ALJDEC decisions subject to certification as final

2022A-03860-NPC-ROC · Registrar of Contractors · 2022-08-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Wolfe's Demolition LLC,

COMPLAINANT

KMTI Construction + Management LLC

License No. ROC 330026,

RESPONDENT

No. 2022A-03860-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 11, 2022

APPEARANCES: Paul Wolfehagen, Owner and Qualifying Party, appeared on behalf of Complainant Wolfe’s Demolition LLC, which was represented by Richard Murphy. Michael Izdepski, Owner and Qualifying Party, appeared on behalf of Respondent KMTI Construction + Management LLC, which was represented by Mike Thal.

ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer

_____________________________________________________________________

FINDINGS OF FACT

KMTI Construction + Management LLC (Respondent) is the holder of License No. 330026 issued by the Registrar of Contractors (Registrar).

On or about December 28, 2021, Wolfe’s Demolition LLC (Complainant) provided Respondent with an estimate for demolition work at 15257 N. Scottsdale Rd., Suites 180 and 115. The estimate indicated the work would be completed in two phases with a Phase 1 cost of $20,400.00 and a Phase 2 cost of $29,800.00.

Complainant performed work on the Phase 1 of the project. Complainant was paid $13,101.00 towards the contract price for Phase 1.

Complainant did not perform any work on Phase 2 of the project.

During the work on Phase 1, someone from Respondent texted Mr. Wolfehagen regarding windows that were broken during the course of Complainant’s demolition work. Mr. Wolfehagen did not respond to the text.

On or about May 10, 2022, Complainant filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $20,400.00 for demolition work performed.

The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a Citation for Alleged Violation of A.R.S. § 32-1154(A)(10).

Mr. Wolfehagen testified that the total amount in dispute was $7,299.00. Mr. Wolfhagen agreed that of the identified chargebacks listed by Respondent, a $130.00 charge for removal of VCT at Storage Area and a $135.00 charge for removal of demising wall section seemed appropriate. Mr. Wolfehagen questioned the $2,000.00 charge for electrical conduit demolition, the $660.00 charge for mechanical duct work removal, and the $4,374.00 charge for the glass replacement as either being outside the scope of the contract or excessive in amount.

Mr. Izdepski testified that Complainant was paid $13,101.00 on Phase 1 of the contract because of the $7,299.00 in backcharges. Mr. Izdepski stated that Complainant did not complete Phase 1 and he had a “heated discussion” with Mr. Wolfehagen during which he told Complainant to finish Phase 1 and they would go separate ways. Mr. Izdepski testified as to the backcharges and indicated that he was able to negotiate reduced charges for the work done, which he then passed on to Complainant. Mr. Izdepski also indicated that Respondent had to hire a new contractor to complete Phase 2 at an increased cost from the $32,000.00 contract with Complainant to an $80,000.00 contract with its replacement. Mr. Izdepski maintained that because of Respondent’s contract with the owner, Respondent was forced to “eat” the additional cost of the replacement contractor.

Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due.

CONCLUSIONS OF LAW

The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119.

A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).

A.R.S. § 32-1154(A)(10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license,

[f]ailure by a licensee or agent or official of a licensee to pay monies in excess of $750 when due for materials or services rendered in connection with the licensee's operations as a contractor unless the licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.

The evidence failed to establish that Respondent owed a total of $7,299.00 for work performed. The backcharges described by Respondent were justified and reasonable.

Therefore, Complainant failed to establish that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant for services or materials rendered in connection with Respondent’s contracting business.

RECOMMENDed order

It is recommended that on the effective date of the Registrar’s final order in this matter, the Registrar close Complainant Wolfe's Demolition LLC’s complaint in Case No. 2022-03869 against Respondent KMTI Construction + Management LLC’s License No. 330026.

In the event of certification of this Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of the certification.

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-137160-45720000Done this day, August 31, 2022.

/s/ Tammy L. Eigenheer

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

By Miranda Alvarez

Legal Secretary -54864001

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