ALJDEC decisions subject to certification as final

06F-2351-ROC · Registrar of Contractors · 2007-06-11

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 11, 2007 APPEARANCES: Complainant : Maureen Featherston appeared pro se. Respondent : No representative appeared for D and D Prime Remodeling, Inc. ADMINISTRATIVE LAW JUDGE: Gary B. Strickland ___________________________________________________________________

A Hearing[1] was convened to determine whether Respondent D and D Prime Remodeling, Inc. violated state law as has been alleged by Complainant Maureen Featherston and as cited by the Arizona Registrar of Contractors (hereinafter also, “the ROC”). Evidence and testimony were presented. Respondent D and D Prime Remodeling, Inc. has held a Class C-61 (Limited Remodeling and Repair) license issued by the Registrar of Contractors. Complainant alleges that Respondent accepted money from Complainant for the remodeling of two rental units but has failed to complete its contractual duties and to perform in accordance with industry workmanship standards to the extent that it did perform. Based upon an examination of the entire record,[2] the following Findings of Fact are made, Conclusions of Law rendered, and DECISION AND RECOMMENDED ORDER issued: FINDINGS OF FACT 1. Respondent’s license (No. 206049) was initially issued on April 17, 2005, with viability through April 30, 2007. The license was “Canceled” effective July 18, 2006.[3] 2. Stefan Daniel Durisek is the Qualifying Party identified on the D and D Prime Remodeling, Inc. (hereinafter also, “the Contractor”) license. 3. The project at issue involved the remodeling of two rental units owned by Complainant and situated at 4021 East Robert E. Lee in Phoenix, Arizona. The work was performed on Arizona property, the contract under which the construction was performed was executed in Arizona, and the Contractor was licensed by the Registrar of Contractors. As such, the Complaint falls within the requirements of Title 32, Chapter 10, Article 3. 4. Ms. Featherston engaged D and D Prime Remodeling, Inc. to perform following D and D Prime Remodeling, Inc.’s offering of estimates (the “contract”) that were accepted by Ms. Featherston on April 6, 2006.[4] 5. The contract price, $12,751.78 per unit (the two units at issue are #’s 102 and 104), has been paid in full. 6. After the work was performed, Complainant noticed several deficiencies in construction and deviations from her contractual understanding. . . . 7. Having become disconcerted over the quality of D and D Prime Remodeling, Inc.’s performance, Complainant Featherston filed a Complaint before the Registrar of Contractors on May 16, 2006.[5] 8. An Inspection of the apartments was conducted by ROC Inspector Warren Duncan on October 17, 2006. Although provided notice of the scheduled inspection, no representative appeared from D and D Prime Remodeling, Inc. Based on his discussions with Ms. Featherston and observations made at the inspection, Mr. Duncan issued a “Corrective Work Order”[6] on November 6, 2006. 9. The “Corrective Work Order” directed D and D Prime Remodeling, Inc. to make numerous corrections and repairs. 10. The Inspector who processed the Complaint, Warren Duncan, testified at the Hearing. Mr. Duncan related that D and D Prime Remodeling, Inc. has defied the directives of the Registrar’s Inspector’s “Corrective Work Order” by not performing as directed by that Order. Mr. Duncan went on to relate that the Contractor had informed him early in the Complaint process that it would not do any further work on the project for the reason that money was allegedly due and owing on the contract. 11. Because Ms. Featherston had given notice that D and D Prime Remodeling, Inc. had not completed the repairs delineated within the “Corrective Work Order,” the Registrar of Contractors issued a CITATION AND COMPLAINT against Respondent’s license on February 8, 2007 therein citing D and D Prime Remodeling, Inc. for violation of A.R.S. § 32-1154(A)(1), (3), (7), and (23). 12. D and D Prime Remodeling, Inc. filed its A.R.S. § 32-1155 ANSWER to the CITATION AND COMPLAINT on or about February 24, 2007. In its ANSWER, D and D Prime Remodeling, Inc. specifically denied any wrongdoing and made affirmative countercharges. At the close of his ANSWER, Mr. Durisek asserted: “I cannot wait to get this in front of the courts or a hearing board.”[7] 13. Thereafter, upon request of Ms. Featherston because no resolution of the problem was forthcoming, the Registrar issued a NOTICE OF HEARING on or about May 7, 2007 and a Hearing was conducted pursuant thereto. 14. Although provided notice of the Hearing by the Registrar having mailed a copy of the NOTICE OF HEARING to D and D Prime Remodeling, Inc.’s address of record, no representative appeared to defend. 15. The weight and sufficiency of the evidence persuades that D and D Prime Remodeling, Inc. has not complied with the directives within the November 6, 2006 “Corrective Work Order.” Evidence of legal excuse for the failure is wanting. 16. It is Inspector Duncan’s opinion that some of the work performed by D and D Prime Remodeling, Inc. on the project fell below workmanship standards. The Inspector’s testimony was uncontroverted. 17. Ms. Featherston provided credible and reliable evidence that she has been caused to expend $2,635.19 to have the items identified by Inspector Duncan corrected and repaired by third-party licensed Contractors[8] and that it will cost yet a further $2,975.00 to replace the tile in both units and make other identified drywall repair and door installation.[9] The Inspector had refrained from directing the Contractor to replace the tile construing the dispute as contractual in nature (“contract not specific as to size [of tile]”).[10] Having examined the documents that one may reasonably infer constitutes the understanding of the parties,[11] along with e-mail transmissions from Ms. Featherston designating the size and color of the tile to be installed (16 X 16 Crete Beige),[12] it is determined probable that the size of the tile installed did not conform to the parties understanding. 18. Ms. Featherston informs that Mr. Durisek filed a civil Complaint in the Maricopa County Justice Court (Dreamy Draw) (Case No. CC2006086428) claiming monies owed on the contract. The Complaint was dismissed on April 23, 2007 when Mr. Durisek failed to appear for trial. 19. By failing to address the items designated for correction in the “Corrective Work Order,” without legal excuse, D and D Prime Remodeling, Inc. abandoned its contract with Ms. Featherston. 20. Based upon the uncontroverted testimony of Inspector Duncan, D and D Prime Remodeling, Inc.’s production on the project failed workmanship standards. 21. D and D Prime Remodeling, Inc.’s failure to take corrective action when directed so to do by the Inspector’s “Corrective Work Order,” without legal excuse, was wrongful and blatantly disrespectful of the Registrar’s oversight and enforcement authority. 22. D and D Prime Remodeling, Inc.’s wrongful acts and omissions on this project have caused Ms. Featherston substantial[13] injury. 23. Although Ms. Featherston believes that D and D Prime Remodeling, Inc.’s conduct was fraudulent in the matter, insufficient evidence was offered to substantiate the allegation.[14] . . . 24. Ms. Featherston is entitled to a restitutionary award under (A.R.S. § 32-1156.01).[15] A reasonable sum required to put her in the position had her agreement with D and D Prime Remodeling, Inc. been completed is $5,610. 25. Factors of aggravation pertain to the assessment. D and D Prime Remodeling, Inc.’s (1) failure to honor the Inspector’s “Corrective Work Order” without, as it turns out, meritorious excuse; (2) filing a lawsuit and then failing to appear as required to prosecute the claim; (3) canceling the license while the ROC Complaint was pending; (4) and, failure to attend the scheduled Hearing, all bespeak invalidity of the defense against Ms. Featherston’s Complaint. . . .

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent with possible violations of A.R.S. § 32-1154(A)(3) (and A.A.C. R4-9-108, the “workmanship rule”), (7), and (23). Those statutory sections require that a holder of a license or a person listed on a license not commit the following:

1. Abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal. . . .

3. Violation of any rule adopted by the Registrar.

. . .

7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.

. . .

23. Failure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held.

. . .

A.A.C. R4-9-108 is the rule violation charged under A.R.S. § 32- 1154(A)(3). The rule requires that all construction work be done in a professional and workmanlike manner and in accordance with applicable building codes and professional industry standards. CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over Complaint No. 06-2351 under the authority of A.R.S. § 32-1101, et seq., a section that enables the Registrar to impose disciplinary sanctions against licensees for the violations noted at A.R.S. § 32-1154. D and D Prime Remodeling, Inc. is a licensee, albeit currently a holder of a “Cancelled” licensee. 2. The burden of persuasion generally at an administrative hearing falls to the party asserting a claim, right or entitlement, or an Agency seeking to impose a penalty.[16] Further, the standard of proof is that of the “preponderance of the evidence.”[17] Proof by a preponderance means that the evidence is sufficient to persuade the finder of fact that the proposition is “. . . more likely true than not.”[18] The evidence taken as a whole must convince the decision maker that the party who bears the overall burden of persuasion, in this case Ms. Featherston, is more probably correct on the issue(s) in dispute. 3. Observing these standards, Complainant Featherston has persuaded, by a preponderance of the evidence, that Respondent D and D Prime Remodeling, Inc. has violated the cited statutory and regulatory provisions by failing to make corrections as directed in the “Corrective Work Order.” Ms. Featherston has persuaded that D and D Prime Remodeling, Inc. has committed a wrongful act substantially[19] injurious to her. Further, Ms. Featherston has persuaded that D and D Prime Remodeling, Inc.’s refusal to correct the Items listed on the Registrar’s November 6, 2006 “Corrective Work Order” was and is not justified. 4. By a preponderance of all of the evidence, Complainant has persuaded that, in the remodeling efforts made by D and D Prime Remodeling, Inc. at Complainant’s rental property, D Prime Remodeling, Inc. has violated A.R.S. § 32-1154(A)(1), (3), (7), and (23) as charged in the CITATION AND COMPLAINT. 5. An examination of D and D Prime Remodeling, Inc.’ license record[20] reveals that no other Complaint has been filed against the license during the brief period of licensure.[21] Therefore, license history does not reveal a basis for an assessment clothed in aggravation, other than to the extent noted in FINDING OF FACT ¶25, above. 6. However, D and D Prime Remodeling, Inc.’s failure to appear at the Hearing to give account for its alleged failures is itself and aggravating cause.[22]

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors enter an Order revoking Lic. No. 206049 until Respondent D and D Prime Remodeling, Inc. provides written proof that it has made satisfactory restitution to Complainant. Should the parties provide written proof to the Registrar of Contractors, before the effect date of the Registrar’s Order, that D and D Prime Remodeling, Inc. has paid $5,610. to Ms. Featherston, Complaint No. 06-2351 should be closed. In the event of the certification of this Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order shall fall forty days from the date of that certification.

Done this 11th day of June 2007.

_____________________________________ Gary B. Strickland Administrative Law Judge

Original transmitted by mail this 11th day of June 2007 to:

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

By ___________________________

----------------------- [1] The start of the Hearing was delayed for fifteen (15) minutes to afford a representative of Respondent to make a late appearance in the event that a more time appearance had been frustrated by unforeseen circumstance.

[2] The record consists of those documents found within the Agency’s case file, the contents of which the Administrative Law Judge has accorded Administrative notice, the exhibits offered by the parties, respectively, and the digital record of the proceedings under A.A.C. R2-19-121. Complainant offered four (4) exhibits, marked 1 through 4.

[3] See http://www.azroc.gov/clsc/AZROCLicenseQuery

[4] See Exhibit C-2. [5] See “Complaint” within the ROC Hearing file.

[6] See “Corrective Work Order” with the ROC Hearing file.

[7] See “ANSWER” within the ROC Hearing file.

[8] See Exhibit C-1.

[9] Id.

[10] See “Corrective Work Order” with the ROC Hearing file.

[11] See Exhibit C-2.

[12] See Exhibit C-3.

[13] Meaning, a material injury, one that is not illusory. See ”substantial”: WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 2280 (2002).

[14] See Echols v. Beauty Built Homes, 132 Ariz. 498, 500; 647 P.2d 629, 631 (Ariz. 1982) (“A showing of fraud requires (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) the speaker's intent that it be acted upon by the recipient in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) the hearer's reliance on its truth; (8) the right to rely on it; (9) his consequent and proximate injury. (citation omitted). Each element must be supported by sufficient evidence. ‘Fraud may never be established by doubtful, vague, speculative, or inconclusive evidence.’ In re McDonnell's Estate, 65 Ariz. 248, 253, 179 P.2d 238, 241 (1947)”).

[15] § 32-1156.01. Restitution

After a hearing pursuant to this article, an administrative law judge may recommend that a licensee provide restitution to any person who is injured or whose property is damaged by an action of the licensee.

See Bentivegna v. Powers Steel & Wire Prods., Inc., 206 Ariz. 581, 585; 81 P.3d 1040, 1044 App. 2004) (“[T]he sole issue in a proceeding before the ROC is whether a license should be suspended or revoked, and, if so, what conditions must be fulfilled before it is reinstated. See A.R.S. §§ 32- 1154, 1155. Although the ROC may order restitution as a condition of license reinstatement, it cannot issue an enforceable order or judgment for money damages against a contractor. See Sunpower of Ariz. v. Ariz. State Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (App. 1990) (ROC may order payment of restitution as condition of license reinstatement); J.W. Hancock Enters. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (App. 1984) (finding that ‘the Registrar's power is limited to suspending or revoking a contractor's license, or attaching conditions to the license. Money damages may not be awarded.’). If a contractor subject to an ROC restitution order were to choose not to have his license reinstated, the restitution order would be ineffective. To fully protect a plaintiff's rights, he must be allowed to seek money damages in the courts in addition to any remedies available through the ROC complaint procedure.”)

“Restitution” is an ambiguous term. But, the concept generally refers to a compensation for injury done. See JOHN D. CALAMARI & JOSEPH M. PERILLO, THE LAW OF CONTRACTS § 9-23, at 376 (3d ed. 1987).

See also Murdock-Bryant Constr. v. Pearson, 146 Ariz. 48, 52; 703 P.2d 1197, 1201 (1985) (“Restitution began as an ancient remedy to enforce contractual rights which could not be enforced in common law courts due to lack of formality of the contract. D. Dobbs, Remedies § 4.2 at 233 (1973). Various forms of action evolved to permit recovery of goods or money on contracts implied in fact -- that is, those which the law implied from the conduct of the party rather than from any explicit words. Id. at 234.”)

See further, Restatement of the Law, Restitution § 1 cmt a. (1937):

a. A person is enriched if he has received a benefit (see Comment b). A person is unjustly enriched if the retention of the benefit would be unjust (see Comment c). A person obtains restitution when he is restored to the position he formerly occupied either by the return of something which he formerly had or by the receipt of its equivalent in money. Ordinarily, the measure of restitution is the amount of enrichment received (see Comment d), but as stated in Comment e, if the loss suffered differs from the amount of benefit received, the measure of restitution may be more or less than the loss suffered or more or less than the enrichment. (Emphasis added.)

[16] See Ariz. Admin. Code R2-19-119 (B).

[17] Culpepper v. Arizona Board of Nursing, 187 Ariz. 431, 930 P.2d 508 (App. 1997); See also Ariz. Admin. Code R2-19-119 (A).

[18] In re Arnold and Baker Farms, 177 B.R. 648, 654 (9th Cir. BAP (Ariz.) 1994). See also J. LIVERMORE, R. BARTELS, & A. HAMEROFF, LAW OF EVIDENCE ( 301.1(4th ed. 2000) (One party bears the overall burden of persuasion on each fact material to the party’s claims and defenses. Further, the party with the burden of persuasion on a particular fact is required to satisfy the burden of production of enough qualitative evidence sufficient to support a finding of the existence of the fact, following a reasonable person standard.)

[19] Meaning, a material injury, one that is not illusory. See ”substantial”: WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 2280 (2002).

[20] See A.A.C. R4-9-117. Prior Record

In any disciplinary proceeding conducted by the Registrar, the licensee's entire license file including the record of prior citations and decisions may be considered by the Registrar in making a decision and order in the case.

[21] See http://www.azroc.gov/clsc/AZROCLicenseQuery

[22] See also FINDING OF FACT ¶25.

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