ALJDEC - Licensing
2024A-03254-NPC-ROC · Registrar of Contractors · 2024-07-29
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
SFA Contracting LLC,
COMPLAINANT
v.
A & E Builders LLC
License No. ROC 336255,
RESPONDENT
No. 2024A-03254-NPC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: July 8, 2024
APPEARANCES: Nick Carolan, President, appeared on behalf of, SFA Contracting LLC. A & E Builders LLC was represented by Lena Zeebuyth.
ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer
EXHIBITS ADMITTED INTO EVIDENCE: Administrative Notice was taken of the Hearing Packet submitted by the Registrar of Contractors. Complainant’s exhibits 2 through 5 and Respondent’s exhibits 1, 2, 4, 6, 7, 9, 10, and 14 were admitted.
_____________________________________________________________________
FINDINGS OF FACT
A & E Builders LLC (Respondent) is the holder of License No. 336255 issued by the Registrar of Contractors (Registrar).
On or about March 19, 2024, SFA Contracting LLC (Complainant) filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $11,904.39 for work performed on three different invoices.
The parties were unable to resolve their differences, and Complainant requested an administrative hearing. The Registrar then issued a Citation for an alleged violation of A.R.S. § 32-1154(A)(10).
The first invoice was referred to as the Fort Lowell Project. Complainant initially submitted a bid totaling $44,485.00 for the project, the bid was accepted, and the parties entered into a contract for that amount. Complainant realized it had misread the plans and had underbid the contract. Complainant prepared an amended contract with a new total amount of $53,019.06. The amended contract was signed by Angel Heras, Project Manager, on behalf of Respondent. Complainant was paid the original contract amount, but not the increased amount, resulting in a balance due of $8,534.06.
The second invoice was referred to as the Steel Contract. Complainant maintained it was owed $917.69 on the Steel Contract for a change order. Invoice # 7142 RO 4 included a charge for $917.69, and indicated Payments/Credits totaling $917.69. Respondent maintained the change order was paid on Invoice #7142 RO 4, and was no longer due.
The third invoice was referred to as the Electrical Contract. Complainant maintained it was owed $3,370.33 on the Electrical Contract. Respondent did not deny a balance due on the contract. Rather, Respondent relied on the “Pay if Paid” provision in the Electrical Contract as justification for its failure to pay. The Electrical Contract provides as follows:
The parties agree that the general contractor’s actual receipt of any progress, change order, claim, retention or final payment from Owner shall be an express condition precedent to general contractor’s or its surety’s obligation to make any such payment to subcontractor for the Work. Subcontractor agrees that all payments to subcontractor shall only be made from, and its right to recover for the work is exclusively limited to, the funds actually received by the general contractor from the Owner and that the subcontractor shall only look to the Owner as the sole source of funds for payment to subcontractor and shall look to no other source. Subcontractor acknowledges that it is sharing, to the extent of payments to be made to the Subcontractor, in the risk that the Owner may fail to make one or more payments to the general contractor for all or a portion of the subcontractor’s work or any changes thereto.
Nick Carolan testified that the total due to Complainant was $12,822.08 as of the date of the hearing. Mr. Carolan did not provide any evidence indicating the alleged balance of $917.69 on the Steel Contract had not been paid on a different invoice.
Zulema Valenzuela, President of Respondent, testified that Ms. Heras was not authorized by Respondent to sign the amended contract for the Fort Lowell project. Respondent did not offer a signed copy of the original contract for the Fort Lowell project. Ms. Valenzuela testified Respondent was not paid for all of Complainant’s work on the Electrical Contract. Ms. Valenzuela asserted, therefore, that the “Pay if Paid” provision of the Electrical Contract meant that Respondent was not obligated to pay Complainant the amount due. Ms. Valenzuela did not make any assertions regarding the amount Respondent was paid, in total, from the Owner on the project.
Respondent did not assert that it lacked the capacity to pay the amount Complainant asserted was due.
CONCLUSIONS OF LAW
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. See A.A.C. R2-19-119.
A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).
A.R.S. § 32-1154(A)(10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license,
[f]ailure by a licensee 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.
The evidence established that Respondent owed Complainant $8,534.06 for the Fort Lowell Project and $3,370.33 for the Electrical Contract.
The evidence failed to establish that Respondent owed Complainant on the Steel Contract.
The evidence failed to establish that Respondent did not receive sufficient monies as payment for the projects or that Respondent lacked the ability to pay Complainant for the work performed.
Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $11,904.39 for services rendered in connection with Respondent’s contracting business.
Based upon Respondent’s violation of the provisions of A.R.S. § 32-1154(A)(10), grounds exist to impose discipline against Respondent’s license
RECOMMENDed order
Based on the foregoing, it is recommended that the Registrar suspend Respondent’s License No. 336255 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $11,904.39 in certified funds.
It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $11,904.39 in certified funds, the Registrar may close the Complaint in Case No. 2024-03254.
Pursuant to A.R.S. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.
In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty (40) days from the date of that certification.
Done this day, July 29, 2024.
/s/ Tammy L. Eigenheer
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Tom Cole, Director
Registrar of Contractors
Nicholas Joseph Carolan SFA Contracting LLC
[email redacted]
Lena Zeebuyth
Brentwood Law Group, PLLC
[email redacted]
By: OAH Staff