ALJDEC - Licensing
2024A-12255-CHC-ROC · Registrar of Contractors · 2025-03-06
IN THE OFFICE OF ADMINISTRATIVE HEARINGS
Christopher M. Halverson,
COMPLAINANT,
v.
CLC Enterprises, Inc.
ROC License No. 334065,
RESPONDENT.
No. 2024A-12255-CHC-ROC
ADMINISTRATIVE LAW JUDGE DECISION
HEARING: March 03, 2025 at 9:00 AM.
APPEARANCES: Christopher Halverson (“Complainant”) appeared on his own behalf. Doug Barrett appeared on behalf of the Arizona Registrar of Contractors (“Registrar”). Mark Shipley appeared on behalf of CLC Enterprises, Inc. (“Respondent”) with Lucas Brown as a witness. Christine Halverson observed.
ADMINISTRATIVE LAW JUDGE: Jenna Clark.
EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the Registrar’s agency file, and February 04, 2025, Hearing Order 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 July 16, 2021, the Registrar issued License No. 334065 General Dual KB-1 contracting license to Respondent. The license has been renewed through July 31, 2025. The license lists William Scott Copeland is listed as the Qualifying Party, Kenneth Wayne Brown as the President, Mark Shipley as the Secretary, and Clayton Howell, Curtis Larry Clouse, and Denise Rees Clouse as the Officers. Respondent’s address of record for the license is P.O. Box 8911 Mesa, Arizona 85214. The license does not have a prior disciplinary action taken against it. However, there had been one (1) complaint that settled or was otherwise resolved against the license, and there is currently one (1) open complaint against the license; which is presumed to be related to this matter. Respondent has an active $90,000.00 surety bond on the license issued by Merchants Bonding Company, effective May 28, 2021.
On November 01, 2024, the Registrar received a brief 2-item complaint from Complainant against Respondent’s License No. 334065 alleging poor work of a residential exterior and interior painting project. The Registrar designated it Complaint No. 2024-12255 and assigned to Doug Barrett (“Investigator Barrett”) for investigation.
On November 06, 2024, Investigator Barrett issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on November 25, 2024, at 10:00 a.m. Correspondence was not returned as undeliverable to Respondent.
On November 25, 2024, Investigator Barrett inspected the work that had been performed on the project to date. Respondent was not present. Investigator Barrett also reviewed contract-related correspondence, and took 78 photographs of the project site. When he was finished, Investigator Barrett drafted his Inspection Notes. Ultimately, Investigator Barrett combined Complainant’s 2-item complaint into a single complaint item, which substantiated based on his firsthand observations. Specifically, Investigator Barrett determined that “[th]e paint was different sheens throughout, there was paint peeling off throughout, and the paint is not complete throughout.” As such, Investigator Barrett concluded that Respondent’s workmanship failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.
On November 25, 2024, Investigator Barrett issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on December 17, 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.
Investigator Barrett also included the following advisement regarding the remediation of complaint item 1:
DIRECTIVE REQUIREMENTS:
You are directed to remedy the following violations by appropriate means:
(Emphasis in original.)
On December 09, 2024, Investigator Barrett issued a Compliance Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on December 18, 2024, at 2:00 p.m. Correspondence was not returned as undeliverable to Respondent.
On December 18, 2024, Investigator Barrett checked to see if any corrective work had been performed on the project to date. Respondent was not present. Investigator Barrett took 29 photographs of the project site. When he was finished, Investigator Barrett drafted his Inspection Notes. Based on his firsthand observations, Investigator Barrett determined that no work had been started or completed during the Directive’s compliance period.
On December 18, 2024, Investigator Barrett forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.
On December 23, 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), and 32-1154(A)(22). Respondent was given until January 07, 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 January 06, 2025, the Registrar received Respondent’s timely Answer whereby Mr. Shipley identified himself as Respondent’s co-owner and argued that the paint used on Complainant’s project was defective, which was the manufacturer’s fault, that the paint had not properly cured prior to Complainant complaining about its appearance, and that Complainant picked at peeling paint, causing damage.” Mr. Shipley denied the workmanship allegation, but did not address the corrective work allegation or offer an explanation as to why Respondent failed to attend any of the Registrar’s inspections in the matter.
On January 08, 2025, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on March 03, 2025. Per the January 31, 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 Barrett as a witness. Mr. Shipley testified on behalf of Respondent. The substantive evidence of record is as follows:
Complainant owns residential property located at 15621 E. Lonesome Ln. Gilbert, Arizona 85298.
On or about June 10, 2024, the parties entered into a $36,739.59 for the exterior and interior painting of Complainant’s residence.
Work on the project commenced on or about June 17, 2024, and stopped on or about October 08, 2024.
Complainant paid Respondent $7,347.92 towards the project.
Complainant was never provided with “cure instructions” for any of the paint used by Respondent on or in his home.
Although Respondent’s license was active and good standing with the Registrar between November 25, 2024, and December 17, 2024, no corrective work was scheduled or attempted by Respondent.
At no time prior to the expiration of the Directive’s compliance period did Respondent request an extension or allege a denial of access.
Additional Evidence
Mr. Shipley testified that although his former partner, Kenneth Brown, was the original point of contact the Registrar used for the business, Respondent did not access his emails until after Mr. Brown effectively separated from the company late-December 2024. Hence, why Respondent failed to respond to the underlying complaint or appear for any of Investigator Barrett’s inspections. Per Mr. Shipley, he “inherited” Complainant’s frustrations with the project due to Mr. Brown’s failure to perform his job duties and/or communicate with him.
Mr. Shipley admitted that while Respondent and Mr. Brown were dissolving their professional relationship, Respondent failed to provide the Registrar with updated contact information for the business, including an email address and mailing address.
Mr. Shipley wrote Respondent’s Answer to the Citation based wholly on information he obtained from employees because he was not involved in the parties’ underlying contract or privy to Complainant’s project.
Respondent never contacted the paint manufacturer to allege their product was defective or inquire about them conducting an inspection of Complainant’s project site.
Complainant contacted the paint manufacturer and had a representative come out to his home on November 07, 2024, to inspect the paint used on his project. At that time, the representative could not ascertain whether Respondent had used the manufacturer’s primer prior to painting, but did not find anything abnormal about any of the paint that was used.
Complainant testified that although Respondent left a number of paint cans behind after it left the project site, he did not use any of it to try and paint the interior of his home.
Closing Arguments
In closing, Respondent apologized for Mr. Brown’s poor customer service, and asked for the Tribunal’s leniency and grace in light of the circumstances.
In closing, Complainant argued that discipline was warranted against License No. 334065 because the record reflected that Respondent’s poor workmanship went uncorrected by Respondent.
CONCLUSIONS OF LAW
The Registrar has jurisdiction over this matter pursuant to Ariz. Rev. Stat. §§ 32-1101 et seq. and 32-1154(A). The matter was properly brought before OAH pursuant to Ariz. Rev. Stat. §§ 41-1092 et seq.
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 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]ll work shall be performed 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 residential painting contract, and that Complainant paid Respondent several thousand dollars towards. It is also clear from the record that Respondent’s workmanship on the project fell below the Registrar’s minimum workmanship standards, because a Directive was issued. The record further reflects that Respondent made no attempts to correct the deficiencies in the underlying work, or settle the dispute with Complainant.
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 insufficient evidence to sustain this burden. As a licensee, Respondent has an obligation to ensure that the Registrar has its correct current contact information on file. Mr. Brown’s dissolution of employment from Respondent is neither a justification or excuse as to why Respondent’s mailing address and/or email address was not correctly on file with the Registrar. 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 once Mr. Shipley received the Registrar’s Citation.
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 Respondent’s contracting 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, ROC License No. 334065, as issued to Respondent CLC Enterprises, Inc., be suspended by the Registrar for five (5) days.
IT IS FURTHER RECOMMENDED that the Registrar require Respondent to pay the sum total of $100.00 (one 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, March 07, 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]
Christopher M. Halverson, Complainant
15621 E. Lonesome Ln.
Gilbert, AZ 85298
[email redacted]
CLC Enterprises, Inc.
339 E. 10th Dr.
Mesa, AZ 85210
[email redacted]
By: OAH Staff