ALJDEC decisions subject to certification as final

2010A-308473962-ROC · Registrar of Contractors · 2011-01-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 11, 2011 at 1:00 p.m. APPEARANCES: Complainant Stewart Steel Erectors, L.L.C. appeared through Tucson Stewart, its qualifying party and managing member; Respondent C S N Construction, L.L.C. did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In April 2001, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC163800, Class K-17 for dual steel and aluminum erection to Stewart Steel Erectors, L.L.C. (“Complainant”). In December 2007, the Registrar issued License No. ROC240985, Class B-1 for commercial general contracting to C S N Construction, L.L.C. (“Respondent”). Respondent’s current address of record is 3063 E. Caitlin Way, Queen Creek, AZ 85140-5446. On June 22, 2010, the Registrar received from Tucson Stewart, on behalf of Complainant, a complaint against Respondent, alleging that Respondent owed $1,776.28 for labor and equipment rental for work on metal railings inside a theater in the Paradise Valley mall, near the Costco (“the Paradise Valley job”). Respondent did not resolve the complaint, and Complainant subsequently requested that the Registrar issue a citation against Respondent. On September 24, 2010, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(4), (5), (11), and (13) (namely A.R.S. § 32-1124(B)). The Registrar mailed a copy of the Citation and Complaint to Respondent at its address of record. Respondent timely answered the Citation and Complaint, admitting that it owed Complainant money, and affirmatively alleging that it had attempted to settle Complainant’s claim, but was unsuccessful because portions of Complainant’s claim were fraudulent. The letterhead on Respondent’s answer showed Respondent’s address as 85 W. Combs Rd. #101/234, Queen Creek, AZ 85240. The Registrar referred the matter to the Office of Administrative Hearings (“the OAH”), an independent agency, for an evidentiary hearing. On November 23, 2010, the Registrar issued a Notice of Hearing, setting a hearing on January 11, 2011, at 1:00 p.m. The Registrar sent a copy of the Notice of Hearing to Respondent at its address of record. On December 27, 2011, the OAH received Respondent’s motion to continue the hearing for five weeks because it had entered into a contract to start work on a project in Heber City, Utah that required Respondent to start work on January 10, 2011. Complainant opposed Respondent’s motion to continue because Complainant had been waiting for Respondent’s payment since May 28, 2010. On January 3, 2011, the Administrative Law Judge denied Respondent’s motion to continue. A hearing was held on January 11, 2011, at 1:00 p.m. Although the beginning of the duly noticed hearing was delayed fifteen minutes to allow Respondent additional travel time, it did not appear through an authorized member, employee, or attorney, did not contact the Office of Administrative Hearings to request that the time for the hearing be further delayed, and did not request to appear telephonically. Respondent presented no evidence at the hearing to defend its license. Complainant presented the testimony of Tucson Stewart, its qualifying party and managing member, and submitted six exhibits. Hearing Evidence On or about May 18, 2010, Respondent posted an ad on Craigslist, in relevant part as follows: I NEED SIX PEOPLE TWO WELDERS AND FOUR HELPERS FOR A TWO TO THREE DAY JOB AT THE PARADISE VALLEY MALL WILL PAY CASH NEED WEDS MORNING 5/19/2010

Respondent provided its contractor’s license number on the posting, but the license number was not preceded by the acronym, “ROC.” Mr. Stewart is a journeyman welder who has “been an iron and steel worker for a long time.” Because Complainant’s business was slow and the Paradise Valley job was “not high profile,” Mr. Stewart and his colleague, Mike Yeagley, responded to Respondent’s posting on Craigslist. Mr. Stewart and Mr. Yeagley agreed to accept the low hourly rate of $12.00 and $10.00 per hour, respectively, that Respondent offered because they needed the money. Respondent agreed to rent a generator and wire feed machine from Complainant. Between May 19 and May 22, 2010, Mr. Stewart and Mr. Yeagley worked 36 hours each on Respondent’s Paradise Valley job. On or about May 22, 2010, Complainant submitted an invoice for $1,155.32 to Respondent for Mr. Stewart’s and Mr. Yeagley’s labor, equipment rental, and materials used on the Paradise Valley job. The invoice closed with the following notation: Scheduled to continue on 05/24/2010 until directed otherwise Rental Equipment and Labor Hours will continue as agreed

Respondent subsequently paid Complainant $1,155.32 in cash. Respondent did not withhold social security taxes from the wages paid to Mr. Stewart and Mr. Yeagley in cash. Between May 24 and May 28, 2010, Mr. Stewart and Mr. Yeagley worked ten hours per day on Respondent’s Paradise Valley project. Although Mr. Stewart and Mr. Yeagley worked ten hours per day for five consecutive days, they charged Respondent the agreed-upon low hourly rate for their time, instead of charging overtime. On or about May 28, 2010, Complainant submitted an invoice to Respondent for a total of $1,767.28. The invoice included $1,100.00 for 50 hours of Mr. Stewart’s and Mr. Yeagley’s labor, $650.00 for equipment rental, and $17.28 for gas to run the equipment. Respondent did not pay Complainant’s May 28, 2010 invoice. Mr. Stewart paid Mr. Yeagley the $500.00 that Respondent owed him for the Paradise Valley job. Rex Stevens and Randy Nelson, Respondent’s members, informed Mr. Stewart that Complainant would need to “proceed with legal means” to get Respondent to pay anything on the May 28, 2010 invoice. On July 8, 2010, after Complainant filed the complaint to the Registrar, Mr. Stevens on Respondent’s behalf sent a letter, alleging that Mr. Stewart and Mr. Yeagley had worked nine, not ten, hours per day on the Paradise Valley job between May 24 and May 28, 2010, and disputing Complainant’s cost for welding tips and equipment rental. Mr. Stevens stated that “[t]he allowable payroll for this period is $990.00,” and offered Complainant $689.00 to settle its complaint. The letterhead on Respondent’s July 8, 2010 letter showed its license number, preceded by the acronym “ROC.” Mr. Stewart testified that Mr. Stevens and Mr. Nelson were “hardly ever on the job” at the Paradise Valley Mall, and that Respondent tried to “nickel and dime” Complainant over minor matters. Mr. Stewart stated that Respondent’s members’ behavior was “wrong” and reflected poorly on the steel and metal trade. According to the Registrar’s record, Respondent’s license is current and in good standing. One complaint has resulted in the Registrar taking discipline against Respondent’s license.

CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[1] 2. The Notice of Hearing that the Registrar mailed to Respondent at its address of record was reasonable and it appears that Respondent actually received the Notice of Hearing.[2] 3. Complainant bears the burden of proof and must establish Respondent’s contracting law violations by a preponderance of the evidence.[3] 4. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 5. Respondent has never disputed that it owes Complainant monies for work performed pursuant to the parties’ agreement on the Paradise Valley job. Complainant established that Respondent violated A.R.S. § 32- 1154(A)(11)[5] by failing to pay Complainant $1,767.28. 6. Although Complainant is a licensed contractor, Respondent did not subcontract the Paradise Valley job to Complainant. Instead, Respondent hired Mr. Stewart and Mr. Yeagley as hourly employees. Complainant established that Respondent violated A.R.S. § 32- 1154(A)(4)[6] by failing to pay social security taxes for Mr. Stewart and Mr. Yeagley. 7. Although Respondent included its license number on its Craigslist posting, the number was not preceded by the acronym, “ROC.” Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(13) (namely, A.R.S. § 32-1124(B)).[7] 8. No evidence was submitted to establish that Respondent violated A.R.S. § 32-1154(A)(5).[8] RECOMMENDED ORDER Based on the contracting law violations that were proven in this matter, it is recommended that on the effective date of the final order in this matter, the Registrar suspend License No. ROC240985, Class B-1 previously issued to Respondent C S N Construction, L.L.C. until Respondent pays Complainant Stewart Steel Erectors, L.L.C. the sum of $1,767.28, and provides satisfactory written proof to the Registrar that it has corrected its business practices to avoid future violations of A.R.S. § 32-1154(A)(4) and (13). It is further recommended that the Registrar not suspend Respondent’s license and, instead, close Case No. 2010-[number redacted] if, on or before the effective date of the final order, the Registrar receives written proof from Respondent that is satisfactory to the Registrar of all three of the following: 1) That Respondent has paid $1,767.28 to Complainant by cashier’s or certified check; 2) That Respondent has placed its license number preceded by the acronym, “ROC,” on all documents used in its contracting business, including electronic documents on Craigslist; and 3) That Respondent no longer conducts its contracting operations through hourly employees for whom it does not pay social security taxes. It is further recommended that, in addition to any license suspension that may result from this matter, Respondent’s Class B-1 license be placed on disciplinary probation for a period of 120 days, commencing on the effective date of the Registrar’s order or the date on which Respondent files notice of compliance, whichever is later. 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 19, 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. §§ 41-1092.04; 41-1092.05(D). [3] 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). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] This statutory subsection 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.” [6] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to comply with the statutes or rules governing social security, workers’ compensation or unemployment insurance.” [7] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” A.R.S. § 32-1124(B) requires that licensed contractors include their license number, which “shall be preceded by the acronym ‘ROC,’” on “all written bids submitted by the licensee and . . . on all advertising, loan forms, lending institution forms, letterheads and other documents used by the licensee in the conduct of business regulated by this chapter.” [8] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to pay income taxes, withholding taxes or a tax imposed by title 42, chapter 5, articles 1 and 4 and incurred in the operation of the licensed business.”

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