ALJDEC decisions subject to certification as final

07F-M2258-ROC · Registrar of Contractors · 2008-02-27

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 13, 2008 APPEARANCES: Complainant: James D. Murphy appeared, pro per. Respondent: Sean Kennedy, corporate officer and qualifying party, appeared telephonically, pro per. ADMINISTRATIVE LAW JUDGE: Brian E. Smith _____________________________________________________________________ Evidence and testimony were presented and, based on the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT 1. This matter convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated January 8, 2008. 2. Complainant James D. Murphy (“Complainant”) is an individual who was employed by Respondent pursuant to a verbal agreement to supervise various construction projects during 2006 and 2007. 3. Respondent Tri West Development Inc. (“Respondent”) is a corporation which holds Arizona Contractor’s License No. 192219, Class KB- (Dual Building) issued by the Registrar of Contractors (“ROC”) on January 12, 2004. Sean Edward Kennedy (“Kennedy”) is a corporate officer and the qualifying party for the license. A review of the licensing database maintained by the Registrar indicates that this license was suspended February 1, 2008 for non-renewal. 4. Complainant filed a complaint with the ROC on May 29, 2007 wherein he alleged, inter alia, non-payment of $11,000.00 as and for profit sharing for work performed on behalf of Respondent in 2006 and 2007. 5. On June 19, 2007, Complainant filed a request for hearing. 6. On September 20, 2007, the Registrar issued a CITATION AND COMPLAINT in Case No. M07-2258 charging Respondent with possible violations of A.R.S. §32-1154A 7 and 11. 7. Respondent filed an answer on October 5, 2007 wherein it alleged, inter alia, that “[r]etention has not been received for the mentioned project,…[c]laims of the project completed punch-list items were not completed,…[Complainant] possess [sic] company tools and computers, he refuses to return,…[p]rofit sharing was a projection of profit at that time December 2006 [and] profit sharing will be re-evaluated after all cost and final sales tax has been paid. The final job profit will supercede [sic] any previous projections” and Respondent is “awaiting response from client if any backcharges that may occur.” 8. At the hearing, Complainant testified and submitted Exhibits C-1 through C11 which were marked, admitted and considered. 9. Kennedy appeared at the hearing telephonically[1] on behalf of Respondent but presented no exhibits. 10. From the evidence elicited at the hearing, the following salient facts are important to note: a. In 2006, Complainant entered into a verbal employment agreement with Respondent to serve as a project superintendent on various Starbucks, Port of Subs and Safeway stores (“projects”). b. In accordance with the parties’ verbal agreement, Complainant would be paid an hourly wage as well as earn additional money under a profit sharing arrangement. c. Complainant testified that Respondent has paid him all hourly wages due during his employment and that he only seeks payment of the outstanding profit sharing due him. d. Complainant introduced Exhibits C-4 through C-10, Job Profitability Details for the subject projects obtained from Respondent, to evidence Respondent’s profit thereon. e. Complainant testified that due to the parties’ inability to agree on the exact amount of profit made on the subject projects as demonstrated by Exhibits C-4 through C-8, they agreed to a $14,000.00 flat amount of profit sharing for 2006 and 2007. f. On or about January 22, 2007, Complainant submitted to Respondent an Expense & Mileage Reimbursement Request (Exhibit C-1) which reflected a $3,000.00 “draw off of 2006 profit sharing.” g. On or about January 26, 2007, Respondent paid Complainant the above-referenced $3,000.00 profit sharing draw. (Exhibit C-2) h. On or about February 12, 2007, Complainant submitted to Respondent an Expense & Mileage Reimbursement Request (Exhibit C-3) which reflected the $11,000.00 balance due for “profit share draw 2006 and 2007.” i. Complainant testified that he has not received any portion of the $11,000.00 profit sharing balance from Respondent. j. Complainant acknowledged that he is in possession of various business assets/tools belonging to Respondent including, without limitation, a Dell computer/monitor, HP lap top, jackhammer with attachments, BOSC drill, fan, trowels, caulking gun and miscellaneous screws, etc which he retained in an effort to receive the outstanding profit sharing payment. k. Respondent did not dispute the $14,000.00 profit sharing verbal agreement but testified that the profit sharing needs to be renegotiated because of offsets, the adverse affects of a lawsuit arising out of one of the projects, retention issues and lesser than expected profits in 2006 and 2007.[2]

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent with possible violations of A.R.S. § 32-1154A (7) and (11). Those statutory sections require that the holder of a license or person listed on the license shall not commit the following:

7. The doing of a wrongful 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 his operations as a contractor when he has the capacity to pay or, if he lacks the capacity to pay, when he 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 this matter, pursuant to A.R.S. § 32-1101, et seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. To warrant such sanctions by the Registrar, Complainant must demonstrate by a preponderance of the evidence that Respondent violated any one, or more, of the statutory sections cited. 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.” In re Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994). See also, Culpepper v. State of Arizona, 187 Ariz. 43, 930 P.2d 508 (App. 1996). It is “evidence 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 (Rev. 6th ed. 1990). 3. It is determined and concluded that Complainant has established by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (11) by its refusal and/or inability to remit payment to Complainant of the $11,000.00 balance due as and for profit sharing earned for 2006 and 2007 on the subject projects. 4. The foregoing violation is deemed by this tribunal to have been wrongful and has resulted in substantial injury to Complainant. Therefore, a violation of A.R.S. §32-1154A 97) has been proved, as cited. 5. It has also been established that Complainant has in his possession various business assets/tools which admittedly belong to Respondent as is set forth in Finding of Fact 10 (j).

RECOMMENDED ORDER On the basis of the foregoing, IT IS RECOMMENDED that, commencing on the effective date of the Order entered in this matter, the KB-01 license of Respondent be suspended until the Registrar of Contractors receives written proof that Respondent has paid or tendered the sum of not less than $11,000.00 to Complainant as and for the outstanding balance due for 2006 and 2007 profit sharing owed on the subject projects provided, however, that Complainant contemporaneously returns to Respondent all of the latter’s business assets/tools in Complainant’s possession.[3] Done this day, February 27, 2008.

________________________ Brian E. Smith Administrative Law Judge

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

Registrar of Contractors Fidelis V. Garcia 3838 N. Central Ave., Ste. 400 Phoenix, AZ 85012-1906 By _____________________ ----------------------- [1] On February 12, 2008 at 4:51 p.m., Kennedy filed via facsimile with the Office of Administrative Hearings a correspondence wherein he requested to appear via telephone due to his now being located in Reno, Nevada. Although filed on the eve of the hearing and, therefore, untimely pursuant to A.A.C. R1-19-106, Kennedy’s motion was granted. [2] Respondent did not submit any documentation to support these factors. [3] 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 in this matter will be forty (40) days from the date of that certification.

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