ALJDEC decisions subject to certification as final

2011A-2070-ROC · Registrar of Contractors · 2012-02-29

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: February 9, 2012

APPEARANCES: Complainant appeared on her own behalf; Respondent was represented by Managing Member and Qualifying Party Frank Davis, and Office Manager Dorothy Davis.

WITNESSES: Rick Oelke, ROC Inspector Karla Holdaway Jason Fowler, Project Manager, Sage Luxury Homes Frank Davis Dorothy Davis

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 complete the project for the price agreed to with regard to plumbing 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, including marked and admitted Exhibits A through I from Complainant and Exhibits 1 through 9 from Respondent. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order finding no violation. FINDINGS OF FACT 1. Respondent is the holder of license K-37.212201-D, a dual specialty contracting license issued by the Registrar of Contractors (“ROC”). It authorizes Respondent to install and repair plumbing for both residential and commercial properties. The Qualifying Party for the license is Frank Davis. 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 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] 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. Evidence shows that Respondent was hired by 21st Century as a subcontractor to perform plumbing work on the project. Although there are written proposals in evidence, they are not signed by 21st Century (except for a change order) so the agreements between Respondent and 21st Century for several portions of the work were verbal agreements. The proposals and documents in Exhibits 1, 2, 3, 4, and 5 are the only evidence of the terms of the verbal agreements.[3] They show that the scope of work for which Respondent was hired was piecemeal. 4. According to Inspector Oelke, the scope of the agreements between 21st Century and Respondent are unusual in the industry, although no one testified that this was a violation of workmanship standards. While most general contractors hire a plumber for all phases of plumbing, or, if not, then for one or more full phases of work (i.e., “soils”, “top out,” and “trim”), Respondent’s agreements were for only portions of the phases of the plumbing work, and not for all phases, or even a complete phase of work. 5. Exhibit 4 lists and describes various parts of the project that Respondent was hired by 21st Century to install as part of the water piping. It also list exclusions of the work. Exhibit 5 describes the work that Respondent performed from that list. Exhibit 1 states that Respondent was hired to do the rough-in gas piping, with some listed exceptions to the scope of work. Exhibit 2 describes the work Respondent did for the gas piping rough-in. Exhibit 3 is a plumbing change order that was signed by 21st Century’s principal and for which Respondent did the work. 6. Inspector Oelke issued a Corrective Work Order (“CWO”) to Respondent on April 21, 2011. The CWO noted that Respondent’s scope of work could not be fully determined because the documentation was not signed by Respondent and the agreements were verbal. The CWO also noted that Respondent used pipe from one manufacturer and fittings from another for the water piping, which is a code and workmanship violation. Finally, the CWO noted that there were deviations from the plans. Respondent was ordered to correct any deficiencies in its work. 7. Respondent performed corrective work. Inspector Oelke testified that Complainant acknowledged that Respondent had complied with the CWO before the Citation and Complaint was issued. Therefore, no violation of A.R.S. § 32-1154(A)(23) was cited. 8. Jason Fowler, Project Manager for Sage Luxury Homes (“Sage”), testified that when Complainant hired Sage as the new general contractor in early 2011, the plumbing top out was 95% completed (very close to pre- drywall inspection). Complainant wanted Respondent to complete the remaining 5% of the phase. However, Respondent declined, stating that the work in the agreements it had with 21st Century was complete. This tribunal finds that the evidence is not clear that the remaining 5% of the top out phase was a contractual obligation for Respondent. Therefore, Respondent’s failure to complete the phase has not been shown to be abandonment. Sage hired Respondent to perform a change order with respect to the water heater, and Respondent did that work without issue. 9. When Sage contacted Respondent and asked Respondent to complete the phase work, Respondent explained that 21st Century had not paid Respondent[4] and that Respondent was finished with the scope of work for which it was hired. Complainant took that as a refusal by Respondent to complete the phase work to top out, which Complainant believed was what Respondent had been hired by 21st Century to do. Complainant, through Sage, had others complete the phase work and make corrections to the plumbing after Respondent had completed the CWO corrective work. 10. At hearing, Complainant presented a list of items for which she believes she is owed restitution by Respondent.[5] First, Complainant hired a plumber to complete the phase work to top out.[6] However, as just discussed, the evidence does not show by a preponderance that Respondent was hired to perform the entire top out phase. Concerning the other items, including corrections to guest bath and master bath plumbing and corrections to gas piping to an outdoor barbecue, the evidence does not show that Respondent was given a chance to correct its work before Complainant hired others to do it. 11. The evidence shows that Respondent has been willing to perform work and any corrections for work that are within the scope of work for which Respondent was hired. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[7] Further, the standard of proof at hearing is by preponderance of the evidence.[8] 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.[9] Complainant has not 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), 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. However, with regard to the plumbing work on the project, the evidence does not show a violation. Subsection (A)(2) prohibits a substantial departure from plans that results in prejudice to another. Although there were some departures from the plans by Respondent, evidence was not presented to show that they were substantial departures and that Respondent prejudiced Complainant.[10] Thus, the evidence does not show a violation of (A)(2). 4. Subsection (A)(3) prohibits violating any ROC rule, namely R4-9- 108, which prohibits poor workmanship. Here, Respondent corrected any workmanship issues and complied with the CWO. The evidence does not show a violation. 5. The Citation and Complaint also alleges a violation of A.R.S. § 32-1154(A)(9), which prohibits failure to complete a project for the price agreed to between the parties. The evidence does not show a violation of that provision. 6. Finally, 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 subcontract agreement was not between Respondent and Complainant. 7. Complainant’s main points at hearing were based on the belief that Respondent was required to complete the work through the top out phase. The evidence does not support such a finding. As unorthodox as it was, 21st Century hired Respondent to do portions of phase work, and Respondent has done the work and corrected any problems with the work when asked. Respondent is not held responsible for corrective work that was done without giving Respondent a chance to make the corrections first. 8. There being no violations shown against Respondent, this matter should be dismissed. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that Citation and Complaint 2011-2070 against Respondent Lacy Rain LLC dba Apache Plumbing Services be dismissed.

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 29, 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] Complainant challenged the reliability of Respondent’s written documentation because she believes they were not disclosed by Respondent at the initial jobsite inspection on April 18, 2011, when they should have been. However, Inspector Oelke’s handwritten notes from that inspection (contained in the complaint file) reveal that he did see the documents in Exhibits 1 through 5 on that day at the inspection. [4] Respondent has filed an ROC no-pay complaint against 21st Century that is ROC Case No. 2011-2099. [5] Some of the items on the list are clearly legal damages and not restitution. Those were identified at hearing an excluded from consideration. [6] Exhibit C. [7] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [8] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [9] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [10] Complainant’s presentation of evidence was disorganized and very difficult to follow.

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