FINACT2018A-05356-ROC.pdf

2018A-05356-ROC · Registrar of Contractors · 2019-07-19

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Dawson Alverson, Case No. 2018-05356 COMPLAINANT, Docket No. 2018A-05356-CHC-ROC v. Beach Ventures Inc., FINAL ADMINISTRATIVE DECISION License No. ROC 186811, AND ORDER RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an

administrative law judge’s written decision. If the Registrar modifies or rejects that decision, then the

Registrar must provide written justification setting forth the reasons for the modification or rejection.

MODIFICATION

In this case, a hearing was held, and the administrative law judge issued a written decision. See

Administrative Law Judge Decision, attached. The Registrar reviewed that decision and hereby modifies it as

set forth below.

WRITTEN JUSTIFICATION

The Registrar’s Citation against Respondent charged possible violations of A.R.S. §§ 32-1154(A)(3)

and (22). See ALJ Dec. at 4:18-19. The administrative law judge in this case found that the preponderance of

the evidence showed that Respondent violated A.R.S. § 32-1154(A)(3), in that its work did not meet the

requirements of A.A.C. R4-9-108(A). ALJ Dec. at 8:11-13. This finding was supported by Respondent’s

admission of deficiencies in its work. See ALJ Dec. at 8:10-11. However, the administrative law judge

recommended dismissal of the matter because Complainant’s testimony indicated “that while he was

negotiating the contract with Respondent he was planning to defraud City of Chandler,” which scheme the

administrative law judge found to be “an abuse of process falling within ROC’s Substantive Policy Statement

2017.01.” ALJ Dec. at 8:23-28.

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 The Registrar agrees with the administrative law judge that Respondent did violate A.R.S. § 32-

1154(A)(3). However, the Registrar finds that dismissal of this matter is not appropriate.

The administrative law judge found that Complainant “effectively admitted” that Complainant

believed he and Respondent had a plan to submit a false accounting to the City of Chandler that would allow

Complainant to make a profit on the project. See ALJ Dec. 2:16-20. The administrative law judge further

found that Respondent denied any knowledge of such a plan. See ALJ Dec. 2: 18-19. Moreover, Complainant

testified that he did not submit a false accounting to the City of Chandler. See ALJ Dec. 2:19-20. In short, the

Administrative Law Judge Decision contains factual findings that: (1) Complainant and Respondent may have

intended to submit a false accounting to the City of Chandler; (2) Respondent denied the existence of any

such plan; and (3) the Complainant never followed through on any such plan.

While certain actions and conduct may support a dismissal of a Registrar complaint for abuse of the

administrative process, under these facts, dismissal is inappropriate. The administrative law judge did not find

that Complainant submitted any false or fraudulent documents. Nor did the administrative law judge find that

Complainant committed any act which could constitute an abuse of the administrative process. Rather, both

Complainant and Respondent testified that no such scheme existed or occurred. See ALJ Dec. 2:16-20.

Whatever Complainant’s and Respondent’s intentions may have been, their conduct cannot reasonably be

considered an abuse of the administrative process under the ROC’s Substantive Policy Statement 2017.01.

Complainant’s pre-complaint actions cannot be considered an abuse of the administrative process as they

occurred prior to the filing of any complaint, before the administrative process had even begun.

The alleged improper conduct at issue in this case does not excuse Respondent from performing in

accordance with the Registrar’s statutes. Therefore, given the administrative law judge’s findings that

Respondent performed poor work in violation of the Registrar’s statutes and rules, discipline is appropriate.

CONCLUSION AND ORDER

The Registrar hereby modifies the Administrative Law Judge Decision by:

• Deleting page 8, paragraph 16.

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 • Replacing the Recommended Order on page 9, lines 1-2, with: “IT IS ORDERED that on the effective

date of the Final Order in this matter, Respondent’s License No. 186811 shall be suspended for two (2) days.”

The Registrar hereby accepts the remainder of the Administrative Law Judge Decision, which

becomes effective on August 24, 2019.

FINAL NOTE

On page 2, line 8 replace “December 27, 2016” with “October 27, 2016”. On page 4, line 18 replace

“January 12, 2019” with “January 17, 2019”. On page 4, line 19 replace “ARIZ. REV. STAT. sections 32-

1154(A)(3) and (A)(22)” with “ARIZ. REV. STAT. sections 32-1154(A)(3), (A)(12), and (A)(22)”.

Dated July 15, 2019. Registrar of Contractors /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund Copy mailed via USPS First Class mail July 15, 2019 to: Respondent Beach Ventures Inc 2978 E Erie Ct Gilbert, AZ 85295 Complainant Dawson Alverson 22237 S Ellsworth Rd Queen Creek, AZ 85142

AND copy electronically mailed this same date to:

Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar

Office of Administrative Hearings Thomas Shedden, Administrative Law Judge Case No. 2018-05356 / SA

of 3 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 6.18.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Dawson Alverson, No. 2018A-05356-ROC COMPLAINANT v. ADMINISTRATIVE LAW JUDGE Beach Ventures Inc, DECISION License No. ROC 186811, RESPONDENT

HEARING: May 29, 2019 APPEARANCES: Dawson Alverson for Complainant; Zane Beach for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT 1. On March 18, 2019, the Registrar of Contractors (“ROC”) issued a NOTICE OF HEARING setting the above-captioned matter for hearing on May 8, 2019 at the Office of Administrative Hearing. The matter was continued and the hearing was conducted on May 29, 2019. 2. The NOTICE OF HEARING shows that the hearing was set to consider the charges made in the CITATION and complaint, but does not specify when these were issued or filed. 3. Respondent Beach Ventures Inc. holds license No. 186811 issued by ROC. Zane Scott Beach is Respondent’s qualifying party and an officer in the corporation. 4. Complaint Dawson Alverson and his wife own QC Accounting LLC. 5. Mr. Alverson and Mr. Beach both appeared and testified; ROC investigator Randy Cason also testified. 6. According to the parties, Mr. Alverson and Respondent entered into several unwritten contracts including one in which Respondent agreed to install a metal roof at a building owned by the Alversons. Respondent’s work on that building is at issue in this matter.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 6.18.2019 ROC LEGAL

7. There is however some ambiguity as to the actual parties to any contract because payments to Respondent were made through checks drawn on QC Accounting LLC’s accounts.

8. The parties agreed that Mr. Alverson was required to pay Respondent for

the work and that Mr. Alverson was going to receive reimbursement from the City of

Chandler, but the parties do not agree as to the cost of the project.

9. Complainant paid to Respondent $14,500 through check number 1050

dated December 27, 2016 that was drawn on QC Accounting LLC’s account. The

record shows that QC Accounting LLC paid to Respondent an additional $3000 with a

check dated March 31, 2017.

10. Mr. Beach asserts that the first check was merely a down payment of 50%

and that Mr. Alverson still owes Respondent about $11,500. Consistent with Mr.

Beach’s position, QC Accounting LLC’s check number 1050 includes a notation

showing “first ½.”

11. In response to Mr. Beach’s assertion that the $14,500 was a down

payment of 50%, Mr. Alverson asked Mr. Beach whether he recalled that the two men

had at one point planned to submit to Chandler a false accounting that would allow Mr. Alverson to make a profit on the project. Although Mr. Beach denied any knowledge of such a plan, Mr. Alverson effectively admitted that he thought the two men did have such a plan, but he added that he did not follow through with it. 12. In support of his position that the parties agreed upon price was not $29,000, Mr. Alverson referenced text messages in which Respondent quoted a cost of $18,000 and a down payment of $7000. Mr. Beach acknowledged those messages, but took the position that Mr. Alverson chose a different material that caused the cost to rise. 13. The administrative record includes copies of a complaint filed against Mr. Beach by Mr. Alverson that was marked received by ROC on November 8, 2018. 14. Mr. Cason conducted a jobsite inspection on December 6, 2018. 15. On December 21, 2018, ROC issued to Respondent a DIRECTIVE that required Respondent to correct by appropriate means: RECEIVED 6.18.2019 ROC LEGAL

Complaint Item 1: Did an unacceptably shoddy job, and then walked away. My roof looks bad and leaks.

Complaint Item 1A: Contractor left debris on roof and property

Complaint Item 1B: Metal roofing system not installed correctly The following locations do not meet workmanship standards. They are as follows:

Blue plastic is left on the metal roofing material in a few areas on roof. East Ridge cap (rear) is not secured properly. East Ridge cap (rear) is missing. Ridge cap was not properly secured. Main ridge roof cap – not installed properly at north end of ridge. Ridge line not uniformed. Cut ends of metal roofing material are not sealed throughout the installation. East side ridge cap is not properly sealed at valley transition. Plastic is left on trim piece at eave on south side and metal roof is not secured properly. South side ridge rake is not installed properly. West ridge rake metal trim not installed properly. West side transition at eave and rake not completed properly. West side over porch – ends of metal roofing material not sealed. North side at ridge-rake trim piece not installed properly and rake overlap is complete incorrect at N/E by electrical post connection to building. North side metal trim piece not installed properly at change of roof lines at covered porch roof line. N/W corner of front porch not completed properly or sealed. West side ridge cap is not properly sealed at valley transition. Electrical pipe going through roof is not properly sealed. RECEIVED 6.18.2019 ROC LEGAL

East side ridge rake trim piece is not properly installed. South side rake line to eave transition not installed properly. Plastic cover is left on eave trim piece.

Complaint Item 1C: Leak in roof cause damage to ceiling in kitchen area of the office. NOTE: HVAC unit is not properly secured to the roof.

16. The DIRECTIVE shows that ROC had determined that any other

workmanship violations alleged in Mr. Alverson’s complaint were unsubstantiated. 17. The DIRECTIVE required Respondent to provide ROC with written proof that he had made the required corrections by no later than 5:00 p.m. January 11, 2019. 18. Respondent did not complete the work ROC ordered it to complete by the deadline imposed by ROC. 19. Through an email dated January 11, 2018, Respondent requested that ROC set the matter for a hearing. In the email, Mr. Beach wrote that the City of Chandler had approved the project at a price of $28,500, and that Mr. Alverson still owed Respondent $11,500. 20. The administrative record includes a CITATION issued to Respondent by ROC on January 12, 2019. Through that CITATION ROC alleges that Respondent may have violated ARIZ. REV. STAT. sections 32-1154(A)(3) and (A)(22). 21. Through a FINAL ADMINISTRATIVE DECISION AND ORDER dated February 6, 2019, ROC found that Respondent had failed to answer the CITATION and it suspended Respondent’s license for five days and imposed a $250 civil penalty. 22. Through an ORDER dated March 11, 2019, ROC determined that although Respondent was in default for failing to answer the CITATION, ROC would excuse that default because Respondent had requested a hearing on January 11th. ROC informed the parties that the matter would be set for hearing and it rescind the five day suspension of Respondent’s license. ROC did not rescind the $250 civil penalty it had assessed against Respondent.

RECEIVED 6.18.2019 ROC LEGAL

23. Mr. Beach asks that the Administrative Law Judge consider that he has already been assessed this $250 civil penalty if the ALJ finds that Respondent has violated ARIZ. REV. STAT. section 32-1154(A)(22).

24. Mr. Cason provided credible testimony showing that the issues that were

identified in the DIRECTIVE still required correction and reflect deficient work by

Respondent in violation of the workmanship standards.

25. Mr. Cason’s opinion was that a crew of two or three could complete the

required work in two or three days. Consequently, he was also of the opinion that ROC

through its DIRECTIVE had given Respondent enough time to complete the required

repairs.

26. Mr. Beach acknowledged that some work was necessary to complete the

project, but he did not agree that this work was as extensive as Mr. Cason testified to.

27. Mr. Beach asserted that Respondent could not make the required repairs

because the building is not safe in that a patio roof attached to the building is

collapsing. The patio roof is not part of Respondent’s scope of work.

28. Mr. Cason did not agree that the building was unsafe because in his

opinion Respondent would not need to go on the patio roof to complete its work. Mr. Cason acknowledged however that if he was doing Respondent’s work, he would shore-up the patio roof. 29. Mr. Beach asserts that Respondent has not completed the work that he acknowledges should be completed because Mr. Alverson had plans to demo the patio roof, which according to Mr. Beach will result in damage to the work that Respondent has left to do. As such, Mr. Beach’s opinion is that it would make no sense for Respondent to complete this work until the patio roof is demoed. 30. Mr. Beach argues that Mr. Alverson’s complaint was filed more than two years after Respondent last worked on the project, Mr. Cason’s opinion was that there was sufficient information to show that Respondent had worked on the project in March 2017, which was less than two years before Mr. Alverson filed his complaint. 31. Mr. Beach testified to the effect that the roof in its current condition will not leak because the underlayment is sound. RECEIVED 6.18.2019 ROC LEGAL

32. Mr. Cason did not conduct a water test during his inspection of the roof and although it was raining, he saw no leaking during the inspection. Nevertheless, Mr. Cason’s opinion is that the roof does leak because Respondent made repairs to the

building’s interior that have once again become water damaged.

33. Mr. Alverson asserts that the roof needs to be replaced.

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).

RECEIVED 6.18.2019 ROC LEGAL

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. The Administrative Law Judge may consider ROC’s administrative record.

See ARIZ. ADMIN. CODE § R4-9-118.

9. 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: ***** 3. Violation of any rule adopted by the registrar. ***** 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.

10. ARIZ. ADMIN. CODE section R4-9-108(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.” 11. ARIZ. REV. STAT. section 32-1154(E) provides that ROC may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of ARIZ. REV. STAT. section 32-1154(A)(22). 12. ROC’s Substantive Policy Statement 2017.01 contains the following information:1 Abuse of the Administrative Process “The Registrar of Contractors relies on complaints to carry out some of the mandates of the office. When anyone attempts to use the complaint process inappropriately, it

1 The Substantive Policy Statement is advisory only. RECEIVED 6.18.2019 ROC LEGAL

undermines the Registrar’s ability to perform the duties that the citizens of Arizona depend on to ensure that the buildings in which they live, work, and play are safe. When that process is compromised, it is appropriate to dismiss the complaint in its entirety.” Source: Reeks v. Superscape, LLC, No. 2016A-594 (ALJ Decision at 1:19–24).

13. Mr. Alverson’s complaint was filed within the two-year statute of limitations found in ARIZ. REV. STAT. section 32-1155. 14. Mr. Cason provided credible testimony showing that Respondent’s work was deficient. Mr. Beach acknowledged that there were deficiencies in Respondent’s work, albeit not as many as Mr. Cason identified. The preponderance of the evidence shows that Respondent has violated ARIZ. REV. STAT. section 32-1154(A)(3) in that its work did not meet the requirements of ARIZ. ADMIN. CODE section R4-9-108(A). 15. Respondent acknowledged that it did not complete the repairs ROC ordered it to complete, but argues to the effect that this failure was justified based on concerns about worker safety and because Mr. Alverson has not paid the full contract price. The preponderance of the evidence shows however that the required work can be completed safely even though the patio roof is a potential hazard. As to the dispute about the contract price, the evidence of record, particularly QC Accounting LLC’s check number 1050, supports Respondent’s position that Mr. Alverson has not paid to Respondent the full amount the parties agreed upon, although it is possible that the notation on that check was part of an aborted scheme to defraud the City of Chandler. 16. Mr. Alverson’s admission to the effect that while he was negotiating the contract with Respondent he was planning to defraud City of Chandler is an abuse of process falling within ROC’s Substantive Policy Statement 2017.01. Considering this abuse, and that ROC has already assessed against Respondent a $250 civil penalty for its violation of ARIZ. REV. STAT. section 32-1154(22), it is appropriate to dismiss this matter. RECOMMENDED ORDER RECEIVED 6.18.2019 ROC LEGAL

IT IS ORDERED that on the effective date of the final ORDER in this matter case

number 2018-05356 is dismissed.

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, June 18, 2019.

/s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors