ALJDEC decisions subject to certification as final

07F-2436-ROC · Registrar of Contractors · 2008-06-23

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 15 and June 2, 2008 APPEARANCES: Complainant: Harold and Penny Klinger appeared and were represented by counsel, Paul M. Levine. Respondent: James Rohrer, corporate officer, appeared and was represented by counsel, Joyce Johnson-Stovall. ADMINISTRATIVE LAW JUDGE: Brian E. Smith _____________________________________________________________________ Evidence and testimony were presented and, based on the entire record[1] in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT 1. This matter first convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of hearing dated December 6, 2007. The parties did not conclude the presentation of evidence at that time and the matter was set for further hearing on June 2, 2008. 2. Complainants Harold and Penny Klinger (“Complainants”) are the owners of a residence located at 5747 E. Caballo, Paradise Valley, Arizona (“premises/project”). 3. Respondent Distinctive Secure Door, Inc. (“Respondent”) is a corporation which holds Arizona Contractor’s License No. 169293, Class K-05 (Security Doors, Sunscreens and Gates) issued by the Registrar of Contractors (“ROC”) October 17, 2001. James Arthur Rohrer, Jr. (“Rohrer”) is a corporate officer and the qualifying party for the license. A review of the licensing database maintained by the ROC indicates that this license was suspended May 23 to June 4, 2007 for lack of bond and placed on probation January 28 to February 4, 2008 (G07-1140). 4. Complainants filed a complaint with the ROC on April 23, 2007 wherein they alleged, inter alia, that they had contracted with Respondent for a custom iron entry door and “auxiliary items” with a completion time of 8 -10 weeks or approximately August 31, 2006. Complainants further alleged that by January 2007 the project was “said to be complete” but Respondent demanded to be paid in full “prior to door inspection, delivery and installation.” 5. On May 7, 2007, Complainants filed a request for hearing. 6. On September 13, 2007, the Registrar issued a CITATION AND COMPLAINT in Case No. 07-2436 charging Respondent with possible violations of ARS Sec. 32-1154A 1, 2, 7 and 13 (namely, ARS Sec. 32-1124 (B)). 7. Respondent filed an answer and request for hearing on September 19, 2007 wherein it asserted, inter alia, that it “manufactured and scheduled an installation of custom ironwork pursuant to the terms and conditions of a written agreement,… Claimant approved the custom ironwork…before it was scheduled for installation [and that] Claimant refused to pay the balance for the ironwork and refused installation event though the door was manufactured in an exceptional manner.” 8. At the hearing, Complainants Harold Klinger (“H. Klinger”) and Penny Klinger (“P. Klinger”) testified and submitted Exhibits C-1 through C- which were marked, admitted and considered. 9. Rohrer testified on behalf of Respondent and submitted Exhibits R- 4, R-6, R-7 and R-13 which were marked, admitted and considered. 10. On or about June 23, 2006, the parties into an agreement (“agreement”) whereby Respondent was to, inter alia, manufacture and install an “arched single grand entry door [and] front iron inserts for walls…” for a total sum of $11,825.00.[2] (Exhibit C-1) 11. At the time of executing the agreement, Complainants paid Respondent a deposit of $5,912.50, or one-half of the total purchase price. The face page of the agreement also provided that the “Balance At Delivery” and “Install Total Due” were both $5,912.50 with installation included. 12. The agreement further provided that the “Approximate Date Due” was “8 TO 10.” Complainants testified that Respondent’s sales representative, “JC”, indicated that the agreement’s delivery date was 8 to weeks after the contract was signed. Rohrer testified that delivery was to be 8 to 10 weeks from the date of design approval by Complainants.[3] 13. Rohrer testified that on or about July 24, 2006 Respondent sent via facsimile to Complainants drawings for the subject door and window inserts for review. Complainants contend they did not receive such correspondence 14. On or about August 7, 2006, P. Klinger, acting on behalf of Complainants, approved the door design and sent it to Respondent. (Exhibit C-2) 15. On or about October 3, 2006, Complainants mailed a correspondence to Respondent (Exhibit C-3) whereby they advised they had not yet seen the door or were provided an opportunity to see it and requested a full refund of the deposit and termination of the contract. 16. On or about October 30, 2006, Complainants went to Respondent’s office to inspect the subject door and related materials. At that time, the door did not comport with the previously approved design which condition was acknowledged by Respondent. As a result, Complainants demanded a refund of their deposit due to the alleged delay in delivery and incorrect design. According to Complainants, Respondent refused to refund any money but, instead, offered to remanufacture the door to the approved plans and provided Complainants with certain concessions which included, without limitation, “hinged glass” and mesh for the driveway. Complainants testified that they did not want to allow Respondent another opportunity to remanufacture the door due to their concern occasioned by Respondent’s initial failure to comply with the agreement and their reluctance to wait another extended period of time for delivery. In light of Respondent’s refusal to refund their deposit, offer of concessions and representation that delivery would take place by Thanksgiving, Complainants agreed to permit Respondent to remanufacture the door. 17. Respondent installed nine of eleven inserts but not the subject door sometime before Thanksgiving 2006. 18. On or about December 4, 2006, P. Klinger sent a letter to Respondent whereby Complainants served notice on Respondent of their “immediate cancellation of the contract…due to breach of contract on behalf of [Respondent].” (Exhibit C-5) 19. Notwithstanding the above-referenced correspondence, in early January 2007 Respondent phoned Complainants and scheduled delivery of the subject door. Subsequently, at a second scheduled date in early January 2007, Respondent arrived at the project with approximately ten employees to install the door. This was the first time Complainants met Rohrer. At that time, a dispute arose between the parties regarding payment of the remainder of the agreement price. The door and related accessories were present in Respondent’s vehicle and ready for Complainants’ inspection and installation. However, Rohrer required payment of the balance of the contract price according to the agreement’s terms which provided “Balance at Delivery.” Complainants contended that the balance was due upon installation which they were ready to remit. As a result of this impasse, a somewhat acrimonious discussion took place and Rohrer refused to unload and install the door.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. 07-2436 charged Respondent with possible violations of A.R.S. §32- 1154A 1, 2, 7 and 13 (specifically A.R.S. §32-1124(B)). Those statutory sections require that the holder of a license or person listed on the license shall 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.

2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or his duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications code.

…

7. The doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured. … 13. Failure in any material respect to comply with the provisions of this chapter.

A.R.S. §32-1124(B) is named as the statute violation charged pursuant to A.R.S. §32-1154A (13). That statute provides that every license and/or renewal must be signed by the Registrar or the Registrar’s designated representative and the licensee. It further provides that every license number must be preceded by the acronym “ROC” and be posted in a conspicuous place on premises where any work is being performed, on all written bids submitted by the licensee and on all advertising, letterheads and other documents used by the licensee in the conduct of business. … … … … CONCLUSIONS OF LAW 1. The Registrar of Contractors has jurisdiction over this matter pursuant to A.R.S. § 32-1101, et. seq., which authorizes the Registrar to impose disciplinary sanctions against licenses for violations of A.R.S. § 32-1154. 2. To warrant such sanctions by the Registrar, Complainants must demonstrate by a preponderance of the evidence that Respondent violated any one, or more, of the statutory sections cited. 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.” In re Arnold and Baker Farms, 177 B.R. 648 (9th Cir. BAP (Ariz.) 1994). See also, Culpepper v. State of Arizona, 187 Ariz. 43, 930 P.2d 508 (App. 1996). It is “evidence which is of greater weight or more convincing than the evidence which is offered in opposition to it; that is, evidence which as a whole shows that the fact sought to be proved is more probable than not.” Black’s Law Dictionary 1182 (Rev. 6th ed. 1990). 3. The purpose of licensing Arizona contractors is to regulate the conduct of contracting and protect the public from unscrupulous acts. Beazer Homes Ariz., Inc. v. Goldwater, 196 Ariz. 98, 101, 993 P.2d 1062, 1065 (App. 1999); Better Homes Constr. v. Goldwater, 203 Ariz. 295, 300, 53 P.3d 1139 (App. 2002). The statutory purpose is to prevent unscrupulous or financially irresponsible contractors from deceiving and taking advantage of those who engage them to build. Sobel v. Jones, 96 Ariz. 297, 394 P.2d 415 (1964). 4. It is determined and concluded that Complainants established by a preponderance of credible, probative and relevant evidence that Respondent abandoned the agreement and therefore violated ARS Sec. 32-1154A (1) when it refused to install the subject iron door and remaining auxiliary items in January 2007. It is well settled in Arizona that ambiguous contract terms are to be interpreted in favor of the non-drafting party. In this instance, the agreement contains conflicting provisions as set forth in Finding of Fact 11, i.e., that the $5,912.50 balance is payable under the “Balance At Delivery” and “Install Total Due” provisions. As a result, the agreement should be interpreted in favor of Complainants. Moreover, it is clear from the agreement that installation was included in the contract price. Therefore, Complainants were within their contractual rights to withhold payment until the subject door and auxiliary items were installed. 5. This tribunal further determines and concludes that based on the violation set forth in Conclusion of Law 4 above, Complainants established by a preponderance of credible, probative and relevant evidence that Respondent’s failure to install the subject door and remaining auxiliary items in January 2007 was wrongful and resulted in Complainants being substantially injured in violation of A.R.S. §32-1154A (7), as charged in the issued Citation in Case No. 07-2436. 6. It is further determined and concluded that Complainants failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (2). Although the door initially manufactured by Respondent was not the design approved by Complainants, their acceptance of concessions and agreeing to a subsequent delivery date constituted a modification to the parties’ agreement. As a result, it was uncontested that the remodeled door complied with the plans approved by Complainants, albeit reluctantly. 6. It is further determined and concluded that Complainants failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (13) as no evidence was presented on this alleged violation. 7. This tribunal further determines and concludes that Respondent’s prior disciplinary probation in Case No. G07-1140 shall serve as a factor in aggravation in this matter.

RECOMMENDED ORDER On the basis of the foregoing, IT IS RECOMMENDED that, commencing twenty (20) days from the effective date of the Registrar’s Order entered in this matter, the Class K-05 license of Respondent be suspended until the Registrar of Contractors receives written proof that Respondent has accomplished by appropriate action, by a licensed subcontractor as necessary, the installation of the subject iron door, remaining inserts and all auxiliary items required by the parties’ agreement as set forth in Conclusion of Law 4 or, alternatively, remitted to Complainants a sum adequate to allow Complainants to retain a third party contractor to complete said work. Notwithstanding the parties’ reported dispute regarding payment of the balance due on the agreement at their January 2007 meeting, the instant record failed to establish any grounds to justify a departure from the long- standing policy of the Registrar of Contractors to allow a contractor a reasonable opportunity, after a hearing, to correct any determined deficiencies in his work. Aside from the instant complaint, Respondent had but an eight (8) day probation period arising from Case No. G07-1140. Given this and the factual dispute between the parties regarding time of payment under their agreement, Complainants have provided this tribunal with no legitimate reason to depart from the aforementioned Registrar of Contractor’s policy to afford Respondent an additional opportunity to correct its work. Therefore, proof of unreasonable and unjustified denial of access by Complainants to allow performance of said work by Respondent and/or its duly licensed subcontractor(s) will constitute compliance with this Order. IT IS FURTHER RECOMMENDED that if Respondent and/or its duly licensed subcontractor(s) accomplish the above-described work in a proper workmanlike manner or is/are denied access to perform same, or alternatively, Respondent remits to Complainants a sum adequate to allow Complainants to retain a third party contractor to complete said items on or before the effective date of this Order then, in that event, no license suspension shall take place due to Respondent’s failure to comply with this portion of the Order. IT IS FURTHER RECOMMENDED that, notwithstanding the absence of any suspension required to be imposed as set forth above, Respondent’s K-05 license be placed on probation for a period of one hundred twenty (120) days commencing at he conclusion of any referenced suspension or on the effective date of this Order, as applicable, due to Respondent’s failure to (1) timely manufacture the approved iron door and related items and (2) twice timely deliver the contracted for products.[4] Done this day, June 23, 2008.

________________________ Brian E. Smith Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2008, to:

Registrar of Contractors Fidelis V. Garcia 3838 N. Central Ave., Ste. 400 Phoenix, AZ 85012-1906

By ________________________ ----------------------- [1] The record consists of those documents found within the Registrar of Contractors’ file, the content of which the Administrative Law Judge took Administrative notice, the exhibits offered by the parties and admitted into evidence and the digital record of the proceedings under A.A.C. R2-19- 121. [2] The agreement also included some ancillary work such as modification of the courtyard door to blend with the new door. However, the wealth of the purchase price was attributable to the iron door ($10,000.00) and iron inserts ($1,275.00). [3] The Terms and Conditions set forth on the reverse side of the agreement provide that the “Due Date: is an approximate date set by the customer or seller to give an approximate date due. Neither seller nor customer shall be liable for an exact date….” [4] 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 in this matter will be forty (40) days from the date of that certification.

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