ALJDEC decisions subject to certification as final

2021A-02844-RFA-LS-ROC · Registrar of Contractors · 2022-08-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

John Hohn,

COMPLAINANT

Tucson Refrigeration Controls, LLC,

License No. ROC 304275,

RESPONDENT

No. 2021A-02844-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: August 12, 2022

APPEARANCES: Complainant John Hohn appeared on his own behalf with his wife, Cassandra Hohn. Miguel Estrada appeared on behalf of Respondent Tucson Refrigeration Controls, LLC. Assistant Attorney General Scott Donald represented the Arizona Registrar of Contractors. Tedi Quezada appeared as a witness for the Arizona Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

FINDINGS OF FACT

Background and Procedure

According to the Arizona Registrar of Contractors’ (“Registrar”) public website, on July 5, 2016, the Registrar issued License No. 304275, Specialty Dual CR-39 Air Conditioning and Refrigeration contracting license to Tucson Refrigeration Controls, LLC (“Respondent”). Miguel Estrada is listed on the license as the Qualifying Party and Member.

Pursuant to Arizona Administrative Code (“A.A.C.”) R4-9-117, Administrative Notice is taken of Respondent’s prior license record as reflected on the Registrar’s public website on August 29, 2022. Respondent’s License No. 304275 is active and currently renewed through July 31, 2024. There are no open complaints against the license, but there are two records of prior discipline that have been taken against the license. Respondent has a $6,750.00 surety bond for the license issued through RLI Insurance Company, effective February 11, 2016.

On or about June 22, 2021, the Registrar received a Complaint filed by John Hohn (“Complainant”) against Respondent alleging poor workmanship in the installation of a new air conditioning unit at Complainant’s residence. The Registrar assigned Investigator James Vildusea to investigate the Complaint.

Investigator Vildusea, with the assistance of Investigator Arlo Houston, conducted a Jobsite Inspection at the project site on July 21, 2021. During that inspection, Investigator Vildusea took photographs of Respondent’s work. After the inspection, Investigator Vildusea drafted Jobsite Inspection Notes.

On or about July 26, 2021, Investigator Vildusea issued a Written Directive From the Registrar (“Written Directive”) to Respondent due to having substantiated Complainant’s allegation that some of the work Respondent had performed failed to meet minimum workmanship standards. The Written Directive included Addendum items of Complainant that had been filed by Complainant prior to the Jobsite Inspection. Respondent was put on notice that it had until 5:00 p.m. on August 16, 2021, to notify the Registrar of its compliance with the Written Directive or face discipline pursuant to A.R.S. § 32-1154(A)(3), A.A.C. R4-9-108, A.R.S. § 32-1154(A)(22), and A.R.S. § 32-1154(E).

On August 12, 2021, Investigator Vildusea issued a second Written Directive to Respondent that extended the deadline date for compliance until August 27, 2021.

Respondent failed to perform the required corrective work. Consequently, Investigator Vildusea referred the Complaint to the Registrar’s legal department.

On October 4, 2021, the Registrar issued a Citation to Respondent for alleged violations of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158, and A.R.S. § 32-1154(A)(22).

After receiving Respondent’s Written Answer to the Citation, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent State agency, for an evidentiary hearing to determine whether the Registrar had cause to discipline Respondent’s license based upon Respondent’s alleged violations of this State’s contracting laws.

On December 7, 2021, an administrative evidentiary hearing took place at OAH.

On or about December 15, 2021, OAH transmitted the Administrative Law Judge Decision (“Decision”) to the Registrar. The Decision recommended that discipline be imposed against Respondent’s contracting license as the Administrative Law Judge concluded that Respondent had violated the charged provisions of this State’s contracting laws. The Decision also recommended that Respondent’s license be suspended for five days and that Respondent pay a civil penalty in the amount of $500.00.

On or about January 7, 2022, the Registrar issued a Final Administrative Decision and Order accepting the Decision.

On February 16, 2022, the Final Administrative Decision and Order became effective.

On or about February 23, 2022, the Registrar received Complainant’s claim for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to A.R.S. §§ 32-1132, in the amount of $16,581.56.

On June 6, 2022, the Registrar issued a Notice and Order of Recovery Fund Claim Denial.

Complainant appealed the Registrar’s Recovery Fund Claim Denial and the matter was referred to OAH for an independent evidentiary hearing.

Hearing Evidence

At the hearing, the Registrar called Tedi Quezada as a witness. Complainant testified on his own behalf and called his wife, Cassandra Hohn, as a witness. Miguel Estrada appeared on behalf of Respondent. The parties stipulated to the admission of all of the Registrar’s exhibits and administrative notice was taken of the agency record. Seven of Complainant’s exhibits were admitted into evidence. Respondent did not offer any exhibits.

Tedi Quezada’s Testimony

Ms. Quezada is a Legal Assistant II for the Registrar and she reviewed Complainant’s claim to the Fund. Ms. Quezada testified that she reviewed Respondent’s scope of work, the Complaint, the payments made to Respondent, the Written Directive, and the Fund claim form which included the bids submitted by Complainant.

Ms. Quezada testified that upon review, she determined that Complainant met all statutory requirements for eligibility. However, in order to calculate Complainant’s actual damages, Complainant was required to obtain bids from other licensed contractors so that the most appropriate one could be chosen by the Registrar, and then permissible remediation costs could be tallied to calculate whether an award was proper.

Ms. Quezada testified regarding the procedural history of this matter as set forth above. Ms. Quezada reviewed Complainant’s Complaint and the allegations contained therein, as well as the parties’ contract. Ms. Quezada further testified that the parties’ contract amount was $10,880.00, and that Complainant paid Respondent $8,100.00 of the contract amount. Ms. Quezada testified regarding Investigator Vildusea’s Jobsite Inspection Notes and the Written Directives issued in this matter. Ms. Quezada testified that the Written Directive ordered Respondent to correct two workmanship deficiencies, specifically, the size and leveling of the pad. There was also a permitting issue that Respondent was ordered to rectify, however, Ms. Quezada testified that such issue was not relevant to the issue of an award from the Fund.

Ms. Quezada testified that the bids submitted by Complainant from Hamstra Heating and Cooling, Inc., in the amount of $15,581.56 (with a rebate), and from Alaskan Air Conditioning & Heating, in the amount of $20,495.00, were for the installation of new air conditioning systems. Ms. Quezada testified that both of these bids were rejected because they exceeded the scope of work that Respondent was ordered to perform, specifically, correcting the pad size and leveling the pad.

Ms. Quezada testified that Complainant sent the Registrar an email in response to the bid rejections, stating that no other contractor will repair Respondent’s work, and will only “start over.”

Complainant submitted a third bid from Strongbuilt Plumbing, Air & Solar, in the amount of $16,700.00, for the installation of a new air conditioning system.

Ms. Quezada explained that she contacted Investigator Vildusea regarding the bids submitted by Complainant. Investigator Vildusea confirmed that “[t]he two items that needed attention per Directive were the correct size stand for the A/C unit, and the stand to be level with the A/C atop the stand. A permit was required per Directive also. [T]hat's all the compensation.” Investigator Vildusea confirmed that the three bids submitted by Complainant were all excessive and exceeded the scope of work that was required of Respondent per the Written Directive.

By letter dated April 25, 2022, Ms. Quezada requested that Complainant provide by May 9, 2022:

New or revised bids that only include the deficient work to be corrected as

outlined in the Written Directive (attached).

Complaint Item 4: “A/C stand was installed incorrectly The instillation guide says the pad should be at least 1” larger that the unit on all sides. It is not. It’s equal.”

Investigator’s Observation: Verified: Upon the job site inspection, I observed the pad was not 1” larger than the unit on all sides. The respondent stated he will be correcting this issue/completing this repair.

. . .

Complaint Item 6: “the instillation guide says the pad must be level-it isn’t level. Which results in the entire ac unit not being level. This causes stress on the unit. The instructions manual says the pad must be level.”

Investigator’s Observation: Verified: Upon the job site inspection, the platform was not level. The respondent stated he will be correcting this issue/completing this repair.

All errors in original.

In response to the Document Request Letter, Complainant submitted three bids for the scope of work delineated in the Written Directive. The bid from Samson and Sons was in the amount of $1,850.00, the bid from Desert Husky was in the amount of $1,250.05, and the bid from B & J Refrigeration, Inc. was in the amount of $1,293.67.

On June 1, 2022, Investigator Vildusea approved the bids submitted in response to Document Request Letter.

Ms. Quezada testified that the Registrar accepted the bid from Samson and Sons in the amount of $1,850.00, however, Complainant’s claim was denied because the actual damages incurred were less than the amount remaining to be paid on the parties’ contract. Ms. Quezada explained the purpose of the Fund and that statute limits an award from the Fund to actual damages and may not exceed the amount necessary to complete or repair the work for which Respondent was responsible.

Ms. Quezada calculated Complainant’s damages and that calculation is contained in the Registrar’s Notice and Order of Recovery Fund Claim Denial. Although the calculation within the Notice and Order contains a typographical error, that error does not impact the result of this matter.

Ms. Quezada subtracted the amount Complainant paid to Respondent, $8,100.00, from the contract amount of $10,880.00, which left an unpaid balance of $2,780.00, from which the allowed $1,850.00 was subtracted, rendering Complainant ineligible for a payout from the Fund as the amount of compensable damages was -$930.00.

Ms. Quezada testified that Complainant requested a hearing due to his disagreement with the calculation, asserting that the balance owed on the contract was incorrect because Respondent did not perform any ductwork, and therefore Complainant does not owe monies for work not performed.

Complainant’s Testimony

Complainant testified that he contracted with Respondent to install an air conditioning system and repair the ductwork, however Respondent did not perform any ductwork. Complainant testified that ductwork was not performed, however it needs to be performed. Complainant also took issue with some of Investigator Vildusea’s findings and wanted to address those findings. Complainant was advised that the underlying matter concerning the Complaint had already been adjudicated, had become final, and was not appealed by Complainant. Complainant was precluded from re-litigating the issues contained in the underlying Complaint.

Complainant asserted that he was “illegally” charged $256.00 in taxes by Respondent.

Complainant cited to A.R.S. 32-1182, for the assertion that a homeowner does not have to pay on a contract for work that has not been performed.

Cassandra Hohn’s Testimony

Ms. Hohn also testified regarding the ductwork and asserted that the balance due on the contract should not be considered in the calculation of an award from the Fund.

Miguel Estrada’s Testimony

Mr. Estrada agreed with the evidence presented by the Registrar and did not wish to present anything further.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. The matter was properly brought before OAH.

Complainant bears the burden of establishing by a preponderance of the evidence that the Fund improperly denied his claim.

“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.”

A.R.S. § 32-1133.01(A) provides that “if a contractor license has been revoked or 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.”

A.R.S. § 32-1132.01(B) provides:

An award from the [Fund] may not exceed the actual damages suffered by the claimant as a direct result of a contractor's violation. Actual damages:

1. May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.

2. Must be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.

A.R.S. § 32-1132.01(H) defines "actual damages" as “the reasonable cost of completing the contract and repairing the contractor's defective performance, minus the part of the contract price still unpaid.” (Emphasis added.)

In this case, Complainant did not sustain “actual damages,” as the “part of the contract price still unpaid” exceeded “the reasonable cost of completing the contract and repairing the contractor's defective performance.”

The Administrative Law Judge further concludes that A.R.S. § 32-1182 is inapplicable to this matter.

Therefore, the undersigned Administrative Law Judge concludes that the Registrar properly denied Complainant’s claim to the Fund. Complainant’s appeal is denied. However, nothing in this order would prevent Complainant from seeking a monetary award against Respondent from a civil court of competent jurisdiction.

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that Complainant’s appeal be denied.

IT IS FURTHER RECOMMENDED that the Registrar affirm the denial of Complainant’s claim to the Fund.

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.

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-137160-45720000

Done this day, August 31, 2022.

/s/ Sondra J. Vanella

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000By Miranda Alvarez

Legal Secretary