ALJDEC decisions subject to certification as final

2019A-03891-CHC-ROC · Registrar of Contractors · 2020-02-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Gary Rensch,

COMPLAINANT,

v.

Contact Restoration LLC,

ROC License: ROC 301855,

RESPONDENT.

No. 2019A-03891-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 30, 2020 at 1:00 PM.

APPEARANCES: John Connor appeared on behalf of Gary Rensch (“Complainant”) with Complainant and Randy Cason as witnesses. Jason Riggs appeared on behalf of Contact Restoration LLC (“Respondent”).

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 December 26, 2015, the Registrar issued License No. 301855 for general dual KB-1 building contracting to Respondent. Respondent’s address of record for the license is 529 S. Lebaron, Mesa, AZ 85210-2403. David Wayne Kishpaugh is listed on the license as the Qualifying Party. Craig and Laura Ann Riggs are also listed on the license as a Members.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record, for License No. 301855, as reflected on the Registrar’s public website on January 30, 2020. Such prior license record reflects that Respondent’s license was suspended as of January 02, 2020. The license has been disciplined on one prior occasion. The record reflects that there is one open complaint against Respondent’s license, which is presumed to be related to this matter.

On July 29 2019, the Registrar received a complaint filed on behalf of Complainant alleging abandonment and poor work performance. Attached to the complaint was a copy of a Power of Attorney for Complainant by his representative. No other documents were provided.

On August 14, 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 September 11, 2019, at 11:00 a.m.

On July 11, 2019, Registrar investigator Wes Ellington (“Investigator Ellington”) inspected the work that had been done on the project to date and took 17 photographs of the project. When he was finished, Investigator Ellington drafted Jobsite Inspection Notes.

On October 11, 2019, Investigator Ellington issued a Directive from the Registrar to Respondent because he substantiated Complainant’s allegation of abandonment, and also because Investigator Ellington substantiated several of Complainant’s 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 October 28, 2019, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1154(E).

On November 15, 2019, the Registrar issued a Citation and Complaint to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). Respondent was given until September 05, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On November 29, 2019, the Registrar received Respondent’s Answer whereby Respondent alleged that Complainant had denied Respondent access to perform repairs.

On December 02, 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 ROC has cause to discipline Respondent’s license based on the following charges:

Charge 1: A violation of A.R.S. § 32-1154(A)(1) (“Abandonment of contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”)

Charge 2: 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 3: 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 called John Connor and Randy Cason as witnesses. Jason Riggs testified on behalf of Respondent and submitted three exhibits. The Registrar’s agency file and Notice of Hearing were admitted into the record as their own exhibits.

John Connor’s testimony

Mr. Connor is Complainant’s Power of Attorney.

Complainant owns residential property located at 16048 E. Ironwood Drive, Fountain Hills, AZ 85268.

On or about March 07, 2018, Complainant’s two-story home suffered extensive flood damage. Complainant, through Mr. Connor, filed a claim with Complainant’s homeowner’s insurance (“Insurance Company”).

On or about April 10, 2018, Insurance Company sent an adjuster to determine the extent of damage and provide a liability estimate.

On or about June 22, 2020, Insurance Company completed its estimate. Insurance Company sent Respondent to Complainant’s residence to perform flood mitigation, repairs, and remodeling.

A contract between Complainant and Respondent was never executed. Complainant was responsible for covering the cost of his deductible and issued full payment of $17,000.00 directly to Respondent.

The Registrar extended Respondent’s compliance deadline from October 28, 2019, to November 11, 2019.

Although the Registrar only substantiated 8 of Complainant’s 14 complaint items, Respondent did not make an effort to remediate the work during the compliance period until November 08, 2019. Because Respondent had not obtained a building permit from the local city authority, Mr. Connors denied Respondent access to the project site.

Randy Cason’s testimony

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

Investigator Cason confirmed that the Registrar extended Respondent’s Directive compliance deadline from October 28, 2019, to November 11, 2019, because Respondent’s license was on suspension at the time the Directive was issued pursuant to Ariz. Rev. Stat. §§ 32-1124(F), 32-1154, and 32-1161(B), due to an unrelated complaint.

The extension of the compliance deadline was a twofold mistake on the Registrar’s part because it had been extended without Complainant’s approval, and because the extended deadline date landed on Veteran’s Day; a federal/state holiday.

Because the Directive explicitly advised, in pertinent part, “[i]f your license is currently suspended for prior discipline or administrative reasons, you may not perform any corrective work nor contract in any manner, which includes hiring other contractors to perform work, until the suspension of your license had been lifted” the Registrar extended Respondent’s compliance deadline to afford him an opportunity to lift his suspension and remediate the violations outlined in the Directive by appropriate means. Ultimately, Respondent’s final deadline for compliance in this matter was November 12, 2019.

Investigator Cason testified, pursuant to Ariz. Rev. Stat. § 32-1161(B), that Respondent had been lawfully permitted to perform corrective work or execute a financial agreement with Complainant prior to the expiration of the extended compliance period, but was not permitted to subcontract the corrective work or charge Complainant additional fees outside of the parties’ preexisting contractual agreement during that time.

Investigator Cason conceded that the Registrar’s Directive did not include Ariz. Rev. Stat. § 32-1161(B)’s advisement(s).

On November 08, 2019, Investigator Ellington and Mr. Connors received the following email from Respondent: “I have resolved the issue that was keeping me from being able to perform the repair and I have secured enough money to complete the repair. I would like to schedule a site visit so that I can perform the repairs. I would like to schedule as soon as possible. What time would work for you? I would prefer Monday 11/11/19 if possible.” Investigator Ellington replied, in pertinent parts, “Your deadline is Monday the 11th at 5 PM, you better work fast and accurate. I will be off until Wednesday, the 13th. When I return, this complaint will be sent to legal if the directive has not been completed. You also have to realize that this has to work with Mr. Rensch’s schedule as well, and Monday is a holiday.” [sic]

On November 13, 2019, Complaint 2019-03891 was escalated to the Registrar’s legal department with citation recommendations.

Jason Riggs’ testimony

On or about February 07, 2018, Insurance Company contacted Respondent to perform remodeling work at Complainant’s residence. Insurance Company’s Scope of Repairs was used as the contract between Complainant and Respondent.

Work on the project commenced mid-May 2018.

Complainant wanted to replace his home’s carpet with the same pre-flood carpet, however, the color was no longer being manufactured. Insurance Company would not cover the cost of Complainant’s secondary carpet color choice/type. Respondent refused to cover the cost of the carpet but agreed to perform the installation. Because the parties could not agree that portion of the project was not completed.

On January 31, 2019, Complainant signed a Certificate of Completion and Satisfaction which signified that the project was complete and Complainant was contented with Respondent’s workmanship.

On September 30, 2019, Respondent’s license was suspended by the Registrar regarding an unrelated matter.

On November 08, 2019, the suspension on Respondent’s license was lifted.

On November 08, 2019, Respondent telephoned Complainant and spoke with Mr. Connors, who informed Respondent that Complainant was “done” with him.

Complainant’s testimony

Complainant testified that he was “pestered” into signing the Certificate of Completion and Satisfaction prior to Respondent actually finishing the project.

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.

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)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

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.”

The material facts in this case are clear.

It is undisputed that Insurance Company contracted with Respondent, for the benefit of Complainant, for a residential flood mitigation and remodeling project. It is also undisputed that Complainant signed a Certificate of Completion and Satisfaction for the project on January 31, 2019. It is further undisputed that after the Registrar completed its investigation of Complaint 2019-03891, that it issued a Directive to Respondent on October 11, 2019, which ultimately required Respondent’s full compliance by November 12, 2019. It is undisputed that Respondent did not timely comply.

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

Complainant’s argument that Respondent could have started remediations as early as October 11, 2019, is without merit. The Registrar’s Directive directly contradict Investigator Cason’s testimony regarding Respondent’s duties and obligations during the extended compliance period. The Directive specifically prohibited Respondent from performing contracting work, including corrective work or the subcontracting thereof, while his license was suspended. There is no dispute that Respondent’s license was in fact suspended as of September 30, 2019. The exceptions to the Directive’s advisement, as allegedly afforded in Ariz. Rev. Stat. § 32-1161(B), were not explicitly offered to Respondent. For undisclosed reasons, Respondent did not satisfy his outstanding suspension obligations with the Registrar until November 08, 2019. While this was certainly close to the compliance deadline date, Respondent did reach out to Complainant, by and through Mr. Connors, that same day his license suspension was lifted to schedule project remediations. There is no indication in the record that the outstanding repairs at issue could not have been completed by November 12, 2019, with requisite notice provided timely to the Registrar.

Moreover, Mr. Connors argument that he was justified in denying Respondent access to the project is also without merit. There is no credible evidence in the record to substantiate Mr. Connor’s allegation that Respondent failed to obtain a required building permit for this project. The Registrar never cited Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(2) and it was not a noticed issue for hearing.

Because the Registrar neither demands nor expects perfection from a licensee on the licensee’s first attempt at work, it follows that a licensee must be given a reasonable opportunity to remediate workmanship issues prior to the issuance of discipline against their license. Because the record reflects that Respondent was unequivocally denied that opportunity in this matter, Respondent has established an affirmative defense by a preponderance of the evidence. No violation of Ariz. Rev. Stat. § 32-1154(A)(22) has been established. Additionally, it follows that violations of Ariz. Rev. Stat. § 32-1154(A)(3) and Ariz. Admin. Code R4-9-108 have also not been established.

Therefore, it cannot be held that Complainant sustained his burden of proof in this matter. The undersigned Administrative Law Judge finds that no grounds exist for the Registrar to take disciplinary action against Respondent’s license under Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and/or 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that Registrar Complaint 2019-03891 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, February 18, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors