ALJDEC decisions subject to certification as final

2021A-03723-CHC-ROC · Registrar of Contractors · 2022-03-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

William August Csencsits,

COMPLAINANT,

v.

Modcor LLC

ROC License No. 326568,

RESPONDENT.

No. 2021A-03723-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 16, 2022 at 1:30 PM.

APPEARANCES: William Csencsits (“Complainant”) appeared on his own behalf. Chris Fultz appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). No appearance(s) by or on behalf of Modcor LLC (“Respondent”).

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 October 18, 2019, the Registrar issued License No. 326568 General Dual KB-1 Residential and Commercial contracting license to Respondent. On February 28, 2022, the license was suspended by the Registrar for non-renewal. Christopher Anthony Losada is the Qualifying Party/Member on this license. Timothy Hurst is also listed on the license as a Manager. Respondent’s address of record for the license is 9823 W. Teakwood Dr. Sun City, AZ 85351. On an unknown date, Respondent had the $14,000.00 surety bond on the license cancelled. There is one prior disciplinary case noted for the license, and one open complaint which is presumed to be related to this matter.

Complainant owns residential property located at 25227 N. Ranch Gate Rd. Scottsdale, AZ 85255.

On or about June 03, 2020, Complainant and Respondent entered into a $99,000.00 contract, of which Complainant paid $95,972.00, for the renovation and reconstruction of an attached casita. Respondent obtained a building permit from the City of Scottsdale. On June 07, 2020, work on the project commenced. On April 09, 2021, work on the project stopped. The work was not completed by Respondent.

On August 02, 2021, the Registrar received a 7-item complaint from Complainant against Respondent’s License No. 326568 alleging poor workmanship and abandonment of their project. Attached to the complaint were copies of the parties contract, correspondence between the parties, and Complainant’s proof of payment to Respondent. The Registrar designated it Complaint No. 2021-03723 and assigned to Chris Fultz (“Investigator Fultz”) for investigation.

On August 17, 2021, Investigator Fultz issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on September 24, 2021, at 10:00 a.m.

On September 28, 2021, Investigator Fultz conducted a review of the contract executed between the parties and inspected the work that had been performed on the project to date. Respondent was not present. He also took 14 photographs of the project site. When he was finished, Investigator Fultz drafted his Inspection Notes. Ultimately, Investigator Fultz substantiated 5 of Complainant’s 7 complaint items. Specifically, Investigator Fultz determined that complaint items 2-4 and 6-7 either failed to meet the Registrar’s minimum workmanship standards and/or required Respondent to perform corrective/completion work to remediate the identified deficiencies. Investigator Fultz also noted that Mr. Losada had previously said that the trade performing the work on the underlying project was not his employee, but that allegation had been rebutted by emails communication exchanged between Mr. Losada and Complainant.

On October 04, 2021, Investigator Fultz issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated some of Complainant’s workmanship allegations against Respondent. Respondent was put on notice that it had until 5:00 p.m. on October 20, 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).

Because no corrective work was performed on the underlying project, and the parties failed to settle their dispute, on October 26, 2021, Investigator Fultz forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On October 27, 2021, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108, and 32-1154(A)(22). Respondent was given until November 11, 2021, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On November 01, 2021, the Registrar received Respondent’s Answer. In pertinent parts, Mr. Losada’s niece, Bree Losada, noted that “Christopher Losada passed away on July 28, 2021.” A copy of Mr. Losada’s Certificate of Death was attached. Ms. Losada also argued that the complaint against Respondent should be dismissed because all correspondence regarding the project was with Michael Lafata and all checks were made payable to 5 Diamond LLC Building & Remodeling LLC (“5 Diamond”); both of whom, per Ms. Losada, are not affiliated with Respondent.

On November 12, 2021, the Registrar issued an Order Denying Request to Dismiss to the parties.

On November 12, 2021, the Registrar also issued a Warning Letter to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(9) and 32-1154(A)(13) for knowingly aiding and abetting Michael Lafata, an unlicensed contractor, and for entering into an agreement that required appropriate licensure with an unlicensed party.

On November 22, 2021, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 11, 2021. Per the December 06, 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)(1)

Charge 2: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108

Charge 3: A.R.S. § 32-1154(A)(9)(a)

Charge 4: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf and called Investigator Fultz as a witness. The Registrar’s agency file was admitted into the record as its own exhibit. The substantive evidence of record is as follows:

During an unrelated complaint the Registrar received against Respondent in 2018 for Complaint No. 2019-05351, Mr. Losada confirmed with the assigned investigator that Mr. Lafata was his employee. At that time, Respondent was issued a Warning Letter for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(9) and 32-1154(A)(13).

On June 01, 2020, Respondent provided a bid and scope of work to Complainant for the underlying project. Michael Lafata signed for Respondent on June 03, 2020. That same day Mr. Lafata provided Complainant with a progress payment schedule.

All of Complainant’s checks were made out to 5 Diamond.

On June 09, 2021, the parties participated in the Registrar’s Building Confidence Program with minimal success.

Complainant believed that Mr. Losada was Mr. Lafata’s Project Superintendent. In April 2021, Mr. Losada met with Complainant to discuss the project. Although Respondent denied being affiliated with Mr. Lafata, Mr. Losada agreed to attempt to remediate the 5 Diamond’s workmanship issues on the project.

As of the date of the hearing, Complainant had not performed any corrective work on substantiated complaint items 2-4 and/or 6-7.

Complainant declined to provide a closing argument.

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)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

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)(9)(a) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Attempting to evade this chapter by aiding and/or abetting ...an unlicensed person.”

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 not in dispute.

It is undisputed that the parties had a contractual residential remodel and construction agreement, Complainant paid Respondent 97% on the contract, Respondent employed the use of an unlicensed trade on the project; after being expressly warned not to by the Registrar, and Respondent did not complete the project. It is also undisputed that Mr. Lafata acted as Respondent’s agent and with authority throughout the course of his dealings with Complainant, to Mr. Losada’s full knowledge. It is further undisputed that a result of 5 Diamond’s poor workmanship and abandonment, the Registrar issued a Directive that required compliance by October 20, 2021, and that Respondent failed to remediate any of the 5 outstanding complaint items substantiated by the Registrar.

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. Because Respondent failed to appear, the record is devoid of mitigating evidence to refute Complainant’s evidence and justify subpar workmanship, abandonment, and corrective inaction in this matter.

Therefore, as Complainant has established violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3), 32-1154(A)(9)(a) 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 regarding 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 Modcor LLC, ROC License No. 326568, be suspended for four (4) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3), 32-1154(A)(9)(a) 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, March 07, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors