ALJDEC decisions subject to certification as final

2010A-753261-ROC · Registrar of Contractors · 2010-06-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 3, 2010 at 8:00 a.m. APPEARANCES: Complainant Anne Marie Moore appeared on her own behalf (with Eric D. Gere, Esq., Jennings, Strouss & Salmon, PLC, who acted as advisory counsel); Respondent Tony Benavides dba Casas Antiguas Builders appeared on his own behalf. ADMINISTRATIVE LAW JUDGE: Diane Mihalsky _____________________________________________________________________

FINDINGS OF FACT Background and Procedure On July 18, 1984, the Arizona Registrar of Contractors (“the Registrar”) issued License No. ROC060665, Class B for residential general contracting to Respondent Tony Benavides dba Casas Antiguas Builders, a sole proprietorship. On November 4, 2009, the Registrar received a complaint against Respondent’s license from Complainant Anne Marie Moore, which concerned Respondent’s construction of a custom home for Complainant at 4903 S. Hacienda Trail, Willcox, Arizona 85643 for a total cost of $591,175.00. According to the complaint, a certificate of occupancy had been issued on June 9, 2008, Respondent had last worked on the house on August 12, 2008, and Complainant had moved into the house on November 15, 2008. According to the complaint, Respondent had failed to provide the following documents to Complainant: (1) Paid-in-full invoices and copies matched with original receipts for the cashier’s checks that Complainant had used to pay Respondent for construction of the house; and (2) Invoices, purchase orders, and receipts from materialmen and subcontractors, which would provide warranty information to Complainant. Complainant also requested that the Registrar order Respondent to reimburse her for $240.00 that she paid to Hi-Tech Painting LLC for repairs and to repair “[t]here Tower Light Pendelums [sic],” which were “still in disrepair/incomplete/Insufficient Quality.” The Registrar assigned the complaint to Inspector Mike Nieves for investigation. Inspector Nieves performed a jobsite investigation and, on December 3, 2009, issued a Corrective Work Order (“CWO”) to Respondent, directing Respondent to provide certain information within fifteen days, in relevant part as follows: 2b. Warranties and company names, contact persons and telephone # and addresses have not been provided for septic system, site blading, plumbing fixtures, fireplace components, windows and exterior doors, interior doors, all cabinetry, tile countertops, bath/shower tile, icemaker appliance and concrete columns: Provide sub-list and corresponding warranty paper work.

3b. Warranties and company names, contact persons and telephone # and addresses have not been provided for heating/air conditioning equipment, concrete tile roof, framing, Exterior and interior painting, drywall, stucco, electrical and plumbing: Provide sub-list and corresponding warranty paper work.

No action is required on the following:

1. Paid in full invoices matched with original receipts for Cashiers Checks paid between 12/01/06 and 8/12/08 have not been provided by the contractor: I could not determine the extent of the contractors responsibility as this is not specified in the contract.

2a. Dated Invoiced receipts: Not specified in the contract.

3a. Dated Invoiced receipts: Not specified in the contract.

4. Owner has not been reimbursed for staining/varnishing of warranted exterior door, $240.00 that contractor refused to pay: I lack jurisdiction.

5. Three tower light pendulums are still in despair [sic]/ incomplete/insufficient quality: Corrected by the respondent prior to the jobsite.

In response to the CWO, Respondent sent Inspector Nieves a list of the subcontractors and suppliers used on the job, with contact information, and copies of purchase orders, invoices, receipts, cashier’s checks, and other documents relating to his construction of Complainant’s house, which documents comprised more than 60 pages. Respondent requested that Inspector Nieves send copies of the documents to Complainant. On December 21, 2009, the Registrar received Complainant’s request for hearing. On February 25, 2010, the Registrar issued a Citation and Complaint against Respondent’s license, charging A.R.S. § 32-1154(A)(23) and (3) (namely A.A.C. R4-9-108). Respondent timely answered the Citation and Complaint, denying any statutory violation and affirmatively alleging as follows: This complaint filed by Mrs. Moore is not due to poor workmanship or defect on my behalf, but about paperwork Mrs. Moore says she has yet to receive. Both Mrs. Moore and the Registrar have been provided with invoices, sub contractors, warranties and such, but they have not met with her approval. Invoices were addressed to both Mrs. Moore and her Husband, Larry Moore, because they were both listed on the contract and they both signed it. Business was conducted with both of them. All this has been provided to Mrs. Moore even though it was never stipulated in the contract.

As to her request for me to provide title to her home is something I cannot legally do. The Moores purchased the property prior to us having a contract. I never owned or controlled said property. Mrs. Moore needs to talk to a title company, with the county or with an attorney, which I have mentioned to her before.

In regards to the invoice to Hi-Tech, I contacted the painter as a courtesy for Mrs. Moore. He was to make contact and arrangements with Mrs. Moore to get the work done. Mrs. Moore was previously told that the painting was not covered by Jeldwen’s warranty or by Casas Antiguas.

The pendulum lights in the towers were selected and purchased by Mrs. Moore several times and reinstalled by the electrician. When these lights were first installed, both the electrician and I recommended that they be anchored because of the high winds in the area and would be at risk of breaking. Mrs. Moore at that time refused.

In closing, I have still not been informed as to which rule, law or article of the Registrar of Contractors I have violated. I have complied with all that has been asked of me; therefore, I feel I have not violated any provisions of the State’s contracting laws, mainly A.S.R. [sic] 32-1154A.

Respondent attached to his written answer copies of the documents provided in response to the CWO, as described in Finding of Fact No. 6 supra. The Registrar referred the matter to the Office of Administrative Hearings (“OAH”), an independent state agency, to schedule and to conduct a fair hearing. Prior to the hearing, Complainant had subpoenas duces tecum issued to sixteen of the subcontractors and suppliers whom Respondent had identified in the documents provided in response to the CWO and attached to Respondent’s written answer. Complainant also had a subpoena duces tecum issued to Respondent. Complainant instructed the subcontractors and suppliers to provide documents responsive to the subpoenas duces tecum to OAH. The Administrative Law Judge forwarded the responses to Complainant, with a copy to Respondent, and hand-delivered the remaining responses to Complainant at the start of the hearing. A hearing was held on June 3, 2010. Inspector Nieves testified telephonically. Complainant testified and submitted five exhibits. Respondent testified and submitted five exhibits. Additional Hearing Evidence Additional Background In February 2006, Complainant’s aunt died and she inherited $1.25 million. She decided to purchase property in Willcox and to build a house on the property. On November 28, 2006, Complainant and her husband accepted Respondent’s offer to construct a house in Willcox per the plans that Complainant provided for $570,000.00, plus the cost of any change orders. Although the contract included certain allowances, the contract was for a lump sum, not for time and materials. The contract did not require Respondent to provide any specific documentation to Complainant. To date, Complainant has paid approximately $700,000 from her inheritance for the property and house in Willcox. Complainant requested that the Registrar suspend, revoke, or otherwise penalize Respondent’s license until it provided the following: (1) Invoices, purchase orders, and other documents regarding 25 items provided by various suppliers or construction performed by various subcontractors; (2) An original notarized statement with the cashier’s checks that Complainant had paid Respondent, which would enable her to take title to her house as her sole and separate property; and (3) Reimbursement for $240.00 that Complainant had spent to paint an exterior door that Jeldwen had replaced and Respondent had installed under warranty. Warranties and Company Names (Item Nos. 2b and 3b on the CWO) Complainant testified that friends who had built houses had all received portfolios of warranty documents from the builder. Complainant felt that she should also receive such a portfolio of documents from Respondent. She is concerned that she may need the documents for necessary warranty work from subcontractors and suppliers. Complainant elected not to review the subcontractors’ responses to her subpoenas duces tecum to see whether the responses included the information she was seeking from Respondent. Complainant explained that she had the subpoenas duces tecum issued as a fallback position, in case she lost the issue at hearing. Complainant disputed whether she had received all the documents that Respondent had provided to the Registrar in response to the CWO, had attached to his written answer to the Citation and Complaint, and submitted at hearing. When the Administrative Law Judge suggested that Respondent be allowed to make another copy of his exhibit for Complainant, however, Complainant opposed a recess because she was not willing to pay her advisory attorney for the delay. Complainant admitted that she had signed the purchase orders and approved Respondent’s purchase of the Jeldwen windows. She also admitted that she had authorized the purchase of and had stored the plumbing fixtures, lighting fixtures, stove, refrigerator, freezer, dishwasher, clothes washer, and clothes dryer. Respondent credibly testified that he had provided invoices and receipts of all allowance items to Complainant during the course of construction. Although Complainant admitted having received and having signed such invoices and receipts, she testified that she still needed purchase orders for warranties. Inspector Nieves testified that, in his opinion, Respondent had complied with the CWO and was not in violation of any contracting law. Paid in Full Invoices for Complainant’s Cashiers’ Checks to Respondent (Item No. 1 on the CWO)

Complainant testified that her accountant had told her that she was not able to get a form 1099 or to take title to the house as her sole and separate property without an affidavit from Respondent with the cashier’s checks that Complainant had used to pay him. In response to the subpoena duces tecum that Complainant had issued, Respondent produced at the beginning of hearing a notarized accounting to which he attached copies of the cashiers’ checks that Complainant had used to pay him. Complainant said the accounting was not sufficient because she thought it was a copy, not an original. Respondent has never owned the land on which he built Complainant’s house and has not asserted any mechanic’s liens or other claims against the house. Reimbursement for Staining/Varnishing of Warranted Exterior Door (Item No. on the CWO)

The only item discussed at hearing on which Respondent has performed warranty work was the Jeldwen windows. Among the documents that Respondent had provided to the Registrar in response to the CWO, had attached to his written answer to the Citation and Complaint, and had submitted at hearing was Quote # JAHC00063 from Jeldwen Windows and Doors and Invoice # SV418 dated October 9, 2007 from Apex Windows and Bath Accessories, which had supplied the Jeldwen windows. Complainant said these documents were not sufficient. She needed a purchase order. One of the windows had broken. Jeldwen had replaced the window under its warranty. Respondent had installed the replacement window. Jeldwen’s warranty did not include custom painting the exterior of the door. Respondent had refused to paint the door. Complainant had paid $240.00 to Rudy Alvarez of High Tech Painting, to whom Respondent had referred Complainant, to paint the door. Complainant testified that another window had started to whistle when the wind blew. Respondent testified that he had an “ongoing work order” with Jeldwen. He had informed Complainant that he had contacted Jeldwen and it was one or two months behind in sending out a technician to investigate the whistling window. The whistling window was not part of the complaint in this matter. Tower Light Pendulums (Item No. 5 on the CWO) Complainant acknowledged that the problems with the pendulum lights had been resolved and withdrew her complaint regarding them at hearing. Date of Warranty Respondent felt the date when two-year warranty required by the Registrar began to run was May 29, 2008, when he had conducted a walk-through inspection with Complainant. Complainant felt the two-year warranty began to run on June 9, 2008, when the Certificate of Occupancy was issued for the house. CONCLUSIONS OF LAW As a licensed contractor, Respondent is subject to the Registrar’s jurisdiction.[1] Complainant bears the burden of proof and must establish Respondent’s statutory violations by a preponderance of the evidence.[2] Respondent bears the burden to establish affirmative defenses by the same evidentiary standard.[3] “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.”[4] 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.”[5] Complainant has not established that Respondent’s alleged failures to provide receipts for the cashier’s checks that it received or receipts, purchase orders and invoices from subcontractors and suppliers violated any statute. Because the contract was for a lump sum, not time and materials, Complainant had no contractual right to receipts, invoices, and purchase orders. No statute requires Respondent as a licensed contractor to provide receipts, invoices, or purchase orders. As a licensed contractor, Respondent is only required to warranty its own and its subcontractors’ workmanship and material for two years.[6] The warranty begins to run upon “occupancy or discovery of the defect, whichever event first occurred.”[7] In this case, according to the complaint, Complainant moved into the house on November 15, 2008. Even after time to assert claims under the warranty required by the Registrar expires, Complainant may assert in a court of competent civil jurisdiction against Respondent or his subcontractors or suppliers for common-law tort claims for latent defects[8] or contract claims[9] for warranty work. No public policy requires Respondent to provide invoices, receipts, or purchase orders to satisfy Complainant in this administrative action as a condition of keeping its license in good standing. Complainant therefore has not borne her burden to establish that Respondent violated A.R.S. § 32-1154(A)(3)[10] or (23)[11] when he allegedly failed to provide receipts, invoices, purchase orders, or any other documentation to satisfy Complainant’s demands. With respect to Complainant’s claim for reimbursement for the $240.00 that she paid to paint the exterior door that was replaced under warranty, the legislature has not empowered either the Office of Administrative Hearings or the Registrar to adjudicate or award money damages.[12] The Registrar may penalize a contractor’s license by ordering payment of restitution if a proven statutory violation can no longer be remedied by corrective work.[13] Restitution may be appropriate when the contractor does not immediately respond to a property owner’s complaint and the workmanship deficiency is such that the property owner is justified in hiring another contractor to remedy a health or safety issue or to mitigate his damages.[14] That is not the case here. The unpainted exterior door was correctible and in fact has been painted. Although the Registrar might have required Respondent to paint the door as part of its warranty after hearing, reimbursement of the $240.00 that Complainant has already paid another contractor to paint the door is beyond the jurisdiction of the Registrar to award in this administrative complaint. 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 should dismiss Complainant Anne Marie Moore’s complaint in Case No. 2010-753261 against Respondent Tony Benavides dba Casas Antiguas Builders’ License No. ROC060665, Class B. 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, June 8, 2010.

/s/ Diane Mihalsky Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See 32-1101 et seq. [2] 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). [3] See A.A.C. R2-19-119(B)(2). [4] Morris K. Udall, Arizona Law of Evidence § 5 (1960). [5] Black’s Law Dictionary at page 1220 (8th ed. 1999). [6] See A.R.S. § 32-1155(A) [7] Arizona Atty. Gen’l Op. R79-071 (April 25, 1979) (citing Lyons v. Great American Insurance Co., 4 Ariz. App. 576, 422 P.2d 724 (1967)). [8] See Richards v. Powercraft Homes, Inc., 139 Ariz. 242, 245, 678 P.2d 427, 430 (1984). [9] See Woodward v. Chirco Constructon Co., Inc., 141 Ariz. 514, 516, 687 P.2d 1269, 1271 (1984). [10] 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.” [11] This statutory subsection 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.” [12] See J.W. Hancock Enterprises, Inc. v. Arizona State Registrar of Contractors, 142 Ariz. 400, 406, 690 P.2d 119, 125 (Ct. App. 1984). [13] 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). [14] In Sunpower, the Arizona Court of Appeals upheld the Registrar’s power to order a contractor to return to a property owner the cost of a solar heater where, although the contractor had made several attempts to repair the heater, he could not make it provide a habitable degree of heat. See id.

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