ALJDEC decisions subject to certification as final

2022A-02913-RFA-LS-ROC-RH · Registrar of Contractors · 2025-04-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Anna Sepic,

COMPLAINANT,

v.

K L P Construction Inc.

License No. ROC 153386,

RESPONDENT.

No. 2022A-02913-RFA-LS-ROC-RH

ADMINISTRATIVE LAW

JUDGE DECISION

HEARING: March 27, 2025.

APPEARANCES: Assistant Attorney General Charles Hover appeared for the Registrar of Contractors. Gary Smith appeared for Complainant. Ken Plude appeared for Respondent.

ADMINISTRATIVE LAW JUDGE: Samuel Fox

EXHIBITS ADMITTED INTO EVIDENCE: Registrar’s Exhibits 1 through 8. Complainant’s Exhibits 1 through 54. Respondent’s Exhibit Packet.

_____________________________________________________________________

FINDINGS OF FACT

K L P Construction Inc. (Respondent) was the holder of License No. 153386 issued by the Arizona Registrar of Contractors (Registrar) on March 22, 2000.

On or about April 11, 2022, the Registrar received a Complaint against Respondent from Anna Sepic (Complainant), alleging poor work.

After an investigation a written directive was issued to correct the work. The Directive from the Registrar specified that Respondent must remedy by appropriate means Complaint Items 1, 2, 3, 5, 6, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 21, 22, 23, 24, 25, 26, 27, 29, 31, 33, 34, 43, and 44.

Although Respondent did not perform work during the Directive period, Respondent successfully remedied seven Complaint Items prior to the hearing, specifically 5, 10, 11, 18, 24, 26, and 44.

The Registrar issued a Citation against Respondent charging possible violations of Arizona Revised Statutes (A.R.S.) § 32-1154(A)(3), specifically Arizona Administrative Code (A.A.C.) R4-9-108(A), and A.R.S. § 32-1154(A)(22).

Respondent filed a timely answer to the Citation, and an administrative hearing was held. In her Decision, Administrative Law Judge Jenna Clark considered Respondent’s arguments and concluded that Complainant established Respondent had, in relevant part, violated A.R.S. § 32-1154(A)(3), specifically A.A.C. R4-9-108(A), and A.R.S. § 32-1154(A)(22) with respect to Complaint Items 1, 2, 3, 6, 9, 12, 13, 14, 15, 16, 17, 19, 20, 21, 22, 23, 25, 27, 31, 33, 34, and 43. The Administrative Law Judge recommended a two-day suspension of Respondent’s license.

On or about May 2, 2023, the Registrar issued its Final Decision, adopting the Administrative Law Judge’s Decision in full.

Complainant then filed a claim with the Residential Contractors’ Recovery Fund (the Fund) to recover the cost of completing or repairing the project. As part of the claim process, Complainant submitted a bid from Division Nine Contracting, Inc., which the Registrar accepted.

The Registrar issued a Notice of Administrative Award, finding that Complainant’s compensable actual damages were $30,000.00. Respondent requested a hearing. Complainant did not contest the amount of the administrative payout. The Registrar referred the matter to the Office of Administrative Hearings (OAH) for an evidentiary hearing.

A hearing was held on March 27, 2025.

Tedi Quezada testified for the Registrar. She testified that Complainant was eligible and followed all of the steps required to receive an award from the recovery fund. She testified in support of the documents and calculation provided in the exhibits. She testified in support of Complainant being entitled to a $30,000.00 award. She testified that because there was not a written contract, she had to rely on other available documents, including a spreadsheet that the parties developed together and Complainant’s checks. She testified that she stopped counting compensable bid amounts after Complainant’s recoverable amount exceeded $30,000.

Anna Sepic testified for Complainant. She agreed with the Registrar’s award.

Ken Plude testified for Respondent. Referring to a bid that was not used by the Registrar, he testified that the award included work that was outside of the Directive’s scope. He also testified that the original contract price was incorrect. He testified that because of change orders, the amount should have been higher. Mr. Plude did not provide documentary evidence to demonstrate change orders or higher amounts.

The bid accepted by the Registrar included items that were outside the scope of the Directive, such as the cabinetry. However, it also included amounts that were within the scope of the Directive, which were not counted by the Registrar. The uncounted costs exceeded the wrongfully included costs.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132.01(B) provides, in pertinent part, as follows:

An award from the residential contractors’ recovery fund may not exceed the actual damages suffered by the claimant as a direct result of a contractor’s violation. Actual damages:

1. May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.

2. Must be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.

Respondent bears the burden of proof to establish that the proposed payout from the Fund is incorrect by a preponderance of the evidence.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

If work is not completed to workmanship standard, it is reasonable for a bidding contractor to include removal of prior work. The bidding contractor is not obligated to accept the condition of existing work.

Respondent had an opportunity to correct the faulty work following the written directive from the Registrar and failed to do so.

The preponderance of the evidence established that the award provided by the Fund accurately reflected Complainants’ actual damages. Accordingly, Complainants are entitled to a payout from the Fund in the amount of $30,000.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, Complainants receive a payout from the Residential Contractors’ Recovery Fund in the amount of $30,000.

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, April 15, 2025.

/s/ Samuel Fox

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

Gary Michael Smith Esq,

Guidant Law Firm

[email redacted]

[email redacted]

Kent A. Lang, Esq.

Lang & Klain PC

[email redacted]

K L P Construction Inc.

[email redacted]

Charles Hover III

Assistant Attorney General

[email redacted]

By: OAH Staff