ALJDEC

97F-F0326-ROC · Registrar of Contractors · 1998-03-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 24, 1998 APPEARANCES: Complainant appeared through its vice-president, J. Melvin Slater and Respondent was represented by its attorney, Stephen Meyers. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

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. Complainant filed the instant complaint with the Registrar of Contractors seeking an Order from the Registrar requiring that Respondent take all necessary action to have Complainant’s name removed from a specified building permit filed with the City of Cottonwood building department. It was undisputed that the building permit in question not only reveals Complainant’s name as the contractor but also shows Complainant’s license number and its sales tax number. 2. The following salient facts were adduced at the hearing and are important to note: Complainant’s president, Pauline Henry, and two others formed an L.L.C. for the purpose of constructing and managing a new motel in the city of Cottonwood, Arizona (hereinafter referred to as “City”). Apparently the original plan of the members of the aforementioned L.L.C. was that one of the members would provide accounting services for the project, one would provide motel management, and that Complainant would act as the general contractor for the project. Although the instant record did not clarify who filed the application for a permit for the construction of the motel, it did demonstrate that the original application for a permit for the construction of the new motel and the filing of the necessary building plans with City was commenced at a time prior to Respondent’s involvement with the project. At the time the L.L.C submitted the paperwork to obtain a construction loan for the project, they were advised that the lending institution would not approve a construction loan for the project, due to the fact that one of the member’s of the L.L.C. was also the president of the construction company that was to act as the general contractor on the project. Subsequent to learning that they could not obtain the necessary construction financing with Complainant acting as the general contractor on the project and, as aforementioned, after applying for (but before receiving) the permit for the construction project, the L.L.C. retained Respondent to act as the construction manager for the project in question.

Respondent’s duties were to oversee the construction project. The parties to the above-described construction manager agreement signed a standard A.I.A. contract form for use between an owner and a construction manager. Section 2.2.21 of the standard contract language was crossed out by the parties to the contract at the time of execution of same. Thus, Respondent did not have any duty or responsibility to assist the owner in obtaining building permits. The parties executed the aforementioned contract on or about March 25, 1996. At the time of execution of the contract, Respondent was advised by the owner that the permit had been applied for and should be ready within a matter of a few days. Upon initially contacting City for the purpose of picking up the permit so that construction could commence, Respondent was advised by City that the red line plans previously submitted had been returned to the architect and thus, the permit was not ready. The permit application process was not completed until some two months after Respondent signed the contract with the owners of the project. When the permit was finally ready in May of 1996, the owner of the project advised Respondent that same was ready and requested that Respondent pick- up the permit. Respondent agreed to pick-up the permit and sent its project manager (employee) to City’s building department to retrieve and pay for the permit. The owner of the project executed a check payable to City for the permit and Respondent utilized said check as the sole method of paying for the permit. Notwithstanding the fact that Respondent was aware that it was the construction manager for the project, that the L.L.C was the owner of the project, and that there was no other general contractor on the project, Respondent’s agent signed the construction permit with information typed on said document showing that Complainant was the contractor and also showing Complainant’s contractor’s license number and sales tax number. Respondent’s agent signed the permit above the line that identified the signer as either the “Contractor, Owner, Architect, or Agent.” Complainant had no knowledge that its name appeared on said permit until such time as the Registrar of Contractors became involved in an investigation of another complaint regarding the project in question. Upon receiving the information that its name erroneously appeared on the permit, Complainant filed the instant complaint with the Registrar of Contractors. 3. The instant record was sufficient to support a finding that having its name on the building permit in question could expose Complainant to future legal claims regarding the construction of said project. Such an exposure to possible future legal actions regarding the construction of the motel may properly be deemed to be the type of substantial injury contemplated by the applicable charged section of the State’s Contracting laws. 4. Although Respondent does not dispute the fact that the building permit showing Complainant as the contractor is in error, it contends that it has no responsibility for said error since it did not apply for the permit and merely picked-up same at the request and direction of the owner of the project. On the contrary, Respondent, acting on behalf of the owner, had the duty to read the document it was signing and also, as a licensed contractor had a duty to assure that the official local building authority document it signed was true and accurate. 5. There does not appear to be any fraud involved in Respondent’s conduct or any willful intent to deceive. Nevertheless, Respondent had the opportunity to read the document it signed and, whether due to negligence or other form of conduct, Respondent’s act of signing the building permit, showing that Complainant was the contractor on the project, is deemed to constitute a wrongful act within the meaning of the charged section of the State’s Contracting laws. Respondent is fully responsible for the acts of its agent and thus, since Respondent’s project manager (employee) signed the false building permit, it remains responsible for the error in the building permit. 6. A jobsite inspection by the appointed inspector for the Registrar of Contractors was held, pursuant to which that Agency sent Respondent a letter requiring it to cause Complainant’s name to be removed from the permit within a stated period of time. 7. Notwithstanding Respondent’s disagreement with the directive issued by the Registrar’s inspector, in an effort to merely resolve the complaint, without admitting responsibility, pursuant to the terms of the Agency directive it contacted the City building department and requested that the name of the contractor on the building permit be changed so as to remove Complainant’s name from any of the records of the City as the contractor on the construction of the motel. 8. Despite receiving information from the owner of the project, Respondent, and Complainant, all advising that Complainant was not the contractor on the project, City, for some unexplained reason, refused to remove Complainant’s name from the building permit and other relevant documents unless and until it received an order from the Registrar of Contractors. Notwithstanding City’s position, it is clear that the Registrar of Contractors does not have any jurisdiction or statutory powers allowing it to order a local building authority to do anything. 9. Under all of the facts and circumstances presented herein, it is determined that Respondent made a good faith effort to comply with the terms and conditions of the above-described Agency directive. The removal of Complainant’s name from the City building permit is out of the control of Respondent, and thus there is no finding that Respondent failed to comply with the terms of the Agency directive. 10. One can only hope that by reading the decision and order issued in this matter that City would be persuaded to remove Complainant’s name from the building permit and other related documents for the construction of the motel.

CONCLUSIONS OF LAW

1. Respondent contends that the provisions of A.R.S. §32-1154A (7) do not apply to it under the facts presented herein due to the fact that it was acting on the construction project as a construction manager and not a “contractor.” A.R.S. § 32-1101B provides that the term “contractor” as used in the State’s Contracting laws includes “consultants representing themselves as having the ability to supervise or manage a construction project for the benefit of the property owner.” Thus, under the facts presented in the instant case, Respondent was acting as a contractor under the commercial license issued to it by the Registrar of Contractors. 2. Respondent violated the provisions of A.R.S. § 32-1154A (7).

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-01 license shall be placed on a period of disciplinary probation for thirty (30) days.

Done this day, March 31, 1998.

_______________________________ MARK A. SILVER Administrative Law Judge

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

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

By _______________________________

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