ALJDEC decisions subject to certification as final

2020A-04435-CHC-ROC · Registrar of Contractors · 2021-06-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Richard Southard,

COMPLAINANT,

v.

Builders Investment Group LLC,

License No. ROC 306835,

RESPONDENT.

No. 2020A-04435-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 12, 2021 at 1:00 PM.

APPEARANCES: Richard Southard (“Complainant”) appeared on his own behalf with Mike Wiskow as a witness. Gregory Coe appeared on behalf of Builders Investment Group LLC (“Respondent”). Susan Southard observed.

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

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. On September 19, 2016, the Registrar issued License No. 306835 General Residential B contracting license to Respondent. The license was revoked on September 21, 2020. Gregory Paul Coe was listed on the license as the Qualifying Party/Member. Respondent’s address of record for the license was 10224 N 82nd St. Scottsdale, AZ 85258. Respondent had a $9,000.00 surety bond on the licensed issued by RLI Insurance Company that was cancelled on January 14, 2021. The license was disciplined on 6 prior occasions. There is one open complaint on the license which is presumed to be related to this matter.

On or about September 15, 2020, the Registrar received a 2-item complaint from Complainant against Respondent’s License No. 306835 alleging abandonment of their project. Attached to the complaint was a copy of the parties’ contract and Complainant proof of payment(s) to Respondent. The Registrar designated it Complaint No. 2020-04435 and assigned to Mike Wiskow (“Investigator Wiskow”) for investigation.

On September 22, 2020, Investigator Wiskow issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on September 29, 2020, at 1:30 p.m.

On September 29, 2020, presented to the project site for inspection. Respondent was not present. Investigator Wiskow conducted a review of the contract executed between the parties and inspected the work that had been performed on the project to date. He also took 6 photographs of the project site. When he was finished, Investigator Wiskow drafted his Inspection Notes. Ultimately, Investigator Wiskow substantiated both of Complainant’s complaint items. Specifically, Investigator Wiskow determined “the majority of the construction contract is not fulfilled” and required Respondent to “finish the project per contract.”

On October 01, 2020, Investigator Wiskow issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s abandonment allegation against Respondent. Respondent was put on notice that it had until 5:00 p.m. on October 27, 2020, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. § 32-1154(A)(22) and 32-1154(E).

On or about October 21, 2020, Investigator Wiskow issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on October 23, 2020, at10:30 a.m.

On October 23, 2020, Investigator Wiskow presented to the project site for the compliance inspection. Respondent was not present. When he was finished with his inspection, Investigator Wiskow drafted his Compliance Jobsite Inspection Notes. Ultimately, Investigator Wiskow determined that Respondent failed to finish the project. Investigator Wiskow specifically noted that the porch had not been completed, the panoramic doors had not been completed, the electrical panel had not been rewired, and neither bathroom had been remodeled.

On October 23, 2020, Investigator Wiskow forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On November 09, 2020, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until November 24, 2020, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On November 20, 2020, the Registrar received Respondent’s Answer. In pertinent parts, Respondent noted that it borrowed from a lender that “recapped their demand for complete payment,” and drew multiple monthly payments directly from Respondent’s checking account which resulted in “a deficit in cash.” Respondent further noted that it “lost our ability to perform the work needed to complete Mr. Sourthard job,” [sic] and that “we lost our license to work because of a few Sub Contractors we could not pay.” [sic] In closing, Respondent offered that it was working to obtain another loan to pay for the completion of Complainant’s project.

On December 21, 2020, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on February 12, 2021. Per the January 13, 2021, Notice of Hearing the issues to be determined are whether the Registrar has cause to discipline Respondent’s license based on the following alleged statutory violations:

Charge 1: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108(a)

Charge 2: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf, called Investigator Wiskow as a witness, and submitted 5 exhibits into the record. Gregory Coe testified on behalf of Respondent. 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 16624 N. 65th St. Scottsdale, AZ 85254.

A leak in Complainant’s kitchen caused extensive damage to Complainant’s home and Respondent was hired to perform repairs and make upgrades to the existing structure. On or about September 26, 2019, Complainant and Respondent entered into an $80,000.00 whole-home renovation contract.

Work on the project commenced October 07, 2019. Work on the project stopped December 09, 2019.

Complainant paid Respondent $102,861.26 on the contract, which included monies for verbal Change Orders regarding a garage door and electrical panel.

On March 16, 2020, Complainant’s attorney issued a demand letter to Respondent. On an unknown date, Respondent replied and requested 45-days to begin the concrete and frame job – to begin May 01, 2020. On March 27, 2020, Counsel for Complainant sent a letter to Respondent evincing Complainant’s agreement to Respondent’s proposal to move forward with the project.

Although Complainant sent several text messages to Respondent, Respondent barely replied and did not perform any further work on their project.

Respondent never accounted for the monies received from Complainant as payment for their project, but admitted most of the funds were used to complete projects he began prior to Complainant’s.

Ultimately, Respondent completed approximately $12,794.95 worth of work on Complainant’s project.

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.

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(a) requires that a contractor perform “[a]ll work in a professional and workmanlike manner.”

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.”

Ariz. Rev. Stat. § 32-1156.01 provides that “[a]fter a hearing pursuant to this article, an administrative law judge may recommend that a licensee provide restitution to any person who is injured or whose property is damaged by an action of the licensee.”

The material facts in the case at bar are not in dispute.

It is undisputed that the Complainant paid Respondent in full on their contract. It is also undisputed that Respondent did not complete the project per the terms of their agreement. It is further undisputed that Respondent failed to timely and completely comply with the Registrar’s Directive.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s Directive and complete Complainants’ project per contract. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent did not sustain his burden. There is no evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project. Respondent’s arguments regarding the recapping of his loan are meritless, as the record clearly shows that Complainant paid Respondent in full on their contract.

Therefore, because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22), Complainant has also established cause for the Registrar to discipline Respondent’s contractor’s license.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter, Respondent Builders Investment Group LLC, ROC License No. 306835, be revoked.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay Complainant the sum of $90,066.31 as restitution pursuant to Ariz. Rev. Stat. § 32-1156.01.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $1,000.00 in certified funds as a civil penalty pursuant to Ariz. Rev. Stat. § 32-1154(E).

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty and restitution 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)(7), unless Respondent tenders payment of any outstanding prior civil penalty and restitution.

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, June 03, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors