ALJDEC decisions subject to certification as final

2019A-03490-CHC-ROC · Registrar of Contractors · 2020-02-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kelly and Todd Zurn,

COMPLAINANTS,

v.

E And E Pool Construction LLC,

ROC License: ROC 309416,

RESPONDENT.

No. 2019A-03490-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 30, 2020 at 8:30 AM.

APPEARANCES: Kelly Zurn and Todd Zurn (“Complainants”) appeared on their own behalf with Steve Nelson as a witness. Kurt Hammond, Esq. appeared on behalf of E and E Pool Construction LLC (“Respondent”) with Arnold Elzy and Randall Lijenquist as witnesses.

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 Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

Background and Procedure

On October 18, 2016, the Registrar issued ROC License No. 309416 for general dual KA-5 swimming pool contracting to Respondent. Respondent’s address of record for the license is 2651 W. Guadalupe Rd., Ste. 105 Mesa, AZ 85202-7250. Kevin Paul Murray is listed on the license as a Qualifying Party and Arnold Elzy is listed on the license as an Officer.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record for ROC License No. 309416, as reflected on the Registrar’s public website on January 30, 2020. Such prior license record reflects that Respondent’s license is active and renewed through October 31, 2020. The license has not been previously disciplined, however, the record reflects that one prior case has been resolved or otherwise settled with the license. The record also reflects that there are two open complaints against Respondent’s license, one of which is presumed to be related to this matter. Respondent has an active $14,000.00 surety bond for the license issued through RLI Insurance Company effective October 07, 2016.

On July 10 2019, the Registrar received a complaint filed by Complainants alleging poor work performance. Attached to the complaint was a copy of the party contract, project schedule, project invoice, and proof of payments.

On July 16, 2019, the Registrar issued a Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by an investigator on August 22, 2019, at 11:00 a.m.

On August 22, 2019, Registrar investigator Dennis Bierma (“Investigator Bierma”) inspected the work that had been done on the project to date and took 43 photographs of the project. When he was finished, Investigator Bierma drafted Jobsite Inspection Notes.

On October 17, 2019, Investigator Bierma issued a Directive from the Registrar to Respondent because he substantiated Complainants’ 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 November 08, 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).

On November 13, 2019, the Registrar issued a Citation and Complaint 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 November 28, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On November 26, 2019, the Registrar received Respondent’s Answer whereby Respondent alleged that Complainants had denied Respondent access to perform repairs prior to the Registrar’s jobsite inspection.

On November 26, 2019, the Registrar received Respondent’s Motion to Dismiss pursuant to Ariz. Rev. Stat. § 32-1155(C).

On December 03, 2019, the Registrar issued an Order Denying Request to Dismiss to Respondent, as if found that Ariz. Rev. Stat. § 32-1155(C) provided Respondent with no grounds for dismissal of the Citation or like relief.

On December 04, 2019, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 30, 2020. Per the Notice of Hearing the issue to be determined is whether the Registrar 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)(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.”).

Hearing Evidence

Complainants testified on their own behalf, called Steve Nelson as a witness, and submitted 3 exhibits into the record. Randall Lijenquist and Arnold Elzy testified on behalf of Respondent. The Registrar’s agency file and Notice of Hearing were also admitted into the record as their own exhibits.

Complainant Kelly Zurn’s testimony

Mrs. Zurn testified that Complainants’ purchased their home in 2011. The underlying pool at issue was already installed when Complainants took possession of the property. Since that time, Complainants have been privately maintaining the pool.

On or about May 07, 2019, Complainants and Respondent entered into a contractual agreement whereby Respondent agreed to perform remodeling on Complainants’ residential pool located at 1250 W. Boston St. Chandler, AZ 85224. Specifically, Respondent agreed to redo the pool’s stacked stone elevation, tile around the water line of the pool, and the pool’s cool decking for the sum total of $4,500.00.

On May 28, 2019, the pool remodeling project commenced.

On June 25, 2019, the project was completed.

Complainants paid $3,500.00 to Respondent towards the project.

Complainants filed their complaint with the Registrar, in pertinent part, because they believed Respondent caused damage to the pebble tec floor of their pool with acid washing during the project, and also because Complainants were dissatisfied with Respondent’s stone, tile, and cool decking workmanship.

Complainants did not deny Respondent access to the project site between October 17, 2019, and November 08, 2019.

Respondent visited the project site once during the Directive compliance period, but was not prepared to perform any remediations and denied receiving the Registrar’s Directive.

Complainant Todd Zurn’s testimony

Mr. Zurn testified that he had been primarily responsible for performing maintenance on Complainants’ pool since 2011, and that he kept monthly records for the chemicals he used in the pool as well as its “pH levels.”

Mr. Zurn opined that the materials and equipment he used to maintain Complainants’ pool kept the pool in “perfect condition.”

Complainants argued overall that Respondent’s poor workmanship “destroyed” their existing pebble tec.

Steve Nelson’s testimony

Mr. Nelson (“Investigator Nelson”) is the Assistant Chief of Investigations for the Registrar.

Investigator Nelson took over Complaint 2019-03490 because Investigator Bierma left the Registrar in November 2019.

Regarding the Directive, Investigator Nelson clarified that although no governing rule was cited complaint item #5 was also included as substantiated because during the jobsite inspection Respondent agreed to correct grout concerns in the stone work.

On November 12, 2019, Investigator Nelson verified that no work had been performed on the project. Investigator Nelson was not persuaded by Respondent’s “denial of access” allegation because both parties agreed that Respondent had access to the project site between October 17, 2019, and November 08, 2019. Any issue regarding Respondent making “warranty repairs” prior to the Registrar’s jobsite inspection was not at issue before the agency, as there was no evidence Complainants denied Respondent access to the project site within 15 days of Respondent’s receipt of the Jobsite Inspection Notification letter. As a result, he escalated Complaint 2019-03490 to the Registrar’s legal department with citation recommendations.

On January 21, 2020, a compliance inspection was conducted at 9:00 a.m. No material changes to Complainants’ pool were observed by Investigator Nelson.

Randall Liljenquist’s testimony

Mr. Liljenquist is the president and owner of Universal White Cement Company and has been in the business of pool refinishing since 1995.

Mr. Liljenquist inspected Complainants’ pool in the summer of 2019 when it was filled with water. At that time he observed that the pebble tec was not tight in some areas.

Mr. Liljenquist testified that pebble tec pools have a life expectancy of anywhere between 10 and 30 years, dependent on a number of variables including sun light exposure, heat, and maintenance.

Mr. Liljenquist did not see the condition of Complainants’ pool prior to their project with Respondent, or examine any of Respondent’s equipment or chemicals used during the project. However, he opined that when tradesmen were working along the pool floor during the underlying project, “foot traffic” caused cement to recede around the pebble tech in some areas. Mr. Liljenquist further opined that although there is no standard of pressure used for washing, Respondent’s power/acid washing of Complainants’ pool would have likely removed some pebble tech due to the age and condition of the pool.

Arnold Elzy’s testimony

Mr. Elzy testified that Respondent’s contract with Complainants covered work for the stacked stone around the pool, tilework around the water line of the pool, and the cool deck surrounding the exterior of the pool.

The condition of the pool’s floor was not examined prior to commencing the project.

Respondent wanted to make workmanship corrections to the project prior to the Registrar’s jobsite inspection, but Complainants’ denied Respondent’s request.

Respondent disagreed with the Registrar’s Directive, and particularly took issue with Registrar’s substantiation of complaint item #3. However, Respondent agreed to remediate all other substantiated complaint items, but Complainants’ would not grant access to the project site unless Respondent agreed to remediate all of the complaint items the Registrar had substantiated. Respondent offered to pay to drain and refill Complainants’ pool if Complainants’ covered the cost of the labor, because the health and quality of pebble tec may only be assessed in an empty pool, but Complainants refused. Because the parties could not come to an agreement, they agreed to “settle things in court.”

Respondent argued overall that the damage to Complainants’ pebble tec was the result of age and/or poor maintenance, and had nothing to do with Respondent’s workmanship. Respondent further argued that Complainants denied access to the project site which prevented Respondent from performing remediations as directed by the Registrar.

CONCLUSIONS OF LAW

The Registrar has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before OAH pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq.

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

The Registrar 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.

Complainants bear 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. 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. 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)(22) provides, 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 Registrar 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 Registrar 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.”

Ariz. Rev. Stat. § 32-1155(D)(1) provides that “[t]he registrar may not issue a citation for failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards if the contractor is not provided an opportunity to inspect the work within fifteen days after receiving a written notice from the registrar.”

Here, the material facts are clear.

It is clear that Complainants contracted with Respondent for a residential pool remodeling project. It is clear that Complainants issued payments to Respondent for services and materials on said project, but still owe an outstanding balance of $1,000.00. It is also clear that some of the work Respondent performed on the project fell below the Registrar’s minimum workmanship standards. Moreover, it is clear that the Registrar issued its Directive to Respondent on October 17, 2019, which required Respondent’s full compliance by November 08, 2019, and that Respondent failed to timely comply.

Therefore, the only remaining issue to address is whether Respondent raised sufficient justification(s) or excuse(s) for failing to timely and completely remediate all substantiated complaint action items in the Registrar’s Directive. This is an affirmative defense that Respondent bears the burden to establish.

At the hearing, Respondent’s defensive arguments were that the Registrar’s Citation was issued in violation of Ariz. Rev. Stat. § 32-1155, that the Registrar erroneously found substantiated complaint item #3 in its Directive, and that Complainants denied Respondent access to the project site during the Directive compliance period. Respondent was not able to establish either of its affirmative defenses by a preponderance of the evidence.

The Registrar neither demands nor expects perfection from a licensee on the licensee’s first attempt at work. A licensee must be given a reasonable opportunity to remediate workmanship issues prior to the issuance of discipline against their license. In an administrative hearing, however, Respondent is responsible for supplying proof sufficient to establish a lack of opportunity. Although Respondent vehemently argued that it had not been afforded the statutorily permitted 15 days after receiving written notice of a complaint by the Registrar to access the project site and made repairs prior to the scheduled jobsite inspection, there is no evidence in the record which tends to corroborate this argument. The only evidence offered by Respondent in support of this contention is an undated text message that appears incomplete on its face. Thus, this tribunal is unable to find that the Registrar issued its Citation against Respondent in violation of Ariz. Rev. Stat. § 32-1155.

Mr. Liljenquist’s opinions regarding what may have happened on the project are insufficient to overcome Investigator Bierma’s notes and photographs, Investigator Nelson’s testimony, or Complainants’ testimonies.

Mr. Elzy’s allegation that Complainants’ refused Respondent access during the Directive compliance period is not supported by the record.

Because Complainants established Respondent violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22) by a preponderance of the evidence, Complainants have also established grounds for the Registrar to take disciplinary action against Respondent’s license and impose a civil penalty against Respondent pursuant to Ariz. Rev. Stat. § 32-1154(E).

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

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that that on the effective date of the Final Order in this matter Respondent E And E Pool Construction LLC, ROC License No. 309416, shall be suspended for two (2) business days.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $100.00 as a civil penalty.

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 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 Ariz. Rev. Stat. § 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, February 19, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors