ALJDEC

98F-1625-ROC · Registrar of Contractors · 1998-06-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 23, 1998 APPEARANCES: Rasheed Kahn, Complainant, in his own behalf Edmundo Robaina, Attorney at Law, on behalf of the Respondent ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________

FINDINGS OF FACT The Complainant, an owner-builder, and the Respondent discussed the installation of carpeting for a home the Complainant was building in Fountain Hills, Arizona. On September 8, 1997, the Respondent sent a copy of a “Sales Contract” signed by the Respondent to the Complainant. The contract was in the amount of $5,300.00 and required a $3,000.00 down payment. The final payment was to be “30 days from completion of the job”. The letterhead on the form contract was in the name of WW Enterprises (WW). Under the business name, address and phone numbers are two contractor’s license numbers which were not issued to WW. The licenses for these numbers were issued to Betty Bentley Carpet Installation (Bentley). The Respondent and Bentley had a business relationship for a number of years. The Complainant had a check in the amount of $3,000.00 sent to the Respondent. The check dated September 10, 1997, was drawn on the account of one of the Complainant’s “investors”. There were no problems in negotiating the check. Upon receipt of the check, the Respondent contacted the Complainant to confirm details about the installation and the parties agreed to an installation date in the area of October 15, 1997. The Respondent was not licensed during this time and its license application was pending before the Registrar of Contractors (Registrar). The license was not issued until on or about November 1, 1997. There is a dispute as to why the installation was not done on schedule by the Respondent. The Complainant testified the Respondent failed to show as scheduled on October 15, 1997, and when the Complainant’s son telephoned the Respondent’s office, he was told by the Respondent’s secretary that the installation could not be done because of an emergency, one of the installers was sick. Attempts to reschedule the installation degenerated into disagreements about the time for final payment. The Respondent testified that the Complainant wanted a postponement of the October 15, 1997 installation to November 15, 1997, and that final payment would not be due for 30 days after that time. It is obvious that the two versions are not compatible and one version will have to prevail. The testimony of Daryl Kahn is considered more credible. It is unlikely that he would fabricate a story involving a named secretary and a specific reason (illness), for the failure of the installers to appear. There was no significant progress by the parties toward getting the carpet installed. After discussions between the parties in November, 1997, the Respondent sent the Complainant a proposal dated November 18, 1997. The proposal showed a balance owing of $2,546.34 and provided for installation on November 19, 1997 with payment of one half the balance ($1,273.17) upon installation, and the other half by December 5, 1997. The Complainant declined this proposal. By letter also dated November 18, 1997, the Respondent informed the Complainant that he would be returning the carpet to the mill or the carpet could be delivered to the Complainant for installation upon payment of a delivery charge and the amount outstanding on the carpet. On November 25, 1997, the Complainant entered a contract to purchase carpeting from another source at a cost of $5,100.00 for the carpeting. The carpeting was installed for an additional $1,139.00 on December 5, 1997. The Respondent offered to return the Complainant’s deposit less $831.00 for the carpet shipping costs. The offer was declined. The Complainant filed the instant Complaint with the Registrar on January 13, 1998 (a supplement was filed on February 9, 1998). The Respondent offered to return all of the Complainant’s deposit, which offer was declined by the Complainant. Aside from restitution in the liquidated amount of $3,000.00, the Complainant is seeking consequential and incidental damages for the delay and financial consequences of the delay, in the amount of $6,000.00. CONCLUSIONS OF LAW The Citation and Complaint allege violation of A.R.S. §32-1154(A)(1), abandonment, (A)(7), wrongful or fraudulent conduct with substantial injury, and (A)(20), discovery of facts which if known at the time of issuance, would have been grounds for denial of the license. The Complainant was informed that this hearing was not the proper forum for the damages claimed beyond the amount of restitution which is readily ascertainable. The evidence shows that the Respondent has offered to return the $3,000.00 down payment and the Complainant has declined this. It is noted that the Complainant’s exhibit 2 reflects some potential overreaching by the Complainant. In this exhibit he avers damages of $10,000.00 for delay and inconvenience plus the $3,000.00 for return of the initial deposit. At the hearing he reduced the $10, 000.00 claim to $6,000.00. In any event, this claim for damages beyond any amount which is readily ascertainable for the purpose of awarding restitution, belongs in a civil court. The Recommended Order in this case should not be construed as limiting or otherwise awarding any damages except for the amount set as restitution for the down payment which amount is clearly established. The Respondent’s failure to install the carpet as scheduled and his subsequent delays plus attempts to secure payment contrary to the specific terms of the contract indicate less than a zealous effort to perform according to the terms of the contract. The issue revolves primarily around the installation date of October 15, 1997. The Respondent testified he believed payment was to be within 30 days of that date even though the installation date was pushed to November 15, 1997. The plain language of the remarks that were sent with the original contract, as well as reason, make this testimony suspect. It appears that the Respondent became anxious about being paid and began using the October 15th date as a means of trying to obtain payment prior to the time originally agreed upon. The proposal of November 18, 1997, evidences the Respondent’s last effort to perform with respect to the contract. When this was declined, the Respondent sent the letter of November 18, 1997, which essentially terminates the contract because of what the Respondent considers threats by the Complainant. In the letter, the Respondent expresses apprehensions about the Complainant’s history of filing complaints and suing. Although neither abandonment or fraud is proven, the facts of the case establish a violation of A.R.S. §32- 1154(A)(7), in that the Respondent’s conduct was wrongful and the Complainant sustained substantial injury from the inexcusable delay and non performance by the Respondent. The final issue concerns the Respondent entering the contract before the license was issued. The explanation was that the Respondent had a lengthy relationship with Bentley who was licensed for the installation and that Bentley would be doing the installation at the Complainant’s home under the direction of the Respondent. It is clear that Bentley is not mentioned in the contract, although her license numbers are listed on the contract. The Respondent explained that he had taken the Bentley name off of the Sales Contract as part of the transition to his changed business status. Although this is accepted as true, the facts of the case do not show any binding or formal legal relationship between Bentley and the Respondent whereby either was authorized to act for the other. This being the case, there was no legal basis for the Respondent to enter a contract with the Complainant which included installation for which the Respondent was not licensed at the time the contract was made. This would constitute a violation of A.R.S. §32-1151, engaging in contracting without a license. The Respondent is not charged with violation of that statute but rather with violation of A.R.S. §32-1154(A)(20), the discovery of any facts which would have been grounds for denial. Violation of this statutory provision is proven. There was insufficient evidence that the Respondent was engaged in active fraud or subterfuge with respect to the Complainant or knowingly intended violation of the statute. RECOMMENDED ORDER In view of the foregoing it is recommended commencing on the effective date of the Order entered in this matter, that the Class C-08 license of the Respondent shall be suspended until the Registrar of Contractors receives written proof that the Respondent has paid or tendered payment to the Complainant in the amount of Three Thousand ($3,000.00) Dollars as restitution; It is further recommended that if the Respondent pays or tenders payment as required by the Order entered in this matter, then the aforementioned suspension shall not take place; . . . . . . . . . It is further recommended that in addition to the foregoing license suspension, if any, that the Respondent’s Class C-08 license be placed on probation for a period of ninety (90) days. Done this day, June 26, 1998.

_______________________________ ALLEN REED Administrative Law Judge

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

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

By _______________________________ JOYCE,

Please note address of Respondent’s attorney:

Edmundo Robaina Yen & Pilch, P.L.C. 1420 E. Missouri Ave. Phoenix, AZ 85014 -----------------------

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