NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

SHEA CONNELLY DEVELOPMENT LLC, Plaintiff/Appellant,

v.

ARIZONA REGISTRAR OF CONTRACTORS, et al., Defendants/Appellees.

No. 1 CA-CV 19-0718 

Appeal from the Superior Court in Maricopa County

No. LC2019-000048-001

The Honorable Douglas Gerlach, Judge

AFFIRMED

COUNSEL

DKL Law PLLC, Tempe

By David W. Lunn

Counsel for Plaintiff/Appellant

Arizona Attorney General’s Office, Phoenix

By John R. Tellier

Counsel for Defendant/Appellee AZ Registrar

Fidelis V. Garcia Attorney at Law, Chandler

By Fidelis V. Garcia

Counsel for Defendant/Appellee Revive

FILED 11-3-2020
SHEA v. AZ REGISTRAR, et al.

Decision of the Court

2

MEMORANDUM DECISION

Presiding Judge Randall M. Howe delivered the decision of the Court, in 

which Judge Kent E. Cattani and Judge Cynthia J. Bailey joined.

H O W E, Judge:

¶1 Shea-Connelly Development, LLC (“SCD”) appeals the 

Arizona Registrar of Contractor’s (“ROC”) suspension of SCD’s

contractor’s license for violations of Arizona’s Prompt Pay Act and 

associated statutes, namely A.R.S. § 32–1183.

1 SCD argues that the 

administrative law judge (“ALJ”) was required to consider offset, accord 

and satisfaction, and recoupment in making its disciplinary determination 

to the ROC. For the foregoing reasons, we affirm. 

FACTS AND PROCEDURAL HISTORY

¶2 SCD and Revive Construction and Cleaning, LLC (“Revive”) 

entered construction subcontracts for two different large-scale construction 

projects. In one, SCD subcontracted Revive to frame the Morningstar 

Glendale Project (“Glendale Project”) in Glendale. In the other, SCD hired 

Revive to fix the framing done by a prior sub-contractor at two buildings at 

the Park Place I Project located in Fountain Hills, Arizona (the “Park Place 

Project”) The Glendale Project subcontract provided that if Revive 

defaulted on any contract or subcontract with SCD, it would be deemed to

have defaulted on all contracts or subcontracts with SCD. In anticipation of 

its work at the Glendale Project, Revive submitted an application for 

payment, SCD paid Revive $58,641.57, and Revive signed a “Conditional 

Waiver and Release on Progress Payment.” Revive did not, however,

perform any work at the Glendale Project.

¶3 The relationship between SCD and Revive deteriorated due 

to Revive’s work on the Park Place Project. What was initially a $300,000 

bid by Revive, turned into invoices totaling over $800,000. SCD sent 

superintendents to review Revive’s work since Revive was well over 

budget and the work failed inspections. SCD continued to pay Revive’s 

weekly invoices until late January, when Revive submitted an invoice for 

1 The operative statutes have been redesignated and renumbered

from A.R.S. §§ 32–1129 to 32–1129.07 as A.R.S. §§ 32–1181 to 32–1188. 
SHEA v. AZ REGISTRAR, et al.

Decision of the Court

3

work done solely on things that failed inspection. SCD did not object to that 

invoice or any subsequent invoices in writing but considered both the Park 

Place and Glendale Projects subcontracts terminated. At the time of

termination, SCD owed Revive for four outstanding invoices from the Park 

Place Project, #97, #100, #101, and #102, totaling $68,783.25.

¶4 Revive filed a complaint with the ROC claiming SCD owed 

$68,783.25 for the outstanding invoices. The ROC notified SCD that a 

complaint had been filed against it, explaining that SCD was “free to raise 

any issues or affirmative defenses to this complaint . . . .” SCD timely replied 

that it did not owe Revive because it had made an accord and satisfaction 

with Revive that mitigated Revive’s damages.

¶5 At the subsequent administrative hearing, SCD’s owner, Bart 

Shea testified that SCD had terminated the Park Place Project subcontract 

because of Revive’s inadequate workmanship, which SCD deemed a

material default. Because of the cross-default provision in the Glendale 

Project subcontract, SCD considered Revive in default on the Glendale 

Project and terminated that subcontract as well. SCD then requested Revive 

return the Glendale Project payment. Revive refused, and Shea considered 

those funds payment for the outstanding invoices from January and 

February in the Park Place Project. Shea further testified that to make the 

Park Place Project pass inspection, SCD hired another subcontractor to fix 

Revive’s work. Shea argued that any amount required to fix Revive’s work 

would offset, or be deducted from, the invoice amount. Therefore, SCD did

not owe Revive, but Revive owed SCD. 

¶6 Revive’s witness, Rogelio Vazquez, declined to answer 

questions about the Glendale Project. He did, however, verify the contracts 

and the unpaid Park Place Project invoices. He further testified that SCD 

notified Revive that it would not pay the invoices but did not provide any 

written explanation.

¶7 The ALJ found that SCD provided no written evidence that it 

paid invoices #97, #100, #101, and #102. She further found that SCD

provided no authority to establish that the Registrar considers offsets when 

assessing whether a contractor has violated the Prompt Pay Act. She made

no findings, however, whether she found any witnesses credible, nor any

other finding related to offset, recoupment, or accord and satisfaction. The 

ALJ consequently found that SCD violated both A.R.S. § 32–1154(A)(10) 

and Arizona’s Prompt Pay Act. Pursuant to A.R.S. § 32–1154(B)(3), the ALJ

recommended the ROC suspend SCD’s license until it paid Revive the 

amount of the invoices it owed, and the ROC adopted the recommendation.
SHEA v. AZ REGISTRAR, et al.

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The superior court affirmed the ROC determination on factual grounds, 

inferring the material facts at issue to affirm the ALJ. SCD timely appealed. 

DISCUSSION

¶8 SCD appeals the suspension of its license under A.R.S. 32–

1154(B)(3), arguing that the ALJ’s recommendation and ROC’s

determination improperly precluded evidence of offset, recoupment, and 

accord and satisfaction. We review an administrative action based on an 

interpretation of law de novo. See Forest Guardians v. Wells, 201 Ariz. 255, 259 

¶9 (2001).

¶9 We interpret statutes to give effect to the legislature's intent, 

looking first to the statutory language itself. Baker v. Univ. Physicians 

Healthcare, 231 Ariz. 379, 383 ¶ 8 (2013). When the language is clear and 

unambiguous, and thus subject to only one reasonable meaning, we apply 

the language without using other means of statutory construction. State v. 

Gomez, 212 Ariz. 55, 57 ¶ 11 (2006). Specifically, “[s]tatutory construction 

requires that provisions of a statute be read and construed in the context of 

related provisions and in light of its place in the statutory scheme.” Id. at 

176. In doing so, we give effect to all provisions of a statute and harmonize 

those provisions. Sw. Gas Corp. v. Indus. Comm'n, 200 Ariz. 292, 297 ¶ 16 

(App. 2001).

I. The ALJ did not abuse her discretion when she rejected SCD’s 

claim that it had an accord and satisfaction with Revive. 

¶10 SCD argues that the ALJ abused her discretion when she did 

not consider evidence that it had an accord and satisfaction agreement with

Revive that constituted payment of the invoices at issue. SCD cannot rely 

on accord and satisfaction here, however.

¶11 The Prompt Pay Act requires a contractor to pay the full 

amount of an invoice for work done and material supplied within seven 

days of the invoice being certified and approved. A.R.S. §§ 32–1183(A), (B); 

see also A.R.S. § 32–1182(A), (D). An invoice is deemed certified and 

approved 14 days after the contractor receives the invoice if the contractor 

does not prepare and issue a written statement detailing the reasons for 

withholding payment. A.R.S. §§ 32–1183(A), (B), (E); see also A.R.S. § 32–

1182(A), (D). SCD concedes that it did not provide written objections to the 

invoices as A.R.S. § 32–1183(E) required, and the invoices were duly

deemed certified. SCD was therefore required to pay the invoices.
SHEA v. AZ REGISTRAR, et al.

Decision of the Court

5

¶12 SCD could not use its alleged accord and satisfaction with 

Revive to escape its obligation to pay the certified invoices. A construction 

contract is “a written or oral agreement relating to the construction, 

alteration, repair, maintenance, moving or demolition of any building, 

structure or improvement or relating to the excavation of or other 

development or improvement to land,” A.R.S. § 32–1181(A)(1), and under

the Prompt Pay Act, a construction contract “shall not alter the rights of any 

contractor, subcontractor or material supplier to receive prompt and timely 

payments as provided under this article,” A.R.S. § 32–1182(P). An “accord 

and satisfaction discharges a contractual obligation or cause of action when 

the parties agree to exchange something of value in resolution of a claim or 

demand and then perform on that agreement.” Abbott v. Banner Health 

Network, 239 Ariz. 409, 413 ¶ 11 (2016). By definition, an “accord and 

satisfaction” would alter a subcontractor or material supplier’s statutory 

right to receive prompt payment under the Prompt Pay Act. Because 

recognizing an accord and satisfaction between SCD and Revive would

limit Revive’s ability to receive payment for work done on a construction 

contract in contravention of the express language of A.R.S. § 32–1182(P), the 

ALJ did not abuse her discretion by not considering evidence of an accord 

and satisfaction.

II. The ALJ was not required to consider any offsets or the defense of 

recoupment in determining whether the Prompt Pay Act was 

violated. 

¶13 SCD also argues that the ALJ abused her discretion by not 

considering evidence of an offsetting counterclaim or the equitable defense 

of recoupment in imposing sanctions under A.R.S. § 32–1154 (B)(3). An 

offset is an action or counterclaim a defendant might have brought in a 

separate action against the plaintiff and recovered a judgment. W. J. Kroeger 

Co. v. Travelers Indem. Co., 112 Ariz. 285, 287 (1975). “[A] recoupment is a 

reduction by the defendant of part of the plaintiff's claim because of a right 

in the defendant arising out of the same transaction.” Morris v. Achen Constr. 

Co., Inc., 155 Ariz. 507, 510 (App. 1986), rev'd and vacated on other grounds, 

155 Ariz. at 512.

¶14 Neither offset nor recoupment apply in Prompt Pay Act 

proceedings before the ROC. The purpose of the Prompt Pay Act is to

establish a statutory framework for ensuring timely payments from owners 

and contractors to subcontractors and suppliers, Stonecreek Bldg. Co., Inc. v. 

Shure, 216 Ariz. 36, 39 ¶ 16 (App. 2007), and proceedings before the ALJ are 

meant to adjudicate whether payments have been timely made or withheld 

for valid statutory objections. The proceedings are not venues for 
SHEA v. AZ REGISTRAR, et al.

Decision of the Court

6

comprehensive litigation over contract rights and obligations. See id., 216 

Ariz. at 40 ¶ 18 (regardless of obligations under the Prompt Pay Act, civil 

remedies for breach of contract or tort claims are unaffected). Allowing a 

contractor to bring a counterclaim or some right outside the Prompt Pay 

Act against a subcontractor or supplier to reduce the amount owed under 

certified invoices would inflate a simple prompt payment proceeding 

before an ALJ to full civil litigation better suited to the superior court.

¶15 SCD argues that not allowing it to litigate these matters before 

the ALJ in the prompt pay proceeding violates its due process and is

judicially inefficient. But due process is not violated when a party has “the 

opportunity to be heard at a meaningful time and in a meaningful manner.”

See Samiuddin v. Nothwehr, 243 Ariz. 204, 211 ¶ 20 (2017). SCD can, if it 

chooses, bring any and all claims in civil litigation against Revive. See 

Stonecreek, 216 Ariz. at 40. SCD argues it may have to pay now only to have 

subsequent relief granted in its favor. But this does not violate due process

because SCD retains full rights to bring its claim in a court of general 

jurisdiction. Furthermore, the Legislature has weighed any potential 

inefficiency in favor of timely payments to subcontractors and material 

suppliers, and we do not second-guess policy decisions. See Kromko v. 

Arizona Bd. of Regents, 216 Ariz. 190, 194 ¶ 21 (2007) (we do not substitute 

our “subjective judgment of what is reasonable under all the circumstances 

for that of the . . . Legislature.”).2

2 SCD requests that this Court award SCD its reasonable 

attorneys’ fees and costs, pursuant to A.R.S. §§ 12-341 and 12-341.01, in 

connection with this appeal. We deny the request because SCD was not 

successful on appeal. 
SHEA v. AZ REGISTRAR, et al.

Decision of the Court

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CONCLUSION

¶16 For the reasons stated, we affirm.