ALJDEC decisions subject to certification as final

2020A-00931-CHC-ROC · Registrar of Contractors · 2020-11-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

John Francis Brennan,

COMPLAINANT,

v.

Revolutionary Construction LLC,

License No. ROC 320173,

RESPONDENT

No. 2020A-00931-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 28, 2020 at 1:30 PM.

APPEARANCES: John Brennan (“Complainant”) appeared on his own behalf. Jason Clonts appeared on behalf of Revolutionary Construction (“Respondent”). Steve Nelson 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 Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

Background and Procedure

On May 18, 2018, the Registrar issued ROC License No. 320173 for General Dual KB-1 Building contracting to Respondent. Respondent’s address of record for the license is 6619 E. Ocotillo Rd. Paradise Valley, Arizona 85253-4334. Jason Reed Clonts is listed on the license as the Qualifying Party and Manager.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record for ROC License No. 320173, as reflected on the Registrar’s public website on October 28, 2020. Such prior license record reflects that Respondent’s license is active and renewed through May 31, 2022. The license has not been previously disciplined, however, the record reflects that one prior case has been resolved or otherwise settled with the license. 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 May 15, 2018.

On February 21, 2020, the Registrar received a complaint filed by Complainant alleging poor work performance. Attached to the complaint was a letter detailing Complainant’s grievance, Respondent’s business card, and an invoice for the project.

On March 03, 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 March 23, 2020, at 12:00 p.m.

On March 23, 2020, Registrar investigator Paul Smith (“Investigator Smith”) inspected the work that had been done on the project to date and took 17 photographs of the project. When he was finished, Investigator Smith drafted Jobsite Inspection Notes.

On March 27, 2020, Investigator Smith issued a Directive from the Registrar to Respondent because he substantiated Complainants’ allegations 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 April 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 27, 2020, Investigator Smith issued a Warning Letter to Respondent to advise that its contract with Complainant did not meet statutory minimum elements in violation of Ariz. Rev. Stat. § 32-1158(A). Respondent was further advised that failure to comply with Ariz. Rev. Stat. § 32-1158(A) was a violation of Ariz. Rev. Stat. § 32-1154(A)(12), which could result in discipline against Respondent’s license including suspension or revocation.

On May 04, 2020, Investigator Smith escalated Complaint No. 2020-00931 to the Registrar’s legal department with a citation recommendation.

On May 06, 2020, the Registrar issued a Citation to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(22). Respondent was given until May 21, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. § 32-1155.

On May 12, 2020, Investigator Smith submitted additional citation recommendations to the Registrar’s legal department.

On May 13, 2020, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). Respondent was given until May 28, 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 and attachments in support of his position.

On May 20, 2020, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on July 15, 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 A.R.S. § 32-1154(A)(2)(b) (“Departure from or disregard of a building code of this state or any political subdivision of this state in any material respect that is prejudicial to another.”)

Charge 2: 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 testified on his own behalf, called Steve Nelson as a witness, and submitted Exhibits 1-42 into the record. Jason Clonts testified on behalf of Respondent and submitted Exhibits A-L into the record. The Registrar’s agency file and Notice of Hearing were also admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant owns residential property located at 8221 E. Garfield St. Unit L-18 Scottsdale, Arizona 85257.

Complainant’s residence is part of the Scottsdale East Homes (“SEH”) co-operative.

In or around June 2019, SEH’s main sewer line collapsed. Several homes, including Complainants, were affected.

On September 18, 2019, SEH entered into a restoration contract with Respondent for repairs to the co-op’s affected units. SEH only agreed to pay Respondent to install new living room flooring and downstairs bathroom flooring related to the sewer damage.

On October 24, 2019, Complainant and Respondent entered into a secondary labor-only $12,110.50 verbal agreement for L-18, whereby Respondent agreed to demo and redo the remainder of Complainant’s downstairs flooring so that the level had the same uniform flooring. Respondent was also supposed to install mirrors, vanities, and a tub and shower in the downstairs bathroom, and also perform electrical work. Payment was due upon completion of the project.

On June 23, 2019, Complainant purchased flooring for the project.

On November 14, 2019, a Minimum Electrical permit was pulled for the project.

Respondent did not demo Complainant’s old flooring and instead tiled over it.

On February 27, 2020, SEH issued a Breach of Contract notice to Respondent. Units J-107, J-207, K-115, L-19, and M-008 were specifically identified for completion. Respondent was given 14 days to complete remediations as contracted.

On or around March 05, 2020, Respondent received an email from SEH’s president which he interpreted as a denial of access the property for failure to comply with its February 27, 2020, correspondence.

Respondent never sought Complainant’s express consent to enter L-18 to perform remediations on the parties’ secondary contract agreement between March 27, 2020, and April 24, 2020.

SEH precluded the city from performing an inspection of Respondent’s electrical work in Complainant’s unit. As a result, Respondent’s electrical work did not pass inspection.

On July 10, 2020, SEH and Respondent entered into a settlement agreement.

No portion of L-18 was remediated as a result of this agreement, nor was Complainant compensated as a result of this agreement.

Complainant and Respondent have not entered into a settlement agreement.

L-18 has not been habitable since June 2019.

In closing, Respondent argued that his settlement agreement with SEH relieved him of all remaining obligations under his contract with the co-op, and that he should not be penalized for not complying with the Registrar’s Directive because SEH prohibited him from doing so.

In closing, Complainant argued that he is aggrieved by Respondent’s settlement with SEH and Respondent’s failure to adhere to the Registrar’s Directive.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction and has been properly brought before the Office of Administrative Hearings for adjudication.

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)(2)(b) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of a building code of this state or any political subdivision of this state in any material respect that is prejudicial to another.”

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 contractor shall perform all work in a professional and workmanlike manner, and that a contractor shall perform all work in accordance with any applicable building codes and professional industry standards.”

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

Ariz. Rev. Stat. § 32-1154(E) holds, in pertinent parts, that the Registrar may impose a civil penalty not to exceed five hundred dollars on a contractor for each violation. The failure by the licensee to pay any civil penalty imposed results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty. It also holds that no future license may be issued to an entity consisting of a person who is associated with the contractor, unless payment of any outstanding civil penalty is tendered.

Here, the material facts are clear.

The evidence of record establishes that Respondent did not complete the project per the terms of its contract with Complainant, and that the work that Respondent did perform did not satisfy the minimum standards set for workmanship by the Registrar. It is also clear that Respondent failed to comply with the Registrar’s Directive.

Notably, however, there was no testimony or document(s) offered for the record to establish a violation of Ariz. Rev. Stat. § 32-1154(A)(2)(b) as the city was not permitted to inspect Respondent’s electrical work.

Therefore, the only remaining issue to address is whether Respondent raised a sufficient justification or excuse for failing to timely complete or remediate Complainant’s project per the Registrar’s Directive. These are affirmative defenses that Respondent bears the burden to establish. There is no evidence in the record that tends to suggest Respondent sustained its burden of proof in this matter. Mr. Clonts admitted that he never attempted to secure permission from Complainant to remediate the parties’ secondary contract agreement for L-18. Additionally, Mr. Clonts’ “absolution” argument regarding his settlement agreement with SEH is in error, because workmanship issues existed in L-18 directly related to agreements he had with Complainant and SEH. To that end, because Mr. Clonts failed to substantively address the workmanship citation, he has therefore acquiesced to the alleged violation.

Because Complainant established violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and/or 32-1154(A)(22) by a preponderance of the evidence, Complainant has also established cause for the Registrar to take disciplinary action against Respondent’s contractor’s license and issue a civil penalty.

Complainant may petition the Registrar’s Recovery Fund for financial recompense regarding this matter, as the Tribunal has no jurisdiction to award a refund of the underlying amount contracted between the parties.

RECOMMENDED ORDER

In light of the foregoing,

IT IS RECOMMENDED that on the effective date of the Final Order in this matter, Respondent Revolutionary Construction LLC, ROC License No. 320173, be suspended for 2 days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22).

IT IS FURTHER RECOMMENDED that Respondent shall pay the sum of $200.00 in certified funds to the Registrar as a civil penalty pursuant to Ariz. Rev. Stat. § 32-1154(E).

IT IS FURTHER ORDERED that if Respondent fails to pay the entire amount of the civil penalty on or before 30 days following the effective date of the Final Order, the Registrar shall revoke Respondent’s license, effective on such deadline date.

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, November 16, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors