ALJDEC decisions subject to certification as final

2021A-03525-CHC-ROC · Registrar of Contractors · 2021-12-17

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Richard Brennis ,

COMPLAINANT

Blue Mountain Custom Roofing LLC

License No. ROC 319735,

RESPONDENT

No. 2021A-03525-CHC-ROC

ADMINISTRATIVE LAW JUDGE

DECISION

HEARING: December 9, 2021

APPEARANCES: Ryan D. O’Neal, Esq. for Complainant; James M. Woodrow, Esq. for Respondent

ADMINISTRATIVE LAW JUDGE: Thomas Shedden

FINDINGS OF FACT

On November 15, 2021, the Registrar of Contractors (“ROC”) issued a Notice of Hearing on Contested Case setting the above-captioned matter for hearing on December 9, 2021.

Through its Notice of Hearing, ROC alleges that Respondent Blue Mountain Custom Roofing LLC may have violated Ariz. Rev. Stat. sections 32-1154(A)(3), (A)(12) and (A)(22).

Respondent holds license number 319735 issued by ROC. Michael Daugherty is Respondent’s qualifying party.

Mr. Daugherty testified for Respondent, which also presented the testimony of Lee Goldblatt of Rapid Collection Systems, Inc. and RCS Preliminary Lien Service, Inc., Monte Heiser, Respondent’s job foreman, and Mark Evenoff, Respondent’s project manager.

Complainant is Richard Brennis, who testified on his own behalf.

ROC investigator Arlo Houston also testified.

Complainant contacted Respondent regarding a roof leak. Respondent informed Complainant that the roof had been damaged by hail and Complainant submitted a claim to his insurance carrier.

On February 18, 2021, the parties entered a contract that called for Respondent to make any repairs allowed by Complainant’s insurer and for Complainant to pay to Respondent all funds received from that insurer. Complainant was obligated to pay his $500 deductible and for any items he requested that were not covered by his insurance.

The insurance company called for repairs including removing and replacing 42 squares of modified bitumen roofing, applying elastomeric coating to the roof, repairing interior damage, and repairing damaged air conditioning fins.

Respondent’s position is that Complainant’s roof had defects that were not covered by his insurance including ponding, issues with scupper elevations, and cracking at the parapet walls. As such, Respondent advised Complainant that the repairs authorized by his insurer would not be sufficient to stop all leaks and that any warranty would be for only five years.

Complainant and Respondent entered verbal change orders the scope of which are in dispute.

Respondent did not remove and replace the modified bitumen roof. According to Respondent, consistent with the verbal change orders, it corrected the ponding issue, altered the scuppers, repaired the parapet walls, and applied elastomeric coating, including an elastomeric layer with cork. Respondent provided a ten-year warranty on its work.

Respondent presented no documentary evidence showing specifically what work it performed on the roof.

Complainant was present when Respondent performed its work, but never went on the roof.

The parties also agreed that Complainant would retain $3000 in exchange for Respondent eliminating painting, but disagree as to the full scope of work that was to be eliminated. Complainant’s position is that he was agreeing only to eliminate the interior painting, whereas Respondent’s position is that it was all painting.

Respondent received from Complainant payments totaling $32,131, which Complainant had received from his insurer in two checks.

Complainant received from his insurer a third check for $12,715.08, but was unwilling to pay that amount to Respondent.

Complainant testified to the effect that he did not make the final payment to Respondent because he was suspicious of, and had lost trust in Respondent. Complainant presented no documentary evidence showing that he had raised his suspicions or concerns with Respondent while the work was on-going or at the time he refused to make the final payment.

On or about May 5, 2021, Respondent filed a lien for $9715.08 on Complainant’s property, which was for the remaining insurance proceeds of $12,715.08 less the $3000 change order reducing the scope of work.

On or about July 27, 2021, Complainant filed with ROC a complaint against Respondent alleging abandonment, poor work, misrepresentation, and failure to complete the full scope of work.

ROC investigator Mr. Houston conducted a jobsite inspection on August 10, 2021.

The parties engaged in settlement discussions, including at least one offer and counteroffer.

On August 16 and 24, 2021, Mr. Goldblatt, on behalf of Respondent, emailed Complainant’s attorney with an offer of settlement. The August 24th email requests a response rejecting or accepting Respondent’s offer.

On September 15, 2021, Complainant’s attorney responded to Mr. Goldblatt’s email of August 24, 2021, writing “As you probably surmised, my client is not interested in accepting this offer and rejects it. I don't have a counteroffer for you at this time.”

On August 27, 2021, ROC issued to Respondent a Directive that provided in part:

**** You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on September 17, 2021.

****

DIRECTIVE REQUIREMENTS

You are directed to remedy the following violations by the appropriate means:

Submit a template/copy of an updated contract that complies with the provisions of A.R.S. §32-1158

Compliance Item: 4 - "Contracted for interior wall repairs in various spots throughout home. Contractor only provided some surface refinishing of one wall in hallway. Contractor did not replace any drywall or remove and replace

insulation as contracted. These repairs were also to include new interior paint. Contractor did not paint the one area of interior repair or otherwise paint the areas as contracted."

Investigator’s Observation: Verified. Upon inspection at this JSI the complainant showed me areas of the hallway, great room, and kitchen ceiling and said the work had not been completed in those areas to include incomplete repair, paint, and insulation and drywall replacement. Upon inspection at this JSI I observed for:

-Incomplete/poorly completed areas of drywall repair in the hallways and great room that had not been painted/finished

-Water stained areas in the hallways/great room that had not been repaired/painted

Governing Rule: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(a): A contractor shall perform all work in a professional and workmanlike manner.

Compliance Item: 5 - "Contracted for A/C condenser fin straightening and repair on units of main dwelling and apartment. Also believe this work was not performed."

Investigator’s Observation: Verified. Upon inspection at this JSI the complainant showed me the AC condensing units and said the cooling fins had not been straightened. I observed that the cooling fins on the AC condensing units had not been straightened.

Governing Rule: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(a): A contractor shall perform all work in a professional and workmanlike manner.

Compliance Item: 6 - "Contracted for fence/double gate repair and painting. Also unclear whether this work was performed."

Investigator’s Observation: Verified. Upon inspection at this JSI the complainant showed me the gates and said they had not been painted. I observed that the gates had not been painted.

Governing Rule: Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(a): A contractor shall perform all work in a professional and workmanlike manner.

ITEMS NOT REQUIRING CORRECTION

The following complaint items require no action by the Respondent:

Compliance Item: 1 - "Contracted for full roof replacement, including removal and replacement of existing modified bitumen roof for main dwelling building. Contractor did not remove existing roof, but instead apparently patched and recoated. Unclear of the exact scope or materials utilized."

Investigator’s Observation: Unverified. Upon inspection at this JSI the complainant said there was an agreement with R to change the scope of work and to apply a cork roofing system. There was insufficient evidence presented at time of inspection to verify for this item.

Governing Rule: N/A

Compliance Item: 2 - "Repaired roof is still leaking. Standing water has recently accumulated inside the main dwelling."

Investigator’s Observation: Unverified. Upon inspection at this JSI there was insufficient evidence to determine verify for this item - I did not observe for an active water leak or standing water at time of inspection.

Governing Rule: N/A

Compliance Item: 3 - "Contracted for removal and replacement of existing roof on small apartment/casita outbuilding. Contractor did not remove existing roof from apartment/casita, but instead patched, repaired, or recoated. Unclear what repairs were performed and what materials were utilized."

Governing Rule: N/A

After receiving ROC’s Directive, Respondent did not begin to make repairs because Mr. Daugherty’s belief was that the parties would reach a global settlement related to the lien and Complainant’s ROC complaint.

On September 16, 2021, after learning of Complainant’s rejection of Respondent’s offer of settlement as set out in Complainant’s attorney’s September 15, 2021 email, Respondent emailed Complainant requesting access on September 17, 2021 to make the repairs that ROC had ordered Respondent to make.

Mr. Houston provided credible testimony that the repairs ROC ordered Respondent to make could have been completed in one day.

Complainant had computer issues and did not access Respondent’s September 16th email until September 18th, which was one day after ROC’s Directive expired.

On September 18, 2021, Complainant informed Respondent that he had no problem allowing Respondent to make repairs, but because Respondent had not contacted Complainant in the time allowed by ROC, Respondent did not have the right to make the repairs (i.e., Complainant would not allow Respondent access to make repairs).

ROC issued to Respondent a Citation dated September 22, 2021, through which ROC alleges that Respondent may have violated Ariz. Rev. Stat. sections 32-1154(A)(3), (A)(12) and (A)(22).

At the hearing, Respondent provided that it was willing to make all repairs that ROC ordered it to make, but Complainant was not willing to allow access.

Respondent acknowledged that it had not corrected the air conditioner’s fins as approved by Complainant’s insurer.

Respondent’s exhibits include a new form contract, but Respondent had not provided ROC with a copy of that form contract prior to the hearing.

Complainant testified that Respondent had not removed and replaced the insulation in areas of the house where drywall was damaged.

CONCLUSIONS OF LAW

Unless otherwise provided by law, a party asserting a claim, right, or entitlement bears the burden of proof; a party asserting an affirmative defense has the burden of establishing the affirmative defense. The standard of proof on all issues in this matter is that of a preponderance of the evidence. Ariz. Admin. Code § R2-19-119.

“At a hearing on an agency action to suspend, revoke, terminate or modify on its own initiative material conditions of a license or permit, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(2).

“At a hearing on an agency's imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion.” Ariz. Rev. Stat. § 41-1092.07(G)(3).

A preponderance of the evidence is:

The 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.

Black’s Law Dictionary 1373 (10th ed. 2014).

Statutes should be interpreted to provide a fair and sensible result. Gutierrez v. Industrial Commission of Arizona, 226 Ariz. 395, 249 P.3d 1095 (2011)(citation omitted); State v. McFall, 103 Ariz. 234, 238, 439 P.2d 805, 809 (1968) ("Courts will not place an absurd and unreasonable construction on statutes.").

“Statutes shall be liberally construed to effect their objects and to promote justice.” Ariz. Rev. Stat. § 1-211(B).

On application to the superior court, subpoenas are enforceable enforced in the manner provided by law for the service and enforcement of subpoenas in civil matters. See Ariz. Rev. Stat. § 41-1092.07(C).

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors. See Aesthetic Property Maintenance v. Capital Indem. Corp., 183 Ariz. 74, 900 P. 2d 1210 (1995).

The Administrative Law Judge may consider ROC’s administrative record. See Ariz. Admin. Code § R4-9-118.

Ariz. Rev. Stat. section 32-1154(A) provides that

The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions:

*****

3. Violation of any rule adopted by the registrar.

*****

12. Failure in any material respect to comply with this chapter.

*****

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. 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.

Ariz. Admin. Code section R49108(A) provides that “A contractor shall perform all work in a professional and workmanlike manner.”

Ariz. Rev. Stat. section 32-1158 provides a list of elements that must be included in any contract in an amount of more than $1,000 entered into between a contractor and the owner of a property to be improved.

The preponderance of the evidence shows that Respondent did not repair the air conditioner fins as required. This is a violation of Ariz. Admin. Code section R4-9-108(A), which is also a violation of Ariz. Rev. Stat. section 32-1154(A)(3).

It has not been proven that Respondent’s work on the drywall and related painting is in violation of the workmanship standards because it has not been proven that Respondent was required to perform that work after the parties entered the verbal change order resulting in Complainant receiving a $3000 credit in exchange for painting work being canceled.

It has not been proven by a preponderance of the evidence that Respondent’s failure to paint the gate is violation of the workmanship standards because it has not been proven that Respondent was required to perform that work after the parties entered the verbal change order resulting in Complainant receiving a $3000 credit in exchange for painting work being canceled.

The preponderance of the evidence shows that Respondent violated Ariz. Rev. Stat. section 32-1158 because its contract did not include the required elements, which is also a violation of section 32-1154(A)(12).

Although Respondent did not complete the corrective work that ROC ordered it to complete, Respondent’s failure to do so was justified because Respondent was acting on the good faith belief that the parties would settle the matter based on the parties’ ongoing settlement negotiations. Respondent’s failure to comply with ROC’s order to repair the drywall and gate was also justified because it has not been proven that Respondent was still obligated to perform this work after the parties entered a change order.

It has not been shown by the preponderance of the evidence that Respondent violated Ariz. Rev. Stat. section 32-1154(A)(22).

Ariz. Rev. Stat. subsection 32-1154(B)(3) provides that ROC “May temporarily suspend ... or permanently revoke any or all licenses issued under this chapter if the holder of the license ... commits any of the acts or omissions set forth in” subsection 32-1154(A).

In this case, no discipline is appropriate because Respondent is willing the make the repairs ROC ordered it to make even though Respondent did not agree that all those items were its responsibility, but Complainant is unwilling to allow Respondent access to do so, and there was no testimony showing that Respondent’s new form contract does not meet the statutory requirements.

RECOMMENDED ORDER

IT IS ORDERED that case number 2021-03525 is dismissed.

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 is forty days after the date of that certification.

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-137160-45720000Done this day, December 17, 2021.

/s/ Thomas Shedden

Thomas Shedden

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors

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-137160-45720000