2023A-09265-NPC-ROC-RH Rehearing - Notice of Hearing & Packet MAILED

2023A-09265-NPC-ROC-RH · Registrar of Contractors · 2024-12-02

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Creco Rental, Case No. 2023-09265

COMPLAINANT, Docket No. 2023A-09265-NPC-ROC- RH v. NOTICE OF HEARING ON DirtWorks Contracting Inc. CONTESTED CASE License No. ROC 318883,

RESPONDENT. This Notice of Hearing is issued under A.R.S. § 41-1092.05(D).

HEARING INFORMATION The hearing is set for:

January 16, 2025 10:30 AM Kay Abramsohn Google Meet. A link will be provided directly from The Office of Administrative Hearings. Go to www.azoah.com to request to appear in-person.

If you have requested to appear in-person at the hearing, the hearing will be held at 1740 W Adams Street, Phoenix, AZ 85007.

You must attend this hearing. This is an adversarial hearing before an administrative law judge, and is conducted in a similar manner as judicial proceedings. Thus, you must be

prepared to present evidence, including witness testimony and documents, in support of your case.

STATEMENT OF LEGAL AUTHORITY AND JURISDICTION

The State of Arizona has determined that the licensing and regulation of construction contractors is a proper state function, and has vested authority in the Registrar of Contractors to administer Title 32, Chapter 10 of the Arizona Revised Statutes. A.R.S. §§ 32-1101 et seq. All hearings for alleged violations of Title 32, Chapter 10 are conducted under Title 41,

Chapter 6, Article 10. A.R.S. § 32-1156.

The statutes and rules governing the hearing can be found at: Arizona Revised

Statutes §§ 41-1092 to -1092.12, and Arizona Administrative Code R2-19-101 to -122.

PARTICULAR ARIZONA STATUTES AND RULES INVOLVED

The statutes and rules the Respondent is alleged to have violated are cited in the

complaint and citation, which were served on the Respondent on August 28, 2023. SHORT AND PLAIN STATEMENT OF THE MATTERS ASSERTED

The complaint and citation allege that the Respondent committed the following act(s): Charge: 1 A.R.S. § 32-1154(A)(10)

THE PARTIES TO THE ADMINISTRATIVE HEARING Because Respondent is a licensee and is charged with an act(s) or omission(s) that is cause for the suspension or revocation of a license, Respondent is a party to this case and will be a party to the hearing. Because Complainant alleged Respondent committed an act(s) or omission(s) that is cause for the suspension or revocation of a license, Complainant is a party to this case and will

be a party to the hearing.

Respondent and Complainant, as the parties to the hearing, will present evidence and

argument to the administrative law judge.

RIGHT TO BE REPRESENTED The parties to the administrative hearing may choose to be represented by an attorney. A.R.S. § 41-1092.07(B). If one of the parties is a company, the company may be represented

by an officer or employee if that person satisfies the conditions set forth in A.R.S. § 32-

1156(B).

CHANGE OF ADDRESS Each party must inform the Registrar and the Office of Administrative Hearings of any change of address within five (5) days of the change. A.R.S. § 41-1092.04.

HEARING PROCEDURES AND RULES

The administrative hearing will be conducted in accordance with A.R.S. §§ 41-1092 to -1092.12, and A.A.C. R2-19-101 to -122. The parties should review the statutes, rules, and

processes governing the administrative hearing. Copies of the statutes, rules, and articles regarding the administrative hearing process can be found at https://www.azoah.com/.

REGISTRAR’S APPEARANCE BY VIDEO CONFERENCE OR TELEPHONE

The Registrar’s investigators, employees, and attorneys will appear at the hearing via

video conference or telephone unless requested by a party to appear in-person. Requests for the Registrar’s investigators, employees, or attorneys to appear in-person must be filed with the Registrar and the Office of Administrative Hearings no later than seven (7) calendar days prior to the hearing date.

HEARING PACKET

In the interests of administrative efficiency, the Registrar compiles and discloses

certain documents to the parties and the Office of Administrative Hearings. These documents

are attached to this Notice of Hearing as the “Hearing Packet.” If any party wishes to submit additional evidence, they must do so during the hearing after completing a disclosure statement. See “Disclosure Statement” section below.

SUBPOENAS FOR TESTIMONY FROM A WITNESS OR DOCUMENTS

The parties to the hearing must be prepared to present evidence in support of their

case. If a party wants to obtain testimony from a witness or documents not in the party’s

possession, the party must prepare and file a written subpoena for the Administrative Law

Judge to review and sign, if approved. A.R.S. § 41-1092.07(C). Forms for requesting a subpoena can be found on the Office of Administrative Hearings’ website at www.azoah.com.

The party seeking a subpoena must serve notice on all the parties to the hearing, and on the Registrar. A.R.S. § 41-1092.04.

DISCLOSURE STATEMENT

At least seven calendar days before the hearing, each party must prepare and serve a

disclosure statement on all other parties, and file it with the Office of Administrative Hearings. A.A.C. R4-9-118; A.A.C. R2-19-108. The disclosure statement must include any exhibit the party will use at the hearing. A party’s failure to timely disclose any witness or exhibit, without good cause, may result in the administrative law judge excluding those witnesses or exhibits from being used at the hearing. A.A.C. R4-9-118(C). A sample disclosure form is available on the Registrar’s website at https://roc.az.gov/forms/RC-L-800A%20- %20Prehearing%20Disclosure%20Statement%2020191007v4.pdf

CHANGING THE HEARING DATE

The date of the hearing may only be advanced or delayed on the agreement of the

parties or on a showing of good cause. A.R.S. § 41-1092.05(C). The date of the hearing may

be changed by filing a written agreement of the parties to change the date of the hearing. The

written agreement must be filed with the Office of Administrative Hearings, directed to the assigned Administrative Law Judge, and transmitted to the Registrar and all other parties. The assigned Administrative Law Judge may be found on the Office of Administrative Hearings’ web portal at www.azoah.com

If a party would like to move the date of the hearing without agreement of all parties, the party must file a written motion with the Office of Administrative Hearings, directed to the assigned Administrative Law Judge, and transmit a copy to the Registrar and all other parties. The motion must state in detail good cause for why the date of the hearing should be advanced or delayed, and the position of all other parties regarding the advancement or delay. A party may also file a motion asserting a right to an expedited hearing upon a showing of

extraordinary circumstances or the possibility of irreparable harm. A.R.S. § 41-1092.05(E).

RESOLUTION SHORT OF ADJUDICATION In any case which is resolved or settled by the parties, or which is withdrawn by the Complainant without objection from Respondent after the Notice of Hearing is issued, the parties must notify the Office of Administrative Hearings of the resolution or settlement. Any such cases will be listed on the Registrar’s website and its records under the category: “Closed

Complaints – Resolved/Settled/Withdrawn.”

Dated December 2, 2024.

By: /s/ Erika Hoskin Erika Hoskin Legal Assistant II Legal Department Arizona Registrar of Contractors

Copy mailed via USPS First Class mail December 2, 2024 to:

Respondent(s) DirtWorks Contracting Inc. 9105 E Del Camino Ste., 112 Scottsdale, AZ 85258

Respondent's Attorney Karen A. Palecek, Esq. 6263 N Scottsdale Rd Ste., 144 Scottsdale, AZ 85250 Complainant(s) Creco Rental 919 W Silverlake Rd Tucson, AZ 85713 Complainant's Attorney Patrick J. Van Zanen, Esq. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693 Copy sent electronically this same date to: Respondent at email address on record with the Registrar Respondent’s Attorney at email address of record with Registrar Complainant at email address on record with the Registrar Complainant’s Attorney at email address of record with Registrar

Case No. 2023-09265 /

Hearing Packet FAQ What is the The Hearing Packet is a packet of certain documents collected or Hearing Packet? issued by the Registrar over the course of its investigation. Who gets the The Hearing Packet is assembled and distributed to all parties and Hearing Packet? to the Office of Administrative Hearings (“OAH”) prior to an administrative hearing. What types of The Registrar prepares a Hearing Packet for Complainant-Handled cases does the Cases and No-Pay Cases. Note: If the Docket Number on the Registrar prepare a Notice of Hearing contains a “CHC” or “NPC”, your case is a Hearing Packet for? Complainant-Handled Case or a No-Pay Case. What is in the The Hearing Packet contains essential case-specific documents and Hearing Packet? at a minimum will include the following documents: ● Original complaint; ● Citation; and ● Answer. The Hearing Packet will also contain the following documents (if applicable): ● Jobsite inspection notices, notes, and photos; ● Written directives; and ● Compliance inspection notices, notes, and photos. What if there are If there is any evidence you submitted to the Registrar that are not documents missing included in the Hearing Packet it is your responsibility to introduce from the Hearing that evidence at the administrative hearing. Note: The Packet? administrative law judge assigned to your case does not have access to the entire Registrar record.

If there is additional evidence you submitted to the Registrar during the investigation that you also want to introduce as evidence during your hearing, it is your responsibility to: ● Properly disclose that evidence to the other party; and ● Introduce the evidence during your hearing.

1700 W. Washington Street, Suite 105 · Phoenix AZ 85007-2812 602.542.1525 · Within AZ 877.692.9762 · Fax 602.542.1599 · roc.az.gov Hearing Packet FAQ

How do I disclose You must properly disclose any and all documents and witnesses evidence I intend to you intend to use at your hearing according to the Registrar’s use at a Hearing? Prehearing Disclosure Rules. See Arizona Administrative Code Section R4-9-118. A sample prehearing disclosure form and instructions are provided to the parties by the Registrar. How do I obtain If you previously submitted documents to the Registrar and need a documents I copy of these documents, please contact the Registrar’s Legal previously submitted Department or submit a public records request at to the Registrar? https://roc.force.com/AZRoc/s/roc-public-request.

1700 W. Washington Street, Suite 105 · Phoenix AZ 85007-2812 602.542.1525 · Within AZ 877.692.9762 · Fax 602.542.1599 · roc.az.gov Hearing Packet FAQ

August 21, 2023

Complainant Via U.S. Mail and Email Creco Rental 919 W Silverlake Rd Tucson, AZ 85713

Respondent Via U.S. Mail and Email DirtWorks Contracting Inc. 3262 E 44th St Tucson, AZ 85713

Re: Complaint No. 2023-09265

Dear Complainant and Respondent:

The Registrar received a complaint filed against DirtWorks Contracting Inc., for non-payment of materials or services rendered. This complaint is complete and will be substantively reviewed by the Registrar.

Respondent is free to raise any issue or affirmative defense to this complaint by filing a response with the Registrar by August 28, 2023. Please reference the complaint number listed above if you file a response. Respondent may file a response by: Mail: P.O. Box 18244, Phoenix, Arizona, 85005-8244 In-Person: 1700 W. Washington St., Ste. 105, Phoenix, Arizona, 85007-2812 Email: [email redacted]

The Registrar will not issue a citation before August 28, 2023 and will review Respondent’s response, if one is submitted.

Please be advised that a response to the complaint is not the same as a written answer. If the Registrar issues a citation Respondent must file a written answer to that citation in accordance with A.R.S. § 32-1155.

Sincerely,

/s/ Gail Mathews Gail Mathews Legal Assistant II Legal Department Arizona Registrar of Contractors

1700 W. Washington Street, Suite 105 · Phoenix AZ 85007-2812

602.542.1525 · Toll Free 877.692.9762 · roc.az.gov Lg100 4/21 Non-Payment Complaint Form Departmental Use Only Complaint Number: Mail to: Registrar of Contractors P.O. Box 18243 Phoenix, AZ 85005-8243

Person Filing Complaint (Payee) Business Name Full Name (First Middle Last) ROC License Number(s) (if any) Steven Gary Mahaffey Street Address City State Zip Code 919 W Silverlake Rd Tucson Arizona 85713 Phone Number Email Address [number redacted] [email redacted] I consent to receive communications electronically in connection with this case

Name of Attorney (if any)

Attorney’s Street Address City State Zip Code

Attorney’s Phone Number Attorney’s Email Address

Licensee Information (Payer) Name (as shown on contracts, invoices, etc.) ROC License Number(s) DirtWorks Contracting Inc ROC 318883 Street Address City State Zip Code 3262 E 44th St Tucson AZ 85713 Phone Number Email Address

Name of Person(s) Representing License Kerry Lanoue Complaint Information Principal Amount Due (excluding interest and fees) Contract Date (if applicable) $91,837.72 March 2, 2023 Have you filed a civil complaint?

List all specific invoices which have not been paid. Attach additional pages if necessary. 39396; 39454; 39455; 39528; 39551; 39619; 39676; 39696; 39769; 39884; 39887; 39895; 39897; 39967; 39991; 40110; 40285; 40352; 40357; 40409; 40428; 40503; 40588; 40787; 40813; 40817; 40882; 40883; 40895; 40923; 40963; 41035; 41107; 41116; 41163; 41164; 41217; 41245; 41284; 41288; 41345; 41357; 41368; 41639; 41673; 41708; 41778; 41793; 41850; 41855; 41876 Certification I certify, upon information and belief, that the above-named licensee has failed 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. I further certify, upon information and belief, that the above-named licensee has the capacity to pay, or has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. A.R.S. § 32-1154(A)(10). Printed Name Signature Date Steven Gary Mahaffey Declaration & Signature I am the Complainant in this Complaint Form or Complainant’s duly authorized representative. I declare under penalty of perjury that the information contained in this Form is true and correct to the best of my knowledge. I further certify that any documents submitted in support of this complaint are true and correct copies of the originals and are accurate to the best of my knowledge. I will assist in the investigation or in the prosecution of the contractor or other parties, and will, if necessary, attend hearings and testify to facts. Printed Name Signature Date Steven Gary Mahaffey 0123ÿ516789 ÿ 12316789 1

1ÿ3126ÿ339ÿ !"#$ %688ÿ5171&&8ÿ'()*+*,-./*.0/*,)123.045 6/78ÿ:;<ÿ=>8ÿ=?=@ÿ1)ÿABCAÿ:D E0BÿF172ÿD1)G*H(ÿ'<172341)G*H(-/0.31I3<0+5 F00JÿD0/,7,<ÿF1728 EG*KÿG1+*ÿLMEÿ41J*ÿ1,KÿN1K4*,)(ÿ0/ÿ1,Kÿ.0,)1.)3ÿÿO*(ÿN2*1(*ÿ40+*ÿP0/H1/JÿH7)GÿQ7)1)70,3 ÿ EG1,R(8 S)*+*,ÿD1G1PP*K D1,1<7,<ÿT1/),*/ QUVQMÿU*,)12 WX;0)*Jÿ)*Y)ÿG7JJ*,Z REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Creco Rental, Case No. 2023-09265 COMPLAINANT, v. DirtWorks Contracting Inc., CITATION License No. ROC 318883,

RESPONDENT.

The Registrar issues this Citation to DirtWorks Contracting Inc. (“Respondent”) under A.R.S. § 32-1155(A). If Respondent fails to answer this Citation by September 12, 2023, then under A.R.S. § 32-1155(C), Respondent’s failure to answer may be deemed an admission of the act or acts charged in the underlying complaint, and the Registrar may then suspend or revoke Respondent’s license(s). THE WRITTEN COMPLAINT On August 11, 2023, Creco Rental (“Complainant”) filed a written complaint with the Registrar. A copy of that Complaint is attached to this Citation. A FORMAL STATEMENT OF THE CHARGES AGAINST RESPONDENT The Registrar investigated this matter and finds cause to charge Respondent with violation(s) of Title 32, Chapter 10 of the Arizona Revised Statutes. Respondent is charged with violating: Charge :1 A.R.S. § 32-1154(A)(10) — Failure by a licensee or agent or official of a licensee to pay monies in excess of $750 when due for materials or services rendered in connection with the licensee's operations as a contractor unless the of 5

1700 W. Washington Street, Suite 105 · Phoenix AZ 85007-2812

602.542.1525 · Toll Free 877.692.9762 · roc.az.gov Lg101 8/21 licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. If the matter proceeds to a hearing and the administrative law judge determines that any of the charges listed above are supported by a preponderance of the evidence, then Respondent’s license(s) may be subject to suspension or revocation, and Respondent may be subject to other penalties provided by law, including civil penalties under A.R.S. §§ 32-1154(E) and (F). FILING A WRITTEN ANSWER Respondent must appear by filing with the Registrar a written answer to the citation and complaint showing cause, if any, why Respondent’s license(s) should not be suspended or revoked. A.R.S. § 32-1155(A). Respondent’s written answer should contain the heading “Written Answer to Citation and Complaint” and should include the case number, which is Case No. 2023-09265. How to File a Written Answer: Respondent’s written answer may be submitted in the following ways: In-Person: 1700 W. Washington St., Ste. 105, Phoenix, Arizona, 85007-2812 Mail: P.O. Box 18244, Phoenix, Arizona, 85005-8244 Email: [email redacted]

The Registrar’s normal office hours are 8:00 a.m. to 5:00 p.m., Monday through Friday.

If Respondent submits a written answer by mail, it is not filed with the Registrar until the

Registrar actually receives it.

Deadline for Filing a Written Answer: Respondent must file a written answer with the

Registrar no later than September 12, 2023.

This deadline is calculated under A.R.S. §§ 32-1155(A) and (B), which provides a

deadline ten days after service of the Citation. Service of the Citation and Complaint is of 5

1700 W. Washington Street, Suite 105 · Phoenix AZ 85007-2812

602.542.1525 · Toll Free 877.692.9762 · roc.az.gov Lg101 8/21 complete five days after the Registrar mails a copy of the Citation and Complaint to Respondent’s latest address of record in the Registrar’s office. Consequences for Failing to File a Written Answer: If Respondent fails to answer, Respondent’s failure may be deemed an admission of the act or acts charged in the written complaint. A.R.S. § 32-1155(C). The Registrar may then suspend or revoke Respondent’s license(s). THE ADMINISTRATIVE HEARING If Respondent files a timely written answer contesting any charges in the Complaint, then the Registrar will request the Office of Administrative Hearings set a date for an administrative hearing and will notify all the parties at least 30 days before that hearing. A.R.S. § 41-1092.05(D). RESPONDENT’S RIGHT TO REQUEST AN INFORMAL SETTLEMENT CONFERENCE

Under A.R.S. § 41-1092.06, if Respondent submits a request to the Registrar for an informal settlement conference, the Registrar must hold a conference within 15 days after receiving the request. Respondent’s request for an informal settlement conference must be in writing and must be filed no later than 20 days before the administrative hearing. A.R.S. § 41- 1092.06(A). The Registrar will not close or settle any case without both parties’ appearance at the Settlement Conference. The parties participating in the settlement conference must have the authority to settle the case and must waive their right to object to the participation of the Registrar’s settlement conference representative in the final administrative decision. A.R.S. § 41-1092.06(B). Any statements, either written or oral, made by the parties at the conference, including a written document, created or expressed solely for the purpose of settlement negotiations, are inadmissible in the administrative hearing. A.R.S. § 41-1092.06(B). of 5

1700 W. Washington Street, Suite 105 · Phoenix AZ 85007-2812

602.542.1525 · Toll Free 877.692.9762 · roc.az.gov Lg101 8/21 RESPONDENT’S PRIOR RECORD Under A.A.C. R4-9-117, in determining the appropriate discipline, the administrative law judge and the Registrar may consider not only facts in the current case, but also facts in prior cases and any documents regarding Respondent on file with the Registrar. Respondent’s prior disciplinary record and current license(s) status may be considered as a mitigating or aggravating factor in determining the appropriate discipline. EVIDENTIARY DISCLAIMER By issuing this Citation, the Registrar is directing Respondent to file a written answer to the Citation and Complaint, showing cause, if any, why Respondent’s license(s) should not be suspended or revoked. A.R.S. § 32-1155(A). This Citation does not constitute proof that any charge or allegation in Complainant’s written complaint is in fact true. This Citation does not constitute proof that Respondent violated any statutory provision or rule adopted by the Registrar. Dated August 28, 2023. By: /s/ Chance Peterson Chance Peterson General Counsel Legal Department Arizona Registrar of Contractors

COPY of the foregoing mailed by Certified Mail, Return Receipt Requested, August 28, 2023 to:

Respondent Certified Mail No: [number redacted] DirtWorks Contracting Inc. 3262 E 44th St Tucson, AZ 85713

of 5

1700 W. Washington Street, Suite 105 · Phoenix AZ 85007-2812

602.542.1525 · Toll Free 877.692.9762 · roc.az.gov Lg101 8/21 Copy mailed by USPS First Class mail this same date to: Respondent DirtWorks Contracting Inc. 3262 E 44th St Tucson, AZ 85713 Complainant Creco Rental 919 W Silverlake Rd Tucson, AZ 85713 Copy sent electronically this same date to:

Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar

Case No. 2023-09265 / GM

of 5

1700 W. Washington Street, Suite 105 · Phoenix AZ 85007-2812

602.542.1525 · Toll Free 877.692.9762 · roc.az.gov Lg101 8/21 Non-Payment Complaint Form Departmental Use Only Complaint Number: Mail to: Registrar of Contractors P.O. Box 18243 Phoenix, AZ 85005-8243

Name of Attorney (if any)

Attorney’s Street Address City State Zip Code

Attorney’s Phone Number Attorney’s Email Address

DIRTWORKS CONTRACTING INC. 3262 E 44 STREET TH

TUCSON, AZ 85713 REGISTRAR OF CONTRACTORS OF STATE OF ARIZONA Creco Rental, Case No.: 2023-09265 COMPLAINANT, v. WRITTEN ANSWER TO Dirtworks Contracting, Inc., CITATION AND COMPLAINT License No. ROC 318883 RESPONDENT. COMES NOW Respondent Dirtworks Contracting, Inc. (hereinafter, “Respondent”), pursuant to A.R.S. § 32-1155(A) hereby files this Written Answer to the Citation and Complaint and further admits, denies, and alleges as follows: The Citation and Complaint contains allegations that Respondent has violated certain

contracting statutes, specifically: Charge :1 A.R.S. § 32-1154(A)(10) Respondent wholly denies the allegations contained in the Citation and Complaint to the extent it expresses or implies any wrongdoing or liability on behalf of Respondent or otherwise alleges any violation of Arizona Contracting laws.

Received 09/05/2023 ROC Legal

WHEREFORE, having fully defended, Respondent requests that this matter be summarily closed, or in the alternative, transferred to the Office of Administrative Hearings for a full evidentiary hearing. RESPECTFULLY submitted this 5th day of September, 2023. Dirtworks Contracting, Inc. COPY emailed this 5th day of September, 2023 to: Legal Department Arizona Registar of Contractors 1700 W. Washington Street Suite 105 Phoenix, Arizona 85007 [email redacted]

Received 9/6/23, 8:11 AM State of Arizona Mail - Case No. 2023-0925 09/05/2023 ROC Legal

Answers - AZROC <[email redacted]>

Case No. 2023-0925 message

Edward Britt <[email redacted]> Tue, Sep 5, 2023 at 3:47 PM To: "[email redacted]" <[email redacted]>

Please see attached Written Answer to Citation & Complaint on behalf of Respondent.

Best,

Eddie Britt

Written Answer to Citation and Complaint.pdf 101K

https://mail.google.com/mail/b/AEoRXRTC_sOmkXSei3Aj2EFQTEUHwJEUbPj-adZhkdXSqhc94hoK/u/0/?ik=581c53cf5c&view=pt&search=all&permth… 1/1 Received 09/12/2023 ROC Legal Received 09/12/2023 ROC Legal Received 09/12/2023 ROC Legal Received 9/13/23, 8:01 AM State of Arizona Mail - Case No. 2023-09265 09/12/2023 ROC Legal

Answers - AZROC <[email redacted]>

Case No. 2023-09265 message

Kerry Lanoue <[email redacted]> Tue, Sep 12, 2023 at 10:52 AM To: "[email redacted]" <[email redacted]>

Hello,

In response to case number 2023-09265. I Kerry Lanoue dissociated as QP from license 31883 3/15/23. The company was purchased from previous owner. My role as QP was supervision. I spoke with the complainant in this case and we reached an agreement. I will personally be paying their bills due during my association up to 3/15/23 and have attached the agreements. Thank you

3680_001.pdf 113K

https://mail.google.com/mail/b/AEoRXRROWhQ64kOOzixWQoec7z9ljbio3UuQMLv6KquTolhPCr40/u/0/?ik=581c53cf5c&view=pt&search=all&permthi… 1/1 RECEIVED LEGAL 12/26/2023

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Creco Rental, No. 2023A-09265-NPC-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION v.

DirtWorks Contracting Inc. License No. ROC 318883,

RESPONDENT

HEARING: December 6, 2023 APPEARANCES: Steven Mahaffey appeared on behalf of Creco Rental. Edward Brit appeared on behalf of DirtWorks Contracting Inc. ADMINISTRATIVE LAW JUDGE: Brian Del Vecchio EXHIBITS ADMITTED INTO EVIDENCE: Hearing Packet submitted by the Registrar of Contractors. FINDINGS OF FACT 1. DirtWorks Contracting Inc. (Respondent) is the holder of License No. 318883 issued by the Registrar of Contractors (Registrar). 2. On August 11, 2023, Steven Mahaffe, Managing Partner of Creco Rental (Complainant), filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $91,837.72 for heavy construction equipment rental services. 3. Between March 21, 2023 and July 24, 2023, Complainant rented to Respondent different heavy construction equipment for various projects Respondent had relating to its contracting business. 4. The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a Citation alleging a violation of ARIZ. REV. STAT. § 32-1154(A)(10). 5. At hearing, Mr. Mahaffey testified that the total amount due to Complainant was over $60,000.00. When Mr. Mahaffey filed the complaint with the Registrar, no

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED LEGAL 12/26/2023

payments had been made by Respondent. Sometime around March 16, 2023, ownership changed within Respondent. Sometime before Respondent changed ownership, payments totaling $22,654.98 were made. As of the date of the hearing, the outstanding balance was $69,182.74 in unpaid invoices for equipment rental services. 6. The majority of Complainant’s customers were contractors who rented equipment related to their construction projects. Mr. Mahaffey testified the invoices on the equipment rentals were due 28 days from submission of invoices. Mr. Mahaffey read the contract and invoice details into the record for each of the invoices which were due, but not paid by Respondent.1 7. At hearing, Mr. Brit made an oral motion to dismiss because equipment rental was not defined as a service under the relevant statute. Mr. Brit’s motion was denied. 8. Mr. Brit testified Complainant failed to provide evidence that Respondent owed the money on the contracts. Mr. Brit testified he had no contracts with Complainant in his possession or in his system. 9. Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence.2 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.”3 3. 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 or agent or official of a licensee to pay monies in excess of $750 when due for materials or services rendered in connection with the licensee's operations as a contractor unless the licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. See Mr. Mahaffe’s testimony at 24:47 to 52:54. See ARIZ. ADMIN. CODE R2-19-119. MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960).

RECEIVED LEGAL 12/26/2023

4. Arizona statute defines equipment rentals as materials. ARIZ. REV. STAT. § 41-2503(27) states “‘[m]aterials’ [m]eans all property, including equipment, supplies, printing, insurance and leases of property, [d]oes not include land, a permanent interest in land or real property or leasing space.” Respondent leased Complainant’s property. Thus, Respondent was supplied materials. Respondent received the benefit of Complainant’s materials and Respondent failed to pay monies in excess of $750.00 when due. Therefore, the Registrar may discipline Respondent’s license for violations of ARIZ. REV. STAT. § 32- 1154(A)(10). 5. The evidence established that, as of the date of the hearing, Respondent owed a total of $69,182.74 for equipment rentals. Respondent received the benefit of the use of Complainant’s equipment at Respondent’s construction jobsites, however, failed to pay the invoices when due. 6. Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the materials provided. 7. Therefore, Complainant established that Respondent violated ARIZ. REV. STAT. § 32-1154(A)(10) by failing to pay Complainant $69,182.74 for services or materials rendered in connection with Respondent’s contracting business. 8. 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. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar suspend DirtWorks Contracting Inc.’s License No. 318883 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $69,182.74 in certified funds. It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $69,182.74 in certified funds, the Registrar may close the Complaint in Case No. 2023-09265. 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.

RECEIVED LEGAL 12/26/2023

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, December 26, 2023. /s/ Brian Del Vecchio Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to: Tom Cole, Director Registrar of Contractors c/o Legal Department 1700 W. Washington Street, Suite 105 Phoenix, AZ 85007 [email redacted]

Creco Rental [email redacted]

DirtWorks Contracting Inc. [email redacted]

By: OAH Staff

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Creco Rental, Case No. 2023-09265 COMPLAINANT, Docket No. 2023A-09265-NPC-ROC v. DirtWorks Contracting Inc., FINAL ADMINISTRATIVE License No. ROC 318883, DECISION AND ORDER

RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the Registrar must provide written justification setting forth the reasons for the modification or rejection of each finding of fact or conclusion of law.

REGISTRAR’S ACCEPTANCE

In this case, a hearing was held, and the administrative law judge issued a written

decision. See Administrative Law Judge Decision, attached. The Registrar reviewed that

decision and accepts it. CONCLUSION AND ORDER

Because the Registrar has accepted the administrative law judge’s decision, that

decision is the final administrative decision in this case and becomes effective on March 4,

2024. The terms of the order, such as suspension, revocation or dismissal, etc., will take place

the next business day.

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 10/23 Dated January 24, 2024. By: /s/ Chance Peterson Chance Peterson General Counsel Legal Department Arizona Registrar of Contractors Copy mailed via USPS First Class mail January 24, 2024 to: Respondent DirtWorks Contracting Inc. 9105 E Del Camino Ste 112 Scottsdale, AZ 85258 Complainant Creco Rental 919 W Silverlake Rd Tucson, AZ 85713 Copy sent electronically this same date to: Office of Administrative Hearings Brian Del Vecchio, Administrative Law Judge Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar

Case No. 2023-09265/

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg131 10/23 RECEIVED LEGAL 12/26/2023

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Creco Rental, No. 2023A-09265-NPC-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION v.

DirtWorks Contracting Inc. License No. ROC 318883,

RESPONDENT

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED LEGAL 12/26/2023

RECEIVED LEGAL 12/26/2023

Done this day, December 26, 2023. /s/ Brian Del Vecchio Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to: Tom Cole, Director Registrar of Contractors c/o Legal Department 1700 W. Washington Street, Suite 105 Phoenix, AZ 85007 [email redacted]

Creco Rental [email redacted]

DirtWorks Contracting Inc. [email redacted]

By: OAH Staff

LEGAL RECEIVED 03/04/2024

PALECEK & PALECEK PLLC ATTORNEYS AT LAW 6263 N. Scottsdale Rd .. Suite 310 Scottsdale. Arizona 85250 Telephone: (602) 522.2454 Facsimile: (602) 522.2349 KAREN A. PALECEK #01 1944 Kpalecek�aleceklaw .com JAMES J. ALECEK #015953 jpalecek < a!paleceklaw.com Attorne_vfor Dirflvorks Contracting. Inc. IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR COUNTY OF MARICOPA DIRTWORKS CONTRACTING. INC.. CASE NO.: Plainti ff/ Respondent. NOTICE OF APPEAL OF FINAL ADMINISTRATIVE DECISION AND ORDER (2023A-09265-NPC-ROC) V. -AND- CRECO. INC. dba CRECO RENTAL REQUEST FOR EVIDENTIARY HEARING Defendant/ Complainant. Plaintiff/ Respondent Dimvorks Contracting. Inc. ("Dirtworks.. ), by and through its undersigned counsel. hereby submits its Notice of Appeal, seeking judicial review of a final administrative decision. pursuant to A.R.S. § 12-904 (A). The Administrative Law Judge Decision ("Order .. ) from the Office of Administrative Hearings (··OAH'') is

attached hereto as Exhibit A and incorporated herein by reference. The Order. dated December 26. 2023. becomes effective March 4. 2024. Thus, this Notice of Appeal is timely taken. Statement of Issues for Review The Order from the OAH grants the suspension of Dirtworks contracting license at LEGAL RECEIVED 03/04/2024

the Arizona Registrar of Contractors C--ROC''), pending the payment of certified funds to CRECO, INC. dba CRECO RENTAL ("'Creco''). Dirtworks hereby submits that it provided sufficient evidence pursuant to A.RS. §32-1154(A)(10), to substantiate that it lacked the capacity to pay Creco due to its current financial status and had not been paid

on various projects. The exhibits submitted to the OAH with Dirtworks' disclosure statement. were in compliance with the pre-hearing procedures and clearly support Dirtworks" inability to pay, specifically due to having not been paid itself for multiple

projects.

As such, Dirtworks respectfully requests judicial review of the Exhibit A Order and also hereby requests an Evidentiary Hearing pursuant to A.RS. § 12-910(A). DATED this 4 ch day of March, 2024. PALECEK & PALECEK, P

By: �0-4� Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 Attorneys for PlaintiffI Respondent ORIGINAL of the foregoing e-filed This 4th day of March. 2024 with: Maricopa County Superior Court A COPY of the foregoing mailed I emailed This 4th day of March. 2024 to: Ill Ill Ill LEGAL RECEIVED 03/04/2024

Creco, Inc. 3144 N. Willow Creek Drive Tucson. AZ 85712 Defendant I Complainant Creco Rental 919 W. Silverlake Road Tucson, AZ 85713 Defendant I Complainant Office of Administrative Hearings Brian Del Vecchio, Administrative Law Judge oah(a1 azoah.com Arizona Registrar of Con tractors Legal Department 1700 W. Washington St, Ste 105 Phoenix. AZ 85007 - �: 13 tfl Wille

,i�. �'" :1; 14 w 10 l'.li; i, 15

LEGAL RECEIVED 03/04/2024

-= 1r � EXHIBIT A == PALECEK & PALECEK PLLC ATTOllNEYS AT LAW LEGAL RECEIVED 03/04/2024

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA Creco Rental, Case No. 2023-09265 COMPLAINANT, Docket No. 2023A-09265-NPC-ROC v. DirtWorks Contracting Inc., FINAL ADMINISTRATIVE License No. ROC 318883, DECISION AND ORDER

RESPONDENT. Under A.R.S. § 41-1092.0S(B}, the Registrar may review and accept, modify, or reject an administrative law judge's written decision. If the Registrar modifies or rejects that decision, then the Registrar must provide written justification setting forth the reasons for the modification or rejection of each finding of fact or conclusion of law. REGISTRAR'S ACCEPTANCE In this case, a hearing was held, and the administrative law judge issued a written

decision. See Administrative Law Judge Decision, attached. The Registrar reviewed that

decision and accepts it. CONCLUSION AND ORDER Because the Registrar has accepted the administrative law judge's decision, that decision is the final administrative decision in this case and becomes effective on March 4, 2024. The terms of the order, such as suspension, revocation or dismissal, etc., will take place the next business day. of2 REGISTRAR OF CONTRACTORS 1700 W. Washington St.- Ste. 105 - Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lglll 10123 LEGAL RECEIVED 03/04/2024

Dated January 24, 2024. By: Isl Chance Peterson Chance Peterson General Counsel Legal Department Arizona Registrar of Contractors Copy mailed via USPS First Class mail January 24, 2024 to: Respondent DirtWorks Contracting Inc. 9105 E Del Camino Ste 112 Scottsdale, AZ 85258 Complainant Creco Rental 919 W Silverlake Rd Tucson, AZ 85713 Copy sent electronically this same date to: Office of Administrative Hearings Brian Del Vecchio, Administrative Law Judge Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar Case No. 2023-09265/ of2 REGISTRAR OF CONTRACTORS 1700 W. Washington St.-Ste. 105- Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lglll 10'23 LEGAL RECEIVED 03/04/2024 RECEIVED LEGAL 12/26/2023

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Creco Rental, No. 2023A-09265-NPC-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION V.

DirtWorks Contracting Inc. License No. ROG 318883,

RESPONDENT

HEARING: December 6, 2023 APPEARANCES: Steven Mahaffey appeared on behalf of Greco Rental. Edward Brit appeared on behalf of DirtWorks Contracting Inc. ADMINISTRATIVE LAW JUDGE: Brian Del Vecchio EXHIBITS ADMITTED INTO EVIDENCE: Hearing Packet submitted by the Registrar of Contractors. FINDINGS OF FACT 1. DirtWorks Contracting Inc. (Respondent) is the holder of License No. 318883 issued by the Registrar of Contractors (Registrar). 2. On August 11, 2023, Steven Mahaffe, Managing Partner of Greco Rental (Complainant), filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $91,837.72 for heavy construction equipment rental services. 3. Between March 21, 2023 and July 24, 2023, Complainant rented to Respondent different heavy construction equipment for various projects Respondent had relating to its contracting business. 4. The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a Citation alleging a violation of ARIZ. REV. STAT.§ 32-1154(A)(10). 5. At hearing, Mr. Mahaffey testified that the total amount due to Complainant was over $60,000.00. When Mr. Mahaffey filed the complaint with the Registrar, no

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 LEGAL RECEIVED 03/04/2024 RECEIVED LEGAL 12/26/2023

payments had been made by Respondent. Sometime around March 16, 2023, ownership changed within Respondent. Sometime before Respondent changed ownership, payments totaling $22,654.98 were made. As of the date of the hearing, the outstanding balance was $69,182.74 in unpaid invoices for equipment rental services. 6. The majority of Complainant's customers were contractors who rented equipment related to their construction projects. Mr. Mahaffey testified the invoices on the equipment rentals were due 28 days from submission of invoices. Mr. Mahaffey read the contract and invoice details into the record for each of the invoices which were due, but not paid by Respondent. 1 7. At hearing, Mr. Brit made an oral motion to dismiss because equipment rental was not defined as a service under the relevant statute. Mr. Brit's motion was denied. 8. Mr. Brit testified Complainant failed to provide evidence that Respondent owed the money on the contracts. Mr. Brit testified he had no contracts with Complainant in his possession or in his system. 9. Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence.2 2. A preponderance of the evidence is "such proof as convinces the trier of fact that the contention is more probably true than not."3 3. 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 or agent or official of a licensee to pay monies in excess of $750 when due for materials or services rendered in connection with the licensee's operations as a contractor unless the licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. See Mr. Mahaffe's testimony at 24:47 to 52:54. 2 See ARIZ. ADMIN. CODE R2-19-119. MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE§ 5 {1960).

LEGAL RECEIVED 03/04/2024 RECEIVED LEGAL 12/26/2023

4. Arizona statute defines equipment rentals as materials. ARIZ. REV. STAT. § 41-2503(27} states "'[m]aterials' [m]eans all property, including equipment, supplies, printing, insurance and leases of property, [d]oes not include land, a permanent interest in land or real property or leasing space." Respondent leased Complainant's property. Thus, Respondent was supplied materials. Respondent received the benefit of Complainant's materials and Respondent failed to pay monies in excess of $750.00 when due. Therefore, the Registrar may discipline Respondent's license for violations of ARIZ. REV. STAT.§ 32- 1154(A)(10). 5. The evidence established that, as of the date of the hearing, Respondent owed a total of $69,182.74 for equipment rentals. Respondent received the benefit of the use of Complainant's equipment at Respondent's construction jobsites, however, failed to pay the invoices when due. 6. Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the materials provided. 7. Therefore, Complainant established that Respondent violated ARIZ. REV. STAT.§ 32-1154(A)(10} by failing to pay Complainant $69, 182.74for services or materials rendered in connection with Respondent's contracting business. 8. 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. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar suspend DirtWorks Contracting lnc.'s License No. 318883 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $69,182.74 in certified funds. It is further recommended that when and if the Registrar receives and accepts Respondent's evidence that it has paid Complainant $69,182.74 in certified funds, the Registrar may close the Complaint in Case No. 2023-09265. Pursuant to A.R.S. § 41-1092.08(/), 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 A dministrative Hearings.

LEGAL RECEIVED 03/04/2024 RECEIVED LEGAL 12/26/2023

Done this day, December 26, 2023. /s/ Brian Del Vecchio Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to: Tom Cole, Director Registrar of Contractors c/o Legal Department 1700 W. Washington Street, Suite 105 Phoenix, AZ 85007 [email redacted] Greco Rental [email redacted]

DirtWorks Contracting Inc. [email redacted]

By: OAH Staff

3/4/24, 2:02 PM State of Arizona Mail - NOTICE OF APPEAL OF FINAL ADMINISTRATIVELEGAL DECISION (courtesy RECEIVED copy) 03/04/2024

OAH Electronic Documents - AZROC <[email redacted]>

NOTICE OF APPEAL OF FINAL ADMINISTRATIVE DECISION (courtesy copy) message

Rachel Foltz <[email redacted]> Mon, Mar 4, 2024 at 11:47 AM To: OAH - HGA <[email redacted]> Cc: [email redacted], [email redacted], Karen Palecek <[email redacted]>

All, Attached please find a courtesy copy of the Notice of Appeal of Final Administrative Order, e-filed in Maricopa County Superior Court today. Thank you, Rachel Foltz Paralegal Palecek & Palecek, PLLC 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 602-522-2454 602-522-2349 (fax) www.paleceklaw.com

Due to COVID-19, our staff is working mostly remotely until further notice. If you call the office number and there is no answer, please leave a message and we will return your call as soon as we are able. Voicemail is being checked once each day. Email is the most efficient way to reach us. You are also welcome to call our cell phones if the number has been provided to you.

The information contained in this electronic message is information protected by attorney-client and/or the attorney/work product privilege. It is intended only for the use of the individual named above and the privileges are not waived by virtue of this having been sent by e-mail. If the person actually receiving this e-mail or any other reader of the e-mail is not the named recipient or the employee or agent responsible to deliver it to the named recipient, any use, dissemination, distribution, or copying of the communication is strictly prohibited. If you have received this communication in error, please immediately notify us by telephone and return the original message to us at the above address via U.S. Postal Service.

2024_03_04_Notice of Appeal of Administrative Decision.pdf 379K

https://mail.google.com/mail/b/AEoRXRSbXF3_ldozO979MvwFVWqke25Cm1qa4JbjAGwwjY9AG4mv/u/0/?ik=1a356ffe08&view=pt&search=all&perm… 1/1 Received 3/07/2024 ROC Legal

PALECEK & PALECEK PLLC ATTORNEYS AT LAW 6263 N. Scottsdale Rd., Suite 310 Scottsdale, Arizona 85250 Telephone: (602) 522.2454 Facsimile: (602) 522.2349 KAREN A. PALECEK #011944 [email redacted] JAMES J. PALECEK #015953 [email redacted] Attorney for Dirtworks Contracting, Inc. IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR COUNTY OF MARICOPA

DIRTWORKS CONTRACTING, INC., CASE NO.: LC2024-000081-001 Plaintiff / Respondent, AMENDED NOTICE OF APPEAL OF FINAL ADMINISTRATIVE DECISION AND ORDER v. (2023A-09265-NPC-ROC) -AND- CRECO, INC. dba CRECO RENTAL REQUEST FOR EVIDENTIARY HEARING Defendant / Complainant.

Plaintiff / Respondent Dirtworks Contracting, Inc. (“Dirtworks”), by and through its undersigned counsel, hereby submits its Notice of Appeal, seeking judicial review of a

final administrative decision, pursuant to A.R.S. §12-904 (A). The Final Administrative

Decision and Order (“Order”) from the Registrar of Contractors (“ROC”) is attached hereto as Exhibit A and incorporated herein by reference, including the recommended order from the Office of Administrative Hearings (“OAH”). The Order, dated December 26, 2023, becomes effective March 4, 2024. Thus, this Notice of Appeal is

timely taken. … Received 3/07/2024 ROC Legal

Statement of Issues for Review The Order from the ROC grants the suspension of Dirtworks’ contracting license at the ROC pending the payment of certified funds to CRECO, INC. dba CRECO

RENTAL (“Creco”). Dirtworks hereby submits that it provided sufficient evidence pursuant to A.R.S. §32-1154(A)(10), to substantiate that it lacked the capacity to pay Creco due to its current financial status and had not been paid on various projects. The exhibits submitted to the OAH with Dirtworks’ disclosure statement, were in compliance

with the pre-hearing procedures and clearly support Dirtworks’ inability to pay, specifically due to having not been paid itself for multiple projects. As such, Dirtworks respectfully requests judicial review of the Exhibit A Order and

also hereby requests an Evidentiary Hearing pursuant to A.R.S. §12-910(A).

DATED this 7th day of March, 2024.

PALECEK & PALECEK, PLLC By: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 Attorneys for Plaintiff / Respondent

ORIGINAL of the foregoing filed This 7th day of March, 2024 with: Maricopa County Superior Court

A COPY of the foregoing mailed / emailed This 7th day of March, 2024 to: /// /// /// Received 3/07/2024 ROC Legal

Creco, Inc. 3144 N. Willow Creek Drive Tucson, AZ 85712 Defendant / Complainant Creco Rental 919 W. Silverlake Road Tucson, AZ 85713 Defendant / Complainant Office of Administrative Hearings Brian Del Vecchio, Administrative Law Judge [email redacted]

Arizona Registrar of Contractors Legal Department 1700 W. Washington St, Ste 105 Phoenix, AZ 85007

/s/ Rachel Foltz Rachel Foltz

Received 3/07/2024 ROC Legal Received 3/07/2024 ROC Legal Received 3/07/2024 ROC Legal Received 3/07/2024 ROC Legal Received 3/07/2024 ROC Legal Received 3/07/2024 ROC Legal Received 3/07/2024 ROC Legal Received 3/07/2024 ROC Legal

DIRTWORKS CONTRACTING, INC., CASE NO.: LC2024-000081-001 Plaintiff / Respondent, NOTICE OF ERRATA RE [AMENDED] NOTICE OF APPEAL v. (AMENDED AGENCY) CRECO, INC. dba CRECO RENTAL

Defendant / Complainant.

Plaintiff Dirtworks Contracting, Inc. (“Dirtworks”), by and through its undersigned counsel, hereby submits this Notice of Errata to amend the Notice of Appeal filed March 4, 2024. The Notice of Appeal is being amended to reflect the proper agency. The

Amended Notice of Appeal replaces “the Office of Administrative Hearings (“OAH”)”

with “the Registrar of Contractors (“ROC”),” as the ROC is the agency that provided the Final Decision and Order, although the OAH was the venue for the hearing and provided a “recommended Order,” which was attached to the Final Decision and Order.

The Final Decision and Order referenced in Exhibit A of the original Notice of Appeal is

correct, and is also attached as Exhibit A to the Amended Notice of Appeal. The Received 3/07/2024 ROC Legal

Amended Notice of Appeal is attached hereto as Exhibit 1 and also filed contemporaneously herewith. In addition, a signature has been added to the Certificate of Mailing on the

Amended Notice of Appeal that was not on the original Notice of Appeal. The amended information is reflected in bold throughout the Amended Notice of Appeal.

DATED this 7th day of March, 2024. PALECEK & PALECEK, PLLC By: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 Attorneys for Plaintiff / Respondent ORIGINAL of the foregoing filed This 7th day of March, 2024 with: Maricopa County Superior Court

A COPY of the foregoing mailed / emailed This 7th day of March, 2024 to:

Creco, Inc. 3144 N. Willow Creek Drive Tucson, AZ 85712 Defendant / Complainant

Creco Rental 919 W. Silverlake Road Tucson, AZ 85713 Defendant / Complainant

Office of Administrative Hearings 1740 W. Adams Street Phoenix, AZ 85007 Brian Del Vecchio, Administrative Law Judge [email redacted] [email redacted] Received 3/07/2024 ROC Legal

Arizona Registrar of Contractors Legal Department 1700 W. Washington St, Ste 105 Phoenix, AZ 85007 [email redacted]

/s/ Rachel Foltz Rachel Foltz

Received 3/07/2024 ROC Legal

EXHIBIT 1 Received 3/07/2024 ROC Legal

Plaintiff / Respondent Dirtworks Contracting, Inc. (“Dirtworks”), by and through its undersigned counsel, hereby submits its Notice of Appeal, seeking judicial review of a

final administrative decision, pursuant to A.R.S. §12-904 (A). The Final Administrative

timely taken. … Received 3/07/2024 ROC Legal

Statement of Issues for Review The Order from the ROC grants the suspension of Dirtworks’ contracting license at the ROC pending the payment of certified funds to CRECO, INC. dba CRECO

also hereby requests an Evidentiary Hearing pursuant to A.R.S. §12-910(A).

DATED this 7th day of March, 2024.

PALECEK & PALECEK, PLLC By: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 Attorneys for Plaintiff / Respondent

ORIGINAL of the foregoing filed This 7th day of March, 2024 with: Maricopa County Superior Court

A COPY of the foregoing mailed / emailed This 7th day of March, 2024 to: /// /// /// Received 3/07/2024 ROC Legal

Arizona Registrar of Contractors Legal Department 1700 W. Washington St, Ste 105 Phoenix, AZ 85007

/s/ Rachel Foltz Rachel Foltz

Legal New Mail - AZROC <[email redacted]>

Dirtworks v. Creco: Notice of Errata and Amended Appeal message

Rachel Foltz <[email redacted]> Thu, Mar 7, 2024 at 10:24 AM To: OAH - HGA <[email redacted]>, [email redacted], [email redacted] Cc: Karen Palecek <[email redacted]>, Catlin Conedera <[email redacted]>

All, Attached please find a courtesy copy of the Notice of Errata and Amended Notice of Appeal, being filed today. Thank you, Rachel Foltz Paralegal Palecek & Palecek, PLLC 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 602-522-2454 602-522-2349 (fax) www.paleceklaw.com

attachments 2024_03_07_Notice of Errata.pdf 509K 2024_03_07_Amended Notice of Appeal.pdf 455K

https://mail.google.com/mail/b/AEoRXRQoW7KCZJx8WrgCRwqSl0wqQUCaVvu50QCFE3uGJD6AG6KH/u/0/?ik=d3afebeda9&view=pt&search=all&p… 1/1 Received 3/12/2024 ROC Legal

PALECEK & PALECEK PLLC ATTORNEYS AT LAW 6263 N. Scottsdale Rd., Suite 310 Scottsdale, Arizona 85250 Telephone: (602) 522.2454 Facsimile: (602) 522.2349 KAREN A. PALECEK #011944 [email redacted] Attorney for Dirtworks Contracting, Inc. IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA

Case No.: LC2024-000081-001 DIRTWORKS CONTRACTING, INC.,

Plaintiff / Respondent, NOTICE OF ACTION (JUDICIAL REVIEW) v. RE: NOTICE OF APPEAL OF FINAL ADMINISTRATIVE DECISION AND CRECO, INC. dba CRECO RENTAL ORDER

Defendant / Complainant.

The Arizona Registrar of Contractors (“ROC”) and the Office of Administrative Hearings (“OAH”) are hereby notified that Dirtworks Contracting, Inc. (“Dirtworks”) has

filed an action for judicial review of the decision in case number 2023A-09265-NPC-ROC.

This Notice of Action is being filed pursuant to A.R.S. §12-904(B). Attached hereto, as Exhibit 1, is the Notice of Appeal, filed with Maricopa County

Superior Court on March 4, 2024. A copy of the Amended Notice of Appeal, filed on

March 7, 2024, is also attached hereto, as Exhibit 2. Courtesy copies of both the Notice of Appeal and Amended Notice of Appeal were mailed and email on the date of the respective filings, including a copy the contested Decision and Order, dated December 26,

2023, attached to both Notices as Exhibit A. Received 3/12/2024 ROC Legal

This Notice of Action is being filed and served within ten (10) days of filing the Notice of Appeal, as required by A.R.S. §12-904(B). Thus, as set forth in A.R.S. §12- 904(B), the Agency shall transmit the hearing record to Superior Court.

DATED this 12th day of March 2024. PALECEK & PALECEK, PLLC

By: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 Attorneys for Plaintiff ORIGINAL of the foregoing filed this 12th day of March, 2024 to: Maricopa County Superior Court Office of Administrative Hearings COPY of the foregoing mailed/ emailed this 12th day of March, 2024 to: Creco, Inc. 3144 N. Willow Creek Drive Tucson, AZ 85712 Defendant / Complainant Creco Rental 919 W. Silverlake Road Tucson, AZ 85713 Defendant / Complainant Office of Administrative Hearings 1740 W. Adams Street Phoenix, AZ 85007 Brian Del Vecchio, Administrative Law Judge [email redacted] /// /// ///

Received 3/12/2024 ROC Legal

Arizona Registrar of Contractors Legal Department 1700 W. Washington St, Ste 105 Phoenix, AZ 85007 /s/ Rachel Foltz Rachel Foltz

Received 3/12/2024 ROC Legal

EXHIBIT 1 Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal

EXHIBIT 2 Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/12/2024 ROC Legal Received 3/14/24, 11:37 AM State of Arizona Mail - Notice of Action: Dirtworks v. Creco 3/12/2024 ROC Legal

Legal New Mail - AZROC <[email redacted]>

Notice of Action: Dirtworks v. Creco message

Rachel Foltz <[email redacted]> Tue, Mar 12, 2024 at 4:20 PM To: OAH - HGA <[email redacted]>, [email redacted], [email redacted] Cc: Karen Palecek <[email redacted]>

All, Attached please find the Notice of Action, e-filed online with the OAH and being filed in-person in Maricopa County Superior Court. A copy is also being mailed as set forth on the certificate of mailing. Thank you, Rachel Foltz Paralegal Palecek & Palecek, PLLC 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 602-522-2454 602-522-2349 (fax) www.paleceklaw.com

2024_03_12_Notice of Action.pdf 1026K

https://mail.google.com/mail/b/AEoRXRS1elkB6Zj9w26bt3pkemOtWURgZL69RejyQ_WZ-BIz0hTe/u/0/?ik=d3afebeda9&view=pt&search=all&permthi… 1/1 CGPY I PALI,CEK & PALECEK PLLC MAR O7 ZO24 ATTORNEYS A1'LAW 6263 N. Scottsdale Rd., Suite 3 10 Cii;(^ Jl: i'tt€ SUPERIoR Cot RT Scottsdale, Arizona 85250 'l clcplronc: (602) 522.2454 i3I'IYCIERX l"acsinrilc: (602) 522.2349 o.tfi--?e KAREN N. PALECEK #OI I944 K palecck(alpaler:ck law.conl iAMESI.PILIFIIKTi-tnies: rul k k llorne.t, Dirlvtor Contracting, Inc. IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR COIJNTY OF MARICOPA

l0 DIRTWORKS CONTRACTING, INC., CASE NO.: LC2024-000081-001 II Plaintiff/ Respondent, AMENDED NOTICE OF APPEAI, OF t2 FINAL ADMINISTRATIVE DECISION AND ORDER lf I3 (20234-09265-NPC-ROC) I 5i t4 .AND- Fi' L t5 [i. CRECO, INC. dba CRECO RINTAL REQUEST FOR EVIDENTIARY HEARING ti l6 Defendant / Complainant.

t7 l8 Plaintiff/ Respondent Dirtworks Contracting, Inc. ("Dirtworks"), by and through l9 its undersigned counsel, hereby submits its Notice of Appeal, seekingjudicial review ofa final administrative decision, pursuant to A.R.S. $12-904 (A). The Final Administrative 2t Decision and Order ("Order") from the Registrar of Contractors ("ROC") is attached

hereto as Exhibit A and incorporated herein by reference, including the recommended order from the Ollice of Administrative Hearings C'OAH"). The Order, dated December 26, 2023, becomes effective March 4, 2024. Thus, this Notice olAppeal is

timely taken.

Htt f-] i-r:'Grr'!- APR Q B 202'I

F'€'O' I Statement of Issues for Review -l'he Order lrom the ROC- grants the suspension o[ I]irtworks' contracting liccnse at the ROC pending the payment of certified funds to CRECO, INC. dba CRECO

RENTAL ("Creco"). Dirtworks hereby submits that it provided sufficient evidcnce

pursuant to A.R.S. $32-l154(AX10), 10 substanriate that it lacked rhe capacity ro pay Creco duc to its current finanoial status and had not been paid on various projects. 1'he

exhibits submitted to the OAH with Dirtworks' disclosure statement, were in compliance

l0 ra,ith the pre-hcaring procedures and clearly support Dirtworks' inability to pay,

ll specifically duc to having not bcen paid itselffor multiple pro.iects. As such, Dirtworks respectlully requests judioial rcview ofthe Exhibit A Order and l3 t4 also hercby requcsts an Evidentiary I{earing pursuant to A.R.S. $ 12-910(A).

F$i l5 l6 DATED this 71h day of March,2024.

t7 PALECEK & PALECEK, PLLC l8 By: /s/ Karen A. Palecck l9 Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale. AZ 85250 Atkrneys for Plainti,ff / Respondenr 2t

ORIGINAL of the foregoing .filed this 7th day of March, 2024 with: Maricopa County Superior Court

A COPY of the foregoing mailed / emailed 'l'l, is 7'h day of March, 2024 to: I Creco, Inc. 3144 N. Willow Creek Drive Tucson, AZ 85712 ., Defe ndant / Co mp I ainant

Creco Rental 919 W. Silverlake Road Tucson, AZ 85713 D efe ndant / C o mp I ainant

Oflice of Administrative Hearings Brian Del Vecchio, Administrative Law Judge oah(@azoah.com

Arizona Registrar of Contractors Legal Department l1 1700 W. Washinglon St, Ste 105 Phoenix, AZ 85007 l2 l3 /s/ Rachel lToltz Rachel Foltz t4

ffii l5 l6 l7 l8 l9

2l ')')

ExHtgITA PAIECJEK & IIAI-IjCT:K PI i-{: ATTOANSTI At LlW I REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Creco Rental, Case No. 2023-09265 COMPLAINANT, Dockct No. 2023A-09265-NPC-ROC

DirtWorks Contracting Inc., FINAI ADMINISTRATIVE License No. ROC 318883, DECISION AND ORDER RESPONDENT.

l0 1l

t2 Under A.R.S. $ 4i-1092.08(B), the Regiskar may review and accepq modi$, or reject an administrative law judge's written decision. If the Registrar modifies or rejects that t4 decision, then the Registrar must provide writlen justification setting forth the reasons for the I5 modification or rejection ofeach finding of fact or conclusion oflaw l5 t7 R.EGISTRAR'S ACCEPTANCE

l8 In this case, a hearing was held and the adminr.ou,tu" 1uu, judEe issued a written

decision. ,See Administrative Law Judge Decision, attashed. The Registrar reviewed that

decision and accepts it. CONCLUSIONAND ORDER 2t Because Lhe Registrar has accepted the administrative law judge's decision, that

decision is the final administrative decision in this case and becomes effective on March 4,

2024. The terms of the order, such as suspension, revocation or dismissal, etc., rvill take place

t}le next business day.

I of2 REGISTRAIT 0I CONTR.ACTORS I700 w. washinglon St SE. I05 Phoenix, AZ 85007-2812 felephon€ (602)542- 152 s'Ioll Ftee (811692-9162 I Dated January 24,2A24. Ilv: l$/ Chance Pelerson Chance Peterson General Counsel Legal Depaflmcnt Ariz.ona Rcgistrar of Contraclors Copy nrailed via USPS Firsl Class mail lutuary 24,2024 to:

Rcspondent DirtWor*s Contr"acting lnc, 9105 Il Dcl Camino Ste 112 Scollsdale, AZ 85258 Complainant l0 Creco Rental 919 W Siiverlake Rd lt Tucson" AZ 85713

t2 Copy sent electronically this same date to: t3 OIfice of Administrative Eearings t4 Brian Del Vecchio, Administrative Law Judge l5 IlcsDondcnt at cmail address on record rvith lhe Registrar (lorirplainant at cmail address on record with the Registrar l6 Case No. 2023-09265/

2l ).,

oI2 RECISTRTR OF CONTRACTORS ITOO W. Wrshington SL- Sle, I05 - Phocni& Az 85007'28t2 T.lephonc (602)542.1525 Toll Fr!€ (8??)692'9762 RECETVI:D LeGA,r. 12r2d2t23

IN IHE OFFICE OF ADMINISTRATIVE HEARINGS

Crcco Renlal, No. 2023A-09265-NPC-ROC

COMPLAINANT ADMINISTRATIVE LAW JUOGE DECIStON

Dirworks Contraciing lnc. License No. ROC 318883, e

g RESPONDENT

HEARING: December 6, 2023 tl APPEARANCES: St€ven Mahaffey appeared on behalf of Creco Rental. Edward Brit appeared on behalf of Dir0ruorks Contracting lnc. 't3 ADM,I.IISTRATIVE LAWJUDGE: Brian Del Vecchio l4 EXHIBITS ADMITTED INTO EVIDENCE: Hearing Packet submitted by the l5 Registrar of Contractors. FINDINGS OF FACT 1l 1. Dirtworks Contracting lnc. (Respondent) is the holder of License No. 318883 issued by the Registrar of Con0actors (Registrar). 2. On August 11,2023, Steven Mahaffe, Managing Partner of Creco Rental (Complainant), filed a Complaint against Respondent with the Registrar alleging that 2t Respondent tnd failed to pay Complainant the sum of $91 ,837.72 for havy construction equlpment rental sorvicos. 3. Between March 21, 2023 and July 24, 2023, Complainant rented to Respondent differenl heavy construotion equipment for various projec'ts Respondent had relating to f-rs contsacting business. x 4. The parlies were unable to resolve their differences, and Complainanl requested an administrative hearing. The Registmr then issued a Citation aileging a 2A violation of ARE. REV. SrAr. S 32-1 1 54(AX 10). 5. At hearing, Mr. Mahaffey testified that the total arnount due to Complainant w6s over $60,000.00. When Mr. Mahaffey fil€d the complaint with the Regislrar, no

Offlc. of Admhbtrs(ve Hearingd l7,O W6t Adsms Slrset, Lo./er Level Phoenlt. Arlzona 85007 (002) 5,12-9826 R€CEIVED !TGAT 1iJ26/2023

payments had been made by Respondent. Sometime around March 16, 2023, olmership '|

changed within Respondent. Sometime before Respondent changed ownership, payments totaling $22,654.98 were made. As of the date of the hearing, the outstanding balance was $69,182.74 in unpaid invoices for equipment rental services.

6. The majority of Complainant's customers w6r€ contraclors who rented equlprnent related to their construction projects. Mr. Mahaffey testified the invoices on the €quipment rentals were due 28 days from submission of invoices. Mr. Mahaffey read the contact and invoice details into the record for each of the invoices which were due. I but not paid by Respondent,l

't0 7. At heafing, Mr. Brit made an oral motion to dismiss because equipment rental was not defined as a service under the relevant statute. Mr. Brit's rnotion was 1l denied. 8. Mr. Brit testified Complainant failed to provkJe evidence that Respondent owed the money on the contracts. Mr. Brit testified he had no contractrs with Conplainant '14 in his possesslon or in hls system. 9. Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due. CONCLUSIONS OF LAW 1. The burden of proof at an adminlstratlve hearing lalls to the party essedng a claim, right, or entltlement and the standard of proof on all issues in these matters is by a preponderance of the evidence-2 2. A preponderance of the evidence is "sucfi proof as oonvinces the lrier of fact that lhe contention is more probably true than not."3 3. ARtz. REV. STAr. S 32-1154(AX10) includes among lhe grounds for suspension, revocation, or other disciplinary action against a contractor's license, ltlailure by a licensee or agent or official of a licensee to pay monies in 2,

excess of $750 when due for materials or services rendercd in connection with the licensee's operalions as a contractor unless the licensee proves that the lic€nsee lacks the capacity to pay and has not received sufficient 2A nlonies as paym€nt for the parlicular construction work project or operation for which the services or materials were rendered or purctased. I Sae Mr. Mahaffe's testimony at 24:47 to 52:54. '? Ses ARrz. AoMN. CoDE R2-19-l'19. MoRRrs K. UDALL, ARzoNA LAw oF EVDENCE S 5 (1960)

RECf:IVEl] L IGAL 12nV2023

4. Arizona statute defines equipment renlals as materials. ARE. REV. SrAT. S 41-2503{27) states ''[m]aterials' [mleans all property, including equipment, supplies, printing, insurance and leases of property, [d]oes not include land, a permanent interest in land or real property or leasing space." Respondent leased Conplainant's property. Thus, Respondent was supplied materials. Respondont received the ben€{it of Complainant's materials and Respondent failed to pay monies in excess of $750.00 when due. Therefore, the Regisfar rnay discipline Respondent's licanse for violatlons of ARrz. REV. STAT. S 32- I 1154(AX10). I 5. The evidence established lhat, as of the date of the hearing, Respondenl owed a total of $69,182.74 for equipment renlals, Respondenl received the benefit of the 1l use of Complainant's equipm6nt at Respondent's construction jobsites, however, failed to pay the invoicos vyhen due. 6. Respondent failed to establish by a preponderance of the evidence Olat it 1,1 lacke{ the ability 1o pay Complainant for the materials provided. 7. Therefore, Complainant established that Respondent violated ARrz. REv. SrAr. S 32-1154(A)(10) byfailing to pay Complainant $69,182.74 for services or materials rondered in connection with Respondent's contracting business. 8, Based upon Respondent's violation of the provisions of ARIZ REV. STAT. S ,s 32-1154(AX10), grounds exist to impose discipllne against Rospondent's lic€ns€. RECOIIMENDED ORDER Based on the foregoing, it is recommended that the Registrar suspend Dirflffo*s Contracting lnc.'s License No. 318883 issued by the Registrar unt{ it has provkJed to lhe Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $69,182.74 in cerlified funds. It is further recommended that when and if he Registrar rec€ives and accepts Respondent's evidence that it has paid Complainant $69,182.74 in certified funds, lhe Registrar may close he Complaint in Case No. 2023-09265. Pu,suant to A.R.S. S 41-1092,08(l), the llcensee may accept the Administrative Law Judge Decision by advising the Office of Administrattve Heartngs ln wrltlng not mo,e than ten (10) deys aftet raceiving the declsion. tf the licens@ accepts the Administ'ativa L.w Judge Declslon, the decision shall be certified as t/ne flaal declslon by the Ofrice of Administrauve Hearlngs.

RECEIVEC t EO4L 12123,2023

In the event of certification of the Administafive Law Judge Declsion by the Director of the Office of Administnllve Hearlngs, the etrecttve date of the Order wlll be forly (40) days from the date of that cedfflcation. x

Done this day, December 26, 2023.

ls/ Brian Del Vecchio Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to: Tom Cole, Direc,tor Regisfar of Contractors tl c/o Legal Departrnent 1700 W. Washington Street, Suite '105 Phoenix, PZ 85[o7 [email redacted]

l{ Creco Rental [email redacted]

't6 DirtWorks Contracting lnc. .17 info@remingtongrace,cDm

By: OAH Staff 1g

s[FEti'offc6th, I PALECEK & PALECEK PLLC RICII'/ED XE t, r'rl\/i u - l.'.t q il tp r AI'TORNEYS ATLAW 6263 N. Scolrsdale Rd., Suite 310 altiltn t? Pil & -l-clcphone Arizona 85250 Scottsdale, ' (601) 522.2454 lracsirnilc: (601) 521.:119 KAItI:N A. I'AI.l-tl:K ilul1944 t lc lccckhrv.com Atlorrrcy ol' rtw Clonlracting. Inc. IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF'MARICOPA

DIRTWORKS CONTRACTING, INC., Case No.: LC2024-000081-001

Plaintiffi Respondent, NOTICE OFACTION (.ruDrcIAL REVTEW) RE: NOTICE OF APPEAL OF'F'INAL ADMINISTRATIVE DECISION AND CRECO, INC. dba CRECO RENTAL ORDER

Defendant / Complainant. I't 15

I 16 The Arizona Registrar of Contractors ("ROC") and the Oflice of Administrative tt Ilearings ('OAH') are hereby notified that Dirtworks Contracting, Inc. ("Dirtworks") has

t9 filed an action forjudicial review of the decision in case number 2023A-09265-NPC-ROC.

'fhis Notice of Action is being filed pursuant to A.R.S. i2-904(B). $ i

ZI I

Attached hereto, as Exhibit l, is the Notice of Appeal, filed with Maricopa County Superior Court on March 4, 2024. A copy of the Amended Notice of Appeal, filed on

March 7, 2024, is also attached hereto, as Exhibit 2. Courtesy copies of both the Notice of Appeal and Amended Notice of Appeal u,ere mailed and ernail on the date of tie respective filings, including a copy the contested Decision and Order, dated December 26, 2023, attached to both Notices as Exhibit A. I This Notice of Action is being filed and served within ten (10) days of filing the Notice of Appeal, as required by A.R.S. S 12-904(8). Thus, as set forth in A.R.S. g 12- 904(8), the Agency shall transmit the hearing record to Superior Court.

DATED this l2th day of March2024. PALECEK & PALECEK, PLLC

Rv: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 l0 Sconsdale, A285250 Attomeys for Plaintifl ll ORIGINAL of the foregoing filed t2 this 12ft day of March, 2024 to: r=:, l3 LBi t4 Maricopa County Superior Court FI: L!' Office of Administrative Hearings t: l5 COPY of the foregoing mailed/ emailed t6 this l2'h day of March, 2024 to: t7 Creco, Inc. l8 3 144 N. Willow Creek Drive Tucson, AZ 85712 l9 Defen dant / C o mpl ainant Creco Rental 919 W. Silverlake Road Tucson. AZ 85713 Defe ndant / Complai nant Office of Administrative Hearings 1740 W. Adams Street Phoenix" 4285007 Brian Del Vecchio, Administrative Law Judge [email redacted]

I Arizona Registrar of Contractors Legal Department 1700 W. Washington St, Sre 105 ., Phoenix, A285007

/s/ Rachel Foltz Rachel Foltz

l0 ll t2 l€ d; J UJ r3

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ExHBn I PAI.ECEtr & PALECEX PLLC ATAORNEYS T LAV L F:I. ull 1 L hlu RC I L C# 3 PALECEK & PALECEK PLLC H:Gii1 SiTi')R Y ATTORNEYS AT LAW lr 6263 N. Scottsdale Rd.. Suire 3 l{) 211{ -l{ ?tt i

Scottsdale.,{rizona 85250 Telephone: (602) 522.2454 F {J V! Facsimile: (602) 522.2349 KAREN A. I'ALECEK #0119.14 d K ale eklarr'.com MAR () x LVL+ J l. 0r 5953 cLmK of llE $lrPERloR cot'Kf I

leceklarv I Attornel' or Dirfitor onlracting, lnc c€Ptfi'vclEF( .:o I

D'A'4*0 i i

IN THE SUPERIOII COURT OFTI{E STATE OF ARIZONA i IN AND IIOR COUNTY OF MARICOPA g

l0 DIR'I'\\lJIiKS CONTRACTING. INC.. CASENo.:LC 20? 4-000 0 B 1-D()l lt PlaintitT Respondent. NOTICE OF APPEAL OF FINAI- t2 ADMTNISTRATTVE DECISION AND oRDER (2023A-0926s-NPC-ROC) tl I3 i

-AND- / ct- l4 CRECO. lNC. dba CRECO RENTAL REQUF],ST FOR EVIT'ENTIARY Fii' L,g! HEARING 'J Del'endant Complainant t7 PtaintilT,' Respondeni Dimvorks Contracting. inc. ( ''Dirtu,orks"), by and through its undersigned counsel. hercby subrnits its Notice ofAppeal, seekingjudicial review ofa l

') final administrative decision. pursuant to A.R.S. S12-90.1 (A). The Administrative Law

Judge Decision ("Order") ti.orn the Olfice of Administrative Hearings (.'OAH'') is

:) attached hercto as Exhibit A and incorporated herein by reference. The Order. dated I

December 26.2023. becomes eflective March 4. 2024. Thus, Ihis Notice ol'Appeal is )5 timely uken.

Slatemcnt of Issues for Review

The Order from the C)AH grants the suspension ol Dirtrvorks contracting license at l

ir I I the Arizona Registrar of Contractors ("ROC"), pending the payment of certified funds to

CRECO, INC. dba CRECO RENTAL (-'Creco"). Dirtrvorks hereby submits that it J provided sufhcient evidence pursuant to A.R. S. $32- I I 54(AX 10), to substantiate that it

lacked the capacity to pal Creco due to its current financia[ status ard had not been paid

on various projects. The exhibits submitted to the OAH rvith Dirtworks' disclosure

statement. $ere in compliance rvith the pre-hearing procedures and clearly support Dirtrvorks' inability to pay, specifically due to having not been paid itselffor multiple

projects.

1t As such. Dimvorks respectfully requests judicial review of the Exhibit A Order t2 and also hereby requests an Evidentiary Ilearing pursuant to A.R.S. $ l2-910(A). I'I I r,i I 6: l4 DATED this 4'h day of March,2021. It l5 l6 t7 PALL,CEK & PALECEK, C

l8 By Q K aren A, Palecek 6263 N. Scottsdale Road, Suite 144 Scoftsdale. AZ 85250 Attorneys for Plaintif / Respondent 2l z? ORIGINAL of the loregoing e-filed This 4d day of March. 2024 rvith: Maricopa Counfy S[perior Court A COPY of the foregoing mailed ,/ emailed This 4s day of March. 2024 ro:

I f; I Creco. Inc. 3144 N. Willorv Creek Drivc I Tucson. AZ 857 l2 j Defe ndant,' Co mp la i na nt I,' Creco Rental 919 W. Silverlalie Road Tucson. AZ 85713 Defe ndant i (' o mp I a i na nt

0f fice of Administrative Helrings Brian Det \iecchio. Administrative Larv Judge oah,i,azoah.cotn I fi

IO Arizona Registrar of Contractors Legal Department i 1l 1700 W- Washington St, Ste I05 i Phoenix. A7, 85007 L. T. l3 I ur:

l--3ii l4 't El| 15

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i; Exruerr A !4LE]3CEE & P LECTK PTTC A.!rotNEfS at L^s REGISTRAR OF CONTRACTORS OF TIIL STATE OF ARIZONA

Creco Rental, Case No. 2023-09265 COMPLA]NANT, Docket No. 2023A-09265-NPC-ROC

DirtWorks Contracting Inc., F'INAI ADMINISTRATIVE License No. ROC 318883, DECISION AND ORDER

RESPONDEN'I..

1.2

Under A.R.S. S 41-1092.08(8), the Registrar may revieu, and accept, modi8,, or reject an adminisbative law judge's rwitten decision. If the Registrar modifies or rejects that I4 decision, then the Registf,ar must provide written justification setting forth the reasons for the modification or rejection <-rf each finding of fact or conclusion of law.

t7 REGISTRAR'S ACCEPIANCE

In this case. a hearing was held, and the administrative law judge issued a lvritton

t9 deoision. See Administrative Law ludge Decisiorl attached. 'l'he Registrar reviewed thal

decision and accepts it. CONCLUSIONAND ORDER 2l Because the Regislrar has accepted the adminiskative law judge's decision that

decision is the final administrative decision in this case and becomes effective on Maroh 4,

?4 2024. 'fhe terms ofthe ordcr, such as suspension, revocation or dismissal. e1c,. will lake place

the next business da1'.

I of2 REGISTRAR ()I, CONTRACTORS r?0o w. washington S!- Src, 105 - Phoenix, AZ E5007-2812 Telephone (602)542-I525 Toll Free (87?)692-97 62 I Dated January 21,2024.

By :/ a Chance etersor General Cormsel Legal Deparhnent Arizona Registrar of Contractots Copy mailed via t JSPS first Class mail lunuary 24,2024 to:.

Respondent Dirttr'orks Contracting Inc. 9105 E Dcl Camino Ste I l2 Scottsdale, AZ &5258 Complainant l0 Creco Rental 919 W Silverlake Rd ll Tucson, AZ 85713

t2 Copy sent el€ctronically this same date to: l3 Office of Administrative Eearings t4 Brian Del Vecchio, Administrative Larv Judge l5 Resoondent at email address on record rvith 0re Registrar Corirplahant at email address on record with the Regisrrar l6 Case No. 2023-09265/ i8 t9

lo of 2 R.ECISTRAR OF CONTRACTORS l?00 w. wsshingron St. Ste. 105 - Pho€nbq AZ A5007'2811 Telepbore (602)542'1525 Toll Frfz <8't 7)692-9'762 RECEIVEO LEGA! 12t2.612023

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Creco Rental, No. 2023A-09265-NPC-ROC COMPLAINANT ADMINISTRATIVE LAW JUDGE DECTSTON

I DirtWorks Contracling lnc. License No. ROC 318883,

RESPONDENT

HEARING: Dec€mber 6, 2023 t1 APPEARANCES: Steven Mahaffey appeared on behalf of Creco Rental- Edwerd Brit appeared on behalf of DirtWorks Contrac,ting lnc. ADMINISTRATIVE LAW JUDGE: Brian Del Veccfrio EXHIBITS AD MlTTE INTO EVIDENCE: Hearing Packet subrnitted by the l5 Registrar of Contradors. FINDINGS OF FACT 1. Dirtworks Contracting lnc. (Respondent) is the holder of Ucense No. 't8 318883 issued by fte Registrar of Contractors (Registrar). 2. On August 11,2023, Steven Mahaffe, Managing Partner of Creco Rental (Complainant), filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant tfie sum of $91 ,837.72 for heavy construdion equipment rental services- 3. Between March 21, 2023 aN July 24,2023, Complainant rented to Respondent diferent heavy clnstruotion equipment for various projects Respondent had relaling to its contracting business. 4. The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a Citation alleging a 2A violation of ARz. REV. SrAr. S 32-1 154(AX10). 5. At hearing, Mr. Mahaffey testified that the total amount due to Complainant was over $60,000.00. When Mr. Mahaffey flled the complaint wilh the Registrar, no

Ofllc€ or AdmiristElive Hearings 1740 W esr Adams Stree!- Lowe. Level Pho€ii,( Arizon, 85mz (602) 6,(2 9E26 RECEIVEO LEGAI 1246i2023

payments had been made by Respondent. Sometime around March 16, 2023, ownership

changed within Respondent. Sometime before Respondent cfanged ownership, payments totating $22,654.98 were made. As of the date oflhe hearing, the outstanding balance was $69,fi2,74 in unpaid invoices for equipment rental seMces.

6. The majority of Complainant's customers wer€ contraclors who rented equipn€nt related to their construclion projects. Mr. Mahaffey testified the invoices on the equipment renlals were due 28 days from submission of invoices. Mr. Mahaffey read the conhact and invoice details into the record for eacfr of the invoices which were due, I but not paid by Respondent.l I 7. At hearing, Mr. Brit rnade an oral motion to dismiss because equipment rental was not defined as a service under the relevant statute. Mr. Brit's motion was denied. 8. Mr. Brit testified Complainant failed to provide evidence that Respondent owed the rnoney on the contracts. Mr. Brit testified he had no contracts with Complainant 't1 in his possession or in his system. 9- Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due. cpNcLUSroNS OF LAW '1. The burden of proof at an administrative hearing falls to the party asserting '19 a claim, right, or entitlement and the standard of proof on all issues in these matters is by 2' a preponderance ofthe evidence-2 2. A preponderanc-e of the eMdence is "suctr proof as convinces the lrier of fact that the contenlion is more probably true than not."3 3. ARrz. REV. STAr. S 32-1154(AX10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor's license, [ftailure by a licensee or agent or oflicial of a licensee to pay monies in excess of $75O when due for materials or services rendered in connection with the licensee's operations as a confactor unless the licensee proves that the licensee lacks the cspacity to pay and has not reoeived sufficient 2e monies as payrnent for the particular conslruction work project or operation for which the services or materials were rendered or purchased, Sce lvlr. Mahaffe's testjmony at 24:47 to 52:54. 'z See ARrz. ADM|N- CooE R2-19-119- MoRRrs K. UDALL. ARrzoNA LAw oF EvDEr.rcr S 5 (1960).

RECEiVED LEGAL 12J26t2023

t 4. Anzona statute defines equipment rentals as materials. ARE. REV. STAT. S 41-2503{21) states ''[m]aterials' [m]eans all property, induding equipment, supplies, printing, insurance and leases of property, [d]oes not indude land, a permanent interest in land or real property or leasing space." Respondent leased Complainant's property. Thus, Respondent was supplied materials. Respondent received the benefit of Complainanfs materials and Respondent failed to pay monies in excess of $750.00 when due. Therefore, the Registrar rnay discipline Respondent's license for violations of ARtz. REV. SrAr. S 32- € 1154(AX10). I 5. The evidence established that, as of the date of the hearing, Respondenl 1o owed a total of $69,182.74for equipm€nt rentals. Respondent received the benefit ofthe 1t use of Complainant's equipment at Respondenfs construction jobsites, however, failed .12 to pay the invoioes Yvhen due- 6. Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the materials provided. 7" Therefore, Cornplainant established that Respondent violated ARz. REV. SrAr. S 32-1 154(4)(10) byfailing to pay Complainant $69,182.74 for services or materials rendered in connection with Respondent's contracting business. rE 8. Based upon Respondent's violation of the provisions of ARtz. REv. STAT. S 32-1154(AX10), grounds exist to impose disdpline against Respondent's license. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar suspend DirtWorks Contracting lnc.'s License No. 3188t)3 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $69,182.74 in cerffied tunds. It is further recommended that when and if the Registrar receives and accepts Respondent's evidence that it has paid Complainant $69,182.74 in cerlified funds, the Registrar may close the Complaint in Case No. 2023-09265. 2e Putsuant Io A.R.S. S 41-1092.Oe(0, the licensee may accept the Adfiinistrative Law Judge Decision by advising the Office of AdminisTtative Hearings ln wrldng not mole than len (1O) days after recelving t{ne decision- lf lhe licensee accep{s the Administ dtive Ldw Judge Decislon, the decision sball be certified as the final declslon by the Office of Administratlve Hearings.

RECEIVEO LEGAL 't?t2612023

In the event of ceftification of the Administrative Law Judge Decision by the Director of the Ofrice of Adminislrative Hearings, the effective date of the Ordq will be forty (40) days from the date of that certification.

Done this day, December 26, 2023. /s/ Brian Del Vecctrio Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to: Tom Cole, Director Registrar of Contractors l'l c;,/o Legal Departrnent 1700 W. Washington Sfeet, Suite '105 '12 Phoenix, M 8*47 [email redacted]

Creco Rental [email redacted]

Dirtworks Contrac{ing lnc. info@remingtong race-com

By: OAH Statr '19

ExHrnn 2 PAI^ECEK & PALECEK ?LLC ATTOnNEiS la trlv ffiffipY PAI,ECEK & PALECEK PLLC MAR S? 2024 ATTORNEYS ATLAW 6263 N. Scottsdale Rd., Suite 310 CrEk .Ji: i ilL tul|Rle& C0U81 'li'lcrrhrrrrc: Arizona 85250 Scotlsdale, (\0)\ 522 )454 |:{JIY CIER( .

frrcsinrilc: \602) 522.2-149

#39;**A3a KAREN A. PALECEK #011944 J. 15953

tk rncy antracting, Inc IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR COUNTY OF MARICOPA

t0 DIRTWORKS CONTRACTING, INC., CASE NO.: LC2024-000081-00I ll Plaintiffi Respondent. AMENDED NOTICE OF APPEAL OF t2 FINAL ADMINISTRATWE DECISIONAND ORDER ,3 t3 (2023A-09265-NPC-ROC)

M t4 -AND- Hi {f\ bL l5 CRECO, INC. dbaCRECO RENTAL REQUEST FOR EVIDENTIARY HEARING ,l t6 Defendant / Complainant.

l8 Plaintiff/ Respondent Dirtworks Contacting, Inc. ("Dirtrvorks"), by and through l9 its undersigned counsel, hereby submits its Notice ofAppeal, seekingjudicial review ofa za final administrative decision, pursuant to A.R.S. $12-904 (A). 'lhe Final Administrative

Dccision and Order ("Order") from the Registrar of Contractors ('ROC") is attached

hereto as Exhibit A and incorporated herein by refetence, including the recommended order from the Office of Administrative Hearings ('OAH"). The Order, dated December 26, 2023, becomes effective March 4, 2024. Thus, this Notice ofAppeal is

timely taken.

ilr HI j sraremenr of Issues for Review il 'l he Order l'rom rhe ROC grants the suspension of Dir(riorks'contlacring Iitcnse I

, fl I

o I at the ROC pending the payrnent olcenified funds to CRECO. INC. dba CRECO I

, **rO, ("Creco''). Dirtworks hereby submis that it provided sufficienr evidence { I

n*turn,toA.R.S. $32-1154(A)( 0). to substantiate thar il lacked the capaciry to pav I

| I

I Creco duc tu its currcnt financial slatus and had not bccn paid un various projects. The I

| fl *n,oU. submitred to the oAH with Dirtworks'disclosure slatement. *.r. ir.o*pliun.. I

,o ll *,,n the pre-hcaring arrng proccourcs Dinworks' rnaDrlrt) and clcarly support D,nworl(s' proccdurcs ano 10pay. inabilit) lo |

t I Il I specificallyductohavingnotbccnpaiditsclflormultipleprojects. nfr As such, Dirtworks respecrfully requests judicial revicw of the Exhibit A {-lrdcr and I

i ;i, tJ ll I

r+ ,rro herebv rcqucsts an Evidcntiarv Hearing pursuant to A.R.S, $12-910(4). FIli tsi r5il fl I

,. DATED this 7'h dav of March. 2024. ,, $ PALECEK & PALECEK, PLLC I

f, I

't il ' 1t/ liirrrt \fllircck ts): K*., A. Palecek I

,, I j44 I

ll 0263 N. Scottsdale Road, Suite |

[ Sconsdate. AZ 85250 I

Arrorneyslor Pluinti'/ft Respontlent ,, I I

[ ooo^nl or the roregoing fi]ed i I I'hi, 7* au, of March,1o24 wirh: I

Ma.i"opa County Superior Court 2s il I

,^ [ o coov of the loregoing mailed / emailed uH,,,,,, -- f, I his 7rh day of March ,2o24 ro: I

ztf;rr I

ilr I I Creco, Inc. 3144 N. Willow Creek Drive Tucson, AZ 85712 D efe ndant / Co mp I ainant

Creco Rental 919 W. Silverlake Road Tucson, AZ 85713 Defe ndant / C ompl ainant

Office of Administrative Hearings Brian Del Vecchio, Administrative Law Judge [email redacted]

t0 Arizona Registrar of Contractors Legal Department ll 1700 W. Washington St, Ste 105 Phoenix, A285007 t2 l3 /s/ Rathcl Follz Rachel Foltz l4 Ffli l5 l6 l7 l8 l9

', It* --I--i-B.-E5.-T r ExHIen A Pr{I"ECEtr & I',tlnie r]!; Fl-t-:(] aTTOSNgt3l.t t-t'w I REGI STRAR OF CONTRACTORS OF TT{E STATE OF ARIZONA

Creco Rental, Case No. 2023-09265 COMPLA]NANT, Docket No. 2023A-09265.NPC-ROC

DirtWorks Contacting Inc., FINAI ADMINISTRATIVE License No. ROC 318883, DECISION AND ORDER

RtsSPONDEM..

l0 1l t2 Under A.R.S, $ 4l -1092.08(8), the Registrar may review and accept, modi6/, or rejecl an administralive law judge's written decision. If the Registrar modifies or rejects thal t4 decision, then the Registrar must provide written justification setting forth the reasons for the I5 modification or rejection ofeach finding of fact or conclusion of law.

t7 RXGISTRAR'S ACCEPTANCE

In this case, a hearing was held and the administrative larvjudge issued a written decision. Jee Administrative Law Judge Decision, attached. The Registrar reviewed that t9 2A decision and accepts it. CONCLUSIONAND ORDtrR 2l zz Because the Registrar has accepted the administrative law judge's decision, that

decision is the final administrative decision in this case and becomes effective on March 4,

2024. The terms of the order, such as suspension, revo€ation or dismissal. etc., will take place

the next business day.

I of2 REG]STR,1I( ( II CONTRACTORS I?0o w. washingron Sr Ste. I0, Phoenlr, AZ a50O7-2812 Tel.phonr (602)542- 152s 'foll Frce (811)692-9162 Dated lanwry 24,2024.

By: /$ Chance tglAr;pA- Chance Peterson General Counsel Legal DepsrttrcnL Arizona Rr:p-ist rar of Contactors Crrp-y rrlailed via USPS First Class majl Januarv 24. 2024 tol.

Rcspundcrrt Dill\\irrks e onl r,]sting Inc. a 9105 li Del Camir0 Ste I 12 Scottsdale, AZ 85258 Colnplairant Creco Rcnkl 919 $r' Silverlake Rd ll Tucson, AZ 85713

Copy sent electronically this same dale to: t3 Oflice of Administrative Eearings t4 Brian Del Vecchio, Administrative Law Judge l5 Ilcspondcnt at cmail address on rec(lrd \vith lhd Rc8jslrar Coniplainant at cmail address on recurd u ith the Registrar

t7 Case No. 2023-092651 l8 l9

2l ),)

of2 REGISTRAR OF CONTRSCTORS l?00 W. Wsshington SL- S(e. 105 * Phocnix, AZ 85007'2812 Telephone (602)542n 525 Toll Fre€ (8??)692'9762 RECE{VED l€GA,l, 112d2C23

I IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Creco Rental, No. 2023A-0926SNPC-ROC

I COMPTAINANT ADMINISTRATIVE LAW JUOGE DECtStON

I DirtWorks Contracling lnc. License No. ROC 318883, RESPONOENT I HEARING: December 6, 2023 tl APPEARANCES: Steven Mahaffey appeared on behalf of Creco Rental. Edward Brit appeared on behalf of DirM/orks Contrac{ing lnc. ADMINISTRATIVE LAW JUDGE: Brian Del Verchio EXHIBITS ADMITTED INTO EVIDENCE: Heari ng Packet subrnitted by the Registrar of Contrac*ors. FINDINGS OF FACT 1. Dirtworks Contracting lnc. (Respondent) is the holder of License No. 318883 issued by the Registrar of Contractors (Registrar). 2. On August 11,2023, Steven Mahafre, Managing Partn€r of Creco Rental (C,omplainant), filed a Complaint against Respondent with the Registrar alleging that 2l Respondent had failed to pay Complainant lhe sum of $91 ,837.72 for heavy construction equipment rental services. 2i 3. Betwe€n March 21, 2023 and July 24,2023, Complainant rented to Respondent different heavy construction equipment for various projects Respondent had relating to its contacting business. a 4. The parties were unable to resolve their differences, and Complainant requested an adninistrative hearing. The Registrar then issued a Citation aileging a 2a violation of ARrz. REv. SrAr. S 32-1 154(AX10). 2e 5. At heering, Mr. Mahaffey testified that the total amount due to Complainant was over $60,000.00. When Mr. Mahaffey filed the complaint with the Regislrar' no

Offf c€ of Admlnlst.sflvo Hearino3 1740 westadam6 Slrs€i, Lowe. Level Phoeolr, Mzone 85007 (602) 5.i2-s826 RECEIV€D LEGAI, 12,2612023

payments had beon made by Respondent. Sometime around March 16, 2023, ov\,nership

changed within Respondent. Sometime before Respondent changed ownership, payments totaling $22,654.98 were made. As of the date ofthe hearing, the outstanding balance was $69 ,182.74 in unpaid invoices for equipment rental services.

6. The majority of Complainant s customers wer€ contraciors who rented equiprnent related to their construction projects. Mr. Mahafiey testified the invoices on the equipment rentals were due 28 days from submission of invoices. Mr. Mahaffey read the conhact and invoice details into the record for each of the invoices which were due, I but not paid by Respondent,l 7. At hearing, Mr. Brit made an oral motion to dismiss because equipment t0 rental was not defined as a service under the relevant s{Etute. Mr. Brit's rnotion was denied. l2 8. Mr. Brit testified Complainant failed to provide evidence that Respondent owed the money on th6 contJ-acts. Mr. Brit testified he had no contracts with Complainant '11 in his possession or in his system. 9. Respondent did not assert that it lacked the capacity to pay the amount 1A Complainant asserted was due. CONCLUSIONS OF LAW 1. The burden of proof at an admlnlstrative hearing falls to the party asserting 1g a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence,2 2. A preporderance of the evidence is 'suctr proof as convinces the trier of fact that the contention is more probably true than not-'3 3. ARlz. REv. STAr. S 32-1154(AX10) includes arnong lhe grounds for suspension, revocalion, or other disciplinary ac'tion against a contractor's license,

fflailure by a licensee or agent or official of a licensee to pay monies in excess of $750 when due for materials or services rendered in conneclion with the licensee's operalions as a contractor unless the licensee proves that the lic€nsee lacks the capacitv to pav and has not reoeived sufficient 2A monies as paym€nt for the parlicular constructon work proiect or operation for which the services or materials were rendered or purchased. See Mr. Mahaffe's lestimonyat 24:47 to 52:54. 'z See ARrz- ADMN. CoDE R2-19-119. MoRRs K. UDALL, ARtzoNA LAw oF EVIDENCE S 5 (1960).

RTCFIVl.D L.t{;AL 12J26t2023

I 4. Arizona statute defines equlpment rentals as materials. Aatz. Rev. Srer. $ 41-2503127) states ''[m]aterials' [m]eans all property, incJuding equipment, supplies, prinfng, insurance and leases of prope(y, [d]oes not include land, a pefmanent interest in land or real properly or leasing space." Respondent leased Complainant's property. Thus, Respondent was supplied materials. Respondent received the benefit of Complainant's materials and Respondent failed to pay monies in excess of $750.0O when due. Therefore, the Regisfar rnay discipline Respondent's license for violations of ARtz. REV. STAr. S 32- I 1154(AX10). I 5. The ovidence established that, as of the date of the hearing, Respondent owed a lotal of $69,182.74 for equipment rentals. Respondent received the benefit ofthe use of Complainant's equipment at Respondent's construction jobsites, however, failed to pay the invoices when due. 6. Respondent failed to establish by a preponderance of the evidence that it lacked the ability 10 pay Complainant for the materials provided. 7. Therefore, Complainant established that Respondent violated ARrz. REV. SrAr. S 32-1154{A)(10) by failing to pay Complainant $69,182.74 for services or materials rendered in conneclion with Respondent's conlraoting business. l6 8. Based upon Respondent's violalion of the provisions of ARlz. REV. STAT. S ,s 32-f154(AX10), grounds exist to impose dlsdpllne against Respondent's license. RECOMMENDED ORDER Based on the foregoing, it is recomrnended that the Registrar suspend Dirfltrorks 2? Contracting lnc.'s License No. 318883 issued by the Registrar untl it has provided to the Registrar, and the Registrar has accepted, doorments that establish that it has paid Complainant $69 ,182.74 in cerlified lunds. It is furth€r rscommended that \,vhen and if the Registrar receives and accepts Respondent's evidence that it has paid Complainant $69,182.74 in certified funds, the Registrar may close the Complaint in Case No. 2023-09265. Pursuant to A.R.S. S 41-1092,0e(0, the ticensee may accept tha Administntive Law Judge Decision by advising the Office of Administratlve Heartngs ln wrltlng not mo,e then ten (1O) days afler rucelving the declsion' ff the llcense accepts the Administative Law Judge Declslon, the decision shall be certlfied as t,,,e flnat declslon by the Ofrice of Administratlve Hearlngs.

RECEIVE' LEGAL 1,]26[023

tn the eY€nt of certificalion of the Adminigfttive Law Judge Declsion by the

Director of the Office of Adminislntlve Haarlngs, the effectlve dab of the Order wlll be forty (40) days fiom (he date of that cediflcalion.

Done this day, December 26, 2023.

/s/ Brian Del Vecchio a Adminislrative Law Judge

Transmitted by either mall, e-mail, or facsimile to: I Tom Cole, Director Registrar of Contraclors l'l clo Legal Department 1700 W. Washington Street, Suite 105 Phoenix, M 8fiO7 t3 [email redacted]

t,l Creco Rental [email redacted]

't6 Dirworks Contracting lnc. 1t [email redacted]

By: OAH Staff 1A

4/5/24, 4:53 PM State of Arizona Mail - Appeals

Donna Lewandowski <[email redacted]>

Appeals Donna Lewandowski <[email redacted]> Fri, Apr 5, 2024 at 4:53 PM To: "Baskin, Mona" <[email redacted]>, "Kolosick, Brian" <[email redacted]> Bcc: Donna Lewandowski <[email redacted]>

Good afternoon. We were served yesterday with the attached appeals. Chance has indicated that we will be nominal in both cases.

ROC 2023-09265 LC2024-000081 Creco v. Dirtworks ROC 2023-09397 LC2024-000083 Janc Excavating v. Dirtworks

In both cases, there has been no stay, so discipline has been imposed against Dirtworks.

Please let me know if you need anything else.

Donna Lewandowski Paralegal Manager, Legal Department Arizona Registrar of Contractors 1700 W. Washington St., Suite 105 Phoenix, AZ 85007 [email redacted] 602.771.6713 (Direct Line) 602.568.4477 (Cell Phone) www.roc.az.gov

ROC is now on social media!

Make sure to follow us on: Facebook Twitter Fill out AZ ROC's survey to let us know how we're doing and how we can better serve you! Facebook

attachments 20240312 Notice of Appeal 2023-09397.pdf 831K 20240304 R's Notice of Appeal of FAD 2023-09265.pdf 1550K 20240403 Amended Notice of Appeal 2023-09265.pdf 7849K 20240312 Notice of Appeal 2023-09397.pdf 831K

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permmsgid=msg-a:r-[number redacted]&simpl=msg-a:r-[number redacted]… 1/1 Received 4/09/2024 ROC Legal

Kristin K. Mayes Attorney General Firm State Bar No. 14000 Mona Baskin Assistant Attorney General State Bar No. 013642 2005 N. Central Ave., SGD/LES Phoenix, Arizona 85004-1592 Tel: (602) 542-7990 Fax: (602) 364-3202 Attorneys for the Arizona Registrar of Contractors E-mail Address for Court Use Only: [email redacted] IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR THE COUNTY OF MARICOPA DIRTWORKS CONTRACTING, INC. Case No. LC2024-000081 Plaintiff/Appellant, NOTICE OF APPEARANCE AS v. NOMINAL PARTY CRECO INC. dba CRECO RENTAL, (Assigned to the Hon. Joseph Mikitish) ARIZONA REGISTRAR OF CONTRACTORS, Nominal Party (Administrative Agency) Appellees.

Appellee Arizona Registrar of Contractors (“Registrar”), by and through the undersigned Assistant Attorney General, hereby enters its appearance and notifies the Court that it will take a passive or nominal role in this appeal. See Int’l Bhd. of Elec. Workers, Loc. Union 640 v. Kayetan, 119 Ariz. 508, 510 (App. 1978). The Registrar seeks to avoid any potential adverse fee award by acting pursuant to A.R.S. § 12- 348(H). Cortaro Water Users Ass’n v. Steiner, 148 Ariz. 314, 316–19 (1986). Received 4/09/2024 ROC Legal

The circumstances underlying this appeal do not warrant the Registrar’s active participation. The Registrar acted as adjudicator in the underlying administrative case between the parties, in Case No. 2023-09265 and OAH Docket No. 2023A-09265- NPC-ROC. Additionally, there is no significant or compelling reason for the Registrar to interject itself into this matter as an advocate. The Registrar believes that its participation under these circumstances is analogous to a judge whose decision has been appealed to a higher court. Therefore, the Registrar is and will continue to be a nominal party and take a passive role. The Registrar further waives its appearance at all future oral arguments, conferences, and hearings, but requests that it continue to receive copies of all pleadings, notices, minute entries, and orders. Respectfully submitted this 9th day of April, 2024. Kristin K. Mayes Attorney General /s/ Mona Baskin Mona Baskin Assistant Attorney General Attorneys for the Arizona Registrar of Contractors

Received 4/09/2024 ROC Legal

ORIGINAL of the foregoing filed this 9th day of April, 2024: Maricopa County Superior Court Clerk Maricopa County Superior Court COPY of the foregoing hand delievered this 9th day of April, 2024: The Honorable Joseph Mikitish Maricopa County Superior Court 201 W. Jefferson St. Phoenix, AZ 85003 COPY th of the foregoing served via electronic mail this 9 day of April, 2024 to:

Karen A. Palecek PALECEK & PALECEK, PLLC 6263 N. Scottsdale Rd. Suite 310 Scottsdale, AZ 85250 [email redacted] Attorneys for Plaintiff/Appellant Dirtworks Contracting, Inc. Patrick Van Zanen SACKS TIERNEY, P.A. 4250 N. Drinkwater Blvd., Suite 400 Scottsdale, AZ 85251 [email redacted] Attorney for Defendant/Appellee Registrar of Contractors Attn: Legal Dept. 1700 W Washington, Suite 105 Phoenix, AZ 85007 [email redacted] [email redacted] Nominal Party By: /s/ Brian Kolosick Office Administrator MB:bfk - #11480998

Received 4/09/2024 ROC Legal

Received 4/10/24, 10:21 AM State of Arizona Mail - MSC-20240409 Notice of Appearance as Nominal Party - Dirtworks Contracting,4/09/2024 Inc. v. Creco Inc. ROC Legal

Legal New Mail - AZROC <[email redacted]>

MSC-20240409 Notice of Appearance as Nominal Party - Dirtworks Contracting, Inc. v. Creco Inc. message

Kolosick, Brian <[email redacted]> Tue, Apr 9, 2024 at 2:19 PM To: "[email redacted]" <[email redacted]>, "[email redacted]" <[email redacted]>, "[email redacted]" <[email redacted]>, "Donna Lewandowski ([email redacted])" <[email redacted]>, "James, Michelle" <[email redacted]>

Good Afternoon,

Please see attached courtesy copy of filing per Assistant Attorney General Mona Baskin. Any courtesy copies and/or filings should flow through [email redacted]; all other inquiries should be directed to [email redacted] . Thank you and have a wonderful day.

Brian Kolosick

Administrative Service Officer I, State Government Division

Arizona Attorney General Kris Mayes

Mailing: 2005 N. Central Avenue, Phoenix, AZ 85004

Physical: 15 South 15th Avenue Phoenix, AZ 85007

Desk: 602-542-7027 I Fax: 602.364.3202

[email redacted]

http://www.azag.gov

ü Go Green! Please consider the environment before printing this e-mail.

_____________________________

Confidentiality and Nondisclosure Notice: This email message, including any attachments, is for the sole purpose of the intended recipient(s) and may contain confidential and privileged information. Any unauthorized review, use, disclosure or distribution is strictly prohibited. If you are not the intended recipient, please contact the sender by reply email and delete and/or destroy all copies of the original message.

MSC-20240409 Notice of Appearance as Nominal Party - Dirtworks Contracti....pdf 39K

https://mail.google.com/mail/b/AEoRXRTZOlti__kLnBEw1clDPOmCFgUqhGm6aIo-iyhw-23MVEB0/u/0/?ik=d3afebeda9&view=pt&search=all&permthi… 1/1 Clerk of the Superior Court *** Electronically Filed *** 06/10/2024 8:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

LC2024-000081-001 DT 06/07/2024

CLERK OF THE COURT HONORABLE JOSEPH P. MIKITISH N. Johnson Deputy

DIRTWORKS CONTRACTING INC KAREN A PALECEK

CRECO INC (001) PATRICK J VAN ZANEN ARIZONA REGISTRAR OF CONTRACTORS MONA BASKIN

JUDGE MIKITISH OFFICE OF ADMINISTRATIVE HEARINGS REMAND DESK-LCA-CCC

ORAL ARGUMENT SET

Agency Case No. 2023A-09265-NPC-ROC

The Court having received and reviewed Appellant’s Notice of Appeal of Final Administrative Decision and Order (2023A-09265-NPC-ROC) and Request for Evidentiary Hearing, filed March 4, 2024,

IT IS ORDERED setting a virtual Oral Argument on July 10, 2024 at 11:30 a.m. (time allotted: 30 minutes) for Administrative Review before this Division.

This hearing will be conducted through Court Connect. Hearings are preferably conducted by videoconference but can also be conducted by phone. Lawyers (and self-represented litigants) are responsible for distributing this notice to anyone who will be appearing on their behalf. All participants must use the web link or the dial in information below to participate.

Participants: Please follow the steps below to participate in the proceeding which will be conducted remotely.

Docket Code 094 Form L000 Page 1 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

LC2024-000081-001 DT 06/07/2024

1. Click the link here Click here to join the meeting (or enter www.tinyurl.com/jbazmc- lcj01) in the browser of your computer/device). 2. Enter your full name and role in name field. 3. Wait for the facilitator to admit you to the proceeding (note that you may wait to be admitted and the Court may not be able to communicate with you while you wait).

Or call in (audio only) Dial-in Information: +1 917-781-4590,,5402598# United States, New York City Dial-in Access Code: 540 259 8#

To ensure an optimal experience, please review the brief Court Connect training prior to the hearing: https://superiorcourt.maricopa.gov/virtual-justice/

IT IS FURTHER ORDERED that oral argument will be limited to 15 minutes for each side unless permission to exceed this limit has been granted.

NOTE: All court proceedings are recorded digitally in lieu of a court reporter. Pursuant to Local Rule 2.22, if a party desires a court reporter for any proceeding in which a court reporter is not mandated by Arizona Supreme Court Rule 30, the party must submit a written request to the assigned judicial officer at least ten (10) judicial days in advance of the hearing, and must pay the authorized fee to the Clerk of the Court at least two (2) judicial days before the proceeding. The fee is $140 for a half-day and $280 for a full day.

NOTICE: LC cases are not under the e-file system. As a result, when a party files a document, the system does not generate a courtesy copy for the Judge. Therefore, you will have to deliver to the Judge a conformed courtesy copy of any filings.

Docket Code 094 Form L000 Page 2 Received 7/09/2024 ROC Legal

Patrick J. Van Zanen, AZ #021371 [email redacted] SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693 Telephone: 480.425.2600

Attorneys for Defendant/ Complainant CRECO, INC. dba CRECO RENTAL SUPERIOR COURT OF ARIZONA MARICOPA COUNTY DIRTWORKS CONTRACTING, INC., No. LC2024-000081 Plaintiff/Respondent, RESPONSE MEMORANDUM IN v. OPPOSITION TO DIRTWORKS SACKS TIERNEY P.A., ATTORNEYS

CONTRACTING, INC.’S MOTION FOR 4250 NORTH DRINKWATER BOULEVARD

CRECO, INC. dba CRECO RENTAL, TRIAL DE NOVO SCOTTSDALE, ARIZONA 85251-3693

Defendant/Complainant. FOURTH FLOOR

(Assigned to the Hon. Joseph Mikitish) Defendant/Complainant Creco, Inc. dba Creco Rental (“Creco”) hereby submits this Response Memorandum in Opposition to Plaintiff/Respondent Dirtworks Contracting, Inc.’s (“Dirtworks”) Motion for Trial De Novo. The Motion should be denied, and the appeal dismissed, because Dirtworks failed to timely file its Opening Brief and moreover, failed to timely request a trial de novo. MEMORANDUM OF POINTS AND AUTHORITIES FACTUAL AND PROCEDURAL BACKGROUND On March 4, 2024, and pursuant to A.R.S. § 12-904, Dirtworks filed its Notice of Appeal of Final Administrative Decision and Order (2023A-09265-NPC-ROC) (the “Notice”) and a Request for Evidentiary Hearing, requested pursuant to A.R.S. § 12-904(A). The Office of Administrative Hearings filed the Certification of Record on Review on April 16, 2024. Having filed its Notice of Appeal on March 4, 2024, Dirtworks filed nothing further until filing an Opening Brief and a Request for Trial De Novo on June 24, 2024. Dirtworks

3879361 Received 7/09/2024 ROC Legal

should not be permitted a de novo trial because its Opening Brief was filed well after the date it was due and the Motion for Trial De Novo filed on the same date was also late. I. DIRTWORKS FAILED TO TIMELY FILE AN OPENING BRIEF Rule 6, J. Review Admin. Dec., provides that appellant must file an opening brief within 45 days of the Certification of Record on Appeal. Here, the Office of Administrative Hearings filed the Certification of Record on Appeal on April 16, 2024. Thus, Dirtworks’ Opening Brief was due no later than May 31, 2024. Dirtworks filed its Opening Brief on June 24, 2024. Thus, the appeal should be dismissed and Dirtworks is not entitled to a trial de novo because the Opening Brief was late filed. II. DIRTWORKS FAILED TO TIMELY REQUEST A TRIAL DE NOVO Rule 4(c)(6), J. Review Admin. Dec., provides that the Notice of Appeal must contain a “[r]equest for trial de novo, if desired, the grant of which is subject to A.R.S. § 12-910.” In SACKS TIERNEY P.A., ATTORNEYS

4250 NORTH DRINKWATER BOULEVARD

harmony with the Rule, A.R.S. § 12-910(D) states that “the trial shall be de novo if trial de SCOTTSDALE, ARIZONA 85251-3693

novo is demanded in the notice of appeal or motion of an appellee other than the agency” FOURTH FLOOR

(emphasis added). Dirtworks did not request a “trial de novo” in it notice of appeal. Moreover, Dirtworks is the appellant – not the appellee – and therefore, Dirtworks was required to request a trial de novo in the notice of appeal and is precluded from requesting a trial de novo by way of motion after filing the notice of appeal. CONCLUSION Based on the foregoing, the Court should deny the Motion for Trial De Novo and should dismiss the appeal based upon Dirtworks’ failure to timely file its Opening Brief. DATED this 9th day of July, 2024. SACKS TIERNEY P.A. By: /s/ PATRICK J. VAN ZANEN Patrick J. Van Zanen Attorneys for Defendant/ Complainant CRECO, INC. dba CRECO RENTAL 3879361 Received 7/09/2024 ROC Legal

ORIGINAL of the foregoing filed with Maricopa County Superior Court this 9th day of July 2024 via courier. COURTESY copy of the foregoing was delivered via courier to: The Honorable Jospeh Mikitish Maricopa County Superior Court 201 W. Jefferson Street Phoenix, AZ 85003 COPY of the foregoing was sent via electronic mail this 9th day of July, 2024, to: Karen A. Palecek James J. Palecek 6263 N. Scottsdale Road, Suite 310 Scottsdale, AZ 85250 SACKS TIERNEY P.A., ATTORNEYS

[email redacted] 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

[email redacted] Attorneys for Dirtworks Contracting, Inc. FOURTH FLOOR

Mona Baskin Assistant Attorney General 2005 N. Central Ave Phoenix, AZ 85004 [email redacted] [email redacted] Attorneys for the Arizona Registrar of Contractors Registrar of Contractors Attn: Legal Dept. 1700 W Washington, Suite 105 Phoenix, AZ 85007 [email redacted] [email redacted] Nominal Party /s/ Keely C. Warner 3879361 Received 7/10/24, 9:14 AM State of Arizona Mail - Dirtworks v. Creco, Inc. - LC2024-000081 [IMAN-IMANAGE.FID806806] 7/09/2024 ROC Legal

Donna Lewandowski <[email redacted]>

Dirtworks v. Creco, Inc. - LC2024-000081 [IMAN-IMANAGE.FID806806] message

Warner, Keely C. <[email redacted]> Tue, Jul 9, 2024 at 2:41 PM To: Karen Palecek <[email redacted]>, "[email redacted]" <[email redacted]>, "[email redacted]" <[email redacted]>, "[email redacted]" <[email redacted]>, "[email redacted]" <[email redacted]> Cc: "Van Zanen, Patrick J." <[email redacted]>

Good afternoon,

Please see the attached filed today.

Thank you,

Keely C. Warner

Legal Administrative Assistant

P: 480.425.2650

Sacks Tierney P.A.

4250 N. Drinkwater Blvd., Fourth Floor

Scottsdale, AZ 85251

www.sackstierney.com

NOTICE: This e‑mail may contain confidential and privileged material for the sole use of the intended recipient. Any review or distribution by others is strictly prohibited. If you are not the intended recipient, please contact the sender and delete and destroy all copies. To ensure IRS compliance, any tax advice included in this e‑mail may not be used by any recipient to avoid penalties imposed under the Internal Revenue Code, state or local tax law provisions.

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permthid=thread-f:[number redacted]&simpl=msg-f:[number redacted] 1/2 Received 7/10/24, 9:14 AM State of Arizona Mail - Dirtworks v. Creco, Inc. - LC2024-000081 [IMAN-IMANAGE.FID806806] 7/09/2024 ROC Legal

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2024.07.09 Response Memo in Opp to Motion for Trial de Novo.pdf 366K

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permthid=thread-f:[number redacted]&simpl=msg-f:[number redacted] 2/2 Received 7/26/2024 ROC Legal Received 7/26/2024 ROC Legal

DATED this 26th day of July, 2024. PALECEK & PALECEK, PLLC

By: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, Arizona 85250 Attorney for Dirtworks Contracting, Inc.

ORIGINAL of the foregoing filed This 26th day of July, 2024 with: Maricopa County Superior Court

A COPY of the foregoing emailed This 26th day of July, 2024 to: Patrick Van Zanen, Esq. Sacks Tierney P.A. 4250 N. Drinkwater Blvd., Fourth Fl. Scottsdale, AZ 85251 Attorney for Defendant Creco Kristin K. Mayes, Attorney General Mona Baskin, Assistant Attorney General 2005 N. Central Ave. Phoenix, AZ 85004 [email redacted] Attorneys for Arizona Registrar of Contractors

/s/ Rachel Foltz Rachel Foltz

Received 7/26/2024 ROC Legal

EXHIBIT A Received 7/26/2024 ROC Legal

PALECEK & PALECEK PLLC ATTORNEYS AT LAW 6263 N. Scottsdale Rd., Suite 144 Scottsdale, Arizona 85250 Telephone: (602) 522.2454 Facsimile: (602) 522.2349 KAREN A. PALECEK #011944 [email redacted] JAMES J. PALECEK #015953 [email redacted] Attorney for Dirtworks Contracting, Inc. IN THE SUPERIOR COURT OF THE STATE OF ARIZONA IN AND FOR COUNTY OF MARICOPA

DIRTWORKS CONTRACTING, INC., CASE NO.: LC2024-000081-001 Appellant / Plaintiff /Respondent, REPLY REGARDING MOTION FOR TRIAL DE NOVO v. CRECO, INC. dba CRECO RENTAL

Appellee / Defendant / Complainant.

Appellant Dirtworks Contracting, Inc. (“Dirtworks”), by and through its undersigned counsel, hereby submits its Reply to Appellee Creco, Inc. (“Creco”)’s Objection to Dirtworks’ Motion for Trial de Novo as follows:

I. Background of Appeal Dirtworks timely filed a Notice of Appeal of Final Administrative Decision (“Notice”) on March 7, 2024 pursuant to Rule 4(b) Arizona Rules of Procedure for

Judicial Review of Administrative Decisions (“JRAD”) and A.R.S. §12-904. Following an

administrative hearing, in which Dirtworks represented itself, the OAH and ROC determined Dirtworks liable for non-payment in violation of A.R.S. §32-1154(A)(10), and Received 7/26/2024 ROC Legal

the ROC suspended Dirtworks’ professional license. Dirtworks has requested and motioned for trial de novo to assert a new defense against the nonpayment of Creco – lack of capacity to pay. Dirtworks can and will provide financial evidence and supporting

testimony by President, Edward Britt, in support of the defense to the alleged nonpayment

violation of A.R.S. §32-1154(A)(10), as well as the fact that a key employee took the working capital of Dirtworks in approximately 3.7 million dollars, over two million wrongfully, causing its demise.

II. Opening Brief Appellee Creco argues that Dirtworks’ appeal should be dismissed due to untimely filing of its Opening Brief. However, while JRAD Rule 6(b) states that the Court may

dismiss the appeal on motion of a party or upon its own motion, if an Opening Brief is not

timely filed, the Court is not required to dismiss the appeal. The decision is completely discretionary. In addition, JRAD Rule 2(b) states that “The court for good cause shown may shorten or extend the time for doing any act required by these rules or by A.R.S.

§§12-901-914, except the court may not extend the time for filing a notice of appeal.”

Further, Dirtworks believed that due to its trial de novo request and the setting of the “Oral Argument” on June 27, 2024, pursuant to the Minute Entry of May 15, 2024, trial de novo would need to be determined prior to an Opening Brief being filed (or due).

Although JRAD Rule 11(e) states that the filing of a Motion for Trial de Novo does not

extend the Opening Brief deadline, it is illogical to file an Opening Brief if a determination on trial de novo has not been made. However, Dirtworks filed an Opening Brief out of an abundance of caution.

Received 7/26/2024 ROC Legal

Procedurally, JRAD Rules require that a request for trial de novo be made in the Notice of Appeal, followed by a Motion for Trial de Novo. Appellant is allowed 30 days to Motion for trial de novo, with a Response to be filed 10 days after service (15 days

total). The completion of the trial de novo process takes 45 days from the Notice of

Appeal, without time to allow for a decision. An Opening Brief is also to be filed 45 days after the Notice. However, these time frames set forth in JRAD are not a logical procedure. Specifically, it is illogical to expect an Appellant to submit an Opening Brief

when a trial de novo has not been determined. The determination of trial de novo wholly

affects the legal arguments to be presented in the Opening Brief. Thus, Dirtworks hereby respectfully requests that this Court not dismiss its appeal, and further allow for the extension of time to allow the filing of the Opening Brief, for

good cause set forth above, pursuant to JRAD Rule 2(b). Dirtworks also respectfully requests that this Court provide a briefing schedule following the decision on trial de novo and that the briefing schedule allow for Dirtworks to file an Amended Opening Brief to allow Dirtworks the opportunity to present the proper arguments consistent with either

trial de novo or an evidentiary hearing and subsequent judicial review.

Should this Court allow Dirtworks’ appeal to proceed, Appellee Creco is in no way prejudiced, as it was aware of the timely filing of the Notice of Appeal and would still

have the opportunity to respond to the Opening Brief.

III. Request of Trial de Novo Appellee Creco also asserts that Dirtworks failed to include a request for Trial de

Novo in its Notice of Appeal. However, Dirtworks’ Notice of Appeal specifically

Received 7/26/2024 ROC Legal

requested an evidentiary hearing consistent with A.R.S. §12-910(A). Pursuant to this request, counsel for Appellant Dirtworks received a call from this Court’s Judicial Assistant on May 2, 2024, requesting clarification on the Notice, regarding whether

Dirtworks was requesting Judicial Review OR Trial de Novo. On the same day, Counsel

for Dirtworks verbally confirmed that Dirtworks requested trial de novo. Pursuant to the verbal clarification, the Court issued the Minute Entry dated May 15, 2024, which confirmed the request for trial de novo and set the “Oral Argument.” The entry

specifically states in the first paragraph, “A request for evidentiary hearing having been

made.” No additional briefing schedule was provided in the Minute Entry. In addition, as set forth above, JRAD Rule 2(b) allows for this Court to extend time for good cause. Dirtworks respectfully requests that this Court allow for the extension of

time for the trial de novo request, for the good cause set forth herein pursuant to JRAD Rule 2(b). Further, Creco is not prejudiced by allowing the appeal that was timely filed to proceed trial de novo.

IV. Denial of Dismissal of Appeal

Dirtworks asserts that the appeal not be dismissed but rather be heard on its merits, as Arizona law favors resolution of cases on the merits. “The law favors resolution on the merits, and therefore if the trial court has doubt about whether to vacate a default

judgment, it should rule in favor of the moving party.” Richas v. Superior Court, 133

Ariz. 512, 652 P.2d 1035 (1982). Dirtworks ensured its right to appeal by timely filing its Notice.

As stated above, allowing Dirtworks’ appeal to proceed is in no way prejudicial

Received 7/26/2024 ROC Legal

against Creco. However, dismissal of the appeal would cause undue burden to Dirtworks, specifically because it timely filed its Notice of Appeal and due to newly discovered evidence. Dirtworks recently discovered new evidence of theft from a former employee.

On approximately April 16, 2024, after an evidentiary hearing through the course of

litigation in another case, Judge Cooper ruled that Dirtworks established the probable validity of its claims, that approximately two million dollars had been wrongfully and fraudulently taken causing the financial destruction of Dirtworks.

Dirtworks asserts that the appeal should not be dismissed, and should proceed trial de novo to allow for the additional evidence. V. Conclusion

Dirtworks’ appeal should not be dismissed, as Dirtworks timely filed its Notice of Appeal thereby securing its right to appeal, and this case should proceed to be heard on its merits, as emphasized by Arizona law. Further, it is within this Court’s power and authority to allow for the additional time for filing and this Court is not required to

dismiss this appeal under the Rules, as the dismissal is discretionary.

For the reasons stated above, Dirtworks respectfully requests that this Court not dismiss the appeal and grant a trial de novo of the administrative decision issued by the

ROC, as a trial de novo is essential to ensure that Dirtworks’ rights are fully protected and

that a fair and impartial determination is made based on the complete and properly evaluated evidence. However, should this case not proceed to trial de novo, Dirtworks requests that the

appeal still proceed to judicial review and Dirtworks hereby specifically requests an

Received 7/26/2024 ROC Legal

evidentiary hearing pursuant to A.R.S. §12-910(A), to supplement its evidence as set forth in the statute, due to the additional evidence that has come to light. This evidence supports Dirtworks’ additional defense regarding nonpayment to Creco - that it lacks the ability to

pay Creco and it has not violated A.R.S. §32-1154(A)(10). Whether the appeal proceeds

trial de novo or with judicial review, Dirtworks maintains that the Court should determine this case based upon the merits, rather than dismissing for procedural error.

RESPECTFULLY SUBMITTED this 26th day of July, 2024.

PALECEK & PALECEK, PLLC

By: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 Attorneys for Plaintiff / Respondent ORIGINAL of the foregoing filed This 26th day of July, 2024 with: Maricopa County Superior Court A COPY of the foregoing emailed This 26th day of July, 2024 to: Patrick Van Zanen, Esq. Sacks Tierney P.A. 4250 N. Drinkwater Blvd., Fourth Fl. Scottsdale, AZ 85251 Attorney for Defendant Creco Kristin K. Mayes, Attorney General Mona Baskin, Assistant Attorney General 2005 N. Central Ave. Phoenix, AZ 85004 [email redacted] Attorneys for Arizona Registrar of Contractors /s/ Rachel Foltz Rachel Foltz Received 8/1/2024 ROC Legal

Patrick J. Van Zanen, AZ #021371 [email redacted] SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693 Telephone: 480.425.2600 Attorneys for Defendant/ Complainant CRECO, INC. dba CRECO RENTAL SUPERIOR COURT OF ARIZONA MARICOPA COUNTY DIRTWORKS CONTRACTING, INC., No. LC2024-000081 Plaintiff/Respondent, REPLY IN SUPPORT OF MOTION TO v. DISMISS SACKS TIERNEY P.A., ATTORNEYS

4250 NORTH DRINKWATER BOULEVARD

CRECO, INC. dba CRECO RENTAL, SCOTTSDALE, ARIZONA 85251-3693

Defendant/Complainant. (Assigned to the Hon. Joseph Mikitish) FOURTH FLOOR

Defendant/Complainant Creco, Inc. dba Creco Rental (“Creco”) hereby submits this Reply Memorandum in Support of Motion to Dismiss the Appeal. The Motion should be granted because Dirtworks failed to timely file its Opening Brief. MEMORANDUM OF POINTS AND AUTHORITIES On March 4, 2024, and pursuant to A.R.S. § 12-904, Dirtworks filed its Notice of Appeal of Final Administrative Decision and Order (2023A-09265-NPC-ROC) (the “Notice”) and a Request for Evidentiary Hearing, requested pursuant to A.R.S. § 12-904(A). The Office of Administrative Hearings filed the Certification of Record on Review on April 16, 2024. Having filed its Notice of Appeal on March 4, 2024, Dirtworks filed nothing further until filing an Opening Brief and a Request for Trial De Novo on June 24, 2024. Appellee Creco opposing the Motion for a trial de novo because the request was late under the Rule. At the same time, Creco moved to dismiss the appeal because Dirtworks failed to timely file its Opening Brief. Dirtworks filed a Reply in support of its motion for trial de novo and

3901993 Received 8/1/2024 ROC Legal

within the Reply, responded to Creco motion to dismiss for failing to timely file an Opening Brief.1 Thus, Creco is entitled to submit a Reply in support of its motion to dismiss and does so herein. I. DIRTWORKS FAILED TO TIMELY FILE AN OPENING BRIEF Rule 6, J. Review Admin. Dec., provides that appellant must file an opening brief within 45 days of the Certification of Record on Appeal. Here, the Office of Administrative Hearings filed the Certification of Record on Appeal on April 16, 2024. Thus, Dirtworks’ Opening Brief was due no later than May 31, 2024. Dirtworks filed its Opening Brief on June 24, 2024. JRAD Rule 11(e) clearly states that the filing of a motion for trial de novo does not extend the opening brief deadline. That said, it is not so obvious, as argued by Dirtworks, that filing an opening brief prior to holding a trial de novo is illogical. In fact, it makes more sense to file a brief stating what the evidence will be at a trial de novo; why that evidence SACKS TIERNEY P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD

was not presented at the administrative hearing or if it was, why the hearing officer got it SCOTTSDALE, ARIZONA 85251-3693

wrong; any mistakes of law made by the hearing officer, etc. In other words, Appellant needs FOURTH FLOOR

to address the administrative records and explain what the problem, i.e., mistake was at the administrative level and explain what the parties need to address in an evidentiary hearing (or trial de novo, assuming they are two different things). It is no response to the foregoing to say that it is a trial de novo in which no deference is given to the administrative record. As this Court has held that a in a trial de novo, “the statutes do not require the [Superior] Court to ignore the Administrative record, hearing and Order…” and “a lack of deference does not mean ignoring all previous proceedings.” Huber Dirtworks’ Reply (containing the response in opposing to Creco’s motion to dismiss) was apparently filed on July 24, 2024, but was not served on Creco’s counsel on that date as stated in the mailing certificate. As such, on July 26, 2024, unaware that Dirtworks had filed the Reply and the Reply not appearing on the docket, Creco moved the Court to rule on the motion to dismiss for failure to oppose the motion. Only then did Dirtworks correct the inadvertent failure to serve the Reply by forwarding it to Creco’s counsel. Dirtworks did not, however, correct the mailing certificate to state that Creco did not get the Reply until July 26, 2024, despite Dirtworks filing a Notice of Errata to address other problems with the filing. 3901993 Received 8/1/2024 ROC Legal

v. Ariz. Naturopathic Physicians Med. Bd., LC2023-000039-001 (Maricopa County Superior Court, May 31, 2023). Further, this Court has held that the amendments to the statute establishing a de novo standard did replace the judicial review scheme with a matter or original jurisdiction. Xtreme Precision, LLC v. Barnes/AROC, LC2022-000353-001 (Maricopa County Superior Court, Feb. 12, 2024. To be sure, if the Court finds that the agency’s legal and factual determinations were correct after a trial de novo, then deference to the agency’s discipline is proper. Pueblo Concepts, LLC v. Hull/AROC, CV-2023-00743 (Mohave County Superior Court, Apr. 9, 2024). The point is, an Opening Brief is proper and logic prior to a trial de novo because the Opening Brief explains what the issue are in the trial de novo. CONCLUSION Based on the foregoing, the Court should deny the Motion for Trial De Novo and SACKS TIERNEY P.A., ATTORNEYS 4250 NORTH DRINKWATER BOULEVARD

should dismiss the appeal based upon Dirtworks’ failure to timely file its Opening Brief. SCOTTSDALE, ARIZONA 85251-3693

DATED this 1st day of August, 2024. FOURTH FLOOR

SACKS TIERNEY P.A. By: /s/ PATRICK J. VAN ZANEN Patrick J. Van Zanen Attorneys for Defendant/ Complainant CRECO, INC. dba CRECO RENTAL 3901993 Received 8/1/2024 ROC Legal

ORIGINAL of the foregoing filed with Maricopa County Superior Court this 1st day of August 2024 via courier. COURTESY copy of the foregoing was delivered via courier to: The Honorable Jospeh Mikitish Maricopa County Superior Court 201 W. Jefferson Street Phoenix, AZ 85003 COPY of the foregoing was sent via electronic mail this 1st day of August, 2024, to: Karen A. Palecek James J. Palecek 6263 N. Scottsdale Road, Suite 310 Scottsdale, AZ 85250 [email redacted] SACKS TIERNEY P.A., ATTORNEYS

[email redacted] 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

Attorneys for Dirtworks Contracting, Inc. FOURTH FLOOR

Mona Baskin Assistant Attorney General 2005 N. Central Ave Phoenix, AZ 85004 [email redacted] [email redacted] Attorneys for the Arizona Registrar of Contractors Registrar of Contractors Attn: Legal Dept. 1700 W Washington, Suite 105 Phoenix, AZ 85007 [email redacted] [email redacted] Nominal Party /s/ Brittany Crane 3901993 Received 8/1/24, 2:17 PM State of Arizona Mail - Dirtworks Construction, Inc. v. Creco, Inc. [IMAN-IMANAGE.FID806806] 8/1/2024 ROC Legal

Donna Lewandowski <[email redacted]>

Dirtworks Construction, Inc. v. Creco, Inc. [IMAN-IMANAGE.FID806806] message

Crane, Brittany <[email redacted]> Thu, Aug 1, 2024 at 2:09 PM To: "[email redacted]" <[email redacted]>, "[email redacted]" <[email redacted]>, "Baskin, Mona" <[email redacted]>, "[email redacted]" <[email redacted]>, "[email redacted]" <[email redacted]>, "[email redacted]" <[email redacted]> Cc: "Van Zanen, Patrick J." <[email redacted]>, "Warner, Keely C." <[email redacted]>

All,

Please see the attached document that was filed today in the above referenced matter.

Thank you,

Brittany

Brittany Crane

Paralegal

P: 480.425.2627

Sacks Tierney P.A.

4250 N. Drinkwater Blvd., Fourth Floor

Scottsdale, AZ 85251

www.sackstierney.com

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permthid=thread-f:[number redacted]&simpl=msg-f:[number redacted] 1/2 Received 8/1/24, 2:17 PM State of Arizona Mail - Dirtworks Construction, Inc. v. Creco, Inc. [IMAN-IMANAGE.FID806806] 8/1/2024 provisions. ROC Legal

Disclaimer

Reply in Support of Motion to Dismiss.pdf 31K

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permthid=thread-f:[number redacted]&simpl=msg-f:[number redacted] 2/2 Received 8/7/2024 ROC Legal

Patrick J. Van Zanen, AZ #021371 [email redacted] SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693 Telephone: 480.425.2600

4250 NORTH DRINKWATER BOULEVARD

CRECO, INC. dba CRECO RENTAL, SCOTTSDALE, ARIZONA 85251-3693

(Assigned to the Hon. Joseph Mikitish) Defendant/Complainant. FOURTH FLOOR

Defendant/Complainant Creco, Inc. dba Creco Rental (“Creco”) hereby submits this Brief if Response to Plaintiff/Respondent Dirtworks Contracting, Inc.’s (“Dirtworks”) Opening Brief. INTRODUCTION Dirtworks comes to the Court on appeal asking for a second bite at the apple, but a second bite that is independent of anything that happened in the administrative proceeding. Dirtworks appears to be under the impression that the de novo standard applicable here renders the administrative proceeding effectively advisory such that if an appellant fails to present relevant evidence at the administrative hearing or is otherwise unhappy with the outcome at the Office of Administrative Hearings (“OAH”), appellant can just have a complete “do-over” in the Superior Court on demand and without convincing anyone that the hearing officer was arbitrary, unfair or mistaken in its legal or factual analysis. This is apparent from Dirtworks’ Opening Brief as it is devoid of an “Argument” section to explain

3905192 Received 8/7/2024 ROC Legal

why the OAH’s final decision should be reversed on appeal. Instead, Dirtworks provides only a “Statement of the Facts” followed by a “Conclusion” in which Dirtworks announces in conclusory fashion that the OAH’s decision “constitutes an abuse of discretion” and “did not provide a fair and full opportunity to present evidence.” The Appeal must be denied for that reason. STATEMENT OF JURISDICTION Creco agrees with Dirtworks’ statement of jurisdiction. This Court has jurisdiction over Dirtworks’ appeal of the Final Administrative Decision of the Office of Administrative Hearings, which dispute originated with the Registrar of Contractors. However, Creco maintains that the appeal should be dismissed because Dirtworks failed to timely file its Opening Brief. STANDARD OF REVIEW SACKS TIERNEY P.A., ATTORNEYS

In 2021, the Arizona Legislature did away with Arizona’ version of “Chevron 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

deference” applicable to the review of a final administrative decision, replacing it with a de FOURTH FLOOR

novo review standard. Nevertheless, the new statutory de novo standard did not establish a free-for-all untethered to any analysis of the appellant’s efforts and diligence in the OAH proceeding; or the evidence presented at the OAH hearing; or the inherent fairness of the OAH proceeding; or whether the OAH was arbitrary in any way; or whether the OAH made a mistake of fact or law. A.R.S. § 12-910(F) sets forth the new de novo standard applicable here, providing: After reviewing the administrative record and supplementing evidence presented at the evidentiary hearing, the court may affirm, reverse, modify or vacate and remand the agency action. The court shall affirm the agency action unless the court concludes that the agency's action is contrary to law, is not supported by substantial evidence, is arbitrary and capricious or is an abuse of discretion. In a proceeding brought by or against the regulated party, the court shall decide all questions of law, including the interpretation of a constitutional or statutory provision or a rule adopted by an agency, without deference to any previous determination that may have been made on the question by the agency. In a proceeding brought by or against the regulated party, the court shall decide all questions of fact without deference to any 3905192 Received 8/7/2024 ROC Legal

previous determination that may have been made on the question by the agency. Notwithstanding any other law, this subsection applies in any action for judicial review of any agency action that is authorized by law. While the Court shall not defer to the administrative agency’s interpretations of the law or the agency’s factual finding or its final decision, the statute still provides that “[t]he court shall affirm the agency action unless the court concludes that the agency’s action is contrary to law, is not supported by substantial evidence, is arbitrary and capricious or is an abuse of discretion.” Recognizing the import of full text of the statute, this court has held: While the Court granted a Trial de Novo in this judicial review action, our statutes do not request the Court to ignore the Administrative Record, hearing, and Order. Rather, Arizona’s laws provide that ‘The record in the Superior Court shall consist of the Record of the Administrative Proceeding, and the Record of any Evidentiary Hearing, or the Record of the Trial de Novo.’ A.R.S. § 12-910(F)… [T]he statutory framework clearly provides for the Superior SACKS TIERNEY P.A., ATTORNEYS

4250 NORTH DRINKWATER BOULEVARD

Court to consider the Record and Rulings of the Administrative Agency. A SCOTTSDALE, ARIZONA 85251-3693

lack of deference does not mean ignoring all previous proceedings. FOURTH FLOOR

Huber v. Ariz. Naturopathic Physicians Med. Bd., LC2023-000039-001 (Maricopa Cty. Super. Ct., May 31, 2023). Further, the [2021] amendments affirm that an appeal to the court is still an appeal. The legislature did not replace the judicial review scheme for an appeal of agency actions with a matter of original jurisdiction with the Superior Court. If it had, it would have eliminated the process for an administrative decision, followed by an administrative appeal, and then judicial review…[T]he issues in any trial de novo must be the ones addressed at the administrative level.

Xtreme Precision LLC v. Barnes/AROC, LC2022-000353-001 (Maricopa Cty. Super.C Ct.,

Feb 12, 2024). Also,

a two-step process is implicated-whereby if this Court determines that the agency’s factual and legal determinations were correct (based on the record and evidence presented in the trial de novo), then it may give deference to the agency’s prescribed discipline which sprung from those determinations. Conversely, if this Court determines that the agency’s factual or legal determinations were flawed (or not supported by the evidence presented), then no such deference can be afforded its disciplinary decisions and modification or vacation with remand would be appropriate.” 3905192 Received 8/7/2024 ROC Legal

Pueblo Concepts, LLC v. Hull/ROC, CV-2023-00143 (Mohave Cty. Super. Ct., Apr. 9, 2024). Ultimately, as the statute requires, “[t]he Appellant “must establish that ‘the agency’s action is contrary to law, is not supported by substantial evidence, is arbitrary and capricious or is an abuse of discretion.’ A.R.S. § 910(F). ‘If it cannot do so, the court must uphold the agency’s decision.’” Xtreme Precision LLC v. Barnes/AROC (Maricopa). ARGUMENT I. DIRTWORK FAILS TO ARGUE – LET ALONE CONVINCE – THAT THE AGENCY ACTION WAS CONTRARY TO LAW, IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, IS ARBITRARY AND CAPRICIOUS OR IS AN ABUSE OF DISCRETION

In the Conclusion of its Opening Brief, Dirtworks states that it is entitled to a trial de

novo if the administrative decision “constitutes an abuse of discretion” or the “administrative

hearing did not provide a fair and full opportunity to present evidence and argument.” SACKS TIERNEY P.A., ATTORNEYS

Dirtworks then purports to meet this standard by stating the “ROC did [not] consider any 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

evidence or testimony with regard to Dirtworks’ financial incapacity to pay the alleged debt.” FOURTH FLOOR

That is the full extent of Dirtworks’ argument. Dirtworks does not explain why the ROC did

not consider any such evidence, which is critically important here in light of the statutory

standard. That is, if the ROC considered no such evidence because Dirtworks failed to

present any such evidence, then it cannot be said that hearing did not provide fair and full

opportunity to present the evidence because failure to present the evidence was Dirtwork’s

fault. Moreover, if Dirtworks failed to present the evidence, the OAH’s decision cannot be

deemed contrary to law, or not supported by substantial evidence, or is arbitrary and

capricious or an abuse of discretion.

CONCLUSION

Appellant cannot refuse in its Opening Brief to explain how the “agency’s action is

contrary to law, is not supported by substantial evidence, is arbitrary and capricious or is an

abuse of discretion” to instead just demand a new trial because it regrets its failure to present

evidence at the OAH hearing or otherwise does not like the outcome at the OAH. Yet, that

is what Dirtworks has done here. The Court must deny the appeal because Dirtworks failed 3905192 Received 8/7/2024 ROC Legal

to rebut the statutory presumption, or standard, in A.R.S. § 12-910(F) providing that “The court shall affirm the agency action unless the court concludes that the agency's action is contrary to law, is not supported by substantial evidence, is arbitrary and capricious or is an abuse of discretion.” DATED this 7th day of August, 2024. SACKS TIERNEY P.A. By: /s/ PATRICK J. VAN ZANEN Patrick J. Van Zanen Attorneys for Defendant/ Complainant CRECO, INC. dba CRECO RENTAL ORIGINAL of the foregoing filed with Maricopa County Superior Court this 7th day of August 2024 via courier. SACKS TIERNEY P.A., ATTORNEYS

COURTESY copy of the foregoing 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

was delivered via courier to: FOURTH FLOOR

The Honorable Joseph Mikitish Maricopa County Superior Court 201 W. Jefferson Street Phoenix, AZ 85003 COPY of the foregoing was sent via electronic mail this 7th day of August, 2024, to: Karen A. Palecek James J. Palecek 6263 N. Scottsdale Road, Suite 310 Scottsdale, AZ 85250 [email redacted] [email redacted] [email redacted] Attorneys for Dirtworks Contracting, Inc. 3905192 Received 8/7/2024 ROC Legal

4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

FOURTH FLOOR

3905192 Received 8/12/24, 9:40 AM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // Case No. LC2024-000081-001 [IMAN-IMANAG… 8/7/2024 ROC Legal

Donna Lewandowski <[email redacted]>

Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // Case No. LC2024- 000081-001 [IMAN-IMANAGE.FID806806] message

Warner, Keely C. <[email redacted]> Wed, Aug 7, 2024 at 12:26 PM To: Karen Palecek <[email redacted]>, "[email redacted]" <[email redacted]>, Rachel Foltz <[email redacted]>, "Baskin, Mona" <[email redacted]>, "[email redacted]" <[email redacted]>, Legal New Mail - AZROC <[email redacted]>, "[email redacted]" <[email redacted]> Cc: "Van Zanen, Patrick J." <[email redacted]>

Good afternoon,

Please see the attached Response Brief of Creco, Inc. dba Creco Rental.

Thank you,

Keely C. Warner

Legal Administrative Assistant

P: 480.425.2650

Sacks Tierney P.A.

4250 N. Drinkwater Blvd., Fourth Floor

Scottsdale, AZ 85251

www.sackstierney.com

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permthid=thread-f:[number redacted]&simpl=msg-f:[number redacted] 1/2 Received 8/12/24, 9:40 AM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // Case No. LC2024-000081-001 [IMAN-IMANAG… 8/7/2024 provisions. ROC Legal

Disclaimer

2024.08.07 Creco Response Brief.pdf 391K

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permthid=thread-f:[number redacted]&simpl=msg-f:[number redacted] 2/2 LEGAL RECEIVED 08/16/2024

DIRTWORKS CONTRACTING, INC., CASE NO.: LC2024-000081-001 Plaintiff / Respondent, MOTION FOR EXTENSION OF DEADLINE TO FILE (AMENDED) v. OPENING BRIEF CRECO, INC. dba CRECO RENTAL

Defendant / Complainant.

Plaintiff / Respondent Dirtworks Contracting, Inc. (“Dirtworks”), by and through its undersigned counsel, hereby requests an extension to file an Amended Opening Brief. This request is made for good cause and not for the purpose of delay.

Pursuant to this Court’s ruling denying Dirtworks’ request for trial de novo and pursuant to the Minute Entry dated August 14, 2024, allowing Dirtworks to move for additional evidence, Dirtworks respectfully request that it be allowed to amend its

Opening Brief after this Court makes a determination on Dirtworks’ Motion for

Additional Evidence, filed contemporaneously herewith. The denial of trial de novo and determination of the Motion for Additional LEGAL RECEIVED 08/16/2024

Evidence wholly affects the legal arguments in the Opening Brief. It is Dirtworks’ position that it be allowed the opportunity to present the proper arguments consistent with the evidence available for judicial review.

In fact, as has been represented to this Court, there has been newly discovered evidence not fully known at the time of the Administrative Hearing. The evidence is such that Dirtworks can establish that its financial demise was caused by an employee who took over $2 million wrongfully, and took $3.7 million of working capital, failing to pay

payables. The Opening Brief should be extended so that the brief can outline the newly presented evidence and legal arguments to defend against the alleged violation of A.R.S.

§32-1154(A)(10), which Dirtworks claims it has not violated because it lacks the capacity

to pay Creco. Pursuant to JRAD Rule 2(b), “The court for good cause shown may shorten or extend the time for doing any act required by these rules or by A.R.S. §§12-901-914,

except the court may not extend the time for filing a notice of appeal.” Thus Dirtworks’

requests an extension of time to allow the filing of the Opening Brief, for good cause set forth above, pursuant to JRAD Rule 2(b).

III. Conclusion

Dirtworks respectfully requests that this Court allow Dirtworks’ to file an Amended Opening Brief, to date following the determination of the Motion for Additional Evidence to ensure that Dirtworks’ rights are fully protected and that a fair and impartial

determination is made based on the complete and properly evaluated evidence that will

LEGAL RECEIVED 08/16/2024

establish that Dirtworks did not violate A.R.S. §32-1154(A)(10). In the alternative, Dirtworks would request a remand to the Office of Administrative Hearings for a new hearing for the Complaint filed at the Registrar of Contractors based on the newly

discovered evidence.

DATED this 16th day of August, 2024.

PALECEK & PALECEK, PLLC By: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 Attorneys for Plaintiff / Respondent

ORIGINAL of the foregoing filed This 19th day of August, 2024 with:

Maricopa County Superior Court A COPY of the foregoing emailed This 16th day of August, 2024 to:

Patrick Van Zanen, Esq. Sacks Tierney P.A. 4250 N. Drinkwater Blvd., Fourth Fl. Scottsdale, AZ 85251 Attorney for Defendant Creco

Kristin K. Mayes, Attorney General Mona Baskin, Assistant Attorney General 2005 N. Central Ave. Phoenix, AZ 85004 [email redacted] Attorneys for Arizona Registrar of Contractors

/s/ Rachel Foltz Rachel Foltz

8/16/24, 3:56 PM State of Arizona Mail - Dirtworks v. Creco (Case No. LC2024-000081-00): Motion for Extension LEGAL RECEIVED 08/16/2024

Legal New Mail - AZROC <[email redacted]>

Dirtworks v. Creco (Case No. LC2024-000081-00): Motion for Extension message

Rachel Foltz <[email redacted]> Fri, Aug 16, 2024 at 3:43 PM To: "Van Zanen, Patrick J." <[email redacted]>, "Baskin, Mona" <[email redacted]>, "Warner, Keely C." <[email redacted]>, [email redacted] Cc: Karen Palecek <[email redacted]>, [email redacted], [email redacted]

All, Attached please find the Motion for Extension sent for in-person filing on Monday. Thank you, Rachel Foltz Paralegal Palecek & Palecek, PLLC 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 602-522-2454 602-522-2349 (fax) www.paleceklaw.com

2024_08_16_Motion for Extension for Opening Brief.pdf 154K

https://mail.google.com/mail/b/AEoRXRREfd11Zdv9dmTy5-xxY0n12uri-SrFhUiiLqbmR9dXVDwb/u/0/?ik=d3afebeda9&view=pt&search=all&permthid=t… 1/1 LEGAL RECEIVED 08/19/2024

DIRTWORKS CONTRACTING, INC., CASE NO.: LC2024-000081-001 Plaintiff / Respondent, DIRTWORKS CONTRACTING INC.’S MOTION TO INTRODUCE v. ADDITIONAL EVIDENCE CRECO, INC. dba CRECO RENTAL (Honorable Judge Joseph Mikitish)

Defendant / Complainant.

Appellant Dirtworks Contracting, Inc. (“Dirtworks”), by and through its undersigned counsel, hereby moves to introduce additional evidence pursuant to A.R.S. §12-910(A) and JRAD Rule 10.

Appellant moves the Court pursuant to A.R.S. §12-910(A) to introduce exhibits and testimony not offered during the Administrative Hearing in addition to the relevant and admissible exhibits and testimony contained in the record of the Office of

Administrative Hearings (“OAH”) and Registrar of Contractors (“ROC”) filed in this

Court. The additional evidence to be introduced is described in detail below, including but not limited to, financial records and testimony of not only the President of Dirtworks, but LEGAL RECEIVED 08/19/2024

also its CPA and fraud expert. The reasons why this Motion may be granted are also stated in the below Memorandum of Points and Authorities. MEMORANDUM OF POINTS AND AUTHORITIES

I. Introduction Appellee (Complainant) Creco, Inc., dba Creco Rental (“Creco”) filed a complaint with the ROC against (Respondent) Dirtworks, alleging non-payment for materials.

Dirtworks represented itself in the administrative hearing. Dirtworks asserted the defense

that rental equipment was not defined as a service under the relevant statute. Dirtworks further asserted that Creco failed to provide evidence that it was owed money on the contract and that there was no contract between the parties.

Ultimately, the OAH and ROC determined Dirtworks was liable to Creco for non-

payment, in violation of A.R.S. §32-1154(A)(10). The ROC subsequently suspended Dirtworks’ professional license. Notably, the Administrative Law Judge Decision specifically states that Dirtworks did not assert that it lacked capacity to pay the amount

alleged due and owing. See paragraph 9 of the Administrative Law Judge Decision. Since

the administrative hearing was held on December 6, 2023, new evidence has come to light that supports the defense that Dirtworks did not have the capacity to pay Creco. On November 30, 2023, Dirtworks filed a Verified Application for Provisional

Remedy - Garnishment and Verified Complaint with Maricopa County Superior Court

(CV2023-018702), asserting, among other things, breach of contract, conversion, fraud and embezzlement against a former employee, Spiro Gus Papanikolas, and other defendants. Although the Complaint was filed just prior to the Administrative Hearing of

LEGAL RECEIVED 08/19/2024

December 6, 2023, Dirtworks retained a fraud expert, Timothy Tribe of Ingen Financial, to determine and evaluate hidden information, not contained in the financial records of Dirtworks. The Honorable Katherine Cooper held an evidentiary hearing, including

testimony of not only Dirtworks’ President, Edward Britt, who also testified at the

Administrative Hearing in this case, but also Dirtworks’ CPA, Mike Tobiason, who found the evidence of the significant withdrawals of working capital, causing the demise of Dirtworks. In addition, the fraud expert testimony outlined what was not disclosed in the

financial records. Thus, the probable validity of Dirtworks’ claims were not confirmed

until April 12, 2024, when the Court affirmed the Order for Provisional Remedy. A copy of the minute entry affirming is attached hereto as Exhibit 1 and incorporated herein by reference. Due to the fact that Papanikolas withdrew working capital in the amount of

$3.7 million dollars from the Dirtworks account, most of which is alleged to be

fraudulent. Dirtworks was unable to continue operating and could not make payment of all outstanding payables owed to vendors of Dirtworks. Based upon these events, significant new evidence has been discovered since the December 6, 2023 Administrative Hearing. In

addition to the new evidence, new testimony by Edward Britt, Mike Tobiason and fraud

expert, Timothy Tribe, as outlined above, is requested to be presented to defend against Creco’s claim and support the Appeal action brought by Dirtworks. Dirtworks’ hereby requests that this Motion be granted to allow presentation of all evidence set forth herein

and set forth in the above-referenced Verified Complaint, as well as testimony and

evidence supporting the financial destruction. Alternatively, Dirtworks’ requests that if this Court does not set an evidentiary

LEGAL RECEIVED 08/19/2024

hearing for the new evidence pursuant to A.R.S. §12-910(A) and (B), that this case be remanded to the OAH and ROC for the additional evidence and testimony to be heard before an Administrative Law Judge.

II. Legal Argument

A. Legal Right to Additional Evidence in Appeal Arizona law provides that “New or additional evidence may be heard by the court

only “in cases where in the discretion of the court justice demands the admission of such

evidence.” A.R.S. s 12-910(A).” Sundown Imports, Inc. v. Arizona Dept. of Transp., Motor Vehicle Division, 115 Ariz. 428, 565 P.2d 1289 (App. 1977). Dirtworks asserts that it would be just to allow the admission of additional evidence, as it supports an entirely

new defense, which specifically absolves Dirtworks of the nonpayment violation.

Dirtworks has not violated A.R.S. §32-1154(A)(10), for its failure to pay Creco for the amount claimed by Creco, as Dirtworks lacks the capacity pay. Thus, Dirtworks can prove it does not have the capacity to pay Creco based on newly discovered evidence.

While the decision in Sundown was to affirm the denial of new evidence, it was

determined by the Court that there was testimony at the administrative hearing dealing with the subject of the additional evidence and that an opportunity to cross-examine had been provided. In the case at hand, the subject of the evidence is completely new, thus has

not been addressed by either party. The evidence was not known or understood because of

the concealment of certain financial information at the time of the Administrative Hearing. Thus, Dirtworks should be granted the opportunity to present it. See Higgins v. Industrial Commission, 16 Ariz. App. 136, 491 P.2d 1138 (1971). Though Higgins is the

LEGAL RECEIVED 08/19/2024

opposite situation, the party having “produced no evidence indicating that the additional evidence it sought to introduce could not have been submitted at the time of the hearing,” with the Court supporting the initial denial, the contrary is true here. Because the evidence

was not available nor fully known at the Administrative Hearing and Dirtworks can prove

it lacked the capacity to pay, the motion for additional evidence should be granted. Further, though the evidence was not available, the events occurred prior to the administrative hearing. Though “Evidence of events that occur subsequent to an

administrative hearing cannot “support” or “oppose” a hearing officer's decision that was

based upon circumstances existing at the time of the hearing,” in the case at hand, the money taken from Dirtworks’ account occurred prior to the hearing, making Dirtworks’ insolvent. However, Dirtworks was not aware of or able to present substantial evidence to

support that fact, at the time of the hearing. See Hatch v. Arizona Dept. of Transp., 184

Ariz. 536, 911 P.2d 542 (App 1995). Most of the financial draws were concealed and not contained in the financial disclosures until the CPA obtained all of the Quickbooks records and the fraud expert examined it.

In addition, pursuant to Dirtworks’ alternative request for remand, the Court can

remand the case for the purpose of hearing additional evidence if it appears that such action is just, as set forth in Sundown.

Therefore, Dirtworks will present new evidence that was not presented for

consideration by the OAH and ROC regarding Dirtworks’ financial incapacity to pay the alleged debt, including detailed financial statements, profit and loss statements, balance sheets, Quickbook records, showing the removal of working capital by Mr. Papanikolas,

LEGAL RECEIVED 08/19/2024

unpaid payables. Dirtworks will also present supporting testimony by President, Edward Britt, who understands the financials and will testify to Dirtworks’ lack of capacity to pay, nonpayment by general contractors and the wrongful withdrawal of over $2 million

dollars the former employee. Further, testimony from CPA, Michael Tobiason, and fraud

expert, Timothy Tribe, will also be presented establishing the concealment and financial demise of Dirtworks. III. Conclusion

For the reasons stated above, Dirtworks respectfully requests that this Court grant its motion for additional evidence to be heard in this Appeal. Alternatively, Dirtworks’ requests that this Court remand the case back to the OAH and ROC for the purpose of

hearing additional evidence.

DATED this 19th day of July, 2024.

PALECEK & PALECEK, PLLC By: /s/ Karen A. Palecek Karen A. Palecek 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 Attorneys for Plaintiff / Respondent

ORIGINAL of the foregoing filed This 19th day of July, 2024 with:

Maricopa County Superior Court Copy to Judge Mikitish

A COPY of the foregoing emailed This 19th day of July, 2024 to:

/// LEGAL RECEIVED 08/19/2024

Patrick Van Zanen, Esq. Sacks Tierney P.A. 4250 N. Drinkwater Blvd., Fourth Fl. Scottsdale, AZ 85251 Attorney for Defendant Creco

Kristin K. Mayes, Attorney General Mona Baskin, Assistant Attorney General 2005 N. Central Ave. Phoenix, AZ 85004 [email redacted] Attorneys for Arizona Registrar of Contractors

/s/ Rachel Foltz Rachel Foltz

LEGAL RECEIVED 08/19/2024

EXHIBIT 1 LEGAL RECEIVED 08/19/2024

Clerk of the Superior Court *** Electronically Filed *** 04/12/2024 8:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

CV 2023-018702 04/09/2024

CLERK OF THE COURT HONORABLE KATHERINE COOPER M. R. Diaz Deputy

DIRTWORKS CONTRACTING INC KAREN A PALECEK

SPIRO GUS PAPANIKOLAS, et al. TYLER STINE

MARTYNA SAWICKA TIMOTHY J WATSON JUDGE COOPER

RULINGS RE PROVISIONAL REMEDY-GARNISHMENT/PROBABLE VALIDITY HEARING & APPLICATION FOR INJUNCTIVE RELIEF

This case arises involves a dispute as to whether Defendant Gus Papanikolas (“Papanikolas”) misappropriated funds from his employer, Plaintiff Dirtworks Contracting Inc. (“Dirtworks”).

Between March 23, 2022 and August 21, 2023, Papanikolas withdrew $3.7 million from Dirtworks’ account. Papanikolas contends that he was entitled to this amount under the sales agreement conveying Dirtworks, formerly Papanikolas’ company, to Britt Pipeline. Dirtworks asserts that Papanikolas was entitled to no more than $524,362.07.

Dirtworks contends that Papanikolas defrauded Dirtworks by taking more money than he knew he was entitled to, failing to disclose his withdrawals, providing false information to conceal his actions, and depleting Dirtworks’ financially until it was forced to close. Dirtworks further alleges that Papanikolas fraudulently induced Edward Britt (“Britt”) to release him from a covenant not to compete so that he could open an identical company, Dirtco, Inc., with

Docket Code 926 Form V000A Page 1 LEGAL RECEIVED 08/19/2024

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CV 2023-018702 04/09/2024

Dirtworks’ funds, clients, and employees. Dirtworks claims damages for the principal amount of $2,124,024.46 plus consequential damages.

Alleging fraud and the disposal of stolen funds, Dirtworks sought a provisional remedy of garnishing bank accounts at Wells Fargo and National Bank of Arizona. The Court found that Dirtworks’ Application for Provisional Remedy Without Notice – Garnishment satisfied the statutory requirements of A.R.S. § 12-2402(B) and ordered that a Writ of Garnishment be served on the banks, subject to Dirtworks posting a bond of $1,124,024. Garnishment Order, December 4, 2023 (“Order”). Defendants requested a probable validity hearing pursuant to A.R.S. § 12- 2402(C). The Court held a Return Hearing at which the parties agreed to consolidate the probable validity hearing with a hearing on Plaintiff’s Application for Temporary Restraining Order and Preliminary Injunction. On February 15, 2024, the Court held the consolidated hearing. Having reviewed the briefs and considered the evidence and counsels’ argument, the Court finds and rules as follows.

I. PROVISIONAL REMEDY

A. Standard

The Arizona Legislature enacted the pre-judgment provisional remedy statutes as a means of securing a judgment. Under A.R.S. § 12-2402(A)(1), the Court may issue a prejudgment provisional remedy without notice when the party against whom it will apply

(a) is about to leave the state and refused to secure the debt; or (b) secreted property to defraud creditors; or (c) disposed of property, wholly or in part, with the intent to defraud creditors, or (d) is about to dispose of property with the intent to defraud creditors.

The remedy requires a verified affidavit that contains “sufficient facts supporting the party’s claim and establish[es] that one of the requirements of subsection A [is] met.” If the receiving party requests a hearing pursuant to § 12-2407, the Court sets a post-garnishment hearing to determine the “probable validity” of the applicant’s claim(s) and any defenses to the provisional remedy and whether the statutory requirements are met. §§ 12-2410(C), (D).

To show the probable validity of its claims, Dirtworks must present “sufficient evidence” that it will prevail on its claims. Tomar Electronics, Inc. v. Watkins, 2010 WL 11434976 at *2 (D. Ariz. 2010). Dirtworks is not required to prove its entire case at this point. Disputed facts shown by controverting evidence will not automatically defeat the provisional remedy. Dirtworks must simply present sufficient evidence to support its claims. Id.

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CV 2023-018702 04/09/2024

Defendants urge the Court to quash the Order on the grounds that Britt misled the Court by falsely alleging that Papanikolas embezzled money and had or intended to dispose of the funds. While Defendants may dispute Dirtworks’ allegations, the threshold issue before the Court is whether Dirtworks has presented sufficient evidence to support its underlying claims to justify a provisional remedy. The Court finds that Dirtworks has presented sufficient evidence.

B. Plaintiff Established the Probable Validity of Claims

The Verified Complaint alleges six counts: Breach of Contract, Fraud, Civil RICO, Conversion/Civil Theft (Embezzlement), Tortious Interference with Contractual Relations, and Conspiracy. The evidence presented focused on the Breach of Contract, Fraud, and Conversion claims.

1. Breach of Contract

To prevail on its breach of contract claim, Dirtworks must prove a contract, breach, and damages. Chartone, Inc. v. Bernini, 207 Ariz. 162 170, ¶ 30 (App. 2004 (internal citations omitted) The contract at issue is the Stock Purchase Agreement signed November 10, 2021 (“SPA”). Under the SPA, Britt Pipeline acquired 100% of Dirtworks’ stock in exchange for $1,450,000.1 It required Papanikolas to leave $750,000 in working capital with the company. (Section 3.6.2; Amendment #3) Retentions and accounts receivable (referred to collectively as “retention receivables”) above the $750,000 and posted on or before the closing date of March 23, 2022 would not remain with the company and would be paid to Papanikolas. (Section 3.6.3). The parties agreed that Papanikolas would continue to work for Dirtworks, overseeing its operations, with a covenant not to compete should he leave. (Section 9.2)

The express language of the SPA and the testimony of Papanikolas and Britt provide sufficient evidence to support Dirtworks’ breach of contract claim. Section 3.6.3 of the SPA limited Papanikolas’ payments from retention receivables to those receivables “in the company at closing.” (emphasis added) Papanikolas admits that he withdrew retention receivables that posted after closing (March 23, 2022). While Papanikolas denies that he breached the SPA and offers various explanations based on his interpretation of the SPA and Dirtworks’ historical end- of-month accounting, the express language of the SPA states March 23, 2022 is the cut-off for his receivables.

As further evidence of breach, Britt testified regarding his conversations with Papanikolas between October 9 and 19, 2023 after he confronted Papanikolas. Britt recalled that

During the due diligence period, the purchase price was amended from $3. 3 million to $1.450 million. See Amendment #1 to SPA. Docket Code 926 Form V000A Page 3 LEGAL RECEIVED 08/19/2024

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CV 2023-018702 04/09/2024

Papanikolas initially denied any wrong-doing, but then called Britt back, acknowledged that he had withdrawn excess funds, and promised to repay the money. He did not argue – as he does in this litigation -- that he was entitled to all of the money he took or that the parties’ “course of performance” modified the SPA. Instead, he made a partial payment of $260,000 and stopped returning Britt’s phone calls. Papanikolas’ recollection of these communications differed. However, having had the opportunity to observe both witnesses while testifying, the Court finds Papanikolas’s defensive demeanor and repeated references to “my money” undermine his credibility. In considering the evidence presented of breach of the SPA and Defendants’ defenses, the Court finds sufficient evidence to justify the provisional remedy.

2. Fraud

Dirtworks asserts two fraud claims. The Complaint alleges that Papanikolas made false statements regarding Dirtworks’ working capital, causing Britt to continue to infuse money to sustain the company, while Papanikolas withdrew capital that he was not entitled to. The Application for TRO and Preliminary Injunction alleges that Papanikolas fraudulently induced Britt to release him from his non-compete provision under the SPA.

Related to both claims, Dirtworks alleges that Papanikolas concealed his fraudulent conduct by a) failing to disclose his withdrawals and providing misleading financial data – both in response to Britt’s request for information to determine why Dirtworks was losing money, and b) failing to disclose that he intended to form Dirtco, Inc., in violation of his non-compete obligation. Arizona recognizes a claim for fraudulent concealment. Wells Fargo Bank v. Arizona Laborer, Teamsters and Cement Masons Local No. 395 Pension, 201 Ariz. 474, 496, ¶¶86-87; Restatement (Second) of Torts §550 (1976). Concealment may be shown by words or acts intended to hide information by creating a false impression, mislead, avoid suspicion, or prevent further inquiry into a material matter. Id. at ¶ 95.

To prove either fraud claim, Dirtworks must prove that Papanikolas made a false, material statement that he knew to be false; that he intended Britt/Dirtworks to rely on the statement; that Britt reasonably relied on the statement; and damages. Enyart v. Transamerica Ins. Co., 195 Ariz. 71, 78 ¶ 18 (App. 1998). Unlawful intent can be inferred from direct or circumstantial evidence. McAlister v. Citibank (Arizona), 171 Ariz. 207, 214 (App. 1992), citing Rowe Intern., Inc. v. J–B Enterprises, Inc., 647 F.2d 830, 834 (8th Cir.1981) ( “An intention to deceive can be proved by direct evidence or by circumstantial evidence from which intent could be inferred…”)

Alleged Fraud Related to Dirtworks’ Financial Condition. Plaintiff presents evidence that Papanikolas falsely attributed 100% of Dirtworks’ lack of working capital to material shortages, developers, and the economy. His statements were false because his withdrawals -- Docket Code 926 Form V000A Page 4 LEGAL RECEIVED 08/19/2024

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CV 2023-018702 04/09/2024

thousands of dollars every few days – also explained the lack of working capital. The statements also served to deflect suspicion. Britt testified that he relied on Papanikolas’ operations-related explanations and, as a result, continued to put more money into Dirtworks to keep it going. Papanikolas knew that Britt trusted and relied on him, as Papanikolas managed the company autonomously for Britt. Papanikolas also concealed his misrepresentations and conduct by providing reports prepared in such a manner so as to bury the withdrawals and to create a false impression regarding the company’s expenses. The evidence is consistent with the “fraud triangle” described by Plaintiff’s expert witness, a certified fraud examiner, as indicating probable fraud – taking cash to recoup his asking price of $3.3 million, Papanikolas’s belief that he was entitled to the money, and Papanikolas’s opportunity to take the money as a trusted manager for an owner lacking sufficient controls over operations.

b. Release from Non-Compete Provision. Substantial evidence exists for the claim that Papanikolas induced Britt to amend the SPA to delete Section 9, the non-compete provision. Fraudulent inducement applies to contracts where a party understands the contract terms but has been induced by fraud to agree to the terms. See Sun Lodge, Inc. v. Ramada Development Co., 124 Ariz. 540 (App. 1979).

The evidence shows that, by the end of August, 2023, Dirtworks had laid off employees, liquidated equipment assets, and received demands from unpaid subcontractors and supplies. On August 28, 2023, Papanikolas told Britt that he needed to earn a living doing one-man jobs or working for another contractor. He requested Britt release the non-compete, stating, “I don’t want to get in trouble.” At or about the same time (close enough that Papanikolas knew his true plan when he asked Britt for the release), Papanikolas filed the documents necessary to form his own company, Dirtco, Inc. By mid-September, he had equipped and opened Dirtco, set up a bank account, and secured work for Dirtco on a project that Dirtworks would have performed. Papanikolas testified that he did not tell Britt that he was obtaining a contractor’s license, forming a company or had used a Dirtworks bid to land a project for Dirtco with LGO. He testified, “I didn’t have to tell him what I was doing with my money.” From this evidence, a jury could reasonably infer that Papanikolas intentionally misled Britt to modify the SPA so that he could open a competitor company.

3. Conversion

Similarly, sufficient evidence is presented to support the conversion claim. Conversion is an intentional exercise of dominion or control over the property which so seriously interferes with the right to another to control it that the actor may justly be required to pay the other the full value of the chattel.” Miller v. Hehlen, 209 Ariz. 462, 472 ¶ 34 (App. 2005). Money can be converted if it can be described, identified, or segregated and an obligation to treat it in a specific manner is established. Autoville, Inc. v. Friedman, 20 Ariz. App. 89, 91 (1973). The material Docket Code 926 Form V000A Page 5 LEGAL RECEIVED 08/19/2024

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CV 2023-018702 04/09/2024

evidence is undisputed. Defendants admit to the transfers, ie control over funds paid to Dirtworks. The converted funds are identified by the documentation of the transfers from Dirtworks’ account to Papanikolas, including Dirtworks’ Quickbooks. Defendants’ conduct prevented Dirtworks from using the money to operate its business.

In sum, the Court finds that Dirtworks has presented sufficient evidence to establish the probable validity of claims asserted against Defendants.

C. Statutory Requirements Met

The evidence also satisfies the statutory requirements for a provisional remedy under A.R.S. §12-2402(C). Defendants argue that the Application was deficient because it was based on an allegedly false affidavit. Dirtworks asserts that the evidence presented at the probable validity hearing is consistent with and supports Britt’s affidavit. Having heard the testimony and considered the other evidence, the Court agrees with Dirtworks. Papanikolas admitted that he took money from Dirtworks’ account; that the closing date of the SPA was March 23, 2022; that he did not discuss the withdrawals with Britt; and that he caused Britt to release the non-compete based on false information. Defendants also do not offer any evidence to dispute that Papanikolas funded Dirtco, at least in part, with money he took from Dirtworks. This evidence justifies the Order based on the fraudulent taking and/or disposal of property owed to a creditor.

II. SUPPLEMENTAL ORDER FOR ADDITIONAL GARNISHEE DEFENDANTS

After the Court issued the Order, Dirtworks requested a Supplemental Order for Provisional Remedy for LGI Homes – Arizona, LLC, LGI Homes Construction, LLC; and LGI Homes Group, LLC (referred to collectively as “LGI Homes”). Defendants filed an Objection, requesting the Court deny the request pending the hearing. The Court held the request in abeyance pending the hearing.

The evidence presented on February 15, 2024, established that Dirtco is currently working on projects for LGI Homes. At least a portion of the work includes projects that Dirtworks did or would have performed, given the relationship between LGI and Dirworks. Regardless of whether the projects would have been performed by Dirtworks, the payments to Dirtco are subject to a garnishment order for the same reasons stated above. In considering the request to add LGI Homes as additional garnishees, the Court finds that Dirtworks has presented sufficient evidence to support its claims, including evidence that Papanikolas fraudulently transferred funds that belonged to Dirtworks pursuant to A.R.S. § 12-2402(A)(1). The Court also considers the request for supplemental order under A.R.S. § 12-2403 as a provisional remedy with notice because Defendants have had the opportunity for a hearing. The Court will issue a

Docket Code 926 Form V000A Page 6 LEGAL RECEIVED 08/19/2024

SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

CV 2023-018702 04/09/2024

separate Supplemental Order for Provisional Remedy – Garnishment. No additional bond is required.

III. TRO/PRELIMINARY INJUNCTION

Dirtworks seeks an injunction to bar Dirtco from operating in Southern Arizona. For a preliminary injunction and/or TRO, Dirtworks must show: (1) a strong likelihood of success on the merits of its claims against Defendants; (2) the possibility of irreparable harm to Dirtworks if relief is denied; (3) the balance of hardships favors Alliance; and (4) that public policy favors the injunction. Power P.E.O. Inc. v. Employees Insurance of Wausau, 201 Ariz. 559, 562 (App. 2002); Shoen v. Shoen, 167 Ariz. 58, 63 (App. 1990).

In determining a request for injunctive relief, the Court may evaluate the evidence using a sliding scale. A moving party may establish either 1) probably success on the merits and the possibility of irreparable injury; or 2) the presence of serious questions and that the balance of hardships favors the moving party. Arizona Ass’n of Providers for Persons with Disabilities v. State, 223 Ariz. 6, 12 (App. 2009). However, a preliminary injunction will not be issued when the plaintiff has an adequate remedy at law (i.e., claims can be rectified by money damages), or when a plaintiff will not suffer irreparable harm. Phoenix Orthopedic Surgeons v. Pearis, 164 Ariz. 54, 58 (App. 1989).

Under either sliding scale analysis, the Court does not find that Dirtworks will sustain an irreparable injury or hardship without injunctive relief. Dirtworks claims past and future economic damages and the loss of its reputation and goodwill. Shuttering Dirtco will not compensate Dirtworks for its economic losses. Dirtworks has a remedy at law for economic losses – money damages. Nor will an injunction prevent the loss of more goodwill or reputation or restore that which has been lost, as Dirtworks is no longer operating. There is no evidence that Dirtworks intends to resume operations. Britt testified that he does not believe that he can re- enter the market in Southern Arizona due to Papanikolas’ wrongful conduct. In balancing the hardships, the harm to Dirtco outweighs the harm to the defunct Dirtworks.

IV. CONCLUSION

IT IS ORDERED affirming the December 4, 2023 Order for Provisional Remedy – Garnishment.

IT IS FURTHER ORDERED granting the Amended Notice and Request to Supplement Order for Provisional Remedy to add LGI Homes – Arizona, LLC; LGI Homes Construction, LLC; and LGI Homes Group, LLC as Garnishee Defendants. The Court will enter a Supplemental Order. Docket Code 926 Form V000A Page 7 LEGAL RECEIVED 08/19/2024

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CV 2023-018702 04/09/2024

IT IS FURTHER ORDERED denying the Application for TRO/Preliminary Injunction.

V. PENDING MATTER

Pending is the Motion for Judgment Against Garnishee Defendant – Zions Bancorporation, N.A. dba National Bank of Arizona filed February 9, 2024, and the parties’ Stipulated Notice of Extension Re: Motion for Judgment, stating the parties will confer regarding Defendants’ Response, if any, to the Motion for Judgment, after receiving the Rulings stated here.

IT IS FURTHER ORDERED that, by April 25, 2024, the parties shall submit either a) briefing schedule to complete the briefing on the Motion for Judgment, or b) a Stipulated and Request for Entry of Garnishment Judgment Against National Bank of Arizona and proposed Judgment.

Docket Code 926 Form V000A Page 8 8/19/24, 1:36 PM State of Arizona Mail - Dirtworks v. Creco, Case No. LC2024-000081-00: LEGAL Motion for Additional 08/19/2024 RECEIVED Evidence

Legal New Mail - AZROC <[email redacted]>

Dirtworks v. Creco, Case No. LC2024-000081-00: Motion for Additional Evidence message

Rachel Foltz <[email redacted]> Mon, Aug 19, 2024 at 8:46 AM To: "Van Zanen, Patrick J." <[email redacted]>, "Baskin, Mona" <[email redacted]>, "Warner, Keely C." <[email redacted]>, [email redacted], [email redacted], [email redacted] Cc: Karen Palecek <[email redacted]>

All, Attached please find the Motion for Additional Evidence sent for in-person filing today. Thank you, Rachel Foltz Paralegal Palecek & Palecek, PLLC 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 602-522-2454 602-522-2349 (fax) www.paleceklaw.com

2024_08_19_Motion to Introduce Additional Evidence.pdf 731K

https://mail.google.com/mail/b/AEoRXRTI5ZV1Jdss4xyUcpYDyMX3mBvZOnTZOciYnX5VMBTjhPK_/u/0/?ik=d3afebeda9&view=pt&search=all&permt… 1/1 Received 8/26/2024 ROC Legal

Patrick J. Van Zanen, AZ #021371 [email redacted] SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693 Telephone: 480.425.2600

CONTRACTING, INC.’S MOTION FOR 4250 NORTH DRINKWATER BOULEVARD

CRECO, INC. dba CRECO RENTAL, EXTENSION OF TIME TO FILE SCOTTSDALE, ARIZONA 85251-3693

OPENING BRIEF Defendant/Complainant. FOURTH FLOOR

(Assigned to the Hon. Joseph Mikitish) Defendant/Complainant Creco, Inc. dba Creco Rental (“Creco”) hereby submits this Response Memorandum in Opposition to Plaintiff/Respondent Dirtworks Contracting, Inc.’s (“Dirtworks”) Motion for Extension of Time to File Opening Brief. The Motion should be denied because Dirtworks fails to provide a justification for its initial failure to timely submit its Opening Brief. Moreover, Dirtworks’ argument that it should be entitled to file its Opening Brief late in order to include newly discovered evidence is unconvincing; based upon a misreading of the relevant statute; and fails to recognize that both of Dirtworks’ requests to an evidentiary hearing and a trial de novo have been denied. Thus, as of now, there is no legal basis for Dirtworks to include in its opening brief a discussion of “evidence” that has never been tested by CRECO in an evidentiary hearing or trial de novo. The Motion should be denied.

3920405 Received 8/26/2024 ROC Legal

MEMORANDUM OF POINTS AND AUTHORITIES On March 4, 2024, and pursuant to A.R.S. § 12-904, Dirtworks filed its Notice of Appeal of Final Administrative Decision and Order (2023A-09265-NPC-ROC) and a Request for Evidentiary Hearing pursuant to A.R.S. § 12-904(A). Having filed its Notice of Appeal on March 4, 2024, Dirtworks filed nothing further until filing an Opening Brief and a Request for Trial De Novo on June 24, 2024. Dirtworks’ Opening Brief was filed well after the date it was due and now asks for an extension as a post hoc remedy for its failure to timely file its Opening Brief. The request should be denied. I. DIRTWORKS FAILED TO TIMELY FILE AN OPENING BRIEF Rule 6, J. Review Admin. Dec., provides that appellant must file an opening brief within 45 days of the Certification of Record on Appeal. Here, the Office of Administrative Hearings filed the Certification of Record on Appeal on April 16, 2024. Thus, Dirtworks’ SACKS TIERNEY P.A., ATTORNEYS

Opening Brief was due no later than May 31, 2024. Dirtworks filed its Opening Brief on June 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

24, 2024. Thus, the appeal should be dismissed based upon Dirtworks’ failure to timely file. FOURTH FLOOR

II. DIRTWORKS’ “NEWLY DISCOVERED” EVIDENCE ARGUMENT IS UNPERSUASIVE

Dirtworks argues that it should not have to file an opening brief until the Court rules

on its recently filed Motion for Additional Evidence. However, the Court only recently ruled

on August 14, 2024, that it would allow Dirtworks to file a motion for additional evidence

after it denied Dirtworks’ motion for a trial de novo because it too was filed late. The point

is that the Court’s recent decision to allow Dirtworks to file a motion for additional evidence

is irrelevant to, and does not excuse, Dirtworks’ failure in the first instance to timely file an

opening brief on May 31, 2024.

That said, Dirtworks argues that it has new evidence that it should be allowed to

present to the Court regarding an employee who stole over $5 million from Dirtworks, which

rendered it incapable of paying CRECO. In this regard, Dirtworks relies on A.R.S. § 32-

1154(A)(10), which provides that:

3920405 Received 8/26/2024 ROC Legal

(A) The holder of a license or any person named on a license pursuant to this chapter may 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 $750 when due for materials or services rendered in connection with the licensee's operations as a contractor unless the licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. First, Dirtworks’ request for a trial de novo was denied. There is no legal basis to present new evidence outside of a trial de novo. As of now, the Court also denied Dirtworks’ request for an evidentiary hearing. However, the Court allowed Dirtworks to brief the issue to explain why an evidentiary hearing is needed. In the event Dirtworks briefs the issue and the Court allows an evidentiary hearing, if the Court also allows new evidence to be admitted SACKS TIERNEY P.A., ATTORNEYS

4250 NORTH DRINKWATER BOULEVARD

in the evidentiary hearing, then it will have essentially “undone” its denial of the trial de SCOTTSDALE, ARIZONA 85251-3693

novo. Alternatively, if the Court maintains its denial of an evidentiary hearing, leaving FOURTH FLOOR

Dirtworks to present its appeal solely on the papers, then certainly Dirtworks cannot discuss in an amended Opening Brief new evidenced that has never been challenged by CRECO in any type of hearing. Second, Dirtworks misreads A.R.S. § 32-1154(A)(10) to contend that so long as it cannot pay CRECO for whatever reason, it did not violate the statute and should not be suspended. However, that is not what the statute says. A.R.S. § 32-1154(A)(10) states the licensee avoids liability only if “licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. See A.R.S. § 32-1154(A)(10) (emphasis added). As such, it is not enough that Dirtworks convince that it had no capacity to pay because an employee stole money from Dirtworks. Rather, Dirtworks must also prove that it “has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were 3920405 Received 8/26/2024 ROC Legal

rendered or purchased.” Under the statute, then, if Dirtworks received sufficient money on this particular job, it is of no consequence that an employee stole it. Third, and perhaps most dispositive, Dirtworks fails to point to any rule or statute that allows it to present newly discovered evidence as to an issue it never raised in the administrative hearing. As this Court has held: the [2021] amendments affirm that an appeal to the court is still an appeal. The legislature did not replace the judicial review scheme for an appeal of agency actions with a matter of original jurisdiction with the Superior Court. If it had, it would have eliminated the process for an administrative decision, followed by an administrative appeal, and then judicial review…[T]he issues in any trial de novo must be the ones addressed at the administrative level. See Xtreme Precision LLC v. Barnes/AROC, LC2022-000353-001 (Maricopa Cty. Super.C Ct., Feb 12, 2024). Here, Dirtworks has not argued that it presented to the administrative law judge the argument that it was unable to pay CRECO. If that argument was not presented at SACKS TIERNEY P.A., ATTORNEYS

4250 NORTH DRINKWATER BOULEVARD

the administrative level, then there is no legal basis for Dirtworks to present “newly SCOTTSDALE, ARIZONA 85251-3693

discovered evidence” on that issue because it was not an issue addressed at the administrative FOURTH FLOOR

level. CONCLUSION Based on the foregoing, the Court should deny the Motion for an Extension of Time to File an Opening Brief. DATED this 26th day of August, 2024. SACKS TIERNEY P.A. By: /s/ PATRICK J. VAN ZANEN Patrick J. Van Zanen Attorneys for Defendant/ Complainant CRECO, INC. dba CRECO RENTAL 3920405 Received 8/26/2024 ROC Legal

ORIGINAL of the foregoing filed with Maricopa County Superior Court this 26th day of August, 2024 via courier. COURTESY copy of the foregoing was delivered via courier to: The Honorable Jospeh Mikitish Maricopa County Superior Court 201 W. Jefferson Street Phoenix, AZ 85003 COPY of the foregoing was sent via electronic mail this 26th day of August, 2024, to: Karen A. Palecek James J. Palecek 6263 N. Scottsdale Road, Suite 310 Scottsdale, AZ 85250 SACKS TIERNEY P.A., ATTORNEYS

[email redacted] 4250 NORTH DRINKWATER BOULEVARD

[email redacted] SCOTTSDALE, ARIZONA 85251-3693

[email redacted] Attorneys for Dirtworks Contracting, Inc. FOURTH FLOOR

Mona Baskin Assistant Attorney General 2005 N. Central Ave Phoenix, AZ 85004 [email redacted] [email redacted] Attorneys for the Arizona Registrar of Contractors Registrar of Contractors Attn: Legal Dept. 1700 W Washington, Suite 105 Phoenix, AZ 85007 [email redacted] [email redacted] Nominal Party /s/ Keely Warner 3920405 Received 8/26/24, 3:00 PM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // Case No. LC2024-000081-001 [IMAN-IMANAG… 8/26/2024 ROC Legal

Donna Lewandowski <[email redacted]>

Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // Case No. LC2024- 000081-001 [IMAN-IMANAGE.FID806806] Warner, Keely C. <[email redacted]> Mon, Aug 26, 2024 at 2:25 PM To: Karen Palecek <[email redacted]>, "[email redacted]" <[email redacted]>, Rachel Foltz <[email redacted]>, "Baskin, Mona" <[email redacted]>, "[email redacted]" <[email redacted]>, Legal New Mail - AZROC <[email redacted]>, "[email redacted]" <[email redacted]> Cc: "Van Zanen, Patrick J." <[email redacted]>

Good afternoon,

Please see the attached Response in Opp of Creco, Inc. dba Creco Rental being filed today.

Thank you,

Keely C. Warner

Legal Administrative Assistant

P: 480.425.2650

Sacks Tierney P.A.

4250 N. Drinkwater Blvd., Fourth Floor

Scottsdale, AZ 85251

www.sackstierney.com

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permmsgid=msg-f:[number redacted]&simpl=msg-f:[number redacted] 1/2 Received 8/26/24, 3:00 PM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // Case No. LC2024-000081-001 [IMAN-IMANAG… 8/26/2024 ROC Legal [Quoted text hidden]

RIO to Motion to File Late Opening Brief.pdf 451K

https://mail.google.com/mail/u/0/?ik=278fe7c9ff&view=pt&search=all&permmsgid=msg-f:[number redacted]&simpl=msg-f:[number redacted] 2/2 LEGAL RECEIVED 09/09/2024

Patrick J. Van Zanen, AZ #021371 [email redacted] SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693 Telephone: 480.425.2600

CONTRACTING, INC.’S MOTION TO 4250 NORTH DRINKWATER BOULEVARD

CRECO, INC. dba CRECO RENTAL, INTRODUCE ADDITIONAL EVIDENCE SCOTTSDALE, ARIZONA 85251-3693

Defendant/Complainant. FOURTH FLOOR

(Assigned to the Hon. Joseph Mikitish) Defendant/Complainant Creco, Inc. dba Creco Rental (“Creco”) hereby submits this Response Memorandum in Opposition to Plaintiff/Respondent Dirtworks Contracting, Inc.’s (“Dirtworks”) Motion to Introduce Additional Evidence. The Motion should be denied because Dirtworks is not entitled to present “additional evidence” regarding arguments that were never made at the administrative hearing. An appeal of a final administrative decision is still an appeal that is based upon the administrative record. The de novo standard written into the statute by the Arizona Legislature in 2021 did not transform administrative hearing into toothless advisory proceedings that can be completely ignored by a party thereto if that party does not like the final administrative decision. The administrative record is still relevant here, and Dirtworks admits that it never raised the defense of “inability to pay” at the administrative level. And to be sure, it certainly could have. That is, Dirtworks knew at the time of the administrative hearing that it was unable to pay CRECO, and it could have argued as much and presented evidence of its financial situation, including its accounting books.

3932209 LEGAL RECEIVED 09/09/2024

Dirtworks now wants to present evidence of why it did not have the ability to pay, i.e., employee embezzlement. However, Dirtworks may not present any such evidence when it never argued in ability to pay in the first instance. The Motion should be denied. MEMORANDUM OF POINTS AND AUTHORITIES On March 4, 2024, and pursuant to A.R.S. § 12-904, Dirtworks filed its Notice of Appeal of Final Administrative Decision and Order (2023A-09265-NPC-ROC) and a Request for Evidentiary Hearing pursuant to A.R.S. § 12-904(A). Having filed its Notice of Appeal on March 4, 2024, Dirtworks filed nothing further until filing an Opening Brief and a Request for Trial De Novo on June 24, 2024. Dirtworks’ Opening Brief was filed well after the date it was due and now asks for an extension as a post hoc remedy for its failure to timely file its Opening Brief. The request should be denied. I. DIRTWORKS MAY NOT PRESENT “NEWLY DISCOVERED” EVIDENCE SACKS TIERNEY P.A., ATTORNEYS

OUTSIDE OF A TRIAL DE NOVO, OF WHICH DIRTWORKS WAS DENIED 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

Dirtworks argues that it has new evidence that it should be allowed to present to the FOURTH FLOOR

Court regarding an employee who stole over $5 million from Dirtworks, which rendered it

incapable of paying CRECO. In this regard, Dirtworks relies on A.R.S. § 32-1154(A)(10),

which provides that:

(A) The holder of a license or any person named on a license pursuant to this chapter may 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 $750 when due for materials or services rendered in connection with the licensee's operations as a contractor unless the licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. However, Dirtworks’ request for a trial de novo was denied. There is no legal basis to present new evidence outside of a trial de novo. As of now, the Court also denied Dirtworks’ request for an evidentiary hearing. However, the Court allowed Dirtworks to brief the issue 3932209 LEGAL RECEIVED 09/09/2024

to explain why an evidentiary hearing is needed. In the event Dirtworks briefs the issue and the Court allows an evidentiary hearing, if the Court also allows new evidence to be admitted in the evidentiary hearing, then it will have essentially “undone” its denial of the trial de novo. Alternatively, if the Court maintains its denial of an evidentiary hearing, leaving Dirtworks to present its appeal solely on the papers, then certainly Dirtworks cannot discuss in an amended Opening Brief new evidenced that has never been challenged by CRECO in any type of hearing. II. DIRTWORKS MAY NOT PRESENT NEWLY DISCOVERED EVIDENCE REGARDING DEFENSE NEVER RAISED AT THE ADMINISTRATIVE HEARING Dirtworks fails to point to any rule or statute that allows it to present newly discovered evidence as to an issue it never raised in the administrative hearing. As this Court has held: SACKS TIERNEY P.A., ATTORNEYS

the [2021] amendments affirm that an appeal to the court is still an appeal. The 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

legislature did not replace the judicial review scheme for an appeal of agency actions with a matter of original jurisdiction with the Superior Court. If it had, FOURTH FLOOR

it would have eliminated the process for an administrative decision, followed by an administrative appeal, and then judicial review…[T]he issues in any trial de novo must be the ones addressed at the administrative level.

See Xtreme Precision LLC v. Barnes/AROC, LC2022-000353-001 (Maricopa Cty. Super.C

Ct., Feb 12, 2024). Here, Dirtworks admits in its Motion that it failed to present to the

administrative law judge the argument that it was unable to pay CRECO. If that argument

was not presented at the administrative level, then there is no legal basis for Dirtworks to

present “newly discovered evidence” as to why it was unable to pay CRECO.

III. THE PROPOSED NEW EVIDENCE FAILS TO ADDRESS A NECESSARY PRONG OF THE “INABILITY TO PAY” DEFENSE PROVIDED FOR IN THE STATUTE Dirtworks misreads A.R.S. § 32-1154(A)(10) to contend that so long as it cannot pay CRECO for whatever reason, it did not violate the statute and should not be suspended. However, that is not what the statute says. A.R.S. § 32-1154(A)(10) provides that the licensee avoids liability or suspension only if “licensee proves that the licensee lacks the capacity to 3932209 LEGAL RECEIVED 09/09/2024

pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. See A.R.S. § 32-1154(A)(10) (emphasis added). As such, it is not enough that Dirtworks merely convince that it had no capacity to pay because an employee stole money from Dirtworks. Rather, Dirtworks must also prove that it “has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.” Under the statute, then, if Dirtworks received sufficient money on this particular job, it is of no consequence that an employee stole it. CONCLUSION Based on the foregoing, the Court should deny the Motion to Introduce Additional Evidence. SACKS TIERNEY P.A., ATTORNEYS

DATED this 9th day of September, 2024. 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

SACKS TIERNEY P.A. FOURTH FLOOR

By: /s/ PATRICK J. VAN ZANEN Patrick J. Van Zanen Attorneys for Defendant/ Complainant CRECO, INC. dba CRECO RENTAL 3932209 LEGAL RECEIVED 09/09/2024

ORIGINAL of the foregoing filed with Maricopa County Superior Court this 9th day of September, 2024 via courier. COURTESY copy of the foregoing was delivered via courier to: The Honorable Jospeh Mikitish Maricopa County Superior Court 201 W. Jefferson Street Phoenix, AZ 85003 COPY of the foregoing was sent via electronic mail this 9th day of September, 2024, to: Karen A. Palecek James J. Palecek 6263 N. Scottsdale Road, Suite 310 Scottsdale, AZ 85250 SACKS TIERNEY P.A., ATTORNEYS

[email redacted] 4250 NORTH DRINKWATER BOULEVARD

[email redacted] SCOTTSDALE, ARIZONA 85251-3693

[email redacted] Attorneys for Dirtworks Contracting, Inc. FOURTH FLOOR

Patrick J. Van Zanen, AZ #021371 [email redacted] SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693 Telephone: 480.425.2600

CONTRACTING, INC.’S MOTION FOR 4250 NORTH DRINKWATER BOULEVARD

CRECO, INC. dba CRECO RENTAL, EVIDENTIARY HEARING SCOTTSDALE, ARIZONA 85251-3693

Defendant/Complainant. FOURTH FLOOR

(Assigned to the Hon. Joseph Mikitish) Defendant/Complainant Creco, Inc. dba Creco Rental (“Creco”) hereby submits this Response Memorandum in Opposition to Plaintiff/Respondent Dirtworks Contracting, Inc.’s (“Dirtworks”) Motion for Evidentiary Hearing. The Motion should be denied because Dirtworks is not entitled to present “additional evidence” regarding arguments that were never made at the administrative hearing. An appeal of a final administrative decision is still an appeal that is based upon the administrative record. The de novo standard written into the statute by the Arizona Legislature in 2021 did not transform administrative hearings into advisory proceedings that can be completely ignored by a party thereto if that party does not like the final administrative decision. The administrative record is still relevant, and Dirtworks admits that it never raised the defense of “inability to pay” at the administrative level. Even in a trial de novo - which was denied here – Dirtworks would be barred from presenting newly discovery evidence regarding issues never raised at the administrative level. Certainly, if Dirtworks could not present such evidence in a trial de novo then it could

3951945 LEGAL RECEIVED 09/30/2024

not present it in an evidentiary hearing. Dirtworks’ proposal to offer evidence of why it did not have the ability to pay CRECO may not presented because it never argued inability to pay at the administrative level. The Motion should be denied. MEMORANDUM OF POINTS AND AUTHORITIES I. DIRTWORKS MAY NOT PRESENT NEWLY DISCOVERED EVIDENCE REGARDING A DEFENSE IT NEVER RAISED AT THE ADMINISTRATIVE HEARING Dirtworks conflates newly discovered evidence regarding issues raised at the administrative level with newly discovered evidence of issues never raised at the administrative level. Dirtworks mistakenly argues that that the new de novo standard of review means that nothing that happened at the administrative level matters such that it can argue and present a totally different case with different arguments and issues that it never raised at the administrative level. However, Dirtworks is wrong and fails to point to any rule SACKS TIERNEY P.A., ATTORNEYS

4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

or statute that allows it to present newly discovered evidence as to an issue it never raised in the administrative hearing. As this Court has held: FOURTH FLOOR

the [2021] amendments affirm that an appeal to the court is still an appeal. The legislature did not replace the judicial review scheme for an appeal of agency actions with a matter of original jurisdiction with the Superior Court. If it had, it would have eliminated the process for an administrative decision, followed by an administrative appeal, and then judicial review…[T]he issues in any trial de novo must be the ones addressed at the administrative level. See Xtreme Precision LLC v. Barnes/AROC, LC2022-000353-001 (Maricopa Cty. Super.C Ct., Feb 12, 2024). Dirtworks admits in its Motion to Present New Evidence that it failed to present to the administrative law judge the argument that it was unable to pay CRECO. If that argument was not presented at the administrative level, then there is no legal basis for Dirtworks to present newly discovered evidence as to why it was unable to pay CRECO. As the Court states above, even if Dirtworks was granted a trial de novo (and it was denied a trial de novo), it still would not be entitled to present newly discovered evidence regarding issues never raised at the administrative level because the trial de novo and the scope of appellate review 3951945 LEGAL RECEIVED 09/30/2024

is limited to the issues addressed at the administrative level. That is, a de novo review standard affording no deference to factual or legal findings made at the administrative level does not mean that totally new arguments can be made at the appellate level. It merely means that on review of the issues raised at the administrative level, the reviewing court need not defer to agency findings or fact or law. Here, if Dirtworks cannot present evidence at a trial de novo of issues never raised at the administrative, then it certainly cannot do so in an administrative hearing. To be sure, if the Court also allows evidence to be admitted in the evidentiary hearing regarding issues never raised at the appellate level, then it will essentially be granting the trial de novo that it previously denied but with freedom to present evidence of issues that would not even have been allowed in a typical trial de novo. II. THE PROPOSED NEW EVIDENCE IS ESSENTIALLY IRRELEVANT BECAUSE IT FAILS TO ADDRESS A NECESSARY PRONG OF THE “INABILITY TO PAY” DEFENSE PROVIDED FOR IN THE STATUTE SACKS TIERNEY P.A., ATTORNEYS

4250 NORTH DRINKWATER BOULEVARD

Dirtworks misreads A.R.S. § 32-1154(A)(10) to contend that so long as it cannot pay SCOTTSDALE, ARIZONA 85251-3693

CRECO for whatever reason, it did not violate the statute and should not be suspended. FOURTH FLOOR

However, that is not what the statute says. A.R.S. § 32-1154(A)(10) provides that the licensee avoids liability or suspension only if “licensee proves that the licensee lacks the capacity to pay and has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.” See A.R.S. § 32-1154(A)(10) (emphasis added). As such, it is not enough that Dirtworks convince the Court that it had no capacity to pay because an employee stole money from Dirtworks’ bank account. Rather, Dirtworks must also prove that it “has not received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.” Under the statute, then, if Dirtworks received sufficient money on this particular job, it is of no consequence that an employee stole it. Dirtworks has not represented that it will present evidence that that it did not receive sufficient funds as payment on this particular job. In this regard, the inquiry under A.R.S. § 32-1154(A)(10) is job specific. So, if Dirtworks received sufficient funds on 3951945 LEGAL RECEIVED 09/30/2024

this particular job, the defense of inability to pay A.R.S. § 32-1154(A)(10) is unavailable even if an employee stole every penny received on this particular job. Short of presenting evidence that Dirtworks was not adequately paid on this job, evidence that an employee embezzled from Dirtworks is totally irrelevant. CONCLUSION Based on the foregoing, the Court should deny the Motion to Introduce Additional Evidence. DATED this 30th day of September, 2024. SACKS TIERNEY P.A. By: /s/ PATRICK J. VAN ZANEN Patrick J. Van Zanen Attorneys for Defendant/ Complainant SACKS TIERNEY P.A., ATTORNEYS

CRECO, INC. dba CRECO RENTAL 4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

FOURTH FLOOR

ORIGINAL of the foregoing filed with Maricopa County Superior Court this 30th day of September, 2024 via courier. COURTESY copy of the foregoing was delivered via courier to: The Honorable Jospeh Mikitish Maricopa County Superior Court 201 W. Jefferson Street Phoenix, AZ 85003 COPY of the foregoing was sent via electronic mail this 30th day of September, 2024, to: Karen A. Palecek James J. Palecek 6263 N. Scottsdale Road, Suite 310 Scottsdale, AZ 85250 [email redacted] [email redacted] [email redacted] Attorneys for Dirtworks Contracting, Inc. 3951945 LEGAL RECEIVED 09/30/2024

4250 NORTH DRINKWATER BOULEVARD

SCOTTSDALE, ARIZONA 85251-3693

FOURTH FLOOR

3951945 10/2/24, 3:35 PM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // CaseLEGAL No. LC2024-000081-001 [IMAN-IMANAG… RECEIVED 09/30/2024

Legal New Mail - AZROC <[email redacted]>

Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // Case No. LC2024- 000081-001 [IMAN-IMANAGE.FID806806] messages

Good afternoon,

Please see the attached Response Brief of Creco, Inc. dba Creco Rental.

Thank you,

Keely C. Warner

Legal Administrative Assistant

P: 480.425.2650

Sacks Tierney P.A.

4250 N. Drinkwater Blvd., Fourth Floor

Scottsdale, AZ 85251

www.sackstierney.com

https://mail.google.com/mail/b/AEoRXRTF4fhjs_o6uY5am53_L_K8h5T9MgUNNW9Z3Mvnz_r4lxuA/u/0/?ik=d3afebeda9&view=pt&search=all&permthi… 1/5 10/2/24, 3:35 PM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // CaseLEGAL No. LC2024-000081-001 [IMAN-IMANAG… RECEIVED 09/30/2024 provisions.

Disclaimer

2024.08.07 Creco Response Brief.pdf 391K

Warner, Keely C. <[email redacted]> Mon, Aug 26, 2024 at 2:25 PM To: Karen Palecek <[email redacted]>, "[email redacted]" <[email redacted]>, Rachel Foltz <[email redacted]>, "Baskin, Mona" <[email redacted]>, "[email redacted]" <[email redacted]>, Legal New Mail - AZROC <[email redacted]>, "[email redacted]" <[email redacted]> Cc: "Van Zanen, Patrick J." <[email redacted]>

Good afternoon,

Please see the attached Response in Opp of Creco, Inc. dba Creco Rental being filed today.

Thank you,

Keely C. Warner

Legal Administrative Assistant

P: 480.425.2650

Sacks Tierney P.A.

4250 N. Drinkwater Blvd., Fourth Floor

Scottsdale, AZ 85251 https://mail.google.com/mail/b/AEoRXRTF4fhjs_o6uY5am53_L_K8h5T9MgUNNW9Z3Mvnz_r4lxuA/u/0/?ik=d3afebeda9&view=pt&search=all&permthi… 2/5 10/2/24, 3:35 PM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // CaseLEGAL No. LC2024-000081-001 [IMAN-IMANAG… RECEIVED 09/30/2024

www.sackstierney.com

[Quoted text hidden]

RIO to Motion to File Late Opening Brief.pdf 451K

Warner, Keely C. <[email redacted]> Mon, Sep 9, 2024 at 1:59 PM To: Karen Palecek <[email redacted]>, "[email redacted]" <[email redacted]>, Rachel Foltz <[email redacted]>, "Baskin, Mona" <[email redacted]>, "[email redacted]" <[email redacted]>, Legal New Mail - AZROC <[email redacted]>, "[email redacted]" <[email redacted]> Cc: "Van Zanen, Patrick J." <[email redacted]>

Good afternoon,

Please see the attached Response Brief in Opposition of Creco, Inc. dba Creco Rental being filed today.

Thank you,

Keely C. Warner

Legal Administrative Assistant

P: 480.425.2650

Sacks Tierney P.A.

4250 N. Drinkwater Blvd., Fourth Floor

https://mail.google.com/mail/b/AEoRXRTF4fhjs_o6uY5am53_L_K8h5T9MgUNNW9Z3Mvnz_r4lxuA/u/0/?ik=d3afebeda9&view=pt&search=all&permthi… 3/5 10/2/24, 3:35 PM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // CaseLEGAL No. LC2024-000081-001 [IMAN-IMANAG… RECEIVED 09/30/2024

Scottsdale, AZ 85251

www.sackstierney.com

[Quoted text hidden]

2024.09.09 RIO to Motion to Intro New Evid.pdf 450K

Rachel Foltz <[email redacted]> Mon, Sep 9, 2024 at 2:45 PM To: "Warner, Keely C." <[email redacted]> Cc: Karen Palecek <[email redacted]>, "[email redacted]" <[email redacted]>, "Baskin, Mona" <[email redacted]>, "[email redacted]" <[email redacted]>, Legal New Mail - AZROC <[email redacted]>, "[email redacted]" <[email redacted]>, "Van Zanen, Patrick J." <[email redacted]>

All, Attached please find the Motion for Evidentiary Hearing filed today as well. Thank you, Rachel Foltz Paralegal Palecek & Palecek, PLLC 6263 N. Scottsdale Road, Suite 144 Scottsdale, AZ 85250 602-522-2454 602-522-2349 (fax) www.paleceklaw.com

[Quoted text hidden]

2024_09_09_Motion for Evidentiary Hearing.pdf 216K

Warner, Keely C. <[email redacted]> Mon, Sep 30, 2024 at 2:11 PM To: Karen Palecek <[email redacted]>, "[email redacted]" <[email redacted]>, Rachel Foltz <[email redacted]>, "Baskin, Mona" <[email redacted]>, "[email redacted]" <[email redacted]>, Legal New Mail - AZROC <[email redacted]>, "[email redacted]" <[email redacted]> Cc: "Van Zanen, Patrick J." <[email redacted]>

[Quoted text hidden]

https://mail.google.com/mail/b/AEoRXRTF4fhjs_o6uY5am53_L_K8h5T9MgUNNW9Z3Mvnz_r4lxuA/u/0/?ik=d3afebeda9&view=pt&search=all&permthi… 4/5 10/2/24, 3:35 PM State of Arizona Mail - Dirtworks Contracting, Inc. v. Creco, Inc. dba Creco Rental // CaseLEGAL No. LC2024-000081-001 [IMAN-IMANAG… RECEIVED 09/30/2024

2024.09.30 Response Memo in Opp to Dirtworks' Motion for Evid Hrg.pdf 387K

https://mail.google.com/mail/b/AEoRXRTF4fhjs_o6uY5am53_L_K8h5T9MgUNNW9Z3Mvnz_r4lxuA/u/0/?ik=d3afebeda9&view=pt&search=all&permthi… 5/5 3MtNtLNIÿNP33ÿRS aK8K6ÿEÿ̀lWVXEU8ÿS8V?ÿfÿuklvl[ilwisÿb6PÿxVWKCEWA7ÿdEUKW8@KVU9Iÿ[U@DÿYDÿdW6@EIÿ[U@DÿH\8ÿdW6@Eÿb6UK8?ÿttÿd876ÿkEDÿidLMLNfMMMMn3fy

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ZCC3VIvv<4R5:];;]56:7;<v<4R5vuvKc;Y}YY~]KKQiH4F}V7_9~SEBVp3C}Tt\9k5i~V4>CbWUgh5Bp5\vhvFvlR2fo4d6u6f4tnTR693CnV64Q7Z455n36Q<<V]Rf| HvH Clerk of the Superior Court *** Electronically Filed *** 10/30/2024 8:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

LC2024-000081-001 DT 10/25/2024

CLERK OF THE COURT HONORABLE JOSEPH P. MIKITISH S. Motzer Deputy

DIRTWORKS CONTRACTING INC KAREN A PALECEK

CRECO INC (001) PATRICK J VAN ZANEN ARIZONA REGISTRAR OF CONTRACTORS MONA NMN BASKIN (001)

OFFICE OF ADMINISTRATIVE HEARINGS REMAND DESK-LCA-CCC JUDGE MIKITISH

MINUTE ENTRY

Agency Case No. 2023A-09265-NPC-ROC

The Court has received and reviewed the Motion to Introduce Additional Evidence, Motion for Extension of Time to File Amended Opening Brief, Motion for an Evidentiary Hearing, all filed by the Appellant Dirtworks Inc. (Dirtworks); the Responses thereto filed by the Appellee Creco Inc. (Creco); and Reply to the Motion for an Evidentiary Hearing filed by Dirtworks.

In the Motions, Dirtworks argues that the newly discovered evidence in the form of documents and testimony would support a defense to the claims raised before the Administrative Agency, the Registrar of Contractors. Dirtworks argues that the new evidence shows that monies were embezzled from the company and rendered the company unable to pay amounts owed to Creco. Dirtworks argues that the evidence supports a defense to Creco’s claim that Dirtworks improperly failed to pay in violation of A.R.S. § 32-1154 (A)(10) that was not considered by the Registrar. Dirtworks argues that the evidence supports an evidentiary hearing, introduction of additional evidence, and an extension of time to file an Amended Opening Brief.

Docket Code 512 Form L000 Page 1 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

LC2024-000081-001 DT 10/25/2024

Creco argues that Dirtworks’ original Opening Brief was filed late under the Administrative Review Act, and therefore the company is not entitled to file an Amended Opening Brief. Creco further argues that Dirtworks did not argue that it was unable to pay before the Administrative Agency, and therefore the evidence and the issue cannot be raised on appeal. Creco further argues that this Court determined that Dirtworks is not entitled to a Trial de Novo, and therefore granting an evidentiary hearing would undermine the Court’s prior ruling.

Arizona Law provides that when a hearing has been held by the agency, the Superior Court may “remand for the purpose of taking additional evidence when from the state of the record of the administrative agency or otherwise it appears that such action is just.” A.R.S. § 12-911 (A) (7). In this case, Dirtworks argues that it was unaware of the embezzlement and therefore was unaware of its ability to raise a defense under the statute. While the issue of an inability to pay is not the only requirement to establish the defense, it is a key component that deserves to be addressed for a full assessment of the claims. The Court finds that the Administrative Agency is in the best position to assess the additional evidence and determine whether the defense may be applicable in this case.

Therefore,

IT IS ORDERED dismissing the appeal and remanding the matter to the Registrar of Contractors to assess the additional evidence raised by Dirtworks purporting to establish that Dirtworks lost substantial funds due to embezzlement, and that loss caused Dirtworks to be unable to pay Creco according to its agreements. The Registrar should also determine the existence of other elements necessary to establish a defense pursuant to the statute.

IT IS FURTHER ORDERED that, given the remand to the Registrar, the Motions at issue are now moot.

IT IS FURTHER ORDERED that once the Registrar has rendered a Final Decision regarding the additional evidence, the defense, and the underlying claims, the parties shall again have an opportunity to this Court pursuant to the Administrative Review Act.

No matters remain pending in connection with this appeal. This is a final order pursuant to J.R.A.D. 13 and Ariz. R. Civ. P. 54(c).

/s/ Joseph P. Mikitish THE HON. JOSEPH P. MIKITISH Judge of the Superior Court

Docket Code 512 Form L000 Page 2 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

LC2024-000081-001 DT 10/25/2024

Docket Code 512 Form L000 Page 3 REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Creco Rental, Case No. 2023-09265

COMPLAINANT, v. DirtWorks Contracting Inc., ORDER License No. ROC 318883, RESPONDENT.

The Registrar issued a Final Administrative Decision and Order on January 24, 2024, finding that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay $69,182.74 to Complainant, and suspending its license until it pays that amount to Complainant. The suspension was imposed beginning March 5, 2024. Respondent timely appealed pursuant to A.R.S. § 12-901 et seq., under Maricopa County Superior Court Case No. LC2024-000081-001. The Registrar entered its appearance as a nominal party. On October 30, 2024, the Superior Court issued a Minute Entry (copy attached), “dismissing the appeal and remanding the matter to the Registrar of Contractors to assess the additional evidence raised by Dirtworks purporting to establish that Dirtworks lost substantial funds due to embezzlement, and that loss caused Dirtworks to be unable to pay Creco according to its agreements. The Registrar should also determine the existence of other elements necessary to establish a defense pursuant to the statute.” In accordance with the Superior Court’s October 30, 2024 Minute Entry, IT IS ORDERED that this matter shall be set for re-hearing before the Office of Administrative Hearings. The Administrative Law Judge shall assess the additional evidence raised by the Respondent purporting to establish that Respondent lost substantial funds due to

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg130 5/21 embezzlement, and whether that loss caused Respondent to be unable to pay Complainant according to its agreements. The Administrative Law Judge shall also determine the existence of other elements necessary to establish a defense pursuant to the statute. The Registrar will contact the Office of Administrative Hearings and issue a notice of re- hearing in due course. Dated November 15, 2024. By: /s/ Chance Peterson Chance Peterson General Counsel Legal Department Arizona Registrar of Contractors

COPY mailed via USPS First Class mail November 15, 2024 to: Respondent DirtWorks Contracting Inc. 9105 E Del Camino Ste. 112 Scottsdale, AZ 85258 Respondent’s Attorney Karen A. Palecek, Esq. 6263 N Scottsdale Rd Ste. 144 Scottsdale, AZ 85250 Complainant Creco Rental 919 W Silverlake Rd Tucson, AZ 85713

Complainant’s Attorney Patrick J. Van Zanen, Esq. 4250 N. Drinkwater Blvd., 4th Floor Scottsdale, AZ 85251-3693

Copy sent electronically this same date to:

Registrar’s Counsel Mona Baskin, Assistant Attorney General

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg130 5/21 Respondent at email address on record with the Registrar Respondent’s Attorney at email address of record with Registrar Complainant at email address on record with the Registrar Complainant’s Attorney at email address of record with Registrar

Case No. 2023-09265 /

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St.– Ste. 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 Toll Free (877)692-9762 Lg130 5/21 Clerk of the Superior Court *** Electronically Filed *** 10/30/2024 8:00 AM SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

LC2024-000081-001 DT 10/25/2024

CLERK OF THE COURT HONORABLE JOSEPH P. MIKITISH S. Motzer Deputy

DIRTWORKS CONTRACTING INC KAREN A PALECEK

CRECO INC (001) PATRICK J VAN ZANEN ARIZONA REGISTRAR OF CONTRACTORS MONA NMN BASKIN (001)

OFFICE OF ADMINISTRATIVE HEARINGS REMAND DESK-LCA-CCC JUDGE MIKITISH

MINUTE ENTRY

Agency Case No. 2023A-09265-NPC-ROC

Docket Code 512 Form L000 Page 1 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

LC2024-000081-001 DT 10/25/2024

Therefore,

IT IS FURTHER ORDERED that, given the remand to the Registrar, the Motions at issue are now moot.

No matters remain pending in connection with this appeal. This is a final order pursuant to J.R.A.D. 13 and Ariz. R. Civ. P. 54(c).

/s/ Joseph P. Mikitish THE HON. JOSEPH P. MIKITISH Judge of the Superior Court

Docket Code 512 Form L000 Page 2 SUPERIOR COURT OF ARIZONA MARICOPA COUNTY

LC2024-000081-001 DT 10/25/2024

Docket Code 512 Form L000 Page 3 Mediation Notice

Mediation Services Mediation services are available to the parties. What is Mediation? Mediation is a method of resolving disputes where the parties can end conflict without the expense and time associated with the full administrative process. Who Participates in During mediation, a mediator will attempt to help the Mediation? parties find an optimal solution to the conflict. Both parties must agree to participate in mediation, and both parties must bring a representative to mediation that has full authority to settle the entire matter. Mediation Is Not Neither the Registrar nor the Office of Administrative Mandatory Hearings will penalize a party for not agreeing to mediation. Where do the Parties The parties will meet at the Office of Administrative Meet for Mediation? Hearings to participate in mediation.

The Office of Administrative Hearings is located at 1400 West Washington, Suite 101, Phoenix, Arizona 85007. When does Mediation can occur after the Registrar issues a citation, but Mediation Occur? before the administrative hearing. Why Should Parties Mediation can be an alternative to the full administrative Consider Mediation? process. Mediation is beneficial because it is (1) time- efficient, (2) cost-effective, (3) confidential, and (4) capable of providing flexible solutions to complex problems. How to Request If the parties wish to mediate this case, they must file a Joint Mediation Request for Mediation with the Office of Administrative Hearings. A Joint Request for Mediation is included with this Mediation Notice. REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA _________________________ Case No. _______________ COMPLAINANT,

v. JOINT REQUEST FOR MEDIATION _________________________ RESPONDENT.

REQUEST

The parties jointly request that this matter be referred to mediation in the Office of Administrative Hearings (OAH). ☐ This matter is set for hearing on __________________(date). ☐ This matter is not currently set for hearing. MEDIATION AGREEMENT By requesting this mediation and signing below, the parties understand, represent, and agree: 1. The parties are prepared to commence mediation and will be ready for mediation on _____________________(date); 2. The parties will participate in the mediation process in good faith; 3. This request for mediation is not intended to hinder or delay administrative proceedings; 4. No party will contend that the mediation limits the power of OAH and its administrative law judges to conduct an administrative hearing and issue decisions under A.R.S. §§ 41-1092 – 1092.12; 5. The parties will be courteous and respectful throughout the mediation process to all participants; 6. The mediation is completely voluntary and the principal purpose is to allow the parties a full and fair opportunity to discuss settlement; of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 7. The mediator may conduct joint and separate meetings with the parties and may suggest resolutions to the parties’ dispute, but the mediator has no authority to impose a settlement upon the parties; 8. The mediation process is confidential. Communications made, material created for or used during, and acts occurring during mediation are confidential and may not be discovered or admitted into evidence in any proceeding except as provided by A.R.S. § 12-2238; 9. The mediator is not subject to service of process or a subpoena to produce evidence or to testify regarding any evidence or occurrence relating to the mediation except as provided in A.R.S. § 12-2238(C); 10. Neither the mediator, nor the Registrar of Contractors, nor the Office of Administrative Hearings is subject to civil liability for any act or omission in connection with any mediation service or activity except for acts involving

intentional misconduct or reckless disregard of a substantial risk of injury to the rights of others; 11. Throughout the mediation process, each party must have a representative present who will have full settlement authority to settle all claims at issue in the administrative

proceeding. 12. The mediation process will terminate when: a. The parties reach settlement; b. The mediator determines that further efforts at mediation are no longer likely

to achieve a settlement; or c. One of the parties withdraws from mediation. _____________________________________ _______________________ Complainant (or representative) Date

_____________________________________ _______________________ Respondent (or representative) Date

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – PHOENIX, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 PREHEARING DISCLOSURE STATEMENT INSTRUCTIONS ***DO NOT SUBMIT THESE INSTRUCTIONS WITH THE PREHEARING DISCLOSURE FORM***

ADMINISTRATIVE RULES A copy of the Arizona Administrative Code’s Rules for the Registrar of Contractors can be located on the Registrar’s Website.

PREHEARING DISCLOSURE REQUIREMENT Under A.A.C. R4-9-118(A), before a hearing, the parties must prepare a disclosure statement. The disclosure statement must contain: • A list of all the witnesses the party will call to testify, including the witnesses’ contact information and a brief description of the subject matter of the witnesses’ expected testimony; and • A list of all the exhibits that the party will use at the hearing.

FILE PREHEARING DISCLOSURE STATEMENTS • The Prehearing Disclosure Statements and Exhibits may be submitted to the Arizona Office of Administrative Hearings using any of the following: • Electronically: https://portal.azoah.com/submission/ • In-Person or by Mail: 1740 West Adams Street, Lower Level, Phoenix, Arizona 85007

EXCHANGING DISCLOSURE STATEMENTS AND EXHIBITS Under A.A.C. R4-9-118(B) (effective November 5, 2017), a party to the hearing must serve on every other party and file with the Office of Administrative Hearings a copy of: • The disclosure statement; and, • Any exhibit that the party will use at the hearing. Service: The disclosure statement and exhibits must be served on all parties in accordance with Arizona Administrative Code R2-19-108 Filing Documents. Under A.A.C. R2-19-108, service is completed by: • Personal delivery; • 1st class, certified or express mail; or • Facsimile. Timing: The disclosure statement and the exhibits must be served and filed not less than seven calendar days before the date of the hearing. Under A.A.C. R2-19-108, a document is served on a party: • On the date it is personally served; • Five days after it is mailed by express or 1st class mail; • On the date of the return receipt if it is mailed by certified mail; or • On the date indicated on the facsimile transmission.

CONSEQUENCES FOR FAILING TO DISCLOSE Under A.A.C. R4-9-108(C), if a witness or an exhibit is not timely disclosed as required the rules, and good cause for the failure to disclose is not shown, then the administrative law judge may: • Order that certain witnesses or exhibits not be used at the hearing; • Order that a particular fact is or is not established for the record; or, • Order that a charge, a defense, a claim, or some portion thereof, be dismissed.

Form RC-L-800A Prehearing Disclosure Statement Rev. 10/08/2019 Instructions Form PREHEARING DISCLOSURE STATEMENT FORM RC-L-800A

PART 1: WITNESS LIST DOCKET NO. Under A.A.C. R4-9-118(A), before a hearing, a party must prepare a disclosure statement containing a list of all the witnesses the party will call to testify, including the witnesses’ contact information and a brief description of the subject matter of the witnesses’ expected testimony. If you need additional space to list all witnesses, complete and attach additional Witness Lists. Example 1. Name 2. Telephone Number 3. Email Address

John Doe (123) 456-7890 [email redacted] 4. Subject Matter of Expected Testimony

John Doe will testify regarding the poor workmanship and poor installation of the Garage Door. Mr. Doe will also testify regarding the invoices and change orders for the project.

Witness 1. Name 2. Telephone Number 3. Email Address

4. Subject Matter of Expected Testimony

Witness 1. Name 2. Telephone Number 3. Email Address

4. Subject Matter of Expected Testimony

Witness 1. Name 2. Telephone Number 3. Email Address

4. Subject Matter of Expected Testimony

Witness 1. Name 2. Telephone Number 3. Email Address

4. Subject Matter of Expected Testimony

Form RC-L-800A Prehearing Disclosure Statement Rev. 1/15/2019 Page 1 of 3 PART 2: EXHIBIT LIST DOCKET NO. Under A.A.C. R4-9-118(A), before a hearing, a party must prepare a disclosure statement containing a list of all the exhibits that the party will use at the hearing. Note: All exhibits listed below must be provided to all parties to the hearing. See A.A.C. R4-9-118(B). If you need additional space to list all witnesses, complete and attach additional Exhibit Lists. Example Contract for new garage door. Invoice #10001 – Cost for garage door replacement.

Exhibit Exhibit Name

Form RC-L-800A Prehearing Disclosure Statement Rev. 1/15/2019 Page 2 of 3 PART 3: ACKNOWLEDGEMENT & SIGNATURE I certify that the above information is true and correct and that I will serve a copy of this disclosure statement and any exhibits listed in Part 2 to all parties to the hearing in accordance with A.A.C. R4-9-118. I acknowledge and understand that if I fail to properly disclose a witness or exhibit, the administrative law judge may: • Order that certain witnesses or exhibits not be used at the hearing; • Order that a particular fact is or is not established for the record; or, • Order that a charge, a defense, a claim, or some portion thereof, be dismissed.

I am the (check one):  Complainant  Respondent Docket No.

Print Name Signature Date

Form RC-L-800A Prehearing Disclosure Statement Rev. 1/15/2019 Page 3 of 3