ALJDEC decisions subject to certification as final

07F-A0024-ROC · Registrar of Contractors · 2007-12-17

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 7 and 11, August 20 and 21 and November 27, 2007. APPEARANCES: Complainant: Ioan Crisan appeared at all hearings, pro per. Respondent: Daniel Rotvold, corporate officer and qualifying party, and Julie Rotvold, corporate officer, appeared at all hearings, pro per. Interpreter: Alin Paul Isfan served as the interpreter at all hearings. ADMINISTRATIVE LAW JUDGE: Brian E. Smith _____________________________________________________________________ Evidence and testimony were presented and, based on the entire record in this matter, the following Findings of Fact, Conclusions of Law and Recommended Order are made:

FINDINGS OF FACT 1. The matter first convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated April 3, 2007. The parties did not complete the presentation in the time allotted and the matter was set for further hearings on May 11, August 20 and 21 and November 27, 2007. 2. Complainants Ioan Crisan and Leonica Crisan (“Complainants”) are the owners of a residence located at 3201 West Homestead Lane, Prescott, Arizona (“premises/project”). 3. Respondent Rotvold Construction Co., Inc. (“Respondent”) is a corporation which holds Arizona Contractor’s License No. 104129, Class B (General Residential) issued by the Registrar of Contractors (“ROC”) on September 15, 1994. Daniel Ray Rotvold (“D. Rotvold”) 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 September 1 – 16, 2002 for non-renewal. 4. Complainants filed a complaint with the ROC on July 17, 2006 wherein they alleged, inter alia, that Respondent didn’t “build the house according to the initial architectural plan received by him and approved by the HOA in this community”; failed to correct such plan deviations; and, did not build items like a patio foundation and entry staircase for which it was paid. Complainants then listed eight (8) items to be corrected: (1) front entry element to be reconstructed per the approved plan; (2) heavy board and sills around all windows; (3) all columns framing was supposed to be built tapered, Respondent had everything built straight; (4) only one of two skylights required by plan were installed; (5) back patio door frame must be repaired/replaced – it is the wrong size and the screen doors cannot be mounted because frame is too small; (6) chimney required by plan not built; (7) contract required that Respondent build the patio and front steps for which it was paid[1]; (8) Respondent collected monies in full for the A/C, electric, roof and plumbing for which it has only made part payment to applicable subcontractors. 5. Registrar of Contractors Inspector John Prince (“Prince”) conducted a jobsite inspection on September 26, 2006 and issued a Corrective Work Order on October 12, 2006 which required Respondent to “correct by appropriate means and do in a good workmanship manner” complaint items (2) and (5) of the complainant and “correct by appropriate means and do in a good workmanship manner or rectify” complaint items (1), (3), (4), (6), (7) and (8). 6. On November 2, 2006, Respondent filed a correspondence with the ROC wherein it, inter alia, requested a hearing and disputed Inspector Prince’s findings set forth in the Corrective Work Order. 7. Complainants filed a request for hearing on November 6, 2006. 8. On January 12, 2007, the Registrar issued a CITATION AND COMPLAINT in Case No. L07-0024 charging Respondent with possible violations of A.R.S. §32-1154A 1, 2, 7, 9, 23 and 3 (namely, R4-9-108, the workmanship rule). 9. Respondent filed an answer on January 26, 2007 wherein it asserted a general denial of all claims and specifically asserted, inter alia, that it had a “legal binding excuse for refusal to perform additional work; did not depart from or disregard plans or specifications without full knowing consent and instruction of owner Crisan; [and] has valid justification for not taking action.” 10. At the hearing, Complainant Ioan Crisan (“Complainant”) testified and submitted Exhibits C-1, C-2, C-3, C-6, C-7, C-8, C-9, C-11, C- 20, C-21, C25 and C-26 which were marked, admitted and considered. Exhibits C-4, C-5, C-10, C-12 through C-18 and C-24 and were stipulated into evidence. 11. D. Rotvold testified on behalf of Respondent and submitted Exhibits R-9, R-11, R-14 and R-16 which were marked, admitted and considered. Exhibits R-1, R-2, R-3, R-7, R-8, R-12, R-15 and R-17 through R-23 were stipulated into evidence. Cory Larson (“Larson”) and Steve Sanchez (“Sanchez”) also testified on behalf of Respondent on the fourth day of hearing. 12. Inspector Prince testified on behalf of the Registrar of Contractors and described his observations and conclusions on his initial jobsite inspection on September 26, 2006 and pre-hearing jobsite inspection on May 7, 2007. 13. From the evidence elicited at the hearing, the following salient facts are important to note: a. On or about June 23, 2004, the parties entered into a “Construction Contract” (“Contract”) whereby Respondent was to construct the subject project for a total of Five Hundred Forty-Five Thousand Dollars ($545,000.00)[2]. (Exhibit R-7) b. The Contract provided for the payment of a Ten Thousand Dollar ($10,000.00) “advance against the contract sum” and five (5) equal Progress Payments of $Seventy-Seven Thousand Seven Hundred Fifty-Four and 40/00 Dollars ($77,754.40). c. A credit of $8,200.00 off the Contract price was provided Complainant due to the exclusion of a basement on the project. d. An excavation cost of $5,000.00 was added to the Contract price. (Exhibit R-20) e. Complainant paid Respondent a total of $268,940.40 for work performed on the project. (Exhibit R-14) f. A factual dispute exists between the parties regarding the extent of work required to be completed and/or remedied by Respondent and the amount of money still owing Respondent under the Contract. Complainants contend that Respondent abandoned the project, failed to complete numerous items required by the Contract including, without limitation, the concrete for the back patio and deck and front entrance foundation and/or failed to pay in full air conditioning, electrical, roofing and plumbing subcontractors. Complainants further contend that due to Respondent’s referenced action and/or inaction, they were required to retain subcontractors directly to complete the project at a cost of not less than $43,408.32 (Exhibit C-18) plus the value of a chimney, fireplace, second skylight and three screen doors. Respondent contends that it performed all work required by the Contract plus additional work requested by Complainants during the course of the project for which Complainants owe the one half of the fourth and all of the fifth draws (a total of $116,631.60) due under the Contract and which precipitated Respondent’s cessation of work on the project in about October 2005 (?).[3] g. Respondent constructed the premises pursuant to the plans and specifications provided by Complainants and in accordance with accepted workmanship standards as acknowledged by Complainants in their April 26, 2006 correspondence to the High Valley Ranch Homeowners Association (“HVRHA”). (Exhibit R-16) h. During the course of construction, Complainants requested Respondent to make several modifications to the plans and specifications including, without limitation, pillars/siding, rock work, back doors, window trim, chimney and front entry. (Exhibit R-26) Subsequently, the HVRHA notified Complainants that these and other items did not comport with the accepted plans and specifications for the High Valley Ranch subdivision and threatened suit to force compliance. As a result, Complainants insisted that Respondent make the subject changes to return the project to the original plans which Respondent refused to do without additional compensation. i. Only one of two skylights was installed on the project due to a conflict with heating ductwork. Respondent offered to install the second skylight in a different location which Complainants refused to accept. j. During the course of construction Complainants approved the venting of the gas fireplace through a wall which eliminated the need for a chimney. Thereafter, when advised by the HVRHO that a chimney was still required for esthetic purposes, a factual dispute arose between the parties as to whether Complainants and Respondent agreed to have Respondent install the chimney.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors charged Respondent with possible violations of A.R.S. §32-1154A 1, 2, 7, 9, and 3 (namely R4-9-108). 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 and code. …

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.

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.

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. Based on the evidence of record and applicable law, this tribunal determines and concludes that Complainants failed to establish by a preponderance of credible, probative and relevant evidence that Respondent abandoned and/or refused to perform work on the Contract without legal excuse and/or failed in a material respect to complete a construction project or operation for the price stated in the contract, or in any modification of the contract in violation of A.R.S. Sec. 32-1154A (1) and (9). It is clear from the evidence elicited at the hearing that a factual dispute exists regarding monies due Respondent on the project, if any. Therefore, an arguable good faith excuse was presented by Respondent regarding some of the work claimed due from Complainants and, in light thereof, Respondent cannot be deemed to have abandoned the project. 5. This tribunal further determines and concludes that Complainants failed to establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. Sec. 32-1154A (2). Notwithstanding Complainants’ assertions to the contrary at the hearing, Complainants acknowledged to their homeowners association that Respondent constructed the project in a workmanlike fashion and per accepted plans. 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. Sec. 32-1154A (3) and A.A.C. R4-9-108, the workmanship rule, as they pertain to any work performed by Respondent on the premises. 7. It is also determined and concluded that Complainants failed to establish by the requisite weight of credible, probative and relevant evidence that Respondent violated A.R.S. Sec. 32-1154A (23). 8. This tribunal further determines and concludes that Complainants failed to establish by a preponderance of credible, probative and relevant evidence Respondent violated A.R.S. Sec. 32-1154A (7).

RECOMMENDED ORDER On the basis of the foregoing, IT IS RECOMMENDED that the entire Citation and Complaint in Case No. A07-0024 be dismissed.[4] Done this day, December 17, 2007

_______________________ Brian E. Smith Administrative Law Judge

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

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

By ___________________________ ----------------------- [1] Complainants also assert that they paid other subcontractors to complete these items. [2] The base Contract price was Three Hundred Ninety-Eight Thousand Seven Hundred Seventy-Two Dollars ($398,772.00). Extras brought the total to $545,000.00. [3] Although the evidence showed that Complainants paid Respondent $268,940.40 and Respondent asserts that $116,631.60 remains unpaid (one half of the third draw and all of the fourth draw) for a total of $385,572.00, no evidence was presented by either party to explain the difference with the agreed upon total contract price of $545,000.00. [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