ALJDEC

99F-3119-ROC · Registrar of Contractors · 2000-01-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 14, 1999. APPEARANCES: VALENZUELA CONCRETE, INC.: by Raul Valenzuela and Manuel Valenzuela, officers; with representation by Angela Wilson, Esq. RICHARD MOSES/TUSCANY BUILDERS, INC.: by Richard Moses, president; with representation by Patricia Nolan, Esq.

ADMINISTRATIVE LAW JUDGE: Anthony Halas _____________________________________________________________________ These consolidated matters proceeded to hearing on December 14, 1999, on cross-complaints, to determine whether either Respondent violated state law as alleged by each 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 relative to the procedural history of each case, the following Findings of Fact, Conclusions of Law, and Consolidated Recommended Decision are made and submitted to the Registrar of Contractors: FINDINGS OF FACT

1. Pursuant to the records of the Registrar of Contractors, Tuscany Builders, Inc. (Tuscany Builders) is a corporation and holder of Arizona contractor’s license no. 132806, Class B, issued March 19, 1998. Richard Moses (Moses) is qualifying party for the license and president of the corporation. 2. Pursuant to the records of the Registrar of Contractors, Valenzuela Concrete, Inc. (Valenzuela Concrete) is a corporation and holder of Arizona contractor’s license no. 131496, Class C-09, issued February 2, 1998. Raul Valenzuela, Jr. is qualifying party for the license and secretary of the corporation; Manuel Valenzuela is treasurer. 3. In April, 1998, Tuscany Builders contracted with the homeowner to build a residence at 10040 East Happy Valley Road (Lot 32), in Scottsdale, Arizona. 4. Tuscany Builders, as the general contractor, then negotiated and subcontracted with Valenzuela Concrete in February, 1999, to perform specified concrete work on the site. 5. A. Subsequently, on May 6, 1999, Valenzuela Concrete filed a complaint (No. 99-3119; docketed herein as 99F-3119-ROC) with the Registrar of Contractors against Tuscany Builders, alleging a balance due from Tuscany Builders of $30,795.00 on the subcontract. B. When the complaint was not resolved administratively, the Registrar issued CITATION AND COMPLAINT on July 20, 1999, charging Tuscany Builders with possible violations of A.R.S. § 32-1154.A.7 and .11. C. Respondent therein, Tuscany Builders, timely filed its written answer on August 4, 1999, asserting, in essence, that the subcontract had been terminated due to Valenzuela Concrete’s failure to timely perform and poor workmanship, such that Tuscany Builders had incurred additional expense to complete the concrete work. 6. A. On June 21, 1999, Richard Moses, as president of Tuscany Builders Inc., filed a complaint (No. 99-3594; docketed herein as 99F-3594- ROC) with the Registrar of Contractors against Valenzuela Concrete, alleging essentially that Valenzuela Concrete had failed to timely or competently perform under the subcontract, resulting in costs incurred to Tuscany Builders of an additional $9,713.18 over and above the subcontract price of $30,795.00. B. When the complaint was not resolved administratively, the Registrar issued CITATION AND COMPLAINT on July 20, 1999, charging Valenzuela Concrete with possible violations of A.R.S. § 32-1154.A.7 and .11. C. Respondent therein, Valenzuela Concrete, timely filed its written answer on July 29, 1999, denying, in essence, all allegations in the complaint, and asserting that delays were the result of Tuscany Builder’s failure to provide accurate blueprints, that the work performed by Valenzuela Concrete met building code requirements, and requesting consolidation of the matters for hearing. 7. At the consolidated hearing, Valenzuela Concrete, Inc., through counsel, offered the testimony of Raul Valenzuela and Manuel Valenzuela, as well as Exhibits A, B, and C. (For purposes of clarity in reviewing Exhibit B, additional time was provided Valenzuela Concrete to also submit an oversize copy of that exhibit). All testimony, and each exhibit (after admission), was duly considered by the undersigned, with objection to Exhibit B overruled, as going to the weight rather than admissibility. 8. Tuscany Builders, Inc. through counsel, offered the testimony of Richard Moses, as well as Exhibits 1 through 35. Objections to photographs contained in Exhibits 19 and 24 were overruled, and all exhibits were admitted, to be duly considered together with Moses’ testimony. 9. On the relevant testimony and evidence adduced, the following is found: A. During the several-month long course of negotiations between the parties, Valenzuela Concrete provided a PROPOSAL (Exhibit 5) dated September 9, 1998 (which Moses apparently signed after a hand- printed entry as “Accepted”) which specified certain items included and items excluded, as well as additional work to be done but not calculated in the base bid of $24,800.00 for “ALL CONCRETE UNDER ROOF AS SHOWN ON FOUNDATION PLAN.” Among the additional work listed were “RETAINING FOOTINGS IN BACK YARD” to be done at a price per foot, with the statement that “THE ESTIMATED AMOUNT OF $5400.00 WILL ADJUSTED [sic] BY FIELD MEASUREMENT.” Valenzuela Concrete asserts that this document defines and controls the contractual relationship of the parties, an assertion disputed by Tuscany Builders. B. Tuscany Builders instead relies on the AGREEMENT BETWEEN CONTRACTOR AND SUBCONTRACTOR (Exhibit 6) dated February 2, 1999 as the document defining the contract. That AGREEMENT was signed by both Moses and Manuel Valenzuela a few days after Valenzuela Concrete began work on the site. The contract price was listed as $30,795.00 (noted by the undersigned to be $5995.00 greater than the PROPOSAL bid price), and the document contains extensive standard or “boilerplate” language, as well as a specific “Schedule of Values” which calculated as part of the contract 154 lineal feet of footings for retaining walls. C. Also specified in the AGREEMENT were the six subcontract documents adopted by reference; the conditions precedent to and amounts of the three progress payments; and a “Description” of the Work” to be included and excluded under the subcontract, specifically including as part of the subcontract “all concrete footings for… retaining walls…” D. Raul Valenzuela testified for Valenzuela Concrete to explain his reliance on the “PROPOSAL” he had presented in September 1998 rather than the “AGREEMENT” signed on site by Manuel Valenzuela in February 1999, in determining work (such as the footings for the retaining walls) to be added to the subcontract price. E. Raul Valenzuela conceded the figure of $30,795.00 listed as due in the complaint filed by Valenzuela Concrete was the subcontract price under the AGREEMENT rather than the PROPOSAL. He denied any breach of the subcontract by Valenzuela Concrete, and asserted that any deficiencies in the work done were minor aesthetic concerns which did not violate code or workmanship standards, and in any event, were caused at least in part by his company’s attempt to work to the plans provided by Tuscany Builders. F. Raul Valenzuela also stated that his company was not provided the city of Scottsdale inspection reports when corrections were required, so could not address those items without knowledge of them. G. Raul Valenzuela further explained his calculation of amounts he now considered due and owing for work done by Valenzuela Concrete before the contract was terminated by Tuscany Builders without any payment to date, despite subsequent invoicing in the amount of $7,238.00 on April 9, 1999 (Exhibit 17) and $11,610.00 on April 29, 1999 (Exhibit 22) by Valenzuela Concrete. H. Manuel Valenzuela testified that he had signed the AGREEMENT on February 8, 1999, and that he performed field layouts for Valenzuela Concrete, and had done the residence layout of this particular project after the layout for the retaining wall footings had been started by a former employee. I. Manuel Valenzuela opined that significant delay in the work done by Valenzuela Concrete were attributable to inaccurate or inconsistent figures on the foundation plan (Exhibit 1) and several subsequent blueprints (specifically including Exhibit B, as annotated) provided by Tuscany Builders, from which he was unable to gain the dimensions necessary to accurately lay out the concrete work to be done until a fourth set, with numerous changes, had finally been provided. J. Manuel Valenzuela stated that further delay of 3 to 4 weeks was unavoidable because Valenzuela Concrete also had to wait for construction of the swimming pool by other subs. K. Manuel Valenzuela further denied that any stem walls or footings were poured incorrectly or in the wrong location, and that several other deficiencies were either corrected or easily correctable. L. Then, through reference to employee Time sheets and Scheduling records (Exhibit C) to confirm the presence of Valenzuela Concrete employees on site on particular days, Manuel Valenzuela disputed the accuracy of Moses’s testimony and chronology. M. In the testimony of Richard Moses, he explained why Tuscany Builders contended the “AGREEMENT” in February, 1999 superseded the “PROPOSAL” months earlier in September 1998. N. By reference to his Chronology of Daily Activity (Exhibit 4), and various other exhibits documenting correspondence (letters, faxes, photographs, invoices) to and from the parties, and City of Scottsdale inspection reports (Exhibits 8, 13, 14, and 20) Moses stated why and how he believed Valenzuela Concrete had specifically and substantially failed to perform its contract responsibilities either on time or according to the plans or minimal code or workmanship standards, so that Tuscany Builders terminated the subcontract on April 22, 1999 (Exhibit 21), after which it incurred specific expense, beyond the original subcontract price, to complete the work described in the subcontract. O. Moses further testified that both he and the architect who had drawn the original foundation plan (Exhibit 1) and subsequent blueprints (including Exhibit B) for Manuel Valenzuela’s use in layout had considered each of them to be sufficiently accurate for that purpose, but had provided each subsequent set of plans in order to assist Valenzuela. Moses noted that the original plans had later been sufficient for the replacement concrete subcontractor’s use in laying out the dimensions of its work, and therefore concluded that the plans were not an excuse for delay. P. Relative to the timeliness of Valenzuela Concrete’s work, Moses described his original Progress Schedule (submitted by Valenzuela Concrete as Exhibit A) which he had included as part of the AGREEMENT, as well as subsequent modifications to the schedule as he attempted to complete construction. He referenced Exhibits 10, 11, 12, 16, 18, and 19 as reflecting his company’s notice to Valenzuela Concrete to continue work in a timely and workmanlike manner, which when not done, led to his letter to Valenzuela Concrete terminating the subcontract (Exhibit 21). Q. Moses stated that, contrary to the terms of the AGREEMENT regarding progress payments (Exhibit 6, p. 8) Valenzuela Concrete had failed to provide any invoicing until April 10, 1999 (Exhibit 17), which invoice he challenged by letter of April 10, 1999 (Exhibit 18) for the additional amounts charged (for the retaining wall footings) which should have been included in the original subcontract price. R. Moses further stated that no further invoicing was received from Valenzuela Concrete until its invoice of April 29, 1999 (Exhibit 22) and cover letter of April 30, 1999 (Exhibit 23), after Tuscany Builders’ notice terminating the subcontract. // // // // //

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.

CONCLUSIONS OF LAW 1. To warrant action by the Registrar in these consolidated matters pursuant to the statutes above, either Complainant must demonstrate by a preponderance of the evidence that the Respondent in that case violated either or both 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 (6th ed. 1990). 2. Upon consideration of the testimony and evidence of record, the undersigned finds and concludes that the controlling document defining the contractual relationship of the parties was the AGREEMENT, and not the prior PROPOSAL, notwithstanding Moses’ signature “accepting” the PROPOSAL.

3. Then, relative to Case No. 99-3119 (Docket No. 99F-3119-ROC), the undersigned finds that the evidence demonstrates, at the least, a compelling and bona fide dispute regarding performance under the subcontract, such that it is concluded that Complainant Valenzuela Concrete has failed to sustain its burden of proving a failure to pay violation by Respondent Tuscany Builders pursuant to A.R.S. § 32-1154.A.11. 4. It is further concluded that in Case No. 99-3119, the evidence fails to sustain the burden required of Complainant Valenzuela Concrete to demonstrate wrongful or fraudulent acts by Respondent Tuscany Builders in violation of A.R.S. § 32-1154.A.7. 5. Relative to Case No. 99-3594 (Docket No. 99F-3594-ROC), the undersigned concludes that Complainant Tuscany Builders has sustained its burden, by a preponderance of the evidence, in demonstrating that Respondent Valenzuela Concrete committed wrongful acts resulting in substantial injury to Complainant, by failing to perform in a timely manner after reasonable notice, and by failing to complete a substantial amount of the work performed to meet minimal code or workmanship requirements. Therefore, a violation of that term of A.R.S. § 32-1154.A.7 is proven. 6. The evidence does not demonstrate that Respondent Valenzuela Concrete committed any fraudulent act, so in Case No. 99-3594 Complainant Tuscany Builders has not proven any violation of that term of A.R.S. § 32- 1154.A.7. 7. On the evidence presented, the undersigned further concludes that it is beyond the scope of this tribunal, within the disciplinary authority provided the Registrar of Contractors, to determine any violation in Case No. 99-3594 by Respondent Valenzuela Concrete of failure to pay pursuant to A.R.S. § 32-1154.A.11. 8. Pursuant to standing order of the Registrar, review of the Registrar of Contractors database relative to the status of the license held by Valenzuela Concrete, Inc., confirms that such has been held for a relatively brief period of less than two years, during which time it has not been subject to any final agency disciplinary orders, such that a degree of mitigation is appropriate in determining final disposition herein. // // // // //

RECOMMENDED DECISION

In light of the foregoing, IT IS RECOMMENDED that the CITATION AND COMPLAINT in Case No. 99-3119 against Tuscany Builders, Inc., be closed. IT IS FURTHER RECOMMENDED that, in Case No. 99-3594 and commencing on the effective date of the Order entered by the Registrar in this matter, license no. 131496, Class C-09, held by Valenzuela Concrete, Inc., be suspended for a period of three (3) consecutive days, and be placed concurrently on disciplinary probation for a period of one hundred eighty (180) days. Done this day, January 14, 2000.

______________________________________ Anthony Halas Administrative Law Judge

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

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

By ___________________________ -----------------------

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