ALJDEC decisions subject to certification as final

2021A-02372-RFA-LS-ROC · Registrar of Contractors · 2022-05-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Bryan Staub,

COMPLAINANT,

v.

Arizona Interiors and Millwork Inc.

ROC License No. 147413,

RESPONDENT.

No. 2021A-02372-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 16, 2022 at 9:00 AM.

APPEARANCES: Assistant Attorney General Sara Asta, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Tedi Quezada as a witness. Bryan Staub (“Complainant”) appeared on his own behalf. Jay Pendergast appeared on behalf of Arizona Interiors and Millwork Inc. (“Respondent”). Barrigan Staub 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

According to the Registrar’s public website, on July 26, 1999, the Registrar issued ROC License No. 147413 for specialty dual CR-60 finish carpentry contracting to Respondent. Jay Pendergast is as the Qualifying Party and Officer on the license. Respondent’s address of record for the license is 17860 W. Palm Ave. Building B, Casa Grande, AZ 85122.

Pursuant to Ariz. Admin. Code R4-9-117 Administrative Notice is taken of Respondent’s prior license record for ROC License No. 147413, as reflected on the Registrar’s public website. The license is currently active and renewed through July 31, 2023. The license has been disciplined by the Registrar on two prior occasions; one of which is presumed to be related to this matter. The license has a $6,750.00 surety bond issued State Farm Fire and Casualty Company, effective October 23, 2014.

On May 26, 2021, the Registrar received a 6-item complaint filed by Complainant alleging poor work performance.

On June 04, 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 June 21, 2021, at 10:00 a.m.

On June 21, 2021, Registrar investigator Jack Grimm (“Investigator Grimm”) inspected the work that had been done on the project to date and took 17 photographs of the project. When he was finished, Investigator Grimm drafted Jobsite Inspection Notes. Ultimately, Investigator Grimm substantiated two of Complainant’s six complaint items; specifically, complaint items 1 and 4.

On June 14, 2021, Investigator Grimm issued a Directive from the Registrar to Respondent because he substantiated 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 26, 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, and 32-1154(A)(22) and 32-1154(E).

On July 29, 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, and 32-1154(A)(22). Respondent was given until August 13, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On August 12, 2021, the Registrar received Respondent’s Answer whereby Respondent detailed challenges he faced during the project; including having to relocate his shop, and supplier delays, and obtaining trades to work on the project.

On August 16, 2021, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on October 07, 2021. Per the Notice of Hearing the issue to be determined was 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 07, 2021, an administrative evidentiary hearing took place at OAH, with ALJ Stone presiding.

On November 23, 2021, the Registrar issued a Final Administrative Decision and Order to the parties whereby Respondent was held to be in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). As such, the Registrar suspended Respondent’s license for five (5) business days and imposed a $500.00 civil penalty under Ariz. Rev. Stat. § 32-1154. On January 02, 2022, the Final Administrative Decision and Order became effective.

On or about January 12, 2022, 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), in the amount of $30,000.00. Attached were a copy of the parties’ contract, proof of $24,800.00 in payments Complainant made Respondent on the project, Complainant’s Warranty Deed for the property at issue, a January 14, 2022, $3,575.00 bond award letter from Respondent’s insurance company, and four (4) repair bids.

On March 11, 2022, the Registrar issued a Notice of Claim for Administrative Award to the parties which held Complainant was awarded $27,553.00 from the Fund.

On March 25, 2025, the Registrar received an appeal letter from Respondent contesting Complainant’s eligibility and award amount from the Fund.

On March 30, 2022, the Registrar also received an appeal letter from Complainant contesting the amount he had been awarded from the Fund.

On March 25, 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 April 05, 2022, the issue for hearing is to determine if Complainants’ award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.

On May 16, 2022, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Tedi Quezada as a witness and submitted 20 exhibits. Complainant testified on his own behalf. Jay Pendergast testified on behalf of Respondent. The Notice of Hearing was also admitted into the record as its own exhibit. The substantive evidence is as follows:

Complainant own property located at 4240 E. Dubois Ct., Gilbert, AZ 85298, which was the site of the underlying project at issue.

Ms. Quezada is a Legal Assistant II for the Registrar. Ms. Quezada made the determination that Complainant was eligible for a payout from the Fund because he satisfied all statutory requirements for an administrative payout.

To determine the appropriate amount of the administrative award, Ms. Quezada verified the $29,000.00 contract amount between the parties, the contract terms, and the $24,800.00 paid on the contract by Complainant. Next, Ms. Quezada confirmed that Complainants’ filed against Respondent’s bond; resulting in a $3,575.00 payment, which was deducted as a disallowed amount. Ms. Quezada also reviewed Complainant’s five repair bids and opted to accept the $35,328.00 bid from Denovo Fine Cabinets (“Denovo”) because it was from an appropriately licensed contractor, encompassed remediations identified in the Directive, and was the least expensive bid submitted. Additionally, Ms. Quezada was able to confirm with Investigator Grimm that Denovo’s bid was neither excessive in cost(s) nor inclusive of items outside the scope of the Directive.

Ultimately, Ms. Quezada calculated Complainants’ damages by deducting the unpaid $4,200.00 contract balance and $3,575.00 bond payout from Complainant’s $35,328.00 costs plus bids, resulting in a $27,553.00 administrative payout from the Fund.

Denovo’s July 30, 2021, supplemental bid to “remove and replace edge banding” and “field touch up” for $3,575.00, dated one day after its initial submission, was disallowed as it was not deemed necessary to make Complainant whole or related to the Directive. The supplemental bid was also in the exact amount previously awarded to Complainant from Respondent’s bond company, and believed to be Complainant’s illegitimate attempt to recoup the funds a second time.

Closing Arguments

In closing, the Registrar argued that both parties failed to sustain their respective burdens of proof in the matter, therefore both appeals should be denied. The Registrar asserted that it accepted all allowable considerations permitted by law to determine Complainant’s eligibility and award amount, and that neither party presented any evidence to rebut or refute the Registrar’s credible evidence.

In closing, Complainant argued that it should be awarded an additional $3.575.00 from the Registrar, based on Denovo’s supplemental bid, but did not offer further argument to support its position, or proffer any evidence to explain how the amount was unrelated to the bond award he had already received in the same amount.

In closing, Mr. Pendergast conceded that he did not contest Complainant’s eligibility to receive an award from the Fund, but argued that the amount that had been awarded was “excessive.” Mr. Pendergast opined that he could complete the project for “ten to twelve thousand,” but did not offer any additional evidence to support his contention or case law/statute(s) to support why he should be permitted to do so.

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 Fund’s payout amount 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.”

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.”

Statutes should be interpreted to provide a fair and sensible result. “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 neither Complainant nor Respondent failed to present any substantive evidence at hearing.

Here, Mr. Pendergast irrelevantly argued, without merit, that Denovo’s selected bid was higher than what it believed Respondent could complete the project for. There is no statutory prevision or regulation that required Complainant’s remediation bid to be within a certain amount, nor is there any industry standard adopted by law that would require the Registrar to hold Complainant to such a requirement. Notably, credible evidence in the record specifically rejects this contention whereby Investigator Grimm confirmed that Denovo’s primary bid was not excessive in cost, in the aggregate or in part(s). Additionally, Complainant failed to counter the rebuttable presumption of record regarding the payment he received from Respondent’s bond. The undersigned does not find it likely that Denovo accidentally omitted scopes of work and related costs from its bid, that just so happened to be in the exact amount of a bond payout Complainant received that was disallowed from his recovery fund award. While it is certainly possible, it is not likely plausible to be true here.

Respondent and Complainant have both failed to sustain their respective burdens of proof in this matter.

The record reflects that the Registrar soundly established Complainant’s eligibility and how Complainant’s administrative award payout amount was properly calculated at $27,553.00. Ms. Quezada credibly testified that she diligently reviewed all pertinent documentation, consulted, and made careful calculations to reach a final figure.

Because Respondent offered no credible evidence to rebut Ms. Quezada’s testimony, as corroborated by the Registrar’s exhibits, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded a $27,553.00 payout from the Fund.

Therefore, Respondent’s appeal is denied.

Complainant’s appeal is also denied.

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that Respondent’s appeal be denied.

IT IS FURTHER RECOMMENDED that Complainant’s appeal be denied.

IT IS FURTHER RECOMMENDED that the Registrar affirm the $27,553.00 payout to Complainant from the Fund as outlined in the Notice of Claim for Administrative Award, as issued on March 11, 2022.

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, May 31, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

By Miranda Alvarez

Legal Secretary