ALJDEC decisions subject to certification as final

2011A-977-ROC · Registrar of Contractors · 2011-08-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 20, 2011

APPEARANCES: Complainant was represented by Office Manager Adam Kriloff, an authorized employee representative; Respondent was represented by attorney C. David Martinez, Law Offices of C. David Martinez, PLLC, accompanied by corporate President Jack Hanks.

WITNESSES: Adam Kriloff Jack Hanks

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant brings this action seeking money it claims is owed by Respondent. The claim arises out of a subcontract agreement between the parties in which Complainant performed emergency water removal. Complainant claims that Respondent owes more than $100,000.00 for the work. Respondent agrees that it owes Complainant payment for the work, but does not agree that it owes the amount that Complainant claims. This tribunal entered the complaint file received from the Registrar of Contractors into the record, along with Complainant’s Exhibits 1, 2 and and Respondent’s Exhibits A through F. 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 a violation and recommending a contingent suspension of the license. FINDINGS OF FACT 1. Respondent is the holder of license KB-1.249849-D, a general dual contracting license issued by the Registrar of Contractors (“ROC”). That license authorizes Respondent to perform general contracting work on both residential and commercial properties, except for specialty areas such as plumbing, electrical, and other work that requires a specialty license. 2. Complainant is an emergency water extraction business that operates in Arizona and is not a licensed contractor in Arizona. Complainant was hired by Respondent in October 2010 on an emergency basis to perform water extraction at a large commercial building (the “Central Ave. job”) for which Respondent was the contractor performing remedial and restoration work.[1] There is a written work order (Exhibit 1) issued by Complainant, but it is an authorization to perform work and does not contain the price agreed to by the parties. The parties dispute the price that they agreed to. 3. According to Complainant’s witness Adam Kriloff, he made a verbal agreement with Respondent’s “Project Manager” Konan Bagley that the price for Complainant’s work would be the amount of Respondent’s work that is covered by insurance, less 10%. Although Konan Bagley signed the work order, as noted it does not reference any pricing terms and there is no other documentation corroborating that alleged verbal agreement to the price. 4. According to Respondent’s corporate President Jack Hanks, the agreement with Complainant was a standard agreement to pay an hourly price for the labor provided by Complainant and to cover the costs of Complainant’s equipment rental. He testified that Konan Bagley never had authorization to enter into any other type of arrangement. Based on the information given by Complainant, Respondent determined that it owes Complainant $34,358.05 for the work Complainant has done on the Central Ave. job.[2] 5. Due to Hanks’ testimony, Respondent has admitted a violation of the no-pay provision. There is some evidence that Respondent attempted to resolve the matter with Complainant and pay them the amount admitted, but resolution never occurred because the parties were at an impasse. 6. As to determining any restitutionary amount greater than $34,358.05, the evidence is inconclusive and does not support Kriloff’s testimony. Even Complainant’s own invoices (Exhibits A, B, and C) do not support Kriloff’s testimony about the payment terms of the agreement. 7. There is a good faith dispute about the contract price over the $34,358.05 amount that Respondent admits.[3] CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[4] Further, the standard of proof at hearing is by preponderance of the evidence.[5] 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.[6] Respondent has admitted a violation. Complainant has not carried its burden as to its claim of more than $100,000.00 in restitutionary damages. 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. Respondent has admitted to owing Complainant $34,358.05 for the work done on the job. This is a violation of the no-pay provision. 4. As to any amount owed above that, the evidence shows only a good faith contractual dispute between the parties. 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 amount above that admitted by Respondent can be found in this forum. 5. A review of Respondent’s licensing history shows that Respondent has held the license without disciplinary action since 2008. Therefore, the appropriate remedy is to order Respondent to pay Complainant $34,358.05 or have its licensed suspended. If Respondent does so, the matter should be closed. RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that license KB-1.249849-D, held by Respondent Firestorm 24/7 Construction Services, Inc., be suspended on the effective date of the Registrar’s Order until the Registrar of Contractors receives written proof of payment to Complainant of the sum of $34,358.05, and the Registrar accepts such written proof. IT IS FURTHER RECOMMENDED that if Respondent provides such written proof, on or before the effective date of the Registrar’s Order, the license suspension shall not take place and case 2011-977 shall be closed.

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, August 9, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The building’s roof had collapsed. [2] This amount is based on costs for equipment rental (as identified in Exhibit A, page 8) plus 283.35 hours of labor (Exhibit D) at $25.00 per hour. [3] It is noted that during Adam Kriloff’s testimony he identified in Exhibit 2 the activity line items that Complainant performed. This included “Water Extraction & Remediation,” “Cleaning & Remediation,” and other activities that do not require a contracting license. However, he also identified that Complainant performed over 450 hours of “General Demolition” work on the job. If true, that work may be contracting without a license. The ROC should investigate this. [4] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [5] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [6] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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