ALJDEC decisions subject to certification as final

08F-4522-ROC · Registrar of Contractors · 2009-06-29

STATE OF ARIZONA IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 25, 2009.

APPEARANCES: >The Complainant appeared through its owner and qualifying party, Wayne A. Demers. >The Respondent appeared through its President and qualifying party, Michael Ray Gove.

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 proposal and contract, Respondent agreed to perform concrete and framing work on Complainant’s property pursuant to plans and specifications as part of a detached garage addition. The originally stated cost price for the contemplated work, including applicable taxes, plan drawings, and local permit fees, as well as a concrete pump truck charge, was in the aggregate total amount of $12,845.73. An adjustment was made soon after the signing of the contract so as to reflect an allowed credit and thereby reduce the contractual cost price to $11,959.68.

2. Three separate payments that were to be paid by Complainant to Respondent had been expressly set forth in the originally signed contract document, before the mutually agreed credit, the first two of which were in the amount of $4,200.00 and the third payment was to be for $4,445.73, representing the remaining balance of the originally specified cost price. The subsequent adjustment to the initially agreed cost price would necessarily cause some ultimate reduction in the third or last installment payment amount.

3. Complainant transmitted the first of the three scheduled payments in the sum of $4,200.00 at the time of signing the contract so as to serve as an advance deposit. The second payment for the same monetary amount was to be paid on the day that the concrete slab was poured, and the final payment would be payable on the day of completion.

4. The work by Respondent started after the permit issuance. The trenching for the footings was performed after the prudently obtained Blue Stake clearance to assure that no utility lines would be impacted by the necessary digging, and the rebar was then placed. This phase of the work was inspected and passed by the local building authority, enabling the pouring and finishing of the concrete slab. Such pour was to be and was a monolithic pour.

5. The relationship between the parties had started to deteriorate, resulting in difficult ongoing communication. The provisions of the parties’ contract, as adjusted, set forth the timing of the second of the three progress payment to coincide with the completion of the poured concrete slab work. This was stated to be also in the sum of $4,200.00, and such second payment was tendered by Complainant to Respondent upon the latter’s request. However, a growing dissatisfaction with the initial jobsite slab work plus an element of distrust that had developed together with an experienced difficulty with getting return phone calls prompted Complainant to stop payment on the second installment check.

6. Subsequently, a complaint was filed by Complainant with the Registrar of Contractors enumerating eight separate items of alleged deficiencies with respect to the concrete work by Respondent.

7. Following a jobsite visit by the Registrar’s assigned Inspector, a written Corrective Work Order was issued to Respondent confirming the need for the performance of remedial work on most of the enumerated items or areas of complaint. More specifically, the slab surface was determined to be improperly finished and uneven, resulting in a substandard and unsightly finished product. Additionally insufficient control joints were provided, despite express recommendations and prevailing standards of the industry, and neither required anchor bolts nor required hold-down straps were provided and installed. Lastly, a 4-foot by 4-foot stoop that was specified in the applicable plans and required by local code provisions had not been installed by Respondent outside the location specified for a door.

8. Many of the items in the Corrective Work Order were the subjects of attempted subsequent correction by Respondent, but Complainant remained dissatisfied even after an extension of the otherwise applicable deadline date had been granted. Such dissatisfaction was credibly shown to have been fully justified, since the remedial work did not acceptably rectify the proven concrete slab deficiencies. It must be held that Respondent did not achieve substantial or even minimal compliance with the terms and conditions of the Inspector’s issued directive. It is further found that the performance by Respondent of its original work as well as of its subsequent corrective attempts was contrary to plans, specifications and local building code provisions and also reflected adversely upon its (Respondent’s) workmanship.

9. After the second payment check given to Respondent was stopped by Complainant, Respondent was shown to have filed a Preliminary 20-day lien notice, specifying as the claimed unpaid balance the amount remaining on the adjusted price

of the parties’ agreement, reflecting the credit amount. During a rather confrontational jobsite meeting at the time that Respondent was preparing to start the framing portion of the contemplated scope of work, even to the extent of entailing the summoning of police personnel to the scene, a mutual agreement was concluded by and between the parties wherein it was provided that Respondent would not be performing the framing portion of the contractual work that was to be placed above the concrete slab, that it would not follow through with any lien action after having filed its Preliminary 20-day Lien Notice and that it would be allowed to remove delivered lumber from the jobsite.

10. The above-described mutual agreement was memorialized in a written document prepared by Complainant. It is found and determined under all the circumstances that the brief agreement was not mutually intended to constitute a complete global resolution of all matters in issue between the parties, more specifically with respect to any purported waiver or release by Complainant relating to receiving appropriate further work to rectify demonstrated problems then existing with the concrete slab. The parties’ agreement did have the effect of deleting the duty of performance by Respondent of the framing from the initially agreed scope of work and also eliminating any duty for Complainant to pay for such framing portion of the work.

11. Complainant resorted to another contractor for the performance of the framing work, and no further remedial work was performed on the slab with the exception of causing the hold-down straps that were placed by Respondent as part of its corrective efforts to be re-installed properly after Respondent’s work with the straps was shown not to have passed the local inspection Complainant was shown to have incurred added materials and labor costs for the required hold-down strap corrections in the sum of approximately $250.00.

12. 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 to rectify construction deficiencies.

13. In this case, it must be found that Respondent had been afforded ample notice from Complainant and also more than an adequate opportunity to undertake and accomplish proper remedial work on the concrete slab. A sufficient showing was made that Respondent has deviated or departed from applicable local building code provisions and the provisions of the contractual plans and specifications with respect to the missing anchor bolts and hold-down straps, as well as to the omitted stoop at what was to become a door opening. Moreover, the stoop that was ultimately poured by Respondent as part of its remedial attempt after issuance of the Inspector’s directive was shown to be substantially less in one of the dimensions than the required 4-foot length.

14. Although it is not a proper function of either the Office of Administrative Hearings or the Registrar of Contractors to adjudicate and award money damages which must be recovered, if at all, through pursuit of a civil court action, the Registrar is empowered by statute to impose reasonable conditions which may serve to reduce or eliminate any otherwise appropriate disciplinary penalties for proven violations of the State’s contracting laws. Whenever the performance of corrective or remedial measures on a jobsite is no longer warranted or possible, the inclusion of a condition in the nature of restitution, total or partial, is fully appropriate and equitably justified. Such authorization to provide for restitution from a contractor to a prevailing party in an administrative action has been legally upheld in Sunpower of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 803 P.2d 430 (1990), and subsequently was expressly confirmed by the statutory enactment of A.R.S. §32-1156.01. In this way, a Complainant in an administrative action who has sustained the burden of proving contracting law violations does not have to await the outcome of protracted civil

litigation in order to recover at least a portion of a demonstrated loss and, of equal or perhaps greater significance, a licensed contractor/Respondent is given the means to control, to some extent, the severity of any disciplinary penalty.

15. The evidence at the hearing was somewhat inconclusive with respect to the projected costs for correcting the slab deficiencies. It did appear that the probable minimum costs to be incurred at this time in order to rectify such existing deficiencies so as to achieve compliance with prevailing applicable minimum workmanship standards as well as with the terms of the issued Corrective Work Order might approach almost $2,000.00. Even without the quantum of proof necessary to support any sum certain as to minimum cost figures, some portion of the aforesaid sum, perhaps no more than one-half, or $1,000.00, is determined to constitute an appropriate element of a monetary condition to be included as part of the Registrar’s disciplinary Order in this matter. Such monetary amount, combined together with the sum of $250.00 expended by Complainant to cause the installation to pass local code inspections, or a total of $1,250.00, to be paid by Respondent to Complainant by way of partial restitution, is found and determined to be an appropriate and fully warranted included payment condition. Both parties would be left free to resort to available remedies before a civil Court of competent jurisdiction for seeking and obtaining either a higher or lower amount of monetary entitlements or obligations resulting from their prior dealings.

16. It must be noted and observed that Complainant had declined to allow Respondent to enter onto his property and to participate in a Pre- Hearing Inspection, scheduled by and conducted by a successor Inspector for the Registrar. The actions of Complainant in refusing access, not for further work, but for preparation of defenses to the charges, are not condoned by this tribunal, since his (Complainant’s) pursuit of administrative disciplinary remedies before the Registrar generates significant due process entitlements for the license holder to observe and participate in such jobsite inspections. Respondent was not shown to have exhibited any previous conduct that

would or should restrict or forfeit such otherwise applicable rights. However, under all the circumstances, the refused access to the property for the purposes of the Pre-Hearing Inspection participation was not sufficiently demonstrated to have been prejudicial in this case.

CONCLUSIONS OF LAW

1. The evidence of record adequately established that Respondent has violated the provisions of A.R.S. § 32-1154(A)(2), (7), (23) and (3); namely, Rule R4-9-108, A.A.C, as charged in the issued Citation.

RECOMMENDED ORDER

In view of the foregoing, it is recommended commencing on the effective date of the Registrar’s Order, that the Class KB-02 license of Respondent be suspended until the Registrar receives written proof that Respondent has paid or tendered to Complainant the sum of $1,250.00.

It is further recommended that if written proof is filed with the Registrar on or before this Order’s effective date that Respondent has paid or tended the aforesaid monetary amount to Complainant, then the above- provided license suspension shall not be imposed.

It is further recommended, in addition to the above-provided suspension penalty, if any, that Respondent pay the sum of $200.00 to the Registrar of Contractors 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 this matter shall result in the automatic revocation of Respondent’s contractor’s license, effective on such extended deadline date. No future

license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. §32-1101A(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 forty (40) days from the date of that certification.

Dated: June 30, 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