ALJDEC decisions subject to certification as final

09F-3119-ROC · Registrar of Contractors · 2009-08-24

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 3, 2009 APPEARANCES: Complainant: Bruce Franklin Varney, corporate officer, appeared, pro per. Respondent: Troy Colby, corporate officer and qualifying party, appeared, 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 Notice of Hearing issued by the Registrar of Contractors (“ROC/Registrar”) on July 2, 2009. 2. Complainant Penhall Company (“Complainant”) is a corporation doing business in Arizona. Bruce Franklin Varney (“Varney”), corporate officer, appeared on behalf of the Complainant. 3. Respondent C P C Construction, Inc. (Respondent”) is a corporation which holds Arizona Contractor’s License No. 080069, Class A- (General Engineering) issued by the ROC on September 16, 1988. David Troy Colby (“Colby”), corporate officer and qualifying party, appeared on behalf of Respondent. A review of the licensing database maintained by the ROC indicates that this license was suspended September 1 – 8, 2006 for non- renewal. 4. On November 25, 2008, Complainant filed a Complaint with the ROC wherein it alleged non-payment of $30,005.79 for “concrete repair, valley gutter, handicap ramps & aprons” on Project No. ST87400101, City of Phoenix 2007 Portland Cement Concrete Repair” (“project”). 5. On May 27, 2009, the Registrar issued a Citation and Complaint in Case No. 09-3119 charging Respondent with possible violations of A.R.S. § 32-1154 (A) (7), (11) and (13) (namely, A.R.S. § 32-1124 (B)). 6. Respondent filed a Respondent on June 5, 2009, wherein it affirmatively asserted that it “paid [Complainant] for the work they performed exactly as those quantities were paid by the City of Phoenix in accordance with the subcontract.” 7. At the hearing, Varney testified on behalf of Complainant and submitted Exhibits C-1 and C-2 which were marked, admitted and considered. Mark Lanhart (“Lanhart”) also testified on behalf of Complainant. 8. Colby testified on behalf Respondent and submitted Exhibit R-1 which was marked, admitted and considered. Exhibits R-2 and R-3 were admitted over objection. Shelly Dooley (“Dooley”) also testified on behalf of Respondent. 9. On approximately September 14, 2007, Complainant and Respondent, as Subcontractor and Contractor, respectively, entered into a Subcontract (“Subcontract”) whereby Complainant was to perform concrete work for Respondent on the project owned by the City of Phoenix (“Owner”) for a base Subcontract Value (“Subcontract Value”) of One Hundred Forty Thousand Seven Hundred Thirty-Eight and NO/00 Dollars ($140,738.00). (Exhibit R-1)[1] 10. Paragraph 3 of the Subcontract provides in pertinent part that “…the Subcontract Value stated shall be adjusted based on final actual quantities which are paid by Owner to Contactor for those line items of Work for which Subcontractor is responsible. In no event will Contractor be responsible to pay Subcontractor any amount or any quantities which have not been paid by the Owner. Items of Work paid as Lump Sum shall be the full compensation to Subcontractor. Items of Work identified as Unit Price, or for which a unit in excess of one shall be paid based on the multiplication of final quantities as approved by Owner multiplied by the Unit Price established on the attached Schedule. Payment to Subcontractor shall in no way become due from Contractor until Contractor has been paid by Owner for the specific lien item or Work and then only in the quantities approved by Owner or his designated representative….” 11. Complainant contends that its bid for the Subcontract was based on “theoretical quantities” and that it is entitled to payment for all quantities paid by the City of Phoenix under the Subcontract less a trucking deduction. Under this interpretation of the Subcontract, Complainant further contends that, since Respondent never terminated the Subcontract, it is owed $32,275.15, i.e., $183,380.49 (total amount paid by Owner) less $53,205.00 (trucking deduction) less $97,900.34 (amount paid to date). 12. Respondent asserts that Complainant is entitled to $16,805.47, i.e., the balance due for work actually performed by Respondent on the project. Respondent further asserts that Complainant is not entitled to the remaining balance for quantities paid on the Subcontract by Owner because that amount represents work performed by Respondent and/or a third party subcontractor. Respondent argues that the Subcontract is not exclusive and that it was entitled to do perform work thereunder and/or subcontract work to another company as it did in this instance. 13. On approximately November 7, 2007, Respondent tendered to Complainant the $16,805.47 it contends is the balance due under the Subcontract. Such tender was rejected by Complainant.

APPLICABLE LAW The Citation and Complaint issued by the Registrar in Case No. 09- 3119 charged Respondent with possible violations of A.R.S. § 32-1154 (A) (7), (11) and (13) (namely, A.R.S. § 32-1124 (B)). 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 legal excuse for the abandonment or refusal.

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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.

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13. Failure in any material respect to comply with the provisions of this chapter.

A.R.S. §32-1124 (B) is named as the statute violation charged pursuant to A.R.S. §32-1154 (A) (13). That statute provides, inter alia, that every license and/or renewal must be signed by the Registrar or the Registrar’s designated representative and the licensee. It further provides that every license number must be preceded by the acronym “ROC” and be posted in a conspicuous place on premises where any work is being performed, on all written bids submitted by the licensee and on all advertising, letterheads and other documents used by the licensee in the conduct of business.

CONCLUSIONS OF LAW 1. The Registrar 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, based on the evidences elicited at the hearing including the terms of the Subcontract, Respondent owes Complainant the sum of $16,805.47. As a result, Complainant failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154 (A) (11) as to monies allegedly due on the subject project. Though Respondent acknowledged that the foregoing amount is due, Complainant rejected Respondent’s tender of payment. 4. It is further determined and concluded that Complainant failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154 (A) (7). 5. This tribunal further determines and concludes that Complainant failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154 (A) (13) (namely, A.R.S. § 32-1124 (B)).

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Citation issued in Case No.09-3119 should be dismissed.[2] Done this day, August 24, 2009.

______________________ Brian E. Smith Administrative Law Judge

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

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

By ___________________________

----------------------- [1] Varney and Colby executed the Subcontract on August 31 and September 14, 2007, respectively.. [2] 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