ALJDEC decisions subject to certification as final

2018A-06004-ROC · Registrar of Contractors · 2019-03-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 27, 2019, at 9:00 a.m. APPEARANCES: The Arizona Registrar of Contractors (“the Registrar”) was represented by John Tellier, Esq., Assistant Attorney General; Arthur King Roofing Company Inc. (“Respondent”) was represented by Jason J. Boblick, Esq., Shorall McGoldrick Brinkmann. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure 1. According to the Registrar’s public website, July 11, 1994, the Registrar issued License No. ROC 103187 for Specialty Dual CR-42 Roofing to Respondent. Respondent’s officer/qualifying party was listed as Arthur (“Art”) Scott King. 2. On December 21, 2018, the Registrar issued an Order of Summary Suspension, Order Consolidating Cases, and Notice of Promptly Instituted Proceeding under A.R.S. § 41-1092.11(B) against Respondent, setting an evidentiary hearing at the Office of Administrative Hearings, an independent agency, on January 4, 2019. 3. The December 21, 2018 Order of Summary Suspension charged cause to suspend Respondent’s contractor’s license under A.R.S. §§ 32- 1154(A)(1) and 32-1154(A)(3), namely A.A.C. R4-9-108, based on three consumer complaints filed with the Registrar by State Industrial Products Corporation (Case No. 2018-05603), Stephen T. Bender (Case No. 2018-05820), and Hibode Condominium Association (Case No. 2018- 05849). 4. On December 2, 2018, the Registrar also issued a Supplemental Notice, setting forth the factual allegations in the three consumer complaints to support the summary suspension of Respondent’s contractor’s license. 5. On January 3, 2019, the hearing was continued to February 27, 2019, at Respondent’s request. 6. On January 28, 2019, the Registrar issued a Second Supplemental Notice, adding four additional counts of cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(1) based on four additional consumer complaints filed with the Registrar by Michael Warren (Case No. 2018-06056), Sean Stephens (Case No. 2019- 00032), Martin Ogden (Case No. 2019-00037), and Richard Kosinski (Case No. 2019-00058). 7. On January 29, 2019, the Registrar issued a Third Supplemental Notice, adding three additional counts of cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(1) based on three additional consumer complaints filed with the Registrar by Joseph Corona (Case No. 2019-00225), Mark Lacey (Case No. 2019-00233), and Carol McOmber (Case No. 2019-00264). 8. On February 12, 2019, the Registrar issued a Fourth Supplemental Notice, adding two additional counts of cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(1) based on two additional consumer complaints filed with the Registrar by James Smith (Case No. 2019-00358) and Brian Davis (Case No. 2019- 00404). 9. On February 19, 2019, Respondent filed a second motion to continue the hearing. The Registrar opposed the motion. On February 26, 2019, Respondent’s second motion to continue the hearing was denied. 10. On February 27, 2017, a hearing was held. The Registrar submitted 41 exhibits. Respondent stipulated to the factual allegations set forth in the Registrar’s Supplemental Notice, Second Supplemental Notice, Third Supplemental Notice, and Fourth Supplemental Notice, but argued that the admitted misconduct was not representative of Respondent’s way of doing business and professional ethics. Art King testified on Respondent’s behalf. Consumer Complaints State Industrial Products Corporation (Case No. 2018-05603) 11. On August 21, 2017, Respondent entered into a contract with State Industrial Products Corporation for Respondent to perform roofing repairs at 7103 N. Black Canyon Hwy., Phoenix AZ 85021, for a contract price of $46,000.00. State Industrial Products Corporation paid the full contract price to Respondent and it performed roofing work. 12. On November 26, 2018, State Industrial Products Corporation filed a complaint with the Registrar alleging that Respondent had performed poor work on the roof and that, as a result, the roof was leaking. 13. On December 19, 2018, the Registrar’s Investigator Chris Fultz performed a jobsite inspection at 7103 N. Black Canyon Hwy., Phoenix, AZ 85021 and observed evidence of poor workmanship and leaks. 14. Respondent failed to repair its poor workmanship. State Industrial Products Corporation hired another contractor to repair Respondent’s poor work. Stephen Bender (Case No. 2018-05820) 15. On October 4, 2018, Stephen Bender entered into a contract with Respondent for it to perform roofing repairs at 18618 N. Welk Dr., Sun City, AZ 85373, for $8,000.00. 16. Mr. Bender paid Respondent $2,666.66 to begin the project. Respondent did not perform any work or reimburse Mr. Bender for his down payment. 17. On December 7, 2018, Mr. Bender filed a complaint against Respondent with the Registrar for abandonment. 18. On December 19, 2018, the Registrar’s Investigator Randy Cason performed a jobsite inspection at 18618 N. Welk Dr., Sun City, AZ 85373, and verified that Respondent had not performed any work. / / / / Hibode Condominium Association (Case No. 2018-05849) 19. On October 18, 2018, Hibode Condominium Association entered into a contract with Respondent for it to perform roofing repairs at the units located at 17618 N. Boswell, Sun City, AZ 85373, for $4,648.76. 20. Hibode Condominium Association paid Respondent $2,324.38 to begin the project. Respondent did not perform any work or reimburse Hibode Condominium Association for its down payment. 21. On December 10, 2018, Hibode Condominium Association filed a complaint against Respondent with the Registrar for abandonment. 22. On December 19, 2018, Investigator Cason performed a jobsite inspection at 17618 N. Boswell., Sun City, AZ 85373, and verified that Respondent had not performed any work. Michael Warren (Case No. 2018-006056) 23. On June 9, 2018, Michael Warren entered into a contract with Respondent for it to perform roofing repairs at 4509 N. 35th St., Phoenix, AZ 85018, for $10,900.00. 24. Mr. Warren paid Respondent $3,200.00 to begin the project. Respondent did not perform any work or reimburse Mr. Warren for his down payment. 25. On December 21, 2018, Mr. Warren filed a complaint against Respondent with the Registrar for abandonment. 26. On December 19, 2018, the Registrar’s Investigator Randy Morris performed a jobsite inspection at 4509 N. 35th St., Phoenix, AZ 85018, and verified that Respondent had not performed any work. Sean Stephens (Case No. 2019-00032) 27. On October 26, 2018, Sean Stephens entered into a contract with Respondent for it to perform roofing repairs at 1979 South Ash St., Gilbert, AZ 85233, for $6,800.00. 28. Mr. Stephens paid Respondent $3,600.00 to begin the project. Respondent did not perform any work or reimburse Mr. Stephens for his down payment. 29. On December 28, 2018, Mr. Stephens filed a complaint against Respondent with the Registrar for abandonment. 30. On January 25, 2019, Investigator Morris performed a jobsite inspection at 1979 South Ash St., Gilbert, AZ 85233, and verified that Respondent had not performed any work. Martin Ogden (Case No. 2019-00037) 31. On October 29, 2018, Martin Ogden entered into a contract with Respondent for it to perform roofing repairs at 10890 N. 57th Ave., Glendale, AZ 85304, for $7,800.00. 32. Mr. Ogden paid Respondent $3,900.00 to begin the project. Respondent did not perform any work or reimburse Mr. Ogden for his down payment. 33. On January 2, 2019, Mr. Ogden filed a complaint against Respondent with the Registrar for abandonment. 34. On January 23, 2019, the Registrar’s Investigator Jack Grimm performed a jobsite inspection at 10890 N. 57th Ave., Glendale, AZ 85304, and verified that Respondent had not performed any work. Richard Kosinski (Case No. 2019-00058) 35. On August 29, 2018, Richard Kosinski entered into a contract with Respondent for it to perform roofing repairs at 10327 W. Ross Ave., Peoria, AZ 85382, for $2,000.00. 36. Mr. Kosinski paid Respondent $1,000.00 to begin the project. Respondent did not perform any work or reimburse Mr. Kosinski for his down payment. 37. On January 3, 2019, Mr. Kosinski filed a complaint against Respondent with the Registrar for abandonment. 38. On January 23, 2019, Investigator Grimm performed a jobsite inspection at 10327 W. Ross Ave., Peoria, AZ 85382, and verified that Respondent had not performed any work. Joseph Corona (Case No. 2019-00225) 39. On August 23, 2018, Joseph Corona entered into a contract with Respondent for it to perform roofing repairs at 14002 N. Driftwood Pt., Sun City, AZ 85351, for $3,231.20. 40. Mr. Corona paid Respondent $1,077.06 to begin the project. Respondent did not perform any work or reimburse Mr. Corona for his down payment. 41. On January 14, 2019, Mr. Corona filed a complaint against Respondent with the Registrar for abandonment. 42. On January 22, 2019, Investigator Fultz performed a jobsite inspection at 14002 N. Driftwood Pt., and verified that Respondent had not performed any work. Mark Lacey (Case No. 2019-00233) 43. On September 6, 2018, Mark Lacey entered into a contract with Respondent for it to perform roofing repairs at 4818 E. Quien Sabe Way, Cave Creek, AZ 85331, for $11,526.00. 44. Mr. Lacey paid Respondent $3,457.80 to begin the project. Respondent did not perform any work or reimburse Mr. Lacey for his down payment. 45. On January 14, 2019, Mr. Lacey filed a complaint against Respondent with the Registrar for abandonment. 46. On January 24, 2019, the Registrar’s Investigator David Fagerburg performed a jobsite inspection at 4818 E. Quien Sabe Way, Cave Creek, AZ 85331, and verified that Respondent had not performed any work. Carol McOmber (Case No. 2019-00264) 47. On September 6, 2018, Carol McOmber entered into a contract with Respondent for it to perform roofing repairs at 15601 N. 98th Ave., Sun City, AZ 85351, for $1,550.75. 48. Ms. McOmber paid Respondent $516.91 to begin the project. Respondent did not perform any work or reimburse Ms. McOmber for her down payment. 49. On January 15, 2019, Ms. McComber filed a complaint against Respondent with the Registrar for abandonment. 50. On January 23, 2019, Investigator Fultz performed a jobsite inspection at 15601 N. 98th Ave., Sun City, AZ 85351, and verified that Respondent had not performed any work. / / / / James Smith (Case No. 2019-00358) 51. On December 19, 2018, James Smith entered into a contract with Respondent for it to perform roofing repairs at 4814 W. Townley, Glendale, AZ 85302, for $6,800.00. 52. Mr. Smith paid Respondent $2,100.00 to begin the project. Respondent did not perform any work or reimburse Mr. Smith for his down payment. 53. On January 22, 2019, Mr. Smith filed a complaint against Respondent with the Registrar for abandonment. 54. On February 8, 2019, the Registrar’s Investigator Phil Jaegge performed a jobsite inspection at 4814 W. Townley, Glendale, AZ 85302, and verified that Respondent had not performed any work. Brian Davis (Case No. 2019-00404) 55. On August 20, 2018, Brian Davis entered into a contract with Respondent for it to perform roofing repairs at 6420 W. Post Rd., Chandler, AZ 85226, for $10,538.17. 56. Mr. Davis paid Respondent $3,512.71 to begin the project. Respondent did not perform any work or reimburse Mr. Davis for his down payment. 57. On January 24, 2019, Mr. Davis filed a complaint against Respondent with the Registrar for abandonment. 58. On February 8, 2019, the Registrar’s Investigator John Smith performed a jobsite inspection at 6420 W. Post Rd., Chandler, AZ 85226, and verified that Respondent had not performed any work. Respondent’s Defense 59. Respondent’s qualifying party/officer Art King did not contest the deposits that the eleven residential customers who were identified in the Registrar’s four supplemental notices had paid and did not contest that Respondent had not performed any work to earn the deposits. 60. Mr. King testified that he is primarily responsible for managing Respondent’s day-to-day operations. Respondent has been in business in Arizona since 1994. Altogether, Mr. King has been in the roofing business for 39 years, having operated a roofing business in Connecticut between 1980 and 1994. 61. Mr. King testified that Respondent performed approximately 200 commercial and residential roofing projects in 2017. In 2018, however, Respondent performed fewer than 100 projects. 62. Mr. King explained that during the second half of 2018, he encountered several difficult personal issues, as follows: 1. First, Mr. King testified that his younger brother, who is a heroin addict, experienced health problems that required Mr. King to travel to Connecticut eight times for extended visits because his brother had no one else in the state to look after him. 2. Second, Mr. King testified that he was in a long-term relationship with a woman with whom he had lived for a while, as well as her children and grandchildren, and was helping her raise her grandsons after her daughter committed suicide two years earlier. During the time that Mr. King was going back and forth to Connecticut to care for his brother, the woman ended the relationship. 3. Third, Mr. King testified that Respondent’s supervisor for the last five years, James Perry, had back surgery in the fall of 2018, that failed and after Mr. Perry’s condition deteriorated, he could no longer work. Mr. King testified that Mr. Perry was difficult to replace, especially since Mr. King’s own problems were preventing him from personally managing Respondent’s day-to- day operations. 63. Mr. King acknowledged that Respondent continued to accept deposits from new customers after he knew that his personal issues and Mr. Perry’s back problems meant that no one was effectively managing Respondent’s day-to-day business. 64. Mr. King testified that the deposits were not segregated from Respondent’s general operating account and the monies were mistakenly spent on Respondent’s day-to-day operating expenses and used to pay bills. He has hired someone to help with accounting to keep deposits separate from Respondent’s general funds until work has started on a project. 65. Mr. King testified that he expected to reimburse the individual complainants for their deposits. Mr. King testified that he had a loan set up in the amount of $85,000.00, in addition to another funding source, to repay the approximately $27,000.00 in homeowners’ deposits, reimburse State Industrial Products Corporation $12,500.00 for having to pay another contractor to repair its roof, and repay Elite material supply $45,000.00 for Respondent’s outstanding balance on its account. Mr. King hoped that the loan would be funded by the end of March 2019. 66. Mr. King testified that in the past, Respondent had sponsored youth sports teams and donated labor and materials to Habitat for Humanity. In the past, Respondent had an A+ rating at the Better Business Bureau. Until the second half of 2018, Respondent did not have any issues taking care of its customers and contributing to the community. Mr. King testified that he planned to resume and continue that tradition. Even if Respondent loses its license, Mr. King testified that he plans to make Respondent’s customers whole. 67. Mr. King testified that, in addition, Respondent generally provides extended warranties on its roofs. Thousands of replaced or repaired roofs are still under warranty. Although Respondent is rarely required to perform warranty work, Mr. King would like to perform warranty work if a former customer requests that such work be performed. 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 Registrar bears the burden to establish grounds for suspension or revocation of Respondent’s contractor’s license by a preponderance of the evidence.[3] Respondent bears the burden to establish affirmative defenses and factors in mitigation of the penalty by the same evidentiary standard.[4] 4. “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] 5. A.R.S. § 32-1154(A)(1) includes among the grounds to suspend or revoke 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.” The Registrar established that, within the space of a few months in the second half of 2018, Respondent entered contracts to perform roofing work, accepted deposits for such work, but failed to perform any work whatsoever for eleven homeowners, to wit: (1) Stephen Bender (Case No. 2018-05820); (2) Hibode Condominium Association (Case No. 2018-05849); (3) Michael Warren (Case No. 2018- 006056); (4) Sean Stephens (Case No. 2019-00032); (5) Martin Ogden (Case No. 2019-00037); (6) Richard Kosinski (Case No. 2019-00058); (7) Joseph Corona (Case No. 2019-00225); (8) Mark Lacey (Case No. 2019- 00233); (9) Carol McOmber (Case No. 2019-00264); (10) James Smith (Case No. 2019-00358); and (11) Brian Davis (Case No. 2019-00404). The Registrar thereby established grounds to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(1). 6. A.R.S. § 32-1154(A)(3) includes among the grounds to suspend or revoke a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” A.A.C. R4-9-108(A) states that “[a] contractor shall perform all work in a professional and workmanlike manner.” A.A.C. R4-9-108(B) states, in pertinent part, that “[a] contractor shall perform all work in accordance with any applicable building codes and professional industry standards.” The Registrar established that Respondent performed repairs on State Industrial Products Corporation’s roof, that Respondent’s repairs were poor and resulted in leaks, and that Respondent failed to repair its work. The Registrar thereby established grounds to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3) and A.A.C. R4-9-108. 7. Mr. King appeared to express genuine mortification and remorse at the hearing and testified that he plans to make all the individual injured property owners whole. Nonetheless, the Registrar established that Respondent continued to take at least eleven customers’ deposits on new contracts while failing to perform previous contracts. For at least the second half of 2018, it does not appear that Respondent could have been regulated. This is a factor in aggravation of the penalty. 8. Atlhough Mr. King appeared to be remorseful, given Respondent’s repeated and egregious misconduct, the public health, safety, and welfare require that Respondent should not have a contractor’s license until all injured consumers are made whole. RECOMMENDED ORDER In light of the foregoing facts and conclusions of law, IT IS ORDERED affirming the Registrar’s December 21, 2018 Order of Summary Suspension of Respondent Arthur King Roofing Company Inc.’s License No. ROC 103187, because the public health, safety or welfare imperatively required emergency action under A.R.S. § 41-1092.11(B). IT IS FURTHER RECOMMENDED that on the effective date of the final order in this matter, Respondent’s License No. ROC 103187shall 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, March 18, 2019.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 32-1154(A). [2] See A.R.S. § 32-1154(D). That statute 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 A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [4] See A.A.C. R2-19-119(B)(2). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Black’s Law Dictionary at 1220 (8th ed. 1999).

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