ALJDEC decisions subject to certification as final

2018A-657-CHC-ROC · Registrar of Contractors · 2018-08-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Sandra Jean Schafer,

COMPLAINANT,

v.

Mirage Custom Homes LLC

DBA: Hoctor and Sons Construction,

License No. B.226450-R,

RESPONDENT.

No. 2018A-657-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING DATES: June 15, 2018, and August 10, 2018; telephonic status conferences were held on July 2, 2018, July 16, 2018, and July 27, 2018.

APPEARANCES: Sandra Jean Schafer (“Complainant”) appeared on her own behalf on both hearing dates and at all telephonic status conferences; Mirage Custom Homes LLC DBA: Hoctor and Sons Construction (“Respondent”) appeared through its qualifying party/member Philip Andrew Hoctor on the June 15, 2018 hearing date and at all telephonic status conferences; Respondent was represented by Matthew J. Pierce, Esq., Warner Angle Hallam Jackson & Formanek PLC at the August 10, 2018 hearing date.

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

According to the Registrar of Contractors’ (“the Registrar’s”) public website, on or about November 12, 2006, the Registrar issued License No. for general residential contracting to Respondent.

On or about February 12, 2018, Complainant filed a complaint with the Registrar against Respondent, alleging that it had failed to provide updated plans for or to complete an addition to her house at 7404 W. Crest Ln., Glendale, Arizona 85310. As a result, the addition had been exposed to weather for three months.

The Registrar assigned the complaint to its Investigator Stephen Lawton for investigation. On March 9, 2018, Investigator Lawton performed a jobsite inspection, which Complainant and Respondent’s qualifying party/member, Mr. Hoctor, attended. On March 20, 2018, Investigator Lawton issued a Directive that required Respondent to perform the following work:

1. Respondent is to obtain corrected plans from local jurisdiction required to complete project, if the local jurisdiction determines that there are corrective issues during the inspection the Respondent will have to correct by Appropriate Means.

2. Complete project per agreements.

The deadline for Respondent to comply with the Directive was on or before April 9, 2018, at 5:00 p.m.

After Respondent failed to complete the project, Investigator Lawton referred the complaint to the Registrar’s Legal Department. On April 17, 2018, the Registrar issued a Citation that charged cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, and A.R.S. § 32-1154(A)(22).

Respondent’s qualifying party/member Mr. Hoctor filed a timely written answer to the Citation, stating that Respondent was “in the process of getting this [complaint] settled, resolved or dismissed.”

The Registrar referred Complainants’ complaint to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing.

The first hearing date was on June 15, 2018. Investigator Lawton testified that he believed that the project was about 50% complete. Mr. Hoctor appeared on behalf of Respondent and indicated his willingness and desire to complete the project. Mr. Hoctor estimated that Respondent would need 30 days to complete the addition. Complainant agreed that Respondent could continue working on the project, but requested that regular status conferences be scheduled to allow the Administrative Law Judge (“ALJ”) to gauge Respondent’s progress on completing the addition. The ALJ informed the parties that she would set status conferences on July 2, 2018, and July 16, 2018.

The first telephonic status conference was held on July 2, 2018. Complainant indicated that she was not satisfied with Respondent’s progress, but that she had paid Respondent an additional $3,000.00 for materials and subcontractors and had paid $500.00 directly to a sheetrock subcontractor whom she had found, which Respondent promised to reimburse.

Mr. Hoctor testified at the first status conference that Respondent agreed to hire Complainant’s sheetrock subcontractor after its original sheetrock subcontractor had failed to appear. Respondent had purchased and installed insulation and would reimburse $500.00 to Complainant the next day. Respondent had ordered windows and would paint the addition the next week. Respondent was working with the city’s inspector to get the project to pass inspections.

The second telephonic status conference was held on July 16, 2018. Complainant stated that the windows still were not installed, that the house had been torn up since October, and that she had paid $2,000.00 for the sheetrock subcontractor, but that Respondent had only paid her $500.00 back.

Mr. Hoctor stated at the second status conference that the project had passed inspection, but that Complainant kept making changes to plans and contacted the window manufacturer directly, which complicated Respondent’s efforts to obtain the windows. Mr. Hoctor stated that he would give appropriate credit to Complainant. Mr. Hoctor also promised that Respondent would install the windows, finish the electrical trim-out, and install the air conditioner by the end of the week. Mr. Hoctor indicated that Respondent had delivered the HVAC unit to the site and had paid for the windows.

Both parties agreed that Respondent had delivered the HVAC unit to the site. The ALJ was concerned that if a replacement contractor was unwilling to install a unit purchased by another contractor, economic waste might result and, in any event, Complainant if Respondent did not install the air conditioner, Complainant might not have any air conditioning in the addition for many months. In addition, although Mr. Hoctor said he had ordered and paid for the windows, only plywood protected the addition from the monsoon storms if Respondent were allowed to install the windows, Complainant’s addition might be better protected from the elements. The ALJ suggested that Complainant allow Respondent two more weeks to install the HVAC unit, install the windows, and finish the electrical system and she reluctantly agreed.

The third telephonic status conference was held on July 27, 2017. Complainant was unwilling to allow Respondent to continue working on the project and wished to “pull the plug” on its involvement in constructing the addition. Complainant stated that the windows that Respondent ordered were the wrong size. Mr. Hoctor stated that Respondent had a crew at Complainant’s house to continue work on the project. At Complainant’s direction, Mr. Hoctor stated that he would call off Respondent’s crew.

To allow a better record to be made of the current status of the project in the event Complainant eventually made a claim to the Residential Contractors’ Recovery Fund or either of the parties sued the other for breach of contract, the ALJ asked Investigator Lawton to perform a second jobsite inspection and scheduled a further hearing.

A further hearing was held on August 10, 2018. Complainant appeared on her own behalf. Mr. Hoctor appeared with an attorney, who had filed a notice of appearance on Respondent’s behalf on August 9, 2018. Investigator Lawton appeared.

Investigator Lawton provided his Compliance Jobsite Inspection Notes dated August 9, 2018, that provided in relevant part as follows:

Compliance Findings: It has been determined by this Investigator that the allowable time after due date issued by this investigator expired, still has not brought the Respondent within compliance of the directive. Windows, painting, baseboards, balcony decking and pavers are just a number of items not completed. HV/AC has been installed but is not per manufacturers specifications. Respondent show[s] up at the inspection with windows that were to be installed in the back of his truck. Initial directive issued by the ROC was 03/20/2018, which was over 4 months ago and is still not completed. Original proposal was written 06/2017 over a year ago.

Investigator Lawton also provided 27 photographs of the status of the job. Investigator Lawton reiterated that, in his opinion, Respondent had had more than enough time to complete the room addition.

In response to Respondent’s attorney’s questions, Investigator Lawton acknowledged that the March 20, 2018 Directive did not allege any specific workmanship deficiencies. Investigator Lawton testified that the Registrar required Respondent to complete the job under the authority of A.R.S. § 32-1154(A)(3) and A.A.C. R4-9-108. Investigator Lawton testified that A.A.C. required contractors to timely complete their construction projects, as well as requiring contractors to comply with the construction industry’s and the Registrar’s minimum workmanship standards.

Investigator Lawton testified that he had measured the windows on Respondent’s truck and acknowledged that there was nothing non-compliant about the windows.

Investigator Lawton testified that the manufacturer’s specifications for the HVAC unit required a certain clearance from walls and that the HVAC unit was too tight against the south wall of the addition. Investigator Lawton acknowledged that the design drawings for the project did not show the location of the HVAC unit. Investigator Lawton acknowledged that because the HVAC unit was not on site at the time of the first jobsite inspection, neither the March 20, 2018 Directive nor the Citation addressed Respondent’s alleged failure to comply with the manufacturer’s specifications. The record does not show whether Respondent’s installation of the HVAC unit passed the city’s inspection.

Respondent’s attorney expressed the opinion that A.R.S. § 32-1154(A)(3) and A.A.C. R4-9-108 do not authorize the Registrar to suspend or revoke a contractor’s license for failing to timely complete a project, as opposed to failing to comply with the industry or the Registrar’s minimum workmanship standards. The ALJ stated that, given the time that the matter had been pending in OAH, she would not request briefing on the issue but would note that Respondent’s attorney had raised the issue.

Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s prior disciplinary history as shown on the Registrar’s public website on this date. Respondent’s license was on a finite suspension as discipline in another matter between May 30, 2017 and May 31, 2017.

CONCLUSIONS OF LAW

The Registrar has jurisdiction to determine whether a licensed contractor has violated any of the subsections of A.R.S. § 32-1154(A) that furnish grounds for the Registrar to suspend or revoke its license. Because Respondent’s attorney raised the issue of the Registrar’s jurisdiction to suspend or revoke a contractor’s license for failing to timely complete a construction project on the last hearing date, the Administrative Law Judge notes that under the controlling common law, “[n]ormally, jurisdiction of the subject matter may be raised at any time, including for the first time on appeal.”

Complainant bears the burden of proof to establish cause to discipline Respondent’s licenses 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.”

A.R.S. § 32-1154(A)(3) includes among the grounds to suspend or revoke a contractor’s license, “[v]iolation of any rule adopted by the registrar.” Although A.R.S. § 32-1158(A)(4) requires a contractor to include in any contract with a property owner in an amount of more than $1,000.00, “[t]he estimated date of completion of all work to be performed under the contract,” no statute specifically or unequivocally makes failure to timely complete a project grounds to suspend or revoke a contractor’s license. A.A.C. R4-9-108 provides as follows:

A contractor shall perform all work in a professional and workmanlike manner.

A contractor shall perform all work in accordance with any applicable building codes and professional industry standards.

All work performed by a contractor in a county, city, or town that has not adopted building codes or where any adopted building codes do not contain specific provisions applicable to that aspect of construction work shall be performed in accordance with professional industry standards.

The ALJ defers to the Registrar’s interpretation and application of the “professional and workmanlike manner” referred to A.A.C. R4-9-108(A) and/or the “professional industry standards” referred to in A.A.C. R4-9-108(B) require contractors to complete their construction projects within a reasonable time. Investigator Lawton credibly testified that, in his expert opinion, Respondent had had more than enough time to complete Complainant’s addition. Therefore, the ALJ concludes that Complainant established cause to revoke or suspend Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3) and A.A.C. R4-9-108.

The Registrar issued a Directive on March 20, 2018, that required Respondent to complete the addition on or before April 9, 2018, at 5:00 p.m. Respondent did not request that the time for completion be extended and, in any event, failed to complete Complainant’s project, even after four months after the original due date on the Directive. Therefore, Complainant established cause to revoke or suspend Respondent’s licenses under A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is ordered that on the effective date of the final order in this matter, as a result of Complainant Sandra Jean Schafer’s complaint in Case No. 2018-657 and the established violation of A.R.S. § 32-1154(A)(3), Respondent Mirage Custom Homes LLC DBA: Hoctor and Sons Construction’s License No. B.226450-R shall be suspended for three business days.

It is further recommended that on or before thirty days after the effective date of the final order, Respondent shall be required to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(E).

It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the final 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 A.R.S. § 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 five days from the date of that certification.

Done this day, August 27, 2018.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors