ALJDEC decisions subject to certification as final

06F-M0206-ROC · Registrar of Contractors · 2007-01-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 8, 2007. APPEARANCES: Hurley’s Gannon Service, Inc. was represented by its attorney, John D. Herbert, Esq. K B L Construction and General Contracting, LLC was represented by its attorney, Julianne C. Wheeler, Esq. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order:

FINDINGS OF FACT

1. Hurley’s Gannon Service, Inc. (“Complainant”) is the holder of License No. 205737 issued by the Registrar of Contractors. 2. K B L Construction and General Contracting, L.L.C. (“Respondent”) is the holder of License No. 137656, a Class A contracting license issued by the Registrar of Contractors. 3. Respondent hired Complainant in 2005 to provide work on the Weston Ranch project in Gilbert, Arizona. 4. Amberwood Homes was the general contractor for the Weston Ranch project. Respondent was its subcontractor. 5. By letter dated June 29, 2005, Complainant demanded payment from Respondent in the amount of $16,050.00 for work performed on the Weston Ranch project. 6. Respondent’s member, Joe Hernandez, testified that he and Complainant’s vice-president, Hurley J. Baker, had a meeting on or about July 4, 2005, to discuss the outstanding balance owed to Complainant. Mr. Hernandez testified that Respondent had some questions regarding some of Complainant’s billings and wanted Complainant to review and resubmit its billings. Mr. Hernandez testified that Respondent was prepared to pay Complainant from other financial sources once Complainant resubmitted its billings. 7. Complainant’s billings to Respondent were consistent with its past business practices with Respondent. Complainant’s billings were approved in the field by Respondent’s field management. 8. By letter dated July 21, 2005, Amberwood Homes advised Complainant that it had paid Respondent the total sum of $234,677.81, which it claimed was more than the original contract price between Amberwood Homes and Respondent. 9. On July 27, 2005, Complainant filed a written complaint against Respondent claiming Respondent owed it $16,050.00 for work performed on the Weston Ranch project. 10. On August 12, 2005, Mr. Hernandez wrote the following response to Inspector Cook of the Registrar of Contractors:

On or about May 4, 2005, KBL ran out of material to continue with the Weston Ranch project due to an error from the engineering firm. Mr. Allen Willis, Project Manager for Amberwood Homes, was sent to Weston Ranch for a meeting. Mr. Willis authorized KBL to over-excavate the streets and the retention area as well as to move the retention area 15’, all necessary to fill, finish and flood the pads. It was agreed that KBL would be paid $1.45 per cy plus additional equipment cost for this work, as an addition to the contract. Hurleys (sic) Gannon was hired to finish the residential pads as the over- excavation was completed. KBL Construction has only received a partial payment for the contract work. The lack of payment from Amberwood Homes, (sic) has prevented KBL from satisfying the obligations owed to Hurley. We are also filing a complaint against Amberwood for the remaining monies (see attached).

11. At the hearing, Mr. Hernandez testified that Respondent claims offsets in the amount of $5,000.00 against the $16,050.00 balance claimed by Complainant. That claim is found to be a bona fide dispute between the parties which should be resolved by a civil court of competent jurisdiction. 12. Complainant has established an undisputed entitlement to payment in the amount of $11,050.00 from Respondent. 13. Respondent’s failure to pay Complainant the undisputed sum of $11,050.00 is a wrongful act which has substantially injured Complainant. Mr. Hernandez credibly testified that Respondent had the financial ability to pay Complainant, but that it did not want to pay the disputed amounts.

CONCLUSIONS OF LAW

1. The Registrar of Contractors has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 3. The evidence of record demonstrated that Respondent violated the provisions of A.R.S. § 32-1154(A)(7), as cited in the Citation and Complaint issued by the Registrar of Contractors and as described in the above Findings. 4. The evidence of record demonstrated that Respondent violated the provisions of A.R.S. § 32-1154(A)(11), as cited in the Citation and Complaint issued by the Registrar of Contractors and as described in the above Findings. There is no credible basis for Respondent’s failure to pay Complainant the undisputed sum of $11,050.00.

RECOMMENDED ORDER Respondent’s Class A contracting license shall be suspended on the effective date of the entered Order in this matter until the Registrar of Contractors receives written proof that Respondent has paid Complainant the sum of $11,050.00. In the event Respondent pays Complainant the sum of $11,050.00 on or before the effective date of the entered Order in this matter, then the above-provided indefinite license suspension shall not take place, but instead Respondent’s Class A contracting license shall be placed on active suspension for 11 days following immediately by a period of disciplinary probation for 110 days, commencing on the effective date of the entered Order in this matter.[1] In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of that certification.

Done this day, January 29, 2007

______________________________________ Brian Brendan Tully Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2007, to:

Fidelis V. Garcia, Acting Director Registrar of Contractors Legal Department 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________ ----------------------- [1] The period of suspension is calculated at one day for the eleven hundred dollars, less $50.00, of the undisputed amount owed to Complainant and the period of probation is calculated at one day for 1% of the eleven hundred dollars, less $50.00.

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