ALJDEC

99F-1777-ROC · Registrar of Contractors · 1999-08-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 17, 1999. APPEARANCES: COMPLAINANT: by Larry Leonard, vice-president, qualifying party and authorized representative; and Linda Leonard, president. RESPONDENT: by Sandy Lake, qualifying party and authorized representative.

ADMINISTRATIVE LAW JUDGE: Anthony Halas _____________________________________________________________________ This matter proceeded to hearing on August 17, 1999, to determine whether Respondent violated state law as alleged by Complainant and as cited by the Registrar of Contractors (Registrar). Based on the testimony and evidence of record, and administrative notice of certain events and documents, the following Findings of Fact, Conclusions of Law, and Recommended Decision are made:

FINDINGS OF FACT 1. Complainant L A Development Inc. (L A Development) is a licensed Arizona contractor; Larry Leonard (Leonard) is an officer of the corporation, qualifying party, and the authorized representative who testified on Complainant's behalf at the hearing in this matter. Linda Leonard (Ms. Leonard) is corporate president, and also provided testimony. 2. Respondent Western Terrain Enterprises LLC (Western Terrain) is holder of Arizona contractor’s license No. 111759, Class C-37R; Sandy Lake (Ms. Lake) is a corporate officer, qualifying party, and the authorized party who provided testimony at hearing for Respondent. 3. On December 9, 1998, Complainant filed a complaint with the Registrar of Contractors alleging that Respondent had failed to pay under a contract; abandoned that contract; committed a wrongful or fraudulent act resulting in substantial injury to Complainant; and had knowingly contracted beyond the scope of its license. 4. By correspondence filed with the Registrar on December 28, 1998, Ms. Lake responded for Western Terrain to assert that no contract had been made, only proposals. 5. When the matter was not resolved administratively, the Registrar then issued CITATION AND COMPLAINT in Case No 99-1777 on March 19, 1999, charging Respondent with possible violations of A.R.S. §§ 32-1154.A. 7, .11, and .17. 6. Respondent did not timely answer the CITATION AND COMPLAINT, so the Registrar issued a default DECISION AND ORDER on April 13, 1999; however, based on Respondent’s subsequent correspondence, the Registrar GRANTED PETITION FOR REHEARING on May 13, 1999, and issued NOTICE OF REHEARING on June 4, 1999, setting rehearing for August 17, 1999. 7. At that hearing, in addition to the testimony of Leonard and Ms. Leonard, Complainant also offered Exhibits A through D, which were marked and admitted, without objection. 8. On the basis of the testimony and evidence presented, and administrative notice of the procedural history herein, before any disciplinary action should be considered by the Registrar, it must be determined whether the parties created a valid and enforceable contract and are therefore subject to the Registrar’s jurisdiction. 9. In that regard, the essence of Complainant's position is that in March 1998, it did contract with Respondent to perform certain actions, some of which it did perform, in excavating/constructing footings for the foundations necessary for the installation of three adjacent manufactured homes in the vicinity of 239th Avenue and Patton, in the west Phoenix metro area. 10. In support of Complainant's assertion that a valid contract was made, Leonard testified that he was first telephoned in mid to late January, 1998, by Bill Blanchard (Blanchard) on behalf of Western Terrain, with no mention made by Blanchard then or later that he was acting only as an agent for the owner of the manufactured homes. 11. Leonard stated that on January 27, 1999, Blanchard then faxed the floor plans (Exhibit A) of the three homes (two of which were 24’ x 56’, while the third was 24’ x 52’) so Leonard could estimate lineal feet, which he calculated to be 472. 12. Subsequently, according to Leonard, Blanchard next telephoned him on about March 1, 1998, to advise Leonard that excavation had been completed. After that call, Leonard went to inspect the potential jobsite, and after doing so, arranged to have a proposal (Exhibit B) dated March 3, 1998, prepared, signed, and faxed to Western Terrain by Linda Leonard on March 4, 1999. 13. Leonard further testified that on that same day, March 4, he also spoke to Blanchard by telephone to explain his conclusions and concerns after inspecting the site regarding the excavation work already done, and advised Blanchard that he would proceed to the site to begin work, which he did that day, constructing the footings on two of the three manufactured home sites. 14. Leonard explained that he began work so promptly because two of the three manufactured homes had already arrived on site, but were protected only by thin plastic sheeting, and could not be secured until the footings and other site preparation work had been completed. 15. According to Leonard, L A Development then received by fax on the morning of March 5, 1998 ( “8:42 AM” by the Western Terrain’s fax machine date-stamp), his company’s original proposal, but as annotated in handwriting and signed and dated that day by “Western Terrain Enterprises LLC / Sandy Lake / Member” (Exhibit C). 16. In his further testimony, Leonard stated that he believed a contract had been formed, because the modifications and changed terms presented by Ms. Lake in the annotated proposal were acceptable to him, which he communicated verbally by telephone to Blanchard later in the afternoon that day, March 5, when he sought written authorization for an additional three courses of block, which authorization was required by the annotated proposal (unlike his company’s original proposal). In that call, he also advised Blanchard that sufficient work had been done by L A Development to allow for the initial Maricopa County Flood Control inspection necessary to ensure minimum floor height above the flood plain had been met. 17. However, Leonard also testified that in that phone call on the afternoon of March 5, Blanchard expressed concern (not surprising to Leonard) for the potential extra cost for additional courses of masonry block, over and above the minimum charge for the lineal feet of footing. Per Leonard, Blanchard told him to stop work until Blanchard could discuss how to proceed with the property owner, which among other alternatives, and given constraints imposed by the excavation already done by others, might include filling in the footings and starting over, information Blanchard conveyed to Leonard in another telephone call on about March 6 or 7, 1999.

18. Leonard stated that for that reason, his company did no further work on the site after March 5, and heard nothing further from Blanchard or anyone else, so that after he drove by the jobsite in late April, 1998 and observed that work had been completed, he determined to send Respondent a bill for the work L A Development had already done. 19. According to Leonard’s testimony, L A Development accomplished that billing, in the amount of $1347.03, by faxing an invoice to Blanchard and Western Terrain on April 27, 1999 (Exhibit D). Leonard clarified the itemization listed in that document, and stated that nothing had yet been paid. 20. Finally, Leonard conceded that L A Development was not necessarily entitled to what he had calculated and complained to the Registrar as the full contract price of $9440.00, since it had not performed the full contract. He explained how that amount was calculated in terms of the dimensions of each of the three manufactured homes (per Exhibit A), with the 472 lineal feet multiplied by the $20.00 per lineal foot stated in the original proposal to equal $9440.00. 21. Through Ms. Lake’s testimony, Respondent contends to the contrary, to assert that there is no basis for disciplinary action by the Registrar because no contract was ever formed by the parties. 22. This is so, according to Ms. Lake (who disputed Leonard’s conclusions regarding contract formation, but did not dispute the basic chronology of events and circumstances he described), because the annotated proposal she had signed and faxed to L A Development on March 5, 1998 (Exhibit C), was also just a (counter) proposal and therefore not binding, consistent with other similar such negotiations and information-gathering being done by Western Terrain at the same time with other contractors for the same work. 23. Ms. Lake also asserted that Western Terrain was not acting as a general contractor on the job, but only as the agent for the company/owner of the three manufactured homes. She confirmed that Western Terrain regularly did business of a similar sort with that company, and that Blanchard, her partner in Western Terrain, was also an employee of the company. 24. Ms. Lake conceded, however, that Blanchard’s communications with Leonard had been presented as on behalf of Western Terrain, as had her annotated (counter) proposal to L A Development, rather than as an agent of the owner. 25. Notwithstanding her contention that no valid contract had been made, Ms. Lake further conceded that L A Development was entitled to payment for the reasonable value of the work it had actually done on site. However, while she did not dispute Leonard’s description of the specific work done, she asserted that such value was less than the $1347.03 billed by L A Development (Exhibit D).

APPLICABLE LAW

A.R.S. § 32-1154.A provides, in pertinent part, as follows: A. The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: . . . . . 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. . . . . . 11. Failure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee's operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. . . . . . 17. Knowingly contracting beyond the scope of the license or licenses of the licensee. . . . . .

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 one or more of the statutory sections cited. Culpepper v. State of Arizona, 187 Ariz. 431, 437-38, 930 P.2d 508 (Ariz. App. 1996). A “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. To be valid and enforceable, and to thus define a relationship over which the Registrar has jurisdiction, a contract must contain the requisite elements necessary to demonstrate the “meeting of the minds” essential to its formation. This is so whether the contract is verbal or written, or some combination thereof. In this matter, given the totality of the essentially uncontroverted circumstances and events, the undersigned finds and concludes that the words, both written and verbal, and actions of Complainant and Respondent constituted offer, counter-offer, and acceptance of terms, sufficient to form a valid and enforceable contract. 3. Respondent asserts that the minimum elements of a contract are defined, for purposes of the Registrar’s statutory requirements, in A.R.S. § 32-1158. However, the undersigned deems that statute inapplicable in this instance, since the unambiguous language therein addresses “…any contract …entered into between a contractor and the owner of a property to be improved…” (emphasis added). Such is not the relationship of the parties in this instance, notwithstanding Respondent’s assertion that it was only acting as the owner’s agent. While that may perhaps be true, all representations made by Respondent to Complainant are deemed by the undersigned to have been made on Respondent’s behalf, not as owner’s agent. 4. Therefore, the Registrar of Contractors has jurisdiction over this matter, pursuant to A.R.S. § 32-1101, et seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 5. The evidence of record is found to establish, by a preponderance, violation of A.R.S. § 32-1154.A.11, for Respondent’s failure to pay monies in excess of $750.00 for the materials or services actually rendered by Complainant. 6. While Ms. Lake contends for Respondent that the value of the work done by Complainant is worth less than the $1347.03 billed, she provided no alternative measure other than a figure of approximately half that amount apparently discussed during her prior negotiations with the Leonards. The undersigned therefore finds and concludes that the amount billed of $1347.03 is reasonable under all the circumstances and on the evidence presented. 7. The undersigned further concludes that the evidence does not demonstrate, by a preponderance, any violation of A.R.S. § 32-1154.A.7. 8. Finally, it is concluded that the evidence of record does not demonstrate, by a preponderance, any violation of A.R.S. § 32-1154.A.17.

RECOMMENDED DECISION

On the basis of the foregoing, IT IS RECOMMENDED that, commencing on the effective date of the Registrar’s Order entered in this matter, Respondent’s Class C-37R license be suspended until the Registrar of Contractors receives written proof that Respondent has tendered the sum of $1347.03 to Complainant. IT IS FURTHER RECOMMENDED that, if Respondent complies with the foregoing on or before the effective date of the Registrar’s Order, then the license suspension not take place, and CITATION AND COMPLAINT in Case No. 99-1777 be closed. Done this day, August 18, 1999.

______________________________________ Anthony Halas Administrative Law Judge

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

Registrar of Contractors Mr. Michael P. Goldwater 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