ALJDEC - Licensing

2024A-04973-NPC-ROC · Registrar of Contractors · 2024-09-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Western Truss and Components,

COMPLAINANT,

v.

Pinnacle Builders LLC

ROC License No. 312965,

RESPONDENT.

No. 2024A-04973-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 06, 2024 at 1:00 PM.

APPEARANCES: Laramy Schmid appeared on behalf of Western Truss and Components (“Complainant”). Benjamin Warner appeared on behalf of Pinnacle Builders LLC (“Respondent”).

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the attached agency file from the Arizona Registrar of Contractors (“Registrar”), and July 30, 2024, Hearing Order were admitted into the record.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Registrar.

FINDINGS OF FACT

Background and Procedure

Pursuant to Arizona Administrative Code (“Ariz. Admin. Code”) R4-9-117, Administrative Notice is taken of Respondent’s license files as shown on the Registrar’s public website. On April 17, 2017, the Registrar issued ROC License No. 312965 for General Residential B contracting to Respondent. Respondent’s license is active, in good standing, and renewed through April 30, 2025. Ben Warner is listed on the license as the Manager. The license is Qualifying Party exempt. The address of record for the license is 12950 E. Shire Way Prescott Valley, Arizona 86315. Respondent has a $9,000.00 surety bond for the license issued through Travelers Casualty & Surety Company, effective February 17, 2024. The license has been disciplined on two (2) prior occasions, and has had six (6) complaints resolved or otherwise settled against it. Currently, the record reflects that there are two (2) open complaints against the license, one of which is presumed to be related to this matter.

On or about May 01, 2024, the Registrar received a complaint from Complainant alleging nonpayment of services and/or materials against Respondent. Specifically, Complainant alleged that Respondent had failed to remit timely payment(s) on invoices totaling $132,706.00 for work Respondent commissioned to have built and delivered to seven (7) project sites. The Registrar designated it Complaint No. 2024-04973 and assigned the case to Dylan Warwick in their legal department for investigation.

On May 14, 2024, the Registrar issued a Notice of No Pay Complaint letter to Respondent providing notice of Complainant’s complaint, and informed Respondent that it was free to raise any affirmative defense(s) or provide additional information by May 21, 2024.

Respondent did not provide a response.

On July 08, 2024, the Registrar issued a Citation to Respondent for an alleged violation of Ariz. Rev. Stat § 32-1154(A)(10). Respondent was notified that a failure to provide an Answer by July 23, 2024, would be deemed as an admission of Respondent’s commission of the act(s) charged in the underlying complaint, pursuant to Ariz. Rev. Stat § 32-1155(B), and could result in discipline against Respondent’s license including suspension or revocation.

On July 22, 2024, the Registrar received Respondent’s timely Answer whereby Mr. Warner provided the following explanation:

I have been working with this vendor to resolve the outstanding balance. Due to some very unforeseen circumstances this has been difficult to do as quickly as we both would like. I am asking for 90 days to have this resolved completely with Complainant. I have not been paid on several jobs we have going which has greatly affect ability to pay and currently going through steps needed to resolve those balances. I have a couple projects closing soon so I can take care of this balance owed.

On July 24, 2024, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on September 06, 2024. Per the Notice of Hearing the issue to be determined is whether the Registrar has cause to discipline Respondent’s license based on the following charge(s) alleged in the Citation:

Charge 1: A violation of A.R.S. § 32-1154(A)(10).

Hearing Evidence

Complainant called Laramy Schmid as a witness. Respondent called Benjamin Warner as a witness. The substantive facts of record are as follows:

Complainant is custom roof and floor truss manufacturer that operates out of northern Arizona. Respondent is a general contractor that operates out of the same general area. On an unknown date, Respondent began commissioning custom work for delivery to Respondent's project site(s).

Complainant issued the following net-15 invoices to Respondent:

August 23, 2022, for $29,713.00 on Job #2101693.

September 02, 2022, for $24,308.00 on Job #2102159.

September 26, 2022, for $22,794.00 on Job #2201452.

November 07, 2022, for $22,759.00 on Job #2101946.

December 15, 2022, for $6,824.00 on Job #2200772.

January 06, 2023, for $11,039.00 on Job #2201663.

January 12, 2023, for $15,269.00 on Job #2200108.

Attached to each invoice is a Purchase Order signed by Mr. Warner.

Respondent never levied any workmanship complaints against Complainant, accused Complainant of incorrectly fulfilling the relevant requisitions, or rejected any of Complainant’s deliveries. Respondent never returned any of the commissions ordered, or asked to be refunded. Respondent received all items it ordered from Complainant.

When Complaint No. 2024-04973 was filed with the Registrar, Respondent had not tendered payment on any of the aforementioned invoices.

Additional Evidence

In mid-2023 Respondent informed Complainant that it was suffering financial difficulties which prevented it from paying the outstanding invoices at issue.

Mr. Warner testified that project budgets suffered shortages due to inflation, and Respondent was further impacted by clients that had outstanding debts owed.

On May 24, 2024, Respondent paid Complainant for Job #2200772, in full.

On unknown date(s), the owner(s) of Job #2200108 began making payments directly to Complainant. As of September 06, 2024, the balance for the invoice had been paid down to $12,500.00.

As of the hearing date, Respondent outstanding balance owed had been reduced to $123,113.00.

Closing Arguments

In closing, Respondent acknowledged the $123,113.00 balance owed to Complainant, and argued that it could not work to pay it off if the Registrar took disciplinary action against its contracting license.

In closing, Complainant argued that it had exhausted its patience with Respondent and had already afforded over 700 days for Respondent to pay off its debts. Complainant beseeched the Tribunal for a decision in its favor, including an Order of Restitution.

CONCLUSIONS OF LAW

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

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

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

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

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

Statutes should be interpreted to provide a fair and sensible result. Statutes shall be liberally construed to affect their objects and to promote justice.

Ariz. Rev. Stat. § 32-1154(A)(10) holds, in pertinent part, that among the grounds for suspension or revocation of a contractor’s license is a “[f]ailure by [the] licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased.”

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

The material facts in this case are clear.

The relevant and credible facts clearly establish that Respondent commissioned work from Complainant on no less than seven (7) occasions, and that Respondent failed to pay all related invoices, save one. The record also clearly establishes that none of Complainant’s work was defective, untimely, or otherwise produced in an unworkmanlike manner. The record further establishes that while de minimis payments have been made towards the outstanding balance, Respondent still owes Complainant $123,113.00 for its defaulted invoices.

Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to tender payment in full to Complainant on its commercial line of credit. This is an affirmative defense that Respondent bears the burden to establish. Here, Mr. Warner admitted that Respondent owed Complainant $123,113.00 for labor and/or materials delivered. While Respondent did address its financial difficulties with Complainant in mid-2023, Respondent failed to provide the Tribunal with proof of insolvency or inability to pay the outstanding debt owed. Instead, Mr. Warner testified that it planned to pay Complainant with monies from upcoming projects Respondent already booked.

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 ROC License No. 312965.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that ninety (90) calendar days from the effective date of the Final Order in this matter, Respondent Pinnacle Builders LLC, ROC License No. 312965, shall be suspended until Respondent provides the Registrar with sufficient proof that $123,113.00 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 2024-04973 may be closed.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order is forty days after the date of that certification.

Done this day, September 09, 2024.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Tom Cole, Director

c/o Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Pinnacle Builders LLC, Respondent

c/o Benjamin Warner, Agent

12950 E. Shire Way

Prescott Valley, AZ 86315

[email redacted]

[email redacted]

[email redacted]

Western Truss and Components, Complainant

c/o Laramy Schmid, Agent

7145 Leupp Rd.

Flagstaff, AZ 86004

[email redacted]

By: OAH Staff