ALJDEC - Licensing

2024A-05186-CHC-ROC · Registrar of Contractors · 2024-08-22

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Thomas Barrett,

COMPLAINANT,

v.

Pleasure Spas Inc.

dba Pleasure Pools

ROC License Nos. 166025 & 201430,

RESPONDENT.

No. 2024A-05186-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: August 22, 2024 at 1:00 PM.

APPEARANCES: Thomas Barrett (“Complainant”) appeared on his own behalf. John Smith appeared on behalf of the Arizona Registrar of Contractors (”Registrar”). No appearance(s) by or on behalf of Pleasure Spas Inc. (“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, was admitted into the record with the July 17, 2024, Hearing Order.

_____________________________________________________________________

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 30, 2001, the Registrar issued License No. 166025 General Residential B-5 Swimming Pool contracting license to Respondent. The license had been renewed through July 31, 2025. Owen David Wendell Brown is listed as the President on the license. Respondent’s address of record for the license is 2004 E. Irvington Rd., #186 Tucson, Arizona 85714. Respondent has an active $15,000.00 surety bond on the license, effective March 11, 2024. The license has been disciplined on two (2) prior occasions, and has had three (3) prior complaints settled or otherwise resolved against it. Currently, the license has twelve (12) open complaint against it; one of which is presumed to be related to this matter.

Pursuant to Ariz. Admin. Code R4-9-117, Administrative Notice is also taken of Respondent’s prior license record for License No. 201430, issued by the Registrar on February 03, 2005, for General Residential B contracting. The license had been renewed through February 28, 2025. Owen David Wendell Brown is also solely listed as the President on the license. Respondent’s address of record for this license is identical to the aforementioned license. Respondent does not have an active surety bond on the license. The license has been disciplined on one (1) prior occasion.

On or about May 09, 2024, the Registrar received a narrative complaint from Complainant against Respondent’s License Nos. 166025 and 201430 alleging abandonment of a residential landscaping and pool construction project. The Registrar designated it Complaint No. 2024-05186 and assigned to John Smith (“Investigator Smith”) for investigation.

On May 07, 2024, Investigator Smith issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on May 16, 2024, at 9:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On May 07, 2024, Investigator Smith issued a Warning Letter to Respondent for an alleged violation of Arizona Revised Statutes (“Ariz. Rev. Stat.”) § 32-1124(B) for failing to include its ROC License No. on its Change Order template, including its contract with Complainant. Correspondence was not returned as undeliverable to Respondent.

On May 07, 2024, Investigator Smith issued another 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. Correspondence was not returned as undeliverable to Respondent.

On May 07, 2024, Investigator Smith issued another Warning Letter to Respondent to advise that Respondent’s contract with Complainant was missing at least one element in violation of Ariz. Rev. Stat. § 32-1158.01. Respondent was further advised that failure to comply with Ariz. Rev. Stat. § 32-1158.01 was a violation of Ariz. Rev. Stat. § 32-1154(A)(12), which could result in discipline against Respondent’s license including suspension or revocation. Correspondence was not returned as undeliverable to Respondent.

On May 16, 2024, Investigator Smith inspected the work that had been performed on the project to date. Respondent was not present. Investigator Smith also reviewed the contract-related correspondence between the parties, and took 13 photographs of the project site. When he was finished, Investigator Smith drafted his Inspection Notes. Ultimately, Investigator Smith derived two (2) separate and distinct complaint items from Complaint No. 2024-05186, both of which he was able to substantiate based on his firsthand observations. Specifically, Investigator Smith determined Respondent’s workmanship on the project failed to meet the Registrar’s minimum workmanship standards in violation of Ariz. Rev. Stat. § 32-1154-(A)(3); Ariz. Admin. Code R4-9-108(a). Investigator Smith also determined that Respondent was in violation of Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1158(A) for failing to have all required elements in its contract template, 32-1154(A)(12); 32-1158.01 for failing to have all required pool elements in its contract template, and 32-1154(A)(12); 32-1124(B) for failing to properly display its ROC License No. on its contract/Change Order template.

On May 20, 2024, Investigator Smith issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated all 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 05, 2024, sometime after 5:00 p.m., Investigator Smith forwarded the matter to the Registrar’s legal department with the issuance of a Compliance Notes. Therein, Investigator Smith specifically noted that Respondent had not provided any response to the complaint, and had failed to comply with the Directive or request an extension thereof.

On June 11, 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), 32-1154(A)(12); 32-1124(B), 32-1154(A)(12); 32-1158, 32-1154(A)(12); 32-1158.01, and 32-1154(A)(22). Respondent was given until June 26, 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 26, 2024, the Registrar received a timely Answer on behalf Respondent from Carly Brown. Ms. Brown offered the following, in pertinent parts:

We have been in conversation with [Complainant] that we believe the issue with the turf is a manufacturing warranty issue. We have submitted this to the manufacturer and are waiting to hear back.

It takes between 8 & 10 weeks for a warranty claim to be processed.

We are asking for time to allow this warranty to be processed.

On or about 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 22, 2024. Per the July 16, 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)(12) – A.R.S. § 32-1124(B)

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

Charge 4: A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1158.01

Charge 5: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on his own behalf and called Investigator Smith as a witness. Although afforded a ten (10) minute grace period, Respondent failed to appear or submit a Motion to Continue. The substantive evidence of record is as follows:

Complainant owns residential property located at 16997 S. Emerald Vista Dr. Vail, Arizona 85641.

On or about February 08, 2022, the parties entered into an $83,200.00 residential in-ground pool installation contract. On June 09, 2022, a $3,150.00 Change Order was executed artificial turf installation.

Work on the project commenced April 06, 2022, and stopped in January 2024. The project was not finished.

Complainant tendered five (5) payments to Respondent for the project totaling $53,870.66.

Although License No. 166025 was in active status and in good standing with the Registrar between May 20, 2024, and June 05, 2024, License No. 201430 was not. None of the remediations outlined in the Registrar’s Directive warranted Respondent’s use of License No. 166025, only License No. 201430. Thus, because Respondent could not lawfully subcontract the corrective work, the only means by which Respondent had to settle the matter was to enter into a settlement agreement with Complainant, which did not occur.

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, allege intentional blockade of communication on the part of Complainant, or request an extension of the Directive’s compliance period.

Respondent was not in communication with Complainant or Investigator Smith from the time Complaint No. 2024-05186 was filed, through the expiration of the Directive’s compliance period.

On or about June 26, 2024, Mr. Brown contacted Complainant to inform him that Respondent was “checking into” the turf’s warranty. Mr. Brown never followed-up with Complainant or the Registrar regarding that issue. Investigator Smith testified, however, that he opined nothing in the state of materials or Respondent’s workmanship indicated the presence of a defect.

Closing Argument

In closing, Complainant expressed his frustrations with Respondent’s lack of communication and progress on is project. Complainant opined that had Respondent offered to settle their disagreement he would have been amenable.

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.

The Notice of Hearing the Registrar mailed to Respondent’s address of record is sufficient, and Respondent is deemed to have received notice of the hearing in this matter. Because the Registrar mailed all correspondence to Respondent in the same manner and failed to receive any mail returned as undeliverable, Respondent is deemed to have received all correspondence regarding this matter from the Registrar as well.

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)(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. § 32-1158.01 provides that in addition to the nine (9) contract-related requirements of section 32-1158, a contractor who enters into a contract for the construction or installation of a residential in-ground swimming pool must also include the following provisions:

A down payment payable on the execution of the contract of not more than fifteen percent of the original contract price.

After the completion of the excavation work on the swimming pool or spa, a payment of not more than twenty-five percent of the amount of the original contract price plus any written change orders approved by the purchaser.

After the installation of steel, plumbing and pneumatically applied concrete materials or the installation of a prefabricated swimming pool or spa, a payment of not more than twenty-five percent of the amount of the original contract price plus any written change orders approved by the purchaser.

After the installation of decking materials, a payment of not more than twenty-five percent of the amount of the original contract price plus any written change orders approved by the purchaser.

Before the application of the finishing interior materials or completion of all work on a prefabricated pool or spa, payment of all remaining sums due on the original contract plus any written change orders approved by the purchaser.

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. § 32-1124(B) requires, in pertinent parts, that a licensee’s license number must be preceded by the acronym “ROC” and appear on all written bids and estimates submitted by the license holder.

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 the parties had an in-ground pool construction contract that included a Change Order for turf installation, which Complainant substantially paid Respondent for. It is also undisputed that Respondent failed to substantially perform on the project, and that some of the work Respondent did perform failed to meet the Registrar’s minimum workmanship standards. It is further undisputed that Respondent did not attempt comply with the Registrar’s Directive, or request an extension thereof. The record also reflects that Respondent never provided the Registrar with an updated construction contract template, pool contract template, or Change Order template to establish its compliance with Ariz. Rev. Stat. §§ 32-1154(A)(12); 32-1124(B), 32-1158, and 32-1158.01.

Therefore, the only remaining issue to address is whether Respondent raised sufficient justification or excuse for failing to enter into a settlement agreement with Complainant to satisfy the Registrar’s Directive, or enter ask for an extension thereof prior to the expiration of the corrective order’s compliance period. These are an affirmative defenses that Respondent bears the burden to establish. The Tribunal is not at liberty to make presumptions in favor of Respondent or accept facts in mitigation on behalf of Respondent that are not supported by the evidence. Here, the record reflects that Respondent failed to act in any degree and had no affirmative defense(s) for doing so. Notably, Respondent’s absence from this administrative proceeding is also a factor in aggravation, as it evinces the licensee’s unwillingness to be regulated by the Registrar.

Because Complainant has established Respondent’s statutory violation(s) of Ariz. Rev. Stat. §§ 32-1154(A)(3); Ariz. Admin. Code R4-9-108(a), 32-1154(A)(12); 32-1124(B), 32-1154(A)(12); 32-1158, 32-1154(A)(12); 32-1158.01, and 32-1154(A)(22) by a preponderance of the evidence, Complainant has also established cause for the Registrar to discipline Respondent’s ROC License Nos. 166025 and 201430.

Complainant may petition the Registrar’s Recovery Fund for financial recompense in this matter.

RECOMMENDED ORDER

Based on the foregoing conduct,

IT IS RECOMMENDED that five days after the effective date of the Final Order in this matter no action be taken against Respondent’s General Residential B-5 Swimming Pool contracting license, ROC License No. 166025.

IT IS FURTHER RECOMMENDED that five days after the effective date of the Final Order in this matter ROC License No. 201430, Respondent’s General Residential B contracting license, be suspended for ten (10) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3), 32-1154(A)(12), and 32-1154(A)(22).

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $300.00 (three hundred) in certified funds as a civil penalty in this matter.

IT IS FURTHER RECOMMENDED that if Respondent fails to pay the entire amount of the civil penalty on or before thirty (30) days following the effective date of the Registrar’s Final Order, the Registrar shall revoke Respondent’s General Residential B contracting license, ROC License No. 201430, 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, August 23, 2024.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Tom Cole, Director

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007-2812

[email redacted]

Pleasure Spas Inc., Respondent

dba Pleasure Pools

2004 E. Irvington Rd., #186

Tucson, AZ 85714

[email redacted]

[email redacted]

[email redacted]

Thomas Barrett, Complainant

16997 S. Emerald Vista Dr.

Vail, AZ 85641

[email redacted]

[email redacted]

By: OAH Staff