ALJDEC - Licensing

2024A-01693-CHC-ROC · Registrar of Contractors · 2024-08-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Sondra Scott,

COMPLAINANT,

v.

Pelican Power Construction LLC

ROC License No. 323160,

RESPONDENT.

No. 2024A-01693-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 13, 2024 at 1:00 PM.

APPEARANCES: Sondra Scott (“Complainant”) appeared on her own behalf. Patrick Lewallen appeared on behalf of Pelican Power Construction LLC (“Respondent”). Todd Anderson 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, and July 08, 2024, 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 January 04, 2019, the Registrar issued License No. 323160 Specialty Dual CR-61 Carpentry, Remodeling and Repairs contracting license to Respondent. The license had been renewed through January 31, 2025. Maria Cervantes Lopez is listed as the Qualifying Party on the license. Colin James Lewallen is also listed as a Manager and Member on the license. Respondent’s address of record for the license was 3408 N. 78th St. Scottsdale, Arizona 85251. Respondent has an active $6,750.00 surety bond on the license issued by RLI Insurance Company, effective December 15, 20203. The license has not been previously disciplined, but has had three (3) prior complaints 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 February 11, 2024, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 323160 alleging abandonment of a residential water damage mitigation project. The Registrar designated it Complaint No. 2024-01693 and assigned to Todd Anderson (“Investigator Anderson”) for investigation.

On February 14, 2024, Investigator Anderson issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on March 13, 2024, at 9:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On March 13, 2024, Investigator Anderson inspected the work that had been performed on the project to date. Respondent was not present. Investigator Anderson also reviewed the contract-related correspondence between the parties, and took 8 photographs of the project site. When he was finished, Investigator Anderson drafted his Inspection Notes. Ultimately, Investigator Anderson derived a single distinct complaint item from Complaint No. 2024-01693, which he substantiated based on his firsthand observations. Specifically, Investigator Anderson determined Respondent “started project to replace damaged items which were removed as part of the mitigation process caused by a flood,” but that at the time of the inspection the only work completed was “mitigation and replacement of a damaged section of drywall. No work has been done since December 8, 2023.”

On March 14, 2024, Investigator Anderson 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 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) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

On April 10, 2024, Investigator Anderson forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On April 16, 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 May 01, 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 07, 2024, because Respondent did not file a timely Answer, the Registrar issued a Final Administrative Decision and Order (Default) (“Default Order”) whereby it suspended License No. 323160 for three (3) days, effective May 14, 2023.

On May 07, 2024, Respondent submitted the following to the Registrar, in pertinent part:

We are requesting to set aside the default date and asks for a hearing date. We did not receive the original legal documents to respond to the legal complaint last month - the mailed copy went to our old address and we did not update.

After the complaint was completed by the investigator- the homeowner and pelican came to an agreement for payments - We have paid 3500 of the approx 8300 owed - and will continue to make payments until paid [sic]

Attached, Respondent included screenshots of alleged wire transfers made to Complainant via Zelle, between April 16, 2024, and April 29, 2024, totaling $2,500.00, and purported text messages between the parties confirming their settlement agreement.

On June 17, 2024, the Registrar issued an Order Setting Aside Final Administrative Decision and Order (Default) and Order Setting Hearing (“Set Aside Order”).

On June 19, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 13, 2024. Per the July 02, 2024, Notice of Hearing on Contested Case (“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)(1)

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)

Hearing Evidence

Complainant testified on her own behalf and called Investigator Anderson as a witness. Patrick Lewallen testified on behalf of Respondent. The substantive evidence of record is as follows:

Complainant owns residential property with her husband, Richard Scott, located at 6935 S. Scott Dr. Chandler, Arizona 85249.

On or about October 05, 2023, the parties entered into a $28,882.07 residential remediation contract to replace sections of damaged drywall, cabinetry, and wood floors throughout Complainant’s home. Respondent also agreed to repaint walls and do some plumbing work as well.

Respondent received approval from Complainant’s insurance company to perform the aforementioned repairs.

Work on the project commenced on or about November 05, 2023, and stopped on or about December 08, 2023.

Complainant paid Respondent a total of $11,772.00 towards the project.

License No. 323160 was administratively suspended by the Registrar from January 17, 2023, through January 18, 2023, and again from January 12, 2024, through January 16, 2024, in unrelated matters. On January 17, 2024, the license went back into active status.

On March 29, 2024, Respondent contacted Investigator Anderson to advise the following:

[Respondent] just sent a cashiers check to the homeowner for 3000$. We will refund the agreed full amount – A little over 8000$-

Could you please extend the directive for 204 weeks as we work towards the full resolution

(All errors in original.)

Respondent attached a photograph of a $3,000.00 Cashier’s Check dated March 29, 2024, in Complainant’s name.

On April 01, 2024, Investigator Anderson granted Respondent’s extension request, and gave Respondent one (1) additional week to comply with the Directive.

On April 06, 2024, Respondent arrived to the project unannounced to deliver a payment to advance the parties’ settlement. Complainant was not home.

On April 09, 2024, Respondent advised Investigator Anderson that Complainant refused partial payment of their agreed settlement amount, to which Investigator Anderson replied the following day that because the Directive’s compliance period had expired the matter had been referred to the Registrar’s legal department.

Respondent did not attempt to perform any corrective work on the underlying project during the Directive’s compliance period.

At no point during the Directive’s compliance period, or anytime thereafter, did Respondent allege a denial of access to the project site to the Registrar.

Additional Evidence

The parties agreed that Complainant would close Complaint No. 2024-01693 if Respondent refunded $8,319.00 in monies paid on the project.

As of the date of the hearing, Respondent refunded Complainant $3,600.00.

After being advised that the Tribunal was statutorily required to issue a Recommended Decision to the Registrar twenty (20) calendar days after their hearing record was closed, the parties stipulated that Complainant would submit a Motion to Vacate to OAH on or before September 03, 2024, if she received the outstanding $4,700.00 from Respondent it agreed to refund her on the project.

Closing Arguments

Both parties declined to provide closing arguments.

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)(1) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[A]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

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)(17) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[c]ontracting or offering to contract or submitting a bid while the license is under suspension or while the license is on inactive status.”

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 hired Respondent, with the approval of her homeowner’s insurance company, to perform remediations in connection with water damage sustained across multiple rooms in her home. It is also clear from the record that Complainant substantially paid Respondent. It is further clear from the record that although Respondent commenced work on the project, Respondent ceased work without explanation to Complainant or refund of monies paid. It is uncontroverted that Respondent did not attempt to perform any corrective work on the project during the Directive’s compliance period. The record reflects that it was not until after Complainant filed Complaint No. 2024-01693 that Respondent agreed to refund her a portion of the monies tendered for Respondent’s work. The record further reflects that Respondent did not adhere with the terms of its repayment arrangement with Complainant prior to or after hearing.

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. There is no evidence in the record that excuses or otherwise justifies Respondent’s inaction and/or lack of performance on this project. Mr. Lewallen’s assertion that Complainant’s repayment was “contingent on solvency” is neither supported by their agreement or the evidence of record. Here, Respondent waited until the last day of the Directive’s compliance period to settle with Complainant, but offered her less than their agreed upon amount. Moreover, during the extension period Respondent failed to perform corrective work or tender the full amount of the parties agreed upon settlement amount to Complainant.

Because Complainant has established Respondent’s violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(1), 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.

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 Pelican Power Construction LLC, ROC License No. 323160, be suspended for five (5) business 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.

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, August 30, 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]

Pelican Power Construction LLC, Respondent

c/o Patrick Lewallen, Agent

3408 N. 78th St.

Scottsdale, AZ 85251

[email redacted]

Sondra Scott, Complainant

6935 S. Scott Dr.

Chandler, AZ 85249

[email redacted]

By: OAH Staff