ALJDEC decisions subject to certification as final

08F-T0197-ROC · Registrar of Contractors · 2008-09-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 3rd, 2008; 1:30 p.m. APPEARANCES: Complainant, KAZ Construction, Inc., was represented by Mr. Mark Ziegler, Vice President and Qualifying Party. Respondent, Southwest Foothills Homes, Inc., was represented by Mr. Walid A. Zarifi, Attorney-at-Law. ADMINISTRATIVE LAW JUDGE: Grant Winston _____________________________________________________________________ The administrative hearing of this matter was held in the Office of Administrative Hearings, Tucson. Testimony was heard and other evidence admitted to the record, and, based on the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made. FINDINGS OF FACT 1. Respondent, Southwest Foothills Homes, Inc., is, and during all time material hereto was, a contractor licensed by and doing business in the State of Arizona, holding Class B License number 111930. 2. Complainant, KAZ Construction, Inc., sold flagstone to be installed at a construction project in Tucson, Arizona, in November of 2005. Exactly who purchased the flagstone and was responsible to pay for it is a bone of contention between these parties. 3. Respondent is owned by Mr. Ahmad N. Zarifi. Mr. Zarifi is also the 50% co-owner of a company known as Skyline Ridge, LLC. 4. Complainant’s Qualifying Party Mr. Mark Ziegler dealt with Mr. Zarifi for the purchase and sale of the flagstone on this project. Respondent was the general contractor for the construction of the project, while his other company was the owner of the subject real estate. 5. There was no written document entitled “Contract,” entered into between these parties or Respondent’s other company. There do exist, however, documents exchanged between Mr. Zarifi and Mr. Ziegler, which provided sufficient evidence of the contract for the purchase of the flagstone by Respondent. 6. Written invoices and receipts for partial payment were submitted by Complainant to Mr. Zarifi as owner of Respondent, which are credible evidence that the contract for the flagstone was between the parties to this Citation and Complaint. There is no evidence that Mr. Zarifi ever corrected Complainant about incorrect invoicing, or admonished Complainant to bill any other entity. 7. The relationship between the parties then grew into a dispute over the proper amount that should have been invoiced for the flagstone purchased and delivered. 8. On November 7th, 2005, Mr. Zarifi sent a letter to Respondent, enclosing therein a check made payable to Complainant in the amount of $6,337.51, as well as Mr. Zarifi’s handwritten breakdown of what he considered to be the proper flagstone cost. The cover letter was on the printed stationery of Respondent “Southwest Foothills Homes, Inc.” In the body of the letter Mr. Zarifi stated to Mr. Ziegler that the enclosed check is “payment in full for all outstanding bills,” meaning for the flagstone. He continued to state in his letter that Mr. Ziegler’s cashing of the check would constitute agreement “that I do not owe you any amount.” Mr. Zarifi signed the check and included a notation on the face of the check “PAID IN FULL NO AMOUNT DUE.” The check was number 4338 drawn on the account not of Respondent, but of Mr. Zarifi’s other company, Skyline Ridge, LLC. 9. Not wishing to relinquish any continuing rights he might have to dispute the amount of money he contended was rightfully owed him for the flagstone he had sold to Mr. Zarifi, Mr. Ziegler declined to cash the check, fearing that his doing so would be construed as his acceptance of the amount as full payment. 10. Some time then passed during which these parties had other contractual dealings which Mr. Ziegler considered to be a credit adjustment to his account balance in favor of Respondent/Mr. Zarifi. As Mr. Ziegler was then satisfied that the amount of the check that had been previously tendered to him now amounted to payment in full, Mr. Ziegler took check number 4338 to his bank on October 6th, 2006, for deposit into the Complainant’s account. He subsequently received notice from his bank that the check was dishonored by the payor bank, which could not find any such account on which the check was drawn. What had apparently happened is that during the time the amount owed was in dispute between the parties, the subject construction project was completed, and the bank account on the project that had been maintained by the owner, Mr. Zarifi’s other company, Skyline Ridge, LLC, had been closed. Complainant was left holding a worthless piece of paper. 11. So Mr. Ziegler returned to Mr. Zarifi seeking payment. Mr. Zarifi’s position was then and is now that Complainant’s contract for the flagstone was with Skyline Ridge, LLC, not this Respondent, and while Complainant is owed the amount in controversy, $6,337.51, Mr. Ziegler should look to Skyline Ridge, LLC for payment, not the Respondent. 12. Notice is taken of Respondent’s prior license record with the Arizona Registrar of Contractors. CONCLUSIONS OF LAW 1. This administrative hearing was held under authority of and pursuant to A.R.S. 32-1156, and A.R.S. 41-1092. 2. Respondent is charged in the instant Citation and Complaint with possible violations of A.R.S. 32-1154.A.7, and 11. 3. The greater weight of evidence proved that Respondent did contract with Complainant for the purchase of flagstone in this particular construction project, notwithstanding the fact that Respondent’s owner later chose to pay for the product out of funds belonging to another of his companies. Complainant was within its legal right to dispute the amount of payment being offered by Respondent. Once the parties reached an accord on the account balance between them, Respondent refused to pay, and continues to refuse to pay the amount owed, $6,337.51. Respondent’s actions constitute a violation of A.R.S. 32-1154.A.11. 4. There is no evidence of any violation of A.R.S. 32-1154.A.7 (wrongful or fraudulent act) independent of the violation of A.R.S. 32-1154.A.11. RECOMMENDED ORDER In view of the foregoing Findings of Fact and Conclusions of Law it is hereby recommended that Respondent’s Class B License number 111930 be suspended until the Registrar receives written proof that Respondent has paid Complainant $6,337.51. It is further recommended that if the Respondent pays the Complainant the aforementioned amount, on or before the effective date of this Order (40 days after the date of service appearing on the Registrar’s certification on the Order), then the above-provided license suspension shall not occur, and Citation and Complaint T08-0197 shall be closed. In the event of certification of the Administrative Law Judge’s Decision and Order by the Director of the Office of Administrative Hearings, then the effective date of the Order shall be 40 days after the date of that certification. Done this day, September 8th, 2008.

______________________________________ Grant Winston 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 100 N. Stone Ave., Suite 704 Tucson, AZ 85701 520-628-5488 Fax: 520-628-5575 www.azoah.com