ALJDEC decisions subject to certification as final

2021A-02903-NPC-ROC · Registrar of Contractors · 2021-09-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Rugby Holdings LLC,

dba Rugby Architectural Building Products,

COMPLAINANT,

v.

ACM Designs LLC,

License No. ROC 323630,

RESPONDENT.

No. 2021A-02903-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 09, 2021 at 2:00 PM.

APPEARANCES: James Reed, Esq. appeared on behalf of Rugby Holdings LLC (“Complainant”) with Erick Doest as a witness. No appearance(s) by or on behalf of Respondent.

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 20, 2019, the Registrar issued ROC License No. 323630 for Specialty Dual CR-60 Finish Carpentry contracting to Respondent. The license was scheduled for renewal on or before February 28, 2021. Jacob Daniel Leverance is listed on the license as the Qualifying Party, and Carli Alana Ream is listed as the Member. The address of record for the license is 208 N. Cedar Dr. Apache Junction, Arizona 85120-1305.

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. Regarding ROC License No. 323630, such prior license record reflects that Respondent’s license was suspended by the Registrar on March 01, 2021. The license has not been previously disciplined, but the record reflects that at least one case was 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. A $6,750.00 surety bond, issued through Merchants Bonding Co. (Mutual), effective July 01, 2019, was cancelled for the license on April 14, 2021.

On or about June 24, 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 on 7 invoices and owed Complainant an outstanding balance of $15,716.98 as a result. The Registrar designated it Complaint No. 2021-02903 and assigned the case to Katelyn Rolling in their legal department for investigation.

On June 29, 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 July 06, 2021.

Respondent did not reply.

On July 01, 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 July 24, 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 July 24, 2021, the Registrar received Respondent’s timely Answer whereby Respondent provided the following response, in pertinent part(s):

“Due to lack of payment from GC for project we did for him that this material was purchased for it caused us to ultimately go out of business and in default with [Complainant]. Which is also why we did not renew our license. We are in process of finishing paperwork to file bankruptcy.”

On July 26, 2021, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on September 09, 2021. Per the Notice of Hearing on Contested Case (“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 Erick Doest, Credit Manager, to testify and submitted Exhibits 1-3 into the record. The Notice of Hearing and Registrar’s agency file were also admitted into the record. Although afforded a 15-minute grace period, there was no appearance by or on behalf of Respondent. The substantive facts of record are as follows:

On October 15, 2018, Respondent submitted a Credit Application & Purchase Agreement to Complainant.

Between January 09, 2020, and February 06, 2020, Complainant issued 7 invoices to Respondent totaling $16,616.98, of which Respondent paid $900.00.

Because Respondent did not timely remit payment(s), Complainant applied an additional $235.76 in contractually permissible finance charges to Respondent’s outstanding balance.

Complainant did not have any contact with Respondent between July 01, 2021, and July 24, 2021.

At no time did Respondent provide notice to Complainant that it had not been paid by its client, or that it was undergoing bankruptcy proceedings.

Complainant has not filed a related civil action against Respondent.

In closing, Complainant opined that Respondent acquiesced to the allegation(s) of nonpayment against it, and argued that the record supported a finding that Respondent failed to pay for materials provided by Complainant. Complainant also argued that the record did not offer any justification or excuse for Respondent’s default on payment. Complainant further argued that Respondent’s license suspension did not prohibit the Tribunal from finding a violation of Ariz. Rev. Stat § 32-1154(A)(10), nor did it preclude the Tribunal from issuing an Order of Restitution in favor of Complainant pursuant to Ariz. Rev. Stat. § 32-1156.01.

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 not in dispute.

It is undisputed that Complainant and Respondent entered into a purchase agreement on October 15, 2018, whereby Respondent agreed to tender payment to Complainant for provided materials. It is also undisputed that while Respondent did make a payment on its outstanding balance with Complainant, Respondent failed to pay Complainant for the sum total of its debt or offer any reason(s) as to why it could not pay.

Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to issue payment to Complainant on the underlying invoices. Because Respondent failed to appear and provide testimony, this burden has not been sustained. The credible evidence of record shows that Respondent failed to promptly and completely pay Complainant for materials on this 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’s ACM Designs LLC, License No. ROC 323630, shall be suspended, and not renew Respondent’s suspended license, until Respondent provides the Registrar with proof that $15,716.98 has been tendered to Complainant in certified funds as restitution.

IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment to Complainant, Complaint 2021-02903 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, September 24, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors