ALJDEC - Licensing
2022A-10299-CHC-ROC · Registrar of Contractors · 2023-05-02
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Mark D. Zudaire,
COMPLAINANT,
v.
Sam's General Contracting LLC
ROC License No. 312164,
RESPONDENT.
No. 2022A-10299-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: April 14, 2023 at 1:00 PM.
APPEARANCES: Mark Zudaire (“Complainant”) appeared on his own behalf. Mike Springer appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Mark Saric, Esq. appeared on behalf of Sam’s General Contracting LLC (“Respondent”) with Samuel Nieblas as a witness.
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 March 21, 2017, the Registrar issued License No. 312164 General Dual KB-2 Residential and Small Commercial contracting license to Respondent. The license is currently active and renewed through March 31, 2025. Samuel Nieblas is listed as Qualifying Party and Member on the license. Respondent’s address of record for the license is 1574 E. 9th St. Douglas, AZ 85607. Respondent has an active $14,000.00 surety bond issued by Merchants Bonding Company on the license, effective February 28, 2017. 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 November 08, 2022, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 312164 alleging abandonment and poor workmanship on their residential remodeling project. The Registrar designated it Complaint No. 2022-10299 and assigned to Mike Springer (“Investigator Springer”) for investigation.
On December 02, 2022, Investigator Springer issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on January 04, 2023, at 10:00 a.m. Correspondence issued to Respondent was not returned as undeliverable.
On December 02, 2022, Investigator Springer issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, including his contract with Complainant. Correspondence issued to Respondent, which was delivered via email and postal mail, was not returned as undeliverable.
On December 02, 2022, Investigator Philpott issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1154(A)(16) for allegedly knowingly contracting beyond the scope of his license. Correspondence issued to Respondent, which was delivered via email and postal mail, was not returned as undeliverable.
On or about December 21, 2022, Investigator Springer received the following written correspondence, in pertinent parts, from Mr. Nieblas on behalf of Respondent:
I was not allowed the opportunity under A.R.S. 32-1155(D) to inspect the work being described in the complaint form. [Complainant] was out of town and numerous attempts were made to communicate with [Complainant] over the phone or video call. I was unsuccessful in meeting or being allowed to inspect with [Complainant] and clarifying all stated complaints.
(All errors in original.)
On January 04, 2023, Investigator Springer inspected the work that had been performed on the project to date. He also conducted a review project-related correspondence exchanged between the parties, including the underlying party contract and proof of payments, and took 50 photographs of the project site. Respondent was not present. Respondent was not present. When he was finished, Investigator Springer drafted his Inspection Notes. Ultimately, Investigator Springer derived a total of twelve (12) complaint items from the complaint. Of those 12 items, Investigator Springer substantiated 9 of them. Specifically, Investigator Springer determined that complaint items 2-9 and 12 failed to meet the Registrar’s minimum workmanship standards and required Respondent to complete and/or perform corrective work to remediate the identified deficiencies.
On January 04, 2023, Investigator Springer issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated 9 workmanship related complaint items against Respondent. Respondent was put on notice that it had until 5:00 p.m. on January 24, 2023, 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). The Directive advises, in pertinent parts, as follows:
After investigation, the Registrar determined that you failed to meet the requirements of A.R.S. § 32-1154(A), and now issues this Directive requiring you to take appropriate corrective action. 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. You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on January 24th, 2023.
You may not perform or hire other contractors to perform work that is outside the scope of your license.
(Emphasis in original.)
Correspondence issued to Respondent, which was delivered via email and postal mail, was not returned as undeliverable.
On January 24, 2023, Investigator Springer received the following written correspondence from Mr. Nieblas on behalf of Respondent:
I have met with [Complainant] since your site visit and a walk-through was conducted with [Complainant]. I have stated to [Complainant] that we will proceed with the completion of [the] project and we were both in agreement. I have received your email and letter concerning this matter and agree in all areas you described. We will not be adding any additional work to this job as I feel this was the reason for the current delay on this project. I appreciate your help in this matter.
(All errors in original.)
On January 25, 2023, Investigator Springer forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On January 26, 2023, 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), 32-1154(A)(12); 32-1158, 32-1154(A)(16), and 32-1154(A)(22). Respondent was given until February 10, 2023, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155. Correspondence issued to Respondent, which was delivered via email and postal mail, was not returned as undeliverable.
On February 10, 2023, the Registrar received Respondent’s Answer, whereby Respondent offered, “I was not able to finish this job and I’m willing to do so.“
On February 13, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on April 14, 2023. Per the March 09, 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)(3) – A.A.C. R4-9-108(a)
Charge 2: A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1158
Charge 3: A.R.S. § 32-1154(A)(16)
Charge 4: A.R.S. § 32-1154(A)(22)
Hearing Evidence
Complainant testified on his own behalf and called Investigator Springer as a witness. Respondent called Samuel Nieblas as a witness. 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 1879 Baker Ave. Douglas, AZ 85607.
On or about December 06, 2021, Complainant entered into a $51,139.00 construction agreement with Respondent for the remodeling of the main dwelling on the property, for $42,000.00, as well as remodeling of the secondary guest structure behind it for $9,139.00. The main dwelling included a 19-item scope of work, and the guest structure included a 4-item scope of work.
On or about December 07, 2021, Complainant tendered $29,000.00 down payment to Respondent towards the contract(s).
On or about May 17, 2022, Complainant tendered a $20,000.00 payment to Respondent towards the contract(s).
An outstanding balance of $2,139.00 remains on the contract(s).
On December 28, 2021, work on the project commenced. On October 28, 2022, work on the project stopped or was otherwise completed.
Although the parties discussed adding additional scopes of work to both structures, Complainant never signed an addendum agreement and Respondent never issued one or more Change Orders.
Though Respondent received notice of the underlying complaint being filed with the Registrar, as well as Investigator Springer’s jobsite inspection notification letter, Respondent did not submit a request to the Registrar, in any form, for the Registrar to inform Complainant of his duty under Ariz. Rev. Stat. § 32-1155(D) to permit Respondent an opportunity to inspect the project, or beseech the Registrar to grant Respondent additional time to inspect the site prior to the Registrar’s jobsite inspection.
Respondent had over 15 days between December 02, 2022, and January 04, 2023, to inspect the project.
Additional Evidence
On or about January 12, 2023, Mr. Nieblas inspected the project site with Complainant and 1 trade present. No corrective work was performed at that time. Instead, Mr. Nieblas advised Complainant that he would return the following week to do so. In turn, Complainant advised that any time after 8:00 a.m. would be fine.
On January 19, 2023, Mr. Nieblas advised Complainant that Respondent would perform corrective work January 24, 2023, and/or January 25, 2023. Complainant did not respond.
On January 24, 2023, Mr. Nieblas sent text messages to Complainant to confirm Respondent’s ability to perform corrective work on January 25, 2023. Complainant did not reply to any of the messages.
At approximately 8:15 a.m. on January 25, 2023, Mr. Nieblas let himself onto the project site via the keypad in Complainant’s mudroom, which woke Complainant up. After a brief exchange between the parties, Complainant had local law enforcement remove Respondent from his property.
Closing Arguments
In closing, Respondent argued that a decision in Complainant’s favor would unjustly enrich him, due, in large part, to Mr. Nieblas’ misunderstanding and unfamiliarity with the Registrar’s Directive and compliance process. Respondent also argued that Mr. Nieblas was not permitted to inspect the project site within 15 days of Complaint No. 2022-10299 being filed, and as such, Respondent’s due process rights were infringed upon.
In closing, Complainant opined that his burden of proof had been met, and as such, the Registrar should take disciplinary action against Respondent’s license.
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(a) requires that “[a]ll work shall be performed in a professional and workmanlike manner.”
Ariz. Rev. Stat. § 32-1154(A)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Failure in any material respect to comply with this chapter.”
Ariz. Rev. Stat. § 32-1158(A) provides that a contract between a contractor and property owner amounting to more than $1,000.00 must contain the following information in writing:
The name of the contractor and the contractor's business address and license number.
The name and mailing address of the owner and the jobsite address or legal description.
The date the parties entered into the contract.
The estimated date of completion of all work to be performed under the contract.
A description of the work to be performed under the contract.
The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.
The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.
The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.
That the property owner has the right to file a written complaint with the Registrar for an alleged violation of Ariz. Rev. Stat § 32-1154(A). The contract shall contain the Registrar's telephone number, website address, and shall state that complaints must be made within the applicable time period as set forth in Ariz. Rev. Stat § 32-1155(A). The information must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor.
Ariz. Rev. Stat. § 32-1154(A)(16) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.”
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.”
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 not in dispute.
It is undisputed that the parties had a $51,139.00 dual residential structure remodeling contract, which Complainant tendered $49,000.00 toward. It is also undisputed that some portion of the scope of work for the underlying project exceeded the scope of Respondent’s license. Additionally, it is also undisputed that Respondent’s contract(s) at issue did not include all 9 required statutory elements. Moreover, it is also undisputed that Investigator Springer determined that some of the work Respondent performed on the project did not satisfy the Registrar’s minimum standards, and that some of the work Respondent performed fell outside the scope of his license. It is further undisputed that Respondent failed to timely comply with the Registrar’s Directive.
Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s Directive and remediate Complainant’s project per contract. This is an affirmative defense that Respondent bears the burden to establish. Mr. Nieblas’ alleged confusion with respect to the Directive and/or his unwillingness or inability to timely perform corrective work or settle this dispute with Complainant are not affirmative defenses. The evidentiary record in this matter reflects that a portion of Respondent‘s work on the underlying project was poor, that a Directive was issued as a result, and that Respondent failed to comply with the Registrar’s Directive without any affirmative defense(s) for doing so.
Regarding the issue of pre-Citation inspection under Ariz. Rev. Stat. § 32-1155(D), that is moot. Mr. Nieblas inspected the project site on or about January 12, 2023, prior to the issuance of the underlying Citation.
Because Complainant established violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(12); 32-1158, 32-1154(A)(16), 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). Notably, it is the opinion of this Tribunal 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.
RECOMMENDED ORDER
Based on the foregoing,
IT IS RECOMMENDED that on the effective date of the Final Order in this matter Respondent Sam's General Contracting LLC, ROC License No. 312164, be suspended for four (4) days based on its violation(s) of Ariz. Rev. Stat. §§32-1154(A)(3), 32-1154(A)(12), 32-1154(A)(16), and 32-1154(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 Final Order will be forty (40) days from the date of that certification.
Done this day, May 02, 2023.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Martín Quezada, Director
c/o Mike Springer, Investigator
Registrar of Contractors
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
Maria D Zudaire, Complainant
1879 Baker Ave.
Douglas, AZ 85607
[email redacted]
Sam's General Contracting LLC, Respondent
1574 E. 9th St.
Douglas, AZ 85607
[email redacted]
By: OAH Staff