ALJDEC decisions subject to certification as final

2009A-1148985-ROC · Registrar of Contractors · 2010-11-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

REHEARING: November 3, 2010 APPEARANCES: Lenny and Irene Phillips appeared personally. G F M Development, L.L.C. did not appear. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Overview In October 12, 2008, Complainants’ filed a complaint involving a driveway which expert testimony has established is heaving and in need of repair. Complainants seek to hold Respondent, the contractor who constructed the driveway in 2003, liable for replacement. In late 2004 or early 2005,[1] Complainants filed a complaint against Respondent in Registrar Case No. P05-0145. As a result, Respondent was held liable for repair, not replacement, of that same driveway. In a later case, Complainants received a recovery fund payout for such repairs in Registrar Case No. RF07-0102. Subsequently, in Registrar Case No. P09-0115 filed in 2008, Complainants unsuccessfully alleged a complaint against DKP involving the remedial work to Complainants’ driveway performed by DKP. Based upon the evidence of record, the Administrative Law Judge finds that Complainants’ October 12, 2008 complaint in 2009-1148985 (formerly P09- 0114) is barred by the statute of limitations, lack of privity of contract, and the principles of res judicata and collateral estoppel, and makes the following Findings of Fact, Conclusions of Law, and Recommended Order:

FINDINGS OF FACT 1. Lenny and Irene Phillips (“Complainants”) are the owners of a residence located at 1151 N. Needles Creek Drive, Show Low, Arizona. 2. G F M Development, L.L.C. (“Respondent”) is the holder of License No. 165622, a Class B- contracting license issued by the Registrar of Contractors (“Registrar”). Respondent constructed a concrete driveway at Complainants’ residence. 3. Complainants’ basic theory is that Respondent bears responsibility for the heaving of Complainant’s concrete driveway that requires removal and replacement. 4. At the hearing in the above-entitled matter,[2] Mr. Phillips candidly testified that there have been numerous administrative hearings related to Complainants’ concrete driveway. 5. Mr. Phillips testified that water accumulates in the driveway cracks then freezes in cold weather. Mr. Phillips’ concern about someone slipping on the icy driveways is legitimate. Statute of Limitations 6. DKP & Co. Concrete and Repair, L.L.C. (“DKP”) was a subcontractor hired to perform remedial work to cracks in Complainants’ driveway. 7. Legend Construction was a contractor that hired DKP to perform remedial work to cracks in Complainants’ driveway. The relationship, if any, between Legend Construction and Respondent is unclear from the evidence of record. 8. Complainants’ Exhibit C3 is the Written Answer to Citation and Complaint Case # P09-0115 filed by DKP in Case No. P09-0115, involving a Complaint by Complainants against DKP over the same Complaint items in the above-entitled matter. In that answer, DKP wrote, among other things, the following:”I was hired by Legend Construction to seal the control joints on the Phillips driveway and did the work on 10/3/06 according to my records.” 9. Complainants’ Complaint in the current matter states that the completion date of DKP’s work was “10/17/2006.” 10. The weight of evidence supports Dip’s records that it performed remedial work to cracks in Complainants’ driveway on October 3, 2006. 11. DKP sent Legend Construction an invoice dated October 17, 2006, in the amount of $1,000.00 for the repairs to Complainants’ driveway. Legend Construction paid that invoice. 12. Assuming that there was some contractual relationship between Respondent and DKP via Legend Construction, Complainants filed their Complaint against Respondent more than two years from the date DKP performed its remedial repairs to Complainants’ concrete driveway. Therefore, the Registrar lacks jurisdiction in this matter.

Issue of Privity of Contract between Respondent and DKP 13. Even if there were no statute of limitation issue with the Registrar, it is not clear from the evidence of record what, if any, relationship existed between Respondent and Legend Construction pertaining to the work performed by DKP on Complainants’ driveway. 14. By letter received by the Registrar on January 27, 2009, Respondent’s member and qualifying party, Greg McIntyre, responded to the Complaint. Among other things, Mr. McIntyre wrote the following: A separate licensed contractor was hired to do the corrective work. The corrective work was inspected by the ROC and was approved! Mr. Phillips continues to state that GFM somehow has some ownership in Legend Construction. If you look at your records, you will see who the owners are. There is no “aka” as stated in the complaint and per section 5 of the complaint form. GFM did not hire DKP&Co Concrete Repair which is clearly shown on the Exhibit 1A. I believe he was paid by Legend Construction.

I read the complaint form section 4 and 5 and wonder if this was read at all. The complaint states “bottom apron panels that have already been resolved unsatisfactorily in a prior complaint.” The complainant took the recovery fund money![3]

15. A review of the Registrar’s official records reveals that Respondent’s License No. 165622 was revoked by the Registrar on October 13, 2006, in Case No. P05-0200. The revocation date of Respondent’s contracting license is prior to the date of October 17, 2006, the date Complainants contend was the date DKP performed remedial work to the cracks in their driveway. Respondent would not have been permitted to hire a contractor to perform such work after the revocation of its contracting license.

Res Judicata and Collateral Estoppel 16. Even if the statute of limitations bar and privity of contract issue between Respondent and DKP did not exist, Complainants are barred by considerations of res judicata and collateral estoppel from seeking relief from the Registrar against Respondent in this matter. 17. The issue of Complainants’ driveway was addressed in Registrar Case No. P05-0145 and a Residential Contractors’ Recovery Fund claim for damages[4] that involved Complainants and Respondent. In those matters, the evidence of record determined that Respondent was responsible only for performing remedial work to cracks in Complainants’ driveway. The evidence of record did not support Complainants’ contention that the driveway needed to be removed and replaced. Those matters were not appealed to a civil court of competent jurisdiction and are now final actions. 18. At the rehearing in this matter, Inspector Coscia testified that he originally performed a jobsite inspection of Complainants’ driveway on December 23, 2008, in case No. P09-0115. Inspector Coscia opined that Complainants’ driveway had and continues to have heaving taking place that requires the driveway to be removed and replaced. 19. Respondent was not a party in Case No. P09-0115. 20. Respondent has only been previously determined to have been responsible for performing repairs to cracking in Complainants’ driveway. Respondent has never been determined to be responsible for removing and replacing Complainants’ driveway in those previous Registrar cases. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent. Pursuant to A.R.S. § 32-1154(C), the revocation of Respondent’s License No. 165622 does not deprive the Registrar “of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such license.” 2. A.R.S. § 32-1155(A) provides that “[u]pon the filing of a written complaint with the registrar charging a licensee with the commission, within two years prior to the date of the filing the complaint, of an act that is cause” for disciplinary action, the Registrar has the authority to investigate and conduct disciplinary proceedings against a licensee and to impose discipline upon the licensee for proven statutory and/or regulatory violations. The Registrar does not have the authority to impose discipline upon a licensee for the commission of an act occurring more than two years prior to the filing of the complaint. 3. Pursuant to A.A.C. R2-19-119(B), Complainants have the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(A). 4. “‛Under the doctrine of res judicata, a judgment on the merits in a prior suit involving the same parties or their privies bars a second suit based on the same cause of action.’”[5] 5. The doctrine of collateral estoppel[6] bars Complainant from relitigating the driveway issues previously litigated in Registrar Case Nos. P05-0145 and RF07-0102. 6. In the alternative, the evidence of record supports the conclusion that the acts alleged to have been committed by Complainant did not occur within two years prior to the date Complainants filed their Complaint in Case No. 2009-1148985. Therefore, the Registrar lacks jurisdiction to impose discipline upon Respondent’s contracting license pursuant to A.R.S. § 32-1155(A). 7. Complainants may be entitled to some civil damages in a judicial forum for Respondent’s poor workmanship or departure from industry standards in constructing Complainants’ driveway. But, based on the evidence that was presented at hearing, they are not entitled to any relief in this administrative forum. RECOMMENDED ORDER The Citation and Complaint in Case No. 2009-1148985 shall be dismissed on the effective date of the Order entered in this matter. 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, November 24, 2010.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The exact date could not be referenced in the available documentation, but the inspection conducted pursuant to the complaint was done in February 2005. [2] The Registrar initially issued a default Decision and Order in Case No. 2009-1148985. On September 16, 2010, the Registrar issued an Order Granting Request for Rehearing. The Registrar “determined that the Citation and Complaint was not properly served upon Respondent via certified mail to Respondent’s correct and complete address of record in accordance with statutory requirements.” [3] Registrar’s Residential Contractors’ Recover Fund Case No. RF07-0102. [4] See footnote 3. [5] Hawkins v. State of Arizona, Department of Economic Security, 183 Ariz. 100, 900 P.2d 1236, 1239 (App. 1995) (quoting Gilbert v. Board of Medical Examiners, 155 Ariz. 169, 174, 745 P.2d 617, 622 (App.1987)). [6] The Arizona Court of Appeals has held:

The doctrine of “collateral estoppel” is a doctrine of issue preclusion. It bars a party from relitigating an issue identical to one he has previously litigated to a determination on the merits in another action. The elements necessary to invoke collateral estoppel are: the issue is actually litigated in the previous proceeding, there is a full and fair opportunity to litigate the issue, resolution of such issue is essential to the decision, there is a valid and final decision on the merits, and there is a common identity of the parties.

Gilbert, 155 Ariz. at 169, 745 P.2d at 622 (quoted in Hawkins, 183 Ariz. At 103, 900 P.2d at 1239).

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