ALJDEC

98F-M1227-ROC · Registrar of Contractors · 1998-09-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 9, 1998. APPEARANCES: Jim Csontos appeared representing Sago Landscape & Design, Complainant. Mark Sifferman appeared representing JCI Construction, Respondent and holder of class B-01 license number 101346.

ADMINISTRATIVE LAW JUDGE: Kip M. Micuda _____________________________________________________________________ The hearing in this matter was held for the purpose of determining whether Respondent violated state law as alleged by Complainant and as cited by the Registrar of Contractors (“Registrar”). Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Decision are made:

FINDINGS OF FACT 1. Sago Landscape & Design, Complainant, is a landscaping subcontractor. 2. JCI Construction, Respondent, is a general contractor and holder of class B-01 license number 101346. 3. This matter arises out of a contract between the parties for landscaping services. Complainant’s claim is, in essence, for Respondent‘s failure to comply with the terms of the agreement by failing to pay sums due. 4. During the hearing in this matter, however, Respondent argued several contentions directed at demonstrating a reasonable basis for Respondent’s conduct; that is, demonstrating that a good faith dispute exists as to the amount owed, the work performed, and compliance with other indivisible contractual obligations. Accordingly, the parties were requested to present their cases by offers of proof in order to allow an initial determination of whether a good faith contractual dispute exists in this matter. 5. The preponderance of evidence presented by the offers of proof demonstrates that a good faith contractual dispute does, in fact, exist in this matter; that is, that a good faith dispute exists as to the amount owed, the work performed, and compliance with other indivisible contractual obligations.

APPLICABLE LAW Arizona Revised Statutes (“A.R.S.”) §32-1154A provides, in relevant portions, that a holder of a license or a person listed on a license shall not commit the following: 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. xxx 11. Failure by a licensee or agent of a licensee to pay monies in excess of seven hundred fifty dollars when due . . . . xxx 23. Failure to take corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving written directive from the Registrar.

With regard to the performance and payment by a contractor, subcontractor, or material supplier, §32-1129(C) adds: Nothing in this section prevents the contractor or subcontractor, at the time of application or certification to the owner or contractor, from withholding such application or certification to the owner or contractor for payment to the subcontractor or material supplier for unsatisfied job progress, defective construction work or material not remedied, disputed work, failure to comply with other material provisions of the contract, third party claims filed or reasonable evidence that a claim will be filed, failure of the subcontractor to make timely payment s for labor, equipment and materials, damage to a contractor or another subcontractor or material supplier, reasonable evidence that the subcontractor cannot be completed for the unpaid balance of the subcontract sum or a reasonable amount for retention not to exceed the initial percentage retained by the owner.

CONCLUSIONS OF LAW 1. To warrant action by the Registrar pursuant to the statutes above, Complainant must demonstrate by a preponderance of the evidence that Respondent violated any one of the statutes. Cf. Culpepper v. State of Arizona, 187 Ariz. 431, 437-38, 930 P.2d 508 (Ariz. App. 1996). Proof by “preponderance of the evidence” means that the evidence is sufficient to persuade the finder of fact that the proposition is “more likely true than not.” In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). It “is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (rev. 6th ed. 1990). 2. The preponderance of evidence presented by the offers of proof demonstrates that a good faith dispute exists in this matter as to the amount owed, the work performed, and compliance with other indivisible contractual obligations. Given that the administrative process, in the context of a disciplinary proceeding, was never intended to be a collection process for contractors, and that the process is ill-equipped to adjudicate matters such as those presented here, cf. §32-1129(C), no conclusion is made that Respondent violated §§32-1154(A)(7), (11), and (23).

RECOMMENDED DECISION In view of the foregoing, it is recommended to the Director that the Citation and Complaint issued in this matter be dismissed without prejudice. Done this day, September 9, 1998.

_________________________________ Kip M. Micuda Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 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