ALJDEC decisions subject to certification as final

08F-3279-ROC · Registrar of Contractors · 2009-03-26

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 12, 2009.

APPEARANCES: >The Complainant was represented by her attorney, Sharon B. Shively, Esq. >The Respondent appeared through its President and qualifying party, Kevin Edward Haney.

ADMINISTRATIVE LAW JUDGE: Robert I. Worth _____________________________________________________________________

Evidence and testimony were presented and, based upon the entire record, the following Findings of Fact, Conclusions of Law and Recommended Order are made.

FINDINGS OF FACT

1. Pursuant to a written proposal and contractual agreement dated in late May, 2007, Respondent agreed to and did undertake to perform general contracting duties for a substantial remodeling project on Complainant’s residential property. Such duties were to consist of the selecting, scheduling, coordinating and superintending the work

of various specialty subcontractors who were to be paid directly by Complainant. Most of the needed materials were to be furnished by Complainant.

2. The stated contractual consideration payable to Respondent for its supervisory role in the entire contemplated project was shown to have been $98,000.00, all of which was further shown to have been fully paid by Complainant through several periodic payments against invoiced draw requests sent by Respondent. The terms of the parties’ agreement, authored by Respondent, provided that any and all Change Orders involving additional work and added cost charges were to be approved in writing.

3. Complainant was shown also to have paid a few additional sums tendered on behalf of Respondent to one of its employees utilized on the project, in the combined aggregate amount of approximately $3,400.00, which total sum should properly have been encompassed within and charged against Respondent’s contractual entitlement to the quoted price for its services. A few of the invoices serving as draw requests also contained added charges for certain identified Change Order items relating to admittedly additional and authorized jobsite work, despite the absence of any advance written and signed Change Order documents, as called for under the parties’ contract agreement. However, Complainant was shown to have transmitted payments of those invoiced Change Order charges in addition to the combined totals of periodic payments to Respondent of the contract amount of $98,000.00.

4. Despite the transmitting by early January, 2008 of full payment to Respondent for its overall managerial functions, the evidence revealed that aspects of the construction remained incomplete, especially with respect to some portions of the household cabinetry, some stucco areas at a garden wall and also some unfinished plumbing in the kitchen, master bathroom and powder room.

5. Little or no further jobsite progress towards completion of the project or the correction of demonstrated deficiencies in the prior work was accomplished by Respondent after its receipt of the early January, 2008 payment shown to have covered its full contractual charges for a completed project. Respondent did, however, transmit to Complainant a further invoice at the end of February, 2008 reflecting a combined total amount of over $10,000.00 for purported additional Change Order work in addition to the claimed extra work appearing on prior draw requests that had been previously invoiced to and paid by Complainant.

6. Once again none of such identified extra work items and charges were authorized in advance either in writing or verbally so as to establish any mutual agreement either as to the validity of any of the items so as to warrant additional charges or as to their respective actual cost prices. In point of fact, except for two out the ten separate claimed Change Order extra charges that totaled less than $900.00, most of the other identified items of claimed additional Change Order work were credibly shown to relate to the costs of correction or the supervision of the correction of construction errors or of applicable plan deviations in the prior work for which Respondent was responsible.

7. In late March, 2008, Complainant filed a formal complaint against Respondent with the Registrar of Contractors and also subsequently filed separate complaints against several of the subcontractors who had performed jobsite work.

8. Following a jobsite visit, the Registrar’s assigned Inspector issued a written Corrective Work Order to Respondent on April 23, 2008 identifying numerous aspects or items listed on the filed complaint that required appropriate remedial work, thereby confirming the validity of a great many of those complaint items, such corrective measures to be undertaken and completed within a stated 15-day time frame.

9. The aforesaid directive sent by the Inspector enumerated 17 out of the 37 items of complaint as being confirmed deficiencies in need of remedial action by or on behalf of Respondent. Most all of the remaining unconfirmed items were due either to the fact either that such items had already been rectified, perhaps by Complainant on her own through other sources that entailed added expenses, or to the fact that it was not possible for the Inspector to ascertain the party or entity responsible for certain claimed damages or deficiencies.

10. The arched opening between the master bedroom and the sitting room contained an irregular and substandard radius.

11. The dimensions for installed plaster columns in the living and dining rooms were incorrect.

12. The dining room ceiling contained excessive visible cracking.

13. The jambs around the double doors to the master bedroom were inconsistent and badly finished.

14. The west master bedroom wall contained an excessive bow, and the entry wall north of one of the water closets was out of square.

15. The lights in the ceiling of both water closets were never centered following some prior work that required the movement of at least some of the walls.

16. Three floor tile pieces in the south water closet did not achieve a satisfactory color match, within acceptable tolerances, with the rest of the tiles in that room.

17. Faucets for a vessel sink in the guest bathroom were installed upside down, and a subsequent remedial attempt by Respondent’s qualifying party not only was

impermissible plumbing work under the allowable scope of Respondent’s general contracting license but also such attempt failed to acceptably rectify the faucet installation problems.

18. The cabinet doors both in the kitchen and in the master bathroom did not adequately match the sample given in advance to and approved by Complainant prior to the delivery and partial installation of such cabinetry. Moreover, the cabinet installation was not fully and properly completed on the project.

19. Medicine cabinets and linen cabinets in the master bathroom that were to be provided and installed were missing.

20. The stucco application at the garden entry wall remained incomplete.

21. Certain damage to a neighbor’s wall during the remodeling work on Complainant’s property was to be repaired by Respondent, and also a wood beam in the master bedroom had become splintered, necessitating remedial work by Respondent. These two items comprised the only identified deficiencies listed in the Inspector’s directive that had been subsequently corrected appropriately by Respondent.

22. With respect to the numerous items of complaint that had been previously corrected prior to the jobsite inspection or that could not be otherwise confirmed by the Inspector as being caused by or attributable to Respondent or its supervisory duties, the evidence at the hearing did sufficiently demonstrate the existence of responsibility on the part of Respondent with respect to a few of such items that had been omitted from the written directive enumerating numerous action items for the contractor to accomplish.

23. Damage to certain bi-fold doors, leading to the need for replacement of same, was shown to be traceable to the original installation, by or on behalf of Respondent, of hinges that were too large.

24. A sufficient showing was made that Respondent was responsible for damage during the jobsite work to the exterior irrigation lines and telephone wires. After having made a request to Respondent to rectify this reported problem and failing to obtain any remedial action, this exterior yard damage was subsequently repaired by Complainant through other sources.

25. After some prior damage had been experienced in the guest bathroom resulting from a roof cave-in unrelated to Respondent’s scope of work, further damage was shown to have been caused in that room during a repair attempt on certain household plumbing features that had sustained prior cave-in damage. That damage attributable to the repair effort would be attributable to Respondent and the selected subcontractor.

26. The local building authority was shown to have issued a list of items to be remedied so as to comply with applicable code provisions, most significantly involving the placement of the fireplace too close to the home, requiring either demolition or the obtaining of a variance. Additionally, several code violations in the prior jobsite work were noted with respect to portions of the plumbing and electrical installation relating to the need for sink venting and also added receptacles as well as for the proper labeling of breakers in the sub-panel. The noted deficiencies were never properly addressed and rectified by or on behalf of Respondent.

27. Credible evidence adduced at the hearing failed to indicate that Respondent was denied access to the premises either prior to or subsequent to the issuance of the Inspector’s Corrective Work Order. On the contrary, Complainant was shown to have

repeatedly attempted both by telephone and e-mail, to induce Respondent not only to complete the contemplated work on the project, but also to correct those portions of the work that were in need of appropriate remedial measures.

28. It must be held and determined that Respondent did not substantially or even minimally comply with the terms of the Inspector’s issued written directive. In point of fact, Respondent, after receipt of the Inspector’s directive, returned to the jobsite premises for only a two hour time duration when it unsuccessfully attempted to perform a plumbing repair that was outside of its proper license scope.

29. The uncorrected items of construction work, as set forth in the complaint and confirmed in large part in the Inspector’s directive, reflect unfavorably upon Respondent’s workmanship. Several such items also represent deviations or departures from applicable local building code provisions. Additionally, the failure or refusal by Respondent to complete the project is further determined to constitute an abandonment, or at the minimum a constructive abandonment, of its duties under the parties’ contractual agreement.

30. Despite numerous assurances by Respondent that the unfinished work on the project would be completed, no effective steps were undertaken to accomplish full completion irrespective of the fact that the invoiced and paid sums had fully satisfied the contractual payment obligations of Complainant. The demonstrated ongoing course of action or inaction on the part of or attributable to Respondent reflects a disregard of the entitlements and comforts of the Complainant/homeowner, as well as of its duties as a licensed contractor in this State. It is further found and determined that the prolonged unresponsive course of conduct on the part of or attributable to Respondent constituted a wrongful (but not fraudulent) act resulting in substantial detriment to Complainant within the meaning of one of the contracting law provisions charged hereunder as having been violated by Respondent.

31. Some portion of the jobsite electrical and plumbing work was shown to have been performed by Respondent’s qualifying party or employees and not through properly license specialty subcontractors, as required. Such work performance is found to have been outside the permissible scope of Respondent’s general contracting license.

32. Bids or proposals were subsequently obtained by Complainant relating solely to the enumerated items identified as requiring action by Respondent that were listed on the Inspector’s Corrective Work Order. The lowest of such obtained bids was in a sum that was not less than $33,700.00. Additionally, such total of sustained damages must properly be increased when direct payments aggregating approximately $3,400.00 to one of Respondent’s employees is considered, based upon this demonstrated overpayment of Respondent’s underlying contractual supervisory charges for the jobsite work completion that was never achieved. Similarly, such total of sustained damage must be increased by the reasonable undetermined costs for rectifying several of the unconfirmed items of complaint proven at the hearing to have been part of Respondent’s responsibilities.

33. Notice is taken of the Registrar’s license files which reveal that Respondent’s Class B license, held by a corporate entity, was suspended and continues to be suspended by operation of law since August 1, 2008 for non-renewal, and since December 24, 2008 for lack of a proper license bond. If the non-renewal suspension is not removed by the filing of a renewal application and the payment of an applicable late fee, Respondent’s license shall expire on August 1, 2009.

34. The above-described non-disciplinary license suspensions do not prevent the Complainant from pursuing her available administrative remedies against Respondent, nor does such license status preclude the Registrar from conducting these

administrative disciplinary proceedings which are expressly authorized by statute.[1] Moreover, little or no valid reason is perceived under all the circumstances to include any remedial work or monetary payment conditions in the Order of the Registrar to be entered in this case. Instead, the Registrar should be prompted to impose a license revocation penalty against Respondent, thereby enabling the within Complainant, as an injured party, to seek and obtain an award from the Residential Contractor’s Recovery Fund for a portion of her proven damages, at least to the extent permitted by statute up to a specified maximum individual recovery amount.

CONCLUSIONS OF LAW

1. The evidence of record more than adequately established that Respondent has violated the provisions of A.R.S.§32-1154(A) (1), (2), (7), (17), (23) and (3) namely Rule R4-9-108, A.A.C.

2. Based upon the testimonial and documentary evidence presented, it is determined that no valid reason presently exists for the Registrar to provide conditions of any type so as to enable the elimination or reduction of an otherwise appropriate disciplinary penalty. The contracting license of Respondent should be revoked.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that Respondent’s Class B 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 forty (40) days from the date of that certification.

Dated: March 27, 2009. OFFICE OF ADMINISTRATIVE HEARINGS

______________________________________ Robert I. Worth Administrative Law Judge

Original transmitted on _____________________

by: _____________________________ , to:

William A Mundell, Director Registrar of Contractors Legal Department 3838 North Central Avenue (Suite 400) Phoenix, AZ 85012 - 1906

----------------------- [1] See A.R.S.§32-1154(C).

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