ALJDEC - Licensing
2024A-03315-NPC-ROC-RH · Registrar of Contractors · 2024-10-09
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
North Mechanical, LLC,
COMPLAINANT,
v.
Black Diamond Builders, LLC
License No. ROC 297510,
RESPONDENT.
No. 2024A-03315-NPC-ROC-RH
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: September 20, 2024
APPEARANCES: Darin North and David North appeared on behalf of Complainant North Mechanical, LLC. Bryan Young appeared on behalf of Respondent Black Diamond Builders, LLC.
ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella
EXHIBITS ADMITTED INTO EVIDENCE: Complainant North Mechanical, LLC’s Exhibits 1-6; Administrative Notice taken of Agency Record
FINDINGS OF FACT
Black Diamond Builders, LLC (“Respondent”) is the holder of License Number 297510, issued by the Arizona Registrar of Contractors (“Registrar”). Bryan Young is Respondent’s owner and Qualifying Party.
In or about March 2024, North Mechanical, LLC (“Complainant”) filed a Complaint against Respondent with the Registrar alleging that Respondent had failed to pay Complainant the sum of $31,331.38 for HVAC work performed by Complainant.
The parties were unable to resolve their differences.
On April 12, 2024, the Registrar issued a Citation charging Respondent with the alleged violation of A.R.S. § 32-1154(A)(10). Respondent timely filed an Answer to the Complaint. The Registrar forwarded the matter to the Office of Administrative Hearings, an independent State agency, to conduct an evidentiary hearing.
On or about March 2, 2023, Respondent contracted with Complainant for Complainant to perform the HVAC work on a new construction home in Payson, Arizona. The contract price was $39,164.22. Complainant billed Respondent a 60% deposit and began working on the project immediately. Complainant completed the rough-in on April 4, 2023, and billed Respondent for this portion of the work, which was 20% of the contract price. Therefore, by April 4, 2023, Complainant had billed Respondent for 80% of the contract price, and had performed 80% of the work as only the trim remained.
On April 8, 2023, Complainant invoiced Respondent for the work it performed in the amount of $31,331.38. The invoice indicated that it was “Past Due.” Respondent has not paid Complainant any monies for the work Complainant performed.
Complainant obtained the draw tickets for the project from First Interstate Bank. A draw ticket dated April 27, 2023, indicates that on March 24, 2023, Respondent was paid $82,941.00, $25,000.00 of which was designated for HVAC.
A draw ticket dated April 27, 2023, indicates that on April 27, 2023, a disbursement was made in the amount of $67,550.00, $10,000.00 of which was designated for HVAC.
On March 21, 2023, Mr. Young signed an Arizona Lien Waiver and Release Form Conditional Waiver and Release on Progress Payment (“Lien Waiver”). The Lien Waiver indicates the following:
On receipt of the undersigned check from 1st Interstate Bank . . . in the sum of $82,941- . . . This release covers a progress payment for all labor, services, equipment or materials furnished to the jobsite or to equipment or materials furnished to the jobsite or to Black Diamond Builders.
. . . The undersigned warrants that he either has already paid or will use the monies he receives from this progress payment to promptly pay in full all his laborers, subcontractors, materialmen and suppliers for all work, materials, equipment or services provided for or to the above-referenced project up to the date of this waiver.
David North, co-owner of Complainant, testified that the owner of the project sued Respondent and the jobsite sat for a period of time at the rough-in stage. Approximately one year later, the owner of the project hired another general contractor that hired Complainant to complete the HVAC work, and paid Complainant the 20% remaining balance of the contract price for the trim work.
Mr. Young testified that Respondent walked off the job in June 2023, because Respondent was not paid by the owner of the project. Mr. Young testified that he is good friends with Darin North and David North, co-owners of Complainant, and that it was never his intention not to pay Complainant.
Mr. Young testified that the owner of the project needed a general contractor to sign lien releases in order to secure funding for the project and the owner was to pay the subcontractors directly from the bank loan. Mr. Young testified that the owner of the project did not pay Respondent in the months of February, March, and April 2023, and that the owners owe Respondent $150,000.00. Mr. Young testified that he lost his contracting license and intends to file for bankruptcy.
Respondent did not submit any documentary evidence establishing that it lacks the capacity to pay Complainant and that it has not received sufficient monies from the owner of the project.
CONCLUSIONS OF LAW
This matter lies within the Registrar’s jurisdiction.
Complainant bears the burden of proof to establish Respondent’s statutory violation(s) by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”
A.R.S. § 32-1154(A)(10) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license:
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.
Mr. Young did not dispute that Complainant performed HVAC work through the rough-in stage and that Respondent did not pay Complainant. Respondent argued that it lacks the capacity to pay Complainant and it was not paid by the owner of the project. The evidence presented by Complainant established that Respondent was paid at least $82,941.00, of which $25,000.00 was designated to be paid to Complainant for the HVAC work, and Mr. Young signed the Lien Waiver evidencing such. Respondent failed to present any credible evidence to prove that it lacks the capacity to pay and has not received sufficient monies as payment for the project. Respondent did not present any documentary evidence establishing that it filed bankruptcy, or other pending lawsuits against Respondent, or any documentary evidence establishing that the owner of the project did not pay Respondent. Respondent, as the licensee, failed to produce any corroborating evidence to establish an inability to pay Complainant.
The Administrative Law Judge concludes, based upon the credible evidence presented at hearing, that Respondent owes Complainant a total of $31,331.38 for the HVAC work performed by Complainant.
Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the work Complainant performed or had not received sufficient monies as payment for the project at issue to pay Complainant.
Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $31,331.38 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 Number 297510 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted, documents that establish that it has paid Complainant $31,331.38 in certified funds.
It is further recommended that when and if the Registrar receives and accepts Respondent’s evidence that it has paid Complainant $31,331.38 in certified funds, the Registrar may close the Complaint in Case Number 2024-03315.
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, October 9, 2024.
/s/ Sondra J. Vanella
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Tom Cole, Director
Registrar of Contractors
North Mechanical, LLC
[email redacted]
Black Diamond Builders, LLC
[email redacted]
By: OAH Staff