ALJDEC decisions subject to certification as final

08F-0924-ROC · Registrar of Contractors · 2009-04-06

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 18, 2009. APPEARANCES: Charles and Christina Surrano were represented by their attorney, Alfred R. Sorenson, Esq. Pensworth Design Build, L.L.C. did not appear. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order:

FINDINGS OF FACT 1. Pensworth Design Build, L.L.C. (“Respondent”) is the holder of License No. 169370, a Class KB-01 contracting license, issued by the Registrar of Contractors (“Registrar”). 2. On October 27, 2005, Respondent’s contracting license was placed on inactive status. 3. Charles and Christina Surrano (“Complainants”) and Respondent entered into a Construction Agreement dated February 8, 2005 (“Pool Contract). There were Addendums to the Pool Contract dated March 15, 2005, and March 28, 2005. 4. The scope of work for the Pool Contract was the construction of a swimming pool/spa at Complainants’ residence. 5. The parties entered into a separate Construction Contract dated February 3, 2005 (“Pool House Contract”), for the construction of a pool house. There were Addendums to the Pool House Contract dated September 5, 2005, and November 30, 2005. 6. On February 17, 2005, the City of Phoenix issued a permit for Complainants’ swimming pool. 7. Complainants received a Final Inspection from the City of Phoenix on May 28, 2005. 8. By Notice of Cancellation, dated October 6, 2005, Platte River Insurance Company notified the Registrar that Respondent’s bond had been cancelled by the insurer for License No. 169370. 9. As a result of its License No. 169370 being placed on inactive status on October 27, 2005, Respondent was prohibited from performing any contracting, including on Complainants’ two projects, as of that date, unless and until that license was reinstated. 10. Complainants received a Certificate of Occupancy from the City of Phoenix for the pool house on October 28, 2005. 11. Respondent sent Complainants an Accounting dated November 30, 2005, which showed a balance due upon completion in the amount of $19,096.00 for the Pool Contract and a balance due upon completion in the amount of $58,333.00 for the Pool House Contract. 12. By letter dated January 23, 2006, Respondent sent an accounting to Complainants requesting payment in the amount of $34,631.00, which was due because the pool house was at 90% completion. Complainants paid the requested sum to Respondent on February 1, 2006. The accounting also stated that the balance due at completion of the pool house was $8,600.00. 13. By letter dated January 26, 2006, Respondent notified Complainants that the total amount due upon completion of the swimming pool/spa and the pool house was $27,696.00. 14. By letter dated August 15, 2006 to Respondent, Mr. Surrano discussed the status of the Pool Contract, the Pool House Contract, and his office remodel. As to the first two contracts, he noted, among other things, the following:

The saga of the pool/pool house construction project at my personal residence need not be recounted here. Suffice it to say, this November, it will be two (2) years since we signed the original contract on that project. It is still not done.

I have left many of the details which needed to be addressed on that project to my wife to handle with you. As with the office [project], your company demanded payment of the final invoice before many of the construction items were completed or repaired. Over the ensuing months, efforts by your company to complete the home construction have been ongoing.”

15. On December 22, 2006, Respondent filed a Notice and Claim of Mechanic’s Material man’s or Professional Services Lien (“Lien”) against Complainants, for their swimming pool/spa, pool house and landscaping. The Lien stated an Amount of Claim totaling $27,946.00. The Lien also stated that the completion date for the Pool Contract and the Pool House Contract was October 31, 2006. 16. Complainants filed a written Complaint dated October 19, 2007 with the Registrar, alleging deficiencies by Respondent during the construction of the swimming pool/spa and the pool house. The Registrar designated Complainants’ Complaint as Case No. 169370. 17. As a result of Complainants’ Complaint, the Registrar’s assigned inspector, Jeff Fleetham, performed a jobsite on November 21, 2007 to view Respondent’s workmanship 18. As a result of his jobsite inspection, Inspector Fleetham issued a Corrective Work Order dated December 10, 2007, which required Respondent to timely correct the following items by appropriate means: 1. Roof leak on pool house. 2. Drywall damage in pool house bath ceiling. 3. Paint damage to ceiling paint in pool house bath ceiling. 4. Pool spa wall leak. 5. Can light trim in pool house patio ceiling. Not installed tight to ceiling. Hanging from wires. 6. Diagonal T & G paneling in pool room is excessively cupped at baseboard. In excess of ¼” in less than 6”. 7. Insufficient grout in pool house bath stone tiles. Mesh backing exposed.

19. The Registrar issued a Citation and Complaint in Case No. 08-0924 alleging possible violations by Respondent of A.R.S. § 32-1154(A) (7), (18), (23) and (3), namely A.A.C. R4-9-108. 20. The Registrar forwarded Case No. 08-0924 to the Office of Administrative Hearings, an independent agency, for formal hearing. 21. The Registrar issued a Notice of Hearing in Case No. 08-0924, which advised the parties of the time, date and location of the evidentiary hearing. The Notice of Hearing was sent to the parties at their addresses of record with the Registrar. 22. The commencement of the hearing was delayed 15 minutes to allow for the late arrival of an authorized representative for Respondent. After the delay, the Administrative Law Judge conducted the hearing in Respondent’s absence. 23. Mr. Surrano credibly testified that Complainants had problems with the pool/spa since it was completed by Respondent. The spa continues to leak. Tile has dislodged from the spa. There have been continuous problems with operating the cleaning heads, and Respondent’s failure to properly install a water feature in the pool. 24. Inspector Fleetham’s Corrective Work Order also describes Respondent’s deficient workmanship. 25. Respondent failed to comply with the Corrective Work Order, to correct its deficient workmanship to minimum workmanship standards. Although Respondent’s Class KB-01 contracting license was inactive at the time, Respondent could have, and should have, reactivated its license to at least complete its work to minimum workmanship standards. 26. Although not specifically addressed in the Corrective Work Order, Respondent is found to have failed to properly install the statue water feature into Complainants’ swimming pool. 27. Respondent clearly continued to perform contracting after its Class KB- license was placed on inactive status on October 27, 2005. By its own admission in the filed Lien, Respondent claimed that the Pool Contract and the Pool House Contract had been completed on October 30, 2005. Complainants credibly established that Respondent continued to perform remedial work until approximately November 22, 2006. 28. The improper filing of the Lien is a wrongful act that substantially injured Complainants, who were forced to bring action in the Superior Court to remove the Lien against their property. Complainants were successful in obtaining judgment against Respondent, who was also assessed Complainants’ attorney fees and sanctions. 29. Respondent’s continuing to contract while its license was on inactive status was a wrongful act that substantially injured Complainants. Respondent was no longer qualified or permitted to continue contracting as of October 27, 2005. 30. Respondent’s failure to comply with the Corrective Work Order was a wrongful act that substantially injured Complainants. It is over three years since the parties entered into the Pool Contract and the Pool House Contract. The scope of those contracts have not yet been completed in a workmanlike manner, thereby denying Complainants of the use of a properly constructed pool/spa and pool house.

CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent and the subject matter in this case. Pursuant to A.R.S. § 32-1154(C), the inactive status of Respondent’s Class KB-01 license does not deprive the Registrar of authority to conduct a disciplinary proceeding against Respondent in this matter, and to impose disciplinary action against the license for proven violations by Respondent, as alleged in the Citation and Complaint issued in Case No. 08-0924. 2. Pursuant to A.A.C. R2-19-119(B), Complainants have the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 3. Respondent violated the provisions of A.R.S. § 32-1154(A) (18), as cited in the Citation and Complaint in Case No. 08-0924 issued by the Registrar. The above-provided Findings of Fact set forth the factual basis for this Conclusion of Law. 4. Respondent violated the provisions of A.R.S. § 32-1154(A) (3), specifically A.A.C. R4-9-108, as cited in the Citation and Complaint in Case No. 08-0924 issued by the Registrar. The above-provided Findings of Fact set forth the factual basis for this Conclusion of Law. 5. Respondent violated the provisions of A.R.S. § 32-1154(A) (23), as cited in the Citation and Complaint in Case No. 08-0924 issued by the Registrar. The above-provided Findings of Fact set forth the factual basis for this Conclusion of Law. The inactive status of its Class KB- contracting license at the time of the issuance of the Corrective Work Order is not a legal defense to Respondent’s failure to comply with it. Although Respondent could not perform contracting work while its license was inactive, it had the ability to reactive its license so that it could comply with the written directive. 6. Respondent violated the provisions of A.R.S. § 32-1154(A) (7), as cited in the Citation and Complaint in Case No. 08-0924 issued by the Registrar. The above-provided Findings of Fact set forth the factual basis for this Conclusion of Law.

RECOMMENDED ORDER Respondent’s License No. 169370 shall be revoked on the effective date of the Order entered in Case No. 08-0924. In addition to the above-provided license revocation, Respondent shall pay the sum of $500.00 to the Registrar by way of a civil penalty pursuant to A.R.S. §32-1154(D). 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 Case No. 08-0924 shall result in the automatic revocation of Respondent’s contracting license, effective on such deadline date. No future licenses shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A) (5), unless payment of any outstanding prior civil penalty is tendered. In addition to the above-provided license revocation and civil penalty, Respondent shall also pay the sum of $1,000.00 to the Registrar by way of a civil penalty pursuant to A.R.S. §32-1154(E). 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 Case No. 08-0924 shall result in the automatic revocation of Respondent’s contracting license, effective on such deadline date. No future licenses shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A) (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 will be 40 days from the date of that certification.

Done this day, April 6, 2009

______________________________________ Brian Brendan Tully Administrative Law Judge

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

William A. Mundell, Director Registrar of Contractors c/o Legal Department 3838 N. Central Ave. Phoenix, AZ 85012

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

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