ALJDEC decisions subject to certification as final

2019A-03862-CHC-ROC · Registrar of Contractors · 2019-12-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Michael A Villegas,

COMPLAINANT,

vs.

Elk Country Construction LLC,

ROC License: ROC 289428,

RESPONDENT.

No. 2019A-03862-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: November 26, 2019 at 1:30 PM.

APPEARANCES: Michael Villegas (“Complainant”) appeared on his own behalf with Mike Springer as a witness. Stephanie Retherford appeared on behalf of Elk Country Construction LLC (“Respondent”) with Trevor Foster 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 Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

Background and Procedure

On March 17, 2014, the Registrar issued License No. 289428 for general residential B contracting to Respondent. Respondent’s address of record for the license is PO Box 305 Sierra Vista, AZ 85636-0305. Joseph Talamadge McGee is listed as on the license as Respondent’s Qualifying Party and Member, and Cheryl Lynn Cunning McGee is listed on the license as Respondent’s Member.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior License record, for License No. 289428, as reflected on the Registrar’s public website on November 26, 2019. Such prior License record reflects that Respondent’s license is currently active and renewed through March 31, 2020. The license has not been previously disciplined by the Registrar. The license has a $9,000.00 surety bond issued through Hudson Insurance Company effective April 09, 2019, of which the total amount remains available. The record also reflects that there is one complaint against Respondent’s license, which is presumed to be related to this matter.

On or about January 30, 2017, Complainant and Respondent entered into a contract agreement whereby Respondent agreed to construct a new residence at Lot 11 Y Lightening Subdivision (later designated 6297S. Kwame), Hereford, AZ 85615 for the sum total of $212,800.00. The project commenced in April 2017 and stopped on or around July 28, 2017. Escrow closed on approximately August 05, 2017.

Per contract, Complainant was to provide a $50,000.00 deposit at signing, and then provide additional payments “as needed” until the project was complete.

On July 31, 2019, the Registrar received a poor workmanship complaint from Complainant. On August 12, 2019, the Registrar received copies of the parties’ contract and escrow documents.

On August 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 August 27, 2019, at 10:00 a.m.

On August 27, 2019, Registrar investigator Mike Springer (“Investigator Springer”) conducted a review of the contract executed between the parties and inspected the work that had been done on the project to date. Respondent attended. Investigator Springer took thirty-two photographs of the project. When he was finished, Investigator Springer drafted Jobsite Inspection Notes.

On August 28, 2019, Investigator Springer issued a Directive from the Registrar to Respondent because he substantiated ten of Complainant’s complaint items that alleged Respondent’s work on the project failed to meet minimum workmanship standards. Respondent was ordered to complete the project per contract via appropriate means. Respondent was put on notice that he had until 5:00 p.m. on September 17, 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).

Respondent failed to timely comply.

On September 18, 2019, Investigator Springer escalated the matter to the Registrar’s legal department with a citation recommendation for violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-018, and 32-1154(A)(22).

On September 19, 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). Respondent was given until October 04, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On October 02, 2019, Respondent provided its Answer to the Registrar. Writing on Respondent’s behalf, Mr. McGee agreed to remediate the 10 complaint items outlined in the Registrar’s Directive, and noted that the workmanship issues were the result of unintentional “human error” and “not the standard for past or future workmanship.”

On October 04, 2019, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on November 26, 2019. Per the October 25, 2019, 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

Complainant testified on his own behalf and also called Investigator Springer as a witness. Respondent called Stephanie Retherford and Trevor Foster as witnesses, and submitted on exhibit into the record. The Registrar’s electronic agency record and Notice of Hearing were also admitted into the record.

Investigator Springer’s testimony

Remediations for the underlying project were within the scope of Respondent’s license.

After the expiration of the Directive compliance deadline, Investigator Springer was notified by Complainant that no corrective work had been performed by Respondent. As a result, a compliance inspection was not scheduled.

The parties did not enter into a financial agreement in lieu of Respondent performing corrective work on the project.

Complainant’s testimony

On July 30, 2018, Complainant provided Respondent with an itemized list of remediations he desired Respondent complete on their project.

On September 11, 2019, Respondent contacted Complainant to schedule a time to perform corrective work on the project. Respondent asked Complainant to extend the Directive deadline to October 31, 2019, and Complainant agreed because he wanted to take time off of work and be present to oversee Respondent’s work.

On September 12, 2019, Respondent appeared on the jobsite to begin project remediations. This was the last day Respondent appeared on the jobsite during the compliance period.

On September 12, 2019, Complainant was informed by Investigator Springer that he was not obligated to agree to an extension of the Directive compliance deadline. Upon receipt of this information, Complainant decided to rescind his agreement to extend Respondent’s compliance period.

The next contact Complainant had with Respondent came in mid-October 2019, at which time Complainant notified Respondent that he would not permit Respondent back on the jobsite.

Mr. Foster’s testimony

On October 14, 2019, Mr. Foster contacted Complainant on behalf of Respondent to schedule time to complete remediations on the project. At that time, Complainant notified Mr. Foster that he would not permit Respondent back on the jobsite.

Ms. Retherford’s testimony

Due to a medical hardship Mr. McGhee suffered, Respondent did not receive the Registrar’s Directive until September 10, 2019, when Respondent’s mail was picked up at its PO Box. Respondent contacted Complainant the following day.

Complainant granted Respondent conditional access to the project site beginning in mid-October 2019, as that was the earliest time Complainant could clear his schedule to be present for Respondent’s remediations on the project.

When Respondent contacted Complainant on October 14, 2019, to set up a time to schedule remediations, Complainant informed Respondent that he would not honor their agreement to extend the Directive compliance deadline through the end of the month, and that he would not let Respondent return to the project site.

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 the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq.

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.

The purpose of the Registrar’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. 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) 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.”

Here, the material facts are not in dispute.

It is undisputed that Complainant extended the underlying Directive deadline from September 17, 2019, to October 31, 2019, that the only remediation work performed took place on September 12, 2019, which did not satisfy the Directive’s requirements, and that Complainant conveyed his oral retraction of said agreement to Respondent on October 14, 2019.

Moreover, it is undisputed that Complainant extended the Directive in this matter as an express condition because he demanded to be present for Respondent’s remediation work on the project.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to address all of the remediation action items outlined in the Registrar’s Directive by the extended deadline. This is an affirmative defense that Respondent bears the burden to establish.

Here, Respondent has provided sufficient evidence in mitigation to refute Complainant’s evidence and justify its inaction in this matter. The issue of whether Respondent could have remediated all of the complaint items outlined in the Directive between October 14, 2019, and October 31, 2019, is irrelevant. The only pertinent issue is that Respondent was denied access to the project site prior to the expiration of the extended Directive compliance deadline. Complainant’s unfamiliarity with Registrar rules and/or procedures does not invalidate his voluntary agreement to extend the Directive compliance deadline. Thus, Respondent’s burden has been sustained. The record shows that although Respondent failed to adhere to a Directive issued by the Registrar, Respondent had an affirmative defense(s) for doing so.

Because Complainant failed to establish by a preponderance of the evidence that Respondent failed to adhere to an issued Directive regarding Respondent’s poor workmanship, Complainant has also failed established cause for the Registrar to take disciplinary action against Respondent’s contractor’s license under Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and/or 32-1154(A)(22).

RECOMMENDED ORDER

In light of the foregoing,

IT IS RECOMMENDED that this appeal be dismissed.

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, December 10, 2019.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors