FINACT2018A-2648-CHC-ROC.pdf

2018A-2648-CHC-ROC · Registrar of Contractors · 2019-01-25

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Jason Elliot Rappaport, Case No. 2018-2648 COMPLAINANT, Docket No. 2018A-2648-CHC-ROC v. FINAL ADMINISTRATIVE DECISION The Lustig Company , AND ORDER License Nos. ROC 249800, 249799 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. REGISTRAR’S ACCEPTANCE In this case, a hearing was held, and the administrative law judge issued a written decision. See Administrative Law Judge Decision, attached. The Registrar reviewed that decision and hereby accepts it. CONCLUSION Because the Registrar has accepted the administrative law judge’s decision, that decision is the final administrative decision in this case and becomes effective on March 4, 2019. Dated January 23, 2019.

Registrar of Contractors

/s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal Department and Recovery Fund

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Copy mailed via USPS First Class mail January 23, 2019 to: Respondent The Lustig Company 10632 N Scottsdale Rd # B-129 Scottsdale, AZ 85254 Charles R. Johnson, Esq. 6501 E Greenway Pkwy, #103-481 Scottsdale, AZ 85254 Complainant Jason Elliot Rappaport 4057 E McLellan Rd Mesa, AZ 85205 Thomas S. Moring, Esq. 3200 N Central Ave Fl 20 Phoenix, AZ 85012 AND copy electronically mailed this same date to: Respondent at email address on record with the Registrar Respondent’s Attorney at email address of record with Registrar Complainant at email address on record with the Registrar Complainant’s Attorney at email address of record with Registrar Office of Administrative Hearings Diane Mihalsky, Administrative Law Judge

Case No. 2018-2648 / AN

of 2 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 1.7.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jason Elliot Rappaport, No. 2018A-2648-CHC-ROC

COMPLAINANT, ADMINISTRATIVE LAW JUDGE DECISION v.

The Lustig Company, License Nos. ROC249800, ROC249799,

RESPONDENT.

HEARING: October 19, 2018, at 8:30 a.m. and December 17, 2018, at 9:00 a.m. APPEARANCES: Jason Elliot Rappaport (“Complainant”) was represented by Thomas S. Moring, Esq., Jaburg Wilk PC; The Lustig Company was represented by Charles R. Johnson, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT BACKGROUND AND PROCEDURE 1. According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website,1 on October 19, 2008, the Registrar issued License Nos. ROC249800, Class B for general residential contracting and ROC249799, Class B-2 for General Small Commercial Contracting to Respondent. 2. On June 11, 2018, Complainant filed a complaint with the Registrar, alleging that Respondent had committed theft in failing to start work that it promised to perform at Complainant’s residence at 4057 E. McLellan Rd., Mesa, Arizona 85205, after Complainant had paid Respondent the full contract price of $36,961.25. According to the complaint, Respondent had refused to provide a written contract, had failed to start work on the designated start date, had ignored all communications from Complainant,

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 1.7.2019 ROC LEGAL

had failed to pay subcontractors, had failed to perform any work, except to create a hazard that injured Complainant’s child, and had refused to refund Complainant’s money.2 The complaint did not mention the scope of work, what work subcontractors

had done that Respondent had failed to pay for, what work caused the hazard, or what

the designated start date was. Complainant attached to his complaint a check in the

amount of $36,961.25, drawn on the account of Complainant and his wife, Juana N.

Rappaport, made payable to Respondent, dated March 10, 2017, for “Completion of

Construction.”3

3. The complaint was assigned to the Registrar’s Investigator Dennis Bierma for

investigation. On July 10, 2018, Investigator Bierma performed a jobsite inspection.

Respondent did not attend the jobsite inspection. During the inspection, a City of Mesa

police officer showed up looking for Respondent’s qualifying party/officer, Shawn

Lustig, because Complainant alleged that Mr. Lustig had threatened him the night

before.4

4. On July 10, 2018, Investigator Bierma on behalf of the Registrar issued a

Directive that found abandonment and required Respondent “to ensure that any and all

required building permits are obtained from the Local Building Authorities prior to making corrections listed in this Directive” on or before July 30, 2018, at 5:00 p.m. 5. On July 16, 2018, Mr. Lustig sent Investigator Bierma an email, in relevant part as follows: As you can see from the attachment, [Complainant] has not been forthright with you. He has restricted our access and missed appointments with subcontractors and with both draftsmen that were hired to provide him drawings and numbers. Did he share with you the original size of the project was to be comparable to the original project I did for him with Mr. Schembri in Gilbert of approximately $120k? Did he also share that he came to me at my jobsite on 64th street and begged me to take a deposit because he was See A.A.C. R4-9-117 (“In any disciplinary proceeding conducted by the registrar, the licensee’s entire license file including the record of prior citations and decisions may be considered by the registrar in making a decision and order in the case.”). See the Registrar’s electronic file at Intake Submittal1.pdf at 1-2. See id. at 3. 4 See the Registrar’s electronic file at Rcc100 Jobsite Inspection Notes 1.rtf. RECEIVED 1.7.2019 ROC LEGAL

divorcing his wife and didn’t want her to get access to his money. Did he tell you I provided the contract for the first project and he didn’t feel it was necessary because we had a working history. Did he share that he came back to me several months later, after he bought this house and said the size of the project had been slashed by $100k? There is so much about him and his ploy to manipulate the ROC that you are unaware of. . . The original draftsman (who was recommended by Jason’s mother Enid and her husband Jerry) made several errors and then refused to address them and the redlines (even after he was paid in full) causing us to hire a different draftsmen to complete the drawings. I was forced to hire a structural engineer to do discovery on the plumbing. We also were confronted with a sound attenuation issue of trying to find a sound attenuation engineer for a $35000 project. As well as electrical issues that were discovered during discovery and the need to dig the sewer to a location other than the existing lavatory proposed by the first draftsman. . . .5

Mr. Lustig attached to the July 16, 2018 email to Investigator Bierma a text from Complainant that appeared to be dated June 12, 2018, at 7:00 a.m., as follows: Do not come on my property without anything approved by me or my lawyer.

Any attempt to do so will be considered criminal trespass. NOT ONE FOOT ON PROPERTY WITHOUT ATTORNEY CONSENT.6

6. On August 9, 2018, the Registrar issued a Citation against Respondent’s

contractor’s licenses, charging cause to suspend or revoke the licenses under A.R.S. §

32-1154(A)(1), A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32-

1154(A)(12), namely A.R.S. § 32-1158(A), and 32-1154(A)(22).7

7. Mr. Lustig on behalf of Respondent filed a timely written answer to the

Citation, denying any statutory violation. In addition to the defenses raised in his July

The Registrar’s electronic file at Insp Correspondence From Respondent 1.pdf; Respondent’s Exhibit 1A. Id. at 2. The attachment is in very small print. The Administrative Law Judge did her best to enlarge it, but cannot vouch for 100% accuracy. Complainant did not contest the gist of the text at the hearing. 7 See the Registrar’s electronic file at Rch424 Citation Multiple Charges Workmanship W221.pdf. RECEIVED 1.7.2019 ROC LEGAL

16, 2018 email to investigator Bierma, Mr. Lustig stated that Respondent could not have begun the project until it was permitted and that Complainant was an “aggressive emailer/texter and that dealing with him was exhausting.”8

8. The Registrar referred the matter to the Office of Administrative Hearings, an

independent state agency, for an evidentiary hearing.

9. A hearing was held on October 19, 2018, and December 17, 2018.

Complainant submitted four exhibits and testified on his own behalf. Respondent

submitted 32 exhibits and presented the testimony of four witnesses: (1) Miguel Soto,

the draftsman who replaced Steve Tucker, the original draftsman on the project; (2)

Beter Tekach, a civil engineer who was also a contractor; and (3) Mr. Lustig.

Investigator Bierma also testified.

ADDITIONAL HEARING EVIDENCE

10. On or about March 8, 2016, Complainant and his wife, Juana, entered into

a construction contract with Tekach Design and Building Services, Inc. for certain renovations to a property at 3054 East Portola Valley Drive, Gilbert, Arizona 85297, including a substantial room addition and landscaping, for a contract price of $110,000.9 Mr. Lustig testified that Respondent was the supervisor on the East Portola Valley Drive project. 11. Complainant testified that on March 10, 2018, Respondent contracted to build a guesthouse or casita at the property on E. McLellan Rd. for a price of $36,961.25. Complainant testified that Mr. Lustig said that the project would be $6,000 to $7,000 cheaper if Complainant paid Respondent in full. Complainant testified that Respondent agreed to start the project on June 17, 2017, but failed to do so. 12. Mr. Lustig testified that on March 22, 2017, Complainant approached him to give him the $36,961.25 check at a jobsite on 64th Street so that Complainant would not have to account for the money in his contentious divorce. Mr. Lustig testified that Complainant wanted it to appear that they payment was for completing the project on East Portola Valley Drive. Mr. Lustig testified that the project would begin when See the Registrar’s electronic file at Lg Citation1.pdf. 9 See Respondent’s Exhibit 8. RECEIVED 1.7.2019 ROC LEGAL

Complainant purchased the property to be improved. Mr. Lustig testified that he did not know how Complainant came up with the $36,961.25 check amount. 13. Mr. Lustig testified that the parties envisioned a project that was similar in

scope to the project on East Portola Valley Drive, which involved substantial

renovations. Mr. Lustig testified that he did not know how Complainant arrived at the

amount of the check, but that the project got scaled back to a guesthouse when

Complainant realized that he would have less cash after his divorce than he had

originally anticipated.

14. Respondent submitted a printout from Maricopa County Superior Court of

the case documents in Complainant’s divorce. Complainant filed the divorce papers on

January 13, 2017. After numerous filings by both parties, the Parties filed a Notice of

Settlement and Request to Vacate the Trial on August 7, 2018.10

15. On May 4, 2017, Complainant and his father, Jerry Seeger, purchased the

property on McLellan Rd. The warranty deed provided that Complainant owned 63%

and Mr. Seeger owned 37% of the property.11 Later that day, Complainant contacted

Mr. Lustig and asked him to meet him the next day to start making plans, even though

the current owner would not move out until the end of May 2017.12 16. On June 22, 2017, Mr. Lustig met with Mr. Seeger and his wife, Complainant’s mother, Enid Seeger, at the McLellan property. Mr. Lustig testified that Mrs. Seeger recommended that he hire her personal friend, Mr. Tucker, to draw plans for the project. Although Mr. Lustig did not know Mr. Tucker, Complainant agreed with his mother that Mr. Tucker should be hired to draw plans for the guesthouse.13 17. On June 27, 2017, Mr. Lustig forwarded Mr. Tucker’s conceptual plan for the guesthouse to Complainant and asked him to review the plan. Complainant responded, “got it.”14

See Respondent’s Exhibit 7. See Respondent’s Exhibit 6. See Respondent’s Exhibit 10. See Respondent’s Exhibit 11. 14 See Respondent’s Exhibit 12. RECEIVED 1.7.2019 ROC LEGAL

18. On or about July 6, 2017, Mr. Tucker furnished a contract to prepare the drawings for the guesthouse for $3,300.00, with equal payments of $1,100.00 due to start work, upon substantial completion, and upon issuance of the building permit. Mr.

Lustig informed Complainant that Respondent was “using your guy” and emailed a

copy of Mr. Tucker’s proposal.15

19. On July 12, 2017, Mr. Tucker sent a conceptual drawing to Mr. Lustig. Mr.

Lustig sent to plans to Complainant for his comments.16

20. Respondent submitted texts that showed numerous communications

between Mr. Lustig and Complainant about other work at the McLellan Road property.

On or about July 17, 2017, Complainant asked Mr. Lustig to help him make a decision

about the roof on the house on McLellan Road. On or about July 19, 2017,

Complainant asked Mr. Lustig about getting another electrical outlet in the master

bedroom, asking Mr. Lustig’s opinion on whether there was room on the main panel,

and upgrading the HVAC system. Complainant asked Mr. Lustig why some roofing

contractors promised to match the existing tile and some said it could not be done. On

July 20, 2017, Complainant requested that Mr. Lustig review Inca Roofing’s proposal,

stating “I am relying on you as GC to do so.”17 21. Complainant testified that although he asked Mr. Lustig for referrals to other contractors, Complainant expected to supervise the contractors and did not expect Mr. Lustig to be involved in the subcontractors’ work after Mr. Lustig’s referral. 22. Mr. Lustig testified that Complainant let him know that Complainant was counting on Respondent to supervise other contractors’ work. Mr. Lustig testified that he took Complainant’s check to Chase Bank and obtained a cashier’s check in the same amount made payable to Inca Roofing. Mr. Lustig testified that he understood that Complainant would pay him something for his referrals, advice on proposals, and supervision of other contractors.

See Respondent’s Exhibit 13. See Respondent’s Exhibit 15. 17 See Respondent’s Exhibit 14. RECEIVED 1.7.2019 ROC LEGAL

23. On August 8, 2017, Complainant asked about the estimated completion date of the guesthouse. Mr. Lustig advised that Mr. Tucker had not yet provided final drawings and that when the drawings were provided, he would send them to the truss

company.18 Mr. Tucker never provided plans that the City of Mesa would accept to

issue a permit. Mr. Tucker also failed to revise his plans.

24. By mid-October 2017, Complainant started threatening to file a criminal

complaint against Mr. Lustig with the City of Mesa Police Department for larceny, to file

a complaint with the Registrar, and to demand all of the $36,961.25 back.19 Mr. Tucker

was threatening to file a lien on the house on McLellan if he were not paid more. Mr.

Lustig disputed Mr. Tucker’s accounting and his ability to file a lien, since he had not

filed a pre-lien. Complainant accused Mr. Lustig of avoiding him.20

25. On October 17, 2017, Mr. Lustig sent a text back to Complainant, as

follows:

You are correct. I am overwhelmed and I have avoided you for the past week. As much as I would like to do this project I’m not sure I can mentally handle any more. I have reached out to a few friends to see what their availability is. I have a crazy day that starts at 5:30 and I expect to be free after 11. I owe you better. I’m sorry I’m letting you down. I will call late morning tomorrow with a decision or I’ll return your money.21

Mr. Lustig promised that Respondent would start construction, including digging footings and pouring concrete. Mr. Lustig acknowledged that on October 2017, a permit had not been obtained and that Respondent could not begin building the guesthouse until it was permitted, although Respondent could perform preparatory work for the permit, such as locating the sewer. 26. In October 2017, Complainant went to the City of Mesa and learned that no permits had been issued for the project on McLellan Rd. He testified that he was

See Respondent’s Exhibit 16. See Complainant’s disclosure statement at pdf 40-45. See Complainant’s disclosure at pdf 78-80. 21 Complainant’s disclosure at pdf 42. RECEIVED 1.7.2019 ROC LEGAL

surprised to find out no permit had been issued, because Respondent was supposed to complete construction of the guesthouse by August 17, 2017. 27. On October 30, 2017, Mr. Lustig obtained a cashier’s check in the amount

of $900.00 to pay Mr. Tucker.22 Mr. Lustig testified that he took the check to

Complainant to give to Mr. Tucker.

28. Respondent submitted paperwork from the City of Mesa that showed that it

had submitted a permit application on November 1, 2017, and the $170.00 permit fee.

On November 2, 2017, Respondent submitted Mr. Tucker’s drawings. On November

16, 2017, the City of Mesa required revisions to the drawing.23 Mr. Lustig testified that

Mr. Tucker refused to make the revisions.

29. Mr. Lustig testified that Mr. Tucker’s plans tied the sewer line for the

guesthouse into the sewer line where it exited the existing house. The City of Mesa did

not accept that plan until the sewer line was located because it wanted to make sure

that there would be sufficient fall for the sewer line from the guesthouse to flow.

30. Mr. Tekach testified that Mr. Lustig initially called him because Respondent

was going to excavate the sewer line from the main house. Mr. Tekach explained that

because the house had two stories and a stem wall would need to be cut, excavation next the house needed to be engineered to make sure that it would not compromise the stability of the house. Mr. Tekach testified that Respondent hired a contractor to sawcut the concrete and locate the sewer. 31. Mr. Tekach testified that he visited the site in November 2017, and that he prepared reports on the location of the sewer line and some electrical issues for the City of Mesa. Mr. Tekach testified that Mr. Lustig paid him $750.00 for this work. 32. Mr. Lustig testified that Respondent paid $185.00 to Fine Line Concrete Cutting to cut the concrete so that the sewer line could be located.24 Respondent paid $1,617.50 to Construction Group Staffing for a laborers to dig the hole.25

See Respondent’s Exhibit 19. See Respondent’s Exhibit 20. See Respondent’s Exhibit 18. 25 See Respondent’s Exhibit 25. RECEIVED 1.7.2019 ROC LEGAL

33. Complainant testified that Respondent damaged plumbing when it dug the hole and that his water bills have gone from $160.00 to $800.00.26 Complainant testified that he had gotten an estimate of more than $19,000.00 to repair the pipes.

34. Mr. Lustig testified that the only thing that was damaged in the digging of

the hole was the irrigation system and that he told Complainant to turn off the irrigation

system until the hole was filled in and the irrigation pipes were repaired.

35. Respondent submitted emails that showed that on December 11, 2017, Mr.

Lustig informed Complainant of the location of the sewer and the impact that it would

have on the plans for the guesthouse.27 On December 27, 2017, Mr. Lustig informed

Complainant that because Mr. Tucker was not responding to requests that he revise

the plans, another draftsman would need to be hired.28

36. Mr. Soto testified that he started work on the drawings on January 2, 2018,

at Mr. Lustig’s request. Another draftsman had been involved in the project. Mr. Soto

testified that he reviewed Mr. Tucker’s plans and that they were unacceptable, with

many revisions by the City of Mesa.

37. Mr. Soto testified that unlike the City of Scottsdale and the City of Phoenix,

the City of Mesa does not have an expedited review process. It can take 3-1/2 to 5 months for the City of Mesa to approve a permit, regardless of the size of the project. 38. Mr. Soto testified that he completed the plans for the project in February 2018, and submitted the revised plans to the City of Mesa.29 Mr. Soto testified that the plans were approved on April 18 or 19, 2018. 39. Mr. Soto testified that a problem he encountered with getting the permit for the guesthouse was that it was within a 1-mile range of the airport, which required noise attenuation measures. He is a draftsman and such measures require a licensed architect.

See Complainant’s Exhibit 4. See Respondent’s Exhibit 23. See Respondent’s Exhibit 24. 29 See Respondent’s Exhibit 20 at 5. RECEIVED 1.7.2019 ROC LEGAL

40. Mr. Soto testified that Respondent has paid him a total of $2,400.00 for his work, as well as paying $300.00 to Mr. Tekach for the noise attenuation measures that the City of Mesa requires.

41. Mr. Tekach testified that he consulted with Mr. Soto on the noise

attenuation issue.

42. Mr. Lustig testified that Respondent paid $1,500.00 to Allen Concrete Inc.

for “Demo concrete haul off and dig and set footings and form”30 and $150.00 to Daryl’s

Locating Service to locate the sewer line.31 Respondent also paid $800.00 to JMC

Design and Excavation to grade the area where the guesthouse would be built.32

43. Respondent submitted texts to show that from February 9, 2018, through

March 28, 2018, Mr. Lustig was keeping Complainant apprised of Respondent’s

progress on obtaining a permit for the job. Complainant continued to express an

interest in having Respondent complete the project.33

44. Mr. Lustig testified that on April 19, 2018, the City of Mesa issued the

permit for the job.34

45. By the first week of June 2018, however, Complainant was threatening to

file a complaint against Mr. Lustig with the Registrar, to file a complaint with the Arizona Medical Board against Mr. Lustig’s wife, and to call the Mesa Police Department if Mr. Lustig set foot on his property.35 On July 10, 2018, the day of Investigator Bierma’s directive, Complainant stated that he was pressing charges to have Mr. Lustig arrested for theft and had filed charges with the medical board against Mrs. Lustig.36 46. Investigator Bierma testified that some of Complainant’s complaints were beyond the Registrar’s jurisdiction. The only thing that he could investigate was whether Respondent had abandoned the project. Investigator Bierma acknowledged

Respondent’s Exhibit 21. See Respondent’s Exhibit 22. See Respondent’s Exhibit 30. See Respondent’s Exhibit 26. See Respondent’s Exhibit 28. See Respondent’s Exhibit 29. 36 See Respondent’s Exhibit 30. RECEIVED 1.7.2019 ROC LEGAL

that because Respondent did not attend the jobsite inspection, he had to rely on Complainant to provide the history of the project. 47. Investigator Bierma testified that the only thing he saw at the jobsite was

concrete that had been sawcut and a chunk of concrete that was missing.37

Complainant told him that was the only thing that Respondent had done on the project.

48. Investigator Bierma testified that he did not close the complaint for denial of

access because Complainant told him that he would allow access to Respondent to

comply with the Directive. Investigator Bierma testified that he did not know whether

Complainant actually allowed access and that he referred the matter to the Legal

Department for a hearing to be scheduled to resolve that issue.

49. Complainant testified that in October 2017, he was still willing to give

Respondent a chance to complete the guesthouse. However, his patience was

exhausted. He called the City of Mesa Police Department. Complainant asked the

Registrar to require Respondent to refund the full $36,961.25 that he had paid to

Respondent, since all Respondent had done was dig a hole. Complainant testified that

one of his seven children had fallen into the hole and had been injured.

50. Mr. Lustig testified that Respondent would have completed the project once the permit was issued if Complainant had allowed access. But Complainant instead fired Respondent from the project and demanded that it refund all the monies that Complainant had paid. Respondent submitted an itemized statement that showed that Complainant owed Respondent $21,492.51 for the monies it had advanced and the time that Mr. Lustig had spent working on the McLellan Road project.38 51. Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s license history on the Registrar’s public website. On this date, License No. ROC249800 was suspended for nonrenewal. The license has never before been disciplined. Complainant’s license appears to be the only one pending against either of Respondent’s licenses. //// See Complainant’s Exhibit 1A. 38 See Respondent’s Exhibit 32. RECEIVED 1.7.2019 ROC LEGAL

CONCLUSIONS OF LAW

1. This matter lies within the Registrar’s jurisdiction.39

2. Complainant bears the burden of proof to establish cause to discipline

Respondent’s contractor’s licenses by a preponderance of the evidence.40 Respondent

bears the burden to establish affirmative defenses by the same evidentiary standard.41

3. “A preponderance of the evidence is such proof as convinces the trier of fact

that the contention is more probably true than not.”42 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.”43

4. Because Respondent did not use its commercial License No. ROC249799 on

Complainant’s residential project, that license should not be revoked or suspended as a direct result of Complainant’s complaint. If Respondent’s residential License No. ROC249800 is revoked as a result of Complainant’s complaint, in due course, License No. ROC249799 will also be revoked.44 5. Complainant established that there was no written contract that set forth the elements required by A.R.S. § 32-1158(A),45 especially the scope of work, total price, See A.R.S. § 32-1154(A). See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). See A.A.C. R2-19-119(B)(2). MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999). 44 See A.R.S. § 32-1154(A)(20) (including among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[h]aving a person named on the license who is named on any other license in this state or in another state which is under suspension or revocation unless the prior revocation was based solely on a violation of this paragraph.”). A.R.S. § 32-1158(B) provides 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 after December 31, 2007 must be in writing and must include the following minimum terms: 1. The name of the contractor and the contractor’s business address and the 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. RECEIVED 1.7.2019 ROC LEGAL

including any progress payments, and an estimated date of completion. If Respondent had prepared such a contract before accepting any money from Complainant or performing any work on the project, it may have avoided this dispute. Although it

appears that Complainant bears some responsibility for the absence of a written

contract, he nonetheless established grounds to suspend or revoke Respondent’s

license under A.R.S. § 32-1154(A)(12).46

6. 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.” (Emphasis

added). Respondent established that it did substantial work on the project.

Respondent also established that Complainant repeatedly informed Mr. Lustig that he

would be arrested if he set foot on the property, with the most recent threat coming on

the day of the Registrar’s directive. A threat of arrest constitutes a legal excuse for a

contractor failing to complete a project.

7. Because construction is not a perfect art, normally a contractor must be

allowed an opportunity to remedy poor workmanship before the Registrar will suspend

or revoke the contractor’s license. A.R.S. § 32-1154(A)(22) includes among the grounds to suspend or revoke a contractor’s license, “[f]ailure to take appropriate

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 ten point bold type. . . . A.R.S. § 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.” RECEIVED 1.7.2019 ROC LEGAL

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.” (Emphasis added.) As with abandonment, a threat

of arrest constitutes valid justification for a contractor’s failure to repair or complete its

work to comply with the Registrar’s directive.

8. Therefore, Complainant did not establish cause to suspend or revoke

Respondent’s residential contractor’s license under A.R.S. § 32-1154(A)(1), A.R.S. §

32-1154(A)(3),47 namely A.A.C. R4-9-108,48 or A.R.S. § 32-1154(A)(22). Although it

appears that Respondent may owe Complainant money, even if Respondent is entitled

to keep some of the $36,961.25 that Complainant paid it under a quantum meruit or

some other equitable theory, Complainant may seek such relief in a court of competent

jurisdiction.

RECOMMENDED ORDER

Based on the foregoing, it is ordered that thirty days after the effective date of the final order in this matter, Respondent The Lustig Company’s License No. ROC249800 shall be revoked. It is further ordered that if, on or before 30 days after the effective date of the final order in this matter, Respondent has provided satisfactory written proof to the Registrar that it has revised its form proposals and contracts to reflect the terms required by A.R.S. § 32-1158(A), the Registrar shall not revoke Respondent’s license but shall, instead, close Jason Elliot Rappaport’s complaint in Case No. 2018-2648. It is further ordered that if Respondent renews its residential License No. ROC249800, the license shall be placed on a three-month disciplinary probationary period, during which the Registrar may conduct unannounced audits to Respondent’s business files to monitor its compliance with A.R.S. § 32-1158(A).

A.R.S. § 32-1154(A)(3) includes among the grounds to suspend or revoke a contractor’s license, “[v]iolation of any rule adopted by the registrar.” A.A.C. 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.” RECEIVED 1.7.2019 ROC LEGAL

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, January 4, 2019.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to: Jeffrey Fleetham, Director Registrar of Contractors