ALJDEC - Licensing
2023A-00680-CHC-ROC · Registrar of Contractors · 2023-10-23
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Nicholas Smith,
COMPLAINANT,
v.
Arizona Restoration Experts LLC
ROC License No. 267098,
RESPONDENT.
No. 2023A-00680-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: August 28, 2023 and October 17, 2023.
APPEARANCES: Nicholas Smith (“Complainant”) appeared on his own behalf. Alan Hill, Esq. appeared on behalf of Arizona Restoration Experts LLC (“Respondent”) with William G. Terrezas as a witness. Mike Springer appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Susan Wright 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 August 08, 2010, the Registrar issued License No. 267098 General Residential B contracting license to Respondent. The license is renewed through August 31, 2024. Bill Gabriel Terrazas is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 4341 E. Pinal St. Tucson, AZ 85739. Respondent has an active $9,000.00 surety bond on the license issued by RLI Insurance Company, effective September 21, 2017. The license no prior disciplinary record.
On or about January 11, 2023, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 267098 alleging poor work of their residential window installation project. The Registrar designated it Complaint No. 2023-00680 and assigned to Mike Springer (“Investigator Springer”) for investigation.
On January 19, 2023, Investigator Springer issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on February 08, 2023, at 10:30 a.m. Correspondence was not returned as undeliverable to Respondent.
On February 08, 2023, Investigator Springer inspected the work that had been performed on the project to date. Respondent was present. Investigator Springer also reviewed the contract-related correspondence between the parties, and took 11 photographs of the project site. When he was finished, Investigator Springer drafted his Inspection Notes. Investigator Springer derived a total of 1 distinct complaint item from the narrative received, which he was able to substantiate based on his firsthand observations. It was determined that the complaint was regarding newly installed leaking windows, and that the installation had not been finished by Respondent as no sealant or caulking had been applied. Specifically, Investigator Springer water tested 3 windows and observed several leaks, he also observed that no sealant or caulking was visible on any of the windows. However, because Investigator Springer believed that the project was incomplete, Complaint No. 2023-00680 was closed by the Registrar on that same date.
On March 28, 2023, Complaint No. 2023-00680 was reopened by the Registrar.
On March 28, 2023, Investigator Springer issued a Written Directive from the Registrar (“Directive”) to Respondent due to his substantiation of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on April 14, 2023, to notify the Registrar of its compliance with the Directive (i.e. remedy the substantiated workmanship violation by “appropriate means”) or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On April 17, 2023, Investigator Springer forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On April 19, 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), and 32-1154(A)(22). Respondent was given until May 04, 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 03, 2023, the Registrar received Respondent’s timely Answer whereby Mr. Terrazas argued that Respondent was a subcontractor on the project and that neither Respondent nor the window manufacturer were required to paint Complainant’s stucco; as evidenced by the fact that Complainant had scheduled whole-home stucco work with another contractor. Though Mr. Terrazas conceded that Respondent had agreed to perform stucco patches around Complainant’s windows, he argued that Respondent’s repeated offers to caulk the windows after the complaint had been reopened had been refused by Complainant. Mr. Terrazas denied abandoning the project, and further argued that Respondent had been denied access to the project site to perform corrective work and that Complainant owed an outstanding balance for work performed.
On May 05, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on June 27, 2023. Per the May 17, 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)(22)
Hearing Evidence
Complainant testified on his own behalf and called Investigator Springer as a witness. Respondent called William G. Terrezas as a witness and submitted Exhibits 9-10 into the record. The Registrar’s agency file, including the Notice of Hearing, was also admitted into the record as its own exhibit. The substantive evidence of record is as follows:
Complainant owns a residential property located at 6974 N. Pusch Peak Pl. Tucson, Arizona 85718.
On January 17, 2022, Complainant and Susan Wright entered into a $50,952.86 contract with Pella Window and Door Showroom of Tucson (“Pella”) for the purchase and installation of 29 exterior windows for the Pusch Peak Pl. property.
On January 17, 2022, Ms. Wright financed the project with third-party lender, GreenSky; paying Pella in full.
On an unknown date, Pella subcontracted Complainant’s window installation to Respondent.
On an unknown date, Complainant and Respondent entered into a verbal side agreement, in an undisclosed amount, for Respondent to perform “stucco patches” around Complainant’s newly installed windows.
Work on the projects commenced on or about June 10, 2022, and stopped or was otherwise completed September 09, 2023.
Complainant paid Respondent $18,104.00 towards their side stucco project.
On or about March 28, 2023, Mr. Terrezas received a Notice of Reopened Complaint No. 2023-00680 from the Registrar.
Between March 28, 2023, and April 14, 2023, Respondent did not perform any corrective work on the project because Mr. Terrezas believed that the Registrar was asking Respondent to perform work outside the scope of their contract(s).
At no point in time did Respondent beseech the Registrar for an extension of the Directive’s compliance period. At no point in time did Respondent allege a denial of access to the project site during the Directive’s compliance period.
On April 17, 2023, Respondent attempted to scheduled corrective work with Complainant, but Complainant refused.
Additional Evidence
In Article 1 of the Pella contract, Complainant initialed his acknowledgement that he would be responsible for the acquisition of paint or stain products, as well as the repainting or touch up of interior and/or exterior walls.
Article 12 of the Pella contract also notes the potential use of subcontractors to perform some or all of the installation work on the project.
Closing Arguments
In closing Respondent argued that Complainant was responsible for paint and stucco post window installation, per contract, and that doing so timely would have “waterproofed” the windows. Respondent further argued that it was unconscionable of the Registrar to enforce an inapplicable standard against it, and opined that Complaint No. 2023-00680 should be reclosed.
In closing Complainant opined that he had sustained his burden of proof and argued that disciplinary action was warranted against License No. 267098.
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 for the Registrar 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] 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) holds, 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 holds that no 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 clear.
It is clear from the record that Respondent performed the window installations at issue. It is also clear from the record that Respondent’s workmanship on the project was in question at the jobsite inspection, and that the complaint was reopened because in the 30 days after it was closed Respondent failed to complete the project per contract and/or industry standards. It is further clear from the record that Respondent took no affirmative steps to comply with the Registrar’s Directive, request an extension thereof, or allege a denial of access prior to its expiration.
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 complete Complainant’s project per contract. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent did not sustain his burden. There is no evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project. While the record establishes that Mr. Terrezas believed that the Registrar wanted Respondent to perform work outside of the scope of the subcontracted agreement, nothing in the record indicates that Respondent sought clarification from the Registrar or attempted to perform any corrections within its perceived limitations. Respondent did not attempt to settle the dispute with Complainant whatsoever.
Because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 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 Arizona Restoration Experts LLC, ROC License No. 267098, be suspended two (2) days.
IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $50.00 (fifty dollars) in certified funds as a civil penalty.
IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before thirty (30) days following the effective date of the Registrar’s Order, the Registrar shall revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in Ariz. Rev. Stat. § 32-1101(A)(5), 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, October 25, 2023.
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]
Nicholas Smith, Complainant
6974 N. Pusch Peak Pl.
Tucson, AZ 85718
[email redacted]
Arizona Restoration Experts LLC, Respondent
c/o Alan Hill, Esq.
Thompson Krone, PLC, Counsel for Respondent
3430 E. Sunrise Dr., Ste. 110
Tucson, AZ 85718
[email redacted]
[email redacted]
By: OAH Staff