ALJDEC - Licensing
2023A-10347-CHC-ROC · Registrar of Contractors · 2023-12-21
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Joshua Baldwin,
COMPLAINANT,
v.
Oak Craft Inc.
ROC License No. 274336,
RESPONDENT.
No. 2023A-10347-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: December 11, 2023 at 1:00 PM.
APPEARANCES: Joshua Baldwin (“Complainant”) appeared on his own behalf. Daniel Peabody, Esq. appeared on behalf of Oak Craft Inc. (“Respondent”) with Elena Lindow and Travis Gilger as witnesses. Robert Di Alto appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, including the Registrar’s attached administrative file, was admitted as its own exhibit. Respondent Exhibits 1-2 & 4-5 were also admitted.
_____________________________________________________________________
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 August 06, 2011, the Registrar issued License No. 274336 Specialty Dual CR-60 Finish Carpentry contracting license to Respondent. The license has been renewed through August 31, 2025. Charles Bearman is listed as the Qualifying Party and Member on the license. Windy Gail Zachek and Leroy David Zachek are also listed on the license as Officers. Respondent’s address of record for the license is 7733 w. Olive. Ave. Peoria, AZ 85345. The license does not have a prior disciplinary action taken against it. However, there had been one (1) complaint that settled or was otherwise resolved against the license, and there are currently two (2) open complaints against the license; one of which is presumed to be related to this matter. Respondent has an active $11,250.00 surety bond on the license issued by RLI Insurance Company, effective July 26, 2011.
On or about September 06, 2023, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 274336 alleging poor work and abandonment of a residential custom cabinetry project. The Registrar designated it Complaint No. 2023-10347 and assigned to Robert Di Alto (“Investigator Di Alto”) for investigation.
On September 07, 2023, Investigator Di Alto issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on September 22, 2023, at 1:00 p.m. Correspondence was not returned as undeliverable to Respondent.
On September 22, 2023, Investigator Di Alto inspected the work that had been performed on the project to date. Respondent was not present. Investigator Di Alto also reviewed contract-related correspondence, and took 10 photographs of the project site. When he was finished, Investigator Di Alto drafted his Inspection Notes. Ultimately, Investigator Di Alto derived a total of 3 separate and distinct complaint items, of which he was able to substantiate 1 based on his firsthand observations. Specifically, Investigator Di Alto determined Respondent’s workmanship on complaint item 1 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.
On September 27, 2023, Investigator Di Alto issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated one of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on October 10, 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). Correspondence was not returned as undeliverable to Respondent.
Investigator Di Alto also included the following advisement regarding the remediation of complaint item 1:
DIRECTIVE REQUIREMENTS:
You are directed to remedy the following violations by appropriate means:
(Emphasis in original.)
On October 11, 2023, Investigator Di Alto forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On October 13, 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 28, 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 19, 2023, the Registrar received Respondent’s timely Answer whereby Mr. Bearman argued that Complainant failed to appear for a remediation appointment on October 11, 2023, and that after waiting chose to leave project materials in another unit “at the direction of the Statesman Group.” Per Mr. Bearman, Respondent was desirous of performing corrective work, but could not do so without access to the project site.
On October 23, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on December 11, 2023. Per the October 31, 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 Di Alto as a witness. Elena Lindow and Travis Gilger testified on behalf of Respondent. The substantive evidence of record is as follows:
The Luxe 1A, LP (“Luxe”) is a luxury condominium complex located within the Toscana subdivision of Desert Ridge in Phoenix, Arizona.
Statesman Design, LLC (“Statesman”) is the designer Luxe used for the interior finishes on each unit.
On or about November 03, 2021, Complainant entered into a residential purchase agreement with The Luxe 1A, LP (“Luxe”) for the procurement of residential property located at 5250 E Deer Valley Rd., Unit 356 Phoenix, Arizona 85054. The base price of the property was $698,970.00. After a $79,030.00 location premium and $111,466.00 in interior upgrades, Complainant paid $889,466.00 for the property.
On or about October 05, 2022, escrow closed on the property and Complainant took possession.
All property upgrade premiums were paid directly to Statesman.
On unknown dates, Complainant filed complaints with Respondent and Statesman regarding multiple punch-list items, including the underlying cabinet at issue.
On September 05, 2023, Respondent ordered a replacement cabinet for Complainant’s project.
Between September 27, 2023, and October 10, 2023, Respondent did not perform any corrective work on complaint items 1.
On unknown dates, Respondent coordinated with a representative from Statesman to schedule a cabinet replacement for Complainant. Complainant was never included in these correspondences.
At no point in time did Complainant designate a third-party to represent him in Complaint No. 2023-10347 or his complaint with Statesman.
On October 09, 2023, Complainant was copied on an email from Respondent to Statesman regarding the rescheduling of an appointment for corrective work at his unit. Because neither Respondent nor Statesman obtained an initial agreement from Complainant to schedule corrective work, or permission to reschedule said appointment, Complainant did not respond to the message.
On October 09, 2023, October 12, 2023, and October 13, 2023, Respondent reported to the project site to perform the cabinet replacement. As he had not been advised beforehand, Complainant was not on site to grant Respondent access. Material were left in a model unit at the direction of a Statesman representative.
On October 19, 2023, Respondent emailed Complainant to schedule a cabinet replacement.
On October 30, 2023, Respondent phoned Complainant to schedule corrective work. Respondent made additional attempts to reach Complainant by phone October 31, 2023, and November 11, 2023, November 27, 2023.
On November 27, 2023, Respondent again emailed Complainant to schedule a cabinet replacement.
At no point in time did Respondent beseech the Registrar for an extension of the Directive’s compliance period. At no point in time did Respondent allege a denial of access to the project site during the Directive’s compliance period.
Additional Evidence
Complainant was not able to identify how much of the $111,466.00 he paid Statesman for unit upgrades was attributable to his cabinetry, or the specific cabinet at issue.
Closing Arguments
In closing Respondent argued that it had been denied access to the project site and therefore could not be held in violation of Rev. Stat. § 32-1154(A)(22). Respondent conceded that the cabinet at issue required corrective work, and argued that instead of performing corrections that it had planned to replace it; which was not cost effective but done to appease Complainant.
In closing Complainant argued that he was not contacted directly by Respondent until after the expiration of the Directive’s compliance period, and that Respondent had not acted in “good faith.” Complainant denied Respondent’s denial of access allegation and further denied any knowledge of one or multiple appointments made to schedule corrective work.
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 in this matter did not have a contract with one another. The record reflects that Respondent provided labor and/or materials to Statesman as a cabinetry subcontractor for Luxe’s condominium complex, and that Complainant bought a unit within that complex in or about October 2022. It is also clear from the record that Complainant filed several complaints with Statesman and Respondent prior to filing Complaint No. 2023-10347 with the Registrar. It is further clear from the record that Investigator Di Alto determined Respondent’s workmanship on substantiated complaint item 1 failed to meet the Registrar’s minimum standards, and that Respondent failed to perform corrective work in compliance with the resulting Directive.
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’ projects per contract. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent did not sustain its burden. There is no evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project. It is quizzical that Respondent would coordinate with a third-party entity regarding replacements or repairs to the interior of Complainant’s residence without first checking with Complainant or obtaining written consent. Respondent’s correspondence to Statesman of October 07, 2023, did not confirm with Complainant or gain his approval, and Respondent’s in-person appearances October 09, 2023, October 12, 2023, and October 13, 2023, were insufficient in light of the fact that Complainant was never forewarned, let alone asked to grant permission for Respondent to access his residence.
Because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22), 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 Oak Craft Inc., ROC License No. 274336, be suspended one (1) day.
IT IS FURTHER RECOMMENDED that the Registrar forgo the imposition of a civil penalty 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, December 21, 2023.
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]
Joshua Baldwin, Complainant
5250 E. Deer Valley Dr. Unit #356
Phoenix, AZ 85054
[email redacted]
Edward A. Salanga, Esq.
Daniel J.F. Peabody, Esq.
Quarles & Brady LLP, Counsel for Respondent
One Renaissance Square
2 N. Central Ave., Ste. 600
Phoenix, AZ 85004-2322
[email redacted]
[email redacted]
By: OAH Staff