ALJDEC decisions subject to certification as final

2020A-00125-NPC-ROC · Registrar of Contractors · 2020-04-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

The Stow Company,

COMPLAINANT,

v.

DEA Remodeling LLC,

ROC License: ROC 315981

RESPONDENT.

No. 2020A-00125-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 01, 2020 at 1:30 PM.

APPEARANCES: Edward Marko Esq., appeared on behalf of The Stow Company (“Complainant”) with Adam Richael as a witness. Eric Marshall appeared on behalf of DEA Remodeling LLC (“Respondent”) with Aaron Marshall as a witness.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Order to the Director of the Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

Background and Procedure

On October 19, 2017, the Registrar issued License No. 315981for specialty dual CR-60 finish carpentry contracting to Respondent. Respondent’s address of record for the license is 2400 N. Arizona Ave. Apt. 1050 Chandler, AZ 85225-1250. Aaron Albert Benjamin Marshall is listed on the license as a Member.

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior License record for License No. 315981, as reflected on the Registrar’s public website on April 01, 2020. Such prior license record reflects that Respondent’s license was disciplined on one prior occasion. Specifically, Respondent’s license was suspended as a result of Complaint No. 2018-3206, which was closed on December 12, 2018. The record also reflects that there is one resolved/settled case, Complaint No. 2017-5610, on Respondent’s license. Currently, the record shows that there is one open complaint against Respondent’s license, which is presumed to be related to this matter. Respondent has an active $6,750.00 surety bond issued through Western Surety Company effective October 21, 2019.

Hearing Evidence

Complainant called Adam Richael as a witness and submitted Exhibits A-H into the record. Eric Marshall and Aaron Marshall testified on behalf of Respondent. The Registrar’s electronic hearing file (“Agency File”) and Notice of Hearing were also admitted into the record as their own exhibits.

Complainant is a residential organization solution parts and materials manufacturer located in Holland, MI. Complainant markets and sells its organization systems to the public via dealer, retail, and e-commerce operations.

Respondent is a residential remodeler located in Chandler, AZ. Respondent specializes in kitchen remodeling, and the installation of prefabricated cabinets and closet organizers.

On or about February 13, 2018, Respondent entered into a contractual agreement to become one of Complainant’s dealers. As per their contract, Complainant supplied Respondent with a website, social media accounts, and an in-studio proprietary design tool for digital use and sales with customers. Under its dealer agreement with Complainant, Respondent contracted to purchase and deliver Respondent’s manufactured parts and/or materials to clients. Per the terms of the parties’ agreement, Complainant would issue Respondent an invoice for parts ordered on a project, and in turn Respondent would issue payment to Complainant on the invoice once the purchased items were processed and shipped. In instances when parts or materials arrived damaged, Respondent was able to utilize Complainant’s proprietary design tool to submit replacement requests, which were shipped to Respondent at no charge.

Between October 2018 and November 2019, Respondent ordered numerous parts and materials from Complainant for 7 projects. Although Complainant issued multiple invoices to Respondent for parts and materials that were ordered and delivered, and in some instances replaced by Complainant per Respondent’s request(s), Respondent did not remit any payments to Complainant.

In early-December 2018, Complainant issued a thirty-day written notice to Respondent to terminate the parties’ contractual agreement, because Respondent had failed to make payments on multiple invoiced projects issued between October 2018 and November 2018, which Complainant had remitted parts and materials for. After the parties’ professional relationship was severed, Complainant permitted Respondent to order replacement parts and materials at no charge to complete outstanding projects.

In principal, Respondent had failed to remit $39,405.45 it owed to Complainant.

Respondent refused to issue payment(s) to Complainant on the outstanding invoices at issue because Respondent opined that the parts/materials received from Complainant were “shoddy.” Respondent allegedly lost customers because of untimely delivery of Complainant’s goods, and in some cases, had to hire subcontractors to fabricate missing materials at a loss to Respondent.

On January 06, 2020, the Registrar received a complaint from Complainant alleging non-payment of services and/or materials against Respondent.

On January 09, 2020, 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 January 16, 2020. Respondent did not respond.

On January 16, 2020, the Registrar issued a Citation and Complaint to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(10). Respondent was given until January 31, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1155(A) and 32-1155(B).

On January 29, 2020, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on March 09, 2020. Per the Notice of Hearing issued on February 05, 2020, the issue to be determined is whether the Registrar 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.”).

On March 23, 2020, in Case No. CV2020-050147, a Judgement by Default was issued against Respondent in Maricopa County Superior Court. Specifically, the Court entered a judgement against Respondent for $39,405.45 in principal amount, for failure to remit payment on the underlying invoices in the case at bar. Notably, the court found that Respondent had been properly and duly served notice, but failed to provide the court with a timely Answer or appear for the scheduled proceeding. On March 27, 2020, the judgment was filed with the Clerk of the Court.

CONCLUSIONS OF LAW

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.

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.

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

Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish factors in mitigation of the penalty and 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.”

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.”

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.

Ariz. Rev. Stat. § 32-1154(E) holds, in pertinent parts, that the Registrar may “[i]mpose a civil penalty not to exceed five hundred dollars on a contractor for each violation. The failure by the licensee to pay any civil penalty imposed results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty. It also holds that no future license may be issued to an entity consisting of a person who is associated with the contractor, unless payment of any outstanding civil penalty is tendered.”

Here, the material facts are not in dispute.

The credible evidence of record reflects that Respondent owes Complainant an outstanding principal balance of $39,405.45 on valid invoices timely provided to Respondent between October and November of 2018. 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 debts to Complainant.

Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to pay Complainant on the invoices in question. This is an affirmative defense that Respondent bears the burden to establish. Respondent’s allegation that the parts/materials received from Complainant during the time period at issue were “shoddy,” is unsubstantiated and insufficient to overcome the substantial evidence provided by Complainant in this matter. The record establishes that Respondent failed to promptly pay Complainant for materials on 7 projects, 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 has also established cause for the Registrar to discipline Respondent’s contractor’s license.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED, pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(10) and 32-1156.01, that that on the effective date of the Final Order in this matter, Respondent DEA Remodeling LLC, ROC License No. 315981, shall be suspended until the Registrar is provided with sufficient proof that Respondent tendered $39,405.45 to Complainant in certified funds.

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the ordered restitution twelve (12) months after the effective date of the Registrar’s Final Order in this matter, a civil penalty of $500.00 shall be assessed against Respondent.

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before one (1) month following the date the civil penalty was issued, the Registrar shall revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in Ariz. Rev. Stat. § 32-1101(A)(5).

Done this day, April 16, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors