ALJDEC

02F-F0027-ROC · Registrar of Contractors · 2002-01-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 7, 2002. APPEARANCES: COMPLAINANT: Steve Burnett, sole proprietor. RESPONDENT: by Earl Bakken, authorized representative.

ADMINISTRATIVE LAW JUDGE: Anthony Halas. _____________________________________________________________________

The hearing in this matter was convened to determine whether Respondent violated state law as alleged by Complainant and as cited by the Registrar of Contractors (Registrar). Evidence and testimony were presented, and based on the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Decision are made:

FINDINGS OF FACT 1. Steven Burnett (Burnett) is a sole proprietor dba Arizona Wastewater Service (Arizona Wastewater Service), Complainant herein. The company holds Arizona Contractor's License No. 096719, Class C-41. Burnett is qualifying party on the license. 2. Respondent Advanced Commercial Construction dba ACS (ACS) is a corporation holding License No. 164933, Class B. Earl Bakken (Bakken) is a corporate officer, qualifying party on the license, and authorized representative for this proceeding. 3. On August 6, 2001, Complainant Arizona Wastewater Service filed a complaint with the Registrar of Contractors (Registrar) alleging an amount due of $7990.36 on its subcontract with Respondent ACS. 4. When the complaint was not administratively resolved and Complainant requested a hearing, the Registrar issued CITATION AND COMPLAINT to Respondent on September 27, 2001, charging the license with possible violations of A.R.S. § 32-1154.A.7 and A.11. On Respondent's timely written answer to the CITATION AND COMPLAINT, the matter was set for hearing. 5. At hearing on January 7, 2001, Steven Burnett appeared and testified for Complainant Arizona Wastewater Service. Earl Bakken appeared and testified for Respondent ACS. On the basis of the testimony and evidence adduced at hearing, and administrative notice of the record, the undersigned determines that: A. Sometime prior to April, 2001, Respondent contracted with homeowner Fishel to construct a residence at 105 Rockridge Drive, in Sedona, Arizona. B. Respondent then subcontracted with Complainant on April 14, 2001, for the installation of a wastewater treatment plant at the residence. The price term of the subcontract was $10,331.00. (Exhibit 1, p. 1). C. On February 6, 2001, Respondent provided notice to Complainant to proceed. (Exhibit 1, pp. 2-3). D. Complainant worked onsite between May and July, 2001, by which time the subcontract work and certain additional work Respondent authorized Complainant to perform was all substantially completed. E. The additional work was invoiced as follows: time and material for haul-off, $192.00 (Exhibit 2, p. 1); extra haul-off, $508.75 (Exhibit 2, p. 2); and, 8" drain-pipe installation, $650.61 (Exhibit 2, p.3). F. With the additional work, the total subcontract price became $11,682.36. Prior to August 6, 2001, the date the complaint at issue was filed, Respondent made payments to Complainant totaling $3692.00, for a balance due of $7990.36, as stated in the complaint. G. On August 16, 2001, Respondent paid an additional $500.00 to Complainant. No additional payment has been made since, leaving the present balance due as $7490.36, exclusive of any finance charges or legal fees. H. Burnett testified to describe the work done by Complainant on the subcontract and by additional agreement, and to confirm payments made by Respondent. He stated the work had been completed in a workmanlike manner, without complaint by the homeowner or general contractor. I. In his testimony for Respondent, Bakken did not dispute $7490.36 as the present balance due Complainant.[1] He explained that his company's former estimator had underbid many aspects of the general contract with the homeowner (including allowing only $8500.00 for the wastewater installation). J. Bakken conceded that the homeowner had paid Respondent the amount allowed for the wastewater treatment installation, but stated that because the project had been underbid, the company was unable to pay all its subcontractors completely. He also noted that Respondent ACS was just about to complete the project, and then calculate a final accounting to bill the homeowner for amounts due Respondent under the general contract.

APPLICABLE LAW A.R.S. § 32-1154.A provides, in pertinent part, as follows: A. The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: . . . . . 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. . . . . .

11. Failure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee's operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over this matter, pursuant to A.R.S. § 32-1101, et. seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. To warrant such sanctions by the Registrar, Complainant must demonstrate by a preponderance of the evidence that Respondent violated either or both of the statutory sections cited. Culpepper v. State of Arizona, 187 Ariz. 431, 930 P.2d 508 (App. 1996). Proof by a “preponderance” means that “the evidence is sufficient to persuade the finder of fact that the proposition is more likely true than not.” In re: Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994. It is “evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (Rev. 6th ed. 1990). 3. The undersigned concludes that Complainant has demonstrated by a preponderance of the evidence that Respondent ACS has failed to pay $7490.36 when due for services rendered by Complainant. 4. Because Respondent's License No. 164933, Class B remains in good standing, and should therefore provide Respondent with the capacity to generate business and income, the undersigned concludes that Respondent retains the capacity to pay the amount due. 5. However, assuming arguendo that Respondent lacks the capacity to pay, it is determined that Respondent has received sufficient monies from the homeowner as payment for the services rendered by Complainant but has still failed to pay for those services. 6. Therefore a violation of A.R.S. § 32-1154.A.11 has been proven. 7. This is so, despite that Respondent appears not to have been fully paid on its general contract with the homeowner, which fact is deemed to be a mitigating consideration, such that the evidence does not demonstrate any fraudulent or wrongful act in violation of A.R.S. § 32- 1154.A.7.

RECOMMENDED DECISION On the basis of the foregoing, IT IS RECOMMENDED that, commencing on the effective date of the Order entered in this matter, the Class B license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has paid or tendered the sum of $7490.36 to Complainant. IT IS FURTHER RECOMMENDED that if Respondent pays or tenders the above sum of money to Complainant on or before the effective date of the Order entered in this matter, then the aforementioned license suspension shall not take place. Done this day, January 15, 2001.

______________________________________ Anthony Halas Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2002, to:

Registrar of Contractors Michael P. Goldwater ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] Bakken and Burnett confirmed that further inspection of the work done on the job site might result in mutual agreement to adjust the $650.61 charged for the 8" drainpipe installation, but Bakken did not dispute that amount as invoiced.

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