ALJDEC decisions subject to certification as final

2010A-23238064-ROC · Registrar of Contractors · 2010-11-23

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: November 4, 2010 at 8:00 a.m. APPEARANCES: Complainant Andrea M. McWhorter appeared on her own behalf; Respondent Mountain Skyline Dreambuilders, Inc. appeared through Stephen P. LaPre, Sr., its qualifying party and president. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In March 2004, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC193598, Class KB-2 for dual residential and small commercial contracting to Respondent Mountain Skyline Dreambuilders, Inc. In January 2010, the Registrar received a complaint from Complainant Andrea M. McWhorter against Respondent. The complaint alleged that on April 6, 2009, Respondent had entered into a written and verbal contract to construct a new garage and room addition and to substantially remodel Complainant’s house at 11010 N. 45th Way in Phoenix, Arizona for a price of $180,000.00 and that Complainant had paid Respondent $210,000.00. The complaint further alleged that Respondent had not completed all construction required by the contract, and the construction that Respondent had completed was deficient in numerous respects. The Registrar’s inspector, Mark Alyea, performed a jobsite inspection. On February 25, 2010, Inspector Alyea issued a Corrective Work Order (“CWO”) to Respondent, directing it within fifteen days to correct by appropriate means 58 items of complaint, including the following: 48. The round design of the cool deck in the back yard is not per plan. . . . .

52. Paver not completed at the front drive [and] the back yard north of the pool.

On March 16, 2010, the Registrar received Complainant’s request for a citation against Respondent. On July 8, 2010, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(2), (3) (namely A.A.C. R4-9-108), (13) (namely A.R.S. § 32-1124(B)), and (23). Respondent filed a timely written answer to the Citation and Complaint, denying any statutory violations and affirmatively alleging that it did not construct some items because the parties’ contract was “cost plus” and Complainant had refused to pay for the items. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. After one continuance at Complainant’s request, a hearing was held on November 4, 2010. Inspector Alyea testified. Complainant submitted five exhibits, testified on her own behalf, and presented the testimony of her son, Tod Ross, and her daughter, Catherine O’Brien. Respondent submitted one exhibit and presented the testimony of its qualifying party and president, Stephen P. LaPre, Sr. According to the Registrar’s record, on the date of the hearing, Respondent’s license was suspended by operation of law after it failed to timely renew the license. This was apparently the only complaint pending against the license. Additional Evidence Respondent submitted a copy of the parties’ contract. The contract was entitled “Cost Plus Agreement” and provided as the contract price, “Cost plus 10%.” The contract did not show Respondent’s license number preceded by the acronym “ROC.” Inspector Alyea testified that Respondent provided a copy of the parties’ contract after the CWO was issued. In light of the cost plus nature of the contract, Inspector Alyea testified that Respondent was not required to install pavers (CWO Item No. 52) or finish other work for which Complainant refused to pay Respondent and that it had not invoiced. Inspector Alyea testified that he did not recommend that the Registrar charge Respondent with a violation of A.R.S. § 32-1154(A)(9)[1] due to the cost plus nature of the contract. Inspector Alyea performed two prehearing jobsite inspections because Respondent was “close to correcting” all items on the CWO. Inspector Alyea last inspected the jobsite on the day before the continued hearing, November 3, 2010. Inspector Alyea testified that Respondent had corrected all items on the CWO in a professional and workmanlike manner except for the following eight items: a) Respondent needed to paint the bottoms of the doors (CWO No. 3); b) Respondent needed to caulk and paint the fireplace (CWO No. 9); c) Although Respondent had painted the ceiling in the west room white, Respondent still needed to correct shadows or shading on the ceiling (CWO No. 10); d) Respondent needed to repair the scratch on the toilet rim in the master bath (CWO No. 17); e) Although Respondent had installed an exhaust fan over the kitchen cooktop, Respondent needed to make the fan operational (CWO No. 34); f) Although Respondent had corrected the operation of the back yard gate, Respondent still needed to paint the gate (CWO No. 46); g) Respondent needed to connect the ground fault circuit interrupters behind the house (CWO No. 50); and h) Respondent needed to repair the Malibu lights (CWO No. 51). Mr. LaPre testified that Respondent would fix the eight items that Inspector Alyea testified required correction. In addition, Mr. LaPre agreed that Respondent would repair the sprinkler lines and heads on the north side of Complainant’s yard (CWO No. 49). Complainant testified that before the parties entered the contract, Respondent had obtained bids from subcontractors and had estimated that the cost of the construction would be approximately $180,000.00. Complainant testified that she only had $180,000.00 available to pay for the project. Complainant lived at the house while Respondent worked on the project. Mr. LaPre testified that Complainant communicated directly with subcontractors to request additional work. Although Mr. LaPre asked Ms. O’Brien to tell Complainant to stop communicating directly with subcontractors, Complainant stated that she was just “questioning the subcontractors about what they were doing, not distracting them.” As Respondent performed the project, Complainant also made other changes that increased its cost. For example, Complainant requested that Respondent remove a wall between the kitchen and addition to create an open area instead of a doorway. The change required Respondent to retain an engineer to perform load calculations and to install a beam. Although Complainant hired an architect to design the project, Respondent still needed to make changes in the field. For example, the headers in the architect’s plan for the garage would not fit, and Respondent was required to perform beam work. After Respondent had submitted its own and its subcontractors’ invoices totaling approximately $180,000.00 and Complainant had paid Respondent this amount, she called Mr. LaPre to ask how much he thought completing the project would cost. Mr. LaPre was driving in his truck at the time and told Complainant that he did not have his paperwork to provide a firm number. Mr. LaPre told Complainant that “off the top of his head,” he would guess it would cost $25,000.00 to $30,000.00 to perform the additional work that Complainant wanted. Complainant’s son took $30,000.00 from his retirement account to help his mother complete the project. After Respondent submitted its own and its subcontractors’ invoices totaling another $30,000.00 and Complainant paid Respondent this amount, the project was still not complete. Respondent refused to perform any more work if Complainant would not pay its invoices. Complainant refused to pay any more money, and Complainant filed the complaint to the Registrar. Complainant at the hearing challenged Respondent’s accounting on various grounds, including that the amounts charged were excessive, that Complainant herself could have done the work, that the subcontractors’ invoices showed that they performed unnecessary work to reach the desired result, that the subcontractors’ invoices were unclear regarding the work that they had performed, and that Respondent charged her for things that it could use on other jobs, such as the lock on the storage unit. Mr. LaPre testified that he was willing to go over the invoices with Complainant and explain Respondent’s accounting, but that he did not have all of Respondent’s paperwork at the hearing. Mr. LaPre testified about some items that had increased the cost of construction, as summarized above. Mr. LaPre testified that Complainant had not been invoiced, nor had she consented to pay, for application of the finish coat on the existing cool deck (CWO No. 48) and installation of the pavers in the driveway and back yard north of the pool (CWO No. 52). Therefore, Mr. LaPre argued that Respondent was not contractually obligated to complete these items. CONCLUSIONS OF LAW This 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] The administratively suspended status of Respondent’s license does not preclude Complainant from pursuing her administrative remedy nor preclude the Registrar from conducting this disciplinary proceeding.[7] Respondent established that it is not contractually obligated to install the pavers or cool deck coating. Therefore, Complainant did not establish that Respondent violated A.R.S. § 32-1154(A)(2)[8] by failing to complete these items. Because the Registrar cannot adjudicate or award money damages,[9] the Administrative Law Judge makes no recommendation on Complainant’s evidence of Respondent’s alleged accounting errors or improprieties. However, the Registrar’s decision should be without prejudice to Complainant’s right to file a civil action in a court of competent jurisdiction if she remains dissatisfied with Mr. LaPre’s explanation of Respondent’s accounting. Complainant established that Respondent violated A.R.S. § 32-1154(A)(3)[10] and (23)[11] in its initial construction of and failure to correct CWO Nos. 3, 9, 10, 17, 34, 46, 49, 50, and 51, as found in Finding of Fact Nos. 15 and 16. Complainant also established that Respondent violated A.R.S. § 32- 1154(A)(13)[12] when it failed to include its license number preceded by the acronym “ROC” on the contract. Respondent’s administratively suspended license presently prevents it from performing or hiring another appropriately licensed contractor to perform any further corrective action in this matter.[13] RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order, the Registrar revoke License No. ROC193598, Class KB-2 previously issued to Respondent Mountain Skyline Dreambuilders, Inc. It is further recommended that the Registrar not revoke Respondent’s license and, instead, close Case No. 2010A-23238064 if, on or before the effective date of the Registrar’s order, Respondent has provided written proof that is satisfactory to the Registrar of the following: (1) Respondent has corrected its estimate, proposal, contract, and invoice forms, letterhead, business cards, and any other documents used in its contracting business to show its license number preceded by the acronym “ROC,” and (2a) Respondent has reinstated its license and repaired in a professional and workmanlike manner the workmanship deficiencies found at Finding of Fact Nos. 15 and 16; or (2b) Respondent has paid Complainant an amount of money that she has accepted as sufficient to hire another appropriately licensed contractor to repair in a professional and workmanlike manner the workmanship deficiencies found at Finding of Fact Nos. 15 and 16. It is further recommended that the Registrar require Respondent to pay the sum of $500.00 as a civil penalty pursuant to A.R.S. § 32-1154(D).

It is further recommended that if Respondent fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s final order, the Registrar revoke Respondent’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. § 32-1101(A)(5), unless Respondent tenders payment of any outstanding prior civil penalty. 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, November 23, 2010. /s/ Diane Mihalsky Administrative Law Judge Transmitted electronically to: William A. Mundell, Director Registrar of Contractors ----------------------- [1] 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.” [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] See A.R.S. § 32-1154(C), which provides that “[t]he expiration, cancellation, suspension or revocation of a license . . . shall not deprive the registrar of jurisdiction to proceed with any investigation of or action or disciplinary proceeding against such license, or to render a decision suspending or revoking such a license . . . .” [8] 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.” [9] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984). [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 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.” [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 any material respect to comply with this chapter.” The specific statute violated is A.R.S. § 32-1124(B), which requires that licensed contractors include their license number, which “shall be preceded by the acronym ‘ROC,’” on “all written bids submitted by the licensee 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.” [13] “Residential contractor” is defined as anyone who “does himself or by or through others” performs construction. A.R.S. § 32-1101(A)(7). It is unlawful for anyone without a contractor’s license in good standing to engage in contracting. See A.R.S. § 32-1151

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