ALJDEC decisions subject to certification as final

09F-A0231-ROC · Registrar of Contractors · 2009-11-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 9, 2009 at 8:15 a.m. APPEARANCES: Complainant Field Day LLC appeared through Ronald Lee Sult, Jr., its qualifying party and member; Respondent Ken Smirke Development LLC appeared through Ken Vincent Smirke, its qualifying party and member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On April 18, 2003, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC184703, Class B- for residential general contracting to Respondent Ken Smirke Development LLC, a limited liability company. Ken Smirke is Respondent’s qualifying party and managing member. On May 18, 2007, the Registrar issued License No. ROC232995, Class K-02 for dual excavating, grading and oil surfacing to Complainant Field Day LLC, a limited liability company. Ronald Sult, Jr. is Complainant’s qualifying party and managing member. On August 29, 2008, the Registrar issued License No. ROC247004, Class KA- for dual engineering to Complainant. On approximately December 9, 2008, Complainant made a complaint against Respondent’s license that alleged that Respondent had failed to pay Complainant $7,027.50 for work that Respondent had authorized on construction of a house for which Respondent was general contractor. Complainant subsequently requested that the Registrar issue a citation against Respondent’s license. On May 8, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging violations of A.R.S. § 32-1154(A)(7) and (11). Respondent timely answered the Citation and Complaint, denying any statutory violation and affirmatively alleging that it had paid Complainant in full for all work done on the project. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule and to conduct a fair hearing. A hearing was held on November 9, 2009. Mr. Sult testified on Complainant’s behalf and submitted eleven pages of documents. Mr. Smirke testified on Respondent’s behalf and submitted 32 pages of documents. Hearing Evidence Respondent hired Complainant to perform some backhoe work at the house. Complainant performed the work that Respondent had hired it to perform and Respondent paid Complainant for it. Respondent’s qualifying party Mr. Smirke is from England. Between August 31, 2008 and September 23, 2008, after construction on the house was underway, Mr. Smirke took a vacation to England. Mr. Smirke had planned the vacation when he entered into the contract to build the house. The owners of the house were aware of his plans. When Mr. Smirke left for England, the house was being framed. He left Jerry Martin, who worked for the framing subcontractor, in charge of overseeing framing. Mr. Smirke instructed the homeowners and Mr. Martin that, during his vacation, they should contact him via e-mail or telephone regarding any problems or changes to plans. Complainant submitted letters from one of the homeowners, Joan Maloof, and from Mr. Martin that stated that Mr. Smirke had left Mr. Martin in charge of all construction at the residence and had authorized Mr. Martin to act as Respondent’s agent in his absence. Complainant did not submit any documentation from Mr. Smirke that gave any authority to Mr. Martin. Complainant’s qualifying party Mr. Sult did not testify that Mr. Smirke ever told him that Mr. Martin would be Respondent’s agent while Mr. Smirke was in England. Mr. Smirke denied ever authorizing Mr. Martin to be Respondent’s general agent while he was in England or to do anything except oversee the progress of the framing. Complainant subsequently performed certain work at the house at Mr. Martin’s or Ms. Maloof’s request. On October 10, 2008, Complainant submitted to Respondent Invoice #389, in the total amount of $5,002.50 for the following work: Scope of Work Amount

Poured concrete a/c pad; back door patio pad & deck landing Built small wall 1,190.00

Excavated for & installed electric, phone and cable Conduit; Shaded; Backfilled 780.00

Excavated for gas & water trenches, & a partial sewer trench; Shaded; Backfilled 1,080.00

Backfilled French drain using ¾ rock 332.50

Water-proofed side of patio slab 100.00

Additional equipment time spent – delays caused By the deck that had to be maneuvered around in order to backfill trenches (appx. 2 days) 1,520.00

On November 1, 2008, Complainant submitted to Respondent Invoice #408, in the total amount of $2,025 for the following work: Scope of Work Amount

Excavated sewer trench 1,755.00

Removed asphalt and road debris material 270.00

The homeowners later hired Complainant directly to place large boulders against the foundation of their house, which is located on a hillside. Mr. Smirke was willing to pay for the legitimate work that Complainant had performed that was on the plans according to the going rate. He testified that Complainant quoted a price of $4.50/lineal foot for the trenching, but was attempting to charge Respondent $10.00/lineal foot. The deck landing and small wall were not on the plans. None of the work needed to have been done at the times that Complainant performed it. Respondent issued a check in the amount of $2,292.00 made payable to Complainant for Mr. Smirke’s estimation of the value of the work that Complainant had performed in Mr. Smirke’s absence. Complainant declined to accept the payment. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[3] “A party asserting the existence of an agency relationship bears the burden of proving it.”[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[6] A.R.S. § 32-1154(A)(11) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.” Agency cannot be established by the acts or declarations of the purported agent or a third person.[7] Complainant submitted no evidence that Respondent ever authorized Mr. Martin to act on its behalf in the construction of the house. Mr. Martin’s and Ms. Maloof’s declarations are legally insufficient to establish that Respondent authorized Mr. Martin to act as its agent in the construction of Ms. Maloof’s house.[8] “A principal is not responsible for a contract which he has neither directly nor indirectly authorized . . . .”[9] Although some of the work for which Complainant seeks payment may have furthered Respondent’s construction of the house, Complainant did not establish that Respondent authorized any of it. Therefore, Complainant has not established that any payment is due under A.R.S. § 32-1154(A)(11) or (7).[10] Respondent may owe some money to Complainant under a theory of quantum meruit. Such equitable relief must be sought in a judicial forum, however, because the legislature has not empowered the Registrar to award it.[11] RECOMMENDED ORDER Based on the foregoing, it is recommended that, on the effective date of the Registrar’s final order in this matter, the Registrar dismiss Case No. A09-0231. It is further recommended that the dismissal be without prejudice to Complainant’s right to bring an action for equitable relief in a court of competent civil jurisdiction. If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be forty days from the date of certification. Done this day, November 17, 2009.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See 32-1101 et seq. [2] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [3] See A.A.C. R2-19-119(B)(2). [4] Reed v. Hinderland, 135 Ariz. 213, 217, 660 P.2d 464, 468 (1983) (citations omitted). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Black’s Law Dictionary at page 1220 (8th ed. 1999). [7] See Cameron v. Lanier, 56 Ariz. 400, 402-03, 108 P.2d 579, 580 (1940). [8] Neither Mr. Martin nor Ms. Maloof testified at the hearing. Ms. Maloof may have incentive to make Respondent responsible for work that she desires that was not included in the contract, at no additional cost to herself. [9] Id. at 402, 108 P.2d at 579. [10] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” [11] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984).

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