ALJDEC decisions subject to certification as final

2020A-02745-NPC-ROC · Registrar of Contractors · 2020-10-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

David's Professional Fire Systems Inc.,

COMPLAINANT

KLJ Consulting LLC,

License No. ROC 293237,

RESPONDENT

No. 2020A-02745-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 13, 2020

APPEARANCES: Complainant David’s Professional Fire Systems Inc., was represented by Claudio E. Iannitelli, Esq., appearing via Google Meet. Respondent KLJ Consulting LLC, was represented by Brian M. Flaherty, Esq., appearing via Google Meet.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

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FINDINGS OF FACT

KLJ Consulting LLC (Respondent) is the holder of License No. 293237, issued by the Registrar of Contractors (Registrar).

On or about June 4, 2020, David’s Professional Fire Systems, Inc. (Complainant) filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $4,293.25 for the installation of a fire sprinkler system.

On July 22, 2020, the Registrar issued a Citation for alleged violation of A.R.S. § 32-1154(A)(10). Respondent timely filed an Answer on July 31, 2020, denying the allegations and requested that the citation be dismissed and close the complaint.

On August 10, 2020, the Registrar denied the dismissal request and informed the parties that a hearing would be set in due course.

A Notice of Hearing was issued on September 11, 2020.

The hearing was held on October 13, 2020 at the Office of Administrative Hearings.

David W. Hale testified on behalf of Complainant. Mr. Hale is the owner of David’s Professional Fire Systems, Inc.

Mr. Hale testified that on or about October 1, 2018, he forwarded a proposal to Respondent for installation a fire sprinkler system in the amount of $4,355.00, in the residence at which Respondent was working. The proposal also indicated what was to be excluded from the work, as well as a “Clarifications” section. Mr. Hale then testified that Jonathan Territo, on behalf of Respondent, signed the proposal on November 19, 2018, without any further modifications to the same.

Mr. Hale testified that two of the major issues in this case involved “Clarification” numbers 1 and 2. “Clarification” number 1 states, “David’s Profession Fire Systems to start at copper male fitting 3 feet above finished floor. Pipe from street and water meter will need to be large enough for the water supply.”

Mr. Hale further testified that the existing water meter was compatible with the new system that he was installing, and because he is not licensed for plumbing work, it would have to be the Respondent’s responsibility to provide and install a new water meter.

Mr. Hale testified that it was his belief that if the existing water meter was used, an additional fifteen sprinkler heads would be needed to properly cover the area, which would greatly increase the cost of the project.

In addition, Mr. Hale testified as to the issue with “Clarification” number 2. This indicated that the drywall needed to be removed in the ceilings where the sprinkler system was to be installed.

Mr. Hale testified that when he got to the property to commence the work, the drywall was not removed as required under the contract, but he started the project and removed the drywall at his own expense. Also, he had to install an additional sprinkler head in the carport area which was not initially planned, and provided a change order for the same.

Mr. Hale testified that the project took three days to complete, but he could not install the unification covers until the sheetrock and painting was completed by Respondent. Thus, he estimated that 95% of the project was fulfilled, but was not allowed back to the jobsite to finish the work. Therefore, Mr. Hale testified that it was his belief that the total amount owed by Respondent was $4,293.25, which was 95% of the total contracted price.

Frank Martinez testified for Complainant as witness. Mr. Martinez was the General Manager and a design technician for F D Fire Design Services, LLC. Mr. Martinez testified that he designed the fire piping plan as presented in Complainant’s Exhibit 4. Mr. Martinez also testified that it was his understanding that the water meter was going to be replaced, so he designed the plans accordingly.

Jonathan Territo, testified on behalf of Respondent as its owner. Mr. Territo testified that he had been licensed since 2013, and has worked on commercial projects and that this project was the first which required an installation of the fire sprinkler system.

Mr. Territo testified generally that there was very little communication between him and Mr. Hale.

Mr. Territo testified that he did not see the plans for the sprinkler system until December 14, 2018, after they were approved by the City of Scottsdale, thus he felt “pigeonholed” into accepting the same.

With regard to the extra sprinkler head in the carport, Mr. Territo testified that the area was always an enclosed bedroom and Mr. Hale should have been aware of the same.

Mr. Territo also testified that this was the first project he was involved with that called for a replacement water meter.

In addition, Mr. Terrio testified that he spent nearly $1,600.00 on the new water meter as well as $1,500.00 to have John Ball, an architect, review the Complainant’s plans.

Mr. Territo testified that he was paid by the homeowner on the project and did not assert that Respondent lacked the capacity to pay the amount Complainant asserted was due.

John Ball testified as a witness for Respondent. He testified that in these types of projects the water meter was almost always replaced, but his plan as indicated in Exhibit 11, was to retain the existing water meter.

Mr. Ball also disagreed with Mr. Hale that an additional 15 sprinkler heads would be needed if the existing water meter remained.

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.

The evidence established that Complainant performed a majority of the work and gave a 5% discount for the work that was not completed, thus bringing the total owed to $4,293.25. Respondent has failed to remit any payment to Complainant.

Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the work performed or that it had not received sufficient monies from the homeowner. The only “defense” that Respondent provided was that it believed it was excused from payment under A.R.S. § 32-1183(C), as Complainant’s design and work was defective and that Complainant failed to complete the work.

The undersigned Administrative Law Judge does not find this argument persuasive. First, the action at hand was brought under A.R.S. § 32-1154(A)(10). It is regulatory in nature and brought by the Registrar of Contractors. A.R.S. § 32-1183 is under the Prompt Pay Act, and this action was not brought under that section.

The only defenses therefore under A.R.S. § 32-1154(A)(10), are if Respondent had not been paid on the project or if Respondent lacked the ability to pay. Again, based upon the evidence presented these defenses have not been established. Respondent may have its own cause of action with the Registrar of Contractors or another court, however, its defense under A.R.S. § 32-1183, is not persuasive.

Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $4,293.25 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 Respondent’s License No: 293237 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted documents that establish that it has paid Complainant $4,293.25 in certified funds.

It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $4,293.25 in certified funds, the Registrar may close the Complaint in Case No. 2020-02745.

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.

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-137160-45720000Done this day, October 19, 2020.

/s/ Adam D. Stone

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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