ALJDEC decisions subject to certification as final

2009A-1476816-ROC · Registrar of Contractors · 2010-09-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 23, 2010 at 10:00 a.m. APPEARANCES: Complainant Paul Randall appeared on his own behalf; Respondent Arizona Barn Constructors, L.L.C. appeared through Roy Johnson, its managing member and qualifying party. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On October 8, 2004, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC200672, Class B for residential general contracting to Respondent Arizona Barn Constructors, L.L.C. On March 30, 2009, the Registrar’s Flagstaff office received a complaint against Respondent from Complainant Paul Randall regarding Respondent’s construction of Complainant’s house at 183 Sunset Ridge in Happy Jack, Arizona. Complainant alleged that Respondent had committed two general categories of misconduct. First, Complainant alleged that Respondent had demonstrated that it lacked “the financial wherewithal” to complete the project on time and within budget. Second, Complainant alleged that specific items of Respondent’s work were poorly constructed, violated applicable code, or were beyond the scope of its license. Complainant requested in the complaint that the Registrar order Respondent to pay Complainant for his claimed monetary losses resulting from Respondent’s alleged lack of financial wherewithal and poor workmanship that Complainant calculated to be $23,273.55. The complaint was assigned to the Registrar’s inspector, Mark Schweiger. On April 14, 2009, Inspector Schweiger performed a jobsite inspection. On April 20, 2009, Inspector Schweiger issued a Corrective Work Order (“CWO”) to Respondent, directing it within fifteen days to correct by appropriate means the electrical work that it had performed that was beyond the scope of its license. The CWO stated that the “workmanship issues were corrected by the homeowner prior to the jobsite inspection” and that the financial issues in the complaint “appear[ed] to be beyond the authority of this inspector to resolve.” On May 20, 2009, the Registrar received from Respondent a report from Chris Connolly, Inc., doing business as Chris Connolly Electric, License No. ROC138415, Class C-11 for residential electrical contracting (“Chris Connolly Electric”). According to the report, Chris Connolly Electric inspected the house and determined that all aspects of Respondent’s electrical work complied with applicable code requirements and industry standards, except that Chris Connolly Electric had found and corrected an open ground and neutral in an outlet in the garage. The report concluded that Complainant’s house “appear[ed] to be wired per code and of sound and safe condition.” Over the next several months, both parties provided information and documents to the Registrar regarding the issue of whether Respondent owed monies to Complainant for work that he had paid others to complete, or whether Complainant owed monies to Respondent for upgrades that it had made to the house. When the parties were unable to resolve their differences, Inspector Schweiger referred the complaint to the Registrar’s Legal Department. On September 17, 2009, the Registrar issued a Citation and Complaint against Respondent, charging A.R.S. § 32-1154(A)(1), (2), (7), (11), (17), (23), and (3) (namely A.A.C. R4-9-108). On September 23, 2009, the Registrar received Respondent’s attorney’s written answer to the Citation and Complaint that denied any statutory violations and requested that the complaint be closed. On September 30, 2009, the Registrar received Complainant’s response to the written answer that argued that Respondent’s denial and request for closure were not reasonable in light of all the detailed information that Complainant had provided. On October 23, 2009, the Registrar received a second letter from Complainant that provided additional documents and stated that “nothing has been done by [Respondent] to satisfy any of [Complainant’s] claims in this matter.” On May 20, 2010, the Registrar received Complainant’s request for hearing so that he could pursue his complaint “to a just conclusion.” On June 24, 2010, the Registrar issued an order denying Respondent’s motion to dismiss. The Registrar referred the matter to the Office of Administrative Hearings, an independent state agency, to schedule and conduct a fair hearing. A hearing was held on August 23, 2010. Complainant testified and submitted seven exhibits. Respondent’s qualifying party and managing member, Roy Johnson, testified. Hearing Evidence On or about December 9, 2006, Respondent contracted to construct Complainant’s house for a fixed contract price of $233,076.00. The contract required any changes to the plans or contract terms to be in writing. Over the next two years, Respondent and its subcontractors performed work to construct the house. Complainant authorized his construction lender to release draws to Respondent. In September 2007, Mr. Johnson informed Complainant that Respondent faced financial difficulties that were unrelated to the project but that might prevent Respondent from completing the project. Complainant personally advanced $12,000.00 to Respondent. On August 18, 2008, Mr. Johnson and his wife signed a personal promissory note in which they promised to pay Complainant and his wife $12,500.00 plus 8% annual interest before November 15, 2008. As of the date of the hearing, Mr. Johnson and his wife have not paid the note. At Complainant’s request, Respondent upgraded certain features of the house from what was shown on the plans that were incorporated into the parties’ contract. These upgrades included increasing the height of the stem wall and piers to improve views from the house, adding two covered porches and a deck, adding additional insulation, changing the framing to add and move walls, upgrading a window, and installing electrical wiring for additional fixtures. No change order commemorated these upgrades, and Complainant did not pay Respondent any additional money for them. On January 15, 2009, Brian Buzzell, R.S. of the Coconino County Health Department inspected Complainant’s septic system. Mr. Buzzell informed the parties that the septic system failed final inspection because the pump lacked a quick disconnect, and the pier footings for one of the additional decks that Respondent had constructed at Complainant’s request were too close to the septic tank. A quick disconnect apparently was installed on the pump, although the record does not reflect by whom. Complainant paid $2,460.00 to Hook Engineering, Inc. to redesign the septic system to comply with Coconino County’s setback requirements. Complainant’s septic system passed final inspection, and a Certificate of Occupancy was issued for the house. Complainant submitted invoices from six subcontractors whom Respondent allegedly had failed to pay. Respondent disputed Complainant’s allegations either because no payment was due, Respondent had paid the subcontractor, or Complainant had contracted directly with the subcontractor. Complainant did not submit evidence that any subcontractor recorded a lien on his property or claimed nonpayment as of the date of the hearing. Mr. Johnson testified that after the Certificate of Occupancy was issued, Complainant, his family, and friends completed the house. Mr. Johnson testified that Respondent could not supervise completion because neither Complainant, his family, or friends were licensed contractors. According to the Registrar’s records, Respondent’s license is current and in good standing. No complaints have resulted in discipline against Respondent. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 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.”[5] Construction is not a perfect art and, generally, a contractor should be afforded an opportunity to complete a project or correct a code violation before the Registrar suspends, revokes, or otherwise disciplines its license. That did not happen here. Before Complained even filed the complaint, the septic system had passed inspection. Before Inspector Schweiger’s jobsite inspection, Complainant had arranged for others to complete the house. Because the code violation was corrected and Complainant did not allow Respondent an opportunity to complete the house, Complainant has not established that Respondent violated A.R.S. § 32- 1154(A)(1),[6] (2),[7] (7),[8] or (3).[9] Complainant did not establish that Respondent failed to pay any monies due to any supplier or subcontractor for materials furnished or services rendered in the construction of Complainant’s house. Therefore, Complainant failed to establish that Respondent violated A.R.S. § 32- 1154(A)(11).[10] With respect to the other monies that Complainant seeks from Respondent, the legislature has not empowered the Registrar to adjudicate or to award money damages.[11] Mr. Johnson and his wife signed the promissory note as individuals, not on behalf of Respondent, and Respondent performed at least some additional work for which it was not paid.[12] The parties may resolve their claims against each for money in a court of competent civil jurisdiction. Complainant has established that Respondent performed electrical work that was beyond the scope of its general contracting license.[13] Therefore, Complainant has established that Respondent violated A.R.S. § 32- 1154(A)(17).[14] Respondent complied with the CWO by hiring Chris Connolly Electric to inspect and to repair as necessary the electrical work that Respondent performed at Complainant’s house. Chris Connolly Electric made one repair and certified that the remainder of Respondent’s work complied with code and industry standards. Therefore, Complainant did not establish that Respondent violated A.R.S. § 32-1154(A)(23),[15] (2), (3), or (7) with respect to its electrical work on the house. RECOMMENDED ORDER As a result of the contracting law violation that Complainant Paul Randall established in this matter, it is recommended that the Registrar place Respondent Arizona Barn Constructors, L.L.C.’s License No. ROC200672, Class B on disciplinary probation for a period of thirty days, commencing on the effective date of the Registrar’s order. 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, September 8, 2010. /s/ Diane Mihalsky Administrative Law Judge Transmitted electronically to: William A. Mundell, Director Registrar of Contractors ----------------------- [1] See 32-1101 et seq. [2] 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). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] 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.” [7] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[d]eparture from or disregard of plans or specifications or any building codes of any state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner’s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.” [8] This statutory subsection formerly included among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[t]he doing of a wrongful or fraudulent act by the licensee as a contractor resulting in another person being substantially injured.” The former statute applies to this complaint. [9] 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 cited 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.” [10] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor . . . .” [11] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984). [12] The Registrar’s Citation and Complaint did not charge a violation of A.R.S. § 32-1154(A)(9), which 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.” For the reasons noted above, however, Complainant did not establish that Respondent violated A.R.S. § 32- 1154(A)(9). [13] Respondent’s Class B license allowed it to construct “all or any part of a residential structure or appurtenance, except for electrical, plumbing, air conditioning systems, boilers, swimming pools, spas, and roofing (except shingles and shakes) which must be subcontracted to any appropriately licensed contractor.” A.A.C. R4-9-103 (emphasis added). [14] 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.” [15] 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.”

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