ALJDEC decisions subject to certification as final

09F-6025-ROC · Registrar of Contractors · 2010-01-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 29, 2009 APPEARANCES: Margaret Gillespie, Esq. represented Complainant Rexel Phoenix Electric. Donald Haddix appeared on behalf of Respondent Solid Ground Electrical, L.L.C. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ The question presented by this matter is whether Respondent Solid Ground Electrical, L.L.C. (“Solid Ground”) is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154(A). Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT Solid Ground is the holder of a Class K-11 license (No. 226381) issued by the Registrar of Contractors (“ROC”). Donald Haddix is Solid Ground’s qualifying party and member. 2. Complainant Rexel Phoenix Electric (“Rexel”) supplied Solid Ground with materials for Solid Ground’s electrical projects. On March 27, 2008, Rexel filed three separate lawsuits in Maricopa County Superior Court in which Solid Ground was named as a Defendant. The first lawsuit concerned the Amerisuites project on which Solid Ground performed electrical work, and for which Rexel provided materials. After that lawsuit was filed, the owner of the Amerisuites project paid Rexel in full in the amount of $31,679.21. The second lawsuit concerned The Aces project on which Solid Ground performed electrical work, and for which Rexel provided materials in the amount of $11,046.99. The owner of the project settled that lawsuit with Rexel for the amount of $8,000.00. The third lawsuit filed by Rexel was against Solid Ground and Mr. Haddix personally, and was for an open account on which Solid Ground purchased materials from Rexel for various projects. Rexel alleged in that Complaint, that Solid Ground owed Rexel $46,341.96 for invoices dating from August 6, 2007 through January 31, 2008. Rexel further alleged that Solid Ground had delivered two Insufficient Funds (“NSF”) Checks to Rexel in the amounts of $30,000.00 and $7,084.00. Rexel had formally notified Solid Ground of the $30,000.00 NSF check and demanded payment of the NSF check within twelve days pursuant to A.R.S. § 12-671(C). Solid Ground failed to respond to Rexel’s demand for payment. 3. On August 11, 2008, the Honorable Richard Nothwehr, Maricopa County Superior Court Commissioner, entered a Default Judgment against Solid Ground in the amount of $85,701.87, which includes the principal sum of $46,341.96, plus prejudgment interest in the amount of $7,322.91, plus double damages for the first NSF check in the amount of $30,000.00, plus attorneys’ fees in the amount of $1,672.00, and court costs in the amount of $365.00. Solid Ground did not appeal the judgment and it has become final. Solid Ground has failed to pay Rexel the judgment amount. 4. On May 22, 2009, Rexel filed a complaint against Solid Ground with the ROC. In its complaint, Rexel alleged that Solid Ground has failed to pay the judgment entered against it for the materials supplied in the amount of $46,341.96. 5. At hearing, Mr. Haddix testified that Solid Ground could not afford to defend the judgment and testified that he has paid all debts due and owing to Rexel and does not owe anything further. During the course of the hearing, Mr. Haddix continually attempted to attack the Superior Court judgment and re-litigate the issue. He was repeatedly advised by the Tribunal that the judgment was final and could not be collaterally attacked in this administrative forum. CONCLUSIONS OF LAW In this proceeding, Rexel bears the burden to prove, by a preponderance of the evidence, that Solid Ground is subject to discipline for violations of A.R.S. § 32-1154(A)(7) and/or (A)(11) as charged by the ROC in its September 4, 2009 Citation and Complaint. See Arizona Administrative Code R2-19-119. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). The Administrative Law Judge concludes that Rexel met its burden of proof as to both of the ROC’s charges. Under A.R.S. § 32-1154(A)(11), a contractor is subject to discipline for “failure . . . 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 . . .” The Administrative Law Judge concludes, based upon the credible evidence of record, that Solid Ground failed to pay the principal amount of the judgment that was entered against it in connection with materials supplied by Rexel. Therefore, the Administrative Law Judge concludes that Solid Ground violated A.R.S. § 32- 1154(A)(11). Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The Administrative Law Judge concludes, based on the weight of the credible evidence presented at hearing, that Solid Ground committed a wrongful act that substantially injured Rexel by failing to pay the principal amount of the judgment for materials supplied by Rexel. Therefore, the Administrative Law Judge concludes that Solid Ground violated A.R.S. § 32- 1154(A)(7). Based upon the above violations of the provisions of A.R.S. § 32- 1154(A), grounds exist to impose discipline against Solid Ground’s license. Upon consideration of all of the facts and circumstances presented by this case, the Administrative Law Judge concludes that Solid Ground’s Class K-11 license should be revoked. The ROC’s authority in disciplinary matters such as the one presented herein includes the ability to impose reasonable conditions that allow the disciplined contractor to reduce the scope of the disciplinary action taken against it. The Administrative Law Judge deems the exercise of such authority to be appropriate in the instant case, and preferable to imposing discipline against Solid Ground’s license without providing a condition to reduce or eliminate same. Upon consideration of all of the facts and circumstances presented by this case, the Administrative Law Judge concludes that the ROC should revoke Solid Ground’s Class K-11 license subject to the condition that Solid Ground can avoid such revocation by paying the sum of $46,341.96 to Rexel. RECOMMENDED ORDER Based on the foregoing, the Administrative Law Judge makes the following Recommended Order: On the effective date of the Order entered in this matter, Solid Ground’s Class K-11 license (No. 226381) shall be revoked. It is further recommended that if the ROC receives written proof that Solid Ground has paid the sum of $46,341.96 to Rexel on or before the effective date of the Order entered in this matter, then the aforementioned license revocation shall not take place but instead Solid Ground’s Class K-11 contracting license shall be placed on active suspension for a period of seven (7) days followed immediately by a period of disciplinary probation for one year. This alternative penalty shall commence, if at all, on the effective date of the Order entered in this matter. 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. Done this day, January 5, 2010.

/s/ Sondra J. Vanella Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors -----------------------

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