ALJDEC decisions subject to certification as final

07F-M2098W-ROC · Registrar of Contractors · 2008-01-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 23, 2008 at 1:30 p.m. APPEARANCES: Complainant Four Peaks Mechanical LLC appeared through Donald C. Evenson, its sole member; Respondent Kaminsky Builders LLC dba Air Command appeared through Keith Kaminsky, its Qualifying Party and sole member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On March 17, 2005, the Registrar issued License No. ROC205393, Class C-39 for residential air conditioning and refrigeration to Respondent Kaminsky Builders LLC dba Air Command, a limited liability company. 2. On April 28, 2005, the Registrar issued License No. ROC206501, Class L-39, for commercial air conditioning and refrigeration to Respondent.[1] 3. Keith Kaminsky is the qualifying party and only member listed on Respondent’s licenses. 4. On April 23, 2007, the Registrar received a complaint from Donald C. Evenson of Complainant Four Peaks Mechanical LLC, a parts supplier,[2] which alleged that Respondent had ordered custom duct work and sheet metal parts from Complainant and had failed to pay $2,919.00 on a contract amount of $2,569.33. The claim included $600.00 in late fees, at a rate of $50.00 per month. 5. The Registrar referred the matter to Respondent for its immediate attention. 6. On June 28, 2007, the Registrar received Complainant’s request for hearing. 7. On September 20, 2007, the Registrar issued a Citation and Complaint against Respondent’s licenses, charging violations of A.R.S. § 32-1154(A)(7) and (11). 8. On September 26, 2007, the Registrar received Mr. Kaminsky’s written answer on behalf of Respondent to the Citation and Complaint, which denied any statutory violations and affirmatively alleged as follows: Four Peaks built ductwork for Air Command – Superior Job. The metal was substandard, the ducts fell apart before the install. I informed Four Peaks that I would pay for the material only, not for time and labor to make the ductwork. It ended up costing me time and labor to do the repairs in the field.

This is the only invoice out of all the invoices received that was approved and given a PO to build. All of the other stands and elbows were not approved by Air Command. I have asked many times to see signed invoices from either Keith or Chris Kaminsky and none have been produced. If Four Peaks built material for Larry Smith (a former employee of Air Command), then please be advised that a lawsuit is under way for Larry illegally ordering parts and other products under Air Command accounts. Please contact the Mesa Police Department.

I will pay for material only for the Superior job, but not the time and labor to build a product that last only six (6) hours.

9. The Registrar referred the matter to the Office of Administrative Hearings and, on November 28, 2007, issued a Notice of Hearing. 10. After one continuance, a hearing was held on January 23, 2007. Complainant presented the testimony of Donald C. Evenson and David T. Evenson and had admitted into evidence three exhibits. Respondent presented Mr. Keith Kaminsky’s testimony. Hearing Evidence 11. D.T. Evenson is Complainant’s shop manager. In late December, 2005, Respondent’s service manager Larry Smith inquired about purchasing parts through Complainant. 12. Between December 2005 and the end of March 2006, Larry Smith was authorized to act on Respondent’s behalf. 13. On December 22, 2005, D.T. Evenson faxed to Mr. Smith a bid on the parts requested. On January 3, 2006, Mr. Smith on behalf of Respondent faxed back an acceptance of Complainant’s bid to Mr. D.T. Evenson. 14. Complainant assembled the parts that Respondent had ordered, all of which were mass produced. Complainant did not assemble any of the parts that Respondent had ordered initially. 15. Respondent sent one of its company trucks to pickup the order from Complainant’s office. Complainant’s employees loaded the parts into Respondent’s company truck at Complainant’s office. 16. On January 12, 2006, Complainant issued Invoice #1661 for Respondent’s first order, which showed a total of $1,379.49 and a payment/credit of $250.00, for a total due of $1,129.49. Mr. D.T. Evenson testified that, because Complainant wished to cultivate Respondent as a customer, he did not mark up the manufacturers’ prices for any of the parts. Complainant still has all the manufacturers’ invoices for all the mass-produced parts that Respondent ordered. 17. The terms of Invoice #1661 and all subsequent invoices were days net. 18. Respondent complained that one of the 31 spiral pipes had unraveled. Although this was a mass-produced item that should not have unraveled absent a manufacturing defect, Complainant contacted the manufacturer and replaced the allegedly defective spiral pipe. Respondent did not make any further complaints about the first order. 19. After the initial order, Mr. Smith on behalf of Respondent ordered more mass produced items from Mr. D.T. Evenson. 20. After the materials on Respondent’s second order had been delivered from the manufacturers, Complainant’s employees again loaded the items into one of Respondent’s company trucks at Complainant’s office. 21. On January 18, 2006, Complainant issued Invoice No. 1664 to Respondent for 48 “HC RND DIFFUSER” of various sizes, in the total amount of $795.92. Again, Mr. D.T. Evenson did not markup the manufacturer’s prices to Respondent. 22. After the second order, Mr. Smith on behalf of Respondent ordered a rooftop elbow from Mr. D.T. Evenson, which Complainant had to fabricate on site. 23. After the elbow had been fabricated, Complainant’s employees loaded it into Respondent’s truck at Complainant’s office. 24. On January 23, 2006, Complainant issued Invoice #1668 to Respondent in the total amount of $150.00 for the elbow. 25. After the third order, in March 2006, Mr. Smith on behalf of Respondent ordered a pitched rooftop angle iron stand from Mr. D.T. Evenson, which Complainant had to fabricate on site.

26. After the pitched rooftop angle iron stand had been fabricated, Complainant’s employees loaded it into Respondent’s truck at Complainant’s office. 27. On March 23, 2006, Complainant issued Invoice #1720 to Respondent in the total amount of $65.00 for the pitched rooftop angle iron stand. 28. Several days later, Mr. Smith on behalf of Respondent ordered a tee cap and stamp 4-way ceiling diffuser from Mr. D.T. Evenson, both of which are mass-produced items. 29. After the manufacturers had delivered the tee cap and stamp 4- way ceiling diffuser, Complainant’s employees loaded the parts onto Respondent’s truck at Complainant’s office. 30. On March 28, 2006, Respondent issued Invoice #1723 in the total amount of $68.92 for the tee cap and stamp 4-way ceiling diffuser. 31. In April 2006, Complainant began making efforts to collect on Respondent’s account. Mr. D.C. Evenson contacted Respondent’s bookkeeper, Christine Kaminsky, and she told him that Respondent did not have sufficient funds to pay off the account. Ms. Kaminsky agreed to begin making monthly payments on the account. She did not object to any of the invoices or amounts. 32. On May 2, 2006, Ms. Kaminsky issued check no. 1957, made payable to Complainant, in the amount of $250.00. Respondent has made no further payments on the account. 33. Mr. Smith never provided Purchase Order (“PO”) information to Complainant to put on the invoices, which would have allowed Respondent to determine at which jobsite the parts were used. 34. Mr. D.C. Evenson testified that, whenever a contractor’s employee comes to Complainant’s office to pick up parts, Complainant always confirms the order with someone in the office. 35. Mr. Kaminsky testified that he did not believe that all of the parts described on the invoices had been placed in Respondent’s trucks because he was not personally there to check the parts. 36. Mr. Kaminsky testified that, although Mr. Smith had been authorized to order parts on behalf of Respondent, he had embezzled more than $100,000 from Respondent. The matter was in federal court. 37. Mr. Kaminsky testified that he needs a list of all the serial and parts numbers of the parts that Complainant says it loaded into Respondent’s trucks so that he can locate the parts on Respondent’s various jobs. He desires to have proof that the parts were used on Respondent’s jobs, rather than converted to Mr. Smith’s personal use, before he pays Complainant for any more of the parts. 38. Mr. D.C. Evenson testified that some of Complainant’s parts customers provide PO numbers. However, because Complainant also holds a contractor’s license and is therefore a competitor with its customers, Complainant does not ask customers to identify the jobs that parts will be used on unless the customer volunteers the information. 39. Mr. Kaminsky did not testify that any of the parts on any of the invoices were defective. 40. When the Administrative Law Judge asked Mr. Kaminsky if Mr. Smith’s embezzlement threatened Respondent’s ability to remain in business, Mr. Kaminsky answered that Respondent had “bounced back” and currently was solvent. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[3] 2. Complainant bears the burden of proof and must establish Respondent’s contracting law violations by a preponderance of the evidence.[4] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[5] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[6] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[7] 3. When Mr. Smith was ordering parts from Complainant, Respondent had authorized him to make such orders. Because Mr. Smith was Respondent’s duly authorized agent, Respondent is responsible for any contracts that Mr. Smith made while acting under the color of Respondent’s authority. As between Complainant and Respondent, Respondent bears the risk of Mr. Smith’s defalcation. 4. Complainant has borne its burden to establish that Mr. Smith on behalf of Respondent ordered the parts described in Invoice #1661, #1664, #1668, #1714, #1720, and #1723 and that Complainant delivered these parts by loading them into Respondent’s trucks. 5. Complainant therefore has established that Respondent violated A.R.S. § 32-1154(7) and (11) when it failed to pay the outstanding amounts due under Invoice #1661, #1664, #1668, #1714, #1720, and #1723, which the Administrative Law Judge calculates as $2,069.33.[8] 6. Complainant has not borne its burden to establish that the bid or any of the invoices provided for late fees or that Respondent ever agreed to pay late fees. 7. Respondent presented no evidence that it ever required Complainant to put PO numbers on its invoices to enable Respondent to identify the jobsites at which the parts were used. It also did not establish that any of the parts ordered were defective or any other legal excuse for its failure to pay Complainant’s invoices. RECOMMENDED ORDER In view of the foregoing, it is recommended that, on the effective date of the Registrar’s order in this matter, the Registrar suspend Respondent Kaminsky Builders LLC dba Air Command’s License Nos. 205393, Class C-39 and 206501, Class L-39, until the Registrar receives proof in writing from Respondent that it has paid Complainant Four Peaks Mechanical LLC $2,069.33. It is further recommended that if, on or before the effective date of the order, the Registrar receives proof in writing from the Respondent that it has paid Complainant $2,069.33, the Registrar should not suspend Respondent’s license but, instead, should close Case Nos. M07-2098 and M07- 2098W. Done this day, January 31, 2008.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of February, 2008, to:

Registrar of Contractors Fidelis V. Garcia, Director 3838 N. Central Ave., Ste. 400 Phoenix, AZ 85012-1906

By ___________________________ ----------------------- [1] At the time of hearing, that license had been suspended for nonrenewal. [2] Complainant is also a licensed air conditioning and refrigeration contractor to whom the Registrar has issued License Nos. ROC177245, Class K- (expired) and ROC202807, Class K-39. However, the dispute in this matter arose while Complainant was acting in the capacity of supplier, not contractor. [3] See A.R.S. § 32-1101 et. seq. [4] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [5] See A.A.C. R2-19-119(B)(2). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] Black’s Law Dictionary at page 1220 (8th ed. 1999). [8] $1,129.49 (#1661) + 795.92 (#1664) + 150.00 (#1668) + 110.00 (#1714) + 65.00 (#1720) + 68.92 (#1723) – 250.00 (ck #1957) = $2,069.33.

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