ALJDEC - Licensing
2024A-00535-RFA-LS-ROC · Registrar of Contractors · 2025-04-29
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Mariali Garcia,
COMPLAINANT,
v.
Desert Sun Customs & Restoration LLC
ROC License No. 333009,
RESPONDENT.
No. 2024A-00535-RFA-LS-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: April 18, 2025 at 1:00 PM.
APPEARANCES: Assistant Attorney General Charles Hover, Esq. appeared on behalf of the Arizona Registrar of Contractors (“Registrar”) with Lauren Johnston as a witness. Mariali Garcia (“Complainant”) appeared on her own behalf. Casey Levi Conrad appeared on behalf of Desert Sun Customs & Restoration LLC (“Respondent”).
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: Registrar Exhibits 1-7, including the Notice of Hearing on Appealable Agency Action (“Notice of Action”), and March 17, 2025, 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 14, 2021, the Registrar issued License No. 333009 to Respondent for General Residential B-3 Remodeling and Repair contracting. The license is active, in good standing, and has been renewed through April 30, 2027. Casey Levi Conrad is the Qualifying Party and Member on the license. Respondent’s address of record for the license is 3912 W. Ina Rd., Ste. 224 Tucson, Arizona 85741. Respondent has an active $9,000.00 surety bond on the license issued by RLI Insurance Company, effective April 07, 2021. The license reflects discipline by the Registrar on two (2) prior occasions, one of which is presumed to be related to this matter.
On or around January 2024, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 333009 alleging poor workmanship of an $8,276.87 remodel project at Complainant’s home that included a closet, bathroom, roof repair, and water damage remediation. The Registrar designated it Complaint No. 2024-00535 and assigned to Ruben Perez Sr. (“Investigator Perez”) for investigation.
On February 06, 2024, Investigator Perez conducted a review of the contract executed between the parties, took 16 photographs, and inspected the work that had been performed on the project to date. Respondent was present. When he was finished, Investigator Perez drafted his Jobsite Inspection Notes. Ultimately, Investigator Perez derived three (3) separate and distinct complaint items from Complaint No. 2024-00535, two (2) of which he was able to substantiate based on his firsthand observations. Specifically, Investigator Perez concluded that the work Respondent had performed on complaint items 1 and 2 failed to meet the Registrar’s minimum workmanship standards, and specifically noted the following:
Master bathroom vanity and cabinet were observed with damaged (stained and cracked) sidings. Master bathroom sink overflow trim ring was observed damaged (broken). Respondent to correct by appropriate means.
Several areas on residence West wall and privacy wall were observed with peeling and bubbling paint. Respondent to correct by appropriate means.
On February 12, 2024, Investigator Perez issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated most of Complainant’s workmanship allegations against Respondent. Respondent was further put on notice that it had until 5:00 p.m. on February 29, 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), 32-1154(A)(22), and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On March 12, 2024, Investigator Perez performed a compliance jobsite inspection of the project and took 8 photographs. Respondent was not present. Based on his firsthand observations, Investigator Perez determined that Respondent had satisfactorily remediated substantiated complaint item 1, but had not performed sufficient corrective work to remediate substantiated complaint item 2. Investigator Perez specifically noted, “This item was not complied with as per written directive as several areas on residence West wall and privacy wall were observed with peeling and bubbling paint.”
On March 25, 2024, the Registrar issued a Citation to Respondent for an alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until April 09, 2024, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.
On April 08, 2024, the Registrar received a timely Answer from Respondent.
On April 18, 2024, a Notice of Hearing on Appealable Agency Action (“Notice of Hearing”) was issued setting a hearing on June 04, 2024, at the Office of Administrative Hearings (“OAH”), an independent state agency, to determine whether the Registrar had grounds to take disciplinary action against License No. 333009 for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22).
On June 19, 2024, as a result of the administrative hearing, a Recommended Administrative Law Judge Decision (“Recommended ALJ Decision”) was issued to the Director of the Registrar that recommended suspension of License No. 333009 for one (1) day and the assessment of a $100.00 civil penalty for Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22). On July 10, 2024, pursuant to Ariz. Rev. Stat. § 41-1092.08(B), the Registrar issued a Final Administrative Decision and Order (“Final Order”) that accepted the Recommended ALJ Decision, effective August 19, 2024. Respondent did not appeal the Final Order.
In or around July 2024, Complainant submitted a second narrative complaint against Respondent’s License No. 333009 whereby she alleged that she had tendered $15,495.01 to Respondent to paint the exterior of her home, which had been done poorly. The Registrar designated it Complaint No. 2024-04154 and assigned to Gregory Johndrow (“Investigator Johndrow”) for investigation.
On unknown dates, Complainant submitted two (2) supplemental complaints to the Registrar against Respondent’s License No. 333009. The first supplemental complaint alleged that Complainant had tendered $49,006.91 to Respondent for a poorly performed bathroom remodel, and the second supplemental complaint alleged that Complainant had tendered 43,464.85 to Respondent for a poorly performed water damage remediation of an exterior wall.
On July 16, 2024, Investigator Johndrow conducted a review of the contract executed between the parties, took 10 photographs, and inspected the work that had been performed on the project to date. Respondent was not present. When he was finished, Investigator Johndrow drafted his Jobsite Inspection Notes. Ultimately, Investigator Johndrow derived four (4) separate and distinct complaint items from Complaint No. 2024-04154 and its supplements, two (2) of which he was able to substantiate based on his firsthand observations. Specifically, Investigator Johndrow concluded that the work Respondent had performed on complaint items 2 and 3 failed to meet the Registrar’s minimum workmanship standards, and specifically noted the following:
The new stucco applied around the new windows, on the exterior of the master bathroom wall, does not match or blend with the existing finish.
There is vertical crack on the right side corner on the exterior wall of the master bathroom where the stucco was repaired. The stucco repair does not match or blend with the existing finish.
On July 24, 2024, Investigator Johndrow issued a Directive to Respondent because he substantiated half of Complainant’s workmanship allegations against Respondent. Respondent was further put on notice that it had until 5:00 p.m. on August 09, 2024, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A), 32-1154(A)(22), and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On August 29, 2024, the Registrar issued a Citation to Respondent for an alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), and 32-1154(A)(22). Respondent was given until September 13, 2024, to respond with its Answer or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A)(22) and 32-1155.
Respondent did not submit a timely Answer to the Registrar.
On September 18, 2024, pursuant to Ariz. Rev. Stat. §§ 32-1154 and 32-1155, the Registrar issued a Final Administrative Decision and Order (Default) (“Default Order”) that suspended License No. 333009 for three (3) days, beginning September 25, 2024, and assessed a $250.00 civil penalty against it. Respondent did not appeal the Default Order.
On or about October 17, 2024, the Registrar received Complainant’s petition for payment from the Residential Contractors’ Recovery Fund (“Fund”), pursuant to Ariz. Rev. Stat. §§ 32-1132(A) and 32-1154(G). Complainant listed the underlying contract date as September 19, 2023, totaling $14,678.82, and avowed she paid $15,495.01; noting payments of $7,339.41 and $8,155.60 on September 19, 2023, and October 14, 2023, respectively. Attached were proof of Complainant’s ownership of the underlying property, proof of the parties’ underlying contracts and payments made to Respondent for the projects, and a bond denial letter from Respondent’s insurance company. Also attached were two (2) repair invoices from Arizona Painting Company (ROC License No. 251484) totaling $13,132.89 dated August 09, 2024, and August 26, 2024, respectively, and a $4,388.00 repair invoice from CalMar Construction (ROC License No. 322123).
On February 13, 2025, the Registrar issued a Notice of Administrative Award (“Notice of Award”) to the parties which held that Complainant was awarded $17,520.89 from the Fund.
On February 27, 2025, the Registrar received an appeal letter from Respondent. The correspondence did not provide a basis for the appeal.
On February 28, 2025, the Registrar referred 2024A-00535-RFA-LS-ROC to OAH for an independent evidentiary hearing. Per the Notice of Action sent to the parties on March 17, 2025, the issues for hearing are to determine whether Complainant’s award from the Fund was properly calculated and appropriately issued pursuant to Ariz. Rev. Stat. §§ 32-1132 to 32-1133.01 and 32-1154(F), as justified by the evidence.
On April 18, 2025, an administrative hearing took place before OAH.
Hearing Evidence
At the hearing, the Registrar called Lauren Johnston as a witness. Complainant testified on her own behalf. Casey Levi Conrad testified on behalf of Respondent. The substantive evidence is as follows:
Complainant owns residential property located at 8030 E. Paseo De Beatriz Tucson, Arizona 85750.
On or about September 08, 2023, the parties entered into a $14,678.82 exterior residential paint contract, including labor and materials.
On or about September 19, 2023, the parties entered into a $7,339.41 exterior residential paint contract, including labor and materials.
On or about October 04, 2023, the parties entered into a $3,464.85 framing and stucco remediation contract, including labor and materials.
On or about October 13, 2023, the parties entered into an $8,155.60 an exterior stucco patch and paint contract, including labor and materials.
On or about October 25, 2023, the parties entered into an $8,276.87 custom closet cabinet fabrication and installation contract, including labor and materials.
Work on the projects commenced on or about September 18, 2023, and stopped on or about October 30, 2023.
Complainant tendered a total of $23,771.88 to Respondent toward their contracts as follows:
On September 19, 2023, Complainant paid Respondent $7,339.41.
On October 14, 2023, Complainant paid Respondent $8,155.60.
On October 25, 2023, Complainant paid Respondent $8,276.87.
Additional Evidence
Ms. Johnston is a Legal Assistant II for the Registrar. Ms. Johnston made the determination that Complainant was eligible to access the Fund, and also eligible to receive an administrative payout from the Fund, because she satisfied all statutory requirements to receive an award. Specifically, Ms. Johnston determined the following:
Complainant owns and occupies the residential property at issue.
Respondent’s license was active and in good standing with the Registrar when the underlying contract was entered into, as well as when Respondent first received payment from Complainant for the project.
Because Complainant paid the September 19, 2023, and October 13, 2023, contracts in full, it was determined that there was no unpaid remaining balance between the parties for those scopes of work.
As a result of Complaint No. 2024-00535 being filed with the Registrar, ROC License No. 333009 was disciplined by the Registrar and assessed a civil penalty.
Though she applied, Complainant did not receive a bond payout for the underlying project from Respondent’s insurance company.
Ms. Johnston conferred with Investigators Perez and Johndrow, both of whom agreed that the repainting of Complainant’s home was necessary to remediate Respondent’s poor workmanship, and was fell within the scope of the underlying contract and Directive.
Complainant paid the CalMar Construction remediation invoice in full.
Complainant paid the Arizona Painting Company remediation invoice in full.
Ultimately, Ms. Johnston calculated Complainant’s compensable damages by subtracting Complainant’s applicable payments from the original contract price, and then adding the amounts of the valid expenditures to repair or otherwise complete the pertinent scopes of her project. Thus, Ms. Johnston deduced that Complainant’s actual damages totaled $17,520.89; reimbursement for payments made to CalMar Construction and Arizona Painting Company.
Ms. Johnston testified that the purpose of the Fund was to make homeowners aggrieved by licensees “whole,” and that Ariz. Rev. Stat. § 32-1131 et seq. was specifically limited to the cost of actual construction work, labor and materials.
Mr. Conrad testified that he believed Respondent’s workmanship only needed addressing “in places,” and opined that repainting was “unnecessarily expensive.”
Closing Arguments
In closing, Respondent argued that it was desirous of performing necessary corrective work to remediate Complainant’s project, and opined that hiring another contractor would be too expensive.
Complainant declined to provide a closing argument.
In closing, the Registrar argued that Respondent failed to sustain its burden of proof in the matter, and that no facts had been presented by Respondent to rebut the Registrar’s credible evidence. The Registrar argued that Complainant met every statutorily mandated requirement for payout from the Fund, and, per administrative calculations, was eligible for a $17,520.89 payout from the Fund. Per the Registrar, it had satisfied its fiduciary duty to comply with the pertinent sections of the law and protect the purpose of the Fund.
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 Arizona legislature established the Fund “to provide improved protection for owners and lessees of property who contract for the construction or alteration of residential structures.”
Complainant bears the burden of establishing by a preponderance of the evidence that the Fund’s claim award amount was incorrect or otherwise improperly issued. The Registrar bears the burden to establish factors in mitigation 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.”
Pursuant to Ariz. Rev. Stat. § 32-1131 et seq., in order to be eligible to access the Recovery Fund an applicant must meet specific eligibility criteria. An individual is eligible for an award from the residential contractors’ recovery fund if they both: (1) own residential real property that is damaged by the failure of a residential contractor to adequately build or improve a residential structure or appurtenance, and (2) actually occupy or intend to occupy the residential real property as the individual’s primary residence. Additionally, the applicant must have contracted with a residential contractor who was appropriately licensed either at the time of contract execution, when the first payment on the project was made, or when the work on the project first began.
Ariz. Rev. Stat. § 32-1154(F) provides that “if a contractor’s license has been revoked or has been suspended as a result of an order to remedy a violation of this chapter the registrar may order payment from the residential contractors’ recovery fund to remedy the violation.”
Ariz. Rev. Stat § 32-1132.01 provides, in pertinent part, that an award from the Recovery Fund “[m]ay not exceed the actual damages suffered” and also “[m]ay not exceed an amount necessary to complete or repair a residential structure.” “Actual damages” means the reasonable cost of completing the contract and repairing the contractor’s defective performance, minus the part of the contract price still unpaid. The maximum individual award from the Recovery Fund is $30,000.00.
Statutes should be interpreted to provide a fair and sensible result. 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.” “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 substantive facts in the case at bar are not in dispute.
Here, none of the parties contended that Complainant was not eligible to access the Fund. Thus, the crux of the matter is whether the Registrar correctly calculated Complainant’s $17,520.89 administrative award from the fund, and if so, whether grounds exist to affirm the Registrar’s Notice of Award. After careful review of the credible and relevant evidence of record, the Tribunal finds in favor of the Registrar and, consequently, Complainant.
Here, the Registrar soundly established Complainant’s eligibility to access the fund, as well as the calculation and resulting award therefrom. In making a homeowner “whole” the Registrar is simply required to identify the reasonable cost of repairing or replacing a licensee’s defective workmanship, less any unpaid balance owed on their agreement – which is exactly what the Registrar did in the case at bar. There is no statute, regulation, precedent, or binding authority that requires the Registrar to do anything more; including permitting a licensee to take further action in an attempt to mitigate or otherwise reduce the amount of a Fund payout. Nor are there any laws, rules, or regulations in existence that require an aggrieved homeowner to find the “cheapest” or “least expensive” repair/replacement option available. All that matters is that the relied upon bid not fall below or exceed the scope of work identified in the parties’ underlying contract or Directive, and that the remediating contractor be appropriately licensed by the Registrar. These requirements have been met here.
Respondent’s opinion that the Registrar’s award calculations were incorrect, and that it should be permitted to take action on Complainant’s property to reduce the overall amount of his award from the Fund, without providing an indicia of evidence to support its contentions, are irrelevant and meritless. The record credibly reflects that in order to remediate the underlying project, Respondent’s workmanship needs to be replaced with competent work. It would be unreasonable to force another contractor to assume latent defects in Respondent’s work in an attempt to perform repairs.
Therefore, based on the credible and relevant evidence of record, the Tribunal must conclude that the Registrar soundly established Complainant’s eligibility to access the Fund, as well as the amount of her administrative award. As such, the undersigned also concludes that Complainant was properly awarded an administrative payout from the Fund.
Accordingly, Respondent’s appeal is denied.
RECOMMENDED ORDER
In light of the foregoing,
IT IS ORDERED that the Registrar affirm the Fund’s December 09, 2024, $17,520.89 Notice of Award.
IT IS FURTHER ORDERED that the Registrar dismiss Respondent’s appeal.
NOTICE
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, April 29, 2025.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Tom Cole, Director
c/o Lauren Johnston - Legal Department
Registrar of Contractors
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
[email redacted]
Charles Hover III, Esq., Assistant Attorney General
Office of the Attorney General
2005 N. Central Ave.
Phoenix, AZ 85004
[email redacted]
Desert Sun Customs & Restoration LLC
c/o Casey Levi Conrad, Agent
3912 W Ina Rd., Ste. 224
Tucson, AZ 85741
[email redacted]
Mariali Garcia, Complainant
8030 E. Paseo De Beatriz
Tucson, AZ 85750
[email redacted]
By: OAH Staff