ALJDEC

01F-G1182-ROC · Registrar of Contractors · 2002-01-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 20, 2001. APPEARANCES: Complainants were represented by Roger Foote, Esq. Respondent was represented by its president, David L. Kiesgan. ADMINISTRATIVE LAW JUDGE: Gregory L. Hanchett _____________________________________________________________________ These matters were consolidated by earlier order. In this matter, Complainants McCaleb and Schmitz (herein after Complainants) allege that Respondent has violated A.R.S. §32-1154(2)(departure from or disregard of plans or specifications which is prejudicial to another without consent of the owner), A.R.S. §32-1154(3)(failure to comport with any rule promulgated by the Registrar, namely, A.A.C. R4-9-108 which requires all work to be performed in workmanlike manner), A.R.S. §32-1154(A)(7) (wrongful or fraudulent conduct that results in substantial harm to another), A.R.S. §32- 1154(10)(Aiding or abetting an unlicensed person to evade the provisions of this chapter), and A.R.S. §32-1154(17)(knowingly contracting beyond the scope of a license). Based on the evidence adduced at the hearing, the following findings of fact, conclusions of law, and recommended decision are made. . . . FINDINGS OF FACT 1. Complainants are residents of a townhouse complex known as West Plaza 3 & 4 located in Phoenix, Arizona. Respondent is a painting company which holds a Class K-34 license, number 137078 under A.C.C. R4-9-104. 2. Respondent entered into a contract with the Board of Directors of the West Plaza 3 & 4 Townhouses Association to complete painting, removal and replacement of wood siding, and removal and replacement of wood trim located on the townhouses and storage sheds that are situated in West Plaza & 4. The contract initially entered into between Respondent and the townhouses association in August, 2000, called for Respondent to complete the painting, overlay of wood siding with new wood siding, and removal and replacement of wood trim on the townhouses and storage sheds in the West Plaza 3 & 4 complex. In addition, the contract called for the replacement of the doors on the storage sheds with solid core doors. 3. Respondent apparently retained PBK Construction shortly after the work on the contract began to complete the overlay of the siding and repair of trim work. At the hearing, Respondent admitted that PBK was not properly licensed by the Registrar to complete the type of work for which it was retained. Respondent, after ascertaining that PBK was not licensed, then retained a different entity to complete the wood work, Womack Construction. In addition, Respondent admitted that it was not properly licensed to act as a general contractor and hire on a subcontractor to complete the work. When Respondent was notified by the Registrar in July, 2001 that it was contracting beyond the scope of its license, Respondent ceased doing so. In mitigation, Respondent indicated that it was unaware that it could not subcontract out the duties of overlaying the siding and replacing the wood trim. 3. This contract was subsequently modified between the townhouses association and Respondent on February 27, 2001 when the parties agreed that Respondent would not be painting the carport covers of the complex, resulting in a contract credit of $5,760.00 to the townhouses association. This contract was again modified on March 19, 2001 when Respondent and the townhouses association agreed that Respondent would complete the painting of buildings 12, 13, 17, and 18. 4. During this time, Complainants, whose townhouses have not as of this date been painted or in any way worked on by Respondent, were apparently dissatisfied with the fact that the townhouses association had entered into a contract with Respondent. This dissatisfaction was apparently borne of the fact that Complainants were dissatisfied both with Respondent’s work on the complex and the fact that Respondent was taking what Complainants considered to be an inordinately long period of time to complete the work. Indeed, Complainant McCaleb filed a lawsuit against the townhouses association and Respondent on May 23, 2001. Ultimately, Complainant McCaleb’s lawsuit for breach of contract and negligence was dismissed against both the townhouses association and Respondent. Complainant McCaleb was found not to have standing “either individually or in a derivative action to maintain an action regarding the contract for services between Defendant West Plaza 3 & 4 Townhouses Association and defendant Commonwealth Painting.” Exhibit A, Maricopa County Superior Court Minute Entry dated November 1, 2001. 5. Within a month of Complainant McCaleb’s filing of her superior court action, Complainants in this matter filed their complaint with the Registrar. Inspector Lewis King was assigned to review the complaint. It appears that no job site inspection was completed. Nevertheless, the inspector did advise Respondent that it was operating outside the scope of its license by hiring a subcontractor to complete the wood work. As indicated above, Respondent ceased doing so upon notification from the Registrar. 6. After the Registrar’s notification, Respondent and the townhouses association again modified their contract in October, 2001, to take account of credits which Respondent had given to the townhouses association. The net result of this contract was that the Respondent and the townhouses association agreed that Respondent owed a credit to the townhouses association of $25,059.64. The October, 2001 contract also provides that Respondent will pay off this overpayment by completing certain additional painting on buildings that have yet to be painted. 7. At the hearing, several items of workmanship, including trim that was separating from buildings, paint that was chipping and fading, uneven paint, and caulking that had failed and separated were shown in photographs. Respondent acknowledges that some of these items are in need of correction and asserts that a punch list has been prepared and will be completed to correct these deficiencies. Respondent also contends that several of the deficiencies complained of by Complainants have been corrected already or do not exist. The October, 2001 contract between the Respondent and the townhouses association states that the Respondent and the townhouses association agreed that Respondent would complete an identified “punch list” within 15 days of the date of the contract. According to the testimony of Complainant Schmitz, the photographs he took, which show workmanship deficiencies, were taken in November, 2001. Given the fact that the problems complained of by Complainants admittedly do not relate to their building, and further given the fact that the contract between Respondent and the townhouses association appears to contemplate that a punch list would be created and completed at about the same time that complainant Schmitz’s photos were taken, the undersigned finds that a sanction against Respondent’s license for this violation is not appropriate. The workmanship deficiencies are being remedied in an appropriate fashion—through the development of a punch list and Respondent’s willingness to correct the punch list. 8. Complainants apparently paid an assessment to the townhouses association of $1,600.00 for the work that is being done to complete the painting of the townhouses. Complainants have requested that as part of any sanction in this case, that Respondent be ordered to pay this amount back to Complainants. The problem, however, is that the assessment was levied by the townhouses association and there was no evidence to show that Respondent has of this time been paid any part of that portion of the assessment actually paid by Complainants. Furthermore, there is no evidence to show that any contract exists between Respondent and the Complainants. Complainants’ cause of action to recoup the $1600 lies not against the Respondent but rather with the townhouses association that collected the assessment. Accordingly, ordering any restitution in this case would be inappropriate. CONCLUSIONS OF LAW 1. The complainants have the burden of proof, and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (App. 1996). 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). It "is evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not." Black's Law Dictionary, 1182 (6th ed. 1990). 2. Arizona Revised Statute § 32-1154(A) provides in pertinent part: A. The holder of a license or any person listed on a license pursuant to this chapter shall not commit any of the following acts or omissions: * * * (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 . . . * * * (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. * * * (10). Aiding or abetting an unlicensed person to evade the provisions of this chapter, knowingly combining or conspiring with a licensed or unlicensed person, allowing one’s license to be used by a licensed or unlicensed person or acting as agent, partner, associate or otherwise of a licensed or unlicensed person with the intent to evade this chapter. * * * (17). Knowingly contracting beyond the scope of the license or licenses of the licensee.

A.A.C. R4-9-108 specifically states that “[a]ll work shall be done in a workmanlike manner.” 3. Arizona Revised Statute §32-1154(B) specifically states that the Registrar may “on the complaint of any person” investigate the acts of any contractor in the state of Arizona. Thus, the Complainants have the ability to bring this action before the Registrar seeking sanctions against Respondent’s license. 4. The evidence as demonstrated in Findings of Fact Paragraph Seven above establishes that Respondent violated A.R.S. § 32-1154(A)(3) by failing to comply with the administrative requirement that work be performed in a workmanlike manner. As indicated above, however, no sanction should be imposed on this violation. Respondent has appropriately responded to the problem and the entity with whom Respondent has contracted, the townhouses association, is, as evidenced by the October, 2001 contract, apparently satisfied with the Respondent’s approach to resolving the workmanship issues that remain. Sanctions for this violation are not warranted. 5. Complainants have also demonstrated that Respondent violated A.R.S. §32-1154(A)(10) and (17). Respondent knew or should have known that his agreement to replace the siding was outside the scope of his license, as demonstrated by Findings of Fact Paragraph Three, above. Likewise, Findings of Fact Paragraph Three shows that Respondent aided an unlicensed entity. These violations merit the imposition of a limited lingering sanction in the form of disciplinary probation for a period of 90 days to ensure that Respondent does not commit any further violation of A.R.S. §32- 1154(A)(10) or A.R.S. §32-1154(A)(17). 6. Complainants have failed to show any violation of A.R.S. §32- 1154(A)(2). Complainants have failed to show that consent for any deviation from the contract was not first obtained from the entity that entered into the contract -- the townhouses association. 7. Complainants have failed to show Respondent violated A.R.S. §32- 1154(A)(7). There has been no showing that there has been any substantial harm to the townhouses association. Again, it appears that Respondent is complying with his contractual obligations and is willing to complete all repairs demanded by the townhouses association, the entity with whom Respondent contracted. RECOMMENDED DECISION Based on the foregoing. It is recommended that commencing on the effective date of the final order entered in this matter that Respondent’s license be placed on a period of disciplinary probation for a period of ninety days. Done this day, January 8, 2002

______________________________________ Gregory L. Hanchett Administrative Law Judge

Original transmitted by mail this ____ day of January, 2002 to:

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

By ___________________________

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