ALJDEC

98F-A0024-ROC · Registrar of Contractors · 1998-03-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 12, 1998. APPEARANCES: The Complainant appeared through its owner and qualifying party, Daniel Wiggins. Respondent appeared through it vice- president and qualifying party, Mark Temple. 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

Complainant had been Respondent’s exclusive drywall subcontractor for two years prior to June 9, 1997, when the parties ceased their business relationship. In May of 1997, Respondent began getting inquiries from other drywall contractors interested in bidding for Respondent’s drywall work. Respondent subsequently received bids from interested subcontractors which were lower than Complainant’s bids. Respondent asked Complainant to pick up the pace of its jobs and to get its prices competitive if it wanted to continue to do Respondent’s drywall work. On one project, Complainant had submitted a bid to Respondent based on plans which was significantly higher than another subcontractor’s bid. Respondent contacted Complainant to see if it wanted to go to the jobsite, take field measurements and submit another bid. Complainant declined the offer. It requested the opportunity to match the lowest bids received by Respondent for future work. Respondent declined the offer. On or about June 9, 1997, Respondent terminated its business relationship with Complainant because the parties’ two year relationship had deteriorated badly. Following the termination, Complainant submitted seven invoices to Respondent totaling the sum of $800.00 for work it had previously performed for Respondent between October of 1996 to June of 1997. Complainant advised Respondent that it would not perform any warranty or repair work until paid in full. Respondent has timely paid Complainant in the past for work performed as its subcontractor. On or about July 20, 1997, Complainant filed a complaint against Respondent with the Registrar of Contractors as a result of Respondent’s failure to pay the submitted invoices. By letter dated July 28, 1997, Respondent advised Complainant that it disputed portions of the invoices. Respondent did not deny that it owed Complainant the sum of $650.00. However, Respondent stated that there was warranty work required to be done at two projects which were Complainant’s responsibility. Complainant was offered the opportunity to perform the warranty work, notwithstanding its prior statements to Respondent that it would not do any such work until it received full payment for the invoices. Respondent informed Complainant that if it did not perform the warranty work, then Respondent would hire another subcontractor to do the work. If it became necessary to hire another subcontractor, Respondent indicated that it would pay for that work out of the retained money. By letter dated August 5, 1997, Respondent filed its Answer to the Complainant’s filed complaint. Respondent acknowledged that the parties had a monetary dispute and stated that it was retaining funds owed to Complainant due to Complainant’s prior refusal to perform warranty work on two jobs. Respondent indicated that a portion of the retained funds would be used to hire another subcontractor to perform the required warranty work and that it would then deduct that expense from the balance owed to Complainant. By letter dated September 26, 1997, Respondent advised Complainant that it had paid another drywall contractor to perform the warranty work that Complainant had refused to perform. Respondent offered to tender payment to Complainant in the amount of $417.50, representing the amount of $650.00 that Respondent agreed was owed to Complainant less the sum of $232.50 paid out in warranty work for Complainant’s two jobs. It is determined that a bone fide monetary dispute exists between the parties. The official records of the Registrar of Contractors indicate that Complainant, a sole proprietorship of Daniel William Wiggins, is the holder of License No. 123497, a Class C-10 drywall license. That license was issued by the Registrar of Contractors on May 9, 1997. Complainant is found to have performed most, if not all, of the work subject to these proceedings while it was an unlicensed contractor. Such work required that a properly licensed contractor perform the work. The Registrar should determine if any disciplinary action against Complainant for its unlicensed contracting is appropriate. It is determined that Respondent improperly contracted with Complainant for approximately two years prior to Complainant obtaining its Class C-10 license on May 9, 1997. Respondent was required to use a licensed drywall subcontractor on most, if not all, of the projects that Complainant seeks payment from it. The Registrar should investigate this matter to determine if any additional disciplinary action against Respondent is warranted. Complainant is deemed to have unclean hands in prosecuting its complaint against Respondent with the Registrar of Contractors. Complainant was not a licensed contractor when it performed most, if not all, of the work for which it seeks payment from Respondent. Complainant was properly licensed at the time it filed its complaint. However, Complainant should not be permitted to prosecute a disciplinary action initiated by a monetary dispute for work it performed as an unlicensed contractor who was required to be licensed at the time. During the hearing Respondent’s vice-president and qualifying party stated that Respondent did $1,700,000.00 gross volume of work in 1997. A review of the official records of the Registrar of Contractors indicates that Respondent has posted a total bond in the amount of $10,000.00. It would appear that Respondent is under bonded. The Registrar should determine if Respondent needs to increase its bond.

CONCLUSIONS OF LAW

A.R.S. ( 32-1153 does not permit a contractor to commence or maintain any judicial action for collection of compensation for the performance of work for which a contractor’s license is required without alleging and proving that it possessed the required license when the contract sued upon was entered into and when the alleged cause of action arose. Since most, if not all, of the contracts and debts claimed by Complainant arose prior to its obtaining the required contractor’s license, it should not be permitted to attempt collection of compensation for that work in these administrative proceedings when Complainant is otherwise prohibited from doing so in a civil judicial action. Complainant may commence or maintain a civil action before a court of competent jurisdiction against Respondent for any unpaid licensed work if Complainant can satisfy the prerequisites of A.R.S. ( 32- 1153. The evidence of record is insufficient to establish that Respondent has violated the provisions of A.R.S. § 32-1154 (A)(7), (11) and (23) as charged in the Citation and Complaint.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the Citation and Complaint in this matter be dismissed.

It is further recommended that the Registrar of Contractors review Findings No. 13, 14 and 16 to determine if additional disciplinary actions are warranted against the Complainant and Respondent. Done this day, March 19, 1998.

________________________________ BRIAN BRENDAN TULLY Administrative Law Judge

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

Mr. 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