ALJDEC decisions subject to certification as final

06F-M2501-ROC · Registrar of Contractors · 2007-04-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 21, 2007. APPEARANCES: Katherine Nelson appeared personally. Drake Development, Inc. was represented by its attorney, Richard Allemann, Esq. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ 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. Drake Development, Inc. (“Respondent”) is the holder of License No. 087094, a Class B- contracting license issued by the Registrar of Contractors. 2. Katherine Nelson (“Complainant”) is the owner of a residence located at 2428 N. 68th Place, Scottsdale, Arizona. 3. Complainant and Respondent entered into a City of Scottsdale Community Development Block Grant Program (“CDBGP”) Construction Contract (“Contract”) in 2005 for the remodeling of Complainant’s residence. 4. CDBGP provides deferred loans to eligible citizens of Scottsdale, Arizona. After 36 months, one-half of the loan is forgiven if the participant is still living in the residence. 5. Respondent was the successful bidder for Complainant’s project with CDBGP. CDBGP agreed to pay Respondent $13,982.00 for the scope of work to be performed. 6. Article V of the Contract provided that any changes to the original scope of work were required to be by written change orders. 7. Article VII of the Contract provided that any disputes between Complainant and Respondent would be resolved through arbitration. 8. By Change Order No. 1 dated October 20, 2005, the scope of work was expanded and the contract price increased to $18,872.80. 9. By Change Order No. 2 dated December 12, 2005, the scope of work was again revised. The contract price increased to $19,444.80. 10. Western Technologies Inc. (“WT”) issued a written report dated December 13, 2005 which presented “the results of the follow-up surface wipe sampling for the lead conducted at [Complainant’s] residence.” WT reported the following sample results:

The HUD standard for lead dust in surface wipe samples for floors is 40 ug/ft². Lead was detected below the acceptable HUD levels at <7.5 ug/ft² in the surface wipe samples collected from the counter and 11 ug/ft² in the sample collected from the windowsill.

11. At the time it performed the testing, WT was the holder of Certificate Nos. AZ-R-7249-1 and AZ-10-022006-0082 issued by the United States Environmental Protection Agency. 12. In its written report, WT staff made no recommendations for further assessment or testing at that time. 13. Justin Boyd is the CDBGP Housing Rehabilitation Coordinator. 14. On December 21, 2005, Mr. Boyd and Respondent’s president and qualifying party, Richard Drake, had a conversation about Respondent’s contract with Complainant. 15. By letter dated January 5, 2006, Mr. Boyd advised Mr. Drake that the dispute that developed between Respondent and Complainant should be resolved by arbitration pursuant to Article VII of the parties’ contract. 16. By letter dated March 14, 2006, the American Arbitration Association sent a letter to Mr. Boyd regarding the details of the arbitration to resolve the parties’ dispute. That arbitration was suspended due to deposits not having been paid to the American Arbitration Association by Complainant. 17. On or about June 16, 2006, Complainant filed a written complaint with the Registrar of Contractors alleging statutory and regulatory violations by Respondent. 18. As a result of the filed complaint, the Registrar of Contractors’ assigned inspector, Ted Gerold, performed a jobsite inspection on August 10, 2006 to view Respondent’s workmanship. Inspector Gerold then issued a Corrective Work Order dated August 22, 2006, which required Respondent to timely perform the following remedial repairs:

The Contractor is to correct the following by appropriate means:

1. Return all plumbing master bath sink fixtures back to complainant. 2. Ensure master bath window is in proper working order. 3. Ensure all leaded paint chips are removed from the property. 4. Repair damaged living room furniture piece top. 5. Finish the outside front bay window, including exposed nails, caulking and paint. 6. Prime and paint wood around wall mount AC outside. 7. Fill in termite drill hole at end of patio. 8. Replace entire kitchen cooktop with new one. 9. Finish all interior drywall repairs where necessary, especially at soffet in living room near AC register. 10. Install extra lock to rear sliding glass door per contract.

Note: In this inspector’s opinion, insufficient evidence was provided to show this contractor responsible for the following and, therefore, no action is required at this time:

1. Gas water heater is allowed on floor in storage room. 2. Living room window operates properly. 3. Any and all cracked window panes of glass on stained glass window. 4. Countertop, sink, and fixtures are appropriate at master bath vanity area, including top overhang. 5. Floor tile and mirrors in mater [sic] bath. 6. Interior treatment of termites including interior damage. 7. Adjustment of master closet door. 8. Low “E” windows. 9. Swamp cooler installation.

19. On March 20, 2007, Inspector Gerold performed a prehearing jobsite inspection to determine Respondent’s compliance with the Corrective Work Order. At the time of his prehearing jobsite inspection, Respondent had not complied with item no. 1, the return of plumbing fixtures. The inspector testified that items no. 2, 3 and 4 were completed. Item 5 has been repaired, however Inspector Gerold noted that there was a small amount of touch up needed. Inspector Gerold rescinded item no. 6 after determining that it was not included within the scope of work. Respondent had not completed item no. 8. Inspector Gerold opined that the existing Jenn Air cooktop, consisting of an electric grill, two burners and a down draft ventilating system, should be replaced with a similar Jenn Air cooktop. Item 9 still needs to be completed. Item 10 has been completed. 20. There is credible testimony that the present cooktop location has a hood above it for ventilation. Mr. Drake testified that there is no duct work for the downdraft ventilation system for the Jenn Air. However, he failed to explain why the grill on the Jenn Air cooktop could not operate properly with the overhead hood ventilation system. 21. Respondent is found to be responsible for replacing Complainant’s cooktop with one that has a grill with two burners, similar to the existing Jenn Air model. 22. Mr. Drake obtained the plumbing fixtures from the estate of his former worker, who is determined to have been given the items as a gift from Complainant. He received the fixtures in September 2006. Respondent returned the items to Complainant during the hearing. However, Respondent failed to explain why it did not return the items earlier to Complainant after receiving them. 23. Respondent was not required to install the plumbing fixtures under its contract. Complainant did not separately negotiate with Respondent for their installation. 24. There is insufficient evidence to attribute any cracking or damage to Complainant’s stain glass window to Respondent. 25. Respondent is found not to have timely complied with the Corrective Work Order. 26. Respondent is not found to have deviated from plans or specifications. 27. Respondent’s failure to comply with the Corrective Work Order and its deficient workmanship are wrongful acts that have substantially injured Complainant. 28. A review of the official records of the Registrar of Contractors reveals that the complaint in this matter is the only one appearing on its contracting license.

CONCLUSIONS OF LAW

1. The Registrar of Contractors has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 3. Respondent did not violate the provisions of A.R.S. § 32-1154(A)(2), as cited in the Citation and Complaint issued by the Registrar of Contractors. 4. Respondent did violate the provisions of A.R.S. § 32-1154(A)(7), as cited in the Citation and Complaint issued by the Registrar of Contractors. 5. Respondent did not violate the provisions of A.R.S. § 32-1154(A)(3), specifically A.A.C. R4-9-108, as cited in the Citation and Complaint issued by the Registrar of Contractors. 6. Respondent did not violate the provisions of A.R.S. § 32-1154(A)(23), as cited in the Citation and Complaint issued by the Registrar of Contractors.

RECOMMENDED ORDER

Respondent’s Class B- contracting license shall be suspended on the effective date of the Order entered in this matter until the Registrar of Contractors receives written proof that Respondent has fully complied with the Corrective Work Order dated August 22, 2006. If Respondent properly complies with the Corrective Work Order on or before the effective date of the Order entered in this matter, then the above-provided license suspension shall not take place and Registrar of Contractors Case No. M06-2501 shall be closed. In addition to the above-provided penalty, if any, Respondent shall pay the sum of $500.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. § 32-1154(D). The failure by Respondent to pay the entire amount of the civil penalty on or before 30 days following the effective date of the Order entered in this matter shall result in the automatic revocation of Respondent’s contracting license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32- 1101(A)(5), unless payment of any outstanding prior civil penalty is tendered. Done this day, April 5, 2007

______________________________________ Brian Brendan Tully Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2007, to:

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

By ___________________________ -----------------------

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