ALJDEC decisions subject to certification as final

2021A-03028-CHC-ROC · Registrar of Contractors · 2022-05-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Aisha Andrea Bates,

COMPLAINANT,

v.

On Demand Construction And Building

Services Inc.,

ROC License No. 318702,

RESPONDENT

No. 2021A-03028-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 03, 2022 at 9:00 AM.

APPEARANCES: Aisha Andrea Bates (“Complainant”) appeared on her own behalf. Wes Ellington appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Gerald Daniels appeared on behalf of On Demand Construction and Building Services Inc. (“Respondent”). Ben Bates observed.

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 April 18, 2018, the Registrar issued License No. 318702 Specialty Dual CR-61 Carpentry, Remodeling and Repair contracting to Respondent. The license is currently active and renewed through April 30, 2024. Gerald Gregory Daniels is the Qualifying Party/Officer on the license. Respondent’s address of record for the license is 20 E. Thomas Rd. Phoenix, AZ 85012. Respondent’s $6,750.00 surety bond, as issued by RLI Insurance Company, is inactive due to cancellation. There is no prior discipline noted for the license, save two (2) open complaints; one of which is presumably Complainant’s.

On July 01, 2021, the Registrar received an 18-item complaint from Complainant against Respondent’s License No. 318702 alleging poor workmanship of their project. The Registrar designated it Complaint No. 2021-03028 and assigned to Mike Nation (“Investigator Nation”) for investigation.

On July 02, 2021, Investigator Nation issued a Notice of Formal Complaint to Respondent, and advised that Respondent had ten (10) days to submit a written response to the Registrar.

Based on a Stop Work Order issued by the City of Phoenix on June 28, 2021, for the permit issued for Complainant’s project, the Registrar closed Complaint No. 2021-03028 in a Dismissal Letter dated July 09, 2021.

On or about November 15, 2021, the Registrar reopened Complaint No. 2021-03028 per Complainant’s request. The reopened matter was assigned to investigator Randy Morris (“Investigator Morris”).

On November 22, 2021, Investigator Morris issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on December 10, 2021, at 10:00 a.m.

On December 15, 2021, Investigator Morris issued a Jobsite Inspection Rescheduled Notification Letter to the parties, advising that he would conduct an inspection of the project on January 06, 2022, at 10:00 a.m.

On January 06, 2022, Investigator Morris conducted a review of the agreements executed between the parties and inspected the work that had been performed on the project to date. Respondent was present. Investigator Morris also took 74 photographs of the project site. When he was finished, Investigator Morris drafted his Inspection Notes. Ultimately, Investigator Morris substantiated 9 of 18 complaint items. Specifically, Investigator Morris verified complaint items 2-5, 7-8, 11-12, and 15. Investigator Morris concluded that some of Respondent’s work on the project failed to meet the Registrar’s minimum workmanship standards.

On January 20, 2022, Investigator Morris issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated half of Complainant’s workmanship allegations against Respondent. Respondent was put on notice that it had until 5:00 p.m. on February 21, 2022, 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 or about February 21, 2022Complaint No. 2021-03028 was reassigned to investigator Wes Ellington (“Investigator Ellington”).

On February 23, 2022, Investigator Morris issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on February 24, 2022, at 11:00 a.m.

On February 05, 2022, Investigator Ellington inspected the corrective work that had been performed on the project and took 18 photographs. Respondent was present. When he was finished, Investigator Morris drafted his Compliance Jobsite Inspection Notes. Ultimately, Investigator Morris determined that Respondent had not performed corrective work necessary to satisfactorily remediate complaint items 2-4, 11, and 15 as identified in the Directive.

On February 05, 2022, Investigator Ellington issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, including his contract with Complainant.

On February 24, 2022, Investigator Ellington forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On March 01, 2022, 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 March 16, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On March 13, 2022, the Registrar received Respondent’s Answer. Respondent noted that his general disagreement with the Citation and requested an appeal hearing.

On March 14, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on May 03, 2023. Per the March 26, 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 her own behalf and called Investigator Ellington as a witness. Gerald Daniels testified on behalf of Respondent. The Registrar’s agency file, including the Notice of Hearing, was admitted into the record as its own exhibit. The substantive evidence of record is as follows:

Complainant is the co-owner of Amant Made LLC. Amant Made LLC owns residential property located at 103 E. Palm Lane #C & #D Phoenix, AZ 85004. The property is intended for private lease.

On an unknown date Complainant began a construction project with multiple trades at the Palm Ln. residence, whereby several trades were performing work independent of one another simultaneously to separate units 3C & D.

On or about April 13, 2021, the parties entered into a $15,520.00 construction contract agreement for electrical, plumbing, framing, and related labor at the Palm Ln. residence. The project was to be completed within ten (10) days.

On or about April 22, 2021, the parties amended their agreement to include six (6) verbal Change Orders, bringing the contract total to $19,993.00. The completion date for the project was not amended.

On or about April 22, 2021, Respondent issued Complainant an $8,920.00 invoice containing two (2) additional Change Order fees totaling $3,015.00 for permits and labor charges.

On April 23, 2021, Complainant tendered $7,760.00 to Respondent towards their contract.

On April 24, 2021, Permit No. 21013464; a 2yr minor residential plumbing permit, was issued to Amant Made LLC by the City of Phoenix for the Palm Lane project.

On April 24, 2021, related Permit No. 21013465; a 2yr minor residential electrical permit, was also issued to Amant Made LLC by the City of Phoenix for the Palm Lane project.

On May 09, 2021, Complainant tendered $6,328.00 to Respondent towards their contract.

On May 17, 2021, Permit No. 21013464 failed the city’s inspection.

On May 17, 2021, Permit No. 21013465 failed the city’s inspection, but later passed on May 20, 2021.

On June 28, 2021, due to a failed inspection a Stop Work Order issued by the City of Phoenix for Permit No. 21013464, as a city inspector determined that Amant Made LLC was “doing work in excess of the Electrical and Mechanical permits pulled.” Amant Made LLC was instructed to draw up plans for the remodel of the dual unit and submit it for review to the city. Amant Made LLC was advised that the Stop Work Order was in effect until their plan review was complete.

During the Directive’s compliance period, Respondent attempted to correct/remediate substantiated complaint items 2-4, 11, and 15.

Additional Evidence

Between April and June 2021 the parties’ professional relationship began to deteriorate.

In correspondence between the parties dated June 24-25, 2021, Respondent accused Complainant of “taking advantage” of his kindness, by adding more work to the project after Respondent had completed the job, and refusing to pay. Respondent admitted that he had performed work outside the scope of the contract to help Complainant “bring [her] vision to light,” but that he would issue an invoice “for EVERYTHING” Respondent did “that wasn’t in the contract.” (Emphasis in original.) Respondent warned, “I will not sign off on the contractor waiver without a paid in full invoice.”

In defense of his position, Respondent argued that his payment terms with Complainant were “50/25/25” and that “all change orders to be paid upfront.” Respondent also argued that Complainant “only requested that the front wall be insulated ... afterwards, you asked if we insulated the back bathroom walls. I didn't extend the same courtesy because we had already completed the wall on both sides.” Respondent further argued that “my company DID NOT frame any bathroom pony wall. You asked us (after the fact again) [sic] to cut the wall down to 36". As a courtesy (we cut the walls down).” [sic]

(All emphasis and errors in original.)

On June 24, 2021, Respondent issued Complainant a $9,220.00 “overdue” invoice that noted payment was due April 22, 2021.

On June 25, 2021, Respondent wrote the following to Complainant, in pertinent parts:

I have bent over backwards to accommodate you. Your complaints doesn't alleviate your obligation to pay. I would like to resolve this as amicable as possible but if I don't receive the payment today, I will take that as a refusal because payment is due upon completion of the job and I invoiced you yesterday.

Upon receipt of Respondent’s invoice, Complainant replied that Respondent had overbilled for work outside the scope of their contract and had not completed and/or corrected eight (8) contracted items that had not been performed to Complainant’s satisfaction.

In closing, Respondent argued that Complainant failed to disclose the entirety of her desired scope of work for Respondent, and added additional items for Respondent after she entered into their contract which she failed to pay for.

In closing, Complainant argued that the Registrar should take disciplinary action against Respondent’s license because he failed to adhere to the Directive and correct identified deficiencies in his poor workmanship.

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 the case at bar are clear.

The record reflects that the parties’ final agreement included their original written contract and six (6) verbal Change Orders, totaling $19,993.00. Respondent’s additional $3,015.00 invoice, for “permits and labor charges” Change Orders, has not credibly been established as a valid contract addendum between the parties. The record also reflects that by May 09, 2021, Complainant had paid $14,088.00 to Respondent towards their agreement. The record further reflects that while Respondent made good-faith attempts to complete the project per the terms of the parties’ agreement, his poor workmanship on some items resulted in the Registrar issuing a Directive that Respondent did not fully or timely comply with.

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 complete Complainants’ project per contract. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent did not sustain his burden. While the record does support Respondent’s arguments that Complainant made multiple requests for additional work, the record also reflects that Respondent granted a number of her requests. Additionally, the record establishes that Respondent failed to execute written Change Orders in these instances or secure any form of written verification from Complainant for work and related charges. Not only has Respondent not established that Complainant agreed to the inclusion of $3,015.00 for “permits and labor charges” Change Orders in his final invoice, Respondent has also failed to establish why he failed to timely and completely comply with the Registrar’s Directive after admitting that he made corrective attempts during the compliance period. There is no evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project. Complainant’s failure to remit timely payment does not alleviate Respondent of his obligations under the parties’ contract.

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.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter, Respondent On Demand Construction And Building Services Inc., ROC License No. 318702, 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, May 20, 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