ALJDEC

99F-0919-ROC · Registrar of Contractors · 1999-04-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 31, 1999. APPEARANCES: COMPLAINANT: by Michael Shriver, corporation president, with representation by Richard Cobb, Esq.; RESPONDENT: No appearance by anyone on its behalf.

ADMINISTRATIVE LAW JUDGE: Anthony Halas _____________________________________________________________________ This matter proceeded to hearing on March 31, 1999, for the purpose of determining whether Respondent violated state law as alleged by Complainant and as cited by the Registrar of Contractors. Based on the evidence presented at that time, as well as administrative notice of certain events relative to the procedural history herein, the following Findings of Fact, Conclusions of Law, and Recommended Decision are made and submitted to the Director of the Registrar of Contractors (Registrar):

FINDINGS OF FACT 1. Complainant Desert Canyon Pools, Inc., is a licensed contractor in Arizona in the business of building in-ground swimming pools and associated items within the scope of its license, and in the course of that business, it entered into a subcontract (Exhibit 1) with Respondent Strasser Development Co., Inc., in September, 1997, to build such a pool at a residence, being built by Respondent as general contractor, at 6430 East Sierra Vista, in Paradise Valley, Arizona. 2. Thereafter, on September 16, 1998, Complainant filed a complaint with the Registrar of Contractors, alleging a balance due and owing from Respondent under that contract in the amount of $52,236.25. 3. When the complaint was not resolved administratively, and Complainant requested hearing, the Registrar issued Case No. 99-0919 CITATION AND COMPLAINT to Respondent on December 9, 1998, alleging possible violations of A.R.S. §§ 32-1154.A.7 and .11. 4. Respondent, through Steven Strasser, then timely filed its answer to the CITATION AND COMPLAINT, and the matter was duly noticed for hearing on March 31, 1998, at 1:30 p.m. 5. At hearing, Complainant was represented by counsel and appeared through its president, Michael Shriver (Shriver). Complainant presented the testimony of Shriver and offered 3 exhibits, which were marked and admitted. No one appeared on behalf of Respondent, and no explanation was received to explain the absence of any such representative, although the record remained open until 2:30 p.m. 6. As adduced at hearing, through the testimony of Michael Shriver, and Exhibits 1 and 2, the uncontroverted evidence of record demonstrates that the original contract amount was for $105,200.00; and that with addenda and change orders the amended contract amount was for $125,736.25. 7. The evidence further establishes that by about June, 1998, Complainant had satisfactorily completed the work the company had contracted to perform. 8. However, prior to that date, and prior to the completion of the work, there remained a balance due and owing on the contract from Respondent to Complainant in the amount of $72,036.25. In reliance on Respondent’s promises to pay, and eventual tender on April 23, 1998 of check no. 1552, in that amount (Exhibit 3), Complainant then proceeded, over the course of approximately two weeks, to continue its work under the contract. 9. According to Shriver’s credible testimony, over the course of those two weeks, he attempted to negotiate the check, but upon each inquiry to Respondent’s bank, was advised that the funds available were insufficient to honor the check. Then, at the end of those two weeks, he was made aware that Respondent had entered a “stop payment” order on the check. 10. At that time, his company ceased work on the contract, until separate arrangements were made with, and funds for the cost to complete were provided by, the homeowner ( “Pierre Falcone” ), after which Complainant completed the work, despite a balance due. 11. Shriver’s testimony, consistent with Exhibit 2, confirmed that the balance due, after crediting the homeowner’s payments, remained $52, 236.25, principal only, and that despite further efforts to collect from Respondent, nothing further had been paid. 12. By its failure to appear for the scheduled hearing, Respondent failed to present any matters in defense or mitigation. 13. Upon information made available by Steven L. Strasser, Respondent’s principal and qualifying party, in his answer to the CITATION AND COMPLAINT in this matter, it is understood that he alleges that his present involvement in the construction trades is limited to work as a consultant for “Cathedral Homes” in the design and bidding process, and not in building homes.

APPLICABLE LAW A.R.S. § 32-1154.A provides, in pertinent part, as follows:

A. The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: . . . . .

7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. . . . . .

11. Failure by a licensee or agent or official of a 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 or, 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. . . . . .

CONCLUSIONS OF LAW 1. To warrant action by the Registrar pursuant to the statutes above, Complainant must demonstrate by a preponderance of the evidence that Respondent violated either, or both, of the statutory sections cited. Culpepper v. State of Arizona, 187 Ariz. 431, 437-38, 930 P.2d 508 (Ariz. App. 1996). The term “preponderance of the evidence” means that the evidence is sufficient to persuade the finder of fact that the proposition is “more likely true than not.” In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). It “is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (rev. 6th ed. 1990). 2. It is found and concluded that the evidence demonstrates that Complainant and Respondent entered into a valid and enforceable contract, fully performed by Complainant, but materially breached by Respondent by its failure to pay. 3. With respect to Respondent’s alleged wrongful or fraudulent conduct and failure to pay as charged in the CITATION AND COMPLAINT, Complainant has sustained its burden of proof, by greater than a preponderance of the probative, uncontroverted evidence, and it is therefore found and concluded that: A. Respondent’s failure to pay Complainant the amount due and owing constitutes violation of A.R.S. § 32-1154.A.11, with no showing that Respondent lacks the capacity to pay or has not received sufficient monies as payment for this particular construction work project for which Complainant's services and materials were provided. B. Respondent’s failure to pay despite its promises to do so, and tender of a check for which there were insufficient funds, and for which Respondent stopped payment, constitutes both fraudulent and wrongful acts upon which Complainant relied to its detriment by continuing work, causing substantial injury to Complainant in violation of A.R.S. § 32-1154.A.7.

RECOMMENDED DECISION In view of the foregoing, IT IS RECOMMENDED that Respondent’s Class B license shall be revoked on the effective date of the Order entered in this matter. Done this day, April 2, 1999.

______________________________________ Anthony Halas Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 1999, to:

Registrar of Contractors Michael P. Goldwater 800 West Washington, 6th Floor Phoenix, AZ 85007

ATTN: Joyce Armijo

By ___________________________

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826