ALJDEC

99F-3270-ROC · Registrar of Contractors · 1999-11-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 8, 1999. APPEARANCES: James Allison, Representative of Complainant; Rick Smith, witness for Complainant; David Brown, Representative of Respondent; Lisa Stanhope, witness for Respondent; and Dave Cuevas, witness for Respondent. ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang. _____________________________________________________________________ Having heard the testimony of the witnesses and having read and considered the entire record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Decision to the Registrar of Contractors. FINDINGS OF FACT 1. Complainant and Respondent contracted for Complainant to install cement work for an Osco Drug building. During contract negotiations, Complainant submitted two proposals which broke down the cost of the contract into different itemized components. In response, Respondent sent Complainant a contract which simply specified that all concrete work would be done for one price. Respondent’s representative encouraged Complainant to come to its office and look at the plans so that Complainant’s bid would encompass everything. 2. Complainant agreed to the price offered by Respondent, but wanted payment for three additional items which were reflected in the plans due to a construction item which was being done improperly. A representative of Respondent, the construction manager, agreed that additional money should be paid for these items and agreed, before Complainant returned the contract, to sign a change order and approve the additional items. 3. Though the contract was signed before the date of the change order, Complainant would not return the signed contract until the change order was agreed to, and he did believe that the three items were part of the same negotiation. Though he could have resubmitted a bid, he believed that the change order expedited the closing of the deal and was faster. 4. Complainant performed the work. He submitted invoices for payment. Respondent paid all but $5,794.42 of the agreed-upon price. Respondent deducted payment for the items on the change order as well as $637.50 for some grinding on concrete which Respondent claimed had been done to repair poor workmanship by Complainant. 5. On May 25, 1999, Complainant filed a complaint with the Registrar of Contractors complaining that Respondent had refused to pay for a properly payable change order and that Respondent had breached the contract by failing to inform Complainant of any problems with performance and allowing Complainant an opportunity to cure (or dispute) the defect. 6. Representative of Respondent appeared at hearing and argued that the contract was intended to be all-inclusive and any agreements for additional work are duplicative since the contract calls for “all” concrete work. He argued that the change order was merely an attempt to circumvent the contract and receive more money, he admitted that the construction manager was authorized to sign the change order. Respondent’s representative agreed that Complainant had not been given an opportunity to cure any defects and that those charges had been inappropriate. 7. Complainant requests that Respondent’s license be sanctioned because of the losses he incurred in the amounts of $5,156.92 for the items on the change order, $637.50 for the inappropriately charged back floor grinding, $200.00 to place a lien on the property, and $25.00 to have the lien lifted, for a total loss to Complainant of $6,019.12. Complainant also argued that Respondent’s bond is inadequate to cover the potential harm imposed by Respondent’s practices. Respondent’s record with the Registrar of Contractors reflects no other complaints against it in the last two years. CONCLUSIONS OF LAW 1. This matter is within the jurisdiction of the Registrar of Contractors pursuant to A.R.S. §§32-1104(A)(4) and 32-1156. 2. The Citation and Complaint issued by the Registrar of Contractors in this matter alleged potential violations of A.R.S. §32-1154(A)(7) and (11). 3. The Arizona Revised Statutes at §32-1154(A)(7) provides for suspension or revocation of a contractor’s license for the “doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured”. 4. The Arizona Revised Statutes at § 32-1154(A)(11) provides for suspension or revocation of a contractor’s license for failure to pay monies in excess of $750 when due for materials or services rendered in connection with the licensee’s operations as a contractor when the contractor has the capacity to pay, or, if the contractor does not have the capacity to pay, when the contractor receives sufficient payment on the project at issue. 5. In this case, Complainant has established that there was a legitimate change order and that the work prescribed thereon had been completed. Though Respondent’s Representative may not have been aware of the change order at the time, it was executed by an employee authorized to do so, and Complainant relied on the agreement in rendering his services in good faith. Complainant also established that he was not given an opportunity to cure or dispute the alleged inadequacy of the floor Respondent ground and charged back to him. Therefore, Complainant has established that Respondent has violated A.R.S. §§ 32-1154(A)(7) and (11) and appropriate sanctions should be imposed. RECOMMENDED ORDER In view of the foregoing, it is recommended, commencing on the effective date of the Registrar’s Order, (thirty-five [35] days after the date of mailing by the Registrar of Contractors) that Respondent’s Class B- license be suspended until the Registrar receives proof that Respondent has paid Complainant $5,794.42. Complainant should not be reimbursed for the cost of the lien and its removal as these items reflect the cost of collecting Complainant’s contract amount, an issue which is more appropriately the subject of a civil lawsuit. It is further recommended, in addition to the foregoing license suspension, if any, that Respondent’s Class B-01 license be placed on disciplinary probation for a period of ninety (90) days. This additional disciplinary penalty shall commence on the effective date of the Registrar’s Order or the date on which notice of Respondent’s compliance with the terms of this Order is filed with the Registrar, whichever is later. In light of Respondent’s record with the Registrar of Contractors, further suspension is not recommended beyond the provisional suspension set forth above. The Registrar of Contractors is empowered by statute (A.R.S. § 32- 1152) to increase the license bond of a contractor after a disciplinary hearing in an amount up to ten times the sum otherwise required based on annual gross volume. Under all the facts and circumstances in this case, some portion of the aforesaid power should be exercised, to be applicable for a fixed time period. It is recommended that Respondent’s license bond be increased by $1,500 for the next two renewal periods following the effective date of the Order entered in this matter.

Done this day, November 16, 1999. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Dorinda M. Lang 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