ALJDEC decisions subject to certification as final

08F-3209-ROC · Registrar of Contractors · 2009-04-07

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 31, 2009.

APPEARANCES: >The Complainant appeared through Alfred Tutko, its qualifying party and a member of the LLC entity. >The Respondent appeared through Joel A. Williamson, its qualifying party and a member of the LLC entity.

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 licensed specialty plumbing contractor, and Respondent is a licensed general contractor. The owners and qualifying parties of both respective LLC contracting entities have, for many years, known each other and have participated in numerous business dealings involving construction projects.

2. The nature of most, if not all, prior dealings between the two parties was frequently on a referral basis that often consisted of arrangements with a property

owner who would transmit payments directly to the involved contractor. On some occasions, Respondent admittedly would transmit payment directly to Complainant’s materials suppliers.

3. The within claim by Complainant was for the unpaid balance of its invoiced charges for plumbing work involving the providing of a water line and relocating a gas line on certain residential property owned by the Atwater family. Respondent was serving as the general contractor for the remodeling of the Atwater residence, and was shown to have recommended Complainant for the performance of the contemplated plumbing work.

4. The age of the property, including the unknown but reasonably anticipated relatively old condition of the water and gas line piping, prompted a proposal by Complainant on a time and materials basis instead of on a fixed cost basis. All elements of the arrangements between the parties, as well as with the homeowners were admittedly verbal, and neither any labor rates nor any overhead and profit factors to be charged by Complainant were communicated in advance. In any event, the calculated total resulting charges for the work performed by Complainant on the jobsite, together with the materials’ costs, were in the aggregate sum of $4,979.84.

5. Complainant was at all times looking to Respondent for the ultimate payment of its invoiced charges, while Respondent was expecting payments to be made directly by and only by the Atwaters, as the homeowners. The evidence revealed that the Atwaters did subsequently remit a partial payment in the amount of $2,477.89 against the invoice sent by Complainant to Respondent, leaving a remaining balance of approximately $2,500.00, which sum Complainant seeks to collect from Respondent as a result of this administrative proceeding.[1]

6. The testimony at the hearing was highly conflicting with respect to the intended arrangements visa vis the Complainant, the Respondent and the property owners. No valid basis is found to exist for the disbelief of either party’s version. However, it may nevertheless be properly found and determined under all the circumstances shown to exist in this case that Respondent had failed to sufficiently distance itself from its customer, the Atwaters, and that Complainant could and did reasonably believe that it was functioning as a subcontractor of Respondent on the project. This relationship would exist irrespective of any identified exclusion of the plumbing-related work in Respondent’s written agreement with the Atwaters of which Complainant had no notice or awareness.

7. Both Respondent and its property owner/customer were shown to have strongly and consistently objected to the total monetary amount set forth by Complainant in its invoice on various grounds. These grounds ranged (a) from the quantum of the purportedly applicable labor rates or overhead margins utilized by Complainant, (b) from the asserted lack of experience and lack of effective supervision of several of Complainant’s employees performing jobsite functions generating some erroneously performed work that had to be corrected, involving wasted hourly time being billed for, and (c) to certain damage to the structure by or attributable to Complainant due to a mistakenly drilled initial hole for the gas line. The payment transmitted to Complainant from the homeowners purportedly represented the Respondent’s and its customer’s calculation of the maximum compensation to which Complainant was properly entitled after considering the aforementioned objections to the work and to the overall amount of the invoiced charges.

8. In these administrative disciplinary proceedings, it must be remembered that it is the complaining party that has the burden of proving wrongdoing on the part of the Respondent/contractor. In this regard, it is not incumbent upon Respondent to prove

that it does not owe any portion of the amount presently claimed due as an unpaid balance. Instead, it is part of Complainant’s burden to demonstrate that all charges are valid and that legitimate invoice amounts remain past due and owing.

9. Nothing in Complainant’s documentary or testimonial evidence presented at the hearing serves to dispel that fact that 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, except possibly for its contention as to non-involvement contractually with Complainant on this project.

10. The Registrar of Contractors is not statutorily empowered to adjudicate and award money damages for contractual breaches which must more appropriately be recovered, if at all, by initiating and pursuing available remedies before a civil court of competent jurisdiction. Based upon the demonstrated bona fide dispute as to the monetary amount claimed past due and owing to Complainant by Respondent, the instant balance of claim filed with the Registrar must be held not to constitute a liquidated sum certain which is an essential element for any finding that Respondent failed to pay monies when due within the purview of the State’s contracting laws. In the event that the basis of Respondent's dispute is ultimately determined to be without merit and a final civil judgment for all or part of the $2,500.00 claimed hereunder is obtained in favor of Complainant and is not promptly satisfied by Respondent, another separate disciplinary complaint may properly be filed with the Registrar of Contractors.

11. The above Findings of Fact, together with this Finding, which may also be properly treated as constituting Conclusions of Law, are not intended to and do not constitute a determination as to the validity or the amount of Complainant’s claim under the alleged subcontractual arrangements nor as to possibly legitimate defenses, set-off

amounts or counterclaims assertable by Respondent, by the property owners or by both. These determinations must be made by the civil tribunal as part of an appropriate separate civil action commenced and pursued by either party, which tribunal would be the more appropriate forum for the resolution of this bona fide monetary dispute. Stated alternatively, the termination of this administrative proceeding shall be expressly without prejudice as to the civil pursuit by Complainant of potential or actual rights to recover additional monies or as to the assertion by Respondent of appropriate defenses.

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 dispute exists as to all or a substantial portion of the claimed indebtedness on the part of Respondent under the parties’ contractual arrangements prevents any supportable finding of a liquidated sum certain remaining past due and owing by Respondent. Consequently, unless or until the claimed obligation is reduced to a valid judgment by a civil court of competent jurisdiction, no violations by Respondent of any of the charged subsections of A.R.S. §32- 1154A can be adequately established.

3. Any dismissal of the instant administrative proceeding must be and is wholly without prejudice to Complainant’s potential rights to pursue available civil remedies for the collection of provable damages for any breach of contract or for any unjust enrichment that may be sufficiently established. Any future failure by Respondent to promptly satisfy a court judgment in favor of Complainant, if obtained, would provide a valid basis for a new, separate disciplinary action leading to the imposition of potential penalties against the licensee.

RECOMMENDED ORDER

In view of the foregoing, it is recommended on the merits that the entire Citation and Complaint in Case Number M08-3209 be dismissed without prejudice.

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: April 8, 2009. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

William A Mundell, Director Registrar of Contractors Legal Department 3838 North Central Avenue (Suite 400) Phoenix, AZ 85012 - 1906 ----------------------- [1] An actual mathematical calculation of the difference in the monetary amounts of the presented invoice and the payment check subsequently tendered to Complainant would be $2,502.95.

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