J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors

690 P.2d 119, 142 Ariz. 400, 1984 Ariz. App. LEXIS 489
CourtCourt of Appeals of Arizona
DecidedAugust 21, 1984
Docket1 CA-CIV 5870
StatusPublished
Cited by65 cases

This text of 690 P.2d 119 (J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 690 P.2d 119, 142 Ariz. 400, 1984 Ariz. App. LEXIS 489 (Ark. Ct. App. 1984).

Opinion

OPINION

GRANT, Judge.

This appeal arose out of a contract dispute between J.W. Hancock Enterprises, Inc., dba Camelot Homes (Camelot) and Stephen and Mary Hancock. In cause no. C-397842 Camelot filed a declaratory judgment action to determine whether it had contracted to install zonolite wall insulation in a house constructed for and purchased by the Hancocks. In cause no. C-397843 Camelot sought through statutory appeal a review, of the decision by the Arizona State Registrar of Contractors (Registrar) finding Camelot in violation of A.R.S. § 32-1154(3) 1 for failing to install zonolite wall insulation in the residence Camelot constructed and sold to the Hancocks. The two actions were consolidated in the trial court.

On appeal the following issues are raised:

(1) whether the Registrar construed and interpreted a disputed contract thereby violating article III of the Arizona Constitution;
(2) whether the decision of the Registrar was illegal, arbitrary and capricious, and contrary to the law;
(3) whether the trial court abused its discretion in the statutory appeal in refusing to consider additional evidence;
(4) whether the decision in the statutory appeal should be given preclusive effect in the declaratory judgment action;
(5) whether the trial court awarded excessive attorneys’ fees in the declaratory judgment action.

*403 FACTS

The facts are as follows: On January 17, 1977, Camelot, a licensed contractor, entered into a written agreement with the Hancocks. Camelot agreed to construct a house on lot 28 in a development known as “Summer Shadows”, and the Hancocks agreed to purchase improved lot 28. Thereafter, on February 2, 1977 the Hancocks and Camelot entered into a supplemental agreement. For $495 Camelot was to install “R-30 insulation package w/2” and batts and 2x2 furring at ext. masonry walls.”

After moving into the residence and unsuccessfully trying to resolve a dispute as to whether the February 2nd supplement required installation of zonolite wall insulation, the Hancocks filed a complaint with the Registrar sometime in 1978. A hearing was held on August 20, 1979 concerning the complaint. Camelot did not retain an attorney to represent it at the hearing. The Registrar issued a Decision and Order on September 11, 1979 finding that the parties had contracted for an insulation package including zonolite wall insulation. Based on this finding the Registrar found a violation of A.R.S. § 32-1154(3), which requires a licensed contractor to comply with the agreed upon plans and specifications. The Registrar ordered Camelot to either install the zonolite or have its contracting license suspended.

Camelot retained present counsel apparently after the Registrar’s decision. Camelot then petitioned the Registrar for a rehearing, in part moving to include additional evidence. The Registrar denied the petition for rehearing and declined to admit additional evidence.

On October 29, 1979 Camelot filed the instant statutory appeal and declaratory judgment action. In the statutory appeal, the trial court entered judgment, which included rule 54(b) language, on November 25, 1980 affirming the decision of the Registrar. Based on the decision in the statutory appeal, the lower court subsequently granted summary judgment in favor of the Hancocks in the declaratory judgment action. Camelot timely appealed both judgments.

CONSTITUTIONALITY

After a hearing the Registrar found the February 2, 1977 supplemental agreement as it related to the additional insulation, to be ambiguous and construed the ambiguity against Camelot, the drafter of the document. Therefore, since zonolite wall insulation was not installed as required the Registrar found Camelot in violation of A.R.S. § 32-1154(3). A.R.S. § 32-1154, in part, provides:

The registrar may upon his own motion, and shall upon the verified complaint in writing of any person, investigate the acts of any contractor within the state, and may temporarily suspend, with or without the imposition of specific conditions in addition to increased surety bond or cash deposit requirements, or permanently revoke any or all licenses issued under this chapter if the holder thereof, while a licensee hereunder, is guilty of or commits any of the following acts or omissions:
* * * * * *
3. Departure from or disregard of plans or specifications ... in any material respect, and prejudicial to another without consent of the owner or his duly authorized representative, and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications____

Camelot argues that where there is a bona fide dispute over the interpretation of a contract, the Registrar of Contractors does not have jurisdiction to resolve the contractual dispute. The resolution of bona fide contractual disputes is solely a judicial function, it is argued, 2 which can *404 not constitutionally be exercised by an administrative agency. Camelot relies on the decisions in Trico Electric Cooperative, Inc. v. Ralston, 67 Ariz. 358, 196 P.2d 470 (1948), and General Cable Corp. v. Citizens Utilities Co., 27 Ariz.App. 381, 555 P.2d 350 (1976).

Appellees, relying on the decision in Batty v. Arizona State Dental Board, 57 Ariz. 239, 112 P.2d 870 (1941), counter with the argument that the legislature may constitutionally confer quasi-judicial powers upon an administrative agency. The power to determine facts and apply the law is not exclusively judicial, so that the real issue is one of primary jurisdiction — which body, the Registrar or the courts, should first address the issue in dispute. Applying the primary jurisdiction test discerned from Campbell v. Mountain States Telephone & Telegraph Co., 120 Ariz. 426, 586 P.2d 987 (App.1978), appellees conclude that the Registrar properly resolved the contractual dispute incidental to its regulatory function.

The starting point in any separation of powers analysis is article III of the Arizona Constitution which provides:

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Bluebook (online)
690 P.2d 119, 142 Ariz. 400, 1984 Ariz. App. LEXIS 489, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jw-hancock-enterprises-inc-v-arizona-state-registrar-of-contractors-arizctapp-1984.