ALJDEC decisions subject to certification as final

2023A-12390-RFA-LS-ROC-RH · Registrar of Contractors · 2026-06-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Johnny Olariu,

COMPLAINANT

Desert View Contractors LLC

License No. ROC 277948,

RESPONDENT

No. 2023A-12390-RFA-LS-ROC-RH

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 9, 2026

APPEARANCES: Assistant Attorney General Mona Baskin represented the Registrar of Contractors with witness Meridith Bell. Thomas A. Walcott represented Complainant with witness Marian Matache. J. Gregory Cahill represented Javier Munoz, Qualifying Party for Respondent, along with witness Jeremy Walterscheid, PE.

ADMINISTRATIVE LAW JUDGE: Fahd Nazir

EXHIBITS ADMITTED INTO EVIDENCE: Administrative notice was taken of the hearing packet submitted by the Registrar of Contractors. Respondent Exhibits 1, 4, 3, 6, 10, 12, and 13 admitted.

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

The Arizona Registrar of Contractors (Registrar) issued License No. 277948 to Respondent.

Johnny Olariu (Complainant) entered into a contract with Desert View Contractors LLC (Respondent) to build a new home.

On or about November 16, 2023, the Registrar received a Complaint against Respondent from Complainant alleging poor work. As a result of the workmanship complaint, the Registrar issued a Citation on March 14, 2024, against Respondent charging possible violations of Ariz. Rev. Stat. § 32-1154(A)(3), namely of Ariz. Admin. Code R4-9-108(C), and Ariz. Rev. Stat. § 32-1154(A)(22).

On or about January 29, 2024, Complainant filed another Complaint against Respondent, claiming abandonment and poor work. As a result of the workmanship complaint, the Registrar issued another Citation on March 28, 2024, against Respondent charging possible violations of Ariz. Rev. Stat. § 32-1154(A)(2)(a); Ariz. Rev. Stat. § 32-1154(A)(3), namely of Ariz. Admin. Code R4-9-108(C), and Ariz. Rev. Stat. § 32-1154(A)(22).

Respondent submitted timely answers for both Complaints and the Registrar referred the matters to the Office of Administrative Hearings (OAH), an independent state agency, for an evidentiary hearing. At OAH, the Administrative Law Judge assigned to conduct the disciplinary hearings ordered docket numbers 2023A-12390-CHC-ROC and 2024A-01175-CHC-ROC to be consolidated and a consolidated hearing was held on September 11, 2024.

In the October 28, 2024, Decision, Administrative Law Judge Samuel Fox considered the parties’ arguments and concluded that Respondent violated one charged provision of the State’s contracting laws. Namely, Judge Fox found Complainant established that Respondent failed to take appropriate corrective action following a written directive from Registrar in violation of A.R.S. § 32-1154(A)(22).

On October 29, 2024, Respondent requested the decision be certified.

On November 13, 2024, the Registrar issued a Final Administrative Decision and Order, affirming the ALJ decision, including the two-day license suspension and $200.00 civil penalty.

On June 26, 2025, Complainant 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 three different licensed contractors that he had obtained to correct the project. The bids were detailed as follows:

Bid #1 Arizona Foundation Solutions in the total amount of $27,114.40.

Bid #2 from Diego & Sons Construction in the total amount of $32,450.00.

Bid #3 from North Division in the total amount of $188,035.00.

On July 24, 2025, the Registrar’s Legal Assistant II Meridith Bell emailed Investigator Joey Chester asking to review the bids and determine if the repairs were in line with the Written Directive. She also told Investigator Chester that the repair work was completed. Investigator Chester then emailed saying, “Yes, the repairs are in line with the directive.”

On August 4, 2025, the Registrar issued a Notice of Administrative Award, finding that Complainant’s actual damages were $23,450.00, which was calculated using valid expenditure to complete/repair project amount of $32,450.00 less funds from other sources. On August 4, 2025, Respondent requested a hearing believing the payout was too high.

The Registrar referred the matter to OAH for an evidentiary hearing. A hearing was held on December 2, 2025.

In the December 22, 2025, Administrative Law Judge Nicole Robinson remanded the matter back to the Registrar to recalculate the actual award amount. Namely, the decision stated:

[a]fter review of all the evidence, the Tribunal concludes that the award proposed by the Fund inaccurately reflected Complainant's actual damages. As such, this ALJ does not have enough evidence to rely on these numbers to determine a proper award amount. Due to the drastic amount of the difference between the Registrar's compensable "Actual Damages" amount of $23,450.00 and Respondent's estimate of $2,020.00, this matter shall be remanded back to the Registrar to recalculate actual damages.

On January 21, 2026, the Registrar modified the decision. The Registrar’s Final Administrative Decision and Order, in pertinent parts, stated:

The ALJ Decision does not specifically limit the issues to be reviewed on remand, despite recognizing that the evidence present at hearing resolving several of these issues. . . . Accordingly, . . . the Registrar modifies the ALJ Decision to note the issues that will not be reheard on remand. . . .

First, the parties “stipulated that Complainant had satisfied the eligibility requirements for a payment from the Fund.” . . .

Second . . . the ‘Less payment on contract’ line item of $110,000.00, will remain unchanged on the award.” . . .

Third, in calculating the award amount, the Registrar deducted $9,000.00, which Complainant received from Respondent’s bond. . . .

Thus, the only issue still in dispute, and which will be the sole issue reviewed on remand, is the “amount necessary to complete or repair” the work, which is to be “established by bids supplied by or the value of work performed by” the repair contractor. A.R.S. § 32-1132.01(B). In other words, “the reasonable cost of . . . repairing the contractor’s defective performance.” A.R.S. § 32-1132.01(H).

As a result, on February 23, 2026, the Registrar sent a letter to the parties reminding them to submit relevant documentation and information relating to the necessary and reasonable cost to repair the defect. The deadline for submissions was March 2, 2026.

Complainant timely re-submitted copies of the three bids it had previously supplied to the Registrar and relied on during the December 2, 2025, hearing.

Respondent timely submitted its response, which stated as follows:

Specifically, as to Compliance Item 4 (First Directive) -- repair of concrete cracks wider than 1/8" -- Mr. Munoz testified that the necessary and reasonable repair to that discreet condition was to add additional sealant to the present cracks and that grinding, saw cutting, and carbon fiber stitching was unnecessary and, additionally, that there were not 275 linear feet of cracks requiring repair. Mr. Munoz further testified that the cost to conduct that repair was $1,370.00-comprised of$650 for sealant material and 16 hours total labor for 2 workers at a burdened rate of $45.00 an hour ($720). He further opined that asserting a cost based on a "per foot cost" ($108 per foot) was grossly excessive and not in conformity with industry standards. The reasonable and necessary cost of this repair is $1,370.00.

Specifically as to Compliance Item 2 (Second Directive) -- repair two areas where concrete was found to be less than 4" in nominal thickness -- Mr. Munoz testified that the necessary and reasonable repair to that condition was as indicated in the Diego & Sons cost of this repair is $650.00. I I I I Construction contract ( drill holes into the existing slab to accommodate re bar and epoxy and then add concrete). See Respondent's Hearing Exhibit 12. Mr. Munoz further testified that the cost of that repair was $650.00 - for additional concrete and labor at the above rate. He further testified that the asserted cost of $2,750 was excessive. The reasonable and necessary cost of this repair is $650.00.

The reasonable and necessary cost to repair the two conditions at issue is no more than $2,020.00. It is not disputed by the parties that Respondent's surety has already made a bond payment of $9,000.00 to Complainant. See Respondent's Exhibit 15. Accordingly, Complainant has already been compensated well in excess of the necessary and reasonable cost to make the repairs. No Recovery Fund payout should be issued.

Having reviewed the information submitted by the parties, the Registrar issued its second Notice of Administrative Award (Award) in this matter on March 30, 2026. The Award stated, in pertinent part, as follows:

Pursuant to A.R.S. § 32-1132.01(B) an award from the Fund is limited to the actual damages suffered by the claimant as a direct result of the contractor's violation. "Actual damages" may not exceed an amount necessary to complete or repair a residential structure or appurtenance within the residential property lines. A.R.S. § 32-1132.01(B)(1). Additionally, actual damages must be established by bids supplied by or the value of work performed by a person or entity that is licensed to perform construction work if the person is required to be licensed under A.R.S. § 32-1132.01(B)(2). In order to determine actual damages, the Fund must be able to verify, among other things, the actual contract price and all payments made on the contract and, if applicable, any unpaid balance due on the contract.

The Registrar has reviewed the parties' submissions and determines that Complainant has sustained "actual damages" in the amount of $23,450.00. The amount that Respondent contends was necessary and reasonable to repair or complete the project, $2,020.00, is based on Respondent's self-serving statements and is not supported by bids supplied or the actual value of work performed by a repair contractor. On the other hand, the documentation submitted by Complainant demonstrates that Complainant incurred actual costs in the amount of $32,450.00 to repair Respondent's work, and that those costs were necessary and reasonable.

Under A.R.S. § 32-1132.01(B)(2), actual damages "[m]ust be established by bids supplied or the value of the work performed . . ." (Emphasis added.) Because Complainant had the work performed by Diego & Sons, the Registrar calculates actual damages based on that cost-not on the bid supplied by Arizona Foundation Solutions ("AFS"). The only relevance of the AFS bid is for comparison with the Diego & Sons contract, to aid in the determination of whether the latter is necessary and reasonable. Because the Diego & Sons contract price is within 10% of the AFS bid amount, the AFS bid supports the conclusion that the Diego & Sons contract amount of $32,450-while not the lowest possible amount-is nonetheless reasonable.

Respondent contends that the necessary and reasonable repair for the concrete cracks is "to add additional sealant to the present cracks and that grinding, saw cutting, and carbon fiber stitching was unnecessary and, additionally, that there were not 275 linear feet of cracks requiring repair." With respect to the second compliance item, Respondent acknowledges that the Diego & Sons contract indicated the appropriate repairs, but that the $2,750 cost was excessive. The appropriate cost for that repair, according to Respondent, was $650.00. But Respondent provides no independent cost to repair in support of its numbers. Therefore, the Registrar finds that Respondent's self-serving calculations are not credible, particularly in light of Complainant's demonstrated actual costs for repair which are supported by a second bid similar in price and scope. Additionally, the Registrar has determined that the scope of work performed by Diego & Sons, including the methods used and the calculation of approximately 275 linear feet, is necessary and reasonable.

Accordingly, the Registrar calculates Complainant's actual damages as follows:

. . .

Compensable “Actual Damages”: $23,450.00.

19. Respondent filed an appeal from the Award on April 9, 2026. The Registrar referred the matter to back to OAH for rehearing via Notice of Rehearing on Appealable Agency Action. A rehearing was held on June 9, 2026, via Google Meets.

Hearing Evidence

Ms. Bell testified that she reviewed the previous Administrative Law Judge Decisions, the original complaints and all the work that remained uncorrected, the payments made by Complainant, the letter from Respondent’s bonding company, and bids submitted by Complainant for completion of the project, in calculating Complainant’s actual damages. Ms. Bell testified that she reviewed the record on file with the Registrar and consulted Investigator Chester prior to issuing the Award. She concluded that Bid #2 was the most accurate estimate of outstanding repair/completion work.

Ms. Bell testified that her calculation of actual damages took into account the total contract price and that the contract was paid in full with no remaining balance. calculated Complainant’s actual damages by subtracting the amount Complainant still owed toward the parties’ contract ($0) from the amount deemed necessary to repair/complete the project per Bid #2 ($32,450.00), less $9,000.00, which Complainant received from Respondent’s bond, and arrived at the amount of $23,450.00.

Ms. Bell added that Complainant re-submitted the bids again following the February 23, 2026, letter to parties. While Respondent submitted a response, it was not in the form of bid(s) supplied by independent contractors or the actual value of work performed by a repair contractor. As a result, she concluded it cost Complainant $32,450.00 to repair Respondent's work. When asked during cross-examination why the Registrar did not review the record afresh in light of ALJ Robinson’s decision, Ms. Bell stated everything was reviewed over again and proper weight was given to the fact that Complainant had already done the repairs.

Namely, she confirmed that Bid #2 was cross-referenced against the Written Directive from December 13, 2023, and because Complainant provided proof of payment, no further evaluation was necessary as to the depth and extent of cracking that needed to be repaired. In Comparison, Respondent’s position statement submitted after the remand was rather self-serving without more evidence.

Mr. Munoz argued that the reasonable and necessary cost to repair was nowhere near $23,450.00. He added that concrete cracking was normal and that it was impossible to eliminate concrete cracking. Regarding the Registrar’s photographic evidence showing cracking, Mr. Munoz stated it only showed normal cracking. He contended that Bid #2 proposal to saw-cut 275 LF was excessive and at most no more than 160 LF needed repair. Regarding repair method, Mr. Munoz testified that saw-cut was unwarranted and it was only necessary to fill the cracks with epoxy. He testified it should have been about $1,800-$1,900 for repairs and labor, plus $350 for epoxy.

Mr. Munoz testified that Bid #2 proposal had such exorbitant per foot rate that it was impossible to break it down to make sense of it. Costs needed to be itemized, identified and classified for labor and materials separately. He added that the total cost was the issue, not the repair method. When asked if he measured the cracks and/or provided additional evidence to support his estimation, Mr. Munoz responded negatively and confirmed he did not consult other contractors. He elaborated that it would not have been possible for him to get an accurate estimate because of access issues.

Respondent’s expert witness, Mr. Walterscheid, a structural engineer by trade, testified that he observed cracking during his site visit. He purported such visit took place prior to any action by the Registrar. Mr. Walterscheid described the cracks as moderate and stated that such cracking was common and did not believe the cracks were “active” or could worsen. Based off his observation, Mr. Walterscheid recommended filling the cracks with epoxy.

When asked if Mr. Walterscheid documented his visit at all, he responded negatively. He indicated he would do so if a client wanted it documented, but in this case, Mr. Munoz only requested a jobsite consult. Although he stated a “crack map” was not generated, he did not see 275 LF of cracking. Mr. Walterscheid did not disagree when presented with information that to properly determine whether a crack was active or not, it would have to be measured over time. In closing, Mr. Walterscheid agreed that he “believed [cracks] not be active” but could not state so with certainty.

It was undisputed that Respondent did not provide written third-party estimates to the Registrar for review during its investigation and/or during the remand process. The Tribunal does not adopt as fact, absent evidence to the contrary, that Respondent would not have been granted access had he requested so judiciously.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Ariz. Rev. Stat. § 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.

In this case, Respondent requested a hearing challenging the Fund payout, and consequently, Respondent bears the burden of establishing by a preponderance of the evidence that the proposed award is improper or contrary to law.

“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.”

In this case, Respondent had an opportunity to correct the faulty work following the Written Directive from the Registrar and failed to do so. It was undisputed that Complainant incurred actual costs in the amount of $32,450.00 to repair Respondent's work. The cost was necessary and reasonable, as determined after initial review and upon further review by the Registrar’s technical staff.

Under these circumstances, the Tribunal concludes that Respondent has not sustained its burden to establish by a preponderance of the evidence that the proposed award is improper or contrary to law. Complainant is eligible for an award from the Fund and the award proposed by the Fund accurately reflects Complainant’s actual damages. Accordingly, Complainant is entitled to a payout from the Fund in the amount of $23,450.00.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order, Complainant receive a payout from the Residential Contractors’ Recovery Fund in the amount of $23,450.00.

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, June 29, 2026.

/s/ Fahd Nazir

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

J. Gregory Cahill, Esq.

Broening Oberg Woods & Wilson PC

[email redacted]

Thomas A. Walcott, Esq.

PROVIDENT LAW

[email redacted]

Registrar of Contractors

[email redacted]

By: OAH Staff