ALJDEC decisions subject to certification as final

2024A-13056-CHC-ROC · Registrar of Contractors · 2025-09-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Tim Donald Larin,

COMPLAINANT

McGrath Builders LLC

License No. ROC 312248,

RESPONDENT

No. 2024A-13056-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 21, 2025 and August 8, 2025

APPEARANCES:

Complainant: Erika Johnson, Attorney

Timothy Larin, Complainant

Shannon Dunville, witness

Andrew Huseman, witness

Jesse Light, witness

Respondent: Austin McGrath

Registrar of Contractors: David Fagerburg, Investigator

ADMINISTRATIVE LAW JUDGE: Nedra-Su Kawasaki

EXHIBITS ADMITTED INTO EVIDENCE: Administrative notice was taken of the Notice of Hearing Packet submitted by the Registrar of Contractors.

Complainant’s Exhibits 1-42.

_____________________________________________________________________

FINDINGS OF FACT

Procedural History

McGrath Builders, LLC (Respondent) was the holder of License No. 312248 issued by the Arizona Registrar of Contractors (Registrar) on March 23, 2017.

On or about February 27, 2023, Tim Larin (Complainant) entered into a contract with Respondent for, among other things, a bathroom remodel.

On or about November 25, 2024, Complainant filed a Licensed Complaint Form with the Registrar, claiming poor work.

The Registrar assigned the complaint to Investigator David Fagerburg, who issued a Jobsite Inspection Notice on December 4, 2024, scheduling the inspection for January 9, 2025.

Investigator Fagerburg conducted the jobsite inspection on January 9, 2025, and Respondent was present. Following the inspection, Investigator Fagerburg issued a Written Directive From the Registrar to Respondent on January 29, 2025 that provided:

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

Complaint Item 1: shower pony wall grout decay, tile pulling away wall, leak under pony wall of shower.

Investigator’s Observation: At this jobsite investigation in the master bathroom shower I observed a pony wall with what appears to have a water leak at the corner of the shower glass. I did not observe any evidence of water leaking under the pony wall or grout decay inside the shower. The tile on the pony wall exterior is also separating from the substrate. See P (3) thru P (10). Both parties agree the drains and water supply lines for the bath tub and the shower were relocated without a permit. Prior to any corrective work the respondent shall obtain a permit from the City of Phoenix Planning and Development Department, comply with all requirements, pass all inspections and correct by appropriate means.

Governing Rule: ARS § 32-1154 (A) (2) (B) Departure from or disregard of a building code, ARS § 32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards.

Complaint Item 2: post tension permits.

Investigator’s Observation: At this jobsite investigation the complainant stated that during the bathroom remodel/restoration project the respondent completely severed 2 post tension cables and damaged a 3rd while jack hammering the concrete slab for the bathroom remodel without x-raying for the locations of the cables. The respondent acknowledged the cables were severed and had an engineer provide a stamped post tension repair guide and had a post tension repair contractor make repairs without a permit. See P (11) thru P (13). It appears the damaged cable running east and west are not under tension with the east side covered in mortar and the west side that remains loose. See P (11) and P (12). Prior to any corrective work the respondent shall obtain a permit from the City of Phoenix Planning and Development Department, comply with all requirements, pass all post tension repair inspections and correct by appropriate means.

On January 29, 2025, Investigator Fagerburg also issued Respondent a warning letter advising Respondent that it was in violation of A.R.S. § 32-1158(A), minimum elements of a contract.

The Written Directive required Respondent to notify Investigator Fagerburg of Respondent’s compliance with the directive prior to 5:00 p.m. on February 21, 2025.

On three occasions, an extension for compliance with the Written Directive was provided, extending the compliance dates to March 14, April 4, and May 2, 2025, respectively. Extensions were granted for the legal excuse of waiting on City approval of permit applications.

On or about May 3, 2025, Complainant informed Investigator Fagerburg that no corrective work had been performed on the project; therefore no compliance inspection was conducted.

On May 9, 2025, the Registrar issued a Citation against Respondent, finding cause to charge Respondent with violations of A.R.S. § 32-1154(A)(2)(b); A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(A); A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158; and A.R.S. § 32-1154(A)(22).

Respondent submitted an Answer to the Citation on May 25, 2025, Respondent’s Answer asserted that regarding the shower leak there was miscommunication, denial of right/access to correct the issues, and misuse as the cause of the shower leak. Regarding the lack of permit, Respondent asserted the original plan was to work with the existing plumbing, then the possible need for a permit was discussed with Complainant who did not want to “waste time and deal with city inspections” and instructed Respondent to “work without pulling permits because the plumbing changes were minimal and there was no knowing of post tension cables in the slab.” Respondent’s Answer further asserted that as soon as the post tension cables were noticed, Respondent hired professional engineers, one of which was actually the original engineer of the home when it was built. The reason the permit had not been approved was because the Special Inspection report was not stamped and signed by the engineer. The engineer advised Respondent that the individual assigned to the project no longer worked for them and they were unable to find any supporting documentation.

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

On June 9, 2025, the Registrar issued a Notice of Hearing on Contested Case setting the hearing for July 21, 2025.

The hearing was held via Google Meet on July 21, 2025 and August 8, 2025.

Background

Work on the bathroom remodel began in March 2023. On the first day of work, while chiseling into the concrete foundation for the shower, Respondent exposed post tension cables. On the second day of work, Respondent continued to work on chiseling the concrete and severed two post tension cables and frayed a third cable.

SunCoast Post-Tension, the original engineer for the house build (1998), was hired by Respondent to repair the three damaged post tension cables.

In or around August 2023, work on the bathroom remodel resumed. On the first day, while working on the interior plumbing, another post tension cable came loose, pulled through the concrete foundation, narrowly missed hitting Respondent’s employee, and lodged debris in a wall 20 feet away.

Jeffrey Starling, a professional engineer (PE), of Starling Madison Lofquist, Inc. (SML) was hired to, and did in fact, engineer a repair plan for the post tension cable.

Complainant thereafter left the home on a business trip and on return the concrete had been poured and Respondent was tiling the shower.

In March 2024, Complainant signed a certificate of completion.

Approximately six months after completion, tile on the outside of the pony wall of the shower was pulling away. It was the opinion of a separate contractor that the adhesive was failing due to water exposure. Complainant then contacted Respondent who sent a tiler to fix the grout. However, the tiler saw the issue and agreed it was not, in fact, a grout issue. Thereafter, Complainant filed the complaint in this matter.

At the hearing, Investigator Fagerburg testified in support of his jobsite inspection findings, the written directive, and the Citation. Investigator Fagerburg further testified that a permit application by Respondent was submitted to the City of Phoenix during the compliance period but no permit was issued, during the compliance period the City of Phoenix issued a Stop Work Order, and no compliance inspection was performed because no corrective work had been completed. Additionally, Investigator Fagerburg noted that the Respondent’s contract with Complainant was missing element numbers four and nine; namely, estimated date of completion of all work performed under the contract and 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. On questioning, Investigator Fagerburg stated that at the initial jobsite inspection there was evidence of a water leak but no active leak was seen, thus a water weak was not ruled out.

Complainant’s witness, Andrew Huseman, PE testified that at the time of the hearing, he was and had been employed by SML for the previous twelve years and had been a partner since 2021. PE Huseman testified as to what a post tension foundation was and that it was common in Arizona. PE Huseman testified in support of the facts as noted above as they related to SML’s involvement in this matter. Specifically, PE Huseman explained that a special inspection certifies that a repair had been done in conformation with the engineering schematic. He further testified that the City of Phoenix had adopted Chapter 17 of the 2018 International Building Code, which provided post tension foundation installation special inspection requirements. Notably, an inspector must be present during the pre-stressing process to verify that the work conforms to the permitted documents. PE Huseman explained that often City inspectors will request a “special” inspection in which any qualified third party inspector must be present during the work. PE Huseman stated it is common for SML to receive third party special inspection report requests on projects performed by other third party inspectors. SML would sign the attestation statement when the necessary inspection information proving conformation was provided. In this case, in May 2025, SML declined to sign the attestation, as requested by Respondent because Respondent did not provide the required information, nor did any SML engineer/inspector witness the reparation in progress. In June 2025, on Complainant’s request, SML inspected a damaged post-tensioned slab on ground tendon and determined through visual inspection that the post tension cable repair recommendations provided by SML in August 2023 were not implemented by the repair contractor.

Complainant’s witness, Jesse Light, a professional and structural engineer (PE, SE) and President of SML, testified that SML could be hired for two separate phases in a post tension repair job, one for the repair engineering and the other for any special inspections required. PE Light further testified that special inspections were specifically excluded from the scope of repair contracts because it was unknown at the time of the repair contract what the special inspection would require and thus could not be accurately quoted at that time. Additionally, the inspection should be contracted with a third party inspector rather than the repair engineer to avoid conflicts of interest. However, it was possible, and allowed, for the repair engineer to provide the special inspection, but it required that the special inspector be hired on behalf of the homeowner (not the contractor) and must have the homeowner’s signature on the special inspection. PE Light explained that to perform a third party inspection, SML would have to be contacted by the contractor at the time the contractor was ready to perform the pre-stressing. Otherwise, SML would not know when to be onsite. PE Light testified that in this case, SML had no documentation it was ever hired to perform a special inspection. Specifically, there was no contract, nor were there any emails or other correspondence by and between Mr. Starling and Respondent, and no time records of any employee ever being dispatched to the project property after the original repair recommendation was provided. To provide a third party special inspection attestation statement at which SML was not present onsite for the repair, specific documentation and proof of the repair would be required, such as photos showing epoxy being applied, concrete tickets, etc. SML requested this information from Respondent but it was never received. After inspecting the project property in June 2025, SML’s recommendation was a complete re-repair with a new hair pin.

Complainant testified in support of the facts and timeline noted above. Complainant stated he was introduced to Respondent through Complainant’s insurance adjuster after he had water damage to his home. Complainant hired Respondent to complete additional work, specific to this matter, a bathroom remodel. In an effort to help Respondent determine whether the home had a post tension foundation, Complainant provided the house plans to Respondent. Complainant testified that after completion of the bathroom remodel, there was much “back and forth” between Complainant and Respondent about the cause of the pony wall issue. Complainant further testified that he was unaware that permits were required for the plumbing and post tension cable repair until Investigator Fagerburg inquired about them at the jobsite inspection. On February 3, 2025, following the jobsite inspection, the City of Phoenix issued a Stop Work order – Notice of Code Violation for non-permitted construction. After the third compliance extension given on April 16, 2025, and in response to Respondent’s email dated April 11, 2025, that Respondent had not heard from the City and “[understood] that ‘most everything’ that [was] submitted was being approved,” Complainant discovered that the City of Phoenix did not have the project permit under review and, in fact, had been waiting on Respondent to provide further documentation since March 17, 2025. On June 25, 2025, Complainant received a Notice of Ordinance Violation from the City of Phoenix, referencing the February 3, 2023 notice and ordering compliance by August 6, 2025. The violations were for lack of permits, failure to request required inspections, and construction work concealed before inspection. Complainant testified that as an officer of a bank, should he be cited for these violations, it could damage his career. Complainant further testified that after the initial jobsite inspection, Complainant did not receive any communication from Respondent (emails to Investigator Fagerburg, on which Complainant was copied, excepted).

Respondent testified that on receipt of Complainant’s concern regarding the shower pony wall, Respondent’s owner Austin McGrath and project manager Neil Vandbeck agreed the issue was related to tile grout and sent a tiler to repair. Respondent further testified that Complainant advised that Respondent was not welcome to come back to the property, and therefore, Respondent did not further contact Complainant until the jobsite inspection. At the jobsite inspection, Respondent advised Investigator Fagerburg and Complainant that it believed the cause of the pony wall issue was related to the way in which Complainant was using the shower and not related to a defect or poor workmanship. However, to determine whether a leak was present, Respondent would need to “sonar” the shower. After the jobsite inspection Respondent applied for permits, and was advised by the City of Phoenix that a special inspection was required. Respondent testified that in response, it contacted Sun Coast Post Tension and SML requesting the special inspection attestation. However, both companies advised Respondent that they did not perform a special inspection and did not have any documentation thereof. Respondent argued that it took all the proper steps in the process, but the hired engineer did not have the required documentation.

On questioning, Respondent admitted that the work at issue was completed without required permits. Respondent further admitted that at all times during the remodel at issue and at the time of the hearing, Respondent carried a $2,000,000 insurance policy through Pekin, but that no claim had been submitted regarding Complainant’s project. Respondent confirmed SML was hired to engineer a repair only for the cable damaged in August 2023 (second incident). Respondent believed there was a report for the first three cables that were damaged in April 2023, but could not provide any such report. Additionally, Respondent testified that it had documentation that it hired SML to “be the engineer” for the project, and thus had hired SML to perform a special inspection. Finally, after SML advised Respondent that it did not perform a special inspection and Respondent could not provide documentation of such, Respondent did not contact any other engineers and did not believe it was necessary. However, Respondent noted it was willing to completely re-do the project to ensure it was done properly.

Administrative notice was taken of Respondent’s prior License record on August 28, 2025. According to that record, Respondent’s License No. 312248 was Active; and there were two open complaints, no disciplined case, and no resolved/settled complaints against Respondent’s license.

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.”

Although Respondent argued that it took all proper steps during the process, specifically in determining whether the home was on a post tension foundation prior to beginning work, and despite determining to the contrary, Respondent was put on notice of its error on the first day of work, when drilling exposed post tension cables. Instead of stopping work and taking appropriate measures at that time, Respondent continued drilling on the second day, resulting in damaging three cables. Although Respondent claimed repairs were made, due to lack of proper documentation, there was no evidence that the repairs were done properly. None of the required permits were pulled, nor was a special inspection performed. In fact, the first day of work resuming after reparation, yet another cable came loose nearly causing catastrophic consequence. This cable repair was planned by a professional engineer; however, again, the repair itself was not documented, no permits were pulled nor was a special inspection performed.

Additionally, no permits required for relocating drains and water supply lines were pulled. Because this was not completed, prior to or during the compliance period, the leak on the pony wall was never corrected. These failures are so egregious that not only have they created additional concern and liability on Complainant’s part (City of Phoenix violations with possible enforcement including civil or criminal actions, sanctions, or demolition at Complainant’s cost), potentially threatening Complainant’s employment, it has also created a significant structural safety concern. Therefore, the undersigned ALJ finds that Respondent acted in violation of A.R.S. § 32-1154(A)(2)(b), A.R.S. § 32-1154(A)(12), namely the contract requirements in A.R.S. § 32-1158, and 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 15 business days Respondent’s License No. 312248.

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).

It is further recommended that within thirty days of the effective date of the Order Respondent shall provide an amended contract to the Registrar which establishes compliance with the requirements in A.R.S. § 32-1158. If Respondent fails to comply, Respondent’s license shall be suspended until it provides a compliant contract.

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.

-54864001

001

-137160-45720000Done this day, September 16, 2025.

/s/ Nedra-Su Kawasaki

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

[email redacted]

Erika L. Johnsen, Esq.

LANG THAL KING & HANSON PC

[email redacted]

David Fagerburg

[email redacted]

McGrath Builders LLC

[email redacted]

Tim Donald Larin

[email redacted]

By: OAH Staff