ALJDEC decisions subject to certification as final

2020A-04893-RFA-LS-ROC · Registrar of Contractors · 2021-12-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

George Franklin Dean,

COMPLAINANT,

v.

Phillip Spires Construction LLC

License No. ROC 234098,

RESPONDENT.

No. 2020A-04893-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 06, 2021 at 9:00 AM.

APPEARANCES: Assistant Attorney General John Tellier, Esq. appeared on behalf of the Arizona Registrar of Contractors with Shaquira Adabule as a witness. Nicholas Patton, Esq., appeared on behalf of George Dean (“Complainant”). Phillip Spires appeared on behalf of Phillip Spires Construction LLC (“Respondent”). Complainant and Dana Spires 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 Registrar.

FINDINGS OF FACT

Background and Procedure

According to the Registrar’s public website, on June 03, 2007, the Registrar issued License No. 234098, General Residential B contracting license, to Respondent. Phillip Brian Spires is listed on the license as the Qualifying Party and Member on this license. Respondent’s address of record on the license is 6872 Queens High Rd. Show Low, AZ 85901.

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. Although the license was renewed through June 30, 2023, the license was suspended on September 07, 2021, for lack of bond. The license has been disciplined by the Registrar on 1 prior occasion, which is presumed to be related to this matter, and has had 2 complaints that have been settled or otherwise resolved.

On October 15, 2020, the Registrar received a complaint filed by Complainant alleging abandonment and poor workmanship on a residential remodeling project, including a carport modification to an enclosed parking garage and the construction of an In-Law Suite.

On November 19, 2020, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); a violation of Ariz. Admin. Code R4-9-108(a), 32-1154(A)(3); a violation of Ariz. Admin. Code R4-9-108(b), 32-1154(A)(12); a violation of 32-1158, and 32-1154(A)(16). Respondent was given until December 04, 2020, to respond with its Answer or be deemed to admit the act(s) charged in the complaint pursuant to Ariz. Rev. Stat. § 32-1155(C).

On December 10, 2020, the Registrar issued a Final Administrative Decision and Order (Default) which suspended Respondent’s license for seven (7) days and assessed a $250.00 civil penalty pursuant to Ariz. Rev. Stat. §§ 32-1154 and 32-1155.

On April 28, 2021, the Registrar received Complainant’s petition for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G), in the amount of $13,000.00. Attached were proof of payments from Complainant to Respondent, a bond denial letter from Respondent’s bond company; RLI Insurance Company, a copy of Complainant’s Warranty Deed, and repair bids Complainant obtained from Mountain Haven Construction Inc. and Mountain Pines Construction LLC.

On June 14, 2021, the Registrar obtained an assessment for Complainant’s property from the Navajo County Assessor’s Office.

On June 30, 2021, the Registrar issued a written request for information to Respondent. On August 03, 2021, the Registrar issued a follow-up written request for information to Respondent, as it had not received a response from its first inquiry. No response was ever received from Respondent.

On September 15, 2021, the Registrar issued a Notice of Claim for Administrative Award to the parties which held Complainant was awarded $20,275.75 from the Fund.

On or about September 30 2021, the Registrar received a timely appeal letter from Respondent contesting Complainant’s award amount from the Fund.

On October 13, 2021, the Registrar again referred the matter to the Office of Administrative Hearings for an independent evidentiary hearing. Per the Notice of Hearing on Appealable Agency Action (“Notice of Hearing”) sent to the parties on November 04, 2021, the issue for hearing is to determine if Complainant’s award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.

On December 06, 2021, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Shaquira Adabule as a witness and submitted Exhibits 1-3, 5, 8-20. Phillip Spires testified on behalf of Respondent. Complainant observed. The Notice of Hearing was admitted into the evidentiary record. The substantive evidence is as follows:

Registrar’s Case-in-Chief

Complainant owns residential property located at 3802 Porter Creek Ln. Lakeside, AZ 85929, which is the site of the underlying project at issue.

Ms. Adabule is a Legal Assistant II for the Registrar. Ms. Adabule made the determination that Complainant was eligible for a payout from the Fund.

In order to be eligible for an administrative payout applicant(s) must meet several requirements. Pursuant to Ariz. Rev. Stat. § 32-1132(B)(1), an individual is eligible for an award from the residential contractors’ recovery fund if they both: (1) own residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance, and (2) actually occupy or intend to occupy the residential real property as the individual’s primary residence. The Registrar also requires that the legal classification of the property must be a 3 or a 6, and that the contractor must have been disciplined by either the Registrar, a Final Order issued by an Administrative Law Judge, or pursuant to a duly entered Consent Order between the contractor and the Registrar.

Here, Complainant satisfied all statutory requirements for an administrative payout from the Fund.

Ms. Adabule determined the contract price was $26,176.25 and that no Change Orders had been executed for the project. Complainant paid Respondent $17,452.00 on the contract.

In order to calculate Complainant’s damages, Complainant’s unpaid balance of $8,724.25 was deducted from the Complainant’s costs; the lowest bid of $29,000.00 from Mountain Pines Construction LLC, resulting in an award of $20,275.75.

Respondent’s Case-in-Chief

On April 17, 2007, the Arizona Corporate Commission (“ACC”) granted business license L13594860 to Respondent, with Mr. Spires listed as the Statutory Agent.

On May 10, 2018, the ACC approved Articles of Amendment for L13594860 that added Scott Yates as a Member on the license.

Mr. Yates was never added to Respondent’s license with the Registrar. Mr. Spires knowingly permitted Mr. Yates to enter into construction agreements with Respondent’s license number, and perform construction under the license.

In May 2020, Mr. Yates entered into a construction contract agreement with Complainant using Respondent’s ROC license number. Mr. Spires had no involvement in the execution of the contract, or in any of the underlying construction performed on the project. However, payments Complainant tendered on the project were made out to Respondent, not Mr. Yates.

On July 21, 2021, the ACC approved Mr. Yates’ removal from L13594860.

When Mr. Spires received the Registrar’s Citation, he forwarded it to Mr. Yates who paid the civil penalty. In or around late-October 2021, Mr. Spires and Mr. Yates terminated their professional relationship. Mr. Spires was unsuccessful in his attempts to reach Mr. Yates after he received notification of Complainant’s Recovery Fund Petition in September 2021.

On December 04, 2021, Mr. Spires reached out to Complainant in an attempt to settle the matter.

Closing Arguments

In closing, the Registrar argued that because Mr. Yates was added to the LLC as a Member, he was authorized to contract with Complainant on behalf of Respondent. The Registrar opined that, regardless of Mr. Spires’ lack of involvement with Complainant’s project, Complainant is eligible to access the Recovery Fund and Respondent is liable for the cost of related repairs.

In closing, Complainant argued that he was entitled to compensation from the Recovery Fund, and that had Mr. Spires reached out in an attempt to settle earlier that the parties may have been able to reach an agreement.

In closing, Mr. Spires noted on behalf of Respondent that he wanted to pay for Complainant’s award outside of the purview of the Registrar’s Recovery Fund, to avoid any disciplinary notices being placed on Respondent’s license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. The matter was properly brought before OAH.

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

Respondent bears the burden of establishing by a preponderance of the evidence that the Fund’s payout amount was incorrect and/or improperly issued. The Registrar bears the burden to establish factors in mitigation 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.”

Pursuant to Ariz. Rev. Stat. § 32-1132(B)(1), in order to be eligible to access the Recovery Fund an applicant must be an individual who both (a) owns residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance, and (b) actually occupies or intends to occupy the residential real property as the individual's primary residence.

Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”

Statutes shall be liberally construed to affect their objects and to promote justice. In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.”

Statutes should be interpreted to provide a fair and sensible result. “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”

The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result.

In the case at bar, however, a detailed factual analysis is not necessary because Respondent failed to present any substantive evidence at hearing. Respondent argued, and rightfully so, that Mr. Yates had contracted with Complainant, performed the substandard work at issue, and paid for the resulting civil penalty levied by the Registrar’s Citation. However, no credible evidence was offered to reasonably suggest Mr. Yates was unauthorized to enter into construction contracts on behalf of Respondent. Mr. Spires admitted that he had not added Mr. Yates to his ROC license, but knowingly permitted him to work under the license for about eighteen months.

As such, Respondent failed to sustain his burden of proof in this matter.

The record reflects that the Registrar soundly established Complainant’s eligibility and how Complainant’s payout award amount was properly calculated at $20,275.75.

Because Respondent offered no credible evidence to rebut Ms. Adabule’s testimony, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded a $20,275.75 payout from the Fund. Respondent’s appeal is denied.

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that Respondent’s appeal be denied.

IT IS FURTHER RECOMMENDED that the Registrar affirm the $20,275.75 payout from the Fund as outlined in the Notice of Claim for Administrative Award, as issued on September 15, 2021.

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 forty (40) days from the date of that certification.

Done this day, December 24, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors