ALJDEC

99F-3026-ROC · Registrar of Contractors · 1999-12-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 2, 1999 APPEARANCES: Labriola General Contracting (“Labriola”) was represented by its attorney, Denise Troy and Pete Diaz and Sons Concrete (“Diaz”) appeared through its owner and qualifying party, Pete Diaz. 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. The above captioned matters were consolidated for the purpose of hearing since both involved similar issues and entailed the use of the same witnesses. Labriola was the general contractor on new commercial construction for a combination Burger King/convenience store/gas station. Labriola retained the services of Diaz to perform the concrete work on the project.

2. The following salient facts were adduced at the hearing and are important to note:

a. The parties entered into a written contract for the concrete work on or about September 15, 1998. The contract provided that the completion date should be “1/99.” Although the contract was silent regarding what day in January was contemplated by “1/99,” Labriola felt that same meant January 1, 1999 and Diaz believed that he had until January 31, 1999 to complete the concrete work.

b. Although Diaz commenced work on the contract and completed almost ninety (90) percent of the contemplated work, it was undisputed that he did not complete the project. Labriola testified that he fired Diaz from the project due to poor workmanship and unacceptable delays and Diaz claims that he quit the project due to non-payment for a past due progress payment.

c. Regardless of why Diaz terminated his work on the project, it was adequately shown that Labriola paid others to complete the work and incurred specified expenditures removing and replacing a significant portion of the concrete work placed by Diaz.

d. Diaz ultimately filed a lien on the project and shortly thereafter Labriola filed the instant complaint with the Registrar of Contractors alleging, among other things, that the work performed by Diaz was substandard. Diaz subsequently filed a complaint against Labriola alleging that Labriola failed to pay a specified sum of money for the services that Diaz had performed prior to the time that he ceased working on the project.

e. The original contract price between the parties was $146,470.00. Diaz contends that he and his concrete supplier received payment from Labriola totaling $84,925.16. He further contends that based on unpaid invoices and specified “extras” that Labriola owes him another $64,992.81.

f. Labriola disputes that it owes any further monies to Diaz. Labriola claims that it has paid Diaz a total of $85,553.66 and that due to specified back-charges and claims for contract provided liquidated damages, Labriola contends that Diaz owes him over $65,000.00.

3. It is held and determined that the dispute that occurred between the parties in January 1999 was, in part, due to a major breakdown in communication by the parties, ultimately resulting in a complete destruction of the ability of the parties to work together. Both parties are found to be responsible for this failure to communicate and work together as professional licensed contractors.

4. The weight of the evidence of record was sufficient to support a finding that the following constitute workmanship deficiencies attributable to Diaz at the time he terminated his work on the project:

a. Specified handicap ramps were not constructed with the degree of slope required by the applicable code and thus, the local building authority would not accept said aspect of the concrete construction, requiring said ramps to be torn out and re-done by the subsequent concrete subcontractor hired by Labriola.

b. Excessive cracking of the concrete was present in specified areas.

c. Certain “tooled” joints were not constructed to the proper depth required by the applicable contract specifications.

d. The base of a number of pipe ballards displayed a rough and unacceptable finish.

e. A specified curb was constructed as a monolithic curb, contrary to the plans and specifications.

f. A certain gutter revealed compound cracking.

g. Areas of the concrete finishing were unacceptable, as manifested by a rough uneven finish along with cracked joints.

h. The trash enclosure area was not constructed as a monolithic pour as required by the applicable plans and specifications.

i. Certain required expansion and control joints were omitted.

j. A specified freezer area was not recessed, as required by the plans and specifications.

5. A jobsite inspection by the appointed inspector for the Registrar of Contractors was held on the complaint filed by Labriola against Diaz, pursuant to which the Registrar sent Diaz a letter directing it to accomplish specified remedial work within a stated period of time. Notwithstanding the terms of said Agency directive, compliance was not accomplished.

6. It is important to note that the assigned Agency inspector appeared at the instant hearing and testified to the ill-will between the parties, indicating that they both were “in each others face” at the jobsite inspection. He further testified that in his opinion the unprofessional conduct of the parties was instigated by Labriola. It is further important to note that Labriola called the police to have Diaz removed from the project property at the conclusion of the jobsite inspection.

7. Under the above-described circumstances regarding the conduct of the parties at the jobsite inspection, as well as the fact that their working relationship had totally deteriorated prior to said jobsite inspection, it is determined that it was near impossible for Diaz to comply with the Agency directive under these conditions. Thus, under all of the salient facts and circumstances presented herein no finding of a violation of the applicable charged section of the State’s Contracting laws, regarding failure to comply with an agency directive, is established.

8. Although the construction deficiencies and deviation from plans and specifications described in Finding of Fact no. 4, above, were present at the time Diaz terminated his work on the project and are sufficient to support a finding of violations of the State’s Contracting laws regarding good and proper workmanship and failure to follow plans and specifications, it is important to emphasize that due to the serious destruction of the parties ability to properly communicate, which led to the breakdown in the working relationship between the parties, Diaz was unable to complete the project and correct all required punch-list deficiencies. Construction work, such as that at issue herein, is not a perfect science and it is not uncommon in the industry to have corrections, repairs, or replacements of resultant poor workmanship prior or subsequent to completion of a specified project, in order to bring the final work product up to appropriate industry standards.

9. Evidence of record demonstrated that Diaz was still on the project at issue herein while his license was suspended by the Registrar of Contractors for lack of a proper bond. Furthermore, his general liability insurance, that he was required to maintain pursuant to the applicable contract, was canceled while he was still working on the concrete project.

10. A portion of the Diaz claim is based on his contention that Labriola requested specified verbal change orders. As a direct result of said claimed change orders, Diaz seeks payment for “extra” work.

11. The applicable contract between the parties provides that changes from the plans and specifications shall be in writing. Sharply conflicting evidence and testimony was presented by the parties regarding any verbal changes. Labriola denies that any such changes were authorized. Although the law may uphold the validity of verbal changes despite the fact that the applicable contract requires written change orders, it is determined that in those situations wherein changes become the subject of a perceived oral agreement which may be effectively disputed at a future date, a contractor acts at its peril to deviate from the plans and specifications without first receiving written authorization from the owner or his designated representative.

12. Diaz failed to present sufficient evidence to corroborate its positions regarding the alleged verbal changes to the contract. Diaz failed to sustain the requisite burden of proof necessary to establish the existence of verbal changes which would have sustained his claim to specified “extras.”

13. Diaz contends that Labriola is responsible for the loss of his tractor that he left on the jobsite when he terminated working on the project. Although not an issue enumerated in the filed complaint by Diaz, during the course of the instant hearing Labriola waived any claim to lack of due process notice on said issue and allowed same to be considered.

14. It was undisputed that Diaz left a tractor on the project for reasons that are not perfectly clear from the instant record. Sharply conflicting testimony was presented from the parties referable to why the tractor was not removed from the project by Diaz. Diaz averred that he was effectively prevented from coming back onto the project to remove his tractor and other materials and has never had the tractor returned to him. Labriola claims that Diaz failed to remove the tractor subsequent to notice to remove same and he has no idea what happened to the tractor. The testimony in this regard was such that no basis exists for the disbelief of either parties’ version of the facts.

15. Diaz should have taken his tractor with him when he left the project and Labriola should have taken better care to assure that equipment was not stolen from the project. The instant record was inadequate to establish whether Labriola or Diaz is responsible for the lost tractor. Under all of the salient facts and circumstances presented regarding the lost tractor, it is determined and held that this is a matter that should more appropriately be handled by a civil court of competent jurisdiction and not a matter within the jurisdiction of the Registrar of Contractors to resolve.

16. The instant matter is an administrative disciplinary proceeding relating to a contractor’s license. Thus, the Registrar is duty-bound to merely determine whether a violation of this State’s contracting laws has occurred and, if so, impose a proper disciplinary sanction. Neither the filing of a complaint with the Registrar, nor a demonstration that a contractor violated state law, vests in a complainant the right to receive any particular individualized relief or an order imposing any particular discipline.

17. Although a number of the construction deficiencies described in Finding of Fact no. 4, above, remain in existence as of the date of the instant hearing, under all of the facts and circumstances presented herein, it is determined that it would be unwise, ill-advised, and futile to expect these two parties to be able to effectively work together in the future. Therefore, it is determined and held that the facts presented herein justify a departure from a long-standing policy of the Registrar of Contractors to order a contractor to return to a jobsite, after a hearing, to correct remaining construction deficiencies as a means to avoid otherwise appropriate disciplinary penalties.

18. The evidence of record adequately demonstrated a dispute between the parties regarding what, if any, amount of money is due and owing to Diaz from Labriola. Labriola’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 Diaz.

19. As set forth in the Citation and Complaint issued by the Registrar of Contractors, Diaz was advised that in the event of a finding of a violation against Diaz, that his prior disciplinary record of final Registrar of Contractors’ orders may be considered in mitigation or aggravation. Accordingly, subsequent to conclusion of the instant hearing, notice was taken of official records of the Registrar of Contractors regarding any prior final disciplinary orders against Diaz and said notice revealed the absence of any such prior disciplinary orders. Therefore, the prior record of Diaz is properly deemed to be excellent and thus, is viewed as a matter in mitigation for any disciplinary penalties to be imposed as a direct result of this case.

20. Notice is hereby taken of official Registrar of Contractors public records, which reveal that the contracting license of Diaz has been canceled since September 13, 1999. Such cancellation does not preclude this tribunal from conducting these administrative proceedings nor from issuing separate disciplinary orders.

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 Labriola of the provisions of A.R.S. § 32-1154A (11) can be supported. Diaz failed to sustain the requisite burden of proving the existence of a valid liquidated debt properly due and owing by Labriola 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) by Labriola.

3. The evidence of record was sufficient to support a finding that Diaz violated the provisions of A.R.S. § 32-1154A (2), (7), and (3); namely Rule R 4-9-108.

RECOMMENDED ORDER

In view of the foregoing, it is recommended in regard to Citation no. 99-3026, that the Citation and Complaint in that matter shall be dismissed. In view of the foregoing, it is recommended in regard to Citation no. 99-2547, that commencing on the effective date of the Order entered in that matter that the Class L-09 license of Diaz shall be placed on a period of disciplinary probation for 120 days. It is further recommended, in addition to the above provided penalty, that any restoration of Diaz’s contracting rights, whether or not probationary, shall be subject to a condition that Diaz first post an additional surety bond, cash deposit or alternative deposit for a period of twenty-four (24) months, including future renewal periods, in the amount of $1,500.00, such bond or deposit to be in addition to the required surety bond or cash deposit set forth in A.R.S. § 32-1152 (D). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two year period following the above- provided twenty-four (24) month period and only if no claims are then pending.

Done this day, December 9, 1999

______________________________________ Mark A. Silver 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