ALJDEC decisions subject to certification as final

2010A-13511974-ROC-com · Registrar of Contractors · 2011-12-19

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 28, 2011

APPEARANCES: Complainants appeared through Brenda Schwartz and were represented by attorney Adam Campbell, Rai & Barone, PC; Respondent was represented by attorney Barbara K. Berrett, Berrett & Taylor, LC, accompanied by Respondent’s President and Qualifying Party Jim Steg.

WITNESSES: Jim Dimond, ROC Inspector Barbara Schwartz Lance Guest, ITSA Contracting, LLC Jim Steg John Jozwick, Rider Levett Bucknall, Ltd

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

This matter was set by the Registrar of Contractors (“ROC”) as a compliance hearing to determine whether Respondent is in compliance with a September 16, 2010 Order issued by the ROC. That Order required Respondent to perform corrective work, required Respondent to pay restitution to Complainants by way of a credit, and required Respondent to pay a civil penalty. Respondent claims that it performed all of the work and complied with the entire Order. Complainant asserts that some work has been done but that other work remains incomplete and not up to workmanship standards. / / / / / /

Procedural Background On September 16, 2010, the ROC issued an Order adopting an August 10, 2010, Administrative Law Judge Decision that ordered Respondent to perform corrective work that properly complied with the terms and conditions of the written Corrective Work Order and the Addendum to the Corrective Work Order issued in this matter and that the Respondent has, as restitution, properly given the Complainants a credit for their expenses for causing the correction of the steam shower and the water damage in the Complainants’ master bathroom in the sum of $5,264.00 which will be deducted from any final amount due to the Respondent.[1]

Thereafter, a dispute as to compliance arose and a compliance hearing was ordered. The ROC’s Order Setting Compliance Hearing states that in late October 2010, Respondent filed a notice stating that all corrective work had been completed. A few days later, Complainants filed a notice stating that Respondent had not complied with the ROC Order. A compliance hearing was ordered as follows: At the Compliance Hearing, the parties’ [sic] may offer evidence and testimony as to whether or not Respondent has complied with the terms and conditions of the Registrar’s September 16, 2010 Order issued in this matter. If it is determined that Respondent has failed to fully comply with the Registrar’s written directives, absent unreasonable interference or denial of access by Complainant, then Respondent’s KB- 2.225805-D License shall be subject to the immediate imposition of discipline. If it is determined that Complainant has unreasonably interfered or denied access to Respondent or its representatives in their attempt to comply with the Registrar’s September 16th Order, then Respondent’s license shall not be disciplined and the matter shall be closed as Respondent having fully complied with the terms of the Registrar’s Order.

The parties appeared for hearing. Complainants stated that they were presenting 14 items that had not been corrected,[2] and that other items were the subject of court litigation and would not be presented at the compliance hearing. Complainants stated that they do not want any further corrective work done by Respondent. They are seeking to show non- compliance so that the license may be disciplined. They also requested that the restitution ordered as a credit in the Order be changed to be payable to Complainants. Complainants do not claim that Respondent failed to pay the civil penalty. Respondent maintains that it properly performed all corrective work and that any problems existing at this time are due to other contracting work done by Complainants or at their request, but in any event are not the responsibility of Respondent. Modification of Restitution Award Denied Complainants request to modify the Order to change the restitution award from a credit to an actual payment was denied at the hearing on the record for the reasons that the award is part of a final order that was not appealed and because Complainants have not alleged non-compliance with the restitution part of the Order. Introduction This tribunal entered the complaint file received from the ROC into the record, which includes documentation relating to the underlying complaint and relating to the question of compliance with the Order. In addition, Complainants submitted Exhibits C1 through C6, which were admitted. Respondent submitted Exhibits R1 and R2, which were also admitted into evidence. The parties presented testimony from the witnesses listed above. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Decision finding that Respondent is not in compliance. FINDINGS OF FACT 1. Respondent is the holder of a license KB-2.225805-D, a general dual (residential and small commercial) contracting license issued by the ROC. The license authorizes Respondent to act as a general contractor for residential and small commercial projects. Jim Steg is the Qualifying Party on the license. The license has not been suspended due to this matter. 2. The original CWO issued in this matter contained over 110 items, some for which no action was ordered and others for which corrective work was ordered. An Addendum was also issued containing an additional seven items, with three ordered for correction. From those CWOs, Complainants hired consultant/inspector Lance Guest who created a list of 17 items that he found were not corrected in late October 2010.[3] Three of those items (12, 16, and 17) relate to contract disputes that Complainants are pursuing in civil court and not here. The remaining 14 items were presented by Complainants and defended by Respondent at the hearing, and are addressed herein. 3. In this case, three experts have inspected the items and reached conclusions as to compliance. All three testified as to those conclusions. ROC Inspector Jim Dimond inspected the items on November 23, 2011, with both Complainants and Respondent and their experts present. He then testified about his conclusions at the hearing on November 28, 2011. 4. Complainants’ expert is Lance Guest of ITSA Contracting, LLC. He is a general contractor who has been in the construction industry for 20 years. He authored a report with his findings on May 6, 2011.[4] He testified in support of those findings at the hearing. 5. Respondent’s independent expert is John Jozwick. He is the Senior Vice President and General Counsel for Rider Levett Bucknall, Ltd, a consulting firm. He has extensive experience in construction. He inspected the items on April 22, 2011, and authored a report on April 24, 2011, and a supplemental report on May 26, 2011.[5] 6. Barbara Schwartz credibly testified that no other work was done in the house that could have affected the workmanship of the corrective work that Respondent performed. 7. Jim Steg, Respondent’s Qualifying Party, also testified about the items. For many of the items, he testified that Complainants had ordered him to make the repair in a certain manner or had accepted the repair that Respondent made. However, none of these alleged statements and acceptances is documented. Therefore, the evidence is not adequate to support the testimony of Jim Steg regarding alleged approvals of the corrective work. 8. The Administrative Law Judge has considered the documentation and testimony of all the witnesses, including the three experts, and makes the following findings, separately stated below by item, that Respondent is out of compliance with the prior order on 11 of the 14 items presented at the compliance hearing.

Item 1 -- Wrought Iron at Front of Home[6] 9. The CWO ordered Respondent to provide more stabilizers, or “feet,” for the wrought iron fencing on top of the front outdoor wall, and ordered that the black paint be corrected to match. Inspector Dimond found that the stucco on the wall had been damaged when Respondent installed the stabilizers but that the paint matched adequately considering that time has faded the original paint. Jozwick did not see evidence of stucco damage by Respondent, but characterized the areas as “weathering.” This tribunal finds Inspector Dimond’s testimony to be credible and, therefore, finds that the item was not completed. Item 2 -- Bowed Wall at Master Bathroom Behind Vanity[7] 10. Respondent was ordered to repair a bowed wall behind a vanity in the master bathroom. Inspector Dimond testified that the bow has been repaired but the color of the replacement countertop does not match the other two countertops in the bathroom and that the difference is unacceptable. Jim Steg testified that he did his best to obtain stone that matched. There was disagreement amongst the experts as to whether the variation in the coloring was acceptable. This tribunal gives the greatest weight to Inspector Dimond. The difference in color is too great to meet industry standards. Therefore, Respondent has not complied with this item. Item 3 -- Grout in Basement Bathroom[8] 11. Respondent was ordered to correct the condition of the grout at the chair rail tiling in the basement bathroom. Inspector Dimond testified that the grout repair that was ordered was not made with grout, but by painting or coloring over the area instead, and that it was not acceptable. Respondent’s position is based on undocumented instructions from Complainants. The item is not in compliance. Item 4 -- Straighten Wall at Basement Wine Cellar Door[9] 12. Respondent was ordered to straighten a wall at the wine cellar door. Inspector Dimond could not determine whether the correction had been made because Respondent covered the area with faux stone and there is no other documentation showing that the correction was performed. The parties have been disputing whether the faux stone should have been put there at all. There is no evidence (such as a sign-off from Complainants) that the corrective work was done. Respondent has not shown compliance for this item. Item 5 -- Exterior Stucco Repairs[10] 13. Respondent was ordered to correct stucco repairs. Inspector Dimond found that the repairs had been corrected except for one area on the South side of the house underneath a window. The evidence supports his testimony. Therefore, this item was not completed and Respondent is not in compliance. Item 6 -- Paint Interior Hallway Closet[11] 14. Respondent was ordered to paint the interior of the hallway closet after drywall repairs had been done. Inspector Dimond found that an area behind the door next to the jamb had not been painted. Respondent claims that it was painted, but the evidence shows otherwise. Respondent is not in compliance with this item. Item 7 – Repaint Wall in Front Bedroom[12] 15. Respondent was ordered to repair water damage in the front bedroom and did most of it. However, Inspector Dimond observed that different sheens of paint were used and inadequate coverage in one area. Respondent did not challenge the Inspector’s observations, but alleged that Complainants had approved the type of paint to use. Once again, there is no documentation to support that allegation. Respondent’s defense is inadequate to show compliance. Item 8 -- Straighten Wall at Game Room[13] 16. The parties agree that this item has been corrected. Item 9 – Blend Repairs at Step Lights at Walk Deck[14] 17. Inspector Dimond testified that the repairs made do not match the surrounding area in an acceptable manner. Compliance is not found. Item 10 – Repair Glass Block Area at Tub/Shower Wall[15] 18. Respondent removed an area that had contained glass block and created a recess (or niche) in the shower wall. That niche was then tiled over, but the tile does not match because there is a small decorative colored band on the tile that stops at one end of the niche and then continues at the other. Only the back wall of the niche does not have the decorative band. Respondent claims that the decorative tile was no longer available. The parties could have worked together to resolve the situation, but did not do so. As such, this tribunal finds that the finished product is aesthetically acceptable and that, therefore, Respondent is in compliance on this item. Item 11 – Air Handler Closet Door Blocks Vent[16] 19. Respondent installed a louvered vent in the door to the closet in which the air handler is located. The door is within inches of the air return, which cannot work properly without adequate air flow. Inspector Dimond did not provide any specific testimony with regard to whether the item was in compliance. Respondent’s expert presented evidence that the item was a pre-existing condition and, therefore, not Respondent’s responsibility. That evidence is rejected because it is not relevant to the issue of compliance. Respondent’s responsibility was found in the initial decision. Compliance is the issue before the tribunal now. Since Respondent did not present relevant evidence on this item, and since Respondent has the burden of establishing compliance,[17] Respondent is not in compliance on this item. Item 13[18] -- Paint Drywall Repair Inside Water Heater Closet[19] 20. There is a clear area that was not painted behind the door inside the water heater closet. Respondent is not in compliance. Item 14 – Basement Carpet Pattern Not Square to Walls[20] 21. The carpet installed in the basement theater room has a pattern that is not square to the wall, at one end by a small amount and at the other end of the room by a larger amount. John Jozwick testified as to acceptable tolerances allowed by the Carpet and Rug Institute and that the pattern was within those tolerances. Based on that testimony, Respondent is in compliance on this item. Item 15 – Relocate Thermostat at Game Room[21] 22. Respondent relocated the thermostat but did not complete the repair by painting the repair. Jim Steg testified that he personally painted the area. Respondent’s apparent position then is that the area was painted but has returned to an unpainted state. There is no evidence in support of that position. It is pure conjecture and is rejected. Respondent is not in compliance on this item. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon the party asserting a claim, right, or entitlement.[22] Further, the standard of proof at hearing is by preponderance of the evidence.[23] Since Respondent was given the burden, under the original order, of showing compliance or facing suspension of the license, and since Respondent has asserted that it should be deemed to be in compliance, Respondent bears the burden of showing by a preponderance of evidence that it has complied with the ROC Order identified above.[24] Respondent has failed to meet that burden. 2. Under the provisions of the September 16, 2010 Order, Respondent was to provide written proof that Respondent had properly corrected the items. The evidence shows that Respondent has not done so with respect to items. 3. Respondent has failed to comply with the September 16, 2010 Order. 4. A review of ROC records shows that Respondent’s license has never been disciplined since it was issued in 2006. It is not appropriate to revoke this license. 5. The record in this matter shows that the parties cannot work with each other. However, Complainant did not request restitution, so that remedy is not available on this record. Therefore, the appropriate discipline is a term of disciplinary suspension. RECOMMENDED ORDER IT IS RECOMMENDED that license KB-2.225805-D, held by Steg Custom Homes, Inc., be suspended immediately for a term of 30 days.

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, December 19, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Administrative Law Judge Decision (OAH Docket No. 2010A-13511974-ROC) at 5. [2] Out of 17 that are listed in the Exhibits. [3] Exhibit C1. [4] Exhibit C1. [5] Both are found in Exhibit R2. [6] This was CWO Items 1/5, 1/39, and 2/4 (List #./Item #). “CWO” refers to the CWO dated December 2, 2009, which used three lists provided by Complainants. Thus, the CWO uses List 1, List 2, and List 3, each with numbered items. CWO Item 1/5, therefore, refers to List 1, Item 5. The CWO Addendum issued February 12, 2010, is referred to as List 4. [7] CWO Item 1/38. [8] CWO Item 3/37. [9] CWO Item 1/21. [10] CWO Item 1/25. [11] CWO Item 1/32. [12] CWO Item 1/33. [13] CWO Item 1/37. [14] CWO Item 3/9. [15] CWO Item 3/15. [16] CWO Item 3/19. [17] See Conclusion of Law 1 below. [18] Recall that Items 12, 16, and 17 were not presented. [19] CWO Item 3/26. [20] CWO Item 3/34. [21] CWO Item 4/5. [22] Arizona Administrative Code (A.A.C.) R2-19-119(B). [23] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [24] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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