ALJDEC decisions subject to certification as final

07F-2753-ROC · Registrar of Contractors · 2008-04-24

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 14, 2008 APPEARANCES: Attorney John O’Neal appeared with Philip S. Gelb, Qualifying Party and Corporate Officer, for Complainant; Jonathon D. Hille, Qualifying Party and Corporate Officer, appeared for Respondent. ADMINISTRATIVE LAW JUDGE: Michael G. Wales _____________________________________________________________________ 1. This matter convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated March 10, 2008. 2. Complainant Tuscan Estate Homes, Inc. (“Complainant”) is an Arizona corporation which holds Arizona Contractor’s License No. 138292, Class B (General Residential Contractor) issued by the Registrar of Contractors (“ROC”) on September 2, 1998. Philip S. Gelb (“Mr. Gelb”) is a corporate officer and is the qualifying party for the license. 3. Respondent Beam Lighting and Construction, Inc. (“Respondent”) is an Arizona corporation which holds Arizona Contractor’s License No. 189477, Class K-21 (Residential and Commercial Landscape and Irrigation Systems) issued by the Registrar of Contractors on October 8, 2003. Jonathan D. Hille (“Mr. Hille”) is a

corporate officer and is the qualifying party for the license. 4. Complainant, by and through its attorney, filed a complaint with the Registrar of Contractors on May 22, 2007 wherein it alleged, inter alia, that: “Tuscan Estate Homes, Inc…. contracted with Beam Lighting and Construction …to provide landscape services on property owned by Tuscan…Respondent agreed to provide living plant material and warranted its work…Respondent was paid in full… and executed an Unconditional Waiver and Release of Lien on March 1, 2007…. Respondent recorded a Mechanic’s Lien against the property on April 12, 2007. Plant material has died and Respondent has failed to honor its warranty...”

5. The complaint alleged that the landscape services had been provided to Complainant at 13098 E. Saddlehorn Trail in Scottsdale, Arizona (“the jobsite”), a lot where a new estate home under construction by Complainant was in its final stages of completion. 6. Registrar of Contractors Inspector Warren Duncan (“Duncan”) conducted a jobsite inspection on July 11, 2007. Thereafter, on July 11, 2007, Duncan issued a Corrective Work Order to Respondent which stated: “Two dead ironwood trees at front and rear courtyards. Contractor to correct by appropriate means.” Respondent was given fifteen (15) days to comply with the Corrective Work Order. 7. On August 8, 2007 Complainant filed a correspondence with the Registrar of Contractors stating that the Corrective Work Order had not been complied with. Complainant requested a hearing on the complaint. 8. On August 16, 2007 Respondent filed a correspondence with the Registrar of Contractors wherein it disputed Inspector Duncan’s Corrective Work Order. Respondent alleged the trees died in a freeze and that they were planted properly. 9. On December 28, 2007, the Registrar issued a CITATION AND COMPLAINT in Case No. 07-2753 charging Respondent with possible violations of A.R.S. §32-1154A(1), (7), (9), (23), (3) (specifically, Rule R4-9-108), and (13) (specifically, A.R.S. §32-1124 (B)). 10. Respondent filed an answer with the Registrar of Contractors on January 7, 2008 wherein it asserted, inter alia, that the trees perished due to frost; that Respondent does not “warranty such acts of Mother Nature”; and, per its contract with Complainant, “Buyer shall assume risk of loss from and after delivery.” 11. At the hearing, the dispute was limited to the two dead trees. Complainant submitted Exhibits C-1 through C-5 which were marked, admitted and considered. Mr. Gelb testified on behalf of Complainant. Dennis O’Dell (“Mr. O’Dell”) also testified for Complainant. 12. Respondent submitted Exhibits R-B through R-G, R-P and R-O which were marked, admitted and considered. Mr. Hille testified on behalf of Respondent. 13. Inspector Duncan testified on behalf of the Registrar of Contractors and described his observations and conclusions regarding his July 11, 2007 jobsite inspection. 14. From the evidence elicited at the hearing, the following salient facts are important to note: a. Mr. O’Dell has been a resident of Arizona since 1982 and has been self-employed in the business of general landscape maintenance in Arizona since 1985. While Mr. O’Dell has had no formal training in landscape maintenance and is not a formally trained or educated arborist, Mr. O’Dell’s testimony regarding his background, experience and practical knowledge regarding the traits and characteristics of ironwood trees established sufficient foundation for this tribunal to admit and consider his opinion as to the condition of the two ironwood trees during the times he observed and cared for the trees after he undertook the job of grounds maintenance at the jobsite shortly after the trees were planted. b. The ironwood trees were installed by Respondent at the jobsite on or about January 29, 2007. Mr. O’Dell did not see the actual installation of the two ironwood trees, but did inspect the trees during a “walk- through” at the jobsite approximately two weeks after they were installed. At the walk-through, Mr. O’Dell observed that the two trees at issue had, as he called it, the distinct dark brown bark of an ironwood tree in distress, and the two trees showed no sign of “leaf pop” as did the other two ironwood trees on the property, one of which had been planted at the same time as the two trees at issue and the other growing naturally in the NAOS. Mr. O’Dell testified that he did not know if the trees were dead at the time, but he did know they were in trouble. c. After the walk-through, Mr. O’Dell made efforts to revive the trees, including monitored watering, frequent soil moisture monitoring with a moisture meter, physical inspections of the soil at the base of the tree for grubs and termites, and application of pesticide. The two trees, however, never sprouted any leaves or showed any signs of new growth, even after nighttime temperatures exceeded 65 degrees and other trees exhibited new growth. d. Inspector Duncan testified that at his July 11, 2007 jobsite inspection the two ironwood trees appeared to be dead. Duncan testified that the applicable Registrar of Contractors minimum workmanship standard requires all plant material to be planted in a living condition. e. Mr. Gelb testified regarding the contract he entered into with Respondent for the delivery and installation of the trees and regarding Respondent’s refusal to replace the trees. Mr. Gelb testified that he paid $4,125.00 each for the two ironwood trees. This amount was confirmed on page 17 of Exhibit C-2. Mr. Gelb testified that the two dead trees had to be cut down in August, 2007, after Respondent had not complied with the Corrective Work Order, to be able to effectively market and sell the property. f. Mr. Hille testified that the ironwood trees were delivered to, and planted on, the jobsite on or about January 29, 2007. Mr. Hille believes that a deep freeze killed the two trees and that testified that a freeze kill does not require replacement under the contract and the warranty he provided to Complainant. Mr. Hille offered into evidence Exhibit R-B, a January 22, 2007 article from the Arizona Republic, indicating that it snowed in Phoenix on the day prior to the article. The same article, however, called for a high of 48 to 53 degrees in Phoenix on January 22, 2007.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. 07-2753 charged Respondent with possible violations of A.R.S. §32-1154A(1), (7), (9), (23), (3) (specifically, Rule R4-9-108), 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 contract or refusal to perform after submitting a bid on work without legal excuse for abandonment of the contract. …

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 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 violation of this paragraph until after a hearing has been held pursuant to the provisions of this article. …

3. Violation of any rule adopted by the Registrar.

…

13. Failure in any material respect to comply with the provisions of this chapter.

A.C.C. R4-9-108 is named as the rule violation charged pursuant to A.R.S. §32-1154A (3). Rule R4-9-108 provides that all work shall be done in a professional and workmanlike manner and in accordance with any applicable building codes and professional industry standards. 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. This tribunal determines and concludes that Complainant failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. §32-1154A (1), (7), (9) and (13) (namely, A.R.S. §32-1124 (B)). 5. This tribunal further determines and concludes that Complainant has established by a preponderance of credible, probative and relevant evidence that the two ironwood trees were not planted in a living condition, which is in contravention to the minimum workmanship standards of the Registrar of Contractors, and that no valid justification existed for Respondent not to comply with the Corrective Work Order in July, 2007. Therefore, this tribunal concludes that Respondent has violated the provisions of A.R.S. § 32-1154A (23), and (3) (specifically Rule R 4-9-108, commonly known as the “workmanship rule”). 6. The Registrar of Contractors’ authority in matters such as presented herein, includes the ability to impose restitution, in whole or in part, as a reasonable condition to reduce any possible disciplinary action against contractors. The exercise of such authority is deemed appropriate in the instant case. Therefore, based upon all the evidence, a reasonable condition in this case would consist of the payment by Respondent to Complainant of $8,250.00, as restitution for the two dead trees. Imposing such a condition is preferable to imposing a disciplinary action against Respondent’s license without providing a condition to reduce or eliminate same. However, nothing in this order would prevent either party from seeking a lesser or greater monetary award from a civil court of competent jurisdiction. 7. The Registrar may order a restitutionary remedy as part of the Registrar’s regulatory authority to take appropriate disciplinary action against those who violate the licensing laws set forth in A.R.S. § 32-1154A (1) through (24), inclusive. An administrative award of restitution is not an unconstitutional exercise of administrative authority where due process procedural rights are protected, where the authority to prohibit conduct has been well defined, as in A.R.S. § 32-1154, and where judicial review is available as provided in A.R.S. § 12-901, et seq. Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (App. 1990). 8. In addition to the Sunpower case, A.R.S. § 32-1156.01 provides, in pertinent part, that “after a hearing…an administrative law judge may recommend that a licensee provide restitution to any person who is injured….by an action of the licensee”.

RECOMMENDED ORDER In view of the foregoing it is recommended, commencing on the effective date of the Order entered in this matter, that the Class K-21 license of Respondent shall be suspended until the Registrar of Contractors receives written proof that Respondent has paid or tendered to Complainant the sum of $8,250.00. It is further recommended that if Respondent pays or tenders the above-described sum of money to Complainant on or before the effective date of the Order entered in this matter, then the aforementioned license suspension shall not take place and in that event, this Citation, together with the Complaint upon which it is based, shall be closed. Finally, it is also recommended that Respondent pay the sum of $250.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. §32-1154E. The failure by Respondent to pay the entire amount of the aforesaid 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 contractor’s 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. §32-1101A(5), unless payment of any outstanding prior civil penalty is tendered. 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. Done this day, April 24, 2008.

Office of Administrative Hearings

______________________________________ Michael G. Wales Administrative Law Judge

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

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

By ___________________________

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