ALJDEC - Licensing
2024A-10994-NPC-ROC · Registrar of Contractors · 2025-02-06
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Timberline Woodworks Inc.,
COMPLAINANT,
v.
Pinnacle Builders LLC
ROC License No. 312965,
RESPONDENT.
No. 2024A-10994-NPC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: January 17, 2025 at 3:00 PM.
APPEARANCES: Daniel Kreyling appeared on behalf of Timberline Woodworks Inc. (“Complainant”). No appearance(s) by or on behalf of Pinnacle Builders LLC (“Respondent”). Ed Bieluch and Renee Feavel observed.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the Arizona Registrar of Contractor’s (“Registrar’s”) attached agency file, and December 16, 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 histories as reflected by the Registrar’s public website. On April 14, 2017, the Registrar issued ROC License No. 312965 for General Residential B contracting to Respondent. Though renewed by Respondent though April 30, 2025, the license was suspended by the Registrar on December 16, 2024, for lack of bond. Ben Warner is listed as the Qualifying Party for the license. The address of record for the license is 12950 E. Shire Way Prescott Valley, Arizona 86315. Respondent does not have an active surety bond for the license. The license has been disciplined on four (4) prior occasions, and has had six (6) complaints settled or otherwise resolved against the license. Currently, the license has six (6) open complaints against it; one of which is presumed to be related to this matter.
In or around early-October 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 seven (7) invoices totaling $63,859.00 regarding six (6) individual custom cabinetry subcontract agreements for residential projects overseen by Respondent. The Registrar designated it Complaint No. 2024-10994 and assigned the case to Dylan Warwick in their legal department for investigation.
On October 15, 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 October 22, 2024.
On November 08, 2024, the Registrar issued a Citation to Respondent for an alleged violation of Arizona Revised Statute (“Ariz. Rev. Stat.”) § 32-1154(A)(10). Respondent was notified that a failure to provide an Answer by November 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 November 01, 2024, the Registrar received Respondent’s timely Answer whereby Mr. Warner provided the following information:
Timberline Woodworks was not paid in full on these jobs due to them not completing the work. Pinnacle Builders had to hire out side trades to finish install of the cabinets supplied. Timberline Woodworks did supply cabinets for each of these invoices and started install but did not complete. Pinnacle Builders paid deposits for the material and willing to work out balances owed but will noy pay in full due to incomplete work[.]
(All errors in original.)
No additional records were attached to Respondent’s Answer.
On November 25, 2024, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 17, 2025. Per the December 03, 2024, 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 Daniel Kreyling as a witness. The substantive facts of record are as follows:
Complainant is a subcontractor and holder of ROC License No. 189461 for Specialty Dual CR-60 Finish Carpentry contracting. Complainant operates out of Prescott, Arizona.
Between August 17, 2022, and July 05, 2023, the parties entered into the following subcontract agreements:
On August 17, 2022, the parties entered into a $33,460.00 custom cabinetry subcontract agreement for Respondent’s client, Villifana, located at 9334 N. Dakota Prescott Valley, Arizona 86315.
On March 15, 2023, the parties entered into a $20,281.00 custom cabinetry subcontract agreement for Respondent’s client, Dudden, located at 14320 E. Casa Serena Prescott Valley, Arizona 86315.
On March 08, 2023, the parties entered into a $23,209.00 custom cabinetry subcontract agreement for Respondent’s client, Elias, located at 9030 N. Riata Trl. Prescott Valley, Arizona 86315.
On February 22, 2023, the parties entered into a $20,860.00 custom cabinetry subcontract agreement for Respondent’s client, Pepin, located at 9583 Gallop Way Prescott Valley, Arizona 86315.
On April 14, 2023, the parties entered into a $25,746.00 custom cabinetry subcontract agreement for Respondent’s client, High, located at 2309 Cyclorama Dr. Prescott, Arizona 86305.
On July 05, 2023, the parties entered into an $11,542.00 custom cabinetry subcontract agreement for Respondent’s client, Catherine, located at 4630 E. Catherine Dr. Prescott, Arizona 86301.
Each contract included a 50% deposit term, delivery draw term, and balance due upon installation term.
Complainant issued the following invoices to Respondent for payment on the above-referenced contracts:
On July 28, 2023, Complainant issued Invoice No. 2828 for $5,842.00 to Respondent for the Catherine project.
On April 19, 2023, Complainant issued Invoice No. 2802 for $10,181.00 to Respondent for the Duden project.
On April 16, 2023, Complainant issued Invoice No. 2801 for $11,329.00 to Respondent for the Elias project.
On October 06, 2023, Complainant issued Invoice No. 2638 for $13,246.00 to Respondent for the High project.
On March 03, 2023, Complainant issued Invoice No. 2779 for $328.00 to Respondent for the Pepin project.
On April 05, 2023, Complainant issued Invoice No. 2791 for $673.00 to Respondent for the Pepin project.
On August 10, 2023, Complainant issued Invoice No. 2835 for $22,260.00 to Respondent for the Villafana project.
Additional Evidence
Mr. Kreyling testified that Complainant and Respondent had been professionally affiliated for the past eight (8) years, and that all of the projects at issue in Complaint No. 2024-10994 were related to new build in the Saddleview subdivision located in Prescott Valley, Arizona.
None of the invoices Complainant issued to Respondent in this matter were returned as undeliverable, charged-back, or otherwise contested by Respondent.
Complainant did not receive any workmanship complaints from Respondent regarding any of the projects at issue, but if they had, Complainant would have been willing to address them.
All projects were completed by Complainant with the exception of the Catherine job, which was missing trim. Invoice No. 2828 was not reduced to reflect the lack of trim.
Closing Argument
In closing, Complainant argued that because Respondent had been paid on all of the projects at issue, Respondent owed Complainant payment for the work it performed.
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.
The Notice of Hearing the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter. Because the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Registrar as well.
Complainant bears the burden of proof to establish cause for the Registrar to discipline Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.
“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. § 32-1129 et seq., provides numerous benefits and protections for subcontractors including their right to timely payment, 1.5% interest per month on unpaid invoices, and the right to stop work for nonpayment (after notice).
Ariz. Rev. Stat. § 32-1129.02(A) provides, in pertinent part, that “[p]erformance by a subcontractor in accordance with the provisions of a construction contract entitles the subcontractor to payment from the party with whom the subcontractor contracts.”
Ariz. Rev. Stat. § 32-1129.02(B) provides, in pertinent part, that “[i]f a subcontractor has performed in accordance with the provisions of a construction contract, the contractor shall pay to its subcontractors within seven days of receipt by the contractor of each progress payment, retention release or final payment, the full amount received for such subcontractor’s work and materials supplied based on work completed or materials supplied under the subcontract.”
Ariz. Rev. Stat. § 32-1129.02(E) provides, in pertinent part, that “[i]f a contractor chooses to withhold the application or certification for all or a portion of a subcontractor’s billing, the contractor must prepare and issue a written statement within fourteen days to the applicable subcontractors stating the reasons for withholding the application or certification from the owner.”
Ariz. Rev. Stat. § 32-1129.02(F) provides, in pertinent part, that “[i]f the owner issues a written statement stating that the owner declines to certify or approve all or a portion of the contractor’s billing and if the amounts to be paid from that billing by the contractor to any subcontractors are affected by the owner’s decision not to certify or approve, the contractor shall send a copy of that written statement within seven days after the receipt to any affected subcontractors or material suppliers.”
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.
In the case at bar, the Tribunal is tasked with determining how much money Complainant is owed by Respondent, if at all, but if so whether said debt(s) constitute a violation of Ariz. Rev. Stat. § 32-1154(A)(10) for which Respondent’s license may be disciplined by the Registrar.
Upon review of the record, the relevant and credible evidence establish that between August 17, 2022, and July 05, 2023, the parties entered into six (6) subcontract agreements totaling $135,098.00, and that Respondent tendered payments on each but still owed an outstanding balance totaling $58,017.00 on all of the contracts.
Therefore, the only issue remaining is whether Respondent raised a sufficient justification or excuse for failing to tender payment in full to Complainant. The Tribunal is not at liberty to make presumptions in favor of Respondent or accept facts in mitigation on behalf of Respondent that are not supported by the evidence. Here, the record reflects that overall Respondent failed to comply with the payment terms of the parties’ agreements, and did not establish any affirmative defense(s). The record does reflect, per Mr. Kreyling’s admission, that Complainant did not complete its scope of work on the Catherine project. There is no evidence in the record, however, that Respondent provided notice of incomplete or deficient workmanship to Complainant.
Notably, Respondent’s absence from this administrative proceeding is a factor in aggravation, as it evinces the licensee’s unwillingness to be regulated by the Registrar.
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 on 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 $58,017.00 has been tendered to Complainant for Invoice Nos. 2802, 2801, 2638, 2779, 2791, and 2835 in certified funds as restitution.
IT IS FURTHER RECOMMENDED that after the Registrar has received Respondent’s proof of payment to Complainant, Complaint No. 2024-10994 may be closed.
NOTICE
Pursuant to Ariz. Rev. Stat. § 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, February 06, 2025.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Tom Cole, Director
c/o Legal Department
Registrar of Contractors
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
Timberline Woodworks Inc., Complainant
1040 Sandretto Dr., Ste. A
Prescott, AZ 86305
[email redacted]
Pinnacle Builders LLC, Respondent
12950 E. Shire Way
Prescott Valley, AZ 86315
[email redacted]
By: OAH Staff