ALJDEC decisions subject to certification as final

2011A-3688-ROC · Registrar of Contractors · 2011-12-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 15, 2011 APPEARANCES: A L R Construction, Inc. was represented by its authorized representative, Mohammed Najem. Azteca Electrical Construction, Inc. was represented by its attorney, James Palecek, Esq. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT 1. A L R Construction, Inc. (“Complainant”) is the holder of License No. 132561, a Class A- general engineering contracting license issued by the Registrar of Contractors (“Registrar”). 2. Azteca Electrical Construction, Inc. (“Respondent”) is the holder of License No. 096205, a Class L-11 electrical contracting license issued by the Registrar. 3. Complainant was the general engineering contractor for a new parking lot at Glendale Community College (“Project”). 4. Complainant subcontracted to Respondent electrical work on the Project. The contract price for the subcontract was $100,000.00. Complainant paid Respondent the sum of $90,000.00, with the remaining sum of $10,000.00 withheld as retainage. 5. On June 27, 2011, Complainant filed a written Complaint with the Registrar alleging that Respondent failed to pay one of its suppliers for the Project. The Registrar designated the Complaint as Case No. 2011-3688. 6. The Registrar issued a Citation and Complaint in Case No. 2011-3688 charging Respondent with violating the provisions of A.R.S. § 32- 1154(A) (11). 7. The Registrar forwarded Case No. 2011-3688 to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 8. Pursuant to A.R.S. § 34-222, Complainant was required to furnish a payment bond for the protection of all claimants supplying labor or materials to Complainant or its subcontractors for the Project. 9. Complainant procured payment bond no. BDA706570 from AMCO Insurance Company (“Surety”), in the sum of $567,700.00, naming Complainant as principal and the Project owner, Maricopa County Community College District, as obligee (“Bond”). As a condition of obtaining the Bond, Complainant agreed to indemnify Surety against any claims or losses by Surety arising under the Bond to the extent Surety was required to issue any payment under the Bond. 10. Respondent furnished materials to the Project that it had purchased on credit from QED Supply, Inc. (“QED”). 11. QED contacted Surety making a demand for payment against the Bond for an outstanding balance owed by Respondent to QED for materials supplied for the Project. 12. Complainant subsequently paid QED a negotiated settlement amount of Respondent’s debt for the materials supplied for the Project. As a result of that settlement, Respondent was able to obtain additional supplies on credit from QED for other projects. 13. Respondent has not reimbursed Complainant for the negotiated settlement amount paid by Complainant to QED. 14. Complainant initiated a civil lawsuit against Respondent and its principals in the Superior Court of Maricopa County, Case No. CV2010- 033061. 15. In the civil lawsuit, the parties participated in an arbitration hearing on August 3, 2011. 16. On October 7, 2011, Arbitrator William D. Cleaveland issued an “Arbitration Award” that awarded Complainant a judgment against Respondent in the principal sum of $20,680.00, with interest on the unpaid principal at the rate of 4.25% per annum from April 8, 2010, until paid in full. Complainant was further awarded judgment against Respondent the sum of $4,521.50 for Complainant’s attorney’s fees and the sum of $389.40 for taxable costs, each with interest at the rate of 4.25% per annum from the date of Judgment until paid. 17. On November 3, 2011, Complainant filed an “Application to Confirm Arbitration Award” with the Superior Court. As of the date of the hearing in the above-entitled matter, the Superior Court had not confirmed the “Arbitration Award.” 18. A review of the Registrar’s official electronic licensing records reveals that there are three open complaints against Respondent’s current contracting license and one resolved/settled/withdrawn complaint. Those records further reveal that Respondent has a bond in the amount of $2,500.00. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. A.A.C. R2-19-119(A). 3. Respondent violated the provisions of A.R.S. § 32-1154(A) (11), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent owed QED in excess of $750.00 for materials purchased on credit by Respondent for the Project. Respondent’s debt owed to QED was satisfied by Complainant. However, Respondent, who was paid for 90% of the parties’ contract price less the 10% retainage, has failed to repay Complainant.

RECOMMENDED ORDER Respondent’s License No. 096205 shall be revoked on the effective date of the Order entered in Case No. 2011-3688. If Respondent pays Complainant the total amounts set forth in the above Finding of Fact No. 16 on or before the effective date of the Order entered in Case No. 2011-3688, and the Registrar approves written proof of such payment in full by Respondent to Complainant, then the above-provided license revocation shall not take place, but instead Respondent’s License No. 096205 shall be placed on suspension for a period of ten (10) days followed immediately by a period of probation for one (1) year. This alternative penalty shall commence, if at all, on the effective date of the Order entered in Case No. 2011-3688. 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 forty (40) days from the date of that certification.

Done this day, December 7, 2011.

/s/ Brian Brendan Tully 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