ALJDEC decisions subject to certification as final

2015A-2293-ROC · Registrar of Contractors · 2015-07-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 19, 2015, at 8:00 a.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by John R. Tellier, Esq., Assistant Attorney General; Respondent Camelback Pools LLC DBA: Paddock Pools & Spas (“Paddock”) failed to appear; Respondent R I G Construction Inc. DBA: Cameo Pools (“Cameo”) failed to appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. On December 12, 2012, the Registrar issued License Nos. B- 5.279068-R for residential general swimming pool contracting[1] and A-9.282166-C for commercial swimming pools to Paddock.[2] Paddock’s address of record on both licenses is 8718 E. Shea Blvd., Scottsdale, Arizona 85260- 6625. 2. On October 28, 2004, the Registrar issued License No. KA- 5.201189-D for dual swimming pool contracting to Cameo. Cameo’s address of record is also 8718 E. Shea Blvd., Scottsdale, AZ 85260-6625. 3. Between January April 9, 2015, and May 19, 2015, the Registrar received fourteen complaints from homeowners against Paddock or Cameo. All of the complaints alleged abandonment and non-responsiveness. 4. On May 29, 2015, the Registrar issued orders summarily suspending Paddock’s and Cameo’s licenses, finding that “the public health, safety, and welfare imperatively require emergency action” because both contractors “[have] been entering into construction contracts with new customers and accepting deposits after [the contractors] had already abandoned the construction projects of existing customers.” 5. The Registrar referred both matters to the Office of Administrative Hearings (“the OAH”), an independent state agency, for an expedited evidentiary hearing. 6. On May 29, 2015, the Registrar issued Citations and Complaints/Notices of Hearing in both cases, setting them both for hearing at the OAH on June 19, 2015, at 8:00 a.m. The Registrar sent the Citations and Complaints/Notices of Hearing to Paddock and Cameo via certified mail at their shared address of record. 7. On June 2, 2015, a local television station filed requests in both matters for permission to bring a camera into the hearing room. Because hearings on matters that are referred to OAH by the Registrar are open to the public, the Administrative Law Judge (“ALJ”) issued orders granting the requests, but imposing certain restrictions to avoid disrupting the hearing. 8. On June 9, 2015, Carole Myers on behalf of both Paddock and Cameo filed requests that the orders granting media access be quashed because “[t]he corporation has been under stress due to the continuing television coverage from all stations” and “[a]ny further exploitation of the company for a news byte may very well end the ability of the corporation to continue.” 9. On June 10, 2015, the ALJ denied Ms. Meyers’ requests because “[t]he First Amendment of the United States Constitutions guarantees freedom of the press” and “no Arizona statute makes the hearing confidential or non- public.” 10. On June 16, 2015, Kathy Corbeil filed motions to continue the hearing on behalf of Ms. Myers, Paddock, and Cameo, because Ms. Myers “[was] in Banner hospital and has been since last Saturday, June 13, 2015,” and would be unable to attend the hearing. 11. At the ALJ’s request, on June 17, 2015, the Registrar’s attorney filed expedited responses to Ms. Myers’, Paddock’s, and Cameo’s motions for continuance. On June 17, 2015, for the reasons stated in the Registrar’s responses, the ALJ issued orders denying the requested continuance. 12. An evidentiary hearing was held on June 19, 2015, at which the cases were consolidated pursuant to the Registrar’s motion. Neither Paddock nor Cameo requested that their representative(s) be allowed to appear telephonically. Although the hearing did not start until approximately 8:15 a.m. and did not conclude until approximately 10:37 a.m., neither Paddock nor Cameo appeared, through an authorized member, officer, employee, or attorney, or contact the OAH to request that the start of the hearing be further delayed. Consequently, neither Paddock nor Cameo presented any evidence to defend their licenses. 13. The Registrar submitted 32 exhibits and presented the testimony of twelve witnesses: (1) John Kreczmer, a homeowner who had filed a complaint with the Registrar against Cameo, which was designated as Case No. 2015- 2069; (2) Paul Ott, a homeowner who had filed a complaint with the Registrar against Paddock, which was designated as Case No. 2015-1608; (3) Patricia Clarke, a homeowner who had filed a complaint with the Registrar against Paddock, which was designated as Case No. 2015-1674; (4) Tiffany Nitzche, a homeowner who had filed a complaint with the Registrar against Cameo, which was designated as Case No. 2015-1567; (5) Jennifer Siozos, a homeowner who had filed a complaint with the Registrar against Paddock, which was designated as Case No. 2015-1943; (6) Brian Keith, a homeowner who had filed a complaint with the Registrar against Paddock, which was designated as Case No. 2015-2018; (7) Danielle Maxfield, a homeowner who had filed a complaint with the Registrar against Paddock, which was designated as Case No. 2015-2189; (8) Janet Moore, a homeowner who had filed a complaint with the Registrar against Paddock, which was designated as Case No. 2015-1954; (9) Chandra Douglas, whose husband, Scott Douglas, is a homeowner who had filed a complaint with the Registrar against Paddock, which was designated as Case No. 2015-2034; (10) Darrah Dombrowski, one of the Registrar’s staff attorneys who helped investigate the complaints and relationship between Paddock and Cameo; (11) The Registrar’s Investigator Timothy Pennington, who investigated Mr. Kreczmer’s complaint; and (12) Adam Stafford, the Registrar’s Chief Counsel. Hearing Evidence The Relationships between Paddock and Cameo and Paddock’s and Cameo’s Current License Status

14. According to the latest annual report that Cameo filed with the Arizona Corporation Commission (“ACC”), Carole S. Myers is Cameo’s secretary. Mrs. Myers filed the annual report on behalf of Cameo on September 5, 2014. On May 13, 2015, Steven Vollaro, Cameo’s former director, resigned. On May 27, 2015, Larry Duffy was removed as an officer.[3] Mrs. Myers is the only person left on the ACC’s records with control over Cameo. 15. According to the ACC’s records, on June 19, 2014, the articles of organization for Paddock were amended to show Craig Maggi and John E. Myers as managers. Mr. Myers is Mrs. Myers’ husband. On July 1, 2014, articles of organization were again amended to show Mr. Myers as the sole manager.[4] 16. Mr. Dombrowski testified that statutes require corporate licensees to inform the Registrar of any changes in ownership or control, but Paddock and Cameo failed to inform the Registrar of any changes. 17. According to the records of the Arizona Secretary of State, on April 13, 2015, Nexgen Pools & Spas, Inc. (“Nexgen”) was assigned the tradename, Paddock Pools.[5] 18. According to the ACC’s records, Nexgen is a foreign corporation domiciled in Wyoming. John E. Myers is Nexgen’s president and Carole S. Myers is its secretary. Nexgen applied for authority to do business in Arizona on April 7, 2015.[6] 19. According to the Registrar’s records, on May 21, 2015, Nathan John Reyes resigned as Paddock’s qualifying party on both the B-5 residential license and A-9 commercial license.[7] John Edward Myers is the only person still listed as a member on Paddock’s licenses. Twenty-five complaints are pending against the B-5 residential license and two complaints are pending against the A-9 commercial license.[8] 20. Mr. Stafford testified that as of the time of the hearing, 41 complaints were pending against Paddock’s B-5 residential license, all involving abandonment. Mr. Stafford testified that the two complaints that were pending against Paddock’s A-9 commercial license both involved non-payment to subcontractors. 21. According to the Registrar’s records, Cameo’s former qualifying party was Larry Michael Duffy. Mr. Duffy resigned as qualifying party on May 13, 2015. The only other person listed on the license is Jill Duffy, an officer. As of June 16, 2015, fourteen open complaints were pending against Cameo’s license.[9] Mr. Dombrowski testified that since that date, additional complaints had been filed against Cameo. The Homeowners’ Complaints Case No. 2015-2293 against Paddock Mr. Ott’s Complaint (Case No. 2015-1608) 22. On or about April 13, 2015, Paul J. Ott filed a complaint with the Registrar against Paddock alleging poor work and abandonment of its January 19, 2015 contract to remodel Mr. Ott’s pool, including that Paddock’s chip out of the pool had damaged the pool’s plumbing, coping stones, and shell. According to the complaint, Mr. Ott had paid Paddock $4,666.00 of the $13,299.00 contract price.[10] 23. Mr. Ott attached to his complaint a copy of his January 19, 2015 contract with Paddock, as well as a Color Selection Sheet and proposals for equipment from Cameo.[11] Mr. Ott testified that Cameo gave him a quote, but his contract was with Paddock. The cancelled check for the $4,666.00 down payment on the remodeling contract that Mr. Ott submitted with his complaint was made payable to Cameo and endorsed by Nexgen.[12] Mr. Ott testified that he had never heard of Nexgen until he did some research on the internet. 24. Mr. Ott testified that Paddock started working on the remodeling project on February 11, 2015, and stopped working on February 24, 2015. 25. On or about May 7, 2015, the Registrar’s Investigator Ted Gerold performed a jobsite inspection at Mr. Ott’s pool and verified that Paddock had failed to complete the work required by its contract to remodel the pool. On May 7, 2015, Investigator Gerold on behalf of the Registrar issued a directive to Paddock to complete the pool and deck project per the contract.[13] 26. Mr. Ott testified that neither Paddock nor Cameo have done anything to comply with the Registrar’s May 7, 2015 directive. Mr. Ott testified that the pool is currently unusable and that he has hired other contractors to finish the remodeling project. Charles and Patricia Clarke’s Complaint (Case No. 2015-1674) 27. On or about April 16, 2015, Charles and Patricia Clarke filed a complaint with the Registrar against Paddock alleging that Paddock had abandoned its October 23, 2014 contract to construct a pool at the Clarkes’ residence. According to the complaint, the Clarkes’ contact at Paddock had an email address at Cameo. The Clarkes also attached to their complaint a Color Selection Sheet and Extra Work Order on Cameo’s forms. The Clarkes also attached copies of their five cancelled checks for the project, which were all made payable to “Paddock Pools.” The last three checks that were written after January 2015, were endorsed by Nexgen.[14] 28. Mrs. Clarke testified that she had called Cameo to get a bid and that she had not seen the name Paddock until she signed the contract. Mrs. Clarke explained that she had been informed that Cameo was buying Paddock, which had been building pools since 1958. 29. On or about May 19, 2015, the Registrar’s Investigator Randy Cason performed a jobsite inspection at the Clarkes’ pool and confirmed that Paddock had failed to perform all the work on the project that its contract required. No one appeared at the jobsite inspection to represent Paddock. On May 21, 2015, Investigator Cason on behalf of the Registrar issued a directive to Paddock to complete construction of the pool and spa at the Clarkes’ residence according to the October 23, 2014 contract and local building codes.[15] 30. Mrs. Clarke testified that no one had done anything to comply with the Registrar’s May 21, 2015 directive. Jennifer Siozos’ Complaint (Case No. 2015-1943) 31. On or about May 4, 2015, Jennifer E. Siozos and Marcus M. Gonzales filed a complaint with the Registrar against Paddock alleging that it had abandoned its March 14, 2014 contract to construct a pool at their residence. The complaint alleged that although Ms. Siozos had paid Paddock $2,000.00 to begin performing its contract, it had never started the project.[16] 32. Ms. Siozos testified that although she started negotiating with Cameo for the project, she was given a Paddock contract and informed that Cameo had purchased Paddock and that the two companies were merging under Paddock’s name. 33. Ms. Siozos testified that she went to Paddock’s showroom in 2015, and overheard its staff discussing cash flow issues, including a concern that it would be unable to make payroll, and decided to cancel the contract. Ms. Siozos also attached to her complaint emails between herself and Ozzie Rodriguez at Paddock in April 2015. Ms. Siozos testified that Mr. Rodriguez identified himself as working in Paddock’s engineering department, where he allegedly had completed the drawings for the permit, and informed Ms. Siozos that the permit fees would have to be deducted from her deposit. Ms. Siozos testified that she questioned whether Paddock had ever applied for a permit, given the more than one-year delay in starting the project. Ms. Siozos requested that Paddock cancel her contract and on April 23, 2015, Mr. Rodriguez informed her that “I handed your file to be reviewed in accordance with the cancellation policy yesterday.”[17] 34. Ms. Siozos testified that Paddock’s vice president of finances, who she thought was named “Carole,” informed her that a refund would be processed, but then stated that cancellation of the contract was foreclosed. Ms. Siozos testified that she has not received any refund of her $2,000.00 deposit. Brian Palmer Keith’s Complaint (Case No. 2015-2018) 35. On or about May 7, 2015, Brian Palmer Keith filed a complaint with the Registrar against Paddock alleging that it had abandoned its January 19, 2015 contract to construct a pool at Mr. Keith’s residence for $30,210.00, even though he had paid Paddock $18,256.00. One of the checks that Mr. Keith attached to his complaint was made payable to Paddock, but endorse by Nexgen.[18] 36. Mr. Keith testified that Paddock had started constructing the pool about a month after January 19, 2015, and that construction was going good for a while. Paddock completed plumbing and rebar and he was waiting for the shotcrete. Mr. Keith testified that although he made the next payment that was due, Paddock never came back to the project. Mr. Keith testified that when he called Lewis, one of his contacts at Paddock, Lewis said that he had quit his job at Paddock because he was not getting paid. 37. On or about May 27, 2015, Investigator Gerold on behalf of the Registrar performed a jobsite inspection at Mr. Keith’s pool and confirmed that Paddock had failed to complete the work required by its January 19, 2015 contract. No representative of Paddock attended the inspection. On May 27, 2015, Investigator Gerold on behalf of the Registrar issued a directive to Paddock, requiring it to complete the pool on or before June 15, 2015. The directive informed Paddock that if its license was suspended, it could not perform any work or hire others to perform work until it did what was necessary to resolve the suspension.[19] 38. Mr. Keith testified that three or four days before the June 19, 2015 hearing, someone from Paddock showed up at his house. At that time, Mr. Keith had already hired others to complete construction and so he sent the person away. Scott L. Douglas’s Complaint (Case No. 2015-2034) 39. On or about May 8, 2015, Scott L. Douglas filed a complaint with the Registrar against Paddock alleging that it had abandoned its March 14, 2015 contract to construct a pool at Mr. Douglas’s residence, even though Mr. Douglas had paid Paddock $10,714.48 of the $24,351.00 contract price. According to the complaint, the person representing Paddock on the project was John Myers.[20] 40. Chandra Douglas testified that she is married to Mr. Douglas. Mrs. Douglas testified that John Myers was Paddock’s salesman for the project. She now knows that John Myers is married to Carole Myers. 41. Mr. Douglas provided copies of the checks that he had made payable to Paddock. Mrs. Douglas testified that someone had added the words, “or Nexgen Holding” or “RIG Contracting” to the lines on the checks for the payee’s names.[21] Neither she nor her husband authorized anyone to deposit the checks into Nexgen’s or Cameo’s accounts. 42. Mrs. Douglas testified that there were daily problems with communication on the job and little work got done. The pool and spa were open holes in her back yard. Eventually, she and her husband received Carole Myers’ name as a contact person. On May 4 and 5, 2015, Mr. Douglas sent emails to Mrs. Meyers, requesting that she “rip up our contract and refund the unused portion of our money.”[22] Mrs. Douglas testified that Paddock had not refunded any money. 43. On or about May 21, 2015, Investigator Gerold on behalf of the Registrar performed a jobsite inspection of the pool at Mr. and Mrs. Douglas’s residence and confirmed that Paddock had failed to perform the work on the project that the contract required. No representative of Paddock attended the jobsite inspection. On May 21, 2015, Investigator Gerold on behalf of the Registrar issued a directive to Paddock requiring it to complete the pool project per the contract and specifications on or before June 5, 2015.[23] 44. Mrs. Douglas testified that Paddock had not done anything to comply with the Registrar’s May 21, 2015 directive. 45. Mrs. Douglas testified that on May 19, 2015, she drafted a letter to Paddock, again requesting that it cancel the contract and return unearned monies. Mrs. Douglas testified that in response, she received a call from Dico Pools, informing her that Paddock had reassigned its unfinished contracts to Dico. Mrs. Douglas testified that Dico sent a contract and release, but the documents only mentioned Dico and Nexgen, not Paddock. Mrs. Douglas testified that she did not sign the documents. Danielle J. Maxfield’s Complaint (Case No. 2015-2189) 46. On or about May 19, 2015, Danielle J. Maxfield filed a complaint with the Registrar against Paddock alleging that it had abandoned its August 20, 2014 contract to construct a pool at Ms. Maxfield’s residence. Ms. Maxfield provided checks to show that she had paid a total of $57,464.20 of the $62,738.00 contract price. The first check was made payable to “Paddock Pools,” the second check was made payable to “Paddock Pools/Cameo Pools,” and the third check was made payable to “Paddock Pools and Nexgen Holding.”[24] 47. Ms. Maxfield testified that she had started contract negotiations with Cameo, but then her salesman informed her that Paddock had acquired Cameo. Ms. Maxfield denied ever making a check payable to Nexgen and stated that someone had added the name after the check was written. 48. Ms. Maxfield testified that Paddock did not begin work on the project until four months after it signed the contract. Ms. Maxfield testified that her contact at Paddock, Lewis, promised to complete the project, but when she called him at Paddock, she was informed that he had been fired. Ms. Maxfield testified that she could not get anyone at Paddock to return to her project to finish it and that the project was still incomplete. Janet Moore’s Complaint (Case No. 2015-1954) 49. On or about May 4, 2014, Janet Moore filed a complaint with the Registrar against Paddock alleging that it had abandoned its February 24, 2015 contract to remodel the pool at Ms. Moore’s residence, even though she had paid Paddock $3,906.04 as a 30% down payment to begin the project.[25] 50. Ms. Moore’s check for the deposit was made payable to Paddock. It was endorsed by Nexgen.[26] Ms. Moore testified that she had never heard of Nexgen. 51. Ms. Moore testified that Paddock had drained the pool and that two days later, it was scheduled to begin work on the project. 52. Ms. Moore testified that Paddock’s superintendent on the job, Aubrey, told her that he was having problems with the crew and that someone would be out within the next few days. Ms. Moore testified that no one had ever returned to perform any other work. Three weeks later she was informed that she would receive a CAD drawing for the project, but she never received a drawing. One of Paddock’s employees told her that it was not paying its subcontractors and that it was in the process of hiring new ones. Various employees of Paddock promised to perform work, but nothing was ever done on the project. 53. Ms. Moore testified that at some point, she was informed that Paddock’s Chief Financial Officer, Carole Myers, would call her about the project. Although Paddock’s Vice President of Operation, Kathy Corbeil, on April 14, 2015, promised in writing to refund her deposit,[27] Ms. Moore testified that Ms. Corbeil later said that she was not authorized to release a refund because Paddock was a publicly traded company. When Ms. Moore confronted Mrs. Myers at her office, Ms. Moore testified that Ms. Myers stated that she was not authorized and that Ms. Moore should go to “Builders Relief Fund.” 54. The Registrar informed Paddock of Ms. Moore’s complaint.[28] Ms. Moore testified that Paddock never refunded her down payment or performed any further work on the project and that in May 2015, she hired another contractor to complete the project. Linda Miller’s Complaint (Case No. 2015-2057) 55. On or about May 4, 2015, Linda Miller failed a complaint against Paddock with the Registrar alleging that it had abandoned its February 27, 2015 contract to remodel the pool at Ms. Moore’s residence, even though she had paid Paddock $10,806.26 of the $33,687.55 contract price. The cancelled checks that Ms. Moore submitted with her complaint were made payable to Paddock, but endorsed by Nexgen.[29] 56. On or about May 13, 2015, the Registrar’s Investigator Stephen Lawton sent a letter to Paddock, informing it of Ms. Miller’s complaint. In response, Larry Duffy sent an email stating in relevant part as follows: I have not worked for NexGen Holding which owns [Cameo] for over weeks. . . . They are not providing me with any complaint information so I had to get a list from the ROC office yesterday so I am trying to reach out to these customers and help solve their issues even though I am no longer there. They have no monies to finish jobs so I am doing my best to help out these customers. This complaint was filed under the wrong license number. I know Nathan Reyes who is the employee [qualifying party] for Paddock is also trying to do what he can but since NexGen will not pay any monies. . . .[30]

Case No. 2015-2296 against Cameo Jill Marie Scherer’s Complaint (Case No. 2015-1830) 57. On or about April 27, 2015, Jill Marie Scherer filed a complaint against Cameo with the Registrar alleging that it had abandoned its July 19, 2014 contract to remodel a pool at Ms. Scherer’s residence, even though she had paid $9,784.05 of the $10,649.43 contract price.[31] 58. On or about May 22, 2015, the Registrar’s Investigator Steve Klein performed a jobsite inspection at Ms. Scherer’s pool and confirmed that Cameo had not completed the project according to the contract. No representative of Cameo attended the inspection. On May 22, 2015, Investigator Klein on behalf of the Registrar issued a directive to Cameo to “complete project per original contract agreement, properly executed change orders, verbal agreements, local building codes and manufacturer[’]s installation instructions.”[32] 59. Cameo did not comply with the Registrar’s May 22, 2015 directive. John and Milda Kreczmer’s Complaint (Case No. 2015-2069) 60. On or about May 11, 2015, John and Milda Kreczmer filed a complaint with the Registrar alleging that Cameo abandoned its contract to build a pool at the Kreczmers’ residence for a contract price $50,331.92. Mr. Kreczmer testified that Milda is his mother. The Kreczmers paid Cameo a total of $51,248.71 for the project.[33] 61. The Kreczmers attached to their complaint a copy of their May 12, 2014 contract, which was with Cameo. They also attached a copy of an April 15, 2015 letter from Paddock that informed them of “Paddock Pools’ agreement to honor the warranty as stated in your original Cameo Pools contract . . . .”[34] 62. Mr. Kreczmer testified that a sales representative told him that Cameo had purchased Paddock’s name because Cameo was expanding its operations. 63. The Kreczmers’ complaint was assigned to Investigator Pennington for investigation. Investigator Pennington testified that although he informed Cameo on May 14, 2015, that he had scheduled a jobsite inspection on May 26, 2015, a representative of Cameo did not attend the inspection.[35] 64. On May 26, 2015, Investigator Pennington on behalf of the Registrar issued a directive to Cameo to complete the Kreczmers’ pool per the contract and to repair the stone that was falling off the wall on or before June 12, 2015.[36] 65. Mr. Dombrowski testified that Cameo did not take any action to comply with the Registrar’s May 26, 2015 directive. Tiffany Shalise Nitzsche’s Complaint (Case No. 2015-1567) 66. On or about April 9, 2015, Tiffany Shalise Nitzsche filed a complaint with the Registrar alleging that Cameo abandoned its contract to remodel her pool. Ms. Nitzsche attached to her complaint a copy of Cameo’s September 16, 2014 contract to remodel her pool for a total price of $50,094.00.[37] 67. Ms. Nitzsche also attached to her complaint copies of cancelled checks that showed that by April 2, 2015, Ms. Nitzsche had paid Cameo a total of $47,618.42. The last two checks were made payable to “Cameo/Paddock.” One of the checks was endorsed by Nexgen.[38] Ms. Nitzsche testified that although her contract was with Cameo, the email address of the superintendent assigned to her project was at Paddock. Ms. Nitzsche testified that she had never heard of Nexgen. 68. On or about April 29, 2015, the Registrar’s Investigator Jack Grimm performed a jobsite inspection at Ms. Nitzche’s pool. On April 29, 2015, Investigator Grimm on behalf of the Registrar issued a directive to Cameo to repair and/or complete six specific items that were included on the September 16, 2014 contract.[39] 69. Ms. Nitzsche testified that Cameo did not perform any work to comply with the Registrar’s April 29, 2015 directive, and she was left with a pool without any working equipment, which caused algae to grow in it. / / / / Karen L. Goettl’s Complaint (Case No. 2015-1062) 70. On or about March 9, 2015, Karen L. Goettl filed a complaint with the Registrar against Cameo alleging poor work in its performance of a March 5, 2015 contract to install tile and plaster in pool at Ms. Goettl’s residence. Ms. Goettl stated that although Cameo started and completed the work on time, it had failed to add startup chemicals to the pool as the contract required, even after she contacted Cameo, which had resulted in stains on the bottom of the pool.[40] 71. On or about April 17, 2015, Investigator Cason on behalf of the Registrar performed a jobsite inspection at Ms. Goettl’s pool and confirmed the presence of the stains and the contract’s requirement for Cameo to provide “start up & start up chemicals.”[41] As a result, on May 7, 2015, Investigator Cason on behalf of the Registrar issued a directive to Cameo requiring it to correct the stains and fully perform the contract on or before May 22, 2015.[42] 72. Cameo never complied with the Registrar’s May 7, 2015 directive to repair Ms. Goettl’s pool. CONCLUSIONS OF LAW The summarily suspended statuses of Paddock’s and Cameo’s licenses do not deprive the Registrar of its ability to prosecute these complaints or prevent the Registrar from determining the merits of these complaints.[43] These matters lie within the Registrar’s jurisdiction.[44] Paddock’s and Cameo’s current owners and remaining employees apparently actually received the Registrar’s Citations and Complaints and Notices of Hearing and were aware of the June 19, 2015 expedited hearing.[45] The Registrar bears the burden of proof to establish cause to discipline Paddock’s and Cameo’s licenses by a preponderance of the evidence.[46] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[47] The Registrar established that Paddock abandoned without legal excuse Mr. Ott’s project, the Clarkes’ project, Ms. Siozos’ project, Mr. Keith’s project, Mr. Douglas’s project, Ms. Maxfield’s project, Ms. Moore’s project, and Ms. Miller’s project. Therefore, the Registrar established eight incidents that furnish cause to discipline Paddock’s B-5 residential license under A.R.S. § 32-1154(A)(1).[48] The Registrar also established that Cameo abandoned without legal excuse Ms. Scherer’s project, the Kreczmers’ project, Ms. Nitzsche’s project, and Ms. Goettl’s project. Therefore, the Registrar established four incidents that furnish cause to discipline Cameo’s license under A.R.S. § 32- 1154(A)(1). The Registrar established that Paddock failed to comply with the Registrar’s and industry standards in the work that it performed on Mr. Ott’s project, the Clarkes’ project, Mr. Keith’s project, and Mr. Douglas’s project. Therefore, the Registrar established four incidents that furnish cause to discipline Paddock’s B-5 residential license under A.R.S. § 32- 1154(A)(3),[49] namely A.A.C. R4-9-108.[50] The Registrar established that Paddock failed to comply with the written directives that the Registrar issued for Mr. Ott’s project, the Clarkes’ project, Mr. Keith’s project, and Mr. Douglas’s project. Therefore, the Registrar established four incidents that furnish cause to discipline Paddock’s B-5 residential license under A.R.S. § 32-1154(A)(22).[51] The Registrar established that Cameo failed to comply with the written directives that the Registrar issued for Ms. Scherer’s project, the Kreczmers’ project, and Ms. Nitzsche’s project. Therefore, the Registrar established three incidents that furnish cause to discipline Cameo’s license under A.R.S. § 32-1154(A)(22). The Registrar also established cause to discipline Paddock’s A-9 commercial license because the same persons control that license as the B-5 residential license and the commercial licensee is engaging in the same kinds of misconduct the residential licensee by not paying its debts or responding to complaints.[52] The commercial licensee also has not notified the Registrar of changes in ownership and control and appears to be playing the same kind of corporate shell game to avoid detection. With respect to the appropriate penalties, Paddock’s and Cameo’s repeated failures to respond to the homeowners’ complaints, commingling of personnel, forms, assets, and business, and failures to inform the Registrar of changes in ownership and controlling persons indicate that at this time, these two contractors cannot be regulated. The Registrar has established more than ample cause to summarily suspend both Paddock’s and Cameo’s licenses. / / / / / / / / / / / / RECOMMENDED ORDERS Case No. 2015-2293 Based on the foregoing, it is recommended that on the effective date of the final Order in this matter, the Registrar’s May 29, 2015 order summarily suspending Respondent Camelback Pools, LLC DBA: Paddock Pools & Spa’s License Nos. B-5.279068-R and A-9-282166-C shall be affirmed. It is further recommended that Paddock’s License Nos. B-5.279068-R and A-9-282166-C shall be revoked. It is further recommended that Paddock shall be required to pay the total sum of $2,000.00 as civil penalties for its four failures to comply with the Registrar’s written directives issued under A.R.S. § 32- 1154(A)(22) pursuant to A.R.S. § 32-1154(E).[53] It is further recommended that if Paddock fails to pay the entire amount of the civil penalties on or before thirty days following the effective date of the final order in this matter, the Registrar shall revoke Paddock’s licenses, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Paddock, as defined in A.R.S. § 32-1101(A)(5), unless Paddock tenders payment of any outstanding prior civil penalties. 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 five days from the date of that certification. Case No. 2015-2296 Based on the foregoing, it is recommended that on the effective date of the final Order in this matter, the Registrar’s May 29, 2015 order summarily suspending Respondent R I G Construction Inc. DBA: Cameo Pools’ License No. KA-5.201189-D shall be affirmed. It is further recommended that Cameo’s License No. KA-5.201189-D shall be revoked. It is further recommended that Cameo shall be required to pay the total sum of $1,500.00 as civil penalties for its three failures to comply with the Registrar’s written directives issued under A.R.S. § 32- 1154(A)(22) pursuant to A.R.S. § 32-1154(E). It is further recommended that if Cameo fails to pay the entire amount of the civil penalties on or before thirty days following the effective date of the final order in this matter, the Registrar shall revoke Cameo’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Cameo, as defined in A.R.S. § 32-1101(A)(5), unless Cameo tenders payment of any outstanding prior civil penalties. 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 five days from the date of that certification. Done this day, July 9, 2015.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See the Registrar’s Exhibit 14. [2] See the Registrar’s Exhibit 15 [3] See the Registrar’s Exhibit 10. [4] See the Registrar’s Exhibit 12. [5] See the Registrar’s Exhibit 13. [6] See the Registrar’s Exhibit 11. [7] See the Registrar’s Exhibit 16. [8] See the Registrar’s Exhibit 14. [9] See the Registrar’s Exhibit 9. [10] See the Registrar’s Exhibit 17. [11] See id. at 6-15. [12] See id. at 16. [13] See the Registrar’s Exhibit 18. [14] See the Registrar’s Exhibit 19. [15] See the Registrar’s Exhibit 20. [16] See the Registrar’s Exhibit 21. [17] Id. at 20. [18] See the Registrar’s Exhibit 22. [19] See the Registrar’s Exhibit 23. [20] See the Registrar’s Exhibit 24. [21] See id. at 11-12. [22] See id. at 20-21. [23] See the Registrar’s Exhibit 25. [24] See the Registrar’s Exhibit 26. [25] See the Registrar’s Exhibit 27. [26] See id. at 3. [27] See id. at 6. [28] See the Registrar’s Exhibit 28. [29] See the Registrar’s Exhibit 29. [30] The Registrar’s Exhibit 30. [31] See the Registrar’s Exhibit 1. [32] The Registrar’s Exhibit 2 at 9. [33] See the Registrar’s Exhibit 3. [34] Id. at 3. [35] See the Registrar’s Exhibit 4 at 3. [36] See id. at 6. [37] See the Registrar’s Exhibit 5 at 4. [38] See id. at 9-10. [39] See the Registrar’s Exhibit 6. [40] See the Registrar’s Exhibit 7. [41] The Registrar’s Exhibit 8 at 10. [42] See id. at 19. [43] See A.R.S. § 32-1154(C). That statute provides that “[t]he expiration, cancellation, suspension or revocation of a license . . . shall not deprive the registrar of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such license, or to render a decision suspending or revoking such a license . . . .” [44] See A.R.S. § 32-1154(A). [45] See A.R.S. §§ 41-1092.04; 41-1092.05(D). [46] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [47] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [48] A.R.S. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [49] A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” [50] A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [51] A.R.S. § 32-1154(A)(22) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.” [52] Even if Paddock’s B-5 commercial license had not been summarily suspended, eventually, the imposition of discipline against Paddock’s B-5 residential license would have resulted in discipline against Paddock’s A-9 commercial license under A.R.S. § 32-1154(A)(20), which includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[h]aving a person named on the license who is named on any other license in this state or in another state which is under suspension or revocation unless the prior revocation was based solely on a violation of this paragraph.” By failing to attend the hearing, despite having received notice of the hearing, Paddock has waived any argument about the sufficiency notice of charges in the Registrar’s Citation and Complaint against the commercial license. [53] A.R.S. § 32-1154(E) provides in relevant part as follows: The registrar may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of subsection A, paragraph 22 of this section. . . . The failure by the licensee to pay any civil penalty imposed under this subsection results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty. No future license may be issued to an entity consisting of a person, as defined in section 32-1101, subsection A, paragraph 6, who is associated with the contractor, unless payment of any outstanding civil penalty is tendered.

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