ALJDEC decisions subject to certification as final

2021A-01443-CHC-ROC · Registrar of Contractors · 2021-10-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Ralph Harold Johnsen,

COMPLAINANT,

v.

Swan Home Investments LLC,

License No. ROC 326208,

RESPONDENT.

No. 2021A-01443-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

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

APPEARANCES: Ralph Johnsen (“Complainant”) appeared on his own behalf. Timothy Hill appeared on behalf of Swan Homes Investments LLC (“Respondent”). Manny Bermudez 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 September 17, 2019, the Registrar issued License No. 326208 for Specialty Dual CR-61 Carpentry contracting to Respondent. Respondent’s address of record for the license is 727 N. Swan Rd. Tucson, AZ 85711-1210. Timothy Paul Hill is listed as the Qualifying Party/Manager on the license, and Haydee Garcia Hill is listed as a 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. 326208, as reflected on the Registrar’s public website. Such prior license record reflects that Respondent’s license is active and currently renewed through September 30, 2023. 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 $6,750.00 surety bond for the license issued through RLI Insurance Company, effective September 16, 2019.

On April 02, 2021, the Registrar received Complaint 2021-01443 filed by Complainant alleging poor work performance on a residential garage extension project. Attached to the complaint was a narrative statement from Complainant, and proof of payment to Respondent.

On April 07, 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 April 22, 2021, at 10:00 a.m.

On April 22, 2021, Registrar investigator Manny Bermudez (“Investigator Bermudez”) reviewed the verbal contract agreement between the parties, inspected the work that had been done on the projects to date, and took 15 photographs of the project. When he was finished, Investigator Bermudez drafted Jobsite Inspection Notes. Ultimately, Investigator Bermudez substantiated 2 of Complainant’s 8 complaint items. Specifically, Investigator Bermudez found that complaint items 1 and 5 were in need of remediation and/or completion by Respondent.

On April 30, 2021, Investigator Bermudez 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 May 30, 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 30, 2021, the Registrar issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(2), for Respondent’s failure to obtain a building permit for the project.

On April 30, 2021, the Registrar 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 its contracts.

On May 30, 2021, Investigator Bermudez confirmed that no corrections had been undertaken by Respondent on the project.

On June 09, 2021, Respondent notified Investigator Bermudez that he was unable to obtain a building permit.

On June 11, 2021, Investigator Bermudez escalated Complaint 2021-01443 to the Registrar’s legal department with a Citation Recommendation.

On June 15, 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, 32-1154(A)(2)(a), and 32-1154(A)(22). Respondent was given until June 30, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On June 28, 2021, the Registrar received Respondent’s Answer. Respondent informed the Registrar that the City of Tucson had not issued a permit for the project. Although Respondent submitted an application on May 17, 2021, the assigned inspector did not complete his plan review until June 16, 2021. Respondent argued that Complainant had “dug out the area for the cement to be poured,” and that he had poured a sufficient amount of concrete so that 4 vehicles could be parked on the slab. Respondent further argued that Complainant’s carport had not been permitted by the City of Tucson, prior to Complainant’s purchase of the property, therefore in order to remediate the project completely Respondent would have to perform work far outside the scope and payment of his agreement with Complainant.

On July 07, 2021, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 19, 2021. Per the July 16, 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)(2)(a)

Charge 2: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108

Charge 3: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant called Mike Bermudez as a witness and testified on his own behalf. Timothy Hill testified on behalf of Respondent. The Registrar’s agency file was admitted into the record as its own exhibit. The substantive evidence of record is as follows:

Complainant owns residential property located at 6021 E. 15th St. Tucson, AZ 85711. When Complainant purchased the home it already had a carport.

On or about February 04, 2020, Complainant hired Respondent to pour an 8ft. x 18ft. concrete slab to extend his existing carport so that it could be converted into a garage. Respondent agreed to perform the work for $1,300.00. No written agreement was executed.

Neither party obtained a building permit from the local authority for the project.

Trades hired by Respondent performed the underlying concrete work. Respondent paid the trades for the project from funds received as payment by Complainant.

Respondent admitted that the workers he hired for Complainant’s project were neither his employees nor licensed subcontractors. Respondent further admitted to understanding that he had been hired to extend an existing carport so that it could be converted into a garage, and that the project required a building permit which had not been issued prior to the start of his work on the project.

The resulting concrete work the trades produces was not level or finished properly. After Complainant complained to Respondent, Respondent agreed to demolish a 13ft. x 6ft portion of the slab and re-pour new concrete in the area for an additional $250.00. Respondent assured Complainant he would ensure a “diamond ground smooth” finish.

Respondent’s remediation attempt was still not level, but the finish was smoother. Respondent did not use any rebar for the job.

Later, when Complainant attempted to secure a building permit from the local authority to convert his carport into a garage, the request was denied.

In early-July 2021, project materials for another project of Respondent’s were mistakenly delivered to Complainant’s residence. In exchange for their release, Respondent signed a written agreement whereby he warranted, “I agree to complete the polishing of the cement I had poured in March of 2020. I will complete on July 19, 2020.”

On August 11, 2021, Investigator Bermudez conducted a Prehearing Jobsite Inspection whereby he verified that no building permit had been issued by the local building authority for the underlying project.

In closing, Respondent argued that he tried his best to obtain a building permit within the time constraints he was given by the Registrar. However, after learning from the local building authority that Complainant’s carport had not been constructed with a valid permit, and in the face of having to remediate workmanship issues caused by the trades he hired, Respondent opined that he had not been afforded enough time by the Registrar to complete all the necessary steps to correct and complete the project.

In closing, Complainant argued that Respondent knew or should have known that a building permit was required for the job, and therefore Respondent should be held liable for any costs associated with remediating the 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)(2) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of plans or specifications or any building code standards without consent of the owner.”

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 the case at bar are not in dispute.

It is undisputed that the parties had a residential construction agreement for which Complainant paid Respondent in full. It is also undisputed that a result of Respondent’s poor workmanship, and that of the unlicensed trades he hired to originally complete the work, the Registrar issued a Directive that required compliance by May 30, 2020; which was later extended through June 09, 2021. It is further undisputed that per Investigator Bermudez’s prehearing jobsite inspection, Respondent had neither obtained a building permit and complete the project per contract nor entered into a financial settlement agreement with Complainant. Thus, violations of Ariz. Rev. Stat. §§ 32-1154(A)(2), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22) have been established by a preponderance of the evidence.

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 the local building authority took too long to issue a permit, is not credible and does not sustain the requisite burden of proof. Respondent did not submit a permit application until nearly three weeks after the Directive was issued. Furthermore, had Respondent submitted the request prior to commencing work on the project, he more likely than not would have discovered that Complainant’s carport had not been built to code.

Because Complainant established violations of Ariz. Rev. Stat. §§ 32-1154(A)(2), 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 Swan Home Investments LLC, ROC License No. 326208, be suspended for three (3) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(2), 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, October 20, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors