ALJDEC - Licensing

2021A-02291-RFA-LS-ROC · Registrar of Contractors · 2023-07-10

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Michael Lombardo and

Susan Lombardo,

COMPLAINANTS,

v.

Fripps Mohave Construction LLC

ROC License No. 263905,

RESPONDENT

No. 2021A-02291-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 08, 2023 at 9:00 AM.

APPEARANCES: Assistant Attorney General Wesley Cox, Esq. appeared on behalf the Arizona Registrar of Contractors (“Registrar”) with Eric Ulinger as a witness. Michael Lombardo (“Complainant M.L.”) appeared on behalf of himself and Susan Lombardo (“Complainant S.L.” collectively as “Complainants”). George Ripps appeared on behalf of Fripps Mohave Construction LLC (“Respondent”). Natalie Fripps 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. 263905, as reflected on the Registrar’s public website. On April 26, 2010, the Registrar issued ROC License No. 263905 for General Dual KB-2 Residential and Small Commercial contracting to Respondent. Though the license was renewed through April 30, 2024, on December 07, 2022, the license was suspended as a matter of law for lack of a bond. George Rodney Ripps and Natalie Isadora Christian are listed as Members on the license. Respondent’s address of record for the license is 3287 Gold Canyon Ct. Kingman, AZ 86401. The licensed has been disciplined on 2 prior occasions, and on 2 additional occasions complaints have been settled or otherwise resolved against the license. The license did have a $14,000.00 surety bond issued Ohio Casualty Insurance Company, but it was cancelled on an unknown date.

On or about May 24, 2021, the Registrar received a 7-item complaint filed by Complainants alleging poor work performance. The Registrar designated it Complaint No. 2021-02291 and assigned Bob Mcquien (“Investigator Mcquien”) for investigation.

On June 17, 2021, Registrar investigator Mcquien inspected the work that had been done on the project to date and took 13 photographs of the project. When he was finished, Investigator Mcquien drafted Jobsite Inspection Notes. Ultimately, Investigator Mcquien determined that complaint items 1-4 and 7 constituted poor or incomplete work, and failed to meet the Registrar’s minimum workmanship standards.

On June 18, 2021, Investigator Mcquien issued a Directive from the Registrar (“Directive”) to Respondent because he substantiated most of Complainants’ 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 July 22, 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 August 10, 2021, Investigator Mcquien conducted a compliance jobsite inspection and took 6 photographs of the project. When he was finished, Investigator Mcquien drafted Compliance Jobsite Inspection Notes whereby he concluded that complaint items 2-3 and 5-7 had satisfactorily been corrected and/or completed, but that complaint items 1 and 4 had not.

On August 13, 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), and 32-1154(A)(22). Respondent was given until August 28, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On September 03, 2021, the Registrar received Respondent’s untimely Answer.

On September 13, 2021, the Registrar granted a good cause exception to Respondent and 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 violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3).

Charge 2: A violation of A.R.S. § 32-1154(A)(22) (“Failure to take appropriate corrective action to comply with this chapter or with 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.”).

On October 29, 2021, an administrative evidentiary hearing took place at OAH before ALJ Eigenheer.

On December 10, 2021, ALJ Eigenheer issued a Recommended Decision suggesting that the Director of the Registrar suspend Respondent’s contracting license for 5 days, and that the Director also impose a $500.00 civil penalty against License No. 263905.

On December 17, 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 of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). As such, the Registrar suspended Respondent’s license for 5 days and imposed a $500.00 civil penalty against Respondent’s license per Ariz. Rev. Stat. § 32-1154. On January 26, 2022, the Final Administrative Decision and Order became effective.

On or about October 26, 2022, the Registrar received Complainants’ petition for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G), for “the cost of repairs.” Attached were copies of Complainants’ Warranty Deed, Title, Residential Resale Real Estate Purchase Contract, Certificate of Authenticity, Complainants’ construction contract with Respondent, bond denial letter, a window bid from Jim’s House of Glass, and stucco bids from AAA Plastering and Kingman Stucco LLC.

On or about December 06, 2022, the Registrar issued a Notice of Administrative Award to the parties which held Complainant was eligible for a payout from the Fund, and awarded $2,959.51 for actual damages sustained under Ariz. Rev. Stat. § 32-1132.01(B).

On December 14, 2022, the Registrar received a timely appeal request for hearing from Respondent.

On December 30, 2022, 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 sent to the parties on January 27, 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 June 22, 2023, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Eric Ulinger as a witness and submitted 4 exhibits. Complainant M.L. testified on behalf of Complainants. George Ripps testified on behalf of Respondent. The Notice of Hearing was also admitted into the record. The substantive evidence is as follows:

Complainants own property located at 4216 Flat Ridge Ave. Kingman, AZ 86401, which was the site of the underlying project at issue.

On or about July 04, 2018, the parties entered into a residential construction agreement whereby Complainant agreed to pay Respondent $329,808.00 for the construction of a single family residence.

Complainants paid Respondent in full on their contract.

Work on the project commenced in July 2018, and stopped in May 2019.

On or about May 24, 2019, escrow closed on the property and Complainants took possession of the residence.

Mr. Ulinger is a Legal Assistant II for the Registrar. Mr. Ulinger made the determination that Complainants were eligible for an administrative payout from the Fund because they satisfies all statutory requirements for an award. Specifically, Mr. Ulinger determined the following:

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

As a result of Complaint No. 2021-02291 being filed with the Registrar, Respondent’s license was suspended for five (5) days and assessed a $500.00 civil penalty.

Ultimately, Mr. Ulinger determined that the $1,459.51 window bid from Jim’s House of Glass, and $1,500.00 stucco bid from Kingman Stucco LLC were reasonable and within the scope of corrective work ordered by the Directive. Therefore, Mr. Ulinger concluded that Complainants’ compensable damages totaled $2,959.51, for actual damages sustained as a result of Respondent’s poor workmanship.

Additional Evidence

The bid for the entire wall, as opposed the affected 2x4 area, was accepted because the stucco would have to be “chipped out” beyond the 2x4 area, and because the synthetic paint Complainants chose was no manufactured or available and had to be replaced with another color. Therefore, the entire wall had to be repainted.

Closing Arguments

In closing, Respondent argued that the Registrar misapplied the applicable statutes and confused “repair” with “replacement.” Respondent also argued that because Complainants did not obtain 3 repair bids for the window and 3 repair bids for the stucco, that Complainants’ Fund petition should not have been approved by the Registrar. Respondent further argued that he obtained a $350.00 bid from another licensed contractor to address complaint items 1 and 4, but admitted that said contractor had not inspected the project site or reviewed the Registrar’s Directive before providing the bid. Respondent opined that the Registrar should permit Mr. Ripps to remediate the outstanding work in lieu of awarding Complainants from the Fund.

In closing, Complainant M.L. argued that Complainants were entitled to an administrative award from the Fund, as Respondent had had 4 years to perform outstanding corrective work and had failed to do so.

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 Complainants met every statutorily mandated requirement for payout from the Fund, and, per administrative calculations, were eligible for a $2,959.51 payout from the Fund. The Registrar also argued that Respondent’s general disagreement(s) with the bids the Fund selected were immaterial.

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 Complainants’ proposed award amount was “excessive” and that remediations to Complainants’ project could have been completed for “less” do not sustain Respondent’s evidentiary burden of proof by a preponderance of the evidence. Respondent’s irrelevant opinions that Complainants were not eligible to access the Fund without providing an indicia of evidence to support its contention. Additionally, Respondent’s assertion regarding potential ramifications Complainants’ administrative award may have on Respondent’s business, particularly in light of Mr. Ripps’ unfortunate medical woes, cannot sway this Tribunal’s requirement to issue a decision pursuant to applicable statutes and governing rules.

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 is denied.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar affirm the December 06, 2022, $2,959.51 Notice of Administrative Award.

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

NOTICE

Pursuant to Ariz. Rev. Stat. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.

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, July 11, 2023.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Martín Quezada, 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]

Fripps Mohave Construction LLC, Respondent

3287 Gold Canyon Ct.

Kingman, AZ 86401

[email redacted]

Michael Lombardo, Complainant

4216 Flat Ridge Ave.

Kingman, AZ 86401

[email redacted]

By: OAH Staff