ALJDEC decisions subject to certification as final

2010A-308474962-ROC · Registrar of Contractors · 2011-02-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 26, 2011, at 8:00 a.m. APPEARANCES: The Complainant appeared on his own behalf. The Respondent appeared through its authorized representative, Richard Fisch. 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 B (No. 099022) License issued by the Registrar of Contractors. 2. This is a residential matter where the parties entered into a cost-plus construction project wherein the Respondent performed an extensive remodeling project on the Complainant’s residence on a cost plus fifteen percent (15%) basis. 3. Credible testimony and evidence established that the Complainant has paid the Respondent the sum of $331,116.61 for the remodeling construction project. 4. During the course of construction the Complainant discovered that the Respondent was giving the Complainant inaccurate invoices with inflated dollar amounts and demanding payment for such invoices, plus fifteen percent (15%) for the Respondent. 5. The Complainant discovered that the Respondent would then either pay its subcontractors a lesser amount and retain the inflated overage, or fail to pay the subcontractor and retain the entire amount paid for the inaccurate invoices. 6. The Complainant was extremely dissatisfied with the Respondent’s business practices and demanded a full accounting for all of the construction expenses that were charged to the Complainant during the remodeling construction project. . 7. When the Respondent failed to comply with the Complainant’s demand for a full accounting, the Complainant filed a formal Complaint against the Respondent with the Registrar of Contractors. 8. The Complaint provides, in relevant part as follows: #1. I have paid Mountain Shadows in full for all work performed even that which is incomplete. I have recently learned that he in turn has not paid a number of trades including S&S electric; Handcrafted Cabinets; Gale Contracting; Heritage Vine, Spectrum Painting; Central Arizona Supply and Modern Communications. I am certain that there are others that have not contacted me as of yet. #2. The contractor falsified invoices from Spectrum Painting. #3. The contractor falsified invoices from Handcrafted Cabinets;

#4. The contractor took kick-backs from Marin Shower and Glass; #5. The contractor refuses to provide invoice reconciliation and has falsified time sheets and charges for exterior stucco repair and drywall repair in the amount of $11,000.00. Further reconciliation should yield falsified invoices for additional trades; [sic]. 9. When the parties were unable to resolve their differences, the Complainant filed a request for an administrative hearing. 10. Credible testimony and evidence established that the Respondent knowingly presented inaccurate invoices with inflated dollar amounts to the Complainant for payment for labor and material allegedly utilized on the construction project by some of the Respondent’s subcontractors. 11. Credible testimony and evidence established that the Respondent would then charge the Complainant an additional 15% based upon the inaccurate invoices with inflated dollar amounts. 12. Credible testimony and evidence established that the inaccurate invoices were always for a higher amount than the amount the subcontractors actually charged the Respondent for the labor and materials utilized for the remodeling construction project on the Complainant’s residence. 13. Credible testimony and evidence established that the Respondent knew many of the invoices presented to the Complainant were inaccurate and contained inflated costs much higher than the amount the subcontractor was actually charging the Respondent for the subcontractor’s labor and material for the construction project. 14. Credible testimony and evidence established that the Respondent knowingly misrepresented to the Complainant that subcontractors involved in the construction project had been paid when in fact many of the subcontractors for the remodeling construction project had not been paid for their labor and materials. 15. The Respondent’s actions, in knowingly providing the Complainant with inaccurate invoices which were always higher than the amount actually paid by the Respondent and charging an additional 15% based on the inaccurate invoices with inflated dollar amounts which the Respondent knew to be inaccurate and inflated, are found to constitute a fraudulent act. 16. The Respondent’s actions, in knowingly informing the Complainant that the Respondent’s subcontractors had been paid for their labor and materials utilized in the construction project when in fact many of the Respondent’s subcontractors had not been paid for their work in the construction project, are found to constitute a fraudulent act. 17. Credible testimony and evidence established that the Complainant has been required to pay several thousand dollars to the unpaid subcontractors directly in order to prevent liens being placed on his residence and to ensure that all subcontractors had been fully paid for their labor and materials utilized on the Complainant’s residence. 18. Credible testimony and evidence established that the Respondent failed to pay monies to several of its subcontractors in excess of seven hundred and fifty dollars when due for materials or services. 19. There was no dispute that the parties’ written construction agreement was prepared and provided by the Respondent. 20. Credible testimony and evidence established that the parties’ written construction agreement fails to contain the minimum elements of a contract as required by applicable stature. 21. Credible testimony and evidence established that the Respondent failed to include the Respondent’s License number with the ROC acronym in the parties’ written construction agreement as required by applicable statute. 22. Notice is taken of the Respondent’s prior License record with the Registrar of Contractors. 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. Credible testimony and evidence supported findings which establish violations by the Respondent of the charged provisions of A.R.S. § 32- 1154 (A) (7) (Fraudulent act), A.R.S. § 32-1154 (A) (11) (Failure to pay monies in excess of seven hundred fifty dollars when due for materials or services), A.R.S. § 32-1154 (A) (13) (Failure in any material respect to comply with this chapter), namely, A.R.S. § 32-1124(B) (Display of License number), and A.R.S. § 32-1154 (A) (13) (Failure in any material respect to comply with this chapter), namely, A.R.S. § 32-1158 (Minimum elements of a contract). RECOMMENDed order In view of the foregoing, it is recommended that the Respondent’s License be revoked on the effective date of this Order of Revocation. 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 2, 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