ALJDEC decisions subject to certification as final

2012A-1518-ROC · Registrar of Contractors · 2013-01-08

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: December 19, 2012

APPEARANCES: Complainant appeared through Ivy L. Kushner, Esq., accompanied by Managing Member John H. Griffin; Respondent was represented by Office Manager (employee) Mike Claffey.

WITNESSES: John Griffin Mike Claffey Todd Bullis, employee of Respondent[1]

ADMINISTRATIVE LAW JUDGE: Eric A. Bryant _____________________________________________________________________

This action was set for hearing upon Complainant’s allegations of abandonment of a contract by Respondent for a commercial contracting project. The Citation and Complaint issued by the Registrar of Contractors (“Registrar” or “ROC”) alleges abandonment of the project and that Respondent was operating outside the scope of Respondent’s license. Complainant appeared for hearing and stated that no further work was needed at the jobsite because Complainant had completed it. Respondent denies the allegations, asserting that it completed the job with Complainant’s help. This tribunal entered the complaint file received from the Registrar into the record, along with Complainant’s Exhibits 1 through 22. The tribunal also heard testimony 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 determining only that Respondent has operated outside the scope of its license. FINDINGS OF FACT 1. Respondent is the holder of License No: K-61.231339-D issued by the Registrar. It authorizes Respondent to perform carpentry, remodeling, and repair for both residential and commercial projects with specified limitations. Respondent’s sole principal and Qualifying Party is Sean William Claffey. 2. Complainant is a retail establishment. At all times relevant, Complainant acted through its principal, John Griffin, who has also been a licensed residential contractor. He and Respondent made a verbal agreement in September 2011 to perform tenant improvements at a new store Complainant was opening at Paradise Valley Mall. Work began in October 2011. On November 28, 2011, the parties signed a written agreement entitled “Commercial Construction Agreement” (hereinafter “CCA”). 3. The CCA called for Respondent to “perform all work required to construct the project. The CCA incorporated by reference an “Exhibit A” that is not part of the record. That document apparently described the specific work to be performed. The contract price was $62,500.00. The parties agreed to progress payments according to terms within the CCA. 4. The CCA required Respondent to achieve “Substantial Completion” no later than December 31, 2011, “subject to adjustments of this Contract Time as provided in the Contract Documents.” The CCA does not define substantial completion. 5. Work progressed on the project through December 2011 and by the end of the year was not close to being completed. The parties met in early January 2012 and Complainant proposed a schedule for progress payments and completion of phases of the work. Respondent did not agree to it, but continued working on the project. However, progress was very slow and John Griffin experienced mounting frustration with Respondent’s slow progress. 6. Griffin testified that in early April 2012 he reached his limit and took over completion of the project for himself. He had filed an ROC complaint in mid-March 2012 and did not believe that Respondent responded to it appropriately.[2] He testified that the reason he took the project over was because of the delay completing the project beyond the December 31, 2011, date. In addition, he testified that he had trouble communicating with Respondent because various people did not return his attempts to contact them. 7. Mike Claffey testified for Respondent. He stated the project was delayed due to many verbal change orders. He described one example with regard to the security door that was originally specified but had to be changed due to on-site conditions. However, he did not specify when the problem occurred or what length of delay it caused. He also testified about problems getting paid, which involved requesting a draw from the mall, who was paying Respondent for the project out of tenant improvement funds. 8. Respondent’s position, as stated through Mike Claffey, is that Respondent achieved substantial completion as required by the CCA on June 4, 2012, after the landlord accepted the construction work as finished. There is no documentation verifying this acceptance, however. Furthermore, it contradicts the testimony that Griffin took over the project in April 2012. The record contains email correspondence between the parties from March and May 2012 that indicates that Complainant was attempting to work with Respondent to get work done. The evidence is not sufficient to show that Respondent was doing no work on the project in April and May 2012. 9. This tribunal finds that the project was completed on June 4, 2012,[3] approximately five months after the completion date stated in the contract. 10. Complainant requests restitution if abandonment is found, but does not have adequate documentation to support any specific amount of restitution.[4] CONCLUSIONS OF LAW 1. The burden of proof at an administrative hearing is generally upon a complainant.[5] Further, the standard of proof at hearing is by preponderance of the evidence.[6] 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.[7] Complainant has met that burden with respect to one of the citations. 2. The Citation and Complaint alleges violations of A.R.S. § 32- 1154(A)(1) (prohibiting abandonment of a contract without legal excuse) and A.R.S. § 32-1154(A)(17) ( prohibiting contracting outside the scope of the license). The evidence does not show abandonment, but shows that Respondent has operated outside the scope of its license. 3. Respondent’s K-61 license is a dual license that includes the scope of work found in two other licenses. It authorizes Respondent to perform carpentry, remodeling, and repair for both residential and commercial projects with some limitations. For commercial projects that involve remodeling, repair, or both, the license is limited to contracts under $50,000.00.[8] For carpentry work, there is no dollar limitation.[9] Also, the scope of the remodeling and repair part of the license does not include specialty contracting such as electrical, plumbing, and other specialties.[10] 4. The record contains a single contract to which Respondent is a party and which includes remodeling work. The contract price is well over the $50,000.00 cap provided for the scope of license. This tribunal finds that the contract violates Respondent’s scope of work limitations.[11] 5. With regard to the abandonment allegation, the evidence is not sufficient to find a violation. Complainant has presented evidence showing a delay for completion of the project, but that is an alleged contract violation and not abandonment. At best, Complainant has shown a good faith contractual dispute between the parties that does not warrant finding a violation of the abandonment provision. This tribunal will not find abandonment on the basis of a good faith contractual dispute. The ROC, acting through an administrative disciplinary hearing, is not empowered by law to adjudicate mere contractual disputes when a contractor holds its position in good faith. Such disputes can be taken to the court system for resolution. 6. Administrative notice is taken of Respondent’s prior license record as reflected on the ROC public website on January 8, 2013. That prior record shows that Respondent has held the license since March 2007 and that it has been suspended once due to failure to comply with an order for approximately one month in July 2011. As such, further and more aggressive discipline is warranted here. 7. The violation for contracting beyond the scope of the license is a serious violation. This tribunal recommends that Respondent serve a 30- day disciplinary suspension, followed by a probationary period of one year. In addition, Respondent’s surety bond should be increased by $10,000.00 for a period of two years. RECOMMENDED ORDER Based on the foregoing, it is hereby recommended that License No: K- 61.231339-D, held by Respondent Celtic Construction, Inc., shall be suspended for a period of 30 days beginning the effective date of the Order entered in Case No. 2012-1518, followed immediately by a period of disciplinary probation for a period of one year. In addition to the above-provided penalties, any restoration of Respondent’s rights to resume contracting, whether or not probationary, shall be subject to a condition that Respondent first post an additional surety bond, cash deposit, or alternative deposit for a period of 24 months, including future renewal periods, in the amount of $10,000.00, this amount being in addition to such surety bond, cash deposit, or recovery fund participation set forth in A.R.S. § 32-1152(C). Cash or alternative additional deposits, if utilized, shall be returned only after the expiration of an additional two-year period following the above-provided 24- month period, and only if no claims are then pending. If Respondent fails to post the additional required surety bond/deposit on or before the expiration of the 30-day period of suspension, Respondent’s license shall remain suspended until such is posted.

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, January 8, 2013.

/s/ Eric A. Bryant Administrative Law Judge

Transmitted electronically to:

William A. Mundell, Director Registrar of Contractors ----------------------- [1] Another employee of Respondent, Audra Allen, took the witness stand at the hearing but it was determined that she did not have relevant testimony because she began working for Respondent in late June 2012. Therefore, she was released and did not testify. [2] Complainant requested a hearing on April 4, 2012. [3] This was the date given by Mike Claffey in response to a direct question. 12/19/12 Hearing Record at 03:34:30-03:35:00. [4] Exhibits 2 and 3 are statements of Complainant’s material costs and other costs without supporting documentation. Without such documentation, those Exhibits are given no weight. [5] Utah Construction Company v. Berg et al, 68 Ariz. 285, 205 P.2d 367 (1949). [6] Smith v. Arizona Dept. of Transportation, 146 Ariz. 430, 706 P.2d 756 (App. 1985). [7] Culpepper v. State, 187 Ariz. 431, 437, 930 P.2d 508, 514 (Ct. App. 1996). [8] A.A.C. R4-9-102(B) (L-61) by way of A.A.C. R4-9-104(B) (K-61). [9] Id. [10] Id. [11] The contract that is in the record is not specific enough to determine if a portion of it was for carpentry work, which has no cap under Respondent’s contract. Thus, this tribunal does not reach the question of whether a contract that combines carpentry and remodeling can exceed the cap for remodeling work.

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