ALJDEC decisions subject to certification as final

09F-6274-ROC · Registrar of Contractors · 2010-03-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 24, 2010 at 1:00 p.m. APPEARANCES: Complainant Hajoca Corporation appeared through Karen I. Dow, District Credit Manager; Respondent Freedom Air Conditioning Plumbing and Heating Inc. did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On January 16, 2005, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC203498, Class K-37 for dual plumbing to Respondent Freedom Air Conditioning Plumbing and Heating Inc., a corporation. Respondent’s address of record is 730 E. Brown Rd., Ste. 106, Mesa, AZ 85203-4839. Respondent’s telephone number of record is 480-827-1700. There are four persons listed as officers on Respondent’s license, as follows: (1) Marvin Lee Deaton, (2) Jonathan Eli Deaton, (3) Jeramy Lee Monday, and (4) Jonathan Eli Gosnell. On July 9, 2003, the Registrar had issued two other licenses to Respondent at the same address and telephone number, on which Marvin Lee Deaton had been listed as secretary and Jonathan Eli Deaton had been listed as qualifying party, as follows: (1) License No. ROC186820, Class L-39 for commercial air conditioning and refrigeration; and (2) License No. ROC186821, Class C-39R for residential air conditioning and refrigeration. Jonathan Eli Deaton had resigned as qualifying party on both licenses on April 24, 2009 and, although no other person has qualified, the licenses were shown on the Registrar’s website as current and in good standing on the date of the hearing. On May 11, 2009, the Registrar issued License No. ROC255269, Class K-37 for dual plumbing to Patriot Air Conditioning and Plumbing LLC (“Patriot”). Patriot’s address of record is the same as Respondent’s, 730 E. Brown Rd., Ste. 106, Mesa, AZ 85203. Jonathan Eli Deaton is listed as a member of Patriot. Complainant Hajoca Corporation is a wholesale plumbing warehouse that sells plumbing supplies to plumbing contractors like Respondent. On June 9, 2009, the Registrar received a complaint from Complainant against Respondent’s license, which alleged that Respondent owed $3,966.01 for an unpaid invoice for materials that Complainant had provided for Respondent’s use in its plumbing contracting business. The Registrar referred the complaint to Respondent for its immediate attention. On June 17, 2009, the Registrar received a notice of appearance from attorney Edward H. Britt on Respondent’s behalf. Mr. Britt also sent a preliminary response to the complaint, denying that Respondent had violated any contracting law. On June 25, 2009, the Registrar received Complainant’s request that a citation be issued against Respondent’s license. On November 27, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging A.R.S. § 32-1154(A)(11). The Registrar mailed a copy of the Citation and Complaint to Respondent at its address of record and to Mr. Britt. On December 10, 2009, the Registrar received a written answer to the Citation and Complaint from Marvin Lee Deaton, “Owner of Freedom,” on Respondent’s behalf. In the written answer, Marvin Lee Deaton denied that Respondent had knowingly failed to pay more than $750 dollars to Complainant without legal justification. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule and to conduct a fair hearing.

On January 19, 2010, the Registrar issued a Notice of Hearing, setting a hearing on March 24, 2010 at 8:00 a.m. at the Office of Administrative Hearings. The Registrar mailed copies of the Notice of Hearing to Respondent at its address of record and to Mr. Britt. A hearing was held on March 24, 2010 at 8:00 a.m. Complainant’s representative Karen I. Dow, District Credit Manager, testified and submitted four 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 officer or attorney. Respondent did not present any evidence to defend its license. Hearing Evidence On March 16, 2005, Marvin Deaton on behalf of Respondent executed an application for commercial credit to purchase plumbing materials from Complainant in an amount up to $5,000.00 per month. Marvin Deaton also provided a personal guaranty for Respondent’s indebtedness to Complainant.

Between May 2005 and February 2009, Respondent purchased materials from Complainant and, within 30 days, paid the full amounts due for the materials. In April 2009, Respondent purchased materials on credit from Complainant in the amount of $3,966.41 for use in its residential plumbing business. Respondent did not pay for these materials. Ms. Dow testified that she subsequently made telephone calls to Respondent at its telephone number of record, 480-827-1700, to attempt to collect the debt. The telephone number still worked but was answered, “Patriot Plumbing.” When Ms. Dow first asked to speak to Marvin Deaton after the phone was answered, “Patriot Plumbing,” she was told that he did not work there. On a subsequent call, however, when Ms. Dow asked to speak to Marvin Deaton, she was asked whether he was expecting her call. She was then connected to his voicemail. According to the Registrar’s record, at the time of the hearing, Respondent’s License No. ROC203498 was suspended. Its bond had been canceled on January 22, 2010. CONCLUSIONS OF LAW 1. The copies of the Notice of Hearing that the Registrar mailed to Respondent at its address of record and to its attorney were reasonable and it is deemed to have received notice of the hearing.[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) 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 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. Complainant has borne its burden to establish that Respondent violated A.R.S. § 32-1154(A)(11) by failing to pay Complainant $3,966.41 for materials that Respondent used in its contracting business. 7. A contractor’s inability to pay and nonpayment by the owner or general contractor on a project are affirmative defenses that the contractor bears the burden to prove in a materialman’s administrative complaint under A.R.S. § 32-1154(A)(11). 8. By failing to appear or to present any evidence at the duly noticed hearing Respondent did not establish its inability to pay, nonpayment by the owner or general contractor on the project(s), or any other affirmative defense. 9. The suspended status of Respondent’s license does not preclude Complainant from pursuing its administrative remedy nor preclude 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. 10. Complainant presented evidence at the hearing to support an inference that Respondent is attempting to evade contracting law requirements through the “license hopping” of its principals from Respondent to Patriot. 11. 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, the revocation in due course will lead to revocation or suspension of any other license on which any of the persons on Respondent’s license are also listed,[8] including Respondent’s License Nos. ROC186820 and ROC186821 and Patriot’s License No. ROC255269, and may prevent any new license from being issued to Respondent or to any of the persons who are listed on its license.[9] 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 should revoke License No. ROC203498, Class K-37 previously issued to Respondent Freedom Air Conditioning Plumbing and Heating Inc. unless Respondent provides proof that it has paid Complainant Hajoca Corporation $3,966.41. It is further recommended that, if on or before the effective date of the order, the Registrar receives documentary proof from Respondent that it has paid $3,966.41 to Complainant by cashier’s or certified check, the Registrar should not revoke Respondent’s license but, instead, should close the complaint in Case No. 09-6274. 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, March 25, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [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] See A.R.S. § 32-1154(C). [8] See A.R.S. § 32-1154(A)(21). [9] See A.R.S. § 32-1122(E).

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