ALJDEC decisions subject to certification as final

2010A-1090837-ROC · Registrar of Contractors · 2011-09-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

REHEARING: July 14, 2011 and August 15, 2011 APPEARANCES: Northern Arizona Excavators, L.L.C. was represented by its attorney, Tony S. Cullum, Esq. Ju Rell General Contracting, L.L.C. was represented by its attorney, Paul E. Steen, Esq. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT 1. Ju Rell General Contracting, L.L.C. (“Respondent”) is the holder of License No. 192545, a Class B-1 contracting license issued by the Registrar of Contractors (“Registrar”). 2. Northern Arizona Excavators, L.L.C. (“Complainant”) is the holder of License No. 210525 issued by the Registrar. Complainant’s contracting license was voluntarily cancelled on June 24, 2010. Complainant’s contracting license was suspended by operation of law for lack of bond from June 14, 2009 to August 25, 2009. 3. On February 26, 2010, Complainant filed a written Complaint with the Registrar alleging nonpayment by Respondent to Complainant in the amount of $44,563.76 for Complainant’s work performed on the Coconino High School project. The Registrar designated the Complaint as Case No. F10-0109, but the case was later re-designated as Case No. 2010- 1090837. 4. The Registrar issued a Citation and Complaint in Case No. F10-0109 charging Respondent with violating the provisions of A.R.S. § 32- 1154(A) (11). The Citation and Complaint was sent to the parties at their addresses of record with the Registrar. 5. On October 15, 2010, the Registrar issued a default “Decision and Order” in Case No. 2010-1090837 due to Respondent’s failure to file a written Answer to the Citation and Complaint. The Registrar ordered that Respondent’s contracting license be suspended until the Registrar received proof that Respondent had paid Complainant the sum of $44,563.76. 6. On November 18, 2010, Respondent submitted to the Registrar its “Request to Set Aside Default Decision and to Set Hearing of Citation.” 7. On March 18, 2011, the Registrar issued its “Order Granting Request To Set Aside Default Decision” in Case No. 2010-1090837. 8. On June 1, 2011, the Registrar issued its “Notice Of Default Rehearing” in Case No. 2010-1090837. The Registrar forwarded the case to the Office of Administrative Hearings, an independent agency, for a rehearing. 9. Respondent was the general contractor for the subject project. Respondent subcontracted the majority of the project to Complainant. 10. On June 6, 2009, the parties executed two subcontract agreements: one with a contract price of $514,273.51 (“Contract A”) and one with a contract price of $506,106.41 (“Contract B”). Complainant believes that Contract A is the governing document. Respondent believes that Contract B governs. 11. According to Complainant’s Complaint, July 1, 2009, was the last day that Complainant performed any work on the project. However, at the hearing Complainant presented evidence that it may have been doing punch list work in August of 2010. 12. Complainant did not have any lien rights on the project. 13. On August 10, 2010,[1] Complainant executed a document entitled “Unconditional Waiver and Release,” that reads as follows: The undersigned has been paid and has received full payment for all labor, services, equipment and material furnished on the job located in Flagstaff, Az. Coconino High School.

This document hereby releases any Mechanics lien any state or federal Statutory [sic] bond right, private bond right, any claim for payment rights for persons in the undersigned position. This release covers final payment for all labor, services, equipment, or material furnished to the above mentioned job site.

The undersigned warrants that he either has already paid or will use the monies he receives from this full payment to promptly pay in full all his laborers, subcontractors, material suppliers, rental equipment, and any debt he has concerning this project.

14. The “Unconditional Waiver and Release” prepared by Respondent was signed on behalf of Complainant by Michael J. Sweeter, Jr., who is Complainant’s qualifying party and a member. Mr. Sweeter did not alter the document in any manner. 15. In consideration for Complainant’s execution of the “Unconditional Waiver and Release,” Respondent paid Complainant the sum of $312,292.99. Mr. Sweeter testified that sum constituted the full payment of the contract price, but it did not include payment for change order items. 16. Complainant prepared a written invoice dated October 12, 2009, that it submitted to Respondent for payment of change order work. The value of that work was $44,563.76. 17. Respondent has refused to pay the sum of $44,563.76 to Complainant contending that Complainant’s execution of the “Unconditional Waiver and Release” admits that Complainant had been paid in full for the project. 18. Complainant responds to that contention by stating that Mr. Sweeter intended that Complainant’s execution of the “Unconditional Waiver and Release” apply only to the original contract price and did not apply to the change order items. However, the plain reading of the document states that Complainant admitted to receiving full payment from Respondent. 19. Complainant contends that the “Unconditional Waiver and Release” does not satisfy the statutory requirements for a lien release. Complainant did not have any lien rights because Complainant did not file a preliminary lien notice for the project. Therefore, the “Unconditional Waiver and Release” is more in the nature of a receipt and acknowledgement from Complainant that it received payment in full for the project. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. A.A.C. R2-19-119(A). 3. Complainant failed to sustain its burden of establishing that Respondent violated the provisions of A.R.S. § 32-1154(A) (11), as charged in the Citation and Complaint issued by the Registrar. The above-provided Findings of Fact support this conclusion. 4. Although Complainant is not charged in this matter, Complainant’s contracting on the subject project while its license was suspended by operation of law for lack of bond violates the provisions of A.R.S. § 32-1154(A) (18). That statute prohibits a contractor from contracting while a contracting license is suspended. RECOMMENDED ORDER The Citation and Complaint in Case No. 2010-1090837 shall be dismissed 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 will be 40 days from the date of that certification.

Done this day, September 2, 2011.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The document is actually dated August 10, 2012. The stated year is a typographical error.

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