ALJDEC

99F-A0247-ROC · Registrar of Contractors · 1999-08-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 29, 1999 APPEARANCES: Mike Folk on behalf of the Complainant; Sharon Parks on behalf of the Respondent ADMINISTRATIVE LAW JUDGE: Lewis D. Kowal _____________________________________________________________________ FINDINGS OF FACT 1. On April 27, 1997, Complainant and Respondent entered into a contract (the “Contract”) for Complainant to rebuild the cable system for Cable One in the Prescott, Prescott Valley, and Chino Valley area. 2. At the commencement of the hearing, it was determined that Complainant, subsequent to the filing of the instant complaint, incorporated as Western States Communications Inc. (herein after referred to as Complainant). The caption of the hearing is amended to reflect that the Complainant is a corporation. 3. Administrative notice is taken of the Registrar of Contractors’ licensing records that reveals Respondent’s license was issued to Respondent as a partnership. Respondent is currently a corporation known as Elite Cable Systems, Inc. The parties did not dispute that the obligations of the Complainant and Respondent concerning this matter arise under the Contract. 4. Mike Folk (“Mr. Folk”), the owner of Western states Communications and the president of the Complainant, testified that for work performed under the Contract, Complainant would submit an invoice every week and Respondent would hold back payment for a two week period as well as retain an amount equal to 10% of the invoiced work for 30 days. 5. Sharon Parks (“Ms. Parks”), a partner of Elite Cable Systems and an officer of Elite Cable System, Inc., testified that pursuant to the provisions of the Contract, Respondent withheld 10% of the amount invoiced by Complainant for 30 to 60 days after Cable One, Respondent’s client, paid Respondent for such work. Under an arrangement Cable One has with Respondent, Cable One may retain 10% of the invoiced work from Respondent for up to one year. 6. Complainant contends that for work performed under the Contract between January 1998, and September 1998, Respondent failed to pay Complainant the sum of $1,200.00. 7. Respondent acknowledged that of the amount retained, Respondent backcharged Complainant the sum of $1,200.00 for work that was not completed by Complainant that Respondent had to perform repairs or hire subcontractors to perform such repairs. 8. With respect to two items that required repairs, Mr. Folk acknowledged during the hearing that those items could be backcharged but disputed the amount of the backcharges that Respondent applied to those items. 9. The Contract provides that Respondent may retain 10% and that the amount retained may be applied against “rejected work, careless damages, or any money owed to ELITE CABLE SYSTEMS for any reason.” 10. Complainant contends that Respondent has either been paid by Cable One for the work that was backcharged or that Respondent could have billed Cable One for that amount. 11. Ms. Park’s credibly testified that Respondent had not been paid the $1200.00 from Cable One, which it backcharged to Complainant and Respondent did not receive compensation from Cable One for such work. Ms. Parks also testified that the amount incurred by Respondent exceeded that sum. 12. Credible evidence was presented to support Respondent’s assertions that rebut the contentions raised by Complainant. 13. This matter involves a contract dispute of an unliquidated sum. Respondent presents a good faith basis for not paying the amount in dispute and establishes that it incurred additional expenses to having Complainant’s uncompleted work repaired. The evidence establishes that there is an issue as to the appropriateness of the backcharges Respondent applied against Complainant. 14. 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 to Complainant, if any. After that determination, the parties may be 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 of contractors and that the process is ill-equipped to adjudicate matters such as those presented here. cf. A.R.S. §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) or(18). RECOMMENDED ORDER Based on the above, it is recommended that the Complaint and Citation issued in Case Number A99-0233 be dismissed and that the Registrar of Contractors inquire into the Respondent’s licensing status and take further appropriate action. Done this day, August 11, 1999

______________________________________ Lewis D. Kowal 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