ALJDEC

02F-M0126-ROC · Registrar of Contractors · 2002-02-25

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 14, 2002.

APPEARANCES: The Complainant appeared in her own behalf. The Respondent appeared through its President and Qualifying Party, Michael J. Lenig.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

Evidence and testimony were presented, and based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. Pursuant to a written proposal and contract dated April 7, 2001, Respondent commenced performance of an extensive repair and remodeling project at Complainant’s residence under a rehabilitation program made available by and monitored by the City of Tempe.

Although the Respondent’s bid, as ultimately accepted, reflected a line- item cost price for the various components of the contemplated construction work, it is found

that the project was for a fixed price, as subsequently adjusted, in the total amount of $19,802.97 and was not intended to be on a cost-plus overhead and profit basis. Consequently, any excess cost incurred for a line-item figure for any identified element would not generate an increase in the overall project cost, nor would any lesser incurred cost, or even an absence of cost, for an included and performed item result in an entitlement to a refund or credit.

3. Payments in the aggregate sum of $14,663.23 were released to Respondent following two draw applications, leaving an unpaid balance of $5,139.74. The contractual work was admittedly not fully completed by Respondent.

4. Complainant contends that Respondent has been overpaid, although no evidentiary showing was made at the hearing that would tend to establish even a rough approximate dollar figure for the presently anticipated total of reasonable correction and completion costs after the last jobsite work by Respondent. Conversely, Respondent contends that it had completed work valued at $15,912.97, thereby leaving approximately $1,249.74 still payable for the portion of work performed and a $3,890.00 contract balance.

5. The testimony was unclear whether or not an appropriate credit admittedly due to Complainant for the sum of $800.00, earmarked for termite treatment that was reportedly unnecessary, would alter the Respondent’s computations set forth in the prior Finding of Fact.

6. The parties have exhibited a genuine and growing inability to reasonably communicate with each other. This counterproductive relationship resulted in the termination by Complainant of Respondent’s further jobsite services on June 16, 2001.

7. Complainant filed the instant complaint with the Registrar of Contractors in mid-July, 2001. Following a jobsite visit by the Registrar’s assigned Inspector, a lengthy written directive was issued to Respondent that identified and confirmed 44 items, areas or aspects of the filed complaint that required remedial action by or on behalf of Respondent. Another item, consisting of a substantial leak under the sink, was subsequently added by way of a supplemental directive following the filing of an addendum to the complaint and another jobsite visit. Copies of the Inspector’s two directives (respectively dated August 15, 2001 and October 16, 2001, and each entitled as a “Corrective Work Order”) are incorporated by reference, and the operative portions of such directives are attached to this Decision and Order as Schedule “A,” consisting of three separate pages.

8. With only a very few exceptions, each of the enumerated items set forth in the Inspector’s directives were sufficiently proven to be either workmanship deficiencies, deviations from contractual specifications or contrary to applicable local building code provisions. It was further shown that the City of Tempe has concurred with the Registrar’s Inspector with respect to most all of the identified items requiring corrective measures.

Examples of some, but not all, of the aforementioned confirmed deficiencies attributable to Respondent’s acts or omissions encompassed several generalized groups of unworkmanlike or incomplete categories of items, as set forth below. (Numbers in parenthesis following each grouping correspond to the assigned item numbers appearing on the Inspector’s directives).

j) Substandard paint or drywall applications, including the failure to adequately protect or to clean existing household articles and features such as draperies (Items ## 1, 2, 3, 4, and 38);

b) Omitting to provide and install proper screening for doors and windows Items ## 5, 14 and 21);

c) Various plumbing and electrical problems, some of which were shown to constitute code violations ( Items ## 6, 7, 8, 11, 13, 15, 16, 34, and 40, plus the single unnumbered item identified on the supplemental directive);

d) Incomplete or poorly installed and operating fans (Items ## and 33)

e) Improper caulking or nailing (Items ## 9, 10, 17, 19 and 25);

f) Shelves in a cabinet that had been moved during the work were broken as was an attic access cover in the garage (Items ## and 43);

g) Failing to remove construction debris from the jobsite (Item # 43).

10. Irrespective of whether or not an improper reversal of the hot and cold water fixture in a bathroom may have existed prior to any jobsite work by Respondent, it is found that the undertaking of this project necessitated the correction of any and all erroneous plumbing features when part of the contractually specified construction included the replacement of the existing fixtures at that location (Item # 7). Similarly, the improper condition of the activation of an exterior outlet from a switch on an interior bedroom wall, constituting a code violation, necessitates remedial work by Respondent notwithstanding the possible existence of this condition prior to the start of Respondent’s work (Item # 13).

11. Apart from the partial listing described above, another item also found to have been properly included in the enumerated listing of items to be rectified was an obligation for Respondent to obtain and furnish Complainant with written confirmation that a proper termite inspection was, in fact, performed, identifying the entity so performing such inspection and including a statement that no termite treatment was determined to be necessary or otherwise warranted (Item # 35).

12. The obligation of Respondent to provide extra ceramic tile for the fireplace (Item # 41), arises because of Respondent’s prior intentional but somewhat questionable election to provide no more than the exact quantity of tile needed to be installed and to not furnish any additional tile pieces to Complainant for possible future use. Consequently, Respondent is found to have a present duty to either obtain and to furnish Complainant with a small quantity of matching extra tile pieces or else, if matching ceramic tile (within industry tolerances) for this installation is no longer obtainable, to remove and re-install new tile materials on the fireplace, allowing for some small quantity of extra pieces after installation for delivery to Complainant .[1]

13. With respect to certain enumerated electrical deficiencies, listed as items #28, #29 and #30 in the directive, the credible evidence tended to demonstrate that those identified items have been adequately remedied by Respondent’s licensed electrical subcontractor. Additionally, Complainant did not sufficiently prove that all available warranties from manufacturers for equipment or appliances had not been delivered by Respondent or otherwise left on the premises as purportedly required under Item #39.

14. With the exception of the three electrical items not sufficiently shown to have been uncorrected, plus the inability to prove that applicable warranties were not furnished, all other 40 enumerated items in the original directive plus the single item in the supplemental directive are found and determined to constitute contracting law violations and to warrant appropriate remedial action.

15. Notwithstanding the showing that Respondent had utilized licensed specialty subcontractors for much of the electrical and plumbing work, the evidence revealed that Respondent impermissibly performed several aspects of such safety trade work though its own employees. This out-of- scope electrical and plumbing work by Respondent, although not charged as a separate violation, may be considered as a matter in aggravation hereunder, especially since some such work, including the placement of GFI receptacles upside-down, was confirmed by the Inspector as being substandard and in need of remedial measures.

16. Although a contracting law violation by a contractor is normally not established until and unless, after notice and a reasonable opportunity is afforded, such contractors fails to undertake and achieve appropriate remedial work, it is found from the evidentiary presentations that Respondent had not been responsive to numerous and repeated requests or demands from Complainant. Moreover, soon after the within complaint was filed, Respondent’s license bond was canceled on July 18, 2001, thereby placing its license under suspension by operation of law. That suspension still remains in effect. Notwithstanding the absence of any prohibition for a suspended licensee to perform corrective work without charge, as opposed to completion work on a project, under the circumstances of this case, including Respondent’s performance of out-of-scope safety trade work, it cannot be found that Complainant was unjustified in refusing further access to the premises to this presently unbonded contractor.

17. It was demonstrated by the evidence that workmanship violations and deviations from codes and contract specifications were committed by Respondent, who failed or rendered itself unable to comply with an Inspector’s written directives. These elements, considered in combination, are further found to constitute a wrongful act to the substantial detriment of Complainant within the meaning of another charged contracting law provision.

18. A reasonable condition in the Order by Registrar in this matter would consist of requiring Respondent to rectify all items contained in the Inspector’s directives, with the exception of the three enumerated electrical items and the warranty delivery item. Additionally, under all the facts and circumstances, it is further deemed appropriate for Respondent to cause all required further work to be accomplished by another properly licensed contractor or subcontractor selected by and paid in advance by Respondent. This does not mean that Respondent, through its principals or employees, may not inspect and evaluate the work so performed, since the proper or improper performance of such work will have an impact on the future status of its license.

19. Several items set forth in the directives are capable of being accomplished without jobsite construction work by either Respondent or its selected contractor. For example, Respondent must obtain and furnish written proof that a prior termite inspection was performed and that it encompassed a report that no actual termite treatment was necessary (Item #35). Similarly, Respondent may comply with one of the elements of the directive by issuing a written credit for $20.00 against the final contract price (Item#18), and Respondent should also confirm the issuance of another $800.00 credit for the deleted contract element of termite treatment.

To the extent that one or more of the listed items of deficiency represent items of completion instead of correction, nothing in this decision is intended to

preclude Respondent, after causing the full performance of all work conditions, from presenting a further draw application to the City for payment as may be appropriate.

21. The suspended status of Respondent’s license by operation of law for lack of a proper bond since July 18, 2001 does not preclude the pursuit by Complainant of its administrative remedies nor the conducting of these disciplinary proceedings. Moreover, such suspended license status must be considered when formulating an appropriate Order in this action. Since little or no motivation would exist for any contractor to undertake and complete any remedial measures to avoid the imposition of a suspension of an already-suspended license, the non-compliance by Respondent with any condition deemed proper for inclusion in the Order to be entered hereunder should realistically result in the imposition of a provisional license revocation.

CONCLUSIONS OF LAW

1. The totality of the evidence of record, indicating numerous and varied instances of substandard and unacceptable workmanship, contractual breaches and building code violations on the part of Respondent, adequately supports a conclusion that Respondent has violated the provisions of A.R.S. §32-1154(A)(2), (7), (23) and (3); namely, Rule R4-9- 108, A.A.C.

2. The evidentiary record further supports the inclusion of a condition in a disciplinary Order, provided as a means to reduce or eliminate otherwise appropriate penalties, that Respondent must “cause” necessary corrective work to be accomplished by another licensed contractor or contractors, selected by and paid in advance by Respondent.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class B license be revoked on the effective date of the Registrar’s Order.

It is further recommended that if, on or before this Order’s effective date, the Registrar receives written proof that Respondent has caused the appropriate correction of all construction items set forth in Schedule “A” attached to this decision, except those excluded under Finding of Fact # 13, through the services of other properly licensed contractors, selected by and paid in advance by Respondent, and also has complied with its duties to provide certain documentation and credit confirmations to Complainant, as outlined in Finding of Fact No. 19, or alternatively, if Respondent has concluded other “mutually” acceptable arrangements with Complainant, then no license revocation shall be imposed. Instead, by way of an alternative penalty, Respondent’s Class B license shall be placed on disciplinary probation for a period of 90 days. This alternative penalty shall commence, if at all, on the effective date of the Registrar’s Order.

Dated: February 27, 2002. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Michael P. Goldwater, Director Registrar of Contractors 800 West Washington Street (6th Floor) Phoenix, AZ 85007

ATTN: Joyce Armijo ----------------------- [1] For the purposes of compliance by Respondent with the duty to provide additional tile pieces for Complainant’s possible future use, the term “small quantity” shall be construed to mean an amount approximately equal to 5% of the overall square footage of the finished installation, but in no event less than 4 or 5 tile pieces.

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