ALJDEC decisions subject to certification as final

2019A-00975-RFA-LS-ROC · Registrar of Contractors · 2022-12-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kelly Peterson,

COMPLAINANT,

v.

Atlas General LLC

ROC License No. 277937,

RESPONDENT.

No. 2019A-00975-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 08, 2022 at 9:00 AM.

APPEARANCES: Assistant Attorney General Seamus Monaghan, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Katelyn Rolling as a witness. Kelly Peterson (“Complainant”) appeared on her own behalf. Alfonso Larriva appeared on behalf of Atlas General LLC (“Respondent”).

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 Registrar.

FINDINGS OF FACT

Background and Procedure

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record for ROC License No. 277937, as reflected on the Registrar’s public website. On March 30, 2012, the Registrar issued ROC License No. 277937 for General Residential B contracting to Respondent. The license is active and in good standing, having been renewed through March 31, 2024. Alfonso Antonio Larriva is listed as the Member on the license. Respondent’s address of record for the license is 6250E. Cheney Dr. Paradise Valley, AZ 85253-3518. There is no disciplinary record noted for the license on the Registrar’s website. The license has a $9,000.00 surety bond issued Western National Mutual Insurance Company, effective March 14, 2014.

On February 27, 2019, the Registrar received a complaint filed by Complainants alleging poor work performance. The Registrar designated it Complaint No. 2019-00975 and assigned Lisa Melton (“Investigator Melton”) for investigation.

On April 30 2019, Registrar investigator Lisa Melton (“Investigator Melton”) inspected the work that had been done on the project to date and took 11 photographs of the project. When she was finished, Investigator Melton drafted Jobsite Inspection Notes. Ultimately, Investigator Melton determined that complaint items 1 and 3 constituted poor or incomplete work, and failed to meet the Registrar’s minimum workmanship standards.

On June 10, 2019, Investigator Melton issued a Directive from the Registrar (“Directive”) to Respondent because she substantiated some of Complainant’s allegations that the work Respondent had done on the project failed to meet minimum workmanship standards. Respondent was put on notice that it had until 5:00 p.m. on June 29, 2019, 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, and 32-1154(A)(22) and 32-1154(E).

Due to the Registrar’s receipt of an addendum complaint submitted by Complainant on June 25, 2019, an addendum jobsite inspection was conducted on July 19, 2019, at 9:00 a.m. Investigator Melton inspected the addendum complaint item and took 8 photographs. Ultimately, Investigator Melton substantiated the additional item.

On July 22, 2019, Investigator Melton issued an Amended Directive from the Registrar (“Amended Directive”) to Respondent whereby Respondent was put on notice that it had until 5:00 p.m. on August 08, 2019, to notify the Registrar of its compliance with the Amended Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22) and 32-1154(E).

On August 12, 2019, at the request of the parties, Investigator Melton issued a 2nd Amended Directive from the Registrar (“2nd Amended Directive”) to Respondent whereby Respondent was put on notice that it had until 5:00 p.m. on September 04, 2019, to notify the Registrar of its compliance with the Amended Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22) and 32-1154(E).

On November 18, 2019, Investigator Melton conducted a compliance jobsite inspection and took 10 photographs of the project. When she was finished, Investigator Melton drafted Compliance Jobsite Inspection Notes whereby she noted the following:

Insulation that was inspected was not wet at the time of inspection. Advised Complainant that Registrar has no jurisdiction over mold. There were shingles which appeared to be somewhat raised, slightly fish mouthing. Respondent’s onsite representative acknowledged the issue. They could not determine the cause. It was decided that the manufacturer would be contacted to perform an inspection.

On November 19, 2019, the Registrar issued a Citation and Complaint (“Citation”) to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). Respondent was given until December 04, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On November 29, 2019, the Registrar received Respondent’s Answer.

On November 29, 2019, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 27, 2020. Per the Notice of Hearing the issue to be determined was whether the Registrar had 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.”).

On January 27, 2020, an administrative evidentiary hearing took place at OAH.

On March 20, 2020, the Registrar issued a Final Administrative Decision and Order to the parties which affirmed the Administrative Law Judge’s recommended decision. Respondent was held to be in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). As such, the Registrar suspended Respondent’s license for one (1) day and imposed a $500.00 civil penalty against Respondent’s license per Ariz. Rev. Stat. § 32-1154. On April 22, 2020, the Final Administrative Decision and Order became effective.

On March 04, 2022, the Registrar received Complainant’s petition for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G), in the amount of $14,400.00. Attached were copies of Complainant’s contract/estimates with Respondent and a repair bid from Sunland Development Corporation (“Sunland”).

On April 27, 2022, the Registrar issued a Notice and Order of Recovery Fund Claim Denial to the parties which held Complainant was ineligible for a payout from the Fund as she had not sustained actual damages per Ariz. Rev. Stat. § 32-1132.01(B).

On May 07, 2022, the Registrar received an appeal an request for hearing from Complainant.

On May13, 2022, the Registrar again referred the matter to the Office of Administrative Hearings for an independent evidentiary hearing. Per the Notice of Hearing on Appealable Agency Action sent to the parties on May 31, 2022, the issue(s) for hearing are to determine if the Registrar’s denial was properly made pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01, based on the evidence.

On December 08, 2022, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Katelyn Rolling as a witness and submitted 22 exhibits. Complainant testified on her own behalf and submitted 13 exhibits. Respondent called Alfonso Larriva as a witness. The Notice of Hearing was also admitted into the record. The substantive evidence is as follows:

Complainant owns property located at 17202 N. 49th Ave. Glendale, AZ 85308, which was the site of the underlying project at issue.

On or about October 22, 2018, the parties entered into a roofing agreement whereby Complainant signed an estimate provided by Respondent.

Ms. Rolling is a Legal Assistant II for the Registrar. Ms. Rolling made the determination that Complainant was ineligible for an administrative payout from the Fund because she did not satisfy all statutory requirements for an award. Specifically, Ms. Rolling determined the following:

On or about November 03, 2018, Complainant attempted to tender a $9,841.96 check to Respondent, which Respondent refused.

On or about December 01, 2018, Complainant mailed the check to Respondent, which Respondent refused to cash.

Thus, the underlying contract between the parties remains unpaid by Complainant.

As a result of Complaint No. 2019-00975 being filed with the Registrar, Respondent’s license was suspended for one (1) day and assessed a $500.00 civil penalty.

Ultimately, Ms. Rolling determined that the Sunland repair bid was out of alignment with the Directive and Investigator Melton’s findings. Per Investigator Melton, the Sunland repair bid was out of alignment with the parties’ original contract because it was “nearly a third more than the original quote,” the workmanship issue involved some of the shingles not all of them, “the shingles were Malarkey not Owens Corning,” and the flat roof in its entirety was not impacted and did not require replacement.

Therefore, because Ms. Rolling calculated that Complainant still owed payment on the contract, it was determined that Complainant did not sustain any actual damages.

Closing Arguments

In closing, the Registrar opined that Complainant failed to sustain her burden of proof in the matter. The Registrar argued that as a public fiduciary it was required to be a good steward of State funds, and as such, could not issue an award to Complainant as she was statutorily ineligible for a payout.

In closing, Complainant argued that because she prevailed in the underlying hearing for 2019A-00975-CHC-ROC and provided the Registrar with all requisite information to complete her Recovery Fund petition, she was entitled to the payout by the Registrar. Complainant opined that the Sunland repair bid was in alignment of her contract with Respondent, and fell within the scope of the Registrar’s Directive.

In closing, Respondent agreed with Registrar’s calculations and determination to find Complainant ineligible for an administrative payout from the Fund.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. The matter was properly brought before OAH.

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 establishing by a preponderance of the evidence that the Registrar’s Recover Fund claim denial was incorrect and/or improperly issued. The Registrar bears the burden to establish factors in mitigation 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.”

Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet specific eligibility criteria. An individual is eligible for an award from the residential contractors’ recovery fund if they both: (1) own residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance, and (2) actually occupy or intend to occupy the residential real property as the individual’s primary residence. Additionally, the applicant must have contracted with a residential contractor who was appropriately licensed either at the time of contract execution, when the first payment on the project was made, or when the work on the project first began.

Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”

Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Recovery Fund is $30,000.00.

Statutes should be interpreted to provide a fair and sensible result. Statutes shall be liberally construed to affect their objects and to promote justice. In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.” “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”

The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result.

In the case at bar, however, a detailed factual analysis is not necessary because Complainant failed to present any compelling evidence at hearing. Here, Complainant irrelevantly argued because she had given Respondent a check for the project that the project had been paid for. The record does not support this argument. Additionally, Complainant’s opinion that the Sunland repair bid was within the scope of Investigator Melton’s investigation findings, the Directive, and her contract with Respondent were all outweighed by the Registrar’s substantive evidence.

As such, Complainant failed to sustain her burden of proof in this matter.

Based on the credible and relevant evidence of record, the Tribunal concludes that the Registrar soundly established Complainant’s eligibility to access the Recovery Fund and also correctly determined that Complainant was not legally eligible for an administrative awarded from the Recovery Fund.

Therefore, the undersigned Administrative Law Judge must conclude that Complainant was properly denied an administrative payout from the Fund.

Complainant’s appeal is denied.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar affirm the Notice and Order of Recovery Fund Claim Denial dated April 27, 2022.

IT IS FURTHER RECOMMENDED that the Registrar deny Complainant’s request for an administrative payout from the Recovery Fund by dismissing her appeal.

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 forty (40) days from the date of that certification.

Done this day, December 20, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

c/o Legal Department

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Seamus Monaghan, Esq., Assistant Attorney General

Office of the Attorney General, Counsel for the Registrar

2005 N. Central Ave.

Phoenix, AZ 85004

[email redacted]

Atlas General LLC, Respondent

c/o Alfonso Larriva

6250 E. Cheney Dr.

Paradise Valley, AZ 85253-3518

[email redacted]

Kelly Peterson, Complainant

17202 N. 49th Ave.

Glendale, AZ 85308

[email redacted]

By: Miranda Alvarez

Legal Secretary