ALJDEC

00F-0818-ROC · Registrar of Contractors · 2000-05-01

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 11, 2000 APPEARANCES: Complainants Michael and Sharon appeared, represented by R. Chip Larsen, Esq. Donald Carl Mendrala appeared on his own behalf.

ADMINISTRATIVE LAW JUDGE: Kay A. Abramsohn _____________________________________________________________________ The hearing in this above captioned matter was held for the purpose of determining whether Respondent was in violation of statute as alleged by the Complainant and as Cited by the Registrar of Contractors (Registrar). Evidence and testimony were presented, and based upon review of the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT 1. Respondent was the tile contractor for flooring, kitchen and baths at Complainants’ new residence being built in Cave Creek, Arizona. Respondent is the holder of a Class C-48 license issued by the Registrar.

2. The estimate and accompanying written contract called for Respondent to supply four thousand square feet of 12” by 12” Autumn Slate at $2.00 square foot (negotiated down from original bid at $2.60), and to install the tile in the Complainants’ home, including 3 showers, and kitchen and counters. The negotiated changed figures on the estimate are all initialed by Complainants. The contract was to include mud set walls, shower floors and kitchen counters (with bullnose edges). The initial contract did not include sealing of the grout or stone; this was the subject of a “change order” (dated December 8, 1998) in the amount of $1,000.00. The total contract amount, after Complainants’ negotiation to a lower cost per square foot, was $16,200.00. The contract, after negotiation for progress payments called for $2,000.00 to start, with $4,900.00 at half completion and the remainder at completion. No start date or completion date is set forth in the contract. 3. Complainants’ original complaint in this matter stated that the project time was to have been 21 to 28 days with two full crews. However, at the hearing, Complainants testified that, pursuant to his discussions with Respondent, the project was to take five to six weeks. 4. The tile work started on May 21, 1999, but was not completed before Respondent left the job in August 1999. Respondent brought in Sunset Tile to complete the job; however, Sunset Tile also left the job without completing it. 5. During the job, the parties re-negotiated the progress payments. Complainants’ time line[1] indicates that Complainants verbally agreed to make payments weekly on Fridays, and that “mortgage payments” would be deducted from the final contract price. Complainants’ evidence shows that $15,500.00 was paid to Respondent from May 13, 1999 to July 23, 1999, and that $1,000.00 was paid to Sunset Tile in either late August or early September 1999. The payments to Respondent and its subcontractor total $16,500.00. 6. On September 4, 1999, Complainants sent a termination letter[2] to Respondent. This letter recites the unfinished items and locations. 7. Evidence showed, and Respondent agreed, that the job was not complete when Respondent and Sunset Tile left the job. 8. Respondent sent Complainants an invoice[3] for the job detailing additional items for the job. These additional items include 1200 square foot of materials, and labor. The labor was stated to be for floor preparation; for corrections of floor, steps and patio; for counter-back build up and electrical wire/box movement; for cutting 16” by 16” material to 4” by 4”; and for installation of materials at certain specified areas. There was also a charge listed for installation of glass block; however, Respondent conceded the glass block was not part of this contract. There was also a $4,500.00 charge listed for nine days of “down time due to inadequate or no payments”. The additional charges invoiced by Respondent total $12,729.02 with tax. 9. On September 13, 1999, Complainants filed a formal complaint with the Registrar against Respondent, and included a four page letter containing many allegations, the contract, the canceled checks, and invoices from purchases. 10. As a result of receiving the complaint, the Registrar’s Inspector scheduled a site inspection. Complainants then requested that the inspection be canceled, as the work had been completed and the non- completion by Respondent would not be able to be inspected. The case was subsequently referred for an administrative hearing. 11. On December 22, 1999, the Registrar issued its Citation and Complaint against Respondent alleging violations of Arizona Revised Statutes (A.R.S.) §§32-1154.A.1, 32-1154.A.7, and 32-1154.A.3, specifying Arizona Administrative Code (A.A.C.) R4-9-108. 12. On January 5, 2000, Respondent filed his six page written answer with the Registrar. Overall, Respondent disagrees with the allegations in the filed complaint, telling his version of the situations, and explains his financial situation at the time. 13. At the time that Respondent left the job, there were incomplete areas, such as: where the tile was not set/installed, where the tile was installed but not grouted, and where the tile was not yet cut to fit at the edges or corners. Complainants testified that approximately 3400 of the estimated 4000 square foot of tile was installed. Complainants agreed that additional stone was purchased during the job, testifying it was purchased due to breakage and loss of about twenty percent. 14. Complainants brought in some labor and other contractors, and the work was completed. In Hearing Exhibit 9, Complainants detail the cost to complete the job. They detail labor costs to be charged against the contract amount for work of their son, and labor costs for additional laborers, for Eddie Canty, for Jaun R., for Jon Moffett Tile and for Echo Tile; the total labor cost amounting to $3,426.00. Complainants detail the materials they purchased during, and to complete, the job for costs of $689.83. Complainants provided two estimates (from March 2000) for cleaning and sealing the tile and grout; Complainants detail cleaning and sealing the floors for $3,350.00, but indicate an allowance of $1,000.00 for the original “bid”. Complainants detail two months of mortgage payments at $2,662.32. Calculating in a $300.00 overpayment, Complainants testified that the completion of the floor, with all the detailed costs, cost them $9,428.15. Complainants ask for this amount to be awarded to them from the contractor’s recovery fund. 15. Complainants’ testimony was very specific on some items and conversations they recalled. However, as to other conversations which Respondent recalled and questioned, Complainants did not recall such conversations. Complainants testified that they had not signed the estimate, but agreed a signature was on the contract. Complainants testified that they had made a verbal agreement to make weekly progress payments, but had not agreed to pay $2,000 per week to help Respondent out with financial difficulties. Complainants testified that Respondent had agreed to install the tile in a barn tack room for free as a part of the contract. Complainants testified that their son worked on the job, essentially working for Respondent, because Respondent did not have sufficient men on the job, and that the son’s wages were to be deducted from the contract amount. Complainants testified that Respondent had agreed to deduct two of their mortgage payments because the job was taking so long. 16. Complainants testified that they had not participated in a walk through for a change order with Sunset Tile. Complainants conceded that there was a $5,400 change order, but argued that they had not agreed to pay the additional dollars. Complainants argued that they completed the job themselves, trying to mitigate the expenses and damages by doing most of the work themselves. 17. Respondent presented little testimony. Respondent testified that he had told Complainants that the project was going to take at least two months to complete because of the poor slab, installed by an unlicensed person. Respondent testified that the weekly payment arrangements had not been made to benefit him, and referred to his Answer. Respondent’s Answer to the Registrar’s Citation and Complaint, states that the payment changes, and the Complainants’ having purchased materials for the job so that Respondent could keep working, were done in that way to accommodate Complainants’ non- receipt of banks draws from which to pay Respondent, and that the entire house project was over budget. Respondent testified that there were design changes in the job as it progressed, and that there was a written $5,400.00 change order which he had submitted to Complainants, which was never signed and/or returned to him. Respondent testified that additional material purchased was for additional square footage on the rear patio and in the garage, but also alluded to a “loss” need in testifying about his September invoice to Complainants. Respondent testified that he pulled off the job because he needed to have payment of half of the remaining dollars (from that change order), and that Complainants only came up with $1,000.00. Respondent testified that there were only two or three days of work left when he pulled off the job. 18. Respondent presented testimony from Sunset Tile: that it had come onto the job, that it had a walk through with Mr. Complainant and Respondent of the work remaining to be done, and that it knew of a $5,400 balance for the completion of the job, but did not know whether it was from a change order. Sunset Tile also testified that it pulled off the job after being paid only $1,000 by the Complainants. 19. The parties have divergent recollections of the circumstances which were occurring during this project. While Complainants do not disagree there were changes ongoing during the installation, they disagree that there was an agreement to pay any extra monies. However, they continued to purchase supplies and materials during the project for Respondent to use while Respondent was on the job. See Hearing Exhibit 9, page 1 for the materials purchased before September 1999. 20. The various tile materials used and the variant sizes lead one to believe that there were other suppliers and purchases of stone tile materials for this residence. The contract called for 12” by 12” slate. However, it is clear that a different size and type of stone tile was used in some areas: the master shower had 6” by 12” tile, the shower floors had 4” by 4” tile, the den shower had marble tile, the guest bath was marble counter top, there was mention of 16” by 16” travertine, and there was base or counter or window edging tile. The contract does not mention installation of tile on bath counters or any exterior tile, but does mention that installation of tile above 4000 square feet will be done [“set”] at $2.00 a square foot. Complainants argued that they should not have to pay for additional tile needed because Respondent had had the opportunity to, but did not, make a good estimate on the amount of tile needed. Complainants’ Hearing Exhibit 11 presents the floor square footage for the interior, but Respondent testified that the interior floor square footage number does not include the rear patio and garage footage and it is unclear how the coverage of kitchen counters and bath counters figures in.

21. The recent cleaning and sealing of the interior floor is a different expense than was anticipated under the contract. There is no breakout on the estimates (for cleaning and sealing) as to the cost for either portion. 22. There is no proof that Respondent agreed to deduct two mortgage payments. There was no contract for cleaning the floor, only sealing. Taking into account the items which would have been included in the contract [the $300.00 overpayment, the son’s labor, the labor to finish the installation, the materials purchased for the job before and after the pull off, and the $1,000.00 sealing bid], the Complainants’ cost to complete the job was $5,415.83. There is no proof that Complainants agreed to the $5,400.00 change order; however, it is evident that approximately $5,400.00 of work remained on the job. 23. Using Respondent’s figures, and presuming that the September 7, 1999 invoice contains items which Respondent had included on his $5,400.00 change order, the additional work Respondent and Sunset Tile had done, or were going to do, can be figured by removing certain items. Respondent testified that most of the items on his invoice were either done by him or by Sunset Tile. Remove the trips for the glass block, as that was not part of this tile contract. Remove the labor to correct the out-of square stone, the out-of-square steps and the slope on the rear patio, as it can be argued that these corrections might be required of a person who “accepted” the surface on which he was working. Remove the inexplicable amount for “down time”. This leaves costs of $6,458.00 to Respondent. The $5,400.00 change order submitted to Complainants was below Respondent’s costs. APPLICABLE LAW A.R.S. §32-1154.A. provides that a holder of a license or a person listed on a license shall not commit the following: … 1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal. 3. Violation of any rule adopted by the Registrar; specifically Arizona Administrative Code (A.A.C.) R4-9-108[4]. … 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. … CONCLUSIONS OF LAW 1. Credible evidence showed that Respondent did not complete the job. However, credible evidence also established that additional materials and labor were necessary for this job, and that the parties failed to work through the submitted $5,400.00 change order for that additional necessary work. The submission of a change order with the additional costs for a job cannot be said to be an “effort to leverage Complainants for additional” dollars, as Complainants had argued. Clearly, there were additional costs due both to design changes and to problems that had not been anticipated or planned for. Additionally, credible evidence further established that the cost for Complainants to complete the contract on their own was $5,415.83. The parties had worked through other rough spots in the estimate and the job with negotiation. It is unclear what happened to impede the parties in August 1999 from their prior pattern of negotiation and agreement. The evidence and testimony at the hearing established no violation, by Respondent, of A.R.S. §§32-1154.A.1. 2. There was insufficient evidence of any wrongful or fraudulent act by Respondent in this matter. There was insufficient evidence of violation by Respondent of workmanship standards. 3. Determinations of the appropriateness or legality of liens is not within the purview of the Registrar. 4. Complainants’ request for reimbursement from the Contractor’s recovery fund is not an appropriate determination to be made as a result of a disciplinary hearing. RECOMMENDED ORDER In view of the foregoing, based on finding no violations, it is recommended that this Citation No. 00-0818, together with the Complaint on which it is based, be dismissed and the case be closed. RECOMMENDED this day, May 2, 2000.

______________________________________ Kay A. Abramsohn Administrative Law Judge

Copy transmitted by mail this _____ day of May, 2000 to:

Registrar of Contractors Mr. Michael P. Goldwater ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________ ----------------------- [1] Hearing Exhibit 3 [2] Hearing Exhibit 5 [3] Hearing Exhibit 14 [4] A.A.C. R4-9-108 provides that all work shall be done in a workmanlike manner which is described to be in compliance with local building codes of express application to the types of work done and complained of.

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 PH(602) 542-9826/ FAX 542-9827