FINACT2018A-2276-ROC.pdf

2018A-2276-ROC · Registrar of Contractors · 2019-05-31

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Carol W Carvalho, Case No. 2018-2276 COMPLAINANT, Docket No. 2018A-2276-CHC-ROC v. Prestige Construction Services LLC, FINAL ADMINISTRATIVE DECISION License No. ROC 306812, AND ORDER RESPONDENT.

Under A.R.S. § 41-1092.08(B), the Registrar may review and accept, modify, or reject an administrative

law judge’s written decision. If the Registrar modifies or rejects that decision, then the Registrar must provide

written justification setting forth the reasons for the modification or rejection.

In this case, a hearing was held, and the administrative law judge issued a written decision. See

Administrative Law Judge Decision, attached.

MODIFICATION AND WRITTEN JUSTIFICATION

The administrative law judge found that Complainant issued a final payment of $3,125.00 to Respondent

via check on February 27, 2015. ALJ Dec. 2:12-13. However, Complainant did not enter into a contract with

Respondent until March 10, 2018, and the only payment made to Respondent was in the amount of $29,810.00

via check the same date.

Despite finding that the Respondent violated A.R.S. §§ 32-1154(A)(1), (A)(3), (A)(12) and (A)(22), the

administrative law judge declined to order that Respondent’s license be revoked because it was revoked prior

to the proceedings. ALJ Dec. 10:11-12. The administrative law judge further recommended a civil penalty of

$2,000.00. ALJ Dec. 10:14.

A.R.S. § 32-1154(G) allows the Registrar to order a payment from the Residential Contractors’

Recovery Fund only where a contractor’s license has been revoked or suspended as a result of an order to

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 remedy a violation. If Respondent’s license is not disciplined for its proven violations of A.R.S. §§ 32-

1154(A)(1), (A)(3), (A)(12) and (A)(22) in this case, Complainant would be barred from filing an

administrative Recovery Fund Claim.

Therefore, the Registrar has determined revocation of Respondent Prestige Construction Services LLC

License No. 306812 is appropriate in this matter.

Finally the administrative law judge recommended a civil penalty of $2,000.00 to be assessed against

Respondent for its violation of A.R.S. § 32-1154(A)(22). However, A.R.S. § 32-1154(E) states that the

“registrar may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of

subsection A, paragraph 22 of this section.” Here, the Registrar charged Respondent with one violation of

A.R.S. § 32-1154(A)(22). Therefore, the Registrar modifies the Decision to assess a $500.00 civil penalty

against the Respondent for its violation of A.R.S. § 32-1154(A)(22).

CONCLUSION AND ORDER

The Registrar hereby modifies the Administrative Law Judge Decision by:

• Striking the following from page 2, lines 12-13: “Complainant issued a final payment of

$3,1250.00 to Respondent via check on February 27, 2015”.

• Replacing the Recommended Order on page 10, lines 11-15, with the following:

♦ IT IS ORDERED that on the effective date of the Final Order in this matter, Respondent

Prestige Construction Services LLC’s License No. 306812 shall be revoked.

♦ IT IS FURTHER ORDERED that pursuant to A.R.S. § 32-1154(E), Respondent must

pay to the Registrar of Contractors, a civil penalty of $500.00 in certified funds on or

before 30 days from the effective date of this Order. Payment may be hand delivered to

the Registrar’s physical address or mailed to:

Registrar of Contractors P.O. Box 6748 Phoenix, Arizona 85505-6748 ♦ IT IS FURTHER ORDERED 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

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Order, the Registrar shall revoke License No. 306812 effective on such deadline date.

No future license shall be issued to any entity consisting of persons associated with

Respondent, as defined in A.R.S. § 32-1101(A)(7), unless Respondent tenders payment

of any outstanding civil penalty.

The Registrar hereby accepts the remainder of the Administrative Law Judge Decision, which becomes

effective on July 8, 2019.

FINAL NOTES

On page 4, line 12 replace “February 27, 2019” with “February 25, 2019”.

Dated May 28, 2019. Registrar of Contractors /s/ Joseph Citelli Joseph Citelli, Chief Counsel Chief of Legal Department and Recovery Fund Copy mailed via USPS First Class mail May 28, 2019 to: Respondent Prestige Construction Services LLC 17470 N Pacesetter Way Scottsdale, AZ 85255 Prestige Construction Services LLC 15801 N 45th Place Phoenix, AZ 85032 Complainant Carol W Carvalho 10318 W Mission Ln Sun City, AZ 85351

Complainant’s Attorney Patrick Monahan Esq Monahan Law Firm, PLC 7025 W Bell Rd Ste 8 Glendale, AZ 85308

AND copy electronically mailed this same date to:

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar Complainant’s Attorney at email address of record with Registrar Office of Administrative Hearings Jenna Clark, Administrative Law Judge Case No. 2018-2276/tw

of 4 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 5.6.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Carol W Carvalho, No. 2018A-2276-ROC COMPLAINANT, ADMINISTRATIVE LAW JUDGE -vs- DECISION Prestige Construction Services LLC, ROC License: ROC 306812 RESPONDENT.

HEARING: April 26, 2019 at 8:30 AM. APPEARANCES: Patrick Monahan, Esq., appeared on behalf of Carol Carvalho (“Complainant”) with Complainant and Jim Dimond as witnesses. No appearance(s) on behalf of Prestige Construction Services LLC (“Respondent”). 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 July 27, 2016, the ROC issued License No. 306812 for general dual KB-2 residential and small commercial contracting to Respondent.1 Respondent’s address of record for the license is 15801 N 45th Pl. Phoenix, AZ 85032-4267.2 Bradley Allan Fenton is listed on the license as Qualifying Party and Member, and Amy Jo Fenton is listed as Member.3 2. Administrative Notice is taken of Respondent’s prior License record, for License No. 306812, as reflected on the ROC’s public website on April 26, 2019. Such

See https://roc.az.gov/contractor-search?Id=a0Yt000000ACW66EAH. 2 Id. Id. Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 5.6.2019 ROC LEGAL

prior License record reflects that Respondent’s license is currently revoked.4 The license has been previously disciplined by the ROC on three prior occasions.5 The record also reflects that there is one complaint against Respondent’s license, which is

presumed to be related to this matter.6 Respondent has a cancelled $9,000.00 surety

bond issued through Merchants Bonding Company (Mutual) effective August 06, 2016,

of which $5,000.00 remains available.7

3. On March 10, 2018, Complainant and Respondent entered into a contract

agreement whereby Respondent agreed to remodel Complainant’s residential property

located at 10318 W. Mission Ln. Sun City, AZ 85351 for the sum total of $59,620.00.8

The project commenced on April 13, 2018, and stopped on May 16, 2018. The project

was not completed. Complainant issued a down payment of $29,810.00 to Respondent

via check on March 10, 2018.9 Complainant issued a final payment of $3,125.00 to

Respondent via check on February 27, 2015.10

4. On May 21, 2018, the ROC received an abandonment and poor

workmanship complaint from Complainant which included a copy of the contractual

agreement between the parties and a copy of Complainant’s down payment check.11

5. On May 23, 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 June 27, 2018, at 9:00 a.m.12 6. On June 27, 2018, ROC investigator Timothy Pennington (“Investigator Pennington”) conducted a review of the contract executed between the parties. Investigator Springer also inspected the work that had been done on the project to date

Id. The license was revoked on January 11, 2019. 5 Id. Id. Id. The bond was cancelled on July 11, 2018. See Hearing File, pages 89-96. See Hearing File, pages 76 and 88. See Hearing File, pages 26 and 33. See Hearing File, pages 21-28. 12 See Hearing File, pages 56-58. RECEIVED 5.6.2019 ROC LEGAL

and took nine photographs of the property and related building permit.13 When he was finished, Investigator Pennington drafted JOBSITE INSPECTION NOTES.14 7. On June 27, 2018, Investigator Pennington issued a DIRECTIVE FROM THE

REGISTRAR to Respondent because he substantiated Complainant’s allegation that

Respondent had abandoned the project, and that the work Respondent had performed

on the project failed to meet minimum ROC workmanship standards.15 Specifically,

Respondent was ordered to complete the project per contract via appropriate means.16

Respondent was put on notice that it had until August 14, 2018, 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).17 Respondent failed

to timely comply.

8. On July 25, 2018, Investigator Pennington issued a COMPLIANCE

INSPECTION NOTIFICATION LETTER to the parties, advising that an onsite review would be

conducted at the project site on August 15, 2018, at 3:00 p.m.18

9. On August 15, 2018, Investigator Pennington conducted a review of the

project site and took six photographs.19 When he was finished, Investigator Pennington

drafted COMPLIANCE JOBSITE INSPECTION NOTES.20 10. On or about August 15, 2018, Investigator Pennington issued a W ARNING LETTER to Respondent to advise that its contract with Complainant did not meet statutory minimum elements in violation of ARIZ. REV. STAT. § 32-1158(A).21 Respondent was further advised that failure to comply with ARIZ. REV. STAT. § 32-1158(A) was a violation of ARIZ. REV. STAT. § 32-1154(A)(12), which could result in discipline against Respondent’s license including suspension or revocation.22

13 See Hearing File, pages 44-52 See Hearing File, pages 39-42. 15 See Hearing File, pages 36-38. Id. Id. See Hearing File, page 35. See Hearing File, pages 27-32. See Hearing File, pages 24-25. See Hearing File, pages 33-34. 22 Id. RECEIVED 5.6.2019 ROC LEGAL

11. On August 17, 2018, the ROC issued a CITATION AND COMPLAINT to Respondent for alleged violations of ARIZ. REV. STAT. §§ 32-1154(A)(1), 32-1154(A)(3); a violation of ARIZ. ADMIN. CODE R4-9-108, 32-1154(A)(12); namely, 32-1158, and 32-

1154(A)(22).23 Respondent was given until September 03, 2018, to respond with its

ANSWER or face discipline pursuant to ARIZ. REV. STAT. §§ 32-1154(A)(22) and 32-

1155.24

12. Respondent electronically filed its ANSWER with the ROC on August 31,

2018,25 which noted in pertinent part, “Prestige construction services LLC did not

intentionally disregard The Registrar Of Contractors Directive. There are many

extenuating circumstances regarding this citation and prestige construction services

wishes to move to settlement conference.” [sic]

13. On February 27, 2019, the ROC referred this matter to the Office of

Administrative Hearings, an independent state agency, for an evidentiary hearing on

April 26, 2019.26 Per the NOTICE OF HEARING27 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) (“Failure in any material respect to comply with this chapter.”) Namely, 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.

See Hearing File, pages 37-43. Id. See Hearing File, page 10. See Hearing File, pages 1-2. 27 See NOTICE OF HEARING. RECEIVED 5.6.2019 ROC LEGAL

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.”). Charge 4: 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.”). HEARING EVIDENCE 14. Complainant testified on her own behalf and submitted twenty-six exhibits. No testimony for or on behalf of Respondent was offered. The ROC’s electronic hearing file and NOTICE OF HEARING were also admitted into the evidentiary record. Investigator Dimond’s testimony 15. Investigator Dimond clarified that Complaint No. 20180-2276 was originally assigned to ROC investigator Timothy Pennington, but that Investigator Pennington left the ROC prior to the hearing regarding the complaint. 16. Per Investigator Dimond, the corrections required by the DIRECTIVE were within the scope of Respondent’s license, but that Respondent could have used subcontractors for HVAC, plumbing, gas, sewer, stucco, and paint. RECEIVED 5.6.2019 ROC LEGAL

17. Investigator Dimond testified that he conducted a prehearing inspection of the project on April 19, 2019 at 10:00 a.m. whereby he noted the project was approximately one-third complete, per the contract between the parties, and that no

work had been performed during the remediation period provided in the DIRECTIVE.

Investigator Dimond opined that the project would have to be started from the

beginning due to the state of the work that had been performed and remaining

materials.

18. Investigator Dimond noted that Respondent had not requested an

extension of the Directive’s compliance deadline. Moreover, Investigator Dimond

testified that although Respondent had scheduled an Informal Settlement Conference

with Complainant he failed to show or reschedule.

Complainant’s testimony

19. Complainant testified that at all times relevant she was the owner of

10318 W. Mission Ln. Sun City, AZ 85351.

20. Complainant testified that although the work was supposed to start on

March 18, 2018, and be completed by April 20, 2018, per contract, Respondent did not

start the project until April 13, 2018. 21. Complainant testified that there was no draw schedule for progress payments included in the contract, or executed by addendum. She provided Respondent with a $29,810.00 down payment with the understanding that the balance on the contract would be due upon completion of the project. Complainant denied signing any Change Orders for the project. 22. Complainant testified that Respondent did not have a project manager on site to oversee matters, and that she routinely took on the role. As a result, there were several delays to the project. When Complainant inquired with Respondent, he would allege that the delays were due to personal issues he was experiencing such as illness, being on vacation, and working on his own home after a house fire. Complainant testified that in order to keep the project moving she incurred an additional $923.50 in

RECEIVED 5.6.2019 ROC LEGAL

expenses that were supposed to have been covered in the monies she paid for the project.28 23. Complainant testified that the project came to a halt after Respondent’s

trades were jackhammering around a gas line in her kitchen and she called him to

complain about it.29 Although it was Respondent’s responsibility to locate the utility

line(s), Respondent demanded additional monies from Complainant for this purpose.30

Complainant refused and in turn Respondent threatened her.31

24. Complainant filed her complaint with the ROC shortly thereafter.

25. Per Complainant, after the DIRECTIVE was issued Respondent agreed to

complete the project but failed to do so.

26. Complainant denied ever denying Respondent, or any of his

subcontractors, access to the project.

27. Complainant testified that she is currently facing a number of issues with

her homeowner’s association as a result of this project due to the state of her property.

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.32 3. The purpose of the ROC’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.33 4. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.34 Respondent bears the See Complainant Exhibits 19, 20 and 26. See Complainant Exhibits 22 and 23. See Complainant Exhibit 3. See Complainant Exhibit 26. 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). 33 See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). RECEIVED 5.6.2019 ROC LEGAL

burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.35 5. “A preponderance of the evidence is such proof as convinces the trier of

fact that the contention is more probably true than not.”36 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.”37

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.” Namely, minimum contract elements as outlined in ARIZ. REV. STAT. § 32-1158(A). 10. ARIZ. REV. 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

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). See ARIZ. ADMIN. CODE R2-19-119(B)(2). MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). 37 BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999). RECEIVED 5.6.2019 ROC LEGAL

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 ROC has the authority to issue license discipline under this provision,

including summary suspension, revocation, or imposing a civil penalty or recovery fund

award.”

11. ARIZ. REV. STAT. § 32-1154(E) holds, in pertinent parts, that the ROC may

“[i]mpose 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.”

12. Here, the material facts are not in dispute. It is undisputed that

Complainant contracted with Respondent for a residential remodeling project that Complainant paid the agreed upon down payment for Respondent’s services and materials, Respondent did not complete the project, and the work that Respondent did on the project fell below the ROC’s minimum workmanship standards. It is further undisputed that the ROC issued its DIRECTIVE to Respondent on June 27, 2018, and required Respondent’s full compliance by August 14, 2018. It is also undisputed that Respondent failed to comply. 13. Therefore, the only issue in dispute 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. Respondent did not provide evidence in mitigation to refute Complainant’s evidence or justify his inaction in this matter. Thus, his 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. RECEIVED 5.6.2019 ROC LEGAL

14. Because Complainant established by a preponderance of the evidence that Respondent failed to perform the scope of work included in their signed contract, Complainant has also established cause for the ROC to take disciplinary action against

Respondent’s contractor’s license under ARIZ. REV. STAT. §§ 32-1154(A)(1), 32-

1154(A)(3); ARIZ. ADMIN. CODE R4-9-108, 32-1154(A)(12); 32-1158, and 32-

1154(A)(22).

15. 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, as ROC License

No. 306812 as issued to Respondent was revoked prior to these proceedings,

IT IS RECOMMENDED that the ROC require Respondent Prestige Construction Services LLC to pay the sum total of $2,000.00 as a civil penalty pursuant to ARIZ. REV. STAT. § 32-1154(E). 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, May 06, 2019. /s/ Jenna Clark Administrative Law Judge

Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors