ALJDEC

98F-3027-ROC · Registrar of Contractors · 1998-12-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 23, 1998 APPEARANCES: Complainant was represented by its attorney, Dennis Wilenchik and Respondent was represented by its attorney, Steven Hirsch. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

The instant matter involves what is typically characterized by the Registrar of Contractor’s office as a “no-pay” complaint. In fact, the complaint filed in this matter by Complainant merely avers that the complaint involves “non-payment of contract.” The Complaint appears to be signed by Complainant’s qualifying party, who is also an attorney. Respondent filed a motion to dismiss the complaint before the Registrar of Contractors based primarily on the fact that there is currently pending a companion civil court case, filed by Complainant in the Superior Court, seeking recovery of monies claimed due and owing from Respondent. A counterclaim has been filed in said civil matter by Respondent, asserting a defense to Complainant’s claim that monies were not paid when due, based on allegations that Complainant breached the applicable contract, failed to comply with contractual conditions precedent to payment and Respondent’s claim that it is entitled to specified offsets against the sums sought by Complainant.. Respondent asserts that the instant matter should be dismissed in the interest of judicial economy and in light of the Registrar of Contractor’s long-standing history of deferring “no-pay” disputes, involving a good faith defense to payment, to the courts. Complainant filed opposition to the motion and Respondent filed a reply to Complainant’s opposition. Due to the nature of the motion and opposition, this Tribunal determined that a threshold issue existed which required oral argument in order to decide the issue. Therefore, the parties appeared on the above-referenced date for the purpose of presenting oral argument on the motion, along with the presentation of respective offers of proof. Complainant relies upon the case of J.W. Hancock Enterprise, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 690 P.2nd 119 (App. 1984), as the authority for the Registrar of Contractors adjudicating and determining the issues set forth in the instant complaint. Unlike the Hancock case, where there was no pending identical civil court action at the time of entry of the administrative decision by the Registrar, Complainant has already filed a case in the Superior Court seeking a monetary award for the alleged failure of Respondent to pay for services rendered pursuant to contract. The court in Hancock, states at p. 406 “that the construction of disputed contractual terms...may constitutionally be exercised by the Registrar ancillary to its regulatory function.” (emphasis added). Regardless of Complainant’s protestations to the contrary, based upon the offers of proof submitted, it appears that the instant case involves a money dispute for alleged non-payment under a contract, wherein Respondent is asserting a good faith defense to payment. Respondent is correct in asserting, under the facts and circumstances of the pending civil court action arising out of the same facts and circumstances, that the Registrar should defer the primary jurisdiction for such a money dispute to the Civil Court. Respondent is further correct in stating that the Registrar of Contractors has had a long-standing “hands-off” policy in those cases brought before it where there is a determination that the matter at issue only involves a bona fide monetary dispute between the parties. Based upon the arguments and offers of proof presented, it appears that the instant matter is, in fact, a classic “no-pay” case, wherein Respondent has presented by offers of proof an apparent good faith defense to payment of the monies sought by Complainant. In such circumstances the Registrar of Contractors should not be vested with primary jurisdiction to adjudicate and liquidate the amount of money, if any, that may be due Complainant and that the primary jurisdiction to determine said issue is more appropriately vested in the Superior Court. As further support for the determination that the instant matter should be dismissed, it is important to note that Respondent filed a complaint, with the Registrar of Contractors, against Complainant (Registrar of Contractors complaint no. 98-3182). Respondent’s complaint was filed within a matters of days subsequent to the filing of Complainant’s complaint. Notwithstanding the fact that Respondent’s complaint does not refer to “non-payment” but instead sets forth a claim of “breach of contract, performance, workmanship...”, the Registrar of Contractors closed the complaint stating: “…this remains…a disputed money amount and, as such, it is not within my jurisdiction.” Thus, for consistency purposes, as well as for the reasons set forth above, the Registrar of Contractors should rule in a similar manner in the instant case. In light of the foregoing, it is hereby recommended that this Citation, together with the complaint upon which it is based, shall be dismissed. Nothing in this ruling should serve to prevent Complainant from re-filing the instant complaint with the Registrar of Contractors subsequent to having the money dispute adjudicated and liquidated in the aforementioned Superior Court case. Done this day, December 31, 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