ALJDEC

99F-M1590-ROC · Registrar of Contractors · 2000-02-10

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Pursuant to notice, a formal hearing was held in the above captioned cases on February 10, 2000, in Phoenix, Arizona, before Neal H. Jordan, Administrative Law Judge of the Office of Administrative Hearings. APPEARANCES For Complainants: Anthony Giammarco, Esq., Mesa. For Respondent: Sherman Gipson, General Manager.

FINDINGS OF FACT Based upon all the evidence of record, the following findings of fact are determined: Complainant, Natural Rock Works, Inc. (“Natural Rock”), is a licensed contractor performing work in constructing water features, water falls, boulder and rock placement and associated services. Complainant, Arizona Shortcrete, Inc. (“Shotcrete”), is also a licensed contractor performing work by installing shotcrete material for the formation and rough finishing of swimming pools and spas. Both Complainants are owned and operated by the same indivduals, Tammy and Jeff Whatcott. Over the course of a period of months, Complainants maintained an ongoing business relationship with Respondent working together in the construction and completion of swimming pools, spas and water features. During that period from approximately April, 1999 to the end of May, 1999, Rock Works performed services on seven (7) jobs for which it submitted to Respondent invoices for work performed. The total of these invoices amounts to $6,825.00. The evidence establishes that these invoices have not been paid. During the month of May, 1999, Shotcrete performed services on two (2) jobs for which it submitted to Respondent invoices for work performed. The total of these invoices amounts to $5,651.70. The evidence establishes that these invoices have not been paid. Of the invoices submitted by Rock Works, Respondent contends that the one for the Newman job is not correct and should be reduced from $1,275.00 to $700.00. Prior to the work being performed on this job no price was discussed or agreed upon between the parties. It is undisputed that Respondent did move and place a certain number of boulders, although it is disputed as to whether it was done with a bobcat or a crane. Respondent has produced no evidence to establish that the figure of $1,275.00 charged by Rock Works is not fair and reasonable based upon the work performed and the history between the parties. Rock Works, through its witnesses, established that its usual and customary charge for such work is $85.00 per boulder with any crane work being charged at a $100.00 per hour. The invoice in question reflects an $85.00 per boulder charge with no charges for any equipment use. The balance of the invoices submitted by Rock Works are undisputed, except for some minor repair backcharges claimed by Respondent. Of the invoices submitted by Shotcrete, Respondent asserts that the work performed on the Sibliris job was seriously deficient and claimed a reduction of $2,500.00 from the charged amount of $3,571.70. When Shotcrete appeared at the jobsite to apply the shotcrete material Respondent’s job superintendent brought to its attention that a cutout section of the spa was overdug and requested Shotcrete’s efforts to correct for this “overbreak” by applying extra shotcrete. Shotcrete agreed to fill in the overbreak and did so with an extra 3 yards of material. However, because of the work performed by and under the control of Respondent, the final shape of the spa was not ultimately completed so as to be in precise compliance with the plan design. After the spa had been fully been completed by all forces, Sibliris complained and insisted that Respondent tear out the entire spa and reinstall a new one. After negotiations, Respondent prevailed upon Sibliris to accept a $2,500 reduction in the price for the spa to avoid having to remove and install a new spa. Shotcrete was not a part of these negotiations nor was it given a reasonable opportunity to correct any alleged deficiencies that were being claimed by Sibliris. The $2,500 reduction is an arbitrary figure and bears no relation to costs to repair or diminution in value, if any. Respondent further asserts that its is entitled to reduce the invoices from Complainants by amounts it claims were incurred to make repairs to certain jobs that were performed by others. The evidence does not establish that Complainants were given a timely notice and opportunity to make the repairs.

CONCLUSIONS OF LAW The Office of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to A.R.S. §41-1092 - 1092.12 (1998). The Complainants has brought these complaints and accordingly bear the burden of proving by a preponderance of the evidence that the allegations contained therein are true. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (Ct. App. 1996); Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985), (the standard of proof is that of the “preponderance of evidence.”)

The Complainants have established by a preponderance of the evidence that Respondent has violated A.R.S. §32-1154 (A)(7) and (11), as charged in the Citation and Complaint in each case and in each respect as set forth below. On the Newman job the evidence is undisputed that the parties did not agree on a price for this work prior to the actual performance of the services. That being the case, any claim for cost of such work must be based upon a claim of quantum meriut, i.e., its reasonable value. The evidence establishes that Rock Works charges $85.00 per boulder which, when mulitplied by 15 boulders, equals the sum of $1,275.00, the price charged in the invoice. See Complainants’ Ex. 1. Other invoices within Complainants’ Exhibit 1 confirm that the usual charge for such work is between $65.00 and $85.00. Respondent’s testimonial evidence that the boulders were not supplied by Rock Works and that a crane was not used does not overcome the proof that the value of the work actually performed by Rock Works was based upon consistent pricing for other work ordered and paid for by Respondent. The evidence supports the conclusion that the charge of $1,275.00 charged for the Newman job was reasonable and fair under all the circumstances. In regards to the Sibliris job, the evidence establishes that when Shotcrete was called back to apply the shotcrete for the pool and spa, it was requested by Respondent to fill in the overbreak so as to make the finished size and shape of the spa as close to the plan design as possible. In fact, Shotcrete did use an extra 3 yards of material for this purpose. Although the evidence is conflicting as to the extent the spa deviates from the plans, it is established that the final product was unacceptable to Sibliris, the homeowner. By a letter, dated June 7, 1999, Respondent informed Shotcrete of this problem and advised that if the problem was not corrected its account balance will be backcharged the sum of $2,500.00, an amount Sibliris demanded as a settlement. At this time an ongoing dispute was developing between the parties regarding the cost and value of work being completed and charged, a dispute that strained their once friendly working relationship. For this reason, Shotcrete, believing that it performed in accordance with instructions from Respondent, refused to return to make any corrections on the Sibliris job. In the face of a threat from Sibliris requiring Respondent to completely demolish and reinstall the spa, a $5,000.00 installation, Respondent agreed to a settlement with Sibliris in the amount of $2,500.00. It is conceded that this amount bears no relationship to any actual cost to repair the alleged deficient work or to a diminution in value of the spa, if any. Notwithstanding the letter advising Shotcrete of the demand by Sibliris, the amount of $2,500.00 was agreed to by Respondent as a measure to ensure its goodwill, and to attempt to pass that cost onto a subcontractor is not to be countenanced in the absence of evidence showing some relationship of the settlement amount to actual damages caused by that subcontractor. When the working relationship between the parties had vanished, Respondent undertook to hire other contractors to make minor repairs to work that had previously been performed by Rock Works. However, there is no evidence that Rock Works was given the opportunity to return to make such repairs of its own accord or that the cost of such repairs performed by others was reasonable and fair. On the basis of the entire evidence of record it is established that on the Rock Works account, Respondent owes the amount of $6,825.00. On the basis of the entire evidence of record it is established that on the Shotcrete account, Respondent owes the amount of $5,651.70. The check submitted by Respondent to the Complainants in payment of a portion of these amounts contained wording in an attempt to create an accord and satisfaction. Because of such wording it is held that this check is to be treated as a nonpayment against this account.

RECOMMENDED ORDER In view of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED, commencing on the effective date of the Order entered in this matter, that the Class B-05 license of Respondent shall be suspended until the Registrar of Contractors receives credible written proof that Respondent has tendered or paid the full amount of $12,476.70 to the Complainants. Upon full payment of said amount, Complainants are to return to Respondent the check previously presented in partial payment on these accounts. It is further recommended that if Respondent pays or tenders said amount on or before the effective date of the Order entered in this matter, then the above license suspension shall not take place.

ENTERED this day, February 15, 2000.

______________________________________ Neal H. Jordan 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 ___________________________

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