ALJDEC

98F-0923-ROC · Registrar of Contractors · 1998-05-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 14, 1998.

APPEARANCES: Complainant, Window Brokers, Inc. appeared through its Secretary-Treasurer, Patrick Michael Burnes.

Respondent, Westward Custom, Inc. appeared through its President and qualifying party, Kermit Otto Lennick.

ADMINISTRATIVE LAW JUDGE: Robert. I. Worth _____________________________________________________________________

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. Pursuant to a written proposal and subcontract, Complainant agreed to and did perform specialty work consisting of providing and installing glass windows and doors on a residential jobsite on which Respondent was serving as the project’s general contractor. The stated contract price of $39,588.00 was subsequently augmented by the addition of several extra-cost change orders and reduced by the deletion of one item, resulting in an adjusted subcontract price of $51,127.50.

2. Respondent had expressed disagreement with one of the change orders that provided for an increase in height of the doors and windows from eight feet to ten feet,

and which added the total sum of $4,053.00 to the parties’ contract price. The claim by Respondent was that a previously quoted price was $1,233.00 less. However, despite some extent of ambiguity in prior discussions and in written notations made by Complainant, the documentary evidence established that a subsequent writing, signed by Respondent’s President, expressly set forth the higher dollar total, thereby resolving this element in favor of Complainant.

3. It was uncontroverted that Respondent has paid the aggregate sum of $42,000.00 to Complainant against the total contract price. In this administrative disciplinary action, Complainant is seeking payment of the allegedly unpaid balance of $9,127.50 plus finance charges that had accrued up to the filing of the within complaint; namely, a combined total of $10,041.43.

4. Respondent has not received a substantial portion of the amounts payable under its agreement with the property owner with whom it is presently engaged in civil litigation. However, Complainant may not properly be made into an insurer as to the ultimate collection of funds due to the general contractor. Although Respondent attempted to demonstrate that one of the primary reasons for its troubles with the owner was traceable to Complainant’s work, no valid basis is found to exist to support such contention, especially since the amount which was withheld from Respondent by the property owner and which is the subject matter of their civil lawsuit is almost eight times the base amount (without finance charges) claimed herein as owing and past due to Complainant.

5. After several remedial efforts had been undertaken by Complainant without complete success, it did appear that Respondent, in accordance with communicated requests from the property owner, ultimately refused to allow Complainant to return to the jobsite for the accomplishment of customarily anticipated final adjustments to the installed doors and windows or of other necessary repair work. Under all the circumstances, it cannot be held that such denial of access by Respondent, abiding by and virtually compelled by its customer’s wishes, was unjustified or arbitrary. Consequently, Complainant is not relieved of the obligation to cause any deficiencies to

be rectified or to reimburse Respondent for costs incurred in arranging for such corrections, especially in light of the fact that a previously communicated deadline date was not met. Additionally, the sources of supply used by Complainant had been proving to be far slower than those utilized by the successor contractor, a then-important factor guiding the prudent actions of Respondent who was being pressured by its customer. Credible evidence tended to indicate that expenses of $3,200.00 were incurred, shown to have been reasonable and necessary, in order to accomplish required adjustment work or other corrective work on the jobsite through another specialty contractor.

6. It is found and determined, based on the evidence of record, that the amount remaining past due and unpaid from Respondent to Complainant under the parties’ contractual agreement was no less than $5,900.00. To the extent that Complainant feels that the amount paid to the successor contractor purportedly to rectify Complainant’s prior work remaining unfinished or unadjusted may have included upgrades or items not properly a part of Complainant’s contract, or if Complainant wishes to obtain sums representing finance charges, all entitlements to such claims, if any, must be pursued before a civil court of competent jurisdiction. Similarly, any counterclaims asserted by Respondent based upon damaging its relationship with the property owner or upon contributing to financial problems leading to a lawsuit may be asserted as separate subjects of civil litigation against Complainant.

7. 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 is empowered by statute to impose reasonable conditions which may serve to reduce or eliminate any otherwise appropriate disciplinary penalties for proven violations of the State’s contracting laws. In this way, a Complainant in an administrative action who has sustained the burden of proving a contracting law violation 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. Under the facts and circumstances of this case, demonstrating a breach by Respondent of the payment terms of its subcontract agreement with Complainant, the inclusion of a condition in the nature of monetary payment of a substantial portion of the within claim is fully appropriate and equitably justified.

8. In this administrative action the total monetary amount sought by Complainant of $10,041.93 must be appropriately reduced by deleting the sums claimed for finance charges ($914.43) as well was the amounts paid by Respondent to a successor contractor to complete and/or correct the work of Complainant ($3,200.00), leaving an unpaid balance of slightly in excess of $5,900.00. The use of this resulting monetary sum as a payment condition in the Registrar’s Order is found to be appropriate.

Notice is taken of the Registrar’s license records which reveal that Respondent presently holds six separate contracting licenses, three in each of the sectors, residential and commercial. These current licenses, dating back to 1990, followed the issuance of other prior licenses dating back to 1987 that had terminated in good standing. An overall analysis and evaluation further reveals that Respondent has complied a highly satisfactory prior record as a contractor in this State. In consideration of this mitigating factor as well as of all the surrounding circumstances of this case, it further appears appropriate for the Registrar to decline to impose any additional disciplinary penalty against Respondent if the payment condition is timely complied with by Respondent.

10. It did appear from the case file, and it was also admitted during the hearing testimony of both parties, that no written directive had been issued by the Registrar’s assigned Inspector requiring the payment by Respondent of any sum certain to Complainant. The wording of a form letter seeking to prompt Respondent to resolve the filed claim, if valid, cannot be equated with the issuance of an order for specific remedial action. The absence of any definitive monetary determination and directed payment action in the Inspector’s letter would serve to generate no duty of compliance

by Respondent and provides no basis for supporting a finding of any violation of A.R.S. §32-1154A(23) or even for having included this charge in the Citation.

CONCLUSIONS OF LAW

1. The Complainant has sustained his burden of proving entitlement to a significant portion of the sums alleged to be remaining due, owing and unpaid, as set forth in his filed complaint, and of proving that Respondent has failed for a prolonged time period to pay these monies when due to Complainant, thereby also constituting a wrongful act to the financial detriment of Complainant. Consequently, the evidence of record sufficiently established that Respondent has violated the provisions of A.R.S. § 32-1154A(11). However, no violations by Respondent of the provisions of A.R.S. § 32-1154A (7) or (23) were adequately proven hereunder.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of this Order (thirty-five [35] days after the date of mailing by the Registrar of Contractors) that Respondent’s Class B license be actively and temporarily suspended until the Registrar receives proof that Respondent has paid or tendered the sum of $5,900.00 to Complainant.

It is further recommended that if Respondent pays or tenders the above-specified monetary amount to Complainant on or before this Order’s effective date, then no active license suspension shall be imposed and the entire Citation and Complaint in Case Number 98-0923 shall be closed.

Dated: May 21, 1998.

OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert. I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

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

ATTN: Joyce Armijo -----------------------

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