ALJDEC decisions subject to certification as final

2021A-01358-NPC-ROC · Registrar of Contractors · 2021-06-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Custom Landscape Materials,

COMPLAINANT,

v.

Action Direct LLC

dba Redpoint Contracting,

License No. ROC 265009,

RESPONDENT.

No. 2021A-01358-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 28, 2021 at 1:00 PM.

APPEARANCES: Jason Klock appeared on behalf of Custom Landscape Materials (“Complainant”) with Sam Schippers as a witness. Jacob Dean appeared on behalf of Action Direct LLC (“Respondent”). Joe Hintz observed.

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 June 21, 2010, the Registrar issued ROC License No. 265009 for General Dual KA Engineering contracting license to Respondent. The license is currently active and renewed through June 30, 2022. Scott Eric Mitchell is listed on the license as the Qualifying Party/Member. The address of record for the license is 39506 N. Daisy Mountain Dr. Ste. 122430 Phoenix, AZ 85086-6079.

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. 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 $14,000.00 surety bond issued by Old Republic Surety Co. effective May 26, 2020.

On March 29, 2021, the Registrar received a complaint from Complainant alleging nonpayment of services against Respondent. Specifically, Complainant alleged that Respondent had failed to remit timely payments amounting to $89,971.03. Attached to the complaint were copies of invoices, emails, and the parties’ related contract agreements. The Registrar designated it Complaint No. 2021-01358 and assigned the case to Ariel Driver in their legal department for investigation.

On April 05, 2021, 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 April 15, 2021.

On April 07, 2021, Respondent submitted a response to the Registrar, which alleged that Respondent had paid Complainant everything it owed save $12,000.00. Respondent argued that “Based on our as-built elevations and pictures of haul trucks that are less than full, it is our stance that we are being overcharged for material that wasn’t delivered on the project.” Respondent further noted that Complainant was offered to “split the difference” with Respondent as a settlement, but the offer was declined by Complainant. Thus, Respondent refused to pay the outstanding balance.

On April 08, 2021, 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 April 23, 2021, 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 April 19, 2021, the Registrar received Respondent’s Answer whereby Respondent reiterated its prior allegation that it only owed an outstanding balance of $12,000.00 to Complainant, and that it was justified in withholding the monies because Complainant had not delivered materials commiserate with the related charge(s). Attached to Respondent’s Answer was a spreadsheet, a Field Density Test Results report, and 3 photographs.

On April 12, 2021, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on May 28, 2021. 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 Jason Klock and Sam Schippers as witnesses. Respondent called Jacob Dean as a witness and submitted Exhibits 1-7 into the record. The substantive facts of record are as follows:

Complainant is a rock manufacturer located in Buckeye, AZ who delivers its products across the greater Phoenix area. Complainant is Respondent’s vendor.

On an unknown date the parties entered into a $938,000 formal contract agreement whereby Complainant agreed to manufacture and deliver shipments of erosion-control rock to Respondent’s jobsite at the Central Arizona Project aqueduct. In turn, Respondent agreed to issue payment for material and delivery within 30-days of receiving Complainant’s weekly invoice.

Shipment of materials for the project commenced in August 2020. Delivery of materials concluded in February 2021.

Loads are weighed and certified prior to shipment, but Respondent was not required to sign for delivery. Complainant shipped approximately 40,000 tons of materials per week from August 2020 through February 2021. A 8,500 ton secondary shipment was also delivered.

Between January 15, 2021, and February 19, 2021, Complainant issued 10 invoices to Respondent totaling $120,426.26 for materials delivered to Respondent.

By March 26, 2021, Complainant’s records reflected payments from Respondent resulting in a lowered outstanding balance of $89,971.03.

By May 28, 2021, Complainant’s records reflected that Respondent owed an outstanding balance of $43,733.65 for 4 invoices.

$12,012.00 invoiced January 15, 2021;

$21,053.04 invoiced January 20, 2021;

$9,038.93 invoiced January 20, 2021, and

$1,629.68 invoiced January 27, 2021.

In March 2021, Respondent provided notice to Complainant that it would issue payment on all outstanding invoices, save the first for $12,012.00.

Respondent has not made any payment(s) to date.

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 clear.

The credible evidence of record reflects that the parties had a contractual agreement and that 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 project. This is an affirmative defense that Respondent bears the burden to establish. Respondent’s argument that Complainant was paid $31,721.65 for invoices 2-4 is not supported by the evidence. Respondent provided no indicia of proof, and when directly asked by the Tribunal could not state with any certainly when and in what manner Complainant was paid for invoices 2-4. Moreover, Respondent admitted withholding $12,012.00 for the first invoice because Respondent “did not believe” Complainant supplied the material, as it was missing from the jobsite. Respondent, however, failed to satisfactorily establish that the missing material was due to Complainant’s failure to deliver. Here, Respondent’s belief is insufficient to overcome the credible evidence established by Complainant. Thus, the undersigned finds that Respondent failed to promptly and completely pay Complainant for labor and/or materials on the underlying 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 Action Direct LLC, dba Redpoint Contracting, ROC License No. ROC 265009, shall be suspended until Respondent provides the Registrar with proof that $43,733.65 has been tendered to Complainant in certified funds as restitution for the 4 outstanding invoices address in this matter.

IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment to Complainant, Complaint 2021-01358 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, June 16, 2021.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors