ALJDEC decisions subject to certification as final

06F-A0268-ROC · Registrar of Contractors · 2006-12-28

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 19 and December 4, 2006. APPEARANCES: Scott and Laura Simpson, Complainants in Docket No. 06F-A0227-ROC, appeared and were represented by counsel, Bruce E. Rosenberg. Design Construction and Consulting, Respondent in Docket No. 06F-A0268-ROC, appeared through Scott Andrew Simpson, owner and qualifying party, and was represented by counsel, Bruce E. Rosenberg. Priority Drywall LLC, Respondent in Docket No. 06F- A0227-Roc and Complainant in Docket No. 06F-A0268-ROC, appeared through Eugene Richard Figy, Jr., member and qualifying party, pro per. Registrar of Contractors: Inspector John Prince appeared at the September 19, 2006 hearing 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. These consolidated matters first convened for hearing via videoconference on September 19, 2006 pursuant to this tribunal’s June 1, 2006 Order Granting Motions to Consolidate/Order Granting Motions to Continue/Order Setting Continued Hearing Date. The parties did not complete the presentation of evidence in the allotted time and a further hearing convened via videoconference on December 4, 2006. 2. At all times here relevant, Scott Andrew Simpson (“S. Simpson”) and Laura Simpson (“L. Simpson”) (collectively referred to hereafter as “Simpsons”) were the owners/occupants of a residence located at 1350 W. Cliff Rose, Prescott, Arizona (“premises/project”). 3. S. Simpson is an individual doing business as Design Construction and Consulting (“Design”). S. Simpson holds and is the qualifying party for Arizona Contractor’s License No. 104007, Class B (General Residential) issued by the Registrar of Contractors (“ROC”) on September 7, 1994. S. Simpson was acting as owner/builder for the subject project. 3. Priority Drywall LLC (“Priority”) is a limited liability company which holds Arizona Contractor’s License No. 163137, Class C-10 (Residential Drywall) issued by the ROC on March 14, 2001. Eugene Richard Figy Jr. (“Figy”) is a member and the qualifying party for the license. A review of the licensing database maintained by the ROC indicates that this license was suspended April 1 – 20, 2005 (renewal) and January 21 through May 3, 2006 (lack of bond). 4. Simpsons filed a complaint with the Registrar of Contractors on October 27, 2005 wherein they alleged that Priority was “not in compliance with [an] attached contract” and had not completed the work thereunder. Annexed to their complaint was a two page “Itemized Complaint” which delineated twenty-on (21) alleged problems precipitated by Priority. 5. Based on the Simpsons’ complaint, Registrar of Contractors Inspector Dan La Fond (“La Fond”) conducted a jobsite inspection November 18, 2005 and issued a Corrective Work Order on November 22, 2005. (Exhibit C-5) Therein, La Fond, referencing the list enumerated in Simpsons’ complaint, determined that corrective action was required to be taken by Priority on Items 2, 3, 5, 7, 9A, 10 and 11. La Fond further determines that no corrective action was required of Priority on Items 1, 4, 6, 8, 9B, 12, 13, 14, 15, 16, 17 and 18. 6. On the basis of Simpsons’ complaint, the Registrar of Contractors issued a CITATION AND COMPLAINT in Case No. A06-0227 on January 6, 2006 charging Priority with possible violations of A.R.S. §32-1154A 1, 2, 7, 23 and 3 (namely, Rule R4-9-108, the workmanship rule). 7. Priority filed an answer on January 17, 2006 wherein it alleged that it had made many attempts to gain access to the Simpsons’ residence to make corrections but were always denied or received no response. Priority further asserts that the only manner in which the Simpsons would resolve this dispute is for it to reduce its contract price. 8. Priority filed a complaint with the Registrar of Contractors on November 14, 2005 against Design wherein “non payment” was alleged. 9. On the basis of Priority’s complaint, the Registrar of Contractors issued a CITATION AND COMPLAINT in Case No. A06-0268 on January 6, 2006 charging Design with possible violations of A.R.S. §32-1154A 7 and 11. 10. Design filed an answer on January 20, 2006 wherein is asserted, inter alia, a general denial and contended that Priority’s deficient and incomplete drywall work caused delays in the subject project which necessitated Design to “expend time and monies to complete and correct the work done by [Priority]. Design further asserted it notified Priority that the “additional expenses and damages for delay would be charged against the total contract price as an offset on any amounts remaining due” under the contract and that it tendered such an offset to Priority which was refused. 11. These matters were consolidated for hearing by this tribunal on June 1, 2006. 12. At the hearing, S. Simpson and L. Simpson testified and submitted Exhibits C-1 through C-6, C-9 through C-14, C-16, C-17 and C-C20 through C-23 which were marked, admitted and considered. LeRoy Berghoefer (“Berghoefer”) also testified on behalf of Simpsons and/or Design. 13. Figy testified on behalf of Priority and submitted Exhibits G, K, O and Q which were marked, admitted and considered. Exhibits L and P were admitted over objection. Steve Pritchard (“Pritchard”), Tamatha Myers (“Myers”) and Bonnie Ogden (“Ogden”) also testified on behalf of Priority. 14. Inspector John Prince (“Prince”) testified on behalf of the Registrar of Contractors and described his observations and conclusions regarding his September 12, 2006 pre-hearing jobsite inspection.[1] 15. From the evidence elicited at the hearing, the following facts are important to note: a. Acting as owner/builder, the Simpsons[2] entered into a contract with Priority on or about July 18, 2005 (Exhibit C-1) to perform drywall work on the project for a total of $11,500.00. At the time of entering into the contract, framing on the project had been completed. According to the contract terms, no baseboard was to be installed by Priority. b. L. Simpson testified that the Simpsons expected drywall work to commence in September 2005. Simpsons gave notice to Priority on or about September 9, 2005 that the project was ready for drywall. Priority began its work on September 21, 2005. c. The contract provided for a fifty per cent (50%) payment prior to nailing inspection and fifty per cent (50%) at completion. d. L. Simpson testified that Figy notified Simpsons on September 23, 2005 at the jobsite that approximately 50% of the drywall work had been completed, all drywall was stocked and the Priority crew was to work through the weekend. At that time, Figy requested the first contract payment which was remitted by Simpsons.[3] (Exhibit C-2) e. On October 8, 2005 Figy related to Simpsons that the work was complete. L. Simpson testified that at that time Priority’s work appeared complete so Simpsons proceeded to paint in order to secure a draw which had been delayed by Priority’s late drywall work. f. On or about October 9, 2005, Simpsons inspected the project and noticed deficiencies. On October 10, 2005, Simpsons faxed an incomplete list of these deficiencies to Priority (Exhibit C-3) and pointed out additional items to Figy at a walkthrough on October 13, 2005. g. L. Simpson further stated after completing some items on October 13, 2005, Priority’s workers asked that she sign off on the entire list which she refused to do because all items had not been completed. L. Simpson agreed to initial those items that were done. h. L. Simpson further testified that Priority performed further work on October 14, 2005 but that not all work had been completed. i. After October 14, 2005, a dispute arose between the Simpsons and Priority regarding completion of drywall work on the project. Simpsons asserted that additional work was required, drywall had been hung so as to accommodate baseboard in direct contravention of the contract’s terms and drywall refuse was left at the premises. Priority asserted that the wealth of the contract work had been performed and several attempts had been made to gain access to complete the remainder of the work but that Simpsons’ gate was locked thereby preventing access. On October 20, 2005, Priority faxed a letter to Simpsons relating its position with regard to the project and to which was annexed a final invoice for the balance due under the contract. (Exhibit C-11) On October 20, 2005, Simpsons responded to Priority’s invoice and asserted that not all work was complete. (Exhibit C- 12) j. Figy testified that he went to the jobsite on October 19, 2005 to review the drywall and was greeted by Simpsons’ daughter who told him he was no longer allowed on the project. Figy further testified that Simpsons related that he would have to lower his contract price or they would contact the Registrar of Contractors. k. While referencing Inspector La Fond’s notes, Inspector Prince related that the parties entered into an agreement at the jobsite inspection on November 18, 2005 pursuant to which Priority agreed to return to complete the unfinished items on November 22 and 23, 2005. As part of this agreement, the parties stipulated to communicating with each other by facsimile to ensure their respective positions were documented. Notwithstanding this provision, another factual dispute thereafter arose between the parties as to when Priority would perform the remaining drywall work and whether the parties had activated their fax machines. As a result, the Simpsons opted to await Inspector La Fond’s Corrective Work Order following the November 18, 2005 jobsite inspection in order to identify what work was required before allowing Priority to return to the premises. (Exhibit C-16) l. On December 1, 2005, in response to Priority’s complaint, Simpsons sent Priority a letter (Exhibit C-17) wherein was enclosed a check for $3,000.00 which they opined represented part payment of the second amount due under the contract for work they felt Priority had performed. Simpsons further stated that they retained the balance of the second payment due under the contract, $2,859.50, to cover costs of their completing and/or correcting items which were and/or should have been done by Priority in accordance with the Corrective Work Order. Simpsons subsequently stopped payment on the subject check because they had closed their project’s account. (Exhibit C-20) m. In December 2005, a further factual dispute arose as to Priority’s efforts to comply with the Corrective Work Order. Figy testified that Priority made several attempts to schedule the remedial work. L. Simpson testified that Priority made only two attempts to contact Simpsons during the Corrective Work Order period, i.e., on December 5 and 6, 2005. L. Simpson acknowledged that Figy left a message on December 22, 2005 requesting to do work but Simpsons did not return call as Priority had not timely completed the work in accordance with the Corrective Work Order and the project was ready for final inspection. S. Simpson stated that Priority did request another chance to perform corrective work after the expiration of the fifteen days set forth in the Corrective Work Order but that he was refused because the Simpsons had already done some corrective work. n. Simpsons assert that they are entitled to restitution in the amount of $5,520.00 for costs incurred and/or to be incurred for remedial work performed or to be performed by them and/or caused to be performed by them. (Exhibit 23) Included among these costs are, inter alia, $3,700.00 and $1,260.00, respectively, for interior molding and related stain to be installed along the bottom of the project walls where drywall was supposed to be. o. Inspector Prince testified that as of the pre-hearing jobsite inspection, Corrective Work Order Items 2 (Failure to complete drywall finish to the bottom of the walls) (Exhibits C-22C, C-22D, C-22E and C- 22G), 5 (Failure to install texture in various areas) (Exhibits C-22A and C- 22B) and part of 3, (i.e., those located at the bottom of the walls), still did not meet minimum workmanship standards. Prince further testified that with regard to Item 2, the photographs examined and referenced above are just examples of the condition existing throughout the premises. Prince acknowledged that he review Item 11 (Failure to wrap the guest bedroom closet door opening) and determined that the parties’ contract required it to be wrapped. Prince further stated that because it wasn’t wrapped, Simpsons related that they had installed trim around it. p. Prince also related that he did not review Items 7, 9A or 10 at the pre-hearing jobsite inspection because the Simpsons indicated they had already corrected and/or caused these items to be corrected. q. Prince further testified that the items which remain to be completed and/or corrected by Priority are minimal as compared to extensive in scope. r. Pritchard was once a supervisor for Priority with approximately 14 years of drywall patching experience but has never held a drywall license. Pritchard testified that he performed certain work on the project and attempted to gain access to the property on October 14, and 17, 2005 but was unable to due to a locked gate. s. Pritchard acknowledged that many of the drywall conditions represented in Exhibit C-22 were not acceptable and/or were incomplete. Pritchard estimated that it would take him approximately a half day to complete drywall repairs and another day to sand. t. Myers testified that she did not hang the drywall work for Priority but did remedial work on or about October 13 and 14, 2005. Myers further testified that as of October 17 or 18, 2005, all drywall work was complete except for “final/warranty” items. Myers further testified that as of November 18, 2005, there were approximately two more days of drywall work to be performed at the project. u. A factual dispute exists regarding whom did the drywall patch work at the bottom of the walls. Myers testified that she did not because there was no carpeting installed at the time she performed her corrective work and, therefore, there would be no carpeting in the drywall mud and/or mud on the carpet as depicted in some of the photos. (Exhibit C-22) L. Simpson testified that as of the November 18, 2005 jobsite inspection one room of the carpet had been installed but was not completed. Simpsons acknowledged in their November 21, 2005 letter to Priority that the “carpet has been installed.” (Exhibit C-16) L. Simpson also testified that after the Corrective Work Order period expired (on or about December 7, 2005), Simpsons themselves performed certain work including cleanup “before the carpet could be laid.” In addition, Simpsons acknowledge in their December 1, 2005 letter to Figy (Exhibit 17) that they “had to apply some finish to the bottom of the walls before carpet was laid.” However, S. Simpson testified that the condition of the wall base depicted in Exhibit C22-C was as Priority left it in October 2005, the carpet was installed afterward and no one on behalf of Simpsons did any drywall work after the carpet was installed. v. Figy maintains that Priority made numerous attempts to contact Simpsons to complete the project and/or perform the necessary corrective work but was denied access to do so as evidenced by their failure to activate their fax machine to receive his attempted communications regarding scheduling. In addition, L Simpson related that Simpsons were out of town December 6, 2005 and did not receive Figy’s message of that date because they assumed Priority was not going to contact them. w. On December 1, 2005, Simpsons acknowledged that $3,000.00 of the $5,859.00 was due Priority for “work…completed on [the] unfinished contract.” (Exhibit C-17) x. On or about January 19, 2006 Simpsons remitted to Priority a second $3,000.00 check to replace the check previously sent December 1, 2005. This represented payment for work Simpsons believed had actually been performed by Priority. This left a balance of $2,859.00 remaining on the contract which Simpsons opined was not owed due to Priority’s failure to complete the contract. (Exhibits 20 and 21) y. Simpsons assert that they do not want Priority to return to the project to complete and/or perform any corrective work.

APPLICABLE LAW

The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. A046-0227 charged Priority with possible violations of A.R.S. §§ 32-1154A 1, 2, 7, 23 and 3 (namely, A.A.C. R4-9-108, the workmanship rule). Those statutory sections require that a holder of a license or a person listed on a license shall 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.

2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.

3. Violation of any rule adopted by the Registrar. …

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 the 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. …

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

A.A.C. R4-9-108 is named as the rule violation charged pursuant to A.R.S. § 32-1154.A.3. That rule 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. The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. A06-0268 charged Design with possible violations of A.R.S. §§ 32- 1154A 7 and 11. Those statutory sections require that a holder of a license or a person listed on a 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.

11. Failure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with his operations as a contractor when he has the capacity to pay or, if lacks the capacity to pay, when he has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. .

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, each 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. 431, 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. This tribunal determines and concludes that Simpsons failed to establish by a preponderance of credible, probative and relevant evidence that Priority violated A.R.S. §32-1154A (1). It is clear from the evidence adduced at the hearing that Priority made attempts through December 2005 to arrange for corrective work to be performed. Why it was unsuccessful is the subject of a factual dispute between Simpsons and Priority regarding phone calls, attempted faxes and the operational status of the parties’ facsimile machines. Given this factual dispute, it is determined that Simpsons failed to meet their burden with respect to A.R.S. §32-1154A (1). 4. This tribunal further determines and concludes that Simpsons failed to establish by a preponderance of probative, credible and relevant evidence that Priority violated A.R.S. §32-1154A (2). No evidence was presented by either party regarding specifications, plans or codes applicable to the subject premises. 5. This tribunal also determines and concludes that Simpsons did not establish by a preponderance of probative, credible and relevant evidence that Priority violated A.R.S. §32-1154A (23). From the evidence elicited at the hearing it is also clear that a factual dispute exists between the parties regarding whether access to the premises was unreasonably denied by Simpsons. Simpsons acknowledged that they refused to allow Priority’s representatives access to the project on November 22 and 23, 2005 pursuant to a jobsite agreement due to Priority’s reported schedule conflict, their belief that the required remedial work could not be completed in the time stated by Priority and their preference to wait for receipt of the Corrective Work Order. In addition, Simpsons acknowledged they rejected Priority’s subsequent effort to schedule remediation work because it was beyond the fifteen day deadline set forth in the Corrective Work Order. Given the factual dispute regarding access and alleged communication attempts, or lack thereof, between the parties, the Simpsons failed to meet the requisite burden of proof regarding A.R.S. §32-1154A (23). 6. It is further determined and concluded that Simpsons established by a preponderance of probative, credible and relevant evidence that Priority violated A.R.S. §32-1154A (3) and A.A.C. R4-9-108 as they pertain to Items 2, 3, 5 and 11 of the Corrective Work Order as delineated in Findings of Fact No. 15 (o). 7. It is further determined and concluded that Simpsons failed to establish by a preponderance of probative, credible and relevant evidence that Priority violated A.R.S. §32-1154A and A.A.C. R4-9-108 as they pertain to Items 7, 9A and 10 of the Corrective Work Order as related in Findings of Fact No. 15 (p). Though originally items requiring remedial work by Priority, Simpsons acknowledged that they performed and/or caused to be performed corrective work on these items yet failed to delineate with any specificity the exact cost incurred to perform each item. The itemization set forth in Exhibit 23 was insufficient for such purpose. 8. Based on the foregoing, Simpsons have not established by the requisite weight of probative, credible and probative evidence their right to restitution in this matter. 9. The foregoing violation in Conclusion of Law 7 is deemed by this tribunal to have been wrongful and has resulted in substantial injury to Simpsons. Therefore, a violation of A.R.S. §32-1154A (7) has be proven as cited. 10. This tribunal further determines and concludes that Priority failed to establish by a preponderance of credible, probative and relevant evidence that Design violated A.R.S. §32-1154A (11) by failing to pay monies in excess of seven hundred fifty dollars when due. Though an issue exists regarding monies due under the parties’ contract, the evidence adduced at the hearing was insufficient to establish that Design, as a contractor, and not Simpsons was a party to that contract. 11. It is further determined and concluded that Priority failed to establish by a preponderance of credible, probative and relevant evidence that Design violated A.R.S. §32-1154A (7).

RECOMMENDED ORDER On the basis of the foregoing, IT IS RECOMMENDED that, commencing twenty (20) days from the effective date of the Registrar’s Order entered in this matter, the Class C-10 Residential Drywall license of Priority Drywall LLC be suspended until the Registrar receives written proof that Respondent has caused another duly licensed contractor to perform the corrective work on those Corrective Work Order items set forth in Conclusion of Law No. 6 hereof. IT IS FURTHER ORDERED that, if Priority, through its duly licensed subcontractor, accomplishes the above-described work in a proper workmanlike manner or is denied access to perform same on or before twenty (20) days from the effective date of this Order then, in that event, no license suspension shall take place due to Priority’s failure to comply. Priority shall notify the Registrar of Contractors in writing of the denial of reasonable access to the project.[4] Done this day, December 27, 2006.

____________________ Brian E. Smith Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2006, to:

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

By ________________________ ----------------------- [1] Inspector Dan La Fond was originally assigned to this matter and conducted the initial jobsite inspection. This tribunal has been advised that Mr. La Fond has assumed part-time status with the Registrar of Contractors due to relocation out of state. As a result, Mr. Prince assumed responsibility for this matter. [2] Although Design, not the Simpsons, is indicated as the party to the contract and invoices were submitted to Design (Exhibit Q) the evidence presented at the hearing was insufficient to establish that the subject project was anything but a personal residence for the Simpsons. [3] The nail inspection took place September 28, 2005. [4] 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.

-----------------------

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