FINACT2019A-00357-ROC.pdf

2019A-00357-ROC · Registrar of Contractors · 2019-05-31

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Westgate Enterprises LLC, Case No. 2019-00357 COMPLAINANT, Docket No. 2019A-00357-ROC v. Octane Design LLC, FINAL ADMINISTRATIVE DECISION DBA: Copper St Construction & Design, AND ORDER License No. ROC 287495, 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.

REGISTRAR’S ACCEPTANCE

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 accepts

it.

CONCLUSION

Because the Registrar has accepted the administrative law judge’s decision, that decision is the

final administrative decision in this case and becomes effective on July 8, 2019.

FINAL NOTES

On page 1, line 29 replace “2724 W. Carver Rd., Laveen, Arizona 85339” with “367 S. Arizona

Ave., Chandler, Arizona 85225”. On page 2, line 14 replace “Laveen” with “Chandler”. On page 2, line

19 replace “International” with “Independent”.

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Dated May 28, 2019.

Registrar of Contractors /s/ Joseph Citelli Joseph Citelli, Chief Counsel Chief of Legal Department and Recovery Fund Copy mailed via USPS First Class mail May 28, 2019 to: Respondent Octane Design LLC DBA: Copper St Construction & Design 11225 N 28th Dr Ste D209 Phoenix, AZ 85029 Complainant Westgate Enterprises LLC PO Box 2378 Glendale, AZ 85311 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 Diane Mihalsky, Administrative Law Judge Case No. 2019-00357/tw

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 5.8.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Westgate Enterprises LLC, No. 2019A-00357-ROC

COMPLAINANT, ADMINISTRATIVE LAW JUDGE DECISION v.

Octane Design LLC, DBA: Copper St Construction & Design, License No. ROC 287495, RESPONDENT

HEARING: April 24, 2019, at 9:00 a.m. APPEARANCES: Westgate Enterprises LLC (“Complainant”) appeared through Jeannette Stevens, its member; Octane Design, LLC DBA: Copper St Construction & Design (“Respondent”) appeared through Nick Jevnikar, its member/qualifying party. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________ FINDINGS OF FACT

BACKGROUND AND PROCEDURE

1. On or about March 17, 2008, the Arizona Registrar of Contractors (“the

Registrar”) issued License No. ROC 243055 for Specialty Dual CR-11 Electrical

contracting to Complainant.

2. On or about November 25, 2013, the Registrar issued License No. ROC

287495 for General Dual KB-2 Dual Residential and Small Commercial contracting to

Respondent.

3. On January 22, 2019, January 25, 2019, and January 30, 2019, Complainant

filed complaints against Respondent with the Registrar that alleged that Respondent owed Complainant $4,604.00 pursuant to a subcontract to perform electrical work at a commercial project at 2724 W. Carver Rd., Laveen, Arizona 85339.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 5.8.2019 ROC LEGAL

4. On February 1, 2019, the Registrar issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10) against Respondent’s license. 5. Respondent filed a timely written answer to the Citation, stating that

Complainant’s complaints constituted “extortion” after Complainant refused to perform

warranty work, causing Respondent to withhold the final payment.

6. The Registrar referred the matter to the Office of Administrative Hearings, an

independent state agency, for an evidentiary hearing.

7. A hearing was held on April 24, 2019. Complainant submitted six exhibits

and presented the testimony of Jeanette Stevens, its member and office manager, and

James Stevens, Sr., its qualifying party/member. Respondent submitted four exhibits

and presented the testimony of Nick Jevnikar, its qualifying party/member.

HEARING EVIDENCE

8. On or about July 17, 2018, Respondent entered into a subcontract with

Complainant for electrical work on the project on Laveen. The initial contract amount was $29,150.00. Mutually approved change orders in the amounts of $549.00, $645.00, $100.00, and $345.00 were subsequently issued, raising the contract price to $30,839.04. 9. Complainant requested a joint check agreement with its electrical supplier, International Electrical Supply (“IES”) so that it could order supplies for the project. Mr. Jevnikar testified that, although Respondent did not agree to pay for Complainant’s materials in advance, Complainant’s cash flow caused it to order materials late and to perform work late. As a result, Respondent was forced to have its drywall subcontractor perform work before Complainant completed its work, which caused Respondent to impose a back charge of $713.00 against Complainant for drywall repairs after Complainant installed lights. 10. In the third week of October, Respondent paid Complainant $14,575.00. Ms. Stevens testified that the payment was 60 days past due. Complainant did not have IES negotiate the check.

RECEIVED 5.8.2019 ROC LEGAL

11. On or about December 9, 2018, Complainant submitted a change order in the amount of $775.00 for additional signs and relocated outlets, which Ms. Stevens testified was caused by the property owner’s change to the hallway.

12. Respondent did not approve the change order. Mr. Jevnikar testified that

the changes were caused by Complainant’s untimely performance of its subcontract.

13. On or about December 10, 2018, Respondent sent an email to

Complainant, informing it that the project had failed the final electrical inspection a

second time.1

14. On or about December 10, 2018, Respondent sent its subcontractors a final

punch list for their scope of work. Complainant’s list had eleven items. Ms. Stevens

testified that two of the items would require a change order, three of the items had been

taken care of, and the remaining six items were cosmetic items that would cost about

$300.00 to repair. Ms. Stevens testified that, on principle, Complainant did not repair

the punch list item because Respondent had been late in making payments and still

owed Complainant money.

15. On or about January 10, 2019. Respondent sent Complainant a check for

$11,660.00, which it eventually cashed. Respondent sent Complainant several emails asking when the punch list items would be completed, but Complainant did not respond to the emails. 16. On or about January 14, 2019, Respondent sent Complainant a third and final deficiency notice, informing Complainant that Respondent would hire a new electrical subcontractor to complete Complainant’s work if it did not return to the jobsite. 17. On or about January 24, 2019, Respondent hired Madyson Electric to repair the punch list item. When Madyson Electric performed the repairs, it noticed that the time clock was not working correctly. Respondent submitted into evidence a video of the time clock that Madyson Electric had taken. 18. Mr. Stevens acknowledged that the video showed that the time clock was not working correctly, but testified that the time clock was working correctly when Complainant left the jobsite and that the time clock had passed inspections. Mr. RECEIVED 5.8.2019 ROC LEGAL

Stevens testified that Respondent’s new electrician must have sabotaged the time clock. 19. Mr. Jevnikar testified Madyson Electric would not jeopardize its license by

committing fraud. Respondent paid Madyson Electric $1,476.06 to repair the punch list

items and the time clock. Respondent made a deductive change order in this amount

against the money it still owed Complainant.

20. Mr. Jevnikar testified that Respondent still owed Complainant $1,889.94

and that he had issued a check to Complainant in this amount, but that Complainant

had not yet cashed the check.

21. Complainant disputed the $713.00 and $1,476.06 back charges.

CONCLUSIONS OF LAW

1. This matter lies with the Registrar’s jurisdiction.2

2. Complainant bears the burden of proof to establish cause to suspend or

revoke Respondent’s contractor’s license by a preponderance of the evidence.3 “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”4 Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.5 3. A subcontractor that refuses to perform a punch list until it is paid in full does so at its peril. Complainant could have performed the repairs required by the punch list and could have inspected the time clock at that time. 4. Fraud in legal proceedings is a serious allegation. Although the usual standard of proof in administrative proceedings is a preponderance of the evidence, as noted above, because of the potential damage to a person’s reputation, fraud must be established by clear and convincing evidence.6 Complainant did not establish that

1 See Exhibit B-2. See A.R.S. § 32-1104(A)(4). See A.A.C. R2-19-119(A) and (B)(1); see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App. 1996). MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). See A.A.C. R2-19-119(B)(2). See, e.g., American Pepper Supply Company v. Federal Insurance Company, 205 Ariz. 465, 468 ¶ 12, 72 P.3d 1284, 1287 (App. 2003) (citations omitted). RECEIVED 5.8.2019 ROC LEGAL

Respondent or the electrical subcontractor that it was forced to hire after Complainant refused to perform punch list repairs sabotaged the time clock. 5. A.R.S. § 32-1154(A)(10) includes among the grounds to suspend or revoke 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 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.” Respondent did not allege that

the owner of the project failed to pay Respondent.

6. Complainant did not establish that either of the back charges were not

legitimate. Respondent has tendered $1,889.94 to Complainant, but Complainant has

refused to cash the check. Therefore, Complainant did not establish cause to suspend

or revoke Respondent’s license under A.R.S. § 32-1154(A)(10).

RECOMMENDED ORDER

In view of the foregoing, it is ordered that, on the effective date of the order in this matter, the Registrar dismiss Complainant Westgate Enterprises LLC’s complaint in Case No. 2019-00357 against Respondent Octane Design LLC DBA: Copper St Construction & Design’s License No. ROC 287495. 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 five days from the date of that certification. Done this day, May 7, 2019. /s/ Diane Mihalsky Administrative Law Judge Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors