ALJDEC - Licensing

2024A-04106-CHC-ROC · Registrar of Contractors · 2024-09-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Leslie Allan Klinke,

COMPLAINANT,

v.

FRF Development LLC

ROC License No. 343439,

RESPONDENT.

No. 2024A-04106-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 12, 2024 at 9:00 AM.

APPEARANCES: Leslie Klinke (“Complainant”) appeared on his own behalf. Cliff Corlett appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Alan Flanagan appeared on behalf of FRF Development LLC (“Respondent”).

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 August 19, 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 February 27, 2023, the Registrar issued License No. 343439 B General Residential contracting license to Respondent. The license has been renewed through February 28, 2025. Alan Jon Flanagan is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 3748 Clearwater Dr. Lake Havasu City, Arizona 86406. Respondent has an active $9,000.00 surety bond on the license issued by Jet Insurance Company, effective December 09 2022. The license has not been previously been disciplined. Currently, there is one (1) open complaints against the license; which is presumed to be related to this matter.

On April 09, 2024, the Registrar received a lengthy narrative complaint from Complainant against Respondent’s License No. 343439 alleging abandonment and poor work of their residential remodel project. The Registrar designated it Complaint No. 2024-04106 and assigned to Cliff Corlett (“Investigator Corlett”) for investigation.

On April 16, 2024, Investigator Corlett issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on April 29, 2024, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On April 29, 2024, Investigator Corlett inspected the work that had been performed on the project to date. Respondent was present. Investigator Corlett also reviewed the contract-related correspondence between the parties, and took 39 photographs of the project site. When he was finished, Investigator Corlett drafted his Inspection Notes. Ultimately, Investigator Corlett derived thirty-two (32) separate and distinct complaint items from Complaint No. 2024-04106, thirteen (13) of which he substantiated based on his firsthand observations. Specifically, Investigator Corlett determined Respondent’s workmanship on complaint items 6-12, 14-16, 23-24, and 27 failed to meet the Registrar’s minimum workmanship standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On May 20, 2024, Investigator Corlett issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated nearly half of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on June 15, 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 June 12, 2024, Respondent submitted a two-week extension request to Investigator Corlett. Respondent was given a seven-day extension, to June 22, 2024.

On July 02, 2024, Investigator Corlett forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On July 09, 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 24, 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 Respondent’s timely Answer whereby Mr. Flanagan provided the following, in pertinent parts:

[Th]e homeowner has been less than cooperative and gone out of there [sic] way to make things more difficult. Towards the end of april [sic] I had to purchase a vehicle because mine was getting older and cost too much to fix, 2 days after I bought a truck, began 5 trips and 25 days at the dealerships, documented, which put me behind on other jobs and ongoing heart issue and temperatures rising as I need to be careful in the heart with 7 medications.

Between playing catch up and my health, I was unable to meet with the homeowner at the limited time I received to handle the simple inside tasks, after 6.15.24 I wasn't allowed access, except when I was out of town 7.2-7.10.

(All errors in original.)

Mr. Flanagan also alleged that Respondent had remediated complaint items 15 and 27, and argued that Complainant owed an outstanding balance of $10,025.00 on the contract.

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 12, 2024. Per the July 31, 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)(3) – A.A.C. R4-9-108(a)

Charge 2: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf and called Investigator Corlett as a witness. Mr. Flanagan testified on behalf of Respondent. The substantive evidence of record is as follows:

Complainant owns secondary residential property located at 2364 Kiowa Blvd. North Lake Havasu City, Arizona 86403. Complainant typically rents the property out from December to April.

On August 22, 2023, the parties entered into a $25,500.00 residential remodel contract, regarding Complainant’s back deck and awning.

Work on the project commenced on April 22, 2023, and concluded on or about November 22, 2023. On or about August 19, 2023, the interior of Complainant’s property sustained water damage due to rain because Respondent failed to properly cover the exposed areas. Thus, expanding the scope of work on the project to include mitigation and repairs.

Complainant paid Respondent $23,944.00 towards the project.

On an unknown date during the Directive’s compliance period, Respondent filed a denial of access complaint against Complainant with the Registrar. Specifically, Respondent accused Complainant of reducing its accessibility to the project site, and being unavailable for corrective work during Respondent’s times of availability. As a result, Respondent was granted a one-week extension of the Directive’s compliance period, on the condition that if sufficient corrective work was performed during that time, and additional seven-day extension would be granted.

An additional extension was not granted by Complainant or the Registrar.

Additional Evidence

Mr. Flanagan testified that he has multiple jobs, and had difficulty scheduling corrective work with Complainant. Per Mr. Flanagan, prior to filing the underlying complaint, Complainant had granted Respondent near-unrestricted access to the project site, but access to the interior of the home was restricted afterwards.

Complainant testified that Respondent only performed corrective work on June 01, 2024, June 12, 2024, and June 20, 2024. Respondent had unfettered access to the exterior of the property, and was given a list of days/times to access the interior of the home. Respondent was asked to supply additional proposed days of entry to the interior of the property, but did not. Respondent was never denied access to the property on any day access was requested. Complainant also testified that he owes Respondent $6,375.00 once the project has been completed. Per Complainant, Respondent damaged his refrigerator door and agreed to cover the cost of repairs, but never did.

Investigator Corlett testified that he performed a prehearing jobsite inspection on August 30, 2024, and determined that Complainant had remediated complaint item 7, and that Respondent had remediated complainant items 11-12 and 16.

Closing Arguments

Respondent declined to provide a closing argument.

In closing, Complainant argued that the corrective work identified by the Registrar did not get completed by Respondent because Mr. Flanagan did not start performing corrections until the last 2-weeks of the Directive’s compliance period. Complainant denied denying Respondent access to the project site. Per Complainant, although access to the interior of the property was limited due to availability, Respondent never requested any additional dates during the Directive’s compliance period to perform corrective work.

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.

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 not in dispute.

It is undisputed from the record that the parties had a residential remodel agreement that Complainant substantially paid Respondent for. It is also undisputed that some of Respondent’s workmanship on the project fell below the Registrar’s minimum workmanship standards, and that as a result, Respondent was required to perform corrective work to remediate the identified deficiencies per the Registrar’s Directive no later than June 22, 2024. It is further undisputed that substantiated complaint items 6-10, 14-1523-24 and 27 remained outstanding at the time of the Directive’s expiration.

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 as required by statute. 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. Here, Mr. Flanagan did not offer an indicia of evidence to support Respondent’s denial of access claim, or explain the delay in commencing corrective work other than that he was “busy.”

The evidentiary record in this matter reflects that Respondent no affirmative defense(s) for failing to comply with Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22).

Because Complainant has established Respondent’s alleged statutory violation(s) by a preponderance of the evidence, Complainant has also established cause for the Registrar to discipline Respondent’s ROC License No. 343439.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter, Respondent FRF Development LLC, ROC License No. 343439, be suspended for four (4) business days.

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, September 16, 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 Cliff Corlett, Investigator

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

FRF Development LLC, Respondent

3748 Clearwater Dr.

Lake Havasu City, AZ 86406

[email redacted]

Leslie Allan Klinke, Complainant

5662 Los Amigos St.

Buena Park, CA 90620

[email redacted]

By: OAH Staff