ALJDEC decisions subject to certification as final

2020A-01239-NPC-ROC · Registrar of Contractors · 2020-08-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Cemex Construction Materials South LLC,

COMPLAINANT

Werner Construction LLC,

License No. ROC 178109, 171508,

RESPONDENT

No. 2020A-01239-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 21, 2020

APPEARANCES: Jeri Joachim appeared via Google Meet on behalf of Complainant Cemex Construction Materials South LLC. Timothy Werner appeared via Google Meet on behalf of Respondent Werner Construction, LLC which was represented by Richard Cobb, Esq. also present via Google Meet.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

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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 August 23, 2002, the Registrar issued License No. 178109 for General Commercial B-1 General Commercial Contractor to Respondent. Respondent’s address of record for the license is 6540 E. Thunderbird Rd., Scottsdale, Arizona 85254. Timothy Wilhelm Werner 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. 178109, as reflected on the Registrar’s public website on July 21, 2020. Such prior license record reflects no prior discipline on Respondent’s license. Respondent has an active $5,000.00 surety bond issued through RLI Insurance Company effective as of February 2, 2012.

Hearing Evidence

At the outset of the hearing, the parties stipulated that Complainant had supplied cement to Respondent for a new home build and that there was $17,685.94 due. Because there was no dispute as to the amount, Complainant’s did not present any further evidence.

Mr. Werner testified on behalf of Respondent. He testified that he was to perform work at a residence for John Crowell. Generally, Mr. Werner testified that he had no ability to pay Complainant.

On February 14, 2020, Mr. Werner sent a text message to Mr. Crowell inquiring as to when he was to expect payment. Mr. Crowell was apologetic for not transmitting payment, and informed him that the house closing was on hold again which was causing the delay.

Mr. Werner also offered into evidence other electronic mail messages from himself to Mr. Crowell and vice versa, inquiring as to when to expect payment and the subsequent apologies from Mr. Crowell due to lack of payment.

Mr. Warner further testified that he received approximately $17,000.00 up front from Mr. Crowell and that there was still approximately $22,000.00 owed. In addition, he testified that the monies he received went to pay payroll and vendors.

Finally, Mr. Warner testified that his debts exceed his income and there was no money to pay Cemex.

On March 9, 2020, the Registrar received a complaint from Complainant alleging non-payment of services and/or materials against Respondent.

On March 16, 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 March 23, 2020. Respondent did not respond.

On May 20, 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 June 4, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1155(A) and 32-1155(B).

Respondent timely filed an Answer on June 2, 2020.

On June 19, 2020, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on July 21, 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).

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,

Failure 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.

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.

Here, the material facts are not in dispute as the parties stipulated that Respondent failed to pay $17,685.94 to Complainant. Although afforded ample time and opportunity by Complainant, Respondent failed to pay its debt to Complainant. Thus, Complainant has met its burden.

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 alleges that it was not fully paid from Mr. Crowell and that it lacked the ability to pay otherwise. Respondent provided no evidence of inability to pay only a blanket statement that Respondent’s debts exceed its income. In addition, while Respondent had not received full payment from Mr. Crowell, Mr. Werner testified that Respondent received an initial payment of $17,000.00. Mr. Werner chose to make payroll and pay other vendors before Cemex. He could have chosen to make all of that payment to Cemex or at least a portion thereof to satisfy his obligation to Cemex. By choosing payroll and other vendors over Cemex, Mr. Werner was essentially relegating Cemex to the bottom of Respondent’s creditor list.

Respondent therefore, did not meet its burden by a preponderance of the evidence of the affirmative defense that it lacked the capacity to pay and had not received sufficient monies as payment for the particular project. The monies Respondent received from Mr. Crowell were sufficient to pay 96 percent of the contract with Cemex. Finally, there was no credible evidence presented that Respondent lacked the ability to pay.

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.

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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 Werner Construction LLC, License No. ROC 178109, 171508, shall be suspended until the Registrar is provided with sufficient proof that Respondent tendered $17,685.94 to Complainant in certified funds.

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-137160-45720000Done this day, August 6, 2020.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000