ALJDEC decisions subject to certification as final

2010A-308473049-ROC · Registrar of Contractors · 2011-01-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 6, 2011

APPEARANCES: Complainant was represented by attorney Ed Marko; Respondent appeared on his own behalf.

WITNESSES: Ed Halliburton

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant brings this action claiming that it is owed $90,803.58 from Respondent for materials Complainant provided to Respondent. Respondent admits that it owes money to Complainant, but denies that the debt constitutes a violation of the no-pay provision of Arizona Revised Statutes (A.R.S.) § 32-1154(A)(11). This tribunal entered the complaint file received from the Registrar of Contractors into the record, along with marked Exhibit A submitted by Complainant. Respondent testified. At the end of the hearing, Complainant agreed that there was no evidence linking Respondent’s two commercial licenses to the activities that form the basis of the complaint. Therefore, Complainant agreed that the allegations against Respondent’s commercial licenses A-5.230823-C and L-5.230822-C should be dismissed. Only Respondent’s residential license C-5.194468-R is hereby considered for possible violation of the no-pay statute. Based upon the record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding that Respondent has violated the no-pay provision. FINDINGS OF FACT 1. Respondent is the holder of three licenses, noted in the caption above, issued by the Registrar of Contractors (“ROC”). Those licenses authorize Respondent to perform grading work for residential and commercial projects. 2. In late 2005, Complainant sold Respondent heavy construction equipment in the form of one large loader vehicle and one small loader vehicle that Respondent used to perform grading work for residential subdivisions in Prescott, Prescott Valley, and Dewey Arizona. The agreement between Complainant and Respondent was an “Installment Sales Contract (Security Agreement).” Respondent bought the equipment because he was contracting to do a great deal of grading work for the three subdivisions. Respondent testified that the three builders involved in those projects filed bankruptcy after he had performed work and while he still had work to perform. He was paid in part for some of the work he did, and he lost a great deal of future income. 3. Respondent testified that he tried to maintain the payments on the equipment and used the equipment to prepare river rock for sale to material suppliers in order to make some income because he was not getting grading work due to a downturn in the economy. Eventually, he could not keep up the payments and the equipment was repossessed by Complainant. 4. In January 2010, Complainant obtained a default judgment against Respondent in Yavapai County Superior Court. The total amount of the judgment is $90,803.58, but this includes principal, interest, court costs, and attorney’s fees. Only the principal amount of that judgment, which is $75,925.26, would fall within the no-pay provision that governs this case, as it applies to “materials or services” rendered to a contractor. 5. The default judgment establishes that Respondent owes Complainant more than $750.00, the statutory minimum. The decisive issue in this case is whether the equipment falls within the “materials” term used in the no- pay provision. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[1] Further, the standard of proof at hearing is by preponderance of the evidence.[2] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that Respondent has violated the statute cited in the Citation and Complaint.[3] Complainant has met that burden. 2. Only one statutory provision is cited in the Citation and Complaint as a potential violation: the “no-pay” provision found in Arizona Revised Statutes (A.R.S.) § 32-1154(A)(11) that prohibits the failure 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 purchased.”[4] The record supports a conclusion that Respondent violated the no-pay provision. 3. The issue is whether the phrase “materials or services” as used in the statute includes the type of equipment at issue here. The primary rule of statutory interpretation is to give effect to legislative intent.[5] The best reflection of that intent is the plain language of the statute.[6] 4. The equipment here is heavy machinery. Such equipment is not “services” because it is tangible property sold to Respondent. Complainant argues that the “materials or services” phrase should be read broadly to include the purchase of heavy machinery that is then used in the construction business. Respondent, on the other hand, likens the equipment to his pickup truck that he uses in his business and argues that the no-pay provision does not apply. 5. Webster’s II, New Riverside University Dictionary (1994), page 732, defines “materials” as “tools or apparatus for performing a given task < painting materials >.”[7] This definition reflects that equipment used to perform contracting work can be considered materials. This tribunal finds that the word “materials” in the no-pay provision refers to tools and equipment used in the construction business as well as construction materials incorporated into the property improvements. The no-pay provision, therefore, covers the heavy equipment that Respondent used in his business. 6. By failing to pay the $75,925.26 principal amount for the purchase of the loaders, Respondent has violated the no-pay provision. 7. A review of Respondent’s license history with respect to license C-5.194468-R shows that the license is current and has been in good standing since it was issued in 2004. Based on that good history, Respondent should be given a chance to pay Complainant and if Respondent does not do so, Respondent’s license C-5.194468-R should be suspended. RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that license C-5.194468-R, held by Respondent Edward Patrick Halliburton dba R A C E Grading, be suspended on the effective date of the Registrar’s Order until the Registrar of Contractors receives written proof of payment to Complainant of the sum of $75,925.26, and the Registrar accepts such written proof. IT IS FURTHER RECOMMENDED that if Respondent provides such written proof, on or before the effective date of the Registrar’s Order, then the license suspension shall not take place and case 2010-[number redacted] shall be closed. IT IS FURTHER RECOMMENDED that Citation and Complaint 2010-[number redacted] against Respondent Edward Patrick Halliburton dba R A C E Grading, pertaining to license A-5.230823-C, be dismissed. IT IS FURTHER RECOMMENDED that Citation and Complaint 2010-[number redacted] against Respondent Edward Patrick Halliburton dba R A C E Grading, pertaining to license L-5.230822-C, be dismissed.

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, January 25, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [2] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [3] See Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996) (moving party bears burden of proof by preponderance of evidence in an administrative hearing). [4] Emphasis added. [5] Anderson v. Ariz. Game and Fish Dep’t, ___ Ariz. ___, 243 P.3d 1021, 1022 (App. 2010). [6] Id. [7] Emphasis in original.

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