ALJDEC decisions subject to certification as final
2021A-02960-CHC-ROC · Registrar of Contractors · 2022-01-25
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Rogelio Garcia ,
COMPLAINANT,
v.
Oak Creek Homes LLC
License No. ROC 317818,
RESPONDENT.
No. 2021A-02960-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: January 06, 2022 at 9:00 AM.
APPEARANCES: Rogelio Garcia (“Complainant”) appeared on his own behalf. Neal Eckel, Esq. appeared on behalf of Oak Creek Homes LLC (“Respondent”) with Steven Macholtz as a witness. Arlo Houston appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
_____________________________________________________________________
After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this 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 as reflected on the Registrar’s public website. On March 03, 2018, the Registrar issued License No. 317818 General Residential B contracting to Respondent. The license is currently active and renewed through February 28, 2022. Steven Warren Macholtz is the Qualifying Party and Andrea Jeanne Konove is a Member on the license. Respondent’s address of record for the license is 3274 E. 26th St. Tucson, AZ 85713. Respondent has an active $9,000.00 surety bond on the licensed issued by Nationwide, effective January 24, 2020. Although there is no prior discipline noted for the license, there have been two complaints that have been resolved or otherwise settled with the license. There is also one open complaint against the license which is presumed to be Complainant’s.
On June 28, 2021, the Registrar received a 22-item complaint from Complainant against Respondent alleging breach of contract. The Registrar designated it Complaint No. 2021-02960 and assigned to Arlo Houston (“Investigator Houston”) for investigation.
On July 08, 2021, Investigator Houston issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on July 26, 2021, at 9:00 a.m.
On July 16, 2021, Investigator Houston issued a Rescheduled Jobsite Inspection Notification Letter to the parties, advising that the inspection of the project would take place on August 03, 2021, at 9:00 a.m.
On July 21, 2021, Complainant submitted a 6-item addendum complaint to the Registrar.
On August 03, 2021, Investigator Houston conducted a review of construction plans and inspected the work that had been performed on the project to date. He also took 26 photographs of the project site. When he was finished, Investigator Houston drafted his Inspection Notes. Ultimately, Investigator Houston substantiated 13 of 28 complaint items. Specifically, Investigator Houston verified complaint items 1, 4-8, 10-12, 14, and 16-18 and concluded that Respondent’s workmanship on the project failed to meet the Registrar’s minimum standards.
On August 13, 2021, Investigator Houston issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated some of Complainant’s allegations regarding Respondent’s poor workmanship. 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. Admin. Code R4-9-108, and Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(22) and 32-1154(E).
On September 13, 2021, Investigator Houston issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on September 20, 2021, at 11:00 a.m.
On September 20, 2021, Investigator Houston inspected the corrective work that had been performed on the project and took 21 photographs. When he was finished, Investigator Houston drafted his Compliance Jobsite Inspection Notes. Ultimately, Investigator Houston determined that Respondent satisfactorily remediate complaint items 6, 11, 16 and 17; noting specifically that Respondent failed to remediate complaint items 5 and 12, and only partially remediated complaint items 1, 4, 7-8, 10, 14, and 18.
On October 07, 2021, Investigator Houston forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On October 26, 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 November 10, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.
On October 25, 2021, the Registrar received Respondent’s Answer whereby Respondent generally denied the alleged statutory violations in the Registrar’s Citation.
On November 10, 2021, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 06, 2022. Per the December 03, 2021, Notice of Hearing the issues to be determined are whether the Registrar has cause to discipline Respondent’s license based on the following alleged statutory violations:
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 and called Investigator Houston as a witness. Respondent called Steven Macholtz as a witness and submitted Exhibit 6 & 13. The substantive evidence of record is as follows:
Complainant owns newly constructed residential property located at 916 S. Fremont Ave. Tucson AZ 85719. Escrow on the home closed July 19, 2019.
In 2019 Complainant submitted a complaint to the Registrar regarding Respondent’s alleged poor workmanship of a newly constructed residence. Complainant’s June 28, 2021, complaint was assigned to Investigator Houston as he had been previously assigned to Complainant’s first related complaint.
On August 17, 2021, Complainant provided written notice to Respondent that he would be traveling August 16-20, 2021, and unable to provide access to the interior of the project site, but that Respondent would continue to have unfettered access to the exterior of the project site.
On August 22, 2021, Complainant provided written notice to Respondent that he would provide access to the project’s interior space each day that week from 8:00 a.m. until 11:00 a.m., and again from 1:30 p.m. to 5:00 p.m.
On August 23, 2021, Investigator Houston clarified that Complainant needed to provide Respondent interior access to the project from 8:00 a.m. through 5:00 p.m., as his limitations amounted to a “restriction of access.” Additionally, because Respondent had not been provided access August 16-20, 2021, the Registrar extended the Directive’s compliance deadline to September 13, 2021.
On August 23, 2021, Complainant extended the Directive’s compliance deadline to September 20, 2021.
On August 27, 2021, Complainant provided written notice that he would comply with the Registrar’s access requirements, as long as Respondent’s trades provided copies of their identification.
Respondent refused to perform corrective work August 27, 2021, through August 30, 2021.
After Investigator Houston was notified on August 30, 2021, he informed Complainant that his requirement did not comport with the Registrar’s requirements and that neither Respondent nor his trades were required to provide him with identification. Investigator Houston clarified that any appropriately licensed subcontractor would have to provide its registered name and license number to Complainant.
On September 01, 2021, Respondent provided written notice that it would commence corrective work September 02, 2021. Complainant replied that he would grant all day access September 07, 2021, onward.
On September 10, 2021, Respondent notified the Registrar that it had completed all corrective work as required by the Directive.
On October 12, 2021, after Investigator Houston provided the parties with copies of his Compliance Jobsite Inspection notes, Respondent asked Complainant if he could perform additional corrective work. Respondent was advised the following day that Complainant was no longer required by the Registrar to provide access to the project site, and that the complaint had been escalated to the Legal Department.
In closing, Respondent argued discipline by the Registrar was not warranted because a good faith attempt to perform corrections had been made.
In closing, Complainant argued that both a suspension and civil penalty should be levied against Respondent’s license.
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.”
The material facts in this case are clear.
It is clear that some of Respondent’s work on the project fell below the Registrar’s minimum workmanship standards, and as a result the Registrar issued a Directive which required Respondent to correct workmanship deficiencies. It is also clear that the Directive‘s compliance deadline was extended twice. Although Respondent made a number of corrections, there were still nine (9) outstanding complaint items in need of repair and/or completion by September 20, 2021; the expiration of the Directive‘s extended compliance deadline.
Therefore, the only remaining issue to address is whether Respondent raised sufficient justification or excuse for failing to timely complete remediates for the project per the specifications outlined in the Registrar’s Directive. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent’s allegation of denial of access is illogical whereby Mr. Macholtz notified Investigator Houston that all corrective work had been completed, in his professional opinion, by September 10, 2021. There is no additional evidence in the record to support a finding that Respondent did not have a reasonable opportunity to remediate workmanship issues prior to the issuance of discipline against Respondent’s license, as the Directive compliance deadline was extended twice to afford him reasonable time to make repairs.
Notably, however, because the record clearly establishes that Respondent did make multiple attempts to comply with the Registrar’s Directive, the assessment of a civil penalty would not be appropriate in this matter.
Therefore, because Complainant has established Respondent’s 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 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 Oak Creek Homes LLC, ROC License No. 317818, 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, January 26, 2022.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Jeffrey Fleetham, Director
Registrar of Contractors