ALJDEC decisions subject to certification as final

06F-M2090-ROC · Registrar of Contractors · 2006-12-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 29, 2006 APPEARANCES: Complainant Bruce Yeung appeared on his own behalf. Kevin Jensen, Esq. represented Respondent Kentec Builders, L.L.C. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ The question presented by this matter is whether Respondent Kentec Builders, L.L.C. (“Kentec”) is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154(A). Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order. FINDINGS OF FACT 1. Kentec is the holder of a Class KB-02 license (No. 191815) issued by the Registrar of Contractors (“ROC”). [1] Kent Brady is Kentec’s qualifying party. 2. On September 6, 2005, Complainant Bruce Yeung contracted with Kentec for Kentec to construct a two-story addition to Mr. Yeung’s home located at 4951 Flint Street in Chandler, Arizona. See Exhibit B, pages 14 through 16. The contract price was $82,638.00. Id. The contract specified the following: 1) Design phase will take approx. 2 weeks and consists of a site measure and follow up for approval of design. If agreement is made today, Sept. 6, 2005 plans will be completed by Tuesday September 9, 2005. 2) Permit phase will begin as soon as plans are finalized and will be submitted to city for review and approval. This will take approx. 6 weeks with the city of Chandler. If agreement is made today, Sept 6, 2005, plans will be submitted to city of Chandler by Wednesday September 14, 2005. 3) Construction will begin within 5 days of permit issuance. Could be as early as November 1, 2005 Depending on City of Chandler permit process. 4) Construction will take approximately 12 weeks to complete. If agreement is made today, construction could be completed by approx. January 15, 2006.

See Exhibit B, Page 16 (emphasis in original).

3. On September 6, 2005, Mr. Yeung paid Kentec a 10% deposit in the amount of $8,200.00. See Exhibit B, page 21. 4. On April 24, 2006, Mr. Yeung filed a complaint against Kentec with the ROC generally alleging that Kentec did not perform any work and abandoned the project. 5. At hearing, Mr. Yeung testified that Kentec failed to timely submit the plans to the City of Chandler, in that Kentec did not submit the plans until October 3, 2005, two weeks after the September 14, 2005 date specified in the contract. Mr. Yeung further testified that the plans were rejected by the City in early November 2005, and that Kentec did not re-submit the plans until January 9, 2006. Mr. Yeung testified that the permit was issued on February 2, 2006 and that he picked up the permit from the City on February 23, 2006. Mr. Yeung testified that Kentec was aware that he and his wife were expecting their second child in late January 2006, and as such, desired to have the construction completed prior to the birth. 6. At hearing, Mr. Brady credibly testified that he drafted the plans and that the plans were ready to be submitted to the City of Chandler on September 15, 2005. Mr. Brady explained that the plans were not submitted until October 3, 2005, because Mr. Yeung would not allow him to submit the plans until Mr. Brady had reviewed the plans with Mr. Yeung in person, line by line. Because of Mr. Yeung’s insistence regarding his personal review of the plans, the submission of the plans was delayed by two weeks. 7. Mr. Brady testified that the City of Chandler called him in the beginning of November 2005 to say that the plans were in need of some revisions and would need to be re-submitted. Mr. Brady credibly testified that within ten days to two weeks, he re-submitted the plans, only after Mr. Yeung reviewed the changes, and called the City in December 2005 to check on the status of the plans. See Exhibit 4. At that time, the City asked him for minor clarifications, what Mr. Brady referred to as “over the counter revisions”. Mr. Brady credibly testified that he met with Mr. Yeung in December 2005 and advised him as to the status of the plans. Mr. Brady further credibly testified that Mr. Yeung had assured him from the inception of the project, that Mr. Yeung had obtained his homeowner association approval for the addition to his home, and that Mr. Yeung confirmed this at that time.

8. The plans were approved by the City of Chandler in early February 2006, and Mr. Yeung picked up the permit from the City in mid to late February. 9. Mr. Brady testified that Kentec was scheduled to commence demolition/construction at the Yeung residence on March 6, 2006. See Exhibit 6. However, both Mr. Brady and Kentec’s office manager, Chantel Miller, credibly testified that when Ms. Miller contacted the Yeungs to inform them that the construction work would commence on March 6, 2006, Mr. Yeung advised Kentec that it could not commence work on the project because he had not yet obtained final homeowner association approval. Mr. Yeung submitted into evidence a letter dated March 14, 2006, from Rossmar & Graham, the homeowner association management company, that gave final approval for the architectural request for remodel that Mr. Yeung had initially submitted in September 2005. See Exhibit P. Mr. Yeung argued that he had actually received approval much earlier than March 14, 2006. However, the evidence of record controverts Mr. Yeung’s assertions, as his own request for architectural approval dated February 23, 2006, states, “As per the Sept 2005 architectural mtg, the initial request for remodeling dated 9/2/05 was approved and voted upon by the board pending City of Chandler permitting approval. Both permit and original HOA submittal are attached.” See Exhibit P, page 2 (emphasis added). This document illustrates that Mr. Yeung was aware that he had not obtained final approval from his homeowner’s association as of February 23, 2006, as the homeowner’s association would not give final approval until the permit had been obtained. Such approval was not given until March 14, 2006. 10. Mr. Brady credibly testified that when he spoke to Mr. Yeung in late March 2006, Mr. Yeung began to ask questions concerning ROC complaints that had been filed against Kentec since the time the parties signed the contract. Mr. Yeung asked Mr. Brady for references and advised Mr. Brady that he would not allow Kentec to commence its work until Mr. Brady gave Mr. Yeung references. Mr. Brady advised Mr. Yeung that he would not give him references, as the parties had entered into a valid, binding contract, Kentec had received a deposit to commence work, and Kentec was ready to proceed with the project. Mr. Yeung advised Mr. Brady that he was not comfortable with Kentec proceeding without first obtaining references. Mr. Yeung requested the return of the deposit. Mr. Brady testified that Kentec did not return the funds because Kentec incurred costs associated with drafting the plans and administrative costs. Further, Mr. Brady felt that Mr. Yeung had breached the contract by not allowing Kentec to proceed with the project. 11. Ms. Miller testified at hearing and credibly corroborated Mr. Brady’s testimony regarding the fact that Kentec had scheduled work to commence at the Yeung residence on March 6, 2006. However, when Ms. Miller contacted Mr. Yeung by phone, Mr. Yeung informed her that Kentec could not proceed on March 6, 2006, because he had not received final approval from the homeowners association. Ms. Miller further testified that subsequent to the early March communication, Mr. Yeung contacted her regarding obtaining references for Kentec and advised that he would not allow Kentec on the property without references. 12. Mr. Yeung denied stating to Kentec that Kentec could not proceed because he did not have homeowner association approval and further denied asking Mr. Brady not to submit the plans to the City of Chandler in September 2005. During the hearing, Mr. Yeung repeatedly alleged that Mr. Brady failed to attend scheduled meetings, did not return phone calls and that he did not receive a schedule for the work. While not attending meetings and returning phone calls may be poor business practices, such actions do not rise to the level of violations of this State’s contracting laws. As to Mr. Yeung’s complaint that he did not receive a schedule of work to be performed, Kentec would not have scheduled any work before the issuance of the permit in February 2006, and when Kentec did advise Mr. Yeung that work was scheduled to commence, he advised that Kentec could not commence its work due to the fact that he had not yet received final approval from the homeowners association. Mr. Yeung acknowledged that he began to lose confidence in Kentec’s abilities, but asserted that he gave Kentec a chance to rebuild trust when he asked for references. 13. The Administrative Law Judge finds, based upon the credible evidence of record, that Mr. Yeung caused an initial delay in the plan submittal to the City of Chandler, due to his insistence on personally reviewing the plans in detail with Mr. Brady. As such, Mr. Yeung’s conduct prevented Kentec from meeting the timeframe for submission set forth in the parties’ contract. The Administrative Law Judge further finds that it is not uncommon to have revisions to plans resulting in re-submittals pursuant to requests from the permitting department of a municipality. Further, when Kentec scheduled the commencement of the construction work, Mr. Yeung specifically instructed Kentec not to proceed because he did not have final homeowner association approval. Lastly, Mr. Yeung would not allow Kentec to proceed without references, and effectively terminated the contract due to his lost confidence in Kentec, based at least in part on ROC complaints that had been filed against Kentec. CONCLUSIONS OF LAW In this proceeding, Mr. Yeung bears the burden to prove, by a preponderance of the evidence, that Kentec is subject to discipline for violations of A.R.S. § 32-1154(A)(1) and/or (A)(7) as charged by the ROC in its June 23, 2006 Citation and Complaint. See Arizona Administrative Code R2-19-119. 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). The Administrative Law Judge concludes that Mr. Yeung failed to meet his burden of proof as to both of the ROC’s charges. Under A.R.S. § 32-1154(A)(1), a contractor is subject to discipline for “abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” The credible evidence of record failed to establish that Kentec abandoned the contract or refused to perform. To the contrary, Kentec stood ready, willing, and able to perform, and in fact had scheduled work to commence at the Yeung residence, but was told it could not proceed, first because of a lack of final approval from the homeowners association, and then because Mr. Yeung wanted references from Kentec before he would allow Kentec to proceed. Therefore, the Administrative Law Judge concludes that Kentec is not in violation of A.R.S. § 32-1154(A)(1). Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The Administrative Law Judge concludes, based upon the credible evidence of record, that Mr. Yeung failed to establish that Kentec committed any wrongful or fraudulent acts that substantially injured Mr. Yeung, as Mr. Yeung caused the delay in the initial plan submittal, was not ready to proceed due to a lack of final homeowner association approval, and then refused to allow Kentec to proceed without references, effectively terminating the contract. Therefore, the Administrative Law Judge concludes that Kentec is not in violation of A.R.S. § 32-1154(A)(7). The Administrative Law Judge concludes, based upon the weight of the credible evidence of record, that no grounds exist to impose discipline against Kentec’s license. The ROC’s Citation in Case Number M06-2090, and the Complaint upon which it is based, should be dismissed. RECOMMENDED ORDER Based on the foregoing, the Administrative Law Judge makes the following Recommended Order: It is recommended that no discipline be imposed against Kentec’s license, and that the Citation issued in Case Number M06-2090, together with the Complaint upon which it is based, be dismissed. 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 40 days from the date of that certification. Done this day, December 11, 2006.

______________________________________ Sondra J. Vanella Administrative Law Judge

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

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

By ___________________________

----------------------- [1] A review of the ROC‘s official records revealed that Kentec’s contracting license was suspended on September 22, 2006 for lack of bond. Such suspended license status does not preclude this tribunal from conducting these administrative proceedings. A.R.S. § 32-1154(C).

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