ALJDEC decisions subject to certification as final

2012A-596-ROC · Registrar of Contractors · 2012-07-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 17, 2012, at 1:00 p.m. APPEARANCES: A S B Electric LLC (hereinafter “Complainant”) appeared through its authorized representative, Aaron Smith Bailey. G H Commercial LLC (hereinafter “G H”) appeared through its authorized representative, Brian Jeffrey Houston. 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. G H is the holder of License No. KB-1.268228-D issued by the Registrar of Contractors. 2. Complainant performed work as an electrical subcontractor for an HVAC contractor on a commercial construction project wherein G H acted as the general contractor. 3. There was no dispute that Complainant purchased and installed an electrical transformer on the newly replaced air conditioning unit on the roof of the commercial project. 4. Keith Bailey testified that he handles Complainant’s office work, including billings and collections. Keith Bailey stated that on or about September 7, 2011, Complainant performed electrical work on a commercial gym in Glendale, Arizona, for an HVAC contractor that was working directly for G H. Keith Bailey stated that the wrong HVAC equipment was delivered to the jobsite and that the HVAC contractor, the owner of the project, and G H requested Complainant to “rectify the situation.”[1] 5. Complainant purchased the materials necessary to resolve the electrical problem and installed an electrical transformer on the project for the total sum of $2,772.45 for labor and materials. Keith Bailey testified that the original payment agreement was that G H agreed to pay Complainant $1,000.00, the owner of the project agreed to pay Complainant $1,000.00, and the HVAC contractor agreed to pay Complainant the remaining sum of $772.45. Complainant completed the agreed upon construction work and invoiced the HVAC contractor, the owner of the project, and G H.[2] 6. Keith Bailey testified that during November 2011, G H suggested that it wanted to combine all of the payments so that everyone would be paid, and issued a check to Complainant for the sum of $2,772.45.[3] 7. G H’s check for $2,772.45 was returned for insufficient funds.[4] 8. Keith Bailey contacted G H and was informed that G H was working on it and that “things should be taken care of.”[5] Complainant acknowledged that it does not have a contract with G H.[6] 9. Brian Houston (hereinafter “Mr. Houston”) testified that he is the owner of G H. Mr. Houston acknowledged that he had entered into an agreement with Complainant where “we would all share in the costs” before the electrical transformer was purchased and installed. Mr. Houston testified that G H’s share was to come out of contingency funds for the construction project. Mr. Houston stated that there were no contingency funds available because the owner of the commercial gym failed to pay G H in full for the completed construction project.[7] 10. Mr. Houston testified that G H stopped payment[8] on the check that was issued to Complainant because the check that the owner issued to G H was returned for NSF. Mr. Houston testified that the owner of the commercial gym has still not paid G H in full for the construction project. Mr. Houston testified that Complainant failed to file a complaint against the HVAC contractor and has not attempted to collect any money from the owner of the construction project.[9] 11. Mr. Houston testified that Complainant’s construction agreement was with the HVAC contractor, not with G H. Mr. Houston stated that his contract with the HVAC contractor has a “pay when paid” clause that obligates G H to pay the HVAC contractor in full only when G H has been paid in full for the construction project. Mr. Houston stated that if G H had a contract directly with Complainant, the same contractual provision would apply.[10] 12. The Terms and Agreement of G H’s construction agreement with the HVAC contractor provided, in pertinent part, as follows: Subcontractor agrees that all payments to Subcontractor shall only be made from, and its right to recover for the work is exclusively limited to, the funds actually received by the General Contractor from the Owner, for the specific project, and from no other source.[11]

13. The evidence of record adequately demonstrated a dispute between the parties regarding what, if any, amount of money is due and owing to Complainant from G H. G H’s position in this dispute 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 Complainant.

CONCLUSIONS OF LAW

1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. Complainant failed to sustain the requisite burden of proving the existence of a valid liquidated debt properly due and owing by G H. Therefore, Complainant has not sustained the burden of proving that G H has violated the charged provision of A.R.S. § 32-1154(A) (11).[12] RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar of Contractor’s Order this Citation and Complaint upon which it is based shall 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, July 30, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] 7/17/12 Hearing Record (hereinafter “H.R.”) at 6:54-7:46. [2] H.R. at 9:09-9:34. [3] H.R. at 9:38-10:27. [4] See Exhibit C-5 (copy of NSF check). [5] H.R. at 10:20-11:23. [6] H.R. at 15:05-15:10. [7] H.R. at 16:21-17:11. [8] The check does not indicate whether it was returned for insufficient funds or that payment was stopped by Respondent. See Exhibit No. C-5. [9] H.R. at 17:20-18:47. [10] H.R. at 19:00-21:40. [11] See Exhibit No. R-2 (Terms and Agreement (A)). [12] 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 or agent or official of 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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