ALJDEC decisions subject to certification as final

2010A-308475538-ROC · Registrar of Contractors · 2011-06-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 2, 2011, at 1:00 p.m. APPEARANCES: The Complainant appeared through its authorized representative, Richard Walden. The Respondent appeared through its authorized representative, Sue Frost. 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 KB-1 (No. 240307) License issued by the Registrar of Contractors. 2. This is a commercial matter where the Complainant provided and installed stone veneer on buildings, landscaping columns and benches in a multi- building shopping center construction project for the Respondent which was operating in its capacity as a licensed general commercial contractor. 3. Credible testimony and evidence established that the total amount that was to be paid the Complainant for the completion of the agreed upon stone veneer work was the total sum of $31, 207.00. 4. Credible testimony and evidence established that the Respondent has paid the Complainant the sum of $14,043.15. 5. The Complainant asserts that all of the stone work has been completed. 6. The Respondent asserts that less than 63% of the agreed upon stone veneer work has been completed. 7. Credible testimony and evidence established that the owner of the multi- building shopping center and the bank funding the construction project required that the Respondent submit a subcontractor invoice for each subcontractor along with a conditional waiver and release upon progress payment for each subcontractor before any check would be issued. 8. Credible testimony and evidence established that the owner of the construction project then paid the monthly draw requests with checks made out jointly to the subcontractor and the Respondent. 9. Credible testimony and evidence established that the owner of the construction project paid monthly progress payments for the first nine (9) months of the construction project and then failed to make any further payments for the construction of the new multi-building shopping center. 10. Credible testimony and evidence established that the Respondent invoiced the owner of the new shopping center for the final retention payment due to the Respondent and the Respondent’s subcontractors, including the Complainant, and that the owner of the shopping center failed to pay the Respondent the final draw request. 11. When the owner of the construction project failed to pay the Respondent the final draw request, the Respondent stopped work at the new shopping center and withdrew from the construction project. 12. Credible testimony and evidence established that the Complainant returned to the construction project and completed additional stone veneer work on the construction project under very difficult circumstances. 13. The parties are in dispute as to why the Complainant returned to the abandoned construction project and performed additional stone veneer work. 14. The Complainant asserted that its return to the construction project was due to an oral request by the Respondent that the Complainant had to return to the unfinished construction project and complete its stone veneer work in order to receive the rest of the money due to the Complainant. 15. The Respondent sharply denies any such request and asserted that the Respondent had specifically informed the Complainant that it was abandoning the construction project and encouraged the Complainant to do the same. 16. Credible testimony and evidence established that the owner of the construction project has defaulted on its loans with the bank that was funding the construction project and that the bank is in the process of foreclosing on the new shopping center. 17. Credible testimony and evidence established that the Respondent has not been fully paid for its work on the construction project at issue and that several hundred thousand dollars are due and owing to the Respondent from the owner of the new shopping center for the Respondent’s construction work. 18. Credible testimony and evidence established that the parties’ written construction agreement (Exhibit No. R-1) provides, in pertinent part, as follows: 11.2 It is agreed that progress payment to the Subcontractor shall only be made with funds received by the Contractor from the Owner for work performed by the Subcontractor as reflected in the Contractor’s application for payment and only when and if such funds are received by the Contractor from the Owner. 19. There was no dispute that the written construction agreement was knowingly and voluntarily entered into by both the Complainant and the Respondent. 20. The parties are found to be bound by the terms of their written construction agreement. 21. Credible testimony and evidence established that the Respondent has not received the final payment from the owner of the construction project at issue. 22. Credible testimony and evidence established that the Respondent lacks the capacity to pay the Complainant for the Complainant’s labor and materials that were utilized in the construction project at issue. 23. The credible testimony and evidence of record demonstrated a dispute between the parties regarding what, if any, amount of money is now due and owing to the Complainant from the Respondent. 24. The Respondent’s position in this dispute based upon the terms of the parties’ written construction agreement is found under all of the circumstances to have been asserted in good faith and therefore, precludes a finding that a liquidated sum is owed to the Complainant. 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. 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 the Respondent of the provisions of A.R.S. § 32-1154 (A) (11) (Failure to pay monies in excess of seven hundred fifty dollars when due) can be supported. 5. The Complainant failed to sustain the requisite burden of proving the existence of a valid liquidated debt properly due and owing by the Respondent and thus, has not sustained the burden of proving that the Respondent has committed the violation charged herein. 6. Credible testimony and evidence supported findings which establish that the Respondent lacks the capacity to pay, and did not receive sufficient monies as payment for the construction project at issue, to pay the Complainant. RECOMMENDED ORDER In view of the foregoing, it is recommended that this matter be dismissed. 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, June 16, 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