ALJDEC decisions subject to certification as final

2020A-00205-NPC-ROC · Registrar of Contractors · 2020-06-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Vincon Engineering Construction LLC,

COMPLAINANT

Sunland Asphalt & Construction Inc.,

License No. 111922, 095189,

RESPONDENT

No. 2020A-00205-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 3, 2020

APPEARANCES: David Troy Colby, Managing Member, appeared on behalf of Complainant Vincon Engineering Construction LLC. Respondent Sunland Asphalt & Construction Inc. was represented by John G. Sestak Jr.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

Sunland Asphalt & Construction Inc. (Respondent) is the holder of License Nos. 111922 and 095189 issued by the Registrar of Contractors (Registrar).

On or about January 13, 2020, Vincon Engineering Construction LLC (Complainant) filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $67,457.62 for concrete flat work performed on the Hunt Highway widening project.

The subcontract agreement between Complainant and Respondent contained the following provision:

5.2 Subcontractor Default and Subcontract Termination by Contractor. If Subcontractor fails or refuses to carry out the Work in accordance with the Master Subcontract or Work Authorization or otherwise fails or refuses to perform in accordance with this Master Subcontract or Work Authorization and fails within three (3) business days after receipt of written notice to commence and continue correction of such default or neglect with diligence and promptness, Contractor may, by written notice to Subcontractor and without prejudice to any other remedy Contractor may have, (i) make good such deficiencies in Subcontractor’s performance and may deduct the reasonable costs thereof from the payments then or thereafter due the Subcontractor, and / or (ii) terminate the Master Subcontract and / or any Work Authorization and complete and / or correct the Work by whatever method Contractor may deem expedient. If the unpaid balance of the Work Authorization Price exceeds the expense of completing and / or correcting the Work and other damages incurred by Contractor and not expressly waived, such excess shall be paid to Subcontractor. If such expense and damages exceed such unpaid balance, Subcontractor shall pay the difference to Contractor.

The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10).

Mr. Colby testified that the total due to Complainant was $67,457.62 for work Complainant had performed and Respondent had accepted. Mr. Colby indicated that on or about March 5, 2019, Complainant had an issue with Respondent regarding the job. Complainant requested a meeting with Respondent to discuss the issue. The parties agreed to meet on March 11, 2019. When something came up, Mr. Colby notified James Martinez, Respondent’s Project Superintendent, that he was unable to attend the March 11, 2019 meeting. Mr. Martinez told Mr. Colby that he would call back to set up a new meeting, but Mr. Colby did not hear from Mr. Martinez again. Mr. Colby asserted that Respondent failed to provide Complainant with written notice to commence and continue work and allow Complainant three business days to comply before having the work performed by a different crew. Mr. Colby testified that he had no further communication from Respondent until April 26, 2019, when he was informed that Respondent had finished the job on its own and notified of punch list work that needed to be completed.

Roger Jay Eischen, Respondent’s Senior Vice President, testified that he was not directly involved in the day-to-day management of the project. Mr. Eischen stated that Respondent did not have time to issue the three day notice required by the contract because Respondent was coming up against the completion of the project and would be subjected to liquidated damages of $3,300.00 per calendar day if the project was not completed on time. Mr. Eischen alleged that Complainant manipulated the contract and pulled off the job for no reason. Mr. Eischen acknowledged that it was Respondent’s mistake to not issue the written notice as soon as Complainant pulled off the job instead of giving Complainant an additional chance to complete the work.

Christopher Eischen, Respondent’s Senior Project Manager, testified that in February 2019, the project had only 7,000 feet left on the project, and by March 5, 2019, only 2,000 feet remained. Because Respondent was so close to the end of the project, waiting three days to have another crew begin Complainant’s work would have delayed the project too long. Mr. Eischen acknowledged that Mr. Colby did not say he was unavailable to meet on March 6, 7, or 8, 2019.

Respondent acknowledged that it owed Complainant some amount of money on the project, but asserted it was entitled to deduct the charge back from the alternative crew that completed the work Complainant was obligated to perform.

Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due or had not received sufficient monies as payment for the project.

CONCLUSIONS OF LAW

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.

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).

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 or agent or official of a licensee to pay monies in excess of $750 when due for materials or services rendered in connection with the licensee's operations as a contractor unless the licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.

While Respondent may have a contractual claim against Complainant for its failure to complete the work in a timely fashion, this is not the venue for the resolution of such a claim. By Respondent’s own admission, it did not provide Complainant with written notification three days prior to having a different crew perform the work and it owed Complainant more than $750.00 on the project.

The evidence established that Respondent owed a total of $67,457.62 for the work it performed on the project.

Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the work performed or had not been paid sufficient funds on the project.

Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $67,457.62 for services or materials rendered in connection with Respondent’s contracting business.

Based upon Respondent’s violation of the provisions of A.R.S. § 32-1154(A)(10), grounds exist to impose discipline against Respondent’s license

RECOMMENDed order

Based on the foregoing, it is recommended that the Registrar suspend Sunland Asphalt & Construction Inc.’s License Nos: 111922 and 095189 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $67,457.62 in certified funds.

It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $67,457.62 in certified funds, the Registrar may close the Complaint in Case No. 2020-00205.

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.

-54864001

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-137160-45720000Done this day, June 24, 2020.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors-54864001

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-137160-45720000