ALJDEC - Licensing

2023A-12801-CHC-ROC · Registrar of Contractors · 2024-06-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kimberly Cavell,

COMPLAINANT,

v.

Pleasure Spas Inc.

dba Pleasure Pools

ROC License No. 166025,

RESPONDENT.

No. 2023A-12801-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 11, 2024 at 1:00 PM.

APPEARANCES: Kimberly Cavell (“Complainant”) appeared on her own behalf. Michael Springer appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). No appearance(s) by or on behalf of Pleasure Spas Inc. (“Respondent”). Joshua Cavell observed

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, including the attached Agency File, and Hearing Order issued May 31, 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 July 30, 2001, the Registrar issued License No. 166025 General Residential B-5 Swimming Pool contracting license to Respondent. The license has been renewed through July 31, 2025. Owen David Wendell Brown is the Qualifying Party and President Officer on the license. James M. O’Brien III is listed as the Owner on the license. Respondent’s address of record for the license is 2004 E. Irvington Rd. #186 Tucson, Arizona 85714. Respondent has an active $15,000.00 surety bond on the license, effective March 11, 2024. The license has been disciplined on one (1) prior occasion, and has had three (3) complaints settled or otherwise resolved against it. Currently, there are thirteen (13) open complaint against the license; one of which is presumed to be related to this matter.

On November 06, 2023, the Registrar received a narrative complaint from Complainant alleging abandonment of an in-ground pool installation project against Respondent’s License No. 166025. The Registrar designated it Complaint No. 2023-12801 and assigned to Mike Springer (“Investigator Springer”) for investigation.

On November 14, 2023, Investigator Springer issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on December 26, 2023, at 10:30 a.m. Correspondence was not returned as undeliverable to Respondent.

On December 26, 2023, Investigator Springer issued a Rescheduled Jobsite Inspection Notification Letter to the parties, advising that the onsite inspection date had changed to March 01, 2024, at 10:30 a.m. Correspondence was not returned as undeliverable to Respondent.

On February 23, 2024, Investigator Springer issued a second Rescheduled Jobsite Inspection Notification Letter to the parties, advising that the onsite inspection time had changed to 1:00 p.m. on March 01, 2024. Correspondence was not returned as undeliverable to Respondent.

On November 14, 2023, Investigator Springer issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. § 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, specifically items 4 and 9, including his contract with Complainant.

On March 01, 2024, Investigator Springer inspected the work that had been performed on the project. Respondent was present. Investigator Springer also reviewed the contract-related correspondence between the parties, and took 3 photographs of the project site. When he was finished, Investigator Springer drafted his Inspection Notes. Ultimately, Investigator Springer derived a single complaint item from Complaint No. 2023-12801, which he was able to substantiate against Respondent based on his firsthand observations. Specifically, Investigator Springer determined that the project was incomplete and that approximately 20% remained unfinished.

On March 01, 2024, Investigator Springer 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 March 19, 2024, 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 March 19, 2024, at 4:12 p.m., Investigator Springer received an extension request of the Directive’s compliance period from Respondent. In the request, Respondent noted that it had not been able to complete Complainant’s project due to its “finances.” Respondent’s request was denied as untimely, no good cause appearing.

On March 28, 2024, Investigator Springer forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On March 29, 2024, the Registrar issued a Citation to Respondent for alleged violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(c), 32-1154(A)(12); 32-1158, and 32-1154(A)(22). Respondent was given until April 13, 2024, 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 April 12, 2024, the Registrar received Respondent’s timely Answer whereby Carly Brown alleged the following on behalf of Respondent:

Due to financial difficulties that [Respondent] is currently experiencing we have not yet been able to complete this project. We have every intention of doing so and are actively pursuing avenues to bring in the needed capital to complete this project and will do so as soon as we are able.

On April 12, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on June 11, 2024. Per the May 09, 2024, Notice of Hearing on Contested Case (“Notice of Hearing”) the issue(s) to be determined are whether the Registrar has cause to discipline Respondent’s license based on the following alleged statutory violation(s):

Charge 1: A.R.S. § 32-1154(A)(1) – A.A.C. R4-9-108(c)

Charge 2: A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1158

Charge 3: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on her own behalf, and called Investigator Springer as a witness. Although afforded a ten (10) minute grace period, Respondent failed to appear, request an alternative appearance, and/or submit a Motion to Continue. The substantive evidence of record is as follows:

Complainant and her husband, Joshua Cavell, own residential property located at 206 W. Charles L. McKay St. Vail, Arizona 85641.

On August 18, 2022, Respondent issued Complainant and Mr. Cavell a $99,500.00 contract for the construction of an in-ground pool and landscaping. Complainant signed the contract on October 10, 2022.

On October 18, 2022, the parties execute a $1,456.00 Change Order.

On January 12, 2023, the parties execute a $0.00 Change Order.

On January 19, 2023, the parties execute a $0.00 Change Order.

On March 07, 2023, the parties execute a $300.00 Change Order.

On an unknown date, Complainant and Mr. Cavell obtained a loan from Lyon Financial to fund their project with Respondent. On February 02, 2023, Mr. Cavell executed a Stage I Release Agreement to have 30% of the contract price directly disbursed to Respondent. On February 16, 2023, Complainant tendered a $1,455.51 to Respondent towards the project.

On April 03, 2023, Mr. Cavell executed a Stage II Release Agreement to have 30% of the contract price directly disbursed to Respondent. On June 13, 2023, Mr. Cavell executed a Stage III Release Agreement to have 30% of the contract price directly disbursed to Respondent.

Work on the project commenced in January 2023, and stopped sometime in August 2023.

Between March 01, 2023, and March 19, 2023, no corrective work on the project was performed by Respondent. Respondent’s license was active and in good standing with the Registrar during this time.

At no point in time did Respondent allege a denial of access to the project site during the Directive’s compliance period.

Respondent did not provide the Registrar with any accounting statements or affidavits regarding the state of its “finances” related to the completion of the underlying project.

The parties have not entered into a settlement agreement for any portions of the underlying project.

Closing Argument

Complainant declined to provide a closing argument.

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 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)(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(c) requires that, “All work performed by a contractor in a county, city, or town that has not adopted building codes or where any adopted building codes do not contain specific provisions applicable to that aspect of construction work shall be performed in accordance with professional industry standards.”

Ariz. Rev. Stat. § 32-1154(A)(12) holds, in pertinent part, that among the grounds for suspension or revocation of a contractor’s license is a “[f]ailure in any material respect to comply with this chapter.” Specifically, Ariz. Rev. Stat. § 32-1158 provides that “Any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information:

1. The name of the contractor and the contractor's business address and license number.

2. The name and mailing address of the owner and the jobsite address or legal description.

3. The date the parties entered into the contract.

4. The estimated date of completion of all work to be performed under the contract.

5. A description of the work to be performed under the contract.

6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.

7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.

8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar's telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection.

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.”

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 pool installation and landscaping project that Complainant substantially paid towards. It is also clear from the record that Respondent did not complete the project per contract, and that Respondent further failed to comply with the Registrar’s Directive to complete the project. Further, there is no evidence in the record to establish that Respondent provided the Registrar with an update contract template to show compliance with Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158(4) or (9).

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. The Tribunal is not at liberty to make presumptions in favor of Respondent or accept facts in mitigation on behalf of Respondent that are not supported by the evidence. Respondent’s absence from this administrative proceeding is, however, a factor in aggravation. The evidentiary record in this matter reflects that Respondent’s performance on the underlying project failed to meet the Registrar’s minimum workmanship standards, and had no affirmative defense(s) for doing so. No evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project.

Because Complainant has established Respondent’s violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(12); 32-1158, 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 Pleasure Spas Inc., ROC License No. 166025, be suspended for seven (7) days.

It is further recommended that the Registrar require Respondent to pay the sum total of two hundred dollars ($200.00) 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, June 17, 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]

Kimberly Cavell, Complainant

206 W. Charles L. McKay St.

Vail, AZ 85641

[email redacted]

Pleasure Spas Inc., Respondent

dba Pleasure Pools

2004 E. Irvington Rd. #186

Tucson, AZ 85714

[email redacted]

[email redacted]

[email redacted]

By: OAH Staff