ALJDEC - Licensing
2023A-11297-CHC-ROC · Registrar of Contractors · 2024-01-28
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Anne Earley,
COMPLAINANT,
v.
Bjelde Construction LLC
ROC License No. 260364,
RESPONDENT.
No. 2023A-11297-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: January 25, 2024 at 9:00 AM.
APPEARANCES: Anne Earley (“Complainant”) appeared on her own behalf with Brian Rich as a witness. David Fagerburg appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). No appearance(s) by or on behalf of Bjelde Construction LLC (“Respondent”). Doug Rich observed.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the Registrar’s attached administrative hearing file, was 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 December 31, 2009, the Registrar issued License No. 260364 General KB-1 Dual Building contracting license to Respondent. On January 22, 2024 the license was revoked by the Registrar. Lyle Nils Bjelde is listed as the Qualifying Party and Member on the license. L N B Enterprises Inc. is also listed on the license as a subsidiary. Respondent’s address of record for the license is P.O. Box 50962 Mesa, Arizona 85749. Respondent had a $9,000.00 surety bond on the license issued by Merchants Bonding Company, effective October 20, 2014, but it was cancelled. $5,000.00 remains available from that bond. The license has been disciplined by the Registrar on 9 prior occasions, and has had 2 complaints settled or otherwise resolved against it. Currently, there are 14 open complaints against the license, one of which is presumed to be related to this matter.
On September 26, 2023, the Registrar received a 4-item complaint from Complainant against Respondent’s License No. 260364 alleging “breach of contract” of their residential new build project. The Registrar designated it Complaint No. 2023-11297 and assigned to David Fagerburg (“Investigator Fagerburg”) for investigation.
On September 28, 2023, Investigator Fagerburg issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on October 30, 2023, at 11:30 a.m. Correspondence was not returned as undeliverable to Respondent.
On October 25, 2023, Investigator Fagerburg issued a Notice of Rescheduled Jobsite Inspection Letter to the parties, advising that the scheduled onsite inspection of the project was reset for October 27, 2023, at 11:30 a.m. Correspondence was not returned as undeliverable to Respondent.
On October 27, 2023, Investigator Fagerburg inspected the work that had been performed on the project to date. Respondent was not present. Investigator Fagerburg also reviewed the contract-related correspondence between the parties, and took 9 photographs of the project site. When he was finished, Investigator Fagerburg drafted his Inspection Notes. Ultimately, Investigator Fagerburg substantiated 2 of Complainant’s complaint items based on his firsthand observations. Specifically, Investigator Fagerburg determined the following regarding complaint items 1 and 3:
Compliant Item 1: Verified. Prior to this jobsite investigation in reviewing the proof of payment submitted by the complainant I am able to verify the respondent has received a total of $148,385.60 in payments from the complainant. During this jobsite investigation I observed and am able to verify there has been no work performed or completed since the signed contract date of August 18, 2021 other than a sign placed at the front of the property with the respondents name and various grading stakes marking where the home is to be located. See P (1) thru P (9). The well observed in P (9) was paid for and installed by a 3rd party contractor at the owners expense above and beyond what has been paid to the respondent. During this jobsite investigation the complainant stated that the civil engineering plans have been completed but the civil engineer will not release the plans for submittal to the local building authority for a permit due to nonpayment by the respondent. The respondent shall secure the required civil engineering plans previously paid for by the complainant, obtain a permit from the local building authority and show significant effort to start the project per contract.
Compliant Item 3: Verified. At this jobsite investigation I observed and am able to verify there has been no work performed or completed since the signed contract date of August 18, 2021 other than a sign placed at the front of the property with the respondents name and various grading stakes marking where the home is to be located. See P (1) thru P (9). Prior to this jobsite investigation in reviewing the proof of payment submitted by the complainant I am able to verify the respondent has received a total of $148,385.60 in payments from the complainant since August 18, 2021. The respondent shall secure the required civil engineering plans previously paid for by the complainant, obtain a permit from the local building authority and show significant effort to start the project per contract.
(All emphasis and errors in original).
On October 31, 2023, Investigator Fagerburg issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated some of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on November 20, 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 22, 2023, Investigator Fagerburg forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On November 27, 2023, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(6), and 32-1154(A)(22). Respondent was given until December 12, 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 December 12, 2023, the Registrar received Respondent’s timely Answer whereby Mr. Bjelde insinuated that project delays were due to Complainant’s design changes which adversely impacted permitting by the local building authority. Respondent further accused Complainant of withholding monies necessary to facilitate commencement of work.
On December 13, 2023, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on January 25, 2024. Per the December 21, 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)(1)
Charge 2: A.R.S. § 32-1154(A)(6)
Charge 3: A.R.S. § 32-1154(A)(22)
Hearing Evidence
Complainant testified on her own behalf and called Investigator Fagerburg and Brian Rich as witnesses. The substantive evidence of record is as follows:
Complainant owns residential land located at 13318 N. Goldfield Rd. Fort McDowell, Arizona 85264.
On or about August 18, 2021, the parties entered into a $450,000.00 residential new build contract for the design and construction of a 2,500 square feet “ranch style” residence.
Work on the projects commenced in August 2021, but was never completed.
Complainant paid Respondent $148,385.74 towards the project.
At no point in time did Respondent allege that Complainant had issued a “stop work” order for the project.
At no point in time did Respondent allege a denial of access to the project site during the Directive’s compliance period, or the extension thereof.
Between October 31, 2023, and November 20, 2023, Respondent did not perform any commence work on the project and/or take any affirmative steps to address substantiated complaint items 1 and/or 3.
Respondent’s license was active and in good status during this time.
Additional Evidence
Investigator Fagerburg testified that, in hindsight, he should have 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 contract with Complainant.
Closing Argument
In closing, Complainant offered that she felt as though she had been “robbed” by Respondent, as she had given him a substantial sum of money in good faith, and received only partial plans in return. Complainant further offered that she was frustrated Respondent’s conduct, and worried that if permitted to retain his contracting license he would “rob” someone else.
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.
The Notice of Hearing the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter. Because the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Registrar 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)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”
Ariz. Rev. Stat. § 32-1154(A)(6) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “the doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured. For the purposes of this paragraph, ‘fraudulent act’ means a material misrepresentation that a licensee makes, that is relied on by another person and that results in damage to that person or that person's property.”
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 had a residential new build contract that Complainant paid Respondent nearly 33% of the contract price. The record also establishes that the only overt action Respondent took towards project completion was to place an advert on the property on order civil engineering plans; which were never released because Respondent failed to pay the engineer for them. It is further clear from the record that Respondent failed to comply with the Registrar’s Directive in this matter. Thus, violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(6), 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 remediate Complainant’s project. This is an affirmative defense that Respondent bears the burden to establish. Because Respondent failed to appear and offer any evidence, 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/competence on this project. Notably, Respondent’s failure to appear is a factor in aggravation as it evinces Respondent’s unwillingness to submit to regulation by the Registrar.
Because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(6), 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, ROC License No. 260364, as issued to Respondent Bjelde Construction LLC, be revoked by the Registrar.
IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $500.00 (five hundred dollars) in certified funds as a civil penalty.
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 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 29, 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]
Anne Earley, Complainant
11545 E Tanque Verde Rd
Tucson, AZ 85749
[email redacted]
Bjelde Construction LLC, Respondent
P.O. Box 50962
Mesa, AZ 85208
[email redacted]
By: OAH Staff