ALJDEC - Licensing

2023A-14138-CHC-ROC · Registrar of Contractors · 2024-09-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Alan Contreras Mexia,

COMPLAINANT,

v.

PH Quality Construction Inc.

ROC License No. 334123,

RESPONDENT.

No. 2023A-14138-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 27, 2024 at 1:00 PM.

APPEARANCES: Alan Contreras Mexia (“Complainant”) appeared on his own behalf. T'Shura-Ann Elias, Esq. appeared as counsel on behalf of PH Quality Construction Inc. (“Respondent”) with Phillip Horsey as a witness. Cliff Corlett appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the Registrar’s attached agency file, was admitted into the evidentiary record, along with a Minute Entry – Granting Continuance from May 31, 2024, and Respondent Exhibits 2-3.

_____________________________________________________________________

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 22, 2021, the Registrar issued License No. 334123 General KB-1 Dual Building contracting license to Respondent. The license had been renewed through July 31, 2025. Philip Ederson Horsey is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is P.O. Box 29746 Laughlin, Nevada 89028. Respondent has an active $14,000.00 surety bond on the license issued by Western Surety Company, effective August 25, 20203. The license has not been previously disciplined, but has had one (1) prior complaint settled or otherwise resolved against it. Currently, the license has one (1) open complaint against it; one of which is presumed to be related to this matter.

On December 13, 2023, the Registrar received a lengthy narrative complaint from Complainant against Respondent’s License No. 334123 alleging poor work and abandonment of a residential water damage mitigation project. The Registrar designated it Complaint No. 2024-14138 and assigned to Cliff Corlett (“Investigator Corlett”) for investigation.

On December 25, 2023, Investigator Corlett issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on January 08, 2024, at 12:15 p.m. Correspondence was not returned as undeliverable to Respondent.

On January 08, 2024, Investigator Corlett inspected the work that had been performed on the project to date. Respondent was present. Investigator Corlett also reviewed the contract-related correspondence between the parties, and took 31 photographs of the project site. When he was finished, Investigator Corlett drafted his Inspection Notes. Ultimately, Investigator Corlett derived 22 separate and distinct complaint items from Complaint No. 2024-14138, 18 of which he substantiated based on his firsthand observations. Specifically, Investigator Corlett determined Respondent’s workmanship on complaint items 1-7, 9-12, and 15-22 fell below the Registrar’s minimum workmanship standards and required correction and/or completion by Respondent.

On February 07, 2024, Investigator Corlett issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated most of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on February 26, 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, Investigator Corlett drafted Compliance Jobsite Inspection notes that noted, “On February 26, 2024 the ROC received an email from the Complainant stating that there has been no corrective work scheduled or performed.” As a result, by that same date, Investigator Corlett forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On March 26, 2024, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until April 10, 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 10, 2024, the Registrar received a timely Answer from Respondent. In sum, Respondent denied the charges in the Citation, specifically accused Complainant of denying access to the project site during the Directive’s compliance period, and asked that Complaint No. 2024-14138 be dismissed.

On April 29, 2024, the Registrar issued an Order Denying Request to Dismiss to Respondent.

On May 03, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on July 01, 2024. Per the May 22, 2024, 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)(3) – A.A.C. R4-9-108(a)

Charge 2: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on her own behalf and called Investigator Corlett as a witness. Phillip Horsey testified on behalf of Respondent. The substantive evidence of record is as follows:

Susan Torres, Complainant’s wife, and Maribel Serrano, Complainant’s mother, own secondary residential property located at 1989 E. Desert Greens Ln. Fort Mohave, Arizona 86426. Complainant does not own the subject property.

On or about September 12, 2023, Mrs. Torres and Ms. Serrano entered into a $14,072.50 residential remediation contract with Respondent to replace sections of damaged drywall, and remove/install cabinets, countertops, and base boards throughout Complainant’s home. The contract also included replacement of plumbing fixtures and section of roof tiles. Respondent also agreed to perform mold remediation and test for affected areas. Complainant is not a party to the underlying contract, but did serve as a point of contact with Respondent on behalf of his wife and mother regarding the project.

Work on the project commenced on or about September 25, 2023. It was stopped on or about October 10, 2023, by Complainant because he wanted to obtain mold test results and lacked confidence in the analysis performed by Respondent.

Respondent was paid a total of $6,332.63 towards the project. The monies Respondent was paid came from lender New American Funding.

Because asked for items that exceeded the scope of work originally contracted for, Respondent delivered a Change Order for those item to Complainant on or about September 29, 2023. Complainant declined to execute the agreement.

On November 15, 2023, a spore trap analysis and mold test were performed on the subject property by Eurofins (EML ID No. 3454696), who generated a pathology reports on November 20, 2023.

On February 26, 2024, Mr. Horsey contacted Investigator Corlett to advise that he was just in receipt of the Registrar’s Directive because he had “forgot” to check his P.O. Box and had not seen the electronic copy sent via email. Investigator Corlett did not extend the Directive’s compliance period because neither he nor Complainant had heard from Respondent since the jobsite inspection, and because Respondent had timely received the jobsite inspection notice. Instead, Investigator Corlett advised that if Mr. Horsey executed a settlement agreement with Complainant before the end of the day, and provided him with a copy, Complaint No. 2024-14138 could be closed as resolved.

On February 26, 2024, at 2:02 p.m., Mr. Horsey contacted Complainant to schedule corrective work and asked “Is it okay to come over?” Complainant replied that it was “the final day” and told Mr. Horsey that he was “out of compliance.”

Although an attempt was made, Respondent did not settle with Complainant.

Additional Evidence

Mr. Horsey testified that when he contacted Complainant he was 20-minutes from the project site, and that he believed he could have mobilized sufficient trades and materials to “work overnight” and remediate the project per the Registrar’s Directive.

Mr. Horsey also testified that he changed his P.O. Box address one week prior to hearing, but had not yet notified the Registrar of the change.

Closing Arguments

In closing, Respondent argued that Registrar lacks jurisdiction to investigate and/or discipline Respondent because Complainant was not a party to the underlying construction contract and did not own the subject property. Per Respondent, because Complainant did not suffer a “material loss” or “injury” as required by Ariz. Rev. Stat. § 32-1154(B)(2). Respondent further argued that because Complainant denied access to the project site and prevented it from performing corrective work on February 26, 2024, Complainant was unable to obtain a favorable decision.

In closing, Complainant argued that he had sustained his burden of proof and established both alleged statutory violations. Per Complainant, no denial of access had taken place, as Mr. Horsey’s phone call on February 26, 2024, did not pertain to accessing the property that day.

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.

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 Complainant’s wife and mother own the subject property, and that they, without Complainant, entered into a water remediation construction agreement with Respondent. It is also clear from the record that Respondent received approximately half of what was owed on the project. It is further clear that some of Respondent’s workmanship on the project fell below the Registrar’s minimum standards, and that Respondent failed to comply with the Directive issued in the matter.

The only issue in dispute is whether Respondent raised a sufficient justification or excuse for failing to adhere to the Registrar’s 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 on this project. Mr. Horsey’s assertion that he “forgot” to check his mail, after having attending the underlying jobsite inspection, is not reasonable given the number of complaint items Investigator Corlett substantiated in his presence. Moreover, Respondent’s allegation that Complainant denied access to the project site on February 26, 2024, is disingenuous. Mr. Horsey admitted that he did not contact Complainant until 2:02 p.m. on the last day of the Directive, and further admitted that he did not physically report to the project site with trades and/or materials in an attempt to perform corrective work and was directly prohibited by Complainant. The record reflects that Mr. Horsey simply asked if it was “okay” to remediate the project. He did not provide any specifics to Complainant.

Complainant’s rejection of Respondent’s subsequent settlement offer(s) are irrelevant, as is Respondent’s assertion that the Registrar lacked jurisdiction to investigate and/or discipline Respondent because Complainant was not a party to the underlying construction contract and did not own the subject property. Both arguments constitute red herrings. Regarding Complainant’s material loss and/or injury under Ariz. Rev. Stat. § 32-1154(B)(2), the record clearly reflects more than a tenuous relationship between Complainant and the subject property. As such, the Registrar maintains jurisdiction to take disciplinary action against its licensee based on the conduct of record.

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

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter, Respondent PH Quality Construction Inc., ROC License No. 334123, be suspended for five (5) business days.

It is further recommended that the Registrar require Respondent to pay the sum total of $100.00 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.

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 five days from the date of that certification.

Done this day, September 03, 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]

Alan Contreras Mexia, Complainant

1989 E. Desert Greens Ln.

Fort Mohave, AZ 86426

[email redacted]

T'Shura-Ann Elias, Esq., Counsel for Respondent

3640 Hwy. 95 Ste. 140

Bullhead City, AZ 86442

[email redacted]

By: OAH Staff