ALJDEC decisions subject to certification as final

06F-2355-ROC · Registrar of Contractors · 2007-02-21

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 7, 2007 APPEARANCES: Complainant: John Roybal, pastor, appeared and was represented by counsel, William Holder. Respondent: Respondent failed to appear either by authorized representative or counsel. Registrar of Contractors: Inspector John Moll appeared on behalf of the Registrar of Contractors. ADMINISTRATIVE LAW JUDGE: Brian E. Smith _____________________________________________________________________ Evidence and testimony were presented and, based on the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT 1. This matter came for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated January 5, 2007. 2. Complainant Central Seventh-Day Adventist Church (“Complainant”) is the owner of property located at 777 W. Montecito, Phoenix, Arizona (“premises/project”). John Roybal (“Roybal”) is the pastor and designated representative of Complainant. 3. Respondent J K E Development LLC (“Respondent”) is a corporation which holds Arizona Contractor’s License No. 181592, Class KB-01 (Dual Building) issued by the Registrar of Contractors (“ROC”) on December 30, 2002. Robert Stanley Martino (“Martino”) is a member and the qualifying party for the license. A review of the licensing database maintained by the Registrar of Contractors indicates that this license was suspended January 1 -11, 2007 (renewal) and January 13 -17, 2007 (lack of qualifying party). 4. Complainant filed a complaint with the ROC on May 16, 2006 to which was attached an April 21, 2006 letter from its architect, George A. Melana, wherein were listed twelve (12) items which were “not completed or started” by Respondent on the project. Complainant further asserted, inter alia, that “on May 12, 2006, the building failed the electrical, HVAC, and fire department inspections, as well as a separate inspection requiring ‘exit’ signs in the building.” 5. Registrar of Contractors Inspector John Moll (“Moll”) conducted a jobsite inspection on June 12, 2006. At that time the parties reviewed the complaint items and agreed that the instant complaint would be closed in an attempt to get the project completed pursuant to a punch list. As a result, no Corrective Work Order was issued and Inspector Moll closed the complaint. 6. On June 26, 2006, Complainant filed a second complaint with the Registrar whereby it requested that its original complaint be reopened. (Exhibit 14) 7. Pursuant to Complainant’s request, the Registrar of Contractors reopened the Complainant and Inspector Moll scheduled and conducted a jobsite inspection on July 6, 2006. At that time, the parties agreed that a punch list would be prepared which Respondent was to complete and no Corrective Work Order would be issued. 8. On July 14, 2006, Complainant, through counsel, requested that Inspector Moll schedule a third jobsite inspection due to Respondent’s reported failure to provide the agreed upon punch list and complete the project. (Exhibit 5) 9. Inspector Moll conducted a jobsite inspection on July 24, 2006 and issued a Corrective Work Order on July 31, 2006 wherein he determined that corrective work was required on items 1 through 12 of the complaint and five (5) additional punch list items agreed to by the parties at the July 24, 2006 jobsite inspection (“additional items”). 10. On August 31, 2006, Complainant, through counsel, filed a request for hearing. 11. On October 2, 2006 the Registrar issued a CITATION AND COMPLAINT in Case No. 06-2355 charging Respondent with possible violations of A.R.S. §32-1154A 7, 23 and 3 (namely, R4-9-108, the workmanship rule). 12. Respondent filed an answer on October 16, 2006 wherein it alleged that the “[a]llegations in this claim are disputable” and requested a hearing. 13. At the hearing, Roybal testified on behalf of Complainant and submitted Exhibits 1 through 24 which were marked, admitted and considered. 14. Respondent failed to appear by authorized representative or counsel.[1] 15. Inspector Moll appeared at the hearing on behalf of the Registrar of Contractors and described his observations and conclusions regarding his jobsite inspections on June 12, July 6 and July 24, 2006. 16. On the testimony and evidence of record, the following salient uncontroverted facts were adduced at the hearing and are important to note: a. On or about June 20, 2005, Roybal, on behalf of Complainant, contracted with Respondent to perform certain remodeling work on the premises for a total sum of $170,065.93. (Exhibits 11 and 12) b. Roybal testified that Respondent representatives verbally estimated the contract work would be completed within six to ten weeks, or by August 2005. c. Respondent performed certain of the remodeling work required by the parties’ contract. As of May 16, 2006, Respondent had performed work that did not meet minimum workmanship standards on numerous aspects of the contract and/or had failed to complete certain work required by the contract. d. During June, July and August 2006, Complainant attempted to work with Respondent and allow it additional time to complete and/or remedy work required under the contract. Between August 8 and 16, 2006 Respondent performed some remedial work on the project. As of August 16, 2006, items (groove visible and glue stains present), 4 (mismatched colors of ceiling tiles), 5, 7A, 8 and 11 of the Corrective Work Order and additional items 1, 3 and 5 of the July 12, 2006 jobsite agreement had not been completed and/or still did not meet minimum workmanship standards. (Exhibit 7) e. Roybal testified that Respondent represented that a Certificate of Occupancy would be issued when the project’s parking lot was painted. Roybal further testified that a Certificate of Occupancy had been issued July 7, 2006 but that as of the hearing date Respondent never advised Complainant that of that fact or provided Complainant with a copy thereof. Roybal also related that he first learned of the issuance of the Certificate of Occupancy (Exhibit 3) in December 2006 from a member of his church. However, in a July 14, 2006 letter to Inspector Moll, counsel for Complainant stated that as far as he knew a Certificate of Occupancy had been issued on July 7, 2006. (Exhibit 5) f. As a result of Respondent’s failure to complete its obligations thereunder, Complainant terminated its contract with Respondent on August 30, 2006. (Exhibit 9) g. Complainant subsequently retained the services of Emanuel Paul to complete the majority of the unfinished work and/or remedy the substandard work performed by Respondent for a total of $4,755.00. (Exhibit 10) These include items 4, 7A, 8 and 11 of the Corrective Work Order and parts of additional items 1 and 5. h. Another subcontractor, Floorco, performed remedial work on Corrective Work Order items 1 and 5 for an unspecified amount. i. Parts of additional items 1 and 5 and all of additional item 3 remain incomplete. j. Pursuant to the instant complaint, Complainant has not remitted to Respondent an unspecified amount of “retainage” due under the contract. … …

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. 06-2355 charged Respondent with possible violations of A.R.S. §32- 1154A 7, 23 and 3 (namely R4-9-108). Those statutory sections require that the holder of a license or person listed on the license shall not commit the following:

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 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 violation of this paragraph until after a hearing has been held pursuant to the provisions of this article. … 3. Violation of any rule adopted by the Registrar.

A.C.C. R4-9-108 is named as the rule violation charged pursuant to A.R.S. §32-1154A (3). Rule R4-9-108 provides that all work shall be done in a professional and workmanlike manner and in accordance with any applicable building codes and professional industry standards

CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over this matter pursuant to A.R.S. § 32-1101, et. seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. To warrant such sanctions by the Registrar, Complainant must demonstrate by a preponderance of the evidence that Respondent violated any one, or more, of the statutory sections cited. 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.” In re Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994). See also, Culpepper v. State of Arizona, 187 Ariz. 43, 930 P.2d 508 (App. 1996). It is “evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (Rev. 6th ed. 1990). 3. The purpose of licensing Arizona contractors is to regulate the conduct of contracting and protect the public from unscrupulous acts. Beazer Homes Ariz., Inc. v. Goldwater, 196 Ariz. 98, 101, 993 P.2d 1062, 1065 (App. 1999); Better Homes Constr. v. Goldwater, 203 Ariz. 295, 300, 53 P.3d 1139 (App. 2002). The statutory purpose is to prevent unscrupulous or financially irresponsible contractors from deceiving and taking advantage of those who engage them to build. Sobel v. Jones, 96 Ariz. 297, 394 P.2d 415 (1964). 4. This tribunal determines and concludes that Complainant established by a preponderance of credible, probative and relevant evidence that Respondent failed to comply with the Registrar of Contractors’ Corrective Work Order dated July 31, 2006 issued by Inspector Moll as pertains to items 1 (groove and glue stains), 4 (mismatched ceiling tiles in fellowship hall), 5, 7A, 8 and 11 and additional items 1, 3 and 5 as set forth in Finding of Fact 16 (d) in violation of A.R.S. §32-1154A (23). 5. This tribunal further determines and concludes that Complainant established by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (3) and A.A.C. R4-9-108, the workmanship rule, as it pertains to those Corrective Work Order and additional items delineated in Conclusion of Law 4 above. 6. It is further determined and concluded that the violations set forth in Conclusions of Law 4 and 5 above were wrongful and resulted in substantial injury to Complainant. Therefore, violations of A.R.S. §32- 1154A (7) have been proven as cited. 7. Complainant offered testimony and documentary evidence of being monetarily damaged in an amount of $4,755.00 and seeks restitution in that amount.[2] Notwithstanding the court’s conclusion in Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (Ariz. App. 1990) framing a rescission claim as a claim in restitution, ordering restitution is a matter of discretion in administrative proceedings. The instant matter is an administrative 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. In this matter it is determined and concluded that Complainant failed to establish by a preponderance of credible, probative and relevant evidence that it is entitled to an award of restitution in any amount. Complainant submitted credible evidence that it paid a third party contractor, Emanuel Paul, $4,755.00 to complete most of the Corrective Work Order and additional items. However, no evidence was presented from which this tribunal could determine what amount had been paid Respondent under the parties’ contract and/or what amount remained unpaid. Therefore, this tribunal could not determine whether the award of %4,755.00 would place Complainant in the same position it would have been without Respondent’s actions. As a result, any restitution award would be speculative. 8. This tribunal further determines and concludes that the weight of credible, probative and relevant evidence established that Respondent failed to act in good faith during its performance under the parties’ contract. It was estimated that the work would be completed in 6 to 10 weeks, or approximately by the end of May 2005. Despite Complainant’s willingness to provide Respondent additional time to complete the required work in June, July and August 2006 following three scheduled jobsite inspections as well as in response to the Registrar of Contractors Inspector’s Corrective Work Order, Respondent still failed to fulfill its contractual obligations. Such absence of good faith is further demonstrated by Respondent’s failure to (1) timely file a motion to continue, (2) provide sufficient evidence of good cause to support a motion to continue, and, (3) appear at the hearing in this matter without legal or reasonable excuse. RECOMMENDED ORDER On the basis of the foregoing, IT IS RECOMMENDED that commencing on the effective date of the Registrar’s Order entered in this matter, the Class KB-01 license of Responded be suspended for a period of ten (10) days. IT IS FURTHER RECOMMENDED that in addition to and commencing at the end of the above-referenced suspension, Respondent be placed on probation for a period of one hundred eighty (180) days; and IT IS FURTHER RECOMMENDED that, in addition to the above-provided penalties, that Respondent pay the sum of $350.00 to the Registrar of Contractors by way of a civil penalty pursuant to ARS Sec. 32-1154D. The failure by Respondent to pay the entire amount of the aforesaid penalty, on or before thirty (30) days following the effective date of the Order entered in this matter, shall result in the automatic revocation of Respondent’s contractor’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in ARS Sec. 32-1101A (5), unless payment of any outstanding prior civil penalty is tendered.[3] Done this day, February 21, 2007.

________________________ Brian E. Smith 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] It must be noted that on February 6, 2007, the day before the hearing, Robert S. Martino, on behalf of Respondent, filed via facsimile with the Office of Administrative Hearings a correspondence requesting a continuance of the hearing (“motion”). Therein, Mr. Martino asserted that he had “just received paperwork to a hearing on Feb. 7, 2007” on February 5, 2007 and “was inadequately prepared for this hearing.” Martino further related that his wife was in the hospital recovering from major surgery. Due to the untimeliness of the motion, the lack of any supporting documentation relative to the nature of Mrs. Martino’s illness and hospitalization and no good cause appearing, Respondent’s motion was denied. This tribunal issued no written order to that effect but addressed the motion on the record prior to proceeding on the merits. It should also be noted that Mr. Martino telephoned this tribunal at 9:39 a.m. the morning of the hearing to again advise that he would not be appearing due to his wife’s health but provided no additional information or documentation to substantiate her situation. [2] Complainant, by and through Roybal, also asserted a claim for restitution for costs for rent of other facilities to hold services and meetings during the approximate 14 months of Respondent’s failure to complete its obligations under the contract, for a storage facility during that period and those related to stolen computers, sound system and an organ the theft of which Complainant attributes to Respondent’s failure to complete the project and/or the acts of its employees and/or subcontractors. However, such costs are considered consequential damages and are not recoverable in this forum. Moreover, Complainant submitted no credible evidence to support its claim for each of these items. [3] 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.

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