ALJDEC decisions subject to certification as final

2020A-03006-CHC-ROC · Registrar of Contractors · 2020-10-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Steven Gold,

COMPLAINANT,

v.

1st Choice Maintenance Corp,

License No. ROC 302536,

RESPONDENT.

No. 2020A-03006-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 16, 2020 at 9:00 AM.

APPEARANCES: Steven Gold (“Complainant”) appeared with Jack Grimm as a witness. Brett Lyon appeared on behalf of 1st Choice Maintenance Corp. (“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 Arizona Registrar of Contractors (“Registrar”).

FINDINGS OF FACT

Background and Procedure

On December 31, 2015, the Registrar issued License No. 302536 for General B-2 Small Commercial contracting to Respondent. Respondent’s address of record for the license is 2732 E. Bluefield Ave. Phoenix, Arizona 85032-1012. Brian Keith Breland is listed on the license as the Qualifying Party/Officer. Brett Earl Lyons is also listed on the license as an Officer.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record, for ROC License No. 302536, as reflected on the Registrar’s public website on October 16, 2020. Such prior license record reflects that Respondent’s license is active and currently renewed through December 31, 2021. The license has not been previously disciplined, but the record does reflect that on one prior occasion a complaint was settled or otherwise resolved 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 a $5,000.00 surety bond for the license issued through RLI Insurance Company, effective December 08, 2017.

On June 22, 2020, the Registrar received a complaint filed by Complainant alleging abandonment of a residential remodeling project. Attached to the complaint was a copy of the parties’ underlying contract and a copy of the accompanying estimate.

On June 22, 2020, the Registrar issued a written request to Complainant to provide copies of proof of payment. Complainant responded by providing copies of 7 checks issued to Respondent totaling $60,000.00.

On June 19, 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 July 10, 2020, at 10:00 a.m.

On July 10, 2020, Registrar investigator Jack Grimm (“Investigator Grimm”) inspected the work that had been done on the project to date and took 12 photographs of the project. When he was finished, Investigator Grimm drafted Jobsite Inspection Notes.

On July 15, 2020, Investigator Grimm issued a Written Directive from the Registrar to Respondent because he determined that Respondent failed to obtain a building permit for work performed, Respondent performed work out of scope with its license, Respondent performed work under a name not listed on its license, Respondent’s contract with Complainant did not contain all statutorily required elements of a contract, and that the little work Respondent had performed failed to meet the Registrar’s minimum workmanship standards. Respondent was put on notice that he had until 5:00 p.m. on November 25, 2019, 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). Respondent was further advised that he was not permitted to subcontract corrective work outside the scope of his license, or perform the remediations himself. Thus, Respondent’s only means of satisfying the Directive was to enter into a financial settlement agreement with Complainant.

On July 15, 2020, Investigator Grimm issued a Warning Letter to Respondent to advise that building permit(s) were not obtained for the project in violation of the International Residential Code and the International Building Code. Respondent was further advised that failure to comply with the building codes was a violation of Ariz. Rev. Stat. § 32-1154(A)(2), which could result in discipline against Respondent’s license including suspension or revocation.

On July 15, 2020, Investigator Grimm 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 July 15, 2020, Investigator Grimm issued a Warning Letter to Respondent because he believed the work on the underlying project required possession of a B-General Residential or B-3 General Remodeling and Repair contracting license that Respondent did not possess during the relevant time period, in violation of Ariz. Rev. Stat. § 32-1154(A)(16), which could result in discipline against Respondent’s license including suspension or revocation..

On July 15, 2020, Investigator Grimm issued a Warning Letter to Respondent for operating under a name that was not listed on his license, in violation of Ariz. Rev. Stat. § 32-1154(A)(14), which could result in discipline against Respondent’s license including suspension or revocation.

On August 11, 2020, Investigator Grimm escalated Complaint No. 2020-03006 to the Department’s legal department with citation recommendations.

On August 14, 2020, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(2)(a), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(12); namely 32-1158, 32-1154(A)(14), 32-1154(A)(16), and 32-1154(A)(22). Respondent was given until August 29, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On August 27, 2020, the Registrar received Respondent’s written Answer.

On September 04, 2020, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on October 16, 2020. Per the September 15, 2020, 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)(a) (“Departure from or disregard of plans or specifications in any material respect that is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.”)

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 3: 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 4: A violation of A.R.S. § 32-1154(A)(14) (“Acting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth on the license.)

Charge 5: A violation of A.R.S. § 32-1154(A)(16) (“Knowingly contracting beyond the scope of the license or licenses of the licensee.”)

Charge 6: 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 Morris as a witness. Alberto Jimenez testified on behalf of Respondent. The Registrar’s agency file (“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 New Daisy Ventures LLC. New Daisy Ventures LLC owns residential property located at 5932 W. Meadowbrooke Ave. Phoenix, Arizona 85033. The property is used as a behavioral health residential group home.

Although the property is used for business purposes, during the relevant time period it was not designated as commercial.

On or about October 15, 2019, the parties entered into a contractual agreement whereby Respondent agreed to renovate the aforementioned property, in exchange for Complainant issuing payment for the sum total of $60,000.00.

The contract lists Respondent’s name as Lyons Contracting, and the ROC License No. as 302536.

The contract does not contain all 9 contractual elements required by statute.

The contract was paid in full. All checks written for payment on the project were issued to Lyons Contracting.

The project commenced on or about October 21, 2019. Work on the project stopped on or about January 31, 2019.

No permits were ever authorized by the local building authority for the underlying project. Prior to starting the project Respondent was aware Complainant had not pulled a permit. After work on the project began, Respondent tried to pull a permit but was unable to do so because of the class of its licensure.

No written Change Orders were executed for the project.

Respondent was present for the Registrar’s jobsite inspection and timely received a copy of the Directive.

On August 11, 2010, Complainant notified the Registrar of Respondent’s noncompliance with the Directive.

Although the parties attempted to negotiate, they did not enter into a financial settlement agreement on or before August 10, 2020.

In closing, Complainant argued that Respondent never asked him to pull a permit for the project. Complainant further argued that he would have pulled a permit for the project if Respondent had instructed him to do so, as evidenced by the fact he had pulled one upon his sprinkler contractor’s request for the same property.

In closing, Respondent argued that Complainant owns 2 residential rehabilitation centers, Denton and Meadowbrooke, and that Respondent had performed construction at Denton only. Respondent argued that Lyons Contracting performed construction at Meadowbrooke only, but had accidentally used Respondent’s ROC License No. 302536 on all of its paperwork with Complainant. Respondent also argued that if Complainant had petitioned to get the property rezoned as commercial, Respondent could have pulled a permit and completed the job per contract.

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)(a) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Departure from or disregard of plans or specifications in any material respect that is prejudicial to another without consent of the owner or the owner's duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.”

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)(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.”

Ariz. Rev. Stat. § 32-1158(A) holds that any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: (1) The name of the contractor and the contractor's business address and license number; (2) The name and mailing address of the owner and the jobsite address or legal description; (3) The date the parties entered into the contract; (4) The estimated date of completion of all work to be performed under the contract; (5) A description of the work to be performed under the contract. (6) 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; (7) The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner; (8) 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; and (9) That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph 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 or the contractor's designated representative. This paragraph does not apply to a person who is subject to and complies with section 12-1365.

Ariz. Rev. Stat. § 32-1154(A)(14) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]cting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth on the license.

Ariz. Rev. Stat. § 32-1154(A)(16) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.”

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) 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.”

Here, the record is clear.

It is undisputed that Respondent’s written contract with Complainant for the underlying project was missing at least 1 element required by statute, Respondent performed work out of scope with its license, Respondent performed work under a name not listed on its license, and Respondent failed to obtain a building permit from the local authority after commencing work on the project. It is also undisputed that some of Respondent’s work on the project required corrective work. It is further undisputed that Respondent was not permitted to perform corrective work until it obtained a building permit, and Respondent failed to do so.

Therefore, the only remaining issue to address is whether Respondent raised sufficient justification or excuse for failing to timely comply with the Registrar’s Directive. This is an affirmative defense that Respondent bears the burden to establish. Here, the record reflects that Respondent failed to adhere to a Registrar Directive because he could not obtain a building permit or successfully negotiate a financial settlement agreement with Complainant. The Tribunal concludes that Respondent’s actions, or inactions, do not satisfy the requisite affirmative defense(s) threshold.

Because Complainant established violations of Ariz. Rev. Stat. §§ 32-1154(A)(2)(a), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(12); namely 32-1158, 32-1154(A)(14), 32-1154(A)(16), 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 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, 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 1st Choice Maintenance Corp, ROC License No. 302536, be suspended for six (6) days.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $450.00 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 Final 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)(5), 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, October 28, 2020.

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors