ALJDEC - Licensing

2022A-06182-RFA-LS-ROC · Registrar of Contractors · 2023-07-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Neil Owen Brillhart,

COMPLAINANT,

v.

Blue Shark Pools, LLC

ROC License No. 327942,

RESPONDENT.

No. 2022A-06182-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 10, 2023 at 9:00 AM.

APPEARANCES: Assistant Attorney General Mona Baskin, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Kyle Nelson as a witness. Neil Brillhart (“Complainant”) appeared on his own behalf. Eddie Perez appeared on own behalf Blue Shark Pools, LLC (“Respondent”). Betty Perez observed.

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. 327942, as reflected on the Registrar’s public website. On March 02, 2020, the Registrar issued ROC License No. 327942 for B-5 General Residential Swimming Pool contracting to Respondent. Eddie Perez is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 10027 W. Preston Ln. Tolleson, AZ 85353. The license has an active $9,000.00 surety bond issued RLI Insurance Company, effective February 24, 2020.

On July 26, 2022, the Registrar received a narrative complaint filed by Complainant alleging poor work performance. The Registrar designated it Complaint No. 2022-06182 and assigned John Peru (“Investigator Peru”) for investigation.

On August 23, 2022, Registrar investigator Peru inspected the work that had been done on the project to date and took 6 photographs of the project. When he was finished, Investigator Peru drafted Jobsite Inspection Notes. Ultimately, because Complainant admitted that he had addressed all but two outstanding complaint items prior to the jobsite inspection, Investigator Peru inspected the two (2) outstanding and distinct complaint items from Complaint No. 2022-06182. As a result, Investigator Peru determined that both complaint items 1 and 2 constituted poor or incomplete work, and failed to meet the Registrar’s minimum workmanship standards.

On August 29, 2022, Investigator Peru issued a Directive from the Registrar (“Directive”) to Respondent because he substantiated all of Complainant’s allegations that the work Respondent had done on the project failed to meet minimum workmanship standards. Respondent was put on notice that it had until 5:00 p.m. on September 13, 2023, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(22), and 32-1154(E).

On September 21, 2022, Investigator Peru escalated Complaint No. 2022-06182 to the Registrar’s legal department with the issuance of a Citation Recommendation.

On September 27, 2022, the Registrar issued a Citation and Complaint (“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 October 12, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On October 12, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for adjudication. Per the Notice of Hearing on Contested Case the issue(s) to be determined were whether the Registrar had cause to discipline Respondent’s license based on the following charges:

Charge 1: A violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3).

Charge 2: A violation of A.R.S. § 32-1154(A)(22) (“Failure to take appropriate corrective action to comply with this chapter or with 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.”).

On December 09, 2022, an administrative evidentiary hearing took place at OAH before ALJ Stone.

On December 27, 2022, ALJ Stone issued a Recommended Decision suggesting that the Director of the Registrar suspend Respondent’s contracting license for three (3) days, and that the Director also impose a $200.00 civil penalty against License No. 327942.

On January 11, 2023, the Registrar issued a Final Administrative Decision and Order to the parties which affirmed the Administrative Law Judge’s Recommended Decision. 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 3 days and imposed a $200.00 civil penalty against Respondent’s contracting license per Ariz. Rev. Stat. § 32-1154. On February 20, 2023, the Final Administrative Decision and Order became effective.

On March 20, 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), for $8,680.00. Attached were copies of Complainant’s Deed of Trust, bond denial letter, Complainant’s construction contract with Respondent and proof of payment, and 2 remediation bids from licensed contractors.

On April 24, 2023, the Registrar issued a Notice of Administrative Award to the parties which held Complainant was eligible for a payout from the Fund, and awarded $8,180.00 for actual damages sustained under Ariz. Rev. Stat. § 32-1132.01(B).

On May 05, 2023, the Registrar received a timely appeal request for hearing from Respondent.

On May 12, 2023, 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 (“Notice of Hearing”) sent to the parties on May 24, 2023, the issue(s) for hearing are to determine if the Registrar’s Fund determination was properly made pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01, based on the evidence.

On July 10, 2023, an administrative evidentiary hearing took place at OAH.

Hearing Evidence

At the hearing, the Registrar called Kyle Nelson as a witness and submitted Exhibits 1-7. Complainant testified on his own behalf. Eddie Perez testified on behalf of Respondent. The Notice of Hearing was also admitted into the record. The substantive evidence is as follows:

Complainant owns property located at 17815 W. Dreyfus St. Surprise, AZ 85388, which was the site of the underlying project at issue.

On or about March 05, 2022, the parties entered into a residential construction agreement whereby Complainant agreed to pay Respondent $8,900.00 for the installation of mini pebble in Complainant’s pool and spa. On or about March 23, 2022, a Change Order was entered into which increased the contract price by $60.00.

Complainant paid Respondent $8,460.00 on their contract.

Work on the project commenced in April 2022, and stopped in September 2022.

Mr. Nelson is employed by the Registrar as a Legal Assistant II. Mr. Nelson made the determination that Complainant was eligible for an administrative payout from the Fund because he satisfied all statutory requirements for an award. Specifically, Mr. Nelson determined the following:

Complainant paid about 95% of the underlying contract, owing an unpaid balance of $500.00.

As a result of Complaint No. 2022-06182 being filed with the Registrar, Respondent’s license was suspended for three (3) days and assessed a $200.00 civil penalty.

Ultimately, Mr. Nelson determined that the $8,680.00 CDC Pools, Inc. remediation bid Complainant provided was reasonable and within the scope of corrective work ordered by the Directive. Therefore, Mr. Nelson concluded that Complainant’s compensable damages totaled $8,180.00, for actual damages sustained as a result of Respondent’s poor workmanship.

Additional Evidence

On or about May 25, 2022, and June 27, 2022, Complainant had leak detection performed on his pool and spa by PinPoint Leak Detection (“PinPoint”) to locate the whereabouts of the leak(s) at issue. PinPoint was paid $1,099.00 for its services.

On or about May 09, 2023, Respondent submitted a remediation bid to the Registrar regarding the project. The Registrar considered the bid but did not give it much weight, as it was unknown if the contractor reviewed the original contract, Directive, and/or inspected the jobsite.

Closing Arguments

Complainant declined to provide a closing argument.

In closing, Respondent argued that the CDC Pools, Inc. remediation bid was “excessively high” and replaced instead of repaired Respondent’s work product, which was not necessary. Respondent opined that the Registrar should have accepted the bid it provided, as it was within the scope of the contract and “reasonably priced” for repairs.

In closing, the Registrar opined that Respondent failed to sustain its burden of proof in the matter, and that no facts had been presented by Respondent to rebut the Registrar’s credible evidence. The Registrar argued that Complainant met every statutorily mandated requirement for payout from the Fund, and, per administrative calculations, were eligible for a $8,180.00 payout from the Fund. The Registrar also argued that Respondent’s general disagreement(s) with the bid the Fund selected in the matter was immaterial.

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 Registrar’s Recover Fund claim award 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.

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.”

Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Recovery Fund is $30,000.00.

Statutes should be interpreted to provide a fair and sensible result. Statutes shall be liberally construed to affect their objects and to promote justice. 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.”

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 compelling evidence at hearing – not even the bid that was purportedly provided to the Registrar on May 09, 2023. Instead, Respondent generally argued that Complainant’s proposed award amount was “excessively high” and that remediations to Complainant’s project could have been completed for a more “reasonable price.” Neither argument sustains Respondent’s evidentiary burden of proof by a preponderance of the evidence. Nor does the argument that Respondent’s work should be repaired over being replaced. Respondent’s self-serving opinion that Complainant is not eligible to access the Fund, without providing an indicia of evidence to support its contention, cannot be afforded any weight.

As such, it must be held that Respondent failed to sustain its burden of proof in this matter.

Based on the credible and relevant evidence of record, the Tribunal concludes that the Registrar soundly established Complainant’s eligibility to access the Fund, and also properly calculated the award amount at issue.

Therefore, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded an $8,180.00 administrative payout from the Fund.

Thusly, Respondent’s appeal is denied.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar affirm the April 24, 2023, $8,180.00 Notice of Administrative Award.

IT IS FURTHER RECOMMENDED that the Registrar dismiss Respondent’s appeal.

NOTICE

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, July 20, 2023.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

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

Martín Quezada, Director

Registrar of Contractors

c/o Legal Department

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Mona Baskin, Esq., Assistant Attorney General

Office of the Attorney General, Counsel for the Registrar

2005 N. Central Ave.

Phoenix, AZ 85004

[email redacted]

Blue Shark Pools, LLC, Respondent

10027 W. Preston Ln.

Tolleson, AZ 85353

[email redacted]

Neil Owen Brillhart, Complainant

17815 W. Dreyfus St.

Surprise, AZ 85388

[email redacted]

By: OAH Staff