ALJDEC decisions subject to certification as final

2020A-03750-NPC-ROC · Registrar of Contractors · 2020-12-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Rymax Development, LLC,

COMPLAINANT

J Squared General Contracting – AZ, LLC,

License No. ROC 323306,

RESPONDENT

No. 2020A-03750-NPC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: December 16, 2020

APPEARANCES: Richard Lacey appeared on behalf of Complainant Rymax Development, LLC. Jack Thurman appeared on behalf of Respondent J Squared General Contracting – AZ, LLC.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

J Squared General Contracting – AZ, LLC (“Respondent”) is the holder of License No. 323306, issued by the Arizona Registrar of Contractors (“Registrar”).

On or about August 3, 2020, Rymax Development, LLC (“Complainant”) filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $18,152.00 for tenant improvements at the location of 2340 East Beardsley Road.

On September 18, 2020, the Registrar issued a Citation charging Respondent with the alleged violation of A.R.S. § 32-1154(A)(10). Respondent timely filed an Answer to the Complaint.

A Notice of Hearing was issued on November 16, 2020, advising the parties that a hearing would convene before the Office of Administrative Hearings on December 16, 2020. On the date and time set for hearing, Richard Lacey, qualifying party and owner of Complainant, testified on behalf of Complainant. Jack Thurman, co-owner of Respondent, testified on behalf of Respondent.

Mr. Lacey testified that Complainant completed its scope of work to industry standards, including a punch list provided by Respondent. Mr. Lacey paid for all the materials for his scope of work, and paid his workers. However, upon completion of the project, Respondent would not pay the balance due on the contract and informed Complainant that non-payment was due to substandard work.

Mr. Lacey testified that there were many delays on the job due to the electrical and HVAC contractors that were hired by the owner of the building. Mr. Lacey explained that all of the plumbing had to be re-routed and the floor needed to be cut to accommodate these changes. Mr. Lacey testified that there were issues with the sewer main that caused a “huge delay.” Mr. Lacey also testified that the client was “difficult” and that the building had to be re-painted because the client was not happy with the color that the client chose. Mr. Lacey testified that Complainant performed work on the project for which it did not charge Respondent, including the replacement of two cabinets.

Mr. Lacey testified that Complainant was given a deadline of June 19, 2020, for punch list items and that those items were completed by June 18, 2020. Mr. Lacey testified that there was no communication from Respondent until he requested final payment 30 days later. At that point, Respondent notified Complainant that the client was not satisfied with certain work. Mr. Lacey asserted at hearing that Complainant’s work was within industry standards, and that the client’s standards are not controlling.

Mr. Lacey asserted that other subcontractors’ subsequent work impacted Complainant’s completed work. Mr. Lacey testified specifically regarding the ceiling grid, that after Complainant installed the grid, other subcontractors, including HVAC, electrical, and fire protection subcontractors, chipped the ceiling tiles.

Mr. Lacey testified that he urged Respondent to contact the Registrar for an inspection when Respondent refused to pay due to “substandard” work, as the Registrar determines workmanship standards, not the client.

Mr. Thurman testified regarding the exhibits submitted by Respondent. See Respondent’s Exhibits 1-8. Mr. Thurman testified that the work performed by Complainant was substandard and that Respondent’s client was dissatisfied with the work. Consequently, the client has not paid Respondent the remaining contract balance between Respondent and the client in the amount of $35,000.00.

Email correspondence from Respondent’s client delineating the items with which the client was dissatisfied, includes items that were outside of Complainant’s scope of work. See Respondent’s Exhibits 2 and 4.

Mr. Thurman asserted that Respondent will not be paid until the client “is happy.” Mr. Thurman also testified that Respondent lost this particular client due to its dissatisfaction with the job. Mr. Thurman testified that Respondent had to hire other subcontractors to complete repairs. Mr. Thurman further testified that Respondent did not contact the Registrar regarding Complainant’s workmanship because those complaints were “based on client’s issues.”

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:

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.

(Emphasis added.)

The evidence established that Complainant performed the work it was contracted to perform, as well as the remaining punch list items. The undisputed evidence established that Respondent failed to pay Complainant the contract balance of $18,152.00.

Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the work performed and that it had not received sufficient monies from the client/owner of the project. The only “defense” that Respondent provided was that its client did not pay Respondent the last draw of $35,000.00 for the entire project because the client was dissatisfied with Complainant’s work. However, the email correspondence from Respondent’s client delineating the items with which the client was dissatisfied, includes items that were outside of Complainant’s scope of work.

The undersigned Administrative Law Judge does not find Respondent’s argument persuasive. Based upon the evidence presented at hearing, the defenses available under A.R.S. § 32-1154(A)(10) have not been established. Respondent did not present evidence establishing that it “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.”

Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $18,152.00 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. 323306 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted documents that establish that it has paid Complainant $18,152.00 in certified funds.

It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $18,152.00 in certified funds, the Registrar may close the Complaint in Case No. 2020-03750.

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 forty (40) days from the date of the certification.

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-137160-45720000Done this day, December 30, 2020.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000