ALJDEC

99F-2062-ROC · Registrar of Contractors · 1999-11-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 28, 1999. APPEARANCES: Sharon Shively, Attorney for Complainant; David J. Geyman, Complainant; Jack Bulkin, Attorney for Respondent; Scott Price, Respondent’s president; and Vance Marshall, Respondent’s witness. ADMINISTRATIVE LAW JUDGE: Dorinda M. Lang. _____________________________________________________________________

Having heard the testimony of the witnesses and having read and considered the entire record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Decision to the Registrar of Contractors. FINDINGS OF FACT 1. Complainant contracted with Respondent in January 1997 to design buildings which Respondent had contracted to build for a developer. Complainant did the work and submitted invoices. The last invoice submitted was on October 31, 1997 for $14, 323.98. Complainant has not received any of this money and has been told by Respondent that Complainant will be paid as soon as Respondent can get the money it is owed on the project. The contract between the parties was not a “pay when paid” contract. 2. Respondent’s president testified that Respondent was solvent on October 31, 1997, when the last invoice was submitted. However, Respondent did not pay Complainant at that time because Respondent preferred to pay from the money it was trying to collect from the developer. Respondent put off paying Complainant’s invoice at that time. Then, in January or February 1998, Respondent experienced a business downturn which resulted in significant losses and lay-offs. Respondent is currently down to five employees from the 45 employees it had in October 1997. It has relocated to a smaller office. Respondent continues to work to pay off subcontractors who are still owed money on various projects. It has filed one lawsuit and is preparing to file another for this purpose. Respondent has no prior complaints or disciplinary sanctions on his nine year record. 3. Complainant has already received over $38,000 for work done on the project at issue and has been paid in full by Respondent for another project for over $88,000 completed during the ensuing two years. CONCLUSIONS OF LAW 1. This matter is within the jurisdiction of the Registrar of Contractors pursuant to A.R.S. §§ 32-1104(A)(4) and 32-1156. 2. The Citation and Complaint issued by the Registrar of Contractors in this matter alleged potential violations of A.R.S. § 32-1154(A)(7) and (11). 3. The Arizona Revised Statutes at § 32-1154(A)(7) provides for suspension or revocation of a contractor’s license for the “doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured”. 4. The Arizona Revised Statutes at § 32-1154(A)(11) provides for suspension or revocation of a contractor’s license for failure to pay a subcontractor in excess of $750 when due when he has the capacity to pay, or, if he lacks the capacity to pay, when he is paid sufficiently on the contracted project. 5. The burden of proof at an administrative hearing is generally upon the Complainant. Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). Further, the standard of proof at hearing is a “preponderance of the evidence”. Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). 6. In this case, Complainant has established that payment for $14,323.98 was due on October 31, 1997 at a time when Respondent had the ability to pay. Complainant has also established that Respondent did not pay the invoice at that time or in the following two months prior to experiencing financial difficulties. Though Respondent’s attempts to get money to pay Complainant in the past two years, its exemplary license record, and its business downturn are factors in mitigation of Respondent’s failure to pay, it has been established that Respondent has violated A.R.S. § 32-1154(A)(7) and (11). RECOMMENDED DECISION In view of the foregoing, it is recommended, commencing on the effective date of the Registrar’s Order, (thirty-five [35] days after the date of mailing by the Registrar of Contractors) that Respondent’s Class B- license be suspended until the Registrar receives proof that Respondent has paid Complainant $14,323.98. If the Registrar of Contractors receives proof that Respondent has paid Complainant prior to the effective date of the Registrar’s Order, the recommended suspension should not take place. It is further recommended, in addition to the foregoing license suspension, if any, that Respondent’s Class B-01 license be placed on disciplinary probation for a period of 60 days commencing on the effective date of the Order entered in this matter or the date on which notice of Respondent’s proper compliance with the terms of the Order is filed with the Registrar of Contractors, whichever is later.

Done this day, November 15, 1999. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Dorinda M. Lang Administrative Law Judge

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

Registrar of Contractors Mr. Michael P. Goldwater ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

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