ALJDEC

98F-0239-ROC · Registrar of Contractors · 1997-12-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 1, 1997. APPEARANCES: Complainants were represented by their attorney, Marc C. Cavness. Respondent was represented by its attorney, David Gaona. 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

Complainant Philip Denaro, Jr. (“Denaro Jr.”) is president of Essex Homes, the holder of a Class B license issued by the Registrar of Contractors. Philip Denaro, Sr. (“Denaro Sr.”) is the father of Denaro Jr. Denaro Sr. is an employee of Essex Homes. He has over 19 years of construction experience. Patricia Mabante is Respondent’s president and the mother of Respondent’s corporate secretary, Cecilia Jones. Denaro Jr. and Jones have known each other since high school. The two families have had a relationship as a result of the children’s relationship. Denaro Jr., who also owns a retail sandwich shop, helped the Mabante family purchased sandwiches from his store during a family funeral when the store would have been otherwise closed. The Mabante family were touched by Denaro Jr.’s assistance during the stressful family crisis. During the latter part of May, 1997, Denaro Sr. telephoned Respondent’s office on behalf of his son and daughter-in-law to obtain a bid for a masonry block fence for their new residence. Denaro Sr. acted in his capacity as a father rather than an employee of Essex Homes when he contacted Respondent’s office for the bid. Denaro Sr. spoke to Jones. He verbally requested a bid for a 6’ X 120’ fence constructed with 4” X 16” block. While Denaro Sr. remained on the telephone, Jones spoke with Respondent’s estimator. Respondent’s estimator informed Jones that the bid would be $14.00 per linear foot. Jones then verbally advised Denaro Sr. that Respondent’s bid was $14.00 per linear foot for the block fence. While on the telephone with Jones, Denaro Sr. converted the bid to $2.25 per square foot. When Denaro Sr. replied to Jones that the bid was $2.25 per square foot, Jones advised him that the bid was based upon linear footage rather than square footage. Respondent does not estimate bids by square footage. Denaro Sr. did not advise Jones during the bid process that the block was to be brown rather than standard grey CMU. Respondent’s bid was accepted by Denaro Sr. The height of the block wall was lowered from 6’ to 5’4”. No adjustment was made in the contract price. The parties did not reduce their verbal agreement to writing. It is determined that the scope of work for the Denaro block fence is smaller than projects Respondent customarily undertakes. However, there is credible evidence that Respondent agreed to perform the project due to the prior good long-standing relationship between the Denaro families and the Mabante family. Denaro Jr. was under time constraints to have the block fence installed because he had to close on the sale of the house. The commencement of the block fence installation was delayed for unexplained reasons by an employee of Respondent. Denaro Sr. contacted Jones about the delay. Jones contacted her mother, Mabante, who directed Respondent’s general superintendent to expedite the construction so that Denaro Jr. could timely close the sale of the property. Respondent’s president directed the general superintendent to advise the Denaros that Respondent would accept a reduced contract price of cost plus 5% due to the inconvenience to them. There is conflicting testimony as to whether or not Denaro Sr. accepted the new contract price of cost plus 5%. It is determined that Complainant is entitled to pay, and Respondent to receive, $14.00 per linear foot or Respondent’s cost plus 5%, whichever is the lesser price. When Respondent’s employees went to the jobsite to construct the block fence, there were no footings in place to support the fence. Respondent’s employees installed concrete footings and constructed the block fence on the footing. There is no dispute as to Respondent’s workmanship of the footings and block fence. The scope of work to have been performed by Respondent is found to have included the block fence and footings for the quoted contract price of $14.00 per linear feet. Although Respondent claims that it quotes separately for footings, there is insufficient evidence of record that such a policy was effectively communicated to Denaro Sr. The Denaros are found to have reasonably relied upon the bid, determined to have been $14.00 per linear foot, as including the necessary footings for the block fence. There is no evidence that Respondent advised the Denaros that the footings were not included in the bid when its employees were at the jobsite to install the block fence with no footings existing at that time. Respondent is found to have committed a wrongful, but not fraudulent, act by not putting the terms of the parties oral agreement in writing as required by A.R.S. ( 32-1158 which has substantially injured Complainants. It is determined that the disputes as to contract price, color of block and scope of work would have been easy to resolve had the parties oral agreement been reduced to a writing as required by A.R.S. ( 32-1158. Notwithstanding Respondent’s failure to comply with the statutory requirement that the parties’ agreement be reduced to a writing, both Denaro Sr. and Denaro Jr. are found to have unclean hands on that issue. Neither requested or insisted on a written agreement. Denaro Sr., with over 19 years of construction experience, and Denaro Jr., president of Essex Homes and an experienced businessman, should have known of the statutory requirement to reduce the agreement to writing. It is determined that there are strong matters in mitigation which should be considered by the Registrar when contemplating any disciplinary action against Respondent in this matter. Respondent agreed to bid on this project because of the prior long-standing personal relationship between its president and corporate secretary, and the Denaros. When the delay in commencement of work was brought to the attention of Respondent’s president, she directed that the work be performed immediately. She further directed that Respondent’s general superintendent advise Complainants and Denaro Sr. that Respondent would accept payment of its cost plus 5% rather than the initial contract price of $14.00 per linear foot, which was intended to be a savings to Complainants for any inconvenience caused by the delay in commencing the project. Complainants have not made any monetary payments to Respondent for the construction of the footings and block fence. The monetary dispute between the parties should be resolved in a civil court of competent jurisdiction.

CONCLUSIONS OF LAW

The evidence of record is sufficient to establish that Respondent has violated the provisions of A.R.S. § 32-1154 (A)(7).

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the Citation and Complaint in this matter be closed.

It is further recommended that the Respondent be and hereby is formally admonished to institute and maintain a practice of reducing all oral agreements to writing, not only for agreements with the general public but especially when contracting with perceived friends of its principals.

Done this day, December 19, 1997.

___________________________________ BRIAN BRENDAN TULLY Administrative Law Judge

Original transmitted by mail this ____ day of December, 1997, 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