ALJDEC decisions subject to certification as final

2020A-02610-NPC-ROC · Registrar of Contractors · 2020-10-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Goliath Mechanical LLC,

COMPLAINANT,

v.

Rezcom Builders LLC,

License No. ROC 318078,

RESPONDENT.

No. 2020A-02610-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 24, 2020 at 9:00 AM.

APPEARANCES: Tyrone Mitchell, Esq. appeared telephonically on behalf of Goliath Mechanical LLC with Malcom Pointon and Larvell Works as witnesses. Paul Soldo appeared telephonically on behalf of Rezcom Builders LLC with Tracy Young as a witness.

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 February 21, 2018, the Registrar issued ROC License No. 318078 for General Dual KB-1 Building contracting to Respondent. Brian Scott Craig listed on the license as the Qualifying Party and Member, and Paul Soldo is also listed on the license as a Member. The address of record for the license is 4079 E. Lexington Ave., Gilbert, Arizona 85234-0725.

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 September 24, 2020. Regarding ROC License No. 318078, such prior license record reflects that Respondent’s license is active and renewed through February 28, 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 $14,000.00 surety bond for the license issued through Hudson Insurance Company effective March 02, 2020.

On May 26, 2020, the Registrar received a complaint from Complainant alleging nonpayment of services against Respondent. Attached to the complaint was a sales order receipt dated September 20, 2019, for $2586.20, and two invoices: one dated September 29, 2019, for $8,000.00 for work performed at 3636 N. 52nd St. Phoenix, AZ 85018 (“52nd Street”), and another dated May 14, 2020, for $2,500.00 for work performed at 3516 N. 36th St. Phoenix, AZ 85018 (“36th Street”). The Registrar designated it Complaint No. 2020-02610 and assigned the case to Kyle Nelson in their legal department for investigation.

On May 28, 2020, the Registrar issued a Notice of No Pay Complaint letter to Respondent providing notice of Complaint No. 2019-02610, and informed Respondent that it was free to raise any affirmative defense(s) or provide additional information by June 04, 2020.

On June 03, 2020, the Registrar received a letter from Respondent which alleged, in pertinent parts, that (a) Respondent had taken over two projects from another contractor and neither contract included heating, ventilation, and air-conditioning (“HVAC”) work, (b) Respondent arranged for the property owner (“Investor”) to pay Complainant directly for HVAC work on both projects, and (c) alleged that Complainant vandalized Homeowner’s HVAC units which is why Investor refused to pay Complainant for the work performed.

On July 13, 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 July 28, 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 July 28, 2020, the Registrar received Respondent’s Answer. In its Answer Respondent denied Complainant’s alleged violation of Ariz. Rev. Stat § 32-1154(A)(10), and noted that “[Respondent] alleges that [Respondent] lacks the capacity to pay [Complainant] all or a portion of the payment to [Complainant] as the duty and/or term for [Respondent] to pay [Complainant] included in the contract between [Respondent] and [Investor].” [sic]

On August, 2020, the Registrar issued a Notice of Telephonic Informal Settlement Conference to the parties.

On July 31, 2020, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on September 24, 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 Malcom Pointon and Larvell Works as witnesses and submitted one exhibit. Respondent called Paul Soldo and Tracy Young as witnesses. The substantive evidence of record is as follows:

Respondent is a general contractor and Complainant is a HVAC subcontractor. The parties have a professional relationship that predates the underlying matter. Historically, the parties’ subcontracting agreements have always been verbal, and there had never been an issue regarding timely invoicing of work or payment.

On an unknown date in September 2019, Respondent and Complainant entered into a verbal subcontracting agreement, whereby Complainant agreed to perform HVAC installations and/or other related services at 3 properties owned by Investor, including 36th Street and 52nd Street. Complainant agreed to invoice Respondent upon completion of work at each property, on a net-30 agreement.

No formal agreement, verbal or written, was ever executed between Complainant and Investor regarding Complainant’s HVAC work at any of Investor’s 3 properties.

On or about September 21, 2019, Complainant completed HVAC work at the 52nd Street property. Complainant issued an invoice to Respondent for $8,000.00.

On or about October 04, 2019, Complainant completed HVAC work at the 36th Street property. Complainant issued an invoice to Respondent for $2,500.00

Upon completion of all work performed at the 36th Street and 52nd Street properties, Investor paid Respondent all outstanding monies owed on their contract.

Respondent refused to tender payment on Complainant’s invoices. Instead, Respondent alleged that Complainant had contracted with Investor for the HVAC work performed at the 36th Street and 52nd Street properties.

In closing, the parties agreed that there is no dispute that Complainant completed HVAC work at Investor’s 36th Street and 52nd Street properties, and that Complainant was owed a total of $10,500.00 for his work on said properties. The only point of contention between the parties is whether Respondent or Investor owes Complainant for the work he completed on the underlying properties.

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.

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.

Here, the material facts are clear.

The credible evidence of record reflects that the only parties to have an agreement with Investor to perform HVAC work on his 36th Street and 52nd Street properties were Complainant and Respondent. The record also reflects that Complainant completed the work as contracted, and requested payment from Respondent upon the completion of each job. The record further reflects that, although afforded ample time and opportunity, Respondent did not pay Complainant for the work that he performed or set up a good-faith 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. Here, Respondent’s allegation that it merely connected Complainant with Investor and was not responsible for issuing payment to Complainant upon completion of his work is insufficient to overcome the substantial evidence provided by Complainant in this matter. The record establishes that Respondent failed to promptly pay Complainant for labor on multiple 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 that on the effective date of the Final Order in this matter, Respondent’s Rezcom Builders LLC, ROC License No. 318078 shall be suspended until the Registrar is provided with sufficient proof that Respondent tendered $10,500.00 to Complainant in certified funds.

IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment to Complainant, Complaint 2020-02610 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, October 09, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors