ALJDEC decisions subject to certification as final

2010A-308472621-ROC · Registrar of Contractors · 2011-02-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 3, 2011 at 8:00 a.m. APPEARANCES: The Complainant appeared through its authorized representative, Jason Bowen. The Respondent appeared through its authorized representative, Sue Frost. ADMINISTRATIVE LAW JUDGE: M. Douglas

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. The Respondent is the holder of a Class KB-1 (No. 240307) License issued by the Registrar of Contractors. 2. This is a commercial matter wherein the Complainant provided and installed HVAC equipment in a multi-building shopping center project for the Respondent, which was operating in its capacity as a licensed general commercial contractor. 3. There was no dispute that pursuant to the terms of the parties’ written construction agreement, the total contract amount due to the Complainant for the full performance of the agreed upon HVAC work was the sum of $110,440.00. 4. There was no dispute that the Complainant has been paid the sum of $99,396.00 for its labor and materials utilized on the construction project at issue. 5. Credible testimony and evidence established that the Complainant has not been paid the final sum of $11,044.00 due to the Complainant for its work on the new shopping center. 6. There was no dispute that the owner of the multi-building shopping center and the bank funding the construction project required that the Respondent submit a subcontractor invoice for each subcontractor along with a conditional waiver and release upon progress payment for each subcontractor before any check would be issued. 7. Credible testimony and evidence established that the owner of the construction project then paid the monthly draw requests with checks made out jointly to the subcontractor and the Respondent. 8. Credible testimony and evidence established that the owner of the construction project paid monthly progress payments for the first nine (9) months of the construction project and then failed to make any further payments for the construction of the new shopping center. 9. Credible testimony and evidence established that the Respondent invoiced the owner of the new shopping center for the final retention payment due to the Respondent and the Respondent’s subcontractors, including the Complainant, and that the owner of the new shopping center failed to pay the Respondent the final draw request. 10. When the owner of the construction project failed to pay the Respondent the final draw request, the Respondent stopped work at the new shopping center and withdrew from the construction project. 11. Credible testimony and evidence established that the owner of the construction project has defaulted on its loans with the bank that was funding the construction project and that the bank is in the process of foreclosing on the new shopping center. 12. Credible testimony and evidence established that the Respondent has not been fully paid for its work on the construction project and that several hundred thousand dollars are due and owing to the Respondent from the owner of the new shopping center for the Respondent’s construction work. 13. Credible testimony and evidence established that the parties’ written construction agreement (Exhibit No. R-1) provides, in pertinent part, as follows: 11.2 It is agreed that progress payment to the Subcontractor shall only be made with funds received by the Contractor from the Owner for work performed by the Subcontractor as reflected in the Contractor’s application for payment and only when and if such funds are received by the Contractor from the Owner. 14. There was no dispute that the written contract was knowingly and voluntarily entered into by both the Complainant and the Respondent. 15. The parties are found to be fully bound by the terms of their written construction agreement. 16. Credible testimony and evidence established that the Respondent has not received the final payment from the owner of the construction project at issue, and that apart from the terms of the parties written construction agreement, the Respondent lacks the capacity to pay the Complainant for the Complainant’s labor and materials that were utilized in the construction project at issue. 17. The evidence of record adequately demonstrated a dispute between the parties regarding what, if any, amount of money is now due and owing to the Complainant from the Respondent. 18. The Respondent’s position in this dispute based upon the terms of the parties’ written construction agreement is found under all of the circumstances to have been asserted in good faith and therefore, precludes a finding that a liquidated sum is owed to the Complainant.

CONCLUSIONS OF LAW 1. The Complainant has the burden of demonstrating by a preponderance of the evidence that the Respondent violated the charged sections of the state’s contracting laws. See Culpepper v. State of Arizona, 187 Ariz. 431, 437-38, 930 P.2d 508 (Ariz. App. 1996). 2. Proof by “preponderance of the evidence” means that it is sufficient to persuade the finder of fact that the proposition is “more likely true than not.” In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). 3. Proof by preponderance of the evidence “is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (rev. 6th ed. 1990). 4. The Registrar of Contractors, acting through an administrative disciplinary hearing, is not empowered by law to adjudicate amounts alleged to be due and owing in the face of a good faith dispute on such amounts. Until and unless any claimed obligation is reduced to judgment by a civil court of competent jurisdiction, no violation by the Respondent of the charged provisions of A.R.S. § 32-1154 (A) (11) (Failure to pay monies when due) can be supported. 5. The Complainant failed to sustain the requisite burden of proving the existence of a valid liquidated debt properly due and owing by the Respondent and thus, has not sustained the burden of proving that the Respondent has committed the violation charged herein. RECOMMENDED ORDER In view of the foregoing, it is recommended that this Citation, together with the Complaint upon which it is based, be dismissed. 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, February 10, 2011.

/s/ M. Douglas 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