This post is a primer for the Arizona contractor (generals and specialty trades) discussing best practices / steps to take upon receiving a complaint from the Arizona Registrar of Contractors. At the end of this article, you should understand (1) what an ROC complaint is; (2) the process you can expect to go through with the ROC; and (3) steps a contractor needs to take to ensure a fair adjudication if the matter cannot be resolved without a “trial.”
(1) What is an Registrar of Contractors “Complaint”
Arizona law requires that any person engaging in any work or operation for which the aggregate price is $1,000 or more (including labor, materials, and all other items – except for expensive electrical fixtures or appliances that are unaltered from the manufacturer and which can be plugged into a common electrical outlet), or any project or work that requires a building permit, relates to fire safety, mechanical, electrical or plumbing work done in connection with fire safety installation, maintenance or repair, or which involves connection to natural gas, propane, petroleum or other gaseous fuel, or where the work is done by the owner of the property in certain circumstance, be licensed by the Arizona Registrar of Contractors (a “licensee”).
Licensees are subject to discipline for any of reasons set forth in A.R.S. 32-1154. The disciplinary process can be commenced by either a property owner, occupant, or a subcontractor. Owners usually complain about workmanship, abandonment, price gouging, etc.; while subcontractors typically complaint over lack of payment.
This article focuses on what to do when an Owner files a complaint against a contractor. Subcontractor payment claims will be discussed in a different article.
NOTE: An ROC complaint is not the same as a lawsuit and the ROC is not able to grant the same relief as a court might. It is possible for there to be different outcomes before the ROC and a civil court regarding the same construction work/claims.
(2) The ROC Complaint Process
The ROC Complaint process is fairly straight forward – although, probably not intuitive. In the Owner vs. Contractor context, the complaint process is started when the Owner (“Complianant”) files a complaint against the Contractor using the ROC complaint form. The form can now be filed online by going to the Arizona Registrar of Contractors Website.
Once a complaint is filed, the ROC opens a file and provides notice to the Contractor (the “Respondent”) and sets an initial site meeting. The Complainant is required to be present during the inspection; the Respondent should also attend the meeting but it is not required; i.e. the ROC will dismiss a complaint if the Complainant does not attend the meeting but will continue investigating the complaint regardless of whether the Contractor is present. Pro-tip: Be Present.
At the meeting, the ROC Investigator will speak to the parties, review the various areas of concern, and usually tell the Parties which direction the Inspector is leaning on each of the claims. Sometimes, the Inspector may be “sure” of how she will deal with certain claims but “undecided” on other claims. In that situation, the ROC inspector may not tell anyone anything during the meeting and wait to issue a determination after the fact.
Either way, the Inspector will ultimately issue either a corrective work order or notice dismissing the claim. The corrective work order will indicate, generically, what claims warrant repairs and place a deadline on such repairs. It the Contractor’s responsibility to either ensure the corrective work is performed by the deadline or that the deadline is moved.
Assuming the corrective work order is either not completed timely, or if the Owner is not satisfied notwithstanding the work performed pursuant to the corrective work order, the ROC will issue a “Citation” which sends the matter to “legal.” Legal will send the file to the Arizona Office of Administrative Hearings which will appoint a judge to hold a hearing on the remaining contested issues. Once a citation is issued, the ROC will provide a copy of the entire investigation file to all parties.
The parties are given an opportunity to engage in mediation facilitated through the ROC while the hearing is pending. If the parties do not resolve the complaint, a hearing is held where the Complainant attempts to establish some basis to discipline the Contractor while Respondent attempts to exculpate itself and avoid discipline.
After the hearing, the judge makes a recommendation to the ROC which the ROC can either accept, modify or reject and provide notice to the Parties of its chosen course of action. Once the decision is rendered, either party may seek reconsideration or appeal; both of which are beyond the scope of this article.
(3) 5 Steps to Ensure a Fair Adjudication at the ROC Hearing
1. Initial Documentation Round Up
The first thing a Contractor should do upon receiving an ROC complaint is to make sure that your entire project file is in one place, easily accessible, and in a format that will be easily transferred electronically.
A construction project necessarily produces lots of paper, not to mention non-paper based communications. (I’m a lawyer – I like long form communications. I email but I don’t typically text because doing so makes for difficult record keeping. Unfortunately, most contractors text like crazy thinking – it’s in writing, I’ll always be able to “go back to my texts”, etc. I’m here to tell you, texting is a bad form of communication because it is logistically challenging to change text messages into images or PDFs stored on a computer. Invariably, some of the texts (usually the best ones for your position) will be lost and most cell phone carriers do not keep texts more than 1 year, making it difficult to “get text messages back” if you need them.)
If you have not kept a pristine file before receiving the ROC, now is the time to get your file in order. A proper construction file should have, at least, the following info/documents: construction contract with any change orders or other addendums; operative plans and specifications in digital (PDF) format; photos of the work in progress and complete; copies of all payments received; project tracking spreadsheet; documentation of any amounts paid related to the project; operative subcontracts and subcontractor insurance information; permits; copies of all payments made to subcontractors/vendors; lien releases for the project; AND ALL CORRESPONDENCE WITH THE OWNER/CUSTOMER whether via email, text message, letter, snapchat, etc.
It will take time to prepare this file – possibly a few hours – but it will be worth it in the long run because doing so will help you be organized to keep lawyer costs and minimize the impact of the ROC complaint on your business.
2. Consult with an Attorney
Once you have your file properly documented, contact your construction lawyer. Ideally for the Contractor, this should be done prior to the first site inspection. A competent AZ construction lawyer will be able to identify which of the claims should be of concern, identify and strategize regarding any personality issues that might come into play during the pending matter, provide recommendations or gut checks about how to proceed and whether to make repairs prior or settlement offers, etc.
It is best to have a construction attorney on retainer. Having an attorney you can call with questions is a better strategy than waiting until there is a problem and having to “find” a lawyer. Having an attorney on retainer allows the Contractor to communicate with the attorney in real time when issues arise and while fixing them still might be the most cost effective way of dealing with a given scenario. Although I make more money when you wait to call me, I am more effective when called me earlier and more often.
3. Record Interactions During the Inspections
Use your cell phone or personal recording device to record the entirety of any site inspections, phone calls, etc. You may feel weird about this but you should not for several reasons.
First, Arizona is a one-party consent state. In some states, it’s illegal to record someone without their consent. In Arizona, if you’re a party to the conversation, you’re allowed to record it. Second, the ROC Inspector is likely to record the meeting for his own records.
Having a copy of the discussions is helpful because Contractors are typically thinking about many different things during a site inspection: what are we looking at, is there incorrect work, what would it take to fix it, is this someone else’s fault, etc.
4. Document Efforts to Schedule Corrective Work
Lack of access or inability (or excusable challenges) to schedule corrective work is a defense at the disciplinary hearing. The problem is, at the hearing the Owner is going to be alleging you did not try to schedule anything, or waited to long, etc. Documentation in the form of emails (or text messages saved to your file) showing your efforts to coordinate repairs with the Owner and the Subcontractors is the best way to demonstrate an attempt to comply with the corrective work order.
5. Document Before / After of any Corrective Work
Take before and after (and during) photos of the corrective work. Not only will the photos be admissible at a hearing, knowing you will take photos of the before and after ensures that you will do the work well. Also, where there are multi-step repairs, documenting “during” the repairs, showing each component being applied/installed, helps to establish your credibility as a contractor. It also removes any doubt from the judge’s mind should the owner attempt to say the Contractor didn’t complete its work.