ALJDEC decisions subject to certification as final

2012A-1186-ROC · Registrar of Contractors · 2012-08-13

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 23, 2012

APPEARANCES: Complainant appeared on his own behalf, accompanied by his wife Allison Oseran; Respondent was represented by Managing Member Bryan Moody.[1]

WITNESSES: Jeff Wills, ROC Inspector Dan Oseran Roy Brown, Respondent’s General Manager Bryan Moody, Managing Member

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

Complainant brings this action against Respondent alleging abandonment of a project and poor workmanship with regard to landscaping work done at Complainant’s home. The Citation and Complaint also alleges that Respondent failed to obtain a required building permit, that Respondent worked while the license was suspended or inactive, and that Respondent used a business name other than its authorized name. Respondent does not deny that its license was suspended for lack of bond at the time of the job or that it used an unauthorized name. Respondent admitted that the job is unfinished, and for that reason denied any workmanship issues. Respondent raised disputes about payment and permitting as reasons that the work is not finished. This tribunal entered the complaint file received from the Registrar of Contractors (“Registrar” or “ROC”) into the record, along with Complainant’s Exhibit A. Testimony was presented from the witnesses listed above. 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 corrective work and sanctions. FINDINGS OF FACT 1. Respondent is the holder of License No: B.272072-R, a general residential contracting license issued by the Registrar. The license authorizes Respondent to operate as a general contractor for residential projects. 2. Complainant hired Respondent in October 2011 to upgrade the backyard landscaping at his home by building a pergola with a bar, a fire pit, and a barbeque. A copy of the signed “Construction Contract and Proposal” is part of the complaint file and shows that the total contract price was $15,609.33. Although not part of the written contract, the parties agree that Respondent agreed to take part of its payment in trade credit with a trade association. An invoice dated February 17, 2012, shows that the trade credit portion of the payment was $10,000.00. This left Complainant with a total cash payment of $5,609.33, which Complainant paid in installments until that portion was paid in full. A few days after the invoice was created, Respondent stopped work on the project. 3. Respondent began the job but ran into cash flow problems and could not purchase materials to complete the job. Roy Brown, who created the proposal and worked with Complainant throughout the proposal process and the construction process, testified that he agreed to accept one-third of the job in cash and two-thirds in trade credit and that this turned out to be a poor bargain on Respondent’s part. He assumed that he would be able to get materials from the trade association to use in Complainant’s project. Due to issues with the trade association, that was not possible. It should be noted that there are no provisions in the written contract that suggest use of the trade association to purchase materials for Complainant’s project.[2] 4. None of the $10,000.00 trade credit has been given to Respondent. Complainant testified that he is ready, willing, and able to give the trade credit upon completion of the job, and is willing to give partial credit at any time to get the job re-started. Thus, the evidence shows that Complainant is ready to make payment under the terms of the contract. However, Respondent has not requested it because Respondent believes that it will not help Respondent complete the job. 5. Administrative notice is taken of Respondent’s prior license record as reflected on the ROC’s public website on August 13, 2012. That prior record shows that Respondent has held the license since April 2011 and that the license was automatically suspended for lack of bond from February 6, 2012 to July 12, 2012. This was during the time that Respondent worked on Complainant’s job, but it was after the proposal was issued and the written agreement entered into. 6. The written documents use the name and logo of “GroundScapes” and not Respondent’s licensed name of GSDL, LLC. 7. After Complainant filed a complaint about workmanship, Inspector Jeff Wills inspected the jobsite on March 23, 2012, and found the following items that needed correction: License # 272072 issued to GSDL LLC was suspended for lack of bond on 2/6/12 and cannot do or subcontract the following corrective work until the suspension is lifted

1. Completion of masonry and structures for bench including removal of 1.5 linear feet. (Partially completed): As pointed out by the Complainant, the masonry work for the fire pit and bench is near completion and the gas line was plumbed to the fire pit but no other work has been performed. In the opinion of this inspector, this installation or connection of gas may require an inspection by the City of Phoenix. Contractor to correct by appropriate means. 2. Completion of masonry and structures for barbeque; includes electricity. (Partially completed): As pointed out by the Complainant, the masonry for the barbeque is nearly complete, electrical outlets have been added and the gas has been plumbed to the BBQ but no other work has been performed. In the opinion of this inspector, this installation or connection of gas and electric may require an inspection by the City of Phoenix. Contractor to correct by appropriate means. 3. Construction of pergola/trellis patio extension; includes electricity. (Partially completed): As pointed out by the Complainant, the Respondent removed some of the homeowners existing pavers for the back patio and started a footing/pillar for the pergola but no other work has been performed regarding this issue. In the opinion of this inspector, the footings and or construction of the patio extension including any electrical work may require an inspection by the City of Phoenix. Contractor to correct by appropriate means. 4. Connection of barbeque and burner to gas line: As pointed out by the Complainant, this has not been completed. In the opinion of this inspector, this installation or connection of gas may require an inspection by the City of Phoenix. Contractor to correct by appropriate means. 5. Connection of fire pit to gas line: Refer to item #1. Contractor to correct by appropriate means. 6. Ground preparation/leveling and installation of pavers and paver borders: As pointed out by the Complainant, the Respondent was to remove all existing pavers currently installed for the existing back patio, level and grade the area appropriately and install new pavers. As pointed out by the Complainant, the Respondent has begun to remove some of the existing pavers but has not completed this part of the job or installed any new pavers. Contractor to correct by appropriate means. 7. Demolition of current landscape – (Mostly completed): As pointed out by the Complainant, most of this work in the backyard has been completed by the Respondent with the exception of removing some existing plants/bushes/shrubs: Contractor to correct per contract and by appropriate means. 8. Ground preparation and installation of new irrigation system, including control box: As pointed out by the Complainant, the existing drip/irrigation system has been shut off and mostly removed due to the backyard landscaping being completely reconfigured. As pointed out by the Complainant, no new drip/irrigation materials have been installed as of yet. Contractor to correct by appropriate means. 9. Ground preparation and installation of new shrubs and trees, including replacement of accidentally removed shrubs: This was pointed out by the Complainant at the time of the inspection. Contractor to correct by appropriate means. 10. Ground preparation and installation of new sod: As pointed out by the Complainant, the existing sod is still in place and dying due to the drip/irrigation system being removed and or inoperable. No new sod onsite at time of inspection. Contractor to correct by appropriate means.

Inspector Wills issued a Corrective Work Order (“CWO”) dated March 29, 2012, containing the items listed above. 8. Respondent does not dispute that the corrective work items need to be addressed in order to complete the project and meet workmanship standards. Respondent performed some stucco work in either late April or early May, according to Complainant. Inspector Wills, who performed a prehearing inspection on July 23, 2012, testified that the stucco work was not sufficient and appears to be unfinished. No other attempts to correct or complete the work were made. 9. Bryan Moody testified that he was not notified immediately by the bonding company that his bond had been suspended in February 2012. He testified that it took Respondent until late July to reinstate the bond. The record shows that the March 29, 2012 CWO references the suspension and requires Respondent to get the suspension lifted before doing corrective work. Yet, Respondent sent a stucco subcontractor to Complainant’s house in April/May 2012 to do work on Complainant’s project. In addition, timely written notification of cancellation of the bond to both Respondent and the ROC is required of the bonding company by A.R.S. § 32-1122(F). Respondent has not corroborated a lack of notification by the bonding company. Respondent failed to show that the bonding company did not notify the ROC of the cancellation of the bond in February 2012. 10. Respondent argued at hearing that Complainant initially “waived” the requirement of a building permit for the project. However, the requirement for a building permit is a requirement placed on Respondent by the local building authority and cannot be waived by anyone but the local authority. Respondent also argued that Complainant was responsible for obtaining the permit and that Respondent was not required to perform further work on the project until a permit was obtained. However, the written agreement does not require that Complainant obtain permits. It does contain a provision requiring Complainant to pay the cost of obtaining a permit, but there is no indication in the written contract that a permit is not included in the contract price. This tribunal finds that the written contract is not clear as to whether the cost of “necessary permits” is included in the contract price or is a separate and additional charge. At minimum, the written contract does not require Complainant to pre-pay for permits, even if they are an additional charge. Respondent could have obtained the permit and billed Complainant accordingly, but did not do so. Therefore, the lack of a permit is not an excuse for Respondent’s non- performance. CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[3] Further, the standard of proof at hearing is by preponderance of the evidence.[4] 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.[5] Complainant has met that burden. 2. The Citation and Complaint alleges violations of A.R.S. § 32- 1154(A)(1) (prohibiting abandonment of a project without legal excuse), A.R.S. § 32-1154(A)(2) (requiring contractors to follow plans, specifications, and building codes), A.R.S. § 32-1154(A)(3) by way of A.A.C. R4-9-108 (prohibiting poor workmanship), A.R.S. § 32-1154(A)(15) (prohibiting use of a name other than that on the license), A.R.S. § 32- 1154(A)(18) (prohibiting contracting while a license is suspended or inactive), and A.R.S. § 32-1154(A)(23) (requiring compliance with a CWO). All of the cited allegations are supported by the evidence. 3. Respondent abandoned the contract without legal excuse. Respondent’s admission that it entered into a poor bargain is not a legal excuse for failure to perform the contracted work. Neither is the lack of payment for a permit, as the contract is unclear about an additional payment for the cost of a permit and the contract does not require pre- payment of the cost of a permit. Respondent could have obtained the permit and billed Complainant for it. Neither is Respondent’s lack of ability to purchase materials an excuse for stopping work on the project. Respondent violated A.R.S. § 32-1154(A)(1) and A.R.S. § 32-1154(A)(2). 4. In his testimony, Inspector Wills confirmed the workmanship issues at the project as set forth in the CWO. Those items have not been corrected. Respondent violated A.R.S. § 32-1154(A)(3) by way of A.A.C. R4- 9-108 and A.R.S. § 32-1154(23). 5. Respondent used a name other than the one on the license to conduct business with Complainant in violation of A.R.S. § 32-1154(A)(15). 6. The Citation and Complaint also alleges violation of A.R.S. § 32- 1154(A)(18) (prohibiting contracting under a license that is suspended or inactive). The evidence shows a violation of that provision because Respondent performed work in late February 2012 and April/May 2012 while its license was suspended for lack of bond. 7. The appropriate sanctions in this matter are (1) suspend Respondent’s license unless and until Respondent has obtained a permit and has properly performed, or caused another to perform, correction of all items in the CWO; (2) impose a civil penalty of $150.00 on Respondent for operating while its license was suspended, and (3) impose a civil penalty of $250.00 on Respondent for failing to comply with the CWO. RECOMMENDED ORDER IT IS RECOMMENDED that License No. L-60.266792-C, held by GSDL, LLC be suspended beginning the effective date of the Registrar’s Order until the Registrar receives written proof that Respondent, or another contractor at Respondent’s expense, has performed correction of all items in the CWO, and the Registrar accepts such written proof. IT IS FURTHER RECOMMENDED that if Respondent provides such written proof on or before the effective date of the Registrar’s Order, the license suspension shall not take place. IT IS FURTHER RECOMMENDED that, in addition to the provisional suspension above, GSDL, LLC pay a civil penalty of $150.00 to the ROC pursuant to A.R.S. § 32-1154(D). Failure to pay the entire amount of the civil penalty, on or before 30 days following the effective date of the ROC Order entered in this matter, shall result in the automatic revocation of Respondent’s license, effective on the deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless payment of any outstanding prior civil penalty is made. IT IS FURTHER RECOMMENDED that, in addition to any sanction provided above, GSDL, LLC pay a civil penalty of $250.00 to the Registrar of Contractors pursuant to A.R.S. § 32-1154(E) for contracting while the license was suspended or inactive. Failure to pay the entire amount of the civil penalty on or before 30 days following the effective date of the Registrar’s Order entered in this matter shall result in the automatic revocation of Respondent’s license, effective on the deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless payment of any outstanding prior civil penalty is made.

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, August 13, 2012.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Bryan Moody was not present for the first 50 minutes of the hearing. The Administrative Law Judge determined that he was voluntarily absent and began the hearing without an authorized representative for Respondent. Once he appeared, Mr. Moody fully participated in the hearing. [2] There are also no provisions regarding a date of completion. Thus, Complainant’s attempt to hold Respondent accountable for verbal dates of completion is not persuasive. If a date of completion was important to Complainant, it could have been written into the terms of the contract, especially in light of the statement at the end of the first page of the contract, just before Complainant’s signature, that states: “I have not been promised anything that is not included in this Contract.” [3] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [4] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [5] 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