ALJDEC decisions subject to certification as final

2021A-00455-CHC-ROC · Registrar of Contractors · 2021-08-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Matthew Charles Price,

COMPLAINANT,

v.

M & M Diversified LLC,

License No. ROC 288011,

RESPONDENT.

No. 2021A-00455-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 27, 2021 at 1:00 PM.

APPEARANCES: Joel Boroweic, Esq. appeared on behalf of Matthew Charles Price (“Complainant”). Sean Mendoza appeared on behalf of M&M Diversified LLC (“Respondent”). Mike Springer appeared on behalf of the Arizona registrar of Contractors (“Registrar”). Mark Nipp 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 Registrar.

FINDINGS OF FACT

Background and Procedure

On January 03, 2014, the Registrar issued License No. 288011 for Specialty Dual CR-61 Carpentry, Remodeling and Repairs contracting to Respondent. Respondent’s address of record for the license is 910 Plaza Del Gado Sierra Vista, AZ 85635-4440. Sean Mendoza is listed as the Qualifying Party and Member on the license.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record, for ROC License No. 288011, as reflected on the Registrar’s public website. Such prior license record reflects that Respondent’s license is active and currently renewed through January 31, 2022. Although the license has not been previously disciplined, the record reflects that there have been 4 resolved or otherwise settled complaints against 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 $6,750.00 surety bond for the license issued through Western National Mutual Insurance Company, effective October 02, 2013.

On February 01, 2021, the Registrar received Complaint 2021-00455 filed by Complainant that alleged Respondent had not used contracted materials on a $32,600.00 residential deck project. Attached to the complaint were copies of invoices, receipts, and emails between the parties.

On February 02, 2021, 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 February 23, 2021, at 9:00 a.m.

On February 23, 2021, Registrar investigator Mike Springer (“Investigator Springer”) reviewed the contract agreements between the parties; including the underlying building permit issued by the City of Sierra Vista and Complainant’s proof of payments, inspected the work that had been done on the projects to date, and took photographs of the project. When he was finished, Investigator Springer drafted Jobsite Inspection Notes. Ultimately, Investigator Springer substantiated 1 of Complainant’s 2 complaint items. Specifically, Investigator Springer determined that in the parties’ amended agreement redwood was to be used for construction of the deck and that the material used was not redwood.

On February 24, 2021, Investigator Springer issued a Written Directive from the Registrar (“Directive”) to Respondent based on the workmanship allegations he substantiated during his jobsite inspection. Respondent was put on notice that he had until 5:00 p.m. on March 22, 2021, 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 March 08, 2021, Investigator Springer received a 2-item addendum complaint from Complainant.

On March 08, 2021, Investigator Springer issued an Addendum Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by an investigator on March 29, 2021, at 10:00 a.m.

On March 29, 2021, Investigator Springer inspected Complainant’s addendum items and took 4 photographs of the project. When he was finished, Investigator Springer drafted Jobsite Inspection Notes. Ultimately, Investigator Springer substantiated both of Complainant’s complaint items. Specifically, Investigator Springer determined that the wood railings were unstable and the garage framing was in direct contact with the ground.

On March 29, 2021, Investigator Springer issued an Amended Written Directive from the Registrar (“Amended Directive”) to Respondent based on the workmanship allegations he substantiated during his addendum jobsite inspection. Respondent was put on notice that he had until 5:00 p.m. on May 01, 2021, 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 April 12, 2021, Investigator Springer received another 2-item addendum complaint from Complainant.

On April 12, 2021, Investigator Springer issued a second Addendum Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site on May 14, 2021, at 10:00 a.m.

On May 14, 2021, Investigator Springer inspected Complainant’s additional addendum items and took 5 photographs. Respondent was not present. When he was finished, Investigator Springer drafted Addendum #2 Jobsite Inspection Notes. Ultimately, Investigator Springer did not substantiate either of Complainant’s additional addendum complaint items.

Investigator Springer notified the parties that because no new items were added for remediation, the Amended Directive’s the May 01, 2021, compliance deadline remained in full force and effect.

A compliance inspection was not performed in this matter.

On May 20, 2021, Investigator Springer escalated Complaint 2020-00455 to the Registrar’s legal department with a Citation Recommendation.

On May 25, 2021, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). Respondent was given until June 09, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On May 28, 2021, the Registrar received Respondent’s Answer. Respondent informed the Registrar “We ordered the materials (redwood) on March 19th and are still awaiting their arrival. We will be complying with the order as soon as the materials are available.”

On June 09, 2021, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on July 27, 2021. Per the June 18, 2021, Notice of Hearing the issues to be determined are whether the Registrar has cause to discipline Respondent’s license based on the following charges:

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

Charge 2: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf and submitted Exhibits 2- 3, 8, 10-15, 20, and 26-29 into the record. Sean Mendoza testified on behalf of Respondent. Investigator Springer testified on behalf of the Registrar. The Registrar’s agency file was admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant owns residential property located at 1010 Plaza Benito Sierra Vista, AZ 85635.

Respondent is a commercial and residential remodeling company.

On July 13, 2018, the parties entered into an $11,000 multi-item contract that included a deck constructed with synthetic materials.

On October 2, 2018, the City of Sierra Vista issued a building permit for the project.

On January 14, 2019 Respondent executed a Change Order, in pertinent part, to replace “all 2x6 deck boards with redwood.” Complainant was refunded $3,200.00 for the difference in the price of materials.

Complainant paid Respondent in full on the contract.

Materials used for the project were purchased by Respondent from Lowe’s and Home Depot, but were not procured from the professional services procurement desk of either establishment. Mr. Mendoza is not a natural materials expert. At the time of purchase(s), Mr. Mendoza believed he had bought redwood for the project but later acquiesced to the allegation that the materials used to construct Complainant’s deck were not redwood at all.

Although work on the deck commenced in November 2018, the project has not been completed.

On March 19, 2021, Respondent ordered the replacement redwood for Complainant’s deck.

On June 07, 2021, the replacement redwood materials were delivered to the jobsite. However, because approximately 6% of boards were subpar (i.e. knotted, holes, and/or otherwise warped and unusable) Respondent was unable to use all of the delivered materials in the build. Respondent was able to exchange the subpar boards to the merchant.

Respondent was additionally delayed because he had to replace a portion of his crew and navigate weather-related setbacks, after the replacement redwood materials were delivered.

On March 06, 2021, Respondent provided Complainant with warranty, and completion date for the redwood deck of March 22, 2021.

On July 22, 2021, Investigator Springer issued a Prehearing Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by an investigator on July 26, 2021, at 9:30 a.m.

On July 26, 2021, Investigator Springer the jobsite and took 4 photographs of the project. Ultimately, Investigator Springer determined that 80% of the project had been completed up to that date. Investigator Springer also observed proof of leaking.

In closing on behalf of Respondent. Mr. Mendoza offered that he was still trying to comply with the Amended Directive and was hopeful to be completed soon.

Complainant declined to provide a closing argument.

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 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.”

The material facts in this matter are clear.

The preponderance of the evidence establishes that the parties had redwood a deck construction agreement; for which Complainant paid Respondent in full, and that Respondent did not initially use redwood materials for the construction of Complainant’s deck; resulting in the Registrar issuance of an Amended Directive that required Respondent’s compliance by May 01, 2021. The preponderance of the evidence also establishes that Respondent did not remediated items substantiated for correction, in full, by the Amended Directive’s compliance deadline date.

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’s argument, that he was waiting for materials in an attempt to complete repairs, while credible, does not sustain the requisite burden of proof. Moreover, Respondent’s argument does not justify or otherwise excuse the portion(s) of project that fell below the Registrar’s minimum workmanship standards.

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

Complainant may petition the Registrar’s Recovery Fund for financial recompense regarding this matter.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter, Respondent M & M Diversified LLC, ROC License No. 288011, be suspended for one (1) day based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22).

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, August 13, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors