ALJDEC decisions subject to certification as final

08F-1933-ROC · Registrar of Contractors · 2009-02-03

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: January 14, 2009 APPEARANCES: Mark and Carrie Hudson appeared on their own behalf. Respondent Desert State Builders, Inc. failed to appear. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ The issue presented by this matter is whether Respondent Desert State Builders, Inc. (“Desert State”) is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154(A). Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: Procedural Background On December 12, 2008, the Registrar of Contractors issued a Notice of Hearing advising the parties that the scheduled hearing of this matter would convene on January 14, 2009 at 9:00 a.m. On the date and at the time scheduled for the hearing, Complainants Mark and Carrie Hudson were present. No one appeared on behalf of Desert State. The Administrative Law Judge delayed the commencement of the hearing for approximately fifteen minutes to allow for the appearance of Desert State, or the receipt of any information that would constitute good cause for Desert State’s absence or delay. No such information was received. Therefore, the hearing proceeded in Desert State’s absence.

FINDINGS OF FACT Desert State is the holder of a Class KB-01 license (No. 213231) issued by the Registrar of Contractors (“ROC”).[1] On or about March 22, 2007, the Hudsons contracted with Desert State for Desert State to construct a basement, room addition and garage to their existing home. See Exhibit 2. The contract price was $98,297.56 plus tax. Id. The Hudsons paid a $7,000.00 deposit to Desert State. Desert State obtained the permit from the City of Glendale on or about August 27, 2007. Excavation and construction began on August 28, 2007. Work progressed and the Hudsons continued to pay Desert State. However, in or about October 2007, the Hudsons discovered that Desert State was not paying its workers or its suppliers. The Hudson’s met with Desert State’s principal, Ernie Merrill, and the parties agreed that the Hudsons would no longer pay Desert State directly, but rather, the payments would be issued as two party checks, and signed lien releases would be obtained for all labor provided and materials supplied. Work continued to progress, albeit slowly, until December 20, 2007, when Desert State abandoned the project. By this time, the construction had already exceeded the contract price. The Hudsons hired their own subcontractors to complete the project. 5. On January 22, 2008, the Hudsons filed a complaint against Desert State with the ROC. In their complaint, the Hudsons generally alleged that Desert State had not completed the project and that the project was over the contract amount. The Hudsons also set forth a timeline of events on their complaint form. 6. Mr. Hudson testified at hearing consistent with the timeline contained within the complaint. Mr. Hudson further testified that the project was completed in February 2008, substantially later than it was supposed to have been completed. Mr. Hudson credibly testified that it cost $139,355.07 to complete the project, approximately $40,000.00 more than the contract price, yet with the same specifications and scope of work set forth in the parties’ contract. CONCLUSIONS OF LAW In this proceeding, the Hudsons bear the burden to prove, by a preponderance of the evidence, that Desert State is subject to discipline for violations of A.R.S. § 32-1154(A)(1), (A)(7), (A)(9), (A)(13), (A)(15), and/or (A)(18) as charged by the ROC in its August 26, 2008 Citation and Complaint. See Arizona Administrative Code R2-19-119. 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). The Administrative Law Judge concludes that the Hudsons met their burden of proof as to four of the ROC’s six charges. 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 Administrative Law Judge concludes, based on the weight of the credible evidence of record, that Desert State failed to complete the project that it contracted to perform without legal excuse for such failure. Therefore, the Administrative Law Judge concludes that Desert State violated A.R.S. § 32-1154(A)(1). Under A.R.S. § 32-1154(A)(9), a contractor is subject to discipline for “failure 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.” The weight of the credible evidence presented at hearing established that it cost the Hudsons approximately $40,000.00 above the contract price to complete the project. Therefore, the Administrative Law Judge concludes that Desert State violated A.R.S. § 32-1154(A)(9). Under A.R.S. § 32-1154(A)(13), specifically, A.R.S. § 32-1124(B), a contractor is required to include their contracting license numbers, preceded by the letters “ROC,” on all documents utilized while engaged in construction-related activities. This requirement is applicable to business cards, sales literature, contract documents, invoices, and other forms utilized by a contractor. The Hudsons did not address this alleged violation. However, a copy of the parties’ contract documents and invoices were submitted into evidence by the Hudsons (Exhibits 2 and 5).[2] Those documents do not contain the letters “ROC”, nor do they contain Desert State’s license number. In view of the foregoing, the Administrative Law Judge concludes that Desert State violated A.R.S. § 32-1154(A)(13). Under A.R.S. § 32-1154(A)(15), a contractor is subject to discipline for “acting in the capacity of a contractor under any license under this chapter in a name other than as set forth upon the license.” The Hudsons did not present any probative evidence at hearing regarding this alleged violation. Therefore, the Administrative Law Judge does not conclude that Desert State violated A.R.S. § 32-1154(A)(15). Under A.R.S. § 32-1154(A)(18), a contractor is subject to discipline for “contracting or offering to contract or submitting a bid while the license is under suspension or while the license is on inactive status.” The Hudsons did not address this alleged violation, however, a review of the ROC’s licensing records reveals that Desert State’s license was suspended on August 30, 2007 and revoked on November 13, 2007. The contract date is March 22, 2007, prior to such disciplinary actions. As such, the Administrative Law Judge concludes that Desert State did not violate A.R.S. § 32-1154(A)(18). Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The Administrative Law Judge concludes, based on the weight of the credible evidence presented at hearing, that Desert State committed wrongful acts that substantially injured the Hudsons by abandoning the project, and as a result of such abandonment, the Hudsons were compelled to pay in excess of the contract price to complete the project. Therefore, the Administrative Law Judge concludes that Desert State violated A.R.S. § 32-1154(A)(7). 10. Based on the foregoing, it is appropriate for the ROC to impose discipline against Desert State’s Class KB-01 license. 11. Upon consideration of all of the facts and circumstances presented by this case, including Desert State’s failure to appear for hearing and Desert State’s license status, the Administrative Law Judge concludes that the ROC should revoke Desert State’s Class KB-01 license. RECOMMENDED ORDER In view of the foregoing, it is recommended that Desert State’s Class KB-01 license shall be revoked on the effective date of the Order entered in this matter. 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, February 3, 2009.

______________________________________ Sondra J. Vanella Administrative Law Judge

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

Armando Contreras, Director Registrar of Contractors 3838 North Central Avenue Phoenix, AZ 85012

By ___________________________

----------------------- [1] A review of the ROC’s official records revealed that Desert State’s contracting license was suspended on August 30, 2007 for lack of bond, revoked on November 13, 2007, and revoked several times since then. Such suspended and revoked license status does not preclude this tribunal from conducting these administrative proceedings. A.R.S. § 32-1154(C). [2] Desert State’s proposal contains its license number preceded by the letters “ROC”.

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