FINACT2018A-05465-NPC-ROC-FinalAgencyAction-6558.pdf

2018A-05465-ROC · Registrar of Contractors · 2019-11-05

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Airepros Air Conditioning and Heating LLC, Case No. 2018-05465

COMPLAINANT, Docket No. 2018A-05465-NPC-ROC

v. FINAL ADMINISTRATIVE DECISION AND DJS Building Services Inc. ORDER DBA: All-In-One Contractors, License No. ROC 307954,

RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an

administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the Registrar

must provide written justification setting forth the reasons for the modification or rejection of each finding of

fact or conclusion of law.

MODIFICATION AND WRITTEN JUSTIFICATION

In this case, a hearing was held and the administrative law judge issued a written decision. See

Administrative Law Judge Decision, attached. The administrative law judge found that Respondent violated

A.R.S. §32-1154(A)(10). ALJ Dec. 7: 13-15. The administrative law judge found that Respondent owes

Complainant $21,049.95. ALJ Dec. 7: 1-3. The administrative law judge therefore recommended that

Respondent’s ROC License No. 307954 be revoked. ALJ Dec. 7: 18-20.

Under A.R.S. §32-1161(C), “[a]fter revocation of a license upon any grounds set forth in section 32-

1154, the license shall not be renewed or reissued for one year after the final determination of revocation and

then only on proper showing that all loss caused by the act or omission for which the license was revoked has

been fully satisfied.” If Respondent’s license is revoked, there is little incentive for Respondent to repay

Complainant, because Respondent would be statutorily prohibited from obtaining a license for at least one year.

However, under a provisional suspension, although Respondent would be unable to contract while suspended,

the possibility of lifting the suspension upon Respondent’s remedying the violation would remain.

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 The purpose of filing a complaint for a violation of A.R.S. §32-1154(A)(10) is to facilitate the payment of outstanding debts owed by a licensed contractor. In a case such as this, revocation frustrates that purpose. While Respondent failed to appear at the hearing in this matter, it did file an Answer indicating that it acknowledges the debt to Complaint and that it intends to pay the money owed. For this reason, the Registrar modifies the Administrative Law Judge Decision to suspend Respondent until it pays Complainant $21,049.95. Additionally, the administrative law judge recommended that Respondent be ordered to provide restitution to Complainant pursuant to A.R.S. § 32-1156.01. ALJ Dec. 7:22-25. Restitution under this statute, however, may only be ordered as a condition of license reinstatement, not as a judgment for money damages against a contractor. See Bentivegna v. Powers Steel and Wire Products, 206 Ariz. 581, 585 (App. 2003). Thus, because Respondent’s license will be provisionally suspended until payment of the amount owed, ordering restitution under § 32-1156.01 is unnecessary. CONCLUSION AND ORDER The Registrar herby modifies the Recommended Order of the Administrative Law Judge Decision by: • Replace page 7, lines 18 through 20, with: o “IT IS ORDERED that on the effective date of the Final Order in this matter, Respondent’s License No. 307954 be suspended until the Registrar receives and accepts written verification that DJS Building Services Inc., DBA: All-In-One Contractors, has paid to Airepros Air Conditioning and Heating LLC the amount of $21,049.95 in certified funds. IT IS FURTHER ORDERED that if, on or before the effective date of the Order, the Registrar receives written proof from Respondent that it has paid to Complainant $21,049.95, then the Registrar will not suspend Respondent’s license, but will instead close the complaint.” • Delete page 7, lines 21 through 24. //

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 The Registrar accepts the remainder of the Administrative Law Judge Decision, which becomes effective on November 20, 2019. Dated October 11, 2019. By: /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund Arizona Registrar of Contractors Copy mailed via USPS First Class mail October 11, 2019 to: Respondent DJS Building Services Inc. DBA: All-In-One Contractors 6028 E Joan De Arc Ave Scottsdale, AZ 85254 Complainant Airepros Air Conditioning and Heating LLC 24654 N Lake Pleasant Pkwy #103-340 Peoria, AZ 85383

Copy sent electronically this same date to: Office of Administrative Hearings Jenna Clark, Administrative Law Judge Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar

Case No. 2018-05465 / fh

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 8/19 RECEIVED 10.4.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Airepros Air Conditioning and Heating LLC, No. 2018A-05465-ROC COMPLAINANT, ADMINISTRATIVE LAW JUDGE vs. DECISION DJS Building Services Inc., DBA: All-In-One Contractors, ROC License: ROC 307954, RESPONDENT. HEARING: September 19, 2019 at 1:30 PM. APPEARANCES: Ryan Houser, Esq. appeared on behalf of Airepros Air Conditioning and Heating LLC (“Complainant”) with Scott Casseday as a witness. No appearance(s) by or on behalf of DJS Building Services Inc. (“Respondent”). Michael Walsh, Keith Persons, and Kristi Casseday observed. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________

Having heard the evidence and testimony and having considered the record in

this matter, the undersigned Administrative Law Judge hereby makes the following

Findings of Fact and Conclusions of Law and issues the following RECOMMENDED

ORDER to the Director of the Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

BACKGROUND AND PROCEDURE

1. On August 17, 2016, the Registrar issued License No. 307954 for general

dual KB-1 building contracting to Respondent.1 Respondent’s address of record for the license is 6028 E. Joan De Arc Ave. Scottsdale, Arizona 85254-3829. David Andrew Stern is listed on the licenses as Qualifying Party and Officer.2 2. Pursuant to ARIZ. ADMIN. CODE R4-9-117, Administrative Notice is taken of Respondent’s prior License record for License No. 307954, as reflected on the Registrar’s public website on October 02, 2019. Such prior license record reflects that See https://roc.az.gov/contractor-search?Id=a0Yt000000ACYAzEAP. Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 10.4.2019 ROC LEGAL

Respondent’s license was suspended for lack of bond on September 26, 2019.3 There is no prior discipline listed for the license. The record shows that there is one open complaint against Respondent’s license, which is presumed to be related to this matter.

Respondent had a $14,000.00 surety bond issued through Merchant’s Bond Company

(Mutual) effective July 25, 2016 that was cancelled on September 12, 2018.4

Respondent had a replacement surety bond, issued through Hudson Insurance

Company effective August 30, 2018, that was cancelled on September 26, 2019.5 Per

the Registrar’s website, there have been no payments issued from either bond prior to

cancellation.

3. On or about September 13, 2017, Complainant and Respondent entered

into a contract agreement, as subcontractor and contractor respectively, whereby

Complainant agreed to perform heating, ventilation, and air conditioning (“HVAC”) work

for Respondent’s commercial project located 2540 W. Apache Trails, Ste. 106, Apache

Junction, Arizona 85120 (“Laundromat Project”) for the sum total of $27,450.00.6 On

October 11, 2017, Complainant issued Invoice No. 17-011 to Respondent for

$27,011.95.7 A progress payment of $23,668.00 was received by Complainant for

Invoice No. 17-011, leaving a balance owed of $3,343.95. Notice of the balance owed was sent to Respondent on December 21, 2018.8 On January 12, 2018, Complainant issued Invoice No. S28528 to Respondent for a 911.00 change order.9 4. On or about May 18, 2018, Complainant and Respondent entered into a contract agreement, as subcontractor and contractor respectively, whereby Complainant agreed to perform HVAC work for Respondent’s commercial project located at 4725 S. Rim Rd. Gilbert, Arizona 85297 (“Pizza Shop Project”) for the sum total of $41,000.00.10 On August 27, 2018, Complainant issued Invoice No. 18-002-3 to Id. 3 Id. Id. Id. See Hearing File, page 13; see also Complainant Exhibit 12. See Hearing File, page 14; see also Complainant Exhibit 5. See Hearing File, page 24. See Hearing File, pages 15 and 25. 10 See Hearing File, pages 17-20; see also Complainant Exhibit 2. RECEIVED 10.4.2019 ROC LEGAL

Respondent for $6,000.00.11 On July 19, 2018, Complainant issued Invoice No. 18-002- to Respondent for $20,000.00.12 On September 10, 2018, Complainant issued Invoice No. S26283 to Respondent for a $795.00 change order.13 No payments were received

by Complainant from Respondent for the Pizza Shop Project.

5. On November 15, 2018, the Registrar received a complaint from

Complainant alleging non-payment of services and/or materials against Respondent for

the Laundromat Project.14

6. On December 21, 2018, the Registrar received a complaint from

Complainant alleging non-payment of services and/or materials against Respondent for

the Pizza Shop Project.15

7. On December 24, 2018, the Registrar issued a NON-PAYMENT COMPLAINT

NOTIFICATION LETTER to the parties, advising that Respondent could supply any

affirmative defenses or raise other issues to the Registrar by January 02, 2019.16

Respondent did not respond.

8. On January 04, 2019, the Registrar issued a CITATION AND COMPLAINT to

Respondent for an alleged violation of ARIZ. REV. STAT. § 32-1154(A)(10).17

Respondent was given until January 21, 2019, to respond with its ANSWER or face discipline pursuant to ARIZ. REV. STAT. §§ 32-1155(A) and 32-1155(B).18 9. On January 24, 2019, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on March 14, 2019.19 Per the NOTICE OF HEARING issued on January 28, 2019, the issue to be determined is whether the Registrar has cause to discipline Respondent’s license based on the following charges:

11 See Hearing File, page 22; see also Complainant Exhibit 6. See Hearing File, page 23. 13 See Hearing File, page 21. See Hearing File, pages 29-30. See Hearing File, page 16. See Hearing File, page 28. See Hearing File, pages 6-11. Id. Notably, Respondent’s ANSWER is not included in the Registrar’s file but is presumed to have been timely received. 19 See NOTICE OF HEARING. RECEIVED 10.4.2019 ROC LEGAL

Charge 1: A violation of A.R.S. § 32-1154(A)(10) (“Failure 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.”).20

HEARING EVIDENCE

10. After multiple continuances at the request of the parties, the matter was

heard on September 19, 2019. No appearance(s) by or on behalf of Respondent.

Complainant called Scott Casseday to testify and submitted fifteen exhibits. The

Registrar’s electronic hearing file and NOTICE OF HEARING were also admitted into the

record as their own exhibits.

11. Complainant and Respondent have worked together over the last several

years, and in that time Respondent has timely paid Complainant’s invoices per their

agreement(s). 12. Complainant completed the Laundromat and Pizza Shop projects for Respondent. Respondent did not file any complaints with the Registrar regarding Complainant’s work on either project. 13. After several months of nonpayment on issued invoices, Complainant contacted Respondent to inquire about the delay. Complainant was advised that Respondent was experiencing financial hardship due to sudden and unexpected personal medical bills. Respondent expressed that although he was paid in full from the Laundromat Project and Pizza Shop Project21, he was unable to pay Complainant due to his mounting medical bills. Respondent expressed his desire to work out a payment plan to bring his debts with Complainant current. 14. For a few months Respondent paid $1,000.00 toward the debt he owed Complainant on the Laundromat Project, but stopped. Respondent never made a

Id. 21 See Complainant Exhibit 7. RECEIVED 10.4.2019 ROC LEGAL

payment on the debt he owed for the Pizza Shop Project, but the owner of that project has agreed to pay Complainant $10,000.00 for the work it performed on that job. 15. On May 27, 2019, Respondent, through his attorney, agreed to assign

proceeds from another project over to Complainant to settle part of his debt with

Complainant22, but later withdrew the funds from his attorney’s possession.23

Respondent never provided Complainant with the agreed upon funds.

16. Because Respondent had not paid his outstanding debt to Complainant,

Complainant has suffered financially. Specifically, Complainant has had to take out

loans to keep his business open, Complainant has not been able to repair or replace

broken machinery, suffered payroll issues, and has had two Mechanic’s Liens placed

against his business.24

CONCLUSIONS OF LAW

1. The Registrar has jurisdiction over this matter pursuant to ARIZ. REV.

STAT. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before the Office of Administrative Hearings pursuant to ARIZ. REV. STAT. §§ 41-1092 et seq. 2. The Registrar may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation was not remedied by corrective action.25 3. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.26 4. The NOTICE OF HEARING the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter.27 Because the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is See Complainant Exhibit 13. See Complainant Exhibit 14. See Complainant Exhibits 3 and 4. See ARIZ. REV. STAT. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990). See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 27 See ARIZ. REV. STAT. §§ 41-1092.04, 41-1092.05(D), and 41-1061(A). RECEIVED 10.4.2019 ROC LEGAL

deemed to have received all correspondence regarding this matter from the Registrar as well. 5. Complainant bears the burden of proof to establish cause to discipline

Respondent’s license by a preponderance of the evidence.28 Respondent bears the

burden to establish factors in mitigation of the penalty and affirmative defenses by the

same evidentiary standard.29

6. “A preponderance of the evidence is such proof as convinces the trier of

fact that the contention is more probably true than not.”30 A preponderance of the

evidence is “[t]he greater weight of the evidence, not necessarily established by the

greater number of witnesses testifying to a fact but by evidence that has the most

convincing force; superior evidentiary weight that, though not sufficient to free the mind

wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to

one side of the issue rather than the other.”31

7. ARIZ. REV. STAT. § 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.” 8. ARIZ. REV. STAT. § 32-1156.01 states, in pertinent part, that after a hearing an Administrative Law Judge may provide restitution to any person who is injured by an action of a licensee. 9. Here, the material facts are not in dispute.

ARIZ. REV. STAT. § 41-1092.07(G)(2); ARIZ. ADMIN. CODE R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). See ARIZ. ADMIN. CODE R2-19-119(B)(2). MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 31 BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999). RECEIVED 10.4.2019 ROC LEGAL

10. The credible evidence of record reflects that Respondent owes Complainant an outstanding balance of $21,049.95 on valid subcontracting agreements executed between the parties in 2017 and 2018. Although afforded ample time and

opportunity by Complainant, Respondent failed to make a good-faith payment or set up

a payment plan to pay off its debt to Complainant.

11. Therefore, the only issue remaining is whether Respondent raised a

sufficient justification or excuse for failing to pay Complainant on their two contracts.

This is an affirmative defense that Respondent bears the burden to establish. Because

Respondent failed to appear and provide testimony, this burden has not been

sustained. Respondent’s absence is a factor in aggravation. The record shows that

Respondent failed to promptly and completely pay Complainant for labor and/or

materials on two projects, and had no affirmative defense(s) for doing so.

12. Because Complainant established by a preponderance of the evidence

that Respondent violated ARIZ. REV. STAT. § 32-1154(A)(10), Complainant has also

established cause for the Registrar to discipline Respondent’s contractor’s license.

RECOMMENDED ORDER Based on the foregoing findings of fact and conclusions of law, IT IS RECOMMENDED that that on the effective date of the FINAL ORDER in this matter, Respondent DJS Building Services Inc., doing business as All-In-One Contractors, ROC License No. 307954 shall be revoked. IT IS FURTHER RECOMMENDED that that five days after the effective date of the Registrar’s FINAL ORDER in this matter, Respondent provide proof of a $21,049.95 payment, in certified funds to Complainant, to the Registrar pursuant ARIZ. REV. STAT. §

32-1156.01.

In the event of certification of the 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 that certification. Done this day, October 02, 2019. RECEIVED 10.4.2019 ROC LEGAL

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors