ALJDEC - Licensing
2024A-03690-CHC-ROC · Registrar of Contractors · 2024-10-21
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Donna Dempsey,
COMPLAINANT,
v.
Escala Construction LLC
ROC License No. 334555,
RESPONDENT.
No. 2024A-03690-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: October 18, 2024 at 9:00 AM.
APPEARANCES: Donna Dempsey (“Complainant”) appeared on her own behalf. Robert Di Alto appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Hannah K. Durrett, Esq. appeared on behalf of Escala Construction LLC (“Respondent”) with Daniel Nuñez and Arturo Noel Sanchez Olivera as witnesses.
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 September 20, 2024, Minute Entry – Granting Continuance 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 August 23, 2021, the Registrar issued License No. 334555 Specialty Dual CR-9 Concrete contracting license to Respondent. The license had been renewed through August 31, 2025. Daniel Nuñez is listed as the Qualifying Party and Manager on the license. Respondent’s address of record for the license was 5632 N. 51st Ave. Glendale, Arizona 85301. Respondent has an active $6,750.00 surety bond on the license issued by RLI Insurance Company, effective August 17, 20201. The license has not been previously disciplined, nor have there been any 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 March 29, 2024, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 334555 alleging poor work of a driveway replacement project. The Registrar designated it Complaint No. 2024-03690 and reassigned the matter to Robert Di Alto (“Investigator Di Alto”) for investigation.
On April 05, 2024, Investigator Di Alto issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on May 16, 2024, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.
On April 17, 2024, Investigator Di Alto issued a Rescheduled Jobsite Inspection Notification Letter to the parties, advising that his onsite inspection of the project would take place on May 23, 2024, at 11:30 a.m. instead. Correspondence was not returned as undeliverable to Respondent.
On May 23, 2024, Investigator Di Alto inspected the work that had been performed on the project to date. Respondent was present. Investigator Di Alto also reviewed the contract-related correspondence between the parties, and took 12 photographs of the project site. When he was finished, Investigator Di Alto drafted his Inspection Notes. Ultimately, Investigator Di Alto derived five (5) distinct complaint items from Complaint No. 2024-03690, two (2) of which he substantiated based on his firsthand observations. Specifically, Investigator Di Alto determined that complaint items 2 and 5 fell below the Registrar’s minimum workmanship standards and required correction and/or completion by Respondent.
On June 10, 2024, Investigator Di Alto issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated some of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on June 28, 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). On June 19, 2024, correspondence was returned as undeliverable to Respondent by the United States Postal Service, but never by Respondent’s email domain.
On July 01, 2024, Investigator Di Alto issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on July 15, 2024, at 10:30 a.m. Correspondence was not returned as undeliverable to Respondent.
On or about July 05, 2024, Investigator Di Alto forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On July 08, 2024, the Registrar issued a Citation to Respondent for 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 July 23, 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 July 23, 2024, the Registrar received a timely Answer behalf of Respondent whereby Respondent admitted that its “communication was noncompliant with the Directive,” and argued that it would have performed repairs, albeit untimely, if Complainant had accepted its offer to perform corrective work on July 15, 2024. No reason(s) was provided as to why Respondent did not address the Directive during its compliance period.
On July 24, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on September 20, 2024. Per the August 01, 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)(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 Di Alto as a witness. Daniel Nuñez and Arturo Olivera testified as witnesses on behalf of Respondent. The substantive evidence of record is as follows:
Complainant owns residential property with her husband, Sean Dempsey, located at 2912 E. Michigan Ave. Phoenix, Arizona 85032.
On or about January 04, 2024, Mr. Dempsey entered into a $10,547.20 residential concrete contract with Respondent to replace their driveway and walkway leading to the front door.
On January 12, 2024, Complainant paid Respondent in full on the project.
Work on the project commenced on or about January 04, 2024, and stopped or was otherwise completed on January 10, 2024.
Respondent hired Upright Concrete, LLC, (“Upright”) ROC License No. 341245, to perform concrete subcontracting work on Complainant’s project. Mr. Olivera is Upright’s Qualifying Party and Member. Mr. Olivera testified that he completed his scope of work on the project in two (2) to three (3) days, and that he was unsupervised during the performance of most of his work.
During concrete installation Respondent and/or Upright accidentally damaged Complainant’s garage door. Complainant provided Respondent with a $4,895.00 repair quote. She gave Respondent twenty (20) days to provide her with a repair quote from another contractor, but he did not do so.
On July 01, 2024, in response to her receipt of Investigator Di Alto’s Compliance Jobsite Inspection Notification Letter, Complainant wrote back to advise, in pertinent part, “Mr. Nunez has not made any attempts to contact me.” As a result, Investigator Di Alto cancelled the compliance jobsite inspection and escalated the complaint to the Registrar’s legal department.
Between June 10, 2024, and June 28, 2024, Respondent’s contracting license was active and in good standing with the Registrar. During this time, however, Respondent did not perform any corrective work in adherence with the Registrar’s Directive or have any communication with Complainant or Investigator Di Alto.
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 or request an extension thereof.
Per Mr. Nuñez, on or about April 25, 2024, he took a medical leave of absence of work through July 31, 2024, because he broke his knee. During that time no other employees had access to his email address, but mail remained deliverable.
On July 15, 2024, Respondent advised Complainant that it would report to the project site the following day to perform corrective work. Complainant advised that because the Directive’s compliance period had expired she would not allow Respondent to perform any corrective work.
Additional Facts
At the jobsite inspection Mr. Nuñez told Investigator Di Alto that the observable crack in Complainant’s side walk, near the end of her driveway, was caused by his equipment and agreed that he would repair the area. Although there was confusion as to whether a permit was needed to perform work on an area that might belong to the City of Phoenix, Respondent never checked with the local building authority to determine if a permit was required to perform corrective work as directed by the Registrar.
After he finished, Mr. Olivera was called back to the project site by Mr. Nuñez, but ultimately did not return because he was informed that Complainant did not want him on the project site. Mr. Olivera never had direct contact with Complainant during the project or subsequently during the Directive’s compliance period.
Closing Arguments
In closing, Respondent argued that it should have been afforded more time than allotted to perform corrective work under the Directive.
In closing, Complainant argued that she had sustained her burden of proof, and opined that Respondent’s failure to remediate her project evinced his unwillingness to be regulated by the Registrar.
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 the parties had a concrete installation project that Complainant paid in full. It is also clear that some of Respondent’s work, either directly or through its subcontractor Upright, failed to meet the Registrar’s minimum workmanship standards. It is further clear that Respondent failed to timely and completely comply with 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 remediate Complainant’s project. 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. Nuñez’s accident occurred prior to the jobsite inspection, which he attended. It is confounding why Mr. Nuñez would use his injury or subsequent period of recovery as the basis for why he did receive the Registrar’s Directive and/or did not, at a minimum, ask the Registrar for more time to comply with the underlying Directive. Moreover, Respondent, as the general contractor, was responsible for the workmanship of its subcontractor. Regardless of who actually performed the work on substantiated complaint items 2 and 5, Respondent was responsible for ensuring their timely remediation.
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.
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 Escala Construction LLC, ROC License No. 334555, 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.
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 five days from the date of that certification.
Done this day, October 21, 2024.
Office of Administrative Hearings
/s/ Jenna Clark
Administrative Law Judge
Transmitted by either mail, e-mail, or facsimile to:
Tom Cole, Director
Registrar of Contractors
c/o Legal Department
1700 W. Washington St., Ste. 105
Phoenix, AZ 85007
[email redacted]
Donna Dempsey, Complainant
2912 E. Michigan Ave.
Phoenix, AZ 85032
[email redacted]
Hannah K. Durrett, Esq.
Escala Construction LLC, Respondent
c/o Denton Peterson Dunn, Counsel for Respondent
1930 N. Arboleda Rd., Ste. 200
Mesa, AZ 85213
[email redacted]
By: OAH Staff