ALJDEC decisions subject to certification as final

08F-4184-ROC · Registrar of Contractors · 2009-06-23

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 30, 2009 and June 15, 2009.

APPEARANCES: >The Complainant appeared in his own behalf at the initial hearing session but failed to appear at the further hearing session. >The Respondent appeared at both hearing sessions through Anthony John Oliverio, its President and qualifying party.

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. The further hearing of this matter was scheduled on advance written notice duly sent to both parties. Although the start of the scheduled further hearing session was delayed for over thirty minutes to afford added time in which to make an appearance, the Complainant failed to appear either individually or through any proper, authorized legal representative.

2. Complainant’s voluntary absenting of himself from the further hearing session does not prevent Respondent from presenting additional testimonial and documentary defense evidence nor does it prevent the tribunal from formulating an appropriate Decision and Recommended Order, which must be and is based upon the entire hearing record. It is additionally noted that Complainant, who had testified personally at the initial hearing session but had not appeared at the further hearing session, had neither completed his testimony nor subjected himself to cross examination by the adversary party, thereby generating some extent of diminished evidentiary value to his partially completed testimony.

3. Pursuant to a written proposal and contract dated September 25, 2006, Respondent agreed to and did perform extensive restoration work on a residential dwelling that had sustained significant fire damage. The home had been acquired and held by Complainant as a rental or investment property. The contemplated jobsite work, including necessary demolition, was outlined in a detailed line item schedule formulated and authorized by Complainant’s insurance company. The agreed cost price amount, subject to possible subsequent modifications or adjustments as the work progressed, was the total sum of $140,614.02. It additionally appeared that the insurer would make progress payments directly to Complainant for ultimate transmittal to Respondent.

4. The evidence tended to indicate that Complainant had subsequently submitted and collected from the insurer added adjustments or increases to the originally approved insurance claim amount, resulting in a revised total insurance claim of $200,000.00. The processing and approvals of these added claims by Complainant did serve to generate some extent of delay in the progress of the jobsite work.

5. In early April, 2007, a point in time when the specified and authorized jobsite work was approximately 98% complete, the subject property was sold by Complainant to a third party who was purportedly accepting the home “as is.” Shortly before the actual

sale by Complainant was completed, possibly even in March, 2007, Respondent was expressly instructed by Complainant to cease all further work on the project and from that time has been denied access to the premises.

6. Up until the time that Complainant had instructed Respondent to cease all jobsite work, Respondent was shown to have received only $91,000.00 in combined progress payments applicable to the contractual cost price of over $140,000.00. After having calculated a reasonable and perhaps generous credit amount applicable to the value of the relatively small amount of remaining unfinished work, as well as for the value of customary return or punch-list remedial work, Respondent sent an invoice to Complainant in the sum of $31,000.00 representing the appropriate monetary amount claimed due over and above the previously transmitted aggregate payments. The credit against the contract price would, therefore, be in a sum of over $18,500.00.

7. Despite Complainant’s having collected from his insurance carrier the full amount of the restoration contract price and also his having received and retained significantly higher monetary amounts following supplemental claims for adjustments and increases, Respondent’s above- described invoice has remained wholly unpaid by Complainant.

8. Approximately one year after having been told to cease further jobsite activities, and following prolonged difficulty in affecting proper service upon Complainant, the Respondent commenced a civil lawsuit against Complainant for recovery of the aforesaid contractual balance. Credible documentary evidence was introduced tending to indicate that, after evidentiary presentations of the parties’ respective positions at a contested hearing on the merits, the appointed Arbitrator has recently issued a written notification that he intends to enter an award wholly in favor of Complainant for the entire claimed sum of $31,000.00, plus interest and attorneys fees. Prior to signing the formal award, the Arbitrator gave Complainant an opportunity to file a response with respect to the proposed quantum of attorneys' fees to be included in the award.

9. The formal complaint with the Registrar was filed by Complainant very shortly after the commencement of the legal action by Respondent, and it may be reasonably concluded that such administrative complaint filing was in the nature of a retaliatory measure. By that time, over a year after Respondent had ceased its jobsite work, Complainant was no longer the owner of the residential property which, in fact, was never occupied by the identified purchaser. In point of fact, that purchaser allowed the property to go into foreclosure, and eventually the home was sold by a bank to another third party who did subsequently take possession of the home.

10. In any event, it appeared that Complainant’s apparent purposes in filing his administrative complaint against Respondent was either to obtain an detailed accounting for monies presently and properly owing under the parties’ contract after legitimate allowances or credits or to obtain a form of declaratory judgment that he (Complainant) does not owe Respondent all or even part of the amount for which he is being sued. Neither of these purposes constitutes a proper use of the Registrar’s administrative forum. The civil tribunal, through the Arbitrator, was and is the more appropriate forum in which to determine such entitlements and obligations since it is fully capable to entertain any and all claims for set-offs or other asserted deductions against the invoice amount that formed the basis of the Respondent’s lawsuit against Complainant.

11. Complainant had acquired the home on February 1, 2006 for $770,000.00 and had sold the same on April 6, 2007 to Timothy Fabray for $830,000.00. The subsequent foreclosure sale, not involving Complainant, was shown to be on June 3, 2008 to Eric Johnson for $370,000.00.

12. After the filing by Complainant of the within complaint, the Registrar’s assigned Inspector attempted to make a jobsite inspection with Complainant being present, but neither could gain access into the residence which was then owned by another party. By looking through various windows, the Inspector was able to confirm

some, but far from all, of the items of complaint. Such items were included in his written Corrective Work Order issued to Respondent. Another subsequently scheduled jobsite inspection resulted in another denial of access by the owner-occupant.

13. Aside from the relatively few unfinished portions of the contemplated restoration work, it was not effectively disputed that various items of touch-up or adjustment work would have been necessary on the jobsite as of the time of Complainant’s sale and Respondent’s work stoppage in April, 2007. Despite having already included the value of the identified remedial work as part of the credit formulated by Respondent in its final invoice billing, Respondent demonstrated and communicated its readiness, willingness and ability to return to the premises and to accomplish all needed remedial work for the ultimate benefit of either Complainant or the subsequent owners. However, access was continually denied despite the sending of several certified letters by Respondent to Complainant, a few of which Complainant was shown never to have picked up.

14. With respect to certain portions of the filed complaint, any deficiencies in the drywall texture or materials and any painting irregularities in Respondent’s original work were not sufficiently demonstrated to be incapable of appropriate correction by measures far short of a complete removal and reapplication of the drywall or paint materials.

15. Construction is not a perfect science, and it is not unusual for items to require attention by way of correction, replacement or adjustment – often even more than once. No finding of a contracting law violation is generally supportable unless and until, after notice and a reasonable opportunity is given, a licensed contractor fails or refuses to rectify construction deficiencies.

16. It is found and determined that Respondent was not given a reasonable opportunity to rectify any workmanship deficiencies or to accomplish full completion of

its work. Moreover, the significant credit given by Respondent to Complainant against the unpaid balance of the contract price is further found to have been more than adequate to cover the anticipated costs for accomplishing all of the corrective measures outlined in the Inspector’s directive and in the itemized complaint.

17. A substantial portion of the filed complaint related not to Respondent’s workmanship but instead to the Respondent’s allegedly wrongful removal of and failure to return certain household features, such as ceiling fans, lighting fixtures, bookshelf/cabinet units, door hardware, and vanity units. However, persuasive evidence was introduced tending to demonstrate that all such allegedly missing and misappropriated items were instead taken by or on behalf of Complainant, himself, and delivered either to Complainant’s own home or, by his instructions, to the residence of one of Complainant’s friends. Similarly, certain damage to the fireplace unit that was not part of Respondent’s scope of work was not shown to have been caused by Respondent or its workers, but instead appeared to have been the product of a further attempt by or on behalf of Complainant to remove household features while the home was vacant and perhaps even prior to any change of ownership.

18. In a somewhat related circumstance, Complainant also arranged for the delivery to his own home of the carpeting materials that were to have been installed in the fire-damaged home pursuant to the insurance company’s authorized and paid allowances. Those materials, plus an added quantity needed in the Complainant’s dwelling, were ultimately installed by Respondent’s subcontractor in Complainant’s own residence. Not only were the actions of Complainant of somewhat questionable propriety in taking the benefit of improving his home with materials allowed and paid for applicable to the restored and insured premises but also Complainant was shown not to have even paid the subcontractor for the added carpet materials needed for the installation in his own home. Additionally, a degree of suspicion must necessarily linger with respect to whether the values of those household features claimed to have been

removed by Respondent but instead taken by or on behalf of Complainant formed any part of the additional monetary increases or adjustments obtained from Complainant’s insurance carrier over and above the original allowed amounts.

19. The evidence adduced at the hearing is found to have been inconclusive with respect to any impermissible aiding or abetting by Respondent of the activities of any unlicensed person. Complainant was unable to sustain his applicable burden of proof as to this issue.

CONCLUSIONS OF LAW

1. At these administrative hearings, the complaining party generally has the burden of proof, Vazzano v. Superior Court, 74 Ariz. 369, 249 P.2d 837 (1952) and the standard of proof on all issues is by a preponderance of the evidence. Culpepper v. State, 187 Ariz. 431, 930 P.2d 508 (1996). See also Smith v. Arizona Department of Transportation, 146 Ariz. 430, 706 P.2d 756 (1985); Utah Construction Company v. Berg, 68 Ariz. 285, 205 P. 2d 367, (1949); Rule R2-19-119, A.A.C. 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). 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 (6th ed. 1990).

2. Not only is the Registrar of Contractors an improper forum through with to pursue and attempt to obtain the type of accounting or declaratory relief sought by Complainant, but also the evidence of record failed to sufficiently establish any violations by Respondent of the specified provisions of A.R.S.§32-1154(A), as charged in the issued Citation.

RECOMMENDED ORDER

In view of the foregoing, it is recommended that the entire Citation and Complaint in Case Number 08-4184 be dismissed.

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: June 24, 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

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