ALJDEC decisions subject to certification as final

2018A-05782-ROC · Registrar of Contractors · 2019-01-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 17, 2018 APPEARANCES: The Arizona Registrar of Contractors was represented by Assistant Attorney General Thomas Raine. Daniel Schmidt, Owner and Qualifying Party, Respondent N X S Construction LLC. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT Background and Procedure 1. On or about September 21, 2009, the Arizona Registrar of Contractors (Registrar) issued License No. 237833 to Respondent. On or about November 2, 2017, the Registrar issued License No. 316256 to Respondent. 2. Administrative notice is taken of Respondent’s prior license records as reflected on the Registrar’s public website on January 5, 2019. Such prior License record reflected that Respondent’s License No. 237833 had 1 prior complaint that led to discipline, 1 prior complaint that was withdrawn or resolved, and 31 open complaints. Such prior license record reflected that Respondent’s License No. 316256 had no prior complaints and 2 open complaints. 3. After the Registrar received five homeowner complaints against Respondent on December 5, 2018, alleging abandonment and failure to meet minimum workmanship standards, the Registrar investigated the homeowner complaints. The Registrar substantiated the homeowner complaints. Under the circumstances, the Registrar found that the public health, safety, or welfare imperatively required emergency action under Ariz. Rev. Stat. § 41-1092.11(B). 4. On or about December 6, 2018, the Registrar issued, in Case Number 2018-05782, an Order of Summary Suspension & Notice of Promptly Instituted Proceeding (Order) setting an expedited evidentiary hearing to convene at 9:00 a.m. on December 17, 2018, before the Office of Administrative Hearings (OAH), an independent state agency. 5. On or about December 11, 2018, the Registrar issued a Supplemental Notice that set forth additional facts that supported the summary suspension. 6. An evidentiary hearing was held on the matters set forth in the Order on December 17, 2018, including nine charges against Respondent including five counts of abandonment of a contract without legal excuse in violations of Ariz. Rev. Stat. § 32-1154(A)(1); and four counts of violating a rule adopted by the Registrar, namely workmanship as set forth in Ariz. Admin. Code R4-9-108, in violation of Ariz. Rev. Stat. § 32-1154(A)(3). Hearing Evidence Homeowner Complaints Case No. 2018-05765 7. On or about March 12, 2018, Respondent entered into a contract with Diane Salinas to perform various remodeling work at 9402 East Casitas Del Rio Drive, Scottsdale, Arizona 85255, for $93,929.42. Ms. Salinas paid Respondent a total of $69,379.67 on the project. 8. On December 5, 2018, the Registrar received a Complaint submitted by Ms. Salinas against Respondent’s license. 9. On December 6, 2018, Dennis Bierma, Investigator with the Registrar, conducted a jobsite inspection at 9402 East Casitas Del Rio Drive, Scottsdale, Arizona 85255. Respondent did not attend the jobsite inspection. Mr. Bierma noted that Respondent had completed approximately half of the project. Case No. 2018-05775 10. On or about August 14, 2018, Ronald Meyerson entered into a contract with Respondent to perform various remodeling work at 9149 East Nittany Drive, Scottsdale, Arizona 85255, for $45,207.00. Mr. Meyerson paid Respondent $40,000.00 to begin work on the project. 11. On December 5, 2018, the Registrar received a Complaint submitted by Mr. Meyerson against Respondent’s license. 12. On December 6, 2018, Mr. Bierma conducted a jobsite inspection at 9149 East Nittany Drive, Scottsdale, Arizona 85255. Respondent did not attend the jobsite inspection. Mr. Bierma noted that Respondent had completed approximately half the project. Case No. 2018-05776 13. On or about March 12, 2018, Respondent entered into a contract with Cory Vanderpoel to perform various remodeling work at 6149 East Surrey Avenue, Scottsdale, Arizona 85254, for $142,000.00. Mr. Vanderpoel paid Respondent a total of $96,127.00 on the project. 14. On December 5, 2018, the Registrar received a Complaint submitted by Mr. Vanderpoel against Respondent’s license. 15. On December 6, 2018, Mr. Bierma conducted a jobsite inspection at 6149 East Surrey Avenue, Scottsdale, Arizona 85254. Respondent did not attend the jobsite inspection. Mr. Bierma noted that Respondent had not started any work on the project. Case No. 2018-05777 16. On or about April 18, 2018, Respondent entered into a contract with Tod Eichacker to perform various remodeling work at 4907 East Everett Drive, Scottsdale, Arizona 85254, for $65,516.29. Mr. Eichacker paid Respondent a total of $40,000.00 on the project. 17. On December 5, 2018, the Registrar received a Complaint submitted by Mr. Eichacker against Respondent’s license. 18. On December 6, 2018, Mr. Bierma conducted a jobsite inspection at 4907 East Everett Drive, Scottsdale, Arizona 85254. Respondent did not attend the jobsite inspection. Mr. Bierma noted that the back door of the home was missing, the hole covered only with a sheet of plastic, and no heat in the main living areas of the home. Case No. 2018-05779 19. On or about July 24, 2018, Robert Miller entered into a contract with Respondent to perform various remodeling work at 6102 Blanche Drive, Scottsdale, Arizona 85254, for $16,879.00. Mr. Miller paid Respondent $13,940.00 on the project. 20. On December 5, 2018, the Registrar received a Complaint submitted by Mr. Miller against Respondent’s license. 21. On December 6, 2018, Mr. Bierma conducted a jobsite inspection at 6102 Blanche Drive, Scottsdale, Arizona 85254. Respondent did not attend the jobsite inspection. Mr. Bierma noted that some materials were on site, but the project was not completed. Mr. Bierma also noted that cabinets had been installed poorly. Other Evidence 22. At hearing, Bonny Allen, Registrar Staff Attorney, testified that as of December 14, 2018, the Registrar had received 26 complaints against Respondent’s license. Ms. Allen stated she was unaware of a licensee having that many complaints in that short of a time period. 23. At hearing, Keith Munch, former employee of Respondent, testified that he was hired approximately three months prior to the hearing to help rebuild the company. 24. Mr. Munch stated that during the last week he was with Respondent, he heard discussions regarding lines of credit and cash infusions, which caused him concern regarding Respondent’s viability. Mr. Munch testified that he began looking at customer files, including the liabilities and obligations and found approximately 50 projects that were in progress. 25. Mr. Munch testified that on December 4, 2018, Respondent’s employees received a text message notifying them that Respondent would be closing its doors permanently. Mr. Munch stated that he started receiving phone calls from homeowners because he was “the only one at [Respondent] who answered [his] phone.” 26. At hearing, Daniel Schmidt, Respondent’s Owner and Qualifying Party, testified as to Respondent’s history and personnel and financial difficulties. Mr. Schmidt did not deny that the project described supra were abandoned, but blamed Mr. Munch for the homeowner complaints and Respondent’s resulting inability to obtain outside investors. Mr. Schmidt indicated that the employees were not told the business was closing permanently, but that they should not come in until further notice to allow him to determine how to best go about solving Respondent’s financial issues. Mr. Schmidt admitted he was not familiar with the financial aspects of the business as much as his prior partners, but testified that Respondent was attempting to sell new contracts in an effort to catch up on its existing obligations. CONCLUSIONS OF LAW 1. These matters lie within the Registrar’s jurisdiction.[1] 2. The summarily suspended status of Respondent’s licenses does not deprive the Registrar of its ability to prosecute these complaints or prevent the Registrar from determining the merits of these complaints.[2] 3. The Notice of Hearing that the Registrar mailed to Respondent at its address of record was reasonable. Nothing suggested that the correspondence sent to Respondent were returned as undeliverable. Thus, Respondent is deemed to have received notice of the continued hearing.[3] 4. The Registrar bears the burden of proof to establish grounds for suspension or revocation of Respondent’s contractor’s license by a preponderance of the evidence.[4] 5. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] 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.”[6] 6. The record reflects that Respondent abandoned, without legal excuse, the projects of Ms. Salinas, Mr. Meyerson, Mr. Vanderpoel, Mr. Eichacker, and Mr. Miller. Therefore, the Registrar established five violations of Ariz. Rev. Stat. § 32-1154(A)(1).[7] 7. The record reflects that Respondent did not meet minimum workmanship standards and/or did not diligently perform and complete the tasks undertaken as required by Ariz. Admin. Code R4-9-108 on the projects of Ms. Salinas, Mr. Meyerson, Mr. Eichacker, and Mr. Miller. Therefore, the Registrar established four violations of Ariz. Rev. Stat. § 32-1154(A)(3).[8] 8. The fact that Mr. Schmidt knew Respondent was in dire financial conditions and was still trying to engage new business in an effort to pay for prior obligations and Respondent’s decision to suddenly close its doors show that, at this time, Respondent cannot be regulated. 9. Under the circumstances, the Registrar has established more than ample cause to summarily suspend Respondent’s license. 10. The tribunal holds that revocation of Respondent’s licenses is appropriate and in the best interest of the public. RECOMMENDED ORDER In light of the foregoing facts and conclusions of law, IT IS RECOMMENDED that the Registrar’s December 6, 2018 Order of Summary Suspension of Respondent’s License Nos. 237833 and 316256 be affirmed. IT IS FURTHER RECOMMENDED that on the effective date of the final order in this matter, Respondent’s License Nos. 237833 and 316256 shall be revoked. 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, January 7, 2019.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See Ariz. Rev. Stat. § 32-1154(A). [2] See Ariz. Rev. Stat. § 32-1154(D), which 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 licensee, or to render a decision suspending or revoking such a license . . . .” [3] See Ariz. Rev. Stat. §§ 41-1092.04 and 41-1092.05(D). [4] See Ariz. Rev. Stat. § 41-1092.07(G)(2); Ariz. Admin. Code R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Black’s Law Dictionary 1220 (8th ed. 1999). [7] Ariz. Rev. Stat. § 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.” [8] Ariz. Admin. Code 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.” Ariz. Rev. Stat. § 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.”

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