ALJDEC decisions subject to certification as final

2019A-04441-CHC-ROC · Registrar of Contractors · 2020-01-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jason J Stiller,

COMPLAINANT,

v.

BCLD LLC,

ROC License: ROC 296383,

RESPONDENT.

No. 2019A-04441-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 03, 2020 at 1:00 PM.

APPEARANCES: Jason Stiller (“Complainant”) appeared on his own behalf with Rita Stiller, Phil Robinson, and Cliff Corlett as witnesses. Roger Nelson appeared on behalf of BCLD 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 February 24, 2015, the Registrar issued ROC License No 296383 for general residential B contracting to Respondent. Respondent’s address of record for the license is 2113 E Mesa Vista Pl., Fort Mohave, AZ 86426-6678. Roger Lester Nelson is listed on the license as Respondent’s Qualifying Party/Member and Brooke Ann Nelson is also listed on the license as a Member.

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior License record, for ROC License No. 296383, as reflected on the Registrar’s public website on January 10, 2020. Such prior License record reflects that Respondent’s license is currently active. The license has not been previously disciplined by the Registrar. The record also reflects that there is one complaint against Respondent’s license, which is presumed to be related to this matter. Respondent has two active surety bonds on the license for $9,000.00 each, as issued by Hudson Insurance Company and Merchants Bonding Company, respectively.

On or about December 21, 2018, Complainant and Respondent entered into a contract agreement whereby Respondent agreed to erect the “shell” of a new residential home located at 2081 E Ethans Way Mohave Valley, AZ 86440 for the sum total of $104,300.00. On January 24, 2019, the project commenced. On or about July 13, 2019, work was last performed on the project.

Per the contract between the parties, an initial down payment of $10,000.00 was due upon signing, followed by 4 progress payments of $20,000.00, and a final payment of $10,000.00 due upon completion of the project.

On or about January 30, 2019, a Change Order totaling $3,400.00 was executed between the parties for the extension of the home’s patio.

On or about September 04, 2019, the Registrar received a complaint from Complainant alleging 49 items regarding poor workmanship and abandonment of contract, including the contract, Change Order, proof of payment, and email correspondence between the parties. It was registered as Complaint 2019-04441. On or about September 17, 2019, a complaint addendum was received by the Registrar alleging 5 additional complaint items. On or about September 27, 2019, a second complaint addendum was received by the Registrar alleging 1 additional complaint item.

On September 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 September 24, 2019, at 10:00 a.m.

On September 24, 2019, Registrar investigator Cliff Corlett (“Investigator Corlett”) conducted a review of the contract executed between the parties and inspected the work that had been done on the project to date. Investigator Corlett took 38 photographs of the project. When he was finished, Investigator Corlett drafted Jobsite Inspection Notes.

On October 03, 2019, Investigator Corlett issued a Directive from the Registrar to Respondent because he substantiated Complainant’s allegations that Respondent’s work on the project failed to meet minimum Registrar workmanship standards. Specifically, Investigator Corlett substantiated 44 of Complainant’s 55 complaint items, 33 of which were regarding electrical workmanship complaints. Respondent was ordered by the Registrar to complete the project per contract via appropriate means. Respondent was put on notice that it had until 5:00 p.m. on October 21, 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)(3), 32-1154(A)(22) and 32-1154(E).

On October 04, 2019, Investigator Corlett issued a Warning Letter from the Registrar to Respondent because he believed the work on the underlying project required possession of a CR-11 Electrical & CR-37 plumbing license(s) that Respondent did not possess during the relevant time period, in violation of Ariz. Rev. Stat. § 32-1154(A)(16).

On October 21, 2019, Complainant notified Investigator Corlett that no remediation efforts had been undertaken by Respondent, per order of the Registrar’s Directive.

On October 22, 2019, Investigator Corlett drafted Compliance Jobsite Inspection Notes to the parties whereby he noted that Respondent failed to timely comply with the Registrar’s Directive.

On October 22, 2019, Investigator Corlett escalated Complaint 2019-04441 to the Registrar’s legal department with a Citation recommendation.

On October 24, 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, 32-1154(A)(12); specifically 32-1158, 32-1154(A)(16), and 32-1154(A)(22). Respondent was given until November 08, 2019, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. § 32-1155(C).

On November 06, 2019, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on January 03, 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 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)(12) (“Failure in any material respect to comply with this chapter; Namely, A.R.S. § 32-1158.”)

Charge 3: A violation of (“Knowingly contracting beyond the scope of the license or licenses of the licensee.”)

Charge 4: 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 submitted 29 exhibits into the record, and called Investigator Corlett and Rita Stiller as witnesses. Respondent called Roger nelson as a witness. The Registrar’s electronic Agency File and Notice of Hearing were also admitted into the record.

Investigator Corlett’s testimony

Investigator Corlett testified that he was assigned to investigate Complaint 2019-04441 by the Registrar.

Respondent was not present for the jobsite inspection.

Although the compliance deadline date was unintentionally omitted from the Directive, Investigator Corlett contacted both parties via email the day the Directive was issued October 03, 2019, to provide them with the compliance deadline date.

On October 21, 2019, the Registrar received a written response to the Directive from Respondent which included Respondent’s admission to 15 complaint items, denials of 17 complaint items, and an allegation of denial of access.

On October 24, 2019, the Investigator Corlett received correspondence from Mr. Nelson expressing confusion over the issuance of the underlying Citation, as Mr. Nelson incorrectly believed his letter, which the Registrar received October 21, 2019, satisfied the requirements of the Directive.

Respondent’s allegation of denial of access was not substantiated by the Registrar.

Rita Stiller’s testimony

Mrs. Stiller testified that she is married to Complainant and is the co-owner of the underlying property at issue.

Mrs. Stiller and Complainant were unaware of Respondent’s license restrictions prior to filing a complaint with the Registrar.

Mrs. Stiller agreed that the original contract between the parties was for Respondent to build a “shell” our rough end of their new structure single family residence. The price was increased from $100,000.00 to $103,400.00 after a Change Order was executed. The final payment has not been tendered to Respondent because the project has not been completed.

Overall, the project had gone smoothly and did not begin to experience issues until near completion, after Complainant issued Respondent a punch list. Respondent declined Complainant’s request to review punch list items outside of regular business hours, which caused friction between the parties. So much so that Respondent threatened to file a Mechanic’s Lien against Complainant’s property.

Per Mrs. Stiller, there was no attempt by Respondent to make remediation efforts on the project between October 03, 2019, and October 21, 2019. Complainant’s home was not inhabitable during the compliance deadline period. The project was not fenced-off or otherwise inaccessible during the compliance period. The structure itself was not secured until the end of July 2019. At a minimum Respondent could have visited the project site to make remediations on the exterior of the project structure without Complainant’s express consent or knowledge, and Respondent could have requested access to the interior of the project which Complainant would have granted.

Roger Nelson’s testimony

Mr. Nelson testified that his work on Complainant’s project was “mostly complete” by July 2019.

On August 20, 2019, Respondent received a punch list from Complainant.

Shortly after receiving Complainant’s punch list Mr. Nelson’s wife took ill. Immediately following his wife’s illness, Mr. Nelson changed his availability to regular business hours only and was unable to meet with Complainant on weekends as Complainant had requested to discuss the punch list.

Mr. Nelson alleged that Respondent was prohibited from accessing the project site on September 13, 2019, September 18, 2019, and October 26, 2019, but admitted that although Respondent received the Registrar’s Directive on October 03, 2019, and had accepted 15 of the substantiated complaint items outlined therein, Respondent made no attempts to access the project site between October 03, 2019, and October 21, 2019, other than to send the Registrar a letter on October 21, 2019.. Per Mr. Nelson, the complaint items regarding issues on the exterior of the project dwelling would have only taken about 20 minutes to remediate, but he did not want to make a trip to the project site during the corrective period because the “quick” and “insignificant” changes were “not worth making the trip” unless he could have also accessed the interior of the home. Notably, Respondent did not request interior access from Complainant during the corrective period.

Mr. Nelson denied having prior knowledge of Respondent’s license limitations and/or restrictions.

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. 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)(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. Rev. Stat. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” Namely, Ariz. Rev. Stat. § 32-1158(A) which provides that a contract between a contractor and property owner amounting to more than $1,000.00 must contain the following information in writing:

The name of the contractor and the contractor's business address and license number.

The name and mailing address of the owner and the jobsite address or legal description.

The date the parties entered into the contract.

The estimated date of completion of all work to be performed under the contract.

A description of the work to be performed under the contract.

The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.

The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.

The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

That the property owner has the right to file a written complaint with the Registrar for an alleged violation of Ariz. Rev. Stat § 32-1154(A). The contract shall contain the Registrar's telephone number, website address, and shall state that complaints must be made within the applicable time period as set forth in Ariz. Rev. Stat § 32-1155(A). The information must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor.

Ariz. Rev. Stat. § 32-1154(A)(16) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.”

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.”

Ariz. Rev. Stat. § 32-1154(E) holds, in pertinent parts, that the Registrar may impose 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.

Here, the material facts are clear.

The evidence of record establishes that Respondent did not complete the project per the terms of its contract with Complainant, and that the work that Respondent did perform did not satisfy the minimum standards set for workmanship by the Registrar. It is also clear that Respondent failed to comply with the Registrar’s Directive.

Because Respondent did not meet minimum workmanship standards as required by Ariz. Admin. Code R4-9-108, Complainant has established a violation of Ariz. Rev. Stat. § 32-1154(A)(3).

Because Respondent admitted to working outside the scope of its license on the underlying project, Complainant has established a violation of Ariz. Rev. Stat. § 32-1154(A)(16).

Because Respondent failed to take appropriate corrective action after the Directive was issued by the Registrar for the underlying project, Complainant has established a violation of Ariz. Rev. Stat. § 32-1154(A)(22).

Notably, however, there was no testimony or document(s) offered for the record to establish a violation of Ariz. Rev. Stat. § 32-1158, thus no violation of § 32-1154(A)(12) exists either.

Therefore, the only remaining issue to address is whether Respondent raised a sufficient justification or excuse for failing to timely complete or remediate Complainant project. These are affirmative defenses that Respondent bears the burden to establish. There is no evidence in the record that tends to suggest Respondent sustained its burden of proof in this matter. Mr. Nelson’s ignorance as to Respondent’s license limitations, as well as Respondent’s misunderstanding regarding its duty to comply with the Registrar’s Directive, are insufficient excuses. Moreover, Mr. Nelson’s accusations of denial of access are without merit and do not constitute an affirmative defense. Lastly, Mr. Nelson failed to substantively address both the workmanship issues and party contract issues as outlined in the Registrar’s Citation and is therefore considered to have acquiesced to those alleged violations.

Because Complainant has established the above-captioned statutory violations by a preponderance of the evidence, Complainant has also established cause for the Registrar to discipline Respondent’s license and assess a civil penalty against Respondent.

RECOMMENDED ORDER

In light of the foregoing,

IT IS RECOMMENDED that 5 days after the effective date of the Final Order in this matter, Respondent BCLD LLC, ROC License No 296383, be suspended for 3 days based on its violations of Ariz. Admin. Code R4-9-108 and Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(16), and 32-1154(A)(22).

IT IS FURTHER RECOMMENDED that Respondent shall pay the sum of $300.00 in certified funds to the Registrar as a civil penalty pursuant to Ariz. Rev. Stat. § 32-1154(E).

IT IS FURTHER ORDERED that if Respondent fails to pay the entire amount of the civil penalty on or before 30 days following the effective date of the Final Order, the Registrar shall revoke Respondent’s license, effective on such deadline date.

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 five days from the date of that certification.

Done this day, January 20, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors