ALJDEC decisions subject to certification as final

2021A-05712-CHC-ROC · Registrar of Contractors · 2022-08-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Brandon J Schwartz,

COMPLAINANT,

v.

Crosby and Company LLC,

ROC License No. 332160,

RESPONDENT.

No. 2021A-05712-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 07, 2022 and August 08, 2022.

APPEARANCES: Brandon Schwartz (“Complainant”) appeared on his own behalf. Andrew Wenker, Esq. appeared on behalf of Crosby and Company LLC (“Respondent”) with Riley Crosby and Gustavo Ancira as witnesses. Chris Fultz appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).

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 March 02, 2021, the Registrar issued License No. 332160 General Residential B-3 Remodeling and Repair contracting to Respondent. The license is active, in good standing, and renewed through February 28, 2023. Riley Chase Crosby is the Qualifying Party and Member on the license. Respondent’s address of record for the license is 18241 W. Louise Dr. Surprise, AZ 85387. Respondent has an active $9,000.00 surety bond on the license issued by Western Surety Company effective February 03, 2021. There is no prior discipline noted for the license, save one open complaint which is presumed to be Complainant’s.

On November 05, 2021, the Registrar received a 16-item complaint from Complainant against Respondent’s License No. 332160 alleging poor workmanship of their project. The Registrar designated it Complaint No. 2021-05712 and assigned to Chris Fultz (“Investigator Fultz”) for investigation.

On November 16, 2021, Investigator Fultz issued a 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 Fultz conducted a review of the contract and change orders executed between the parties, as well as Complainant’s proof of payments, and inspected the work that had been performed on the project to date. He also took 37 photographs of the project site. Respondent was not present. When he was finished, Investigator Fultz drafted his Jobsite Inspection Notes. Ultimately, Investigator Fultz determined that there were a total of eleven (11) individual complaint items contained within Complainant’s original complaint. Of those, Investigator Fultz substantiated seven (7) total complaint items. Specifically, Investigator Fultz verified complaint items 1-3, 5, 7, and 10-11. Investigator Fultz concluded that the work Respondent had performed failed to meet the Registrar’s minimum workmanship standards.

On December 21, 2021, Investigator Fultz issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated a majority of Complainant’s workmanship allegations against Respondent. Respondent was put on notice that it had until 5:00 p.m. on January 21, 2022, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A), 32-1154(A)(22), and 32-1154(E).

On an unknown date the Registrar issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that Investigator Fultz would conduct an inspection of the project on February 23, 2022, at 2:00 p.m.

On February 23, 2022, Investigator Fultz inspected the corrective work that had been performed on the project and took 38 photographs. When he was finished, Investigator Fultz drafted his Compliance Jobsite Inspection Notes. Ultimately, Investigator Fultz determined that Respondent had satisfactorily remediated complaint items 1-3 and 10, but that Respondent had not performed corrective work necessary to remediate complaint item 7. Additionally, Investigator Fultz determined that because another contractor performed work on complaint items 5 and 11, Respondent was not responsible for the correction, completion, and/or workmanship of those items.

On March 11, 2022, the Registrar issued a Citation to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(22). Respondent was given until March 28, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On March 15, 2022, the Registrar issued an Order Quashing Citation and Complaint because the Registrar determined that the March 11, 2022, Citation had erroneously been issued prior to competition of Investigator Fultz’s investigation of the matter, and that further investigation was necessary.

On March 15, 2022, Investigator Fultz forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On March 18, 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); specifically 32-1158, and 32-1154(A)(22). Respondent was given until April 04, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On April 04, 2022, the Registrar received Respondent’s Answer, whereby Respondent generally denied violating the enumerated charges listed in the Citation.

On April 08, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on June 07, 2022. Per the May 26, 2022, 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(a)

Charge 2: A.R.S. § 32-1154(A)(12)

Charge 3: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf, called Investigator Fultz as a witness, and submitted exhibits 12, 37, and 47 into the record. Respondent called Riley Crosby as a witness and submitted exhibits 5-6, 8-10, 18, 24, 34, 37, and 40-42 into the record. The Notice of Hearing and the Registrar’s agency file were admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant owns residential property located at 10826 E. Palm Ridge Dr. Scottsdale, AZ 85255.

On March 19, 2021, the parties entered into a $236,267.60 residential renovation construction contract for the aforementioned property. Complainant paid Respondent $218,155.51 towards the contract prior to filing his complaint with the Registrar.

Work on the project commenced April 14, 2021, and stopped September 13, 2021.

On July 30, 2021, a City of Scottsdale building permit was issued to Complainant for the project.

On September 14, 2021, Complainant formally terminated the parties’ construction contract for reasons including, but not limited to, Complainant’s dissatisfaction with Respondent’s workmanship, communication, professionalism, and absenteeism. Complainant was also displeased regarding financial disputes involving change orders and materials.

On October 18, 2021, the parties participated in the Registrar’s Building Confidence Program, Case No. 2021-04632, in an attempt to resolve their dispute in a less formal manner.

So too did the parties participate in an Informal Settlement Conference on April 14, 2022, for the same or similar purpose.

After the underlying Directive had been issued, Respondent alleged that he had been denied access on a number of occasions. During that same time, Complainant submitted a number of inquiries to Investigator Fultz’s supervisor, which ultimately resulted in the Registrar granting Respondent two (2) Directive compliance deadline extensions through February 11, 2022.

During Investigator Fultz’s Compliance Jobsite Inspection he discovered a “minor leak at the generator” for the master bathroom. Notwithstanding the issue, Investigator Fultz determined that the compliance item had been satisfactorily remediated by Respondent, and suggested that Complainant permit Respondent to make the repair in lieu of filing a new complaint for the item. Complainant, however, refused to permit Respondent to perform corrective work.

During the original Jobsite Inspection, Investigator Fultz had substantiated a complaint item regarding a “significant bow” in hallway wall. At that time, Respondent had been advised to “repair the baseboard in the area.” During the subsequent Compliance Jobsite Inspection, Investigator Fultz confirmed that Respondent had performed corrective work to the baseboard area, but that it failed to remedy the bowing. Investigator Fultz testified that he had poorly communicated the issue to Respondent, and he believed that is why Respondent had not properly addressed it.

During his later testimony, Mr. Crosby corroborated Investigator Fultz’s belief and opined that the bowing of the hallway wall had been caused by the improperly framing of Complainant’s home. Per the contract, the only framing Respondent performed on the project was in Complainant’s kitchen.

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(a) requires that “[a]ll work shall be performed in a professional and workmanlike manner.”

Ariz. Rev. Stat. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Failure in any material respect to comply with this chapter.”

Ariz. Rev. Stat. § 32-1158(A) provides that a contract between a contractor and property owner amounting to more than $1,000.00 must contain the following information in writing:

The name of the contractor and the contractor's business address and license number.

The name and mailing address of the owner and the jobsite address or legal description.

The date the parties entered into the contract.

The estimated date of completion of all work to be performed under the contract.

A description of the work to be performed under the contract.

The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.

The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.

The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

That the property owner has the right to file a written complaint with the Registrar for an alleged violation of Ariz. Rev. Stat § 32-1154(A). The contract shall contain the Registrar's telephone number, website address, and shall state that complaints must be made within the applicable time period as set forth in Ariz. Rev. Stat § 32-1155(A). The information must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor.

(Emphasis added.)

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.

It is clear from the record that on March 19, 2021, the parties entered into a $236,267.60 residential renovation construction contract and that Complainant paid Respondent $218,155.51 towards the contract prior to terminating Respondent on September 14, 2021. It is also clear from the record that the contract failed to include information necessary to satisfy Ariz. Rev. Stat. §§ 32-1158(A)(4) and (9). The record further establishes that while the Registrar issued a Directive in this matter, by the time of the underlying compliance inspection only complaint item 7, the bow in Complainant’s hallway wall, remained unrepaired.

Therefore, the only issues in dispute are whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s Directive and remediate complaint item 7, and whether Respondent cured the deficiencies in its construction contract template. Respondent bears the burden to establish all affirmative defenses by a preponderance of the evidence. Here, the record reflects that Respondent’s failure to remediate the defective work was due, in whole or large part, to the advisement of Investigator Fultz identifying the baseboard as the source of the bow and/or area that needed to be addressed in order to rectify the issue. Additionally, the record reflects that Respondent was never issued a Warning Letter by the Registrar or afforded an opportunity to submit its corrected construction contract template for review and/or approval by the Registrar. Thus, Respondent’s conduct is justified by the evidence, or otherwise excused as innocuous or immaterial.

Therefore, because Complainant has not established Respondent’s 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) by a preponderance of the evidence, Complainant has failed to establish 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 Complaint No. 2021-05712 be closed.

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, August 18, 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