ALJDEC decisions subject to certification as final

09F-3207-ROC · Registrar of Contractors · 2009-10-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 7, 2009 at 8:00 a.m. APPEARANCES: Complainant Arizona sun Electrical Contractors, Inc. appeared through Ronald Keith Dickens, its President and Qualifying Party. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On October 9, 1992, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC095064, Class C-11 for residential electrical to Complainant Arizona Sun Electrical Contractors Inc., a corporation. On July 22, 1996, the Registrar issued License No. ROC115997, Class B-01 for commercial general contracting to Respondent Shelly Construction LLC, a limited liability company. Respondent’s address of record was 2164 E. Broadway Rd., Ste. 300, Tempe, AZ 85282. Respondent’s current address of record is P.O. Box 1407, Mesa, AZ 85211- 1407. On December 3, 2008, the Registrar received sixteen complaints against Respondent’s license from Complainant. According to the complaints, Respondent general contractor owed Complainant electrical subcontractor for work done in four of the subdivisions on which Respondent was acting as general contractor for developer Brown Family Communities: Canyon Trails (2), Travis Park (2), Whispering Heights (3), and Greer Ranch (9). Complainant attached to each complaint copies of its invoice, Respondent’s work order, and Respondent’s acknowledgement of work performed. The Registrar referred the complaint to Respondent for its immediate attention. On December 18, 2008, the Registrar received Complainant’s request that a citation be issued against Respondent’s licenses because Respondent had not responded to or attempted to resolve the complaints. On April 30, 2009, the Registrar issued a Citation and Complaint against Respondent’s licenses, charging A.R.S. § 32-1154(A)(7) and (11). Respondent timely filed a written answer to the Citation and Complaint, which admitted that it owed Complainant money but affirmatively alleging that it had suspended operations due to a termination of bank financing and that it was looking for additional financing from other lenders. The address on the letterhead on which Respondent’s answer was written was 2164 E. Broadway Road, Suite 300, Tempe, Arizona 85282. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, to schedule and to conduct a fair hearing. On July 30, 2009, the Registrar issued a Notice of Hearing, setting a hearing on October 7, 2009 at 8:00 a.m. The Registrar sent a copy of the Notice of Hearing via certified mail to Respondent at P.O. Box 1407, Mesa, AZ 85211-1407. On August 12, 2009, Respondent notified the Office of Administrative Hearings that, because it “[had] suspended operations and terminated employment of all operational personnel,” no one would be available to attend the hearing. The former address of record on Respondent’s letterhead had been scratched out and replaced with “P.O. Box 1407, Mesa, AZ 85211-1407.” On August 12, 2009, the Administrative Law Judge issued a minute entry, informing the parties that the administrative hearing would proceed on the date at the time scheduled, regardless of whether Respondent appeared. A copy of the minute entry order was mailed to Respondent at P.O. Box 1407, Mesa, AZ 85211-1407. A hearing was held on October 7, 2009. Complainant’s qualifying party and president Ronald Dickens testified. Respondent did not appear through a duly authorized employee or attorney, did not contact the Office of Administrative Hearings to request a continuance or that the time for the hearing be further delayed, and did not present any evidence to defend its license. Mr. Dickens testified that Complainant had been a “trade partner” of Brown Family Communities/Shelly Construction LLC, which was a title calculated to make Complainant feel like part of the community. Complainant performed more than half of the electrical work for new Brown Family Communities subdivisions. Mr. Dickens explained that, during his early days in the electrical contracting business, the first job on which he had acted as a foreman for an electrical crew was on a Dave Brown subdivision. He was honored to be a “trade partner” and considered his company to be in partnership with Respondent. Mr. Dickens testified that, in August 2008, Complainant had received its normal check but the check was about $20,000 short. He called Respondent and was informed that the girl who worked in accounts payable had recently become a widow. Due to her distracted state, she had overlooked some of Complainant’s invoices. Approximately two weeks later, Complainant had been paid the balance of the invoices it had submitted for August. Mr. Dickens testified that, in September 2008, Complainant did not receive its usual check on time. Respondent informed Complainant that it was having cash flow problems and needed help from its trade partners through their patience and forbearance. Respondent cut Complainant’s check for September approximately two weeks late. Mr. Dickens testified that, in October 2008, Respondent informed its trade partners that their checks for the rest of the year would be about two weeks late, but assured them that they would get paid. Mr. Dickens testified he approached Telford Delmo, Respondent’s Vice President of Purchasing, and Tom Venberg, Respondent’s Vice President of Construction. Mr. Dickens explained that he had employees and suppliers to pay and that he needed Respondent’s assurances that Complainant would get paid. Although Messrs. Delmo and Venberg stated that they could not provide anything in writing, they both gave their personal assurances that Complainant would get paid. Mr. Dickens testified that Complainant continued to provide electrical contracting work and electrical materials to Brown Family Communities subdivisions because Messrs. Delmo and Venberg had given their word. Mr. Dickens testified that Respondent made no further payments to Complainant. Mr. Dickens testified that Complainant was paid approximately $9,000 or $10,000 by title companies for homes that had been sold against which Complainant had perfected mechanic’s liens. Mr. Dickens testified to establish foundation for twelve invoices for work done in the Whispering Heights and Greer Ranch subdivisions. Mr. Dickens testified that Respondent had not paid Complainant for the following twelve invoices: |Invoice#|Date |Subdivision |Address |Amount | |193739 |10/08/2008|Whispering |4133 E. Cherrywood |$2,664.00| | | |Heights |Pl. | | |192927 |10/08/2008|Whispering |5239 S. Amethyst Pl. |$1,084.00| | | |Heights | | | |193049 |10/08/2008|Whispering |4300 E. Beechnut Pl. |$1,095.00| | | |Heights | | | |967115 |09/30/2008|Greer Ranch |16092 W. Poinsettia |$ | | | | |Dr. |70.00 | |193227 |09/19/2008|Greer Ranch |15938 E. Jenan Dr. |$3,970.00| |193631 |10/08/2008|Greer Ranch |16074 W. Jenan Dr. |$4,242.00| |193452 |10/08/2008|Greer Ranch |16089 W. Poinsettia |$3,948.00| | | | |Dr. | | |967125 |09/30/2008|Greer Ranch |15993 W. Poinsettia |$ | | | | |Dr. |160.00 | |190265 |08/22/2008|Greer Ranch |15981 W. Poinsettia |$ | | | | |Dr. |980.00 | |967108 |09/15/2008|Greer Ranch |15981 W. Poinsettia |$ | | | | |Dr. |85.00 | |190076 |08/22/2008|Greer Ranch |15925 W. Jenan Dr. |$1,158.00| |192995 |10/16/2008|Greer Ranch |15949 W. Jenan Dr. |$ | | | | | |978.00 |

The total of these twelve invoices is $20,434.00. The Registrar’s record reveals that both of Respondent’s licenses are current and in good standing. One complaint is pending against Respondent’s License No. ROC115997, Class B-01; nineteen complaints are pending against Respondent’s License No. ROC115998, Class B-. CONCLUSIONS OF LAW 1. The notice of the hearing that the Registrar mailed to Respondent at its address of record was reasonable and it appears that Respondent actually 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) 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.” 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). 7. Since Respondent failed to attend the duly noticed hearing, it presented no evidence to establish any affirmative defense. Respondent has never disputed that it owes money to Complainant for labor and materials used in its contracting business. 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 $20,434.00. 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. ROC115998, Class B- previously issued to Respondent Shelly Construction, LLC, unless prior thereto the Registrar receives written proof from Respondent that it has paid Complainant Arizona Sun Electrical Contractors Inc. $20,434.00 by certified or cashier’s check. It is further recommended that, if before the effective date of the Registrar’s final order, the Registrar receives proof from Respondent that it has paid $20,434.00 to Complainant by cashier’s or certified check, the Registrar shall not suspend Respondent’s license but, instead, close Case No. 09-3207. 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, October 7, 2009.

______________________________________ Diane Mihalsky Administrative Law Judge

Original transmitted by mail this ____ day of October, 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.”

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