ALJDEC decisions subject to certification as final

2010A-308473229-ROC · Registrar of Contractors · 2011-01-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 15, 2010 at 8:00 a.m. APPEARANCES: Complainant Blade Runners, Inc. appeared through Bernard Emery, its president and qualifying party; Respondent Mays Construction, Inc. A R, dba A R Mays Construction, appeared through Joseph Barth, its vice president. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In May 1990, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC086439, Class L-5 for commercial asphalt and concrete cutting and sealing to Complainant Blade Runners, Inc. In December 1997, the Registrar issued License No. ROC129831, Class A for commercial general engineering to Respondent Mays Construction, Inc. A R, dba A R Mays Construction. In May 2010, the Registrar received a complaint from Complainant against Respondent that alleged that Respondent had failed to pay Complainant $4,071.76 pursuant to a verbal contract for asphalt and concrete saw- cutting at the Lincoln Village commercial retail project in Scottsdale, Arizona (“the project”). After Respondent did not resolve the complaint, Complainant requested that the Registrar issue a citation against it. On September 1, 2010, the Registrar issued a Citation and Complaint against Respondent’s license, charging a violation of A.R.S. § 32-1154(A)(11). Respondent timely answered the Citation and Complaint, denying any statutory violation because it did not have a contract with Complainant. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule an evidentiary hearing. A hearing was held on December 15, 2010. Complainant presented the testimony of three witnesses: (1) Bernard Emery, Complainant’s president and qualifying party; (2) Don S. Sensky, Complainant’s saw operator on the project; and (3) Scott Wagoner, the owner of Arizona Discount Demolition. Complainant also submitted eleven exhibits. Respondent presented the testimony of two witnesses: (1) Joseph Barth, Respondent’s vice president; and (2) Danette Del Castillo, Respondent’s senior project accountant. Respondent also submitted five exhibits. Hearing Evidence On or about September 28, 2009, Respondent subcontracted demolition at the project to Arizona Discount Demolition, License No. ROC190540, Class L- for commercial wrecking, for a total contract price of $65,000.00. In October 2009, Arizona Discount Demolition asked Complainant to perform saw-cutting on the project. Arizona Discount Demolition directed Complainant to John Burgess, Respondent’s superintendent on the project. Complainant is a “service company” that bills its work according to the time and materials used to complete a specific task, not according to a written contract that sets forth a scope of work. Mr. Burgess, on Respondent’s behalf, directed Complainant to perform saw-cutting where needed. After Complainant performed the saw-cutting, it prepared invoices and Mr. Burgess or one of Respondent’s other project supervisors signed the invoices. The invoices were addressed to Arizona Discount Demolition. In December 2009, Mr. Emery learned that Arizona Discount Demolition had lost its bond and became concerned about whether Complainant would get paid for its work on the project. Although it is not customary for second-tier subcontractors to file liens on commercial projects, Complainant filed a 20- day preliminary lien notice on the project. Mr. Emery also contacted Ms. Del Castillo in Respondent’s accounting department. Ms. Castillo assured Mr. Emery that between eight and nine thousand dollars remained of Arizona Discount Demolition’s retention for Respondent to pay Complainant. Mr. Emery asked Ms. Del Castillo whether Complainant should continue filing preliminary lien notices as it continued to perform work on the project. Ms. Del Castillo responded that although she could not advise Complainant whether to pre-lien the project, because Respondent had the money to pay Complainant, she did not see any reason to do so. Complainant continued to work on the project. Mr. Burgess continued to direct Complainant’s work on Respondent’s behalf and to sign Complainant’s invoices. In February 2010, Arizona Discount Demolition stopped working on the project. Neither Respondent nor Arizona Discount Demolition paid Complainant’s invoices. In April 2010, Mr. Emery again contacted Ms. Del Castillo. She again assured him that sufficient monies remained from Arizona Discount Demolition’s retention for Respondent to pay Complainant. On April 21, 2010, Ms. Del Castillo sent a facsimile of a Conditional Waiver and Release on Final Payment to Mr. Emery with the request, “Please fill in the amount that is due, sign and fax back to me . . . . I will make sure you are paid before any money is released to Arizona Discount Demo.” Mr. Emery filled in the amount of $4,492.70, signed, and returned the Conditional Waiver and Release on Final Payment to Ms. Del Castillo, with copies of Complainant’s invoices. Ms. Del Castillo testified that when she spoke to Mr. Emery in April 2010, she had not received certain invoices and change orders that reduced Arizona Discount Demolition’s retention. On May 3, 2010, Respondent issued a check to Complainant in the amount of $420.94. Mr. Barth testified that this was the amount secured by Complainant’s 20-day preliminary lien notice and that Respondent’s contract with the owner of the project required that all liens be satisfied. Mr. Barth testified that if Complainant had filed a lien for the remaining amount due, Respondent would have paid it. Mr. Wagoner testified that Respondent did not pay any of the retention to Arizona Discount Demolition. Mr. Wagoner testified that at this time Arizona Discount Demolition cannot afford to pay Complainant for its work on the project. Mr. Barth testified that Respondent used all the monies held in retention to complete Arizona Discount Demolition’s subcontract and change orders on the project and that a job superintendent’s signature on invoices is not a guarantee of payment. Mr. Barth testified that if Respondent had been made aware that Arizona Discount Demolition was not paying Complainant, Respondent would have made the checks issued to Arizona Discount Demolition jointly payable to Complainant before it left the project. According to the Registrar’s record, Respondent’s license is current and in good standing. This is the only complaint pending against the license. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[5] Respondent acknowledged that Complainant performed $4,071.76 worth of uncompensated work on the project and that Respondent has been paid for Complainant’s work. Respondent did not dispute Complainant’s evidence that it continued working on the project and did not file additional 20-day preliminary lien notices after Ms. Del Castillo on Respondent’s behalf assured Mr. Emery that sufficient monies remained due of Arizona Discount Demolition’s retention for Respondent to pay Complainant. Under the circumstances, the lack of a formal contract between the parties does not defeat Respondent’s obligation to pay Complainant under A.R.S. § 32-1154(A)(11).[6] Therefore, Complainant established that Respondent violated that statute. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s order in this matter, the Registrar suspend Respondent Mays Construction, Inc. A R, dba A R Mays Construction, License No. ROC129831, Class A, until Respondent has paid Complainant Blade Runners, Inc. the sum of $4,071.76. It is further recommended that if on or before the effective date of the order, the Registrar receives satisfactory proof in writing from Respondent that it has paid Complainant the sum of $4,071.76 by certified or cashier’s check, the Registrar not suspend Respondent’s license but, instead, close Case No. 2010-[number redacted]. 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 4, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See 32-1101 et seq. [2] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] This statute 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.”

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