ALJDEC decisions subject to certification as final

07F-L0020-ROC · Registrar of Contractors · 2007-02-16

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 29, 2007. APPEARANCES: Complainant appeared on her own behalf; Respondent’s qualifying party, David Openshaw, appeared and Respondent was represented by Attorney Glenn Buckelew. ADMINISTRATIVE LAW JUDGE: Thomas Shedden _____________________________________________________________________ The issue presented is whether Daveco Inc. is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154. Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: FINDINGS OF FACT Daveco Inc. (“Respondent”) is the holder of a Class B License (No.183666) issued by the Registrar of Contractors (“ROC”). David Openshaw is Respondent’s qualifying party. Kimberly Moore (“Complainant”) owns a house located at 1440 Beefeater, Lake Havasu City, Arizona (“the house”).

In about April 2006, Respondent, Complainant, and a third party, the Western Arizona Council of Governments (“WACOG”) entered a contract under which: a. Respondent agreed to provide various construction services at the house for a total of $30,500.00; b. WACOG agreed to: (1) provide funding to Complainant; and (2) make two progress payments to Respondent; one progress payment was to be made when 50% of the work was completed, inspected and approved by a WACOG Housing Contract Specialist, and a second progress payment was to be made when 100% of the work was completed, inspected and approved by a WACOG Housing Contract Specialist. See Contract, in administrative record (undated). Complainant put a Deed of Trust on her home, naming WACOG as the Beneficiary in return for WACOG funding the project. See Exhibit C1. Complainant testified that if she remained in the home for a sufficient length of time, WACOG would not require her to repay the loan secured by the Deed of Trust. Complainant became dissatisfied with Respondent’s work and at Complainant’s request WACOG agreed to terminate the contractual relationship between Respondent and Complainant. See Exhibit R2 (letter from WACOG to Complainant dated July 7, 2006). That letter instructed Respondent that it was to notify the sub-contractors that they would no longer have access to Complainant’s house. On July 17, 2006 Complainant filed a Complaint with the Registrar of Contractors (“ROC”). ROC Inspector Cliff Corlett investigated the complaint. On July 26, 2006 Inspector Corlett conducted a jobsite inspection at the house. Present at the jobsite inspection were Complainant and Ms. Sue Reichenfeld, who was acting as an advocate for Complainant; Respondent’s qualifying party, Mr. Openshaw, Kathy, Mark and Samuel Openshaw; and representatives for two subcontractors. Inspector Corlett’s notes indicate that the Complaint did not include a specific list of issues to be addressed, but that during the inspection the Complainant

established a list of 6 items to be addressed. As a result of this inspection, Inspector Corlett issued a Corrective Work Order (“CWO”) on July 30, 2006. The CWO listed 6 items and directed Respondent to take action on these items: 1.) Roof not redone per contract; the contract calls for removal of the existing roof so that the sheathing can be checked; Respondent roofed over the existing roof rather than removing that roof; Respondent’s representative stated that Blaine Rausch had authorized this change; roofing over an existing roof is common and is permitted by code, but the contract requires all changes to be in writing and approved by both the Owner [Complainant] and WACOG. Respondent was directed to comply with the contract; 2.) Windows not properly installed/incomplete; the installation was not complete as the windows were not properly weather sealed and there was trim work required. Respondent was directed to properly complete the window installations; 3.) Plumbing incomplete/improper; various plumbing items were either leaking or not completed. Respondent was directed to properly complete all plumbing work; 4.) Back door installation not complete; Respondent was directed to properly complete the installation; 5.) Garage wiring damaged; Respondent was directed to have a licensed electrician properly repair the wiring; and 6.) New sanitary sewer line not properly permitted and possible damage to home foundation; No damage to the foundation was noted, but after the inspection, Inspector Corlett spoke to Jerry Amann in the Lake Havasu City building department who informed Inspector Corlett that the sewer line required a permit. Respondent was directed to obtain any necessary permit and have any necessary inspections performed. In letters dated August 16 and August 22, 2006 Respondent’s attorney contacted Complainant in an attempt to schedule the required corrective work, except for the roof, which Respondent asserted was not required because Respondent had

received authorization from WACOG to make the change. See Exhibits R3 and R4. These letters also provide the names of sub-contractors that Respondent proposed to use to complete the corrective work, and noted that Ms. Reichenfeld had determined that some of these sub-contactors were not acceptable. Id. In a letter dated August 11, 2006 Complainant requested a hearing. In that letter, Complainant stated that Respondent’s attorney had contacted her with a request to have two sub-contactors begin the corrective work, but these sub-contractors were not acceptable because both had previously done unacceptable work at the house. Complainant also stated that she was adamant that Respondent not be allowed on her property. See August 11, 2006 letter, in administrative record; and admitted as Exhibit R5. On October 19, 2006 ROC issued Citation and Complaint No. L07-0020 against Respondent, charging that Respondent may have violated A.R.S. § 32- 1154(A)(1); (A)(2); (A)(7); (A)(23); and (A)(3). Respondent, through its attorney, filed an Answer in which it asserted that Respondent had been authorized by WACOG to make the change with respect to roof, but because Respondent and its sub-contractors had been denied access to the house Respondent was unable to correct the other 5 items listed in the CWO. ROC issued a Notice of Hearing on December 11, 2006 setting the instant matter for 1:15 p.m. on January 29, 2007. The hearing was convened shortly after that time. Inspector Corlett testified; Complainant presented her own testimony and that of Ms. Reichenfeld; Respondent presented Mr. Openshaw’s testimony and that of Mr. Joe Schmiedeknecht. No one representing WACOG testified or appeared. The hearing was held by video-conference with parties and witnesses appearing in Lake Havasu City and the Administrative Law Judge in Phoenix. Inspector Corlett provided testimony that was consistent with his CWO. Inspector Corlett had spoken to WACOG’s Mr. Blaine Rausch, who confirmed that WACOG had authorized the change in plans with respect to the roof. Inspector Corlett agreed that except for the roof and the sewer line the items on the CWO could be considered to be works-in-progress, rather than faulty

workmanship, although the wiring in the garage may have been construction related damage. He also testified as to the number of times representatives for the Complainant and Respondent had contacted him, their apparent inability to get along, and to the lack of access for Respondent to make any required repairs. Ms. Reichenfeld testified that she has been acting as an advocate for Complainant because Complainant is “mentally challenged.” Ms. Reichenfeld testified that Respondent had done a poor job and had left Complainant without a functioning bathroom for an extended period of time. Complainant testified that Respondent had damaged her house and had not completed the required work in a competent manner. This alleged damage included damage to a door-way to a bathroom and damage related to the new sewer line. According to Complainant that sewer line was not part of the contract. Mr. Schmiedeknecht is the qualifying party for August Plumbing. He testified that he had been hired to finish plumbing work that had been started by another contractor. Initially Mr. Schmiedeknecht was working for Respondent, but after Respondent was asked not to return to the house, WACOG hired Mr. Schmiedeknecht. Mr. Schmiedeknecht could not recall the dates, but testified that after WACOG hired him, he went to the house on a Friday with no problem, but when he returned the following Monday, Complainant would not allowed him access.

Mr. Openshaw testified that he had signed the contract with WACOG after another contractor backed out of the project, and he began work about mid- April 2006. After Complainant had Respondent terminated from the project, Respondent continued to work with sub-contractors to finish the work. Mr. Openshaw testified that WACOG’s Mr. Blaine Rausch gave Respondent authorization to deviate from the contract with respect to the roof. There was no evidence in the house to show that the roof had ever leaked. Mr. Openshaw testified that Respondent was not responsible for the outside sewer line that is described in CWO Item 6. After it was discovered that the old sewer line needed to be replaced, Mr. Openshaw discussed the matter with WACOG’s Jack Valentine. Mr. Valentine authorized Respondent to do some work, but that was limited

to work inside the house and the laundry hook-up. According to Mr. Openshaw, Ms. Reichenfeld hired the plumber that installed the portion of the sewer line that ran outside the house, and that she had submitted a bill to WACOG requesting reimbursement. See also May 1, 2006 letter from Ms. Reichenfeld to WACOG, in administrative record. Mr. Openshaw testified that he had spoken to a Lake Havasu City building official and had been told that no permit was required because the work was replacing “like for like.” Respondent has been paid about $16,000.00 for its work on the project. Respondent is willing to make the repairs specified in the CWO. CONCLUSIONS OF LAW Complainant bears the burden to prove that Respondent violated A.R.S. § 32- 1154(A)(1); (A)(2); (A)(7); (A)(23); or (A)(3) as charged by the ROC in its October 19, 2006 Citation and Complaint. See A.A.C. R2-19-119(B)(1). The standard of proof is that of a preponderance of the evidence. See A.A.C. R2-19-119(A). 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). Under A.R.S. § 32-1154(A)(1), a contractor is subject to discipline for “abandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” The preponderance of evidence shows that Complainant requested WACOG to terminate the contractual relationship with Respondent and that based on this request, WACOG did so. The preponderance of evidence also shows that Complainant does not want Respondent on her property. Therefore, the Administrative Law Judge concludes that Respondent has not violated A.R.S. § 32-1154(A)(1). Under A.R.S. § 32-1154(A)(2), a contractor is subject to discipline for “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 the owner's 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.” There are two potential violations of A.R.S. § 32-1154(A)(2): the roof and the sewer line. There is no dispute that Respondent deviated from the contract with respect to the roof. But Respondent asserts that it was authorized to do deviate from the contract, and Inspector Corlett confirmed that this was true. Inspector Corlett also stated that roofing over an existing roof is common practice, and his CWO was based only on Respondent’s failure to get Complainant’s approval in addition to WACOG’s. There has been no showing that this deviation caused prejudice to Complainant, and presumably the roof was inspected and approved by a WACOG Housing Contract Specialist, as required by the contract, prior to WACOG making a progress payment to Respondent. Therefore, the Administrative Law Judge concludes that Respondent has not violated A.R.S. § 32-1154(A)(2) by deviating from the contract specifications with respect to the roof. With respect to the sewer line, Respondent asserts that no permit was required for the work that it did, and that it was not actually responsible for all the sewer line work. The May 1, 2006 letter from Ms. Reichenfeld to WACOG supports Respondent’s position with respect to the scope of work it conducted. Therefore, the Administrative Law Judge concludes that Respondent has not violated A.R.S. § 32-1154(A)(2) by failing to obtain a permit for the sewer line work. Under A.R.S. §32-1154(A)(3), a contractor is subject to discipline for “violation of any rule adopted by the Registrar.” In this case, ROC charged Respondent with violating A.A.C. R4-9-108, which, among other things, requires contractors to perform work in a professional and workmanlike manner and in accordance with professional industry standards. Complainant did not meet the burden of proof to show Respondent’s work fell below industry standards. Inspector Corlett testified that the CWO items in need of completion could be considered as work-in-progress, and the preponderance of evidence shows that Complainant did not allow Respondent access to complete this work. Therefore, the Administrative Law Judge concludes that Respondent has not violated A.R.S. § 32-1154(A)(3).

Under A.R.S. §32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act…resulting in another person being substantially injured.” Complainant has not met the burden of proof to show that Respondent committed a wrongful or fraudulent act resulting in substantial injury. Therefore, the Administrative Law Judge concludes that Respondent has not violated A.R.S. § 32-1154(A)(7). Under A.R.S. § 32-1154(A)(23), a contractor is subject to discipline for “failure to take appropriate corrective action…without valid justification within a reasonable period of time after receiving written directive from the registrar.” The preponderance of evidence shows that Complainant has denied Respondent access to the house to complete the CWO items. Therefore, the Administrative Law Judge concludes that Respondent has not violated A.R.S. § 32-1154(A)(23). Based on the foregoing, the Administrative Law Judge concludes that it is not appropriate for the ROC to impose discipline against Respondent’s license. Further, the Administrative Law Judge finds that this matter should be dismissed for a combination of two reasons. First, Complainant does not want to allow Respondent on her property, and she had Respondent terminated before it could complete its work. And second, the contract is clear that WACOG would not make any progress payments unless the work was inspected and approved by a WACOG Housing Contract Specialist, and Respondent has received only about half the contract amount. Therefore, based on the evidence of record, it is unlikely that WACOG has paid Respondent for the work at issue in the CWO. RECOMMENDED ORDER The Administrative Law Judge recommends that no discipline be imposed on Respondent’s Class B License (No.183666) and that Citation No. L07-0020 and the Complaint upon which it is based should be dismissed. In the event of certification of the Administrative Law Judge’s Decision and Order by the Director of the Office of Administrative Hearings, then the effective date of the order shall be 40 days from the date of that certification.

Done this day, February 16, 2007

______________________________________ Thomas Shedden Administrative Law Judge

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

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

By ___________________________

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