ALJDEC decisions subject to certification as final

2015A-3101-ROC · Registrar of Contractors · 2016-03-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 22, 2016 APPEARANCES: Complainant Durfee New Co LLC doing business as Honeyman A/C was represented by Fidelis V. Garcia. Respondent Molina Custom Homes LLC was represented by Greg Eagleburger. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT 1. Molina Custom Homes LLC (Respondent) is the holder of License No. 291869 issued by the Registrar of Contractors (Registrar). 2. On or about July 2, 2015, Durfee New Co LLC, doing business as Honeyman A/C (Complainant) filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant anything on a $21,300.00 contract for HVAC work done at Lake Pleasant Towne Center. 3. The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10). 4. On or about February 20, 2015, Complainant submitted an estimate for the project indicating the estimate was “based on plans drawn on 2/5/15” and that “[f]or installs, initial payment is due upon rough- in, the balance is due on trim.” The estimate for the project was $12,588.00. Complainant was identified on the estimate as HONEYMAN A/C, 29602 E. Northern Ave., B-200, Phoenix, AZ 85028. Exhibit 5. 5. Upon initial review of the plans, the City of Peoria informed Respondent that an Energy Recovery Ventilation (ERV) system was required in the air conditioning plans. Exhibit 7. 6. New plans dated March 16, 2012, were done including the ERV system. Anthony Molina, Respondent’s Qualifying Party and Member, testified that he forwarded the new plans to Complainant on or about May 13, 2015. 7. On May 14, 2015, Complainant submitted a rebid for the project, still dated February 20, 2015, indicating the estimate was “based on plans drawn on 2/5/15” and that “[f]or installs, initial payment is due upon rough-in, the balance is due on trim.” The estimate for the project was $21,737.30. Complainant was identified on the estimate as HONEYMAN A/C, 29602 E. Northern Ave., B-200, Phoenix, AZ 85028. Exhibit 6. 8. Complainant provided testimony that the increase in price from the original bid and the rebid was due to a typo and not the result of the addition of the ERV system to the revised plans and that this had been communicated to Respondent. Respondent denied that such an error was ever communicated to it. 9. On May 18, 2015, Complainant emailed a new estimate indicating the total contract price was $21,300.00. Exhibit 8. 10. On or about Tuesday, May 19, 2015, Respondent emailed Complainant confirming that Complainant was to start work on Thursday of that week and would be done in a week. Exhibit 9. 11. On July 7, 2015, Respondent sent an email to Complainant that read as follows: “This is a 24 hour notice to man the job and complete ready for inspection with the evr [sic] system installed. If your [sic] do not complete I will be forced to hire another contractor to complete and hold Honeyman AC responsible for the cost”. Exhibit 12. 12. Through email correspondence back and forth, Complainant asserted that the ERV system was not part of the plans it bid from and therefore, was not a part of the contract. Respondent stated that it would not execute a change order as the Complainant had the revised plans prior to submitted its rebid. 13. On July 16, 2015, Respondent sent an email to Complainant to memorialize a discussion that occurred that morning. The email read as follows: Per our meeting this morning at 9 am at the salon. I would like to recap what we discussed. 1. You will have guys there tomorrow at 7am to fix the drain line 2. I will schedule an above ceiling inspection for Monday 3. You will then come Tuesday at 7am to complete everything for a rough inspection. All ductwork that needs to be competed, marker locators, Stat wires, exhaust lines….evr system curb installed and evr system ordered. You will be ready for inspection Thursday 4. I spoke to Miro the mechanical engineer. He said the system cannot be changed. He said that you are welcome to call him and he can explain. He said there is no other way to install the system because of code. I told him of your idea of running smaller evr at each unit and he said the city will not allow. I need to know today by 5 if all of the above items are correct and if you intend to complete the erv system.

Exhibit 12 (all errors in original).

14. On July 16, 2015, Complainant responded via email as follows: 1. We will be there in the morning to fix the drain lines. 2. After inspection we will return to complete work per our contract. 3. The erv is not in our contract, we will be glad to order and complete when we receive a change order for the installation of this system. 4. Please refer to the contract dated 2-20-2015, bid per plans dated 2-5-2015 and signed by you 5-18-2015.

Exhibit 12. 15. On July 16, 2015, Respondent responded via email as follows: 1. You are welcome to return to fix whatever you would like to fix and complete the rest of the work per your contract. 2. Just so we are clear. I will not pay you any monies until after the ERV is installed by you per the plan that you bid. 3. I will not pay you any additional monies to install the ERV system when it was clearly on the revised set of plans that you received prior to your new price.

Exhibit 12. 16. On July 17, 2015, Respondent sent Complainant an email to stop work. Respondent indicated that it had just discovered that Honeyman AC’s license had been cancelled by the Registrar as of July 13, 2015. Respondent stated that it had hired another licensed contractor to complete the work. Exhibit 12. 17. Complainant responded with an email stating that it had “been in contact with the ROC and this will be resolved Monday.” Exhibit 12. 18. City of Peoria inspection records indicate that the above grid mechanical inspection on July 6, 2015, was denied with the note “provide correct supp0ort [sic] intervals for PVC condensate as per Plumbing piping code support table.” The above grid mechanical inspection was approved on August 17, 2015. Exhibit 10. 19. Respondent provided testimony from Don Wade from Pro Solutions Air, the new contractor, who stated that he first visited the job on July 17, 2015. Mr. Wade testified to the work required to complete the job and stated that it tool a week to a week and a half after joining the job to complete the rough-in, including additional work to install the ERV system. 20. The prior license record for license number 235072 issued to “Honeyman A C LLC” indicates that the license was first issued on July 1, 2007, and was voluntarily cancelled on July 13, 2015. 21. The prior license record for license number 297152 issued to “Durfee New Co LLC DBA Honeyman A/C” indicates that the license was first issued on March 20, 2015, prior to the original bid that was submitted to Respondent for this project. The record does not show the license was suspended or revoked during the timeframe in question. 22. Complainant argued that it had completed the rough-in on the project prior to Respondent issuing the stop work order such that the “initial payment” identified in the contract should have been paid to Complainant. Complainant asserted that the contract did not require that the work pass the rough-in inspection prior to the payment being due. Complainant did not identify a specific dollar amount it believed was due and did not submit any invoice that had been issued to Respondent. Complainant maintained that to allow Respondent to avoid payment would be to unjustly enrich Respondent and would be contrary to public policy. 23. Respondent argued that the rough-in was not completed in part due to the lack of the ERV system and also that the new contractor had to work for a week to a week and a half to complete the rough-in. Respondent asserted that Complainant incorrectly bid the project and was trying to back out of it once it discovered its errors. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. A.R.S. § 32-1154(A)(10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, [f]ailure by a licensee or agent or official of 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 when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.

Emphasis added. 4. Complainant performed work on the project, but regardless of whether the ERV system was included as a part of the bid/contract, Complainant failed to establish that it had completed the rough-in of the installation of the system. As completion of the rough-in triggered the initial payment on an installation, Complainant failed to establish that Respondent owed monies in excess of $750.00 that were due. 5. While Complainant asserted that to allow Respondent to avoid paying Complainant for the work it performed would unjustly enrich Respondent, such an argument is unpersuasive. The determination in this matter does not preclude Complainant from pursuing recourse in a different venue. 6. Therefore, Complainant failed to establish that Respondent violated A.R.S. § 32-1154(A)(10). RECOMMENDed order Based on the foregoing, it is recommended that the Registrar dismiss the Compliant in Case No. 2015-3101. 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, March 14, 2016.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors -----------------------

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