ALJDEC - Licensing

2022A-11633-NPC-ROC · Registrar of Contractors · 2023-03-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Hampton Construction Services LLC,

COMPLAINANT,

v.

Clout Construction LLC

ROC License No. 336894,

RESPONDENT.

No. 2022A-11633-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 13, 2023 at 9:00 AM.

APPEARANCES: DeVon Veater, Esq. appeared on behalf of Hampton Construction Services LLC (“Complainant”) with Chanita Hampton-Jenkins as a witness. Davis Reed appeared on behalf of Clout Construction LLC (“Respondent”). Joe Finkleberg 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 October 21, 2019, the Registrar issued ROC License No. 336894 for General Commercial K-1 contracting to Respondent. Davis Reed is listed on the license as the Qualifying Party/President. JJAL Consulting LLC is listed on the license as the Partner, and Joseph Benjamin Finkelberg is listed as the Shareholder. The address of record for the license is 820 3rd Ave. W. Bradenton, FL 34205.

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. 336894, such prior license record reflects that Respondent’s license is active and renewed through March 31, 2024. The license has not been previously disciplined and no prior complaints have been resolved or otherwise settled on the license. However, the record reflects that there is one (1) open complaints against the license, which is presumed to be related to this matter. Respondent has an active $50,000.00 surety bond for the license issued through Ohio Casualty Insurance Company, effective January 21, 2022.

On or about December 19, 2022, the Registrar received a complaint from Complainant alleging nonpayment of services and materials against Respondent. Specifically, Complainant alleged that Respondent had failed to remit timely payments on a dual invoice based on work performed in scope of an existing verbal contract between the parties, and that Respondent owed Complainant an outstanding balance of $7,825.00 as a result. The matter was designated Complaint No. 2022-11633 by the Registrar and assigned to legal assistant Doug Ulmer for investigation.

On December 21, 2022, Complainant provided supplemental documentation to the Registrar.

On December 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 December 29, 2022.

On December 27, 2022, Respondent provided a response to the Registrar.

On January 03, 2023, 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 18, 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 17, 2023, the Registrar received Respondent’s timely Answer and attachments. In short, Respondent alleged in its Answer that the invoice at issue had not been paid because (a) the work performed was per a contract agreement between general contractor LB Contracting and Complainant, not between Complainant and Respondent, (b) Respondent had agreed to pay Complainant for the work at issue, only if needed, in accordance with its subcontract agreement with LB Contracting, (c) Complainant’s workmanship was poor and required out-of-pocket remediations that Respondent covered, and (d) Complainant demanded payment prior to the invoice’s due date. Respondent attached invoices for allegedly repaired damage caused by Complainant, as well as an alleged remediation invoice to correct Complainant’s deficient work.

On January 13, 2023, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on March 13, 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

Chanita Hampton-Jenkins testified on behalf of Complainant. Davis Reed testified on behalf of Respondent. The Registrar’s agency file, including the Notice of Hearing, was admitted into the record as its own exhibit. The substantive facts of record are as follows:

On or about March 11, 2022, Respondent and LB Contracting LLC (“LB”) entered into a subcontract agreement to erect a new commercial building for Caliber Collision in Casa Grande, Arizona.

When Respondent first contracted with LB, Ms. Hampton was employed by LB as Administrative Assistant. At that time, Ms. Hampton worked on the Caliber Collision project for LB.

On July 14, 2022, the Registrar issued ROC License No. 339412 for General Commercial A Engineering contracting license to Hampton Construction Services LLC. Ms. Hampton is a Member on the license, and Orville Larry Bryant is the Qualifying Party.

Ms. Hampton remained on the Caliber Collision project after her company was licensed by the Registrar.

Gary Kaeser, project manager for Complainant, served as the liaison between Complainant and Respondent.

On an unknown date, Mr. Kaeser approached Mr. Davis on site with concerns about getting paid by LB. Mr. Davis informed Mr. Kaeser that Respondent could do a joint check with LB or directly pay Complainant from LB’s contracting funds.

On or about November 01, 2022, Respondent asked Complainant to perform grading work on the Caliber Collision project. The parties negotiated a $125.00 per hour rate, and work was performed from November 04, 2022, through November 08, 2022. No interest terms were included.

On or about November 09, 2022, Respondent asked Complainant to perform street sweeping work at the Caliber Collision project site. The parties negotiated a $140.00 per hour rate, and work was performed from November 11, 2022, through November 12, 2022. No interest terms were included.

On November 12, 2022, Complainant issued a single $7,835.00 invoice to Respondent, Invoice No. 1037, for the grading and street sweeping. Respondent was charged 47 hours for grading, and 12 hours for street sweeping. No interest terms were included.

Per the parties’ agreement, Complainant overcharged Respondent for 2 hours of street sweeping. Thus, a balance of $7,555.00 was owed on the invoice.

In late-December 2022, the Caliber Collision project was finished.

On December 02, 2022, Mr. Davis acknowledged receipt of Complainant’s invoice and replied, “Received. This will likely get processed next week.”

When Mr. Davis forwarded Complainant’s invoice to LB, LB declined to pay it due to glass Mr. Kaeser allegedly broke on site and alleged dissatisfaction LB had with Mr. Kaeser’s workmanship on sewer line work he performed.

On October 25, 2022, a $588.00 Subcontract Change Order was created by Respondent for “deduct broken glass” purportedly from September 2022. Complainant is not referenced in the document. The document is not signed by LB or Respondent.

On November 21, 2022, a $2,596.55 Subcontract Change Order was created by Respondent for “deduct – central mech services.” Complainant is not referenced in the document. The document is not signed by LB or Respondent.

Respondent agreed to pay Complainant for Invoice No. 1037, less the aforementioned chargebacks.

Additional Evidence

Between mid-July 2022 and late-November 2022, it is unclear what work, if any, Mr. Kaeser performed on behalf of Complainant for Respondent other than grading and street sweeping in November 2022.

Respondent did not notify Complainant of any workmanship concerns regarding grading and/or street sweeping performed in November 2022.

Closing Arguments

Respondent declined to provide a closing argument.

In closing, Complainant argued that the record established Respondent’s admission that Mr. Davis agreed to pay Complainant for Invoice No. 1037, and that neither the alleged broken glass nor sewer workmanship had anything to do with Complainant’s grading or street sweeping. Complainant further argued that Respondent’s reasons for withholding or reducing payment on Invoice No. 1037 was meritless, as no evidence supported a finding that Mr. Kaeser actually broke any glass, damaged a sewer line, or acted as Complainant’s agent when either occurred, if at all. As such, Complainant asked for payment in full, with interest, and an award of attorney’s fees under Ariz. Rev. Stat. § 32-1183(J).

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. A restitution award made pursuant to this section may not include attorney fees. (Emphasis added.)

Ariz. Rev. Stat. § 32-1183, commonly referred to as the Prompt Pay Act, provided in relevant subsection (J) that in any action brought to collect payment(s) or interest, the successful party shall be awarded costs and attorney fees in a reasonable amount.

Here, the material facts of record are clear.

The record reflects that the parties had two (2) back-to-back verbal contracts for grading and street sweeping in November 2022, where the scope of work and terms were negotiated, for the [modified] amount of $7,555.00. The record also reflects that Complainant completed both projects and that Respondent did not identify or inform Complainant of any issues regarding workmanship. The record further reflects that Complainant issued an invoice to Respondent for the projects, and that Respondent confirmed its receipt but failed to remit payment.

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 credible evidence of record shows that Respondent failed to promptly and completely pay Complainant for labor and/or materials on this project, and had no affirmative defense(s) for doing so. Respondent’s deflections regarding Mr. Kaeser are mere red herring arguments that are not germane to the issue for hearing. Although Mr. Davis’ moderate confusion regarding the employment status of one or more employees is understandable, that does not negate Respondent’s duties or obligations to pay Complainant under their agreement. Because the credible evidence of record reflects that Respondent owes Complainant payment for the invoice at issue in this matter, and Respondent has 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, pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(10) and 1156.01, that on the effective date of the Final Order in this matter, Respondent Clout Construction LLC, ROC License No. 336894, shall be suspended until Respondent provides the Registrar with proof that $7,555.00 in certified funds has been tendered to Complainant for completed work on Invoice No. 1037 as restitution in this matter.

IT IS FURTHER RECOMMENDED that Complainant be statutorily barred from an award of attorney’s fees and/or interest in this matter.

IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment to Complainant, Complaint 2022-11633 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 Order is forty days after the date of that certification.

Done this day, March 16, 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]

Clout Construction LLC, Respondent

c/o Davis Reed, Agent

820 3rd Ave. W.

Bradenton, FL 34205

[email redacted]

DeVon Veater, Esq.

Brentwood Law Group PLLC, Counsel for Complainant

2520 E. University Dr., Ste. 103

Tempe, AZ 85281

[email redacted]

By: OAH Staff