ALJDEC - Licensing
2023A-09641-CHC-ROC · Registrar of Contractors · 2024-01-01
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Pat Lavallee,
COMPLAINANT,
v.
M & M Diversified LLC
ROC License No. 288011,
RESPONDENT.
No. 2023A-09641-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: December 13, 2023 at 1:00 PM.
APPEARANCES: Patricia Lynn Lavallee (“Complainant”) appeared on her own behalf. Sean P. Mendoza appeared on behalf of M & M Diversified LLC (“Respondent”). Mike Springer appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Richard Lavallee observed.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The October 26, 2023, Notice of Hearing, including the Registrar’s attached agency file, and November 08, 2023, Hearing Order were admitted into the record as their own exhibits.
_____________________________________________________________________
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 January 03, 2014, the Registrar issued License No. 288011 Specialty Dual CR-61 Carpentry, Remodeling and Repairs contracting license to Respondent. The license was renewed through January 31, 2024, but was suspended by operation of law, effective September 01, 2023, due to a Recovery Fund payout. Sean Patrick Mendoza is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 910 Plaza Del Gado Sierra Vista, Arizona 85635. Respondent had a $6,750.00 surety bond for the license issued by Platte River Insurance Company, effective December 01, 2021, which was cancelled on an unknown date. $4,250.00 remains payable on the policy. Currently, there are two (2) open complaints listed against the license, one of which is presumed to be related to this matter.
On or about August 21, 2023, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 288011 alleging poor work of their apartment remodeling project. The Registrar designated it Complaint No. 2023-09641 and assigned to Mike Springer (“Investigator Springer”) for investigation.
On August 22, 2023, Investigator Springer issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on September 12, 2023, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.
On July 17, 2023, Investigator Springer inspected the work that had been performed on the project to date. Respondent was not present. Investigator Springer also reviewed the contract-related correspondence between the parties, and took 52 photographs of the project site. When he was finished, Investigator Springer drafted his Inspection Notes. Investigator Springer derived eight (8) separate and distinct complaint items from Complainant’s submission. Ultimately, he was able to substantiate five (5) complaint items based on his firsthand observations. Specifically, Investigator Springer noted that complaint items 1-5 required correction and/or completion by Respondent because the work fell below the Registrar’s minimum workmanship standards.
On or about August 22, 2023, Investigator Springer issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in its contracts, including his contract with Complainant.
On September 12, 2023, Investigator Springer issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated most of Complainant’s complaint allegations against Respondent. Respondent was put on notice that it had until 5:00 p.m. on September 29, 2023, to notify the Registrar of its compliance with the Directive (e.g. obtain structural drawings and a building permit, and remedy the substantiated complaint items by appropriate means) or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On October 02, 2023, Investigator Springer escalated 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), 32-1154(A)(12); 32-1158,, 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. Mendoza argued that Complainant had filed Complaint No. 2023-09641 before the project was finished in an attempt to compel Respondent to address her punch list, and that the project took longer than expected to complete due to Change Orders requested by Complainant. Mr. Mendoza also noted that due to the suspension of License No. 288011 that Respondent could not perform any corrective work on the project during the Directive’s compliance period.
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 13, 2023. Per the October 26, 2023, Notice of Hearing on Contested Case (“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)(22)
On November 08, 2023, OAH issued a Hearing Order to the parties that provided remote participation information, including a videoconference hyperlink and teleconference dial-in information, for the hearing scheduled November 30, 2023. Correspondence was not returned as undeliverable to Respondent.
Hearing Evidence
Complainant testified on her own behalf and called Investigator Springer as a witness. Respondent called Sean Mendoza as a witness. The substantive evidence of record is as follows:
Complainant owns a 6-unit apartment building located at 1116 E. Fremont St. Tombstone, Arizona 85638.
On or about September 09, 2022, the parties entered into a $29,915.00 contract for to remodel a deck and 3 units at Complainant’s apartment complex; including cabinetry, flooring, drywall, electrical, paint, and plumbing. Complainant paid this invoice in full.
On or about March 03, 2023, the parties executed a $10,515.00 Change Order for the remodel of 3 additional units. Complainant paid half of the invoice.
On or about March 30, 2023, the parties executed a $1,600.00 Change Order for carpentry work and swamp cooler removal. Complainant paid the invoice in full.
On or about March 31, 2023, the parties executed a $1,000.00 Change Order for additional electrical work. Complainant paid the invoice in full.
On or about May 08, 2023, the parties executed a $400.00 Change Order for door installation. Complainant paid the invoice in full.
There is an approximate outstanding balance of $5,257.00 owed on the project.
Work on the project commenced in September 2022, and stopped on or about August 21, 2023.
Although Respondent received the Registrar’s jobsite inspection notice, Mr. Mendoza chose not to attend. He provided Investigator Springer with notice beforehand.
On or about September 01, 2023, License No. 288011 was suspended by the Registrar. As such, the only allowable means by which Respondent could comply with the Registrar’s Directive was for Mr. Mendoza to enter into a financial settlement agreement with Complainant.
Closing Argument
Both of the parties forewent providing closing arguments and instead indicated that they were interested in settling their underlying dispute.
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 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 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.”
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)(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.
It is undisputed that Respondent’s initial contract with Complainant did not contain all statutorily required elements. It is also undisputed that the Complainant paid Respondent nearly 88% of the contract price for the underlying project(s). It is also undisputed that Respondent did not complete the project per the terms of its contract and change orders, and that most of the work Respondent performed did not satisfy the minimum standards set for workmanship by the Registrar. It is further undisputed that Respondent failed to timely and completely comply with the Registrar’s Directive. Thus, violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(12); 32-1158, and 32-1154(A)(22) have been established by a preponderance of the evidence.
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 complete Complainants’ project per contract. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent did not sustain his burden. There is no evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project; not even the suspension of License No. 288011. Respondent could have settled its dispute with Complainant prior to hearing, and chose not to do so.
Therefore, because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(12); 32-1158, and 32-1154(A)(22), Complainant has also established cause 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 M & M Diversified LLC, ROC License No. 288011, be suspended for seven (7) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(12), and 32-1154(A)(22).
IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $300.00 (three hundred) 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, January 02, 2024.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Tom Cole, Director
c/o Legal Department
Registrar of Contractors
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
M & M Diversified LLC, Respondent
910 Plaza Del Gado
Sierra Vista, AZ 85635
[email redacted]
[email redacted]
Pat Lavallee, Complainant
6128 W. McRae Way
Glendale, AZ 85308
[email redacted]
By: OAH Staff