ALJDEC decisions subject to certification as final

06F-G1725-ROC · Registrar of Contractors · 2006-12-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 20, 2006 APPEARANCES: Complainant Clifton Allen appeared on his own behalf; Kevin Jensen, Esq. appeared on behalf of Respondent Kentec Builders LLC ADMINISTRATIVE LAW JUDGE: Marianne T. Bayardi _____________________________________________________________________ The issue presented by this matter is whether Respondent Kentec Builders LLC is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154(A). Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: FINDINGS OF FACT 1. Respondent Kentec Builders LLC (“Respondent”) is the holder of a Class KB-02 License (No. 191815) issued by the Registrar of Contractors (“ROC”). Kent Brady is Respondent’s qualifying party. 2. Complainant Clifton Allen owns a residence located at 27326 North 97th Drive, Peoria, Arizona (the “Home”). 3. On August 18, 2005, Complainant and Respondent entered into a contract for Respondent to enlarge the master bedroom, enclose the existing patio, and add a new patio at the Home (the “Project”). The contracted price was $31,165.00. The contract called for a 10 percent deposit at the time of contract acceptance, which Complainant paid on August 20, 2005, by way of a $3,100.00 check payable to Respondent. Thereafter, Respondent prepared plans and submitted them to the City of Peoria for approval. Respondent was required to revise the plans prior to approval by the City of Peoria on October 10, 2005. 4. After the plans were approved, Complainant and Malinda Allen contacted Troy Shields, Respondent’s superintendent on the Project, to inform him that they could not go forward as planned.[1] Ultimately the parties agreed that Respondent would retain Complainant’s deposit money but put the Project “on hold” until Complainant advised Respondent that he was ready to proceed. 5. In or about January, 2006, Complainant informed Respondent he was ready to proceed with the Project. Respondent then submitted the plans to Complainant’s Home Owners Association’s (“HOA”) architectural committee for approval. The HOA notified Complainant that the plans had been approved by way of a February 23, 2006 letter. 6. On or about March 7, 2006, Respondent commenced work on the Project. Also on that date, Complainant made a $6,233.00 progress payment to Respondent. Respondent’s employees dug footers and poured a portion of the concrete. Respondent ran out of concrete and, consequently, could not pour the entire slab and all footings. Respondent ordered more concrete and returned, according to Mrs. Allen, “a couple of weeks later” to finish that portion of the Project. 7. Some time elapsed with no construction activity on the Project. Complainant became very dissatisfied with the lack of activity or progress as well as the lack of responsiveness from Kent Brady, Respondent’s principal. 8. Thereafter, Respondent framed the Project and installed new roofing. The new roofing material was, however, the wrong color. Respondent was required to return to the Home and remove the wrong roofing material and install the proper colored material. The parties agree that Respondent has not completed the roof. 9. On June 13, 2006, Complainant authored a letter to Respondent, reproduced verbatim, stating: All work was to be completed within 3 months per original contract. June 6, 2006 was the last day of the 3 months. The Allen’s are willing to extend the contract date to June 26, 2006. If the work is not completed by that date, starting on June 27, 2006 [Respondent] agrees to credit the Allen’s #338.75 per day until 100% of the work is completed.

Mr. Brady denied receiving said letter until some time later, but did discuss the issues raised in the letter during a phone conversation with Complainant on June 14, 2006. In that conversation, the parties disagreed over whether the contract had “expired” and whether a new contract was necessary. Respondent did not agree to Complainant’s demand for liquidated damages if Respondent failed to complete the Project by June 26, 2006.. 10. On June 14, 2006, Complainant filed the instant Complaint against Respondent with the ROC. The Complaint alleged: 1) Did not complete work within contract time frame. 2) Long periods of time go in between work sessions. 3) Will not return any calls. 4) Demands further payment or threatens to place lein (sic) on house.

11. On July 2, 2006, Complainant requested the instant administrative hearing. On August 10, 2006, the ROC issued Citation and Complaint No. G06- 1725 alleging that Respondent had violated A.R.S. § 32-1154(A)(1) and (A)(7). 12. On August 24, 2006, Respondent filed a written Answer to the Citation and Complaint. 13. The instant administrative hearing took place on November 20, 2006. 14. At hearing, Complainant contended that Respondent abandoned the project by allowing two months to lapse without any construction activity on the Project and that the contract expired without Respondent completing the required work. 15. Respondent maintained that the three month time period in the contract was an estimate, rather than an expiration period. Moreover, Respondent, while not denying there were gaps in activity, contended that it continued to perform a variety of work on the Project. 16. The parties agreed that Complainant proposed an amendment to the contract, which Respondent refused to sign. Respondent contended, and Complainant did not contest, that it was precluded from performing additional work on the Project without signing the amendment. 17. Mrs. Allen testified that she and Complainant discussed timing of completion with Mr. Shields when Complainant re-initiated the contract. According to Mrs. Allen, Mr. Shields told them Respondent would have no problem meeting the three month time frame described in the contract. Mrs. Allen also testified that both Mr. Brady and Mr. Shields knew that time was of the essence as she and Complainant needed to have the repairs competed in order to sell the Home and avoid further financial difficulties related thereto. 18. Mrs. Allen testified that, after the footers and slab were completed (on or around March 21, 2006), Respondent performed no work on the Project for two months. However, Mrs. Allen’s further testimony and Complainant’s exhibits controvert this contention. For example, Mrs. Allen testified that Respondent returned to the Home for approximately two weeks at the end of May to work on the framing. After that, Complainant begrudgingly paid Respondent the next progress payment. That progress payment, by way of check number 1097, admitted into evidence as part of Exhibit 2, is dated May 11, 2006. One can infer that, if Respondent completed the framing work in the two weeks or so preceding the payment, then Respondent actually started that portion of the Project sometime in the end of April. Moreover, Mrs. Allen testified that around this same time period Respondent installed the new roof, albeit the wrong color. 19. Mrs. Allen testified that she did not want Respondent to continue work on the Project unless it consented to the amendment and agreed to the liquidated damages provision. 20. Complainant testified that he authored and sent the amendment in order to enter into a dialogue with Mr. Brady, who had been non-responsive to that point, in order to get the Project competed. When Mr. Brady refused to sign the amendment, Complainant “let the Complaint stand” and Respondent performed no additional work on the Project. Complainant also testified that Respondent did perform some work in the May – June, 2006 time frame. 21. Mr. Brady testified that Respondent was working on the Project, but encountered usual delays with vendors and others. He testified that the time listed in the contract was a “time frame” and not an “expiration.” Mr. Brady intimated that Respondent was ready and willing to finish the contract, but could not do so because it was unwilling to sign Complainant’s amendment. Mr. Brady testified, and Complainant acknowledged, that Complainant did not respond to Mr. Brady’s July, 2006 letter concerning contract completion. 22. The Administrative Law Judge finds that Respondent’s work on the Project, while not daily, was ongoing and that Respondent did not abandon the contract prior to Complainant’s preparation of his proposed amendment to the contract. The Administrative Law Judge also finds that the parties’ disagreement over the operation of the contract, including whether it had “expired” and whether an amendment was necessary or appropriate, constitutes a good faith dispute between the parties, which should be determined by a civil court of competent jurisdiction rather than in this administrative disciplinary action. CONCLUSIONS OF LAW 1. In this administrative proceeding, Complainant bears the burden to prove, by a preponderance of the evidence, that Respondent violated A.R.S. § 32-1154(A)(1) and/or (A)(7) as charged by the ROC in its August 10, 2006 Citation and Complaint. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. Under A.R.S. § 32-1154(A)(1), a contractor is subject to discipline for abandoning a contract without legal excuse. The Administrative Law Judge concludes that Complainant failed to present sufficient credible and probative evidence that Respondent abandoned the contract. On the contrary, Complainant’s own evidence established that Respondent continued to perform some work on various aspects of the Project during the spring of 2006. Therefore, the Administrative Law Judge concludes that Respondent has not violated A.R.S. § 32-1154(A)(1). 4. Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . resulting in another person being substantially injured.” The Administrative Law Judge concludes that Complainant failed to present sufficient credible and probative evidence that Respondent committed a wrongful or fraudulent act. Therefore, the Administrative Law Judge concludes that Respondent has not violated A.R.S. § 32-1154(A)(7). 5. Based on the foregoing, the Administrative Law Judge concludes that no grounds exist to impose discipline against Respondent’s Class KB-02 License (No. 191815). RECOMMENDED ORDER The Administrative Law Judge recommends that no discipline be imposed against Respondent’s Class KB-02 License (No. 191815) and that Citation No. G06-1725 and the Complaint upon which it is based be dismissed. In the event of certification of this Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of that certification. Done this day, December 5, 2006.

______________________________________ Marianne T. Bayardi Administrative Law Judge

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

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

By ___________________________ ----------------------- [1] Malinda Allen and Complainant are married, though Mrs. Allen is not a named Complainant in this matter.

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

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