ALJDEC - Licensing

2025A-10431-NPC-ROC · Registrar of Contractors · 2026-03-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Magnum Paving Inc,

COMPLAINANT

v.

Monrad Veldman Construction LLC

DBA: Venn Construction

License No. ROC 300445,

RESPONDENT

No. 2025A-10431-NPC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 10, 2026.

APPEARANCES:

Complainant: Mason Fagotti, Esq.

Steven Haws

Respondent: Nick Veldman

ADMINISTRATIVE LAW JUDGE: Nedra-Su Kawasaki

EXHIBITS ADMITTED INTO EVIDENCE: Administrative notice was taken of the Notice of Hearing Packet submitted by the Registrar of Contractors.

Complainant’s Exhibits 1-33.

_____________________________________________________________________

FINDINGS OF FACT

Monrad Veldman Construction, LLC (Respondent) was the holder of License No. 300445 issued by the Arizona Registrar of Contractors (Registrar) on August 3, 2015.

On or about October 14, 2024, Magnum Paving, Inc. (Complainant) entered into a contract with Respondent to, among other things, provide labor, materials, and services to complete Site Utilities Subcontract.

On or about October 10, 2025, Complainant filed a Non-Payment Complaint Form with the Registrar, claiming Respondent had failed to pay Invoices 05.24018-015, and 06.24018-15, for a total of $842,030.15.

On November 19, 2025, 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 December 4, 2025, asserting it was actively working on a payment resolution with the project owner and Complainant but had not yet received payment in full. The contract between Respondent and Complainant assumes no obligation for Respondent to issue payment to Complainant unless the project owner issued payment to Respondent. Finally, Respondent had confirmation that there would be resolution to the matter on or before December 15, 2025.

The matter was referred to the Office of Administrative Hearings for an administrative hearing. The Notice of Hearing was issued on December 22, 2025, setting the hearing for February 10, 2026.

A hearing was held on February 10, 2026.

During opening statements, the following facts were found to be undisputed: after the Citation was issued, Complainant received a payment of $141,000.00 which left a remaining outstanding balance owed to Complainant of $561,631.00 (for the two pay applications included in the complaint) plus the unpaid retention of $138,788.00. At the time of the hearing, the $561,631.00 outstanding invoice balance had been paid (pending receipt) by Respondent’s bond. The only remaining amount at issue was $138,788.00 held in retention.

Complainant testified in support of the undisputed facts and as to the timeline of events. Mr. Fagotti, Complainant’s Counsel, argued that retention was withheld until substantial completion and Complainant had achieved substantial completion and due retention. Mr. Fagotti further argued that during the invoice months at issue (June and July 2025), Respondent had been paid in full by the project owner for Complainant’s work, but withheld payment without justification.

Respondent testified in support of the undisputed facts but did dispute whether the retention payment was due. Respondent testified that retention is owner controlled, and at the time of filing, retention was not due and Respondent has since asked the project owner to pay the subcontractors directly. In closing, Respondent argued that between the bonding companies’ payments and the project owner paying subcontractors directly, Complainant would be made whole.

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.”

The evidence on record may be given more or less weight toward establishing a preponderance depending on the indicia of credibility associated with that evidence and its source. When a source is proven untrustworthy, its evidence shall be considered less probative of the truth.

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.

In Arizona, when construing statutes, we look first to a statute’s language as the best and most reliable index of its meaning. If the statute’s language is clear and unambiguous, we give effect to that language and apply it without using other means of statutory construction, unless applying the literal language would lead to an absurd result. Words should be given “their natural, obvious, and ordinary meaning,” unless defined by the legislature.

The issue in this matter is whether, as of the date of filing, the retention payment was due for payment to Complainant. A licensee is required to pay its subcontractor for materials or services rendered, when due, unless the licensee proves the lack of capacity to pay and sufficient payment was not received from the particular project for which the subcontractor’s services or materials were rendered.

In this case, Complainant argued that substantial completion of its contract was achieved; therefore, the retention payment was due. Mr. Veldman, however, argued that retention payments were owner-controlled and to his knowledge the project owner had not funded retention. There was no dispute that the $138,788.00 retained was earned and owed. However, neither party presented evidence by which a determination of whether the retention amount, or any portion thereof, was due to Complainant, could be made.

Therefore, Complainant failed to establish that the outstanding retention balance of $138,788.00 was due, in this forum.

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, March 20, 2026.

/s/ Nedra-Su Kawasaki

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

Magnum Paving Inc

[email redacted]

Monrad Veldman Construction LLC

DBA: Venn Construction

[email redacted]

Mason Fagotti, Esq.

Fennemore Craig PC

[email redacted]

By: OAH Staff