ALJDEC decisions subject to certification as final

08f-G0719-ROC · Registrar of Contractors · 2008-10-21

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: October 2, 2008. APPEARANCES: Warren Nielsen appeared personally and was represented by his attorney, Chris Stovall, Esq. R Tek Services, LLC did not appear.[1] ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order:

FINDINGS OF FACT 1. R Tek Services, LLC (“Respondent”) is the holder of License No. 206729, a Class B-03 contracting license, issued by the Registrar of Contractors (“Registrar”). 2. On or about June 6, 2007, Respondent entered into a written remodeling agreement with Warren Nielsen (“Complainant”) and his wife. The total contract price was $48,109.00. Complainant paid Respondent a down payment of $12,661.00 using his credit card. 3. The parties’ contract contained a Notice of Cancellation provision. Complainant had three days to cancel the contract without financial penalty. Paragraph 16 of the contract provided that if Complainant cancelled the contract after the three-day period, Respondent would be entitled to retain no less than 25% of the total contract price. 4. On or about June 28, 2007, Complainant and Respondent executed a written addendum to their contract. The addendum added additional work to be performed by Respondent. The contract price for the addendum was $30,365.13. Complainant paid Respondent an additional down payment of $8,000.00 for the addendum scope of work. 5. Paragraph 16 of the addendum was similar to the provision in the parties’ contract. 6. Respondent ordered tile and granite without Complainant making any selection. 7. On or about August 1, 2007, Complainant had a telephone conversation with Respondent’s superintendent. Complainant was asked if he was satisfied with Respondent’s work. Complainant told the superintendent that no work had been performed. The superintendent was surprised by that information. The superintendent called Complainant back and said that work was scheduled to be performed the next day. Respondent did not perform the work the next day. 8. Weeks later Complainant telephoned Respondent’s office. He was told that his project’s superintendent had a death in the family and he was unavailable. No one else was available to speak to Complainant. Complainant was told someone would return his call. 9. Complainant waited approximately two more weeks without hearing from Respondent. He then telephoned Respondent’s office to discuss his project with the superintendent, who said he was no longer the project superintendent. Complainant was given the name of the second superintendent and called him. 10. The second superintendent told Complainant that Respondent would start work the next day. Respondent failed to appear the next day. 11. Complainant telephoned Respondent’s office and was informed that the project’s plans had been “red lined.” 12. In the beginning of September 2007 one of Respondent’s sale persons contacted Complainant to solicit work. Complainant informed the sales person that he already had a contract with Respondent but no work had been performed. 13. On or about September 25, 2007, Complainant telephoned Respondent’s office to cancel the contract. He was told that he had to speak to Fred Richie, Respondent’s general manager. 14. On or about September 26, 2007, Mr. Richie telephoned Complainant. He apologized for the plans being “red lined.” He said that Respondent had to start from scratch. 15. On or about September 26, 2007, Complainant notified Respondent in writing that he was cancelling the contract. 16. Approximately one week later, Respondent sent an employee to Complainant’s residence in an attempt to talk Complainant into staying with the contract. The employee admitted to Complainant that the plans needed to be fixed and that it would take four weeks to do so. Complainant discussed the return of his down payment, but the employee had no information about a refund. 17. Complainant attempted to contact Mr. Richie by telephone weeks later. He did not receive a response from Mr. Richie. 18. On or about November 6, 2007, Complainant filed a written Complaint with the Registrar against Respondent. The Registrar designated the Complaint as Case No. G08-0719. 19. On or about November 13, 2007, the Registrar’s assigned inspector, Eric Ulinger, informed the parties that Complainant’s Complaint had been received by the Registrar. 20. By letter dated November 28, 2007 addressed to Complainant, Mr. Ritchie acknowledged receiving Inspector Ulinger’s letter. Mr. Ritchie wrote the following:

After the contracts were written, I assigned staff to begin the design work and to prepare the drawings for submission to the City of Glendale for the appropriate permits. Prior to the submission of drawings to the City of Glendale, you called our offices and notified us that you intended to cancel the project.

21. Mr. Ritchie’s above statement is disingenuous. The credible evidence of record is that the plans were “red lined” prior to Complainant cancelling the contract. 22. Mr. Ritchie’s letter claims that Complainant is only entitled to a refund of $313.63 out of the $20,661.00 paid by Complainant. 23. Paragraph 5 of the parties’ contract reads: “Project will not commence until purchaser has secured adequate financing.” Complainant financed the original scope of work and addendum scope of work through Respondent. After Complainant had paid the down payments and agreed to financing through Respondent, Respondent had the obligation to commence work on the project in a reasonable time frame. 24. After waiting over three months for Respondent to perform its contractual obligations, it was reasonable for Complainant to cancel the contract due to Respondent’s breach of contract. 25. Respondent abandoned Complainant’s project without legal justification. 26. Respondent failed to complete the subject project for the price stated in the contract and addendum. 27. There is no credible evidence that Respondent performed any quality work prior to Complainant terminating the contract. On the contrary, there is credible evidence that Respondent’s plans were deficient and not completed at the time Complainant terminated the contract. 28. Complainant is entitled to the return of his combined down payment of $20,661.00. 29. Complainant’s abandonment of Complainant’s project, its failure to complete the project for the total contract price, and its failure to return the total down payment to Complainant after he terminated the contract due to Respondent’s lack of performance are wrongful acts that substantially injured Complainant. 30. A review of the Registrar’s official records reveals that Respondent’s License No. 206729 was suspended by operation of law for lack of bond on July 11, 2008. That license was revoked on October 17, 2008. There are five open complaints, two disciplined complaints and seven resolved/settled/withdrawn complaints listed against Respondent’s contracting license.

CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 3. Respondent violated the provisions of A.R.S. § 32-1154(A)(1), as cited in the Citation and Complaint issued by the Registrar. 4. Respondent violated the provisions of A.R.S. § 32-1154(A)(9), as cited in the Citation and Complaint issued by the Registrar. 5. Respondent violated the provisions of A.R.S. § 32-1154(A)(7), as cited in the Citation and Complaint issued by the Registrar. 6. Pursuant to A.R.S. § 32-1154(C), the suspension by operation of law for lack of bond and subsequent revocation of Respondent’s contracting license does not deprive the Registrar of authority to impose disciplinary action against that license for the above-provided statutory violations.

RECOMMENDED ORDER Respondent’s License No. 206729 shall be revoked on the effective date of the Order entered in Case No. G08-0719. 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 45 days from the date of that certification.

Done this day, October 21, 2008

______________________________________ Brian Brendan Tully Administrative Law Judge

Original transmitted by mail this ____ day of ____________, 2008, to:

Armando Contreras, Director Registrar of Contractors 3838 N. Central Ave. Phoenix, AZ 85012

By ___________________________

----------------------- [1] At the commencement of the hearing, Fred Richie attempted to represent Respondent. Mr. Ritchie announced that he was Respondent’s former general manager, but that Respondent is no longer in business. Mr. Richie is not listed on Respondent’s contracting license. The Administrative Law Judge sustained Complainant’s objection to Mr. Ritchie representing Respondent because he did not qualify to do so pursuant to Rule 31(11) of the Rules of the Arizona Supreme Court.

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