ALJDEC - Licensing

2024A-07766-NPC-ROC · Registrar of Contractors · 2025-01-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

B-Line Directional Drilling LLC,

COMPLAINANT,

v.

Red Hawk Construction LLC,

License No. ROC 227792,

RESPONDENT.

No. 2024A-07766-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: November 19, 2024

APPEARANCES: Kristopher Stadeli, Qualifying Party, represented B-Line Directional Drilling LLC. Joshua Cullipher, Qualifying Party, represented Red Hawk Construction LLC.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

EXHIBITS ADMITTED INTO EVIDENCE: ROC Notice of Hearing Packet (Packet); Respondent Exhibits A through N.

_____________________________________________________________________

FINDINGS OF FACT

Red Hawk Construction LLC (Respondent) holds License No. 227792, General Dual KA Dual Engineering, which was issued by the Registrar of Contractors (Registrar) in December 2006.

In July 2024, B-Line Directional Drilling LLC. (Complainant) filed a Non-Payment Complaint Form (Complaint) with the Registrar against Respondent alleging that Respondent had failed to pay Complainant the invoiced sum of $7,000.00 for work performed in April 2023. See Packet at 12.

The project involved Complainant boring a hole for steel/water piping to be drawn/pushed through the hole under an existing road so the water piping would be connected to a water main; the water pipe connection was needed for a new housing development being built on the other side of Brown Road. Complainant provided a copy of the December 2022 project estimate in the amount of $9,500.00 and the past-due June 1, 2023 invoice in the amount of $7,000.00. See Packet at 13.

On September 16, 2024, the Registrar issued a Citation to Respondent for the alleged violation of Arizona Revised Statutes (A.R.S.) § 32-1154(A)(10). See Packet at 77.

On October 1, 2024, Respondent filed its answer. See Packet at 109. Respondent stated that no money was due because Complainant’s work had not met the project’s specifications and was not corrected by Complainant, causing Respondent to have to hire another contractor to perform the work to specifications. Respondent stated that Complainant did not offer to correct the resultant bored hole.

The matter was not resolved informally between the parties and the matter was forwarded to the Arizona Office of Administrative Hearings.

The project and work process was a series of situations, most of which occurred following Complainant having drilled the hole. While the parties made every effort to walk the Tribunal through the process of the project with their testimony, some information was conflicting and, perhaps, was not specific enough. However, based on the evidence of record and testimony of the parties at hearing, the following is a somewhat-chronological outline of what appears to have happened regarding the project:

Mr. Stadeli had met with Rob Cullipher, Respondent’s Owner, at the Brown Road site. According to the estimate, Complainant had bid the project for drilling in “hard dirt” and for a bore hole distance of forty (40) feet.

Badger Daylighting Corp. had previously performed excavation work for Respondent in order to expose the various existing utility lines; this resulted in discovery of an AT&T fiber optic line in the way of the then-approved plans.

In performing the drilling, Complainant located the bore hole lower than the fiber optic line; as a result, the bore hole was twenty-four inches below the then-approved plans “on the other side.” Additionally, the bore hole ended up at eighty (80) feet instead of 40.

Complainant drilled the hole and then reamed it out, leaving the hole ready for installation of the steel pipe. Complainant indicated that the last portion of the drilling was into “rock” and that they had/have less control over the drill when drilling into “rock.” The hole ended up with a curvature. Complainant acknowledged that the water pipe, when installed, is supposed to be at a certain elevation due to the need to tap into the water main. The next part of the process involved trenching to have room to be able to create/build and install a casing and then insert the water pipe.

Before Complainant’s crew left the site, Joshua Cullipher, Respondent’s superintendent on the project, alerted Complainant’s work crew [i.e., Travis (no last name)], at the time the hole was drilled that the hole was too low. According to Josh, Travis apparently responded that Joshua needed to talk with Mr. Stadeli.

Rob Cullipher called Mr. Stadeli the next day to discuss the matter. Mr. Stadeli stated at hearing that he had come out to the site and had suggested several things to Rob Cullipher because Complainant could not now bore a hole higher than the existing hole (as that might make a new hole collapse into the old hole); he suggested to make the hole bigger and/or move the water line up (which was sometimes the case when dealing with utility line locations) and to have the water company work out with the engineers what to do, and to let him know.

Mr. Stadeli stated at hearing that he then never heard from Rob or Respondent regarding the matter. Mr. Stadeli stated that he never told Rob he was not going to do anything more on the project, and that he presumed that the project had been completed when he did not hear from Rob or Respondent.

On May 1 or May 2, 2023, Mr. Stadeli happened to call “Dan” about a piece of equipment and Dan told him that he was at the Brown Road project jobsite “trying to fix it.”

Mr. Stadeli rushed to the jobsite to observe what was going on. He discovered that the project had not been completed in April after Complainant drilled and reamed out the hole. He saw that another company, Boss II Construction LLC (Boss II), was trying to make the hole bigger, and/ or to ream out the hole with a small reamer and a tire; Mr. Stadeli stated that Boss II did not have the right equipment to re-ream the hole.

At hearing, Mr. Stadeli indicated that, on May 1st or 2nd, it was then 2 1⁄2 weeks later and, as would be expected, the hole had dried up but they were just now trying to push in the pipe and, he opined, there was no chance that steel pipe was going in easily. Mr. Stadeli noted that, at the time he drilled, there would have been wet cutting mix (dirt and rock) in the hole, which the pipe would easily pushed through during the pipe installation. Mr. Stadeli noted that he would have come out to re-ream the hole to make it bigger if they had just called on him to do it.

At hearing Mr. Stadeli further indicated that, due to the time that had passed, Rob Cullipher’s (cancer) situation, what Respondent was trying to do in May instead of just calling him, he determined to lower his invoice for the services of drilling the hole from $9,500.00 to $7,000.00.

At hearing, Joshua Cullipher stated that Complainant had known it was a “hard dig” and that drilling the hole “deeper” had not been discussed at the time the drilling was done; further that, once Complainant drilled it, the hole had not been either vertically or horizontally aligned per approved plans and the hole had an unexpected curvature.

Joshua was unable to clarify what his father and Mr. Stadeli had talked about (he was not on the phone with them) but indicated that, based on a June 25, 2024 email, Complainant had admitted the hole was not correctly done.

Joshua acknowledged that time had passed until he called another company, Boss II, to come out and “straighten” the hole. Joshua indicated that Boss II had dragged tires through the hole to “clean it out” so they could assess the status of the hole; he indicated that, the next day, Boss II took a bore machine and made the hole “straighter” and then they tried to put the casing in the hole but had difficulty because they could not exactly straighten the hole.

Joshua acknowledged that Respondent did not have another hole drilled, but did, after making the “corrections,” use the same hole that Complainant had drilled. Joshua indicated that AZ Water, the owner of the water lines, had to approve getting the hole and lines therein to work as to how the line had been engineered.

Mr. Nate Eck, from AZ Water, indicated that the hole, as Complainant had drilled it, had not been correct on either side of the road, but after a week or two, AZ Water determined how to make the vertical alignment “satisfactory.” Mr. Eck noted that, with the re-reaming and better straightening, it was “close enough” to be able to use 2 fittings to bring the line up to the level of the main and then connect the line; he indicated that he had had to go through his main office to have the engineers make corrections to the previously-approved plans so the plans could be approved by the city. Mr. Eck did acknowledge that, in the field, sometimes water lines have to go around other utility lines but stated that, in the end in this case, the hole had not been drilled according to the specific plans.

Regarding the “corrective work,” Respondent did not pursue any workmanship complaint with the Registrar with regard to Complainant’s work performed and did not pursue back charges against Complainant’s invoice.

Regarding payment, Complainant argued that Respondent did use the hole he drilled and that he should be paid on the invoice for the drilling services he provided, especially after having given Respondent a discounted charge for the services.

Regarding payment, Respondent argued that they had “rejected” the hole

Complainant had drilled and that Respondent had to incur extra expenses to re-ream and straighten the hole, and for completion of the project. Respondent argued that it was being taken advantage of by Complainant due to the death of Rob Cullipher.

According to the Registrar’s public record, Respondent has one open complaint, which is the instant Complaint.

Since the time of the hearing, neither party has notified the Tribunal that the matter was resolved.

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 hearing evidence established that Respondent was invoiced a total of $7,000.00 to Complainant for drilling work Complainant performed, which was an amount lower than the estimated $9,500.00.

Respondent failed to demonstrate any statutory justification or excuse for failing to issue payment to Complainant. Respondent failed to establish by a preponderance of the evidence that it lacked the ability to pay Complainant for the work Complainant performed. In this case, there is no evidence that Respondent was a subcontractor who was awaiting the receipt of payment from an Owner or a general contractor; therefore, the evidence would not demonstrate any defense that Respondent had not received sufficient payment for the particular construction work.

Based on the hearing record, Complainant established that Respondent violated A.R.S. § 32-1154(A)(10) by failing to pay Complainant $7,000.00 for services Complainant 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, on the effective date of the Registrar’s final order, the Registrar suspend Red Hawk Construction LLC License No. 227792 until Respondent has provided to the Registrar, and the Registrar has accepted, documents that establish that Respondent has paid Complainant $7,000.00 in certified funds.

It is further recommended that when and if the Registrar does receive and accept Respondent’s evidence that it has paid Complainant $7,000.00 in certified funds, the Registrar shall close the matter.

No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(7), unless Respondent tenders payment of the outstanding $7,000.00 to Complainant.

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, January 27, 2024.

/s/ Kay A. Abramsohn

Administrative Law Judge

Transmitted electronically to:

Tom Cole

Registrar of Contractors

c/o Legal Department

[email redacted]

B-Line Directional Drilling LLC

3837 E Miami Ave

Phoenix, AZ 85040

[email redacted]

Red Hawk Construction LLC

2032 N 64th St

Mesa, AZ 85215

[email redacted]

By: OAH Staff