ALJDEC - Licensing

2024A-04905-CHC-ROC · Registrar of Contractors · 2024-10-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Brian Keast,

COMPLAINANT,

v.

Tri-Edge LLC

ROC License No. 317057,

RESPONDENT.

No. 2024A-04905-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 24, 2024 at 9:00 AM.

APPEARANCES: Brian Keast (“Complainant”) appeared on his own behalf. Trinidad Joseph Logan appeared on behalf of Tri-Edge LLC (“Respondent”). Chris Allison appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Ken Costello and Michelle Keast 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, August 19, 2024, Hearing Order, and September 07, 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 December 26, 2017, the Registrar issued License No. 317057 B General Residential contracting license to Respondent. The license has been renewed through December 31, 2025. Trini Joseph Logan is listed as the Qualifying Party and Member on the license. Respondent’s address of record for the license is 6208 E. Thorne Ln. Prescott Valley, Arizona 86314. Respondent has an active $9,000.00 surety bond on the license issued by RLI Insurance Company, effective December 12, 2023. The license does not have a prior disciplinary record. Currently, there is one (1) open complaint against the license; which is presumed to be related to this matter.

On April 29, 2024, the Registrar received a short narrative complaint from Complainant against Respondent’s License No. 317057 regarding his dissatisfaction with a detached garage project. The Registrar designated it Complaint No. 2024-04905 and assigned to Chris Allison (“Investigator Allison”) for investigation.

On April 29, 2024, Investigator Allison 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 May 16, 2024, Investigator Allison inspected the work that had been performed on the project to date. Respondent was present. Investigator Allison also reviewed the contract-related correspondence between the parties, and took 3 photographs of the project site. When he was finished, Investigator Allison drafted his Inspection Notes. Ultimately, Investigator Allison derived five (5) separate and distinct complaint items from Complaint No. 2024-04905, two (2) of which he substantiated based on his firsthand observations. Specifically, Investigator Allison determined Respondent’s workmanship on complaint items 1 and 3 required corrective work and/or completion by Respondent.”

On June 06, 2024, Investigator Allison 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 July 07, 2024, to notify the Registrar of its compliance with the Directive or face discipline pursuant to Arizona Revised Statute (“Ariz. Rev. Stat.”) §§ 32-1154(A) and 32-1154(E). Correspondence was not returned as undeliverable to Respondent.

On July 09, 2024, Investigator Allison issued a Warning Letter to Respondent for an alleged violation of 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.

On July 09, 2024, Investigator Allison forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On July 22, 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 R2-19-108(a), 32-1154(A)(12); 32-1158, and 32-1154(A)(22). Respondent was given until August 06, 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 August 01, 2024, the Registrar received Respondent’s timely Answer whereby Mr. Logan denied abandoning Complainant’s project, and insisted that he had only agreed to help Complainant as a favor to their mutual friend. Mr. Logan accused Complainant’s wife, Michelle Keast (“Mrs. Keast”), of creating a “hostile environment” on the project site by making “nasty, rude comments.” Per Mr. Logan, Mrs. Keast told him, “You won’t get another dime from us,” and “Your contractor skills are poor and we’re not happy with your work, so we’re not paying.” Due to the contentiousness between the parties, Mr. Logan asserted that no work would continue until both parties signed a written agreement regarding the project labor and material costs.

On August 02, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on September 13, 2024. Per the August 07, 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)(3) – A.A.C. R4-9-108(a)

Charge 3: A.R.S. § 32-1154(A)(12) – 32-1158

Charge 4: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf and called Investigator Allison as a witness. Trinidad Joseph Logan testified on behalf of Respondent. The substantive evidence of record is as follows:

Complainant owns residential property located at 2400 W. Zuni Ct. Show Low, Arizona 85901.

On December 02, 2023, the parties entered into a $33,250.00 agreement, including labor and material costs, for the construction of a detached garage on Complainant’s residential property.

On March 10, 2024, Complainant tendered a $24,937.50 deposit to Respondent towards the contract.

Work on the project commenced on or about December 29, 2023, and stopped or was otherwise completed on April 23, 2024.

On February 09, 2024, a $3,400.00 Change Order was executed for the project.

On March 31, 2024, a $3,644.00 Change Order was executed for the project.

On April 22, 2024, a $1,146.71 Change Order was executed for the project.

On April 29, 2024, an $838.00 Change Order was executed for the project.

Between June 06, 2024 and July 07, 2024, Respondent’s contracting license was active and in good standing with the Registrar. During this time, did not perform any corrective work in adherence with the Registrar’s Directive or have any communication with Complainant or Investigator Allison.

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.

Additional Evidence

Investigator Allison testified that, based on his review of the parties’ contract(s) and inspection of the project site, he opined Respondent had underbid the project and would complete it at a loss of profit.

Mr. Logan issued a Change Order to Complainant regarding corrective work outlined in the Directive. Because Complainant refused to sign or otherwise approve the contract amendment, Respondent in turn refused to perform the work because he believed Complainant would not pay the outstanding balance owed on the project once it was finished.

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, “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)(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)(12) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “Failure in any material respect to comply with this chapter.”

Ariz. Rev. Stat. § 32-1158(A) provides that a contract between a contractor and property owner amounting to more than $1,000.00 must contain the following information in writing:

The name of the contractor and the contractor's business address and license number.

The name and mailing address of the owner and the jobsite address or legal description.

The date the parties entered into the contract.

The estimated date of completion of all work to be performed under the contract.

A description of the work to be performed under the contract.

The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes.

The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner.

The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

That the property owner has the right to file a written complaint with the Registrar for an alleged violation of Ariz. Rev. Stat § 32-1154(A). The contract shall contain the Registrar's telephone number, website address, and shall state that complaints must be made within the applicable time period as set forth in Ariz. Rev. Stat § 32-1155(A). The information must be prominently displayed in the contract in at least ten point bold type, and the contract shall be signed by the property owner and the contractor.

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 not in dispute.

It is undisputed that Respondent originally estimated the project cost at $22,250.00, of which he required and did obtain a 75% deposit (i.e. $24,937.50) from Complainant. It is undisputed that four (4) Change Orders were executed totaling $9,028.71 which brought the contract price to $42,278.71, with a remaining balance owed by Complainant of $17,341.21. It is undisputed that the terms of the parties’ agreement only required Complainant to pay the outstanding balance owed on the once it was completed. It is undisputed that Respondent did not complete the project, and that some of the work Respondent did perform fell below the Registrar’s minimum workmanship standards. It is further undisputed 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 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. Logan’s argument that Mrs. Keast told him that neither she nor Complainant would pay the balance owed on the contract is not a justifiable excuse for lack of performance on the project or compliance with the Directive. Per the terms of his own contract, Mr. Logan was not owed any monies from Complainant until the project was complete. Mr. Logan did not testify that he could not complete the work due to a lack of funds or materials, so there is no reasonable basis for his failure or refusal to complete the project, favor or not. Investigator Allison’s opinion that Mr. Logan did not want to finish the project because he would do so at a loss is likely accurate and provides a plausible explanation for why Mr. Logan chose not to finish the project or perform repairs.

Notably, nothing in the record tends to suggest that Respondent provided the Registrar with an updated contract template on or after July 09, 2024, to show its compliance with Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158.

Because Complainant has established Respondent’s violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3); Ariz. Admin. Code R2-19-108(a), 32-1154(A)(12); 32-1158, 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 Tri-Edge LLC, ROC License No. 317057, be suspended ten (10) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(1), 32-1154(A)(3), and 32-1154(A)(22).

IT IS further RECOMMENDED that the Registrar suspend ROC License No. 317057 until the agency is provided with a contract template from Respondent that satisfactorily complies with requirements set forth in Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158.

It is further recommended that the Registrar require Respondent to pay the sum total of two hundred fifty dollars ($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

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 15, 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]

Tri-Edge LLC, Respondent

c/o Trinidad J. Logan, Agent

6208 E. Thorne Ln.

Prescott Valley, AZ 86314

[email redacted]

Brian Keast, Complainant

944 S. 53rd Cir.

Mesa, AZ 85206

[email redacted]

By: OAH Staff