ALJDEC decisions subject to certification as final

2016A-953-ROC · Registrar of Contractors · 2016-09-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 29 and August 25, 2016 APPEARANCES: Eric Walberg, Attorney for Shiloh Homes, Inc.(“Shiloh”); Keith and Darla Bolock, Shiloh representatives; Cheryl Carr and Kristy Field, Arrow Electric, Inc. representatives; Matt Gunstra (July 29th only), Registrar of Contractors Investigator ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang _____________________________________________________________________

FINDINGS OF FACT 1. Shiloh Homes Construction & Remodeling, Inc. (“Shiloh”) and Arrow Electric, Inc. (“Arrow”) filed complaints against each other with the Registrar of Contractors regarding a project in which Shiloh was the general contractor and Arrow was the electric contractor. Shiloh’s complaint alleged that Arrow abandoned the project and performed incomplete and deficient work. Arrow’s complaint alleged that Shiloh failed to pay appropriately and hired unlicensed electricians to complete the work. The Registrar issued a citation for abandonment against Arrow and a citation against Shiloh for non-payment. These were the sole issues to be considered at hearing. 2. At the hearing, Arrow offered evidence that the former owner and qualifying party became sick and died, causing problems for the company. While there were other employees to do the work, Arrow fired them all without notice to Shiloh and did not make arrangements to complete the work. 3. Regarding payment, Arrow claimed that Shiloh owed $18,902.10 on the project. Arrow claimed this was for the time and materials put into the project that Arrow did not finish. Interestingly, this was the exact same amount as Arrow’s written proposal for the entire project. Arrow argued, unconvincingly, that this was because the proposal was only an estimate. 4. Shiloh offered uncontested testimony that the homeowner refused to pay for the electrical work because it wasn’t working when he moved into the home and living with the problems created by Arrow were so inconvenient that he still refuses to pay for any of the work that Arrow did. 5. The contract between the parties provides that the subcontractor will not be paid until the general contractor receives payment for the subcontractor’s work.[1] It also reserves the general contractor’s right to withhold payment for faulty work and other legally permissible reasons.[2] It is also noted that the contract provides for $150 per day in liquidated damages if the subcontractor causes the project to be delayed.[3] 6. As of the time of this recommendation, Shiloh’s license is current with only this open complaint showing against it on the Registrar of Contractors’ website. Arrow’s license number 057771 has been suspended for lack of bond since June 5, 2016. The website erroneously states that there are no open complaints against it. It also states there is one closed complaint against it that resulted in discipline. Arrow’s license number 277817 has been suspended for lack of bond since April 17, 2016 and suspended for non-renewal since May 1, 2016. The website erroneously shows no open complaints against it. It also shows no closed complaints. CONCLUSIONS OF LAW 1. This matter is within the jurisdiction of the Registrar of Contractors pursuant to A.R.S. §§ 32-1104(A)(4), 32-1154(B) and 32-1156. 2. The citations issued by the Registrar of Contractors in these two matters alleged potential violations of A.R.S. § 32-1154(A)(1) and (10). 3. A.R.S. § 32-1154(A)(1) provides grounds for suspension or revocation of a contractor’s license for departure from or disregard of plans or specifications or building codes without consent of the owner or his or her representative. 4. A.R.S. § 32-1154(A)(10) provides grounds for suspension or revocation of a contractor’s license as follows:

Failure 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.

5. The Registrar of Contractors may consider the prior record of a contractor in any disciplinary proceeding. A.A.C. R4-9-117. On standing motion by the Registrar of Contractors, the computer records of the Registrar of Contractors may properly be considered to be evidence in the event the Administrative Law Judge finds a violation of any of the statutory provisions cited in the Citation and Complaint. 7. In this case, Shiloh established that Arrow abandoned the project at issue by failing to return to the job site. The abandonment is especially egregious because Arrow did not notify Shiloh in advance and did not make alternative arrangements to meet its contractual obligations. Arrow’s violation was further aggravated by its attempts to cover for its actions by making numerous claims that it had made alternative arrangements, which was not supported by the weight of the evidence. Arrow has admitted that it ceased doing business on January 19, 2016.[4] Yet Arrow informed Shiloh on March 3, 2016 that it was still in business, it just didn’t have any employees.[5] Either way, however, Arrow undertook to do the project and failed to complete it; therefore, it was a violation in the form of abandonment to stop working on it without legal justification, especially when Arrow did so without at least giving Shiloh fair notice so that Shiloh could make arrangements to meet its own obligations. 8. Arrow offered no legal justification for its failure to complete the project at issue. Rather, Arrow explained that the owner of the business had died. However, he died several months before Arrow stopped performing on this project, so Arrow did not establish a valid legal excuse for abandoning the project. Arrow also offered explanations about the difficulties Cheryl Carr, the owner’s wife and co-owner of the business, was having during that time. This, too, is an invalid excuse for failing to meet Arrow’s contractual agreement. Arrow’s evidence and its behavior during this project indicate that it is not fit to continue engaging in contracting in Arizona. 9. Regarding its own complaint, Arrow did not establish that Shiloh violated A.R.S. § 32-1154(A)(10) when Shiloh refused to pay Arrow’s invoice for $18,902.10. It was undisputed that the parties’ contract states that payment is not due until the homeowner pays for the services at issue.[6] It was undisputed that the homeowner refused to pay for Arrow’s services because of their poor work and abandonment.[7] For this reason alone, Arrow cannot prevail. However, Shiloh also established that, even if it were appropriate to pay something for the services Arrow performed, Arrow did not establish by credible evidence that the invoice was the proper amount to pay. Further, considering the undisputed fact that Shiloh had to pay its own workers and others additional funds to complete the work that Arrow failed to do, Shiloh would be entitled to deductions for the additional costs it incurred due to Arrow’s sloppy business practices. Even if the Registrar finds that Shiloh should have paid Arrow something, Arrow should not prevail because it did not meet its burden of proof to establish by the greater weight of the evidence how much, if anything, Shiloh should appropriately pay. RECOMMENDED DECISION Arrow’s complaint (2016A-1891-ROC) should be denied. Shiloh’s complaint (2016A-953-ROC) should be sustained. Arrow’s licenses (License No: 057771 and 277817) should be revoked.

If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be forty (40) days from the date of certification.

Done this day, September 12, 2016.

/s/ Dorinda M. Lang Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Case File on either case under “Intake Complaint Submission”. The contract was attached to both complaints. This provision is found at Paragraph 15 of the contract. [2] Ibid. Paragraph 14 of the contract. [3] Ibid. Paragraph 8 of the contract. [4] Case file on 2016A-953-ROC, Lg Misc. Corres1.pdf, 5/20/16, “Written answer.” [5] Case file on 2016A-953-ROC, Intake Additional Docs Submitted1.pdf, 3/21/16 email from Keith Bolock. [6] Case File on either case under “Intake Complaint Submission,” paragraph of the contract. [7] Had Arrow notified Shiloh of its inability to complete the job earlier, Shiloh might have been able to complete the work sooner and the homeowner might have been more cooperative.

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