ALJDEC - Licensing

2023A-05915-CHC-ROC · Registrar of Contractors · 2024-05-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Charism Design, Inc.,

DBA: Thunderbird Pools & Spas,

COMPLAINANT,

v.

Spartan Shade Systems, LLC

License No. ROC 336822,

RESPONDENT.

No. 2023A-05915-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 8, 2024

APPEARANCES: Stephen Weber, Esq. represented Complainant Charism Design, Inc., doing business as Thunderbird Pools and Spas. Cohl Workman was present on behalf of Complainant Charism Design, Inc., doing business as Thunderbird Pools and Spas. Ruben Maynes appeared on behalf of Respondent Spartan Shade Systems, LLC. Arizona Registrar of Contractors Investigator John Peru appeared as a witness, as did Arturo Osuna.

ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella

EXHIBITS ADMITTED INTO EVIDENCE: Complainant Charism Design, Inc., doing business as Thunderbird Pools and Spas’ Exhibits 1-6; Administrative Notice was taken of the Agency Record

FINDINGS OF FACT

Spartan Shade Systems, LLC (“Respondent”) is the holder of License Number 336822 issued by the Arizona Registrar of Contractors (“Registrar”).

On or about October 6, 2022, Charism Design, Inc., doing business as Thunderbird Pools and Spas (“Complainant”), contracted with Respondent for Respondent to construct a 4K Aluminum structure for the Sudyka project. The parties’ contract specified that the material to be used for the project was 4K Aluminum. On October 6, 2022, Respondent invoiced Complainant in the amount of $78,970.00. Complainant paid Respondent $25,000.00 on October 7, 2022, and $15,985.00 on October 11, 2022, for a total of $40,985.00, in order for Respondent to procure the 4K Aluminum materials for the project.

On or about May 23, 2023, the Registrar received a Complaint against Respondent from Complainant alleging abandonment of the project.

The Registrar assigned the Complaint to Investigator John Peru. After a July 14, 2023 Jobsite Inspection, Investigator Peru issued a Written Directive to Respondent, dated July 21, 2023, that provided as follows:

After investigation, the Registrar determined that you failed to meet the requirements of A.R.S. § 32-1154(A), and now issues this Directive requiring you to take appropriate corrective action. Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a citation, discipline of your license, and a civil penalty pursuant to A.R.S. § 32-1154(E) of up to $500.00. You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on August 7, 2023.

You are directed to remedy the following violations by the appropriate means:

Item: 1 - "Installation of Pergola, supply 4K material for construction of Pergola per contract."

Investigator’s Observation: Verified.

At the time of this Inspection, both parties acknowledged that there is a dispute in regards to using the specified materials per contract (4K). Both parties acknowledged that the contract specifies (4K) as the prescribed material to construct the Pergola with. This contract is with the Homeowner (client) and the Complainant (General Contractor). The Respondent (Subcontractor) is required to follow the terms of the contract. The subcontractor shall initiate construction of the Pergola per plans/contract. REF:(P) 1

All errors in original.

After the expiration of the Written Directive, Investigator Peru ascertained that Respondent had not performed the work required by the Written Directive. Consequently, a Compliance Inspection was not conducted.

Thereafter, Investigator Peru forwarded the matter to the Registrar’s Legal Department. The Registrar issued a Citation against Respondent charging possible violations of A.R.S. § 32-1154(A)(1) and A.R.S. § 32-1154(A)(22).

The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, for an evidentiary hearing.

The hearing of this matter was scheduled to convene on October 26, 2023, at 1:00 p.m. On the date and time set for hearing, Stephen Weber, Esq. represented Complainant. Cohl Workman was present on behalf of Complainant. Ruben and Donna Maynes appeared on behalf of Respondent. Investigator Peru was present. The parties participated in a prehearing discussion outside of the presence of the Administrative Law Judge. As a result of that discussion, the parties resolved the matter in dispute, however, required additional time in which to execute the terms of their agreement. Consequently, the Administrative Law Judge set this matter for a written Status Update on November 13, 2023.

On November 14, 2023, Complainant submitted a Status Update indicating that Respondent did not comply with the terms of the parties’ settlement agreement and requested that the matter be set for hearing.

The matter was set for hearing, and continued twice thereafter, once at the request of Complainant, and once at the request of Respondent. The hearing ultimately convened and concluded on May 8, 2024.

Investigator Peru testified that at the Jobsite Inspection, neither party contested that the work was not performed. Investigator Peru testified that the material specified on the parties’ contract was 4K Aluminum. However, 4K Aluminum will no longer conduct business with Respondent, and therefore, Respondent is unable to procure the specified materials. Respondent suggested substituting a different material, however, the owners of the project would not accept a substitution of materials.

Cohl Workman, President and owner of Complainant, testified about his background and experience in the industry. Mr. Workman testified regarding his contract with the owners of the project, the Sudykas. Mr. Workman testified that Complainant’s contract with the Sudykas specified that 4K Aluminum was to be used for the project. Mr. Workman explained that at the time Complainant contracted with Respondent, Respondent was a 4K Aluminum builder, and Complainant and Respondent had a good relationship as they had previously worked together on other projects, including a personal project for Mr. Workman. Mr. Workman testified that Respondent was well aware that the Sudykas wanted 4K Aluminum and explained that there is a “huge” difference between 4K Aluminum and other products. Because of the superior quality and aesthetics of 4K Aluminum, the Sudykas would not accept a substitute material and the specifications for the project specified 4K Aluminum. Respondent had been provided a copy of those specifications.

Complainant paid Respondent $40,985.00 to procure the 4K Aluminum necessary for the project.

Mr. Workman testified that Respondent was also to obtain the engineering and permitting for the project which is specified in Respondent’s invoice, at a cost of $3,000.00. By April 27, 2023, Respondent had not obtained the engineering or the permit for the project and the 4K Aluminum materials had not been delivered to the jobsite. Mr. Workman testified that he began to investigate and contacted 4K Aluminum directly. He was informed that Respondent owed 4K Aluminum over $200,000,00 and that Respondent was no longer permitted to procure any materials from 4K Aluminum. Mr. Workman was also informed that Respondent had not ordered the materials from 4K Aluminum that Complainant paid Respondent to order.

On April 27, 2023, Complainant received a letter from the CEO of 4K Aluminum that confirmed their conversation, as follows:

4K Aluminum, INC., ceased conducting business with Spartan Shade Systems on January 16, 2023. As of that date their account is closed with a significantly overdue balance. A complaint was filed with ROC, #2023-00651. Our company will not conduct business with Spartan Shade Systems, Ruben and Donna Maynes again.

On April 27, 2023, Complainant sent Respondent a letter requesting a refund of the monies paid for the 4K Aluminum material that Respondent did not order and was no longer able to order. Complainant stated in the letter that it could not move forward with the project as it “was sold as 4K Aluminum Project and must be built with 4K Aluminum, therefore Spartan Shade cannot perform the work or provide the material requested.”

In December 2023, Respondent offered an alternate material for the project. However, the owners of the project contracted for and only wanted 4K Aluminum. They would not accept any materials that were not 4K Aluminum.

Mr. Workman testified that due to Respondent’s failures, he lost the pool portion of the contract with the Sudykas in addition to the $40,985.00 he paid to Respondent. Mr. Workman further testified that Respondent did not complete the engineering, and the portion was that was completed, was incorrect, compelling Complainant to obtain the engineering and permit for the project. Complainant became a 4K Aluminum supplier and hired another subcontractor to complete the project after the expiration of the Written Directive

Ruben Maynes testified that he ordered the material on October 11, 2022, however, the project had been delayed. Mr. Maynes testified that he used to order 4K Aluminum material in “bundles” and “did not order per job.” Mr. Maynes further testified that he believed that Complainant canceled their contract on April 27, 2023, and therefore, Respondent did not abandon the project. Mr. Maynes acknowledged that Respondent did not deliver 4K Aluminum to the jobsite, that as of January 2023, Respondent could no longer procure 4K Aluminum material, and therefore, could not comply with the terms of the parties’ contract. Mr. Maynes acknowledged that Respondent owes Complainant a refund of the monies paid, however, asserted that Respondent did not abandon the parties’ contract.

Administrative notice is taken of Respondent’s prior License record on May 22, 2024. Such prior License record reflects that Respondent’s License Number 336822 was first issued on February 25, 2022, and is active. Such prior License record also reflects that there is only the instant open complaint, three resolved/settled complaints, and no discipline against Respondent’s license.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

The credible, substantial, and probative evidence of record established that Respondent abandoned its contract with Complainant or refused to perform without legal excuse. Respondent contracted with Complainant in October 2022, and was paid $40,985.00 to obtain the specified 4K Aluminum materials for the project. It was not until January 16, 2023, that Respondent was prohibited from purchasing materials from 4K Aluminum and that prohibition only existed due to Respondent’s failure to pay 4K Aluminum for materials Respondent had previously procured from 4K Aluminum. Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(1).

The evidence established that Respondent did not complete the corrective work following the Written Directive being issued and that valid justification for such failure did not exist. Therefore, Complainant established that Respondent failed to take appropriate corrective action following a Written Directive from the Registrar in violation of A.R.S. § 32-1154(A)(22).

A.R.S. § 32-1156.01(A) provides, “[a]fter a hearing pursuant to this article, an administrative law judge may recommend that a licensee provide restitution to any person who is injured or whose property is damaged by an action of the licensee.”

The Administrative Law Judge finds that the appropriate discipline in this matter is a provisional suspension of Respondent’s license until it refunds to Complainant the amount Complainant paid to Respondent for the 4K Aluminum materials that Respondent did not procure. Respondent acknowledged that it owes Complainant the amount of $40,985.00.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the Registrar suspend Respondent’s License Number 336822 issued by the Registrar until it has provided to the Registrar, and the Registrar has accepted documents that establish that it has paid Complainant $40,985.00 in certified funds.

It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(E).

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 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 A.R.S. § 32-1101(A)(7), unless Respondent tenders payment of any outstanding prior civil penalty.

Pursuant to A.R.S. § 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, May 23, 2024.

/s/ Sondra J. Vanella

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

John Peru

[email redacted]

Stephen L. Weber, Esq.

Weber Law Firm, PLLC

[email redacted]

Spartan Shade Systems, LLC

[email redacted]

By: OAH Staff