ALJDEC decisions subject to certification as final

2011A-7047-ROC · Registrar of Contractors · 2012-07-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: June 21, 2012, at 8:00 a.m. APPEARANCES: LandSmith L P (hereinafter “Complainant”) appeared through its authorized representative, Quentin Thornton. G & O Construction LLC (hereinafter “G&O”) appeared through its authorized representative, Michael Phillip Osselear. ADMINISTRATIVE LAW JUDGE: M. Douglas _____________________________________________________________________

Evidence and testimony were presented and the following Findings of Fact, Conclusions of Law and Recommended Order are made: FINDINGS OF FACT 1. G&O is the holder of License No. KB-1.272046-D issued by the Registrar of Contractors. 2. Complainant entered into a construction agreement with Consolidated Asset Management, Inc. (hereinafter “CAM”) for the management of an apartment complex identified as Cypress Woods Apartments located at 2135 W. Campbell Ave., Phoenix, Arizona 85017 (hereinafter “the project”). 3. Complainant became embroiled in a financial dispute with CAM regarding CAM’s management of the apartment complex and filed a compliant against CAM with the Arizona Department of Real Estate and a complaint against G&O with the Registrar of Contractors. 4. Complainant’s complaint against CAM was investigated by the Arizona Department of Real Estate and closed on June 6, 2012.[1] 5. Complainant alleged that CAM contracted with G&O for the remodeling of eleven rental units in the project. Complainant asserts that there is a complete commonality of interest, personnel, and objectives between CAM and G&O because G&O’s representative, Michael Osselear, is the President and CEO of CAM and is also a member of G&O. Complainant alleges that CAM and G&O are the same entity and that G&O is fully responsible for the actions of CAM. 6. Complainant asserts that CAM provided Complainant with an estimate of $3,736.00 per unit for the cost of completing construction work on the eleven apartment units in the project. 7. Complainant asserts that when the construction project was completed, CAM sent an invoice to Complainant for the completed construction work on the eleven apartment units in the project in an amount that averaged over $6,400.00 per unit. Complainant asserts that CAM doubled the amount to be spent on the construction project without Complainant’s authorization. Complainant also asserts that CAM commingled residents’ rent and deposits with payments for remodeling work. Complainant asserts that CAM exceeded the scope of the parties’ contract for the construction project and failed to provide Complainant with timely updates and detailed records related to the cost overruns. 8. The parties were unable to resolve their differences and Complainant requested an administrative hearing. 9. On March 22, 2012, the Registrar of Contractors issued a Citation and Complaint which provided in pertinent part as follows: Respondent is advised and notified that the specific provisions of the State’s contracting laws which are charged in the Citation as possibly having been violated by you are as follows: A.R.S. § 32-1154A

2. Departure from or disregard of plans or specifications or any building codes of the state or any political subdivision of the state in any material respect which is prejudicial to another without consent of the owner or the owner`s duly authorized representative and without the consent of the person entitled to have the particular construction project or operation completed in accordance with such plans and specifications and code.

9. Failure in a material respect by the licensee to complete a construction project or operation for the price stated in the contract, or in any modification of the contract.

20. Subsequent discovery of facts which if known at the time of issuance of a license or the renewal of a license would have been grounds to deny the issuance or renewal of a license.

10. Complainant’s only witness, Quentin Thornton (hereinafter “Mr. Thornton”), submitted an exhibit that he identified as CAM’s estimated costs for remodeling the units at issue. Mr. Thornton acknowledged that he had no knowledge or evidence that G&O departed from or disregarded plans, specifications or any building codes. Mr. Thornton acknowledged that he had no knowledge or evidence that G&O failed in a material respect to complete a construction project or operation for the price stated in the contract, or in any modification of the contract. Mr. Thornton further acknowledged that he had no knowledge or evidence that G&O performed any construction work as an unlicensed contractor prior to obtaining a license from the Registrar of Contractors.[2] 11. Jessica Elizabeth Green (hereinafter “Ms. Green”) testified that she is the qualifying party for G&O. Ms. Green stated that G&O was formed in May 2011, and that G&O has no employees and subcontracts out its construction work. Ms. Green acknowledged that she is employed by CAM, but denied that she had any ownership interest in CAM.[3] 12. Ms. Green testified that the ownership structures of CAM and G&O are completely different. Ms. Green stated that the controller of CAM has no involvement or interest in G&O’s construction work.[4] CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing falls to the party asserting a claim, right, or entitlement and the standard of proof on all issues in these matters is by a preponderance of the evidence. See A.A.C. R2-19-119. 2. A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). 3. There was no credible testimony or evidence that G&O departed from or disregarded plans or specifications or any building codes. This tribunal concludes that Complainant failed to sustain its burden of proof to establish that G&O violated the charged provisions of A.R.S. § 32- 1154(A)(2). 4. There was no credible testimony or evidence that G&O failed to complete a construction project or operation for the price stated in the contract or in any modification of the contract. This tribunal concludes that Complainant failed to sustain its burden of proof to establish that G&O violated the charged provisions of A.R.S. § 32-1154(A)(9). 5. There was no credible evidence of any facts which if known at the time of the issuance of License No. KB-1.272046-D to G&O which if known at the time of issuance of the license would have been grounds to deny the issuance of the license. This tribunal concludes that Complainant failed to sustain its burden of proof to establish that G&O violated the charged provisions of A.R.S. § 32-1154(A)(20). RECOMMENDed order In view of the foregoing, it is recommended that on the effective date of the Registrar of Contractors’ Order in this matter, Complainant’s complaint in Case No. 2011-7047 be dismissed. In the event of certification of this 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 the certification.

Done this day, July 12, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] See Exhibit No. R-15 (6/6/122 Arizona Department of Real Estate letter in Case No. C11-000974). [2] 6/21/12 Hearing Record (hereinafter “H.R.”) at 26:46-28:21. [3] H.R. at 37:01-38:20. [4] H.R. at 38:28-38:56.

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