ALJDEC - Licensing

2023A-00707-CHC-ROC · Registrar of Contractors · 2023-12-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Donald Butler,

COMPLAINANT,

v.

Gentry Estates LLC

ROC License No. 278337,

RESPONDENT.

No. 2023A-00707-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 10, 2023, October 05, 2023 & December 15, 2023.

APPEARANCES: Donald Butler (“Complainant”) appeared on his own behalf for the first scheduled hearing, August 10, 2023. David Fagerburg appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Clint Schuler appeared on behalf of Gentry Estates LLC (“Respondent”).

Zachary W. Rosenberg, Esq. appeared as counsel for Complainant for the first further hearing, October 05, 2023, with Complainant as a witness. David Fagerburg appeared on behalf of the Registrar. Clint Schuler appeared on behalf Respondent.

Megan Schandle, Esq. appeared as counsel for Complainant for the final further hearing, December 15, 2023, with Complainant as a witness. David Fagerburg appeared on behalf of the Registrar. No appearance(s) by or on behalf of Respondent.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, including the Registrar’s attached agency file, Registrar’s October 12, 2023, supplemental agency file, Complainant Exhibits A-P, a July 07, 2023, Hearing Order, August 10, 2023, Further Hearing Order and October 05, 2023, Further Hearing Order were admitted into the 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

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 April 18, 2012, the Registrar issued License No. 278337 General Residential B contracting license to Respondent. The license was last renewed through April 30, 2024, but was disciplinarily suspended by the Registrar on October 23, 2023. Clint Patrick Schuler is listed as the Qualifying Party and Manager on the license. David Jimenez is also listed on the license as a Member. Respondent’s address of record for the license is 7907 E. Portobello Ave. Mesa, AZ 85212. Respondent has an active $9,000.00 surety bond on the license issued by Western Surety Company, effective June 18, 2019. The license has been disciplined on four (4) prior occasions, and has settled or otherwise resolved one (1) other complaint against it. Currently, there are six (1) open complaints listed against the license, one of which is presumed to be related to this matter.

On or about January 19, 2023, the Registrar received a lengthy narrative complaint from Complainant against Respondent’s License No. 278337 alleging poor work of their residential new build project. The Registrar designated it Complaint No. 2023-00707 and assigned to David Fagerburg (“Investigator Fagerburg”) for investigation.

On January 30, 2023, Investigator Fagerburg issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on March 07, 2023, at 11:30 a.m. Correspondence was not returned as undeliverable to Respondent.

On February 01, 2023, Investigator Fagerburg issued a Notice of Rescheduled Jobsite Inspection Letter to the parties, advising that the onsite project inspection was reset for February 10, 2023, at 11:30 a.m. Correspondence was not returned as undeliverable to Respondent.

On February 10, 2023, Investigator Fagerburg inspected the work that had been performed on the project to date. Respondent was present. Investigator Fagerburg also reviewed the underlying contract and contract-related correspondence between the parties, and took 23 photographs of the project site. When he was finished, Investigator Fagerburg drafted his Inspection Notes. Ultimately, Investigator Fagerburg derived fifteen (15) separate and distinct complaint items from Complainant’s submission, ten (10) of which he was able to substantiate based on his firsthand observations. Specifically, Investigator Fagerburg noted that complaint items 1, 3-6, 8-9, and 11-13 required correction and/or completion by Respondent because the work fell below the Registrar’s minimum workmanship standards.

On March 06, 2023, Investigator Fagerburg issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, including his contract with Complainant. Correspondence was not returned as undeliverable to Respondent.

On March 06, 2023, Investigator Fagerburg issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated a majority of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on March 29, 2023, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E).

On March 22, 2023, the Registrar received a 12-item addendum complaint from Complainant. As a result, Investigator Fagerburg issued an Addendum Jobsite Inspection Notification Letter to the parties, advising that he would conduct another inspection of the project on April 12, 2023, at 11:30 a.m. Correspondence was not returned as undeliverable to Respondent.

On April 12, 2023, inspected the project regarding the addendum complaint items. Respondent was present. Investigator Fagerburg took 29 photographs and drafted Inspection Notes. Ultimately, Investigator Fagerburg substantiated eight (8) addendum complaint items based on his firsthand observations. Specifically, Investigator Fagerburg noted that addendum complaint items 1-3, 6-7, 9-10, and 12 required correction and/or completion by Respondent because the work fell below the Registrar’s minimum workmanship standards.

On April 14, 2023, Investigator Fagerburg issued an Addendum Written Directive from the Registrar (“Addendum Directive”) to Respondent regarding the addendum complaint allegation(s) he substantiated against Respondent. Respondent was put on notice that it had until 5:00 p.m. on May 05, 2023, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Respondent was specifically advised as follows:

Investigator Notes:

1: The complainant made an attempt to comply with the respondent’s request to remove or relocate all the personal items stored in the lower level of the home. During this addendum jobsite investigation the respondent expressed concerns regarding liability for remaining personal items and materials that remain inside the lower level of the home.

2: During this addendum jobsite investigation both parties agree the respondent is not required to correct the items listed on the original Written Directive issued March 6, 2023 inside the lower level of the home with the exception of installing additional support under the Glue lamb beam running east and west at the bottom of the stairs.

3: The following items listed on the original Written Directive issued March 6, 2023 no longer require correction by the respondent. Complaint Items 3, 4, 5. All other items listed on the original Written Directive issued March 6, remain standing.

(Emphasis in original.)

Correspondence was not returned as undeliverable to Respondent.

On May 08, 2023, Investigator Fagerburg 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)(2)(a), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(12); 32-1158, 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 24, 2023, the Registrar received Respondent’s timely Answer whereby Mr. Schuler denied all of the charges against Respondent. Specifically, Mr. Schuler argued that (1) all plan changes had been approved by Complainant, (2) the project was incomplete and therefore Respondent could not be in violation of Ariz. Rev. Stat. § 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), (3) the Registrar previously waived Respondent’s violation of Ariz. Rev. Stat. § 32-1154(A)(12); 32-1158 in writing, and (4) insufficient time was afforded Respondent to perform the required corrective work under the Directive.

On June 23, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 10, 2023. Per the June 29, 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)(2)(a)

Charge 2: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108(a)

Charge 3: A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1158

Charge 4: A.R.S. § 32-1154(A)(22)

On October 13, 2023, Mr. Schuler submitted Official Form 309A in Case No. 2:23-bk-07344-DPC in United States Bankruptcy Court for the District of Arizona on behalf of Respondent to OAH without any context.

On October 20, 2023, Complainant submitted a formal objection to Respondent’s perceived Motion to Stay or Continue.

On October 24, 2024, Respondent submitted a formal Motion to Stay Proceedings, which was denied by the tribunal on November 01, 2023.

Hearing Evidence

Complainant testified on his own behalf and called Investigator Fagerburg as a witness. The substantive evidence of record is as follows:

Complainant owns land located at 47711 N. 40th Ln. New River, Arizona 85087.

On or about July 11, 2020, the parties entered into a $381,023.62 contract for the construction of a new residence on Complainant’s land.

Work on the project commenced on or about May 03, 2021, and stopped on or about January 07, 2023.

Complaint paid Respondent $286,285.07 for the project.

Complainant, a retired electrician formerly licensed in Chicago, IL, performed all electrical work for the project, as noted in the contract.

Per the underlying contract, Respondent was to serve as the general contractor and designer, and was responsible for hiring all subcontractors for the project.

A Schedule of Values was included as a term in the parties’ contract which required Respondent to provide supporting documentation regarding completion in order for payment to be tendered by Complainant. At the time Respondent stopped work on the project, due to a dispute regarding payment of an $8,000.00 invoice, no payment from Complainant was in fact due. Respondent’s demand for payment ahead of schedule was not in compliance with the term(s) of the parties’ agreement.

At the jobsite inspection Complainant was advised that a number of trades on the project were unlicensed by the Registrar.

Between March 06, 2023, through May 05, 2023, the only corrective work that was performed on the project was the pouring of concrete in Spring 2023, which was subsequently removed. During that period Complainant had removed a majority of the personal items that had been stored in the garage to allow Respondent sufficient work space.

Additional Evidence

No written request to continue or appear via alternative means was received by or on behalf of Respondent prior to the final setting of hearing.

Closing Statement

In closing, Complainant argued that its burden of proof had been sustained as the evidence of record established all statutory violations alleged against License No. 278337. Complainant opined that regardless of the personal items in his garage, nothing prevented Respondent from addressing issued in and around the residential build. Per Complainant, Respondent “walked off the job” over an $8,000.00 invoice that was not due. Complainant further opined that Respondent’s tardiness to the initial hearing and absence from the final setting evinced its inability to be regulated by the Registrar. As such, Complainant asked the tribunal to issue an Order in its favor and a recommendation to the Registrar that disciplinary action be taken against Respondent’s contracting 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.

The Notice of Hearing the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received Notice of Hearing in this matter. Because OAH issued all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from OAH as well.

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)(2)(a) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, in pertinent part, “Departure from or disregard of plans or specifications in any material respect that is prejudicial to another without consent of the owner.”

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 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”

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)(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 clear.

It is clear from the record that the parties had a new build construction remediation contract that Complainant three-quarters of. It is also clear from the record that Respondent terminated the parties’ contract over a dispute regarding an $8,000.00 invoice that was not in fact payable at the time. It is also clear from the record that much of Respondent’s workmanship on the project fell outside the scope of plan specifics and below the Registrar’s minimum workmanship standards, because a Directive was issued acknowledging such. It is also clear from the record that Respondent made no attempts to correct the deficiencies in the underlying work, or settle the dispute with Complainant. The record further reflects that Respondent’s contract with Complainant failed to include all nine (9) statutorily required minimum elements. There is no evidence to establish that Respondent’s contract template was updated to comply with Ariz. Rev. Stat. §32-1158 and/or provided to the Registrar.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s Revised Directive and complete Complainant’s project per contract. This is an affirmative defense that Respondent bears the burden to establish. As Respondent failed to appear and provide testimony, this burden has not been sustained. Mr. Schuler’s absence in this matter is also a factor in aggravation. Here, the credible evidence of record shows that Respondent failed to perform corrective work on this project, and had no affirmative defense(s) for doing so.

Because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(2)(a), 32-1154(A)(3), 32-1154(A)(12), and 32-1154(A)(22), Complainant has also established cause for the Registrar to take disciplinary action against Respondent’s contracting 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 Gentry Estates LLC, ROC License No. 278337, be revoked by the Registrar.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $500.00 (five hundred 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, that no future license 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, December 20, 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]

Gentry Estates LLC, Respondent

c/o Clint Shuler, Agent

7907 E. Portobello Ave.

Mesa, AZ 85212

[email redacted]

Donald Butler, Complainant

c/o Lang & Klain, PC, Counsel for Complainant

ATTN: Megan Schandle, Esq.

6730 N. Scottsdale Rd., Ste. 101

Scottsdale, AZ 85253

[email redacted]

[email redacted]

[email redacted]

By: OAH Staff