ALJDEC

99F-2637-ROC · Registrar of Contractors · 1999-08-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 4, 1999 at 9:00 a.m. APPEARANCES: Complainant appeared through its President, Bruce Zeller; Respondent appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

The parties presented evidence and testimony on the issue of whether Respondent failed to pay Complainant monies when due for services rendered in connection with Respondent’s contracting business. Based upon the entire record, the undersigned makes the following Findings of Fact, Conclusions of Law and Recommended Order. FINDINGS OF FACT The Registrar of Contractors issued license no. 093189, Class B, to Respondent, an individual, on April 7, 1992. According to Respondent’s hearing testimony, he has been in the business of contracting since 1978, originally in Chicago and later in Arizona. Sometime in late 1997, the parties entered into a contract under which Complainant agreed to perform certain excavating work in consideration for Respondent’s payment of $5,850.00. By early January 1998, Complainant had completed the work contemplated by the parties’ contract. Respondent admitted at the hearing that he received payments from the owner or general contractor on the project after Complainant completed work, although he has not yet been paid in full for the project. Respondent paid Complainant $500.00 on or about March 26, 1998 and $1,000.00 on or about May 1, 1998 for work Complainant performed pursuant to the parties’ contract. Despite repeated requests, Respondent has made no further payments of principal or interest. On or about September 16, 1998, Complainant filed a complaint in Northeast Phoenix Justice Court against Respondent for breaching of the parties’ contract by failing to make the promised payments, which with interest allegedly totaled $4,898.05 at that time, which complaint was designed Case No. CV98-0529RA. On or about September 29, 1998, Respondent answered the complaint, alleging that “[t]he amount of $4,898.05 is incorrect balance due.” On February 25, 1999, Justice of the Peace Jacqueline McVay entered a default judgment against Respondent for $4,898.05 plus $105.00 in costs and interest at 10% per annum until the judgment was paid in Case No. CV98- 0529RA, apparently because Respondent failed to make disclosure or appear for trial. The justice court judgment has become final, but Complainant has not recovered any portion of it. On March 11, 1999, Complainant made the complaint at issue to the Registrar, alleging that “[Respondent] has not fulfilled his payment obligation and by his own admission used monies paid to him to keep his home, etc., instead of paying his subcontractors.” On April 29, 1999, the Registrar issued a Citation and Complaint, charging Respondent with violations of A.R.S. § 32-1154(A)(7) and (11). On or about May 5, 1999, Respondent answered the Citation and Complaint, alleging that Complainant’s work was deficient, which required him to hire another contractor to remedy the workmanship, and that he had a pending complaint to the Registrar for $200,000.00 owed by another contractor to him on another job, which prevented him from paying Complainant. The undersigned takes administrative notice that the Registrar on July 15, 1999 issued his decision in Case No. 98-3126, which involved Inca Contracting Co.’s workmanship claims against Respondent and which imposed penalties against Respondent’s license. Because this decision has not become final and no other final orders have been entered against Respondent’s license as of the date of this recommendation, the undersigned finds no factors in aggravation to be considered in determining the appropriate penalty to be imposed against Respondent’s license as a result of the statutory violations she recommends that the Registrar find in this case. At the hearing, Respondent testified that five of his close relatives have recently died, that two family members have recently been diagnosed with cancer, that he has not been paid in full for the last 16 contracting jobs he has performed,[1] and that he has been a reputable contractor since 1978. Because Respondent alleges that he has no money or assets to satisfy Complainant’s judgment or claim to the Registrar for nonpayment, he has not offered to make payments or other arrangements to settle this claim. All he can do is offer to perform landscaping work for Complainant, which declined the offer because it does not undertake landscaping and performs all of its own grading and excavation on other projects. CONCLUSIONS OF LAW In this administrative proceeding, Complainant bears the burden of proof and must establish statutory violations by a preponderance of the evidence. See A.A.C. R2-19-119; see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App. 1996). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). A preponderance of the evidence is “evidence which is of greater weight or more convincing than 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 at page 1064 (6th ed. 1990). In Arizona, “‘[p]ublic policy dictates that there be an end to litigation; that those who have contested the issue shall be bound by the result of the contest; and that matters once tried shall be considered forever settled as between the parties.’” Lofts v. Superior Court, 140 Ariz. 407, 410, 682 P.2d 412, 415 (1984) (quoting Baldwin v. Iowa State Traveling Men’s Ass’n., 283 U.S. 522, 525, 51 S. Ct. 517, 518, 75 L. Ed. 1244 (1931)). “That the judgment was rendered by default does not affect its validity, for such a judgment admits as true all the material allegations properly set forth in the complaint and is just as binding and conclusive as to them as though it had been rendered after answer and contest.” Collister v. Inter-State Fidelity Building and Loan Ass’n, 44 Ariz. 427, 435, 38 P.2d 626 (1934) (citations omitted). This well-established law makes the justice court’s judgment in Case CV98-05290RA conclusive with respect to the amount of principal owed and forecloses Respondent from denying the debt based on Complainant’s allegedly deficient workmanship. Respondent’s personal tragedies and business reversals do not excuse his failure to pay Complainant under A.R.S. § 32-1154(A)(11), which includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure by 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 received sufficient monies as payment for the particular construction work project or operation for which the services . . . were rendered . . . .” The Arizona legislature enacted this statute in 1951 based on the California statute that is presently numbered Cal. Bus. & Prof. Code § 7120.[2] See Historical and Statutory Notes to A.R.S. § 32- 1154; Sunpower of Arizona v. Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (Ct. App. 1990). While the California statute requires “wilful or deliberate” misconduct or the absence of good faith, when the Arizona legislature enacted A.R.S. § 32-1154(A)(11), it omitted any such requirement. The only inference that may be drawn from this legislative omission and the plain language of the statute is that the legislature did not intend for a general contractor’s good faith or claimed inability to pay to be an absolute defense to a violation of the statute requiring him to pay money when owed after he has received payment for the project for which the debt was incurred. See, e.g., Janson v. Christensen, 167 Ariz. 470, 471, 808 P.2d 1222, 1223 (1991) (“[T]he best and most reliable index of a statute’s meaning is its language and, when the language is clear and unequivocal, it is determinative of the statute’s construction.”). Respondent admitted at the hearing that he had received monies from the owner or general contractor on the project after Complainant completed its performance of work on the project. Therefore, Complainant has carried its burden to prove that Respondent has violated A.R.S. § 32-1154(A)(7)[3] and (11) in failing to pay Complainant monies owed under the contract. Because $548.05 of the justice court judgment comprised interest, which was not for “services rendered in connection with [Respondent’s] operations as a contractor” under A.R.S. § 32-1154(A)(11), however, Respondent’s statutory violation consists solely of his failure to pay the remaining monies owed under the contract, $4,350.00. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar of Contractors suspend Respondent’s License No. 093189, Class B on the effective date of his order, thirty-five days after the date of mailing. It is further recommended that, if on or before the effective date of the Registrar’s order, Respondent furnishes written proof to the Registrar that it has paid Complainant $4,350.00 as restitution for its contracting law violation, no license suspension shall take place and the Citation and Complaint in Case No. 99-2637 be closed. Done this day, August 5, 1999.

______________________________________ Diane Mihalsky Administrative Law Judge

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

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

By ___________________________

----------------------- [1] The undersigned notes that the Registrar on July 15, 1999 also issued his decision in Case No. 98-2692, the companion case to No. 98-3126, which is discussed above and involved Inca Contracting Co.’s claims against Respondent, which dismissed Respondent’s claims against Inca for nonpayment pursuant to Respondent’s requests on April 5 and 6, 1999. [2] The current version of Cal. Bus. & Prof. Code § 7120 provides as follows: Wilful or deliberate failure by any licensee or agent or officer thereof to pay any moneys, when due for any materials or services rendered in connection with his operations as a contractor, when he has the capacity to pay . . . constitutes a cause for disciplinary action, as does the false denial of any such amount due or the validity of the claim thereof with intent to secure for himself, his employer, or other person, any discount upon such indebtedness or with intent to hinder, delay, or defraud the person to whom such indebtedness is due.

[Emphasis added.]

[3] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

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