ALJDEC - Licensing

2023A-00347-NPC-ROC · Registrar of Contractors · 2023-04-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Eisenhower LLC,

COMPLAINANT

Image Building Systems LLC

License No. ROC 228671,

RESPONDENT

No. 2023A-00347-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 31, 2023

APPEARANCES: Nicholas Morales appeared on behalf of Complainant Eisenhower, LLC. Ryan Klosterman appeared on behalf of Respondent Image Building Systems, LLC.

ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson

_____________________________________________________________________

FINDINGS OF FACT

1. In or around April of 2020, Complainant Eisenhower, LLC (Complainant) entered into an agreement with Respondent Image Building Systems, LLC (Respondent), wherein Complainant agreed to perform construction work for Respondent on the Salt River Pima, Maricopa Indian project, in the amount of $325,578.00. The scope of the work included, “the furnishing and installation of the, Crushed Base Compacted, Rebar, foundations, Concrete Slab, Saw Cuts & Sealant.”

2. Nicholas Morales is the manager for Complainant.

3. Ryan Klosterman is the qualifying party for Respondent.

4. Complainant provided labor and materials for the project under the contract.

5. On December 19, 2021, Complainant issued invoice 521 to Respondent for a final retention payment in the amount of $32,557.80.

6. Respondent did not pay the invoice.

7. Complainant filed a complaint with the Arizona Registrar of Contractors (ROC) alleging that Respondent failed to pay for labor and services provided by Complainant pursuant to the construction contract.

8. On February 6, 2023, the ROC issued a Citation against Respondent’s license. Through the Citation, the ROC alleged that Respondent may have violated Arizona Revised Statutes (A.R.S.) 32-1154(A)(10).

9. The matter was referred to the Office of Administrative Hearings for an evidentiary hearing.

10. A hearing was held on March 31, 2023.

11. At hearing, Mr. Morales testified on behalf of Complainant. Mr. Klosterman testified on behalf of Respondent.

12. Mr. Morales explained that Complainant completed the project, but Respondent failed to pay a total of $32,557.80 that was due.

13. Mr. Klosterman contended that Respondent did not pay the retention payment because the Salt River Pima, Maricopa Indian Community (SRPMIC) withheld payment to Respondent. Mr. Klosterman stated that the SRPMIC withheld final payment to Respondent because Complainant failed to appropriately apply finish to one of the buildings.

14. Having given due consideration to the foregoing, the Administrative Law Judge finds that there is insufficient evidence to show that Complainant materially breached the contract. Additionally, while Respondent presented evidence that its client, the Salt River Pima-Maricopa Indian Community, failed to issue the final payment due, Respondent did not establish that it lacked the capacity to pay Complainant.

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 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 number 228671 held by Respondent Image Building Systems LLC, until it has provided to the ROC, and the ROC has accepted, documents that establish that it has paid Complainant $32,557.80 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. 2023A-00347.

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.

-54864001

001

-137160-45720000Done this day, April 20, 2023.

/s/ Velva Moses-Thompson

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

By Miranda Alvarez

Legal Secretary

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, April 20, 2023.

/s/ Velva Moses-Thompson

Administrative Law Judge

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

Eisenhower, LLC

[email redacted]

Image Building Systems LLC

[email redacted]

Martín Quezada

Registrar of Contractors

[email redacted]

By: OAH Staff