ALJDEC

99F-2189-ROC · Registrar of Contractors · 1999-12-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 22, 1999 APPEARANCES: David Brown, House Counsel, on behalf of the Complainant Thomas Stewart, President on behalf of the corporate Respondent ADMINISTRATIVE LAW JUDGE: Allen Reed _____________________________________________________________________ Findings of Fact The evidence in this case is limited. The Complainant presented no witnesses and its evidence consisted of documents which were stipulated into the record. The Respondent was competent to testify but had not brought relevant documentary evidence relating to whether the stucco fire wall failed to meet specifications or code. The Respondent asserted he had been unable to retain counsel until just a few weeks prior to the hearing. Counsel was retained for civil matters related to the broader aspects of the construction project, but not for the instant hearing. The Respondent was building three homes as part of an “in fill” project consisting of eight lots on East Bethany Home Road in Phoenix, Arizona. Two of the homes were speculation homes and one home had been pre- sold. The Complainant submitted a bid to the Respondent to do the lath and stucco for the three homes. On May 12, 1998, the Respondent accepted the bid. The total price was $27,200.00 for the three homes ($9,000.00, and two homes at $9,100.00) The acceptance of the bid and specifications for the homes require one hour fire walls. The Complainant normally applies a three coat stucco system consisting of a scratch, brown and finish coat. This system generally meets one hour fire wall standards. The Complainant performed lath and stucco work on the homes and was paid a total of $20,826.00 by the Respondent. In the latter part of 1998, a City of Phoenix building inspector “red tagged” the homes because the stucco did not meet the one hour fire wall standard at the required areas. According to the Respondent, the stucco which was used is a one coat fiber system called “New Wall” which is not accepted by the City of Phoenix. The Respondent informed one of the Complainant’s employees of the problem and was told that the system met required standards. Due to various construction related difficulties which resulted in unanticipated costs, the Respondent did not conclude the sale of the homes.

It is unknown if any additional stucco work was done by another contractor or whether occupancy permits have been issued for any of the homes. On January 29, 1999, the Complainant filed the instant complaint with the Registrar of Contractors (Registrar) alleging $9,050.00 was due and owing on the contract. The contract amount cited in the complaint is $18,100.00 (based on the evidence, this amount is in error). The Complainant had no evidence of any information being received from the Respondent regarding the city’s refusal to approve the fire wall stucco work. By check dated September 3, 1999, the Complainant was paid $5,000.00 on a claim against the Respondent’s bond for this case. This brings the total paid to the Complainant to $25,826.00. The Complainant filed suit against the Respondent in the Northeast Justice Court. The Respondent failed to answer the civil complaint and on October 28, 1999, a default judgment was entered against the Respondent in the amount of $5,000.00 plus attorneys fees and costs.

Conclusions Of Law The allegations in this Citation and Complaint concern A.R.S. §32- 1154(A)(7), wrongful or fraudulent acts with substantial injury; and (A)(11), failure to pay for materials or services when the licensee has the capacity to pay. The Respondent testified credibly about his experience with stucco and the fact that the homes were red tagged because the stucco fire wall did not meet city code requirements. The amount asserted as owing to the complaint is $9,050.00 which is the total of the unpaid invoices dated: C. May 27, 1998, garage lath completed, $1,050.00; D. June 28, 1998, stucco progress, $3,750.00; E. November 13, 1998, stucco complete, $1,000.00 and $3,250.00. It is unknown how the Complainant identified the items asserted as not having been paid. The Complainant’s three payments amounting to $20,826.00 were made in June, July and August, 1998. Some of the payments were applied to “Extras” invoiced in July, 1998, but not to the earlier invoices from May 27 or June 28, 1998. It is unknown why earlier items were left as unpaid by the Complainant while later items were determined to be paid. The Complainant submitted additional costs as part of the instant complaint (Invoice 710-N-900 for $1,315.00, Extras PO #2967 and Invoice 00711-N-900 for $1,280.00, Extras PO #2968). When these extras are added to the original contract price of $27,200.00, it brings the total cost to $29,795.00. However, the Complainant’s claim prior to collecting on the bond was for $9,050.00 which if added to the $20,826.00 already received by the Complainant, would bring the total contract price to $29,876.00. There was no competent witness or evidence to explain the reason for this $81.00 difference in the total amounts. Assuming that the extras were properly charged against the Respondent and the total contract price was therefore $29,795.00, the difference between that amount, and the amount paid to the Complainant (including the bond), is $3,969.00. This does not explain the $5,000.00 judgment irrespective of costs and attorney fees from the Justice Court. This award came after the $5,000.00 bond payment to the Complainant. The Complainant has a civil judgment and therefore has a civil remedy. The Registrar is not required to enforce civil money judgments especially ones which are as problematical as this one. The evidence suggests that there was a problem with the stucco fire wall as installed by the Complainant and whether it met fire wall specifications or city code standards. There is no evidence of how this issue was resolved. The amount of money involved in this case varies with how the math is done. There was no competent witness to testify about the Complainant’s billing procedure, why payment was applied as it was, or about the admittedly minor variation in the amounts being sought. Although the defense was not made directly, the evidence suggests that the Respondent did not have the ability to pay some of the amounts which were owing. Based on the above, a violation of A.R.S. §32- 1154(A)(11) is found but no determination is made of any amount which is properly due and owing. Recommended Order In view of the foregoing it is recommended, commencing on the effective date of the Order entered in this matter, that the Respondent’s Class B license be placed on probation for a period of forty-five (45) days. Done this day, December 27, 1999.

______________________________________ ALLEN REED Administrative Law Judge

Original transmitted by mail this ____ day of December, 1999, 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 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826