ALJDEC

02F-M0207-ROC · Registrar of Contractors · 2002-02-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 31, 2002 at 9:00 a.m. APPEARANCES: Complainant appeared through Greta Hay, its Treasurer, and Carol Sweet, an employee of its management; Respondent did not appear. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

Complainant La Mesa Homeowners Association presented evidence to establish Respondent P F P Plumbing Inc.’s statutory violations in installing valve boxes for Complainant’s members. Based on the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order to the Registrar of Contractors. FINDINGS OF FACT Complainant is the homeowner’s association for a condominium development. Complainant has hired Tillet Property Management, Inc. to manage its members’ property. On March 19, 2001, Respondent submitted a proposal to Tillet Property Management to “[r]eplace shut off valves” to 132 units, four valves to a box, at La Mesa Grande for $15,546.00. The bid includes a handwritten notation by Shane Alan Prince that 25%, or $3,886.50 of the contract price was payable “up front.” On May 5, 2001, the Registrar issued License No. 165128 to Respondent, a corporation. Respondent’s qualifying party is Shane Alan Prince. The minutes for Complainant’s Board of Directors’ May 8, 2001 meeting summarize Mr. Prince’s presentation of the bid as follows: Representative, Shane, from PFP Plumbing was present. He stated that most of the valves are dripping and this is creating additional water usage. Board stated there is not enough money to do all the valves at one time. Shane noted that it is possible to spread the work over several months but it will be necessary for the Association to purchase all the valves prior to the work being completed. A motion was made, seconded and approved to have one building done now and if the work is satisfactory, to sign a contract for the balance of the valves. Association will purchase and store all the valves. The valves will be locking valves and all homeowners will be given a key. Homeowners will be responsible to give new owners the key and if they are lost there will be a $25 charge for a new one.

Following the Board’s meeting, Respondent amended its bid to include the following terms of payment: Per box will $450.00. . . . The original bid was for all 132 valves to be done at the same time. I have informed the Board members that upon starting this project all valves would be purchased. This amount will need to be paid before the start date of project. The first draw is 25% due at the start of project. . . . We will bill the next quartly [sic] payments as we finish each section. . . .

On May 16, 2001, Treasurer Greta Hoy accepted Respondent’s bid, as modified, on Complainant’s behalf. On May 22, 2001, Complainant gave Respondent Check #2280 for $3,886.50 to begin work. As a receipt, on May 23, 2001, Respondent submitted Invoice No. 103 to Complainant for $3,886.50 for “First 25% down remainder will be billed.” Respondent began work. On June 13, 2001, Respondent submitted Invoice No. 107 to Complainant for “3 Boxes Done (valves)”, at a total price of $1,610.00, including $410.00 for “shipping.” Complainant’s Board objected to Respondent’s invoice because they understood that the first payment was to begin work. Respondent’s qualifying party said he had paid for all the valves with the first check and needed more money to continue the project. To clarify the purpose of the first invoice, Respondent’s qualifying party provided Complainant with a document that stated “*Deposit made only covered materials* Notice* Call by Don was Jun 14th 2001 about caution tape. We then 10:00 next morning we completed caution tape at our cost!!!” To keep the job moving, on June 14, 2001, Complainant paid Respondent $1,610.00 by Check #2291. Some of the valves in the first phase of valve replacement that Respondent installed leaked. It returned to repair the leaks when it installed the second phase of valves. On June 26, 2001, Respondent submitted Invoice No. 115 for the second phase of the project for $2,400.00 to install “6 boxes.” On July 1, 2001, Complainant paid Respondent $2,400.00 by Check #2298. Some of the valves in the 6 boxes that Respondent installed in the second phase leaked. It returned to repair the leaks when it installed the third phase of valves. On July 11, 2001, Respondent submitted Invoice No. 117 for the third phase of the project for $1,600.00 to replace “4 boxes.” Respondent had installed the four boxes of the third phase on a Wednesday. The valves began leaking immediately, much worse than the first two phases. Two of the boxes could not be drained completely because the valves were leaking so badly. Complainant tried to contact Respondent several times about the leaks, but it did not respond. Complainant never paid Invoice No. 117. On July 14, 2001, the following Saturday, Complainant hired Keith Riggs Plumbing, Inc., License No. 36170, to repair the four boxes in the third phase. Keith Riggs Plumbing, Inc. charged Complainant $5,269.42 to make the repairs. On July 20, 2001, Complainant canceled its contract with Respondent to replace the water valves and requested that it “turn over all the supplies that were purchased and paid for by [Complainant].” The letter noted that the repeated repairs “caused an extreme hardship on the residents at the complex as the water must be shut off each time the valves are being worked on.” On July 23, 2001, Complainant paid Keith Riggs Plumbing, Inc. $5,269.42 on Check No. 2311. On July 26, 2001, Complainant made a complaint to the Registrar against Respondent’s contractor’s license. Complainant attached to the form complaint the following narrative: Contractor has acted in an unprofessional manner since the beginning of the project. Area around the boxes was opened in approximately twenty-four (24) places. These areas have been left open for over a month. No caution tape was put up until Board of Directors and Management complained about the liability issue. Contractor did go back and put up tape. Contractor stated that no permit was required. When Riggs Plumbing came out to fix the problem, they stated a permit was required and obtained one from the City. Quite a few of the valves that were put in leaked and contractor did not come back to fix all the problems. The Contractor had to be called several times to repair the leaks, he did not come back on his own even though he knew about the leaks. The Board hired a different plumber (Keith Riggs) to come in to repair the rest of the problems. The cost for this work was $5269.42. Board of Directors is withholding payment of the PFP Plumbing invoice for $1600 due to the amount required to get their work repaired. All of the valves and supplies for the entire project were purchased by LaMesa Grande HOA at the beginning of this project at the request of PFP Plumbing. Now, PFP Plumbing is refusing to turn over all the valves and supplies until the $1600 invoice is paid. Board does not feel this is proper due to the extra amount they had to pay to repair PFP Plumbing’s poor workmanship. Board is asking that PFP Plumbing be required to turn over the supplies and valves and to pay the extra money that the Association had to pay Riggs to fix PFP’s work.

On August 7, 2001, Respondent’s attorney responded to the complaint, alleging that Complainant had failed to mitigate its damages and owed money to Respondent under the contract. Respondent would convey the valves to Complainant when it was paid. In August 2001, Complainant hired Roto Rooter to complete the valve replacement project. Complainant had to purchase new valves. On September 11, 2001, Respondent’s qualifying party called Complainant, saying he would return unused valves. On September 12, 2001, Donald Taliento, one of Complainant’s members, called Respondent’s supplier Farnsworth Wholesale to get information on the valves. Mike Ramirez at Farnsworth told him that Respondent’s qualifying party had been in about a week earlier, attempting to get a refund for the unused valves. Mr. Ramirez told Mr. Taliento that he did not give a refund because the valves were a special order. Mr. Ramirez would not tell Mr. Taliento how much the valves cost. Shortly thereafter, Respondent’s qualifying party returned 76 valves to Complainant. Respondent had contracted to install 132 valves and actually had installed 52 valves in the 13 boxes it had replaced before Complainant terminated the contract. Respondent did not mention the apparently missing four valves. Complainant has no use for the 76 valves that Respondent returned, since Roto Rooter had already completed the project. Complainant does not know where to return the valves for a refund. On October 17, 2001, the Registrar issued a Citation and Complaint against Respondent’s contractor’s license, charging violations of A.R.S. § 32- 1154(A)(1), (2), (7), and (12). Respondent’s attorney on its behalf timely answered the Citation and Complaint, denying any statutory violation or other wrongdoing. The Registrar referred the matter to the Office of Administrative Hearings and, on November 8, 2001, scheduled the hearing. The notice of hearing was sent via certified mail to Respondent at its last address of record, 31347 E. McKellips Lot 161, Mesa, AZ 85213, the same as address as the Citation and Complaint had been sent to. The notice of hearing was also sent to Respondent’s attorney. Although the beginning of the duly noticed hearing was delayed fifteen minutes to allow Respondent additional travel time, it neither appeared, through its attorney or an authorized representative, contacted the Office of Administrative Hearings to request a continuance or that the time for the hearing be further delayed, nor presented any evidence at the hearing in its defense. The Citation and Complaint notified Respondent that, if it were found to be in violation of any statute, the Registrar might consider its prior disciplinary record of final agency orders in mitigation or aggravation. The Registrar’s record shows that no final orders have been entered against this license. But the Registrar’s record shows that Respondent’s qualifying party Shane Alan Prince was listed as a partner on License No. 148974, Class C-37R, which the Registrar issued to Powerhouse Plumbing on September 26, 1999. The Registrar revoked License No. 148974 on June 20, 2001 as a result of Powerhouse Plumbing’s failure to comply with the Registrar’s final orders in Case Nos. 00-2838, 00-2933, 00-2934, and 00-2935. This poor history is considered a factor in aggravation of the penalty to be imposed against Respondent and its qualifying party. CONCLUSIONS OF LAW Complainants bear the burden of proof and must establish statutory violations by a preponderance of the evidence.[1] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[2] A preponderance of the evidence is “evidence which is of greater weight or more convincing than 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.”[3] Complainant has established that Respondent violated A.R.S. § 32- 1154(A)(1)[4] and (7)[5] in its installation of and failure to repair the valve boxes. Complainants’ refusal to pay Invoice 117 for $1,600.00 does not justify Respondent’s failure to repair the leaking valves it had installed because the Registrar requires that, once a licensed contractor undertakes contracting work for promised compensation, he must perform the work in a professional and workmanlike manner.[6] With respect to the valves, Respondent should have provided an accounting to Complainant and returned the unused valves immediately, when Complainant asked that the valves be returned and the valves still could be used. Respondent’s failure to do so is another violation of A.R.S. § 32- 1154(A)(7). The fact that Respondent’s qualifying party was listed on another license that was revoked shortly after this license was issued does not preclude Complainant from pursuing its administrative remedy nor preclude the Registrar from conducting these disciplinary proceedings.[7] But the fact that Respondent’s qualifying party was listed on a license that the Registrar revoked, when considered with the additional statutory violations proven in this case, supports an unconditional revocation of the license at issue in this complaint.[8] Complainant also has established injury and a right to restitution because Respondent refused to repair the leaking valves and the leaking valves needed to be repaired quickly to protect Complainant’s members’ water supply.[9] The evidence does not allow the Administrative Law Judge to liquidate the injury that Complainant suffered as a result of Respondent’s failures to repair the leaking valves or to return the unused valves that Complainants paid for. She makes no comment or finding of what amount, if any, Complainant should recover from the Residential Contractors’ Recovery Fund if the Registrar accepts this recommended order. RECOMMENDED ORDER Based on the foregoing, it is recommended that the Registrar revoke Respondent P F P Plumbing Inc.’s License No. 165128, Class C-37R on the effective date of the order in this matter, 40 days after service. Done this day, February 7, 2002.

______________________________________ Diane Mihalsky Administrative Law Judge Original transmitted by mail this ____ day of February, 2002 to: Registrar of Contractors Michael P. Goldwater ATTN: Joyce Armijo 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________ ----------------------- [1] See A.A.C. R2-19-119; see also Culpepper v. State, 187 Ariz. 431, 438, 930 P.2d 508, 515 (App. 1996).

[2] Morris K. Udall, Arizona Law of Evidence § 5 (1960).

[3] Black’s Law Dictionary at page 1064 (6th ed. 1990).

[4] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

[5] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” [6] See A.A.C. R4-9-108(A).

[7] See A.R.S. § 32-1154(C).

[8] See A.R.S. § 32-1154(A)(21).

[9] The legislature has empowered the Registrar to impose reasonable conditions that may serve to reduce or eliminate any otherwise appropriate disciplinary penalties for proven violations of contracting laws, however, if the performance of corrective or remedial measures on a jobsite is no longer possible. See A.R.S. § 32-1156.01; Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 440-41, 803 P.2d 430, 433-34 (App. 1990).

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