ALJDEC decisions subject to certification as final

2017A-3326-CHC-ROC · Registrar of Contractors · 2017-10-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

C2K Properties LLC,

COMPLAINANT,

v.

AZ Revamp LLC, License No: 295911,

RESPONDENT.

No. 2017A-3325-CHC-ROC

No. 2017A-3326-CHC-ROC

CONSOLIDATED ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 16, 2017

APPEARANCES: C2K Properties, LLC (Complainant) was represented by Wallid Zarifi, Esq. Arizona Revamp LLC (Respondent) was represented by Bradford Martz, its qualifying party and authorized representative.

ADMINISTRATIVE LAW JUDGE: Suzanne Marwil

_____________________________________________________________________

Hearing was convened to determine whether Respondent violated state law as alleged by Complainant and as cited by the Registrar of Contractors (Registrar). Evidence and testimony were presented, and based on the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Order are made:

FINDINGS OF FACT

Complainant is the owner of residences located at 2946 North 47th Street, Phoenix, Arizona 85018 (2946 project) and 3007 North 47th Street, Phoenix, Arizona 85018 (3007 project). Both these residences are investment properties, brought by Complainant to be resold once they were remodeled.

Respondent holds Arizona Contractor’s License No: 295911. The license is a class CR61 for Carpentry, Remodeling and Repairs, which has a contracting limit of $5,000.00 per project. License No: 295911 was suspended for lack of bond on January 9, 2017 and subsequently revoked on January 19, 2017.

On June 27, 2017, Complainant filed two complaints with the Registrar alleging that Respondent had contracted for to remodel the 3007 project for $195,505.50 on August 16, 2016 and contracted to remodel the 2946 project for $224,999.99 on October 10, 2016. The complaints alleged that despite being paid in accordance with the contracts for both these projects, Respondent refused to complete the projects unless it was paid additional funds it claimed Complainant owed on two prior remodel projects that were not the subject of the complaints.

The Registrar assigned investigator Matt Gunstra investigate the complaints. Gunstra testified that he arranged to perform an inspection of both residences on July 13, 2017, and notified Complainant and Respondent of the time and place of the inspection. Gunstra indicated that at the time of an inspection, he substantiated that the 2946 project and the 3007 project were both incomplete. Gunstra also substantiated that based on payment information and other documentation received Respondent had both exceeded the scope of its license and done work on a suspended/expired license.

On July 14, 2017, Gunstra sent Respondent two Directives from the Registrar. The Directives stated in pertinent part as follows:

After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in discipline of your license and a civil penalty pursuant to A.R.S. § 32-1154(4) of up to $500.00. Failure to comply with this Directive may also be treated as an aggravating factor should the Registrar pursue discipline of your license. You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on July 31, 2017.

You are hereby directed to remedy the following violations by appropriate means:

Respondent shall complete project per written contract, written change order[s] and verbal agreements

NOTE: Respondent’s license is REVOKED at this time and no work shall be performed without a current license. See highlighted section below.

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.

. . .

If your license 295911 is suspended for administrative reasons or is revoked, expired, or cancelled, you may not contract in any manner and may remedy the workmanship violations listed above only by paying a properly licensed contractor hired by Complainant to remedy your deficient workmanship or by reaching a financial settlement with Complainant.

On August 7, 2017, Gunstra contacted Complainant and learned that it had not reached a settlement with Respondent. Gunstra therefore forwarded the matter to the Registrar’s legal department.

On August 9, 2017, the Registrar issued Respondent a Citation. That Citation contained four charges. Charge 1 referenced “[a] violation of A.R.S. § 32-1154(A)(1)” stemming from the “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” Charge 2 alleged “[a] violation of A.R.S. § 32-1154(A)(16)”, namely “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.” Charge 3 specified “[a] violation of A.R.S. § 32-1154(A)(17), specifically “[c]ontracting or offering to contract or submitting a bid while the license is under suspension or while the license is on inactive status.” Charge 4 alleged “[a] violation of A.R.S. § 32-1154(A)(22)”, namely “[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.”

Hearing was convened at the Office of Administrative Hearings (OAH) on October 16, 2017.

Gunstra testified consistently with the facts detailed above as did Thyra Dixon, Managing Member of Complainant, and Martz. Martz admitted that Respondent worked outside the scope of its license, commenting that Respondent wanted to grow and thought this was one way to show it could handle larger projects. Martz also admitted that Respondent had continued to do work when its license was both suspended and revoked .Martz acknowledged that he and his ex-partner informed. Dixon that they would no longer do work on the 2946 project or 3007 project unless they were paid monies they believed they were owed on two other houses they had remodeled for Complainant. Martz said that Respondent had used its own money to cover those projects and did not believe that was right. Martz agreed that Complainant had paid the amounts specified in Exhibit G for the 2946 project and 3007 project.

Dixon testified that Respondent had been paid 90% of the purchase price for the 3007 project by May 11, 2017, but refused to continue work unless it was paid the full contract price along with additional monies for approved and non-approved change orders. She indicated that Respondent had been paid 41% of the contract price for the 2946 project but that all they had to show for it was architectural plans, permits and one passed inspection. Dixon noted that Complainant had to pay other contractors to finish the 3007 project and that the 2946 project remained under construction with another contractor.

Martz maintained he no longer intended to work as a contractor and wanted to mediate this matter, but subsequently declined to make Complainant an offer of financial settlement, although the Administrative Law Judge offered to go off the record so that he could do so.

CONCLUSIONS OF LAW

The Registrar has jurisdiction over this matter, pursuant to A.R.S. § 32-1101, et seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-115.

Respondent’s revoked license does not deprive Complainant of its right to prosecute its complaint or prevent the Registrar from determining the merits of the complaint. See A.R.S. § 32-1154(D).

To warrant such sanctions by the Registrar, Complainant must demonstrate by a preponderance of the evidence that Respondent violated the statutory section cited. Proof by a “preponderance” means that “the evidence is sufficient to persuade the finder of fact that the proposition is more likely true than not.” In re: Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994). See also Culpepper v. State of Arizona, 187 Ariz. 431, 930 P.2d 508 (App. 1996). It is “evidence which is of greater weight or more convincing than the 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 1182 (Rev. 6th ed. 1990).

Undisputed credible testimony established that Respondent abandoned or refused to perform the contracts it signed for the 2946 project and 3007 project without legal excuse in violation of A.R.S. § 32-1154(A)(1). Nothing in the contracts for the 2946 project or the 3007 project permitted Respondent to cease work due to nonpayment for other previously completed projects. Having entered into the contracts to complete the 2946 project and 3007 project and accepted money to do the same, Respondent could not rely on an unrelated money dispute involving other projects to fail to meet its contractual obligations.

Undisputed credible testimony established Respondent exceeded the scope of its CR61 license by contracting for projects exceeding $50,000.00 in violation of A.R.S. § 32-1154(A)(16). Martz admitted he knew the limits of Respondent’s license but chose to take the jobs in hopes of growing Respondent.

Undisputed credible testimony established Respondent continued to work on the 2946 project and the 3007 project after January 2017 when Respondent’s license was suspended and revoked in violation of A.R.S. § 32-1154(A)(17). Martz admitted he knew of the suspension and revocation and continued to do work.

An A.R.S. § 32-1154(A)(22) violation is, warranted for Respondent’s failure to which a financial settlement with the Complainant or to engage a licensed contractor to complete the 2946 project and 3006 project as required by the Directives. Throughout this proceeding, Respondent has attempted to deflect responsibility for its out-of-scope and unlicensed work. This raises concerns that Respondent cannot be regulated.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall revoke Respondent’s License No. 295911.

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 40 days from the date of that certification.

Done this day, October 18, 2017.

/s/ Suzanne Marwil

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors