FINACT2018A-3067-CHC-ROC.pdf

2018A-3067-CHC-ROC · Registrar of Contractors · 2019-02-21

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Jim and Danna Armstrong, Case No. 2018-3067 COMPLAINANTS, Docket No. 2018A-3067-CHC-ROC v. FINAL ADMINISTRATIVE DECISION Copper State Home Builders LLC, AND ORDER License Nos. ROC 249002, 246380 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 April 1, 2019.

Dated February 20, 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 February 20, 2019 to: Respondent Copper State Home Builders LLC 2625 N 24th St Unit 11 Mesa, AZ 85213 Complainant Jim and Danna Armstrong 1719 S Moonlight Dr Star Valley, AZ 85541 AND copy electronically mailed this same date to: Respondent at email address on record with the Registrar Complainant at email address on record with the Registrar

Office of Administrative Hearings Thomas Shedden, Administrative Law Judge Case No. 2018-3067 / 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 1.31.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jim and Danna Armstrong, No. 2018A-3067-CHC-ROC

COMPLAINANT ADMINISTRATIVE LAW JUDGE DECISION -v-

Copper State Home Builders, LLC, License No. 249002, 246380,

RESPONDENT HEARING: January 14, 2019 APPEARANCES: Jim and Danna Armstrong on their own behalf; Clint Steven Fessler for Respondent ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

1. On October 3, 2018, the Registrar of Contractors (“ROC”) issued a NOTICE OF HEARING setting the above-captioned matter for hearing on November 20, 2018 at

the Office of Administrative Hearing. The matter was continued and the hearing was conducted on January 14, 2019. 2. Respondent Copper State Home Builders LLC, holds license Nos. 249002 and 246380 issued by ROC. Clint Steven Fessler is a member of the LLC and the qualifying party on the licenses. 3. The NOTICE OF HEARING shows that the hearing was set to consider the charges made in the CITATION and complaint. 4. Through a CITATION dated September 6, 2018, ROC alleges that Respondent may have violated ARIZ. REV. STAT. sections 32-1154(A)(3) and (A)(22). The CITATION shows that if the Administrative Law Judge finds that any of the alleged charges are valid, ROC may suspend or revoke Respondent’s license. The CITATION shows that ROC could not determine whether Respondent has actually committed any of the alleged violations, which is why the matter was set for hearing. The CITATION also

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 1.31.2019 ROC LEGAL

shows that the CITATION itself is not evidence that Respondent has violated any statute or rule. 5. Complainants Jim and Danna Armstrong’s house suffered water damage

and they hired Respondent to complete restoration and construction work.

6. The record shows that while the project was underway the house was

damaged by water a second time, which appears to have occurred in November 2017.

7. Respondent did not submit a disclosure statement, and although

Complainants did submit one, the only exhibits they disclosed were bids from other

contractors.1

8. The parties’ contract(s) are not in evidence and the information in the

administrative record is not sufficient to show the full scope of the parties’ agreements,

and it is possible that not all the agreements were memorialized.

9. It appears that the parties may have entered into three or more contracts,

one related to initial water damage, one related to the second leak, and another after

Complainants had entered into side-deals with Stephen Lowery, who was at that time

an employee of Respondents.2

10. The record supports a finding that this side-deal work, which was not originally authorized or agreed to by Respondent, led to delays in Respondent completing its work on the project. 11. The parties eventually did enter a contract or agreement under which Respondent agreed to complete some of the work that was the subject of the side-deals between Complainants and Mr. Lowery. 12. The administrative record shows that each party had retained an attorney and they were trying to negotiate a settlement to what appears to be essentially a contract dispute, but there is no evidence showing that a settlement was reached. 13. The administrative record includes copies of a complaint form that was marked received by ROC on July 3, 2018, which is presumably the complaint that gave rise to this matter. But there is uncertainty as to whether this is the complaint at issue These exhibits were not offered into evidence. 2 Mr. Lowery was fired, at least in part, because he entered these side-deals. RECEIVED 1.31.2019 ROC LEGAL

because the copies in the record are not signed by either of the Complainants and are not dated. 14. The complaint in the administrative record shows that the contract was

entered on July 31, 2017, but it also shows that work stopped on February 20, 2017. It

appears that Complainants may have intended to indicate that work stopped in

February 2018. And as set out above, it appears that the parties may have entered into

three agreements or contracts.

15. Information in the administrative record shows that Respondent completed

the dry-out work for the first leak on July 31, 2017.

16. Respondent’s answer shows that there was a delay of about two months

after the initial dry-out before construction began because Complainants’ insurance

company did not approve a budget.

17. According to Respondent, the budget that was received did not include

sufficient funding to replace the roof, but tear-off work started anyway. In late October,

not long after the work was started, Respondent learned that Mr. Lowery and

Complainants had made side-deals to upgrade the roofing plywood, to use metal on the

roof (instead of shingles), and for the construction of a porch or patio. 18. According to Respondent’s answer, this unauthorized work had been started by the time Mr. Fessler learned of it, and the original scope of work could not be completed until the unauthorized work was finished. 19. The parties entered into an agreement to split the costs associated with the side-deals that Complainants had entered into with Mr. Lowery. The administrative record shows Respondent’s position that Complainants did not fully honor their agreement to do so. 20. The administrative record shows that the work on the porch led to delays in Respondent’s work and that at one point, the porch project was “red-tagged” because the footings had never been properly inspected and that neither Complainants nor Mr. Lowery had obtained the required permits for the porch. As a result, the work that had been completed on the porch had to be torn out. RECEIVED 1.31.2019 ROC LEGAL

21. At the hearing, Mr. Fessler testified that Respondent had been fired from the job on November 24, 2017. He later clarified that Respondent was fired as the remediation or dry-out contractor, but not as a construction contractor, and he testified

to the effect that Respondent’s employees and subcontractors were unwilling to work

on the project because they had been abused or threatened by Complainants or their

sons.

22. This threatening behavior included an incident wherein Complainants’ son

Cash drove onto the site erratically, almost hitting one of Respondent’s vehicles, after

which Cash began swearing at people, making threats to kill someone and to do

physical harm to one of Respondent’s employees and Mr. Fessler. Written statements

from Respondent’s employees show that Complainants stood by and watched as this

happened. Another employee was lassoed by one of Complainants’ sons while on the

job and evidence shows that the sons had been abusive throughout the process.

23. These allegations of abusive behavior are in the administrative record and

were largely confirmed at the hearing. Complainants’ presented no rebuttal evidence

except to say that not all of the Respondent’s employees felt threatened, which is true,

but some of those who did not feel threatened nevertheless wrote that they understood why others would have. 24. Despite Mr. Fessler’s position that Respondent had been terminated in November 2017, Respondent continued to conduct dry-out services at the house. According to Respondent’s answer, the dry-out was complete and Respondent could have started on interior repairs on December 9, 2017, but was not given access to complete the construction work until mid-February 2018. 25. Respondent’s notes in the administrative record show that on or about December 14th, Mr. Fessler contacted Complainants expressing his position that Respondent was being denied access to complete its work. He also explained that Respondent was having difficulty finding employees and subcontractors who were willing to work on the project because they felt unsafe being around Complainants’ sons. RECEIVED 1.31.2019 ROC LEGAL

26. Respondent’s notes in the administrative record show that on several occasions during early January, Complainants or their consultant refused to allow Respondent access to complete its work. These notes show that work was also delayed

because Complainants were unwilling to purchase materials, with the reasonable

inference being that Respondent believed that Complainants were responsible to

purchase the materials as part of the parties’ agreement to split the cost of completing

the side-jobs.

27. Respondent’s notes in the administrative record show that at one point,

Complainants’ consultant would not let Respondent work inside the house because the

porch had not been completed.

28. Respondent’s notes in the administrative record show that on January 16,

2018, Respondent had his attorney send to Complainants a notice to the effect that

within seven days, Complainants had to allow Respondent access to complete the work

on the roof, and that Respondent had been trying to get access to do so since

December 9, 2017.

29. In response to Complainants’ complaint, ROC Investigator Chris Allison

conducted a jobsite inspection on August 8, 2018. At the hearing, Mr. Allison testified that Complainants had informed him that they would allow Respondent access to complete any repairs that ROC ordered it to complete. 30. On August 18, 2018, ROC issued to Respondent a DIRECTIVE that required Respondent to correct by appropriate means: 2. Electrical wires removed from entry way side of home, not reinstalled to code. The electrical wiring on the exterior of the home was not completed. Home is to be completed to pre loss status. Correct by appropriate means. 5. Small bath needs, grout, drywall repair, molding and shower door replaced. Small bathroom (Hall bathroom) is not completed per contract and is not completed to pre loss status. Correct by appropriate means. RECEIVED 1.31.2019 ROC LEGAL

6. Base boards in living room are terribly gap[p]ed and do not meet standards. Baseboards were not installed per workmanship standards “All joints on molding, casing, [Etc.], should fit and be securely attached as well as properly filled and sanded.” Correct by appropriate means. 9. Front porch light removed by contractor, needs to be replaced by contractor. Porch light was never reinstalled. Home is to be completed to pre loss status. Correct by appropriate means. 11. Seamless gutters were removed when work[ ] began and are still on the ground. Gutters are not installed. Home is to be completed to pre loss status. Correct by appropriate means. 13. Tape marks on hardwood from plastic cover for drywall and paint repair. There is tape residue on the floor. Correct by appropriate means. 18. 3/4" Solid wood floor has separation damage from water leak. There is a separation in the planks of the flooring. Correct by appropriate means.

31. The DIRECTIVE shows that ROC had determined that any other workmanship violations alleged in Complainants’ complaint were unsubstantiated. 32. The DIRECTIVE required Respondent to provide ROC with written proof that it had made the required corrections by no later than 5:00 p.m. August 31, 2018. 33. Mr. Allison testified that to the effect that he allowed Respondent only the statutory minimum of fifteen days (plus a couple of days for mailing time) for the corrective work to be completed, which is what he typically does. 34. Respondent did not complete the work that ROC ordered it to do.

RECEIVED 1.31.2019 ROC LEGAL

35. Respondent’s answer shows that the tape marks are of a different size tape than it uses for its dry-out work. At the hearing, Respondent presented testimony is support of that position.

36. At the hearing, Respondent presented evidence to show that it had not

done any work on the solid wood floors. There was no substantial evidence adduced to

show that repairing any gaps in the floor was within Respondent’s scope of work.

CONCLUSIONS OF LAW

1. Unless otherwise provided by law, a party asserting a claim, right, or

entitlement bears the burden of proof; a party asserting an affirmative defense has the

burden of establishing the affirmative defense. The standard of proof on all issues in

this matter is that of a preponderance of the evidence. ARIZ. ADMIN. CODE § R2-19-119.

2. “At a hearing on an agency action to suspend, revoke, terminate or

modify on its own initiative material conditions of a license or permit, the agency has

the burden of persuasion.” ARIZ. REV. STAT. § 41-1092.07(G)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” ARIZ. REV. STAT. § 41- 1092.07(G)(3). 4. A preponderance of the evidence is: The 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. BLACK’S LAW DICTIONARY 1373 (10th ed. 2014). 5. Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes."). 6. “Statutes shall be liberally construed to effect their objects and to promote justice.” ARIZ. REV. STAT. § 1-211(B). RECEIVED 1.31.2019 ROC LEGAL

7. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

8. The Administrative Law Judge may consider ROC’s administrative record.

See ARIZ. ADMIN. CODE § R4-9-118.

9. ARIZ. REV. STAT. section 32-1154(A) provides that

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: ***** 3. Violation of any rule adopted by the registrar. ***** 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. 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.

10. ARIZ. ADMIN. CODE section R4-9-108(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.” 11. ARIZ. REV. STAT. section 32-1154(E) provides that ROC may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of ARIZ. REV. STAT. section 32-1154(A)(22). 12. ROC alleges that Respondent violated ARIZ. ADMIN. CODE section R4-9-108(A) because: (1) it did not restore the house to its pre-loss condition (items 2, 3, 9, and 11); (2) additional work was required on the baseboards (item 6); (3) there was tape residue on the floor (item 13); and (4) there was separation in the floor planks (item 18).

RECEIVED 1.31.2019 ROC LEGAL

13. The preponderance of the evidence is not sufficient to show that Respondent was contractually (or otherwise obligated) to correct the floor planks, and it has not been proven that this was a violation of ARIZ. ADMIN. CODE section R4-9-108(A).

14. Regarding the tape residue, there is insufficient evidence to show that this

residue was a result of poor work on Respondent’s behalf or the result of the tape

remaining on the floor for almost eight months after Complainant had denied

Respondent access to finish the project. Consequently, and it has not been proven that

this was a violation of ARIZ. ADMIN. CODE section R4-9-108(A).

15. Items 2, 3, 9, 11, and 6, were identified by ROC as being incomplete,

rather than being poor workmanship per se, indicating possible abandonment rather

than workmanship violations. Regardless, the administrative record has sufficient

information to show that prior to ROC’s investigation, Complainants had denied

Respondent reasonable access to complete that work. In addition, the evidence shows

that some of Respondent’s employees were justifiably unwilling to work on the project

based on the behavior of Complainants’ son and Complainants’ tacit approval of that

behavior.

16. Consequently, although Respondent did not complete items 2, 3, 9, 11, and 6, this failure is not properly considered a violation of ARIZ. ADMIN. CODE section R4-9-108(A), and even there was a violation of that rule, it would be inappropriate to discipline Respondent’s license considering Complainants’ denial of access. 17. It has not been proven by a preponderance of the evidence that Respondent violated ARIZ. REV. STAT. section 32-1154(A)(3). 18. Respondent did not comply with ROC’s DIRECTIVE in the time ROC allowed, and it did not directly address Mr. Allison’s testimony that as of the date of his inspection, Complainants had agreed to allow Respondent access to complete the work ROC ordered it to complete. Respondent did however raise its concern that Complainants had created an unsafe work environment for its employees. Respondent’s concern is valid and it provides a justification for its failure to comply with the DIRECTIVE. RECEIVED 1.31.2019 ROC LEGAL

19. Consequently, it has not been shown by a preponderance of the evidence that Respondent violated ARIZ. REV. STAT. section 32-1154(A)(22).

RECOMMENDED ORDER

IT IS ORDERED that on the effective date of the final Order in this matter Case

No. 2018-3067 is dismissed.

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 is forty days after the date of that certification. Done this day, January 31, 2019. /s/ Thomas Shedden Thomas Shedden Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors