ALJDEC

98F-2592-ROC · Registrar of Contractors · 1998-09-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 10, 1998 APPEARANCES: Ray Moyers, Superintendent SCP Construction, on behalf of the Complainant Fred Porter, Program Manager, on behalf of the Respondent ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________

FINDINGS OF FACT The parties entered a contract in January, 1997, whereby the Complainant would do certain concrete work for the Respondent on a commercial building being constructed by the Respondent. Under paragraph nine of the contract, any additional work requiring additional payment must be in writing, via a change order, approved and signed. Under the proposal, which preceded and became part of the contract, the removal of excavated and graded spoils from the project site was excluded from the Complainant’s scope of work. Subsequently, the parties verbally entered a supplementary contract for additional work which called for the over excavation and re-compacting of areas where three additional concrete slabs were to be poured. The over excavation was to be to a depth of two feet below the bottom level of the concrete which was to be 18 to 20 inches thick. Due to various problems, work fell behind schedule and in early July, 1997, the Respondent’s Project Manager, Fred Porter (Porter), contacted the Complainant’s Superintendent, Ray Moyers (Moyers), to discuss ways of getting back on schedule. On or about July 9, 1997, the parties agreed that rather than re-compacting the over excavated areas, rock could be used to fill them in and then the concrete could be poured. The parties agreed that there would be no additional cost for this change. By a verification of the proposal from the Complainant to the Respondent dated July 17, 1997, but received on July 14, 1997 by the Respondent, the Complainant set forth the scope and cost of the supplementary contract. This proposal also had the exclusion for the removal of excavated and graded spoils from the project site. At the time the verification of the proposal was sent and received, the work had already been done. If the excavated soil had been re-compacted, possibly 40% would have been used. Additionally, some of the excavated soil is used to fill in and build up around the foundation. The soil which remained from the excavation amounted to 247 cubic yards. On or about August 1, 1997, Porter contacted Moyers and told him it was necessary to dispose of the excess dirt. The specifics of this conversation are sketchy, with Moyers recalling he told Porter the removal was not within the scope of the contract, and Porter responding that the dirt had to be removed. The parties agree there was no discussion regarding specific costs for removal. The Complainant removed the dirt and submitted a bill in the amount of $6,814.00 for labor and equipment costs plus dumping fees. The amount was not challenged by the Respondent. The Respondent submitted the bill to the owners who refused to pay and the Respondent in turn did not pay the Complainant. The instant complaint was filed with the Registrar of Contractors (Registrar), on April 14, 1998. CONCLUSIONS OF LAW The Citation and Complaint allege violation of A.R.S. §32-1154(A)(7), wrongful or fraudulent act with substantial injury, and (11), failure to pay amounts in excess of $750.00 for materials or services rendered. In the absence of specific agreement as to which party is responsible for the cost of the removal of the dirt, other factors must be considered in reaching a conclusion. The factors are: The January, 1997 contract between the parties excluded the removal of dirt from the Complainant’s scope of work. The July, 1997 verification of the proposal for the supplementary contract had the same exclusion. The Respondent had received the verification of the proposal for the supplementary contract prior to the time of the discussions between Porter and Moyers regarding the removal of the dirt. The Respondent knew at the time Porter told Moyers to get rid of the dirt that the Complainant had excluded the removal of the dirt from the scope of work in the supplementary contract. Based on the discussion between Porter and Moyers, even though no specific price term was mentioned, it was, or at least should have been reasonably clear that Complainant was not going to assume the cost for the removal of the dirt and this would be the responsibility of the Respondent. The provision in paragraph nine of the original contract of January, 1997, which required any cost for additional work to be in writing does not control this later supplementary contract which was entered into and executed based on an oral agreement and a subsequent verification of the proposal. The Respondent paid on this supplementary contract even though it did not meet the requirements of paragraph nine. In short, the Complainant performed at the direction of Porter who is charged with the knowledge that Complainant’s performing would result in a reasonable cost to the Respondent. Equitable and legal doctrines of quantum meruit, unjust enrichment and restitution could also be applied to the instant case. Further discussion under the facts of the case is not deemed necessary. The violation of A.R.S. §32-1154(A)(11) is proven. The facts do not support a violation of A.R.S.§32-1154(A)(7). 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 B-01 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 Six Thousand-Eight Hundred- Fourteen ($6,814.00) Dollars; It is further recommended that if the Respondent pays or tenders payment on or before the effective date of the Order entered in this matter, then the aforementioned . . . license suspension shall not take place and the Citation and Complaint upon which it is based shall be closed. Done this day, September 15, 1998.

_________________________________ ALLEN REED Administrative Law Judge

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

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