ALJDEC decisions subject to certification as final

2019A-05523-RFA-LS-ROC · Registrar of Contractors · 2021-03-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Richard A. Henry,

COMPLAINANT,

v.

Desert Escapes Landscaping LLC,

License No. 231318,

RESPONDENT.

No. 2019A-05523-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 05, 2021 at 9:00 AM.

APPEARANCES: Assistant Attorney General John Tellier, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with witness Douglas Ulmer. Richard Henry (“Complainant”) appeared on his own behalf. Amanda Rivard appeared on behalf of Desert Escapes Landscaping LLC (“Respondent”) with Clayton Rivard as a witness. Rochelle Henry observed.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Registrar.

FINDINGS OF FACT

Background and Procedure

According to the Registrar’s public website, on April 05, 2007, the Registrar issued License No. 231318, specialty dual CR-11 hardscaping and irrigation systems contracting license, to Respondent. Clayton Emmanuel Rivard is the Qualifying Party and Member on this license. Respondent’s address of record on the license is 14036 N 161st Ct Surprise, AZ 85379-5008.

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website. The license is active and renewed through April 30, 2021. The license has been disciplined by the Registrar on 1 prior occasion, and has had 1 complaint that has been settled or otherwise resolved. The record also reflects that there is 1 open complaint against the license, which is presumed to be related to this matter. The license has a $6,750.00 surety bond issued RLI Insurance Corporation, effective May 16, 2019.

On or about November 05, 2019, the Registrar received a complaint filed by Complainant alleging abandonment of a residential backyard remodeling project, including the installation of a pool, fire pit, pavers, lights, and a barbeque island grill.

On November 08, 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 December 05, 2019, at 1:30 p.m.

On December 05, 2019, Registrar investigator Steve Klein (“Investigator Klein”) inspected Respondent’s work on the project. When he was finished, Investigator Klein drafted Jobsite Inspection Notes.

On December 06, a Warning Letter was issued to Respondent for an alleged violation of Ariz. Rev. Stat. §§ 32-1154(A)(16).

On December 06, a Warning Letter was issued to Respondent for an alleged violation of Ariz. Rev. Stat. §§ 32-1158.

On December 06, 2019, Investigator Klein issued a Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s abandonment allegation, and also determined that the work Respondent had performed on the project failed to meet minimum workmanship standards. Respondent was put on notice that he had until 5:00 p.m. on January 06, 2020, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(22), and 32-1154(E).

On January 07, 2020 Investigator Klein drafted Compliance Jobsite Inspection Notes to the parties whereby he noted that Respondent failed to timely comply with the Registrar’s Directive.

On January 07, 2020, Investigator Klein escalated Complaint 2019-05523 to the Registrar’s legal department with a Citation recommendation.

On January 09, 2020, the Registrar issued a Citation 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 January 24, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. § 32-1155(C).

On January 24, 2020, the Registrar received Respondent’s Answer.

On February 14, 2020, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on March 19, 2020. Per the 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.”).

On June 17, 2020, an administrative evidentiary hearing took place at OAH.

On July 31, 2020, the Registrar issued a Final Administrative Decision and Order to the parties whereby Respondent was held to be in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). As such, the Registrar suspended Respondent’s license for two (2) business days and imposed a $500.00 civil penalty under Ariz. Rev. Stat. § 32-1154. On September 09, 2020, the Final Administrative Decision and Order became effective.

On August 18, 2020, the Registrar received Complainant’s petition for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G), in the amount of $15,120.00. Attached were proof of payments Complainant made Respondent on the project, invoices and change orders issued to Complainant by Respondent, proof of payments Complainant made to a pool contractor to remediate the project, and a bond denial letter from Respondent’s insurance company.

On November 25, 2020, the Registrar issued a Notice of Claim for Administrative Award to the parties which held Complainant was awarded $18,084.54 from the Fund.

On December 07, 2020, the Registrar received an appeal letter from Respondent contesting Complainant’s award amount from the Fund.

On December 18, 2020, the Registrar again referred the matter to the Office of Administrative Hearings for an independent evidentiary hearing. Per the Amended Notice of Hearing sent to the parties on January 11, 2021, the issue for hearing is to determine if Complainant’s award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.

On March 05, 2021, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Doug Ulmer as a witness and submitted 18 exhibits. Complainant testified on his own behalf. Respondent called Amanda Rivard and Clayton Rivard as witnesses. The Notice of Hearing was also admitted into the record. The substantive evidence is as follows:

Complainant owns residential property located at 6215 E Juniper Ave Scottsdale, AZ 85254, which is the site of the underlying project at issue.

Mr. Ulmer is a Legal Assistant II for the Registrar. Mr. Ulmer made the determination that Complainant was eligible for a payout from the Fund.

In order to be eligible for an administrative payout applicant(s) must meet several requirements. First, the underlying contractor’s license must have been in good standing at the time the contract between the parties was executed. Second, the applicant(s) must own the property at issue as their primary residence, and occupy it. Third, the legal classification of the property must be a 3 or a 6. Fourth, the contractor must have been disciplined by either the Registrar, a Final Order issued by an Administrative Law Judge, or pursuant to a duly entered Consent Order between the contractor and the Registrar.

Here, Complainant satisfied all statutory requirements for an administrative payout from the Fund.

Mr. Ulmer determined the contract price was $49,776.00, however, pursuant to $5,000.00 a Change Order executed between the parties the contract price was increased to $54,776.00. Complainant paid Respondent $50,209.58 on the contract.

Complainant paid $21,081.00 to Refresh Pools AZ, ROC License No 316217, to remediate his project with Respondent. Complainant also paid a materials supplier $1,569.96. Monies Complainant paid to unlicensed or improperly licensed individuals were disallowed.

In order to calculate Complainant’s damages, Complainant’s unpaid balance was deducted from the Complainant’s costs plus bids, resulting in an award of $18,084.54.

Closing Arguments

In closing, the Registrar argued that Respondent failed to sustain its burden of proof in the matter. The Registrar noted that Refresh Pools AZ had been issued a Warning Letter by the Registrar for performing work outside the scope of its license in regards to Complainant’s barbeque, but argued that the Registrar does not disallow payment from the Recover Fund based on that allegation.

In closing, Complainant argued that Respondent only performed half of the work required on the project, but received over half of the contracted price.

In closing, Respondent argued that the barbeque grill it made for Complainant had not needed to be demolished and rebuilt by Refresh Pools AZ. Respondent also argued that Refresh Pools AZ had not been properly licensed to perform the work, and that by allowing the payment Complainant made to the contractor the Registrar was permitting and encouraging unlicensed contracting in direct contradiction to applicable laws. Respondent further argued that because Refresh Pools AZ did not itemize its contract agreement with Complainant, or invoices, that it was impossible to identify what portion of costs association with Complainant’s barbeque should be disallowed from Complainant’s Recovery Fund award.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. The matter was properly brought before OAH.

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

Respondent bears the burden of establishing by a preponderance of the evidence that the Fund’s payout amount was incorrect and/or improperly issued. The Registrar bears the burden to establish factors in mitigation 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.”

Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet four eligibility criteria. See McMurren v. J.M.C. Builder, Inc., 204 Ariz. 345 (App. 2003). First, an applicant must meet the definition of a “person injured” set forth at Ariz. Rev. Stat. § 32-1131(3) which requires that the applicant be the owner of the residential real property at issue. Second, the property must have had a classification of three under Ariz. Rev. Stat. § 42-12003. Third, the owner of the property must have occupied, or intended to occupy, the property as a resident that is damaged by a [residential or dual licensed] contractor who has paid for financial protection from the Recovery Fund. These criterion must be met at either the time the contract was executed or at the time the injury accrued. Fourth, as set forth in Ariz. Rev. Stat. § 32-1132(A), the applicant must have contracted with a residential contractor whose license was in good standing at the time of contract execution.

Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”

Statutes shall be liberally construed to affect their objects and to promote justice. In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.”

Statutes should be interpreted to provide a fair and sensible result. “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”

The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result.

In the case at bar, however, a detailed factual analysis is not necessary because Respondent failed to present any substantive evidence at hearing. Respondent argued, and rightfully so, that Refresh Pools AZ did not hold a proper license to demolish or rebuild Complainant’s barbeque to remediate complaint item 2 per the Directive. Had Refresh Pools AZ not completed the remediation(s) and instead Complainant had simply submitted their bid to the Recovery Fund for review, the outcome would be different. Here, however, Respondent did not provide evidence to suggest what portion of Refresh Pools AZ’s fee was attributed to the barbeque, nor did Respondent provide bids from appropriately licensed contractors, who had been apprised of the underlying contract and Directive, to offer estimates to determine an appropriate approximation of costs.

As such, Respondent failed to sustain his burden of proof in this matter.

The record reflects that the Registrar soundly established Complainant’s eligibility and how Complainant’s payout award amount was properly calculated at $18,084.54. Mr. Ulmer credibly testified that he diligently made calculations to allow and disallow line items from the bid chosen by the Registrar, which is how he reached a final figure.

Because Respondent offered no credible evidence to rebut Mr. Ulmer’s testimony, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded an $18,084.54 payout from the Fund. Respondent’s appeal is denied.

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that Respondent’s appeal be denied.

IT IS FURTHER RECOMMENDED that the Registrar affirm the $18,084.54 payout from the Fund as outlined in the Notice of Claim for Administrative Award, as issued on November 25, 2020.

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 forty (40) days from the date of that certification.

Done this day, March 25, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors