ALJDEC decisions subject to certification as final

03F-G0244-ROC · Registrar of Contractors · 2003-10-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 2, 2003 APPEARANCES: Nancy Shasteen appeared on behalf of herself and her husband, Ronald Shasteen (“Complainants”). Terrence Reale, part owner of Alpha Concrete (“Respondent”), appeared on behalf of Respondent. ADMINISTRATIVE LAW JUDGE: Michael L. Barth _____________________________________________________________________ findings of fact 1. The purpose of the hearing was to determine whether Respondent violated A.R.S. § 32-1154(A)(2), (5),(7), (9), (13), (23) and/or (3), namely A.A.C. R4-9-108. 2. It was undisputed that pursuant to a contract, Respondent performed, on or about July, 2002, concrete work at Complainants’ residence at 4453 W. Wethersfield, Glendale, Arizona. Respondent asserted that the contract between the parties was written, as illustrated by written Proposal, Exhibit 1, containing Mr. Shasteen’s signature. Complainants did not dispute that it was Mr. Shasteen’s signature on the written Proposal but did dispute that the signature had been placed there by Mr. Shasteen. Mr. Shasteen denied having been presented with a written proposal. 3. It was undisputed that the contracted concrete project included pouring a back patio entry extension, sidewalk, front patio entry extension, and another slab at the Complainants’ RV driveway. 4. It was undisputed that Complainants had not paid Respondent for any of the work that had been performed by Respondent. 5. Complainants accused Mr. Reale of tampering with a public record alleging that Mr. Reale had transferred the signature of Mr. Shasteen contained on the purchase agreement for Complainants’ house, which is a public record stored on a computer, on to the written Proposal, Exhibit 1, and attaching the written Proposal as part of a Notice and Claim of Lien for Labor, Material and/or Machinery filed on Complainants’ property. 6. Mr. Reale denies having transferred Mr. Shasteen’s signature from the purchase agreement on Complainants’ home to the written Proposal for the concrete work. Mr. Reale asserts that he had left the written Proposal with Mr. Shasteen for a period of time, and that while it was in Mr. Shasteen’s control, Mr. Shasteen had transferred his signature from the purchase agreement onto the written Proposal as part of a conspiracy between Mr. Reale’s neighbor with whom Mr. Reale has an ongoing feud and Mr. Shasteen who was reported to be a friend of this neighbor, to not pay Respondent for work, as well as to frame Mr. Reale for violations of criminal and contracting laws. 7. In corroboration of their above-referenced accusation, Complainants presented Exhibit 3, an Order from Maricopa County Superior Court Judge Crane McClennen, in which Mr. Reale pled guilty, pursuant to a plea agreement, of committing forgery and tampering with a public record relative to the Notice and Claim of Lien. 8. Mr. Reale asserts that the prosecutor found his conspiracy theory to be credible as evidenced by Exhibit D, the State’s Disclosure of Information Pursuant to Rule 26.8(b). 9. In this Disclosure, the prosecutor discloses that Mr. Reale’s explanation for Counts and 1 and 2 can not be discounted given the friendship between Mr. Reale’s neighbor and Mr. Shasteen and, therefore, agreed to dismiss Counts 1 and 2. 10. This tribunal finds that the Disclosure lacks sufficient probative value to support Mr. Reale’s conspiracy theory. First, the Disclosure does not set forth the crimes which are the subject of Counts 1 and 2 and which were dismissed, or the explanation by Mr. Reale to those Counts to which the prosecutor refers. Second, if the explanation to which the Disclosure refers is Mr. Shasteen’s explanation for the appearance of Mr. Shasteen’s signature on the purchase agreement on the written Proposal, and the prosecutor found this explanation to be credible then this tribunal finds that it would have been unlikely for the prosecutor to have still prosecuted Mr. Reale on Counts 3 and 4, forgery and tampering with a public document. Third, the basis for the prosecutor’s willingness to agree to dismiss Counts 1 and 2 was an interview of a defense witness, who requested that his identity be withheld, reporting that Mr. Shasteen and Mr. Reale’s neighbor were friends, a friendship denied by Mr. Shasteen. Fourth, the interview of said witness was not under oath. Fifth, the witness was not subject to cross examination by Complainants. Sixth, the prosecutor who made the disclosure was not subject to cross examination. Seventh, Mr. Shasteen’s testimony that he had never been presented with the written Proposal was consistent with the testimony of Respondent’s former employee and foreman, Josue Cadriel, that most contracts were verbal, as well as being consistent with Mr. Reale’s motivation for and commission of forgery and tampering with a public document relative to filing the Notice and Claim of Lien, and inconsistent with Mr. Reale’s testimony that generally agreements for work were in writing. 11. This tribunal further finds that it is unlikely for one to plead guilty to crimes one did not commit. 12. This tribunal finds that Respondent failed to present any evidence causing this tribunal to question the credibility of Complainants. Based on the foregoing, this tribunal rejects Respondent’s conspiracy theory, and finds that Mr. Reale committed the fraudulent conduct to which he pled guilty and, therefore, further finds that Mr. Reale is not a credible witness. 13. As a result of Respondent’s criminal conduct, Complainants’ property was the subject of a fraudulent lien, and Complainants were required to become involved in and undergo the stress and anxiety of a criminal investigation into Mr. Reale’s conduct in order to prevent Respondent from foreclosing on the fraudulent lien on their property. 14. It was undisputed that Respondent also failed to produce income tax records for the business for years 2001 and 2002 in response to a Complainants’ Subpoena for same. Based on Respondent’s failure to produce the requested tax documents as directed in the Subpoena, it can be reasonably inferred that the requested records did not exist; otherwise, Respondent would have produced them at the hearing as directed by the Subpoena. Accordingly this tribunal finds that Respondent failed to pay income taxes for the years 2001 and 2002 and withholding tax for Josue Cadriel for the year 2002. 15. Based on the uncontroverted and credible testimony of Registrar of Contractors Inspector Jack McKim, this tribunal finds that the concrete project was not performed within minimum workmanship standards due to the following deficiencies: a. The presence of voids and exposed aggregate or lack of consolidation of the concrete at the edges of the concrete. b. Ponding at the front entry way or North main entry patio extension. c. In some areas, the edges of concrete were less than the requisite thickness of 3.5 inches.

16. Mr. Shasteen testified that he had instructed Respondent to construct the back or west patio entry extension to the height designated by the red line marked by ”x” in the photograph of the area in question, Exhibit 10. However, as reflected in the photograph, the patio was constructed to a height well below the specified red line. Mr. Cadriel, Respondent’s foreman on the project, testified that the red line shown in Exhibit 10 indicated the height initially specified by Mr. Shasteen, but that the height specification had been revised by Mr. Shasteen out of concern for a trip hazard, and the patio was constructed in accordance with that revised height specification. Given Mr. Cadriel’s relationship to Respondent as a former employee and presently as Qualifying Party for Mr. Reale’s new company, this tribunal finds Mr. Shasteen’s testimony to be more credible on this point and, therefore, finds that the patio was not constructed to the specified height. 17. Mr. Shasteen further credibly testified that he had instructed Respondent to construct 5 1/2-6 inch “turn-downs,” edges of the concrete, at the back or west patio entry extension. 18. Respondent admitted to not constructing the turn downs to the specified thickness, but asserted its failure to do so was justified. Mr. Reale explained that Respondent would have violated the law because Mr. Shasteen, who by his own admission was having the “turn downs” constructed for purpose of adding a patio cover in the future, had informed Mr. Reale as to the purpose of his request for the 5 1/2 -6 inch thick turn downs, but had not obtained the requisite permit for construction of a patio cover. However, the patio cover was not under construction, Respondent had not been hired to construct the patio cover and Respondent failed to present any probative evidence that a permit was required for the cement work to be completed. Based on the foregoing, this tribunal finds that Respondent’s failure to construct the turndowns to the specified thickness was not justified. 19. Regarding the concrete slab poured at the RV driveway, Mr. Shasteen testified that he had informed Respondent to construct an extension to the RV driveway, but that the slope of the slab was greater than the slope of the existing RV driveway. 20. Mr. Reale testified that the slab had been constructed with a higher slope than the RV driveway because he did not know that the existing concrete was serving as a driveway and had been informed to construct a pad for a shed. 21. This tribunal finds that the photograph of the existing concrete at the area where the slab in question was poured, Exhibit 13, even in the absence of vehicles, shows an existing driveway. Based on Exhibit 13, this tribunal finds that a reasonable contractor would likely conclude that the existing concrete was a driveway unless advised otherwise. Accordingly, this tribunal finds that Respondent’s failure to construct the slab of concrete at issue as specified was not justified not only for the reason that Mr. Reale had been found not to be a credible witness but also for the reason that the existing driveway, as reflected in Exhibit 13, is inconsistent with Mr. Reale’s purported lack of awareness that the existing concrete was serving as a driveway. 22. Taking administrative notice of the Corrective Work Order, this tribunal finds that Inspector McKim issued a Corrective Work Order to Respondent on September 6, 2002, directing Respondent to correct certain deficiencies including those identified in paragraph 10 above within 15 days of the issuance of the Corrective Work Order. 23. It was undisputed that Respondent failed to comply with the Corrective Work Order. However, Respondent asserted that its failure to do so was justified in that it had been denied access to Complainants’ residence for the purpose of performing the corrective work. Mr. Reale testified that he had contracted an independent contractor to correct those deficiencies set forth in the Corrective Work Order and that the independent contractor had informed him that he had found the deficiencies could be properly corrected without replacing the concrete but that Mr. Shasteen refused to allow him to do so. Mr. Shasteen denied prohibiting the independent contractor from correcting the concrete, testifying that said contractor left, having advised him that in order for the deficiencies in the concrete to be properly corrected the concrete had to be replaced. 24. Given Respondent’s failure to call said contractor to testify at the hearing, as well as having found Mr. Reale not to be a credible witness, and having no reason to question Mr. Shasteen’s credibility, this tribunal finds that Complainant did not deny Respondent access to perform the corrective work; instead the independent contractor determined that the concrete had to be replaced and Respondent chose not to have the independent contractor replace the concrete. 25. This tribunal further finds that neither party presented sufficient probative evidence as to the manner in which the deficiencies discussed above had to be corrected in order to comply with minimum workmanship standards. 26. Mr. Reale contended that, as reflected in the aforesaid Notice and Claim of Lien, Complainants agreed to pay Respondent the sum of $2,380.46 to perform the project. Complainants testified that they had agreed to pay Respondent the sum of $1,731.00 including the purchase and application of fill dirt, to perform the aforementioned project. 27. Having found Mr. Reale not to be credible witness, and having no reason to question the credibility of Complainants, this tribunal finds that Complainants had agreed to pay Respondent the price of $1,731.00 to complete the contract. 28. Given the filing of the aforesaid Notice and Claim of Lien by Respondent reflecting that Complainants owed Respondent more than the agreed upon price for completion of the contract and Respondent’s failure to complete the project within minimum workmanship standards and in accordance with Complainants’ specifications, this tribunal finds that Respondent failed to complete the project for the price stated in the oral contract. 29. The written Proposal at issue, Exhibit 1, did not include Respondent’s license number preceded by the acronym “ROC.” 30. This tribunal finds that as a result of Respondent’s poor workmanship, the concrete has a poor appearance, does not drain properly in some areas and requires repair and/or replacement, further delaying completion of the project and inconveniencing the Complainants. Conclusions of law 1. Having failed to perform the concrete work within minimum workmanship standards, Respondent violated A.A.C. R4-9-108, and in turn violated A.R.S. § 32-1154(A)(3). 2. Having failed to comply with the Corrective Work Order without valid justification, Respondent violated A.R.S. § 32-1154(A)(23). 3. In committing forgery and tampering with a public document and in failing to perform the contracted work within minimum workmanship standards and Complainants’ specifications, Respondent committed fraudulent and wrongful acts causing Complainants substantial injury in violation of A.R.S. § 32-1154(A)(7). 4. Having failed to construct the concrete as specified, Respondent violated A.R.S. § 32-1154(A)(2) which prohibits a contractor from departing from specifications. 5. Having failed to complete the contracted work for the price stated in the oral contract, as evidenced by Respondent failing to perform the work in accordance with Complainants’ specifications and the minimum workmanship standards and filing a fraudulent lien for an amount in excess of the agreed upon contract price, Respondent violated A.R.S. § 32- 1154(A)(9). 6. Having failed to present tax documents as directed by Complainants’ Subpoena, this tribunal concludes that the records do not exist as Respondent has failed to pay income taxes and withholding taxes in violation of A.R.S. § 32-1154(A)(5). 7. Having utilized the written Proposal, Exhibit 1, which did not contain its license number preceded by the acronym “ROC” in the operation of its business, Respondent violated A.R.S. § 32-1124(B), and in turn violated A.R.S. § 32-1154(A)(13). Recommended Order Given the egregious nature of Respondent’s misconduct, it is recommended that commencing on the effective date of the Order entered in this matter, Respondent’s Class K-09 license be revoked Done this day, October 20, 2003

______________________________________ Michael L. Barth Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2003, to:

Registrar of Contractors Israel G. Torres ATTN: Jennifer Brown 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