ALJDEC decisions subject to certification as final

05F-F0263-ROC · Registrar of Contractors · 2005-12-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 18, 2005 APPEARANCES: Complainants appeared on their own behalf and Respondent appeared through its owner and qualifying party, Glen Kinion. ADMINISTRATIVE LAW JUDGE: Mark A. Silver _____________________________________________________________________

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

FINDINGS OF FACT

1. Pursuant to contract, Complainants retained Respondent to accomplish specified remodel work on their existing home. Complainants allege certain deficiencies in the work performed and billings provided by Respondent and same are discussed in the findings below.

2. The following salient facts were adduced at the hearing and are important to note:

a. At the outset of the scheduled hearing, Hale Dwoskin (“Dwoskin) indicated that the instant hearing would be limited to only specified workmanship issues, allegations of fraud and improper bookkeeping, accounting issues, and abandonment. b. At the outset of the hearing, Dwoskin indicated that the assigned inspector for the Registrar of Contractors had recently completed a pre- hearing inspection, wherein the inspector found new items which he concluded required corrective work. Although these items were not on the original complaint or considered at the original jobsite inspection, Respondent consented to have same considered at the instant hearing. c. The assigned inspector appeared at the instant hearing and provided testimony regarding his findings. He testified that he found several fan rheostats which were not functioning properly. A rheostat in the kitchen was found to be excessively warm to the touch. Although rheostats can be warm to the touch, the inspector found the warmth on this one to be excessive and unacceptable. d. The inspector found other rheostats for fans that either did not properly move the fan or caused the fan to stutter in operation. e. At the pre-hearing inspection paint was found to be peeling at the window areas in the indoor swimming pool area of the home. f. Regarding some water penetration into the transition room, the inspector could not state with any degree of certainty that Respondent had any responsibility for this problem. g. Subsequent to completing the original jobsite inspection, the inspector issued a Corrective Work Order (“CWO”). Although the inspector indicated that the corrections required by said CWO had been completed, as of the time of his pre-hearing inspection, uncontroverted testimony from Dwoskin indicated that the corrections were not completed within the time deadline set forth in said CWO. h. The applicable contract was a time and materials contract. Dwoskin indicated that Respondent led him to believe that he could save money with a time and materials contract, as opposed to a fixed price contract. i. Evidence of record demonstrated that the project has not been completed by Respondent. Respondent contends that he stopped working on the project due to non-payment of invoices by Complainants and Complainants contend that there were gross errors discovered in a number of Respondent’s invoices, thus causing them to stop paying, unless and until they received adequate “back-up” for Respondent’s billings. j. Ultimately, when the parties could not resolve their disputes regarding Respondent’s accounting practices and Complainants failure to pay any further billings, Complainants filed the instant complaint with the Registrar of Contractors. It should be noted that Respondent also contacted the local office of the Registrar of Contractors for assistance in resolving the impasse between the parties. k. Among other problems referable to Respondent’s billings, evidence of record showed that Respondent submitted an invoice, dated December 14, 2004 for the amount of $8,329.89. After Complainants questioned the accuracy of said invoice, a subsequent corrected invoice was submitted showing a balance due of only $6,752.24. Complainants also questioned the invoice dated January 7, 2005 for $2,269.54 and subsequently, Respondent issued a credit on said invoice of $205.21. l. Complainants called their C.P.A., Colleen Hager (“Hager”) to testify at the hearing and Respondent called his accountant, Abbie Denton (“Denton”) as a witness. m. Although Hager did not audit Respondent’s books, she did perform a limited review of all “back-up” information supplied by Respondent, along with all invoices. According to Hager, she found numerous inconsistencies in the “back-up” materials and invoices. She opined that Respondent had poor bookkeeping practices. n. Among other things, Hager found inaccuracies in Respondent’s billings for materials, Respondent’s time sheet “back-up” information, and Respondent’s application of sales tax. After her admittedly limited review, she came to the conclusion that as of the time work ceased on the project, Respondent owed Complainants the sum of approximately $1,045.76 due to a variety of mistakes in Respondent’s billings. o. Denton testified that Respondent did make some bookkeeping mistakes, regarding over charges and under charges. Nevertheless, after her review of all of the information at her client’s office, her conclusion was that Complainants actually still owe Respondent approximately $7,300.00.

3. As demonstrated by the facts found above, sharply conflicting testimony was presented by the parties regarding whether Respondent overcharged Complainants or Complainants still owed further money to Respondent at the time work ceased on the project. The dispute over payment and billings is found to be asserted by both parties in good faith, thereby preventing any finding of a liquidated sum due and owing by either party.

4. The nature of the testimony was such that no basis exists for the disbelief of either side’s position in this regard. Since Complainant has the burden of proof on this issue, said burden has not been met. Moreover, the Registrar of Contractors, acting through an administrative license disciplinary hearing, is the inappropriate forum to adjudicate and liquidate such an accounting and monetary dispute. Nevertheless, nothing in this ruling should serve to prevent the parties from pursuing their financial/bookkeeping dispute in a civil court of competent jurisdiction.

5. Notwithstanding the foregoing finding, there was sufficient evidence to support a finding that Respondent did commit errors in some of its billings[1] and although these errors were eventually corrected, after Respondent was advised of same, billing errors represent sloppy bookkeeping and accounting practices and, as such, are indicative of a wrongful act, within the meaning of the applicable charged section of the State’s Contracting laws.

6. Notwithstanding the good faith monetary dispute between the parties, work that was already completed by Respondent must be capable of meeting minimum industry standards for good and acceptable workmanship. The problems with the rheostats and the peeling paint in the swimming pool room are indicative of substandard and unacceptable workmanship in violation of the applicable charged sections of the State’s contracting laws. Nevertheless, by way of mitigation it must be emphasized that Respondent was not made aware of these problems until the time of the hearing.

7. As aforementioned, Respondent’s belief that it was not being paid by Complainants was found to be asserted in good faith and thus, no finding of abandonment, without legal excuse, can be made at this time.

8. Although Respondent failed to complete the required corrections set forth in the CWO within the deadline set forth in said Agency directive, the fact that same were ultimately corrected would militate against the imposition of any civil penalty in this regard.

9. The evidence of record was inadequate to support any finding that the water penetration into the transition room was attributable to Respondent’s work on the project.

10. As set forth in the Citation and Complaint issued by the Registrar of Contractors, Respondent was advised that in the event of a finding of a violation against Respondent, Respondent’s prior disciplinary record of final Registrar of Contractors’ orders may be considered in mitigation or aggravation. Accordingly, subsequent to conclusion of the instant hearing, notice was taken of official records of the Registrar of Contractors regarding any prior final disciplinary orders against Respondent and said notice revealed that the instant complaint was the only complaint on the Registrar of Contractors’ current record regarding Respondent. Therefore, Respondent’s prior record is properly deemed to be excellent and thus, is viewed as a matter in mitigation for any disciplinary penalties to be imposed as a direct result of this case.

CONCLUSIONS OF LAW

Respondent violated the provisions of A.R.S. § 32-1154A (23), (7), and (3); namely Rule R 4-9-108.

RECOMMENDED ORDER

In view of the foregoing it is recommended, commencing on the effective date of the Order entered in this matter, that the Class B license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has accomplished appropriate and effective remedial work on the rheostat’s that are not operating properly and corrected the peeling paint in the swimming pool room. It is further recommended that if Respondent accomplishes the above- described corrective work on or before the effective date of the Order entered in this matter, then the aforementioned license suspension shall not take place. It is further recommended, in addition to the foregoing license suspension, if any, that Respondent’s Class B license be placed on a period of 120 days disciplinary probation. This additional disciplinary penalty shall commence on the effective date of the Order entered in this matter or the date on which notice of Respondent’s compliance with the terms of this Order is filed with the Registrar, whichever is later. 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 in this matter will be forty (40) days from the date of that certification.

Done this day, December 5, 2005.

______________________________________ Mark A. Silver Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2005, to:

Registrar of Contractors Israel G. Torres ATTN: Alicia Guerra 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] Finding of Fact 2(j), above.

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