ALJDEC decisions subject to certification as final

2019A-03490-RFA-LS-ROC · Registrar of Contractors · 2021-06-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kelly and Todd Zurn,

COMPLAINANTS,

v.

E And E Pool Construction LLC,

License No. ROC 309416,

RESPONDENT.

No. 2019A-03490-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 13, 2021 at 1:00 PM.

APPEARANCES: Assistant Attorney General John Tellier, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Kyle Nelson as a witness. Kelly Zurn and Todd Zurn (“Complainants”) appeared on their own behalf. Kurt Hammond, Esq. appeared on behalf of E And E Pool Construction LLC (“Respondent”) with Arnold Elzy as a witness.

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

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

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. The license is currently active and renewed through October 31, 2022. The license has been disciplined by the Registrar on 2 prior occasions, and has had 1 complaint that has been settled or otherwise resolved. The license has a $14,000.00 surety bond issued RLI Insurance Corporation, effective November 12, 2021.

On July 10 2019, the Registrar received a complaint filed by Complainants alleging poor work performance. Attached to the complaint was the parties’ contract and Complainants’ proof of payment to Respondent for the project.

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 (“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 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 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 30, 2020, an administrative evidentiary hearing took place at OAH.

On March 17, 2020, the Registrar issued a Final Administrative Decision and Order to the parties whereby 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 two (2) business days and imposed a $100.00 civil penalty under Ariz. Rev. Stat. § 32-1154. On April 26, 2020, the Final Administrative Decision and Order became effective.

On or about February 09, 2021, 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 $16,250.00. Attached were proof of payments Complainant made Respondent on the project, invoices and change orders issued to Complainant by Respondent, a bond denial letter from Respondent’s insurance company, and 2 repair bids.

On March 11, 2021, the Registrar issued a Notice of Claim for Administrative Award to the parties which held Complainant was awarded $16,200.00 from the Fund.

On or about March 16, 2021, the Registrar received an appeal letter from Respondent contesting Complainant’s award amount from the Fund.

On March 26, 2021, 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 April 09, 2021, the issue for hearing is to determine if Complainants’ award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.

On May 13, 2021, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Kyle Nelson as a witness and submitted 15 exhibits. Complainants testified on their own behalf. Respondent called Arnold Elzy as a witness and submitted 1 exhibit. The Notice of Hearing was also admitted into the record. The substantive evidence is as follows:

Complainants own property located at 1250 W. Boston St. Chandler, Arizona 85224, which was the site of the underlying project at issue.

Mr. Nelson is a Legal Assistant II for the Registrar. Mr. Nelson made the determination that Complainants were eligible for a payout from the Fund because they satisfied all statutory requirements for an administrative payout.

To determine the appropriate amount of the administrative award, Mr. Nelson verified the $4,500.00 contract amount between the parties, the contract terms, and the $3,500.00 paid on the contract by Complainants. As a result, a $1,000.00 deduction was made because of the equivalent unpaid balance on the contract. Next, Mr. Nelson confirmed that Complainants’ filed against Respondent’s bond. Mr. Nelson also reviewed Complainants’ 2 repair bids and opted to accept the first bid from Platinum Pool Care LLC (“Platinum”) because it was from an appropriately licensed contractor, encompassed remediations identified in the Directive, and was the least expensive bid submitted. Additionally, Mr. Nelson was able to confirm with Investigator Lawton that Platinum’s bid was neither excessive in cost(s) nor inclusive of items outside the scope of the Directive.

Ultimately, Mr. Nelson calculated Complainants’ damages by deducting the unpaid contract balance from Complainants’ costs plus bids, resulting in a $16,200.00 administrative payout from the Fund.

Closing Arguments

In closing, the Registrar argued that Respondent failed to sustain its burden of proof in the matter.

In closing, Complainants argued that because they prevailed in their underlying hearing for 2019A-03490-CHC-ROC and provided the Registrar with all requisite information to complete their Recovery Fund petition, they were entitled to the payout as calculated by the Registrar.

In closing, Respondent argued that because might be possible to complete portions of the remediations identified in the Directive at a lower cost, the Registrar should recalculate Complainants’ administrative payout or quash it altogether.

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.

Respondent bears the burden of establishing by a preponderance of the evidence that the Fund’s payout amount 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.”

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.”

Statutes should be interpreted to provide a fair and sensible result. “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 Respondent failed to present any substantive evidence at hearing. Here, Respondent irrelevantly argued that Platinum’s bid was higher than one they obtained, and also opined without merit that it could complete/remediate the project for less than Platinum’s bid. There is no statutory prevision or regulation that required Complainants’ remediation bid to be within a certain amount, nor is there any industry standard adopted by law that would require the Registrar to hold Complainants to such a requirement. Notably, credible evidence in the record specifically rejects this contention whereby Investigator Lawton confirmed that Platinum’s bid was not excessive in cost, in the aggregate or in part(s).

As such, Respondent failed to sustain its burden of proof in this matter.

The record reflects that the Registrar soundly established Complainants’ eligibility and how Complainants’ administrative award payout amount was properly calculated at $16,200.00. Mr. Nelson credibly testified that he diligently reviewed all pertinent documentation, consulted, and made careful calculations to reach a final figure.

Because Respondent offered no credible evidence to rebut Mr. Nelson’s testimony, the undersigned Administrative Law Judge must conclude that Complainants were properly awarded a $16,200.00 payout from the Fund.

Respondent’s appeal is denied.

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that Respondent’s appeal be denied.

IT IS FURTHER RECOMMENDED that the Registrar affirm the $16,200.00 payout from the Fund as outlined in the Notice of Claim for Administrative Award, as issued on March 11, 2021.

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, June 01, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors