ALJDEC - Licensing

2022A-07198-CHC-ROC · Registrar of Contractors · 2023-07-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kody Bottazzi ,

COMPLAINANT,

v.

Rivas Custom Builders LLC

ROC License No. 239109,

RESPONDENT.

No. 2022A-07198-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 28, 2023 and June 01, 2023.

APPEARANCES: Brenda Lee, Esq. appeared on behalf of Kody Bottazzi (“Complainant”) with Complainant as Michael Bottazzi witnesses. John Smith appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Neal A Eckel, Esq. appeared on behalf of Rivas Custom Builders LLC (“Respondent”) with Eric Nickerson and William Rivas as witnesses. Olivia Rivas 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 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 December 06, 2007, the Registrar issued License No. 239109 General Dual KB-2 Residential and Small Commercial contracting license to Respondent. The license is active and renewed through December 31, 2023. William James Rivas is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 702 S. Campbell Ave. Tucson, AZ 85719. Respondent has an active $20,000.00 surety bond on the license issued by Merchants Bonding Company. 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. 239109 alleging poor work their residential guesthouse construction project. Attached to the complaint were copies of the following: underlying Construction Agreement, Addendum, Proposal, 2 Change Orders, Cost Breakdown, several Unconditional Waiver and Release on Final Payment documents, plans, Building Permit, and proof of payments. The Registrar designated it Complaint No. 2022-07198 and assigned to James Vildusea (“Investigator Vildusea”) for investigation.

On August 25, 2023, the Registrar issued a Notice of Complainant regarding Complaint No. 2022-07198 to Respondent, which afforded Respondent ten (10) days to provide a written response. On September 01, 2023, Respondent provided a response.

On September 12, 2022, Investigator Vildusea issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on October 04, 2022, at 9:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On October 03, 2023, Investigator Vildusea forwarded additional complaint-related information received to Respondent.

On October 07, 2022, Investigator Vildusea issued a Rescheduled Jobsite Inspection Notification Letter to the parties, advising that the inspection of the project was reset to October 25, 2022, at 9:30 a.m. Correspondence was not returned as undeliverable to Respondent.

On October 25, 2022, Investigator Vildusea inspected the work that had been performed on the project to date. Respondent was present. Investigator Vildusea also reviewed the contract related correspondence between the parties, and took 13 photographs of the project site. When he was finished, Investigator Vildusea drafted his Inspection Notes. Ultimately, Investigator Vildusea derived twelve (12) complaint items from Complainant’s narrative submission, of which he was able to substantiate 11 complaint items based on his firsthand observations. Specifically, Investigator Vildusea concluded Respondent’s workmanship on complaint items 1-11 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On or about October 25, 2022, Investigator Vildusea issued a Warning Letter to Respondent for an alleged violation of Arizona Revised Statutes (“Ariz. Rev. Stat.”) § 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, including the underlying contract.

On or about October 25, 2022, Investigator Vildusea issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b) and 32-1154(A)(3) for Respondent’s departure from or disregard of building codes and professional industry standards.

On October 28, 2022, Investigator Vildusea issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated most of Complainant’s workmanship allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on November 14, 2022, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

The Directive provided, in pertinent part, as follows:

Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a citation, discipline of your license, and a civil penalty pursuant to A.R.S. § 32-1154(E) of up to $500.00.

On November 10, 2022, Mr. Rivas’ wife, Olivia Rivas, notified Investigator Vildusea that both of her parents had suffered extreme medical emergencies shortly after the jobsite inspection, and as a result Respondent was seeking an extension for the Directive. On November 14, 2023, Investigator Vildusea forwarded the correspondence to Complainant.

As a result, on November 16, 2022, Investigator Vildusea issued an Ammended [sic] Written Directive from the Registrar (“Amended Directive”) to Respondent which extended the underlying compliance period until 5:00 p.m. on December 01, 2022. Respondent was instructed to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

On December 01, 2022, Investigator Vildusea forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On December 06, 2022, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until December 21, 2022, 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 December 19, 2022, the Registrar received Respondent’s timely Answer whereby Respondent denied all alleged violations and requested an administrative hearing.

On December 19, 2022, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on February 10, 2023. Per the January 10, 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)(1)

Charge 2: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108(a)

Charge 3: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on her own behalf, called her husband Michael Bottazzi and John Smith as witnesses, and submitted Exhibits 12, 15, and 18-19 into the record. Respondent called Eric Nickerson and William Rivas as witnesses and submitted Exhibits 1-4, 14-15, 17-18, 20, 23, and 25 into the record. The Registrar’s agency file, including the Notice of Hearing, Continued Hearing Order, and Further Hearing Order were admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Robert Dipper and Mary Dipper (“Dippers”), an elderly couple, own residential property located at 3680 W. Potvin Ln. Tucson, AZ 85742.

On May 03, 2021, Respondent furnished a proposal to the Dippers for the construction of their guesthouse; which included a passageway between the primary residence and guesthouse, and a carport. The proposal noted, in part, that construction was “[c]ontingent on Pima County dwelling guidelines.”

On or about May 09, 2021, the Dippers entered into a contract with Respondent for the construction of a 1,100 sq. ft. guesthouse at Complainant’s residence for the sum total of $160,000.00.

Work on the project commenced on or about October 11, 2021, and stopped on or about August 19, 2022.

The Dippers paid Respondent $76,000.00 towards the contract.

Vector Progression LLC (“VPL”) drafted the plans for the Dipper guesthouse. Approved plans, which were only provided to Respondent, did not include a passageway between the primary and secondary dwellings, nor did they include a car port, due to size restrictions by Pima County.

On May 21, 2021, a $4,650.56 Change Order (”Change Order 1”) was issued for the installation of a stackable electric washer and dryer.

On August 13, 2021, a reviewer for Pima County submitted design review comments to VPL due to the proposed structure being over the maximum accessory coverage allowed. On August 17, 2021, Mr. Nickerson replied for VPL that based on revised measurements taken for “the shade ramada, storage building, and existing house” that Respondent was under the allowable area.

On August 26, 2021, Permit No. P21BP07694 was issued for the project by Pima County.

On November 04, 2021, a $26,000.00 Change Order (”Change Order 2”) was issued for “price escalation due to market conditions.”

Because the Dippers had concerns over draws not comporting with Respondent’s progression on the project or inspections, the Dippers asked Respondent for a Schedule of Values. In response, on April 07, 2022, Respondent provided a Cost Breakdown to illustrate how the Dippers’ payments had been allocated.

On April 14, 2022, an Addendum was issued by Respondent which confirmed that the project would be completed within 90-days of signature, July 15, 2022. Respondent did not meet this deadline.

The project suffered a number of delays, due in large part, to the global OVID-19 pandemic. Respondent experienced labor and material shortages. Mr. Rivas was hospitalized for 10-days due to a medical emergency, and was off-site 6 weeks thereafter for recovery.

On July 25, 2022, Complainant became the Dippers Durable Power of Attorney (“POA”) for financial management. Shortly after becoming the Dippers POA, Complainant conducted an audit of the Dippers payments to Respondent and a review of all contract-related documents.

On August 04, 2022, Respondent passed its intermediate inspection with Pima County. Though a $40,000.00 draw was due at that time, Complainant withheld payment and instead raised concerns over Respondent’s unilateral and unauthorized deviation of plans.

In a letter to Complainant dated August 18, 2022, Mr. Rivas essentially alleged that Complainant’s failure to tender the intermediate draw unnecessarily delayed the project.

In a reply to Respondent dated August 19, 2022, Complainant advised that no monies would be paid until all issues had “been dealt with,” and accused Respondent of “holding up the project” by not resolving outstanding issues. Complainant also advised that an insulation crew left the project site after Complainant told them that Respondent had not passed a scheduled inspection, as did a stucco crew who left the project after requisite work was missing in order for them to perform their portion of the project.

Between October 28, 2022, and December 01, 2022, no corrective work was performed on the project by Respondent in compliance with the Directive.

Additional Evidence

Mr. Rivas admitted during his testimony that some of the materials he used were out of scope with approved plans, and that he had planned to replace materials after the receipt of the intermediate draw.

Mr. Rivas also admitted that prior to commencement of the project neither the Dippers nor Complainant had been advised that a passageway and carport could not be constructed. To that end, Mr. Rivas also admitted he did not refund or reserve monies tendered by the Dippers for the construction of the passageway or carport. Instead Mr. Rivas further admitted that he used the monies on unauthorized “upgrades” throughout the project.

Per Mr. Rivas, although the Dippers wanted saltillo flooring, he “talked” them into concrete.

Per Mr. Rivas, Respondent’s contract with the Dippers did not include underground electrical work.

At no time between October 28, 2022, and December 01, 2022, did Mr. Rivas allege to Investigator Vildusea that Complainant or the Dippers terminated Respondent or denied Respondent access to the project site.

Closing Arguments

In closing, Respondent argued that the Dipper contract provided for a payment of $40,000 upon passing intermediate inspection, and that Respondent’s work passed inspection by Pima County on August 04, 2022. Respondent argued that Mrs. Bottazi’s assertion that Pima County later rejected or modified the intermediate inspection was incorrect and not supported by corroborating evidence, but that the record did reflect Complainant never paid Respondent for the intermediate draw as scheduled. Per Respondent, Mr. Rivas was under no obligation to address the Registrar’s Amended Directive until Respondent had been paid for work already performed, and that any delays on the project outside of Respondent’s immediate control were excused or otherwise permitted under a force majeaure clause in Section 2 of the Dipper contract. Respondent further argued that it was precluded from performing corrective work after the expiration of the Amended Directive’s compliance period because it had been fired by Mrs. Bottazi. Ultimately, Respondent asked that Complaint No. 2022-07198 be closed and that no disciplinary action be imposed against its license.

In closing Complainant argued that Respondent had taken numerous liberties with the Dipper contract, like installing unauthorized upgrades, and failed to issue credits or refunds for such and other incomplete or incorrect work. Complainant also argued that Respondent never attempted to perform any of the corrective work ordered by the Amended Directive. Per Complainant, Respondent was not terminated from the project, as evidenced by the fact that Mr. Rivas never made a related allegation to the Registrar, or accused Complainant of a denial of access. Ultimately, Complainant opined that she had sustained her burden of proof, and in light of the extended hardship Respondent caused to the Dippers, Respondent’s license should be subject to “the most serious discipline” permitted by law.

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.”

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.

Ariz. Rev. Stat. § 32-1154(A)(1) holds, in pertinent part, that that among the grounds for suspension or revocation of a contractor’s license is “[A]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

Ariz. Rev. Stat. § 32-1154(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.

Ariz. Rev. Stat. § 32-1154(E) provides, in pertinent parts, that the Registrar may “[i]mpose 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 provides that “[n]o 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 material facts in the case at bar are clear.

It is clear that Respondent had a residential construction contract with the Dippers to build a guesthouse with a passageway to the main residence and a carport, and that the Dippers paid Respondent $76,000.00 towards the contract. It is also clear that the Dippers designated Complainant as their POA, and that Complainant submitted Complaint No. 2022-07198 to the Registrar on their behalf. It is also clear that Investigator Vildusea substantiated nearly all of Complainant’s workmanship complaint items against Respondent, and that a Directive was issued which required Respondent to repair and/or complete deficient items. The record further reflects that, per Respondent’s request, the Directive’s compliance deadline was extended via issuance of the Amended Directive, however, no corrective work was ever performed by Respondent.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s Amended Directive and timely remediate Complainant’s project. 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. The evidentiary record in this matter reflects that Respondent failed to complete the underlying project solely because Complainant failed to tender the intermediate draw after Respondent passed inspection, and that Respondent never credited the Dippers for unauthorized upgrades or costs associated with the construction of the passageway or carport. Although the record does reflect that an intermediate draw was due to Respondent when it passed inspection by Pima County on August 04, 2022, that monetary dispute did not preclude Respondent from addressing substandard work already performed as outlined in the Registrar’s Amended Directive. At no time between October 28, 2022, and December 01, 2022, did Respondent attempt to enforce the force majeaure clause in the Dipper contract, allege a denial of access or termination to the Registrar, or filed a Prompt Pay complaint with the Registrar. Because there is no evidence in the record that excuses or otherwise justifies Respondent’s lack of performance on this project, or establish one or more affirmative defenses for Respondent’s failure to address the Registrar’s Amended Directive, Respondent has failed to sustain its burden of persuasion in this matter.

Thusly, because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3), and 32-1154(A)(22), 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 in 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 Rivas Custom Builders LLC, ROC License No. 239109, be suspended for fourteen (14) days.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $250.00 in certified funds as a civil penalty in this matter.

IT IS FURTHER RECOMMENDED no future license shall be issued to any entity consisting of persons associated with Respondent, as defined in Ariz. Rev. Stat. § 32-1101(A), unless Respondent tenders payment of any outstanding prior civil penalty.

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, July 06, 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]

Neal A Eckel, Esq.

Farhang & Medcoff, Counsel for Respondent

100 S. Church Ave., Ste. 100

Tucson, AZ 85701

[email redacted]

Brenda J. Lee, Esq.

Lee & Travers, PLC, Counsel for Complainant

2421 E. 6th St. Ste. 1

Tucson, AZ 85719

[email redacted]

By: OAH Staff