violation of the applicable charge that Respondent failed to pay for services and/or materials provided but also a wrongful act, within the meaning of the applicable charged section of the State’s Contracting laws.

5. As set forth in the Citation and Complaint issued by the Registrar of Contractors, Respondent was advised that in the event of a finding of a violation against Respondent, Respondent’s prior disciplinary record of final Registrar of Contractors’ orders may be considered in mitigation or aggravation. Accordingly, subsequent to conclusion of the instant hearing, notice was taken of official records of the Registrar of Contractors regarding any prior final disciplinary orders against Respondent and said notice revealed that the instant complaint was the only complaint on the Registrar of Contractors’ current record regarding Respondent. Therefore, Respondent’s prior record is properly deemed to be excellent and thus, is viewed as a matter in mitigation for any disciplinary penalties to be imposed as a direct result of this case.

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 KB-01 license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has paid or tendered $8,170.00 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 KB-01 license be placed on a period of 90 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. In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order in this matter will be forty (40) days from the date of that certification.

Done this day, March 11, 2008.

______________________________________ Mark A. Silver Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2008, to:

Registrar of Contractors Fidelis V. Garcia 3838 N. Central Ave., Ste. 400 Phoenix, AZ 85012-1906

By ___________________________

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