ALJDEC

99F-2810-ROC · Registrar of Contractors · 2000-01-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 20, 2000 at 9:00 a.m. APPEARANCES: Complainants appeared through their attorney, Joseph M. Huey, Esq.; Respondent appeared through its qualifying party, Jim Harrison. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The parties discussed with the Registrar of Contractors’ Inspector Phil Coscia and the undersigned the remedies available to homeowners in administrative proceedings on complaints to the Registrar and the elements required to show violations of various subsections of A.R.S. § 32-1154.A. Based on these discussions, the parties agreed to settle the complaint then pending before the Registrar, without prejudice to an action being asserted in a judicial forum. Based upon the entire record, the undersigned makes the following Findings of Fact, Conclusions of Law and Recommended Order. FINDINGS OF FACT The Registrar issued License No. 126285, Class C-05, to Respondent, a corporation, on August 11, 1997. In early March 1999, Respondent contracted to and did perform certain work outside Complainants’ residence. The parties’ contract was at least partly oral and was made after Respondent showed Complainants a sample of its work. Complainants did not pay Respondent the full contract price and it filed a lien against their residence. On April 4, 1999, Complainants made a complaint to the Registrar that alleged that Respondent’s workmanship was deficient in 11 enumerated respects. Inspector Coscia performed a jobsite inspection and, on June 22, 1999, on behalf of the Registrar directed Respondent to take appropriate action to repair or correct six of the alleged deficiencies. Inspector Coscia noted on the directive that “[o]ther than the repairs listed above, this inspector cannot comment on as to whether overall work is that of sample viewed by the [Complainants]. This inspector has not seen the same sample.” At the hearing, Inspector Coscia amended Item No. 3 of his directive, which related to variations in color between the two patios Respondent constructed. Inspector Coscia testified that he had performed additional research, which indicated that applicable industry standards require only that flagstone tiles must be similar colors. This additional research changed Inspector Coscia’s original opinion and, at the time of the hearing, he believed that the observed color variations in Respondent’s work were acceptable. Complainants indicated their continued dissatisfaction with the overall color of the aggregate concrete tiles that Respondent had installed on their patio, which were fabricated and installed to resemble sandstone. The undersigned informed the parties that, without any writing or documentary support, breach of an alleged oral agreement to install a certain color of concrete probably would not constitute a violation of A.R.S. § 32-1154.A.2,[1] .3,[2] or .7[3] as long as the color otherwise met applicable minimum standards. Although the undersigned therefore likely would not have recommended that the Registrar suspend or revoke Respondent’s license based on this item of complaint, Respondent’s failure to install the exact color allegedly orally chosen by Complainants might give rise to a breach-of-contract claim that could be asserted in a court having appropriate civil jurisdiction. The undersigned also explained to Respondent that, under most circumstances, a homeowner’s failure to pay the full contract price does not excuse a contractor from performing warranty work on prior construction, although nonpayment may constitute a legal excuse for abandonment of the contract or refusal to perform additional work. See A.R.S. § 32-1154.A.1. The Registrar lacks statutory authority to order homeowners to pay contractors. Respondent indicated its willingness to perform the work required to comply with the Registrar’s amended directive and promised to perform this work within 35 days of the date of the hearing, or by February 28, 2000. The parties clarified their understanding of the directive by asking Inspector Coscia, on the record, where and to what extent in his opinion repairs were needed. Complainants agreed to withdraw their complaint and to consent to the entry of an order closing the citation and complaint. However, the closure of this administrative action is without prejudice to the filing of a new complaint if Respondent breaches the parties’ settlement agreement. These administrative disciplinary proceedings are cut short by the parties’ entry into the settlement agreement, which is presented to the Registrar for approval and adoption. Consequently, Respondent is advised that any future breach of the settlement agreement will not only constitute grounds for a new complaint or request for a compliance hearing, but also will warrant treatment as a circumstance in aggravation. All rights and defenses of the parties are deemed to have been merged into the settlement agreement and, if any timely petition for rehearing, request for compliance hearing, or new complaint is filed in the future, the sole issue for determination shall be whether Respondent has performed its obligations under the settlement agreement. The settlement agreement is fair and reasonable, under all the circumstances, and is the product of knowing and voluntary action on the part of each party. CONCLUSIONS OF LAW Public policy favors settlement of disputes and adverse parties should be free to adjust their differences by entry into agreements or stipulations. The parties should attempt to resolve their disputes in forums having jurisdiction over them. This preserves the parties’ own resources as well as the resources of the Office of Administrative Hearings and the Registrar of Contractors. The settlement reached and submitted following the hearing of this matter, having been found to be reasonable and voluntarily made, warrants termination of the hearing and closure of the Citation and Complaint. RECOMMENDED ORDER In view of the foregoing, it is recommended that the Registrar close the Citation and Complaint in Case No. 99-2810 against Respondent’s License No. 126285, Class C-05. Done this day, January 20, 2000.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of January, 2000, to:

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

By ___________________________

----------------------- [1] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[d]eparture from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.”

[2] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar.” The rule violated here was A.A.C. R4-9-108, which requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”

[3] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

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