ALJDEC decisions subject to certification as final

2011A-4992-ROC · Registrar of Contractors · 2012-02-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 26, 2012, at 1:00 p.m. APPEARANCES: Complainant Richard Parks appeared on his own behalf; Respondent Dennis Stewart Gloyd dba Add More Custom Cabinets appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In March 2001, the Arizona Registrar of Contractors (“the Registrar”) issued License No. C30R.163513-R for residential kitchen and bathroom components to Dennis Stewart Gloyd doing business as (“dba”) Add More Custom Cabinets (“Respondent”). On August 29, 2011, the Registrar received a complaint from Richard Parks (“Complainant”) against Respondent. Complainant alleged that Respondent had failed to pay a total of $4,264.00 for sales commissions on four jobs: (1) The Ron Swartz Construction/Thumy Residence ($1,521.00); (2) The Kosters residence ($1,483.00); (3) A Desert Development job ($660.00); and (4) A second Desert Development job ($600.00). On October 31, 2011, the Registrar issued a Citation and Complaint against Respondent, charging a violation of A.R.S. § 32-1154(A)(11). On November 10, 2011, Respondent filed a written answer to the Citation and Complaint, denying any statutory violation. Respondent admitted that he owed Complainant a total of $1,463.00 in sales commissions for the four jobs. Respondent explained his calculation as follows: (1) A $500.00 commission for the Ron Swartz job; (2) A $835.00 commission for the Kosters job; (3) A $350.00 commission for one of the Desert Development jobs; and (4) A $222.00 refund for an unspecified cancelled job. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A videoconference hearing was held in the Registrar’s office in Flagstaff, Arizona on January 26, 2011. Complainant submitted eight exhibits and presented the testimony of three witnesses: (1) himself; (2) Ronald Kosters, Respondent’s customer to whom Complainant had sold one of the jobs; and (3) Sal Festenese, another of Respondent’s customers to whom Complainant had sold another job that was not at issue. Respondent submitted seven exhibits and testified on his own behalf. Hearing Evidence The Parties’ Verbal Agreement and Course of Dealing Complainant is a retired appliance salesman. In mid-2008, Complainant responded to Respondent’s advertisement for a salesperson who would work on commission. The parties made a verbal agreement under which Respondent would pay Complainant a commission of 10% of the amount of any contract on jobs that Complainant sold. The parties also agreed that Respondent would pay the commission to Complainant when the customer paid Respondent for the job. Between September 2008, and June 2011, Respondent paid Complainant a total of $14,420.80 as commissions for various jobs. The Ron Swartz Job On or about August 27, 2009, Complainant presented Respondent’s proposal to install certain cabinets at a job at 6733 West Evans Drive in Peoria, Arizona to Ron Swartz Construction, Inc., License No. B.056964-R (“Ron Swartz”). The total amount of the proposal was $30,241.00, payable in two payments of $15,120.50. The proposal that Respondent submitted was not signed by anyone on behalf of Ron Swartz. Respondent did not submit the signed contract for the Ron Swartz job, but did submit a printout from his accountant that showed total payments on the job. Respondent testified that the actual total amount on the Ron Swartz contract was $22,500.00, as shown on the printout from his accountant. Respondent paid Complainant $1,500.00 as commission for the Ron Swartz job. Respondent testified that based on the amount of the contract and the payments received, he owed Complainant an additional $750.00 for commission on the job. The Kosters Job On or about January 5, 2011, Complainant presented Respondent’s proposal to install certain cabinets at a job at Cross Roads Ranch in Prescott, Arizona to Ronald and Patty Kosters. The total amount of the proposal was $16,730.00, payable in three payments of $8,365.00, $3,500.00, and $4,865.00. The proposal that Complainant submitted was not signed by either Mr. Kosters or Mrs. Kosters. On or about January 12, 2011, Respondent paid Complainant $835.00 as a commission for the Kosters job. On or about April 4, 2011, at the Kosters’ request, Respondent presented a proposal to install additional cabinets and upgrades, for an additional price of $6,090.00. Patty Kosters signed the proposal. Due to a dispute about the quality and timeliness of Respondent’s work, Mr. Kosters acknowledged that he has not paid Respondent the full amount of the original contract or anything for the additional cabinets and upgrades. Respondent testified that based on the original contract, he still owed Complainant $838.00 as commission for the Kosters job. Respondent also testified that based on the Kosters’ actual payments, Respondent only owed Complainant $645.00. Respondent did not submit any accounting or other evidence to establish the amount that the Kosters actually paid or owed on the original contract. / / / / / / / / The Desert Development Job at 15750 True Grit On or about November 22, 2010, Complainant presented Respondent’s proposal to install certain cabinets at a job at 15750 True Grit in Prescott to Desert Development and Design Corp., License No. B.089717-R (“Desert Development”).[1] The total amount of the proposal was $6,690.00, payable in three payments of $3,345.00, $1,500.00, and $1,845.00. The proposal that Complainant submitted was not signed by anyone on Desert Development’s behalf. Respondent testified that he did not obtain the contract with Desert Development for the cabinets at 15750 True Grit. Respondent testified that since he was not paid any money for this job, he does not owe Complainant any commission. The Desert Development Job at 15850 True Grit On or about November 22, 2010, Complainant presented Respondent’s proposal to install certain cabinets at a job at 15850 True Grit in Prescott to Desert Development. The total amount of the proposal was $7,560.00, payable in three payments of $3,780.00, $1,500.00, and $2,280.00. The proposal that Complainant submitted was not signed by anyone on Desert Development’s behalf. Respondent testified that the amount of the contract that Desert Development signed for the job at 15850 True Grit was $5,600.00. Respondent submitted the final invoice to Desert Development dated May 30, 2011, that showed that the total of payments made and payments due was $5,600.00. On or about January 21, 2011, Respondent paid Complainant $250.00 as a commission for the Desert Development job at 15850 True Grit. Respondent testified that based on the contract amount and payments received, he owed Complainant $310.00 for this job. / / / / / / / / / / / / Other Evidence Respondent testified that in this economy, he sometimes submits five or ten proposals to address a customer’s budgetary concerns before the customer accepts a proposal. Respondent’s written answer and the accounting that Respondent submitted alleged that Complainant owed Respondent $222.00 for a job cancellation. Respondent did not offer evidence at hearing to substantiate this charge.[2] Complainant testified that he was unable to obtain the final contracts for the jobs, but believed that Respondent completed the initial contracts that Complainant presented to the customers on the Ron Swartz job and Desert Development jobs at 15750 and 15850 True Grit. The parties did not have any agreement about whether Respondent would pay Complainant commissions for additional work that customers requested that increased the contract price after Complainant sold the jobs. Complainant testified that the usual practice in the sales profession is for commissions to be paid on change orders and subsequent contracts because the salesperson initially brought the customer to the contractor. Each party submitted substantial evidence to impeach his opponent. Respondent submitted evidence to establish that at different times, Complainant claimed that Respondent owed different amounts for commissions, including $4,264.00 on the August 29, 2011 complaint to the Registrar, $3,343.00 on a tally sheet that Complainant gave Respondent in August 2011, before he filed the complaint, and $2,000.00 that Respondent testified Complainant initially demanded. Complainant presented evidence to establish that although Respondent’s September 14, 2011 initial written response to the complaint stated that Complainant was fired “over 4 months ago,” on June 8, 2011, Complainant submitted Respondent’s proposal for cabinets to Mr. Festenese. Respondent testified that Complainant had requested that Respondent hide from or misrepresent to the Internal Revenue Service any commissions paid to Complainant to avoid any reduction of his Social Security retirement payments. Mr. Kosters and Mr. Festenese both testified that they were not satisfied with the quality or timeliness of Respondent’s work. Respondent testified that he had attempted to pay the commissions that he admitted he owed to Complainant three different times, but Complainant refused to accept the payment. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[3] Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.[4] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[5] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[6] 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.”[7] Complainant did not establish that the amounts of Respondent’s contracts for the Ron Swartz job or the Desert Development job at 15850 True Grit was greater than the amounts that were shown on the accounting records that Respondent submitted. Complainant also did not establish that Respondent ever made a contract with Desert Development for the house at 15750 True Grit. Complainant also did not establish that the parties agreed that Respondent would pay commissions for change orders that increased the amount of the contract after Complainant sold a job or that the parties’ verbal agreement incorporated the usual practice in the sales profession. Complainant also did not establish that the parties agreed that he would be entitled to a commission before the customer paid for a job that he sold. Respondent did not establish that he is entitled to any offset against the amounts otherwise owed to Complainant for sales commissions. There were significant inconsistencies in the commissions that Complainant’s complaint alleged were owed, the commissions that Respondent’s answer acknowledged were owed, and the commissions that the evidence at hearing established were owed. Based on the evidence that the parties presented at the hearing, Respondent owes Complainant sales commissions in the amounts of $750.00 for the Ron Swartz job,[8] $838.00 for the Kosters job,[9] and $310.00 for the Desert Development job at 15850 True Grit,[10] for a total of $1,898.00. Although Respondent offered to pay Complainant, the amount that Respondent’s written answer acknowledged was owed was less than the amount that Complainant established at the hearing. It appears that Respondent offered to pay Complainant on the condition that Complainant withdrew his claim for any greater amount. Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(11).[11] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, the Registrar suspend Respondent Dennis Stewart Gloyd dba Add More Custom Cabinets’ License No. C30R.163513-R until he pays $1,898.00 to Complainant Richard Parks. It is further recommended that if on or before the effective date of the Registrar’s order, Respondent provides written proof that is satisfactory to the Registrar that Respondent has paid Complainant $1,898.00 by certified or cashier’s check, the Registrar not suspend Respondent’s license but, instead, close Case No. 2011-4992. 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 10, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The proposal that Complainant submitted was actually addressed to T C Homes, but both parties referred to the projects as the “Desert Development projects.” The Administrative Law Judge was unable to locate any contractor named T C Homes on the Registrar’s website. [2] Mr. Festenese testified that he made a complaint to the Registrar against Respondent. Respondent testified that as a result of Mr. Festenese’s complaint, he refunded all monies that Mr. Festenese had paid.

[3] See 32-1101 et seq. [4] 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). [5] See A.A.C. R2-19-119(B)(2). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] Black’s Law Dictionary at page 1220 (8th ed. 1999). [8] 10% of $22,500.00 (actual contract amount) = $2,250.00 - $1,500.00 (commission already paid) = $750.00 (commission owed). [9] 10% of $16,730.00 (actual contract amount) = $1,673.00 - $835.00 (commission already paid on first payment of $8,365.00) = $838.00 (commission that was owed based on full contract amount). [10] 10% of $5,600.00 (actual contract amount) = $560.00 - $250.00 (commission already paid) = $310.00 (commission owed). [11] 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 . . . .”

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