ALJDEC decisions subject to certification as final

08F-2658-ROC · Registrar of Contractors · 2009-03-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 10, 2009 APPEARANCES: Todd Kartchner, Esq. represented Complainant The ACES. Respondent Rex Allen Stevens, doing business as Rex Construction, failed to appear. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ The question presented by this matter is whether Respondent Rex Allen Stevens, doing business as Rex Construction (“Rex”), is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154(A). Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: Procedural Background On February 6, 2009, the Registrar of Contractors issued a Notice of Hearing advising the parties that the scheduled hearing in this matter would convene on March 10, 2009 at 9:00 a.m. On the date and at the time scheduled for the hearing, Todd Kartchner, Esq. represented Complainant The ACES. No one appeared on behalf of Rex. The Administrative Law Judge delayed the commencement of the hearing for approximately fifteen minutes to allow for the appearance of Rex, or the receipt of any information that would constitute good cause for Rex’s absence or delay. No such information was received. Therefore, the hearing proceeded in Rex’s absence. FINDINGS OF FACT 1. Rex is the holder of a Class B-02 license (No. 231623) issued by the Registrar of Contractors (“ROC”). Rex was the general contractor for the addition of four classrooms to The ACES (The Austin Centers for Exceptional Students), a special education school, located at 6815 West Cactus Road in Peoria, Arizona. 2. On February 25, 2008, Francie Austin, the President and owner of The ACES filed a complaint against Rex with the ROC generally alleging that (1)Rex failed to pay its framing and drywall subcontractor, All Jobs Construction (“All Jobs”), in the amount of $14,441.22; (2)failed to pay the electrical subcontractor, Solid Ground Electrical (“Solid Ground”), in the amount of $1,500.00; and (3)failed to pay Solid Ground’s electrical supplier, Rexel Phoenix Electric (“Rexel”), in the amount of $11,046.99. 3. Pursuant to the terms of the parties’ contract, Rex “will be responsible for preparing and obtaining a lien release for each check that the Owner releases to a subcontractor. The General Contractor shall insure that no payments are released to subcontractors without first obtaining an unconditional lien release for that payment.” See Exhibit 2, page 2. 4. Ms. Austin testified that she obtained all lien releases from Rex, and on November 9, 2007, obtained a final lien release for the project, indicating that The ACES had paid Rex in full. See Exhibit 1. 5. On November 1, 2007, Rexel filed a Notice and Claim of Mechanics’ and Materialman’s Lien in the amount of $11, 046.99. See Exhibit 3. 6. Ms. Austin testified that on March 27, 2008, Rexel filed a Complaint in Maricopa County Superior Court naming The ACES as a Defendant, and alleging that Rexel has not been paid for electrical materials worth at least $11,046.99. See Exhibit 3. 7. Ms. Austin credibly testified that Rex has been notified of the lawsuit, and that The ACES has made a demand on Rex to defend The ACES in the lawsuit. Rex has not responded. 8. On October 11, 2007, All Jobs filed a Notice and Claim of Lien for Labor, Services, Material, Machinery, Fixtures, and/or Tools, in the amount of $14,441.22. See Exhibit 4. 9. Ms. Austin testified that on May 21, 2008, All Jobs filed a Crossclaim against The ACES and a Third Party Complaint Against Rex Construction, Inc. in Maricopa County Superior Court, alleging that Rex owes All Jobs the sum of $14,441.22 plus interest thereon. See Exhibit 4. Ms. Austin credibly testified that Rex advised her that Rex’s employees had performed all framing, drywall, and acoustical work. Ms. Austin later found out, after the project was completed, that Rex had subcontracted this work to All Jobs. 10. Ms. Austin credibly testified that Rex has been advised of the lawsuit filed by All Jobs, that The ACES has made a demand on Rex to defend The ACES, and that Rex has been non-responsive. 11. Donald Haddix, Solid Ground’s owner, testified that Rex contracted with Solid Ground for Solid Ground to “wire” the additions and tie them into the original building. Mr. Haddix credibly testified that Solid Ground completed the work it was contracted to perform, and that Rex has not paid Solid Ground in full. Mr. Haddix testified that Rex continues to owe Solid Ground in excess of $9,000.00, and that this amount includes amounts owed to Rexel. As such, Solid Ground has been unable to pay Rexel, its electrical supplier. 12. The Administrative Law Judge finds, based on the weight of the credible evidence of record, that Rex has failed to pay subcontractors and a supplier for work performed and materials provided for The Acres project, notwithstanding having provided lien releases and an Unconditional Waiver and Release on Final Payment to The ACES. As a result of Rex’s failure to pay these subcontractors and supplier, The ACES is now named as a Defendant in two separate lawsuits, filed by Rexel and All Jobs. CONCLUSIONS OF LAW 1. In this proceeding, The ACES bears the burden to prove, by a preponderance of the evidence, that Rex is subject to discipline for violations of A.R.S. § 32-1154(A)(7) and/or (A)(11) as charged by the ROC in its September 9, 2008 Citation and Complaint. See Arizona Administrative Code R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. The Administrative Law Judge concludes that The ACES met its burden of proof as to both of the ROC's charges. 4. Under A.R.S. § 32-1154(A)(11), a contractor is subject to discipline for the “failure . . . 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.” The instant record demonstrates that Rex failed to pay subcontractors and a supplier in amounts in excess of $750.00, notwithstanding having been paid in full on the project. Accordingly, under all of the facts and circumstances presented herein, Rex’s conduct is found to constitute a violation of A.R.S. § 32-1154(A)(11). 5. Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The Administrative Law Judge concludes, from the evidence presented, that Rex committed wrongful acts that substantially injured The ACES by failing to pay for all of the work performed and material supplied for the project, resulting in substantial injury to The ACES as demonstrated by the fact that The ACES must incur the expense associated with defending itself in two separate lawsuits, and by the fact that two liens have been filed against the property. Therefore, Rex violated A.R.S. § 32-1154(A)(7). 6. Based upon the above violations of the provisions of A.R.S. § 32- 1154(A), grounds exist to impose discipline against Rex’s license. 7. Upon consideration of all of the facts and circumstances presented by this case, including Rex’s failure to appear for hearing, the Administrative Law Judge concludes that the ROC should revoke Rex’s Class B-02 license.

RECOMMENDED ORDER

Based on the foregoing, the Administrative Law Judge makes the following Recommended Order: On the effective date of the Order entered in this matter, Rex’s Class B-02 license (No. 231623) shall be revoked. 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, March 18, 2009.

______________________________________ Sondra J. Vanella Administrative Law Judge

Original transmitted by mail this ____ day of March, 2009, to:

William A. Mundell, Director Registrar of Contractors c/o Legal Department 3838 North Central Avenue Phoenix, AZ 85012

By ___________________________

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