ALJDEC decisions subject to certification as final

07F-G0262-ROC · Registrar of Contractors · 2007-05-15

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 3, 2007.

APPEARANCES: >The Complainants appeared in their own behalf. >The Respondent appeared through Terry Lynn Kalmi, its qualifying party and a member of the LLC entity.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

Evidence and testimony were presented, and based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. During the presentation of evidence and testimony, an amendment to the within Citation, Complaint and Case Caption was requested on behalf of the named Complainant and permitted by the Administrative Law Judge so as to allow Sandra J. Marshall, the wife of Michael D. Marshall and a part owner of the subject residential property, to be added as an additional named Co-Complainant in this administrative action.

2. Pursuant to an accepted verbal proposal, Respondent agreed to and did perform concrete work on Complainants’ property consisting of the installation of a slab for a contemplated separate garage structure. It appeared that, after a credit was allowed for certain work performed by one of the Co-Complainants, and after the quoted price was increased due to the need for additional concrete materials actually used in the initial pour, the total adjusted cost price of $5,586.00 was fully paid to Respondent by Complainants who tendered such sum in two separate checks on June 5, 2006 and June 6, 2006, respectively.

3. It was not effectively disputed that all dealings between the parties through the bidding and the work performance stages reflected that Respondent was using a business name other than the name then appearing on its license and bond. At those times, Respondent’s license was held under its legal entity’s name of Alpha Hardware, LLC, but Respondent was shown to have been utilizing the name of Canyon State Remodeling as a “d.b.a.” (Doing Business As) name. The use of such name as part of Respondent’s contracting activities was impermissible, despite the fact that Respondent had successfully sought and obtained a registration for that business name through the office of the Arizona Secretary of State. In mitigation, when notified of the above-described impropriety, Respondent promptly applied for and obtained an appropriate name change with the Registrar of Contractors.

4. It was similarly not disputed that Respondent had utilized the services of an unlicensed individual for the initial pour of the concrete slab for Complainants’ intended garage structure. Such individual was shown not to have been an employee of Respondent but instead was an independent specialty subcontractor, compensated in accordance with a fixed price bid for the work and having no portion of the monies payable withheld for taxes or other deductions. The actions of Respondent in hiring and paying that individual worker is found to have effectively aided and abetted the activities of an unlicensed person in violation of the State’s Contracting laws.

5. Although Respondent contended that it did not knowingly violate the charged contracting law provision relating to aiding and abetting, the term “knowingly” as defined in State law requires only that Respondent be factually aware of what it is doing and with whom it is doing it, and does not require knowledge that the conduct is unlawful. See A.R.S. §1-215 (17). Respondent did confirm that it immediately discontinued the further use of the unlicensed person.

6. The concrete slab for the future garage structure was shown to be the subject of an initial pour and also three subsequent partial pours. The first pour, utilizing the services of the above-mentioned unlicensed person, took place in June, 2006. Following the period of time customary for the concrete’s curing, the slab was shown to have developed a widespread cracking condition, prompting the filing of the within complaint by Complainants in August, 2006.

7. The credible evidence at the hearing tended to show that, despite an express indication on the applicable plans and specifications, Respondent did not install an underlayment of 4-inches of ABC materials below the initially poured concrete slab. However, this omission was the subject of an advance discussion between the parties, and Complainant was shown to have ratified the elimination of ABC materials when informed of the fact that the Respondent’s proposed cost price did not include any ABC materials and that the use of such materials would generate an increased contractual cost.

8. The evidence additionally revealed that Respondent had also elected to use ½-inch anchor bolts throughout the slab, spaced 32 inches apart, instead of the customary industry standard of 48 inches or more. Although the plans did call for larger 5/8-inch anchor bolds at a few specified locations, any deviation by Respondent from the applicable plans is found to have been rendered neither material nor prejudicial due to the closer spacing of the smaller size bolts. In point of fact, the closer spacing intervals for the installed bolts may well have been a beneficial deviation.

9. The Registrar’s assigned Inspector, after viewing the condition of the initially poured concrete slab, determined that there was compound cracking throughout the slab, affecting more than the visible surface, and informed the parties that appropriate remedial work by Respondent should be undertaken and completed.

10. In October, 2006, Respondent did arrange for a second pour of concrete, this time through a properly licensed specialty subcontractor. The corrective work effort consisted of pouring a concrete overlay with a thickness of approximately 3 ½-inches on the entire top of the previously poured 8-inch thick slab. Respondent had completed this second partial pour by installing wire mesh material along the bottom of the overlay slab, abutting the top of the initially poured slab. Although the evidence tended to indicate that an original layer of wire mesh provided by Respondent to increase the strength of the initially poured slab was inappropriately not raised but instead was left on the ground below the slab, by subsequently installing another layer of wire mesh throughout the bottom of the overlay slab, Respondent is found to have adequately rectified the initially misplaced wire mesh by locating the new mesh materials at a near mid-point of the now almost 12-inch thick concrete slab.

11. Relatively soon after the second pour, an unlevel surface condition became evident, primarily in the Southern portion of the slab, and unacceptable excessive surface ponding of water was experienced. When the same Registrar’s Inspector confirmed the need for further remedial work, Respondent arranged for a third pour consisting of the removal and replacement of approximately two-thirds of the prior overlay pour, once again through the same licensed subcontractor. This additional corrective work was accomplished in February, 2007.

12. The Northern portion of the overlay slab was not replaced, since the unlevelness did not extend into that portion of the overlay slab. Complainants nevertheless assert that visible compound cracking exists on the unreplaced portion of

the slab that is comparable to the type of cracking experienced after the initial pour, However, Complainants were unable to demonstrate by a preponderance of probative evidence at the hearing that the present condition of this Northern portion of the slab is presently below acceptable prevailing standards and tolerances for concrete installations.

13. A pre-hearing Inspection conducted about a week prior to the scheduled hearing date revealed that the pouring of a 12-foot long section along the stem wall footing had been inadvertently omitted and this area was left exposed. However, Respondent promptly and properly arranged for this omission to be corrected by a fourth pour by the selected subcontractor, completing such remedial work a few days thereafter, thereby appropriately remedying any deficiency prior to the hearing date..

14. Construction is not a perfect science, and it is not unusual for items to require attention by way of correction, replacement or adjustment – often even more than once. No finding of a contracting law violation is generally supportable unless and until, after notice and a reasonable opportunity is given, a licensed contractor fails to rectify construction deficiencies. In this case, all deficiencies were shown to have been addressed and ultimately rectified by additional work, all at Respondent’s expense.

15. Complainants, acting as owner/builders, were shown to have ordered, to have paid for and to have had delivered a quantity of lumber materials to be utilized in the construction of the garage above the completed slab. In this administrative proceeding, Complainants seek to recover substantial monetary damages based upon the allegedly deteriorated condition of the materials delivered to the jobsite and allowed to remain there for a much prolonged time period. Such damages, in addition to incurred storage expenses for other materials stored elsewhere and awaiting the completion and correction of all slab work, were claimed by Complainants to have been

attributable to and purportedly caused by the overall delays that were experienced due to the need for several corrective work efforts on the part of Respondent with respect to the concrete slab above which the materials would be used.

16. The Registrar of Contractors is not proper forum in which to pursue claims for money damages based upon Respondent’s acts or omissions in completing and subsequently correcting the contracted work. It must be noted that the Complainants, serving as their own general contractor and consequently assuming some measure of responsibility for various jobsite scheduling matters, may have allowed a possibly premature delivery of materials shortly before the start of Respondent’s work, thereby perhaps warranting a shared fault analysis. Moreover, the evidence was inconclusive with respect to the portion and the value of delivered materials that was incapable of being subsequently used to erect the structure over the concrete slab. In any event, there is a far more appropriate forum in which to seek and potentially recover demonstrated monetary losses consisting of either claims for deterioration of some or all of the paid for and delivered materials or claims for incurred storage costs for other materials delivered elsewhere but not useable until after all remedial work was ultimately accomplished. To the extent that Respondent may be shown to have been wholly or at least primarily responsible for any or all generated losses, such claims by Complainants must be sought and recovered, if at all, by pursuing available remedies before a civil court of competent jurisdiction..

17. The within decision is not intended to constitute a finding on merits either as to Complainants’ entitlement or as to Respondent’s responsibility with respect to consequential losses purportedly incurred and attributable to this Respondent’s acts or omissions.

18. Respondent’s impermissible use of a business name not on its license or bond at the time, as well as its use of an unlicensed individual to perform jobsite work,

especially where, as here, such work generated substandard and unacceptable results, are found and determined to constitute wrongful (but not fraudulent) acts to the detriment of the Homeowner/Complainants, in violation of one of the charged contracting law violations hereunder.

18. Notice is taken of the Registrar’s license files which reveal that Respondent has compiled a very good prior record as a contractor in this State.

CONCLUSIONS OF LAW

1. At these administrative hearings, the complaining party generally has the burden of proof, Vazzano v. Superior Court, 74 Ariz. 369, 249 P.2d 837 (1952) and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (1996). See also Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (1985); Utah Construction Company v. Berg, 68 Ariz. 285, 205 P. 2d 367, (1949); Rule R2-19-119, A.A.C. A "preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not." Morris K. Udall, Arizona Law of Evidence, §5 (1960). 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 (6th ed. 1990)

2. The evidence of record sufficiently established that Respondent has wrongfully (but not fraudulently) aided and abetted an unlicensed person and has used a business name that was not on its contracting license and bond, in violation of the provisions of A.R.S.§32-1154(A)(7), (10) and (13); namely A.R.S. §32-1124(B). However, no violations by Respondent of the provisions of A.R.S. §32-1154(A)(3); namely Rule R4-9-108, A.A.C., based upon the existence of workmanship deficiencies

that remained uncorrected for more than a reasonable time after the giving of notice and an opportunity to rectify reported problems, has been adequately proven hereunder.

3. The responsive actions of Respondent in addressing and correcting reported workmanship problems, in ceasing the continued use of an individual not possessing a proper license and in changing is license to reflect the use of another business name, in addition to Respondent’s good prior contracting record, should be accorded some consideration in mitigation of any otherwise appropriate disciplinary penalties to be imposed in this case.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order that Respondent’s Class B-03 license be suspended for a period of forty-five (45) days; provided however, in consideration of certain demonstrated mitigating circumstances, only the first five (5) days shall consist of active license suspension and the remaining forty (40) days shall be in the nature of disciplinary probation.

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 will be forty (40) days from the date of that certification.

Dated: May 16, 2007. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to: Fidelis V. Garcia, Director Registrar of Contractors Legal Department 800 West Washington Street (6th Floor) Phoenix, AZ 85007

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