ALJDEC - Licensing

2024A-05659-CHC-ROC · Registrar of Contractors · 2025-05-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Joshua Philp,

COMPLAINANT,

v.

BMS Cat of Arizona LLC

ROC License No. 326231,

RESPONDENT.

No. 2024A-05659-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: April 30, 2025 at 9:00 AM.

APPEARANCES: Joshua Philp (“Complainant”) appeared on his own behalf. Roy Shane Hudson appeared on behalf of BMS Cat of Arizona LLC (“Respondent”). Steven Avila appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Ryan Wilkens, Melodie Johns, and Laura Hanley 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 March 17, 2025, Hearing Order were admitted into the evidentiary record.

_____________________________________________________________________

Having reviewed 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 records as reflected on the Registrar’s public website. On September 18, 2019, the Registrar issued License No. 326231 General Dual KB-1 contracting license to Respondent. The license has been renewed through September 30, 2025. The license lists Justin Cox as the Qualifying Party, Robert Smith as the Treasurer and Vice President, BMS Cat, LLC as a the Parent Entity, and BMS Cat Group Inc. as the Owner. Respondent’s address of record for the license is 5718 Airport Freeway Haltom City, Texas 76117. The license does not have any prior disciplinary action taken against it. There is currently one (1) open complaint against the license, which is presumed to be related to this matter. Respondent has an active $34,000.00 surety bond on the license, effective August 25, 2020.

On May 20, 2024, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 326231 alleging poor work of a residential roofing project. The Registrar designated it Complaint No. 2024-05659 and assigned to Steven Avila (“Investigator Avila”) for investigation.

On May 30, 2024, Investigator Avila issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on June 19, 2024, at 9:00 a.m. Correspondence was not returned as undeliverable to Respondent.

On June 19, 2024, Investigator Avila inspected the work that had been performed on the project to date. Respondent was present. Investigator Avila also reviewed contract-related correspondence, and took 19 photographs of the project site. When he was finished, Investigator Avila drafted his Inspection Notes. Ultimately, Investigator Avila derived eighteen (18) separate and distinct complaint items from Complaint No. 2024-05659, nine (9) of which substantiated based on his firsthand observations. Specifically, Investigator Avila determined Respondent’s workmanship on complaint items 1-3, 5-7, 9, 11, and 15 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On July 17, 2024, Investigator Avila issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated half of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on August 02, 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). Correspondence was not returned as undeliverable to Respondent.

Investigator Avila also included the following advisement regarding the remediation of substantiated complaint items 1-3, 5-7, 9, 11, and 15:

DIRECTIVE REQUIREMENTS:

You are directed to remedy the following violations by appropriate means:

(Emphasis in original.)

On September 12, 2024, Investigator Avila drafted a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on October 04, 2024, at 9:00 a.m. Due to an administrative error, correspondence was inadvertently not issued to either party.

On December 30, 2024, Investigator Avila issued the Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on January 07, 2025, at 1:00 p.m. Correspondence was not returned as undeliverable to Respondent.

On January 07, 2025, Investigator Avila inspected the corrective work that had been performed on the project and took 28 photos. Respondent was present. When he was finished, Investigator Avila drafted his Compliance Jobsite Inspection Notes, which included the following notation:

[T]he written directive issued expired on August 2, 2024. The respondent was afforded additional time by the homeowner to perform repairs. Compliance inspection performed on 1/7/2025, which was 5 months after the expiration of the written directive.

(Emphasis in original.)

Ultimately, Investigator Avila determined that Respondent had satisfactorily remediated complaint items 3, 5, and 15, but that complaint items 1-2, 6-7, 9 and 11 remained outstanding.

On February 18, 2025, Investigator Avila forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On February 25, 2025, 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 March 12, 2025, 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 March 10, 2025, the Registrar received Respondent’s timely Answer whereby Mr. Hudson denied the alleged statutory violations outlined in the Citation, and noted that it “will continue to take appropriate corrective action as timely cooperation is provided by the Complainant.”

On March 12, 2025, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on April 30, 2025. Per the March 14, 2025, 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 Avila as a witness. Shane Hudson testified on behalf of Respondent. The substantive evidence of record is as follows:

Complainant owns residential property located at 3763 N. Piedra Cir. Mesa, Arizona 85207.

On an unknown date, Complainant opened a claim with his homeowner’s insurance company (“State Farm”) due to water damage sustained to his residence on August 08, 2021.

As a result, on or about April 16, 2022, Complainant entered into a $160,000.00 residential restoration and remodel construction contract to repair the damage sustained to his living room, laundry room, bedroom, closet, and kitchen, and also to upgrade his bathroom.

Work on the project commenced in or around April 2022, and stopped on or about July 2022.

Both State Farm and Complainant tendered payments to Respondent for the project. The project was paid in full.

Because Respondent’s availability was limited during the Directive’s compliance period, Complainant agreed to extend Respondent’s compliance deadline through November 02, 2024. Respondent was able to remediate complaint items 3, 5, and 15 during that time.

Although Respondent performed additional corrective work November 2024 through early-January 2025, it was unable to satisfactorily address complaint items 1-2, 6-7, 9 and 11 by the time the Compliance Jobsite Inspection took place on January 07, 2025; nearly five (5) months after the expiration of the Directive’s compliance period.

Respondent performed additional corrective work to address compliant item 1 in February and March 2025, but Complainant remained unsatisfied.

At no time did Respondent request an extension of the Directive or allege a denial of access to the project site.

A Prehearing Jobsite Inspection was not performed by Investigator Avila in Complaint No. 2024-05659.

The parties never entered into a settlement agreement regarding complaint items 1-2, 6-7, 9 and/or 11.

Closing Arguments

In closing, Respondent argued that was still willing to perform corrections to complaint items 1-2, 6-7, 9, and 11.

In closing, Complainant argued that the Registrar should take disciplinary action against License No. 326231 because, although afforded a substantial amount of additional time, Respondent failed to remediate 2/3rds of the complaint items substantiated by Investigator Avila.

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) 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 material facts in the case at bar are clear.

It is clear from the record that the parties had a water damage remediation and remodel contract, that was paid in full. It is also clear from the record that there were a number of deficiencies in Respondent’s work that required correction, only some of which Respondent successfully remediated prior to the expiration of the Registrar’s Directive in this matter.

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 presented no evidence to sustain this burden. The credible evidence of record shows that Respondent failed to perform corrective work on this project, and had no affirmative defense(s) for doing so. Moreover, nothing prevented Respondent from entering into a financial settlement agreement with Complainant.

Because Complainant has established Respondent’s violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22), Complainant has also established cause for the Registrar to take disciplinary action against ROC License No. 326231.

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, ROC License No. 326231, as issued to Respondent BMS Cat of Arizona LLC, be suspended by the Registrar for five (5) days.

IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $200.00 (two hundred dollars) in certified funds as a civil penalty.

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 Order, that no future license 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, May 09, 2025.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Tom Cole, Director

c/o Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Joshua Philp, Complainant

3763 N. Piedra Cir.

Mesa, AZ 85207

[email redacted]

BMS Cat of Arizona LLC, Respondent

c/o Melanie Johns, Agent

5718 Airport Freeway

Haltom City, TX 76117

[email redacted]

[email redacted]

BMS Cat of Arizona LLC, Respondent

c/o Shane Hudson, Agent

992 W. Melody Ave.

Gilbert, AZ 85233

[email redacted]

By: OAH Staff