ALJDEC decisions subject to certification as final

2019A-03258-CHC-ROC · Registrar of Contractors · 2020-01-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Judy Schaefer,

COMPLAINANT

Merchants’ Services LLC,

ROC License: 317391,

RESPONDENT

No. 2019A-03258-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 18, 2019

APPEARANCES: Ryan O’Neal, attorney, appeared on behalf of Judy Schaefer, Complainant. Johnny Merchant appeared on behalf of Merchants’ Services LLC, Respondent.

ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera

_____________________________________________________________________

FINDINGS OF FACT

On or about January 23, 2018, the Registrar of Contractors (“ROC”) issued License No. 317391 for General Dual KB-2 Dual Residential and Small Commercial to Merchants’ Services LLC (“Respondent”). Respondent’s address of record for the license is 7289 South Via Boca Del Mar, Tucson, AZ 85756-8360. Johnny Vega Merchant is listed on the license as Qualifying Party and Member. Belen Ortega Merchant is also listed as Member.

Administrative Notice is taken of Respondent’s prior License record, for License No. 317391, as reflected on the ROC’s public website on December 18, 2019. Such prior License record reflects that Respondent’s license is currently active. The license has been disciplined by the ROC on two cases. 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 $5,000.00 surety bond issued through Western Surety Company effective December 19, 2017.

On or about June 24, 2019, Judy Schaefer (“Complainant”) entered into a written contract whereby Respondent agreed to build a deck with steps and a ramp at Complainant’s residential property located at 15495 North Lago Del Oro Parkway, Tucson, AZ 85739 for the sum total of $23,620.00. The project commenced on April 22, 2019. Complainant paid Respondent a total $16,000.00 by the time Respondent stopped working on the date of June 8, 2019.

On or about June 24, 2019, the ROC received a workmanship complaint from Complainant which included a copy of the contractual agreement between the parties.

On or about June 28, 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 July 19, 2019, at 8:00 a.m.

On or about July 19, 2019, ROC investigator John Smith (“Investigator Smith”) conducted a review of the contract executed between the parties. Investigator Smith also inspected the work that had been done on the project to date and took approximately 50 photographs.

On or about July 23, 2019, Investigator Smith 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 1-10, 12-19, 21-29, and 31-34 via appropriate means. Respondent was put on notice that it had until August 16, 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.

On or about July 23, 2019, Respondent emailed Investigator Smith and indicated that the compliance deadline would not work because it needed time to apply for a permit and it was waiting for Complainant’s decision regarding materials.

On or about August 19, 2019, Respondent emailed Investigator Smith and stated that it was not able to complete any work on the property.

On or about August 20, 2019, Investigator Smith conducted a Compliance Jobsite Inspection. Both parties were present during the inspection and acknowledged that Respondent did not perform any corrective work.

On or about August 20, 2019, the ROC issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. § 32-1154(A)(3), Ariz. Rev. Stat. § 32-1154(A)(12)-32-1158, and 32-1154(A)(22), and Ariz. Admin. Code R4-9-108. Respondent was given until September 6, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. § 32-1154(A)(22) and 32-1155.

On or about October 16, 2019, Investigator Smith conducted a prehearing inspection. Respondent was not present during this inspection. Investigator Smith observed that the deck area was in the same condition as it was during the Compliance Jobsite Inspection and that no corrective work had been done.

On September 19, 2019, the ROC referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on December 18, 2019. Per the Notice of Hearing, the issue to be determined was whether the ROC had cause to discipline Respondent’s license based on the following charges:

Charge :1 A.R.S. § 32-1154(A)(3) - R4-9-108

Charge :2 A.R.S. § 32-1154(A)(12) - A.R.S. § 32-1158

Charge :3 A.R.S. § 32-1154(A)(22)

All errors in original.

HEARING EVIDENCE

At hearing, Complainant testified that all of Respondent’s work had to be redone. Complainant first noticed the stairs were installed incorrectly when she noticed the posts were not centered. Thereafter, she observed the siding was “cut into” and the hurricane straps were completely cut through.

The hurricane straps were the frame of the project and attached the floor to the wall. The straps were like the anchor. The fact that the straps were cut through, all of the straps needed to be replaced. Complainant contacted other contractors to assist in replacing the straps, but there were no contractors willing to do that scope of work. Additionally, Respondent’s work failed the Pima county inspection.

At hearing, Johnny Merchant, owner of Respondent, testified that he did not get a permit for the project because Complainant did not live in a flood plain and this type of skirting project did not require a permit. Mr. Merchant admitted that he took it upon himself to change the plans and construct the ramp in the back of the house instead of the front even though the ramp was approved by the city for the front of the house.

Mr. Merchant also acknowledged that he made a mistake when he constructed the ramp 3⁄4 inches lower, in height, than the plans indicated. Mr. Merchant agreed with the ROC that his work resulted in poor workmanship.

Mr. Merchant acknowledged that he did not perform any corrective work because Complainant informed him that the ROC had to be involved. Mr. Merchant reached out to Complainant regarding correcting his errors while he waited to hear back from Complainant. When he heard back from Complainant, he was informed that Complainant hired an attorney as well as engineers. Mr. Merchant never saw any engineering reports. He attempted to get help from other contractors to help him fix the hurricane straps but was unable to do so. Mr. Merchant admitted that he did not know how to fix it.

CONCLUSIONS OF LAW

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.

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.

The purpose of the ROC’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

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 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.”

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.”

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.”

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:

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.

9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365.

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.”

Ariz. Rev. Stat. § 32-1154(E) holds, in pertinent parts, that the ROC 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 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.”

Here, the material facts are not in dispute. It is undisputed that Complainant contracted with Respondent to build a deck with steps and ramps, that Complainant paid the agreed upon fees for Respondent’s services/maintenance and materials, and that the work that Respondent completed fell below the ROC’s minimum workmanship standards. By its own admission, Respondent incorrectly constructed the hurricane straps and ramp.

Furthermore, Respondent admitted that it failed to perform corrective work per the Directive. Thus, there are sufficient facts in the record to conclude that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(3), 32-1154(A)(22), and ARIZ. Admin. Code R4-9-108 by a preponderance of the evidence.

The only evidence regarding a violation of Ariz. Rev. Stat. § 32-1154(A)(12) - A.R.S. § 32-1158 was presented by Investigator Smith. Neither parties introduced evidence at hearing contrary to Investigator Smith’s findings nor did either party introduce the contract itself. Thus, the evidence presented by Investigator Smith established that Respondent violated Ariz. Rev. Stat. § 32-1154(A)(12) - A.R.S. § 32-1158.

Because Complainant established by a preponderance of the evidence that Respondent performed poor workmanship and failed to perform corrective work per the Directive, Complainant established cause for the ROC to suspend Respondent’s contractor’s license under Ariz. Rev. Stat. § 32-1154(A)(22).

Complainant may petition the ROC’s Recovery Fund for financial recompense regarding this matter, as the Tribunal has no jurisdiction to award a refund of the underlying amount contracted between the parties.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar suspend Merchants’ Services LLC, ROC License No. 317391, 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 Final Order in this matter Respondent Merchants’ Services LLC, ROC License No. 317391 shall be suspended for a period of three (3) days.

It is further recommended that the ROC require Respondent to pay the sum total of $500.00 as a civil penalty pursuant to Ariz. Rev. Stat. § 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 ROC’s Order, the ROC 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 Ariz. Rev. Stat. § 32-1101(A)(7), 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, January 3, 2020.

/s/ Antara Nath Rivera

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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