ALJDEC decisions subject to certification as final

09F-5226-ROC · Registrar of Contractors · 2009-12-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 2, 2009 at 8:00 a.m. APPEARANCES: Complainant D J B Enterprises Ltd. appeared through Lynda Bush, its Vice President; Respondent Wolfe’s Corporation dba Canopus Construction did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT On November 5, 1987, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC070120, Class B-01 for commercial general contracting to Respondent Wolfe’s Corporation dba Canopus Construction, a corporation. Respondent’s address of record is 1300 E. Missouri Ave., Ste. D-100, Phoenix, AZ 85014. On November 18, 1994, the Registrar issued License No. ROC105068, Class B- for commercial general contracting to Complainant D J B Enterprises Ltd. Complainant is in the business of fabricating and installing metal work at commercial construction projects. On April 3, 2009, the Registrar received a complaint from Complainant against Respondent’s license, which alleged that Respondent owed $11,000.00 in unpaid invoices for steel stairs, pipe ballards, stair pans, and stair railings that Complainant had fabricated and installed at a project on 111111 N. 7th St. pursuant to its subcontract with Respondent. Complainant attached to the form complaint the following documents: (1) A purchase order to Complainant dated November 19, 2008 from Respondent showing the name “Wolfe Construction” for the Pointe Hilton Tapatio Cliffs project at 111111 N. 7th Street in Phoenix in the amount of $6,250.00; (2) Change Order #1 dated December 1, 2008 from Respondent showing the name “Wolfe Construction” for the Pointe Hilton Tapatio Cliffs project adding $750.00, for an adjusted total of $7,000.00; (3) Change Order #2 dated January 5, 2009 from Respondent showing the name “Wolfe Construction” for the Pointe Hilton Tapatio Cliffs project adding $4,000.00, for an adjusted total of $11,000.00; (4) Complainant’s Invoice dated December 17, 2008 for $7,000.00, less retention of $200.00, for a total amount due of $6,800.00; and (5) Complainant’s Invoice dated January 21, 2009 for an additional $4,000.00, less retention of $100.00, for a total amount due of $3,900.00. Respondent’s purchase order and change orders did not show its license number preceded by the acronym “ROC.” The Registrar referred the complaint to Respondent for its immediate attention. On April 6, 2009, the Registrar’s Inspector Mark Alyea sent letters to Respondent, informing it that the Registrar had received information that (1) Respondent was acting as a contractor under the name “Wolfe Construction,” rather than the name shown on its license, in violation of A.R.S. § 32-1154(A)(15), and (2) Respondent did not show its license number, preceded by the acronym “ROC” on documents used in its business, in violation of A.R.S. § 32-1124(B). On April 20, 2009, the Registrar received Complainant’s request that a citation be issued against Respondent’s license because it had not paid anything on its account. On August 4, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging violations of A.R.S. § 32-1154(A)(7), (11), (15), and (13) (namely A.R.S. § 32-1124(B)). The Registrar mailed a copy of the Citation and Complaint to Respondent via certified mail at its address of record. On August 19, 2009, the Registrar received Respondent’s written answer to the Citation and Complaint, which did not deny that Respondent owed money to Complainant but asserted that it had ceased operations and was in the process of filing Chapter 7 bankruptcy. The answer to the Citation and Complaint was on a letterhead that showed Respondent’s address of record. Respondent provided no other address. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule and to conduct a fair hearing.

On October 16, 2009, the Registrar issued a Notice of Hearing setting a hearing on December 2, 2009 at 8:00 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 December 2, 2009 at 8:00 a.m. Complainant’s representative appeared, testified, and submitted two exhibits. 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 representative testified to establish foundation for the documents that were attached to its complaint to the Registrar. She also testified that Complainant had fully performed the parties’ subcontract. Complainant’s representative testified that it had filed a lien against the property to secure payment. The property owner had paid Complainant $8,000.00 and it had released the lien. However, it did not sign fully release its claim against Respondent. Complainant’s representative testified that its subcontract with Respondent allowed it to charge 1.5% monthly interest on outstanding debts and to recover attorney’s fees incurred in collecting unpaid debts. Complainant submitted an accounting that showed, as of the date of the hearing, that Respondent owed Complainant $3,000.00 pursuant to the subcontract, $500.00 for attorney’s fees in foreclosing the lien, and $1,614.50 in interest, for a total of $5,114.50. The Registrar’s record shows that, on July 15, 2009, Respondent’s license was suspended for lack of bond and, on October 1, 2009, was again suspended for nonrenewal. Respondent’s license has not been reinstated. 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 was reasonable and it is deemed to have received it.[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 . . . .” 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). Respondent’s failure to appear at the duly noticed hearing or to present any evidence to defend its license prevents any finding that it has established an affirmative defense. 7. Similarly, Respondent must show that a claim is subject to the automatic stay or that the claim has been discharged in bankruptcy. The mere suggestion that Respondent is contemplating bankruptcy without any document from the bankruptcy court does not prevent the Registrar from penalizing Respondent’s license for proven contracting law violations. 8. The suspended status of Respondent’s license does not prevent Complainant from pursuing its administrative remedy nor prevent the Registrar from conducting these disciplinary proceedings.[7] 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, in due course will lead to revocation of any other license on which Respondent or its qualifying party may be listed[8] and may prevent any new license from being issued.[9] 10. Respondent has never disputed that it owes Complainant for the amounts shown on Complainant’s invoices for services rendered and materials provided in the course in Respondent’s contracting business. Complainant therefore has borne its burden to establish that Respondent violated A.R.S. § 32-1154(A)(7)[10] and (11). 11. With respect to the amount owed, the legislature has not empowered the Registrar to award attorney’s fees[11] or interest[12] in administrative proceedings against a contractor’s license. 12. The record in this matter shows that Respondent did not put its license number preceded by the acronym “ROC” on its purchase orders and change orders, in violation of A.R.S. § 32-1154(A)(13).[13] 13. The record in this matter also shows that Respondent showed the name “Wolfe Construction” on its purchase orders and change orders, which is not the name on its license, in violation of A.R.S. § 32-1154(A)(15).[14] 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. ROC070120, Class B-01 previously issued to Respondent Wolfe’s Corporation dba Canopus Construction. 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 $3,000.00 to Complainant by cashier’s or certified check, the Registrar should not revoke Respondent’s license but, instead, close the complaint in Case No. 09-5226. 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, December 2, 2009.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [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] See A.R.S. § 32-1154(C). [8] See A.R.S. § 32-1154(A)(21). [9] See A.R.S. § 32-1122(E). [10] 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.” [11] See Semple v. Tri-City Drywall, Inc., 172 Ariz. 608, 611-612, 838 P.2d 1369, 1372-73 (App. 1992) (Prevailing party in administrative claim before Registrar of Contractors was not entitled to attorney’s fees from its opponent under A.R.S. § 12-341.01(A) because administrative hearing is not an “action”). [12] Cf. A.R.S. § 12-347 (entitling court clerk to include in judgment costs and “interest on the verdict from the time it was rendered”). [13] 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.” [14] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[a]cting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth upon the license.”

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