ALJDEC - Licensing

2024A-05692-CHC-ROC · Registrar of Contractors · 2025-01-30

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Audrey Summers,

COMPLAINANT,

v.

Rivas Custom Builders LLC,

License No. ROC 239109,

RESPONDENT.

No. 2024A-05692-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: January 3, 2025

APPEARANCES: Audrey and Justin Summers appeared on their own behalf. Respondent failed to appear. Arizona Registrar of Contractors Investigator Jim Smith appeared as a witness.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn

EXHIBITS ADMITTED INTO EVIDENCE: ROC Notice of Hearing Packet (Packet). _____________________________________________________________________

FINDINGS OF FACT

Rivas Custom Builders LLC (Respondent), is the holder of License No. 239109, KB-2 Dual Residential and Small Commercial, issued by the Arizona Registrar of Contractors (Registrar or ROC) in December 2007.

On or about June 2, 2024, the Registrar received a Licensed Complaint Form (Complaint) from Audrey Summers (Complainant) against Respondent alleging abandonment on the project. The project had been contracted in August 2022 and work began in February 2023; work stopped in November 2023. .

The Registrar assigned the Complaint to Investigator John Smith. After one delay, on August 15, 2024, Investigator Smith conducted a Jobsite Inspection.

On August 15, 2024, Investigator Smith issued a Directive requiring that Respondent perform corrective work and notify the Investigator no later than September 3, 2024.

The Directive indicates the following:

DIRECTIVE REQUIREMENTS

You are directed to:

• Complete work per contract dated 8/2/2022

• Obtain all required permits from the local building authorities

• Satisfy all requirements of the local building authorities

• Remedy the following violations by the appropriate means:

Complaint Item 2: “whole house was not complete”

Investigator’s Observations: Verified.

The original contract, in the amount of $105,000.00, is dated 8/22/2022.

Work progressed, and payments were made, based on the original contract. Work stopped 11/8/2023

Current conditions on site: Work is not complete

• The interior of the house has been demoed to the framing and concrete.

• Plumbing, gas lines, HVAC, Electrical, and framing have all been started, and left incomplete.

o Plumbing work includes under-ground and under-slab plumbing that is longer visible.

o Framing work includes structural load bearing beams.

Per contract, no progress payments are currently due.

Work stopped 11/8/2023.

A new proposal, with additional work items, in the amount of $189,900.00, is dated 12/6/2023. The complainant’s did not accept to the new proposal.

No work has progressed.

Without a mutual agreement on a new proposal, the respondent is required to complete all work per the original contract, dated 8/22/2022.

Additionally, this entire project is permit required work, which has been started without permits being obtained.

Governing Rule: A.R.S. § 32-1154(A)(1): Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

Governing Rule: A.R.S. § 32-1154(A)(2): Departure from or disregard of: (b) A building code...

Governing Rule: A.R.S. § 32-1154 (A)(3) - R4-9-108(a): Violation of any rule adopted by the registrar; Namely R 4-9-108(a) A contractor shall perform work in a professional and workmanlike manner.

Governing Rule: A.R.S. § 32-1154(A)(3) – R4-9-108(b): Violation of any rule adopted by the registrar; Namely R 4-9-108(b): A contractor shall perform work in accordance with any applicable building codes and professional industry standards. For work to be performed in accordance with professional industry standards, a contractor shall use such skills, prudence, and diligence in performing and completing tasks undertaken that the completed work meets the standards of a similarly licensed contractor possessing ordinary skill and capacity.

ADDITIONAL VIOLATIONS

In addition to the allegations in the complaint, the following violations were verified:

Elements of a Contract

Investigator’s Observations: The respondent’s contract is missing the following information:

• The date the parties entered into the agreement

o The agreement is dated; however, without signatures, it is not possible to determine the date the parties entered into the agreement.

• An estimated date of completion

• A payment schedule

• Information about the customer’s right to file a complaint with the registrar

• Contact information for the registrar

• A signature of the property owner

• A signature of the contractor

Governing Rule: A.R.S. § 32-1154(A)(12), Namely A.R.S. § 32-1158(A) Minimum Elements of a Contract.

Any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information:

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

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

3: The date the parties entered into the contract.

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

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

6: 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.

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

8: 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.

9a: That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A.

9b: The contract shall contain the registrar’s telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1162, subsection A.

9c: The information in this paragraph must be prominently displayed in the

contract in at least ten- point bold type...

9d: ...and the contract shall be signed by the property owner and the contractor or the contractor’s designated representative.

This paragraph does not apply to a person who is subject to and complies with section 12-1365.

REQUIRED CORRECTIVE ACTION: The respondent is to submit a contract form (for use on future projects) that complies with A.R.S. § 32-1158

Performing permit required work without a permit being obtained

Investigator’s Observations:

Work performed on this project includes:

• Main electric panel upgrade

• New electrical circuits and electrical wiring

• New gas lines

• New sewer lines, including new lines below grade and below the foundation that are no longer visible or accessible to the local code official.

• New water supply lines.

• New framing, including new structural load bearing beam(s)

• Removal of existing HVAC equipment.

• Installation of new HVAC duct work.

This entire project is permit required work, which has been started without permits being obtained.

Governing Rule: A.R.S. § 32-1154 (A)(2)(b): Departure from or disregard of: (b) A building code...

Governing Rule: A.R.S. § 32-1154 (A)(3) - R 4-9-108(b): Violation of any rule adopted by the registrar; Namely R 4-9-108(b): A contractor shall perform work in accordance with any applicable building codes and professional industry standards...

Building Code: IRC (International Residential Code) R105.1: “Any owner or authorized agent who intends to construct, enlarge, alter, repair, move, demolish, or change the occupancy of a building or structure, or to erect, install, enlarge, alter, repair, remove, convert or replace any electrical, gas, mechanical or plumbing system, the installation of which is regulated by this code, or to cause any such work to be done, shall first make application to the building official and obtain the required permit.”

REQUIRED CORRECTIVE ACTION:

The Respondent is to obtain any and all required building permits from the Local Building Authorities prior to making corrections listed in this Directive.

If the local jurisdiction finds corrective issues relating to the respondent’s work, the respondent will be required to correct those issues by appropriate means. The respondent is required to satisfy all requirements of the local building official, and to submit a copy of the approved inspection results to the ROC Investigator.

ITEMS NOT REQUIRING CORRECTION

The following complaint items require no action by the Respondent:

Complaint Item 1: “contractor told us (homeowners) that the AC company was paid in full, but come to find out the AC company has not been”

Investigator’s Observations: This allegation is NOT verified.

If a subcontractor, hired by the general contractor, has not been paid by the general contractor, that subcontractor may considering filing a non-payment complaint against the general contractor.

Governing Rule: N/A

Respondent did not perform any of the corrective work pursuant to the Directive.

On September 3, 2024, Respondent contacted Investigator Smith for an extension, indicating he had been in contact with the architect for new plans and they then would need to obtain permits through City of Tucson, which together could take approximately 6 weeks. Further, that there would be a new $105,000.00 contract with a change order for $84,900.00 and new payment schedule for the parties.

Investigator Smith did not grant an extension and forwarded the matter to the Registrar’s Legal Department.

On September 5, 2024, the Registrar issued a Citation against Respondent charging the following possible violations:

Charge: 1 A.R.S. § 32-1154(A)(1)

Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.

Charge: 2 A.R.S. § 32-1154(A)(2)(b)

Departure from or disregard of: (b) A building code of this state or any

political subdivision of this state in any material respect that is prejudicial to another.

Charge: 3 A.R.S. § 32-1154(A)(3) - R4-9-108(a)

Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(a): A contractor shall perform all work in a professional and workmanlike manner.

Charge: 4 A.R.S. § 32-1154(A)(3) - R4-9-108(b)

Violation of any rule adopted by the Registrar; Namely A.A.C. R4-9-108(b): A contractor shall perform all work in accordance with any applicable building codes and professional industry standards. For work to be performed in accordance with professional industry standards, a contractor shall use such skills, prudence, and diligence in performing and completing tasks undertaken that the completed work meets the standards of a similarly licensed contractor possessing ordinary skill and capacity.

Charge: 5 A.R.S. § 32-1154(A)(12) - A.R.S. § 32-1158

Failure in any material respect to comply with this chapter; Namely A.R.S. § 32-1158.

Charge: 6 A.R.S. § 32-1154(A)(22)

Failure to take appropriate corrective action to comply with this chapter or with 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.

William J. Rivas, Sr., Qualifying Party for Respondent, filed an Answer to the Citation on September 20, 2024. In its Answer, Mr. RIvas indicated the project had started as a kitchen remodel but as it progressed and after they had done some demolition they had discovered termite and water damage and sewer issues. Mr. Rivas indicated that his subcontractor brought the electrical up to date in the previously non-permitted additions and that, at this point, the Complainants had requested more remodeling in bedrooms along with exterior construction; he indicated that, in December of 2023, he had presented Complainant’s with a new contract proposal for $189,9000.00, which had not been executed. Mr. Rivas indicated that the project was on hold while Complainants were arranging new financing; he indicated he had received payments totaling $75,000.00.

Along with the Answer, Respondent also provided an updated written contractual form.

The Registrar subsequently referred the matter to the Office of Administrative Hearings, an independent State agency, for an evidentiary hearing.

On October 8, 2024, the Registrar issued a Notice of Hearing setting the matter to convene on November 20, 2024, at 9:00 a.m., via Google Meet. The Office of Administrative Hearings had also issued an ORDER advising the parties about the virtual hearing and specifying how to connect to the November 20, 2024 hearing via Google Meet.

On November 13, 2024, Complainants requested to appear in person for the hearing.

On November 19, 2024 at nearly 4:00 p.m., Respondent filed an ex-parte continuance request, stating there was a “current incident with Mr. William Rivas's mental health” and that he would not be able to be present at the hearing the next day. The assigned Administrative Law Judge was not in the office at that time and was unware of the continuance request until the next morning at about the same time Complainants arrived in person for the hearing. The hearing was continued to a date on which Complainants and Investigator Smith indicated they were available.

On November 24, 2024, the Tribunal issued an ORDER for the continued hearing to convene virtually on January 3, 2025 at 9:00 a.m. Complainants again requested to appear in person and arrived on time for the continued hearing setting.

On the date and at the time set for the continued hearing and for fifteen minutes thereafter, Respondent did not appear through an authorized member, employee, or attorney. Respondent had not requested that the hearing be continued. Because Respondent failed to appear, Respondent did not present any evidence to defend its license.

Investigator Smith testified consistent with the detailed findings contained in his Jobsite Inspection Notes and the Directive. Investigator Smith testified that, in his opinion, the manner in which Respondent had proceeded with not pulling any permits, demolition, performing now unknown and unapproved plumbing work, and then not competing the work under the parties’ contract, was egregious. Investigator Smith credibly testified that the home is not in a livable condition due to status of the project and uncompleted work.

Complainants did not dispute the detailed Directive or Investigator Smith’s testimony regarding the matter. Complainants had indicated that there had been multiple delays caused by Respondent in the project.

Administrative notice is taken of Respondent’s license history and status with the Registrar on January 29, 2025. Respondent’s license record reflects that Respondent’s License No. 239109 is active, with three resolved matters and 2 open cases, one of which is the instant case.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction. See A.R.S. § 32-1101 et seq.

The copy of the Notice of Hearing that the Registrar mailed to Respondent at its address and email address of record was reasonable, and Respondent is deemed to have received notice of the hearing. A.R.S. §§ 41-1092.04 and 41-1092.05(D).

The ORDERs sent by the Office of Administrative Hearings were issued to Respondent at the email address on record with the Registrar. Therefore, Respondent is also deemed to have received notice of the virtual setting and process for the hearing. A.R.S. §§ 41-1092.04 and 41-1092.05(D).

Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazzano v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960).

The evidence of record established that Respondent’s work was not in conformity with the Registrar’s standards, statutory requirements, and regulatory requirements. Complainant established by a preponderance of the evidence that Respondent had not completed the project that had been contracted in August of 2022.

Based on the hearing record, Respondent is in violation of each of the following cited charges: A.R.S. § 32-1154(A)(1); A.R.S. § 32-1154(A)(2)(b); A.R.S. § 32-1154(A)(3), namely R4-9-108(a); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(b); and A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158.

Additionally, Complainant established that Respondent failed to take appropriate corrective action following a Directive from the Registrar in violation of A.R.S. § 32-1154(A)(22). Based on the hearing record, with the exception of developing a new written contract form, Respondent failed to take any demonstrable action toward correction or remediating the cited violations following the issuance of the Directive.

A.R.S. § 32-1156.01(A) provides, “[a]fter a hearing pursuant to this article, an administrative law judge may recommend that a licensee provide restitution to any person who is injured or whose property is damaged by an action of the licensee.”

Based on the hearing record, the Administrative Law Judge concludes that Respondent has, with the work performed at Complainant’s property in violation of multiple statutory and regulatory provisions, has damaged Complainant’s property to the extent that restitution is appropriate. Therefore, the Administrative Law Judge concludes that the appropriate discipline in this matter is a provisional suspension of Respondent’s license until it refunds to Complainant the $75,000.00 amount Complainant has paid to Respondent in this matter.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that the Registrar provisionally suspend Respondent’s License No. 239109 issued by the Registrar until Respondent has provided to the Registrar, and the Registrar has accepted documents that establish that Respondent has paid restitution to Complainant in the amount of $75,000.00 in certified funds.

It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(E) for the failure to have corrected the work per the Directive.

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 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 A.R.S. § 32-1101(A)(7), unless Respondent tenders payment of any outstanding prior civil penalty.

Pursuant to A.R.S. § 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, January 30, 2025.

/s/ Kay Abramsohn

Administrative Law Judge

Transmitted electronically to:

Tom Cole, Director

Registrar of Contractors

John Smith

[email redacted]

Audrey Summers

4450 E 16th St

Tucson, AZ 85711

[email redacted]

Rivas Custom Builders LLC

702 S Campbell Ave

Tucson, AZ 85719

[email redacted]

By: OAH Staff