ALJDEC decisions subject to certification as final

2010A-582053-ROC · Registrar of Contractors · 2010-08-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 21, 2010 at 8:15 a.m. APPEARANCES: Complainant Trinidad Builders, Inc. appeared through Randy Bueghly, its president and qualifying party; Respondent T J K Remodeling, Inc. appeared through Timothy D. Kurtz, its president and qualifying party. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On September 22, 2003, the Registrar of Contractors (“the Registrar”) issued License No. ROC188930, Class B for residential general contracting to Complainant Trinidad Builders, Inc. Randy Bueghly is Complainant’s qualifying party and president. On May 22, 2008, the Registrar issued License No. ROC245305, Class B-3 for residential general remodeling and repair contracting to Respondent T J K Remodeling, Inc. Timothy D. Kurtz is Respondent’s qualifying party and president. On October 19, 2009, the Registrar received a complaint from Complainant against Respondent’s license for work that it allegedly performed on a jobsite in Munds Park, Arizona pursuant to a verbal and written contract dated June 27, 2007. The complaint alleged that Respondent abandoned the project and that its work was deficient. Eighteen of the twenty specific items of complaint concerned electrical work. The Registrar’s inspector, Mark Schweiger, performed a jobsite inspection. In a letter dated November 5, 2009, Inspector Schweiger informed the parties that he had determined that the Registrar should close the complaint because, although he had identified numerous code violations and workmanship deficiencies, the lack of a signed contract prevented him from identifying Respondent’s role on the project. On November 16, 2009, the Registrar received Mr. Bueghly’s written request that the Registrar issue a citation against Respondent’s license because, allegedly, Respondent had acted as general contractor on the project. The Registrar issued a Citation and Complaint against Respondent’s license, charging violations of A.R.S. § 32-1154(A)(1), (2), (3) (namely A.A.C. R4-9- 108), (17), and (20). Mr. Kurtz, on behalf of Respondent, timely answered the Citation and Complaint, denying any statutory violations and affirmatively alleging that he personally had been involved in the project before Respondent came into existence. The Registrar referred the matter to the Office of Administrative Hearings, an independent agency, to schedule and to conduct a fair hearing. A hearing was held on July 21, 2010. Inspector Schweiger testified. Mr. Bueghly testified on Complainant’s behalf and submitted fifteen exhibits. Mr. Kurtz testified on Respondent’s behalf and submitted twelve exhibits. Additional Evidence In 2007, an individual named Jamie Buchanan decided to remodel a cabin and to build accessory structures on property that her family owned (“the Buchanan project”). The property was located off a dirt road in a remote, rural area near Munds Park. Because the existing improvements had not been permitted, Ms. Buchanan did not want to involve the Coconino County Building Department in the project. In 2007, Mr. Kurtz was living in Munds Park, working as a superintendent for another construction company. Mr. Bueghly asked Mr. Kurtz to work on the Buchanan project “on the side” and to use his construction contacts in the Munds Park area to help Complainant finish the project. Mr. Bueghly, on behalf of Complainant, agreed to pay Mr. Kurtz “under the table,” without withholding taxes or reporting the payments to any government agency. No signed contract exists between Complainant and Mr. Kurtz. Mr. Kurtz prepared a list of the items, including demolishing existing walls, framing, replacing windows and doors, constructing a shed to house a generator, adding electrical outlets, and installing new plates and switches at existing electrical outlets. The only notation that tied the list to the project was the words, “Buchanan’s Residence,” written at the top. Mr. Kurtz performed at least some of the work on the list with the help of his sons and others. Mr. Bueghly asserted that Complainant’s role on the Buchanan project was to act as “the owner’s representative,” not the general contractor. Mr. Bueghly’s assertion regarding Complainant’s role on the project was not credible because Ms. Buchanan hired and paid Complainant, and Complainant hired and paid Mr. Kurtz for his work on the Buchanan project. Based on this undisputed evidence, Inspector Schweiger testified that Complainant was the general contractor on the Buchanan project. Mr. Bueghly testified that he reasonably believed that Mr. Kurtz was licensed in 2007 because he went to the Registrar’s website and found a license for T J K Construction. According to the printout that Complainant submitted at the hearing, the Registrar issued the license to sole proprietor Thomas Joseph Komick dba T J K Construction at an address in Yuma, Arizona.[1] Mr. Bueghly’s testimony that he believed that Mr. Kurtz was licensed when Complainant hired him was not credible for the following reasons: a. Because Mr. Kurtz and Mr. Bueghly had been friends since 1993, when they met while working together in the construction industry, Mr. Bueghly would not have needed to consult the Registrar’s website in 2007 to determine whether his old friend was licensed;

b. Mr. Kurtz filed Articles of Incorporation for Respondent with the Arizona Corporation Commission on April 8, 2008;

c. Between June 27, 2007 and May 20, 2008, Complainant paid a total of $135,000.00 in six checks that were drawn on Complainant’s business account and made payable to Mr. Kurtz personally, not to Respondent;

d. No evidence was submitted that Mr. Kurtz ever lived in Yuma or that Mr. Komick was ever involved in the Buchanan project; and

e. Mr. Kurtz listed Mr. Bueghly as a reference on Respondent’s license application to the Registrar.

Mr. Kurtz referred Complainant to Jesse Whitmer of Williams Mountain Electric, L.L.C., License No. ROC235071, Class C-11 (“Williams Mountain”) for the electric work on the Buchanan project. In August 2008, Williams Mountain submitted an estimate to Complainant for installation of the propane generator, wiring, and a subpanel on the Buchanan project. In October 2008, Williams Mountain submitted an invoice to Complainant in the amount of $4,699.98 for the completed work. Williams Mountain subsequently filed a complaint with the Registrar against Complainant’s license for nonpayment, which the Registrar designated as Case No. F09-0115. Mr. Kurtz initially tried to mediate between Complainant and Williams Mountain and to help Complainant complete the Buchanan project. When the project “came apart,” however, he stopped answering Mr. Bueghly’s calls. Complainant then filed the complaint with the Registrar against Respondent’s license. After Inspector Schweiger received Complainant’s complaint, he contacted the Coconino County Building Department and learned that the Buchanan project was not permitted. On October 27, 2009, the Coconino County Building Department issued a Correction Notice that identified fourteen different building code violations on the Buchanan project. The Correction Notice also stated that “owner needs to submit new plan views and plot plans” and “more inspections to come.”[2] Coconino County Building Inspector Lars Forsyth and one other county employee attended Inspector Schweiger’s October 28, 2009 jobsite inspection. On January 19, 2010, Williams Mountain’s complaint for nonpayment against Complainant in Case No. F09-0115 proceeded to hearing before Administrative Law Judge Eric A. Bryant. Mr. Bueghly argued that Williams Mountain’s contract was with Mr. Kurtz, not Complainant. On February 8, 2010, Judge Bryant issued a decision, rejecting Mr. Bueghly’s argument and finding that Complainant had contracted with and had failed to pay Williams Mountain $4,700.00, in violation of A.R.S. § 32-1154(A)(11).[3] On March 1, 2010, the Registrar accepted the Judge Bryant’s findings in Case No. F09-0115. As a result, the Registrar suspended Complainant’s license until it provided proof that it had paid Williams Mountain.[4] According to the Registrar’s records, Respondent’s license is current and in good standing. Two open complaints are pending against Respondent’s license. CONCLUSIONS OF LAW This matter lies within the Registrar’s jurisdiction.[5] Complainant bears the burden of proof and must establish cause to penalize Respondent’s license by a preponderance of the evidence.[6] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[7] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[8] 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.”[9] Complainant has not established that Respondent, as opposed to Mr. Kurtz, performed any contracting work on the Buchanan project. Therefore, Complainant has not established cause to penalize Respondent’s license under A.R.S. § 32-1154(A)(1),[10] (2),[11] (3),[12] or (17).[13] Complainant established that Mr. Kurtz acted as an unlicensed contractor on the Buchanan project, in violation of A.R.S. § 32-1151.[14] Therefore, Complainant has established cause to penalize Respondent’s license under A.R.S. § 32-1154(A)(20).[15] Respondent’s clean record is a factor in mitigation of any penalty to be assessed as a result of the contracting law violation that Complainant established in this matter. Another factor is mitigation is Complainant’s own culpability in setting in motion the events that led to its complaint against Respondent’s license.[16] RECOMMENDED ORDER In light of the contracting law violation that Complainant Trinidad Builders, Inc. established in this matter, it is recommended that the Registrar place Respondent T J K Remodeling, Inc.’s License No. ROC245305, Class B-3 on disciplinary probation for a period of 60 days, commencing on the effective date of the Registrar’s final order. It is further recommended that any continuation or restoration of Respondent’s contracting rights, whether or not probationary, be subject to a condition that Respondent first post an additional surety bond, cash deposit, or alternative deposit for a period of 60 days, including future renewal periods, in the amount of $500.00, such bond or deposit to be in addition to the required surety bond, cash deposit, or recovery fund participation set forth in A.R.S. § 32-1152. Cash or alternative additional deposits, if utilized, should be returned only after the expiration of an additional two-year period following the above 60-day period only if no complaints are then pending. 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, August 4, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] The printout for T J K Construction’s License No. ROC128272, Class B was dated October 31, 2009. According to the printout, the Registrar issued the license on October 20, 1997. [2] See Complainant’s Exhibit C12. [3] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure by a licensee . . . to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee’s operations as a contractor when the licensee has the capacity to pay . . . .” [4] Respondent appealed the Registrar’s final Decision and Order in Case No. F09-0115 to superior court. [5] See A.R.S. § 32-1101 et seq. [6] 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). [7] See A.A.C. R2-19-119(B)(2). [8] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [9] Black’s Law Dictionary at page 1220 (8th ed. 1999). [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, “[v]iolation of any rule adopted by the registrar.” The rule violated here 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.” [13] 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.” [14] This statute makes it unlawful for any person to engage in the business of contracting without possessing a contractor’s license in good standing. [15] This statutory subsection includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[s]ubsequent discovery of facts which if known at the time of issuance of a license or the renewal of the license would have been grounds to deny the issuance or renewal of the license.” [16] Complainant may have violated A.R.S. § 32-1154(A)(10) when it hired Mr. Kurtz and A.R.S. § 32-1154(A)(5) when it paid him “under the table.”

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