ALJDEC decisions subject to certification as final

2010A-29766688-ROC · Registrar of Contractors · 2011-05-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 25, 2011 APPEARANCES: Scottsdale Winnelson Co. was represented by its authorized representative, Greg White. Knoop Development Corp. was represented by its authorized representative, Ben van der Knoop. 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. Knoop Development Corp. (“Respondent”) is the holder of License No. 163630, a Class B contracting license issued by the Registrar of Contractors (“Registrar”). 2. Scottsdale Winnelson Co. (“Complainant”) is a wholesale distributor who supplied Respondent plumbing products on a line of credit. 3. On March 9, 2010, Complainant filed a written Complaint with the Registrar alleging non-payment by Respondent in the amount of $4,663.42 for plumbing supplies provided to Respondent on credit granted by Complainant. The Registrar originally designated the Complaint as Case No. 10-2976, but later re-designated it as Case No. 2010-29766688. 4. The Registrar issued a Citation and Complaint in Case No. 2010- 29766688 charging Respondent with violating the provisions of A.R.S. § 32-1154(A) (11) and (13), specifically A.R.S. § 32-1158. 5. The Registrar forwarded Case No. 2010-29766688 to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 6. Complainant’s Complaint states that the last date Complainant provided Respondent with supplies on credit was May 13, 2008. 7. Respondent does not deny that it owes Complainant the claimed sum. However, Respondent presented credible evidence to establish that it lacks the capacity to pay the debt. 8. Respondent had two construction loans with Union Bank. In 2008, Respondent submitted two draw requests for two projects for a total amount of $109,963.56. Despite Respondent’s compliance with Union Bank’s insistence on receiving proof of termite inspections and certificates of occupancy, Union Bank did not fund the draw requests. 9. Union Bank was subsequently closed by the Federal Deposit Insurance Corporation (“FDIC”). 10. Respondent was not able to obtain funding from FDIC. 11. Respondent’s principals have paid over $30,000.00 to suppliers from their personal credit card, but they are unable to pay more to suppliers. 12. Complainant did not present any evidence regarding the issue of whether Respondent’s contracts meet the required statutory minimum elements. 13. A review of the Registrar’s official electronic licensing records reveals that Respondent’s License No. 163630 was suspended by operation of law for non-renewal on April 1, 2011. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent and the subject matter in this case. Pursuant to A.R.S. § 32-1154(C), the suspension of Respondent’s contracting license does not deprive the Registrar of the authority to undertake disciplinary proceedings against Respondent. 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. The Administrative Law Judge concludes that Respondent did not violate the provisions of A.R.S. § 32-1154(A) (11), as charged in the Citation and Complaint issued by the Registrar. While it is uncontroverted that Respondent owes the claimed debt to Complainant, Respondent presented credible evidence that it lacks the capacity to pay that debt due to Union Bank’s failure to fund the two draw requests described in the above Findings of Fact. 4. There is no evidence that Respondent violated the provisions of A.R.S. § 32-1154(A) (13), specifically A.R.S. § 32-1158, as charged in the Citation and Complaint issued by the Registrar. Complainant did not address this issue at the hearing. RECOMMENDED ORDER The Citation and Complaint in Case No. 2010-29766688 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, May 10, 2011.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors -----------------------

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