ALJDEC

00F-2236-ROC · Registrar of Contractors · 2000-10-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 13, 2000 APPEARANCES: Chris Cataldo appeared on behalf of Monument Homes. Oscar Trevino appeared on behalf of Pueblo Viejo Wallboard Systems, Inc. ADMINISTRATIVE LAW JUDGE: Daniel G. Martin _____________________________________________________________________ The issue presented by this consolidated matter is whether Monument Homes and/or Pueblo Viejo Wallboard Systems, Inc. is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: FINDINGS OF FACT H A Developers Monument Homes, doing business as Monument Homes (“Monument”) is the holder of a Class B license (No. 104570) issued by the Registrar of Contractors (“ROC”). Chris Cataldo is Monument’s owner and qualifying party. Pueblo Viejo Wallboard Systems, Inc. (“Pueblo Viejo”) is the holder of a Class K-10 license (No. 145351) issued by the ROC. Oscar Trevino is Pueblo Viejo’s owner and qualifying party. In the Fall of 1999, Pueblo Viejo entered into two contracts with Monument to perform drywall work at two custom residences under construction by Monument. The first residence is hereinafter referred to as the “Schler Residence.” The second residence is hereinafter referred to as the “Isaac Residence.” The agreed upon price for Pueblo Viejo’s work at the Schler Residence was $11,000.00. The agreed upon price for Pueblo Viejo’s work at the Isaac Residence was $12,000.00. Both contract prices included labor and material costs. The parties entered into a joint check agreement for materials. Thus, in practice, Monument advanced all funds for materials used in the two projects. Monument’s Complaint Against Pueblo Viejo On February 22, 2000, Monument filed a complaint against Pueblo Viejo with the ROC arising out of Pueblo Viejo’s work at the Schler Residence. Monument alleged “poor quality workmanship, failure to correct mistakes, incomplete work, did not clean-up or remove all debris.” [1] On March 15, 2000, ROC Inspector Joseph Cotten conducted a jobsite inspection at the Schler Residence. During that inspection, Inspector Cotten noted numerous deficiencies in Pueblo Viejo’s workmanship. On March 17, 2000, Inspector Cotten issued a Corrective Work Order (“CWO”) under which Pueblo Viejo was given 15 days to correct the following deficiencies (numbering corresponds to numbering on CWO): 1. [No action required by Contractor] 2. Chamfer cornerbead unsanded in numerous locations throughout home. Most prevalent at bottom 6” of wall. 3. Chamfer corner at master bath vanity not parallel. 4. Void in drywall mud, lower left corner just outside of master bedroom entry. 5. At 45-degree corner in master closet, drywall mud not sanded smooth at ceiling. 6. Drywall mud on window frame, opposite master bath vanity. 7. Transition at glass block entry wall, unsanded above 8 feet over finished floor. 8. Seams in ceiling in living room: Minor void where marked with tape. 9. 45-degree corner bead at bar: Loose at top, not straight at bottom. 10. Round coffered ceiling, left of bar: Edges rough, wavy, not finish sanded. 11. Unsightly void at transition of soffit to window above arcadia door, opposite the bar. 12.A [No action required by Contractor] 12.B Chamfer bead at soffit in living room, bulges in at least two places. 13. Areas around fire sprinkler heads, poorly sanded. 14. Office closet, inside jamb on strike side: Rough drywall mud. 15. Several areas at bottom of wall unsanded. 16. Upstairs guest bath, chamfer bead above vanity lifting away from drywall. 17. Kitchen pantry, inside jamb: Rough drywall mud. 18. Garage entry door to stairwell, chamfer bead unfinished. 19. Garage service door to backyard transition poor. 20. Garage ceiling rough in several areas. 21. Screw pop in ceiling of garage. 22. Corner in ceiling over stairs to lowest level, poorly sanded. At the hearing, Inspector Cotten credibly testified that in his opinion, each of the deficiencies identified in the CWO as requiring correction were items that failed to meet applicable ROC workmanship standards. Pueblo Viejo failed to present any credible evidence refuting or tending to refute Inspector Cotten’s testimony regarding the quality of Pueblo Viejo’s workmanship. Consequently, the Administrative Law Judge finds, on the evidence presented, that each of deficiencies identified in the CWO as requiring correction were items that failed to meet applicable ROC workmanship standards. Pueblo Viejo did not comply with the ROC’s directives as set forth in the CWO. According to Mr. Cataldo’s testimony, which the Administrative Law Judge found to be credible, Pueblo Viejo took the position in mid-June 2000 that it was not obligated to perform any more work at the Schler residence. Inspector Cotten testified that as of October 12, 2000, the date of the prehearing inspection, the following CWO items had not yet been corrected in whole or in part: Nos. 2, 5, 6, 7, 9, 10, 12B, 13, 15, 18, 19 and 20. Regarding item no. 11, Inspector Cotten testified that he did not view this transition during the prehearing inspection. However, based on Mr. Cataldo’s testimony, the Administrative Law Judge finds that as of October 12, 2000, item no. 11 had not been fully corrected. The Administrative Law Judge finds that CWO item nos. 1, 3, 4, 8, 12A, 14, 16, 17, 21 and 22 have been corrected and are no longer at issue in this dispute. The Administrative Law Judge finds that serious deficiencies exist in the work performed by Pueblo Viejo at the Schler Residence, and that Pueblo Viejo did not establish any reasonable justification for its failure to have complied with the CWO. Pueblo Viejo’s Complaint Against Monument On March 14, 2000 (one day before the jobsite inspection concerning Monument’s complaint against Pueblo Viejo), Pueblo Viejo filed a complaint against Monument alleging non-payment of the balances due on the Schler and Isaac residences. As stated in Finding of Fact No. 4, above, the agreed upon price for Pueblo Viejo’s work at the Schler and Isaac residences, including labor and material costs, totaled $23,000.00. Pursuant to a change order, Monument agreed to pay Pueblo Viejo an additional $1,034.00 on the Schler residence. Thus, the total contract price for both jobs was $24,034.00. The weight of the credible evidence established that Monument paid $10,500 directly to Pueblo Viejo and that Monument paid an additional $13,629.86 in material costs ($7,355.29 to Rew Materials, $5,016.42 to Desert Drywall, $449.04 to Sun Valley Supply, $438.89 to Home Depot and $370.22 to Payless Cashways). Thus, Monument paid Pueblo Viejo a combined total of $24,129.86 on the Schler and Isaac contracts.[2] By subtracting the amount paid ($24,129.86) from the contract price ($24,034.00), the Administrative Law Judge finds that Monument has overpaid Pueblo Viejo in the amount of $95.86. Consequently, there are no amounts due from Monument to Pueblo Viejo on either the Schler or Isaac contracts. Mr. Cataldo testified that he made a mistake hiring Pueblo Viejo to perform the drywall work at the Schler and Isaac Residences, and that he does not believe Pueblo Viejo is capable of completing the unfinished work in a workmanlike manner. The Administrative Law Judge finds that although certain portions of Pueblo Viejo’s workmanship at the Schler Residence suffers from workmanship deficiencies, Pueblo Viejo has not been shown to be incapable of correcting that workmanship to bring it within minimum ROC workmanship standards. CONCLUSIONS OF LAW In this consolidated matter, the parties bear separate burdens. Monument, on the one hand, bears the burden to prove, by a preponderance of the evidence, that Pueblo Viejo is subject to discipline for violations of A.R.S. § 32-1154(A)(7), (A)(23) and/or (A)(3) as charged by the ROC in its July 3, 2000 Citation and Complaint. Pueblo Viejo, on the other hand, bears the burden to prove, by a preponderance of the evidence, that Monument is subject to discipline for violations of A.R.S. § 32-1154(A)(7) and/or (A)(11) as charged by the ROC in its July 12, 2000 Citation and Complaint. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). The Administrative Law Judge first addresses Monument’s complaint against Pueblo Viejo. The Administrative Law Judge concludes, on the evidence presented, that Monument sustained its burden to prove that Pueblo Viejo violated A.R.S. § 32-1154(A)(7), (A)(23) and (A)(3) (namely, Rule R4-9-108). Under A.R.S. § 32-1154(A)(3), a contractor is subject to discipline for “violation of any rule adopted by the registrar.” In this case, the ROC charged Pueblo Viejo with a violation of Rule R4-9-108, which, among other things, requires contractors to perform work in a professional and workmanlike manner. The evidence demonstrated that Pueblo Viejo’s work at the Schler Residence did not meet ROC workmanship standards. Therefore, the Administrative Law Judge concludes that Pueblo Viejo violated A.R.S. § 32-1154(A)(3). Under A.R.S. § 32-1154(A)(23), a contractor is subject to discipline for “failure to take appropriate corrective action . . . without valid justification within a reasonable period of time after receiving written directive from the registrar.” In accordance with A.R.S. § 32-1154(D), the ROC may impose a civil penalty on Pueblo Viejo not to exceed $500.00 for each violation of A.R.S. § 32-1154(A)(23). The evidence demonstrated that Pueblo Viejo failed to comply with the ROC’s directives as set forth in the CWO, and that Pueblo Viejo had no valid justification for this failure. Therefore, the Administrative Law Judge concludes that Pueblo Viejo violated A.R.S. § 32-1154(A)(23). Although a civil penalty would be warranted under the circumstances, the Administrative Law Judge declines to recommend the assessment of such a penalty due to Pueblo Viejo’s excellent ROC record (see Conclusion of Law No. 12, below). Pueblo Viejo is advised, however, that it should consider itself on notice that any future failures to fully comply with written ROC directives shall be grounds for the imposition of potentially substantial civil penalties. Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The evidence demonstrated that Pueblo Viejo committed a wrongful act when it failed to comply with the CWO, thereby causing substantial injury to Monument in terms of delays in completing the Schler Residence in a timely and workmanlike manner. Therefore, the Administrative Law Judge concludes that Pueblo Viejo violated A.R.S. § 32-1154(A)(7). Based on the foregoing violations, it is appropriate for the ROC to impose discipline against Pueblo Viejo’s license. Regarding Pueblo Viejo’s complaint against Monument, the Administrative Law Judge concludes that Pueblo Viejo failed to sustain its burden to prove that Monument violated A.R.S. § 32-1154(A)(7) or (11). Under A.R.S. § 32-1154(A)(11), a contractor is subject to discipline for “failure . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered . . . .” The evidence demonstrated that Monument owes nothing to Pueblo Viejo (to the contrary, Monument overpaid Pueblo Viejo). Therefore, Monument did not fail to pay monies when due and did not violate A.R.S. § 32-1154(A)(11). Because Monument did not violate A.R.S. § 32-1154(A)(11), no grounds exist to support a conclusion that Monument violated A.R.S. § 32- 1154(A)(7). Because Pueblo Viejo failed to prove that Monument violated the provisions of A.R.S. § 32-1154(A), no grounds exist to impose discipline against Monument’s license. The ROC’s July 3, 2000 Citation and Complaint advised Pueblo Viejo that in the event of a finding of a violation against it, Pueblo Viejo’s prior disciplinary record of final Registrar of Contractors’ orders could be considered in mitigation or aggravation. Accordingly, subsequent to the conclusion of the instant hearing, the Administrative Law Judge took notice of prior final disciplinary orders against Pueblo Viejo in the ROC’s official records. Those records revealed that the instant complaint was the only complaint in the ROC’s current record regarding Pueblo Viejo. Therefore, Pueblo Viejo’s prior record is deemed to be excellent. The Administrative Law Judge considered this mitigating factor when determining appropriate recommended discipline for this matter. The Registrar of Contractors’ authority in disciplinary matters such as the one presented herein includes the ability to impose reasonable conditions that allow the disciplined contractor to reduce the scope of the disciplinary action taken against it. The Administrative Law Judge deems the exercise of such authority to be appropriate in the instant case. Therefore, although the Administrative Law Judge acknowledges Monument’s concerns, in light of its previous experience, about allowing Pueblo Viejo an additional opportunity to perform corrective work at the Schler Residence, the Administrative Law Judge deems that Pueblo Viejo should be given one last opportunity to remedy its deficient work. Imposing such a condition is preferable to imposing disciplinary action against Pueblo Viejo’s license without providing a condition to reduce or eliminate same. RECOMMENDED ORDERS With regard to Docket Number 00F-2236-ROC, it is recommended that no discipline be imposed against Monument’s license, and that the entire Citation and Complaint issued in Case Number 00-2236 be dismissed. With regard to Docket Number 00F-2064-ROC, it is recommended, commencing on the effective date of the Order entered in this matter, that the Class K-10 license of Pueblo Viejo be suspended until such time that the ROC receives written proof that (a) Pueblo Viejo has corrected the deficiencies identified as item nos. 2, 5, 6, 7, 9, 10, 11, 12B, 13, 15, 18, 19 and 20 in the ROC’s March 17, 2000 Corrective Work Order OR (b) that Pueblo Viejo has entered into other mutually acceptable arrangements with Monument. It is further recommended that if Pueblo Viejo accomplishes the above- identified work in a proper, workmanlike manner on or before the deadline date, then no license suspension shall be imposed and the entire Citation and Complaint in Case Number 00-2064 shall be closed.

Done this day, November 2, 2000.

______________________________________ Daniel G. Martin Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2000, to:

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

By ___________________________ ----------------------- [1] Monument also filed a workmanship complaint against Pueblo Viejo in connection with the Isaac Residence. However, that complaint was separately resolved and is not at issue in the present proceeding.

[2] Mr. Trevino claimed that Pueblo Viejo purchased materials for the Schler Residence. However, Mr. Trevino failed to present any credible or probative evidence in support of this claim. The Administrative Law Judge finds, on the evidence presented, that Pueblo Viejo did not pay for any materials used on either the Schler or Isaac jobs.

-----------------------

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