ALJDEC - Licensing

2023A-00561-CHC-ROC · Registrar of Contractors · 2023-11-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Michael Diver,

COMPLAINANT

Opal Builder, LLC

License No. ROC 333656,

RESPONDENT

No. 2023A-00561-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 20, 2023, September 25, 2023, and October 13, 2023.

APPEARANCES: Michael Charles Brown, Esq., represented Michael Diver. Tim Ray, Esq., represented Opal Builder, LLC.

ADMINISTRATIVE LAW JUDGE: Brian Del Vecchio

FINDINGS OF FACT

Opal Builder, LLC (Respondent) is the holder of License No. 333656 issued by the Arizona Registrar of Contractors (Registrar). The qualifying party and owner of Respondent is Sereivuthy Dimang (Tee).

On or about August 17, 2020, Michael Diver (Complainant) entered into a contract with TT 88 Groups, LLC for the design of a custom residential home. TT 88 Groups, LLC was owned by Tee. Complainant paid Tee a total $83,650.00 on that contract.

On or about March 17, 2021, Complainant entered into a contract with Respondent for the construction of the custom residential home designed by TT 88 Groups, LLC. The contract did not contain the contractor’s license number, the dollar amount of any progress payment and stage of construction at which the contractor would be entitled to collect progress payments during the course of construction, or notice to property owner of their right to file a written complaint with the Registrar.

On March 29, 2021, Complainant issued a check from his personal bank account to TT II Groups LLC in the amount of $200,000.00 with the memo of “Builder deposit”.

On or about May 25, 2021, Tee submitted an application for a single-family home construction permit with the City of Scottsdale.

On June 1, 2021, $100,000.00 was wired to Respondent from Complainant’s personal bank account.

On September 22, 2021, a $93,827.50 draw was issued to Respondent from Complainant’s PNC construction loan.

In January of 2022, PNC Bank reached out to Complainant regarding his construction loan. The terms of the contract identified a 360 day completion from March of 2021, and PNC Bank wanted a status update on the project. The bank had threatened to foreclose on the loan and demanded updates on the project. Complainant text messaged Tee regarding PNC Bank’s inquiry and Tee stated he would respond to the bank.

On March 29, 2022, Complainant texted Tee asking for updates on the project. Tee claimed he hired an excavator and requested to have a water meter set for dust control and fence installed around the site.

On April 7, 2022, Complainant texted Tee asking for status updates.

On April 8, 2022, Tee replied and claimed the construction fence was to be installed the following week and that the water meter had been installed and should be ready to be turned on following week.

On June 24, 2022, Complainant texted Tee again for status updates and the schedule of work to be performed. Tee replied he would get that information to Complainant the following week.

On June 30, 2022, Complainant again texted Tee seeking status updates and schedules.

On July 1, 2022, Tee replied to Complainant that the excavation crew had a tentative start date of July 6 through 15.

On July 15, 2022, Complainant again texted Tee seeking status updates. Tee replied trees were relocated from the building site, site walls perimeter lay-out had been staked in preparation for excavation, footing prep was completed for concrete, and excavation was to begin the following week.

On July 28, 2022, the perimeter fence was installed.

On September 7, 2022, PNC bank emailed Complainant regarding his extension request from earlier in the year demanding an explanation for the delays.

On September 9, 2022, Complainant texted Tee asking for assistance with the bank. Tee replied he planned to respond to the bank directly.

On September 14, 2022, Tee emailed PNC bank informing them the delays were the result of equipment and material shortages and requested an extension through April 1, 2023.

On October 24, 2022, Complainant texted Tee asking whether the building permits were expired; Complainant attempted to search for the permits on the City of Scottsdale’s website but no permits were available online. Complainant also sought a status update regarding the delays. Tee replied that the building permit expired and he planned to resubmit the architectural plans to obtain a new permit. Tee also told Complainant the reason for the delays was due to lack of subcontractors, negotiations on price increases on excavation equipment, retaining wall changes, framing lumber costs, and sewer septic tank cost increases.

On October 25, 2022, Complainant texted Tee and asked whether permits were ever issued.

On October 26, 2022, Tee replied the site could be prepared for excavation while the permits renew.

On October 28, 2022, Complainant texted Tee requesting an accounting of the funds spent to date.

Sometime in November 2022, Complainant was notified of the death of Tee’s father. Tee told Complainant he would be unavailable during his cultural mourning period. No work was completed while Tee was away handling the funeral services for his father.

On or about January 20, 2023, the Registrar received a Complaint against Respondent from Complainant alleging abandonment of the project.

The Registrar assigned the complaint to Investigator David Fagerburg. After a jobsite inspection, Investigator Fagerburg documented his observations of the jobsite as follows:

Compliant Item 1: 32-1154(A)(2)(6): Builder (S. Dimang) failed to disclose and misrepresented facts surrounding revocation of a contractor's license of a D/B/A used by builder D/B/A is Infinity 88 Development LLC, ROC 277101;

Investigator’s Observation: Not Verified. After this jobsite investigation in reviewing the written contract submitted by the complainant I am able to verify Opal Builder LLC ROC 333656 is active and the respondent is the qualifying party. However, the license number is not disclosed on the contract. In reviewing the status of Infinity 88 Development LLC, I am able to verify ROC 277101 was revoked on 3-3-2020 and the qualifying party is the respondent.

Governing Rule: ARS §32-1158 (A) Minimum elements of a contract.

Compliant Item 2: 32-1154(A)(2)(b) Builder engaged in construction activity on site without approval of final plans by HOA and without obtaining a building permit from City of Scottsdale.;

Governing Rule: ARS §32-1154 (A) (1) (Abandonment), ARS §32- 1154 (A)(2)(B) Departure from or disregard of a building code.

Compliant Item 3: 32-1154(A)(2)(6): Builder made misrepresentations about having obtained a building permit from the City of Scottsdale. Builder stated in a text message that licenses had lapsed and would need to be renewed when permits had never been obtained.;

Investigator’s Observation: Verified. At this jobsite investigation I observed a vacant lot and a building site with a construction fence around part of the 5 acre property with a rough surface driveway installed by the respondent located at the address listed. See P (1) thru P (4). After this jobsite investigation in reviewing the text message thread provided by the complainant I am able to verify the respondent informed the complainant that the permit had expired and will resubmit to be active again. After this jobsite investigation in reviewing the City of Scottsdale Planning & Development website I am able to verify the plans were submitted for review 5-25-2021, plan review was completed with corrections required with a review date of 6-23-2021. I am able to verify there has been no building permit issued and the project appears to have been abandoned.

Governing Rule: ARS §32-1154 (A) (1) (Abandonment), ARS §32-1154 (A) (8) (Failure to Complete Project)

Compliant Item 4: 32-1154(A)(1) and/or 32 1154(A)(8): Builder has failed to perform any meaningful construction work on the site despite having received in excess of $500,000 in payments and deposits from us. He also drew $93,827.50 from PNC bank on September 22, 2021 (immediately after the construction loan closed). As of now, there has only been a small amount of preliminary excavation work performed on the site. ;

Investigator’s Observation: Verified. At this jobsite investigation I observed a vacant lot and a building site with a construction fence around part of the 5 acre property with a rough surface driveway installed by the respondent located at the address listed. See P (1) thru P (4). I am unable to verify whether or not the respondent withdrew $93,827.50 from PNC Bank on September 22, 2021 as alleged. After this jobsite investigation in reviewing the City of Scottsdale Planning & Development website I am able to verify the plans were submitted for review 5-25-2021, plan review was completed with corrections required, with a review date of 6-23-2021. I am able to verify there has been no building permit issued and the project appears to have been abandoned. In reviewing the proof of payment documents submitted by the complainant I am able to verify the complainant has paid the respondent a total of $483,650.00 and very little work has been performed.

Governing Rule: ARS §32-1154 (A) (1) (Abandonment), ARS §32-1154 (A)(8) (Failure to Complete Project)

Compliant Item 5: 32-1154(A)(2)(6): Builder stated on numerous occasions that excavation would commence as far back as October 2021 and to date excavation has not started in any meaningful way. ;

Investigator’s Observation: Verified. At this jobsite investigation I had no knowledge as to what the respondent may have stated to the complainant regarding dates excavation would commence. After this jobsite investigation in reviewing the text message thread provided by the complainant I am able to verify the respondent informed the complainant on October 28, year unknown, that “we can prepare to excavate ASAP while permits renew”. During this jobsite investigation I observed a vacant lot and a building site with a construction fence around part of the 5 acre property with a rough surface driveway installed by the respondent located at the address listed. See P (1) thru P (4). At the time of this jobsite investigation I am able to verify excavation has not started in any meaningful way and the project appears to have been abandoned.

Governing Rule: ARS §32-1154 (A) (1) (Abandonment), ARS §32-1154 (A) (8) (Failure to Complete Project)

Following the jobsite inspection, Investigator Fagerburg issued a pencil cite to the Registrar’s legal department recommending citation of Respondent for, among other things, job abandonment.

The Registrar issued a Citation against Respondent, charging possible violations of Ariz. Rev. Stat. § 32-1154(A)(1); Ariz. Rev. Stat. § 32-1154(A)(2)(b); Ariz. Rev. Stat. § 32-1154(A)(8); and Ariz. Rev. Stat. § 32-1154(A)(12), namely Ariz. Rev. Stat. § 32-1158.

At hearing, Complainant’s exhibits 1 through 11 were admitted and Michael Diver testified on his own behalf. Respondent’s exhibits 1 through 3 were admitted and Sereivuthy Dimang testified on behalf of Respondent.

Investigator Fagerburg testified consistently with his jobsite inspection notes. No written directive was issued because Investigator Fagerburg visited the jobsite and the documentation provided by Complainant during the jobsite inspection confirmed his opinion the job was abandoned. Investigator Fagerburg testified nearly $500,000.00 was given to Respondent and very little work was performed. Investigator Fagerburg further testified the only observable work performed on the property was the installation of fencing surrounding the 5-acre property and the installation of a temporary gravel driveway.

Complainant testified he and his wife were living in Chicago prior to contracting with Respondent. Complainant and his wife were in the market for a new home in the Scottsdale area. During their house hunt they came across a custom home which was recently designed and built by Respondent. Complainant, through intermediaries, reached out to Tee with the intent to contract to build their dream home. After many discussions, the parties entered into two contracts. One contract was for the architectural layout and design and the other was the construction contract. On August 17, 2020, the architectural contract was signed and work began shortly after. According to the construction contract, Respondent was to complete the home approximately 360 days from the day construction began. The cost of construction which included all closing cost, loan fees, and deposits was $1,876,550.00. Complainant intended to pay for the construction through a combination of monies from his personal bank accounts and a construction loan from PNC bank. The initial deposit was $250,000.00, which Complainant paid out of his personal bank accounts. Respondent was to be paid $255,000.00 in supervisory fees for the competition of the project. From the beginning of the project, deliverables suffered from severe delays from civil engineers, fence companies, grading companies, and acquisition of permits. Per the terms of both contracts, Respondent was responsible for obtaining all permits. In order to obtain said permits, a land survey conducted by a civil engineer was needed to mark off the property boundary. The civil engineer began the project in August of 2020, but did not complete their survey until March of 2021. Once the property boundary was marked a fence company was to install a fence to enclose the property; however, the fence was not installed until July 28, 2022. Frequently throughout the build, Complainant texted Tee asking for status updates, but often those requests were not returned. At no point were permits obtained by Respondent from the City of Scottsdale. Approval to build was never granted by the homeowners association. Complainant never received an accounting of the expenditures.

Respondent testified he believed he never abandoned the job, rather, he believed he was fired by Complainant’s letter dated January 19, 2023. Respondent testified there were several delays which were out of his control combined with delays associated with a personal family tragedy. At the time the parties contracted, the COVID-19 pandemic slowed the global supply chain and caused major shortages for construction materials and skilled workers. When the initial deposit was received, Respondent attempted to hire sub-contractors which included a civil engineer, a fence company, and an excavation company. Respondent testified he used the same civil engineer for all of his builds. The civil engineer was an elderly man in poor health and, because of the pandemic, reduced the number of jobs he was willing to schedule. Respondent did not attempt to contact other civil engineers, instead, he waited until this specific civil engineer was available. On or about June 23, 2021, Respondent submitted to the City of Scottsdale the architectural plans as part of the initial process of obtaining a permit. As a result of the delays caused by the civil engineer, the architectural plans expired which halted the permitting process. Once the civil engineer marked off the property boundary, Respondent reached out to four different fence companies to secure the jobsite. Due to the pandemic, a limited supply of fencing was available and even fewer crews were available to install said fencing. After the fence was installed, Respondent then sought a grading company to install the gravel access driveway and prep the land for excavation of the foundation. Once again, due to the pandemic Respondent struggled to find available excavation companies. Tee admitted that, while he would like to complete the contract, the price would have to increase as a result of the increased cost of materials and labor.

Administrative notice is taken of Respondent’s License record on October 28, 2023. Respondent’s License No. 333656 was first issued on June 10, 2021, and is active. Respondent’s License record also reflects that there were no other open or prior complaints against Respondent’s license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

The evidence established that Respondent abandoned the construction project. The original contract was to be completed within 360 days of March of 2021. While there were delays caused by the pandemic, Respondent was given nearly two years to perform, but the only work completed was the installation of a perimeter fence, relocation of some bushes, the installation of a temporary gravel driveway, and no single-family home construction permits were ever requested or granted by the City of Scottsdale. Therefore, Complainant established that Respondent abandoned or refused to perform after submitting a bid on work without legal excuse for the abandonment or refusal in violation of Ariz. Rev. Stat. § 32-1154(A)(1).

The evidence established that Respondent failed to obtain the necessary local building permits for the construction of a single-family home. Respondent admitted construction permits were never obtained from the City of Scottsdale, but pre-excavation site prep was completed. The City of Scottsdale required permits to be granted prior to any work on the site. Therefore, Complainant established that Respondent failed to obtain the necessary local building permits from the City of Scottsdale in violation of the local building codes and Ariz. Rev. Stat. § 32-1154(A)(2)(b).

The evidence established that Respondent did not complete the scope of work in the contract and indicated it would require more money to complete the project. Therefore, Complainant established that Respondent failed to complete the project for the price stated in the contract in violation of Ariz. Rev. Stat. § 32-1154(A)(8).

The evidence established that Respondent’s contract failed to include the required elements of a contract set forth in Ariz. Rev. Stat. § 32-1158(A). Therefore, the Registrar established that Respondent failed to comply with the Registrar’s statute in violation of Ariz. Rev. Stat. § 32-1154(A)(12).

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall revoke Respondent’s License No. 333656.

It is further recommended that, on or before thirty (30) days after the effective date of the final order, Respondent shall provide a sample contract to the Registrar to demonstrate that it has amended its contracts to include the nine terms required by Ariz. Rev. Stat. § 32-1158(A). If Respondent fails to establish to the Registrar that it has brought its contracts into compliance with Ariz. Rev. Stat. § 32-1158(A) within thirty days, its contractor’s license shall be suspended until it demonstrates that it has done so.

Pursuant to A.R.S. § 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, November 1, 2023.

/s/ Brian Del Vecchio

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

Michael Diver

[email redacted]

Opal Builder, LLC

[email redacted]

Michael Charles Brown

Lewis Roca Rothgerber Christie LLP

[email redacted]

Tim Ray

Schern Richardson Finter

[email redacted]

By: OAH Staff