ALJDEC

99F-3620-ROC · Registrar of Contractors · 1999-12-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 6, 1999 APPEARANCES: Complainant, Goforth Building Corporation was represented by its President, Larry Stuart. Respondent, Republic Painting was represented by its owner, Leo Nicovic. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ 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 submits the following Recommended Decision to the Director of the Arizona Registrar of Contractors. FINDINGS OF FACT 1. On or about June 18, 1998, Respondent entered into a contract with Trademark Builders, Inc. to paint the interior of the Comfort Inn (“the project”). Subsequent to the completion of the project, Trademark Builders, Inc. went out of business. Complainant took over the project as general contractor. 2. On or about March 26, 1999, Complainant and Respondent entered into a contract wherein Respondent agreed to honor the terms and conditions of the original contract between Respondent and Trademark.

3. On or about October 18, 1998, Respondent billed Trademark in the amount of $12,250 for partial completion of the contract. Respondent had primed all of the available units, which were approximately 80% of 72 units. The total amount of the contract had been $49,000.

4. Ranger Insurance Company is Trademark’s indemnity company. On or about March 26, 1999, Respondent received payment in the amount of $7,000 from Ranger Insurance Company as and for final payment for the work that had been performed by Respondent prior to Trademark leaving the project. Complainant claims that he is entitled to reimbursement of the $7,000 payment made to Respondent because it was Complainant that had written letters to the indemnity company requesting the release of the $7,000 to Respondent, in order to enable Respondent to commence work for Complainant. The undersigned Administrative Law Judge finds that the $7,000 paid to Respondent for work previously completed, is not recoverable by Complainant because Respondent is entitled to compensation for work previously performed under the terms of the original contract. As it is, Respondent still has not recovered the full amount billed for the priming work (i.e. $12,250).

5. On or about May 5, 1999, prior to Respondent recommencing work, Respondent notified Complainant that it was experiencing financial difficulties and could not man a work force. Therefore, Respondent could not proceed with the performance of the remainder of the contract.

6. Complainant hired another subcontractor to complete the painting work on the project. Complainant claims that based upon Respondent’s breach of contract, Complainant is entitled to liquidated damages.

7. The evidence of record adequately demonstrated a dispute between the parties regarding what, if any, amount of money is due and owing to Complainant from Respondent. However, Complainant’s position in this dispute is found to be unclear. Originally, Complainant testified that the damages in this case were approximately $20,000 due to Complainant having had to pay a new subcontractor to complete the project. When the undersigned Administrative Law Judge asked the Complainant to itemize the damages, the damages decreased to $13,000. Complainant did not submit any credible evidence documenting the amount paid to the new subcontractor. Complainant further testified that he would settle for the $7,000 paid to Respondent by Trademark’s indemnity company. The undersigned Administrative Law Judge finds this position to be unjustified. Complainant also testified that he wanted recovery from Respondent’s bond. This administrative forum is not the appropriate forum for bond recovery. Under all of the circumstances, a finding that a liquidated sum is owed to Complainant is unsubstantiated.

CONCLUSIONS OF LAW 1. The Complainant has the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996). A “preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence, (5 (1960). 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. 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. Complainant failed to sustain the requisite burden of proving the existence of a valid liquidated debt properly due and owing by Respondent.

3. However, the undersigned Administrative Law Judge concludes that a valid contract existed between Complainant and Respondent. The undersigned Administrative Law Judge further concludes that there has been a sufficient showing that Respondent abandoned the contract or refused to perform within the meaning of A.R.S. ( 32-1154 (A)(1), as set forth in Findings of Fact #5 and #6. Financial difficulties may be a matter in mitigation, nonetheless, it is not a legal excuse for abandonment.

4. The undersigned Administrative Law Judge concludes that there has been a sufficient showing that Respondent acted wrongfully, resulting in Complainant sustaining some financial injury, within the meaning of A.R.S. ( 32-1154 (A)(7), as set forth in Findings of Fact #5, #6 and #7. However, as a matter in mitigation, the undersigned Administrative Law Judge further concludes that Respondent intended to fulfill the terms of the contract when the contract was entered into, and but for the financial difficulties would have performed.

5. The undersigned Administrative Law Judge concludes that grounds exist to discipline Respondent’s Class L-34 license. The undersigned Administrative Law Judge concludes that placing Respondent’s Class L-34 license on probation is appropriate in light of the mitigating factors.

RECOMMENDED DECISION In view of the foregoing, it is recommended that the Class L-34 license of Respondent be placed on probation for a period of thirty (30) days commencing on the effective date of the Registrar’s Order.

Done this day, December 14, 1999.

______________________________________ Sondra J. Vanella Administrative Law Judge

Original transmitted by mail this ____ day of December, 1999, to:

Mr. 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