ALJDEC decisions subject to certification as final

2022A-03926-CHC-ROC · Registrar of Contractors · 2022-09-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Joseph Shukert,

COMPLAINANT,

v.

Hudson Construction AZ LLC

ROC License No. 322268,

RESPONDENT.

No. 2022A-03926-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 16, 2022 at 1:00 PM.

APPEARANCES: Joseph Shukert (“Complainant”) appeared on his own behalf. Wes Ellington appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). No appearance(s) by or on behalf of Respondent.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

_____________________________________________________________________

Having heard the evidence and testimony and having considered the record in this matter, the undersigned Administrative Law Judge hereby makes the following Findings of Fact and Conclusions of Law and issues the following 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, for ROC License No. 322268, as reflected on the Registrar’s public website. On October 10, 2018, the Registrar issued License No. 322268 for general dual KB-2 residential and small commercial contracting to Respondent. Respondent’s address of record for the license is PO Box 15083 Scottsdale, AZ 85267. Nolan Evan Hudson is listed on the license as the Qualifying Party, Member, and Signer. Amy Hudson is also listed on the license as an Owner. The license record also reflects that Respondent’s license was revoked in August 05, 2022. The license was disciplined on six (6) prior occasions, and there are currently five (5) open complaints against the license; one of which is presumed to be related to this matter. There is an active $14,000.00 surety bond for the license issued through Merchants Bonding Company, effective November 18, 2019.

On or about May 20, 2022, the Registrar received a brief narrative complaint filed by Complainant abandonment on a roof replacement project. Specifically, Complainant alleged that Respondent received payment for the work, but never started performance. The Registrar designated it Complaint No. 2022-03926 and assigned to Wes Ellington (“Investigator Ellington”) for investigation.

On May 25, 2022, Investigator Ellington issued a Jobsite Inspection Notification letter to the parties, advising that an onsite review would be conducted at the project site by an investigator on June 16, 2022, at 1:00 p.m.

On May 31, 2022, Investigator Ellington issued a Notice of Rescheduled Jobsite Inspection letter to the parties, advising that an onsite review would be conducted at the project site by an investigator on June 27, 2022, at 10:00 a.m.

On June 27, 2022, Investigator Ellington performed his jobsite inspection. Respondent did not participate. Investigator Ellington reviewed the agreement between the parties, inspected the project site, and took four (4) photographs. When he was finished, Investigator Ellington drafted Jobsite Inspection Notes. Investigator Ellington concluded that after a storm in mid-July 2021, Respondent contacted Complainant regarding the damage to his roof. The same date that he was contact, Complainant signed an agreement with Respondent to turn over monies received from his homeowner’s insurance company to Respondent, and in turn Respondent agreed to replace Complainant’s roof. Investigator Ellington substantiated Complainant’s abandonment allegation against Respondent, as Complainant paid for the project in full and Respondent never commenced work on the project.

On June 30, 2022, Investigator Ellington escalated Complaint No. 2022-03926 to the Registrar’s legal department with the issuance of a Citation Recommendation.

On July 01, 2022, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. § 32-1154(A)(1). Respondent was given until July 18, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154 and 32-1155.

On July 15, 2022, the Registrar received Respondent’s Answer which noted, in pertinent parts, as follows:

Regretfully, due to the extreme increase in materials and labor, we have found it impossible to continue with roofing. Like many small businesses, the problems caused by Covid and rapidly escalating material costs, has created a situation which forces us to declare bankruptcy. We have been upfront and honest with the insurance companies and made them aware of our dilemma. We will vigorously defend any accusations of fraud. Never was our intent to do anything but help this homeowner.

(All errors in original.)

On July 18, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on September 16, 2022. Per the August 08, 2022, Notice of Hearing the issues to be determined are whether the Registrar has cause to discipline Respondent’s license based on the following charge:

Charge 1: A.R.S. § 32-1154(A)(1)

Hearing Evidence

Complainant testified on his own behalf, called Investigator Ellington as a witness, and submitted Exhibits 1-2 into the record. The Notice of Hearing and 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 5425 E. Diamond Cir. Mesa, AZ 85206.

On or about August 06, 2021, Respondent contacted Complainant to offer roof replacement services after a storm ravaged the area. Complainant accepted Respondent’s offer, and tendered a $5,584.66 check to Respondent to cover the cost of the parties’ agreement.

Although work on the project was to commence shortly thereafter, Respondent alleged that due to “labor shortages” and “supply-chain issues” related to the global COVID-19 pandemic, Respondent was unable to start Complainant’s project.

On February 10, 2022, Respondent contacted Complainant to inform him that materials for his project would be delivered by March 01, 2022. The materials, however, were never delivered.

Although Respondent advised Investigator Ellington that Complainant would be refunded prior to the jobsite inspection, Respondent never issued a refund to Complainant.

On June 27, 2022, Respondent informed Investigator Ellington that Complainant’s insurance company had been contacted and convinced to issue an additional check to the Complainant for the project. Respondent opined that the additional amount should be enough to finish the job. After Investigator Ellington explained the Registrar’s directive process, Respondent stated that Complainant would need to “turn over” his insurance company’s additional check to Respondent, or their supplier, in order for Respondent to complete the project.

Although Respondent later advised Investigator Ellington that Respondent “[A]re likely going to have to declare bankruptcy,” no documentation was every provided to the Registrar to establish that Respondent commenced bankruptcy proceedings in court.

Complainant declined to provide a closing argument.

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, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

In the case at bar, Complainant has sustained his burden of proof.

It is clear from the record that the parties had a $5,584.66 roof replacement contract, of which Complainant paid the amount in full, and Respondent never commenced the project or ordered the materials necessary to complete the work.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to complete Complainant’s project per contract. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent did not sustain its burden. There is no evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project. Moreover, Respondent’s failure to appear and license revocation are both factors in aggravation.

Therefore, because Complainant has established Respondent’s violation of Ariz. Rev. Stat. § 32-1154(A)(1), 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 regarding 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 Hudson Construction AZ, LLC, ROC License No. 322268, be revoked.

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, September 19, 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