ALJDEC decisions subject to certification as final

2009A-14261445-ROC · Registrar of Contractors · 2012-01-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

COMPLIANCE HEARING: December 21, 2011, at 1:00 p.m. APPEARANCES: Complainant Mark Siegel, D.O. appeared on his own behalf; Respondent Myers and Son Plumbing, L.L.C. appeared through Christopher Brooks Myers, member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT In March 2005, the Arizona Registrar of Contractors (“the Registrar”) issued License No. K-37.204952-D for dual plumbing to Myers and Son Plumbing, L.L.C. (“Respondent”). According to the Registrar’s electronic record, Respondent’s members include Christopher Brooks Myers and Rebecca German Myers. On or about September 9, 2008, the Registrar received a complaint against Respondent from Mark Siegel, D.O. (“Complainant”) regarding Respondent’s failure to pay its supplier, resulting in a $42,085.00 lien against a commercial condominium project that Complainant was having built at 8050 North 51st Avenue in Glendale, Arizona. The Registrar designated the complaint as Case No. 09-1426. On March 11, 2009, the Registrar issued a Citation and Complaint in Case No. 09-1426 against Respondent, charging violations of A.R.S. § 32- 1154(A)(1), former (7), (11), and (13), namely, A.R.S. § 32-1124(B). After the parties informed the Registrar that they had resolved their dispute, the Registrar closed Case No. 09-1426. Subsequently, the parties filed correspondence to the Registrar about Respondent’s failure to perform the settlement agreement in Case No. 09- 1426. The Registrar redesignated Case No. 09-1426 as Case No. 2009- 14261445. On October 28, 2011, the Registrar issued an Order Reopening Complaint and Setting Compliance Hearing in Case No. 2009-14261445, formerly 09-1426, providing in relevant part as follows: On or about October 5, 2010, Complainant submitted correspondence with the Registrar requesting that the matter be reopened alleging that Respondent failed to comply with the terms of the Settlement Agreement, and that as of September 22, 2010, Respondent failed to pay any monies to Complainant.

On or about October 29, 2010, Respondent submitted written correspondence with the Registrar maintaining that “[Respondent] had hoped for business to pick up…” Respondent further maintained that it had filed a Petition for Chapter 13 Bankruptcy Protection in U.S. Bankruptcy Court.

A review of the PACER website reveals that the bankruptcy at issue was a personal bankruptcy filed by Christopher Brooks Myers and Rebecca Germann [sic] Myers, and the personal bankruptcy does not affect the License, which is held by an LLC.

Upon review and consideration of Complainant’s Request to Reopen, as well as the entire file in this matter, and with good cause appearing, IT IS ORDERED that Case No. 2007-4768676 [sic] 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 present evidence and testimony as to whether or not Respondent has engaged in conduct constituting violation[s] of A.R.S.§ 32- 1154(A)(7) and (11) set forth in the Citation and Complaint and breached the terms set forth in the 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.

A Notice of 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 this 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 Respondent, such breach, in and of itself, may constitute a violation of A.R.S.§32-1154(A)(7). Further, the same breach may constitute a violation of A.R.S. §32-1154(A)(11) if the agreed upon monetary amount was attributable to materials or services rendered by Respondent in connection with its operations as a contractor.

(Emphasis in original.) The Registrar referred Case No. 2009-14261445, formerly 09-1426, to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A Compliance Hearing was held on December 21, 2011. Complainant testified that Respondent was paid $450,000.00 on a $470,000.00 contract. Complainant testified that he had to pay Respondent’s supplier $42,000.00 to remove its lien for materials furnished to Respondent on the condominium project. On or about March 27, 2009, the parties entered into a Payment Agreement under which Respondent promised to pay Complainant $42,000.00, plus interest at 6.5% per annum, on or before September 25, 2010, in $10,000.00 installments. Respondent’s qualifying party, Christopher Brooks Myers, testified that Respondent’s subcontract was with the general contractor on the condominium project, Lucchesi Construction.[1] Mr. Myers acknowledged that Respondent’s supplier had not been paid, but testified that Respondent had a joint check agreement with its supplier and that Lucchesi Construction had let Respondent out of the subcontract. The Registrar’s electronic record reflects that on November 28, 2011, Respondent’s license was cancelled. CONCLUSIONS OF LAW The cancelled status of Respondent’s license does not deprive Complainant of his right to prosecute his complaint against Respondent or prevent the Registrar from determining the merits of Complainant’s complaint.[2] This matter lies within the Registrar’s jurisdiction.[3] Under the doctrine of merger and bar, the parties’ Payment Agreement in Case No. 2009-14261445, formerly 09-1426, precludes Mr. Myers from arguing at the compliance hearing that Respondent was not responsible for paying Complainant or Respondent’s subcontractor, whose lien against the property provided the basis for the settlement. Respondent bears the burden to establish by a preponderance of evidence that it fully complied with the Payment Agreement that it entered in Case No. 2009-14261445, formerly 09-1426.[4] Respondent acknowledged that it did not comply with the Payment Agreement that it entered in Case No. 2009-14261445, formerly 09-1426. Respondent also acknowledged that the basis of the settlement was the lien filed against the project by its supplier for materials that it used on the project in connection with its contracting operations. Therefore, Respondent’s failure to pay Complainant $42,000.00 plus interest pursuant to the parties’ Payment Agreement violates A.R.S. § 32-1154(A)(11)[5] and former A.R.S. § 32-1154(A)(7).[6] RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar revoke Respondent Myers and Son Plumbing, L.L.C.’s License No. K-37.204952-D. It is further recommended that if the Registrar receives satisfactory written proof from Respondent that it has paid Complainant Mark Siegel, D.O., by certified or cashier’s check, the sum of $42,000.00 plus interest at 6.5% per annum from March 27, 2009, or has otherwise fully resolved Dr. Siegel’s complaint to his satisfaction, the Registrar reinstate Respondent’s cancelled license. 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 five days from the date of that certification. Done this day, January 9, 2012.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The Registrar’s electronic record shows that it issued License No. B- 1.177206-C for commercial general contracting to Lucchesi Construction, a partnership, and License No. B-1.244108-C to Lucchesi Construction and Development, Inc. [2] See A.R.S. § 32-1154(C). That statute provides that “[t]he expiration, cancellation, suspension or revocation of a license . . . shall not deprive the registrar of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such license, or to render a decision suspending or revoking such a license . . . .” [3] See 32-1101 et seq. [4] See A.A.C. R2-19-119(2); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [5] This statutory subsection 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] A.R.S. § 32-1154(A)(7) formerly included 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.” As noted in the Registrar’s Order Reopening Complaint and Setting Compliance Hearing, the former statute applies to the original complaint and to the settlement.

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