ALJDEC decisions subject to certification as final

2019A-03561-OMC-ROC · Registrar of Contractors · 2019-08-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 01, 2019 at 9:00 AM. APPEARANCES: Assistant Attorney General Thomas Raine, Esq., appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Marshall Chance Patterson and Gregory Johndrow as witnesses. No appearance(s) on behalf of or by Acra Construction LLC (“Respondent”). Robert Sterling observed. 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 1. On August 20, 2003, the Registrar issued License No. 186920 for general dual KB-2 residential and small commercial contracting to Respondent.[1] Respondent’s address of record for the license is 880 W. Camino Casa Verde, Green Valley, AZ 85614.[2] Kimberley Ann Reynolds is listed on the license as Qualifying Party/Member.[3] 2. Administrative Notice is taken of Respondent’s prior License record, for License No. 186920, as reflected on the Registrar’s public website on August 01, 2019. Such prior License record reflects that Respondent’s license is currently suspended.[4] The license has been previously disciplined by the Registrar on four prior occasions.[5] The record also reflects that there are seven open complaints against Respondent’s license, four of which are presumed to be related to this matter.[6] Respondent cancelled a $14,000.00 surety bond on September 01, 2018, that was issued through RLI Insurance Company effective August 07, 2015, of which $14,000.00 remains available.[7] 3. On April 4, 2019, the Registrar issued an Order of Summary Suspension, Order Consolidating Cases, and Notice of Promptly Instituted Proceeding (“Order”) setting the above-captioned matter for an expedited hearing at 9:00 a.m., on August 01, 2019, at the Office of Administrative Hearings.[8] In the Order, the Registrar presented its determination that the public welfare imperatively required emergency action and it summarily suspended Respondent’s license.[9] 4. On July 25, 2019, the Registrar also issued a Supplemental Notice to clarify and detail the specific charges against Respondent.[10] The Supplemental Notice provides a Statement of Facts and a Formal Statement of Alleged Violations in which Registrar alleges that Respondent committed three violations of Ariz. Rev. Stat. § 32- 1154(A)(1), one violation of Ariz. Rev. Stat. § 32-1154(A)(3), and one violation of Ariz. Rev. Stat. § 32-1154(A)(22).[11] 5. The Registrar is requesting that Respondent’s license be revoked. Hearing Evidence 6. No appearance(s) by or on behalf of Respondent. Complainant called Marshall Chance Patterson and Gregory Johndrow as witnesses and submitted twenty-one exhibits into the record. The Registrar’s electronic hearing file and Notice of Hearing were also admitted into the record. 7. Between April and June of 2019, the Registrar received four complaints against Respondent which were consolidated into this single proceeding. Complaint No. 2019-01821 8. Nancy Warren’s complaint against Respondent was received by the Registrar on April 08, 2019.[12] In her complaint Ms. Warren alleged that work Respondent performed on her kitchen cabinetry project was substandard. 9. On April 12, 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 May 06, 2019, at 9:00 a.m.[13] 10. On May 06, 2019, Registrar investigator Gregory Johndrow (“Investigator Johndrow”) conducted an inspection of the project site. Both parties were present. Specifically, Investigator Johndrow reviewed the contract executed between the parties and learned that the parties entered into their agreement on July 10, 2018, for $17,838.95, all of which had been paid to Respondent. Investigator Johndrow also inspected the work that had been done on the project to date and took ten photographs of the project.[14] When he was finished, Investigator Johndrow drafted Jobsite Inspection Notes.[15] 11. On May 15, 2019, Investigator Johndrow issued a Directive from the Registrar to Respondent because he substantiated Complainant’s allegation that the work Respondent had performed on the project failed to meet minimum Registrar workmanship standards.[16] Specifically, Respondent was ordered to complete complaint items 1, 3, and 4 via appropriate means.[17] Respondent was put on notice that it had until May 31, 2019, to notify the Registrar 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).[18] 12. On June 07, 2019, Investigator Johndrow issued a Compliance Inspection Notification Letter to the parties, advising that an onsite review would be conducted at the project site on June 13, 2019, at 12:00 p.m.[19] 13. On June 13, 2019, Investigator Johndrow conducted a review of the project site. Respondent was not present. When he was finished, Investigator Johndrow drafted Compliance Jobsite Inspection Notes which held that no corrective work had been performed by Respondent.[20] 14. On June 18, 2019, the Registrar issued a Citation and Complaint to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32- 1154(A)(3); a violation of Ariz. Admin. Code R4-9-108, and 32- 1154(A)(22).[21] Respondent was given until July 03, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32- 1154(A)(22) and 32-1155.[22] 15. Respondent electronically filed its Answer with the Registrar on July 10, 2019,[23] which noted in pertinent part, “There is two contractors that are involved in this case. The countertop installer has not responded to the ROC complaint. I am willing to fix my cabinets but the countertop needs to be removed for me to do so. I don’t want to take the liability of removing the countertops as it is 2cm material and no more available so if it breaks I am responsible.” [sic] Complaint No. 2019-02805 16. Christine Jackson’s complaint against Respondent was received by the Registrar on May 31, 2019.[24] In her complaint Ms. Jackson alleged that Respondent had not performed any work on her kitchen countertop project. 17. On June 06, 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 June 24, 2019, at 9:00 a.m.[25] 18. On June 24, 2019, Investigator Johndrow conducted an inspection of the parties’ project site. Respondent was present. Specifically, Investigator Johndrow reviewed the contract executed between the parties and learned that the parties entered into their agreement on February 02, 2019, for $8,723.12, of which $4,000.00 had been paid to Respondent. Investigator Johndrow also inspected the project site and took five photographs of the project.[26] When he was finished, Investigator Johndrow drafted Jobsite Inspection Notes.[27] 19. On June 24, 2019, Investigator Johndrow issued a Directive from the Registrar to Respondent because he substantiated Complainant’s allegation that the Respondent had abandoned the project.[28] Specifically, Respondent was ordered to complete the project, per the terms of the parties’ original contract agreement, via appropriate means.[29] Respondent was put on notice that it had until July 15, 2019, to notify the Registrar 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).[30] 20. On July 15, 2019, Investigator Johndrow received notification from Ms. Jackson that no corrective work had been performed by Respondent.[31] 21. On July 16, 2019, Investigator Johndrow forwarded the case to the Registrar’s legal department with recommendations to issue a citation under Ariz. Rev. Stat. §§ 32-1154(A)(1) and 32-1154(a)(22).[32] Complaint No. 2019-03256 22. Cassandra Kendell’s and Kelley Jacquez’s complaint against Respondent was received by the Registrar on June 21, 2019.[33] In the complaint Ms. Kendell and Ms. Jacquez allege that Respondent never performed work on their master bedroom/laundry room project. 23. On June 27, 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 July 19, 2019, at 8:30 a.m.[34] 24. On July 09, 2019, the Registrar issued a Reschedule Notification Letter to the parties, advising that an onsite review of the project would be conducted at 3:30 p.m. on July 15, 2019.[35] 25. On July 15, 2019, Investigator Johndrow conducted an inspection of the parties’ project site. Respondent was not present. Specifically, Inspector Johndrow reviewed the contract executed between the parties and learned that the parties entered into their agreement on July 14, 2017, for $3,983.55, of which $2,000.00 had been paid to Respondent. Investigator Johndrow also inspected the project site and took six photographs of the project.[36] When he was finished, Investigator Johndrow drafted Jobsite Inspection Notes.[37] 26. On July 15, 2019, Investigator Johndrow forwarded the case to the Registrar’s legal department with recommendations to issue a citation under Ariz. Rev. Stat. § 32-1154(A)(1).[38] Complaint No. 2019-03292 27. Jan Crust’s complaint against Respondent was received by the Registrar on June 20, 2019.[39] In her complaint Ms. Crust alleged that Respondent had not performed any work on her kitchen/bathroom project. 28. On June 27, 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 July 19, 2019, at 9:30 a.m.[40] 29. On July 08, 2019, the Registrar issued a Reschedule Notification Letter to the parties, advising that an onsite review of the project would be conducted at 2:00 p.m. on July 10, 2019.[41] 30. On July 10, 2019, Investigator Johndrow conducted an inspection of the parties’ project site. Respondent was not present. Specifically, Investigator Johndrow reviewed the contract executed between the parties and learned that the parties entered into their agreement on April 16, 2019, for $56,352.26, of which $30,000.00 had been paid to Respondent. Investigator Johndrow also inspected the project site and took twenty-eight photographs of the project.[42] When he was finished, Investigator Johndrow drafted Jobsite Inspection Notes.[43] 31. On July 11, 2019, Investigator Johndrow forwarded the case to the Registrar’s legal department with recommendations to issue a citation under Ariz. Rev. Stat. § 32-1154(A)(1).[44] 32. On July 11, 2019, the Registrar issued a Citation and Complaint to Respondent for an alleged violation of Ariz. Rev. Stat. § 32- 1154(A)(1).[45] Respondent was given until July 26, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32- 1154(A)(22) and 32-1155.[46] CONCLUSIONS OF LAW 1. The Notice of Hearing and Supplemental Notice the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter.[47] Because the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Registrar as well. 2. 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 the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq. 3. The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.[48] 4. “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.”[49] 5. Respondent’s suspended license does not deprive Complainant their right to prosecute the complaints or prevent the Registrar from determining the merits of the complaints.[50] 6. The Registrar bears the burden of proof to establish cause to discipline Respondent’s license by a preponderance of the evidence.[51] Respondent bears the burden to establish factors in mitigation of the penalty and affirmative defenses by the same evidentiary standard.[52] 7. The standard of proof on all issues in this matter is that of a preponderance of the evidence.[53] 8. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[54] 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.”[55] 9. 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.” 10. Ariz. Rev. Stat. § 32-1154(A)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” 11. 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.” 12. 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 Registrar has the authority to issue license discipline under this provision, including summary suspension, revocation, or imposing a civil penalty or recovery fund award.” 13. Here, the material facts are not in dispute. 14. It is undisputed that Respondent entered into residential remodeling contracts with Ms. Warren, Ms. Jackson, Ms. Crust, and Ms. Kendall and Ms. Jacquez, and that Respondent did not deliver materials or perform services for which Respondent had been paid. It is further undisputed that on at least one of these projects Respondent’s workmanship fell below the Registrar’s minimum workmanship standards. Additionally, the record establishes that Respondent did not complete any of these projects; and further failed to start work on at least three of them. It is also undisputed that a Directive was issued by the Registrar in each complaint, and that Respondent failed to comply with all of them. 15. Therefore, the only outstanding issue is whether Respondent raised a sufficient justification or excuse for failing to timely and completely finish the underlying projects at issue, per each of their contracts. This is an affirmative defense that Respondent bears the burden to establish. Respondent did not provide evidence in mitigation to refute the Registrar’s evidence or justify its inaction in this matter. Thus, Respondent’s burden has not been sustained. The record shows that Respondent failed to adhere to four corrective work orders issued by the Registrar, and had no affirmative defense(s) for doing so. 16. Because the Registrar established by a preponderance of the evidence that Respondent failed to perform the scope of work included in the underlying signed contracts regarding Complaint Nos. 2019-1821, 2019- 02805, 2019-03256, and 2019-03292, the Registrar has also established cause for it to take disciplinary action against Respondent’s contractor’s license under Ariz. Rev. Stat. §§ 32-1154(A)(1), 32- 1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). 17. Considering Respondent’s conduct in these matters, the Registrar shall revoke Respondent’s license to ensure the protection of the public’s welfare. 18. Complaining parties in Registrar Complaint Nos. 2019-1821, 2019-02805, 2019-03256, and 2019-03292 may petition the Registrar’s Recovery Fund for financial recompense regarding these matters, as the Tribunal has no jurisdiction to award a refund of the underlying amounts contracted between the complainants and Respondent. RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that on the effective date of the Final Order in this matter, Acra Constructing, LLC’s license No. 186920 shall be revoked. 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, August 01, 2019.

/s/ Jenna Clark Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] See https://roc.az.gov/contractor-search?Id=a0Yt000000ACHXMEA5; see also Registrar Exhibit 7. [2] Id. [3] Id. [4] Id. The license was suspended on July 17, 2019. [5] Id. [6] Id. [7] Id. The bond was cancelled on July 11, 2018. [8] See Notice of Hearing. [9] Id. Citing Ariz. Rev. Stat. § 41-1092.11(B). [10] See Supplemental Notice. [11] Id. [12] See Registrar Exhibit 8. [13] See Hearing File, pages 58-59. [14] See Registrar Exhibit 9. [15] Id. [16] See Registrar Exhibit 10. [17] Id. [18] Id. [19] See Hearing File, page 79. [20] See Respondent Exhibit 11. [21] See Respondent Exhibit 12. [22] Id. [23] See Respondent Exhibit 13. [24] See Registrar Exhibit 14. [25] See Hearing File, pages 130-131. [26] See Hearing File, pages 133-137. [27] See Registrar Exhibit 15. [28] See Registrar Exhibit 16. [29] Id. [30] Id. [31] See Hearing File, page 140. [32] See Hearing File, page 141. [33] See Respondent Exhibit 17. [34] See Hearing File, pages 36-37. [35] See Hearing File, page 38. [36] See Hearing File, pages 40-45. [37] See Hearing File, page 39. [38] See Hearing File, page 46. [39] See Hearing File, pages 143-144. [40] See Hearing File, pages 179-180. [41] See Hearing File, page 181. [42] See Hearing File, pages 183-210. [43] See Hearing File, page 182. [44] See Hearing File, page 211. [45] See Hearing File, pages 212-217. [46] Id. [47] See Ariz. Rev. Stat. §§ 41-1092.04, 41-1092.05(D), and 41-1061(A). [48] See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995). [49] See Ariz. Rev. Stat. § 41-1092.07(G)(2). [50] See Ariz. Rev. Stat. § 32-1154(D). [51] Ariz. Rev. Stat. § 41-1092.07(G)(2); Ariz. Admin. Code R2-19- 119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [52] See Ariz. Admin. Code R2-19-119(B)(2). [53] See Ariz. Admin. Code R2-19-119. [54] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [55] Black’s Law Dictionary at page 1220 (8th ed. 1999).

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