ALJDEC decisions subject to certification as final

2010A-308474864-ROC · Registrar of Contractors · 2011-04-07

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 14, 2010 and March 18, 2010 APPEARANCES: Trinity Land Development, L.L.C. was represented by its attorney, Eric D. Gere, Esq. Heritage Homes Island Builder, Ltd. was represented by its attorney, Peter C. Kelly, Esq. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Orders: FINDINGS OF FACT 1. Heritage Homes Island Builder, Ltd. (“Respondent”) is the holder of License No. 197651, a Class B contracting license issued by the Registrar of Contractors (“Registrar”). 2. In 2007, the parties entered into a business relationship. Complainant paid Respondent monthly payments toward the building of two spec homes. In addition to the monthly payments, Respondent was to be paid a percentage of the selling price for each home after Complainant sold them. Complainant financed the projects. 3. The two spec homes were to be constructed through the drywall stage. According to the parties’ sales model, purchasers could make selections of custom features and the homes would then be completed. 4. The two homes did not sell due to the real estate market in Arizona. Therefore, they sat uncompleted for an extensive period of time. 5. On August 3, 2010, Complainant filed a written Complaint with the Registrar alleging workmanship deficiencies by Respondent on a house being constructed at 900 Cala Rosa Drive, Lake Havasu City, Arizona. The Registrar designated the Complaint as Case No. 2010-[number redacted] (“Complaint 1”). 6. Complaint 1 contains the following complaint item: “Moisture is coming up through the garage slab due to a failure by the contractor to place the proper soils and/or vapor barrier under the concrete.” 7. Later, Complainant filed an addendum to Complaint 1, which added the following Complaint items: #1. Contractor removed his [sic] license from the permit through the city without completing the job AND WITHOUT NOTICE! #2 Contractor failed to provide the required documents on rights to file a complaint #3 Contractor is refusing to provide proof of insurance or Certificate of Insurance for this construction job #4 Contractor failed to provide lien releases from payments to the sub-contractors for paid invoices #5 Contractor failed to name Homeowner as an insured on Insurance Policy that Homeowner Paid Contractor to provide

(Emphasis in the original).

8. In response to Complaint 1, the Registrar’s assigned inspector, Cliff Corlett, performed a jobsite inspection to view the complaint items. As a result of his jobsite inspection, Inspector Corlett issued a Corrective Work Order dated September 13, 2010, which provided, among other things, the following: License # 197651, issued to HERITAGE HOMES ISLAND BUILDERS LTD was SUSPENDED for nonrenewal on 08/01/2010 and cannot do or sub- contract the following corrective work until the suspension is lifted.

All decisions herein are based on standard practices for similar work in the construction industry and or the adopted Workmanship Standards for Licensed Contractors (WSLC). These standards cover performances of those construction items of major concern to the buyer. The effective date for the start of these standards should begin with the close of escrow, when the buyer occupies the structure or the date of discovery, whichever occurs first, unless otherwise stated.

Complaint’s Allegations from Complaint Form are Underlined.

1. Moisture coming up through the garage slab due to failure of contractor to place proper soils and or vapor barrier under the concrete. Registrar of Contractors, *****ROC, Garage slab(s) surfaces exhibit signs of moisture problems. Respondent (R/P) should determine cause and correct by appropriate methods.

2. (Added at J/S) Concrete surfaces deteriorated to an unacceptable condition in the areas of the garage doors. ROC ***** Agree, R/P should correct by appropriate methods.

9. On October 25, 2010, the Registrar issued a Citation and Complaint in Complaint 1 charging Respondent with violating the provisions of A.R.S. § 32-1154(A) (2), (3), namely A.A.C. R4-9-108, and (23). 10. On August 3, 2010, Complainant also filed a written Complaint with the Registrar alleging deficient workmanship by Respondent on a residence located at 904 Cala Rosa Drive, Lake Havasu City, Arizona. The Registrar designated the second Complaint as Case No. 2010- [number redacted] (“Complaint 2”). 11. Complaint 2 contains the following complaint item: “Moisture is coming up through the garage slab due to a failure by the contractor to place the proper soils and/or vapor barrier under the concrete.” 12. Later, Complainant filed an addendum to Complaint 2, which added the following Complaint items: #1. Contractor removed his [sic] license from the permit through the city without completing the job AND WITHOUT NOTICE! #2 Contractor failed to provide the required documents on rights to file a complaint #3 Contractor is refusing to provide proof of insurance or Certificate of Insurance for this construction job #4 Contractor failed to provide lien releases from payments to the sub-contractors for paid invoices #5 Contractor failed to name Homeowner as an insured on Insurance Policy that Homeowner Paid Contractor to provide

(Emphasis in the original).

13. In response to Complaint 2, Inspector Corlett, performed a jobsite inspection to view the complaint items. As a result of his jobsite inspection, Inspector Corlett issued a Corrective Work Order dated September 13, 2010, which provided, among other things, the following: License # 197651, issued to HERITAGE HOMES ISLAND BUILDERS LTD was SUSPENDED for nonrenewal on 08/01/2010 and cannot do or sub- contract the following corrective work until the suspension is lifted.

Complaint’s Allegations from Complaint Form are Underlined.

2. (Added at J/S) Concrete surfaces deteriorated to an unacceptable condition in the areas of the garage doors. ROC ***** Agree, R/P should correct by appropriate methods.

14. The Registrar forwarded Complaint 1 and Complaint 2 to the Office of Administrative Hearings, an independent agency, for a consolidated evidentiary hearing. 15. In August 2009, Complainant discovered the workmanship deficiencies in Complaint 1 and Complaint 2. 16. In 2010, Respondent removed its name from the building permits for the subject residences. 17. Respondent never sent written notice of termination to Complainant. Respondent continued to have a financial interest in the subject homes if they were sold. 18. At the hearing, Inspector Corlett testified that he performed pre- hearing jobsite inspections at the two subject residences on the morning of the hearing. Inspector Corlett further testified that Respondent did not comply with the two Corrective Work Orders. 19. A review of the Registrar’s official electronic licensing records reveals that Respondent’s License No. 197651 remains suspended by operation of law for non-renewal. As a result of that license status, Respondent cannot perform any remedial work or subcontract any work in these matters. 20. Any allegation contained in Complaint 1 and/or Complaint 2 not specifically addressed in the above Findings of Fact is determined to either meet workmanship standards or lack sufficient evidence of record to make a finding of a statutory and/or regulatory violation by Respondent. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent and the subject matter in these cases. Complainant timely filed its complaints against Respondent in these cases. 2. Pursuant to A.R.S. § 32-1154(C), the suspension of Respondent’s contracting license does not deprive the Registrar of the authority to impose discipline upon that license for proven violations in these matters. 3. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is preponderance of the evidence. A.A.C. R2-19-119(B). However, Complainant does not have the burden of establishing the cause of any deficient workmanship by Respondent or the manner of correcting any deficiencies. Complaint 1 4. There is insufficient evidence of record to support a conclusion that Respondent violated the provisions of A.R.S. § 32-1154(A) (2), as charged in the Citation and Complaint issued by the Registrar in Case No. 2010-[number redacted]. 5. Respondent violated the provisions of A.R.S. § 32-1154(A) (3), namely A.A.C. R4-9-108, as charged in the Citation and Complaint issued by the Registrar in Case No. 2010-[number redacted]. 6. Respondent violated the provisions of A.R.S. § 32-1154(A) (23), as charged in the Citation and Complaint issued by the Registrar in Case No. 2010-[number redacted]. Complaint 2 7. There is insufficient evidence of record to support a conclusion that Respondent violated the provisions of A.R.S. § 32-1154(A) (2), as charged in the Citation and Complaint issued by the Registrar in Case No. 2010-[number redacted]. 8. Respondent violated the provisions of A.R.S. § 32-1154(A) (3), namely A.A.C. R4-9-108, as charged in the Citation and Complaint issued by the Registrar in Case No. 2010-[number redacted]. 9. Respondent violated the provisions of A.R.S. § 32-1154(A) (23), as charged in the Citation and Complaint issued by the Registrar in Case No. 2010-[number redacted]. RECOMMENDED ORDERS Complaint 1 Respondent’s License No. 197651 shall be revoked on the effective date of the Order entered in Case No. [number redacted]. If Respondent fully complies with the Corrective Work Order issued in Case No. [number redacted] on or before the effective date of the Order entered in Case No. [number redacted], then the above-provided license revocation shall not take place, but instead the Citation and Complaint in Case No. 2010- [number redacted] shall be closed. In addition to the above-provided license revocation, if any, Respondent shall pay the sum of $500.00 to the Registrar by way of a civil penalty pursuant to A.R.S. § 32-1154(D). The failure by Respondent to pay the entire amount of the aforesaid civil penalty on or before the effective date of the Order entered in Case No. 2010-[number redacted] shall result in the automatic revocation of Respondent’s contracting 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) (3), unless payment of any outstanding prior civil penalty is tendered.

Complaint 2 Respondent’s License No. 197651 shall be revoked on the effective date of the Order entered in Case No. [number redacted]. If Respondent fully complies with the Corrective Work Order issued in Case No. [number redacted] on or before the effective date of the Order entered in Case No. [number redacted], then the above-provided license revocation shall not take place, but instead the Citation and Complaint in Case No. 2010- [number redacted] shall be closed. In addition to the above-provided license revocation, if any, Respondent shall pay the sum of $500.00 to the Registrar by way of a civil penalty pursuant to A.R.S. § 32-1154(D). The failure by Respondent to pay the entire amount of the aforesaid civil penalty on or before the effective date of the Order entered in Case No. 2010-[number redacted] shall result in the automatic revocation of Respondent’s contracting 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) (3), unless payment of any outstanding prior civil penalty is tendered.

Certification 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(s) will be 40 days from the date of that certification. Done this day, April 7, 2011.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors -----------------------

Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826