ALJDEC decisions subject to certification as final

2018A-3012-ROC · Registrar of Contractors · 2019-01-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 18, 2018 APPEARANCES: Fidelis V. Garcia, Esq. appeared on behalf of Complainant Revive Construction And Cleaning, LLC. David W. Lunn, Esq. appeared on behalf of Respondent Shea Connelly Development, LLC. ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson _____________________________________________________________________ FINDINGS OF FACT 1. Complainant Revive Construction And Cleaning, LLC, (“Revive”), and Respondent Shea Connelly Development, LLC (“Shea”), entered into an agreement wherein Shea agreed to pay Revive to perform demolition and repair work at the Park Place Phase 1 project (“Park Place project”). 2. Shea’s qualifying party is Bart Shea. 3. Rogelio Vasquez is the owner of Revive. 4. On or about January 15, 2018, Revive issued invoice # 97 to Shea, in the total amount of $2,503.25, for materials purchased and rented for the Park Place project. See Exhibit A. 5. On or about January 29, 2018, Revive issued invoice #100 to Shea, in the total amount of $33,390, for worked performed at the Park Place project. See Exhibit B. 6. On or about February 5, 2018, Revive issued invoice #101 to Shea, in the total amount of $29,880, for work performed at the Park Place project. See Exhibit C. 7. On or about February 5, 2018, Revive issued invoice #102 to Shea, in the total amount of $3,010 for work performed at the Park Place project. See Exhibit D. [1] 8. Shea did not pay invoice #97, #100, #101, and #102. 9. On or about June 29, 2018, Revive filed a complaint against Shea with the Arizona Registrar of Contractors, (“Registrar”), for non- payment in connection with the Park Place project. 10. On September 28, 2018, the Registrar, issued a Citation for an alleged violation of A.R.S. § 32-1154(A)(10) and A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1129.02. 11. Shea filed a timely response to the Citation. 12. The Registrar referred the matter to the Office of Administrative Hearings, (“OAH”) an independent agency, to schedule an evidentiary hearing. 13. On October 31, 2018, the Registrar issued a Notice of Hearing setting the above-captioned matter for hearing at 1:30 p.m. on December 18, 2018, at the OAH in Phoenix, Arizona. 14. A hearing was held on December 18, 2018. 15. At hearing, Revive presented the testimony of Mr. Vasquez, and submitted exhibits A thorugh D. Shea presented the testimony of Mr. Shea, and submitted exhibits 2, 3, and 4. 16. Mr. Vasquez testified that Revive performed work and provided materials as described in invoice #97, #100, #101, and #102. Mr. Vasquez testified that after about 95% of the work was completed, Revive began to experience problems receiving payment from Shea. 17. Mr. Shea initially testified that the contract with Revive for the Park Place project was for time and materials. Later in the hearing, Mr. Shea testified that the contract with Revive for the Park Place project was a time contract for labor. Mr. Shea testified that Shea has fully paid Revive over $800,000. Mr. Shea testified that Shea paid Revive $58,641.17 in the form of a down payment to start work on the Morningstar of Glendale project. Mr. Shea contended that Shea was not obligated to pay the invoices for the Park Place project because it had already paid Revive $58, 641.17 for the Morningstar of Glendale project, which was never completed. Mr. Shea testified that Shea paid another contractor close to $300,000 to complete the Park Place and Morningstar of Glendale projects. 18. Revive contended that contractors are obligated to pay their subcontractors under Arizona law. Revive argued that Shea did not provide a written statement within fourteen days to Revive under A.R.S. § 32- 1129.02 (E), before it withheld payment for any of the grounds listed A.R.S. § 32-1129.02 (C). Revive contended that Shea failed to pay invoice #97, #100, #101, and #102 when they became due. 19. Shea contended that the prompt payment statute does not apply because Revive performed poor work. Shea argued that the Registrar considers offsets when considering whether a contractor has violated A.R.S. § 32-1154 (A)(10) and A.R.S. § 32-1129.02. However, Shea provided no written evidence to show that it paid invoice #97, #100, #101, and #102. Shea provided no authority to establish that the Registrar considers offsets when assessing whether a contractor has violated A.R.S. § 32-1154 (A)(10) and A.R.S. § 32-1129.02. 20. Administrative notice is taken of Respondent’s prior License record on January 3, 2019. Such prior License record reflects that Respondent’s License No. 270463 was first issued on January 28, 2011, and is active. Such prior License record also reflects that is one open complaint against Respondent, and one complaint that was resolved or settled. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[2] 2. A party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 3. A preponderance of the evidence is: The 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.

Black’s Law Dictionary 1373 (10th ed. 2014). 4. Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.") 5. “Statutes shall be liberally construed to effect their objects and to promote justice.” A.R.S. § 1-211(B). 6. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 7. A.R.S. § 32-1154(A) provides that: The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: …. 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….. 12. Failure in any material respect to comply with this chapter.

8. A.R.S. § 32-1129.02(A) provides that performance by a subcontractor in accordance with the provisions of a construction contract entitles the subcontractor or material supplier to payment from the party with whom the contractor, subcontractor or material supplier contracts. 9. A.R.S. § 32-1129.02(B) provides that a subcontractor who has performed in accordance with a construction contract is entitled to payment within seven days of receipt of payment by the general contractor. 10. A.R.S. § 32-1129.02(C) provides that a general contractor may withhold funds from a subcontractor for any of the following reasons: 1. Unsatisfactory job progress. 2. Defective construction work or materials not remedied. 3. Disputed work or materials. 4. Failure to comply with other material provisions of the construction contract. 5. Third party claims filed or reasonable evidence that a claim will be filed. 6. Failure of the subcontractor to make timely payments for labor, equipment and materials. 7. Damage to a contractor or another subcontractor or material supplier. 8. Reasonable evidence that the subcontract cannot be completed for the unpaid balance of the subcontract sum. 9. The owner has withheld retention from the contractor, in which case the amount of the retention withholding by the contractor shall not exceed the actual amount of the retention retained by the owner pertaining to the subcontractor's work.

11. A.R.S. § 32-1129.02(E) provides:

If the contractor or subcontractor chooses to withhold the application or certification for all or a portion of a subcontractor's or material supplier's billing or estimates as permitted by subsection C of this section, the contractor or subcontractor must prepare and issue a written statement within fourteen days to the applicable subcontractors or material suppliers stating in reasonable detail the contractor's or subcontractor's reasons for withholding the application or certification from the owner or contractor.

12. The preponderance of the evidence shows that Shea violated A.R.S. § 32-1154(A)(10) as alleged. 13. The preponderance of the evidence established Shea violated A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1129.02 (A). 14. The preponderance of the evidence shows that Shea violated A.R.S. §§ 32-1154(A)(10) and (A)(12) by failing to pay Revive $68,783.25 for services rendered in connection with Shea’s contracting business. 15. Based upon Respondent’s violation of the provisions of A.R.S. § 32- 1154(A)(10) and (12), grounds exist to impose discipline against Shea’s license. RECOMMENDed order Based on the foregoing, it is recommended that the Registrar suspend Respondent’s License No: 270463 issued by the Registrar unless Respondent has provided to the Registrar, and the Registrar has accepted, documents that establish that Respondent paid Complainant $68,783.25 in certified funds. It is further recommended that if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $68,783.25 in certified funds before the effective date of the Registrar’s Order, the Registrar may close the Complaint in this matter. 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 is forty days after the date of that certification. Done this day, January 3, 2018.

/s/ Velva Moses-Thompson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] At hearing, Mr. Vasquez testified that the $3,010 amount represented an unpaid balance for invoice #99 which was for work performed at the Park Place Phase 1 project. [2] See A.R.S. §§ 32-1151 to 32-1169.

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826