ALJDEC decisions subject to certification as final

2021A-05107-RFA-LS-ROC · Registrar of Contractors · 2026-01-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

JoAnne Packus,

COMPLAINANT,

v.

US Veterans Construction LLC

ROC License No. 318020,

RESPONDENT.

No. 2021A-05107-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 13, 2026, at 9:00 AM.

APPEARANCES: Assistant Attorney General Mona Baskin, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Erika Hoskin as a witness. JoAnne Packus (“Complainant”) appeared on her own behalf. William Scott Neal appeared on behalf of US Veterans Construction LLC (“Respondent”).

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Appealable Agency Action (“Notice of Action”), Registrar Exhibits 1-10, July 05, 2025, Minute Entry - Granting Continuance, and December 18, 2025, Amended Continued Hearing Order were admitted into the evidentiary record.

_____________________________________________________________________

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 Arizona Administrative Code (“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 February 22, 2018, the Registrar issued License No. 318020 to Respondent for General KB-1 Dual Building contracting. Although the license was renewed through February 29, 2024, on February 12, 2024, the license became inactive. Elias Barajaz. is listed as the Chief Financial Officer on the license. Rex Lyman Parry is listed as the Qualifying Party and Member on the license. William Scott Neal is listed as the Member on the license. Respondent’s address of record for the license is 612 W. honeysuckle Dr. Chandler, Arizona 85248. The license reflects discipline by the Registrar on one (1) prior disciplinary occasion, which is presumed to be related to this matter.

On or about October 09, 2021, the Registrar received an 18-item complaint from Complainant against Respondent’s License No. 318020 alleging poor workmanship of a $21,250.00 residential renovation project. The Registrar designated it Complaint No. 2021-05107 and assigned to Jason Simpson (“Investigator Simpson”) for investigation.

On October 02, 2021, Investigator Simpson conducted a review of the contract executed between the parties, took nine (9) photographs, and inspected the work that had been performed on the project to date. Respondent was present. When he was finished, Investigator Simpson drafted his Jobsite Inspection Notes. Ultimately, Investigator Simpson substantiated nine (9) complaint items based on his firsthand observations. Specifically, Investigator Simpson concluded that the work Respondent performed on complaint items 2-3, 5, 9, 11-14, and 18 failed to meet the Registrar’s minimum workmanship standards.

On or about October 02, 2021, Investigator Simpson issued eight (8) Warning Letters to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), 32-1154(A)(3)(b); Ariz. Admin. Code R4-9-108(b), 32-1154(A)(9), 32-1154(A)(12); 32-1158(A-C), 32-1158.01, and 32-1124(B), 32-1154(A)(14), 32-1154(A)(16), and 32-1154(A)(17) for Respondent’s failure to obtain a building permit prior to commencing construction, poor workmanship, failure to include all nine (9) required minimum elements in his contracts, including his contract with Complainant, lack of a swimming pool/spa contract, failure to properly display license, failure to have the appropriate name listed on the license, knowingly contracting beyond the scope of the license, performing construction on a suspended or otherwise inactive license, and aiding and abetting and unlicensed person. Correspondence was not returned as undeliverable to Respondent.

On or about October 02, 2021, Investigator Simpson also issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158(A)

On November 19, 2021, Investigator Simpson issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated some of Complainant’s allegations against Respondent. The Directive put Respondent on notice that the licensee had until 5:00 p.m. on December 08, 2021, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-1154(A), 32-1154(A)(22), and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

On December 03, 2021, Investigator Simpson issued an Addendum Jobsite Inspection Notice (“Addendum JSI Notice”) to the parties to advise that an onsite review of the project would be conducted December 16, 2021, to address a single item addendum complaint submitted by Complainant. Correspondence was not returned as undeliverable to Respondent.

On December 16, 2021, Investigator Simpson inspected the addendum item and took ten (10) photographs. Ultimately, Investigator Simpson substantiated the workmanship item based on his firsthand observations.

On January 12, 2022, Investigator Simpson issued an Addendum Written Directive from the Registrar (“Addendum Directive”) to Respondent because he substantiated Complainant’s addendum allegation against Respondent. The Addendum Directive put Respondent on notice that the licensee had until 5:00 p.m. January 31, 2022, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-1154(A), 32-1154(A)(22), and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

On January 26, 2022, Investigator Simpson issued a second Addendum Jobsite Inspection Notice (“2nd Addendum JSI Notice”) to the parties to advise that an onsite review of the project would be conducted February 16, 2022, to address an 8-item addendum complaint submitted by Complainant. Correspondence was not returned as undeliverable to Respondent.

On February 16, 2022, Investigator Simpson inspected the additional addendum items. Ultimately, Investigator Simpson substantiated five (5) of the 2nd Addendum items based on his firsthand observations. Specifically, Investigator Simpson concluded that the work Respondent performed on 2nd Addendum complaint items 20-21 and 23-25 failed to meet the Registrar’s minimum workmanship standards.

On March 09, 2022, Investigator Simpson issued a second Addendum Written Directive from the Registrar (“2nd Addendum Directive”) to Respondent because he substantiated some of Complainant’s 2nd Addendum complaint items against Respondent. The 2nd Addendum Directive put Respondent on notice that the licensee had until 5:00 p.m. April 04, 2022, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-1154(A), 32-1154(A)(22), and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

On April 18, 2022, Investigator Simpson conducted a compliance jobsite inspection of the project. Respondent was present. In total, Investigator Simpson determined that eight (8) complaint items had not been satisfactorily corrected or otherwise completed, and that Respondent had failed to submit correct construction templates to the Registrar.

On an unknown date, Investigator Simpson forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On May 03, 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(a), 32-1154(A)(12); 32-1158, and 32-1154(A)(22). Respondent was given until May 18, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On September 20, 2022, a hearing was held before the Office of Administrative Hearings (“OAH”), an independent state agency, to determine whether grounds existed for the Registrar to take disciplinary action against Respondent’s construction licensed based on violation alleged in the Citation. Respondent failed to appear.

On October 04, 2022, an ALJ Decision was issued to the Registrar’s Director that recommended a three (3) day suspension of License No. 318020 and imposition of a $500.00 civil penalty for violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(12), and 32-1154(A)(22).

On October 25, 2022, the Registrar issued a Final Administrative Decision and Order (“Final Order”) accepting and adopting the ALJ Decision, effective December 04, 2022. Respondent did not appeal the Final Order.

On August 09, 2024, Complainant submitted a $19,954.24 petition for payment from the Residential Contractors’ Recovery Fund (“Fund”) to the Registrar, pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G). Attached, were copies of Complainant’s Warranty Deed, bond denial letter dated August 27, 2024, the underlying contract with Respondent and proof of payments, and two (2) repair bids.

On May 30, 2025, the Registrar issued a Notice of Administrative Award (“Notice of Award”) to the parties which held that Complainant was to be awarded a $15,942.92 payout from the Fund.

On June 18, 2025, the Registrar received a timely appeal from Respondent contesting Complainant’s award amount.

On June 20, 2025, the Registrar referred 2021A-05107-RFA-LS-ROC to OAH for an independent evidentiary hearing. Per the Notice of Action sent to the parties on July 09, 2025, the issues for hearing are to determine whether Complainant’s award from the Fund was properly determined pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.

On January 13, 2026, an administrative evidentiary hearing in the above-captioned matter took place before OAH.

Hearing Evidence

At the hearing, the Registrar called Erika Hoskin as a witness. Complainant testified on her own behalf. William Scott Neal testified on behalf of Respondent. The substantive evidence is as follows:

Complainant owns single family residential property located at 2848 E. Isabella Ave. Mesa, Arizona 85204.

On or about May 04, 2021, the parties entered into a $21,250.00 remodeling contract.

Work on the project commenced on or about May 07, 2021, and stopped on or about September 16, 2021.

Complainant tendered a total of $19,625.00 to Respondent towards the project.

Respondent did not perform corrective work on eight (8) substantiated complaint items or enter into a settlement agreement with Complainant regarding said items. Respondent did not request an extension of the Directive, Addendum Directive, and/or 2nd Addendum Directive prior to the expiration of their respective compliance periods. At no time between November 19, 2021, and April 04, 2022, did Respondent allege a denial of access to the project site.

Additional Evidence

Respondent testified that it appealed the underlying Notice of Award because the materials identified in the bid accepted by the Registrar differed and constituted an “upgrade” from materials on its original project with Complainant.

Complainant testified that due to the significant amount of time that had passed since Respondent performed work on her project, availability and costs of materials had changed. Per Complainant, she relied on the expertise of licensees willing to provide bids to select which materials, and the amounts thereof, to remediate her project.

Ms. Hoskin is a Legal Assistant II for the Registrar. Ms. Hoskin made the determination that Complainant was eligible to access the Fund and also qualified for an administrative payout from the Fund because she had suffered “actual damages.” Specifically, Ms. Hoskin determined the following:

Complainant own and occupies the residential property at issue.

Respondent’s license was active and in good standing with the Registrar when the underlying contract was entered into, when Respondent performed the underlying work in question, as well as when Respondent first received payment from Complainant for the project.

Complainant did not pay the contract in full. There was a $1,625.00 unpaid balance remaining.

As a result of Complaint No. 2021-05107 being filed with the Registrar, ROC License No. 318020 was suspended for a period of three (3) days and assessed a civil penalty by the Registrar.

Though she applied, Complainant did not received a bond payout for the underlying project from Respondent’s insurance company.

Although Ms. Hoskin verified with Investigator Simpson that the selected bid was in line with all Directives, but that the inclusion of associated fees were unreasonable so they were removed.

Ultimately, Ms. Hoskin calculated Complainant’s compensable damages by subtracting monies paid on the original contract price to obtain the unpaid balance, and then deducted that amount from the cost of the selected bid less fees. Thus, Ms. Hoskin deduced that Complainant’s actual damages totaled $15,942.92.

Ms. Hoskin testified that the purpose of the Fund was to make homeowners aggrieved by licensees “whole,” and that Ariz. Rev. Stat. § 32-1131 et seq. was specifically limited to the cost of actual construction work, labor and materials.

Closing Arguments

In closing, the Registrar opined that Respondent failed to sustain its burden of proof and that its appeal should be denied. Ultimately, the Registrar opined that it had satisfied its fiduciary duty to comply with the pertinent sections of the law and protect the purpose of the Fund wherein Complainant’s award was lawfully issued.

Complainant declined to provide a closing argument.

In closing, Respondent argued that Complainant’s award from the Fund should be reversed or modified to reflect like-for-like materials.

CONCLUSIONS OF LAW

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

The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.

Respondent bears the burden of establishing by a preponderance of the evidence that the Registrar’s Recover Fund claim award was incorrect and/or improperly issued. Both Complainant and the Registrar bear the burden to establish factors in mitigation 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.”

Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet specific eligibility criteria. An individual is eligible for an award from the residential contractors’ recovery fund if they both: (1) own residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance, and (2) actually occupy or intend to occupy the residential real property as the individual’s primary residence. Additionally, the applicant must have contracted with a residential contractor who was appropriately licensed either at the time of contract execution, when the first payment on the project was made, or when the work on the project first began.

Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been 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.”

Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Recovery Fund is $30,000.00.

Statutes should be interpreted to provide a fair and sensible result. Statutes shall be liberally construed to affect their objects and to promote justice. In interpreting a statute, “[w]e first consider the language of the statute and, if it is unclear, turn to other factors, including ‘the statute’s context, subject matter, historical background, effects, consequences, spirit, and purpose.” “In applying a statute its words are to be given their ordinary meaning unless the legislature has offered its own definition of the words or it appears from the context that a special meaning was intended.”

The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result.

In the case at bar, however, a detailed factual analysis is not necessary because Respondent failed to present any compelling evidence at hearing. The underlying property is owned by Complainant as a primary residence, Complainant paid most of the contract price, and Respondent’s license was active and in good standing with the Registrar during all relevant times. Most notably, ROC License No. 318020 was disciplined by the Registrar in 2021A-05107-CHC-ROC for its poor workmanship and failure to address the Directives, effective December 04, 2022, making Complainant’s August 09, 2024, Fund claim submission timely.

The only outstanding consideration is that of Respondent’s materials argument, which also fails because Respondent did not present any evidence regarding availability or costs relating to materials used on the original project. Neither the Registrar nor Complainant was required to perform any such investigation in order for the selected bid to be deemed reasonable under the circumstances.

Therefore, the undersigned Administrative Law Judge must conclude that Complainant was properly received an administrative payout from the Fund.

Thusly, Respondent’s appeal must be denied.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar affirm the Fund’s May 30, 2025, Notice of Award.

IT IS FURTHER RECOMMENDED that the Registrar dismiss Respondent’s appeal, with prejudice.

NOTICE

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.

Done this day, January 22, 2026.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Tom Cole, Director

c/o Erika Hoskin, Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

[email redacted]

Mona Baskin, Esq., Assistant Attorney General

Office of the Attorney General

2005 N. Central Ave.

Phoenix, AZ 85004

[email redacted]

[email redacted]

JoAnne Packus, Complainant

2848 E. Isabella Ave.

Mesa, AZ 85204

[email redacted]

US Veterans Construction LLC, Respondent

c/o Scott Neal, Agent

612 W. Honeysuckle Dr.

Chandler, AZ 85248

[email redacted]

By: OAH Staff