ALJDEC - Licensing

2023A-10373-CHC-ROC · Registrar of Contractors · 2024-04-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Julie Mataway,

COMPLAINANT,

v.

Cardinal Heating & Cooling LLC

ROC License No. 282148,

RESPONDENT.

No. 2023A-10373-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 05, 2024 at 1:00 PM.

APPEARANCES: Julie Mataway (“Complainant”) appeared on her own behalf. Robert Di Alto appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). No appearance(s) by or on behalf of Cardinal Heating & Cooling LLC (“Respondent”). Lane Marcus observed.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, including the Registrar’s attached agency file, and Minute Entry – Granting Continuance issued January 30, 2024, 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 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 November 28, 2012, the Registrar issued License No. 282148 Specialty Dual CR-39 Air Conditioning and Refrigeration contracting license to Respondent. The license is active and renewed through November 30, 2024. Gerardo Suarez Quijada is listed as the Qualifying Party and Officer on the license. German Suarez Quijada is also listed as an Member on the license. Respondent’s address of record for the license was 3653 N. 35th Ave. Phoenix, Arizona 85017. Respondent has an active $6,750.00 surety bond on the license issued by RLI Insurance Company, effective December 28, 2021. The license has not been previously disciplined, but has, on one (1) prior occasion had a complaint settled or otherwise resolved against it. Currently, the license has one (1) open complaint against it, which is presumed to be related to this matter.

On September 06, 2023, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 282148 alleging poor work of a residential HVAC installation project. The Registrar designated it Complaint No. 2023-10373 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 29, 2023, at 10:15 a.m. Correspondence was not returned as undeliverable to Respondent.

On September 29, 2023, Investigator Di Alto inspected the work that had been performed on the project to date. Respondent was present. Investigator Di Alto also reviewed the contract-related correspondence between the parties, and took 13 photographs of the project site. When he was finished, Investigator Di Alto drafted his Inspection Notes. Ultimately, Investigator Di Alto derived a single distinct complaint item from Complaint No. 2023-10373, which he substantiated based on his firsthand observations. Specifically, Investigator Di Alto determined Respondent’s workmanship on the project failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On October 19, 2023, Investigator Di Alto issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on November 06, 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 06, 2023, Investigator Di Alto forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On November 13, 2023, 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 November 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 November 27, 2023, the Registrar received Respondent’s timely Answer whereby Respondent requested an Informal Settlement Conference.

On December 01, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 29, 2024. Per the December 18, 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 her own behalf and called Investigator Di Alto as a witness. Although afforded a ten (10) minute grade period, no witness(es) appeared on behalf of Respondent. The substantive evidence of record is as follows:

Complainant owns secondary residential property located at 9633 N. 16th St. Phoenix, Arizona 85020. The property is used as a rental. The residence is approximately 900 square feet, consisting of 2 bedrooms and 1 bathroom, and is masonry type construction on the exterior. The windows have northern exposure and share a common wall with an adjoining unit.

On an unknown date Complainant contacted Respondent for a bid to replace her HVAC unit with a 2 ton or 2.5 ton unit. Respondent countered that it only had a 3 ton unit, but would install it for the price of a 2 ton unit.

On May 17, 2023, the parties executed a formal agreement for Respondent to remove her old HVAC and replace it with a 3 ton unit, for the consideration of $5,956.50. Complainant paid Respondent in full.

After Respondent’s HVAC replacement, Complainant’s monthly electricity bill dramatically increased through the summer season.

When Complainant complained, Respondent charged her $365.00 to add a pound of refrigerant and clean the unit’s coils. Later, when Complainant complained that the unit still did not work properly, Respondent offered that “sometimes units come under charged from the manufacturer. On numerous occasions Respondent failed to report for scheduled appointments to address Complainant’s concerns.

At the jobsite inspection, Investigator Di Alto noted that the interior temperature of Complainant’s residence was 87°F. Less than an hour later, the interior temperate was 90°F.

It was ultimately determined that the duct work, specifically the cold air return, was too small. Respondent had not replaced the duct work to fit the new 3 ton unit in the original scope of work. Respondent quoted Complainant $850.00 to add a new air return.

Between October 19, 2023, and November 06, 2023, Respondent did not perform any corrective work on the project.

At no point in time did Respondent allege a denial of access to the project site to the Registrar during the Directive’s compliance period, or request an extension thereof to the agency.

On November 06, 2023, Respondent contacted Complainant to schedule corrective work for November 07, 2023. Complainant declined.

The parties did not enter into a financial settlement agreement regarding substantiated complaint item 1.

Additional Evidence

Respondent failed to attend the Informal Settlement Conference regarding Complaint No. 2023-10373, the rescheduled Informal Settlement Conference it requested, or the originally scheduled hearing for 2023A-10373-CHC-ROC.

Closing Argument

In closing, Complainant argued that Respondent had engaged in unscrupulous and dangerous business practices that resulted in Complainant sustaining actual harm. Complainant accused Respondent of being deceptive and knowingly installing an HVAC unit that was too large for the existing duct work, and for further failing to advise her of such. Complainant further accused Respondent of lying regarding the underlying cause of the problems with the unit it had installed. Complainant also opined that her reliance on Respondent as a professional subject matter expert was reasonable under the circumstances. Complainant noted that while she would have settled with Respondent prior to hearing, she now sought discipline of License No. 282148 and admission into the Registrar’s Recovery Fund to remediate her project.

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.

The Notice of Hearing the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received Notice of Hearing in this matter. Because OAH issued all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable; including to Respondent’s counsel per its Notice of Appearance, Respondent is deemed to have received all correspondence regarding this matter from OAH as well.

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) holds, 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 holds that no 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.”

Ariz. Rev. Stat. § 32-1156.01 states, in pertinent part, that after a hearing an Administrative Law Judge may provide restitution to any person who is injured by an action of a licensee.

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 an HVAC installation contract that Complaint paid in full. It is also clear from the record that there were deficiencies in Respondent’s work that required correction. It is further clear from the record that Respondent did not comply with the Registrar’s Directive, request an extension thereof, or alleged a denial of access to the project site.

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 Complainant’s project 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. Respondent knew or should have known that a 3 ton HVAC unit would require new duct work in order for the unit to work properly, and failed to, at a minimum, advice Complainant. Moreover, there is no clear explanation for why Respondent waited until the last day to comply with the Directive to attempt to schedule corrective work with Complainant. Notably, because Respondent failed to appear and provide testimony, there is no exigent or otherwise mitigating evidence in the record in favor of Respondent. In fact, Respondent’s absence from these proceedings is a factor in aggravation and evinces Respondent’s unwillingness to be regulated by the Registrar.

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 Cardinal Heating & Cooling LLC, ROC License No. 282148, shall be suspended until Respondent provides the Registrar with proof that $365.00 has been tendered to Complainant in certified funds as restitution.

It is further recommended that the Registrar require Respondent to pay the sum total of $100.00 as a civil penalty pursuant to Ariz. Rev. Stat. § 32-1154(E).

It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s Order, the Registrar 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, April 09, 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]

Cardinal Heating & Cooling LLC, Respondent

3653 N. 35th Ave.

Phoenix, AZ 85017

[email redacted]

Julie Mataway, Complainant

1306 E. Yucca St.

Phoenix, AZ 85020-1121

[email redacted]

By: OAH Staff