ALJDEC decisions subject to certification as final

2023A-10801-RFA-ROC · Registrar of Contractors · 2025-11-28

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Stefany Vara Villegas,

COMPLAINANT

REIcon LLC

License No. ROC 319709,

RESPONDENT

No. 2023A-10801-RFA-ROC

ADMINISTRATIVE LAW

JUDGE DECISION

HEARING: October 23, 2025

APPEARANCES:

Complainant: Stefany Vara Villegas

Respondent: Todd Baxter, Esq.

Chris Riegel

Registrar of Contractors: Charles Hover III, Assistant Attorney General

Doug Ulmer

ADMINISTRATIVE LAW JUDGE: Nedra-Su Kawasaki

EXHIBITS ADMITTED INTO EVIDENCE: Department’s Exhibits 1-15; Complainant’s Exhibits 1-3; Respondent’s Exhibits A-P.

_____________________________________________________________________

FINDINGS OF FACT

REIcon, LLC (Respondent) was the holder of License No. 319709 issued by the Arizona Registrar of Contractors (Registrar).

On or about September 16, 2023, the Registrar received a Complaint against Respondent from Stefany Vara Villegas (Complainant) alleging abandonment and poor workmanship. On November 9, 2023, Complainant filed an addendum to the Complaint.

After an investigation a written directive was issued to correct the work. The Directive from the Registrar specified Respondent must correct Complaint items 1-6, 8-10, 12, 14, 16, 18, and 19-22.

Respondent failed to correct the complaint items.

The Registrar issued a Citation against Respondent charging possible violations of Arizona Revised Statutes (A.R.S.) § 32-1154(A)(1); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(B); and A.R.S. § 32-1154(A)(22).

Respondent filed a timely answer to the Citation, and an administrative hearing was held. In their Decision, Administrative Law Judge Velva Moses-Thompson considered Respondent’s arguments and concluded that Complainant established Respondent had, in relevant part, violated A.R.S. §§ 32-1154(A)(1), (A)(3), and (A)(22). The Administrative Law Judge recommended a three day suspension of Respondent’s license.

On or about August 13, 2024, the Registrar issued its Final Decision, adopting the Administrative Law Judge’s Decision in full.

Complainant then filed a claim with the Residential Contractors’ Recovery Fund (the Fund) to recover the cost of completing or repairing the project. As part of the claim process, Complainant submitted bids from two different contractors that Complainant had received to correct the project.

The Registrar issued a Notice of Administrative Award, finding that Complainant’s compensable actual damages were $30,000.00. Respondent requested a hearing to appeal both the award amount and the propriety of the amount. The Registrar referred the matter to the Office of Administrative Hearings (OAH) for an evidentiary hearing.

A hearing was held on October 23, 2025.

Doug Ulmer testified for the Registrar. He testified that Complainant was eligible and followed all the steps required to receive an award from the recovery fund. He testified in support of the documents and calculation provided in the exhibits. He testified in support of Complainant being entitled to a $30,000.00 award.

Complainant testified that the contract was vague and she did not know where they were on the budget because the “invoices” were all the same. However, in February Respondent told her the budget was up $30,000.00. She testified she asked Respondent for an itemized list and he sent an email with those attachments. Additionally, she advised Respondent that he could stop and not complete the bathroom. Complainant stated that Respondent did not prove where her money was spent and Respondent should have provided change orders. On questioning, Complainant testified that she and Respondent had conversations regarding how to bring down the budget because she did not have the money.

Chris Riegel testified for Respondent. He testified that the contract was not a fixed price, but a cost plus contract. He further testified that the scope of the project was increased and issues were encountered that also added to the scope. Mr. Riegal explained how cost-plus contracts work and how allowances are used in the contract. He further testified that he had multiple communications with Complainant regarding ways to save money including items of the project that could be done at a later time.

In closing, Mr. Hover argued that A.R.S. § 32-1132.01(H) does not include “line item,” rather it is the contract as a whole. Additionally, Mr. Hover argued that Respondent did not appeal the Administrative Law Judge Decision which included the finding that the contract price was $102,500 with Complainant paying $100,861.76 on the contract.

Complainant, in closing, argued that she never received appropriate documentation to justify amending the work.

In closing, Respondent argued that the nature of the contract could not be ignored. Complainant received value of work equal to payments made. Allowing the “actual damages” calculation to stand as it is would result in unjust enrichment. Respondent maintained the contract was completed because the budget was met.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

A.R.S. § 32-1132.01(B) provides, in pertinent part, as follows:

An award from the residential contractors’ recovery fund may not exceed the actual damages suffered by the claimant as a direct result of a contractor’s violation. Actual damages:

1. May not exceed an amount necessary to complete or repair a residential structure or appurtenance within residential property lines.

2. Must be established by bids supplied by or the value of work performed by a person that is licensed pursuant to this chapter if the person is required to be licensed pursuant to this chapter.

Respondent bears the burden of proof to establish that the proposed payout from the Fund is incorrect by a preponderance of the evidence.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

In Arizona, when construing statutes, we look first to a statute’s language as the best and most reliable index of its meaning. If the statute’s language is clear and unambiguous, we give effect to that language and apply it without using other means of statutory construction, unless applying the literal language would lead to an absurd result. Words should be given “their natural, obvious, and ordinary meaning,” unless defined by the legislature.

If work is not completed to workmanship standard, it is reasonable for a bidding contractor to include removal of prior work. The bidding contractor is not obligated to accept the condition of existing work.

Respondent had an opportunity to correct the faulty work following the written directive from the Registrar and failed to do so.

The preponderance of the evidence failed to establish that the award provided by the Fund accurately reflected Complainant’s actual damages. The evidence does not support the Registrar’s calculations provided in the Notice of Administrative Award.

A.R.S. § 32-1132.01(H) defines “actual damages” as the “reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid.”

In this case, the contract at issue was a cost-plus contract. Therefore, for purposes of determining actual damages, the scope of the contract was completed and there remains no work nor payment due and owing. However, Respondent remains responsible for workmanship of any and all work, started, attempted, and/or completed. Thus, in determining actual damages in this case, it is only the reasonable cost of repairing the contractor’s defective performance which remains at issue.

The bids provided were overly-broad such that it could not be determined what was the cost for repairing Respondent’s defective work per the Written Directive versus additional work such as the dining room. Stated simply, Complainant’s actual damages are limited to the deficient work of Respondent as cited in the Written Directive.

RECOMMENDED ORDER

Based on the foregoing, the undersigned Administrative Law Judge concludes that the Notice of Administrative award should be quashed and remanded for new bids consistent with this decision and a subsequent recalculation of actual damages based on the new bids.

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.

-54864001

001

-137160-45720000Done this day, November 28, 2025.

/s/ Nedra-Su Kawasaki

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Tom Cole, Director

Registrar of Contractors

Chris Riegel

REIcon LLC

[email redacted]

Todd A. Baxter, Esq.

DICKINSON WRIGHT PLLC

[email redacted]

Charles S. Hover, III

Office of the Attorney General

[email redacted]

Stefany Vara Villegas

[email redacted]

By: OAH Staff