ALJDEC decisions subject to certification as final

2022A-06302-CHC-ROC · Registrar of Contractors · 2022-12-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Dennis Wayne Tucker,

COMPLAINANT,

v.

The 9 Design Group LLC

ROC License No. 326280,

RESPONDENT.

No. 2022A-06302-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 06, 2022 at 1:00 PM.

APPEARANCES: Dennis Tucker (“Complainant”) appeared on his own behalf. Albert Bernal appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Brett Markusen appeared on behalf of The 9 Design Group LLC (“Respondent”). Debbie Tucker 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 September 20, 2019, the Registrar issued License No. 326280 B-4 General Residential Engineering contracting license to Respondent. The license is renewed through September 30, 2023. Brett David Markusen is the Qualifying Party/Manager/Member on this license. Respondent’s address of record for the license is 2854 E. Ivanhoe St. Gilbert, AZ 85295. Respondent has two active surety bonds for the license. The first is for $9,000.00 issued by Western National Mutual Insurance Company, effective September 01, 2020. The second is for $9,000.00 issued by an unidentified company, effective June 01, 2021. The license has been disciplined on one prior occasion, and has had one compliant resolved or otherwise settled against the license. There are also four open complaints listed against the license, one of which is presumably related to this matter.

On or about July 28, 2022, the Registrar received a 5-item complaint from Complainant against Respondent’s License No. 326280 alleging abandonment of their swimming pool project. Attached to the complaint was a copy of the parties’ underling contract, Complainant’s proof of payment, and correspondence between the parties. The Registrar designated it Complaint No. 2022-06302 and assigned to Albert Bernal (“Investigator Bernal”) for investigation.

On August 03, 2022, Investigator Bernal issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on August 29, 2022, at 9:30 a.m.

On August 29, 2022, Investigator Bernal conducted a review of the project site. He also took 5 photographs of the project site. When he was finished, Investigator Bernal drafted his Inspection Notes. Ultimately, Investigator Bernal determined that the project had been completed by Complainant, and that Respondent had confirmed the alleged abandonment. As such, Investigator Bernal substantiated all 5 complaint items. Specifically, Investigator Bernal determined that Respondent had abandoned the project.

On September 08, 2022, Investigator Bernal forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On September 12, 2022, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. § 32-1154(A)(1). Respondent was given until September 27, 2022, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.

On September 27, 2022, the Registrar received Respondent’s timely Answer. In pertinent parts, Mr. Markusen noted the following:

[Respondent] [n]ever told [Complainant] we did not have enough money to finish the job. We did let him know that cash flow was an issue at the time, but we were also waiting on very large progress payments to come in from other projects. [Complainant’s] statement that we told him we could not finish the job is false.

One of our representatives met with [Complainant] in his backyard on April 14 of 2022. In this meeting, [Complainant] told our representative that he was going to finish the job himself. That he would “bankroll the project on his own“.[Complainant] hired subcontractors and purchased his own material and completed the project. It was also at this time that we agreed that we would look at the financials of this project and see if we could come up with some compromise. [Respondent] agreed to [Complainant’s] proposal in this meeting. Technically, he would be under "breach of contract", but we did not want anything to escalate and we wanted our client to get his project done.

On October 07, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on December 06, 2022. Per the November 01, 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 violation(s):

Charge 1: A.R.S. § 32-1154(A)(1)

Hearing Evidence

Complainant testified on his own behalf and called Investigator Bernal as a witness. Respondent declined to present any evidence. 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:

Complainant owns residential property located at 5424 E. Glade Ave. Mesa, Arizona 85206.

On or about September 10, 2021, the parties entered into a $106,035.44 pool remodeling and landscaping contract.

Complainant paid $87,000.00 towards the contract.

Work on the project commenced on or about October 05, 2021. Respondent ceased work on the project sometime in April 2022, though the job was incomplete.

In a meeting between the parties on April 14, 2022, Respondent advised Complainant that it did not have sufficient funds necessary to complete the underlying project. At that time the parties agreed that Complainant would serve as the General Contractor for the remainder of the project and pay trades of his choosing to finish the job, and that Respondent would reimburse Complainant his costs.

Complainant hired Respondent’s subcontractors and paid them $35,000.00 to finish the project. The work was completed by July 27, 2022.

On or about April 28, 2022, Respondent left the following voicemail for Complainant:

Okay, hey [this is] T.J. umm I thought I’d leave you messages instead of texting this umm yeah dude we’re ... just we’re tapped on money. We got $120,000 of shock repayments that we can’t get done. We have jobs siting for six weeks. And we’ve had to obviously use our you know small capital but so we don’t do a lot but I did tell branch at the time that we’re trying to do too much at once. Man I’m telling you gotta go one at a time but umm I’ve spent two weeks trying to find a company. I think I found one you might know him it’s I go to you part of like the campo concrete company. He’s like “Yeah that was my dad Campo Cool Deck.” Umm they’re from Mesa but his yeah his son um I think he can get to it but then you know they got a concrete shortage, can’t get mortar sands, can’t get concrete pavers for 10 months. And uh yeah it’s u no in leaving you can’t find him. Um so I’m just letting you know I’m trying to get some other connections made so I can get this rolling. Carlos is just waiting on me to get the material out there which I got it all lined up but I just wanted to let you know where we’re at I think uh well we should be good. Hopefully I can get some stuff out there for Friday but I got a plumber that plumbed the pool backwards, plums, three pumps and he plumbed all three of them backwards. He put the section in the return on the return, in the section, so that client’s irate and he was supposed to be out there today to fix it. And he said he couldn’t get out there. So I’m sorry man, just putting out fires. I just like I told my wife like you’re the coolest ever man. And uh if you know a company, I’d love to talk to him. Thanks, I’ll talk to you soon.

(All errors in original.)

On or about May 13, 2022, Respondent issued written correspondence to Complainant which notes, in pertinent part(s), as follows:

On Thursday April 14th of 2022, [Mr. Markusen] met with [Complainant], and we made an agreement that we would no longer perform the rest of the services that were part of the listed amounts. [Mr. Wilcoxson] agreed to [Complainant’s] request that he would finish the project himself and that [Respondent] would compensate [Complainant] the amount of money that [Respondent] collected that was above the work that we had performed at that time.

(All errors in original.)

Although multiple settlement meetings were scheduled in July 2022, Respondent failed to attend and the parties were unable to resolve their dispute.

Complainant requested $38,171.69 from Respondent, which was never paid.

Respondent never advised Complainant that it would resume and/or complete the underlying project upon receipt of anticipated funds from other projects.

Closing Arguments

Both parties declined to provide closing arguments.

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)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

Ariz. Rev. Stat. § 32-1156.01 provides that, after a hearing, an administrative law judge may recommend that a licensee provide restitution to any person who is injured or whose property is damaged by an action of the licensee.

The material facts in this case are clear.

It is clear that the parties had a pool remodeling and landscaping contract that Complainant substantially paid on, and that Respondent failed to complete due to insolvency. The record reflects that the parties’ settlement agreement, for Respondent to reimburse Complainant for completing the project, was not honored by Respondent though Complainant fulfilled his obligations under the negotiated deal.

Therefore, the only remaining issue to address is whether Respondent raised sufficient justification or excuse for failing to timely complete the project per contract, or reimburse Complainant for the project’s completion. This is an affirmative defense that Respondent bears the burden to establish. The Tribunal is not at liberty to make presumptions in favor of Respondent or accept facts in mitigation on behalf of Respondent that are not supported by the evidence. Here, the record here reflects that Respondent failed to complete the project or honor the terms of its settlement agreement with Complainant.

Because Complainant has established a violation of Ariz. Rev. Stat. § 32-1154(A)(1) by a preponderance of the evidence, Complainant has also established grounds for the Registrar to take disciplinary action against Respondent’s license as a result of Complaint No. 2022-06302.

However, because Complainant’s testimony regarding the amount of money he spent to complete the project was not corroborated by the evidentiary record, an order of restitution would not be appropriate in this matter.

Complainant may petition the Registrar’s Recovery Fund for financial recompense.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that on the effective date of the Final Order in this matter Respondent The 9 Design Group LLC, ROC License No. 326280, be suspended for fourteen (14) days.

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, December 14, 2022.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director

c/o Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

The 9 Design Group LLC, Respondent

2854 E. Ivanhoe St.

Gilbert, AZ 85295

[email redacted]

Dennis Wayne Tucker, Complainant

5424 E. Glade Ave.

Mesa, AZ 85206

[email redacted]

By Miranda Alvarez

Legal Secretary