FINACT2018A-3897-CHC-ROC.pdf

2018A-3897-ROC · Registrar of Contractors · 2019-08-06

REGISTRAR OF CONTRACTORS OF THE STATE OF ARIZONA

Penny Latridis, Case No. 2018-3897 COMPLAINANT, Docket No. 2018A-3897-CHC-ROC v. Johnson Roofing LLC, FINAL ADMINISTRATIVE DECISION License No. ROC 272325, AND ORDER 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 MODIFICATION

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 modifies

it.

BACKGROUND

On April 24, 2019, the administrative law judge held a hearing on Complaint No. 2018A-3897-

ROC. Both parties appeared and called witnesses. ALJ Decision, p. 1. After the hearing the

administrative law judge issued its Final Administrative Decision and Order for the Registrar’s review.

The final administrative decision of the administrative law judge contains extensive findings of fact, and

the Registrar adopts those findings of fact by reference. ALJ Decision pp. 1-8 ¶¶ 1-36.

The administrative law judge concluded that the contract was invalid and void because

Complainant had refused to perform by paying the Respondent, and therefore a workmanship violation

could not exist under A.R.S. § 32-1154(A)(3) or A.A.C. R4-9-108. ALJ Decision p. 10 ¶¶ 11-13. The

administrative law judge also concluded that Respondent was not liable for failure to comply with the

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 written directive under A.R.S. § 32-1154(A)(22), because the Respondent neither created nor

exacerbated the leak, and because the investigator exceeded the Registrar’s authority by directing the

Respondent to repair the flashing at the stucco wall because it was outside the scope of the contractor’s

license.

Because the administrative law judge: 1) misstates Arizona contract law; 2) incorrectly held that a

contract was necessary for a violation of A.R.S. § 32-1154(A)(3); 3) contradicted the findings of fact that

a contract existed; and 4) improperly concluded that the Registrar cannot direct a licensed contractor to

correct work that is incidental or supplemental to the contractor’s license, the Registrar modifies the

Administrative Law Judge Decision.

WRITTEN JUSTIFICATION

First, the administrative law judge’s conclusions of law contradict the findings of fact that a

contract existed between the Complainant and Respondent for contracting. The administrative law judge

found that “Complainant and Respondent entered into a contract agreement whereby Respondent agreed

to perform roof work at Complainant’s residential property…for the sum total of $550.00. ALJ Decision

¶ 3. This finding of fact was supported by substantial evidence. See also ALJ Decision ¶ 23

(“Respondent agreed to make repairs and the parties entered into a contract agreement.”); ¶ 26

(“Complainant testified that she did not remit payment on her contract agreement with Respondent

because no monies were due until the project was complete….”); and ¶¶ 29-30 (“Mr. Johnson testified

that Respondent had complied with all terms of its contract with Complainant….”). Given the

administrative law judges’ finding of fact that a contract existed, and the substantial support for that

finding, the conclusion of law that an enforceable contact did not exist is incorrect.

Second, under Arizona contract law, a contract existed between the parties. 1 “For a contract to

exist, there must be an offer, acceptance of the offer, consideration, and terms sufficiently specific so that

Proof of the elements of a contract is not necessary or relevant to establishing a statutory violation of A.R.S. § 32-1154(A)(3) and A.A.C. R4-9-108. The issue before the administrative law judge was whether cause existed to discipline Respondent’s license. Keystone Floor & More v. Registrar of Contractors, 223 ARIZ. 27, 219 P. 3D 237, 241 (App. Div. 1 2009) (citation omitted) (issue in workmanship violation cases is whether contractor “fail[ed] to comply with the Workmanship Rule…”)..

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 the obligation[s] created by the contract can be determined.” RAJI (Civil) 5th Contract, Contract 3 (citing

Savoca Masonry Co. v. Homes & Son Constr. Co., 112 Ariz. 392, 394, 542 P.2d 817, 819 (1975); K-Line

Builders, Inc. v. First Fed. Sav. & Loan Ass’n, 139 Ariz. 209, 212, 677 P.2d 1317, 1320 (Ct. App. 1983)).

“[C]onsideration is adequate if it was agreed upon between the parties, and a promise or agreement to

perform an act is adequate legal consideration.” RAJI (Civil 5th) Contract Instructions, Contract 7, cmt.

(emphasis added) (citing Knack v. Industrial Comm’n, 108 Ariz. 545, 548, 503 P.2d 373, 376 (1972).

The ALJ found that the Respondent agreed to perform roof work, and the Complainant promised to pay

him $550 for the work. ALJ Decision ¶ 3. The Complainant’s promise to pay is sufficient consideration

for the formation of an enforceable contract under Arizona contract law2.

However, while the administrative law judge’s findings of fact raise substantial questions

regarding whether Respondent’s work met minimum work standards under A.A.C. R4-9-108, on the

record as described by the administrative law judge, it does not appear that Complainant met the burden

of proving that Respondent failed to meet the minimum workmanship standards. 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.A.C. R2-19-119(B). Arizona’s Workmanship Standards for Licensed

Contractors requires that for a leaking tile roof the “Contractor should determine [the] cause of [the] leak

and make necessary repairs.” June 2009, Roofs-Tile, number 1. Respondent agreed to perform work on

Complainant’s roof, and the roof may have been a contributing factor to the leak in Complainant’s home.

ALJ Decision p. 2 ¶ 3, p. 5 ¶ 18, and p. 6 ¶ 23. However, even after Respondent performed the work the

leak persisted. ALJ Decision p. 6 ¶¶ 23-25. While the Complainant attempted to establish that the

persistent leak was within the scope of the Respondent’s work, or a result of Respondent’s work on the

2 Although a material breach (also referred to as failure of consideration) “excuses performance by the non-breaching party. Non-material breach does not excuse performance by the other party, but may permit a claim for damages.” RAJI (Civil) 5th Contract, Contract 9 cmt. If either the Complainant or Respondent believe there is a breach of contract by the other party, they may elect to pursue a breach of contract claim for not allegedly performing their obligation to tender the consideration promised. However, that has no bearing on the enforceability or validity of the contract.

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 roof, the current cause of the leak cannot be identified. ALJ Decision p. 2 ¶ 3, p. 5 ¶ 18. Respondent

argued that he correctly performed the work he agreed to in accordance with the workmanship standards,

and that the cause of the leak exists as a result of an issue with stucco that was outside his scope of work.

ALJ Decision p. 7 ¶¶ 29-34. On these facts, the Complainant has not established by a preponderance of

the evidence that Respondent failed to meet minimum standards under A.R.S. § 32-1154(A)(3) and

A.A.C. R4-9-108, or agreed to perform supplemental stucco work or damaged the stucco during the work

on Complainant’s roof.

The Respondent cannot be held liable for failure to follow the written directive to correct work, if

the Complainant has not established that the work failed to meet minimum industry standards 3. Also,

Respondent sufficiently proved that he was effectively denied access to perform any remediation. While

the Registrar may not direct the method of a Respondent’s remediation, a Complainant may decline to

have specific work performed on Complainant’s property. Here, Respondent has argued that after

“proposing a course of action that the registrar… deemed appropriate we were denied access….” ALJ

Decision pp. 3-4 ¶12. Respondent offered to perform work at the Complainant’s house to either try to

correct issues, or determine the root cause of the leak. ALJ Decision p. 8 ¶¶ 35-36. Complainant, within

her rights, did not want the proposed work performed. Without permitting the contractor to perform work

that it believes may meet written directive, the Respondent was effectively denied access. Therefore,

Respondent is not in violation of A.R.S. § 32-1154(A)(22).

CONCLUSION

For the reasons stated above, the Registrar modifies the Administrative Law Judge’s Decision.

However, while the Registrar does not agree with the reasoning of the Administrative Law Judge’s

If the Complainant had established that the Respondent agreed to perform work on the stucco as incidental or supplemental work to the work on the roof, or damaged the stucco, the Registrar may have appropriately demanded that the Respondent remedy the work. A.R.S. § 32-1105(D) permits contractors to perform or contract for work that is incidental or supplemental to their license. The administrative law judge decision incorrectly holds that Investigator Bierma’s directive exceeded his authority, because stucco is outside of the Respondent’s license scope.

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 Decision, the Registrar concurs with the ultimate holdings that the Respondent is not liable for violations

of A.R.S. § 32-1154(A)(3) and A.A.C. R4-9-108, or A.R.S. § 32-1154(A)(22).

This decision is the final administrative decision in this case, and becomes effective on

September 11, 2019.

Dated August 2, 2019. Registrar of Contractors /s/ Joseph Citelli Joseph Citelli Chief Counsel Chief of Legal and Recovery Fund Copy mailed via USPS First Class mail August 2, 2019 to: Respondent Johnson Roofing LLC 713 W 1st Pl Mesa, AZ 85201 Complainant Penny Latridis 7525 E Gainey Ranch Rd Unit 207 Scottsdale, AZ 85258

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 Jenna Clark, Administrative Law Judge

Case No. 2018-3897 / DE

of 5 REGISTRAR OF CONTRACTORS 1700 W. Washington St. Suite 105 – Phoenix, AZ 85007-2812 Telephone (602)542-1525 1-877-692-9762 RECEIVED 7.5.2019 ROC LEGAL

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Penny Iatridis, No. 2018A-3897-ROC COMPLAINANT, ADMINISTRATIVE LAW JUDGE v. DECISION

Johnson Roofing LLC, ROC License: ROC 272325 RESPONDENT.

HEARING: April 24, 2019 at 1:30 PM and June 19, 2019 at 2:00 PM. APPEARANCES: Penelope Iatridis (“Complainant”) appeared on her own behalf with Dennis Bierma as a witness. William Richardson, Esq. appeared on behalf of Johnson Roofing LLC (“Respondent”) with Tyler Johnson as a witness. Nancy Listeros and Sterling Smith observed. ADMINISTRATIVE LAW JUDGE: Jenna Clark. _____________________________________________________________________ After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this RECOMMENDED ORDER to the Director of the Registrar of Contractors (“Registrar”). FINDINGS OF FACT BACKGROUND AND PROCEDURE 1. According to the Registrar’s public website, on April 08, 2011, the Registrar issued License No. 272325 Specialty Dual CR-42 Roofing contracting license to Respondent.1 The license is currently active and renewed through April 30, 2021.2 Tyler Kade Johnson is the Qualifying Party/Member on this license.3 Respondent’s address of record on the license is 713 W 1st Pl., Mesa, Arizona 85201-6404.4 2. Administrative Notice is taken of Respondent’s prior License record, for License No. 272325, as reflected on the Registrar’s public website on April 24, 2019. Such prior License record reflects that Respondent’s license is currently active.5 The

See https://roc.az.gov/contractor-search?Id=a0Yt000000ACUREEA5. Id. Id. Id. Id.

Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826 RECEIVED 7.5.2019 ROC LEGAL

license has no prior disciplinary record. The record reflects that there is one complaint against Respondent’s license, which is presumed to be related to this matter. 6 Respondent has an active $6,750.00 surety bond issued through RLI Insurance Company effective March 28, 2011.7 All of the funds are currently available. 3. On June 27, 2018, Complainant and Respondent entered into a contract agreement whereby Respondent agreed to perform roof work at Complainant’s residential property located at 7525 E. Gainey Ranch Rd., #207, Scottsdale, AZ 85258 for the sum total of $550.00.8 Specifically, Respondent was contracted to install a tile pan within the roof’s z-bar, install batten boards, remove and replace underlayment, remove and inspect under time and replace any broken tile(s), and replace or adjust flashing.9 The project commenced some time during the first week in July of 2018, and stopped at some point during the week of on July 15, 2018. 4. Complainant did not issue payment, in full or in part, to Respondent for any materials or work performed on this project. 10 5. On August 20, 2018, the Registrar received a poor workmanship complaint from Complainant which included a copy of the contractual agreement between the parties.11 6. On August 22, 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 from the Registrar on September 19, 2018, at 12:00 p.m. 12 7. On September 19, 2018, Registrar investigator Dennis Bierma (“Investigator Bierma”) conducted a review of the contract executed between the parties and inspected the work that had been done on the project to date. Investigator Bierma

Id. Id. See Hearing File, pages 91-95. Id. Flashing is a thin material, usually galvanized steel, which is used to divert water away from critical areas of the roof like wherever the roof plane meets a vertical surface. Z-bar is a type of flashing. See Hearing File, page 91. See Hearing File, pages 91-95. See Hearing File, pages 273-275. RECEIVED 7.5.2019 ROC LEGAL

also took six photographs of the project. 13 When he was finished, Investigator Bierma drafted JOBSITE INSPECTION NOTES.14

8. On October 04, 2018, Investigator Bierma issued a DIRECTIVE FROM THE REGISTRAR to Respondent because he substantiated Complainant’s allegation that the work Respondent had performed on the project failed to meet the Registrar’s minimum workmanship standards.15 Specifically, Respondent was ordered to complete the project per contract via appropriate means. 16 Respondent was put on notice that it had until 5:00 p.m. on October 30, 2018, to notify the Registrar of its compliance with the corrective order or face discipline pursuant to ARIZ. ADMIN. CODE R4-9-108 and ARIZ. REV. STAT. §§ 32-1154(A)(22) and 32-1154(E). 17 9. On or about October 04, Investigator Bierma issued a COMPLIANCE INSPECTION NOTIFICATION LETTER to the parties, advising that an onsite review would be conducted at the project site on November 01, 2018, at 10:00 a.m. 18 10. Consequently, the Registrar determined that Respondent did not comply with the DIRECTIVE. 11. On November 30, 2018, the Registrar issued a CITATION AND COMPLAINT to Respondent for alleged violations of ARIZ. REV. STAT. §§ 32-1154(A)(3); a violation of ARIZ. ADMIN. CODE R4-9-108, and 32-1154(A)(22).19 Respondent was given until December 17, 2018, to respond with its ANSWER or face discipline pursuant to ARIZ. REV. STAT. §§ 32-1154(A).20 12. Respondent electronically filed its ANSWER to the Registrar on December 17, 2018,21 which notes in pertinent part, “In regards to this citation we did our best to resolve it: first when the issue became evident and we believed it to be outside of our

See Hearing File, pages 76-81 See Hearing File, pages 276-277. See Hearing File, pages 270-271; see also Respondent Exhibit 2. Id. Id. See Hearing File, page 272. See Hearing File, pages 3-9; see also Respondent Exhibit 1. Id. See Hearing File, page 82. RECEIVED 7.5.2019 ROC LEGAL

ordinary scope of work we offered to walk away from the job and not drop demands for any compensation. Furthermore after proposing a course of action that the registrars investigator deemed appropriate we were denied access to complete the work. Furthermore after issuance of the citation I reached out to the complainant requesting what she wanted us to do in this matter. I have delayed replying to give her as much time to respond as possible. To this date i have not received a response from her.” [sic] 13. On December 26, 2018, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on February 25, 2019.22 Per the NOTICE OF HEARING23 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 Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3). Charge 2: 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 14. Complainant testified on her own behalf and called Investigator Bierma as a witness. Respondent called Tyler Johnson as a witness and submitted eight exhibits into the record. The Registrar’s electronic hearing file and NOTICE OF HEARING were also admitted into the evidentiary record. Investigator Bierma’s testimony 15. Investigator Bierma testified that he conducted a jobsite inspection of the project on September 19, 2018, including a visual inspection of the underlying window

See Hearing File, pages 1-2. Due to exigency the matter was reset to 1:30 p.m. on April 24, 2018, and continued to 2:00 p.m. on June 19, 2019. See NOTICE OF HEARING. RECEIVED 7.5.2019 ROC LEGAL

area at issue, observation of the roof where Respondent performed work, and interior water damage. 16. Because he was unable to determine where the underlying leak was originating from, or why, Investigator Bierma scheduled a water test for October 04, 2018. 17. On October 04, 2018, Investigator Bierma conducted a water test. 24 Specifically, he sprayed hose water from the ground up onto the wall above the window at issue for about five minutes, and then inspected inside the residence above the window where the water damage is visible whereby he determined the area was dry. Investigator Bierma then returned outside and sprayed hose water from the ground up to Complainant’s roof for about two minutes, at which time water began dripping from above the interior window where the damage is located. 18. Based on Investigator Bierma’s observations and testing he determined that the water was leaking from the roof, even though he could not identify exactly where on the roof the leak was originating from. Per Investigator Bierma, the leak was not necessarily as a direct result of Respondent’s work, but resulting from work Respondent had performed in the area of the leak. After Respondent protested, as Investigator Bierma did not go up on Complainant’s roof to investigate or get up on a ladder, Investigator Bierma offered to perform another water test. Because Complainant counter protested, as she did not want additional water damage on the interior of her home, Investigator Bierma acquiesced to her objection. 19. Investigator Bierma testified that he issued a DIRECTIVE on October 04, 2018, whereby he instructed Respondent to remediate Complainant’s roof leak by appropriate means. 20. In an email dated October 26, 2018, Investigator Bierma granted Respondent permission to perform stucco repairs “as needed” corollary to its roofing remediation work, or subcontract out necessary stucco work.25 Investigator Bierma also granted Respondent permission to “subcontract out any needed stucco work.” 26

See Hearing File, pages 84-90. See Hearing File, page 22; see also Respondent Exhibit 1. Id. RECEIVED 7.5.2019 ROC LEGAL

Because another water test was already scheduled for the following week, Investigator Bierma informed the parties that he would grant an extension upon request and reschedule the compliance inspection.27 Because the parties agreed to an extension, the compliance deadline was extended to November 11, 2018. 21. Although a compliance inspection had been scheduled, it did not take place because no corrective work had taken place during the compliance period. Respondent had sent Complainant two remediation proposals, but she declined both of them. 28 22. No prehearing inspection was performed in this case for the same reason. Complainant’s testimony 23. Complainant testified that during a storm one of her interior windows began to leak. Complainant contacted Respondent because she thought the water was leaking through her roof, as she had experienced similar affects as a result of a roof leak sometime in 2015.29 Respondent agreed to make repairs and the parties entered into a contract agreement. 24. Complainant alleged that Respondent did not adhere to or complete contract term #52 or #54, but agreed that she did not go up on the roof to inspect Respondent’s work or materials. 25. Complainant is frustrated with Respondent because the initial “repair” did not remedy her roof leak, Complainant had to call Respondent out several times afterwards to try and repair the leak, and the replacement tiles Respondent affixed were not the same color as her other roof tiles. Although Respondent denied being responsible for the leak Respondent had agreed to replace the roof’s underlayment but did not. Respondent alleged that the leak originated from within the stucco, but the proposed remediation’s varied between not affecting the stucco and leaving a sizable hole in the stucco.

Id. See Respondent Exhibit 8. Investigator Bierma noted that neither a complainant nor the Registrar had control over how a respondent performed a remediation; a complainant must let a respondent finish a job before the Registrar may make a workmanship determination. See Respondent Exhibit 5. RECEIVED 7.5.2019 ROC LEGAL

26. Complainant testified that she did not remit payment on her contract agreement with Respondent because no monies were due until the project was complete, and by the date she filed her complaint with the Registrar the project was not finished. 27. Per Complainant, she lives in a neighborhood governed by a strict homeowners association. Her roof tiles are required to be a certain color, and all tiles on her roof must match. 28. Complainant denied preventing Respondent’s access to the project site. Tyler Johnson’s testimony 29. Mr. Johnson testified that Respondent had complied with all terms of its contract with Complainant, except for term #2591. Mr. Johnson testified that Respondent was not required to install z-bar, only install tile a 6” tile pan in the z-bar. 30 Regarding term #54, Mr. Johnson clarified that Respondent had adjusted Complainant’s flashing as replacement was unnecessary. 30. Mr. Johnson agreed that Complainant had not paid the contract, in whole or in part. 31. Mr. Johnson testified that Complainant’s roof had individual waterproofing systems in the stucco and the wall, which slopes and diverts away excess water. 31 However, due to a negative pitch in the z-molding, some water ended up in the metal resulting in Complainant’s leak.32 32. Mr. Johnson argued that the sealant/caulking/paint combination, that is visible along a section where Complainant’s roof meets a portion of the stucco wall, is not his work but rather the product of a prior contractor.33 33. Mr. Johnson testified that the only persons to ever inspect Complainant’s roof in 2018, by getting on the roof, were himself and three of his employees. Mr. Johnson testified that all work Respondent performed met industry standards. 34. Per Mr. Johnson, the Registrar never advised Respondent of the exact work it had performed for Complainant that was allegedly outside of their minimum

See Respondent Exhibits 3 and 4. See Respondent Exhibit 12. Id; see also Respondent Exhibit 11. Id. RECEIVED 7.5.2019 ROC LEGAL

workmanship standards, and that the Registrar’s DIRECTIVE to perform stucco work was improper as such repairs were outside the scope of Respondent’s license.34 35. Mr. Johnson also alleged that Complainant refused Respondent access to the project multiple times after the DIRECTIVE was issued, which prevented Respondent from redoing the project and/or fully investigating the root cause of Complainant’s leak. 36. Mr. Johnson testified that Respondent offered Complainant three remediation options, prior to the DIRECTIVE compliance deadline, which were all refused.35 CONCLUSIONS OF LAW 1. 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 the Office of Administrative Hearings pursuant to ARIZ. REV. STAT. §§ 41-1092 et seq. 2. 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.36 3. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.37 4. Complainant bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.38 Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard. 39 5. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”40 A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the

See Respondent Exhibit 2. See Respondent Exhibit 8. See ARIZ. REV. STAT. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990). See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). ARIZ. REV. STAT. § 41-1092.07(G)(2); ARIZ. ADMIN. CODE R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). See ARIZ. ADMIN. CODE R2-19-119(B)(2). MORRIS K. UDALL, ARIZONA LAW OF EVIDENCE § 5 (1960). RECEIVED 7.5.2019 ROC LEGAL

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.”41 6. Statutes should be interpreted to provide a fair and sensible result. 42 Statutes shall be liberally construed to affect their objects and to promote justice.43 7. 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.” 8. 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.” 9. 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.” 10. 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

BLACK’S LAW DICTIONARY at page 1220 (8th ed. 1999). See 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.”). See ARIZ. REV. STAT. § 1-211(B). RECEIVED 7.5.2019 ROC LEGAL

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.” 11. Here, the underlying contract between the parties is invalid. 12. The requisite elements that must be established to demonstrate the formation of a legally binding contract are (1) an offer; (2) acceptance; (3) consideration; (4) mutuality of obligation; (5) competency and capacity; and, in certain circumstances, (6) a written instrument. 44 It is a well-established legal principal that a contract is void without consideration. Because both parties had an agreement, each of the parties was required to furnish consideration by giving the other something as exchange. Complainant did not provide any consideration to Respondent for its labor or materials, which voids their agreement because it cannot be enforced in its gratuitous state. 13. Therefore, no violations of ARIZ. REV. STAT. § 32-1154(A)(3) or ARIZ. ADMIN. CODE R4-9-108 exist. 14. Because a Directive was issued by the Registrar, however, a determination as to whether a violation of ARIZ. REV. STAT. § 32-1154(A)(22) occurred must be made. 15. Respondent conceded that it did not comply with the Registrar’s DIRECTIVE. Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to timely and completely comply with the Registrar’s DIRECTIVE. This is an affirmative defense that Respondent bears the burden to establish. 16. Here, Respondent provided evidence in mitigation to refute Investigator Bierma’s conclusion that its work on the underlying project caused Complainant’s leak, which justifies its inaction in this matter. 17. The evidence of record establishes that Complainant’s leak was preexisting. There is no evidence in the record to suggest Respondent’s work exacerbated the leak or created an entirely new leak. Thus, Respondent may not be

The written instrument in this case dictates in term #13 that Complainant had thirty-days from Respondent’s completion date to tender payment. Complainant’s dissatisfaction with Respondent’s work, in whole or in part, is not a legally sufficient justification or excuse to withhold payment. The record reflects that Respondent completed the project for this purpose. See Hearing File, page 20. RECEIVED 7.5.2019 ROC LEGAL

held liable for repairing damage that it did not cause. The record reflects that Respondent upheld its contractual obligation(s) to Complainant. Therefore, no violations of ARIZ. REV. STAT. § 32-1154(A)(22). 18. Notably, although the DIRECTIVE explicitly states that Respondent is not permitted to perform work outside the scope of its license, or hire contractors to perform work outside of Respondent’s license, in an email dated October 26, 2018, Investigator Bierma granted Respondent permission to perform stucco repairs “as needed” corollary to its roofing remediation work, or subcontract out necessary stucco work 45. This Tribunal holds that this permission exceeded the scope of Investigator Bierma’s authority, as Respondent could have been cited by the Registrar under ARIZ. REV. STAT. §§ 32-1154(A). 19. Upon review of the relevant and credible evidence of record, this Tribunal finds that Complainant has not sustained her burden of proof in this matter. 20. Because no cause has been established for the Registrar to discipline Respondent’s contractor’s license under ARIZ. REV. STAT. §§ 32-32-1154(A)(3), 32- 1154(A)(22), or ARIZ. ADMIN. CODE R4-9-108, it is appropriate to close Complaint No. 2018-3897. RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that Complaint No. 2018-3897 against Respondent Johnson Roofing LLC ROC License No. 272325 shall be closed. 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 days from the date of that certification. Done this day, July 05, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to: See Hearing File, page 22; see also Respondent Exhibit 1. RECEIVED 7.5.2019 ROC LEGAL

Jeffrey Fleetham, Director Registrar of Contractors