ALJDEC - Licensing

2023A-01849-CHC-ROC · Registrar of Contractors · 2023-08-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Michael Morton,

COMPLAINANT,

v.

WM A Clark Construction Inc.,

License No. ROC 080678,

RESPONDENT

No. 2023A-01849-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 27, 2023 at 1:00 PM.

APPEARANCES: Michael Morton (“Complainant”) appeared on his own behalf. William Allen Clark appeared on behalf of WM A Clark Construction Inc. (“Respondent”). Chris Fultz appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).

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 November 02, 1988, the Registrar issued License No. 080678 General Residential B contracting license to Respondent. The license has been renewed through October 31, 2023. William Allen Clark is listed as the Qualifying Party and Officer on the license. George Douglas Clark is also listed as an Officer on the license. Respondent’s address of record for the license is 7550 E. McDonald Dr., Ste. H Scottsdale, AZ 85250. Respondent has an active $5,000.00 surety bond on the license issued by First Interstate Bank of Arizona. The license no prior disciplinary record, save one (1) open complaint which is presumed to be related to this matter.

On February 23, 2023, the Registrar received a short narrative complaint from Complainant against Respondent’s License No. 080678 alleging abandonment and poor work regarding their residential new build project. The Registrar designated it Complaint No. 2023-01849 and assigned to Chris Fultz (“Investigator Fultz”) for investigation.

On March 10, 2023, Investigator Fultz issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on April 05, 2023, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On April 05, 2023, Investigator Fultz inspected the work that had been performed on the project to date. Respondent was not present. Investigator Fultz also reviewed the contract-related correspondence between the parties, and took 10 photographs of the project site. When he was finished, Investigator Fultz drafted his Inspection Notes. Ultimately, Investigator Fultz derived one (1) separate and distinct complaint item from Complainant’s narrative submission to the Registrar, of which, he substantiated based on his firsthand observations. Specifically, Investigator Fultz determined that the doors did not close or lock properly, and therefore Respondent’s workmanship failed to meet the Registrar’s minimum standards which required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On April 13, 2023, Investigator Fultz issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s workmanship allegation against Respondent. Respondent was put on notice that it had until 5:00 p.m. on May 13, 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.

On May 15, 2023, Investigator Fultz forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On May 17, 2023, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until June 01, 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 June 01, 2023, the Registrar received Respondent’s timely Answer whereby Respondent essentially argued that against Respondent’s advice Complainant ordered oversized entryway doors, and notwithstanding the doors were professionally installed by a licensed installer recommended by the vendor. Per Respondent, although the parties’ contract had been terminated in June 2022, when he was notified that the doors were not operating properly in early 2023 he contacted the vendor on behalf of Complainant. Respondent argued that on an unknown date after he left the project site, a finish carpentry feature was constructed over the doors, which Mr. Clark opined could be the underlying source of the doors issues. Ultimately, Respondent denied responsibility for the functionality of the doors.

On June 02, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on July 27, 2023. Per the June 12, 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)(1)

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

Charge 3: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf, called Investigator Fultz as a witness, and submitted Exhibit 1. Respondent called William Clark as a witness. The Registrar’s agency file, including the Notice of Hearing, was admitted into the record as its own exhibit. The substantive evidence of record is as follows:

Complainant owns a residential property located at 10500 E. Lost Canyon Dr. Scottsdale, AZ 85255.

On or about September 25, 2020, the parties entered into a $2,173,596.00 residential new build project. Work on the project commenced on or about December 15, 2020, and stopped around June 02, 2022.

Complainant tendered $1,642,473.00 to Respondent towards the contract.

Towards the end of the project the parties’ relationship began to sour. Frustrated with the balance of outstanding work, Mr. Clark gave Complainant notice of his termination of their contract on June 02, 2022.

Mr. Clark did not attend Investigator Fultz’s jobsite inspection because he did not want to see Complainant.

Between April 13, 2023, and May 13, 2023, Respondent did not take any affirmative steps to attempt to comply with the Registrar’s Directive. The parties did not enter into a financial settlement agreement for the doors during that period.

None of Respondent’s assertions in its Answer were able to be investigated because

Additional Evidence

Article 10: Termination or Suspension of the [parties’] Contract provides as follows, in pertinent parts:

10.1 TERMINATION BY CONTRACTOR

10.1.1 The Contractor may terminate the Contract if the Work is stopped for a period of sixty (60) consecutive days through no act or fault of the Contractor or a subcontractor, sub- subcontractor or their agents or employees or any other persons or entities performing portions of the Work under direct or indirect contract with the Contractor, for any of the following reasons:

.1 The issuance of an order of a court or other public authority having jurisdiction which requires all Work to be stopped; or

.2 An act of government, such as a declaration of national emergency which requires all Work to be stopped; or

.3 The Owners have not made payment on an Application for Payment within the time stated in the Contract Documents.

10.1.2 The Contractor may terminate the Contract, if through no act or fault of the Contractor or a subcontractor, sub-subcontractor or their agents or employees or any other persons or entities performing portions of the Work under direct or indirect contract with Contractor, repeated suspensions, delays or interruptions of the entire Work by the Owners constitute in the aggregate more than 100 percent of the total number of days scheduled for completion, or 120 days in any 365-day period, whichever is less.

10.1.3 If one of the reasons described in Article 10.1.1 or 10.1.2 exists, the Contractor may, upon seven (7) days written notice to the Owners to cure the deficiencies, terminate the Contract and recover from Owners payment for Work executed and for proven loss with respect to materials, equipment, tools, and construction equipment and machinery, including reasonable overhead.

10.1.4 If the Work is stopped for a period of sixty (60) consecutive days through no act or fault of the Contractor or subcontractor or their agents or employees or any other persons performing portions of the Work under contract with the Contractor because the Owners have persistently failed to fulfill the Owners’ obligations under the Contract Documents with respect to the matters important to the progress of the Work, the Contractor may, upon seven (7) additional days written notice to the Owners to cure the deficiencies, terminate the Contract and recover from the Owners any and all sums due and owing to it.

(Emphasis in original.)

EXHIBIT A – Warranty Obligation of Contractor of the parties’ contract provides as follows:

B. Contractor's Limited Warranty. Contractor warrants that the Work shall be of a quality which conforms to the requirements of the Arizona Registrar of Contractors and shall substantially conform to the approved Plans and Specifications, and Contractor warrants any and all such Work against defective workmanship and materials for a period of two (2) years from the date the final payment is distributed.

Contractor, during normal business hours, at its own expense, will cause to be made any and all necessary repairs and replacements, the need for which Contractor is notified of in writing during the two year warranty period; provided that, (a) such repairs and replacement are necessary as a result of defective workmanship or materials or other breach of the warranty set forth in this exhibit; (b) Contractor is provided with notice of the alleged defect and an opportunity to cure or remedy the same within a reasonable period of time and Owner must cooperate with Contractor in doing so; and (c) Contractor is granted reasonable access to the Property during normal business hours.

Contractor's obligations under this warranty and under this Contract are limited solely to repair and replacement. No steps taken by Contractor to cause defects to be corrected shall extend the warranty period unless otherwise provided by law. This warranty is applicable only to the matters reported in writing to Contractor before the expiration of the warranty period.

Contractor’s obligations under this warranty and under this Contract are for its own Work and that of all tiers of subcontractors and vendors performing Work as well as their agents and employees.

(Emphasis in original.)

On July 27, 2023, the door manufacturer issued the following correspondence to Complainant:

We have made multiple trips to adjust and work on your great room doors. At this time there is nothing more we can do until the issue of the sagging header is fixed. The door frames are pushed down more than 1⁄4” in the middle preventing the doors from working and can not [sic] be fixed until that is resolved. Please let us know the issue is resolved and we will gladly adjust the doors.

Closing Arguments

Both parties declined to provide closing arguments.

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)(1) holds, in pertinent part, that that among the grounds for suspension or revocation of a contractor’s license is “[A]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

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) 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 that the parties had a contract for the construction of custom residential property, of which, Complainant paid just over three quarters of. It is also clear that prior to completion of the project, Mr. Clark terminated the parties’ contract on behalf of Respondent. It is also clear that about one year later, Complainant reported issues with the main doors to the home. It is further clear that the Registrar substantiated Complaint No. 2023-01849 via issuance of the Directive, which Respondent willfully ignored.

Therefore, the only issue to address is whether Respondent raised a sufficient justification or excuse for failing to settle its underlying dispute with Complainant or perform corrective work in accordance with the Registrar’s Directive. This is an affirmative defense that Respondent bears the burden to establish. The Tribunal is not at liberty to make presumptions in favor of Respondent or accept facts in mitigation on behalf of Respondent that are not supported by the evidence. Here, a detailed analysis is not necessary because Mr. Clark’s argument, that he was justified in cancelling the contract because he provided notice, is patently false. Nothing in the parties’ contract granted Respondent authority to terminate the agreement because Mr. Clark was “upset” and/or “unhappy” with Complainant or remaining scope of work. Furthermore, Mr. Clark’s assertion that carpentry work above the doors “could have” had negative ramifications on his work, while plausible, are insufficient without any sort of corroborating evidence. Thus, Respondent’s purported excuses, much like Mr. Clark’s failure to settle with Complainant, do not justify Respondent’s failure to comply with the Registrar’s Directive. Respondent has failed to sustain his burden of persuasion in this matter.

Therefore, because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 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 WM A Clark Construction Inc., License No. ROC 080678, be suspended for ten (10) days.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $250.00 (two hundred fifty) in certified funds as a civil penalty in this matter.

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 Final 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, August 04, 2023.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Martín Quezada, Director

c/o Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

WM A Clark Construction Inc., Respondent

7550 E. McDonald Dr., Ste. H

Scottsdale, AZ 85250

[email redacted]

Michael Morton, Complainant

10500 E. Lost Canyon Dr., Lot 29

Scottsdale, AZ 85255

[email redacted]

By: OAH Staff