ALJDEC decisions subject to certification as final

2020A-00200-CHC-ROC · Registrar of Contractors · 2020-06-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Joseph Hsu,

COMPLAINANT

v.

Cactus Pine Builders LLC,

License No. ROC 237667,

RESPONDENT

No. 2020A-00200-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 5, 2020.

APPEARANCES: Scott Zwillinger, attorney, appeared telephonically and represented Joseph Hsu, Complainant. Dan Harris represented Cactus Pine Builders LLC, Respondent.

ADMINISTRATIVE LAW JUDGE: Antara Nath Rivera.

_____________________________________________________________________

FINDINGS OF FACT

On or about June 20, 2016, the Registrar of Contractors (“ROC”) issued License No. 237667 for General Dual KB-2 Dual Residential and Small Commercial to Cactus Pine Builders LLC (“Respondent”). Respondent’s address of record for the license is 4220 West Mogollon Drive, Show Low, AZ 85901. Fred Thomas Padilla is listed on the License as Qualifying Party and Member.

Pursuant to A.A.C. R4-9-17, Administrative Notice is taken of Respondent’s prior License records as reflected on the ROC’s public website on June 5, 2020. Such prior License record reflects that Respondent’s License is currently active. License number 237667 has one disciplined case by the ROC. The record also reflects that License number 237667 has two open complaints against Respondent’s license, one of which is presumed to be related to this matter. Respondent has an active $14,000.00 surety bond issued through Merchant’s Bonding Co (Mutual).

In July 2017, Joseph Hsu (“Complainant”) entered into a written contract whereby Respondent agreed to remodel and build an addition at Complainant’s residential home located 7027 East Sunnyvale Road, Paradise Valley, AZ 85253 for the sum total of $373,900.00. The project commenced approximately July 2017, and stopped on or about November 1, 2019. Complainant did not pay Respondent for any of the performed work because Complainant disputed the charge with his credit card company and stopped the payment.

On or about January 13, 2020, the ROC received a complaint for poor workmanship and abandonment.

On or about January 21, 2020, the ROC issued a Jobsite Inspection Notification letter to the parties, providing proper notice to them, and advising them that an onsite review would be conducted at the project site by an ROC investigator on February 5, 2020. Both parties were present for the Jobsite Inspection.

On February 5, 2020, ROC Investigator Randy Morris (“Investigator Morris”) conducted an inspection of the work that had been done on the project to date and took approximately 25 photographs of the property.

On or about February 13, 2020, Investigator Morris issued a Directive From The Registrar (“Directive”) to Respondent because he substantiated Complainant’s allegation that Respondent exhibited poor workmanship on work that was not completed per industry standards. Specifically, Respondent was ordered to remediate complaint items 1, 4, and 11 via appropriate means. The compliance deadline for the Directive was March 2, 2020.

On or about March 19, 2020, the ROC issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22), and Ariz. Admin. Code R4-9-108. Respondent was given until April 3, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On or about April 3, 2020, Respondent filed an Answer. In summary, Respondent indicated that the remodel project began with three items and grew to be a larger project than anticipated. Complainant requested various changes and additions to the project. These changes resulted in a delay of the project. Respondent secured subcontractors to complete the remaining items. Furthermore, Complainant did not pay Respondent fully for the work completed. This was a result of Complainant’s partner passing away. Complainant’s partner paid for most of the project and after his death, a hold was put on his accounts. Not only did Respondent not abandon the job, Respondent performed work outside of the scope of the contract to help Complainant. Respondent was actively involved with this project and intended to complete the project but had no control over timelines.

On or about March 17, 2020, Investigator Morris conducted a Compliance Jobsite Inspection. Investigator Morris observed that items 1, 4, and 11 were not completed.

On or about April 10, 2020, the ROC referred this matter to the Office of Administrative Hearings (OAH), an independent state agency, for an evidentiary hearing on June 5, 2020.

Per the Citation, 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)(3)-R4-9-108. (“Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108.”).

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

Investigator Morris testified to the results of his investigation.

Complainant testified that he contracted with Respondent to install an elevator in the house to accommodate his partner’s medical needs. The elevator was supposed to be completed within six to nine months. Complainant would have stopped the project had he known it would take three years. Complainant denied making any changes to the contract.

Complainant testified that Respondent failed to install a garage door for over a year due to subcontractor issues. Subsequently, there was damage inside the garage from debris, rain, and water stains.

Complainant acknowledged that he changed the style of the base cabinet in the wine room. He stated that the wine room was completed prior to the hearing.

After November 2018, the project slowed down. Complainant made several attempts to reach out to Respondent. Respondent never responded and did not come back to the project. Complainant wanted to sell the house but has been unable to do so due to the incompletion of the elevator. Complainant acknowledged that he owed Respondent $30,000.00.

At the hearing, Dan Harris testified on behalf of Respondent. Mr. Harris stated that the project took longer than anticipated due to the high end finishes requested by Complainant. The finishes were shipped from other states. Additionally, Complainant made several changes throughout the project which further delayed completion of the project.

Mr. Harris argued that the project was delayed due to Complainant’s additions and changes to the project and Complainant’s inability to pay Respondent. Mr. Harris went above and beyond what was expected of Respondent despite the lack of funds to continue the project. At one point, Complainant requested to be taken off the contract to avoid liability.

Mr. Harris testified that all subcontractors have been paid in full. The outstanding items included certification of the elevator and finishing the wine room. The garage door for the RV garage has been installed and the missing trip piece was installed. While the materials for the wine room recently arrived, the subcontractor was in quarantine due to the COVID-19 virus and was unable to complete the wine room. Additionally, Mr. Harris offered to pay for the inspection of the elevator to activate the services.

Mr. Harris opined that he was unable to fully complete the items on the Directive due to COVID-19 issues. Mr. Harris informed the Tribunal that the elevator was set to be inspected and activated on June 10, 2020. Mr. Harris argued that he never abandoned the project because he was actively working to ensure that the items on the Directive were complete.

Following Mr. Harris’ testimony, the parties, along with the Administrative Law Judge (ALJ) discussed Respondent’s opportunity to correct the items on the Directive. Both parties agreed to hold the record open to allow Respondent to correct the following items: inspection of the elevator, completion of the drywall, and completion of the limestone flooring. The record was held open and the case was set for a status update until June 17, 2020.

On or about June 18, 2020, the OAH received a status update from Complainant which advised OAH that the elevator was nonfunctioning and the limestone flooring was not corrected.

On or about June 19, 2020, Mr. Harris emailed the OAH and informed the OAH the drywall and limestone flooring had been completed. However, due to circumstances beyond his control, the elevator inspection did not occur.

The ALJ having received a status update from both parties, deemed the case concluded.

CONCLUSIONS OF LAW

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

Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See Ariz. Rev. Stat. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).

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)(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 ROC has the authority to issue license discipline under this provision, including summary suspension, revocation, or imposing a civil penalty or recovery fund award.”

Complainant established by a preponderance of the evidence that Respondent failed to complete the project in a workmanlike manner when Respondent failed to install proper flooring and obtain certification of the elevator in a timely manner. The evidence showed that there were issues of nonpayment by Complainant. However, Respondent’s workmanship still fell below the industry standards. Thus, Respondent was in violation of Ariz. Rev. Stat. § 32-1154(A)(3), namely A.A.C R4-9-108.

Furthermore, Complainant established by a preponderance of the evidence that Respondent failed to complete the project in a workmanlike manner when Respondent did not correct any of those issues prior to the Directive deadline. Additionally, Respondent did not correct the items by June 17, 2020, the deadline for Respondent to continue corrective work after the record was held open from the hearing. Thus, Respondent’s failure to comply was in violation of Ariz. Rev. Stat. § 32-1154(A)(22).

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that on the effective date of the Order, the Registrar shall suspend Respondent Cactus Pine Builders LLC’s License Nos. 237667 for a period of three (3) days.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum of $500.00, in certified funds, as a civil penalty pursuant to A.R.S. § 32-1154(E).

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s final order, the Registrar 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)(7), 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 40 days from the date of that certification.

Done this day, June 25, 2020.

/s/ Antara Nath Rivera

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors