ALJDEC - Licensing

2024A-04674-CHC-ROC · Registrar of Contractors · 2024-09-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Max A. Almodovar,

COMPLAINANT,

v.

Integrity Steel Company LLC

dba Integrity Steel Co.

ROC License No. 336643,

RESPONDENT.

No. 2024A-04674-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 30, 2024 at 9:00 AM.

APPEARANCES: Max A. Almodovar (“Complainant”) appeared on his own behalf. Nicholas Lammers appeared on behalf of Integrity Steel Company LLC (“Respondent”). Doug Barrett appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Zach Born, Paul Dawson, Brian Lueck, Tom Lewis, and Rob Linck 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 agency file, and August 07, 2024, Hearing Order were admitted into the 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 11, 2022, the Registrar issued License No. 336643 General Dual KB-2 Residential and Small Commercial contracting license to Respondent. The license has been renewed through February 28, 2026. Nicholas Barlow Lammers is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 4339 E. Estrella Ct. Gilbert, Arizona 85296. Respondent has an active $14,000.00 surety bond on the license issued by American Contractors Indemnity Company, effective January 18, 2022. The license does not have a prior disciplinary record, save two (2) prior complaints that have been settled or otherwise resolved against it. Currently, there are five (5) open complaints against the license; one of which is presumed to be related to this matter.

On or about April 23, 2024, the Registrar received a brief narrative complaint from Complainant against Respondent’s License No. 336643 alleging abandonment and poor work of a detached residential building project. The Registrar designated it Complaint No. 2024-04674 and assigned to Doug Barrett (“Investigator Barrett”) for investigation.

On April 30, 2024, Investigator Barrett issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on May 15, 2024, at 11:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On May 15, 2024, Investigator Barrett inspected the work that had been performed on the project to date. Respondent was present. Investigator Barrett also reviewed the contract-related correspondence between the parties, and took 12 photographs of the project site. When he was finished, Investigator Barrett drafted his Inspection Notes. Ultimately, Investigator Barrett derived a single complaint item from Complaint No. 2024-04674, which he substantiated based on his firsthand observations. Specifically, Investigator Barrett determined Respondent had not completed the project as contracted, and required Respondent to do so via “appropriate means.”

On May 15, 2024, Investigator Barrett issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated most of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on June 05, 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 06, 2024, Investigator Barrett issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on June 10, 2024, at 10:30 a.m. Correspondence was not returned as undeliverable to Respondent.

On June 10, 2024, Investigator Barrett inspected the corrective work that had been performed on the project. Respondent was not present. When he was finished, Investigator Barrett drafted his Compliance Jobsite Inspection Notes. Ultimately, Investigator Barrett determined that Respondent had not attempted to complete the underlying project.

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

On June 12, 2024, 2024, the Registrar issued a Citation to Respondent for alleged violations of Ariz. Rev. Stat. §§ 32-1154(A)(1) and 32-1154(A)(22). Respondent was given until June 27, 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 27, 2024, the Registrar received Respondent’s timely Answer whereby Mr. Lammers accused Complainant of denying Respondent access to the project site. Specifically, Mr. Lammers alleged that he sent a crew to complete the project on four (4) separate occasions, but Complainant “refused to allow the crew of worker[s] to proceeds with the work.” Per Mr. Lammers, Complainant prevented Respondent’s tradesmen from performing work because he took issue with windows provided by the manufacturer. Although Mr. Lammers purchased different windows, Complainant remained dissatisfied and continued to prevent Respondent’s crew from completing the job.

On July 01, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on August 30, 2024. Per the July 23, 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)(1)

Charge 2: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf and called Investigator Barrett as a witness. Respondent called Mr. Lammers to testify as a witness. The substantive evidence of record is as follows:

Complainant owns residential property located at 15509 E. Ocotillo Rd. Gilbert, Arizona 85298.

On May 19, 2024, Complainant entered into a $130,372.53 construction agreement with Respondent to erect and install a prefabricated “40’ x 60’ steel structure with 18ft eave height.” Scope of work included “Roof pitch to be a 2-12. Concrete to be 4” thick with rebar reinforced, including (1) 10’ x 10 white sectional insulated garage door, (2) 12’x14’ white sectional insulated garage doors and (2) walk doors to be 3’ x 7’ (4) 3’ x 3’ windows with trim included.” (All errors in original.)

Complainant paid Respondent $108,770.39 towards the project.

Work on the project commenced on or about June 08, 2023, with subcontractor Black Iron Steele. On or about April 02, 2024, Paul Dawson replaced Black Iron Steele as the subcontractor on the project. Work on the project concluded on or about April 18, 2024.

No Change Orders were executed for the project.

On May 23, 2024, when materials were delivered to the project site, Complainant stopped construction because the windows were single-pane and the wrong size. Complainant asked Respondent to reorder double-pane windows in the correct size.

On May 28, 2024, Respondent’s crew reported to the project site to perform work. However, because windows were not present, the crew could not commence construction. They left after waiting for four (4) hours.

On May 30, 2024, new single-pane windows of an incorrect size were delivered to the project site.

On May 31, 2024, new single-pane windows of a correct size were delivered to the project site.

Respondent never ordered dual-pane windows for the project.

Additional Evidence

Mr. Lammers testified that Complainant never denied Respondent’s access to the project site during the Directive’s compliance period.

Closing Arguments

In closing, Respondent argued that the parties’ contract did not specify the type or grade of window pane(s) any of the windows for the project were supposed to have. Respondent argued that the prefabricated structure came with single-pane windows from the manufacturer, and if Complainant had wanted different windows it would have been included in their agreement or a Change Order. Respondent argued that it was not possible to commence constructions without the windows, and that Complainant’s refusal to accept the delivered windows resulted in Respondent being unable to move forward with construction.

In closing, Complainant argued that Respondent failed to communicate clearly or effectively during the progression of the project. Complainant also argued that the reason the project was delayed, including all remediations to it, was because Respondent failed to deliver double-pane windows as required per contract.

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, “Abandonment 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)(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 clear.

It is clear from the record that the parties had a $130,372.53 construction agreement for Respondent to build and erect a detached structure on Complainant’s residential property, for which Respondent was substantially paid. It is also clear that by the date of Investigator Barrett’s jobsite inspection, and subsequent compliance jobsite inspection, that Respondent had not completed the project per contract. It is further clear that Respondent failed to comply with the Registrar’s Directive by the compliance deadline, and failed to request an extension thereof.

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 sustained its burden. The record clearly establishes that Respondent was directed to complete the project between May 15, 2024, and June 05, 2024, and that the windows Respondent initially had delivered to the project site on May 30, 2024, were the wrong size. However, the record also establishes that the following day, on May 31, 2024, Respondent had the correct size windows delivered. Complainant argues that he desired double-pane windows, but failed to establish that Respondent was required to deliver and/or install such by contract. The four corners of the binding document are clear. The parties agreed that “3’ x 3’ windows with trim included” were to be installed. Moreover, no Change Orders or subsequent agreements were stipulated to that denoted the specificity of pane to be use for the project’s windows. Both parties agree that construction could not proceed without the windows, as they needed to be placed first before any other part of the building could be erected. Complainant’s refusal to accept materials effectively prohibited Respondent from moving forward and killed the project. Respondent cannot be held liable or responsible for Complainant’s volitional choice(s).

While it is unclear as to why Respondent did not simply execute a Change Order for double-pane windows on May 31, 2024, and complete the project by June 05, 224, or request an extension of the Directive, the answer is moot as irrelevant. Respondent was not required to appease Complainant outside of their bargained for and contracted terms.

Because Complainant failed to establish Respondent’s violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(1) and 32-1154(A)(22) by a preponderance of the evidence, Complainant has not established cause for the Registrar to discipline Respondent’s contractor’s license.

RECOMMENDED ORDER

Based on the foregoing,

IT IS RECOMMENDED that Complaint No. 2024-04674, as filed against ROC License No. 336643, be closed by the Registrar, with prejudice.

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 11, 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, Complainant

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Integrity Steel Company LLC, Respondent

4339 E. Estrella Ct.

Gilbert, AZ 85296

[email redacted]

Max A. Almodovar, Complainant

15509 E. Ocotillo Rd.

Gilbert, AZ 85298

[email redacted]

By: OAH Staff