Universal Homes v. Mitchell ( 2019 )


Menu:
  •                      NOTICE: NOT FOR OFFICIAL PUBLICATION.
    UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
    AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
    IN THE
    ARIZONA COURT OF APPEALS
    DIVISION ONE
    UNIVERSAL HOMES CONSTRUCTION LLC, Petitioner/Appellant,
    v.
    IVY LYNN MITCHELL, et al., Respondents/Appellees.
    No. 1 CA-CV 18-0501
    FILED 5-21-2019
    Appeal from the Superior Court in Maricopa County
    No. LC2017-000445-001
    The Honorable Patricia A. Starr, Judge
    AFFIRMED
    COUNSEL
    Righi Fitch Law Group, PLLC, Phoenix
    By Richard L. Righi, Marcus D. Tappe
    Counsel for Petitioner/Appellant
    Robert C. Kozak, PLLC, Prescott
    By Robert C. Kozak
    Co-Counsel for Respondent/Appellee Ivy Lynn Mitchell
    Suits Law Firm, PLC, Prescott
    By Douglas J. Suits
    Co-Counsel for Respondent/Appellee Ivy Lynn Mitchell
    Arizona Attorney General’s Office, Phoenix
    By John R. Tellier
    Counsel for Respondent/Appellee Arizona Registrar of Contractors
    MEMORANDUM DECISION
    Presiding Judge Lawrence F. Winthrop delivered the decision of the Court,
    in which Judge Kent E. Cattani and Judge Diane M. Johnsen joined.
    W I N T H R O P, Judge:
    ¶1            Universal Homes Construction, LLC (“Universal”) appeals
    the superior court’s decision affirming the order of the Arizona Registrar of
    Contractors (the “ROC”) finding that Universal violated statutory
    obligations when performing work for homeowner Ivy Lynn Mitchell and
    suspending Universal’s contractor’s license. For the following reasons, we
    affirm.
    FACTS AND PROCEDURAL HISTORY
    ¶2          In 2016, Mitchell moved from Alabama to Prescott Valley,
    Arizona. She contracted with Universal to build a home with ceramic tile
    floors.
    ¶3             In December 2016, Mitchell informed Universal of what she
    believed to be several issues with the tile installation. According to the
    Workmanship Standards for Licensed Contractors published by the ROC,
    the vertical displacement, or “lippage,” for ceramic tile must be 1/32 of an
    inch or less. Mitchell stated that more than twelve tiles contained lippage
    ranging from 1/8, 3/16, and 1/16 of an inch. She indicated that the uneven
    height of the tile created a serious hazard for her to trip and fall due to her
    ALS, or amyotrophic lateral sclerosis, and she asserted the only way to
    2
    UNIVERSAL HOMES v. MITCHELL, et al.
    Decision of the Court
    repair the flooring was to re-tile the entire home. In February 2017,
    Universal responded and agreed to replace the non-conforming tiles but
    refused to re-tile the entire home. Mitchell then filed a complaint with the
    ROC. In addition to the lippage, she identified several hollow and cracked
    tiles. Universal timely responded to the complaint and contested the
    allegations.
    ¶4            An inspection of the home occurred on March 28, 2017. The
    ROC inspector determined Universal failed to meet minimum
    workmanship standards in violation of Arizona Administrative Code
    (“A.A.C.”) R4-9-108 and Arizona Revised Statutes (“A.R.S.”) § 32-
    1154(A)(22) (2019).1 The ROC issued a directive (the “Directive”)
    mandating that Universal fix approximately thirty-five tiles with non-
    compliant lippage and replace several hollow or cracked tiles. The repairs
    had to be made on or before April 15, 2017. Because Mitchell was in the
    process of moving, she requested a ten-day extension on the repair
    deadline, and the ROC granted her request. Universal attempted to
    conduct repairs on April 12 and April 20, 2017, but Mitchell denied the
    workers access to the home because her furniture would need to be moved.
    The ROC agreed the repairs could be completed in May 2017. Universal
    thereafter provided written notice to the ROC that it had completed those
    repairs over a three-day period in May.
    ¶5            The ROC then sent notice to both Universal and Mitchell that
    a follow-up inspection to review the repairs would be conducted on June 2,
    2017. That inspection indicated that four tiles still failed to meet the lippage
    standard. The ROC issued a citation to Universal stating that it had violated
    the workmanship standard under A.A.C. R4-9-108—thereby violating
    A.R.S. § 32-1154(A)(3)—and the timeliness requirement for repairs under
    A.R.S. § 32-1154(A)(22). Universal requested Mitchell allow access to
    attempt further repairs, but Mitchell refused.
    ¶6           Universal contested the citation, and an administrative
    hearing was held in August 2017. The ALJ determined Universal violated
    A.A.C. R4-9-108 and § 32-1154(A)(3) but not § 32-1154(A)(22). The ALJ
    reasoned that because Mitchell repeatedly refused Universal access to her
    home, valid justification existed for Universal not completing the repairs.
    The ALJ also determined disciplinary action should not be taken against
    Universal and Mitchell’s complaint should be dismissed. Mitchell
    1      Absent material revision after the relevant dates, we cite the current
    version of the statutes and rules.
    3
    UNIVERSAL HOMES v. MITCHELL, et al.
    Decision of the Court
    requested review of the decision, and the ROC issued a final administrative
    decision (the “ROC Decision”) in September 2017. The ROC modified the
    ALJ’s decision by removing “conclusion of law #9” and substituting three
    new conclusions of law to reflect its decision that Universal violated A.R.S.
    § 32-1154(A)(22). The ROC also imposed a one-day suspension of
    Universal’s contractor’s license pursuant to A.R.S. § 32-1154(B).
    ¶7           Universal appealed to the superior court, and the superior
    court affirmed the ROC Decision. Universal timely appealed to this court,
    and we have jurisdiction pursuant to A.R.S. § 12-2101(B).2
    ANALYSIS
    I.     The ROC Decision is Supported by Substantial Evidence
    ¶8            In administrative proceedings, the decision of the agency
    director, not the ALJ, is the final administrative decision. J.L.F. v. Ariz.
    Health Care Cost Containment Sys., 
    208 Ariz. 159
    , 161, ¶ 12 (App. 2004). As
    the final decision maker in a contested agency proceeding, an agency,
    through its director, has the authority to make independent findings of fact
    and conclusions of law, and it is not bound by an ALJ’s findings. 
    Id. at 162,
    ¶ 12.
    ¶9            In reviewing a superior court judgment affirming an
    administrative action, we determine whether the agency’s decision is
    supported by substantial evidence, or whether it is instead arbitrary or
    capricious, or otherwise constitutes an abuse of the agency’s discretion.
    Sanderson Lincoln Mercury, Inc. v. Ford Motor Co., 
    205 Ariz. 202
    , 205, ¶ 8
    (App. 2003) (citing A.R.S. § 12-910(E)). If the agency’s decision is supported
    by substantial evidence, we will uphold the decision even if the record also
    supports a different conclusion. DeGroot v. Ariz. Racing Comm’n, 
    141 Ariz. 331
    , 336 (App. 1984).
    ¶10          An administrative agency’s determination will be set aside as
    arbitrary and capricious only if an appellate court determines “there has
    been unreason[ed] action, without consideration and in disregard for facts
    and circumstances.” Petras v. Ariz. State Liquor Bd., 
    129 Ariz. 449
    , 452 (App.
    1981). But “where there is room for two opinions, the action is not arbitrary
    2     Universal named the ROC as an appellee in this appeal as required
    by A.R.S. § 12-908. The ROC filed an answering brief identifying itself as
    only a nominal party for the appeal. See Int’l Bhd. of Elec. Workers, Local
    Union 640 v. Kayetan, 
    119 Ariz. 508
    , 510 (App. 1978) (“[T]he role of the
    agency-defendant in [appellate] court proceedings may be a passive one.”).
    4
    UNIVERSAL HOMES v. MITCHELL, et al.
    Decision of the Court
    or capricious if exercised honestly and upon due consideration, even
    though it may be believed that an erroneous conclusion has been reached.”
    
    Id. ¶11 Universal
    contends the ROC erred by modifying the ALJ’s
    conclusions of law. Specifically, Universal asserts: (1) it met the exception
    under A.R.S. § 32-1154(A)(22), so the agency’s determination of a violation
    was not supported by substantial evidence; (2) the modifications are
    arbitrary, capricious, and not supported by substantial evidence; and (3) the
    modifications are self-contradictory, making them unenforceable.
    A.      A.R.S. § 32-1154(A)(22) Violation
    ¶12           Section 32-1154(A) enumerates various acts and omissions
    that could subject a licensee to disciplinary action. Section 32-1154(A)(22)
    prohibits ROC licensees from failing to take “appropriate corrective action
    . . . without valid justification” in response to a written directive by the
    ROC. Universal asserts that Mitchell repeatedly refused its workers access
    to her home, and therefore a “valid justification” existed for its failure to
    make all the necessary repairs in a timely manner. The ALJ agreed with
    this argument, but on review, the ROC found the argument unpersuasive.
    ¶13            The ROC Decision explained that because of the access issues,
    the inspector extended the deadline for Universal to comply with the
    Directive. Once allowed access, however, Universal still failed to
    satisfactorily complete the corrective action directed by the ROC. Thus, the
    ROC determined Universal violated A.R.S. § 32-1154(A)(22).
    ¶14            On appeal, Universal does not cite to any authority to support
    its argument that it should have been given additional time to comply with
    the Directive after the ROC issued the citation following the June
    inspection. The record shows that Universal was given an adequate
    opportunity to correct its workmanship, but it failed to do so. Although
    Mitchell initially made access to her home difficult for Universal, the access
    issues were resolved when the ROC extended the deadline for compliance.
    Universal gave notice that it had completed the subject repairs within the
    time allowed by the ROC, and Universal did not request any additional
    time or opportunity to do any further work until after the ROC had issued
    its notice of violation.
    ¶15           Mitchell was not required to allow Universal additional time
    beyond the extension granted by the ROC to comply with the Directive.
    Indeed, as the ROC Decision later noted, “while the Registrar encourages
    parties to continue efforts to resolve a complaint’s underlying issues, there
    5
    UNIVERSAL HOMES v. MITCHELL, et al.
    Decision of the Court
    is no ongoing duty to grant access to the jobsite after the written directive’s
    deadline expires.”
    B.      The ROC Decision Was Not Arbitrary or Capricious
    ¶16           Universal asserts the ROC Decision disregarded all the
    evidence presented at the administrative hearing and imposed an extreme
    penalty as a result. However, Universal did not include a transcript of the
    hearing in the appeal record; accordingly, to the extent Universal’s
    argument turns on what occurred at the hearing, the missing transcript is
    presumed to support the ROC’s conclusion. See Myrick v. Maloney, 
    235 Ariz. 491
    , 495, ¶ 11 (App. 2014). Further, Universal acknowledges that it was
    given an initial opportunity to repair all the tiles, yet it failed to do so. As
    such, we conclude the ROC Decision was not “without consideration and
    in disregard for facts and circumstances.” 
    Petras, 129 Ariz. at 452
    .
    ¶17           Universal also argues the ROC Decision was arbitrary and
    capricious because, during the pendency of these proceedings, Mitchell
    contacted the inspector’s supervisor and Arizona State Senator Karen Fann
    to complain about the ROC inspector’s handling of her claim. Universal
    contends the ROC only reversed the ALJ’s decision to “appease” Mitchell
    and to encourage her to abandon these additional complaints. Beyond this
    bare assertion, however, Universal offers no evidence of any biased conduct
    by the ROC, and we will not reverse the decision based on an allegation
    alone. See ARCAP 13(a)(7).
    C.      The ROC Decision is Enforceable
    ¶18          Finally, Universal argues that the modifications made in the
    ROC Decision contradict the findings adopted by the ROC from the ALJ’s
    decision. Universal asserts the decision is unenforceable because it
    simultaneously stated that Universal did and did not violate § 32-
    1154(A)(22).
    ¶19           Under § 41-1092.08(B), an administrative agency may modify
    an ALJ’s written decision. In addition, § 32-1154(B) states the ROC may
    temporarily suspend a license if a licensee commits any of the prohibited
    acts identified in § 32-1154(A). Here, the ROC suspended Universal’s
    license for one day due to its failure to comply with not only
    § 32-1154(A)(22), but also A.A.C. R4-9-108 and § 32-1154(A)(3). Assuming
    without deciding that some of the modifications made by the ROC
    contradicted other findings adopted from the ALJ’s decision regarding § 32-
    1154(A)(22), the ROC nevertheless acted within its authority in suspending
    Universal’s license pursuant to § 32-1154(A)(3). Therefore, we conclude
    6
    UNIVERSAL HOMES v. MITCHELL, et al.
    Decision of the Court
    that the administrative decision is enforceable—any error made by the
    director in issuing the administrative decision was harmless, and we will
    not disturb the ROC’s ultimate determination. Creach v. Angulo, 
    186 Ariz. 548
    , 550 (App. 1996) (citation omitted) (“To justify the reversal of a case,
    there must not only be error, but the error must have been prejudicial to the
    substantial rights of the party. Furthermore, prejudice is not presumed but
    must appear from the record.”).
    II.    Costs on Appeal
    ¶20           Mitchell requests her costs incurred in this appeal. As the
    successful party, we award her costs pursuant to A.R.S. § 12-341 contingent
    on her compliance with ARCAP 21.
    CONCLUSION
    ¶21           For the foregoing reasons, we affirm the superior court’s
    order affirming the ROC Decision. Ritland v. Ariz. State Bd. of Med. Exam’rs,
    
    213 Ariz. 187
    , 192 (App. 2006) (explaining that if there is substantial
    evidence in the record to support both the ALJ’s finding and the
    administrative agency’s decision to overrule it, this court will uphold the
    decision of the agency).
    AMY M. WOOD • Clerk of the Court
    FILED: AA
    7