ALJDEC - Licensing

2022A-08851-NPC-ROC · Registrar of Contractors · 2023-02-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Xact Masonry, LLC,

COMPLAINANT,

v.

L H C Construction, Inc.

License No. ROC 173191,

RESPONDENT.

No. 2022A-08851-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 27, 2023

APPEARANCES: Francisco Valenzuela appeared on behalf of Complainant Xact Masonry, LLC. Michael Fitzgerald appeared on behalf of Respondent L H C Construction, Inc.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

L H C Construction, Inc. (“Respondent”) is the holder of License No. 173191, issued by the Arizona Registrar of Contractors (“Registrar”).

On or about September 30, 2022, Xact Masonry, LLC (“Complainant”) filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $16,770.00 for concrete work performed by Complainant at two properties on Bracero Lane, in Lake Havasu.

On November 16, 2022, the Registrar issued a Citation charging Respondent with the alleged violation of A.R.S. § 32-1154(A)(10). Respondent timely filed an Answer to the Complaint.

A Notice of Hearing was issued on December 15, 2022, advising the parties that a hearing would convene before the Office of Administrative Hearings on January 27, 2023. On the date and time set for hearing, Francisco Valenzuela, owner of Complainant, testified on behalf of Complainant. Van Tran, the homeowner of the subject properties was also present. Michael Fitzgerald, Project Manager for Respondent, testified on behalf of Respondent. Jim Liesen was also present with Mr. Fitzgerald.

Mr. Valenzuela testified that Complainant was contracted by Mr. Fitzgerald to perform concrete installation/construction at the project. Mr. Valenzuela testified that Mr. Fitzgerald represented himself to be the general contractor for the project. Mr. Valenzuela testified that Respondent calculated the elevations and obtained the permits. Mr. Valenzuela testified that Complainant’s contracted scope of work was to perform specified concrete work on two properties and that Complainant completed all of the work it was contracted to perform. Mr. Valenzuela testified regarding the specific amounts of monies paid by Respondent to Complainant and the monies that continue to be owed by Respondent to Complainant.

Mr. Valenzuela testified regarding invoice #100, that Respondent paid the invoice in full in the amount of $7,000.00 for the installation of 2,100 square feet of concrete slab, and also paid $13,000.00 for Complainant to purchase materials for other portions of its scope of work.

Regarding invoice #148 in the amount of $17,000.00 for six retaining walls, Mr. Valenzuela testified that Respondent paid $10,000.00, leaving a balance of $7,000.00.

Regarding invoice #102 in the amount of $12,320.00 for the construction of two planter walls and four columns, Mr. Valenzuela testified that Respondent has not paid any amount toward this invoice, leaving a balance of $12,320.00.

Regarding invoice #218 in the amount of $20,450.00 for five retaining walls, Mr. Valenzuela testified that Respondent paid $10,000.00 toward this invoice, leaving a balance of $10,450.00.

All of the invoices are contained in the agency record, of which administrative notice was taken.

The sum of the amounts owing to Complainant from Respondent, $7,000.00 from invoice #148, $12,320.00 from invoice #102, and $10,450.00 from invoice #218, is $29,770.00. After deducting the $13,000.00 Respondent paid toward materials, Respondent continues to owe Complainant $16,770.00.

Mr. Fitzgerald testified that he hired Complainant to construct the walls on the project, however, Mr. Valenzuela became ill with COVID, lost his mother and sister to COVID, and was hospitalized for several months due to complications caused by COVID. Mr. Fitzgerald testified that during Mr. Valenzuela’s hospitalization (three months in a coma and three months in recovery), none of Complainant’s crew members came to the jobsite because they did not know what work needed to be performed and could not get direction from Mr. Valenzuela due to his incapacitation, which resulted in delays on the project.

Mr. Fitzgerald testified that he had to pay other subcontractors to complete the scope of Complainant’s work, and accused Mr. Valenzuela of stealing left over concrete block that was used by Complainant to perform work that the homeowner independently hired Complainant to perform. Mr. Fitzgerald further testified that some of Complainant’s work had to be redone.

Mr. Fitzgerald asserted that although Complainant provided a bid for the installation of the driveway, Respondent did not contract with Complainant for the construction of the driveway.

Mr. Fitzgerald asserted that Complainant’s work was “sloppy,” that he had to hire an electrician to repair the lighting in the block walls, that a column needed to be reconstructed, and that Complainant did not complete its scope of work.

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

Failure 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 credible evidence of record, including Mr. Valenzuela’s testimony, established that Complainant performed the scope of work it was contracted to perform. Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the work performed and that it had not received sufficient monies from the client/owner of the project. The only “defense” that Respondent provided was that Mr. Valenzuela’s illness resulted in delays on the project causing Respondent to pay other subcontractors to complete the scope of Complainant’s work. However, Respondent did not provide any documentation establishing entitlement to any offsets or that Respondent, in fact, hired others to complete Complainant’s scope of work or repair any alleged deficiencies in Complainant’s work.

The undersigned Administrative Law Judge does not find Respondent’s argument persuasive. Based on the evidence presented at hearing, the defenses available under A.R.S. § 32-1154(A)(10) have not been established. Respondent did not present evidence establishing that it “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.”

Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $16,770.00 for services or materials rendered in connection with Respondent’s contracting business.

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.

RECOMMENDed order

Based on the foregoing, it is recommended that the Registrar suspend Respondent’s License No. 173191 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted documents that establish that it has paid Complainant $16,700.00 in certified funds.

It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $16,770.00 in certified funds, the Registrar may close the Complaint in Case No. 2022-08851.

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, February 15, 2023.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Martín Quezada, Director

Registrar of Contractors

[email redacted]

Xact Masonry, LLC

[email redacted]

L H C Construction Inc.

[email redacted]

By: OAH Staff