ALJDEC decisions subject to certification as final

06F-2563-ROC · Registrar of Contractors · 2007-04-12

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 5, 2007.

APPEARANCES: >The Complainant was represented by her attorney, Nancy K. Swift, Esq. >The Respondent failed to appear.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth

(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((- Based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. The instant hearing was scheduled on advance written notice duly sent to both parties. The start of the scheduled hearing was delayed for well over twenty minutes so as to afford additional time for Respondent to appear. However, no authorized individual member of the LLC entity or any proper legal representative appeared on behalf of Respondent.

2. Complainant’s uncontroverted evidence established that Respondent had proposed to perform extensive remodeling work encompassing several additions to the Complainant’s existing residence. Complainant had duly accepted Respondent’s proposal which therefore ripened into a construction contract.

3. The total agreed cost price for the contemplated work was expressly stated to be $64,051.00 plus the cost of a local building permit in the amount of $715.79, resulting in a final agreed price of $64,766.79. The credible testimonial and documentary evidence revealed that Complainant has paid Respondent various progress payments in a combined aggregate total sum of $54,150.79, leaving an unpaid balance of $10,616.00.

4. Jobsite construction work by Respondent had commenced on April 3, 2006. Notwithstanding the Respondent’s previously communicated representations to Complainant that the entire project would be completed in about two months, the progress of construction began to appreciably slow down in mid-May, 2006. The last payment by Complainant was transmitted shortly before the represented completion date and brought the total payments to an amount that was approximately 85% of the entire consideration to be paid under the parties’ agreement. However, at that time the overall project was significantly incomplete and not nearly commensurate with the amount or percentage of contractual payments tendered by Complainant and accepted by Respondent.

5. In addition to the incomplete condition of the construction, several serious problems with the electrical wiring and with roof leaks had developed and were communicated by Complainant to Respondent. However, despite Complainant’s numerous and repeated attempts by telephone and by mail to prompt Respondent to accomplish proper corrections of the reported deficiencies, the completion of the project, and also requesting a definitive schedule for such completion, Respondent

remained highly non-responsive to all such requests and demands. Complainant ultimately filed the within complaint with the Registrar on June 20, 2006. The work progress during the months of June and July, 2006 was scanty and sporadic.

6. Even prior to the aforesaid filing of the complaint, several work problems were experienced, most importantly with respect to electrical deficiencies in the kitchen wiring that potentially could and then actually did result in a dangerous fire hazard. Additionally, the leaks from the roofing installed by Respondent were brought to Respondent’s attention, but no responsive remedial action was taken as to either problem. The credible evidence demonstrated that Complainant understandably and prudently caused these items to be corrected by other contractors at her own expense so as to mitigate her damages and to be able to safely use the premises which she and other family members had been occupying during the ongoing construction activities. The costs incurred by Complainant for remedial measures made necessary because of Respondent’s poor work are found and determined to constitute legitimate offsets or credits against the contract price otherwise payable.

7. Respondent’s progress in finalizing or even starting other aspects of the contemplated remodeling work was negligible. Most importantly, a 5-ton air-conditioning unit that was to have been furnished and installed by Respondent under its contract obligations was not provided, leaving the home without a unit of sufficient size to appropriately cool the residence during the not unexpected summer heat. In addition, granite countertops and a sink for the kitchen were never provided by Respondent.

8. One bedroom window was not installed in accordance with applicable local code provisions and remains uncorrected at the present time. Respondent’s workmen had been observed to be unsupervised most of the time and to have exhibited questionable behavior while purporting to perform jobsite work. These workmen were

shown to have caused avoidable damage to Complainant’s existing irrigation system, and Respondent allowed a hazardous condition to remain on the property by not timely removing the roll off dumpster used during the initial portions of the jobsite work.

9. Following a jobsite visit, the Registrar’s assigned Inspector issued a written Corrective Work Order to Respondent on August 25, 2006 identifying many items to be appropriately completed and/or rectified by Respondent on or before a specified time deadline. However, Respondent was shown not to have accomplished or even commenced any corrective work on this project, thereby failing to comply with the terms of the issued directive.

10. Most all of the items identified in the Corrective Work Order are found to have reflected adversely upon Respondent’s workmanship, and some such items also constituted violations of applicable safety laws and building code provisions, as well as being deviations or departures from the contractual plans and specifications.

11. Respondent’s failure to remedy the reported deficiencies over a much prolonged time period during which it had ample opportunity to arrange for and accomplish necessary corrective measures is found to support a determination that Respondent has failed to complete this project for the agreed price and also that Respondent had effectively abandoned, or at the minimum had constructively abandoned, its contractual responsibilities. In addition, Respondent’s acts or inaction is further found to constitute a wrongful (but not fraudulent) act resulting in detriment to Complainant within the meaning of another contracting law provision charged hereunder as having been violated.

12. It appeared from the credible testimony that Respondent did not appropriately subcontract the electrical and plumbing work to licensed specialty

contractors, as required, but instead impermissibly performed such jobsite work through its own employees or unlicensed independent contractors (day laborers). Such work performance was outside the proper scope of Respondent’s Class KB-02 license.

13. After the expiration of the time period set forth in the issued directive, Complainant justifiably resorted to other contractors so as to enable the proper completion of the remodeling project, and she also purchased many of the component materials that were to have been furnished and paid for by Respondent under the parties’ contract.

14. The undisputed testimonial and documentary evidence presented at the administrative hearing tended to indicate that Complainant has expended monetary sums significantly greater that the amount remaining as an unpaid balance otherwise payable to Respondent. More specifically, expenses of approximately $11,900.00 were shown to have been necessarily incurred by Complainant to rectify deficiencies in the partial work performed by Respondent, such as electrical and roofing repairs, stucco and painting repairs and irrigation system repairs. Additionally, Complainant was required to expend further sums not only to obtain those items of equipment and materials that Respondent had failed to provide but also to accomplish completion of the project through other contractors so as to obtain a Certificate of Occupancy from the local building authority.[1] Such completion-related expenditures, which included substantial sums for a complete air-conditioning system, granite countertops and floor coverings, were shown to be slightly in excess of $17,600.00, thereby resulting in a combined total for correction and completion of not less than $29,500.00 attributable to Respondent’s acts or omissions. After subtracting the $10,616.00 amount of the

unpaid contract balance, and after adding certain costs to be ascertained and incurred for the correction of items required by the municipality, Complainant will have incurred costs that appear to exceed her contractual entitlements by a monetary amount that is not less than $20,000.00, and by the time all local approvals are obtained, she very likely will have sustained damages in a somewhat higher total sum.

15. The overall course of conduct on the part of or attributable to Respondent is found to reflect a substantial disregard of its duties as a licensed contractor in this State as well as of the comforts and entitlements of the Complainant/homeowner.

16. Notice is taken of the Registrar’s license records which reveal that the contracting license of this Respondent has been revoked for cause as a result of four separate disciplinary proceedings. An inordinate amount of administrative complaints, including the instant complaint, are still open and pending, thereby generating a reasonable likelihood of further revocation penalties. No valid reason is perceived to exist in this case for considering the inclusion of any monetary conditions in light of the matters in aggravation that have been more than adequately demonstrated hereunder.

CONCLUSIONS OF LAW

1. The undisputed evidence of record adequately established that Respondent has violated the provisions of A.R.S.§32-1154(A)(1), (2), (7), (9), (12), (17) (23) and (3); namely, Rule R4-9-108, A.A.C., as charged in the within Citation.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class KB- license be revoked on the effective date of the Registrar’s Order.

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: April 13, 2007. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

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

----------------------- [1] At present, Complainant has obtained a temporary Certificate of Occupancy from the City, conditioned upon her correcting the bedroom window that is in violation of Code and also rectifying certain electrical wiring deficiencies noted during a final inspection. The costs for these added remedial measures are unknown, but the probability is that such added expenses may likely approach or even exceed $2,500.00.

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