ALJDEC decisions subject to certification as final

2019A-05464-NPC-ROC · Registrar of Contractors · 2020-01-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Tino's Heating and Cooling LLC,

COMPLAINANT,

v.

Elidas Residential Contracting LLC,

License No. ROC 323400,

RESPONDENT.

No. 2019A-05464-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 28, 2020, at 1:00 p.m.

APPEARANCES: Tino’s Heating and Cooling LLC (“Complainant”) appeared through Oswaldo Ramirez, its qualifying party/member; Elidas Residential Contracting LLC (“Respondent”) appeared through Enrique Venegas, its qualifying part/member; Interpreter Gabriela A. Olguin of Language Connections was present to provide Spanish-English translation.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website, on July 17, 2018, the Registrar issued License No. ROC 320845 for General Residential B General Residential Contracting to Respondent. On January 29, 2019, The Registrar issued License No. ROC 323400 for General Dual KB-2 Dual Residential and Small Commercial contracting. Respondent cancelled License No. ROC 320845 on February 4, 2019. Enrique Venegas is Respondent’s qualifying party/member.

On April 18, 2019, the Registrar issued License No. ROC 324237 for Specialty Dual CR-39 Air Conditioning and Refrigeration contracting to Complainant. Oswaldo R. Ramirez is Complainant’s qualifying party/member.

On or about October 31, 2019, Complainant filed a non-payment complaint with the Registrar against Respondent for failing to pay Complainant $2,920.00 on an October 9, 2019 contract to install a new air plenum, grease ducts, and repair an existing plenum on existing air conditioning units at a restaurant in Chandler (“the project”).

On or about November 15, 2019, the Registrar issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10) against Respondent’s contractor’s License No. ROC 323400.

On or about November 25, 2019, Respondent filed a written answer to the Citation that the Registrar had issued on Complainant’s complaint for non-payment, alleging that on October 30, 2019, Complainant had abandoned the project by showing up to the jobsite without the necessary materials to complete the job and that Respondent had called the police when Complainant refused to leave.

On or about November 25, 2019, Respondent also filed a workmanship complaint with the Registrar against Complainant, making the same allegations as in the written answer. Because Respondent had allegedly paid others to complete and/or repair Complainant’s allegedly poor or incomplete work, the Registrar did not issue a Citation against Complainant as a result of Respondent’s workmanship complaint.

The Registrar referred the complaint to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held on January 28, 2020. Complainant submitted eight exhibits and presented the testimony of three witnesses: (1) Mr. Ramirez, Complainant’s qualifying party/member; (2) Fernando Gastellum, Complainant’s employee who had damaged the ceiling grid at the project; and (3) Carlos Gil, whom Complainant had hired to repair the ceiling grid. Respondent submitted ten exhibits and presented the testimony of Mr. Venegas, Respondent’s qualifying party/member.

Hearing Evidence

On or about October 1, 2019, Complainant signed a contract written by Respondent for the following scope of work:

All the necessary materials and labor for 2 new AC units for new restaurant space al duct work, 2 [prefabricated] boxes with R8 insulation, 16” spiral tube for AC returns and air vents with dampers integrated, service the 2 old units to have running properly except if motor needs to be replaced, or Freon is needed, or fan blower.

The mechanical systems at the project included two existing AC units and 2 units that the tenant or owner of the project had installed. The contract price was $4,963.00, payable $1,500.00 to start and $3,463.00 after the work was done.

Respondent paid Complainant $1,500.00. Complainant performed the work described on the contract. Complainant did not install thermostats for the new air conditioning units that the owner or tenant of the project had installed.

While Complainant was installing the duct work, its workers damaged the ceiling grid. Mr. Gastellum testified that there was not much damage and that Mr. Venegas told Complainant’s workers not to worry about it.

On or about October 4, 2019, Complainant submitted Invoice #001031 for the following work:

Installed new duct for 2 existing commercial units

metal material

2 Prefabricated boxes with R8 insulation

2 – 16 inch spiral duct

. . . .

Service 2 existing old unit on roof

1 – Check both system and found them on working condition

Respondent paid Complainant the remaining $3,463.00 due under the October 1, 2019 contract and Complainant’s October 4, 2019 invoice.

Mr. Venegas explained that he was pleased with Complainant’s work, he wanted Complainant to perform more work on the project, and he was confident that Complainant would provide and install the two thermostats and repair the ceiling grid.

Mr. Ramirez testified that Complainant did not install thermostats for the new units that the tenant or owner had installed because the October 1, 2019 contract did not require Complainant to install thermostats.

Mr. Venegas testified that the practice in the industry is that, if a HVAC contractor contracts to provide components for an air conditioning unit, the contractor contracts to install everything that is necessary for the unit to be fully operational. Mr. Venegas compared the HVAC contractor’s role to a mechanic who commits to repair a vehicle to get it to run, in that the mechanic must inspect and, if necessary, repair all the vehicle’s components and mechanical systems to ensure that they are sound.

Between October 4, 2019, and October 9, 2019, the parties reached an agreement in a series of texts that Complainant would install a new make-up air plenum with 16” supply, split on 4 boxes 24” x 12” x 8”, install 2 new grease ducts, and repair an existing plenum for a contract price of $4,420.00, with a $1,500.00 payment to start.

Respondent paid Complainant $1,500.00 and Complainant performed work pursuant to the second contract.

On October 25, 2019, a Friday, Respondent issued check no. 315 in the amount of $2,920.00 for the remaining amount due for the second contract. Mr. Venegas explained that Mr. Ramirez told him he needed the money and that he would complete all work.

On the following Monday, October 28, 2019, Respondent stopped payment on check no. 315. Mr. Venegas explained in an email to Mr. Ramirez that he stopped payment on the check because Complainant had not installed two thermostats for the two new air conditioning units, had not installed a smoke detector on the unit inside the kitchen, and had not repaired the ceiling grid. Mr. Venegas did not mention that the grease ducts or plenum were too short. Mr. Ramirez agreed that Complainant would repair the ceiling grid.

On October 30, 2019, Mr. Ramirez went to the restaurant with Complainant’s laborer, Carlos Gil, to repair the ceiling grid. Mr. Gil testified that he had the materials with him to repair the grid. Mr. Ramirez testified that Mr. Venegas called the police and that police said Mr. Ramirez and Mr. Gil should leave the project.

Mr. Venegas testified that he called police because Mr. Ramirez and Mr. Gil threatened him. Mr. Ramirez and Mr. Gil denied threatening Mr. Venegas. Mr. Ramirez and Mr. Gil were not arrested or charged with any crime as a result of the incident. No formal police report that assigned blame was submitted.

Complainant submitted Mr. Gil’s invoice in the amount of $265.59 to repair the ceiling grid, including the cost of “15 pcs. Of Cross T Bar 48 in.” Respondent did not submit any evidence of its cost to repair the ceiling grid.

Mr. Venegas testified that the grease ducts that Complainant installed were 4-1/2” too short and that the plenum that it installed was 17-1/2” too short.

Mr. Ramirez testified that he performed the second contract to specifications. Complainant submitted photographs of its work.

Respondent did not submit evidence of paying anyone to repair the grease ducts or plenum and, although it submitted photographs of Complaint’s allegedly poor work, it did not submit any specifications or photographs that showed that the plenum or the grease ducts were too short.

Mr. Venegas questioned whether Complainant ever inspected or serviced the two existing units. Respondent submitted an invoice dated January 6, 2020, from Kade Mechanical, LLC for $349.00 for the following scope of work:

Operation 0 Found thermostat’s programmed incorrectly – re programmed and re located FOH into the front. Turned programming mode off on both Breaburns. Found BOH return is located in FOH as are 2 BOH supplies – Charles would like returns and supplies pulled to the BOH. Opened supply registers to get rid of excessive noise. Units are operating normally at this time.

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 license is current and in good standing. No discipline has ever before been taken against the license. Complainant’s is apparently the only complaint presently pending against the license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish Respondent’s statutory violation by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”

A.R.S. § 32-1154(A)(10) includes among the grounds for suspension or revocation 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.”

Respondent acknowledged that it failed to pay Complainant $2,920.00 on the second contract for the project. Respondent argued that its failure was justified by Complainant’s failures to install thermostats for the two new air conditioning units, to install new grease ducts and a new plenum in the right lengths, to ensure that the old air conditioning units were functioning properly, and to repair the ceiling grid. These are affirmative defenses what would otherwise be a violation of A.R.S. § 32-1154(A)(10) that Respondent bears the burden to establish.

Respondent did not establish that Complainant installed grease ducts that were 4-1/2” too short or a plenum that was 17-1/2” too short. No specifications were submitted and Respondent did not submit any evidence that Complainant did not build the grease ducts and plenum according to specifications. Respondent did not submit any evidence that it paid another contractor to correct the grease ducts and plenum. Respondent therefore did not establish that Complainant’s construction of the grease ducts and plenum was deficient, justifying nonpayment.

The October 1, 2019 contract did not require Complainant to install thermostats and Respondent did not submit any evidence that Complainant ever agreed to install thermostats. Complainant did not install the two new air conditioning units and, under Respondent’s argument, the owner or tenant who installed the units shared responsibility with Complainant for installing the thermostats. Respondent also did not submit evidence of payments to another contractor to install the thermostats. Respondent therefore did not establish that Complainant’s failure to install the thermostats justifies nonpayment.

Kade Mechanical, LLC’s January 6, 2020 invoice was for adjusting the thermostats and opening the supply registers to get rid of excessive noise on the existing units. Kade Mechanical, LLC’s invoice did not state that it had found anything wrong with the operation of the existing units, as opposed to the thermostat adjustment. In the October 1, 2019 contract, Complainant only contracted to service the two existing units to ensure that they were running properly, not to check the thermostats or to make the units run more quietly. Therefore, Respondent did not establish that Complainant failed to perform its October 1, 2019 contract to service the two existing units, justifying nonpayment.

Mr. Ramirez acknowledged that Complainant’s crew damaged the ceiling grid at the project and that it did not repair the grid because Mr. Venegas called the police on October 30, 2019, when Mr. Ramirez and Mr. Gil showed up at the project to repair the ceiling grid. Although Respondent should have allowed Complainant to repair the grid, the $265.59 invoice that Mr. Gil provided to repair the ceiling grid must be deducted from the amount that Respondent owes on the project, since Complainant did not perform this work.

Based on the foregoing, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $2,654.41.

RECOMMENDED ORDER

Based on the foregoing, it is ordered that thirty days after the effective date of the final order in this matter, Respondent Elidas Residential Contracting LLC’s License No. ROC 323400 shall be suspended until Respondent pays $2,654.41 to Complainant Tino’s Heating and Cooling LLC.

It is further ordered that if on or before thirty days after the effective date of the final order, the Registrar receives written proof from Respondent that is satisfactory to the Registrar that Respondent has paid Complainant $2,654.41 by certified or cashier’s check, the Registrar not suspend Respondent’s license but, instead, close Case No. 2019-05464.

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, January 31, 2020.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors