ALJDEC - Licensing

2024A-04067-NPC-ROC · Registrar of Contractors · 2024-11-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

MoraVel Construction LLC,

COMPLAINANT,

v.

Henry Benning Associates Inc.,

License No. ROC 334963,

RESPONDENT.

No. 2024A-04067-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

VIRTUAL HEARING: August 15, 2024 with hearing record held open for review of documents received day of and post-hearing.

APPEARANCES: Qualifying Party Stella Veliz-Morales represented Complainant. Attorney Guy Bluff represented Henry Benning Associates Inc.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

EXHIBITS ADMITTED INTO EVIDENCE: ROC Notice of Hearing Packet (ROC Packet); Complainant Exhibits 1 through 16; Respondent Exhibits R-01 through R-011.

_____________________________________________________________________

FINDINGS OF FACT

Henry Benning Associates Inc. (Respondent) is the holder of License No. 334963 issued by the Registrar of Contractors (Registrar or ROC).

On or about April 9, 2024, MoraVel Construction LLC (Complainant) filed a Non-Payment Complaint Form (Complaint) against Respondent alleging that Respondent had failed to pay Complainant for work performed on one project. Complainant alleged that its AIA Documents G702 and G703, Application 001 in the amount of $63,900.00 (dated Nov. 8, 2023) remained unpaid.

On or about April 16, 2024, Respondent filed a response to the ROC indicating that, financially, Respondent lacks the capacity to pay Complainant and that Respondent has not been paid the final amount due on its contract with STNL Tucson SE, LLC (STNL).

On May 30, 2024, ROC issued a Citation in this matter, citing Respondent for alleged violation of Arizona Revised Statute (Ariz. Rev. Stat.) § 32-1154(A)(10), failure to pay monies in excess of $750.00 when due for services rendered.

On June 17, 2024, Respondent filed its Answer to the Citation, denying the allegation and requesting the matter be dismissed or, alternatively, set for administrative hearing.

The matter was not resolved between the parties and the ROC subsequently set the matter for administrative hearing.

Complainant’s position is that it completed all the work for which it was contracted and, Respondent having been paid by STNL on the work Complainant had performed, Respondent is in violation of Ariz. Rev. Stat. § 32-1154(A)(10) for not having paid Complainant.

Complainant contracted with Respondent in June 2023 for metal stud framing, insulation, drywall, FR Plywood, FRP Board and some Aluminum mesh work. Complainant completed its work on November 4, 2023. Complainant and Respondent met on that day on the project and Complainant performed some final work corrections. Respondent’s requested that Complainant make some adjustments on six doors that (a) were not part of Complainant’s original contract and (b) that Complainant had not installed; Complainant made those adjustments under an approved Change Order.

On November 8, 2023, Complainant forwarded its AIA Documents G702 and G703 to Respondent and Complainant also contacted its materials supplier, FBM, to provide its lien release and waiver. When Complainant received the FBM lien release and waiver from FBM on November 8, 2023, Complainant forwarded that document that same day to Respondent.

Complainant was not contacted by Respondent with regard to any further work expected to have been done; Complainant did not receive a punch list from Respondent.

On January 4, 2024, Complainant reached out to Respondent for the payment due. Complainant indicated that FBM was about to file a lien on the property. Complainant also indicated that it had reached out to STNL with regard to the matter.

At hearing, Complainant indicated its understanding that Respondent had, in fact, been paid for the work Complainant had performed.

Complainant provided to the hearing record a copy of a February 1, 2024 email from STNL indicating the following:

Please be advised that STNL, as owner, has paid its general contractor, Henry Benning Associates, Inc. (“HBAI”), in full on each of its pay applications submitted for work and materials furnished on the project. This would have included payment for any work or materials your company furnished on the project. Pursuant to its contract with STNL, HBAI certified that the funds received would be used to pay its subcontractors and vendors accordingly. At this point, the only contract funds being held back by STNL relate to retainage, which will be reconciled after various close-out items with HBAI are first addressed.

Respondent’s position is that, financially, it lacks the capacity to pay Complainant and, further, that it has not been paid the final amount due from STNL on its contract with STNL. Respondent indicated that it was in a requisite mediation process with STNL with regard to the final payment due to Respondent, which process was not yet completed, with a future session to be scheduled. Respondent indicated that it would pay Complainant when it receives the final STNL payment.

Respondent forwarded to STNL an Application #24-Revised (dated April 24, 2024) for payment on paving work, overruns, overhead, and retainage; that Application documented that Respondent had already been paid for Complainant’s performed work on previous application(s) absent the typical retainage.

Additionally, Respondent argued that Complainant did not, in fact, complete its work on the project because, as of November 8, 2023, Respondent had not yet had a punch list walk through with Owner.

Respondent received a punch list from STNL on November 15, 2023. Respondent argued that, due to the punch list items, Respondent had incurred additional expenses for hiring another subcontractor to complete some work in addition to having self-performed some work, which it completed on December 15, 2023. Respondent indicated that, in multiple locations, the fiberglass reinforced panels (FRP) had not been appropriately caulked and Respondent had self-performed those corrections. Further, Respondent argued that Complainant had not provided the requisite lien waivers from either Complainant’s subcontractor or Complainant’s own lien release.

In response, Complainant noted that the person who does the base work is responsible to do the FRP caulking and that such base work was not a part of Complainant’s contract. Additionally, the hearing record demonstrated that Respondent had received the FBM lien waiver through Complainant’s email on November 8, 2023.

Post-hearing, neither party has indicated to the Tribunal that the instant matter has since been resolved.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction and has been properly brought before OAH for adjudication.

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

The Registrar may resolve contractual disputes if such resolution is ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation was not remedied by corrective action.

Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence.

A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

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.

Ariz. Rev. Stat. § 32-1156.01 states, in pertinent part, that after a hearing an Administrative Law Judge may provide restitution to any person who is injured by an action of a licensee.

The relevant and credible evidence in the hearing record established that Respondent owed monies to Complainant that were not yet paid to Complainant at the time Complainant filed the Complaint; further, that Respondent owed monies to Complainant that were not yet paid to Complainant at the time of the administrative hearing. The hearing record also established that Respondent had been paid by STNL for Complainant’s performed work.

Therefore, the only issue remaining is whether Respondent raised a sufficient justification for failing to tender payment in full to Complainant. Respondent bears the burden to establish a sufficient justification. While Respondent does not deny that it owes Complainant the monies, Respondent failed to demonstrate both that it lacks the capacity to pay Complainant the monies owed and that it has not been paid by STNL for the work Complainant performed.

Because Complainant established by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10), Complainant also established cause for the Registrar to discipline Respondent’s ROC License No. 334963.

RECOMMENDed order

Based on the foregoing,

IT IS RECOMMENDED that twenty (20) calendar days from the effective date of the Final Order in this matter, Respondent Henry Benning Associates Inc.’s ROC License No. 334963, shall be suspended until Respondent provides the Registrar with sufficient proof that $63,900.00 has been tendered to Complainant in certified funds as restitution.

IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment to Complainant, Complaint 2024-04067 may be closed.

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, November 12, 2024.

/s/ Kay A. Abramsohn

Administrative Law Judge

Transmitted electronically to:

Tom Cole, Director

Registrar of Contractors

MoraVel Construction LLC

[email redacted]

[email redacted]

Guy W. Bluff, Esq.

Bluff and Associates

[email redacted]

By: OAH Staff