ALJDEC - Licensing

2023A-05014-NPC-ROC · Registrar of Contractors · 2023-09-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Gulfside Supply Inc.,

COMPLAINANT

v.

Rugged Roofing, LLC

License No. ROC 329220,

RESPONDENT.

No. 2023A-05014-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 14, 2023

APPEARANCES: Michael Fuller, Esq. represented Complainant Gulfside Supply, Inc. Kevin Kasarjian represented Respondent Rugged Roofing, LLC.

ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson

_____________________________________________________________________

FINDINGS OF FACT

According to the public website of the Arizona Registrar of Contractors

(Registrar) public website, on June 8, 2020, the Registrar issued License No. ROC 32922 to Respondent Rugged Roofing, LLC. Laci Mercer is Respondent’s qualifying party.

Complainant Gulfside Supply, Inc. supplied roofing products to Respondent in 2022, in connection with Respondent’s work as a contractor.

Complainant invoiced Respondent for the supplies, however, Respondent failed to pay a total of $76,820 as shown in invoices dated from the time period of November 2022 to December 2022. See Exhibit B.

On or about April 28, 2023, Complainant filed a complaint with the Arizona Registrar of Contractors (Registrar) alleging that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10).

On May 25, 2023, the Registrar issued a Citation to Respondent alleging that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10).

Respondent filed a timely answer to the Citation.

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

On July 3, 2023, the Arizona Health Care Cost Containment System issued a Notice of Hearing setting the above-captioned matter for hearing at 1:00 p.m. August 14, 2023 at the Office of Administrative Hearings in Phoenix, Arizona.

A hearing was held on August 14, 2023.

At hearing, Complainant presented the testimony of its Branch Manager, Josh Beall. Complainant also took the testimony of Respondent’s qualifying party, Laci Mercer. Respondent present the testimony of its Operations Manager, Tanner Schritter, and its former salesman, Jay Johnson.

Mr. Beall has worked as Complainant’s Branch Manager since May of 2023. Mr. Beall worked as Complainant’s Operations Manager from August of 2022 to May of 2023. Mr. Beall oversees payment disputes and collections. Mr. Beall explained that Complainant invoiced Respondent for roofing material supplied to Respondent, but Respondent failed to pay $76,820.00. Mr. Beall alleged that Complainant sent Respondent the invoices that serve as the basis for the Complaint in 2022.

Mr. Schritter disputed that Respondent owed Complainant for several several reasons, including: lack of signatures from one of Respondent’s authorized signers, lack of date and/or address and a signature from one of Respondent’s authorized signers. Mr. Schritter also disputed that Respondent owed Complainant for some of the invoices alleging that Respondent did not perform work for the project stated, materials were returned, the amount of supplies provided in an invoice was too heavy to be picked up by Respondent, Respondent never received materials due to a cancelled contract, and a service charge.

Mr. Schritter also disputed that Respondent owed Complainant $76,820.00 because the amount includes taxes. Mr. Schritter stated that Respondent is tax exempt and the verification of Respondent’s tax exempt status was timely provided to Complainant. Mr. Schritter stated that Respondent was tax exempt because it was a contractor doing business in Arizona for a contractor that pays taxes to Arizona at the end of the project.

Ms. Mercer explained that she provided verification of Respondent’s tax exempt status to Complainant’s sales representative Jay Johnson.

Mr. Johnson worked for Complainant for two years prior to the time that he left the company three months and a week prior to the hearing date. Mr. Johnson also worked for Complainant’s predecessor, R & S Supply. Mr. Johnson worked for R & S Supply for two years. In or around January of February of 2022, Complainant purchased R & S Supply. Respondent had been a customer of R & S Supply. After the purchase, Mr. Johnson was required to obtain a new credit application from Complainant. At the time, Mr. Johnson obtained a new credit application and a tax exempt from Ms. Mercer and Mr. Schritter. Mr. Johnson sent the form to Complainant’s bookkeeper, Julie Brock. Mr. Johnson explained that after Gulf Eagle routinely charged taxes to contractors.

Mr. Johnson stated that Complainant’s corporate office was in Florida and the individuals working in the Florida office did not believe that Arizona provided a tax exemption to contractors.

Mr. Schritter alleged that Respondent did not receive the invoices that serve as the basis of the Complaint until May of 2023.

Having given due consideration to the foregoing, and the remainder of the evidence of record, the Administrative Law Judge finds that Respondent timey provided Respondent with the documentation to show that Respondent was tax exempt in the year of 2022. The Administrative Law Judge finds that the preponderance of the evidence shows that Respondent owes a total of $54,589.45, which is the total amount alleged by Complainant, less the amount of the disputed invoices in the amount of $17,466.00, the $4,045.40 in taxes, and a service charge in the amount of $719.15.

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. Ariz. Admin. Code 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.” Ariz. Rev. Stat. § 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.” Ariz. Rev. Stat. § 1-211(B).

The purpose of the Registrar’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).

Ariz. Rev. Stat § 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. Ariz. Rev. Stat § 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 Ariz. Rev. Stat § 32-1154(A)(10) as alleged.

11. The Administrative Law Judge concludes that Respondent did not waive his right to dispute the invoices issued by Complainant. 12. Based upon Respondent’s violation of the provisions of Ariz. Rev. Stat § 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 Registrar suspend Rugged Roofing, LLC License No. ROC 329220 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $58,034.39 in certified funds.

It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $58,034.39 in certified funds, the Registrar may close the Complaint in Case No. 2023A-05014.

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, September 5, 2023.

/s/ Velva Moses-Thompson

Administrative Law Judge

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

Martín Quezada, Director

Registrar of Contractors

[email redacted]

Kevin Kasarjian, Esq.

Bergin, Frakes, Smalley & Oberholtzer

[email redacted]

[email redacted]

Michael J. Fuller, Esq.

[email redacted]

By: OAH Staff