ALJDEC decisions subject to certification as final

2011A-5631-ROC-rhg · Registrar of Contractors · 2012-11-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 22, 2012

APPEARANCES: Complainant was represented by corporate President Robert Corrigan; Respondent was represented by attorney Michael Tafoya, Esq., accompanied by Qualifying Party William McCleve.

WITNESSES: Robert Corrigan William McCleve Victor McCleve

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant brings this action seeking money it claims is owed by Respondent. The claims arise out of a subcontract agreement between the parties in which Complainant performed concrete, excavation, cabinetry, and other work as a subcontractor on a residential project built by Respondent. Respondent denies that it owes the money.[1] This tribunal entered the complaint file received from the Registrar of Contractors (“ROC”) into the record, along with Complainant’s Exhibits C1 through C12 and Respondent’s Exhibits R1 through R28 (excluding R5 and R26). The parties presented evidence and testimony at the hearing. 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 is the holder of license B.176412-R, a general residential contracting license issued by the ROC. That license authorizes Respondent to perform general contracting work on residential properties, except for specialty areas such as plumbing, electrical, and other work that requires a specialty license. The Qualifying Party on the license is William McCleve. 2. Complainant also holds a general residential contracting license.[2] The Contractual Relationship of the Parties 3. Complainant claims that six separate invoices (relating to three different residential lots) are unpaid by Respondent. Complainant’s principal Robert Corrigan testified at hearing that the six invoices are based on written proposals that were sent to Respondent and verbally accepted by Respondent. Complainant’s Exhibits C10, C11, and C12 are the three invoices. The copies in evidence are not signed as accepted by Respondent, but William McCleve testified that he accepted and signed two of them (C10 and C11), but not the third (C12). 4. In addition, and further complicating matters, Corrigan testified that he dealt with Victor McCleve on the project, thinking that Victor McCleve was a representative for Respondent. In fact, Victor McCleve was the owner of the properties and is not legally associated with Respondent.[3] He is William McCleve’s father. Victor McCleve testified at hearing that he had hired Respondent as the general contractor for the projects, with the exceptions of final grading, irrigation, driveways, and sidewalks.[4] There is no evidence that anyone associated with Complainant saw the agreements between Respondent and Victor McCleve or that Complainant was aware of those agreements. There is no evidence that Corrigan was aware of the legal relationship between Victor McCleve, William McCleve, and Respondent. Also, Respondent stipulated that the only payments made to Complainant were made by Victor McCleve, but on behalf of Respondent. Thus, the Administrative Law Judge finds that Corrigan’s assumption that Victor McCleve was associated with Respondent and could act on its behalf was a reasonable assumption. 6. Due to the foregoing facts, the Administrative Law Judge finds that Victor McCleve had apparent authority to act on Respondent’s behalf and that Respondent is bound by Victor McCleve’s actions. 7. During the hearing, both parties continually referred to another complaint: Case No. 2012-24, a workmanship complaint filed by Respondent against Complainant. They both agreed that the case was closed on March 14, 2012, with no violations found. Because that case has been closed with no violations found, Respondent’s reliance on that case is misplaced to show, as a defense to this action, that Complainant owes Respondent money for the cost of corrective work or that Complainant’s workmanship was substandard. Furthermore, workmanship issues are not before this tribunal and no findings about workmanship will be made herein.[5] The Invoices Invoice 89 8. With that context in mind, Corrigan testified about each of the six invoices. First, Invoice 89 was issued November 16, 2010, and requests payment for grading “slabs and exterior.” A note on the invoice says that it was “PD [paid] 3-23-11.” Corrigan testified that he received a check from Victor McCleve that he credited to Invoice 89. Invoice 106 9. Next, Invoice 106 bills for work designated as excavation for water, sewer, and electrical lines, installing stove vents, installing electrical conduit, and cleaning up the jobsites. Except for installing the electrical conduit, this work is within the accepted proposal that is Exhibit C10. According to Corrigan, the conduit work was requested by Victor McCleve and performed by an electrician hired by Complainant. Respondent did not dispute that testimony and the Administrative Law Judge finds it to be credible. Invoice 108 10. Invoice 108 seeks payment for interior trim work on all three lots. That work is within the scope of the accepted proposal that is Exhibit C10. Respondent’s defense is that the workmanship was poor and had to be corrected at Respondent’s expense. As noted above, the complaint filed by Respondent has been closed with no finding of poor workmanship. Therefore, Respondent’s defense is not supported. A note on Invoice 108 shows that it was paid. Invoice 113 11. Invoice 113 covers cabinet installation. That work is part of the accepted proposal that is Exhibit C11. Invoice 123 12. Invoice 123 seeks payment for concrete work for the driveway and sidewalks. That work is part of the proposal that is Exhibit C12 and that Respondent denies accepting. Exhibit C12 does not have signed acceptance. Furthermore, it describes the work as “Form Pour Grade & Finish Concrete Driveways & Walkway as per owner.” This identifies Victor McCleve as the requestor of the work. Therefore, Respondent is responsible for payment of that invoice. Invoice 127 13. Finally, Invoice 127 bills Respondent for trim work. This work includes “remove and repair micro vent” for all three lots. Payments 14. The record shows three payments totaling $9,300.00. There was no dispute about this amount. All Invoices 15. In sum, the invoice amounts and payments show the following: Invoice 89 $2,339.54 Invoice 106 $2,141.23 Invoice 108 $3,300.00 Invoice 113 $6,340.00 Invoice 123 $7,585.00 Invoice 127 $532.52

Total $22,238.29 Minus payments -$9,300.00

Amount owed $12,938.29

16. The evidence shows that Respondent owes Complainant $12,938.29. 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, Complainant bears the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[8] Complainant has met that burden. 2. The Citation and Complaint in this case cites only the “no-pay” provision found in A.R.S. § 32-1154(A)(11) that prohibits the failure of a licensee to pay monies in excess of $750 “when due for materials or services” when the licensee has the capacity to pay or when the licensee has been paid for the project. 3. The evidence shows that Respondent, through its representatives, entered into agreements for the work done by Complainant and reflected in the six invoices. Complainant has been paid less than half of the amount owed, which is greater than the amount specified in statute. 4. Respondent’s defenses are rejected. Respondent essentially alleges poor workmanship and abandonment as defenses. However, the complaint made by Respondent against Complainant has been closed with no violations found. This does not support Respondent’s defenses. The Administrative Law Judge will not make findings on workmanship or abandonment in a no-pay case when those findings would be inconsistent with a related complaint that has gone through the complaint process and been closed. 5. The evidence submitted with this record does not show a good faith contractual defense by Respondent. 6. Respondent has failed to pay Complainant $12,938.29 that is due and owing for services and materials rendered in connection with Respondent’s work as a contractor. 7. Administrative notice is taken of Respondent’s prior license record as reflected on the ROC’s public website on November 13, 2012. That prior record shows that Respondent has held the license since June 2002 and has never been disciplined. This is an excellent record. 5. Respondent should be given an opportunity to pay the remaining balance and if Respondent fails to do so, its license should be suspended until it does. RECOMMENDED ORDER IT IS RECOMMENDED that License No. B.176412-R held by Respondent J M Homes, LLC, be suspended on the effective date of the Registrar’s Order until the Registrar receives written proof of payment in certified funds to Complainant of the sum of $12,938.29, and the Registrar accepts such written proof. IT IS FURTHER RECOMMENDED that if Respondent J M Homes, LLC, provides such written proof on or before the effective date of the Registrar’s Order, the license suspension shall not take place and case 2011-5631 shall be closed.

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 13, 2012.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] However, Respondent’s answer to the Citation and Complaint (received December 30, 2011) admits that Respondent owes Complainant $818.00 upon completion of the project. [2] License KB-2.159657. [3] Victor McCleve testified that he bought the properties from Respondent, but he did not give a date of that purchase. The implication of his testimony was that the purchase occurred before the contracting work. [4] Exhibits R16, R17, and R18 are copies of the agreements between Respondent and Victor McCleve. [5] The appropriate case to pursue workmanship issues is the other case. [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).

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