ALJDEC decisions subject to certification as final

2012A-125-ROC · Registrar of Contractors · 2012-08-15

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: July 27, 2012, at 8:00 a.m. APPEARANCES: Sygnos, Inc. (hereinafter “Complainant”) appeared through its attorney, Scott F. Frerichs, Esq., Mann, Berens & Wisner, LLP. Tades, Inc. (hereinafter “Tades”) appeared through its attorney, Michael Hornisher, Esq., Michael Hornisher Law Office. 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. Tades is the holder of License No. K-11.241392-D issued by the Registrar of Contractors. 2. Tades performed construction work as an electrical subcontractor on a commercial project at the Veteran’s Hospital in Tucson, Arizona, wherein Complainant was functioning as the licensed general commercial contractor on the project. 3. The parties became embroiled in a financial dispute and Tades filed non- payment complaints against Complainant with the Registrar of Contractors (ROC Case Nos. 2011-6226 and 2011-6626). Complainant then filed this complaint against Tades with the Registrar of Contractors alleging that Tades had failed to perform its work in a workmanlike manner, that Tades failed to comply with applicable plans, specifications and code provisions, and that Tades had failed to pay material suppliers. 4. Following an administrative hearing the Registrar of Contractors dismissed ROC Case Nos. 2011-6226 and 2011-6626. 5. Pursuant to the filing of the formal Complaint regarding workmanship, an assigned Agency Inspector, Mike Nieves (hereinafter “Inspector Nieves”), conducted an onsite inspection. Inspector Nieves issued a written Corrective Work Order directing Tades to perform designated corrective work on the project. 6. The Corrective Work Order provides, in pertinent part, as follows: Contractor to correct the following by appropriate means and per all plans, specifications and building codes: 2. TADES, Inc. wrote an email to the owner claiming that the installation of the 13,800 volt transformer that they installed which feeds the building SES is “extremely dangerous” and could [“]explode.[”] TADES waited approximately 3 months to inform anyone of the life threatening safety hazard and claims the concrete contractor should be liable for the condition. Exhibit B. Message from TADES Inc.: Transformer is out of level, needs to be properly corrected. 3. TADES, Inc. has written an email to the owner claiming that they have knowingly installed the electrical system with the amount of code violations on this project is to an extent that we will be unable to give any type of warranty on this job. “Exhibit C. from TADES, Inc.: Telecommunications room, Normal [P]ower room and Emergency Power room do not have power disconnects, needs to be properly corrected.

7. Inspector Nieves testified that he spoke with Complainant on July 24, 2012, and Complainant informed him that Complainant had corrected Item number 2 of the Corrective Work Order and that Tades had corrected item number 3 of the Corrective Work Order. Inspector Nieves acknowledged that he based his testimony regarding item number 2 of the Corrective Work Order on Complainant’s statements to him.[1] 8. Darin Walters (hereinafter “Mr. Walters”) testified that he is a project manager for Complainant. Mr. Walters stated that the Complaint was filed because Tades failed to perform corrective action on Complainant’s punch list. Mr. Walters stated that he informed Inspector Nieves that he believed that another electrical contractor had corrected the levelness of the transformer. Mr. Walters denied that he had informed Inspector Nieves that Complainant had corrected item number 2 of the Corrective Work Order.[2] 9. Mr. Walters stated that he was not complaining about Tades’ storm drain work. Mr. Walters stated that it was in the Complaint because Mr. Kellogg made in an electronic communication containing allegations of poor quality work performed at the construction project.[3] 10. Mr. Walters testified that the manufacturer of the transformer examined the installation of the transformer and found the installation of the transformer to be square to the concrete slab. Mr. Walters acknowledged that the Veteran’s Administration had dropped the issue regarding the installation of the transformer on the concrete pad based upon the manufacturer’s examination and acceptance of the installation of the transformer on the concrete pad.[4] 11. The manufacturer of the transformer examined the installation of the transformer on the concrete pad and issued a letter stating that the manufacturer observed that the installation of the transformer was square to the concrete slab.[5] 12. Mr. Walters testified that the installation of the transformer on the concrete pad was no longer an issue.[6] 13. Chris Kellogg (hereinafter “Mr. Kellogg”) testified that he is president and qualifying party for Tades. Mr. Kellogg testified that Tades installed the transformer on the concrete pad on September 11, 2011. Mr. Kellogg stated that Tades informed the onsite representative from the Veteran’s Administration and Darin Walters that the concrete pad was out of level and that it was a problem that needed to be addressed.[7] 14. Mr. Kellogg testified that Darin Walters and the representative from the Veterans’ Administration directed Tades to complete the installation of the transformer on the concrete pad despite the fact that Tades had informed both individuals that the concrete pad was out of level. Mr. Kellogg testified that Darin Walters stated that Complainant would take care of the problem later. Mr. Kellogg’s testimony is found to be credible.[8] 15. Complainant’s concrete subcontractor constructed the concrete pad. Tades then installed the electrical transformer on the unlevel concrete pad at the specific direction of Complainant. 16. Mr. Kellogg testified that he requested Eaton, the manufacturer of the transformer, to examine the installation of the transformer. Mr. Kellogg stated that Eaton verified that the installation of the transformer met its criteria and that Eaton would warranty the transformer as installed.[9] 17. Mr. Kellogg testified that Tades was unable to pay its material suppliers in full because Complainant had failed to pay Tades in full for its work. Mr. Kellogg stated that Complainant had failed to pay Tades at least $150,000.00. Mr. Kellogg testified that Tades had made payment arrangements with its material suppliers and was in the process of paying its material suppliers from other sources, despite the fact that it had not been fully paid by Complainant for its electrical work on the construction project.[10] 18. Administrative notice is taken of Tades’ prior license record as reflected on the Registrar of Contractors’ public website on August 14, 2012. Such prior license record reflects that Tades’ License No. K- 11.241392-D was current. 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. Tades originally failed to install power disconnects in the Normal Power Room and Emergency Power Room as noted in Item No. 3 of the Corrective Work Order. This Tribunal concludes that Tades violated the charged provisions of A.R.S. § 32-1154(A)(2)[11] and A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108.[12] 4. The parties are embroiled in an ongoing financial dispute which the Registrar of Contractors has already determined to in good faith in Case Nos. 2011-6226 and 2011-6626. The credible evidence of record was insufficient failed to support a finding that Tades violated the charged provisions of A.R.S. § 32-1154(A)(11) in this matter.[13] 5. There was no dispute that Tades has installed power disconnects in the Normal Power Room and the Emergency Power Room as directed in the Corrective Work Order. The owner of the construction project and the manufacturer of the transformer have accepted the installation of the transformer installed by Tades and no corrective action was shown to be necessary or requested. This Tribunal concludes that Tades has taken appropriate corrective action and has fully complied with the terms of the Corrective Work Order. Accordingly, there is no violation of the charged provision of A.R.S. § 32-1154(A)(23).[14] RECOMMENDed order In view of the foregoing, it is recommended that no discipline be imposed on Tades’ License No. K-11.241392-D and that this matter be closed on the effective date of this Order. 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, August 15, 2012.

/s/ M. Douglas Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors

----------------------- [1] 7/27/12 Hearing Record (hereinafter “H.R.”) at 06:20-8:47. [2] H.R. at 9:27-11:59. [3] H.R. at 26:20-30:42. [4] H.R. at 40:14-48:30.. [5] See Exhibit No. C-2 (Eaton letter of 2/15/12). [6] H.R. at 58:10-59:57. [7] H.R. at 1:05:55-1:06:39. [8] H.R. at 1:06:40-1:07:11. [9] H.R. at 1:09:00-1:10:30. [10] H.R. at 1:10:50-1:12:50. [11] 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. [12] R4-9-108 provides: A. A contractor shall perform all work in a professional and workmanlike manner. B. A contractor shall perform all work in accordance with any applicable building codes and professional industry standards. C. All work performed by a contractor in a county, city, or town that has not adopted building codes or where any adopted building codes do not contain specific provisions applicable to that aspect of construction work shall be performed in accordance with professional industry standards.

[13] Failure by a licensee or agent or official of a licensee to pay monies in excess of seven hundred fifty dollars when due for materials or services rendered in connection with the licensee's operations as a contractor when the licensee has the capacity to pay or, if the licensee lacks the capacity to pay, when the licensee has received sufficient monies as payment for the particular construction work project or operation for which the services or materials were rendered or purchased. [14] Failure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar. The written directive shall set forth the time within which the contractor is to complete the remedial action. The time permitted for compliance shall not be less than fifteen days from the date of issuance of the directive. A license shall not be revoked or suspended nor shall any other penalty be imposed for a violation of this paragraph until after a hearing has been held.

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