ALJDEC

97F-2691-ROC · Registrar of Contractors · 1998-01-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

REHEARING: January 2, 1998. APPEARANCES: Complainant appeared personally. Respondent was represented by its attorney, Michael Rhees. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT

1. The official records of the Registrar of Contractors reflect that License No. 082460, a Class B license, is issued to Andre Custom Home Builder A/C, a corporation, doing business as Andre Custom Home Builder. 2. The Registrar’s records also indicate that George Figgins is Respondent’s corporate president and that Respondent is exempt from the requirement that it have a qualifying party. 3. On or about November 17, 1996, Complainant executed a written agreement prepared and submitted by George Figgins for the construction of a concrete block house at the rear of Complainant’s lot located at 2233 East Roosevelt, Phoenix, Arizona. Complainant’s lot had two apartments and an existing small building on the property. 4. That written agreement was drafted on letterhead bearing the names of Figgins General Engineering and Andre Custom Home Builders Inc. The document also contained blank boxes with the following corresponding licenses appearing along side them: C-11 A-2 Electric Lic. #082347; L-11 Lic. #086667; L-37 Figgins Plumbing; C-37 Figgins Plumbing; Commercial Lic. #085948-B-1; Residential Lic. #082460-006-B; and Engineering Lic. # 082952-010- A. There was a mark in the box corresponding to Respondent’s captioned Class B license. 5. The written agreement provided that Respondent would furnish all necessary prints, permits, labor and material to build a complete 450 square foot block house approved by the City of Phoenix. 6. The agreement further provided that the new block house to be constructed by Respondent was to be attached to Complainant’s existing small block building, which was being remodeled by another contractor. 7. The new block house and adjoining remodeled building were intended to become Complainant’s new residence. 8. The written agreement set forth specifications for the new one- level block house to be constructed by Respondent. 9. The contract price under the parties’ agreement was $30,900.00. 10. Complainant tendered a down payment in the amount of $10,000.00 to George Figgins on December 6, 1996. Prior to tendering the down payment, Complainant received assurances from Respondent that the plans and specifications would be acceptable to the City of Phoenix. 11. The written agreement provided that any check payments made by Complainant “be made out to Figgins General Engineering” rather than to Respondent. 12. The contract, which was drafted by Respondent, required that any changes to the written agreement had to “be put in writing and signed by both parties”. 13. The agreement further provided that Respondent would complete the project within three months or sooner. 14. After Complainant paid the required down payment, Respondent caused plans to be drawn pursuant to the parties’ written agreement and submitted to the City of Phoenix for approval. 15. Although Respondent’s initial inquiry to City officials indicated that its proposed plan would be acceptable, the submitted plans were not approved by the City. 16. The City required the following additional work prior to its approval of Respondent’s plan: landscaping and irrigation on the property; a basketball court; paved on-site parking; pavement of the alley from Complainant’s property to the street; and tables and a barbecue for tenant use. 17. After being informed of the City’s requirements for plan approval, Respondent advised Complainant of those requirements. Respondent advised Complainant that the required improvements necessary to obtain City approval would cost her an additional $9,000.00 above the original contract price. 18. Although negotiations between the parties subsequently occurred, no new written agreement or written change order was executed by the parties. 19. Without prior agreement, Respondent prepared additional plans for the project. The revisions included removal of the existing structure being remodeled by another contractor, deletion of the 450 square foot single story structure and substitution of a two story 950 square foot structure. 20. Complainant requested a new written agreement or written change order incorporating Respondent’s subsequent proposals for the work shown on the new plans. Respondent has not produced any such documents. 21. Complainant advised Respondent that she could not financially afford to pay any monies in excess of the original contract price. 22. Complainant terminated Respondent from the project because it could not timely perform its contractual scope of work. 23. When Complainant terminated Respondent, she requested the return of her $10,000.00 down payment. Respondent refused and still refuses to return the down payment, claiming that it has earned that amount as a result of preparing the plans and participating in the planning approval process. 24. The totality of the evidence of record supports a finding that Complainant is entitled to the return of her $10,000.00 down payment due to Respondent’s inability to perform its original contractual obligations. 25. After failing to produce plans incorporating the elements of the parties’ agreement that were acceptable to the City of Phoenix and to consummate either a written change order or new written agreement mutually changing the scope of the work to be performed and the contract price to be paid, Respondent is deemed to have committed a wrongful act by failing to return Complainant’s down payment. 26. Since it was adequately demonstrated that Complainant did not receive the benefits of her contractual bargain with the Respondent, the inclusion of a condition consisting of the return of her $10,000.00 down payment previously paid would constitute a reasonable and appropriate amount for a restitution condition in the disciplinary Order to be entered in this matter. 27. To the extent that a reasonable restitutional condition is to be included in any Order entered hereunder so as to enable reduction of disciplinary penalties, the Registrar should decline to impose any additional disciplinary penalties against Respondent that would possibly be warranted based upon the evidence of record in this matter.

CONCLUSIONS OF LAW

1. Complainant did not receive her intended benefit under the parties’ written agreement due to Respondent’s failure to develop plans approved by the City of Phoenix which complied with the original contractual scope of work. 2. Respondent’s inability to secure City approval of contractual plans and specifications rendered performance of originally contemplated construction work impossible, or at the minimum frustrated the purpose of the parties’ agreement. In either case, Respondent’s retention of the advanced down payment is not justified. 3. The subsequent negotiations by the parties did not result in a valid modification of the original written contract. 4. The evidence of record is adequate to establish that Respondent has violated the provisions of A.R.S.( 32-1154 (A) (7) and (9). 5. The evidence of record is not sufficient to establish that Respondent has violated the provisions of A.R.S. ( 32-1154 (A) (1). 6. It is not a proper function of either the Office of Administrative Hearings or the Registrar of Contractors to adjudicate and award money damages which must be recovered, if at all, through civil court action. However, the Registrar of Contractors is empowered by statute to include reasonable conditions in any Order, compliance with which would effectively reduce or eliminate any otherwise appropriate disciplinary penalties against a licensee for proven violations of the State’s contracting laws. In this case, the inclusion of a condition in the nature of restitution is fully appropriate and equitably justified. In this way, a Complainant in an administrative action who has sustained the burden of proving contracting law violations does not have to await the outcome of protracted civil litigation in order to recover at least a portion of a demonstrated loss and, of equal or perhaps greater significance, a licensed contractor/Respondent is given the means to control, to some extent, the severity of any disciplinary penalty. Moreover, any amounts paid in satisfaction of a condition affecting licensure may properly be evaluated, credited or applied against any civil judgment ultimately obtained in favor of either party. 7. Based upon all the evidence of record, a reasonable monetary condition for payment by Respondent to Complainant in the amount of $10,000.00 would appear to be fully warranted and equitably justified. Any such payment by Respondent to Complainant would be without prejudice to either party seeking recovery of a monetary award for additional provable damages in a civil court of competent jurisdiction.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Order entered in this matter that Respondent’s Class B license be suspended until the Registrar of Contractors receives written proof that Respondent has paid or tendered to Complainant the $10,000.00 down payment. It is further recommended that if Respondent pays or tenders the $10,000.00 down payment to Complainant on or before the effective date of the Order entered in . . . . . .

this matter, then the above-provided license suspension shall not take place and this Citation and Complaint shall be closed.

Done this day, January 22, 1998.

______________________________________ BRIAN BRENDAN TULLY Administrative Law Judge

Original transmitted by mail this ____ day of January, 1998, to:

Mr. Michael P. Goldwater, Director Registrar of Contractors ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By _______________________________ -----------------------

Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826