ALJDEC decisions subject to certification as final

2010A-63020-ROC-rhg · Registrar of Contractors · 2010-11-18

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

REHEARING: November 1, 2010 at 8:00 a.m. APPEARANCES: Complainant Granite Plus, Inc. appeared through Nollan Blackwell, Jr., an officer; Respondent F G Homes, Inc. appeared through Walid A. Zarifi, Esq. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure In 2003, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC184051, Class B for residential general contracting to Respondent F G Homes, Inc. (“F G Homes”). In 2006, the Registrar issued License No. ROC215678, Class K-5 for dual granite and marble to Complainant Granite Plus, Inc. (“Granite Plus”). On or about July 6, 2009, the Registrar received a complaint from F G Homes against Granite Plus. The complaint alleged that Granite Plus overcharged F G Homes and that Granite Plus’ workmanship was deficient on granite that it installed in a house that F G Homes was building at 7828 N. Ancient Indian Dr. in Tucson, Arizona. The Registrar designated F G Homes’ complaint against Granite Plus as Case No. T10-0012. On or about July 6, 2009, the Registrar received a complaint from Granite Plus against F G Homes that alleged that F G Homes owed Granite Plus $5,515.30 for work that it had performed on the house at 7828 N. Ancient Indian Dr. in Tucson, Arizona. The Registrar designated Granite Plus’ complaint against F G Homes as Case No. 2010-63020. Both parties subsequently requested that the Registrar issue a citation against the other on their respective complaints. Granite Plus failed to file a timely written answer to the Registrar’s Citation and Complaint in Case No. T10-0012. As a result, on or about February 23, 2010, the Registrar issued a Decision and Order against Granite Plus in Case No. T10-0012, finding that under A.R.S. § 32-1155(B),[1] Granite Plus admitted the violations charged in the Citation and Complaint.[2] On March 3, 2010, the Registrar issued a Citation and Complaint in Case No. 2010-63020 against F G Homes charging a violation of A.R.S. § 32- 1154(A)(11). F G Homes filed a timely written answer, denying any statutory violation and arguing that Granite Plus’ complaint should be dismissed because the Registrar’s Decision and Order in Case No. T10-0012 against Granite Plus resolved all issues in this matter. The Registrar referred Case No.2010-63020 to the Office of Administrative Hearings (“the OAH”), an independent agency, for an evidentiary hearing, which as assigned the number 2010A-63020-ROC. Administrative Law Judge (“ALJ”) Brian Brendan Tully ordered the parties to submit legal briefs on the collateral effect of the Registrar’s final Decision and Order in Case No. T10-0012 and heard oral argument on F G Homes’ motion to dismiss on July 7, 2010. Although Granite Plus opposed F G Homes’ motion to dismiss, ALJ Tully recommended that the Registrar dismiss Granite Plus’ complaint in this matter because under the doctrines of res judicata or collateral estoppel, the Registrar’s Decision and Order in Case No. T10-0012 barred Granite Plus’ complaint for non-payment. On August 27, 2010, the Registrar rejected ALJ Tully’s recommended decision because “[a] review of the Complaints filed in both [Case No.2010- 63020] and in Case No. T10-0012 reveals that while some of the issues alleged may be precluded by the defenses of res judicata and collateral estoppel, not all of the issues are identical or subject to a dismissal on claim or issue preclusion grounds.” (Emphasis in original.) Therefore, the Registrar referred the matter back to the OAH for an evidentiary hearing and the OAH added the suffix “rhg” to the former OAH tracking number to reflect that the matter would be reheard, resulting in the present matter number 2010A-63020-ROC-rhg. A rehearing was held before the undersigned ALJ on November 1, 2010. Granite Plus presented the testimony of Nollan Blackwell, Jr., an officer of the corporation, and submitted one exhibit. F G Homes presented the testimony of Fouad Ghotmi, its qualifying party and an officer of the corporation, and submitted two exhibits. According to the Registrar’s record, F G Homes’ license is current and in good standing. This is apparently the only complaint pending against its license. Hearing Evidence On April 6, 2009, Granite Plus submitted an estimate to F G Homes to perform some granite work in the large custom home on N. Ancient Indian Dr. in the amount of $14,385.00. The estimate stated that F G Homes would provide, and Granite Plus would fabricate and install, Mascarello granite slabs for the kitchen countertops and master bathroom tub deck and vanity. F G Homes accepted Granite Plus’ estimate. Mr. Ghotmi wrote on Granite Plus’ estimate that additional work would be charged at a cost of $25.00 or $30.00 per square foot. Mr. Blackwell testified that he quoted this amount as Granite Plus’ labor cost, not the cost of labor plus materials, especially the granite. Mr. Blackwell estimated the number of slabs that Granite Plus would need for the job based on Mr. Ghotmi’s sketches, not detailed architectural drawings or measurements of cabinets and fixtures, because no cabinets or fixtures had been installed in the house at the time Granite Plus submitted the estimate. Mr. Blackwell testified that most suppliers will not sell stone to companies that are not licensed stone fabricators. Mr. Blackwell testified that the granite slabs that F G Homes purchased from Arizona Tile for the job were of inferior quality that would have been difficult to sell to anyone else. Granite Plus installed the granite on the kitchen countertops. F G Homes paid Granite Plus $13,000.00. Before Granite Plus prepared the estimate, Mr. Ghotmi had told Mr. Blackwell that the tub deck in the master bathroom was approximately 4’ long. The tub deck actually was approximately 8’ long. Another slab would be needed if the pieces left over from the kitchen could not be patched together to cover the tub deck. Granite Plus attempted to patch eight pieces of granite left over from the kitchen countertops. Mr. Blackwell testified that Mascarello is “a very colorful” granite. Two pieces on the tub deck were mismatched, with very visible seams. Mr. Ghotmi instructed Mr. Blackwell to purchase another granite slab for the tub deck. Granite Plus purchased another granite slab for an additional cost, and fabricated and installed it for the price quoted on the April 6, 2009 estimate. Because Mr. Ghotmi at the time did not know whether the kitchen island would have a wood or granite countertop, Granite Plus’ estimate did not include granite for an island. Mr. Ghotmi subsequently instructed Granite Plus to purchase and install granite on the large, approximately 10’ long kitchen island. Granite Plus located, purchased, fabricated, and installed a large piece of granite on the kitchen island at the house. On May 11, 2009, Granite Plus sent a copy of Invoice No. 1344 for the completed job, in the amount of $18,515.30. Granite Plus’ final invoice included four different or additional amounts that its April 6, 2009 estimate did not include, as follows: (1) An additional $1,137.82 for purchasing the granite slab for the tub deck; (2) An additional $2,170.00 for purchasing, fabricating, and installing the granite countertop on the kitchen island; (3) A difference of $747.48 between the estimate and invoice amounts for “Group A Granite for laundry Room & Master Laundry Granite supplied by Granite Plus Inc.”;[3] and (4) $75.00 for the cost of an “[u]ndermount sink cut out.” Granite Plus’ complaint to the Registrar against F G Homes for non- payment of $5,515.30 was for the difference between the amount of the final invoice and F G Homes’ $13,000.00 payment. F G Homes’ complaint against Granite Plus in Case No. T10-0012 disputed three charges on Granite Plus’ final invoice, as follows: 1. The $1,137.82 charge for the granite slab for the master tub deck, which F G Homes alleged was required because Granite Plus miscalculated the number of granite slabs that would be needed for the job; 2. The $747.48 charge for the laundry room, which F G Homes alleged should have been included in the amount of the original estimate because it was part of the original scope of work; and 3. An overcharge of $755.13 for the kitchen island because Mr. Ghotmi asserted that the parties agreed that Granite Plus would perform the extra work at a cost of $25.00 to $30.00 per square foot, including labor and materials, which meant that Granite Plus’ $2,170.00 charge for the kitchen island countertop should have been only $1,414.00. F G Homes’ complaint against Granite Plus to the Registrar in Case No. T10-0012 also alleged four workmanship deficiencies, as follows: 1. Before Granite Plus started the job, F G Homes had pre-selected two slabs at Arizona Tile, but Granite Plus had purchased, fabricated, and installed other slabs instead of using the two slabs that F G Homes had pre-selected; 2. The granite that Granite Plus had installed on the fireplace had cracks and excessive gaps from the wall, and Granite Plus had damaged the wall during installation, which damage F G Homes had repaired at its own expense; 3. Granite Plus had left several chipped areas on the kitchen and dining bar; and 4. Granite Plus had left chipping at the edges of the master niches. Mr. Blackwell testified that the Registrar’s inspector performed a jobsite inspection in Case No. T10-0012 and did not find any deficiencies in Granite Plus’ work. F G Homes argued that the Registrar’s Decision and Order in Case No. T10- 0012 established that Granite Plus overcharged F G Homes the amounts set forth in the complaint. F G Homes also argued that the cost to repair the workmanship deficiencies established by the Registrar’s Decision and Order in Case No. T10-0012 exceeded the difference between the overcharges established in Case No. T10-0012 and the amount that Granite Plus claimed that F G Homes owed in 2010A-63020-ROC-rhg. F G Homes did not present any evidence at the rehearing to establish the cost to repair the deficiencies described in its complaint against Granite Plus in Case No. T10-0012. CONCLUSIONS OF LAW 1. This matter lies within the Registrar’s jurisdiction.[4] 2. Granite Plus bears the burden of proof and must establish F G Homes’ statutory violation by a preponderance of the evidence.[5] F G Homes bears the burden to establish affirmative defenses by the same evidentiary standard.[6] F G Homes also bears the burden to establish the legal merits of its motion to dismiss Granite Plus’ entire claim under the doctrine of res judicata or collateral estoppel.[7] 3. “‘Under the doctrine of res judicata, a judgment on the merits in a prior suit involving the same parties or their privies bars a second suit based on the same cause of action.’”[8] A default judgment "is conclusive and res judicata on all issues which were or could have been litigated and is not subject to collateral impeachment at a subsequent time."[9] Under this law, the factual issues of whether F G Homes owes Granite Plus $1,137.82 for the extra granite slab for the tub deck, the $747.48 extra charge for the laundry room, and $755.13 of Granite Plus’ charge for the kitchen island countertop were determined in the Registrar’s final Decision and Order in Case No. T10-0012 and cannot be challenged in this matter. Therefore, F G Homes has established that it is entitled to an offset of $2,640.43 against the $5,515.30 that Granite Plus alleged in its complaint to the Registrar for non-payment. 4. F G Homes did not allege in its complaint in Case No. T10-0012 or at hearing in this matter that it does not owe Granite Plus the difference between the $2,640.43 offset and the invoiced $5,515.30 if Granite Homes had fully and satisfactorily performed the parties’ contract. Instead, F G Homes’ attorney argued that the cost to remedy the workmanship complaints that F G Homes established in its complaint in Case No. T10-0012 equaled or exceeded the amount otherwise owed. However, F G Homes failed to provide probative or substantial evidence of that cost. 5. The Registrar may penalize a contractor’s license by ordering the contractor to pay restitution if the party that requests restitution submits evidence to establish the damages caused by the contractor’s proven statutory violations.[10] An attorney’s arguments are not evidence. Because F G Homes did not present any evidence to establish the cost to remedy Granite Plus’ workmanship deficiencies, F G Homes did not establish that it is entitled to any offset other than the ones established in Case No. T10-0012. 6. Granite Plus established that it performed the work described on the May 11, 2009 invoice. Therefore, Granite Plus established at the hearing that F G Homes violated A.R.S. § 32-1154(A)(11)[11] by failing to pay Granite Plus the difference between $2,640.43 and $5,515.30, or $2,874.87. 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 F G Homes’ License No. 184051, Class B, until F G Homes has paid Granite Plus the sum of $2,874.87. It is further recommended that if on or before the effective date of the final order, the Registrar receives written proof from F G Homes that is satisfactory to the Registrar that it has paid Granite Plus the sum of $2,874.87 by cashier’s or registered check, the Registrar close Case No. 2010-63020. 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, November 18, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] This statute provides that “[f]ailure of the licensee to answer [a Citation and Complaint] within ten days after service shall be deemed an admission by the licensee of the licensee’s commission of the act or acts charged in the complaint . . . .” [2] The record in this matter does not contain a copy of the Registrar’s Citation and Complaint or the Decision and Order in Case No. T10-0012. Complainant did not dispute that the Registrar issued the Decision and Order against it based on its failure to file a timely written answer in Case No. T10-0012. [3] The record does not contain any explanation for this additional charge. [4] See 32-1101 et seq. [5] 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). [6] See A.A.C. R2-19-119(B)(2). [7] See A.A.C. R2-19-119(B)(3). [8] Hawkins v. State of Arizona, Department of Economic Security, 183 Ariz. 100, 103, 900 P.2d 1236, 1239 (App. 1995) (quoting Gilbert v. Board of Medical Examiners, 155 Ariz. 169, 174, 745 P.2d 617, 622 (App. 1987)). [9] Dairyland Ins. Co. v. Richards, 108 Ariz. 89, 91, 492 P.2d 1196, 1198 (1972). [10] 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). [11] 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 . . . .”

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