Gomez Pools v. Arizona Registrar

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

GOMEZ POOLS & SERVICE LLC,
Plaintiff/Appellant,

v.

ARIZONA REGISTRAR OF CONTRACTORS,
Defendant/Appellee.

No. 1 CA-CV 22-0241
FILED 12-15-2022

Appeal from the Superior Court in Maricopa County
No. LC2021-000195-001
The Honorable Daniel J. Kiley, Judge

AFFIRMED

COUNSEL

Wheeler Law Group, PLLC, Tempe
By Julianne C. Wheeler
Counsel for Plaintiff/Appellant

Arizona Attorney General’s Office, Phoenix
By Justin Larson
Counsel for Defendant/Appellee
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MEMORANDUM DECISION

Presiding Judge Samuel A. Thumma delivered the decision of the Court, in
which Judge Cynthia J. Bailey and Vice Chief Judge David B. Gass joined.

T H U M M A, Judge:

¶1 Gomez Pools & Service, LLC (GPS) appeals from the superior
court’s ruling reversing, vacating and remanding for further proceedings
an Arizona Registrar of Contractor’s (ROC) decision revoking GPS’
contractor’s license. GPS also challenges the court’s denial of its request for
attorneys’ fees. Because GPS has shown no error, the rulings are affirmed.

FACTS AND PROCEDURAL HISTORY

¶2 GPS is an ROC-licensed swimming pool contractor. In
October 2019, GPS signed a contract to build a swimming pool at a
recreational vehicle park in Tacna, Arizona, owned by Copper Mountain
R.V. Park, LLC. The one-page form contract GPS supplied required Copper
Mountain to make $73,000 in progress payments. In October 2020, the pool
was not finished, and Copper Mountain filed a complaint with the ROC
alleging GPS committed fraud and abandoned the project. The parties later
reached an Interim Settlement Agreement with a December 2020
completion date, but the pool was still unfinished on that date.

¶3 After an inspection, the ROC issued a written directive
requiring GPS to complete the project by early January 2021. When GPS
failed to do so, the ROC issued a Citation against GPS’ license. GPS
requested a hearing, which was held by an Office of Administrative
Hearings Administrative Law Judge (ALJ).

¶4 After receiving evidence and argument, the ALJ issued an
eight-page decision, recommending that the ROC revoke GPS’ license. The
ALJ recommended revocation as “the appropriate sanction” based on four
findings:

[1 GPS’] failure to accept responsibility for its
actions, [2] its failure to comply with the Interim
Settlement Agreement, [3] that [GPS] made false
statements to [Copper Mountain] during the
time project was under way, and [4] that after

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almost a year and a half, the project had not
been completed.

The ROC accepted the recommended decision as written and denied GPS’
motion for rehearing.

¶5 GPS appealed to the superior court, also seeking an award of
attorneys’ fees and costs under Arizona Revised Statutes (A.R.S.) sections
12-348 and 12-341.01. GPS and Copper Mountain then settled their dispute.
GPS filed a stipulation and notice, alerting the court of the settlement and
that Copper Mountain had withdrawn its complaint with the ROC. Stating
Copper Mountain “has no objection” to the reversal of the ROC decision,
the notice added GPS and Copper Mountain “recognize [] the ROC has
standing to pursue defense of the appeal.” GPS, however, did not seek
dismissal of its appeal.

¶6 GPS’ opening brief in the superior court, filed months later,
acknowledged that the ROC had “active party status” and argued the
merits of GPS’ appeal. GPS’ opening brief did not ask that its appeal be
withdrawn or dismissed. Nor did it request an award of attorneys’ fees. The
ROC’s response asked the court to uphold the ROC’s decision.

¶7 After oral argument, the superior court reversed and vacated
the ROC’s decision and remanded to the ROC for further proceedings. In
doing so, the court noted two issues. First, the court expressed concern that
the ALJ may have required corroboration by a GPS witness, but not an ROC
witness. Second, the court rejected the decision’s reliance on GPS’ “failure
to comply with the Interim Settlement Agreement,” stating that doing so
was an “error of law” because deciding the consequences for a contract
breach “is a judicial, not an administrative, function.” Accordingly, the
court found, a breach of the Interim Settlement Agreement was not a proper
basis for revoking GPS’ license.

¶8 Because the record was unclear as to whether the revocation
decision would have been the same without relying on GPS’ breach of the
Interim Settlement Agreement, the court reversed and vacated the decision
and remanded to the ROC for “further appropriate proceedings.” The court
also found GPS waived its request for attorneys’ fees and costs by failing to
request them in its opening brief. The court entered the ruling as a final
judgment. See Ariz. R. Civ. P. 54(c).

¶9 GPS moved to reconsider, arguing for the first time that “no
further proceedings [were] appropriate because” Copper Mountain
“withdrew the Complaint,” and challenging the waiver finding on fees. In

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opposition, the ROC argued it had taken an active role in the litigation as
authorized under A.R.S. § 32-1154(B)(1) and remand was appropriate.
Before the superior court ruled on the motion to reconsider, GPS filed a
timely notice of appeal. Because the notice of appeal divested the superior
court of jurisdiction, it noted but did not rule on the motion to reconsider.
See Aqua Mgmt., Inc. v. Abdeen, 224 Ariz. 91, 93 ¶ 7 n.3 (App. 2010). This
court has jurisdiction over GPS’ appeal under Article 6, Section 9, of the
Arizona Constitution; A.R.S. §§ 12-913, -120.21(A)(1) and -2101(A)(1) and
JRAD Rule 13.

DISCUSSION

¶10 GPS argues the superior court erred by (1) remanding the case
because Copper Mountain withdrew its complaint and (2) finding that GPS
waived its request for attorneys’ fees and costs.

I. The Superior Court Properly Remanded the Case to the ROC for
Further Proceedings.

¶11 Whether remand is appropriate is an issue of law this court
reviews de novo. Hafner v. Beck, 185 Ariz. 389, 391 (App. 1995). The
Legislature defines the scope of the ROC’s authority. See Roberts v. State, 512
P.3d 1007, 1017 ¶ 36 (2022). Stated generally, the Legislature authorized the
ROC to regulate and discipline contractor licenses. See A.R.S. § 32-1100 et
seq. Among other things, the ROC can investigate a contractor’s actions
upon receiving a private complaint or on its own. See A.R.S. § 32-1154(B).
“[A]lthough a private complainant may prompt the Registrar’s initial
investigation, the Registrar chooses whether and to what extent to pursue
its administrative proceeding, pursuant to A.R.S. § 32–1155.” Mission
Hardwood Co., Inc. v. Registrar of Contractors of State of Ariz., 149 Ariz. 12, 16
(App. 1986). The ROC’s investigation of, and discipline against, a
contractor’s license is separate and independent of the complainant’s rights
to press court proceedings. See Bentivegna v. Powers Steel & Wire Products,
Inc., 206 Ariz. 581, 585 ¶14 (App. 2003).

¶12 Both in the stipulation and notice filed in the superior court,
and in its opening brief with that court, GPS recognized the ROC has
standing to pursue the matter. That tracks Mission Hardwood, which
recognized the ROC can “adopt[] the role of an advocate in the appeal to
the superior court.” 149 Ariz. at 16. GPS now argues Mission Hardwood does
not apply because the complainant in that case had not withdrawn its
complaint.

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¶13 As confirmed in Bentivegna, however, Mission Hardwood
recognized the ROC “chooses whether and to what extent to pursue its
administrative proceeding.” 206 Ariz. at 585 ¶ 14. More specifically, Mission
Hardwood recognized the ROC is a party to the action given its
responsibility to protect the public, no matter if the complainant persists in,
or withdraws, its allegations. See id. at 585–86 ¶¶ 15–16. The ROC’s power
and focus is directed at “‘suspending or revoking a contractor’s license, or
attaching conditions to the license,’” not awarding money damages. Id. at
585 ¶ 15 (quoting J.W. Hancock Enter’s, Inc. v. Ariz. State Registrar of
Contractors, 142 Ariz. 400, 406 (App. 1984)). Thus, a contractor’s resolution
of a claim with a customer does not preclude the ROC’s power to pursue
discipline against the contractor’s license.

¶14 Nor is the ROC’s authority and discretion to pursue discipline
against a contractor’s license limited to administrative proceedings, as GPS
suggests. GPS argues that, by appealing the ROC decision to the superior
court, the ROC is somehow divested of its authority to pursue discipline
against GPS’ license when the complainant (here, Copper Mountain)
withdraws its complaint. GPS cites no authority supporting that position.
GPS’ approach would allow a contractor to evade ROC discipline against
its license by appealing an ROC decision to a superior court and then
settling with its customer. Such an approach would negate the Legislature’s
directive that the ROC “protect the public health, safety and welfare by
licensing, bonding and regulating contractors engaged in residential
construction.” 1994 Ariz. Sess. Laws, ch. 7, § 3 (2d Reg. Sess.). Such an
approach also would contradict longstanding directives on interpreting
statutes. Lake Havasu City v. Mohave Cnty., 138 Ariz. 552, 557 (App. 1983)
(“Statutes must be given a sensible construction which will avoid absurd
results.”) (citing School District No. 3 of Maricopa Cnty. v. Dailey, 106 Ariz.
124 (1970)). Thus, this court rejects GPS’ argument that the ROC lacks any
authority to defend its disciplinary decisions in a superior court proceeding
after the complainant resolves its dispute with a licensed contractor.

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¶15 To the extent that GPS argues the superior court erred in
remanding the case because there was no action remaining by the ROC,
GPS misconstrues the superior court’s ruling. Along with questioning
whether corroboration properly was required, the superior court found that
one of the four reasons cited for license revocation was improper. Nowhere
did the court determine that no discipline was proper, or that revocation
could not be imposed. Instead, after setting aside the ROC’s decision given
an error of law in considering the Interim Settlement Agreement, the court
remanded for the ROC to determine the proper discipline absent that
improper reason. See City of Tucson v. Mills, 114 Ariz. 107, 110 (App. 1976)
(“Where the administrative body has made invalid or inadequate findings
. . . , the court granting judicial review can and should remand the case to
the administrative body ‘for further proceedings to the end that valid and
essential findings may be made.’”) (citation omitted).

¶16 GPS argues, without supporting authority, that only the ROC
can grant a rehearing and “[if it] is found to have acted arbitrarily and
capriciously, its decision is reversed, and the matter concluded.” This
argument contradicts Arizona law. See A.R.S. § 12-910(F) (“After reviewing
the administrative record . . . , the court may affirm, reverse, modify or
vacate and remand the agency action.”) (emphasis added); Comm. for Justice
& Fairness v. Ariz. Sec’y of State’s Off., 235 Ariz. 347, 351 ¶ 15 (App. 2014)
(quoting statutory predecessor). Nor do the cases GPS cites from other
jurisdictions prove the contrary. GPS has not shown that the superior court
erred by remanding the matter for the ROC to consider the appropriate
discipline, without considering GPS’ breach of the Interim Settlement
Agreement, even though Copper Mountain had withdrawn its complaint.

II. On This Record, GPS Is Not Eligible for an Award of Attorneys’
Fees and Other Expenses Under A.R.S. § 12-348(A).

¶17 GPS argues the superior court erred by finding it had waived
its request for attorneys’ fees and costs. By statute, a party “that prevails by
an adjudication on the merits” in “[a] court proceeding to review a state
agency decision . . . is entitled to recover reasonable attorney fees and
costs.” A.R.S. § 12-348(A)(2). GPS has yet to prevail “by an adjudication on
the merits.” Scottsdale Healthcare, Inc. v. Ariz. Health Care Cost Containment
Sys. Admin., 206 Ariz. 1, 8–9 ¶ 29 (2003). Thus, notwithstanding any waiver,
GPS is not eligible for an award of attorneys’ fees and costs under A.R.S. §
12-348(A).

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CONCLUSION

¶18 The judgment is affirmed.

AMY M. WOOD • Clerk of the Court
FILED: AA

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