ALJDEC decisions subject to certification as final

2019A-01066-NPC-ROC · Registrar of Contractors · 2019-09-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 1, 2019 APPEARANCES: Elias Velasquez for Complainant Steiger Services LLC. Rudy Martinez for Shade N Net of Arizona, Inc. ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn _____________________________________________________________________ FINDINGS OF FACT 1. On March 5, 2019, Complainant Steiger Services LLC (“Steiger”) filed a Complaint against Respondent for Shade N Net of Arizona, Inc (“Shade”) with the Arizona Registrar of Contractors (“Registrar”) alleging that Shade had failed to pay Complainant on seven (7) invoices: #21518; #11319; #13419; #13519; #13619; #11619; and, #11819, totaling $110,312.00.[1] 2. The parties were unable to resolve the matter, and Complainant requested an administrative hearing. The Registrar then issued a formal Citation charging Shade with a possible violation of A.R.S. § 32-1154(A)(10). Shade filed a response to the Citation. 3. The matter was referred to the Office of Administrative Hearings for an evidentiary hearing, which was continued once on request of Shade. 4. The parties contracted with each other in connection with various improvements for the City of Gilbert (“Gilbert”)[2] and City of Mesa (“Mesa”). The general contractor on the jobs was Haydon.[3] 5. The parties initially had verbal agreements that were dependent on Shade winning the bid for the projects; the verbal agreements were that Steiger would be paid on the various projects when Shade received payment. Much later, generally when work was to begin or had begun, Steiger sent scope of work/contracts to Shade on the projects. 6. The document for Quote #Q83018 represented that a “deposit” had been invoiced and due.[4] Shade noted on the document, at the time it signed the contract on December 12, 2018, that it was “Never told about deposit till after the fact” and Shade crossed that “deposit” line off. 7. The various projects had some delays. While Complainant had made purchases of some materials for some improvements, there were time periods that had passed when work was not able to be performed due to the various delays. None of delays were demonstrated to be attributable to Shade. 8. There is no dispute that Steiger performed construction work under the verbal agreements and scope of work agreements. However, Steiger often pressed Shade, demanding payment, apparently for “deposit” amounts, and also contacted Mesa trying to obtain payments. 9. Both parties were dissatisfied with the other in relation to payment. Shade was unhappy with Steiger’s demands for payment, which Shade attributed to Steiger’s financial situation after having purchased materials prior to being able to begin the work. Steiger was unhappy with not being paid, apparently already having made purchases of materials, and with not being paid immediately when it invoiced Shade. Steiger’s position was that “Net Due” meant payment was due immediately.[5] Shade indicated that it did not know what “Net Due” meant. 10. At hearing, Steiger provided a list, dated February 1, 2019, of invoices, only three of which he indicated were the subject of his appeal at this time: #11619, #11719, and #11819. See Complainant’s Exhibit 1.[6] Invoice #11719 was not listed in the filed Complaint. 11. Shade had been aware of Invoice #11719. 12. Invoice #11619, for $3,185.00, was dated January 19, 2019 and indicated “Net Due” under the payment terms.[7] The noted location of this work was “Cubs/Sloan Park” which is in Mesa, Arizona. The underlying scope of work document was dated December 27, 2018; the execution date was January 3, 2019.[8] The agreement indicated that the payment “Terms” were “Net Due.” 13. Invoice #11819, for $3,564.00, was dated January 21, 2019 and indicated “Net Due” under payment terms.[9] The noted location of this work was “Gene Autry Park” which is in Mesa, Arizona. The underlying scope of work document was dated December 27, 2018; the execution date was January 3, 2019.[10] The agreement indicated that the payment “Terms” were “Net Due.” 14. Invoice #11719 is not contained in the hearing record. The February 1, 2019 list indicated an invoice date of January 18, 2019 and an amount due of $4,284.00, with the noted location as “Hohokam Major Practice Field,” which is in Mesa, Arizona. The hearing record does not contain a scope of work document for this job; therefore no specific terms are known. 15. According to its Steiger account record, Shade paid Steiger $72,164.00 with Check No. 27719 on Gilbert projects on January 15, 2019 based on Shade having received payment of $75,822.72 on January 14, 2019.[11]

16. According to its Steiger account record, Shade made a payment with Check No. 27835 to Steiger on February 28, 2019, which included the payment for Invoice #11719.[12] 17. As of January 2019, Shade had not yet sent a request for its progress payment to Mesa on these improvements due to an issue with the Mesa purchase order (“PO”) number. Shade inquired about the Mesa POs on March 14, 2019. See Respondent’s Exhibit A. The person responsible for clearing up the PO issue had been ill and out of his office. Id. Shade received the PO on March 19, 2019. 18. In its efforts to satisfy Steiger’s demands and to end its relationship with Steiger, Shade made its final payment of $19,343.00 to Steiger on March 25, 2019, on Check No. 27912, which included $6,749.00 in payment for Invoice #11619 and Invoice #11819.[13] 19. However, Shade did not receive its $35,911.80 payment from the general contractor, Haydon, until March 27, 2019.[14] 20. At hearing, Steiger acknowledged that the invoices were paid. However, Steiger argued that these particular invoices, dated in January of 2019, had been “Net Due” but were not paid until March of 2019.[15] Steiger’s position was that it had expected “timely” payment, i.e., “net,” and that Shade should not be able to do this to anyone else. 21. Shade made no argument, and presented no evidence, on its capacity to pay but indicated, as to these two complained-of invoices, that it had not received its payment. 22. Steiger made no argument that, at the time of the Invoices #11619 and 11819, Shade had the capacity to pay. 23. Given that Steiger had already been paid in full on all the Complaint- listed invoices prior to the first hearing setting but had not withdrawn his complaint alleging non-payment, the Tribunal presumes that Steiger’s remaining issue is, as he stated at hearing, that “ Net Due “ requires immediate payment. 24. The hearing record contains no evidence on Shade’s capacity to pay other than the Steiger account record which indicates that Shade had not yet been paid on the projects. 25. Neither party referenced any authority as to the meaning of “Net Due.”

CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over this matter pursuant to A.R.S. § 32-1101, et seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. Therefore, to warrant such sanctions by the Registrar, a complainant must demonstrate by a preponderance of the evidence that a respondent violated any one of the statutory sections cited by the Registrar. Therefore, Steiger has the burden to demonstrate a violation by Shade of the contracting laws. 3. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 4. A.R.S. § 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 . . . 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.

Emphasis added here.[16]

5. The hearing record shows that Steiger was paid on February 28, 2019 for Invoice #11719 after Shade receive payment and was paid on March 25, 2019 on Invoice #11619 and Invoice #11819. 6. Steiger’s dispute is as to timing of payments. However, the evidence does not demonstrate that the parties had agreed, prior to the work being reduced to a document/contract, regarding payment. Shade’s position was that Steiger would be paid when Shade received payment. Steiger’s position was that payment was due immediately upon invoice. While there were two scope of work documents executed by the parties, on these projects in Mesa, which each indicated a payment term of “Net Due,” the parties did not come to an agreement on what that meant as to payment. The totality of the evidence does not demonstrate the parties had agreement on when payment would be due. 7. Generally, the term “net due” is an indication that the full amount of an invoice is due with no discount and, generally, within 30 days. 8. The hearing record did not demonstrate that Shade had the capacity to pay Steiger for the work performed on the two at-issue invoices. The hearing record does not demonstrate whether Shade lacked the capacity to pay Steiger for the work performed on the two at-issue invoices. Therefore, Steiger did not establish that Shade violated A.R.S. § 32- 1154(A)(10) regarding the two at-issue invoices and grounds do not exist to impose discipline against Shade’s license. RECOMMENDed order Based on the foregoing, it is recommended that the Registrar dismiss Steiger’s Complaint and close Case No. 2019-001066. In the event of certification of this 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 the certification. Done this day, September 3, 2019.

/s/ Kay A. Abramsohn Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Steiger attached a summary list, dated March 5, 2019, to the Complaint.

[2] Shade’s response to the Complaint indicated work for Gilbert; at hearing, the projects discussed were for Mesa. [3] See Shade’s response to the Citation. At hearing, Shade continually referred to Mesa, not Haydon. At hearing, the parties glossed over the details herein, which primarily were drawn from the records provided by the Registrar; neither party filed any pre-hearing disclosure with the Tribunal. [4] This document is a quote for work to be performed in the City of Gilbert; however it is noted here in relation to Shade’s concern about Steiger demanding “deposits” be paid to him ahead of Shade receiving progress payments. [5] Steiger made no other argument and provided no citation of law or rule on which it relied for this position. [6] Two invoices on the updated list were not listed in the filed Complaint: #21518 and #23318. [7] A copy of this invoice was attached to the Complaint; the February 1, 2019 list erroneously indicates an invoice date of January 18, 2019. [8] This document is attached to the Complaint. [9] A copy of this invoice was attached to the Complaint; the February 1, 2019 list erroneously indicates an invoice date of January 20, 2019. [10] This document is attached to the Complaint. [11] The amount paid to Steiger was less than the $79,960.00 invoice, apparently due to sales taxes being deducted from the invoice. At hearing, there was some discussion regarding Shade having explained to Steiger that the differences in some payments were the taxes. [12] See Shade’s Answer to Citation [chart of Steiger account]. However, the hearing record does not contain a copy of the stated check number in payment. Because Steiger had already been paid, this is likely the reason why Invoice #11719 was not listed in the March 5, 2019 Complaint. [13] Id. [chart of Steiger account]. [14] Id. [Oracle payment receipt]. [15] Of the eight invoices on the February 1, 2019 list, four were listed for payment in 30 days and four were listed for payment “Net Due.” [16] A.R.S. § 32-1154(A)(10) has recently been amended; the quoted language herein is the statute in effect at the time of the alleged violation.

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