ALJDEC - Licensing

2024A-09017-CHC-ROC · Registrar of Contractors · 2025-01-02

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Katy Horgan,

COMPLAINANT,

v.

Sun Valley General Contractors LLC

ROC License No. 345270,

RESPONDENT

No. 2024A-09017-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: December 05, 2024 at 1:00 PM.

APPEARANCES: Katy Horgan (“Complainant”) appeared on her own behalf with Torsten Coulson as a witness. Lawrence J. Felder, Esq. appeared on behalf of Sun Valley General Contractors LLC (“Respondent”) with Alin Ghetes as a witness. Mike Wiskow appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Christopher Stinnett and Elizabeth Milburn-Gosselin 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, Registrar’s Supplemental Exhibit A, and Complainant Exhibits 2 & 7 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 May 30, 2023, the Registrar issued ROC License No. 345270 General Dual KB-1 contracting license to Respondent. The license has been renewed through May 31, 2025. Alin Ilie Ghetes is listed as the Qualifying Party and Manager on the license. Respondent’s address of record for the license is 2390 E. Camelback Rd., Ste. 130 Phoenix, Arizona 85016. Respondent has an active $14,000.00 surety bond on the license issued by American Contractors Indemnity Company, effective May 25, 2023. The license has not been previously disciplined by the Registrar, or had any other complainants settled or otherwise resolved against it. Currently, the license has two (2) open complaints against it; one of which is presumed to be related to this matter.

On August 08, 2024, the Registrar received a narrative complaint from Complainant against ROC License No. 345270 alleging poor work regarding construction of a residential guest home. The Registrar designated it Complaint No. 2024-09017 and assigned the matter to Mike Wiskow (“Investigator Wiskow”) for investigation.

On August 08, 2024, Investigator Wiskow issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on September 11, 2024, at 10:30 a.m. Correspondence was not returned as undeliverable to Respondent.

Respondent did not provide a response to Complaint No. 2024-09017, or request to inspect the work complained of.

On September 11, 2024, Investigator Wiskow inspected the work that had been performed on the project to date. Respondent was present. Investigator Wiskow also reviewed the contract-related correspondence between the parties, and took 9 photographs of the project site. When he was finished, Investigator Wiskow drafted his Inspection Notes. Ultimately, Investigator Wiskow derived two (2) separate and distinct complaint items from Complaint No. 2024-09017, both of which he substantiated based on his firsthand observations. Specifically, Investigator Wiskow determined that both complaint items fell below the Registrar’s minimum workmanship standards and required correction and/or completion by Respondent. Investigator Wiskow noted the following, in pertinent parts:

The project is currently sitting at the framing stage with six (6) notable deficiencies. There are large gaps under the bottom plates because the concrete is not level. The walls should sit on load bearing concrete. The project must be completed per plans, specifications, and contract terms. All inspections should be signed off and Certificate of Occupancy obtained.

On September 12, 2024, Investigator Wiskow issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated both of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on September 27, 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.

The morning of September 30, 2024, Investigator Wiskow called Complainant to ask if he could perform a Compliance Jobsite Inspection of the project at 12:00 p.m. that same date. Complainant agreed. Later that afternoon, Investigator Wiskow inspected Respondent’s corrective work on substantiated complaint items 1-2. Respondent was not present because it was not invited or otherwise asked to attend. Investigator Wiskow took 6 photographs of the project site. When he was finished, Investigator Wiskow drafted his Compliance Inspection Notes. Ultimately, Investigator Wiskow determined that neither complaint item had satisfactorily been addressed. Specifically, Investigator Wiskow determined that the framing had not been corrected, and there was still unevenness and cracking in the concrete despite Respondent’s attempts to correct. Although Respondent had found an engineer to identify the issue(s), no methodology regarding remediation had also been identified.

On September 30, 2024, Investigator Wiskow 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 his contract with Complainant. Correspondence was not returned as undeliverable to Respondent.

On September 30, 2024, Investigator Wiskow forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation, whereby he noted that Respondent did not comply with the Directive.

On October 04, 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); 32-1158, and 32-1154(A)(22). Respondent was given until October 19, 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 October 20, 2024, the Registrar received Respondent’s untimely Answer. Respondent argued that it had made “considerable progress” on the project prior to its termination by Complainant’s representative on September 27, 2024, and noted that the project had suffered delays earlier that month due to Mr. Ghetes’ emergency dental surgery. Overall, Respondent denied performing poor workmanship or otherwise incorrect work.

On an unknown date, Complainant submitted a reply to Respondent’s Answer whereby she outlined her factual disagreements.

On October 21, 2024, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on December 05, 2024. Per the October 28, 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)(3) – A.A.C. R4-9-108(a)

Charge 2: A.R.S. § 32-1154(A)(12) – A.R.S. § 32-1158

Charge 3: A.R.S. § 32-1154(A)(22)

Hearing Evidence

Complainant testified on her own behalf and called Investigator Wiskow and Torsten Coulson as witnesses. Alin Ghetes testified on behalf Respondent. The substantive evidence of record is as follows:

Complainant owns residential property located 1907 W. Holly St. Phoenix, Arizona 85009.

On November 21, 2023, the parties entered into a $62,700.00 construction agreement for Respondent to build a guest house in Complainant’s backyard.

Complainant paid Respondent $17,243.00 towards the project.

Work on the project commenced on or about February 15, 2024. Although the project was supposed to be completed in April 2024, work on the project continued through Summer 2024 and stopped on or about August 01, 2024.

On July 30, 2024, because Complainant had concerns regarding the quality of Respondent’s workmanship, she had Foresight Property Inspections LLC (“Foresight”) conduct an inspection of the project. In a subsequent report, Foresight noted “several red flags” regarding “subpar work” including but not limited to sloping uneven concrete, gaps, bowed walls, disconnected gussets, missing and short studs, damaged truss webs, missing windows, and missing flashing that it opined may need to be redone. Complainant was advised to seek out the assistance of the Registrar.

On September 12, 2024, Investigator Wiskow advised Respondent that “An extension may be granted if substantial progress is shown,” and specified that Complainant would need to sign-off on his framing.

Between September 12, 2024, and September 27, 2024, Respondent’s contracting license was active and in good standing with the Registrar. During this time, Respondent went to the project site on six (6) different occasions to perform any corrective work in adherence with the Registrar’s Directive.

On the afternoon of September 27, 2024, Respondent emailed the following correspondence to Investigator Wiskow:

Hi Sir. I had a very bad week and a half. My dad had a stroke a month ago and have been non stop Dr visits etc and I had Mouth Surgery on Tue and it kicked my but for 2 days. I’m asking to be able to work through the weekend to get the called into the city for inspection on Mon. Please please give me the weekend.

(All errors in original.)

On the evening of September 27, 2024, Complainant emailed the following reply to Investigator Wiskow:

[Respondent] has not put in the time, nor has he completed the tasks. The project is still not done correctly. There have been many days without any work being done, again. (I was also not communicated with about any health issues. [Respondent] has given me excuses throughout this entire project. I believe I was too lenient at the beginning and [Respondent] took advantage of me.

This project was to be completed in April. [Respondent] has had ample time to complete this project correctly. The directive ended today. I am pretty upset at the moment, but wanted to get an email out.

I would like an inspection done for framing as the directive was to be completed today, by 5:00pm and it is not completed.

I left you a message. I am so frustrated and I don't know how to communicate correctly. I look forward to your assistance.

I'm attaching pictures taken today (and [Respondent] did not show up today as well).

On September 30, 2024, Investigator Wiskow advised the parties that “The directive period has expired.”

Additional Evidence

Summer 2024, Complainant hired Torsten Coulson of DDS Renovations as a project consultant, to assist Respondent with addressing roofing issues. Mr. Coulson testified that there were no plans on site, sealed or otherwise, and that a city inspector told Respondent during an inspection that trusses were not permitted to be built on site because they were supposed to be manufactured.

Mr. Ghetes is a self-described “carpenter by trade.” Mr. Ghetes testified that in early-September 2024 his father suffered a stroke, and that as a result he had to travel out of the country to see him. Although Mr. Ghetes returned mid-September 2024, he suffered a dental emergency on September 23, 2024, that required oral surgery. Mr. Ghetes received respite care September 24-25, 2024. On September 27, 2024, Mr. Ghetes asked Complainant to extend the Registrar’s Directive by three (3) days, but received no reply. Mr. Ghetes agreed that he did not completed all required corrective work, but opined that “not much” was left to complete.

Complainant testified that Respondent performed corrective work on the project on September 24, 2024, for approximately two (2) hours.

Closing Arguments

In closing, Respondent opined that discipline against ROC License No. 345270 was not warranted because Complaint No. 2024-09017 was its first, and because Mr. Ghetes suffered a number of exigent circumstances outside of his immediate control in September 2024 that prevented Respondent from fully addressing corrective work required by the issued Directive. Respondent further argued that had its extension request been granted, it would have been able to complete the outstanding corrective work at issue.

In closing, Complainant opined that she had sustained her burden of proof, and argued that she should receive access to the Registrar’s Residential Recovery Fund as a result.

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)(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 undisputed.

It is undisputed that the parties had a $62,700.00 guest house construction agreement, which Complainant paid at least $17,243.00 towards, but that Respondent’s contract did not contain all required statutory elements. It is also undisputed that much of the work Respondent performed on the project fell below the Registrar’s minimum workmanship standards. It is further undisputed that Respondent failed to comply with the 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 remediate Complainant’s project. 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 lack of performance on this project. Per Mr. Ghetes, his father’s medical emergency happened nearly a month prior to the issuance of the Directive. While Mr. Ghetes’ emergency dental surgery is exigent on its face, his respite was apparently not necessary as he was working back on the jobsite the following day. It is unclear why Mr. Ghetes waited until September 27, 2024, to ask for an extension, but clear from the record that he had not made “substantial progress” as previously advised by Investigator Wiskow. Additionally, Mr. Ghetes’ claim that Respondent had been terminated by Complainant’s representative on September 27, 2024, is meritless. Nothing in the record establishes that Complainant ever had a legal representative or that Respondent was ever advised that it was fired from the project. What the record does reflect, is that Respondent was advised of the Directive’s compliance deadline date in advance, and further reminded on that the corrective work period expired.

Notably, nothing in the record tends to suggest that Respondent ever provided the Registrar with an updated contract template on or after September 27, 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)(3), 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 Sun Valley General Contractors LLC, ROC License No. 345270, be suspended two (2) days based on its violations of Ariz. Rev. Stat. §§ 32-1154(A)(3) and 32-1154(A)(22).

It is further recommended that the Registrar require Respondent to pay the sum total of one hundred dollars ($100.00) 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, January 02, 2025.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile:

Tom Cole, Director

c/o Legal Department

Registrar of Contractors

1700 W. Washington St., Ste. 105

Phoenix, AZ 85007

[email redacted]

Katy Horgan, Complainant

1907 W. Holly St.

Phoenix, AZ 85009

[email redacted]

Lawrence Felder, Esq.

Resolvere Law, PLLC, Counsel for Respondent

3101 N. Central Ave., Ste. 850

Phoenix, AZ 85012

[email redacted]

[email redacted]

[email redacted]

By: OAH Staff