ALJDEC - Licensing

2021A-00577-RFA-LS-ROC · Registrar of Contractors · 2023-10-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Laura Ann Kavanaugh,

COMPLAINANT,

v.

Midstate Concrete Inc.,

ROC License No. 328234,

RESPONDENT.

No. 2021A-00577-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 11, 2023 at 9:00 AM.

APPEARANCES: Assistant Attorney General Wesley Cox, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Shaquira Adebule as a witness. Laura Ann Kavanaugh (“Complainant”) appeared on her own behalf. Michael Coleman appeared on behalf of Midstate Concrete Inc. (“Respondent”). Lynn Zimmerman 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

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record for ROC License No. 328234, as reflected on the Registrar’s public website. On March 24, 2020, the Registrar issued ROC License No. 328234 for Specialty Dual CR-9 Concrete contracting to Respondent. Michael Wayne Coleman is listed as the Qualifying Party and President on the license. Justine Elizabeth Aponte is listed as an Officer on the license as well. Respondent’s address of record for the license is 2800 S. Aspen Way. Camp Verde, AZ 86322.

On February 08, 2021, the Registrar received a 6-item complaint filed by Complainant alleging poor work performance. The Registrar designated it Complaint No. 2021-00577 and assigned Steve Philpott (“Investigator Philpott”) for investigation.

On March 04, 2021, Registrar investigator Philpott inspected the work that had been done on the project to date and took 1 photograph of the project. When he was finished, Investigator Philpott drafted Jobsite Inspection Notes. Ultimately, Investigator Philpott determined that complaint item 3 constituted poor or incomplete work, and failed to meet the Registrar’s minimum workmanship standards.

On March 18, 2021, Investigator Philpott issued a Directive from the Registrar (“Directive”) to Respondent because he substantiated one of Complainant’s allegations that the work Respondent had done on the project failed to meet minimum workmanship standards. Respondent was put on notice that it had until 5:00 p.m. on April 05, 2021, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(22), and 32-1154(E).

On April 07, 2021, Investigator Philpott issued an Amended Directive from the Registrar (“Directive”) to the parties which extended Respondent’s compliance deadline to 5:00 p.m. on April 23, 2021.

On April 26, 2021, Investigator Philpott conducted a compliance jobsite inspection and took 6 photographs of the project. When he was finished, Investigator Philpott drafted Compliance Jobsite Inspection Notes whereby he concluded that complaint item 3 had not satisfactorily been corrected and/or completed by Respondent.

On April 26, 2021, Investigator Philpott issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(14) for operating under a name other than the name listed on Respondent’s license.

On April 26, 2021, Investigator Philpott issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, including his contract with Complainant.

On April 30, 2021, the Registrar issued a Citation and Complaint (“Citation”) to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(12); 32-1124(B), 32-1154(A)(12); 32-1158, 32-1154(A)(14), and 32-1154(A)(22). Respondent was given until May 15, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On May 07, 2021, the Registrar received Respondent’s timely Answer.

On May 12, 2021, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for adjudication. Per the Notice of Hearing the issue(s) to be determined were whether the Registrar had cause to discipline Respondent’s license based on the following charges:

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

Charge: 2 A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1124(B)

Charge: 3 A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1158

Charge: 4 A.R.S. § 32-1154(A)(14)

Charge: 5 A.R.S. § 32-1154(A)(22)

On July 07, 2021, an administrative evidentiary hearing took place at OAH before ALJ Shedden.

On July 21, 2021, ALJ Shedden issued a Recommended Decision suggesting that the Director of the Registrar suspend Respondent’s contracting license for one (1) day, and that the Director also impose a $100.00 civil penalty against License No. 328234.

On August 09, 2021, the Registrar issued a Final Administrative Decision and Order to the parties which affirmed the Administrative Law Judge’s Recommended Decision. Respondent was held to be in violation Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(12); 32-1124(B), 32-1154(A)(12); 32-1158, 32-1154(A)(14), and 32-1154(A)(22). As such, the Registrar suspended Respondent’s license for 1 day and imposed a $100.00 civil penalty against Respondent’s license per Ariz. Rev. Stat. § 32-1154. On September 18, 2021, the Final Administrative Decision and Order became effective.

On or about January 29, 2023, 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), for “cost of replacing driveway.” Attached were copies of Complainant’s proof of payments to Respondent for the underlying contract.

On February 06, 2023, the Registrar asked for the following documentation from Complainant:

Documentation from the contractors bonding company showing the final disposition of your claim

A copy of the Kavanaugh Family Trust documents (i.e. Certificate of Trust)

A copy of your property deed in effect at the time of the contract

A written statement confirming why your mailing address is different from the jobsite address

On February 07, 2023, Complainant provided the Registrar with copies of her Warranty Deed and Quit Claim Deed.

On February 14, 2023, the Registrar asked for the following documentation from Complainant:

A copy of the Kavanaugh Family Trust documents (i.e. Certificate of Trust)

When you receive the payout from the bond company, provide the payout letter and a copy of the check they send you

Provide an affidavit confirming if you occupy or intend to occupy the jobsite address as your primary residence

On February 22, 2023, Complainant provided the Registrar with proof of payment from Respondent’s bond insurer, totaling $4,250.00.

On April 05, 2023, Complainant provided the Registrar with a copy of the March 05, 2015, Kavanaugh Family Trust and Certificate of Trust.

On May 03, 2023, the Registrar advised Complainant that it “found that the bids submitted are excessive to repair Respondent’s poor workmanship,” and asked for the following documentation from Complainant:

Submit copies of TWO new or revised itemized bids for each item requiring

repairs or completion

The bids must be from licensed residential contractors that are in good standing

with the Registrar

NOTE: The bids you supply must match up with any written directive

or findings from your underlying disciplinary case

(Emphasis in original.)

On June 15, 2023, Complainant provided the Registrar with a $17,073.00 bid from RPM Masonry & General Contracting Inc. (ROC License No. 168993), and another $14,305.63 bid from Shafor Concrete Inc. (ROC License No. 087769).

On July 27, 2023, the Registrar issued a Notice of Administrative Award to the parties which held Complainant was eligible for a payout from the Fund, and awarded $10,055.63 for actual damages sustained under Ariz. Rev. Stat. § 32-1132.01(B).

On August 09, 2023, the Registrar received a timely appeal request for hearing from Respondent.

On August 18, 2023, 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 September 06, 2023, the issue(s) for hearing are to determine if the Registrar’s Fund determination was properly made pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01, based on the evidence.

On October 11, 2023, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Shaquira Adebule as a witness and submitted Exhibits 1-13. Michael Coleman testified on behalf of Respondent. Complainant did not testify. The Notice of Hearing was also admitted into the record. The substantive evidence is as follows:

Complainant owns residential property located at 3307 W. Wilson Dr. Flagstaff, AZ 86001, which was the site of the underlying project at issue.

On or about June 27, 2020, the parties entered into a residential construction agreement whereby Complainant agreed to pay Respondent $8,000.00 to pour a concrete driveway at Complainant’s residence.

Complainant paid Respondent in full on their contract.

Work on the project commenced in June 2020, and stopped or was otherwise completed on July 10, 2020.

Ms. Adebule is a Legal Assistant for the Registrar. Ms. Adebule made the determination that Complainant was eligible for an administrative payout from the Fund because she satisfied all statutory requirements for an award. Specifically, Ms. Adebule determined the following:

Complainant paid the underlying contract in full. Thus, there is no unpaid balance owed.

As a result of Complaint No. 2021-00577 being filed with the Registrar, Respondent’s license was suspended for one (1) day and assessed a $100.00 civil penalty.

Ms. Adebule was also able to confirm with Investigator Philpott that “complete removal of Respondent’s work would be necessary” in order to remediate the Respondent’s workmanship on the project.

Ultimately, Ms. Adebule determined that the $14,305.63 bid from Shafor Concrete Inc. was reasonable and within the scope of corrective work ordered by the Directive. However, because Complainant received a payout from Respondent’s bond, a deduction of that amount, $4,250.00, was made. Therefore, Ms. Adebule concluded that Complainant’s compensable damages totaled $10,055.63, for compensable damages sustained as a result of Respondent’s poor workmanship.

Additional Evidence

At the time of her Recovery Fund Petition submission, Complainant did not reside at the Wilson Dr. property, but did intend to reside there permanently as a retiree after the sale of other property she had shared with her husband, who predeceased her.

Closing Arguments

In closing, the Registrar opined that Respondent failed to sustain its burden of proof in the matter, and that no facts had been presented by Respondent to rebut the Registrar’s credible evidence. The Registrar argued that Complainant met every statutorily mandated requirement for payout from the Fund, and, per administrative calculations, were eligible for a $10,055.63 payout from the Fund. The Registrar also argued that Respondent’s general description of the Shafor bid as “excessive” was baseless and immaterial.

Complainant declined to provide a closing argument.

In closing, Respondent vehemently denied any poor workmanship associated with the underlying complaint, and abjectly refused to pay any amount related to a Notice of Administrative Award issued by the Registrar in favor of Complainant. Per Mr. Coleman, the Registrar could “have” his contracting 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 Registrar’s Recover Fund claim award 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. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet specific eligibility criteria. 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. Additionally, the applicant must have contracted with a residential contractor who was appropriately licensed either at the time of contract execution, when the first payment on the project was made, or when the work on the project first began.

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.”

Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Recovery Fund is $30,000.00.

Statutes should be interpreted to provide a fair and sensible result. 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.” “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 compelling evidence at hearing. Here, Respondent’s general arguments that Complainant’s proposed award amount was “excessive,” and that remediations to Complainant’s project could have been completed for “less” or by Respondent do not sustain Respondent’s evidentiary burden of proof by a preponderance of the evidence. Respondent’s irrelevant opinions that Complainant was ineligible to access the Fund without providing an indicia of evidence to support its contention. As such, it must be held that Respondent failed to sustain its burden of proof in this matter.

Based on the credible and relevant evidence of record, the Tribunal concludes that the Registrar soundly established Complainant’s eligibility to access the Recovery Fund, also correctly determined that Complainant was legally eligible for an administrative awarded from the Recovery Fund, and also properly calculated said award amount.

Therefore, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded an administrative payout from the Fund.

Thusly, Respondent’s appeal must be denied.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar affirm the July 27, 2023, $10,055.63 Notice of Administrative Award.

IT IS FURTHER RECOMMENDED that the Registrar dismiss Respondent’s appeal.

NOTICE

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, October 13, 2023.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Tom Cole, Director

Registrar of Contractors

c/o Legal Department

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Wesley Cox, Esq., Assistant Attorney General

Office of the Attorney General, Counsel for the Registrar

2005 N. Central Ave.

Phoenix, AZ 85004

[email redacted]

Midstate Concrete Inc., Respondent

2800 S. Aspen Way

Camp Verde, AZ 86322

[email redacted]

Laura Ann Kavanaugh, Complainant

2111 Toboggan Ct.

Flagstaff, AZ 86001

[email redacted]

By: OAH Staff