ALJDEC decisions subject to certification as final

03F-T0322-ROC · Registrar of Contractors · 2003-06-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: Tuesday, June 10th, 2003; 9:00 a.m. APPEARANCES: Complainant was represented by Mr. Jeffrey M. Hall, attorney-at-law. Respondent was represented by Mr. Mike Skupin, attorney- at-law. ADMINISTRATIVE LAW JUDGE: Grant Winston. _____________________________________________________________________ This matter was brought on for administrative hearing in the Office of Administrative Hearings, Tucson, Arizona. Testimony was heard and other evidence admitted to the record and, based on the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made. FINDINGS OF FACT 1. Respondent herein, Bailey Enterprises, LLC, doing business as Intelect, is, and during all time material hereto was, a contractor licensed by the Arizona Registrar of Contractors, holding Class L-11 License number 154428. 2. Complainant, Safeguard Security and Communications, Inc. (Safeguard), was subcontracted by respondent on July 19th, 2002, to install intercommunication and security additions to Indian Oasis School, in Sells, Arizona. The contract price term was $32,000.00. A company known as T L. Roof was the general contractor on the job. 3. Complainant completed work on the project in September of 2002, and on the 19th of that month invoiced respondent the agreed upon $32,000.00. Undisputed among the parties are the facts that complainant timely performed pursuant to the contract, and that complainant’s workmanship was in no way defective or incomplete. 4. Actually, a few days prior to the issuance of the invoice, on September 13th, 2002, respondent gave complainant a check for the full amount, $32,000.00. At that time, respondent’s Managing Member, Mr. Clinton Bailey, knew the Intelect account had not a balance adequate to cover the check. 5. Complainant deposited the check into its bank account on September 15th, 2002. Respondent’s check to complainant was dishonored by the payor bank on September 19th, 2002, for non-sufficient funds, and complainant was assessed a transaction fee of $50.00 incidental thereto. 6. Complainant has made numerous demands on respondent to pay the amount owed, and filed a civil action in Superior Court in and for the County of Maricopa in an effort to collect. 7. Mr. Bailey conceded in testimony that respondent was paid in full ($36,000.00) for its work on the Indian Oasis School project on September 17th, 2002. However, that money went elsewhere to satisfy other of respondent’s debts. Respondent now contends that it has insufficient funds to pay complainant until it receives payment for two of its other projects, one in Gilbert, and another in Scottsdale, Arizona. 8. Notice is taken of respondent’s prior license record with the Arizona Registrar of Contractors. CONCLUSIONS OF LAW 1. This administrative hearing was held under authority of and pursuant to A.R.S. §32-1156, and A.R.S. §41-1092. 2. Respondent in this case is cited in the citation and complaint with possible violations of A.R.S. §32-1154.A.7., and 11. 3. A.R.S. §32-1154.A.11. prohibits a licensed contractor, in pertinent part, from failing to pay more than $750.00 when due for services rendered in connection with the contractor’s operations as a contractor when the contractor has the capacity to pay, or, lacking capacity to pay, when the contractor has received sufficient money for the particular project in question. 4. Respondent claims incapacity to pay as a defense to the charge. However, the statute reads in the disjunctive, not the conjunctive. The respondent/contractor must pay when either it has the capacity to pay, or when it itself has received sufficient payment for the project in question to pay the complainant. “Sufficient” in this statute does not mean sufficient money to make payment to a subcontractor/complainant a financially comfortable act. When, as in this case, the respondent/contractor has received $36,000.00 in payment for the project in question, it has, received “sufficient” money to pay subcontractor/complainant the $32,000.00 owing on their contract. That the $32,000.00 in this case went to satisfy other of respondent’s debts is a fact of no consequence. 5. A.R.S. §32-1154.A.7. prohibits a licensed contractor from engaging in any wrongful or fraudulent act as a contractor which results in another person being substantially injured. The evidence proved both wrongful and fraudulent action on the part of respondent in knowingly issuing a bad check which caused complainant to suffer a $50.00 transaction fee. 6. Restitution should be made to complainant from respondent for the $50.00 pursuant to A.R.S. §32-1156.01. 7. Respondent did violate A.R.S. §32-1154.A.7., and 11. as set forth in the citation and complaint. RECOMMENDED ORDER In view of the foregoing Findings of Fact and Conclusions of Law, it is hereby recommended that respondent’s Class L-11 License number 154428 be revoked on the effective date of this order (40 days after the date of service shown on the Registrar’s certification on the order). It is further recommended that in the event the Registrar receives written proof of respondent’s payment to complainant of $32,050.00, on or before the effective date of this order, then the above-provided license revocation shall not occur, and instead the subject license shall be merely suspended on the effective date of this order for a period of three days. Done this day, June 26th, 2003.

________________________________ GRANT WINSTON Administrative Law Judge

Original transmitted by mail this ____ day of June, 2003, to:

Israel G. Torres, Director Registrar of Contractors ATTN: Jennifer Brown 800 West Washington, 6th Floor Phoenix, AZ 85007

By ____________________________

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