ALJDEC decisions subject to certification as final

2010A-308475916-ROC · Registrar of Contractors · 2012-06-14

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: April 5, 2012 and May 24, 2012

APPEARANCES: Complainant appeared on his own behalf, accompanied by his wife Daniele Tanner; Respondent was represented by Jeffery M. Hall, Esq., Jeffery M. Hall, PLC, accompanied by Managing Member Christopher James (“C. J.”) Carbone.

WITNESSES: David Lee, Dave’s Custom Framing and Remodeling, Inc. James Puszert, The Stucco Guy, Inc. Ken Tanner C. J. Carbone

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

This matter comes before this tribunal on remand from the Maricopa County Superior Court and the Registrar of Contractors (Registrar or ROC) to determine the amount of restitution that would compensate Complainant for the violations that have been found by default against Respondent. Complainant has requested $13,097.00. Respondent denies that any amount is owed. This tribunal entered the complaint file received from the ROC into the record, along with Complainant’s Exhibits L, M, N, and O, and Respondent’s Exhibits 1 through 8.[1] Testimony was presented from the witnesses listed above. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding that Complainant has shown restitution in the amount of $12,434.03. FINDINGS OF FACT 1. Respondent is the holder of License No. KB-2.240142-D, a dual small commercial and residential license issued by the Registrar. 2. On September 20, 2010, Complainant filed a complaint against Respondent’s license for Respondent’s work on a two-story addition to his home that consisted of a combined two-car garage and home office/sewing room. The complaint listed 23 complaint items and contained a 20-page narrative of the complaints. The primary allegation was abandonment of the project. Because the project was incomplete, Complainant agreed that an inspection was not necessary; therefore, no Corrective Work Order was issued in this case. When Complainant requested a hearing on October 20, 2010, he filed approximately 150 pages of explanation of the problems with the work. 3. On December 3, 2010, the Registrar issued a Citation and Complaint citing several alleged violations of the Arizona contractor licensing statutes, including A.R.S. § 32-1154(A)(1) (abandonment of a project without legal excuse).[2] 4. Respondent defaulted by failing to file a timely answer to the Citation and Complaint. This resulted in a Decision and Order issued by the Registrar on January 26, 2011, that found Respondent in violation and suspended Respondent’s license unless and until Respondent corrected the violations. Respondent appealed that Decision and Order to the Maricopa County Superior Court and received a stay of that Decision and Order. 5. On January 20, 2012, the Superior Court issued an Order of Remand to Registrar of Contractors for Determination of Restitution, in which the case was remanded back to the Registrar for a hearing to determine “the amount of restitution monies reasonably necessary to compensate Defendants Tanner for the completion of their residential remodeling effort. . . .“ By Appeal Order issued by the Registrar on February 8, 2012, the matter was referred to the Office of Administrative Hearings to conduct the restitution hearing ordered by the Superior Court.[3] 6. At the start of the restitution hearing, Complainant informed the Administrative Law Judge that the project had been completed by others. The Administrative Law Judge then informed the parties that he needed three numbers to calculate restitution: (1) the contract price, including agreed- upon change orders; (2) the amount paid on the contract price; and (3) the amount that Complainant paid out-of-pocket to have the job completed. The Administrative Law Judge stated that he would be using the contract price and total amount paid as stated by Complainant in the complaint form he originally filed on September 10, 2010, as the starting point for the restitution analysis. Those numbers, which Respondent admitted by default, are a contract price of $41,791.00 and an amount paid on the contract of $38,233.99. Contract Price and Amount Paid on Contract Price 7. The parties agreed that the amount paid on the contract by Complainant was $38,233.99. 8. Complainant urged that a contract price of $41,962.34, as stated in the contract itself,[4] should be used as the contract price number rather than the number he provided and swore to in the complaint form. He testified that the number $41,791.00 was written in the complaint form because he had taken some items out of the price stated in the contract because those items were not in the plans and he did not want to pay for them. However, that explanation supports use of the lower number provided in the complaint form. That number, $41,791.00, was the contract price that Complainant alleged and that Respondent admitted to by default. 9. Based on the testimony and evidence, the tribunal finds that the agreed-upon price between the parties for the project was $41,791.00. 10. The unpaid portion of the contract price is $3,557.01 ($41,791.00 minus $38,233.99). Cost to Complete the Project a. Dave Lee – Exterior Painting, Drywall, and Other Items 11. Complainant presented proposals and invoices in Exhibit L to show the work that was done to complete the job and the cost of that work. The first proposal presented is from “Dave Lee,” and it covers drywall, exterior painting, installation of a handrail, and some other items. It shows an address, telephone/fax number, and email address, but no ROC license number. David Lee testified in support of the proposal. He testified that he is the Qualifying Party and President of Dave’s Custom Framing and Remodeling, Inc., which has held ROC License No. B-3.157934-R (General Remodeling and Repair) since the year 2000.[5] Although the “Dave Lee” proposal is not in compliance with several ROC statutes regarding format and presentation of the name and license number,[6] these deficiencies are not enough to disallow its use as a measurement of restitution. 12. Mr. Lee testified as to each line item on the proposal. The first item is exterior priming and painting for the addition at a price of $3,300.00. Respondent challenged that amount with C. J. Carbone’s testimony that priming was not part of the original contract and that the price Mr. Lee charged was excessive. Those challenges are not persuasive because priming a surface before applying paint is a reasonable and necessary step and Respondent did not support its challenge with documentation showing that priming was excluded from the contract between Complainant and Respondent. This tribunal finds that the amount of $3,300.00 is reasonable and appropriate for exterior priming and painting. 13. Mr. Lee also testified that he completed installing drywall, with tape and texture, for the price of $3,910.00, which is the next item on the proposal.[7] Again, Mr. Carbone testified that the amount was overpriced, but he did not support that opinion with independent evidence. Therefore, it is not persuasive. This tribunal finds that the amount of $3,910.00 is reasonable and appropriate for drywall completion. 14. The next item on the proposal is the installation of a handrail. The price on the proposal included the price for the material, but Mr. Lee testified that Complainant supplied the handrail and only labor was paid for by Complainant, which Mr. Lee estimated at $200.00 to $250.00. This tribunal finds that the amount of $200.00 is reasonable and appropriate for labor to install the handrail. 15. The next item on the proposal refers to a separate list of items that included completing the insulation and installing “deflectors foam around doors and windows,” as well as installing “trim around doors” for a price of $3,256.00.[8] Mr. Lee used the list of items from page 2 of the original complaint to describe the various items he completed for line five of the proposal at a price of $3,256.00. Mr. Carbone testified that the price charged was excessive, and offered lower estimates for those items, but has no independent support for that position. Based on Mr. Lee’s testimony, this tribunal finds that the amount of $3,256.00 is reasonable and appropriate for the items in line five of the proposal. 16. The last item in the proposal is a calculation for transaction privilege tax. The numbers in the calculation are not explained in the document and were not explained in testimony, nor are they understandable on their face. In addition, given that the price changed when the handrail portion became labor only, it is unclear what the tax would be with that modification. This tribunal can make no determination on this record with regard to an amount for transaction privilege tax on the “Dave Lee” proposal. 17. The total amount found reasonable and appropriate based on the proposal from Mr. Lee is $10,666.00. 18. Complainant submitted Exhibit R into evidence, which contains copies of cancelled checks that were tendered to contractors as payments for the work done to complete the project. Complainant submitted Exhibit R to show that he actually paid the amounts on the proposals and invoices. Exhibit R shows several checks that were made out to “Dave Lee” as payment on the proposal from Mr. Lee.[9] One of the checks in Exhibit R is made out to “Baldemar Patino,” who Mr. Lee testified was working for him on Complainant’s project.[10] Mr. Lee told Complainant to make the check out to Mr. Patino because Mr. Patino was on the jobsite at that time working for Mr. Lee. The total amount of the checks paid for the work done by Dave’s Custom Framing and Remodeling, Inc. is $11,185.36.[11] 19. Respondent challenges use of the payment checks for purposes of establishing restitution on two grounds: (1) because they were not made out to the licensed entity “Dave’s Custom Framing and Remodeling, Inc.” and (2) because the check to Baldemar Patino could be considered unlicensed contracting. Both of these challenges are rejected. The fact that the checks were made out to “Dave Lee” rather than “Dave’s Custom Framing and Remodeling, Inc.” is not a bar to establishing the amount actually paid for completion of the project. This tribunal considers the payments to have been made to a licensed contractor.[12] With regard to the check made out to “Baldemar Patino,” this tribunal has no solid evidence that unlicensed contracting occurred and finds no fault by Complainant, who was just following the directions of Mr. Lee. 20. The evidence shows that Complainant paid the reasonable and appropriate amount of $10,666.00 to complete the portion of the project regarding exterior painting, drywall, and other items as set forth in the proposal from Dave Lee in Exhibit L. b. The Stucco Guy – Lath and Stucco 21. James Puszert testified for Complainant. He is the Qualifying Party for The Stucco Guy, Inc., holder of ROC License C-36.164452-R as a specialty contractor (plastering).[13] He testified that his company completed the stucco work on Complainant’s project in November 2010 and presented an invoice at Exhibit L, page 75 for $1,800.00. His testimony that the stucco work performed and the price charged were reasonable is found to be credible.[14] Exhibit R shows that Complainant actually paid the $1,800.00. 22. The evidence shows that Complainant paid the reasonable and appropriate amount of $1,800.00 to complete the portion of the project regarding stucco as set forth in the invoice from The Stucco Guy, Inc. in Exhibit L. c. Wayne Dalton – Garage Door 23. Complainant testified that he hired Wayne Dalton Genie Sales Center, holder of ROC License K-60.264794-D (finish carpentry),[15] to install a garage door system. The sales order at Exhibit L, page 77, shows that the price was $1,358.51. Exhibit R shows that Complainant actually paid that amount. 24. The evidence shows that Complainant paid the reasonable and appropriate amount of $1,358.51 to complete the garage door system as set forth in the sales order from Wayne Dalton Genie Sales Center in Exhibit L. d. J. .F. Haase – Electrical Trim Out 25. Complainant testified that the electrical trim out was completed by the subcontractor who had been doing the electrical work for Respondent, J. F. Haase Electrical, Inc., holder of two electrical specialty licenses (ROC111425 and ROC113596).[16] He requested that the company provide him with an invoice showing the amount for completion of the work, and that invoice is found at Exhibit L, page 79 for $1,000.00. 26. The evidence shows that Complainant paid the reasonable and appropriate amount of $1,000.00 to complete the portion of the project regarding electrical trim out as set forth in the invoice from J. F. Haase Electric, Inc. in Exhibit L. e. Quality Stairways – Stair Rail Installation 27. Complainant testified that he needed to pay for labor to install a stair rail as part of the completion of the job. He provided Exhibit L, page 82, to show that the labor was performed by Quality Stairways, Inc., a contractor licensed by the ROC as a finish carpenter (ROC156454),[17] in the amount of $633.00. Exhibit R shows that the amount was actually paid by Complainant. 28. The evidence shows that Complainant paid the reasonable and appropriate amount of $633.00 to complete the portion of the project regarding labor for installation of a stair rail as set forth in Exhibit L, page 82. f. A Company – Portable Restroom 29. Complainant testified that he paid for a portable restroom to be placed at the site while the project was being completed. He hired A Company, Inc. to provide it, and they charged a total of $157.53 as evidenced by Exhibit L, pages 83-84. 30. The evidence shows that Complainant paid the reasonable and appropriate amount of $157.53 to provide a portable restroom for workers completing the project. g. Midwest Disposal Services -- Dumpster 31. Finally, Complainant testified that he provided a dumpster for waste materials at the site. The dumpster was provided by Mid-West Disposal Services for a price of $375.00, which Exhibit R shows was paid by Complainant. 32. The evidence shows that Complainant paid the reasonable and appropriate amount of $375.00 to provide a dumpster for waste materials at the jobsite while the project was being completed. Summary 33. In summary, the record shows the following reasonable and appropriate amounts to complete the project abandoned by Respondent: a. Dave Lee $10,666.00 b. Stucco Guy $1,800.00 c. Wayne Dalton $1,358.51 d. J. F. Haase $1,000.00 e. Quality Stairways $633.00 f. A Company $157.53 g. Mid-West Disposal $375.00 Total: $15,990.04

34. The amount of reasonable and appropriate costs to complete the project ($15,990.04) must be discounted by the unpaid portion of the contract price. The unpaid portion is $3,557.01. Therefore, the final number is $12,433.03. 35. This tribunal finds that the evidence supports restitution reasonably necessary to compensate Complainant in the amount of $12,433.03. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[18] Further, the standard of proof at hearing is by preponderance of the evidence.[19] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that he is entitled to a particular amount of restitution. 2. As found above, Complainant has shown that the amount of restitution reasonably necessary to compensate him for Respondent’s abandonment of the project is $12,433.03. RECOMMENDED ORDER IT IS RECOMMENDED that Registrar of Contractors adopt this Administrative Law Judge Decision and forward it to the Maricopa County Superior Court.

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 the date of that certification.

Done this day, June 14, 2012.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Exhibit S was offered into evidence by Complainant. Respondent timely objected for lack of foundation. The objection was sustained for lack of foundation and authenticity; therefore, Exhibit S was not admitted. [2] There were also allegations in the complaint of poor workmanship and failure to follow plans and specifications. However, Complainant agreed that if the project were completed in a workmanlike manner, the other allegations would be cured. Therefore, the abandonment claim was the primary claim. In addition, the Citation and Complaint alleged a violation of A.R.S. § 32-1154(A)(9) (failure to complete a project for the price stated in the contract). The Administrative Law Judge ruled on the record that the allegation would not be considered as a basis for restitution because it was superseded by the abandonment claim. Restitution in this case is governed by the cost of completing the project. [3] The Appeal Order directs this tribunal to provide a recommendation to the Registrar that will then be forwarded by the Registrar back to the Superior Court. [4] Exhibit M at 2. [5] This information was verified by taking administrative notice of the information on the ROC website on June 13, 2012. [6] A.R.S. § 32-1158 requires minimum elements of a contract which are missing from the proposal, while A.R.S. § 32-1124(B) requires the license number to be posted on all documentation, including written bids, used in the business of contracting. In addition, A.R.S. § 32-1154(A)(15) prohibits a licensed contractor from acting in any name other than that on the license. [7] It is actually the third item on the proposal but the second item was a “no charge” item. [8] Exhibit L at 68. [9] Check numbers 1724, 1730, 1738, 1764, 1780, 1781, and 1782. These checks total $9,405.36. [10] Check number 1732 for $1,780.00. [11] This amount is higher than the $10,666.00 noted above due to the inclusion of tax and the handrail material. [12] In addition, Respondent does not have clean hands in this regard as Exhibit 5 shows that Respondent made checks out to “Dave Lee” rather than “Dave’s Custom Framing and Remodeling, Inc.” (check 1679) and to “Jason Haase” rather than “J. F. Haase Electrical, Inc.” (check 1672). [13] This information was verified by taking administrative notice of the information on the ROC website on June 13, 2012. [14] Respondent attempted to undermine Mr. Puszert’s credibility by claiming that The Stucco Guy, Inc.’s current bond is not adequate. The Administrative Law Judge does not find that challenge to be relevant or persuasive because the license was active and in good standing at the time the work was performed. [15] This information was verified by taking administrative notice of the information on the ROC website on June 13, 2012. [16] This information was verified by taking administrative notice of the information on the ROC website on June 13, 2012. [17] This information was verified by taking administrative notice of the information on the ROC website on June 13, 2012. [18] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [19] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985).

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