ALJDEC decisions subject to certification as final

2020A-01527-CHC-ROC · Registrar of Contractors · 2020-07-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Ridley Nolan,

COMPLAINANT,

v.

Silver River Builders LLC,

License No. ROC 313720,

RESPONDENT.

No. 2020A-01527-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 31, 2020 at 8:30 AM.

APPEARANCES: Roy Ridley Nolan Jr. (“Complainant”) appeared on his own behalf with John Ellington as a witness. No appearance(s) by or on behalf of Silver River Builders LLC (“Respondent”).

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 Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

Background and Procedure

According to the Registrar’s public website, on or about May 31, 2015, the Registrar issued License No. 313720, general B residential contracting license to Respondent. David Colt Henderson is the Qualifying Party and Member on this license. Respondent’s address of record on the license is 248 S 100 E Ste. 3, Kanab, Utah 84741-1717.

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. ROC License No 313720 has not previously been disciplined by the Registrar. There is one open complaint against the license, which is presumed to be related to this matter. The license has a $9,000.00 surety bond issued by RLI Insurance Company effective May 10, 2017. The license had been renewed through May 31, 2021.

On March 26, 2020, Complainant filed a complaint against Respondent with the Registrar essentially alleging poor workmanship and abandonment of a new residential construction project. Complainant included a punch list, residential listing, party purchase agreement, and title documents.

On an unknown date Complainant submitted an addendum to his complaint to the Registrar.

On March 31, 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 April 16, 2020, at 10:00 a.m.

On April 16, 2020, Registrar investigator John Ellington (“Investigator Ellington”) inspected the work that had been done on the project to date and took 90 photographs of the project. Respondent was not in attendance. When he was finished, Investigator Ellington drafted Jobsite Inspection Notes.

On April 20, 2020, Investigator Ellington issued a Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s poor workmanship allegation. Respondent was put on notice that he had until 5:00 p.m. on May 20, 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 May 21, 2020, Investigator Ellington escalated Complaint 2019-01527 to the Registrar’s legal department with a Citation Recommendation.

On May 22, 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(a), and 32-1154(A)(22). Respondent was given until June 06, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. § 32-1155(C).

On June 04, 2020, the Registrar received Respondent’s Answer whereby Respondent provided the following information:

“I spoke with Wes Ellington (the inspector) but he'd just already sent it over so said he couldn't do anything about it anymore. Long story short, my 13 year old daughter developed liver cancer that spread to brain tumors. I took her to Houston for treatment from January 2nd to beginning of May when they life-flighted her back to Utah. She passed away on the 11 of May and we had the funeral last week. Needless to say the last couple months have been a bit crazy. I'd told inspector that he said they were giving more time for corrections due to Covid. I'd been in contact with the homeowner and explained situation and he was very empathetic. (I can even show you the text threads back and forth) but he told inspector I'd not been in contact. I'd like to make things right but not sure what status is at this point?” [sic]

(All errors in original.)

On June 10, 2020, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on July 31, 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 A.R.S. § 32-1154(A)(3) (“Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.)

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 and called Investigator Ellington as a witness. The Registrar’s agency file and Notice of Hearing were admitted into the record as their own exhibits. Although the Tribunal afforded Respondent a 10-minute grace period, there was no appearance by or on behalf of Respondent, nor did OAH receive a Motion to Continue on Respondent’s behalf. The hearing was held in Respondent’s absence. The substantive facts are as follows:

Respondent is a residential developer. As the owner of 5300 E. Captain Call Ln. San Tan Valley, Arizona 85140, Respondent constructed a residence on the land and placed it for sale on the real estate market on June 14, 2018.

On or about December 09, 2018, Complainant and Respondent entered into a contractual agreement whereby Complainant agreed to tender the sum total of $365,000.00 to Respondent in exchange for property ownership rights to the aforementioned newly constructed residence.

On January 29, 2019, the parties participated in a pre-closing walkthrough of the property, whereby Complainant identified 12 areas of remediation for Respondent to address.

On January 31, 2019, escrow on the property closed.

On February 07, 2019, Complainant took possession of the property.

At an unknown date after move-in, Complainant contacted Respondent to address the outstanding punch list items and address new workmanship issues discovered after move-in.

In response, Respondent sent out a painter to address Complainant’s exterior paint concerns.

Respondent did not address any other items on Complainant’s punch list.

Despite his efforts, Complainant was not able to reach Respondent to address their dispute. Respondent sent a liaison to assess Complainant’s concerns, but Complainant had no further contact with said liaison afterwards.

Neither Investigator Ellington nor Complainant received a request from Respondent to extend the Registrar’s Directive compliance deadline prior to its expiration.

Respondent did not make any attempts to comply with the Registrar’s Directive, subcontract the work to other licensed contractors, or enter into a financial agreement with Complainant.

In closing, Complainant expressed his empathy over Respondent’s personal hardships due to the loss of his daughter, but also expressed his frustration and remorse over the potential monies he stood to lose on his residential investment. Complainant noted that he could not afford to pay for the repairs necessary to remediate his dispute with Respondent, and beseeched the Tribunal for relief.

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.

The Notice of Hearing the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter. Because the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Registrar as well.

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.”

Ariz. Rev. Stat. § 32-1154(E) provides, in pertinent parts, that the Registrar may “[i]mpose 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 provides that “[n]o 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.”

The material facts in this case are not in dispute.

It is undisputed that Complainant paid Respondent in full for the construction of a new residential build. It is also undisputed that the work Respondent performed on the project did not meet the Registrar’s minimum workmanship standards. It is further undisputed that the Registrar’s post-investigative Directive required Respondent’s full compliance by May 20, 2020, and that Respondent did not timely comply.

Therefore, the only remaining issue to address is whether Respondent raised sufficient justification or excuse for failing to timely and completely remediate all complaint action items outlined in the Registrar’s Directive. This is an affirmative defense that Respondent bears the burden to establish. The Tribunal is not at liberty to make presumptions in favor of Respondent or accept facts in mitigation on behalf of Respondent that are not supported by the evidence. While the Tribunal extends its deepest sympathies and condolences to Respondent, the record here reflects that Respondent failed to adhere to a Registrar Directive, and had no affirmative defense(s) for doing so.

Because Respondent’s performance on the underlying project did not meet the Registrar’s minimum workmanship standards, Complainant has established a violation of Ariz. Rev. Stat. § 32-1154(A)(3).

Because Respondent failed to take appropriate corrective action after the Directive was issued by the Registrar for the underlying project, Complainant has also established a violation of Ariz. Rev. Stat. § 32-1154(A)(22).

As such, Complainant has also established grounds for the Registrar to take disciplinary action against Respondent’s license and impose a civil penalty against Respondent pursuant to Ariz. Rev. Stat. § 32-1154(E).

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

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that on the effective date of the Final Order in this matter Respondent Silver River Builders LLC, ROC License No. 313720, be suspended for two (2) days.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $200.00 in certified funds as a civil penalty.

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before thirty (30) days following the effective date of the Registrar’s Order, the Registrar shall 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 Ariz. Rev. Stat. § 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, July 31, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors