ALJDEC - Licensing

2023A-04776-CHC-ROC · Registrar of Contractors · 2023-08-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

JoAnna Freerksen,

COMPLAINANT,

v.

New Construction Plumbing LLC

ROC License No. 337387,

RESPONDENT.

No. 2023A-04776-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 17, 2023 at 9:00 AM.

APPEARANCES: JoAnna Freerksen (“Complainant”) appeared on her own behalf. Mike Springer appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Luis Alberto Magaña appeared on behalf of New Construction Plumbing LLC (“Respondent”). Stephanie Retherford 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 March 30, 2022, the Registrar issued License No. 337387 Specialty Dual CR-37 Plumbing contracting license to Respondent. The license is renewed through March 31, 2024. Luis Alberto Magaña is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 1125 N. 7th St., Ste. 1195C Sierra Vista, AZ 85635. Respondent has an active $6,750.00 surety bond on the license issued by American Contractors Indemnity Company, effective March 04, 2022. The license no prior disciplinary record, save one (1) open complaint listed against the license which is presumed to be related to this matter.

On or about April 21, 2023, the Registrar received a 12-item complaint from Complainant against Respondent’s License No. 337387 alleging abandonment of their residential remodel project. The Registrar designated it Complaint No. 2023-04776 and assigned to Mike Springer (“Investigator Springer”) for investigation.

On April 24, 2023, Investigator Springer issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on May 22, 2023, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On April 24, 2023, Investigator Springer issued a Warning Letter to Respondent for an alleged violation of Arizona Revised Statutes (“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 May 22, 2023, Investigator Springer inspected the work that had been performed on the project to date. Respondent was not present. Investigator Springer also reviewed the contract-related correspondence between the parties, and took 12 photographs of the project site. When he was finished, Investigator Springer drafted his Inspection Notes. Ultimately, Investigator Springer substantiated 11 complaint items based on his firsthand observations. Specifically, Investigator Springer determined Respondent’s workmanship on complaint items 1-8 and 10-12 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On May 22, 2023, Investigator Springer issued a Warning Letter to Respondent because he believed that some of the work on the underlying project required possession of a B-General Residential or B-3 General Remodeling and Repair contracting license that Respondent did not possess during the relevant time period, in violation of Ariz. Rev. Stat. § 32-1154(A)(16), which could result in discipline against Respondent’s license including suspension or revocation. Correspondence was not returned as undeliverable to Respondent.

On May 22, 2023, Investigator Springer issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated nearly all of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on June 07, 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). Correspondence was not returned as undeliverable to Respondent.

On June 13, 2023, Investigator Springer forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On June 14, 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), 32-1154(A)(12); 32-1158, 32-1154(A)(16), and 32-1154(A)(22). Respondent was given until June 29, 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 28, 2023, the Registrar received Respondent’s timely Answer whereby Mr. Magaña argued that while he did not agree with the complaint, he acknowledged that he was “ready to take full responsibility of any mistakes” Respondent committed.

On June 30, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 17, 2023. Per the July 06, 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)(12) – A.R.S. § 32-1158

Charge 3: A.R.S. § 32-1154(A)(16)

Charge 4: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on her own behalf and called Investigator Springer as a witness. Respondent called Luis Magaña as a witness. The Registrar’s agency file, supplemental agency file, and Notice of Hearing were admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant owns a residential property located at 5480E. Hawk Rd. Hereford, Arizona 85615.

On or about December 15, 2022, the parties entered into a $29,325 verbal contract for the remodel of Complainant’s residence including drywall, electrical, paint, and plumbing.

Work on the project commenced on or about January 13, 2023, and stopped or was otherwise completed in February 2023.

Complainant paid Respondent $30,000.00 towards the project.

Mr. Magaña hired licensed contractors to perform work on the project, but did not have any assistance from trades on portions of the project he undertook himself.

Mr. Magaña did not make any attempts to perform corrective work on the project between May 22, 2023, and June 07, 2023, in adherence with the Registrar’s Directive.

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.

Respondent could not perform corrective work on substantiated complaint items 5-8 during the Directive’s compliance period because the work was out of scope with License No. 337387.

Respondent could not legally subcontract out corrective work for substantiated complaint items 5-8 during the Directive’s compliance period due to the limitations of License No. 337387.

Although Mr. Magaña promised to refund a portion of the contract price to Complainant for not timely completing the project, no recompense was received by Complainant.

Additional Evidence

Work on the project was supposed to be completed by February 15, 2023. Complainant opted to “shelter in place” with her three children; ages 26, 15, and 11, during Respondent’s renovation of her residence for health-related reasons.

Complainant has cancer, her oldest child is autistic, and her remaining children are immune compromised.

Although Complainant reached out to Mr. Magaña via several means in an attempt to schedule corrective work, he never replied to her. As a result, Complainant was forced to take her children and vacate the residence due to its inhabitability.

As of the date of the hearing, Complainant’s residence remains in an unlivable state.

Closing Arguments

In closing, Respondent denied that he had abandoned the project, and argued that he was willing to “accept responsibility” and “make things right” with Complainant.

In closing, Complainant argued that Respondent had had sufficient time to complete the project, and opined that Respondent’s license should be disciplined by the Registrar in light of the evidentiary record.

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)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Failure in any material respect to comply with this chapter.”

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)(16) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.”

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 not in dispute.

The record reflects that Respondent accepted a verbal contract that contained elements that were outside the scope of License No. 337387, and that Mr. Magaña acted as the General Contractor for the project. The record also reflects that Complainant paid the contract in full. The record further reflects that Respondent did not complete per the Registrar’s minimum workmanship standards, and that Respondent took no affirmative action to address the Registrar’s Directive.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to complete the underlying project or timely enter into a financial settlement agreement with Complainant in compliance 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. Mr. Magaña did not offer an explanation for why the project was not timely completed, and further admitted that made no attempt to address the Registrar’s Directive or request an extension thereto. Thus, 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)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(12); 32-1158, 32-1154(A)(16), 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 New Construction Plumbing LLC, ROC License No. 337387, be suspended sixteen (16) days.

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 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 18, 2023.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

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

Martín Quezada, Director

Registrar of Contractors

c/o Legal Department

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

New Construction Plumbing LLC, Respondent

1125 N. 7th St. 1195-C

Sierra Vista, AZ 85635

[email redacted]

JoAnna Freerksen, Complainant

5480 E. Hawk Rd.

Hereford, AZ 85615

[email redacted]

By: OAH Staff