ALJDEC

98F-M1023-ROC · Registrar of Contractors · 1998-09-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 21, 1998

APPEARANCES: Complainant appeared through its authorized employee, Salvador Encinas.

Respondent appeared through its President, Annette Magnussen.

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. Pursuant to a verbal subcontract, Complainant agreed to and did perform drilling work as part of a project on which Respondent was serving as general contractor. The work consisted of providing a drilling rig together with employees to operate same.

2. The contemplated subcontractual work involved the drilling by Complainant of six holes, each to a depth of 45 feet. However, due to numerous soil condition problems encountered on the jobsite, Complainant was not permitted to complete the

work but instead its further services on the project were terminated by Respondent after four consecutive days.

3. Following its having furnished equipment and drilling labor on the jobsite for the four-day time period, Complainant transmitted an invoice to Respondent based upon the total number of work hours, adjusted to include travel time but to exclude unproductive time not traceable to other trades or to Respondent. The submitted invoice, utilizing a rate of $185.00 per hour for 33.5 net hours of work, was in the total amount of $6,197.50.

4. No monies were paid by or on behalf of Respondent for a prolonged time period, after which the parties entered into settlement talks. Despite a failed mediation effort after the filing of the within complaint as well as after the commencement of a civil lawsuit, the parties did conclude what appeared to be an overall settlement of their respective claims and offsets. The mutually agreed sum was $4,350.00, a lesser amount than was set forth in the submitted invoice.

5. Complainant was made aware that the source of the agreed payment would be from funds payable by the project's owner to Respondent, confirming this understanding by the mutual signing and exchanging of a joint payment authorization form and a conditional lien release. Neither document made reference to any deadline date for the actual transmittal of the payment, thereby implicitly requiring a tender within a reasonable time span.

6. Less than one day after the parties purportedly had concluded their settlement and had exchanged the signed forms, Complainant communicated a rejection of any agreement based upon the Respondent's failure to comply with an assertedly applicable time deadline for delivering payment. In the same communication, Complainant also stated its intent to pursue the pending civil litigation, seeking to collect not only the original invoice price but also additional charges, fees and costs. It must be noted that the formal complaint filed in this administrative disciplinary action expressly set forth the invoice amount as the sum allegedly past due

and owing, and any potential entitlement to seek a greater sum must be established, if at all, only as part of the successful pursuit of civil remedies.

7. A separate check from the project's owner issued on behalf of Respondent, in the amount of $4350.00 and made payable solely to Complainant, was sent by mail and received by Complainant approximately seven weeks after the purported agreement had been made and the attempted rejection had been communicated. Such tendered check was never negotiated and still remains in the possession of Complainant.

8. Both the testimonial and the documentary evidence offered on behalf of the parties were sharply conflicting, with no valid basis found to exist for the disbelief of either party's version. This conflict extended to the value of the Complainant's underlying partial work performance on the project, bearing upon the monetary total properly payable, as well as to the exact terms of the subsequent settlement agreement, especially with respect to the inclusion of any assertedly applicable deadline date for transmitting the agreed monetary sum.

9. There was little doubt that the respective positions of the parties, as presented at the hearing, confirm that the monetary amount claimed past due and owing to Complainant is subject to a dispute, the grounds for which cannot be held to be unreasonable or arbitrary on the part of Respondent. Also disputed was whether or not Respondent's payment obligation under the subsequent settlement agreement was made subject to a near immediate time deadline. Nothing in Complainant's evidence or testimony serves to dispel the fact that a dispute exists between these parties, and no element of Respondent's bad faith in asserting such dispute may reasonably be inferred. Since the Registrar of Contractors is not statutorily empowered to adjudicate and award money damages, no violation of the code sections charged in the Citation would be supportable unless and until the amount claimed due is liquidated and reduced to a sum certain by a judgment of a civil court of competent jurisdiction. In the event that any final judgment in excess of the already tendered amount of $4,350.00 is obtained in favor of Complainant and is not satisfied by Respondent, in whole or in part, another separate disciplinary complaint may properly be filed with the Registrar of Contractors.

10. Based upon the demonstrated bona fide dispute as to the monetary amount, if any, properly owing to Complainant by Respondent, the instant claim for $6,197.50, as set forth in the complaint filed with the Registrar representing the allegedly unpaid and past due subcontract balance, must be held not to constitute a liquidated sum which is an essential element for any finding that Respondent failed to pay monies when due within the purview of the State's contracting laws. Moreover, this administrative tribunal is certainly not the appropriate forum for seeking and obtaining additional sums to which Complainant may be entitled, such as interest, court costs or attorney fees.

11. Nothing in this decision is intended to constitute a determination as to validity of claims for unpaid contract balances, legitimate set-offs, justifiable back-charges or potential counterclaims. Nor is any determination made with respect to the exact terms of the parties purported agreement of accord or the timelines of the tendered payment that was ultimately made. These determinations must properly be made by the civil tribunal as part of the already-commenced civil lawsuit, since such court is the more appropriate forum for the resolution of this monetary dispute. Stated alternatively, the termination of the instant administrative proceeding shall be expressly without prejudice to the civil pursuit by the respective parties of their rights, defenses, set-offs or counterclaims, with the exception of one of the charged contracting law violations discussed in the following Finding of Fact.

12. It did appear from the case file, and it was also admitted during the hearing testimony of both parties, that no written directive had been issued by the Registrar's assigned Inspector requiring the payment by Respondent of any sum certain to Complainant. The wording of a form letter seeking to prompt Respondent to resolve the filed claim, if valid, cannot be equated with the issuance of an order for specific remedial action. The absence of any definitive monetary determination and directed payment action in the Inspector's letter would serve to generate no duty of compliance by Respondent and provides no basis for supporting a finding of any violation of A.R.S. §32-1154A(23) or even for having included this charge in the Citation. This charged violation should appropriately be dismissed with prejudice.

CONCLUSIONS OF LAW

1. The demonstrated existence of a bona fide monetary dispute between the parties generates an inability for Complainant to adequately prove that Respondent either had failed to pay a liquidated amount of money when due or had committed any wrongful act to the financial detriment of Complainant, and the evidence of record failed to indicate the issuance of a valid written agency directive requiring Respondent’s compliance by paying a sum certain to Complainant. Consequently, the evidence of record does not support a conclusion that Respondent has violated any of the provisions of A.R.S. §32-1154(A), as charged in the Citation.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the Registrar of Contractors enter his Order dismissing the charged violation by Respondent of A.R.S. §32-1154A(23) with prejudice and dismissing the balance of the charges and allegations contained, respectively, in the Citation and Complaint issued in Case Number M98-1023 without prejudice to the rights of the named parties to continue to assert and pursue their respective claims, counterclaims, defenses and set-offs in another, more appropriate forum.

Dated: September 28, 1998.

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

Office of Administrative Hearings 1700 West Washington, Suite 602 Phoenix, Arizona 85007 (602) 542-9826