ALJDEC decisions subject to certification as final

2019A-01312-CHC-ROC · Registrar of Contractors · 2019-10-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 20, 2019 APPEARANCES: Brian Flaherty, attorney, appeared on behalf of Complainant. Steve Sanford Wilbur appeared on behalf of D S W Restoration LLC (“Respondent”). ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera _____________________________________________________________________ FINDINGS OF FACT 1. On March 29, 2008, the ROC issued License No. 243619 for General Residential B General Residential Contractor to D S W Restoration LLC (“Respondent”). Respondent’s address of record for the license is 4220 East Turney Avenue, Phoenix, AZ 85018-4277. Steve Sanford Wilbur is listed on the license as Qualifying Party and Member.[1] 2. Administrative Notice is taken of Respondent’s prior License record, for License No. 243619, as reflected on the ROC’s public website on September 20, 2019. Such prior License record reflects that Respondent’s license is currently active. The license has never been disciplined by the ROC. The record also reflects that there is one open complaint against Respondent’s license, which is presumed to be related to this matter. Respondent has an active $9,000.00 surety bond issued through Western Surety Company effective March 23, 2012.[2] 3. On or about May 18, 2018, Nancy Lou Hardison (“Complainant”) entered into a verbal contract agreement whereby Respondent agreed to construct a residential home located at 4923 East Indianola Avenue, Phoenix, AZ 85018 for the sum total of $156,963.00. The project commenced on January 22, 2018, and stopped on August 24, 2018. Complainant paid Respondent a total $221,356.00 by the time Respondent stopped working on the date of August 24, 2018. 4. On or about March 15, 2019, the ROC received a workmanship complaint from Complainant. On the complaint, Complainant indicated that poor workmanship, abandonment, and non-payment were the basis for the complaint. 5. On or about April 25, 2019, the ROC issued a Jobsite Inspection Notification letter to the parties, providing proper notice to them, and advising that an onsite review would be conducted at the project site by an ROC investigator on May 21, 2019, at 10:00 a.m. 6. On May 21, 2019, ROC investigator Randall Morris (“Investigator Morris”) conducted a review of the contract executed between the parties. Investigator Morris also inspected the work that had been done on the project to date and took thirty photographs of the property. 7. On or about June 28, 2019, Investigator Morris issued a Directive from the Registrar to Respondent because he substantiated Complainant’s allegation that Respondent’s work failed to meet minimum ROC workmanship standards. Specifically, Respondent was ordered to remediate complaint items 8, 9, 10, 11, 12, 14, and 16 via appropriate means. Respondent was put on notice that it had until July 15, 2019, to notify the ROC 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). Respondent failed to timely comply. 8. On or about July 16, 2019, a compliance jobsite inspection was conducted. During that inspection, Investigator Morris observed that the items 8, 9, 10, 11, 12, 14, and 16 still needed to be corrected. 9. On or about July 19, 2019, the ROC issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32- 1154(A)(12), 32-1158 and 32-1154(A)(22), and Ariz. Admin. Code R4-9- 108. Respondent was given until August 5, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32- 1154(A)(22) and 32-1155. 10. On or about August 2, 2019, Respondent filed an Answer to the Citation. In its Answer, Respondent stated that while there were items that were outstanding and should have been done prior to Complainant moving in, Complainant, “stopped access, stopped paying and stopped communication.” Respondent stated that it was willing to correct all items that needed to be fixed. Respondent further indicated that there was an outstanding balance of $17,400.00, yet to be paid by Complainant. 11. On or about August 2, 2019, the ROC referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on April 19, 2019. 12. Per the Citation, the issue to be determined is whether the ROC 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)(12) (Failure in any material respect to comply with this chapter; namely A.R.S. § 32- 1158.) 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.”).

13. On or about September 20, 2019, ROC investigator Phillip Jaegge (“Investigator Jaegge”) conducted a prehearing inspection because Investigator Morris was unavailable. Investigator Jaegge observed that the same items, listed on the Directive, were not corrected. HEARING EVIDENCE 14. At hearing, Investigator Jaegge testified that he would be testifying on behalf of ROC because Investigator Morris was unavailable. All observations prior to the prehearing jobsite inspection were made by and documented by Investigator Morris. 15. Investigator Morris created a document entitled “Checklist details for AROC complaint for DSW” (Checklist). In his Checklist, Investigator Morris requested a contract from Respondent. Respondent failed to provide proof of a written contract. Respondent provided Quickbook spreadsheets, an invoice, and emails that documented the work. Furthermore, Investigator Morris determined that “[a]t the time of this complaint access revoked by DSW.” On or about September 11, 2018, Complainant emailed Respondent and indicated that she wanted stop communicating with Respondent. In its Answer, Respondent did not provide a reason for not complying with the Directive. 16. At hearing, Complainant testified that, at all times relevant, she was the owner of 4923 East Indianola Avenue, Phoenix, AZ 85018. Complainant had a verbal agreement with Respondent for Respondent to perform construction on her home. Complainant did not indicate that she denied access to Respondent. She also did not explain her email to Respondent denying access to Respondent in September 2018. Following the Directive, Complainant did not have contact with Respondent. Complainant learned from Investigator Morris that Respondent attempted to reach out to Complainant but Complainant denied receiving such correspondence. 17. At hearing, Steve Sanford Wilbur (Mr. Wilbur), Respondent’s owner, testified on behalf of Respondent. Mr. Wilbur acknowledged that there was poor workmanship issues at the end of the project. During the project, Complainant and Respondent got along well, including Complainant complimenting Mr. Wilbur on his work. Mr. Wilbur was blind sighted when Complainant emailed him that she refused to communicate with him. Mr. Wilbur made several attempts to correct any issues she had with his work. There were detailed emails that explained the work that needed to be done before Complainant could move into the home. Even after Respondent and Complainant scheduled a walk through, Complainant cancelled the walk through. Up until that point, Respondent paid approximately $12,000.00 out of its pocket to correct some issues. 18. Mr. Wilbur stated that the reason Complainant stopped communication was because she was unhappy with the change orders. However, Complainant still asked Respondent to continue the work and paid Respondent an extra $30,000.00. Shortly thereafter, Complainant canceled payment on that check with no explanation. Respondent was denied access to Complainant’s property since September 2018. 19. After receipt of the Directive, Mr. Wilbur acknowledged that he did not reach out to Complainant because she made it clear that she would not communicate with Respondent and did not want Respondent on her property as of September 2018. Mr. Wilbur did not address the issue of the lack of a written contract. CONCLUSIONS OF LAW 1. The ROC 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 ROC 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.[3] 3. The purpose of the ROC’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.[4] 4. Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See Ariz. Rev. Stat. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 5. 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.” 6. 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.” 7. 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 ROC has the authority to issue license discipline under this provision, including summary suspension, revocation, or imposing a civil penalty or recovery fund award.” 8. Ariz. Rev. Stat. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” 9. Ariz. Rev. Stat. § 32-1158 holds, in pertinent part, that “[a]ny 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 following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.” 10. There is evidence that Respondent violated Ariz. Rev. Stat. § 32- 1154(A)(12) and Ariz. Rev. Stat. § 32-1158 when it entered into a verbal contract with Complainant, for work amounting to more than $1,000.00, without specifying elements of a contract. 11. The evidence also established that some of Respondent’s work was not in conformity with the Registrar’s standards. Respondent acknowledged that it did not complete the project in a workmanlike manner. Furthermore, Mr. Wilbur’s email documented the work that needed to be done prior to Complainant moving in to the house. Furthermore, Investigator Jaegge’s prehearing jobsite inspection confirmed that there was no compliance with the Directive based on his observations. Therefore, Complainant established that Respondent did not complete the project in a workmanlike manner in violation of Ariz. Rev. Stat. § 32-1154(A)(3), namely A.A.C R4-9-108. 12. There was evidence that Complainant denied Respondent access to her property and stopped communication with Respondent as of September 2018. While denial of access constitutes a valid justification for failing to comply with a written directive of the ROC, in this case, Respondent failed to establish, by a preponderance of the evidence, that Complainant denied it access to the property after the Directive was issued. Mr. Wilbur admitted that he did not contact Complainant following the Directive due to her denial of access in September 2018. Thus, Respondent failed to comply with the Directive and was in violation of Ariz. Rev. Stat. § 32-1154(A)(22). RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that the Registrar suspend D S W Restoration LLC Redesign Green Build LLC’s License No: 243619, issued by the Registrar, until it has provided to the Registrar, and the Registrar has accepted, a form contract that is in accordance to the requirements set forth in Ariz. Rev. Stat. § 32-1158. IT IS FURTHER RECOMMENDED that on the effective date of the Order, the Registrar shall suspend Respondent’s License No. 243619 for a period of one day. IT IS FURTHER RECOMMENDED that the Registrar require Respondent 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 Registrar’s final order, the Registrar 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 40 days from the date of that certification.

Done this day, October 10, 2019.

/s/ Antara Nath Rivera Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACLyWEAX. [2] Id. [3] 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). [4] See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

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