ALJDEC decisions subject to certification as final

2018A-365-CHC-ROC · Registrar of Contractors · 2018-06-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Dale Thomas Marolf,

COMPLAINANT,

Kelly Gene Helgeson dba,

Iron Man Building ,

License No: 311673

RESPONDENT.

No. 2018A-365-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 8, 2018

APPEARANCES: Dale Marlof, Complainant, Kelly Helgeson, Respondent and

Qualifying Party, JoAnn Helgeson, Mark Hanson, Esq., and Attorney for the Respondent, Steve Philpot, Investigator, and Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson _____________________________________________________________________

The Procedural History

On May 4, 2018, the Registrar of Contractors (“ROC”) issued a Notice Of Hearing setting the above-captioned matter for hearing for May 16, 2018 at 01:00 PM at the Office of Administrative Hearings in Phoenix, Arizona.

Respondent Kelly Gene Helgeson d/b/a, Iron Man Buildings [hereinafter referred to as “Iron Man”] holds license number 311673 first issued by the ROC on January 1, 2017. As of January 8, 2018, the license for Iron Man has been administratively suspended for lack of bond. As of the date of this Recommended Order, Iron Man’s license remains in a suspended status.

At the May 16, 2018 hearing, Complainant appeared personally. Mr. Kelly Helgeson, Respondent’s Qualifying Party, appeared personally and through his attorney.

On May 24, 2018, the ROC filed an Amended Citation stating that:

[A] hearing was conducted and the Registrar discovered that it erroneously listed a violation of A.R.S. § 32-1154(A)(3) for Charge 1 that should have instead been listed as a violation of A.R.S. § 32-1154(A)(1). Due to this clerical administrative error, Respondent has not been sufficiently notified of the charges levied against it. Therefore, the Registrar issues this Amended Citation with the appropriate charges and permits Respondent an opportunity to Respond in accordance with A.R.S. § 32-1155(A).

On May 25, 2018, it was Ordered Holding the Record Open in this case until close of business, June 8, 2018 to permit Iron Man a reasonable opportunity to file an Answer to the Amended Citation. Iron Man timely filed its Answer to the Amended Citation advising, among other things, the following:

Here, although the Registrar mistakenly cited a violation of (A)(3) rather than. (A)(1), the Registrar’s Investigator and both parties addressed an abandonment claim during the May 16. 2018 administrative hearing. Accordingly, there is no cause for a. rehearing or a second hearing which would violate Respondent's rights and constitute a waste of administrative resources...

The record having been closed on June 8, 2018 and the Respondent’s Answer to the Amended Citation having been filed indicating no further hearing was required to address ROC’s Citation Amendments, the ALJ determined to issue its Recommended Order in this matter.

FINDINGS OF FACT

Complainant Dale Thomas Marolf alleges in his Complaint filed January 25, 2018, that he entered into an agreement on August 17, 2017 with Iron Man it to provide excavation services on the Complainant’s new home construction site in Sedona, Arizona. The Complainant is the owner and builder of this project. Iron Man was paid more than one thousand dollars for its services on this project. The Complaint alleges poor workmanship and abandonment.

Following the filing of the Complaint the matter was assigned to ROC Inspector Steve Philpot for investigation. Mr. Philpot arraigned to conduct a Job Site Inspection [“JSI] and on February 9, 2018 the JSI was conducted. Immediately thereafter, Mr. Philpot issued his Directive from the ROC on February 22, 2018 containing a Corrective Work Order [“CWO”] directed to Iron Man. The CWO indicated:

At this time, a violation of state law cannot be established for alleged poor work. Because Respondents work is not completed and it’s considered work in progress, the Registrar cannot substantiate that Respondent’s work failed to meet minimum construction standards or violation of A.R.S. § 32-1154(A)(3)...

The stated deadline in the CWO for compliance was March 10, 2018. On March 13, 2018, the ROC issued its Citation to Iron Man alleging possible violations of:

Rule 4-9-108 titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3)

A violation of A.R.S. § 32-1154(A)(12), specifically a violation of 1158(A); and

A violation of A.R.S. § 32-1154(A)(22).

No evidence was introduced or entered of record to dispute the Investigator’s finding at the JSI regarding workmanship or that that Respondent failed to meet minimum construction standards or violation of A.R.S. § 32-1154(A)(3).

Inspector Nelson testified consistent with his Job Site Inspection Notes that

“The parties do not have a written agreement for the project, however the email from the Respondent dated Feb 2, 2018, indicates the “Proposal dated August 16, although not signed, is basis for work to be completed.”

The Proposal dated August 16, 2017 [hereinafter the “Proposal”] Mr. Philpot refers to in his Job Site Notes and his testimony is unsigned by either the Complainant or the Respondent.

Attached to the Complaint, is the written document dated August 17, 2017 [hereinafter, the “August 2017 Writing”]. It bears the notarized and sworn signature of the Complainant and a witness. The August 2017 Writing is not signed by Iron Man, its agents or employees. At the hearing, Dale Thomas Marolf identified and offered the August 2017 Writing as being the contract between the Complainant and Iron Man.

At hearing, Respondent Kelly Helgeson testified for Iron Man stating that Iron Man denies the August 2017 Writing had ever been seen by him until it was disclosed as an attachment to the Complaint in this case. He said Iron Man denies having entered into the August 2017 Writing agreement with Mr. Marlof. The August 2017 Writing sets for a list of items of excavation and contains a late performance penalty clause as follows:

Ironman Enterprises understands and agrees if not completed and approved by 01/16/18 (5 months) D. Marolf will notify the ROC and Ironman Enterprises will refund 50% of all monies paid to date within 60 days & sign over K. Helgeson's $35,000 Earthmover. If Ironman Enterprises cashes check #146 enclosed for $18,406.25, Ironman Enterprises is authorized to do all work as specified in the time limits stated above.

Mr. Helgeson testified emphatically that no reasonable engineering business would ever agree to give back half of its contract charges and turn over its dirt moving equipment as a penalty for late performance and that he certainly did not enter into such an agreement.

Comparison of the August 17, 2017 Writing with the August 16, 2017 Proposal demonstrates to the ALJ that the scope of work, terms of completion and price between the two documents are materially different. Additionally, while the Proposal has no penalty clause for late performance, the unsigned (by Iron Man) August 17 2017 Writing contains what was characterized as an onerous penalty clause.

Other than the August 16, 2017 Proposal and the August 17 2017 Writing, no other written evidence was offered to reflect the term of an agreement between these parties.

Inspector Nelson indicated in his Job Site Notes from the JSI that he conducted that “I have however substantiated the allegation of abandonment. The Respondent has indicated by email that “I want to be fully pardoned from this site.” At hearing Mr. Nelson testified that his abandonment determination was based upon his observation of work that to him appeared to still be “in-progress” and the statement contained in this e-mail. Taken in context with the entirety of the e-mailed comment, the statement ““I want to be fully pardoned from this site” is not a declaration of abandonment or otherwise a declaration of an anticipatory breach. To the contrary, the sense of the e-mail was that the Respondent was communicating with the ROC official in charge of processing the Complaint [as opposed to the other purported contracting party] and was stating that it is was his hope that Iron Man would be relieved by the ROC of any responsibility to complete this job.

Neither the August 17, 2018 Writing nor the Proposal contain all statutorily required contract language as required by A.R.S. § 32-1158(A). Specifically, absent from these documents are:

The estimated date of completion of all work to be performed under the contract;

A prominently displayed notice “That the property owner has the right to file a written complaint with the registrar for an alleged violation of A.R.S. A.R.S. §32-1154, (A); and,

A prominently displayed notice displaying 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 A.R.S. §32-1155, subsection A.

CONCLUSIONS OF LAW

“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)(1).

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.

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).

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.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

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).

The preponderance of the evidence fails to demonstrate that the parties had a “meeting of the minds” either with regard to the scope of work to be performed by Iron Man or as to the terms of a contract (including time of completion, penalties for late performance or an agreed upon price for services to be rendered). There is no evidence of a contract in this case.

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: .... 1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

Complainant has not shown by a preponderance of the evidence that Respondent committed the alleged violation of Ariz. Rev. Stat section 32-1154(A)(1).

Complainant has not shown, by a preponderance of the evidence that Iron Man’s work on this project was below minimum standards. No evidence was presented to support the contention that Respondent has violated A.R.S. § 32-1154(A)(22) and, therefore, Complaint has failed to meet its burden to prove, by a preponderance of the evidence, that Respondent violated A.R.S. § 32-1154(A)(22).

The evidence shows that absent from the documents presented by either party used in an effort to prove of the existence of a contract were :

The estimated date of completion of all work to be performed under the contract;

A prominently displayed notice “That the property owner has the right to file a written complaint with the registrar for an alleged violation of A.R.S. A.R.S. §32-1154, (A); and,

Notwithstanding, A.R.S. § 32-1158(A) 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 shall contain in writing at least...” the items heretofore listed [emphasis added]. The the existence of a contract between these parties has not been found to exist. Thus, Complainant has failed to meet its burden of proof, by a preponderance of the evidence, that Iron Man violated A.R.S. § 32-1158(A).

RECOMMENDED ORDER

IT IS RECOMMENDED it be ordered that on the effective date of the final Order in this matter, the Citation and Complaint in Case No. 2018A-365-CHC-ROC be 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, June 23, 2018

/s/ Randolph D. Wolfson

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

c/o Legal Department

1700 W. Washington Street, Suite 105

Phoenix, AZ 85007

By: _________________