ALJDEC decisions subject to certification as final

09F-5924-ROC · Registrar of Contractors · 2010-03-11

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 2, 2010 at 8:00 a.m. APPEARANCES: Complainant Linda Greco appeared through Lawrence M. Lazzara, Jr., Esq., Parker & Lazzara PLLC; Respondent Specialty Installations and Service Inc. appeared through Daniel B. Zebelman, Esq., Ridenour Hienton & Lewis PLLC. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On April 26, 2004, the Registrar of Contractors issued License No. ROC195134, Class C-63 for residential appliances to Respondent Specialty Installations and Service Inc., a corporation. Patrick Lyn Parnell is the qualifying party, president, and only person listed on Respondent’s license. On May 15, 2009, the Registrar received a complaint from Complainant Linda J. Greco that, on March 12, 2008, Respondent had entered into a verbal contract to remodel her master bedroom and master bedroom closet, to install a steam shower and tub, and to install shelving, walls, and tiles for a contract price of $17,721.93, which Ms. Greco still owed. Ms. Greco specifically complained that Respondent had contracted beyond the scope of its C-63 license, that it had abandoned the project, that it had installed the master bathroom tub too high, that it had installed the wall tiles defectively, that the master bedroom closet had been defectively remodeled, because it did not provide additional closet space, and that Respondent had defectively installed carpet in the master bedroom. The Registrar referred the complaint to Respondent for its immediate attention. The Registrar’s Inspector Mark Alyea performed a jobsite inspection and, on July 11, 2009, issued a Corrective Work Order (“CWO”) to Respondent, directing it within fifteen days to do the following: Contractor to correct by appropriate means the following.

1. The whirlpool bathtub in the master bath, should be installed per 2006 I.R.C. section P 2720.4, pg. 435 manufacturers instructions. 2. The chips in the floor tile in the master bath. 3. The deco tile in the shower, at hinge side of the glass door. 4. The master closet is not a walk in type, like it was proposed.

No action required by the contractor of the following.

1. The uneven shower wall tile and the bathtub were corrected by a friend of the complainants. 2. As an R.O.C. inspector I do not have the authority over the contractor on drinking, smoking and padding of hours.

On June 12, 2009, the Registrar received Complainant’s attorney’s request for hearing. On October 27, 2009, the Registrar issued a Citation and Complaint against Respondent’s license, charging violations of A.R.S. § 32-1154(A)(1), (9), (17), (23), (3) (namely A.A.C. R4-9-108), and (13) (namely A.R.S. § 32- 1124(B)). Respondent’s attorney timely answered the complaint, denying any statutory violations and affirmatively alleging that Respondent had not worked for Complainant. Instead, Complainant had employed Mr. Parnell on an hourly basis. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule and to conduct a fair hearing. A hearing was held on March 2, 2010. Inspector Alyea testified. Complainants presented the testimony of three witnesses: (1) Complainant Ms. Greco; (2) Scott Lillard, who is Complainant’s fiancé and also lives in the house; and (3) Scott Warga, the qualifying party and managing member of A C S I American Construction Specialists & Investigations LLC (“A C S I”), License No. ROC216772, Class KB-02.[1] Complainants submitted 12 exhibits. Respondent presented the testimony of its qualifying party and president, Mr. Parnell. Respondent also submitted two exhibits. Additional Evidence The Contract and Its Aftermath After Respondent installed appliances for Complainant, she requested references for contractors to remodel her master bedroom, master bathroom, and master closet. Complainant did not hire any of the contractors to whom Mr. Parnell had referred her. Because Respondent’s work was slow, Mr. Parnell testified that he offered to provide himself and other of Respondent’s employees to perform remodeling work at a rate of $40/man/hour. Complainant testified that Mr. Parnell told her that, because Respondent had just gotten its license and work was slow, it would charge her one-half of its usual charge for an hourly rate. Complainant testified that Mr. Parnell never told her that Respondent was not properly licensed to do remodeling work. Complainant did not hire an architect or design professional. No plans or specifications for the remodel were ever prepared. Mr. Parnell credibly testified that the project was designed by Complainant and Mr. Lillard. Respondent started the remodeling work in August 2008, mostly working evenings and weekends. Mr. Parnell testified that, because his work was intermittent, he did not intend to present invoices to Complainant until the remodeling work was complete. In February 2009, Complainant asked for an invoice. On February 24, 2009, Respondent provided an invoice to Complainant in the amount of $16,980.00 for various specifically described items of work. The invoice showed Respondent’s name but did not show Respondent’s license number, preceded by the acronym “ROC.” Complainant was shocked at the amount of the invoice. Complainant did not ever pay any amount of money to Respondent. On April 24, 2009, Respondent filed a civil complaint against Complainant for breach of contract and unjust enrichment in Maricopa County Superior Court Case No. CV2009-013090. The complaint was later amended to include Mr. Parnell rather than Respondent as party plaintiff and to include a claim for failure to pay wages and for treble damages. On July 21, 2009, the Honorable J. Kenneth Mangum issued a detailed minute entry in Case No. CV2009-013090, in which he granted Ms. Greco’s motion to dismiss the complaint under A.R.S. § 32-1153 because Respondent and Mr. Parnell lacked the proper license to perform the work for which it sought payment. Mr. Warga of A C S I inspected the property on October 22 and December 18, 2009 and prepared a report in which he opined that all of the work that Respondent performed was so deficient that it would need to be demolished and replaced, at a total estimated cost of $42,614.86. Mr. Warga’s estimate was not itemized and included many items that were not part of Complainant’s complaint to the Registrar, including that the walls were out of plumb in the closet, that the tile grout was improperly installed, that the floor tiles had been installed out of plumb, and that brown or rust colored water came out of the shower fixtures. Mr. Parnell denied performing some of the work. In addition, Mr. Warga’s estimate was based on the floor tile being natural stone and that tiles would have to be removed and completely replaced because it was no longer possible to match the natural stone. Inspector Alyea and Mr. Parnell testified that the floor tiles were ceramic porcelain. The Specific Workmanship Deficiencies Inspector Alyea performed a prehearing jobsite inspection shortly before the hearing in this matter, on February 26, 2010. The Whirlpool Bathtub (CWO Item #1) Inspector Alyea testified that Respondent had installed the whirlpool tub 29” or 30” above the floor, which he felt presented a safety hazard when a bather stepped from the tub onto the tile floor. The IRC Code Book requires a contractor to install tubs per the manufacturer’s instructions. Although Inspector Alyea was not provided with the manufacturer’s instructions, he felt that the manufacturer more likely than not would have required a step due to the height of the tub. Mr. Parnell testified that Complainant had requested that the tub be set to maximize horizontal space for “knickknacks” and that the tub be set at the level of a window sill. Complainant and Mr. Lillard had already purchased the tub, which was a display model, when Respondent began the project. Complainant testified that Mr. Parnell selected the height of the tub. Respondent had all the booklets for the fixtures used in the remodel. The Chips in the Floor Tile in the Master Bath (CWO Item #2) After Respondent left the jobsite in February 2009, Complainant hired plumbers, tile setters, and carpet layers to perform additional work on the project. In the bathroom, all tiles was removed and replaced on the vanities and in the shower. The faucets for the master bathroom plumbing fixtures were installed. Inspector Alyea testified that, at the May 29, 2009 jobsite inspection, Complainant showed him two places where the porcelain tile showed ¼” square chips, one in front of the vanity and the other in front of the closet door. At the February 26, 2010, prehearing inspection, Complainant showed him another chipped tile in the master bath toilet area. Inspector Alyea testified that he did know whether Respondent had caused the three chips in the porcelain tile floor. Respondent denied having caused the chips. The Deco Tile in the Shower (CWO Item #3) Inspector Alyea testified that the deco tile had been corrected by another at the time of the prehearing inspection. The Master Closet (CWO Item #4) Originally, Complainant’s master bathroom and master bathroom both had shallow closets with sliding doors to access the length of the closets, which had rods on which clothes could be hung, with a shelf above the rod. Complainant wanted more storage space in her master bedroom closet. Respondent removed the wall between the master bedroom and master bathroom closets. Respondent also removed plant shelves in the master bedroom and master bathroom to open up the ceiling of the closet up to a height of approximately 14’. To create more wall space for Complainant’s artwork in the master bedroom, Respondent removed both sliding doors and installed a single door to access the larger closet through the bedroom. Inspector Alyea testified that the closet that Respondent made was a “step-in closet,” not a walk-in closet. Complainant told him that Respondent had contracted to make a walk-in closet. There is not enough space available in Complainant’s house to make a true walk-in closet off her master bedroom or bathroom. There is also not enough space in the closet to install a ladder to reach the higher shelves in the closet. Mr. Parnell testified that, although he had designed a pull-down storage system, Mr. Lillard had selected and installed a rack system. Photographs of the interior of the closet show that it is crammed full of clothing and other stored items. Complainant argued that the height of the shelves presented a safety hazard if she tried to remove large items from those shelves. Complainant argued that she had less storage space than she had had before the remodel. Mr. Warga recommended that wood mirror sliding doors be reinstalled in the openings in the master bedroom and master bathroom that Respondent had closed to allow access to the closet from both the bedroom and bathroom. No evidence was presented on defective carpet installation in the master bedroom. Mr. Parnell denied having installed carpet in the master bedroom. The Registrar’s record shows that Respondent’s license is current and in good standing. This appears to be the only complaint pending against the license. CONCLUSIONS OF LAW The matter lies within the Registrar’s jurisdiction.[2] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[3] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[4] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[5] A preponderance of the evidence is “[t]he greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.”[6] Complainant has borne her burden to establish that Respondent violated A.R.S. §§ 32-1154 (13) and 32-1124(B)[7] when it failed to put its license number, preceded by the acronym “ROC,” on the invoice that it submitted to her on February 24, 2009. Judge Mangum’s July 21, 2009 minute entry order in Maricopa County Superior Court Case No. CV2009-013090 established that Respondent acted as a contractor and that it contracted beyond the scope of its C-63[8] license when it undertook and performed remodeling work at Complainant’s house. Complainant therefore has borne her burden to establish that Respondent violated A.R.S. § 32-1154(A)(17)[9] in the remodeling work it did at her house. Complainants did not establish that Respondent caused the chips in the porcelain tile floor. It appears that a true walk-in closet cannot be constructed in the area that Complaint selected and that any problems in the “step-in” closet that Respondent constructed are due to Complainant’s design rather than Respondent’s execution of the design. Complainant has established that Respondent violated A.R.S. § 32- 1154(A)(3)[10] and (23)[11] in the height that it installed the whirlpool tub. Respondent’s C-63 license does not, however, allow it to remedy this violation directly or through others. Because Complainant has not established that Respondent ever contracted to complete the remodeling job for any specific amount and because Complainant has not paid anything to Respondent, she has not borne her burden to establish that Respondent failed to complete the project for the price stated in the contract in violation of A.R.S. § 32-1154(A)(9).[12] Because Respondent never submitted a bid or proposal for the remodeling job, Complainant terminated Respondent from the job, and, as noted above, Respondent cannot legally perform the remodeling project in any event, Complainant has not borne her burden to establish that Respondent abandoned the project in violation A.R.S. § 32-1154(A)(1).[13] Complainant finally has not borne her burden to establish that she is entitled to restitution under A.R.S. § 32-1156.01 in any amount. RECOMMENDED ORDER In view of the foregoing, on the effective date of the Registrar’s final order, it is recommended that the Registrar suspend License No. ROC195134, Class C-63 previously issued to Respondent Specialty Installations and Service Inc. for a period of 30 days. During this time, Complainant may make a claim to the Residential Contractors’ Recovery Fund under A.R.S. § 32-1132(A) for the cost to pay an appropriately licensed contractor to reinstall the whirlpool tub at a safe height or to install a step to the whirlpool tub. It is further recommended that, in addition to any license suspension that may result from this matter, Respondent’s Class C-14 license be placed on disciplinary probation for a period of 180 days, commencing on the effective date of the Registrar’s order. It is further recommended that the Registrar order Respondent to pay the sum of $250.00 as a civil penalty pursuant to A.R.S. §32-1154(D). The failure by Respondent to pay the entire amount of the civil penalty, on or before thirty-five days following the effective date of the Registrar’s Order, shall result in the automatic suspension of Respondent’s contractor’s license, effective on such 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. It is further recommended that the Registrar should not reinstate Respondent’s license unless it provides proof in writing that it has placed its license number, preceded by the acronym “ROC,” on all proposal and bid forms, business cards, stationery, invoices, and any other document used in its contracting business. If the Director of the Office of Administrative Hearings certifies this Administrative Law Judge Decision, the effective date of the order will be forty days from the date of certification. Done this day, March 11, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] According to the Registrar’s record, on the day before the hearing, A C S I’s license had been administratively suspended for nonrenewal. Neither Mr. Warga, the parties, nor the attorneys appeared to have been aware of the suspension. [2] See A.R.S. § 32-1101 et seq. [3] See A.R.S. § 41-1092.07(G)(2); A.A.C. R2-19-119(A) and (B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). [4] See A.A.C. R2-19-119(B)(2). [5] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [6] Black’s Law Dictionary at page 1220 (8th ed. 1999). [7] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure in any material respect to comply with this chapter.” The specific statute violated is A.R.S. § 32-1124(B), which requires that licensed contractors to include their license number, which “shall be preceded by the acronym ‘ROC,’” on “all written bids submitted by the license and . . . on all advertising, loan forms, lending institution forms, letterheads and other documents used by the licensee in the conduct of business regulated by this chapter.” [8] According to A.A.C. R4-9-103, a C-63 license allows “[i]nstallation and repair of appliances. Included is the connection of a mobile home to existing gas, plumbing, and electrical services.” [9] This statutory subsection includes among the grounds for suspension, revocation, and other disciplinary action against a contractor’s license “[k]nowingly contracting beyond the scope of the license or licenses of the licensee.” [10] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[v]iolation of any rule adopted by the registrar.” The rule violated here was A.A.C. R4-9-108, which requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” [11] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.” [12] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.” [13] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.”

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