ALJDEC decisions subject to certification as final

2004A-3209199-ROC · Registrar of Contractors · 2011-10-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 26, 2011 (record held open to September 23, 2011)

APPEARANCES: Complainants appeared and are represented by attorney Daniel Oehler, Law Offices of Daniel J. Oehler; Respondent is represented by attorney Benjamin R. Jemsek, Thrasher Jemsek, PLLC, who was accompanied by Respondent’s Managing Member and Qualifying Party Lori Barker.

WITNESSES: William Redman, ROC Inspector Michael Proctor Pamela Proctor Robert L. Morse, Engineer, ARQ Engineering Robert Harrington, Ph.D., Geologist Ron Riggins, Project Manager, Earth Systems Southwest Lori Barker

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

This matter was set by the Registrar of Contractors as a compliance hearing to determine whether Respondent is in compliance with an Order issued by the Registrar of Contractors on January 5, 2006 (hereinafter “2006 Order”). That 2006 Order adopted an Administrative Law Judge Decision that required Respondent to perform corrective work. Respondent claims that it is in compliance with the 2006 Order and that Complainants have unreasonably denied access to perform the work.[1] Complainants deny those allegations. Procedural Background On July 27, 2009, the Registrar of Contractors (“ROC”) suspended Respondent’s license in accordance with the 2006 Order after it was upheld in Mohave County Superior Court upon judicial review and affirmed at the Arizona Court of Appeals upon appeal. Thereafter, the ROC received correspondence from both parties disputing whether corrective work had been performed and reasonable access granted. The July 27, 2009, suspension was ordered by the ROC’s Order Denying Respondent’s Request for a Compliance Hearing. In that order, the ROC noted that the Arizona Court of Appeals had issued a Memorandum Decision[2] that found that there was no need to further clarify the corrective work required by the 2006 Order and that Respondent had not yet complied with the 2006 Order. The ROC also noted that “the Registrar is no longer interested in inspection reports from geotechnical experts or engineers” and that, based on a review of correspondence received from both parties, no remedial work had been done at that time. The parties continued to file correspondence with the ROC disputing whether compliance had been achieved and access granted. These disputes resulted in the issuance of an Order Setting Compliance Hearing dated April 22, 2011. The ROC’s Order Setting Compliance Hearing states that at the compliance hearing the parties are to present evidence as to whether or not Respondent has complied with the 2006 Order. It also states: The Registrar insists that this will be the FINAL Compliance Hearing in this matter. The Registrar recommends that if after the Compliance Hearing, it is determined that Complainants unreasonably denied access to Respondent, the suspension shall be lifted, and this matter be closed with prejudice. If it is determined that Respondent failed to comply with the terms of the Registrar’s Orders in this matter, absent any unreasonable denial of access, Respondent’s license shall be immediately revoked, and then Complainants may proceed with filing a claim with the Residential Contractors’ Recovery Fund.

Note: It appears as though Respondent provided notice to the Registrar that all work had been completed, yet in later correspondence Respondent has admitted not all work had yet to be performed. Such inconsistent submissions reflect a lack of candor towards the Registrar.

Introduction This tribunal entered the complaint file received from the Registrar of Contractors into the record, which includes documentation relating to the underlying complaint and relating to the question of compliance with the 2006 Order. In addition, Complainant’s Exhibits C-1 through C-17 and Respondent’s Exhibits 72 through 79 and 81 through 84 were admitted into evidence.[3] The parties presented testimony from the witnesses listed above. After the hearing, the parties filed post-hearing arguments in writing.[4] Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding that Complainants did not unreasonably restrict access and that Respondent is not in compliance with the 2006 Order and should have its license immediately revoked. FINDINGS OF FACT 1. Respondent is the holder of license B.157428-R, a general residential contracting license issued by the ROC. Lori Barker is Respondent’s Qualifying Party. The license has been suspended in this matter since July 27, 2009.[5] 2. After a two-day evidentiary hearing held in 2005 in the underlying case in this matter (Case No. H04-0320), an Administrative Law Judge Decision[6] was adopted by the ROC in its 2006 Order. The facts as found showed that Respondent damaged Complainants’ property as Respondent was building a home on property adjacent to Complainants’ property. Due to excavation on the property line, soil began to erode/slough into Complainants’ property and Respondent then conducted shoring procedures to prevent further damage. The ALJ Decision found that the shoring work performed by Respondent did not comply with engineered shoring plans obtained by Respondent. Instead of removing the shoring material as requested by Complainants, Respondent backfilled against the shoring, burying the shoring materials, and did not properly compact the area. As noted by the Arizona Court of Appeals, the ALJ Decision: concluded that (1) Avalon had violated workmanship standards by abandoning debris and building materials on and under the Proctors’ property; (2) Avalon failed to comply with the UBC [Uniform Building Code of 1997] requirements with respect to excavation, fills, compaction, and testing procedures; (3) Avalon “disregarded or departed from” the requirements for 90% or 95% compaction of an excavated area; (4) Avalon acted wrongfully by disregarding the excavation requirements imposed by the UBC and/or City of Bullhead City; and (5) Avalon caused the Proctors substantial injury.[7]

Furthermore, the ALJ Decision ordered Respondent to bring “conditions at the Proctor property within standards” or face suspension of its license. 3. The standards referred to by the ALJ Decision, and adopted by the ROC, were the standards cited to and referenced in the ALJ Decision. These included specific sections of the 1997 UBC identified in the ALJ Decision. In a footnote appended to the statement that Respondent “ought to be required to conform its work to the identified standards,” the ALJ Decision notes that Complainants have agreed to allow Respondent to chose among two options as to how to remediate the damaged property. Option (a) is identified as removing the shoring material, backfilling and compacting to required standards. Option (b) is to remove only the top two feet of material, leave the rest in place, and perform chemical or cement grouting as recommended by the engineer hired by Complainants.[8] 4. This tribunal finds the ALJ Decision to be clear and unambiguous. The 2006 Order adopting the ALJ Decision places the burden of compliance squarely on Respondent’s shoulders. The options laid out in the footnote are also clear and easily understandable. Either of those options would bring the property into compliance. 5. After the 2006 Order was issued, a lengthy legal process of judicial review and appeal ensued. That process had ended in July 2009 when the ROC suspended Respondent’s license. 6. On July 28, 2009, Respondent’s Qualifying Party Lori Barker filed a statement with the ROC: “All repairs have been made per the engineer’s reports.” This statement was disingenuous at best. Instead of creating a remediation plan and proposing it to Complainants with request for access, Respondent had more testing of the soils done in September 2008. At that time, Respondent hired Earth Systems Southwest (“ESS”) “to evaluate the subsurface soil conditions and to identify conditions that may contribute to future potential distress of the site.”[9] The report generated by ESS makes no mention of the 2006 Order or even the ROC complaint litigation.[10] As such, Respondent’s efforts to characterize the ESS report as a step in the direction of compliance is unpersuasive. 7. The evidence shows no attempt by Respondent at creating a remedial plan. 8. The evidence does not show unreasonable denial of access. The only time access was denied was during a four week period in April 2007 surrounding an important social event held at Complainants’ home. Otherwise, there was no restriction to access. Complainants’ request for hours notice was also reasonable. 9. The rub in this case lies in Respondent’s misguided notion that Complainants were required to create a remediation plan and submit it to Respondent for approval. That notion is the exact opposite of what the 2006 Order required. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the party asserting a claim, right, or entitlement.[11] Further, the standard of proof at hearing is by preponderance of the evidence.[12] Here, Respondent was ordered to comply with the 2006 Order and to provide written confirmation of compliance. Therefore, in this case, Respondent bears the burden of showing, by a preponderance of the evidence, that it is in compliance with the 2006 Order.[13] Respondent has failed to meet that burden. 2. Under the provisions of the 2006 Order, Respondent was to provide written proof that Respondent had properly corrected the condition. Respondent’s position that Complainants were required to create a plan was wrong, as Respondent had the burden to comply with the 2006 Order, not Complainants. Respondent’s hiring of ESS to perform investigation of the soils was wasted effort, but is consistent with Respondent’s continuous efforts to re-litigate this matter in an attempt to get a different result. 3. Respondent has failed to comply with the 2006 Order. RECOMMENDED ORDER IT IS RECOMMENDED that license B.157428-R, held by Avalon Custom Homes, LLC, be revoked immediately.

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 5 days from the date of that certification.

Done this day, October 17, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] As the ROC has already pointed out, these positions are inconsistent. [2] Case No. 1 CA-CV 08-0106. [3] Respondent began numbering its Exhibits after the end of its exhibits for the underlying complaint. [4] Respondent’s Motion to Strike Portions of Complainants’ Post-Hearing Memorandum is denied. Complainants are free to make any arguments and this tribunal has evaluated the validity of those arguments based on the evidence. [5] The license has been suspended and put on probation in other matters in 2010. [6] OAH Docket H04-0320. [7] Avalon Custom Homes, LLC v. Arizona Registrar of Contractors, et al., 2008 WL 5384108 (Ariz. App. Dec. 26, 2008, Memorandum Decision). [8] Footnote 28 on page 17 of the ALJ Decision. [9] Exhibit 77 at 1. [10] The report recommends that no remedial action is warranted. [11] Arizona Administrative Code (A.A.C.) R2-19-119(B). [12] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [13] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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