ALJDEC decisions subject to certification as final

2017A-1719-NPC-ROC · Registrar of Contractors · 2017-08-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Tradesmen International LLC,

COMPLAINANT,

v.

Phoenix HVAC Experts Inc,

License No: 291368

RESPONDENT.

No. 2017A-1719-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 28, 2017 at 8:30 AM

APPEARANCES: Justin Bjornson (“Complainant”); Katie J. Sackal (“Respondent” for Phoenix HVAC Experts Inc.).

ADMINISTRATIVE LAW JUDGE: Linda Marie Brown

_____________________________________________________________________

FINDINGS OF FACT

Phoenix HVAC Experts Inc. (“Respondent”) is the holder of License No. 291368 issued by the Registrar of Contractors (“Registrar”).

On or about March 29, 2017, Tradesman International LLC (“Complainant”) filed a Complaint against Respondent with the Registrar alleging that Respondent failed to pay Complainant the sum of $12,201.81 for temporary skilled labor provided to Respondent.

The Registrar sent a letter to the parties on April 13, 2017, providing notice that a Complaint has been filed against Respondent for non-payment of materials or services rendered, and that Respondent may file a response to the Complaint.

Respondent replied to the initial complaint on April 18, 2017, asserting that on or about October 2016, the general contractor to whom they were subcontracted with was terminated from the project and all subcontractors were thrown off the job. Respondent asserted that their company suffered a loss of approximately $80,000.00 on that project, and that they informed Complainant that they did not have the funds to pay. Complainant approved a payment arrangement of $2,000.00 a month.

Respondent also stated in its letter that it requested time cards from Complainant and it anticipated receiving time cards on a weekly basis, and alleges a dispute of approximately $6,000.00 of fraudulent invoicing by Complainant.

On April 21, 2017, the Registrar issued a Citation to Respondent for Alleged Violation of A.R.S. § 32-1154(A)(10).

Respondent replied to the Citation on May 2, 2017, asserting they lacked capacity to pay the full amount and restated they lost $80,000.00 on a project, and have been making monthly payments to Complainant.

A Notice of Hearing was issued on May 22, 2017, that a hearing will be held at the Office of Administrative Hearings located at 1400 W. Washington St., Ste 101, Phoenix, AZ 85007.

HEARING (TESTIMONY/ EVIDENCE)

Justin Bjornson, Complainant’s General Manager, testified that invoices are due upon receipt, and that there remains an outstanding total of $6,201.81, to include three (3) invoices for services provided on 07/31/16, 08/07/16, and 08/21/16.

Katie J. Sackal, Respondent’s President, the last payment made on the account was 03/28/17 for $4,000.00 but payment did not process until 03/31/17 which was after the complaint was filed.

Respondent alleged fraudulent signing of the time cards by Complainant’s employees. Specifically, asserting that Respondent’s supervisor did not sign the time cards associated with three (3) invoices as 07/31/16 for $1,384.50; 08/07/16 for $1,679.00; and 08/21/16 for $839.00. Respondent provided copies of the time cards alleging forged signatures. Respondent testified that the signatures appear to be that of a Matt or Nate and they do not have a Matt or Nate employed as a supervisor.

Respondent provided various emails beginning 02/14/17 requesting from Complainant time cards to accompany the invoices.

Respondent entered as exhibits copies of their accounting records to reflect the loss of $85,338.06.

Complainant testified that the time cards are 3-part and that when a customer’s supervisor signs off on the time cards, they give the employee 2 copies and retain one copy to return to the customer’s accounting department to be matched up with invoices due upon receipt. The employee retains one copy and returns one copy to Complainant’s office so that they may correctly invoice Respondent based on authorized signature of customer’s supervisor’s signature. Complainant credibly testified that it is the duty of the supervisor to retain a copy of the time cards and explained further the reason the time card is a 3-part document.

Respondent re-asserted that it lacked capacity to pay the amount Complainant asserted was due. Complainant referenced the Contract wherein it states that Customer is responsible for all temporary labor services and further testified that its contracts contain no liquidation clause since they are having to pay in advance wages to provide temporary laborers for its customers.

CONCLUSIONS OF LAW

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.

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).

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.

The evidence established that Respondent owes a remaining balance of $6,201.81 for obtaining and utilizing skilled labor services provided by Complainant. Respondent’s assertion that they contested invoices as based on fraudulent time cards and that Complainant failed to provide the time card fails as it is clear that the burden is on the Respondent to instruct its supervisors to retain a copy of the 3-part time card to turn into their accounting department to be matched up with the incoming invoices. Additionally, this Tribunal finds that waiting until February 2017 to raise fraud as a defense which is almost five (5) or more months later from the date services were received to be untimely.

Respondent also entered a defense that it lacked capacity to pay for labor services. This Tribunal finds that Respondent was making payments of $2,000.00 a month and that this payment arrangement illustrates they had capacity to make all the required payments to satisfy the remaining debt. Therefore, Respondent did not establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the work performed.

Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant the remaining balance of $6,201.81 for services or materials rendered in connection with Respondent’s business.

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 Respondent Phoenix HVAC Experts Inc.’s License No: 291368 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $6,201.81 in certified funds.

It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $6,201.81 in certified funds, the Registrar may close the Complaint in Case No. 2017-1719.

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, August 17, 2017.

/s/ Linda Marie Brown

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors