ALJDEC decisions subject to certification as final

2011A-532-ROC · Registrar of Contractors · 2011-07-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 1, 2011, at 1:00 p.m. APPEARANCES: Complainant Vito Construction appeared through Vito Austin, its qualifying party and owner; Respondent Carol Melton Callison dba Callison Construction Company appeared through Carol Melton Callison, its owner. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In February 2007, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC229267, Class KB-2 for dual residential and small commercial contracting to Vito Frederick Austin doing business as (“dba”) Vito’s Construction (“Complainant”). In February 2010, the Registrar issued License No. ROC262839, Class KB-2 to Carol Melton Callison dba Callison Construction Company (“Respondent”). Complainant and Respondent are both based in Quartzsite, Arizona. On January 27, 2011, the Registrar received a complaint from Complainant against Respondent that alleged that the parties had entered into a contract for electrical work at Complainant’s restaurant, Times 3 Family Restaurant at 1275 West Main in Quartzsite (“the restaurant”) in the amount of $18,000.00. The complaint alleged further that although Complainant had completed the work described in the contract, Respondent had paid only $10,000.00, and that Respondent still owed Complainant $8,000.00. The Registrar referred the matter to Respondent for her attention. Complainant subsequently requested that the Registrar issue a Citation and Complaint against Respondent. On March 23, 2011, the Registrar issued a Citation and Complaint against Respondent, charging a violation of A.R.S. § 32-1154(A)(11). Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violation and affirmatively alleging that she did not owe Respondent any money because she mistakenly thought that Complainant was an electrical contractor, but he was not, and because she did not have a contract with Nicholas Hawkins. Respondent also alleged that after she had been unable to get Complainant to finish the job, she terminated the contract. Respondent did not allege that Complainant’s performance of the contract was deficient. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A videoconference hearing was held from the Registrar’s Yuma office on July 1, 2011. Complainant submitted twelve exhibits and presented the testimony of three witnesses: (1) Himself; (2) Nicholas Hawkins dba Nicholas Electric, License No. ROC234403, Class K-11 (“Nicholas Electric”), to whom Complainant subcontracted the electrical work at the restaurant; and (3) The Registrar’s inspector in Yuma, Daryl McCloskey. Respondent submitted eight exhibits and testified on her own behalf. Hearing Evidence Respondent remodeled an existing commercial building for the restaurant. On or about December 12, 2010, Respondent and her business partner, Tom Tolson, signed Complainant’s proposal to install an 800 amp electrical service, 3 main breakers, and to perform rough-in electrical work, excluding fixtures, at the restaurant, for a total contract price of $18,000.00. Complainant’s proposal reflected receipt of the $2,000.00 deposit for the electrical panel and the $8,000.00 deposit for the remainder of the work. The proposal does not state a projected completion date or when progress payments would be due. Respondent at hearing denied acting as general contractor in the renovations at the restaurant, and testified that her partner, Mr. Tolson, acted as general contractor. However, the Registrar’s record and the parties’ evidence do not show that the Registrar has issued any license to Mr. Tolson or any entity in which he is a principal. After Complainant filed the complaint for non-payment against Respondent, Respondent filed a complaint against Complainant for abandonment and contracting beyond the scope of his license. The Registrar designated Respondent’s complaint against Complainant as Case No. 2011-732. The record in this matter does not reveal the status of Case No. 2011-732. Inspector McCloskey and the Registrar’s investigator in Yuma, Don Hermann, investigated a complaint of unlicensed contracting activity at the restaurant on January 13, 2011. Inspector McCloskey testified that Commercial Solar Electric, L.L.C., License No. ROC260723, Class K-11 (“Commercial Solar”) had workers onsite who were neither licensed subcontractors nor employees. As a result, on February 9, 2011, the Registrar sent warning letters to Commercial Solar and to Respondent about their involvement with unlicensed contracting activities. Complainant and Mr. Hawkins testified that they obtained an electrical permit from the Town of Quartzsite on Respondent’s behalf for the restaurant, performed most of the work required by the contract, and Arizona Public Service started supplying electrical power to the restaurant. Complainant testified that the parties agreed that Respondent would pay Complainant $6,000.00 after the power to the restaurant was turned on. Mr. Hawkins testified that Nicholas Electric had almost completed the scope of work under the contract when Respondent told him to leave and threatened to call the police if he did not leave the restaurant immediately. Complainant submitted a letter dated January 27, 2011, from Respondent, stating that Complainant worked only three or four hours daily for three days and then left for three weeks, leaving the restaurant without power. Respondent terminated Complainant’s contract because “[w]e have checked with the Board of Contractors and found that the contract we entered into with Vito’s Construction is not a valid contract as Vito is not a registered electrical contractor.” Mr. Hawkins and Complainant both testified that they believed that Respondent terminated the contract as a ploy to avoid paying Complainant. Respondent testified that Complainant promised that the rough-in electrical work at the restaurant would be complete in three days, that he worked on the restaurant only intermittently, and that when the rough-in electrical at the restaurant was still not complete on January 27, 2011, she terminated Complainant’s contract because she needed to open the restaurant. Respondent submitted a letter from Dennis McGinnis of Interurban Electrical, L.L.C., License No. ROC234281, Class K-11 (“Interurban Electrical”), that stated that Complainant’s electrical work was deficient and needed to be redone, at a total cost of $8,618.51. Respondent also submitted several undated invoices from Interurban Electrical to Respondent for the restaurant and a packing list for supplies for materials requested on January 28, 2011. The customer on the invoices was identified as Respondent. Mr. McGinnis did not testify at the hearing and the invoices were not clear whether the work described was for rough-in or finish electrical work. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[5] Complainant established that Respondent acted as general contractor in the improvements to the restaurant, not merely as property owner. Contracting statutes require Respondent as general contractor to hire only properly licensed contractors. Complainant hired a duly licensed electrical contractor to perform its contract with Respondent for electrical work. Therefore, Complainant’s lack of an electrical contracting license does not justify Respondent’s failure to pay Complainant. Interurban Electric’s letter and invoices are hearsay.[6] Although hearsay may be admitted in an administrative hearing,[7] it should not be relied upon if it is not the kind of evidence upon which reasonable persons would rely in serious matters.[8] Because Respondent was paying Interurban Electric to work on the restaurant and possibly for its opinions on Complainant’s work, reasonable persons would not rely on those documents to decide whether Complainant should get paid for its work. Respondent did not establish that it was justified in terminating Complainant’s contract or that the work that Interurban Electrical performed was primarily to correct Complainant’s rough-in electrical work, rather than performing finish electrical work so that the restaurant could open. Instead, Complainant established that Respondent terminated Complainant’s contract on a pretext to avoid paying Complainant, rather than affording Complainant and its duly licensed electrical subcontractor an opportunity to complete and correct its work, if necessary. Complainant therefore established that Respondent did not pay him at least $750.00 for work that his subcontractor completed at the restaurant, in violation of A.R.S. § 32-1154(A)(11).[9] Complainant’s and Mr. Hawkins’ credible testimony established that Respondent failed to pay Complainant at least $6,000.00 for Complainant’s subcontractor’s completed electrical work at the restaurant. RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order in this matter, Respondent Carol Melton Callison dba Callison Construction Company’s License No. ROC262839, Class KB-2 be suspended until she pays Complainant Vito Austin dba Vito’s Construction the sum of $6,000.00. It is further recommended that if on or before the effective date of the Registrar’s order, Respondent furnishes satisfactory written proof that she has paid Complainant $6,000.00 by certified or cashier’s check, the Registrar not suspend Respondent’s license but, instead, close Case No. 2011-532. It is further recommended that in addition to any license suspension that may result from this matter, Respondent’s Class C-14 license be placed on disciplinary probation for a period of thirty (30) 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, July 18, 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. § 41-1092.07(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). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] See Ariz. R. Evid. 801(c) (“‘Hearsay’ is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.”). [7] See A.R.S. § 41-1092.07(F)(1). [8] See Plowman v. Arizona State Liquor Board, 152 Ariz. 331, 337, 732 P.2d 222, 228 (App. 1986) (citing Begay v. Arizona Department of Economic Security, 128 Ariz. 407, 626 P.2d 137 (App. 1981)). [9] A.R.S. § 32-1154(A)(11) 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.”

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