ALJDEC decisions subject to certification as final

07F-M2355-ROC · Registrar of Contractors · 2009-02-27

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 10, 2009 APPEARANCES: Complainant Connie Tarro appeared on her own behalf; Member and Qualifying Party Jeremy Monday appeared for Respondent. ADMINISTRATIVE LAW JUDGE: Michael G. Wales _____________________________________________________________________ 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. This matter convened for hearing at the time, date and place set forth in the Registrar of Contractors’ Notice of Hearing dated January 8, 2009. 2. Complainant Connie Tarro (“Complainant”) is the owner and occupant of a residence located at 360 W. Amoroso Drive in Gilbert, Arizona, for which she sought to have air-conditioning repair and replacement work performed by Respondent. 3. Respondent J Monday, LLC dba J Monday Cooling Plumbing and Gas Piping, LLC (“Respondent”) is an Arizona Limited Liability Company which holds Arizona Contractor’s License No. 212262, Class K-39 (Dual Air Conditioning and Refrigeration) issued by the Registrar of Contractors on September 30, 2005. Jeremy

Lee Monday is a member of the LLC and is the Qualifying Party for the license. A review of the licensing database maintained by the Registrar of Contractors indicates Respondent’s license was, and remains, suspended for lack of bond on November 10, 2008. 4. Complainant filed a complaint with the Registrar of Contractors on June 9, 2007, wherein she alleged that Respondent installed a new heat pump, including the compressor and outdoor condenser coil, air handler and indoor evaporator coil, thermostat and larger return air grille in her home in March, 2005. Complainant further alleged that in July, 2005, water began dripping from the ceiling vanity lights immediately below the condensate pan located beneath the evaporator coil in the attic. Complainant alleged that Respondent repaired the condition causing the condensate pan to overflow, but failed to correct any water damage to the ceiling and walls. Complainant also alleged that, as a result of the previously alleged water damage, in September 2005, the newly installed larger return air grille fell from the ceiling and caused a dent in her wall. Finally, Complainant alleged that in early 2007 her compressor failed because Respondent failed to match the home’s circuit breakers to the load capacity of the newly installed compressor. 5. Registrar of Contractors Inspector Ted Gerold conducted a jobsite inspection on July 26, 2007. Shortly thereafter, on July 30, 2007, Inspector Gerold issued a Corrective Work Order to Respondent stating the following: “In this Inspector’s opinion this contractor should not have installed any AC appliances prior to all electrical conditions being right.” The Corrective Work Order went on to state: “Also, all condensate lines should either be replaced or thoroughly cleaned out when a new AC air handler is installed. This Inspector feels neither was done.” Finally, the Corrective Work Order concluded: “Therefore, this contractor is to reimburse complainant for all costs incurred in the correction of the AC system, take care of all water damages in master bath and any damages to the walls in the hallway where return air grill fell down. All is to be done by appropriate means.” 6. Complainant asserted that Respondent did not comply with the Corrective Work Order and, on November 28, 2007, the Registrar issued a CITATION AND COMPLAINT in Case No. M07-2355 charging Respondent with possible violations of A.R.S. § 32-1154A (2), (7), (15), (17), (23), (3) (namely, A.A.C. R4-9-108) and (13) (namely A.R.S. § 32-1124(B) and A.R.S. § 32-1158). 7. Respondent filed an answer denying the allegations. The matter was set for the instant hearing before the Office of Administrative Hearings, an independent state agency. 8. At the hearing, Complainant called witnesses, testified and submitted Exhibits 1 through 6 which were marked, admitted and considered. Jeremy Monday testified on behalf of Respondent. 9. From the evidence elicited at the hearing, the following salient facts are important to note: a. On or about March 15, 2005, Complainant verbally contracted with Respondent to install a new heat pump, including the compressor and outdoor condenser coil, air handler and indoor evaporator coil, thermostat and larger return air grille in her home. b. When Respondent first met with Complainant, Respondent, who had yet to be licensed by the Registrar of Contractors and who was just starting his business, presented a business card to Complainant, the front of which contained only the name “J. Monday”, and the back of which contained only the handwriting “480 980 7233, A/C, Elec, Plumbing”. (See Exhibit 1). No other information was on the business card. c. Respondent replaced the condenser coil and compressor outside of Complainant’s home, replaced the air handler and evaporator coil inside the home, replaced the thermostat with a digital thermostat, and increased the size of the filter grille to accommodate for the new system’s required airflow. d. In July, 2005, water began dripping from the bathroom ceiling vanity lights below the newly installed air handler and evaporator coil, where refrigerant evaporates as it absorbs heat from the air that passes over the coil. Respondent responded to a service call regarding the water and found that the condensation pan below the air handler was overflowing. Respondent testified that the evaporator coil had iced over and ice was also blocking the condensation lines, thus causing the overflow. Respondent opined that Complainant’s failure to keep her filters clean caused the air passing over the evaporator coil to be trapped causing a drop in temperature and freezing over the evaporator coil. The resultant ice then clogged the condensation lines. Inspector Gerold testified, however, that he “believed” Respondent admitted to the Inspector at the site inspection that he did not replace or properly clear the condensation lines during the installation. Upon review of the evidence presented by both parties, this tribunal concludes that insufficient evidence was presented to determine whether any improper workmanship, or resultant damage from improper workmanship, caused the condensate pan to overflow and, as a result, the water damage alleged. e. In September 2005, the newly installed larger return air grille fell from the ceiling and caused a dent in Complainant’s wall. Respondent responded to Complainant’s service call and re-installed the filter grille. Complainant alleged that the excess water caused the entire filter grille, including its frame, to fall out of the ceiling. Respondent testified that only the portion of the grill which holds the filter in place fell and, it fell because Complainant did properly secure the grille after replacing her filter. Insufficient evidence was presented for this tribunal to determine whether any improper workmanship or resultant damage from improper workmanship caused the filter grill, or some portion of the filter grille, to fall. f. In January of 2007, Complainant noticed that her compressor was making excessive noise. Complainant contacted Respondent who did respond to the service call. Respondent advised Complainant that improper voltage regulation was affecting the compressor and advised Complainant that she should contact an electrician. g. On January 30, 2007, Complainant hired Total air & Home Repair, LLC (“Total Air”) to inspect the electrical system for the compressor. Total Air removed and replaced the A/C system circuit breakers, one switch and a burnt wire. Complainant paid Total Air $120.00 for this service. h. The Compressor continued to make excessive noise and on June 9, 2007, Complainant filed her complaint with the Registrar of Contractors. i. On June 20, 2007, Complainant hired Total Air to inspect and repair the Compressor. Total Air checked Complainant’s system and found the compressor to be damaged and not operating properly. Total Air removed and replaced the compressor. While the compressor was under warranty, Complainant paid Total Air $750.00 for labor. j. As stated above, on July 26, 2007, Registrar of Contractors Inspector Ted Gerold conducted a jobsite inspection and, on July 30, 2007, Inspector Gerold issued a Corrective Work Order to Respondent stating the following: ‘In this Inspector’s opinion this contractor should not have installed any AC appliances prior to all electrical conditions being right.” k. At hearing, Respondent admitted that he knew the new compressor would require a larger circuit breaker as it was specified on the compressor, yet he installed the new compressor without requiring the homeowner to first change her circuit breaker assigned to the new compressor to the maximum allowable circuit breaker size that would properly disconnect power to the equipment under any anticipated fault condition. Respondent, however, disputed Inspector Gerold’s opinion that minimum workmanship standards require a contractor to ensure that a homeowner has properly installed the proper circuit breaker prior to the contractor installing a new compressor. Respondent opined that a contractor need only inform a homeowner of the need to install a proper circuit breaker and that he cannot force a homeowner to follow his suggestions.

APPLICABLE LAW The CITATION AND COMPLAINT issued by the Registrar of Contractors in Case No. 08-0963 charged Respondent with possible violations of A.R.S. § 32- 1154A(2), ), (7), (15), (17), (23), (3)(namely, A.A.C. R4-9-108) and (13) (namely A.R.S. § 32-1124(B) and A.R.S. § 32-1158). Those statutory sections require that the holder of a license or person listed on the license shall not commit the following: 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 …

15. Acting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth upon the license. …

17. Knowingly contracting beyond the scope of the license or licenses of the licensee.

…

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.R.S. § 32-1124(B) is named as one of the statute violations 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. A.R.S. § 32-1158 is named as the second statute violation charged pursuant to A.R.S. § 32-1154A (13). Subsection A of that statute (minimum elements of a contract) provides that from and after December 31, 1992 until December 31, 2007, any contract in an amount of more than one thousand dollars and less than one hundred fifty thousand dollars entered into between a contractor and the owner of a property to be improved shall contain in writing at least the following information: 1. The name of the contractor and the contractor's business address and license number. 2. The name and mailing address of the owner and the jobsite address or legal description. 3. The date the parties entered into the contract. 4. The estimated date of completion of all work to be performed under the contract. 5. A description of the work to be performed under the contract. 6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. 7. The dollar amount of any advance deposit paid or scheduled to be paid to the contractor by the owner. 8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

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, Complainant 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 has established by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154A(2) as it pertains to the allegation in the Citation and Complaint that Respondent violated any plans, specifications or building codes. The evidence of record clearly established that the component compressor specified a specific electrical standard that must be met as it pertains to the assigned circuit breaker. The evidence also clearly established that Respondent installed the compressor without ensuring such specification was met at the time of the installation. 5. This tribunal further determines and concludes that Complainant has established by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154A(3) as it pertains to Respondent’s failure to ensure that Complainant’s circuit breakers were properly matched to the newly installed compressor prior to installing the compressor. 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. Failure to ensure that Complainant’s circuit breakers were properly matched to the newly installed compressor prior to installing the compressor violates Rule R4-9-108. Insufficient evidence was presented, however, to find a violation of A.A.C. R4-9-108 as to the alleged failure to blow out the condensation lines or any resultant damage therefrom. 6. This tribunal further determines and concludes that Complainant has established by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154A(13) as it pertains to Respondent’s failure to provide Complainant with a written contact containing the minimum elements described in A.R.S. § 32-1158(A). Insufficient evidence was presented, however, to find a violation of A.R.S. § 32-1124(B). Respondent did not violate that statute as he did not have a license issued by the Registrar of Contractors when he performed the work on March 15, 2005 and presented his business card, and invoice, which was devoid of a license number and the acronym “Registrar of Contractors”. 7. This tribunal further determines and concludes that Complainant has not established by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154A(15). No evidence was presented that Respondent was acting under any name other than that set forth on the license, once issued. 8. This tribunal further determines and concludes that Complainant has not established by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154A(17) as it pertains to the allegation that Respondent was contracting outside the scope of his license. Insufficient evidence was presented that Respondent performed electrical work, or other work, outside the scope of his K-39 license. 9. This tribunal further determines and concludes that Complainant has established by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154A(23) as it pertains Respondent’s failure to, as ordered in the Corrective Work Order, “reimburse complainant for all costs incurred in the correction of the AC system”. Sufficient evidence was presented to conclude that Respondent’s failure to ensure the correct circuit breaker was in place prior to installation of the compressor caused the compressor damages and resultant repair costs. This tribunal determines and concludes, however, that Respondent has established sufficient justification to excuse compliance with the remainder of the Corrective Work Order as insufficient evidence was presented to find a violation of A.A.C. R4-9-108 as to the alleged failure to blow out the condensation lines or any resultant damage therefrom. 10. Finally, this tribunal determines and concludes that Complainant did establish by a preponderance of credible, probative and relevant evidence that Respondent violated A.R.S. § 32-1154A(7). First and foremost, the evidence of record clearly established that Respondent performed work for Complainant when Respondent was not licensed to do so. The evidence established that on or about March 15, 2005 Complainant contracted with Respondent to install, and Respondent did install, a new heat pump, compressor, indoor and outdoor coils, thermostat and larger return air grille in Complainant’s home, and such installation requires a license issued by the Registrar of Contractors. Yet, according to the records of the Registrar of Contractors, for which this tribunal takes administrative notice, Respondent was not issued License No. 212262, Class K-39 (Dual Air Conditioning and Refrigeration) until September 30, 2005. Additionally, Respondent’s violations of A.R.S. § 32-1154A(2), (3), (13) and (23), as described above, also warrant a finding of a violation of A.R.S. § 32-1154A(7). Complainant’s costs of repair of $120.00 and $750.00 constitute a substantial injury caused by the actions of Respondent. 11. As discussed above, Respondent violated the provisions of A.R.S. § 32-1154A(2), (3), (23), (13) and (7), and the evidence supports a determination that in this case disciplinary action is appropriate and fully warranted. 12. 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. While Complainant shares some fault in this matter in hiring an unlicensed contractor to perform work at her residence, based upon all the evidence, a reasonable condition in this case would consist of the payment by Respondent to Complainant of $870.00 as restitution for Complainant’s cost of repair for the electrical issues and compressor. Imposing such a condition is preferable to imposing a disciplinary action against Respondent’s license without providing a condition to reduce or eliminate same. 13. 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 damages 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.2nd 430 (App. 1990). 14. 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 Therefore, in view of the foregoing, it is recommended, commencing on the effective date of the Order entered in this matter, that the Class K-39 License (No. 212262) of Respondent shall be revoked.

It is further recommended that if the Registrar of Contractors receives written proof that Respondent has paid, or tendered to, Complainant the total sum of $870.00 in restitution, on or before the effective date of the Order entered in this matter, and the Registrar accepts such proof, then the above-provided license revocation shall not take place but instead Respondent’s Class K-39 License shall be placed on active suspension for a period of l4 days followed immediately by a period of disciplinary probation for one year. This alternative penalty shall commence, if at all, on the effective date of the Order entered in this matter.

It is further recommended, in addition to the above-provided penalties, if any, that Respondent pay the sum of $250.00 to the Registrar of Contractors by way of a civil penalty pursuant to A.R.S. §32-1154D. 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.

It is further recommended, if the alternative penalty is applicable and in addition to the above-provided alternative disciplinary penalties, that any restoration of Respondent’s contracting rights, whether or not probationary, shall be subject to a condition that Respondent first post an additional surety bond, cash deposit or alternative deposit for a period of twenty-four (24) months, including future renewal periods, in the amount of $1,500.00, such bond or deposit to be in addition to the required surety bond or cash deposit set forth in A.R.S. § 32-1152(D). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two year period following the above-provided twenty-four (24) month period and only if no claims are then pending.

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, February 27, 2009. Office of Administrative Hearings

__________________________ Michael G. Wales Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2009, to:

Registrar of Contractors William A. Mundell, Director 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________ -----------------------

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