ALJDEC decisions subject to certification as final

2010A-308472362-ROC · Registrar of Contractors · 2010-11-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 10, 2010 APPEARANCES: Desert Sunrise Heating and Cooling, Inc. was represented by its president and qualifying party, Jose Aguilar. Dean Douglas Homes, L.L.C. was represented by its member, Ed Patterson. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT 1. Desert Sunrise Heating and Cooling, Inc. (“Complainant”) is the holder of License Nos. 220389 (commercial) and 220390 (residential) issued by the Registrar of Contractors (“Registrar”). Both of those contracting licenses are inactive. 2. Dean Douglas Homes, L.L.C. (“Respondent”) is the holder of License No. 214208 issued by the Registrar. 3. On April 14, 2010, Complainant filed a written Complaint with the Registrar alleging non-payment by Respondent in the amount of $14,726.00 for work performed by Complainant on Respondent’s behalf on two projects: one in Tuba City for the Navajo Housing Authority (“Tuba City Project”), and one for the Gila River Indian Community (“GRIC Project”). 4. The Registrar designated Complainant’s Complaint against Respondent as Case No. 2010-[number redacted]. 5. The Registrar issued a Citation and Complaint in Case No. 2010- [number redacted] charging Respondent with violating the provisions of A.R.S. § 32-1154(A) (11). 6. The Registrar forwarded Case No. 2010-[number redacted] to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 7. The GRIC Project consisted of two agreements between the parties for HVAC work: Subcontract Agreement dated December 8, 2008, and Subcontract Agreement dated October 10, 2008. 8. Respondent entered into a written construction agreement dated July 22, 2009, with the Navajo Housing Authority. Under that agreement, Respondent built 10 residences for Navajo tribal members in Tuba City. 9. By Subcontract Agreement dated August 18, 2009, Respondent subcontracted with Complainant for Complainant to provide HVAC work on the Tuba City Project. 10. After completion of the Tuba City Project and the GRIC Project, Complainant failed to perform warranty work on its scope of work. Complainant did not perform the warranty work because of a payment dispute with Respondent. 11. The parties’ contracts allowed Respondent to retain 10 percent of payments due to Complainant to assure that warranty work would be performed by Complainant. 12. Respondent has used some retained funds to pay others for warranty work to Complainant’s workmanship and to pay one of Complainant’s suppliers, Goodman Distribution. 13. By letter dated November 8, 2010, Linda Johnson, Contracts Specialist for the Navajo Housing Authority, explained to the Registrar’s assigned inspector, Jeff Fleetham, that eight of the ten housing units constructed by Respondent on the Tuba City Project had been accepted, but that two units were waiting for final utility service and final inspections. Ms. Johnson further explained that the Navajo Housing Authority will not release the contract retention for the total project “until all 10 units are accepted as stipulated in our Construction Agreement.” 14. Complainant has refused to perform any warranty work on the Tuba City Project and GRIC Project until paid in full by Respondent. 15. Complainant cannot perform any contracting while its residential contracting license is inactive. 16. Respondent presented credible evidence that the warranty work for the two projects, back charges to Complainant, and Complainant’s outstanding balance owed to Goodman Distribution exceed the amount that Complainant claimed was owed by Respondent. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 3. The evidence of record does not support a conclusion that Respondent violated the provisions of A.R.S. § 32-1154(A) (11). The parties have a bona fide financial dispute. The Registrar’s disciplinary process is not the appropriate forum for resolving the parties’ financial dispute. RECOMMENDED ORDER The Citation and Complaint in Case No. 2010A-[number redacted] shall be dismissed on the effective date of the Order entered in this matter. 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 40 days from the date of that certification. Done this day, November 24, 2010.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors -----------------------

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