ALJDEC decisions subject to certification as final

2016A-189-ROC · Registrar of Contractors · 2016-08-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 18, 2016 APPEARANCES: Amy Elizabeth Phillips on her own behalf; Keith Knowlton, Esq. for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ FINDINGS OF FACT 1. On May 19, 2016, the Registrar of Contractors (“ROC”) issued a Notice of Hearing setting the above-captioned matter for hearing on July 18, 2016, at the Office of Administrative Hearings in Phoenix, Arizona. 2. Respondent Monster Medical LLC, d.b.a. Flood Impact Xperts, holds license number 270557 issued by ROC. As of the hearing date, Monster Medical’s license was suspended for lack of a bond. Monster Medical indicated that it does not intend to reactivate its license. 3. The Notice of Hearing shows that the hearing was set to consider the charges made in the Citation and Complaint.[1] 4. Through the Citation, ROC alleges that Monster Medical LLC may have violated Ariz. Rev. Stat. sections 32-1154(A)(2), (A)(3), (A)(12) and (A)(22), and 32-1158(B). The Citation shows that if the Administrative Law Judge finds that any of the alleged charges are valid, ROC may suspend or revoke Monster Medical LLC’s license.[2] 5. In addition to its contracting work, Monster Medical LLC does flood restoration or remediation work. 6. Complainant Amy Elizabeth Phillips entered a contract with Monster Medical LLC in which Monster Medical was to perform flood remediation work and to perform construction work at her house. Monster Medical LLC also performed remediation work on a second flood at Ms. Phillip’s house. 7. On January 15, 2016, Ms. Phillips filed a complaint with ROC alleging workmanship and other deficiencies on Monster Medical LLC’s part. 8. In response to that complaint, ROC Investigator Stephen Lawton conducted a job-site inspection on March 7, 2016. 9. On March 22, 2016, ROC issued to Monster Medical LLC, a Directive through which it ordered Monster Medical LLC to correct by appropriate means: (1) carpet left under closet door track and wood flooring not installed under the track; (2) baseboards that were not installed per the parties’ agreement; (3) no permit for new shower; (4) smoke detector not installed; and (5) wood flooring not complete at transitions. 10. Ross Lindsy Frazier is a member of the Monster Medical LLC. 11. At the hearing, Mr. Frazier acknowledged that Monster Medical LLC did not obtain a building permit for the shower as required. Mr. Frazier testified to the effect that this was inadvertent because for the work Monster Medical LLC does, generally no permit is required. 12. Regarding the other items listed in the Directive, Mr. Frazier testified that these items were not completed because Ms. Phillips had fired Monster Medical LLC before the project was completed. 13. Ms. Phillips acknowledged that she had fired Monster Medical LLC, and she testified to the effect that the project had taken longer than she believed it should have and that Monster Medical LLC had not provided her with an accounting of the project’s expenses. 14. Monster Medical LLC takes the position that Ms. Phillips owes it over $17,000 and that this entire matter should be resolved in the civil courts. 15. The Directive shows that because Monster Medical LLC’s license is suspended, Monster Medical LLC could only comply with the Directive by paying a licensed contractor hired by Ms. Phillips. Because of the monetary dispute between the parties, Monster Medical LLC was unwilling to do that unless Ms. Phillips pays what Monster Medical LLC believes she owes. 16. Mr. Frazier testified that Ms. Phillips had never provided Monster Medical LLC with information showing that she had hired another contractor to make the repairs set out in the Directive.

17. Monster Medical LLC argues that the suspension of its license and Ms. Phillips’s failure to hire another contractor to make any required repairs provides a valid justification for not performing the corrective work that ROC ordered it to complete. Mr. Lawton’s testimony shows however, that Monster Medical LLC could also have reactivated its bond, in which case it the requirement that Monster Medical LLC comply with the Directive by paying a contractor hired by Ms. Phillips would no longer apply. CONCLUSIONS OF LAW 1. Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119. 2. “At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3). 4. A preponderance of the evidence is: The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Black’s Law Dictionary 1373 (10th ed. 2014). 5. Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 6. “Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B). 7. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). 8. Ariz. Rev. Stat. section 32-1154(A) provides that: The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: ***** 2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect that is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code. 3. Violation of any rule adopted by the registrar. ***** 12. Failure in any material respect to comply with this chapter. ***** 22. Failure 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. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held.

9. Ariz. Admin. Code section R4-9-108(A) provides that “A contractor shall perform all work in a professional manner.” 10. Ariz. Rev. Stat. section 32-1158(B) provides that: From and after December 31, 2007, any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract. 9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12- 1365. 11. The preponderance of the evidence shows that Monster Medical LLC violated Ariz. Rev. Stat. section 32-1154(A)(2) by failing to obtain the permit required for its work. 12. The preponderance of the evidence does not show that Monster Medical LLC violated Ariz. Rev. Stat. section 32-1154(A)(3) by failing to perform its work in a professional manner. The evidence of record shows that the four items listed in the Directive (i.e., those other than the failure to obtain the permit) were not completed because Ms. Phillips fired Monster Medical LLC before it could complete this work. As such, these cannot sensibly be considered workmanship violations. 13. Considering that there is a good-faith monetary dispute between the parties and that Ms. Phillips fired Monster Medical LLC prior to filing with ROC her complaint, the preponderance of the evidence does not show that Monster Medical LLC violated Ariz. Rev. Stat. section 32-1154(A)(22). Put another way, the existing dispute provides a valid justification for Monster Medical LLC’s failure to comply with the Directive.[3] 14. There was no argument presented to show that Monster Medical LLC’s contract does not meet the requirements of Ariz. Rev. Stat. section 32-1158(B). As such, the preponderance of the evidence does not show that Monster Medical LLC violated Ariz. Rev. Stat. section 32-1154(A)(12). 15. Based on the proven violation of Ariz. Rev. Stat. section 32- 1154(A)(2), Monster Medical LLC’s license should be suspended for one day. RECOMMENDED ORDER IT IS RECOMMENDED that on the effective date of the final Order in this matter Monster Medical LLC’s license number 270557 is suspended for one day. 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 is forty days after the date of that certification. Done this day, August 5, 2016.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] The Notice of Hearing does not provide the date the Citation was issued or when the Complaint was issued or filed. There appears to be no dispute that the Citation was issued on May 3, 2016 or that the Complaint was filed on January 15, 2016. [2] The Citation shows that ROC could not determine whether any violations had actually occurred, which is why the matter was set for hearing. [3] Monster Medical LLC’s argument that it did not violate subsection (A)(22) because its license is suspended is without merit. Accepting that argument would lead to the non-sensible result that contractors could avoid their responsibility to correct defective or incomplete work by canceling their bonds.

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