ALJDEC decisions subject to certification as final

07F-2035-ROC · Registrar of Contractors · 2007-12-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 13, 2007. APPEARANCES: Complainant was represented by its vice-president Bruce Heller; Respondent was represented by attorney William Kozub. ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ The issue presented in this matter is whether Respondent Hallcraft Construction Inc. is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154. Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: FINDINGS OF FACT Hallcraft Construction Inc., (“Respondent”) is the holder of a Class B- License (No. 158871) issued by the Registrar of Contractors (“ROC”). Eugene Baker is Respondent’s president. Crout and Heller Painting Services Inc. (“Complainant”) is the holder of a Class K-34 License (No. 176126) issued by ROC. Bruce Heller is Complainant’s vice-president.

Complainant and Respondent entered two contracts in which Complainant agreed to provide painting services at a subdivision in Pinal County. See Exhibits 2 and 3. The parties agree that Respondent has not paid Complainant $54,381.00 for those services. Complainant filed a Complaint and ROC issued a Citation and Complaint No. 07-2035 charging that Respondent may have violated A.R.S. § 32-1154(A)(7) and (A)(11). Respondent filed a Written Answer to Citation and Complaint (the “Answer”) asserting that it did not have the capacity to pay the money owing to Complainant and that Respondent had not received payment for the services provided by Complainant. Respondent also explained that there had been litigation involving the owner of the subdivision and others that resulted in the funding bank (“Ohio Bank”) refusing to release construction funds. The Answer included a copy of an Order issued by District Court Judge Earl H. Carroll that resolved the ownership issue. Respondent anticipated that the bank would release funds within about 6 months of the date the Answer was filed and Complainant would then be paid. ROC issued a Notice of Hearing on November 8, 2007 setting the matter for 1:30 p.m. December 13, 2007. Mr. Heller and Mr. Baker each testified. Mr. Baker confirmed that Respondent owes the money at issue, but testified that it has no funds to pay. Respondent has no employees that are being paid and has only one existing project (“Gladden II”), but payments to subcontractors working on that project are made directly from the lending institution Mr. Baker testified that Respondent is essentially insolvent, but has not filed for bankruptcy because if the Ohio Bank releases the funds, Respondent may be able to avoid bankruptcy. Mr. Baker testified that his legal counsel is not being paid. Mr. Baker has used the same counsel since the 1980s and it is based on this long relationship that counsel is currently providing services.

Respondent has about $300.00 to $500.00 in the bank and has passed money through that account to keep the Gladden II project going. Mr. Baker testified that all money that Respondent has received for work completed by Complainant has been paid to Complainant. Complainant has also filed a lawsuit in Maricopa County Superior Court alleging breach of contract based on the same facts at issue in the instant matter. See Exhibits 43 and 45.[1] CONCLUSIONS OF LAW Generally the party asserting a claim or right bears the burden of proof at an administrative hearing, but a party asserting an affirmative defense bears the burden of proof with respect to that defense. The standard of proof is that of the preponderance of the evidence. See A.A.C. R2-19-119. A preponderance of the evidence is “[e]vidence 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 (6th ed. 1990). Complainant has not met the burden of proof to show that Respondent violated A.R.S. § 32-1154(A)(7). Mr. Baker provided testimony that Respondent does not have the capacity to pay the amount Respondent owes Complainant, and that Respondent has not received money for work completed by Complainant without paying Complainant. Complainant did not rebut or refute that testimony. Consequently, the preponderance of evidence does not show that Respondent violated A.R.S. § 32-1154(A)(11). Because there is no proven violation of A.R.S. § 32-1154 this matter should be dismissed. RECOMMENDED ORDER IT IS RECOMMENDED that no discipline be imposed on Respondent’s Class B License No. 15887, and that Citation No. 07-2035 and the Complaint upon which it is based should be dismissed. 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, December 14, 2007

______________________________________ Thomas Shedden Administrative Law Judge

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

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

By ___________________________ ----------------------- [1] Only 5 exhibits were admitted into evidence: Complainant’s Exhibits 1, and 3 and Respondent’s Exhibits 43 and 45.

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