ALJDEC decisions subject to certification as final

2012A-1355-ROC · Registrar of Contractors · 2012-09-12

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: August 23, 2012 APPEARANCES: Jesse Vermani appeared personally. Accell Builders, L.L.C. was represented by its authorized representative, Dwight Smith. ADMINISTRATIVE LAW JUDGE: Brian Brendan Tully _____________________________________________________________________ Based upon the evidence of record, the Administrative Law Judge makes the following Findings of Fact, Conclusions of Law, and Recommended Order: FINDINGS OF FACT 1. Accell Builders, L.L.C. (“Respondent”) is the holder of residential License No. B.275842-R issued by the Registrar of Contractors (“Registrar”). 2. Jesse Vermani (“Complainant”) is the owner of a residence located at 2411 East Carol Avenue, Phoenix, Arizona. 3. On September 29, 2011, Complainant and Respondent entered into a written contract for a remodeling project at Complainant’s residence. 4. On March 13, 2012, Complainant filed a written Complaint with the Registrar alleging statutory and regulatory violations by Respondent on the subject project. The Registrar designated the Complaint as Case No. 2012-1355. 5. On April 5, 2012, the Registrar’s assigned inspector, Jeff Fleetham, conducted a jobsite inspection at Complainant’s residence to view the Complaint items. As a result of the jobsite inspection, Inspector Fleetham issued a Corrective Work Order dated April 12, 2012, that contained his findings and specific directives requiring Respondent to perform remedial repairs as follows: Respondent shall complete project per original contract agreement, properly executed change orders, local building codes, and manufacturer's installation instructions.

ALL Electrical, plumbing, air conditioning systems work must be subcontracted to an appropriately licensed contractor.

Family Room 1. Chips and holes in concrete subflooring. • Project not complete - no deficiency confirmed

2. Chips and holes in fireplace brick wall • Project not complete - no deficiency confirmed

3. Damaged wood beam above fireplace. • Rough sawn beam at ceiling has splinter on corner. • Respondent shall correct by appropriate means.

4. Glue not removed from concrete subflooring • Project not complete - no deficiency confirmed

5. Damaged handle on fireplace door. • Unable to assign fault or determine cause at time of inspection. • No action required by the Respondent

6. Cabinetry not removed completely • Project not complete - no deficiency confirmed

7. Scratches on cabinetry. • Project not complete - no deficiency confirmed.

Master Bathroom 8. Sink connection leaking. • Project not complete - no deficiency confirmed.

9. Damaged cabinet floorboard as a result of sink connection leaking • Unable to assign fault or determine cause at time of inspection. • No action required by the Respondent

10. Floor tile not removed completely • Project not complete - no deficiency confirmed

11. Thinset not removed from concrete subflooring • Project not complete - no deficiency confirmed

12. Broken light fixture and switch a. Unable to assign fault or determine cause at time of inspection. b. No action required by the Respondent.

13. Cabinet doors removed prematurely a. Project not complete - no deficiency confirmed

14. Notes written in black marker inside cabinet drawers. a. Cabinet location identifier written in permanent marker in cabinet drawers and inside cabinets. b. Respondent shall correct by appropriate means

15. Hole in wall a. Project not complete - no deficiency confirmed.

Master Bedroom 16. No electricity a. Project not complete - no deficiency confirmed

Master Closet 17. No electricity a. Project not complete - no deficiency confirmed.

18. Holes in walls a. Drywall damage occurring during demolition is a normal occurrence and should be corrected during course of the project b. Respondent shall correct by appropriate means.

Kids Bedroom 19. cabinet doors removed prematurely a. Project not complete - no deficiency confirmed

20. Notes written in black marker inside cabinet drawers a. Cabinet location identifier written in permanent marker in cabinet drawers and inside cabinets. b. Respondent shall correct by appropriate means

Kid’s bathroom 21. Cabinet doors removed prematurely a. Project not complete - no deficiency confirmed.

22. Notes written in black marker inside cabinet drawers a. Cabinet location identifier written in permanent marker in cabinet drawers and inside cabinets. b. Respondent shall correct by appropriate means

Kids Closet 23. Broken Shelf. a. Respondent shall correct by appropriate means.

Laundry Room 24. Electrical junction box left inside wall with no access. a. Electrical work not permitted b. Respondent shall correct by appropriate means using properly licensed contractor

25. Cabinetry installed on wall without ensuring proper positioning, covering up ceiling a. No plan, specification, or properly executed change order provided at time of inspection. b. Project not complete - no deficiency confirmed.

26. Cutout and unfinished wall Cabinet doors removed prematurely a. Project not complete - no deficiency confirmed.

27. Cabinet doors removed prematurely. a. Project not complete - no deficiency confirmed.

Paul’s Bedroom 28. [T]ack strips removed (should not have been) a. No deficiency demonstrated or observed at time of inspection b. Project not complete - no deficiency confirmed.

Basement: 29. Broken hardwood flooring. a. Damage occurring during demolition is not uncommon occurrence and should be corrected during course of the project. b. Respondent shall correct by appropriate means.

30. Ceiling fan and light fixtures left outside in the rain a. No fixtures at time of inspection.

Guest Room: 31. Thinset not removed from concrete subflooring a. Project not complete - no deficiency confirmed.

32. Hole in wall a. Drywall damage occurring during demolition is a normal occurrence and should be corrected during course of the project. b. Respondent shall correct by appropriate means.

Guest Bathroom 33. Broken toilet a. One piece turquoise toilet is broken at base. b. Unable to determine cause or assign fault at time of inspection

34. Floor tile not removed in shower a. Project not complete - no deficiency confirmed.

35. Thinset not removed from concrete subflooring a. Project not complete - no deficiency confirmed.

Equipment Room: 36. Debris left a. Project not complete - no deficiency confirmed.[1]

6. On May 29, 2012, the Registrar issued a Citation and Complaint in Case No. 2012-1355 charging Respondent with the following violations: A.R.S. § 32-1154(A)(1); A.R.S. § 32-1154(A)(2); A.R.S. § 32- 1154(A)(3), namely A.A.C. R4-9-108; A.R.S. § 32-1154(A)(6); A.R.S. § 32-1154(A)(7); A.R.S. § 32-1154(A)(9); A.R.S. § 32-1154(A)(10); A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1124(B); A.R.S. § 32- 1154(A)(13);[2] A.R.S. § 32-1154(A)(16); A.R.S. § 32-1154(A)(17); A.R.S. § 32-1154(A)(20); and A.R.S. § 32-1154(A)(23). 7. The Registrar forwarded Case No. 2012-1355 to the Office of Administrative Hearings, an independent agency, for an evidentiary hearing. 8. After the commencement of the scheduled hearing but prior to its conclusion, Respondent’s authorized representative, Dwight Smith, voluntarily left the hearing knowing that the hearing would continue in his absence. After Mr. Smith left the hearing, the Administrative Law Judge continued to conduct the hearing in his absence. As a result of Mr. Smith’s leaving the hearing, Respondent failed to present any evidence at the hearing. 9. The parties’ contract listed Respondent’s contracting license as “License # ROC 238596.” That license is Respondent’s commercial contracting license. The parties’ contract did not list Respondent’s residential contracting license number B.275842-R because that license was not issued by the Registrar until November 17, 2011. Therefore, Respondent had not been properly licensed as a residential contractor at the time the parties entered into the remodeling contract. 10. The parties’ contract does not satisfy the minimum elements of a contract requirement set forth in A.R.S. § 32-1158 as follows: (i) The estimated date of completion of the project; (ii) The pay schedule for the full contract price of $32,500.00; and (iii) The required language advising the consumer of the consumer’s right to file a complaint with the Registrar for alleged violations of A.R.S. § 32-1154. 11. The evidence of record established that Respondent contracted beyond the scope of its general residential contracting license by performing electrical, plumbing, and air conditioning work on the subject project instead of subcontracting such work to properly licensed subcontractors. 12. J.R. Salcido performed contracting work for Respondent on the subject project. Mr. Salcido was not a licensed contractor or an employee of Respondent. Therefore, Respondent aided and abetted Mr. Salcido’s unlicensed contracting on the subject project. 13. At the hearing, Complainant introduced into evidence an advertisement for Respondent that claims Respondent had 30 years of building experience in the Phoenix area. However, Respondent became a domestic limited liability company on June 29, 2007, in Arizona. 14. Complainant presented credible evidence that Respondent demanded payments for the subject project in excess of the $32,500.00 contract price without submitting change orders for additional work. 15. Although Complainant had paid Respondent $10,000.00 for demolition, Respondent demanded an additional $4,000.00 to return to the project to complete that work although there was no payment schedule for those additional funds. 16. Respondent deviated from plans and specifications when it constructed a wall in front of an existing wall with a junction box, which made the junction box inaccessible. The new wall was not on any plans or specifications. 17. Complainant failed to present credible evidence to establish that Respondent committed fraud in this matter. 18. Complainant seeks restitution from Respondent in the amount of $10,000.00, being the amount of money paid to Respondent by Complainant. However, Complainant’s financial claim should be decided in a civil court of competent jurisdiction rather than by the Registrar in this disciplinary action because he has additional claims for damages and attorney fees. 19. Administrative notice is taken of the Respondent’s prior License record as reflected on the Registrar’s public website on September 11, 2012. Such prior License record reflects that Respondent’s License No. B.275842-R is current with two open complaints pending against the license. CONCLUSIONS OF LAW 1. The Registrar has jurisdiction over Respondent and the subject matter in this case. 2. Pursuant to A.A.C. R2-19-119(B), Complainant has the burden of proof in this matter. The standard of proof is by a preponderance of the evidence. A.A.C. R2-19-119(A). 3. Respondent violated the provisions of A.R.S. § 32-1154(A)(1), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent abandoned the parties’ contract without legal excuse for the abandonment. Respondent refused to perform further work on the subject project without additional payment from Complainant that was not required by the parties’ contract. Respondent also failed to perform remedial work required by the Registrar’s Corrective Work Order. 4. Respondent violated the provisions of A.R.S. § 32-1154(A)(2), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent deviated from plans and specifications by moving a wall that resulted in a junction box becoming inaccessible because it was blocked by the new wall. In addition, Respondent failed to comply with local code requirements by not obtaining a building permit and inspections for the subject project. 5. Respondent violated the provisions of A.R.S. § 32-1154(A)(3), namely A.A.C. R4-9-108, as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent failed to perform portions of its work in a workmanlike manner as noted in the Registrar’s Corrective Work Order. 6. Complainant failed to sustain his burden of proving that Respondent violated the provisions of A.R.S. § 32-1154(A)(6), as charged in the Citation and Complaint issued by the Registrar. Complainant failed to present credible evidence that Respondent misrepresented any material fact on its application for the residential contracting license. 7. Complainant failed to sustain his burden of proving that Respondent committed fraud on the subject project in violation of the provisions of A.R.S. § 32-1154(A)(7), as charged in the Citation and Complaint issued by the Registrar. A.R.S. § 32-1154(A)(7) does not define what constitutes actionable fraud. The nine elements of common-law fraud are as follows: "'(1) A representation; (2) its falsity; (3) its materiality; (4) the speaker's knowledge of its falsity or ignorance of its truth; (5) his intent that it should be acted upon by the person and in the manner reasonably contemplated; (6) the hearer's ignorance of its falsity; (7) his reliance on its truth; (8) his right to rely thereon; (9) his consequent and proximate injury.'"[3]

Respondent failed to present credible evidence establishing each of the nine elements of common-law fraud in this matter. 8. Respondent violated the provisions of A.R.S. § 32-1154(A)(9), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent demanded payments for the project in excess of the stated contract price without written change orders. 9. Respondent violated the provisions of A.R.S. § 32-1154(A)(10), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent aided and abetted Mr. Salcido, an unlicensed contractor, who performed contracting work on the subject project. 10. Respondent violated the provisions of A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1124(B), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent’s contract form contained only its commercial contracting license when it entered into a contract with Complainant for a residential construction project. 11. Respondent violated the provisions of A.R.S. § 32-1154(A)(13), namely A.R.S. § 32-1158, as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that the parties’ contract failed to list all of the minimum elements of a contract required by the statute. 12. Respondent violated the provisions of A.R.S. § 32-1154(A)(16), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent’s advertising relied upon by Complainant falsely stated Respondent’s residential construction experience. 13. Respondent violated the provisions of A.R.S. § 32-1154(A)(17), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent exceeded the scope of its contracting license by failing to subcontract the electrical, plumbing, and air conditioning work to properly licensed subcontractors. 14. Respondent violated the provisions of A.R.S. § 32-1154(A)(20), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent’s contracting for residential work on the subject project prior to obtaining a residential contracting license would have been grounds for the Registrar to deny the issuance of Respondent’s residential license if that activity had been known to the Registrar. 15. Respondent violated the provisions of A.R.S. § 32-1154(A)(23), as charged in the Citation and Complaint issued by the Registrar. The evidence of record established that Respondent failed to comply with the Registrar’s Corrective Work Order. Respondent failed to present any evidence at the hearing establishing that Complainant unreasonably denied access to Respondent preventing Respondent from performing the required remedial work. 16. Based upon the evidence of record, the Administrative Law Judge concludes that Complainant’s request for restitution in the amount of $10,000.00 from Respondent, which is the total amount Complainant had paid to Respondent for the subject project, should be denied. The Administrative Law Judge concludes that the parties’ financial dispute should be resolved in a civil court of competent jurisdiction where each of the parties’ positions may be adjudicated. Therefore, the Administrative Law Judge declines to recommend restitution in this matter pursuant to A.R.S. § 32-1156.01. RECOMMENDED ORDER Respondent’s License No. B.275842-R shall be revoked on the effective date of the effective date of the Order entered in Case No. 2012-1355. In addition to the above-provided license revocation, Respondent shall pay the sum of $500.00 in certified funds to the Registrar by way of a civil penalty pursuant to A.R.S. § 32-1154(D). The failure by Respondent to pay the entire amount of the aforesaid civil penalty on or before 30 days following the effective date of the Order entered in Case No. 2012- 1355 shall result in the additional automatic revocation of Respondent’s License No. B.275842-R, effective on such 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 tendered. 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, September 12, 2012.

/s/ Brian Brendan Tully Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Agency Record, “inspActionLetters7.rft.” [2] The Citation and Complaint does not specify the statutory violation. At the hearing, it was determined that the parties knew that the specific violation was A.R.S. § 32-1158, which pertains to the minimum elements of a construction contract. [3] Staheli v. Kauffman, 122 Ariz. 380, 383, 595 P.2d 172, 175 (1979) (quoting Carrel v. Lux, 101 Ariz. 430, 434, 420 P.2d 564, 568 (1966); Nielson v. Flashberg, 101 Ariz. 335, 338-39, 419 P.2d 514, 517-18 (1966)(footnote added)).

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