ALJDEC decisions subject to certification as final

2010A-308473987-ROC · Registrar of Contractors · 2011-04-26

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 7, 2011, at 10:00 a.m. APPEARANCES: Complainant Laurel King appeared on her own behalf; Respondent Gyroland, Incorporated appeared through its qualifying party and president, Leonard Dennis Penning. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In June 2007, the Registrar of Contractors (“the Registrar”) issued License No. ROC217061, Class C-14 for residential fencing to Gyroland, Incorporated (“Respondent”). The only person listed on Respondent’s license is Leonard Dennis Penning, its qualifying party and president. In March 2006, the Registrar issued License No. ROC233958, Class C-31 for residential masonry to Respondent. On June 23, 2010, the Registrar received a complaint from Laurel King (“Complainant”) against Respondent that alleged 23 specifically enumerated items of complaint concerning Respondent’s repair of a leak in the interior of her home at 2851 Smoketree Lane, #21, in Prescott, Arizona (“the house”). Complainant stated that she had paid Respondent $2,000.00 of the $3,000.00 contract price, and attached to her complaint a copy of a civil complaint that Respondent had filed against her in small claims court for $1,200.00 plus taxes. Complainant requested that the Registrar require Respondent to return the $2,000.00 that she had paid to it, pay for all necessary repairs, and compensate her for the diminution of her home’s value due to Respondent’s poor work. The complaint was assigned to the Registrar’s inspector, Cliff Frandsen, for investigation. Inspector Frandsen performed a jobsite inspection and on July 21, 2010, on behalf of the Registrar, issued a Corrective Work Order (“CWO”) to Respondent, requiring it to perform the following corrective actions within fifteen days: The contractor made structural modifications to this home without a building permit. The contractor does not hold the proper license to accomplish these modifications.

The work provided does not meet industry standards or the workmanship standards set by this Agency.

The contractor shall take necessary and proper action to remediate the deficiencies listed below:

#1. Obtain a building permit from the City of Prescott for the structural modifications to this manufactured home.

#2. Remove the tile from the front porch. The tile was set too high and it creates a trip hazard at the front door threshold.

#3. The drywall work inside the home has an unsightly finish. The contractor shall pay a properly licensed entity to correct this deficiency.

The contractor shall make reparation to the homeowner for all costs incurred to correct these deficiencies and complete the project in a timely and workmanlike manner.

Complainant subsequently requested that the Registrar issue a citation against Respondent. On October 26, 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, (7), (13), namely A.R.S. § 32-1158, (17), and (23). Respondent filed a timely written answer, denying any statutory violations and affirmatively alleging that it contracted to remove and replace the front porch as necessary and that Complainant had not paid the full contract price. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held via videoconference on April 7, 2011, from the Registrar’s office in Flagstaff, Arizona. Inspector Frandsen testified. Respondent testified. Complainant testified, presented the testimony of her mother, Dorothy Hullett, and her neighbor, Jesse McDaniel, and submitted twenty exhibits. Additional Evidence Complainant’s house is an older manufactured home that has a large wooden porch on the front. After a rainstorm, Complainant noticed water damage in her dining room, located next to the porch. Complainant did not know who to hire and asked the pastor at her church to refer her to someone. Complainant’s pastor referred her to Mr. Penning, who is also a member of Complainant’s church and had performed work for other members of the church. Complainant testified that Mr. Penning misrepresented Respondent’s qualifications. Mr. Penning testified that he urged Complainant to contact other contractors, but she insisted that Respondent perform the repairs to her house. Mr. Penning testified that he used to be a general contractor in California and is experienced in mobile home repairs. Respondent inspected Complainant’s home and opined that the water damage to the dining room was caused by the porch draining toward the house, rather than away from the house. Respondent also opined that as a result of the improper drainage, parts of the wooden porch had rotted and mildewed. On or about April 21, 2010, Respondent prepared a document entitled “Contractor’s Invoice” that provided the parties’ names and addresses and Respondent’s fencing license number. The remainder of the document provided in its entirety as follows: Remove & Replace Front Portch [sic] Replace Rotten wood on walk under windows inside & outside

$3,000.00 Ck # 1789 Down Pamnt [sic] 1000 2000.00

Any extra cost to be discussed before hand [sic].

Copy of estimate

Although Complainant did not sign the invoice, she paid $1,000.00 to Respondent and it started work. Respondent subsequently substantially removed and replaced the wooden porch, installed tile on the porch, cut a screen door to accommodate the raised height of the porch next to Complainant’s house, and repaired the drywall in the dining room. Complainant subsequently paid another $1,000.00 to Respondent. Complainant submitted a report dated April 5, 2011, from Tim Fiske dba Fiske Construction, License No. ROC098816, Class B for residential general contracting, that identified the following workmanship deficiencies in Respondent’s work on Complainant’s porch: 1. The new floor joist used to support the new porch floor are [sic] lapped and nailed together with the existing joist. They are not resting on a structural beam. I recommend a structural beam be installed to support the weight of the exterior walls of the home and the porch floor itself. (please see pictures C5,C4,C6)

2. The vapor barrier, witch [sic] is installed by the factory to protect and seal the home from moister [sic] problems like mold was removed. I recommend installing a new moister [sic] barrier. (pictures C5,C6,C4)

3. Factory installed insulation under home at new porch was missing. Recommend installing new insulation. (pictures C6,C5,C4)

4. Metal flashing was used at siding to tile transition on top of porch that is very sharp and pointed, this is a safety hazard and should be corrected with proper size metal flashing.

Complainant also submitted the photographs that Mr. Fiske took of the underside of her porch that were referenced in his report. Respondent disputed Mr. Fiske’s criticisms of the porch. Inspector Frandsen testified that Complainant’s house was installed approximately one foot off the ground and that he did not crawl under the house to inspect the supports. Therefore, he could not tell whether the house or the porch that Respondent repaired was structurally sound. Inspector Frandsen testified that when Respondent replaced the flooring on the deck entryway to Complainant’s house, it cut a supporting brace to the main beam for the porch. Inspector Frandsen testified that because Respondent had covered the porch deck with tile, he could not tell whether the remainder of the job complied with the Registrar’s workmanship standards or building code requirements. Inspector Frandsen testified that rebuilding and repairing Complainant’s porch would have required a residential carpentry, remodeling, or general contracting license and that the job was mostly beyond the scope of Respondent’s masonry and fencing licenses. Respondent’s repairs to the drywall also were beyond the scope of its licenses. However, Respondent possibly could have removed and replaced the tile on the porch. On July 29, 2010, after Inspector Frandsen issued the CWO, Respondent applied to the City of Prescott Community Development Department Building Safety Division (“the City”) for a building permit for Complainant’s porch. Respondent included an as-built plan for the project on the application. Inspector Frandsen testified that Respondent should remove the tile so that the City inspector could inspect the underlayment. Complainant testified that when she went down to the City to enquire about the status of the permit, she was informed that the City “would just pass the job because the case was closed.” Mr. Penning testified that the City tried to schedule a final inspection, but Complainant refused to allow Respondent or the City to inspect the porch. On August 24, 2010, after Inspector Frandsen issued the CWO, Mr. Penning’s son, on Respondent’s behalf, attempted to perform work at Complainant’s house, but Complainant “expressed concerns” about Respondent’s work and the two became embroiled in a verbal dispute. Complainant called the City of Prescott police, who asked Mr. Penning’s son to leave Complainant’s house. Mr. Frandsen testified that he performed a prehearing inspection a few days before the hearing and that nothing had changed since his initial jobsite inspection. Mr. Penning attempted to attend the prehearing inspection and Complainant again called the City of Prescott police, who gave him a written warning for the crime of trespass. Mr. Frandsen acknowledged that the arrival of the police “interrupted” the prehearing inspection. Complainant testified that Mr. Penning’s son had just been released from jail and that Mr. Penning had worn a gun on his hip at church. Complainant testified that she felt that Mr. Penning intended the gun to be a threat against her. The record does not reveal whether Respondent attended the initial jobsite inspection or whether Complainant allowed Respondent to inspect its work at any time after she filed the complaint to the Registrar. The record contains the Registrar’s letter advising the parties of Respondent’s right to inspect the work under A.R.S. § 32-1155. Respondent did not argue at the hearing that the Registrar should dismiss the complaint under A.R.S. § 32-1155(C)(1) because he was not provided an opportunity to inspect the work within fifteen days after receiving the Registrar’s written notice. According to the Registrar’s record, Respondent’s residential masonry and fencing licenses are current and in good standing. This is the only complaint pending against either license.

CONCLUSIONS OF LAW The 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 homeowner’s failure to pay a contractor is not a defense to any other statutory violation except abandonment under A.R.S. § 32-1154(A)(1). The Registrar did not charge Respondent with abandonment. Complainant established that Respondent repaired and substantially replaced the porch before he obtained the requisite building permit from the City, installed tile too high at the front door, creating a trip hazard, and installed the drywall in Complainant’s dining room with an unsightly finish. Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(2)[5] and (3),[6] namely A.A.C. R4-9-108.[7] Respondent’s “Contractor’s Invoice” was the only writing that set forth the scope of Respondent’s contractual undertaking at Complainant’s house. Respondent’s “Contractor’s Invoice” did not include an estimated date of completion, provide for progress payments or the stage of construction when the progress payments would be due, did not state the amount of taxes that Complainant would have to pay on the contract amount, and did not advise Complainant of her right to file a written complaint to the Registrar under A.R.S. § 32-1154. Therefore, Complainant established that Respondent violated A.R.S. § 32-1154(A)(13),[8] namely, A.R.S. § 32-1158.[9] Respondent’s C-14 residential fencing license allows it to install and repair fencing, including concrete masonry units that do not exceed six feet in height, excluding footings, that are not used for retaining wall purposes.[10] Respondent’s C-31 masonry license allows it to install “stone, structural glass, brick, block, baked clay, or other products common to the industry,” including flagstone and stone masonry.[11] Repair of Complainant’s wooden porch and drywall are beyond the scope of Respondent’s fencing and masonry licenses. “‘Knowingly’ imports only a knowledge that the facts exist which bring the act or omission within the provisions of the statute using such word. It does not require any knowledge of the unlawfulness of the act or omission.”[12] “‘Notice of facts and circumstances which would put a man of ordinary prudence and intelligence on inquiry is . . . equivalent to knowledge of all the facts a reasonably diligent inquiry would disclose.’”[13] Because Respondent should have known that its licenses did not allow it to perform most of the work that it undertook to perform at Complainant’s house, Complainant established that Respondent violated A.R.S. § 32-1154(A)(17).[14] When Complainant called the police after Respondent’s employee showed up to perform work at her house, she denied Respondent reasonable access to comply with the CWO. Although Complainant does not have the right to demand that Respondent repair the work to her specifications, or that Respondent address her stated concerns to her satisfaction, Complainant was not required to allow Respondent to attempt repairs to the drywall to comply with the CWO. Because Respondent never sent an appropriately licensed contractor to perform this work, Complainant established that Respondent violated A.R.S. § 32-1154(A)(23).[15] Complainant did not establish that Respondent violated A.R.S. § 32- 1154(A)(7).[16] RECOMMENDED ORDER Based on the foregoing, it is recommended that on the effective date of the Registrar’s final order in this matter, the Registrar suspend Respondent Gyroland, Incorporated’s License No. ROC217061, Class C-14 until Respondent has hired an appropriately licensed contractor or contractors to repair as necessary its work at Complainant Laurel King’s house to comply with all applicable building codes and the Registrar’s workmanship standards. It is further recommended that the Registrar not suspend Respondent’s license and, instead, close the complaint in Case No. 2010-[number redacted] if on or before the effective date of the Registrar’s order, Respondent provides proof that is satisfactory to the Registrar of either one of the following: 1) Respondent has hired an appropriately licensed contractor or contractors to repair as necessary the porch and interior drywall at Complainant’s house, the contractors have performed such repairs in a professional and workmanlike manner, and the repairs have passed the final building inspection by the City of Prescott; or 2) Complainant has refused to allow reasonable access for the appropriately licensed contractor(s) whom Respondent has hired to perform repairs or has refused to allow reasonable access to the City of Prescott for a final inspection. 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. Unless Respondent tenders payment of any outstanding prior civil penalty, 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), and the Registrar may discipline Respondent’s License No. ROC194064, Class L-34 under A.R.S. § 32- 1154(A)(21). 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, April 26, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See A.R.S. § 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] 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.” [6] 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.” [7] A.A.C. R4-9-108 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.” [8] 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.” [9] A.R.S. § 32-1158(B) provides that any contract in an amount of more than one thousand dollars entered into between a contractor and the owner of a property to be improved after December 31, 2007 must be in writing and include the following minimum terms:

3. The estimated date of completion of all work to be performed under the contract. . . . .

6. The total dollar amount to be paid to the contractor by the owner for all work to be performed under the contract, including all applicable taxes. . . . .

8. The dollar amount of any progress payment and the stage of construction at which the contractor will be entitled to collect progress payments during the course of construction under the contract.

9. That the property owner has the right to file a written complaint with the registrar for an alleged violation of section 32-1154, subsection A. The contract shall contain the registrar’s telephone number and website address and shall state that complaints must be made within the applicable time period as set forth in section 32-1155, subsection A. The information in this paragraph must be prominently displayed in the contract in ten point bold type. . . . [10] See A.A.C. R4-9-103. [11] See id. [12] A.R.S. § 1-215. [13] Maricopa Utilities Co. v. Cline, 60 Ariz. 209, 214, 134 P.2d 156 (1943) (quoting Schneider v. Henley, 61 Cal. App. 758, 763, 215 P. 1036, 1038 (1923)). [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.” [16] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[t]he doing of a fraudulent act by the licensee as a contractor resulting in another person being substantially injured.”

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