ALJDEC decisions subject to certification as final

08F-0725-ROC · Registrar of Contractors · 2008-07-15

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 8, 2008.

APPEARANCES: >The Complainant appeared through Sharon McCauley, its Credit Manager and an authorized corporate employee. >The Respondent appeared through its sole owner and qualifying party, Timothy Kyle Wilson.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

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

FINDINGS OF FACT

1. Complainant is a materials supplier with whom Respondent had been doing business for several years. It was not disputed that Respondent had continued to make purchases from Complainant consisting of electrical- related supplies that were either delivered to specified jobsites or picked up by Respondent’s representatives. The arrangements between the parties were that all purchases were charged on an open

account basis, and periodic payments were due within thirty days following the issuance and receipt of invoices that identified the transaction.

2. In this administrative proceeding, Complainant is claiming entitlement to a total monetary amount of $3,448.78 that is asserted to be long past due and owing from Respondent.[1] Such claimed arrearages were shown to have arisen from various charged purchases over a time period ranging from February, 2007 through August, 2007, and were further shown to be, primarily attributable, in large part, to one transaction involving a lighting package for a restaurant being constructed by a general contractor who was utilizing Respondent as the project’s selected electrical contractor.

3. The above-described lighting package was the subject of an invoice sent by Complainant in early April, 2007 in the amount of $9,920.00. The entire package, which was delivered somewhat late causing a need for rescheduling other work on the project by other trades, was ultimately found to consist of items or components not ordered or otherwise not appropriate for the intended design within the restaurant. The entire lighting package was ultimately returned through Complainant to the manufacturer whose representative, together with a sales representative of Complainant, were shown to have been personally involved in most all phases of the selection and ordering process

4. Complainant subsequently issued a written credit to Respondent for the returned lighting package. However, unlike the parties’ prior business arrangements under which a full monetary credit would be given for returns of items that were either picked up or delivered but were not used on various projects, in this instance, the amount of credit issued to Respondent was in the sum of $7,236.14, leaving a balance

purportedly payable for the returned lighting package in the sum of $2,683.86. The remaining portions of the within overall claim by Complainant related to other relatively small purchases of supplies both for the same restaurant project as well as for another unrelated project, in the combined aggregate amount of $764.92. The overall claim presently asserted by Complainant was further shown to be the subject of an ongoing effort on behalf of Complainant to recover monies through the use of a Collection Agency.

5. Respondent stated at the hearing that there was no objection to payment of the $764.92 sum that was admittedly owed for purchases other than the lighting package for the restaurant. In point of fact, Respondent expressly stipulated that the aforesaid amount was properly due and payable to Complainant. However, Respondent decided unilaterally to withhold any payment of such undisputed balance pending resolution of the issues relating to the returned merchandise and the amount of credit allowed for same.

6. Complainant’s testimonial and documentary evidence presented at the hearing in support of its claim for a balance on the lighting package was somewhat inconsistent and confusing. It appeared that the product manufacturer had purportedly issued a substantially smaller credit to Complainant for the returned lighting package it (Complainant) had previously paid for in full, prompting Complainant not to fully credit Respondent’s account with the originally invoiced total. However, although Complainant maintained its right to retain the profit margin of 16.6% over its cost price, which had led to the adding of approximately $1,663.00 to Complainant’s cost so as to reach the $9,920.00 purchase price actually billed to Respondent, the amount of the issued credit left a much greater claimed balance payable in the sum of $2,683.86. It appeared likely that the manufacturer’s allowed credit was far smaller than anticipated, perhaps due to freight charges and potentially applicable re-stocking fees, and that Complainant was attempting to share the deficit with Respondent, utilizing the prior profit percentage as a basis for allocating losses between these parties.

7. Respondent’s ongoing communicated position, supported by the written and verbal statements by the project’s general contractor and designer, was that the inability of Complainant to timely meet delivery schedules and to ultimately deliver the correct items ordered, leading to a total rejection of the entire package by the ultimate consumer, served to negate any entitlement on the part of Complainant either to retain anticipated profits or even to pass along a share of any losses, especially since representatives of the manufacturer and of Complainant were personally involved in the overall selection, delivery and product design and adjustment process. Stated alternatively, Respondent asserts that the return of the lighting package under all the circumstances warranted treatment no different than under the previously experienced return policies in effect between the parties of issuing full credit for the original cost price of the returned items.

8. Nothing in Complainant’s evidentiary presentation serves to dispel that fact that, with respect to the portion of the claimed balance due arising out of the delivery and return of the lighting package and the issuance of a partial credit, a monetary dispute had existed and still exists between the parties. Nor can it be reasonably held or inferred that Respondent’s position in disputing its liability for all or any portion of the balance claimed due and owing was arbitrary, unreasonable or asserted other than in good faith on the part of Respondent.

9. The Registrar of Contractors is not the appropriate tribunal before which to seek the adjudication and an award of a monetary claim that is the subject of a bona fide dispute between the parties. Such claim and any applicable set-offs or counterclaims must more properly be pursued by the respective parties before a civil court of competent jurisdiction. Moreover, the civil forum is fully empowered and capable to determine collateral issues affecting the quantum of any and all provable damages by resorting to a joint, shared or comparative fault analysis when assessing the extent, if any, of entitlements and/or offsets as between the respective parties.

Even if the basis of Respondent's dispute is ultimately determined to be without merit, the present existence of the above-described bona fide monetary dispute results in an inability for Complainant to sufficiently establish that a liquidated amount or a sum certain remains past due and owing for the lighting package, which is an essential element of the charged contracting law offense.

10. Neither any advance notice nor even any contemporaneous notice was given by Complainant to Respondent prior to or at the time of the return of the lighting package that other than a full monetary credit would be given equal to the originally billed cost price, and the extent or quantum of any charges, fees or other deductions was never communicated or otherwise mutually agreed upon. It must be held that, with respect to the portion of the overall claim relating to the lighting package, Complainant was unable to sustain its applicable burden of proving its entitlement to the amount sought herein for such identified item by a preponderance of reliable, substantial and probative evidence.

11. Notwithstanding the aforementioned inability to sufficiently demonstrate an entitlement for all or any portion of the adjusted charges claimed due for the lighting package, the evidence of record did adequately establish that Respondent has failed or refused to pay Complainant an amount in excess of $750.00 when due based upon the admittedly unpaid invoice amounts unrelated to the lighting package. However, no finding is supportable that Respondent has committed any wrongful act resulting in detriment to Complainant, within the meaning of another code provision charged hereunder to have been violated by Respondent

12. Notice is taken of the Registrar’s license records which reveal that the prior record of Respondent as a contractor in this State has been excellent. Consequently, the Registrar should decline to impose any additional disciplinary penalties against Respondent’s license other than a provisional license suspension conditioned solely

upon the payment by Respondent to Complainant of the undisputed balance of $764.92.

CONCLUSIONS OF LAW

1. At these administrative hearings, the complaining party generally has the burden of proof, Vazzano v. Superior Court, 74 Ariz. 369, 249 P.2d 837 (1952) and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (1996). See also Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (1985); Utah Construction Company v. Berg, 68 Ariz. 285, 205 P. 2d 367, (1949); Rule R2-19-119, A.A.C. 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). It is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not." Black's Law Dictionary, 1182 (6th ed. 1990).

2. The showing that a good faith monetary dispute exists as to a substantial portion of the claimed indebtedness on the part of Respondent under the parties’ ongoing contractual arrangements prevents any supportable finding of a liquidated sum past due and owing by Respondent with respect to the amounts sought hereunder relating to any obligations to pay for a portion of the returned lighting package. Unless or until the claimed obligation, if any, for such lighting package is reduced to a valid judgment by a civil court of competent jurisdiction, the sole aspect of the filed complaint that would constitute a violation by Respondent the provisions of A.R.S. §32-1154A (11) relates to the claim of $764.92 for other purchases during the time period in question. No violations by Respondent of the wrongful act provisions set forth in A.R.S. § 32- 1154(A)(7) were sufficiently proven hereunder.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order that Respondent’s Class K-11 license shall be suspended until the Registrar receives written proof that Respondent has paid or tendered the sum of $764.92 to Complainant.

It is further recommended that if written proof is filed with the Registrar on or before this Order’s effective date that Respondent has complied with the above-described payment condition, then no license suspension shall be imposed and the entire Citation and Complaint in Case Number 08-0725 shall be closed.

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 will be forty (40) days from the date of that certification.

Dated: July 16, 2008. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Fidelis V. Garcia, Director Registrar of Contractors 3838 North Central Avenue (Suite 400) Phoenix, AZ 85012 - 1906 ----------------------- [1] The filed complaint had set forth an allegedly unpaid amount due of $3,451.32, which was $2.54 higher than the sum revealed by the credible testimony at the hearing based upon the business records of Complainant.

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