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Read: Arizona law allows contractors to lock in favorable hearing decision before ROC input

Thursday, June 13, 2024

Read: Arizona law allows contractors to lock in favorable hearing decision before ROC can modify/reject it

Content Courtesy of Electric Times

Alan M. Petrillo

Electric Times

An Arizona law that went into effect in September 2022 gives new protections to licensed contractors and other business and professional licensees in state agency licensing decisions.

Jamie Hanson, a partner at the construction and business litigation law firm of Lang Thal King & Hanson, said the amended A.R.S. squiggle 41-1092.08 gives a contractor 10 days to accept an administrative law judge's provision decision before the Registrar of Contractors (ROC) has a chance to modify it or reject it. If the administrative law judge's written decision is favorable, the contractor can accept it, making the decision final, which means the ROC cannot change it.

Hanson pointed out that the 10-day window applies "in any appealable agency action or contested case involving a licensing decision." The new provision applies to state agencies and their licensees in general, as well as the ROC and licensed contractors.

If the contractor does not accept the administrative law judge's decision, the ROC can still do what it has always been able to do: accept the decision, modify it, or even reject it, Hanson added. However, under the 2022 amendments, if the ROC intends to modify or reject the provisional decision, that is, by imposing a penalty or punishment, the ROC must first have a conference with the contractor.

If the ROC seeks to deviate from the administrative law judge's recommendation, the ROC runs the risk of an adverse attorney-fee award. Under amendments to A.R.S. squiggle 12-348(A)(2), that statute now provides, "A licensee that prevails in an appeal of an agency's final decision following a conference pursuant to section 41-1092.08 subsection I is entitled to recover reasonable attorney fees and costs incurred during all stages of the proceeding." Thus, a state agency that wants to change the administrative law judge's recommended decision must weigh that potential liability for its own attorney fees and those of the license holder.

Hanson said the new law is good news for contractors, because it gives them more control over the hearing process that affects their license.

Many contractors deal with homeowner complaints about workmanship, he pointed out, and an adverse decision can lead to suspension of the contractor's license. Under the amended A.R.S. squiggle 41-1092.08, a decision to suspend a contractor's license after a homeowner's workmanship complaint is a "licensing decision" that falls under the protection of the 2022 law.

If a contractor successfully defends its license at the administrative hearing, the administrative law judge's decision will recommend that the complaint be dismissed, with no discipline against the contractor's license. Thanks to the 2022 law, the contractor has the right to accept that favorable decision, without the risk of the ROC overturning it. Hanson added, "That was a real risk before the law was passed; if it disagreed with the administrative law judge's decision, the ROC would sometimes convert a dismissal into a suspension."

If the administrative law judge's decision recommends only a "slap on the wrist" decision (a one-day suspension, for example), the ROC cannot increase that discipline unless the ROC meets with the contractor in advance, Hanson said."If the ROC persists in increasing the discipline, then the ROC could be liable for attorney fees if that decision is ultimately overturned in Superior Court," he noted.

Apart from this development in the law being generally more favorable to contractors, it also helps contractors in any negotiations with homeowners during the complaint process, Hanson said.

"The new law is a healthy reminder that the homeowner is not in total control of the complaint process, and there are protections in place to preserve the contractor's right to hold a license," he said. "However, it is always wise for a contractor to talk with an attorney to strategize about what a case requires and how it is to be approached," Hanson added.