ALJDEC decisions subject to certification as final

2019A-03044-NPC-ROC · Registrar of Contractors · 2019-08-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 19, 2019 at 9:00 AM. APPEARANCES: George Sideris appeared on behalf of OnCall Staffing (“Complainant”). Frank Luster appeared on behalf of F D L Electric LLC (“Respondent”). 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 Registrar. FINDINGS OF FACT Background and Procedure 1. Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s license file as shown on the Registrar’s public website August 19, 2019. On January 13, 2011, the Registrar issued License No. 270114 Specialty Dual CR-11 Electrical contracting license to Respondent.[1] Respondent’s address of record for the licenses is 4227 Villa Rita Dr., Glendale, Arizona 85308-2514.[2] Frank D. Luster is listed on the licenses as Qualifying Party and Member. 2. Respondent’s license is currently suspended.[3] The license has been disciplined by the Registrar on one prior occasion, and one settlement is noted on the record as well.[4] The record also reflects that there are two open complaints against Respondent’s license, one of which is presumed to be related to this matter.[5] Respondent’s surety bond issued through RLI Insurance Company was cancelled on July 25, 2019.[6] $6,750.00 remains available.[7] 3. On October 23, 2013, Complainant and Respondent entered into a contract agreement, as subcontractor and contractor respectively, whereby Complainant agreed to supply Respondent with electrical apprentices on a net fourteen pay schedule. 4. On December 21, 2018, Complainant issued Invoice 01-44975 to Respondent for $1,605.00. Invoice 01-44975 was for sixty hours of work performed by seven temporary employees on December 17, 2018, through December 19, 2018, as provided by Complainant. 5. On December 21, 2018, Complainant issued Invoice 01-44976 to Respondent for $1,391.00. Invoice 01-44976 was for fifty-two hours of work performed by five temporary employees on December 19, 2018, through December 21, 2018, as provided by Complainant. 6. On June 12, 2019, the Registrar received a complaint from Complainant alleging non-payment of services and/or materials.[8] Complainant included a copies of invoices issued to Respondent, underlying Work Orders, and a balance sheet.[9] 7. On June 18, 2019, the Registrar issued a non-payment complaint notification letter to the parties, advising that Respondent could supply any affirmative defenses or raise other issues to the Registrar by June 24, 2019.[10] On June 24, 2019, Respondent submitted the following response to the Registrar: “FDL Electric, LLC and Frank Luster is in the process of filing bankruptcy chapter 7. FDL is not in business any longer.”[11] [sic] 8. On June 26, 2019, the Registrar issued a Citation and Complaint to Respondent for an alleged violation of Ariz. Rev. Stat. § 32- 1154(A)(10).[12] Respondent was given until July 11, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32- 1155(A) and 32-1155(B).[13] 9. On July 17, 2019, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on April 16, 2019. Per the Notice of Hearing the issue to be determined is whether the ROC has cause to discipline Respondent’s license based on the following charges: Charge 1: A violation of A.R.S. § 32-1154(A)(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.”).

Hearing Evidence 10. Complainant called George Sideris to testify as a witness and submitted one exhibit. Respondent called Frank Luster to testify as a witness. The Registrar’s electronic hearing file and Notice of Hearing were also admitted into the record as their own exhibits. 11. Complainant and Respondent’s professional relationship spanned the last several years, and in that time Respondent usually paid Complainant’s invoices within fourteen days of receipt. Last year Respondent fell behind on payments to Complainant, which were eventually paid. 12. After several months of nonpayment on the invoices at issue in this matter, Complainant was able to reach Respondent at which time Complainant was informed that Respondent was filing for bankruptcy. Respondent did, however, promise to remit payment for the outstanding balances owed on invoices 01-44975 and 01-44976. Respondent never remitted any payment to Complainant. 13. In total, Respondent owes Complainant $2,996.00 for two invoices issued on December 21, 2018. 14. Complainant completed all project assignments related to the underlying invoices for Respondent, and Respondent did not file any complaints regarding Complainant’s work on any of the related jobs. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq. 2. The Registrar may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation was not remedied by corrective action.[14] 3. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.[15] 4. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[16] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[17] 5. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[18] 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.”[19] 6. Ariz. Rev. Stat. § 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 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.” 7. Here, the material facts are not in dispute. The credible evidence of record reflects that Respondent owes Complainant an outstanding balance of $2,996.00 on a valid subcontracting agreement executed between the parties on October 23, 2013. . Although afforded ample time and opportunity by Complainant, Respondent failed to make a good- faith payment or set up a payment plan to pay off its debt to Complainant. 8. Therefore, the only outstanding issue to be resolved is whether Respondent raised a sufficient justification or excuse for failing to timely and completely finish Complainant’s project per contract. This is an affirmative defense that Respondent bears the burden to establish. Because Respondent conceded to all of the aforementioned evidence presented by Complainant, this burden has not been sustained. The record shows that Respondent failed to promptly and completely pay Complainant for labor and/or materials, and had no affirmative defense(s) for doing so. 9. Because Complainant established by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10), Complainant has also established cause for the Registrar to suspend or revoke Respondent’s contractor’s license. RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that that on the effective date of the Final Order in this matter, Respondent F D L Electric, LLC ROC License No. 270114 shall be revoked. IT IS FURTHER RECOMMENDED, pursuant to Ariz. Rev. Stat. § 32-1156.01, that Respondent pay $2,996.00 in certified funds to Complainant upon issuance of the Final Order 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 will be 40 days from the date of that certification. Done this day, August 20, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACHGWEA5. [2] Id. [3] Id. As of August 15, 2019. [4] Id. [5] Id. [6] Id. [7] Id. [8] See Hearing File, page 31. [9] See Hearing File, pages 32-50. [10] See Hearing File, page 5. [11] See Hearing File, page 4. [12] See Hearing File, pages 26-30. [13] Id. [14] See Ariz. Rev. Stat. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990). [15] See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). [16] Ariz. Rev. Stat. § 41-1092.07(G)(2); Ariz. Admin. Code R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [17] See Ariz. Admin. Code R2-19-119(B)(2). [18] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [19] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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