ALJDEC - Licensing

2023A-13465-CHC-ROC-RH · Registrar of Contractors · 2025-01-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Kevin Jay Carpenter,

COMPLAINANT,

v.

Mountain Roof Repair LLC

ROC License No. 319233,

RESPONDENT.

No. 2023A-13465-CHC-ROC-RH

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: October 04, 2024 and December 13, 2024.

APPEARANCES: Kevin Jay Carpenter (“Complainant”) appeared on his own behalf. Miles Crosby appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Lawrence Felder, Esq. appeared on behalf of Mountain Roof Repair LLC (“Respondent”) with Kevin Young and Kelvert Schumway as witnesses.

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The May 24, 2024, and August 19, 2024, Notices of Hearing (Notice 2 and Notice 1, respectively), including the Registrar’s respectively attached agency files, the Registrar’s supplemental agency file, Complainant Exhibit 3, Respondent Exhibit A, and the October 08, 2024, Further Hearing Order 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 April 04, 2018, the Registrar issued License No. 319233 General Dual KB-1 Building contracting license to Respondent. The license has been renewed through April 30, 2026. Kevin L. Young is listed as the Qualifying Party and Member on the license. Jacob N. Parker is also listed on the license as a Member. Respondent’s address of record for the license was 1282 Lone Pine Dam Rd. Show Low, Arizona 85901. Respondent has an active $14,000.00 surety bond on the license issued by Platte River Insurance Company, effective March 28, 2020. The license does not been previously disciplined by the Registrar or had any other complaints 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 October 30, 2023, the Registrar issued a Building Confidence Program Inspection Notification Letter to the parties, advising that it would assign an investigator to conduct an inspection of the project on December 15, 2023, at 11:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On November 25, 2023, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 319233 alleging poor work on a residential shed roof extension project. The Registrar designated it Complaint No. 2023-13465 and assigned the matter to Miles Crosby (“Investigator Crosby”) for investigation.

On December 15, 2023, Investigator Crosby issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on December 21, 2023, at 1:00 p.m. Correspondence was not returned as undeliverable to Respondent.

On December 18, 2023, Investigator Crosby issued a Rescheduled Jobsite Inspection Notification Letter to the parties, advising that his onsite inspection of the project was reset to January 04, 2024, at 11:00 a.m. due to a scheduling conflict. Correspondence was not returned as undeliverable to Respondent.

On January 04, 2024, Investigator Crosby inspected the work that had been performed on the project to date. Respondent was present. Investigator Crosby also reviewed the contract-related correspondence between the parties, and took 22 photographs of the project site. When he was finished, Investigator Crosby drafted his Inspection Notes. Ultimately, Investigator Crosby derived nine (9) separate and distinct complaint items from Complaint No. 2023-13465, three (3) of which he substantiated based on his firsthand observations. Specifically, Investigator Crosby determined that complaint items 1-3 fell below the Registrar’s minimum workmanship standards and required correction and/or completion by Respondent.

On January 09, 2024, Investigator Crosby 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 January 27, 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 January 23, 2024, Investigator Crosby performed a compliance jobsite inspection of the project. Respondent was not present. Investigator Crosby took an unknown number of photos and drafted his Compliance Jobsite Inspection Notes. Ultimately, Investigator Crosby determined that Respondent had satisfactorily remediated complaint items 1-3 from the first Directive, but that a permit remained outstanding for the project which Respondent was responsible for.

On February 01, 2024, Investigator Crosby issued a second Directive to Respondent regarding “violations not alleged by Complainant but subsequently discovered and substantiated.” Specifically, Investigator Crosby held as follows:

Permits for this project were not obtained as required by the Navajo County Building Department. Prior to any work beginning all applicable permits shall be obtained. Unpermitted work shall be inspected by the local building inspector and any building code deficiencies identified or code violations caused by the Respondent shall be corrected. All required inspections shall be scheduled and passed. Completed project must comply with original contract agreement, properly executed change orders, local building codes, and manufactures installation instructions.

Respondent was put on notice that it had until 5:00 p.m. on February 17, 2024, to notify the Registrar of its compliance with the second 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 February 01, 2024, Investigator Crosby issued a Warning Letter to Respondent for an alleged violation of Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158 for Respondent’s failure to include all nine (9) required minimum elements in its contracts, including its contract with Complainant. Correspondence was not returned as undeliverable to Respondent.

On February 01, 2024, Investigator Crosby issued a second Warning Letter to Respondent to advise that building permit(s) were not obtained for the project in violation of the International Residential Code and the International Building Code. Respondent was further advised that failure to comply with the building codes was a violation of Ariz. Rev. Stat. § 32-1154(A)(2), which could result in discipline against Respondent’s license including suspension or revocation.

On February 02, 2024, Complaint No. 2023-13465 was closed by the Registrar because Respondent provided the agency with a signed contract that required Complainant to obtain a permit for the underlying project. The Closure Letter provided the following, in pertinent part:

[Complainant] may obtain the permit and have the build inspected. It would be reasonable that if there are any items of construction, within the scope of work, that do not pass inspection, the Respondent would be responsible for those items to be brought up to code. If at that time there is still unresolved issues between the parties, [Complainant] may request for the complaint to be reopened. The request will be evaluated at that point, if needed.

On April 02, 2024, Complainant inquired with the local building authority regarding obtaining a permit for is project. On April 03, 2024, Complainant was advised of the following in reply:

After reviewing the information supplied by Core Engineering and brief consultation from [a structural Engineer], it has been concluded that this specific project can not [sic] be permitted. The reasons for this conclusion is as follows –

Too many current code violations per the 2018 IRC as supplied per Core Engineering.

Unverifiable footing depth and reinforcement.

Nailing pattern unverifiable on roof sheeting.

Since it is essential to have a permit to inspect each phase of the build to insure proper construction of the code or to have a professional engineered letter of approval of the existing build and neither is attainable it is therefore deemed unpermitable. [sic]

(All errors in original.)

On April 03, 2024, Complaint No. 2023-13465 was reopened by the Registrar.

On April 05, 2024, Investigator Crosby issued correspondence to the parties to advise that a separate complaint, Complaint No. 2024-0318, was received by Complainant against License No. 319233, and that the Registrar would incorporate it to Complaint No. 2023-13465 as an Addendum.

On April 09, 2024, Investigator Crosby issued an Addendum Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of Complainant’s addendum complaint items for the project on April 16, 2024, at 11:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On April 16, 2024, Investigator Crosby performed an addendum jobsite inspection of the project, to review five (5) additional complaint items submitted by Complainant in Complaint No. 2024-03818. Respondent was present. Investigator Crosby took 6 photos and drafted his Addendum Jobsite Inspection Notes. Ultimately, Investigator Crosby determined that the addendum complaint items were substantially similar to the original complaint items filed, but held, overall, that Respondent failed to obtain a permit or ensure one was in place prior to commencing construction, and that the existing structure did not meet standards or code. Investigator Crosby’s notes include the following, in pertinent parts:

The issue remains that the Complainant has not been provided the necessary permit(s) and the in-progress work would need correction by appropriate means to meet code or standards.

[T]he work is still in progress and [Complainant] is correct in his assessment that the dimension contracted are different the sketch provided and his understanding of what he would receive from the Respondents finished work. The dimensions have noted in the items and as it stands now, [Respondent] has failed to obtain a permit or resolve the matter with [Complainant].

Complainant advised he has not been billed for the entirety of the contract as listed in the Addendum item #2.

Complainant provided an engineering report from Core Structure Group, LLC, dated 3/18/2024. The Engineer is an AZ State Certified Engineer and the report has been added to this case and reviewed. This report was obtained by [Complainant] due to [Respondent] proceeding without a permit from the Navajo County Building Department and substantial work being completed that needs inspection. It was within the contract for the Complainant to obtain the permit but is ultimately the Respondents obligation to ensure the proper legalities are in place prior to any construction. This was noted in the Written Directive issued on 2/1/2024. From here the Complainant and Respondent disputed over the obtaining of the permit and none was obtained.

Complainant advised no permit could be obtained due to the in progress work. When [Complainant] spoke to the Navajo County Building Department he was advised this based on the information he gave them. On 4/9/2024 I spoke to Michael “Mischa” Larisch, CFM PW Deputy Director Planning and Development. Mischa contacted me after received the 20240401 C015 Notice to Building Official letter from me. I explained to Mischa the issue created by the Respondent proceeding without a permit and was able to clarify that a permit could be issued but the existing structure would need to be inspected to see if substantial progress was past their ability to inspect or not. If too much work had been done, then the work would have to be restarted or signed off by an engineer. This effort was made in order to assist the Complainant in obtaining the permit even if an inspection would not be done due to the existing work.

In conclusion, [t]he ROC cannot require [Respondent] to be present during the work process even if it is [Respondent’s] best interests. If a Respondent entrusts an employee who fails to do the work to standards or code, it is at their risk to do so.

(Emphasis added.)

On April 17, 2024, Investigator Crosby forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On April 18, 2024, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until May 03, 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 30, 2024, the Registrar received a timely Answer on behalf of Respondent whereby Mr. Young asserted that the contract with Complainant was for an owner-builder project that did not have permits or drawings. Per Mr. Young, Complainant completed demolition prior to contacting Respondent for a bid, and informed Respondent that drawings and permits were not needed because the work was “preexisting” and “remove and go back.” Because of Complainant’s assertions, Respondent included a clause in the parties’ contract that Complainant would be responsible for obtaining any required permits. Mr. Young argued that Respondent build the porch per Complainant’s specifications as instructed, but had to redo the eaves of the porch at no extra charge because the house was “out of square.” Mr. Young opined that Respondent had exhausted all attempts to satisfy Complainant, including performing additional corrective work and offering a full refund.

On May 06, 2024, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing at 1:00 p.m. on July 03, 2024. Per Notice 2, issued May 24, 2024, the issue(s) to be determined were whether the Registrar had cause to discipline Respondent’s license based on the following alleged statutory violations:

Charge 1: A.R.S. § 32-1154(A)(2)(b)

Charge 2: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108(a)

Charge 3: A.R.S. § 32-1154(A)(22)

Notice 2 noted, in pertinent part, as follows:

Google Meet. A link will be provided directly from The Office of Administrative Hearings. Go to www.azoah.com to request to appear in person.

If you have requested to appear in-person at the hearing, the hearing will be held at 1740 W Adams Street, Phoenix, AZ 85007.

You must attend this hearing. This is an adversarial hearing before an administrative law judge, and is conducted in a similar manner as judicial proceedings. Thus, you must be prepared to present evidence, including witness testimony and documents, in support of your case.

(Emphasis in original.)

Correspondence was not returned as undeliverable to Complainant.

On June 07, 2024, OAH issued a Hearing Order to the parties that provided remote participation information, including a videoconference web link and teleconference phone number and pin. Correspondence was not returned as undeliverable to Complainant.

On July 03, 2024, at the time scheduled for hearing, although afforded a fifteen (15) minute grace period, there was no appearance by or on behalf of Complainant. Complainant failed to appear.

On July 05, 2024, OAH issued an Order Vacating Hearing pursuant to Ariz. Admin. Code R2-19-111(4) and R2-19-117.

On July 05, 2024, Complainant submitted a Request to Reopen Complaint No. 2023-13465 to the Registrar, and also requested that an administrative hearing be reset as well.

On July 09, 2024, the Registrar issued an Order of Closing for Complaint No. 2023-13465.

On an unknown date, Complainant’s reopening request was granted by the Registrar. On August 14, 2024, the Registrar again referred this matter back to OAH for an evidentiary hearing at 1:00 p.m. on October 04, 2024, to address the above-captioned issues.

Hearing Evidence

Complainant testified on his own behalf and called Investigator Crosby as a witness. Kevin Young and Kelvert Schumway testified as witnesses on behalf of Respondent. The substantive evidence of record is as follows:

Complainant owns residential property located at 7944 Marken Ranch Rd. Show Low, Arizona 85901.

On or about August 09, 2023, the parties entered into an $11,459.00 contract for the construction of a 16x42 shed roof extension on the side of Complainant’s home. The contract included the following terms:

Note: If permits are required, they will need to be provided by owner.

Exclusions: Bonds, permits, all wood, metal, insulation, and painting not listed above, mechanical, electrical, and plumbing, any OSHA required roof top covers.

Complainant tendered a 50% deposit to Respondent for the project, resulting in a $5,729.50 balance due upon completion of the project.

Work on the project commenced September 13, 2023, and stopped on or about November 20, 2023.

Respondent satisfactorily remediated substantiated complaint items 1-3 as required by the January 09, 2024, Directive, but failed to obtain a building permit for the project as required by the February 01, 2024, Directive.

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.

The parties did not enter into a settlement agreement for Complainant to obtain the necessary permits and/or plans for the project.

Additional Evidence

Investigator Crosby testified that Complainant should have obtained a building permit prior to September 12, 2023, but noted that nothing prevented Respondent from obtaining a building permit between September 13, 2023, and April 16, 2024. Per Investigator Crosby, per the parties’ contract, Respondent could have refused to star work on the project until Complainant obtained a building permit from the local authority. Investigator Crosby also opined that Complainant obstructed all avenues for Respondent to cure deficiencies or settle the parties’ dispute.

Closing Arguments

In closing, Respondent argued that the Registrar erred in reopening Complaint No. 2023-13465. Respondent further argued that the Registrar violated its rights to Due Process by issuing the underlying Citation two (2) days after Investigator Crosby’s addendum jobsite inspection, as it failed to afford Respondent a reasonable time to address the permitting issue. Respondent opined, overall, that it navigated Investigator Crosby’s “unclear instructions” the best it could, and offered that it should not be subject to disciplinary action for Complainant’s failure to adhere to their contractual agreement.

In closing, Complainant opined that he had sustained his burden of proof, and argued that disciplinary action was warranted against License No. 319233 because he reasonably relied upon Respondent’s expertise as a licensed contractor.

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.

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.

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 $11,459.00 contract that Complainant paid half of. It is also clear that, per the terms of the contract, Complainant was to obtain all permits required for the project, but that Respondent commenced work prior to ensuring any such permits had been secured. It is further clear from the record that while there were some deficiencies in Respondent’s workmanship, substantiated complaint items 1-3 were remediated after the issuance of the January 09, 2024, Directive. However, after the issuance of the second Directive on February 01, 2024, Respondent had until February 17, 2024, to obtain a permit for the project, or arguably commence proceedings in obtaining one and request an extension from the Registrar if unable to secure by the Directive’s compliance deadline. It is undisputed that Respondent never attempted to obtain a permit or request an extension.

Therefore, the only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to obtain a building permit for the underlying project per the Registrar’s February 01, 2024, Directive. 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. While contractually it was Complainant’s responsibility to obtain a permit for his project with Respondent, it was also Respondent’s responsibility to ensure that a permit had been issued by the local building authority prior to commencing construction. However, once Respondent began work on the project, as demolition had already been performed by Complainant, Respondent adopted or otherwise assumed the responsibility of ensuring that the project would be permitted and pass inspection. As the licensed party, Respondent knew or should have known that any unpermitted work would necessitate authorized inspection, and any building code deficiencies identified and/or code violations resulting from Respondent’s poor workmanship would have to be corrected after a permit was issued. Had Respondent contact the local building authority like Investigator Crosby had, it most likely would have been informed that a permit could be issued on the in-progress project, if the existing structure had not progressed past their ability to inspect, otherwise the work would have to be restarted or signed off by an engineer.

Regardless of the corrective work Respondent performed in a workmanlike manner prior to the issuance of a building permit, which was within industry standards, it still do not comply with requirements set forth in Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), 32-1154(A)(3), and/or 32-1154(A)(22). Here, Respondent’s legal obligations superseded Complainant’s contractual duties because as the licensee, Respondent was required to ensure that a duly issued permit was in place prior to commencing construction on this project.

Notably, Respondent’s diligent attempts to correct the issues in this matter are factors in mitigation.

Because Complainant has established Respondent’s violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), 32-1154(A)(3), and 32-1154(A)(22), Complainant has also established cause for the Registrar to discipline Respondent’s contractor’s license.

However, Complainant’s conduct directly goes against the Registrar’s advisement regarding cooperation, as outlined in its Guide to Jobsite Inspections, and also goes against the Spirit of Fair Dealing, it is deemed a factor in aggravation.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter, Respondent Mountain Roof Repair LLC, ROC License No. 319233, be suspended for three (3) days.

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 09, 2025.

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]

Mountain Roof Repair LLC, Respondent

Lawrence J. Felder, Esq., Counsel for Respondent

3101 N. Central Ave Ste. 850

Phoenix, AZ 85012

[email redacted]

Kevin Jay Carpenter, Complainant

7944 Marken Ranch Rd.

Show Low, AZ 85901

[email redacted]

By: OAH Staff