ALJDEC decisions subject to certification as final

2019A-02388-CHC-ROC · Registrar of Contractors · 2019-11-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 1, 2019 APPEARANCES: Veronica L. Manolio, Esq. appeared on behalf of Complainant Gregory J. Mizioch. Robert D. Corl, Esq. appeared on behalf of Respondent Arizona Valley Home Builders, LLC. ADMINISTRATIVE LAW JUDGE: Velva Moses-Thompson _____________________________________________________________________ The hearing was convened to determine whether Respondent violated the charged provisions of Arizona Revised Statutes (A.R.S.) §§ 32-1154(A)(3) and (A)(22) as alleged by Complainant and as cited by the Registrar of Contractors. 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 Decision to the Registrar of Contractors. The parties stipulated to the facts set forth below. STIPULATED FINDINGS OF FACT 1. Gregory and Rebecca Mizioch entered into a written “Construction Management Contract” with Arizona Valley Home Builders, LLC (ROC #302555) on or about October 24, 2016. This contract covers the “Construction Management” for a new build residence located at 1742 W. Sentinel Rock Road, Phoenix, AZ 85086. 2. Bob Michael (Mike) Ellis signed the Contract on behalf of Arizona Valley Home Builders, LLC (Contractor). 3. Mr. Ellis is currently the only Member of Arizona Valley Home Builders, LLC and also the LLC’s sole Manager. 4. The Contractor undertook construction on the Mizioch residence in November of 2016. 5. A Certificate of Occupancy was issued for the residence in April of 2018. 6. After the C of O was issued, the Miziochs began experiencing “roof leaks” in their residence. 7. By April 2019, Mr. Mizioch contacted the Contractor again and reported multiple roof leaks and resulting damage. 8. Mr. Mizioch filed a Complaint with the Registrar of Contractors (ROC) on or about May 7, 2019. 9. ROC investigator, David Fagerburg #210, inspected the Mizioch residence and substantiated that the Contractor’s work failed to meet the minimum workmanship standards. 10. The Contractor was issued an ROC Directive on or about July 12, 2019 that instructed the Contractor to take corrective measures no later than July 30, 2019 and to remedy these noted violations: a. Three roof leaks at Master Bedroom; two at Family Room; one at Kitchen; one at entry closet. (7 total that needed to be repaired) b. Drywall, painting, mold prevention, and drywall cracking at no- leak areas at Entry Closet, Master Bedroom, Family Room, Kitchen and Patio. 11. The Contractor responded (through legal counsel) to the ROC’s Directive on July 25, 2019. In that response, the Contractor admits: a. An unlicensed contractor/roofer performed the work on the Mizioch residence; b. The work was substandard and resulted in the problems identified in Directive; and c. The work was done in the name of Arizona Valley Home Builders, LLC. 12. To date, the Contractor has not made any of the repairs that were noted as violations by the ROC. FINDINGS OF FACT 13. At time that Contractor agreed to build Mr. Mizioch’s home, John Endres was employed by Contractor as a Superintendent. 14. Contractor submitted a cost breakdown to National Bank to obtain financing to build Mr. Mizioch’s new home. See Complainant’s Exhibit 14. 15. The cost breakdown included a budget for roofing in the amount of $22,000. Mr. Ellis signed the request which included the cost breakdown. See Complainant’s Exhibit 14. 16. Arizona Valley submitted an invoice to Mr. Mizioch in the amount of $22,000. See Exhibit 13. 17. Contractor last performed work on Mr. Mizioch’s home in 2018. 18. In April of 2019, Contractor suggested that Mr. Mizioch contact Mr. Endres regarding his roof problems. 19. On August 11, 2019, the ROC issued a Citation against Contractor’s license. The Citation contained allegations that Contractor violated Ariz. Rev. Stat. section 32-1154(A)(1); Ariz. Rev. Stat. section 32-1154(A)(3) (specifically, Ariz. Admin. Code section R4-9-108; Ariz. Rev. Stat. section 32-1124(B); Ariz. Rev. Stat. sections 32-1154(A)(12) and (A)(22). 20. Contractor filed a timely appeal to the Citation. 21. The matter was referred to the Office of Administrative Hearings for an evidentiary hearing. 22. On September 13, 2019, the ROC issued a Notice of Hearing setting the matter for hearing at 8:30 a.m. on October 18, 2019, by the Office of Administrative Hearings in Phoenix, Arizona.[1] 23. A hearing was held on November 1, 2019. 24. At hearing, Mr. Mizioch testified on behalf of himself and presented the testimony of John Endres. Contractor presented the testimony of Mike Ellis. Investigator Fagerburg testified regarding his investigation of the complaint, the jobsite inspection, and the issuance of the Directive. 25. Mr. Ellis testified that Arizona Valley never agreed to build Mr. Mizioch’s roof. Mr. Ellis asserted that Mr. Mizioch entered into a separate contract with John Endres to build his roof. However, Mr. Ellis testified that he and Mr. Endres did not agree to hire Renco as the roof installer. 26. Mr. Ellis contended that the checks written to AZ Homes were not deposited into a bank account belonging to Arizona Valley. Mr. Ellis contended that John Endres committed fraud and there were funds missing from his bank accounts. Mr. Ellis stated that there was a pending investigation with Wells Fargo regarding his accounts. 27. Mr. Ellis argued that John Endres has stolen his money. Mr. Ellis was aware that John Endres had spent time in prison before he hired him. However, Mr. Ellis stated that he was unaware that he committed bankruptcy fraud. Mr. Ellis stated that he believed that John Endres had spent time in prison for committing perjury. 28. Mr. Ellis contended that he could not be held vicariously liable for the actions of his employee, the John Endres. 29. Mr. Mizioch explained that Arizona Valley performed poor work when it remodeled his home. 30. John Endres testified that Mr. Ellisi was aware that Arizona Valley hired Renco as a subcontractor. 31. Mr. Mizioch testified that Arizona Valley built his home, including his roof. 32. Administrative notice is taken of the Registrar’s public website. According to the information available on the website on November 21, 2019, Contractor’s license was first issued on January 20, 2016, and is active. Such prior License record also shows that there is one complaint against Contractor’s license, and that one complaint was previously resolved or settled.

CONCLUSIONS OF LAW 1. Unless otherwise provided by law, 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. 2. “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)(2). 3. “At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3). 4. 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). 5. 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."). 6. “Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B). 7. 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). 8. The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118. 9. 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. ***** 3. Violation of any rule adopted by the registrar.

***** 11. Failure of a contractor to comply with any safety or labor laws or codes of the federal government, this state or political subdivisions of this state.

12. Failure in any material respect to comply with this chapter.

***** 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. 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.

10. Ariz. Admin. Code section R4-9-108(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.” 11. Ariz. Rev. Stat. section 32-1154(E) provides that ROC may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of Ariz. Rev. Stat. section 32- 1154(A)(22). 12. The preponderance of the evidence shows that Respondent agreed to build a new home for Complainant, including a roof. 13. The preponderance of the evidence shows that Respondent did not perform the work in a professional and workmanlike manner in violation of Ariz. Rev. Stat. section 32-1154(A)(3), namely A.A.C. R4-9-108.[2] 14. The preponderance of the evidence shows that Respondent failed to correct the items listed in the Registrar’s Directive without valid justification, which is a violation of Ariz. Rev. Stat. section 32- 1154(A)(22). RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar suspend License No. 302555 of Arizona Valley Home Builders, LLC for a three calendar days. It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to Ariz. Rev. Stat. section 32-1154(E). It is further recommended that no future license shall be issued to any entity consisting of persons associated with Respondent, as defined in Ariz. Rev. Stat. section 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty. Done this day, November 21, 2019.

/s/ Velva Moses-Thompson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors

----------------------- [1] The matter was continued to November 1, 2019. [2] Ariz. Rev. Stat. section 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.” A.A.C. 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.”

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