ALJDEC

98F-2722-ROC · Registrar of Contractors · 1998-12-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 21, 1998

APPEARANCES: Complainant appeared through its president, Lon Slechta, and Respondent appeared through its president, Douglas Jeffrey. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

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. Complainant was the low voltage contractor selected and hired by the owner of a new custom home which was under construction at the time that Complainant agreed to install a central vacuum, security, stereo, and intercom systems in the home. Respondent was the general contractor on said new home construction project. 2. Complainant completed the work in question and contends that it has not been paid the balance due and remaining on his contract. Complainant further contends that Respondent is responsible for said payment. The facts surrounding Complainant’s claim are discussed in the findings below. 3. The following salient facts were adduced at the hearing and are important to note: a. Although Respondent was the general contractor on the new home construction project, the owner of the home, who also is involved in the construction industry, was a friend and business associate of Respondent. Therefore, Respondent had agreed to allow the owner to select many of the subcontractors that would perform work on the project. b. Respondent neither selected nor recommended Complainant to the owner of the home. In fact, Respondent’s president never met Complainant’s president until the day of the instant hearing. c. Complainant submitted its proposal to the owner of the home and when he approved the proposal, he advised Complainant that Respondent was the general contractor on the project, that all scheduling of the work would go through Respondent, and that all payments from the construction loan would be paid through Respondent. Thus, Complainant was instructed by the owner of the home to transmit a copy of the approved, but unsigned, proposal to Respondent and send all relevant future billings to Respondent. d. It is important to note that not only was there no written contract properly executed by Respondent for Complainant’s work but moreover, Respondent never signed the acceptance for the proposal prepared by Complainant. The proposal form shows that it was submitted to Tony Fiano (the owner of the home) and has Respondent’s name written above Tony Fiano’s name but not in the box identifying for whom the proposal was submitted. e. Complainant’s proposal document makes provision for a number of options which would increase the base price of the proposal. The owner of the home elected to take the options. Thus, the price for Complainant’s work was $6,950.00. In addition, after Complainant’s work on the project commenced, the owners elected to add several other items bringing the total for Complainant’s work on the project to $7,540.00. Respondent had no part in the decision making process referable to the options and extras accepted by the owner of the home. f. The applicable written and signed construction contract between Respondent and the owner of the home only provided the owner of the home with a $4,000.00 allowance for low voltage work in the home. g. The proposal submitted by Complainant provided for payment of ½ the contract price upon completion of the “rough-in” and the balance upon completion. Upon completing the “rough-in” of its work, Complainant submitted a billing to Respondent for ½ of the original contract price (including the options). Respondent, upon receiving the approval from the owner of the home, paid this billing ($3,475.00) from the owner’s construction loan proceeds. h. Upon competing the final trim work on the project, Complainant submitted the final billing to Respondent seeking the balance of the contract plus the approved extras. No payment was received and ultimately, Complainant filed the instant complaint with the Registrar of Contractors. 4. Respondent testified that at the end of the project it became involved in a major dispute with its now former friend and business associate (the owner of the home) and that said dispute involves, among other issues, Respondent’s claim that the owner has failed to pay the balance due on the contract in the sum of approximately $60,000.00. Respondent’s position in the instant case is that it only gave the owner an allowance of $4,000.00 for the low voltage work, that Complainant’s work was well in excess of said contract allowance, that Respondent did not approve or enter into any contract with Complainant, and that Respondent was merely acting as a conduit for the payment to Complainant, in the event that the owner approved release of funding to Respondent in order to pay Complainant. Thus, since there was no contract between Complainant and Respondent and Respondent did not receive sufficient funds from the owner to pay Complainant the contract balance, Respondent has refused to pay the claim asserted in the instant complaint. 5. The facts and circumstances presented herein are insufficient to establish any contractual liability for Respondent to pay Complainant the balance due for his low voltage work on the new home construction project, particularly in light of the failure of the instant record to establish that the owner of the home ever released any funding to Respondent earmarked to pay Complainant the balance due for completion of the low voltage work. The mere fact that Respondent was the general contractor on the project and had agreed to pay the owner’s subcontractors when sufficient funding was released to it, does not create a duty on Respondent to pay Complainant when the owner failed to release the funding necessary to pay Complainant for its work. Complainant failed to sustain the requisite burden of proof on this issue.

CONCLUSIONS OF LAW

1. The evidence of record did not sufficiently sustain a finding of violations by Respondent of the provisions of A.R.S. §32-1154A, as charged in the Citation. . . . . . . RECOMMENDED ORDER

Based on the foregoing, it is hereby recommended that this Citation, together with the Complaint upon which it is based, be dismissed.

Done this day, December 28, 1998.

_________________________________ MARK A. SILVER Administrative Law Judge

Original transmitted by mail this ____ day of December, 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