ALJDEC decisions subject to certification as final

2018A-06010-ROC · Registrar of Contractors · 2019-04-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 12, 2019 at 1:00 PM APPEARANCES: Kim Keaveny (“Complainant”) appeared on her own behalf with Steve Philpott as a witness. Bob Vela appeared on behalf of RGV Renovations LLC (“Respondent”). Mark Cockerham, JoAnn Kennedy, and Bob Cason observed. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following Recommended Order to the Director of the Arizona Registrar of Contractors (“ROC”). FINDINGS OF FACT Background and Procedure 1. On April 29, 2011, the ROC issued License No. 272298 for general dual KB-2 residential and small commercial contracting to Respondent.[1] On May 21, 2014, the ROC issued License No. 289042 for specialty dual CR- floor covering contracting to Respondent.[2] Respondent’s address of record for the licenses is 40 W. Sheffield Ave. Gilbert, AZ 85233- 8302.[3] Gilbert Joseph Elliot is listed on the licenses as a Qualifying Party on the license, and Robert Vela is listed on the licenses as Member/Qualifying Party.[4] 2. Administrative Notice is taken of Respondent’s prior License record, for License No. 272298, as reflected on the ROC’s public website on April 12, 2019. Such prior License record reflects that Respondent’s license is active. The license has not been previously disciplined. There are three open complaints against the license, one of which is presumed to be related to this matter. Respondent has an active $14,000.00 surety bond, RSB145611, issued by RLI Insurance Company effective November 17, 2014. No payouts have been made from this bond. 3. Administrative Notice is also taken of Respondent’s prior License record, for License No. 289042, as reflected on the ROC’s public website on April 12, 2019. Such prior License record reflects that Respondent’s license is active. The license has not been previously disciplined. There are no open complaints against the license. Respondent has an active $6,750.00 surety bond, [number redacted], issued by American Contractors Indemnity Company effective October 24, 2016. No payouts have been made from this bond. 4. On October 22, 2018, Complainant entered into a residential contract agreement with Respondent whereby Respondent agreed to remodel a deck, repair a roof, and widen a driveway located at 17420 Sequoia Dr. Munds Park, AZ 86017 for $73,532.00.[5] Complainant issued a check to Respondent for $46,000.00 on October 29, 2018, and another check for $20,000.00 on November 17, 2018.[6] The project commenced on November 29, 2018. Work on the project ceased December 04, 2018. 5. On December 18, 2018, the ROC received a complaint from Complainant alleging abandonment of the project.[7] Complainant included a copy of its contractual agreement with Respondent, payment invoices, and an undated Chapter 7 declaration from Respondent.[8] The complaint was 6. On December 21, 2018, the ROC issued a warning letter to Respondent regarding a violation of Ariz. Rev. Stat. § 32-1124(B) because Respondent’s contract with Complainant did not include Respondent’s license number preceded by the acronym “ROC.”[9] 7. On December 21, 2018, the ROC issued a second warning letter to Respondent regarding a violation of Ariz. Rev. Stat. § 32-1158(A) because Respondent failed to include the nine statutory elements of a contract greater than $1,000.00 in its written agreement with Complainant.[10] 8. On December 21, 2018, the ROC issued a third warning letter to Respondent regarding a violation of Ariz. Rev. Stat. § 32-1154(A)(14) because Respondent was operating under a name other than the name listed on its license.[11] 9. On December 21, 2018, the ROC issued a Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by an ROC investigator on December 28, 2018, at 10:00 a.m.[12] 10. On December 28, 2018, ROC investigator Steve Philpott (“Investigator Philpott”) conducted a review of the contract executed between the parties. Investigator Philpott also inspected the work that had been done on the project to date and took eight photographs of the property.[13] When he was finished, Investigator Philpott drafted Compliance Jobsite Inspection Notes.[14] 11. On January 04, 2019, the ROC issued a Directive from the Registrar to Respondent regarding a violation of Ariz. Rev. Stat. § 32-1154(A)(1) because he substantiated Complainant’s allegation that Respondent abandoned the contracted project.[15] Respondent was put on notice that it had until 5:00 p.m. on January 22, 2019, to notify the ROC of its compliance with the corrective order or face discipline pursuant to Ariz. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1154(E).[16] 12. On January 23, 2019, the ROC issued a Citation and Complaint to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32- 1154(A)(1), 32-1154(A)(3), 32-1154(A)(12)-1124(B), 32-1154(A)(12)-32- 1158, 32-1154(A)(14), 32-1154(A)(22), and Ariz. Admin. Code R4-9- 108.[17] Respondent was given until February 07, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32- 1154(A)(22) and 32-1155.[18] 13. The ROC received Respondent’s Answer on February 08, 2019.[19] 14. On January 16, 2019, the ROC referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on March 15, 2019. Per the Notice of Hearing the issue to be determined is whether the ROC has cause to discipline Respondent’s license based on the following charges: Charge 1: A violation of A.R.S. § 32-1154(A)(1) (“Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”) Charge 2: 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 3: A violation of A.R.S. § 32-1154(A)(12) – A.R.S. § 32- 1124(B). (“Failure in any material respect to comply with this chapter; namely 32-1124(B).”) Charge 4: A violation of A.R.S. § 32-1154(A)(12)-32-1158 (“Failure in any material respect to comply with this chapter; Namely A.R.S. § 32-1158.”) Charge 5: A violation of A.R.S. § 32-1154(A)(14) (“Acting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth on the license.”) Charge 6: 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.”).[20] Hearing Evidence 15. Complainant testified on her own behalf, called Investigator Philpott as a witness, and submitted three exhibits.[21] No testimony or evidence was offered on behalf of Respondent. The ROC’s electronic hearing file and Notice of Hearing were also admitted into the record as their own exhibits. Investigator Philpott’s testimony 16. Investigator Philpott testified that he was assigned to Complaint No. 2018-06010 as an expedited case on December 21, 2018. 17. Investigator Philpott testified that he issued three warning letters to Respondent on December 21, 2018, as a result of his review of the contract documents between the parties. 18. Investigator Philpott testified that he conducted a jobsite inspection on December 28, 2018, and issued a Directive to Respondent as a result because he substantiated Complainant’s allegation that the project had been abandoned. Per Investigator Philpott, no materials were on site and very little work had taken place on site. 19. Investigator Philpott confirmed that Respondent did not comply with the Directive by the January 22, 2019, compliance deadline. Investigator Philpott also testified that he did not have any contact with Respondent during the remediation period afforded by the ROC. 20. Per Investigator Philpott, bankruptcy would not absolve or excuse a contractor for abandoning a project under the applicable statutes and codes. Complainant’s testimony 21. Complainant testified that the H.W. Hayes Trust (“Trust”) was established on June 01, 2009, by Holland Webb Hayes (“Trustor”). After Trustor passed away on September 27, 2018, Complainant was assigned as the sole Trustee on October 01, 2018.[22] The Trust owns the residential property located at 17420 Sequoia Dr. Munds Park, AZ 86017. Complainant’s primary responsibility as Trustee is to maintain the Trust property. 22. Per Complainant, as the Trust property was being prepared for sale she realized that it was in disrepair so she contacted Respondent’s representative Bob Casen. 23. Complainant was informed that there was more damage to the property than she originally expected after Respondent performed an initial inspection. Because the residence was still being occupied by the Trustor’s widow, Complainant wanted to have the repairs performed immediately. 24. Complainant entered into a contractual agreement with Respondent to perform repairs and remodeling on the property. Shortly after remitting her second progress payment she received a letter from Respondent stating that the company was going out of business due to bankruptcy.[23] Complainant was not offered refund. 25. Complainant testified that Respondent did perform some work in an effort to complete the project, but no materials were delivered before the winter season set in and the project was essentially abandoned once it began to snow.[24] 26. Complainant moved the occupant out of the residence and filed a complaint with the ROC. CONCLUSIONS OF LAW 1. The ROC has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq. 2. The ROC may resolve contractual disputes if such resolution in ancillary to its regulatory mission and may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation was not remedied by corrective action.[25] 3. The purpose of the ROC’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.[26] 4. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[27] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[28] 5. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[29] 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.”[30] 6. 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.” 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. 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.” 9. Ariz. Rev. Stat. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” 10. Ariz. Rev. Stat. § 32-1154(A)(14) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]cting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth on the license.” 11. Ariz. Rev. Stat. § 32-1154(A)(22) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[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. 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.” 12. Ariz. Rev. Stat. § 32-1124(B) holds, in pertinent part, that the license number appearing on any licenses held by the licensee shall be preceded by the acronym "ROC" and shall be posted in a conspicuous place on premises where any work is being performed, shall be placed on all written bids submitted by the licensee and shall be placed on all broadcast, published, internet or billboard advertising, letterheads and other documents used by the licensee to correspond with the licensee's customers or potential customers in the conduct of business regulated by this chapter. A violation of this subsection relating to posting and placement of license numbers shall be, at the discretion of the registrar, grounds for disciplinary action pursuant to section 32-1154, subsection A, paragraph 12, but not grounds for preventing the award of a contract, voiding an awarded contract, or any other claim or defense against the licensee. 13. Ariz. Rev. Stat. § 32-1158(A) holds that any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: (1) The name of the contractor and the contractor's business address and license number; (2) The name and mailing address of the owner and the jobsite address or legal description; (3) The date the parties entered into the contract; (4) The estimated date of completion of all work to be performed under the contract; (5) A description of the work to be performed under the contract. (6) The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes; (7) The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner; (8) The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract; and (9) That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365. 14. Here, the material facts are not in dispute. 15. It is undisputed that Respondent failed to include all nine required elements of a contract on its agreement with Complainant, and that it omitted the requisite “ROC” before its license number of the document as well. It is also undisputed that Respondent was operating under a name that is not the name registered with the ROC or listed on its license. 16. Moreover, it is further undisputed that Complainant contracted with Respondent for a residential remodel and repair project whereby Complainant made the agreed upon progress payments for Respondent’s services and materials, and Respondent failed to complete the project. Additionally, it is undisputed that Respondent did not issue a refund to Complaint either in whole or in part. It is further undisputed that the ROC issued its Directive to Respondent on January 04, 2019, and required Respondent’s full compliance by January 22, 2019. It is also undisputed that Respondent failed to comply. 17. Therefore, the only point at issue is whether Respondent raised a sufficient justification or excuse for failing to timely and completely finish Complainant’s project per contract. This is an affirmative defense that Respondent bears the burden to establish. Because Respondent failed to provide testimony or evidence to support an affirmative defense, this burden has not been sustained. The record shows that Respondent failed to adhere to an ROC corrective work order, and had no affirmative defense(s) for doing so. 18. Because Complainant established by a preponderance of the evidence that Respondent failed to perform the scope of work included in his signed and paid for contract with Respondent, Complainant has also established cause for the ROC to suspend or revoke Respondent’s contractor’s license under Ariz. Rev. Stat. § 32-1154(A)(22). 19. Complainant may petition the ROC’s Recovery Fund for financial recompense regarding this matter, as the Tribunal has no jurisdiction to award a refund of the underlying amount contracted between the parties. RECOMMENDED ORDER Based on the foregoing findings of fact and conclusions of law, IT IS RECOMMENDED that that on the effective date of the Final Order in this matter, Respondent RGV Renovations LLC, License No. 272298 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 40 days from the date of that certification. Done this day, April 17, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACHXgEAP. [2] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACMMXEA5. [3] Id. [4] Id. Miguel Angel Aguilera was listed on the license as a Qualifying Party until March 22, 2018, whereby he was disassociated. [5] See Hearing File, pages 26-27 and 60-65. [6] See Hearing File, pages 30-31. [7] See Hearing File, pages 26-27. [8] See Hearing File, pages 28-32. [9] See Hearing File, page 33. [10] See Hearing File, pages 34-35. [11] See Hearing File, page 36. [12] See Hearing File, pages 70-72. [13] See Hearing File, pages 79-86; see also Complainant Exhibit C. [14] See Hearing File, pages 73-74. [15] See Hearing File, pages 37-39. [16] Id. [17] See Hearing File, pages 14-20. [18] Id. [19] See Hearing File, pages 40-42. [20] See Notice of Hearing. [21] Pages 8-11 of Complainant Exhibit C were replaced with color photographs provided by Complainant at the hearing. [22] See Complainant Exhibit B. [23] See Hearing File, page 29. [24] See Complainant Exhibit A. [25] See Ariz. Rev. Stat. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990). [26] See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). [27] 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). [28] See Ariz. Admin. Code R2-19-119(B)(2). [29] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [30] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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