ALJDEC decisions subject to certification as final

2011A-2069-ROC · Registrar of Contractors · 2012-02-24

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 6, 2012

APPEARANCES: Complainant appeared on her own behalf; Respondent was represented by Qualifying Party David Greer.

WITNESSES: Rick Oelke, ROC Inspector Andy Pulsipher, Architect Karla Holdaway Jason Fowler, Project Manager, Sage Luxury Homes David Greer

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant brings this action against Respondent alleging abandonment, poor workmanship, failure to build according to plans, and failure to comply with a Corrective Work Order with regard to HVAC (heating, ventilation, and air conditioning) work done by Respondent at Complainant’s home. Respondent was operating as a subcontractor of Complainant’s former general contractor. Respondent denies the allegations. This tribunal entered the complaint file received from the Registrar of Contractors into the record. The parties presented evidence and testimony from the witnesses above at the hearing. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding violations and recommending discipline. FINDINGS OF FACT 1. Respondent is the holder of license K-39.256999-D, a dual specialty contracting license issued by the Registrar of Contractors (“ROC”). It authorizes Respondent to install and repair air conditioning and heating systems (excluding solar) for both residential and commercial properties as part of the mechanical specialty trade. The Qualifying Party for the license is David Greer. 2. In May 2010, Complainant hired a general contractor to perform a major remodeling and addition to her home. Complainant’s subsequent disastrous situation has been adjudicated by the ROC and this tribunal in her case against her former general contractor, 21st Century Construction Co., LLC (“21st Century”), which resulted in the revocation of 21st Century’s license.[1] That decision found that 21st Century substantially deviated from the plans and specifications that had been prepared by an architect and mechanical engineer at Complainant’s expense. It also found that Complainant had made progress payments to 21st Century for work up to and through the stage at which trim, cabinets, and countertops were to have been completed. However, 21st Century had only completed the project to the pre-drywall stage when it quit the job, closed its doors, and left Complainant with a mess.[2] The decision found that neither Complainant, nor her architect, nor her mechanical engineer was informed about the deviations by 21st Century, and there were no change orders. 21st Century was found to have abandoned the job without legal excuse, to have substantially deviated from the approved plans and specifications, to have poor workmanship, and to have failed to comply with a Corrective Work Order (“CWO”). ROC Inspector Rick Oelke, the assigned inspector for all claims relating to the project, characterized 21st Century as a “rogue contractor” and the project as a “rogue project” due to the scope and severity of deviations from the approved plans and because the deviations were built without approval from the homeowner, building authority, or architect. Those facts and findings are the backdrop to Complainant’s current action against Respondent. 3. Uncontested evidence shows that Respondent was hired by 21st Century as a subcontractor to perform HVAC work on the project only through the rough-in stage.[3] There is no documentation of the agreement between 21st Century and Respondent because it was a verbal subcontract agreement. Respondent performed the work without following the approved plans. In fact, Respondent’s Qualifying Party, David Greer, testified that the HVAC system could not be built per plan because the framing had not been built per plan. 4. The HVAC system built by Respondent does not comply with the approved plans. The evidence shows that Respondent knew the framing was not built to plan from the start. David Greer testified that there was a meeting in September 2010 with Respondent, 21st Century, Complainant, and the architect about what to do because of the problem. However, both Complainant and the architect, Andy Pulsipher, credibly testified that Mr. Pulsipher was not present at that meeting and never approved any changes to the plans as drawn. Further, there is no written change order or any other documentation showing that Complainant or one of her agents—the architect or the mechanical engineer who designed the system on the plans—had been notified of the situation before September 2010. The evidence does show that Complainant met with Respondent and 21st Century in September 2010 to talk about how an HVAC system could be put into the existing framing. Again, there is no documentation showing what Complainant was informed about or agreed to at that point. 5. Respondent went ahead and built a system that would fit the framing. After 21st Century abandoned her, Complainant hired Sage Luxury Homes (“Sage”) to finish the project and Sage contacted Respondent to talk about the HVAC system. In March 2011, Complainant entered into a written contract with Respondent to change some of the duct work and vent piping.[4] Respondent did that work. 6. In April 2011, ROC Inspector Rick Oelke inspected Respondent’s work and issued a CWO ordering Respondent to work with Complainant, her architect, her mechanical engineer, and her new general contractor to get the existing system into compliance with the building code and into good working condition. He had found a code violation, which was subsequently corrected by Respondent, and some other items that needed attention. 7. The evidence shows that Respondent was willing to complete the project in accordance with the CWO, and performed some work in furtherance of it. However, Complainant’s engineer needed to make some changes to the system as built, and there was some small delay as documents were sent back and forth between Respondent and the engineer. Respondent then did all the work but for two items: (1) relocation of a return air vent, and (2) installation of a range hood vent. David Greer testified that Respondent could not do those items because the new drawings were incorrect about the dimensions for the return air duct and did not show the correct location of the range vent. He testified that he was not willing to do the work unless the plans were changed because that is the same type of situation upon which the complaint had been based. Thus, he stated that he was willing to do the work as soon as the plans were modified and approved; he was waiting for Complainant’s engineer and Sage. This is substantiated by a May 20, 2011 e-mail from Respondent to Sage. 8. Complainant thought that Respondent did not want to do the work and hired others to do it instead. She was not happy with Respondent due to the situation she was in. 9. Complainant put into evidence information about costs associated with correcting conditions caused by the failure to build the HVAC system according to the plans. Those costs are documented as follows: a) Soffits in master bedroom, closet, bathroom, and office $2,200.00 b) Modifications to former equipment room $1,200.00 c) Completion of HVAC rough-in $1,365.00 d) Cabinet installation in pool bath $1,074.11 e) Additional amount to complete HVAC system $245.00 f) Framing changes to make system work $2,400.00 g) Engineering costs to approve current system $2,500.00 Total $10,984.11

Complainant testified that these costs were necessary to make the existing home complete and each space useable, given the substantial deviations from the HVAC system called for in the plans. 10. The record before the tribunal in this matter does not contain sufficient information to make a calculation of Complainant’s restitution with regard to the HVAC system. The record does not show the amount that Complainant agreed to pay for the HVAC portion of the project or what amount Complainant paid 21st Century for that portion. Without those numbers, restitution cannot be determined. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[5] Further, the standard of proof at hearing is by preponderance of the evidence.[6] Therefore, Complainant bears the burden of showing, by a preponderance of the evidence, that Respondent has violated the statutes cited in the Citation and Complaint.[7] Complainant has met that burden. 2. The Citation and Complaint alleges several violations of the statutes with which licensed contractors must comply. With regard to the work performed by Respondent, the Citation and Complaint cites Arizona Revised Statutes (A.R.S.) § 32-1154(A)(1), (A)(2), (A)(23), and (A)(3) by way of ROC Rule R4-9-108. Subsection (A)(1) prohibits abandonment of a contract without legal excuse. The evidence does not show abandonment by Respondent. 3. Subsection (A)2) requires that contractors build according to plans, specifications, and building codes. In Complainant’s situation, this is the most significant failure of 21st Century and the source of her substantial problems with her project. The question as it relates to Respondent is “What was Respondent’s obligation toward Complainant with regard to following the approved plans?” Based on the evidence, especially the testimony of Inspector Oelke, Respondent has the same duty as the general contractor to build according to the approved plans. Here, Respondent did not do so. It is no excuse that the project had already been harmed by the general contractor’s non-compliant framing and that the approved HVAC system could not have been built with that framing. Respondent should have insisted on seeing written approval for the deviation or declined the job. Instead, Respondent aided 21st Century in its conduct that damaged Complainant. Thus, Respondent joined in the significant damage that was done to Complainant and must bear responsibility for its part. 4. Two citations apply to workmanship: Subsection (A)(23) prohibits failure to comply with a CWO. Subsection (A)(3) prohibits violating any ROC rule, namely R4-9-108 which prohibits poor workmanship. Here, Respondent corrected any workmanship issues and was wiling to comply with the CWO, but Complainant ran out of patience. The evidence does not show that Respondent failed to comply with the CWO. 5. The Citation and Complaint also alleges a violation of A.R.S. § 32-1158, which requires that contracts between a contractor and an owner be in writing with certain minimum requirements. That provision was not violated here because the verbal subcontract agreement was not between Respondent and Complainant, although it was unwise for Respondent to enter into a verbal subcontract agreement. 6. Finally, the evidence shows a violation of A.R.S. § 32- 1154(A)(15), as cited in the Citation and Complaint, because Respondent used the name “North Wind Air Conditioning” rather than its licensed name. A warning letter was issued to Respondent by the ROC, and this tribunal finds that to be sufficient. 7. A review of Respondent’s license status shows that the license was issued in 2009 and has not been disciplined. Due to the short amount of time, this factor is not significant. 8. Because Respondent aided the general contractor in damaging Complainant but was not the primary wrongdoer, the appropriate sanction in this matter is to place Respondent’s ;license on disciplinary probation.

RECOMMENDED ORDER IT IS RECOMMENDED that license K-39.256999-D, held by North Wind Mechanical LLC, be placed on disciplinary probation for a period of six (6) months beginning the effective date of the Registrar’s Order.

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, February 24, 2012.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Karla Holdaway v. 21st Century Construction Co., LLC, OAH Docket No. 2010A-[number redacted]-ROC (issued July 27, 2011). Adopted by Order of the ROC on August 8, 2011 in ROC Case No. 2010-[number redacted]. [2] 21st Century did not appear at the hearing against its license. [3] This, in itself, is unusual because one would normally want the same contractor to perform all phases of the HVAC portion of the home. [4] Change Order attached to Respondent’s Written Answer of November 18, 2011. [5] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [6] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [7] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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