ALJDEC

01F-2380-ROC · Registrar of Contractors · 2001-09-10

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 10, 2001 APPEARANCES: Complainant : Carole Colodny appeared at the hearing pro se. Testifying for Ms. Colodny were Robert Futch, a neighbor, Celine Cameron, a neighbor, and John Charles Breen, Councilman, District 5, Tonopah. Respondent : David R. Jordan, Esq., of the firm Titus, Brueckner & Berry, P.C., represented Edward Joseph Shepherd dba AA Shepherd Contracting and Roofing. Testifying for the company were Edward J. Shepherd, Qualifying Party, Carole Shepherd, Mr. Shepherd’s wife, and Terrie Knowles, Realtor. Inspector : Mel Purchase of the Registrar of Contractors testified at the behest of Complainant. ADMINISTRATIVE LAW JUDGE: Gary B. Strickland _____________________________________________________________________ A hearing was convened to determine whether Respondent violated state law as has been alleged by Complainant and as cited by the Arizona Registrar of Contractors. Evidence and testimony were presented, and based on the entire record, the following Findings of Fact, Conclusions of Law, and Recommended Decision are made: Respondent holds a Class B (General Residential Contracting) license issued by the Registrar of Contractors. Respondent asserts that Respondent has never operated in Arizona as a contractor. Respondent further asserts that the Registrar of Contractors does not have jurisdiction over the issue(s) presented because Respondent allegedly was not engaged in contracting under these facts.

FINDINGS OF FACT 1. Respondent’s license (Residential Contracting), which was initially issued on February 28, 1994, renewed on January 31, 2000, was in active status when he entered into the contract with Complainant that is at issue. 2. Joseph Edward Shepherd is the Qualifying Party identified on the AA Shepherd Contracting and Roofing Company license. 3. Mr. Shepherd holds a Commercial Plumbing (L-37) License, No. [number redacted], and a Residential Plumbing (C-37R) License, No. [number redacted], in addition to his Residential Contracting license. 4. Complainant, Carole Colodny, resides at 34807 West Broadway, Tonopah, Arizona. Ms. Colodny purchased her home from Mr. Shepherd. 5. At various times during 1998 and 1999, Mr. Shepherd purchased several used double-wide mobile homes with an intent to remodel the homes ostensibly for his own use or as rental property (one of the homes) and an intent to sell the remaining homes (six) to qualified purchasers. 6. The home that is the subject of this complaint was sold to Ms. Colodny for a $67,000. purchase price. The contract included a one and one- quarter plat as part of the consideration. 7. Mr. Shepherd testified that he purchased the used mobile home for $5,000. The parties disagree as to the age of the used structure; Complainant’s witness Breen is of the opinion that the home was originally constructed between the years 1964 and 1968; Mr. Shepherd testifed that it was a 1977 model. The fact was not established at this hearing. 8. There is some evidence that Mr. Shepherd actually purchased the home for $1,000.[1] 9. Respondent contests that the Registrar does not have jurisdiction over this complaint because Mr. Shepherd did not act or function as a contractor during this transaction as such conduct is contemplated by A.R.S. ( 32-1121(A)(5), an exception to the licensure requirement. 10. Mr. Shepherd asserts that he intended to remodel the subject home for personal use or rental, not for resale. 11. Mr. Shepherd’s testimony is not credible on this issue: (1) at most, Mr. Shepherd “camped out” in the home for a period of 30 days while undertaking the remodeling project; he and his wife never lived in the home thereby abandoning their then current residence; (2) this home was sold to Ms. Colodny as number three or four (depending on the various accounts given by the parties) in a series of transactions whereby a total of seven such remodeling projects have been sold by Mr. Shepherd; (3) the defense of jurisdiction was only raised once the Respondent’s Answer to the Complaint was filed (June 11, 2001). While such challenge to subject matter jurisdiction is certainly appropriate at that point in the process of administrative adjudication and, in fact, may not be waived, it is a curiosity that counsel for Respondent wrote to the Registrar’s Inspector on May 1, 2001 wherein, inter alia, was requested by the Respondent additional time within which to comply with the Registrar’s Corrective Work Order. If the Registrar lacked jurisdiction, why was this contractor then implying that he intended to comply with the directive? The argument appears to contradict the act. 12. Mr. Shepherd testified that he does not intend to comply with the Registrar’s Corrective Work directive. 13. On March 28, 2000, Ms. Colodny filed a complaint with the Registrar of Contractors alleging disconcertion over the contractor’s quality of workmanship on numerous items (17 identified). 14. In response to the complaint, the Registrar’s inspector, Mel Purchase, conducted a jobsite inspection on April 12, 2001, with Complainant and Respondent present. 15. As a result of his on-site review of conditions, Inspector Purchase issued a Corrective Work Order on April 18, 2001, directing Respondent to make the following itemized corrections, by appropriate means:

7) Correct the existent condition on the end of the house wherein separation is visible, as the gable ends are not nailed or braced properly; 8) Correct bird stops; 9) Straighten exterior walls; 11) Put locks on the windows; 16) Install/repair switches in living room; 17) Correct the living room ceiling that is drooping.

In addition to the aforementioned items requiring correction/repair, the contractor was directed to obtain the proper permits for construction, the contractor’s failure of which to procure is effectively admitted by Respondent through counsel in the May 1, 2001 letter to Mr. Purchase previously noted in Finding of Fact 9. 16. To date, the repairs have not been made. 17. The Registrar issued a Citation and Complaint against the license of AA Shepherd on May 31, 2001[2] identifying numerous alleged violations of the provisions of Title 32 for which discipline may be imposed. Thereafter, a Notice of Hearing was forwarded to the Respondent licensee’s address of record on May 16, 2001.[3] 18. Upon Respondent’s timely written answer to the complaint, the Registrar of Contractors set the matter for hearing before the undersigned Administrative Law Judge of the Office of Administrative Hearings. 19. At the hearing, Ms Colody and Mr. Shepherd appeared and testified, along with supporting witnesses. Complainant offered Exhibits 1 through 4, the latter two of which were received into the record. 20. Testimony was given by Complainant witness Breen to the effect that the home was constructed out-of-code. While the testimony was lacking in foundation, indication that the home was remodeled with only one door for ingress and egress and the witnesses’ testimony of a Maricopa County code enforcement complaint “V990693” is accorded some weight. That testimony went unrebutted. 21. The weight and sufficiency of the evidence establishes (1) that Mr. Shepherd acted within the course and scope of his residential contractor’s license in this transaction as the concept is contemplated by Title 32; (2) that Respondent failed to address the items of correction/repair for which he was given notice by the Registrar’s Corrective Work Order; (3) that Respondent does not intend to comply with the Registrar’s directive.

APPLICABLE LAW The statutory pericope raised by Respondent in an effort to deny the Registrar jurisdiction over this matter is A.R.S. ( 32-1121(A)(5). The statute provides:

Owners of property who improve or who build or improve structures or appurtenances on such property and who do the work themselves, with their own employees or with duly licensed contractors if the structure, group of structures or appurtenances, including the improvements thereto, are intended for occupancy solely by the owner and are not intended for occupancy by members of the public as the owner’s employees or business visitors and the structures or appurtenances are not intended for sale or for rent. In all actions brought under this chapter, proof of the sale or rent or the offering for sale or rent of any such structure by the owner- builder within one year after completion or issuance of a certificate of occupancy is prima facie evidence that such project was undertaken for purposes of sale or rent. As used in this paragraph “sale” or “rent” includes any arrangement by which the owner receives compensation in money, provisions, chattels or labor from the occupancy or the transfer of the property or the structures on the property. . . . The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent with possible violations of A.R.S. § 32-1154(A)(3) (and A.A.C. R4-9-108, the workmanship rule), (A)(7), (A)(2), (A)(17) and (A)(23). Those statutory sections require that a holder of a license or a person listed on a license shall not commit the following:

3. Violation of any rule adopted by the Registrar. . . . 7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. . . . 23. Failure to take corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving written directive from the Registrar. . . . 2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code. . . . 17. Knowingly contracting beyond the scope of the license or licenses of the licensee. . . . A.A.C. R4-9-108 is named as the rule violation charged pursuant to A.R.S. § 32-1154.A.3. That rule provides that all work shall be done in a professional and workmanlike manner, and in accordance with any applicable building codes and professional industry standards.

CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over this matter, pursuant to A.R.S. § 32-1101, et. seq., which authorizes the Registrar to impose disciplinary sanctions against licensees for violations of A.R.S. § 32-1154. 2. The Registrar further has jurisdiction, despite Respondent’s protestation otherwise, for the reasons identified in Finding of Fact 9. It is not credible that Mr. Shepherd constructed this home with an intent that he and his family reside therein as is required by the exception to licensure requirements established by A.R.S. ( 32-1121(A)(5). Whether it is prima facie evidentiary that Mr. Shepherd undertook this project for his own use and enjoyment is uncertain given the quality (or lack thereof) of the evidence presented. What is not uncertain, however, is that the assertion proposed by Mr. Shepherd is lacking credibility. 3. The burden of proof generally at an administrative hearing falls to the party asserting a claim, right or entitlement or seeking to impose a penalty.[4] Further, the standard of proof is that of the “preponderance of the evidence”.[5] Proof by a preponderance means that the evidence is sufficient to persuade the finder of fact that the proposition is “…more likely true than not.”[6] The evidence taken as a whole must convince the decision maker that the party who bears the overall burden of persuasion, in this case the Complainant, is more probably correct on the issue(s) in dispute. Observing these standards, Complainant has satisfied her burden of demonstration, by a preponderance of the evidence, that Respondent has violated statute, regulation or general principle of law by selling to her a home remodeled through defective and substandard workmanship. Further, it has been demonstrated by admission that Respondent is unwilling to comply with the Registrar’s directive that he correct/repair the workmanship deficiencies. 4. By a preponderance of all of the evidence, Complainant has established that Respondent contractor violated A.R.S ( 32-1154(A)(3) and (23) as charged in the Citation and Complaint. Respondent failed to address the deficiencies in workmanship of which he had been given notice by the Inspector’s Corrective Work Order. It was and is a reasonable expectation of this homeowner that she be provided repairs to her home in a manner and to a degree that accords with applicable standards. The weight of the evidence persuades that the Complainant has not been provided that to which she is entitled given her consideration agreed upon and the requirements of Title 32. 5. By a preponderance of the evidence, it has been proven that Respondent has violated the provisions of A.R.S. ( 32-1154(A)(2) by failing to satisfy Maricopa County Building Code provisions. Respondent failed to obtain the requisite permit and failed to give the County the requisite notice. 6. Therefore, by a preponderance of the evidence, Complainant has established that Respondent contractor violated A.R.S ( 32-1154(A)(7) as charged in the Citation and Complaint. It has been shown that Respondent has committed a wrongful act resulting in injury[7] to another person. 7. By a preponderance of the evidence, it has not been proven that Respondent violated the provisions of A.R.S. ( 32-1154(A)(17) by performing beyond the scope of his license. 8. Respondent’s failure to effect a repair of the subject home as directed by the Registrar’s Inspector, along with his acts and omissions that left this consumer with a remodeled structure deficient in workmanship, constitute statutory violations for which a fair and just disciplinary penalty ought to be imposed. Anything less than revocation of this license would work an injustice upon principles inuring to the public good and determined to be upheld by the prescriptions and proscriptions contained within Title 32. 9. It is further noted that Mr. Shepherd’s testimony that he never intended to operate under and within the parameters of his Residential Contracting license, and does not intend so to do in the future, belies necessity for his holding such license. Still further, Mr. Shepherd’s assertion of nonacquiescence to the Registrar’s jurisdiction under these facts smacks of an intent to sidestep requirements.

RECOMMENDED DECISION Based on the foregoing, IT IS RECOMMENDED that the Registrar revoke the Residential Contracting license of Respondent herein.

Done this day, September 12, 2001. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Gary B. Strickland Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2001, to:

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

By ___________________________

----------------------- [1] See Exhibit 4, an Affidavit of Affixture. [2] A.R.S. ( 32-1155(A). [3] Hearing Exhibit 12. [4] Culpepper v. Arizona Board of Nursing, 187 Ariz. 431, 930 P.2d 508 (App. 1997); See also Ariz. Admin. Code R2-19-119 (B). [5] Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985); See also Ariz. Admin. Code R2-19-119 (A). [6] In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). See also, J. Livermore, R. Bartels, & A. Hameroff, LAW OF EVIDENCE ( 301.1(4th ed. 2000) (One party bears the overall burden of persuasion on each fact material to the party’s claims and defenses. Further, the party with the burden of persuasion on a particular fact is required to satisfy the burden of production of enough qualitative evidence sufficient to support a finding of the existence of the fact, following a reasonable person standard.) [7] The term “injury” is not defined in the statute. A reasonable construction of the language used in its context (as required by A.R.S. ( 1- 201(B)) would include at risk considerations as well as economic harm. By not performing as agreed, this contractor harmed this homeowner not only by failing its consideration but also by placing her at risk for structural hazard.

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