ALJDEC decisions subject to certification as final

2018A-04845-RFA-ROC · Registrar of Contractors · 2020-02-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

John Ritter,

COMPLAINANT,

v.

Jack Lee Depew Jr.,

DBA: Depew Enterprises,

ROC License: ROC 252248,

RESPONDENT.

No. 2018A-04845-RFA-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 27, 2020 at 9:00 AM.

APPEARANCES: Andrew R. Peshek appeared on behalf of John Ritter (“Complainant”). Assistant Attorney General Sarah Asth, Esq., appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Shaquira Adebule as a witness. Jack Lee Depew Jr. appeared on behalf of Depew Enterprises (“Respondent”). John Tellier and Mary Bernascomi observed.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Registrar.

FINDINGS OF FACT

Background and Procedure

According to the Registrar’s public website, on February 01, 2009, the Registrar issued ROC License No. 252248, Specialty Dual CR-61 Carpentry, Remodeling and Repairs contracting license to Respondent. Jack Lee Depew Jr. is listed on the license as the Qualifying Party. Respondent’s address of record for the license is 2812 E. Lantana Dr. Chandler, AZ 85286-2443.

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website on February 27, 2020. ROC License No. 252248 was suspended effective December 09, 2019. There are no open complaints against the license, but there is one record of prior discipline that has been taken against the license. No bond information is listed.

On or about October 12, 2018, the Registrar received a complaint filed by Complainant against Respondent alleging poor workmanship of a residential recreation vehicle (“RV”) garage. The Registrar designated the grievance Complaint No. 2018-04845 and assigned it to Jack Grimm (“Investigator Grimm”) for investigation.

On October 26, 2018, the Registrar issued a Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by an investigator on November 26, 2019, at 2:00 p.m.

On November 05, 2018, the Registrar issued a Rescheduled Jobsite Inspection Notification letter to the parties advising that the onsite review would be rescheduled to 2:00 p.m. on December 03, 2018, due to a scheduling conflict.

On December 03, 2018, Registrar investigator Grimm inspected the work that had been done on the project to date and took 9 photographs. When he was finished Investigator Grimm drafted Jobsite Inspection Notes.

On December 06, 2018, Investigator Grimm issued a Warning Letter to advise Respondent that on the underlying project Respondent had operated outside the scope of his license in violation of Ariz. Rev. Stat. § 32-1154(A)(16). Respondent was further advised that knowingly contracting beyond the scope of his license could result in discipline against Respondent’s license including suspension or revocation.

On December 06, 2018, Investigator Grimm issued a second Warning Letter to Respondent to advise that his contract with Complainant did not meet statutory minimum elements in violation of Ariz. Rev. Stat. § 32-1158(A). Respondent was further advised that failure to comply with Ariz. Rev. Stat. § 32-1158(A) was a violation of Ariz. Rev. Stat. § 32-1154(A)(12), which could result in discipline against Respondent’s license including suspension or revocation.

On December 06, 2018, Investigator Grimm issued a Directive from the Registrar to Respondent because he substantiated Complainant’s allegation that the work Respondent had done on the RV garage project failed to meet minimum workmanship standards. Respondent was put on notice that he had until 5:00 p.m. on December 24, 2019, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(22), and 32-1154(E).

On December 26, 2018, Investigator Grimm escalated Complaint 2018-04845 to the Registrar’s legal department with citation recommendations.

On January 02, 2019, the Registrar issued a Citation and Complaint to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). Respondent was given until January 17, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On January 09, 2019, the Registrar received Respondent’s Answer.

On March 14, 2019, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on April 16, 2019. Per the Notice of Hearing the issue to be determined was whether the Registrar had cause to discipline Respondent’s license based on the following charges:

Charge 1: A violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3).

Charge 2: A violation of A.R.S. § 32-1154(A)(8) (“Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.”)

Charge 3: A violation of A.R.S. § 32-1154(A)(16) (“Knowingly contracting beyond the scope of the license or licenses of the licensee.”)

Charge 4: A violation of A.R.S. § 32-1154(A)(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.”).

On April 16, 2019, a hearing was held.

On May 06, 2019, OAH subsequently transmitted a Recommended Order to the Registrar’s Director, which held Respondent in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(8), 32-1154 (A)(16, and 32-1154 (A)(22). As a result, Respondent’s license was suspended for one day.

On May 14, 2019, the Recommended Order was accepted by the Director.

On June 23, 2019, the Final Administrative Decision and Order became effective.

On August 09, 2019, the Registrar received Complainant’s petition for payment to the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G), in the amount of $30,000.00.

On August 16, 2019, the Registrar issued a Recovery Fund Notification Letter to the parties.

On December 18, 2019, the Registrar issued a Notice of Claim for Administrative Award which held Complainant was awarded $30,000.00 from the Fund. The parties had until January 02, 2020, to appeal the amount or proprietary of payment.

On December 29, 2019, the Registrar received an electronic mail appeal letter from Respondent contesting Complainant’s award amount from the Fund.

On January 15, 2020, the Registrar again referred the matter to the Office of Administrative Hearings for an independent evidentiary hearing. Per the Notice of Hearing sent to the parties on January 27, 2020, the issue for hearing is to determine if Complainant’s award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. § 32-1154(F), as justified by the evidence.

An evidentiary hearing took place at OAH on February 28, 2020.

Hearing Evidence

At the hearing, the Registrar called Shaquira Adebule as a witness and submitted 18 exhibits. Neither Complainant nor Respondent presented any evidence. The Registrar’s agency file and Notice of Hearing were also admitted into the record.

Shaquira Adebule’s testimony

For the last two years Ms. Adebule has been employed by the Registrar as a Legal Assistant II.

Ms. Adebule reviewed Complainant’s recovery fund petition and calculated Complainants’ administrative payout.

There is no statute of limitations on recovery fund claims.

In order to be eligible for an administrative payout applicant(s) must meet several requirements. First, the underlying contractor’s license must have been in good standing at the time the contract between the parties was executed. Second, the applicant(s) must own the property at issue as their primary residence, and occupy it. Third, the legal classification of the property must be a 3 or a 6. Fourth, the contractor must have been disciplined by either the Registrar, a Final Order issued by an Administrative Law Judge, or pursuant to a duly entered Consent Order between the contractor and the Registrar.

Respondent’s license was in good standing at the time the contract with Complainant was executed.

Ms. Adebule determined the contract execution date between the parties to be November 30, 2017. Although the contract document is titled Proposal, Ms. Adebule relied on the bottom portion of the agreement, under the Acceptance of Proposal section, which reads:

The above prices, specifications, and conditions are satisfactory and are hereby accepted. You are authorized to do the work as specified. Payments will be made as outlined above.

The contract price was $80,635.00, of which Complainant paid Respondent half (e.g. $40,317.50).

Regarding the classification of Complainants’ property, the Registrar assessed the land as a Category 3 at the time of filing, because it was real property Complainant owned and used as his primary residence.

In order to calculate Complainant’s damages, Complainant was required to obtain bids from other contractors so that the lowest one could be chosen by the Registrar, and then permissible remediation costs could be tallied to calculate Complainant’s award. Per Ms. Adebule, she chose Complainant’s second bid (“PCH bid”) because it was the lowest of the itemized bids she received. Ms. Adebule calculated Complainants’ damages by going line by line between the PCH bid, the parties’ original contract, and consulting with Investigator Grimm’s about his notes and the PCH bid. Ultimately, after removing disallowed items and recalculating applicable sales tax(es) to the PHC bid’s subtotal, Ms. Adebule ’s was able to calculate Complainant’s final payout.

On June 20, 2019, Respondent’s bond company, RLI Insurance Company (“RLI”), issued a denial letter to Complainant because Complainant’s bond claim was for work outside the scope of Respondent’s license. RLI noted that the bond “[c]annot be held liable for activity not related to the CR61 Carpentry, Remodeling, & Repair’s license” as issued to Respondent.

Closing Arguments

In closing, the Registrar argued that Complainant sustained every statutorily mandated requirement for payout from the Fund, and, per administrative calculations, Complainant was eligible for the maximum allowable amount.

Respondent did not provide a closing argument.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. The matter was properly brought before OAH.

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

Respondent bears the burden of establishing by a preponderance of the evidence that the Fund’s payout amount was incorrect or improperly issued. The Registrar bears the burden to establish factors in mitigation by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he 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.”

Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet four eligibility criteria. See McMurren v. J.M.C. Builder, Inc., 204 Ariz. 345 (App. 2003). First, an applicant must meet the definition of a “person injured” set forth at Ariz. Rev. Stat. § 32-1131(3) which requires that the applicant be the owner of the residential real property at issue. Second, the property must have had a classification of three under Ariz. Rev. Stat. § 42-12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a resident that is damaged by a [residential or dual licensed] contractor who has paid for financial protection from the Recovery Fund. These criterion must be met at either the time the contract was executed or at the time the injury accrued. Fourth, as set forth in Ariz. Rev. Stat. § 32-1132(A), the applicant must have contracted with a residential contractor whose license was in good standing at the time of contract execution.

Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”

Statutes shall be liberally construed to affect their objects and to promote justice. In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.”

Statutes should be interpreted to provide a fair and sensible result. “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”

The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result. In the case at bar, however, a detailed factual analysis is not necessary because Respondent failed to present any evidence at hearing. As such, Respondent failed to sustain his burden of proof in this matter.

Here, the evidence is clear regarding to whom and how much Complainant would have to pay to remediate his contract with Respondent. The record reflects that the Registrar soundly established Complainant’s eligibility and how Complainant’s payout award amount was properly calculated at $30,000.00. Ms. Adebule credibly testified that she diligently made calculations to allow and disallow line items from the bid chosen by the Registrar, which is how she reached her final figure.

Therefore, the undersigned Administrative Law Judge concludes that Complainant was properly awarded a $30,000.00 payout from the Fund. Respondent’s appeal is denied.

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that Respondent’s appeal be denied.

IT IS FURTHER RECOMMENDED that the Registrar affirm the $30,000.00 payout from the Fund as outlined in the December 18, 2019, Notice of Claim for Administrative Award.

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 forty (40) days from the date of that certification.

Done this day, February 28, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors