ALJDEC decisions subject to certification as final

2021A-02369-CHC-ROC · Registrar of Contractors · 2021-12-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Patrick Kennedy,

COMPLAINANT,

v.

Pulte Development Corporation,

ROC License No. 079383,

RESPONDENT.

No. 2021A-02369-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 08, 2021 at 2:00 PM.

APPEARANCES: Patrick Kennedy (“Complainant”) appeared on his own behalf. Todd Baxter, Esq. appeared on behalf of Pulte Development Corporation (“Respondent”) with witnesses Lauren Mandola (formerly Marquez) and Nicole Cole. Diane DeLeon Kennedy 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 August 01, 1988, the Registrar issued License No. 079383 for General Residential B contracting to Respondent. Respondent’s address of record for the license is 16767 N. Perimeter Dr. Ste. 100 Scottsdale, AZ 85260. Pulte Diversified Companies Inc. and Pulte Home Company LLC are listed as Owners on the license. Pulte Home Corporation is listed as a Subsidiary 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. 079383, as reflected on the Registrar’s public website. Such prior license record reflects that Respondent’s license is active and currently renewed through July 31, 2022. The license is in good standing and has not been previously disciplined, but there have been 15 prior cases that have settled or otherwise been resolved with the license. The record reflects that there are 8 open complaints against Respondent’s license, one of which is presumed to be related to this matter. Respondent has a $15,000.00 surety bond for the license issued through Safeco Insurance Company, effective August 01, 1988.

On May 26, 2021, the Registrar received Complaint 2021-02369 filed by Complainant alleging poor flooring installation on new build project. Attached to the complaint were copies of an estimate and itemized billing statement.

On or about June 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 July 12, 2021, at 10:00 a.m.

On July 12, 2021, Registrar investigator Steve Klein (“Investigator Klein”) reviewed Complainant’s home purchase agreement and inspected the work that had been done on the project to date. When he was finished, Investigator Klein drafted Jobsite Inspection Notes. Ultimately, Investigator Klein substantiated 1 of Complainant’s 2 complaint items. Specifically, Investigator Klein found that complaint item 1, regarding grout discoloration, was in need of remediation by Respondent.

On July 12, 2021, Complainant submitted an Addendum Complaint to the Registrar.

On July 12, 2021, the Registrar issued an Addendum Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by Investigator Klein on August 17, 2021, at 10:00 a.m.

On August 17, 2021, Investigator Klein inspected the workmanship regarding Complainant’s third complaint item. When he was finished, Investigator Klein drafted Jobsite Inspection Notes. Ultimately, Investigator Klein did not substantiate Complainant’s addendum complaint item.

On August 17, 2021, Investigator Klein issued a Written Directive from the Registrar (“Directive”) to Respondent based on the workmanship allegation he substantiated during his jobsite inspection. Respondent was put on notice that it had until 5:00 p.m. on September 06, 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 September 09, 2021, Investigator Klein issued a Compliance Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site on September 22, 2021, at 2:30 p.m.

On September 22, 2021, Investigator Klein inspected the workmanship complaint item previously identified for remediation and took 9 photographs. When he was finished, Investigator Klein drafted Compliance Jobsite Inspection Notes. Ultimately, Investigator Klein determined that although Respondent did make attempts to correct the work, there were still inconsistent grout colors in the kitchen area that remained at issue that had not been satisfactorily remediated by Respondent.

On September 23, 2021, Investigator Klein escalated Complaint 2021-02369 to the Registrar’s legal department with a Citation Recommendation.

On September 24, 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 October 09, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On October 05, 2021, the Registrar received Respondent’s Answer. Respondent denied the allegations in the Citation and informed the Registrar that it “acted in an appropriate and reasonable manner to resolve the issues with respect to the grout at the Complainant’s home.”

On October 15, 2021, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on December 08, 2021. Per the November 05, 2021, Notice of Hearing on Contested Case (“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. Respondent called Lauren Mandola and Nicole Cole as witnesses, and submitted Exhibits A-G. The Registrar’s agency file and Respondent’s Motion to Continue were also admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant owns residential property located at 7662 S. Barlow Dr. Gilbert, AZ 85298.

On or about March 08, 2019, Complainant entered into a Home Purchase Agreement with Respondent for the sale of newly constructed residential property by Respondent.

In or around September 2019, construction on the residence was completed, and escrow closed on the property. Complainant took possession of the property shortly thereafter.

As part of his Home Purchase Agreement with Respondent, Complainant had a one year property inspection completed for his residence. As a result, Complainant was advised that the residence had “soft grout.” Subsequently, Respondent dispatched an inspector who verified the soft grout findings.

To remedy the issue, Respondent hired a subcontractor to remove the flooring throughout the residence and redo the flooring and grout. Corrective work on the project began in January 2021, and was completed in early February 2021.

Once the work was completed Complainant noticed that the new grout was an incorrect color.

In mid-February 2021, Respondent’s subcontractor re-grouted the flooring and stained it.

Because Complainant remained unsatisfied, Respondent had its subcontractor remove the grout and replace it with the correct color grout.

Complainant complained to Respondent after he noticed irregularities in the grout color, with discoloration and darkening in the kitchen area. Respondent advised that the corrective work it had performed was “[T]he best we can do.”

On November 17, 2021, Respondent offered to “stain seal” Complainant’s grout; a 2-day process that would allegedly “repair the discoloration by applying the stain seal” and “give the grout a uniform appearance throughout.” On November 22, 2021, Complainant declined Respondent’s offer.

In closing, Respondent argued that because Complainant’s escrow closed in September 2019, that the warranty window closed in September 2020. Respondent argued that any issues brought to its attention prior to the expiration of the warranty were not extended beyond the warranty deadline. Respondent argued that the Registrar could not find that it violated workmanship statutes because it had replaced all of Complainant floors and then replaced the grout again. Per Respondent, Complainant’s refusal to permit it to stain seal the grout was unreasonable and prevented Respondent from completing its remediation of the project.

In closing, Complainant argued that he afforded Respondent a reasonable opportunity to corrective the grout issue, over 15 months, and utilized the Registrar as a final resort to get Respondent to correct deficiencies brought to its attention months prior. Complainant opined that he had received “less quality” than he had paid for, and as a result the equity/value of his home had been negatively affected.

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.”

In the case at bar, the issue is whether grounds exist for the Registrar to take disciplinary action against Respondent’s license based on the discoloration of the correct color grout installed, and if so, whether Complainant’s refusal to accept Respondent’s offer to stain seal the grout qualifies as an affirmative defense.

Here, it is undisputed the parties’ Home Purchase Agreement included numerous warranties, including a workmanship warranty for the flooring and grout. . It is also undisputed that Respondent acknowledged the poor workmanship regarding the flooring and attempted to make corrections several times, prior to the Registrar’s involvement. . It is also undisputed that once the Registrar became involved, it determined that Respondent’s workmanship required corrective work. . It is also undisputed that after the underling Directive was issued for this matter, compliance was required no later than September 06, 2021. It is further undisputed that after Investigator Klein’s compliance jobsite inspection, the grout discoloration issue had not been satisfactorily remediated by Respondent.

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 timely complete the required corrective work. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent’s November 2021 offer to stain seal Complainant’s grout, while credible, does not sustain the requisite burden of proof as the offer was made past the expiration of the Directive compliance deadline.

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 Pulte Development Corporation, ROC License No. 079383, be suspended for two (2) days 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, December 20, 2021.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors