ALJDEC decisions subject to certification as final

2021A-05577-CHC-ROC · Registrar of Contractors · 2022-03-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Henry Sipp,

COMPLAINANT,

v.

Kadosh Concrete LLC

ROC License No. 326154,

RESPONDENT.

No. 2021A-05577-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 04, 2022 at 1:00 PM.

APPEARANCES: David Williams, Esq. appeared on behalf of Henry Sipp (“Complainant”) with Complainant as a witness. Juan Gradias appeared on behalf of Kadosh Concrete 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 Arizona Registrar of Contractors (“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 November 11, 2019, the Registrar issued ROC License No. 326154 General Commercial A Engineering contracting license to Respondent. The license is currently active and renewed through September 30, 2023. Gaetano Falcone is the Qualifying Party/Officer on the license, and Juan Gardias is listed as a Manager on the license. Respondent’s address of record for the license is 5402 E. 5th St. Tucson, AZ 85711-2334. Respondent has an active $15,000.00 surety bond on the licensed issued by RLI Insurance Company effective September 10, 2019. There is no prior discipline noted for the license, save one open complaint which is presumably related to this matter.

On or about March 26, 2021, Complainant and Respondent entered into a $6,140.00 contract agreement to demolish and remove existing concrete, and pour a new 18’ x 28’ slab at Complainant’s residence.

On March 27, 2021, work on the project commenced. On April 02, 2021, work on the project stopped.

Complainant tendered $6,540.00 to Respondent for the project; including costs associated with an additional 70 square feet of concrete requested by Complainant.

On November 01, 2021, the Registrar received a 5-item complaint from Complainant against Respondent’s License No. 326154 alleging poor workmanship of their project. The Registrar designated it Complaint No. 2021-05577 and assigned to Manny Bermudez (“Investigator Bermudez”) for investigation.

On November 23, 2021, Investigator Bermudez issued a Rescheduled Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on December 06, 2021, at 10:00 a.m.

On December 06, 2021, Investigator Bermudez conducted a review of the contract executed between the parties and inspected the work that had been performed on the project to date. He also took 35 photographs of the project site. When he was finished, Investigator Bermudez drafted his Inspection Notes. Ultimately, Investigator Bermudez substantiated complaint items 1-2. Specifically, Investigator Bermudez determined that the patio had not been graded properly, causing flooding, and that the patio had not been sealed. Investigator Bermudez concluded that Respondent’s concrete pour failed to meet the Registrar’s minimum workmanship standards.

On December 07, 2021, Investigator Bermudez issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s workmanship allegations against Respondent. Respondent was put on notice that it had until 5:00 p.m. on December 30, 2021, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-32-1154(A) and 32-1154(E).

On January 03, 2022, the Registrar issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(16) for knowingly working outside the scope of its license.

On January 03, 2022, Investigator Bermudez escalated the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On January 07, 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, 32-1154(A)(16), and 32-1154(A)(22). Respondent was given until January 22, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On January 18, 2022, the Registrar received Respondent’s Answer. In pertinent parts, Mr. Gradias admitted that he was unaware Respondent was unable to perform residential work and that he did perform the work at issue at Complainant’s residence. Mr. Gradias noted that after the Registrar’s Directive was issued, he was unable to perform corrective work or hire an appropriately licensed subcontractor to perform remediations, and that Complainant had refused his offer to refund payment as a means settle the matter. Respondent also provided the Registrar with its updated mailing address.

The Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on March 04, 2021. Per the February 01, 2021, Notice of Hearing on Contested Case (“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)(16)

Charge 3: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf and called Investigator Bermudez as a witness. Juan Gradias testified on behalf of Respondent. The Registrar’s agency file and Notice of Hearing were admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant owns residential property located at 6142 E. 15th St. Tucson, AZ 85711.

Although Respondent’s bid proposal displayed its ROC License No., it did not state what type of license Respondent possessed.

At the conclusion of the jobsite inspection, Investigator Bermudez determined that Respondent’s concrete pour was nearly level and did not allow for draining. A water test showed ponding. Investigator Bermudez also determined that the concrete had not been sealed.

Because of the type of license Respondent possessed at the time the Registrar’s Directive was issued, he was unable to perform corrective work or hire an appropriately licensed subcontractor to perform remediations on the project. The only possible way to resolve the dispute, prior to hearing was for the parties to come to a mutually exclusive financial agreement and notify the Registrar.

After Complainant refused Mr. Gardias’ December 08, 2021, settlement offer, he countered with a $12,000.00 settlement offer that Mr. Gardias declined. Mr. Gardias counter offered trench the patio and build a ramp for Complainant, but that offer was also declined. The parties were unable to come to an agreement prior to hearing.

Respondent declined to provide a closing argument.

In closing, Complainant opined that there was no dispute as to whether Respondent violated Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(16), and 32-1154(A)(22), and argued that Respondent’s license should be suspended for three (3) days and assessed a civil penalty by the Registrar a result.

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)(16) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.”

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.”

Ariz. Rev. Stat. § 32-1154(E) provides, in pertinent parts, that the Registrar may “[i]mpose a civil penalty not to exceed five hundred dollars on a contractor for each violation. The failure by the licensee to pay any civil penalty imposed results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty.” It also provides that “[n]o future license may be issued to an entity consisting of a person who is associated with the contractor, unless payment of any outstanding civil penalty is tendered.”

The material facts in the case at bar are clear.

It is clear that the parties had a concrete-related contract, and that Complainant paid Respondent in full. It is also clear that the work Respondent performed did not satisfy the Registrar’s minimum standards, and, as a result, Respondent was required to timely perform corrective work and remediate workmanship deficiencies on the project identified in the Registrar’s Directive. It is undisputed that the only possible way for Respondent to comply with the Registrar’s Directive was for the parties to come to a mutually exclusive financial agreement. It is clear from the record that did not happen. As a result, Respondent failed to timely comply with the Registrar’s Directive by December 30, 2021.

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. Mr. Gardias’ arguments regarding his legal conundrum, while credible, do not excuses or otherwise justify Respondent’s inaction and/or lack of performance on this project. Moreover, Mr. Gardias’ assertion that he did not know the duties and restrictions of Respondent’s license is not credible. As a Manager on ROC License No. 326154, it is Mr. Gardias’ responsibility to know all facets of the license as a licensee.

Therefore, because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 32-1154(A)(16), and 32-1154(A)(22), Complainant has also established cause for the Registrar to take disciplinary action against 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 Kadosh Concrete LLC, ROC License No. 326154, be suspended for five (5) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(16), and 32-1154(A)(22).

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $100.00 in certified funds as a civil penalty.

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before thirty (30) days following the effective date of the Registrar’s Final Order, the Registrar shall revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in Ariz. Rev. Stat. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty.

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 24, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

Registrar of Contractors