ALJDEC - Licensing

2022A-11388-RFA-LS-ROC · Registrar of Contractors · 2025-02-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Laurence Albert Fuller,

COMPLAINANT,

v.

Barron Backhoe Service LLC

ROC License No. 331915,

RESPONDENT.

No. 2022A-11388-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: February 05, 2025 at 1:00 PM.

APPEARANCES: Assistant Attorney General Charles Hover III, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Shaquira Adebule as a witness. William O’Leary, Esq. appeared on behalf of Laurence Albert Fuller (“Complainant”). Jeremiah Barron appeared on behalf of Barron Backhoe Service LLC (“Respondent”). Complainant observed.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Appealable Agency Action (“Notice of Action”) and Registrar Exhibits 1-26 were admitted into the evidentiary record.

_____________________________________________________________________

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

On January 12, 2021, the Registrar issued ROC License No. 331915 Specialty Dual CR-2 Excavating Grading and Oil contracting license to Respondent. Jeremiah Denton Barron is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 13900 E. Ridge Way Dewey, AZ 86327.

On December 09, 2022, the Registrar received a narrative complaint from Complainant against ROC License No. 331915 alleging poor work of their residential retaining wall project. The Registrar designated it Complaint No. 2022-11388 and assigned to Chris Allison (“Investigator Allison”) for investigation.

On December 13, 2022, the Registrar requested additional information from Complainant, which Complainant provided December 18, 2022.

On December 15, 2022, Investigator Allison issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on January 11, 2023, at 11:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On January 11, 2023, Investigator Allison inspected the work that had been performed on the project to date. Respondent was present. Investigator Allison also reviewed the contract-related correspondence between the parties, and took 5 photographs of the project site. When he was finished, Investigator Allison drafted his Inspection Notes. Investigator Allison determined that Complainant was the General Contractor on the underlying project, as he purchased a majority of materials and paid Respondent hourly for work. Ultimately, Investigator Allison derived five (5) separate and distinct complaint items from Complainant’s narrative submission to the Registrar, of which, he substantiated 3 based on his firsthand observations. Specifically, Investigator Allison 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. Investigator Allison also specifically concluded that the project required a building permit, which Complainant needed to obtain prior to the commencement of corrective work, and that Respondent would not be held responsible for any additional work, if any, required in approved plans from the local building authority – save the inclusion of geotextile fabric, if required.

On January 25, 2023, Investigator Allison issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated some of Complainant’s workmanship allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on February 24, 2023, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

Investigator Allison also included the following advisement to Complainant:

*** Complainant will be responsible for updating the investigator on the progress of the permit. If no progress has been made by the due date above the complaint will be closed.

Once the permit has been issued the investigator will revise this document with a new date for the corrective work to be completed. ***

(Emphasis in original.)

On February 20, 2023, the Registrar received a narrative addendum complaint from Complainant.

On an unknown date, Investigator Allison issued an Addendum Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on March 16 2023.

On March 17, 2023, due to safe access concerns related to inclement weather, the addendum jobsite inspection was rescheduled to 1:00 p.m. on March 23, 2023. Correspondence was not returned as undeliverable to Respondent.

On March 21, 2023, due to a conflict in one of the party’s schedules, the addendum jobsite inspection was reset to 12:00 p.m. on April 03, 2023. Correspondence was not returned as undeliverable to Respondent.

On April 04, 2023, Investigator Allison inspected the three (3) addendum complaint items he derived from Complainant’s narrative addendum submission to the Registrar, of which, he substantiated all. Specifically, Investigator Allison determined Respondent’s workmanship on addendum complaint items 6-8 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies. Respondent was present. Investigator Allison took 8 photographs.

On April 19, 2023, Investigator Allison issued an Amended Written Directive from the Registrar (“Amended Directive”) regarding the substantiation of Complainant’s addendum workmanship allegation(s) against Respondent. However, the parties were also placed on notice of the following:

*** Respondent was contracting out of scope with their license. Respondent’s license scope does not allow them to do or subcontract the corrective work. Complaint may only be remedied through financial resolution with the Complainant. ***

(Emphasis in original.)

Respondent was put on notice that it had until 5:00 p.m. on May 04, 2023, to notify the Registrar of its compliance with the Amended Directive or face discipline pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

On May 10, 2023, Investigator Allison forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On May 11, 2023, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Arizona Administrative Code (“Ariz. Admin. Code”) R4-9-108(a), 32-1154(A)(16), and 32-1154(A)(22). Respondent was given until May 26, 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 May 23, 2023, the Registrar received Respondent’s timely Answer whereby Respondent essentially argued that he had performed the underlying work as a “guinea pig” for Complainant, both as a new contractor and friend. Per Respondent, the parties had “several different items going on at one time” at Complaint’s property, and in their failure Complainant was “pointing blame” at Respondent.

On May 26, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on July 24, 2023. Per the June 05, 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)(16)

Charge 3: A.R.S. § 32-1154(A)(22)

As a result of the hearing, whereby both parties participated and presented evidence, on August 02, 2023, OAH issued a Recommended Decision to the Registrar recommended the Director suspend ROC License No. 331915 for three (3) days for violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(16), and 32-1154(A)(22).

On August 28, 2023, the Registrar issued a Final Administrative Decision and Order (“Final Order”) pursuant to Ariz. Rev. Stat. § 41-1092.08(B) accepting OAH’s Recommended Decision, effective October 07, 2023. Respondent did not appeal the Final Order.

From October 09-11, 2023, ROC License No. 331915 was suspended by the Registrar.

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, which notes that on October 13, 2023, ROC License No. 331915 was suspended by the Registrar for non-renewal.

On December 14, 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). Attached was a copy of the Final Order in Case No. 2022-11388, Complainant’s Warranty Deed for the underlying property, a bond denial letter dated October 11, 2023, from Respondent’s insurance company, and proof of payments Complainant made to Respondent for the project. Complainant also provided the Registrar with two (2) repair bids: a $171,500.00 bid from Homes By Mark Inc. (“HBM”) dated June 29, 2023, and a $188,265.00 bid from Marjanen Builders LLC (“Marjanen”) dated November 03, 2023.

On November 20, 2024, the Registrar issued a Notice of Administrative Award (“Notice of Award”) to the parties which held that Complainant was awarded $30,000.00 from the Fund.

On December 05, 2024, the Registrar received a timely appeal of the Notice of Award on behalf of Respondent.

On December 20, 2024, the Registrar referred this matter back to OAH for an independent evidentiary hearing. Per the Notice of Action sent to the parties on January 03, 2025, the issues for hearing are to determine whether Complainant’s award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.

Hearing Evidence

At the hearing, the Registrar called Shaquira Adebule as a witness. Respondent called Jeremiah Barron as a witness. The substantive evidence is as follows:

Complainant owns and occupies residential property located at 1685 N. Amethyst hills Dr. Prescott, AZ 86303. Complainant’s property is on a steeply sloped plot of land.

On an unknown date the parties entered into a verbal contract for excavation and the construction of multiple retaining walls on Complainant’s property. Respondent was paid hourly for work on the project, which varied depending on the task and equipment used. A cash discount was also offered for payments made to Respondent.

Work on the project commenced in February 2022, and stopped or was otherwise completed in September 2022.

Respondent was paid over $100,000.00 by Complainant towards the project.

Respondent did not ensure that a building permit was obtained for the project prior to commencing work, and failed to obtain one after construction began. One of the walls Respondent constructed completely collapsed. Attempts to rebuild were unsuccessful.

On February 13, 2023, structural engineering firm Core Structure Group, LLC (“CSG”) performed an inspection of the retaining walls Respondent built. In a subsequent report dated February 16, 2023, CSG structural engineer Jacob Vinton, Cert. No. 58976, noted a multitude of issues with the walls Respondent built and concluded that CSG had no confidence in their structural integrity. CSG opined that all walls necessitated demolition and reconstruction in accordance with designs from a structural engineer, manufacturer’s requirements, and a special inspection for soil materials and compaction.

Complainant failed to obtain a building permit as required by the Directive, between January 25, 2023, and February 24, 2023.

Although Complainant’s addendum complaint was received four (4) days prior to the expiration of the Directive, Investigator Allison was unable to inspect the addendum complaint items until April 04, 2023. In his subsequent Amended Written Directive from the Registrar (“Amended Directive”) issued April 19, 2023, Investigator Allison explained that, based on his firsthand observations, he determined that Respondent’s workmanship on addendum complaint items 6-8 failed to meet the Registrar’s minimum standards, but that Respondent was unable to perform corrective work or otherwise address them because Respondent was also found to be contracting outside the scope of ROC License No. 331915.

Because the parties did not settle their dispute, the matter ultimately resulted in the 3-day suspension of ROC License No. 331915 due to its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(16), and 32-1154(A)(22), and the Fund’s related issuance of Complainant’s $30,000.00 administrative award.

Additional Evidence

Mr. Barron clarified that his appeal was regarding both Complainant’s eligibility to access the Fund as well as the amount of the Notice of Award. He provided no additional evidence to support either contention.

Ms. Adebule is a Legal Assistant II for the Registrar. Ms. Adebule testified that she made the determination that Complainant was eligible to access the Fund, and also eligible to receive an administrative payout from the Fund, because he satisfied all statutory requirements for an award. Specifically, Ms. Adebule determined the following:

Respondent’s license was active and in good standing with the Registrar when the underlying contract was entered into, when Respondent first received payment from Complainant for the project, and from January 25, 2023, to May 04, 2023, during the Directive and Amended Directive compliance periods.

Though he applied, Complainant did not received a bond payout for the underlying project from Respondent’s insurance company.

Ms. Adebule was able to verify with Investigator Allison that the HBM and Marjanen bids weere excessive and out of scope with the Registrar’s Directive. Afterwards, Complainant was asked by the Registrar to submit two (2) new or revised bids for the Fund’s consideration.

In response, Complainant submitted a revised labor-only bid for $155,500.00 from HBM dated February 24, 2024, and a revised labor-only bid for $152,250.00 from Marjanen dated November 03, 2023, to the Registrar.

After reaching back out to Investigator Allison, Ms. Adebule was able to confirm that both bids were “generic” and “inflated.” Afterwards, Complainant was instructed to provide engineer stamped plans, copy of a building permit, and new or revised bids that are specific to the plans that include a breakdown of costs for demolition and construction, equipment costs, and materials.

In response, Complainant submitted plans, a revised bid for $74,500.00 from HBM dated July 10, 2024, a $93,500.00 estimate from Zebrascapes Landscaping Services (“Zebrascapes”) dated July 29, 2024, and a $93,250.00 estimate from Yavapai Landscaping LLC (“Yavapai Landscaping”) dated July 18, 2024.

After reaching back out to Investigator Allison a third time, Ms. Adebule was able to confirm that all of the bids were out of scope with the Directive. Investigator Allison returned copies of all bids back to Ms. Adebule with line-item redactions to identify which portions were out of scope. The substantive information was forwarded to Complainant whereby he was advised that the processing of his petition could not proceed until at least two (2) new or revised bids were received that comported with Investigator Allison’s advisements.

Shortly afterwards, it was revealed that a retaining wall was not necessary for Complainant’s property, and that it would be both sufficient and feasible for the land to be compacted and sloped. Reconstruction was deemed unnecessary. Upon consideration, both Investigator Allison and Ms. Adebule agreed that Complainant would be permitted to obtain bids to remove Respondent’s wall, and compact and slope the ground as approved by the engineer’s stamped blueprint.

After Complainant submitted a final revised $59,500.00 bid from HBM dated October 31, 2024, and a final revised $56,250.00 bid from Yavapai Landscaping dated November 07, 2024, both bids were accepted for consideration as part of Complainant’s Fund petition.

Ultimately, Ms. Adebule calculated Complainant’s compensable damages by subtracting $48,905.81 in payments Complainant made to Respondent on the $57,908.48 worth of invoices issued for the underlying project, and then subtracting that $9,002.67 unpaid balance from the $52,250.00 final Yavapai Landscaping bid. Ms. Adebule deduced that Complainant’s actual damages totaled $47,247.33, but because the statutory maximum payout per Ariz. Rev. Stat § 32-1132.01 was capped at $30,000.00 she issued a Notice of Award for that amount.

Ms. Adebule testified that the purpose of the Fund was to make homeowners aggrieved by licensees “whole,” and that Ariz. Rev. Stat. § 32-1131 et seq. was specifically limited to the cost of actual construction work, labor and materials.

Closing Arguments

In closing, the Registrar argued that Respondent’s suggested calculations regarding Complainant’s administrative award were not credible and thusly could not be relied upon, and further argued that Respondent failed to offer any evidence to suggest that Complainant was not lawfully eligible to access the Fund. Per the Registrar, the record was devoid of any evidence that rebutted its own; that Complainant was eligible for a $30,000.00 payout from the Fund. The Registrar opined that because it had satisfied its fiduciary duty to comply with the pertinent sections of the law and protect the purpose of the Fund as its fiduciary, the Notice of Award should be upheld by the Tribunal.

In closing, Complainant opined that the Registrar had sufficiently established Complainant’s Fund eligibility, and soundly established the basis for his administrative award.

Respondent declined to provide a closing argument.

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 Fund claim award amount was incorrect and/or improperly issued, and/or that Complainant was incorrectly and/or improperly deemed to be eligible to access the Fund. Both Complainant and the Registrar bear 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 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 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.

The crux of the matter is whether repair or replacement would make Complainant “whole,” and which submitted, if any, could fulfill the Registrar’s Directives and Investigator Allison’s advisements. In the case at bar, however, a detailed factual analysis is not necessary because Respondent failed to present any compelling evidence at hearing.

Here, the Registrar soundly established Complainant’s eligibility to access the fund, as well as the calculation and resulting award therefrom. Mr. Barron’s assertion that Complainant is ineligible to access the Fund, without providing an indicia of evidence to support his contention, is irrelevant.

The record credibly reflects that in order to remediate the underlying project, Respondent’s workmanship needs to be demolished and (a) replaced with competent work engineer-approved, or (b) the land needs to be compacted and sloped per approved plans. It cannot simply be repaired.

Respondent’s concerns regarding the cost of the Yavapai Landscaping bid is also irrelevant. There is no statute, regulation, precedent, or binding authority that requires an aggrieved homeowner or the Registrar to find the “cheapest” or “least expensive” repair/replacement option available. All that matters is that the relied upon bid not fall below or exceed the scope of work identified in the parties’ underlying contract or Directive, and that the remediating contractor be appropriately licensed by the Registrar. These requirements have been met here. Additionally, there is no statute, regulation, rule or precedent that would require Complainant to permit Respondent to attempt to perform further corrective work after the expiration of the Directive’s compliance period. Although the Tribunal empathizes with Mr. Barron’s financial concerns for his business, 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 must conclude that the Registrar soundly established Complainant’s eligibility to access the Fund, as well as the amount of his administrative award. Therefore, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded an administrative payout from the Fund.

As such, Respondent’s appeal is denied.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that the Registrar affirm the Fund’s November 20, 2024, $30,000.00 Notice of Award as issued to Complainant in the above-captioned matter.

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, February 21, 2025.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

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

Tom Cole, Director

c/o Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Charles Hover III, Esq., Assistant Attorney General

Office of the Attorney General

2005 N. Central Ave.

Phoenix, AZ 85004

[email redacted]

William J. O’Leary, Esq.

Michael P. Thieme, Esq.

O’Leary Eaton, PLLC, Counsel for Complainant

115 N. Grove Ave,

Prescott, AZ 86301

[email redacted]

Barron Backhoe Service LLC, Respondent

c/o Jeremiah Barron, Agent

13900 E. Ridge Way

Dewey, AZ 86327

[email redacted]

By: OAH Staff