ALJDEC - Licensing

2022A-06096-CHC-ROC · Registrar of Contractors · 2023-04-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Timothy Robert Henggeler,

COMPLAINANT,

v.

BlackHawk Concrete LLC

ROC License No. 305328,

RESPONDENT

No. 2022A-06096-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 22, 2023 at 9:00 AM.

APPEARANCES: Carol Henggeler appeared on behalf of Timothy Henggeler (“Complainant”) with Patrick Haywood and Gavin Pehl as witnesses. James Brennan appeared on behalf of BlackHawk Concrete LLC (“Respondent”). Chris Allison appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Complainant 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 June 10, 2016, the Registrar issued License No. 305328 Specialty Dual R-9 Concrete contracting license to Respondent. The license is currently active and renewed through June 30, 2024. James Andrew Brennan is listed as Qualifying Party/Manager on the license. Respondent’s address of record for the license is 1616 W. Iron Springs Rd. Prescott, AZ 86305. Respondent has an active $6,750.00 surety bond on the licensed, effective May 01, 2020. There is no prior discipline noted for the license. Currently, there is 1 open complaint against the license, which is presumed to be related to this matter.

On or about July 25, 2022, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 305328 alleging poor workmanship on their new build foundation project. The Registrar designated it Complaint No. 2022-06096 and assigned to Chris Allison (“Investigator Allison”) for investigation.

On July 26, 2022, Investigator Allison issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on August 12, 2022, at 11:00 a.m.

On August 02, 2022, Investigator Allison notified the parties that the jobsite inspection was reset for 11:00 a.m. on August 19, 2022, due to a scheduling conflict.

On August 16, 2022, the Registrar received an addendum complaint from Complainant that included 2 additional complaint items.

On an unknown date the jobsite inspection was reset for 11:00 a.m. on September 06, 2022.

On September 06, 2022, Investigator Allison inspected the work that had been performed on the project to date. He also took 5 photographs of the project site. When he was finished, Investigator Allison drafted his Inspection Notes. Along with the 2 addendum complaint items, Investigator Allison derived 7 complaint items from Complaint No. 2022-06096. Of the 9 total complaint items, Investigator Allison substantiated 1 complaint item. Specifically, Investigator Allison determined that complaint item 9, regarding columns, failed to meet the Registrar’s minimum workmanship standards, as they were “offset” and required Respondent to complete and/or perform corrective work to remediate the identified deficiencies.

On September 12, 2022, Investigator Allison issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated complaint item 9 against Respondent. Respondent was put on notice that it had until 5:00 p.m. on September 27, 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 Investigator Allison received a request from Complainant to perform another jobsite inspection, as surveyors had remarked footing locations/stem in the underlying area of concern at the project site. As a result, on an unknown date a secondary jobsite inspection was scheduled for October 17, 2022, at 11:00 a.m.

On October 17, 2022, re-inspected complaint item 9. He also took 4 photographs of the project site. In his Revised Inspection Notes Investigator Allison noted as follows, in pertinent parts:

While there is no way to verify if these marks are the same as what was originally there[, i]t does show that he wall is out of square and does not match approved plans. It appear [sic] that a straight line was ran from on [sic] corner to the opposite. When the plans clearly show the two corners were supposed to be offset a little. Whether the original survey points were marked correctly or not it is the responsibility of [Respondent] to verify prior to constructing the foundation. By constructing the foundation, [Respondent] accepted the marks as accurate and assumed responsibility for the location of the foundation.

(All errors in original.)

On October 28, 2022, Investigator Allison issued a Revised Written Directive from the Registrar (“Revised Directive”) to Respondent that substantiated complaint item 9. While the Revised Directive did not expressly instruct Respondent to also correct complaint item 6, per the original Directive, it was not included in the list of complaint items not requiring correction in the Revised Directive. Respondent was put on notice that it had until 5:00 p.m. on November 15, 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 November 29, 2022, Investigator Allison forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22).

On November 30, 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), and 32-1154(A)(22). Respondent was given until December 15, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On December 12, 2022, the Registrar received Respondent’s Answer. Overall, Respondent argued that the Registrar’s Directive contradicted Investigator Allison’s initial inspection, as he had not substantiated complaint item 6. To that end, Respondent further complained that Complainant’s post-inspection survey was unverified, and thus it was unreliable for Investigator to use its findings as a predicate to substantiate complaint item 6. In pertinent part, Respondent also argued the following:

I was very diligent in explaining to the General contractor that due to the extreme slope on the lot, conventional methods that are used to square foundation walls would be impossible on this house. And that all corners would be built off of the engineers’ points. And that I could not be responsible for this.

On December 14, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on February 07, 2023. Per the November 22, 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)(22)

Hearing Evidence

Complainant testified on his own behalf, called Patrick Haywood, Gavin Pehl, and Investigator Allison as witnesses, and submitted Exhibits 1A-25A into the record. James Brennan testified on behalf of Respondent. 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:

On an unknown date Timothy and Carol Henggeler (“Henggelers”) purchased vacant residential property located at 1440 Hollowside Way Prescott, AZ 86305 for the purpose of erecting a primary residential structure.

On an unknown date, the Henggelers entered into a new build construction agreement with Pehl Contracting, Inc., with Gary Pehl as their project manager.

On July 13, 2021, Respondent entered into a $97,998.00 subcontract agreement with the Henggelers footings and stem walls, garage slabs, and an elevator pit. The agreement also included an advisement regarding potential impact to costs related to a “soils report.” Complainant paid $94,942.19 towards the contract.

Construction on the residential foundations began on or about July 26, 2021, and concluded on or about June 28, 2022.

Respondent performed in sections and wholly relied on the survey to perform the totality of its work on the project. At no time did Respondent advise Mr. Pehl that the surveyor’s pins were believed to be incorrect.

On November 14, 2022, the Registrar’s Revised Directive compliance deadline was extended to November 27, 2022.

Respondent did not address the Registrar’s Revised Directive because the only option was to settle with Complainant, as corrective work could not be performed, and Respondent and Complainant could not come to terms amenable to both parties.

Additional Evidence

It was nearly impossible for the surveyor to layout the home due to the steep elevation. The surveyor returned to the property a total of 11 times throughout the project.

Mr. Pehl was notified at framing that the stem wall was out of square.

An engineer was engaged to determine what remediations, if any, were feasible to perform corrects necessary to square the wall. Ultimately, it was determined that the wall was beyond repair.

It could not be determined whether Respondent followed the surveyor’s incorrect pinnings, or whether Respondent deviated from the surveyor’s correct pinnings.

Closing Arguments

In closing, Mr. Brennan argued that because of the difficulty of the project, Respondent relied on the survey provided to perform its portion of the work. Mr. Brennan further argued that the record was devoid of evidence tending to suggest Respondent deviated from the provided survey, or that Complainant’s secondary survey was an identical match to the original survey. Respondent abjectly denied substandard work performance on the underlying project, and asked the Tribunal to forgo recommending discipline against its license to the Registrar.

In closing, Complainant opined that due to Mr. Brennan’s failure to double-check the provided survey and/or disregard the identified pinnings, Respondent’s resulting workmanship failed to meet the Registrar’s minimum workmanship standards. Complainant argued that the underlying situation was exacerbated because Respondent did not double-check his work as he went along, and opined that had Mr. Brennan done so, Complainant could have been advised earlier in the process. As such, Complainant asked the Tribunal to recommend discipline against Respondent’s license to the Registrar.

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 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. § 32-1154(E) holds, in pertinent parts, that the Registrar may impose a civil penalty not to exceed five hundred dollars on a contractor for each violation. The failure by the licensee to pay any civil penalty imposed results in the automatic revocation of the license thirty days after the effective date of the order providing for the civil penalty. It also holds that no future license may be issued to an entity consisting of a person who is associated with the contractor, unless payment of any outstanding civil penalty is tendered.

The crux of the matter is whether the surveyor failed to place points per plan, which Respondent blindly followed, or whether Respondent failed to follow the surveyor’s points that followed the plans.

The material facts at bar are clear.

It is well established that a contractor adopts the surface area of the location where there work is performed. It is the responsibility of the contractor to ensure that the surface area is sound prior to commencing work, or alternatively, to knowingly accept a surface area in whatever state it is in. In simpler terms, a contractor must ensure that a project site is ready for construction prior to the commencement of work, make it ready prior to the commencement of work, or accept responsibility for any issues that arise during the course of construction if the contractor fails to act beforehand.

Nothing in the record reflects that Respondent intentionally or negligently disregarded plans provided by Complainant, or that Respondent intentionally or negligently failed to follow the provided survey. Nor does any evidence of record establish that the surveyor’s initial pinnings, the ones that Respondent used an relied on to perform most if not all of the work at issue, were incorrect.

What the record does reflect, however, is that Respondent did not verify the surveyor’s points prior to commencing work, or that Respondent alerted Complainant at any time throughout the concrete work on the project that it was out of square. While Mr. Brennan testified that he followed the survey, he also conceded that he did not check for squareness though he had opportunities to do so because he performed work in sections. Mr. Brennan’s reliance on the survey was reasonable, but not absolute. Respondent maintained a duty at all time to perform work in compliance with the Registrar’s minimum workmanship standards, and did not do so in this instance. The facts establish that Respondent’s wall is out of square and does not match approved plans. Respondent did not verify the survey pins prior to construction, and in doing so, “accepted the marks as accurate and assumed responsibility for the location of the foundation.” As such, a violation of Ariz. Rev. Stat. § 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a) has been established by a preponderance of the evidence.

Therefore, the only remaining issue to address is whether Respondent raised a sufficient justification or excuse for failing to timely address the Registrar’s Revised Directive. This is an affirmative defense Respondent bears the burden to establish. Both parties and Investigator Allison agreed that the deficiency at issue could not be repaired, and that the only means by which the Revised Directive could effectively be addressed was via settlement. Respondent’s unwillingness or inability to settle this dispute with Complainant is not an affirmative defense. The evidentiary record in this matter reflects that a portion of Respondent‘s work on the underlying project was poor, that a Revised Directive was issued as a result, and that Respondent failed to comply with the Registrar’s Revised Directive without any affirmative defense(s) for doing so. Thus, Respondent did not sustain its burden of proof in this matter. A violation of Ariz. Rev. Stat. §32-1154(A)(22) exists.

Because Complainant established violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22) by a preponderance of the evidence, and since the outstanding substantiated items are issue are not de minimis, Complainant has also established grounds for the Registrar to take appropriate disciplinary action against Respondent’s contracting license under Ariz. Rev. Stat. § 32-1154(B)(3). It is the opinion of this Tribunal, however, that an assessment of a civil penalty against Respondent would not be appropriate in this matter.

Complainant may petition the Registrar’s Recovery Fund for financial recompense regarding this matter, as the Tribunal has no jurisdiction to award a refund of the underlying amount contracted between the parties.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that on the effective date of the Final Order in this matter Respondent BlackHawk Concrete LLC, ROC License No. 305328, be suspended for two (2) days based on its violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(3) and (A)(22).

NOTICE

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 is forty days after the date of that certification.

Done this day, April 04, 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]

Timothy R. Henggeler, Complainant

c/o Carol Henggeler, Complainant Advocate

P.O. Box 4141

Prescott, AZ 86302

[email redacted]

BlackHawk Concrete LLC, Respondent

c/o James Brennan, Agent

1616 W. Iron Spring Rd.

Prescott, AZ 86305

[email redacted]

By: OAH Staff