ALJDEC decisions subject to certification as final

2011A-224-ROC · Registrar of Contractors · 2011-10-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 23, 2011 (record held open to September 16, 2011)

APPEARANCES: Complainant appeared on his own behalf, accompanied by his wife Cindy Brophy; Respondent was represented by attorney John Parker, Parker Law Firm, PLC, accompanied by Chad Gloetzner, Respondent’s Managing Member and Qualifying Party.

WITNESSES: Called by Complainant: Michael Brophy Cindy Brophy

Called by Respondent: Brian Deucher, Air Cold Supply Ron Hoyt, Hoyt’s Heating & Air Conditioning Ed Hoyt, Hoyt’s Heating and Air Conditioning Chad Gloetzner Lori Brinegar, Member of Respondent LLC

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant Michael Brophy brings this action claiming that he did not receive the benefit of his contract with Respondent Segway General Contracting. The Citation and Complaint issued by the Registrar of Contractors (“ROC”) cites alleged violations of the workmanship requirements licensees bear. Complainant’s claim against Respondent concerns the air conditioning system that Complainant purchased from Respondent and that was installed by Respondent at Complainant’s home. Respondent denies the allegations. At the beginning of the hearing, Respondent moved to dismiss the complaint on the grounds that the complaint had been settled by the parties pursuant to a written agreement. Complainant objected to dismissal. The hearing proceeded and evidence was entered into the record relevant to both the dismissal motion as well as the merits of Complainant’s complaint. After the hearing, Respondent filed a written Motion to Dismiss, limited to the legal argument based on the settlement. Complainants were given an opportunity to file a response, but did not do so. This tribunal entered the complaint file received from the Registrar of Contractors into the record, as well as marked Exhibits C1, C2, C3, and C5[1] from Complainant and R1 through R9 from Respondent. The parties presented evidence and testimony at the hearing. Based upon the entire record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order for dismissal. FINDINGS OF FACT 1. Respondent is the holder of license KB-1.208792-D, a general dual contracting license issued by the Registrar of Contractors (“ROC”). It authorizes Respondent to perform general construction for both residential and commercial properties, except for specialty trades such as electrical, plumbing, and others. The Qualifying Party on the license is Chad Gloetzner. 2. In December 2010, after a hail storm and in conjunction with an insurance claim by Complainant, Respondent installed a new air conditioner on Complainant’s roof. The parties’ contract called for “a new [15] SEER Gas Pack”[2] that included a “[n]ew 5 ton [unit], Day and Night brand.” Respondent ordered a 15 SEER package from its supplier and installed the unit provided by the supplier. The unit installed measures at 14.5 SEER. A witness for the supplier, Brian Deucher, testified at hearing that the unit installed at Complainant’s home is typical for a 15 SEER package and is the highest efficiency unit that they sell. 3. Complainant filed an ROC complaint in January 2011. He raised several workmanship issues, but not the SEER issue because he was not aware of the SEER rating his new unit had at that time. 4. On January 28, 2011, the ROC received a letter from Complainant that was signed by Complainant, his wife Cindy Brophy, Charles Gloetzner, and Lori Brinegar and that settled the case as follows: In response to [ROC] Complaint #2011-224, Segway General Contracting, myself and my wife have reached a resolution. We agree to accept a credit of $402.16 for the items listed in the Complaint, to pay Segway General Contracting the full amount due or $3,964.46 and to close Complaint #2011-224.

Our agreement is satisfactory and we request that you close Complaint #2011-224. Additionally we agree that no further claims will be filed for any work associated with State Farm Insurance Claim #03-H222-286. All issues have been resolved.[3]

The evidence shows that the credit was issued and Complainant made the payment to Respondent; thus, both parties complied with the terms of the settlement. 5. Shortly thereafter, Complainant discovered that he was not eligible for a rebate program from SRP because the unit that was installed was 14.5 SEER and not 15 SEER. Complainant asked the ROC to reopen the complaint and set the matter for hearing, claiming that he had purchased a SEER unit and had not been provided one. The ROC granted the request. Inspector Jim Hennessy inspected the installation and issued a Corrective Work Order (“CWO”) finding nothing wrong with the installation (no workmanship problems), but ordering that the unit be replaced with a 15 SEER unit under the terms of the contract. 6. Respondent moved to dismiss the matter based on the settlement. For the reasons stated below in the Conclusions of Law, that motion is granted as to the citation of poor workmanship. The parties also put forth evidence on the merits of Complainant’s claim, which is a contractual dispute. 7. Brian Deucher from Air Cold Supply, who provided the unit that was installed, testified that a “15 SEER package” can include a unit that is 14.5 SEER. He testified that the unit that was supplied for installation at Complainant’s home is commonly sold with a 15 SEER package. 8. Both Ron and Ed Hoyt, father and son operating as Hoyt’s Heating and Air Conditioning LLC, testified that Hoyt’s was the subcontractor that installed the unit. They testified about the installation of the unit at Complainant’s home. Both testified that they ordered the unit in the normal course of business and requested a 15 SEER package from Air Cold supply. No one had told them that the unit must be a 15 SEER rated unit and could not be a 14.5 SEER unit. 9. Respondent’s principal and Qualifying Party Chad Gloetzner also testified that no mention was made about eligibility or qualifications for the SRP rebate during the negotiations and execution of the contract. 10. Complainant and his wife testified that qualifying for the SRP rebate with a 15 SEER unit was one of their expectations. However, the evidence does not support that such an expectation was ever communicated to Respondent or anyone else. The SRP rebate is not mentioned in the contract or any other documents provided, nor was there testimony that an intent to obtain the SRP rebate was verbally communicated to Respondent. 11. The evidence shows that the unit installed at Complainant’s home operates as intended and cools the home appropriately. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[4] Further, the standard of proof at hearing is by preponderance of the evidence.[5] 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.[6] Complainant has not met that burden. 2. The Citation and Complaint alleges violations of Arizona Revised Statutes (A.R.S.) § 32-1154(A)(3) by way of ROC Rule R4-9-108 (prohibits poor workmanship), and (A)(23) (requires compliance with a CWO). This tribunal concludes, for the following reasons, that the matter should be dismissed. 3. First, the settlement document shows a waiver of all workmanship issues. The settlement is not limited only to those workmanship issues known at the time of the agreement. In addition, the Citation and Complaint cites subsection (A)(3) relating to workmanship issues. Therefore, this tribunal should not find a workmanship violation under (A)(3), even if the evidence showed such, because workmanship issues have been waived by Complainant in the settlement. 4. Second, the CWO is based on the ROC Inspector’s interpretation of the contract between the parties, an action that ROC inspectors rarely take. In this case, the evidence shows, at best, a good faith contractual dispute about the terms of the contract. The Registrar of Contractors, acting through an administrative disciplinary hearing, should not become involved in good faith contractual disputes that can be decided by the court system. A licensed contractor may believe in good faith that he is not in breach of contract, and such belief should not be the basis of a violation of the ROC statutes unless it is a clear violation of one of the subsections in A.R.S. § 32-1154(A). Only poor workmanship has been cited here, so there is no reason to adjudicate the contractual issue in this forum. Until and unless the good faith contractual dispute between the parties is reduced to judgment in favor of Complainant by a civil court of competent jurisdiction, no violation by Respondent can be supported. 5. Third, the evidence on the merits, through the testimony of Brian Deucher of Air Cold Supply, shows that the industry standard is to provide a 14.5 SEER unit in a “15 SEER package.” Thus, the evidence shows that Respondent has complied with industry standards. 6. This matter should be dismissed. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that Citation and Complaint 2011-224 against Respondent Segway Management LLC dba Segway General Contracting 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, October 11, 2011.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] C4 and C6 were offered but not admitted due to lack of relevance. [2] The basic proposal was for a 13 SEER but Complainant upgraded under the terms of the proposal to a 15 SEER. [3] The unit is installed on the roof and insurance was involved due to hail damage. [4] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [5] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [6] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996).

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Office of Administrative Hearings 1400 West Washington, Suite 101 Phoenix, Arizona 85007 (602) 542-9826