ALJDEC decisions subject to certification as final

2010A-308473595-ROC · Registrar of Contractors · 2011-03-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 2, 2011

APPEARANCES: Complainant was represented by corporate President Deborah Sanderson; Respondent was represented by the company’s President and Qualifying Party Chris Thompson.

WITNESSES: Deborah Sanderson Carl Gunn, Superintendent for Complainant Chris Thompson

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant brings this action seeking refunds of two payments, one paid directly to Respondent and another paid to a third party on behalf of Respondent. The claims arise out of a subcontract agreement between the parties in which Respondent is an electrical subcontractor and Complainant is the general contractor who hired Respondent. Respondent denies that it owes the money.[1] This tribunal entered the complaint file received from the Registrar of Contractors into the record. The parties presented evidence and testimony at the hearing. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding no violation.

FINDINGS OF FACT 1. Respondent is the holder of a license L-11.129788-C, a specialty commercial contractor’s license issued by the Registrar of Contractors (“ROC”) that authorizes Respondent to perform electrical work for commercial projects. Chris Thompson is Respondent’s Qualifying Party. 2. In March 2008, the parties entered into a subcontract agreement in which Respondent agreed to perform electrical work for Complainant for a contract price of $99,000.00. Payments were to be by joint check made out to Respondent and Respondent’s material suppliers. Progress payments were made by Complainant to Respondent. The second progress payment was made by joint check to Respondent and its supplier Essco Wholesale Electric, Inc. (“Essco”), of which $26,242.89 was for materials to be supplied by Essco. That payment is the focus of Complainant’s claims against Respondent. 3. Complainant claims that Respondent did not pay Essco the $26,242.89. After the joint check payment was made, Essco notified Complainant of an intent to file a lien on the project for $26,242.89 for materials. Essco stated that Respondent received the materials but that Essco had not been paid. In order to lift the lien notice and forestall a lien, Complainant paid Essco $26,242.89. In sum, Complainant paid Respondent for the materials and then Essco for the same materials. 4. Complainant acknowledges that some of the materials from Essco were provided, but claims that not all materials were delivered to the jobsite. Complainant does not know the value of the materials that were received at the jobsite or the value of the materials that were not received. 5. This tribunal finds that Complainant’s claims against Respondent for both payments of $26,242.89 are claims in the nature of damages for breach of contract that would typically be part of a civil court action. Complainant is not claiming money owed from Respondent under the terms of the contract. 6. Respondent denies that it owes money to Complainant, and claims that Complainant owes Respondent money under the contract terms and for change orders. Complainant acknowledges that the work reflected in the change orders was performed, but disputes that the change orders were submitted in compliance with the terms of the agreement. There is no evidence that Respondent has filed claims in civil court or with the ROC for the amounts Respondent claims it is owed. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[2] Further, the standard of proof at hearing is by preponderance of the evidence.[3] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[4] Complainant has not met that burden. 2. The Citation and Complaint in this case cites only 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 $750 “when due for materials or services” when the licensee has the capacity to pay or when the licensee has been paid for the project. 3. The evidence shows only a good faith contractual dispute between the parties that does not warrant finding a violation of the no-pay provision. This tribunal can not find that the amount claimed by Complainant is due and owing from Respondent. 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 Respondent of the no pay provision can be supported. 4. This matter should be dismissed. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that Citation and Complaint 2010-[number redacted] against Respondent Giant Electric Corporation 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, March 22, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] This dispute is also the subject of a civil court action between the parties. [2] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [3] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [4] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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