ALJDEC

98F-2610-ROC · Registrar of Contractors · 1999-05-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 4, 1999.

APPEARANCES: Complainants appeared through Dr. Joseph Guida.

Respondent appeared through its qualifying party, Robert Thayne Packer.

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. At the outset of the scheduled hearing, the Citation in this case was amended to conform more accurately to the specific allegations of the filed complaint and to conform to the proof to be introduced by Complainant so as to include an additional charged violation by Respondent of the provisions of A.R.S. §32-1154A(11) consisting of an alleged failure to pay monies when due to a third-party materials supplier.

2. At all times material herein, Respondent was the holder of a Class C-10 license number 109569 issued by the Registrar of Contractors on September 25, 1995. The evidence was inconclusive with respect to whether or not this license is current or if it has expired.[1]

3. Complainant served in the capacity of an owner-builder of his residence, replacing a previously hired general contractor or construction manager who had subcontracted with Respondent for the drywall portion of the overall construction.

4. It was not effectively disputed that the total subcontract price for the contemplated work was $12,900.00. A subsequent amendment or change resulted in an increase to the agreed price of $3,300.00, and another increase of $1,000.00 was also agreed upon so as to reflect the added cost of materials between the presentation of the original bid and the start of construction. Nor was it disputed that Complainant has transmitted two separate payments to Respondent in the combined amount of $11,000.00 against the amended subcontract price of $17,200.00, leaving an unpaid balance of $6,200.00.

5. Although the start of the parties’ relationship was smooth and productive, there was a significant deterioration in such relationship as the job progressed. These difficulties ultimately resulted in the termination of Respondent’s services shortly prior to the end of the agreed work performance at a time when a significant portion of the contractually agreed work had been completed. Complainant induced Respondent to execute an unconditional lien waiver effectively acknowledging that no further contract payments would be made.

6. Respondent somewhat understandably believed that his execution of the aforesaid unconditional lien waiver reflecting that no further contract payments would be payable had effectively resulted in the termination of the parties’ arrangements, with each side “walking their separate ways” without further obligations or entitlements. However, from the point of view of Complainant, equally understandably, no waiver or release other than to the contract balance was generated or intended, especially relating to Respondent’s ongoing responsibility for corrective or warranty work. In any event, it is determined that the impact and legal effect of the signing of that lien waiver, the Respondent’s ability to collect all or part of the unpaid contract balance and/or the Complainant’s entitlement to recoup monetary losses, if any, resulting from rectifying and completing drywall work through others are all matters more appropriately reserved for resolution by way of a civil court action at which the various respective claims, counterclaims, set-offs, waivers and releases may be asserted and adjudicated.

7. A portion of the within complaint related to the Respondent’s non- payment of an alleged indebtedness to a supplier. This item of complaint is found to be properly assertable by Complainant who, as the property owner affected or impacted by any proven failure to pay, would have standing to pursue this administrative remedy. However, the evidence and testimony adduced at the hearing to establish the validity and/or amount of any such claimed arrearages was inconclusive, thereby resulting in Complainant’s inability to prove a liquidated (sum certain) amount past due and owing which is an essential element of the charged contracting law violation, added by amendment hereunder.

8. Merely showing that requests or demands for payment have been made by a third party, not present and testifying under oath at the hearing, does not establish the validity of such claim, nor does a threatened lien action, even if timely and legally permissible, sufficiently demonstrate the existence of any genuine indebtedness. On

the contrary, the credible testimony at the hearing indicated that the entire total amount of the initial payment from Complainant in a substantial amount equal to one-half of the entire amended or adjusted contractual price was transmitted by Respondent, immediately upon its receipt, to that same supplier. Such sum was shown to have been significantly in excess of that supplier’s charges attributable to those materials that had been furnished to the project at Complainant’s property. Any unilateral election by the creditor to apply all or part of such payment to other potential indebtedness of Respondent instead of to the billings directly applicable to Complainant’s jobsite would appear to be somewhat arbitrary and, in any event, would not support a finding that Respondent failed to pay monies when due for materials furnished on this residential project.

9. It was not effectively disputed that numerous aspects of the drywall work at scattered locations were and are still substandard and unacceptable according to prevailing industry tolerances. These deficiencies, left uncorrected for more than a reasonable time period after notice, reflect adversely upon Respondent’s workmanship. Examples of these workmanship violations are the uneven or irregular application of materials along a glue-lam beam, an unsightly paneling effect at several cove joint locations at or near the ceiling, numerous nail pops that have become visible, the drywall treatment around windows, and some extent of damage to a few windows as well as to some electrical wiring resulting from Respondent’s failure to adequately protect household features during the drywall work on adjacent or nearby areas.

10. Credible testimony tended to demonstrate that numerous telephone calls were made and letters were written by Complainant to Respondent for the purpose of requesting the prompt performance of further corrective work without receiving timely responses. Complainant ultimately retained the services of other licensed contractors to rectify some but not all of the more observable deficiencies in an understandable

effort to enable the closing of pending loan arrangements and the occupancy of the structure.

11. Administrative remedies are not lost by resorting to other sources for the accomplishment of corrective work on those items or areas that are substandard after having afforded the original contractor a reasonable opportunity to repair reported construction deficiencies. However, Complainant stated at the hearing that he was seeking monetary compensation from Respondent for certain damages arising out of the latter’s acts or omissions in discharging the subcontract, including the charges billed by and paid to the successor contractors for portions of the necessary corrective work. Complainant was also seeking payment for sums representing an alleged penalty for prolonged periods of Respondent’s non- appearance on the jobsite and for additionally incurred bank interest charges.

12. Neither the Registrar of Contractors nor the Office of Administrative Hearings are an appropriate forum in which to obtain an adjudication and award of the above-described items of possibly recoverable damages to the property owner. Similarly, any claims for restitution of the monetary costs incurred in partially correcting areas of deficiency in the drywall application must by sought by pursuing available civil court remedies at which time any and all claimed damages in excess of the outstanding subcontract balance, if any, may be fully asserted and defended against.

13. The facts and circumstances of this case are determined not to warrant the inclusion of any corrective work conditions in the Order to be entered herein in light of the case history, the deteriorated relationship of the parties and the likelihood of repeated compliance inspections as well as potential limited hearings or rehearings.

CONCLUSIONS OF LAW

1. The evidence of record adequately established that Respondent was in violation of the provisions of A.R.S. §32-1154A(7) and (3); namely, Rule R4-9-108. However, no violation by Respondent of A.R.S. §32-1154A(11), the charge added by amendment, was sufficiently proven hereunder.

RECOMMENDED ORDER

In view of the foregoing, and in light of the inconclusive evidence with respect to Respondent’s present license status, alternative recommendations are deemed appropriate.

In the event that Respondent’s Class C-10 license has, in fact, expired, and treating its ongoing contracting activities while so suspended by operation of law as a matter in aggravation, although not specifically charged in the within Citation, it is recommended that the license be revoked on the effective date of this Order.

In the event that Respondent’s license has not expired or is otherwise restored to a current status, it is recommended that Respondent’s Class C-10 license be suspended for a period of 90 days of which only the first 15 days shall be active license suspension and the remaining 75 days shall be in the nature of disciplinary probation.

Dated: May 14, 1999. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert. I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

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

ATTN: Joyce Armijo ----------------------- [1] Although a print-out reflecting the status of Respondent’s license indicated that it has expired as of August 31, 1998 (thereby also indicating it must have been suspended for non-renewal since one year prior to such expiration date), Respondent claimed not only to be wholly unaware of any expiration or delinquency but also produced his most recent license card specifically showing that his license was current and was effective until August, 1999.

-----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826