ALJDEC decisions subject to certification as final

2015A-97-ROC · Registrar of Contractors · 2015-10-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 14, 2015, at 8:00 a.m. APPEARANCES: New Base Plastering LLC (“Complainant”) appeared through Luis Mireles, its managing member and qualifying party; Loven Contracting Inc. (“Respondent”) was represented by Everett S. Butler, Esq., The Butler Law Firm. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure The Arizona Registrar of Contractors (“the Registrar”) issued License Nos. B-1.114019-C and B.069567-R to Respondent. The Registrar issued License Nos. CR36.204409-D, CR36.255424-D, and CR10- 255708-D to Complainant. On or about January 9, 2015, Complainant filed a complaint with the Registrar against Respondent alleging that Respondent had paid only $1,600.00 of a $10,233.00 contract to apply exterior stucco at a project located at 2600 W. Route 66 in Williams, Arizona 86040, despite Complainant’s substantial completion of the contract. The Registrar subsequently received Complainant’s request for hearing. On June 4, 2015, the Registrar issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10).[1] On June 9, 2015, the Registrar received Respondent’s written answer to the citation that denied any violation. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held on October 14, 2015, at 8:00 a.m. Complainant’s managing member and qualifying party, Luis Mireles (“Mr. Mireles”) testified and submitted one exhibit on Complainant’s behalf. Respondent’s attorney presented the testimony of James Michael Loven, Respondent’s qualifying party and officer, and submitted ten exhibits on Respondent’s behalf. Hearing Evidence Respondent was the general contractor for the substantial renovation of the Best Western Motel in Williams. Respondent requested bids from subcontractors for the project. On or about July 2, 2014, Complainant submitted a proposal in the amount of $7,100.00 to apply a Western One-Kote stucco system at the project.[2] Respondent did not sign Complainant’s proposal. Instead, on or about August 8, 2014, Respondent issued a contract for the stucco portion of the project. The contract was in the amount of $7,100.00 but specified in four places that Complainant would apply an Exterior Insulation and Finishing System (“EIFS”) stucco.[3] The contract also specified that Complainant was required to cure any deficiencies within seven days of receiving notice, after which time Respondent would have the right to hire others and to deduct the amount paid from any amounts otherwise owed to Complainant. The “Exclusions” section was left blank. Finally, the contract provided that “[t]his document constitutes the parties’ entire understanding and agreement and supersedes all prior understandings and agreements between the parties.”[4] Mr. Mireles’ wife signed the contract on Complainant’s behalf. Mr. Mireles acknowledged that his wife was authorized to sign documents on Complainant’s behalf, but stated that he would not have signed the contract if he had seen that it required EIFS stucco. Complainant proceeded to apply Western One-Kote stucco to the Best Western Motel. On October 3, 2014, Respondent sent an email to Complainant, thanking it for its timely completion of the work.[5] On October 3, 2014, Complainant sent Respondent an application for final payment in the amount of $8,001.00.[6] Respondent acknowledged that it had issued change orders that increased the cost of the job. On October 8, 2014, Respondent sent an email to Complainant requesting it to cure certain enumerated alleged deficiencies, including that the stucco system needed to be EIFS, not Western One-Kote.[7] On October 9, 2014, Complainant responded to Respondent’s email, agreeing to correct three alleged deficiencies. Mr. Mireles refused to apply EIFS because he said that was not what the plans required.[8] Mr. Mireles testified that he planned to perform corrections but that it took eight days for him to arrange to travel from his home in Tucson to Williams. Mr. Mireles testified that when he arrived in Williams, Respondent informed him that it had already hired another subcontractor to cure the deficiencies in Complainant’s work. On November 3, 2014, Respondent issued a Notice of Backcharges to Complainant, stating that after backcharges, Complainant was owed $1,600.00. Respondent enclosed with its letter a check made payable to Complainant in the amount of $1,600.00 for the final payment on the project.[9] Mr. Mireles acknowledged that he cashed the $1,600.00 check because he needed the money. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[10] 2. Complainant bears the burden of proof to establish statutory cause for the Registrar to discipline Respondent’s licenses by a preponderance of the evidence.[11] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[12] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[13] 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.”[14] 4. Unfortunately, Mr. Mireles did not read the contract before his wife signed it. In a commercial transaction such as this one, contracts are enforced as written. Respondent established that the contract required EIFS stucco and that Complainant applied Western One-Kote stucco to the Best Western Motel in Williams. 5. Respondent also established that the contract provided that if Complainant failed to cure deficiencies within seven days of receiving notice, Respondent could hire another contract and deduct the amounts paid to others from the amount otherwise owed to Complainant. Mr. Mireles acknowledged that Complainant failed to respond to the notice of deficiencies within seven days. 6. Therefore, Complainant has not established by a preponderance of the evidence that Respondent owes Complainant any money for the job or that cause exists to discipline Respondent’s license under A.R.S. § 32- 1154(A)(10). RECOMMENDED ORDER Based on the foregoing, it is ordered that Complainant New Base Plastering LLC’s complaint in Case No. 2015-97 against Respondent Loven Contracting Inc.’s License Nos. B-1.114019-C and B.069567-R shall be dismissed. 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 five days from the date of that certification. Done this day, October 26, 2015.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] 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 . . . 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.” [2] See Respondent’s Exhibit B. [3] See Respondent’s Exhibit A. [4] Respondent’s Exhibit A at 1. [5] See Respondent’s Exhibit C. [6] See Respondent’s Exhibit H; see also Respondent’s Exhibit G (change orders). [7] See Respondent’s Exhibit D. [8] See Respondent’s Exhibit E. [9] See Respondent’s Exhibit I. [10] See 32-1101 et seq. [11] 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). [12] See A.A.C. R2-19-119(B)(1). [13] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [14] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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