ALJDEC decisions subject to certification as final

2009A-7090975-ROC · Registrar of Contractors · 2010-09-27

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: September 20, 2010 APPEARANCES: D. Jeffrey Craven, Esq. represented Complainant Alfred Merle Hunt. Dwayne Nahorodny appeared on behalf of Respondent Nahorodny Architectural Design and Construction, L.L.C. ADMINISTRATIVE LAW JUDGE: Sondra J. Vanella _____________________________________________________________________

The question presented by this matter is whether Complainant Alfred Merle Hunt is entitled to an award and payment from the Residential Contractors’ Recovery Fund pursuant to A.R.S. § 32-1132(A). Based on the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order to the Director of the Registrar of Contractors. FINDINGS OF FACT 1. Respondent Nahorodny Architectural Design and Construction, L.L.C. (“NADC”) is the holder of a Class B- license (No. 223377) issued by the Registrar of Contractors (“ROC”).[1] Dwayne Nahorodny is NADC’s sole member and qualifying party. 2. On March 26, 2007, Mr. Hunt entered into a contract with NADC for NADC to convert an existing carport into a garage, to construct an addition onto Mr. Hunt’s home, and perform some remodeling to the existing great room. See Exhibit 1C. The contract price was $78,997.00. Id. Mr. Hunt paid NADC a deposit in the amount of $26,100.00. 3. On November 1, 2007, Mr. Hunt filed a complaint against NADC with the ROC. Mr. Hunt generally alleged that NADC performed deficient work, failed to adequately staff the project, and departed from plans and specifications. 4. On March 28, 2008, the ROC issued a Citation and Complaint in Case No. M08-0796, charging NADC with violations of A.R.S. § 32-1154(A)(2), (A)(3), (A)(7) and (A)(11). 5. NADC failed to file a written Answer to the Citation and Complaint. Consequently, on July 18, 2008, the ROC issued a default Decision and Order concluding that NADC violated the charged provisions of this State’s contracting laws, and ordering that NADC’s Class B- license be suspended until the ROC received proof that NADC “appropriately rectified the issues involved and detailed in the Complaint . . .” The ROC’s Order indicated that the Order would become effective on August 27, 2008, and that any request for rehearing must be filed on or before August 22, 2008. The Order also set forth that any appeal to the Superior Court must be filed and a Stay Order secured on or before August 27, 2008. 6. On August 22, 2008, NADC timely filed a Request for Rehearing. 7. On September 9, 2008, Mr. Hunt, through counsel, filed a response in opposition to the Request for Rehearing. 8. On February 11, 2009, the ROC issued an Order Denying Petition for Rehearing. 9. On May 11, 2009, Mr. Hunt, through counsel, filed a claim with the ROC seeking payment from the Residential Contractors’ Recovery Fund (the “Fund”) in the amount of $109,119.29. 10. The ROC investigated Mr. Hunt’s claim against the Fund and pursuant to its June 25, 2010 Notice of Claim for Administrative Payout, recommended a payout in the amount of $12,211.74. 11. On July 12, 2010, NADC requested a hearing regarding Mr. Hunt’s claim, and this matter was thereafter set for hearing before the Office of Administrative Hearings, an independent state agency. 12. At hearing, ROC Inspector Beau Cruz testified consistently with the findings contained in his Recovery Fund Inspection Report. On September 2, 2009, Inspector Cruz conducted a Recovery Fund jobsite inspection. Inspector Cruz found that the garage was substantially complete with some exceptions, and that the value of the work completed was $6,055.90. See Exhibit 3. Inspector Cruz also found that NADC had completed the plans and permitting for the addition, and that the value for these services was $2,832.86. Id. Inspector Cruz found that the total value of the work performed by NADC, including the plans for the project, was $8,888.26. Id. 13. Inspector Cruz concluded that the cost to complete the garage would be $1,900.00, comprised of the following: i) drywall repairs in the amount of $275.00; ii) complete electrical in the amount of $900.00; iii) concrete patch for footing in the amount of $250.00; iv) interior painting in the amount of $250.00; and v) trim in the amount of $225.00. Id. 14. Inspector Cruz deducted the value of the work performed, as well as the $5,000.00 received by Mr. Hunt from NADC’s bonding company, from the $26,100.00 deposit Mr. Hunt paid to NADC, and recommended a payout in the amount of $12,211.74. 15. NADC essentially contested the amount of the recommended payout for two reasons. First, NADC disagreed with Inspector Cruz’s calculation of what he believed it would cost to complete the garage because the parties’ contract specifies that “all demo work, sheetrock, finishing, roofing and paint to be done by others unless noted or included in future charge orders.” See Exhibit 1C. As such, Mr. Nahorodny specifically contested the costs attributed to drywall repairs, the concrete patch, the interior painting, and the trim. However, NADC submitted to Mr. Hunt a Working Budget for the carport to garage project dated June 1, 2007, approximately two months after the contract was executed. See Exhibit 2. The Working Budget specifies that NADC is to “trim out all walls.” Id. Further, Mr. Hunt credibly testified that the drywall repairs are attributable to one of NADC’s employee’s mistakenly putting his foot through the drywall. 16. The second aspect that NADC contested regarding the amount of the recommended payout was the cost of preparing the revised electrical plans prepared by Mr. Nahorodny. Mr. Nahorodny testified that Mr. Hunt requested that NADC obtain a bid from an electrical subcontractor to re- wire the entire house and bring it up to code, as the home is an older home constructed under previous electrical code requirements. Mr. Nahorodny testified that these revisions substantially added to the cost of the project in the amount of $2,455.00. Mr. Nahorodny testified that he spent three to four 18-hour days in May 2007, and two 18-hour days in June 2007, making revisions to the plans that he testified were necessary in order for NADC to obtain bids for the re-wiring of the home. Both Mr. Hunt, and his roommate, D. Daniel Hollingshead, who was very involved in the project, credibly testified that when Mr. Hunt requested a bid for the additional electrical work, Mr. Nahorodny did not advise that there would be an extra charge to prepare plans in order to obtain a bid. Mr. Hollingshead testified that the reason Mr. Nahorodny had to repeatedly revise the plans was because the plans he prepared did not reflect Mr. Hunt’s specifications as to the placement of outlets and switches. As such, the plans needed to be revised several times. Mr. Hunt testified that he believed such work was encompassed in the $3,500.00 design fee provided for in the contract. The Administrative Law Judge finds this aspect of Mr. Hunt’s testimony to be disingenuous given that when the parties executed the contract, the re-wiring of the entire house was not contemplated, and as such, could not have been encompassed within the original design plans drafted by Mr. Nahorodny, and therefore, could not have been taken into account when NADC arrived at its contract price. However, notwithstanding such, Mr. Nahorodny did not provide any documentation regarding the alleged time he spent making the revisions, nor did he provide any evidence regarding the hourly rate he charges for his services. While NADC may be entitled to receive compensation for additional services rendered, based on the evidence presented at hearing, the Administrative Law Judge is unable to determine an amount, if any, that NADC may be entitled to receive as an offset.[2] 17. Based on the evidence presented, the Administrative Law Judge finds that Mr. Hunt is entitled to receive an award from the Fund in the amount of $12,211.74. CONCLUSIONS OF LAW Under A.R.S. § 32-1132, the ROC is empowered to determine and award payment to Mr. Hunt from the Fund. Mr. Hunt meets all of the requirements of a “person injured” as that term is defined in A.R.S. § 32-1131(3). Pursuant to A.R.S. § 32-1132(A), “the residential contractors’ recovery fund is established, to be administered by the registrar, from which any person injured by an act, representation, transaction or conduct of a residential contractor licensed pursuant to this chapter that is in violation of this chapter or the rules adopted pursuant to this chapter may be awarded in . . . an amount of not more than thirty thousand dollars for damages sustained by the act, representation, transaction or conduct.” The weight of the credible evidence presented at hearing demonstrated that Mr. Hunt was injured as a result of NADC’s violations of this State’s contracting laws. Mr. Hunt is entitled to a payout from the Fund in the amount of $12,211.74. Based on the foregoing, Mr. Hunt should be awarded a total payout from the Fund in the amount of $12,211.74, all of which should be charged against NADC and/or persons named on NADC’s Class B- license as set forth in A.R.S. § 32-1139(B).

RECOMMENDED ORDER The Administrative Law Judge makes the following Recommended Order: On the effective date of the Order entered in this matter, the ROC shall commence and finalize payment procedures from the Fund to Alfred Merle Hunt in the amount of Twelve Thousand Two Hundred Eleven Dollars and Seventy-four Cents ($12,211.74). 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, September 27, 2010.

/s/ Sondra J. Vanella Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] A review of the ROC’s official records revealed that NADC’s contracting license was suspended on December 29, 2008, until compliance with the Order entered in Case Number 08-0007, and suspended on April 2, 2009, until compliance with the Order entered in Case Number M08-0796. Such suspended license status does not preclude this tribunal from conducting these administrative proceedings. A.R.S. § 32-1154(C).

[2] Nothing herein should be construed as precluding either party from filing a claim in a civil court of competent jurisdiction.

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