ALJDEC decisions subject to certification as final

2019A-05820-NPC-ROC · Registrar of Contractors · 2020-02-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Valley of the Sun Environmental Consultant LLC,

COMPLAINANT,

v.

Arizona Fire and Water Restoration Inc.,

ROC License: ROC 065873, 072526,

RESPONDENT.

No. 2019A-05820-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 05, 2020 at 1:00 PM.

APPEARANCES: Ronald Barnett appeared on behalf of (“Valley of the Sun Environmental Consultant LLC”). Dean Hamilton appeared on behalf of Arizona Fire and Water Restoration Inc. (“Respondent”) with Jerry Kerby and Lyle Book as witnesses. Bradley Hindman observed.

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

On August 27, 1986, the Registrar issued ROC License No. 065873 for B General Residential contracting to Respondent. Lyle Robert Book and Barbara Jo Book are listed on the license as the Qualifying Party and Officer, respectively. The address of record for the license is 4645 S. 36th St., Phoenix, Arizona 85040-2955.

On December 17, 1987, the Registrar issued ROC License No. 072526 for B-1 General Commercial contracting to Respondent. Lyle Robert Book and Barbara Jo Book are both listed on the license as an Officer. The address of record for the license is 4645 S. 36th St., Phoenix, Arizona 85040-2955.

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s license files as shown on the Registrar’s public website February 05, 2020.

Regarding ROC License No. 065873, such prior license record reflects that Respondent’s license is active and currently renewed through July 31, 2021. The license has not been previously disciplined, however, the record reflects that one prior case has been resolved or otherwise settled with the license. The record also reflects that there is one open complaint against the license, which is presumed to be related to this matter. Respondent has an active $9,000.00 surety bond for the license issued through Western Surety Company, effective August 18, 2004.

Regarding ROC License No. 072526, such prior license record reflects that Respondent’s license is active and currently renewed through June 30, 2021. The license has not been previously disciplined and there are no open complaints listed. Respondent has an active $5,000.00 surety bond for the license issued through Western Surety Company, effective August 18, 2004.

On November 22, 2019, the Registrar received a complaint from Complainant alleging nonpayment of services against Respondent. The Registrar designated it Complaint No. 2019-05820 and assigned the case to Tedi While in their legal department for investigation.

On November 25, 2019, the Registrar issued a Notice of No Pay Complaint letter to Respondent providing notice of Complainant’s complaint, and informed Respondent that it was free to raise any affirmative defense(s) or provide additional information by December 03, 2019.

On December 03, 2019, the Registrar received a letter from Respondent which alleged that Complainant had overcharged Respondent for services rendered. Specifically, Respondent alleged that Complainant had taken “more than double the amount of samples required” and “also wrote double the amount of NESHAP reports required.” Ultimately, Respondent argued that Complainant’s professional methods resulted in a larger than necessary bill to Respondent. Respondent supported its contention by supplying the Registrar with comparative competitor bids.

On December 04, 2019, the Registrar issued a Citation to Respondent for an alleged violation of Ariz. Rev. Stat § 32-1154(A)(10). Respondent was notified that a failure to provide an Answer by December 19, 2019, would be deemed as an admission of Respondent’s commission of the act(s) charged in the underlying complaint, pursuant to Ariz. Rev. Stat § 32-1155(B), and could result in discipline against Respondent’s license including suspension or revocation.

On December 18, 2019, the Registrar received Respondent’s Answer. In its Answer Respondent alleged that its relationship with Complainant was impacted when less expensive competition was introduced to the market. As a result, Respondent’s use of Complainant’s services decreased dramatically due to cost. Respondent further alleged that it came to an agreement with Complainant that it would give Complainant half of its business if Complainant would meet competitor pricing. Respondent reiterated its allegation that Complainant “ran the price up” on the underlying project “using our price list” and blamed Respondent for the resulting cost of the work. Respondent accused Complainant of being “disgruntled” and “unfair” for refusing to lower its fee schedule.

On December 18, 2019, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on February 05, 2020. Per the Notice of Hearing, the issue to be determined is whether the Registrar has cause to discipline Respondent’s license based on the following charge(s) alleged in the Citation and Complaint:

Charge 1: A violation of A.R.S. § 32-1154(A)(10).

Hearing Evidence

Complainant called Ronald Barnett as a witness and submitted 6 exhibits. Respondent called Dean Hamilton, Jerry Kerby, and Lyle Book as witnesses and submitted 3 exhibits. The NOTICE OF HEARING and Registrar’s agency file were also admitted into the record as their own exhibits.

Stipulated evidence

Complainant provides testing and data analysis for bacteria, microbial, asbestos, and lead-based paint to residential and commercial customers in Arizona.

Respondent provides disaster mitigation and repair contracting for water, fire, smoke, mold, biohazard, odor, and other alike damage to residential and commercial customers in Arizona.

Respondent and Complainant have had a professional relationship for a number of years, whereby Respondent would hire Complainant to perform testing and analysis for Respondent’s various projects. Payment for Complainant’s services would typically be due within 30 days of receipt of Complainant’s invoice.

Specifically regarding the underlying project at issue, no signed contractual agreement exists. Neither party clarified with the other how many samples were to be taken, either in total or per type, nor did either party confirm how many report(s) were to be submitted upon completion of Complainant’s work prior to the commencement of the underlying project. Additionally, there was no clarity as to which fee schedule, if any, was to be used for pricing/payment on this project.

Complainant’s testimony

On or about August 21, 2019, Respondent contacted Complainant for a job. Specifically, Complainant was hired by Respondent to perform asbestos and lead testing on six structures for one of Respondent’s clients. At that time, Complainant was given a fee structure to follow from Respondent.

On August 21, 2019, the following text message exchange took place between Complainant and Respondent:

Respondent: Hey Ron cancel the job sorry for inconvenience we will pay you for your time already

Complainant: Samples are at lab being analyzed what you mean

Complainant: Only the main house was completed

Respondent: Empire wants to go another direction I will pay for your time sorry buddy not my call

Complainant: Confirm you will pay for time and samples collected?

Respondent: Yes not going to have you work for free

Respondent: If you haven’t already taken to lab than do not need to have results

Complainant: Samples were submitted to lab yesterday

Respondent: Ok

Respondent: Continue survey Ron he want to move forward

Respondent: Sorry for the inconvenience this guy just wants it ASAP

Complainant: The other 4 structures will be completed today. It was a total of 5 structures.

Respondent: Yes i aware that is fine

Just confirming a full report with results timeframe ASAP thanks appreciate you sorry for the rush this company is in a rush

Complainant: Full NESHAP survey

Respondent: Yes

Complainant: Survey completed on 6 structures.

Respondent: Great job when will we have report

Complainant: We’ll do our best to get it to you ASAP

Respondent: Thanks

Complainant: Ur welcome

Respondent: This won’t usually happen these guys are rushing everything

Complainant: Tell them, it’s a lot of samples. Patient.

(All errors in original.)

In two days’ time, Complainant obtained samples and completed testing for the project. In total, Complainant tested 112 asbestos samples and 28 lead samples.

On or about August 28, 2019, Complainant submitted test results for the project and an invoice for $6,596.00 to Respondent for the work performed.

During a subsequent teleconference on an unknown date, Respondent expressed to Complainant that its client had “sticker shock” regarding Complainant’s invoice and refused to remit payment. Respondent also refused to remit payment. A disagreement ensued between the parties, whereby Complainant argued that he had followed Respondent’s fee schedule for pricing, and Respondent countered that Complainant used its fee schedule to inflate the cost of Complainant’s work. Due to an impasse, the parties were unable to resolve their dispute.

Complainant later contacted a NESHAP expert who verified that the Complainant had not taken/tested too many lead samples on the underlying project per governing EPA requirements.

Overall, Complainant argued that it wanted to be paid for the work Respondent asked it to do, per the fee schedule Respondent had provided.

Respondent’s testimony

During a telephone conference with Complainant, after the underlying invoice at issue was provided to Respondent, Complainant told Respondent that he would have charged Respondent approximately $2,700.00 for the project under his own fee schedule.

After receiving Complainant’s invoice, Respondent obtained two comparative bids from competitors for $3,685.00 and $5,340.00, respectively, and also obtained a competitive fee schedule.

Overall, Respondent argued that Complainant had taken too many samples, performed too many tests, and generated too many reports, resulting in Respondent being overcharged by Complainant on this project. Respondent argued that it wanted to pay Complainant, but did not want to pay a price it believed to be unfair.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction and has been properly brought before the Office of Administrative Hearings for adjudication.

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence.

“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.”

Statutes should be interpreted to provide a fair and sensible result. Statutes shall be liberally construed to affect their objects and to promote justice.

Ariz. Rev. Stat. § 32-1154(A)(10) holds, in pertinent part, that among the grounds for suspension or revocation of a contractor’s license is a “[f]ailure by [the] 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, 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.”

Ariz. Rev. Stat. § 32-1156.01 states, in pertinent part, that after a hearing an Administrative Law Judge may provide restitution to any person who is injured by an action of a licensee.

The material facts in this case are not in dispute.

Here, it is undisputed that on August 21, 2019, Complainant and Respondent entered into a verbal agreement for Complainant to collect samples from 6 structures, perform testing, and provide written reports to Respondent as soon as possible. It is also undisputed that this agreement was confirmed between the parties via text message on August 22, 2019. It is also undisputed that the parties did not identify what fee schedule, if any, they would use for this project. It is further undisputed that Complainant fulfilled his performance responsibilities under the parties’ agreement. Moreover, it is undisputed that Respondent did not pay Complainant for this project.

Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to issue payment to Complainant on the underlying project. This is an affirmative defense that Respondent bears the burden to establish. Respondent’s arguments that it could have paid less for the project by using another competitor or Complainant’s fee schedule is immaterial. Respondent stopped using Complainant’s services because it thought Complainant’s fees were too high, only to agree months later to utilize Complainant as long as Complainant adhered to its fee schedule. The fact that the underlying invoice at issue is high does not inherently make it unfair or unlawful. Respondent’s arguments do not satisfy the statutory requirements necessary to establish an affirmative defense. Thus, Respondent’s burden of proof has not been sustained. The credible evidence of record shows that Respondent failed to promptly and completely pay Complainant for labor and/or materials on this project, and had no affirmative defense(s) for doing so.

Because Complainant established by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10), Complainant also established cause for the Registrar to discipline Respondent’s contractor’s license.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that on the effective date of the Final Order in this matter, Respondent’s Arizona Fire and Water Restoration Inc., ROC License Nos. ROC 065873 and 072526 shall be suspended until Respondent provides the Registrar with proof that $6,596.00 has been tendered to Complainant in certified funds as restitution. After the Registrar has received Respondent’s proof of payment to Complainant, Complaint 2019-05820 may be closed.

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 is forty days after the date of that certification

Done this day, February 20, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors