ALJDEC decisions subject to certification as final

06F-H0255-ROC · Registrar of Contractors · 2006-12-07

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 7, 2006 APPEARANCES: Complainant : Kenneth L. Sondegrath, P.C., Stephen L. Irgens, Esq., appeared for Ingeborg R. Wald. Ms. Wald testified. Further testifying was William Redman, Registrar of Contractors Inspector. Respondent : LAW OFFICES OF PAUL LENKOWSKY, Gautem Sen, Esq., appeared for Terra Firma Builders and Developers, Inc.[1] ADMINISTRATIVE LAW JUDGE: Gary B. Strickland _____________________________________________________________________ A Hearing was convened to determine whether Respondent Terra Firma Builders and Developers, Inc. violated state law as has been alleged by Complainant Ingeborg Wald and as cited by the Arizona Registrar of Contractors (hereinafter also, “the ROC”). Evidence and testimony were presented. Respondent Terra Firma Builders and Developers, Inc. holds a Class B- (General Residential Contractor) license issued by the Registrar of Contractors. Complainant alleges that Respondent has performed the construction of her home in an unworkmanlike manner and has abandoned its construction contract. 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 Terra Firma Builders and Developers, Inc.’s license (No. 144841) was initially issued on May 6, 1999, was renewed on June 13, 2005 with viability through May 31, 2007. The license was revoked effective September 7, 2006. 2. David Bernard Garringer is the Qualifying Party identified on the Terra Firma Builders and Developers, Inc. (hereinafter also, “the Contractor” or “Terra Firma”) license. 3. Complainant Ingeborg Wald is a seventy-two year-old woman in ill health, having a history of cardiologic problems. 4. The project at issue involved the construction of a home at a location generally known as 1926 Marble Canyon Road, Bullhead City, Arizona. The work was performed on Arizona soil, the contract under which the construction was performed was executed in Arizona, and the Contractor is licensed by the ROC. As such, the acts and omissions alleged in the Ingeborg Wald Complaint fall within the requirements of Title 32, Chapter 10, Article 3. 5. Complainant Ingeborg Wald entered into a contract with Terra Firma for the construction a new home on March 3, 2004, amended on May 13, 2004.[3] 6. All but $6, 818.79 of the $314,905.00 contract price has been paid.[4] 7. Having become disconcerted over the quality of Terra Firma’s performance on specific aspects of the construction project, Ingeborg Wald filed a Complaint before the Registrar of Contractors on or about December 1, 2005.[5] 8. An inspection of the site was conducted by ROC Inspector William Redman on December 16, 2005 with both parties present. 9. Based upon his observations made at the December 16, 2005 inspection and upon his discussions had with the parties, Inspector Booth issued a “Corrective Work Order” on December 28, 2005 directing Terra Firma to make numerous corrections and repairs of the thirty-three (33) items of complaint.[6] 10. Thereafter, because no resolution had been accomplished, Ingeborg Wald requested that a CITATION AND COMPLAINT be issued and that a Hearing be convened. 11. An ROC CITATION AND COMPLAINT was issued on February 7, 2006 citing Terra Firma Builders and Developers, Inc. for possible violation of A.R.S. § 32-1154(A)(1),(3), (7), (9), and (23).[7] 12. Terra Firma Builders and Developers, Inc. filed an A.R.S. § 32- 1155 ANSWER to the CITATION AND COMPLAINT on February 21, 2006 denying responsibility for a couple of the items and protesting that other items had been corrected.[8] 13. Upon request of Ms. Wald, the ROC issued a NOTICE OF HEARING on June 14, 2006 and the Hearing convened pursuant thereto. . . . 14. At the Hearing, ROC Inspector William Redman testified. He related that he had conducted a Prehearing Inspection of the property on November 30, 2006 whereat he observed that the following items in his previously-issued “Corrective Work Order” had either not been addressed by the Contractor or inadequately or improperly addressed”: Item Nos. 5, 7, 9, 11, 14, 17, 18, 19, 20, 22, 24, 25, 26, 27, 30, 31, and 33. The Inspector is unaware of any excuse whereby the Contractor may be relieved of responsibility for the repairs. 15. No witness was present to testify on behalf of Terra Firma. 16. A “substantial injury” under A.R.S. § 32-1154(A)(7) is reasonably construed as one that is real and identifiable.[9] Ms. Wald has been damaged by Terra Firma’s failures on the project. 17. Terra Firma’s failure to make the corrections and repairs when directed so to do was wrongful. Terra Firma did not present evidence of legal excuse in the failure. Further, the failure to make the corrections is evidence of an abandonment of contractual duties. 18. As identified by the Inspector vis-à-vis “Corrective Work Order” item numbered 25, Terra Firma failed workmanship standards in the construction. 19. There has not been any evidence intimating fraudulent conduct.[10] 20. No evidence was presented indicative that Terra Firma failed to construct the home for the price stated in the parties’ contract and amendments thereto. . . . APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent Terra Firma Builders and Developers, Inc. 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.

9. Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.

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. H06-0255 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(A). Terra Firma Builders and Developers, Inc. is a 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.[11] Further, the standard of proof is that of the “preponderance of the evidence.”[12] 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.”[13] The evidence taken as a whole must convince the decision maker that the party who bears the overall burden of persuasion, in this case Ingeborg Wald, is more probably correct on the issue(s) in dispute. 3. Observing these standards, Complainant Ingeborg Wald has persuaded, by a preponderance of the evidence, that Respondent Terra Firma Builders and Developers, Inc. has violated several of the cited statutory and regulatory provisions by failing to correct substandard workmanship and, thereby, failing to complete the project. The failure was wrongful, without legal excuse, and has caused Ms. Wald substantial injury. 4. By a preponderance of all of the evidence, Complainant has persuaded that, in the construction of her home, Terra Firma Builders and Developers, Inc. violated A.R.S. § 32-1154(A(1),)(3), (7), and (23), but not (9), as charged in the CITATION AND COMPLAINT. 5. An examination of Terra Firma Builders and Developers, Inc.’s license record reveals that eleven (11) other Complaints have been filed against the license.”[14] Five (5) of the Complaints have resulted in the administration of “Discipline.” Seven (7) Complaints remain “Open.”[15] The disciplinary history of the license presents basis for an assessment founded in aggravation.

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors revoke Lic. No. 144841. IT IS FURTHER RECOMMENDED that, in addition to the above provided penalty, any continuation or restoration of Respondent’s contracting rights, whether or not probationary, shall be subject to a condition that Respondent first post an additional surety bond, cash deposit, or alternative deposit, for a period of twenty-four (24) months, including future renewal periods, in the amount of $5,000.00, the amount deemed additional to the required surety bond, cash deposit, or RECOVERY FUND participation set forth at A.R.S. § 32-1152(D). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two (2) year period following the above- provided twenty-four (24) months; and, a return shall be made only if no claims are then pending against Respondent . 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 7th day of December 2006.

_____________________________________ Gary B. Strickland Administrative Law Judge

Original transmitted by mail this 7th day of December 2006 to:

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

By ___________________________ ----------------------- [1] No party representative appeared at the Hearing. Counsel filed a motion to continue the Hearing giving as reasons supporting a delay: (1) Counsel was retained the day before the Hearing; and (2) Respondent’s Qualifying Party’s son was then in intensive care. The motion was denied under A.R.S. § 41-1092.05(C) and A.A.C. R2-19-110(A). Counsel did not present any indicia supporting assertion (2); Counsel could not even identify the hospital whereat the son was being treated. This matter has long been on the docket, the Complainant is a senior citizen and demands redress, and Respondent’s current revocation status militates against prolongation of the case. [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 one exhibit, marked C-7. The exhibit was received.

[3] See “Wald Complaint” with the Agency Hearing file.

[4] Id.

[5] Id.

[6] “Corrective Work Order” within the Agency Hearing file.

[7] Within the Agency Hearing file.

[8] ANSWER within the Agency Hearing file.

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

[10] 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)”).

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

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

[13] 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.)

[14] 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.

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

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