ALJDEC decisions subject to certification as final

2011A-3348-ROC · Registrar of Contractors · 2011-11-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 8, 2011

APPEARANCES: Complainant was represented by its Secretary/Treasurer JD Wright; Respondent was represented by Managing Member and Qualifying Party Ed Patterson.

WITNESSES: JD Wright Ed Patterson Rob Rasmussen, Project Manager for Respondent

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant brings this action seeking money it claims is owed by Respondent. The claims arise out of a subcontract agreement between the parties in which Complainant performed concrete work as a subcontractor on a project built by Respondent. Respondent denies that it owes money to Complainant. This tribunal entered the complaint file received from the Registrar of Contractors into the record, along with Respondent’s Exhibits 1 through 8. 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 license B-1.239842-C, a general commercial contracting license issued by the Registrar of Contractors (“ROC”). That license authorizes Respondent to perform general contracting work on commercial properties, except for specialty areas such as plumbing, electrical, and other work that requires a specialty license. Ed Patterson is Respondent’s Qualifying Party. 2. In September 2010, the parties entered into a subcontract agreement in which Complainant agreed to perform concrete work for Respondent at the “Show Low Bus Facility Expansion” that Respondent was building.[1] Work progressed and progress payments were made, up to the final payment. The final payment was a retention of $2,742.78 and was due upon completion of the concrete work. 3. Complainant is seeking the retention amount of $2,472.78 because the concrete work at the Show Low Bus Facility Expansion is complete. 4. Respondent agrees that it is complete. However, one of the provisions in the subcontract between the parties, Section 22, allows for offsets as follows: 22. Right to Offset-Contractor [Respondent] shall have the right to deduct from the amounts due Subcontractor [Complainant] under this Subcontract any amounts due Contractor from Subcontractor, pursuant to any provision to this Subcontract, or pursuant to any other obligation or agreement of Contractor and Subcontractor.

Respondent claims that due to problems with another job that Complainant did for Respondent, Respondent is authorized to withhold the Show Low Bus Facility retention under Section 22. 5. Respondent presented photographs and other evidence showing potential problems with Complainant’s workmanship on a job known as “Zuni Wellness Center.” Ed Patterson testified that Respondent filed an ROC complaint against Complainant for that alleged poor workmanship, but the case was dismissed because the project was on Indian Reservation land and not in Arizona. 6. Respondent presented enough evidence to show that a reasonable question exists as to the workmanship of Complainant at the Zuni Wellness Center. Thus, Respondent has a good faith belief that Section 22 of the Show Low Bus Facility subcontract allows Respondent to offset the retention payment due to Complainant. 7. The evidence shows, at best, a contractual dispute between the parties. It also shows that Respondent holds its position in good faith[2] that it is not in breach of contract and does not owe Complainant any more money CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[3] Further, the standard of proof at hearing is by preponderance of the evidence.[4] 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.[5] 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 cannot 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 2010-3348 against Respondent Dean Douglas Development LLC 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, November 23, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Exhibit 7. [2] Respondent’s reliance on Exhibits 1 and 2 is in good faith. [3] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [4] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [5] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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