ALJDEC decisions subject to certification as final

09F-2017-ROC · Registrar of Contractors · 2009-09-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 1, 2009 at 9:00 a.m. APPEARANCES: Complainant Younger Brothers Construction Company, Inc. appeared through James R. Schmillen, Esq.; Respondent Execution Inc. did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT On October 18, 1976, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC044531, Class C-07 for residential carpentry to Complainant Younger Brothers Construction Company Inc., a corporation. On March 10, 2007, the Registrar issued License No. ROC230639, Class KB-01 for dual building contracting to Respondent Execution Inc., a corporation. Respondent’s address of record is 7519 N. 12th Avenue, Phoenix, Arizona 85021. On October 7, 2008, the Registrar received a complaint from Complainant against Respondent’s license, which alleged that Respondent owed $52,921.00 for unpaid invoices for work done pursuant to Respondent’s subcontract at two lots in Russell Ranch. Complainant also provided copies of e-mails and other correspondence between the parties, in which Respondent had acknowledged that the amounts were owed. The Registrar referred the complaint to Respondent for its immediate attention. On November 7, 2008, the Registrar received Complainant’s request that a citation be issued against Respondent’s license because it had not resolved the complainant and “all nonpayment items listed in Younger Brothers’ Complaints remain outstanding.” On March 26, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging violations of A.R.S. § 32-1154(A)(7) and (11). The Registrar mailed a copy of the Citation and Complaint to Respondent via certified mail at its address of record. On April 10, 2009, the Registrar received Respondent’s written answer to the Citation and Complaint, which admitted that the monies were owed and affirmatively alleged that it was obtaining financing to pay its debts. Respondent estimated that it would be able to pay Respondent by April 17, 2009 or, at the latest, by May 30, 2009. The answer to the Citation and Complaint showed Respondent’s address of record as its return address. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule a fair hearing. On June 4, 2009, the Registrar issued a Notice of Hearing setting a hearing on September 1, 2009 at 9:00 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 September 1, 2009 at 9:00 a.m. Complainant’s attorney appeared and submitted one exhibit. 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’s attorney referenced the subcontracts, accountings, and e- mails that were attached to the complaint to the Registrar against Respondent’s license. The Registrar’s record shows that, on April 1, 2009, Respondent’s license was suspended for nonrenewal and had 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] 2. This matter lies within the Registrar’s jurisdiction.[2] 3. Complainant bears the burden of proof and must establish Respondent’s statutory 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 . . . .” Although Complainant may also file a civil complaint in a judicial forum for Respondent’s breach of contract in failing to pay monies owed when due, the Arizona legislature has also made non-payment a violation of state contracting law.

6. A contractor’s inability to pay a subcontractor and nonpayment by the owner on a project are affirmative defenses that the contractor bears the burden to prove in a subcontractor’s administrative complaint under A.R.S. § 32-1154(A)(11). Respondent’s failure to appear for the duly noticed hearing prevents it from carrying its burden to establish these affirmative defenses. 7. Respondent has never disputed that it owes $52,921.00 to Complainant under subcontracts for work at the Russell Ranch development. 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 $52,921.00. 8. The suspended status of Respondent’s license does not preclude Complainant from pursuing its administrative remedy nor preclude the Registrar from conducting these disciplinary proceedings.[8] 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 suspended license will be revoked. 9. If the Registrar accepts this recommendation and, as a result of Respondent’s failure to comply with the Registrar’s final decision in this matter, the Registrar revokes Respondent’s license, the revocation in due course will lead to revocation of any other license on which Respondent or its qualifying party may be listed[9] and may prevent any new license from being issued to Respondent or its qualifying party.[10] 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. ROC230639, Class KB-01 previously issued to Respondent Execution Inc. It is further recommended that, if before the effective date of the order, the Registrar receives proof from Respondent that it has paid $52,921.00 to Complainant Younger Brothers Construction Company Inc. by cashier’s or certified check, the Registrar not revoke Respondent’s license but, instead, close the complaint in Case No. 09-2017. 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, September 1, 2009.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

By ___________________________ ----------------------- [1] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [2] See 32-1101 et seq. [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] See A.R.S. § 32-1154(C). [9] See A.R.S. § 32-1154(A)(21). [10] See A.R.S. § 32-1122(E).

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