ALJDEC decisions subject to certification as final

2011A-3734-ROC · Registrar of Contractors · 2011-12-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 28, 2011, at 1:00 p.m. APPEARANCES: Complainant Southwest Designs of Arizona Window Coverings, Inc. appeared through Matthew James Tardy, an officer and qualifying party; Respondent Inspired Products, L.L.C. dba New West Shutter and Blind appeared through Rodney Vincent DiGiovanni, member and qualifying party. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In 2000, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC154978, Class C-65R for residential window treatment to Southwest Designs of Arizona Window Coverings, Inc. (“Complainant”). Complainant’s officer and qualifying party is Matthew (“Matt”) Tardy. In 2008, the Registrar issued License No. ROC245127, Class C-65R to Inspired Products, L.L.C., doing business as (“dba”) New West Shutter and Blind (“Respondent”). The persons listed on Respondent’s license are Rodney (“Rod”) DiGiovanni as member and qualifying party and his wife, Catherine (“Katy”) DiGiovanni, as member. On or about June 28, 2011, the Registrar received a complaint from Complainant against Respondent that alleged that Respondent failed to pay Complainant $3,615.00 for 320 square feet of shutters that Complainant had manufactured pursuant to its subcontract with Respondent. Complainant subsequently requested that the Registrar issue a citation against Respondent. On September 7, 2011, the Registrar issued a Citation and Complaint against Respondent, charging a violation of A.R.S. § 32- 1154(A)(11). Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violation. Respondent affirmatively alleged that Complainant negligently performed the subcontract and failed to expedite completion and shipping of the shutters. Respondent also alleged that the subcontract only required Complainant to manufacture 306.5 square feet of shutters at $18.00 per square foot. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. A hearing was held on November 28, 2011. Complainant submitted six exhibits and presented the testimony of two witnesses: (1) Mr. Tardy; and (2) James (“Jim”) Gibbs, the owner of Arizona Shutter, to whom Complainant subcontracted its contract with Respondent.[1] Respondent submitted nine exhibits and presented the testimony of two witnesses: (1) Mr. DiGiovanni; and (2) Mrs. DiGiovanni. Hearing Evidence On or about January 27, 2011, Respondent’s customer, Hawkins Construction, Inc., a contractor in the State of Florida (“Hawkins”), ordered 42 fixed- louver shutters for 21 windows in a house that Hawkins was constructing in Florida. Hawkins’ order stated that the projected shop submittal date was February 4, 2011, the projected delivery date was May 1, 2011, and “time [was] of the essence.” On or about February 2, 2011, Mr. DiGiovanni, on Respondent’s behalf, sent an e-mail to Mr. Tardy, soliciting Complainant’s proposal to manufacture 42 panels of fixed-louver shutters and to package the shutters for shipment. Mr. DiGiovanni stated that Respondent would arrange shipment of the order. Mr. Tardy, on Complainant’s behalf, orally provided a price of $18.00 per square foot. Because the windows had not been constructed yet in the Florida project, Complainant did not know then the exact dimensions of the shutters. On or about March 19, 2011, Respondent issued a purchase order to Complainant for 305 square feet of shutters at $18.00 per square foot, in the total amount of $5,490.00, based on the approximate size of the 21 windows, and stated that “[d]etailed measurements to follow.” On or about March 28, 2011, Respondent issued a check in the amount of $2,745.00 to Complainant for the down-payment on manufacture of the shutters. On or about April 12, 2011, Respondent provided to Complainant the exact dimensions of the windows on the Florida project and calculated the exact square footage as 301.8 square feet. On or about April 13, 2011, Complainant issued an invoice in the amount of $6,360.00 for the shutters, based on Mr. Tardy’s calculation that the total square footage was 320 feet ($18.00 x 320 = $5,760.00),[2] and a cost of $600.00 to package the shutters for shipment to Florida. Complainant’s April 13, 2011 invoice stated “3 wk Del RUSH.” Three weeks after April 13, 2011, would be May 4, 2011. Because Complainant did not have a shop, it subcontracted manufacture of the shutters to Mr. Tardy’s friend, Mr. Gibbs of Arizona Shutter, who had a small shop. On May 3, 2011, Mr. Tardy became ill. On that date, Mr. Tardy informed Mr. DiGiovanni that he was ill, but stated that the shutters were being manufactured by Arizona Shutter. Mr. DiGiovanni testified that he became concerned because Mr. Tardy’s responses to his questions about when the shutters would be ready to ship were “nebulous,” delivery usually requires at least five days, and he needed to tell his customer in Florida when the shutters would be delivered. Mr. DiGiovanni testified that when he asked where the shutters were being manufactured, Mr. Tardy provided Arizona Shutters’ shop’s address. Thereafter, Mr. Tardy stopped returning Mr. DiGiovanni’s telephone calls. On Friday, May 6, 2011, Mr. and Mrs. DiGiovanni arrived at Arizona Shutters’ shop and discovered that Respondent’s order was substantially incomplete. When Mr. Gibbs returned to the shop, Mr. DiGiovanni gave him Respondent’s check made payable to Arizona Shutters in the amount of $1,000.00 to expedite the manufacture of Respondent’s order. Between May 6, 2011 and Monday, May 9, 2011, Mr. and Mrs. DiGiovanni, Mr. Gibbs, two of Arizona Shutters’ employees, and two of Respondent’s employees worked on manufacturing the shutters for Respondent’s customer in Florida. In addition to the $1,000.00 paid to Mr. Gibbs, Respondent paid the following amounts to complete the work that Complainant had undertaken in the contract to perform: (1) $124.97 to Home Depot for packing materials; (2) $60.00 to Arizona Shutters’ employee, Hector;[3] (3) $125.00 to Respondent’s employee, Cirillo Mendoza; (4) $75.00 to Respondent’s employee, Edgar Mendoza; and (5) $1,475.00 to Arizona Shutters for the amount that remained owing on its contract with Complainant. On May 6, 2011, Respondent shipped half of the shutter order to his customer in Florida. On May 9, 2011, Respondent shipped the other half of the order as an expedited shipment. CONCLUSIONS OF LAW Because jurisdiction cannot be waived, a tribunal may on its own motion consider whether it has jurisdiction to determine an issue.[4] 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 . . . .” (Emphasis added.) “[A]dministrative powers are limited to those granted by a constitution or statute. . . . No administrative agency can give itself powers not expressly granted it by legislation.”[5] The legislature has not invested the Registrar with the authority to review and discipline a licensee for acts that do not involve contracting as defined by statute. The legislature has defined contracting to exclude the manufacture of goods that are to be installed by others on construction projects outside the State of Arizona.[6] Therefore, the Registrar lacks jurisdiction over this dispute and should dismiss Complainant’s complaint. 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 for lack of jurisdiction Complainant Southwest Designs of Arizona Window Coverings, Inc.’s complaint in Case No. 2011-3734 against Respondent Inspired Products, L.L.C. dba New West Shutter and Blind’s License No. C- 65R.245127-R. 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, December 6, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Arizona Shutter and Mr. Gibbs apparently are unlicensed. As discussed below, because the contract only required the manufacture, rather than the installation, of the shutters, it does not appear that performance of the subcontract required a contractor’s license. [2] The record in this matter does not explain the basis of Mr. Tardy’s recalculation of square footage. [3] Mr. DiGiovanni testified that Arizona Shutters’ other employee “disappeared” before Respondent could pay him. [4] Bruce v. State, 126 Ariz. 271, 272, 614 P.2d 813, 814 (1980) (Even where the parties do not question a tribunal’s jurisdiction, “an appellate court will consider jurisdictional questions sua sponte. . . . Jurisdiction cannot be waived and may be raised at any stage of the proceedings.” Citations omitted.). [5] Corella v. Superior Court, 144 Ariz. 418, 420, 698 P.2d 313, 315 (App. 1985) (citations omitted). [6] See A.R.S. § 32-1101(A)(3). This statute defines “contractor” as follows:

"Contractor" is synonymous with the term "builder" and means any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that, for compensation, undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid or responds to a request for qualification or a request for proposals for construction services to, does himself or by or through others, or directly or indirectly supervises others to: (a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or any other structure or work in connection with the construction. (b) Connect such structure or improvements to utility service lines and metering devices and the sewer line. (c) Provide mechanical or structural service for any such structure or improvements.

See also A.R.S. § 32-1121(A)(4) (“This chapter shall not be construed to apply to . . . [a]ny materialman, manufacturer or retailer who furnishes finished products, materials or articles of merchandise and who does not install or attach such items . . . .”); A.A.C. R4-9-103 (defining the scope of a C-65 license as “[i]nstallation and repair of glass, glass products, plastics, frames, holding members, and all materials common to the industry. This scope includes all C-65R subclassifications,” including window treatments. (Emphasis added)).

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