ALJDEC - Licensing

2024A-11946-NPC-ROC · Registrar of Contractors · 2025-02-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Lone Mountain Concrete Inc,

COMPLAINANT,

v.

L C I Builders LLC

License No. ROC 270961,

RESPONDENT.

No. 2024A-11946-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 6, 2025.

APPEARANCES:

For Complainant: Stacey Miner.

For Respondent: Stockton Banfield.

ADMINISTRATIVE LAW JUDGE: Samuel Fox

EXHIBITS ADMITTED INTO EVIDENCE: Administrative notice was taken of the Hearing Packet submitted by the Registrar of Contractors. Complainant’s Exhibits 1 through 9. Respondent’s Exhibit’s 1 through 28.

_____________________________________________________________________

FINDINGS OF FACT

L C I Builders LLC (Respondent) was the holder of License No. 270961, issued by the Arizona Registrar of Contractors (Registrar) on March 11, 2011.

On or about June 13, 2023, Lone Mountain Concrete Inc. (Complainant) issued two proposals for the construction project at issue in this matter (Project). Proposal 29237 was for $57,967.00. Proposal 29238 was for $76,380.00, and included a bid for “concrete stairs – detail 22 on G&D (10 YDS)” for $200.00.

The proposals included the following language:

This proposal is subject to change at any time due to the fluctuating market. This proposal is subject to general conditions. If Contractor issues a contract based on this proposal, conditions herein shall be deemed accepted and understood to be incorporated in said contract as though written therein. If any provisions is inconsistent with this proposal this document will prevail. I/We understand and agree to pay 50% collection fee on any outstanding balances due that are turned over to a collection agency.

On or about August 2, 2023, Complainant entered into a contract with Respondent for, among other things, structure footings and slab and grading and drainage retaining wall footings, which included “[s]teps concrete stairs – detail 22 on g&D.” The contract price was $134,347.00. According to the contract’s section 2.02, progress payments, Complainant can apply for payments for work completed. According to the contract’s section 2.03, final payment, Respondent will make a final payment after accepting the finalized work. According to the contract’s section 2.05, payment contingent upon subcontract agreement compliance, Respondent may withhold payment for incomplete work. According to sections 6.01 and 6.02, if Complainant failed to comply with a material part of the contract, then Respondent may withhold payments due to Complainant. According to section 8.10, the contract supersedes any proposals or other prior agreements.

On or about September 9, 2024, Complainant issued two invoices: invoice 29601 for $56,632.00 and 29602 for $78,540.00, which amount to $135,172.00. The total invoiced was $825.00 above the contract price because of fuel and pump charges, which Respondent was willing to pay.

Complainant had not built the stairs; the invoices did not charge for that work.

In an email dated September 11, 2024, Complainant bid the stairs at $8,000. Complainant submitted a backdated, amended Proposal 29238, bidding the stairs at $10,000.

Between September 11, 2024, and October 17, 2024, Respondent attempted to pay Complainant $115,172.00, which was the invoiced amount with a $20,000 holdback because the work had not been completed. Complainant rejected the payment, demanding full payment of the invoiced amount.

On or about October 18, 2024, Complainant filed a Non-Payment Complaint Form with the Registrar, claiming Respondent had failed to pay two invoices, amounting to $135,172.00.

On or about October 31, 2024, the Registrar notified Respondent that it had received a complaint and the Complainant could raise issues and defenses by November 7, 2024.

On November 26, 2024, the Registrar issued a Citation, alleging that Respondent violated Arizona Revised Statutes (A.R.S.) § 32-1154 (A)(10). Respondent timely submitted an Answer on or about December 11, 2024, stating Respondent had tried to make payment for work completed on several occasions. Respondent further stated that it was withholding some funds because the work was not completed.

On or about December 24, 2024, Respondent’s counsel sent Complainant a letter about a progress payment of $125,172.00, withhold only the $10,000.00 that Complainant quoted for the stairs. Complainant refused to accept the payment, continuing to demand full payment.

The matter was referred to the Office of Administrative Hearings for an administrative hearing. The Notice of Hearing was issued on January 3, 2025, setting the hearing for February 6, 2025.

A hearing was held on February 6, 2025.

At hearing, Complainant presented the testimony of Stacey Miner. Respondent presented the testimony of Steve Lenzmeier.

Mr. Miner testified that he did not build the stairs, and he did not charge for them in the amount billed. Complainant argued that he should be paid for the full value of the contract, plus fuel and pump charges, even though he did not build the stairs. Complainant argued that his proposal’s language superseded the contract with Respondent. Complainant believed that Respondent knew that the stairs would cost more than the original bid prior to entering the contract.

Mr. Lenzmeier testified in support of the contract processes, incomplete work, and attempted payments. He testified that he relied on the proposals for his bid.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bore the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. Respondent bore the burden of proof to establish an affirmative defense 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,

[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.

Statutes should be interpreted to provide a fair and sensible result and “be liberally construed to effect their objects and to promote justice.”

Generally, a contractor bears the burden of their errors in a contract or bid. Here, Complainant submitted a proposal for the Project, which included building concrete stairs. Complainant’s proposal contained an error: the stairs were significantly underpriced.

Respondent accepted the proposal, understanding it to include stairs and comparing it to other proposals that included stairs. Respondent used the proposal for is bid to the owner, which resulted in a contract between Respondent and Complainant. When Complainant sought payment, Respondent made a substantial progress payment, which Complainant rejected.

By rejecting a progress payment, Complainant waived a claim for discipline for that amount of money. The amount remains due to Complainant, but Respondent cannot be disciplined under A.R.S. § 32-1154(A)(10) for amounts it has paid but which were rejected without a legal reason.

The final progress payment that Complainant rejected was $125,172.00; accordingly, the only amount at issue for discipline is $10,000.00.

Complainant argued that he did not build or bill for the stairs, so he should receive payment for the full amount of the contract. The contract and contract price included; accordingly, the amount “due” is the value of the completed work under contract. The contract permitted Respondent to withhold an amount, and Complainant quoted $10,000.00 as its cost to complete the stairwell.

The record does not indicate that Respondent acted in bad faith.

Solely for the purposes of discipline under for the purposes of A.R.S. § 32-1154(A)(10), Complainant failed to establish that any unpaid monies were due for materials or services rendered to Respondent in connection with Respondent’s operations as a licensed contractor.

The preponderance of the evidence did not show that Respondent violated A.R.S. § 32-1154(A)(10) as alleged.

Therefore, the Administrative Law Judge did not find grounds 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 Order, Complainant’s complaint 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, February 25, 2025.

/s/ Samuel Fox

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Tom Cole, Director

Registrar of Contractors

Lone Mountain Concrete Inc.

[email redacted]

Stockton Banfield, Esq.

[email redacted]

By: OAH Staff