ALJDEC decisions subject to certification as final

06F-M2474-ROC · Registrar of Contractors · 2007-04-26

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 24, 2007 APPEARANCES: Complainants : Rony and Margarita Ghanooni appeared pro se. Testifying was Rob Hauck, Dependable Heating and Air, Inc. Respondent : DODGE, ANDERSON, MABLESON, STEINER, JONES & HOROWITZ, LTD., Timothy Ducar, Esq. represented P B S Construction Management, Inc. Testifying were Dennis Cook, Registrar of Contractors Inspector, and Peter J. Sorace, Jr., Qualifying Party. ADMINISTRATIVE LAW JUDGE: Gary B. Strickland _____________________________________________________________________ A Hearing was convened to determine whether Respondent P B S Construction, Inc., Inc. violated state law as has been alleged by Complainants Rony and Margarita Ghanooni and as cited by the Arizona Registrar of Contractors (hereinafter also, “the ROC”). Evidence and testimony were presented. Respondent P B S Construction, Inc., Inc. holds a Class B- (General Residential Contractor) license issued by the Registrar of Contractors. Complainants allege that Respondent has performed in the sale and installation of two A/C units in a less-than-workmanlike manner and has failed its contractual responsibilities. Based upon an examination of the entire record,[1] the following Findings of Fact are made, Conclusions of Law rendered, and DECISION AND RECOMMENDED ORDER issued: FINDINGS OF FACT 1. Respondent P B S Construction, Inc.’s license (No. 158208) was initially issued on September 7, 2000, and was most recently renewed on October 26, 2006 with viability through September 30, 2008. The license was suspended on September 26, 2007 pending compliance with the Registrar’s Order in Complaint No. M05-1685.[2] 2. Peter J. Sorace, Jr. is the Qualifying Party identified on the P B S Construction, Inc. (hereinafter also, “the Contractor” or “P B S Construction”) license. 3. The project at issue involved, inter alia, the installation of two A/C units at a home situated on Apollo Avenue in Tempe, 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 Ghanooni Complaint fall within the requirements of Title 32, Chapter 10, Article 3. 4. Complainants Ghanooni entered into a remodeling contract with P B S Construction on or about July 26, 2004.[3] 5. All but $2,900. of the $32,500. contract price has been paid.[4]

6. Having become disconcerted over the quality of P B S Construction’s performance on specific aspects of the remodeling project, the Ghanoonis filed a Complaint before the Registrar of Contractors on or about June 13, 2006.[5] 7. An inspection of the site was conducted by ROC Inspector Dennis Cook on August 9, 2006 with both parties present. 8. Based upon his observations made at the August 9, 2006 inspection and upon his discussions had with the parties, Inspector Cook determined not to issue a “Corrective Work Order.” Instead, he issued to the parties a Form RC-C-007 letter wherein he explained his decision in the following terms:

There was insufficient evidence to show faulty workmanship by the contractor in regard to the front entry door and the cooling of the bedroom.[6]

9. Thereafter, because no resolution had been accomplished, the Ghanoonis requested that a CITATION AND COMPLAINT be issued and that a Hearing be convened. 10. An ROC CITATION AND COMPLAINT was issued on November 20, 2006 citing P B S Construction for possible violation of A.R.S. § 32-1154(A)(3) and (7).[7] 11. P B S Construction filed an A.R.S. § 32-1155 ANSWER to the CITATION AND COMPLAINT on December 1, 2006 generally denying any violation of the disciplinary statute.[8] 12. Upon request of the Ghanoonis, the ROC issued a NOTICE OF HEARING on February 15, 2007 and the Hearing convened pursuant thereto. 13. It is agreed by both parties that two issues of concern have been advanced by Complainants – (1) the cooling at the home; and (2) the integrity of the front door. 14. Robert (“Rob”) Hauck, Qualifying Party for Dependable Heating and Air, Inc. (ROC Lic. No. 133676) testified for Complainants. Mr. Hauck gave his opinion that the unit on the west side of the house was not cooling adequately. The inadequacy he attributed to restricted airflow caused by a collar not being sealed, crushed and bent ductwork, an expansion valve misplaced, fan speeds not having been set on high (as required), ductwork leading to the master bedroom register installed in such a manner that air was emitted only one way through a specified “four (4) way” register, and a return air vent not having been installed in the master bedroom. Nonetheless, upon questioning, Mr. Hauck characterized each of his expressed concerns as of “minor” variety. Overall, the installation of the air cooling units did not fall below industry, workmanship, or practice standards, in his opinion. 15. ROC Inspector Dennis Cook testified after having sat through the testimony of Complainants’ expert. He related that, upon his inspection, he observed (felt) adequate air-flow into the subject master bedroom. Calling attention to the ROC's written workmanship standards, Mr. Cook noted that it is sufficient that a unit has cooled a structure 30° lower than the outside temperature.[9] He found conditions in the subject structure and bedroom well within tolerance. However, had he been aware of loose and crushed ductwork, not observed by him but attested to by Complainants’ expert during testimony, he might have issued a directive to Respondent to correct conditions. By the same token, had he been told that third parties had worked on or around the A/C units and ductwork, as was evidenced at the Hearing, he would not have issued a “Corrective Work Order” unless he had confirmed that P B S Construction was responsible for the condition(s). As to the front oak door, he is of the opinion that the alleged deficiencies all relate to general wear of the door and its sun exposure. 16. Evidence was presented indicative that another Contractor worked on the A/C units after P B S Construction had performed at the site. Further, other trades (electrical, TV/stereo, phone, etc.), in addition to the Contractor working on the A/C units, made their way into the area whereat the crushed and bent ductwork was found. It cannot be known whether any or all of the other tradesmen were responsible for the conditions depicted in the Ghanoonis’ photos[10] and described by Mr. Hauck. 17. The Ghanoonis also complain that they did not receive A/C warranty paperwork and maintenance manuals from Respondent. Testimony of the witnesses revealed that the owner’s manual was discovered inside one of the A/C units at the time of Mr. Cook’s jobsite inspection, that Mr. Sorace of P B S Construction then promised to deliver to the Ghanoonis their copies. Mr. Sorace credibly testified that he had, in fact, left the original paperwork on the kitchen countertop in December 2004, at the conclusion of the project, as is his practice. How they ended inside the unit he does not know. He swears further that he delivered the copies to the Ghanoonis shortly after the jobsite inspection, as promised. It is probable that Sorace gave the warranty paperwork to the Ghanoonis, as required.[11] 18. Regarding the oak door of which the Ghanoonis complain, the Ghanoonis have not persuaded that the present condition of the door, as reflected in photos,[12] can be attributed to anything other than normal wear and sun exposure. Mr. Sorace’s explanation that the door’s sitting at Pima Door for several months awaiting pick-up for installation, all the time protectively wrapped, is reasonable. The delay did not contribute to the complained of condition of the door. Further, Mr. Sorace’s explanation that he used the product chosen by Mrs. Ghanooni to seal the door, Minwax® (uncontested), and that he followed manufacturer’s specifications, is credible and persuasive. 19. A “substantial injury” under A.R.S. § 32-1154(A)(7) is reasonably construed as one that is real and identifiable.[13] The Ghanoonis have not persuaded that they have been damaged on this project by an act or omission attributable to P B S Construction. 20. There has not been any evidence intimating fraudulent conduct.[14] 21. No assertion of workmanship deficiency has been proved, given the testimony of those with expertise, even the Ghanoonis own expert.[15] 22. It is not persuasive that P B S Construction acted wrongfully on this project, given the record created.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent P B S Construction, Inc., Inc. with possible violations of A.R.S. § 32-1154(A)(3) (and A.A.C. R4-9-108, the “workmanship rule”) and (7). Those statutory sections require that a holder of a license or a person listed on a license not commit the following:

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.

. . . 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. M06-2474 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). P B S Construction, 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.[16] Further, the standard of proof is that of the “preponderance of the evidence.”[17] 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.”[18] The evidence taken as a whole must convince the decision maker that the party who bears the overall burden of persuasion, in this case the Ghanoonis, is more probably correct on the issue(s) in dispute. 3. Observing these standards, Complainants Ghanooni have not persuaded, by a preponderance of the evidence, that Respondent P B S Construction has violated the cited statutory and regulatory provisions. 4. By a preponderance of all of the evidence, Complainants have not persuaded that, on the subject remodeling project, P B S Construction violated A.R.S. § 32-1154(A)(3) and/or (7) as charged in the CITATION AND COMPLAINT.

RECOMMENDED ORDER In view of the foregoing, IT IS RECOMMENDED that the Registrar of Contractors dismiss Complaint No. M06-2474. 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 26th day of April 2007.

_____________________________________ Gary B. Strickland Administrative Law Judge

Original transmitted by mail this 27th day of April 2007 to:

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

By ___________________________ ----------------------- [1] 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. Complainants offered twelve (12) exhibit, marked C-1 through C-12. The exhibits received into the record.

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

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

[4] Id.

[5] Id.

[6]See September 1, 2006 Cook RC-C-007 Letter in the Agency Hearing file.

[7] Within the Agency Hearing file.

[8] ANSWER within the Agency Hearing file.

[9] See WORKMANSHIP STANDARDS FOR LICENSED CONTRACTORS (August 2004) at p.5, §6.

[10] See Exhibit C-2.

[11] Mr. Sorace’s comment that the Ghanoonis could have downloaded the material from the Trane® website is noted, albeit not dispositive of the issue.

[12] See Exhibit C-6.

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

[14] 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)”).

[15] See FINDING OF FACT ¶14, above (notably, the last sentence). [16] See Ariz. Admin. Code R2-19-119(B).

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

[18] 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.)

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