ALJDEC decisions subject to certification as final

09F-4326-ROC · Registrar of Contractors · 2009-09-21

STATE OF ARIZONA OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 31, 2009

APPEARANCES: Complainant Milan Peric appeared and was represented by attorney John Parker; Respondent was represented by attorney Mike Schern and the company’s President and Qualifying Party Dave Fix.

WITNESSES: For Complainant: Milan Peric

For Respondent: Tony Venero, Complainant’s former employee Jerry Sebern, employee of Respondent Dave Fix

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant Milan Peric brings this action claiming that he is owed over $36,000.00 from Respondent Adanac Enterprises for concrete work Complainant performed as a subcontractor on a residential project for which Respondent was the general contractor. Respondent denies that any further monies are owed Complainant and counters that Complainant’s poor work has cost Respondent more money than Complainant claims he is owed. This tribunal entered the complaint file received from the Registrar of Contractors into the record, with the addition of Complainant’s Exhibits A through G and Respondent’s Exhibits 1 through 4. The parties presented evidence and testimony at the hearing. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Decision finding no violation of the provisions applying to licensed contractors. FINDINGS OF FACT 1. Respondent Adanac Enterprises Corp. is the holder of a class KB- license (No. 189034), a dual building contractor’s license issued by the Registrar of Contractors (“ROC”). It authorizes Respondent to perform general residential and general commercial construction.[1] David Fix is Respondent’s Qualifying Party. 2. Complainant is a sole proprietor and is currently the holder of a class KB-02 dual contracting license allowing Complainant to perform work as a general contractor on small commercial projects and residential projects. The KB-02 license was issued in February 2008.[2] 3. The contract that is at issue here was made between Magellan Concrete, LLC and Respondent in January 2008[3] (Magellan held an L-09 license at that time). Complainant, operating as Happy Family Excavating, took over the contract for Magellan in February 2008.[4] 4. Complainant began the work in March 2008. In July 2008, Respondent brought in another contractor to repair and complete Complainant’s work. 5. The evidence presented at hearing supports a finding that Respondent has a good faith belief that it was necessary to bring in another contractor and that the expense to repair and complete Complainant’s work is more than Complainant’s claim. Tony Venero, one of Complainant’s employees, and Jerry Sebern, one of Respondent’s employees, credibly testified at the hearing that the concrete work done by Complainant was substandard and incomplete.[5] They also verified that Complainant’s poor work and lack of sufficient manpower on the job substantially delayed the project. Photographs submitted into evidence (Exhibit 2) show the substantial amount of grinding that was necessary to make Complainant’s work meet standards. 6. In addition, Complainant’s claim is based on verbal change orders. However, the contract between the parties requires written change orders. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[6] Further, the standard of proof at hearing is by preponderance of the evidence.[7] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[8] Complainant has not met that burden. 2. Although several citations are given in the Citation and Complaint, this case focuses on the “no pay’ provision found in Arizona Revised Statutes (A.R.S.) § 32-1154(A)(11) that prohibits the failure of a licensee to pay monies in excess of $750 “when due for materials or services” when the licensee has the capacity to pay or when the licensee has been paid for the project. 3. The evidence is not sufficient to show that Respondent has violated those statutes cited in the Citation and Complaint. The contract between the parties requires written changes. Complainant did not provide written change orders to support the further amounts claimed. Therefore, this tribunal cannot find that the amounts claimed by Complainant were due and owing from Respondent. Furthermore, parties to a contract may have a good faith dispute about their obligations under a contract that would be appropriate for a civil court action but would not rise to the level of a disciplinary violation on a determination that the amount was due and owing as alleged in the Citation and Complaint. A good faith dispute about payment issues should not result in disciplinary action against a license. Those disputes can be taken to court. 4. Complainant has failed to show a violation of statutes by Respondent. 5. This matter should be dismissed. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that the Citation and Complaint against Respondent Adanac Enterprises Corp. in case 09-4326 be dismissed.

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 will be 40 days from the date of that certification.

Done this 21st day of September 2009.

Office of Administrative Hearings

______________________________ Eric A. Bryant Administrative Law Judge

Copy mailed 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, Arizona Revised Statutes § 32-1102 and Arizona Administrative Code R4-9-104 for a description of dual contracting license classifications and scope of work. [2] At the time of the subcontract with Respondent that is the basis for this complaint, January 2008, Complainant held three licenses: (1) a K-02 dual license (No. 175790) for excavating, grading and oil resurfacing (under the name Happy Family Excavating); (2) a K-05 dual license (No. 213843) for pavers, brick work, and extruded curbing (also under the name Happy Family Excavating); and (3) was a member of Magellan Concrete LLC, who held an L-09 commercial concrete license (No. 237675). The K-02 license was suspended by law for lack of renewal on July 1, 2008 and expired on July 1, 2009. The K-05 license was suspended by law for lack of renewal for the entire year of 2008 and expired in January 2009. The L-09 license was cancelled in February 2008. Thus, the work that is the subject of this complaint was done under the K-02 or KB-02 license. [3] Exhibits A and B. [4] Exhibit C. [5] This testimony is supported by Exhibit 2, photographs of the condition of the concrete [6] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [7] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [8] See Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996) (moving party bears burden of proof by preponderance of evidence in an administrative hearing).

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