By Jon Johnson
THATCHER — Brian Hughes of Hughes Custom Performance (HCP), the general contractor for the newly completed American Southwest Credit Union building, says his company is still owed more than $309,000 in final payment and retainage — months after the project wrapped up — due to a dispute over transactional privilege tax (TPT) payments.
Hughes, who has operated in the Gila Valley since late 2006, called the withholding a clear breach of contract and violation of Arizona law. He alleges that the La Macchia Group, the Wisconsin-based design firm that hired HCP, is improperly withholding the funds despite the project’s successful completion and HCP’s full compliance with its tax obligations.
According to Hughes, HCP was initially approached as a potential subcontractor but instead signed on as the general contractor and used mostly all local subcontractors to complete the project. Despite challenges such as site elevation issues and a delay with a specialized glass door — which Hughes personally addressed by upgrading laminate countertops to quartz at a cost of roughly $18,000 — the work was completed on time. Final walkthroughs were completed, and a Certificate of Occupancy was issued.
“I billed them on April 16 for $309,637.11, which included the final payment and all 10% retainage,” Hughes said. “That was due April 30.”
He received an email from La Macchia on April 27 indicating the payment was being processed. However, days later, the firm notified him it would withhold approximately $115,731 related to TPT.
Hughes emphasized that the contract explicitly required HCP to collect and remit Arizona sales taxes—a responsibility the company fulfilled across 10 pay applications and fully documented. He claims La Macchia’s accounting team double-paid or mishandled the taxes, paid the state directly, and now wants HCP to pursue a refund from the Arizona Department of Revenue while accepting only a partial payment.
“They’re wanting me to sign a document acknowledging that they’re going to pay part of it, and that I have to go ask the state for a refund,” Hughes said. “That wasn’t my contract. I followed the contract.”
Hughes said his attorney and staff have confirmed with the Arizona Department of Revenue that La Macchia can seek the refund directly. Arizona law, he noted, prohibits withholding final payment over a tax dispute when the work has been satisfactorily completed.
“All of this is a TPT dispute,” Hughes said. “They recognize that in their emails, yet they’re withholding it. The law says you can only withhold for unsatisfactory work or faulty materials — not this.”
HCP has paid all its local subcontractors in full, protecting them from the dispute. However, the withheld amount represents HCP’s profit margin and is straining the small, family-run operation, which Hughes, after a hiatus, restarted in 2023 in partnership with his son, Brennan, and wife, Tenille.
The company has retained legal counsel, is preparing a notice of claim, and has filed a complaint with the Arizona Registrar of Contractors (ROC), which has notified La Macchia. Hughes said he is prepared to pursue litigation or mediation if necessary and is seeking the full amount plus 18% interest and attorneys’ fees.
Hughes expressed frustration with what he described as a pattern of larger out-of-state firms pressuring smaller local contractors.
“Big guys pick on the little guys all the time,” he said. “I’m just not interested in letting it slide. I want to make a stance.”
He hopes that public attention and perhaps some encouragement from American Southwest Credit Union will prompt a resolution. The Gila Herald reached out to the La Macchia Group for comment but had not received responses by press time. If a resolution isn’t reached quickly, Hughes advised that he would pursue litigation.
The credit union project was celebrated locally upon completion for its benefits to the community. Hughes said the experience has reinforced the importance of filing liens early on future projects, despite earlier assurances received during the groundbreaking.
HCP began as a subcontractor in the Gila Valley and grew into a full general contractor by late 2007, focusing on custom homes and later expanding into commercial construction. After a hiatus working at a local mine, Hughes restarted the company in 2023 in partnership with his son, Brennan, and wife, Tenille.
The firm now handles residential and commercial projects (including MGRMC’s new pharmacy and office expansion/renovation), restoration, mine-contract work, and related services through its affiliated companies, including HCP Cleaning. Past commercial work includes the Copper Hills Dental building and the Gila Institute for Technology. The company will be starting two new subdivisions, according to Hughes, 1-acre lots just east of Safford and a large subdivision in Pima near Ferrin’s Corner, as well as other projects.
