ALJDEC decisions subject to certification as final

2023A-00534-RFA-LS-ROC · Registrar of Contractors · 2025-10-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Molly Schulz,

COMPLAINANT,

Engrained Cabinetry and Countertops LLC

License No. ROC 265845,

RESPONDENT.

No. 2023A-00534-RFA-LS-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 12, 2025 at 9:00am

APPEARANCES: Complainant Molly Schulz appeared on her own behalf. Attorney David Potts represented Respondent Engrained Cabinetry and Countertops, LLC with witness Tom Corkery. Assistant Attorney General Charles Hover appeared on behalf of the Arizona Registrar of Contractors with witness Erika Hoskin.

ADMINISTRATIVE LAW JUDGE: Nicole Robinson

EXHIBITS ADMITTED INTO EVIDENCE: State’s Exhibits 1 through 13. Respondent’s Exhibits 1 through 12.

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (“Registrar”) issued License No. ROC 265845 to Engrained Cabinetry and Countertops, LLC (“Respondent”).

On or about January 14, 2023, the Registrar received a Complaint against Respondent from Molly Schulz (“Complainant”) alleging, among other things, poor work with Respondent’s contracted scope of work (“the workmanship complaint”). Respondent had contracted with Complainant to replace countertop and cabinets in the kitchen and bathroom in her Flagstaff, Arizona home.

As a result of the workmanship complaint, on June 8, 2023, the Registrar issued a Citation against Respondent charging possible violations of Ariz. Rev. Stat. § 32-1154(A)(3), namely of Ariz. Admin. Code R4-9-108(a), and Ariz. Rev. Stat. § 32-1154(A)(22).

Respondent filed a timely answer to the Citation. On July 28, 2023, an administrative hearing was held. In the August 7, 2023 Decision, Administrative Law Judge Clark considered Respondent’s arguments and concluded that Respondent violated BOTH of the charged provisions of this State’s contracting laws and recommended that Respondent’s contracting license be suspended for a period of six (6) days and Respondent pay a $200.00 civil penalty.

On or about August 31, 2023, the Registrar issued a Final Administrative Decision and Order affirming the violations and imposing a $200.00 civil penalty.

Complainant then filed a claim with the Residential Contractors’ Recovery Fund (“the Fund”) to recover the cost of performing the corrective work and completing the project.

As part of the claim process, Complainant submitted bids from two different contractors that Complainant had received to correct the project. The bids from the licensed contractors were detailed as follows:

Bid #1 from Matt’s Drywall & Patch for a total amount of $20,350.00.

Bid #2 from Distinctive Woodworks for a total amount of $26,673.00.

On July 3, 2025, the Registrar issued a Notice of Administrative Award, finding that Complainant’s actual damages were $13,600.00. Respondent requested a hearing, believing the payout was too high and that the selected bid from Matt’s Drywall & Patch (“Bid #1”) included items that were not listed items in the Written Directive. Complainant did not contest the amount of the administrative award. The Registrar referred the matter to the Office of Administrative Hearings for an evidentiary hearing.

A hearing was held on September 12, 2025 at 9:00am.

Hearing Evidence

The Amended Written Directive from Registrar Investigator Chris Allison specified the following in pertinent part:

After investigation, the Registrar determined that you failed to meet the requirements of Ariz. Rev. Stat. § 32-1154(A). ...

You are directed to remedy the following violations by the appropriate means:

Compliance Item: 1 - The cabinets have been installed with 2 colors of wood. Only one color was ordered. (Cabinet of side with over).

Investigator’s Observation: The cabinets appear to be two similar but different colors. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 3 - The holes that were drilled for the 3 faucets (time 3) are not centered on the countertops. (Bathroom faucets are not able to be placed as a result of this. (Kitchen sink was adjusted so faucet could be installed, but it is off center.

Investigator’s Observation: The kitchen sink faucet is functioning and appears to be centered with the divider of the sink. The bathroom sink faucet hole were drilled to close to the under mount sink. This is not allowing the faucets to be installed properly. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 5 - The pantry cabinet has been installed with hardware on the wrong side. I would need to reach around hardware to get cabinet items. This was supposed to be reordered several months ago per Eszter, but was only recently ordered for replacement per Dana.

Investigator’s Observation: The hardware was installed in the wrong

direction. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 6 - Cabinet under kitchen sink was cut with multiple uneven cuts. Leaving gaps between sink and cabinet.

Investigator’s Observation: The cutout in the sink cabinet for the apron sink was do very poorly. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 7 - Cabinet under the sink in the bathroom is warped due to water damage.

Investigator’s Observation: The bottom on the vanity cabinet is warped and/or swollen. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 8 - There are cabinets in the kitchen and bathroom that do not close properly

Investigator’s Observation: Cabinets and drawers need to be adjusted. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 9 - Cabinets have damage which includes cuts/scratches.

Investigator’s Observation: There is some minor damage to the cabinets. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 11 - There are gouges and scrapes to the walls of my kitchen.

Investigator’s Observation: There is some damage to the drywall in the kitchen. This is consistent with demo work and is quite common. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 12 - Countertop with cooktop has be cut crooked.

Investigator’s Observation: The countertop cut out for the cooktop is not straight, resulting in the cooktop being installed at an angle. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 13 - Backsplash by oven has been cut where it is not supposed to be

Investigator’s Observation: The back splash behind the cooktop is cut awkwardly. It is notched for a finish side panel that hangs well past the cabinet. Respondent shall correct in an appropriate manner.

. . . .

Compliance Item: 14 - Wood trim on the floor is incomplete.

Investigator’s Observation: Trim not completed. Respondent shall complete in an appropriate manner.

. . . .

Compliance Item: 15 - Trim around cabinets is not straight.

Investigator’s Observation: The trim on the cabinet’s bows in several locations. Respondent shall correct in an appropriate manner.

. . . .

Investigator Allison determined that Respondent was not in compliance with the Written Directive.

Erika Hoskin, Legal Assistant and Claims Reviewer for the Fund, testified that she reviewed the Complaint, the Written Directive, the Administrative Law Judge Decision regarding the underlying Complaint, the parties’ contract, the payments made by Complainant to Respondent, the claim Complainant filed with Respondent’s bonding company, the deed to the property, and bids/costs and payments submitted by Complainant for repair/completion of the project, in determining that Complainant was eligible to file a claim with the Fund and in calculating Complainant’s actual damages.

Ms. Hoskin determined, upon her review, that Complainant had satisfied the eligibility requirements for a payment from the Fund.

Ms. Hoskin testified that her calculation of actual damages took into account the contract price of $38,895.43 and the payments made toward the contract price in the amount of $38,683.50, and concluded that there was a remaining balance on the contract in the amount of $211.93.

Ms. Hoskin calculated Complainant’s actual damages by subtracting the amount Complainant still owed toward the parties’ contract ($211.93) and a payment from contractor’s bond ($6,750.00) from the amount deemed necessary to repair and/or complete the project per Bid #1 ($20,350.00), to arrive at the amount of $13,388.07.

Ms. Hoskin reviewed the documentation submitted by Complainant with Investigator Allison, and Investigator Allison concurred that the bids provided lined up with the Written Directive in this case.

Bid #1 was chosen by Ms. Hoskin to determine Complainant’s damages. The total amount of this bid was $20,350.00 and the tax was listed as $0. In addition, the bid stated “[p]rice includes all material all delivery all delivery charges installation all clean up all haul off and dump fees of any debris, all preparations and masking to keep Job in worklike manner.” The list of items to be completed on Bid #1 were detailed as follows:

Quartz around stovetop squared and finished properly. Includes backsplash that is cut incorrectly.

Cabinet under sink has spaces right under sink that need to be filled in.

Cabinet above refrigerator is pulling away from ceiling and is crooked.

Cabinet housing oven and speed oven is the wrong color. One cabinet door has some wood missing.

Trimwork around all cabinets isn’t symmetrical.

Floorboard is missing in area entering the kitchen.

Cabinets on either side of sink are scratched and attempted to be fixed with wrong color putty.

(We are including to include drawer under the stove). This item wasn’t included in list of infractions by ROC.

Tom Corkery, Owner, testified on behalf of Respondent. Mr. Corkery revealed that there were many items contained in Bid #1 that were not a part of the Directive. Mr. Corkery pointed out that on Bid #1, Part of Item a (“Quartz around stovetop squared and finished properly”), Item c (“Cabinet above refrigerator is pulling away from ceiling and is crooked”), Item f (“Floorboard is missing in area entering the kitchen”), and Item h (“the drawer under the stove”) were not items listed in the Directive. Mr. Corkery testified that because Bid #1 did not itemize the line items, it was a challenge to subtract the amount of those items from the bid, to adjust the actual damages amount. Mr. Corkery provided that the four items from the bid that were included in the Directive, Items b (“Cabinet under sink has spaces right under sink that need to be filled in”), d (“Cabinet housing oven and speed oven is the wrong color. One cabinet door has some wood missing”), e (“Trimwork around all cabinets isn’t symmetrical”), and g (“Cabinets on either side of sink are scratched and attempted to be fixed with wrong color putty”) would cost approximately $2,000.00 to repair.

Complainant testified that she hired another company (outside of the two bids she received) to perform the corrective work.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Ariz. Rev. Stat. § 32-1132.01(B) provides, in pertinent part, as follows:

An award from the residential contractors' recovery fund may not exceed the actual damages suffered by the claimant as a direct result of a contractor's violation. Actual damages:

1. May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.

2. Must be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.

In regards to the burden of proof in this matter, Respondent argued that the burden of proof lies with the Registrar and Complainant, citing an Arizona Court of Appeals Memorandum Decision. Complainant argued that the Court relied on Ariz. Rev. Stat. § 41-1092(G)(3) which states, “[a]t a hearing on an agency’s imposition of fees or penalties or any agency compliance order, the agency has the burden of persuasion,” but does not provide an analysis for relying on that law. Complainant argued that a recovery fund award does not equate to a compliance order, nor was the award an imposition of fees or penalties. This Tribunal agrees, as such, Respondent, having contested the amount of the proposed payout from the Fund, bears the burden of proof to establish that the proposed payout from the Fund was incorrect by a preponderance of the evidence.

A preponderance of the evidence means “proof which leads the [trier of fact] to find that the existence of the contested fact is more probable than its nonexistence.”

Respondent had an opportunity to correct and complete its work following the Written Directive from the Registrar and failed to do so. However, Respondent met its burden and showed that the proposed payout from the Fund was incorrect. Bid #1 relied on by Ms. Hoskin contained four items (part of a, c, f, and h) that were not included in the Directive. In fact, Ms. Hoskin received confirmation from Investigator Allison that the bids were appropriate, even though Bid #1 clearly stated that Item h “[w]asn’t included in list of infractions by ROC.”

After review of all the evidence, the Tribunal concludes that the award proposed by the Fund inaccurately reflected Complainant’s actual damages. Respondent’s testimony offered at hearing presented that the value of the work properly included in Bid #1 and was a part of the Written Directive was approximately $2,000.00 to repair. However, this Administrative Law Judge does not have enough evidence to rely on these numbers to determine a proper award amount. Due to the drastic amount of the difference between the Registrar’s compensable “Actual Damages” amount of $13,388.07 and Respondent’s estimate of $2,000.00, this matter shall be remanded back to the Registrar to recalculate actual damages.

RECOMMENDED ORDER

Based on the foregoing,

It is Recommended that this matter is remanded back to the Registrar to recalculate a proper award amount payout to Complainant.

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.

-54864001

001

-137160-45720000Done this day, October 23, 2025.

/s/ Nicole Robinson

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

c/o Legal Department

1700 W. Washington Street, Suite 105

Phoenix, AZ 85007

[email redacted]

Molly Schulz

1730 N Blue Spruce Cir

Flagstaff, AZ 86001

[email redacted]

Charles Hover, Assistant Attorney General

Office of the Attorney General

2005 N Central Ave

Phoenix, AZ 85004-1592

[email redacted]

David C. Potts, Esq.

JONES, SKELTON & HOCHULI P.L.C

40 N. Central Avenue, Suite 2700

Phoenix, AZ 85004

[email redacted]

By: OAH Staff