ALJDEC - Licensing
2023A-10308-CHC-ROC · Registrar of Contractors · 2024-09-09
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Ken Boldt,
COMPLAINANT,
v.
Atlas General LLC
ROC License No. 277937,
RESPONDENT
No. 2023A-10308-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: April 09, 2024 & August 08, 2024.
APPEARANCES: Ken Boldt (“Complainant”) appeared on his own behalf with Kyle Myers as a witness. Aaron King appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Alfonso Larriva appeared on behalf of Atlas General LLC with Yonathan Benitez and Alexander Anau as witnesses.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the Registrar’s attached agency file, Complainant Exhibits 1-10, and Respondent Exhibits A-G were 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 March 30, 2012, the Registrar issued License No. 277937 B General Residential contracting license to Respondent. On April 09, 2024, the license was voluntarily cancelled by Respondent. Alfonso Antonio Larriva is listed as the Qualifying Party and Member on the license. Atlas Capital, LLC is also listed as the Parent Entity for the license. Respondent’s address of record for the license was 6250 E. Cheney Dr. Paradise Valley, Arizona 85253-3518. Respondent had a $9,000.00 surety bond on the license issued by Western National Mutual Insurance Company, which has been cancelled. The license has been previously disciplined by the Registrar on one (1) occasion. Currently, the license has one (1) open complaint against it; which is presumed to be related to this matter.
On September 05, 2023, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 277937 alleging poor workmanship of a residential roofing installation project. The Registrar designated it Complaint No. 2023-10308 and assigned to Aaron King (“Investigator King”) for investigation.
On September 14, 2023, Investigator King issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on October 05, 2023, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.
On October 05, 2023, Investigator King inspected the work that had been performed on the project to date. Respondent was present. Investigator King also reviewed the contract-related correspondence between the parties, and took 6 photographs of the project site. When he was finished, Investigator King drafted his Inspection Notes. Ultimately, Investigator King derived four (4) separate and distinct complaint items from Complaint No. 2023-10308, the last of which he substantiated based on his firsthand observations. Specifically, Investigator King determined that complaint item #4 failed to meet the Registrar’s minimum workmanship standards and required correction by Respondent.
On October 13, 2023, Investigator King issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated one-fourth of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on October 30, 2023, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Arizona Revised Statutes (“Ariz. Rev. Stat.”) §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On November 27, 2023, Investigator King issued a second Jobsite Inspection Notification Letter to the parties, advising that he would conduct a re-inspection of the project on November 30, 2023, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.
On November 30, 2023, Investigator King re-inspected the work that had been performed on the project. Respondent was not present. Investigator King took 26 photographs of the project site. When he was finished, Investigator King drafted his Inspection Notes. This time, Investigator King substantiated complaint items 1-3 from Complaint No. 2023-10308. Investigator King made the following notations, in pertinent parts:
[T]he contract between the Complainant and the Respondent stated that the underlayment would be removed and a new one would be installed. The roof shows that the old one is still in place with the new one on top. The invoice also shows the removal of old underlayment as well. This means that the installation was not done according to contract. Additionally, the manufacturers installation instructions have stated that for UDL 50, that staples are not to be used as they will void the warranty, and staples were used in this installation. The exact wording states, “DO NOT USE STAPLES: The use of staples to penetrate UDL50 will void warranty.” Multiple examples show that staples were used instead of the nails required in the manufacturer’s directions. The entire roof warranty is voided with stapled UDL50.
When referencing the Tile Roofing Institute and the Eagles Version for the Eagle Tile used on this home, the industry standard is shown to require pre-flashing. The area is supposed to put a pre-flashing on and the Respondent didn't put the pre-flashing, they just sealed around it.
At the vent flashings it is required that there be an adhesive weather blocking material used over the tile and under the flashing. This is described in the Tile Roofing Institute, Installation Manual. The adhesive also helps to prevent the edge from flipping up in strong winds. Multiple flashings were standing up due to missing adhesive or by having old adhesive. Old adhesive is present in areas but it appears they were not re-sealed. Some of the flashings that are bent, may have cracked at the bend now and should be reviewed for replacement.
Vertical and horizontal lines should be reasonably straight unless varied deliberately for effect. There was no effect required and so the varied lines are not supposed to be there.
Thusly, all four (4) complaint items levied in Complaint No. 2023-10308. Were substantiated by Investigator King.
On December 11, 2023, Investigator King issued a second Directive to Respondent because he substantiated all of Complainant’s remaining complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on January 02, 2024, to notify the Registrar of its compliance with the Directive; specifically, to correct the identified deficiencies 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 January 17, 2024, Investigator King forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On January 25, 2024, 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 February 09, 2024, 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 February 09, 2024, the Registrar received a timely Answer from Respondent. Overall, Respondent opined that Complainant’s faulty solar panels caused the roof it installed to “fail prematurely,” and alleged that Complainant was “demanding and controlling” throughout the project. Respondent also noted its dissatisfaction with the assigned investigator, and alleged that management within the Registrar had to be engaged in order for Respondent to be heard. Respondent asked that another Directive be issued so that it could be afforded another opportunity to “repair the items in the original complaint.”
On February 14, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on April 09, 2024. Per the February 26, 2024, 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)(22)
Hearing Evidence
Complainant testified on his own behalf and called Investigator King and Kyle Myers as witnesses. Alfonso Larriva, Jonathan Benitez, and Alexander Anau testified on behalf of Respondent. The substantive evidence of record is as follows:
Complainant owns residential property located at 3917 N. Dorado Ln. Casa Grande, Arizona 85122. On an unknown date, prior to his contract with Respondent, Complainant had a photovoltaic system installed by Sunstream Solar.
Prior to commencing the underlying roof project, Complainant paid Sunstream Solar $5,300.00 to remove, and then later replace, the solar panels on his roof.
On an unknown date, the parties entered into an $11,568.85 residential roof removal and replacement agreement, the terms of which are as follows:
On April 10, 2023, Complainant tendered $5,000.00 to Respondent towards the project.
Work on the project commenced on or about May 01, 2023, and concluded on or about May 17, 2023.
On May 03, 2023, the parties executed a $1,300.00 Change Order for the use of smaller solar posts.
On May 11, 2023, Respondent issued Invoice No. 2021-16619 to Complainant for labor and materials on the project.
During the initial jobsite inspection regarding Respondent’s workmanship, Investigator King declined to go onto Complainant’s roof. He noted the following, in pertinent parts:
The roof is fully installed so I am unable to physically see the underlayment. Without definitive evidence showing the underlayment was not properly installed, the complaint item is therefore unverified.
On October 23, 2023, Respondent contacted Complainant to schedule corrective work later that same week. Complainant replied, in pertinent part, that “No one from [Respondent] is allowed on this property at this time. Still waiting for a report and pictures showing your work.”
Investigator King was advised by Respondent shortly thereafter that, “[Complainant] is now refusing to let us on property.”
On December 01, 2023, Complainant paid K&M Roofing $425.00 to inspect his roof and provide a comprehensive report. Afterwards, Complainant contacted Investigator King and requested a second jobsite inspection.
On November 30, 2023, at the subsequent second jobsite inspection, Complainant had Kyle Myers of K&M Roofing present, to remove dozens of roof tiles and vent stacks so that Investigator King could observe the state underneath from his vantage point on a nearby positioned ladder; including the lack of pre-flashing and underlayment.
Respondent arrived thirty (30) minutes after the start time of the inspection. The inspection was concluded by that time.
Respondent did not attempt to perform any corrective work during the initial Directive’s compliance period, or request an extension thereof.
One day towards the beginning of the second Directive’s compliance period, Respondent contacted Complainant to scheduled flashing-related corrective work. Although the parties had agreed on a date, Respondent failed to show up. Days later, Respondent called Complainant to advise that it was en route and would arrive been 12:00 p.m. and 2:00 p.m., to which Complainant replied, “That won’t cut it.” Upset that Respondent still only wanted to address the flashing, and not the underlayment which was the main point of Complainant’s contention, Complainant argued that Respondent should address the entire Directive, not just the flashing, or nothing at all. Because Respondent only wanted to address a portion of the corrective work and not the totality required by the Registrar, Complainant refused Respondent’s access to the project site. Complainant informed Respondent that it would have to wait until on or after the parties’ scheduled hearing date or thereafter to gain access to the project site. Between December 14, 2023, and December 16, 2023, the parties exchanged a plethora of emails, each escalating the ire and acrimony between them. On December 15, 2023, however, Respondent relented and agreed to subcontract-out the Directive’s corrective work, and informed Complainant that he would have the subcontractor reach out to schedule corrections after the New Year. Complainant agreed. On December 17, 2023, though, Respondent rescinded his offer, and informed Complainant that it wished to appeal the Directive to the Registrar.
On December 16, 2023, in an attempt to persuade the regulatory agency to change its position regarding the issuance of the second Directive, Respondent submitted 26 photographs to the Registrar. On December 27, 2023, Respondent alleged that it received untimely notice of the second jobsite inspection, and argued it possessed evidence to refute Investigator King’s adverse determinations. “[Complainant] was unhappy with the first directive and able to get his evidence reviewed and a second directive issued. We’re asking for the same right, and the answer I’m getting from Aa ‘too bad.’ We should have the same rights in this case considering the evidence provided.”
In response, on December 28, 2023, Assistant Chief of Investigations, Wes Ellington (“Asst. Chief Ellington”), informed Respondent that Investigator King’s second jobsite inspection was performed at his direction, due to the K&M Roofing inspection report Complainant provided, which Respondent failed to attend. “You chose not to attend the inspection, then chose not to provide this info until the new directive had been issued.” Asst. Chief Ellington advised Respondent that it could comply with the second Directive, or “do nothing and wait for [the] opportunity to request a hearing.”
Prior to the expiration of the second Directive’s compliance period, Respondent did not perform any corrective work or request an extension thereof.
Additional Evidence
Investigator King testified that on January 06, 2024, he spoke with the manufacturer of Complainant’s roofing materials. At that time he was informed that Complainant’s warranty would be voided by the company if they determined that staples had been used during the roof’s installation.
Mr. Larriva testified that Respondent used the materials provided in the roofing kit issued by the manufacturer.
Mr. Benitez testified that Respondent chose not to remove Complainant’s prior existing underlayment because it was in good shape and because Respondent did not want to jeopardize Complainant’s warranty with Sunstream Solar by cutting around solar posts. Per Mr. Benitez, Complainant was in agreement.
Mr. Anau testified that Respondent did reference the manufacturer’s installation manual prior to commencing work on the underlying project.
Closing Arguments
In closing, Respondent admitted that it had agreed with the first Directive issued in Complaint No. 2023-10308, but argued that the complaint items identified for correction under the second Directive were erroneous.
In closing, Complainant reiterated his dissatisfaction with Respondent’s workmanship, and argued Respondent’s refusal to address all substantiated complaint items was the reason he denied Respondent’s access to the project site.
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.
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.
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 residential roof removal and replacement agreement, and that Complainant paid Respondent approximately 43% towards their contract. It is also clear from the record that there were several deficiencies in Respondent’s work that required correction. Specifically, Complaint No. 2023-10308 had four (4) separate and distinct complaint items. At the initial jobsite inspection, Investigator King did not access Complainant’s roof. Only performed visual inspection. On October 13, 2023, Investigator King issued a Directive to Respondent solely regarding complaint item 4, which needed to be complied with by October 30, 2023. Complainant hired K&M Roofing to inspect roof and provide report, which was provided to Investigator King. As a result, a second jobsite inspection was scheduled. At the second jobsite inspection, with Mr. Myers’ assistance, Investigator King was able to make observation he was unable to make previously. As a result, on December 11, 2023, Investigator King issued a second Directive to Respondent because he substantiated all of Complainant’s remaining complaint allegation(s) against Respondent. The second Directive needed to be complied with by January 02, 2024. It is further clear from the record that Respondent did not comply with either of the Registrar’s Directives, or request an extension thereof.
Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s Directive(s) and remediate Complainant’s roofing project. This is an affirmative defense that Respondent bears the burden to establish.
Here, Respondent did not sustain its burden. The initial Directive’s compliance period was from October 13, 2023, to October 30, 2023. However, on October 23, 2023, Complainant denied Respondent’s access to the project site from that day through the remainder of the period. The second Directive’s compliance period was from December 11, 2023, to January 02, 2024; which included two (2) state holidays. Notably, shortly after the corrective work order was issued by the Registrar, Complainant again Respondent’s access to the project site. The denial was rescinded on December 15, 2023, after Respondent agreed to fix all four (4) substantiated complaint items. Thusly, Respondent had approximately twenty-seven (27) days to perform corrective work and failed to do so. Respondent failed to present any evidence to justify or otherwise excuse why no action was taken within the available or otherwise allotted time to perform corrective work. Moreover, Respondent conceded that it never asked the Registrar for an extension of either Directive.
Because Complainant has established Respondent’s violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(3) 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 Atlas General LLC, ROC License No. 277937, be suspended for two (2) business days.
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 five days from the date of that certification.
Done this day, September 16, 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]
Atlas General LLC, Respondent
c/o Alfonso Larriva, Agent
6250 E. Cheney Dr.
Paradise Valley, AZ 85253-3518
[email redacted]
Ken Boldt, Complainant
3917 N. Dorado Ln.
Casa Grande, AZ 85122
[email redacted]
By: OAH Staff