ALJDEC decisions subject to certification as final

09F-0023-ROC · Registrar of Contractors · 2009-02-25

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 10, 2009 APPEARANCES: Richard Drake, Esq. represented Complainant Bashar Khalil. Jim Throgmorton appeared on behalf of Respondent Shaw Throgmorton General Contracting, L.L.C. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________ The question presented by this matter is whether Respondent Shaw Throgmorton General Contracting, L.L.C. (“Shaw”) is subject to discipline for acts or omissions in violation of A.R.S. § 32-1154(A). Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law and Recommended Order: FINDINGS OF FACT Shaw is the holder of a Class KB-01 license (No. 161832) issued by the Registrar of Contractors (“ROC”).[1] Jim Throgmorton is Shaw’s qualifying party and member.

On or about August 27, 2007, Complainant Bashar Khalil contracted with Shaw for the restoration of Mr. Khalil’s house due to losses caused by a fire. See Exhibit A. The contract price was $130,000.00. Id. The contract specified the following scope of work: Selective demolition of the remains of the original house and landscaping; Development of floor plans as may be required by the City of Glendale’s Building Department to secure a building permit; The existing concrete slab on grade shall be re-used. Demolition and replacement is not included; Provide framing, including roof trusses, asphalt roofing shingles, doors and windows and stucco exterior to match the look and level of performance of the original house, except that any required changes to meet current building codes will be included; Provide electrical wiring per current code requirements; Provide a base lighting package which will include six ceiling mounted fans with lights; Provide drywall with a spray textured finish painted “Noble” white; Provide finish flooring to match the look and level of performance as original to the house; and Cabinets and fixtures, including lighting and fans, shall be equal to the pre-built products available from Lowe’s Building Supply. Id. The terms of the contract further called for Mr. Khalil to pay $53,000.00 upon acceptance of the proposal. Id. On October 16, 2007, Mr. Khalil paid $10,000.00 to Shaw. See Exhibit B. On November 7, 2007, Mr. Khalil paid Shaw $40,000.00. Id. On October 17, 2007, Shaw obtained a demolition permit from the City of Glendale, and immediately thereafter performed the demolition work. See Exhibit D. Upon receipt of the $40,000.00 payment, Shaw produced a full set of plans for construction to be submitted to the City of Glendale for approval. The permit was issued on December 11, 2007. Id. Shaw also needed to obtain a deferred permit for the trusses, which was issued on January 30, 2007. Id. Mr. Khalil made two more payments to Shaw, one on February 25, 2008 in the amount of $31,000.00, and one on March 5, 2008 in the amount of $30,000.00. Id. Work proceeded through July 2, 2008, when Mr. Khalil terminated his contract with Shaw and had Shaw removed from the project by the Glendale Police Department. See Exhibit 2. On July 1, 2008, Mr. Khalil filed a complaint against Shaw with the ROC. Mr. Khalil’s complaint alleges in pertinent part, “failure of contractor to restore house to original condition with equal or better substitution of all materials.” 7. Upon termination of Shaw, Mr. Khalil hired Bob Whaley as a construction project manager. Mr. Whaley is not a licensed contractor in the State of Arizona. Mr. Whaley has extensive construction experience from his days in the Army, as well as from work in various other states, as a laborer, supervisor, project manager, and estimator. Mr. Whaley testified on behalf of Mr. Khalil. Mr. Whaley visited the site on July 2, 2008, Shaw’s last day on the project. Mr. Whaley viewed the exterior of the home, and viewed the interior through windows. He did not actually enter the home. Mr. Whaley prepared an estimate for completion of the project for Mr. Khalil based upon his inspection and information obtained from Mr. Khalil. See Exhibit S. Mr. Whaley estimated the cost to complete the project to be $70,668.75. Id. Mr. Whaley testified that it will cost $6,500.00 to perform the landscaping, however, landscaping was not included within Shaw’s scope of work. See Exhibit A. Mr. Whaley estimated a cost of $7,560.00 for the lighting package based upon Mr. Khalil’s desire to have a $3,000.00 to $4,000.00 chandelier, when Shaw’s contract only included a base lighting package. Id. At hearing, Mr. Whaley revised his lighting estimate to $750.00. Mr. Whaley estimated an additional $1,850.00 for electrical, yet at hearing, he acknowledged that there may be no cost incurred upon an electrical inspection. Mr. Whaley estimated an additional $2,700.00 for interior paint, however, acknowledged that the house was painted in the color specified in the contract. Mr. Whaley testified that Mr. Khalil advised him that he preferred a different paint color. Mr. Whaley also included in his estimate $2,750.00 for appliances that were not included in the contract, $1,750.00 for an arcadia door that is not within the scope of the parties’ contract, testifying that Mr. Khalil “wanted a better door”. Mr. Whaley included $2,750.00 for granite countertops, when Mr. Khalil’s old countertops were laminate, and Shaw was only required to replace them “equal to the pre-built products . . .” Id. Mr. Whaley testified that the roof and roof jacks had been installed by Shaw, that the majority of the stucco installed was acceptable, and the interior doors were installed, contrary to his estimate. Mr. Whaley testified that only 50%-60% of the project was complete. The Administrative Law Judge finds Mr. Whaley’s testimony to lack credibility in that Mr. Whaley admittedly did not inspect the interior of the home, and produced an estimate for Mr. Khalil not based upon the scope of Mr. Khalil’s contract with Shaw, but based upon Mr. Khalil’s desire for substantial upgrades and work for which he did not contract. 8. Mr. Throgmorton testified that a completion date is not specified in the contract. Mr. Throgmorton further testified that at the outset of construction, Mr. Khalil told him that he wanted a third bathroom constructed. Mr. Throgmorton advised him that it would cost $13,000.00 plus overhead and profit for this addition. Mr. Khalil proposed to Mr. Throgmorton, that if he could secure another contract for a restoration project for a friend from church, Shaw would construct the third bathroom as a “finder’s fee”. Mr. Throgmorton further testified that he advised Mr. Khalil that if he could not secure the contract for his friend’s restoration project, that Mr. Khalil would have to pay $13,000.00 plus overhead and profit for the bathroom addition. Shaw drafted the plans to include the third bathroom addition and these were the plans that were approved by the City of Glendale. See Exhibit 1, plans dated December 2007. 9. Mr. Throgmorton further testified that a four week delay was caused because Mr. Khalil’s $40,000.00 check did not initially clear his account. As such, Shaw did not have the funds to pay the roofing contractor, and the roofing contractor would not perform without payment. The lack of funds caused the roofing contractor to perform on other projects, and could not schedule Mr. Khalil’s project until four weeks later. Shaw could not perform the drywall or stucco work before the roof was constructed. Further, Shaw could not complete the framing without the approval of the truss plans, and those were not approved by the City of Glendale until January 30, 2008. At that point the trusses needed to be ordered, fabricated, delivered, and installed. The rough plumbing is complete and has passed city inspection, the electrical is complete, as well as data and telephone, the roof is complete, the windows are installed, the drywall, texture and paint are complete, the doors are installed, the cabinets are installed, as well as the dishwasher. Mr. Throgmorton testified that the project is almost complete, with the exception of the finishes. 10. Mr. Throgmorton testified that in February 2008, after the third bathroom was constructed, and after he learned that Mr. Khalil’s friend did not accept Shaw’s bid, Mr. Throgmorton reminded Mr. Khalil was he needed to pay for the construction of the bathroom addition. Mr. Throgmorton testified that the parties’ relationship deteriorated after that conversation. Mr. Throgmorton locked the home for security reasons, as the fixtures were on site, as well as for his own security. Mr. Throgmorton performed much of the work himself, and he testified that Mr. Khalil had threatened him with physical violence, and that whenever Mr. Khalil visited the property, he was never alone. Mr. Throgmorton testified that Shaw closed its business office in March or April 2008 because the office manager was afraid for her safety, although the business continued to operate. 11. On July 2, 2008, after termination, Mr. Throgmorton sent a letter to Mr. Khalil delineating exactly what work remained to be completed. See Exhibit K. Mr. Throgmorton estimated the cost for completion to be $18,320.00, an amount less than what remained due on the contract price. Id. This amount did not include the cost for the bathroom addition. 12. Mr. Khalil had the property appraised on September 11, 2008. The appraiser estimated that the project was 50% to 55% complete, however, the appraiser erroneously indicated that the roof is not yet complete. See Exhibit T. Therefore, his estimate is inaccurate. 13. Mr. Khalil testified that he “never made an agreement to add the third bathroom”, and that he did not know of the additional cost for the bathroom until April 2008. Mr. Khalil first testified that he believed that Shaw constructed the additional bathroom as compensation for the project taking so long to complete. Then Mr. Khalil testified that “he does not know why [Shaw] built the third bathroom”. Mr. Khalil further testified that he believed that Shaw had abandoned the project. CONCLUSIONS OF LAW In this proceeding, Mr. Khalil bears the burden to prove, by a preponderance of the evidence, that Shaw is subject to discipline for violations of A.R.S. § 32-1154(A)(1), (A)(7), (A)(9), and/or (A)(15) as charged by the ROC in its September 19, 2008 Citation and Complaint. See Arizona Administrative Code R2-19-119. 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). The Administrative Law Judge concludes that Mr. Khalil met his burden of proof as to one of the ROC’s four charges. Under A.R.S. § 32-1154(A)(1), a contractor is subject to discipline for “abandonment of a contract or refusal to perform . . . without legal excuse for the abandonment or refusal.” The Administrative Law Judge concludes, based upon the credible evidence of record, that Mr. Khalil failed to establish that Shaw abandoned its contract or refused to perform without legal excuse. Shaw was working on the project when Mr. Khalil had Shaw removed from the project by the Glendale Police Department. Therefore, the Administrative Law Judge concludes that Shaw did not violate A.R.S. § 32-1154(A)(1). Under A.R.S. § 32-1154(A)(9), a contractor is subject to discipline for “failure . . . to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” The Administrative Law Judge concludes, based upon the credible evidence of record, that Mr. Khalil paid Shaw a total of $111,000.00 of the $130,000.00 contract price. Therefore, $19,000.00 remained for completion of the project. Further, the contract price did not include the addition of the third bathroom that Mr. Khalil was advised would cost $13,000.00 plus overhead and profit if Mr. Khalil did not secure his friend’s restoration project for Shaw. The Administrative Law Judge further concludes that it would have been unreasonable for Mr. Khalil to believe that Shaw constructed a bathroom addition at no charge, and that Mr. Khalil was aware of the agreement as the bathroom addition was included on the original plans submitted to and approved by the City of Glendale. Therefore, the Administrative Law Judge concludes that Shaw did not violate A.R.S. § 32- 1154(A)(9). Under A.R.S. § 32-1154(A)(15), a contractor is subject to discipline for “acting in the capacity of a contractor under any license issued under this chapter in a name other than as set forth upon the license.” Although Mr. Khalil did not address this alleged violation, he submitted into evidence a copy of the parties’ contract and letters written on Shaw’s letterhead. See Exhibits A, G, H, and I. These documents contain the heading “stgc Homes”, and Shaw’s contracting license is issued under the name “Shaw Throgmorton General Contracting, L.L.C.”. Therefore, the Administrative Law Judge concludes that Mr. Khalil established that Shaw is in violation of A.R.S. § 32-1154(A)(15). Under A.R.S. § 32-1154(A)(7), a contractor is subject to discipline for “the doing of a wrongful or fraudulent act . . . as a contractor resulting in another person being substantially injured.” The Administrative Law Judge concludes, based on the weight of the credible evidence presented at hearing, that Mr. Khalil failed to establish that Shaw committed wrongful or fraudulent acts that substantially injured him. Therefore, the Administrative Law Judge concludes that Shaw did not violate A.R.S. § 32-1154(A)(7). Based upon the above violation of the provisions of A.R.S. § 32- 1154(A), grounds exist to impose discipline against Shaw’s license. 9. Upon consideration of all of the facts and circumstances presented by this case, the Administrative Law Judge concludes that Shaw’s Class KB-01 license should be suspended for a period of one day. RECOMMENDED ORDER The Administrative Law Judge makes the following Recommended Order: Shaw’s Class KB-01 license (No. 161832) shall be suspended on the effective date of the Order entered in this matter for a period of one (1) day. 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 40 days from the date of that certification. Done this day, February 25, 2009.

______________________________________ Sondra J. Vanella Administrative Law Judge

Original transmitted by mail this ____ day of February, 2009, to:

William A. Mundell, Director Registrar of Contractors 3838 North Central Avenue Phoenix, AZ 85012

By ___________________________

----------------------- [1] A review of the ROC’s official records reveals that Shaw’s contracting license was suspended on February 1, 2009 for nonrenewal. Such suspended license status does not preclude this tribunal from conducting these administrative proceedings. 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