ALJDEC - Licensing

2024A-00183-CHC-ROC · Registrar of Contractors · 2024-07-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Milo Kartchner,

COMPLAINANT,

v.

Desert Edge Construction and Renovations

LLC,

ROC License No. 337533,

RESPONDENT.

No. 2024A-00183-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 16, 2024 at 1:00 PM.

APPEARANCES: Milo Kartchner (“Complainant”) appeared on his own behalf. No appearance(s) by or on behalf of Desert Edge Construction and Renovations LLC (“Respondent”). Mike Springer 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 attached agency file, was 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 records as reflected on the Registrar’s public website. On April 07, 2022, the Registrar issued License No. 337533 General Dual KB-2 Residential and Small Commercial contracting license to Respondent. The license has been renewed through April 30, 2026. Myka James Campbell is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 419 N. Miller Ln. Saint David, Arizona 85630. Respondent has an active $14,000.00 surety bond on the license issued by RLI Insurance Company, effective March 04, 2022. The license has no prior disciplinary record, save four (4) complaints that have been settled or otherwise resolved against it. Currently, there is one (1) open complaint listed against the license which is presumed to be related to this matter.

On January 26, 2024, the Registrar received a narrative complaint from Complainant alleging poor work of a metal roof replacement project against Respondent’s License No. 337533. The Registrar designated it Complaint No. 2024-00183 and assigned to Mike Springer (“Investigator Springer”) for investigation.

On January 29, 2024, Investigator Springer issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on March 14, 2024, at 11:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On March 14, 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 4 photographs of the project site. When he was finished, Investigator Springer drafted his Jobsite Inspection Notes. Ultimately, Investigator Springer derived a single complaint item from Complaint No. 2024-00183, which he was able to substantiate against Respondent based on his firsthand observations. Specifically, Investigator Springer concluded that Respondent’s workmanship failed to meet the Registrar’s minimum standards, as a leak was present in the metal roof, and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On March 14, 2024, Investigator Springer issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s single complaint allegation against Respondent. Respondent was put on notice that it had until 5:00 p.m. on April 01, 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 April 10, 2024, Investigator Springer forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On April 19, 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 May 04, 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 May 04, 2024, the Registrar received Respondent’s Answer whereby Respondent denied all alleged statutory violations levied in the Citation. Mr. Campbell specifically offered the following, in pertinent parts:

I have completed the repairs necessary for this job which included stripping the new roof and replace it with proper materials for the pitch. All of the work for this complaint and job and now complete. [sic]

On May 20, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on July 16, 2024. Per the June 03, 2024, 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)(3) – 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 his 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 owns residential property located at 550 N. Sibyl Rd. Saint David, Arizona 85630.

On or about March 27, 2023, the parties entered into a $27,000.00 metal roof replacement agreement. On unknown dates, Change Orders for underlayment and a carport metal roof addition were executed by the parties for an additional $19,000.00. Complainant paid Respondent in full for the contract.

Work on the project commenced March 29, 2023, and stopped on or about November 22, 2022.

On March 29, 2024, Complainant advised Investigator Springer that Respondent had performed corrective work on the project the prior day.

On April 03, 2024, Complainant advised Investigator Springer that the metal roof over the carport continued to leak.

On or about April 03, 2024, Respondent made a second attempt to perform corrective work on the project.

At no point during March 14, 2024, and April 01, 2024, did Respondent notify Investigator Springer of its compliance with the Registrar’s Directive, request an extension thereof, or allege a denial of access to the project site. During this period, Respondent’s contracting license was active and in good standing with the Registrar.

It did not rain again at Complainant’s residence until June 2024. At that time, Complainant was able to confirm that the metal roof over the carport was still leaking.

The parties have not entered into a settlement agreement for any portions of the underlying project, nor has Respondent tendered any refund(s) to Complainant for monies paid on the project.

Additional Evidence

Complainant testified that on June 22, 2024, and July 17, 2024, the parties were in communication regarding potential settlement of the underlying issue(s), which remain outstanding as of the date of the hearing. Per Complainant, he remains open to the parties settling their dispute prior to the issuance of the Final Order in this matter.

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 “[a]ll work shall be performed in accordance with professional industry standards.”

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 metal roof replacement agreement, including specific underlayment requirements and carport coverage, which Complainant paid in full. It is also clear from the record that Respondent’s workmanship on the project failed to meet the Registrar’s minimum workmanship standards, and that Respondent further failed to comply with the Registrar’s Directive to remediate the project leaving Complainant with a leaking roof.

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. The record further reflects that assertions made in Respondent’s Answer to the underlying Citation are wholly inaccurate. No evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project.

Notably, the record is devoid of any evidence that would tend to suggest Respondent ever provided the Registrar with an updated or otherwise legally sufficient construction contract template.

Because Complainant has established Respondent’s violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(12), and 32-1154(A)(22), Complainant has also established cause for the Registrar to discipline License No. 337533.

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 Desert Edge Construction and Renovations LLC, ROC License No. 337533, be suspended for six (6) days.

It is further recommended that the Registrar require Respondent to pay the sum total of $250.00 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, July 23, 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]

Desert Edge Construction and Renovations LLC, Respondent

c/o Myka Campbell, Agent

419 N. Miller Ln.

Saint David, AZ 85630

[email redacted]

Milo Kartchner, Complainant

550 N. Sibyl Rd., Box 457

Saint David, AZ 85630

[email redacted]

By: OAH Staff