ALJDEC decisions subject to certification as final

2009A-128406453-ROC · Registrar of Contractors · 2013-03-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 14, 2013, at 1:00 p.m. APPEARANCES: HD Supply Plumbing and HVAC (hereinafter “Complainant”) appeared through its attorney, Edward J. Marko, Esq., Marko & Sarko PLLC. License No. L-37.088264-C, License No. B.135326-R, and License No. B- 1.102121-C of Northridge Mechanical Inc (hereinafter “Northridge”) appeared through their Qualifying Party, Daniel Amado Ortega, Sr. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Orders on Consolidated Compliance Hearing are made: FINDINGS OF FACT 1. Northridge is the holder of License No. L-37.088264-C, License No. B.135326-R, and License No. B-1.102121-C issued by the Registrar of Contractors. 2. The Order Reopening Complaint and Setting Compliance Hearing provided, in pertinent part, as follows: On November 18, 2009, the Registrar issued a combined Default Decision and Order in these matters providing that Respondents’ L-37.088264-C License, B.135326-R License and B- 1.102121-C License would be suspended on the effective date of the Order and remain suspended until the Registrar received proof that Respondents had paid Complainant the balance of the money Complainant claimed was due and owing, $41,881.41, as stated in the Complaint. If Respondents paid Complainant the claimed amount of money on or before the effective date of the Order then Respondents’ L-37.088264-C License, B.135326-R License and B- 1.102121-C License would not be suspended and the matters would be closed. The Orders had an effective date of December 28, 2009.

On or about November 20, 2009, Counsel for Complainant submitted written correspondence in these matters providing that Counsel’s office “is seeking an update in this matter. The debtor has repeatedly refused to resolve this matter while continuing to benefit from this ROC license.”

On January 25, 2010, the Registrar suspended Respondents’ L- 37.088264-C License, B.135326-R License and B-1.102121-C License in accordance with the terms set forth in the Registrar’s November 18, 2009 Default Decisions and Orders.

On or about October 1, 2010, Counsel for Complainant submitted written correspondence in these matters providing, among other things, that the suspensions imposed be lifted and Respondents’ Licenses reinstated because the parties reached a resolution of the issued [sic] underlying the Citation and Complaint. Counsel further provided that Counsel is “requesting and the [R]espondent agrees that our client reserves the right to reinstate this [C]omplaint should terms be defaulted on.” The Registrar treated this as a Notice of Compliance/Request to Lift Suspension.

On October 7, 2010, the Registrar lifted the disciplinary suspensions imposed upon Respondents’ L-37.088264-C License, B.135326-R License and B-1.102121-C License.

On or about May 3, 2012, Counsel for Complainant submitted written correspondence in these matters providing, among other things, that Respondents “ha[ve] failed to live up to the terms of the agreement. [Respondents] ha[ve] failed to meet any of the promises [Respondents] ha[ve] made when given extensions. . . . At this time please consider our formal request to reopen the [C]omplaints referenced above and re-suspend all the [L]icenses as agreed by [Respondents].” The Registrar treated this submission as a Request to Reopen.

On May 22, 2012, the Registrar sent a copy of Counsel for Complainant’s Request to Reopen to Respondents, providing Respondents with an opportunity to file a Response thereto.

On or about May 31, 2012, Respondents submitted written correspondence in these matters maintaining, among other things, Respondents “would like to request a hearing in this matter. The last time [Respondents’] licenses were suspended, [Respondents] lost [their] ability to make revenue. Not only that, all of [Respondents’] certifications were denied and [Respondents] lost [Respondents’] bonding to do projects.”

On or about July 31, 2012, Counsel for Complainant submitted written correspondence in these matters providing that “[u]nder the Payment Agreement and Release [Respondents] agreed by [m]utual consent to the reinstatement of the suspensions in the event of default.” However, Counsel did not provide the Registrar with a copy of the Payment Agreement and Release.

Upon review and consideration of Complainant’s Request to Reopen, Respondents’ Response thereto, as well as the entire file in this matter, and with good cause appearing, IT IS ORDERED that Case No. 2009-28402118 be REOPENED. IT IS FURTHER ORDERED that a Compliance Hearing be scheduled in the expedited course of docketing in the Phoenix area. At the Compliance Hearing, the parties may offer evidence and testimony as to whether or not Respondents engaged in conduct constituting violations of A.R.S. § 32-1154(A)(7) and (11) as alleged in the Citation and Complaint and/or breached the terms of the parties’ Settlement Agreement. If the assigned Administrative Law Judge recommends that discipline is to be imposed upon Respondents’ L-37.088264-C License, B.135326-R License and B-1.102121-C 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 committed by Respondents, Respondents further breached the parties’ Settlement Agreement.

A Notice of Compliance Hearing shall be issued in due course.

Note: As of September 30, 2009, the mere breach of a Settlement Agreement no longer constitutes a violation of Arizona contracting law. See A.R.S. § 32-1154(A)(7) (removal of “wrongful” from the statute). However, the Citation and Complaint issued in these matter was issued prior to the removal of the word “wrongful” from A.R.S. § 32-1154(A)(7). Because the Registrar maintains that a breach of the Settlement Agreement would constitute wrongful conduct on the part of Respondents, such breach, in and of itself, may constitute a violation of A.R.S. § 32-1154)(A)(7).

3. The terms of the parties’ written Settlement Agreement did not necessarily require Northridge to pay any money to Complainant. The Settlement Agreement required Northridge to provide Complainant with photocopies of any construction agreements that Northridge entered into and for Northridge to pay Complainant a percentage of any profit made on such construction agreements.[1] 4. At the onset of the scheduled hearing, Northridge’s Qualifying Party, Daniel Amado Ortega, Sr. (hereinafter “Mr. Ortega”), stipulated that Northridge breached the terms of the parties’ Settlement Agreement by failing to comply with any of the terms of the Settlement Agreement.[2] 5. William E. Garrison (hereinafter “Mr. Garrison”) testified that he was previously the Regional Credit Manager for Complainant. Mr. Garrison stated that the principal amount due and owing to Complainant from Northridge for construction materials delivered to Northridge was the sum of $37,992.93. Mr. Garrison stated that the $37,992.93 did not include interest or attorney’s fees. Mr. Garrison testified that the materials delivered to Northridge were for more than one construction project.[3] 6. Mr. Garrison’s testimony is found to be credible. 7. Mr. Ortega testified that he had severe financial problems. Mr. Ortega stated that he had no money to pay Complainant. Mr. Ortega acknowledged that “he owed the money to Complainant.” Mr. Ortega testified that the materials had been furnished for several construction projects and that Northridge had been paid for some of the construction projects. Mr. Ortega stated that he had not submitted financial documents to Complainant as required in the parties’ Settlement Agreement. Mr. Ortega testified that Northridge failed to pay a percentage of Northridge’s profits from construction projects as required in the parties’ Settlement Agreement. Mr. Ortega stated that he had no excuse for not complying with terms of the parties’ Settlement Agreement. Mr. Ortega testified that sometimes “he just forgets things.”[4] 8. Administrative notice is taken of Northridge’s prior license records as reflected on the Registrar of Contractors’ public website on February 27, 2013. Such prior license records reflects that License No. L-37.088264- C, License No. B.135326-R, and License No. B-1.102121-C are current. License No. L-37.088264-C was suspended until compliance from 1/25/10 through 10/07/10, suspended for non-renewal from 11/01/09 through 10/25/10, suspended for non-renewal from 11/1/01 through 12/6/01, suspended for from 11/1/03 through 12/16/03 for non-renewal, and suspended from 11/1/07 through 1/30/08 for non-renewal. License No. B.135326-R of Northridge was suspended for non-renewal on 06/01/10 through 10/25/10, suspended until compliance on 01/23/10 through 10/07/10, suspended for non- renewal from 6/1/02 until 6/10/02, suspended for non-renewal from 6/1/06 through 6/2/06, and suspended for non-renewal from 6/1/08 through 10/30/08. License No. B-1.102121-C of Northridge was suspended for non-renewal from 05/01/11 through 05/13/11, suspended until compliance from 01/25/10 through 10/07/10, suspended for lack of bond from 8/16/07 through 9/12/07, and suspended for non-renewal from 5/1/09 through 5/26/09. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. 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). 3. The terms of the parties’ written Settlement Agreement did not necessarily require Northridge to pay any money to Complainant. The Settlement Agreement required Northridge to provide Complainant with photocopies of any construction agreements that Northridge entered into and for Northridge to pay Complainant a percentage of any profit made on such construction agreements. There was no dispute that Northridge breached the terms of the parties’ Settlement Agreement. Northridge’s breach of the parties’ Settlement Agreement is found to constitute a wrongful act in violation of the charged provision of former A.R.S. § 32- 1154(A)(7).[5] 4. Northridge has had over six years and repeated opportunities to pay the money it owes to Complainant. Despite the repeated opportunities, Northridge has failed to pay Complainant anything on the $37,992.93 that Northridge admits that it owes to Complainant. Northridge’s failure to pay the $37,992.93 that Northridge owes to Complainant for materials that Northridge utilized on various construction projects in connection with the Northridge's operations as a licensed contractor is found to constitute a violation of the charged provision of A.R.S. § 32- 1154(A)(11).[6] 5. A licensed contractor is not entitled to an unlimited period of time or an endless succession of opportunities to comply with specified conditions which reduce, eliminate, or terminate, disciplinary action against the Contractor’s License. RECOMMENDed order In view of the foregoing, it is recommended that License No. L- 37.088264-C, License No. B.135326-R, and License No. B-1.102121-C of Northridge shall be immediately revoked. In the event of certification of this 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 the certification. Done this day, March 4, 2013.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] See Exhibit C-4 (Stipulated Agreement and Request to lift Suspension). [2] 2/14/13 Hearing Record (hereinafter “H.R.”) at 25:15-25:50. [3] H.R. at 26:18-30:52. [4] H.R. at 31:08-48:17. [5] The Citation and Complaint issued in these matter was issued prior to the removal of the word “wrongful” from A.R.S. § 32-1154(A)(7). Before September 30, 2009, A.R.S. § 32-1154(A)(7) included among the grounds for disciplinary action against a contractor’s license, the doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. [6] A.R.S. § 32-1154(A)(11) includes among the grounds for disciplinary action against a contractor’s license, failure by a licensee or agent or official of 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.

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