ALJDEC - Licensing

2025A-01296-CHC-ROC · Registrar of Contractors · 2025-06-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

Amy Frederick-Hall,

COMPLAINANT,

v.

Retail Store Construction Inc.,

ROC License No. 327719,

RESPONDENT.

No. 2025A-01296-CHC-ROC

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 12, 2025 at 1:00 PM.

APPEARANCES: Amy Frederick-Hall (“Complainant”) appeared on her own behalf. Kyle Kimberlain appeared on behalf of Retail Store Construction Inc. (“Respondent”). James Carter appeared on behalf of the Arizona Registrar of Contractors (“Registrar”).

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing on Contested Case (“Notice of Hearing”), including the Registrar’s attached administrative file, Complainant Exhibits 1-2, and April 30, 2025, Hearing Order were admitted into the evidentiary record.

_____________________________________________________________________

Having reviewed 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 records as reflected on the Registrar’s public website. On February 13, 2020, the Registrar issued License No. 327719 General Dual KB-1 contracting license to Respondent. The license has been renewed through February 28, 2026. The license lists Kyle Kimberlain as the Qualifying Party and President. Respondent’s address of record for the license is 24200 N. Alma School rd., Unit 28 Scottsdale, Arizona 85255. Respondent has an active $32,000.00 surety bond on the license, effective April 10, 2025. The license has been disciplined on one (1) prior occasion. Currently, there are two (2) open complaints against the license, one of which is presumed to be related to this matter.

On February 06, 2025, the Registrar received a narrative complaint from Complainant against Respondent’s License No. 327719 alleging poor work of a newly constructed single-family residence. The Registrar designated it Complaint No. 2025-01296 and assigned to James Carter (“Investigator Carter”) for investigation.

On February 12, 2025, Investigator Carter issued a Jobsite Inspection Notification Letter to the parties, advising that he would conduct an inspection of the project on March 05, 2025, at 9:00 a.m. Correspondence was not returned as undeliverable to Respondent.

Respondent did not request to inspect the complained of project items, or submit a written response to the underlying complaint.

On March 05, 2025, Investigator Carter inspected the work that had been performed on the project to date. Respondent was not present. Investigator Carter also reviewed contract-related correspondence, and took 94 photographs of the project site. When he was finished, Investigator Carter drafted his Inspection Notes. Ultimately, Investigator Carter derived twenty (20) separate and distinct complaint items from Complaint No. 2025-01296, sixteen (16) of which substantiated based on his firsthand observations. Specifically, Investigator Carter determined Respondent’s workmanship on complaint items 1-6, 10-13, and 15-20 failed to meet the Registrar’s minimum standards and required Respondent to perform corrective and/or completion work to remediate the identified deficiencies.

On March 07, 2025, Investigator Carter issued a Written Directive from the Registrar (“Directive”) to Respondent because he substantiated most of Complainant’s complaint allegation(s) against Respondent. Respondent was put on notice that it had until 5:00 p.m. on March 28, 2025, 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.

Investigator Carter also included the following advisement regarding the remediation of substantiated complaint items 1-6, 10-13, and 15-20:

DIRECTIVE REQUIREMENTS:

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

(Emphasis in original.)

On April 02, 2025, 2025, Investigator Carter forwarded the matter to the Registrar’s legal department with the issuance of a Citation Recommendation.

On April 03, 2025, 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 April 18, 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 April 18, 2025, the Registrar received Respondent’s timely Answer whereby Mr. Kimberlain denied the alleged statutory violations outlined in the Citation, and noted that it in the prior two (2) years, Complainant had not filed a warranty claim or requested substantiated complaint items 1-6, 10-13, and/or 15-20 be corrected. Overall, Mr. Kimberlain argued that the items at issue were due to lack of homeowner maintenance, and noted that Complainant received a payout from Respondent’s bond company for the drywall and stucco issue(s).

On April 23, 2025, the Registrar referred this matter to the Office of Administrative Hearings (“OAH”), an independent state agency, for an evidentiary hearing on April 30, 2025. Per the April 30, 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 her own behalf and called Investigator Carter as a witness. Kyle Kimberlain testified on behalf of Respondent. The substantive evidence of record is as follows:

On or about February 21, 2023, Complainant and her husband, Chad Hall, purchased residential property located at 6244 S. Dean Rd. Buckeye, Arizona 85326 for $524,000.00 from Respondent.

On or about March 23, 2023, Complainant took possession of the property.

On December 21, 2023, Complainant issued correspondence to Respondent via email and text message regarding a 21-item punch list, whereby she requested Mr. Kimberlain reply by January 04, 2024.

On January 18, 2024, Complainant issued a follow-up email and text to Respondent regarding her punch list items, whereby she noted that she was “still under warranty” but Mr. Kimberlain was not responsive to her correspondence.

On March 17, 2025, Respondent requested a 3-day extension of the Directive’s compliance period, which was denied by Investigator Carter.

Between March 07, 2025, and March 28, 2025, Respondent did not attempt to perform any corrective work on the project.

License No. 327719 was suspended for approximately half of the Directive’s compliance period, during which time Respondent was prohibited from performing corrective work or hiring trades or subcontractors to address on its behalf.

On March 20, 2025, a handyman hired by Respondent performed an inspection of the project site and advised Complainant that corrective work necessary to remediate substantiated complaint items 1-6, 10-13, and 15-20 were outside his professional scope and expertise. No other trades or subcontractors were sent to the project site on Respondent’s behalf to perform corrective work.

At no time during the Directive’s compliance period did Respondent allege a denial of access to the project site.

Neither a Compliance Jobsite Inspection nor a Prehearing Jobsite Inspection was performed by Investigator Carter in Complaint No. 2025-01296.

The parties never entered into a settlement agreement regarding complaint items 1-6, 10-13, and/or 15-20.

Additional Evidence

On an unknown date, Complainant submitted a complaint to the Registrar, which was ultimately decided in her favor. Afterwards, Complainant submitted a petition to the Registrar’s Recovery Fund. During the Recovery Fund process, Complainant was required to submit a claim against Respondent’s bond; which resulted in a $15,000.00 payout from the insurance company. Complainant submitted Complaint No. 2025-01296 to the Registrar after she received her bond payout.

Investigator Carter testified that he reviewed the prior complaint, which had been investigated by another investigator, and removed any related items from Complaint No. 2025-01296 as he believed they had already been addressed in the previous complaint. Investigator Carter also testified that none of the items he substantiated were due to “wear and tear,” nor were they items that could simply be adjusted. Per Investigator Carter, a homeowner need not file a warranty claim with a builder prior to filing a complaint with the Registrar.

Mr. Kimberlain advised Investigator Carter that he would not attend the jobsite inspection, but did not ask that the inspection be rescheduled.

Closing Arguments

In closing, Respondent argued that Complaint No. 2025-01296 was a continuation of the prior complaint filed by Complainant, and opined that it was unfair to permit her to go through the administrative process again; particularly in light of the fact that she had already received a payout from Respondent’s bond.

Complainant declined to provide a closing argument.

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)(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 Complainant purchased newly built residential property from Respondent, which she paid for in full. It is also clear that during the home’s warranty period Complainant brought items or concern to Respondent’s attention no less than two (2) times, both of which Respondent essentially ignored. While the details of Complainant’s first complaint against Respondent are unclear, the record reflects that Investigator Carter went through the complaint and removed any similar or exact items from Complaint No. 2025-01296. The record further reflects that Mr. Kimberlain willingly chose not provide a written response to Complaint No. 2025-01296 or participate in Investigator Carter’s jobsite inspection. Moreover, the record reflects that although sixteen (16) of twenty (20) complaint items were substantiated by Investigator Carter, Respondent failed to attempt corrective work on any of the items per the Registrar’s Directive or settle the underlying 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 remediate substantiated complaint items 1-6, 10-13, and 15-20. This is an affirmative defense that Respondent bears the burden to establish. Here, Respondent presented no evidence to sustain this burden. 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. While the record does reflect that License No. 327719 was suspended for about ten (10) days during the Directive’s compliance period, the suspension itself was not in error. Notably, nothing prevented Respondent from entering into a financial settlement agreement with Complainant. Mr. Kimberlain’s erroneous belief that Complainant’s bond payout constituted a settlement in Complaint No. 2025-01296, which was paid prior to the filing of the underlying complaint, is neither a justification nor a valid excuse for Respondent’s inaction in this matter because it is unreasonable.

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 License No. 327719.

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. 327719, as issued to Respondent Retail Store Construction Inc., be suspended by the Registrar for eight (8) 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.

Done this day, June 24, 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]

Amy Frederick-Hall, Complainant

6244 S. Dean Rd.

Buckeye, AZ 85326

[email redacted]

Retail Store Construction Inc., Respondent

c/o Kyle Kimberlain, Agent

24200 N. Alma School Rd., Unit 28

Scottsdale, AZ 85255

[email redacted]

By: OAH Staff