ALJDEC decisions subject to certification as final

08F-4236-ROC · Registrar of Contractors · 2009-11-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 20, 2009 at 8:00 a.m. APPEARANCES: Complainant Mar Lam Industries Inc. appeared through Michelle M. Riggan, Accounts Receivable; Respondent Sunwest Valley Developers Inc. did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT On August 27, 1985, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC063529, Class C-30 for residential finish carpentry to Complainant Mar Lam Industries Inc., a corporation. Complainant is in the business of manufacturing and installing cultured marble countertops. On June 4, 2002, the Registrar issued License No. ROC175525, Class KB-02 for dual residential and small commercial contracting to Respondent Sunwest Valley Developers Inc., a corporation. Respondent’s address of record is 6501 E. Greenway Pkwy., #103 PMB 482, Scottsdale, AZ 85254. On May 9, 2008, the Registrar received a complaint from Complainant against Respondent’s license, which alleged that Respondent owed $8,468.00 for unpaid invoices for cultured marble countertops that Complainant had installed pursuant to its subcontract with Respondent for the Stratland Estates subdivision, for which Respondent was general contractor. The Registrar referred the complaint to Respondent for its immediate attention. Respondent’s president Steve Greco admitted that Respondent owed money and alleged that it was looking for financing to pay its debts. The letterhead on Respondent’s initial response to the complaint showed “Stratland Homes” and showed the license no. “ROC175525.” The letterhead also showed the address of 8245 N. 85th Way, Scottsdale, AZ 85258. On July 9, 2008, the Registrar received Complainant’s request for a citation because Respondent had not paid anything on its account. On November 14, 2008, the Registrar issued a Citation and Complaint against Respondent’s license, charging violations of A.R.S. § 32-1154(A)(7), (11), (15), and (13) (namely A.R.S. § 32-1124(B)). The Registrar mailed copies of the Citation and Complaint to Respondent via certified mail at its address of record and the address on its initial answer to the complaint. On November 24, 2008, the Registrar received Respondent’s written answer to the Citation and Complaint, which stated that Respondent “had filed for Chapter 11 bankruptcy and is in the process of reorganization.” Respondent did not provide a case number or expressly assert that Complainant’s claim was subject to the automatic stay. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule and to conduct a fair hearing.

On October 9, 2009, the Registrar issued a Notice of Hearing setting a hearing on November 20, 2009 at 8:00 a.m. in the Office of Administrative Hearings. The Registrar mailed the Notice of Hearing via certified mail to Respondent at its address of record. A hearing was held on November 20, 2009 at 8:00 a.m. Complainant’s representative appeared and testified at the duly noticed hearing. Although the beginning of the hearing was delayed fifteen minutes to allow Respondent additional travel time, it did not contact the Office of Administrative Hearings to request that the hearing be continued or that the start of hearing be further delayed and did not appear through an authorized employee or attorney. Respondent did not present any evidence to defend its license. Complainant submitted the following invoices for work it had performed pursuant to its subcontract with Respondent in the Stratford Estates subdivision: Date Invoice Number Amount

August 27, 2007 1311066 $ 2,830.00 May 23, 2007 1308797 3,693.00 August 27, 2007 0912176 1,345.00 February 22, 2008 38175 600.00

TOTAL $8,468.00

Complainant’s representative testified that it had not received any payment from Respondent for these invoices. The Registrar’s record shows that, on April 3, 2009, Respondent’s license was revoked based on statutory violations found in eight separate cases and that the license has not been reinstated. CONCLUSIONS OF LAW 1. The notice of the hearing that the Registrar mailed to Respondent at its address of record was reasonable and it is deemed to have received it.[1] 1. Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[3] 2. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 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.”[5] 3. A.R.S. § 32-1154(A)(11) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure by 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.” 4. A general contractor’s inability to pay and nonpayment by the owner on a project are affirmative defenses that the general contractor bears the burden to prove in a subcontractor’s administrative complaint under A.R.S. § 32-1154(A)(11). By failing to appear or to present any evidence at the hearing, Respondent failed to carry its burden to establish this affirmative defense. 5. Similarly, the burden is on the debtor in bankruptcy to give notice to claimants that their claims are subject to the automatic stay.[6] The mere suggestion in Respondent’s written answer to the Citation and Complaint is not sufficient to subject Complainant’s claim to the automatic stay. 6. Respondent has never disputed that it owes $8,468.00 to Complainant for its performance of subcontracts in the Stratland Estates subdivision. Complainant therefore has borne its burden to establish that Respondent violated A.R.S. § 32-1154(A)(7)[7] and (11) by failing to pay Complainant $1,084.01, the total of the invoices set forth above. 7. Respondent put its license number on the letterhead of its initial response to the complaint. The Administrative Law Judge has not located any other form documents from Respondent in the file provided by the Registrar that do not include Respondent’s license number. The record does not show any violation of A.R.S. § 32-1154(A)(13).[8] 8. Respondent’s initial response to the complaint was written on letterhead that showed “Stratland Homes,” rather than the name on its license. Respondent did violate A.R.S. § 32-1154(A)(15)[9] in this correspondence. 9. The revoked status of Respondent’s license does not preclude Complainant from pursuing its administrative remedy nor preclude the Registrar from conducting these disciplinary proceedings.[10] If Respondent fails to comply with any condition that the Registrar sees fit to include in his final Decision and Order in this matter, its license will be revoked again. RECOMMENDED ORDER Based on the contracting law violations that were proven in this matter, it is recommended that, on the effective date of the final order in this matter, the Registrar of Contractors revoke License No. ROC185525, Class KB-02 previously issued to Sunwest Valley Developers Inc. It is further recommended that, if on or before the effective date of the order, the Registrar receives proof from Respondent that it has paid $8,468.00 to Complainant Mar Lam Industries by cashier’s or certified check, the Registrar not revoke Respondent’s license but, instead, close the complaint in Case No. 08-4236. If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be forty days from the date of certification. Done this day, November 20, 2009.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [2] 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). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] See Aheong v. Mellon Mortgage Co. (in Re Aheong), 276 B.R. 233, 240 (9th Cir. 2002). [7] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” [8] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure in any material respect to comply with this chapter.” The specific statute violated is A.R.S. § 32-1124(B), which requires that licensed contractors to include their license number, which “shall be preceded by the acronym ‘ROC,’“ on “all written bids submitted by the license and . . . on all advertising, loan forms, lending institution forms, letterheads and other documents used by the licensee in the conduct of business regulated by this chapter.” [9] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[a]cting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth upon the license.” [10] See A.R.S. § 32-1154(C).

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