ALJDEC decisions subject to certification as final

2020A-00577-RFA-LS-ROC-RE · Registrar of Contractors · 2022-05-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Hans Jurgen Marion Ehringer Revocable Living Trust,

COMPLAINANT,

v.

Bare Floors LLC

ROC License No. 291163,

RESPONDENT.

No. 2020A-00577-RFA-LS-ROC-RES

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 04, 2022 at 9:00 AM.

APPEARANCES: Assistant Attorney General Sara Asta, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Katelyn Rolling as a witness. Janet Mata appeared on behalf of the Hans Jurgen Marion and Ehringer Revocable Living Trust (“Complainant”). Amir Kajtezovic appeared on behalf of Bare Floors 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 Registrar.

FINDINGS OF FACT

Background and Procedure

According to the Registrar’s public website, on May 01, 2014, the Registrar issued ROC License No. 291163 for specialty dual CR-8 floor covering contracting to Respondent. Respondent’s address of record for the license is 11201 N. 23rd Ave. Phoenix, Arizona 85209. Amir Kajtezovic is listed on the license as the Qualifying Party and Member.

Pursuant to Arizona Administrative Code (“Ariz. Admin. Code”) R4-9-117, Administrative Notice is taken of Respondent’s prior License record, for License No. 291163, as reflected on the Registrar’s public website on May 04, 2022. Such prior License record reflects that Respondent’s license is active and renewed through May 31, 2022. The license has been disciplined on one (1) prior occasion; presumably related to this matter. There are no open complaints against Respondent’s license. The license has a $6,750.00 surety bond issued by RLI Insurance Company effective March 12, 2014.

On February 04, 2020, Complainant filed a complaint against Respondent with the Registrar alleging abandonment and poor workmanship of a new residential construction project. Complainant included a punch list, residential listing, party purchase agreement, and title documents.

On February 14, 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 from the Registrar on March 20, 2020, at 8:30 a.m.

On March 20, 2020, Registrar investigator Beau Cruz (“Investigator Cruz”) conducted a review of the contract executed between the parties. Investigator Cruz also inspected the work that had been done on the project to date and took 22 photographs of the property. When he was finished, Investigator Cruz drafted Jobsite Inspection Notes.

On March 23, 2020, Investigator Cruz issued a Written Directive from the Registrar (“Directive“) to Respondent because he substantiated Complainant’s workmanship complaints item numbers 4-5, 15-16 and 18 that the work Respondent had done failed to meet minimum workmanship standards. Respondent was put on notice that it had until April 23, 2020, to notify the Registrar of its compliance with the corrective order or face discipline pursuant to Ariz. Admin. Code R4-9-108, and Arizona Revised Statute (“Ariz. Rev. Stat.”) §§ 32-1154(A)(22) and 32-1154(E).

On April 02, 2020, Investigator Cruz issued an Amended Written Directive from the Registrar Replacing Directive (“Amended Directive”) of March 23, 2020 to Respondent. Respondent was put on notice that it had until April 23, 2020, to notify the Registrar of its compliance with the corrective order or face discipline pursuant to Ariz. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1154(E).

On April 24, 2020, investigator Cruz issued a Minimum Elements of a Contract Warning Letter to Respondent to advise that its contract with Complainant violated Ariz. Rev. Stat. § 32-1158.

On May 06, 2020, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); namely Ariz. Admin. Code R4-9-108, 32-1154(A)(12); namely 32-1158, and 32-1154(A)(22). Respondent was given until May 21, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On May 19, 2020, the Registrar received Respondent’s Answer whereby Respondent alleged that Complainant denied him access to the project site.

On May 20, 2020, the Registrar referred this matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing on July 14, 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)(12) – A.R.S. § 32-1158. (“Failure in any material respect to comply with this chapter; namely 32-1158.”)

Charge 3: 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 July 14, 2020, an administrative evidentiary hearing took place at OAH.

On August 07, 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) and 32-1154(A)(22). As such, the Registrar suspended Respondent’s license for two (2) business days. On September 16, 2020, the Final Administrative Decision and Order became effective.

On or about November 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), requesting “$21,000.00 – $26,000.00.” Attached were Complainant’s Special Power of Attorney executed April 27, 1992, Complainant’s Certification of Trust executed February 22, 2021, Complainant’s Warranty Deed executed August 14, 2002, a Bond Denial Letter from Respondent’s insurance company dated August 11, 2020, a statement from Complainant, and 4 repair bids including 2 revisions.

On June 30, 2021, the Registrar issued a Notice of Claim for Administrative Award to the parties which held Complainant was awarded $29,755.46 from the Fund.

On July 13, 2021, the Registrar received an appeal letter from Respondent contesting Complainant’s award amount from the Fund.

On July 16, 2021, the Registrar again referred the matter to the Office of Administrative Hearings for an independent evidentiary hearing set for September 10, 2021.

On or about March 16, 2022, the matter was reopened by the Registrar, who again referred the case back to the Office of Administrative Hearings for an independent evidentiary hearing set for May 04, 2022. Per the Notice of Hearing sent to the parties on March 25, 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 May 04, 2022, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Katelyn Rolling as a witness and submitted Exhibits 1-25. Complainant called Janet Mata as a witness. Respondent called Amir Kajtezovic as a witness. The Notice of Hearing was also admitted into the record as its own exhibit. The substantive evidence is as follows:

Hans-Jurgen Ehringer and Marion Ehringer are the Settlors and Trustees of the Hans-Jurgen Ehringer and Marion Ehringer Revocable Trust (“Trust”). Parcel #[SSN redacted], otherwise identifiable as Lot 77 in Paradise Gardens in Maricopa County, Arizona (i.e. 10010 N. 34th Pl. Phoenix, AZ 85028), is owned by the Trust. On April 27, 1992, Janet Mata, formerly Janet Ehringer, was duly appointed as Special Power of Attorney (“Special POA“) by the Trust. In her position as Special POA, Mrs. Mata is authorized to engage in “legal decision-making” on behalf of the Trust, in pertinent parts, as follows:

Enter the trust property into contractual agreements, accept and tender payments, and perform acts necessary and appropriate to be done about the premises.

Mrs. Mata filed both the underlying homeowner complaint in 2020A-00577-CHC-ROC, as well as the recovery fund petition in the case at bar.

Ms. Rolling is a Legal Assistant II for the Registrar. Ms. Rolling made the determination that Complainant was eligible for a payout from the Fund because it satisfied all statutory requirements for an administrative payout.

To determine the appropriate amount of the administrative award, Ms. Rolling verified the parties’ October 31, 2019, informal $6,510.00 contract amount, the contract terms, and the $5,000.00 paid on the contract by Complainant. As a result, a $1,510.00 deduction was made because of the equivalent unpaid balance on the contract. Next, Ms. Rolling confirmed that Complainant filed against Respondent’s bond. Ms. Rolling also reviewed Complainant’s four (4) repair bids and opted to accept a revised bid from Arizona Construction and Restoration (“AC&R”) because it was from an appropriately licensed contractor, encompassed remediations identified in the Directive but did not include items outside of it, contained detailed pricing, and was the least expensive bid submitted.

The other bids were not chosen because they were either insufficiently detailed in scope, did not cover all of the items that required repair, did not contain exact measurements, and/or the associated cost(s) were excessive.

Ultimately, Ms. Rolling calculated Complainant’s damages by deducting the unpaid contract balance from Complainant’s costs plus bids, resulting in a $29,755.46 administrative payout from the Fund. At the hearing, however, the Registrar and Mrs. Mata stipulated that a baseboard line item from AC&R’s revised bid needed to be struck, as it was not included in the parties’ original agreement. Thus, $1,485.51 was deducted from the award amount, leaving Complainant with a final award total of $28,269.95.

Closing Arguments

In closing, Respondent admitted that he was generally confused about the hearing process; specifically regarding the litigation issues and jurisdictional authority underlying the CHC and RFA matters. Still, Respondent opined that the Registrar failed to act diligently in accepting Complainant’s AC&R bid, as Mr. Kajtezovic had received several bids from other licensed contractors that were less than AC&R’s bid. Respondent also argued that Mrs. Mata should not have been able to file on behalf of the Trust, regardless of her role as its Special POA. Respondent asked that Complainant’s payout award be reduced or quashed, or in the alternative, that Mr. Kajtezovic be allowed the finish the job.

In closing, the Registrar offered that as the fiduciary of the Recovery Fund it followed all applicable statutes as a good steward. The Registrar opined that the process was fair for all parties, and produced a fair and just result. Respondent argued that Respondent failed to sustain his burden of proof, as the credible evidence of record reflected that Complainant was eligible to access the Recovery Fund and its award had been properly calculated, which was not outweighed by Respondent’s unsubstantiated opinions on AC&R’s pricing. The Registrar asked that the Notice of Claim for Administrative Award be affirmed, as stipulated.

Complainant declined to provide a closing argument.

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 specific eligibility criteria. An individual is eligible for an award from the residential contractors’ recovery fund if they both: (1) own residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance, and (2) actually occupy or intend to occupy the residential real property as the individual’s primary residence. Additionally, the applicant must have contracted with a residential contractor who was appropriately licensed either at the time of contract execution, when the first payment on the project was made, or when the work on the project first began.

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. Here, Mr. Kajtezovic irrelevantly argued that AC&R’s bid was higher than ones he obtained, and also opined without merit that it could complete/remediate the project for less than AC&R’s bid. There is no statutory prevision or regulation that required Complainants’ remediation bid to be within a certain amount, nor is there any industry standard adopted by law that would require the Registrar to hold Complainant to such a requirement. Notably, credible evidence in the record specifically rejects this contention whereby Ms. Rolling confirmed that AC&R’s bid was not excessive in cost, in the aggregate or in part(s), and the Registrar and Complainant agreed to reduce the bid by $1,485.51 to remove an included disallowed item.

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

The record reflects that the Registrar soundly established Complainants’ eligibility and how Complainants’ administrative award payout amount was properly recalculated at $28,269.95. Ms. Rolling credibly testified that she diligently reviewed all pertinent documentation, consulted, and made careful calculations to reach a final stipulated figure.

Because Respondent offered no credible evidence to rebut Ms. Rolling’s testimony, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded a payout from the Fund.

Respondent’s appeal must be 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 modified $28,269.95 payout from the Fund as outlined in the Notice of Claim for Administrative Award, as issued on June 30, 2021.

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, May 24, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

By Miranda Alvarez

Legal Secretary