ALJDEC decisions subject to certification as final

2010A-308472431-ROC · Registrar of Contractors · 2011-01-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 12, 2011, at 8:00 a.m. APPEARANCES: The Complainant appeared through his attorneys, Nicole Sornsin and Rick Erickson. The Respondent appeared through its attorney, Richard B. Murphy. . ADMINISTRATIVE LAW JUDGE: M. Douglas

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. The Respondent is the holder of a Class K-61 (No. 193922) License issued by the Registrar of Contractors. 2. This is a residential matter where on August 14, 2008, the parties entered into a construction agreement wherein the Respondent agreed to complete an extensive remodeling of the Complainant’s existing residence located at 5431 N. 46th Place, Phoenix, Arizona for the total sum of $292,000.00. 3. There was no dispute that the scope of the Respondent’s Class K-61 License is limited to the performance of construction projects which can not exceed the sum of $25,000.00. 4. There was no dispute that the Respondent has a bond of $3,500.00 on record with the Registrar of Contractors. 5. Credible testimony and evidence established that the Respondent’s posted bond of $1,000.00 residential and $2,500.00 commercial was insufficient for a residential construction project of $292,000.00. 6. Credible testimony and evidence established that the Respondent knowingly entered into a construction agreement beyond the scope of the Respondent’s Class K-61 License and that the Respondent knew, or should have known, that the Respondent’s bond was insufficient for the performance of a $292,000.00 construction project. 7. Credible testimony and evidence established that the Respondent knowingly failed in a material respect to comply with the provisions of A.R.S. § 32-1152 (Bonds). 8. There was no dispute that the Complainant paid the Respondent a down payment of $45,000.00 when the construction agreement was signed on August 14, 2008. 9. There was no dispute that the parties’ written construction agreement was prepared by the Respondent. 10. Credible testimony and evidence established that the parties’ written construction agreement failed to include the estimated date of completion of the construction work to be performed or a statement that the property owner has a right to file a written complaint with the Registrar of Contractors. 11. Credible testimony and evidence established that the Respondent knowingly failed to comply with the provisions of A.R.S. § 32-1158 (Minimum elements of a contract). 12. There was no dispute that the parties’ written agreement provides that construction work for the remodeling project was to commence on October 1, 2008. 13. Credible testimony and evidence established that the Complainant requested that the commencement of actual construction work on the construction project be delayed until January 2009. 14. Credible testimony and evidence established that in December 2008, the Complainant requested that the construction project be delayed for an additional period of time to enable the Complainant sufficient time to resolve pressing private issues. 15. Credible testimony and evidence established that the parties then entered into several additional agreements to delay the start of actual construction work on the Complainant’s residence. 16. There was no dispute that prior to commencement of actual construction work on the Complainant’s residence, the Complainant informed the Respondent that he wished to cancel the construction project and requested the return of the down payment of $45,000.00 that the Complainant had paid the Respondent. 17. When the Respondent failed to respond to the Complainant’s request to return the down payment of $45,000.00, the Complainant made several additional requests for the return of the down payment. 18. On March 30, 2010, the Respondent issued a letter to the Complainant wherein the Respondent furnished the Complainant with a brief accounting of the Respondent’s time and expenses that had allegedly been expended for the construction project and informed the Complainant that the $45,000.00 down payment had been expended and that there was a balance due to the Respondent in the sum of $7,528.25. 19. The Complainant then filed a formal Complaint against the Respondent with the Registrar of Contractors. 20. There was no onsite inspection because no construction work was actually performed at the construction site. 21. The Complainant asserts that the Respondent’s purported costs set forth in the Respondent’s letter of March 30, 2010, are specious, duplicative and have no basis in the parties’ written construction agreement. 22. The Complainant asserts that the Respondent’s action in retaining the Complainant’s down payment of $45,000.00 is a fraudulent act. 23. Credible testimony and evidence established that the Respondent did incur some legitimate expenses in preparing for the start of the actual construction work on the construction project. 24. The credible evidence of record adequately demonstrated a dispute between the parties regarding what, if any, amount of money from the Complainant’s down payment of $45,000.00 is due and owing to the Complainant from the Respondent. 25. The parties’ dispute regarding the amount of money from the Complainant’s down payment of $45,000.00 that the Respondent should return to the Complainant is found to be a good faith money dispute which can be resolved in a civil court of competent jurisdiction. 26. The Respondent’s position in this monetary dispute is found under all of the circumstances to have been asserted in good faith and therefore, precludes a finding that the Respondent’s action in refusing to return the down payment of $45,000.00 to the Complainant is fraudulent. 27. The credible testimony and evidence of record is insufficient and fails to support a finding that the Respondent violated the charged provisions of A.R.S. § 32-1154 (A) (7) (The doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured). 28. Notice is taken of the Respondent’s prior good license record with the Registrar of Contractors CONCLUSIONS OF LAW 1. The Complainant has the burden of demonstrating by a preponderance of the evidence that the Respondent violated the charged sections of the state’s contracting laws. See Culpepper v. State of Arizona, 187 Ariz. 431, 437-38, 930 P.2d 508 (Ariz. App. 1996). 2. Proof by “preponderance of the evidence” means that it is sufficient to persuade the finder of fact that the proposition is “more likely true than not.” In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). 3. Proof by preponderance of the evidence “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 (rev. 6th ed. 1990). 4. The credible testimony and evidence of record was inadequate to support a finding of a violation of the charged provisions of A.R.S. § 32-1154 (A) (7) (Fraud). 5. The credible testimony and evidence of record supported findings which establish that the Respondent violated the charged provisions of A.R.S. § 32-1154 (A) (13) (Failure in any material respect to comply with this chapter, namely A.R.S. § 32-1158 (minimum elements of a contract). 6. The credible testimony and evidence of record supported finding which establish that the Respondent violated the charged provisions of A.R.S. § 32-1154 (A) (13) (Failure in a material respect to comply with this chapter, namely A.R.S. § 32-1152).

RECOMMENDED ORDER In view of the foregoing, it is recommended that, commencing on the effective date of the Registrar’s Order, the Respondent’s License be placed on active suspension for a period of twenty (20) days, followed immediately by a period of one hundred and twenty (120) days disciplinary probation. It is further recommended, in addition to the above provided penalties, if any, that any continuation or restoration of the Respondent’s contracting rights, whether or not probationary, be subject to a condition that the Respondent first post an additional surety bond, cash deposit or alternative deposit for a period of twenty-four (24) months, including future renewal periods, in the amount of $5,000.00, such bond or deposit to be for the sole benefit of persons injured as defined in A.R.S. § 32-1131 (3) and to be in addition to the required surety bond, cash deposit or recovery fund participation set forth in A.R.S. § 32-1152 (D). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two year period following the above-provided twenty-four (24) month period and only if no claims are then pending. In the event of certification of this 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 the certification.

Done this day, January 26, 2011.

/s/ M. Douglas 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