ALJDEC

98F-1956-ROC · Registrar of Contractors · 1998-07-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 22, 1998. APPEARANCES: Complainant appeared through its president and qualifying party, Dan Puente. Respondent appeared through its corporate vice-president/secretary, Thomas Coggins. 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. Respondent was the commercial general contractor for a construction project at Palm Valley Medical Plaza-Phase III, 13657 West McDowell Road, Specialty Suite #214, Goodyear, Arizona 85338. 2. Respondent and Complainant entered into a written agreement dated March 12, 1997, which provided that Complainant would perform electrical work on the project. 3. The written agreement identified the property owner as Palm Valley Medical Building Partnership c/o Broadland Medical Development-PMH I, LLC, 3740 East Southern Avenue, Suite 214, Mesa, Arizona 85206. 4. There is no evidence of record as to the exact scope of the electrical subcontract to be performed by Complainant under the written agreement. 5. Complainant completed its scope of work. The weight of credible and reliable evidence of record supports a finding that Complainant’s work was acceptable to the property owner. Complainant completed all punchlist items and was not requested by either the property owner or Respondent to perform any additional remedial work. 6. Complainant received draw payments from Respondent with the exception of the final payment. 7. Article 12 of the parties’ written agreement governs the final payment. The provision is a “pay when paid” provision which provides that final payment to Complainant is predicated upon Respondent’s receipt of final payment from the property owner. 8. On or about May 21, 1997, Complainant submitted an invoice to Respondent in the amount of $1,015.96 for electrical work performed on the project. On or about July 3, 1997, Complainant submitted another invoice in the amount of $123.95. The total unpaid balance owed to Complainant is $1,139.91. Respondent does not dispute that those monies are owned to Complainant. 9. The property owner retained funds in the amount of $1,800.00 from Respondent for items it felt were not properly completed or repaired on the project. Those items were: electrical outlets upside down in some places; counter holes not bored for wires; certain counters needed cut at degree angle; vinyl flooring in nurses station, procedure room, bathroom and lounge needed to be cleaned and sealed; screw holes in some cabinets need rubber plugs to cover the holes; a door in the adjacent suite needed to be installed; the ceiling grid in the procedure room did not fit properly; the ceiling grid in the doctor’s office passes over a sprinkler head; at the entrance there is a chip on one of the front doors located 1 inch from the top; in the exam room the grid needed to be moved towards the window to eliminate excess heat coming from the window and a sprinkler head ring needed to be tightened up; replacement of a stained tile from a roof leak in the bathroom; remove the return air grill in the pediatrics hallway and install it in Room 16; repair gouge in the left side door of the interior cabinet located in the break room; repair screws popping out from the bottom of the upper cabinet in the break room; and repair a stained ceiling tile located next to the ceiling fan in a bathroom. 10. There is no evidence of record that the property owner’s complaint regarding electrical outlets being upside down in some places was attributable to Complainant’s electrical workmanship. Although the Complainant had previously completed punch list repairs on the project, the issue of those electrical outlets was never communicated to Complainant. 11. Respondent relies on the provisions of Article 12 of the parties’ written agreement to support its position that Respondent is not obligated to pay Complainant the outstanding balance owed for the electrical work because it has not received final payment from the property owner. 12. By letter dated May 5, 1998, the property owner advised Respondent that it had hired another contractor to do the remedial work described in Finding No. 9 above due to Respondent’s delay in completing the requested corrective work. The property owner advised that the cost of having the subsequent contractor perform the repairs was $1,506.98, leaving a balance of $293.02 in retainage. The owner tendered a check to Respondent in the amount of $293.02 for the remaining balance. 13. It is determined that Respondent had been paid in full by the property owner for the electrical work performed by Complainant prior to the tender of the money described in Finding No. 12 above. Having been paid in full for the electrical work, and in the absence of any evidence that Complainant was still required to perform any additional repairs to its workmanship, Respondent had a duty to make the final payment to Complainant. Respondent is not entitled to withhold payment to Complainant because the property owner has retained funds for alleged workmanship deficiencies outside the scope of Complainant’s electrical work. 14. Respondent’s failure to pay Complainant for the electrical work after having received payment for that work from the property owner is a wrongful act which has substantially injured Complainant. Respondent’s failure to tender payment for an extended period of time is deemed a strong matter in aggravation. 15. There is no evidence of record to support a finding that Respondent failed to comply with a written directive issued by the Registrar of Contractors in this matter.

CONCLUSIONS OF LAW

1. The evidence of record is adequate to establish that Respondent has violated the provisions of A.R.S. § 32-1154 (A) (7) and (11). 2. The evidence of record is insufficient to establish that Respondent has violated the provisions of A.R.S. § 32-1154 (A) (23).

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class B- license be revoked on the effective date of the Order entered in this matter.

It is further recommended that if Respondent pays or tenders the sum of $1,139.91 to Complainant on or before the effective date of the Order entered in this matter, then the above-provided license revocation shall not take place, but instead that Respondent’s Class B-01 license shall be placed on suspension for a period of 5 days followed immediately by a period of disciplinary probation for 90 days. This alternative penalty shall commence, if at all, on the effective date to the Order entered in this matter.

Done this day, July 24, 1998.

______________________________________ BRIAN BRENDAN TULLY Administrative Law Judge

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

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

ATTN: Joyce Armijo

By ___________________________ -----------------------

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