ALJDEC decisions subject to certification as final

2014A-4253-ROC · Registrar of Contractors · 2016-07-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: Wednesday, July 13, 2016, at 10:00 a.m. APPEARANCES: Jeff C. Bozzuto for Apache Pipelines, Inc. (“Complainant”); Ken DeCoster for Elite Luxury Homes, LLC, DBA Elite Commercial (“Respondent”) WITNESS: James Zech for Apache Pipelines, Inc. ADMINISTRATIVE LAW JUDGE: Linda Marie Brown _____________________________________________________________________ Complainant brings this action claiming that it is owed payment from Respondent for work Complainant performed for Respondent. Respondent denies that the debt constitutes a violation of the no-pay provision of Arizona Revised Statutes (A.R.S.) § 32-1154(A)(10).[1] Procedural Background On December 23, 2014, the Registrar of Contractors (“Register” or “ROC”) declined to issue a citation because during the investigation, Respondent raised defenses sufficient to contradict the allegation. Because a reasonable, good-faith dispute existed as to the amount due, including the amount of any counterclaim, reimbursement, recoupment, or set- off for work performed outside the specifications of the project, the Registrar could not substantiate the alleged violation of A.R.S. § 32- 1154(A)(10). The closing letter further stated if Complainant decides to pursue a civil action against Respondent and obtains a judgment on the merits for the alleged obligation, that upon providing a copy of such judgment, the Registrar will then decide whether discipline is warranted in the matter. On March 15, 2016, Apache Pipelines, Inc. forwarded to ROC a copy of a Default Judgment entered by the Maricopa County Superior Court on July 14, 2015. On April 19, 2016, the Registrar issued an Order Reopening the entire file in this matter. Based upon the record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding that Respondent has violated the no-pay provision. FINDINGS OF FACT The Registrar issued License No. KB1.287047-D to Respondent. Respondent’s address of record is 3120 West Carefree Highway, Suite 1 #333, Phoenix, Arizona 85086-3202. Complainant is a subcontractor. On or about October 17, 2014, Complainant filed an initial complaint with the Registrar alleging that Respondent owed Complainant $35,240.00 for services provided on a Taco Bell project. At that time, the Registrar found Respondent had raised a reasonable, good- faith defense and closed the matter. Complainant provided the address of 2708 East Jones Avenue, Phoenix, Arizona 85040 on its initial complaint filed with the Registrar. Complainant subsequently requested a hearing from its initial complaint against Respondent. On April 21, 2016, the Registrar issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10) against Respondent. Respondent filed a timely written answer to the Citation and Complaint disputing the amount owed. The Registrar referred the matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing. On May 18, 2016, the Registrar issued a Notice of Hearing, setting a hearing on July 13, 2016, at 10:00 a.m. at the OAH. The Registrar mailed a copy of the Notice of Hearing to Complainant at the address on its complaint and to Respondent at its address of record. During the hearing, Complainant testified that the work was complete in 2015, and that after repeated attempts to obtain payment from Respondent and no payment received from Respondent, he sought civil remedies. Complainant then filed a civil action against Respondent and obtained a Default Judgment in Maricopa County Superior Court against Respondent in the amount of $40,822.14, including interest, costs and attorney fees. Only the principal amount of that judgment, which is $35,240.00, would fall within the no-pay provision that governs this case, as it applies to “materials or services” rendered to a contractor. Respondent testified that it was paid approximately $650,000.00 for the entire project and that he underbid the project. Respondent also raised a defense of workmanship in its testimony. When questioned as to why Respondent did not answer the civil action and raise defenses, Respondent replied that notice of the civil proceeding was not perfected. However, the purpose of this hearing is not to determine whether the Judgment is valid but rather whether Respondent failed to pay Complainant. The default judgment establishes that Respondent owes Complainant more than $750.00, the statutory minimum. CONCLUSIONS OF LAW This dispute lies within the Registrar’s jurisdiction to resolve.[2] 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 statute(s) cited in the Citation and Complaint.[5] Complainant has met that burden. The Citation and Complaint cites the “no pay” provision found in Arizona Revised Statutes (A.R.S.) § 32-1154(A)(10) that prohibits the failure of a licensee to pay monies in excess of $750.00 “when due for materials or services” when the licensee has the capacity to pay or when the licensee has been paid for the project. The evidence is sufficient to show that Respondent has violated this provision for failure to pay. Respondent has failed to pay Complainant $35,240.00 that is due and owing for services rendered to Respondent in connection with Respondent’s work as a subcontractor. RECOMMENDED ORDER IT IS RECOMMENDED that license KB-1.287047-D, held by Elite Luxury Homes, LLC, DBA: Elite Commercial, be revoked on the effective date of the Registrar’s Order, unless the Registrar receives written proof of payment that Respondent has paid Complainant $35,420.00 in certified funds. If the Registrar accepts such written proof, on or before the effective date of the Registrar’s Order, the license revocation shall not take place and case 2014A-4253-ROC shall be closed. Done this day, July 28, 2016. /s/ Linda Marie Brown Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] A.R.S. § 32-1154(A)(10) 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 . . . .”

[2] See A.R.S. § 32-1101 et seq. [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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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826