ALJDEC decisions subject to certification as final

2008A-12545326-ROC · Registrar of Contractors · 2011-10-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 20, 2011

APPEARANCES: Complainant appeared through its corporate President John Schmaltz; no one appeared on behalf of Respondent.

WITNESSES: John Schmaltz

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

This matter was set by the Registrar of Contractors as a compliance hearing to determine whether Respondent has violated A.R.S. § 32-1154(A)(7) (prohibiting the doing of a wrongful or fraudulent act) and (A)(11) (prohibiting failure to pay subcontractors or suppliers under certain circumstances) as well as whether Respondent has “breached the terms set forth in parties’ [sic] Settlement Agreement.” That agreement required Respondent to make payments to Complainant. As noted above, Respondent did not appear at the compliance hearing; therefore, Complainant’s evidence is uncontested. Procedural Background On March 25, 2009, the Registrar of Contractors (“ROC”) issued an Order of Closing that accepted the terms of a Settlement Agreement (“Agreement”) between the parties. The terms of that Agreement were written into an Administrative Law Judge Decision dated February 25, 2009, and provided that Respondent make payments on a debt owed to Complainant. On July 22, 2011, the ROC issued an Order Reopening Complaint and Setting Compliance Hearing based on Complainant’s allegation that Respondent had not complied with the Agreement. Introduction The ROC’s Order Reopening Complaint and Setting Compliance Hearing states that the parties may present evidence and testimony as to whether or not Respondent has engaged in conduct constituting violations of A.R.S. § 32-1154(A)(7) and (11) as set forth in the [original] Citation and Complaint and breached the terms set forth in parties’ Settlement Agreement. If the assigned Administrative Law Judge recommends that discipline is to be imposed upon Respondent’s License, and the Registrar adopts such recommendation, the discipline may be imposed immediately, based upon a finding that in addition to any violation of contracting laws that have been committed by Respondent, Respondent further breached the parties’ Settlement Agreement.[1]

This tribunal entered the complaint file received from the Registrar of Contractors into the record, which includes documentation relating to the underlying complaint as well as relating to the question of compliance with the Settlement Agreement. Complainant presented brief testimony at the compliance hearing. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Decision finding that the Respondent is not in compliance with the Settlement Agreement and has violated the ROC statutes in the Citation and Complaint. FINDINGS OF FACT 1. Respondent is the holder of license KB-1.195599-D, a dual general contracting license issued by the ROC. The license authorizes Respondent to act as a general contractor for both commercial and residential projects. Gregory Ritterby is Respondent’s Qualifying Party. The license expired May 1, 2011. 2. Complainant’s principal, John Schmaltz, testified at the compliance hearing and explained the basis for the complaint and the events of Respondent’s default on settlement payments. The evidence shows that Complainant performed subcontracting work for Respondent in 2007 and Respondent failed to pay two invoices (#2068 and #2087) that totaled over $36,000.00. After the complaint was filed and a hearing set, the parties appeared for the hearing on February 25, 2009, and resolved the matter through settlement. As noted in the Administrative Law Judge Decision issued the same day and adopted by the ROC on March 25, 2009, Respondent agreed to pay $36,769.43 in six installments of $6,128.23 each month beginning in March 2009. 3. Schmaltz testified that after Respondent made a first payment of $1,500.00 in June 2009, the parties agreed to monthly payments of $750.00 per month. Respondent made five (5) of those payments, then defaulted again and has not made a payment since. Schmaltz testified that Respondent currently owes $42,521.00 (which includes $35,568.65 principal and thirteen (13) months at 1.5% interest as agreed to in the settlement). Respondent paid $5,250.00 toward the debt. 4. Complainant’s evidence is uncontested. 5. The evidence shows that Complainant has been reasonable and that Respondent owes Complainant $42,521.00. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[2] Further, the standard of proof at hearing is by preponderance of the evidence.[3] 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[4] and that Respondent has failed to comply with the terms of the Agreement. Complainant has met that burden. 2. The Citation and Complaint cites 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. It also cites A.R.S. § 32- 1154(A)(7) that prohibits doing a wrongful or fraudulent act. The evidence is sufficient to show that Respondent has violated those provisions. 3. Respondent has failed to pay Complainant $42,521.00 that is due and owing for services rendered to Respondent in connection with Respondent’s work as a contractor. 4. Respondent’s license has expired. Pursuant to A.R.S. § 32- 1154(C), the expiration of a license does not deprive the ROC or this tribunal of jurisdiction and does not render the Registrar powerless to discipline the license. 5. Respondent should be given one last opportunity to pay the remaining balance and if Respondent fails to do so, its license should be revoked. RECOMMENDED ORDER IT IS RECOMMENDED that license KB-1.195599-D, held by T and R Construction, Inc., be revoked on the effective date of the Registrar’s Order unless the Registrar of Contractors receives written proof of payment to Arroyo Contracting Stucco, Inc. of the sum of $42,521.00 and the Registrar accepts such written proof. IT IS FURTHER RECOMMENDED that if Respondent provides such written proof, on or before the effective date of the Registrar’s Order, the license revocation shall not take place and case 2008-12545326 (formerly 08- 1254) shall be closed.

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 day, October 11, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Emphasis added. [2] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [3] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [4] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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