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.
However, on Tuesday, Tom Kennedy, President of La Macchia Group, issued this statement, according to the company’s media representative:
“La Macchia Group is aware of a payment dispute with Hughes Custom Performance (HCP) related to the construction of American Southwest Credit Union’s Thatcher, Arizona, branch.
The dispute involves a transactional privilege tax (TPT) administrative matter identified during project closeout. La Macchia Group has proactively offered a resolution that we believe addresses the full scope of HCP’s contractual compensation, and we remain committed to reaching a fair and timely outcome.
For 25 years, La Macchia Group has partnered with local contractors and vendors to keep investment and opportunity within the communities our clients serve. That approach reflects our core values and our commitment to honoring our obligations to every partner we work with.
American Southwest Credit Union (ASCU) has fulfilled all of its obligations on this project and bears no responsibility for this dispute. ASCU was an outstanding client, and the Thatcher branch was completed successfully and on time.
We look forward to resolving this matter.” – Tom Kennedy, President of La Macchia Group
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.
Editor’s Note: After publication, American Southwest Credit Union emailed the following statement to the Gila Herald.
“American Southwest Credit Union (American Southwest) is aware of a dispute involving La Macchia Group and Hughes Custom Performance (HCP) related to the construction of its Thatcher branch. This matter exists solely between those two parties. American Southwest is not a participant in their agreement or the dispute.
All contractual obligations on behalf of American Southwest associated with this project have been fully satisfied. The credit union was not involved in the contractual relationship between La Macchia Group and HCP, including the structure, execution, or administration of those agreements. American Southwest did not influence or control the terms between those parties and has no role in the issues currently being raised.
From the outset of the project, American Southwest made a deliberate effort to support the local economy by encouraging participation from local contractors and businesses whenever possible. This approach reflects the credit union’s broader commitment to strengthening the communities it serves. While construction projects can sometimes give rise to complex disputes, any matters related to payments or tax treatment in this case fall outside the scope of American Southwest’s involvement.
American Southwest remains a neutral third party and is not involved in resolving this matter. The credit union hopes all parties reach a timely and fair resolution.
For more information, visit ASCU.org or call 520-459-1860.”
