ALJDEC decisions subject to certification as final

08F-G0721-ROC · Registrar of Contractors · 2008-11-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 24, 2008 APPEARANCES: Complainant appeared through its member and qualifying party, James Reid (“Reid”) and Respondent appeared through its general manager and qualifying party, Doug Pajak (“Pajak”). 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, Respondent retained Complainant to prepare a “plan design and review” for a fire sprinkler system on a tenant improvement project, wherein Respondent was employed as the general contractor. Complainant contends that Respondent has improperly refused to pay for the services rendered and the facts surrounding this claim are discussed in the findings below.

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

a. Complainant was actually contacted by the City of Surprise (“Surprise”), to make contact with Respondent to prepare a fire sprinkler protection bid for the tenant improvement project. b. Complainant prepared a bid proposal for Respondent on or about October 5, 2005. The parties executed said bid proposal as a contract on or about October 5, 2005. Pursuant to the contract, for the price of $1,865.00 Complainant was to provide a new fire sprinkler design, provide specified review of the system plan design and obtain approval for same from Surprise. c. The above-described document is totally silent regarding any time deadline or that time is of the essence. d. According to Reid, Complainant expeditiously retained a plan designer to prepare the necessary plans and said plans were submitted to Surprise within seven (7) days of the signing of the contract. It was not until October 19, 2005 that Surprise completed their review of the proposed fire protection sprinkler plans and this review resulted in a number of “red-line” corrections. e. Reid testified that after receiving notice of the “red-line” corrections, he immediately contacted Pajak, who demanded a copy of the submitted plans with the notice for red-line corrections. Complainant’s plans were presented to Pajak. Reid testified that Pajak advised him, at that time, he did not have time for any red-line corrections. According to Reid, this was the last he heard from Respondent in regard to this project. f. Evidence of record showed that Respondent ultimately hired another contractor to obtain approval for the installation of a fire protection sprinkler system and to install same. g. Pajak testified that he did not find Complainant’s actions to be fast enough and that the project was being held-up, pending the approval of the fire sprinkler protection system installation. He also contends that the project manager for Surprise, Dan Newell (“Newell”), told him to terminate Complainant and get someone else for the project. Interestingly, it was Newell that had originally recommended Complainant to Respondent for the job. Respondent had never used Complainant before this project. h. Evidence of record showed that Respondent received a bid proposal from the successor contractor for the fire protection sprinkler system on or about November 7, 2005. However, it was not until November 11, 2005 that Respondent signed the contract with this contractor. Reid pointed out that the delay in signing the contract was somewhat peculiar, since Pajak was now claiming that Respondent was in a big hurry to get the project completed. i. There was no evidence to show that Respondent ever gave Complainant any written notice that their contract was terminated, nor did it give Complainant a chance to correct the red-line problems within a stated period of time, before taking the action to terminate Complainant.

3. It is determined and held that if time was a critical factor, then it was incumbent upon Respondent to insert such a condition into the contract. The contract is devoid of any such notice to Complainant. The facts presented herein support a finding that Complainant was acting in a diligent manner to get the required plan approval for the fire protection sprinkler and Respondent failed to give Complainant any reasonable opportunity to correct the red- line issues on the plans, before terminating Complainant from the project.

4. Construction work and or plan submittal, such as that at issue herein, is not a perfect science and it is not uncommon in the industry to have corrections to plans in order to obtain governing authority approval. In this regard, a contractor should be given a reasonable opportunity to complete necessary remedial work. Complainant was acting in a reasonable and prudent manner to earn the contract fee and Respondent acted unfairly, in failing to give Complainant any opportunity to correct the deficiencies in the plans. Thus, the facts and circumstances presented herein support a finding that Complainant earned its fee on this project and Respondent improperly withheld payment to Complainant. The failure to pay Complainant is also viewed as 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

1. Respondent violated the provisions of A.R.S. § 32-1154A (7) and (11).

2. There was no evidence presented by Complainant regarding the issue of a possible violation of A.R.S. §32-1154A (13); namely A.R.S. §32- 1124(B).

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 B-01 license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has paid or tendered the sum of $1,865.00 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 and in that event, this Citation (no. G08- 0721) 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 in this matter will be forty (40) days from the date of that certification. Done this day, November 24, 2008.

______________________________________ Mark A. Silver Administrative Law Judge

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

Registrar of Contractors Armando Contreras 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________

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