ALJDEC - Licensing
2023A-07437-CHC-ROC · Registrar of Contractors · 2024-02-15
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Kabir Singh Bains,
COMPLAINANT,
v.
Bacon Family Contracting LLC
ROC License No. 319131,
RESPONDENT.
No. 2023A-07437-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: December 14, 2023 & January 30, 2024.
APPEARANCES: Kabir Singh Bains (“Complainant”) appeared on his own behalf. Jack Grimm appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Kevin Estevez, Esq. and Ian Balitis, Esq. appeared on behalf of Bacon Family Contracting LLC (“Respondent”) with Nicholas Bacon as a witness.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, including the Registrar’s attached agency file, were admitted into the record. Complainant Exhibits 2, 4, 7-8, 15 (pt. 3-4), 18 (pt. 6), and 20 were admitted. Respondent Exhibits 4, 8, 10, and 20 were also admitted into the 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 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 April 12, 2018, the Registrar issued License No. 319131 General Dual Building KB-1 contracting license to Respondent. The license is renewed through April 30, 2024. Nicholas Comstock Bacon is listed as the Qualifying Party and Member on the license. George S. Bacon III is also listed on the license as a Member. Respondent’s address of record for the license is 232 W. Reeves Ave. San Tan Valley, AZ 85140. Respondent has an active $14,000.00 surety bond on the license issued by RLI Insurance Company, effective March 22, 2018. The license no prior disciplinary record, save 1 prior settled complaint and 1 open complaint which is presumed to be related to this matter.
On or about June 30, 2023, the Registrar received a 9-item complaint from Complainant against Respondent’s License No. 319131 alleging poor work of their commercial construction project. The Registrar designated it Complaint No. 2023-07437 and assigned to Jack Grimm (“Investigator Grimm”) for investigation.
On July 11, 2023, Investigator Grimm issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on August 09, 2023, at 9:00 a.m. Correspondence was not returned as undeliverable to Respondent.
On August 09, 2023, Investigator Grimm inspected the work that had been performed on the project to date. Respondent was present. Investigator Grimm also reviewed the contract-related correspondence between the parties, and took 17 photographs of the project site. When he was finished, Investigator Grimm drafted his Inspection Notes. Ultimately, Investigator Grimm substantiate 3 of Complainant’s complaint items based on his firsthand observations. Specifically, Investigator Grimm determined Respondent’s workmanship on complaint items 2 and 5-6 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.
A tenth complaint item was added to the complaint during the jobsite inspection, but was not substantiated by Investigator Grimm.
On August 21, 2023, Investigator Grimm issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated some of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on September 11, 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).
Investigator Grimm also included the following advisement regarding the remediation of complaint items 2 & 5-6:
DIRECTIVE REQUIREMENTS:
You are directed to remedy the following violations by appropriate means:
(Emphasis in original.)
Complaint Item #2 – Observation: The two locations that where addressed regarding poorly finished and paint drywall is the ceiling island over the cooking area and order station and the location over the soda fountain area. Contractor at the inspection stated he only made drywall repairs and finished a small corner location over the door going into the rear of the kitchen. However based on the photos the contractor provided taken during his work regarding the ceiling over the cooking area extended out to almost the location of the menu TV’s. This ceiling drywall is not flat and is irregular. Contractor states he offered to correct this location and was told no they needed to get opened. The other location observed was the island over the soda fountain. This location appears acceptable. *Correct drywall ceiling over the cooking area for flatness and appearance. Parties will have to work out reasonable access for repairs.
Complaint Item #5 – Observation: Door appears to be installed correctly. It does not self-close correctly[.] *Adjust for correct operation.
Complaint Item #6 – Observation: The proprietary business wrap/wall paper appears to have been damaged during the installation of the door into the office. It appears some drywall damage also occurred under the wall paper as well. *Correct by appropriate means.
Correspondence was not returned as undeliverable to Respondent.
On September 19, 2023, Investigator Grimm issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on September 25, 2023, at 9:00 a.m. Correspondence was not returned as undeliverable to Respondent.
On September 25, 2023, Investigator Grimm inspected the corrective work that had been performed on the project and took 8 photographs. Respondent was not present. When he was finished, Investigator Grimm drafted his Compliance Jobsite Inspection Notes. Ultimately, Investigator Grimm determined that Respondent had not performed corrective work necessary to remediate complaint items 2 and/or 5-6. Investigator Grimm noted the following in particular:
Complaint Item #2 – INCOMPLETE: No work was performed on this item.
Complaint Item #5 – INCOMPLETE: Adjustments were performed. Door now does not close to the jam stop and the door can be pushed open without pushing the panic bar and can just be pulled open from the outside without turning the handle.
Complaint Item #6 – INCOMPLETE: No work was performed on this item.
On September 29, 2023, Investigator Grimm forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On October 03, 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 October 18, 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 October 17, 2023, the Registrar received Respondent’s timely Answer whereby Mr. Bacon offered the following:
Respondent was hired by Complainant to complete the work of Complainant’s original contactor (“OC”), and perform corrections where necessary. At the time the underlying contract was entered into, Complainant’s grand opening was already 6 months behind schedule.
The office door, which had incorrect dimensions per plans, was framed by OC. Respondent had to modify the opening greatly to fit the door. The tile and wallpaper, which had already been completed, also needed to be modified to the opening.
The door to the back of the restaurant would not latch. A Change Order was executed for Respondent to address it. Complainant’s franchise owner’s provided hood system equipment would not fit through the existing door. Complainant purchased the new door and installation materials.
Regarding the drywall, on several different occasions Respondent offered to address Complainant’s concerns but was denied access. Specifically, Complainant restricted Respondent’s working hours, and demanded back-charges for lost income during specific times.
Complainant refused to pay Respondent’s final invoice. Items in Complaint No. 2023-07437 were not an issue until Respondent tried to collect the final balance.
On October 20, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on December 14, 2023. Per the October 26, 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 his own behalf and called Investigator Grimm as a witness. Nicholas Bacon testified on behalf of Respondent. The substantive evidence of record is as follows:
Complainant, along with his mother (“Mother”), owns commercial property located at 11 W. Washington St., Ste. 120 Phoenix, Arizona 85003. The property is used as a franchised restaurant operating as “Nick the Greek.” The restaurant is their first business venture.
On or about November 16, 2022, the parties entered into a $14,337.36 commercial repair and remodel contract for Nick the Greek. No less than 2 Change Orders were executed between the parties, which increased the contract cost to $83,215.11.
Originally, Complainant had hired another general contractor for his commercial project, but Respondent was later hired to remediate and complete the project.
Work on the projects commenced in or around November 2022, and stopped on or about March 17, 2023.
Complainant paid Respondent $79,050.42 towards the project. A $4,164.69 balance is owed on the contract.
The contract notes, in pertinent part, as follows:
Contractors Limited Warranty. Contractor warrants to the Owner that all materials and equipment furnished under this Contract shall be new unless otherwise specified and that all Work under this agreement will be performed in a good and workmanlike manner, shall be of good quality, free from faults and defects, and in conformance with Contract Documents for a period of two (2) years following completion. Contractor, during normal business hours and at its expense, will make any and all necessary repairs and replacements, provided such repairs and replacements are necessary as a result of defective workmanship or materials and provided Contractor is granted reasonable access to the Project during normal hours. Contractor’s obligations under this warranty are limited to repair and replacement. This contract does not include labor or materials provided by subcontractors that are not contracted directly with Contractor. CONTRACTOR GIVES NO WARRANTIES EXCEPT THOSE EXPRESSLY CONTAINED HEREIN. CONTRACTOR DISCLAIMS ALL OTHER WARRANTIES AND CONDITIONS IMPLIED BY LAW, USAGE OF TRADE, COURSE OF DEALING OR COURSE OF PERFORMANCE INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY, QUALITY, AND FITNESS FOR A PARTICULAR PURPOSE.
(Emphasis in original.)
On March 17, 2023, Nick the Greek opened for business. The restaurant is open from 11:00 a.m. to 9:0 0p.m. daily.
Respondent received the Registrar’s jobsite and compliance inspection notices, but chose not to participate in the compliance inspection.
On August 21, 2023, Respondent contacted Complainant to schedule corrective work per the Registrar’s Directive. Respondent advised that it would need “three 8 hour periods” in order to get the work completed.
In a text exchange with Mother that same date, Respondent informed Mother that her offer to settle Respondent’s final invoice for $1,250.00 “is not going to cut it,” in light of the fact that Nick the Greek was “open, operating, and making money” while Respondent had yet to be paid in full by Complainant. Mother replied that she “can’t have people coming in here anymore ... what[‘s] done is done” and that she would pay Respondent’s invoice by check.[sic]
On August 23, 2023, Complainant replied that he would only grant Respondent access to perform corrective work between 10:15 p.m. until 7:00 a.m., with the exception of the rear door repair whereby he granted access from 11:30 a.m. to 10:00 p.m. Complainant also conditioned Respondent’s access upon Respondent cleaning dust and debris, hauling trash, and requiring Respondent to financially compensate Complainant for “loss of sales” any day the restaurant was closed for repairs. Additionally, Complainant demanded that Respondent sign another agreement between Complainant and a third party for the wrap and related repair.
Respondent’s normal business hours are from 6:00 a.m. to 2:00 p.m. For the sole purpose of addressing the Registrar’s Directive, Respondent offered to perform corrective work from 4:30 a.m. to 8:30 a.m., noting that set-up and cleanup would take about 1.5hrs in total each day. Complainant declined over fears regarding “profit loss.”
On August 23, 2023, Respondent replied that it would agree to “work overtime, after hours” if Complainant would agree to pay Respondent’s after hours rates prior to the commencement of work.
Complainant did not respond.
Additional Evidence
Complainant provided the rear door for the project. Per Respondent, the door appeared to be warped, which Respondent opined to be the result of a manufacturer’s defect. Nonetheless, Respondent installed the door and attempted to adjust the latch and closing speed. Respondent did not advise Complainant that the door was potentially warped prior to installation. Investigator Grimm testified that the door had been installed in a workmanlike manner, but that the door did not close properly.
Per Respondent, Complainant’s prior general contractor had framed the office doorway incorrectly, which Respondent determined needed to be widened and heightened. In approving the work, Complainant knew that surrounding and/or affixed tie, wallpaper, and/or paint would be affected and require repairs afterward. Per Investigator Grimm, contractors accept surface area(s) but not framed area(s).
The wallpaper is proprietary to Nick the Greek. Per the franchise owner agreement, only authorized vendors may install the wallpaper. Respondent was not privy to this information prior to commencing this portion of the project, nor was Respondent authorized by corporate to perform the wallpaper installation.
Investigator Grimm testified that there was a visible 1-1.5 inch tear in the wallpaper. Complainant told Respondent that it would cost $12,000.00 to $13,000.00 to repair.
Complainant performed repairs to the office door using “mud,” and had another contactor perform corrective work on the wallpaper.
Closing Arguments
In closing, Respondent argued that the Registrar should forgo discipline against License No. 319131 because the rear door Complainant purchased for the project was defective, the office door had been framed incorrectly, Respondent was precluded from correcting the proprietary wallpaper, Complainant had unreasonably restricted its access to the project site which amounted to a denial of access, and that Complaint No. 2023-07437 was filed by Complainant in retaliation and to avoid final payment.
In closing, Complainant argued that discipline was warranted against License No. 319131 as the parameters set for Respondent’s corrective work under the Directive were reasonable given the circumstances, and that all complaint items remained at issue by the date of Investigator Grimm’s compliance jobsite inspection.
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 clear.
It is clear from the record that the parties had a valid commercial repair and remodel contract, of which there had been substantial performance by Respondent and payment by Complainant. It is also clear from the record that a portion of Respondent’s workmanship failed to meet the Registrar’s minimum workmanship standards, and that a Directive was issued for substantiated complaint items 2 and 5-6 as a result. The record further reflects that Respondent did not make sufficient corrections to substantiated complaint item 5, and did not make any corrections to substantiated complaint items 2 and 6 during the Directive’s compliance period.
Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s Directive and timely remediate Complainant’s project. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent has sustain its burden, in part. The parties’ contract agreement, specifically the limited warranty contained therein, specifically states that Respondent shall be permitted to perform corrective work and repairs “during normal business hours.” The record is clear that Complainant did not honor his agreement with Respondent, or mind the advisement regarding acceess in the Guide to Written Directives. Complainant’s severe limitation to access of the project site amounts to a denial of access. The record also clearly establishes that Respondent was prohibited from addressing corrections regarding the proprietary wallpaper, which also amounts to a denial of access. Thusly, complaint items 2 and 6 are unsubstantiated and moot. Although Respondent vehemently contended that the rear door was warped, and therefore defective, there is no credible evidence in the record to corroborate this contention. Respondent admittedly did not alert Complainant of its concerns prior to installation, and made several “adjustments” after the rear door was installed. Regardless of the fact that Respondent installed the rear door in a workmanlike manner, Respondent was still responsible for ensuring that it functioned properly as well; including closing. Notably, Mother’s text of August 21, 2023, does not justify or excuse Respondent’s lack of action regarding this issue.
Therefore, only substantiated complaint item 5 is at issue in this matter.
Because substantiated complaint item 5 is not de minimis, and because Respondent was granted access to perform corrective work from 11:30 a.m. to 10:00 p.m. during the Directive’s compliance period, Complainant has established violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). As such, ground exist for the Registrar to discipline Respondent’s contractor’s license.
RECOMMENDED ORDER
Based on the foregoing,
IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter, Respondent Bacon Family Contracting LLC, ROC License No. 319131, be suspended two (2) days.
IT IS FURTHER RECOMMENDED that the Registrar forgo the assessment of a
civil penalty against Respondent in this matter.
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, February 15, 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]
Bacon Family Contracting LLC, Respondent
c/o Kevin Estevez, Esq. & Ian Balitis, Esq.
Holden Willits PLC, Counsel for Respondent
2 N. Central Ave., Ste. 2000
Phoenix, AZ 85004
[email redacted]
[email redacted]
Kabir Singh Bains, Complainant
11 W. Washington St., Ste. 120
Phoenix, AZ 85003
[email redacted]
By: OAH Staff