ALJDEC decisions subject to certification as final

05F-2664-ROC-com · Registrar of Contractors · 2008-06-24

STATE OF ARIZONA

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

COMPLIANCE HEARING: June 12, 2008.

APPEARANCES: >The Complainant was represented by its attorney, Craig L. Keller, Esq. >The Respondent was represented by its attorney, David F. Gaona, Esq.

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 on Compliance Hearing are made.

FINDINGS OF FACT

1. The above-entitled matter was scheduled for a Compliance Hearing in accordance with a partial remand mandate from the Superior Court as part of a Judicial Review action initiated by Respondent that effectively affirmed the underlying Order of the Registrar of Contractors approving and adopting the amended decision of the previously assigned Administrative law Judge. The Court’s ruling, in large part fully confirming the findings and conclusions that Respondent had violated the charged

provisions of the State’s contracting laws, may not properly be collaterally attacked in these further administrative proceedings.

2. The Court determined that, since Complainant had filed a prior request for a Compliance Hearing and Respondent had filed a Motion to Dismiss based upon an asserted denial of access so as to enable the performance of the corrective work condition included within the disciplinary Order, further proceedings should have occurred to address the post-hearing efforts and positions of the parties. The instant Compliance Hearing is in the nature of an Order to Show Cause why the provisional license suspension should or should not be imposed under all the circumstances. Stated alternatively, it is presently necessary, after evidentiary presentations, to determine whether or not there has been a “valid” tender of remedial work by Respondent communicated to Complainant, and also whether or not there has been an ongoing “unreasonable” or “unjustified” denial to Respondent of access to the premises on the part of Complainant.

3. The Registrar’s original Order, adopting the Administrative Law Judge’s Amended Decision, provided for a license suspension against Respondent unless written proof was filed on or before the Order’s effective date that Respondent has corrected certain substandard workmanship conditions at the site or that alternative financial accommodation by and between the parties has been accomplished. The agency’s final Order, denying Respondent’s filed Petition for Rehearing in this matter, included the observation that any unreasonable denial of access to Respondent to perform the corrective work may be treated as compliance by Respondent and may result in the case being closed without discipline.

4. It was not disputed that no corrective work on the jobsite premises has been performed. The parties’ continuing inability to communicate with each other resulted in the exchange of correspondence between their respective attorneys relaying their clients’ positions and intentions.

5. The post-hearing access issue, recognized by the Superior Court to be of critical importance in this matter of determining compliance, is found to encompass all post-hearing communicated positions and intentions during the entire time period from and after the time that the Registrar’s final Order was entered and continuing to the time of the Superior Court’s ruling and possibly also up until the time of the instant Compliance hearing.

6. While a contractor is customarily left free to determine the manner of accomplishing remedial work, if any licensee elects to perform a less expensive correction or a less extensive treatment of any problem, such contractor remains at its peril to achieve effective results that are acceptable, as tested by prevailing industry standards and tolerances, also encompassing any applicable obligations under the parties’ contractual arrangements.

7. The performance of remedial work on this jobsite premises was fully recognized by the parties to generate some realistic disruption and interference with the ongoing business use of the property by the owner (Complainant), and Respondent in its originally communicated proposal through counsel had commendably sought to perform its proposed work on certain dates towards the end of work-weeks that would result in a minimizing of any such interference time.

8. Notwithstanding the above-described long-standing policy of the Registrar not to instruct or to advise any licensed contractor how to accomplish necessary corrective work, if the tender of work is incomplete or otherwise may tend to result in the prolonging of the disruptive impact of a potential failure of the proposed work thereby requiring additional future efforts, any property owner would be prudent in communicating reasons why any proposed work may be insufficient or inappropriate. In point of fact, if any such owner remains silent and knowingly allows performance of less

than complete or improper remedial measures, a risk may well exist that such owner may be equitably precluded or estopped in the future from subsequently complaining about the results of the performed work.

9. In the instant case, the Registrar’s prior ruling denying a previously sought Compliance Hearing shortly following the entry of the final administrative Order herein was based in large part on the expressed reasoning that any such hearing must be “after” corrective work had been attempted. The Superior Court’s ruling in the appeal action in effect disagreed with the reasoning of the Registrar and opined that further proceedings should have occurred at that time even prior to performance of remedial work to determine the validity of Respondent’s tender of work and/or the reasonableness of any denial of access on the part of Complainant. Especially where corrective work efforts are recognized to be somewhat disruptive of ongoing business activities on the jobsite, the convening a Compliance Hearing in advance of any work performance is appropriate and fully warranted.

10. Complainant’s ongoing communicated position, through its counsel, appeared always to expressly be granting access to Respondent for the performance of more extensive remedial work than was being proposed. Even if such conditions or scope of work be viewed as a denial of access so as to enable performance of a lesser extent or manner of corrective work, it must be held that any such denial was not unreasonable or arbitrary under all the circumstances.

11. The Corrective Work Order issued by the Registrar’s assigned Inspector, found as part of the prior finalized proceedings to have been violated by Respondent, required the contractor to appropriately rectify the asphalt parking lot slope determined to be insufficient to cause desired water drainage away from the workshop behind several garage doors and to avoid excess ponding around the site.

12. The proposed corrective work initially communicated by Respondent’s counsel made reference only to creating and installing a valley gutter in the area immediately in front of the garage doors on the South side of the paved parking lot, omitting any mention of another location shown also to have been adversely affected by the grading slope of the asphalt on the East side in front of a leased building being operated as a bar known as the Holly Inn. The uncommunicated or insufficiently communicated private intention of Respondent’s principal officer and qualifying party to include performance of remedial work at both locations resulted in, at best, an incomplete or invalid tender of all necessary work. Moreover, another portion of the asphalt surface on which excessive ponding was occurring was not the subject of any proposed further work by Respondent. The incorrect grading or sloping of the asphalt lot surface was also adversely affecting the neighboring property to the North.

13. The Registrar’s policy of not instructing any contractor how to accomplish needed remedial work is not intended to provide a blanket authorization to undertake and complete measures that are not reasonably calculated to produce fully appropriate results. Any owner is admittedly entitled to be informed of the proposed manner of performance of such work, one purpose of which is to evaluate the probable success of same. One of the dominant purposes of a Compliance Hearing must necessarily be to determine whether the tendered work is addressing all workmanship issues or whether there is a likelihood of multiple future attempts to achieve results that satisfy prevailing industry standards as well as any and all applicable contractual entitlements.

14. Based upon the testimonial and documentary evidence and the contents of previously entered administrative and judicial rulings, it is found and determined that the communicated proposal to install a valley gutter almost directly in front of the garage doors, and even to place another valley gutter in front of the East side building, for the purposes of diverting water improperly draining from the parking lot surface toward the structures, did not constitute a valid tender of corrective work reasonably calculated to

achieve compliance with prior directives and Orders. Moreover, the proposed installation of a valley gutter or gutters was shown by credible testimony to likely generate some measure of interference with the ongoing conduct of Complainant’s trailer construction business activities that customarily take place both inside and directly outside the garage interior.

15. It is further noted that the manner and extent of proposed work was formulated by Respondent’s qualifying party who, although possessing substantial prior experience and knowledge, was not an engineer, and no advance engineering evaluations and opinions with respect to the proposed corrective work were sought or obtained. Although it might make more sense to have obtained a civil engineer’s advance evaluation and approval or modification of the proposed manner and extent of corrective work in advance of performing or even proposing any such remedial work, Respondent’s principal owner did, at the Compliance hearing, repeat his individual intentions previously reported in several post-hearing motions and responses before the Registrar, which was to have an engineer examine and approve the remedial work performance but only after it was completed.

16. It is further found and determined that appropriate and effective remedial work to rectify the original workmanship deficiencies would consist of at least the removal and replacement of some portion of the wrongfully sloped parking lot surfaces, perhaps not in their entirety, but at least to include locations approximately twenty feet in front of the building structures, so as to create the appropriate grading or sloping away from the garage and the leased building structures. Additionally, the corrective efforts must also address the ability of any surface water to reach the intended drainage departure point from the property, especially at or close to the location in which there was an excessive ponding condition proven to exist near the Northwest corner of the lot. Any prior rejection by Complainant of tendered work of a lesser extent must be held not to have been unreasonable or unjustified.

17. Notwithstanding the foregoing, it additionally appeared that in early March, 2007, long before the Court’s decision in the Judicial Review action was rendered affirming the Registrar’s prior Order, and shortly following receipt of an interim ruling by the Registrar denying motions or requests by or on behalf of the respective parties for the convening of a Compliance Hearing and/or for a Dismissal based upon an alleged denial of access, in which ruling Complainant was specifically made aware of the potentially adverse impact of any unreasonable access denial, Complainant had caused the express written communication to Respondent of its intent to allow the installation of a valley gutter or gutters as Respondent had been proposing, although reserving its right to subsequently object to the sufficiency of such corrective measures. Such expressed reservation would appear unnecessary since the ultimate results of the work effort must be appropriate in all respects.

18. Respondent failed to effectively respond to Complainant’s unrestricted granting of access, even to the extent of repeating its previously communicated tenders of incomplete work or attempting to schedule same, instead deciding to await the prolonged judicial appeal process concluded nine months thereafter. Even after becoming aware of the Court’s ruling and the ultimate convening of the instant Compliance Hearing, no further tenders of work were communicated by or on behalf of Respondent.

19. No merit is found to Respondent’s position that Complainant’s failure to expressly accept the Respondent’s communicated tender of valley gutter work prior to the filing of an appeal by Respondent operated to waive any entitlement to receive corrective measures. Stated alternatively, any prior denial of access by Complainant that might be deemed to have been unreasonable (which was not the case hereunder) or any previously experienced failure by Complainant to expressly grant access so as to allow Respondent to perform originally proposed incomplete remedial measures at

points in time prior to the filing of the appeal action by Respondent must be held not to have operated as any waiver of entitlement by Complainant to receive appropriate corrective work performance.

20. It is further found that the course of conduct on the part of or attributable to Respondent in formulating methods to address proven workmanship problems and in availing itself of legitimately available appeal remedies were not motivated by any bad faith intentions but rather by an apparent desire to provide what was believed to constitute an adequate and beneficial solution for such problems. Consequently, although the Registrar is empowered as a result of the Compliance Hearing to impose additional or lingering disciplinary penalties even after ultimate proper compliance is achieved, and while not condoning the duration of time that the jobsite premises has been left improperly corrected, no such additional penalties need be or should be included against Respondent by the Registrar.

CONCLUSIONS OF LAW

1. The evidence of record supported a determination that Respondent has not complied with the terms and conditions of the prior final Order of the Registrar and that it had not at any time been unreasonably denied access to the premises by Complainant.

2. Based upon the credible testimonial and documentary evidence adduced at the Compliance Hearing, a modification to the terms of the previously entered Order is warranted so as to reflect that the appropriate corrective work to be performed as a condition for eliminating any license suspension must encompass the removal, re-grading and replacement of such portion of the asphalt paving that will enable the surface to positively drain water away from the South-side garage structure and from

the East-side building structure, as well as from a location near the Northwest corner experiencing excessive ponding, directing all such water drainage to an appropriate departure point from the lot. To the extent that prior engineering evaluations and recommendations are deemed necessary or prudent in formulating the specific details of the necessary corrective work, consistent with the determinations made in this recommended decision, Respondent’s obligations would include the obtaining and paying for any such engineering expenses.

RECOMMENDED ORDER ON COMPLIANCE HEARING

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order on Compliance hearing that Respondent’s Class A-14 license shall be suspended unless or until written proof is filed with the Registrar that Respondent has accomplished proper corrective work on the parking lot, consistent with the Findings and Conclusions set forth above or has concluded other “mutually” acceptable financial arrangements with Complainant.

It is further recommended that if written proof is timely filed with the Registrar either (a) demonstrating that Respondent has accomplished necessary remedial work in a proper, workmanlike manner on or before the effective date of the Registrar’s Order on Compliance hearing, or (b) that Respondent is unable to so accomplish such work because of Complainant’s unwillingness to accept a valid tender or same or its refusal to grant reasonable and timely access to the premises for Respondent’s representatives, then no license suspension shall be imposed and the entire Citation and Complaint in Case Number 05-2664 shall be closed. …….. ……. …….

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty (40) days from the date of that certification.

Dated: June 26, 2008. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

Fidelis V. Garcia, Director Registrar of Contractors 3838 North Central Avenue (Suite 400) Phoenix, AZ 85012 - 1906 -----------------------

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