ALJDEC decisions subject to certification as final

2020A-02378-NPC-ROC · Registrar of Contractors · 2020-08-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Quail Construction LLC,

COMPLAINANT,

v.

TSG Communications LLC

License No. 326635,

RESPONDENT.

No. 2020A-02378-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 19, 2020 at 9:00 AM.

APPEARANCES: Michael Scott Nickerson appeared on behalf of Quail Construction LLC (“Complainant”). No appearance(s) by or on behalf of TSG Communications LLC (“Respondent”).

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 Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

Background and Procedure

On October 24, 2019, the Registrar issued ROC License No. 326635 for Specialty Dual CR-2 Excavating Grading and Oil Surfacing contracting to Respondent. Maria E Machado Barros Gonzalez is listed on the license as the Member. The address of record for the license is 9046 N 28th St Phoenix, Arizona 85028-4703.

Pursuant to Arizona Administrative Code (“Ariz. Admin. Code”) R4-9-117, Administrative Notice is taken of Respondent’s license files as shown on the Registrar’s public website August 19, 2020. Regarding ROC License No. 326635, such prior license record reflects that Respondent’s license is active and renewed through October 31, 2021. The license has not been previously disciplined and no prior complaints have been resolved or otherwise settled on the license. However, the record reflects that there is one open complaint against the license, which is presumed to be related to this matter. Respondent has an active $6,750.00 surety bond for the license issued through RLI Insurance Company, effective October 21, 2019.

On May 11, 2020, the Registrar received a complaint from Complainant alleging nonpayment of services against Respondent. Specifically, Complainant alleged that Respondent had failed to remit timely payments on 10 invoices and owed Complainant an outstanding balance of $30,020.14 as a result. On May 14, 2020, the Registrar designated it Complaint No. 2020-02378 and assigned the case to Lovey Martinez in their legal department for investigation.

On May 15, 2020, 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 May 22, 2020.

Respondent did not provide a response.

On May 29, 2020, 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 June 15, 2020, 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 June 19, 2020, the Registrar received Respondent’s untimely Answer. In its Answer Respondent alleged that due to the global COVID-19 pandemic it had asked Complainant to revise its payment arrangement to accommodate Respondent’s lack of revenue due to the cancellation of several of its projects. Respondent further alleged that the underlying general contractor cancelled the remainder of Respondent’s work on the project, which made it impossible to pay Complainant monies owed for work Complainant completed on said project. Respondent concluded by requesting mediation between the parties.

On June 24, 2020, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 19, 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:

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

Hearing Evidence

Complainant called Michael Scott Nickerson, Chief Operations Officer, to testify and submitted Exhibits 1-7 into the record. The Notice of Hearing and Registrar’s agency file were also admitted into the record. Although afforded a 10-minute grace period, there was no appearance by or on behalf of Respondent. The substantive facts of record are as follows:

Complainant was hired by Respondent as a subcontractor on a utility project to perform commercial concrete repair.

Complainant and Respondent had not previously conducted business with each other prior to entering into the underling contract at issue.

Specifically regarding the underlying project at issue, no signed contractual agreement exists. On or about November 06, 2019, the parties verbally agreed that Complainant would perform subcontracting services for Respondent on a project for Pauley Construction, and that Respondent would pay Complainant at or under 30-days after receiving an invoice for services from Complainant. Respondent signed a line of credit authorization form, which Complainant used to collect payment on several invoices issued from November 17, 2019, through February 23, 2020.

From December 15, 2019, through February 23, 2020, Complainant issued 10 invoices to Respondent totaling $30,020.14.

On or about February 23, 2020, Respondent asked Complainant to stop drafting payments on its line of credit.

At the end of February 2020 Complainant completed its work for Respondent on their project.

In March 2020 Respondent informed Complainant that it would not be able to pay monies owed until May or June of 2020.

Complainant confirmed with Pauley Construction that Respondent had been paid in full on their contract.

Complainant’s attempts to set up a payment arrangement with Respondent have been unsuccessful.

In closing, Complainant argued that Respondent should have been able to pay Complainant the $30,020.14 it owed because it had received payment in full on its contract with Pauley Construction. Complainant also argued that it would have accepted a payment arrangement with Respondent, but that Respondent ceased communication and left Complainant without recourse. Complainant concluded by expressing concern over a rumor that alleged Respondent shuttered its business and relocated to another state.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction and has been properly brought before OAH for adjudication.

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

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 Notice of Hearing the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter. Because the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Registrar as well.

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.

It is undisputed that Complainant and Respondent entered into a verbal subcontracting agreement on or about November 06, 2019, whereby Complainant completed the work and Respondent failed to remit full payment on the agreement.

Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to issue payment to Complainant on the underlying projects. This is an affirmative defense that Respondent bears the burden to establish. Because Respondent failed to appear and provide testimony, this burden 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 TSG Communications LLC, ROC License No. 326635, shall be suspended until Respondent provides the Registrar with proof that $30,020.14 has been tendered to Complainant in certified funds as restitution.

IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment to Complainant, Complaint 2020-02378 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, August 19, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors