ALJDEC

99F-1407-ROC · Registrar of Contractors · 1999-07-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 28, 1999 APPEARANCES: Complainant appeared on his own behalf and Respondent was represented by its attorneys, John Ryan and Douglas Grier. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record in this matter, the following Findings of Fact, Conclusions of Law, and Recommended Order are made:

FINDINGS OF FACT

1. Pursuant to written contracts, Complainant agreed to provide the framing and drywall work on the new home construction project wherein Respondent was acting in the capacity of general contractor. The framing contract was for a total of $36,500.00 and the drywall contract set forth a contract price of $12,000.00. 2. The following salient facts were adduced at the hearing and are important to note: a. Complainant commenced work on the framing part of the project on or about January or February 1998. In this regard the original progress payment invoice in the amount of $25,550.00 was submitted to Respondent in February 1998 and paid by Respondent. A subsequent progress payment in the sum of $7,300.00 was submitted and paid by Respondent in March 1998. The remaining unpaid balance on this written contract is $3,650.00. b. Complainant performed the drywall work and on the drywall contract he has been paid a total of $8,000.00, leaving an unpaid balance of $4,000.00. c. It was undisputed that there was one written change order executed between the parties on the drywall contract and said change order was for the sum of $560.00. This demonstrates that the parties were well aware of the need to place any changes or extras into a written change order. This sum has not been paid to Complainant. Thus, the total unpaid amount on the above-described contracts, including the one written change order, was shown to be $8,210.00. d. The working relationship and lines of communication between the parties broke down after the original progress payments on the project were paid by Respondent. Sharply conflicting testimony was presented by the parties regarding the cause of the breakdown of their working relationship. Respondent contends that there were numerous deficiencies in Complainant’s work, that Complainant failed to appear at the jobsite as required on numerous occasions, that Complainant failed to respond in a timely manner to punch- list work, and that Complainant failed to appear at scheduled jobsite meetings to discuss problems on the job. Complainant denied these allegations. e. Evidence of record established that there were numerous punch- lists prepared by Respondent referable to Complainant’s work on the framing and drywall work. These punch-lists were not shown to be unreasonable or unfounded. Ultimately after Respondent received no response to a twenty- four hour demand letter (for remedial work), it started making arrangements with others to complete and repair Respondent’s work. In this regard, Respondent contends that it incurred specified costs and claims entitlement to the total sum of $8,485.70 for back-charges against Complainant. The total sum of these back-charges was shown to be $275.70 higher than the balance unpaid on the two written contracts and the one written change order executed with Complainant. f. Complainant filed the instant complaint with the Registrar of Contractors claiming that Respondent not only owes the balance due on the two contracts (including the one written change order) but in addition claims entitlement to payment for specified verbal changes or extra costs that it incurred in working on the project. 3. Although the instant record demonstrated that Complainant responded, albeit sometimes very belatedly, to the requests for remedial work in Respondent’s numerous punch-lists, the weight of the evidence of record was sufficient to support a finding that he failed to correct all of the deficiencies in the framing and drywall work. 4. It was shown that Complainant’s failure to timely respond to the requests for remedial work had a very deleterious effect on Respondent’s ability to adhere to the construction schedule and have the project completed on time. Thus, under all of the facts and circumstances presented herein, it is determined that Respondent’s decision to look to others, after Complainant failed to respond to the aforementioned twenty- four hour demand letter requiring attention to specified framing errors, justified Respondent’s decision to have the project corrected and completed by others. 5. Sharply conflicting testimony was presented by the parties regarding the issue of Complainant’s claimed entitlement to certain extras. The contract between Respondent and the homeowner was a “cost-plus” contract and Respondent indicates that if any changes were necessary it would have simply passed the costs of such “extras” on to the homeowner. The instant record is inadequate to support Complainant’s claim for any perceived extras or changes that were not part of a written document. Thus, Complainant failed to sustain the requisite burden of proof on the issues of extra costs that it may have incurred or verbal changes. 6. The evidence of record adequately demonstrated that a dispute exists between the parties regarding what, if any, amount of money is due and owing to Complainant from Respondent. Respondent’s position in this dispute is found under all of the circumstances to have been asserted in good faith and therefore, precludes a finding that a liquidated sum is owed to Complainant. . . . . . . CONCLUSIONS OF LAW

1. The Registrar of Contractors, acting through an administrative disciplinary hearing, is not empowered by law to adjudicate amounts alleged to be due and owing in the face of a good faith dispute on such amounts. Until and unless any claimed obligation is reduced to judgment by a civil court of competent jurisdiction, no violation by Respondent of the provisions of A.R.S. § 32-1154A (11) can be supported. Complainant failed to sustain the requisite burden of proving the existence of a valid liquidated debt properly due and owing by Respondent and thus, has not sustained the burden of proving that Respondent has committed the violations charged herein. 2. The evidence of record was inadequate to support any finding of a violation of A.R.S. § 32-1154A (7).

RECOMMENDED ORDER

In view of the foregoing, it is recommended that this Citation, together with the Complaint upon which it is based, shall be dismissed.

Done this day, August 2, 1999.

______________________________________ MARK A. SILVER Administrative Law Judge

Original transmitted by mail this ____ day of August, 1999, to:

Michael P. Goldwater Registrar of Contractors ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826