ALJDEC

99F-T0708-ROC · Registrar of Contractors · 1999-08-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

|J. HERNDON, INC., |(|Case No.: T99-0708 | | |(| | |Complainant, |(|Docket No.: 99F-T0708-ROC | | |(| | |vs. |(| | | |(|Recommended | |License No. 140484, Class L-38 of|(|Decision and Order | |SIGN AND LIGHTING MAINTENANCE, |(| | |INC. (CORP), |(| | | |(| | |Respondent. |(| |

HEARING: Monday, August 2nd, 1999; 10:15 a.m. Appearances: The Complainant was represented by Mr. Scott Baker, Attorney-at-Law. The Respondent was represented by Mr. Scott B. Cohen, Attorney-at-Law. Administrative Law Judge: Grant Winston

This contested matter was brought on for administrative hearing on August 2nd, 1999. The hearing was scheduled to convene at 9:00 a.m., but did not convene until approximately 10:15 a.m., in order to allow the parties to explore the possibility of settlement outside the presence of the Administrative Law Judge. Both parties were present and represented by legal counsel. Testimonies were taken and other evidence admitted to record, and, based on the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. The Complainant in this case, J. Herndon, Inc., is the owner of three Burger King restaurants in Tucson, Arizona. Complainant sought the services of the Respondent to install all the interior, exterior and parapet lighting at these restaurants.

2. Respondent is a licensed contractor in the State of Arizona, holding Class L-38 license number 140484. Respondent has extensive experience installing the lighting for Burger King franchises both in and outside of Arizona.

3. The parties began negotiations for the installation of the lighting at the three subject Burger Kings sometime in April of 1998. Complainant impressed upon the Respondent the importance of the lighting to the business, and the importance that the lighting be installed timely.

4. Respondent prepared three separate job estimates for Complainant’s consideration; one for each of the three restaurants. The estimates for the restaurants at 1763 East Prince and 10 North Wilmot were dated May 9th, 1998. The estimate for the restaurant at 1005 North Campbell was dated May 10th, 1998. However, what the parties in this case actually contracted to do is impossible to ascertain from the evidence admitted due to the facts that the so-called estimates were constantly being re-figured, and new proposals from the Respondent submitted to the Complainant in writing. While these new proposals bear a signature line for the Complainant’s signature, hardly any are signed by him. Also, as can be found from the parties’ separate testimony, there was a “swearing contest” between them concerning other terms that were, or were not, agreed upon.

5. A job estimate for the lighting work at 1005 N. Campbell was first submitted in writing on May 10th, 1998. Then, on June 26th, 1998, another job estimate for that restaurant was submitted. Then on August 6th, 1998, a job proposal work sheet was submitted. Three signature lines for Complainant are blank. Then, on September 8th, 1998, a new parapet lighting and sign repair proposal was submitted. The signature line for Complainant is blank. Then, on October 15th, 1998, a new kitchen ceiling lighting proposal was submitted. The signature line for Complainant does appear to bear his signature. A new complete job estimate was also submitted on this date. On October 26th, 1998, a new parapet lighting and sign repair proposal was submitted. The signature line for Complainant is blank.

6. A job estimate for the lighting work at 1763 E. Prince was first submitted in writing on May 9th, 1998. Another job estimate was submitted the next day, May 10th, 1998. Another job estimate was submitted June 26th, 1998. A new exterior lighting proposal was submitted July 28th, 1998. The signature line for Complainant is blank. A job proposal work sheet was submitted on August 6th, 1998. Also on that date a new parapet lighting and sign repair proposal and a new interior lighting proposal were submitted. The signature line for Complainant on both is blank. On October 26th, 1998 a new parapet lighting and sign repair proposal and a new kitchen ceiling lighting proposal were submitted. The signature line for Complainant on both is blank.

7. A job estimate for the lighting work at 10 N. Wilmot was first submitted in writing on May 9th, 1998. Another job estimate was submitted June 26th, 1998. A new interior lighting proposal and a new exterior lighting proposal were submitted on July 28th, 1998. The signature line for Complainant is blank on both. A job proposal work sheet was submitted on August 5th, 1998. A new parapet lighting and sign repair proposal was submitted on August 5th, 1998. The signature line for Complainant is blank. A new exterior lighting proposal was submitted on September 8th, 1998. The signature line for Complainant is blank. A new kitchen ceiling lighting proposal was submitted on October 15th, 1998. The signature line for Complainant appears to bear his signature. A new job estimate was submitted on October 15th, 1998. A new parapet lighting and sign proposal was submitted on October 26th, 1998. The signature line for Complainant is blank.

8. Thus it is that hardly any terms of agreement can be ascertained form the instruments themselves.

9. Complainant accepted from Respondent whatever it was he accepted by making payments in the form of checks issued to the Respondent. One check was issued from Complainant to Respondent on September 9th, 1998, in the amount of $10,500.00. A second check was issued from Complainant to Respondent on October 13th, 1998, in the amount of $10,957.50. Additional checks were issued on October 23rd, 1998 ($4,063.98); October 27th, 1998 ($22,746.71); two on November 20th, 1998 ($12,759.08 and $409.94), and one on January 8th, 1999 ($7,333.89). Thus it appears that Complainant accepted whatever Respondent was proposing as early as September 9th, 1998. Still, as has been seen in the paperwork, it appears that the terms of what was actually being proposed and accepted remained fluid not just during the negotiating stage prior to any acceptance by payment of money, but repeatedly thereafter.

10. Not only are there many uncertainties within the proposals and estimates, and the descriptions and prices therein, the parties’ testimonies reveal that much of their disagreement lies in what was, or was not, verbally agreed. Ongoing throughout the time the parties were producing estimates and proposals and issuing checks, were their discussion of other terms relative to the work to be done. Foremost among these as a bone of contention among the parties is who was responsible for retaining the professional services of an engineer, and whether Respondent informed Complainant an engineer would be required to insure compliance with a Tucson “dark sky” ordinance. Complainant swears nothing was told to him of his responsibility to obtain the services of an engineer, and Respondent swears that he informed Complainant of this repeatedly. Nothing in the written documents throws any light on this subject.

11. As already found, the work dragged on far longer than either party anticipated. Nerves were strained. The working relationship deteriorated, and the parties were no longer on amicable terms it seems by the autumn of 1998. A number of these delays do seem to be attributable to both parties, and others to the source or sources to which Respondent was looking to supply the fixtures called for by the jobs. As found, payment was still being made to Respondent in January of 1999. However, in early March of 1999, Complainant, through counsel, took decisive action.

12. A letter from Complainant’s lawyer was written to Respondent on March 3rd, 1999. Part of the letter informs Respondent “You are instructed to perform no other services for my client, as he has obtained another, reputable, lighting firm to complete what you did not finish.” Respondent received this letter on March 5th, 1999, and ceased work on the project. The record shows that although there had been delays as already mentioned, Respondent was unto that time still in the process of working to obtain needed fixtures and was still making efforts to perform.

13. Complainant filed his complaint against the Respondent with the Registrar on or about April 9th, 1999. He complained that as of the filing he had paid Respondent more than $20,000.00 for the parapet lighting, but Respondent had not installed the parapet lighting. A review of the checks of record (detailed supra) reveal nothing in the way of a memo to indicate that any of their amounts was earmarked for any particular aspect of the construction, parapet or other. At the hearing Complainant testified he is owed $21,169.00. He also wants to compel the Respondent to return and complete the exterior lighting, for which Complainant contends he has given payment. Respondent filed his answer on June 7th, 1999. Respondent contends that he has performed the work for the $21,169.00., and is owed for other work performed to date in the sum of $10,664.19.

14. As of the date of the administrative hearing, the interior lighting had been completed at all three restaurants; the exterior lighting had been completed at only two of the three, and the parapet lighting had not been installed at any of the three. There is controversy between the parties as to whether or not some of the particulars of the work have actually been completed. There is a controversy over the purchase and whereabouts of exit signs, creating more dispute over who owes whom money.

15. The evidence revealed that from April through November 16th, 1998, the Respondent corporation was not yet licensed by the Registrar. Mr. Donald M. Carson, the owner of the Respondent corporation, and the principal during these transactions, had a contractor’s license himself as a sole proprietor at the time, and was in the process of obtaining licensure for the corporation which, as stated, was obtained on November 16th, 1998.

Conclusions of Law

1. This hearing was held under authority of A.R.S. §32-1156, and A.R.S. §41-1092.

2. The Respondent herein is charged with possible violations of A.R.S. §32-1154.A.1., 7., 9., and 3., namely A.A.C. R4-9-108 (Poor Workmanship).

3. A.R.S. §32-1154.A.1. prohibits a contractor from “Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” The preponderance of evidence supports the conclusion that Respondent did not abandon the contract, or contracts, or refuse to perform. He was terminated by the other party, and up until the time of the termination was still taking steps to complete the job.

4. A.R.S. §32-1154.A.9. prohibits a contractor from “Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” As found, it is highly problematic to ascertain what prices were stated or agreed to between the parties, there being so many proposals, so many unsigned proposals, and so much contradictory testimony of what was agreed to or not agreed to verbally. Aside from those facts, there is insufficient evidence to conclude that Respondent was refusing to perform, whatever the price stated or modified price may have been.

5. A.R.S. §32-1154.A.3., prohibits a contractor from violating “any rule adopted by the registrar.” In this case, the rule cited is the rule addressing workmanship standards. Generally speaking, this rule requires all of a contractor’s work to be performed in a professional and workmanlike manner, and up to all applicable codes and industry standards. No evidence suggests that the work that was performed by Respondent was done in a shoddy manner, or in violation of codes. The only allegation that might touch and concern this rule is the allegation of abandonment or refusal to perform which already has been addressed.

6. A.R.S. §32-1154.A.7., prohibits “wrongful or fraudulent act[s] by the licensee as a contractor resulting in another person being substantially injured.” There is no evidence of fraud on the Respondent’s part other than holding out the corporation as a licensee, when in fact it was not licensed until November 16th, 1998. Even so, this misrepresentation alone cannot be concluded from the facts to have resulted in substantial injury to Complainant, unless the misrepresentation induced Complainant to contract or deal with Respondent, and he was monetarily damaged thereby. This question of monetary damage leads to the next conclusions, and for the reasons they state they prevent concluding that Respondent did or did not violate subsection 7.

7. In addition to what has been addressed in Conclusions ##3-6, it is obvious that the parties have a substantial controversy over how much money one owes the other for the work of the Respondent and payment of the Complainant to date. This is obviously a good faith money dispute between the parties, and one involving tens of thousands of dollars. As such, this is a dispute which cannot, and should not, here be resolved by the Registrar. This is a controversy more properly to be resolved in a civil court, as the Registrar ought not be the arbiter of monetary disputes outside the confines of recovery fund hearings or restitution. See: A.R.S. §32-1131 et seq.; Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430, review denied (App. 1990). This conclusion realizes additional support in the fact that the Complainant, after terminating the contract between he and Respondent, seeks now to have the Registrar revive a portion of the contract relating to the exterior lighting. Considering the uncertainty of the terms of whatever agreement the parties had, what Complainant asks would likely require the Registrar not only to revive a portion of the contract, but to write that portion for the parties as well. Altogether it is unadvisable for the Registrar to enter into such endeavors. This contract, ill-fated from the start as it was, has been terminated. Whatever remains is a question of damages, and the proper forum for its resolution Superior Court.

Recommended Order

Wherefore, it is hereby recommended that Citation and Complaint number T99-0708, together with the complaint on which it is based, be closed.

Dated this 18th day of August, 1999.

OFFICE OF ADMINISTRATIVE HEARINGS

_________________________________ Grant Winston Administrative Law Judge

Original mailed this day of August, 1999, to:

Michael P. Goldwater, Director Attn: Joyce Armijo Registrar of Contractors 800 W. Washington, 6th Floor Phoenix, AZ 85007

Transmitted by:

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