ALJDEC decisions subject to certification as final

2020A-00126-CHC-ROC · Registrar of Contractors · 2020-06-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

The Ronald LLC,

COMPLAINANT,

v.

SkyGreen Construction LLC,

License No. ROC 314249,

RESPONDENT.

No. 2020A-00126-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 29, 2020 at 1:00 PM.

APPEARANCES: Ronald Nawrocki appeared on behalf of The Ronald LLC (“Complainant”) with Beata Nawrocki as a witness. Brian Burgmeir appeared on behalf of SkyGreen Construction LLC (“Respondent”). Chris Fultz appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).

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 Registrar.

FINDINGS OF FACT

Background and Procedure

On June 22, 2017, the Registrar issued ROC License No. 314249 for general dual KB-2 residential and small commercial contracting to Respondent. Respondent’s address of record for the license is 31 E Yvonne Ln, Tempe, AZ 85284-4079. Brian Anthony Burgmeier is listed on the license as the Qualifying Party and Member.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record for ROC License No. 314249, as reflected on the Registrar’s public website on May 29, 2020. Such prior license record reflects that Respondent’s license is active and renewed through June 30, 2021. The license has been previously disciplined on 6 prior occasions. The record also reflects that there is one open complaint against Respondent’s license, which is presumed to be related to this matter. Respondent has an active $14,000.00 surety bond for the license issued through RLI Insurance Company effective June 07, 2017.

On January 08, 2020, the Registrar received a complaint filed by Beata Nawrocka, on behalf of Complainant, for abandonment. Attached to the complaint was a copy of the underlying contract, permit inspection history, a spreadsheet of payments and invoices, and proof of payments.

On January 16, 2020, 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 February 10, 2020, at 12:00 p.m.

On February 10, 2020, Registrar investigator Chris Fultz (“Investigator Fultz”) inspected the work that had been done on the project to date and took 2 photographs of the project. When he was finished, Investigator Fultz drafted Jobsite Inspection Notes.

On February 25, 2020, Investigator Fultz issued a Directive from the Registrar to Respondent because he substantiated Complainants’ thirteenth allegation 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 March 24, 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, and 32-1154(A)(22) and 32-1154(E).

On March 26, 2020, Investigator Fultz escalated Complaint 2019-04441 to the Registrar’s legal department with a Citation Recommendation.

On April 15, 2020, the Registrar issued a Citation and Complaint to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). Respondent was given until April 30, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On April 16, 2020, the Registrar received Respondent’s Answer whereby Respondent essentially alleged that Complainant had fired Respondent and hired a number of subcontractors to complete the project. Respondent offered to continue to work with Complainant to remediate deficient work performed by its employee(s), but refused to perform remediations for work completed by other contractors.

On April 17, 2020, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on May 29, 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.”).

Hearing Evidence

Complainant called Ronald Nawrocki and Investigator Fultz as witnesses, and submitted 5 exhibits (1-5) into the record. Respondent called Brian Burgmeir as a witness, submitted 2 exhibits (1-2) into the record. The Registrar’s agency file, Notice of Hearing, and May 11, 2020, Telephonic Order were also admitted into the record as their own exhibits. The substantive facts are as follows:

Complainant is a residential contracting developer. Complaint 2020-00126 is regarding one of several homes in a subdivision where Complainant was building and/or remodeling houses. The property at issue was located at 601 E Clarendon Ave., Phoenix, AZ 85012.

On or about November 21, 2017, the parties entered into a contract agreement whereby Respondent agreed to perform, and provide all materials necessary, for a whole-home remodel and construct a room addition for Complainant at the above-referenced address in exchange for the sum total of $112,264.68. Between November 27, 2017, and January 07, 2019, Complainant issued 12 checks totaling $79,598.99 to Respondent.

At some unknown point, when Respondent was about 90% complete with the block privacy wall in the rear of Complainant’s property, a City garbage truck hit the wall causing substantial damage. The City paid Complainant approximately $433.00 for the damage. Complainant turned those monies over to Respondent for compensation to remediate the damage and complete the wall structure. The wall remained unfinished by the date Complainant submitted its complaint to the Registrar.

Both parties were present at the subsequent February 10, 2020, jobsite inspection. At that time Investigator Fultz was informed that the back wall portion of the project was substantially performed by Respondent, and none of the subcontractors that Complainant had hired to remediate the project had worked on that portion.

Of the 17 issues listed in Complaint 2020-00126, only 1 was within the Registrar’s purview - #13. All remaining complaint items were either outside the jurisdiction of the Registrar or had already been remediated or otherwise completed by Complainant’s subcontractor(s).

Between February 25, 2020, and March 24, 2020, Investigator Fultz did not receive notice from the parties that a financial agreement had been reached.

On May 29, 2020, Investigator Fultz received an email from Respondent that that Complaint Item #13 had been successfully remediated. Investigator Fultz did not have an opportunity prior to hearing to confirm with Complainant that Respondent’s avowal was correct. No compliance inspection was performed.

Complainant testified that although Respondent completed the rear block wall portion of the project sometime during the first week of April 2020, the work itself was “okay” but “does not look like contractor quality work.” Complainant conceded that the wall was “acceptable” and opined that most buyers would not notice that the wall was “not properly finished.”

Respondent admitted that despite the global COVID-19 pandemic, which began in or around early-2020, Respondent was considered an essential business. Therefore, despite the Governor’s shelter-in-place Executive Order, Respondent’s business did not shutter during the quarantine period. Rather, Respondent was still open for business and could have performed remediations necessary to complete Complainant’s project by March 24, 2020, and would have done so but for its tradesman running out of materials.

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)(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) provides, 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 clear.

The evidence of record establishes that the Registrar issued a Directive to Respondent with specific instruction to Respondent to complete the construction of Complainant’s rear block wall no later than March 24, 2020, and that Respondent failed to timely comply.

Therefore, the only remaining issue to address is whether Respondent raised a sufficient justification or excuse for failing to timely complete Complainant’s project. These are affirmative defenses that Respondent bears the burden to establish. Respondent admitted that it failed to complete the project by March 24, 2020, because it ran out of materials, but completed the job days after the expiration of the Directive compliance deadline. Markedly, however, Respondent did provide rebuttable evidence sufficient to establish that the underlying work at issue was completed in a manner consistent with the Registrar’s minimum workmanship standards.

Because Complainant failed to establish by a preponderance of the evidence that Respondent’s rear block wall performance fell below the Registrar’s minimum workmanship standards, Complainant has not established a violation of Ariz. Rev. Stat. § 32-1154(A)(3).

However, because Respondent failed to take appropriate corrective action after the Directive was issued by the Registrar on the underlying project, Complainant has established a violation of Ariz. Rev. Stat. § 32-1154(A)(22). Thus, Complainant has also established cause for the Registrar to discipline Respondent’s license.

Notably, the undersigned Administrative Law Judge does not recommend that the Registrar take disciplinary action against Respondent’s license based on the underwhelming indiscretion it committed in this matter.

RECOMMENDED ORDER

In light of the foregoing,

IT IS RECOMMENDED that that on the effective date of the Final Order in this matter, that this case shall 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 five days from the date of that certification.

Done this day, June 17, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors