ALJDEC - Licensing
2024A-03468-CHC-ROC · Registrar of Contractors · 2024-10-17
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Lisa Cockrell,
COMPLAINANT,
v.
HR Capital Contracting LLC
ROC License No. 346260,
RESPONDENT.
No. 2024A-03468-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: October 09, 2024 at 1:00 PM.
APPEARANCES: Daniel Gregory, Esq. appeared on behalf of Lisa Cockrell (“Complainant”) with Complainant as a witness. Mike Wiskow appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Hugo Reyna appeared on behalf of HR Capital Contracting LLC (“Respondent”). Princeton Cockrell observed.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the Registrar’s attached administrative 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 record as reflected on the Registrar’s public website. On July 14, 2023, the Registrar issued License No. 346260 General Dual KB-2 Residential and Small Commercial contracting license to Respondent. The license has been renewed through July 31, 2025. Hugo Ruben Reyna is all listed as the Qualifying Party and Owner on the license. Respondent’s address of record for the license is 11214 W. Sieno Pl. Avondale, AZ 85392. Respondent has an active $14,000.00 surety bond on the license, effective June 26, 2023. The license has no prior disciplinary record. Currently, there is one (1) open complaint against the license; which is presumed to be related to this matter.
On March 25, 2024, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 346260 alleging abandonment and poor work of their home remodeling project. The Registrar designated it Complaint No. 2024-03468 and assigned to Jack Grimm (“Investigator Grimm”) for investigation.
On March 29, 2024, Investigator Grimm issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on April 22, 2024, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.
On April 22, 2024, Investigator Grimm inspected the work that had been performed on the project to date. Respondent was present. Investigator Grimm also reviewed the contract-related correspondence between the parties, and took 33 photographs of the project site. When he was finished, Investigator Grimm drafted his Inspection Notes. Ultimately, Investigator Grimm derived sixteen (16) separate and distinct complaint items from Complaint No. 2024-03468, nine (9) of which he substantiated based on his firsthand observations. Specifically, Investigator Grimm determined that Respondent’s workmanship on complaint items 1-2, 5-7, 9-10, 12, and 14 fell below the Registrar’s minimum workmanship standards and/or constituted one or more departures or disregarded approved plans or specification that required Respondent to complete or otherwise perform corrective work to remediate the identified deficiencies.
On May 06, 2024, Investigator Grimm issued a Warning Letter to Respondent for an alleged violation of Arizona Revised Statute (“Ariz. Rev. Stat.”) § 32-1158(A) for Respondent’s failure to include all nine (9) required minimum elements in his contracts, including its contract with Complainant. Correspondence was not returned as undeliverable to Respondent.
On May 06, 2024, Investigator Grimm issued another Warning Letter to Respondent to advise that building permit(s) were not obtained for the project prior to the commencement of Respondent’s work 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 May 07, 2024, Investigator Grimm issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated about half of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on May 30, 2024, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Ariz. Rev. Stat. §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.
On or about May 31, 2024, Investigator Grimm forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On June 13, 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(c), and 32-1154(A)(22). Respondent was given until June 28, 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 June 25, 2024, the Registrar received Respondent’s timely Answer whereby Mr. Reyna denied the allegations listed in the Citation. Specifically, Mr. Reyna argued that he “tried two separate attempts to complete written directive given by ROC” and alleged that “homeowner has failed to allow access to complete work.” Per Mr. Reyna, Complainant sent a list of items she wished to have corrected, which exceeded the scope of remediations identified in the Directive, and he informed her that only items listed in the Directive would be address but Complainant failed to schedule corrective work with Respondent.
On June 26, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 20, 2024. Per the July 15, 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)(2)(b)
Charge 2: A.R.S. § 32-1154(A)(3) – A.A.C. R4-9-108(c)
Charge 3: A.R.S. § 32-1154(A)(22)
Hearing Evidence
Complainant testified on her own behalf and called Registrar investigator Mike Wiskow (“Investigator Wiskow”) as a witness. Mr. Reyna testified on behalf of Respondent. The substantive evidence of record is as follows:
Complainant owns residential property located at 5214 S. 53rd Ln. Laveen, Arizona 85339 which she shares with her chronically ill son, Princeton Cockrell.
On an unknown date, after taking leave from employment due to disability, Complainant began working with multiple trades to perform various scopes of work on her home.
On or about December 18, 2023, the parties entered into a contract for whole-home tile flooring, the amount of which was unspecified. Shortly after commencing the flooring project, the parties agreed to extend the scope of work to include an extension of a wall in Complainant’s kitchen, reconfiguration of the primary and guest bathrooms, coat closet addition, installation of two (2) accent walls, and whole-home painting.
The parties failed to identify an estimation of costs for the additional work, or execute a written Change Order.
A permit was not obtained for any portion of the added work.
Between December 27, 2023, and March 01, 2024, Complainant tendered seventeen (17) payments to Respondent $22,871.87 towards the aforementioned project.
March 08, 2024, was Respondent’s last day performing work on the project.
Over the course of the project Complainant repeatedly asked Respondent for a contract, or alternatively, for an invoice to itemize various scopes of work and their associated costs for labor and/or material(s). Complainant’s requests were never directly addressed by Respondent.
On or about March 20, 2024, Mr. Reyna sent Complainant a text message to inform her that Respondent would not be returning to perform work on the project.
Between April 28, 2024, and May 25, 2024, Complainant priority mailed Respondent four (4) letters asking that Mr. Reyna return to complete the project, including items later identified by Complainant that were not a part of Complaint No. 2024-03468. In her latter correspondence, Complainant specified that Mr. Reyna need only address the work identified in the Registrar’s Directive. None of the letters were returned by the United States Post Office as undeliverable.
Sometime between May 07, 2024, and May 27, 2024, Respondent accused Complainant of a denial of access to the project site, though Respondent never actually tried to access the project site during that period.
Between May 10, 2024, and May 28, 2024, the parties exchanged a number of emails regarding scheduling corrective work, but never settled on one or more dates for performance.
Respondent never contacted Complainant during the Directive’s compliance period to scheduled corrective work.
At no point in time prior to the expiration of the Directive’s compliance period, or anytime thereafter, did Respondent request an extension thereof.
Additional Evidence
On an unknown date, Mr. Reyna submitted a permit from the local building authority for Complainant’s project. On May 28, 2024, Mr. Reyna was asked for measurements. In turn, Mr. Reyna asked Complainant for measurements. Complainant countered that Mr. Reyna should have been privy to that information, as he had already demolished the space in question. Mr. Reyna never followed-up with his permit request.
Mr. Reyna testified that he is unsure what amount, if any, Complainant owes on their contract.
Respondent never supplied the Registrar with an updated template of its construction contract agreements.
Complainant testified that her guest bathroom is completely unusable, and that only the toilet in the primary bathroom works. Per Complainant, she and her son have to wash their hands in the kitchen sink and shower at her next door neighbor’s home. To that end, Complainant also testified that she is facing default of her FHA home loan due to the loss of use of her guest bathroom.
Closing Arguments
In closing, Respondent argued that it was willing to address the substantiated complaint items identified for remediation by the Registrar’s Directive.
In closing, Complainant argued that licensure to engage in contracting in the State of Arizona was a privilege, not a right, which came with great responsibility. Per Complainant, Respondent violated multiple regulations due to Mr. Reyna’s failure to execute a written agreement with Complainant or clarify the scope of work and associated costs, and opined that the Registrar should take disciplinary action against License No. 346260 because Mr. Reyna’s workmanship was poor and went unaddressed as required by the licensee.
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)(2)(b) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Departure from or disregard of a building code of this state or any political subdivision of this state in any material respect that is prejudicial to another.”
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 performed by a contractor in a county, city, or town that has not adopted building codes or where any adopted building codes do not contain specific provisions applicable to that aspect of construction 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) provides, 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 provides that “[n]o 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 substantive facts of record in this matter are not in dispute.
It is undisputed that Respondent agreed to install flooring in Complainant’s home, and that prior to completion of said installation, Respondent further agreed to expand the scope of work to include work in Complainant’s kitchen, bathrooms, and paint throughout the home. It is also undisputed that Respondent never provided Complainant with a written contract or Change Order, but did accept approximately $22,871.87 towards the overall project. It is also undisputed that Respondent commenced work on the added-on project without first obtaining a valid permit from the local building authority, or ever. It is further undisputed that some of Respondent’s workmanship on the project fell below the Registrar’s minimum workmanship standards, and that Respondent did not comply the Registrar’s Directive.
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 Complainants’ project per contract. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent did not sustain his 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. Reyna’s contention that Complainant wanted him to address items outside the scope of the Registrar’s Directive does not explain why he failed to address the actual Directive or settle his dispute with Complainant, nor does it explain why Respondent did not obtain a permit for the project and/or ask the Registrar for an extension of the Directive’s compliance period. No mitigating evidence exists in the record in favor of Respondent.
Because Complainant has established Respondent’s statutory and regulatory violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), 32-1154(A)(3); Ariz. Admin. Code R2-19-108(c), 32-1154(A)(12); 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 HR Capital Contracting LLC, ROC License No. 346260, be suspended six (6) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(2)(b), 32-1154(A)(3), and 32-1154(A)(22).
It is further recommended that the Registrar require Respondent to pay the sum total of one hundred fifty dollars ($150.00) 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, October 17, 2024.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted electronically to:
Tom Cole, Director
Registrar of Contractors
c/o Legal Department
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
Daniel Gregory, Esq.
c/o Lisa Cockrell, Complainant
Gregory Law Firm, Counsel for Complainant
15331 W. Bell Rd., Ste. 212
POB 9491
Surprise, AZ 85374
[email redacted]
HR Capital Contracting LLC, Respondent
c/o Hugo Reyna, Agent
11214 W. Sieno Pl.
Avondale, AZ 85392
[email redacted]
By: OAH