ALJDEC - Licensing

2022A-08473-NPC-ROC · Registrar of Contractors · 2023-11-20

R2-19-111. VIN THE OFFICE OF ADMINISTRATIVE HEARINGS

Otto Trucking, Inc.,

COMPLAINANT

v.

Sunland Asphalt & Construction LLC

License No. ROC 095189,

RESPONDENT.

No. 2022A-08473-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 29, 2023 and September 18, 2023

APPEARANCES: Ralph D. Harris, Esq. represented Complainant Otto Trucking, Inc. Andrew R. Peshek, Esq. represented Respondent Sunland Asphalt & Construction, LLC.

ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson

_____________________________________________________________________

FINDINGS OF FACT

1. On or about August 26, 2020, Complainant Otto Trucking, Inc. (Complainant) entered into an agreement with Respondent Sunland Asphalt & Construction, LLC (Respondent), wherein Complainant agreed to provide trucking and hauling services to Respondent, in connection with its project to mill and pave the Sandario Road in Pima County, Arizona.

2. Complainant’s owner is Alan Otto.

3. Matt Johnson is the President of Maintenance and Public Works for Respondent.

4. On or about December 7, 2020, Complainant started work pursuant to the agreement.

5. In or around January of 2021, Complainant completed the job.

6. In December of 2020 and January of 2021, Complainant issued invoices to Respondent, based on work performed under the trucking and hauling agreement, for the total amount of $50,646. Respondent did not pay the invoices.

7. On or about September 22, 2022, Complainant filed a complaint with the Arizona Registrar of Contractors (Registrar or ROC), alleging that Respondent failed to pay for labor and services provided by Complainant.

8. On October 12, 2022, the ROC issued a Citation against Respondent’s licenses. Through the Citation, the ROC alleged that Respondent may have violated Arizona Revised Statutes (A.R.S.) 32-1154(A)(10).

9. Respondent filed a timely response to the Citation. In its response, Respondent stated that it originally back charged Complainant in the amount of $99,558.63. Respondent alleged that Complainant caused multiple delays and had an insufficient amount of trucks. Complainant stated that the back charge was reduced to

$59,990.26 after multiple conversations with Mr. Otto. Complainant then alleged that the parties agreed to split the original charge and decrease the back charge to $50,000. Complainant’s reply provided, in relevant part, as follows:

The reduction came from decreasing fully burdened equipment rates in the back charge down to stand-by rates. This was done based on Sunland trying to be a good partner with a valued subcontractor and also because of our long term history and relationship with Otto. Through further conversation internally and with Otto, the decision was made to simply split the original back charge and decrease the amount to $50,000.00. The short pay amount to Otto of $50,646.00 was achieved through paying various Otto invoices in full to keep the accounting side of the back charge simple for all involved. Al was not happy with the outcome but verbally agreed to the $50,000.00 back charge and that it was time to move forward and put this behind us during a phone call on March 31, 2021 between he and I.

10. The matter was referred to the Office of Administrative Hearings for an evidentiary hearing. A hearing was held on March 29, 2023 and September 18, 2023.

11. At hearing, Mr. Otto testified on behalf of Complainant. Matt Johnson and Immanuel Martinez testified on behalf of Respondent.

December 7, 2020

12. Respondent alleges that Complainant owes Respondent a backcharge for all of its downtime: $3,900 for standby on millings and $1,083.33 for paving. Meanwhile, Complainant had 29.4 hours of standby on day 1 waiting for Respondent (which Complainant did not charge for).

13. On December 7, 2020, the first day of the job, Mr. Otto went to the job-site to make sure that the job started as agreed. During the first hour of the day, Respondent told Mr. Otto that to hold the trucks because traffic control barricades had not been set up (because it was still dark). The mills had to wait because Complainant had to wait for Respondent to start. Complainant redirected its trucks to Vulcan’s Orange Grove Plant to avoid halting production, because The Vulcan Materials Marana hot plant broke down. In addition, Respondent’s paver went down for one half hour at noon. Complainant was not the cause of Respondent’s traffic control not being set up, Vulcan’s hot plant breaking down and resulting delays due to rerouting of trucks to the alternate hot plant, or Respondent’s paver having a break down.

December 8, 2020

14. Respondent alleged that on December 8 2020, its mills had down time of 4.5 hours. On December 8, 2020, Respondent’s tack truck was late getting loaded and arriving to the site. As a result, the paver and mills had to wait. Respondent did not charge Complainant for the delay. One of Complainant’s trucks broke down on December 8, 2020, however, Complainant had a total of 7.97 hours of trucking standby that day.

December 9, 2020

15. Respondent alleges that for December 9, 2020, it is owed four hours of delay to the milling operation (for a $10,400.00 back charge).

16. On December 9, 2020, Complainant added an additional truck for a total of 14. Complainant caused a 45 minute delay when a driver accidently dropped material on the scale at the hot plant. Respondent alleges that due to the accident, Respondent’s paving was delayed for one hour and seeks a back charge of $1,300.00.

17. On December 9, 2020, the milling operation again got ahead of the paving operation and had to stop to avoid a gap. Respondent’s job notes state that Respondent moved some of Complainant’s trucks from milling to paving. Respondent alleged that its milling operation’s waiting on the slower paving operation was the result of lack of trucks. Complainant contends that the back charge is not valid because Respondent did not need all the trucks they had initially assigned to milling that day in order to stay ahead of the paving, and there was no lack of trucking to the mills.

18. On December 9, 2020, Complainant had 14 trucks idling their engines and waiting on standby for a total of 9.45 hours. Complainant argued that adding more trucks would not have allowed the milling operation to move any faster. The milling crew just got ahead of the paver and had to hold up.

December 10, 2020

19. Respondent alleges that it is owed a back charge of only 15 minutes (.25 hours) delay, for $325.00 for paver standby. Respondent’s Supervisor said in his own notes that the Vulcan asphalt plant in Marana broke down at 12:20 p.m. and Complainant had to send its trucks to the Orange Grove plant 10 miles further away to get asphalt to finish the day. As a result, the paver was forced to stop for more than an hour and a half in the middle of the day. On that day, Complainant fully supplied trucks to the site with 17 trucks, 3 more than day before (again, Complainant steadily increased the number of trucks as the project moved away from and then back towards the asphalt plant). The paver went as far as it could go that day given the breakdown of the Marana asphalt plant. As a result of the paver having to hold up due to the hot plan going down, Respondent had to shut down its mills to avoid a gap developing between the paver and the mills. One mill shut down at 12:30 p.m. and the other mill shut down at 1:15 p.m. In addition, Respondent’s own supervisor said they cut trucks at 10:15 and 11:05 a.m. There was no shortage of trucks to the mills. In fact, Complainant’s trucks were on standby that day for 22.45 hours. The milling operation got too far ahead of the paving again and did not need the trucks. Complainant contended that there should not be any milling back charges to Complainant because mills had to wait for the paver.

December 11, 2020

20. Regarding December 11, 2020, Complainant contends that its trucks incurred 9.25 hours of standby related to paving (as opposed to the milling). Respondent alleges that Complainant owes it a back charge for a half hour of delay on paving. On December 11, 2020, Respondent shut down both of its milling machines early. Respondent’s milling foreman noted that the 250 milling machine broke down at 10:30 a.m. – not due to any truck issue. Complainant contends that it did not cause the milling delay on December 11, 2020.

December 14, 2020

21. Respondent alleges that Complainant owes a back charge of $5,200 for two hours of delay to each of the two mills. On December 14, 2020, Respondent’s milling supervisor documented that he had to shut down one mill because of the gap between the paver and mill, and that he had to put the second mill on standby at 11:45 a.m. to 1:30 p.m. to shorten the gap between the paver and mill. However, at hearing, Mr. Martinez stated that there was an error in the exhibit and that the standby must be attributed to paving and not milling. Mr. Martinez stated referred to Complainant’s Exhibit 13 that provides, “We had to wait for mix 6 times today it was a total of 1 hour and 50 min.” However, Complainant contended that it was not the cause of delay on December 14, 2020. Complainant contended that even thug the paver had to wait for asphalt mix, the delay was due to backups at the asphalt hot plant, not due to lack of trucks. The trucking sheets submitted by Complainant show that on 19 different occasions, Complainant’s trucks incurred standby at the hot plant waiting for a total of five hours and 15 minutes (not counting the first 15 minute of delay) to receive loads of asphalt to take to the paver. On December 14, 2020, Complainant added four more trucks, bringing the total count to 22 trucks. Complainant had a total of 12.15 hours of standby that day. See id. Respondent did not make a claim for delay’s caused by Complainant’s trucks to paving on December 14, 2020.

December 15, 2020

22. On December 15, 2020, Complainant had 22 trucks on the job.

23. Respondent made no claim delays on December 15, 2020. However, Respondent claims that Complainant owes a back charge of $1,300.00 for milling on December 15, 2020.

24. For December 15, 2020, Respondent’s milling supervisor documented that he cut one truck at the mill at 10:25 a.m., cut two more trucks at 11:20 a.m., and cut one more truck at 12:15 p.m. He shut down one mill at 10:15 a.m. because it was too far ahead of the paver. He noted that he had no wait time on the trucks. He noted that he shut down the second mill at 2:30 p.m. for the day.

December 16, 2020

25. On December 16, 2020, Complainant had had 23 trucks on the job, and sustained 26 full hours of standby time. One of Complainant’s trucks accidentally dump a load on the hot plant scale which temporarily stopped loading at the plant, and as an effect of this the paver had to wait 1.5 hours. However, Respondent’s supervisor documented in his notes that the paver caught up to the plant’s production at 12:45 p.m. (“We also caught the plant by 12:45”). On December 16, 2020, despite Complainant’s spill at the hot plant that day, the paver fully kept up with the plant’s maximum ability to produce asphalt. Respondent cut one truck off at 1:10 p.m. and another truck at 2:00 p.m. In addition, according to Respondent’s supervisor’s notes, Respondent shut down the first mill at 11:30 a.m. due to the gap in front of the paver and shut the second mill down at 3:00 p.m. At hearing, Mr. Martinez testified to the effect that if two machines milled continuously, they would get too far ahead of the paver and risk leaving unpaved roadway when the road was opened back up to public traffic each day.

December 17, 2020

26. For December 17, 2020 Respondent alleges that Complainant owes a back charge of $2,600 for one hour of milling standby for each of its two milling machines. Respondent’s milling supervisor noted that he cut trucks and then later added trucks to correct the distance in front of the paver. Respondent shut down one mill at 10:00 a.m. The paver starting late while the milling started on time.

December 18, 2020

27. Respondent alleges that Complainant owes a back charge of $5,200 for two hours of alleged milling standby. Respondent’s foreman documented that the mills started late and were on standby until 7:45 a.m. due to Respondent not setting up its traffic control on time. Complainant’s trucks and the paver had to wait for the milling to begin. Despite the late start, both mills shut down early at 1:45 p.m.

December 21, 2020

28. Respondent alleges that Complainant owes $2,600 for milling standby and $1,300 for paving standby. On December 21, 2020, Respondent started back northbound from the south end of the project. Complainant had 23 trucks on the job this day as evidenced by a number of documents in evidence, including but not limited to Complainant’s Exhibit 14 at Otto 000376 and 393. As the distance decreased after finishing the furthest point the truck count gradually decreased with no complaints from Respondent. The first mill shut down at 11:00 a.m. to close the gap between the mills and paver and the second mill took a break from 1:00 p.m. to 1:20 p.m. to help let the paver catch up. Complainant had 5.2 hours of standby on the milling operation.

December 22, 2020

29. Respondent alleges that Complainant owes it one half hour for paving delay and a half hour for milling delay. On December 22, 2020, Complainant had 23 trucks on the job and incurred 24.18 hours of standby. This day was one of the furthest points on the project. That morning, the Respondent paving supervisor noted that he had to push the paving back 30 minutes, causing delay to both Respondent and Complainant. Complainant did have one truck spill on the scale at the hot plant which took 20 minutes to clean up, but otherwise the day went well. With regard to milling, Respondent had one of its mills shut down for 3.75 hours and then start up again in recognition of the gap between the mills and the paver. One mill ended the day at 3 p.m. The other mill ended the day at 3.30 p.m.

December 23, 2020

30. On December 23, 2020, Complainant supplied 18 trucks. Respondent wants to back charge Complainant 1.25 hours ($1,625) for delay to one of its mills, and 1.75 hours ($2,275) for paving standby. However Respondent shut down its first mill at 9:25 a.m. with no wait time, and the second mill was required to wait because it was too far ahead of the paver and had to close the gap. Complainant did have an incident with one of its trucks backing into another of Complainant’s trucks, but it did not cause any wait time. Complainant had standby time that day of 13.62 hours.

December 28, 2020

31. On December 28, 2020, the first day after the Christmas break, Complainant had 19 trucks on the job. Respondent seeks to back charge Complainant 2.75 hours delay for each of the mills ($7,150) and 1.25 hours delay ($1,625) on the paving. Complainant admits to having 2 trucks break down this day which did cause some standby. However, part of the standby for this day came from Respondent keeping trucks too long at the mill which caused a shortage of trucks at the hot plant for asphalt. Plus, Complainant had 9.45 hours of standby, more than Respondent.

December 29, 2020

32. On December 29, 2020, a total of 2,689.05 tons of asphalt were delivered to the job with 21 trucks running. The trucks had “caught” the asphalt plant at 1:00 p.m. and had to wait for each load thereafter. The plant broke down at 2:40 p.m. after shipping the previous load at 2:31 p.m. On this day, the most productive day of the job, Respondent wants to back charge Complainant 4.5 hours of standby for each milling machine (for a total of $11,700) and 1.25 hours of standby for the paver ($1625). Meanwhile, Complainant had 12.67 hours of standby and objects to being back charged.

December 30, 2020

33. On December 30, 2020, Respondent paved 2,373.44 tons, 312.61 tons less than the previous day. On both days, the same number of trucks were supplied. Respondent did not charge standby for day 16, either for milling or paving, despite charging Complainant standby for the more productive day. When asked at trial Mr. Martinez could not answer how that could be.

January 4, 2021

34. Respondent wants to back charge Complainant 1.5 hours of delay for each of the two the milling machines (totaling $3,900). On January 4, 2021, Complainant had 18 trucks on the job. The asphalt hot plant had several lengthy closures that day for several different reasons, including what was called a “dust line” (dealing with a dust control or air quality issue) and later a gear box problem. Also, an Complainant truck dropped a load on the scale, causing a half hour of delay. The result was that Complainant’s 18 trucks sat idle a substantial part of the day, incurring a whopping 65.25 hours of standby.

January 5, 2021

35. For January 5, 2021, Respondent wants to charge Complainant for 2.5 hours (or $6,500) of standby on millings. Id. On January 5, 2021, there were 18 trucks at the job. Respondent claims no delay regarding paving. As on prior days, the mills had to take breaks to wait for the paver to catch up. Plus, Complainant had 7.35 hours of standby that day waiting about equal amounts of time on Respondent’s milling and paving/hot plant.

January 6, 2021

36. On January 6, 2021, Complainant decreased the truck count by 4 from the previous day, keeping 14 trucks on the job. Respondent did not charge standby on this day. Complainant had 18.25 hours of standby.

37. Respondent’s own form of contract precludes modifications which are not in writing and signed by both parties. Mr. Otto did not agree to and did not sign a change order or any other modification of the contract, and he did not waive Complainant’s right to full payment. There was no settlement as claimed by Respondent.

38. Having given due consideration to the foregoing, and the remainder of the evidence of record, the Administrative Law Judge (ALJ) finds that the record is insufficient to support a finding that Complainant owes Respondent back charges in the total amount of $99,558.63, as shown in Respondent’s Exhibit 2.

CONCLUSIONS OF 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.A.C. R2-19-119.

“At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” A.R.S. § 41-1092.07(G)(2).

A preponderance of the evidence is:

The 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.

Black’s Law Dictionary 1373 (10th ed. 2014).

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” A.R.S.. § 1-211(B).

The purpose of the ROC’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

A.R.S. § 32-1154(A) provides that:

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: .... 10. Failure by a licensee or agent or official of a 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 or, 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.

8. 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 . . . 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 or, 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.”

9. Payment for “[s]ervices rendered in connection with the licensee’s operations as a contractor” does not include interest, finance charges, lien charges, or other charges that are based solely on contract terms.

10. The preponderance of the evidence shows that Respondent failed to pay invoices in the amount of $50,646, when payment became due for services provided to Respondent in connection with its operations as a contractor. The preponderance of the evidence shows that Respondent violated A.R.S. § 32-1154(A)(10) as alleged.

11. Based upon Respondent’s violation of the provisions of A.R.S. § 32-1154(A)(10), grounds exist to impose discipline against Respondent’s license.

12. Because A.R.S. § 32-1154(A)(10) only includes a licensee’s failure to pay for materials or services rendered in connection with the licensee’s operations as a contractor, not late fees, interest, or other consequential or contractual damages, the Administrative Law Judge does not recommend that Respondent be required to pay late fees as a condition of keeping its contractor’s license in good standing.

RECOMMENDed order

Based on the foregoing, it is recommended that the ROC suspend license numbers 095189 and 111922 held by Asphalt & Construction, LLC until it has provided to the ROC, and the ROC has accepted, documents that establish that it has paid Complainant $50,646.00 in certified funds.

It is further recommended that when and if the ROC receives and accepts Respondent’s evidence that it has paid Complainant in certified funds, the ROC may close the Complaint in Case No. 2022A-08473.

Pursuant to A.R.S. § 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 Order will be forty (40) days from the date of that certification.

Done this day, November 20, 2023.

/s/ Velva Moses-Thompson

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Tom Cole

Registrar of Contractors

[email redacted]

Ralph D. Harris, Esq.

[email redacted]

Sunland Asphalt & Construction LLC

[email redacted]

Peggy Klassen

Otto Trucking Inc

4220 E McDowell Rd Ste 108

Mesa AZ 85215-9743

Andrew R. Peshek, Esq.

WONER HOFFMASTER PESHEK & GINTERT, PC

[email redacted]

[email redacted]

By: OAH Staff