ALJDEC - Licensing
2023A-06461-RFA-LS-ROC · Registrar of Contractors · 2024-06-20
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Frank A. Reda,
COMPLAINANT,
v.
Victory Contracting LLC
ROC License No. 321316,
RESPONDENT.
No. 2023A-06461-RFA-LS-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: June 20, 2024 at 9:00 AM.
APPEARANCES: Assistant Attorney General Charles Hover III, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Gail Matthews as a witness. Frank Reda (“Complainant”) appeared on his own behalf. Melaquias Sandoval appeared on behalf of Victory Contracting LLC (“Respondent”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Appealable Agency Action (“Notice of Hearing”), Hearing Order issued May 31, 2024, and Registrar Exhibits 1-9 were admitted into the evidentiary record.
_____________________________________________________________________
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 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 July 27, 2018, the Registrar issued License No. 321316 to Respondent for Specialty Dual CR-36 Plastering contracting. The license is active, in good standing, and renewed through July 31, 2024. Melaquias Sandoval is the Qualifying Party and Member on the license. Respondent’s address of record for the license is 1210 W. Alameda Dr., Ste. 111 Tempe, Arizona 85282. Respondent has an active $6,750.00 surety bond on the license, effective January 05, 2024. There is one prior disciplinary event noted for the license, which is presumed to be related to this matter.
On or about June 06, 2023, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 321316 alleging poor workmanship of their cabinetry and countertop project. The Registrar designated it Complaint No. 2023-06461 and assigned to Albert Bernal (“Investigator Bernal”) for investigation.
On June 15, 2023, Investigator Bernal issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on July 12, 2023, at 9:30 a.m.
On August 09, 2023, Investigator Bernal issued a Warning Letter to Respondent because he believed the work on the underlying project required possession of a CR-21 Hardscaping and Irrigation System 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 July 12, 2023, Investigator Bernal conducted a review of the contract executed between the parties, took 15 photographs, and inspected the work that had been performed on the project. Respondent was present. When he was finished, Investigator Bernal drafted his Jobsite Inspection Notes. Ultimately, Investigator Bernal determined that there were a total of three (3) separate and distinct complaint items contained within Complainant’s original complaint. Of those, Investigator Bernal substantiated one (1) complaint item. Specifically, Investigator Bernal concluded that the work Respondent had performed on complaint item 3 failed to meet the Registrar’s minimum workmanship standards based on his firsthand observations.
On July 14, 2023, Investigator Bernal issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated one of Complainant’s workmanship allegations against Respondent. The Directive included the following advisement, in pertinent part:
DIRECTIVE REQUIREMENTS
You are directed to remedy the following violations by the appropriate means:
Complaint Item 3 – Investigator’s Observation: I noted that a residue white in color was present on top of several areas of the travertine pavers’ deck surface. Remove white residue from pavers’ surface.
(Emphasis in original.)
Respondent was further 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 Ariz. Rev. Stat. §§ 32-1154(A), 32-1154(A)(22), and 32-1154(E).
On an unknown date, Investigator Bernal 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 an alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(16), 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.
The Registrar received a timely Answer from Respondent.
On August 28, 2023, the Registrar referred 2023A-06164-CHC-ROC to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on October 23, 2023. Per the September 07, 2023, Notice of Hearing on Contested Case (“Notice of Hearing”) the issues to be determined were whether the Registrar had 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)(16)
Charge 3: A.R.S. § 32-1154(A)(22)
On October 23, 2023, an administrative evidentiary hearing took place at OAH before ALJ Stone. On November 07, 2023, ALJ Stone issued his Recommended Decision to the Director of the Registrar.
On November 30, 2023, pursuant Ariz. Rev. Stat. § 41-1092.08(B), the Registrar issued a Final Administrative Decision and Order (“Final Order”) whereby the ALJ’s Recommended Decision was modified, and Respondent was held to be in violation of Ariz. Rev. Stat. §§ 32-1154(A)(3), (A)(16) and (A)(22). Specifically, the Registrar held the following:
[Th]e project, which included installation of travertine pavers and bullnose coping, required a CR-21 hardscaping and irrigation system license, which Respondent did not hold. Therefore, the Registrar modifies Administrative Law Decision to include a violation of A.R.S. § 32-1154(A)(16).
Thus, the Registrar replaced ¶4, page 5, with the following:
As to contracting outside the scope of his license, Respondent contracted beyond the scope of its license(s) as the project required a CR-21 hardscaping and irrigation system license. Therefore, Respondent violated A.R.S. § 32-1154(A)(16).”
As such, the Registrar suspended Respondent’s license for five (5) days and imposed a $500 civil penalty. On January 09, 2024, the Final Order became effective. Neither party appealed the order.
On February 05, 2024, the Registrar received Complainant’s petition for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G), in the amount of $28,337.20. Attached were proof of Complainant’s residency for the underlying property, proof of payments made to Respondent for the related project, a bond denial letter from Respondent’s insurance company, and five (5) remediation bids from various contractors; a $3,834.00 repair quote from Prestige Floor and Carpet Care, a $5,325.08 repair quote from Baker’s Travertine Power Clean, a $6,064.00 repair quote from PV Interiors, a $27,750.00 replacement quote from Arizona Hardscapes, Inc., and a $28,924.40 replacement quote from Paver Aces.
On April 15, 2024, the Registrar issued a Notice of Claim for Administrative Award (“Notice of Award”) to the parties which held that Complainant was awarded $6,064.00 from the Fund.
On April 19, 2024, the Registrar received an appeal letter from Complainant solely contesting the amount awarded from the Fund.
Respondent did not appeal the Notice of Award.
On April 26, 2024, the Registrar referred 2023A-06461-RFA-LS-ROC to OAH for an independent evidentiary hearing. Per the Notice of Hearing on Appealable Agency Action (“Notice of Action”) sent to the parties on May 15, 2024, the issues for hearing are to determine whether Complainant’s award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.
On June 20, 2024, an administrative evidentiary hearing took place at OAH.
Hearing Evidence
At the hearing, the Registrar called Gail Matthews as a witness. Complainant testified on his own behalf. Respondent called Melaquias Sandoval as a witness. The substantive evidence is as follows:
Complainant leases residential property located at 3755 S. Windstream Pl. Chandler, Arizona 85286. The property is owned by Complainant and is his primary residence.
On or about April 22, 2022, the parties entered into a $47,016.00 travertine pool deck installation agreement with Respondent, which also included a rock feature, step extension, and plumbing. Complainant paid Respondent in full for the project.
ROC License No. 321316 was suspended by the Registrar for lack of bond from July 18 2023, through January 16, 2024. ROC License No. 318471 has never been disciplined by the Registrar.
Ms. Matthews is a Legal Assistant II for the Registrar. Ms. Matthews made the determination that Complainant was eligible for an administrative payout from the Fund because she satisfied all statutory requirements for an award. Specifically, Ms. Matthews determined the following:
There is not an unpaid balance on the underlying contract between the parties.
Complainant did not receive a bond payout for the underlying project. On February 02, 2024, Respondent’s bond company, RLI Insurance Company (“RLI”), denied claims Complainant submitted against both of Mr. Sandoval’s licenses. In denying Complainant’s claims, RLI noted the following:
In reviewing your allegations, it does not appear that many of the items in the scope of the work performed, are covered by a [sic] R-8 license nor a CR-36 license. Please note that RLI’s bonds cannot be held liable for activity unrelated to the CR-8 and CR-36 license classification.
(Emphasis added.)
As a result of Complaint No. 2023-06461 being filed with the Registrar, Respondent’s license was suspended for five (5) days and assessed a $500.00 civil penalty.
On or about March 22, 2024, Ms. Matthews inquired with Investigator Bernal as to whether the tiles in the underlying project warranted replacement or repair, as Complainant had submitted bids for both with his Fund petition. In response, Investigator Bernal clarified that replacement of all tiles would be “excessive,” and confirmed that repair would be sufficient to remediate Complainant’s project. Using that information, Ms. Matthews reviewed all bids submitted by Complainant and selected PV Interiors as being closest in line with the Registrar’s Directive.
Therefore, Ms. Matthews concluded that Complainant’s $6,064.00 compensable damages, for damages sustained as a result of Respondent’s poor workmanship, fell under statutorily cap of $30,000.00 per Ariz. Rev. Stat § 32-1132.01.
Additional Evidence
Complainant testified that he hired three (3) different licensed contractors, including PV Interiors, to repair 4x4 sample areas on his travertine deck, to no avail.
Per Complainant, the Registrar was misguided in relying on the PV Interiors’ bid when they had already proven to be unreliable. Complainant further opined that since multiple contractors were unable to repair his deck tiles, which left no other choice but for the Registrar to cover the cost of their replacement.
Closing Arguments
In closing, the Registrar opined that Complainant failed to sustain his burden of proof in the matter, and that no facts had been presented by Complainant to rebut the Registrar’s credible evidence. The Registrar argued that Complainant met every statutorily mandated requirement for payout from the Fund, and, per administrative calculations, was eligible for a $6,064.00 payout from the Fund. The Registrar also argued that Complainant’s unsubstantiated opinions regarding licensing requirements for the remediating contractor and need to replace Respondent’s poor workmanship were baseless and immaterial, and that both parties’ attempts to re-litigate 2023A-06164-CHC-ROC was impermissible. Per the Registrar, it had satisfied its fiduciary duty to comply with the pertinent sections of the law and protect the purpose of the Fund as its fiduciary.
In closing, Complainant argued that he should receive a $27,000.00 payout from the Fund so that his project could be redone.
Respondent declined to provide a closing argument.
CONCLUSIONS OF LAW
This matter lies within the Registrar’s jurisdiction. The matter was properly brought before OAH.
The purpose of the Registrar’s licensing statutes is to protect the public from unscrupulous, unqualified, and financially irresponsible contractors.
Complainant bears the burden of establishing by a preponderance of the evidence that the Registrar’s Recover Fund claim award amount was incorrect and/or improperly issued. The Registrar bears the burden to establish factors in mitigation 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.”
Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet specific eligibility criteria. An individual is eligible for an award from the residential contractors’ recovery fund if they both: (1) own residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance, and (2) actually occupy or intend to occupy the residential real property as the individual’s primary residence. Additionally, the applicant must have contracted with a residential contractor who was appropriately licensed either at the time of contract execution, when the first payment on the project was made, or when the work on the project first began.
Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”
Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Recovery Fund is $30,000.00.
Statutes should be interpreted to provide a fair and sensible result. 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.” “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 crux of the matter is whether repair or replacement would make Complainant “whole,” and which bid Complainant submitted, if any, could fulfill the corrective work order. In the case at bar, however, a detailed factual analysis is not necessary because Complainant failed to present any compelling evidence at hearing.
Here, the Registrar soundly established Complainant’s eligibility to access the fund, as well as the calculation and resulting award therefrom. Conversely, Complainant failed to provide an indicia of evidence to outweigh the Registrar’s credible evidence. Complainant’s vehement assertion that a CR-21 Hardscaping and Irrigation System contracting license was required to remediate his project is factually and legally incorrect. Per the Directive, Respondent was only required to “[r]emove white residue from pavers’ surface” by appropriate means. The Registrar included the Ariz. Rev. Stat. § 32-1154(A)(16) violation in its Final Order regarding other terms of the parties’ agreement that fell outside the scope of Respondent’s. To that end, it is debatable as to whether both of Respondent’s licenses should have been utilized in the underlying Citation; particularly because Respondent’s plastering license was suspended for nearly all of the Directive’s compliance period, while his floor covering license remained active and unencumbered and was sufficient for the purposes of addressing Complainant’s tile repair. Regardless, the record clearly establishes that repair, not replacement, is the appropriate methodology to use in remediating the underlying project. As such, the Tribunal concludes that the Registrar’s reliance on PV Interiors’ $6,064.00 bid is appropriate because it comports with the parameters of the Registrar’s Directive and is reasonable under the circumstances.
Thusly, it must be held that Respondent failed to sustain its burden of persuasion in this matter. Based on the credible and relevant evidence of record, the Tribunal must conclude that the Registrar soundly established Complainant’s eligibility to access the Recovery Fund, as well as the amount of her administrative award. Therefore, the undersigned Administrative Law Judge must conclude that Complainant was properly awarded an administrative payout from the Fund.
The Administrative Law Judge must conclude that Complainant’s appeal is denied.
RECOMMENDED ORDER
Based on the foregoing,
IT IS RECOMMENDED that the Registrar affirm the Fund’s April 15, 2024, $6,064.00 Notice of Award.
IT IS FURTHER RECOMMENDED that the Registrar dismiss Respondent’s appeal.
NOTICE
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, June 24, 2024.
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
Phoenix, AZ 85007
[email redacted]
Charles Hover III, Esq., Assistant Attorney General
Office of the Attorney General
2005 N. Central Ave.
Phoenix, AZ 85004
[email redacted]
Victory Contracting LLC, Respondent
1210 W. Alameda Dr. Ste. 111
Tempe, AZ 85282
[email redacted]
Frank A Reda, Complainant
3755 S. Windstream Pl.
Chandler, AZ 85286
[email redacted]
By: OAH Staff