PDF copy: ALJDEC decisions subject to certification as final

2020A-04925-NPC-ROC · Registrar of Contractors · 2021-07-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Lee’s Asphalt, Inc., No. 2020A-04925-NPC-ROC

COMPLAINANT, ADMINISTRATIVE LAW JUDGE DECISION v.

L B Contracting LLC, License Number ROC 244981, RESPONDENT.

HEARING: January 20, 2021 APPEARANCES: Jeremy Petroshus appeared on behalf of Complainant Lee’s Asphalt, Inc. Devon Veater, Esq. appeared on behalf of Respondent L B Contracting, LLC. ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson _____________________________________________________________________ FINDINGS OF FACT 1. Respondent L B Contracting, LLC (L B) holds license number 244981 issued by the Registrar of Contractors (Registrar). 2. Orville Bryant is the qualifying party for L B. 3. Jeremy Petroshus is the General Manager for Complainant Lee’s Asphalt, Inc. (Lee’s Asphalt). 4. Lee’s Asphalt and L B entered into a contract wherein Lee’s Asphalt would perform asphalt work at the Human Bean construction project. 5. Lee’s Asphalt performed the work pursuant to the contract.

6. On or about May 29, 2020, Lee’s Asphalt issued an invoice to L B in the

amount of $36,917.77 for the work that it performed at the Human Bean construction

project.

7. On June 26, 2020, Lee’s Asphalt inquired with L B about the status of the

payment, by e-mail. See Exhibit A, pg. 34.

8. On June 26, 2020, L B responded to Lee’s Asphalt’s inquiry by e-mail. See Exhibit A, pg. 34. L B notified Lee’s Asphalt that it expected to be paid by another contractor the following week. L B requested that Lee’s Asphalt send a final waiver. See id. 9. On July 13, 2020, L B received an e-mail from Lee’s Asphalt’s e-mail address inquiring whether payment could be made by “EFT.” See Exhibit A, pg. 1-3. 10. On July 31, 2020, L B received unconditional waivers for the Human Bean construction project via e-mail from Lee’s Asphalt’s e-mail address. 11. On August 4, 2020, L B notified Lee’s Asphalt by e-mail that it was waiting for a check to clear before sending payment. L B requested Lee’s Asphalt’s banking information. See Exhibit A, pg. 13. 12. On August 4, 2020, L B received an e-mail from Lee’s Asphalt’s e-mail address that provided banking information for a wire transfer. See Exhibit A, pg. 13. The August 4, 2020 e-mail provided, in relevant part, as follows:1 Thank you so much for your assistance and follow up with this payment. Please find below ACH information for payment: Bank: Eagle Bank Address: 7815 Woodmont Ave, Bethseda, MD 20814 [account number redacted] ACH [account number redacted] Beneficiary: Lees Asphalt Inc. Kindly acknowledge receipt of the ACH information. Thank you for the opportunity to work with you on this project.

Jeremy Petroshus Estimator Lee’s Ashalt Inc [email redacted] www.leesasphalt.com Cell 520-360-8193 Phone 520-294-0448 2640 E. Ganley Tuscon AZ 85706

1 See id. 2 13. On August 31, 2020, L B paid the amount of $37,364.36 by wire transfer to the account provided in the August 4, 2020 e-mail. See Exhibit A, pg. 77. 14. Lee’s Asphalt subsequently notified L B that it did not receive payment for the Human Bean construction project. Lee’s Asphalt suggested that L B verify the location of the transfer through its bank. 15. L B later discovered through Bank of America that its payment in the amount of $37,364.36 was wired to “Lee’s Asphalt Paving” instead of “Lee’s Asphalt”. See Exhibit A, pg. 39. 16. L B hired a computer forensic expert to investigate the matter. The forensic expert discovered that the e-mails from Lee’s Asphalt’s e-mail address were not sent by Lee’s Asphalt. The funds were diverted to another source due to a hacker’s activity. 17. On or about October 16, 2020, Lee’s Asphalt filed a COMPLAINT against L B with the Registrar alleging non-payment in the amount of $35,917.77 for work performed in connection with the Human Bean construction project. 18. On or about November 9, 2020, the Registrar issued a CITATION against L B. Through the CITATION, the Registrar alleged that L B may have violated ARIZ. REV. STAT. section 32-1154(A)(10). 19. L B filed a timely response to the CITATION. 20. The matter was referred to the Office of Administrative Hearings for an evidentiary hearing. 21. A hearing was held on January 20, 2021. 22. At hearing, Mr. Petroshus testified on behalf of Lee’s Asphalt. Mr. Bryant testified on behalf of L B and submitted exhibit A. 23. At hearing, it was undisputed that L B received banking information for a wire transfer from Lee’s Asphalt’s e-mail address. 24. Mr. Petroshsus stated that Lee’s Asphalt never sent an e-mail to L B inquiring about an EFT. Mr. Petroshsus denied that Lee’s Asphalt sent an e-mail to L B providing wire transfer banking information for Lee’s Asphalt. According to 3 Mr. Petroshus, Mr. Bryant told him that L B’s e-mail address was hacked. Mr. Petroshus asserted that Lee’s Asphalt’s e-mail address was not hacked. Mr. Petroshus asserted that he does not accept wire transfers. 25. Mr. Bryant testified at hearing that his forensic expert concluded that a hacker sent e-mails to L B using Lee’s Asphalt’s e-mail address. Mr. Bryant initially asserted that Lee’s Asphalt’s e-mail address was hacked. Later in the hearing, Mr. Bryant explained that he did not know whether the e-mail address of L B or Lee’s Asphalt was hacked. Mr. Bryant filed a fraud report with Bank of America and the local police department. 26. Mr. Petroshus testified that Lee’s Asphalt never accepts wire transfers. However, Mr. Petroshus nor Lee’s Asphalt informed L B that wire transfers would not be accepted before the August 31, 2020 wire transfer. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.2 2. 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. ARIZ. ADMIN. CODE § R2-19-119. 3. A preponderance of the evidence is: The 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. BLACK’S LAW DICTIONARY 1373 (10th ed. 2014). 4. Statutes should be interpreted to provide a fair and sensible result.

2 See A.R.S. §§ 32-1151 to 32-1169. 4 Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.") 5. “Statutes shall be liberally construed to effect their objects and to promote justice.” ARIZ. REV. STAT. § 1-211(B). 6. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 7. ARIZ. REV. STAT section 32-1154(A) provides that: The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: …. 10. Failure by a licensee or agent or official of a 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 or, 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. 8. The evidence presented at hearing established that L B paid the money that it owed Lee’s Asphalt for the Human Bean construction project through a wire transfer using banking information provided in an e-mail from Lee’s Asphalt’s e-mail address. Although Lee’s Asphalt may not have received the payment due to the interference of a hacker, the preponderance of the evidence does not show that Lee’s Asphalt failed to receive payment through any fault of L B. 9. The preponderance of the evidence does not show that L B violated ARIZ. REV. STAT section 32-1154(A)(10) as alleged. ORDER IT IS ORDERED that the CITATION and COMPLAINT in Case No. 2020A-04925 is dismissed.

5 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, February 5, 2021.

/s/ Velva Moses-Thompson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors