ALJDEC decisions subject to certification as final

2015A-3785-ROC · Registrar of Contractors · 2016-04-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 25, 2016 APPEARANCES: Complainant P I C Construction Inc. doing business as Solar Sense was represented by Joel Sannes. Respondent OneRoof Energy Inc. was represented by Matthew Lloyd. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT 1. OneRoof Energy Inc. (Respondent) is the holder of License No. 291619 issued by the Registrar of Contractors (Registrar). 2. On or about September 2, 2015, P I C Construction Inc. doing business as Solar Sense (Complainant) filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $30,880.88 for amounts due on ten projects. 3. The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10). 4. Celeste Padilla, former employee of Complainant, testified that she issued the invoices for the projects requesting payment. Ms. Padilla stated that during her conversations via email with Respondent, no issue was ever raised regarding the work performed. Rather, the only issue raised by Respondent in response to the invoices involved a levy by the Internal Revenue Service (IRS). According to Ms. Padilla, the following amounts were due: Project Name Amount Due Horton (Exhibit 4) $2,068.23 Reeves (Exhibit 2) $4,710.71 Haddock (Exhibit 8) $1,982.69 Estrella (Exhibit 7) $3,360.06 Nickel (Exhibit 10) $2,215.40 Reyna (Exhibit 12) $3,933.79 Aprim (Exhibit 6) $3,712.00 Slocumb (Exhibit 13) $2,309.48 White (Exhibits 5 and 9) $3,975.30 Belt (Exhibit 11) $2,613.22 Total $30,880.88

5. Pablo Curiel, Complainant’s Vice President of Operations, testified as to Complainant’s relationship with Respondent. Mr. Curiel indicated that Complainant had installed approximately 150 projects and had no issues with payment until the final 10 projects at issue in this matter. Mr. Curiel stated that Complainant was a dealer for Respondent and that Respondent provided a financing mechanism to homeowners for the installation of solar. Complainant generated leads and presented options to homeowners for solar packages. Respondent provided a portal through which Complainant entered documents throughout the project to ensure the project met required milestones prior to completion. Respondent’s portal prevented a project from moving to the next phase until all elements of the phase had been completed. Mr. Curiel testified that every project was required to pass a city inspection or “green tag inspection” and a utility inspection. Mr. Curiel stated that all ten projects passed both inspections. 6. Ben Neuman, Respondent’s Director of Operations, testified that as a result of the contract and offsets, Respondent did not owe Complainant any monies and, in fact, Complainant owed Respondent monies. Mr. Neuman stated that with respect to the Reeves project, Respondent had paid $18,842.84 in milestone payments that, pursuant to the contract, were advances on fees that Complainant did not earn because the project had never passed a utility inspection and, thus, been brought online. Mr. Neuman testified that the homeowner on the Reeves project refused to allow access for the utility inspection and did not identify any work that needed to be done by Complainant at this point. Mr. Neuman acknowledged that while Respondent had threatened legal action against the homeowner on the Reeves project to allow the inspection as a requirement of the homeowner’s contract with Respondent, Respondent had not done so. 7. Mr. Neuman also testified as to various offsets based on various repairs and contract modifications made for homeowners that Mr. Neuman attributed to the performance of or promises by Complainant. Mr. Neuman acknowledged that Respondent did not provide any written explanation as to why it was not making payment on the invoices when they were received. 8. The contract between Complainant and Respondent provides as follows: 4) Payments to Contractor a. Generally: Developer and Administrator agree to fund the Contractor’s development fee and all fees for Installation Services, in the aggregate (the “Aggregate Contractor Fees”) as follows: i. 20% of the Aggregate Contractor Fees shall be payable to Contractor within ten (10) business days of Administrator’s countersignature of each applicable Consumer Agreement (the “M1 Payment”); and ii. 60% of the Aggregate Contractor Fees shall be payable to Contractor within ten (10) business days of the Substantial Completion of each applicable System (the “M2 Payment”). b. Final Payment to Contractor: The remaining 20% of the Aggregate Contractor Fees shall be paid by Administrator within ten (10) business days of the Final Completion of the System (the “M3 Payment”). Developer shall have no liability to Contractor to make any M3 Payment, and Contractor agrees to look only to Administrator for any such M3 Payment. In the event that the Aggregate Contractor Fee amount changes following the fundign of the estimated Aggregate Contractor Fees pursuant to Section 4(a) above (whether as a result of a change in System design or sizing or otherwise), the difference shall be reflected in the final payment by Administrator pursuant to this Section 4(b). c. Payments Treated as Advances; No Other Compensation: The M1 Payments and M2 Payments shall be treated by all parties as advances on fees not yet earned by Contractor with respect to the applicable Systems. The M1 Payments and M2 Payments shall be deemed earned with respect to any System only upon Final Completion of such System. For the avoidance of doubt, the Aggregate Contractor Fees described herein constitute all of the compensation that may become due to Contractor hereunder, and there shall be no additional compensation attributable to any marketing or sales activities of the Contractor, the compensation for which are included within the Aggregate Contractor Fees.

Exhibit 19.

9. According to Respondent’s documentation from its portal system, nine of the projects had been finalized and authorized for payment with the last “Permission to Operate” date being February 6, 2015. The only difference from the numbers presented by Complainant were for the Reyna project and Aprim project. According to Respondent’s records, Complainant was owed $3,433.79 for the Reyna project and $3,557.50 for the Aprim project. (Exhibits A and B). Mr. Neuman was unable to account for the difference in those projects. Respondent’s records indicate that the Reeves project had not passed the utility inspection and had not been given permission to operate. Therefore, Respondent asserted that the $18,842.84 paid to Complainant as the M1 Payment and M2 Payment for the Reeves project were advances and should be repaid to Respondent. 10. Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due. 11. Administrative notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website on April 14, 2016. Such prior License record reflects that Respondent’s License No. 291619 was first issued on June 10, 2014, and was current. 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. 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 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.

4. A.R.S. § 32-1129.01 provides: K. On final completion of the work, a contractor shall submit a billing or estimate for final payment. Except as provided in subsection F of this section, a billing or estimate for final payment shall be deemed certified and approved fourteen days after the owner receives the billing or estimate, unless before that time the owner or owner’s agent prepares and issues a written statement stating in reasonable detail the reasons the billing or estimate has not been certified or approved. The owner is deemed to have received the billing or estimate for final payment when the billing or estimate is submitted to any person designated by the owner for receipt of or for certification and approval of the billing or estimate.

5. The evidence established that Complainant completed, as defined by the contract, nine of the projects identified above and issued invoices as requests for payment on those projects. The evidence also established that Respondent did not provide “a written statement stating in reasonable detail the reasons the billing or estimate has not been certified or approved” within 14 days of receiving the invoices as required by A.R.S. § 32-1129.01 if Respondent did not believe payment was proper at that time. Therefore, Complainant established that Respondent owed the following amounts for these projects: Project Name Amount Due Horton (Exhibit 4) $2,068.23 Haddock (Exhibit 8) $1,982.69 Estrella (Exhibit 7) $3,360.06 Nickel (Exhibit 10) $2,215.40 Reyna (Exhibit 12) $3,933.79 Aprim (Exhibit 6) $3,712.00 Slocumb (Exhibit 13) $2,309.48 White (Exhibits 5 and 9) $3,975.30 Belt (Exhibit 11) $2,613.22 Total $26,170.17

6. As to the Reeves project, the evidence submitted does not support a finding that Complainant completed the work required by the contract because the system had not been given permission to operate. Therefore, the final payment of $4,710.71, was not due at the time of the invoice. This is not to say that the failure to complete the project was attributable to Complainant because the evidence established that the homeowner was the major impediment to the final utility inspection. The issue of the M1 and M2 Payments for the Reeves project being considered advances that should be deducted from any amounts owed to Complainant is not persuasive because the project was not completed as a result of the homeowner’s actions and Respondent’s failure to pursue its legal rights under its contract with the homeowner. Should Respondent’s argument be accepted, it would be to Respondent’s advantage to allow homeowners to delay the final inspection of systems and allow Respondent to recoup all M1 and M2 Payments made to entities such as Complainant for no reason directly attributable to Complainant’s actions or workmanship. 7. Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the work performed. 8. Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $26,170.17 for materials and services rendered in connection with Respondent’s contracting business. 9. Based upon Respondent’s violation of the provisions of A.R.S. § 32- 1154(A)(10), grounds exist to impose discipline against Respondent’s license RECOMMENDed order Based on the foregoing, it is recommended that the Registrar suspend OneRoof Energy Inc.’s License No: 291619 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that Respondent has paid $26,170.17 in certified funds due to Complainant in conformity with any IRS levy instructions and documentation received. It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid $26,170.17 in certified funds, the Registrar may close the Complaint in Case No. 2015-3785. 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, April 14, 2016.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826