ALJDEC - Licensing
2023A-01782-NPC-ROC · Registrar of Contractors · 2024-04-15
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Colter Electric LLC
COMPLAINANT,
v.
Adanac Builders Corporation
License No. ROC 189034,
RESPONDENT.
No. 2023A-01782-NPC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: March 25, 2024
APPEARANCES: Evan Schube, Esq. represented Complainant Colter Electric LLC (Complainant). David Fix represented Respondent Adanac Builders Corporation (Respondent).
ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson
EXHIBITS ADMITTED INTO EVIDENCE: Complainant Exhibits 1, 4, 5, 6, 7, 8, 9, 10, 11, 12, 17, 19, 20.
_____________________________________________________________________
FINDINGS OF FACT
1. On or about June 11, 2020, Complainant and Respondent entered into a Subcontractor Agreement wherein Complainant agreed to perform electrical labor and supply materials and equipment to Respondent in connection with construction work for a Hyatt Hotel in Flagstaff, Arizona, for the amount of $566,236.00.
2. The Subcontractor Agreement provided, in relevant part, as follows:
...........................................
18. Paid When/Paid If. Subcontractor acknowledges and agrees that the Owner’s approval of the work performed by the Subcontractor and receipts of payment by Contractor from the Owner for the work performed by the Subcontractor are conditions precedent to the Contractor’s obligation to pay the Subcontractor for the work performed under this Subcontract Agreement, regardless of the reason of Owner’s nonpayment. In addition, the Subcontractor shall not be paid by the contractor unless and until the Contractor has been paid by the Owner from the application for payment approved by the Owner and/or architect and all other conditions in this Subcontract Agreement are met. If the Subcontractor interferes by communication to the Owner regarding payment, the Subcontractor will be considered in material breach and will be terminated. Once all conditions precedent to payment are satisfied, including lien waivers, then the Subcontractor shall be paid. Subcontractor acknowledges and agrees that the sole source of payment for work performed by Subcontractor under this Subcontract Agreement are those funds received by Contractor from Owner for the Work described in this Subcontract Agreement.
3. Complainant filed a complaint with the Arizona Registrar of Contractors (Registrar) alleging that Respondent failed to pay the principal amount of $142,409.80 when payment became due for materials and services provided to Respondent in connection with Respondent’s operations as a contractor.
4. On March 31, 2023, the Registrar issued a Citation against Respondent’s license alleging that Respondent violated Arizona Revised Statutes (A.R.S.) § 32-1154 (A)(10).
5. Respondent filed a timely response to the complaint.
6. In his response, Respondent asserted that many of Complainant’s pay applications contained errors related to change orders that were not approved by Respondent. Respondent also asserted that it has not been paid by the Owner.
7. The matter was referred to the Office of Administrative Hearings for an evidentiary hearing.
8. A hearing was held on March 26, 2024.
9. At hearing, Complainant presented the testimony of Colter VanWagenen. David Fix testified on behalf of Respondent.
10. Mr. VanWagenen testified to the effect that Complainant has not been paid for labor and materials supplied to Respondent. Mr. Fix asserted that Complainant has not paid Respondent the remaining amount because Respondent was not paid by the Owner. Respondent also contended that it did not approve change orders that serve as the basis of the complaint.
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).
The Administrative Law Judge may consider the Registrar’s administrative
record.
See Ariz. Admin. Code § R4-9-118.
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.” Emphasis Added.
9. The evidence presented in this case shows that the Owner’s approval of the work and payment to Respondent for the work were conditions precedent to Respondent’s obligation to pay Complainant under the contract. The evidence presented at hearing shows that the Owner did not pay Respondent for the labor and materials described in the complaint.
10. The preponderance of the evidence does not show that Respondent violated A.R.S. § 32-1154(A)(10) as alleged.
11. Therefore, the Administrative Law Judge does not find grounds to impose discipline against Respondent’s license.
RECOMMENDED ORDER
Based on the foregoing, it is recommended that on the effective date of the Registrar’s Order, Complainant’s complaint be dismissed.
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 15, 2024.
/s/ Velva Moses-Thompson
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Tom Cole, Director
Registrar of Contractors
Colter Electric LLC
PO Box 3946
Flagstaff, AZ 86003
Kevin P. Nelson, Esq.
Evan P. Schube, Esq.
Tiffany & Bosco P.A.
[email redacted]
[email redacted]
Adanac Builders Corporation
17505 N 79th Ave
Glendale, AZ 85308
[email redacted]
By: OAH Staff