ALJDEC - Licensing

2022A-02493-RFA-LS-ROC · Registrar of Contractors · 2023-03-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Codi McCalla,

COMPLAINANT,

v.

Arizona Pristine Roofing LLC,

ROC License No. 332702,

RESPONDENT.

No. 2022A-02493-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 21, 2023 at 9:00 AM.

APPEARANCES: Codi McCalla (“Complainant”) appeared on her own behalf. Marshall Hunt, Esq. appeared on behalf of Arizona Pristina Roofing LLC (“Respondent”) with Christopher Muzio, and George Alper as witnesses. Assistant Attorney General Seth Hargraves, Esq appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Gail Matthews as a witness. Wesley Cox, Jazlyn Muzio, and Sati McCalla 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 22, 2021, the Registrar issued License No. 332702 Specialty Dual CR-42 Roofing contracting to Respondent. The license is active, in good standing, and renewed through March 31, 2023. Jazlyn Nicole Muzio is the Qualifying Party and Member on the license. Christopher A. Muzio is also listed as a Member for the license. Respondent’s address of record for the license is 20976 E. Raven Dr. Queen Creek, AZ 85142. Respondent has an active $6,750.00 surety bond on the license issued by RLI Insurance Company effective February 24, 2021. There is one prior disciplinary event noted for the license, which is presumed to be related to this matter.

On March 29, 2022, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 332702 alleging poor workmanship of their project. The Registrar designated it Complaint No. 2022-02493 and assigned to Chris Fultz (“Investigator Fultz”) for investigation.

On April 06, 2022, Investigator Fultz issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on April 20, 2022, at 10:00 a.m.

On April 20, 2022, 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. When he was finished, Investigator Fultz drafted his Jobsite Inspection Notes. Ultimately, Investigator Fultz determined that there were a total of fourteen (14) individual complaint items contained within Complainant’s original complaint. Of those, Investigator Fultz substantiated seven (8) total complaint items. Specifically, Investigator Fultz verified complaint items 1, 3-4, 7-8, 10 and 13-14. Investigator Fultz concluded that the work Respondent had performed failed to meet the Registrar’s minimum workmanship standards.

On April 28, 2022, Investigator Fultz issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated a number of Complainant’s workmanship allegations against Respondent. Respondent was put on notice that it had until 5:00 p.m. on June 01, 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 June 07, 2022, Investigator Fultz forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On June 10, 2022, the Registrar issued a Citation to Respondent for an alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until June 25, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

The Registrar received a timely Answer from Respondent.

On June 13, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 10, 2022. Per the June 27, 2022, Notice of Hearing the issues to be determined were whether the Registrar had 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)(22)

On August 10, 2022, an administrative evidentiary hearing took place at OAH.

On September 22, 2022, the Registrar issued a Final Administrative Decision and Order to the parties whereby Respondent was held to be in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). As such, the Registrar suspended Respondent’s license for two (2) business days.

On or about January 03, 2023, the Registrar received Complainant’s petition for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G), in the amount of $21,995.00. Attached were proof of payment Complainant made Respondent on the project, the parties’ original contract and an invoice with a change order issued to Complainant by Respondent, a bond denial letter from Respondent’s insurance company, and 2 repair bids.

On January 18, 2023, the Registrar issued a Notice of Claim for Administrative Award to the parties which held Complainant was awarded $13,095.00 from the Fund.

On or about January 23, 2023, the Registrar received an appeal letter from Respondent contesting both Complainant’s eligibility to access the Fund as well as Complainant’s award amount from the Fund.

On January 27, 2021, the Registrar again referred the matter to the Office of Administrative Hearings for an independent evidentiary hearing. Per the Notice of Hearing on Appealable Agency Action sent to the parties on February 08, 2023, the issues for hearing are to determine whether Complainant is legally eligible for a payout from the Fund, and if so, whether Complainant’s award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.

On March 21, 2023, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Gail Matthews as a witness and submitted Exhibits 1-7. Complainant testified on their own behalf and submitted Exhibit 9. Respondent called Christopher Muzio and George Alper as witnesses, and submitted Exhibit 3. The Notice of Hearing was also admitted into the record. The substantive evidence is as follows:

On or about February 06, 2017, Francis Jackson Porter conveyed 28000 N. 59th Pl. Scottsdale, AZ 85266 to the Porter Living Trust, a revocable living trust.

On October 25, 2018, the Porter Living Trust declared Francis J. Porter and Complainant as Trustees of the trust, and specifically named Complainant as a Successor Trustee in the event of the Grantor’s death.

On April 24, 2021, Francis J. Porter, Grantor of the Porter Living Trust, passed away. Complainant subsequently took possession of the property, and has since maintained it as her primary residence.

On or about March 02, 2022, the parties entered into a $15,200.00 residential roofing construction contract for the aforementioned property.

Complainant paid Respondent $7,600.00 towards the contract prior to filing her complaint with the Registrar.

On June 10, 2022, Respondent wrote the Registrar to advise that it misunderstood the Directive, and had admitted that no steps were taken to perform corrective work during the compliance period.

On November 01, 2022, the Registrar’s Final Administrative Decision and Order (“Final Order”) became effective, which held Respondent in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22).

Ms. Matthews, a Legal Assistant II for the Registrar, was assigned to review Complainant’s petition to the Fund. Ms. Matthews made the determination that Complainant was eligible for a payout from the Fund because she satisfied all statutory requirements for an administrative payout.

To determine the appropriate amount of the administrative award, Ms. Matthews verified the original $15,200.00 contract amount and terms between the parties, the $1,300.00 change order for wood and tile replacement, and the $7,600.00 paid on the contract by Complainant. As a result, a $7,600.00 deduction was made because of the equivalent unpaid balance on the contract. Next, Ms. Matthews confirmed that Complainant filed against Respondent’s bond. Ms. Matthews also reviewed Complainant’s 2 repair bids and opted to accept the second bid from Lyons Roofing (“Lyons”) because it was from an appropriately licensed contractor, encompassed remediations identified in the Directive, and was the least expensive bid submitted. Additionally, Ms. Matthews was able to confirm with Investigator Fultz that Lyons bid was neither excessive in cost(s) nor inclusive of items outside the scope of the Directive. Specifically, Investigator Fultz offered, “[Respondent] did a full roof and didn’t do the installation right. A full roof repair meets what would need to be done.”

Notably, Kevin Keith, Project Manager for Lyons, noted as follows on the bid:

After reviewing the R.O.C. [sic] corrective work order related to bring roof up to code and per manufactuters specifications it is necessary to do a complete R&R on tile roof.”

(All errors in original.)

Ultimately, Ms. Matthews calculated Complainant’s damages by deducting the unpaid contract balance from Complainant’s costs plus bids, resulting in a $13,095.00 administrative payout from the Fund. Ms. Matthews testified that she found Complainant eligible to access the payout because, as a Successor Trustee of the Porter Living Trust, Complainant resided on the property at issue.

Additional Evidence

Mr. Muzio testified that neither he nor his wife knew Mr. Alper, or his business Native Builders LLC, but later admitted post-impeachment that Mrs. Muzio had been in Mr. Alper’s employ for over five (5) years. Mr. Muzio also testified that he had hired Mr. Alper’s company to perform work on jobs Respondent had been hired for, but later recanted post-impeachment and qualified that he had merely referred clients to Native Builders LLC. Though Mr. Muzio denied personally hiring Mr. Alper or Native Builders LLC, Mr. Muzio testified that Native Builders LLC was the only contracting company Respondent sought to obtain a quote from regarding the remediation of the underlying project.

Mr. Alper testified that he was a certified roofing inspector. Per Mr. Alper, notwithstanding the state and federal holiday, on November 11, 2022, he issued a remediation quote to Respondent at Mrs. Muzio’s request, though he admittedly only relied on the Registrar’s Directive and undisclosed photographs provided by Respondent, and had not inspected Respondent’s workmanship beforehand. Mr. Alper testified that though he was “not specific about the methodology of each line item” in his quote, absent terms were implied in what was provided.

Closing Arguments

In closing, the Registrar argued that its administrative award should be affirmed, as the record established that (a) Respondent performed below minimum workmanship standards and the work had yet to be repaired, (b) the Lyons bid was within scope to correct Respondent’s deficient work, and (c) Complainant was legally eligible to access the Fund because she was the trust property owner. The Registrar also opined that Respondent’s quote was unreliable as it was from a “family friend,” and that most if not all of Mr. Muzio’s testimony need be disregarded due to a lack of credibility.

Complainant declined to provide a closing argument.

In closing, Respondent opined that Complainant lacked grounds to access the Fund as a trustee, and that the Registrar erred in calculating Complainant’s administrative award because it “unjustly enriched” her by exceeding her actual damages. Respondent argued that the requisite repairs were “cosmetic” and “aesthetic” in nature, and did not warrant the removal of Respondent’s work and installation of a new roof. As such, Respondent ask that the Registrar’s award to Complainant be reversed.

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 Fund’s payout amount was incorrect and/or improperly issued. The Registrar bears 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.

An owner who occupies or intends to occupy a residence, and who is a Trustor, Trustee, and Beneficiary of a revocable trust that owns the property, meets the statutory owner-occupant requirement of Ariz. Rev. Stat. § 32-1131.

Ariz. Rev. Stat. § 32-1132(A) allows persons “injured by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter” to recover a payout from the Fund.

Ariz. Rev. Stat. § 32-1132.01(B) provides that an award from the Fund may not exceed the actual damages suffered by a claimant as a direct result of a contractor’s violation, and may not exceed an amount necessary to complete or repair a residential structure.

Ariz. Rev. Stat. § 32-1154(B)(2) requires the Registrar to investigate “the written complaint of any owner . . . that is a party to a construction contract or a person who suffers a material loss or injury as a result of a contractor's failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards . . . .” (Emphases added.) The statute also requires the Registrar to investigate written complaints received from persons who claim injury “as a result of a contractor's failure to perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards . . . .”

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.”

Statutes shall be liberally construed to affect their objects and to promote justice.

Statutes should be interpreted to provide a fair and sensible result. 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.”

Thus, a Recovery Fund applicant must have filed a Workmanship complaint with the Registrar and occupy (or intend to occupy) the home as a residence when the contract with the residential contractor was entered into or when a claim resulting from a violation of Ariz. Rev. Stat. § 32-1154 accrued, to qualify as a “person injured” under Ariz. Rev. Stat. § 32-1131(3).

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 credible evidence at hearing. Mr. Muzio’s multiple impeachments rendered his testimony unreliable, and Mr. Alper’s testimony was insufficient to overcome the Registrar’s more substantive and persuasive evidence.

Respondent irrelevantly argued that the Lyons bid was higher than one Mr. Alper provided, and also opined, without merit, that Mr. Muzio could complete/remediate the project for less than Lyons bid. Notably, there is no statutory prevision or regulation that required Complainant’s remediation bid to be within a certain amount, nor is there any industry standard adopted by law that would require the Registrar to hold Complainant to such a requirement. More compelling evidence in the record specifically rejects this contention whereby Investigator Fultz confirmed that Lyons bid was not excessive in cost, in the aggregate or in part(s).

Here, what the record reflects is that the Registrar soundly established Complainant’s eligibility and how her administrative award payout amount was properly calculated at $13,095.00. Ms. Matthews credibly testified that she diligently reviewed all pertinent documentation, consulted, and made careful calculations to reach a final figure. Because Respondent offered no credible evidence to rebut Ms. Matthews’ testimony, the undersigned Administrative Law Judge must conclude that Complainant was properly deemed eligible to access the Fund and awarded a $13,095.00 payout therefrom.

As such, Respondent failed to sustain its burden of proof in this matter.

Therefore, Respondent’s appeal must be denied.

RECOMMENDED ORDER

Based on the foregoing,

it is recommended that Respondent’s appeal be denied.

IT IS FURTHER RECOMMENDED that the Registrar affirm the $13,095.00 payout from the Fund as outlined in the Notice of Claim for Administrative Award, as issued on January 18, 2023.

Pursuant to Ariz. Rev. Stat. § 41-1092.08(I), the licensee may accept the Administrative Law Judge Decision by advising the Office of Administrative Hearings in writing not more than ten (10) days after receiving the decision. If the licensee accepts the Administrative Law Judge Decision, the decision shall be certified as the final decision by the Office of Administrative Hearings.

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, March 23, 2023.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Martín Quezada, Director

c/o Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Seth Hargraves, Esq., Assistant Attorney General

Office of the Attorney General

2005 N. Central Ave.

Phoenix, AZ 85004

[email redacted]

Marshall R. Hunt, Esq.

Davis Miles McGuire Gardner PLLC, Counsel for Respondent

40 E. Rio Salado Pkwy, Ste. 425

Tempe, AZ 85281

[email redacted]

Codi McCalla, Complainant

28000 N. 59th Pl.

Scottsdale, AZ 85266

[email redacted]

By: OAH Staff