ALJDEC decisions subject to certification as final

2019A-04942-CHC-ROC · Registrar of Contractors · 2020-05-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Jeffrey S. Heald,

COMPLAINANT

v.

Mirage Custom Homes LLC,

License No. ROC 226450,

RESPONDENT.

No. 2019A-04942-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING DATES: April 28, 2020, at 9:00 a.m. and May 12, 2020, at 1:00 p.m.

APPEARANCES: Jeffrey S. Heald (“Complainant”) was represented by Nelson F. Mixon, Esq., Holden Willits, PLC; Mirage Custom Homes LLC (“Respondent”) was represented by James N. Hanson, Esq., Lang & Klain, PC (pre-hearing), Respondent’s qualifying party/member Philip Hoctor (April 28, 2020 hearing), and Stephanie Monroe Wilson, Esq., Stoops, Denious, Wilson & Murray, PLC (May 12, 2020 hearing).

ADMINISTRATIVE LAW JUDGE: Diane Mihalsky

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

According to the Arizona Registrar of Contractors’ (“the Registrar’s”) public website, on or about November 12, 2006, the Registrar issued License No. ROC 226450 for General Residential B Contracting to Respondent. Respondent’s member/qualifying party is Philip Andrew Hoctor.

On or about September 30, 2019, Complainant filed a complaint with the Registrar against Respondent that alleged that it had abandoned and performed poor work on its contract to build a casita and remodel certain portions of Complainant’s house at 2043 W. Canyon Dr., in Buckeye, Arizona. Complainant stated that he paid Respondent $159,800.00 of the $165,000.00 contract price.

The complaint was assigned to the Registrar’s Senior Investigator Stephen Lawton. On October 31, 2019, Investigator Lawton performed a jobsite inspection. On November 6, 2019, Investigator Lawton on behalf of the Registrar issued a Directive, requiring Respondent to correct complete the project on or before 5:00 p.m. on or before November 25, 2019, in relevant part as follows:

Complaint Item 1: Abandonment.

Investigator’s Observation: It was observed that construction was being performed to construct a casita on the back side of garage. Respondent stated that [he] was last on the job 09/06/2019.

Respondent stated that he had a verbal contract for another contractor to complete the project. Respondent will be held at this time to complete the project as the contractor under contract to build said project per agreement between both parties and local jurisdiction codes.

Governing Rule: Workmanship Rule: ARS 32-1154 (A) [(3)]; Namely R4-9-108 (A&B).

Investigator Lawton performed a compliance jobsite inspection on November 26, 2019. Respondent did not attend the compliance inspection. After Complainant informed Investigator Lawton that Respondent had not complied with the directive, Investigator Lawton referred the complaint to the Registrar’s Legal Department.

On December 4, 2019, the Registrar issued a Citation against Respondent’s license, charging cause to suspend or revoke the license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158, and A.R.S. § 32-1154(A)(22).

Respondent filed a timely written answer to the Citation, denying any statutory violations.

The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

A hearing was held on April 28, 2020, and May 12, 2020. Complainant submitted seventeen exhibits and presented the testimony of his wife, Donna L. Heald. Respondent submitted thirteen exhibits and presented Mr. Hoctor’s testimony. Investigator Lawton also testified.

Additional Hearing Evidence

On or about March 20, 2019, Respondent contracted to construct a casita and remodel the kitchen, laundry room, pantry, and utility room at Complainant’s house. The contract provided that time was of the essence and that the construction time frame would be four months. The contract required written change orders. The contract also provided that “Jada Homes is partnering up to manage and to complete this project.”

The contract that was submitted did not have signature lines or signatures by either party. The contract also did not advise Complainant of his right to file a complaint with the Registrar against Respondent for a violation of A.R.S. § 32-1154(A) within the time allowed by A.R.S. § 32-1155(A) or provide the Registrar’s contact information.

Mrs. Heald testified that Respondent never gave her and her husband a copy of a signed contract. Although Mr. Hoctor testified that he had a signed contract, he did not submit it.

Mrs. Heald testified that Respondent started working on the project on or about April 1, 2019, when the construction fence was installed. Although the work was supposed to be complete in 120 days, or by July 26, 2019, work was still substantially incomplete on the casita in August 2019, even though she and Complainant had paid most of the contract price. The parties’ relationship went downhill in September 2019. Mrs. Heald explained that, although Respondent was supposed to have installed the fire sprinklers in July 2019, Complainant and Mrs. Heald had to hire American Eagle directly to install the fire sprinklers.

The parties agreed that the last time Respondent had been to the site before Complaint filed the complaint was September 6, 2019. The parties also agreed that at that time, the project was substantially incomplete.

Investigator Lawton testified that he did not determine that Respondent had abandoned the project because it had been at the jobsite on September 6, 2019. The directive did require Respondent to complete the project according to the parties’ agreement.

Investigator Lawton testified that the project was about 50% complete on October 31, 2019. He acknowledged that Respondent would need about six weeks to complete the project, longer than the four weeks that the directive allowed. Investigator Lawton explained that he expected Respondent to proceed with reasonable diligence. Investigator Lawton testified that he told the parties that they should be working together to get the project done. If Respondent made progress, Complainant could extend the time on the directive to allow Respondent to complete the project.

Investigator Lawton testified that Mr. Hoctor told him at the October 31, 2019 jobsite inspection that Respondent was trying to get Jada Homes to complete the project. Investigator Lawton testified that, because Complainant’s contract was with Respondent, it was responsible for completing the project, either directly or through subcontractors like Jada Homes. The Registrar does not get involved in financial disputes.

After the directive was issued, on November 12, 2019, Complainant’s attorney sent Respondent a letter, requesting that it provide a construction schedule for completing the project. Respondent did not respond to the letter.

Mrs. Heald testified that, after the Directive was issued, Respondent did not deliver any materials or perform any work at the project, either with its own employees or through subcontractors.

Mr. Hoctor testified that after the directive was issued, he arranged for and passed inspections of four rough trades and the fire sprinkler system. Mr. Hoctor testified that the inspections had to be done in a certain order and that the City of Buckeye Fire Marshall had a backup that delayed the sprinkler inspection almost three weeks.

Investigator Lawton testified that, before he became an Investigator for the Registrar, he was a building inspector for the City of Buckeye, and it is not true that inspections must be performed in a certain order. Investigator Lawton testified that inspections are usually performed the day after they are requested. Although he did not work for the City of Buckeye Fire Marshal, he knows the Marshal and was told that things were not submitted correctly for the sprinkler inspection. It should not take more than a few days to arrange an inspection of fire sprinklers.

Investigator Lawton testified that, at the time of the November 26, 2019 compliance inspection, the brown coat for the exterior stucco had been applied, interior insulation had been installed, and drywall had been delivered. He did not know who had performed this work.

Complainant submitted a declaration by Jose J. Gallego, attesting that he was a member of Gallego’s Painting, LLC dba Pentagono Painting, Drywall and Stucco Co. (“Pentagono Painting”) and that Pentagono Painting, under contract with the Healds and Jada Homes, performed all lath, stucco, insulation, garage floor repair, garage paint, interior and exterior painting of casita and all touch up painting on the Project and that Complainant and his wife paid for Pentagono Painting’s work.

Complainant also submitted a declaration by John X. Gaitan, that he was the director and President of AZ Energy, Inc. (“AZ Energy”); that Respondent hired AZ Energy to perform electrical work at Complainant’s house; that Respondent failed to pay AZ Energy; that, although work remained on the project, Respondent did not hire AZ Energy to do perform the electrical work that remained on the project; and that AZ Energy, under contract with “the Healds/Jada Homes,” finished the electrical work on the project.”

At some point, Respondent gave Complainant and Mrs. Heald payments of $15,000 and $5,000 to hire others to perform work.

Investigator Lawton testified that, if Complainant had arranged for the work that he saw at the compliance inspection, it would have been a modification of Respondent’s work. But Respondent remained responsible for any of its work that had not been modified.

Mrs. Heald testified that she and Complainant were concerned about leaving the casita exposed to the elements, so they hired Jada Homes to complete the exterior stucco.

Investigator Lawton testified that the effects of leaving various construction exposed to the elements depends on the type of construction. He has seen large home builders leave stick built structures like the casita without a roof or stucco system for as long as two months.

Investigator Lawton acknowledged that the fire sprinkler would have to pass inspection before the insulation could be installed din the casita.

Mr. Hoctor arrived at the jobsite 10 minutes after Investigator Lawton completed the compliance inspection and left the jobsite. Mr. Hoctor testified that he intended to continue working on the project, but Complainant started calling him names and threatening harm. Mr. Hoctor left the jobsite called the Buckeye Police Department. Police responded and issued a report, but did not arrest or charge Complainant.

Both parties agreed that, on November 26, 2019, Complainant and Mrs. Heald terminated Respondent from the project.

Mr. Hoctor testified that Respondent got in trouble on the project due to the labor shortage in the Phoenix construction market. Mr. Hoctor testified that he paid several subcontractors deposits, and that they subsequently failed to perform any work. Mr. Hoctor explained that the project was delayed while Respondent attempted to have the subcontractors return the deposits. Although Mr. Hoctor testified that three plumbing subcontractors took deposits without performing work, he could not provide any of their names.

Pursuant to A.A.C. R4-9-117, administrative notice is taken of Respondent’s prior disciplinary history as shown on the Registrar’s public website on this date. Respondent’s License No. ROC 226450 was suspended on May 12, 2020, as discipline. The Registrar has disciplined the license six times and six complaints are pending against the license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish cause to suspend or revoke Respondent’s license by a preponderance of the evidence. Respondent bears the burden to establish affirmative defenses and factors in mitigation of the penalty 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.”

Complainant established cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(12), specifically A.R.S. § 32-1158, because its contract was not signed by either party and did not advise Complainant that he could file a complaint against Respondent with the Registrar for a violation of A.R.S. § 32-1154(A) within the time allowed by A.R.S. § 32-1155(A).

Complainant established that Respondent failed to complete the project within the time specified in the contract or within a reasonable time frame under general standards on the construction industry. Therefore, Complainant established cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.

Respondent did not establish that Complainant did not allow reasonable access for it to comply with the November 6, 2019 directive. Because Respondent acknowledged that the project was still substantially incomplete, Complainant established further cause to suspend or revoke Respondent’s contractor’s license under A.R.S. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing, it is ordered that, on the effective date of the final order in this matter, License No. ROC 226450 of Respondent Mirage Custom Homes LLC shall be revoked.

It is further ordered that the Respondent shall pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(E).

If Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the final order, the Registrar shall revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty.

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, May 26, 2020.

/s/ Diane Mihalsky

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors