ALJDEC decisions subject to certification as final

2019A-00137-ROC · Registrar of Contractors · 2019-05-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 10, 2019, at 1:00 p.m. APPEARANCES: The G R A Z A K Corporation (“Complainant”) appeared through Alicia Latrell, its Office Manager; MIO Specialty Contractors LLC (“Respondent”) failed to appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website, on or about September 11, 2017, the Registrar issued License No. ROC 315229, for General Commercial B-2 Contracting, to Respondent. Respondent’s current address of record is 3217 E. Shea Blvd., Ste. 211, Phoenix, AZ 85028-3381. Respondent’s qualifying party/member Brian Jeffrey Houston. The Registrar has issued License Nos. ROC 186269, ROC 286351, and ROC 178935 to Complainant. Complainant sometimes provides services to other contractors pursuant to subcontracts with those contractors. On or about January 8, 2019, Complainant filed a complaint with the Registrar against Respondent’s license, alleging that Respondent owed Complainant a total of $29,204.00 for its work on three projects and that Respondent had not paid anything for Complainant’s work on any of the projects. Complainant attached invoices that showed it had billed Respondent $5,253.00 for the Club Pilates project in Mesa, Arizona, $14,800.00 for the Human Bean project in Phoenix, Arizona, and $9,151.00 for the Tint World of Chandler project in Chandler, Arizona. Complainant also attached to its complaint copies of the Short Form Contracts between Complainant and Respondent for the three projects. On February 12, 2019, the Registrar issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10) against Respondent’s license. The Registrar mailed a copy of the Citation to Respondent at its address of record. Respondent filed via email a timely written answer to the Citation, denying any violation. Respondent alleged that it lacked the capacity to pay, that it had not been paid anything for the Human Bean project, and that Complainant had agreed it would be paid only when Respondent received sufficient monies from the owner of the Human Bean. Respondent alleged that Complainant failed to perform in accordance with the project schedule on the Tint World of Chandler project. Respondent did not directly address its alleged failure to pay Complainant anything on the Club Pilates project. The Registrar referred the matter to the Office of Administrative Hearings (“OAH”), an independent agency, for an evidentiary hearing. On February 19, 2019, the Registrar issued a Notice of Hearing on Complainant’s complaint, setting a hearing on March 27, 2019, at 1:00 p.m. The Registrar sent a copy of the Notice of Hearing via USPS first class mail to Respondent at its address of record. On March 25, 2019, Mr. Houston on behalf of Respondent filed a motion to continue the hearing because his wife had passed away at 40 years old after a heart attack. Mr. Houston also requested that Case Nos. 2019-00137, 2019- 0088, 2019-00326, and 2019-00245 be consolidated because they were all “non- payment complaints against the same building owner who refused to pay [Respondent].” On March 26, 2019, the Administrative Law Judge assigned to conduct the hearing in this matter (“undersigned ALJ”) issued a minute entry, informing the parties that because Case Nos. 2019-0088 and 2019-00326 had not been referred to OAH, they could not be consolidated with this matter, but allowing Complainant time to respond to the motion to continue and the motion to consolidate Case No. 2019A-002245-ROC with this matter. On March 27, 2019, Complainant filed an email to OAH, stating that it did not oppose the motion to continue but opposed the motion to consolidate because it had no knowledge of Case No. 2019A-00245-ROC. On March 27, 2019, the ALJ issued an order, continuing the hearing in this matter to May 10, 2019, but deferring the ruling on Respondent’s motion to consolidate to the Administrative Law Judge assigned to hear Case No. 2019A-002245. Staff at OAH mailed the March 27, 2019 order to Respondent at its address of record. On April 9, 2019, the Administrative Law Judge assigned to conduct the hearing in Case No. 2019A-00245-ROC issued an order denying the motion to consolidate. A continued hearing was held in this matter before OAH on May 10, 2019. Respondent did not request to appear telephonically at the duly noticed continued hearing. Although the beginning of the hearing was delayed 21 minutes, Respondent did not appear through an authorized member, employee, or attorney and did not contact OAH to request another continuance or that the time for the hearing be further delayed. Consequently, Respondent presented no evidence to defend its license. Complainant called the undersigned ALJ’s attention to the exhibits attached to its complaint, presented the testimony of Alicia Latrell, its Office Manager, and submitted four exhibits. Complainant submitted evidence showing that the owner of the Human Bean had paid Respondent the full contract price of $453,095.64.[1] Ms. Latrell testified that the amounts shown on Complainant’s invoices did not include interest, penalties, attorney’s or collection fees, or any amounts other than what Respondent had failed to pay Complainant for its work pursuant to its subcontracts with Respondent on the three projects. Ms. Latrell also testified that Mr. Houston was currently doing business under License No. ROC 324025 issued to Houston Lyons Construction Company. However, the Registrar’s public website indicates that the only person listed on that license is Michael Leon Lyons. Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s license history on the Registrar’s public website on this date. Respondent’s contractor’s License No. ROC 315229 was suspended, had been disciplined once, and had five open complaints pending against it. Respondent’s failure to appear at the hearing and the large amount of the debt are also considered as factors in aggravation of the penalty. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[2] 2. The Registrar’s Notice of Hearing and OAH’s order continuing the hearing at Respondent’s request, which were both mailed to Respondent at its address of record, were reasonable. Respondent is deemed to have received notice of the continued hearing.[3] 3. Complainant bears the burden of proof to establish cause to suspend or revoke Respondent’s contractor’s license by a preponderance of the evidence.[4] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[5] 4. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[6] 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.”[7] 5. A.R.S. § 32-1154(A)(10) specifically includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure by 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 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.” 6. A contractor’s inability to pay and nonpayment by the general contractor or owner on a project are affirmative defenses that the Respondent contractor bears the burden to prove in a subcontractor’s administrative complaint for nonpayment under A.R.S. § 32-1154(A)(10). 7. Respondent did not present any evidence to establish its inability to pay or nonpayment by the general contractors or owners on any of the three projects. To the contrary, Complainant established that Respondent has been paid in full for the Human Bean project, despite Mr. Houston’s allegations in Respondent’s written answer to the Citation.. 8. A complainant subcontractor’s poor work justifying non- payment is also an affirmative defense that the Respondent contractor bears the burden to prove under A.R.S. § 32-1154(A)(10). Respondent did not present any evidence that Complainant does not deserve to be paid for its work on the Human Bean, Tint World of Chandler, or Club Pilates projects. 9. Complainant therefore has borne its burden to establish cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(10) because it failed to pay Complainant $29,204.00 for services rendered in connection with Respondent’s contracting operations. 10. If Respondent’s license is revoked as a result of its proven violation of A.R.S. § 32-1154(A)(10), in due course the revocation will lead to revocation of any other license on which Mr. Houston may be listed[8] and will prevent any new license from being issued to him or to any entity for which he is a member, director, officer, or qualifying party.[9] RECOMMENDED ORDER Based on the contracting law violation that was proven in this matter, IT IS ORDERED that Respondent MIO Specialty Contractors LLC’s License No. ROC 315229 shall be revoked thirty days after the effective date of the final order in this matter. If on or before thirty days after the effective date of the final order, the Registrar receives documentary proof from Respondent that it has paid $29,204.00 to Complainant The G R A Z A K Corporation by cashier’s or certified check or otherwise resolved Complainant’s complaint to its satisfaction, the Registrar shall not revoke Respondent’s license but, instead, should close the complaint in Case No. 2019-00137. If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be five days from the date of certification. Done this day, May 29, 2019.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See Complainant’s Exhibits A, B, C, and D. [2] See 32-1101 et seq. [3] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [4] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [5] See A.A.C. R2-19-119(B)(2). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] Black’s Law Dictionary at page 1220 (8th ed. 1999). [8] See A.R.S. § 32-1154(A)(21). [9] See A.R.S. § 32-1122(E).

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