ALJDEC decisions subject to certification as final

2018A-3011-CHC-ROC · Registrar of Contractors · 2018-12-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 4, 2018 APPEARANCES: Araceli Montes (Complainant) appeared on her own behalf. Mirage Custom Homes LLC doing business as Hoctor and Sons Construction (Respondent) was represented by Matt Pierce. ADMINISTRATIVE LAW JUDGE: Tammy L. Eigenheer _____________________________________________________________________ FINDINGS OF FACT Mirage Custom Homes LLC doing business as Hoctor and Sons Construction (Respondent) is the holder of License No. 226450 issued by the Arizona Registrar of Contractors (Registrar). Sometime in January 2018, Araceli Montes (Complainant) entered into a contract with Respondent for an addition to her home. The original contract was not provided at hearing. Respondent did not begin work on the project until March 2018. On or about April 21, 2018, the parties executed an updated contract reflecting changes to the original project and progress payments made to that point. The updated contract did not include Complainant’s mailing address, the jobsite address, the estimated date of completion of all work to be performed under the contract, or a statement that Complainant had the right to file a written complaint with the Registrar for an alleged violation of A.R.S. § 32-1154(A). On or about June 29, 2018, the Registrar received a Complaint against Respondent from Complainant alleging poor work with respect to the project.

The Registrar assigned the complaint to Investigator Steve Lawton. After a jobsite inspection, Investigator Lawton issued a written directive to Respondent that provided as follows: After investigation, the Registrar has substantiated that your work fails to meet minimum workmanship standards (see A.A.C. R4-9-108). Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a Citation, discipline of your license and a civil penalty pursuant to A.R.S. § 32- 1154(E) of up to $500.00. Failure to comply with this Directive may also be treated as an aggravating factor should the Registrar pursue discipline of your license. You must provide the Registrar with satisfactory written proof of your compliance with this Directive prior to 5:00 p.m. on August 13, 2018.

You are hereby directed to remedy the following violations by the appropriate means:

1. Complete project per agreement between both parties and approvals from local jurisdiction for completion of project.

The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action.

Following the issuance of the written directive, Respondent performed some corrective work, but did not complete the project. After the deadline in the directive expired, Investigator Lawton was notified the corrective work had been completed. On or about August 21, 2018, Investigator Lawton conducted a compliance inspection. At that time, Investigator Lawton noted the project was not complete. Investigator Lawton also observed that there were exposed live electrical wires at that time. On or about August 23, 2018, the Registrar issued a Citation against Respondent, charging possible violations of A.A.C. R4-9-108, and thereby of A.R.S. § 32-1154(A)(3); A.R.S. § 32-1154(A)(12), namely A.R.S. § 32- 1158(A); and A.R.S. § 32-1154(A)(22). The Citation referenced the written complaint filed by Complainant and included a summary of the Registrar’s investigation. On or about September 5, 2018, Respondent filed a Written Answer to Citation and Complaint (Answer). In the Answer, Respondent did not raise any concerns regarding the adequacy of the Citation to inform Respondent of the allegations being brought against it. On or about October 11, 2018, the Registrar issued a Notice of Hearing indicating that a hearing “upon the charges made in the Citation and Complaint” would be held by the Office of Administrative Hearings. Investigator Lawton testified that because the project was not completed, he did not make any formal determinations as to workmanship issues. Investigator Lawton stated that his normal practice is not to look at workmanship issues until a project is complete because completing a project usually resolves most workmanship issues. Complainant testified that as to the numerous issues on the project. Complainant indicated that the addition was to allow her mother to move in with her and that the delay in completing the project put her mother at risk. Complainant presented photographs taken through the course of the project including numerous photographs that she asserted represented the condition of the project as of the hearing date. Philip Hoctor, Respondent’s Owner, Qualifying Party, and Member, acknowledged that the project “drug out too long.” Mr. Hoctor testified that Respondent was unable to obtain qualified tradesmen to do the work because of a shortage of talent in the valley. Mr. Hoctor admitted at hearing that the shower was not complete, the air conditioning unit was out of plumb, the stucco needed to be repaired and painted, and other “punch list” items might need to be addressed. Respondent argued due process issues relating to the Registrar’s processes. Initially, Respondent asserted that the citation was served via certified mail even though the applicable statute requires that it be sent via registered mail. Additionally, Respondent argued that the Notice of Hearing in this matter was deficient in that it failed to include a short and plain statement of the matters asserted. Administrative notice is taken of Respondent’s prior License record on December 23, 2018. Such prior License record reflects that Respondent’s License No. 226450 was first issued on November 12, 2006, and is current. Such prior License record also reflects that there were two open complaints, two prior complaints resulting in discipline, and two prior complaints that were resolved or settled against Respondent’s license. Notably, one of the complaints against Respondent’s license was filed in 2017 and the remaining five were filed in 2018. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32- 1101 et seq. 2. Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. As to the due process issues raised by Respondent, upon the filing of a written complaint with the Registrar, the Registrar may issue a citation to a licensee. “Service of citation on the licensee shall be fully effected by personal service or by mailing a true copy thereof, together with a true copy of the complaint, by registered mail in a sealed envelope with postage prepaid and addressed to the licensee at the licensee's latest address of record in the registrar's office.” A.R.S. § 32-1155(A) (emphasis added). 4. A.R.S. § 1-215(25) provides that “[i]n the statutes and laws of this state, unless the context otherwise requires: . . . . ‘Registered mail’ includes certified mail.” While Respondent pointed to other statutes applicable to the Registrar that require notice to be sent certified mail, nothing in the context of A.R.S. § 32-1155(A) requires a conclusion that service of the citation may only be made by registered mail. Therefore, the mailing of the Citation via certified mail did not deprive Respondent of due process. 5. As to the Notice of Hearing in this matter, Respondent asserted the Notice of Hearing was deficient in that it failed to include a short and plain statement of the matters asserted. The Notice of Hearing provided that the hearing would be on the charges made in the Citation and Complaint. Respondent was able to respond to the allegations raised in the Citation. Those same issues were presented, by incorporation, in the Notice of Hearing. Therefore, the Notice of Hearing did not deprive Respondent of due process. 6. The evidence established that Respondent failed to complete the work on the shower, the stucco, and the air conditioning unit. Therefore, Complainant established that Respondent did not diligently perform and compete the tasks undertaken during the project in violation of A.A.C. R4-9-108,[1] and thereby of A.R.S. § 32-1154(A)(3).[2] 7. The evidence established that Respondent did not compete the corrective work following the Directive being issued. Therefore, Complainant established that Respondent failed to take appropriate corrective action following a written directive from the Registrar in violation of A.R.S. § 32-1154(A)(22).[3] 8. The record reflects that Respondent’s contract with Complainant failed to include the required elements of a contract set forth in A.R.S. § 32-1158(A).[4] Therefore, Complainant established a violation of A.R.S. § 32-1154(A)(12).[5] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend Respondent’s License No. 226450 for a period of five days. It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 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 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 A.R.S. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty. It is further recommended Respondent’s License No. 226450 shall be suspended based on its violation of A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158(A) until such time that Respondent provides written proof that is acceptable to the Registrar that it has amended its form contract to comply with A.R.S. § 32-1158(A). 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, December 24, 2018.

/s/ Tammy L. Eigenheer Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] A.A.C. R4-9-108 requires that “[a] contractor shall perform all work in accordance with . . . professional industry standards. For work to be performed in accordance with professional industry standards, a contractor shall use such skills, prudence, and diligence in performing and completing tasks undertaken that the completed work meets the standards of a similarly licensed contractor possessing ordinary skill and capacity.” [2] A.R.S. § 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.” [3] A.R.S. § 32-1154(A)(22) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.” [4] A.R.S. § 32-1158 provides as follows: 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. [5] 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.”

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