ALJDEC decisions subject to certification as final

09F-1972-ROC · Registrar of Contractors · 2009-07-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 27, 2009 at 1:30 p.m. APPEARANCES: Complainant Lennards Plumbing Inc. appeared through Robert P. Rutila, Esq., Buchalter Nemer; Respondent P F G Construction Inc. did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT On December 11, 1987, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC072226, Class L-77 for Commercial Plumbing Including Solar to Complainant Lennards Plumbing Inc., a corporation. On September 1, 2000, the Registrar issued License No. ROC158281, Class KB- for Dual Building Contracting to Respondent P F G Construction Inc., a corporation. Respondent’s current address of record is 1617 W. Williams Drive, Phoenix, Arizona 85027. On October 6, 2008, the Registrar received Complainant’s complaint against Respondent’s license, which alleged that Respondent owed Complainant $10,140.00 on the Tierra Office Park Project at 1410 W. Elliot Road in Gilbert, Arizona. The Registrar referred the complaint to Respondent for its immediate attention. Respondent filed an initial response to the complaint, which alleged that it agreed that Complainant was owed money but that the parties’ subcontract included a “pay when paid” clause and that the owner had not paid Respondent for Complainant’s work. The letterhead of Respondent’s initial response showed Respondent’s License No. ROC158281. Complainant subsequently requested that the Registrar issue a Citation and Complaint against Respondent’s license. On March 11, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging violations of A.R.S. § 32-1154(A)(11), (7), and (13) (namely A.R.S. § 32-1124(B)). The Registrar mailed a copy of the Citation and Complaint to Respondent at 1617 W. Williams Drive, Phoenix, Arizona 85027. Respondent timely answered the Citation and Complaint, again alleging that the parties’ subcontract included a “pay when paid” clause and that the owner had not released payment for Complainant’s work. The letterhead on Respondent’s answer showed Respondent’s address of 1617 W. Williams Drive, Phoenix, Arizona 85027 and the License No. ROC58281. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for the scheduling of a fair hearing. On April 21, 2009, the Registrar issued a Notice of Hearing on Complainant’s complaint, setting a hearing on July 27, 2009 at 1:30 p.m. The Registrar sent a copy of the Notice of Hearing via certified mail to Respondent at 1617 W. Williams Drive, Phoenix, Arizona 85027. On July 7, 2009, Respondent moved to amend the complaint to allege an additional $4,868.50 owed. Complainant did not respond to the motion to amend in the time allowed and, on July 20, 2009, the Administrative Law Judge amended the complaint to include the additional monies allegedly owed. A hearing was held on July 27, 2009 at 1:30 p.m. Although the beginning of the duly noticed hearing was delayed fifteen minutes to allow Respondent additional travel time, it did not appear through a duly authorized officer, employee, or attorney and did not contact the Office of Administrative Hearings to request a continuance or that the time for the hearing be further delayed. Respondent presented no evidence at the hearing to defend its license. Complainant presented the testimony of Terry Pickett, its Vice President and the Project Manager on the Tierra Office Park project, and submitted two exhibits. Mr. Pickett testified that the Tierra Office Park project included seven buildings. Complainant started work pursuant to its subcontract with Respondent on May 15, 2008 and completed work on September 12, 2008. Complainant submitted the subcontract, which provided that “[a]ll payments shall be subject to all of the requirements and conditions set forth in Article 14 of the General Conditions.” Article 14 of the General Conditions of the subcontract did not include a “pay when paid” clause. Mr. Pickett testified that the Tierra Office Park project included seven different buildings. The parties’ subcontract required Complainant to be paid on the completion of certain earmarks, including completion of the seven buildings at the project. Complainant submitted four invoices, which Mr. Pickett testified had been sent to Respondent at its current address. Invoice No. 16174 was dated July 31, 2008, and showed an amount due of $48,685.00, which was 70% of the subcontract amount of $69,550.00. Mr. Pickett testified that, under the subcontract, 70% of the full contract amount was due on Complainant’s completion of underground plumbing. Invoice 16174 also showed a 10% retention amount of $4,868.50. Mr. Pickett testified that Respondent had paid the full amount of Invoice 16174, less the 10% retention, or $43,816.50, but had not paid the $4,868.50 retention. Invoice 16196, which was dated August 18, 2008, showed $7,740.00 for the topout for several buildings. Mr. Pickett testified that Respondent had not paid Invoice 16196. Invoice 16233, which was dated September 23, 2008, showed $2,400.00 due for Complainant’s topout of the remaining buildings. Mr. Picket testified that Respondent had not paid Invoice 16196. The Registrar’s records reveal that, if the Registrar accepts this recommended decision, it will be the only final order against Respondent on the current record. Respondent’s record therefore is considered as a factor in mitigation of the recommended penalty. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[1] 2. The notice of the hearing that the Registrar mailed to Respondent at its address of record and the address provided on its answer to the Citation and Complaint was reasonable and Respondent is deemed to have received the Notice of Hearing.[2] 3. Complainant bears the burden of proof and must establish Respondent’s contracting law violations by a preponderance of the evidence.[3] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[4] 4. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] 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.”[6] 5. A.R.S. § 32-1154(A)(11) specifically 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 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.” 6. 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). 7. Respondent has never disputed that it owes Complainant for its work pursuant to the parties’ subcontract on the Tierra Office Park project. Respondent did not present any evidence to establish the affirmative defenses of its inability to pay or of the owner’s failure to pay. Moreover, the copy of the subcontract that Complainant submitted establishes that the contractual defense of the owner’s failure to pay is not available to Respondent. 8. 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 $15,008.50, the total of the invoices set forth above. 9. Respondent put its correct license number on the letterhead of its initial response to the complaint. The letterhead of Respondent’s answer to the Citation and Complaint contained a license number but, through an apparent inadvertent typographical error, the first digit was omitted. The record in this matter does not establish Respondent’s violation of A.R.S. § 32- 1154(A)(13).[8] 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 suspend License No. ROC158281, Class KB-01 previously issued to P F G Construction 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 $15,008.50 to Complainant Lennards Plumbing Inc. by cashier’s or certified check, the Registrar not revoke Respondent’s license but, instead, close the complaint in Case No. 09-1972. Done this day, July 27, 2009.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

By _________________________ ----------------------- [1] See 32-1101 et seq. [2] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [3] 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). [4] See A.A.C. R2-19-119(B)(2). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Black’s Law Dictionary at page 1220 (8th ed. 1999). [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.”

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