ALJDEC decisions subject to certification as final

2017A-5128-NPC-ROC · Registrar of Contractors · 2018-01-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Cummings Contractors LLC,

COMPLAINANT,

v.

Douglas Craig McKee dba,

Grand Canyon Development ,

License No: 274147

RESPONDENT.

No. 2017A-5128-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 10, 2018, at 1:00 P.M.

APPEARANCES: Wayne Cummings (“Mr. Cummings” representative for Cummings Contractors LLC “Complainant”); Logan Cummings (“Logan Cummings” witness1 for Complainant); Kennie Cummings (“Kennie Cummings” witness2 for Complainant); and Doug McKee (“Mr. McKee” representative for Douglas Craig McKee dba, Grand Canyon Development “Respondent”).

ADMINISTRATIVE LAW JUDGE: Linda Marie Brown

_____________________________________________________________________

FINDINGS OF FACT

According to the Registrar of Contractors (“Registrar”) public website, Douglas Craig McKee DBA: Grand Canyon Development (“Respondent”) is the holder of License No. 274147. This license was first issued on July 24, 2011 as a B-2 General Small Commercial Contractor. Respondent is also holder of License No. 103718 issued on August 16, 1994, which is not subject to this Complaint.

On or about October 10, 2017, Cummings Contractors, LLC, (“Complainant”) filed a Complaint against Respondent with the Registrar alleging that Respondent failed to pay Complainant the sum of $3,839.78 for skilled labor and materials provided to Respondent.

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

Respondent replied to the initial complaint on October 19, 2017, asserting that his company has been operating since 1994, and that he was serving as a project manager for this project as hired by the owner/builder. Respondent provided several references to tax code that defines an owner and referenced A.R.S. § 32-1154(5).

On October 23, 2017, the Registrar issued a Citation to Respondent for Alleged Violation of A.R.S. § 32-1154(A)(10) . . . failure to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with licensee’s operations.

Respondent replied to the Citation on November 7, 2017, asserting again that it was not financially responsible for the project and that this was an owner/builder project and that Complainant knew this at the time of contracting.

On or about November 15, 2017, Respondent filed with the Registrar a Motion to Dismiss the complaint against it to which the legal department denied the Motion upon receipt deferring the matter to the Office of Administrative Hearings.

A Notice of Hearing was issued on November 21, 2017, that a hearing will be held on January 10, 2018 at 2501 N 4th St. Ste 22, Flagstaff, AZ 86004 at 01:00PM.

TESTIMONY/ EVIDENCE

Both parties testified and presented exhibits as evidence. Respondent filed Exhibits R1 through R39 on January 3, 2018, which were admitted at hearing; and Complainant filed Exhibits C-1 through C-7 on December 29, 2017, which were admitted at hearing.

Complainant testified that invoices are due upon receipt, and that there remains one (1) outstanding invoice for materials, supplies and labor provided and billed on September 1, 2017, for a total remaining balance of $3,839.78.

Respondent continued to argue all of its points raised in its answer to the Complaint and Answer to the Citation. It argued that Complainant has the wrong party and that it should not be held responsible since it was serving in the capacity of a project manager/consultant only.

Respondent alleged against Complainant fraudulent invoicing and padding of their invoices.

Respondent provided various text messages exchanged between it and Complainant regarding payment and testified that Complainant knew where the money was coming from. Respondent also provided text messages sent to Complainant stating that owner expressed to it dissatisfaction of the color of concrete.

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 owed a total of $3,839.78 for the contracting materials, supplies, and labor. Respondent’s assertion that they contested invoices as fraudulent and over-inflated is unfounded. This Tribunal finds this argument to fail given that there was no initial contract stating that any party has the right to withhold payment. The only evidence of an agreement provided was the Estimate and Invoices billed to Respondent by Complainant on Estimate #88, dated August 11, 2017, in the amount of $16,298.50, and Invoice #82 dated September 1, 2017 in the amount of $3,839.78. Based on the numerous text messages that both parties entered into evidence as Exhibits, the Tribunal finds that Complainant was consistent in seeking payments for work performed and that Respondent continued to make promises that payment would be forthcoming. Regardless of what avenue payment was to travel, Respondent promised payment.

While Respondent argued in its defense that it was serving in the capacity as project manager/consultant for the owner and that the owner is responsible for payment, this Tribunal finds this argument fails even if the owner issued one payment to Complainant simply because Respondent holds himself out to the community as a general contractor since 1994, and when Complainant provided the Estimate, Respondent is the named party who was invoiced as the “bill to” entity for services.

Respondent offered no evidence of his agreement with the homeowner other than a letter from the homeowner stating it hired Respondent to serve as a project manager/consultant. No other evidence was admitted as to the method on how Respondent was paid for his services, whether homeowner wrote checks for these services to Respondent’s company, whether Respondent operates as a separate entity where it is holds itself out as for-hire as a project manager/consultant, or any other evidence that would support this shield he is attempting to hold up to protect itself from liability on a project in which it apparently obtained the bids, controlled the hiring, accepted receipt of invoices, procured payments, and even directed Complainant to bill to its entity for Transactional Privilege Tax (TPT) purposes.

The fact that Respondent testified that the purpose of directing Complainant to bill his entity for TPT is of no concern for this Tribunal in matters concerning the Registrar. Neither is testimony of its attempts to alleviate liability for payment to persons whom it hires to perform work in whatever capacity. This Tribunal finds that Respondent has held itself out to the community as a licensed contractor in the state of Arizona for more than 20 years, and that this would lead a reasonable person to believe and expect that Respondent is the party responsible for payment, especially when directing and accepting Invoices addressed to it for payment. Therefore, Respondent did not establish by a preponderance of the evidence that it is not the party responsible for payment to the Complainant for the work performed.

At hearing, a review of the line items listed in Invoice #82 dated 09/01/2017 billed to Grand Canyon Dev Doug McKee was performed. This Tribunal finds it was Respondent who appeared to diminish actual work performed.

Further, this Tribunal finds Respondent’s Exhibit R35 illustrates it made an offer to settle the payment dispute but attempted to make accusations that Complainant was inflating costs and under-estimated its offer under the doctrine of quantum meruit.

Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complaint $3,839.78 for materials, supplies and labor rendered in connection with the project located at 2943 Camino Del Rio, Mohave Valley, Arizona.

This Tribunal also finds Respondent misplaces its interpretation of A.R.S. § 32-1154(5).

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 Douglas Craig McKee DBA: Grand Canyon Development, License No: 274147 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $3,839.78 in certified funds.

It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $3,839.78 in certified funds, the Registrar may close the Complaint in Case No. 2017-5128.

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, January 30, 2018.

/s/ Linda Marie Brown

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors