ALJDEC decisions subject to certification as final

2020A-01630-CHC-ROC · Registrar of Contractors · 2020-09-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Wanda M Squyres,

COMPLAINANT,

v.

Arizona Restoration Pros Inc.,

License Nos. ROC 323907, 327728,

RESPONDENT.

No. 2020A-01630-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 31, 2020 at 9:00 AM.

APPEARANCES: Wanda Squyres (“Complainant”) appeared with Jon Smith as a witness. Paul Redman appeared on behalf of Arizona Restoration Pros Inc. (“Respondent”) with Danielle Robin as a witness. Park Squyers and Don France observed.

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 March 26, 2019, the Registrar issued License No. 323907 for Specialty Dual CR-61 Carpentry, Remodeling and Repairs contracting to Respondent. Respondent’s address of record for the license is 1601 S. Pantano #107 Tucson, AZ 85710. Paul S. Redman is listed on the license as the Qualifying Party and President.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record, for ROC License No. 323907, as reflected on the Registrar’s public website on August 31, 2020. Such prior license record reflects that Respondent’s license is active and renewed through March 31, 2021. The license has not been previously disciplined, and the record does not reflect any open complaints against Respondent’s license. Respondent has a $6,750.00 surety bond for the license issued through RLI Insurance Company, effective March 04, 2019.

On February 14, 2020, the Registrar issued License No. 327728 for General Dual KB-2 Residential and Small Commercial contracting to Respondent. Respondent’s address of record for the license is 1013 S. Euclid Ave. Tucson, AZ 85719-6631. Paul S. Redman is listed on the license as the Qualifying Party and President.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record, for ROC License No. 327728, as reflected on the Registrar’s public website on August 31, 2020. Such prior license record reflects that Respondent’s license is active and renewed through February 28, 2022. The license has not been previously disciplined, however, the record does show that there is one open complaint against Respondent’s license which is presumed to be related to this matter. Respondent has a $20,000.00 surety bond for the license issued through RLI Insurance Company, effective February 03, 2020.

On March 30, 2020, the Registrar received a complaint against Respondent alleging poor work performance on a whole-home restoration project. Attached to the complaint was a copy of the related work order and proof of payment for the project.

On April 08, 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 29, 2020, at 9:00 a.m.

On April 29, 2020, Registrar investigator John Smith (“Investigator Smith”) inspected the work that had been done on the project to date and took 50 photographs. When he was finished, Investigator Smith drafted Jobsite Inspection Notes.

On May 01, 2020, Investigator Smith issued a Directive from the Registrar to Respondent because he substantiated Complainant’s 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 May 18, 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 December 02, 2019, 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, and 32-1154(A)(22). Respondent was given until July 14, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On July 14, 2020, the Registrar received Respondent’s Answer whereby Respondent opined that most of the complaint items substantiated in Investigator Smith’s Directive had been corrected and argued that delays in completing the project were due to (i) delays in approvals from Complainant’s homeowner’s insurance company (“American Family”), (ii) manufacturer’s and sub-contractors’ closures because of the global COVID-19 pandemic, (iii) Complainant’s refusal to allow Respondent to make repairs, and (iv) Complainant’s alleged “aggressive, belligerent, angry” and “unreasonable” behaviors resulting in confusion, delay, and the creation of a “hostile work environment” for trades that caused several of them to walk off the job.

On July 17, 2020, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 31, 2020. Per the July 30, 2020, Notice of Hearing on Contested Case (“Notice of Hearing”) the issue to be determined is whether the Registrar has cause to discipline Respondent’s license(s) 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) (“Failure in any material respect to comply with this chapter; namely, A.R.S. § 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.”).

Hearing Evidence

Complainant testified on her own behalf and called Investigator Smith as a witness. Paul Redman and Danielle Robin testified on behalf of Respondent and submitted Exhibits A-C and E. The Registrar’s agency file and Notice of Hearing were admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant owns residential property located at 38615 S. Sand Crest Dr. Tucson, AZ 85739 with her husband, Park Squyers.

On April 13, 2019, the Squyers’ residence sustained extensive smoke and fire damage. American Family, Complainant, and Respondent entered into a Work Order Agreement to Perform Restoration Services, Direct Pay Authorization & Assignment of Benefits for American Family to pay Respondent to rebuild Complainant’s residence.

No payment schedule was included in the parties’ contract.

On an unknown date, Complainant issued American Family a check for $2,500.00 to cover the cost of her homeowner’s insurance deductible.

Respondent was paid as follows for the underlying project –

On an unknown date, American Family issued Respondent a check for $97,682.27 to cover costs related to the rebuild and repairs.

On July 11, 2019, Complainant tendered a check to Respondent for $70,900.87.

On August 13, 2019, Complainant tendered a check to Respondent for $50,000.00.

On October 29, 2019, Complainant tendered a check to Respondent for $45,000.00.

Work on the $276,128.27 project commenced in May of 2019.

At that time, Respondent was only licensed for CR-61 contracting. Approximately 9 months after the start of this project Respondent obtained his KB-2 contracting license.

Work on the project stopped in early-2020 because of a financial dispute between the parties. Respondent refused to make corrections to work Complainant took issue with until Complainant tendered an additional payment on the project. Complainant refused to tender additional payments on the project until Respondent completed the remediation on work performed up to the date of her complaint. The stalemate between the parties brought the project to a halt.

On March 30, 2020, Complainant submitted a complaint to the Registrar that contained 49 complaint items.

On April 08, 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 April 08, 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 Investigator Smith on April 29, 2020, at 9:00 a.m.

On April 13, 2020, April 16, 2020, and April 20, 2020, the Registrar received addendums to Complainant’s complaint, including copies of the parties’ underlying contract, American Family’s estimate of damages, the county’s residential inspection record, and an independent roof inspection report for the project.

On April 29, 2020, during his jobsite inspection, Investigator Smith substantiated 27 of Complainant’s complaint items against Respondent. Specifically, Investigator Smith substantiated complaint items 4-12, 14-15, 17-18, 20, 25-32, 37, 40B, 42B, 43, and 47. Investigator Smith explained to the parties that his Directive would be issued for compliance within 15 days, but that if Respondent made attempts to comply the compliance deadline would be extended to 28 days from the date of issuance.

Because Respondent agreed to perform the remediation, the Directive’s compliance deadline date was extended to May 29, 2020.

On May 12, 2020, Investigator Smith issued an Addendum Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site on May 14, 2020, at 9:00 a.m.

On May 14, 2020, during his addendum jobsite inspection, Investigator Smith was not able to verify Complainant’s additional complaint items against Respondent.

On May 28, 2020, Complainant’s property passed Pinal County’s Department of Building Safety inspection, and a Certificate of Occupancy was issued that same date.

On May 28, 2020, the Investigator Smith issued a Compliance Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site on June 01, 2020, at 1:00 p.m.

On May 31, 2020, the Registrar received another addendum from Complainant that contained 11 additional complaint items.

On June 01, 2020, Investigator Smith inspected Respondent’s remediation efforts and took 29 photographs. When he was finished, Investigator Smith drafted Compliance Jobsite Inspection Notes.

On June 01, 2020, Investigator Smith issued an Amended Directive from the Registrar to Respondent. Respondent was put on notice that he had until 5:00 p.m. on June 19, 2020, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(3), namely Ariz. Admin. Code R4-9-108; 32-1154(A)(22); and 32-1154(E).

The scope of corrective work was modified because Complainant’s homeowner’s association’s (“HOA”) would not permit Respondent to complete corrective work for substantiated complaint items 26-29.

On June 03, 2020, Complainant received a Notice of Violation from her HOA’s Architectural and Landscaping Committee because it found that “the contractor is not working within the requirements and guidelines and not restoring the home to its original condition.”

On June 22, 2020, Investigator Smith issued a second Compliance Jobsite Inspection Notification letter to the parties, advising that an additional onsite review would be conducted at the project site on June 25, 2020, at 9:00 a.m.

On June 25, 2020, Investigator Smith inspected Respondent’s additional remediation efforts and took 39 photographs. When he was finished, Investigator Smith drafted Jobsite Inspection Notes. Ultimately, Investigator Smith determined that Respondent had successfully and satisfactorily remediated all substantiated complaint items, including addendum complaint items, except for items 11, 26-29, A1, A3, A4a, and A12.

On June 25, 2020, Investigator Smith escalated Complaint No. 2020-01630 to the Registrar’s legal department with a Citation Recommendation.

On August 27, 2020, Investigator Smith conducted a prehearing jobsite inspection of the underlying project. No additional remediation efforts had been performed to address substantiated complaint items 11, 26-29, A1, A3, A4a, and A12.

In closing, Complainant conceded that her HOA prevented Respondent from correcting some of her complaint items, but argued that additional work performed by Respondent had either not been done so correctly or completed. Complainant further argued that Respondent had been substantially paid on the contract, and therefore should have been able to finish the project.

In closing, Respondent argued that a “perfect storm of elements” resulted in the Registrar’s issued Citation. Respondent conceded that substantiated complaint items 11, 26-29, A4a from the Amended/Directive had not been remediated by the hearing date, noting that it “worked with what we had,” and further admitted that its contract with Complainant did not comply with Ariz. Rev. Stat. § 32-1158(A).

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 the Office of Administrative Hearings pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq.

The Registrar may resolve contractual disputes if such resolution is 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 Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

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. 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)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure in any material respect to comply with this chapter.” Specifically, Ariz. Rev. Stat. § 32-1158(A) provides that a contract between a contractor and property owner amounting to more than $1,000.00 must contain the following information in writing:

The name of the contractor and the contractor's business address and license number.

The name and mailing address of the owner and the jobsite address or legal description.

The date the parties entered into the contract.

The estimated date of completion of all work to be performed under the contract.

A description of the work to be performed under the contract.

The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.

The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.

The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

That the property owner has the right to file a written complaint with the Registrar for an alleged violation of Ariz. Rev. Stat § 32-1154(A). The contract shall contain the Registrar's telephone number, website address, and shall state that complaints must be made within the applicable time period as set forth in Ariz. Rev. Stat § 32-1155(A). The information must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor.

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.

Here, the material facts are clear.

The evidence of record establishes that Complainant contracted with Respondent for a residential restoration project, and that the contract itself did not contain all 9 statutorily required contractual elements. The record also establishes that Complainant owes Respondent an outstanding balance of approximately $12,545.13 on the contract. It is clear from the record that the scope of this project was vast, and although Respondent performed substantially, there were several areas where Respondent’s workmanship fell below the Registrar’s minimum standards. It is also clear from the record that the Registrar’s post investigative Amended Directive required Respondent’s full compliance by June 19, 2020, and that Respondent did not timely comply.

Therefore, the only remaining issue to address is whether Respondent raised sufficient justification(s) or excuse(s) for failing to timely and completely remediate all complaint items 11, 26-29, and A4a. This is an affirmative defense that Respondent bears the burden to establish.

Here, the record reflects that Complainant’s HOA prevented Respondent from completing remediation efforts for complaint items 26-29, which is a valid affirmative defense. Regarding complaint items 11 and A4a, however, the record establishes that Respondent failed to timely complete corrective work on those items. Therefore, based on the evidence, the undersigned has no choice but to conclude that Respondent failed to comply with the Registrar’s Amended Directive.

Because Complainant established violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), namely Ariz. Admin. Code R4-9-108; 32-1154(A)(12), namely 32-1158(A); and 32-1154(A)(22) by a preponderance of the evidence, Complainant has also established grounds for the Registrar to take disciplinary action against Respondent’s license(s).

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that on the effective date of the Final Order in this matter Respondent Arizona Restoration Pros Inc., ROC License Nos. 323907 and 327728, be suspended for two (2) days.

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, September 14, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors