ALJDEC decisions subject to certification as final

2015A-4064-ROC · Registrar of Contractors · 2016-04-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 5, 2016 and March 25, 2016 APPEARANCES: Paul Rich, president of Paul Rich Roofing and Construction, Inc. (Complainant) appeared on behalf of Complainant, along with Wayne Pratt, general manager for Complainant. Stephen Richman, Esq. represented CORE Construction, Inc. Brent Stayner, Esq. represented LGE Corporation dba LGE Design Build. ADMINISTRATIVE LAW JUDGE: Suzanne Marwil _____________________________________________________________________ FINDINGS OF FACT 1. CORE Construction Inc. (CORE) is the holder of License Nos. 069786, 199920 and 110343 issued by the Registrar of Contractors (Registrar). LGE Corporation dba LGE Design Build (LGE) is the holder of License No. 101562 issued by the Registrar. 2. Paul Rich Roofing and Construction, Inc. filed a Complaint with the Registrar alleging that CORE and LGE entered into a contract to pay Complainant $510,972.00 but had only paid it $472,237.25 for its work in constructing and installing metal panels on the Scottsdale Museum of the West (the museum project). 3. LGE contended that it was not involved in paying Complainant and was simply a silent partner in its joint venture with CORE. 4. CORE argued that it had paid the full amount due under the contract and received an Unconditional Waiver and Release on Final Payment from Wayne Pratt, general manager of Complainant, on April 21, 2015. See Exhibit 5. The full text of that Release states as follows: Project: COS - Scottsdale Museum of the West

Job No.: 13-02-002

The undersigned has been paid in full for all labor, services, equipment or material furnished to the jobsite or to CORE LGE Joint Venture, on the job of City of Scottsdale located at COS - Scottsdale Museum of the West. 3830 N Marshall Way, Scottsdale, Arizona 85258 and does hereby waive and release any right to mechanic’s lien, any state or federal statutory bond right, any private bond right, any claim for payment and any rights under any similar ordinance, rule or statute related to claim or payment rights for persons in the undersigned’s position, except for disputed claims for extra work in the amount of $0.00. The undersigned warrants that he either has already paid or will use the monies he receives from this final payment to promptly pay in full all of his laborers, subcontractors, materialmen and suppliers for all work, materials, equipment or services provided for or to the above referenced project.

Date: 21st day of April, 2015 Paul Rich Roofing & Construction. Inc. (Company name) By: Wayne Pratt (Signature) Project Mgr (Title)

NOTICE: THIS DOCUMENT WAIVES RIGHTS UNCONDITIONALLY AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE NOT BEEN PAID USE A CONDITIONAL RELEASE FORM.

5. Complainant clarified at hearing that it was seeking $38,734.75 in overtime payments that it alleged CORE had agreed to pay it so that the museum project could open as intended. Paul Rich acknowledged that a representative of Complainant had signed the Release and Final Payment but believed that the release did not cover overtime because CORE was funding the checks for overtime separately and directly. 6. Complainant agreed that LGE was not involved in its arrangement with CORE to work overtime. 7. The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a formal Citation charging Respondent with a possible violation of A.R.S. § 32-1154(A)(10). 8. Wayne Pratt testified that under the contract Complainant had 100 days from June 29, 2014, to complete its work, but that Complainant’s work ultimately did not begin until November 20, 2014, leading the parties to discuss overtime. Pratt was under the impression that CORE was funding the overtime payments directly and separately from the joint venture. For that reason, Pratt signed an Unconditional Waiver and Release on Final Payment on April 21, 2014. 9. Pratt indicated that although disputes arose between CORE and LGE about manpower on the job, CORE did not see three quarters of its workforce, which remained in Complainant’s yard fabricating the metal panels that were to be installed on the exterior of the museum building. 10. Pratt recalled that on October 21, 2015, Matt Buckannon, Director of Operations at CORE, agreed to pay Complainant a premium to work six- day weeks in order to finish the job on time. See Exhibit 8. Pratt said that CORE paid the first invoice for overtime on January 9, 2015 (Exhibit 4), but had not paid the remaining invoices. See Exhibits B, C and D. 11. Pratt acknowledged that there is nothing in writing after January 5, 2015, where CORE approved or paid for overtime. He acknowledged that the parties never agreed on the total amount of overtime. He believed CORE had simply agreed to pay an hourly premium and that Complainant could submit invoices for those hours once they had been worked. 12. Paul Rich confirmed Pratt’s understanding as to the parties’ agreement regarding overtime. He noted that his employees worked the overtime specified in the invoices and should be paid for the time they worked.

13. Pratt and Rich both noted that by failing to reduce the parties’ overtime agreement to a change order, CORE had deviated from the terms of the subcontract and as such should not be able to use its terms as a reason to fail to pay the overtime as promised. 14. Carlos Aragon, Complainant’s field supervisor, testified that he supervised the workers in Complainant’s yard fabricating the metal panels for the museum project from December 2014 to March 2015. He recalled being told to work ten hours a day including evenings and weekends. He said he would never have done so if he knew that Complainant was not going to be paid for working overtime. Aragon indicated that CORE representatives Jim Milostan and Ron Roman verbally agreed to the overtime. Aragon also noted that Bobby Joyce of CORE asked that Aragon have Complainant’s workers work on Sundays. Aragon acknowledged that the amount of approved overtime hours was never discussed. On cross-examination, Aragon agreed that Milostan was not working on the museum project after mid-January 2015. 15. William Pennington, CORE’s project manager on museum project, testified that CORE never approved any overtime on the museum project after the museum’s soft opening to the public in January 2015. He indicated that the fact that payment of overtime would stop in mid- January was discussed verbally between CORE representatives and Pratt, but was not documented in writing. 16. Pennington testified that after paying Complainant’s first overtime invoice and reducing it to a change order, he believed that CORE had paid for all overtime work Complainant had done on the project. Pennington based this belief on the fact that Complainant had signed monthly Unconditional Waiver and Release on Progress Payments for the months of January, February and March 2015. See Exhibit 7. He said he was surprised to receive additional invoices for overtime and declined to pay the invoices. 17. Pennington explained that he did not believe paying for the additional overtime was in CORE’s best interest because paying for overtime had not gotten the project to where it needed to be. He acknowledged that one of the invoices Complainant submitted for payment in March 2015 did include overtime work before the soft opening, but said he did not pay for that time because it was clear that Complainant was not going to meet its timetable of constructing the wall panels within 45 days. He noted that Complainant did not get where it needed to be with the overtime and had also had ample time to complete the work. 18. Pennington explained that is not uncommon for subcontractors to work overtime without additional compensation in order to meet its contractual obligations. He said that CORE attempted to work with Complainant by agreeing to pay overtime in order to have the two entrances open to the public ready for the soft opening. See Exhibit 8. For this reason, on January 14, 2015, after the soft opening, CORE requested that Complainant work seven days a week to finish its work, but did not agree to overtime pay. 19. Ron Roman, CORE’s lead superintendent on the museum project, testified and denied having conversations with Aragon regarding authorizing overtime work. He noted he lacked authority to authorize overtime as such agreements need to be in writing with his supervisor or the project manager. He also denied having conversations on the topic of overtime with Pratt. 20. Robert “Bobby” Joyce, CORE’s project superintendent, testified that he worked on the museum project from October 15, 2014, until its competition. He denied discussing overtime with Aragon and said he had no authority to do so. He said that he went to Complainant’s yard on a Saturday in October 2014 to confirm that Complainant was fabricating the metal panels needed for the museum project. Joyce understood that CORE’s Director of Operations, Matt Buckhannon, agreed to pay Complainant overtime to get to the soft opening and ensure that the east and south entrances to the museum were presentable, but was not aware that Complainant continued to work overtime thereafter. Joyce believed everyone knew the overtime authorized for the project had an end date of January 14, 2015. Joyce said he was aware that Complainant was behind schedule on the project. 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 . . . 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. No evidence was presented that LGE ever agreed to pay the overtime that is at issue in this matter. As such, Complainant failed to meet its burden of proof that LGE violated A.R.S. § 32-1154(A)(10). 5. With regard to CORE, the Tribunal cannot determine by a preponderance of the evidence that an agreement to pay an additional $38,734.75 in overtime existed. While Complainant is adamant that such an agreement existed and had no end date, Respondent is equally convinced that any agreed upon overtime ended in mid-January. More importantly, Complainant voluntarily signed an Unconditional Waiver indicating that CORE had paid it in full for all labor and services. See Exhibit 5. Had Complainant believed it was in fact owed additional monies for overtime it could have signed a conditional waiver. See Exhibit 5. Instead, on at least four occasions, Complainant signed waivers confirming it had been paid for all labor and services. See Exhibits and 7.[1] On this record, Complainant has failed to meet it burden of proof that CORE violated A.R.S. § 32-1154(A)(10). RECOMMENDed order Complainant’s Complaints against both LGE and CORE should 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, April 13, 2016.

/s/ Suzanne Marwil Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] The waivers regarding progress payments contain a similar warning to sign a conditional release if additional money is owed.

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