ALJDEC decisions subject to certification as final
2018A-2111-RFA-ROC · Registrar of Contractors · 2020-11-04
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
David Hooker,
COMPLAINANT,
v.
K & L Custom Roofing, LLC,
License No. ROC 315345,
RESPONDENT.
No. 2018A-2111-RFA-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: October 19, 2020 at 1:30 PM.
APPEARANCES: Assistant Attorney General John Tellier, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Tedi White as a witness. David Hooker (“Complainant”) appeared on his own behalf. Leeona DuBois appeared on behalf of K & L Custom Roofing, LLS (“Respondent”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
_____________________________________________________________________
FINDINGS OF FACT
According to the Registrar’s public website, on or about September 15, 2017, the Registrar issued License No. 315345, Specialty Dual CR-42 Roofing contracting license, to Respondent. Justin Edward Lawson is the Qualifying Party on this license. Leeona Lynn DuBois is also listed on the license as a Manager. Respondent’s address of record on the license is 1920 N. Davis Ranch Rd. Willcox, Arizona 85643.
Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior License record as reflected on the Registrar’s public website. The license is active and renewed through September 30, 2021. On January 20, 2019, License No. 315345 was disciplined by the Registrar. The license has an active $6,750.00 surety bond issued by RLI Insurance Company effective May 30, 2019.
On or about May 03, 2018, Complainant filed a complaint against Respondent with the Registrar alleging poor workmanship. In the complaint, Complainant alleged that on or about December 01, 2017, Complainant and Respondent entered into a contract whereby Respondent agreed to perform residential roofing services for Complainant for the sum total of $15,750.00, of which Complainant paid $8,000.00, and Respondent failed to complete the project as contracted. The Registrar received the complaint May 09, 2018, whereby it was designated Complaint No. 2018-2111 and assigned to Michael Springer (“Investigator Springer”) for investigation.
On June 05, 2018, Investigator Springer completed his inspection of the project. Respondent was not in attendance. Ultimately, Investigator Springer substantiated 5 of Complainant’s 10 complaint items, and concluded that the work Respondent had performed fell below the Registrar’s minimum workmanship standards.
On June 13, 2018, a Directive From The Registrar (“Directive”) was issued which instructed Respondent to complete the project per contract and provide written proof of completion to the Registrar no later than 5:00pm on July 02, 2018. Specifically, Respondent was advised to complete the following specific corrective tasks:
Correct all gaps in siding where cut short and allowing entry into attic.
Correct all soffit joints that have no backing support and nail.
Ensure there is 150/1 ration for attic/soffit venting.
Correct missing trim between siding and brick.
Seal all open areas where daylight is shining through in attic (Minus soffit vents)
Install foam closure strips at bottom of metal panels.
Correct valley flashing where cut short. Should extend past fascia approximately 1.5 inches.
On June 27, 2018, an Amended Directive was issued whereby Respondent was advised to complete the 4 following additional corrective tasks:
Ensure any metal roofing is not scratched from being on ground.
Ensure all gaps on Ridge and end pieces are sealed.
Ensure all metal is secured.
Ensure all fasteners are correct for purpose.
Respondent was required to provide proof of completion no later than 5:00 p.m. on July 16, 2018.
On July 06, 2018, Investigator Springer conducted a Compliance Jobsite Inspection and determined that Respondent failed to remediate 9 of the 10 substantiated complaint items identified for correction in the Registrar’s Directive and Amended Directive. Specifically, Investigator Springer determined that the only complaint item that Respondent appropriately corrected was compliant item #6.
On July 09, 2018, a Citation was issued and sent certified and first class mail to Respondent’s address of record charging Respondent with failure to meet minimum construction standards in violation of Ariz. Rev. Stat. § 32-1154(A)(3) and Ariz. Admin. Code R4-9-108, and for failing to take corrective action after a written directive was issued by the Registrar in violation of Ariz. Rev. Stat. § 32-1154(A)(22). Respondent was advised to submit a written Answer to the Registrar by July 24, 2018, and that failing to do so would constitute an admission pursuant to Ariz. Rev. Stat. § 32-1155(B).
It is unclear from the record when, if ever, Respondent submitted an Answer to the Registrar.
On December 11, 2018, the Registrar issued a Final Administrative Decision and Order to the parties whereby it was held that Respondent had been wrongfully denied an opportunity to remediate the Registrar’s substantiated compliant items as outlined in the Registrar’s Directive and Amended Directive. Therefore, Respondent was given until 5:00 p.m. on December 21, 2018, to provide the Registrar with “satisfactory evidence” that it corrected the aforementioned complaint items. If successful, the Registrar would close the complaint. If unsuccessful, the Registrar would suspend ROC License No. 315345 for 2 days.
On October 02, 2019, the Registrar received a claim for payment with the Residential Contractors’ Recovery Fund (“the Fund”) from Complainant. Complainant did not indicate a specific amount he anticipated to receive from the Fund, band instead noted that he wished to receive “[e]nough to remove all improperly installed and damaged materials make repairs and replace with new”. [sic] Attached to his claim, Complainant included invoices from Respondent, proof of payment, a written statement, a Notice of Value from the Cochise County Assessor, and a Warranty Deed.
On July 02, 2020, the Registrar issued a Notice of Claim for Administrative Payout which held Complainant was awarded $30,000.00 from the Fund. The Notice also advised the parties that they had until July 17, 2020, to submit a written appeal and request for an administrative hearing.
On July 24, 2020, the Registrar referred the matter to the Office of Administrative Hearings (“OAH”) for an independent evidentiary hearing on September 09, 2020. The issue at hearing was to determine if the Complainant’s award from the Fund was appropriately issued and properly calculated pursuant to Ariz. Rev. Stat. § 32-1154(F), as justified by the evidence.
Hearing Evidence
At the hearing, the Registrar presented the testimony of Tedi White and submitted Exhibits 1-19. Complainant testified on his own behalf. Leeona DuBois testified on behalf of Respondent and submitted Exhibits A-B. The Notice of Hearing was also admitted into the record as its own exhibit. The substantive facts are as follows:
The Registrar did not receive sufficient evidence of Respondent’s compliance with the Directive and Amended Directive by December 21, 2018.
On January 23, 2020, Respondent’s bond company, RLI Insurance Company, issued a bond denial letter to Complainant. The letter reads in pertinent part as follows:
At this time, RLI elects to exercise its right under ARS § 32-1152(E) and require that suit be filed, and judgment obtained, against the contractor and surety (RLI) before payment is issued under the bond (not to exceed the $4,250.00, the available amount on the residential portion of the bond.) Pursuant to A.R.S. § 32-1152(E), the priority for payment through the bond shall be based upon the timing of the entry of a judgment, by an appropriate court.
Therefore, when and if suit is filed, RLI will respond accordingly. In the meantime, RLI must deny your claim against the bond as such is premature at this time.
Pursuant to ARS § 12-1641, failure to bring the required lawsuit within sixty (60) days after your receipt of this notice will discharge the surety from all liability on the bond.
(All errors in original.)
On an unknown date in July 2020, Respondent’s appeal was received by Registrar.
Complainant submitted 2 repair bids to the Fund for consideration. The first was for $42,428.00 from America Roofing Repair, and the second was for $47,674.00 from Headlee Roofing Co. Inc. In reviewing the bids, Investigator Springer and Ms. White determined that the Complainant’s roof needed to be removed and replaced, but questioned why the bids were not received from local licensed roofers as the ones Complainant secured were “unreasonably high.”
Ultimately, the Fund selected the $42,428.00 America Roofing Repair bid, and calculated that Complainant was eligible for a $34,553.00 by going line by line between the bid, the parties’ original contract, and Directive and Amended Directive. Fund’s award of $30,000.00, however, was solely a result of statutory limitation.
In closing, the Registrar argued that Complainant met every statutorily mandated requirement for payout from the Fund, and, per administrative calculations, Complainant was eligible for a $30,000.00 payout notwithstanding the fact that he only requested an $8,000.00 award. The Registrar also argued that Respondent’s general disagreement(s) with the bid the Fund selected were immaterial.
In closing, the Respondent argued that the bids Complainant obtained for the Registrar’s consideration were exorbitantly high, and that the Registrar erred in accepting them. Respondent opined that a local roofer could removal and install Complainant’s roof for far less than America Roofing Repair could perform the work. However, Respondent did not offer a bid secured from a local licensed roofer that performed an inspection of the project. Respondent concluded by asking that Complainant’s award be reduced to prevent the financial ruin of its small family business.
Complainant declined to provide a closing argument.
CONCLUSIONS OF LAW
This matter lies within the Registrar’s jurisdiction and was properly brought before OAH for adjudication.
Respondent bears the burden of establishing by a preponderance of the evidence that the Fund’s payout amount was incorrect.
“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” 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.”
Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Fund an applicant must meet four eligibility criteria. First, an applicant must meet the definition of a “person injured” set forth at Ariz. Rev. Stat. § 32-1131(3) which requires that the applicant be the owner of the residential real property at issue. Second, the property must have had a classification of three under Ariz. Rev. Stat. § 42-12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a resident that is damaged by a [residential or dual licensed] contractor who has paid for financial protection from the Fund. These criterion must be met at either the time the contract was executed or at the time the injury accrued. Fourth, as set forth in Ariz. Rev. Stat. § 32-1132(A), the applicant must have contracted with a residential contractor whose license was in good standing at the time of contract execution.
Ariz. Rev. Stat § 32-1132(B) provides, in pertinent part, that only “individuals who are owners of residential property damaged by the failure of a contractor to adequately build or improve a residential structure, who reside at the property as their primary residence” are eligible for an award from the Fund.
Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Fund is $30,000.00.
Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”
In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.” “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”
Here, Respondent’s general arguments and opinions that Complainant’s award amount was “excessive” and that remediations to Complainant’s project could have been completed for “less” do not sustain Respondent’s evidentiary burden of proof by a preponderance of the evidence. No binding authority was offered to establish that a licensed roofer reside or otherwise be located within the underlying project site’s immediate vicinity. Additionally, Respondent’s arguments regarding potential ramifications Complainant’s administrative award may have on Respondent’s business cannot sway this Tribunal’s requirement to issue a decision pursuant to applicable statutes and governing rules. The facts establish that it will take an amount in excess of Complainant’s administrative award to make him whole.
Therefore, based on the credible and available evidence of record, the Tribunal concludes that the Registrar soundly established Complainant’s eligibility to access the Fund, correctly determined that Complainant was legally eligible for an administrative award from the Fund, and also properly calculated Complainants payout award from the Fund.
Because Respondent did not sustain its burden of proof in this matter, Respondent’s appeal must be denied.
RECOMMENDED ORDER
Based on the foregoing,
IT IS RECOMMENDED that the Registrar affirm the Notice of Claim for Administrative Payout dated July 02, 2020, and deny Respondent’s request to amend and/or quash the payout amount from the Fund.
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 forty (40) days from the date of that certification.
Done this day, November 04, 2020.
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Jeffrey Fleetham, Director
Registrar of Contractors