ALJDEC decisions subject to certification as final

2018A-3207-CHC-ROC · Registrar of Contractors · 2020-11-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Rachel Noreen,

COMPLAINANT,

v.

Stephen Thomas Latimore,

dba C J Latimore Construction,

ROC License Nos.118118 & 223431,

RESPONDENT.

No. 2018A-3207-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 29, 2019, July 22, 2020, and September 14, 2020.

APPEARANCES: Greg Larson, Esq. appeared on behalf of Rachel Noreen (“Complainant”) with Complainant and Curt Peterson as witnesses. Michael Ellsworth, Esq. appeared on behalf of C J Latimore Construction (“Respondent”) with Stephen Latimore, William Murray, John Connolly, and John Wilhelm as witnesses. Christopher Allen appeared as a witness for the Arizona Registrar of Contractors (“Registrar”). Scott Noreen, Michael Brogan, and Morgan Brown observed.

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 (“Registrar”).

FINDINGS OF FACT

Background and Procedure

On October 17, 1996, the Registrar issued License No. 118118 for General Residential B contracting to Respondent. Respondent’s address of record for the license is 959 Tumbling 77 Show Low, Arizona 85901-4036. Stephen Thomas Latimore is listed on the license as the Qualifying Party and Owner.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record, for ROC License No. 118118, as reflected on the Registrar’s public website on October 22, 2020. Such prior license record reflects that Respondent’s license is active and currently renewed through September 30, 2021. The license has been disciplined on 1 prior occasion. The record also reflects that there is 1 open complaint against Respondent’s license, which is presumed to be related to this matter. Respondent has a $9,000.00 surety bond for the license issued through Western Surety Company, effective June 18, 2016.

On August 09, 2006, the Registrar issued License No. 223431 for General Small Commercial B-2 contracting to Respondent. Respondent’s address of record for the license is 959 Tumbling 77 Show Low, Arizona 85901-4036. Stephen Thomas Latimore is listed on the license as the Qualifying Party and Owner.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record, for ROC License No. 223431, as reflected on the Registrar’s public website on October 22, 2020. Such prior license record reflects that Respondent’s license is active and currently renewed through August 31, 2022. The license has not been previously disciplined and there are no prior complaints that have been settled or otherwise resolved with the license. Respondent has a $5,000.00 surety bond for the license issued through Western Surety Company, effective January 25, 2013.

On July 13, 2018, the Registrar received a complaint filed by Complainant alleging poor workmanship of a newly built house. The complaint included 45 complaint items. Attached to the complaint was a copy of the sales contract for the property. On July 23, 2019, the Registrar later received a copy of the title for the underlying property.

On July 16, 2018, the Registrar issued a Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by an investigator on August 03, 2018, at 10:00 a.m.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken that on or about August 02, 2018, Complainant commenced civil action against Respondent and other defendants in Superior Court of Arizona, Navajo County.

On August 03, 2018, Registrar investigator Christopher Allen (“Investigator Allen”) inspected the work that had been done on the project to date and took 94 photographs of the project. When he was finished, Investigator Allen drafted Jobsite Inspection Notes whereby he substantiated 20 of Complainant’s 28 complaint items. Specifically, Investigator Allen concluded that complaint items 1-2, 5-8, 10, 12, 15-20, 22-25, and 27-28 required remediation for poor workmanship.

On August 15, 2018, Investigator Allen issued a Directive from the Registrar (“Directive”) to Respondent because he determined that some of Respondent’s work on the project failed to meet the Registrar’s minimum workmanship standards. Respondent was put on notice that he had until 5:00 p.m. on September 03, 2018, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(22), and 32-1154(E). Respondent was also specifically advised not to perform any corrective work until a determination regarding “the cause for the excessive settling and movement of the home” was made.

The Directive compliance deadline was extended to October 15, 2018, then to February 15, 2019, and again to April 19, 2019.

On February 21, 2019, Complaint No. 2020-3207 was closed.

On April 29, 2019, Complaint No. 2020-3207 was reopened.

On April 29, 2019, Investigator Allen issued a Compliance Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by an investigator on May 10, 2019, at 10:00 a.m.

On May 10, 2019, Investigator Allen inspected the project and took 26 photographs. When he was finished, Investigator Allen drafted Compliance Jobsite Inspection Notes detailing his determination that the only substantiated complaint item Respondent attempted to remediate was complaint item 5, which was not complete.

On May 14, 2019, Investigator Allen escalated Complaint No. 2020-3207 to the Registrar’s legal department with citation recommendations.

On May 15, 2019, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). Respondent was given until May 30, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On May 29, 2019, the Registrar received Respondent’s Answer whereby Respondent asserted, in pertinent parts, it had built the home at issue per specifications issued by the original owners, and was denied access to the project cite during the Directive’s compliance period. Respondent also alleged that Complainant failed to maintain the property and filed her claim to force Respondent into a settlement agreement in their related civil action. Respondent further alleged that the Citation had been issued in violation of Ariz. Rev. Stat. § 32-1155(C) because Respondent was not provided with an opportunity to inspect the project within 15-days of receiving written notice of the complaint, and because Respondent’s work was subject to neglect.

On May 31, 2019, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 12, 2020. Per the June 05, 2019, Notice of Hearing the issue to be determined is whether the Registrar has cause to discipline Respondent’s license based on the following charges:

Charge 1: A violation of A.R.S. § 32-1154(A)(2) (“Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.”)

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)(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

Complainant testified on her own behalf, called Investigator Allen and Curt Peterson as witnesses, and submitted Exhibits 1-3, 5, 7-9, 11, 14-23 into the record. Respondent called John Wilhelm, John Connolly, William Murray, and Stephen Latimore as witnesses, and submitted Exhibits B, D-E, M, and O into the record. The Registrar’s agency file and Notice of Hearing were also admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Investigator Allen’s testimony

The Registrar does not require new construction builds to include rain gutters and/or snow guards per state statue or rule.

In or around 2016 public residential subdivision Angela’s Place began construction in Show Low, Arizona. Roger and Susan Hesketh, Trustees of the Roger and Susan Hesketh Trust (“Trust”) dated February 02, 2007, are the Developers of Angela’s Place. Trustees hired Sunrise Construction for the build and Arrowhead Drafting to draft plans, which the City of Show Low approved.

In June 2017, Complainant and her husband, Scott Noreen, began renting property located at 660 S. Angela’s Pl. Show Low, Arizona 85901 from Roger and Susan Hesketh.

The property did not possess rain gutters or snow guards.

On or about November 20, 2017, Complainant and Mr. Noreen entered into a purchase agreement for the aforementioned residential property from the Heskeths for $230,000.00.

On December 12, 2017, Complainant signed a Public Report Receipt for the property.

On January 03, 2018, escrow closed on the property.

Complainant never installed rain gutters or snow guards to the property.

The property’s warranty dictates a workmanship compliant must be filed within 2 years of the date of purchase, but does not require that the original owner be the complainant.

In or around November 2017, Complainant filed a workmanship complaint with Respondent.

The Registrar determined that Complaint No. 2020-3207 was received within the 2 year statute of limitations, as the complaint was received on January 13, 2018, and the Certificate of Occupancy was issued on May 25, 2017.

During the underlying jobsite inspection, excessive water and moisture underneath Complainant’s property was noted. It was also noted that the rear of the property slopes higher than the front of the property, which does allow for drainage. No signs of excavation in the rear of the property was noted. It was further noted that the foundation’s slab had turned down footings along the perimeter and in the stem wall. Ultimately, Investigator Allen determined that the water leaks derived from several spots due to sloping, not from a leaking hose bib, and that the plan specification had not been adhered to because the footing requirements had not been met and the property had been built on expansive soil.

Respondent arrived late to the inspection and departed before it concluded.

Investigator Allen unsubstantiated complaint items 3, 11, 13, 26, determined that complaint items 4 and 9 had already been remediated prior to his inspection, and determined that complaint items 14 and 21 were outside of the Registrar’s jurisdiction.

Investigator Allen observed the broken exterior faucet by Complainant’s front porch, but did not examine it because the he opined it was improbable for the leak to originate on the opposite side of the property as no leak was observed.

Investigator Allen did not observe signs of abuse to Respondent’s work, modification of Respondent’s work, and/or neglect of Respondent’s work.

Curt Peterson’s testimony

Mr. Peterson has an undergraduate degree in Civil Engineering and a graduate degree in Geotechnical Engineering. In 200 he founded Peterson Geotechnical Group LLC (“PGG”), a firm dedicated to solving soil-related issues through forensic investigation.

PGG conducted 2 inspections of Complainant’s property, and on both instances issued a formal report.

On or about November 26, 2018, PGG issued its first evaluation of Complainant’s property. A floor-level survey was conducted whereby a water minometer was used to determine the elevation of Complainant’s residence. It was determined that the property was 1.8in out of level on the rear-west side, which resulted in water entering the foundation of the property’s slope due to heaving, and the eventual collection of water in the crawl space. PGG concluded that the combination of expansive soil and poor drainage resulted the excessive water issues Complainant experienced.

On or about February 13, 2019, PGG issued its second evaluation of Complainant’s property. Test pits were excavated around the 4 sides of Complainant’s property. It was determined that clay was the native soil underneath Complainant’s property and that it had not been properly compacted with backfill soil, which was near saturation. The test resulted in the prior conclusion.

PGG opined that a contractor assumes the risk of building on such soil.

As a design solution, PGG recommended the installation of a French Drain, collect and transport excess water to the street. PGG also noted that it could also be beneficial for Complainant to install a surface drain and gutters as well.

Mr. Peterson opined that a civil draftsperson, not a licensed engineer had, drafted the blueprints for Complainant’s property because they lacked an official insignia.

PGG did not observe water running toward the property during either inspection.

Mr. Peterson opined that Complainant’s residence had been built according to plan depth, including the stem wall.

The existing hillside had to be cutout to build Complainant’s residence. All sides of the home were built to code except for the rear.

Complainant’s testimony

In June 2017, when Complainant moved into the underlying property, she immediately noticed hairline cracks in the drywall and tile. Over time new cracks appeared and old cracks became larger and more pronounced. Cracks would worsen any time it rained or snowed. Doors would jam in their frames and their locks would not latch.

Prior to Complainant’s purchase of the property an existing trench was covered by a sidewalk. Complainant neither authorized nor paid for the paving of the sidewalk.

In or around November 2017, Complainant filed a workmanship complained with Respondent. In response, Respondent dispatched its foremen, Brandon Garvin (“Foreman”), to the property. Complainant informed cracks due to “settling.” Foreman plastered and painted over the surface cracks on the walls and doors in the master bedroom and closet, master bathroom, living room, kitchen archway, and garage. By early-January 2018, new cracks appeared and old cracks became visible through Foreman’s patches. In early-March 2018, Complainant reported to Respondent that the rear hose bib, which had not had a hose affixed since September 2017, had cracked and began leaking. Respondent dispatched William Murray to replace it in early-April 2018. On May 16, 2018, Foreman informed Complainant that he and Respondent were “no longer partners” but that he was willing to perform additional remediations on Complainant’s property to “make it right.”Foreman placed a girder under the property to “jack it up” with a backhoe and close the cracks. Water was observed in the crawl space and stem wall near the master bedroom. Complainant heard a loud snap while Foreman attempted to pull down the front porch.

The only time Complainant ever “watered the foundation” was during Investigator Allen’s jobsite inspection to demonstrate wetness, which lasted no more than 15 minutes.

In summer of 2018, water was observed pouring through cracks in the stem wall underneath Complainant’s master bedroom.

On or about September 13, 2018, Complainant retained Starling Madison Lofquist, Inc. (SML”), a structural engineering firm, to perform a site inspection of the interior and exterior of Complainant’s property, as well as review related design drawings, reports, and the contents of the Registrar’s file for Complaint No. 2020-3207. On October 18, 2018, SML issued its official report to Complainant to address the allegation of construction defect and provide opinions regarding structural safety and stability. SML issued the following advisement, in pertinent parts:

SML observed the grade to have negative slope towards the rear (west) and right (north) side of the home where the surface water is directed towards the rear masonry steam wall and crawl space. The builder is offering to repair the area by installing a French drain and directing the water to the north side yard. SML takes no exception to this repair as long as the perimeter steam wall is water-proofed and the drain is lined and constructed to handle the maximum amount of calculated surface water that accumulates along the rear and right side yards; the drain shall also be constructed to allow the homeowner access for maintenance.

SML also recommends installing gutters along the roof eave to reduce the amount of water drained into the side yards; roof gutters should be fitted with downspouts and tight-lined with leader pipes to direct the water to the front of the property. The foundations and masonry stem wall around the entire perimeter of the house require remediation as noted [Investigator Allen].

Prior to any repairs, SML recommends remediating the foundation movement by stabilizing the foundation and the underlying soils of the home. A period of at least three months should be given to allow the house and supporting soils to stabilize after the completion of the grading and drainage improvements and the waterproofing of the masonry stem walls.

SML recommends that a floor level survey be conducted prior to the completion of improvements to the grading and drainage and any foundation stabilization methods in order to determine the current relative elevation of the floor finishes on the interior of the house, at the front porch and rear patio.

SML recommends retaining a geotechnical engineer to perform a geotechnical evaluation of the supporting soils of the home and determine the moisture sensitivity of the supporting soils. The geotechnical engineer shall also provide appropriate stabilization recommendations based on foundation depth and moisture sensitivity of the soils in order to reduce the occurrence of future and ongoing earth movement related activity.

In or around late-November 2018, Complainant retained PGG, a geotechnical engineering firm, to evaluate the soil conditions around the perimeter of Complainant’s home. PGG issued evaluations on November 26, 2018, and February 13, 2019.

In or around mid-June 2019, Complainant obtained 2 remediation bids for the underlying project from licensed contractors who had inspected the project. Alpine Construction, ROC. License No. 143304, estimated the cost of repairs to total $98,500.00, including a French drain and rain gutters, but noted that, “This list may not be compete and would require definition by building authorities to give further direction on items that do not pass local building codes.” 3E Construction, ROC. License No. 227377, declined to provide an estimate because, “There are sure to be other expenses that will arise once repairs have begun. For this reason I am reluctant to set a fixed amount on the cost of returning this home to a state that is acceptable to the homeowners.”

Complainant installed rain gutters above the garage just prior Investigator Allen’s compliance jobsite inspection.

John Wilhelm’s testimony

Mr. Wilhelm has served as a Building Official with the City of Show Low’s Building Department since 2006. His primary duties and responsibilities are to oversee plan, review, and inspection processes on behalf of the city, per federal mandates and local rules and regulations.

Roger Hesketh’s plans met approval guidelines for accuracy and code compliance, which is why an initial building permit was issued. Because the build passed inspection, a final permit was authorized.

On May 24, 2016, Mr. Hesketh submitted an Erosion Control permit application. An Erosion Control permit is required for all projects that disturb soil. To pass inspection, it must be determined that there is no sediment runoff or contamination of other properties.

The drainage and grading away standard is 10ft 6in away from a dwelling or 5% to swell of 2%that drains away into a ditch. The city would not issue a Certification of Occupancy unless this inspection was passed.

As of September 27, 2016, all city inspections were passed.

Mr. Wilhelm was present for Investigator Allison’s jobsite inspection and observed standing water against the stem wall.

Per Mr. Wilhelm, “something happened” between the time the project passed inspection and Complainant began experiencing water-related issues, but he declined to opine what, if anything, caused them.

John Connolly’s testimony

In the spring of 2018, Mr. Connolly worked for Respondent as a Framer and Carpenter. He was supervised and paid by Foreman.

On the day Foreman “jacked up” Complainant’s residence “with supports,” Mr. Connolly assisted by cutting boards outside and handing them to Foreman, who was under the house. From Mr. Connolly’s vantage point, he could view water along the stem wall.

William Murray’s testimony

Mr. Murray has owned a plumbing company since 2010.

In or around early-April 2018, Respondent dispatched Mr. Murray to repair a hose bib leak on the north side of Complainant’s residence. Mr. Murray determined that the tube, where the water drains from, had expanded due to freezing. The leak was not continuous, as the faucet had not been left in the “on” or “open” position. After Mr. Murray made the repair and replacement of the hose bib, he provided Complainant with maintenance and preventative education.

Steven Latimore’s testimony

Mr. Latimore has been Respondent’s owner since 1996. Respondent has worked exclusively in the Show Low, Arizona area for the past 20 years.

In or around late-June 2016, Respondent began construction on 660 S. Angela’s Pl. Show Low, Arizona 85901 for the original homeowner and builder, Roger Hesketh, per the design plans issued.

Respondent did not review the Subdivision Disclosure Report for Angela’s Place issued September 16, 2016, by the Arizona Department of Real Estate.

Respondent did not perform soil testing prior to beginning work on the project.

A runoff ditch was dug around the perimeter of the property to catch runoff water.

The Certification of Occupancy was issued 6 months after the construction of the residence was complete.

Respondent’s warranty for the property, as outlined in the contract executed between the Trust and Respondent, include remediations for foundational issues.

When Respondent was called to the property in or around late-April 2018, Mr. Latimore observed standing water in the rear of the home. Mr. Latimore also observed a walkway built off of the back porch that spanned across the drainage ditch, blocking the flow and capture of runoff water like a dam. Upon further investigation Mr. Latimore determined that the foundational piers under the residence had shrunk. He determined that the best way to remediate the issue was to “shim between the beams to maintain structural integrity.

Respondent believes the surface cracks throughout Complainant’s property are due to a leak in the hose bib, when it runs. On an unknown date Mr. Latimore went into Complainant’s crawlspace and discovered a leak in the stem wall, but no standing water. Per his inspection, Mr. Latimore opined that Complainant left the hose on the bib for one or more winter days, causing the pipe to crack and leak through the bib.

Per their report, no groundwater was encountered during PGG’s excavation.

Mr. Latimore opined that winter 2017/18 in the area was relatively dry, and argued that the moisture level at Complainant’s could not have been the result of weather.

Closing Arguments

Respondent’s closing argument

In closing, Respondent argued that “someone” changed Complainant’s landscaping, creating a barrier in the ditch Respondent dug to divert surface water away from the property. Per Respondent, the circumstance was exacerbated by Complainant failure to install rain gutters and/or snow guards, causing excessive moisture to seep into the foundation. Respondent also noted that Foreman had performed corrective work after Complainant was made aware that he no longer worked for and/or with Respondent, without Respondent’s express permission or consent. Respondent argued that it had built the project according to specifications and plans it was provided, and denied the existence of a design defect. Respondent further argued that if there was a defect in the design Trustee Roger Hesketh should be liable as the Subdivider. Respondent noted that during his testimony Investigator Allison could not identify what building code, if any, Respondent had violated. Respondent concluded that he had complied with the Directive and identified the problem causing the soil underneath Complainant’s property to expand, namely the modification of the drainage, lack of gutters, hose bib leak. To that end, Complainant’s neglect of his workmanship was sufficient excuse to take no further action under the Registrar’s Directive.

Complainant’s closing argument

In closing, Complainant argued that Respondent assumed the risk of building a residential subdivision in Angela’s Place because Respondent was aware, or should have been aware, that shallow spread footing was not to be used in that area and that backfilling around the foundation of a build atop the lot’s expansive soil was strongly encouraged. Complainant also argued that Respondent’s failure to take recommended precautions resulted in Complainant’s home sustaining structural defects such as cracking and warping. Moreover, Complainant argued that Respondent used draftsman blueprints drawn for another contractor, and never had a licensed engineer review or approve them prior to building. Complainant further argued that Respondent evinced his intent not to remediate the underlying project by failing to fully participate in the Registrar’s jobsite and compliance inspections. Additionally, although given several extensions by Complainant totaling about 8 months, Respondent never attempted to perform any of the corrective work on the project as prescribed by the Registrar’s Directive. Complainant concluded by beseeching the Tribunal to discipline Respondent’s license and impose a “$10,000.00 civil penalty into the Residential Contractors Recovery Fund.” [sic]

CONCLUSIONS OF LAW

The Registrar has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before OAH pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq.

The Registrar 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.

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”

Ariz. Rev. Stat. § 32-1154(A)(2) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of plans or specifications or any building code standards without consent of the owner.”

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.”

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.”

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 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 Registrar has the authority to issue license discipline under this provision, including summary suspension, revocation, or imposing a civil penalty or recovery fund award.”

Ariz. Rev. Stat. § 32-1154(E) holds, in pertinent parts, that the Registrar 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.”

Here, the material facts are clear.

It is clear from the record that Respondent built 660 S. Angela’s Pl. Show Low, Arizona 85901, Complainant and her family have been its sole occupants prior to and after it purchase on January 03, 2018, and that the home experienced varying degrees of structural issues for the entirety of Complainant’s occupancy. It is also clear that the property was under warranty when Complainant submitted her first workmanship complaint to Respondent, and within the statute of limitations when Complainant filed her complaint with the Registrar. Moreover, it is clear that the Registrar substantiated 20 of Complainant’s 28 complaint items and issued a Directive to Respondent that required compliance by April 19, 2019, and that Respondent failed to comply.

What is unclear, however, is the alleged violation of Ariz. Rev. Stat. §§ 32-1154(A)(2). The evidence of record establishes that Respondent built the underlying property at issue per specifications and that the City of Show Low approved Respondent’s work. There is no evidence in the record which tends to show that the plans themselves contained patent or latent defects. No statutory violation has been established by a preponderance of the evidence.

Therefore, the only remaining issue(s) to address are whether Respondent raised a sufficient justification or excuse for failing to timely and completely comply with the Registrar’s Directive in a workmanlike manner. This is an affirmative defense that Respondent bears the burden to establish. The evidence of record fails to establish that Complainant modified Respondent’s ditch to a damming state or “watered the foundation” as Respondent has repeatedly alleged – which undermines Respondent’s final argument that he was not required to perform any of the corrective work prescribed by the Registrar’s Directive. Thus, the record reflects that Respondent failed to adhere to a Registrar Directive, and had no affirmative defense(s) for doing so.

Because Complainant established violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22) by a preponderance of the evidence, Complainant has also established grounds for the Registrar to take disciplinary action against Respondent’s license and impose a civil penalty against Respondent pursuant to Ariz. Rev. Stat. § 32-1154(E).

Complainant may petition the Registrar’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,

IT IS RECOMMENDED that that on the effective date of the Final Order in this matter Respondent C J Latimore Construction, ROC License No 118118, shall be suspended for twenty (20) days.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $1,000.00 in certified funds as a civil penalty.

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before thirty (30) days following the effective date of the Registrar’s Order, the Registrar shall 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 Ariz. Rev. Stat. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty.

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, November 12, 2020.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors