ALJDEC decisions subject to certification as final

2018A-2015-CHC-ROC · Registrar of Contractors · 2018-11-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 16, 2018 at 1:00 PM.[1] APPEARANCES: David Williams, Esq. appeared on behalf of Everett Britton (“Complainant”) with Complainant as a witness. John Smith appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Jeff Brei, Esq. appeared on behalf of Rincon Roofing Inc. (“Respondent”) with Daniel Ryan, Bob Gourley, and Matthew Servanti as witnesses. 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 1. Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s license file as shown on the Registrar’s public website October 16, 2018. On October 03, 1980, the Registrar issued License No. 316271 for Specialty Dual CR-42 Roofing contracting license to Respondent.[2] There is no prior discipline against the license, but there is one open complaint against the license which is presumably Complainant’s.[3] The license has an active CD bond from Valley National Bank of Arizona for $7,500.00 effective January 30, 1987.[4] Bob Allen Gourley is listed as the Qualifying Party/Officer on the license.[5] Daniel Patrick Ryan is also listed as an Officer on the license.[6] Respondent’s address of record on the license is 2560 W Zinnia Avenue, Tucson, Arizona 85705-1929.[7] 2. On May 03, 2018, the Registrar received a complaint from Complainant alleging seven specific instances poor workmanship on Complainant’s roofing project by Respondent.[8] The Registrar designated Complaint Number 2018-2015 to the case and assigned it to investigator John Smith (“Investigator Smith”) for review. 3. On May 09, 2018, Investigator Smith issued a Jobsite Inspection Notification letter to the parties on behalf of the Registrar, advising that he would conduct an onsite review at the project site on June 01, 2018, at 8:00 a.m.[9] 4. On May 09, 2018, Investigator Smith also issued a warning letter to Respondent.[10] Investigator Smith believed Respondent’s contract with Complainant was improper because it did not contain all nine codified elements, as required in Ariz. Rev. Stat. § 32-1158(A). Respondent was placed on notice that noncompliance with the aforementioned statute constituted a violation of Ariz. Rev. Stat. § 32-1154(A)(22) as well.[11] 5. On June 01, 2018, Investigator Smith inspected the work that had been done on the project to date.[12] He took fifty-six photographs of various parts of the project.[13] When he was finished Investigator Smith drafted inspection notes whereby he substantiated six complaint items.[14] 6. On June 04, 2018, Investigator Smith issued a Directive from the Registrar to Respondent because he had substantiated Complainant’s allegations that the work Respondent had done on the project failed to meet minimum workmanship standards in violation of Ariz. Admin. Code R4- 9-108.[15] Respondent was put on notice that it had until 5:00 p.m. on June 21, 2018, to notify the Registrar of its compliance with the corrective order or face discipline including the issuance of a Citation, discipline of Respondent’s license, and/or a civil penalty pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1154(E).[16] Respondent was required to remedy the following by appropriate means: Complaint item 1: "…paint on cooler itself…" Complaint item 2: "Roof jacks old ones applied roofers did not properly shingle around roof jacks." Complaint item 3: "Electrical pole was left unattached to roof when roofers left house." Complaint item 4: "Master cool legs damaged..." Complaint item 5: "Master cool still not attached to roof as we speak." Complaint item 6: "Water leak from roof has damaged bathroom walls roof and sides of bathroom drywall still damaged and surrounding wall." This includes damage to the ceiling, soffit area, and south wall of the bathroom, and also the shelving installed at the south wall.

7. On June 20, 2018, Investigator Smith issued a Compliance Inspection Notification letter to the parties on behalf of the Registrar, advising that he would conduct an onsite review at the project site on June 29, 2018, at 2:00 p.m. to determine adherence to his previously issued Directive.[17] 8. Investigator Smith completed a Compliance Inspection on June 20, 2018, whereby he inspected the work that had been done on the project to date.[18] He took nineteen photographs of various parts of the project.[19] When he was finished, Investigator Smith drafted compliance notes in which he found, “The directive has not been complied with. No corrective work has been done.”[20] Investigator Smith’s notes were sent to both parties. 9. Investigator Smith forwarded his findings to the Registrar’s legal department. 10. On July 02, 2018, the Registrar issued a Citation to Respondent that charged cause to suspend or revoke Respondent’s license under Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(12), 32-1154(A)(22) and 32- 1158(A), as well as Ariz. Admin. Code R4-9-108.[21] The Citation reads, in pertinent parts, as follows: The Registrar hereby notifies Rincon Roofing, Inc. that if the act or acts charged in the written complaint are proved at an administrative hearing, then Rincon Roofing, Inc. may be found to have violated the following statutory provisions and rules: 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). 2: A violation of A.R.S. § 32-1154(A)(12)(“Failure in any material respect to comply with this chapter.”). 1158(A): A violation of A.R.S. § 32-1158(A)(“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. 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.”). Furthermore, on June 4, 2018, the Registrar issued Rincon Roofing, Inc. a written directive to take appropriate corrective action. Under A.R.S. § 32-1154(A)(22), Rincon Roofing, Inc.’s license may not be revoked or suspended, nor may any other penalty be imposed on Rincon Roofing, Inc., for a failure to take that appropriate corrective action until after a hearing has been held. Therefore, the administrative law judge presiding over the hearing will determine whether the following charge against Rincon Roofing, Inc. has merit: 3: 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.”).

11. On July 16, 2018 the Registrar received Respondent’s timely Answer to the Citation.[22] 12. The Registrar referred the complaint to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing. 13. An evidentiary hearing was held on October 16, 2018. Complainant testified on his own behalf and called Mr. Smith as a witness. Complainant submitted nine exhibits.[23] Dan Ryan, Bob Gourley, and Matt Servanti testified on behalf of Respondent. Respondent submitted six exhibits.[24] The Notice of Hearing, Minute Entry Continuance, and Registrar’s electronic file were also admitted into the record. Hearing Evidence 14. At the hearing, Mr. Britton testified that he paid the full contract price of $4,000.00 on February 23, 2017 to Respondent for a new roof on residential property he owns located at 5701 E. 2nd Street, Tucson, Arizona 85711.[25] Per Mr. Britton, work on the projected started February 08, 2018. Mr. Britton testified that he had a number of issues with the workmanship of the project, but that when it rained over the course of three days the roof leaked and several interior walls were damaged as a result. Mr. Britton testified that he obtained a remediation estimate for $1,183.13 from another contractor on April 19, 2018.[26] Mr. Britton testified that he did not deny Respondent access to the project site to make repairs. Mr. Britton testified that the only time Respondent asked to make repairs was when he was out of state from June 12, 2018, through June 17, 2018. Mr. Britton admitted that he refused to grant permission for Respondent to be on his property if he could not be there as well. Mr. Britton testified that he although he granted Respondent permission to commence repairs upon his return one week later, that no repairs were ever made. Mr. Britton testified that although Respondent agreed to pay another contractor to perform repairs on the project, he was never contacted by Respondent to choose said contractor. 15. Investigator Smith verified that he sent the May 09, 2018 minimum elements contract letter to Respondent, and that he substantiated six complaint items for poor work performance on June 01, 2018, at the parties’ jobsite. Investigator Smith testified that Respondent was not licensed for drywall, so the only way that Respondent could comply with the related portion of the Directive issued by the Registrar on June 04, 2018, would have been to come to one of two financial agreements with Complainant, because Respondent would not have been permitted to subcontract the work out beyond the scope of its license. Investigator Smith further testified that during his follow-up inspection on June 29, 2018, as well as his prehearing inspection on October 12, 2018, he observed no corrective work had been completed by Respondent. 16. Mr. Ryan testified that he met with Complainant on two or three occasions to address Complainant’s workmanship concerns on the project. Mr. Ryan could not recall whether he failed to answer or return any of Complainant’s telephone calls, or the approximate dates he sent trades out to the project site to remediate Complainant’s items of concern. Mr. Ryan agreed that the last contact he had with Complainant was on May 18, 2018, and that Complainant’s contract came with a four-year warranty for “fixes.” 17. Mr. Gourley testified that prior to the filing of Complaint No. 2018- 2015 he had offered to refund Complainant his money, which Complainant declined. Per Mr. Gourley, after the Registrar’s Directive was issued he instructed Mr. Servanti and Mr. Ryan to “do whatever [Complainant] wants,” but admitted that he refused to inspect any part of the plywood underneath Complainant’s roof, or re-roof it, because he thought the request from Complainant was unreasonable.[27] Mr. Gourley acknowledged that no corrective work was completed between September 11, 2018, and October 16, 2018.[28] Mr. Gourley testified that he was unaware a prehearing inspection had been scheduled for October 12, 2018. Mr. Gourley further testified that he presumed Respondent’s Answer had been sent to Complainant, but that he could not say for certain that it had been. 18. Mr. Servanti testified that he sent a letter to Complainant on June 10, 2018, whereby informed Complainant that Respondent would hire a contractor of Complainant’s choosing to repair the drywall damage, hire a contractor to install the cooling system on Complainant’s roof, and that Respondent would re-install the electrical pole on Complainant’s roof and complete other roofing repairs.[29] Mr. Servanti testified that Complainant did not contact Respondent after Complainant returned from out of state, but admitted that he spoke with Complainant on June 25, 2018, whereby he assured Complainant that Respondent would comply with the Registrar’s Directive. Per Mr. Servanti, Complainant said he never wanted Respondent to touch his roof again, so Mr. Servanti agreed to pay for a contractor of Complainant’s choosing to repair the drywall damage. According to Mr. Servanti, Respondent did not affix Complainant’s cooler to the roof because it was not their practice to do so, for fear it would cause damage. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction and has been properly brought before the Office of Administrative Hearings for adjudication.[30] 2. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[31] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[32] 3. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[33] 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.”[34] 4. Ariz. Admin. Code R4-9-108(A) holds, in pertinent part, that “[a] contractor shall perform all work in a professional and workmanlike manner. 5. Ariz. Admin. Code R4-9-108(B) holds, in pertinent part, that “[a] contractor shall perform all work in accordance with any applicable building codes and professional industry standards. 6. Ariz. Admin. Stat. § 32-1154(A)(3) holds that a holder of a license may not violate a rule adopted by the Registrar. 7. Ariz. Admin. Stat. § 32-1154(A)(12) holds that a holder of a license may not fail in any material respect to comply with the chapter. 8. Ariz. Admin. Stat. § 32-1154(A)(22) holds, in pertinent part, that a holder of a license may not fail to take appropriate corrective action to comply with this chapter or 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. The Registrar has the authority to issue license discipline under this provision, including summary suspension, revocation, or imposing a civil penalty or recovery fund award. 9. Ariz. Rev. Stat. § 32-1158(A) holds that a contract between a contractor and property owner amounting to more than one thousand dollars must contain the following information in writing: 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. 9. That the property owner has the right to file a written complaint with the Registrar for an alleged violation of Ariz. Rev. Stat § 32-1154(A). The contract shall contain the Registrar's telephone number, website address, and shall state that complaints must be made within the applicable time period as set forth in Ariz. Rev. Stat § 32-1155(A). The information 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.

10. Ariz. Admin. Stat. § 32-1154(E) holds, in pertinent parts, that the Registrar may impose a civil penalty not to exceed five hundred dollars on a contractor for each violation. The failure by the licensee to pay any civil penalty imposed results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty. It also holds that no future license may be issued to an entity consisting of a person who is associated with the contractor, unless payment of any outstanding civil penalty is tendered. 11. Here, Respondent acquiesced its violation of Ariz. Rev. Stat. §§ 32- 1154(A)(12) and 32-1158(A) as no evidence was presented to rebut the allegation. 12. It is undisputed that the Registrar issued its Directive to Respondent on June 04, 2018, and required Respondent’s full compliance by June 21, 2018. It is also undisputed that Respondent had between June 04, 2018, through June 12, 2018, and June 18, 2018, through June 21, 2018 to complete the complaint items identified in the Registrar’s Directive, as Complainant was out of state June 12, 2018, through June 17, 2018. It is further undisputed that Respondent failed to timely comply. 13. Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to timely complete Complainant’s project. This is an affirmative defense that Respondent bears the burden to establish by a preponderance of the evidence. 14. Respondent’s general assertion that Complainant failed to make his property reasonably available in order for Respondent to take the action(s) necessary to comply with the Directive are erroneous. Respondent’s denial of access argument is undermined by Respondent’s admission that it entered into an agreement with Complainant to pay one or more contractors to remediate the complaint items on the project. The agreement between the parties did not need to be finalized at the project site, as it could have been handled via telephone, email and/or fax. The record shows that Respondent failed to timely take appropriate corrective action, and had no valid affirmative defense(s) for doing so in violation of Ariz. Rev. Stat. § 32-1154(A)(22). 15. Because Complainant established by a preponderance of the evidence that Respondent failed to perform the scope of work included in their $4,000.00 fully paid contract, Complainant has shown that Respondent did not completed the job per their agreement pursuant to Ariz. Admin. Code R4-9-108, and thereby Ariz. Rev. Stat. § 32-1154(A)(3). 16. Because Complainant established by a preponderance of the evidence that Respondent failed to take appropriate corrective action to comply with the Directive that was issued in this matter, Complainant also established cause for the Registrar to suspend or revoke Respondent’s contractor’s license under Ariz. Admin. Stat. § 32-1154(A)(22) and/or impose a civil penalty pursuant to Ariz. Admin. Stat. § 32-1154(E). 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 Rincon Roofing Inc., License No. 051581 shall be suspended for one (1) business day. It is further recommended that the ROC require Respondent to pay the sum total of $100.00 as a civil penalty pursuant to Ariz. Rev. Stat. § 32- 1154(E). It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s Final Order, the Registrar shall revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in Ariz. Rev. Stat. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty in certified funds. 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, November 14, 2018.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] The record in this matter was held open until October 26, 2018, so that attorneys for Complainant and Respondent could submit written closing arguments to the Office of Administrative Hearings. Both written arguments were timely submitted. [2] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACZL6EAP. [3] Id. [4] Id. [5] Id. [6] Id. [7] Id. [8] See the Registrar’s electronic file at Intake Complaint Submittal1.pdf; see also Respondent Exhibit 3. [9] See the Registrar’s electronic file at Rcc012 Formal Inspection Jobsite1.rtf. [10] See the Registrar’s electronic file at Warning Letter Elements of Contract321158 B1.rtf. [11] Id. [12] See the Registrar’s electronic file at Insp Formal Complaint Miscellaneous3.pdf. [13] Id. [14] See the Registrar’s electronic file at Rcc100 Jobsite Inspection Notes1.rtf. [15] See the Registrar’s electronic file at Rcc014 Corrective Work Order1.rtf. [16] Id. [17] See the Registrar’s electronic file at Rcc078 Compliance Jobsite1.rtf. [18] See the Registrar’s electronic file at Insp Formal Complaint Miscellaneous1.rtf. [19] Id. [20] See the Registrar’s electronic file at Rcc104 Compliance Jobsite Inspection Notes1.rtf. [21] See the Registrar’s electronic file at Rch424 Citation Multiple Charges Workmanship W221.rtf. [22] See the Registrar’s electronic file at Lg Citation1.pdf. Complainant was neither copied nor forwarded Respondent’s electronically submitted Answer to the Registrar. [23] Complainant exhibits marked as 1, 3-6, and 9-12. [24] Respondent exhibits marked as 2-4, 9-10, and 21. [25] See Respondent Exhibit 2. [26] See Complainant Exhibit 3. [27] See Respondent Exhibit 4. [28] September 11, 2018 was the original date of the hearing. It was continued for October 16, 2018. [29] See Respondent Exhibits 9 and 10. [30] See Ariz. Rev. Stat. §§ 32-1101 et seq., 32-1154(A), and 41-1092 et seq. [31] 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). [32] See Ariz. Admin. Code R2-19-119(B)(2). [33] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [34] 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