ALJDEC decisions subject to certification as final

2017A-3129-NPC-ROC · Registrar of Contractors · 2017-09-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Frederick Electric LLC,

COMPLAINANT,

v.

Patterson Remodeling LLC,

License Nos. 245563, 242914

RESPONDENT.

No. 2017A-3129-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 12, 2017, at 8:30 a.m.

APPEARANCES: Frederick Electric LLC (“Complainant”) appeared through its qualifying party/member, Aaron Frederick; Patterson Remodeling LLC (“Respondent”) was represented by Taylor W. Tondevold, Esq., Tondevold Law, PLC.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

The Arizona Registrar of Contractors (“the Registrar”) issued License Nos. CR48.242914-D for dual ceramic, plastic and metal tile and B-3.245563-R for residential remodeling and repair contracting to Respondent.

The Registrar issued License No. CR11.254304-D for dual electrical to Complainant.

On June 20, 2017, Complainant filed a complaint against Respondent with the Registrar that alleged that Respondent owed $3,422.50 pursuant to a verbal contract for electrical work that Complainant had performed at 7943 North Via Azul, Scottsdale, Arizona 85258. Complainant attached to the complaint invoice #3003, which reflected a discount from the initial amount of $3,650.00 that Respondent had requested.

Complainant also attached to its complaint a letter to Complainant dated March 31, 2017, from Respondent’s Chief Financial Officer, Nathan Dick, that stated in relevant part as follows:

Please see the attached check for $2,000.00 as payment in full for your work completed at the job located at 7943 N. Via Azul. [Respondent] disputes your invoiced amount of $3,422.50 for the wok completed at the project. When you provided the scope of work you indicated that you would provide the estimated prices within a few days. However, no estimated prices were ever sent to [Respondent]. The maximum amount that [Respondent] expected to pay for the work completed was $2,000.00. As no estimated prices were ever provided by you, [Respondent] had no reason to expect to be billed $3,422.50 and thus this amount was never authorized. [Respondent] did not agree to you performing the work and then billing after the fact.

Respondent submitted a copy of its check no. 1985, dated March 31, 2017, made payable to Complainant in the amount of $2,000.00, that was attached to Mr. Dick’s March 31, 2017 letter. According to the exhibit, the check was cashed on April 7, 2017. The check did not contain the words, “Payment in full,” or any similar notation.

On June 30, 2017, the Registrar issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10) against Respondent’s license.

On July 13, 2017, Respondent’s attorney filed a written answer to the Citation, denying any cause to revoke or suspend Respondent’s license because, when Complainant negotiated the $2,000.00 check, it evidenced an accord and satisfaction under Arizona common law.

The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

A hearing was held on September 12, 2017. Respondent’s qualifying party/ member, Aaron Frederick, testified. Respondent was represented by its attorney, who submitted into evidence a copy of the March 31, 2017 check and argued that Complainant’s negotiation of the March 31, 2017 check for $2,000.00 precluded any finding of cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(10).

Mr. Frederick testified that the project on N. Via Azul was the fourth or fifth project that Complainant had performed for Respondent, correcting electrical work that unqualified persons had performed on various remodeling contracts that Respondent had undertaken. Mr. Frederick testified that when Complainant submitted its initial invoice of the scope of repairs without prices, Respondent’s representative had stated, “we know what things cost.” Mr. Frederick stated that Complainant had discounted the cost of the work on invoice #3033 and had not charged Respondent for any overtime, even though Complainant’s crew had worked into the night to meet Respondent’s deadline.

Mr. Frederick testified that Complainant completed the work shortly before Christmas 2016, and that Complainant shut down its operations over the holidays. Although Complainant had discovered additional repairs on the N. Via Azul project that needed to be performed, when Mr. Frederick contacted Respondent after the first of the year, he was informed that Respondent had hired someone else to complete the repairs.

Respondent’s attorney argued that the parties had reached an accord and satisfaction under Arizona common law that precluded the Registrar from finding cause to suspend or revoke Respondent’s license under A.R.S. § 32-1154(A)(10).

Mr. Frederick argued that because the check on its face did not show “payment in full” or any similar notation, the parties had not reached an accord and satisfaction, notwithstanding the March 31, 2017 letter from Mr. Dick.

CONCLUSIONS OF LAW

This matter lies with the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish cause to suspend or revoke Respondent’s contractor’s license by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.

“The proponent of a motion shall establish the grounds to support the motion.”

Arizona statute sets forth the circumstances under which a notation on a negotiable instrument would discharge a debt:

If a person against whom a claim is asserted proves that the person in good faith tendered an instrument to the claimant as full satisfaction of the claim, the amount of the claim was unliquidated or subject to a bona fide dispute and the claimant obtained payment of the instrument . . . .

As Mr. Frederick pointed out, Respondent’s check #1985 did not say, “Payment in full” or any similar notation.

Arizona courts have held that “[t]he general rule is that acceptance and use of a remittance by check which purports to be a payment ‘in full’, or which implies words of similar meaning, or is accompanied by a letter to that effect, constitute an accord and satisfaction of the larger claim of the creditor, assuming the claim is unliquidated or disputed.” A creditor’s acceptance of a check purporting to be final settlement of a disputed amount constitutes an accord and satisfaction, even though there may be no actual meeting of the minds. Even if a subcontractor cashes the check because it is being pressured by its own creditors, acceptance of a check that indicates on its face or in an accompanying letter that it is intended to be payment in full constitutes an accord and satisfaction.

Arizona courts have also held that a letter that contains an accounting of a balance due but that did not indicate “that acceptance of the check constituted satisfaction in full of the debt” was not an accord and satisfaction as a matter of law. Although Respondent’s March 31, 2017 letter unequivocally stated that it disputed the amount of Respondent’s debt, it did not unequivocally inform Complainant that its negotiation of the check would constitute an accord and satisfaction. However, Respondent’s March 31, 2017 letter did inform Complainant that Respondent considered the $2,000.00 check to be “payment in full.” Although it is a close question, Respondent thereby established an accord and satisfaction under the Arizona common law.

Therefore, Complainant did not establish cause to suspend or revoke Respondent’s licenses under A.R.S. § 32-1154(A)(10) because Respondent failed to pay the $1,422.50 that Complainant feels is still due under Invoice #3003 for Complainant’s work on the N. Via Azul project.

RECOMMENDED ORDER

In view of the foregoing, it is ordered that, on the effective date of the order in this matter, the Registrar dismiss Complainant Frederick Electric LLC’s complaint in Case No. 2017-3129 against Respondent Patterson Remodeling LLC’s License Nos. 242914 and 245563.

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, September 26, 2017.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors