ALJDEC - Licensing

2024A-13651-CHC-ROC · Registrar of Contractors · 2025-08-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Debbie Williams,

COMPLAINANT

Magnolia Home Builder PLLC

License No. ROC 322613,

RESPONDENT

No. 2024A-13651-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: July 31, 2025

APPEARANCES: Complainant Debbie Williams appeared on her own behalf. Christine Miller appeared on behalf of Respondent Magnolia Home Builder PLLC. Investigator David Fagerburg appeared on behalf of the Registrar of Contractors.

ADMINISTRATIVE LAW JUDGE: Adam D. Stone

EXHIBITS ADMITTED INTO EVIDENCE: Complainant’s Exhibits 1-18 were admitted into evidence.

_____________________________________________________________________

FINDINGS OF FACT

Magnolia Home Builder PLLC (Respondent) is the holder of License No. 322613 issued by the Arizona Registrar of Contractors (Registrar).

On or about August 24, 2021, Complainant hired Respondent to construct a new home and casita in Peoria, Arizona.

On or about December 12, 2024, the Registrar received a Complaint against Respondent from Complainant alleging poor work with respect to project.

The Registrar assigned the complaint to Investigator David Fagerburg. The jobsite inspection was performed on January 28, 2025.

Investigator Fagerburg then issued a Written Directive on or about February 21, 2025, which provided in pertinent part as follows:

After investigation, the Registrar determined that you failed to meet the requirements of A.R.S. § 32-1154(A), and now issues this Directive requiring you to take appropriate corrective action. Failure to comply with this Directive constitutes a violation of A.R.S. § 32-1154(A)(22) and may result in the issuance of a citation, discipline of your license, and a civil penalty pursuant to A.R.S. § 32-1154(E) of up to $500.00. You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on Monday March 24, 2025.

. . .

Investigator Notes:

1: Upon reviewing the invoices #MHB333-0903 and MHB333-0904 dated 8-24-2021 and contract invoice #MHB333-0816 dated 8-19-2021 signed 8-25-2021 and submitted by the complainant I am able to verify there is at least 1 of the 9 minimum elements of a contract missing violating ARS §32-1158 (A) Minimum elements of a contract.

Specifically #2, #6 and #9.

2: Based on the invoice/contract submitted by the complainant the contract date was August 24, 2021 with a start date of within 7-14 days of permit issuance and an estimated completion date of 12 calendar months of the start date.

3: Upon reviewing the Maricopa County Planning and Development Department permit search I am able to verify permits B202204003 and B202204104 were both issued November 2, 2022.

4: After this jobsite investigation the complainant’s consultant submitted additional proof of payment documents that verify 1,351,257.86 dollars have been paid to the respondent for a contract price listed on the complaint form as being $900,000.00.

Investigator Notes Continued:

5: During this jobsite investigation the complainant stated that the respondent has not provided copies of the signed change orders or receipts showing additional costs for the project violating ARS § 32-1158.02(F) Changes, additions, or deletions in original contract must be by written change order. To date there has been no additional documentation submitted by either party related to change orders.

6: During this jobsite investigation the respondent acknowledged the 2 septic system installations has not started and the permits have expired.

DIRECTIVE REQUIREMENTS

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

Complaint Item 1: Failure to complete both home and casita per agreement between owner and contractor

Investigator’s Observation: At this jobsite investigation I observed a home and Casita that are both currently under construction with completed slate shingle roofs, incomplete interior framing with lath and foam that has yellowed from UV exposure. The respondent stated that the foam will be inspected by the new stucco contractor that should be starting in about a week and any foam damaged from UV exposer will be replaced. It is noted that there is no drywall installed in either structure at this time. See P (1) thru P (44). During this jobsite investigation the respondent stated that SRP required the upgraded panel to match the permit with the panel which took some time, there was some back and forth regarding the power supply being provided either overhead or underground and eventually the plans were resubmitted and updated in December 20, 2024 and the main service panel was relocated December 21, 2024. The respondent acknowledged there have many recent challenges vetting new subcontractors and contractors that have not completed the work under subcontracts. During this jobsite investigation the respondent stated the last time any work was performed was by an electrician about a week ago and the project can be completed within 75 to 90 days. Based on the dates both permits were issued with a start date of within 7-14 days of permit issuance and an estimated completion date of 12 calendar months of the start date I am able to verify the project is not being completed in a timely manner. The respondent shall complete the home and Casita in a timely manner per contract by appropriate means.

Governing Rule: ARS § 32-1154 (A) (3) namely R4-9-108, Poor work not performed in accordance with professional industry standards and 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.

Complaint Item 2: Concrete Slab not level

Investigator’s Observation: At this jobsite investigation in the Casita and main home I observed interior concrete slabs that are not level within 1⁄4” over 12 feet. See P (3) thru P (11) and P (27) thru P (36). Per ROC Workmanship Standards floors should be level within 1/4" in any 12' run and floors should not vary from flat more than 1/4" over a 10' area. In the complaint documents submitted by the complainant there is an email provided by the flooring contractor dated December 11, 2024 informing the complainant’s consultant that a visit to the site determined the concrete slab is not within the LVP manufacture’s guidelines of being level within 3/16” per 10 feet for the warranty to be valid and the entire concrete slabs in both structures would require selfleveling material be installed at an estimated cost of 8-12K with materials and labor to bring the concrete slab within manufacture’s installation specifications. During this jobsite investigation the complainant showed me flooring that has been in onsite storage for some time. See P (42) and P (43). The respondent shall correct the concrete slabs that are not level and vary from flat to be within ROC Workmanship Standards in the main home and Casita and ensure compliance with the flooring manufacture’s installation specifications by appropriate means.

Governing Rule: ARS § 32-1154 (A) (2) (A) Departure from or disregard of plans or specifications, ARS § 32-1154 (A) (3) namely R4-9-108,

Poor work not performed in accordance with professional industry standards and 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.

Complaint Item 3: Framing not plumb or level. Framer was not licensed

Investigator’s Observation: At this jobsite investigation in the Casita and main home I observed framing that is not complete with some framing members twisted, bowed, not plumb or within ROC Workmanship Standards. There is also fire blocking missing. See P (12) thru P (23) and P (37) thru P (41). During this jobsite investigation the respondent acknowledged the framing is incomplete and will have a framer onsite to complete the work in the near future. The respondent stated that the project should be completed within 75 to 90 days. Based on the dates both permits were issued with a start date of within 7-14 days of permit issuance and an estimated completion date of 12 calendar months of the start date I am able to verify the project is not being completed in a timely manner. The respondent shall correct the framing deficiencies in both structures to be within ROC Workmanship Standards and complete the project in a timely manner per contract by appropriate means.

Complaint Item 5: Per Maricopa County Building Dept. House is only 35% complete

Investigator’s Observation: At this jobsite investigation the complainant’s consultant provided a live screenshot from the Maricopa County Planning and Development Department showing the estimated completion for the main home as being 33%. During this jobsite investigation the respondent stated that the project should be completed within 75 to 90 days. The respondent shall complete the project in a timely manner per contract by appropriate means.

Complaint Item 6: Per Maricopa County Building Dept. Casita is only 33% complete

Investigator’s Observation: At this jobsite investigation the complainant’s consultant provided a live screenshot from the Maricopa County Planning and Development Department showing the estimated completion for the Casita as being 38%. During this jobsite investigation the respondent stated that the project should be completed within 75 to 90 days. The respondent shall complete the project in a timely manner per contract by appropriate means.

Complaint Item 7: Per Maricopa County Building Inspector House has truss issues that has held up framing inspection.

Investigator’s Observation: At this jobsite investigation the complainant nor the complainant’s consultant were able to show me the location of the house trusses with issues that may be holding up the framing inspection. The Maricopa County Planning and Development Department will determine if any trusses require repair to comply with IRC code and industry standards. The respondent shall ensure all trusses and framing comply with local building code, pass all inspections and complete the project in a timely manner by appropriate means.

Complaint Item 8: Framing top out not completed

Investigator’s Observation: At this jobsite investigation I observed and am able to verify the framing top out has not been completed. During this jobsite investigation the respondent stated that the project should be completed within 75 to 90 days. Based on the dates both permits were issued with a start date of within 7-14 days of permit issuance and an estimated completion date of 12 calendar months of the start date I am able to verify the project is not being completed in a timely manner. The respondent shall complete the framing top out in a timely manner per contract by appropriate means.

Complaint Item 9: Electrical not completed (Rough)

Investigator’s Observation: At this jobsite investigation I observed and am able to verify the rough electrical is not complete. During this jobsite investigation the respondent stated the last time any work was performed was by an electrician about a week ago and the project can be completed within 75 to 90 days. Based on the dates both permits were issued with a start date of within 7-14 days of permit issuance and an estimated completion date of 12 calendar months of the start date I am able to verify the project is not being completed in a timely manner. The respondent shall complete the home and Casita electrical in a timely manner per contract by appropriate means.

On April 7, 2025, Investigator Fagerburg conducted a compliance jobsite inspection and found that items 1, 2, 3, 4, 6, 8, and 9 remained uncorrected, noting in pertinent part:

Compliance Findings:

Complaint Item 1: Failure to complete both home and casita per agreement between owner and contractor.

...

Compliance Observation: The complainant’s consultant agreed the main home is now approximately 55% complete and the Casita is approximately 45 % complete based on the Maricopa County Planning and Development portal. The complainant’s consultant stated that on Friday April 4, 2025 the yellow lath foam was in the same condition as the original jobsite inspection and there was no foam insulation applied in either structure. During this compliance jobsite inspection most of the yellow lath foam on the main home has been brushed to remove the yellow layer of UV exposed foam with the exception of the east side. The Casita lath foam is in the same condition as the original jobsite inspection. See P (1), P (2) P (24). Spray foam insulation has been partially applied in the main home. The foam is inadequately applied with voids in the stud bays and stud bays that are not fully filled. See P (29), P (30), and P (32) thru P (36). There has been no spray foam insulation applied in the Casita. See P (4), P (8), P (12) thru P (15), P (17), P (21), P (22). Considering permits were issued for both structures November 2, 2022 it is this investigator’s opinion that the respondent is not completing the project in a timely manner, there has been very little progress since the written directive was issued February 21, 2025 and it appears there is no urgency to resolve the continuing delays.

Governing Rule: 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. The respondent is not incompliance with the directive.

☐ CORRECTED ☒ NOT CORRECTED

Complaint Item 2: Concrete Slab not level

. . .

Compliance Observation: In the Casita the concrete slab control joints have been grinded level with the exception of the west exterior wall where there is what appears to be a cold joint and a crack that exceeds 3/32” width, vertical displacement that exceeds 1/8” and a compound crack in excess of 1/16”. See P (4) thru P (11) and P (21). At 1 of the control joints there is fracture and loose concrete. See P (9) and P (10). In the main home the concrete slab control joints have been grinded level leaving fractures, holes and loose concrete along the control joint edges. See P (25), thru P (27), P (29) and P (31). In 1 of the bedrooms there is a control joint that has been grinded but is not level within 3/8” over a straight edge length of 8’- 4”. See P (27) thru P (30). Considering permits were issued for both structures November 2, 2022 it is this investigator’s opinion that the respondent is not completing the project in a timely manner, there has been very little progress since the written directive was issued February 21, 2025 and it appears there is no urgency to resolve the continuing delays.

☐ CORRECTED ☒ NOT CORRECTED

Complaint Item 3: Framing not plumb or level. Framer was not licensed

. . .

Compliance Observation: The complainant’s consultant acknowledged that the framing inspection by the Maricopa County Planning & Development Department for the main home has passed and spray foam insulation has been applied to the bottom of the roof deck and some of the exterior walls. The spray foam is inadequately applied with voids in the stud bays and stud bays that are not fully filled. See P (29), P (30), and P (32) thru P (36). Prior to this compliance jobsite inspection during a phone conversation the respondent acknowledged the framing inspection for the Casita did not pass, additional corrections are required and another inspection is pending. See P (12) thru P (19).

☐ CORRECTED ☒ NOT CORRECTED

Complaint Item 5: Per Maricopa County Building Dept. House is only 35% complete

. . .

Compliance Observation: The complainant’s consultant acknowledged the main home is now approximately 55% complete based on the Maricopa County Planning and Development portal. Considering the permit was first issued November 2, 2022, the complaint was filed December 12, 2024 with the jobsite inspection being conducted on January 28, 2025 and a written directive issued February 21, 2025 with an expiration date of March 24, 2025 it is this investigator’s opinion that the respondent is not completing the project in a timely manner, there has been very little progress since the written directive was issued February 21, 2025 and it appears there is no urgency to resolve the continuing delays.

☐ CORRECTED ☒ NOT CORRECTED

Complaint Item 6: Per Maricopa County Building Dept. Casita is only 33% complete

. . .

Compliance Observation: The complainant’s consultant acknowledged the Casita is now approximately 45% complete based on the Maricopa County Planning and Development portal. Considering the permit was first issued November 2, 2022, the complaint was filed December 12, 2024 with the jobsite inspection being conducted on January 28, 2025 and a written directive issued February 21, 2025 with an expiration date of March 24, 2025 it is this investigator’s opinion that the respondent is not completing the project in a timely manner, there has been very little progress since the written directive was issued February 21, 2025 and it appears there is no urgency to resolve the continuing delays.

☐ CORRECTED ☒ NOT CORRECTED

. . .

Complaint Item 8: Framing top out not completed

. . .

Compliance Observation: Prior to this compliance jobsite inspection during a phone conversation the respondent acknowledged the framing inspection for the Casita did not pass, additional corrections are required and another inspection is pending. See P (12) thru P (19). The complainant’s consultant acknowledged that the framing inspection by the Maricopa County Planning & Development Department for the main home has passed.

☐ CORRECTED ☒ NOT CORRECTED

Complaint Item 9: Electrical not completed (Rough)

. . .

Compliance Observation: The rough electrical in both structures is incomplete, there is no temporary power on the jobsite and there are no breakers installed at either the main service panel at the Casita or the subpanel at the main home. See P (20) and P (38). Considering the permit was first issued November 2, 2022, the complaint was filed December 12, 2024 with the jobsite inspection being conducted on January 28, 2025 and a written directive issued February 21, 2025 with an expiration date of March 24, 2025 it is this investigator’s opinion that the respondent is not completing the project in a timely manner, there has been very little progress since the written directive was issued February 21, 2025 and it appears there is no urgency to resolve the continuing delays.

☐ CORRECTED ☒ NOT CORRECTED . . .

On April 24, 2025, the Registrar issued a Citation against Respondent, charging possible violations of 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).

On or about May 9, 2025, Respondent submitted an Answer to the Registrar.

On or about June 2, 2025, a Notice of Hearing was issued setting a hearing on July 11, 2025, at the Office of Administrative Hearings, an independent state agency. The Notice of Hearing was sent to Respondent’s mailing and e-mail address of record. Further the Office of Administrative Hearings issued an Order setting the matter on Google Meet on June 4, 2025 and sent it to the parties’ email mail addresses of record.

After a continuance, the hearing was held on July 31, 2025.

At hearing, Investigator Fagerburg testified as to the Registrar’s involvement and the above timeline and findings.

Investigator Fagerburg testified that the contract drafted by Respondent was missing items, 2, 6 and 9 of the minimum elements of a contract.

Further, Investigator Fagerburg testified that while the Directive may have not been possible for Respondent to complete, he was looking for Respondent make significant progress, which did not occur.

In addition, Investigator Fagerburg testified that he conducted a pre-hearing inspection on July 29, 2025, and found that a front door had been installed and that while some drywall had been installed, it had not been prepared for paint and that it appeared that there was a garage wall which contained no insulation.

Complainant testified that she paid to have a main house and a casita built, which remained incomplete nearly 3 years later. Complainant also testified that she always gave Respondent additional money when it was requested, and paid over an additional $400,000.00 from the original contracted price. Further, Complainant still had yet to see a full accounting of the project. Finally, Complainant testified that she would like whatever materials that were purchased with her money returned to her and that Respondent’s license be revoked, as well as requesting restitution.

Complainant’s daughter-in-law, Carolina Stevens also echoed Complainant’s frustrations, by stating that Respondent betrayed their trust with excuse after excuse.

Finally, Steve Lawton testified for Complainant. He testified that by his estimation that while Complainant paid over $1,300,000.00, he estimated that only about $500,000.00 of work had been completed. Further, Mr. Lawton testified too as to the lack of information provided by Respondent as to the accounting and information about subcontractors.

Christine Miller testified that she had been in the construction industry for approximately 20 years, and had not experienced the business turmoil that she was currently experiencing. She testified that it was her belief that Mr. Lawton was interfering with her trades, adding that her company had been “breached”, and that it was “outlandish what she’s had to face.

Ms. Miller testified that she acknowledged that she underbid the project, and felt overwhelmed, as the project was for essentially two full-sized houses.

Finally, Ms. Miller testified that Complainant should already have a full accounting of the project in her possession.

Administrative notice was taken of Respondent’s prior License record on August 15, 2025. Such prior License record reflected that Respondent’s License No. 322613 was first issued on November 14, 2018, and reflected that there were three open cases, including the present case, plus one disciplined case and three “Resolved/Settled Cases”.

CONCLUSIONS OF LAW

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

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 preponderance of the evidence established that the parties contract was in violation of A.R.S. § 32-1154(A)(12), namely A.R.S. § 32-1158, as the parties contract did not contain the name and mailing/jobsite address of the owner, the total dollar amount to be paid, and the “right to file” language. Further, Respondent provided no testimony as to this allegation.

The preponderance of the evidence established that there was a violation of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108(A), as the project had not been timely completed per the contract, the concrete slabs in the main home and casita were not level, the framing was not level in both locations, and the rough electrical had not been completed.

The preponderance of the evidence established that the project remained substantially incomplete. Therefore, Complainant 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 tribunal declines to award restitution in this matter under A.R.S. §32-1156.01, as it believes that issue may be better resolved in a different legal forum.

Finally, the tribunal is extremely concerned with the discipline history of Respondent and believes that a substantial suspension is warranted in this matter.

RECOMMENDED ORDER

Based on the foregoing, it is recommended that on the effective date of the Order, the Registrar shall suspend Respondent’s License No. 322613 for a period of twenty-five (25) business days.

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 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 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.

It is further recommended that Respondent be ordered to provide the Registrar with a proper sample contract which complies with A.R.S. § 32-1158. It is recommended that Respondent’s license remain suspended until it complies with the same.

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, August 15, 2025.

/s/ Adam D. Stone

Administrative Law Judge

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

Tom Cole, Director

Registrar of Contractors

Magnolia Home Builder PLLC

[email redacted]

Debbie Williams

[email redacted]

By: OAH Staff