ALJDEC decisions subject to certification as final

2010A-308475862-ROC-res · Registrar of Contractors · 2014-02-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 17, 2014

APPEARANCES: Complainants appeared and were represented by attorney Guy Bluff, Bluff & Associates; Respondent was represented by attorney Whitney Cunningham, Cunningham Mott PC.

WITNESSES: Julie McGuire

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainants originally brought this action against Respondent based on a court judgment they received against Respondent. The case has gone through administrative hearing and has been appealed to superior court. The Mohave County Superior Court has remanded the matter to address whether or not there has been a violation of A.R.S. § 32-1154(A)(9) due to overcharging by Respondent. Respondent denies the allegation. This tribunal entered the complaint file received from the Registrar of Contractors into the record. The parties stipulated to admission of Exhibits C-1 through C-35 by Complainants and Exhibit R-4 by Respondent. Testimony from the witness listed above was presented. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding a violation. FINDINGS OF FACT 1. Respondent was the holder of License No. B.082893-R, a general residential contracting license issued by the Registrar of Contractors (“ROC”). The license expired in May 2012. 2. In 2006, the parties entered into a construction agreement for the building of a home for Complainants. After the home was built, a contractual dispute arose between the parties and they took the dispute to binding arbitration. 3. An Arbitration Award was issued on July 27, 2009, finding in favor of Complainants and awarding them $72,647.30 as overpayment to Respondent.[1] The Arbitration Award was formalized in a Judgment issued from the Mohave County Superior Court on November 5, 2009.[2] 4. The Arbitration Award found that Respondent did not fulfill its contractual duty “in many instances in connection with the issues in dispute, and has either failed to maintain the necessary records or has failed to produce the necessary records.”[3] The Arbitration Award also found that “[t]he method by which CB Development applied supervision, overhead and builders’ fees to additive and deductive change to the contract was inequitable. . . .”[4] And, “[f]inally, the method by which CB Development actually calculated its ‘mark-up’ is found to be disturbing and misleading” because Respondent’s interpretation of the contract language “is not within the reasonable expectations of the a [sic] consumer.”[5] 5. The parties agree that the project was completed by Respondent. The issue left in dispute is whether it was completed for the price stated in the contract, or any modification of the contract. The Arbitration Award classified the credits given to Complainants into four categories: 1) Allowance Items; 2) Mark Up on Allowance Items; 3) Change Orders; and 4) Concrete. In each instance, the Arbitration Award found that Respondent owed Complainants money under the contract terms. 6. Complainants argue that the Arbitration Award supports a finding that Respondent overcharged them. 7. Respondent argues that there is no stated price in the contract because it was a combined fixed price and cost-plus contract that made the final amount fluid. Therefore, according to Respondent, no violation of A.R.S. § 32-1154(A)(9) can be found. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[6] Further, the standard of proof at hearing is by preponderance of the evidence.[7] Therefore, Complainants bear the burden of showing, by a preponderance of the evidence, that Respondent has violated A.R.S. § 32-1154(A)(9).[8] Complainants have met that burden. 2. A. R. S. § 32-1154(A)(9) prohibits contractors from “failure in a material respect . . . to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” The Administrative Law Judge reads this provision to prohibit overcharging by the contractor.[9] 3. Respondent’s argument, that there was no set amount for the contract price, is not persuasive. While that was true during the construction of the home, at some point there came a time for an accounting and for a final price. The Arbitration Award considered that issue and made those findings, concluding that Respondent overcharged Complainants and owed them over $70,000. 4. The evidence shows a violation by Respondent of A.R.S. § 32- 1154(A)(9). 5. Administrative notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website on February 5, 2014. That prior record shows that Respondent has held the license since 1989 and has been disciplined several times. Respondent’s license was suspended for disciplinary reasons for a week in May 2000. Respondent’s license was again suspended for disciplinary reasons from December 2005 to January 2006. Respondent had to post a disciplinary bond for two years in January 2006. And finally, Respondent’s license was placed on probation from January 2006 through July 2006. This is not a good record. 6. As noted, Respondent’s license is currently expired. Pursuant to A.R.S. § 32-1154(C), expiration of a license does not deprive the ROC or this tribunal of jurisdiction and does not render the Registrar powerless to revoke the license. The Administrative Law Judge finds that the appropriate sanction in this matter is revocation. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that License No. B.082893-R held by C B Development, Inc. be revoked.

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, February 6, 2014.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Exhibit C-2. [2] Exhibit C-3. [3] Exhibit C-2 at 2. [4] Id. [5] Id. at 3. [6] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [7] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [8] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [9] The Administrative Law Judge does not read the provision to prohibit abandonment, as that violation is covered in A.R.S. § 32-1154(A)(1).

-----------------------

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