ALJDEC decisions subject to certification as final

07F-A0203-ROC · Registrar of Contractors · 2007-06-06

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 6, 2007 APPEARANCES: Complainant : Charles Abraham appeared pro se. Respondent : Romy Smith, Qualifying Party, represented Mile High Custom Homes, L.L.C. ADMINISTRATIVE LAW JUDGE: Gary B. Strickland _____________________________________________________________________

A Hearing[1] was convened to determine whether Respondent Mile High Custom Homes, L.L.C. violated state law as has been alleged by Complainant Abraham Custom Contracting and as cited by the Arizona Registrar of Contractors (hereinafter also, “the ROC”). Evidence and testimony were presented. Respondent Mile High Custom Homes, L.L.C. holds a Class B- (General Residential Contractor) license issued by the Arizona Registrar of Contractors. Complainant alleges that Respondent owes Complainant money for work performed. Based upon an examination of the entire record,[2] the following Findings of Fact are made, Conclusions of Law rendered, and DECISION AND RECOMMENDED ORDER issued: FINDINGS OF FACT 1. Respondent’s license (No. 220057) was initially issued on May 12, 2006, with viability through May 31, 2008.[3] 2. Romy Cornela Smith is the Qualifying Party identified on the Mile High Custom Homes, L.L.C. (hereinafter also, “Mile High Custom Homes” or “the Contractor”) license. 3. The transaction at issue relates to alleged acts and omissions of a construction company licensed by the Registrar of Contractors; the subject agreement that Abraham Custom Contracting seeks to enforce was created in Arizona; and, the various transactions at issue by and between the parties occurred in Prescott Valley, Arizona. As such, the acts and omissions alleged in the Complaint filed by Abraham Custom Contracting fall within the requirements of Title 32, Chapter 10, Article 3. 4. Complainant Charles Abraham testified that he entered into a verbal agreement with Romy Smith of Mile High Custom Homes to perform framing construction and installation at a residence known as the “7150 Alto Desierto Dr. project.” Respondent’s Qualifying Party, Romy Smith, stipulates that the parties verbally agreed that the work would be performed. The parties further stipulated that Abraham has invoiced Mile High Custom Homes for $9,094. on the project, of which $1,019. remains unpaid. 5. After the agreement was entered, on September 22, 2006, Charles Abraham signed a Mile High Custom Homes, L.L.C. AGREEMENT RESPECTING INSURANCE, INDEMNIFICATION AND WARRANTY FOR THE YEAR 2006[4] whereby Abraham Custom Contracting agreed to indemnify and hold harmless Mile High Custom Homes from damage and loss resultant from Abraham Custom Contracting’s efforts on the 7150 Alto Desierto Dr. project. 6. Mr. Abraham stipulates that, in fact, Abraham Custom Contracting did not maintain either Worker’s Compensation or liability insurance at any time while it was engaged on the 7150 Alto Desierto Dr. project. 7. Mr. Abraham further acknowledges that Mile High Custom Homes delivered to him a document while he was working the project[5] wherein and whereby notice was provided to him that a Subcontractor’s failure to provide Mile High Custom Homes with proof of Worker’s Compensation and liability insurance would “result in cancellation of [its] contract.” Mr. Abraham stipulates that he did not provide Mile High Custom Homes with proof of Worker’s Compensation and liability insurance. 8. Believing that Mile High Custom Homes owed him money on the project, Mr. Abraham filed his Complaint to the ROC on October 18, 2006. In the Complaint, Abraham asserted that Mile High Custom Homes had not paid $6,394. for the work performed. At the Hearing, Mr. Abraham reduced his claim to $1,019. due and owing on the 7150 Alto Desierto Dr. project. 9. Because resolution was not forthcoming and upon request of the Complainant, the ROC issued a CITATION AND COMPLAINT on February 6, 2007 citing Mile High Custom Homes with alleged violation of A.R.S. § 32- 1154(A)(7) and (11) by its alleged failure to pay what is claimed. 10. Mile High Custom Homes filed an ANSWER to the CITATION AND COMPLAINT on February 21, 2007 defending against the Complaint by asserting as a defense, inter alia, Complainant’s wrongful breach of contract through its failure to satisfy the conditions laid out in the AGREEMENT RESPECTING INSURANCE, INDEMNIFICATION AND WARRANTY FOR THE YEAR 2006. 11. Thereafter, upon request of Abraham Custom Contracting, the ROC issued a NOTICE OF HEARING on May 3, 2007 and the Hearing convened pursuant thereto. At the Hearing, both parties presented evidence as set forth above. 12. It is Abraham Custom Contracting,’s burden to persuade through the presentation of competent, reliable, and probative evidence that Mile High Custom Homes has committed a “wrongful” or “fraudulent” act by its failure to pay monies due and owing. 13. It is Mile High Custom Homes’s burden to defend against the claim by presenting competent, reliable, and probative evidence that it has not made payment because it has a legally cognizable excuse for not doing so and has not acted in a manner violative of any legislative or Agency proscription. 14. While Abraham Custom Contracting has presented evidence in support of its claim, it cannot recover in face of Mile High Custom Homes’s uncontested rebuttal evidence of rightful withholding of payment. 15. Mile High Custom Homes has established that Abraham Custom Contracting breached its contract with it thereby relieving it of obligation to pay that which is presently claimed. 16. The weight and sufficiency of the evidence is uncontested that Mile High Custom Homes has legal excuse to cancel its contract with Abraham Custom Contracting. It has done so and is thereby not further obligated. . . . APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent with possible violations of A.R.S. § 32-1154(A)(7) and (11). Those statutory sections require that a holder of a license or a person listed on a license not commit the following:

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 Complaint No. A07-0203-ROC under A.R.S. § 32-1101, et seq., a chapter that authorizes the Registrar to impose disciplinary sanctions against licensees for violations of A.R.S. § 32-1154(A). At all times relevant, Mile High Custom Homes was a licensee. 2. The burden of persuasion generally at an administrative hearing falls to the party asserting a claim, right or entitlement, or an Agency seeking to impose a penalty.[6] Further, the standard of proof is that of the “preponderance of the evidence”.[7] 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.”[8] The evidence taken as a whole must convince the decision maker that the party who bears the overall burden of persuasion, in this case Complainant Abraham Custom Contracting, is more probably correct on the issue(s) in dispute. 3. Observing these standards, Complainant has not satisfied its burden, by a preponderance of the evidence, that Respondent Mile High Custom Homes has violated the controlling statutory and regulatory provisions by failing to pay monies due and owing. Respondent Mile High Custom Homes has manifested legal excuse for its refusal to pay further on the contract. As such, Mile High Custom Homes is not found to have violated A.R.S. § 32-1154(A)(11). 4. Mile High Custom Homes refusal to make further payment is neither wrongful nor fraudulent under A.R.S. § 32-1154(A)(7). 5. The Complaint ought to be dismissed.

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors enter an Order dismissing Complaint No. A07-0203-ROC. In the event of the certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty days from the date of that certification.

Done this 6th day of June 2007.

______________________________________ Gary B. Strickland Administrative Law Judge

Original transmitted by mail this 6th day of June 2007.

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

By ___________________________ ----------------------- [1] The Hearing was conducted via videoconferencing technology with the parties situated at the offices of the Registrar of Contractors in Prescott and the Administrative Law Judge located at the Office of Administrative Hearings in Phoenix.

[2] The record consists of those documents found within the Agency’s case file, the contents of which the Administrative Law Judge has accorded Administrative notice, the exhibits offered by the parties, respectively, and the digital record of the proceedings under A.A.C. R2-19-121. Respondent offered three exhibits, marked R-E, R-J, and R-K. Each of the exhibits was received.

[3] See http://www.azroc.gov/clsc/AZROCLicenseQuery

[4] Exhibit R-J.

[5] Exhibit R-K.

[6] See Ariz. Admin. Code R2-19-119(B).

[7] Culpepper v. Arizona Board of Nursing, 187 Ariz. 431, 930 P.2d 508 (App. 1997); See also Ariz. Admin. Code R2-19-119 (A).

[8] In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). See also J. LIVERMORE, R. BARTELS, & A. HAMEROFF, LAW OF EVIDENCE ( 301.1(4th ed. 2000) (One party bears the overall burden of persuasion on each fact material to the party’s claims and defenses. Further, the party with the burden of persuasion on a particular fact is required to satisfy the burden of production of enough qualitative evidence sufficient to support a finding of the existence of the fact, following a reasonable person standard.)

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