ALJDEC decisions subject to certification as final

2021A-04983-NPC-ROC · Registrar of Contractors · 2022-01-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

G Mack Demolition Inc.,

COMPLAINANT,

v.

Aloha Construction Group Inc.

License No. ROC 298150,

RESPONDENT.

No. 2021A-04983-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 03, 2022 at 9:00 AM.

APPEARANCES: Jennifer Mack appeared on behalf of G Mack Demolition Inc. (“Complainant”). Gus Shultz appeared on behalf of Aloha Construction Group Inc. (“Respondent”). Gerard Mack 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 February 21, 2018, the Registrar issued ROC License No. 298150 for General Dual KB-1 Building contracting to Respondent. Gus Schultz listed on the license as the Qualifying Party and Officer. The address of record for the license is 3868 S. Lindsay Rd., Gilbert, Arizona 85297.

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. 298150, such prior license record reflects that Respondent’s license is active and renewed through May 31, 2023. The license has not been previously disciplined. The record also 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 for the license issued through Merchants Bonding Company effective May 04, 2017.

On October 04, 2021, the Registrar received a complaint from Complainant alleging nonpayment of services against Respondent totaling $2,070.00. Attached to the complaint was a Meridian invoice dated December 21, 2019, for $1,100.00; for work performed December 16, 2019, and separate Rancho Mercado invoice dated January 01, 20120, for $970.00; for work performed December 18, 2019. The Registrar designated it Complaint No. 2021-04983 and assigned the case to Katelyn Rolling in their legal department for investigation.

On October 06, 2021, the Registrar issued a Notice of No Pay Complaint letter to Respondent providing notice of Complaint No. 2021-04983, and informed Respondent that it was free to raise any affirmative defense(s) or provide additional information by October 13, 2021.

On October 13, 2021, the Registrar received a letter from Respondent which summarily alleged that the company had not hired Complainant to complete the underlying work at issue.

On October 20, 2021, the Registrar asked Complainant to provide documentation that would tend to establish a contractual agreement between the parties. In response, Complainant conceded that all agreements were verbal, but did provide a sworn statement from Respondent’s former employee, Chris Herrera, who attested that he ordered the underlying work in his capacity as Concrete Foreman. Mr. Herrera also provided paystubs to substantiate his employment with Respondent and position.

On October 26, 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 November 10, 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 November 03, 2021, the Registrar received Respondent’s Answer. In its Answer Respondent denied Complainant’s alleged violation of Ariz. Rev. Stat § 32-1154(A)(10), and argued that Respondent “[D]id not hire [complainant] to complete this work.”

On November 12, 2021, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 03, 2022. 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

Jennifer Mack testified on behalf of Complainant. Gus Schultz testified on behalf of Respondent. The Registrar’s electronic hearing file was admitted into the record as its own exhibit. The substantive evidence of record is as follows:

Respondent is a general contractor. Complainant is a demolition subcontractor. The parties have a professional relationship dating back to 2013. Historically, all of the parties’ contracts have been verbal. In the past, after completing demolition and dumping materials, Complainant would attach a dump receipt to invoices submitted to Respondent for payment.

On an unknown date, Respondent’s Concrete Forman, Chris Herrera, entered into a verbal agreement with Gerard Mack for two (2) separate projects; for demolition and hauling at Meridian on December 11, 2019, and demolition and hauling at Rancho Mercado on December 18, 2019.

On December 21, 2019, Complainant issued Invoice 13614 via QuickBooks to Respondent for the Meridian project. No dump receipt was attached.

Respondent did not open the invoice until July 07, 2020.

On January 01, 2020, Complainant issued Invoice 13645 via QuickBooks to Respondent for the Rancho Mercado project. No dump receipt was attached.

Respondent did not open the invoice until July 07, 2020. Respondent subsequently viewed the invoice again on December 16, 2020, January 26, 2021, October 13, 2021, October 21, 2021, October 28, 2021, November 05, 2021, and January 03, 2022.

On at least one occasion Mrs. Mack spoke with Rochelle Wallace in Respondent’s accounts payable department regarding Invoices 13614 and 13645. On or about July 15, 2020, Respondent asked for the dump receipts for both underlying projects. Complaint declined the requests the next day.

In closing, Respondent argued that the invoices at issue were not paid because Complainant never provided proof that the underlying work was performed. Respondent opined that it should not be required to pay, as no evidence in the record established that Complainant ever performed the work at issue.

In closing, Complainant argued that but for Mr. Herrera’s request it would have not completed the work at issue for Respondent.

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.

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.

Here, although the record does establish that Mr. Herrera ordered two projects from Complainant in December 2019 totaling $2,070.00, Complainant did not establish by a preponderance of the evidence that it did in fact complete the underlying work. There is nothing in the record that tenuously corroborates Mrs. Mack’s assertion that the work was completed. Her opinion that QuickBooks would not have issued the invoices at issue unless the jobs were finished, does not overcome Respondent’s vehement denial that the work was not performed. The record reflects that by all accounts the parties had an amicable professional relationship whereby Respondent paid all invoices in a timely fashion, and did so upon Complainant’s submission of dump tickets attached to its invoices. No dump tickets were provided to Respondent when the invoices were originally issued, and no dump tickets were submitted as evidence to support Complainant’s contentions.

Therefore, because Complainant failed to establish by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10), Complainant has not established cause for the Registrar to discipline Respondent’s contractor’s license.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that Complaint 2021-04983 be dismissed and 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, January 24, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors