ALJDEC (decisions subject to certification as fin)

03F-0222-ROC · Registrar of Contractors · 2002-12-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 4, 2002. APPEARANCES: The Complainant appeared personally. The Respondent was represented by its president and qualifying party, Sam Lorimor. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________

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

FINDINGS OF FACT

1. The Respondent is the holder of License No. 159452, a Class B general residential contactor’s license, issued by the Registrar of Contractors. 2. The Complainant is the owner of a residence located at 1318 West Willetta Street, Phoenix, Arizona. 3. Complainant decided to remodel his residence, which had been previously classified for historic preservation by the City of Phoenix Neighborhood Services Department. 4. On or about March 4, 2002, Respondent submitted a written estimate to Complainant for the remodeling project. The contract price listed was $30,360.00. The scope of work described in the estimate was as follows: • 330 sq. foot room addition with patio and Ramada. • Respondent responsible for filing for all required permits. • Re-route main electrical panel, mail plumbing supply and all demolition. • Framing, plumbing, electrical, drywall, paint, doors, trim, flooring, exterior stucco finish, roofing, window refurbish and relocate. • Final architect drawings. • APS off property work. • Total cost estimated at approximately $92.00 per square foot. • Estimated contract amount did not include the cost of materials. • Any additional work may require a new estimated total.

5. After the submission of Respondent’s estimate, the parties negotiated and entered into a written agreement on or about April 8, 2002, which was authored by the Respondent. 6. The Respondent agreed to perform work on the addition of a bedroom, bathroom and patio to Complainant’s existing residence. The scope of work was as follows:

• Permits. • Demolition/Tear-out. • Debris Removal. • Concrete slab/footings. • Fence (Wood slat across back of driveway, security chain link fence down property line, approximately 30 linear feet). • Stucco and exterior paint (stucco to match existing). • Interior paint. • Ramada footings (including patio, overhang, footings, wiring and outlet set-up). • Ramada overhang (covering 12’ x 17’ area) or approximate area over patio. • Patio tile for Ramada (including Brick face Desert Sand, Terra Cota Tile or interlocking brick). • 1.5 ton HVAC (rooftop). • Framing (including sub floor, walls, ceiling and support beams set on footing). • Trim carpentry (baseboard and door frames to match existing in house, crown molding if requested, doors to be modern equivalent existing doors in house). • Plumbing (including mainline work material). • Electrical (including circuit box relocation material and bury cable if approved by APS). • Foam roofing. • Insulation. • Plumbing in bathroom (including commode, $200.00, corner shower, $500.00-$700, countertop Corian® or concrete, $280.00, vanity, $800.00, sink, $250.00, showerhead and handles, $200.00, sink faucets and handles, $200.00). • Light fixtures/ceiling fans (including 4 outside, $160.00, track inside, $80.00, recessed for bathroom vanity, $225.00, 2 ceiling fans, $180.00). • Cable outlets (including 2 inside, 1 outside). • Phone outlet (sic) (including 1 in bedroom). • Electrical outlets (including 3 in bathroom, 1 in closet and 5 in bedroom). • Ceiling fan hook-up (including 1 in bedroom and 1 on patio). • Heat lamp bathroom hookup. • French doors (including 10 lights with screen), $800.00. • Pocket doors (including closet and bathroom doors). • Relocating existing windows (inset and rebuilt). • Flooring, tile and hardwood (including bathroom tile in shower and 4’ high on walls, $720.00, bedroom wood, $2,100.00, using existing floors in closet). • Repairs to existing house (including vent fan in bathroom and electrical outlets in office and living room).

7. Respondent agreed in the contract to perform the specified work according to the following schedule, which did not include any delays due to inspection or weather and was to begin upon receipt of the required construction permits:

• Week 1: Demolition, debris removal, re-route electrical and plumbing mains, and ground breaking. • Week 2: Framing, electrical, plumbing and mechanical. • Week 3: Drywall, insulation, stucco and roofing. • Week 4: Painting, install shower, cabinetry, flooring, trim, doors and install A/C. • Week 5: Trim plumbing, trim electrical, punch list and clean-up.

8. The parties’ written contract contained an addendum signed by both parties covering the following construction items, miscellaneous item and cost not to exceed provision:

• Construction items included in contract price: dimmer switches, trap door in closet for access to crawl space, antique rustic doors between the commode and vanity in bathroom, the cost of these items may be between $200.00-$500.00, cost of doors and installation part of the bid price; termite treated wood to be used in construction; and any disturbed soil to be treated for termites. • No tax added to bid price. • “Total cost of job agreed to in the attached contract will not exceed an amount equal to 5% greater than the amount agreed to of $30,360, whether increased costs are caused by foreseeable or unforeseeable circumstances.”

9. Complainant agreed to pay the contact price of $30,360.00 according to the following payment schedule: $10,120.00 due upon signing; $10,120.00 due 17 days after receipt of construction permits; and $10,120.00 due upon completion. 10. Wayne Chaney was hired by Complainant to complete the architectural plans and drawings for the project. The plans do not contain an architect’s stamp. 11. Prior to April 10, 2002 when Respondent took the plans and drawings to the Phoenix Historical Preservation Office and City of Phoenix Development Services Department to start the permit process, Respondent’s president and qualifying party, Sam Lorimor, met with Mr. Chaney at least two times. 12. There is credible evidence that Complainant did not ask Mr. Chaney to alter the room addition square footage from the figure on the plans presented to Respondent. 13. The City of Phoenix Development Services Department and the Phoenix Historical Preservation Office approved the plans and drawing subject to required red lined noted corrections. 14. On May 14, 2002, the City of Phoenix Development Services Department issued a building permit for the remodeling project. The building permit listed the following scope of work: “Addition of 391 sq. ft. bedroom, bathroom and 204 sq. ft. patio to existing single family residence per approved plans…increase water meter to ¾” from 5/8’’ and increase building supply to 1”.” 15. The parties’ written contract drafted by Respondent is silent as to the square footage of the room addition and the Ramada. It is determined that the plans and drawings control those specifications. 16. The plans and drawings specify the room addition as 391 square feet and the Ramada, listed as a patio, as 17 square feet. Respondent is found to be contractually bound to construct to those specifications. 17. During the course of construction Respondent realized that it had underbid the project because it did not realize that the plans called for the room addition to be 391 square feet, rather than 330 square feet as stated in its estimate. 18. Respondent subsequently submitted a written change order to Complainant in the amount of $10,000.00 covering the following scope of work: replacement of the main sewer pipe to the kitchen, replacement of the ¾” main copper line with 1” pipe, and an additional 100 square feet on the addition. There was no itemization of the costs for materials and labor in the change order. 19. Complainant objected to the change order relying upon the parties’ written contract. 20. After Complainant refused to consent to the proposed change order, Respondent picked up its tools and its workers left the job. Respondent has not returned to the project. 21. Complainant subsequently filed a complaint with the Registrar of Contractors alleging that Respondent violated provisions of the State’s contracting laws on this project. 22. In response to the Complainant’s complaint, the Registrar of Contractors filed a Citation and Complaint alleging that Respondent violated the provisions of A.R.S. § 32-1154(A)(1), (2), (7) and (9). 23. Respondent’s contention that the square footage for the room addition set forth in its estimate should control because the contract does not specify any square footage is determined not to be supported by the evidence. After the submission of the estimate, the parties negotiated a final written contract that was drafted by Respondent. Respondent had a responsibility to examine the project’s plans and drawings that clearly specify the square footage for the room addition and the patio/Ramada. Those specifications were not expanded. 24. It is determined that Respondent underbid this project by not responsibly examining the plans and drawings. Once it entered into the contract with the Complainant, it had a duty to perform the scope of work set forth in the plans and drawings unless the parties entered into a mutually agreeable change order. 25. Respondent is found to have abandoned the subject remodeling project without legal justification. 26. Respondent deviated from plans and specifications by insisting upon a change order for additional square footage that is contained in the original plans. 27. Respondent failed to complete its contractual scope of work for the agreed upon contract price. 28. Respondent’s abandonment of the project without legal justification, its failure to perform its contractual obligations pursuant to the plans and drawings and its failure to complete the project for the agreed upon contract price are deemed to be wrongful acts which have substantially injured Complainant. 29. Pursuant to the standing motion of the Registrar of Contractors, notice is taken of the Registrar’s official records pertaining to Respondent’s Class B license. That license is currently suspended by operation of law because Respondent failed to timely renew the license.

CONCLUSIONS OF LAW

1. The evidence of record is adequate to establish that Respondent violated the provisions of A.R.S. § 32-1154(A)(1), (2), (7) and (9). 2. Pursuant to the provisions of A.R.S. § 32-1154(C), the suspension of Respondent’s Class B license by operation of law does not deprive the Registrar of Contractors of jurisdiction to impose disciplinary penalties on that license.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class B license be revoked on the effective date of the entered Order in this matter. It is further recommended that if Respondent causes, at its sole cost and expense, a properly licensed residential general contractor to complete the project per the approved plans and drawings, and/or pays Respondent for any contracting work performed by a properly licensed contractor subsequent to Respondent’s abandonment of the contract, on or before the effective date of the entered Order in this matter, then the above-provided license revocation shall not take place, but instead that Respondent’s Class B license shall be placed on suspension for a period of ten calendar days followed immediately by a period of disciplinary probation for 180 days. This alternative penalty shall commence, if at all, on the effective date of the entered Order in this matter or the date that Respondent’s Class B license is renewed, whichever is the later. It is further recommended, in addition to the above-provided penalties, that any restoration of Respondent’s rights to resume contracting, whether or not probationary, shall be subject to a condition that Respondent first post an additional surety bond, cash deposit or alternative deposit for a period of 24 months, including future renewal periods, in the amount of $4,000.00, such bond or deposit to be in addition to the required surety bond, cash deposit or recovery fund participation set forth in A.R.S. § 32-1152(C). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two year period following the above-provided 24 month period and only if no claims are then pending.

Done this day, December 23, 2002

______________________________________ Brian Brendan Tully Administrative Law Judge

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

Michael P. Goldwater, Director Registrar of Contractors ATTN: Jennifer Brown 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________ -----------------------

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