ALJDEC

99F-A0233-ROC · Registrar of Contractors · 1999-08-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 28, 1999 APPEARANCES: Allan Erickson on behalf of the Complainant; Todd Miller on behalf of the Respondent ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________ FINDINGS OF FACT 1. At all times material to this matter, Complainant was licensed as a contractor by the State of Arizona, Registrar of Contractors. 2. At all times material to this matter, Respondent was licensed as a general contractor by the State of Arizona, Registrar of Contractors. 3. It is undisputed that in April 1998, Complainant submitted a written proposal to install a fire alarm system at the Cavalry Chapel (the “Church”) in Prescott, Arizona, a project that was under the Respondent’s supervision. Previously, Complainant had performed service calls to the project with respect to telephone lines and computer lines. 4. Complainant installed a fire alarm system and also installed a security system at the Church. According to Complainant, the initial contract provided for the installation of a security system as an option for the price of $800.00. Complainant contends that Respondent did not elect to include that option as part of the contract between the parties and subsequently requested that Complainant install a security system. The Complainant also contends that at the point in time when the request was made, the cost of such work was greater than the $800.00 proposal because to install the original intended equipment required more labor due to the ongoing construction of the Church that occurred since the original written proposal was made. 5. Complainant maintains that he is owed $2080.20 for installation of the fire alarm, installation of a security system, service calls to address the duct detectors that had been installed by a mechanical contractor, and pre-contract work regarding the telephone and computer lines in which Respondent retained 10% of the amount billed for the work. 6. Respondent maintains that there were problems with the fire alarm system, that the security system components never worked properly, and that Complainant did not install a complete security system as contemplated by the parties. Respondent also contends that on April 20, 1998, the contract was executed and the option for the security system was accepted and became part of the contract.. In support of that contention, a copy of the contract was admitted into evidence showing that Todd Miller, on behalf of the Respondent, not only executed the contract but circled the option provision, dated it 4-20, and initialed that portion of the contract. That document does not show that Complainant agreed to the election by Respondent to have Complainant install a security system at the Church. A copy of the contract with the signatures of Allan Erickson, Complainant’s owner, and Todd Miller, without the election for the security system ,was also admitted into evidence. Under the circumstances, the weight of the evidence shows that the contract entered into between the parties provides for the fire alarm system and not the security system. 7. Complainant installed the fire alarm system from May 1998, to June 1998, but could not obtain an acceptance test from the Central Yavapai Fire Department (“Fire Department”) until work performed by other contractors was completed. In late August 1998, or early September 1998, Complainant completed the fire alarm system and had the Fire Department pass the system’s testing. 8. Prior to submission of the above-mentioned written proposal, both Mr. Erickson and Mr. Miller walked through the Church and discussed the areas of the building that required security devices and what those devices should be. During the course of the hearing, neither Mr. Erickson nor Mr. Miller provided complete details as to the nature and number of each different security device to be installed in the Church. 9. Initially, Respondent had contracted with J.F. Lavoie to install the fire alarm and security system at the Church. After completing most of the rough in wiring for both systems, J.F. Lavoie went out of business and could not complete the job. This caused Respondent to hire Complainant to complete the job and resulted in the above-mentioned contract. 10. From the time of execution of the contract, the project’s construction continued, the framing and rough in had been accomplished, and the sprinkler contractor and electrician were working at the site. 11. During the hearing, Mr. Miller admitted that most of the conversations he had with Mr. Erickson during the relevant time period concerned the fire alarm system and not the security system. 12. In June, 1998, Respondent started to install the drywall at Church and intended to turn the building over to its owner in August 1998. In July 1998, Mr. Miller had a conversation with Mr. Erickson and for the first time became aware of a problem concerning the security system. It was at that time that Mr. Miller learned that Complainant believed that it never contracted with Respondent for the security system. In light of that development, Mr. Miller contacted a Church official named Skip who directed Mr. Miller to have the security system installed by Complainant. Subsequently, Mr. Miller informed Mr. Erickson to do “whatever it takes” to install the security system with the understanding that no existing construction would be torn down. 13. The weight of the evidence of record establishes that the parties believed the scope of the initial contract to be different. The evidence further reveals that even when that misunderstanding became known to the parties and an arrangement was made for Complainant to install a security system, the parties failed to specify details as to what security devices would be installed in the Church. 14. Respondent claims that the work performed by Complainant with respect to the fire alarm system did not meet minimum workmanship standards. In support of that contention, Respondent presented into evidence a copy of a Corrective Work Order issued by a Registrar of Contractors Inspector that listed corrective action to be performed by Complainant in Complaint Number A99-0157. However, Respondent admits that after issuance of the Corrective Work Order, Complainant complied with its terms. In this proceeding, Respondent contends that the fire alarm system functioned on the date of testing performed by the Fire Department but did not perform prior to or subsequent to that time. 15. Respondent presented a request made to the Registrar of Contractors for a hearing in Complaint Number A99-0157 as a result of disagreeing with the statement in the Corrective Work Order that no corrective action is required by Complainant with respect to the alarm system. Respondent contends that Registrar of Contractors Inspector Charles Thomas, who performed a jobsite inspection and issued the above-mentioned Corrective Work Order, did not inspect the security system. 16. Regardless of the outcome in Complaint Number A99-0157, it is determined that Respondent is not precluded from raising the failure of the security system to function properly in the instant proceeding. 17. Complainant submitted a final bill for payment in the sum of $2080.20 that was not paid by Respondent. Respondent refused to pay that bill until Complainant installed complete and functional security system in the Church. Respondent contends that the work reflected in Complainant’s final billing statement relate to each other and that the security system was not complete or functional. Complainant refused to perform additional work for Respondent with respect to the security system, despite requests from Respondent, until he received payment from Respondent for what he believed was due and owing. 18. Respondent presented evidence that it hired another contractor to complete Complainant’s work on the security system and install a complete security system at the Church for a cost of $2,004.00 19. Respondent and Complaint had a business relationship prior to the execution of the contract in dispute herein. The arrangement was not memorialized in writing and some of the work and amounts withheld by Respondent involve that business arrangement. 20. This matter mainly involves a contract dispute as to what was contemplated by the parties as to the installation of security system in the Church. It is determined that a good faith basis has been presented by the Respondent for not paying the $2080.20 to Complainant for the work performed at the Church. The evidence of record does not establish why Complainant charged $800.00 for the security system that he installed when by Complainant’s own account, he could not install all of the original items contemplated by the parties, whatever that may have been. Therefore, the Administrative Law Judge is unable at this time to determine what amount, if any is owed to Complainant, in light of the fact that Respondent incurred additional expenses to having Complainant’s work completed and a complete security system installed by another contractor. 21. Under the facts and circumstances of this case, it is determined that a court of competent jurisdiction and not the Registrar of Contractors is the more appropriate forum to adjudicate and liquidate the sum due and owing, if any. After that determination, the parties maybe entitled to proceed further with the Registrar of Contractors. CONCLUSIONS OF LAW The Registrar of Contractors is empowered to have administrative disciplinary hearings held by the Office of Administrative Hearings but is not empowered by law to adjudicate amounts alleged to be due and owing in the face of a good faith dispute as to such amounts. The Registrar of Contractors disciplinary process was not intended to be a collection process for contractors and that the process is ill-equipped to adjudicate matters such as those presented here. cf.32-1129(C). Complainant failed to sustain the requisite burden of proving a valid liquidated debt properly due and owing by Respondent and has not sustained his burden of proving that Respondent violated the provisions of A.R.S. 32- 1154(A)(11). The evidence of record is inadequate to support a finding that Respondent violated A.R.S. 32-1154(a)(7). RECOMMENDED ORDER Based on the above, it is recommended that the Complaint and Citation issued in Case Number A99-0233 be dismissed. Done this day, August 10, 1999

______________________________________ Lewis D. Kowal Administrative Law Judge

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

Registrar of Contractors Mr. Michael P. Goldwater 800 West Washington, 6th Floor Phoenix, AZ 85007

ATTN: Joyce Armijo

By ___________________________

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