ALJDEC - Licensing
2022A-02836-NPC-ROC · Registrar of Contractors · 2023-05-21
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Topocean Consolidation Service Inc.,
COMPLAINANT,
v.
American Bath Remodeling, Inc.
ROC License No. 307529,
RESPONDENT.
No. 2022A-02836-NPC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: May 11, 2023 at 9:00 AM.
APPEARANCES: Edward Marko, Esq. appeared on behalf of Topocean Consolidation Service Inc. (“Complainant”) with Wai “Wil” Hung Wog as a witness. Brian Cooper appeared on behalf of American Bath Remodeling, Inc. (“Respondent”) with David Sanders as a witness.
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
Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website. On August 18, 2016, the Registrar issued License No. 307529 for B-2 Small General Commercial contracting license to Respondent. The license is currently active and renewed through August 31, 2024. Dave Greg Sanders is the Qualifying Party and Member on the license. Respondent’s address of record for the license is 8711 E. Pinnacle Peak Rd., Scottsdale, AZ 85255. There is an active $25,000.00 bond issued by Nationwide Mutual Insurance Company for the license, effective June 30, 2016. There is no prior disciplinary history for the license, save one (1) prior resolved or otherwise settled complaint.
On April 08, 2022, the Registrar received a complaint from Complainant alleging nonpayment of $18,720.00 worth of services against Respondent. Specifically, Complainant alleged that Respondent had failed to remit timely payments on two (2) invoices, for $4,660.00 and $14,060.00 respectively, both of which were issued to Respondent in November 2020. The Registrar designated it Complaint No. 2022-02836 and assigned the case to Gail Mathews in their legal department for investigation.
On April 22, 2022, 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 29, 2022.
On April 28, 2022, the Registrar received a response from Mr. Cooper on behalf of Respondent as follows, in pertinent part:
Myself and the Principals of American Bath are out of town addressing projects for other entities we are a part of. Since this Matter dates back to 2020, which is before my time as an accountant for American Bath Remodeling, I logically ask for an additional 60 Days to properly Research and Respond To this Matter. There have been no other Correspondence to this claim By Complainant in reference to this for a long, long time.
(All errors and emphasis in original.)
On May 13, 2022, because concurrent related litigation between the parties was pending before the Superior Court of the State of Arizona in and for the County of Maricopa, Complaint No. 2022-02836 was closed by the Registrar.
On December 15, 2022, the Registrar received a copy of a November 07, 2022, Judgement by Default from Complainant for Superior Court Case No. CV2022-051308 that established a civil court had found Respondent owed Complainant $18,720.00 for the unpaid invoices at issue in the case at bar. The judgement noted, in pertinent parts, as follows:
[T]he Court finding: that the Defendant(s) hereinafter named were regularly and duly served; that their time to answer expired; that their default was regularly entered and that the allegations contained in Plaintiff’s Complaint are true and correct. IT IS ADJUDGED that Plaintiff(s) is/are granted judgment against Defendant(s).
Complainant asked that the Registrar reopen Complaint No. 2022-02836 and suspend Respondent’s contracting license.
On December 27, 2022, 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 January 11, 2023, 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 January 09, 2023, the Registrar received Respondent’s timely Answer. In its Answer Respondent alleged that Complainant “used an erroneous method of service to get a judgement without any proper notification” to Respondent. Per Respondent, used Complainant’s services “years ago to deliver freight from China” and that after payment was sent Complainant inexplicably returned it to Respondent. After which, Complainant asked for payment to be resent, which Respondent declined as it had determined the invoice(s) had overcharged a “Drayage penalty” of $4,500.00. Specifically, Respondent alleged that Complainant had been “derelict in getting the freight in a timely fashion from the port” which resulted in an overcharge Respondent believed it had been erroneously charged for. Because Complainant had refused to accept payment for the principal balance on the invoices at issue, less $4,500.00, the parties were unable to resolve their dispute.
On January 11, 2023, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on March 02, 2023. 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 Wil Wog, Customer Service Manager, as a witness. Respondent called David Sanders as a witness. The Notice of Hearing and Registrar’s agency file were also admitted into the record. The substantive facts of record are as follows:
Complainant is freight forwarding company that specializes in container movement between their customers and various international shipping companies. Complainant is licensed to operate federally and by the State of California.
Historically, Respondent would use Complainant’s services to receive freight shipped from oversees and deliver it stateside per Respondent’s instruction(s). Upon the freight’s delivery to an American port, Complainant would be permitted to take possession of it after obtaining a Telex Release and/or Bill of Lading from the shipper. Rarely, if ever, did the parties enter into formal written agreements regarding their contracts.
On an unknown date, Respondent verbally contracted Complainant to pick up and deliver freight from three (3) shipping containers to Respondent’s client’s project site.
On September 25, 2020, Respondent’s shipping container TLLU5507566 arrived from a shipper (“Shipper”) in China at the Port of Los Angeles, in California. On October 01, 2020, Respondent’s shipping containers HDMU6735308 and HDMU6862600 arrived at the same port. All 3 containers were held on site and refused release per Shipper’s orders, as it had not received payment(s) from Respondent.
On October 28, 2020, Complainant received a Telex Release from Shipper for all 3 containers.
On October 30, 2020, and November 03, 2020, Complainant was able to pick up the freight for Respondent because it had paid the terminal charges to retrieve the shipments after Shipper had issued Telex Releases and Bill of Ladings for the shipping containers.
On October 29, 2020, Respondent sent a check via overnight delivery to Complainant for delivery of the freight at issue. On October 30, 2020, Complainant accidentally returned the check to Respondent. Although Respondent contacted Complainant nearly immediately afterwards, Respondent was assured by Complainant that the returned check was not in error.
On November 08, 2020, Complainant issued invoices JK901202 and JK901203 to Respondent, including demurrage and storage fees.
Invoice JK901202 includes $6,250.00 and $6,920.00 in demurrage charges, and $280.00 in trucking yard storage fees.
Invoice JK901203 includes a $4,610 demurrage charge.
Initially Respondent agreed to resend payment but later refused, alleging that some of the freight was delivered in a damages state. As a result, Respondent held the returned payment “for consideration” in hopes Complainant would negotiate the price of both invoices, to no avail.
No claims for damaged freight were ever filed by Respondent.
No further invoices were issued to Respondent.
Respondent has not requested that the Judgement by Default in Superior Court Case No. CV2022-051308 be set aside.
Closing Arguments
In closing, Respondent argued that the nonpayment at issue was Complainant fault, as it had mistakenly returned payment to Respondent. Respondent opined that the disputed amount should be lessened due to alleged damage and incorrectly calculated and/or applied late fees.
In closing, Complainant argued that its burden of proof had been sustained, and as such Respondent’s contracting license should be suspended. Complainant further argued that Respondent failed to provide any evidence to corroborate its contentions that freight was damaged upon delivery and/or that any disputed fees or charges had been incorrectly/inappropriately applied to the invoices at issue.
CONCLUSIONS OF LAW
The Registrar has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before OAH pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq.
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.
Statutes should be interpreted to provide a fair and sensible result. “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”
The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result.
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 the case at bar are clear.
The substantive facts of record establish that the parties had a verbal agreement for Complainant to pick up cargo for Respondent from the Port of Los Angeles, and deliver the freight to Respondent’s client’s project site; which Complainant did. The record also reflects that delivery was delayed due to Shipper releasing the containers late, because Respondent had not timely paid for them when they arrived to port. The record further reflects that Respondent timely paid the underlying invoices, Complainant returned it, and Respondent refused to resent or remit payment due to one or more disputed charges. Most notably, the record reflects that in November 2022 a Judgement by Default was entered against Respondent in Superior Court for the principal amount at issue in this case.
Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to issue payment to Complainant on the underlying projects. This is an affirmative defense that Respondent bears the burden to establish. The Tribunal is not at liberty to make presumptions in favor of Respondent or accept facts in mitigation on behalf of Respondent that are not supported by the evidence. Here, Mr. Sanders admitted that he withheld payment to leverage settlement between the parties, and that he never filed a claim over the alleged damage freight delivered to his client’s project site. Because the credible evidence of record reflects that Respondent owes Complainant payment(s) on the invoices at issue in this matter, and that Respondent had no affirmative defense(s) for failing to timely remit payment(s), Respondent has failed to sustain its burden of proof.
Therefore, as Complainant has established by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10), Complainant has 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 American Bath Remodeling, Inc., ROC License No. 307529, shall be suspended until Respondent provides the Registrar with sufficient proof that $18,720.00 in certified funds has been tendered to Complainant for invoices JK901202 and JK901203 as restitution in this matter.
IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment(s) to Complainant, Complaint No. 2022-02836 may be closed.
NOTICE
Pursuant to Ariz. Rev. Stat. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the Final Decision by the Office of Administrative Hearings.
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 Final Order is forty (40) days after the date of that certification.
Done this day, May 22, 2023.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Martín Quezada, Director
c/o Legal Department
Registrar of Contractors
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
American Bath Remodeling, Inc., Respondent
c/o Brian Cooper
8175 E. Evans Rd., #14241
Scottsdale, AZ 85260
[email redacted]
Edward J. Marko, Esq.
Marko Law PLLC, Counsel for Complainant
14820 N. Cave Creek Rd., Ste. 6
Phoenix, AZ 85032
[email redacted]
By: OAH Staff