ALJDEC decisions subject to certification as final

2021A-00574-CHC-ROC · Registrar of Contractors · 2021-09-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Rick Nagle ,

COMPLAINANT,

v.

C and N Roofing, Inc.

ROC License No. 153685,

RESPONDENT.

No. 2021A-00574-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 01, 2021 at 9:00 AM.

APPEARANCES: Rick Nagle (“Complainant”) appeared on his own behalf. Erasmo Soto, Jr. appeared on behalf of C and N Roofing, Inc. (“Respondent”). Steve Klein appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).

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 April 02, 2000, the Registrar issued License No. 153685 for Specialty Dual CR-42 Roofing contracting to Respondent. Respondent’s address of record for the license is 1545 E. Corona Ave. Phoenix, AZ 85040-1144. Christopher Thomas Kriaris is listed as the Qualifying Party and Officer on the license, and Nicholas George Kriaris is listed as an Officer on the license as well.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record, for ROC License No. 153685, as reflected on the Registrar’s public website. Such prior license record reflects that Respondent’s license is active and currently renewed through April 30, 2022. The license is in good standing and has not been previously disciplined. The record reflects that there is one open complaint against Respondent’s license, which is presumed to be related to this matter. Respondent has a $3,500.00 cash bond for the license, as well as a $6,750.00 surety bond issued through Merchants Bonding Co (Mutual), effective April 11, 2016.

On February 08, 2021, the Registrar received a 2-item narrative complaint, Complaint 2021-00574, filed by Complainant alleging poor work performance on a commercial ceiling coating project. Attached to the complaint were copies of and the parties’ contract.

On February 16, 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 March 05, 2021, at 2:30 p.m.

On March 05, 2021, Registrar investigator Steve Klein (“Investigator Klein”) inspected the work that had been done on the project to date, and took 44 photographs of the project. When he was finished, Investigator Klein drafted Jobsite Inspection Notes. Ultimately, Investigator Klein substantiated both of Complainant’s complaint items; specifically identifying 30 separate and distinct pieces of equipment damages in complaint item 2.

On March 09, 2021, Investigator Klein 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 April 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 09, 2021, Investigator Klein escalated Complaint 2021-00574 to the Registrar’s legal department with a Citation Recommendation.

On April 12, 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(a), and 32-1154(A)(22). Respondent was given until April 28, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On April 26, 2021, the Registrar received an Answer on behalf of Respondent.

On May 17, 2021, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing. Per the June 03, 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 charges:

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 called Investigator Klein as a witness and testified on his own behalf. Erasmo Soto, Jr. testified on behalf of Respondent. The substantive facts of record are as follows:

Complainant owns commercial property located at 2726 E. Mohawk Ln. Phoenix, AZ 85050.

Complainant is a water purification plant that specializes in deionization, ultra violet sterilization, water softening, and carbon and reverse osmosis systems. Complainant employs the use of a dozens of pieces of intricate equipment, valued at over $1,300,000.00, to operate its business.

Complainant is 1 of 2 such water treatment plants in the United States.

On or about November 17, 2020, the parties entered into a $19,527.31 contract agreement, of which Complainant paid $10,000.00, whereby Respondent agreed to cover all of Complainant’s equipment in the facility’s production area, power wash the ceiling to remove rust, and then coat the ceiling and metal interior piping in epoxy.

On or about December 04, 2020, work on the project commenced. On or about December 13, 2020, work on the project stopped. During that time period Respondent failed to properly cover Complainant’s equipment and caused rust related damage during the power wash; broke the main polyvinyl chloride (“PVC”) pipe in the facility and caused a flood, and stained the floors and a number of pieces of equipment with ceiling epoxy.

Respondent’s crew had never performed the type of work involved in the project, and had minimal supervision throughout the course of the job.

At the time of the project, Complainant was preparing for a grand opening and franchise expansion of the facility.

At the jobsite inspection Respondent took full responsibility for the myriad of mishaps and poor workmanship that resulted in the damage to Complainant’s facility. However, by the time the Registrar’s Directive expired, no corrective work had been performed by Respondent.

At the hearing, Respondent testified that it intentionally took no steps to perform replacements or repairs because Complainant had filed an insurance claim with its carrier. Per Respondent, the insurer had neither completed their investigation nor identified a valuation of compensation for the claim by April 01, 2021. Moreover, the delay in Respondent’s action was due to the fact that two experts, in machinery and roofing epoxy, had been hired to determine Complainant’s loss(es) and had not returned their reports by April 01, 2021.

In August 2020 Complainant was provided an offer from Respondent’s insurance company, which was met with a counter-offer from Complainant. Respondent’s insurance company has yet to respond to Complainant’s counter-offer.

As of the date of the hearing Complainant had not been compensated whatsoever by or on behalf of Respondent.

Complainant has lost an unknown amount of revenue due to the down time associated with this matter, as Complainant lost four (4) accounts and has not been able to accept new clients since December of 2020.

In closing, Complainant argued that what should have been a 3-day job turned into nightmare that has lasted 10-months with no end in sight. Complainant opined that Respondent’s crew was outside of its depth to take on Complainant’s job; as evidenced by the resulting poor work and extensive damage. Complainant bemoaned the fact that was unable to franchise his facility as planned, and that the state of his business has nearly ruined him both financially and emotionally.

Respondent 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(a) requires that “[a]ll work shall be performed 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) holds, 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 holds that no 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, in pertinent part, 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 are clear.

It is undisputed that the parties had a contractual residential remodel agreement for which Complainant paid Respondent just over half of the contracted amount. It is also undisputed that a result of Respondent’s poor workmanship, Complainant sustained severe damage(s) and the Registrar issued a Directive that required compliance by April 01, 2021. It is further undisputed that Respondent did not attempt to perform any corrective work in this matter.

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 perform corrective work. This is an affirmative defense that Respondent bears the burden to establish.

Here, Respondent’s argument, that no corrective action was taken because its insurance company’s investigation was not complete prior to April 01, 2021, while credible, does not sustain the requisite burden of proof.

Because Complainant established 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 C and N Roofing, Inc., ROC License No. 153685, be suspended for fourteen (14) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22).

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay $10,000.00 to Complainant, in certified funds, as restitution pursuant to Ariz. Rev. Stat. § 32-1156.01.

IT IS FURTHER RECOMMENDED that should Respondent fail to pay the entire amount of the restitution no later than sixty (60) days following the effective date of the Registrar’s Final Order, the Registrar 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 restitution.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum of $500.00 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 on or before sixty (60) days following the effective date of the Registrar’s Final Order, the Registrar 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, September 14, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors