FINACT2018A-3331-NPC-ROC.pdf

2018A-3331-NPC-ROC · Registrar of Contractors · 2018-11-19

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

High & Dry, LLC, Case No. 2018-3331 COMPLAINANT, Docket No. 2018A-3331-NPC-ROC v. FINAL ADMINISTRATIVE DECISION Adams Disaster & Restoration Inc., AND ORDER License No. ROC 286698, 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. 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 Registrar reviewed that decision and hereby modifies it. The Administrative Law Judge Decision, Conclusions of Law, concluded that Complainant sustained its burden of proof regarding an amount owed by Respondent, but that “[b]ecause the amount owed Complainant is less than seven hundred fifty dollars, Respondent cannot held in violation of ARIZ. REV. STAT. § 32-1154(A)(10).” ALJ Dec. 8: 16-28. The administrative law judge recommended that Respondent’s license be “suspended for one (1) business day unless Respondent has (A) provided satisfactory written evidence to the ROC that it has paid Complainant High & Dry LLC four hundred twenty eight dollars and sixty seven cents ($428.67) via certified funds, OR (B) Respondent has provided satisfactory written evidence to the ROC that it has entered into a mutually acceptable arrangement with Complainant. If Respondent provides such satisfactory written proof within 30 days of the effective date of the final order, no such suspension shall

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 take place and the ROC shall close Case No. 2018-3331.” ALJ Dec. 9:1-13. Because Respondent was not

found to be in violation of A.R.S § 32-1154(A)(10), it would be inappropriate to suspend Respondent’s

license. Therefore, the Registrar modifies the recommendation so that Case No. 2018-3331 be dismissed.

CONCLUSION AND ORDER

The Registrar hereby modifies the Recommended Order of the Administrative Law Judge

Decision by replacing page 9, lines 1 through 13 with “Based on the foregoing, IT IS RECOMMENDED

that on the effective date of the final order in this matter, Case No. 2018-3331 be dismissed.”

The Registrar hereby accepts the remainder of the Administrative Law Judge Decision, which

becomes effective on December 26, 2018.

Dated November 16, 2018.

Registrar of Contractors /s/ Nicole Sornsin Nicole Sornsin Assistant Director, Legal and Recovery Fund Copy mailed via USPS First Class mail November 16, 2018 to: Respondent Adams Disaster & Restoration Inc 2120 E 6th St Ste 7 Tempe, AZ 85281 Complainant High & Dry LLC HD Restoration 2338 E Catalina Ave Mesa, AZ 85204 AND copy electronically mailed this same date to: Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar

Office of Administrative Hearings Jenna Clark, Administrative Law Judge Case No. 2018-3331 / AN

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 10.23.2018 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

High & Dry LLC DBA: HD Restoration, No. 2018A-3331-NPC-ROC COMPLAINANT, ADMINISTRATIVE LAW JUDGE v. DECISION Adams Disaster & Restoration Inc., License No: 286698 RESPONDENT.

HEARING: October 03, 2018 at 8:30 AM. APPEARANCES: Brittany Ottersen appeared on behalf of High & Dry LLC (“Complainant”). Caylee Frost appeared on behalf of Adams Disaster & Restoration Inc., (“Respondent”). Shane Adams, Cynthia Adams, and Stanley Adams observed. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Arizona Registrar of Contractors (“the ROC”). FINDINGS OF FACT BACKGROUND AND PROCEDURE 1. On August 14, 2018, the ROC issued a NOTICE OF HEARING setting the above-captioned matter for hearing at 8:30 a.m. on October 03, 2018 at the Office of Administrative Hearings. 2. The NOTICE OF HEARING shows that the hearing was being conducted on the charges made in the CITATION and COMPLAINT. 1 The issue for hearing is whether the charges in Complainant’s written complaint, which charge Respondent with the commission of an act or acts that would, if proved, be cause for the suspension or revocation of Respondent’s license under ARIZ. REV. STAT. § 32-1154(A)(10), are fully

See Registrar’s electronic file at Rch421 Citation No Pay1.rtf. Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 10.23.2018 ROC LEGAL

supported by legally sufficient evidence and whether the relevant elements of the applicable statutory provisions and rules can be established. 3. Administrative notice is taken of Respondent’s prior License record as

reflected on the ROC’s public website on October 03, 2018. According to the site,

Respondent holds license number 286698, issued by the ROC on or about August 29,

2013. The site reflects that Respondent’s license has not previously been issued formal

discipline by the ROC. Although, the record does reflect that there are two open

complaints against Respondent’s license, one of which is presumed to be related to

this matter. Respondent has a $9,000.00 surety bond through RLI Insurance Company

effective July 27, 2016. Glenn Paul Balliet is Respondent’s qualifying party/member.

Stanley Edward Adams and Shane Ryan Adams are listed as officers for the license.

Respondent’s address of record on the license is 2120 E. 6th Street Suite 7, Tempe, AZ

85281-3081. 2

4. Complainant, doing business as HD Restoration, is an emergency

restoration subcontractor operating out of Mesa, AZ.

5. During the parties’ professional history, Respondent has hired

Complainant as a subcontractor on several restoration projects. Historically, Complainant would enter into a contractual agreement with Respondent whereby Respondent would pay Complainant for work completed on a project within thirty-days of a homeowner signing off on the project’s completion, per contract. 6. The parties agree that most of their projects tigether, if not all of them, incur additional supplemental charges based on a homeowner’s insurance adjusters repair estimation, and that supplemental charges must be pre-approved in writing by Respondent in advance of Complainant performing any work outside the scope of the originally contracted agreement. 7. At issue in the case at bar are six invoices for projects Complainant alleges Respondent failed to pay in full, per their agreements. All of Respondent’s sub- contracting agreements with Complainant state, in pertinent part:

2 See https://roc.az.gov/contractor-search?Id=a0Yt000000ACTwAEAX. RECEIVED 10.23.2018 ROC LEGAL

Adams will take care of any supplements needed, we must be notified on the 1st day of your walk for any supplements or additional approval. HEARING EVIDENCE 8. Brittany Ottersen appeared on behalf of Complainant and submitted Exhibits 1-11. 3 Caylee Frost appeared on behalf of Respondent and submitted Exhibits A-H. No other persons testified in the hearing. 9. Ms. Frost is Respondent’s former General Manager. 4 Ms. Frost testified that Respondent had undergone an internal auditing and discovered a multitude of errors in their accounts payable and receivable. Ms. Frost further testified that the accounting took several months to complete and in the interim several employees had presented themselves as managers and made promises to pay on accounts that Respondent did not owe money on, Complainant included. Those employees were terminated from employment as a result. 10. Ms. Ottersen is the Office Manager for Complainant. Ms. Ottersen testified that she presumed the persons she was in contact with at Respondent’s company were authorized to verbally modify the parties’ written agreements. 11. Ms. Ottersen testified that Respondent failed to pay, in whole or in part, six invoices that were billed to Respondent as follows: DATE ISSUED INVOICE NUMBER PROJECT BALANCE 09/18/2017 1538 Gordon Leishman $984.35

09/20/2017 1539 Carollyn Sechler $3,942.01 11/10/2017 1580 Dan Van Galder $2,160.64 11/28/2017 1581 Carolyn Ryan $6,673.45 11/28/2017 1582 Jerome Thompson $330.13 10/15/2017 1706 Meghan Trujillo $450.00

The Leishman project

Ms. Ottersen submitted a total of one hundred nine pages of emails Complainant sent to Respondent, and in some instances include responses from Respondent, between September 15, 2017 and June 21, 2018. The email threads were not in chronological order, and many related to projects/invoices unrelated to those in this case. None of the referenced attachments were submitted as additional exhibits. RECEIVED 10.23.2018 ROC LEGAL

12. The parties entered into a subcontract agreement for the Leishman project on or about July 13, 2017. Complainant did not sign the agreement. Per agreement, Complainant was to receive $2,186.90 of the $2,803.72 total contract price. 5 Although

no written agreement exists between the parties for additional work beyond the scope

of their original agreement, Complainant testified that the project incurred an additional

$1,730.47 of charges of which $984.35 was due to Complainant from Respondent.

13. On September 18, 2017, Complainant sent Invoice #1538 to Respondent

for $984.35.

14. Ms. Frost testified that Respondent issued check number 17506 to

Complainant for $2,186.90 on October 27, 2017. 6

The Sechler project

15. The parties entered into a subcontract agreement for the Sechler project

on or about April 20, 2017. Complainant did not sign the agreement. Per agreement,

Complainant was to receive $2,281.34 of the $2,924.80 total contract price. 7 Although

no written agreement exists between the parties for additional work beyond the scope

of their original agreement, Complainant testified that the project incurred $2,129.06

worth of supplemental charges which brought the project total to $5,053.86, of which $3,942.01 was due to Complainant from Respondent. 8 16. On June 20, 2017, Respondent issued check number 18297 to Complainant for $1,413.27. 9 17. On September 20, 2017, Complainant sent Invoice #1539 to Respondent for $2,528.74, acknowledging Respondent’s $1,413.27 payment. 18. Ms. Frost testified that Respondent issued check number 18873 to Complainant for $868.07 on August 30, 2018. 10 Ms. Frost was Respondent’s General Manager at all times relevant to this case, and currently consults as an accountant on an as needed basis. See Registrar’s electronic file at Intake Complaint Submittal2.pdf. See Respondent Exhibit B. See Registrar’s electronic file at Intake Complaint Submittal2.pdf. In an email dated April 20, 2017, Dana Mar Aic, field claim representative for Auto-Owners Insurance, writes to the homeowner, “Hi Rick. This supplement is approved and I’ll send the check. I’m reviewing the other invoices and estimates now.” See Complainant Exhibit 4. No additional information is provided. 9 See Respondent Exhibit E. RECEIVED 10.23.2018 ROC LEGAL

The Van Galder Project 19. The parties entered into a subcontract agreement for the Van Galder project on or about July 31, 2017, 2017. Complainant did not sign the agreement. Per

agreement, Complainant was to receive $2,684.24 of the $3,441.33 total contract

price. 11

20. On November 10, 2017, Complainant sent Invoice #1580 to Respondent

for $2,160.64.

21. Ms. Frost testified that Respondent issued check number 18297 to

Complainant for $2,684.24. Ms. Frost provided a stub to substantiate her claim, but the

stub did not bear a date of issuance.

The Ryan project

22. The parties entered into a subcontract agreement for the Ryan project on

or about August 29, 2017. Complainant did not sign the agreement. Per agreement,

Complainant was to receive $4,693.50 of the $6,017.31 total contract price. 12 Although

no written agreement exists between the parties for additional work beyond the scope

of their original agreement, Complainant testified that the project incurred an additional

charges of which $1,979.95 was due to Complainant from Respondent. 23. On November 28, 2017, Complainant sent Invoice #1581 to Respondent for $6,673.45. 24. Ms. Frost testified that Respondent issued check number 18873 to Complainant for $4,693.50 on August 30, 2018. 13 The Thompson project 25. The parties entered into a subcontract agreement for the Thompson project on or about September 07, 2017. Complainant did not sign the agreement. Per agreement, Complainant was to receive $1,255.87 of the $1,610.09 total contract price. 14

See Respondent Exhibit D. Check sent via Certified Mail. See Registrar’s electronic file at Intake Complaint Submittal1.pdf; see also Respondent Exhibit A. See Registrar’s electronic file at Intake Complaint Submittal1.pdf. See Respondent Exhibit D. Check sent via Certified Mail. 14 See Registrar’s electronic file at Intake Complaint Submittal1.pdf. RECEIVED 10.23.2018 ROC LEGAL

26. On November 28, 2017, Complainant sent Invoice #1582 to Respondent for $1,607.35. 27. Ms. Frost testified that Respondent issued check number 18157 to

Complainant for $1,277.22. Ms. Frost provided a stub to substantiate her claim, but the

stub did not bear a date of issuance.

The Trujillo project

28. The parties entered into a subcontract agreement for the Trujillo project

on or about September 22, 2017. Complainant did not sign the agreement. Per

agreement, Complainant was to receive $5,222.93 of the $6,696.06 total contract

price. 15

29. On October 15, 2017, Complainant sent Invoice #1706 to Respondent for

$450.00.

30. Ms. Ottersen testified that the project was not completed because

Complainant pulled employees off the job due to Respondent’s lack of payment on

other projects.

31. Ms. Frost conceded Respondent owes Complainant for the work that was

completed on this project. CONCLUSIONS OF LAW 1. The ROC has jurisdiction over this matter pursuant to ARIZ. REV. STAT. §§ 32-1101 et seq. and 32-1154(A), which was appropriately brought before this tribunal pursuant to ARIZ. REV. STAT. § 41-1092 et seq. 2. Unless otherwise provided by law, 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. 16 3. A preponderance of the evidence is: See Registrar’s electronic file at Intake Complaint Submittal1.pdf. 16 “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” ARIZ. REV. STAT. § 41- 1092.07(G)(2). RECEIVED 10.23.2018 ROC LEGAL

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 affect their objects and to promote justice.” ARIZ. REV. STAT. § 1-211(B). 6. The purpose of the Registrar’s licensing statutes are 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. Among the grounds for suspension or revocation of a contractor’s license is a “[f]ailure by [the] 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 . . . .” ARIZ. REV. STAT. § 32-1154(A)(10). 8. The record reflects a very convoluted relationship between the parties whereby Respondent often untimely remitted payment for Complainant invoices, and Complainant continued to accept projects from Respondent although payment for several completed jobs remained outstanding. 9. In the case at bar the tribunal is tasked with determining how much money, if at all, Complainant is owed for Invoices 1538, 1539, 1580, 1581, 1582, and 1706, and if monies are indeed owed, whether Respondent is in violation of ARIZ. REV. STAT. § 32-1154(A)(10) and subject to discipline by the Registrar. 10. Upon review of the record, a preponderance of the evidence establishes that of the $14,540.58 Complainant argues Respondent owes, $428.67 is due.

RECEIVED 10.23.2018 ROC LEGAL

11. There is no credible evidence in the record to suggest Respondent owes Complainant $984.35 for the Leishman project. Complainant failed to sustain its burden of proof to establish that the parties agreed to the alleged additional supplemental

amount.

12. There is no credible evidence in the record to suggest Respondent owes

Complainant $3,942.01 for the Sechler project. Complainant failed to sustain its burden

of proof to establish that the parties agreed to the alleged additional supplemental

amount.

13. There is no credible evidence in the record to suggest Respondent owes

any money for the Van Galder project. The record reflects that the contracted amount

was paid to Complainant in full.

14. There is no credible evidence in the record to suggest Respondent owes

Complainant $1,979.95 for the Ryan project. Complainant failed to sustain its burden of

proof to establish that the parties agreed to the alleged additional supplemental

amount.

15. There is no credible evidence in the record to suggest Respondent owes any money for the Thompson project. The record reflects Respondent overpaid the contracted amount by twenty one dollars and thirty three cents ($21.33). 16. Credible evidence exists in the record to establish Respondent owes Complainant four hundred twenty eight dollars and sixty seven cents ($428.67) for the Trujillo project. 17 Complainant sustained its burden of proof regarding the amount owed by Respondent for Invoice #1706. 17. Because the amount owed Complainant is less than seven hundred fifty dollars, Respondent cannot held in violation of ARIZ. REV. STAT. § 32-1154(A)(10). 18. Therefore, it would be inappropriate to suspend or revoke Respondent’s license pursuant to ARIZ. REV. STAT. § 32-1154(B), unless Respondent fails to remit the four hundred twenty eight dollars and sixty seven cents ($428.67) owed to Complainant. Although Respondent admits to owing the outstanding balance on the Trujillo project, $21.33 shall be deducted from $450.00 because Respondent overpaid that amount on the Thompson project. RECEIVED 10.23.2018 ROC LEGAL

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that on the effective date of the final order in this matter,

Adams Disaster & Restoration Inc., License No. 286698 be suspended for one (1)

business day unless Respondent has (A) provided satisfactory written evidence to the

ROC that it has paid Complainant High & Dry LLC four hundred twenty eight dollars

and sixty seven cents ($428.67) via certified funds, 18

OR

(B) Respondent has provided satisfactory written evidence to the ROC that it has entered into a mutually acceptable arrangement with Complainant. If Respondent provides such satisfactory written proof within 30 days of the effective date of the final order, no such suspension shall take place and the ROC shall close Case No. 2018-3331. 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, October 23, 2018.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

18 The total amount owed will be seven thousand seven hundred sixty seven dollars and fifty three cents ($471.53) if the ROC concludes Respondent owes ten percent interest on the outstanding balance, per the parties’ agreement.