ALJDEC decisions subject to certification as final

2010A-308475995-ROC · Registrar of Contractors · 2011-05-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: May 17, 2011, at 8:00 a.m. APPEARANCES: Complainant Jade Fine Chinese Dining appeared through Chao Li Meng, its president; Respondent Pacificspan, L.L.C. dba Pacificspan Construction and Development appeared through John Jiang Lee, its qualifying party and managing member. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In February 2008, the Registrar of Contractors (“the Registrar”) issued License No. ROC242809, Class B-1 for commercial general contracting to Pacificspan, L.L.C., doing business as (“dba”) Pacificspan Construction and Development (“Respondent”). On September 22, 2010, the Registrar received a complaint from Chao Li Meng, the president of A.L.L. USA Trading, Inc. dba Jade Fine Chinese Dining (“Complainant”) against Respondent, alleging certain specific deficiencies in Respondent’s construction of a restaurant located at 34455 North 27th Drive, #160-162, Phoenix, Arizona (“the restaurant”). The Registrar’s inspector, Scott Deering, performed a jobsite inspection and on October 8, 2010, issued a Corrective Work Order (“CWO”) to Respondent, directing it within fifteen days to correct by appropriate means certain items of complaint, as follows: Complaint # 1- Repair of [sic] replace, as necessary, the circuit breaker that services the back storage area of the kitchen. The circuit breaker turns off when all plugs are in use. These four electrical receptacles are not on the city approved plans. This appears to be within code. Possible appliance load is overloading the 20 ampere circuit. No action required by the contractor.

Complaint # 2- Repair the leak at the kitchen sink that is on the east side. At the time of the jobsite inspection, the sink was not leaking. No action required by the contractor.

Complaint # 3- Repair the light switch that does not work by the kitchen door that operates the lights in the service area. Contractor to correct by the appropriate means using a properly licensed contractor.

Complaint # 4- Repair the vent hood so that the oil drip from the hood is stopped. Contractor to correct by the appropriate means.

Complaint # 5- The drain in the men’s room and the drain in the service area are allowing sewer gasses to permeate the air. At the time of the jobsite inspection the inspector could not verify.

Complaint # 6- During construction, used rusted and old materials. Inspector cannot verify at this time.

Complaint # 7- The contractor changed original blue print without restaurant owner’s permission. He made the change to save construction cost so he can max the profit. Complainant failed to demonstrate at the jobsite inspection.

Complaint # 8- In order to save money, the contractor uses unprofessional and illegal laborers, [sic] That is why the construction is taken [sic] longer than expected and poor quality. Inspector cannot verify.

On November 15, 2010, the Registrar received Complainant’s request for hearing because Respondent had not corrected any of the items on the CWO. On January 13, 2011, the Registrar issued a Citation and Complaint against Respondent, charging violations of A.R.S. § 32-1154(A)(1), (2), (3), namely A.A.C. R4-9-108, (5), (9), and (23). Respondent timely answered the Citation and Complaint, denying any statutory violations and affirmatively alleging that Mr. Meng had denied access for Respondent to perform repairs. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. A hearing was held on May 17, 2011. Inspector Deering testified. Mr. Meng testified on Complainant’s behalf and submitted twenty exhibits. Respondent’s qualifying party and managing member, John Jiang Lee, testified on its behalf and submitted five exhibits. Additional Evidence On or about July 14, 2009, the parties entered into a contract for Respondent to construct tenant improvements at a commercial space that Complainant leased for a new restaurant for a total contract price of $186,000.00. Complainant paid Respondent $156,000.00. Respondent filed a lien against the property in the amount of $35,792.00. Complainant’s landlord, Terra Carefree, L.L.C. (“Terra”) paid Respondent $35,792.00 on or about July 8, 2010, in consideration for its agreement to release the lien against the property where the restaurant is located. Inspector Deering testified that his CWO did not follow the original complaint because at the beginning of the original jobsite inspection, Mr. Meng handed him a letter from Complainant’s attorney that contained five additional items of complaint. Because Mr. Lee did not object to amending the complaint to add the items, Inspector Deering included them in the CWO. Inspector Deering testified that although he notified the parties in a letter that he scheduled a prehearing inspection on May 13, 2011, at 10:00 a.m., no one was there to give him access when he went to the restaurant at the scheduled time. Respondent submitted work orders dated October 4, 2010, that it had prepared to correct the items on the CWO. Mr. Lee testified that Respondent wanted to comply with the CWO and had scheduled repairs on three different occasions, but Mr. Meng denied access each time. Mr. Lee testified that Mr. Meng was involved in litigation with his former partners, who had given Mr. Meng money to hire Respondent to perform the tenant improvements to open the restaurant, and that Mr. Lee would be a witness in the trial scheduled for July 7, 2011. Mr. Lee testified that instead of allowing Respondent access to comply with the CWO, Mr. Meng demanded that Respondent pay Complainant money to drop the complaint to the Registrar. Mr. Meng denied that he had ever denied access to Respondent. Instead, he testified that Respondent never showed up. Mr. Meng also testified that all he wanted was for Respondent to repair the items that required repair, especially the hood and the electrical issues, because these deficiencies cause possible safety issues. However, Mr. Meng also testified that he did not want Respondent to perform any repairs because he “had no faith in its employees.” Mr. Meng testified that Complainant hired other contractors to repair the electrical system at the restaurant and submitted an estimate dated October 31, 2009, from Lundell Electrical Services, License No. ROC216065, Class K-11, for $1,505.00 for installation of additional outlets and lights at the restaurant.[2] No additional evidence was submitted at the hearing regarding the light switch that Inspector Deering found did not function properly (CWO #3) that the CWO required Respondent to correct. Mr. Lee’s and Mr. Meng’s testimony at trial showed that their relationship was strained and contentious. Mr. Lee spoke English as his fifth language and Mr. Meng did not speak English at all, but testified through his friend, James S. Wu, who acted as translator. Inspector Deering testified consistently with the CWO. With respect to the items that the CWO did not require Respondent to correct, Inspector Deering acknowledged that Mr. Meng may not have understood that he needed to expose alleged deficiencies behind walls and to show Respondent’s alleged modifications to approved plans. With respect to the vent hood (CWO #4), Inspector Deering testified that a trough ran around the lower part of the hood to collect oil from the exhaust and to drain the oil into a receptacle. Inspector Deering testified that the oil was not draining as intended and that he did not know whether the hood was out of level. Respondent submitted a report from BDB Engineering Company, L.L.C. dated January 26, 2010, that concluded that “[t]he Commercial Kitchen Ventilation (Type 1 hoods) system performs as required.” Although the report mentioned among the tests performed “[o]bservation of capture and containment test(s) of smoke generated by test candles,” the report did not mention any tests of the hood’s ability to collect oil from exhaust. Mr. Meng acknowledged that Complainant placed towels in the trough on the hood to absorb oil and that Complainant’s employees wrung the towels out from time to time. Mr. Meng testified that if Complainant did not place the towels on the hood, the oil would drain onto the floor and onto employees who were working at the stove, creating a safety hazard. Mr. Lee testified that any obstruction in the hood’s channel would prevent the oil from collecting and draining according to the hood’s design. Mr. Lee testified that although Respondent installed the hood according to code and the hood passed the city’s inspection, Respondent was willing to “take a close, hard look at” the hood and perform any repairs that were necessary to make it function as intended. Complainant submitted numerous photographs of Respondent’s work, some of which showed a small amount of rust on the surface of metal used in construction of the restaurant. Mr. Lee testified that some of the stainless steel that Respondent used on the restaurant had not been previously used, but was left over from previous jobs and had been stored in Respondent’s yard. Mr. Lee testified that he had a graduate degree in engineering and that the rusted metal was only for backing, not structural support, and did not compromise the structural integrity of the tenant improvements at the restaurant. Complainant submitted an accounting that showed that Respondent owed Complainant $20,316.91 for various items, including $3,800.00 as a “refund for installation of rusted walls” and the $35,792.00 that Terra paid to Respondent to remove its lien. Complainant’s accounting did not include any amounts for the two items that the CWO required Respondent to correct. According to the Registrar’s record, Respondent’s license is current and in good standing. One complaint was resolved, settled, or withdrawn, and this is the only complaint currently pending against Respondent. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[3] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[4] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[5] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[6] 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.”[7] Complainant established that Respondent violated A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108,[8] in its construction of the light switch by the kitchen door (CWO Item #3) and the vent hood (CWO Item #4). With respect to the rust on some of the steel that Respondent used to construct the restaurant, all of the steel was under or behind decorative surfaces. Because Complainant did not establish that the rust rendered the steel unfit for its intended purpose or compromised the structural integrity of the tenant improvements at the restaurant, Complainant did not establish that Respondent violated any statute in using the steel. Mr. Meng’s failure to pay the full contract price, disputes with his former partners, failure to allow access to Inspector Deering for the prehearing jobsite inspection, continued demands that Respondent pay money to Complainant to resolve the complaint, and acknowledged reluctance to allow Respondent’s employees to perform repairs, along with the parties’ general demeanor, rendered Mr. Lee’s testimony regarding access more credible. Respondent established that Complainant refused to allow reasonable access for Respondent to comply with the CWO. Therefore, Complainant did not establish that Respondent violated A.R.S. § 32-1154(A)(23).[9] Complainant did not present any evidence to establish that Respondent violated A.R.S. § 32-1154(A)(1),[10] (2),[11] (5),[12] or (9).[13] The legislature has not empowered the Registrar to adjudicate or award money damages.[14] Although the Registrar may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation cannot be remedied by the Respondent’s performance of corrective work,[15] such condition is not present in this matter. Therefore, Complainant has not established that it is entitled to restitution in any amount. RECOMMENDED ORDER In view of the foregoing, it is recommended that on the effective date of the Registrar’s final order, the Registrar suspend License No. ROC242809, Class B-1 previously issued to Respondent Pacificspan, L.L.C., dba Pacificspan Construction and Development until Respondent rectifies CWO Items #3 and #4. It is further recommended that the Registrar not suspend Respondent’s license and, instead, close Case No. 2010-[number redacted] if on or before the effective date of the Registrar’s final order, Respondent provides written proof that is satisfactory to the Registrar of either one of the following:

1) Respondent has repaired in a professional and workmanlike manner CWO Items #3 and #4; or 2) Complainant Jade Fine Chinese Dining has refused to provide reasonable access to Respondent to allow it to repair CWO Items #3 and #4. 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, May 31, 2011.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Although Chao Li Meng wrote Complainant’s name on the Registrar of Contractors’ complaint form as “Chao Li Meng dba Jade F C Dining,” evidence at hearing established that the corporate complainant’s full name is A.L.L. USA Trading, Inc. doing business as (“dba”) Jade Fine Chinese Dining. According to the Arizona Corporation Commission’s records, Mr. Meng is the president of A.L.L. USA Trading, Inc. dba Jade Fine Chinese Dining. The Administrative Law Judge has amended the caption to show Complainant’s full legal name and the full name of the restaurant where Respondent performed work. [2] Lundell Electrical Services’ estimate predates the CWO and neither party claimed that Lundell performed the electrical work at issue in the complaint. [3] See A.R.S. § 32-1101 et seq. [4] 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). [5] See A.A.C. R2-19-119(B)(2). [6] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [7] Black’s Law Dictionary at page 1220 (8th ed. 1999). [8] A.R.S. § 32-1154(A)(3) 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.” 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.” [9] A.R.S. § 32-1154(A)(23) 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.” [10] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[a]bandonment of a contract or refusal to perform after submitting a bid on work without legal excuse for the abandonment or refusal.” [11] 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.” [12] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license “[f]ailure to pay income taxes, withholding taxes or any tax imposed by title 42, chapter 5, articles 1 and 4 and incurred in the operation of the licensed business.” [13] 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.” [14] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984). [15] See A.R.S. § 32-1156.01; Sunpower of Arizona v. Arizona Registrar of Contractors, 166 Ariz. 437, 441, 803 P.2d 430, 434 (Ct. App. 1990).

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