ALJDEC - Licensing
2023A-08122-NPC-ROC · Registrar of Contractors · 2024-05-29
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
The Sherwin Williams Company,
COMPLAINANT,
v.
SBI Homes LLC
ROC License No. 316515,
RESPONDENT.
No. 2023A-08122-NPC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: May 23, 2024 at 9:00 AM.
APPEARANCES: James Reed, Esq. appeared on behalf of The Sherwin Williams Company (“Complainant”) with Kimberly Haberer as a witness. No appearance(s) by or on behalf of SBI Homes LLC (“Respondent”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, including the Arizona Registrar of Contractors’ attached agency file, and all Minute Entries issued in this matter were admitted into the record.
_____________________________________________________________________
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 Registrar.
FINDINGS OF FACT
Background and Procedure
On October 31, 2017, the Registrar issued ROC License No. 316515 for General Residential B contracting to Respondent. Harvey Allen Grill and Steve Blake Iverson are listed on the license as Members. The address of record for the license is 156 Fairway Dr. Williams, Arizona 86046.
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 Regarding ROC License No. 316515, such prior license record reflects that Respondent’s license was revoked by the Registrar on April 22, 2024. Respondent had a $9,000.00 surety bond for the license issued through Merchants Bonding Company, which was cancelled on an unknown date. The license has been disciplined on two (2) prior occasions, and has had two (2) other complaints resolved or otherwise settled against it. Currently, the record reflects that there is one (1) open complaint against the license, which is presumed to be related to this matter.
On July 17, 2023, the Registrar received a complaint from Complainant alleging nonpayment of services against Respondent. Specifically, Complainant alleged that Respondent had failed to remit timely payment(s) on a $17,510.28 outstanding line of credit Complainant opened with Respondent. The Registrar designated it Complaint No. 2023-08122 and assigned the case to Katelyn Rolling in their legal department for investigation.
On July 19, 2023, 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 July 26, 2023.
Respondent did not provide a response.
On August 02, 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 August 17, 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 August 16, 2023, the Registrar received Respondent’s timely Answer whereby Counsel for Respondent generally denied the alleged violation of Ariz. Rev. Stat § 32-1154(A)(10).
On August 18, 2023, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on October 10, 2023. Per the Notice of Hearing on Contested Case (“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
Complainant called Kimberly Haberer, Financial Analyst, to testify. The Notice of Hearing and Registrar’s agency file were also admitted into the record. Although afforded a 15-minute grace period, there was no appearance by or on behalf of Respondent. The substantive facts of record are as follows:
On March 30, 2021, Respondent submitted a commercial credit application to Complainant. The application included the following:
If credit is granted, it is understood that the terms of sale are net 20th of the month following purchase. Applicant agrees (a) to make timely payments for all goods and services supplied to Applicant regardless of any credit limit assigned by [Complainant], and (b) in the event Applicant’s account is placed for collection to pay all costs including actual attorney’s fees and court costs incurred by [Complainant] in the collection of any amounts owed to [Complainant] by Applicant. In the event of default and in addition to all other available remedies, [Complainant] may charge interest on any past due balance at the rate of 1.5% per month (i.e. 18% per annum) with said interest calculated from the date of default.
By signing below, each Guarantor personally guarantees to [Complainant the collection of the amounts due hereunder upon Applicant’s failure to pay as agreed and shall be jointly and severally liable for the debt of Applicant, including any fees and charges.
(Emphasis in original.)
The application was signed by Steve Iverson on behalf of Respondent.
Respondent’s credit application was initially approved by Complainant for a $2,500.00 limit. Respondent’s limit was increased to $5,000.00 on April 03, 2021, and again to $15,000.00 on September 27, 2022.
Between November 01, 2022, and January 04, 2023, Complainant billed Respondent thirty-four (34) times for six (6) projects; each time using a net-20 payment(s) due date.
Respondent’s last payment of $4,571.40 was received by Complainant on February 03, 2023.
On March 31, 2023, Complainant issued a Statement of Commercial Account to Respondent, which noted that an aggregate balance of $17,510.28 was due by April 20, 2023.
Additional Evidence
On or about January 20, 2023, Respondent advised Complainant that it would tender payment towards its credit balance upon the receipt of an anticipated draw from a developer-client.
Complainant has been unable to reach Respondent since February 28, 2023. On or about that same date, the credit balance was forwarded to Mr. Iverson, sans response.
None of Complainant’s correspondence to Respondent in its attempts to collect the outstanding debt were returned as undeliverable.
Respondent never contested or otherwise denied any of the invoices issued by Complainant or the overall amount of the outstanding balance on its line of credit.
Closing Arguments
In closing, Complainant opined that it had sustained its burden of proof and argued that because Respondent failed to appear and establish one or more affirmative defenses, the Tribunal should issue an Order in Complainant’s favor that included restitution.
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.
The Notice of Hearing the Registrar mailed to Respondent’s address(es) of record are sufficient, and Respondent is deemed to have received the Notice of Hearing in this matter. Because OAH issued all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable; including to Respondent’s counsel per its Notice of Appearance, Respondent is deemed to have received all correspondence regarding this matter from OAH as well.
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.
The material facts in this case are clear.
The relevant and credible facts clearly establish that Respondent applied for a line of credit with Complainant, which was granted and increased on no less than two occasions. The record also clearly establishes that Respondent ceased payment(s) on the outstanding balance owed to complainant in January 2024 without explanation, and ceased all communications with Complainant the following month. The record further establishes that Respondent still owes Complainant $17,510.28 for its defaulted line of credit.
Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to tender payment in full to Complainant on its commercial line of credit. This is an affirmative defense that Respondent bears the burden to establish. Because Respondent failed to appear and provide testimony, this burden has not been sustained. Here, the record shows that Respondent stopped paying Complainant towards the balance on its line of credit, and had no affirmative defense(s) for doing so.
Because Complainant established by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10), Complainant also established cause for the Registrar to discipline Respondent’s contractor’s license.
RECOMMENDED ORDER
Based on the foregoing,
IT IS RECOMMENDED that on the effective date of the Final Order in this matter, Respondent SBI Homes LLC, ROC License No. 316515, shall remain in a revoked and inactive status until Respondent provides the Registrar with sufficient proof that $17,510.28 has been tendered to Complainant in certified funds as restitution.
IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment to Complainant, Complaint 2023-08122 may be closed.
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.
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 will be forty (40) days from the date of that certification.
Done this day, May 30, 2024.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Tom Cole, Director
c/o Legal Department
Registrar of Contractors
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
SBI Homes LLC, Respondent
156 Fairway Dr.
Williams, AZ 86046
[email redacted]
Mark A. Hanson, Esq.
The Ledbetter Law Firm, PLC, Counsel of Record for Respondent
1003 N. Main St.
Cottonwood, AZ 86326
[email redacted]
The Sherwin Williams Company, Complainant
2225 W. Whispering Wind Dr., Ste. 100
Phoenix, AZ 85085
[email redacted]
James B. Reed, Esq.
Udall Shumway, Counsel for Complainant
1138 N. Alma School Rd., Ste. 101
Mesa, AZ 85201
[email redacted]
By: OAH Staff