ALJDEC decisions subject to certification as final

08F-A088018-BFS-rhg · Department of Fire Building and Life Safety · 2009-01-22

STATE OF ARIZONA OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 28, 2008 (reconsidered January 5, 2009)[1]

APPEARANCES: Complainant Jenna Jones appeared on her own behalf;[2] Respondent Redman Homes was represented by counsel Marc Appel, Appel Law Office, PLLC, and Service Manager Barbara Holloway;[3] Respondent Mountainview Homes was represented by its Qualifying Party Al Stasser.[4]

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Upon reconsideration as ordered by the Order Granting Rehearing, issued by the Director of the Arizona Department of Fire, Building, and Life Safety on November 5, 2008, the Administrative Law Judge addressed the following issues raised by Complainant: (1) Complainant’s first ground for reconsideration concerns Finding of Fact 9 in the original Administrative Law Judge Decision. Upon reconsideration, it is found that that finding was vague, poorly worded, and not necessary to the decision. It is therefore completely removed from the Administrative Law Judge Decision (Upon Reconsideration) below. All other findings of fact remain as in the original. (2) Complainant’s second ground for reconsideration is that she did not withdraw item 19 of the non-verified items as stated in the original decision. However, upon review of the record, it is found that Complainant did indeed withdraw item 19 as an item for adjudication at the hearing on July 28, 2008; she intended to bring that item instead to the Consumer Recovery Fund. Complainant even admits in her motion for rehearing that item 19 was “not subject to deliberation at the administrative hearing.”[5] That constitutes a withdrawal. Therefore, the original decision has not been modified in that regard. The record does not support the requested change. (3) Finally, Complainant argues that the Director’s Final Order, issued September 2, 2008, and adopting the Administrative Law Judge Decision, is not clear with regard to dismissal against Respondent Redman Homes, Inc. To the extent this is true, it has become moot with the reconsideration of the matter, as a new Final Order will be issued. In any event, the record is clear that the only claim against Respondent Redman Homes, Inc. at the July 2008 hearing was in case 08F-C088076-BFS and was withdrawn by Complainant based on the avowal that the one item to which it referred had been corrected. In this regard, the Recommended Order below has been modified by adding the docket number. Administrative Law Judge Decision (Upon Reconsideration) Based upon those considerations, the following Administrative Law Judge Decision (Upon Reconsideration) is made: Complainant Jenna Jones brings these actions arising out of two complaints she filed with the Office of Manufactured Housing (“OMH”) of the Arizona Department of Fire, Building, and Life Safety (“Department”) concerning the purchase and installation of a manufactured home (factory built building). First Complaint The first complaint was filed in August 2007 and alleged numerous (approximately 30) workmanship violations, contractual defaults, and wrongful conduct by Respondent Mountainview. It also alleged several workmanship problems against Respondent Redman. With regard to that complaint, Complainant seeks to enforce the complaint items found verified in the Verified Complaint, in which Respondents were ordered to perform corrective work. The Department issued a Citation and Complaint alleging failure to correct those items on March 11, 2008.[6] Complainant seeks enforcement of the Citation and Complaint. Respondent Redman Homes answered the Citation and Complaint by submitting proof to the Department showing that Respondent Redman Homes had corrected the one item it was responsible for as ordered by the Department and that Complainant was satisfied with the correction. In response, the Department, on April 30, 2008, issued an Order of Dismissal that dismissed the matter against Respondent Redman Homes. Thus, Respondent Redman Homes is not a Respondent in case 08F-C088025-BFS. The action is solely against Respondent Mountainview. On March 31, 2008, the Department issued an Order of Suspension against Respondent Mountainview’s license, based on the failure of Respondent Mountainview to answer the Citation and Complaint. The Department deemed the allegations as admitted and suspended the license.[7] At hearing, Respondent Mountainview’s representative Al Stasser stated that Respondent Mountainview was not challenging the Order of Suspension; thus, it is a final order and deems the allegations as admitted. Therefore, there was no need to hold an evidentiary hearing on the allegations in the Citation and Complaint for 08F-C088025-BFS; they are admitted. The only issue remaining is the appropriate discipline for those violations. Second Complaint Complainant’s second complaint was filed in February 2008 and concerns approximately 20 more workmanship, contractual and wrongful conduct allegations regarding the same home and transaction. One of the workmanship items was verified to be the responsibility of Respondent Redman Homes, and the rest were verified against Respondent Mountainview. At the start of the hearing on July 28, 2008, counsel for Respondent Redman Homes avowed that the item verified to it had been corrected. Complainant accepted the avowal and stated that there was no need to proceed further against Respondent Redman Homes. Therefore, Respondent Redman Homes was dismissed from the hearing and is dismissed from this matter (specifically case 08F-C088076-BFS) below. Complainant seeks enforcement of the Citation and Complaint against Respondent Mountainview.[8] In addition, Complainant appeals the items in the complaint that were not verified by inspection.[9] At the start of the July 28 hearing, Respondent Mountainview’s representative stated that Respondent Mountainview had not timely answered the Citation and Complaint in case 08F-C088076-BFS. By statute, this is deemed an admission of the allegations.[10] Again, the only issue remaining is the appropriate disciplinary action to be taken. Finally, concerning the appeal of the non-verified items in the second complaint, Complainant withdrew several of these at hearing (items 8, 10, 13, 18, and 19). She also understood that, because the allegations in each Citation and Complaint had been admitted and Respondent Mountainview’s license was already suspended so that Respondent Mountainview cannot perform corrective work, the only remaining issue in this matter is what the appropriate disciplinary action should be, and proof of the non-verified items as wrongful actions pertained only to that issue. Complainant requests that Respondent Mountainview’s license be revoked based on the admitted allegations and the wrongful conduct she alleges as part of the non-verified items. Respondent Mountainview asks that the license not be revoked. Complainant intends to seek recovery of her damages from the Consumer Recovery Fund. Complainant and Respondent Mountainview presented evidence and testimony at the hearing,[11] including the complaint file submitted to this tribunal from the Arizona Department of Fire, Building, and Life Safety, and Complainant’s Exhibits 1 through 11, excluding 9.[12] Witnesses at the hearing were Jenna Jones, Al Stasser, and OMH Inspector Dennis Butzen. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Order finding that the evidence shows wrongful action and unworkmanlike conduct by Respondent Mountainview and recommending continued suspension of Respondent Mountainview’s license. FINDINGS OF FACT 1. Respondent Mountainview Homes, Inc., is the holder of a class D- Master Retailer’s license (No. 5853) issued by the OMH. That license authorizes Respondent Mountainview to act as a retailer or broker of, mobile homes, manufactured homes, and factory-built buildings.[13] This includes authority to contract with other properly licensed entities for the setup or installation of the homes. The Qualifying Party on the license is Al Stasser. 2. In January 2006, Complainant entered into a contract with Respondent Mountainview for purchase, which included delivery and setup, of a new manufactured home (factory built building). The contract notes that a construction loan was to be used for “phase funding.” It also notes that verbal agreements were not part of the contract. The home was delivered to the setup site in late September 2006. Installation was slow-going and the parties had disputes about construction loan draws that resulted in each party believing that the other had breached the contractual agreement. Respondent Mountainview wanted payment to complete the project. Complainant refused to allow disbursement of about one-quarter of the purchase price. Nevertheless, Respondent Mountainview completed enough of the project to get a certificate of occupancy for the home on April 2, 2007. Complainant occupied the home shortly thereafter. 3. Complainant found numerous items in the home (about 50) that did not meet standards and filed complaints in August 2007 and February 2008. As noted, the allegations for these items are deemed admitted and have not been corrected. Because Respondent Mountainview’s license is suspended, Respondent Mountainview cannot perform corrective work and Complainant’s only option is to make a claim to the Consumer Recovery Fund for her damages. 4. With regard to the non-verified items, Complainant makes allegations that Respondent Mountainview misled her or misrepresented information to her during the long process of purchase and installation. The Administrative Law Judge has carefully reviewed all of the documentation submitted in support of these allegations, guided by the “matrix” provided at the beginning of Complainant’s Exhibit notebook, and does not find them to be sufficiently proven. For example, one of the main allegations in this regard is the allegation that Respondent Mountainview did not complete the project on time. The evidence certainly shows that the project took a very long time to complete, but the contract did not provide for a definite completion date. Complainant has proven that Respondent Mountainview made various statements at various times as to when the project would be completed, but these were verbal statements that were not formalized by making them contractual provisions. As such, they are seen as estimates or goals stated by Respondent Mountainview. The evidence does not show that Respondent Mountainview was obligated by contract or any other authority to complete the project within a definite timeframe. And, given the disputes over the requested loan draws and the lack of any contractual provisions regulating the loan draws, delay was an understandable by-product of the pay-as-you-go nature of the project. 5. Similarly, Complainant alleges that Respondent Mountainview misrepresented information in order to “gain additional funds.” However, this allegation does not make sense unless Respondent Mountainview was seeking more than the contractual price, which it was not. Respondent Mountainview was asking for construction draws within the terms of the contract, which provided for “phase funding,” and within the total contract price. The evidence does not show that Respondent Mountainview sought more than the contract price—the price Complainant was obligated to pay for the project. Neither does the evidence show misrepresentation in this regard. While there may have been mistakes in some of the documentation, the evidence does not show active misrepresentation by Respondent Mountainview. 6. The other misrepresentation allegations are similarly without sufficient support in the evidence, especially with regard to the type of home Complainant bought. While the documentation compiled by Complainant about the type of home was unclear and perhaps confusing, it does not rise to the level of misrepresentation. That information has since been clarified. 7. Finally, Complainant’s allegation concerning the use of unlicensed contractors on the project is supported by the evidence.[14] The evidence shows that Respondent Mountainview used an unlicensed painter on the home, and that the subcontractor who built the garage performed electrical work that was beyond the scope of its licensure. Respondent Mountainview hired the unlicensed painting subcontractor and should have known better; that action is a serious violation for a licensee. Moreover, Respondent Mountainview should have known that the garage subcontractor could not perform electrical work and should have made other provision for such work. Again, this is a serious violation for a license holder. 8. In summary, the complaint items verified against Respondent Mountainview have been admitted; Respondent Mountainview has not corrected them. In addition, one of the non-verified items, concerning use of unlicensed contractors, is supported by the evidence and is verified. However, the other non-verified items have not been proven. The question left is whether revocation is the appropriate sanction in this case. That question is addressed below. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the Complainant.[15] Further, the standard of proof at hearing is preponderance of the evidence.[16] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that Respondent Mountainview has violated the statutes governing its license and that the non-verified items should be verified.[17] Because the allegations of workmanship violations were admitted, Complainant has met the burden with respect to those violations. With regard to the non-verified items, Complainant has not met the burden, except with regard to hiring unlicensed contractors. 2. As a licensed dealer, Respondent Mountainview is prohibited from committing wrongful acts in relation to its activities as a license holder.[18] In addition, license holders must perform work that meets workmanship standards; that is, in a professional manner and with a result that meets professional standards.[19] Commission of a wrongful act and failure to meet workmanship standards are each a violation of the regulatory statutes that govern Respondent Mountainview’s license and subjects that license to disciplinary sanctions such as revocation, suspension, or probation.[20] 3. As found above, Respondent Mountainview has committed violations of the statues governing its conduct as a licensee. Therefore, disciplinary action against Respondent Mountainview’s license is warranted. 4. Because Respondent Mountainview’s license is already suspended by a final order from the Department, only the question of whether the license should now be revoked remains. Complainant requests revocation of the license based mainly on her experience during the setup and installation of the home, which formed the basis for the non-verified complaints. While her evidence in this regard was not sufficient for verification of the allegations as violations of the statutes, except with regard to unlicensed subcontractors, the evidence did reveal a licensee who was not diligent, did not communicate well with Complainant, and did not inspire confidence. On the other hand, Respondent Mountainview did get the project to substantial completion (by certificate of occupancy), and did not abandon the project even when it became difficult. 5. Complainant has submitted evidence of prior cases involving Respondent Mountainview, one from 1997 and another from 2001. However, this evidence does not show that Respondent Mountainview’s license was sanctioned. In both cases, Respondent Mountainview was allowed to perform corrective work and avoid any sanctions. There is no evidence showing that Respondent Mountainview failed to perform the work ordered in those matters. Therefore, there is no evidence showing that Respondent Mountainview’s license has ever been disciplined during its many years of licensure, until the March 31, 2008, Order of Suspension finding Respondent Mountainview in default for this matter. This clean record for a substantial period of time is favorable to Respondent Mountainview. 6. As previously noted, Respondent Mountainview’s conduct concerning unlicensed contractors is a serious violation. However, it is not enough to warrant revocation, considering the evidence as a whole and Respondent Mountainview’s appearance at the hearing and express desire to operate under the license in the future. Instead, the current suspension should remain in place until Complainant’s Consumer Recovery Fund claim has been adjudicated and Respondent Mountainview’s license is suspended under the provisions relating to that matter, which will then supersede the current suspension. This tribunal does not find that revocation is appropriate. RECOMMENDED ORDER IT IS RECOMMENDED that the complaint against Redman Homes, Inc. in case 08F-C088076-BFS be dismissed in accordance with the withdrawal by Complainant described above. IT IS FURTHER RECOMMENDED that Class D-12 license number 5853 held by Mountainview Homes, Inc. remain suspended per the Department’s March 31, 2008, Order of Suspension.

Done this 22nd day of January 2009.

Office of Administrative Hearings

______________________________ Eric A. Bryant Administrative Law Judge

Original mailed this ___ day of January 2009, to:

Robert Barger, Director Arizona Department of Fire, Building, and Life Safety ATTN: Debra Blake 1110 West Washington Ave., Suite 100 Phoenix, AZ 85007

By ___________________________ ----------------------- [1] This matter was set for rehearing by evidentiary hearing on January 5, 2009. By unopposed motion of Complainant, the evidentiary hearing was cancelled and only a reconsideration of the original record was conducted. [2] For rehearing, Complainant was represented by attorney Mark D. Bogard, Jaburg & Wilk, PC. [3] Respondent Redman Homes, Inc. did not participate in the rehearing. [4] Respondent Moutainview Homes, Inc. did not participate in the rehearing. [5] Petition for Review . . . at 14. [6] This is case 08F-C088025-BFS. [7] These actions are allowed by A.R.S. § 41-2181(B). [8] This is case 08F-C088076-BFS. [9] This is case 08F-A088018-BFS. [10] A.R.S. § 41-2181(B). [11] Late on Friday, July 25, 2008, one business day before the hearing, Al Stasser filed a brief written request to delay the hearing date. There being no time to do so, the request could not be addressed until the hearing the following Monday morning, At that time, Mr. Stasser did not renew the request, but participated in the hearing. Therefore, the request is deemed to be withdrawn. [12] Complainant’s Exhibits are bound in a notebook presented and admitted during the hearing. [13] See Arizona Administrative Code (A.A.C.) R4-34-203. [14] Exhibit 2. [15] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [16] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [17] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [18] A.R.S. § 41-2186(6). [19] A.R.S. § 41-2186(20); A.A.C. R4-34-104. [20] A.R.S. § 41-2186.

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