ALJDEC - Licensing
2022A-07175-CHC-ROC-RHG · Registrar of Contractors · 2023-10-03
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Eric Wagner,
COMPLAINANT,
v.
D and H Air Conditioning Company Inc.,
dba D & H Air Conditioning & Heating
Company
ROC License No. 076494,
RESPONDENT
No. 2022A-07175-CHC-ROC-RHG
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: September 27, 2023 at 9:00 AM.
APPEARANCES: Eric Wagner (“Complainant”) appeared on his own behalf. Evan Thompson, Esq. appeared on behalf of D and H Air Conditioning Company Inc. (“Respondent”) with Phillip Robles as a witness. John Smith appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).
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 Arizona Administrative Code (“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 March 15, 1988, the Registrar issued License No. 076494 Specialty Residential R-39 Air Conditioning and Refrigeration Including Solar contracting license to Respondent. Although the license has been renewed through February 29, 2024, and is Qualifying Party exempt under Arizona Revised Statute (“Ariz. Rev. Stat.”) § 32-1125(C). Arthur G. Duhmel is listed as the Historical Owner on the license. Brett L. Wright is also listed on the license as an Officer. D and H Air Conditioning Company Inc. is listed on the license as a related Subsidiary. Respondent’s address of record for the license is 3990 S. Evans Blvd. Tucson, AZ 85714-1682. Respondent has an active $7,500.00 surety bond on the license issued by Merchants Bonding Company, effective March 27, 2023, and another $7,500.00 bond for the license issued by Capitol Indemnity Corporation, effective March 27, 1991. The license reflects that there has been at least one (1) complaint that has been settled or otherwise resolved with the license. The license no prior disciplinary record, save one (1) open complaint listed against the license which is presumed to be related to this matter.
On or about August 23, 2022, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 076494 alleging poor work of their residential HVAC installation project. The Registrar designated it Complaint No. 2022-07175 and assigned to John Smith (“Investigator Smith”) for investigation.
On September 06, 2022, Investigator Smith issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on September 19, 2022, at 12:30 p.m. Correspondence was not returned as undeliverable to Respondent.
On September 19, 2022, Investigator Smith inspected the work that had been performed on the project to date. Representatives on behalf of Respondent were present. Investigator Smith also reviewed the contract-related correspondence between the parties, and took 11 photographs of the project site. When he was finished, Investigator Smith drafted his Inspection Notes. Ultimately, Investigator Smith derived a total of three (3) separate and distinct complaint items from Complaint No. 2022-07175 and was able to substantiate all 3 complaint items based on his firsthand observations. Specifically, Investigator Smith determined Respondent’s workmanship on complaint items 1-3 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies. Additionally, Investigator Smith determined that, Respondent had not included all 9 statutorily required elements in its written contract with Complainant, in violation of Ariz. Rev. Stat. § 32-1154(A)(12); 32-1158. Investigator Smith also discovered that no permit had been obtained for the project.
On or about September 19, 2022, Investigator Smith issued Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(2)(b) for Respondent’s alleged failure to perform work in accordance with applicable local building code(s) and professional industry standards.
On or about September 19, 2022, Investigator Smith issued another Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, including his contract with Complainant. Correspondence was not returned as undeliverable to Respondent.
On September 28, 2022, Investigator Smith issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated all of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on October 19, 2022, to notify the Registrar of its compliance with the Directive, i.e. remedy the identified violations by appropriate means, or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Respondent was specifically advised as follows:
REQUIRED CORRECTIVE ACTION:
The Respondent is to obtain any and all required building permits from the Local Building Authorities, specifically the Town of Oro Valley.
(Emphasis in original.)
Correspondence was not returned as undeliverable to Respondent.
On March 03, 2023, Investigator Smith forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation, which includes the following, in pertinent parts:
Compliance Notes:
In addition to correcting poor workmanship, the Directive did require the respondent obtain a building permit. The time required for the permitting process is somewhat beyond the respondent’s control; therefore, the respondent was initially allowed additional time to complete all required corrective actions.
As of today’s date, March 3, 2023, the respondent has had 135 days to comply with the Directive[.] [sic]
As of today’s date, March 3, 2023, the respondent has not taken appropriate corrective action to comply with the Directive.
(Emphasis in original.)
On March 10, 2023, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(b), and 32-1154(A)(22). Respondent was given until March 25, 2023, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155. Correspondence was not returned as undeliverable to Respondent.
On March 13, 2023, the Registrar received Respondent’s timely Answer whereby Mr. Robles gave a histrionic overview of the company and explained the following, in pertinent parts:
Originally, Respondent did not believe that a permit was required for the underlying project;
Once the necessity of a permit was identified, Respondent erroneously submitted its permit request to the incorrect government agency – the City of Tucson;
In September 2022, Respondent submitted a permit request to Oro Valley, who had its application “routed for review” through February 01, 2023;
On October 01, 2022, Respondent corrected all but 3 workmanship items on the project;
On October 02, 2022, and November 17, 2022, additional corrective work was performed by Respondent;
On an unknown date Respondent issued Complainant a reimbursement check in an unknown amount;
On February 02, 2023, Respondent was informed that its Oro Valley Business license (“TPT”) had expired on January 01, 2023, and therefore a permit could not be issued to Respondent for the project;
On February 02, 2023, Respondent purchased a new TPT which was confirmed on February 08, 2023;
On February 09, 2023, per Respondent’s request, an onsite inspection was conducted;
On September 09, 2023, Respondent learned that it had not passed inspection due to an unsecured electrical whip being found by the Oro Valley inspector, and
On September 09, 2023, Respondent performed corrective work on the electrical whip.
On August 04, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on September 27, 2023. Per the August 28, 2023, 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)(2)(b)
Charge 2: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108(a)
Charge 3: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108(b)
Charge 4: A.R.S. § 32-1154(A)(22)
Hearing Evidence
Complainant testified on his own behalf and called Investigator Smith as witnesses. Respondent called Mr. Robles as a witness and submitted Exhibits 2-10. 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 8760 N. Placita De Reynaga Oro Valley, Arizona 85704.
On or about April 30, 2022, the parties entered into a $26,032.00 contract for the removal of Complainant’s evaporative cooler and installation of a mini-split air conditioning units in multiple bedrooms throughout the residence.
Work on the project commenced on or about April 30, 2022, and stopped or was otherwise completed on or about June 13, 2022.
A building permit was not obtained by either party prior to the commencement of work on the project.
Complainant paid Respondent in full on the project.
During the jobsite inspection, Respondent acknowledged the workmanship issued in complaint items 1-3 and agreed to address them.
Respondent’s initial application to Oro Valley was rejected due to lack of information.
Between October and November 2022 Respondent sent Investigator Smith 4 updates regarding its attempts to secure a permit for the project.
Though not requested by Respondent, Investigator Smith extended the Directive’s compliance period for an unspecified period, but did not issue an Amended Directive or any such other notice to the parties.
On an unknown date, Investigator Smith was informed by Complainant that all workmanship issues had been satisfactorily resolved on the project during the Directive’s compliance period.
No Compliance Jobsite Inspection or Prehearing Jobsite Inspection was performed in the matter.
On February 02, 2023, a permit for the underlying project was approved by Oro Valley.
On February 09, 2023, Respondent failed an onsite inspection with an Oro Valley inspector.
On March 16, 2023, the project passed inspection with an Oro Valley inspector.
Additional Evidence
On April 14, 2023, the Registrar issued a Notice of Hearing for OAH Docket No. 2022A-07175-CHC-ROC for a hearing scheduled for 1:00 p.m. on May 18, 2023.
On April 28, 2023, the matter was continued at Respondent’s request and reset for hearing at 9:00 a.m. on July 18, 2023. Correspondence was not returned as undeliverable from either party.
On July 18, 2023, though afforded a fifteen (15) minute grace period, Complainant failed to appear. An Administrative Law Judge Decision was issued that same date which recommended the dismissal of Complaint No. 2022-07175.
On July 19, 2023, Complainant submitted a Motion for Rehearing predicated on his incorrectly calendaring the hearing time.
On August 02, 2023, the Registrar issued an Order Granting Complainant’s Request for Rehearing.
Closing Arguments
In closing, Respondent argued that disciplined was not warranted against License No. 076494 because no controversy existed between the parties, as all workmanship issues had been resolved in compliance with the Registrar’s Directive. In terms of the timeliness of its compliance, Respondent opined that the permitting issues it suffered were largely out of its control and denied ever acting in bad faith.
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 for the Registrar 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)(2)(b) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of a building code of this state or any political subdivision of this state in any material respect that is prejudicial to another.”
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(a) requires that “[a] contractor shall perform all work in a professional and workmanlike manner.”
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.
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.”
Statutes should be interpreted to provide a fair and sensible result. “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.
The material facts in the case at bar are clear.
The record clearly reflects that the parties had a mini-split installation contract that Complainant paid in full. The record also reflects that Respondent commenced the project without first ensuring appropriate permit(s) had been obtained. The record further reflects that some of Respondent’s work on the project fell below the Registrar’s minimum standards, and that Respondent untimely complied with the Registrar’s unofficially extended Directive.
Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing enter into a financial settlement agreement with Complainant and/or timely perform corrective work in compliance with the Registrar’s Directive. These are affirmative defenses 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, however, a detailed analysis is not necessary. The record clearly reflects that Respondent corrected substantiated complaint items 1-3 prior to the expiration of the Registrar’s Directive. The record also reflects that Respondent obtained a permit for the project, which passed inspection, well after the expiration of the Registrar’s Directive. The untimeliness underlying Respondent’s procurement of a permit, in large part, is due to an unquantifiable delay by Oro Valley. However, but for Respondent’s inaccurate belief at the signing of the contract in this matter, Oro Valley’s delayed permit issuance likely would not have been an issue for Respondent at all. Nor would have Respondent’s contribution to further delays by submitting its initial permit request to the wrong building authority. As the onus to ensure that all proper permits are in place prior to substantially performing on a contract falls on a licensee, so too was Respondent required to ensure that all permits were properly issued for the underlying project before it commenced work. Noting that Complainant suffered no harm from Respondent’s error, Respondent’s failure(s) are de minimis. No case or controversy exists. Thus, Respondent has sustained its burden of persuasion in this matter.
Although Complainant has established Respondent’s procedural violation of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), and de minimis violations of 32-1154(A)(3); R4-9-108(a-b) and 32-1154(A)(22), because Respondent has also established factors in mitigation of the applicable penalties for said violations, no grounds exist for the Registrar to take disciplinary action against Respondent’s contracting license.
RECOMMENDED ORDER
Based on the foregoing,
IT IS RECOMMENDED Complaint No. 2022-07175 be dismissed with prejudice.
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 will be forty (40) days from the date of that certification.
Done this day, October 03, 2023.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Cindy Casaus, Interim Director
Registrar of Contractors
c/o Legal Department
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
D and H Air Conditioning Company Inc., Respondent
c/o Evan L. Thompson, Esq.
Thompson Krone, PLC, Counsel for Respondent
3430 E. Sunrise Dr., Ste. 110
Tucson, AZ 85718
[email redacted]
Eric Wagner, Complainant
8760 N Placita De Reynaga
Oro Valley, AZ 85704
[email redacted]
By: OAH Staff