ALJDEC decisions subject to certification as final
2022A-01199-CHC-ROC · Registrar of Contractors · 2022-07-01
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Robert Church,
COMPLAINANT,
v.
Three Peaks Construction and Remodeling LLC,
ROC License No. 328321,
RESPONDENT.
No. 2022A-01199-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: June 21, 2022 at 1:00 PM.
APPEARANCES: Robert Church (“Complainant”) appeared on his own behalf with Evan Stegelmeier as a witness. Steve Philpott appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). No appearance(s) by or on behalf of Three Peaks Construction and Remodeling LLC (“Respondent”). Sherry Church observed.
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 31, 2020, the Registrar issued License No. 328321 General Residential B-3 Remodeling and Repair contracting to Respondent. The license was suspended on April 01, 2022, for failure to renew. Natalie Elizabeth Buehler is the Member on the license. Evan Parker Stegelmeier was also a Qualifying Party and Member on the license, but was formally granted disassociation by the Registrar on March 04, 2022, and June 07, 2022, from his respective positions. Respondent’s address of record for the license is 2417 W. 1st St. Flagstaff, AZ 86004. Respondent has an active $9,000.00 surety bond on the licensed issued by Western Surety Company effective February 05, 2020. There is no prior discipline noted for the license, save one open complaint which is presumably Complainant’s.
On February 11, 2022, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 328321 alleging abandonment and poor workmanship of their project. The Registrar designated it Complaint No. 2022-01199 and assigned to Steve Philpott (“Investigator Philpott”) for investigation.
On February 17, 2022, Investigator Philpott issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on March 07, 2022, at 10:00 a.m.
On March 07, 2022, Investigator Philpott 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 52 photographs of the project site. When he was finished, Investigator Philpott drafted his Inspection Notes. Ultimately, Investigator Philpott determined that there were a total of nineteen (19) complaint items contained within Complainant’s narrative complaint. Of those, Investigator Philpott substantiated 18 of 19 complaint items. Specifically, Investigator Philpott verified complaint items 1-14, and 16-19. Investigator Philpott concluded that Respondent had abandoned the parties’ deck demolition and installation project, and that the work Respondent had performed failed to meet the Registrar’s minimum workmanship standards.
On March 17, 2022, Investigator Philpott issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated a majority of Complainant’s workmanship allegations and abandonment allegation against Respondent. Respondent was put on notice that it had until 5:00 p.m. on April 04, 2022, 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).
On April 05, 2022, Investigator Philpott forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On April 13, 2022, 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 April 28, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.
On April 27, 2022, the Registrar received Respondent’s Answer. In pertinent parts, Ms. Buehler accused Mr. Stegelmeier of abandoning the project and Respondent, and letting his license lapse. Per Ms. Buehler, the only contract for the project was for the initial permit, and did not include a scope of work to be performed by Respondent. Ms. Buehler also alleged that she was not involved with the underlying project, and asserted that Mr. Stegelmeier had hired subcontractors to work on the project. Ms. Buehler argued that because Respondent’s license was inactive, and without a Qualifying Party, Respondent was unable to perform corrective work in compliance with the Registrar’s Directive.
On April 27, 2022, the Registrar received a reply to Ms. Buehler’s Answer from Mr. Stegelmeier. In pertinent parts, Mr. Stegelmeier noted that after Respondent had commenced work on the project, Complainant made a “substantial modification” request that required Respondent to “cease all work” while it “applied for new building permits and ordered additional materials.” Per Mr. Stegelmeier, the project’s framing passed inspection in December 2021, and all items save the railing were complete. Mr. Stegelmeier argued that Ms. Buehler failed to finish punch list items after his departure despite her promise to do so, and opined that “[a]ny responsibility for failure to complete the project after January 21, 2022, rests solely with [Respondent] and [Ms. Buehler].”
On April 29, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on June 21, 2022. Per the May 10, 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)(1)
Charge 2: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108)
Charge 3: A.R.S. § 32-1154(A)(22)
Hearing Evidence
Complainant testified on his own behalf, and called Investigator Philpott and Mr. Stegelmeier as witnesses. The Registrar’s agency file, including the Notice of Hearing, was admitted into the record as its own exhibit. The substantive evidence of record is as follows:
Complainant owns residential property located at 2355 N. Broken Circle Rd. Flagstaff, AZ 86004.
Respondent’s construction company was a partnership between Mr. Stegelmeier and Ms. Bueuhler, whereby Mr. Stegelmeier addressed the labor portion of the business and Ms. Bueuhler focused on the financial aspects.
Initially the partners earned hourly wages, but once Ms. Bueuhler agreed to “take over” the business in September 2021, she became salaried.
On or about May 18, 2021, Complainant and Respondent entered into an $83,368.60 for the demolition of Complainant’s existing deck, and installation of a replacement deck and side deck. Complainant paid $77,700.00 towards the project. The project commenced on October 04, 2021, and was stopped on January 20, 2022.
A short while after the project commenced, multiple Change Orders were executed to modify the parties’ original contract agreement to build a larger deck.
On or about June 30, 2021, an Application for Residential Building/Grading Permit was submitted for the project to the City of Flagstaff’s building department. Both Mr. Stegelmeier and Ms. Bueuhler were listed as the “General Contractor” for the project, and Ms. Bueuhler was also listed as the point of contact.
Shortly thereafter, the City of Flagstaff issued Permit No. BP-21-02072 to Respondent for Complainant’s project.
On August 16, 2021, Complainant’s homeowners association’s design committee approved the underlying project, with the specific requirement that it be completed by November 30, 2021.
On August 31, 2021, an inspector from the City of Flagstaff’s Building & Safety Department performed a substantive review of the proposed plan changes. Three (3) areas of concern were identified for Respondent to address. Per the notice, Respondent had less than 180 days to make the corrections and complete the project unless a good cause extension had been granted by the City.
In mid-December 2021, Mr. Stegelmeier advised Complainant that he was dissolving his partnership with Ms. Buehler, but that he would ensure the project’s completion.
In late-December 2021, Mr. Stegelmeier relocated to Idaho. Although Mr. Stegelmeier returned to Arizona in early-January 2022 to try and complete the project, Ms. Bueuhler refused to supply any trades to assist Mr. Stegelmeier. For that reason, and because additional materials which had been ordered to effectuate Complainant’s Change Orders had not arrived, Mr. Stegelmeier was unable to complete the project.
On January 21, 2022, Mr. Stegelmeier, Ms. Bueuhler, and Complainant met to discuss outstanding items for the project. A written list was compiled by the parties, and signed by Ms. Buehler as her acknowledgement that Respondent would complete the items and therefore complete the project.
After Mr. Stegelmeier left the site that day he had no further involvement with the project.
Respondent did not obtain another Qualifying Party after Mr. Stegelmeier’s departure.
On an unknown date, Mr. Stegelmeier filed paperwork with the Arizona Corporate Commission to disassociate with Respondent.
On March 18, 2022, Investigator Philpott provided Ms. Buehler with a copy of Ariz. Rev. Stat. § 32-1162.
On March 23, 2022, the City issued a Correction Notice for the project that required the stairs, landing, and railings to be finished. The Notice further warned that no further work was to be performed until the noted corrections had been completed, and that another City-led inspection needed to be performed.
On May 25, 2022, Western Surety Company issued an Award Letter to Complainant, which noted, in pertinent part, that it would issue a $9,000.00 settlement check to Complainant. Days later, after Complainant returned the bond company’s Release and Assignment, Complainant received the settlement funds.
Between late-January 2022, and March 31, 2022, Respondent did not perform any corrective or completive work on the project, nor did the parties enter into a financial settlement agreement during that time.
In closing, Complainant argued that the dissolution of Ms. Buehler’s and Mr. Stegelmeier’s partnership adversely impacted the completion of his project, and opined that the evidence of record sufficiently sustained his burden of proof. Complainant asked that he be granted access to the Registrar’s Recovery Fund so that he could receive financial assistance for the completion of his deck.
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 Notice of Hearing mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter. Because OAH and the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable by the United States Postal Service, Respondent is deemed to have received all correspondence regarding the matter as well.
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)(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. § 32-1162(B-C) provides, in pertinent part, that a person named on the license; including a licensee’s qualifying party, is responsible for any violation committed by the licensee during the period of time that person was named on the license.
The material facts in the case at bar are clear.
It is clear from the record that Complainant paid Respondent just over 93% on their contract. It is also clear that Respondent did not complete the project per the terms of their agreement, and that some of the work Respondent performed did not satisfy the minimum standards set for workmanship by the Registrar. It is further undisputed that Respondent failed to timely comply with the Registrar’s Directive.
Notably, the record also establishes that Respondent was present for Investigator Philpott’s jobsite inspection and received a copy of the Registrar’s Directive. Moreover, Ms. Buehler was explicitly advised by Investigator Philpott the day after the Directive was issued, that she too was required to address the corrective order. The license was not suspended by the Registrar until April 01, 2022, therefore, a number of actions could have been taken by Respondent to address the Directive until March 31, 2022. Moreover, Respondent could have entered into a financial settlement agreement, which would have rendered the Directive moot, on or before April 04, 2022.
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, neither Ms. Buehler nor Mr. Stegelmeier provided sufficient evidence to sustain Respondent’s burden. Ms. Buehler’s absence is a factor in aggravation, and Mr. Stegelmeier’s disassociation is not a valid defense for Respondent’s inaction. There is no evidence in the record that excuses or otherwise justifies Respondent’s lack of performance on this project.
Because Ms. Buehler and Mr. Stegelmeier were listed on ROC License No. 328321 when Respondent’s contract with Complainant was signed, both of them are liable for Respondent’s conduct, or lack thereof, on the underlying project.
Therefore, because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108, 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 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 Three Peaks Construction and Remodeling LLC, ROC License No. 328321, be revoked based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) 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, July 01, 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