ALJDEC decisions subject to certification as final

08F-2013-ROC · Registrar of Contractors · 2009-01-05

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 17, 2008 APPEARANCES: Complainant Diane Thomason appeared on her own behalf. Steven Lochner appeared on behalf of Respondent Lochner Masonry Incorporated. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ The issue presented by this matter is whether Respondent Lochner Masonry Incorporated (“Lochner”) 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: FINDINGS OF FACT 1. Lochner is the holder of a Class B- license (No. 171027) issued by the Registrar of Contractors (“ROC”). Steven Lochner is Lochner’s qualifying party and corporate officer. 2. Complainant Diane Thomason had purchased a lot in FireRock Country Club Estates in Fountain Hills, Arizona, upon which she planned to construct a custom home. Ms. Thomas lived in Portland, Oregon during at least the design phase of the home. Ms. Thomason hired Rick DiGiacomo of RDA Designs, L.L.C. (“RDA”) to draft plans for the construction of the home for submittal to and approval by the FireRock Country Club Architectural Committee (the “Committee”) and the Town of Fountain Hills. 3. When Ms. Thomason reached the point when she was considering potential contractors for the construction of her home, RDA contacted Mr. Lochner, who had been working with RDA on the plans for another home in the FireRock subdivision. Mr. Lochner met with Ms. Thomason, and in or about May 2007, Ms. Thomason contracted with Mr. Lochner, as Summit Custom Homes (“Summit”), for the following: . . . to work as liason (sic) between [Ms. Thomason] and the Designer (RDA Designs) in the following capacity: Responsibility of [Summit] will be to coordinate final design ideas and requests by [Ms. Thomason] to achieve a plan that will be acceptable for submittal and approval to build, by both the Town of Fountain Hills and the Committee of Architecture for FireRock Country Club Estates. This responsibility to also include structural calcs and final civil plan.

See Exhibit 7. The contract price was $15,000.00. Id. Ms. Thomason has paid Mr. Lochner in full. 4. In the scope of performing his duties under the terms of the contract, Mr. Lochner attended meetings with Ms. Thomason and RDA, and worked with RDA on design changes and the submittal and re-submittal of plans to the Committee. 5. During the approval process, the Committee rejected the plans at least twice. The first rejection was on June 13, 2007, for the following reason: Preliminary plan DISAPPROVED. Design is not grade-adaptive, is largely on fill, and does not exhibit four-sided architecture. Level of detailing and massing do not meet the standard expected for the community and need much work: Issues include proportions, improper WI termination, blank faces, roof lines, double retaining walls/deep fill, wrought iron fencing fronting on FRCC Dr. and production details. Call for conference.

See Exhibit 2, page 1. 6. The second rejection was on August 29, 2007, for the following reason: Preliminary plan were (sic) DISAPPROVED. Little change from previous submittal. Review design to make consistently territorial in geometry and materials. Thicken parapets and deepen window recesses. Use wood instead of wrought iron. Incorporate stairs (not spiral) into design at rear. Use adobe veneer. Remove radiused edges. Rethink entry experience and path to front door. Show wrought iron on south elevation. Link pool equipment screen wall to window behind it. $350 fee.

See Exhibit 2, page 2. 7. After the second rejection of the plans by the Committee, Ms. Thomason became dissatisfied with RDA’s services and terminated RDA on or about September 26, 2007. See Exhibits 4 and 5. 8. Ms. Thomason thereafter hired Bonnie Tuttle of Tuttle Designer Homes to prepare plans for submittal to the Committee and the Town of Fountain Hills. 9. On October 31, 2007, after Ms. Tuttle’s first submittal to the Committee, the plans were given preliminary approval as follows: Preliminary plans were APPROVED with the stipulation to call out heights of all site walls on the civil and indicate where wrought iron may be used. Add stone to west side, as discussed. Create a separate mass at left front at master to better respond to roof design (kick out 2’?). Call out above natural grade at roof ridge lines and detail scuppers and crickets. Landscape plan must soften/ground North West corner of residence as discussed. $350.00 fee.

See Exhibit 2, page 3. 10. On February 1, 2008, Ms. Thomason received Final Plan Approval from the Committee. See Exhibit 2, page 4. In March 2008, Ms. Thomason obtained the building permit from the Town of Fountain Hills. 11. On January 24, 2008, Ms. Thomason filed a complaint against Lochner with the ROC. Ms. Thomason alleged the following in her complaint: 1) Defrauded out of $15,000.00 without disclosing true nature of contract;

2) Contractor sent to bank (without my authorization) a construction contract requiring an additional $50,000 at signing with an additional $151,600.00 at issuance of building permit, for a total of $216,000.00 before any work would be started;

3) Contractor agreed to perform pre-construction work under “Contract for Final Design & Submittal” (CFDS) Contractor charged $15,000.00 fee, I paid in advance;

4) Contractor did not perform CFDS work after receiving $15,000.00; a) never completed anything on final design for over six months; b) plans were turned in late & unacceptable; c) caused additional costs to me of time, money, & submittal fees;

5) $15,0000.00 was an outrageous amount for scope of work compared to other builders in area who charge 3,000 – 6,000 w/50% returnable at time of permit;

6) Contractor would only credit $15,000 after I sign & pay additional $50,000 + $151,600.00 (never saw construction contract until 9/08);

7) Contractor asking for additional draw of $151,600 upon completion of slab;

8) Contractor demanding over $368,200.00 paid to him with nothing more than slab completion; and

9) Lochner purported to contract under DBA Summit Custom Homes showing License ROC # 171027 (Lochner Masonry, Inc.). Summit Custom Homes has no contractor license registered with AZ!

12. Ms. Thomason testified that within two weeks of hiring Ms. Tuttle, the plans were approved, and that Lochner had nothing to do with the final design or obtaining approval from the Committee. Ms. Thomason submitted into evidence a notarized Statement signed by Ms. Tuttle, in which Ms. Tuttle affirms that “no portion of the previous design by RDA was used or carried over to the new design.”[1] See Exhibit 1. 13. Ms. Thomason expressed outrage with the terms of the construction contract that Lochner submitted to her lending institution. See Exhibit 8. However, Ms. Thomason did not sign the contract, and therefore was not bound by any of its terms. Further, Mr. Lochner testified that the reason he submitted a construction contract to the lending institution was solely because the bank requested a sample contract. 14. Ms. Thomason testified that she ended her relationship with Lochner in January 2008 because she believed Mr. Lochner was trying to take advantage of her, and that he was “incapable of coming up with a design”. However, Mr. Lochner was not responsible for designing the home. 15. Mr. Lochner testified that he was not hired to be the designer of the home, but rather to act as a liaison between Ms. Thomason and RDA, and to submit the plans as prepared by RDA to the Committee and eventually to the Town of Fountain Hills. Mr. Lochner testified that he physically submitted the approved plans to the Town of Fountain Hills. Mr. Lochner further testified that he accompanied Ms. Thomason to various suppliers in order to obtain design ideas. Ms. Thomason acknowledged in her Exhibit 1A, that Mr. Lochner did, in fact, attend many meetings with her and acted as a “runner”. 16. The Administrative Law Judge finds, based on the evidence presented, that with regard to this State’s contracting laws, Lochner was unable to complete the terms of its contract with Ms. Thomason through no act or omission of its own, as the contract specified that Lochner was to act as a liaison between Ms. Thomason and RDA, and once Ms. Thomason terminated RDA, Lochner was unable to fulfill the terms of the contract. The Administrative Law Judge declines to make a ruling regarding whether Ms. Thomason is entitled to damages, as this administrative hearing is not the appropriate forum to do so. However, nothing herein should be construed as preventing Ms. Thomason from seeking such relief in a more appropriate forum. CONCLUSIONS OF LAW In this proceeding, Ms. Thomason bears the burden to prove, by a preponderance of the evidence, that Lochner is subject to discipline for violations of A.R.S. § 32-1154(A)(1), (A)(7), and/or (A)(15) as charged by the ROC in its July 17, 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 Ms. Thomason failed to meet her burden of proof as to two of the three ROC 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 upon the credible evidence of record, that Ms. Thomason failed to establish that Lochner abandoned the contract or refused to perform. The evidence demonstrated the contrary, in that Ms. Thomason terminated RDA due to RDA’s inability to perform, and the consequence of such action rendered Lochner unable to fulfill the terms of its contract with Ms. Thomason. Therefore, the Administrative Law Judge concludes that Lochner did not violate A.R.S. § 32-1154(A)(1). 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 issued . . . in a name other than as set forth upon the license.” The Administrative Law Judge concludes, based on the weight of the evidence, that Lochner contracted with Ms. Thomason under the name “Summit Custom Homes”, and further submitted to her lending institution a sample contract with such name, and utilized Lochner’s License Number 171027, for such purposes. Therefore, the Administrative Law Judge concludes that Lochner violated A.R.S. § 32-1154(A)(15). 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 Ms. Thomason failed to establish that Lochner committed wrongful or fraudulent acts that substantially injured her. Therefore, the Administrative Law Judge concludes that Lochner did not violate A.R.S. § 32-1154(A)(7). Based on the foregoing, it is appropriate for the ROC to impose discipline against Lochner’s license. The ROC’s July 17, 2008 Citation and Complaint advised Lochner that in the event of a finding of a violation against it, Lochner’s prior disciplinary record of final ROC orders could be considered in mitigation or aggravation. Accordingly, subsequent to the conclusion of the instant hearing, the Administrative Law Judge took notice of prior final disciplinary orders against Lochner in the ROC’s official records. Those records revealed that Lochner has not been the subject of any ROC disciplinary orders within the past two years. The Administrative Law Judge considered this disciplinary record when determining appropriate recommended discipline for this matter. Upon consideration of all of the facts and circumstances presented by this case, and the serious nature of Lochner’s violation of A.R.S. § 32- 1154(A)(15), the Administrative Law Judge concludes that the ROC should suspend Lochner’s Class B- license for a period of seven days to be followed by a 180 day probationary period. RECOMMENDED ORDER Based on the foregoing, the Administrative Law Judge makes the following Recommended Order: Commencing on the effective date of the Order entered in this matter, Lochner’s Class B- license (No. 171027) shall be suspended for a period of seven (7) days. It is further recommended, in addition to the foregoing license suspension, that Lochner’s Class B- license be placed on disciplinary probation for a period of one hundred and eighty (180) days. This additional disciplinary penalty shall commence 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, January 5, 2009.

______________________________________ Sondra J. Vanella Administrative Law Judge

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

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

By ___________________________

----------------------- [1] Neither party submitted into evidence copies of the plans that were prepared by RDA and Ms. Tuttle’s approved plans for comparison purposes.

-----------------------

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