ALJDEC decisions subject to certification as final

06F-2264-ROC · Registrar of Contractors · 2007-03-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 21, 2006

APPEARANCES: Complainants appeared on their own behalf and Respondent was represented by its attorney, Michael Brewer. 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 remodel their kitchen and office. In addition, they also retained Respondent to construct a new entertainment center for the great room in their home. Complainants allege certain deficiencies in the work performed 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. On or about September 2004 the parties entered into the original contract. The first phase of the project was for the kitchen remodel and this was completed on or about January 2005. b. Complainants allege that there are several construction related deficiencies in the kitchen remodel portion of the contract. c. Complainants submitted a rough drawing to Respondent for their idea regarding the entertainment center and Respondent prepared his own sketch in this regard. In addition, numerous conversations occurred regarding the design of the entertainment center. d. Among other things, there was an issue regarding the placement of the television set. Initially, Complainants indicated that they wanted the television set over the fireplace, which was located between the two sections of the entertainment center. Later, but after the entertainment center was built by Respondent in its shop, they decided that the television set should be located on one of the side units for the entertainment center. e. Gary Davalos (“Davalos”), Respondent’s qualifying party, appeared at the instant hearing and presented testimony. f. Davalos testified that the entertainment center was not constructed until the latter part of July 2005 and only after numerous discussions and drawings had been provided by Complainants. He believed, at the time, that the television was still to be over the fireplace and thus, did not make a provision for said unit on either of the side portions of the entertainment center. g. Complainants contend that Respondent should not have built the system with the television in the center, due to their position that they had never given a final approval for such a design and had advised Davalos on several occasions that they were still undecided regarding the location of the television unit. h. On or about November 10, 2005, Respondent appeared at Complainants’ home, in the evening, for the purpose of completing the installation of the entertainment center. Prior to completing the project, Davalos made a demand for the balance on the entertainment center portion of the contract, which was $2,037.00. Complainants refused to pay said balance until the project was completed and all punch-list items corrected. i. When Complainants refused to pay the balance on the contract, Respondent terminated any further work on the project and refused to return unless said contract balance was paid in advance. j. Ultimately, Respondent filed a civil action (case no. CC [number redacted] SC) against Complainants in the Maricopa County Justice Court, Small Claims Division, seeking payment of the $2,037.00 contract balance. A trial was held in this matter on or about February 28, 2006 and many of the details of said court case were discussed at the instant administrative hearing. k. Evidence of record showed that during the course of the above- described court case, Complainants defended against Respondent’s claim by arguing that there were deficiencies in Respondent’s work and they did not feel the job had been completed.[1] According to Davalos, he advised the judge in the civil trial that he would return to Complainants’ home to finish the project. Nevertheless, when the judge asked Janice Brody if she would allow Respondent back in her home, she told the judge she would not. Sometime after the judge received Janice Brody’s response, regarding not allowing Respondent back on her property, the judge advised Davalos not to return to Complainants’ home. l. The judge in the civil court case issued a judgment for Respondent, awarding Respondent the sum of only $1, 237.00 ($800 less than what Respondent was claiming). It would appear that the remaining $800.00, not awarded to Respondent, was the judge’s evaluation of a reasonable sum for Complainant’s to keep, in order to pay someone else to make repairs to the work performed by Respondent. m. Subsequent to issuance of the judge’s ruling in the civil court case, on or about May 2, 2006 Complainants filed the instant Complaint with the Registrar of Contractors. After receiving the filed Complaint, the matter was assigned to one of the Registrar’s inspectors. The inspector convened a jobsite inspection. n. At the jobsite inspection, the inspector reviewed the workmanship issues, as presented by Complainants. Davalos was not present at the jobsite inspection, because he believed the civil court case would preclude the Registrar of Contractors from taking any action on the filed Complaint.

o. After concluding the jobsite inspection, the inspector issued a Corrective Work Order (CWO), requiring Respondent to accomplish specified remedial work within a stated period of time. Notwithstanding the terms of the Agency directive, Respondent failed to comply with same, based on Davalos’ belief that the civil court case had already given Complainants’ money to make repairs and thus, the Registrar of Contractors’ action was improper. In addition, Davalos had been told by the Judge in the civil court case not to return to Complainants’ home. p. The Registrar of Contractors’ inspector appeared at the instant hearing and testified regarding his findings at the jobsite inspection. His findings included the following:

1. Speaker compartments were not built according to the dimensions of the speakers that were to be placed in said areas.

2. Fabric covers for speaker compartments were not installed. 3. “Pull-outs” for specified shelves were not installed. 4. Specified exterior molding, where the entertainment center meets the wall, was not installed flush with the walls. 5. Specified hardware for drawers, doors, and or “pull- outs” had not been installed. 6. A drip is present in the varnish applied to a specified area of the project. 7. The refrigerator handle has fallen off the door. 8. There is a scratched glass shelf in a specified area of the kitchen. 9. Pocket doors on the entertainment center are scratched. 10. A drawer is loose in the kitchen, and the false front on the kitchen sink cabinet is also not adequately attached. 11. Specified area of the crown molding was not filled, leaving an unacceptable gap 12. A section of trim was missing at the right end of kitchen upper cabinet, above the cooking range. 13. Respondent worked on the project, during a period of time when its original license had been suspended.

3. It is determined and held that Respondent was acting under a good faith belief, when it built the entertainment center, that Complainants wanted the television unit in the center of the entertainment system. This good faith belief was based on the representations that had previously been made by Complainants, the discussions between the parties, and all of the plans that had been drawn to that point. Complainants failed to sustain the requisite burden of proof necessary to establish any wrongdoing by Respondent in regard to the location of the television set on the entertainment center.

4. It is further determined and held that Respondent’s demand for payment in full on the contract, prior to completing same and resolving the punch-list items was indicative of substandard and unacceptable workmanship. It is not unreasonable for a general contractor or a homeowner to withhold final payment of a contract balance, as retention money, until such time as the project is completed and all punch-list work is resolved. Davalos’ action in terminating work on the project, prior to completion, is also found to be a wrongful act, within the meaning of the applicable charged section of the State’s Contracting laws.

5. The evidence of record was sufficient to support a finding that there are numerous aspects of deficiencies in Respondent’s work, as manifested by the items set forth in Findings of Fact 2(P)(1) through 2(P)(12), above.

6. The above-described deficiencies in the work performed by Respondent, prior to its termination of work on the project caused by the money payment dispute between the parties, constitutes substandard and unacceptable workmanship, in violation of the State’s Contracting laws. In addition, such unacceptable work also is viewed as a wrongful act, within the meaning of the applicable charged section of the State’s Contracting laws. With this type of initial work on the project, it is no wonder that Complainants would refuse to make any further payments to Respondent until such time as the project was completed and all punch-list work repaired.

7. Davalos did not dispute the fact that there was a period of time, while working on this project that he was not working without a valid contractor’s license. He testified that he commenced work on the project, while acting as the qualifying party for the license of Blue Sky Solutions, LLC. (“Blue Sky”). At some point in the project, the license of Blue Sky was suspended by operation of law, for lack of a proper bond. Davalos testified he was unaware of this bond suspension until such time as he made application for Respondent’s license. There was no evidence that Respondent named herein, was suspended during any period of time that the license of Respondent was involved in this project. Nevertheless, it is determined that Davalos is not only the qualifying party for Respondent but also appears as the qualifying party on a license that was suspended (Blue Sky).

8. Although Complainants are not happy with the above-described Maricopa County Justice Court decision, claiming that they did not receive adequate compensation to repair and complete the project at issue herein, the evidence of record presented at the instant administrative license disciplinary hearing supports a finding that the exact same issues were litigated and adjudicated in the civil court case. Thus, it is determined and held that the prior court decision is binding upon the parties and this Tribunal by the principles of res judicata.

9. Based on the ruling of the judge in the Maricopa County Justice Court case, along with testimony presented by the parties at the instant license disciplinary hearing, regarding what was litigated in the civil court case, it is further determined and held that the Court decision resolved not only the financial, but also the workmanship dispute between the parties. The Court refused to award Davalos the full amount of his contract claim, thereby leaving Complainants with a specified sum of money to complete all necessary remedial work.

10. In light of the decision in the Maricopa County Justice Court, which allowed Complainants to keep a significant portion of the contract balance, it would be improper for the Registrar of Contractors to order Respondent to return to Complainants’ home and repair and complete the project. Moreover, the instant matter is an administrative license disciplinary proceeding, relating to a contractor’s license. The Registrar’s role in this matter is not one of a collection agency or judicial tribunal, but merely one duty-bound to determine whether a violation of this State’s contracting laws has occurred and, if so, impose a proper disciplinary sanction. Neither the filing of a Complaint with the Registrar, nor a demonstration that a contractor violated state law, vests in a Complainant the right to receive any particular individualized relief or an order imposing any particular discipline.

11. 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

1. It is a well settled doctrine and policy of law that final judgments of civil courts may not be subject to collateral attack in subsequent proceedings. The findings and judgment in Maricopa County Justice Court case no. CC [number redacted] SC are res judicata as to the issues and allegations in the instant complaint.

2. Respondent violated the provisions of A.R.S. § 32-1154A (1), (2), (7), (21) 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 for five (5) days, followed immediately by a period of disciplinary probation for 120 days. It is further recommended, in addition to the above provided penalties, that any continuation or restoration of Respondent’s contracting rights, 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 twenty-four (24) months, including future renewal periods, in the amount of $2,500.00, such bond or deposit to be for the sole benefit of persons injured as defined in A.R.S. § 32-1131 (3) and to be in addition to the required surety bond, cash deposit or recovery fund participation set forth in A.R.S. § 32-1152 (D). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two year period following the above- provided twenty-four (24) month period and only if no claims are then pending. 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, March 5, 2007.

______________________________________ Mark A. Silver Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2007, to:

Registrar of Contractors Fidelis V. Garcia Legal Department 800 West Washington, 6th Floor Phoenix, AZ 85007

By ___________________________

----------------------- [1] Complainants did not dispute the accuracy of the amount Respondent claimed as the unpaid balance on the contract.

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