ALJDEC - Licensing
2024A-12284-NPC-ROC · Registrar of Contractors · 2025-03-27
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
R.A.C.E Grading LLC,
COMPLAINANT,
v.
Superior Grading & Excavating LLC
ROC License No. 330569,
RESPONDENT.
No. 2024A-12284-NPC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: March 07, 2025 at 1:00 PM.
APPEARANCES: Edward Halliburton appeared on behalf of R.A.C.E. Grading LLC (“Complainant”) with Henry Hernandez, and Austin Halliburton as witnesses. James Golden, Esq. appeared on behalf of Superior Grading & Excavating LLC (“Respondent”) with Colton Floyd, Cyrus Mahboubi, and Melissa Floyd as witnesses.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the attached agency file by the Arizona Registrar of Contractors (“Registrar”), was admitted into the evidentiary 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 September 09, 2020, the Registrar issued ROC License No. 330569 for General Dual KA Engineering contracting to Respondent. The license has been renewed through September 30, 2026. Colton Patrick Floyd is listed as the Qualifying Party and Member for the license. The address of record for the license is 10380 N. Dozer Dr. Prescott Valley, Arizona 86315. Respondent has an active $14,000.00 surety bond for the license issued by RLI Insurance Company, effective August 19, 2020. The license has no prior disciplinary history. Currently, the license has one (1) open complaint against it; which is presumed to be related to this matter.
In or around early-November 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 a single invoice totaling $32,965.49 regarding extraction, hauling, and delivery of materials to multiple sites operated by Respondent at the latter’s behest. The Registrar designated it Complaint No. 2024-12284 and assigned the case to Shaquira Adebule in their legal department for investigation.
On November 12, 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 November 19, 2024.
On December 03, 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 December 18, 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 December 17, 2024, the Registrar received Respondent’s timely Answer whereby counsel for Respondent provided the following information, in pertinent parts:
[Complainant] is not entitled to recover on its No-Pay Complaint. [Complainant] alleges that [Respondent] has not paid it $32,965.49 for work that [Complainant] allegedly performed at the Exceptional Healthcare Prescott project, located at 4822 E. State Rte. 69 in Prescott, Arizona (the “Project”). To the contrary, it is [Complainant] that owes [Respondent] monies on the subject project. Specifically, [Respondent] and [Complainant] entered into an oral agreement wherein [Complainant] was permitted to access to valuable materials developed from grading work that [Respondent] itself performed on the Project. [Complainant] was to pick up, haul off, and then process the subject materials —after which [Complainant] was to pay [Respondent] royalties for the materials it took from the site and processed (via a percentage of revenues earned by [Complainant] from second-hand sales of the subject materials). [Respondent] and [Complainant] did not execute a written contract regarding this verbal agreement. As to [Complainant’s] claim, the parties never entered an agreement – verbal or otherwise – regarding Superior’s alleged obligation to pay [Complainant] remove the materials. Interestingly, the parties’ royalty agreement is confirmed by the invoice that [Respondent] sent to [Complainant] which is attached on the last page of the Citation issued in this matter. Further, in reviewing the invoices attached to the Citation, it is not clear to what each of the items in those invoices even relate, whether and to what extent the work allegedly performed was done on the Project, and how the rates and amounts were determined. [T]he invoices [Complainant] submitted with the No-Pay Complaint were concocted months after [Complainant] hauled the materials off the Project (the materials were hauled off starting in February 2024, while the invoices are dated in May 2024), and the parties never agreed to the payment of any money to [Complainant] regarding this work. As such, [Respondent] rightfully did not pay the invoices referenced in the No-Pay Complaint and Citation because no agreement ever existed whereby [Respondent] would owe [Complainant] the amounts stated therein.
No additional records were attached to Respondent’s Answer.
On December 20, 2024, this matter was referred to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on February 14, 2025. Per the January 13, 2025, 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
Henry Hernandez, Austin Halliburton, and Edward Halliburton testified on behalf of Complainant. Colton Floyd, Cyrus Mahboubi, and Melissa Floyd testified on behalf of Respondent. The substantive facts of record are as follows:
On an unknown date, Respondent was hired as a replacement subcontractor by general contractor BMH As-Built USA of Arizona, Inc. (“BMH”), ROC License No. 340219, to perform commercial contracting on a project (“Project”) located at 4822 E. State Rte. 69 Prescott, Arizona 86301 for Exceptional Healthcare Community Hospital after BMH’s first subcontractor defaulted. Specifically, Respondent was contracted to complete mass grading, underground utility installation, and paving for the Project.
Mr. Mahboubi owns BMH.
The project commenced in or around September 2022, and was completed sometime in January 2024.
Due to the nature of the project approximately 25,000 tons of valuable spoils accumulated onsite post-construction.
BMH was going to hire a company to haul the spoils off the Project site, but Respondent suggested an alternative. Instead of buying or renting equipment to process the materials, Respondent gave Complainant (ROC License No. 333008) nearly all of the spoils from the Project for processing. Specifically, Respondent permitted Complainant to access the site and remove most of the spoils, leaving enough for Complainant to use to pave the hospital parking lot. Mr. Floyd told Austin Halliburton to “do with the material what you decide.”
Mr. Floyd and Austin Halliburton are friends who went to high school together. After he graduated, Mr. Floyd worked for Edward Halliburton prior to starting his own business.
On an unknown date, the underlying project was given to Complainant by Mr. Floyd as a favor, because he understood that Austin Halliburton, whose partner had just given birth, was looking for work close to home.
Prior to commencing material removal, Mr. Floyd and Edward Halliburton discussed the terms of their agreement. Austin Halliburton was present. Complainant pitched that it would charge Respondent a hauling and processing fee, and Respondent pitched that Complainant would pay royalties to Respondent for any processed materials. Neither pitch was ever solidified as an agreement between the parties. Mr. Floyd and Austin Halliburton simply “shook hands” regarding the underlying scope of work.
From January to early-May 2024, Complainant hauled nearly all of the spoils off the Project site, processed the materials, and sold them for an undisclosed amount.
On May 15, 2024, Complainant issued Invoice No. 12174 to Respondent totaling $32,965.49, for materials allegedly processed and delivered to multiple jobsites for Respondent.
On June 03, 2024, Respondent issued Invoice No. 2272 to Complainant totaling $41,589.56, for royalties, back-charging, and material and transportation fees.
Additional Evidence
Edward Halliburton testified that he would not have accepted the job from Respondent under a royalty agreement, and that he had always planned to sell processed spoils back to Respondent “under market rate.”
Austin Halliburton testified that Respondent let Complainant use a substantial amount of the Project spoils, which were run through Complainant’s crusher and sold.
Mr. Floyd testified that Respondent had a “no strings attached” agreement with Complainant whereby he willingly gave valuable raw materials to Complainant, knowing Complainant had the ability to process the materials, and that in turn Complainant could sell them for a profit. Mr. Floyd also testified that he estimated the spoils Complainant removed from the Project to be valued at $650,000.00, after processing.
Mr. Mahboubi testified that he estimated the spoils Complainant removed from the Project to be valued at $374,000.00.
Closing Arguments
In closing, Respondent argued that Complainant failed to sustain its burden of proof, as no rate or payment terms had been established to support the payment of Invoice No. 12174. Respondent reiterated that the project had been extended to Complainant as a “favor to a friend” and analogized the agreement as placing gold bars on a curb with a “free” sign, and then Complainant trying to charge Respondent to haul away the free gold.
In closing, Complainant argued that it did not need “charity” from Respondent, and only entered into their agreement on the understanding that it would be compensated.
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.
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. § 32-1129.02(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. § 32-1154(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.”
In the case at bar, the Tribunal is tasked with determining how much money Complainant is owed by Respondent, if at all, and 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 evidence establishes that Complainant has not sustained its burden of proof by the requisite evidentiary standard.
Although Complainant contends that the parties had a valid verbal agreement, no evidence was provided to substantiate that claim and overcome Respondent’s credible denials to the contrary. Here, the record reflects that Respondent gave Complainant valuable spoils, which Complainant processed and sold. There is nothing in the record that corroborates Complainant’s contention that it hauled processed materials to any project site owned or run by Respondent, let alone at Mr. Floyd’s direction. There is not an iota of evidence in the record that corroborates Complainant’s claims that Mr. Floyd agreed to any specific rate for the processing and/or hauling of said materials, even though two (2) of Complainant’s witnesses were supposedly in the meeting where the conversation took place.
Because Complainant has not established by a preponderance of the evidence that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(10), Complainant did not establish cause for the Registrar to discipline ROC License No. 330569.
RECOMMENDED ORDER
In light of the foregoing,
IT IS RECOMMENDED that the Registrar dismiss Complaint No. 2024-12284, with prejudice.
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, March 27, 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]
R.A.C.E GRADING LLC, Complainant
c/o Cindy Halliburton, Agent
P.O. Box 1044
Dewey, AZ 86327
[email redacted]
Steven R. Beeghley, Esq.
James C. Golden, Esq.
Sacks Tierney P.A., Counsel for Respondent
4250 N. Drinkwater Blvd., 4th Fl.
Scottsdale, AZ 85251-3693
[email redacted]
[email redacted]
By: OAH Staff