ALJDEC - Licensing

2024A-12884-CHC-ROC · Registrar of Contractors · 2026-02-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

LeeAnne Pelzer,

COMPLAINANT,

v.

Earth Pro Excavating LLC

License No. ROC 306777,

RESPONDENT.

No. 2024A-12884-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: September 10, 2025; December 15, 2025; February 6, 2026; record held open to February 20, 2026.

APPEARANCES:

For Complainant: Guy Bluff.

For Respondent: Marcel Ruzan.

For the Registrar of Contractors: Chris Allison.

ADMINISTRATIVE LAW JUDGE: Samuel Fox

EXHIBITS ADMITTED INTO EVIDENCE: Notice of Hearing Packet submitted by the Registrar of Contractors. Complainant’s Exhibits. Respondent’s Exhibits.

_____________________________________________________________________

FINDINGS OF FACT

Earth Pro Excavating LLC (Respondent) was the holder of License No. 306777 issued by the Arizona Registrar of Contractors (Registrar) on August 19, 2016.

On or about June 20, 2023, LeeAnne Pelzer (Complainant) entered a contract with AXXO LLC 1 (AXXO) for purchase of a new-build home.

On or about November 20, 2024, Complainant filed a Licensed Complaint Form with the Registrar, claiming poor work against Respondent.

On December 12, 2024, Investigator Chris Allison conducted a noticed jobsite inspection; Respondent was not present.

On December 23, 2024, Investigator Allison issued a Written Directive From the Registrar.

On January 21, 2025, Complainant submitted an addendum to the complaint, and Investigator Allison performed a noticed Jobsite Inspection on February 18, 2025; Respondent was not present.

On February 28, 2025, Investigator Allison issued a Revised/Amended Written Directive from the Registrar to Respondent, requiring Respondent to remedy the identified violations by appropriate means. The Revised Directive notified Respondent that Complainant would make the home available from March 23 to April 24, 2025.

Respondent did not perform corrective work on the project, so Investigator Allison did not perform a compliance inspection.

On May 1, 2025, the Registrar issued a Citation against Respondent, finding cause to charge Respondent with violations of A.R.S. § 32-1154(A)(3), specifically AAC R4-9-108(A), and A.R.S. § 32-1154(A)(22).

Respondent submitted an Answer to the Citation and Motion to Dismiss, which the Registrar denied, on May 5, 2025. The Registrar referred the matter to the Office of Administrative Hearings for an evidentiary hearing.

Investigator Allison testified in support of his findings, testifying about non-septic system issues and septic system issues separately.

Regarding Complaint Item 5, Investigator Allison observed that the window had been leaking. Regarding Complaint Item 6, he observed the trim was missing. Regarding Complaint Items 7, 8, and 9, he observed separating baseboards, cracking drywall, and popping nail in the hall and bathroom, which he testified was evidence of abnormal settling. He testified that these issues had gotten worse between the jobsite inspection and the prehearing inspection. Regarding Complaint Item 17, he observed evidence that the French drain was draining contaminated water into the storm ditch. Regarding Complaint Item 18, he observed exposed fabric on and French drain. Regarding Complaint Item 18, he observed that the French drain was malfunctioning.

Regarding Complaint Items 1, 2, 3, 4, 10, 11, 12, and 14, Investigator Allison observed that overall, the septic system was not operating correctly. He testified that he was not sure why the system was not working, and it was Respondent’s obligation to determine why it was not working and to fix it. He observed multiple indicators of system failure, including liquid percolation, unusual plant and algae growth, gray water, overworking pumps, ground erosion, and improperly placed native soil.

Investigator Allison testified that he performed a prehearing inspection, and the condition of the home had deteriorated.

Investigator Allison testified that a contractor of record was responsible for the work on the project. He testified that for new builds the contractor of record should be identified in the purchase agreement. If the contractor of record was not identified there, then the contractor named on the permit was the contractor of record.

Investigator Allison testified that contractors are responsible for defective materials and warranty claims.

Complainant testified in support of Investigator Allison’s findings and about her experience with Respondent. She testified that the French drain was installed to rectify the septic system, but it drained effluent into the community storm drains. She testified that she provided Respondent 61 days of access, including vacating the home for 29 days. She testified that Respondent did not attempt to schedule corrective work.

Complainant and Lindsey Severt testified that a text message, from Ms. Severt to Respondent, stating the septic was never turned on, was incorrect. Their testimony aligned in that the system would not have been turned off until or unless the system was malfunctioning. Ms. Severt testified that the system may have been turned off when the system was pumped. Complainant testified that she believed the system shut itself off as a safety measure.

James Riley, a registered engineer, testified in support of Investigator Allison’s findings. He testified about the condition of the property. He testified that problems with the installation likely caused the septic system’s failure. He believed the problems identified by Investigator Allison, such as the ground erosion and presence of native soil where imported clean soil should have been placed, were strong evidence in support of that belief.

Ronald Jerumbo, Respondent’s owner, testified that Smitty’s Excavating (Smitty’s), AXXO’s subcontractor, was responsible for the septic system, not Respondent. He testified that Respondent did not hire Smitty’s or have a contract with Smitty’s. He testified that Respondent recommended other contractors to perform the septic installation, but AXXO hired Smitty’s instead. He testified about Smitty’s scope of work and explained that Smitty’s was responsible for the septic system installation. He also testified that other documents, such as the Discharge Authorization, demonstrated that Smitty’s was AXXO’s subcontractor and was responsible for the septic system.

Mr. Jerumbo testified that he believed the power was turned off to the septic system, resulting in its failure. He testified that Complainant did not grant him access to the property.

Mr. Jerumbo testified that the French drain was appropriate because storm water needed to be removed from the leach fields. He testified that the designer approved of installing a French drain. He testified that he had wanted to install vegetation around the leach fields to absorb some of the liquid and heal the soil.

Mr. Jerumbo testified that some of Complainant’s emails went to his email junk folder but that he did not “drag” them to his junk mailbox.

Mr. Jerumbo testified that compaction was verified by CMT engineering, but AXXO had that information. He testified that Smitty’s used imported material for filling the leach field.

Mr. Jerumbo testified that on or about Christmas day, his roofer went to look at the window. He testified that, an unspecified time later, he received a text message from Complainant’s counsel that contractors were not allowed to look at any items. He testified that he had a contractor ready to fix the drywall and nail issues, but he never got dates to perform corrective work.

The septic installation passed the county inspection.

Administrative notice was taken of Respondent’s prior License record on February 20, 2026. According to that record, Respondent’s License No. 306777 was active and had one active and one resolved case.

CONCLUSIONS OF LAW

This matter lies within the Registrar’s jurisdiction.

Complainant bears the burden of proof to establish Respondent’s statutory violations by a preponderance of the evidence. Respondent bears the burden of proof to establish an affirmative defense by a preponderance of the evidence.

“A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”

For the purposes of this hearing, Respondent only had notice of the alleged violations in the Citation. Accordingly, this Tribunal can only find violations of law that appeared in the Citation. For complaint-specific items, only alleged violations identified by the Investigator and deemed uncorrected are noticed in the Citation. As stated in the Citation, “[t]he Registrar investigated this matter and [found] cause to charge Respondent with violation(s).” Where the investigator did not find cause to charge Respondent, charges were not incorporated into the Citation.

A contractor accepts the surface upon which it works. Prior to performing work, a contractor should inspect the surface for flaws or defects that would affect the work to be performed; if the surface is unacceptable, the contractor should call the defect to the owner’s attention so that the owner can choose to pay for corrective work or for the contractor to request a warranty disclaimer.

A contractor is expected to use materials that are fit for their purpose, including identifying defective materials and not using them. While a manufacturer may be ultimately responsible for replacing unfit materials, a contractor is responsible for using those materials. If a contractor timely makes a warranty claim for defective products and needs additional time to pursue that process, the Registrar should grant reasonable extension requests.

For the purpose of the Citation in this matter, Complaint Items 1, 2, 3, 4, 10, 11, 12, and 14, are one issue: “The septic system is not functioning as intended/properly. . . . Respondent shall determine the cause and correct it in an appropriate manner.”

The preponderance of the evidence established that (1) the septic system was not functioning properly; (2) the ADU window leaked; (3) trim was missing in the kitchen; (4) abnormal settling of the home, separating baseboards, cracking drywall, and popping nails; and (5) French drain not functioning properly, including draining effluent into a storm drain and exposed fabric.

An owner of property who builds structures for sale (owner-developer) is required to maintain a license with the Registrar unless it falls within the exemption in A.R.S. § 32-1121(A)(6). If an owner-developer does not have a license, it must contract with a general contractor, who becomes the contractor of record, to perform the work and hire other contractors. That general contractor is the party responsible for the project.

It is a rebuttable presumption that the contractor named on a permit is the contractor of record and responsible for the work performed under the permit. That contractor may either perform the work itself or, if allowed, act as a general contractor, hiring subcontractors to perform that work.

This regulatory scheme, requiring a licensed contractor for new-build and permitted projects, ensures that a licensed party is responsible for each project.

AXXO was not a licensed contractor, and Respondent was the contractor of record on the permit and was presented as the contractor of record for warranty purposes. For the purpose of license discipline, Respondent accepted the responsibility of being the licensed general contractor for the project. Respondent is responsible for all work performed under the permit and all contractors performing that work.

Respondent argued that Smitty’s was not Respondent’s subcontractor because they did not have a direct contractual relationship and that Respondent did not have a duty regarding Smitty’s. Respondent’s argument fails. Smitty’s may not have been Respondent’s subcontractor, but Respondent was still responsible for Smitty’s work. For the purposes of licensing discipline and professional responsibility, Respondent allowed AXXO to hire contractors (which AXXO would not otherwise be able to do) under Respondent’s license to perform work that Respondent was responsible for under the permit. Respondent knew that AXXO hired Smitty’s instead of one of Respondent’s proposed contractors and accepted the risk of continuing to act as the general contractor under those circumstances. A respondent might be able to prove, by a preponderance of the evidence, that some combination of contracts and appropriate notice relieves it of responsibility in such a situation. However, those facts are not present in this matter.

Denial of access is an affirmative defense, requiring Respondent to show by a preponderance of the evidence that Complainant actually or effectively denied it access to the property. A Written Directive orders a contractor to correct deficiencies by appropriate means during the Directive Period, which is the contractor’s opportunity to defend its license by correcting defective work. During the Directive Period, complainants cannot refuse access to a contractor and continue to utilize the Registrar’s discipline process. Refusing access impinges on the contractor’s right to defend itself within the Registrar’s process. During the Directive Period, Respondent’s role is arranging and performing corrective work, and Complainant’s role is to allow Respondent to perform the corrective work.

Respondent’s argument that Complainant did not make sufficient effort to schedule repairs fails. Denial of access must be based on actions taken by Complainant that make performing corrective unreasonably difficult for Respondent. Respondent did not allege that Complainant refused access to the property during the Revised Directive Period. It alleged the existence of a disputed, extra-record text message from Complainant’s counsel prior to the relevant period and attempted to shift the burden. Contrary to Respondent’s position, Complainant provided two months of access without setting unreasonable restrictions.

When a county, city, or other political subdivision (locality) adopts a code for workmanship standards and those standards are inconsistent with the Registrar’s standards, the locality’s standards are applied instead of the Registrar’s standards. However, deference to the locality’s standards does not deprive the Registrar of jurisdiction or its rights and obligations as a licensing agency.

When a locality approves work, performed by a licensed contractor, as compliant with the applicable standards, it establishes a rebuttable presumption of compliance with those standards. The Registrar may investigate complaints and alleged violations of the applicable standards, and if the Registrar finds that a preponderance of the evidence supports that a contractor’s work is deficient, it may discipline the contractor.

Neglect, modification, or abnormal use of the contractor’s work are affirmative defenses to allegations that the contractor failed to “perform work in a professional and workmanlike manner or in accordance with any applicable building codes and professional industry standards.” To establish the defense, a contractor must demonstrate that the neglect, modification, or abnormal use could have been material to creating the alleged deficiency of workmanship or industry standards or materially impacted the work or cost required to correct the deficiency. Subsequent work that has a de minimis impact on the issues alleged is not sufficient to establish the affirmative defense.

Respondent argued that Complainant neglected or misused the septic system, resulting in its failure. The preponderance of the evidence does not support that neglect or misuse of the septic system was a material cause of the system’s failure. Complainant provided evidence to support multiple reasons why the system may have failed. Respondent never investigated the cause of failure and did not present any credible evidence about the cause of the failure. Respondent relied on conjecture about a loss of power and argued that such a power loss caused the failure. It is far more likely that one of the reasons stated by Complainant was the cause of failure than one of the reasons stated by Respondent.

Respondent argued that it could not perform the septic system repairs because those repairs were outside the scope of its license. That argument fails because, unlike the trades, subcontracting to perform that work is within the scope of Respondent’s general contractor license.

The preponderance of the evidence established that Respondent failed to perform work in a professional and workmanlike manner in violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(A), specifically Complaint Items 1, 2, 3, 4, 10, 11, 12, 14, and 5, 6, 7, 8, 9, 17, 18, and 19.

The preponderance of the evidence established that Respondent failed to take appropriate corrective action following a written directive from the Registrar in violation of A.R.S. § 32-1154(A)(22).

“The registrar may impose a civil penalty of not to exceed $500 on a contractor for each violation of subsection A, paragraph 22 of this section.” If a licensee fails to pay the civil penalty, their license is automatically revoked “thirty days after the effective date of the order providing for the civil penalty.” Additionally, any “person who is or was named on a license. . . may not receive a new license under this chapter until the entire civil penalty is paid.”

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend for five days Respondent’s License No. 306777.

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).

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, February 25, 2026.

/s/ Samuel Fox

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

Earth Pro Excavating LLC

[email redacted]

Guy W. Bluff, Esq.

Bluff and Associates

[email redacted]

LeeAnne Pelzer

[email redacted]

Scott McClure

Lewis Brisbois Bisgaard & Smith LLP

[email redacted]

Chris Allison

[email redacted]

By: OAH Staff