ALJDEC - Licensing

2023A-05619-CHC-ROC · Registrar of Contractors · 2023-09-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

R T White Investments Inc.,

COMPLAINANT,

A 1 C Construction LLC

ROC License No. 226477,

RESPONDENT.

No. 2023A-05619-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 22, 2023 at 9:00 AM.

APPEARANCES: Robert Thomas White appeared on behalf of R T White Investments Inc. (“Complainant”). David Fagerburg appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Alonso Ceballos appeared on behalf of A 1 C Construction LLC (“Respondent”).

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 13, 2006, the Registrar issued License No. 226477 Specialty Dual CR-7 Carpentry contracting license to Respondent. The license iss renewed through November 30, 2024. Alonso Ceballos Sr. is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 3715 E. Edna Ave. Phoenix, AZ 85032. Respondent has an active $6,750.00 surety bond on the license issued by Western National Mutual Insurance Company, effective November 03, 2016. The license has no prior disciplinary record, however, there are currently two (2) open complaints listed against the license; one of which is presumed to be related to this matter.

On or about May 16, 2023, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 226477 alleging poor work of their residential stucco project. The Registrar designated it Complaint No. 2023-05619 and assigned to David Fagerburg (“Investigator Fagerburg”) for investigation.

On May 23, 2023, Investigator Fagerburg issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on June 21, 2023, at 11:30 a.m. Correspondence, which was mailed and emailed to Respondent, was not returned as undeliverable.

On June 21, 2023, Investigator Fagerburg reviewed the underlying contract executed between the parties and inspected the work that had been performed on the project to date. Respondent was not present. Investigator Fagerburg also took 13 photographs of the project site. When he was finished, Investigator Fagerburg drafted his Inspection Notes. Ultimately, Investigator Fagerburg derived a total of 3 separate and distinct complain items from Complaint No. 2023-05619, of which he was able to substantiate all 3 based on his firsthand observations. Specifically, Investigator Fagerburg determined Respondent’s workmanship on complaint items 1-3 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On June 26, 2023, Investigator Fagerburg issued a Warning Letter to Respondent for an alleged violation of Arizona Revised Statutes (“Ariz. Rev. Stat.”) § 321154(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.

On June 26, 2023, Investigator Fagerburg issued a Warning Letter to Respondent to advise that Respondent’s work on the underlying project required possession of an R-61 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.

On June 26, 2023, Investigator Fagerburg issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated all of Complainant’s workmanship allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on July 18, 2023, to notify the Registrar that it had resolved the substantiated complaint items at issue “by appropriate means” or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E).

Investigator Allison also included the following advisement to Complainant:

RESTRICTIONS

You may not perform or hire other contractors to perform work that is outside the scope of your license.

(Emphasis in original.)

Correspondence was not returned as undeliverable to Respondent.

On June 27, 2023, Complainant submitted a single-item Addendum Complaint to the Registrar.

On June 27, 2023, Investigator Fagerburg issued an Addendum Jobsite Inspection Notification letter to the parties, advising that he would conduct an onsite review at the project site on July 06, 2023, at 11:30 a.m.

On August 17, 2021, Investigator Fagerburg inspected the workmanship regarding Complainant’s addendum complaint item. He took 10 photographs. Respondent was present. When he was finished, Investigator Fagerburg drafted Addendum Jobsite Inspection Notes. Ultimately, Investigator Fagerburg did not substantiate Complainant’s addendum complaint item, and thusly dismissed the addendum complaint.

On July 26, 2023, Investigator Fagerburg forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On July 31, 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); 23-1158, 32-1154(A)(16), (and 32-1154(A)(22). Respondent was given until August 15, 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/unable to forward to Respondent.

On July 31, 2023, the Registrar received Respondent’s timely Answer.

On August 02, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on September 22, 2023. Per the August 10, 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 called Robert White and Investigator Fagerburg as witnesses. Respondent called Alonso Ceballos as a witness. The Registrar’s agency file; including the Notice of Hearing, and supplemental file were admitted into the record as their own exhibits. The substantive evidence of record is as follows:

Complainant owns a residential property located at 10320 E. Filaree Scottsdale, AZ 85262.

On or about August 09, 2022, the parties entered into a $91,000.00 contract for the application of stucco on the exterior of Complainant’s residence.

Work on the project commenced on or about September 28, 2022, and stopped or was otherwise completed May 05, 2023.

Complainant paid Respondent in full on the project.

June 26, 2023, through July 06, 2023, Respondent did not perform, or attempt to perform, any corrective work in accordance with the Registrar’s Directive or enter into a financial settlement agreement with Complainant.

Respondent did not request an extension of the Directive’s compliance period.

Additional Evidence

Neither a compliance jobsite inspection nor a prehearing jobsite inspection was performed by Investigator Fagerburg in this matter because no corrective work was attempted by or on behalf of Respondent.

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)(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 the parties had an exterior residential stucco contract that Complainant paid in full, which Respondent did not complete per the Registrar’s minimum workmanship standards. The record also reflects that Respondent’s contract with Complainant was missing multiple required statutory elements, and also contained elements outside the scope of License No. 226477. The record also reflects that Respondent any affirmative steps to address the Registrar’s Directive.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to perform the project in compliance with the Registrar’s minimum workmanship standards or settle its underlying dispute 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 as Mr. Ceballos did not offer an explanation for why the project was not completed in a workmanlike manner, 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), 32-1154 (A)(12), 32-1154 (A)(16) and 32-1154 (A)(22) by a preponderance of the evidence, 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 A 1 C Construction LLC, ROC License No. 226477, be suspended for four (4) days.

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 13, 2023.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Cindy Casaus, Interim Director

c/o Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

A 1 C Construction LLC, Respondent

3715 E. Edna Ave.

Phoenix, AZ 85032

[email redacted]

R T White Investments Inc., Complainant

c/o Robert T. White

32531 N. Scottsdale Rd., Ste. 105

Scottsdale, AZ 85266

[email redacted]

By: OAH Staff