ALJDEC - Licensing

2023A-04946-CHC-ROC · Registrar of Contractors · 2023-11-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Laura Sereno,

COMPLAINANT,

v.

MODERN DESIGN CABINETRY L.L.C.

ROC License No. 338128,

RESPONDENT.

No. 2023A-04946-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: November 08, 2023 at 9:00 AM.

APPEARANCES: Laura Sereno (“Complainant”) appeared on her own behalf. Derek Foulk appeared on behalf of Modern Design Cabinetry LLC (“Respondent”). Robert Di Alto appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Alex Glade 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 May 11, 2022, the Registrar issued License No. 338128 Specialty Residential R-60 Finish Carpentry contracting license to Respondent. The license is renewed through May 31, 2024. Derek Tyler Foulk is listed as the Qualifying Party and Manager on the license. Respondent’s address of record for the license is 7009 W. Cherry Hills Dr. Peoria AZ 85345. Respondent has an active $4,250.00 surety bond on the license issued by RLI Insurance Company, effective April 13, 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 April 26, 2023, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 338128 alleging poor work of their residential remodel project. The Registrar designated it Complaint No. 2023-04946 and assigned to Robert Di Alto (“Investigator Di Alto”) for investigation.

On May 01, 2023, Investigator Di Alto issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on June 06, 2023, at 1:00 p.m. Correspondence was not returned as undeliverable to Respondent.

On May 03, 2023, Investigator Di Alto issued a Rescheduled Jobsite Inspection Notification Letter to the parties, advising that the onsite inspection of the project was rescheduled for May 16, 2023, at 10:15 a.m. Correspondence was not returned as undeliverable to Respondent.

On May 16, 2023, Investigator Di Alto inspected the work that had been performed on the project to date. Respondent was not present. Investigator Di Alto also reviewed the contract-related correspondence between the parties, and took 79 photographs of the project site. When he was finished, Investigator Di Alto drafted his Inspection Notes. Ultimately, Investigator Di Alto derived a total of twenty (20) separate and distinct complaint items from Complainant’s narrative submission to the Registrar, and substantiated all of them based on his firsthand observations. Specifically, Investigator Di Alto determined Respondent’s workmanship on all 20 complaint items failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On or about May 26, 2023, Investigator Di Alto issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated all of Complainant’s workmanship allegation(s) against Respondent. However, because a majority of the corrective work exceeded the scope of Respondent’ license, Complainant asked that an Amended Written Directive from the Registrar (“Amended Directive”), containing only items within the scope of License No. 338128 be issued.

Therefore, on July 10, 2023, Investigator Di Alto issued an Amended Directive to Respondent regarding his substantiation of complaint items 5, 11, and 20. Respondent was put on notice that it had until 5:00 p.m. on August 04, 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 August 10, 2023, Investigator Di Alto forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On August 11, 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 August 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 August 25, 2023, the Registrar received Respondent’s timely Answer whereby Respondent admitted to contracting outside the scope of its license by entering into a whole-home renovation project with Complainant that included plumbing, A/C ducting, countertop fabrication and installation, and cabinetry. Respondent argued that due to the execution of multiple Change Orders the project took longer than originally quoted, but that Complainant never complained about workmanship. Respondent further argued that the Amended Directive’s compliance period was during a preplanned 2-week family vacation, leaving Mr. Foulk insufficient time to complete requisite repairs to complaint items 5, 11, and 20. Respondent opined that it was “unfair” of Complainant not to let Mr. Foulk perform corrective work after the expiration of the Amended Directive’s compliance period because he had not obtained permission from the Registrar.

On August 28, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on October 24, 2023. Per the September 07, 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 her own behalf and called Investigator Di Alto as a witness. Respondent called Derek Fould as a witness. The Registrar’s agency file, supplemental file, and Notice of Hearing were admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant’s fiancé, Alex Glade, owns a residential property located at 1814 E. Harmont Dr. Phoenix, AZ 85020. .

On or about July 28, 2022, the parties entered into a $160,000.00 contract for the for the renovation of Harmont Dr. residence.

Work on the project commenced on or about July 29, 2022, and stopped or was otherwise completed March 29, 2023.

A total of three (3) verbal Change Orders were executed on the project, totaling $42,651.00.

Complainant paid Respondent $176,300.00 towards the project.

In March 2023, after learning that Respondent was only licensed for finished carpentry, Complainant informed Mr. Foulk that he would only be granted access to the project site to perform work on the cabinet portion of the project.

On April 01, 2023, Mr. Foulk told Complainant that he would deliver her finished custom cabinets on April 04, 2023, but did not complete the delivery.

Between July 10, 2023, and August 04, 2023, Respondent did not materially perform any corrective work on the project; save on August 03, 2023, when Mr. Foulk dropped off windows at the project site.

On August 07, 2023, Mr. Foulk emailed Investigator Di Alto to complain that Complainant was being “irrational” by refusing to let him perform corrective work after August 04, 2023. Specifically, Mr. Foulk wrote the following:

I already brought all the remaining windows that they requested and I've been working on the kitchen cabinets. I'm letting you know so that I can get it officially approved to go back in and do the work that was on the inspection now that the final date has passed. Please respond with what I am able to do now that they have told me I cannot go in anymore. I'm trying to work with them but they are being irrational.

By the expiration of the Amended Directive’s compliance period, which Respondent did not request an extension of, the parties had not settled their underlying dispute.

At no time did Respondent allege there was a denial of access to the project site.

Additional Evidence

No Warning Letters were issued in this matter.

Neither a Compliance Jobsite Inspection nor a Prehearing Jobsite Inspection was performed in this matter.

Closing Arguments

In closing, Respondent asked that Complaint No. 2023-04946 be dismissed, despite Mr. Foulk’s admission that he did not timely address the Registrar’s Amended Directive.

In closing, Complainant opined that Mr. Foulk had been disingenuous in April 2023 when he asserted that her cabinets had been finished, as he failed to ever deliver them. Because substantiated complaint items 5, 11, and 20 remained outstanding, Complainant argued that she had sustained her burden of proof and further opined that disciplinary action against License No. 338128 was warranted.

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) 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 the parties had a whole-home renovation contract, which included custom cabinetry, which far exceeded the scope of Respondent’s contracting license. The record also reflects that although Complainant paid the base contract in full, though she still owes a small outstanding amount on the parties’ Change Orders, Respondent did not finish the project. Moreover, much of the work Respondent performed fell below the Registrar’s minimum workmanship standards. The record further reflects that Respondent did not complete any corrective work in accordance with the Registrar’s Amended Directive.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to settle its underlying dispute with Complainant in compliance with the Registrar’s Amended 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. Foulk’s assertion that Respondent was unable to complete corrective work due to lack a denial of access is insufficient. The record reflects that Mr. Foulk did not attempt to schedule corrective work until August 04, 2023, which was the last day to comply with the Addendum Directive. In light of his assertions to Complainant in April 2023 that the cabinetry at issue was ready for installation at that time, his lack of performance is exceptionally questionable. The record further establishes that Respondent never asked the Registrar for an extension of the Addendum Directive’s compliance period. The Tribunal holds that these excuses do not justify Respondent’s failure to comply with the Registrar’s Amended Directive. 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) and 32-1154(A)(22) by a preponderance of the evidence, Complainant has also established cause for the Registrar to discipline 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 Modern Design Cabinetry, LLC, ROC License No. 338128, be suspended for seven (7) 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, November 09, 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

[email redacted]

Modern Design Cabinetry, LLC, Respondent

7009 W. Cherry Hills Dr.

Peoria, AZ 85345

[email redacted]

Laura Sereno, Complainant

1814 E. Harmont Dr.

Phoenix, AZ 85020

[email redacted]

By: OAH Staff